Tag Archives: Japan

Currency composition of FX reserves of world’s central banks.


Here you can find a useful graph of the currency composition of FX reserves for the 114 reporting countries’ central banks.

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Japan’s consumer prices fall again in January. Deflation now -1.3% compared to January 2009.


Japan, after two decades of fighting against deflation and racking up 240% of GDP public debt has literally nothing to show for. The deflation is firmly entrenched in the Japanese economy, which is a very good thing for consumers, not speculators.

G7’s Sheeple Distraction in IQALUIT, Canada, while Central Bankers Meet Secretly in Australia.


We don’t know what the Central Bankers will be discussing during their secret two day meeting in Australia, but what we know is that you don’t hold a well publicized G7 economic ministers meeting at the same time for no reason. If the CBs need a distraction that means that something is very grave and serious is going on. Whether we are on the verge of a new panic and financial crisis or something else, but it cant be good. Perhaps the sovereign debt issues in Europe are on the verge of causing a big monetary implosion and stock markets collapse.

Google wants to get into energy trading business. Is this a sign of coming deflation in that sector?


When you see automotive companies and consumer electronics companies getting into the business of Finance, you know that the boat is lurching to far to one side in will most surely topple over. So it happened in the US Financial Services industry that has expanded far beyond the original investment banks and brokerage houses.

What deflation will do to future US GDP.


It is now an established fact that Japan has been mired in deflation for the last 18 years. It meant no economic growth as manifested in the below GDP graph. Assuming that USA is now in the early stages of a similar, if not much stronger, deflationary depression, we may be able to project future US GDP growth/contraction based on the Japanes experience.

Treasury Three-Month Bill Yields Turn Negative.


When you have US Treasury yields sitting at historic lows at prolonged periods of time and across the entire yield curve, it only means one thing – delfation is here and anywhere you look on the horizon. But when you have yields turn negative, which really means investors paying privately owned Federal Reserve to hold their money as it has become the only safe place to keep it, this is a sign of a crash or some impending credit event which is also deflationary. Someone somewhere knows something. Only indication we, the common folks get of an impending crisis, is the sharp jump in excess reserves held with the Federal Reserve banks by other financial institutions. The excess reserves rose by almost $250 Billion between July of 2009 and November 2009, while the stock market has been setting yearly highs and “recovery” has been gathering pace, or so the powers that be would want us to beleive. Add to this the November 19th, 2009 delay in release of “Reserve Bank credit H.4.1 weekly report” and you get a shiver down your spine that something is about to hit the proverbial fan.

Japan sees long deflation in US, bets on falling Treasury yields.


“The recovery is very weak and the U.S. is running the risk of deflation…” say the Japanese investors as they are piling into US Treasuries while expecting the yields to drop sharply. They may be the only ones in current economic environment that have extensive experience investing in deflationary times and so it may be worth wile heeding their advice:

“Demand for Treasuries is very good because of the idle money in the banking system…”

“The medium term risk toward inflation is being caused by potential policy missteps by policy makers in regards to monetary and fiscal policy and the weakening dollar…”

“Any economics textbook would tell you that the massive stimulus from the central government will eventually cause inflation, but the Japanese know it doesn’t have to turn out that way…”

“The U.S. economy has faced a double whammy: the recession and credit contraction. The U.S. will face a triple whammy with deflation. That’s good for the Treasury market.”

Mother of all carry trades will lead to inevitable deflationary bust.


For now the privately owned US Federal Reserve’s efforts to reflate the financial markets are sending a flood of liquidity into speculative asset bubble blowing by the speculators. Nearly every asset class is seeing its price being bid up with cheaply borrowed US dollars. At some point an asset bubble always bursts when an event or a perception driven change of heart causes investors to unwind their speculative positions. As the article below explains, when this happens we’ll witness a huge deflationary bust which may wipe out many speculators. Will it wipe out the Central Banks is another good question that only time will be able to answer.

Deflation is firmly taking root in USA. FED is still in denial.


Even though the signs of deflation are everywhere as expressed in contracting credit, money supply, and prices, the privately owned Federal Reserve’s executives continue to beat about the deflationary bush by referring to it as “disinflation” and talking about it in future tense. It has been happenning already for the past year and a half and it will continue as evidenced by record low long term Treasury yields this week. The below article provides a detailed discussion and solid evidence of deflation and how it works.

Does the world have the courage to deal with its debts?


Quite a sensible article from an MSM source, Telegraph of UK, that aptly discusses the real state of things on the Central Banks’ front of deflationary fighting and suggests several solutions out of this global economic crisis. I, however, do not agree with the proposed solution ouf of indebtedness problem that we the people should pay down the debts as the author puts it “very slowly, by sweat and toil”. This contradicts the very natural economic self-interest of the majority of hundreds of millions of people that were either duped into borrowing by financial wizards or had to do it as they saw no other way of being able to afford things as the wages stagnated for decades. No, I propose to default on all the debts, walk away and let the owners of this world financial system have it. I in essense call for a debt revolt, stick it to them and let them be crushed under their own debts.