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Bank profitability,,, Hierarchy of need
The productive loop of the economy has NO NEED of currency expansion above and beyond the level of expansion created by increased productivity.
Monetary inflation is strictly the province of bankers. The same is true for the State. It too must depend on currency expansion. Here is an article that lays out the current situation.
BOJ Offers To Buy Unlimited JGBs After Yields Surge, USDJPY Tumbles
So, their central bank offers to buy government bonds without limit.
"the BOJ is set to launch a full-scale investigation to mitigate the side effects of its yield-curve control policy on bank profitability and government bond trading, "
" Deutsche Bank complaining vocally about the ECB's policies) similar concerns have spread in Japan where both banks and pension funds have been agitating for at least some yield curve steepening to increase NIM and support bank profitability."
"another factor that is likely playing a key role is the ongoing decline in BOJ bond purchases, which both the bond and FX markets have so far been sternly ignoring."
The private sector refuses to buy all that stinky paper.
Here is a chart of 10 year yields around the world.
http://thesoundingline.com/wp-conten...-countries.jpg
So, as Powell raises rates he sucks capital away from the R.O.W. He endangers domestic U.S. debt with the higher rates. At the same time, he sucks in capital to U.S. markets. The 10 year interest rate is the battering ram that Powell uses to clobber The ECB and BOJ and PBOC. It also has a big effect on States like India and Turkey. Armstrong tells us that the U.S. bond market will be the last to collapse. This is quite a gamble.
Armstrong again, "Do not put equities in the same boat with bonds. The ship is sinking, but that is concerned with debt – not equity. Keep in mind that the collapse of a financial system has historically unfolded to different degrees."
That was before instant instant communication and instant capital transfer.
"n order for tangible assets like stocks, gold, art, antiquities, etc. to survive, the fundamental infrastructure must survive. That means there must be ample food for gold to have any value whatsoever. So you must stop short of the Mad Max event for anything tangible to have a safe haven value."
"he typical scenario painted by the doomsday crowd involves the German hyperinflation. However, that did not wipe out the structure of surrounding countries. This mean all tangible assets retained value because they could still be sold elsewhere."
The single currency area of the EU guarantees universal European collapse. American States has a single currency also.
"Therefore, if we are only talking about a reset of the world financial system, then tangible assets retain value that becomes translated into the new currency. Hence, equities will survive, government debt and currency will not. Only going all the way to a Mad Max event would everything lose value except food. Not even gold survives for trade comes to an end."
This is NOT true. Government debt and currency will die in the default cascade. Look at the many previous collapses. The hierarchy of needs starts with air, water and food. It moves up and includes dirt and seeds. From there it MAY move up to some level of luxuries. A basic shelter, tools and weapons. Remember that the collapse will erase a higher percentage of the wealth of the rich than it will erase of the poor.
If our energy intensive farming system fails, you will trade your Renoir for a bushel of rutabagas. It is only excess wealth that allows the production and sale of "An Orange Balloon Dog Sold for $58.4M"
If we slip down to the bottom of the hierarchy of needs, very few people will have the skills to survive. A global currency reset seems unavoidable.
When it all vanishes in a puff of smoke, what fraction of the hierarchy of needs will still be in demand?
" If everyone understands that we CAN SURVIVE this with society mostly intact ONLY IF WE UNDERSTAND what and how things unfold, then we have options once the crash and burn comes. We can stop short of a Mad Max event by understanding history, which is our road map to the future."
"The civil unrest we have beginning today post-Trump is intended to overthrow Trump and Obama has remained in Washington, which NO PRESIDENT has ever done. "
SIDE NOTE, Obama Ex National Intel Director Says Barry Is
Behind The Entire Russian 'Witch Hunt'
"Hence, this is a battle shaping up for the future; the final conflict over Marxism, which began with the fall of Communism in 1989. This final battle began 26 years from 1989.95."
https://www.armstrongeconomics.com/w...ip-is-sinking/
7/23 Disaster For Theresa May: Brits Overwhelmingly Reject New Brexit Plan – ZH
7/23 Australia’s version of the subprime mortgage crisis arrives – SMH
7/23 Emerging markets at mercy of falling Yuan as currency war looms – Bloomberg
The currency war is just a war of confidence. The Chinese print to feed the dragon. America raises interest rates to starve the dragon.
The productive loop of the economy has NO NEED of currency expansion above and beyond the level of expansion created by increased productivity.
Monetary inflation is strictly the province of bankers. The same is true for the State. It too must depend on currency expansion. Here is an article that lays out the current situation.
BOJ Offers To Buy Unlimited JGBs After Yields Surge, USDJPY Tumbles
So, their central bank offers to buy government bonds without limit.
"the BOJ is set to launch a full-scale investigation to mitigate the side effects of its yield-curve control policy on bank profitability and government bond trading, "
" Deutsche Bank complaining vocally about the ECB's policies) similar concerns have spread in Japan where both banks and pension funds have been agitating for at least some yield curve steepening to increase NIM and support bank profitability."
"another factor that is likely playing a key role is the ongoing decline in BOJ bond purchases, which both the bond and FX markets have so far been sternly ignoring."
The private sector refuses to buy all that stinky paper.
Here is a chart of 10 year yields around the world.
http://thesoundingline.com/wp-conten...-countries.jpg
So, as Powell raises rates he sucks capital away from the R.O.W. He endangers domestic U.S. debt with the higher rates. At the same time, he sucks in capital to U.S. markets. The 10 year interest rate is the battering ram that Powell uses to clobber The ECB and BOJ and PBOC. It also has a big effect on States like India and Turkey. Armstrong tells us that the U.S. bond market will be the last to collapse. This is quite a gamble.
Armstrong again, "Do not put equities in the same boat with bonds. The ship is sinking, but that is concerned with debt – not equity. Keep in mind that the collapse of a financial system has historically unfolded to different degrees."
That was before instant instant communication and instant capital transfer.
"n order for tangible assets like stocks, gold, art, antiquities, etc. to survive, the fundamental infrastructure must survive. That means there must be ample food for gold to have any value whatsoever. So you must stop short of the Mad Max event for anything tangible to have a safe haven value."
"he typical scenario painted by the doomsday crowd involves the German hyperinflation. However, that did not wipe out the structure of surrounding countries. This mean all tangible assets retained value because they could still be sold elsewhere."
The single currency area of the EU guarantees universal European collapse. American States has a single currency also.
"Therefore, if we are only talking about a reset of the world financial system, then tangible assets retain value that becomes translated into the new currency. Hence, equities will survive, government debt and currency will not. Only going all the way to a Mad Max event would everything lose value except food. Not even gold survives for trade comes to an end."
This is NOT true. Government debt and currency will die in the default cascade. Look at the many previous collapses. The hierarchy of needs starts with air, water and food. It moves up and includes dirt and seeds. From there it MAY move up to some level of luxuries. A basic shelter, tools and weapons. Remember that the collapse will erase a higher percentage of the wealth of the rich than it will erase of the poor.
If our energy intensive farming system fails, you will trade your Renoir for a bushel of rutabagas. It is only excess wealth that allows the production and sale of "An Orange Balloon Dog Sold for $58.4M"
If we slip down to the bottom of the hierarchy of needs, very few people will have the skills to survive. A global currency reset seems unavoidable.
When it all vanishes in a puff of smoke, what fraction of the hierarchy of needs will still be in demand?
" If everyone understands that we CAN SURVIVE this with society mostly intact ONLY IF WE UNDERSTAND what and how things unfold, then we have options once the crash and burn comes. We can stop short of a Mad Max event by understanding history, which is our road map to the future."
"The civil unrest we have beginning today post-Trump is intended to overthrow Trump and Obama has remained in Washington, which NO PRESIDENT has ever done. "
SIDE NOTE, Obama Ex National Intel Director Says Barry Is
Behind The Entire Russian 'Witch Hunt'
"Hence, this is a battle shaping up for the future; the final conflict over Marxism, which began with the fall of Communism in 1989. This final battle began 26 years from 1989.95."
https://www.armstrongeconomics.com/w...ip-is-sinking/
7/23 Disaster For Theresa May: Brits Overwhelmingly Reject New Brexit Plan – ZH
7/23 Australia’s version of the subprime mortgage crisis arrives – SMH
7/23 Emerging markets at mercy of falling Yuan as currency war looms – Bloomberg
The currency war is just a war of confidence. The Chinese print to feed the dragon. America raises interest rates to starve the dragon.
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