Perspectives on the global economic changes

[chanakyaa]

So yes, dollars are actually held and any policy affecting them affects the overall economy quite a bit.

I am afraid that is not accurate saar. Please pull out any prospectus for any investment. To make it easy use USA as the example as most prospecti are available online. Anything will do- money market funds, hedge funds, mutual funds, etc. Anything. And if you read the print it will say dollars are not held but bonds are. Its true for the apparently very liquid money market funds too. They invest in 30 day paper. Even futures contracts are settled in dollar terms but no dollars are paid out. The Eurodollar market - the biggest oversea dollar market out there - also does not hold currency. They hold bonds.

+1, except when balance sheet entry on the fund's statement says "Cash" (not "Cash Equivalent", digital money of course). Panduranghari, your post on currency as a transit mechanism was great.

[Rammpal]

if a gold standard was not satisfactory a 100 years ago why would it be satisfactory now?

crickets chirping........

If that is so true;

"...However, gold has never lost its appeal as an asset of real value. Whenever recessions or inflation looms, investors return to gold as a safe haven. It reached its record high of $1,895 an ounce on September 5, 2011. ..."
https://www.thebalance.com/what-is-the- ... rd-3306136

Why is that ?

[chanakyaa]

Six Things to Consider About Inflation (Mises) (As it is reported and preached in the west)

As an economic term, “inflation” is shorthand for “inflation of the money supply.”

The general public, however, usually takes it to mean “rising prices” which is not surprising since one of the common effects of an increase in the money supply is higher prices. However, supporters of government policy often say, “If quantitative easing (QE) and its terrible twin, fractional reserve banking, are so awful, why have we got no inflation?”

To address this conundrum, there are six related factors that are noteworthy:

Number One: we need to be clear about the terms we are using. Instead of talking about “inflation” in the loose sense, as above, it is more accurate to speak of currency debasement, which is the real impact of fiat money creation by any means. We experience currency debasement as declining purchasing power. Two sides of the same coin: one reflects the other.

Number Two: the above question overlooks the fact that the measures used in this process are inherently unreliable. The decline in purchasing power is most evident when objectively measured by reference to an essential commodity such as oil — rather than against the Consumer Price Index (CPI). The CPI purports to reflect the prices of ingredients selected by government statisticians in what they consider to be a typical, but notional, basket of “consumer goods and services.” This basket, whose contents are varied periodically, results in an index that cannot be trusted as an objective barometer. It supports the wizardry of non-independent Treasury statisticians, and relates to goods that scarcely feature in your shopping basket or mine.

Blowing Bubbles

Number Three: newly created fiat money must go somewhere — and so it goes into the grasp of its first receivers, the banks, the financial institutions, government institutions, and urban moneyed classes who least need it — widening the gap between rich and poor — and thereby building asset bubbles in property, luxury cars, yachts and the myriad baubles that only the very rich can afford to acquire. So never say that “there is no price inflation” — it’s just that those asset prices don’t figure in the official CPI stats.

Number Four: The European Central Bank (ECB) is no slouch when it comes to money creation out of thin air, and banks within the euro zone have therefore come to rely on it for survival. The solvency of Southern EU countries is dependent on the promise of limitless — thanks to Mario “Whatever it takes” Draghi — fiat money bailouts from the ECB. But, until the next bailout arrives, governments of Europe will do their coercive best to prop up their insolvent banks by any means, fair or foul. In Italy, for example, the government has now “invited” the country’s pension funds to invest 500 million euros in a bank fund called “Atlante,” which has been formally set up as a buyer of last resort to help Italian lenders (whose bad debts equate to a fifth of GDP) reduce their toxic burden. Having run out of other people’s money the Italian government is now trying to raid the nation’s pension funds.

Number Five: In the same vein, you have no doubt heard reference to “helicopter money.” This is a variant of QE favored by certain politicians who talk blithely about the need for “QE for the people.” The idea is to by-pass the treasury mandarins by dropping newly printed money directly to the people via government spending, so that they (rather than the already-rich classes) can benefit from the bonanza and aid the economy by spending their new-found wealth. Again, this notion commits the fundamental error of equating “money” and “wealth.” If everyone suddenly finds that free handouts have swelled their bank accounts, how long will it be before prices follow? (And since even helicopter money originates at the central bank, you can be sure that the financial sector will somehow get its hands on it first anyway!)

Number Six: the final point concerns the corrosive effect of the deliberate and utterly misguided suppression of interest rates which, if they were allowed to find their own market level, would represent the time-value of money, or what the private sector is prepared to pay for liquidity — either for spending now or saving for future spending.

The suppression of interest rates is yet another desperate attempt to stimulate demand, hoping that it will lead to productive economic activity. But it flies in the face of Say’s Law, which holds, correctly, that we produce in order to consume. Reversing these leads to the idiocy of “demand management” — as if stimulating demand will magically generate the production needed to satisfy that demand. If that were true, Venezuela and Zimbabwe would be vying right now for the title of the world’s most prosperous economy.

Suppressing interest rates destroys the natural measure of time preference. It leaves many long-term infrastructure investment plans on hold, simply because no private sector producer of capital projects will commence a venture that cannot be reliably costed. After all, who knows when interest rates will rise? And at what economic cost to the project? Uncertainty stifles action.

The risk of misallocation of capital resources is simply too great for the private construction sector. Just look at the many public sector cock-ups: there are Spanish airports at which no plane has landed, and Portuguese motorways on which there are no cars. And here in the UK? Just wait for HS2, new airport runways, Hinckley — and all the other mammoth “interest-free” projects that get the go-ahead, having never been subjected to any reliable economic calculation.

So what do we finish up with in the productive sector? The near-zero interest rates favor short-term production schedules with minimal capital requirements, resulting in low-risk production lines of cheap goods. That’s why we have “pound- shops” and 99p shops and all the other shabby outlets that now litter every suburban high street — creating the illusion of zero inflation. Which is where we came in.

Emile Woolf writes about economics, taxation, and related developments that have a financial dimension.

[yensoy]

So yes, dollars are actually held and any policy affecting them affects the overall economy quite a bit.

I am afraid that is not accurate saar. ... They hold bonds.

To claim otherwise if being disingenuous.

FRN is not held that commonly and unless there is evidence provided to the contrary, I would until then be in very clear disagreement with your opinion.

I don't disagree, nor did my post say otherwise. Dollars in cash or equivalent, which includes bonds, money markets and the like (and overwhelmingly so, since cash in circulation is a miniscule amount of the dollar denominated holdings).

Please don't mix up the demonetization discussion context (where the focus is on actual currency holdings) with this one (where discussion of holdings is cash-equivalent).

[Austin]

National Debt Under Obama : How Much Did Obama Add to the Nation's Debt?

https://www.thebalance.com/national-deb ... ma-3306293

[TSJones]

M1 is 25% of M2.

50% of cash is held overseas.

most of my money is held in stock brokerage accts. which makes me M1 poor.

[pankajs]

1. 50% of Cash overseas.
2. Flood of money was used by the Banks to strengthen their balance sheets. Very little appetite for lending.
3. What was available for borrowing was used by the corporate America to fund M&A and buybacks. Very little investment. M&A and buybacks are just shuffling of money from one pocket to the other while increasing debt which contribute zero to economy.
4. Public has no appetite for debt driven binge spending.

At least that has been the trend from the time of the GFC. Money that has being pumped in by the Feds is just not moving through the economy. Flood of money has been counteracted by falling velocity of money and inflation has not picked up.

[Neshant]

Walk into a bank and ask a person working there for 20 years "how does money come into existence" and I guarantee you 9 out of 10 bank managers & senior staff won't have a clue. In what other field is ignorance of even the basics so widespread? I can think of none.

If you think you understand the issue, try answering that question yourself. Keep in mind, 99.9% of the population does not understand how money comes into existence despite spending a lifetime working for it.

This is the video that made me understand the issue.


Creature From Jekyll Island Second Look at the Federal Reserve

[Neshant]

Why don't you take this opportunity and educate me (and the rest of us) how this is all applicable to India, if at all. Considering that the RBI is well under the GoI and there is no visible revolving door

The part you don't understand that this is the gateway.

Not that I agree with govt having monopoly over the monetary system, but a case can be made that while a govt is elected by its people, it will not harm its people nor steal from them (idealistically speaking). It will protect the wealth of the people and lose it more so through bungling than theft.

However that is not what happens as per history once the wealth of the people is forcefully consolidated at the top under whatever pretence.

What history shows is that once the people who've earned the wealth are fire-walled from their wealth by govt at the urging of banksters, the banksters step right in and convince/bribe/con the govt into making banks the legal custodians of that wealth. The revolving door, the "consulting" contracts to ex-politicians, the stuffing of ex-bankster employees into the legislature, the financing of election campaigns..etc. spreads like a cancer.

There after begins the greatest robbery scheme ever devised disguised as "stimulating the economy", "promoting growth", "stabilizing the economy", "creating jobs", "too-big-to-fail" and apparently jail and all manner of corruption. Its just a cover for theft of that wealth and its subsequent transfer to banksters.

Bad as it is, the worst part is NOT the theft of the peoples wealth.

The worst part is the destruction of the state itself through the cancer of bankster induced corruption which spreads under the above system.

So long as the people choose the money they transact in voluntarily, the country cannot be colonized/conquered. The moment control over their wealth is handed over to <whomever> the nation has been enslaved.

We've been through enough enslavement. Its time to wake up.

[panduranghari]

M1 is 25% of M2.

50% of cash is held overseas.

most of my money is held in stock brokerage accts. which makes me M1 poor.

If I take your thought experiment a bit further, I am trying to ascertain if you are claiming that Hyperinflation in US is impossible?

[TSJones]

M1 is 25% of M2.

50% of cash is held overseas.

most of my money is held in stock brokerage accts. which makes me M1 poor.

If I take your thought experiment a bit further, I am trying to ascertain if you are claiming that Hyperinflation in US is impossible?

not if the fed reserve is allowed to do its job. like it did in late 1970s and early 1980s.

but yes politicians can get stupid and over ride FOMC (federal open market committee) which would be unprecedented but I will admit that someday in the future it could happen. nothing is cast in concrete.

[Austin]

Good Read

The Big Bank Bailout

[Neshant]

Please stop posting nonsense. Your statement has no basis other than the ravings of a conspiracy theorist. Cash has the same problem as it is dependent on "trust". Issues with the western banking system are due to other causes that do not affect the Indian economy at this time. I speak from experience as a "bankster" as you say. [url=viewtopic.php?f=2&t=7280&p=2081153#p2081153]I have debunked some of your "issues" already,

The sad reality is you don't even understand what is being said prior to typing out comments.

The issue is not fiat cash being more trustworthy than a fiat bank deposit.
The issue is the gradual erosion of financial sovereignty of the individual who earns the wealth to keep his wealth.

The drive to track all individuals, their earnings, their savings, their purchases for the purpose of wealth confiscation is the goal of private banking interests.

Once a person's earnings/savings are fire-walled from him and put under the allegedly "honest" custodianship of corporate banking interests, he is nothing more than a serf in the system. That is the end goal of enforced digital currencies as it inevitably migrates from the hands of govt-politicians to private banking interests.

[panduranghari]

Agreed Neshant ji.

2008 happened because regulations were eroded.

viewtopic.php?f=2&t=7280&p=2081153#p2081153

Wrong. It was not the issue. 2008 happened because the firewall between retail banking and casino banking was taken away by Glass Stegal act. The reason why they removed glass stegal was because the extrinsic support for the exorbitant privilege of dollar was not supported by other countries, until China was admitted to WTO in 2001. The exorbitant privilege of the dollar was questioned un 1968 by de Gaulle and he withdrew from the London Gold pool which caused Nixon to 'temporarily' close the gold exchange standard in 1971. The gold exchange standard itself was imposed by J Keynes and Harry Dexter White at the Bretton Woods in 1944 when all were not agreeing to it.

know the history.

[panduranghari]

zerohedge

Why is all of the above relevant? Because while so far the global capital markets have been immune to the substantial tightening in financial conditions resulting from the sharp rise in the US Dollar and US interest rates, a similar tightening in China - which is now clearly taking place - will be far more difficult for global risk assets to ignore.

[panduranghari]

Chaanakya ji thanks for your compliment.

Your post about Venezuela and Zimbabwe should have a well performing stock market found traction with CNBC.

[JohnTitor]

Agreed Neshant ji.

2008 happened because regulations were eroded.

viewtopic.php?f=2&t=7280&p=2081153#p2081153

Wrong. It was not the issue. 2008 happened because the firewall between retail banking and casino banking was taken away by Glass Stegal act. The reason why they removed glass stegal was because the extrinsic support for the exorbitant privilege of dollar was not supported by other countries, until China was admitted to WTO in 2001. The exorbitant privilege of the dollar was questioned un 1968 by de Gaulle and he withdrew from the London Gold pool which caused Nixon to 'temporarily' close the gold exchange standard in 1971. The gold exchange standard itself was imposed by J Keynes and Harry Dexter White at the Bretton Woods in 1944 when all were not agreeing to it.

know the history.

Which part of "regulations were eroded" does that not cover? I'm well aware of Glass Stegal, Brown's "light touch regulation" and the financial system. I did not bother with the history/details because it was OT for the post I was replying to. As I said, I work in the IB industry. If you think 2008 was bad, you should see the next one. Lots of money to be made if you know how.

[chanakyaa]

..If you think 2008 was bad, you should see the next one. Lots of money to be made if you know how.

What would be the catalyst?



In the meantime, Financial Engineering 2.0 is work in progress.

When interest rates rise from its all time lows, the only thing that leveraged economies can do (i.e. in order to add further leverage) without making borrowers feel the heat of higher rates is "extend maturity". Once the treasuries are introduced, mortgage markets will follow. Financial house of cards keeps getting bigger.

(WSJ) Mnuchin Steals an Idea from Europe: 100-Year Treasurys?

President-elect Donald Trump‘s pick for Treasury Secretary is already moving markets — though the idea he floated is hardly a new one.

In an interview on CNBC Wednesday, Steven Mnuchin said about the current mix of U.S. debt issuance: “we’ll look at potentially extending the maturity of the debt because eventually we are going to have higher interest rates and that is something this country is going to need to deal with.”

Prodded further, he indicated that he may look at issuing debt that doesn’t come due for as long at 50 or 100 years, among other options, a much more distant maturity than the longest-term 30-year bond that’s currently outstanding.

Surging oil prices and the upward pressure they could put on inflation are likely a key driver pushing the yields on long-term Treasurys higher Wednesday. But Mr. Mnuchin’s comments have certainly added to this move. The yield on the 30-year bond was recently up 0.11 percentage points to 3.055%, on pace to close at its highest level of the year.

....(more)

[Austin]

David Stockman
‏@DA_Stockman

Mnuchin appointment is horrid. Crony capitalist speculator & bubble rider. Clinton/Bush/Obama/Goldman again!

Memo To Secy #Mnuchin: The Only "Safe" Fannie Is A Dead Fannie.

https://twitter.com/DA_Stockman


Peter Schiff ‏@PeterSchiff 16h16 hours ago https://twitter.com/PeterSchiff

Increasing the maturity on the national debt is good but it will add hundreds of billions to annual budget deficits. How will we pay for it?


If Trump's nominee for Secretary of the Treasury is serious about lengthening the maturity of the national debt QE 4 is going to be huge!

[Austin]

LONDONREAL James Rickards - LIVE

[JohnTitor]

What would be the catalyst?

That is the wrong question. Like the straw that broke the camels back, the trigger could be any number of things. The issue is that there are so many bubbles that have built up and the world & markets being interconnected, everything will go up/down together (or at least close together). The whole thing is a house of cards.

The honest answer to your question is, I don't know. Anyone who says otherwise is either lying or will become super rich. The problem is the bubbles range from the equity markets, bonds, real estate, debt markets and the list goes on. We are seeing unprecedented highs in almost every market. Interest rates going up, unemployment, Brexit, trump, Deutsche Bank's coco bonds.. the trigger could be anything. Some of my colleagues think its the bonds that will start the cascade, while others feel it will be the dollar popping. Personally, I think it will be closely linked to politics - perhaps, Trump or Brexit that leads to higher costs to business which in turn lead to unemployment followed by the debt market crashing. But we'll see. One thing that is for sure is that it will happen, though when is, as the bard said, the rub.

The right question is: How do I make an opportunity of the next crash.

One can use hedging strategies - in FX, commodities & Equities - to make money in all times, more so during the downfalls. Recessions and depressions make those in the know richer than you can imagine, which is why a lot of them privately look forward to a market crash.

The guy who claimed that going cashless somehow put power in the hands of bankers forgets that although India doesnt have as sophisticated banking system as the west, the Indian currency has lost more buying power than most western countries. One big reason is (other than the fake notes from Pak), those with unaccounted wealth becoming richer as they have "first dibs" on commodities & resources alike, while those earning an honest living as well as the poor have to bid over the left overs with a significantly weaker rupee.

Peter Schiff ‏@PeterSchiff 16h16 hours ago https://twitter.com/PeterSchiff

Schiff is a marketer.. He's been calling the crash for almost 5 years now. Each time he keeps saying "this is the last straw", yet so far he's not been right. Arguing that there will ultimately be a crash is a no-brainer. I know that, everyone who works in finance knows that. The gold lies with the person who knows WHEN, which schiff doesn't. While what he says is fundamentally right, he is constantly selling his gold business using this, so I would discount his rants significantly. The same goes with the likes of Maloney.

[Austin]

^^ I have yet to see any of the analyst who can say with absolute certinity when the crash will take place , neither Peter Schiff nor David Stockman says that .....The only person I have come across who puts a date is Jim Rickards who puts the year at 2018.

For me what Peter Schif or David Stockman says is fundamentally right then I can do my own investment based on inputs from them including Jim.

And Contrary to what you say that Peter is Gold Bug , Well actually he says dont invest more than 5-10 % in real physical gold.....David Stockman and James Rickards puts the upper limit at 10 % too ......but I am more interested in their general economic analysis of the situation we are into and see how I can be better prepared.

[Austin]

Peter Schiff says currently US Government pays $250 Dollar as Interest on Bonds , if they opt for longer duration high interest bonds to fund their deficit or increase spending then the interest rates payment could go as high as 1 trillion dollar.

[JohnTitor]

^^ I used to listen to him for quite a few years. But over the last few months, I've realised that he's just as clueless as the rest. He's constantly making calls that never happen. If you go through his youtube channel, you can see it for yourself.

For instance, here he says the Fed will reverse the rate rise and launch QE4. Here he says Fed won't hike the rates at all! When the Fed did eventually raise rates, Schiff said that it wasn't a rate rise it was only a marginal increase and that they have no confidence. Fact is, no one expected the Fed to "rise" the rate to 1% or 3% or 5% overnight. The Fed is actually doing something new - they first keep warning that they will raise rates.. and then after a while they do, thereby prepping the market instead of it coming as a surprise.

So I would urge caution in listening too much to these guys.

Let me reiterate that I don't disagree with what these guys say about the economy at a fundamental level (i.e. the "recovery" is nothing more than pumping up the markets with excess liquidity and it has not benefited the masses unlike 2003-2008), but they are no good at making calls on what will happen next. Do I blame them for not knowing? No - but when they do "predict" and get it wrong, it needs to be called out. I don't give too much credence to Schiff's "prediction" of the crisis in 2008. Even a broken clock is right twice a day. Schiff saying there will be a crash is not a "prediction" - as I said previously, everyone knows these are cycles and after the current "boom" (at least in certain markets such as equities & bonds), there will be a bust. That makes me no more a foreteller than one who says tomorrow the sun will rise! It is inevitable.

^^ I have yet to see any of the analyst who can say with absolute certinity when the crash will take place , neither Peter Schiff nor David Stockman says that .....The only person I have come across who puts a date is Jim Rickards who puts the year at 2018.

I don't have the link to the exact video, but Schiff has said it on multiple occasions. If you can be bothered, you will find it in one of his youtube videos. Here for instance, he says the bear market is about to begin. Here is a video where he says the stocks will crash after an oil crash.

I have to admit though, he is good entertainment.

[Austin]

Look no one can say with certainty when the market will crash at best you can read the trends and see the direction it is going , even Jim Rickards says market will likely crash in 2018 but may also crash tomorrow.

It's good to hear counter point from these people else we will have to just live by Fed & Corporate press release and just happily accept what these people put up.

There is hardly any honest market these days and all we have are speculators making most of sentiments or what ever they put up , we are living in extraordinary times where markets are not a indicator of economy.

All the more reason I like listening to them and read others has to say so that I can make my own wise investment decision and I have certainly benefitted from it , I don't control the market for all you know Dow might just keep going higher and higher but I can make sound investment decision listening to counter views.

[Suraj]

Look no one can say with certainty when the market will crash at best you can read the trends and see the direction it is going , even Jim Rickards says market will likely crash in 2018 but may also crash tomorrow.

Such advice doesn't help anyone who's an actual investor or speculator. Timing matters. Information that provides no insight on timing is useless.

As an example, I would look at the macroeconomic status today and provide two prognostications:
* The market will rise
* The market will crash

Both these are 100% guaranteed to be accurate. It doesn't actually help anyone except someone who happened to be lucky enough to buy before a major rise or sell before a major crash. But fundamentally open-ended assertions of these kinds serve more to build a group of followers to keep the person employed.

[Austin]

Look no one can say with certainty when the market will crash at best you can read the trends and see the direction it is going , even Jim Rickards says market will likely crash in 2018 but may also crash tomorrow.

Such advice doesn't help anyone who's an actual investor or speculator. Timing matters. Information that provides no insight on timing is useless.

As an example, I would look at the macroeconomic status today and provide two prognostications:
* The market will rise
* The market will crash

Both these are 100% guaranteed to be accurate. It doesn't actually help anyone except someone who happened to be lucky enough to buy before a major rise or sell before a major crash. But fundamentally open-ended assertions of these kinds serve more to build a group of followers to keep the person employed.

If you are looking for timing then David Stockman says get out of market , Jim Rickards says crash in 2018 , Peter has his own investment firm that hedges by investing in different kind of stocks including gold.

Like I said it is up to individual to make that call , I get all sort of advise from my own investment firm , no one can really time the market , Personally I sold and out of market since 3 months or so

Since I am in India the banks and companies keep sending their assessment of how market will behave every one has their own prediction.

[Suraj]

If you are looking for timing then David Stockman says get out of market , Jim Rickards says crash in 2018 , Peter has his own investment firm that hedges by investing in different kind of stocks including gold.

Like I said it is up to individual to make that call , I get all sort of advise from my own investment firm , no one can really time the market , Personally I sold and out of market since 3 months or so

Since I am in India the banks and companies keep sending their assessment of how market will behave every one has their own prediction.

What is their past record ? Both their correct *and* wrong calls ? And more importantly , how far off or how close to target were they each time ?

[Austin]

If you are looking for timing then David Stockman says get out of market , Jim Rickards says crash in 2018 , Peter has his own investment firm that hedges by investing in different kind of stocks including gold.

Like I said it is up to individual to make that call , I get all sort of advise from my own investment firm , no one can really time the market , Personally I sold and out of market since 3 months or so

Since I am in India the banks and companies keep sending their assessment of how market will behave every one has their own prediction.

What is their past record ? Both their correct *and* wrong calls ? And more importantly , how far off or how close to target were they each time ?

Peter Schiff runs an investment fund company , David and Jim Rickards are commentators and don't run any investment firms perhaps they are just authors and expert commentators

Jim Rickards in his new book death of money has given his opinion on how to invest in coming crash and hedge your rrnvestment

[Suraj]

Well that still doesn't say anything about how often their calls were right or wrong. A probabilistic measure of their accuracy based on past record would help, otherwise 'XYZ said so' means nothing...

[Austin]

Well that still doesn't say anything about how often their calls were right or wrong. A probabilistic measure of their accuracy based on past record would help, otherwise 'XYZ said so' means nothing...

http://www.wallstreetdaily.com/2016/07/ ... my-brexit/

For example, according to Morningstar, Peter’s International Value Fund (EPIVX) rose by 31.3% in the first half of 2016, beating the average fund in its category by 34.34%, ranking it the best-performing fund out of the 370 funds tracked by Morningstar in the Foreign Large Cap Value category. While the average fund in that category lost over 3% in the first two quarters of 2016, investors in Peter’s fund actually gained over 30%.

But in absolute terms, investors in Peter’s Gold Fund (EPGFX) did even better, as that fund rose by a staggering 112.23% in the first half of 2016, beating the average gold fund by 17.09%!

Peter believes that these strong moves are just the down payment on a much larger move to come – once rank-and-file investors finally perceive the real risks facing the U.S. dollar and the U.S. economy.

[Austin]

Donald Trump's pick for Commerce Secretary William Ross Interview , Interesting Interviews Makes Sense what he says

http://money.cnn.com/2016/11/30/news/wilbur-ross-nafta/

In an interview on CNN's "Erin Burnett Outfront," Wilbur Ross, the chairman of private equity firm WL Ross & Co, said "we're working out the fine-point details, but NAFTA is a logical starting point," adding that it would make sense because it was a large part of Trump's campaign.

When it comes to China, which Trump also focused on during the campaign, Ross said "China is the world's biggest exporter, but they're also the people with one of the highest tariffs on imports in the whole world. That seems a little bit oxymoronic."

[Suraj]

Well that still doesn't say anything about how often their calls were right or wrong. A probabilistic measure of their accuracy based on past record would help, otherwise 'XYZ said so' means nothing...

http://www.wallstreetdaily.com/2016/07/ ... my-brexit/

For example, according to Morningstar, Peter’s International Value Fund (EPIVX) rose by 31.3% in the first half of 2016, beating the average fund in its category by 34.34%, ranking it the best-performing fund out of the 370 funds tracked by Morningstar in the Foreign Large Cap Value category. While the average fund in that category lost over 3% in the first two quarters of 2016, investors in Peter’s fund actually gained over 30%.

But in absolute terms, investors in Peter’s Gold Fund (EPGFX) did even better, as that fund rose by a staggering 112.23% in the first half of 2016, beating the average gold fund by 17.09%!

Peter believes that these strong moves are just the down payment on a much larger move to come – once rank-and-file investors finally perceive the real risks facing the U.S. dollar and the U.S. economy.

EPIVX has a terrible long term record. It doesn't even keep up with something like PIMCO Total Return, a bond fund. It's WAY behind VIIIX, the Vanguard S&P 500 index fund. Invest Rs.10000 in all three 5 years ago and you'd be sitting on Rs.15000 on PTTRX and VIIIX, but on Rs7500 in your EPIVX. It's all easy to compare on Morningstar, which I've used a lot to pick my own personal set of high performing funds over the years.

Reading further it has a 4.5% load. So that makes it even worse, considering it can't be bought and sold cheaply. A badly performing mutual fund with a heavy frontend load and a 2% backend load for redemptions within a month. A terrible deal overall.

[Austin]

EPIVX has a terrible long term record. It doesn't even keep up with something like PIMCO Total Return, a bond fund. It's WAY behind VIIIX, the Vanguard S&P 500 index fund. Invest Rs.10000 in all three 5 years ago and you'd be sitting on Rs.15000 on PTTRX and VIIIX, but on Rs7500 in your EPIVX. It's all easy to compare on Morningstar, which I've used a lot to pick my own personal set of high performing funds over the years.

Reading further it has a 4.5% load. So that makes it even worse, considering it can't be bought and sold cheaply. A badly performing mutual fund with a heavy frontend load and a 2% backend load for redemptions within a month. A terrible deal overall.

It all depends on what the Mandate for Fund is what has the Fund Manager met his expectations .I have not seen the mandate for EPIVX

From my own experience in MF in India , without reading the mandate of what the fund is trying to achieve and what is the approx breakup of investment a MF has made i.e sector wise exposure and on which year it could meet the expectations and on other where the short fall is , Comparing to its peers or just BSE 100 figures wont give you an idea if the fund has actually met its mandate or had shortfall.

There are Funds that are not designed to perform great compared to its peers on a good year for Stocks may be it might just give 15 % returs yearly compared to similar looking fund giving 40 % but when the markets are down these funds would still give 6-7 % returns while the good performing funds would fall by more than 50 % ........ Without knowing the mandate a fund is suppose to achieve and reading reports of its past performance based on its mandate its hard to compare.

[Neshant]

Peter Schiff runs an investment fund company , David and Jim Rickards are commentators and don't run any investment firms perhaps they are just authors and expert commentators

Both David Stockman and Jim Rickards run investment companies and write books.

[Suraj]

It all depends on what the Mandate for Fund is what has the Fund Manager met his expectations .I have not seen the mandate for EPIVX

This is vastly overcomplicating the problem. Every fund has one mandate only - make money. If you don't make money, you fail. Any any fund manager that. They can talk all they want, but they don't make money, then they lose business.

EPIVX is a terrible all around fund. 4.5% front load, 2% early redemption fee, a ridiculously high 1.75% expense ratio, a rate of return that lags S&P and the bond aggregate index. And no, it's not good to 'time' it. MFs by definition discourage churn, and EPIVX with its 6.5% transaction cost on short term plays makes it clear they want long term holders, whom they then provide a very poor return.

This fund is also pretty useless as 'diversification'. It does not preserve capital. This years 'great performance' means your losses over 5 years fell from -30% to -25%. What good is that ? At the very least, any fund should keep up with the broad market. It is expensive. Its return is worse than even just GLD. If I followed Schiff's gold bug talk and bought both GLD and EPIVX 5 years ago, I'd make more money on GLD. They're a Morningstar 1-star rated fund, which means they don't even make the typical 3/4 star minimum filters most people use. Overall his fund is poor, so I'm not going to give his talk any importance.

[Neshant]

Banking is a scam not an industry producing anything of value in society.
Since it produces nothing of value, it has to steal from those who do produce value.
Enter yet another proposed robbery scheme.

One thing they over-look is the more such theft operations they implement, the less and less productive society trusts the system.

------

Tax on cash withdrawals coming?

[Austin]

Peter Schiff runs an investment fund company , David and Jim Rickards are commentators and don't run any investment firms perhaps they are just authors and expert commentators

Both David Stockman and Jim Rickards run investment companies and write books.

AFAIK David went along with Agro Financials just a month back or so before that he was not running any investment company to the best of my knowledge while Jim and David write books for long time.

[Austin]

This is vastly overcomplicating the problem. Every fund has one mandate only - make money. If you don't make money, you fail. Any any fund manager that. They can talk all they want, but they don't make money, then they lose business.

Thats a very narrow and short sighted view , If you just want to make money the follow the morning star rating or valueresearch and invest in fund that gives highest return. MF investement are long term atleast should be for 10-12 years

EPIVX is a terrible all around fund. 4.5% front load, 2% early redemption fee, a ridiculously high 1.75% expense ratio, a rate of return that lags S&P and the bond aggregate index. And no, it's not good to 'time' it. MFs by definition discourage churn, and EPIVX with its 6.5% transaction cost on short term plays makes it clear they want long term holders, whom they then provide a very poor return.

This fund is also pretty useless as 'diversification'. It does not preserve capital. This years 'great performance' means your losses over 5 years fell from -30% to -25%. What good is that ? At the very least, any fund should keep up with the broad market. It is expensive. Its return is worse than even just GLD. If I followed Schiff's gold bug talk and bought both GLD and EPIVX 5 years ago, I'd make more money on GLD. They're a Morningstar 1-star rated fund, which means they don't even make the typical 3/4 star minimum filters most people use. Overall his fund is poor, so I'm not going to give his talk any importance.

Why Peter Schiff’s international fund is up over 35% year-to-date
http://www.cnbc.com/2016/09/07/peter-sc ... -fund.html

His talk is sound for most part so does David and Jim and I like to listen to them , if you dont like any one of them its fine your call any ways

[Austin]

Donald Trump’s unhappy fate is to oversee a financial crisis far worse than the last-
James Rickards

http://www.cityam.com/254834/donald-tru ... crisis-far

As earthquake doesn’t care if you’re progressive or populist. It destroys your house all the same. Likewise a financial crisis is indifferent to a politician’s policy mix. Systemic crises proceed according to their own dynamic based on the array of agents in a system, and systemic scale.

The tempo of recent crises in 1994, 1998, and 2008 says a crisis is likely soon. A new global financial panic will be one legacy of the Trump administration. It won’t be Trump’s fault, merely his misfortune.

The equilibrium and value-at-risk models used by banks will not foresee the new panic. Those models are junk science relying as they do on notions of efficient markets, normally distributed risk, continuous liquidity, and a future that resembles the past. None of those hypotheses match reality.

Advances in behavioural psychology have demolished the idea of efficient markets. Data shows the degree distribution of risk is a power curve not a normal bell curve. Liquidity evaporates when most needed. Prices gap down; they do not move continuously. Each of the 1994, 1998, and 2008 crises was worse than the one before, and required more drastic intervention. The future does not resemble the past; it keeps getting worse. The standard models are in ruins.

Recent model improvements that take into account so-called tail risk still fail to come to grips with systemic scale. The most catastrophic event possible in a complex system is an exponential function of scale. In plain language, if you double system size, you do not double risk; you increase it by a factor of five or more.

Since 2008, the largest banks in the world are larger in terms of gross assets, share of total deposits, and notional value of derivatives. Everything that was too-big-to-fail in 2008 is bigger and exponentially more dangerous today.

The living wills and resolution authority of Dodd-Frank are entrances to gated communities. They seem imposing, but are a façade. They will do nothing to stop an angry mob. Increases in regulatory capital will not suffice. When a leveraged financial institution faces a liquidity panic, no amount of capital is enough. As boxing legend Mike Tyson mused, no plan survives the first punch in the face.

If existing models don’t work, what does? A blend of complexity theory, Bayesian statistics, and behavioural psychology can produce models with robust predictive power. Such models are being developed in a few centres of excellence such as the Santa Fe Institute, the LSE, and ETH Zurich. Yet, they are far from mainstream thinking and will not be adopted in time to mitigate the next crisis.

Financial panics are dynamically and mathematically identical to a variety of natural phenomena such as earthquakes and avalanches. As snow accumulates on a mountainside, seasoned observers can spot avalanche danger. Soon one snowflake alights in such a way as to perturb others that begin to slide, form a chute, create momentum, and rip loose the entire snowpack. Timing is uncertain, yet the avalanche is inevitable.

What snowflake could precipitate the next financial panic? Deutsche Bank is an obvious candidate. Less obvious is a failure to deliver physical gold by a London bullion bank. That would expose the hyper-leveraged “paper gold” market for what it is. A natural disaster on the scale of Fukushima would do as well.

Looming over these catalysts is a global dollar shortage, which has been limned by economists Claudio Borio and Hyun Song Shin at the Bank for International Settlements. The strong dollar could precipitate a wave of defaults on $9 trillion of dollar-denominated emerging markets corporate debt. Those defaults would make the 1994 Tequila Crisis look tame.

The 2008 crisis was truncated with tens of trillions of dollars of currency swaps, money printing, and rate cuts coordinated by central banks around the world. The next crisis will be beyond the scope of central banks to contain because they have failed to normalise either interest rates or their balance sheets since 2008. Central banks will be unable to pull another rabbit out of the hat; they are out of rabbits.

In the next crisis, liquidity will come from the IMF, which has the only clean balance sheet remaining. The IMF will print the equivalent of $10 trillion in world money called special drawing rights. China and Russia will acquiesce in this liquidity injection provided it hastens the demise of the dollar as the benchmark global reserve currency.

Can Trump avoid this fate? Possibly. Ski patrols reduce avalanche danger by using dynamite to descale the snowpack. Likewise the financial system can only be made safer by reducing its scale. Large vessels use watertight holds to achieve the same margin of safety. A hole in the hull floods one hold, but does not sink the ship.

Descaling finance means reinstating the Glass-Steagall and pre-Big Bang separation of deposit taking and securities underwriting. It means breaking up the big banks. JP Morgan, Chase Manhattan, and Chemical Bank should reemerge from the embrace of Jamie Dimon. Derivatives should be banned except for exchange-traded futures tied to specific assets used for commercial hedging. It’s time to close the casino.

Will Trump pursue these policies? It’s unlikely. Such proposals will be lost in a sea of competing priorities. Bank lobbyists rule Washington from the commanding heights; draining the swamp won’t change that.

Sooner than later a new treasury secretary and Fed chair will retrace the 2008 footsteps of Hank Paulson and Ben Bernanke to tell President Trump the system is having a heart attack. They will have no remedy except to suggest a call to Madame Lagarde.

James Rickards is an economist and New York Times bestselling author. His latest book, The Road To Ruin (Penguin Random House), was published in November 2016.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.