Headlines

Police groups break with Biden

Jobless claims, total unemployment level worse than expected

Autopsy: George Floyd had coronavirus ...

Ellison elevating charges on Derek Chauvin, charging other officers

Trump promises Stone won’t serve prison time: ‘He can sleep well at night’

ECB takes its pandemic bond buying to 1.35 trillion euros to try to prop up economy

Two NYPD officers shot, one stabbed in Brooklyn ...

2 million first-time gun owners in first half of 2020 alone

Jimmy Carter calls out police injustice, but says violence is ‘not a solution’

CDC wants people to drive solo to avoid coronavirus, sparking fear over more congenstion and emissions

Another one turns ... Mattis rips Trump for dividing America ...

Donald Trump: Gen. Jim Mattis ‘world’s most overrated general’

Headlines

'We've never seen anything like this': GOP overwhelmed by Democratic cash

Draghi to Rome: Don't expect an ECB rescue if budget talks fail

Social giant [Facebook] admits hackers saw intimate information of millions ...

Juan Williams: Kanye's Trump meeting 'shameful' behavior

Trump praises Robert E. Lee during Ohio rally

Thousands line up for zero-down-payment, subprime mortgages

Trump vows 'severe punishment' if [Saudi] Kingdom killed [WaPo journalist] ...

Confidence in economic policy rises to highest level in 15 years

Trump set to force drug makers to post prices in ads

Russia hits a snag in developing hypersonic weapon after Putin said it was already in production

[Florida]Residents increasingly desperate for food and shelter ...

Google competitor 'GOGODUCK' reaches 30 million searches a day

Race to the Bottom

The world is taking a dangerous and rocky path to universal monetary collapse.  Japan is now following the United States's Federal Reserve in devaluing its currency ... in order to give its economy a shot in the arm, see: CNBC Story.  The U.S. Fed’s Chairman, Ben Bernanke, has been pushing “quantitative easing” (QE) for the last three years in order to sop up all the debt that this country is forced to issue to cover it’s fire-hose federal spending … to the point where it has expanded our money supply (and its balance sheet) by $3 trillion.  And, in order to keep this crushing debt burden from sinking things further, it has kept generic interest rates artificially low with its banking muscle.  It has been able to run the monetary printing presses night and day without setting off crushing inflation because our economy is still so weak …  reflected in our poor employment and wage-increase statistics.

But one economic “benefit” of this monetary expansion is a weak U.S. dollar which tends to help export markets and crimp importers.  Given how poor the U.S. balance of payments actually is … image what a disaster it would be without the Fed’s dollar deflationary measures?  However, our trading partners are losing patience with us and, as indicated in the referenced article, are now mimicking Bernanke’s strategy.  The European Central Bank (ECB), China, Great Britain, Japan, and even Switzerland (for heaven’s sake) are falling over one another to try to devalue their currencies with their own QEs.  A U.S. Dollar slide begets a Chinese Yuan slide which begets an Euro slide which begets a Japanese Yen slide which begets a British Pound slide which begets a Swiss Pound slide.  This is all a very dangerous race to the bottom.

How will this end?  With all this quantitative easing, the world will be, in short order, awash in money.  The balance sheets of the central banks will have reached unsustainable levels … probably the ECB first; and the only way out will be for them to let the dogs out … allow inflation to reduce the carrying-cost pain of their excessive debts.  And, this time, run-away inflation will not be as localized as it was in Germany in the 1920s.  It will be world-wide and will engender political upheavals that are likely to be quite painful.  (At this point Bernanke will not look quite so angelic.)  So be forewarned and be prepared … own real hard assets (not cash) and owe lots of money … and live in an area of relative political sanity.

Funny Money

Quantitative Easing (QE) ... this seems to be the central banks of the world's solution to their mounting debt crises. The European Central Bank (ECB) has just taken its cue from Ben Bernanke of the U.S. Federal Reserve Bank (Fed) and embarked on a three year binge of QE (see: Boston.com Article)  What does this mean?

It means that European banks can borrow at a 1% rate from Mario Draghi's (ECB's President) piggy bank and turn around and lend it to various European countries at north of 5% (sometimes well north) ... government largess that rivals the green-energy give-aways in the United States. This is meant  to recapitalize these banks which have been weakened by the haircuts they are taking on Greek bonds (and others to follow?)  I sometimes wonder why the ECB doesn't just give the damn money to these banks instead of this obvious artifice.

This mimics what has been happening in the United States where the Fed has been lending money to our banks at below 1% and they, in turn, have been buying government bonds at higher yields ... not quite as lucrative as in Europe, but largess nonetheless.  And where does the Fed get this money to fire-hose out to the banks?  Not from the U.S. taxpayer, but it creates it out of thin air.  It sells U.S. bonds, bills and notes to get the cash to lend out to U.S. (and foreign) banks (and to fund our huge annual deficits).

And why, you ask, does not all this selling of U.S. government debt obligations push down prices and push up yields.  Simple ... because the Fed buys for its own account around 80% of everything it offers.  This financial slight-of-hand has increased the Fed's balance sheet almost three-fold in the last three years (see: QE Comparison) ... a dizzying statistic ... if we can rely on this reporting since the Fed may also be playing Enron-like accounting shenanigans (see: Finger on the Scale).  Zowee!  If the Wall Street Occupiers only knew these funny-money tricks that were taking place at the Fed, they might move north one block and become Pine Street Occupiers (where the Fed is located).

I'm not quite Ron Paul on this issue yet, but I am getting closer.  For those not yet nodding off, I intend to blog more on this whole mare's nest later ...