Living In A QE World | The Big Picture

All Central Bank Balance Sheets Are Exploding Higher, Or Engaged In QE

The degree to which central banks around the world are printing money is unprecedented.

The first eight charts below show the balance sheets of the largest central banks in the world. They are the European Central Bank (ECB), the Federal Reserve (Fed), the Bank of Japan (BoJ), the Bank of England (BoE), the Bundesbank (Germany), the Banque de France, the People’s Bank of China (PBoC) and the Swiss National Bank (SNB). Noted on the charts are significant events or growth rates.

Shown is the size of each respective balance sheet in its local currency. Note that all are exploding higher as every chart goes from the lower left to the upper right. Most are still making new all-time highs. If the basic definition of quantitative easing (QE) is a significant increase in a central bank’s balance sheet via increasing banking reserves, then all eight of these central banks are engaged in QE.

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via Living In A QE World | The Big Picture.

Creeping Fascism, Part One: Return of the Company Town

The US government’s obliteration of the Bill of Rights via the Patriot Act, the recent defense bill that allows the military to detain citizens indefinitely without trial, the health care law that forces citizens to buy insurance, and the attempted takeover of the Internet through SOPA and PIPA has gotten a lot of attention lately, and in a few rare cases has generated some effective push-back.

But according to an article in this month’s Harper’s Magazine (Killing the competition: How the new monopolies are destroying open markets, by Barry C. Lynn), US corporations are evolving into forms that are more threatening to their victims than anything emanating from Washington. As the author characterizes it, a new generation of monopolists are imposing their own private governments on their industries — and not always the industries one would expect. This long, detailed article should be read by anyone with a desire to understand how the US is evolving. Here I’ll highlight a few excerpts to summarize the major plot points:

Silicon Valley

Just a few years ago a software engineer’s talents were almost completely portable, allowing a programmer to move effortlessly between tech companies. In other words, there was a functioning market for talent in which the individual had power and choice vis-à-vis local employers. Then a handful of companies began to accumulate near-monopoly control over their product lines — and their workers. From the article:

These days the Valley is once again abuzz. Headlines report bulging wallets and a smorgasbord of new perks. Venture capitalists hum down Route 101, and angel investors lurk and listen in the bars. But instead of a disruptive melee like that of the late 1990s, with its diversity of players and voices, the overwhelming tendency today is a further consolidation of power by the already powerful. During the past decade, a few giants have managed to fence in market after market for hardware, software, and content. Some did so simply by buying up their competitors….

Yet this de facto license to govern a trillion-dollar industry—and with it, entire swaths of the American economy—appears to have left these high-tech headmen unfulfilled. Or so we learned when the Justice Department complained in 2010 that senior executives at Apple, Google, Intel, Pixar, and two other corporations had “formed and actively managed” an agreement that “deprived” the engineers and scientists who work for them of “access to better job opportunities.” Even in those reaches of society long accustomed to the rule of the few, the fact that some of the biggest and the richest had agreed not to poach one another’s workers managed to shock. In an editorial, the New York Times wondered “What Century Are We In?” Yet in the Valley itself, from those most directly affected, we’ve heard only the rarest of whimpers. The anger is there. But it’s tamped down by fear.

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via Creeping Fascism, Part One: Return of the Company Town — DollarCollapse.com.

Many Of You Will Not Believe Some Of The Things Americans Are Doing Just To Survive

You might not want to read this article if you have a weak stomach. Most Americans have absolutely no idea what is going on in the dark corners of America, and when people find out the truth it can come as quite a shock. Many of you will not believe some of the things Americans are doing just to survive. Some families are living in sewers and drain tunnels, some families are living in tents, some families are living in their cars, some families will make ketchup soup for dinner tonight and some families are even eating rats. Some homeless shelters in America are so overloaded that they are actually sending people out to live in the woods. As you read this, there are close to 50 million Americans that are living below the poverty line, and that number rises a little bit more every single day. America was once known as the greatest nation on earth, but now there is decay and economic despair almost everywhere you look. Yes, money certainly cannot buy happiness, but the lack of it sure can bring a lot of pain. As the economy continues to decline, the suffering that we see all around us is going to get a lot worse, and that is a very frightening thing to think about.

The following is a half hour documentary produced by the BBC entitled “Poor America”. Trust me, this is a must watch. Your heart will break as you hear some American children talk about what they have to do for food….

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via » Many Of You Will Not Believe Some Of The Things Americans Are Doing Just To Survive Alex Jones’ Infowars: There’s a war on for your mind!.

Why Our Currency Will Fail

The idea that the very same economic forces that are currently plaguing Greece, et al., are somehow not relevant to the United States’ circumstances does not hold water. As goes the rest of the world, so goes the US. When we back up far enough, it is clear that money and debt are there to reflect and be in service to the production of real things by real people, not the other way around. With too much debt relative to production, it is the debt that will suffer. The same is true of money. Neither are magical substances; they are merely markers for real things. When they get out of balance with reality, they lose value, and sometimes even their entire meaning.This report lays out the case that the US is irretrievably down the rabbit hole of deficits and debt, and that, even if there were endless natural resources of increasing quality available at this point, servicing the debt loads and liabilities of the nation will require both austerity and a pretty serious fall in living standards for most people. Of course, the age of cheap oil is over. And as Jim Puplava says, the oil price is the new Fed funds rate, meaning that it is now the price of oil that sets the pace of economic movement, not interest rates established by the Fed.

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via Why Our Currency Will Fail – Blogs at Chris Martenson.

Mortgage Settlement Is Just Another Stealth Bank Bailout

Yet Another Bailout for the Giant Banks … Homeowners Get Hosed Again

The 50-state settlement with the banks (Oklahoma didn’t sign, but supports letting the banks go scot-free) over mortgage fraud is a stealth bank bailout, according to many top observers. See this, this, this, this, this, this, this and this.

This is par for the course … All of Obama’s previous “mortgage relief” programs have really been stealth bank bailouts which screwed the homeowner. And see this.

For example:

Most independent experts say that the government’s housing programs have been a failure. That’s too bad, given that the housing slump is now … worse than during the Great Depression.

Indeed, PhD economists John Hussman and Dean Baker, fund manager and financial writer Barry Ritholtz and New York Times’ writer Gretchen Morgenson say that the only reason the government keeps giving billions to Fannie and Freddie is that it is really a huge, ongoing, back-door bailout of the big banks.

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via Mortgage Settlement Is Just Another Stealth Bank Bailout.

Why Silver Is As Good As Gold In A Monetary Collapse

We are at the edge of a major economic crisis. Our monetary system is the underlying cause of this major crisis. The massive debt bubble created by our monetary system is about to burst. The demonetization of gold and silver has over the years diverted value from these metals to all paper assets (such as bonds) linked to the debt-based monetary system.

The process of the devaluation of gold and silver, started by the demonetization of gold and silver, is about to reverse at a greater speed than ever before. This is similar to what happened during the late 70s (see my previous article), when the gold and silver price increased significantly. However, what happened in the 70’s was just a prelude to this coming rally. The 70’s was the end of a cycle, this is likely the end of a major cycle; an end of an era of the debt-based monetary system (dishonest money).

This era of dishonest money has filled the economic world with many promises that will never be fulfilled. There will be a massive flight out of paper promises into the ideal safe haven assets that would offer protection.

The type of assets that people will flee to depends on the extent to which the assets offer protection against the specific crisis. For example, if people are extremely thirsty, then most would likely go for water instead of milk or soft drinks. They would therefore rank water higher than soft drinks or milk. The reason that they would go for water is due to its superior properties for countering the thirst crisis.

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via Why Silver Is As Good As Gold In A Monetary Collapse – Seeking Alpha.

Fed pledges low rates till kingdom come! What it means …

Last week, I discussed how the European Central Bank has lost its marbles, launching its own version of quantitative easing. I dubbed it “QE-E.”

I also said that QE accomplishes almost nothing for the “real” economy, even if it juices asset markets. And sure enough, we got more proof of that this week (details to follow!).

Well, this week it was the Federal Reserve’s turn at the podium and what happened? Policymakers didn’t launch an official QE3 program. But they did promise to keep short-term interest rates low through late 2014 … up from a previous pledge of 2013.

Not only that, the Fed also said it would continue with its “Operation Twist” policy of selling shorter-term Treasuries and buying longer-term ones. The goal? Hold down long-term interest rates.

Noted bond fund manager Bill Gross of Pimco dubbed it “QE2.5.” All I could do was shake my head!

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via Fed pledges low rates till kingdom come! What it means … — Money and Markets.

World Bank: Grim Prospects for 2012

The World Bank released its Global Economic Prospects (GEP) 2012 in Beijing on January 18, announcing that the global economic situation is not optimistic. Developing countries should prepare for further downside risks, as eurozone debt problems and weakening growth in several large emerging economies are dimming global growth prospects, the report said.

The bank has lowered its growth forecast for 2012 to 5.4 percent for developing countries and 1.4 percent for high-income countries (-0.3 percent for the eurozone), down from its June estimates of 6.2 and 2.7 percent (1.8 percent for the eurozone), respectively. Global growth is now projected at 2.5 and 3.1 percent for 2012 and 2013, respectively.

Slower growth is already visible in weakening global trade and commodity prices. Global exports of goods and services expanded an estimated 6.6 percent in 2011 (down from 12.4 percent in 2010), and are projected to rise by only 4.7 percent in 2012. Meanwhile, global prices of energy, metals and minerals, and agricultural products are down 10, 25 and 19 percent respectively since peaks in early 2011. Declining commodity prices have contributed to an easing of headline inflation in most developing countries. Although international food prices eased in recent months, down 14 percent from their peak in February 2011, food security for the poorest, including in the Horn of Africa, remains a central concern.

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via World Bank: Grim Prospects for 2012 — Beijing Review.

Fed to Maintain Rates Near Zero Through Late 2014

WASHINGTON — The Federal Reserve, declaring that the economy would need help for years to come, said Wednesday it would extend by 18 months the period that it plans to hold down interest rates in an effort to spur growth.

The Fed said that it now planned to keep short-term interest rates near zero until late 2014, continuing the transformation of a policy that began as shock therapy in the winter of 2008 into a six-year campaign to increase spending by rewarding borrowers and punishing savers.

The economy expanded “moderately” in recent weeks, the Fed said in a statement released after a two-day meeting of its policy-making committee, but jobs were still scarce, the housing sector remained deeply depressed and Europe’s flirtation with crisis could undermine the nascent domestic recovery.

The Fed forecast growth of up to 2.7 percent this year, up to 3.2 percent next year and up to 4 percent in 2014, but at the end of that period, the central bank projected that the recovery would still be incomplete. Workers would still be looking for jobs, and businesses would still be looking for customers.

“What did we learn today? Things are bad, and they’re not improving at the rate that they want them to improve,” said Kevin Logan, chief United States economist at HSBC. “That’s what they concluded — ‘We’ve eased policy a lot, but we haven’t eased it enough.’ ”

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via Fed to Maintain Rates Near Zero Through Late 2014 – NYTimes.com.

Doug Casey on the Collapse of the Euro and the EU

L: So Doug, a lot of readers are concerned about what’s going on in Europe. Is this the beginning of the proverbial “it?” Or can the Eurozone be saved?

Doug: In brief, the answers are “yes,” then “no” – and a “good riddance” to both the Eurozone and the euro. But most people think the old order should be maintained at almost any cost. That would include George Soros, who recently penned an article called Does the Euro Have a Future?

Now, I don’t normally look to Soros for economic commentary, despite the fact that he’s one of the shrewdest and most successful speculators in the world. He does, however, represent the way the Davos people, Eurocrats, and the ruling classes in general think. But just because he’s made a lot of money doesn’t make him an expert in economics, any more than financial success is proof that Ted Turner, Bill Gates or Warren Buffet know anything about economics. They’re all idiot savants, a bit like Dustin Hoffman’s character in Rain Man. But that’s another subject.

Soros writes: “The political will to create a common European treasury was absent in the first place, and since the time the euro was created the political cohesion of the European Union has greatly deteriorated.” He’s absolutely right about that and goes on to say that to create a common European treasury, the EU would have to have the power to tax. So, he’s saying that the euro should be preserved, and that to do that, it should be backed by wealth extracted by force from the average person in Europe.

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via Doug Casey on the Collapse of the Euro and the EU – Casey Research.