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Tag Archives: banks

  • Insider
    Dreamstime

    The Future Of Interest Rates

    The Fed faces an increasingly bad set of options
    by Brian Pretti

    Friday, April 17, 2015, 7:36 PM

    4

    Executive Summary

    • Why the Fed may no be able to raise rates from here
    • Will the Fed go to negative interest rates instead?
    • Why the next recession will limit the Fed's options greatly
    • Why it may well be too late for the Fed at this point to act

    If you have not yet read Part 1: Has The Fed Already Lost? available free to all readers, please click here to read it first.

    What If The Fed Isn't Actually Able To Raise Rates From Here?

    Let’s start with a look at the history of the Federal Funds rate (the shortest maturity interest rate the Fed directly controls).  Alongside the historical rhythm of the Funds rate are official US recession periods in the shaded blue bars.   

    Chart Source:  St. Louis Federal Reserve

    Of course there is one striking and completely consistent historical commonality in the behavior of the Funds rate over time.  The Fed has lowered the Federal Funds rate in every recession since 1954 at least.  There are no exceptions.  You can see the punchline coming, can’t you?  Just how does one lower interest rates from zero to stimulate a potential slowdown in the economy?

    Of course in the banking system…

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  • Insider
    Kevin Grant/Shutterstock

    The Fed Is Destroying the World One Saver At A Time

    Bernanke's new blog offers bloviating proof of that
    by Chris Martenson

    Tuesday, April 7, 2015, 4:25 AM

    27

    I must confess to a deep-seated anger at just how insultingly stupid the world has become. As a sufferer of crisis fatigue I can be caught exclaiming You have got to be kidding me!!? several times per day, or perhaps shouting How dumb do they think we are?

    Three choice outbursts came last week as I read Bernanke’s new blog and came across statements like this one:

     

     

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  • Podcast

    Steve Keen: The Deliberate Blindness Of Our Central Planners

    Choosing to ignore the largest risks
    by Adam Taggart

    Sunday, March 29, 2015, 4:20 PM

    72

    The models we use for decision making determine the outcomes we experience. So, if our models are faulty or flawed, we make bad decisions and suffer bad outcomes.

    Professor, author and deflationist Steve Keen joins us this week to discuss the broken models our central planners are using to chart the future of the world economy.

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  • Blog
    Netfalls - Remy Musser/Shuttestock

    Greece Exposes The Global Economy’s Achilles Heel

    Countries that can't repay their debts -- won't
    by Chris Martenson

    Thursday, February 5, 2015, 8:54 PM

    15

    The new Greek political party, known as Syriza, the Coalition of the Radical Left, has done the unthinkable: they've dared to speak the truth.

    Such honest assessments are not supposed to be uttered in politics, no matter how true they may be. And so, as you can imagine, the machinery of the defenders of the status quo is in quite a lather over the whole affair. And it's doing everything it can to minimize and marginalize the new Greek government.

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  • Podcast

    Nomi Prins: The Sinister Evolution Of Our Modern Banking System

    Because we're all about those banks, 'bout those banks...
    by Adam Taggart

    Sunday, February 1, 2015, 3:06 AM

    43

    Today, the 'revolving door' connecting our political and financial systems is evident to anyone with eyes. But this entwined relationship between Washington DC and Wall Street is nothing new, predating even the formation of the Federal Reserve. 

    In this well-detailed interview, Nomi Prins goes into depth of the rationale and process behind the creation of the Federal Reserve, and more important, how its mandate — and the behavior of the banking system overall — metastasized into the every-banker-for-himself regime of sanctioned theft we now live with.

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  • Blog
    Creativa Images/Shutterstock

    2014 Year in Review: Part 2

    Will 2015 be the year it all comes tumbling down?
    by David Collum

    Friday, December 19, 2014, 4:27 PM

    18

    This year has been all about risk—existential risk. Some of it seemed to dissipate and some lingers.  Market valuations remain risky—regression to the mean could easily provide a 50% haircut and more if we observe regression through the mean. This has not come to pass, but the risk is very real.

    Those who seek risk in markets will eventually find it.

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  • Blog
    E_K/Shutterstock

    2014 Year in Review

    The year we piled up risks like a global game of Tetris
    by David Collum

    Friday, December 19, 2014, 4:27 PM

    33

    I have not seen a year in which so many risks—some truly existential—piled up so quickly. Each risk has its own, often unknown, probability of morphing into a destructive force. Groping for a metaphor—I love metaphors and similes—I feel like we’re in the final throes of a geopolitical Game of Tetris as financial and political authorities race to place the pieces correctly. But the acceleration is palpable. The proximate trigger for pain and ultimately a collapse can be small, as anyone who’s ever stepped barefoot on a Lego knows.

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  • Insider
    r.classen/Shutterstock

    Deflation Is Still Winning!

    OK, folks: this is it
    by Chris Martenson

    Tuesday, December 16, 2014, 1:20 AM

    32

    As we've written on and warned about before, deflation is winning.  We're starting to see very serious cracks in the façade, beginning with oil, then various peripheral currencies — especially from emerging market oil exporters — and now equities.

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  • Blog
    soft_light/Shutterstock

    Ready Or Not…

    The unsustainable status quo is ending
    by Chris Martenson

    Thursday, September 25, 2014, 8:00 PM

    45

    If risk has been taken from where it belongs and instead shuffled onto central bank balance sheets, or allowed to be hidden by new and accommodating accounting tricks, has it really disappeared? In my world, risk is like energy: it can neither be created nor destroyed, only transformed or transferred. 

    If reality no longer has a place at the table — such as when policy makers act as if the all-too-temporary shale oil bonanza is now a new permanent constant — then the discussions happening around that table are only accidentally useful, if ever, and always delusional.

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  • Insider
    Gwoeii/Shutterstock

    The 3 Likeliest Ways Things Will Play Out From Here

    Do you have a plan for each?
    by Chris Martenson

    Thursday, September 25, 2014, 7:58 PM

    35

    Executive Summary

    • The wisdom and value of scenario planning
    • Scenario #1: A Slow Burn
    • Scenario #2: Fragmentation
    • Scenario #3: A Hard Landing
    • The prudence of taking individual action now, vs depending upon "the system" to react to future events

    If you have not yet read Part 1: Ready Or Not available free to all readers, please click here to read it first.

    It all begins with the clear-eyed recognition that the old way of doing business is clearly unsustainable. And yet knowing that the various governmental and institutional powerbrokers are doing everything they can to perpetuate the status quo way of doing business.

    Business-as-usual is literally going to end in some flavor of disaster, and yet we collectively adhere to it, even when the end-point is as obvious as calculating the linear rate of withdrawal of water from a non-renewing aquifer.

    But there's nothing linear about the nested and/or intertwined complex systems we call the Economy, the Environment and Energy.  Each of these is independently complex, meaning they often easily defy the attempts to manage them. And they are utterly unpredictable for anything longer than the immediate term.

    For example, of the three, Energy seems the simplest, and it is.  But even there, we note that the amount of energy that can and will be extracted is a function of the price of energy, available technology and skills, capital available for investment, and what's actually down there in the earth to be pulled up.  In that list, several factors are courtesy of the Economy, which is itself dependent on Energy. A glitch in one can feedback rapidly to create a glitch in the other.

    Given all of this complexity, one good way to get a handle on things is to identify the scenarios we deem to be most likely given all available evidence, and then assign probabilities to each. Asking ourselves, What can we today to prepare for Scenario X? then allows us to begin constructing action plans to mitigate our vulnerability, and even better in cases, position ourselves to prosper as the future unfolds. 

    Scenario #1:  A Slow Burn

    In 2008, the practice of borrowing too much caught up with the developed world and a serious financial crisis threatened to take down the entire financial system.  Indeed, according to after-action reports from Hank Paulson (then Treasury Secretary) and Mervyn King (then BoE chairman), the world came within mere hours of a full-blown global banking system meltdown…

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