Category Archives: Economics in the Age of Fiat Money

June 9, 2015

Did You Know The Government Owns 60% Of All US Home Mortgages?

It’s true. The US mortgage market has effectively been nationalized. Here’s how it happened: The Government-Sponsored Enterprises, primarily Fannie Mae and Freddie Mac, issued $7 trillion worth of debt and bought up $7 trillion worth of mortgages and other debt securities between 1987 and 2007. They securitized most of the mortgages they acquired and sold…
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May 8, 2015

Yellen’s Dilemma: Global Growth or US Growth

The Fed faces a difficult choice. It must decide between boosting global economic growth or boosting US economic growth. If the Fed increases US interest rates, the Dollar will strengthen further. That would cause US exports to fall and imports into the US to increase. As a result, the US Current Account deficit would expand…
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April 25, 2015

Liquidity Gauge Warning: After mid-year, Look Out!

Liquidity determines which way asset prices move. When there is excess liquidity, the price of stocks, bonds and property tends to rise. When liquidity is negative, the price of those assets tends to fall. After two years of excess liquidity – and rapidly appreciating asset prices – liquidity will turn negative in the second half…
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April 16, 2015

Watch Free Video: QE Is Debt Cancellation

Yesterday, I send a blog with a link to a new CNBC interview and a second link to a free video explaining the details of how central banks have effectively cancelled trillions of dollars of government debt and are in the process of cancelling trillions more. The link to the second video did not work,…
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April 6, 2015

Don’t Miss This One! The Chris Martenson Interview

This is one of the very best interviews I have ever participated in. Chris Martenson did a brilliant job, asking all the right questions. This podcast was posted on the PeakProsperity website today under the eye-catching (or even heart-stopping) headline, The Real Risk Of A Coming Multi-Decade Global Depression. We do discuss that risk. But…
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March 8, 2015

I Strongly Recommend You Listen To This Interview

The Financial Sense Newshour Interview Cris Sheridan was my host on The Financial Sense Newshour last week. We had a real go at solving the world’s problems. Among the topics discussed: 1. Why Quantitative Easing is effectively debt cancellation. (When a central bank buys a government bond, it is effectively the same thing as cancelling…
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March 3, 2015

How The Fed Intends To Hike Interest Rates

The consensus view is that the Federal Reserve will begin increasing interest rates later this year. I believe the consensus view is wrong. The Fed hikes rates to fight inflation. Higher interest rates reduce spending and investment, push up unemployment and cause wages to fall. Median income in the United States is little changed from…
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February 17, 2015

QE Is Debt Cancellation

When a central bank prints money and buys a government bond, it is the same thing as cancelling that bond (so long as the central bank does not sell the bond back to the public). That means governments have far less debt than is generally understood. It also has very important policy implications. The new…
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February 4, 2015

Why ECB QE Will Drive European Stock Markets Higher

The European Central Bank has announced a massive Quantitative Easing program that is very likely to push European stock prices significantly higher. The new Macro Watch video, ECB QE, explains everything you need to know about the ECB’s plans to create and invest Euro 60 billion a month to defeat deflation in Europe. Here are…
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January 3, 2015

If Interest Rates Rise, Wealth Will Fall

There is a broad consensus among financial market participants that interest rates will rise in 2015. If they do, the stock market and the economy are likely to suffer a severe blow. The Macro Watch video uploaded today, Finance Capital, explains why. In the previous two videos, “Capital: A Crash Course” and “How Capital Grows”,…
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December 27, 2014

How Capital Grows

Over the past 250 years, the growth of Capital has completely transformed the world. The next time you fly, look out the window. Most of the cities, highways, canals and power grids that you see below weren’t there just a few generations ago. In the latest Macro Watch video, How Capital Grows (uploaded today), we…
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December 6, 2014

CAPITAL: A Crash Course

It’s impossible to understand Capitalism without understanding Capital. In the new Macro Watch video, uploaded today, we look at Capital and the Capital Structure of the United States. Capital generates Income. Therefore, the Capital Stock we have inherited and built, when combined with labor and natural resources, is the source of all of our income….
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November 24, 2014

Japan’s Crisis & The BOJ’s Solution

In the latest Macro Watch video (uploaded today) we look at Japan and the very serious challenges it faces. These include a demographic crisis, a sharp deterioration in its trade balance, deflationary pressures and a dangerously high level of government debt relative to GDP. We also consider how the Japanese government is responding to those…
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November 10, 2014

FX Reserve Accumulation Is Quantitative Easing

The accumulation of Foreign Exchange Reserves has a profound impact on global asset prices – just as Quantitative Easing does. That makes Foreign Exchange Reserves (which now amount to $12 trillion) one of the most important, but least understood, aspects of how the global economy works now, in this post-Bretton Woods era. In FX Reserves,…
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October 28, 2014

Analyzing The Five Largest Central Banks

The latest Macro Watch video (uploaded today) analyzes the strategies and compares the balance sheets of the world’s five largest central banks: The People’s Bank of China, The Federal Reserve, The European Central Bank, The Bank of Japan and The Bank of England. Central banks print money for one of three reasons: 1) To end…
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October 12, 2014

Slowing Global Liquidity Points To Deflation Ahead

The Fed is about to end its third round of Quantitative Easing, but the Bank of Japan is printing Yen faster than ever before and the European Central Bank intends to reaccelerate its creation of Euros. So, THE question is: Will the increase in new Yen and Euros be enough to compensate for the end…
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October 2, 2014

The Prospects For Asset Prices

Prepare for a stock market sell-off. A new Macro Watch video has been uploaded. In it, I discuss the outlook for stocks, bonds/interest rates, property, commodities and currencies. Topics include: Where will the S&P Index be at the end of next year? Why the Fed won’t begin to increase interest rates any time soon. Will…
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September 26, 2014

Why The Fed Will Launch Another Round Of Quantitative Easing

In November 2002, Fed Governor Ben Bernanke introduced the concept of Quantitative Easing to the world. In a speech entitled “Deflation: Making Sure It Doesn’t Happen Here”, he explained that the Fed could prevent deflation from taking hold in the United States by creating money and using it to acquire government and agency (i.e. Fannie…
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