This article by David Webb is insightful and brief. You may have no interest in Bitcoin, however, his observations are relevant to banking and the financial system. For me, one conclusion is that it is immoral to support (buy) bitcoin, on the level of gambling, and, if you understand it as a pyramid scheme, morally …
Continue reading Bitcoin: the World’s first decentralised Ponzi scheme by David Webb
Category:Interest Rates and Currencies
Asset prices down, money chasing security. What’s the problem?
While there has been enthusiasm for a recovering global economy, optimism is being dampened by market movements. There are some fundamental concerns about projected consumption levels and production costs. There are a number of geopolitical risks festering around the world: The strife in Hong Kong is being calmed by force. That will be re-assuring now, …
Continue reading Asset prices down, money chasing security. What’s the problem?
A single global currency.
China has suggested the adoption of a single global reserve currency citing the dangers of relying upon one national currency (US$). The currency would be underwritten by the IMF. It would certainly be helpful to move towards a more balanced global currency regime. The euro is a step in this direction because it is weighted …
Continue reading A single global currency.
Next, the FED will pay you to borrow their money.
The US FED has dropped interest rates to the floor: zero to a quarter of a percent. That probably won’t have a big impact, except short term (a day or so) on stock market sentiment. But if banks aren’t actually lending to businesses, then its not going to stimulate economic activity. So, maybe negative rates …
Continue reading Next, the FED will pay you to borrow their money.
Chinese Yuan XR volatility – Q and A
Reuters published an interesting analysis of the recent depreciation of the Yuan here, including implications, dangers and analyst expectations. It’s copied here below. If depreciation is market driven, a big if, then the depreciation may be appropriate and help revitalise Chinese exports and in turn western consumption. Whether or not the value has been engineered, …
Continue reading Chinese Yuan XR volatility – Q and A
US interest rates – how low can you go
Well not much lower. US interest rates were cut from 1.5% to 1.0% today. Soon they’ll be emulating Japan’s interest rate environment – hovering around 0.5%. And Japan’s economic reputation for the past decade or so has not been good. As we’ve said before, the interest rate level is not the problem. This reduction may …
Continue reading US interest rates – how low can you go
Interest rates cut in desperation …
Six central banks have cut their interest rates by half a percentage point. The US Federal Reserve has cut rates from 2% to 1.5% and the European Central Bank (ECB) trimmed its rate from 4.25% to 3.75%. The UK trimmed the interest rate to 4.5% from 5%. The central banks of Canada and Sweden …
Continue reading Interest rates cut in desperation …
EU interest rates up …
The ECB raised EU interest rates yesterday to 4.25% as expected. The stated rationale is to control inflation in the medium term (18 months). That’s the accepted wisdom anyway. But mostly its a signal to the market. Interest rates have been relatively stable over recent years and much of the volatility is underpinned by leveraging …
Continue reading EU interest rates up …
Another Fed rate cut … how low can you go, Ben?
The US Fed cut again from 2.25% to 2%. Now is the time to be reducing rates. But they’ve already come down so much in the past 2-3 quarters, while behaviour of policy makers and fiduciaries remains behind the game. I’m sure Ben would like to have additional room to reduce rates in case stimulation …
Continue reading Another Fed rate cut … how low can you go, Ben?
US dollar at new Euro low
The dollar has fallen to a record low against the euro as traders bet that further interest rate cuts will be needed to stem a US recession. And Bernanke may well drop interest rates further. though that does not mean confidence will return in the same way as previously – or should we say “irrational …
Continue reading US dollar at new Euro low