WindRock - Displaying items by tag: Money and Inflation

End the Fed: an Interview with Dr. Ron Paul

Published in Podcasts
Friday, 28 February 2020

Most mainstream financial pundits view the Federal Reserve as a bastion of economic wisdom and stalwart protector against inflation, recessions, and economic turmoil.  Dr. Paul disagrees. 

His unique perspective on the Federal Reserve was developed from his tenure on the House Financial Services Committee and his long-term adherence to the Austrian school of economics.  Rather than viewing the Federal Reserve as the solution, he sees it as the cause of many economic problems.

Dr. Paul discusses:

  • Which Federal Reserve chairpersons have been the best – and worst;
  • Why he sponsored bill HR 1207 to audit the Federal Reserve (and what he expected to find);
  • How closely central banks coordinate financial and monetary actions;
  • Why Chairman Powell drastically changed monetary policy over the last 18 months; and
  • What America’s best, most realistic hope is for exiting our debt burden and avoiding economic calamity.

February, 2020




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SOMA for the Masses

Published in Blog
Friday, 07 February 2020
February, 2020

The world’s stable now.  People are happy; they get what they want, and they never want what they can’t get.  They’re well off; they’re safe; they’re never ill; they’re not afraid of death; they’re blissfully ignorant . . . they’re so conditioned that they practically can’t help behaving as they ought to behave.  And if anything should go wrong, there’s soma.

- the Controller in Brave New World by Aldous Huxley, 1932.

 

In Huxley’s story, soma is a government-provided drug which helps people escape the real world by artificially enhancing their joy, arousal, and overall sense of well-being.  Coincidentally, in our financial and economic story, the Federal Reserve (“Fed”) increases their SOMA (System Open Market Account) by buying assets with freshly printed money for the same purpose.  So, while Huxley’s future citizens drank soma or ate it in infused strawberry ice cream, today’s financial markets consume the Fed’s monetary infusions to the same effect.  

Quantitative easing waned starting in 2017 as the Fed actively sold bond holdings (for which they receive money which then leaves economic circulation).  As detailed in the chart below, this situation reversed in late 2019.

Ostensibly, the reason was to “calm money markets” last September when they experienced . . .

. . . funding shortages Monday and Tuesday [September 16th and 17th], driving the rate on one-day loans backed by Treasury bonds – known as repurchase agreements, or repos – as high as 10%, about four times greater than last week’s levels.(1)

The Fed’s interventions in the repo market have continued unabated.  On February 4th alone, Fed purchases totaled $94.45 billion.  Since repos are reversed in a fairly short time-frame, the impact of any intervention must be netted against such reversals.  But even after such considerations, the overall level of outstanding repos owned by the Fed stands at $187.2 billion.(2)  All of this comports with the Fed’s operating policy as detailed in a December 12th statement.(3)

But could there be another reason?  The fact that these repo operations serve as de facto quantitative easing without the stigma of citing economic concerns cannot be dismissed as a convenient coincidence.  Since December 2018, when the stock market decreased dramatically and Treasury Secretary Mnuchin startled Wall Street with his “ample credit” statement at Christmastime, the Fed has been a bit scared and highly reactive.(4)  The repo market simply provides them public relations cover to continue their post-2008 monetary mischief as measured in the SOMA.  The financial markets are truly living in a Brave New World.

 

 

1)  McCormick, Liz and Harris, Alex.  “Fed’s First-in-a-Decade Intervention Will Be Repeated Wednesday” Bloomberg.  17 September 2019. 
2)  Derby, Michael.  “New Fed Repos Total $94.45 Billion, Total Temporary Money Ticks Up To $187.2 Billion” The Wall Street Journal.  4 February 2020.
3)  Statement Regarding Repurchase Operations.  Federal Reserve Bank of New York.  12 December 2019.
4) Paletta, Damian and Dawsey, Josh.  “Treasury secretary startles Wall Street with unusual pre-Christmas calls to top bank CEOs”  The Washington Post.  23 December 2019.

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Winter 2020 Financial Market Update

Published in Articles
Friday, 07 February 2020

The Future of the U.S. Dollar

Published in Articles
Wednesday, 03 April 2019

The Future of the U.S. Dollar

Published in Podcasts
Wednesday, 03 April 2019
Mark Whitmore, founder and CEO of Whitmore Capital, joins WindRock to discuss currency investing.  Whitmore Capital specializes in trading currencies relative to their intrinsic value using a proprietary, long-term strategic model.

Mr. Whitmore discusses such topics as: 

  • Why should investors consider currencies as a viable asset class?
  • How currencies performed during and since the last financial crisis?
  • What makes a currency worth more than others?
  • Which currencies may be under or overvalued today?
  • What may happen to the U.S. dollar with the next financial crisis and/or worldwide recession?

 March, 2019

 


 

This discussion represents the contributor’s (Mark Whitmore's) opinions as of the date of the publication. These opinions are subject to change at any time based on market and other conditions. It is intended for general information only and should not be considered investment advice. References to specific securities and issuers are for illustrative purposes only and should not be interpreted as recommendations to purchase or sell such securities. Currency investments are speculative, involve risk and utilize leverage, which can amplify losses as well as gains. Such investments are not suitable for all investors.



The Cryptocurrency Report-Autumn 2018

Published in Articles
Thursday, 18 October 2018

The Cryptocurrency Report-January 2018

Published in Articles
Thursday, 08 February 2018

Cryptocurrency Roundtable

Published in Articles
Thursday, 18 January 2018
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