Perspectives on the global economic changes

Austin · Post by **Austin** » 14 Dec 2014 14:46

Nice Watch

Global Change Keynote | Peter Schiff

Vamsee · Post by **Vamsee** » 16 Dec 2014 03:01

Russia hiked interest rates from 10.5% to 17%!

650 basis points in one shot.

Suraj · Post by **Suraj** » 16 Dec 2014 05:47

Their primary issue is inflation, so this is a blunt Volcker tool to deal with it.

Neshant · Post by **Neshant** » 16 Dec 2014 13:46

One of the biggest acts of crony capitalism just took place.
Banking goons have got their cronies in power to put taxpayers back on the hook for derivative bets banks are making.
Derivatives are highly leveraged bets and banks want the FDIC aka taxpayer to guarantee their gambling pay out.
What a scam!
This means peoples deposits are really not protected by anything since what little there is in FDIC will be used to pay off the derivative bets of banking crooks in a crash scenario. That aside, its pretty absurd that FDIC has only 56 billion to back 6 trillion in deposits and now 303 trillion in derivatives.
Make sure you keep a good amount of physical cash under the mattress literally. When this crash unfolds, it will be a sight to behold.

I've said it before and I'll say it again. Banking is a scam not an industry. It produces nothing of value. Since it produces nothing of value, it has to figure out ways of stealing from those who do produce.

Presenting The $303 Trillion In Derivatives That US Taxpayers Are Now On The Hook For
http://www.zerohedge.com/news/2014-12-1 ... e-now-hook

Theo_Fidel · Post by **Theo_Fidel** » 16 Dec 2014 18:59

^^^
Yes! I agree it is a horrible decision. Bankers should not be betting with OPM.

Neshant · Post by **Neshant** » 16 Dec 2014 21:28

http://www.c-span.org/video/?c4518885/s ... nding-bill

Austin · Post by **Austin** » 17 Dec 2014 10:31

Neshant wrote:http://www.c-span.org/video/?c4518885/s ... nding-bill

So they actually passed the law to use Tax Payers Money in High Risk Derivatives as I understand the budget is signed ?

Quite Scarry to even think about it .....one day the banks would even gamble with people organs on high risk derivative market

Neshant · Post by **Neshant** » 17 Dec 2014 13:08

They plan to use depositors money to gamble in derivative markets and have taxpayers (FDIC) assume the counter-party risk of default/non-payment.

Its a perfect scam to setup shell derivative counter-parties that can be folded while the taxpayer is tapped for the "loss" on the derivate trade.

Its hard to believe the depths to which crony capitalism and banking goons have taken over the system.

Frightening really.

Withdraw a good sum of USD from your bank accounts and keep it under the mattress so to speak as a protection. Enough to last you a year or longer.

nandakumar · Post by **nandakumar** » 17 Dec 2014 14:42

Neshant wrote:One of the biggest acts of crony capitalism just took place.
Banking goons have got their cronies in power to put taxpayers back on the hook for derivative bets banks are making.
Derivatives are highly leveraged bets and banks want the FDIC aka taxpayer to guarantee their gambling pay out.
What a scam!
This means peoples deposits are really not protected by anything since what little there is in FDIC will be used to pay off the derivative bets of banking crooks in a crash scenario. That aside, its pretty absurd that FDIC has only 56 billion to back 6 trillion in deposits and now 303 trillion in derivatives.
Make sure you keep a good amount of physical cash under the mattress literally. When this crash unfolds, it will be a sight to behold.

I've said it before and I'll say it again. Banking is a scam not an industry. It produces nothing of value. Since it produces nothing of value, it has to figure out ways of stealing from those who do produce.

Presenting The $303 Trillion In Derivatives That US Taxpayers Are Now On The Hook For
http://www.zerohedge.com/news/2014-12-1 ... e-now-hook

Correct me if I am wrong. The Dood-Frank Act only required that banks must, at a minimum, place 5 per cent of their investments in complex and extremely risky derivate assets into a subsidiary company. It is this clause that the latest spending bill did away with. In other words, the US taxpayer was already in the hook for 95 per cent of the complex and extremely risky derivative assets of big banks. Of course, the banks anyway had a leeway under the Dodd-Frank regime by claiming any derivative instrument as either non-complext or not extremely risky!

Austin · Post by **Austin** » 17 Dec 2014 15:56

Neshant wrote:They plan to use depositors money to gamble in derivative markets and have taxpayers (FDIC) assume the counter-party risk of default/non-payment.

Its a perfect scam to setup shell derivative counter-parties that can be folded while the taxpayer is tapped for the "loss" on the derivate trade.

Isnt that a form of QE for the bankers in non-conventional sense ?

Austin · Post by **Austin** » 17 Dec 2014 15:58

Russian economy must ‘adapt’ to new conditions, says Central Bank head

Despite Russia’s Central Bank stepping in to raise interest rates to 17 percent after a late-night emergency meeting, the ruble continued its freefall against the U.S. dollar and euro on Dec. 16, reaching a low of 100 rubles to the euro and surpassing 80 rubles to the dollar. Central Bank head Elvira Nabiullina says Russia will have to learn to ‘live in a new reality.’

Austin · Post by **Austin** » 18 Dec 2014 11:31

Financial Market Manipulation Is The New Trend: Can It Continue?

http://www.paulcraigroberts.org/2014/12 ... -continue/

Financial Market Manipulation Is The New Trend: Can It Continue?
Financial Imperialists Attack Russia

Paul Craig Roberts

A dangerous new trend is the successful manipulation of the financial markets by the Federal Reserve, other central banks, private banks, and the US Treasury. The Federal Reserve reduced real interest rates on US government debt obligations first to zero and then pushed real interest rates into negative territory. Today the government charges you for the privilege of purchasing its bonds.

People pay to park their money in Treasury debt obligations, because they do not trust the banks and they know that the government can print the money to pay off the bonds. Today Treasury bond investors pay a fee in order to guarantee that they will receive the nominal face value (minus the fee) of their investment in government debt instruments.

The fee is paid in a premium, which raises the cost of the debt instrument above its face value and is paid again in accepting a negative rate of return, as the interest rate is less than the inflation rate.

Think about this for a minute. Allegedly the US is experiencing economic recovery. Normally with rising economic activity interest rates rise as consumers and investors bid for credit. But not in this “recovery.”

Normally an economic recovery produces rising consumer spending, rising profits, and more investment. But what we experience is flat and declining consumer spending as jobs are offshored and retail stores close. Profits result from labor cost savings from employee layoffs.

The stock market is high because corporations are the biggest purchases of stock. Buying back their own stock supports or raises the share price, enabling executives and boards to sell their shares or cash in their options at a profitable price. The cash that Quantitative Easing has given to the mega-banks leaves ample room for speculating in stocks, thus pushing up the price despite the absence of fundamentals that would support a rising stock market.

In other words, in America today there are no free financial markets. The markets are rigged by the Federal Reserve’s Quantitative Easing, by gold price manipulation, by the Treasury’s Plunge Protection Team and Exchange Stabilization Fund, and by the big private banks.

Allegedly, QE is over, but it is not. The Fed intends to roll over the interest and principle from its bloated $4.5 trillion bond portfolio into purchases of more bonds, and the banks intend to fill in the gaps by using the $2.6 trillion in their cash on deposit with the Fed to purchase bonds. QE has morphed, not ended. The money the Fed paid the banks for bonds will now be used by the banks to support the bond price by purchasing bonds.

Normally when massive amounts of debt and money are created the currency collapses, but the dollar has been strengthening. The dollar gains strength from the
rigging of the gold price in the futures market. The Federal Reserve’s agents, the bullion banks, print paper futures contracts representing many tonnes of gold and dump them them into the market during periods of light or nonexistent trading. This drives down the gold price despite rising demand for the physical metal. This manipulation is done in order to counteract the effect of the expansion of money and debt on the dollar’s exchange value. A declining dollar price of gold makes the dollar look strong.

The dollar also gains the appearance of strength from debt monetization by the Bank of Japan and the European Central Bank. The Bank of Japan’s Quantitative Easing program is even larger than the Fed’s. Even Switzerland is rigging the price of the Swiss franc. Since all currencies are inflating, the dollar does not decline in exchange value.

As Japan is Washington’s vassal, it is conceivable that some of the money being printed by the Bank of Japan will be used to purchase US Treasuries, thus taking the place along with purchases by the large US banks of the Fed’s QE.

The large private US and UK banks are also manipulating markets hand over fist. Remember the scandal over the banks fixing the LIBOR rate (the London Interbank Borrowing Rate) and the opening gold price on the London exchange. Now the banks have been caught rigging currency markets with algorithms developed to manipulate foreign exchange markets.

When the banks get caught in felonies, they avoid prosecution by paying a fine. You try doing that.

The government even manipulates economic statistics in order to paint a rosy economic picture that sustains economic confidence. GDP growth is exaggerated by understating inflation. High unemployment is swept under the table by not counting discouraged workers as unemployed. We are told we are enjoying economic recovery and have an improving housing market. Yet the facts are that almost half of 25 year old Americans have been forced to return to live with their parents, and 30% of 30 year olds are back with their parents. Since 2006 the home ownership rate of 30 year old Americans has collapsed.
.
The repeal of the Glass-Steagall Act during the Clinton regime allowed the big banks to gamble with their depositors’ money. The Dodd-Frank Act tried to stop some of this by requiring the banks-turned-gambling-casinos to carry on their gambling in subsidiaries with no access to deposits in the depository institution. If the banks gamble with depositors money, the banks’ losses are covered by FDIC, and in the case of bank failure, bail-in provisions could give the banks access to depositors’ funds. With the banks still protected by being “too big to fail,” whether Dodd-Frank would succeed in protecting depositors when a subsidiary’s failure pulls down the entire bank is unclear.

The sharp practices in which banks engage today are risky. Why gamble with their own money if they can gamble with depositors’ money. The banks led by Citigroup have lobbied hard to overturn the provision in Dodd-Frank that puts depositors’ money out of their reach as backup for certain types of troubled financial instruments, with apparently only Senator Elizabeth Warren and a few others opposing them. Senator Warren is outgunned as Citigroup controls the US Treasury and the Federal Reserve.

The falling oil price has brought concern that oil derivatives are in jeopardy. Citigroup has a provision in the omnibus appropriations bill that shifts the liability for Citigroup’s credit default swaps to depositors and taxpayers. It was only six years ago that Citigroup was bailed out to the tune of a half trillion dollars. Already Citigroup is back for more while nothing whatsoever is done to bail the American people out of their hardships caused by Citigroup and the other financial gangsters.

What we are experiencing is not a repeat of the past. The ability or, rather, the audacity of the US government itself to manipulate the major financial markets is new. Can this new trend continue? The government is supposed to be the enforcer of laws against market manipulation but is itself manipulating the markets.

Governments and economists take their hats off to free markets. Yet, the markets are rigged, not free. How long can stocks stay up in a lackluster or declining economy? How long can bonds pay negative real interest rates when debt and money are rising. How long can bullion prices be manipulated down when the world’s demand for gold exceeds the annual production?

For as long as governments and banks can rig the markets.

The manipulations are dangerous. Manipulations blow a bigger bubble economy, and manipulations are now being used by Washington as an act of war by driving down the exchange value of the Russian ruble.

If every time the stock market tries to correct and adjust to the real economic situation, the plunge protection team or some government “stabilization” entity stops the correction by purchasing S&P futures, unrealistic values are perpetuated.

The price of gold is not determined in the physical market but in the futures market where contracts are settled in cash. If every time the demand for gold pushes up the price, the Federal Reserve or its bullion bank agents dump massive amounts of uncovered futures contracts in the futures market and drive down the price of gold, the result is to subsidize the gold purchases of Russia, China, and India. The artificially low gold price also artificially inflates the value of the US dollar.

The Federal Reserve’s manipulation of the bond market has driven bond prices so high that purchasers receive a zero or negative return on their investment. At the present time fear of the safety of bank deposits makes people willing to pay a fee in order to have the protection of the government’s ability to print money in order to redeem its bonds. A number of events could end the tolerance of zero or negative real interest rates. The Federal Reserve’s policy has the bond market positioned for collapse.

The US government, perhaps surprised at the ease at which all financial markets can be rigged, is now rigging, or permitting large hedge funds and perhaps George Soros, to drive down the exchange value of the Russian ruble by massive short-selling in the currency market. On December 15 the ruble was driven down 19%.

Just as there is no economic reason for the price of gold to decline in the futures market when the demand for physical gold is rising, there is no economic reason for the ruble to suddenly loose much of its exchange value. Unlike the US, which has a massive trade deficit, Russia has a trade surplus. Unlike the US economy, the Russian economy has not been offshored. Russia has just completed large energy and trade deals with China, Turkey, and India.

If economic forces were determining outcomes, it would be the dollar that is losing exchange value, not the ruble.

The illegal economic sanctions that Washington has decreed on Russia appear to be doing more harm to Europe and US energy companies than to Russia. The impact on
Russia of the American attack on the ruble is unclear, as the suppression of the ruble’s value is artificial.

There is a difference between economic factors causing foreign investors to withdraw their capital from a country, thereby causing the currency to lose value, and manipulation of a currency’s value by heavy short-selling in the currency market. The latter can cause the former also to occur. But the outcome for Russia can be positive.

No country dependent on foreign capital is sovereign. A country dependent on foreign capital, especially from enemies seeking to subvert the economy, is subject to destabilizing currency and economic swings. Russia should self-finance. If Russia needs foreign capital, Russia should turn to its ally China. China has a stake in Russia’s strength as part of China’s protection from US aggression, whether economic or military.

The American attack on the ruble is also teaching sovereign governments that are not US vassals the extreme cost of allowing their currencies to trade in currency markets dominated by the US. China should think twice before it allows full convertibility of its currency. Of course, the Chinese have a lot of dollar assets with which to defend their currency from attack, and the sale of the assets and use of the dollar proceeds to support the yuan could knock down the dollar’s exchange value and US bond prices and cause US interest rates and inflation to rise. Still, considering the gangster nature of financial markets in which the US is the heavy player, a country that permits free trading of its currency sets itself up for trouble.

The greatest harm that is being done to the Russian economy is not due to sanctions and the US attack on the ruble. The greatest harm is being done by Russia’s neoliberal economists.

Neoliberal economics is not merely incorrect. It is an ideology that fosters US economic imperialism. By following neoliberal prescriptions, Russian economists are helping Washington’s attack on the Russian economy.

Apparently, Putin has been sold, along with his internal enemies, the Atlanticist integrationists, on “free trade globalism.” Globalism destroys the sovereignty of every country except the world reserve currency country that controls the system.

As Michael Hudson has shown, neoliberal economics is “junk economics.” But it is also a tool of American financial imperialism, and this makes neoliberal Russian economists tools of American imperialism.

The remaining sovereign countries, which excludes all of Europe, are slowly learning that Western economic institutions are deceptive and that placing trust in them is a threat to national sovereignty.

Washington intends to subvert Russia and to turn Russia into a vassal state like Germany, France, Japan, Canada, Australia, the UK and Ukraine. If Russia is to survive, Putin must protect Russia from Western economic institutions and Western trained economists.

It is too risky for the US to take on Russia militarily. Instead, Washington is using its unique symbiotic relationship with Western financial institutions to attack an incautious Russia that foolishly opened herself to Western financial predation.

Note: The winter issue of Gerald Celente’s Trends Journal identifies financial market manipulation as a Top Trend for 2015.

Dr. Paul Craig Roberts was Assistant Secretary of the Treasury for Economic Policy and associate editor of the Wall Street Journal. He was columnist for Business Week, Scripps Howard News Service, and Creators Syndicate. He has had many university appointments. His internet columns have attracted a worldwide following. Roberts' latest books are The Failure of Laissez Faire Capitalism and Economic Dissolution of the West and How America Was Lost.

Neshant · Post by **Neshant** » 18 Dec 2014 13:05

Austin wrote:Russian economy must ‘adapt’ to new conditions, says Central Bank head
Despite Russia’s Central Bank stepping in to raise interest rates to 17 percent after a late-night emergency meeting, the ruble continued its freefall against the U.S. dollar and euro on Dec. 16, reaching a low of 100 rubles to the euro and surpassing 80 rubles to the dollar. Central Bank head Elvira Nabiullina says Russia will have to learn to ‘live in a new reality.’

I remember from back in the day when the Icelandic currency collapsed. One local guy had the good fortune of having kept his entire life savings in gold and was spared the carnage.

You can bet any Russian with his life's savings in gold would side step this mess as well.

Someday, the same situation will unfold for those vested in worthless paper currencies of western countries.

Austin · Post by **Austin** » 18 Dec 2014 14:28

Neshant wrote: I remember from back in the day when the Icelandic currency collapsed. One local guy had the good fortune of having kept his entire life savings in gold and was spared the carnage.

You can bet any Russian with his life's savings in gold would side step this mess as well.

Someday, the same situation will unfold for those vested in worthless paper currencies of western countries.

Actually in past 2 days the Rouble hit as high as 80 but today it stabilised to 60 , Between 80 and 60 the speculators must have gained and would have burnt.

http://www.bloomberg.com/quote/USDRUB:CUR

Having said that I agree with you , I think Russia should also eventually start pegging Rouble against Gold , the current pegging against USD/Euro always present the risk of eternal crisis depending on how the wind is blowing either designed or genuine.

May be pegging against Gold would mean small economy GDP wise ( I dont know but thats what I am guessing may be you can throw up something here ) but it would build greater financial discipline probably at the cost of smaller credit but it would also prevent external influence.

I dont know if Pegging against Gold is possible in short time they have about 1500 T of Gold may be thats not enough but in the interim period they can peg Rouble against Yuan and Euro ( europe still being largest trading partner ) or some Basket Currency of BRICS ( Yuan/Rupee/Real ) till they make full towards Gold. Being an export surplus nation they would always have money to fund their project

Austin · Post by **Austin** » 18 Dec 2014 17:47

The Fed caused the oil crash, and stocks are next: Schiff

I am not sure of Global Oil Crises but most certainly the entire Shale Boom is built around cheap credit ala ZIRP and QE and yet the Shale industry is in red

Gyan · Post by **Gyan** » 18 Dec 2014 18:35

In long term, sanctions and low crude oil prices are good for Russia as it will force it to redevelop in manufacturing industries.

Shanmukh · Post by **Shanmukh** » 19 Dec 2014 05:26

Gyan wrote:In long term, sanctions and low crude oil prices are good for Russia as it will force it to redevelop in manufacturing industries.

If Russia can persuade investors (China, E. Asia, etc) to invest in manufacturing in Russia (they have abundant energy and tons & tons of minerals, not to mention an educated populace), they should be able to utilise this weak ruble to build up their own manufacturing, at least for their own domestic markets.

Christopher Sidor · Post by **Christopher Sidor** » 19 Dec 2014 06:54

. Exxon Mobil Shows Why U.S. Oil Output Rises as Prices Plunge -Bloomberg dated 19-Dec-2014

From the article

U.S. energy producers plan to pump more crude in 2015 as declining equipment costs and enhanced drilling techniques more than offset the collapse in oil markets, said Troy Eckard, whose Eckard Global LLC owns stakes in more than 260 North Dakota shale wells.

Global giant Exxon Mobil Corp. (XOM), the largest U.S. energy company, will increase oil production next year by the biggest margin since 2010. So far, the Organization of Petroleum Exporting Countries’ month-old bet that American drillers would be crushed by cratering prices has been a bust.

Cheers

Austin · Post by **Austin** » 19 Dec 2014 09:08

The problem with falling oil price is not how much they can drill now thats not really getting impacted for conventional Oil producers but for Shale/Tar Sand Oil producers only.

It is with investement needed for future project which will eventually impact the oil they can drill and would impact the price. Not to mention the low returns the shareholder of these corporates would be getting due to low price.

Bankers See $1 Trillion of Zombie Investments Stranded in the Oil Fields

Neshant · Post by **Neshant** » 19 Dec 2014 13:11

Austin · Post by **Austin** » 20 Dec 2014 15:02

Neshant wrote:

So she is suggesting its better to not keep Deposit in the Bank and most who would be affected would be ordinary citizen with small savings , She herself mentions does not keep money in banks.

Swiss Central Bank to Introduce Negative Interest Rates

Austin · Post by **Austin** » 20 Dec 2014 15:05

How much Gold does a country need to peg its currency in Gold ? Is it the amount of currency in circulation so called M1 or is it a combination of factors that decide how much Gold does a country need ?

How can credit be generated in growing economy if the money supply is dictated by the presence of Physical Gold ? I am not referring to printing press and unlimited money but something beyond say like 1:1 money ratio that Gold could impose ?

panduranghari · Post by **panduranghari** » 20 Dec 2014 15:56

M0 and M1, also called narrow money, normally include coins and notes in circulation and other money equivalents that are easily convertible into cash.

M2 includes M1 plus short-term time deposits in banks and 24-hour money market funds.

M3 includes M2 plus longer-term time deposits and money market funds with more than 24-hour maturity. The exact definitions of the three measures depend on the country.

M4 includes M3 plus other deposits.

FOFOA defines it as follows

FOFOA wrote:Money is credit. More specifically, it is the recording of current balances of credit. It can be recorded in your head, represented on an institutional ledger, or carried in your pocket as pieces of paper or metal with numbers recorded on them. But notice that it's the recorded numbers and not the paper/metal in your pocket that constitutes the money

He goes on and states -

FOFOA wrote: If we look at all of history we find a whole host of materials that have been used to record the money concept—electrum, gold, silver, copper, iron, nickel, zinc, paper, wooden tally sticks, Yap stones, even silicon microchips buried in secure computer servers for the last 40 years or so. But let's say that you reject this notion that money is really only the credit notation and insist that it is, instead, the physical item itself. What is the harm in that? Well, I think it leads to some horribly wrong conclusions, especially about how banks work.

Banks facilitate the fungible exercise and circulation of credit. If I have plenty of credit, I can walk into any bank and get a loan. Then I can spend that loan and my credit (money) will begin to circulate throughout the economy as a medium of exchange. But if I am to accept that money is actually some tangible wealth reserve item, then I have to be skeptical about the source of that bank loan.

If, on careful examination, the bank has less of these physical wealth items in reserve than it has in outstanding liabilities, I might craft the common description of fractional reserve banking to explain what I found. This would lead me to the cynical notion that banks are somehow cheating by counterfeiting the real money that they have on deposit or in reserve. It would probably just remain my theory until some sort of crisis happened, and then it could mature into an outright accusation of fraud.

Reserves, of course, have always been vital to the business of banking. They are how banks settle up amongst themselves, and in the case that a bank customer decides to transact in a distant land outside of his local system of bank settlement (or locally in a black market), reserves are what the bank gives the customer to take with him. But this idea that the reserves are the real money and the credit is some sort of counterfeit or fraudulent money leads to horribly wrong conclusions and destructive prescriptions whenever a banking crisis occurs.

There is a big hump to get over here if you are in the hard money camp. Simply, get over this idea that banks need to have something to lend. This is the faulty premise: that banks lend something to the borrower. They do not. The borrower already has the credibility, the credit, and the banks are simply facilitating the exercise of that credit so that it can be used in transactions, and so that the counterparty to those transactions doesn't need to understand the borrower's credibility. The bank has already verified it and now stands behind it. This is the very essence of money.

In fact, banks are not (and should not be) constrained by the amount of reserves or capital/equity they have. But that's not to say they are not constrained. They are, just not by reserves and capital as this faulty premise leads some to believe. Instead, they are profit constrained; they want to make a profit. And because of this, they are experts at verifying credit and managing their reserves.

I realize this is difficult to see given the current state of the modern banking and financial landscape, but worse, it is impossible to see without a proper perspective on money. Without a realistic view of money, a proper understanding of banking is impossible. And without that, if you happen to be one of the few with the drive to be heroic, you'll be spinning your wheels on "solutions" (prescriptions) that range from useless to disastrous.

So Austin saar when you say

Austin wrote:How much Gold does a country need to peg its currency in Gold ? Is it the amount of currency in circulation so called M1 or is it a combination of factors that decide how much Gold does a country need ?

How can credit be generated in growing economy if the money supply is dictated by the presence of Physical Gold ? I am not referring to printing press and unlimited money but something beyond say like 1:1 money ratio that Gold could impose ?

You can have as much or as little gold, with gold standard you should be willing to put all that gold to defend the currency parity to gold. At some stage, GOLD WILL RUN OUT. Like it did for USA. as FOFOA says you will be spinning prescriptions from useless to disastrous.

SaraLax · Post by **SaraLax** » 20 Dec 2014 22:07

Austin wrote:Financial Market Manipulation Is The New Trend: Can It Continue?

http://www.paulcraigroberts.org/2014/12 ... -continue/

Financial Market Manipulation Is The New Trend: Can It Continue?
Financial Imperialists Attack Russia

Paul Craig Roberts

A dangerous new trend is the successful manipulation of the financial markets by the Federal Reserve, other central banks, private banks, and the US Treasury. The Federal Reserve reduced real interest rates on US government debt obligations first to zero and then pushed real interest rates into negative territory. Today the government charges you for the privilege of purchasing its bonds.
.
.
In other words, in America today there are no free financial markets. The markets are rigged by the Federal Reserve’s Quantitative Easing, by gold price manipulation, by the Treasury’s Plunge Protection Team and Exchange Stabilization Fund, and by the big private banks.

.
.
As Japan is Washington’s vassal, it is conceivable that some of the money being printed by the Bank of Japan will be used to purchase US Treasuries, thus taking the place along with purchases by the large US banks of the Fed’s QE.

The large private US and UK banks are also manipulating markets hand over fist. Remember the scandal over the banks fixing the LIBOR rate (the London Interbank Borrowing Rate) and the opening gold price on the London exchange. Now the banks have been caught rigging currency markets with algorithms developed to manipulate foreign exchange markets.

When the banks get caught in felonies, they avoid prosecution by paying a fine. You try doing that.
.
.

The falling oil price has brought concern that oil derivatives are in jeopardy. Citigroup has a provision in the omnibus appropriations bill that shifts the liability for Citigroup’s credit default swaps to depositors and taxpayers. It was only six years ago that Citigroup was bailed out to the tune of a half trillion dollars. Already Citigroup is back for more while nothing whatsoever is done to bail the American people out of their hardships caused by Citigroup and the other financial gangsters.

Manipulations blow a bigger bubble economy, and manipulations are now being used by Washington as an act of war by driving down the exchange value of the Russian ruble.
.
.
The price of gold is not determined in the physical market but in the futures market where contracts are settled in cash. If every time the demand for gold pushes up the price, the Federal Reserve or its bullion bank agents dump massive amounts of uncovered futures contracts in the futures market and drive down the price of gold, the result is to subsidize the gold purchases of Russia, China, and India. The artificially low gold price also artificially inflates the value of the US dollar.

.
The US government, perhaps surprised at the ease at which all financial markets can be rigged, is now rigging, or permitting large hedge funds and perhaps George Soros, to drive down the exchange value of the Russian ruble by massive short-selling in the currency market. On December 15 the ruble was driven down 19%.

Just as there is no economic reason for the price of gold to decline in the futures market when the demand for physical gold is rising, there is no economic reason for the ruble to suddenly loose much of its exchange value. Unlike the US, which has a massive trade deficit, Russia has a trade surplus. Unlike the US economy, the Russian economy has not been offshored. Russia has just completed large energy and trade deals with China, Turkey, and India.

If economic forces were determining outcomes, it would be the dollar that is losing exchange value, not the ruble.

The illegal economic sanctions that Washington has decreed on Russia appear to be doing more harm to Europe and US energy companies than to Russia. The impact on Russia of the American attack on the ruble is unclear, as the suppression of the ruble’s value is artificial.

There is a difference between economic factors causing foreign investors to withdraw their capital from a country, thereby causing the currency to lose value, and manipulation of a currency’s value by heavy short-selling in the currency market. The latter can cause the former also to occur. But the outcome for Russia can be positive.

No country dependent on foreign capital is sovereign. A country dependent on foreign capital, especially from enemies seeking to subvert the economy, is subject to destabilizing currency and economic swings. Russia should self-finance. If Russia needs foreign capital, Russia should turn to its ally China. China has a stake in Russia’s strength as part of China’s protection from US aggression, whether economic or military.

The American attack on the ruble is also teaching sovereign governments that are not US vassals the extreme cost of allowing their currencies to trade in currency markets dominated by the US. China should think twice before it allows full convertibility of its currency. Of course, the Chinese have a lot of dollar assets with which to defend their currency from attack, and the sale of the assets and use of the dollar proceeds to support the yuan could knock down the dollar’s exchange value and US bond prices and cause US interest rates and inflation to rise. Still, considering the gangster nature of financial markets in which the US is the heavy player, a country that permits free trading of its currency sets itself up for trouble.

The greatest harm that is being done to the Russian economy is not due to sanctions and the US attack on the ruble. The greatest harm is being done by Russia’s neoliberal economists.

Neoliberal economics is not merely incorrect. It is an ideology that fosters US economic imperialism. By following neoliberal prescriptions, Russian economists are helping Washington’s attack on the Russian economy.

Apparently, Putin has been sold, along with his internal enemies, the Atlanticist integrationists, on “free trade globalism.” Globalism destroys the sovereignty of every country except the world reserve currency country that controls the system.

As Michael Hudson has shown, neoliberal economics is “junk economics.” But it is also a tool of American financial imperialism, and this makes neoliberal Russian economists tools of American imperialism.

The remaining sovereign countries, which excludes all of Europe, are slowly learning that Western economic institutions are deceptive and that placing trust in them is a threat to national sovereignty.

The week the dam broke in Russia and ended Putin's dreams - AEP

The currency has since stabilised at 60 to the dollar. But it has lost half its value in a year. Russia’s $2.1 trillion (£1.3 trillion) economy has shrunk to $1.1 trillion, half the GDP of California. The external debt of Russian banks and companies has by mathematical effect ballooned to 70pc of total output.

Bloomberg reports that Putin asked his key advisers at a secret meeting in February whether Russia had sufficient foreign reserves to withstand a showdown with the West if it annexed Crimea. They assured him that Russia could weather the storm.

Putin took a huge gamble. Deutsche Bank and other lenders were already forecasting an oil glut in 2014 as the US flooded the markets with shale oil. Nor did the Kremlin team seem to fully grasp that Russia is far more vulnerable to sanctions now that it depends on foreign capital and is tied into global finance. For the last decade, an elite cell at the US Treasury has been sharpening the tools of economic war, crafting ways to bring countries to their knees without firing a shot.

The strategy relies on hegemonic control over the global banking system, buttressed by a network of allies. Iran has felt its grim effects. “It is a new kind of war, like a creeping financial insurgency, intended to constrict our enemies’ financial lifeblood, unprecedented in its reach,” says Juan Zarate, who once led the team.

Austin · Post by **Austin** » 23 Dec 2014 13:30

panduranghari wrote: You can have as much or as little gold, with gold standard you should be willing to put all that gold to defend the currency parity to gold. At some stage, GOLD WILL RUN OUT. Like it did for USA. as FOFOA says you will be spinning prescriptions from useless to disastrous.

Thanks , If Gold Runs Out like your Fiat currency , How is moving to Gold Standard any way different from Fiat money standards we run today eventually both can run out in economic crisis ?

Can any country can have a middle ground where say 50 % of its currency is pegged in Gold Standard while remaining 50 % in Fiat currency ?

panduranghari · Post by **panduranghari** » 23 Dec 2014 15:15

To truly set free gold so that it can act like wealth reserve, you need fiat currency. Gold! It is the only medium that currencies do not "move through". It is the only Money that cannot be valued by currencies. It is gold that denominates currency. It is to say "gold moves through paper currencies'.

In the good the bad and ugly - Blondie says - there are 2 types of people in the world - One who have guns and others who dig. Similarly, In this world there are 2 types of people in this world - those who produce and those who consume. Most of us consume.

So we need gold to ensure our whatever little production is not looted by inflation. And for the producers, gold is essential to keep their productive earnings to serve in hard times when they will become consumers.

link

In working on this project, I was personally shocked when I discovered that we absolutely NEEDED paper currency in order to set Gold free. In the perfect world you lapse into in your comments, everything you say is well and good. We don't live in that world, however. My biggest challenge in piecing together my proffered solution was to accept what this real world had to offer and avoid foisting my own preferences onto the world like a square peg in a round hole."

"Several years ago, many gold bugs and gold advocates missed the path as the trail turned." "Yes, the war now is between the Euro and the dollar! The Washington Agreement [a Central Bank agreement] placed gold 'on the road to high prices'." "The war between gold and the dollar has been over for a while now… Leaving gold bugs with a lot of questions that ask why this: both systems will strive for a higher currency price for gold; one doing it because they have to; the other doing it because they want to! The casualty on this battlefield will be the world gold market as we know it. A market caught between how Western perception thinks gold's price should be "discovered" and at what price level trading in physical gold craters the entire paper structure… This paper gold market will be cashed out at prices far below real bullion trading so as to inflate further the books of the Bullion Banks,,,,,, not destroy them. At least this is how the US side will proceed."

Austin · Post by **Austin** » 23 Dec 2014 20:31

CNBC:Could Russia back its currency with gold?

Russia's government could still be pushed into using its gold reserves to bolster the falling ruble, currency experts have forecast.

Rumors last week that Russia was on the verge of selling its gold reserves were quashed with the news on Friday that it has continued to add to its holdings. However, John Butler, chief investment officer at Atom Capital, and Alasdair MacLeod, the head of research at online bullion exchange GoldMoney Foundation, believe that Russian President Vladimir Putin could bring the country onto some sort of "gold standard" to try to shore up its economy.

"It was (and still is) in Russia's power to adopt a gold standard," MacLeod told CNBC via email.

"There is no doubt that Russia and China, plus the other Eurasian states in their sphere of influence are all accumulating gold and the indications are they see it as central to replacing the U.S. dollar for cross border trade."

Whether Russia would actually decide to do it was another matter, said MacLeod, and expected the country's central bank to the lack the courage to act. However, he said that if Putin is "provoked sufficiently" he may judge it to be in Russia's best interests and could overpower any reluctant officials at the bank.

"It is already in Russia's interest to cast itself off from inflating western currencies and to base their economy on sound money, aka gold," he said.

Countries that are indebted and provide substantial welfare for its citizens would be most threatened by any return to gold convertibility, according to MacLeod, who said Russia could therefore be building a "weapon of mass financial destruction."

The Nixon administration has been credited with originally breaking the link between gold and the dollar in the early 1970s amid surging inflation, rising costs from the Vietnam War, and an oil crisis.

Before that, fixed amounts of gold were directly convertible to the U.S. dollar and vice versa. That meant money supply theoretically was limited by the amount of gold backing it, and exchange rates were based on the difference in price for an ounce of gold between the dollar and a foreign currency.

Russia has been aggressively buying the commodity in recent years and has formed closer currency ties with neighboring China in the process. Russia's gold holdings rose to 38.2 million ounces as of December 1, according to a statement by the central bank on Friday. This was a rise from a figure of 37.6 million from the month before, and allayed fears that it had sold the precious metal for dollars so it could further rebalance the ruble. The Russian currency had a torrid week, plunging bmore than 11 percent last Tuesday — its steepest intraday fall since 1998.

Jim Rickards, the senior managing director at Tangent Capital and who has written extensively on the subject, told CNBC via email that Russia will move to a gold-backed currency but believes that such a move could be a long way off.

Russia will continue to acquire gold, but will need hard currency reserves also to bridge the gap between today's position and any future intentions," he said.

One major drawback for Russia is that the ruble is already heavily linked to the price of oil and a gold-backed currency would link it to a second commodity, according to Phoenix Kalen, the director of emerging markets strategy at Societe Generale.

Thus, this would hinder usage of the "freely" floating currency as a shock-absorbing mechanism for its economy, she said.

I think it's highly unlikely that Russia would move toward a gold-backed currency," she told CNBC via email.

"At this point in time, it may make more sense for Russia to accumulate gold reserves, as it would help the country to diversify away from U.S. assets, stay ahead of the U.S. monetary policy tightening cycle which may adversely impact U.S. Treasury holdings, and benefit from the inflation protection provided by gold assets."

Austin · Post by **Austin** » 23 Dec 2014 20:33

Had a question here , Considering Rouble is free floating though its still pegged against USD/Euro basket.

What prevent Russian Central Bank to move away from pegging Rouble to Yuan/Gold and move away completely from Euro/USD

shyam · Post by **shyam** » 24 Dec 2014 06:09

I don't think it is a good idea to peg one's currency to anything whose value it can not control (even gold). If you peg, a wild fluctuation in that (strengthening or weakening) will affect your currency and hence your economy, and you have no way to control that. If you really want to link it with, say gold, say that gold is a valid money too (i.e. no tax on appreciation) and do everything to make price of gold to be stable in your currency. For this you will need a locally trade-able gold reserve and a gold exchange in your country. This way, if you feel that somebody is manipulating price of gold to influence your currency, you can adjust the price match without really going against the promise you made (if it was openly pegged to gold). If Russia really wants to spook the market, it just needs to announce 50% discount for oil when paid in physical gold. Considering the domino effect it can create, I doubt Russia will make that call. It is more like an economic Brahmastra.

Neshant · Post by **Neshant** » 25 Dec 2014 22:46

The best monetary system is one where the people who earn the wealth get to choose the type of money they wish to hold and save.

Anything else is just thievery and tyranny masked with a load of jargon meant to deceive.

Austin · Post by **Austin** » 30 Dec 2014 11:42

Russia prepares new stress scenario with oil price at $40

Russia’s Finance Ministry has prepared a preliminary stress scenario for a downturn of the Russian economy if oil prices drop to $60 or even $40 per barrel, Russian newspaper Gazeta.ru has reported, citing two sources in the Finance Ministry.

With the oil price at $60 per barrel, the Russian economy is projected to shrink by a little more than 5%. A price drop to $40 will aggravate the recession. The data turned out to be worse than the recent forecast of the ex-Finance Minister Alexey Kudrin, who has reckoned that if oil prices are at $60 next year, the GDP will fall by 4% "or more."

A similar viewpoint was earlier expressed by Russia’s central bank. According to the latest forecast by Moody's experts, the Russian economy would shrink by 5.5% in 2015, with JP Morgan projecting a decline of 3.3%, and HSBC a drop of 3%.

Previously, an updated forecast for the next year prepared by the Economic Development Ministry in early December caused a flurry of criticism from the Ministry of Finance, the cabinet office and the Kremlin. Many officials believed it was too pessimistic (especially on the eve of the presidential address to the Federal Assembly), since it forecast a 0.8% decline in GDP and an average annual price of oil at $80 a barrel.

With the oil price at $40-60 per barrel, recession is inevitable, according to the Deputy Head of the Institute "Development Center" of HSE Valeriy Mironov.

"The fall in GDP can amount to 4-5% with the oil price at $60, and even 9% if the price for oil plunges to $40, which will even exceed the fall in 2009," he said.

The Finance Ministry projects the dollar exchange rate in 2015 under the scenario of "oil price at $60 per barrel" to be not higher than the current level of RUR 54 per dollar, and RUB 49 to the dollar at an oil price of $80 per barrel, based on the forecast of Economic Development Ministry.

According to the Ministry of Finance, the price for oil may hit the level of $40 per barrel as early as January next year.

Such a scenario is not ruled out. Just recently, Saudi Oil Minister Ali al-Naimi stated in his interview with the Middle East Economic Survey that the oil cartel (OPEC) would not reduce oil production, even if the price of oil fell to $20. According to him, the Gulf monarchies can withstand falling prices for oil for a long period, because they have the lowest cost of production.

The Economic Development Ministry is working out the same scenario for Russian economy (envisaging price oil price drop to $60 and $40 per barrel). Their estimates will unlikely differ much from those prepared by other government agencies.

Austin · Post by **Austin** » 30 Dec 2014 13:07

From Energy War to Currency War: America’s Attack on the Russian Ruble

Chinmayanand · Post by **Chinmayanand** » 30 Dec 2014 13:08

Why can't Russia have its own market for Russian oil & gas and buyers/sellers are required to settle in deliveries rather than the fake trades on american exchanges ? this way Russia can control the fair prices of oil & gas it sells.

Austin · Post by **Austin** » 30 Dec 2014 13:22

Chinmayanand wrote:Why can't Russia have its own market for Russian oil & gas and buyers/sellers are required to settle in deliveries rather than the fake trades on american exchanges ? this way Russia can control the fair prices of oil & gas it sells.

Something along the lines is coming up

http://www.examiner.com/article/russia- ... the-dollar

They have indicated they would be selling Oil in Rouble and Yuan gradually .....Considering Europe remains the largest trading partner for them trading in Euro also makes sense.

Reducing Dollar in their economy is something they would be doing hence forth , Obama had indicated openly yesterday that they are in for Long Strategic Economic Warfare with Russia

Obama Says US ‘Strategic Patience’ With Russia Getting Results

Eventually I suspect Russia would look towards some deal with China to trade Oil/Gas in Yuan for financial package or along similar lines and would peg rouble against Gold/Yuan/BRICs versus Euro/USD

But 2015-2016 would be an interesting time for US and Euro economy as QE has ended

The Fiction of Economic Recovery: “Magic Growth Numbers” From the U.S. Government

Chinmayanand · Post by **Chinmayanand** » 30 Dec 2014 15:11

Austin wrote:
The Fiction of Economic Recovery: “Magic Growth Numbers” From the U.S. Government

American growth numbers have indeed become paki , effect of paki company perhaps.

panduranghari · Post by **panduranghari** » 30 Dec 2014 17:06

Austin wrote:From Energy War to Currency War: America’s Attack on the Russian Ruble

Come on Austin. All these smoke and mirrors of American war on Russian Rouble are for deceiving the American sheeple. Its demand destruction which is bring down the price of oil. Even T Boone Pickens has come out on CNBC and said so. If you want to know about T B P read up. He has been in that industry longer than most 'pandits'. The rig count of all the American shale plays, Canadian Tar sands, The Russian polar rigs is dropping like flies. These companies cannot afford to keep their small companies running. The majors will downsize. While the minors will go under.

This could be the straw that finally broke the American camels back. What irony!

Neshant · Post by **Neshant** » 01 Jan 2015 09:46

Chinmayanand wrote:
Austin wrote:
The Fiction of Economic Recovery: “Magic Growth Numbers” From the U.S. Government
American growth numbers have indeed become paki , effect of paki company perhaps.

These days all kinds of creative accounting is going on in many nations to inflate GDP numbers to make the debt to GDP ratio appear smaller. The result is nobody knows how to get an accurate measure of a country's productive output. Useless industries like banking are factored into GDP even though they consume rather than produce wealth.

Neshant · Post by **Neshant** » 04 Jan 2015 15:53

Austin · Post by **Austin** » 06 Jan 2015 11:18

Jim Rickards is suggesting low oil price is deflationary for US , Chinese Economic Bubble will cost them GDP growth to 4 %

panduranghari · Post by **panduranghari** » 06 Jan 2015 16:09

Suraj wrote:Jeff Gundlach had a great recent presentation of his thesis on recent investing trends. His primary statement about gold is that there was a gold vs real estate relationship in the last two years; as gold prices peaked, he noticed several clients diversifying out of gold into depressed real estate. Whether it will flow back into depressed gold now from RE and stocks, remains to be seen.

Bringing this up again from the past.

Gundlach expected bonds to outperform stocks, gold to be a “loser,” commodity prices to head higher, non-US markets to outperform U.S. markets and the dollar to be weak.

How wrong was he.

Now he comes up with this - http://www.zerohedge.com/news/2015-01-0 ... ial-system

These guys just turn their opinion on a dime. Macroeconomics can go to hell. They get their cut any way.