Notes From Underground: CNBC Santelli Exchange–Central Bankers’ Timing

Yra & Rick, April 15, 2016

Click on the image to watch me and Rick discuss central bank policy timing.

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6 Responses to “Notes From Underground: CNBC Santelli Exchange–Central Bankers’ Timing”

  1. asherz Says:

    Yra- monetizing IMF gold and using the billions to build infrastructure is continuing the mistaken QE programs in a different form. You are increasing debt and have governments create work that just kicks the can some more. The problem is TOO MUCH DEBT. Close to $60 TRILLION in new debt has been created since 2007 with little to show for it. It has been supported by ZIRP or now negative rates that will not allow rates to ever get back to normal levels. This is destroying pension funds and insurance companies and cause malinvestment in asset inflation. Excessive Debt is the noose on real growth.
    For Britain there is a vote on Brexit coming up. For Lagarde, Yellin, Draghi and Kuroda there is No Exit. The road to perdition of more and more debt has no doors. We are overdosed and keep needing more and more stimulants. Fiat currency destruction is inevitable. Hard currency will be the only safe harbor.
    Sorry for this lagubrious assessment but Graham Dodd has led me to these thoughts. Unprecedented spending binges have serious consequences. The morning after cannot be avoided.

  2. Asherz Says:

    There is a long term solution that will not be pain free. Reduce the overregulated economies, cut government spending, lower taxes on business, encourage creation of small businesses that will create jobs and begin to show real growth. Over the next ten years government debt should be radically reduced to allow entrepreneurs to thrive, That environment allowed the US to have the greatest expansion in the economy and a steep rise in the standard of living post WW ll.. The No Exit policies of our Central Bankers with bigger roles for government and Crony Capitalism has put us in our precarious situation.

  3. yra Says:

    asherz–your point on debt is of course correct and as a long time reader you know all my analysis begins with an Austrian lens.But the point on the IMF is they have an asset and a balance sheet whether we like it or not and they are looking to play a role in the world.In Jim Rickards new book he covers the IMF very well as I read this weekend but even he doesn’t have a way for the IMF to securitize and thus monetize its gold hoard as I have argued for the last five years—I never condone debt for the sake of debt or as the U.S. economic system has developed to,the continuing bringing forward of demand through the over use of debt.The point of my argument is that collateralizing of debt by GOLD would make the lenders far more responsible because the collateral cannot be created out of thin air or by the printing press

    • asherz Says:

      Yes, your prescription is the lesser of the evils. I would choose to characterize this as far less irresponsible than the obverse. Choose your poison.

  4. Frank C. Says:

    As an alternative to the IMF collateralizing their gold in a debt offering they could use the futures market and write covered out of the money calls on gold.

    Or create a gold backed zero coupon bond that is payable in ounces of gold or cash. Say a 2026 bond $100,000 bond that at maturity is payable in 50 ounces of gold ($2,000 oz.) or $100,000 in dollars. This would be a great hedge against negative rates.

    Or perhaps they could just hire the same DB commodity crew that just plead guilty to manipulating the silver and gold spot price and let them hedge the IMF gold position. That looks a like a guaranteed winner.

    • yra Says:

      Frank C.–absolutely but i don’t think they want to rid themselves of the barbarous relic–just securitize it

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