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Archives for October 2013

Your World Drowning in Easy Money

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You know something’s amiss when the Fed pumps $85 billion a month into the system. The Fed’s balance sheet has ballooned to $3.85 trillion. What’s missed by the media is that 60% of the Fed’s balance sheet is excess reserves or $2.3 trillion—money that banks keep on deposit at the Fed. Banks currently earn 0.25% from the Fed, which is actually paid by you and me the taxpayer. This is simply a ripple now, but wait until interest rates go up. The cost to taxpayers could be catastrophic. “A return to even a normal 2% rate on excess reserves of $2.3 trillion would cost U.S. taxpayers $46 billion. … [Read more...]

VIDEO: Fed Easing Has Been `Helpful’ for Economy: Hatzius

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Here Bloomberg anchors Stephanie Rule and Erik Schatzker grill Goldman’s chief economist for his continued support of quantitative easing, despite a dearth of evidence showing the policy works. Oct. 24 (Bloomberg) -- Jan Hatzius, chief economist at Goldman Sachs Group Inc., talks about Federal Reserve policy and the U.S. economy Hatzius speaks with Stephanie Rule and Erik Schatzker on Bloomberg Television's "Market Makers." … [Read more...]

Quantum Dawn 2

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Over the Summer some Wall Street banks ran a crisis scenario in which "bank executives in charge of operations, technology and crisis planning were tasked with detecting how a massive cyber attack was unfolding in the markets - but each one only got to see a tiny red flag waving in a sea of information," Reuters reports. For years we've been recommending Fidelity Investments as a custodian for investor money. For my money no financial institution does technology better than Fidelity Investments. And that would include preparations against cyber attacks. If you don't already have an account … [Read more...]

Serious Problems Seen in Monetary Policy Pullback

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In a speech at the Bank of Mexico, BIS General Manager Jaime Caruana flashes major warnings about central bank independence and the effectiveness of emergency techniques that are being used to prop up the economies of the world. In his speech, Caruana attempted to outline the magnitude of the interventions undertaken by the world’s central banks since 2007 saying “Since late 2007, central bank total assets in the major advanced economies have more than doubled to exceed $9 trillion, more than a quarter of GDP. And the maturity of these assets has lengthened. Prolonged interventions of this … [Read more...]

What We’re Reading 10-18-13

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The Wages of Unemployment, Review & Outlook, The Wall Street Journal Top 2% of Chinese account for third of global luxury sales, Robert Frank, CNBC High-End Houses Lure Flippers From New York to California, Prashant Gopal, Bloomberg Bitcoin Mining Rush Means Real Cash for Hardware Makers, Olga Kharif, Bloomberg The Yellen Difference, Review & Outlook, The Wall Street Journal Janet Yellen, a Backer of Pushing the Fed's Policy Boundaries, McGrane and Hilsenrath, The Wall Street Journal … [Read more...]

VIDEO: Gold Standard Is `Obvious Way Forward,’ Grant Says

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Oct. 16 (Bloomberg) -- James Grant, publisher of Grant's Interest Rate Observer, talks about the impact of the fiscal impasse in Washington on global markets, U.S. debt and the dollar, and the outlook for Federal Reserve policy. Grant speaks with Deirdre Bolton on Bloomberg Television's "Money Moves." (Source: Bloomberg) … [Read more...]