This article was submitted by Joel Bauman, SchiffGold Precious Metals Specialist. Any views expressed are his own and do not necessarily reflect the views of Peter Schiff or SchiffGold.
In my latest post titled Inflation: A Semantic Change Worth Noting, I briefly reviewed the changing connotation of the terms ‘inflation’ and ‘deflation.’
In this final post in my 2-part series on inflation and banking, I look at the inflation process who whom it benefits.
The inflationary process is facilitated by two means: expanding the Federal Reserve’s balance sheet, and through credit expansion via fractional reserve banking.
As the Fed buys assets, it creates the money to purchase them out of nothing but a promise. This is what most TV pundits refer to as “printing money.” The larger the Fed’s balance sheet grows, the more money must be created in order to finance these purchases.
This article was submitted by Fabian Gambino, SchiffGold Precious Metals Specialist. Any views expressed are his own and do not necessarily reflect the views of Peter Schiff or SchiffGold.
Are Wall Street banks finally getting on the right side of the gold trade?
In an interview with CNBC, Solita Marcelli, global head of fixed income at JP Morgan, revealed that the Wall Street investment bank is recommending that clients position themselves for a “new and very long” bull market in gold.
She explained that negative interest rates around the world are making gold a more attractive investment. Since gold is a non-yielding asset and has minimal storage costs, it actually compares quite favorably with the increasing number of negative yield bonds on the global stage. It has a positive carry.
This article was submitted by Joel Bauman, SchiffGold Precious Metals Specialist. Any views expressed are his own and do not necessarily reflect the views of Peter Schiff or SchiffGold.
In light of the economic malaise around the United Kingdom, the Bank of England may be releasing additional monetary stimulus in the near future. They will do this in response to increased unemployment rates and lack of private investing.
But the BoE is waiting on a June 23 referendum in which Britain and will decide whether or not to leave the European Union before taking action. The BoE is worried about the possible negative economic consequences this decision will have on its economy. Businesses have already been putting investments on hold until after the vote is has been decided. Mark Carney, the governor of the bank of England and Chairman of the Monetary Policy Committee (MPC), said the pending vote on what has become known as Brexit is weighing on growth and clouding the economic outlook.
This article was submitted by Joel Bauman, SchiffGold Precious Metals Specialist. Any views expressed are his own and do not necessarily reflect the views of Peter Schiff or SchiffGold.
We hear on the news all the time, “The Fed is fighting deflation,” or, “Central banks are responsible for maintaining a healthy 2% inflation rate.” But what exactly is the Fed fighting? What exactly is inflation and deflation?
The concepts of inflation and deflation have been completely misconceived by the public and economists alike. Back in grad school I was in the middle of class, and I realized the definition of inflation used by my professor was different than what I had originally learned. In fact, the definition given depended on whom I asked, or which book I read.
One can look up the definitions in any Webster’s dictionary published from 1864 through 2003 and find inflation defined as: “Undue expansion or increase, from over-issue; — said of currency.” This definition is seen in older versions of the American College Dictionary describing inflation as “Undue expansion or increase of the currency of a country, especially by the issuing of paper money not redeemable in specie.”
This article was submitted by Joel Bauman, SchiffGold Precious Metals Specialist. Any views expressed are his own and do not necessarily reflect the views of Peter Schiff or SchiffGold.
We hear a lot about the role of central banks in the world’s economies. But what exactly have they been doing over the last few years, and what has the actual impact been?
Central banks have the authority over the interest rates and the quantity of a nation’s currency. Their official responsibility is to regulate price stability. By law some central banks, such as the Federal Reserve, operate under a dual mandate and must also promote full employment. Central banks hold the reserve assets that support the integrity of their issued currency.
The Federal Reserve holds the enviable position of being the issuer of the world’s primary reserve asset, the Federal Reserve Note, also known as the United States dollar. The Fed, in many ways, has led the charge in terms of the size and scale of unorthodox monetary policies practiced over the last few years. The impacts of these monetary policies are incredibly profound, and the world will soon see the true extent of their economic consequences.
Basically, the Fed and other central banks have played the role of a drug dealers pushing more heroin on addicted economies.
This article was submitted by Joel Bauman, SchiffGold Precious Metals Specialist. Any views expressed are his own and do not necessarily reflect the views of Peter Schiff or SchiffGold.
Unfortunately, too few people remember or know of the story of MF Global Inc.
MF Global was one of the most respected primary dealers for stock, bond, and futures trading. The firm had been operating over 200 years, formerly known as Man Financial. In 2010, the company was directed by Jon Corzine, who was a senator, governor, and at one time was the CEO of Goldman Sachs. MF Global was second-to-none, and it serviced some of the wealthiest private traders and institutions.
In the fall of 2011, 38,000 accounts were adversely affected when MF Global illegally transferred $1 billion in funds out their clients’ trading accounts. MF Global used these funds to cover the company’s personal trading losses after some European bond investments went belly-up.
This article was submitted by Joel Bauman, SchiffGold Precious Metals Specialist. Any views expressed are his own and do not necessarily reflect the views of Peter Schiff or SchiffGold.
In the last few decades, we have seen an international trend towards a “cashless world.” Physical currency is becoming relatively scarce and the world’s money supply is made up of almost entirely electronic funds. Governments and banks are waging a war on cash and you don’t want to become a victim.
According to the Federal Reserve, in July of 2013, the total amount of physical currency in the world equaled $1.2 trillion, most of it held outside the United States. This accounted for a mere 7.7% of the total $15.5 trillion money supply. (Cash, checking/savings accounts, money market accounts, stocks and bonds) The percentage of physical cash in relation to electronic funds has been steadily decreasing over the last 50 years.
Interestingly, even with the diminishing purchasing power of the US dollar, the face value of Federal Reserve notes has also been decreasing. Today the highest denomination produced by the Federal Reserve is the one hundred dollar note. US currency used to include denominations of $500, $1,000, $5,000, and even $10,000. In 1969, the Federal Reserve began taking these higher denominations out of circulation. Recently, a former US Treasury Secretary floated the idea of doing away with the $100 bill as well.
