Argentina: Central Bank to be Barred from Financing Government

Good news! Bravo President Milei!

(1986) Central Bank to be Barred from Financing Government | World Business Watch - YouTube

Taiwan Passes Crucial Crypto Law With Licensing Rules, Stablecoin Framework

Good news!

"Taiwan’s Legislative Yuan approved the Virtual Asset Service Act in its third reading on Tuesday, the island’s first comprehensive framework for the crypto sector. Lawmakers sent the bill to President Lai Ching-te, who is expected to sign it into law within ten days.

The act establishes a licensing regime for all virtual asset service providers in Taiwan and hands broad oversight to the Financial Supervisory Commission (FSC). Under the law, crypto businesses must secure FSC approval before operating in Taiwan. The framework covers seven categories of providers, including exchanges, trading platforms, transfer firms, custodians, underwriters and lending services. ..."

Taiwan Passes Crucial Crypto Law With Licensing Rules, Stablecoin Framework "Taiwan passed its first comprehensive crypto law, creating a licensing regime for virtual asset firms, establishing stablecoin rules, and imposing penalties of up to seven years in prison for unlicensed operations, as the island moves to formalize and expand its digital asset industry."

China cashless

Apparently, most daily transactions are paid for by consumers with their smartphones in China by scanning the seller's code.

I have very rarely seen any Chinese individuals paying with cash for products or services.

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!

Why is the Ruble Crashing?

Recommendable! Since the lethargic and apathetic Russian Slavs (citizens) are unable or unwilling to oust the megalomaniac and war criminal Putin the Terrible, maybe deteriorating economic conditions and war spending will do the trick!

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

Mali, Niger, and Burkina Faso to launch common currency after ECOWAS exit

A very interesting development and potentially an economic booster if done right!

Dollarization in Latin America. Will Argentina follow?

Recommendable! Food for thought!

Will Argentina adopt dollarization? "... on August 13, when Javier Milei, the only pro‐​dollarization candidate taking part in the primary elections, won a surprise victory ..."

Seven Myths about Dollarization in Latin America | Cato at Liberty Blog

I cannot help it, but the dude looks a little weird, but looks can be deceiving. Maybe he needs a haircut ...

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.

The Fed balance sheet Is In the Red. Here's Why

Very recommendable! For at least 15 years or so Western central banks (incl. the Fed) inflated their balance sheets to buy e.g. government bonds and they maintained ultra low interest rates over that period. Both have been reckless and irresponsible!
Cheap combined with too much money often are a major cause of price inflation! Essentially all economists know that, but few have voiced their criticism!

The enormous economic distortions caused by ultra low Western central bank interest rates since about 2008

 The considerable distortions of cheap money have been as follows:

1. Overinvestment in e.g. residential and commercial real estate, risky financial assets (e.g. digital currencies), art works, startups etc., company stocks (in particular technology)
2. The usual allocation of household savings changed away from interest bearing bank accounts and government bonds
3. Governments increased spending for various reasons (e.g. never let a welcome crisis go to waste), have run more budget deficits, and accumulated more government debt than otherwise 
4. No surprise we are now experiencing a severe price inflation 

Worst of all, economists did too little to prevent this development despite better knowledge and historical evidence! Au contraire, too many economists actually aided and abetted this development!

U.S. price inflation caused by reckless Federal Reserve

The Federal Reserve has purchased government debt by the trillions since 2008 thereby increasing money supply and expanded the balance sheet 16 times over the level before 2008.

Many economists knew or must have known that this can not go on and it will not end well! Especially not when other external shocks hit the U.S. economy (China Covid-19 lockdown, Russian war of aggression against the Ukraine etc.)

Between 2006 and 2018, the Fed had two awful Chairmen, i.e. Ben Bernanke and Janet Yellen! I have blogged about them several times.

P.S. It is very peculiar the Fed does not provide a time series going back further in time than end of 2002.

Europe’s Top Central Banks Take Divergent Tracks as They Confront Inflation

Finally and several years too late Western central banks are reversing the reckless and irresponsible extremely loose monetary policy and extremely low interest rates since 2009! Public and private debt accumulation became too cheap since 2009.

Cheap money can lead to binge buying!

The advantages of Brexit!

"Europe’s foremost central banks took diverging policy paths a day after the Federal Reserve set the stage for rate rises in 2022, differing approaches that underscore the challenges for policy makers as they balance surging inflation and renewed risks to growth from the fast-spreading Omicron variant of the coronavirus.

The Bank of England became the first of the world’s major central banks to raise its benchmark interest rate since the pandemic began, while the European Central Bank said it would phase out an emergency bond-buying program while ramping up other stimulus measures to keep the 19-nation eurozone’s recovery on track. ..."

Europe’s Top Central Banks Take Divergent Tracks as They Confront Inflation - WSJ After Fed signal of future rate rises, Bank of England raises benchmark rate and ECB says increase in 2022 is very unlikely

Since 2008, Monetary Policy Has Cost American Savers about $4 Trillion

For over a decade monetary policy in Western countries has been irresponsible and reckless with extremely low interest rates. Government debt has grown tremendously. It may have created real estate bubbles etc.

In 2021, we witness price inflation not seen since 30 years ago or so!

"... The Fed has been delivering negative real returns on savings for more than a decade. ..."

Since 2008, Monetary Policy Has Cost American Savers about $4 Trillion | Mises Wire

Höhere Zinsen: Im Unterschied zur EZB nehmen die Zentraleuropäer die Inflation ernst

Good news! Viele Jahre lang haben westliche Zentralbanken eine unverantwortliche extreme Niedrigstzinspolitik betrieben! So wurde die enorme Zunahme der Staatsschulden finanziert! Langfristige Geldanleger wurden verprellt! Immobilienblasen wurden angetrieben u.v.m.

Inflation und höhere Zinsen in Zentraleuropa Die Notenbanken Polens, Ungarns und Tschechiens haben die Zinsen erhöht, teilweise schon mehrmals. Eindringlich warnen ihre Vertreter vor der Inflation, die sich nicht bloss auf die höheren Energiepreise zurückführen lasse.

In zahlreichen internationalen Metropolen steigt die Gefahr einer Immobilienblase

Bravo Neue Züricher Zeitung! Die viel zu lockere Geldpolitik seit der Finanzkrise von 2008 mit ständigem quantitative easing (Geld drucken) und extrem niedrigen Zinsen gebiert unangenehme Früchte!

Dann wäre da noch China's Evergrande zu erwähnen!

"Die lockere Geldpolitik der Notenbanken heizt seit Jahren die Preise von Realwerten wie Aktien und Immobilien an. Wenig überraschend wird immer wieder die Frage aufgeworfen, ob sich hier nicht Blasen bilden, die früher oder später platzen werden. ..."

"Eine von der UBS veröffentlichte Studie [leider konnte ich die Studie im Internet nicht finden] zeigt, dass es sich bei der Verteuerung von Eigenheimpreisen um ein globales Phänomen handelt. Am stärksten ausgeprägt sind die Risiken einer Blase laut der Studie in Frankfurt, Toronto, Hongkong, München und Zürich ..."

Eine Immobilienblase droht in immer mehr Städten (behind paywall) Trotz der Corona-Pandemie hat sich der Preisanstieg für Wohneigentum vielerorts beschleunigt. Und erneut führt eine deutsche Stadt die Liste der am stärksten gefährdeten Zentren an.

Nach Urteil des Bundesverfassungsgerichts: Rekordkäufe der EZB

Seit mindestens 2007/8 engagiert sich die EZB in einer unverantwortlichen und rücksichtslosen Geldpolitik der Niedrigstzinsen und Anleihekäufe!

Nach dem spinnerten Dragi nun die spinnerte Lagarde! So viel Unverstand, kaum zum aushalten! Die Politikerkaste in Deutschland und Europa ist viel zu abgehalftert!

Hier werden massiv Staatsaufgaben/-ausgaben, ohne die Zustimmung der Bürger durch Wahlen, finanziert! Sehr fragwürdig!

Merkel muss weg! Höchste Zeit!

Nach Urteil des Bundesverfassungsgerichts: Rekordkäufe der EZB

The Federal Reserve Is Changing What It Means to Be a Central Bank

This is cause for grave concern! Since at least Alan Greenspan, the Fed has pursued this reckless and irresponsible low interest rate policy. Since the financial crisis of 2008, the Fed has expanded its balance sheet by several multiples to now $6.5 trillion dollars total assets up from under $0.9 trillion in 2007.

The Federal Reserve Is Changing What It Means to Be a Central Bank - WSJ: By lending widely to businesses, states and cities, the Fed is breaking taboos about who gets money to prop up a frozen U.S. economy, risking a political backlash down the line.

Reckless Monetary Policy Dooms Western Democracies

Posted: 6/17/2016

I have blogged here numerous times about the irresponsible and reckless monetary policies pursued by the likes of Alan Greenspan and the dim witted economic professor and successor Ben Bernanke. The current head of the U.S. Federal Reserve System, another very pale economic professor, Janet Yellen is not much better. Mario Draghi (or Dracula) or his predecessor at the European Central Bank have not been better either. By the way, Ben Bernanke and Mario Draghi were both students of Stanley Fischer.

To destroy western civilization and individual freedom politicians start by debauching the currency. This basic wisdom has been known hundreds of years before Maynard Keynes or Lenin.

If awful monetary policies are pursued in conjunction with irresponsible fiscal policies (more deficits and more government debt and more government regulation instead of lower taxes and more economic freedom) as is the case in the first decade of the 21st century, then our elected politicians have created the perfect storm.

Why the considerable rise of populism in recent times in Europe or the USA?

Why are Western democracies in crisis as I blogged here before?