Money/inflation, the Fed, Banking, Monetary Policy, Dollar, BTC, crypto, Gold

[ya]

BTC hash rate: Price follows hash rate. Looks like maybe a nation state is involved? I would speculate on Russia ?, a second reason could be all the miners have upgraded to new BTC mining rigs with newer chips. Whatever the cause for the rise in hash rate...Price must follow.

[ccp]

https://www.dailywire.com/news/republicans-lead-charge-against-bidens-push-for-central-bank-digital-currency

[ccp]

https://www.embroker.com/blog/what-is-the-howey-test-does-crypto-pass/#:~:text=The%20Howey%20Test%20refers%20to,contract%2C%20it's%20considered%20a%20security.

gensler :
btc only crypto not a "security"

https://cryptoslate.com/sec-chair-gensler-confirms-everything-other-than-bitcoin-is-a-security-implications-and-analysis/

[G M]

Kim Dotcom
@kimdotcom
You’re witnessing the accelerated fall of an empire. This year expect major escalation with Russia and China for driving global de-dollarization. When the US can no longer fund its debt with money printing it will collapse under the weight of its current debt. It’s happening now.

https://tass.com/politics/1594445

[ya]

Alarm bells are ringing... see Fox news below, but others such as Michael Pettis are not concerned (though he works in China).
https://twitter.com/i/status/1640302421762007044

[ya]

Experts say dedollarisation is good and meaningless. I am not expert enough to comment, but intuitively sounds like a bad idea.

[ccp]

what does it mean

of course this is Monica Crowley who is not known as a world class economnist ( ). but still worth the listen:

https://twitter.com/BitcoinNewsCom/status/1640302421762007044

would like to hear Kudlow (who I trust) opinion or Scott Grannis opinion

I know in many countries they liked to be bribed in US dollars

[Crafty_Dog]

How U.S. Regulators Are Choking Crypto
The effort would stifle American innovation and competition—and that seems to be the objective.
By Katie Haun
March 27, 2023 1:03 pm ET


Some financial regulators appear to have seized on a series of high-profile meltdowns to go around Congress and try to freeze an entire industry out of banking services.

I spent more than a decade as a federal prosecutor on some of the worst threats our country faces—organized crime, the opioid epidemic, political corruption and terrorism. In my final years at the Justice Department, I shifted to cases involving emerging technology, including the then-nascent crypto category, from the Mt. Gox hack to the corrupt Silk Road agents. Years later, the space continues to attract crime and fraud, but it has also drawn some of the brightest engineering talent in the world. Public blockchains, the foundational technology of the ecosystem, are an important set of tools that reflect breakthroughs in cryptography and distributed computing. In addition to early financial-use cases, this sector provides new ways to develop, monetize and govern all kinds of software.

Unfortunately, members of this computing vanguard are being lumped in with the bad actors as part of a coordinated regulatory campaign to stymie progress in the sector. While other countries are putting in place laws and regulations, in the U.S. unelected officials are making major policy decisions about whether or not America should have a crypto industry. These efforts are misguided, reckless and potentially unconstitutional. Most important, they put America on the dangerous path of closing off the banking system to those disfavored by a particular administration.

In January, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corp. and the Federal Reserve issued a statement notifying financial institutions to be on alert for customers operating in the space, saying decentralized networks are “highly likely to be inconsistent with safe and sound banking practices.” This ominous statement, coupled with seeming behind-the-scenes discouragement by their regulators, has led many banks to begin steering clear of almost any business touching blockchain technologies. In subsequent weeks, numerous banks shut their doors to this emerging sector, and regulators reportedly are conditioning sales of distressed banks on severing ties with the industry.

A decade ago, in an effort called Operation Choke Point, the Justice Department, the Comptroller of the Currency and the FDIC tried to circumvent Congress using similar tactics—pressuring banks to cease business with specific industries, citing fraud prevention. Today, we are again seeing backroom tactics as a substitute for legislation, process and public regulation. Regardless of one’s position on the underlying issue, these significant policy decisions should be made in an open and transparent way.

This extralegal crackdown initially might not concern observers whose impressions of crypto are rooted in headlines about bad actors and outright criminals. But as four senators pointed out in a recent letter to the Fed, the FDIC and the OCC: “When the Bernie Madoff fraud was uncovered, regulators did not pressure banks to cut off access to other asset managers.”

The teams my firm works with are developing applications beyond financial services. One CEO is a former Green Beret whose company is building products to keep personal data safe using cryptography. Others include a serial entrepreneur creating developer tools for decentralized technologies, and a team building tax and compliance software for digital assets. Several Coinbase alumni are building products that help creators monetize digital content outside TikTok and Meta-owned Instagram. These aren’t scofflaws in cargo shorts committing theft.

Whatever one believes about crypto (I realize many smart and reasonable people don’t yet see the potential or need), major U.S. policy decisions should be made by Congress and state legislatures, not by unelected officials. If financial regulators are concerned about specific risks and believe new rules are appropriate, then they should follow procedures, including public notice and comment. If legislation is needed, that’s up to Congress, but unelected officials shouldn’t try to destroy an industry by freezing it out of the banking system.

Imagine if more than a century ago regulators had cut Ford and General Motors off from banking services because they considered automobiles too risky, or too competitive with trains and horses. In 1980, Massachusetts securities regulators barred citizens from buying stock in Apple’s IPO on the grounds that it was too “risky.” In the future, what if financial regulators were to warn banks against taking artificial-intelligence or alternative-energy customers because they’re too risky? And because of semiconductors we now know what happens when America fails to keep key industries onshore.

Meanwhile, other countries are working on regulating digital assets through a public process. Just this month, the U.K. reaffirmed its commitment to provide a framework for consultation to regulate digital assets, and the EU recently introduced a harmonized set of rules for all 27 member countries. Singapore, Dubai and Japan are all establishing rules to provide clarity to the industry. Hong Kong is developing a crypto-licensing regime, with the apparent blessing of Beijing. If American lawmakers don’t provide a framework for decentralized technologies, then a major frontier of technological innovation will begin to move to more hospitable economies.

America has long been a global leader in technology. Our regulators have risen to the occasion—not stifling innovation but embracing technological advances while maintaining a fair, honest and trusted playing field. But the expedient political view threatens to choke off innovation and punish legitimate actors. Every lawful business should have access to the banking system. Government censorship as a backdoor substitute for the legislative process has no place in finance—or any industry.

Ms. Haun is CEO and founder of Haun Ventures, an investment firm specializing in decentralized technologies. She is a director of Coinbase and a former federal prosecutor.

[ya]

Read about Operation chokepoint 2.0. A 500 B$ asset has panicked the US govt!

https://www.cooperkirk.com/wp-content/uploads/2023/03/Operation-Choke-Point-2.0.pdf

[Crafty_Dog]

It’s good to be a banker at the remainder counter, especially when the feds are helping with the purchase. First Citizens BancShares on Sunday night was the lucky winner of the bidding to buy the assets of Silicon Valley Bank, and what a deal it is. Rather than minimize the cost to the deposit insurance fund as required by law, the Federal Deposit Insurance Corp. seems to have chosen the best political match.


North Carolina-based First Citizens will acquire all of SVB’s deposits, loans and branches but leave $90 billion in securities and other assets with the FDIC. First Citizens will buy SVB’s $72 billion in loans at a sizable $16.5 billion discount and share future losses or gains with the FDIC. How sweet it is for First Citizens, whose shares rose 45.5% Monday.

The FDIC loss-share agreement is a tacit recognition that SVB’s large book of loans to unprofitable startups carries substantial credit risk. SVB’s business model involved extending low-cost credit to tech startups, many with no revenue, and getting repaid when they were acquired by larger companies, raised more private funds or floated shares publicly.

Problem is, rising interest rates have caused venture funding and the market for initial public offerings to dry up. Market valuations for startups have slumped. Bigger companies aren’t in the market to buy startups with large amounts of debt relative to revenue. That means big loan losses could be coming.

Hedge funds might have been interested in buying SVB’s loans, but the FDIC ruled them out for political reasons. Progressives dislike hedgies, and Silicon Valley venture investors worried they would be less forgiving of startups that couldn’t repay their debt. SVB often accommodated struggling startups at the request of their venture-capital financiers.

The FDIC says the deal will “minimize disruptions” for SVB borrowers. First Citizens stressed it is “committed to building on and preserving the strong relationships” with venture and private equity firms. CEO Frank Holding Jr. added that “together, with the legacy SVB team, we are well positioned to understand the unique financial needs of [the tech] sector.”


They sure are thanks to FDIC assistance, but all this suggests that the FDIC hardly minimized its own risks and costs. In addition to the loss-share agreement, the FDIC will finance the deal with a five-year $35 billion loan plus a $70 billion line of credit to cover potential deposit flight. This is a government match made in heaven.

After the deal closes, First Citizens will have $219 billion in assets—double what it had at the end of last year. This would make it among the 25 largest banks in the U.S. and puts it on the cusp of being classified as too-big-to-fail. The losers in this sweetheart deal will be other banks (and their customers) that will have to pick up the estimated $20 billion cost to replenish the deposit insurance fund. That’s about 15% of the entire fund. By comparison, the 214 bank failures between 2011 and 2022 cost the fund $12.4 billion.

The FDIC might have been able to shut down and sell SVB at a smaller loss had it accepted offers that we were told were floated over the first weekend after its collapse. But Chairman Martin Gruenberg rejected them out of hostility to consolidation as per the warnings from Sen. Elizabeth Warren and her protege on the FDIC board, Rohit Chopra. Now we end up with consolidation anyway at a greater cost to the deposit-insurance fund.

The FDIC is supposed to be an apolitical regulator that makes judgments based on the best interests of taxpayers and insured depositors. The SVB transaction raises questions about whether political ideology is compromising basic financial competence at the FDIC. This isn’t the right message to send in a bank panic.

[Crafty_Dog]

second

What Congress Should Ask Regulators in SVB’s Aftermath
Some lawmakers blame a bipartisan 2018 reform law for the bank’s collapse. That’s so nonsensical, it isn’t even wrong.
By Randal K. Quarles
March 27, 2023 6:21 pm ET


Congress will hold hearings this week on lessons from the failure of Silicon Valley Bank. Some lawmakers are calling for the financial stampede that brought down SVB to be followed by a political stampede of new, restrictive laws and regulations. That would be a mistake. We can learn much from this episode, but not if we move heedlessly in reaction to the loudest, most partisan voices.


First, note what the crisis doesn’t teach. Several politicians have called for rolling back the carefully calibrated regulatory changes stemming from the Economic Growth, Regulatory Relief and Consumer Protection Act of 2018—a banking-reform law enacted by strong bipartisan majorities. As Wolfgang Pauli once said of a fellow physicist’s hypothesis, that’s so nonsensical, it isn’t even wrong.

SVB’s failure wasn’t related to regulatory changes. Rather, it was a “textbook case of mismanagement,” as Michael Barr, the Federal Reserve’s Vice Chairman for Supervision, said Monday. The bank failed as the public began to focus on changes in the value of securities in the bank’s “held to maturity” account. The 2018 law didn’t change the capital treatment of such securities. SVB didn’t have a capital shortage—it remained solvent. Instead, it succumbed to a bank run. Thus the focus of any critique should be on liquidity, not capital.

But even applying to SVB the full-strength liquidity rules governing our largest banks wouldn’t have changed its fate. Those rules, first established in 2014 as mandated by Dodd-Frank, impose the toughest restrictions on banks with large amounts of short-term wholesale funding and treat banks funded with deposits from their customers—even uninsured deposits—as being reasonably resistant to runs. That treatment was crafted by the Obama-era regulators and hasn’t been amended.


Another misconception is that the changes in stress testing might have blinded the bank and its examiners to problems. That, too, isn’t right. Banks of all sizes are subject to a range of stress tests, not merely one. Most of these weren’t affected by the 2018 changes—and the longstanding requirement for banks to run tough internal stress tests on their interest-rate-risks remained untouched.

As it has gradually become clear that changes to law, regulation and stress testing weren’t relevant to SVB’s collapse, some critics want to blame changes in the supervisory instructions given by the banking agencies to their field examiners. Yet the only concrete change they point to has been the “guidance on guidance” issued in 2018 and codified in 2021.

This claim is decidedly odd. That project—which was supported and voted for by Martin Gruenberg and Lael Brainard, respectively chairman of the Federal Deposit Insurance Corp. and director of the White House National Economic Council—doesn’t limit any action an agency wants to take. It simply clarifies which actions will be accomplished through regulatory measures and which through supervisory measures. It continues to allow any unsound practice to be reined in by examiners and merely firms up the justifications for the written record. In a world where courts are increasingly ready to invalidate agency action that doesn’t comply with the Administrative Procedure Act, this clarification strengthens bank supervision rather than weakens it.

If the Obama-era regulation didn’t prevent SVB’s failure, the 2018 adjustments didn’t cause it, and the instructions to supervisors continued not only to be strong but focused on the right risks, then what can be done? Must we simply throw up our hands and insure all deposits of any size with the attendant moral hazard—or worse, devise even more unfocused and restrictive regulation, increasing the cost of capital and further slowing economic growth?

I don’t think so. There are some clear lessons, if we filter out the noise and focus on essential questions. Here is what I would ask the bank regulators:

Why didn’t uninsured depositors behave consistent with historical expectations? Many have commented on the concentrated nature of SVB’s customer base in a single industry—the venture-capital and tech sector—and on its susceptibility to fads, enthusiasms and herd behavior. But others have noted that thanks to modern social media and bank technology, we are awash in the perfect flow of imperfect information and can act instantaneously on it. Is the right answer to focus on diversifying banks’ deposit bases, as we have long focused on diversifying their assets? Or do we need to reconsider the longstanding treatment of uninsured customer deposits in both the regulation and supervision of liquidity?

Second, why didn’t the FDIC arrange for a stronger bank to buy SVB the night before it failed? The swift transfer of a failed institution into the hands of a strong buyer usually restores calm without extraordinary regulatory actions, which inevitably confuse incentives and create moral hazard. Were some potential purchasers ruled out at the beginning? Did the FDIC provide enough incentive for an acquisition early on? The system is designed to absorb the failure of a $100 billion bank, but not if the FDIC ties one hand behind its back.

Finally, we should review the lessons of fiscal policy. I cut my teeth on the savings-and-loan crisis 40 years ago, and I see strong similarities in the genesis and development of that debacle. Excessive fiscal stimulus from the Johnson and Nixon administrations baked inflation into the economy. The resulting mismatch of rising short-term liability costs and falling long-term asset values, which accelerated when the Fed began the necessary interest-rate rises to bring inflation under control, doomed the S&Ls. The SVB incident is isolated to a handful of banks, but it is fair to ask the regulators where we might see more pressure in the financial system from the inflation that mismanaged fiscal policy has engendered.

If cool heads and expert analysis had prevailed three weeks ago, SVB’s customers wouldn’t have run from the bank. If cool heads and expert analysis prevail in Congress and at the banking agencies, we can avoid the political stampede to a destructive regulatory response that would do much more damage.

Mr. Quarles is chairman of the Cynosure Group. He served as the Federal Reserve’s vice chairman for supervision, 2017-21.

[ya]

what does it mean

of course this is Monica Crowley who is not known as a world class economnist ( ). but still worth the listen:

https://twitter.com/BitcoinNewsCom/status/1640302421762007044

would like to hear Kudlow (who I trust) opinion or Scott Grannis opinion

I know in many countries they liked to be bribed in US dollars

Even though there is a lot of talk about de-dollarization, the US $ remains the king and demand for it is very high and everything is priced in $. Attempts by BRICS nations will not put much of a dent to it, but what it does is, it puts a dent to US respectability world wide and basically gives a small poke to the US eye. Fair to say, the US is not viewed with great esteem in many parts of the world. If there is a more involved war in Europe, money will flow into the $, Gold and BTC.

[Crafty_Dog]

FOX Business reports this morning that Brazil's big new deal with China includes doing the transactions in the Chinese currency.

[G M]

FOX Business reports this morning that Brazil's big new deal with China includes doing the transactions in the Chinese currency.

The dollar is faker than Bruce Jenner's vagina. The world is done with subsidizing our dumpster fire country.

[ya]

In the meantime, Softwar, the 400 pg tome continues to make waves. I focussed on the first chapter and then the last few which have the meat.

https://www.politico.com/newsletters/digital-future-daily/2023/03/30/space-force-major-to-pentagon-mine-bitcoin-00089745

[ya]

[Crafty_Dog]

Thank you for the reminder on Softwar.  I bought it, read the first few pages, then life got in the way.  I need to circle back to this.

[ccp]

https://retirementincomejournal.com/article/theres-no-national-ponzi-scheme/

I just cannot stop feeling like these arguments are swindling me
like a 3 card monty

[Crafty_Dog]

Intriguing piece.

Two themes left out:

1) The differential between interest rates and inflation.  At present, though less than not too long ago, at present interest rates to the government are below inflation.   Interest rates are NEGATIVE.

2) The dollar's role (or not) as the reserve currency.  What has this meant so far?  What threats if this becomes less so, or not at all.
https://www.investopedia.com/terms/s/seigniorage.asp

[ccp]

I don't understand this :

"It appears to be the result of an increase in world saving, a decline in world growth, and possibly an increase in market power."

I don't know about the world but I don't know who is saving in the US
 with more and more people living paycheck to paycheck

and keeping money in bank accounts treasuries is no where close to inflation

 

[ya]

Time for some green for a while

[ya]

This is an important read, if the govt decides to shut down all on and off ramps to BTC. Thinking is 1 BTC=1BTC, where everything is priced in BTC, so no fiat currency is needed. I personally, dont think this is likely to happen in the US.

https://foundationdevices.com/2023/03/bitcoin-doesnt-need-banks/

[ya]

And...

[G M]

This is an important read, if the govt decides to shut down all on and off ramps to BTC. Thinking is 1 BTC=1BTC, where everything is priced in BTC, so no fiat currency is needed. I personally, dont think this is likely to happen in the US.

https://foundationdevices.com/2023/03/bitcoin-doesnt-need-banks/

The OGUS/FUSA will do everything it can to force everyone onto the CBDC social credit surveillance grid. They WILL make Bitcoin illegal.

https://media.gab.com/cdn-cgi/image/width=1050,quality=100,fit=scale-down/system/media_attachments/files/133/917/394/original/0d21058f43cd1f12.png

[G M]

https://media.gab.com/cdn-cgi/image/width=1050,quality=100,fit=scale-down/system/media_attachments/files/134/022/920/original/e84abb5517814fd2.png

[ya]

[Crafty_Dog]

   
 
JPMORGAN BOSS: BANKING CRISIS EFFECTS WILL CONTINUE… CNBC: Jamie Dimon says the banking crisis is not over and will cause ‘repercussions for years to come’

The stress on the financial sector caused by two bank failures in the United States last month is still a threat and should be addressed by a reimagining of the regulatory process, according to JPMorgan Chase CEO Jamie Dimon.

“As I write this letter, the current crisis is not yet over, and even when it is behind us, there will be repercussions from it for years to come,” the longtime CEO said in his annual letter to shareholders on Tuesday. […]

The recent banking issues in the U.S. began with the collapse of Silicon Valley Bank, which was closed by regulators on March 10 as depositors pulled tens of billions of dollars from the bank. The smaller Signature Bank was closed two days later. And in Europe, Swiss regulators brokered a purchase of Credit Suisse by UBS.

JPMorgan and other large banks stepped in to make $30 billion of deposits at First Republic, another regional bank that investors feared could become the next SVB. […]

“Any crisis that damages Americans’ trust in their banks damages all banks – a fact that was known even before this crisis. While it is true that this bank crisis ‘benefited’ larger banks due to the inflow of deposits they received from smaller institutions, the notion that this meltdown was good for them in any way is absurd,” Dimon wrote.

[G M]

https://media.gab.com/cdn-cgi/image/width=1050,quality=100,fit=scale-down/system/media_attachments/files/134/022/920/original/e84abb5517814fd2.png

https://www.zerohedge.com/geopolitical/here-are-7-signs-global-de-dollarization-has-just-shifted-overdrive

[ya]

https://www.aier.org/article/de-dollarization-has-begun/

Also this Tucker C video https://twitter.com/i/status/1643781248408494080

and a ZH https://www.zerohedge.com/geopolitical/why-regime-needs-dollar-be-global-reserve-currency

[ya]

The Fed issuing a clarification. FedNow is not a CBDC, while technically true, it was a baby step in that direction. With politicians like Robert kennedy Jr/DeSantis opposing CBDC and only Pocahontas supporting it...pressure is mounting against CBDC in the US. However, the US needs to get its act together, the 31T deficit cannot be paid back. The banking crisis is not over, commercial real estate might be the next shoe to fall.

https://www.federalreserve.gov/faqs/is-fednow-replacing-cash-is-it-a-central-bank-digital-currency.htm

[Crafty_Dog]

https://www.theepochtimes.com/irs-to-prioritize-enforcement-including-criminal-investigation-for-certain-assets_5181321.html?utm_source=Morningbrief&src_src=Morningbrief&utm_campaign=mb-2023-04-09&src_cmp=mb-2023-04-09&utm_medium=email&est=gWCjTEGkiAuhYU%2BJRk7fxLvL7uRyH8tHuA86vVvf4dVPVGJlw3CoV52RV4OTx4aUS


The Internal Revenue Service (IRS) said it would increase enforcement in the area of digital asset transactions and listed transactions.

The federal agency identified certain transactions to have high-risk issues in noncompliance and vowed to ramp up enforcement in those transactions.

“The IRS tracks many known, high-risk issues in noncompliance, such as digital asset transactions, listed transactions and certain international issues. These issues arise in multiple taxpayer segments, and data analysis shows a higher potential for noncompliance,” the tax agency wrote in its newly-released funding plan (pdf).


“We will prioritize resources to increase enforcement activities, including criminal investigation as appropriate,” the agency added.

According to the plan, the IRS will develop the information platform to support digital asset reporting and analytics tools to increase digital asset compliance in the fiscal year 2024, which is between April 1, 2023, and March 31, 2024.

Digital assets include convertible virtual currency, cryptocurrency, stablecoins, non-fungible tokens (NFTs), and other digital representations of value, according to the IRS website.

The IRS treats digital assets as property and requires taxpayers to report taxable gains or losses from digital asset transactions.

As it’s difficult to identify the owners of digital assets, U.S. judges allow the IRS to use “John Doe summons” to seek the identities of taxpayers of interest.

Individuals Earning $400,000 or More Targeted
The IRS released details Thursday on how it plans to use an infusion of $80 billion for improved operations, pledging to invest in new technology, hire more customer service representatives, and expand its ability to audit high-wealth taxpayers.

The plan lays out the specifics of how the IRS will allocate the $80 billion of funding—from fiscal year 2024 to 2031—that was approved through legislation.

Some improvements have been long expected, such as bringing more paper-based systems online and answering taxpayers’ phone calls promptly. Others are more ambitious: continuing to explore ways to create a government-operated electronic free-file tax return system, for example.


Janet Yellen
Treasury Secretary Janet Yellen (C) tours the IRS New Carrolton Federal Building in Lanham, Md., on Sept. 15, 2022. (Alex Brandon/AP Photo)
After Congress passed legislation for the funding last summer, Treasury Secretary Janet Yellen directed the IRS to develop a plan outlining how the tax agency would overhaul its technology, customer service, and hiring processes. Her memo sent instructions to IRS leadership not to increase audit rates on people making less than $400,000 a year annually.

During a call with reporters, Treasury Deputy Secretary Wally Adeyemo said the plan “is heavily driven by the fact that we need to make technology investments that will improve productivity, which will mean that over time the number of employees and the mix of employees at the IRS will change.”

Officials are promising not “to raise audit rates on small businesses and households making under $400,000 per year, relative to historic levels.” The report says more than half of the new money—$45.6 billion—will be devoted to pursuing high-wealth individuals and companies.

“Given the size and complex nature of these tax filings, this work often requires specialized approaches, and we will make these resources available,” the report said. “We will use data and analytics to improve our understanding of the tax filings of high-wealth individuals.”

The Associated Press contributed to this report.

[Crafty_Dog]

second

https://www.cryptopolitan.com/ecb-president-shocking-truth-digital-euro/

[Crafty_Dog]

third

https://www.aier.org/article/de-dollarization-has-begun/

[ccp]

https://finance.yahoo.com/news/satoshi-nakamoto-crypto-fans-just-163808135.html

BTC origins still shrouded in mystery

[ya]

BTC is math.

[G M]

https://media.gab.com/cdn-cgi/image/width=1050,quality=100,fit=scale-down/system/media_attachments/files/134/022/920/original/e84abb5517814fd2.png

https://www.zerohedge.com/geopolitical/here-are-7-signs-global-de-dollarization-has-just-shifted-overdrive

https://www.zerohedge.com/geopolitical/role-reversal-collapse-dollar-enforced-empire

[Crafty_Dog]

https://www.theepochtimes.com/is-a-new-gold-standard-possible_5179327.html?utm_source=Opinion&src_src=Opinion&utm_campaign=opinion-2023-04-10&src_cmp=opinion-2023-04-10&utm_medium=email&est=d%2F12Akqfz%2FPdHV1sM4AbPTOKtXwY0PAonCOgjVxBWpa3HyWSdfrnD6VaufuwG%2FtQG2BO

[ya]

[Crafty_Dog]

Up 5% today last I looked.

[ya]

Re: BTC 25.2K is the next resistance, if we cross that...30K in coming. The 25.2K line is formidable.

Touched 30K..

[G M]

https://tldavis.substack.com/p/damn-you-all

[ccp]

except BTC
https://www.yahoo.com/finance/news/u-sec-committee-urges-aggressive-080342781.html

[G M]

https://tldavis.substack.com/p/damn-you-all

https://www.zerohedge.com/economics/project-icebreaker-beginning-one-world-digital-currency-system

[Crafty_Dog]

Mundell Predicted Our Economic Instability
The Nobel laureate knew that floating exchange rates would make the global economy volatile.
By Sean Rushton
April 11, 2023 5:54 pm ET


As the world attempts to stave off a new banking crisis, it’s worth remembering the lessons of Nobel economics laureate Robert Mundell (1932-2021). Mundell showed that domestic economic policy doesn’t operate in a vacuum but rather interacts with—and affects—global financial forces such as international capital and trade flows.

His “open economy” model considered policy under two very different monetary regimes. One assumed a global common currency system in which a currency’s value was fixed, the quantity of money floated, and exchange rates among currencies were stable. This was the norm when he wrote in the 1950s and had been for hundreds of years. The other scenario, obscure until the early 1970s, assumed balkanized central banks fixing the quantity of money at their discretion, while a currency’s value and its exchange rates floated. Mundell noted that the two systems functioned in completely different ways—a distinction that seems lost on many policy makers today.

For example, he debunked the notion that monetary policy always operates with a “long and variable lag” of six to 18 months. The basis for this claim—Milton Friedman and Anna Schwartz’s 1963 book, “A Monetary History of the United States”—gathered data from the 1870s through the 1950s, a time of mainly fixed exchange rates. Mundell said that under such conditions, there was some truth to the idea of a lag. But in the modern world of flexible exchange rates and lightning-fast capital movements, the idea was “poppycock.”

He gave two examples: 1981-82 and 2008. In both cases, after a bout of rising inflation, tighter U.S. monetary policy contributed to big, sudden capital inflows. In the 1980s, it was the Reagan tax cuts plus the Federal Reserve’s sky-high interest rate. In 2008, it was the Fed’s unexpected reversal from dovish to hawkish policy during the initial phase of the subprime mortgage crisis. In both cases, capital quickly flowed into the dollar, the exchange rate appreciated, and commodity and other asset prices plummeted. In both cases, consumer prices fell sharply in the months following these initial market moves.

Mundell’s decadeslong critique of floating exchange rates, which were implemented in 1973, was based on his deep understanding of how the practice really worked. Far from being a source of new stability and liberation, floating rates would leave most nations adrift, struggling in isolation to manage their currencies in a world suddenly dominated by huge speculative capital flows unlike anything that existed before.

The record bore him out: The floating-exchange-rate system of the past five decades has proved financially volatile and crisis-prone. Mundell cited four major fiascoes linked to exchange-rate swings: the international debt crisis of 1982, the savings-and-loan crisis of the late 1980s, the Asian financial crisis of 1997 and the global financial crisis of 2008. None of these, he noted, would have occurred under the fixed exchange-rate systems of the past.

To be sure, fixed rates carried the risk of other kinds of crises. Wars caused bouts of high inflation followed by painful attempts to restore prewar price levels. Branch-banking restrictions in the U.S. led to local cash shortages during harvest times. But the system itself was fundamentally stable as currency values were fixed and the quantity of money adjusted automatically across the system. Giant, currency-induced capital movements were rare.

Today, the U.S. dollar dominates the monetary world, and its movements, often driven by backward-looking Federal Reserve policies, can destabilize the entire system. In 2021-22 we saw a burst of monetary activism from the Fed, coinciding with a huge expansion of the money supply, a depreciation of the dollar with rising commodity prices, followed by high general inflation. Then, last year, as the Fed belatedly began raising its target rate, there was a big appreciation of the dollar, along with a falling money supply and declining commodity and consumer prices. The yield curve inverted last fall, and now banks are showing cracks, mitigated by an unprecedented federal pledge to back deposits without limit. Despite these quakes, the Fed raised its target interest rate in March, looking in the rearview mirror at lagging 12-month inflation data. The central bank’s “dot plot” suggests another hike still to come this year.

In the years after 2008, Mundell called the global financial crisis the greatest policy blunder in Fed history aside from the Great Depression. The lost wealth, the bailouts, the multiple rounds of quantitative easing with huge up-down cycles for the dollar and price of oil—all contributed to the lost decade that followed where annual gross-domestic-product growth averaged about half its historical level. Anyone confused about the populist discontent that erupted in 2016 need look no further.

To show it has learned its lesson, the Fed should forget long and variable lags and watch real-time market prices. Declare victory in the war on inflation as long as the dollar remains relatively high and commodity prices don’t spike. Beyond that, today’s leaders should take Mundell’s counsel on the need to end large exchange-rate swings, starting with the dollar-euro rate, which he called “the most important price in the world.” Stability there, with future invitations to Japan and Britain to join, would begin to restore order to the system. China, which already maintains a relatively stable exchange rate with the dollar, could be kept at arm’s length.

These reforms could give way one day to an international currency for settlement purposes, which Mundell suggested be made up, in equal measure, of major currencies and gold, to offset the global demand for dollars that keeps the U.S. trade deficit higher than it would be otherwise. Such a system would resolve the defects of the current system, restore financial stability and enable stronger economic growth.

Mr. Rushton is an adjunct fellow at the Jack Kemp Foundation.

[Crafty_Dog]

second

Global Monetary Tightening Tests the U.S. Banking Sector
Apr 12, 2023 | 15:51 GMT



While tight global financial conditions and a deteriorating economic growth outlook are unlikely to get major U.S. banks into serious trouble, smaller and mid-sized banks face non-negligible risks connected to their exposure to commercial real estate portfolios. Global interest rates have risen substantially over the past year, leading to tighter financing conditions, falling asset values and greater investor risk aversion in the United States (and elsewhere). Sri Lanka and Ghana defaulted on their sovereign debt in May 2022 and December 2022, respectively. From late September through much of October, a massive uptick in volatility in U.K. government bond markets forced the Bank of England to intervene to avoid a larger crisis. The crypto exchange FTX collapsed in November. Two mid-sized U.S. banks (Silicon Valley Bank and Signature Bank) then collapsed in early March, prompting U.S. authorities to intervene forcefully and guarantee all deposits. And on March 19, authorities in Switzerland oversaw the merger of two global, systemically important financial institutions — Credit Suisse and UBS — to prevent a European (and possibly global) banking crisis. Moreover, several developing and emerging economies — most prominently Argentina, Egypt and Pakistan — are facing significant financial challenges, as evidenced by high inflation, foreign-exchange rationing and very high yields on their international debt. The World Bank and the International Monetary Fund estimate that a full third of developing economies, including 60% of low-income countries, either have unsustainable debts or are in danger of seeing their debt become unsustainable.

The U.S. Federal Reserve has raised its main policy rate from 0-0.25% to 4.75-5% since March 2022.

The European Central Bank has raised its main policy rate from -0.5% to 3% since July 2022.

After more than a decade of ultra-low interest rates, the tightening of global financial conditions has begun to expose financial vulnerabilities. Last month's collapse of Silicon Valley Bank (SVB) and Signature Bank was directly related to the sharp rise in U.S. interest rates. The Fed's policy lifted banks' deposit rates and hence financing costs. This forced SVB and Signature Bank to realize losses on the sale of long-term, fixed-rate assets and led to deposit outflows, precipitating their financial collapse. The financial problems in many low-income developing economies are also best explained by higher global and U.S. interest rates and higher financing costs in the context of prior excess borrowing and the COVID-related surge in government outlays. The broader problems faced by many crypto companies are at least in part related to higher interest rates, which make many speculative crypto investments less attractive. In some cases, such as the recent collapse of the FTX cryptocurrency exchange and hedge fund, the worsening financial climate exacerbated pre-existing issues. The volatility in U.K. government bond markets this past fall was also related to greater risk- and yield-seeking by pension funds in the context of very low interest rates, which subsequently led to financial instability once U.K. interest rates increased sharply. By contrast, the near-collapse of Switzerland's Credit Suisse last month was a consequence of declining profitability, mounting losses and a broader loss of confidence in the international investment bank.
 
The main financial risk over the next few months will be connected to small and mid-sized U.S. banks' exposure to commercial real estate and pressure on their deposit base. Unlike the developing market debt crisis of the early 1980s, a wave of defaults in low-income countries today would not risk causing a global banking crisis because international banks currently have very limited exposure to these countries. A systemic banking crisis similar to the 2008-2009 subprime crisis is also unlikely because large, systemically important U.S. and European banks (like JPMorgan, Chase and UBS, Credit Suisse) currently benefit from much higher capital and liquidity buffers than they did 15 years ago. A systemic banking crisis also appears improbable due to much better regulation and higher capital levels in both Europe and the United States. Finally, a sovereign crisis in any of the major advanced economies, similar to the eurozone crisis of the early 2010s, looks unlikely for now, judging by spreads on credit default swaps, long-term yields and debt dynamics. Moreover, surprise inflation has helped reduce debt levels, if perhaps only temporarily. In fact, the main concern in the short-to-medium term stems from U.S. banks' exposure to commercial real estate, which will come under pressure amid falling asset values, slowed economic growth, and reduced lending by liquidity-constrained banks. Once again, this will prove particularly challenging for small and mid-sized U.S. banks, which are much more dependent on this type of lending compared with larger financial institutions. Large U.S. banks also benefit from substantial fee-related income. Second- and third-tier U.S. banks will thus be most at risk.

Commercial real estate prices in the United States are coming under pressure, which will reduce the value of loan collateral. U.S. office vacancy rates are high at close to 20%, compared with less than 7% in Europe, according to the Financial Times.

If U.S. mid-sized and small banks incur major losses on their commercial real estate portfolios, while liquidity constraints reduce lending to the sector, weakened capitalization levels may then reduce these banks' willingness and ability to extend credit, which would weigh on U.S. economic growth. If significant financial distress emerges in the banking sector, the U.S. Treasury and the Fed may intervene just enough to prevent a broader crisis. But because of political constraints, U.S. financial regulators may not do enough to fix the financial damage quickly. Beyond the imminent risk of a broader banking crisis, ongoing instability could thus weigh on the United States' medium-term economic outlook by leading banks to reduce credit to the real economy. Similar to Japan in the 1990s, weakened U.S. banks may also prefer to roll over doubtful loans, thereby creating so-called zombie companies (or companies that are effectively unable to service their debt and do not generate economic growth), which will translate into a misallocation of capital and lower economic growth. If this happens, the U.S. government would then need to intervene and force banks to clean up their balance sheets and recapitalize in order to strengthen their ability to extend credit and finance economic growth. Again, this would mostly be an issue for small and mid-sized regional banks. Using Japan's experience as guidance, U.S. authorities will be eager to act in a forward-looking way to avoid the emergence of systemically undercapitalized small and mid-sized banks. But politically, the Fed and the Treasury's hands may be tied due to gridlock in Congress, which may limit the speed with which they will be able to address a weakened banking sector.

[ya]

[Crafty_Dog]

Is that some sort of LGBTQ medal on King Charles?

[G M]

https://media.gab.com/cdn-cgi/image/width=1050,quality=100,fit=scale-down/system/media_attachments/files/134/022/920/original/e84abb5517814fd2.png

https://www.zerohedge.com/geopolitical/here-are-7-signs-global-de-dollarization-has-just-shifted-overdrive

https://www.zerohedge.com/geopolitical/role-reversal-collapse-dollar-enforced-empire

https://donsurber.substack.com/p/biden-is-killing-the-dollar?utm_source=post-email-title&publication_id=1115457&post_id=113293089&isFreemail=true&utm_medium=email

[ccp]

so what ! He is saving the planet from climate change
and cool with the culture warriors .....

besides he and Obama have made sure to get rich first..


 

[G M]

https://www.zerohedge.com/markets/there-no-fix-rubino-warns-global-monetary-experiment-ends-bloodbath

Plan accordingly.