From Yra Harris:

“In the spirit of the season I am asking NOTES FROM UNDERGROUND readers to consider a season contribution to one of my favorite charities, which has raised money for feeding the hungry, clothing the naked, and aiding the education of pre-kindegarten inner city children in Chicago. The charity is Santa Mike at Marillac St. Vincent Family Services and has been under the direction of my very dear friend, Mike Sturch, for more than 50 years. The ravages of inflation has led to great needs, especially for food and clothing. No amount is too small and is appreciated. Every dime goes to the intended targets. Contact Mike at mikkees@sbcglobal.net and tell him YRA sent you. These are difficult times and every bit helps those in need. (For more information, see the letter below.)”

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“The QE program fomented by Ben Bernanke in response to the 2008 financial crisis ran interference for the ECB, BOE, BOJ  and others so as to prevent their currencies from rapidly appreciating against a DOLLAR. That is, massive amounts of liquidity were injected into the financial system to “forestall” deflation. The US and Europe experienced a deflation but the FED allowed for all to keep the monetary spigots wide open. The only country that experienced actual deflation was/is Japan. Now that global inflation is the result of massive liquidity infusions the question remains how to extract the liquidity without causing too much stress on a global system awash in QE-fueled debt.

The FED seems to be intent on raising rates ever HIGHER in an effort to break inflation, but maybe it’s time to halt the rate rises and increase the pace of the balance sheet runoff? This is the prevailing question as we head into 2023, but for us we will rely on the wisdom of Louis Gave : We adapt, not forecast.

Last week, Bank of Austria President and ECB Board member Robert Holzmann said in a Financial Times story he favored a 75 basis point increase at the next meeting in December. But Holzmann also warned that it is imperative that the ECB begin shrinking its BOND PORTFOLIO “before it had finished raising rates, adding that it is important to avoid short-term borrowing costs rising above long-term ones.” Holzmann wants to avoid an inverted yield curve because “it would be a challenge for Europe’s banking sector, which relies on being able to borrow cheaply in the short term to make longer-term loans at higher rates.” As Holzmann said, “We have to make sure it doesn’t get to that point.”’

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Disclaimer: The views or opinions expressed in this blog post may or may not be representative of the views or opinions of the Financial Repression Authority.

Disclaimer: The views or opinions expressed in this blog post may or may not be representative of the views or opinions of the Financial Repression Authority.

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“It is safe to say that the G20 may have plunged into an irretrievable path toward irrelevancy. Even before the current Southeast Asian summit wave – in Phnom Penh, Bali and Bangkok – Lavrov had already signaled what comes next when he noted that “over a dozen countries” have applied to join BRICS (Brazil, Russia, India, China, South Africa).

Iran, Argentina, and Algeria have formally applied: Iran, alongside Russia, India, and China, is already part of the Eurasian Quad that really matters.

Turkey, Saudi Arabia, Egypt, and Afghanistan are extremely interested in becoming members. Indonesia just applied, in Bali. And then there’s the next wave: Kazakhstan, UAE, Thailand (possibly applying this weekend in Bangkok), Nigeria, Senegal, and Nicaragua.”

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Link to find more info on Peter’s work – https://boockreport.com/

Link to find more info on David’s work – https://www.rosenbergresearch.com/

For a Free 30-day trial to Rosenberg Research click here: https://bit.ly/34crdIK

From Rosenberg Research: “We strive to be investors’ first and most trusted resource for economic research and financial market strategy. President and Chief Economist & Strategist, David Rosenberg, brings decades of experience in analyzing current trends and identifying future shifts in the global economy and financial markets, with an unwavering commitment towards helping his clients navigate their portfolios in an ever-changing, uncertain world.  At Rosenberg Research, we provide the information, insights and strategy to enhance your investment decisions, backed by our team’s macroeconomic research capabilities and David’s unique market lens.”

Link to Yra’s blog – https://yragharris.com/

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“Typically, a very strong dollar is catastrophic for emerging markets. And yet, we have seen periods this year where emerging markets have outperformed US equities. That is because EM currencies, particularly in Latam, are already cheap. Moreover, sovereign dollar-denominated credit spreads in the emerging markets universe typically widen with a strong dollar but they have narrowed in a few markets this year. Again, this is evidence that the monetary tightening cycle is very advanced in emerging markets which is attractive from a real yield perspective. Interestingly, Latin America with its commodity export strength has gotten very little credit this year. Earnings in the region have been stronger than in Asia and yet the relative forward multiple has favored the Asian markets. In a nutshell, we prefer Latin America over Asia within Emerging Markets and have a preference for EM over EAFE at the moment.”

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“A Treasury Secretary exercising the power of QE would mark a departure in how monetary policy is conducted. Monetary policy has always been in part determined by actions of the Treasury, who influences the shape of the yield curve by deciding the national debt’s maturity profile. However, a sizable buyback program would be a much more overt foray into monetary policy. It would functionally ease financial conditions at a time when the Fed struggling to contain inflation. The concern over Treasury market fragility is legitimate, but so is the perception of monetary policy independence. The option to goose the stock market at will may also be very tempting.”

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“In addition to Yellen, Barry Eichengren, the most renowned economist on the DOLLAR since Robert Aliber, had a Foreign Affairs article warning of the “Dangers of a Strong Dollar,” suggesting that central banks “diversify their reserves and for countries to diversify their transactions away from the DOLLAR and towards the currencies of the eurozone, China and smaller economies. Doing so would leave countries less exposed to one bank.” Dollar debt sustainability is a great problem, something the FED/TREASURY needs to be very aware of as it will create the greatest financial breakage.”

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“Participation in BRICS becomes a sign of belonging to a world that is emerging beyond established Western dominance.”

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 “There is too much debt in the world, so they must inflate it away, which they can do. They will. That’s the only thing you need to know.”  

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“The strong dollar creates even more tension for the Europeans as it forces the ECB to tighten rates even as cracks appear in the EU edifice .. Couple this with the ongoing weakening YEN and, which could potentially cause Europe and other nations even more pain.”

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