Perspectives on the global economic changes

[Suraj]

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

I'd be happy to use its entire record. EPIVX doesn't have a 10-12 year record. It's record since inception is -20% . And yes that's AFTER the 35% growth this year. And remember, +35% is not really true because of the 4.5% front load he takes from you; your original investment only grew ~29% as a result, even if you bought it at the start of the year. If you bought at inception, you'd have 76.5% of your original investment - he takes the front load and then loses 20% of what's left. "Give him 10-12 years to prove himself" is not an option - showing a -20% record after 6 years suggests he will have trouble being able to attract much money solely on merit, as opposed to from his talks. That's why I said his talk is mainly to buttress his business, which in itself is doing poorly.

Doesn't matter who else chooses to listen to him. It just implies they follow him off his cliff. His returns are poor. It's not a diversification choice; YTD, you are better off buying just GLD because there's no load on it. I understand the idea of diversification; the point is Schiff's fund is the worse gold diversification option here. GLD itself is better. GDX is vastly better, when you look at returns this year. He may write compelling stuff, but to quote a phamous movie "show me the money".

[Austin]

Russia’s By-the-Book Central Banker Sees QE Fading for Good

The unprecedented tools used by central banks to fight deflation and fire up growth didn’t serve the global economy well, according to Bank of Russia Governor Elvira Nabiullina. And once they’re gone, she says they aren’t coming back.

Besides spillovers that are inflating “asset bubbles in different segments” of global markets, another consequence of ultra-easy settings is that investment has poured into projects that are hurting productivity, Nabiullina said in a Bloomberg Television interview in Moscow. The outcome is a further drag on economic growth and trade that’s reverberating worldwide, she said.

“Quantitative easing was initially conceived as a temporary policy, to win time for structural changes,” Nabiullina said. “We see that it’s being carried out for quite an extended period and negative consequences of the policy are accumulating.”

Looser policy by major central banks has propelled stocks since the global financial crisis, and government bond yields have fallen to record lows. While Russia’s central bank has been so by-the-book that Morgan Stanley deemed it to be the “most orthodox” in developing Europe, policy makers in Moscow are more than innocent bystanders in a global debate over the pitfalls of monetary stimulus.

“Monetary policy alone can’t cope with these imbalances,” she said. “For the effort to be effective, what’s needed is a good mix, a good combination of fiscal and monetary-policy and structural changes.”


The European Central Bank last month also repeated its “strong call” for governments to flank loose monetary policy with “adequate fiscal policies and structural reforms” to make growth stronger and more sustainable. President Mario Draghi in October told euro-area governments that the ECB policies give time for economic reforms to be undertaken.

“If you have cheap money, it doesn’t necessarily go into projects with increasing efficiency, increasing productivity,” Nabiullina said. “Therefore, a consequence of low productivity of projects and the lack of meaningful growth in labor productivity is the low pace of economic growth, which harms everyone, all the countries, as we live in a globalized world.”


The timing of policy normalization will depend on the specific situation in each country, according to Nabiullina. The governor praised the Fed for its “rather careful” approach to preparing the markets for possible tightening in the U.S.

“Central banks of these countries face a very difficult task, of course, considering the deflation in these countries and the so-far limited impact of soft monetary policy,” Nabiullina said. “They are having to resort to artistry to achieve their goals.”

While higher rates in the U.S. won’t have any “significant, immediate impact” on the Russian economy, the Fed’s policy turn can reach the world’s biggest energy exporter by affecting the price of oil and stoking market volatility, she said.

Although central banks world over have bumped up against the limits of what they can accomplish, Nabiullina sees more than the failure of monetary stimulus.

“The job of central bankers is now difficult in all countries,” she said. “The tasks are different, and indeed they are hard to solve, leading to the use of non-traditional instruments. But I think it speaks to the flexibility of central banks, their readiness to deploy even non-traditional instruments, expand their arsenal of measures to act on the economy in order to reach their goals.”

[JohnTitor]

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.

------

What a load of tosh. I expected more from posters on BR.. I have seen a few posts here after the demonetisation that banking is a scam to take away peoples money. Please stop posting such nonsense here.

First off, your response suggests that you know nothing about the financial system. While it can be argued that banking does not add the same amount of value to society that say a farmer or doctor does, it is nonsense to claim that banking adds no value at all.

Banking is responsible for capital to be re-allocated in the economy. It allows for a smooth transfer of wealth and can efficiently use capital for the development of the country & economy. One's excess earnings which one has no use for at the moment can be utilised by someone else to purchase goods/inventory/land etc.

Your claim that everyone will be better off if noone had an account and hoarded cash is silly. If you held on to the thousands/millions/billions of rupees that you have earned but have no use for at this very moment, you would push inflation up rapidly. In fact this was one of the reasons India has had such high inflation in the last decade. Demand is increased artificially by those with lots of money at the expense of those with little money. The only alternative is to either go all gold coins or barter. You might find it hard to sell your 1000kg rice bags for a car or vice versa.

This is banking at its core. India's banking system is archaic. Branches are not fully connected i.e you cannot deposit/withdraw from any branch in the banking you have your account in. ATMs have limitations etc i.e. you cannot withdraw money from ANY cash machine in the country, because you need to withdraw from your own bank & even that is limited - you are allowed 5 free withdrawals? (or something like that). In a developed country, these hurdles do not exist. I can withdraw and deposit in any branch in the country. Heck I can do so in any bank in Europe! ATMs are free (most) to use and there is no limit on the number of withdrawals. India's banking system needs to enter the 21st century to begin with. Even with things like deposit protection, India has none. If an indian bank failed, all deposits would be lost and all depositors loose everything. In the EU, UK & US, there are protections for depositors provided by the government for which banks have to reserve capital. Legislation needs to be created and approved for this in India & banks need to set aside a portion of their capital for this.

Now, there are more complex variations of this that have grown over the last 50-100 years but that does not make banking a bad thing. For this, there needs to be proper regulation and oversight. This sits broadly under "investment banking". But this isn't "banking" in the true sense. It is more deal making, capital insurance, hedging etc. As long as investment banks cannot access customer deposits to do their business, it's fine. The problem arises if there is no firewall between the two. As far as the central bank goes, things like QE and interest rate manipulation to "solve" fundamental issues in the economy create more problems than they solve. Again, this isn't banking in the purest form. These are more recent (the fed was created in 1913) and its actions have led to bubbles.

But to say banking itself is a scam is plain stupid. As I said, there needs to be a lot of oversight and regulation to prevent such things from happening. This is more political

[TSJones]

This is banking at its core. India's banking system is archaic. Branches are not fully connected i.e you cannot deposit/withdraw from any branch in the banking you have your account in. ATMs have limitations etc i.e. you cannot withdraw money from ANY cash machine in the country, because you need to withdraw from your own bank & even that is limited - you are allowed 5 free withdrawals? (or something like that). In a developed country, these hurdles do not exist. I can withdraw and deposit in any branch in the country. Heck I can do so in any bank in Europe! ATMs are free (most) to use and there is no limit on the number of withdrawals. India's banking system needs to enter the 21st century to begin with. Even with things like deposit protection, India has none. If an indian bank failed, all deposits would be lost and all depositors loose everything. In the EU, UK & US, there are protections for depositors provided by the government for which banks have to reserve capital. Legislation needs to be created and approved for this in India & banks need to set aside a portion of their capital for this.

thank you for illuminating some of the differences between banking systems. I knew that India's was prolly not as sophisticated as the US banking system but I didn't realize the extent of it.

probably the same also exists for currency controls.

[James]

------
[/quote]
Even with things like deposit protection, India has none. If an indian bank failed, all deposits would be lost and all depositors loose everything.
[/quote]

^ Not true. In India, deposits upto Rs 1 lac are protected. See this :

https://m.rbi.org.in//SCRIPTs/FAQView.aspx?Id=64

[TSJones]

^^^^apparently most people do not make use of this guarantee because of the huge cash only economy.

[Austin]

If some one needs 100% guarantee for money deposited in India , they can invest in short term gilt fund which has very little volatility and credit quality of gsec

[GShankar]

^^^^apparently most people do not make use of this guarantee because of the huge cash only economy.

But then the extent of unsophistication does seem to be a bit less..

[Austin]

Even with things like deposit protection, India has none. If an indian bank failed, all deposits would be lost and all depositors loose everything.

Not unless you are depositing in some co-operative banks in India , If its a government bank or good private banks your deposits are secure as best it can be even if there is some failure , even though they have an insurance of 1 Lac against such failure but the banking system depends as much as on trust as on rules and any PSU banks will be bailed out by GOI in worst scenario.

If some one is still keen on having 100 % guranteed safe investment , Short Term Gilt are the best options they give you interest as good as FD and are backed by GSEC , then there are Liquid funds which are not 100 % GSEC but are secure too

[Neshant]

While it can be argued that banking does not add the same amount of value to society that say a farmer or doctor does, it is nonsense to claim that banking adds no value at all.

Banking as it stands is a scam not an industry of productive value.
As such it not add value but rather subtracts value from the productive economy.
If you do not understand this, you truly do not understand the industry you are in.

The whole notion of some "wise man" (i.e. central banker) sitting up in an ivory tower printing money (aka counterfeiting) and setting interest rates (aka price fixing) is absurd.

What part of this is capitalism?

It nothing more than a robbery mechanism to transfer profits from the productive economy to private banks. Or to put it another way, to transfer losses to the productive economy. Beyond that deception, it serves no other purpose.

Trillions of dollars are channeled to an industry producing NOTHING on account of this mechanism of theft. No other industry which produces nothing of value could survive a day without this parasitic dependency on the productive economy.

Monopolies invariably promote corruption. Monopoly over the issuance of fiat currency and its value thereof which private banks have usurped from national govts is the mechanism through which the privatization of profits & socialization of losses takes place.

All kinds of nonsensical gibberish & gobbly-goop laced with fancy terminology is used to justify this theft. Inflating (aka counterfeiting), too big to fail, too big to jail, economic stimulus (which is debt taken out at the country's expense to bail out private banks market gambling bets gone sour), market rigging which incurs no jail only small fines, buying off politicians, keeping taxpayers on the hook for more bailouts, and all manner of financial chicanery are the tools of the trade.

The free market does not need a useless middleman industry (i.e. banking) to allocate capital. The free market already is an efficient allocator of capital. We live in a world where buyer can connect directly with seller and lenders can connect directly to borrower. That private banks continue to insist that govt actively (i.e. forcefully) prevent an end to their monopoly over the issuance of fiat money is itself telling.

Like I said in my original message - you are NOT going to understand any of this.
Your message is just a rambling mess that misses the point completely.

The fiat system is setup in such a way that as few people understand it as possible.

If you doubt this, walk into a bank and ask a senior bank manager who's been working there for 20 years - "How money comes into existence ?" 9 out of 10 of them don't have a clue - this despite having spent all their lives in the "industry".

The best video on what I call the "useless middleman industry" (aka central banking aka private bank monopoly) is what's below. Its the one video which explains at its basics the core of this scam. None explains it better.

[Neshant]

The purpose of going cashless is not for our “convenience”, it is specifically for the purpose of “saving the banks” and tax collections. Governments and banks could care-less about what is convenient for us. They are only concerned with how much of our wealth they can extract from every person who has any currency.

Once that takes hold, banksters & bureaucrats will have total information on all your transactions, purchasing behavior, profiles about consumers, political and social background history and even predictive behavior, allowing them to control the population with ease.

That is the primary objective of a cashless society and it is why banksters are so for it.

If the objective was fighting corruption, hoards of banksters caught blatantly defrauding markets & investors over the years would be filling up the jails. Since none of that has happened, its obvious the objective is not fighting corruption - more so promoting it.

[Manish_P]

India's banking systems may be archaic but some points mentioned below do not hold for a lot of banks

1. A lot of banks (Public and Private) are inter-connected. You can deposit and withdraw from any branch of the bank you hold an account in. There might be some service charges applied.

2. You are permitted 'x' number of free withdrawals from your banks ATMs. But it depends on the grade of Customer you are(basically how much money you have deposited with them). In my primary bank i have unlimited free withdrawals. In another bank where i maintain only a nominal amount i have only 5 free withdrawals per month.

This is banking at its core. India's banking system is archaic. Branches are not fully connected i.e you cannot deposit/withdraw from any branch in the banking you have your account in. ATMs have limitations etc i.e. you cannot withdraw money from ANY cash machine in the country, because you need to withdraw from your own bank & even that is limited - you are allowed 5 free withdrawals? (or something like that). In a developed country, these hurdles do not exist. I can withdraw and deposit in any branch in the country. Heck I can do so in any bank in Europe! ATMs are free (most) to use and there is no limit on the number of withdrawals. India's banking system needs to enter the 21st century to begin with. Even with things like deposit protection, India has none. If an indian bank failed, all deposits would be lost and all depositors loose everything. In the EU, UK & US, there are protections for depositors provided by the government for which banks have to reserve capital. Legislation needs to be created and approved for this in India & banks need to set aside a portion of their capital for this.

thank you for illuminating some of the differences between banking systems. I knew that India's was prolly not as sophisticated as the US banking system but I didn't realize the extent of it.

probably the same also exists for currency controls.

[pankajs]

^
Indeed!

I haven't visited my base branch(es) for the last 10+ years. While I have changed residence/City/State I have continued to use the nearest branch for all my transactions but never felt any difference. The only inquiry I get after making the first couple of visits to a new branch, if they figure out that I reside nearby, is if I am interested in changing my base branch.

About 6 years back, after they figured I had shifted city, they pulled my account to some local branch with my permission. I have't seen the inside or outside of my *new* base branch till date. I don't even know where it is except that the location is printed on the cheque book.

One does have to submit periodic KYC forms and keep the communication address updated for receiving cheque books, etc.

While I rarely use another banks ATM and even then my cash needs are usually minimal, I do have the impression that the cash limits at another banks ATM is lower that at own bank ATMs. I haven't tested the limits in quite a while so may not be true in the current context (Before DeMo).

[Bart S]

This is banking at its core. India's banking system is archaic. Branches are not fully connected i.e you cannot deposit/withdraw from any branch in the banking you have your account in. ATMs have limitations etc i.e. you cannot withdraw money from ANY cash machine in the country, because you need to withdraw from your own bank & even that is limited - you are allowed 5 free withdrawals? (or something like that). In a developed country, these hurdles do not exist. I can withdraw and deposit in any branch in the country. Heck I can do so in any bank in Europe! ATMs are free (most) to use and there is no limit on the number of withdrawals. India's banking system needs to enter the 21st century to begin with. Even with things like deposit protection, India has none. If an indian bank failed, all deposits would be lost and all depositors loose everything. In the EU, UK & US, there are protections for depositors provided by the government for which banks have to reserve capital. Legislation needs to be created and approved for this in India & banks need to set aside a portion of their capital for this.

Most of your information is plain wrong. You need to check all your facts and get in touch with reality on the ground in India. The banking system is nowhere near as primitive as you make it out to be, in fact if you compare facilities available to customers based on the size of the deposit, the Indian banks probably offer you more and better services with less hassles.

[Austin]

Most of your information is plain wrong. You need to check all your facts and get in touch with reality on the ground in India. The banking system is nowhere near as primitive as you make it out to be, in fact if you compare facilities available to customers based on the size of the deposit, the Indian banks probably offer you more and better services with less hassles.

+ 1 & A decent Positive Interest Rate to top it up

I was wondering why that gentleman was calling it archaic , Unless he referring to early 90's when ATM was just coming into being and banks were not as interconnected as it is today.

AFAIK the PSU banks and Big Private banks ( ICICI,HDFC etc ) are well managed and are under sharp supervision of RBI , It is not possible that depositor would loose their money overnight.

Its just some of co-operative banks that I would say might have a chance that there is a chance depositors might loose their money at worst for short/medium duration try to stay away from them

[panduranghari]

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

I'd be happy to use its entire record. EPIVX doesn't have a 10-12 year record. It's record since inception is -20% . And yes that's AFTER the 35% growth this year. And remember, +35% is not really true because of the 4.5% front load he takes from you; your original investment only grew ~29% as a result, even if you bought it at the start of the year. If you bought at inception, you'd have 76.5% of your original investment - he takes the front load and then loses 20% of what's left. "Give him 10-12 years to prove himself" is not an option - showing a -20% record after 6 years suggests he will have trouble being able to attract much money solely on merit, as opposed to from his talks. That's why I said his talk is mainly to buttress his business, which in itself is doing poorly.

Doesn't matter who else chooses to listen to him. It just implies they follow him off his cliff. His returns are poor. It's not a diversification choice; YTD, you are better off buying just GLD because there's no load on it. I understand the idea of diversification; the point is Schiff's fund is the worse gold diversification option here. GLD itself is better. GDX is vastly better, when you look at returns this year. He may write compelling stuff, but to quote a phamous movie "show me the money".

Suraj Saar and Austin saar,
While I do not disagree with your opinions(because you both are approaching the issue from 2 different ends), I just have to ask- Do you believe in miracles or do you believe in maths?

Because, if you believe in maths, then all that matters is how much gold you own. Rest all is just noise.

[JohnTitor]

Before I go any further, Mods - I'm not sure if this is the right thread to progress this discussion. If not, let us know and I will desist from further debate of this topic.

Most of your information is plain wrong. You need to check all your facts and get in touch with reality on the ground in India. The banking system is nowhere near as primitive as you make it out to be, in fact if you compare facilities available to customers based on the size of the deposit, the Indian banks probably offer you more and better services with less hassles.

Your reply is perfect. You are right in that I don't know everything about Indian banking, but my reply was based on my limited experience I had in dealing with it. Further, it demonstrates exactly what is wrong with the system. Why should a poor man who has deposits of 10k be charged to access his money beyond 'x' times? (whatever that x is) while someone who has 10lak be allowed unlimited free withdrawals? Yes I know the charge is for "use of the facilities & the banking resources" - but there needs to be cross subsidisation. This is how banking works where I am. Otherwise, the very people who can least afford these charges have to pay them, disincentivising use of the system. If you are going to charge be to withdraw my own money, why will I deposit it in the first place? I will pay cash everywhere.

As far as the second part of your response is concerned, I am aware of the "better services" that banks provide to richer customers. I speak from experience, I can get things done in india by directly speaking to the manager while sitting thousands of miles away. That would not work in the UK or the US. Does it make life convenient for me? Of course - but that's the point.. why should there be one rule for the rich and another for the poor?

India's banking systems may be archaic but some points mentioned below do not hold for a lot of banks

1. A lot of banks (Public and Private) are inter-connected. You can deposit and withdraw from any branch of the bank you hold an account in. There might be some service charges applied.

2. You are permitted 'x' number of free withdrawals from your banks ATMs. But it depends on the grade of Customer you are(basically how much money you have deposited with them). In my primary bank i have unlimited free withdrawals. In another bank where i maintain only a nominal amount i have only 5 free withdrawals per month.

Yes - you are right. I should have qualified my statement using "most/some" as it does give the impression I meant all. Apologies for that. But the issue of a lack of full connectivity is still present. I had trouble when trying to deposit money in a Karnataka bank branch in a different city, because my account was based in Blr. This is something that I had taken for granted. Similarly, the services you would receive weren't the same - as in, loans etc were harder to obtain and it required contacting the branch manager from the branch my account was in and get him to send an email/docs. Again, this is unnecessary hassle which you wouldn't undergo elsewhere.

I have to state that this was a couple years ago, so things might have changed. I hope they have. As I understand it, the issue with 'x' withdrawals is an RBI mandate, which I think is plain stupid and inconveniences the common folk. I should be able to withdraw from any ATM in the country any number of times (with certain amounts per day - to prevent fraud/theft - and upto account balances).

The whole notion of some "wise man" (i.e. central banker) sitting up in an ivory tower printing money (aka counterfeiting) and setting interest rates (aka price fixing) is absurd.

What part of this is capitalism?

I'm sorry but half of what you say doesn't apply to the Indian banking system. In some ways, its "lack of sophistication" is what has protected it from bank runs caused by "casino banking". But for corruption induced issues i.e providing loans to those that aren't deserving, the Indian banking system is rock solid.

Capitalism in its truest form would allow "dynamic" interest rates where demand for money would push up/down rates instantly. But in reality, this is not possible as it would require complete digitisation with everyone having access to the same information at the same time. The Indian central bank is "owned" by the govt i.e public and can be enforced to run with a certain objectives in mind. You cannot compare it to the Fed because the Fed is private. Its shareholders are corporations who are driven by profit.

If you doubt this, walk into a bank and ask a senior bank manager who's been working there for 20 years - "How money comes into existence ?" 9 out of 10 of them don't have a clue - this despite having spent all their lives in the "industry".

Ignorance isn't evidence that the system doesn't work. I bet half the managers had no clue about finance before they joined up. They just wanted a good govt job with guaranteed pensions. This doesn't mean banking is a farce.

Excess Money printing is a bad thing. This can and should be curbed through legislation and heavy oversight of the central bank. The BoE for instance, has an objective to maintain inflation at no more than 2% - but since 2008, this is less of a concern and the bank had embarked - as did the Fed - with QE. HERE lies the mistake.

As far as "too big to fail" etc are concerned, that is a political mistake rather than a banking issue. Politics has the problem of short-sightedness. All politicians worldwide have one objective and one objective only. To get re-elected. To that end, they will enact policies and make decisions that will ensure that nothing goes wrong at the next election cycle. These short term issues are the cause of things like "too big to fail". If you let a huge bank fail, most non-depositors will lose everything which will start a cascade. But this is natural and required to regularly clean the system. Kicking the can down the road only makes the problems worse. Look at what has happened across the world now. Banking itself is not the cause - wealth/power/short-sightedness and not willing to have short term pain for long term gain is the problem.

The free market does not need a useless middleman industry (i.e. banking) to allocate capital. The free market already is an efficient allocator of capital. We live in a world where buyer can connect directly with seller and lenders can connect directly to borrower.

Pray tell us how. You are a farmer, you grow corn.. you fancy a nice car. Tell me how you will exchange your corn for the car without an intermediary. Gold? Sure - but it has the flaw of being severely limited along with its attraction to thieves.

[JohnTitor]

^ Not true. In India, deposits upto Rs 1 lac are protected. See this :

https://m.rbi.org.in//SCRIPTs/FAQView.aspx?Id=64

Ahh.. Thankyou. I was unaware of this. This is definitely a good thing. I feel that the protected amount is quite small, but that's a different issue.

[JohnTitor]

Not unless you are depositing in some co-operative banks in India , If its a government bank or good private banks your deposits are secure as best it can be even if there is some failure , even though they have an insurance of 1 Lac against such failure but the banking system depends as much as on trust as on rules and any PSU banks will be bailed out by GOI in worst scenario.

If some one is still keen on having 100 % guranteed safe investment , Short Term Gilt are the best options they give you interest as good as FD and are backed by GSEC , then there are Liquid funds which are not 100 % GSEC but are secure too

Thanks Austin - I was unaware of this. I will try to find out more about GSEC/guilts. How would one go about purchasing them? Stock brokers don't provide access to the Indian sovereign bonds market (at least the ones I spoke to). I would prefer that if possible.

[svinayak]

I was wondering why that gentleman was calling it archaic , Unless he referring to early 90's when ATM was just coming into being and banks were not as interconnected as it is today.

AFAIK the PSU banks and Big Private banks ( ICICI,HDFC etc ) are well managed and are under sharp supervision of RBI , It is not possible that depositor would loose their money overnight.

Why do we need to feed others. These firangi are here but dont know India. There is no need to answer to their ignorance
They compare with some other countries which does not match

[Austin]

Thanks Austin - I was unaware of this. I will try to find out more about GSEC/guilts. How would one go about purchasing them? Stock brokers don't provide access to the Indian sovereign bonds market (at least the ones I spoke to). I would prefer that if possible.

Most Mutual Fund House offer GILT funds , Short Term has low volatility compared to long term ones ...Depends also on your investment horizon. ( This is india specific I am not sure of NRI can invest into this but likely they can )

Here is some listed https://www.valueresearchonline.com/fun ... Chng=1&pg=

If you want to take lowest risk in ST GILT just opt for the one with Low Standard Deviation and Lowest Maturity Years.

[Austin]

I was wondering why that gentleman was calling it archaic , Unless he referring to early 90's when ATM was just coming into being and banks were not as interconnected as it is today.

AFAIK the PSU banks and Big Private banks ( ICICI,HDFC etc ) are well managed and are under sharp supervision of RBI , It is not possible that depositor would loose their money overnight.

Why do we need to feed others. These firangi are here but dont know India. There is no need to answer to their ignorance
They compare with some other countries which does not match

Yes sure he is new hear but he will learn among the biggies here

[Austin]

Market Insights From A Gold Fund Manager - Podcast

I'm publishing our recent chat for you today. The recording cuts straight into our conversation, the skinny of which is as follows:

Headwinds to gold in the short to medium term.
What a strong dollar means for gold.
Good inflation vs. bad inflation. Or at least the market perception of this.
Why NOT owning gold is simply foolish.
And other juicy titbits.

[panduranghari]

Why do we need to feed others. These firangi are here but dont know India. There is no need to answer to their ignorance
They compare with some other countries which does not match

Many will jump from high rises when the shit finally hits the fan. The traders cant see the wood from the trees.

[Neshant]

I'm amazed the Bank of Japan can simply go on buying its own govt bonds.

Its almost like a perpetual motion machine.

No debt needs to be repaid when savers, wage earners, pensioners and the young can be looted indefinitely.

Conventional physics however suggests the snake cannot go on eating its own tail forever.

[Austin]

I'm amazed the Bank of Japan can simply go on buying its own govt bonds.

Its almost like a perpetual motion machine.

No debt needs to be repaid when savers, wage earners, pensioners and the young can be looted indefinitely.

Conventional physics however suggests the snake cannot go on eating its own tail forever.

Indeed this looks like a Perpetual Motion Machine and so far their Public Debt to GDP Ratio has shot up to something like onleee 240 % of GDP and growing

I mean how to they control inflation with such huge internal borrowing and how can govt allow such huge bond borrowing without affecting its credit rating ?

[panduranghari]

JGBs are called widow makers. All those who have shorted them at 10, 9, 8, 7, 6, 5, 4, 3, 2, 1, 0.5 % yields have lost money.

Carry trade has kept the inflation very low.

[Neshant]

The plan of the Bank of Japan is to buy up all these govt bonds and then "forgive" them in one go.

That is the same plan of the Federal Reserve.

Probably the same plan of every country out there with no intent to make good on those bonds.

Presumably inflation is the consequence of all this money printing (which is what this really is).
But what if even a fraction of the leveraged bets (e.g. stock market gambles & derivate casino bets) taken out with the above phantom money starts imploding?
Will the govt then produce even more bonds to "stimulate the economy" (aka bail out bankers) and the central bank buy even more of those bonds up which it then "forgives"?

[Austin]

The plan of the Bank of Japan is to buy up all these govt bonds and then "forgive" them in one go.

Forgive as in they wont pay back to the bond holder i.e people of japan the interest and the capital ?

[Austin]

The US is $19.9 trillion in debt — here are the countries we owe the most

http://www.businessinsider.com/us-199-t ... 16-12?IR=T

[Neshant]

The Road to ROOTA!

[Neshant]

------
^ Not true. In India, deposits upto Rs 1 lac are protected. See this :

What you don't realise is that these claims are meaningless.
They may as well said deposits up to 100 crore are protected.

Govts cannot and will not insure all depositors in a collapse scenario.
The US FDIC for instance has less than 1% on reserve for total outstanding deposits.
This means only 1% of the deposits can be paid.
If major banks collapse, you won't be getting your 1 lakh deposit.
You'll be getting a goose egg.

[panduranghari]

Govts cannot and will not insure all depositors in a collapse scenario.

Government will cover all deposits. Its guaranteed. You wait and see. To save the currency system, they will destroy the currency itself. Sounds counterintuitive? Its not.

What politicians do is take the path of least resistance. And when faced with a currency collapse, they always take an easy way out. Dont believe the government to do the right thing. They can never do the right thing because for a drug addict the next fix is necessary. Similarly for a politician in an over indebted society, the whole idea of debt repayment getting harder due to contraction of the money supply and the supposed deflation, is akin to political oblivion. While hyperinflation conjures up images of a trillion dollar zimbabwe dollar notes, we need to understand this is the reflexive response of the government to the onset of loss of confidence in the currency. Its a palliative treatment for a cancerous patient. At best, it makes the people getting the higher denomination note feel they got more money to pay off the debt. Not realising that every transaction that has happened until that higher denomination note has reached their hands, has debased it. Those who will benefit from the currency printing will be those closest to the spigot of the money creation. And while the Marie Antoinettes will ask the sheeple to eat their cake, the government will fulfil their obligation of covering the deposits with ever higher denomination currency.

It will play out in most western countries. Not so much bad in the so called 'global south'.

[Neshant]

The plan of the Bank of Japan is to buy up all these govt bonds and then "forgive" them in one go.

Forgive as in they wont pay back to the bond holder i.e people of japan the interest and the capital ?

Yes, the purpose of the Bank of Japan buying up lots of govt bonds is to cancel them outright.

Effectively the bonds never have to be repaid. The payment comes through the dilution of the currency's value.

The few remaining private bond holders get paid however.

[Neshant]

Govts cannot and will not insure all depositors in a collapse scenario.

Government will cover all deposits. Its guaranteed. You wait and see. To save the currency system, they will destroy the currency itself.

They will not print but rather guarantee the entire leveraged debt pyramid or at least try as was done in 2008.
But I doubt this time round it is going to work.

[Austin]

They will have to print money , the 1 lac insurance is more like means nothing , FD are secured by government as the banks PSU and even big private ones will be bailed out by government in case of crisis which means printing more bigger denomination notes ( I am not sure if printing Rs 2000 is a precursor to it and case of how it will be done ) , If they dont there would be riots on street and pitch forks will be out.

What about GILIT they are more secure than FD

[panduranghari]

They will not print but rather guarantee the entire leveraged debt pyramid or at least try as was done in 2008.
But I doubt this time round it is going to work.

Them guaranteeing it means, they will cover the deposits. They will destroy the currency to save the save the currency system. i.e. they will destroy US dollar to save the $ based international monetary system i.e. swift, IMG, WB, G20, NSG, UNSC, G2, etc. etc.

The leveraged bets upon which the deposits are based implode first and only then do deposits implode.
The former occurs first which then causes the latter not the other way around.

The leveraged bets come in many forms. Bond market was rising constantly for the past 35 years. The Dow will cross 20000 soon and will get to 38000. I think Austin was shocked when I said that a couple of months back. But I think it will probably go to 40000 too. Real estate has risen pretty much in tandem with bonds over the past 35 years except for the downturn in 2007-2009. Commodity cycle peaked in 2014 and has been in cyclical downturn since. Remember Glencore. I was convinced that it will be Lehmann mk 2. But it was not. Somehow it has survived. Systemically important financial institutions -SIFI's- are even bigger than what they were in 2007. Because assets held by one are liabilities of another, the only way they can survive downturn is when the deposits are covered and the government stands behind them. It succeeded in 2007 but now CB's are at 0%. The balance sheet expansion cannot happen without currency destruction. Leveraged bets are now a part of the system. It were since repealing of Glass Steagal in USA. Dodd Frank act will probably ensure bail ins will happen to ensure leveraged bets do not implode without some back stop. EIther way it does not matter. Of course you know that, so I am preaching to the converted.

So it's not deposits the govt has to print. Rather it has to guarantee the credit worthyness of leveraged gambers who placed bets with assets they don't have all of which sit atop the deposit.

As I said, Dodd Frank has ensured that leveraged bets are exactly the same as deposits now.

I seriously doubt the govt will guarantee house flippers and stock market high rollers gambling their ass away on leverage and getting huge margin calls they cannot pay.

If you observe the actions of the governments in the western countries, you will notice that they do not care about the common people. They will guarantee everything. Are you not following happenings in Venezuela?

But that's what govt would have to do to prevent leverage from collapsing and the currency becoming null & void. Note the currency becomes void not through printing but through the collapse of leveraged bets.

[/quote]

Its one and the same thing. Collapse of the leveraged bets is called loss of confidence.

We see the deflationists everywhere. Nomi Prinz, Raul-Illargi-Meijer at Automatic Earth Blog, Mish Shedlock, Jim RIckards etc. It seemed that all of their conclusions came to the same end: that dollar deflation would rule the day, no matter what. Mind you now, most of them were split on the finer points of the issue, but for all of them; Deflation was always the final outcome. We need to understand that debt is the very essence of fiat. Just like aatma is the true essence of our living body. These deflationists get their direction from thinking that as debt defaults, the fiat currency is destroyed. They do not see that hyperinflation is the process of saving debt at all costs, even buying it outright for cash. Deflation is impossible in today's dollar terms because US government policy will allow the printing of cash, if necessary, to cover every last bit of debt. These dollars will be worthless but there will never be any deflation in dollar terms.

[panduranghari]

Another question to deflationists-
Did Zimbabwe have 1 Trillion dollar note when the hyperinflation started?

[TSJones]

Another question to deflationists-
Did Zimbabwe have 1 Trillion dollar note when the hyperinflation started?

you are focusing on the symptom and not the cause.....

zimbabwe went thru a disasterous war and drove out the whites and confiscated their properties and then thru corruption collapsed the rest of businesses. then kept printing money.

the American economy is for real. highly mobile work force, innovative, culturally adaptable, and constantly promoting new ideas and technology.

THAT is what the dollar is based on. the rest of the world is constantly playing catch up.

[panduranghari]

OH come on TSJ. Dollar TODAY is not based on highly mobile work force which is innovative, culturally adaptable and constantly promoting new ideas and tech. Dollar in 1870 was based on all that.