Gold Hits Record High: Why Rising Prices Signal Global Risk with Palki Sharma

Why the heck are world's central banks buying so much gold? Palki did not answer this question.

Has the Fed Fostered Fiscal Irresponsibility? Very likely, a purely rhetorical question!

Bad news, if confirmed! Clearly the Federal Reserve acted irresponsible accumulating so much federal debt since about the beginning of the millenium!

How much has the Fed contributed to price inflation in the US in recent years given its outlandish buying of government debt?

I selected these two instructive charts below, because they seem to illustrate what is wrong with federal government deficits and debt in the US. Unfortunately, the history goes only back to 1990, too short for my taste!

Indeed, it appears that the Federal Reserve has recklessly acquired/financed too much federal government debt with the beginning of the new millenium. Very bad, requires immediate correction by President Trump!

The analysis argues for a "fiscal policy that is not associated with automatic stabilizers (i.e., programs that automatically adjust tax or spending programs without changes in law or regulation to offset economic conditions)". This is certainly one of the accepted solutions presented in  textbooks of macroeconomics. Another technical term used in this analysis is "quantitative easing" in response to macroeconomic shocks by the central bank.

Caveat: I did not have the time to read this economic analysis.

Has the Fed Fostered Fiscal Irresponsibility? - EPIC for America "Evidence suggests that deficits are higher after economic shocks when the Federal Reserve buys government debt."

Unfortunately, the usefulness of this second chart is somewhat diminished, because it shows the percentage relative to public debt overall, but public debt holding increased dramatically as the first chart above shows. But make no mistake, a Fed holding of over 15% is way too much!

The Complex Tech Behind Counterfeit-Resistant Cash

Recommendable, but so 20th century! Cash is almost obsolete in the 21st century! How do we safeguard digital currency and payments. These, days I use my credit card exclusively to pay for almost all my shopping no matter whether online or in brick and mortar stores etc..

Notice also how North Korea is involved in counterfeiting foreign currencies with emphasis on the U.S. currency.

Maysaa Sabrine becomes first woman to lead Syria’s central bank

Good news! This could be another sign that the current political regime of Syria is moderate.

Not even the socialist Baath party under dictator Hafez al-Assad managed to do that!

Maysaa Sabrine becomes first woman to lead Syria’s central bank | Syria's War News | Al Jazeera "Sabrine is the first female governor of the Syrian central bank in its more than 70-year history."

Swiss Central Bank Delivers Third Straight Rate Cut by 25 basis points to 1%. Really!

Will a new era of too cheap money begin again fueling the next financial crisis? Most likely other central banks will follow like lemmings!

A 1% interest rate on money is ridiculous! The real interest rate again is is zero and/or negative!!!!

How many more times will the lessons of economic history and economics be ignored! As an economist myself, I can only despair!

Even the otherwise level headed Swiss people can not resist foolishness in this respect!

Swiss Central Bank Delivers Third Straight Rate Cut - WSJ "The Swiss National Bank lowered its key rate to 1% from 1.25%, having cut borrowing costs by the same amount in June"

Reserve Bank of India Shifts 100 Tonnes of Gold from London to India with Palki Sharma

Good news! India, a rising superpower! Palki forgot to mention whether these were the entire gold reserves held by the RBI in London.

Bank of Japan Poised to End Negative Interests After 8 Years with Palki Sharma

Recommendable! 8 years of negative interest rate, another definition of insanity!

Bank of Japan to end yield curve control and ETF purchases Tuesday

Good news! Get central banks out of the way to manipulate free markets!

"The Bank of Japan is poised to decide to end its yield curve control and purchases of risk assets as well as call time on negative interest rates Tuesday, Nikkei has learned, making the biggest change in Japanese monetary policy in nearly two decades."

BOJ to end yield curve control and ETF purchases Tuesday - Nikkei Asia Negative interest rates also ending in Japanese monetary policy shake-up

Ghana’s President Akufo Addo demands Africa's foreign exchange reserves return from abroad

While many African countries were more politically more volatile it probably mades some sense to keep and hold state owned foreign exchange reserves in major Western countries. But today?

Swiss National Bank Rules Out profit distribution After Losing $3.5 Billion Last Year

No profit distribution for the Swiss government! This is the second year in a row of losses!

If I am not totally mistaken, the Swiss and the German central bank in the past several decades used to be some of the very few Western central banks that fairly consistently generated, sometimes significant, annual profits. 

Is the long time sterling reputation of Switzerland in global financial markets is a bit at stake!

Swiss National Bank Rules Out Payouts After Losing $3.5 Billion Last Year - WSJ

Bank of Israel cuts interest rate for the first time since early 2020. What will other central banks do next?

Will this move trigger a downward trend of interest rates in other countries?

"... The Bank of Israel Monetary Committee ... announced this afternoon that it is cutting the interest rate by 0.25% to 4.5%. ..."

Bank of Israel cuts interest rate - Globes This is the first interest rate cut in Israel since March 2020, as the Bank of Israel Monetary Committee seeks to support the war-hit economy.

China cuts banks’ reserve requirement ratio for second time this year, ahead of August data release

Maybe the economy of China is indeed in trouble!

"Move by People’s Bank of China comes as world’s second-largest economy has been struggling to bounce back this year

Reserve requirement ratio will be cut by 0.25 percentage points on Friday ..."

China cuts banks’ reserve requirement ratio for second time this year, ahead of August data release | South China Morning Post

Central banks repatriating gold in wake of sanctions against Russia, study finds

Not sure what the import of this is, but it certainly seems to be unusual! 

Alert: I am not a gold bug! 😊

"An increasing number of countries are repatriating gold reserves as protection against the sort of sanctions imposed by the West on Russia, according to an Invesco survey of central bank and sovereign wealth funds published on Monday. ...
Over 85% of the 85 sovereign wealth funds and 57 central banks that took part in the annual Invesco Global Sovereign Asset Management Study ..."

Countries repatriating gold in wake of sanctions against Russia, study finds | Reuters

Invesco Global Sovereign Asset Management Study 2023

Credits: Zentralbanken ziehen Goldreserven aus Ausland ab

 

Turkey raises interest rate to 15% from 8.5% to fight inflation

Bravo! Impressive! Women can be tough and they can get down to business!

"Two weeks after President Recep Tayyip Erdogan appointed former Goldman Sachs banker Hafize Gaye Erkan as governor, Turkey's central bank delivered a 6.5-point interest rate hike on Thursday, lifting the benchmark rate to 15%.

The first hike since March 2021 was lower than expected for a country facing an inflation rate of 39.6%. The lira tumbled 3% to a new depth of 24.3 to the dollar shortly after the central bank move was announced. ..."

Turkey raises interest rate to 15% from 8.5% to fight inflation - Nikkei Asia Hafize Gaye Erkan, first woman to head central bank, begins 'gradual' tightening

Hafize Gaye Erkan, Turkey's new central bank governor, receives flowers from her predecessor, Sahap Kavcioglu, during a handover ceremony on June 9 in Ankara

Singapore punishes Citi, DBS, OCBC and others over Wirecard scandal

Bravo! Singapore is doing much better than Germany, where the Wirecard Scandal originated! "Questions have been raised about regulatory failure on the part of Federal Financial Supervisory Authority (BaFin), Germany's top financial watchdog, and possible malpractice of Wirecard's long time auditor Ernst & Young." Even the now chancellor of Germany Olaf Scholz is implicated as he was the federal finance minister at the time!

"Some of the largest financial institutions operating in Singapore are being punished for lapses associated with the fall of German payment services group Wirecard, after authorities found during a probe inadequate controls for money laundering.

 

The Monetary Authority of Singapore, the city-state's central bank and financial regulator, said on Wednesday that it will impose penalties amounting to 3.8 million Singaporean dollars ($2.8 million) on Citibank, DBS Bank, OCBC Singapore and Swiss Life Singapore."

Singapore punishes Citi, DBS, OCBC over Wirecard scandal - Nikkei Asia

MAS Penalises 3 Banks and an Insurer for Breaches of Anti-Money Laundering Requirements

China trims key lending rate as new data shows flagging recovery

Is this the first major global economy to reverse the rise in central bank interest rates? But a very special interest rate and not by much! What kind of signal might this be?

"China cut a key lending rate on Thursday to lower borrowing costs, as property sales and industrial production weaken while youth joblessness deepens.

The People's Bank of China announced it is trimming the rate on 237 billion yuan ($33 billion) worth of one-year, medium-term lending facility loans to banks by 10 basis points to 2.65%, from 2.75%."

China trims key lending rate as new data shows flagging recovery - Nikkei Asia Property investment down 7.2% in first five months, youth joblessness rises

Much exaggerated fears of the Swedish E-Krona

The author makes Sweden look like a totalitarian surveillance state monitoring each citizen's activities 24 hours! He is quite shrill to compare Sweden and the former Soviet Union.

Let's wait and see what the Swedish people come up with concerning the introduction of a digital currency!

"... Sweden is the nightmare example of a state destroying financial privacy, winning the war on cash and having control of all financial transactions. Sweden has almost completely abolished anonymous cash transactions and, as a result, its regulators have control of all financial assets. Since at least 1971, when I moved to Sweden, bank assets have to be reported annually to the tax authorities, which can also demand documentation for all bank transactions. Since 2020, the Swedish police have the right by law to acquire access to locked iphones and computers by use of force.

In such a privacy-averse environment, one should consider Bitcoin as a better alternative. ...
Sweden is now moving toward a central-bank-issued, digital, national currency. Since 2017, the Swedish central bank, Sveriges Riksbank ... has been promoting the e-krona as a complement to, or replacement of, physical cash. Proponents of e-krona argue that it prevents money laundering and criminal activities, speeds up the financial system and finetunes financial and monetary activities. Critics argue that it is the ultimate tool for financial censorship, control and surveillance. The development of e-krona is happening in cooperation with other central banks and the Bank For International Settlements (BIS). ...
The e-krona is centralization and central planning as it existed in the Soviet Union's banking system. ..."

Sweden CBDC For Financial Surveillance - Bitcoin Magazine - Bitcoin News, Articles and Expert Insights As they increase financial surveillance and control, Swedish authorities are inadvertently making the case for Bitcoin as an alternative.

De-Dollarisation: Argentina to Pay China in Yuan With Palki Sharma

Recommendable! The Chinese currency is on the rise! The Indian currency is catching up!

Swiss National Bank posts record $143 billion loss in 2022

This is huge! I almost choked when I saw these news today!

Compare that to the nominal GDP of Switzerland, which was about $801 billion in 2021!

Usually, the SNB distributes a sizable annual profit to the government! In 2020 and 2021, the SNB had profits of $26b and $21b respectively.

"The Swiss National Bank posted an annual loss of 132 billion Swiss francs ($143 billion) in 2022, it said on Monday, the biggest in its 115-year history as falling stock and fixed-income markets hit the value of its share and bond portfolio. ..."

Swiss National Bank posts record $143 billion loss in 2022 | Reuters

Basiszinssatz der Bundesbank nach zehn Jahren erstmals wieder positiv. Der Wahnsinn des billigen Geldes endlich zu Ende!

Dieser lang anhaltende Wahnsinn des billigen Geldes passt auch zur Bananenrepublik D.! Nach dem Motto Geld kostet ja nichts oder?

Nicht zuletzt ist das auch einer der Antreiber der jetzigen Preisinflation!

Negative Zinsen über 10 Jahre lang? Absolut hirnrissig! Warum Ökonomen in den westlichen Ländern so versagt haben und nicht stärker Kritik geübt haben an dieser unverantwortlichen Negativzinspolitik der westlichen Zentralbanken ist extrem verwunderlich!!!

Die Sparer wurden beraubt! Immobilienbooms forciert usw.

"... Die Bundesbank berechnet den Basiszinssatz nach einem gesetzlich festgelegten Schlüssel jeweils zum 1. Januar und zum 1. Juli eines jeden Jahres. Seit 2013 war der Wert negativ und hatte seit Juli 2016 -0,88 Prozent betragen. ..."

Basiszinssatz der Bundesbank nach zehn Jahren wieder positiv Verzugszinsen vor Gericht werden deutlich teurer. Durch die Zinserhöhungen der Europäischen Zentralbank steigt auch der Basiszinssatz der Deutschen Bundesbank nach jahrelangem Minuszins erheblich.