Virg Bernero, the mayor of Lansing, Michigan, just won the Democratic nomination for governor of his state, making a state-owned Bank of Michigan a real possibility. Bernero is one of at least a dozen candidates promoting that solution to the states’ economic woes. It is an innovative idea, with little precedent in the United...
Read more »
As they prepare for holiday reading in Tuscany, City bankers are buying up rare copies of an obscure book on the mechanics of Weimar inflation published in 1974. Ebay is offering a well-thumbed volume of “Dying of Money: Lessons of the Great German and American Inflations” at a starting bid of $699 (shipping free.....
Read more »
As we long ago predicted, 2005 was the beginning of the collapse of the housing bubble. The result was financial chaos and a credit crisis that enveloped the US, Europe and eventually the world. Some would like us to believe that materialism and selfishness were the reasons for bubbles, but the causes go far...
Read more »
Thomas Ferguson: A few small useful measures, but the bill strengthens the Fed and is weak on big issues. Thomas Ferguson is Professor of Political Science at the University of Massachusetts, Boston and a Senior Fellow of the Roosevelt Institute. He received his Ph.D. from Princeton University and taught formerly at the Massachusetts Institute...
Read more »
It looks like the next big wave of deflation is upon us. Looking at some key fundamentals, we see the labor market is again shredding jobs (652,000 in June), the money supply is contracting at levels not seen since the Great Depression and the US Federal Governments finances are in complete disaster. We stand...
Read more »
Banks Profit from Near-zero Interest Rates: Another Reason for States to Own Their Banks While individuals, businesses and governments suffer from a credit crisis created on Wall Street, the banks responsible for the crisis are tapping into nearly-interest-free credit lines and using the money to speculate or to make commercial loans at much higher...
Read more »
Most Americans know that the U.S. economy is in bad shape, but what most Americans don’t know is how truly desperate the financial situation of the United States really is. The truth is that what we are experiencing is not simply a “downturn” or a “recession”. What we are witnessing is the beginning of...
Read more »
Evidence of a Financial Coup in America How much more evidence of a financial coup and the THEFT of TRILLIONS of DOLLARS do we need before the media and our politicians do something, anything, to restore a rule of law in this nation? What is it going to take? About four months ago, I...
Read more »
What Is India and China Doing That Malaysia Has Neglected To Do? On 27th August 2009 I wrote an article, “An Appeal To Malaysia’s Prime Minister Cum Finance Minister – Re-Examine the Country’s Strategy For Foreign Reserves”, to urge our Prime Minister to examine the critical need to diversify our foreign reserves, specifically to...
Read more »
Interest rates. The Fed does not need slinky women in plunging necklines to peddle money. All it needs is low interest rates. When rates are pushed lower than the rate of inflation, the Fed provides a subsidy for borrowing. This is not as hard to grasp as it sounds. If I offered to give...
Read more »
On February 1, 1960, four students sat down at a lunch counter at
the former Woolworth’s store in Greensboro North Carolina. 4 students! Just four! They were protesting racial segregation. They were denied,
service, harassed and arrested. Greensboro was and still is a backwater, yet their courage and
commitment sparked and helped drive a national movement that
would,...
Read more »
Our view is that the elitists are currently buying time for the dollar, and stalling the rally in precious metals, by weakening other currencies until they are ready for the big stock takedown/correction. This process of supporting the dollar is becoming extremely expensive and difficult, so they had to take the Dow down 200...
Read more »
GrillzillaWilliam K. Black – professor of economics and the senior regulator during the S & L crisis – says that that the government’s entire strategy now – as during the S&L crisis – is to cover up how bad things are (“the entire strategy is to keep people from getting the facts”). Indeed, as...
Read more »
Arab oil producing nations and the some world’s largest oil consumers including China and Japan are reliably reported to be secretly planning a long-term exit from pricing their oil trade in dollars. If true, it would spell the death knell for the dollar as world reserve currency and for the USA as global economic...
Read more »
Focus on the face at the top of Federal Reserve neglects questioning the institution and the system President Obama has re-nominated Ben Bernanke to sit as Chairman of the Federal Reserve for another four-year term. Most of the media has praised Bernanke for his handling of the current economic crisis, Obama himself suggests that...
Read more »
Entering the Greatest Depression in History Introduction While there is much talk of a recovery on the horizon, commentators are forgetting some crucial aspects of the financial crisis. The crisis is not simply composed of one bubble, the housing real estate bubble, which has already burst. The crisis has many bubbles, all of which...
Read more »
Bankrupt US Financial System: The Bubble Bursts and the Economy goes into a Tailspin. We’re making this way too complicated. It’s simple really. The Fed has only one tool at its disposal; to create more money. Typically, the way the Fed adds to the money supply is by lowering interest rates. When the Fed...
Read more »
In the real economy, unemployment is at Depression-era levels (see this, this and this). In the real economy, bank loan loss rates will be higher than the Depression. In the real economy, government revenue is at its lowest level since the Depression, and most states are on the verge of bankruptcy. In the real...
Read more »
“Blowing Bubbles” and “Using Palliatives” which “Make Things Worse” BIS Slammed Federal Reserve and Other Central Banks for Blowing Bubbles and then “Using Gimmicks and Palliatives” which “Will Only Make Things Worse” If you have any doubt that the Fed and other central banks should have known that a crash was coming, all you...
Read more »
At the start of this week, German-based Deutsche Bank announced a huge increase in its profits. The bank reported a net profit of €1.1 billion in the second quarter of this year, nearly doubling its earnings over the same period last year (€645 million). The massive increase in Deutsche Bank’s profits follows record earnings...
Read more »
The Conservatives have pledged to hand the Bank and its Governor Mervyn King power to control the balance sheets of all Britain’s major banks and finance houses, as well as regulation of the broader financial system. With its existing power to control interest rates, the proposed reforms will mean the Bank will rival the...
Read more »
William White predicted the approaching financial crisis years before 2007′s subprime meltdown. But central bankers preferred to listen to his great rival Alan Greenspan instead, with devastating consequences for the global economy. William White had a pretty clear idea of what he wanted to do with his life after shedding his pinstriped suit and...
Read more »
President Obama has repeated his call for a public option in health care, in order to create some competition for the insurance companies and keep them honest. We the people need to call for a public option in banking, in order to create some competition for the private banks and keep them honest. In...
Read more »
“The empire of the dollar is crashing.” Hugo Chavez, Venezuelan President “The U.S. dollar is a worthless piece of paper.” Mahmoud Ahmadinejad, Iranian President “losing its status as the world currency.” Xu Jian, vice director, People’s Bank of China, “It is the policy of the United States and it will...
Read more »
Upswing in stocks comes from profits due to cutbacks and concessions, worse is yet to come
Read more »
Introduction Humanity is on the verge of entering into the most tumultuous period in our history. The prospects of a global depression, the likes of which have never been seen before; a truly global war, on a scale never before imagined; and societal collapse, for which nations of the world are building totalitarian police...
Read more »
With a view to restoring financial stability, World leaders have called upon the Group of 20 countries (G-20) to instigate a new global currency based on the IMF’s Special Drawing Rights (SDRs). The media has presented the global currency initiative as a consensus building process, in which BRIC countries (Brazil, Russia, India and China)...
Read more »
A careful reading of Federal Reserve chairman Ben Bernanke’s op-ed in Tuesday’s Wall Street Journal, shows that Bernanke thinks the economy is in a deflationary spiral that will last for some time. Ben Bernanke: “The depth and breadth of the global recession has required a highly accommodative monetary policy. Since the onset of the...
Read more »
Details emerge of how the Fed secretly doled out trillions of dollars during the financial crisis The Federal Reserve is one of the most powerful and secretive institutions in Washington, long considered beyond the reach of lawmakers. But now, as details emerge of how the Fed secretly doled out more than a trillion dollars...
Read more »
Last week I was very pleased that hearings were held on the independence of the Federal Reserve system. My bill HR 1207, known as the Federal Reserve Transparency Act, was discussed at length, as well as the general question of whether or not the Federal Reserve should continue to operate independently. The public is...
Read more »
Pollin: Obama plan to ‘empower’ the Fed won’t reign in casino capitalism; finance must be democratized Barack Obama recently announced that his new plan for Wall Street regulation would be hinged upon an enhanced oversight role for the Federal Reserve. Robert Pollin, while welcoming a first attempt at regulation, points out that the Fed...
Read more »
As global leaders struggle to rescue their nations from economic breakdown, the legitimacy of the dollar as the world’s reserve currency is under attack. Perhaps the problem lies with the Fed. A large part of the “super” in the American superpower is based on the modern creed of liberal democracy, which serves as the...
Read more »
Dollar vulnerability no surprise to us, collapse is the cost for not paying attention, Fed failures the cause of devaluations, stimulus plans may well be insufficient to bolster economy, Jobless rate indicates where we stand now in our weakened economy Re-emergence of dollar vulnerability has taken almost all professionals by surprise. That has been...
Read more »
During the Great Depression, my grandfather ran a butter creamery in rural Minnesota. Growing up, I heard how a group of farmers stormed in one day and threatened to burn the place down if he didn’t stop production. I had no idea who those farmers were or why they had done that—it was just...
Read more »
The way money is created and issued, who creates it and in what form—as debt or debt-free, in one currency or another—largely determines whether a financial system works fairly and efficiently or not. In our global village, money shapes our lives at personal, household, local, national, and international levels. The system now in place...
Read more »
Some of the best ideas are often the simplest. When applied to the global economic crisis, the solution is easier than imagined. What’s hard, in fact a Gordian Knot, is the political will to embrace it. But even matters that great can be solved by a bold stoke, and according to legend, Alexander the...
Read more »
In 1900, Argentina was one of the richest, most promising countries in the world. Just 100 years later it was, well…Argentina. A beautiful, cultured, wonderful place that’s such an economic basket case that many of its promising young people emigrate to Mexico to find work and opportunities. What happened to this country so rich...
Read more »
The U.S. Treasury and the Federal Reserve have arguably two of the least transparent balance sheets known to humankind. This wouldn’t be such a big issue if the amount of money funneled into these organizations was small. That is not the case. The Federal Reserve since October of 2008 has held on its balance...
Read more »
This week couldn’t end fast enough for the Treasury bond market or the dollar, both of which were hammered again today as investors bailed out in thin pre-holiday trading. The yield on the 10-year T-note jumped to 3.45%, up from 3.35% on Thursday and 3.14% a week ago. The yield now is the highest...
Read more »
Bill Murphy and Chris Powell, co-founders of the Gold Anti-Trust Action Committee Inc. (www.gata.org), will be in London, England. Their trip is part of GATA’s ongoing effort to raise awareness of the gold cartel and its surreptitious intervention in the gold market. Bill and Chris will meet with the British news media to explain...
Read more »
Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism by George A. Akerlof and Robert J. Shiller Princeton University Press, 230 pp. The Subprime Solution: How Today’s Global Financial Crisis Happened, and What to Do About It by Robert J. Shiller Princeton University Press, 196 pp. By now...
Read more »
The Earth stood still, the seas parted and a member of the U.S. political class admitted last week that the Federal Reserve helped to cause the financial meltdown. OK, only the last of those happened, but it’s a welcome miracle nonetheless. The revelation came from Timothy Geithner last Wednesday with PBS’s Charlie Rose, who...
Read more »
Treasury Secy Tim Geithner Testimony Senate Banking Committee, May 20, 2009 – Full Text Good morning. Chairman Dodd, Ranking Member Shelby, members of the Senate Banking Committee, thank you for the opportunity to testify before you today. On October 3, 2008, during a time of tremendous financial upheaval and economic uncertainty, Congress passed the...
Read more »
The US dollar is not Russia’s basic reserve currency anymore. The euro-based share of reserve assets of Russia’s Central Bank increased to the level of 47.5 percent as of January 1, 2009 and exceeded the investments in dollar assets, which made up 41.5 percent, The Vedomosti newspaper wrote. The dollar has thus lost the...
Read more »
Zhou did not mention the dollar by name but said the financial crisis had shown the need for reform. The head of the Chinese central bank has called for a new global currency controlled by the International Monetary Fund (IMF), saying such a move would give governments particularly in the developing world the ability...
Read more »
But, you may ask, won’t the powers that be step into the breach again and abort the crisis before it gets a chance to run its course? Yes, certainly. That, by now, is standard operating procedure, and it cannot be excluded that it will succeed in the same ambiguous sense that it did after...
Read more »
Some worried commentators are predicting a massive hyperinflation of the sort suffered by Weimar Germany in 1923, when a wheelbarrow full of paper money could barely buy a loaf of bread. An April 29 editorial in the San Francisco Examiner warned: “With an unprecedented deficit that’s approaching $2 trillion, budget proposal...
Read more »
Introduction Following the 2009 G20 summit, plans were announced for implementing the creation of a new global currency to replace the US dollar’s role as the world reserve currency. Point 19 of the communiqué released by the G20 at the end of the Summit stated, “We have agreed to support a general SDR allocation...
Read more »
For more than a year, the U.S. Federal Reserve System has been increasingly acting as the world’s central bank, injecting hundreds of billions of dollars into foreign government treasuries in an effort to increase liquidity in those countries. The foreign central banks have used the U.S. currency to bail out financial institutions within their...
Read more »
Taming the Speculators: What Should Countries Do With Their Central Bank Reserves? Last week Izvestiya published an interview with former Premier Yevgeny Primakov, now president of the Chamber of Commerce and Industry. (Johnson’s Russia List published a translation on May 8). The discussion centered on a universal problem – what China and other Asian...
Read more »
The Federal Reserve Act was legislated in 1913 to end recessions, panics and depression. Over that almost 100-year period they have been eminently no more successful then their predecessors. The Fed is a private corporation, which guides US monetary policy. Its staff is from Wall Street, banking, and transnational conglomerates and occasionally from academia....
Read more »
THE LEVEL OF PUBLIC IGNORANCE on the topic of the U.S. and world monetary system is astonishing. This is part of the plan, of course, because the monetary elite control not only the financial system but also the news media, the publishing industry, and the educational system. The blueprint for control was put together...
Read more »
Do we really want the Bank for International Settlements (BIS) issuing our global currency In an April 7 article in The London Telegraph titled “The G20 Moves the World a Step Closer to a Global Currency,” Ambrose Evans-Pritchard wrote: “A single clause in Point 19 of the communiqué issued by the G20 leaders amounts...
Read more »
Just how did we get into this economic mess? The answers are both complex and troubling. Blame greed, irresponsibility, lax government oversight, conflicts of interest and especially blind faith in a housing boom that seemingly had no end. But end it did, setting off a chain reaction that has left the economy in tatters...
Read more »
On January 5, Ron Paul addressed the House Financial Services Committee’s hearing on the Madoff Ponzi scandal. He pointed out that Bernard Madoff was operating under the supervision of the SEC, that more regulation will only make the job of cunning fraudsters easier because they can claim to be approved by the government, and...
Read more »
Fuelling a new world money supply A paper written ahead of the recent G20 summit by Zhou Xiaochuan, governor of the Chinese central bank, caused quite a stir. Zhou called for the establishment of a global reserve currency, a step which would firmly tip the balance of economic power in the direction of emerging...
Read more »
The American economy has gone away. It is not coming back until free trade myths are buried six feet under. America’s 20th century economic success was based on two things. Free trade was not one of them. America’s economic success was based on protectionism, which was ensured by the union victory in the Civil...
Read more »
At a Cambridge House Investment Conference I received a question about Bear Stearns. In my answer I alluded to the possible financial benefit of some from its implosion. When pressed I had to explain how credit default swaps worked and then we were out of time. Because the owners of the majority of the...
Read more »
Peter Millar: Seven-fold increase in gold needed to avert debt depression While it is almost three year old, a study of the enduring importance of gold in the world economic system by R. Peter W. Millar, founder of Valu-Trac Investment Research Ltd. in Scotland (www.valu-trac.com), seems ever more compelling to share with you. Millar...
Read more »
The value of gold is kept low to keep the value of the dollar high. Traditionally the value of a currency is measured in gold. Current economic policy (Monetarism) advices to infuse new money into the economy to stimulate economic growth. For the last few years money growth in the US has been over...
Read more »
What is a fiat currency? A currency that’s created and controlled by a government. In other words, it exists by government “fiat.” Using the dollar as an example, the U.S. Federal Reserve creates new dollars simply by printing them or injecting electronic “reserves” into the banking system. The supply of dollars thus depends on...
Read more »
(One of our objectives is to help non-specialist readers understand what they are reading in the news. Read Financial Crisis for Beginners.) I’ve had two posts so far on the terms under which Treasury sold back to Old National the warrants on Old National stock that Treasury got in exchange for its TARP investment,...
Read more »
(One of our objectives is to help non-specialist readers understand what they are reading in the news. Read Financial Crisis for Beginners.) Kevin Drum pointed me to Ryan Avent’s insightful review of Ben Bernanke’s recent speech on financial innovation. (How’s that for the Internets in action?) Bernanke’s brief was simple: to defend financial innovation...
Read more »
(One of our objectives is to help non-specialist readers understand what they are reading in the news. Read Financial Crisis for Beginners.) What is a bad bank? . . . No, I don’t mean that kind of bad bank, with which we are all much too familiar. I mean the kind of “bad bank”...
Read more »
(One of our objectives is to help non-specialist readers understand what they are reading in the news. Read Financial Crisis for Beginners.) An interest rate is the price of money. If you buy a 5-year CD from your bank, it will pay you something like 3% annual interest. You are selling the bank the...
Read more »
(One of our objectives is to help non-specialist readers understand what they are reading in the news. Read Financial Crisis for Beginners.) The most common point of comparison for our current economic crisis is, far and away, the Great Depression. The Depression is most often bracketed with some version of the phrase, “but we’re...
Read more »
(One of our objectives is to help non-specialist readers understand what they are reading in the news. Read Financial Crisis for Beginners.) No, this isn’t another article about how credit default swaps (CDS) have ruined or are going to ruin the economy. It’s about one of the nice side benefits of CDS: the habit...
Read more »
(One of our objectives is to help non-specialist readers understand what they are reading in the news. Read Financial Crisis for Beginners.) We had a comment last week asking for an explanation of, roughly, what it is that the Federal Reserve does, so I thought that would be a good topic for a Beginners...
Read more »
(One of our objectives is to help non-specialist readers understand what they are reading in the news. Read Financial Crisis for Beginners.) So, it looks like we’re in a recession. What’s a recession? A recession is a period when overall economic activity contracts. In most times, overall economic activity increases, for two reasons. First,...
Read more »
(One of our objectives is to help non-specialist readers understand what they are reading in the news. Read Financial Crisis for Beginners.) In honor of Paul Krugman, recent Nobel Prize winner and “inventor” of the currency crisis, we seem to be experiencing a global currency crisis. This may prompt the question: what is a...
Read more »
What happened to the global economy and what we can do about it We believe that everyone should be able to understand how the financial crisis came about, what it means for all of us, and what our options are for getting out of it. Unfortunately, the vast majority of all writing about the...
Read more »