Mario Draghi Doubles Down On Eurozone Failure

 Bible prophecy, Economy, End Times, EU, Finance, National security, QE  Comments Off on Mario Draghi Doubles Down On Eurozone Failure
Jan 232015
 

euroInvestors Business Daily Op-Ed:Economics: Despite the opposition of the European Union’s most powerful nation, Germany, the European Central Bank has launched a massive quantitative easing program. It’s not what the stagnant EU needs.

Yes, markets rallied on the news, largely cheering the fact that someone, anyone, seems to be doing something about the eurozone’s fast-deflating and slumping economy. But the giddiness isn’t likely to last.”

Opinion: 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 – Sudden price increases out of control rendering the concept of inflation meaningless.

Central bankers are convinced that the world’s economies are deflating and it is their job to jump-start inflation. In order to make controlled inflation happen, bankers have been experimenting since 2008 with quantitative easing (QE), or creating money to buy back the nation’s debt (bonds).

When bonds are purchased in massive quantities interest rates go down, and conversely when bonds are sold in massive quantities interest rates go up.

Yesterday, Mario Draghi, the European Central Bank president announced a new QE of bond purchases to the tune of 60 billion euros per month. Draghi, whose name translates to dragon, is a Harvard educated, Goldman Sachs banker who is either lying or ignorant of the commonsense economic principles regarding counterfeit money.

Someday the bill for the created debt will have to be paid. Economies have two natural cures for excessive government: spending and debt.

Recession: period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.

Depression: a severe and sustained long-term downturn in economic activity; an extreme recession that lasts two or more years.

The recession of 2008-9 should have resulted in depression. Government tinkering in the housing market forced lenders to sell mortgages to people who had no hope of paying them off, packaged up those mortgages and sold them to banks all over the world.

But, instead of allowing the depression to cleanse the market, government tinkered again and created more money called stimulus, or QE.

Chairman Draghi’s new QE caused euphoria yesterday in the world’s stock markets, much like a 5 year old on too much sugar.

Someday, that 5 year old will get a real bad tummy ache.

Hyperinflation is sudden and prophetic, Revelation 6:5-6.

 

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Jan 172015
 

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Investors Business Daily Op-Ed: “Currency Crisis: The abrupt move by Switzerland’s central bank to remove the cap on the franc-euro exchange rate has created turmoil from Europe to Wall Street. This is what you get when monetary policy runs amok.

The move caused an unprecedented 18% one-day surge in the Swiss currency’s value against the euro. Since Switzerland’s franc is one of the world’s major currencies, the sudden surge has impacts far and wide.

Opinion: On November 30, the Swiss population overwhelmingly rejected a referendum to force the Swiss National Bank to hold some 20% of its reserves in gold in a landslide vote, with about 78% voting against what AP politely termed “protecting the country’s wealth by investing in gold.”

The biggest winner, of course, was the Swiss Central Bank who was then free to print money in the same way that the European Central Bank, the Bank of Japan, and the US Federal Reserve have done since the start of the great recession of 2008-9.

When a nation’s currency is pegged to gold, money printing is prohibited.

The move this week by the SNB to un-peg the franc from the euro caused an 18% rise in the nation’s currency, making the country’s exports much more expensive which will severely damage their tourism business.

Swiss interest rates plunged making bank deposits an unbelievable negative .75% return to depositors.

Bottom line: Switzerland, like every nation on earth, has unsustainable debt that causes a drag on growth due to constant increases in income taxes.

Central bankers began experimenting with money printing to stimulate economic growth. The result is even more debt, still sluggish economic growth and high unemployment.

The US has fared better (the best horse in the glue factory) mostly because of fracking, which makes energy cheaper and the dollar stronger, despite crushing debt.

Common sense dictates it won’t work. The Bible confirms in Revelation 6:5-6 that it won’t work and at some point and for some still unknown reason, global currencies will all come crashing down forcing the world to agree on a global electronic currency exchangeable only under the control of a still unknown dictator.

Isn’t it fascinating to watch it unfold (Isaiah 46:10)?

 

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If QE Works, Why Has It Failed to Kick-Start Inflation?

 Bible prophecy, Economy, End Times, Finance, Jesus Christ, National security, New World Order, QE  Comments Off on If QE Works, Why Has It Failed to Kick-Start Inflation?
Jan 052015
 

Japanese-DeflationZero Hedge: “Quantitative easing (QE) was supposed to stimulate the economy and pull us out of deflation. But the third round of quantitative easing (“QE3″) in the U.S. failed to raise inflation expectations.

And QE hasn’t worked in Japan, either.

Opinion: Perplexing? Not really.

In simple terms, two of the economists in the article have it right:

Ed Yardeni – a former Federal Reserve economist who held positions at the Fed’s Board of Governors and the Treasury Department, who served as Chief Investment Strategist for Deutsche Bank, and was Chief Economist for C.J. Lawrence, Prudential Securities, and E.F. Hutton – notes that economists including Ben Bernanke have known for 20 years that there is no transmission mechanism by which QE stimulates the real economy.

Having worked with both EF Hutton and Pru, I am familiar with Dr. Yardeni’s work. The Fed has been experimenting; literally kicking the can down the road in hope that something would jumpstart normal inflation. It has not worked anywhere in the world.

Claudio Borio the BIS (Bank of International Settlements) chief economist, worries what will happen when the next downturn hits. “So far, institutional set-ups have proved remarkably resilient to the huge shock of the Great Financial Crisis and its tumultuous aftermath. But could (they) withstand yet another shock?”

Notice Mr. Borio says when the next downturn hits.

The Federal Reserve Bank will be out of new ideas. Having postponed a depression in 2008-9 by literally manufacturing money from thin air, the only option left will be to print more, likely under a different name than QE.

The Fed will attempt to flood the world with US dollars in an attempt to bail out failing economies. But there will never be enough of them to make the plan work.

By doing so, asset prices will continue to bubble making the 1% much more wealthy and the middle class poorer. At some point, a one-of-a-kind global event could cause the US dollar to plunge overnight, bringing hyperinflation.

The best analogy is found in the book of Revelation 6:5-6. The Rider on the Black Horse brings economic collapse remarkably similar to hyperinflation; a day’s labor for a day’s food, and the wealthy are excluded for a time.

It is uncanny how it all lines up. The event could be the sudden disappearance (1 Thessalonians 4:16-18) of millions of people from the most Christian nation on earth.

That would be us.

 

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Dec 312014
 
“Everything is Awesome” in America? So Says Liberal Writer

The New American: “Everything Is Awesome!” is the title of a recent Politico piece on the American economy by liberal Michael Grunwald. And although it’s not followed by LEGO song lyric “Everything is awesome when we’re living our dream,” some would say he certainly is dreaming. Much like the children’s movie Grunwald seems to be

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Swiss Central Bank Enters NIRP, Sends Deposit Rates Negative

 Bible prophecy, Economy, End Times, EU, Finance, National security, QE  Comments Off on Swiss Central Bank Enters NIRP, Sends Deposit Rates Negative
Dec 182014
 
Swiss Central Bank Enters NIRP, Sends Deposit Rates Negative

Zero Hedge: “Everyone thought that any major monetary policy surprises and/or capital controls today would come from Putin during his annual press conference. Boy were they wrong: just after 2 am Eastern, none other than the Swiss National Bank joined the ranks of the ECB in scrambling to stem the wave of capital flight, not

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Dec 132014
 
Boehner’s Spending Deals Increased Debt $3.8T in 3.8 Years

CNS News: “The federal debt has increased by $3.8 trillion in the 3.8 years that have passed since House Speaker John Boehner cut his first spending deal with Senate Democrats and President Obama. That works out to $32,938.38 for every household in the United States—including those taking federal welfare benefits—and $42,783.20 for every full-time year-round

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Total Derivatives Decline By 3% In Q2 To Only $691 Trillion

 Economy, End Times, Finance, National security, New World Order, QE  Comments Off on Total Derivatives Decline By 3% In Q2 To Only $691 Trillion
Dec 082014
 
Total Derivatives Decline By 3% In Q2 To Only $691 Trillion

Hedge: “Who says macroprudential regulation doesn’t work: according to the BIS, notional amounts of outstanding OTC derivatives contracts fell by 3% to “only” $691 trillion at end-June 2014. This is also roughly equal to the total derivative notional outstanding just before the Lehman collapse, when global central banks volunteered taxpayers to pump a few trillion

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