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Salmo trutta

Salmo trutta
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  • If The Fed Wants Higher Inflation It Should Raise Rates [View article]

    A day late...
    Nov 24, 2015. 03:14 PM | 1 Like Like |Link to Comment
  • If The Fed Wants Higher Inflation It Should Raise Rates [View article]
    "Consumer confidence unexpectedly declined in November to the lowest level in more than a year as Americans grew less enthusiastic about the labor-market outlook" - Bloomberg

    "China's Earliest Monthly Economic Indicators Flash Warning Sign"

    - Nostradamus
    Nov 24, 2015. 11:44 AM | 1 Like Like |Link to Comment
  • If The Fed Wants Higher Inflation It Should Raise Rates [View article]
    Money stock and money velocity control are the Central Bank's only bailiwick. I.e., Greenspan never tightened monetary policy and Bernanke never eased monetary policy.
    Nov 24, 2015. 11:21 AM | Likes Like |Link to Comment
  • The U.S. Dollar Has Already Caused A Global Recession And Now The Fed Is Going To Make It Worse [View article]
    It's déjà vu. The E-$ system underwent an unchecked, cumulative and self-reinforcing, bank credit contraction (as all previous prudential reserve,CB systems have). The E-$ market’s collapse set off the commodity sell-off and global economic recession beginning July 2008.

    Temporary (unlimited since 2011), dollar swap liquidity lines and foreign-currency liquidity lines won’t arrest this de-stabilizing flow of money and credit.


    The foreign exchange value of any currency is determined by the supply of and the demand for that particular currency. In international financial analysis supply and demand take on an unique role; for what is demand from our point of view is supply from the standpoint of foreigners – and vice versa.

    All transactions that require the conversion of foreign currencies into dollars constitute a demand for dollars. These include exports, payments received for services rendered to foreigners, capital flows (interest and dividends collected from foreigners), etc. An increase in the volume of any one of these times will increase the demand for dollars and, ceteris paribus, the foreign exchange value of the dollar. The opposite types of transactions, imports, etc., which involve payments to foreigners increase the supply of dollars and thereby reduce the foreign exchange value of the dollar.

    In foreign exchangesupply always equals demand at the current rates of exchange. International debits equal international credits. The balance of payments always balances since there can be no credit transfer of funds. When the balance of payments is balanced by foreigners acquiring net holdings of our equities, bonds, and real estate, and capital outflows (interest, dividends, rentals, etc.) exceed inflows, we are either decreasing our net creditor position in the world, or increasing our net debtor position.

    Beginning 1985 it has been the latter. The trade deficits, plus the unilateral transfer of funds by the Federal Government to foreigners, transformed this country from this world’s largest creditor - to the world’s largest debtor – for the first time since 1917.

    Since 1985 we now have a net debtor position exceeding 9 trillion dollars, but the principle villain (since 1973) has been our dependence on foreign oil.

    The contraction begins next month (DEC). But it will likely roll-over into the 1st qtr. of 2016 (negative R-gDp). So dollar-longs could become sellers of equities.
    Nov 24, 2015. 11:12 AM | 1 Like Like |Link to Comment
  • Deleveraging, QE, And Inflation [View article]
    "the Fed is behind the curve"

    No, the U.S. will likely have negative R-gDp first qtr 2016.
    Nov 24, 2015. 10:44 AM | Likes Like |Link to Comment
  • If The Fed Wants Higher Inflation It Should Raise Rates [View article]

    Money flows have just gone thru the 2nd most contractionary period since the GD. The period leading up to the GR was the most contractionary period. The 3rd most contractionary period was the time leading up to "Black Monday".
    Nov 24, 2015. 10:41 AM | 1 Like Like |Link to Comment
  • If The Fed Wants Higher Inflation It Should Raise Rates [View article]
    JasonC schooled me:

    Salmo - try to keep up. The Fed is requiring Chase to keep not 4.5, not 6, not 8.5, but 13% tier one capital plus another 10.5% long term debt. That is Basel III with 1.5% important layer, plus the 2.5 cushion, plus an *additional* 4.5% mark for its supposed systemic importance, with the latter added both to the tier 1 requirement and to a long term debt requirement, that starts at a base 6% match to Basel III tier 1. See their October press release on the debt requirement, which lists the systemic marks and cumulative required totals for 8 majors, all *way* beyond Basel III. Citi has a 3.5% extra mark of this kind, and Goldman, Morgan Stanley, and Bank of America each 3%. Wells Fargo, State Street, and Bank of New York Mellon all get lesser marks, 1% to 2%. They literally want the biggest US banks to run at 4-5 times leverage, long term debt capital included. How they expect any of them to make money, or grow, with such requirements, is a complete mystery. Apparently they just don't care; maybe they'd rather they just go away or something.

    Here is a link to their own relevant PDF illustration -
    Nov 24, 2015. 10:39 AM | 1 Like Like |Link to Comment
  • There Is Something In This More Than Natural [View instapost]
    Concerning the price-level: after the CBs ceased to be reserve bound in 1995, i.e., after 2 orbits around the sun, the housing bubble began.

    Then in Sept. 1996, the G.6 Debit and Demand Deposit Turnover release was discontinued, disguising the bubble.
    Nov 24, 2015. 10:30 AM | Likes Like |Link to Comment
  • Can The U.S. Escape Japanification? [View article]
    Yes, the U.S. will be worse.
    Nov 23, 2015. 12:53 PM | 2 Likes Like |Link to Comment
  • It's Time To Prepare For The Bear [View article]
    Not everybody celebrates X-mas. Note: the Chinese took down equities earlier this year.
    Nov 23, 2015. 12:52 PM | 1 Like Like |Link to Comment
  • If The Fed Wants Higher Inflation It Should Raise Rates [View article]
    "It is not clear to me that we disagree"

    Introducing, or increasing, the remuneration rate during FRB-NY's open market operations of the buying type, e.g., QE, will induce non-bank dis-intermediation (which could be contractionary - as these operations simultaneously (1) can reduce the supply of loan-funds in the long-term debt market - as well as (2) add new money, if the NBs, and not the CBs, are the Fed's counter-party). It all depends on the inverted yield curve (which can be arbitraged by the CBs, where the CBs might outbid the NBs for whole-sale loan-funds), that the Fed establishes using the payment of interest on the CB's excess reserve balances (IBDDs).

    I.e., the Fed should add new primary dealer regulations which can fix the distribution of OMOs between the banks and their customers (like U.S. Treasury funding operations).

    But as long as the remuneration rate doesn't change its position on the wholesale funding yield curve for the NBs (no movement to the right), raising IBDD returns will add to CB profits (a neutral policy response which simply follows market clearing rates).
    Nov 23, 2015. 12:16 PM | 1 Like Like |Link to Comment
  • If The Fed Wants Higher Inflation It Should Raise Rates [View article]
    The Fed's already tightened - so why raise rates? With the increased bank capital adequacy requirements (effectively a back door credit control device), the Central Bank is courting deflation.
    Nov 23, 2015. 11:50 AM | Likes Like |Link to Comment
  • It's Time To Prepare For The Bear [View article]
    Roc's in M*Vt = roc's in N-gDp (a trillion dollar economic formula).

    Holiday's elastic-currency (beginning of "Black Friday" retail profits), will set up a short-selling opportunity. Follow the counter-cross current closely.

    Nov 23, 2015. 11:45 AM | 2 Likes Like |Link to Comment
  • Swap Spreads For Dummies? [View article]
    Hey, you taught me something. I didn't realize how the increase in bank capital requirements is translated into significantly higher bank borrowing costs.
    Nov 23, 2015. 11:35 AM | 1 Like Like |Link to Comment
  • A Dollar Melt Up? [View article]
    "Bernanke jump-started it"

    It's an incontrovertible fact, Bankrupt U Bernanke was the sole cause of the Great Recession. He should be tried for high treason (straight talk). And it's also a fact that reflation and recovery were both subpar. Economists are plain stupid. That includes Yellen.

    Nov 23, 2015. 11:32 AM | 1 Like Like |Link to Comment