Repo Fails Force Taper

After we feature: Povery Repledged, Reused and Rehypothecated, Bloomberg touches on failures to deliver collateral in this short video

Hedge Fund Managers Explain Unintended Consequences of Printing

Last Thursday we reported on the latest from hedge fund manager Hugh Hendry of Eclectica Asset Management where he shared his view on gold and much more at the recent Buttonwood Gathering. In the article linked above, just below the Buttonwood Gathering video, we posted a shorter clip of his “Greatest Hits,” revealing that Hendry argued years ago that the policies of central banks were specifically to achieve inflation, but nevertheless were, on net, very deflationary. This has proved to be both true and prescient.

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Truly Free Market Never Wrong

European Central Bank President Mario Draghi has been busy this week trying to convince grumpy German bankers that his program of buying up Eurozone nations’ debt is not simply tantamount to firing up the printing presses, will not lead to price inflation and does not represent a bailout of profligate nations at German taxpayer expense. His justification for undertaking the program, which is similar to the Federal Reserve’s quantitative easing programs, now in their sixth and apparently endless, iteration, is that “the market is wrong.”

As Wealth Cycles readers know, the market, when left to function free of government interference, contains a universe of information about supply and scarcity, input costs, prices and demand—far more information than any individual, institution or government can encompass. A properly functioning free market is not wrong.

However, given the continuous manipulation of the markets by central banks in recent decades, tremendously accelerated since 2008, Draghi, today, probably is correct: the market is wrong.

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Germany Brings it Home - Gold Repatriation as Stocks Scare

The German Bundesbank is now concerned with acquiring their physical gold, while other central banks are busily investing the cash they create into stocks (see the Banks of Japan, Israel, and the indirectly Federal Reserve-funded plunge protection team). Meanwhile, risk appetite in markets has reached extreme levels, according to the Barclays chart below.

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QE Event Horizon - Open-Ended Printing by Federal Reserve

An event horizon, is in laymans terms, "the point of no return" according to Wikipedia--more specifically, “the point at which the gravitational pull becomes so great as to make escape impossible. The most common case of an event horizon is that surrounding a black hole.”

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Food Prices - It's Lights Out for Agriculture

A second blackout in two days plunged one-half of the 1.2 billion Indian citizens into darkness. Convenience is not the only sacrifice. Agricultural supplies fall under further pressure as a result of the dry weather--the dryness is also the cause of the twin grid failures.

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Dollar Printing to Follow Renewed Stock and Oil Market SellOff

It is obvious today, after years of first-hand evidence, that money supply and expectations for changes in the money supply--in other words, dollar printing--impact asset prices and investing more than any other factor.

The word “cycle” comes from the Greek word kyklos, meaning cycle or circle. One common definition of cycle is “a periodically repeated sequence of events.”

The idea of a cycle is symbolized by a circle, which, because there is no beginning or end, represents recurrence. The symbolic circle is often divided into segments—often two, such as the Chinese yin and yang or day/night, but more often four segments, like the seasons.

A recognition and understanding of cycles is one way human beings are able to recognize patterns in data. As early humans learned that events in nature recur over and over again with regularity, they developed the ability to plan for the future, which ultimately led to advanced civilizations.

The Consumer Price Index (CPI) is a measure generated by the U.S. Bureau of Labor Statistics (BLS) by tracking the cost of a standard basket of goods and services over the years. At one time, the CPI was a valid yardstick of prices, based on the actual price of the same items year after year. But for the past few decades, the CPI has been comparing apples and oranges, so to speak. Under the methodology used to calculate CPI since 1982, when the price of one item—say a pound of steak—rises significantly, BLS simply substitutes another, less costly item—say a pound of chicken breast. In other cases, BLS uses a technique called hedonic regression, by which its statisticians guesstimate, for example, that an item—say a home computer—built today is probably faster and better than a home computer built 10 years ago. So they adjust the price increase downward to compensate for the assumed higher value of the newer item.

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Central Bank Actions, Words Control Markets

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Operation Twists Only $267 Billion - Watch Out Below!

Written By: The WealthCycles Staff

Ben Bernanke is current Chairman of the Federal Reserve Board. He succeeded Alan Greenspan as Chairman in 2006, following his nomination by former President George W. Bush. He is an economist and former professor at Princeton University. Nicknames include "the bernank," and "Helicopter Ben."  

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testiomials The extension of Operation Twist is inconsequential. The markets had priced in real printing. This caused disappointment, but this disappoint will help lead the markets lower, which is exactly the excuse Ben Bernanke needs to fire up the printing press.”

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Central Banks Begin Mini Coordinated Expansion - Fed to Join

All signs point to more inflation, defined as an increase in the supply of currency and credit, This means better prospects for savers of gold and silver. The mini (so far) coordinated expansion of currency and credit is the reason why. Let’s take a look.

Simply put, bonds are debt. Bonds basically say: "I owe you (IOU) X-amount of currency, plus X-amount of interest." —Michael Maloney, Guide to Investing In Gold & Silver. But, there is more to it than that. Bonds set the cost of borrowing, determine international currency flows, and play a huge role in determining the value of each nation’s currency. That means bonds have a direct effect on the dollars, euros, pesos or yuan in your wallet or bank account.

Ben Bernanke is current Chairman of the Federal Reserve Board. He succeeded Alan Greenspan as Chairman in 2006, following his nomination by former President George W. Bush. He is an economist and former professor at Princeton University. Nicknames include "the bernank," and "Helicopter Ben."  

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