Oil Prices Range-Bounded as Torn Between Inventory Draw and Firm USD

Strong economic indicators and easing geopolitical tensions kept US dollar firm, lifting the DXY index for a second consecutive day. Indeed, the greenback was higher against major currencies and were particularly strong against British pound (+1.02%) and Japanese yen (+0.9%), of which the weakness was driven by improving risk appetite.

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Brien Lundin: If They Don’t Want You To Own It, You Probably Should

Authored by Adam Taggart via PeakProsperity.com,

We're living through the most extraordinary period of monetary manipulation in all of human history. It’s as widespread as it is delusional.

One of the most perplexing mysteries to us is that right as the Federal Reserve embarked on QE3 -- which was a huge, enormous, $85 billion a month experiment -- commodities began a multiyear decline within two weeks of that announcement. Concurrently, the world’s central banks plunged the world into steeply negative real interest rates, a condition that has almost always resulted in booming commodity prices -- but not this time. Today, the ratio between commodity prices and equities is at one of, if not the most, extreme points in history.

To explain that gap, we talk this week with Brien Lundin, publisher of Gold Newsletter and producer of the New Orleans Investment Conference (where Chris and Adam are speaking on Oct 25-28):

Gold Newsletter was started in 1971 by my mentor in the business, Jim Blanchard. That's the same year that the United States had closed the gold window, closed the convertibility of dollars into gold by other nations. Jim realized that now the US could print money with full abandon, it could print as much money and create as much debt as it wanted.


And at that time still, and until we managed to get gold legalized in 1974, you couldn’t own gold legally, except in the form of jewelry or rare coins. It was up there with plutonium and heroin as substances you weren't allowed to own.


So it should be little surprise that, today, we're seeing a synchronous rise in equity markets across the globe. It corresponds almost exactly with the unprecedented rise in debt, in liquidity, in all of these developed nations. If you look for example at the rise in the Fed's balance sheet since 2008 and the corresponding rise in the S&P 500, the correlation is 97%. I don’t think that’s a coincidence. That’s where all of this reflation, this monetary reflation went, into those markets -- which is why you really need to up your allocation to the uncorrelated assets [such as the precious metals] that are at historic lows in relation to financial assets.


Every time in history, before we’ve had a great upset in the financial markets, people have said: This time is different. And every time, it’s proven not to be. You have to have a correction. You have to have things return to the mean and, usually, overshoot a bit.


Alan Greenspan just a couple of days ago made the point that we’re in a bond market bubble and that's what’s eventually going to burst. The risk inherent in bonds is not being priced into the markets now. When that bond bubble bursts, it’s going to take equities down with it. And there’s still tremendous liquidity out there; massive amounts of money will start suddenly looking for a safe haven.


The gold market is miniscule. It’s so small relative to the funds that are in bonds, interest bearing securities, equities, that it won’t take much of an allocation at all to send gold to record levels. That’s going to happen at some point. We can get fuzzy on the actual timescale and the timing of when it’s going to happen. But the fact that it will happen is inevitable, these trends are absolutely irreversible at this point.


So...What’s so special about gold? If it's what they tell us: that it’s a barbaric relic and it has no use in society, then why be so secretive about it? Why be so reluctant to have your citizens own it? That alone tells you all you really need to know.


If they don’t want you to know about it, if they don’t want you to own it, you probably should.

Click the play button below to listen to Chris' interview with Brien Lundin (46m:01s).

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Inside The Opioid Crisis That You’re Not Allowed To See

Via StockBoardAsset.com,

Earlier this month, U.S. Attorney General Jeff Sessions unveiled a plan to go after doctors and pharmacies suspected of healthcare fraud by oversubscribing opioids. America’s opioid epidemic killed 33,000 people in 2015 making it the worst drug crisis in our history. Last week, President Donald Trump declared the opioid crisis a national emergency allowing the executive branch to direct funds towards treatment facilities and supplying police officers with naloxone.

As a socio-economist on the front lines of the opioid crisis in Baltimore, Maryland, I am about to take you through an opioid experience like you’ve never seen before. We’re going to travel into the inner city of Baltimore and interview current and former addicts of opioids and heroin. Some of these individuals used heroin 15-minutes before the cameras started rolling.

These individuals have never been given the chance to tell their story until now. Baltimore’s mainstream news is not allowed to share this because it breaks the narrative that everything is awesome. It turns out that Baltimore could have the largest methadone clinic in the United States called Turning Point Clinic. Each of the interviewees are current and past patients of the clinic and speak very negatively about it. A similar description of Baltimore is heard from each of the interviewees of a hellacious city with decades of deindustrialization, drug abuse, and violent crime.

In the first video, three women who are current or past addicts of opioids tell the story of clinics, doctors, and pharmacies flooding the street of Baltimore with opioids. Gina mainly speaks about the Turning Point Clinic - how a preacher who operates the facility went from “nothing to now wearing $1000 gators, flying private jets, and driving Bentleys”. As described by one of the women, it looks like ‘zombie-land’ outside of the clinic.

In the second video, Gina speaks about her addiction to opioids and how she overcame the troubles through a strong-will. The next women to speak is Wanda, who is currently in pain management at Turning Point Clinic and speaks about how the opioid crisis is destroying America’s youth. I then ask the question about record number of homicides in Baltimore, and Wanda says opioids are a big part of that.

In the third video, ‘John Doe’ shot up on heroin 15-minutes before giving us the interview. He is an active patient at the Turning Point Clinic and describes it to be the largest methadone clinic in the United States with 6k-10k patients per day. The illegal activity and the corruption around this clinic is highlighted in the video via ‘John Doe’ statements, along with truth bombs that will not disappointment.


We now have an understanding that opioids are big business in the hood. You’re not allowed to know about this, because only a select few in our society are allowed to prosper from it. It’s unfortunate that drug trade is the most prevalent type of good flowing around low income areas across the United States. We wouldn’t expect nothing else after 50-years of deindustrialization and the bottom 90% of Americans left to rot.

America’s inner cities have to change or the collapse of an empire is on the horizon. Doesn’t help when 96 million Americans are out of the workforce.

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WTI Lifts Towards $48 After Biggest Crude Inventory Draw Since September

WTI slipped back to almost a $46 handle today before bouncing modestly into the close ahead of tonight's API report, with all bullish eyes hoping last week's surprise gasoline build was a 'blip'. API reported a much larger than expected crude draw (biggest since Sept 2016) and while WTI rallied on the print, it was a very modest move (that for now failed to achieve $48) as we suspect the fact that gasoline saw another surprise build weighed on sentiment.



  • Crude -9.2mm (-472k exp) - biggest draw since Sept 2016
  • Cushing +1.7mm (+700k exp)
  • Gasoline +301k (-450k exp) - second weekly build in a row
  • Distillates -2.1mm (-250k exp)

Last week's surprising gasoline inventory build was overwhelmed by a much larger than expected crude draw reported by API... and the same appears to have happened this week - big crude draw, modest gasoline build...

Additionally, the DOE confirmed it will sell 14 million barrels of crude from the SPR later this month.


WTI was hovering around $49 ahead of last week's API data and is hovering just above $47 into today's print... futures rose very modestly as the crude draw exuberance was offset by the gasoline build.

“As much as oil inventories have been coming down in the U.S., which is something that is seasonally normal, the fact that U.S. shale production is very resilient and is again confirmed by this EIA Drilling Productivity Report, that is something that is weighing on the market’s mind,” says Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas told Bloomberg.

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Housing Bubble 2.0: Number Of Homebuyers Putting Less Than 10% Down Soars To 7-Year High

A really long, long time ago, well before most of today's wall street analysts made it through puberty, the entire international financial system almost collapsed courtesy of a mortgage lending bubble that allowed anyone with a pulse to finance over 100% of a home's purchase price...with pretty much no questions asked.

And while the millennial titans of high finance today may consider a decade-old case study on mortgage finance to be about as useful as a Mark Twain novel when it comes to underwriting mortgage risk, they may want to considered at least taking a look at the ancient finance scrolls from 2009 before gleefully repeating the sins of their forefathers.

Alas, it may be too late.  As Black Knight Financial Services points out, down payments, the very thing that is supposed to deter rampant housing speculation by forcing buyers to have 'skin in the game', are once again disappearing from the mortgage market.  In fact, just in the last 12 months, 1.5 million borrowers have purchased a home with less than 10% down, a 7-year high.

- Over the past 12 months, 1.5M borrowers have purchased a home by putting down less than 10 percent, which is close to a seven-year high in low down payment purchase volumes


- The increase is primarily a function of the overall growth in purchase lending, but, after nearly four consecutive years of declines, low down payment loans have ticked upwards in market share over the past 18 months


- Looking back historically, we see that half of all low down payment lending (less than 10 percent down) in 2005-2006 involved piggyback second liens rather
than a single high LTV first lien mortgage


- The low down payment market share actually rose through 2010 as the GSEs and portfolio lenders pulled back, the PLS market dried up, and FHA lending buoyed
the purchase market as a whole


- The FHA/VA share of purchase lending rose from less than 10 percent during 2005-2006 to nearly 50 percent in 2010


- As the market normalized and other lenders returned, the share of low-down payment lending declined consistent with a drop in the FHA/VA share of the purchase market


On the bright side, at least Yellen's interest rate bubble means that today's housing speculators don't even have to rely on introductory teaser rates to finance their McMansions...Yellen just artificially set the 30-year fixed rate at the 2007 ARM teaser rate...it's just much easier this way.

"The increase is primarily a function of the overall growth in purchase lending, but, after nearly four consecutive years of declines, low down payment loans have ticked upward in market share over the past 18 months as well," said Ben Graboske, executive vice president at Black Knight Data & Analytics, in a recent note. "In fact, they now account for nearly 40 percent of all purchase lending."


At that time half of all low down payment loans being made involved second loans, commonly known as "piggyback loans," but today's mortgages are largely single, first liens, Graboske noted.


The loans of the past were also far riskier – mostly adjustable-rate mortgages, which, according to the Black Knight report, are virtually nonexistent among low down payment mortgages today. Instead, most are fixed rate. Credit scores of borrowers taking out these loans today are also about 50 points higher than those between 2004 and 2007.

Finally, on another bright note, tax payers are just taking all the risk upfront this time around...no sense letting the banks take the risk while pretending that taxpayers aren't on the hook for their poor decisions...again, it's just easier this way.

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Preparing for Zombie Apocalypse for less than $1,200 in just one weekend

You think that after watching all the wonders of modern warfare fall flat on their high-tech hyper ass, that after watching three months of the Great Panic and watching everything you knew as reality be eaten alive by an enemy that wasn't even supposed to exist that you're gonna keep a cool fucking head and a steady fucking trigger finger?

-World War Z: An Oral History of the Zombie War, by Max Brooks.

Little money?  Big fear?   

You may have already read my ZH article... 

...Guide for Those with Much Money and Very Little Patience Whom Want to Prepare for Zombie Apocalypse But Are Afraid to Google It For Fear of DHS Labeling Them A Terrorist.  There are some unique aspects to this Guide.  First, because it is for Those with Much Money, it assumes you can afford to drop as much as $25,000 and thus save much time by not trying to do things on the cheap.  Second, because it is for Those with...Very Little Patience, it makes no attempt to explain the rationale behind each recommendation.  One can complete the entire Guide within a couple of months, thus allowing you to put this fear out of your mind and move on to much more productive worries, except for fitness.  Regular exercise should really become a habit for the duration of your life. 



Now, let's have some fun discussing how one might get a family of three preparing for TEOTWAWKI and a bug-in scenario for less than $1,200 in just one weekend.

What is the peril?  Like I said in the other article, who knows?  So prepare for Zombies!

Develop a basic mindset.  Here are some ideas.  Commit to prepare for zombies, so that currency collapse, EMP, hurricanes, revolution, world war, or anything else will seem relatively mild.  Understand that the time to make a plan and prepare is before, not after a zombie invasion.  Understand that there is no way you can plan or prepare for every contingency, but doing something today goes a long way to peace of mind, and eliminating any regrets should the shit actually hit the fan.  Realize that everything is likely to cost more next year, if you can get it, so better to buy it now.  Acknowledge that nobody really knows if, what, when, or how anything in the future is going to happen...it is all just speculation.  Finally, always remember that, "On a long enough timeline the survival rate for everyone drops to zero," so don't get too worked up, or go into debt, just because of this little exercise in paranoia.

The hardest step is to simply start on a path for getting physically fit.  This may be the most important step, and it will pay dividends even if the Apocolypse doesn't happen during your lifetime.  If you are not yet so fat and lazy that you rely on a "free" government scooter to move about the world, then you may still have hope.

These two professional voters were literally stuck in this gutter.  Pathetic.  What are they going to do?  Call AAA?

Ask yourself...

"Do I have a good pair of shoes that I can put on and walk to the next town without blisters?"

I suggest that you do not buy a new pair of Nikes, or join a health club.  Instead, make your very own pair of huarache sandals using an old tire from the side of the road and a long piece of 1/4" leather lace from Tandy Leather ($12).    


Now, start to get yourself in shape so you can run for your life.  Go running, in your sandals, no matter how slowly, four or five times per week.  Stick to trails, for physical and mental health, and avoid the roads and treadmill like The Black Plague.  Work yourself up to 30-minute runs during the week, and then a longer run on the weekends.  After each run, do three sets of as many push-ups as you can do.  I swear almost anybody can do it.  We were all born to run!  When you go see your doctor to ask for permission to get healthy, ask her to find some way to get you off any drugs you allegedly require to survive.  And if you really want to improve your chances of survival, and your kissing, then stop smoking!  

The beautiful mrs_horseman and I have been running and backpacking in our huaraches for more than five years.  We were over 40 when we started.  We cannot imagine, now, filling the arches of our feet with Chinese foam, binding them up in a pair of $150 man-made containment apparati, and blinding our perfectly programmed lower brain to the terrain.  

We also suggest trying one of our house fitness rules: 20 pushups, immediately , whenever someone says the word, "fuck."  It works!

Next, let's talk about shelter.  Your own personal TEOTWAWKI can happen in any moment.  Fix your one-kick doors by replacing the 1/2" screws of your door hinges and hasps with 3" stainless steel deck screws ($13).  

Do not let the zombies just walk in to your home quietly. Replace or convert your exterior doors to a "storeroom function" knob or lever lock.  It look just like regular entry locks. However, there is no button on the inside. Egress is always free, the exterior is always locked, requiring the use of a key to operate the lock every time, because you never want to leave the door unlocked. Some entry locks are designed to allow operation like a storeroom lock when the interior locking button is depressed AND rotated. ($120/lock)

EXHIBIT A:  The convictions were handed down about 18 months after the men broke into a house on East 79th Street, ransacked the home, sexually assaulted resident Eileen Potenza and her adult daughter and left with many of their belongings. The Indianapolis Star typically does not name people who are or may have been victims of sexual assault, but Potenza spoke publicly about the ordeal after the verdicts were handed down. 


Not only do we need to account for the insanity of our local youth, but we should also prepare our homes for the insanity of our world leaders.  Buy and store a roll of 10 ft. x 100 ft. Black 4 mil Plastic Sheeting ($32), and aquire a dozen or more surplus blankets from someplace generous like The Salvation Army.  Pick a basement or interior closet or room to be both your survival storage and shelter.  Detailed instructions are found under "shelter" at: http://www.ki4u.com/guide.htm 

Radioactive fallout is the particulate matter (dust) produced by a nuclear explosion and carried high up into the air by the mushroom cloud. It drifts on the wind and most of it settles back to earth downwind of the explosion. The heaviest, most dangerous, and most noticeable fallout, typically dark grit, will 'fall out' first closer to ground zero. It may begin arriving minutes after an explosion. The smaller and lighter dust-like particles will typically be arriving hours later, as they drift much farther downwind, often for hundreds of miles. Once it begins to arrive, whether visible or not, all that will fall will usually do so in about an hour, coating everything, just like dust does on the ground and roofs. However, rain can concentrate the fallout into localized 'hot spots' of much more intense radiation with no visible indication.


This radioactive fallout 'dust' is dangerous because it is emitting penetrating radiation energy (similar to x-ray's). This radiation (not the fallout dust) can go right through walls, roofs, windows and clothing. Even if you manage not to inhale or ingest the dust, and keep it off your skin, hair, and clothes, and even if none gets inside your house, the radiation penetrating your home is still extremely dangerous, and can injure or kill you inside.


Radioactive fallout from a nuclear explosion, though very dangerous initially, loses its intensity quickly because it is giving off so much energy. For example, fallout emitting gamma ray radiation at an initial rate over 500 R/hr (fatal with one hour of exposure for 50%) shortly after an explosion, weakens to only 1/10th as strong 7 hours later. Two days later, it's only 1/100th as strong, or as deadly, as it was initially.


That is really very good news, because our families can readily survive it IF we get them into a proper shelter to safely wait it out as it becomes less dangerous with every passing hour.


What reduces radiation, and thus protects your family, is simply putting distance and mass between them and the radiation source. Like police body armor stopping bullets, mass stops (absorbs) radiation. The thicker and heavier the mass, the more radiation it stops, and the more effective it is with every inch more you add to your fallout shelter. The thickness in inches needed to cut the radiation down to only 1/10th of its initial intensity for different common materials is: Steel 3.3", concrete 11", earth 16", water 24", wood 38". The thickness required to stop 99% of the radiation is: 5" of steel, 16" of solid brick or hollow concrete blocks filled with mortar or sand, 2 feet of packed earth or 3 feet if loose, 3 feet of water. (BTW, lead is nothing special, same as anything else pound for pound.) You may not have enough steel available, but anything you do have will have mass and can be used to add to your shielding - it just takes more thickness of lighter wood or books, for example, than heavier earth, to absorb and stop the same amount of radiation. Increasing the distanc

I recommend using five gallon plastic buckets (often found for free in restaurant dumpsters), filled with dirt (free exercise), to create bullet-resistant cover between your position in your shelter and the most likely direction of attack.  

You can wash these scavanged 5 gallon buckets with lids, or buy new ones at Home Depot for about $4 each.  Unlike trash cans, an average person can move a 5 gallon bucket of water...barely.  Fill them with clean water and a little chlorine bleach from the one gallon bottle of Clorox you can get at the store ($5).  Stack the buckets of water and use them to line your shelter.  I want a bare minimum of 20 gallons of water per person.  

A can of soup, condensed milk, or fruit, can be bought on sale for about $1, and does not require preparation or cooking.  Cold soup is better than, "No soup for you!"  I believe these poor-man's MREs last far longer than 5 years, and recommend at least 90 cans per person.  Don't forget the can opener.  

Place the used food cans in an empty water bucket and seal lid.  In a post-apocalyptic world, you do not want to throw trash out where it will attract hungry zombies.

Store toilet paper.  I suggest collecting at least 6 rolls per person while it can still be acquired for free at most public restrooms.  Piss and shit in two different 5 gallon buckets, then seal the lids.  It is best to dump it down a sewer pipe when it gets full, yet many people do not realize that a toilet still works without water.  Simply poor the bucket of urine in the top tank, and it will flush the shit in the toilet down the sewer.

Store tampons, even if you are a man.  You can get a box of 36 for $5, so buy at least three ($15).  This could turn out to be the best investment you ever made.  

 You can dilute some of your bleach in water to make a hand sanitizer.

Buy a new Benelli Nova Tactical Pump-Action 12 gauge shotgun ($400).  There are some places to save money, but this isn't one of them.  Buy at least a case, 250 rounds, of 12-guage 2-3/4" 00 buck shot shells ($125).  

Always follow the firearm safety rules...  

Before handling a firearm, it is most important for EVERYONE in the household to know, understand, and follow these four safety rules:


1) Treat all weapons as if they are loaded.


2) Do not point the weapon at anyone or anything that you do not want to shoot, kill, or destroy.


3) Do not put your finger on the trigger until you have 1) target, 2) sights on target, and 3) perception that either A) "serious bodily injury or death is imminent for myself or another person," or B) firing range is hot and training drill is live. 


4) Be aware of, and take responsibility for, all bystanders that may be behind or near the target.


I add a fifth rule, to the common four, which is to not be under the influence of any mind-altering chemical such as alcohol or dope when handling a firearm.

I absolutely refuse to be within a mile of anyone that I see not following these rules, which is why I generally avoid public gun ranges, and suggest that you shoot at a nice, lonely, high, dirt hill, way out in the boonies, or find a friend or relative to take you as a guest to a private tactical range that screens all members and has at least 270 degree bays.

Again, I cannot stress this point enough, get instruction from an experienced professional.    Trade your family's work, barter, or beg, but do whatever it takes to get some good tactical shotgun training.   If you and your family show honest interest, I believe that many instructors will offer you an option you can afford.  It does not matter whether you are a 10-year veteran of law enforcement, a Marine with two tours in the sandbox, or both, you will still learn much and improve significantly with good instruction.   Taking the state's required, "course," to test for a concealed handgun license (CHL), or having gone bird hunting with Uncle Lester as a kid, is not even close to adequate instruction.   

A good instructor will teach you the safety rules and how to safely and correctly manipulate your shotgun, including operating the safety, loading, unloading, checking if loaded, reloading, managing stoppages, managing squibs, slinging, carrying, shouldering, firing, and possibly even field stripping your gun. It is likely that you will also learn how to hit your target, and be able to do so relatively quickly.  It takes much more practice for you to get the hits when you are under stress, shooting a moving target or multiple targets, lying in your shelter, hiding behind buckets of dirt, it is dark, it is cold, you are being shot at, and your gun is empty...

...so train to feed the beast.

TEOTWAWKI may be lonely and dark.  Buy an iRonsnow Dynamo Emergency Solar Hand Crank Self Powered AM/FM NOAA Weather Radio LED Flashlight Smart Phone Charger Power Bank with Cables ($20).   Go get a library card and always have a stack of good thick books lying around the house, such as the Holy Bible and complete works of William Shakespeare.  Your personal selections may vary.  

Before you start this plan, watch this Twilight Zone episode, The Shelter .

Finally, try to remember the first rule of Fight Club.  



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Orwell Or Kafka – Ken Rogoff’s Crusade Against Cash Continues

Authored by Raul Ilargi Meijer via The Automatic Earth blog,

Harvard professor and chess grandmaster Kenneth Rogoff has said some pretty out there stuff before, in his role as self-appointed crusader against cash, but apparently he’s not done yet. In fact, he might just be getting started.  

This time around he sounds like a crossover between George Orwell and Franz Kafka, with a serving of ‘theater of the absurd’ on top. Rogoff wants to give central banks total control over your lives. They must decide what you do with your money. First and foremost, they must make it impossible for you to save your money from their disastrous policies, so they are free to create more mayhem.

Prepare For Negative Interest Rates In The Next Recession Says Top Economist

Negative interest rates will be needed in the next major recession or financial crisis, and central banks should do more to prepare the ground for such policies, according to leading economist Kenneth Rogoff. Quantitative easing is not as effective a tonic as cutting rates to below zero, he believes. Central banks around the world turned to money creation in the credit crunch to stimulate the economy when interest rates were already at rock bottom.

Central banks create recessions and crises. Note people, and not economies. Central banks. The next recession, which is inevitable, that’s the one thing Rogoff has right, will come when the bubbles in housing, stocks, bonds, etc., created by central banks’ QE, ZIRP, NIRP, start to pop. And there’s nothing worse than giving central banks even more tools for creating crises. We should take away the tools they have now, not hand them more sledgehammers.

In a new paper published in the Journal of Economic Perspectives the professor of economics at Harvard University argues that central banks should start preparing now to find ways to cut rates to below zero so they are not caught out when the next recession strikes. Traditionally economists have assumed that cutting rates into negative territory would risk pushing savers to take their money out of banks and stuff the cash – metaphorically or possibly literally – under their mattress. As electronic transfers become the standard way of paying for purchases, Mr Rogoff believes this is a diminishing risk.

Risk? What risk? The risk of people doing what their money what they choose to do, doing what they think is best? Of people trying to save their savings from being burned by central bank policies? What kind of mind comes up with this nonsense? Who is Ken Rogoff to think that he knows better what you should do with the money you worked for than you yourself do? You’d be a fool not to protect you hard-earned earnings from negative interest rates. Rogoff therefore seems intent on creating nations full of fools.

“It makes sense not to wait until the next financial crisis to develop plans and, in any event, it is time for economists to stop pretending that implementing effective negative rates is as difficult today as it seemed in Keynes time”, he said. The growth of electronic payment systems and the increasing marginalisation of cash in legal transactions creates a much smoother path to negative rate policy today than even two decades ago. Countries can scrap larger denomination notes to reduce the likelihood of cash being held in substantial quantities, he suggests. This is also a potentially practical idea because cash tends now to be used largely for only small transactions. Law enforcement officials may also back the idea to cut down on money laundering and tax evasion.

What makes sense is to not create crises. What does not make sense is negative interest rates. Ultra low interest rates have already destroyed trillions in savings and pensions, and now Rogoff effectively says central banks should take this a step further, and target whatever it is you have left. This is insane megalomania. It’s communism in its worst possible form. Oh, and it’s outright theft. Of a form that’s far more insidious and harmful than money laundering.

The key consequence from an economic point of view is that forcing savers to keep cash in an electronic format would make it easier to levy a negative interest rate. “With today’s ultra-low policy interest rates – inching up in the United States and still slightly negative in the eurozone and Japan – it is sobering to ask what major central banks will do should another major prolonged global recession come any time soon,” he said, noting that the Fed cut rates by an average of 5.5 percentage points in the nine recessions since the mid-1950s, something which is impossible at the current low rate of interest, unless negative rates become an option. That would be substantially better than trying to use QE or forward guidance as central bankers have attempted in recent years.

Forcing savers to keep cash in an electronic format would make it easier to steal it. Central banks could dictate that you lose 5% of your money every year. Or at least, that’s what they think. They want you to spend your money, and they got just the way to force you to do that. Or so they think. Well, go ask Abe and Kuroda how that’s worked out in Japan lately. What actually happens is that when you start stealing people’s money, savings etc., they become afraid of losing the rest too, so they start looking for ways to save their savings, not spend them.

In that sense, Rogoff’s suggestions amount to terror, to terrorizing people into doing things that go against their very survival instincts. What gets people to spend money is if they don’t feel terror, when they see their money and savings grow by a few percent per year. That is the exact opposite of what Rogoff wants to do. When people ‘sit’ on their savings, they do so for good reasons. What do you think has happened to Japan?

“Alternative monetary policy instruments such as forward guidance and quantitative easing offer some theoretical promise for addressing the zero bound,” he said, in the paper which is titled ‘Dealing with Monetary Paralysis at the Zero Bound’. “But these policies have now been deployed for some years – in the case of Japan, for more than two decades – and at least so far, they have not convincingly shown an ability to decisively overcome the problems posed by the zero bound.”

No wait, Rogoff is right second time: indeed “they have not convincingly shown an ability to decisively overcome the problems”. Because they’re terribly wrong. Theoretical promise? That’s all? But that means you’re just experimenting with people’s lives and wellbeing. Who gave you that right?


It’s high time, even if it’s very late in the game, to take political power away from central banks- and thereby from the banks that own them.

There is nothing worse for our societies than letting these people decide what you can and cannot do with our money. Because as long as they have that power, they will seek to expand it. To prop up their member banks at your expense. And there is only one possible end result: you’ll be left with nothing. They want it all.

Until we take that power away from them, please don’t talk to me about democracy. Talk to me about Orwell and Kafka instead.

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Venezuela’s Grim Reaper – A Weekly Report

Authored by Steve H. Hanke of the Johns Hopkins University. Follow him on Twitter @Steve_Hanke.

The Grim Reaper has taken his scythe to the Venezuelan bolivar. The death of the bolivar is depicted in the following chart. A bolivar is worthless, and with its collapse, Venezuela is witnessing the world’s worst inflation. 


As the bolivar collapsed and inflation accelerated, the Banco Central de Venezuela (BCV) became an unreliable source of inflation data. Indeed, from December 2014 until January 2016, the BCV did not report inflation statistics. Then, the BCV pulled a rabbit out of its hat in January 2016 and reported a phony the annual inflation rate for the third quarter of 2015. So, the last official inflation data by the BCV is almost two years old. To remedy this problem, the Johns Hopkins – Cato Institute Troubled Currencies Project, which I direct, began to measure inflation in 2013. 

The most important price in an economy is the exchange rate between the local currency and the world’s reserve currency — the U.S. dollar. As long as there is an active black market (read: free market) for currency and the black market data are available, changes in the black market exchange rate can be reliably transformed into accurate estimates of countrywide inflation rates. The economic principle of Purchasing Power Parity (PPP) allows for this transformation.

I compute the implied annual inflation rate on a daily basis by using PPP to translate changes in the VEF/USD exchange rate into an annual inflation rate. The chart below shows the course of that annual rate, which peaked at 1823% (yr/yr) in early August 2017. At present, Venezuela’s annual inflation rate is 1195%, the highest in the world (see the chart below).

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