Posts Tagged ‘paper money’

Federal Reserve Officials: Americans Are Saving Too Much Money So We Need To Purposely Generate More Inflation To Get Them Spending Again

Federal Reserve Officials: Americans Are Saving Too Much Money So We Need To Purposely Generate More Inflation To Get Them Spending Again

Courtesy of Michael Snyder at Economic Collapse 

Some top Federal Reserve officials have come up with a really bizarre proposal for stimulating the U.S. economy.  As unbelievable as it sounds, what they actually propose to do is to purposely raise the rate of inflation so that Americans will stop saving so much money and will start spending wildly again.  The idea behind it is that if inflation rises a couple of percentage points, but consumers are only earning half a percent (or less) on their savings accounts, then there will be an incentive for consumers to spend that money as the value of it deteriorates sitting in the bank. 

Yes, that is how bizarre things have gotten.  It is not as if U.S. consumers are even saving that much money.  Several decades ago, Americans typically saved between 8 and 12 percent of their incomes, but over this past decade the personal saving rate got down near zero a number of times as Americans were living far beyond their means. Once the recession hit, Americans very wisely started saving more money, and so now the personal saving rate has been hovering around the 5 to 7 percent range.  This is well below historical levels, but the folks at the Fed apparently are eager for Americans to pull that money out and start spending it again.

In an article entitled "Fed Officials Mull Inflation as a Fix", Wall Street Journal columnist Sudeep Reddy described this bizarre new economic approach that some over at the Federal Reserve are now advocating….   

"But as the U.S. economy struggles and flirts with the prospect of deflation, some central bank officials are publicly broaching a controversial idea: lifting inflation above the Fed’s informal target."

Does increasing inflation as a way to stimulate the economy sound like a good idea to any of you?…
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Preserve and Protect: Mapping The Tipping Points

Preserve and Protect: Mapping The Tipping Points

Courtesy of Gordon T Long of Tipping Points

The economic news has turned decidedly negative globally and a sense of ‘quiet before the storm’ permeates the financial headlines. Arcane subjects such as a Hindenburg Omen now make mainline news. The retail investor continues to flee the equity markets and in concert with the institutional players relentlessly pile into the perceived safety of yield instruments, though they are outrageously expensive by any proven measure. Like trying to buy a pump during a storm flood, people are apparently willing to pay any price.  As a sailor, it feels like the ominous period where the crew is fastening down the hatches and preparing for the squall that is clearly on the horizon. Few crew mates are talgking as everyone is checking preparations for any eventuality. Are you prepared?

What if this is not a squall but a tropical storm, or even a hurricane? Unlike sailors, the financial markets do not have the forecasting technology for protection against such a possibility. Good sailors before today’s technology advancements avoided this possibility through the use of almanacs, shrewd observation of the climate and common sense. It appears to this old salt that all three are missing in today’s financial community.

Looking through the misty haze though, I can see the following clearly looming on the horizon.

Since President Nixon took the US off the Gold standard in 1971, the increase in global fiat currency has been nothing short of breath taking. It has grown unchecked and inevitably has become unhinged from world industrial production and the historical creators of real tangible wealth.

Do you believe trees grow to the sky?
Or, is it you believe you are smart enough to get out before this graph crashes?

Apparent synthetic wealth has artificially and temporarily been created through the production of paper. Whether Federal Reserve IOU notes (the dollar) or guaranteed certificates of confiscation (treasury notes & bonds), it needs to never be forgotten that these are paper. It is not wealth. It is someone else’s obligation to deliver that wealth to the holder of the paper based on what that paper is felt to be worth when the obligation is required to be surrendered. It must never be forgotten that fiat paper is only a counter party obligation to deliver. Will they?…
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Jim Rogers: “I Am Buying Gold For A Relief Rally” But All Fiat Currencies Are Doomed

Courtesy of Tyler Durden

Coins in a Cash Box

On one hand you have BNP revising their mid-term EURUSD forecast to 0.98, on the other you have such pessimists as Jim Rogers saying to buy the Euro. Who to trust anymore? Granted, Rogers’ thesis is only predicated on a a relief rally, pretty much the same as what we suggested when we saw the Goldman downgrade of the EURUSD, and immediately beckoned readers to get right back in. We consider the +50,000 pips picked in the ensuing week a direct gift from god (or at least his favorite worker). At this point the relief rally has likely fizzled, and the direction now is indeed down, at least until the next time the CFTC notes the net EUR shorts have hit a fresh record. Back to Rogers: in the long-term, Jim is just as bearish as always: "The European governments are not getting their act together, not at all. All paper money is flawed, nearly every currency in the world."

Rogers on European credibility: "If Greece went bankrupt it would send the signal to the world, and to the rest of Europe – ok, we’re not going to let people lie about their finance anymore, we are not going to let them spend money they don’t have, we are going to run a tight ship. That means the euro would be an extremely sound currency, it would the old Deutsche Mark." On Keynesianism: "You can’t keep spending money you don’t have because eventually the whole thing collapse in a house of cards." On the transition to reality: "I am not suggesting it is going to be a good time, don’t get me wrong. But if you wait 5 years from now, 10 years from now, when there is nothing you can do, and the whole system collapses, then you have real chaos in the streets, then you have Greece never recovering. In the US we have had states go bankrupt, cities go bankrupt, counties go bankrupt. It didn’t end the US, it didn’t end the US dollar." And on the flaws of our political system, which are just as applicable to our own president: "Greece is just trying to get through the next election, I am trying to figure out what’s good for country, what’s good for the world, what’s good for Europe, what’s good for the financial system."


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Phil's Favorites

Barry Ritholtz: Donald Trump Owns This Stock Market

Trump vs. Stock Market...

Many thought that Trump’s aggressive style and economic ignorance wouldn’t leave a lasting mark on either stocks or bonds.

That was wishful thinking. https://t.co/COMz54EOk6

— Bloomberg Opinion (@bopinion) December 16, 2018

...

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Zero Hedge

Visualizing The West's Domination Of The Global Arms Market

Courtesy of ZeroHedge. View original post here.

Overall, arms sales increased in 2017, with total global sales nearing 400 billion dollars, marking a 2.5 percent increase from last year and the third year of continued growth for the industry.

But, as Statista's Sarah Feldman points out, U.S. arms companies still produce the most weapons worldwide.

...



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Chart School

Newmont Mining Gann Angles

Courtesy of Read the Ticker.

Newmont Mining (NEM) is a gold stock with plenty of institutional interest. This means due to its huge following it is a good candidate for Gann Angles.

Gold and gold stocks are waiting for the FED and other central banks to swing to dovish monetary policy, Powell hinted this in last speech, and next week the FED is expected to hike 0.25% to 2.5%, however the 3 previously planned hikes in 2019 look very doubtful. 

In short the hike from near 0% to 2.5% is all the US economy can take, as things start to break (ie corporate credit funding stuff like share buy backs.) with the US 10 yr above 3%. A concern to Powell is the US stock market gain contributes to a huge amount of tax revenue to the US treasury and higher interest rates will take this away (April 20...

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Kimble Charting Solutions

Dow Theory Concerns? Transportation Stocks Make New Lows

Courtesy of Chris Kimble.

The bull market is experiencing its first real test since the 2014/2015 stock market correction. Volatility is high and key sectors are heading lower.

One such sector is the Transportation Sector(NYSEARCA: IYT) and select stocks.

The age-old Dow Theory call for the Industrials and Transports to lead the market (and confirm each others moves). Currently, both are struggling. But the Dow Transports are on the precipice of a major breakdown. Looking at the chart below, you can see that the Transportation Sector ETF (IYT) is attempting to break down below its 12-month trading range and 9-year rising support line.

If the market doesn’t reverse higher soon, this break down will send a negative message to investors about the economy… and the broader stock market.

A move lower wou...



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Digital Currencies

Crypto Bull Tom Lee: Bitcoin's 'Fair Value' Closer To $15,000, But He's Sick Of People Asking About It

Courtesy of ZeroHedge. View original post here.

Listening to the crypto bulls of yesteryear continue to defend their case for new new all-time highs, despite a growing mountain of evidence to suggest that last year's rally was spurred by the blind greed of gullible marginal buyers (not to mention outright manipulation), one can't help but feel a twinge of pity for Mike Novogratz and Wall Street's original crypto uber-bull, Fundstrat's Tom Lee.

Lee achieved rock star status thanks to ...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga.

  • Data on retail sales for November will be released at 8:30 a.m. ET.
  • Data on industrial production for November will be released at 9:15 a.m. ET.
  • The flash Composite Purchasing Managers' Index for December is schedule for release at 9:45 a.m. ET.
  • Data on business inventories for October will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the recent week is schedule for release at 1:00 p.m. ET.

Posted-In: Economic DataNews Economics ...



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Biotech

Those designer babies everyone is freaking out about - it's not likely to happen

Reminder: We're available to chat with Members, comments are found below each post.

 

Those designer babies everyone is freaking out about – it's not likely to happen

Babies to order. Andrew crotty/Shutterstock.com

Courtesy A Cecile JW Janssens, Emory University

When Adam Nash was still an embryo, living in a dish in the lab, scientists tested his DNA to make sure it was free of ...



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Members' Corner

Blue Wave with Cheri Jacobus (Q&A II, Updated)

By Ilene at Phil's Stock World

Cheri Jacobus is a widely known political consultant, pundit, writer and outspoken former Republican and frequent guest on CNN, MSNBC, FOX News, CBS.com, CNBC and C-Span. Cheri shares her thoughts on the political landscape with us in a follow up to our August interview.

Updated 12-10-18

Ilene: What do you think about Michael Cohen's claim that the Trump Organization's discussions with high-level Russian officials about a deal for Trump Tower Moscow continued into June 2016?

...

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Mapping The Market

Trump: "I Won't Be Here" When It Blows Up

By Jean-Luc

Maybe we should simply try him for treason right now:

Trump on Coming Debt Crisis: ‘I Won’t Be Here’ When It Blows Up

The president thinks the balancing of the nation’s books is going to, ultimately, be a future president’s problem.

By Asawin Suebsaeng and Lachlan Markay, Daily Beast

The friction came to a head in early 2017 when senior officials offered Trump charts and graphics laying out the numbers and showing a “hockey stick” spike in the nationa...



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ValueWalk

Vilas Fund Up 55% In Q3; 3Q18 Letter: A Bull Market In Bearish Forecasts

By Jacob Wolinsky. Originally published at ValueWalk.

The Vilas Fund, LP letter for the third quarter ended September 30, 2018; titled, “A Bull Market in Bearish Forecasts.”

Ever since the financial crisis, there has been a huge fascination with predictions of the next “big crash” right around the next corner. Whether it is Greece, Italy, Chinese debt, the “overvalued” stock market, the Shiller Ratio, Puerto Rico, underfunded pensions in Illinois and New Jersey, the Fed (both for QE a few years ago and now for removing QE), rising interest rates, Federal budget deficits, peaking profit margins, etc...



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OpTrader

Swing trading portfolio - week of September 11th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

...

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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