Helicopter Money——The Biggest Fed Power Grab Yet

Jim Sinclair

My Dear Extended Family,      

This is not an easy read, but it is the most IMPORTANT read of your lifetime.

I have asked Editor Dan to post Stockman's article in total today on JSMineset because here is where we are now and where we are going in the future in a much larger way than anything before.

I have been looking for the reason for the Fed's Chair visit at the White House recently. What this will do is bury the fiat currency system in terms of buying power. It is already dead as a storehouse of wealth. The carrot on the string to own money, interest rates, are presently history. This is what the present administration and its economic clone democratic candidate are counting on. This is the substance that the meeting between the Federal Reserve and the White House was all about. This has just been made public down under by a Fed female personality where it is least apt to be publicly discussed. It is simple money printing hidden in complexity so you have to change your understanding of the expanded QE theory. If you will not first read this then make the effort, you are lost. Please make that effort.

Unless we get rid of the Fed we the 99% are all dead financially and literally.

There is no better reason to own the limited supply of gold that is above ground and therefor freely obtainable. It is the reason that this gold and silver market has many more years to move forward to the final price determined not in the paper gold make believe futures market, but the Real Free Gold cash physical market.

The bull market that never ended has many more years in front of it than you can imagine and a final and permanent price dictated by Russia and China. This is the world war of all world wars where there are no borders. This is why this is the last time to protect yourselves, the gold rally that you do not sell. This financial power grab of all historical power grabs that you must understand, no matter how many times you must read the article below, will be discussed for years to come by the Freedom Bloggers of the modern world, as Patrick Henry was to the foundation of the Constitution. This work is to save you from yourselves via knowledge. This time it is the knowledge of the plan accepted by Chair Yellen at the recent and rare White house meeting between the occupant of the Oval Office and the occupant of the Chair.

We will work to help you, but this you must understand if you are to avoid the execution of everything we hold from the formation of this nation as true, good and holy. This is the end of all that. It has come. It is not coming in the future. It is here today.

It has the power to be the end of elections and permanent power resting between the oval office
and chair, making the 1% the new aristocracy of the globe. You think Putin does not understand this? This proves one more time there are no atheists in the fox hole. War in a different form is now being practiced and all out application is close. GOTS while you can.

The end:

Standing watch, The western economic Texas Ranger and the man with the longest career in finance and metals anywhere - 56 years. The Sinclair/Holter combined effort to save the 99% from the 1%.

Helicopter Money--The Biggest Fed Power Grab Yet 
by David Stockman * July 13, 2016

The Cleveland Fed's Loretta Mester is a clueless apparatchik and Fed lifer, who joined the system in 1985 fresh out of Barnard and Princeton and has imbibed in its Keynesian groupthink and institutional arrogance ever since. So it's not surprising that she was out flogging--albeit downunder in Australia-- the next step in the Fed's rolling coup d' etat.

We're always assessing tools that we could use," Mester told the ABC's AM program. "In the US we've done quantitative easing and I think that's proven to be useful.

"So it's my view that [helicopter money] would be sort of the next step if we ever found ourselves in a situation where we wanted to be more accommodative.

This is beyond the pale because "helicopter money" isn't some kind of new wrinkle in monetary policy, at all. It's an old as the hills rationalization for monetization of the public debt--that is, purchase of government bonds with central bank credit conjured from thin air.

It's the ultimate in "something for nothing" economics. That's because most assuredly those government bonds originally funded the purchase of real labor hours, contract services or dams and aircraft carriers.

As a technical matter, helicopter money is exactly the same thing as QE. Nor does the journalistic confusion that it involves "direct" central bank funding of public debt make a wit of difference.

Suppose Washington issues treasury bonds to the 23 primary dealers on Wall Street in the regular manner. Further, assume that some or all of these dealers stick the bonds in inventory for 3 days, 3 months or even 3 years, and then sell them back to the Fed under QE (and most likely at a higher price).

So what!

The only thing different technically about "helicopter money" policy is the suggestion by Bernanke and others that the treasury bonds could be issued directly to the Fed. That would just circumvent the dwell time in dealer (or "investor") inventories but result in exactly the same end state. In that event, of course, Wall Street wouldn't get the skim.

But that's not the real reason why helicopter money policy is so loathsome. The unstated essence of it is that our monetary politburo would overtly conspire and coordinate with the White House and Capitol Hill to bury future generations in crushing public debts.

They would do this by agreeing to generate incremental fiscal deficits--as if Uncle Sam's current $19 trillion isn't enough debt--which would be matched dollar for dollar by an increase in the Fed's bond-buying or monetization rate. That amounts not only to teaching children how to play with matches; it's tantamount to setting fiscal forest fires across the land.

There are a few additional meaningless bells and whistles to the theory, which we will dispatch in a moment, but the essential crime against democracy and economic rationality should be made very explicit. To wit, this is a central bank power grab like no other because it insinuates our unelected central bankers into the very heart of the fiscal process.

Needless to say, the framers delegated the powers of the purse-spending, taxing and borrowing--to the elected branch of government, and not because they were wild-eyed idealists smitten by a naïve faith in the prudence of the demos.

To the contrary, they did so because the decision to spend, tax and borrow is the very essence of state power. There is no possibility of democracy--for better or worse--if these fundamental powers are removed from popular control.

Yet that's exactly what helicopter money policy would do. Based on some Keynesian gobbledygook about the purported gap between full-employment  or "potential GDP" and actual output and employment, the Fed would essentially set the Federal deficit target.

In practice, it would also likely throw-in some gratuitous advice about its composition between tax cuts, infrastructure spending and social betterment. The recommended mix would arise from an economic whim, of course, as to whether the FOMC in its wisdom thought household consumption or fixed asset investment needed to be goosed more.

Alas, the peoples' elected representatives would relish this "expert" cover for ever bigger deficits and the opportunity to wallow in the pork barrel allocation of the targeted tax cuts and spending increases. There is not a hard core New Dealer turning in his grave who could have imagined a better scheme for priming the pump.

And that's not the half of it. Helicopter money turns the inherently dangerous idea of fiscal borrowing in a democracy into an outright monetary fraud.

Even "New Deal" FDR worried about the rising public debt and "Fair Deal" Harry Truman positively loathed it.

Likewise, the power-mad Lyndon Johnson essentially vacated the oval office when he finally agreed to a substantial tax hike in early 1968 order to stem the deficit hemorrhage from his guns and butter policies.

Even the greatest deficit spender of all time--Ronald Reagan--thought the resulting explosion of the public debt was half Jimmy Carter's fault and half due to defense spending increases, which didn't count in his unique way of reckoning the national debt.

So what makes helicopter money so positively insidious is that it relieves elected politicians entirely from their vestigial fears of the public debt and from accountability for the burdens it imposes on future generations. And that's especially true owing to the Bernanke fillip.

Folks, the Bernank is no hero whatsoever--notwithstanding his self-conferred glorification for the courage to print. He is a demented paint-by-the-numbers Keynesian who has a worse grasp on the real world than the typical astrologer.

Indeed, the crucial element in his helicopter money scheme, as explained in a recent Washington Post op ed, is an explicit and loud announcement by the Fed that the incremental debt will be permanent. It will never, ever be repaid--not even in today's fictional by-and-by.

Providing a purportedly scientific monetary cover story so that elected politicians can issue non-repayable public debt is a truly reprehensible idea in its own right. But the reason for it is downright lunatic.

To wit, unless current taxpayers are assured that future taxes will not rise owing to Washington's helicopter money handouts and tax breaks, says the Bernank,  they won't spend the government gifts they find strewn along the path of flight!

That's right. When a road building boom from helicopter money appropriations results in surging demand at the sand and gravel pits, the small-time businessman involved won't buy any additional trucks or hire any additional drivers until Washington assures them that they won't pay higher taxes 20 years hence!

Only in the Eccles Building puzzle palace does such drivel not elicit uncontainable guffaws. Only in Sweden do they give Nobel Prizes for the academic obscurantism called "rational expectations theory" that is the basis for Bernanke's toxic assault on fiscal discipline and sound money.

At the end of the day, the operative words here are "groupthink" and "coup d' etat". These baleful conditions flow from the essential predicate of modern central banking.

We are referring here to the erroneous notion that economic wealth can be permanently elevated through more public and private borrowing and that central bank falsification of financial asset prices will facilitate the achievement of those ends.

In fact, as we have repeatedly demonstrated, the Fed's purported macro-management of the economy and business cycle is simply a variation of the old Keynesian parlor trick that is over and done.

That is to say, so long as households and businesses have unused runway on their balance sheets, they can be induced to leverage-up with cheap money, and thereby be enabled to spend more for consumption goods and capital goods than could otherwise be financed out of current incomes and cash flows, respectively.

But we are now at Peak Debt. There is no balance sheet runway left.

Accordingly, the impact of the massive flow of new central bank credit and the Fed's sustained falsification of financial asset prices after 2008 never left the canyons of Wall Street. It did not stimulate the main street economy one bit; it merely generated vast windfalls to the top 10% and 1% who own most of the financial assets, while fueling ever more unstable, extreme and dangerous financial bubbles.

In short, the real issue is that the Fed was foolishly given a so-called Humphrey-Hawkins mandate to deliver full-employment and stable inflation 40 years ago. But in today's global economy and financialized world, the FOMC's crude tools of interest rate pegging, bond-buying and wealth effects pumping are utterly unsuited for the task.

And well they should be. In the first place, no politburo of 12 people can define full-employment in a gig-based, labor-driven globalized economy. The Fed can do nothing about an auto job that migrates to Germany because American consumers like Mercedes cars better than Cadillacs.

Nor can it fully employ a worker who scams the social security disability system or a road warrior who prefers to work only six months per year and party the rest of the time. Likewise, fiddling with interest rates can't help a McDonald's fry cook who gets canned because the Seattle City Council foolishly raised the minimum wage to $15 per hour and invited robots to take over the job.

Pure and simply, there is no such measurable as "full employment".  Nor is there a chance in the world that the Eccles Building can cause the true creators of jobs--enterprise, capital and technology--to make more of them by fueling every larger financial bubbles.

As for the inflation side of its dual mandate, there is not a word in the 1977 Act that says a 2% annual gain in consumer prices is what Congress had in mind-even in the midst of its confusion about what central banking can actually do.  I remember well voting against it at the time, and not hearing a single speech in behalf of the magic 2%.

That's because the sacred 2% inflation target was only adopted by the Fed 34-years later in 2011 under Bernanke's relentless prodding. In fact, the very idea of "inflation targeting" is a stupid academic hobby horse invented by Bernanke in the 1990s- long after the Act was passed--and which bears no empirical relationship to the rate of GDP growth, jobs or anything else.

But it is a thinly disguised excuse for a power grab. That is, the Fed has been massively intruding upon financial markets and distorting and deforming prices in the capital and money markets for nearly two decades now on the pretext that there is a "shortfall" in the inflation rate.

Well, there hasn't been. Not even close.

Based on what we call the "flyover CPI", which weights the four horseman of inflation--energy, housing, medical and food--at 64% or by what most of America spends its paycheck on, inflation has been 3% or better for nearly two decades.



So the single most important thing that could be done by Congress to get the American economy functioning again would be to repeal the Humphrey-Hawkins Act and thereby eliminate the Fed's legal basis for its rolling coup d'état.

At the same time, it could launch a modern equivalent of the Pecora hearings of the 1930s. Only this time they would be focused on the Fed's role in generating massive Wall Street bubbles and their subsequent devastating collapses--including for what will soon be the third time this century.

Such a probe could readily bring to the surface what amounts to the raging elephant in the room of national economic policy. Namely, that the Fed's massive intervention in the financial markets and its feckless pursuit of ZIRP and QE is a battering ram of dangerous and worsening financial instability.

But the Eccles Building and its 12 branch offices are so mummified in Keynesian groupthink that they cannot even see the obvious. Thus, in touting its next grab for helicopter money power, the aforementioned Cleveland Fed President let loose of the following whopper:

Maintaining stability in financial markets should not be an explicit goal for the Federal Reserve, which should use interest rates to head off a crisis only if more precise and better-suited tools fail, a top Fed official said on Tuesday.......Cleveland Fed President Loretta Mester said in remarks prepared for delivery in Sydney, adding that the Fed's key price stability and maximum employment goals usually align with its desire for a stable financial sector.

Oh, c'mon. The purpose of the systematic financial repression by the Fed and the rest of the world's central banks is to flush savers and investors out of the money market and out the risk curve.

That's why there is $13 trillion of subzero sovereign debt and growing by the day. That's why there is a mad scramble for yield; and that's why the global financial system is riven with FEDs (financial explosive devices) waiting to be ignited.

Today, Fitch Ratings spotlighted one more example of the Fed's destructive regime of Bubble Finance at work.

The trailing 12-month junk-bond default rate hit a 6-year high in June at 4.9%, says Fitch Ratings, highlighting the ongoing pain from the oil patch.

Energy companies defaulted on $28.8 billion of debt the first half of this year, Fitch calculates, putting the sector's default rate at 15%. For exploration and production, the rate is 29%.

A 29% default rate in the E&P sector!

Does Ms. Mester really believe that in a honest free market several hundred billions of high yield debt could have been sold by the rank commodity speculators who ply the shale patch?

Not in a month of Sundays.

By contrast, modern central banking is a doomsday machine of financial booms and busts and ever intensifying financial instability. One of these days--perhaps when the current mother of all bubbles implodes--even the somnambulant Congressional Republicans may figure out the real enemy of American prosperity and productive capitalism.

That is, a rogue central bank that has seized plenary financial power already, and that is so mummified in groupthink that it will stop at nothing in the expansion of its remit. Even to the extent of sending clueless career apparatchiks like Loretta Mester to the ends of the earth to flog the unspeakable folly of "helicopter money".

Link to full article...

上半年自港進口飈1.4倍 大增384億 內地否認走資 稱從港大量購金

 - 20160714 - 經濟

【明報專訊】內地今年上半年自香港進口貨值按年增長1.4倍，按金額計大增384億元（人民幣‧下同）。雖然市場一直質疑內地由香港進口急速增長，是通過「虛假進口」實現資金出逃，但昨日海關總署首次回應稱，增長主要是內地將黃金進口的來源地由其他地區轉移到香港。本地業界人士亦稱，上半年香港黃金出口確實翻兩倍。不過，仍有分析師希望當局能提供更多細節以釋疑慮。

海關總署：港進口黃金增5.5倍

中國內地從香港進口的貨值由今年1月開始持續增長超過或接近一倍，年初已有不少大行猜測，當中涉及報大進口金額，即所謂「假進口」，以便把內地的資金匯到香港，達到走資的目的。海關總署新聞發言人黃頌平昨天回答記者提問時特別解釋，內地自香港進口在上半年突增主因是黃金進口增長，「從原來傳統的進口地，轉移到香港」。

今年上半年，內地進口黃金按年下跌15%至1730億元；其中自瑞士、南非和澳洲進口分別減少30%、23%和31%，自香港進口增長5.5倍，至458億元，佔進口黃金總量26.5%，去年同期僅佔2.8%。

他進一步表示，由於瑞士等主要黃金出口國在香港設立了黃金精煉廠，香港地區黃金庫存量增加，價格也相對廉宜，使得內地進口黃金的渠道發生了轉移。

張德熙：黃金冶煉廠遷港趨增

金銀業貿易場永遠名譽會長張德熙昨日接受本報查詢時亦稱，香港黃金的出口量，由去年上半年約200噸增加到今年的600噸左右。過去黃金市場淡靜時，很多黃金冶煉廠從香港撤離，如今又重新返回香港。由於中國和印度成為全球黃金的最大買家，為節省成本，瑞士、南非等傳統出口國都開始將冶煉廠東移，未來一兩年香港的精煉廠有增加趨勢，目前內地七成的金飾便是由深圳生產的。本報查閱資料，2014年本港有兩間黃金冶煉廠，分別是賀利氏（Heraeus）和美泰樂（Metalor Technologies）。

彭博經濟學家陳世淵則認為，內地首次澄清，代表政府開始重視與市場溝通，希望打消市場對於進口虛假增長的疑慮，不過，市場對於數字的細節和背後成因仍然有疑問。他認為黃金需求上升，本身就表明了不確定性增加。

興銀：不排除有真實需求

興業銀行首席經濟學家魯政委認為，不能排除進口黃金有真實的需求，但其中也有套利和轉移資金的需求，「在內地黃金進口需要許可證，有一些人就開一個首飾公司，將資金送出去」。他認為無論是哪種情况，都證明了資金在外流，體現了市場對於人民幣貶值的預期。

明報記者 顧冷冰

施永青 補充美國禁金的歷史

施永青 am730C觀點 2016年7月15日

有讀者來電指出，網上不是沒有美國禁止民間藏金的資訊，而是我的搜尋方式不得法；我用「美國禁金令」這個欄目去查，當然沒有結果，因為「禁金令」這個名詞並不通用，谷歌才沒有反應。他說，要知道詳細一些，可以查＂Executi

ve Order 6102＂(羅斯福總統所簽署的行政命令)。

經 過進一步搜查資料後，我發現昨文在有些地方需要修正與補充。之前，我把違令藏金的罰款弄錯了，其實只是1萬美元而已。不過，以今天的幣值計，這1萬美元已 相等今天的18萬美元，折合140萬港元。若然，連同被無償沒收的藏金一起去計，犯令者可以損失慘重。因此，把禁金令視作嚴刑峻法並不為過。

羅 斯福總統當年之所以要這樣做，一方面是因為美國人爭相向銀行擠兌黃金，必須加以制止；另一方面，為了避免通縮惡化，聯儲局有需要增加貨幣的供應量。然而， 按聯邦儲備法，聯儲局在發行貨幣時，必須有40%或以上的黃金儲備，而當時聯儲局發行的貨幣已接近這個上限，如果再任由人民以官價100%兌黃金，儲備很 快會不足，不但不可以增加貨幣供應，還要收縮貨幣供應，這不符合羅斯福要帶領美國走出大蕭條的政治綱領。在形勢緊逼之下，羅斯福總統不惜侵犯私有產權，簽 署行政命令，限制人民不得在1933年5月1日之後私藏黃金，否則政府可以全部沒收。亦即是說人民都得在這個日子前，以官價20.67美元一安士的價格把 黃金賣給政府。

為了令這個禁令迅速產生效果，美國出動了United States Secret Service的秘密特務去執行這條行政命令。

　三藩市珠寶商Gus Farber，因賣出了13個20美元的金幣，被特務人員查悉，竟累及他的父親與12個涉嫌參與交易的人士，分別在美國四個城市同時被捕，大陣仗過對付有組織的毒販。

紐 約有個社會地位不低的律師Frederick Barber Campbell，因為沒有在限期前把他存放在銀行的5,000安士黃金兌成美元，結果這筆黃金再也沒法提出來，因為給美國政府全部沒收。5,000安士 的黃金，現值港幣五千萬元，可不是一筆小數目，在毫無犯錯的情況下竟被充公，不知當事人有何感受？可見美國的「禁金令」不是開玩笑的，而是雷厲風行的。

今 天，美國已放棄金本位，聯儲局有權自行發鈔，無需理會手上有多少黃金儲備。因此，美國應該不用再像羅斯福年代那樣，要把黃金收歸國有。然而，世人若是對持 有黃金的偏好過高，多少會破壞美元在國際上的認受性；而為了維持美國的國力，美國極需要繼續向全球收取發鈔紅利。因此，貶低黃金的貨幣功能，仍會是美國的 當然國策；投資黃金的人一定要關注美國政府在這方面的舉措。