central banks

Podcast

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Mike Maloney: This Is The Peak

To be followed by 'one hell of a crisis'
Sunday, August 28, 2016, 3:09 PM

Precious metals dealer and monetary historian Mike Maloney is quite confident the liquidity-driven 'recovery' created by the world's central banks is now over. In his estimation, the path ahead is one of accelerating descent into inevitable currency destruction. » Read more

Blog

Dreamstime

The Marginal Buyer Holds The Pin That Pops Every Asset Bubble

So it's important to watch him very closely
Friday, August 19, 2016, 2:01 AM

Those of you who took an Economics class in college may remember the saying that prices are set "at the margin". That's a fancy way to say that prices are set by the person (or people) willing to pay the most.

This person willing to pay top dollar is called the "marginal buyer". Most of us don't really think about him, but he (or she) is very, very important.

Why? Because the marginal buyer not only determines price levels, but also their stability and degree of volatility. The behavior of the marginal buyer, as well as the degree of competition for his/her "top dog" spot, sets the prices of nearly every asset class held by today's investors. » Read more

Insider

Hoping For A Market Crash

If we inflate much higher, the fall is likely to kill us
Thursday, July 28, 2016, 1:32 AM

We desperately need to have new national and global conversations about everything from how we’ll feed everyone in 2050, to developing a coherent sustainable energy policy, to the fact that each year is hotter than the year before, to the idea that we’re living with a soul crushing sense of scarcity in a world of abundance.

There’s lots that needs addressing, and the process should begin with letting go of the old narrative so that we can make space for assembling the new one. » Read more

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Making The Wrong Choices For The Wrong Reasons

Why we're on a collision-course with crisis
Friday, July 22, 2016, 8:54 PM

Life is full of examples where folks make bad choices for noble reasons. Not every decision is a winner: sometimes you make the right call, sometimes you don't.

  • In 1962, Decca Records passed on signing a young new band because it thought that guitar-based groups were falling out of favor. That band was The Beatles.
  • Napolean Bonaparte calculated he could conquer Russia by assembling one of the largest invading forces the world has ever seen. He marched towards Moscow in the summer of 1812 with over 650,000 troops. Less than six months later, he retreated in failure, his forces decimated down to a mere 27,000 effective soldiers.
  • 1985 217 separate investors turned down an entrepreneur trying to raise the relatively modest sum of $1.6 million for his vision of transforming a daily routine shared by millions around the world. That company? Starbucks.  

In these cases, those making the decision made what they felt was the best choice given the information available to them at the time. That's completely understandable and defensible. Fate is fickle, and no one is 100% right 100% of the time.

But what's much harder to condone -- and this is the focus of this article -- is when people embrace the wrong decision even when they have ample evidence and comprehension that doing so runs counter to their welfare. » Read more

Podcast

Grant Williams: The Rising Danger Of A Bidless Market

We risk a future of flash crashes as liquidity dries up
Sunday, July 17, 2016, 12:18 PM

Grant Williams, veteran portfolio and strategy advisor, as well as proprietor of the economic blog Things That Make You Go Hmmm returns to the podcast this week to discuss his great concern about the liquidity risk underlying financial markets long-addicted to central bank rescue stimulus. » Read more

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The Great Market Tide Has Now Shifted To Risk-Off Assets

A global sea-change in risk appetite & sentiment
Friday, July 8, 2016, 3:03 PM

In the conventional investment perspective, risk-on assets (i.e. investments with higher risks and higher potential returns) such as stocks are on a see-saw with risk-off assets (investments with lower returns and lower risk, such as Treasury bonds). When risk appetites are high, institutional managers and speculators move money into stocks and high-yield junk bonds, and move money out of safe-haven assets such as gold and U.S. Treasuries.

But recently, markets are no longer following this convention. Safe haven assets such as precious metals and Treasuries are soaring at the same time that stock markets bounced strongly off the post-Brexit lows.

Risk-on assets (stocks) rising at the same time as safe-haven assets is akin to dogs marrying cats and living happily ever after. 

What the heck is going on? » Read more

Insider

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Investing For Crisis

The future of stocks, gold & safe havens
Friday, July 8, 2016, 3:03 PM

Executive Summary

  • Which coming developments we can predict with certainty
  • Why the next crisis won't be like 2008
  • Why what worked post-2008 won't work this time
  • Where stocks and gold are headed
  • Where to find safe haven for your investment capital

If you have not yet read The Great Market Tide Has Now Shifted To Risk-Off Assets, available free to all readers, please click here to read it first.

In Part 1, we reviewed the market’s risk-on, risk-off gyrations and laid out the case for long-term declines in confidence, political stability and profits.  What does this new era of uncertainty mean for individual investors?

What’s Predictable?

We can start by asking—is there anything we can predict with any certainty?

I think we can very confidently predict that future central bank monetary policies will fail to generate sustainable growth or fix what’s broken in the global financial system.

I think we can predict that uncertainty will only increase with time rather than decrease. This rise of uncertainty will predictably lower the attractiveness of risk-on assets, other than as short-term speculative bets after some central banker issues yet another “whatever it takes” proclamation.

It’s also a pretty good bet that if central banks and states continue expanding credit/money that isn’t matched by a corresponding expansion of goods and services, the purchasing power of those currencies will decline.

We can very confidently predict that the authorities will continue to do more of what has failed spectacularly until they are removed from power or the system breaks down.

We can predict with some confidence that issuing more debt will provide little productive results.

I also think we can hazard a guess that the next financial crisis will be of a different sort than the 2008-09 Global Financial Meltdown.

Just as generals prepare to fight the last war, with predictably dismal results (unless the exact same war is replayed, which rarely seems to happen), central bankers are fully prepared to stave off a crisis like the one in 2008: a financial crisis that emerges from leveraged bets going bad in money-center investment banks.

My basic presumption is... » Read more

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An Everyman's Guide To Understanding Cryptocurrencies

What are they exactly? Why consider owning them?
Friday, June 10, 2016, 5:51 PM

When an asset rises by almost 30% in a few weeks, it tends to attract attention.  Recently, that asset was bitcoin (BTC). The price of BTC in dollars rose from $454 on May 23 to $590 on June 6th.

When an asset doubles in a matter of months, it tends to attract attention.  The cryptocurrency Ether (part of the Ethereum platform) doubled from around $7 in April to roughly $14 in early June.

Are these cryptocurrencies mere fads? Or are they potentially game-changing alternatives to the conventional currencies such as the U.S. dollar, Chinese RMB, Japanese yen or European Union euro? » Read more

Insider

Etsy

Off The Cuff: Jackass Leadership

We'd be so much better off with so much less
Monday, May 23, 2016, 4:52 PM

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

  • Implications Of The Recent Fed Minutes
    • Per usual, good for stocks/bad for gold
  • The Dying Middle Class
    • Sucked dry by central planning policy
  • The Dirty Trick Of Politics
    • Both parties are worth throwing out
  • Jackass Leadership
    • In the Fed, on the Hill, in the White House...
Insider

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Off The Cuff: The Folly Of Financialization

Its cures are worse than the diseases it tries to fix
Thursday, April 14, 2016, 12:22 PM

In this week's Off The Cuff podcast, Chris and Charles Hugh Smith discuss:

  • The Future Of Oil
    • Much more volatile prices lie ahead
  • The Folly Of Financialization
    • Central planners are creating cures worse than the diseases they're trying to fix
  • The Dollar Dilemma
    • The direction of dollar now hurts as many player as it helps
  • Return Of 'Race To The Bottom'
    • We risk a global currency war like that seen in the 1930's