China Securities Regulatory Commission Greenlights Seven IPOs #CSRC #IPOs #listings
Boehner: Almost everything Trump has done in office has been a complete disaster
Donbas - beyond the headlines
Pakistan hikes spending as Sharif eyes next year’s elections
Under state pressure, Venezuela TV limits live coverage of protests
Ariana Grande to hold concert in Manchester for bombing victims
In shake-up, Trump to set up war room to repel attacks over Russia probe
BT talking to pensioners about caps on benefits - Telegraph
A mind-boggling tax reform looms over Indias $2 trillion economy
The ex-Goldman star who traded through the 2011 earthquake has made an unusual move
New airport scanners could end bans on laptops and liquids
Brexit wont derail the euro areas revival and Britain has more to lose, ECB official says
Mr. President: Cooperation with Russian investigation is your best play
Egypt Blocks Access to Many News Websites
12 things you should always have in your carry-on ✈️ #TravelTips
25 celebrity relationships you totally forgot about
Prefabricated cabins designed as battery-charging stations for humans:
#Thailand: PM poses questions of #democracy to public, asks for feedback
Trump tries to patch things up with Comey in latest Simpsons short
This is how a former employee of Jared Kushners described him.
Conservative Professor at UCLA is Under Review #tcot
Grantee @Lisa_Palmer spoke at the @TheWilsonCenter about her new book, #HotHungryPlanet.
People who are really serious about software should make their own hardware”- Alan Kay.
Ariana Grande to hold concert in Manchester for bombing victims
Philippines: Price rises remain strong with inflation maintaining recent rate in May. #SMI
Kushners busted on Instagram for giant undisclosed art collection
Asias monetary guardians retain a high degree of unpredictability
Alex Tizon and growing up as a witness to violence
Trumps State Department quietly lifts restrictions on refugee admissions
#Trump Administration Moves to Slaughter Americas Wild Horses – Take #Action Now!
5 outdoor games you can build yourself
‘Game-changer’: MSNBC panelists explain magnitude of ‘devastating’ Kushner revelations
Top aide to former US president Jimmy Carter, Zbigniew Brzezinski, dies
Family income is now the highest since 2002 @rickjnewman
The Federal Reserve Is Destroying America
Understanding The Feds Endgame Is Key To Protecting Your Wealth
Canadian teen allegedly behind notorious dark web hacking forum:
White House considering vetting Trump’s tweets: report
Ivy League Hunger Strikes Do Little to Change Reality #tcot
Political scientist, Carter adviser Zbigniew Brzezinski dies
Like monsters under the bed, climate change is worse in the dark.
Clinton mocks Trump on inauguration crowd size claims and alternative facts
Chinas developers are chasing a new profit play: $2,400 nose jobs
Zbigniew Brzezinski, national security adviser to Jimmy Carter, dies at 89
This computer program can tell if your facial expressions are fake:
If Mexico’s ruling party can’t win here, it’s probably doomed
Is this the electric car thats going to kill Tesla?
Here is Copernicus, who put the Sun rather than the Earth at the center of the universe, doing monetary economics.
Its extraordinary for a court to call the president a liar like this.
The dealmaker who bet big on Philippine President Duterte is building an empire
Is this the electric car thats going to kill Tesla?
Zbigniew Brzezinski, national security adviser to Jimmy Carter, dies at 89
A Fairbanks 12-year-old takes an early lead in the Homer halibut derby with a 104.4-pounder
Morning Joe host Mika Brzezinski announces fathers death at 89
Malaysian man sings 112 national anthems
Can a font be a whole brand? @YouTube thinks so
From Umbrellas to Basketballs, Sharing Economy Blooms #sharingeconomy #umbrellas
Where you can make the most money renting your stuff
Cai Qi appointed Beijing CPC chief, replacing Guo Jinlong
Replicable and Scalable Urban Park Management
Trump tries to patch things up with Comey in latest Simpsons short
Singapore strongly condemns bus attack on Coptic Christians in Egypt
Bush takes photo with Bono: Hes the real deal
Former US national security adviser Zbigniew Brzezinski dies aged 89
Do you meet the 4 criteria that mean youre healthy? (Probably not.)
Heres your guide to Memorial Day ceremonies in Southcentral Alaska
JUST IN: Tim Kaines son charged with misdemeanor for Trump rally incident
What did The Manchurian Candidate mean in 1962, and what does it mean today?
Construction begins on worlds largest telescope in Chilean desert
Clogged roads but cheap gas await Memorial Day drivers
After decades of neglect, India build roads along China border
Two former Home Capital brokers sanctioned in first disclosed crackdown
Security tight for Wonder Woman movie premiere in Hollywood
Wall St. drifts before long weekend; consumer stocks up
Tension high among civilians as violence surges in Central African Republic
WATCH: GOP lawmakers urge Trump to stop using Twitter
How does a big tech company know if its energy is renewable? via @bv
#Hakuho gets boost toward 38th #sumo title
Africas untapped free trade potential
‘Hey Bill Nye, Could the Government Be Hiding Extraterrestrials From Us?’
Play the fact, not the speculation. - @stuartlowman
Looking for a sneak preview of Hell? Check out these scorching destinations
#Earthquake magnitude 4 - 186,6 km from #Salta - #Argentina
How to recycle your phone no matter where you live
Trumps bid to open U.S. monuments to development draws calls for protection
Egypt launches air strikes in Libya after 28 Christians killed by armed group linked to ISIL
The message of Trump’s budget: Get a job! @rickjnewman
Whiplash isn’t a presidential strategy—predictability is, write @jonfiner Joshua Geltzer
Zbigniew Brzezinski, ex-White House adviser and author of The Grand Chessboard, dies
50 Things That Made the Modern Economy: Tally Stick
Preet Bharara on Montana Republican: If he were an immigrant, hed face deportation
Sales Managers Report Global Manufacturing Sector Growth at a 22 Month High in May. #SMI
For two Alaska villages, walruses remain essential. As sea ice disappears, can it last?
EXCLUSIVE: Trump son-in-law had undisclosed contacts with Russian envoy - sources
Alabama governor signs law banning cities from removing Confederate monuments
Summer Of Love: Beatles album Sgt. Peppers turns 50
Iraqi border berm divides land and communities
Warp-speed activism: 13 protest posters that took minutes to design
The old US Customs area is now a bus stop.
Video: Alaska State Troopers dogs graduate from drug detection training
JUST IN: Jimmy Carters national security adviser Zbigniew Brzezinski dies at 89
Immense progress made in Manchester attack investigation
This photo is from Austin Powers and the Foreign Peril and every one in it is Mike Myers. Esp front row.
Kushner had undisclosed ties to Russian envoy
Finding Disneys next CEO is Bob Igers number one priority @nicoleusinclair
Sheriff David Clarke directed officers to hassle plane passenger who criticized him: report
$500 million opium farm found in North Carolina
This computer program can tell if your facial expressions are fake:
From @nytimes add-on story: Kushner and Flynn wanted Russia backchannel to discuss Syria strategy
Boehner: Almost everything Trump has done in office has been a complete disaster
Two further arrests in Manchester attack probe
NY Times rips Trump over embarrassing NATO speech
Out-of-Touch Conservatives? #tcot
Migrants who clung to boat rescued off Libya, seven bodies found - officials
Boehner: Trump has been complete disaster
UK police say theyve arrested some key players behind Manchester bombing
Trumps bid to open U.S. monuments to development draws calls for protection
After four months of increases, orders for durable goods decline by 0.7 percent
Tens of thousands visit Protestant congress in Berlin #dekt17
Scarborough on Trump-Macron handshake: He tore his arm off
Behind the black architectural resistance, from 1967 to 2017
The fund manager who avoids having meetings with investment bankers
Hollywood is running out of ’80s hits to reboot:
3 reasons #BigData analytics goes wrong @CIOonline #fintech #IoT #AI
JUST IN: Russian bank owners sue Buzzfeed for publishing unverified Trump/Russia dossier:
He played me for a fool: Kentucky Trump supporter laments he should have voted for Hillary
Rimsky Yuen, Justice Secretary of HK SAR speech on one country, two systems @asiahouseuk
Chinese judges US federal courts
Op-Ed: Raising the minimum wage is essential for working people. We know from experience.
Nest Learning Thermostat Review: Smart temperature control that sticks to your schedule
Did Admiral Mike Rogers tell the NSA that Trump colluded with the Russians?
Thrilled 2 speak at @Quarterhouse_UK w @DrLegumes for @BrainFestUK #Normal17 : were talking #goodmoodfood
US Senate Intelligence Committee requests Trump campaign documents
To soften charges of unfair trade, South Korean firms are accelerating investment in America
How can companies support veterans this Memorial Day? Hire them @robsmithonline
From killer to calligrapher, a Hong Kong artist’s dark journey
25 Amazing Dishes for Your Memorial Day Cookout #Vegan
Brazils judges are being called on to clean up a political mess... again
Electric cars are expected to be cheaper than gasoline-powered models within a decade
John F. Kennedys descendants look at his legacy a century after he was born
Trumps State Department quietly lifts restrictions on refugee admissions
Apple is working on a dedicated chip to power AI on devices
How to earn millions in Chinas app economy
A housing bubble is forming in Canada. Here’s what to do about it
How Trump could set tariffs in the name of national security
The sad saga of North Koreas ATMs, an alien concept in Pyongyangs shiny new airport
The White House will share information about lobbyist waivers
The White House will share information about lobbyist waivers
Three cocktails you can make at home, then take to the beach
White House considering vetting Donald Trump’s tweets 
The worlds 15-year-olds are clueless about money
Trump to maintain or even strengthen Obama-era sanctions against Russia, top adviser says
These are the top 10 highest-paid CEOs of 2016
$PEP in #bid to #acquire Vita Coco owner | @Reuters | #MnA
.@CassSunstein has scientific evidence that Trump is making xenophobia respectable
U.S. Senate intelligence panel requests Trump campaign documents - Washington Post
Boehner: Trump has been complete disaster
What Hillary Clinton said to the Wellesley class of 2017, @anna_m_diamond reports:
How to earn millions in Chinas app economy
Guys. You broke the Congressional Budget Office. Thank you!
Most applicants to the U.S. visa lottery are from Africa, the Middle East and Asia
Where immigrants get the job done (and where they cant crack the labor market)
This relatively minor change in China is surely a negative step for financial openness
Hows a big tech company to know if its energy is renewable?
China is building some of the worlds biggest packaged food companies
Millions of people are hoarding cash, cutting their spending and living frugally
Ben Stiller and wife Christine Taylor split after 17 years of marriage
Top Trump adviser breaks with Trump: Coal doesn’t even make that much sense anymore
Precio de la canasta petrolera #WTI y #Brent al 26/05/2017. #UCV #OPEC #Venezuela #OPEP
Millions of people are hoarding cash, cutting their spending and living frugally
Chipotle says hackers stole payment card info in data breach
PepsiCo in bid to acquire Vita Coco owner - sources
Trumps bid to sell more than half the U.S. emergency oil stockpile could hurt OPEC cuts
Many people around the world are unsuspecting that they have diabetes diabetes
Making Japan a little more halal-friendly
Your skinny jeans are killing the fashion industry
Heres how Putin went from being a poor kid in Leningrad to the symbol of Russian power
Tories challenge Gordon Brown to say whether federal UK plans mean referendum
Delighted to write about why I chose to become an ambassador for @YoungMindsUK
Heres how Putin went from being a poor kid in Leningrad to the symbol of Russian power
Chinese buying far-away homes in smaller cities are raising bubble risks
How Facebook can fight the hate
Inside the hidden cycles that rule markets, history... and everyday life
Goodbye, Denys (1922-2017)
Alonso looks to return to work with Indy 500 win
Steven Peikin expected to be named co-chief of SEC enforcement: source
Chinese group buys condom brand named after James Bond
Five takeaways from the Montana special election
The GOP valued tax cuts over health care. The results are obvious.
Indias highest grossing movie ever didnt come from Bollywood
Why the Chinese will pay for online content that Americans wont
$CSCO closes $125M #buyout of AI firm MindMeld | @SeekingAlpha | #MnA
Chipotle says it has removed malware after a breach hit its payment systems
Move over, IKEA: This ultra-portable furniture adapts to any apartment
WATCH: First promo released for Megyn Kellys new NBC show
Harvard Library Waived Overdue Fees to Avoid Stressing Students Out #tcot
The most inspiring words of advice for the Class of 2017
Do pain gels even work? We asked a pain researcher to look into it
At least 91 people killed in floods, landslides in Sri Lanka
Leveraging Big Data Analytics to Revitalize Brownfields
Digital gap between rural and nonrural Americans persists
Puerto Rico governor pushes statehood as vote looms despite no U.S. support
#Philippines security forces must uphold rights amid #MartialLaw – Commission
Perfect Weekend: A yen for hot treks and cool views in Oshima
Rice rolls (cantonese: cheung fun) before boarding at #HongKong airport. #travel #weekend #saturday
ICYMI: Trump Accuses NATO Members of Owing Massive Amounts of Money to U.S.
White House considering vetting Trump’s tweets: report
Chinese jets intercept U.S surveillance plane: U.S. officials
Coal versus Kiwis - New Zealand struggles to balance business and environment
Clinton mocks Trump on inauguration crowd size claims and alternative facts
10 traditional types of German jokes #MeettheGermans
Nobody agrees on how to ease Toronto’s problematic housing boom
Smoking hot Fanny Brice as a Ziegfeld Follies girl, c1910-1915.
10 more landless workers massacred in Brazil:
G7 leaders turn gaze to Africa, climate harmony elusive
What case should you get for your phone?
Comment: China’s hi-tech economy is taking shape, thanks to its entrepreneurs and innovators
Boost Your Data Wrangling with R #R #datascience
Whole Foods employees reveal 11 things they want you to know before shopping there
US plans first counter-ICBM test
We are now on Threema! How to send information and tips securely to ThinkProgress
How Amazons bookstore is a test for future non-book plans @readDanwrite
#Bitcoin Is Bigger Than Ever, And Heres Why That Matters #fintech @RyanWhitwam
Mr. President: Cooperation with Russian investigation is your best play
Show yourself some love :) ... Via @CollectiveEvol
Trump tries to patch things up with Comey in latest Simpsons short
.@ABC News Exclusive: Iraqi troops torture and execute civilians in secret videos.
Pirates of the Caribbean 5 is a sinking vessel, writes @OrrChris
Worlds largest telescope sets sights on 2024 unveiling
Net Brazilian equity futures open contracts Net shift from domestic to foreign accounts
Homeland Security chief: If you knew what I know, youd never leave the house
This prismatic sculpture reacts to your aura
Morgan Stanley has lowered its year-end 2018 WTI forecast to $55
JUST IN: Trumps State Department quietly lifts restrictions on refugee admissions
Liberal Media Continues to Publish Fake News about President Trump #tcot
Increased wildfire risk reduces carbon storage of forests Forest management / #ClimateChange
Your guide to the best #MemorialDay discounts on cars, clothes, and more
The Bhim Army: The new voice of Indias Dalits
Two Years of Buhari - How Did We Survive?: #Nigeria
The suspicious circumstances of Kushner’s secret meeting with a Kremlin-connected banker
Natural fungicide could restore French winemaking glory
#F1 Fans Asked For Ideas On How #IoT Can Improve #RacingTeams #fintech #BigData @SiliconGB
Egypt launches air strikes over Libya in response to Coptic Christian attack
Not a horror movie: melting permafrost could release sleeping pathogens. @majohnso
Cant wait for that cashless society. $CMG
WATCH: GOP lawmakers urge Trump to stop using Twitter
Also, this...
Tillerson breaks decades-old tradition of holding Ramadan event at State Dept: report
How Trumps housing budget targets extremely low-income families
Wolf-like golden jackal discovered in northern Germany


James G. Rickards
Get Ready for Quantitative Tightening
8 days ago




Get Ready for Quantitative Tightening

[Ed. Note: Jim Rickards’ latest New York Times bestseller, The Road to Ruin: The Global Elites’ Secret Plan for the Next Financial Crisis, is out now. Learn how to get your free copy – click HERE. This vital book transcends geopolitics and rhetoric from the Fed to prepare you for what you should be watching now.]

Despite yesterday’s market sell-off, the Fed is still on track to raise interest rates in June. Wednesday’s action is no more than a speed bump for the Fed. It will not stop the Fed from moving forward with another 0.25% rate increase.

The Fed is embarking on a new path, a path that started several years with QE (quantitative easing).

QE is the name for the method the Fed uses to ease monetary conditions when interest rates are already zero. Conventional monetary policy calls for interest rate cuts to stimulate growth and inflate asset prices when the economy is in a recession.

What does a central bank do when interest rates are already at zero and you can’t cut them anymore?

One solution is negative interest rates, although the evidence from Japan and Europe indicates that negative rates do not have the same effect as rate cuts from positive levels.

The second solution is to print money!

The Fed does this by buying bonds from the big banks. The banks deliver the bonds to the Fed, and the Fed pays for them with money from thin air. The popular name for this is quantitative easing, or QE, although the Fed’s technical name is long-term asset purchases.

The Fed did QE in three rounds from 2008 to 2013. They gradually tapered new purchases down to zero by 2014. Since then, the Fed has been stuck with $4.5 trillion of bonds that it bought with the printed money.

When the bonds mature, the Fed buys new ones to maintain the size of its balance sheet. But now the Fed wants to “normalize” its balance sheet and get back down to about $2 trillion. They could just sell the bonds, but that would destroy the bond market.

Instead, the Fed will let the old bonds mature, and not buy new ones. That way the money just disappears and the balance sheet shrinks. The new name for this is “quantitative tightening,” or QT.

You’ll be hearing a lot about QT in the months ahead.

QT is now replacing quantitative tightening. The Fed wants to start shrinking its balance sheet by letting the bonds mature, receiving the cash and not reinvesting. That way the balance sheet shrinks and the money just disappears, as I described.

Essentially, the Fed is putting QE in reverse. This is part of the Fed’s effort to get interest rates and its balance sheet back to normal in the aftermath of the 2008 financial crisis. Right now, the Fed’s target interest rate for fed funds (the so-called “policy rate”) is 1%. The Fed’s balance sheet is at about $4.5 trillion, as stated.

Using the Taylor Rule and the pre-crisis trend line, a normal Fed at this stage of an expansion would probably have interest rates at about 2.5% and a balance sheet of $2 trillion. The Taylor Rule is a formula suggesting how the central banks should alter interest rates in response to changes in economic conditions.

Created by economist John Taylor, it’s designed to adjust short-term interest rates to stabilize the economy, while still allowing long-term growth and inflation goals.

Basically, it suggests a fairly high interest rate when inflation rises above the target or under conditions of full employment level. Conversely, the Taylor Rule suggests a fairly low interest rate when the opposite conditions prevail.

As you probably know, the Fed is far from normal today. Interest rates are on track to hit 2.5% by late 2018. The balance sheet might hit $2 trillion by 2020. We’re still a few years away from normal. Meanwhile the current economic expansion is eight years old next month, one of the longest in history.

Here’s the problem. The Fed spent eight years telling us that QE would “stimulate” the economy, create a “wealth effect,” and save us from depression.

Now they’ll want to say that QT is no big deal and not affect the economy at all. For example, Bill Dudley, President of the Federal Reserve Bank of New York, believes that QT can be done gradually and can “run in the background” without disrupting markets.

Really? Don’t believe it.

The Fed’s decision not to buy new bonds will be just as much a form of tightening as raising interest rates. How come it’s stimulative when they print money, but it’s not contractionary when they make money disappear? The argument contains a basic contradiction.

The contradiction leads to two results. One is that the Fed is engaged in happy talk and wants us to believe QT is not contractionary when it is. The other is that QT actually is contractionary, and we’ll be in a recession sooner than later. Unfortunately, both things are true.

The Fed operates on a theory that it’s better to clean-up the mess after an asset bubble bursts than it is to try to deflate the bubble in the first place. This theory is based on an incorrect reading of history and a deficient understanding of the dynamics of systemic risk.

The “clean-up theory” started with a study of the Great Depression by Milton Friedman and Anna Schwartz in their book A Monetary History of the United States. The U.S. stock market was clearly in a bubble in 1927 and 1928. But the U.S. was also receiving gold inflows because of a U.S. trade surplus.

Under the monetary standard at the time, the Fed should have eased monetary policy. Instead they tightened policy to deflate the stock market bubble. The tight money policy led to a stock market crash that caused the Great Depression.

Alan Greenspan applied the “clean-up theory” again during the dot.com bubble of 1996-2000. Greenspan could see the bubble as early as 1996 and said so in his “irrational exuberance” speech. But he did nothing to deflate it. Once the bubble burst in 2000, Greenspan supplied easy money to prevent the stock market crash from turning into something worse.

Based on the experiences of 1929 and 2000, the Fed has now embraced the clean-up theory. As a result, the Fed does nothing to stop asset bubbles from growing. But markets do.

So, what happens if the Fed tightens too much too soon in a weak economy and causes a recession before they can normalize?

The first thing they would do is stop QT. The next thing they would do is to cut interest rates. At that point, the Fed is in danger of hitting a zero rate again before the recession is over. That’s what happened in 2008.

What then? Well,the Fed has an answer. It’s back to QE!

You can call it QE4 or QE1 part 2, or anything you like. The point is that the Fed has trapped itself into perpetual manipulation of markets. There’s no escape from this giant experiment in unconventional monetary policy — dreamed up by academics like Ben Bernanke and Janet Yellen, who don’t understand real world economics.

For now, look for QT. But in the next recession, possible soon, look for the return of QE.

Here’s the takeaway: The Fed can bail out the stock market or the big banks when needed, but they’re not coming to bail out you and me. We need to look out for ourselves.

So this is a great time to increase your allocations to cash, gold, silver and U.S. Treasuries.

What you give up in yield will be more than made up by avoiding losses and being able to shop for bargains when the correction comes.

These are your best forms of insurance against the coming crash.

Regards,

Jim Rickards
for The Daily Reckoning