Oct 232014
 

Currency-Wars-Evolve-With-Goal-of-Avoiding-Deflation-300x240

Stratrisks: “Currency wars are back, though this time the goal is to steal inflation, not growth.

Weak price growth is stifling economies from the euro region to Israel and Japan. Eight of the 10 currencies with the biggest forecasted declines through 2015 are from nations that are either in deflation or pursuing policies that weaken their exchange rates, data compiled by Bloomberg show.

“This beggar-thy-neighbor policy is not about rebalancing, not about growth,” David Bloom, the global head of currency strategy at London-based HSBC Holdings Plc, which does business in 74 countries and territories, said in an Oct. 17 interview. “This is about deflation, exporting your deflationary problems to someone else.”

Opinion: This is really important, but first we need some definitions:

  • Inflation – A general increase in prices and fall in the purchasing value of money.
  • Deflation – A general decline in prices, often caused by a reduction in the supply of money or credit.
  • Hyperinflation – Price increases are so out of control that the concept of inflation is meaningless.

Deflation then is the opposite of inflation. Deflation has the side effect of increased unemployment since there is a lower level of demand in the economy for goods and services, which can lead to an economic depression. Central banks attempt to stop severe deflation, along with severe inflation, in an attempt to keep the excessive drop in prices to a minimum.

Oil prices are falling partly due to early deflation. While that may feel good when you get gas, it is a very bad sign for the economy.

The Federal Reserve has been printing money to prop up the economy for 7 years. As a result interest rates have been kept from rising, but deflation worries persist. Picture holding a beach ball underwater and taking your hands away, it pops to the surface.

Currency manipulation or exporting deflation to some other nation is the equivalent of kicking the can down the road. Severe prolonged deflation can cause a collapse of a nations currency which then results in rapid hyperinflation.

And hyperinflation is what I believe the rider on the Black Horse (Revelation 6:5-6) is all about.

We are not there, yet – because “we” are still here.

 

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Oct 232014
 

energy

Investors Business Daily Op-Ed: Inflation: “We’ve chastised President Obama many times for failing to live up to promises he made when running for the office. So in fairness, we want to credit him for fulfilling one of them: his pledge to raise energy costs.

According to the Bureau of Labor Statistics, the energy price index has been higher than the overall Consumer Price Index since December 2010 — 46 straight months and counting.”

Opinion: The president waged a war on coal and fossil fuels. He wants 80 percent of U.S. electricity to come from renewable energy sources by 2035 and has already invested billions of taxpayer dollars, created more than 700 government programs, and populated his administration with environmental wackos and Wall Street bankers to ensure his success.

What is interesting is that if the recent drop in global oil prices continues, wind and solar energy sources will become even less attractive, making  skyrocketing energy prices even more ridiculous.

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Oct 102014
 

30Y%20Oct%202014_0

Zero Hedge: “If yesterday’s 10 Year auction was very weak, despite the market reaction post the Fed minutes ramping the paper to highs not seen since last May, moments ago the Treasury concluded this week’s auctions by selling another $13 billion in the August 30-Year reopening, in another relatively weak issue, which priced at 3.74%, a small 0.2 bps tail to the 3.72% When Issued.”

Opinion: In simple English, here is why this is important. But first there are three definitions:

  • Short term bonds: 1-5 year in duration
  • Intermediate bonds: 5-15
  • Long term bonds: 15-30

The Federal Reserve only controls short-term interest rates.

When the Treasury offers US government bonds  at auction they are usually bought up immediately. When they are not, which is what happened this week, long term rates may be forced higher to attract buyers, regardless of what the Federal Reserve does.

If the problem persists, the Fed will be forced to start buying the bonds that are not bid for – using newly printed money in another round of QE.

In our book Antichrist: The Search For Amalek, we envisioned such a scenario on page 180-81. But we placed that event after the rapture of the Church. Either we have the timing wrong,  or this panic will right itself, or the rapture is close.

The answer is unknown, but here is the excerpt:

“At 2:00 p.m., rumors of a poorly bid Treasury auction of ten-year bonds started to rattle the bond market. Reports had been circulating for years that China and Japan had been curbing their purchases of US Treasury bonds because of unrestrained spending by the US government.

 The US auctioned off longer-term Treasury bonds with even worse results, indicating that US debt was no longer attractive at current interest-rate levels.

In an attempt to calm financial markets, Federal Reserve chairman Janet Yellen appeared before the Senate Banking Committee to explain why Quantitative Easing (QE) 4, the same money-creation scheme that had seemed to work for her predecessor, was having little or no effect on the recent market sell-off.

The conversation shifted instead to the weak bond auctions of the past two days.

Committee chairman Mike Reed (R, Florida) reminded those present that if other nations such as China, Japan, or Russia were unwilling to finance the country’s two-trillion-dollar deficit and the national debt of almost twenty trillion dollars, interest rates would necessarily rise quickly and destroy the fragile housing market.

Chairman Yellen was a reassuring presence that morning, explaining to Congress that there was nothing to worry about as far as America’s ability to continue to borrow. She said the Fed had its finger on the pulse of the economy and was prepared to buy up all the bonds that had not been bid for in the recent Treasury auctions. Yellen’s comments, however, had little effect in calming the markets.

Traders on global exchanges knew that Yellen’s comments meant that the Fed would simply “create” more money to finance America’s exploding debt. By noon, the Dow Jones Industrial Index was down by almost 1,100 points.”

 

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Oct 092014
 
China Currency Push Takes Aim At US Dollar

USA Today: “Protests over democracy in Hong Kong may be preoccupying the Chinese leadership, but a subject of still greater international importance is being played out this week behind closed doors in Washington. China is bidding to enter the heart of global finance by establishing its currency, the renminbi, as part of an ubiquitous monetary

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Oct 092014
 
Wal-Mart Stymied By ObamaCare

Investors Business Daily Op-Ed: “Wal-Mart says it’s cutting health benefits to part-timers and boosting worker premiums. If a retail empire built on low prices can’t find a way around ObamaCare’s added costs, we are all doomed. The world’s biggest retailer announced this week that its health costs will be about 48% higher for the current

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Oct 092014
 
Just Took Two Sentences From The Fed To Make Stock Market Go Wild

Business Insider, Federal Reserve: “The event that made stocks take off like a rocket was the Fed minutes that came out at 2 p.m. ET. 1. Economic growth and inflation in the euro area could lead to a further appreciation of the dollar and have adverse effects on the U.S. external sector. 2. The appreciation

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Oct 042014
 
Labor Participation Rate Drops To 36 Year Low; Record 92.6 Million Americans Not In Labor Force

Zero Hedge: “While by now everyone should know the answer, for those curious why the US unemployment rate just slid once more to a meager 5.9%, the lowest point since the summer of 2008, the answer is the same one we have shown every month since 2010: the collapse in the labor force participation rate,

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