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Tag Archives: treasury

  • Blog
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    The Dollar May Remain Strong For Longer Than We Think

    Why demand for it is higher than other fiat currencies
    by charleshughsmith

    Wednesday, September 17, 2014, 2:50 AM

    4

    I have long been a dollar bull, not for any over-arching reasons based on inflation, deflation, rising geopolitical multi-polarity or any of the other issues that touch on the dollar’s valuation vis-à-vis other currencies. My analysis focuses on a few basics:  the dollar’s status as the global reserve currency, Triffin’s Paradox (a.k.a. Triffin’s Dilemma) and global capital flows into the dollar and dollar-denominated assets such as U.S. Treasury bonds.

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  • Blog
    Peak Prosperity

    Money Creation: The Fed – Crash Course Chapter 8

    Creating money out of thin air since 1913...
    by Adam Taggart

    Saturday, August 9, 2014, 12:49 AM

    48

    Chapter 8 of the Crash Course is now publicly available and ready for watching below.

    As a follow-on to the two previous chapters — one explaining the nature of fiat money, the other showing how money is loaned into existence through our fractional reserve banking system — this week's video details the Fed's near-magical ability to create money out of thin air (literally!).

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  • Insider
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    Why Your Own Plan Better Be Different

    Because the cavalry isn't coming
    by Chris Martenson

    Tuesday, January 21, 2014, 7:40 PM

    31

    Executive Summary

    • Why the insolvency hole the U.S. is in may be much deeper than appreciated.
    • Current 'best case' assumptions show us doubling the size of our economy TWICE over the next 75 years. Why that's just not achievable.
    • Why the above assumptions get even worse when the energy story is taken into account.
    • Why action at the individual level is your best bet now.

    If you have not yet read Part I: "Endless Growth" Is the Plan & There's No Plan B available free to all readers, please click here to read it first.

    A Big Hole

    When the Treasury Department estimates that the U.S. has a ~$65 trillion NPV (Net Present Value) shortfall in its main accounts, it's saying that using its assumptions, the U.S. government would need to have $65 trillion – today – in an account, earning a stated rate of interest, in order to be solvent.

    Since the U.S. government don't have that have that kind of scratch, it's insolvent. 

    But the real picture is likely worse. The Fed calculates the NPV shortfall to be closer to $100 trillion. And if you believe Lawrence Kotlikoff's math, the figure is closer to $200 trillion. Either way – $65 trillion, $100 trillion, or $200 trillion – the sum cannot be paid.

    So it won't be.

    And the real trouble is that all of these numbers make the same implicit assumption: The future will more or less resemble the past. That is, some form of future growth – exponential future growth – of the economy is at the heart of every single calculation.

    But we might question that, because somewhere between here and there, economic growth will have to come to an end. Or at least a pronounced deceleration. Why? Quite simply, because the earth is finite.

    Now, we might comfort ourselves with the belief that our future date with hard limits is lifetimes away. But when we do, we shortchange ourselves (if we're wrong) and our progeny (if we're right). After all, the time to make an adjustment is when the resources and energy exist to make that change.

    And that's now. Or, really, decades ago…

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  • Blog

    The Fed Matters Much Less Than You Think

    It can't control the real economy
    by charleshughsmith

    Thursday, August 1, 2013, 5:18 AM

    8

    This lemming-like belief in the power of the Federal Reserve generates its own psychological force field, of course; the actual power of the Fed is superseded by the belief in its power. We can thus anticipate widespread disbelief at the discovery that the Fed is either irrelevant or an impediment to the non-asset-bubble parts of the economy.

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  • Insider
    © Steve Mann | Dreamstime.com

    Off the Cuff: Turbulence Ahead!

    Rising bond yields are an ugly portent
    by Adam Taggart

    Thursday, May 30, 2013, 3:01 PM

    7

    In this week's Off the Cuff podcast, Chris and Mish discuss:

    • Weakness in U.S. Treasurys
      • The mother of all powder kegs
    • The Japan Bug
      • Finally finding its windshield
    • The Pain in Spain
      • A preview of what's coming to the rest of the EU
    • The Odds of a Euro breakup
      • Getting higher all the time
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  • Daily Digest
    Image by EpSos.de, Flickr Creative Commons

    Daily Digest 5/23 – Big Wind’s Trail Of Wings, Living Buildings For Tomorrow’s Cities

    by DailyDigest

    Thursday, May 23, 2013, 2:22 PM

    8
    • Gold ETFs Are Liquidating By The Ton
    • Schizophrenic investors expect slump: bet on boom
    • Clients Denied Gold At Major Banks As Shortage Intensifies
    • Thanks To QE Bernanke Has Injected Foreign Banks With Over $1 Trillion In Cash For First Time Ever
    • Gramm and McMillin: The Debt Problem Hasn't Vanished
    • Want to Save the Environment? Build More Cities
    • Republic of Ireland calls for international tax action
    • US Treasury secretary says he has begun tapping federal retiree pension fund to avoid default
    • Millions falling into poverty in recession-racked Italy: report
    • Seven Ways Today's Economy Is Like The NHL Playoffs
    • PBS Killed Wisconsin Uprising Documentary "Citizen Koch" To Appease Koch Brothers
    • Court upholds B.C. mining company’s use of temporary foreign workers from China
    • Big Wind’s trail of wings
    • Living buildings for tomorrow’s cities
    • Food swapping: The movement taking off in the UK

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  • Blog
    © Skypixel | Dreamstime.com

    QE for Dummies

    Understanding the most outlandish monetary experiment ever c
    by Chris Martenson

    Tuesday, February 5, 2013, 3:25 PM

    38

    A PeakProsperity.com reader recently lamented:

    I have been trying to get my head around the mechanism of QE. Not being an economist or experienced investor I don't really understand a lot of the jargon. The usual simple definition of QE as "thin air money printing" does not satisfy my need for understanding either. Have hunted for a description of QE for dummies that leaves me feeling like I get it, but with no luck. My difficulty is in understanding how thin air money gets into circulation.

    So I'm going to do my best to answer this plea in as intuitive and straightforward a manner as I can. I, too, share the need to understand the mechanism of a process in order to feel like I have a grasp of it.  And I think it's critically important to understand QE (also known by its full name, "quantitative easing") and what it really represents. Because it is, without a doubt, one of the largest market-shaping forces of our times.

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  • Insider

    Running on Fumes

    Things are beginning to run recklessly hot
    by Chris Martenson

    Friday, February 1, 2013, 10:49 PM

    52

    The stock market blasted higher, with the Dow crossing the 14,000 mark because the jobs report came in well under expectations.  In today's world, one follows the other.

    In yesterday's world, the one where logic and reason ruled the day, that first sentence would not have been written.  Economic weakness would not have been rewarded with a big surge in stocks.

    But this all makes perfect sense in today's world, once you tilt your view to the "new normal" and get with the program.

    I titled this piece 'running on fumes' because, in one very real sense, that's exactly what this current market is doing.  The fumes in this case happen to be thin-air money that the Fed is injecting into the financial markets to the tune of $85 billion per month, or roughly $4 billion per working day.

    When an engine finally runs out of gas and turns to fumes, the last act of that engine is to run really hot – to race for a while – before finally quitting.

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  • Blog
    © Skypixel | Dreamstime.com

    QE 4: Folks, This Ain’t Normal

    What you need to know about the Fed's latest move
    by Chris Martenson

    Friday, December 14, 2012, 5:22 PM

    40

    Okay, the Fed's recent decision to boost its monetary stimulus (a.k.a. "money printing," "quantitative easing," or simply "QE") by another $45 billion a month to a combined $85 billion per month demonstrates an almost complete departure from what a normal person might consider sensible.

    To borrow a phrase from Joel Salatin: Folks, this ain't normal.  To this I will add …and it will end badly.

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