White House trade adviser Peter Navarro said on Monday the trade deal with China is “over,” and he linked the breakdown in part to Washington’s anger over Beijing’s not sounding the alarm earlier about the coronavirus outbreak.
“It’s over,” Navarro told Fox News in an interview when asked about the trade agreement. He said the “turning point” came when the United States learned about the spreading coronavirus only after a Chinese delegation had left Washington following the signing of the Phase 1 deal on Jan. 15.
“It was at a time when they had already sent hundreds of thousands of people to this country to spread that virus, and it was just minutes after wheels up when that plane took off that we began to hear about this pandemic,” Navarro said.
U.S.-China relations have reached their lowest point in years since the coronavirus pandemic that began in China hit the United States hard. President Donald Trump and his administration repeatedly have accused Beijing of not being transparent about the outbreak.
Trump on Thursday renewed his threat to cut ties with China, a day after his top diplomats held talks with Beijing and his trade representative said he did not consider decoupling the U.S. and Chinese economies a viable option.
Navarro has been one of the most outspoken critics of China among Trump’s senior advisers.
In other news, Catherine Austin Fitts provides a big picture update with Greg Hunter …
As global trade volumes continue to fall, air cargo rates are hitting their lowest levels in four years, reported The Journal of Commerce(JOC).
Peter Stallion, an analyst at Freight Investor Services (FIS), told JOC that air cargo rates out of Asia in Aug. and Sept. have generally been a good indication of what to expect in 4Q. He said rates in Asia haven’t been this low since 2015, and that could mean the global economy is likely to slow through the year.
WorldACD, a firm focused on advising air cargo companies, said in the first eight months of 2019, from January to August, global air cargo demand fell 5% YoY. For the same period, demand for Asian carriers sank by 6%.
WorldACD said chargeable weight declined 7% for the first eight months on a YoY basis, which sparked worldwide revenue declines for global air cargo firms of at least 16%. More specifically, air cargo originating in Europe plummeted 15.3% and was down 11.6% for cargo originating in Asia-Pacific.
Andrew Herdman, director-general of the Association of Asia Pacific Airlines (AAPA), said cargo demand from Asia fell 6.4% in Aug. YoY as macroeconomic headwinds continued to gain momentum into late summer, now fall.
Herdman said, in the first eight months, air cargo demand in Asia dropped 5.9% YoY — thanks to collapsing business confidence amid trade war escalations.
“Consumer goods markets continued to expand, but demand for intermediate goods fell further, contributing to the decline in air shipments,” Herdman said.
Edoardo Podesta, Dachser Far East’s managing director of air and sea logistics Asia-Pacific, told JOC that peak season expectations for the holidays are likely to disappoint.
“Even those who usually try to drum up the peak expectations to push up rates are openly admitting that it will likely be weak,” he said.
“We have a rather pessimistic approach and believe that there will be no more than two to three weeks of peak in November and that even that will not be too strong. It is difficult right now to predict what will happen before [Chinese New Year]. Again, we believe it will not be strong.”
The air cargo slump is happening as global trade volumes are declining around the world.
Earlier this week, The World Trade Organization (WTO) published its latest forecast that said trade growth would only expand by 1.2% in 2019, down from 2.6% it predicted in April.
The slowdown in air cargo is also seen inglobal shipping rates. The most serious of them all is the Freightos global 40′ shipping container rate, now plunging to new lows on the year, signaling that the probability of a rebound in the global economy this year is diminishing.
Global trade is in a destructive cycle, expected to move lower through the year, as the threat of a worldwide trade recession soars for 2020.
With the trade war between the US and China re-escalating once more, investors are again casting frightened glances at declining global trade volumes, which as Bloomberg writes today, “threaten to upend the global economy’s much-anticipated rebound and could even throw its decade-long expansion into doubt if the conflict spirals out of control.”
“Just as tentative signs appeared that a recovery is taking hold, trade tensions have re-emerged as a credible and significant threat to the business cycle,” said Morgan Stanley’s chief economist, Chetan Ahya, highlighting a “serious impact on corporate confidence” from the tariff feud.
To be sure, even before the latest trade war round, global growth and trade were already suffering, confirmed most recently by last night’s dismal China economic data, which showed industrial output, retail sales and investment all sliding in April by more than economists forecast.
The World Trade Organization published anew reportthat shows world trade is projected to “face strong headwinds” into 2020.
WTO economists expect merchandise trade volume growth to drop to 2.6% in 2019, down from 3% last year. The report said a rebound in global trade is possible if trade tensions dramatically ease.
The bearish forecast for 2019/2020 marks the second consecutive year that WTO economists revised their outlook and also follows similar warnings from the World Bank and the International Monetary Fund.
“It is increasingly urgent that we resolve tensions and focus on charting a positive path forward for global trade which responds to the real challenges in today’s economy – such as the technological revolution and the imperative of creating jobs and boosting development. WTO members are working to do this and are discussing ways to strengthen and safeguard the trading system. This is vital. If we forget the fundamental importance of the rules-based trading system we would risk weakening it, which would be a historic mistake with repercussions for jobs, growth and stability around the world,” Azevedo said.
The report said current forecasts reflect downgraded GDP projections for North America, Europe, and Asia — mostly due to waning effects of fiscal stimulus by the Trump administration.
WTO economists noted a “phase-out” of monetary stimulus in Europe and a continuing economic transition of China’s economy from manufacturing to services.
The reported noted that trade growth severely waned in 2H18 by several factors, including several rounds of tariffs and retaliatory tariffs affecting hundreds of goods, an already slowing Chinese economy, volatility in financial markets, and tighter monetary conditions by Central Banks.
Forward-looking trade indicators turned negative in 1Q19, including WTO’s World Trade Outlook Indicator (WTOI). WTOI index dropped to 96.3, below its baseline value of 100, indicating that the global slowdown will persist for some time.
The sustained loss of trade momentum highlights the urgency of the Trump administration to reduce trade tensions, which together with the rise of nationalism and financial volatility could deepen the synchronized global slowdown well into 2020.
(TheLastRefuge) The words from Peter Navarro will come as no surprise to any CTH reader who is fully engaged and reviewing the multi-trillion stakes, within the Globalist (Wall St-vs- Nationalist (Main Street) confrontation.
For several decades Wall Street, through lobbying arms such as the U.S. Chamber of Commerce (Tom Donohue), has structurally opposed Main Street economic policy in order to inflate profits and hold power –“The Big Club”. This manipulative intent is really the epicenter of the corruption within the DC swamp.
U.S. National Trade Council Director Peter Navarro discusses how Wall Street bankers and hedge-fund managers are attempting to influence U.S.-China trade talks. He speaks at the Center for Strategic and International Studies in Washington, D.C.
This article was built around the following short news clip…
Originallyoutlined a year ago. At the heart of the professional/political opposition the issue is money; there are trillions at stake.
President Trump’s MAGAnomic trade and foreign policy agenda is jaw-dropping in scale, scope and consequence. There are multiple simultaneous aspects to each policy objective; however, many have been visible for a long time – some even before the election victory in November ’16.
If we get too far in the weeds the larger picture is lost. CTH objective is to continue pointing focus toward the larger horizon, and then at specific inflection points to dive into the topic and explain how each moment is connected to the larger strategy.
If you understand the basic elements behindthe new dimension in American economics, you already understand how three decades of DC legislative and regulatory policy was structured to benefit Wall Street and not Main Street. The intentional shift in fiscal policy is what created the distance between two entirely divergent economic engines.
REMEMBER[…] there had to be a point where the value of the second economy (Wall Street) surpassed the value of the first economy (Main Street).
Investments, and the bets therein, needed to expand outside of the USA. hence, globalist investing.
However, a second more consequential aspect happened simultaneously. The politicians became more valuable to the Wall Street team than the Main Street team; and Wall Street had deeper pockets because their economy was now larger.
As a consequence Wall Street started funding political candidates and asking for legislation that benefited their interests.
When Main Street was purchasing the legislative influence the outcomes were -generally speaking- beneficial to Main Street, and by direct attachment those outcomes also benefited the average American inside the real economy.
When Wall Street began purchasing the legislative influence, the outcomes therein became beneficial to Wall Street. Those benefits are detached from improving the livelihoods of main street Americans because the benefits are “global”. Global financial interests, multinational investment interests -and corporations therein- became the primary filter through which the DC legislative outcomes were considered.
As an outcome of national financial policy blending commercial banking with institutional investment banking something happened on Wall Street that few understand. If we take the time to understand what happened we can understand why the Stock Market grew and what risks exist today as the monetary policy is reversed to benefit Main Street.
Instead of attempting to put Glass-Stegal regulations back into massive banking systems, the Trump administration is creating a parallel financial system of less-regulated small commercial banks, credit unions and traditional lenders who can operate to the benefit of Main Street without the burdensome regulation of the mega-banks and multinationals. This really is one of the morebrilliant solutionsto work around a uniquely American economic problem.
♦ When U.S. banks were allowed to merge their investment divisions with their commercial banking operations (the removal of Glass Stegal) something changed on Wall Street.
Companies who are evaluated based on their financial results, profits and losses, remained in their traditional role as traded stocks on the U.S. Stock Market and were evaluated accordingly. However, over time investment instruments -which are secondary to actual company results- created a sub-set within Wall Street that detached from actual bottom line company results.
The resulting secondary financial market system was essentially ‘investment markets’. Both ordinary company stocks and the investment market stocks operate on the same stock exchanges. But the underlying valuation is tied to entirely different metrics.
Financial products were developed (as investment instruments) that are essentially wagers or bets on the outcomes of actual companies traded on Wall Street. Those bets/wagers form the hedge markets and are [essentially] people trading on expectations of performance. The “derivatives market” is the ‘betting system’.
♦Ford Motor Company (only chosen as a commonly known entity) has a stock valuation based on their actual company performance in the market of manufacturing and consumer purchasing of their product. However, there can be thousands of financial instruments wagering on the actual outcome of their performance.
There are two initial bets on these outcomes that form the basis for Hedge-fund activity. Bet ‘A’ that Ford hits a profit number, or bet ‘B’ that they don’t. There are financial instruments created to place each wager. [The wagers form the derivatives] But it doesn’t stop there.
Additionally, more financial products are created that bet on the outcomes of the A/B bets. A secondary financial product might find two sides betting on both A outcome and B outcome.
Party C bets the “A” bet is accurate, and party D bets against the A bet. Party E bets the “B” bet is accurate, and party F bets against the B. If it stopped there we would only have six total participants. But it doesn’t stop there, it goes on and on and on…
The outcome of the bets forms the basis for the tenuous investment markets. The important part to understand is that the investment funds are not necessarily attached to the original company stock, they are now attached to the outcome of bet(s). Hence an inherent disconnect is created.
Subsequently, if the actual stock doesn’t meet it’s expected P-n-L outcome (if the company actually doesn’t do well), and if the financial investment was betting against the outcome, the value of the investment actually goes up. The company performance and the investment bets on the outcome of that performance are two entirely different aspects of the stock market. [Hence two metrics.]
♦Understanding the disconnect between an actual company on the stock market, and the bets for and against that company stock, helps to understand what can happen when fiscal policy is geared toward the underlying company (Main Street MAGAnomics), and not toward the bets therein (Investment Class).
The U.S. stock markets’ overall value can increase with Main Street policy, and yet the investment class can simultaneously decrease in value even though the company(ies) in the stock market is/are doing better. This detachment is critical to understand because the ‘real economy’ is based on the company, the ‘paper economy’ is based on the financial investment instruments betting on the company.
Trillions can be lost in investment instruments, and yet the overall stock market -as valued by company operations/profits- can increase.
Conversely, there are now classes of companies on the U.S. stock exchange that never make a dime in profit, yet the value of the company increases. This dynamic is possible because the financial investment bets are not connected to the bottom line profit. (Examples include Tesla Motors, Amazon and a host of internet stocks like Facebook and Twitter.) It is this investment group of companies that stands to lose the most if/when the underlying system of betting on them stops or slows.
Specifically due to most recent U.S. fiscal policy, modern multinational banks, including all of the investment products therein, are more closely attached to this investment system on Wall Street. It stands to reason they are at greater risk of financial losses overall with a shift in fiscal policy.
That financial and economic risk is the basic reason behind Trump and Mnuchin putting a protective, secondary and parallel, banking system in place for Main Street.
Big multinational banks can suffer big losses from their investments, and yet the Main Street economy can continue growing, and have access to capital, uninterrupted.
Bottom Line: U.S. companies who have actual connection to a growing U.S. economy can succeed; based on the advantages of the new economic environment and MAGA policy, specifically in the areas of manufacturing, trade and the ancillary benefactors.
Meanwhile U.S. investment assets (multinational investment portfolios) that are disconnected from the actual results of those benefiting U.S. companies, and as a consequence also disconnected from the U.S. economic expansion, can simultaneously drop in value even though the U.S. economy is thriving.
The Fed Funds Futures say a December 2015 rate raise is a near sure thing at 74%.
Many major currencies are down substantially against the USD in the last 1-2 years. This is hurting exports. It is costing jobs.
A raise of the Fed Funds rate will lead to a further appreciation of the USD. That hurt exports more; and it will cost the US more jobs.
A raise of the Fed Funds rate will also lead to an automatic cut to the GDP’s of Third World and Emerging Market nations, which are calculated in USD’s.
There will likely be a nasty downward economic spiral effect that no one wants in Third World countries, Emerging Market countries, and in the US.
The Fed Funds Futures, which are largely based on statements from the Fed Presidents/Governors, are at 74% for a December 2015 raise as of November 26, 2015. This is up from 50% at the end of October 2015. If the Fed does raise the Fed Funds rate, will the raise have a positive effect or a negative one? Let’s examine a few data points.
First raising the Fed Funds rate will cause the value of the USD to go up relative to other currencies. It is expected that a Fed Funds rate raise will cause a rise in US Treasury yields. This means US Treasury bond values will go down at least in the near term. In the near term, this will cost investors money. However, the new higher yield Treasury notes and bonds will be more attractive to investors. This will increase the demand for them. That is the one positive. The US is currently in danger that demand may flag if a lot of countries decide to sell US Treasuries instead of buying them. The Chinese say they are selling so that they can defend the yuan. Their US Treasury bond sales will put upward pressure on the yields. That will in turn put upward pressure on the value of the USD relative to other currencies.
So far the Chinese have sold US Treasuries (“to defend the yuan”); but they have largely bought back later. Chinese US Treasuries holdings were $1.2391T as of January 2015. They were $1.258T as of September 2015. However, if China decided to just sell, there would be significant upward pressure on the US Treasury yields and on the USD. That would make China’s and other countries products that much cheaper in the US. It would make US exports that much more expensive. It would mean more US jobs lost to competing foreign products.
To better assess what may or may not happen on a Fed Funds rate raise, it is appropriate to look at the values of the USD (no current QE) versus the yen and the euro which have major easing in progress. Further it is appropriate to look at the behavior of the yen against the euro, where both parties are currently easing.
The chart below shows the performance of the euro against the USD over the last two years.
(click to enlarge)
The chart below shows the performance of the Japanese yen against the USD over the last two years.
(click to enlarge)
As readers can see both charts are similar. In each case the BOJ or the ECB started talking seriously about a huge QE plan in the summer or early fall of 2014. Meanwhile the US was in the process of ending its QE program. It did this in October 2014. The results of this combination of events on the values of the two foreign currencies relative to the USD are evident. The value of the USD went substantially upward against both currencies.
The chart below shows the performance of the euro against the Japanese yen over the last two years.
(click to enlarge)
As readers can see the yen has depreciated versus the euro; but that depreciation has been less than the depreciation of the yen against the USD and the euro against the USD. Further the amount of Japanese QE relative to its GDP is a much higher at roughly 15%+ per year than the large ECB QE program that amounts to only about 3%+ per year of effectively “printed money”. The depreciation of the yen versus the euro is the result that one would expect based on the relative amounts of QE. Of course, some of the strength of the yen is due to the reasonable health of the Japanese economy. It is not just due to QE amount considerations. The actual picture is a complex one; and readers should not try to over simplify it. However, they can generally predict/assume trends based on the macro moves by the BOJ, the ECB, and the US Fed.
The chart below shows the relative growth rates of the various central banks’ assets.
(click to enlarge)
As readers can see, this chart makes it appear that Japan is in trouble relative to the other countries. When this situation will explode (implode) into a severe recession for Japan is open to question. That is not the theme of this article, so I will not speculate here. Still it is good to be aware of the relative situation. Japan is clearly monetizing its debts relative to the other major currencies. That likely means effective losses in terms of “real” assets for the other countries. It means Japan is practicing mercantilism against its major competitors to a huge degree. Do the US and other economies want to allow this to continue unabated? Theoretically that means they are allowing Japanese workers to take their jobs unfairly.
I will not try to include the Chinese yuan in the above description, since it has not been completely free floating. Therefore the data would be distorted. However, the yuan was allowed to fall against other major currencies by the PBOC in the summer of 2015. In essence China is participating in the major QE program that many of the world’s central banks seem to be employing. It has also been steadily “easing” its main borrowing rate for more than a year now from 6.0% before November 23, 2014 to 4.35% after its latest cut October 23, 2015. It has employed other easing measures too. I have omitted them for simplicity’s sake. Many think China will continue to cut rates in 2016 and beyond as the Chinese economy continues to slow.
All of these countries are helping their exports via mercantilism by effectively devaluing their currencies against the USD. The table below shows the trade data for US-China trade for 2015.
(click to enlarge)
As readers can see in the table above the US trade deficit popped up in the summer about the time China devalued the yuan. Some of this pop was probably seasonal; but a good part of it was almost certainly not seasonal. This means the US is and will be losing more jobs in the future to China (and perhaps other countries), if the US does not act to correct/reverse this situation.
The US Total Trade Deficit has also been going up. ⦁ For January-September 2013, the deficit was -$365.3B. ⦁ For January-September 2014, the deficit was -$380.0B. ⦁ For January-September 2015, the deficit was -$394.9B.
The US Total Trade Deficit has clearly been trending upward. The lack of QE by the US for the last year plus and the massive QE by the US’ major trade partners is making the situation worse. The consequently much higher USD has been making the situation worse. The roughly -$30B increase in the US Total Trade Deficit for the first nine months of the year from 2013 to 2015 means the US has been paying US workers -$30B less than it would have if the level of the deficit had remained the same. If the deficit had gone down, US workers would have benefited even more.
If you take Cisco Systems (NASDAQ:CSCO) as an example, it had trailing twelve month revenue of $49.6B as of its Q3 2015 earnings report. That supported about 72,000 jobs. CSCO tends to pay well, so those would be considered “good” jobs. Adjusting for three fourths of the year and three fifths of the amount of money (revenue), this amounts to roughly -57,000 well paying jobs that the US doesn’t have due to the extra deficit. If I then used the multiplier effect from the US Department of Commerce for Industrial Machinery and Equipment jobs of 9.87, that would translate into over -500,000 jobs lost. Using that logic the total trade deficit may account for more than -5 million jobs lost. Do US citizens really want to see their jobs go to foreign countries? Do US citizens want to slowly “sell off the US”? How many have seen the Chinese buying their houses in California?
The US Fed is planning to make that situation worse. A raise of the Fed Funds rate will lead directly to a raise in the yield on US Treasuries. It will lead directly to a stronger USD. That will translate into an even higher US trade deficit. That will mean more US jobs lost. Who thinks that will be good for the US economy? Who thinks the rate of growth of the US trade deficit is already too high? When you consider that oil prices are about half what they were a year and a half ago, you would think that the US Trade Deficit should not even be climbing. Yet it has, unabated. That bodes very ill for the US economy for when oil prices start to rise again. The extra level of non-oil imports will not disappear when oil prices come back. Instead the Total Trade Deficit will likely spike upward as oil prices double or more. Ouch! That may mean an instant recession, if we are not already there by then. Does the US Fed want to make the already bad situation worse?
Consider also that other countries use the USD as a secondary currency, especially South American and Latin American countries. Their GDP’s are computed in USD’s. Those currencies have already shown weakness in recent years. One of the worse is Argentina. It has lost almost -60% of its value versus the USD over the last five years (see chart below).
(click to enlarge)
The big drop in January 2014 was when the government devalued its currency from 6 pesos to the USD to 8 pesos to the USD. If the Fed causes the USD to go up in value, that will lead to an automatic decrease in the Argentine GDP in USD terms. Effectively that will lead to an automatic cut in pay for Argentine workers, who are usually paid in pesos. It will cause a more rapid devaluation of the Argentine peso due to the then increased scarcity of USD’s with which to buy imports, etc. Remember also that a lot of goods are bought with USDs in Argentina because no one has any faith in the long term value of the Argentine peso. Therefore a lot of Argentine retail and other trade is done with USD’s. The Fed will immediately make Argentinians poorer. Labor will be cheaper. The cost of Argentine exports will likely go down. The US goods will then have even more trouble competing with cheaper Argentine goods. That will in turn hurt the US economy. Will that then cause a further raise to the US Treasury yields in order to make them more attractive to buyers? There is that possibility of a nasty spiral in rates upward that will be hard to stop. Further the higher rates will increase the US Budget Deficit. Higher taxes to combat that would slow the US economy further. Ouch! The Argentine scenario will likely play out in every South American and Latin American country (and many other countries around the world). Is this what the Fed really wants to accomplish? Christine Lagarde (head of the IMF) has been begging them not to do this. Too many Third World and Emerging Market economies are already in serious trouble.
Of course, there is the argument that the US has to avoid inflation; but how can the US be in danger of that when commodities prices are so low? For October export prices ex-agriculture and import prices ex-oil were both down -0.3%. The Core PPI was down -0.3%. Industrial Production was down -0.2%. The Core CPI was only up + 0.2%. The Core PCE Prices for October were unchanged at 0.0%. Isn’t that supposed to be one of the Fed’s favorite inflation gauges? Personal Spending was only up +0.1%, although Personal Income was up +0.4%. I just don’t see the inflation the Fed seems to be talking about. Perhaps when oil prices start to rise again, it will be time to raise rates. However, when there are so many arguments against raising rates, why would the Fed want to do so early? It might send the US economy into a recession. It would only increase the rate of rise of the US Trade Deficit and the US Budget Deficit. It would only hurt Third World and Emerging Market economies.
Of course, there is the supposedly full employment argument. However, the article, “20+ Reasons The Fed Won’t RaiseEven After The Strong October Jobs Number” contains a section (near the end of the article) that explains that the US employment rate is actually 10.8% relatively to the level of employment in 2008 (before the Great Recession). The US has not come close to recovering from the Great Recession in terms of jobs; and for the US Fed or the US government to pretend that such a recovery has occurred is a deception of US citizens. I am not talking about the U6 number for people who are only partially employed. If I were, the unemployment number would be roughly 15%. I am merely adding in all of the people who had jobs in 2008, who are no longer “in the work force” because they have stopped “looking for jobs” (and therefore not in the unemployment number calculation). The unemployment number the government and the Fed are citing is a farce if you are talking about the 2008 employment level; and people should recognize this. The Fed should also be recognizing this when they are making decisions based on the unemployment level. Political posturing by Democrats (Obama et al) to improve the Democratic performance in the 2016 elections will only have a negative impact on the US economy. There is no “full employment” at the moment.
We all know that the jobs numbers are usually good due to the Christmas season. Some say those jobs don’t count because they are all part time. However, a lot of businesses hire full time temporarily. Think of all of those warehouse jobs for e-commerce. Do you think they want to train more people to work part time? Or do you think they want to train fewer people to work perhaps even more than full time? Confusion costs money. It slows things down. Fewer new people is often the most efficient way to go. A lot of the new jobs for the Christmas season are an illusion. They will disappear come late January 2016. Basing a Fed Funds rate raise on Christmas season hiring is again a mistake that will cost the US jobs in the longer term. If the Fed does this, it will be saying that the US economy exists in a US vacuum. It will be saying that the US economy is unaffected by the economies of the rest of the world. Remember the latest IMF calculation for the world economic outlook for FY2015 was cut in October 2015 to +3.1% GDP Growth. This is -0.2% below the IMF’s July 2015 estimate and -0.3% below FY2014. If the world economic growth outlook is falling, is it at all reasonable to think that US economic growth will be so high as to cause significant inflation? Is it instead more reasonable to think that a higher Fed Funds rate, higher Treasury yields, and a more highly valued USD will cause the US economy to slow further as would be the normal expectation? Does the Fed want to cause STAGFLATION?
If the Fed goes through with their plan to raise rates in December 2015, they will be committing the Sin Of Pride. That same sin is at least partially responsible for the US losing so many of its jobs to overseas competitors over the last 50 years. One could more logically argue that the Fed should be instituting its own QE program in order to combat the further lost of US jobs to the mercantilist behaviors of its trade partners. The only reason not to do this is that it believes growing its balance sheet will be unhealthy in the long run. However, the “Total Central Bank Assets (as a % of GDP)” chart above shows that the US is lagging both the ECB and the BOJ in the growth of its balance sheet. In other words our major competitors are monetizing their debts at a faster rate than we are. You could argue that someone finally has to stop this trend. However, the logical first step should be not adding to the central banks’ asset growth. Reversing the trend should not be attempted until the other major central banks have stopped easing measures. Otherwise the US Fed is simply committing the SIN OF PRIDE; and as the saying goes, “Pride goeth before a fall”. There are a lot of truisms in the Bible (Proverbs). It is filled with the wisdom of the ages; and even the Fed can benefit from its lessons. Let’s hope they do.
Easy Money 