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Showing posts with label QE3. Show all posts
Showing posts with label QE3. Show all posts
Monday, October 1, 2012
Raw footage of Jim Rogers interview - The Bubble film
Etichette:
Commodities,
debt us,
FED,
financial education,
Jim Rogers,
QE3
Friday, September 28, 2012
Gold Could Easily Double From These Levels
By Caesar Bryan from kingworldnews.com
“The balance sheets of the major central banks, over the last several
years, have gone from just over $2 trillion, to almost $10 trillion.
We’re talking here about the Fed, ECB, BoE, and the BOJ.”
“Most of that increase has been in the last
few years, since the financial crisis. We are clearly not at the end
of this, and you could argue that the rate of increase is actually
accelerating. I don’t believe that has been properly reflected in the
gold market yet.
The gold market breached
$1,000 in the beginning of 2008, fell toward the $700 level after the
Lehman crisis, and then went back over $1,000 in 2009. Since that time
we have had a dramatic increase, a more than doubling of the balance
sheets of just those four central banks....
“The underlying price of gold hasn’t even
kept up with the increase in the balance sheets of the central banks.
So there is no question that gold is undervalued today. As these
central banks continue to expand their balance sheets, the upside for
gold is very significant.
It’s not as if investors
are overweight in gold. On the contrary, central banks and private
investors have a very tiny exposure to gold. So should there be a
discussion about changes to the financial architecture, with a role for
gold being part of that new architecture, then gold would go much
higher. Gold could easily double from here.
Gold has had a decent move
over the past couple of months, but you have to remember that gold
already traded near $2,000 in the summer of 2011. Meanwhile, money
printing at central banks continues unabated. The Fed has already said
they are going to do this mortgage-backed asset purchase scheme, but if
the economy does not respond, they are prepared to do more.
The European situation is
different, but the result seems to be very similar. We have
unsustainably high interest rates in the periphery of Europe, and the
ECB is going to purchase those peripheral bond markets until rates come
down and those countries can finance themselves.
The political will in
Europe to maintain the euro is very strong. To maintain the euro
necessitates these dramatic moves. So it is crystal clear that in an
environment of subdued economic growth, central banks are going to
remain very active, and this will act as an accelerant for gold going
forward.”
“The gold equities continue to be inexpensive, and unloved, despite
their recent performance. There is excellent potential, in a high gold
price environment, for gold equities to put in a very powerful
performance. The bottom line is they are still incredibly cheap at
these levels.”
Etichette:
debt us,
FED,
Gold and Silver,
Investment,
News,
QE3
A Faltering Global Economy, Neo-Keynesians & $15,000 Gold
by kingworldnews.com Jean-Marie Eveillard
First, the Keynesian
policies are somewhat dubious, but number two, after a major financial
crisis, it’s always very difficult for the economies to recover....
Today legendary value investor Jean-Marie Eveillard told King World News, “There are people who have figured out that in view of the enormous amount of money printing, which has taken place over the past three or four years, a price of $15,000 an ounce for gold would not be absurd.”
Eveillard, who oversees $60 billion, also said, “I’m not sure they are right, because I have not studied how they came to that conclusion, but I think what is true is there has been gigantic money printing, which will of course help the price of gold.”
Here is what Eveillard had to say: “The global economy seems to be weakening. It’s weakening in the US, Europe, China, in Asia, and this is in spite of the stimulus. Asia is suffering because Japan continues to do poorly. Again, this weakness is apparent despite the fact that Neo-Keynesian policies are in place. There is enormous fiscal stimulus associated with gigantic budget deficits.”
Eveillard, who oversees $60 billion, also said, “I’m not sure they are right, because I have not studied how they came to that conclusion, but I think what is true is there has been gigantic money printing, which will of course help the price of gold.”
Here is what Eveillard had to say: “The global economy seems to be weakening. It’s weakening in the US, Europe, China, in Asia, and this is in spite of the stimulus. Asia is suffering because Japan continues to do poorly. Again, this weakness is apparent despite the fact that Neo-Keynesian policies are in place. There is enormous fiscal stimulus associated with gigantic budget deficits.”
“There is considerable monetary stimulus
associated with the Fed and now the ECB, with the ECB deciding in an
‘unlimited way’ they would print money. So this weakness is a puzzle
for policymakers. It’s a sign that the economies in the developed world
are not responding to the Neo-Keynesian remedies.
“In view of the fact that the Neo-Keynesian
policies continue to be in place almost everywhere, and as long as
there is no change in those policies, I think gold still has
considerable upside.
There are people who have
figured out that in view of the enormous amount of money printing which
has taken place over the past three or four years, a price of $15,000 an
ounce for gold would not be absurd.
I’m not sure they are
right, because I have not studied how they came to that conclusion, but I
think what is true is there has been gigantic money printing, which
will of course help the price of gold.
I would also add that I
think the mining shares, of course it was impossible to determine the
timing, but they had been lagging the price of bullion for so long, and
in such a major way, that we knew at some point they had to outperform.
It’s quite possible that a week and a half ago we got to that point.
The move in the mining
shares surprised some market observers because they thought they could
pick the bottom. Going forward, I think investors should own a proper
balance of undervalued equities, gold, and cash. Gold is appropriate
today for the obvious reason we have discussed, but they should also own
undervalued equities because to some extent they are also real assets.”
Interest Rates Are Prices
by Ron Paul - Daily Paul
One of the most enduring myths in the United States is
that this country has a free market, when in reality,
the market is merely the structural shell of formerly free institutions. Government
pulls the strings behind the scenes. No better illustration of this can be
found than in the Federal Reserve's manipulation of interest rates.
The Fed has interfered with the proper function of
interest rates for decades, but perhaps never as boldly as it has in the past
few years through its policies of quantitative easing. In Chairman Bernanke's
most recent press conference he stated that the Fed wishes not only to drive
down rates on Treasury debt, but also rates on mortgages, corporate bonds,
and other important interest rates. Markets greeted this statement
enthusiastically, as this means trillions more newly-created dollars flowing
directly to Wall Street.
Because the interest rate is the price of money,
manipulation of interest rates has the same effect in the market for loanable
funds as price controls have in markets for goods and services. Since demand
for funds has increased, but the supply is not being increased, the only way
to match the shortfall is to continue to create new credit. But this process
cannot continue indefinitely. At some point the capital projects funded by
the new credit are completed. Houses must be sold, mines must begin to
produce ore, factories must begin to operate and produce consumer goods.
But because consumption patterns have either remained
unchanged or have become more present-oriented, by the time these new capital
projects are finished and begin to produce, the producers find no market for
their goods. Because the coordination between savings and consumption was
severed through the artificial lowering of the interest rate, both savers and
borrowers have been signaled into unsustainable patterns of economic
activity. Resources that would have been used in productive endeavors under a
regime of market-determined interest rates are instead shuttled into
endeavors that only after the fact are determined to be unprofitable. In
order to return to a functioning economy, those resources which have been malinvested need to be liquidated and shifted into
sectors in which they can be put to productive use.
Another effect of the injections of credit into the
system is that prices rise. More money chasing the same amount of goods
results in a rise in prices. Wall Street and the banking system gain the use
of the new credit before prices rise. Main Street, however, sees the prices
rise before they are able to take advantage of the newly-created credit. The
purchasing power of the dollar is eroded and the standard of living of the
American people drops.
We live today not in a free market economic system but
in a "mixed economy", marked by an uneasy mixture of corporatism;
vestiges of free market capitalism; and outright central planning in some
sectors. Each infusion of credit by the Fed distorts the structure of the
economy, damages the important role that interest rates play in the market,
and erodes the purchasing power of the dollar. Fed policymakers view
themselves as wise gurus managing the economy, yet every action they take
results in economic distortion and devastation.
Unless Congress gets serious about reining in the
Federal Reserve and putting an end to its manipulation, the economic
distortions the Fed has caused will not be liquidated; they will become more
entrenched, keeping true economic recovery out of our grasp and sowing the
seeds for future crisis.
source : www.24hgold.com
Etichette:
debt us,
financial education,
Friedrich von Hayek,
Gold and Silver,
QE3,
Ron Paul
Animal spirits
The BBC is running a three-part series on notable economists, starting with Keynes. There were a number of errors made, but I shall ignore those and address two Keynesian fallacies. The first was that Keynes correctly anticipated the economic and political consequences of the Versailles Treaty, which inflicted punitive reparations on Germany: this was true. It was bizarrely extrapolated to the current situation, concluding that Germany must reduce its prosperity and economic power to a level closer to that of the other Eurozone countries in the interests of economic balance.
The second point was that Keynes described unexpected changes in economic behaviour as "animal spirits". Mervyn King, Governor of the Bank of England no less, said on the programme that it was the best explanation for the Banking crisis five years ago. To describe such an event in those terms is not an explanation and exposes a yawning gap in King’s knowledge.
"Animal spirits" amount to the failure of Keynesians to explain a basic phenomenon of human action. The origin of the phrase, if the programme is to be believed, comes from Keynes’s unsuccessful attempts to predict stock market prices. We have all been there: we invent a fool-proof trading system only to see it fail in practice. "Animal spirits" is a substitute for understanding that it is impossible to predict tomorrow’s prices with certainty, whether they be of financial assets or of goods.
Prices change for one of two reasons. Either there is a change in the value of the goods being exchanged for money, or there is a change in the value of the money used. The Banking crisis to which King referred was about a sudden change in the value of money.
Before the crisis, banks were willing to lend, and consumers were willing to borrow to buy. The prerequisite was continually expanding credit, a process that was bound to end sometime. And when it did, the consequence of a change in the availability of money was an increase in its value to the consumer, and the result was a fall in prices. "Animal spirits" is an attempt to summarise this effect without understanding it.
Left alone, prices would have adjusted to new lower levels. Government action was focused on stopping this happening, by introducing schemes such as car scrappage, or cash-for-clunkers, to encourage demand. At the same time central banks flooded the banking system with money to stop its value rising. Prices were therefore prevented from adjusting to the bursting of the credit bubble. This Keynesian solution has another fallacy at its heart, clearly stated by the experts, including King, on the programme. They believe that production has to be subsidised in order to keep unemployment down. If people remain employed, they will spend, and that gets the economy back on track. This analysis is incorrect: as we have seen, the problem is prices, not production.
The order of events does not start with production, it starts with consumption. If prices are too high, because of a change in the value of money, then they must fall if consumers are to be tempted. The fall in prices exposes over-valued productive capacity. It is an adjustment that must occur, and no amount of subsidy and money-printing to address "animal spirits" can change that. And the sooner it happens, the sooner an economy gets back on track.
Originally published on www.goldmoney.com
Etichette:
debt us,
financial education,
Gold and Silver,
Investment,
News,
QE3
The Fed is Trapped, Gold is the Exit
47% of US investors dependent on the Fed believe they are victimized by government, who believe they are entitled to enough liquidity to profit when risk is laid-off onto others, to society, to you-name-it… On September 13th, the Fed announced QE3, a policy of open-ended bond purchases which would add $1 trillion annually to the Fed’s balance sheet. The Fed’s decision to provide liquidity ad infinitum, i.e. QE etc, was framed in reasonable and carefully chosen language: …These actions, which together will increase the Committee's holdings of longer-term securities by about $85 billion each month through the end of the year, should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative…
The measured wording gave the Fed sufficient cover to mask its increasingly desperate condition, i.e. how to keep its fatally-wounded credit and debt ponzi-scheme functioning while searching for a solution that doesn’t exist.
The measured wording gave the Fed sufficient cover to mask its increasingly desperate condition, i.e. how to keep its fatally-wounded credit and debt ponzi-scheme functioning while searching for a solution that doesn’t exist.
CAPITALISM’S CONSTANTLY COMPOUNDING DEBT IS THE DEVIL’S WHIP OF GROWTH
In capitalist economies, capital, i.e. money, is introduced by central banks into the economy in the form of loans; and because interest constantly compounds, economies must constantly expand in order to pay down and/or service those loans. This is why economists in capitalist systems are obsessed with growth. Capitalism is, in actuality, a smoke and mirrors shell game where credit and debt have been substituted for money; and, as long as capitalism expands no one is the wiser because the fraud is so subtle. Capitalism, however, is no longer expanding. It is contracting. Capitalism reached its peak in 2008 when Greenspan’s historic credit bubble burst. What investors believed was a finely-tuned balancing act between credit and debt orchestrated by Fed Chairman Alan Greenspan turned out instead to be a speculative bubble fed by Easy Al’s easy credit from the Fed’s 24/7 discount window. While Greenspan presided over the greatest credit expansion in the history of capitalism, Greenspan also presided over two of its largest speculative bubbles—the 1996-2000 dot.com bubble and 2002-2007 US real estate bubble. Greenspan would later refer to evidence of these bubbles as ‘froth’; to those who lost homes and fortunes, it was blood.
read more here : http://www.24hgold.com
Etichette:
debt us,
financial education,
Gold and Silver,
QE3
Fed Easing Only Helped Stocks, Not Economy
Etichette:
debt us,
FED,
financial education,
Investment,
QE3
Macro Analytics - FEDEREAL RESERVE - Flawed Premise - Mistaken Role
The Federal Reserve and its Monetary Malpractice is at the core of the American Dream becoming a myth for the vast majority of Americans. Jobs, disposable income and financial security are all under pressure, as the Federal Reserve continues its historic monetary gamble on unproven policies of Quantitative Easing and ZIRP.
Charles Hugh Smith and Gordon T Long discuss how a flawed premise and the mistaken role for this private-public institution is leading to moral hazard, unintended consequences and dysfunctional financial markets. They argue that there is sufficient proof to now call into question the historic role of the Federal Reserve .
This two part series also examines who is winning, who is losing and where it is likely to lead. The facts laid out in this series should be a concern to all Americans who care for their country and the future for their children.
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