A
decision by New Delhi on November 8 to scrap all large-denomination
banknotes overnight removed 86 per cent of India’s currency from
circulation. In an effort to prevent banks running out of cash, the
finance ministry then imposed strict limits on the amount of new notes
that could be withdrawn. Customers can currently withdraw just Rs2,500
from an ATM per day — equivalent to $37 — or Rs24,000 over the counter
per week.
“If the government lifts the limits on Friday and there is a sudden
rush, banks will be totally dependent on the central bank to give them
enough liquidity,” said Soumyajit Niyogi, associate director at India
Ratings and Research. “The Reserve Bank of India has been giving
assurances that it has enough cash but reports of how much currency
there currently is in the system suggest this might not be the case.”
New Delhi claims that purging most of India’s old cash supply, and
replacing it with a smaller quantity of new banknotes, will eliminate
illicitly earned or unaccounted for income that has been beyond the
reach of tax officials.
But as of December 19, banks had replaced just 38 per cent of the
Rs15.3tn in demonetised notes that was sucked out of the system by
November’s announcement, according to RBI data.
The figures have alarmed bankers, who are now urging the government not to lift the curbs immediately. One executive said: “The
government and the RBI need to make sure there is enough cash in the
system before they lift the withdrawal limits.” A private banker told
the Indian Express newspaper: “If the limits are relaxed, people will
ask for more cash and there is limited cash. This will only turn banks
into villains.”
When the policy was first announced, the government estimated that
Rs5tn would remain undeclared as it would be part of illicit money
hoards. But R Gandhi, RBI deputy governor, said earlier this month that
over Rs12tn had already been handed back, and a newspaper report on
Wednesday said the figure had since climbed to Rs14tn, leaving just over
Rs1tn remaining.
This suggests either that the amount of illicit money in the system
was overestimated by the government – or that new ways to launder cash
have been discovered despite the government’s efforts.
Well
before India’s surprise ban on using 86 per cent of its cash supply,
rightwing circles were abuzz with speculation about prime minister
Narendra Modi taking such a step to fight so-called black money.
Mainstream economists paid little heed to the chatter — deeming it
“too preposterous” to take seriously, given the economic damage it would
inflict.
But with India now reeling from the acute cash crunch triggered by
the decision to cancel its old Rs500 and Rs1,000 notes, many economists
and observers are debating what other unorthodox economic policy
experiments may lie ahead.
Mr Modi is expected to intensify his campaign against black money,
with his next target likely to be property purchased with illicit wealth
and not registered in the true owners’ names. Speculation is rife that
he is also seriously considering other dramatic and unusual reform
measures — including possibly abolishing income tax and replacing it
with a banking transaction tax.
Expect More Pain, Failures The hit to India’s GDP will be much larger than expected.
Nonetheless, it appears that Modi is prepared to follow up with the popular economic philosophy: If it doesn’t work, do more of it.
The irreversible error of the refugee crisis has resulted in the birth
rate suddenly soaring in Germany for the first time in 33 years. The
refugees are altering Germany in a dramatic way. In 2015, the number of
births per woman rose from 1.4 children to 1.5 children. One in five
newborns had a mother who was born abroad, according to the Federal
Statistical Office. The impact of this is now transforming refugees into
migrants whose children are now German. This is altering everything
within Germany. The Protestant Revolution transformed the majority from
Catholic to Protestant. Will Germany, 30 years from now, be Muslim?
Interesting evolutionary process.
GOLD AND SILVER RISE/HUGE
BOMBSHELL AGAIN AT TOSHIBA/CHINA FINALLY ADMITS THAT IT WILL NOT HIT ITS
TARGETS: DOWN GOES COMMODITY PRICES/RUN ON THE BANK AT MONTE DEI PASCHI
AS WEIDMANN STATES THEY MUST NOW RAISE 9 BILLION EUROS INSTEAD OF 5
BILLION EUROS
For comex gold:
NOTICES FILINGS FOR DECEMBER CONTRACT MONTH: 1 NOTICE(S) FOR 100
OZ. TOTAL NOTICES SO FAR: 9127 FOR 912700 OZ (28.388 TONNES)
For silver:
NOTICES FOR DECEMBER CONTRACT MONTH FOR SILVER: 7 NOTICE(s)
FOR35,000 OZ. TOTAL NUMBER OF NOTICES FILED SO FAR; 3787 FOR 18,935,000
OZ
In silver, the total open interest ROSE by 681 contracts UP to 161,953 with respect to FRIDAY’S TRADING. In
ounces, the OI is still represented by just less THAN 1 BILLION oz i.e.
.810 BILLION TO BE EXACT or 116% of annual global silver production (ex
Russia & ex China).
FOR THE DECEMBER FRONT MONTH: 7 NOTICES FILED FOR 35,000 OZ.
In gold, the total comex gold ROSE BY 4,682 contracts AS WE HAD A RISE IN THE PRICE GOLD ($3.10 with FRIDAY’S
trading ).The total gold OI stands at 407,673 contracts. We are very
close to the bottom with respect to OI. Generally 390,000 should do it.
A key market is now in serious trouble as banks have established near all-time record short positions.
Commercials Near All-Time Record Short Positions In Oil
Below you can see the commercial short positions in the crude oil market
are now close to an all-time record as the commercials have been
dramatically increasing their short bets as the price of oil has rallied
(see remarkable chart below).
In sharp contrast, look at the commercial short positions in the gold market…
Commercial
short positions have been dramatically reduced as they have been
covering their shorts as the price of gold has declined for seven
straight weeks (see chart below).
The
bottom line is that both of these markets may be near major reversals.
Oil will be particularly interesting to watch as the commercials are
really piling on the shorts into the rally in crude.
Hot on the heels of China gold import restrictions, and India's demonetization and gold confiscations, The European Commission proposed tightening controls on cash and precious metals transfers from outside the EU under the guise of shutting down one route for funding of militant attacks on the continent, following the Berlin Christmas attack.
China has already begun de facto gold import restrictions, and as Jayant Bhandari detailed previously,
India is experiencing a continuation of new social engineering
notifications, each sabotaging wealth-creation, confiscating people’s
wealth, and tyrannizing those who refuse to be a part of the herd, in
the process destroying the very backbone of the economy and
civilization. There are clear signs that in a very convoluted way,
possession of gold for investment purposes will be made illegal. Expect
capital controls to follow.
And now, as Reuters reports,
it appears last Monday's attack on a Christmas market in Berlin, where
12 people were killed as a truck ploughed into a crowd, has given The
European Commission just the excuse to tighten capital controls -
specifically cash and precious metals - into and out of Europe.
It
is part of an EU "action plan against terrorist financing" unveiled
after the bombings and shootings in Paris in November 2015.
Under the new proposals, customs officials in European Union states
can step up checks on cash and prepaid payment cards sent by post or in
freight shipments.
Authorities will also be able to seize cash or precious metals carried by suspect individuals entering the EU.
People carrying more than 10,000 euros (8,413.56 pounds) in cash already have to declare this at customs when entering the EU. The
new rules would allow authorities to seize money below that threshold
"where there are suspicions of criminal activity," the EU executive
commission said in a note.
EU officials said some of the recent attacks in Europe were carried
out with limited funds, sometimes sent from outside the EU by criminal
networks.
The Commission is also considering whether to set up an EU-focussed "terrorist finance tracking programme"
along the lines of the U.S.-EU TFTP, which has long been opposed by EU
lawmakers and privacy campaigners because it allows widespread checks on
consumers' bank transfers.
The plan complements Commission proposals after the Paris attacks to tighten controls on virtual currencies such as bitcoin, and prepaid cards, which French authorities said were used to fund the bombings.
EU states backed these proposals on Tuesday. Under the deal, which still needs European Parliament approval, holders of prepaid cards would have to show some form of identity when they make payments of 150 euros or more.
But it gets better...
The
Commission is also proposing common rules for the 28 EU countries on
freezing "terrorists' financial resources" and on confiscating assets
even from those thought to be connected to criminals.
So - cash, bitcoin, precious metals, and prepaid cards over
$150 are all instruments of the "terrorists" and are now open to
confiscation if you are a suspicious person... which, by their rhetoric,
you are if you actually hold any of these assets.
總部位於巴黎的反洗錢金融行動特別工作組(Financial Action Task Force on Money Laundering,
簡稱FATF)本月早些時候公佈的一份報告指出了瑞士黃金交易相關的風險。該特別工作組設定打擊反洗錢行為的標準。這份報告顯示，FATF的評估人想知悉
瑞士黃金行業對這些風險的了解程度。
Technical analyst Clive Maund says liquidity issues with banks could lead to restrictions on cash and precious metals.
The global financial system
continues to groan under the strain of the accumulated weight of
trillions of dollars worth of debt and derivatives, which have built up
to even more fantastic levels than those that precipitated the near
collapse in 2008, thanks to the policy of solving liquidity problems
near term by creating even more debt and derivatives, Quantitative
Easing being the most obvious example. However, while the majority
considers the situation to be hopeless, there is actually “light at the
end of the tunnel.”
If only a way could be found to freely
tap the funds of savers at will, by imposing duties or taxes on bank
accounts, with the additional option to appropriate savers’ funds on
occasion as required, then the systemic liquidity problems will be
solved. Banks need never fear solvency problems again and they can
simply fall back on the account holder’s funds to meet any obligations.
There are in fact already names for these restorative operations, they
are called “bails-ins” and NIRP (Negative Interest Rate Policy).
Unfortunately, any immediate attempt to
implement bail-ins and NIRP on a large scale will backfire because,
faced with being charged significant sums for the privilege of keeping
their money in the bank, savers will simply withdraw their funds
and keep them as cash at home, or maybe even invest in precious metals.
It is therefore imperative that these escape routes are blocked off.
We have already seen an interesting “trial balloon” in recent years with respect to bails-ins.
This was the celebrated Cyprus bail-in. When Cyprus banks were about to
go belly up a couple of years ago, they saved themselves by raiding
customers’ accounts, which is more palatably described as a bail-in. The
reaction of global savers to this action by the Cyprus banks was one of
horror and revulsion and they made it plain that they weren’t going to
stand idly by and watch banks plunder their funds—they would withdraw
them as cash if any such threat should appear over the horizon.
This reaction set the great
minds of the banking community to work on how to stop savers withdrawing
their funds in the face of these threats.The solution was and is simple—abolish cash!
Thus we have seen production of
the 500 Euro note in the European Union stopped so that it gradually
fades into oblivion and in the U.S. Larry Summers has proposed abolition
of the $100 bill, which accounts for most of the money in circulation.
The idea is to implement the policy for a global cashless society in stages—if it is done all at once the public will revolt. They need to be trained to go cashless and this will take time.
By starting with high denomination
notes you actually remove most of the currency in circulation at a
stroke, but the masses can still buy cigarettes and candy bars at street
corner shops with small denomination notes. The excuse given
for the removal of the notes is that it impedes organized crime and
money laundering, etc., which is, of course, a convenient smokescreen.
With plans for a cashless society already well advanced it was time for another trial balloon.India
was selected. Anxious to demonstrate his credentials as a card
carrying member of the New World Order, and oblivious to the effects of
the operation on the hapless citizenry of his country, Indian Prime
Minister Narendra Modi went ahead with the withdrawal of two key
banknotes.
This caused chaos across the country,
especially in rural areas where many don’t even have bank accounts, and
citizens often had to travel long distances to get to banks to change
these banknotes, only to find that the banks had in many cases run out
of smaller denomination notes.
Despite the economic
dislocation and suffering experienced by the masses, including some
deaths, the experiment was deemed a success by the elites, as they had
gotten away with it, with the cowed and impotent citizenry accepting it
as their fate—what they should have done is rioted until the measures were withdrawn.
Globally, the plan therefore is
to keep chipping away at it until the cashless society is universally
accepted, the only cash likely to remain being small denomination notes
and coins suitable for paying street vendors and bus fares etc.
The arrival of the cashless
society will not only mean that banks will be able to avail themselves
of citizens’ funds as and when they please, it will also mean that the
banks, and by extension the government, will know all your financial
business, what you do and when.
Tax evasion will be impossible,
and eventually you will not be able to do business with companies that
are not approved of by the government.
With the escape route into cash set to be blocked off, that leaves precious metals: gold and silver—gold as a store of value and silver more for everyday transactions.
Gold bugs and others, especially survivalists, and many wealthy
investors see this as THE way to escape the rapacious grasp of the banks
and the government, and are busy squirreling away fortunes into
overseas vaults, etc.
However, it is unfortunate that
if you can think of this, so can they, so can the banks and the
government, and they have plans for you and your gold hoard.
Remember, their power is absolute, no
one dares stand up to them and they can and will do what they like,
changing the law as required to suit their purposes. They are much more
powerful than President Franklin D. Roosevelt, who in the 1930s, in an
act of naked piracy, seized the gold of U.S. citizens, and furthermore
their modern powers of surveillance and tracking are much more
sophisticated than anything back then.
Thus we can expect governments
to declare the holding of gold (and silver) to be illegal, and to demand
forfeiture to the government in exchange for nominal compensation.
Vendors of gold bars will be closed down and mints will not sell retail gold.
Unlike the 1930s, this would be a coordinated global campaign, a kind
of witch hunt if you will, and there will be no corner of the world that
is safe, just as they finished off private banking in Switzerland.
Those buying gold and stashing
it in various pseudo anonymous remote foreign depositories will be in
for a nasty shock as these vaults are arbitrarily raided and plundered,
with local and international law being changed as required to facilitate
this. Nothing will stand in the way of a system that will not permit
alternatives.
We will end on a positive note. No
one really wants to see a complete systemic collapse, which is what
will happen if banks don’t avail themselves of savers’ funds quite soon,
least of all the controlling elites at the top of the pyramid who live
lives of scarcely imaginable opulence and luxury and wish to continue
doing so.
Such a collapse would lead to bank
accounts being frozen, and a breakdown of the distribution system
leading to anarchy and hand-to-hand fighting in the streets for
essentials like food and gasoline. Should we not therefore be grateful
to our illustrious masters who have ingeniously thought of a way out of
the current impasse, by availing themselves of your funds as required? Is
it not a small price to pay to go cashless and forego your privacy and
independence, and forfeit your gold and silver on demand?
It is tempting to blame others
for all this, especially those in control of the system, but don’t
forget that for decades you voted for people who routinely lied before
elections, and told you what you wanted to hear, that you could have it
all right now and to hell with the future—well, that future has now arrived.
In January of 2016, the Bundesbank announced that
three years after commencing the transfer of some of its offshore-held
gold from vaults located at the Banque de France in Paris and the NY Fed
in New York, it had repatriated a total of 366.3 tonnes, bringing the
German central bank's gold reserves held in Frankfurt to 1,402 tonnes,
or 41.5% of Germany's total gold of 3,381 tonnes, for the first time
greater than the 1.347 thousand tonnes located at the New York Fed,
which as of January 27, 2016 held 39.9% of Germany's official gold.
"With approximately 1,403 tonnes of gold, Frankfurt has been
our largest storage location, ahead of New York, since the end of last
year," said Carl-Ludwig Thiele, Member of the Executive Board of the
Deutsche Bundesbank. "The transfers are proceeding smoothly. We have
succeeded in once again significantly increasing the transport volume
compared with 2014. This means that operations are running very much according to schedule," added Thiele last January.
As a reminder, according to its gold storage plan, unveiled
in January 2013, the Bundesbank would store half of Germany's gold
reserves in its own vaults in Frankfurt am Main by 2020 which would
necessitate a transfer to Frankfurt of 300 tonnes of gold from New York
and all 374 tonnes of gold from Paris. It also meant that as of January, another 111 tonnes of gold from the NY Fed and 196.4 tonnes of gold from Paris remained to be transfered.
The "politically correct" motives for the transfer, as well
as the logistics and the mechanics behind it were explained in a March
2015 video released by the Bundesbank...
Specifically, the court wanted to ensure that the nearly 3400 tons of
gold, of which more than 2,000 tonnes held offshore, is in fact in
existence - 'because stocks have never been checked for authenticity and weight'. The
move to repatriate was only accelerate following rumors that much of
the offshore-held gold might have been "rehypothecated", and not be
there anymore, that it might have been melted down, leased, or sold.
Ironically, at the time, Bundesbank Board member Carl-Ludwig
Thiele told the Handelsblatt that these moves were a “trust-building”
measure, and he tried vigorously to put the rumors about the missing
gold to rest. Of course, repatriating your gold from foreign central
banks is precisely the opposite of a "demonstration of confidence."
What made matters worse is that at the end of 2013,
the Bundesbank announced it had managed to repatriate only 37 tonnes of
the total 700 scheduled for redemption, further spooking the local
population and suggesting that conspiracy theories that the gold was
missing were in fact accurate.
As a result, following blowback from both the media and the
public, the Bundesbank accelerated its activity, and repatriated 120
tonnes in 2014 and another 210 in 2015, implying that the Bundesbank's
faith in its foreign central bank peers had declined in inverse
proportion to the following accelerated redemption schedule as of
January 2016.
Almost one year later, last Friday, Germany's Bild reported that in 2016 the Bundesbank has repatriated "more of its gold than planned", as it moves toward relocating half of the world's second-largest reserve at home.
"We brought back significantly more gold to Germany in 2016
again than initially planned. By now, almost half of the gold reserves
are in Germany," Bube president Jens Weidmann told the German
publication.
As Reuters added,
in the wake of the European financial crisis, many ordinary Germans
have demanded to see more of the 3,381 tonnes of gold in vaults at home.
"Some had even questioned whether it still exists, prompting the
Bundesbank to publish a long list of details on the gold holdings in
2015."
According to Bild, around 1,600 tonnes of Germany's gold
reserves are now in the country, a figure set to rise to 1,700 tonnes by
2020.
This means that the Bundesbank repatriated roughly 200
tonnes of gold in 2016, comparable to the 210 tonnes its brought back to
Frankfurt in 2015, and the total held domestically amounts to 1,600
tonnes at the end of 2016, just shy of the 1,700 or so planned to be
repatriated over the next three years, suggesting that for some unknown
reason, the German central bank has aggressively pushed forward the
redemption timetable ahead of its scheduled completion in 2020.
Neither Bild, nor Weidmann, explained why after initially
dragging its feet on gold relocation in 2013, over the past two years
the German central bank has demonstrated a curious sense of urgency in
repatriating its gold. In any case, we are confident that the German
population will be happy to learn that nearly half of its gold is now on
domestic soil, just in time for the holidays.
As MacLean's Jason Kirby points out,
the Bank has taken to YouTube to warn Canadians about the dangers of
too much debt and unrealistic house price expectations. He wonders,
however, whether anyone will listen as one after another real estate
bubble form in Canada, a nation whose household debt ratio has never
been higher.
As BMO pointed out,
when the latest household debt ratio data was released, the upward
trend in household debt goes back for the 26 years for which it has
records and is showing no signs of slowing down.
"While it looks as though the Vancouver housing market is
cooling after the foreign buyers' tax was implemented, the Toronto
market remains very strong, and others are showing signs of improving as
well," said BMO senior economist Benjamin Reitzes.
Meanwhile, none other than Canada's central bank has ramped up
its warnings about heavily indebted households and the unreasonable
expectations driving the housing market, yet all indications are that
Canadians have stuffed cotton in their ears.
In Toronto, for instance, house prices are up nearly 15 per cent
since the summer when Bank of Canada governor Stephen Poloz warned
that price gains in the city were “difficult to match up with any
definition of fundamentals that you could point to.” In the more than 15
years that the Teranet-National Bank House Price Index has tracked
property prices in the city, there’s never been a six-month period when
prices rose that fast. Meanwhile, the latest figures released by
Statistics Canada showed the household debt-to-income ratio broke yet another record in the third quarter.
Now Canada’s central bank is trying a different platform to get its message across: YouTube.
In a video posted Monday on YouTube, in conjunction with the release of the Bank’s semi-annual financial system review
last Thursday, Bank of Canada senior policy adviser Joshua Slive
sketches out how Canada’s dangerous brew of debt and inflated house
prices could combine to devastate the economy.
Here’s the scenario that worries the Bank.
1. As the Bank has pointed out already, households are
highly indebted and house prices are rising at an unsustainable
rate, though as Slive observes, people can often cope with these
vulnerabilities for an extended period.
2. That is, until an economic shock triggers a negative chain of events.
For instance, a severe recession would lead to “a sharp increase” in
unemployment.
3. A lot of households, especially those carrying the heaviest debt
loads, would have trouble meeting their debt payments. As a result, some
households would start to default on their loans, and in turn, banks
and trust companies would foreclose and try to sell those houses.
4. At the same time, with the economy slowing, new buyers would delay
house purchases until the economy improved. Given the challenges already
facing the economy, this could “cause a large drop in house prices.”
5. If house prices fell, it would push down household wealth, which has received a huge boost from the housing boom, and that could curtail consumer spending, which itself has become a primary driver of growth.
The added stress on the financial sector would also weigh on the
economy as lenders cut back on making new loans. Slive doesn’t use
the term, but what he’s talking about is a credit crunch.
There is good news, Slive says. Stress tests show Canada’s
big banks will be just fine even with a large drop in house prices
(stress tests also showed that both Belgian Dexia and Spanish Bankia
were perfectly solvent just months prior to their respectively
failrues). It’s also important to note that the Bank, in its financial
system review, said there is a “low probability” of a sharp correction
in house prices. But there’s no getting around the immense damage such
a scenario would have on the economy.
The video is a break from regular fare on the Bank of
Canada’s YouTube channel, which is largely made up of speeches by top
Bank officials. And even if Slive’s delivery is trademark central-banker
dry, the message is stark, and shows the Bank is desperate for
Canadians to heed its warnings on debt and rising house prices.
If there’s one quibble to be made, it’s with the
initial domino that the Bank sees setting everything in motion—a severe
recession leading to job losses. Since the U.S. housing bubble popped
and that country went into its long, dark funk, a chicken-versus-egg
debate has raged over whether the housing collapse triggered the U.S.
recession, or whether something else, like soaring oil prices, brought
on the recession and turned the housing slowdown into a total collapse.
What’s beyond debate is that America’s housing market reached its
frothiest in mid-2006, and then began its decline, one-and-a-half years before the recession began.
Whatever the case, the Bank’s video should be another
wake-up call for Canadians, but "not that anyone’s listening" as Jason
Kirby laments.
