Taxing Money: The Call to Arms by the IMF
I have been a follower for some time now and had great pleasure in
hearing you speak at the Princeton WEC. Thank you for so readily
sharing your knowledge with those that are willing to listen and learn.
I recall you mentioning that governments will often have a desired
policy “floated” through another source, so as to provide the appearance
that they are adopting an independently conceived course of action. I
noticed that just yesterday the IMF published Staff Discussion Note
SDN/15/22 ( http://www.imf.org/external/pubs/cat/longres.aspx?sk=43162
). To my reading, this paper advocates further QE by the ECB. Maybe
the most notably questionable comment to be found in the paper is that
“governments do tend to take corrective measures in response to an
increase in government debt”, as indicated under point 14.
I thought you might find this article interesting and foretelling.
If nothing else, it seems to be further confirmation of the predictions
provided by Socrates.
Best, WN
REPLY: Europe
has become one giant experiment for taxing money, which is popularly
called negative interest rates. They meant precisely this when they
stated “governments do tend to take corrective measures in response to
an increase in government debt.” It is NOT a trend toward
hyperinflation, as in revolutionary or defunct governments where they
just disavow the prior debt of the previous government. This is the
deflationary course which shrinks the economy rather than dealing with
the debt. The IMF is advocating taxing money itself, and this will only
lead to hoarding and trying to get off the grid.
Gold, Geopolitics, & the Dollar
QUESTION: Hi Martin,
Thank you for you blog and your informed perspective on world markets.
I’ve owned gold and silver bullion for about 10 years and since
2011 they have behaved much differently. Normally they would spike on
geopolitical catastrophes but now they quickly hit a ceiling and
collapse on such news.
The prices rise in Asia and late in the evening they tank, likewise when the London markets open.
Do you have an explanation for gold and silver’s change in response?
Thank you.
P
ANSWER:
The gold promoters’ fundamental explanation has done a tremendous
amount of damage. They have wrongly linked gold to geopolitical events
as if it were somehow always bullish regardless of where the event takes
place. Capital always flees from the battlefield. During WWI and WWII,
money fled to the USA, and at the end of the day, the USA had the
greatest gold reserves. Capital fled the USA during the Cuban Middle
Crisis. It is not as plain as vanilla as these people
report.Furthermore, we are in a Sovereign Debt Crisis that began in
Europe, but will spread to Japan before it reaches the USA probably in
2017-2018. The euro fell and the Dow rose. This is showing net capital
movement out of Europe to the USA in the wake of the siege of Paris. Try
not to look at everything through the eyes of only gold. You may
discover that there is a time to buy, and a time to sell.There is
something interesting going on in the world of fixed income, even in the
debt markets. Throughout the global markets, there is a clear trend
emerging as we have warned. The traditional relationship between
government and private debt is inverting as part of the Sovereign Debt
Crisis. Within the USA, we are seeing capital shifting toward good
quality corporate debt. This is confirming the forecast we have been
making.
The metals are primarily a retail market. As such, retail
participation, even in the stock market, has declined and has been
unable to make new highs since 2007. This also warns of the decline in
liquidity. So gold is being overpowered by the rise in the dollar. Of
course there will be a bounce followed by a renewed retest of support.
It is just not ready yet for prime time. It’s day will come.
Schäuble Said Refuge Crisis will Not Destroy Europe
Schäuble: Flüchtlingskrise wird EU nicht zum Zerfallen bringen. Es wird wieder vorangehen.
Schäuble has said that the refugee crisis will not destroy Europe and it will proceed. This illustrates our crisis with career politicians. He MUST take this position or he must admit the politicians are wrong. Now that can never happen.
Why Are Roman Hoards Found 274-300AD?
QUESTION: Hi Marty,
I saw another article about a trove of 4,000 Roman coins found in Switzerland.
I read that the earliest date was 274 AD, during the reign of
Aurelian. I’ve noticed that many of these buried collections that are
found seem to have been typically buried during this time period? Would
you know why? I have read your writings on Roman monetary debasement
and wonder if the burying of the money, as well as the coming dark ages
were a cause or effect of the debasement? There is something going on
there for all these people to hide their money around the same time.
Thank you,
LB
ANSWER: The
hoard of Roman coins I purchased from a find in Britain was a bit
earlier from about 260-300AD. A recent find in Switzerland spans the
period 274-294AD and this is overlapping the same period. The massive
debasement takes place between 260 and 268AD during the reign of Gallienus (253-268AD), the son of Valerian I
(253-260AD) who what captured by the Persians. The next emperor was
Claudius II and his coinage is also of the same poor quality as the end
of the reign of Gallienus.
First
of all, the capture of Valerian I was devastating to the confidence of
the Roman population. We also see during this period the separatist
movement as we do today because of economic conditions. There was the
separation of France and Britain becoming the Gallic Empire led by Postumus (259-268AD). The East also split with Zenobia
(267-272AD) who rules from Palmyra in modern day Syria, So we have the
empire itself fragmenting. The Romans used the coinage as newspaper.
Here we have Postumus picturing himself as the restorer of Gaul.
Aurelian introduced a major monetary reform. The coins are back to
being well struck and here is an Antoninianus with the reverse declaring
he is the restorer of the world. The marking XXI generally is read to
mean 20 parts copper to one part silver. This mark appeared on the
coinage from Aurelian reform up until the monetary reform of Diocletian. It seems to vanish after 294AD.
Additionally, there were many barbarian invasions. The previous emperor, Claudius II Gothicus
(268-270AD) defended the empire which became under siege on all fronts.
Once the Persians captured a Roman Emperor, then everyone began
invading and could small the blood.
Aurelian constructed a wall around Rome which still stands today.
This was showing that Rome itself was no longer truly safe. This is why
we begin to see many hoards buried during this time period of great
uncertainty. We are approach such an era today as people are starting to
hoard cash from excessive government taxation.
Market Talk November 19th, 2015
The WTI oil had a similar price action to European equities as all early gains were reversed and we closed near the days lows. Traders continue to defend the $40 price level as we appear to chip-away at it every day! Gold saw a rally of around $15 mid morning as a weak US Dollar ignited a reactionary bounce.
It was more a day of USD weakness rather than any other story. Despite UK Retail Sales poor update (Expected -0.5% m/m and 4.2% the actuals were -0.6% and 3.8%) GBP actually performed well on the day last seen up 0.3% at 1.5285. Against the Euro the USD lost 0.7% and against the A$ and Russian Rouble it lost around 1% on the day. The DXY (US Dollar Index) lost 0.65% to close around 98.97. This really should not be a surprise given that the USD has seen such strong gains recently having risen everyday for the past five sessions. Since the FED’s minutes release the market is pricing-in an 85% chance the FED moves in December whilst the rest of the Fed Fund Futures curve is pricing in two hikes then a minimal chance of a third throughout 2016.
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