Fines, Withdrawals, Job Cuts. It Was an Ugly Day for Global Banks

“While each has unique challenges, the overwhelming thing that has happened to the banks is they’re forgetting their purpose, while complexity is increasing opportunity for errors,” said Jon Lukomnik, executive director of the Investor Responsibility Research Center Institute in New York. 

Eight years after the financial crisis, the global banking industry is groping for a way forward. Global regulators have sought to make banks look more like boring utilities, but that road has proven steep. Emboldened by an international populist groundswell, they continue to dole out fines and penalties, and firms are scrambling for ways to make money as trading volumes decline and capital requirements become more stringent.

DYI Comments:  Ugly day hardly!  Until we start seeing the top boys leaving with handcuffs on only then will it be an ugly day for bankers.

Generational Dynamics

Wells Fargo found to have defrauded millions of customers

An audit consulting firm has determined that Wells Fargo opened over 1.5 million "ghost" bank accounts in the name of customers who didn't even know about it.

Apparently the way it worked was as follows:

• A Wells Fargo employee created a new "ghost" checking account in the name of an existing customers, without notifying the customer. There were 1.5 million "ghost" checking accounts.



• The employee moved funds from the customer's existing account into the ghost account, so that the account would look valid.



• The employee's high sales volume would be rewarded with big bonuses, in addition to their already high salaries.



• Customers were being charged for insufficient funds or overdraft fees -- because there wasn't enough money in their original accounts.



• Employees also created half a million "ghost" credit card accounts, with phony PIN numbers and fake e-mail addresses, to enroll customers in online banking services.



• Customers would be assessed non-payment fees. Since the customers weren't even aware of the ghost checking and credit card accounts, the overdraft and non-payment fees would often be unpaid, harming their credit ratings, forcing them into car loans or mortgage loans with high interest rates.

This wasn't one or two rogue employees. This was thousands of employees defrauding millions of customers. The size of this fraud is mind-boggling. The number of crooked employees is staggering. The number of defrauded customers is beyond belief.

And yet it's clear that nobody will go to jail. The crooked employees will keep their huge bonuses, and even if they've been fired, they'll be perfectly free to go on to other jobs and defraud other people, because with the rise of Generation-X, fraud has essentially become a free crime.

Wells Fargo was fined $185 million by the Consumer Finance Protection Bureau. Wells Fargo's net income in the second quarter was $5.6 billion, so the fine is just 3.3% of one quarter's net income (or less than 1% of annual income). Wells Fargo's CEO John Stumpf was fired and fined $41 million, but that leaves him with more than $100 million in company stock and millions in salary.

I've already used the words "mind-boggling," "staggering" and "beyond belief," so there are no words left to describe the enormity of this farce. Bankers can get away with almost anything today, with no punishment except sometimes to give back a small portion of their fraudulent gains, and then they're free to go to the next fraud.

I've written about this many times in the past. First there was the "financial crisis" of the mid-2000s decade. That was created by Gen-Xers who poured out of colleges in the 1990s with masters degrees in financial engineering. Those crooks knowingly created tens of trillions of dollars in fraudulent securities, and sold them to investors knowing that they were defrauding the investors.

And not a single one of these crooks has gone to jail or even been criminally prosecuted.

Instead, President Obama's Department of Justice adamantly refused to prosecute these crooks, but instead chose to accept billions of dollars in campaign contributions from the very banks that had made trillions of dollars fraudulently, putting millions of people into bankruptcy or homelessness after being unable to pay their sub-prime mortgages.

 "I've never believed this massive level of government corruption was possible in America, but it's happening."

In 2010, congressional Financial Crisis Inquiry hearings provide 'smoking gun' evidence of widespread criminal fraud. I expected investigations and prosecutions to begin at that time, but there were none. In fact, as described in the movie "The Big Short," the crooks were financial rewarded by the administration for their criminal fraud.

I've written many, many times, that the failure of the administration to criminally prosecute these crooked backs would leave the same bankers in the same jobs finding other ways to defraud people. That's exactly what's happened. The massive Wells Fargo frauds began in 2011, according to reports. The massive Libor and Forex rate-rigging began around the same time.

I believe that when the 2010 Financial Crisis Inquiry hearings were completed and the crooked bankers were rewarded instead of being prosecuted, it was a signal to bankers that they could do anything they wanted, with impunity. This does not mean all bankers, of course, but it means a significant minority.

As for bankers, I remember when I was growing up in the 1950s how much my mother hated bankers, and thought they were all crooks. Bankers seemed like nice people to me, so I never understood why she felt that way. But I understand now. She had grown up in the 1930s, a time when bankers were just as crooked as they are today.

If you'd like to take a few moments for some musical entertainment, then listen to the song "Little Tin Box" from the 1959 Broadway Musical Fiorello!, about how 1930s politicians made millions of dollars and claimed they did it by saving their pennies in a "Little Tin Box." YouTube: Fiorello - 'Little Tin Box' - original Broadway version and CNN and LA Times.

DYI

 

 

Congress Votes to Override Obama Veto on 9/11 Victims Bill

WASHINGTON — Congress on Wednesday voted overwhelmingly to override a veto by President Obama for the first time, passing into law a bill that would allow the families of those killed in the Sept. 11, 2001, terrorist attacks to sue Saudi Arabia for any role in the plot.

Democrats in large numbers joined with Republicans to deliver a remarkable rebuke to the president. The 97-to-1 vote in the Senate and the 348-to-77 vote in the House displayed the enduring power of the Sept. 11 families in Washington and the diminishing influence here of the Saudi government.

DYI Comments:  Its about time not just for the families for redress of grievances but there will be right of discovery that will show Saudi involvement.  Let's hope lawsuits are filed immediately!

DYI

   

Top Bank Fraud Expert: ALL of the Big Banks’ Profits Come from FRAUD

The country’s top white collar crime expert, William Black – who put over 1,000 top S&L executives in jail for fraud, and is a  professor of law and economics at the University of Missouri – confirmed recently what the alternative media has been saying for years:  the business plan of Wall Street is fraud. That’s their key profit center. 

Black also says that a British parliamentary investigation Tories found that all of the retail profits of the largest banks in the UK came from fraud. 

Well, experts say that we have to prosecute fraud or else the economy won’t EVER really recover and stabilize. 

But the government is doing the exact opposite. Indeed, the Justice Department has announced it will go easy on big banks, and always settles prosecutions for pennies on the dollar (a form of stealth bailout. It is also arguably one of the main causes of the double dip in housing.) 

Indeed, the government doesn’t even force the banks to admit any criminal guilt as part of their settlement.

Hell To Pay

The final condition for a market crash is falling into place

The global experiment with our current flawed economic and monetary models are drawing to a close. The fetish worship of central banks, bankers, and banking is over. 

Belief in central bank omnipotence is being chipped away at daily, as it's becoming increasingly clear that the easing policies of the past seven years have only served to kick a can down the road -- a can that can longer be kicked any further. 

Once the illusion of central bank control is fully lost, the financial markets will implode in a deflationary wave that has been held at bay for far too long. Asset prices will collapse, companies will fail, and millions of jobs will be lost. People will re-discover that partying too hard for too long earns a massive hangover. 

In short: There will be hell to pay. 

All this matters because once faith in central banks is lost, their power to delay the deflationary day of reckoning goes with it. The stupendous amount of debt they have helped heap onto the financial system since 2008 will start going into default and the only question that will matter is: Who is going to eat the losses? 

The daisy chain of bubbles in stocks, real estate and the mother of them all -- the bond market -- will pop, adding additional losses to the growing bloodbath. 

All this will weigh on the already-sluggish growth in the economy, sending us into deep capital-R Recession, or worse.

DYI 

THE DISINTEGRATION OF U.S. INFRASTRUCTURE 

The United States is sitting on top of a massive amount of aging infrastructure that continues to disintegrate at an alarming rate.  According to the American Society of Civil Engineers, the U.S. suffers from 240,000 water main breaks a year.  That’s roughly 700 water main breaks each day. 

The continued disintegration of the U.S. water infrastructure is due to the Falling EROI- Energy Returned On Investment.  Of course it is true that Local, State and Federal Governments are funneling a lot of tax payer money to corrupt institutions, highly paid retried pensioners and to pay debt or interest on debt. 

However, the Falling EROI of U.S. oil is not allowing enough profitable barrels of oil to maintain our infrastructure.  I believe the aging U.S. infrastructure will continue to rot, especially when the next financial and economic collapse occurs.  There just won’t be the available surplus funds to replace or repair all this massive aging infrastructure. 

Americans need to understand the huge problem growing beneath the surface.  Again, U.S. infrastructure will continue to disintegrate and become increasingly unreliable in the future.

DYI 

Lester Holt:  The Third Debater?

At tonight’s debate, Donald Trump faced off not just against Hillary Clinton, but against moderator Lester Holt.

The game of two-on-one saw Holt ask no questions about:

• Hillary’s emails
• Benghazi
• The Clinton Foundation

While ignoring these issues, Holt grilled Trump on stop-and-frisk, the birther story, his comments about women, his many bankruptcies, why he hasn’t released his tax returns — and a host of other issues the media sees as unfriendly to the Republican candidate.

Holt also repeatedly attempted to “fact check” on some of Trump’s positions, such as his claim to have opposed the Iraq War from the beginning. Holt interrupted Trump several times to interject, but rarely succeeded (and may have come across as weak and impotent).

DYI Comments:  I watched the debate as Holt became more and more brazen in his attack of Trump while being absent questioning Clinton regarding her E-mails, Benghazi(We came, we saw, he died) their Foundation(slush fund) especially Haiti or her pay for play scheme.  It is no wonder that 90% of Americans no longer trust the main stream press (just as I beginning in the 1970's). 

Green Party presidential nominee Jill Stein escorted off Hofstra University campus ahead of debate

Green Party presidential nominee Dr. Jill Stein was escorted off the college campus hosting Monday night’s presidential debate, her campaign said.Nassau County police and Hofstra University security removed Stein from campus Monday afternoon after questioning both Stein and MSNBC over her credentials, Stein wrote on Twitter.“We were immediately escorted off of the Hofstra campus after the press conference just now and told not to do any more press,”“She was on the college campus, we asked to verify for proper credentials, she did not have them, and she was nicely escorted off the campus," a Nassau County police spokeswoman said.

DYI Comment:  What total B.S.!  Police state! Where are your papers?  I'm certain the first thing that was done was google up pictures of herself as the Green Party candidate for president. What really is happening they have their marching orders from the Democrats to keep Jill as far away as possible for she is capable of pulling votes away from Clinton.  Welcome to Amerika the police state!

DYI  

 

'I can't find a job because I don't speak Spanish': Working class Alabama woman says changing demographics brought on by illegal immigration has left her struggling to find employment

A white middle class Alabama woman says she has been rejected by prospective employers because she doesn't speak Spanish.   

Sandra Langlois, a native of Albertville, Alabama, told CNN the changing demographics brought on by illegal immigration has left working class whites like herself struggling to find gainful employment. 

Langlois, a 42-year-old woman who as a child immigrated to the United States legally from Germany, said: 'It's kind of, really, discrimination. If you're not here legally, then you need to go ahead and go back home... They need to come over here the right way. Don't sneak over. Don't stay here.'

DYI 

    

Structural Growth and Dope Dealers on Speed-Dial

John P. Hussman, Ph.D.

At present, we estimate prospective S&P 500 nominal total returns averaging just 1.4% annually over the coming 12 year horizon, with the likelihood of an interim 40-55% market collapse over the completion of the current cycle. It’s tempting to believe that the continued suppression of interest rates will prevent any normalization of valuations “this time.” 

But when one examines a century of market evidence, it turns out that the completion of every single market cycle in history has brought valuations to the point where prospective returns increased to the 8-10% range or higher. That’s true even of cycles where interest rates were quite low. Indeed, the level of interest rates at any point in time exerts a minuscule effect on the level of valuations observed even a few years later. 

This is the same argument I made at the market peak in 2000, and again in 2007. While my concerns may have been the subject of debate at the time, the dismissive argument that “profit margins are fine, valuations should be higher, and stocks are going up” was settled by the steepest market plunge since the Great Depression.  

The fact that those losses have been stick-saved by creating the third speculative bubble since 2000 doesn’t mean that these concerns can be dismissed. 

No, it means that the spectacular collapse of yet another bubble is going to be replayed over the completion of the current cycle.

DYI Comment:  My model portfolio speaks for itself:

 Updated Monthly

AGGRESSIVE PORTFOLIO - ACTIVE ALLOCATION - 9/1/16

Active Allocation Bands (excluding cash) 0% to 60%

85% - Cash -Short Term Bond Index - VBIRX

15% -Gold- Precious Metals & Mining - VGPMX

 0% -Lt. Bonds- Long Term Bond Index - VBLTX

 0% -Stocks- Total Stock Market Index - VTSAX

[See Disclaimer]

 This blog site is not a registered financial advisor, broker or securities dealer and The Dividend Yield Investor is not responsible for what you do with your money.

This site strives for the highest standards of accuracy; however ERRORS AND OMISSIONS ARE ACCEPTED!

The Dividend Yield Investor is a blog site for entertainment and educational purposes ONLY.

The Dividend Yield Investor shall not be held liable for any loss and/or damages from the information herein.

Use this site at your own risk.

PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.

DYI

Oversight Committee votes to hold Clinton IT aide in contempt of Congress

The former State Department employee declined to appear at an Oversight hearing on Clinton's server last week, in spite of a subpoena demanding his presence. The committee held a follow-up hearing on the same subject on Thursday morning, which Pagliano also declined to attend. 

When Pagliano didn’t show, Republicans immediately adjourned the hearing and held a business meeting to vote on the contempt of Congress resolution. 

Oversight members on Thursday morning reviewed an immunity agreement struck between Pagliano and the Department of Justice during the FBI’s investigation into Clinton’s server, according to a Democratic committee aide. 

“Under those circumstances, Mr. Pagliano has no fear of criminal liability preventing him from testifying before the committee,” Chaffetz said Thursday.

DYI Comments:  Mr. Pagliano knows full well singing like a jay bird regarding the Clinton's is the express lane to an untimely death.  It is simple as that.  He will never talk.  Many including this blogger regard this as the Bush-Clinton crime syndicate.  Yes the Bush's and the Clinton's are best of friends - thick as thieves!

DYI 

Get Ready for the Mother of All Stock Market Corrections Once Central Banks Cease their Money Printing

Over the last year, central bank manipulation of markets has reached ludicrous levels, far beyond the “quantitative easing” used to mitigate the early stages of the crisis. Through long use, “unconventional monetary policy” of the original sort has become ineffective, and, well, simply conventional in nature.  

To get pushback, central banks have been straying ever further onto the wild-west frontiers of monetary policy. Today it’s not just government bonds which are being bought up by the lorry load, but corporate debt, and in the case of the Bank of Japan and the Swiss National Bank (SNB), even high risk equities. 

OECD Warns Fed, BOJ, ECB of Asset Bubbles, “Risks to Financial Stability,” Pinpoints US Stocks & Real Estate

The OECD estimates in its Interim Economic Outlook that for member nations as a whole, GDP-per-capita will grow only 1% in 2016, “which is half the average in the two decades preceding the crisis.” 

Per-capita is what counts. It’s what people experience. It’s their slice of the economic pie. Population growth papers over a lot of ills for economists: for example, in the US, 14 million jobs were created since the Financial Crisis, which has been touted endlessly. But the US population grew by 15 million people. Now there are fewer jobs “per capita” than there were at the depth of the Financial Crisis. That’s why per-capita matters.

Yet its outlook, bad as it is, is “subject to significant risks.” The economy might further deteriorate, it says, because: “Financial instability risks are rising, including from exceptionally low interest rates and their effects on financial assets and real estate prices.” 

Bubbles in stocks and real estate! The Fed, however, as always, is steadfastly blind to bubbles.

This is Why the Job Market Stinks, but No One is Talking about it

E-mail is a great example. Almost everyone uses e-mail. Before e-mail, there was “snail mail.” 

Every month, people sent you bills, magazines, catalogs, fliers, etc., and a guy in a truck came around once a day and stuffed your mail box full. You wrote checks, put them in envelopes, added stamps, and put them back in the USPS system to go back to your vendors. 

Today, I get an average of two pieces of mail a month, mostly fliers that go to everyone in the neighborhood. I can’t remember the last piece of first class mail that I received. The USPS has half the employees it had a few years ago, and its business is basically a package delivery service and a deliverer of junk mail.However, it is not just the loss of direct jobs. The USPS uses a lot less gas, trucks, tires, equipment, power, etc. All that reduction filters down to other vendors that supply the USPS. 

The USPS has lost about 200,000 nicely paid employees since its peak. Since the losses were scattered over the total US, and over time, it wasn’t really all that noticeable. If some US company laid off 200,000 people at once, the uproar would be tremendous.

4,100,000 people make their living driving. Driverless cars, trucks, and buses are not coming; they are already hitting the streets today. Within a decade probably 50% of the driving jobs will disappear. That’s a lot of good paying jobs gone. 

People say all the time, “I’m not worried, they will never automate my job.” But that is not the point. Everyone with a job depends on customers with money to make their paycheck. If the customers don’t have money, eventually, you will be out of a job also. The people that had bookstores didn’t do anything wrong. But the Kindle and Amazon ran them out of business.

DYI 

Yellen helps Clinton dodge a bullet

Federal Reserve policymakers keep their key interest rate steady, putting the central bank on the sidelines until after Election Day.

DYI Comments:  No doubt this does help Clinton and it is of no surprise as Yellen is a member of the Council of Foreign Relations(CFR).  CFR are one world government types in league with big government and big business along with open borders.  Totally the opposite direction of Donald Trump.

DYI      

NYPD: We can't tell you how much cash we seize because it would break our computers

New York City council member Ritchie Torres wants to know how much cash NYPD seizes every from citizens every year using using civil asset forfeiture, so he introduced legislation requiring annual reports from NYPD.  But NYPD said at a hearing that the bill shouldn't be allowed to pass because NYPD's computers will crash if they attempt to generate the reports. Sounds legit!

DYI Comments:  Good Lord what B.S. from the NYPD! Civil asset forfeiture needs to end as majority of the cases are not drug king pins but blue collar, mostly minorities who are seen as an easy mark by the police.  This has simply become BIG BUSINESS for police departments.  In most of the cases assets are seized but the individuals are rarely prosecuted or plea bargained.  Total lack of due process.

DYI

FBI Agents Can Pose as Journalists, Inspector General Says

FBI agents may impersonate journalists while conducting undercover investigations, and an agent who posed as an editor with the Associated Press during a 2007 investigation did not violate agency policies, the Department of Justice Office of the Inspector General found in a report released Thursday. 

The conclusion sparked consternation across social media by journalists, civil rights groups and some legal experts, who have argued that the practice – by its very existence – threatens to heighten public mistrust of reporters, damage journalists' credibility and have a chilling effect on sources and whistleblowers who may fear that their contacts in the media are actually undercover agents.

FBI Director James Comey has previously called the practice "lawful and, in a rare case, appropriate:" 

"That technique was proper and appropriate under Justice Department and FBI guidelines at the time," he wrote in a New York Times op-ed in November 2014. "Every undercover operation involves 'deception,' which has long been a critical tool in fighting crime. The FBI’s use of such techniques is subject to close oversight, both internally and by the courts that review our work." 

DYI Comments:  What total B.S.  F.B.I. Director Comey it is NEVER appropriate to masquerade as journalists; Congress through legislation needs to FORBID this activity. Allowing this to become a standard operating procedure is the basis of a SECRET POLICE! The freedom of the press must be allowed to flourish especially investigative journalism that pressures for honest government and exposes criminal politicians.  The F.B.I. and other law enforcement have many other techniques for crime fighting forgoing posing as journalists will not harm their investigative productivity.

This is a 1st Amendment Right and is clearly under assault.  This is why many in government want to regulate the internet as a means of suppressing free speech and the press.  Today the mainstream press has been completely co-opted by their global masters promoting propaganda benefiting big government and big business.     The maintenance of freedom is through eternal vigilance.  By protecting journalism AND allowing it to flourish through multiple means[radio, TV, internet, printed newspapers, magazines etc.] their vigilance rooting out craft and corruption especially in government will benefit us all.  

DYI

Washington Post Makes History: First Paper to Call for Prosecution of its own Source(After Accepting Pulitzer) 

THREE OF THE four media outlets that received and published large numbers of secret NSA documents provided by Edward Snowden — The Guardian, the New York Times, and The Intercept –– have called for the U.S. government to allow the NSA whistleblower to return to the U.S. with no charges. That’s the normal course for a news organization, which owes its sources duties of protection, and which — by virtue of accepting the source’s materials and then publishing them — implicitly declares the source’s information to be in the public interest. 

But not the Washington Post. In the face of a growing ACLU and Amnesty-led campaign to secure a pardon for Snowden, timed to this weekend’s release of the Oliver Stone biopic “Snowden,” the Post editorial page today not only argued in opposition to a pardon, but explicitly demanded that Snowden — the paper’s own source — stand trial on espionage charges or, as a “second-best solution,” accept “a measure of criminal responsibility for his excesses and the U.S. government offers a measure of leniency.”

 But what makes today’s Washington Post editorial so remarkable, such a tour de force, is that the editors are literally calling for the criminal prosecution of one of the most important sources in their own newspaper’s history. 

Having basked in the glory of awards and accolades, and benefited from untold millions of clicks, the editorial page editors of the Post now want to see the source who enabled all of that be put in an American cage and branded a felon.  

That is warped beyond anything that can be described.

DYI:  So typical of the mainstream press who now have been co-opted by big government and big business.  When the history of the Washington Post is written this will be cited as the tipping point for the paper's demise.  Only 6% to 10% of the populous believe what the mainstream press reports with CNN being the poster child of deception and out right false reporting.

DYI  

Nabiullina Lauds Positive Real Rates as Key for Russian Growth

Central bank Governor Elvira Nabiullina has a message for Russian businesses that may be finding it difficult to adapt to positive real interest rates: get used to it. 

The Bank of Russia will continue its “moderately tight” monetary policy, with the inflation rate now below its benchmark for the past eight months, Nabiullina told a banking conference in the Black Sea resort city of Sochi on Friday. Keeping real interest rates stable in positive territory is an “important condition for healthy economic growth,” she said. 

The main drivers of growth should be “fixed investment, structural changes in the economy and efficiency increases,” Nabiullina said. “It’s necessary to safeguard household deposits against inflationary depreciation to support a high level of savings and to create the conditions to transform them into investment.”

DYI Comments:  What has this world come to where most of the common sense government policies are coming from - no other than  - RUSSIA?!  Their central bank governor is "spot on" by safeguarding savers from inflation will flood their banks with deposits will most definitely foster future investment AND THE CREATION OF NEW JOBS!  A very sound platform for our central bank.  Don't hold your breath the Fed's are hell bent and determined to throw us all over the cliff.

DYI  

Bond Yields are Surging Despite Deflation, and that is Dangerous

 It has been sliding relentlessly for almost two years, a warning signal that underlying deflationary forces may be tightening their grip on the US economy. 

Given this extraordinary backdrop, the violent spike in US and global bonds yields over the last four trading days is extremely odd. It is rare for AAA-rated safe-haven debt to fall out of favour at the same time as stock markets, and few explanations on offer make sense. 

We can all agree that oxygen is thinning as we enter the final phase of the economic cycle after 86 months of expansion. The MSCI world index of global equities has risen to a forward price-to-earnings ratio of 17, significantly higher than on the cusp of the Lehman crisis.

 Fed governor Lael Brainard clearly agrees. Far from capitulating to the hawks - as many expected - her speech on Monday night warned that: 

"Business investment has been falling for the last three quarters, and now the housing market is softening too."

DYI Comments:  Take away prosperity (what little there is) world bond and stock markets will come tumbling down.  Once the next recession hits the U.S. stock market will decline over many months with the very real potential from peak to trough 45% - 60%!

DYI

Ken Rogoff Book - The War on Cash Needs to be Renamed - How to Create a Modern Day Feudal State in Two Easy Steps - Negative Rates - Banning Cash!

The Curse Of Ken Rogoff—–The War On Cash Is A Prelude To Government Default And Wealth Seizure

It seems clear that Rogoff’s negative interest rate/cashless society proposal is structured to engineer a back-door US government debt default. 

Over the long term, by forcing savers, businesses, and banks to give the US government their money, and allowing Washington to repay less of that money each year, the US can legally default – on all that it owes.

 

More worrying for investors: the fact that Rogoff, Ben Bernanke and others are proposing negative rates despite the considerable evidence that they will do no economic good suggests that they believe that the US government cannot pay back its debts – that it is already insolvent. 

Rogoff’s “cashless society” is an elegant solution to a key problem bedeviling the Federal Reserve: with interest rates at the zero bound, the US central bank has no ammunition left to fight the next recession – because if cuts rates below zero, savers will withdraw their cash and put it under their mattresses. 

Another challenge that Rogoff overlooks in his econometrics models is that banning paper currencies will drive widespread acceptance of alternate forms of money ranging from crypto-currencies to precious metals, not just among underground economy even among the economic elites themselves. 

Then again, maybe Rogoff is just as good a player on the public policy front as he is on the chess board. There is a possibility that he wrote The Curse of Cash as a quasi-job application for a higher government post, possibly as Treasury Secretary in a Clinton Administration. 

“If you give me the job, I’ll help make sure that government can borrow all it wants and it won’t have to pay any of it back,” may be the sub-text to Rogoff’s book.

DYI Comments:  Since the inception of the Federal Reserve in 1913 inflation has been the rule except during a brief pause the Great Depression of the 1930's.  How were the costs of WWI, WWII, Korean War, Vietnam, and President Johnson's War on Poverty paid?  High taxes and inflation and lots of it!  

The oldest game by governments all through history.  The Romans by chipping off a small amount from their gold and silver coins to make new coins to finance wars or building projects. Of course over time the old coins - as the populous caught on - were of lesser value - INFLATION!  The new coins needed to be chipped all to keep the Ponzi scheme going which led to the major reason for the fall of the Roman Empire!  The elites of Rome and later Constantinople destroyed the Roman "back bone" their version of a middle class into poverty.  The Roman Empire destroyed itself and replaced by a feudal state known as the Dark Ages.          

Without property rights - honest money is an expression of that right - the "back bone" or middle class will forever be under assault.  This will eventually lead to the end of the U.S. as we know and replaced with an elite controlled socialist feudal state.

David Stockman: Central Bank Era of Bubble Finance Leading to a Dead End

Stockman explains his take on the Central Bank era saying, “I think we are on the very edge, but what is different this time and makes it scarier… is I believe the central banks that ruled the roost have gone from one extreme to the next and done unfathomable things like negative interest rates on $13 trillion of bonds around the world, monetization of the debt, and bond purchases that are staggering such as $90 billion a month in Europe. . . . 

So, this time, as the phrase goes, they went all in. 

 They have violated every principle of sound money and sustainable finance that mankind has ever learned about over many centuries. 

They have taken us to the edge, but they are out of dry powder.  I think it’s pretty obvious that they can’t go any deeper with subzero interest rates, or negative interest rates… 

If they tried this in the United States, I think there would be a huge political uprising… 

They are out of dry powder and out of tools, and therefore, the financial markets of the world are more vulnerable, maybe even more so than in 1929.   

"You are talking about a bond bubble like never before imagined or conceived, and the stock market is the same way as well as derivatives.”

DYI Comments: My model portfolio speaks for itself:

 Updated Monthly

AGGRESSIVE PORTFOLIO - ACTIVE ALLOCATION - 9/1/16

Active Allocation Bands (excluding cash) 0% to 60%

85% - Cash -Short Term Bond Index - VBIRX

15% -Gold- Precious Metals & Mining - VGPMX

 0% -Lt. Bonds- Long Term Bond Index - VBLTX

 0% -Stocks- Total Stock Market Index - VTSAX

[See Disclaimer]

 This blog site is not a registered financial advisor, broker or securities dealer and The Dividend Yield Investor is not responsible for what you do with your money.

This site strives for the highest standards of accuracy; however ERRORS AND OMISSIONS ARE ACCEPTED!

The Dividend Yield Investor is a blog site for entertainment and educational purposes ONLY.

The Dividend Yield Investor shall not be held liable for any loss and/or damages from the information herein.

Use this site at your own risk.

PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.

Rock-Bottom Yields Digs Hole for Pensions

It’s going to be hard to reverse the damaging effects of ultralow bond yields on the global economy. 

A glaring example of the longer-lasting ramifications can be found by looking at big American corporate pensions, which were formed to provide retirees with a reliable income. These plans are now facing their worst deficit in 15 years, with enough money to cover just 76 percent of their estimated $2.1 trillion of liabilities, Wells Fargo analyst Boris Rjavinski wrote in a Sept. 9 note.

 So why are they facing such a dire outlook? Because they’ve been piling into longer-term bonds to avoid the volatile swings of stocks. Their bond allocations climbed to about 42 percent of their holdings last year, compared with 29 percent eight years earlier, the Wells Fargo analysts wrote. 

The problem is that longer-term bond yields have dropped to record lows. These pools of bonds are providing a diminishing amount of income at a time when many pensions still rely on 6.5 percent or higher annual returns. The average yield on U.S. 30-year bonds has fallen to 2.4 percent, about one-half the average over the past 15 years. 

DYI Comments:  When it is all said and done economic historians will write how this period of time world wide central banks went galloping off and over the cliff with their sub atomic/negative interest rates destroying the returns for pension plans.  The majority of these pensions will break their promises and have to reduce monthly payments by 25% to 40% to meet obligations.  School teachers, fire fighters, police along with other State and locale employees will bear the brunt here in the States.  Those only with 401k's are being pushed out into riskier and riskier assets since bond yield are so low.  This will not end well and is another reason among many to END THE FED.

DYI