08/19/2014 - BEFORE Financial Repression BONDS were “for Widows, Orphans and Pensioners” For those who couldn’t and SHOULDN’T take risk
Now the government is forcing Public Pensions into Stocks
Some 50% of all US pension fund assets are invested in stocks and only 20% in Treasurys
UNDERSTAND
“SHORTING” & “PUT DERIVATIVES”
to know how
THE GREATEST WEALTH TRANSFER IN HISTORY
IS BEING SET-UP TO EVENTUALLY BE EXECUTED
08/18/2014 - “When a Government Doesn’t Own its Own Currency this Eventually Happens”
Its Called FINANCIAL REPRESSION
When an Unelected, Private Institution (The Federal Reserve), Owned by the Banks, Controls the Money Supply & Interest Rates this occurs
“Permit me to issue the money of a nation, and I care not who makes it laws”
Mayer Amschel Rothchild, Banker 1790
08/18/2014 - Indebted Governments Will Resort To Capital Controls
Daily Reckoning commentary on how indebted, western-world governments will likely begin instituting draconian controls & regulations on restricting the movement of money, all with the goal of keeping itself alive & not going into default on its debt while at the same time maintaining a relatively strong currency
.. “The U.S. government, along with other Western countries and innumerable banking institutions, is starting to make it very difficult for regular citizens — you, me and the nice lady next door — to move money
.. In essence, capital controls enable governments to limit the flow of money coming in and out of their country in the hopes of manufacturing conditions that protect the value of their currency. As we reach a fiscal tipping point, we could very well see our government revert to making use of capital controls.”
.. it’s another example of financial repression.
READ: 4 Ways the Government Is Set to Take Your Money
08/17/2014 - ECB TAKES ON INCREASED POWERS THE “SUPERVISION FRAMEWORK”
CENTRAL PLANNING & CONTROL
A EURO BOND IS COMING
&
THE UNIVERSAL TAXATION TO SUPPORT
ITS DEBT
Bloomberg Brief Reports:
“A new supervision framework is required to revive the euro area’s single financial market with the assurance that it will yield more benefits than costs. So far, balkanization of banking rules among assorted national supervisors has been a barrier for cross-border lending. This will be lifted with the ECB taking the role of a new single supervisor on Nov. 4.
As Draghi pointed out, “There will no longer be a distinction between home and host supervisors for cross-border banks. Instead, there will be a single supervisory model and eventually a single supervisory culture, rather than one per country.”
As a result, banks could see a reduction in compliance costs and an increase in opportunities for economies of scale, even if taxes will still differ according to member states’ fiscal policies. For the longer term, the authority given to the single supervisor may also improve the monitoring of systemically relevant banks, helping to curb sector excesses and risk.
The transfer of power to a single European bank supervisor should be a game changer.
The ECB is hoping to do more than simply strengthen financial stability. It also envisions unified authority as a tool to repair the broken channels of monetary policy transmission, prompting banks to make their comeback at the periphery and improve credit conditions there. The central bank timidly expressed this wish in its latest financial integration report, stating that “the banking union is expected to contribute indirectly to the return of cross border credit flows.”
When Dead Beat Peripherals Can no Longer Pay there is only one solution.
Tax The Entire Union
08/16/2014 - FINANCIAL REPRESSION SAVED THE BANKS
BUT DESTROYED THE US MIDDLE CLASS
FINANCIAL REPRESSION
Accelerated the Decline of America
AMERICA Now A Two Class Society
“Haves & Have Nots”
& Maybe More Concerning
A Culture of
“SOCIAL DEPENDENCY”
08/11/2014 - Federal Reserve & Congress Talk “ENHANCED PRUDENTIAL STANDARDS”
CENTRAL PLANNING & CONTROL
Moving towards Control of YOUR Pensions
through Control of Insurance Industry
Other non-banks to face ‘designation’ as “systemic risks to the financial system”
The Fed has insisted that the Dodd-Frank financial reform bill forced it to apply bank capital standards to non-banks. In response, the Senate recently passed a bill that would give the Fed the room to apply capital standards that are tailored for the insurance industry
Life insurer MetLife is waiting to see if it will be designated this year, while its smaller rival
Prudential Financial was deemed a systemic risk last September.
LARGEST ASSET MANAGERS: On July 31, FSOC decided for now to lift the threat of systemic risk designations for the largest asset managers, but said it would focus on the industry’s products and activities.
PRIVATE EQUITY & HEDGE FUNDS: The review of asset managers came after an FSOC-commissioned report on the industry, which also said it was reviewing private equity and hedge funds, prompting predictions that those sectors could be next on the council’s agenda.
Fed gives preview of future non-bank scrutiny 08-11-14 FT
08/10/2014 - DON’T EXPECT SOCIAL SECURITY TO BE THERE TO SAVE YOU!
THERE ARE
$84T OF UNFUNDED RETIREMENT ENTITLEMENTS
US is Bankrupt: $89.5 Trillion in US Liabilities vs. $82 Trillion in Household Net Worth & The Gap is Growing. We Now Await the Nature of the Cramdown 08-04-14 Chris Hamilton via Charles Biderman TrimTabs’ blog, via ZH
America’s Hidden Credit Card Bill Laurence Kotlikoff: The Government Should Report Its ‘Fiscal Gap,’ Not Just Official Debts LAURENCE J. KOTLIKOFF
08/09/2014 - THE GOVERNMENT’S GAME OF “ENTRAPMENT” via FINANCIAL REPRESSION FINANCIAL REPRESSION
Initially Forced Fund Managers Into
Junk Bond Yields
THE SET-UP
STEP 1: EXCESSIVE LIQUIDITY
STEP 2: EXCESSIVE RISK TAKING
STEP 3: BAD MONEY FORCES OUT GOOD MONEY
NOW THE SQUEEZE
STEP 4: THE PANIC
THE FLIGHT TO PERCEIVED SAFETY
STEP 5: ACHIEVE GOAL -> CHEAPER GOVERNMENT FINANCING COSTS
“Wolf Richter’s essay posted on Stockman’s Contra Corner sees junk bond investors running for the hills, “But there no hills” .. In the latest week, investors yanked $7.1 billion out of junk bond funds, a record amount, according to Lipper – this exodus has been going on since early July, junk bond prices have dropped, yields have jumped from all-time lows, yield spreads have suddenly widened .. “After having been inflated to dizzying proportions, the junk-bond bubble has been pricked. And the hot air is hissing out of it .. Neither glorious economic fundamentals nor corporate financial engineering caused investors to pile helter-skelter, eyes-closed into this high-yield junk. The Fed’s financial repression did .. The Fed has made it impossible for yield investors to earn a noticeable return above the rate of inflation with low-risk paper. So they chased after whatever yield they could get and they held their noses and ventured deeper and deeper into a swamp they normally wouldn’t want to be in. They did that in unison. The demand they created for junk drove up valuations and repressed yields further into low-yield purgatory, where potential losses are huge and potential gains very meager. Exactly as the Fed had wanted them to .. But the Fed has changed its mind”CliffKule.com
08/08/2014 - We have reached the point where Keynesian Central Planning manipulations are now stifling Innovation & Growth
“.. we have moved far away from free markets. The authorities have established endless ‘detours’ (via policies such as Financial Repression) that restrict free market capitalism. We have reached the point that all the manipulations interfere with the innovations & growth that free markets would produce. We are living through ‘Capitulation of all the Manipulation’ (the ‘Keynesian Endpoint’). The manipulations of the last 5 or 6 decades have stifled the ‘invisible hand’ that makes free markets superior to centrally planned economies. In other words, Adam Smith has been defeated. Our system is more like Karl Marx’s, but not in the way that most people think. A small group of wealthy ‘capitalists’ ended free markets when they were awarded monopoly control over the creation & distribution of the money. They called their group ‘Federal’ even though it is no more Federal & just as private as Federal Express. They used the word ‘Reserve’ even though they create money from no reserves at all. Their government contract to control America’s money was the beginning of a long slippery slope away from free market capitalism to a centrally planned economy. Think about it: Free Markets When Money Is Privately Controlled? That is an OXYMORONIC. That is our system & it is OXYMORONIC.” CliffKule.com
FINANCIAL REPRESSION’S REGULATORY DETOURS ARE INCREASINGLY TAKING US AWAY FROM THE ‘SELF CORRECTING” POWER OF FREE MARKETS
08/07/2014 - REAL GOVERNMENT BORROWING COSTS CLOSE TO ZERO
FINANCIAL REPRESSION
STRIPS SAVERS, PENSIONERS,
PRUDENTIAL INVESTING &
REAL DISPOSABLE INCOME
TO FINANCE GOVERNMENT SPENDING
Ten year constant maturity Treasury yields (blue), ten year constant maturity yields minus ten year (median) expected inflation (red +), and ten year constant maturity TIPS (black). NBER defined recession dates shaded gray. Source: Federal Reserve via FRED, Survey of Professional Forecasters, and author’s calculations.
08/06/2014 - Central-Planners Herd Money Market Funds Into Government Financing
“We’re definitely worried about breaking the buck,” Verett Mims, assistant treasurer at Chicago-based Boeing, said in a telephone interview on July 30. “That’s our biggest problem, the notion of principal preservation.”
“one of the biggest winners in the push to make money-market funds safer for investors is turning out to be none other than the U.S. Government.” (no surprise to the Financial Repression Authority!!!)
Rules adopted by regulators last month will require money funds that invest in riskier assets to abandon their traditional $1 share-price floor and disclose daily changes in value. For companies that use the funds like bank accounts, the prospect of prices falling below $1 may prompt them to shift their cash into the shortest-term Treasuries, creating as much as $500 billion of demand in two years, according to Bank of America Corp.
“Whether investors move into government institutional money-market funds or just buy securities themselves, there will be a large demand” for short-dated debt, Jim Lee, head of U.S. derivatives strategy at Royal Bank of Scotland Group Plc’s capital markets unit in Stamford, Connecticut, said in a telephone interview on July 28. “That will lower yields.”
He predicts investors may shift as much as $350 billion to money-market funds that invest only in government debt.
Bank of America, which also has hated Treasurys as an asset class since mid-2013, also chimes in:
Investors using prime funds to manage their idle cash may find floating prices an unnecessary risk when differences in fund rates are so minimal, said Brian Smedley, an interest-rate strategist at Bank of America in New York. He estimates about half the $964 billion held in institutional prime funds will flow into those that only invest in government debt and yield about 0.013 percentage point less, before the new rules become fully effective in 2016.
The Fed will continue herding investors as long as it takes: first out of the money market funds, then out of bond funds, until the only possible investment product remains triple digit P/E stocks, and everyone is all the biggest market ponzi bubble of all time.
08/04/2014 - The Amphora Report Investing In Financial Repression
READ: Amphora Report
In his latest report, John Butler sees a long-term stagflationary environment similar to the 1970s but it could be worse .. sees stagflation as the inevitable result of the aggressive, neo-Keynesian policy responses to the global financial crisis .. this report discusses the causes, symptoms & financial market consequences of the new stagflation .. “Stagflation is a hostile environment for investors .. Keynesian policies require that the public sector siphon off resources from the private sector, thereby reducing the ability of private agents to generate economic profits. So-called ‘financial repression’, a more overt seizure of private resources by the public sector, is by design and intent hostile for investors.”
He recommends avoiding financial assets & cash altogether – instead accumulating real assets like gold & oil .. “Some readers might be skeptical that, from their current starting point, gold, oil or other commodity prices could rise tenfold in price from here. Oil at $100/bbl sounds expensive to those who remember the many years when oil fluctuated around $20. Gold at $1,300 also seems expensive compared to the sub-$300 price fetched by UK Chancellor Brown in the early 2000s. In both cases, prices have risen by a factor of 4-5x. Note that this is the rough order of magnitude that gold and oil rose into the mid1970s .. But it was not until the late 1970s that both really took off, leaving financial assets far behind .. If anything, a persuasive case can be made that the potential for gold, oil and other commodity prices to outperform stocks and bonds is higher today than it was in the mid-1970s.”
Stagflation Is A Keynesian Phenomenon
08/04/2014 - Why the Fed Has Declared War on Your Money America’s Roots WERE In Sound (Honest) Money
Daily Reckoning essay explores the roots of sound (also referred to as ‘honest’) money in the U.S
Alexander Hamilton, America’s first Secretary of the U.S. Treasury under U.S. President George Washington faced the challenge of restoring the U.S. economy that had been devastated by the U.S. Revolutionary War
.. “When money serves as a stable measure of value, it most clearly expresses the value of everything in terms of everything else.”
.. Hamilton boosted the U.S. economy with legislation for the U.S. federal government to assume & pay off all the debts of the states, establishing the foundation for U.S. creditworthiness
.. the essay describes the historical success with the gold standard:
“Fixing a nation’s currency to gold assures that the currency maintains astable long term value, without inflation, or deflation. That enables a nation’s money to serve as a measure of value, like a ruler measures inches, or a clock measures time. Such a stable measure of value, in turn, means money can best perform its most essential function in facilitating transactions .. The termination of any link between the dollar and gold immediately inaugurated worsening boom and bust cycles of inflation and recession in the 1970s, with inflation soaring into double digits for several years. Inflation peaked at 25% over just two years in 1979 and 1980.”
Campaign poster showing William McKinley holding U.S. flag and standing on gold coin “sound money”, held up by group of men, in front of ships “commerce” and factories “civilization”. (Photo credit: Wikipedia)
08/03/2014 - U.S. & China Financial Repression Is Preventing Their Economic Recovery China’s Risky Play in the U.S. Debt Market READ: China’s Risky Play in the U.S. Deb t Market Caixin Online 07-31-14
CATO Institute Senior Fellow James Dorn explains how & why China has been picking up the pace of its purchases of U.S.Treasury Bonds recently, but “both it & the U.S. would be better off if China relied less on the accompanying investment & export-led model”
.. China is supporting U.S. Treasury bond prices from a desire to stimulate its export growth & to protect its state-owned enterprises, not out of the goodness of its heart to help the U.S. to finance debt & deficits
.. “Financial Repression in China and in the United States (with negative real interest rates) distorts the global allocation of capital. China, as a capital-poor country, should not be a net exporter of capital. By controlling capital flows, suppressing interest rates and pegging the exchange rate, China continues to rely on investment and export-led development. That model of development, with the central role of state-owned banks and enterprises, is not sustainable, as China’s leaders have noted
.. It is in China’s long-run interest to downsize its holding of U.S. debt by ending financial repression and allowing a greater play of market forces. A virtuous outcome would be to deny the U.S. government the means to over-leverage and overspend, while invigorating China’s non-state sector by releasing scarce capital for private investment.”
08/02/2014 - More Financial Repression To Pay Down Debt
READ: Asset Forfeiture – How Cops Continue to Steal Americans’ Hard Earned Cash with Zero Repercussions libertyblitzkrieg.com 07-28-14
There is a growing trend among U.S. local city & state municipalities to use asset forfeiture to help finance their budgets & pay down debt
.. In a nutshell, civil forfeiture is the practice of confiscating items from people, ranging from cash, cars, even homes based on no criminal conviction or charges, merely suspicion
.. lots of this going on in especially Texas, Tennessee, Michigan
.. “A town of 150 people called Estelline Texas earns more than 89% of its gross revenues from traffic fines and forfeitures
.. If you think that example is just a one-off, think again. One of the most horrific instances of non-lethal police abuse last year was the story of David Eckert, the New Mexico man for whom a routine traffic stop turned into a nightmare of torture, including multiple involuntary anal probes. The police dog that ‘sniffed drugs’ and kicked off the entire episode wasn’t even certified to sniff for drugs in the state of New Mexico at the time. His certification expired two years earlier, but that didn’t stop local police from using it to harass and torture state residents.”
08/01/2014 - The Typical Household During Era of FINANCIAL REPRESSION Now Worth a Third Less
New money is being re-directed to pay increasing debt loads as corporate profits come primarily at the expense of reduced income growth while inflation crushes real disposable income.
A study financed by the Russell Sage Foundation.
DECLINING FINANCIAL WEALTH FOR MOST AMERICANS SINCE 2001
“The housing bubble basically hid a trend of declining financial wealth at the median that began in 2001” — Fabian T. Pfeffer, the University of Michigan professor who is lead author of the Russell Sage Foundation study.
“For households at the median level of net worth, much of the damage has occurred since the start of the last recession in 2007. Until then, net worth had been rising for the typical household, although at a slower pace than for households in higher wealth brackets. But much of the gain for many typical households came from the rising value of their homes. Exclude that housing wealth and the picture is worse: Median net worth began to decline even earlier.”
07/30/2014 - FINANCIAL REPRESSION HAS BEEN AGGRESSIVELY PURSUED SINCE THE DOTCOM BUBBLE IMPLOSION
FIAT CURRENCIES ARE BEING DEVALUED IN A COORDINATED MANNER AS PART OF THIS MACROPRUDENTIAL POLICY
This is only evident by measuring a basket of Fiat Currencies in Hard Assets
THE CURRENCY CARTEL
Controls +90% of the $5T in currencies traded daily.
07/29/2014 - Fund managers now have the Legal Right to ‘suspend redemptions’ by the you on your Money Market Funds
SEC Approves Tighter Money Fund Rules – Plan Allows Money Funds to Temporarily Block Investors from Withdrawing Money in Times of StressWSJ
SEC Votes Through Money Market Exit Gates Zero Hedge
HIDDEN TAX INCENTIVES
In conjunction with Wednesday’s release, the U.S. Treasury department is expected to relax certain accounting burdens on the reporting of gains and losses “to ease the transition to a floating share price”.
CREDIT RATINGS REMOVED
Separately, the SEC voted unanimously to re-propose a plan, originally floated in 2011, to purge references to credit-rating firms embedded in the SEC’s money-fund rule. The change is a requirement of the 2010 Dodd-Frank financial law that requires federal agencies to scrub their rule books of references to credit ratings, forcing them to find new measures to help investors assess creditworthiness.
07/27/2014 - “Relying upon Macroprudential Supervision to prevent financial instability provides an artificial sense of confidence!?”
READ: The Danger of Too Loose, Too Long With an improving labor market and an uptick in inflation, the danger now is to wait too long to tightenRichard W Fisher 07-27-14 WSJ
“I have grown increasingly co. ncerned about the risks posed by current monetary policy. First, we are experiencing financial excess that is of our own making. There is a lot of talk about “macroprudential supervision” as a way to prevent financial excess from creating financial instability. But macroprudential supervision is something of a Maginot Line: It can be circumvented. Relying upon it to prevent financial instability provides an artificial sense of confidence”.
“There are some who believe that “macroprudential supervision” will safeguard us from financial instability. I am more skeptical. Such supervision entails the vigilant monitoring of capital and liquidity ratios, tighter restrictions on bank practices and subjecting banks to stress tests. All to the good. But whereas the Federal Reserve and banking supervisory authorities used to oversee the majority of the credit system by regulating depository institutions, depository institutions now account for no more than 20% of the credit markets”.
Mr. Fisher is president of the Federal Reserve Bank of Dallas. This article is excerpted from his speech on July 16 at the University of Southern California’s Annenberg School for Communication & Journalism.
Low interest rates and abundant availability of credit in the nondepository market, the bond markets and other trading markets have spawned an abundance of speculative activity
“The Fed has been running a hyper-accommodative monetary policy to lift the economy out of the doldrums and counteract a possible deflationary spiral. Much of what we have paid out to purchase Treasurys and mortgage-backed securities has been put back to the Fed in the form of excess reserves deposited at the Federal Reserve banks. As of July 9, $2.517 trillion of excess reserves were parked on the 12 Fed banks’ balance sheets, while depository institutions wait to find eager and worthy borrowers to lend to. But with low interest rates and abundant availability of credit in the nondepository market, the bond markets and other trading markets have spawned an abundance of speculative activity. ” — Fabian T. Pfeffer, the University of Michigan professor who is lead author of the Russell Sage Foundation study.
07/24/2014 - Which Is Better For Getting People To Understand The Economy’s Problems?
A Classic Comedic Metaphor? from
Or Graphic Statistical Analysis?
In his latest Hmmm, Grant Williams* makes the analogy of an episode from Monty Python’s Flying Circus, to the ‘line’ we are being fed by the Fed & other central banks .. highlights the example of Europe where the central bank has encouraged the buying of bond of bankrupt countries – “we’ll make sure you don’t lose money” – financial repression European-style .. “European banks loaded themselves to the gills with peripheral European debt as part of the quid pro quo with Draghi, but making free carry off the desperate central bank is hardly what used to pass for banking. Remember when banking used to be about things like making loans?” This is a thoughtful piece with graphs to substantiate the commentary. Don’t miss it.
Click on “Hmmm July 28” to download the report (may have to provide your email address), or hit “View Fullscreen” far below next to the ‘S’ icon to enlarge the viewing .. John Mauldin, Best-Selling author and recognized financial expert, is also editor of the free Thoughts From the Frontline that goes to over 1 million readers each week. For more information on John or his FREE weekly economic letter go to: http://www.frontlinethoughts.com/learnmore .. permission granted by Grant Williams to us to post the below, courtesy of www.vulpesinvest.com funds.
Grant Williams Does An Admirable Job Of Bringing Both Together
Get a load of the first one that shows European banks are not lending to people anymore. On the second one, understand that above 0 means the math of it all is getting worse, even with austerity.
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