BOOM as at 18th October 2020

CHINA ISSUES ELECTRONIC CASH — LEADING ON MONEY INNOVATION

Last week, almost 50,000 Chinese people were each given 200 Yuan by the Government — or more accurately, by the People’s Bank of China — the central bank. That is equal to about US$ 40. The recipients were decided by lottery because this was a trial of a new “Digital Wallet” — an App downloaded onto their smartphones. The App received and stored the electronic money — not their bank account.  In total, about $ 2 Million worth of Yuan was distributed.

The Chinese government and the Chinese central bank must be reading BOOM’s many articles on the need to increase Cash in all economies to buffer credit money (money created as a bank loan). They are now leading the charge in regard to money innovation, not the West.

In Western media stories about this trial, the words “digital currency”, “digital Yuan” and “digital wallet” are being used extensively. However, this is disingenuous. All currencies in every nation are already overwhelmingly digital. They exist principally as deposits on the computer ledgers of commercial banks. And all bank accounts are already, in effect, “digital wallets”. That term could also be used to describe commonly used Debit Cards. SO what is the fuss all about?

The funds of the so-called “digital Yuan” have been issued by the central bank of China and not by any commercial bank or from government Treasury accounts. The funds are not loans so there is no interest component. Thus, they are Electronic Cash issued directly to personal digital wallet Apps.

China, that bastion of communism, is leading the world in regard to the issuance of this new form of money. They have just boosted the fresh money supply by the equivalent of $ 2 Million. In future, they could easily boost it by $ 2 Billion worth of Yuan or even $ 2 Trillion. And they could ask the recipients to spend it in designated outlets by a specified time. This would immediately cause a huge boost to the total of economic transactions — the GDP — of China.

Interestingly, the money can only be spent at 3,800 designated outlets in the district of Luohu. This means  that they are a local (or regional) currency with closely restricted usage characteristics. Adolf Hitler built the economic miracle of pre World War 2 Germany using a very similar (but obviously not digital) methodology — called a Mefo Bill. And the Mefo Bill was fashioned on a little known successful experiment in local money issuance (outside of the banking system) in the small Austrian village of Worgl during the great depression of 1932.

BOOM wrote about this in a recent editorial on 3rd May titled
“CHINA LEADS WITH COUPONS — HISTORY REPEATS — SILVIO GESELL — COMPLEMENTARY CURRENCIES”.

If you are at all interested in the future of money creation, you should read it again.

https://boomfinanceandeconomics.wordpress.com/2020/05/02/boom-as-at-3rd-may-2020/

What the Chinese are doing is very similar to what BOOM has been proposing as a system of interest free Electronic Cash. However, the difference is that, in BOOM’s proposal, the “cash” would reside on the ledgers of the entire banking system plus the government’s Treasury ledger (rather than just on the central bank’s ledger in a closed loop with a smartphone App).

BOOM’s proposal is called Quantitative Boosting. In it, there is no separation of new money from old. And no restriction occurs on where or when the money can be spent because, under QB, the money is initially spent into the real economy by the Treasury in payment of government obligations. BOOM’s system is also dramatically superior to the Chinese system because of the natural checks and balances brought to bear by the proposed Tripartite Agreement that must exist between commercial banks, central banks and government to operate it. In other words, the People (yes, that’s us) get a seat at the table via their government representatives who control the Treasury.

This is much more acceptable in Democratic nations — because otherwise, if they adopted the Chinese system, the central bank would become solely responsible for such electronic cash issuance. And BOOM does not have sufficient confidence in the central bankers of the Western democracies to allow such huge power to go unchecked by normal democratic oversight.  Don’t you agree?

Electronic Cash is coming because it is essential.  Why? Because we have allowed physical Cash to dwindle to just 3 % of all money used in most advanced economies. Cash is very important in all economies because it is an interest free buffer to the huge amounts of credit created money issued when banks make loans de novo to borrowers. We MUST have cash in a digital world. It is an absolutely essential, non-interest bearing, stabilizing component to our money system.

BOOM is ready to assist in any way to move these innovations forward. The major central banks, the Bank for International Settlements, the OECD, the World Bank and the IMF are all constrained by the current monetary system because they see their role as the preservation of that system. They have already adopted ZIRP, NIRP and QE and are now considering “Helicopter Money” (reluctantly) — commonly called UBI (Universal Basic Income). Those policies have been proved to be not sufficiently innovative and have actually not worked to revive the advanced economies. Think Tanks could be established to examine the task. BOOM is ready for that role and feels that perhaps Switzerland or Australia may be the best Western nations to adopt advanced monetary innovations as an example to other larger nations.

In the absence of a massive increase in physical cash which BOOM would prefer (but acknowledges that it is unlikely to happen), we need the very best Electronic Cash system — BOOM’s Quantitative Boosting.

Quantitative Boosting for Dummies — Yes — You can safely Click on the Link: 

https://boomfinanceandeconomics.wordpress.com/2020/01/18/boom-as-at-19th-january-2020/

WHAT THE HELL IS A CASE?
WE STILL DON’T KNOW

Nothing seems to have changed since this article was published in the British Medical Journal on September 3rd. The author, Elisabeth Mahase, is Clinical News Reporter at The BMJ.

Covid-19: The Problems with Case Counting

“I’m still waiting to see the small print to clarify what we are counting as cases.”
“Both Heneghan and Raffle say that it’s hard to compare the figures on cases over time because the way we define a case seems to have changed, moving from people with symptoms who have then tested positive to a PCR positive result alone, regardless of symptoms.”

Link:  https://www.bmj.com/content/370/bmj.m3374

TWO MORE COVID TRIALS STOPPED

Two more Covid 19 Clinical Trials have been stopped. A vaccine trial was stopped last week by Johnson & Johnson because a trial participant had developed an “unexplained illness”. BOOM has not been able to find any details of the illness.

And a second trial based on Covid 19 Antibody therapy by Eli Lilly was also stopped last week due to a “potential safety concern”.

Trials of yet another vaccine from Astra Zeneca and Oxford University were halted previously in the US because another trial participant developed a serious neurological condition of the spinal cord called Transverse Myelitis.

LOCKDOWNS NOT RECOMMENDED BY WHO

Two leading Doctors in the WHO (World Health Organization) last week spoke out against harsh Lockdowns being used by some governments against Covid 19.

Dr David Nabarro, a Special Envoy of the WHO, told world leaders to stop “using lockdowns as your primary control method” of the coronavirus.
“We in the World Health Organisation do not advocate lockdowns as the primary means of control of this virus”.  “The only time we believe a lockdown is justified is to buy you time to reorganise, regroup, rebalance your resources, protect your health workers who are exhausted, but by and large, we’d rather not do it.”

Also, the World Health Organization’s Regional Director for Europe Hans Kluge said that governments should stop enforcing lockdowns, unless as a “last resort,” because the impact on other areas of health and mental well-being is more damaging.

Thousands of Doctors in clinical practice all over the world have issued similar warnings for months now but the politicians of the Western world have steadfastly refused to listen to anyone except their government appointed “principal health advisers”. WHY?

Meanwhile, there are currently no excess deaths occurring in Europe. The official total death numbers per week from all causes for 24 European nations including the UK are still below the baseline (normal) and falling.

LEGAL ACTIONS ARE COMING

Legal challenges are being organized against politicians and their advisers because of their alleged incompetence in adequately assessing the degree of accuracy of the PCR Test for Covid 19.

A German lawyer, Dr. Reiner Fuellmich, explains in this lecture why the so-called corona pandemic in his opinion is a scandal that qualifies to be called a crime against humanity.

The Short Version (8 minutes) — https://www.bitchute.com/video/IrtC2Ew0biYo/
The Full Analysis (49 minutes) —  https://www.bitchute.com/video/kZAHIhkF6GuQ/

Some other organizations are seeking Judicial Reviews of all Government decisions concerning Covid 19. Here are just two that BOOM is aware of —

Keep Britain Free — Court Action to begin late October — https://www.keepbritainfree.com/

GotFreedom  — USA — Judicial Review —  https://got-freedom.org/

TRUTH IS DEAD OR DYING

A discussion about the origins of Covid 19 cannot be allowed in the mainstream media because (perhaps) the real origins of the Coronavirus may then become obvious. Truth may well be dead in the official narrative.

A book was banned on Amazon last week titled “Covid 19 and the Agendas to Come: Red Pilled” by James Perloff. 3,500 copies of it had already been sold by Amazon since August 20th. The explanation given by Amazon was that the book “violated content guidelines”.

On the night of May 10, 1933, German students and Hitler’s Nazi Brown Shirts gathered in Berlin to burn books with “unGerman” ideas. The Nazi Propaganda Minister Joseph Goebbels was there to encourage the activity. The crowd tossed heaps of books into a bonfire while giving the Hitler arm-salute and singing Nazi anthems. A hundred years before Hitler, the German-Jewish poet, Heinrich Heine, said — “Wherever books are burned, human beings are destined to be burned too.”

In the communist dictatorship of the USSR, the people said “We pretend to work and they pretend to pay us”.

In our world today, we could say “We pretend to believe and they pretend to tell us the truth”

Link:  Are the Global Scientific Elite Trying to Bury the Truth About the Origin of COVID-19?

In economics, things work until they don’t. Until next week …………  Make your own conclusions, do your own research.  BOOM does not offer investment advice.
CLICK HERE FOR PODCASTS:
   OUR BRAVE NEW ECONOMIC WORLD

EMAIL: gerry {at} boomfinanceandeconomics.com

Return to the BOOM Main Website –  BOOM Finance and Economics at  http://boomfinanceandeconomics.com/

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HOW MOST MONEY IS CREATED

BANKS CREATE FRESH NEW MONEY OUT OF THIN AIR (but they always need a Borrower to do so)

THERE IS NO SUCH THING AS A DEPOSIT
BANKS PURCHASE SECURITIES, THEY DON’T MAKE LOANS
BANKS DON’T TAKE DEPOSITS, THEY BORROW YOUR MONEY
Watch this short 15 minutes video and learn as Professor Richard Werner brilliantly explains how the banking system and financial sector really work.
https://www.youtube.com/watch?v=EC0G7pY4wREhttp://

How is Most New Money Created ?

LOANS CREATE DEPOSITS — that is how almost all new money is created in the economy (by commercial banks making loans).

From the Bank of England Quarterly Bulletin Q1 2014    —
“Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.“Most money in the modern economy is in the form of bank deposits, which are created by commercial banks themselves”.

Youtube Video —  https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-in-the-modern-economy-an-introduction

and

https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-creation-in-the-modern-economy

Paper:  Money in the Modern Economy  PDF —  CLICK HERE

Quarterly Bulletins Indexhttp://www.bankofengland.co.uk/publications/Pages/quarterlybulletin/2014/qb14q1.aspx

Most economists are unaware of this and even ignore the banking & finance sectors in their econometric models.

On 25th April 2017, the central bank of Germany, the Bundesbank, released a statement on this matter —

“In terms of volume, the majority of the money supply is made up of book money, which is created through transactions between banks and domestic customers. Sight deposits are an example of book money: sight deposits are created when a bank settles transactions with a customer, ie it grants a credit, say, or purchases an asset and credits the corresponding amount to the customer’s bank account in return. This means that banks can create book money just by making an accounting entry: according to the Bundesbank’s economists, “this refutes a popular misconception that banks act simply as intermediaries at the time of lending – i.e. that banks can only grant credit using funds placed with them previously as deposits by other customers”. By the same token, excess central bank reserves are not a necessary precondition for a bank to grant credit (and thus create money).

”Reference: https://www.bundesbank.de/Redaktion/EN/Topics/2017/2017_04_25_how_money_is_created.html

The Reserve Bank of Australia (Australia’s central bank) has also contributed to the issue in a speech by Christopher Kent, the Assistant Governor on September 19th 2018.“…… the vast bulk of broad money consists of bank deposits”“Money can be created …….. when financial intermediaries make loans

“In the first instance, the process of money creation requires a willing borrower.” “It’s also worth emphasizing that the process of money creation is not the result of the actions of any single bank – rather, the banking system as a whole acts to create money.”
================================================================

Disclaimer:   All content is presented for educational and/or entertainment purposes only. Under no circumstances should it be mistaken for professional investment advice, nor is it at all intended to be taken as such. The commentary and other contents simply reflect the opinion of the authors alone on the current and future status of the markets and various economies. It is subject to error and change without notice.The presence of a link to a website does not indicate approval or endorsement of that web site or any services, products, or opinions that may be offered by them.

Neither the information nor any opinion expressed constitutes a solicitation to buy or sell any securities nor investments. Do NOT ever purchase any security or investment without doing your own and sufficient research.  Neither BOOM Finance and Economics.com nor any of its principals or contributors are under any obligation to update or keep current the information contained herein. The principals and related parties may at times have positions in the securities or investments referred to and may make purchases or sales of these securities and investments while this site is live. The analysis contained is based on both technical and fundamental research.

Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.

Disclosure: We accept no advertising or compensation, and have no material connection to any products, brands, topics or companies mentioned anywhere on the site.

Fair Use Notice: This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of issues of economic and social significance. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.

==============================================================

MOLS Denmark

BOOM as at 11th October 2020

US AND CHINA STRONG ECONOMIC RECOVERY

The US economy is recovering with strong growth forecasted and possibly already in place. The GDPNow model published by the Atlanta Federal Reserve Bank is currently estimating real GDP growth (seasonally adjusted annual rate) in the third quarter of 2020 to be 35.2 percent.

BOOM’s two key indicators for China’s economic activity are also both showing a strong situation in China with steady, strong growth.

With strong rebounds already happening in China and America, we can all relax a little (for the time being) about what should turn out to be a short, sharp recession. Long term, there is still great uncertainty of course.

TRUMP WINNING

Donald Trump appears to be winning the Presidential race. As at 21st September, his estimated Electoral College votes seemed to be around 278 versus 260 for Biden. Any candidate who wins 270 will take the White House. These were the numbers released on that day by Professor Bela Stantic at Griffith University in Australia. However, there is still a long way to go with three and a half weeks yet to transpire in the race.

Professor Stantic accurately predicted Trump’s victory in 2016. He uses Big Data analytics rather than polling to reach his estimations.  Polls are usually only based on surveys of about 1,000 people — 330 Million reside in the US.

Link: https://www.newshub.co.nz/home/world/2020/09/tracking-well-data-expert-predicts-donald-trump-will-win-us-election.html

AUSTRALIA COVID FACTS

Regarding Australia, let’s look at the Covid 19 phenomenon there.  Australia has a population of around  25.6 Million and about 400 people die on average every day from all causes. That’s about 12,000 per month or 100,000 already in 2020. 

After almost 8 months of the “horrific” Corona SARS CoV2 “pandemic” and the massive political and media Panic-Demic, there have been only 900 deaths attributed to Covid 19. Most of those people have been elderly, in poor health and have died from other serious pre-existent diseases (dying with Covid not from it). Some have died from the Covid illness itself. The Australian Bureau of Statistics reported on 24th June that “68.5% of people who died from COVID-19 had pre-existing chronic conditions. Hypertension was the most common of these pre-existing conditions, followed by dementia, diabetes, chronic obstructive pulmonary disease and cancer”. But 25,000 Australians have recovered after having had the infection. Many of those had no symptoms. Very few required hospitalization.

It is a sad fact but while those Covid related deaths were occurring, 100,000 people died from other causes. The media did not show any concern or care for them. And neither did the politicians. Let’s be clear about that. The media were more concerned with grabbing the limelight and selling advertising. While the politicians were busy trying to grab as much power as possible from what they saw as a once-in-a-lifetime opportunity. These dynamics are present all over the world as the media and the politicians talk endlessly about “cases” without defining the word. Donald Trump is now a “case” but he is well and active.

Australia has had 35 deaths per million population attributed to this threat. The death rate in San Marino Italy was 1,237 per million. In Belgium, it was 870. And all of the top 12 nations have registered deaths per million rates above 600.

What is really going on? People all over the world are suspicious about the official narrative and the media panic mongering. They are looking for better explanations. They are becoming more distrustful of politicians and mainstream journalists by the day.

If you are  one of those people, a critical thinker, there is a book just published titled Corona False Alarm, written by two outstanding authorities.

CORONA FALSE ALARM?

The Authors:  Karina Reiss was born in Germany and studied biology at the University of Kiel where she received her PhD in 2001. She became assistant professor in 2006 and associate professor in 2008 at the University of Kiel. She has published over sixty articles in the fields of cell biology, biochemistry, inflammation, and infection, which have gained international recognition and received prestigious honors and awards.

Sucharit Bhakdi was born in Washington, DC, and educated at schools in Switzerland, Egypt, and Thailand. He studied medicine at the University of Bonn in Germany, where he received his MD in 1970. He was a post-doctoral researcher at the Max Planck Institute of Immunobiology and Epigenetics in Freiburg from 1972 to 1976, and at The Protein Laboratory in Copenhagen from 1976 to 1977. He joined the Institute of Medical Microbiology at Giessen University in 1977 and was appointed associate professor in 1982. He was named chair of Medical Microbiology at the University of Mainz in 1990, where he remained until his retirement in 2012. Dr. Bhakdi has published over three hundred articles in the fields of immunology, bacteriology, virology, and parasitology, for which he has received numerous awards and the Order of Merit of Rhineland-Palatinate.

Their book Corona False Alarm is available on Amazon Kindle for just $ 9.68 and Amazon paperback for $ 19.72

It is also available at Chelsea Green Publishing here —
https://www.chelseagreen.com/product/corona-false-alarm/http://

GREAT BARRINGTON DECLARATION

Signatures:     15,209  Doctors    6,964 Medical Scientists   208,989  General Public
Current lockdown policies are producing devastating effects on short and long-term public health.”
https://gbdeclaration.org/

IS CORONA VIRUS MAN MADE?

Some mainstream media publications are carrying this story about a Chinese virologist named Li-Meng Yan. 

Yan also stated that the coronavirus was an ‘unrestricted bioweapon’ intentionally unleashed by the Communist Party.  She wrote: ‘In addition, records indicate that the unleashing of this weaponised pathogen should have been intentional rather than accidental.”

‘We therefore define SARS-CoV-2 as an Unrestricted Bioweapon and the current pandemic a result of Unrestricted Biowarfare.’

More here —

In April incumbent US president Donald Trump claimed he had seen evidence that the coronavirus was built in a laboratory in Wuhan as he suggested the Government may impose sanctions on China in response.

‘Yes I have. Yes I have,’ Trump said when asked if he had seen proof the virus originated in the Wuhan Institute of Technology.

However, the president would not divulge what the evidence was that confirmed his suspicions, when asked by a reporter.

‘I can’t tell you that. I am not allowed to tell you that,’ he responded.

Link:  https://www.dailymail.co.uk/news/article-8823825/Coronavirus-Chinese-virologist-accuses-Beijing-faking-virus-genome-data-hide-bioweapon.html 

MASK FACTS

Here are some Mask Facts from the The Association of American Physicians and Surgeons.
Conclusion: “Wearing masks (other than N95) will not be effective at preventing SARS-CoV-2 transmission, whether worn as source control or as PPE.  The chance of catching COVID-19 from a passing interaction in a public space is minimal”.

The World Health Organization (WHO): (April 6, 2020)

“Advice to decision makers on the use of masks for healthy people in community settings:
The wide use of masks by healthy people in the community setting is not supported by current evidence and carries uncertainties and critical risks.”

Final Thoughts:

“Surgical masks are loose fitting. They are designed to protect the patient from the doctors’ respiratory droplets.  The wearer is not protected from others’ airborne particles.

People do not wear masks properly. Many people have the mask under the nose. The wearer does not have glasses on and the eyes are a portal of entry.  If the virus lands on the conjunctiva, tears will wash it into the nasopharynx.

Most studies cannot separate out hand hygiene.

The designer masks and scarves offer minimal protection. They give a false sense of security to both the wearer and those around the wearer.

Remember: children under 2 years should not wear masks because of accidental suffocation and difficulty breathing in some.

The Association of American Physicians and Surgeons – AAPS – is a non-partisan professional association of physicians in all types of practices and specialties across the country.

Since 1943, AAPS has been dedicated to the highest ethical standards of the Oath of Hippocrates and to preserving the sanctity of the patient-physician relationship and the practice of private medicine.”

Link: https://aapsonline.org/mask-facts/

NEGATIVE YIELD INVESTMENTS

23 European Nations now have negative yields on their 2 year sovereign bonds. That is a staggering fact. In other words, if you invest in those bonds you will receive less capital back at maturity after 2 years than you invested. The governments will effectively tax your capital while using it.

In economics, things work until they don’t. Until next week …………  Make your own conclusions, do your own research.  BOOM does not offer investment advice.
CLICK HERE FOR PODCASTS:
   OUR BRAVE NEW ECONOMIC WORLD

EMAIL: gerry {at} boomfinanceandeconomics.com

Return to the BOOM Main Website –  BOOM Finance and Economics at  http://boomfinanceandeconomics.com/

=============================================================

HOW MOST MONEY IS CREATED

BANKS CREATE FRESH NEW MONEY OUT OF THIN AIR (but they always need a Borrower to do so)

THERE IS NO SUCH THING AS A DEPOSIT
BANKS PURCHASE SECURITIES, THEY DON’T MAKE LOANS
BANKS DON’T TAKE DEPOSITS, THEY BORROW YOUR MONEY
Watch this short 15 minutes video and learn as Professor Richard Werner brilliantly explains how the banking system and financial sector really work.
https://www.youtube.com/watch?v=EC0G7pY4wREhttp://

How is Most New Money Created ?

LOANS CREATE DEPOSITS — that is how almost all new money is created in the economy (by commercial banks making loans).

From the Bank of England Quarterly Bulletin Q1 2014    —
“Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.“Most money in the modern economy is in the form of bank deposits, which are created by commercial banks themselves”.

Youtube Video —  https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-in-the-modern-economy-an-introduction

and

https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-creation-in-the-modern-economy

Paper:  Money in the Modern Economy  PDF —  CLICK HERE

Quarterly Bulletins Indexhttp://www.bankofengland.co.uk/publications/Pages/quarterlybulletin/2014/qb14q1.aspx

Most economists are unaware of this and even ignore the banking & finance sectors in their econometric models.

On 25th April 2017, the central bank of Germany, the Bundesbank, released a statement on this matter —

“In terms of volume, the majority of the money supply is made up of book money, which is created through transactions between banks and domestic customers. Sight deposits are an example of book money: sight deposits are created when a bank settles transactions with a customer, ie it grants a credit, say, or purchases an asset and credits the corresponding amount to the customer’s bank account in return. This means that banks can create book money just by making an accounting entry: according to the Bundesbank’s economists, “this refutes a popular misconception that banks act simply as intermediaries at the time of lending – i.e. that banks can only grant credit using funds placed with them previously as deposits by other customers”. By the same token, excess central bank reserves are not a necessary precondition for a bank to grant credit (and thus create money).

”Reference: https://www.bundesbank.de/Redaktion/EN/Topics/2017/2017_04_25_how_money_is_created.html

The Reserve Bank of Australia (Australia’s central bank) has also contributed to the issue in a speech by Christopher Kent, the Assistant Governor on September 19th 2018.“…… the vast bulk of broad money consists of bank deposits”“Money can be created …….. when financial intermediaries make loans

“In the first instance, the process of money creation requires a willing borrower.” “It’s also worth emphasizing that the process of money creation is not the result of the actions of any single bank – rather, the banking system as a whole acts to create money.”
================================================================

Disclaimer:   All content is presented for educational and/or entertainment purposes only. Under no circumstances should it be mistaken for professional investment advice, nor is it at all intended to be taken as such. The commentary and other contents simply reflect the opinion of the authors alone on the current and future status of the markets and various economies. It is subject to error and change without notice.The presence of a link to a website does not indicate approval or endorsement of that web site or any services, products, or opinions that may be offered by them.

Neither the information nor any opinion expressed constitutes a solicitation to buy or sell any securities nor investments. Do NOT ever purchase any security or investment without doing your own and sufficient research.  Neither BOOM Finance and Economics.com nor any of its principals or contributors are under any obligation to update or keep current the information contained herein. The principals and related parties may at times have positions in the securities or investments referred to and may make purchases or sales of these securities and investments while this site is live. The analysis contained is based on both technical and fundamental research.

Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.

Disclosure: We accept no advertising or compensation, and have no material connection to any products, brands, topics or companies mentioned anywhere on the site.

Fair Use Notice: This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of issues of economic and social significance. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.

==============================================================

MOLS Denmark

BOOM as at 4th October 2020

QUANTITATIVE EASING DISTORTS ASSET PRICES
DOES NOT STIMULATE ECONOMIC GROWTH
DOES NOT INDUCE CPI INFLATION

The central bankers in the advanced economies of the USA, UK and European Union over the last 12 years have progressively lowered official overnight interest rates to all time lows and embarked on massive asset buying programs (called Quantitative Easing). Japan has been doing this for much longer, for about 25 years in fact. The aim is to produce economic growth and CPI inflation.

The various central banks are either close to Zero, at Zero or at Negative interest rate settings. Zero is called ZIRP — Zero Interest Rate Policy. Negative is called NIRP — Negative Interest Rate Policy. And when they are not quite at Zero, they are “moving to the lower bound”.  That actually suggests that zero is the limit of their policy settings. But we all know that is not true. Negative interest rates can happen. In fact, Switzerland, Denmark and Japan have already had negative official overnight interest rates since 2016.

Why are they doing this? The answer is that they are desperately trying to create CPI inflation and economic growth as measured by the GDP (Gross Domestic Product). But it is failing. Most have now given up on lower interest rate settings and simply expanded their asset purchasing programs. The assets they mainly purchase are bonds issued by their respective governments to help fund the huge deficit spending programs which cannot be adequately funded by falling taxation revenues. But this doesn’t seem to trigger growth or CPI inflation.

Central bank asset purchase programs fail because they are asset purchase programs. Sounds circuitous but it is true. These activities distort asset prices to the upside leading to Asset Price Inflation — and of assets that are already in existence so economic growth is not stimulated and neither is CPI inflation. Actually CPI inflation falls as the bulk of money (both new and old) just follows the asset price trail in a bid to benefit from those increases. CPI inflation is then at  the mercy of powerful deflationary forces inside the real economy.

Those deflationary forces include aging demographics (too many old people who don’t borrow), cheap energy inputs, massive technological change, low wages growth, cheap Chinese imports and a relative shortage of borrowers.

BOOM’s Quantitative Boosting new money policy is the answer. It will create interest free electronic cash on the banking sector’s balance sheets and that money will be expended through the normal government channels well established by Treasury departments. It is not mediated through any asset market. Thus, the real economy will grow immediately and CPI inflation will occur. And the central bankers will have another new weapon — a New Money Volume Control —  which will complement their current, standard interest rate controls.

Quantitative Boosting Explained — Link:  https://boomfinanceandeconomics.wordpress.com/2020/01/18/boom-as-at-19th-january-2020/

ISSUING A BOND THAT PAYS INTEREST

Can a Government issue a bond and then use the capital raised from that bond to pay the interest owing on other bonds previously issued? Sounds like a Ponzi Scheme? But the answer is yes. Governments do not have to explain exactly where the funds raised via a bond issuance will be expended. If, for example, the average interest rate owing on previously issued bonds is 4%, then 25 such bonds can be issued over 25 years. The numbers are theoretically staggering.

For example, a nation with $ 1 Trillion ($ 1,000 Billion) of total bonds on issuance with an average annual cost (interest rate) of 4 %. Thus a new bond can be issued each year to raise just $ 40 Billion to cover the cost of the interest owed on the previously issued bonds. Easy.

There is really no end to this game as long as CPI inflation does not get out of control and as long as the currency does not collapse in general acceptance and usage.

The problem however, is this. The excess issuance of government bonds may (theoretically) distort the bond market pricing mechanism. The distortion of bond market prices can have greater consequences than expected over the long term because our whole financial system uses those prices to price credit, especially mortgage credit created to fund house purchases. The result is a BOOM not just in bond prices but also in house prices and other assets (such as shares).

Asset Price Inflation throughout the economy is virtually guaranteed in such a situation.

MAKING CRIME LEGAL

The UK Government is seeking to make crime legal for a number of government departments.

This video is revealing — https://www.ukcolumn.org/ukcolumn-news/uk-column-news-28th-september-2020

Speed up the Playback speed to 1.5 for a quick look. It outlines the introduction to Parliament of a Bill to authorize “criminal conduct, in the course of, or otherwise in connection with, the conduct of covert human intelligence sources”. The Criminal Conduct Bill.

Surely, this means Totalitarian, non-democratic government and the end of Freedom?

HSBC SURGES

Last weekend, BOOM wrote about a possible bank rescue in operation. It happened as per BOOM’s expectation. The shares of a large UK based bank, HSBC, rose 10.22% on the following Monday. A major Chinese insurance company bought a large number of shares to boost its stake to 8% ownership overall. Many other major bank shares around the Globe rose as well.

This rise of 10.22% was the biggest intra-day rise for HSBC shares in a decade. In the previous week, HSBC shares fell to a 25 year low. The lights were burning late into the night in Basel last weekend.

FEAR PRODUCES FEAR

Fear produces Cognitive Dissonance which produces Fear. This phenomenon is a closed loop. And it can result in disturbing outcomes. Cognitive dissonance is a reaction of compressed anxiety that occurs in people who have a fixed view of reality when they are confronted by another person who presents a different view. Sometimes, the anxiety compresses and can suddenly manifest as violence.

Most people cannot hold two different views of reality. They are fully stretched intellectually in constructing one. This one view is precious to them because it is theirs. It is the result of years of patient construction (some would say brainwashing). They prefer narratives as the tool of construction because narratives are easier to remember.

Conflicting facts require a whole new effort and may be presented without a narrative causing consternation. To someone with limited intellect, they can be seen as potential threats. That is when violent reactions can manifest as a defense mechanism.

To change the world, we have to change the dominant narrative by skillfully incorporating new facts in a non-threatening way and moving people slowly to acceptance of the different, new narrative.

The only other methodology is superior force/violence that cannot be opposed. That is what the USSR and the Allies did to Germany in WW2 and the atomic bombs did to the Japanese. Those aggressive, warring nations acquiesced and became peaceful — almost overnight.

VERNON COLEMAN ON BRAND NEW TUBE

https://brandnewtube.com/watch/everything-that-has-happened-was-meant-to-happen_YzirTosrfBeJD65.html

3,500 US COMPANIES SUE TRUMP

Not all American companies are happy with Trump. Trump’s unwise Trade War is the problem. About 3,500 U.S. companies, including Tesla, Ford, Target, Walgreen and Home Depot are legally challenging the Trump administration over tariffs on more than $300 billion of goods imported from China. The legal suits have been filed in the U.S. Court of International Trade.
One suit challenges the administration’s “unbounded and unlimited trade war impacting billions of dollars in goods imported from the People’s Republic of China by importers in the United States”.

On Sept. 15, the World Trade Organization found the United States breached global trading rules by imposing multi billion-dollar tariffs in Trump’s trade war with China.

The Full Story: 
https://www.reuters.com/article/usa-china-tariffs-idUSKCN26H03S

In economics, things work until they don’t. Until next week …………  Make your own conclusions, do your own research.  BOOM does not offer investment advice.
CLICK HERE FOR PODCASTS:
   OUR BRAVE NEW ECONOMIC WORLD

EMAIL: gerry {at} boomfinanceandeconomics.com

Return to the BOOM Main Website –  BOOM Finance and Economics at  http://boomfinanceandeconomics.com/

=============================================================

HOW MOST MONEY IS CREATED

BANKS CREATE FRESH NEW MONEY OUT OF THIN AIR (but they always need a Borrower to do so)

THERE IS NO SUCH THING AS A DEPOSIT
BANKS PURCHASE SECURITIES, THEY DON’T MAKE LOANS
BANKS DON’T TAKE DEPOSITS, THEY BORROW YOUR MONEY
Watch this short 15 minutes video and learn as Professor Richard Werner brilliantly explains how the banking system and financial sector really work.
https://www.youtube.com/watch?v=EC0G7pY4wREhttp://

How is Most New Money Created ?

LOANS CREATE DEPOSITS — that is how almost all new money is created in the economy (by commercial banks making loans).

From the Bank of England Quarterly Bulletin Q1 2014    —
“Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.“Most money in the modern economy is in the form of bank deposits, which are created by commercial banks themselves”.

Youtube Video —  https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-in-the-modern-economy-an-introduction

and

https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-creation-in-the-modern-economy

Paper:  Money in the Modern Economy  PDF —  CLICK HERE

Quarterly Bulletins Indexhttp://www.bankofengland.co.uk/publications/Pages/quarterlybulletin/2014/qb14q1.aspx

Most economists are unaware of this and even ignore the banking & finance sectors in their econometric models.

On 25th April 2017, the central bank of Germany, the Bundesbank, released a statement on this matter —

“In terms of volume, the majority of the money supply is made up of book money, which is created through transactions between banks and domestic customers. Sight deposits are an example of book money: sight deposits are created when a bank settles transactions with a customer, ie it grants a credit, say, or purchases an asset and credits the corresponding amount to the customer’s bank account in return. This means that banks can create book money just by making an accounting entry: according to the Bundesbank’s economists, “this refutes a popular misconception that banks act simply as intermediaries at the time of lending – i.e. that banks can only grant credit using funds placed with them previously as deposits by other customers”. By the same token, excess central bank reserves are not a necessary precondition for a bank to grant credit (and thus create money).

”Reference: https://www.bundesbank.de/Redaktion/EN/Topics/2017/2017_04_25_how_money_is_created.html

The Reserve Bank of Australia (Australia’s central bank) has also contributed to the issue in a speech by Christopher Kent, the Assistant Governor on September 19th 2018.“…… the vast bulk of broad money consists of bank deposits”“Money can be created …….. when financial intermediaries make loans

“In the first instance, the process of money creation requires a willing borrower.” “It’s also worth emphasizing that the process of money creation is not the result of the actions of any single bank – rather, the banking system as a whole acts to create money.”
================================================================

Disclaimer:   All content is presented for educational and/or entertainment purposes only. Under no circumstances should it be mistaken for professional investment advice, nor is it at all intended to be taken as such. The commentary and other contents simply reflect the opinion of the authors alone on the current and future status of the markets and various economies. It is subject to error and change without notice.The presence of a link to a website does not indicate approval or endorsement of that web site or any services, products, or opinions that may be offered by them.

Neither the information nor any opinion expressed constitutes a solicitation to buy or sell any securities nor investments. Do NOT ever purchase any security or investment without doing your own and sufficient research.  Neither BOOM Finance and Economics.com nor any of its principals or contributors are under any obligation to update or keep current the information contained herein. The principals and related parties may at times have positions in the securities or investments referred to and may make purchases or sales of these securities and investments while this site is live. The analysis contained is based on both technical and fundamental research.

Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.

Disclosure: We accept no advertising or compensation, and have no material connection to any products, brands, topics or companies mentioned anywhere on the site.

Fair Use Notice: This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of issues of economic and social significance. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.

==============================================================

MOLS Denmark

BOOM as at 27th September 2020

COVID DEATHS PER MILLION CONUNDRUM
ARE WE BEING LIED TO?

The politicians have worked hard at trying to convince us that Covid 19 is a “once in 100 year” special case epidemic and is a continuing threat that requires harsh measures. They have been assisted by the mainstream media in their Panic Now Fear Campaigns. Totalitarian policies have been implemented “for your own good” and we have seen police in vast numbers “protecting” us all from (presumably) a fate worse than death. Because Covid is (apparently) really, really horrible. It is worse than death, didn’t you know?

The problem is that the facts don’t stack up. Absolute Excess Death Numbers attributed to Covid 19 have been almost identical to excess death numbers in previous Influenza Virus epidemics in Europe (as recent as 2 years ago). Those influenza virus epidemics were not managed with masks, lockdowns, massive police actions, contact tracing or promises of instant, new vaccines. They just collapsed and went away — like all Flu epidemics have done repeatedly for many, many years. Covid 19 attributed death numbers in 24 European nations (including the UK) have also collapsed dramatically this year.

Check the graphs here — https://www.euromomo.eu/graphs-and-maps

The Euromomo graphs show that the excess death numbers in Europe and the UK peaked sharply in week 14 of 2020, the first week in April. Then they collapsed dramatically to around baseline death numbers by week 22 — the last week in May — (baseline is the normal average weekly death number). By then, there were no excess deaths occurring above the normal baseline in those nations as a group where over 400 million people live. And that has remained the case ever since with the exception of a very small increase in deaths above the baseline that occurred from week 29 – week 33 (the “dreaded second wave”?). Currently, the deaths per week number is below baseline and falling. There are NO excess deaths occurring in all of Europe and the UK.

Four months have passed since week 22 but the “scientific advisers” and the politicians refuse to acknowledge that  the epidemic is long gone. They have upped the ante and moved to even stricter police state actions as “case” numbers have gone up. So-called “case” numbers are just positive PCR tests which are to be expected if you do more testing. PCR tests, by the way, can detect long dead viral genetic fragments. Over 80 % of those people testing positive are not sick at all and 99% (at least) are at no risk whatsoever of death but we are all being subjected to increased Panic Now Fear campaigns.

Lockdowns have made no difference. We already know this by comparing death rates between nations and between regions inside nations. In Italy, for example, a study was done to compare the death numbers in many regions. This is a detailed study called — Patterns of COVID-19 Related Excess Mortality in the Municipalities of Northern Italy.

Link:  https://www.medrxiv.org/content/10.1101/2020.05.11.20097964v1.full.pdf

The authors of the study were mystified by the results. Death rates differed dramatically from region to region despite common health policies.

“Our study demonstrates that nearby municipalities within each region may show highly different mortality levels, despite being under common regional health policies, therefore further studies are necessary to analyze more in depth the local determinants of COVID-19 spread.”

We can also look at the Deaths Per Million population numbers from nation to nation. We are being told that the virus is the same virus everywhere so how can dramatic differences in absolute excess death numbers be explained? In Taiwan, there have been 0.3 deaths per million population attributed to Covid 19 — only 7 deaths in total (!). In San Marino, Italy, the death rate was 3,000 times higher. Covid deaths there occurred at the rate of  1,237 deaths per million population. Let’s repeat that for emphasis — the death rate in San Marino was 3,000 times higher than the death rate in Taiwan, presumably from the exact same virus. The Top 10 Covid 19 nations as measured by Deaths per Million have all had death numbers 2,000 times greater than Taiwan.

Check for yourself   https://www.worldometers.info/coronavirus/

The number in the Top 10 Nations range from 631 (USA) to 1,237 (San Marino). The Deaths per Million population number in Hong Kong is 14. Yet Hong Kong is the 4th most densely populated nation on Earth with 6,300 people per square kilometer and a total of 7.5 Million. Belgium is the Top western nation with 859 Deaths per Million. But Thailand has had extremely low death numbers — 0.8 per Million —  1,000 times lower than Belgium.

Oh — “the lockdowns are the explanation” say the true believers. But BOOM begs to differ. There is no way that mask use, lockdowns, police actions and public health measures could have made such significant difference to these numbers if we are dealing with the same virus and the same methods of spread. How could such measures result in 2,000 – 3,000 times less deaths from nation to nation?

Think about that while you consider these questions.

Are we are dealing with the exact same virus and the same methods of spread? And if not, are we being deliberately lied to? Are our government appointed “scientific advisers” competent or incompetent? Why do they not seem to consider the increased deaths caused by lockdown measures due to delayed diagnosis and treatment of cancers and heart disease? Why is the terminology of “cases” being used worldwide? Is this a deliberate obfuscation of the truth? And, if so, why is it so well organized? Why does the mainstream media in many different nations continue to slavishly use the exact same terminology? Are we actually dealing with different strains of the SARS CoV 2 virus in different locations? And are we dealing with malicious spread? Why is it that Iran and Russia are (clearly) having a second wave of combined “cases” and deaths while almost all other nations are not? Why does China have almost no new “cases” since late April (5 months)? And why has China had no new deaths attributed to Covid 19 since then either?

All of these questions need answers. But the mainstream media are unwilling to ask them. Our politicians are unwilling to answer them. They are even unwilling for these questions to be asked. Do they know something that we don’t? Are we being lied to? Over and over again?

There is an old joke about politicians. How can you tell if a politician is lying? Answer: His/Her lips are moving.

FINANCIAL MARKETS MAYHEM?

Some interesting behavior occured in stock markets, bond markets and commodities markets last week. The US stock market had some disturbingly bad days with large falls but, by the end of the week, buyers had mostly returned. The Doomers and the Gloomers came out in force to declare the end of the world as we know it. However, there was no rush to invest in the so-called “safe havens”. The US Government issued sovereign bond market rose not quite 1 % and the high quality corporate bond market fell by about 1% (in toto).

The Gold, Silver and Platinum markets did not show heavy buying. In fact, quite the opposite, the prices of these so called “precious safe haven metals” all fell. Platinum ended the week down 10.3%, Gold ended down 4.88% and Silver ended down 14.88%.  Huh?

The German and French stockmarkets dutifully fell almost 5% over the week. The Italian stock market fell by 4% and the UK market fell about 2.7%. In Asia, the Korean stock market fell by about 5.5 % and the Taiwan market fell by 5%. But the Japanese market barely budged, falling just 0.67% while the New Zealand market rose by more than 2% and the Australian market rose by 1.37%.

So — it was a very odd week. Perhaps the volatility was caused by the US Dollar that rose strongly?  The US Dollar Index rose by 1.75% and was strong against most major currency alternatives. But this is not an adequate explanation as far as BOOM can see.

Some large European banks got hit hard which suggests something seriously amiss there which would be no surprise to most observers. Money laundering rumors were rampant. Yes — apparently some people are shocked to learn that banks may be involved in money laundering. Many of the European bank shares fell by 10 – 12%. Also the large international banks resident in the UK fell hard. HSBC went down 8.2% and Barclays fell by over 6% as did Standard Chartered. The two large Swiss banks fell hard. UBS shares dropped 12.64% while Credit Suisse fell 11.24%. There have been rumors that the two Swiss giants were considering a merger. The large banks in the US were not spared with many big falls. However, Australian bank shares rose very sharply during Friday’s session, suggesting vigorous foreign buying.

BOOM has not yet seen anything approaching an adequate explanation for these large bank share falls right across the globe. And none is expected. The officers in Basel of the Bank for International Settlements probably know the answer but they will be tight lipped as they arrange a solution over the weekend. BOOM is expecting a rebound in bank shares when that happens and suggests that, meanwhile, everyone involved in banking should read last week’s BOOM Editorial on Quantitative Boosting and Electronic Cash.

CHINA ECONOMY INDICATORS UPDATE

BOOM’s primary indicator for China’s economy is still rising strongly. The secondary indicator is still in clear uptrend but is showing signs of weakness over the last 2 weeks.

In economics, things work until they don’t. Until next week …………  Make your own conclusions, do your own research.  BOOM does not offer investment advice.

CLICK HERE FOR PODCASTS:   OUR BRAVE NEW ECONOMIC WORLD

EMAIL: gerry {at} boomfinanceandeconomics.com

Return to the BOOM Main Website –  BOOM Finance and Economics at  http://boomfinanceandeconomics.com/

=============================================================

HOW MOST MONEY IS CREATED

BANKS CREATE FRESH NEW MONEY OUT OF THIN AIR (but they always need a Borrower to do so)

THERE IS NO SUCH THING AS A DEPOSIT
BANKS PURCHASE SECURITIES, THEY DON’T MAKE LOANS
BANKS DON’T TAKE DEPOSITS, THEY BORROW YOUR MONEY
Watch this short 15 minutes video and learn as Professor Richard Werner brilliantly explains how the banking system and financial sector really work.
https://www.youtube.com/watch?v=EC0G7pY4wREhttp://

How is Most New Money Created ?

LOANS CREATE DEPOSITS — that is how almost all new money is created in the economy (by commercial banks making loans).

From the Bank of England Quarterly Bulletin Q1 2014    —
“Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.“Most money in the modern economy is in the form of bank deposits, which are created by commercial banks themselves”.

Youtube Video —  https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-in-the-modern-economy-an-introduction

and

https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-creation-in-the-modern-economy

Paper:  Money in the Modern Economy  PDF —  CLICK HERE

Quarterly Bulletins Indexhttp://www.bankofengland.co.uk/publications/Pages/quarterlybulletin/2014/qb14q1.aspx

Most economists are unaware of this and even ignore the banking & finance sectors in their econometric models.

On 25th April 2017, the central bank of Germany, the Bundesbank, released a statement on this matter —

“In terms of volume, the majority of the money supply is made up of book money, which is created through transactions between banks and domestic customers. Sight deposits are an example of book money: sight deposits are created when a bank settles transactions with a customer, ie it grants a credit, say, or purchases an asset and credits the corresponding amount to the customer’s bank account in return. This means that banks can create book money just by making an accounting entry: according to the Bundesbank’s economists, “this refutes a popular misconception that banks act simply as intermediaries at the time of lending – i.e. that banks can only grant credit using funds placed with them previously as deposits by other customers”. By the same token, excess central bank reserves are not a necessary precondition for a bank to grant credit (and thus create money).

”Reference: https://www.bundesbank.de/Redaktion/EN/Topics/2017/2017_04_25_how_money_is_created.html

The Reserve Bank of Australia (Australia’s central bank) has also contributed to the issue in a speech by Christopher Kent, the Assistant Governor on September 19th 2018.“…… the vast bulk of broad money consists of bank deposits”“Money can be created …….. when financial intermediaries make loans

“In the first instance, the process of money creation requires a willing borrower.” “It’s also worth emphasizing that the process of money creation is not the result of the actions of any single bank – rather, the banking system as a whole acts to create money.”
================================================================

Disclaimer:   All content is presented for educational and/or entertainment purposes only. Under no circumstances should it be mistaken for professional investment advice, nor is it at all intended to be taken as such. The commentary and other contents simply reflect the opinion of the authors alone on the current and future status of the markets and various economies. It is subject to error and change without notice.The presence of a link to a website does not indicate approval or endorsement of that web site or any services, products, or opinions that may be offered by them.

Neither the information nor any opinion expressed constitutes a solicitation to buy or sell any securities nor investments. Do NOT ever purchase any security or investment without doing your own and sufficient research.  Neither BOOM Finance and Economics.com nor any of its principals or contributors are under any obligation to update or keep current the information contained herein. The principals and related parties may at times have positions in the securities or investments referred to and may make purchases or sales of these securities and investments while this site is live. The analysis contained is based on both technical and fundamental research.

Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.

Disclosure: We accept no advertising or compensation, and have no material connection to any products, brands, topics or companies mentioned anywhere on the site.

Fair Use Notice: This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of issues of economic and social significance. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.

==============================================================

MOLS Denmark

BOOM as at 20th September 2020

A MONEY REVOLUTION — ELECTRONIC CASH

We use a money system inherited from 16th century Venice and it needs to be changed urgently because it is simply not fit for purpose in our modern world. The advanced economies are all now struggling since 2008 because they are increasingly under the influence of many deflationary forces that inhibit CPI inflation. And without CPI inflation, the Venetian money system based on banking and credit creation simply cannot function as it must. Those deflationary forces include aging demographics (too many old people who don’t borrow), cheap energy inputs, massive technological change, low wages growth, cheap Chinese imports and a relative shortage of borrowers. 

So do we drive 16th century cars? Do we still ride horses to get from A to B?

No but we use a money system that has not changed since those ancient days in medieval Venice. Back then, the bankers walked to the Rialto Bridge and St Mark’s Square every day with their benches on their shoulders to set up and conduct business on the side walks. The benches were called il banco or i banchi. In the Italian language, banco means a bench. So therin lies the origin of the word bank.

Banks are at the very core of our Venetian money system and they are granted a special banking license to create bank credit money (bank loans — 90 – 97 % of our fresh new money supply). We also have Cash — notes and coins — commonly called sovereign money (because the sovereign or the State issues it). And we have banking reserves money which can only be used by banks inside the banking system to settle inter-bank transactions so that money does not circulate in the goods and services economy.

Cash has slowly but surely been reduced in use over the last 50 – 60 years. Before large mainframe computers arrived, it was the dominant form of money. However, these days, almost all money is now in electronic, digital form issued by banks when they create a loan. So nearly all our money now has an interest component payable. Cash is very different because we do not pay interest on it when we use it.

There are some people who even want to get rid of cash altogether “because it is inconvenient” and “is used in the black economy”. However, cash is a great buffer to the credit money in our economy. And that buffering aspect has been slowly lost over those 50  – 60 years, leading to a distorted balance in our supply of fresh new money. This is causing major problems in our money system and needs to change. It’s obvious that we now need Electronic Cash. 

BOOM’s Quantitative Boosting policy is essentially a comprehensive policy designed to create it. The policy is described in the link below in terms that anyone can understand.

Electronic Cash — as described and created in BOOM’s Quantitative Boosting policy — will reside on the Ledgers of both banking sector (commercial banks and central banks) and the Treasury Department under a Tripartite Agreement. That is the best solution for a new, revolutionary cash money system to complement bank credit money.

Fresh new money created by QB will not flow into the asset price economy directly — therefore minimizing any Asset price Inflation effect. And it will not flow into citizens’ pockets directly — therefore minimizing any Consumer price Inflation effect. It will be non-interest bearing, mediated via a mix of perpetual and/or fixed term Promissory Notes. Its economic effect will be immediate upon expenditure via the normal Treasury channels so no new technology is needed. If the Treasury can prioritize its new spending into employment creation (jobs for all) and the development of productive infrastructure, it will have an immediate beneficial effect on social goals and economic stability.

Such electronic cash will co-exist with credit money (originated as per usual in the form of bank loans). It can be increased in volume and decreased in volume over time, allowing better inflation control but it should never exceed 50% maximum of the total money supply in existence. The volume control mechanism will give central banks a new lever to pull in generating both economic activity and in limiting inflation. However, the central bank will still retain conventional monetary policy for use in those goals (interest rate settings).

The Government presence in the Tripartite Agreement will allow the people to have a seat at the table through their political representatives. The Commercial Banks’ involvement is a critical part of the Tripartism. Without them, a Bipartite agreement would happen between just the central bank and the government. This would result in power devolving towards the Government because the central bankers are, after all, appointed by the Government.

QB’s electronic cash is a new mechanism of fresh new money supply for the economy. It can be instigated within minutes via the exchange of just two Promissory Notes. The first will pass from the central bank to the commercial banks and the second will pass from the Treasury to the central bank. The ledger entries would be immediate and the funds would flow to the Treasury immediately. All of this can be achieved before morning coffee with the three parties sitting at a table to effect the ledger entries and with the Tripartite Agreement decided beforehand.

The Establishment Loans and the Promissory Notes would be classified as Reserve Assets and Reserve Liabilities (respectively) on the central bank and commercial banks’ ledgers. On the Treasury ledger, the government’s Promissory Note to the central bank would be a liability and the funds received (the electronic cash) would be a liquid asset.

WHAT ARE THE ALTERNATIVE SOLUTIONS?

Central bankers know this problem exists and they are keen to invent electronic cash. There are two other alternative electronic cash solutions to Quantitative Boosting currently under consideration. They are CBDC’s (so called “Central Bank Digital Currencies”) and the Coronado Potter Solution (designed by two economists who previously worked for the US central bank).

Any central bank electronic cash solution issued solely by the central bank directly to citizens would grant too much money creation power to the central bankers (e.g. a “CBDC – a Central Bank Digital Currency”). Their new money creation power would be essentially unchecked. The risk of uncontrollable CPI inflation outbreak would be enhanced by such a methodology over time. Also, once the cash is created under such a system, how can it be recalled?

The Coronado Potter solution whereby the Treasury would issue contingent “Recession Insurance Bonds” directly to citizens would grant too much money creation power to the political class. After all, the politicians would soon learn to issue such bonds in a heart beat if they thought it necessary. The risk of uncontrollable CPI inflation outbreak would be enhanced by such a methodology. Also, again, once the cash is created under such a system, how can it be recalled?

Central banks are currently using a policy called Quantitative Easing — whereby they create fresh new money and buy assets (principally freshly issued government bonds). However, this is all mediated through the asset markets and obviously has a strong distorting effect on asset prices. The rich (who hold lots of assets) get richer under this policy and the poor get poorer  — relatively and without even knowing. They suspect that something is “not quite right” and that the system is working against them. The result is loss of egalitarianism, social unrest, protests, violence and, ultimately, violent revolution may erupt.

Can’t we just have a peaceful revolution instead?  The Money Revolution of BOOM’s Quantitative Boosting can be put to work immediately. Let’s get started.

Quantitative Boosting Explained — Link:  https://boomfinanceandeconomics.wordpress.com/2020/01/18/boom-as-at-19th-january-2020/

HUGE NUMBERS OF DOCTORS ASK FOR REASSESSMENT OF CORONA MEASURES

Globally, we are seeing a massive campaign of disinformation concerning Covid 19 in the main stream media. While a great number of doctors are presenting different views, unprecedented censorship by the media prevents them from making the news bulletins and headlines. Their opinions are effectively banned.

Information from different thinking experts and professionals can currently be found almost exclusively through targeted searches on the internet or alternative news sources, but not in the mainstream media. Start with THE OPEN LETTER from Doctors in Belgium  —

THE OPEN LETTER

SIGNATORIES

Germany

An international group of doctors has launched an extra-parliamentary inquiry into the “exaggerated and oppressive corona measures”, with a view to questioning politicians and scientists around the world.

International

The initiative by Luc Montagnier, Nobel Prize winner in medicine, and Robert F. Kennedy, lawyer, among others, addresses the many inconsistencies surrounding corona policy and is addressed to the presidents of the WHO, the European Commission and the European Parliament.

United States

In the US, a group of clinician doctors, who see patients on a daily basis, united under the banner “America’s Frontline Doctors” and gave a press conference which has now been watched millions of times.

The Netherlands

In the Netherlands, doctors have come together and drafted an open letter addressed to colleagues and the government pleading for proportional measures. This letter aims to stimulate an open and frank debate on how to tackle the Covid-19 outbreak and was signed by more than 800 doctors.

An open, sharp-worded letter, was written by doctors and mental health care providers, that has been signed by more than 2500 healthcare professionals.

Spain

A public press conference of “Doctors for Truth” in Madrid, was attended by 400 doctors and scientists under the slogan “A world dictatorship with a sanitary excuse”.

https://niburu.co/gezondheid/15385-artsen-komen-massaal-met-coronawaarheid-naar-buiten

Belgium

A Belgian initiative, which has already been signed by more than 900 doctors and health professionals (3 September 2020)

http://omgekeerdelockdown.simplesite.com/?fbclid=IwAR2bJAAShAlIidjnRQPyVSoZbk1Uj-FTHAthL77hKX_Oo8aMLN3V6DdwAac

An open letter on the initiative of a group of doctors from the Cliniques Universitaires St-Luc, UCLouvain. 12,000 have signed already.

In economics, things work until they don’t. Until next week …………  Make your own conclusions, do your own research.  BOOM does not offer investment advice.

CLICK HERE FOR PODCASTS:
   OUR BRAVE NEW ECONOMIC WORLD

EMAIL: gerry {at} boomfinanceandeconomics.com

Return to the BOOM Main Website –  BOOM Finance and Economics at  http://boomfinanceandeconomics.com/

=============================================================

HOW MOST MONEY IS CREATED

BANKS CREATE FRESH NEW MONEY OUT OF THIN AIR (but they always need a Borrower to do so)

THERE IS NO SUCH THING AS A DEPOSIT
BANKS PURCHASE SECURITIES, THEY DON’T MAKE LOANS
BANKS DON’T TAKE DEPOSITS, THEY BORROW YOUR MONEY
Watch this short 15 minutes video and learn as Professor Richard Werner brilliantly explains how the banking system and financial sector really work.
https://www.youtube.com/watch?v=EC0G7pY4wREhttp://

How is Most New Money Created ?

LOANS CREATE DEPOSITS — that is how almost all new money is created in the economy (by commercial banks making loans).

From the Bank of England Quarterly Bulletin Q1 2014    —
“Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.“Most money in the modern economy is in the form of bank deposits, which are created by commercial banks themselves”.

Youtube Video —  https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-in-the-modern-economy-an-introduction

and

https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-creation-in-the-modern-economy

Paper:  Money in the Modern Economy  PDF —  CLICK HERE

Quarterly Bulletins Indexhttp://www.bankofengland.co.uk/publications/Pages/quarterlybulletin/2014/qb14q1.aspx

Most economists are unaware of this and even ignore the banking & finance sectors in their econometric models.

On 25th April 2017, the central bank of Germany, the Bundesbank, released a statement on this matter —

“In terms of volume, the majority of the money supply is made up of book money, which is created through transactions between banks and domestic customers. Sight deposits are an example of book money: sight deposits are created when a bank settles transactions with a customer, ie it grants a credit, say, or purchases an asset and credits the corresponding amount to the customer’s bank account in return. This means that banks can create book money just by making an accounting entry: according to the Bundesbank’s economists, “this refutes a popular misconception that banks act simply as intermediaries at the time of lending – i.e. that banks can only grant credit using funds placed with them previously as deposits by other customers”. By the same token, excess central bank reserves are not a necessary precondition for a bank to grant credit (and thus create money).

”Reference: https://www.bundesbank.de/Redaktion/EN/Topics/2017/2017_04_25_how_money_is_created.html

The Reserve Bank of Australia (Australia’s central bank) has also contributed to the issue in a speech by Christopher Kent, the Assistant Governor on September 19th 2018.“…… the vast bulk of broad money consists of bank deposits”“Money can be created …….. when financial intermediaries make loans

“In the first instance, the process of money creation requires a willing borrower.” “It’s also worth emphasizing that the process of money creation is not the result of the actions of any single bank – rather, the banking system as a whole acts to create money.”
================================================================

Disclaimer:   All content is presented for educational and/or entertainment purposes only. Under no circumstances should it be mistaken for professional investment advice, nor is it at all intended to be taken as such. The commentary and other contents simply reflect the opinion of the authors alone on the current and future status of the markets and various economies. It is subject to error and change without notice.The presence of a link to a website does not indicate approval or endorsement of that web site or any services, products, or opinions that may be offered by them.

Neither the information nor any opinion expressed constitutes a solicitation to buy or sell any securities nor investments. Do NOT ever purchase any security or investment without doing your own and sufficient research.  Neither BOOM Finance and Economics.com nor any of its principals or contributors are under any obligation to update or keep current the information contained herein. The principals and related parties may at times have positions in the securities or investments referred to and may make purchases or sales of these securities and investments while this site is live. The analysis contained is based on both technical and fundamental research.

Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.

Disclosure: We accept no advertising or compensation, and have no material connection to any products, brands, topics or companies mentioned anywhere on the site.

Fair Use Notice: This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of issues of economic and social significance. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.

==============================================================

MOLS Denmark

BOOM as at 13th September 2020

MESSAGES FROM MEDIA AND GOVERNMENT

This is a rough timeline of the many messages sent to the Australian public from the mainstream media and from the various State and Federal Governments as the Covid 19 phenomenon evolved (all to the best of BOOM’s memory).  After reading the list, BOOM wonders if Australia has become the latest version of Communist East Germany or perhaps a branch state of North Korea? Political tyranny has erupted. Maximum panic was always the goal, every time, every day.

Note — Some journalistic license is used here for dramatic effect. Please forgive BOOM for that but you will see the point — humor is essential in such circumstances. By the way, the list is incomplete (obviously). Here we go —

The virus comes from bats
The origin of the virus may be bat soup
It comes from Wuhan open air wet markets
All Chinese wet markets should be closed immediately
There is an intermediate animal vector but we don’t know what it is
No intermediate animal vector can be identified
It is a bat virus from bats
The origin of the virus may not be bat soup
The virus cannot possibly be man made and NO DISCUSSION of this can take place
The virus is NOT a bioweapon and NO DISCUSSION of this can take place
500,000 could die in the UK —  “Imperial College Experts”
Millions will die in China
The fatality rate is much higher than Influenza
Lockdowns will work — we will flatten the Curve
We must Flatten the Curve — to save our health system
We are all in this together
Staying Apart Keeps Us Together
We must close our hospitals to save them
We have to build emergency testing centers
Mass graves are being dug
We must stop all hospital treatments of other diseases
All routine surgery must stop even for cancer patients
Dying from cancer or heart disease is OK but not if you have Covid 19
Then it is horrible, Covid 19 deaths are horrible
The hospitals must stand empty, waiting for the onslaught
We will need thousands of new intensive care ventilators
It’s all about flattening the curve
It’s not about flattening the curve
Social Distancing must be 1.5 meters (exactly)
Staying Apart Keeps Us Together
We are all at risk — everyone can die — even children
You cannot sit on grass — dangerous
You cannot picnic at a table  — dangerous
You cannot walk on sand  — dangerous
You cannot swim in the ocean  — dangerous
Beaches are dangerous
Masks prevent you from spreading the virus
Masks protect you from getting the virus
It doesn’t matter what type of mask you wear
It doesn’t matter how often you change your mask
It doesn’t matter where you dispose of your mask
Wear gloves
Don’t wear gloves
If you are walking, you must wear a mask
If you are jogging, you do not need to wear a mask
Death numbers don’t matter, only case numbers
We will not tell you our definition of a “case” — never
There will be ABSOLUTELY NO discussion of False Positive Tests
There will be ABSOLUTELY NO discussion of False Negative Tests
There will be ABSOLUTELY NO discussion of Test Accuracy
There will be ABSOLUTELY NO discussion of PCR Tests versus Antibody Tests
Rapid Antibody Tests will soon be available and will save the day
Rapid Antibody Tests are of no use
We don’t need thousands of new intensive care ventilators
We have no idea for how long the virus is infectious
A quarantine period of exactly 2 weeks is mandated and will stop the spread
We are all in this together
Staying Apart Keeps Us Together
Hotel quarantines will be policed by untrained, unemployed people
Borders must be closed but not for some special people
Special people can be given permission to cross borders (especially if rich and famous)
The Phone Tracking App must be downloaded and will be the ultimate weapon
Everyone must download the Phone Tracking App
At least 6 million must download the Phone Tracking App
Forget the Phone Tracking App
In Melbourne lockdown, you cannot shop more than exactly 5kms from home
In Melbourne lockdown, you can walk for exactly 1 hour per day (and no more)
Coffee Shops contain the Virus, Supermarkets do not
Restaurants are dangerous
Staying Apart Keeps Us Together
BLM Protests are safe and OK
Protests against lockdowns are a “serious threat and dangerous”
Protests against lockdowns require massive police control and mass arrests
Professional athletes (especially professional footballers) are not at risk
The virus is not present on the grass on professional football fields
Mandatory Influenza shots will help protect professional footballers
Any footballer refusing a Flu shot is irresponsible and cannot play
Highway signs  — “Covid 19 — Get your Flu Shot”
The Second Wave is coming
Forget about flattening the curve
A vaccine is coming within months
The vaccine will be mandatory
The vaccine will be as mandatory as possible
The vaccine will not be mandatory
(all three within minutes from the Prime Minister)
Give Billions to vaccine developers and call them heroes
The vaccine will save us all, it is our only hope
The vaccine will be safe and effective
The vaccine will be here before November
The vaccine will be a cure
A vaccine will be unlikely (after the Russian vaccine was announced)
Hydroxychloroquine is a very safe drug, used by millions for decades
Hydroxychloroquine is a safe effective treatment if used with Zinc in early stage disease
Hydroxychloroquine is extremely dangerous and is now banned
All discussion concerning Hydroxychloroquine is DANGEROUS
All discussion concerning Hydroxychloroquine is FORBIDDEN
No discussions of normal vaccine development periods are allowed
No discussions concerning vaccine safety are allowed
No discussions concerning vaccine effectiveness are allowed
We are controlling the virus
We don’t want to lose control of the virus
We are not trying to eliminate the virus
Our aim is to eliminate the virus
You cannot leave Australia without special permission
You cannot cross State borders without special permission
All Doctors who challenge the official narrative should be ignored
Those Doctors are clearly incompetent
We want to keep you safe, the scientists are in charge
We always act on scientific advice (carefully selected)
You can always depend on us to signal our virtue
We only take these grave decisions on the best scientific advice
The Dreaded Second Wave is here
The second wave is dangerous
Nothing is our fault, nothing
Staying Apart Keeps Us Together
We will not discuss co-morbid diseases as a cause of death
We will continue to label all deaths as Covid deaths
We will not discuss the fact that 94% of “Covid” deaths are from co-morbid diseases
We will continue to emphasize “case” numbers and not death numbers
We will not define what a “case” is — Never — Case numbers are paramount
We will never compare death numbers of Covid 19 versus Influenza death rates
No comparisons between Covid and Influenza epidemics will be tolerated
You can rely on us to generate maximum panic and fear
That is our solemn promise to keep you safe
We care for you, this is not about politics
We are virtuous, caring, taking medical advice, in control
The second wave is not so dangerous
That is all  —  apologies to MASH and Animal Farm/George Orwell
We are all in this together
Staying Apart Keeps Us Together

Meanwhile, official Excess Death Number statistics in Europe show clearly that the epidemic effectively ended there almost 4 months ago when Excess Death Numbers returned to baseline and below. They are now below baseline numbers and falling.

https://www.euromomo.eu/graphs-and-maps
https://boomfinanceandeconomics.wordpress.com/2020/08/15/boom-as-at-16th-august-2020/

WHAT IS A COMPLICITY THEORIST ?

A BOOM reader sent me this. It  is intriguing — the opposite of Conspiracy Theorist

Definition of a Complicity Theorist — “A person who accepts the political narrative of the day unquestionably; consumes mainstream media like it was 1980; and is prone to submissiveness, outbursts of irrational fear and public shaming of free-thinkers.”

In economics, things work until they don’t. Until next week …………  Make your own conclusions, do your own research.  BOOM does not offer investment advice.
CLICK HERE FOR PODCASTS:
   OUR BRAVE NEW ECONOMIC WORLD

EMAIL: gerry {at} boomfinanceandeconomics.com

Return to the BOOM Main Website –  BOOM Finance and Economics at  http://boomfinanceandeconomics.com/

=============================================================

HOW MOST MONEY IS CREATED

BANKS CREATE FRESH NEW MONEY OUT OF THIN AIR (but they always need a Borrower to do so)

THERE IS NO SUCH THING AS A DEPOSIT
BANKS PURCHASE SECURITIES, THEY DON’T MAKE LOANS
BANKS DON’T TAKE DEPOSITS, THEY BORROW YOUR MONEY
Watch this short 15 minutes video and learn as Professor Richard Werner brilliantly explains how the banking system and financial sector really work.
https://www.youtube.com/watch?v=EC0G7pY4wREhttp://

How is Most New Money Created ?

LOANS CREATE DEPOSITS — that is how almost all new money is created in the economy (by commercial banks making loans).

From the Bank of England Quarterly Bulletin Q1 2014    —
“Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.“Most money in the modern economy is in the form of bank deposits, which are created by commercial banks themselves”.

Youtube Video —  https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-in-the-modern-economy-an-introduction

and

https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-creation-in-the-modern-economy

Paper:  Money in the Modern Economy  PDF —  CLICK HERE

Quarterly Bulletins Indexhttp://www.bankofengland.co.uk/publications/Pages/quarterlybulletin/2014/qb14q1.aspx

Most economists are unaware of this and even ignore the banking & finance sectors in their econometric models.

On 25th April 2017, the central bank of Germany, the Bundesbank, released a statement on this matter —

“In terms of volume, the majority of the money supply is made up of book money, which is created through transactions between banks and domestic customers. Sight deposits are an example of book money: sight deposits are created when a bank settles transactions with a customer, ie it grants a credit, say, or purchases an asset and credits the corresponding amount to the customer’s bank account in return. This means that banks can create book money just by making an accounting entry: according to the Bundesbank’s economists, “this refutes a popular misconception that banks act simply as intermediaries at the time of lending – i.e. that banks can only grant credit using funds placed with them previously as deposits by other customers”. By the same token, excess central bank reserves are not a necessary precondition for a bank to grant credit (and thus create money).”Reference: https://www.bundesbank.de/Redaktion/EN/Topics/2017/2017_04_25_how_money_is_created.htmlThe Reserve Bank of Australia (Australia’s central bank) has also contributed to the issue in a speech by Christopher Kent, the Assistant Governor on September 19th 2018.“…… the vast bulk of broad money consists of bank deposits”“Money can be created …….. when financial intermediaries make loans““In the first instance, the process of money creation requires a willing borrower.”“It’s also worth emphasizing that the process of money creation is not the result of the actions of any single bank – rather, the banking system as a whole acts to create money.”
================================================================

Disclaimer:   All content is presented for educational and/or entertainment purposes only. Under no circumstances should it be mistaken for professional investment advice, nor is it at all intended to be taken as such. The commentary and other contents simply reflect the opinion of the authors alone on the current and future status of the markets and various economies. It is subject to error and change without notice.The presence of a link to a website does not indicate approval or endorsement of that web site or any services, products, or opinions that may be offered by them.

Neither the information nor any opinion expressed constitutes a solicitation to buy or sell any securities nor investments. Do NOT ever purchase any security or investment without doing your own and sufficient research.  Neither BOOM Finance and Economics.com nor any of its principals or contributors are under any obligation to update or keep current the information contained herein. The principals and related parties may at times have positions in the securities or investments referred to and may make purchases or sales of these securities and investments while this site is live. The analysis contained is based on both technical and fundamental research.

Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.

Disclosure: We accept no advertising or compensation, and have no material connection to any products, brands, topics or companies mentioned anywhere on the site.

Fair Use Notice: This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of issues of economic and social significance. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.

==============================================================

MOLS Denmark

BOOM as at 6th September 2020

COVID CASES DEFINITION CONTROVERSY

WHAT is a Covid 19 “case” definition? The mainstream media has been unwilling to define what a “case” is and yet they continually report “new cases” as if that is something to be terribly worried about. Fear and panic is supposedly the appropriate reaction.

A BOOM reader recommended two articles on this issue. If you are wondering what a “case” actually means and are mystified by the whole Covid 19 phenomenon, then perhaps you should read these? One is an article published in the British Medical Journal 4 days ago and the other is written by Dr Malcolm McKendrick, a General Practitioner in Scotland — yes, a clinician — someone who actually looks after patients. Note — he is NOT an academic epidemiologist or a hospital administrator or an expert in some unrelated obscure disease or a government health adviser, thankfully.

The article title is “Why Terminology Really, Really Matters

The BMJ article is written by Elizabeth Mahase, clinical news reporter at the Journal.

Title:   Covid-19 – the problems with case counting

Link:  https://www.bmj.com/content/370/bmj.m3374

CHINA INDICATORS STRONG

BOOM regularly informs readers about the two indicators that he watches closely in regard to the future prospects of the Chinese economy. Both indicators are now moving steadily upwards since late June. This is continued evidence of strength in the Chinese economy. It is beginning to look like China will (again) be the driving force behind a resurgence in the global economy following the Covid 19 over-reaction by almost all governments.

INSTANT PAYMENTS STRENGTHENS BANKING SYSTEM

On 6th August, the US central bank – the Federal Reserve – issued a Press Release titled — “new 24x7x365 interbank settlement service with clearing functionality to support instant payments in the United States”. It is called the FedNow service.

The Federal Reserve intends to phase this in gradually to the US banking system with full implementation sometime in 2023 or 2024. The term 24x7x365 means that it will operate in real time 24 hours a day, 7 days a week and 365 days of the year. The FedNow Service will modernize the U.S. payment system and bring the benefits of instant payments broadly to communities across the country.

There is a team of well over 100 people working on the FedNow Service. In regard to the risk of fraud, they are developing fraud tools within the FedNow Service to support banks’ efforts to mitigate the risk of fraud with instant payments. Accordingly, upon implementation, banks will be able to proactively set parameters that limit transaction activity in the FedNow Service based on banks’ knowledge of their own customers. They are also developing a liquidity management tool that allows a bank (or other participant) with excess funds in its Federal Reserve account to transfer funds to another bank (or other participant) who needs the funds on weekends, holidays, and after hours. And the FedNow Service will be interoperable with private-sector instant payment services. The FedNow Service will offer real-time gross settlement of transactions, an approach that involves each transaction being processed individually and immediately, which avoids interbank credit risk.

This improves the US banking system a great deal. It helps in eliminating the problem of interbank credit risk during the day, making it much more stable. They are probably using a private blockchain technology as the technology backbone — because blockchain records are immutable (cannot be altered), instant and cheap to keep. They have not revealed which blockchain they are using but one can guess that it is probably a private version of IBM’s Hyperledger, Corda or perhaps Ripple. Presumably, all banks and participants will have access to see their transactions occurring in real time.

This is really good news for the conventional banking system as a whole, rendering it much more stable than previously. It also has economy wide systemic effects via improved trust in all commercial transactions. Trade credit, for example, may become a thing of the past in the long run which would help in providing instant cash flows to businesses with no accounting lag.   Links below:

https://www.federalreserve.gov/newsevents/pressreleases/other20200806a.htmhttps://www.federalreserve.gov/newsevents/speech/brainard20200806a.htm

SWISS NATIONAL BANK

The Swiss National bank is the central bank of Switzerland. It is often called “the biggest hedge fund in the world” but BOOM thinks that title is now firmly held by the US Federal Reserve (their central bank). The Japanese may beg to differ because their central bank has been determinedly buying assets for 25 years — so surely they should hold the title?
But let’s look at the Swiss National Bank and its asset purchasing program. Central bankers don’t like to call it that. They prefer to sound very serious and powerful by calling it a Quantitative Easing program.

The Swiss National Bank has been creating fresh new money for some considerable time now to buy foreign assets and thus drive down the relative price of its currency, the Swiss Franc, against other currencies. The rationale for this is that it helps the Swiss companies that are exporters and that it helps create CPI inflation inside Swiss borders.

It’s hard to know the full extent of their asset holdings. But we can look at what they own in the United States. There, they own US$ 118 Billion worth of stocks. Their biggest holdings are in Apple, Microsoft, Amazon, Alphabet, and Facebook but they own shares in 2,437 US companies. Many of these are Chinese companies whose shares trade in the US but the vast majority are US based companies.

But, if you look at the balance sheet of the SNB, it actually owns about US$ 940 Billion of total foreign currency investments (as at 31st August). So they obviously own a lot more foreign assets than those listed on the US stock markets. It is possible to access the detail of these enormous holdings, all published by the SNB.

Of the US$ 940 Billion total 20% is held in equities (foreign stocks) which amounts to US$ 188 Billion (of which as previously stated $ 118 Billion is in US listed stocks) while 70% is held in foreign Government Bonds and 10% is held in other Bonds (presumably highly rated Corporate bonds). The investment duration of their bond holdings is 4.7 years. So, with 80% of the portfolio held in safe haven bond investments, the Swiss National Bank cannot be accused of being a gambler. However, with a duration of only 4.7 years on their bond holdings, it could be said that they are tending to invest for the relatively short term. Their bonds will mature, on average, every 4.7 years and they will then have to decide what to do going forward.

Can they sell before then? This is the Trillion Dollar question. If they sold out in large volumes and repatriated their resultant foreign currency holdings back to Switzerrland, they would drive the Swiss Franc up dramatically in response to such a huge demand. This would harm their exporters and cause a surge of CPI dis-inflation (or deflation) inside Switzerland.

So the answer is NO — they  cannot sell and never will. These assets are now permanently held by a foreign central bank.  BOOM suggests you read his editorial titled CAN CENTRAL BANKS BUY EVERYTHING? THE BOOM THESIS —  published on 5th July 2020.

Link:  https://boomfinanceandeconomics.wordpress.com/2020/07/05/boom-as-at-5th-july-2020/

Of course, none of this helps Swiss importers. Obviously, the central bank has no concerns for their well being. Perhaps there is a government subsidy program for them aimed at maintaining the peace? BOOM suspects this may be the truth.

In economics, things work until they don’t. Until next week …………  Make your own conclusions, do your own research.  BOOM does not offer investment advice.
CLICK HERE FOR PODCASTS:
   OUR BRAVE NEW ECONOMIC WORLD

EMAIL: gerry {at} boomfinanceandeconomics.com

Return to the BOOM Main Website –  BOOM Finance and Economics at  http://boomfinanceandeconomics.com/

=============================================================

HOW MOST MONEY IS CREATED

BANKS CREATE FRESH NEW MONEY OUT OF THIN AIR (but they always need a Borrower to do so)

THERE IS NO SUCH THING AS A DEPOSIT
BANKS PURCHASE SECURITIES, THEY DON’T MAKE LOANS
BANKS DON’T TAKE DEPOSITS, THEY BORROW YOUR MONEY
Watch this short 15 minutes video and learn as Professor Richard Werner brilliantly explains how the banking system and financial sector really work.
https://www.youtube.com/watch?v=EC0G7pY4wREhttp://

How is Most New Money Created ?

LOANS CREATE DEPOSITS — that is how almost all new money is created in the economy (by commercial banks making loans).

From the Bank of England Quarterly Bulletin Q1 2014    —
“Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.“Most money in the modern economy is in the form of bank deposits, which are created by commercial banks themselves”.

Youtube Video —  https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-in-the-modern-economy-an-introduction

and

https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-creation-in-the-modern-economy

Paper:  Money in the Modern Economy  PDF —  CLICK HERE

Quarterly Bulletins Indexhttp://www.bankofengland.co.uk/publications/Pages/quarterlybulletin/2014/qb14q1.aspx

Most economists are unaware of this and even ignore the banking & finance sectors in their econometric models.

On 25th April 2017, the central bank of Germany, the Bundesbank, released a statement on this matter —

“In terms of volume, the majority of the money supply is made up of book money, which is created through transactions between banks and domestic customers. Sight deposits are an example of book money: sight deposits are created when a bank settles transactions with a customer, ie it grants a credit, say, or purchases an asset and credits the corresponding amount to the customer’s bank account in return. This means that banks can create book money just by making an accounting entry: according to the Bundesbank’s economists, “this refutes a popular misconception that banks act simply as intermediaries at the time of lending – i.e. that banks can only grant credit using funds placed with them previously as deposits by other customers”. By the same token, excess central bank reserves are not a necessary precondition for a bank to grant credit (and thus create money).”Reference: https://www.bundesbank.de/Redaktion/EN/Topics/2017/2017_04_25_how_money_is_created.htmlThe Reserve Bank of Australia (Australia’s central bank) has also contributed to the issue in a speech by Christopher Kent, the Assistant Governor on September 19th 2018.“…… the vast bulk of broad money consists of bank deposits”“Money can be created …….. when financial intermediaries make loans““In the first instance, the process of money creation requires a willing borrower.”“It’s also worth emphasizing that the process of money creation is not the result of the actions of any single bank – rather, the banking system as a whole acts to create money.”
================================================================

Disclaimer:   All content is presented for educational and/or entertainment purposes only. Under no circumstances should it be mistaken for professional investment advice, nor is it at all intended to be taken as such. The commentary and other contents simply reflect the opinion of the authors alone on the current and future status of the markets and various economies. It is subject to error and change without notice.The presence of a link to a website does not indicate approval or endorsement of that web site or any services, products, or opinions that may be offered by them.

Neither the information nor any opinion expressed constitutes a solicitation to buy or sell any securities nor investments. Do NOT ever purchase any security or investment without doing your own and sufficient research.  Neither BOOM Finance and Economics.com nor any of its principals or contributors are under any obligation to update or keep current the information contained herein. The principals and related parties may at times have positions in the securities or investments referred to and may make purchases or sales of these securities and investments while this site is live. The analysis contained is based on both technical and fundamental research.

Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.

Disclosure: We accept no advertising or compensation, and have no material connection to any products, brands, topics or companies mentioned anywhere on the site.

Fair Use Notice: This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of issues of economic and social significance. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.

==============================================================

MOLS Denmark

BOOM as at 30th August 2020

GOOD NEWS IN THE US ECONOMY

Believe it or not, there is good news happening in the US economy. Both new and existing home sales are rising sharply after suffering a steep decline in March, April and May. It is only one month’s improvement but a V shaped rebound seems to be here. New home sales rose almost 14 % more in July than in June.

The Home Ownership rate is also rising to its highest level since the great financial crisis of 2008. Almost 68 % of Amercians now own their homes. According to the US Census Bureau, that number fell to just 63 % in 2014. So it has been rising for 6 years.

The other good news last week was the expected increase in US GDP. The GDPNow model estimate from the Atlanta Federal Reserve Bank for real US GDP growth (the seasonally adjusted annual rate) in the third quarter of 2020 is currently positive 28.9 percent. This is a forecast for the period from June to to the end of August. So, if it is correct, then we are seeing a strong rebound in economic growth in the United States after the collapse in the previous three months caused by the Covid 19 panic over-reaction.

Consumer spending in the US also seems to be recovering rapidly although there is doubt about whether or not this can be sustained over the next 12 months.

If these indicators of renewed economic health are correct, then we should soon see a healthier banking sector and a healthier real estate sector in the US. BOOM mentioned very early signs of improvement in those sectors two weeks ago. And those tentative signs are continuing so the economic outlook remains hopeful.

LOOK FOR PERSPECTIVE IN COVID 19

We are being deluged by intense negativity from the mainstream media on a daily basis designed to instill intense fear and anxiety. The media refuses to put the Covid 19 epidemic into perspective, preferring to stir the pot at every opportunity. If you don’t take care, it is all too easy to become convinced that the economic outlook is gloomy especially if you only listen to or read the mainstream media.

BOOM is here to provide some much needed perspective. BOOM’s analysis two weeks ago showed that the absolute death numbers occurring from Covid 19 in 2020 are no different to those experienced three years ago during the Influenza epidemic of 2017/2018. And there was no panic then, no masks, no lockdowns, no 24 hour “cases” reports from the TV news anchors, no alerts or states of emergency declared by politicians.

BOOM’s analysis was derived from the numbers provided by EuroMOMO from 24 European nations (including the UK). Hundreds of millions of people live in those nations so the statistics are statistically significant.   Reference:https://www.euromomo.eu/graphs-and-maps/

So you can relax. If you didn’t panic two years ago during the Flu epidemic , why should you panic now? This appears to be a contrived Panic-Demic as far as BOOM can tell.

Check out the numbers again here — https://boomfinanceandeconomics.wordpress.com/2020/08/15/boom-as-at-16th-august-2020/

Remember, a million people on average die every year from Tuberculosis and about 10 million become infected with that disease. Are you panicking about that? Has any politician warned you about your Tuberculosis risk? Has any mainstream media “news” outlet ever mentioned this to you?

KEEP ASKING WHY?

A BOOM reader keeps asking WHY? Why has the world gone mad? Why have our political leaders crashed our economies? Why are they demanding we all wear masks and stay away from each other? That reader knows that Covid 19 is no more fearful than a bad Influenza so the why of the mystery continues to evade him.

BOOM’s answer is always the same — here are some of the key elements (but not all) —
Politicians clearly are self selected individuals. They share a common greed for power over others and they are driven by the need to promise a utopia on earth to anyone who will listen. An out-of-control ego is their driving force. And hubris supports this force.

Hubris is a personality quality of extreme or foolish pride or dangerous overconfidence, often in combination with arrogance.

So the steps that almost all politicians fall prey to are easy to list because there are only three of them.

“I AM MORE IMPORTANT THAN OTHERS”  
“I DESERVE TO LIVE FOREVER IN A PERFECT WORLD”  …. and  ….
“ONLY I CAN MAKE THAT HAPPEN”.

Ego first ……. hubris second ……. then action to close the circle.

Think about your current Prime Minister, President, Governor or Premier — does this definition sound like them?  Narcissistic personality disorder — “one of several types of personality disorders — is a mental condition in which people have an inflated sense of their own importance, a deep need for excessive attention and admiration, troubled relationships, and a lack of empathy for others. But behind this mask of extreme confidence lies a fragile self-esteem that’s vulnerable to the slightest criticism.”

BOOM can immediately recognize these characteristics in some rather famous politicians who are currently leaders of advanced economy nations. Can you name them?

Referencehttps://www.mayoclinic.org/diseases-conditions/narcissistic-personality-disorder/symptoms-causes/syc-20366662

Narcissists always seek an audience. BOOM advises you to stop listening to them, stop believing in them, become skeptical of them. Best of all, ignore them. Deprive them of an audience.

FOLLOWING BOOM’S LEADERSHIP

The Coronado Potter Solution is an initiative from two senior economists who have previously worked for the US central bank.

Their solution is very close to what BOOM has been steadily promoting over the last few years which is called “Quantitative Boosting” (QB).  In BOOM’s opinion, QB is actually the obvious next step in the evolution of our monetary system. And it will have wide-ranging effects on our societies — making them much more egalitarian in the long run rather than the opposite (which is where we are heading at present). After 400 years, our money creation system needs a dramatic overhaul.

QB Explainedhttps://boomfinanceandeconomics.wordpress.com/2019/12/15/boom-as-at-15th-december-2019/

CORONADO POTTER SOLUTION

As far as BOOM can tell from media reports, the Coronado Potter solution involves “Zero-Coupon securities” — called “Recession Insurance Bonds”. They would be Non-Interest Bearing Bonds issued by the Treasury direct to the people that can be activated (triggered) by some bad economic circumstances that may arise in the future. When such circumstances arise, the central bank would buy them off the people (with fresh new money created by the central bank).

So this is, in effect, interest free digital cash (just like QB) arriving in a citizen’s bank account from the central bank (not from the Treasury as it would in QB).

It allows the Central Bank to be in control of the process — so no direct political oversight would occur (except on issuance because the Treasury issues the bonds).

The proposers refer to avoiding price distortions in the bond market — which is also a key element of QB.  “The Fed could buy the bonds quickly without going to the private market”. In other words, the central bank would buy the bonds directly from the citizens by depositing funds into their bank accounts.

They are essentially creating digital cash here that is non-interest bearing and which is a digital form of Sovereign Money (which we usually call Cash).

The key features of this system (just like BOOM’s QB system) are —

    Digital, electronic cash injected directly into the economy
    Non interest bearing
    Avoidance of the asset markets (so no distortion of Bond Prices in the secondary market)

The people would then be encouraged to spend the money ariving in their bank accounts as soon as possible to boost the real economy.

I know all of this is complex — and you probably won’t “get it” at first. However, the end result is that the supply of fresh new money grows in the real economy (not in the asset economy) and without having to grow the volume of bank loans in an economy. It is an alternative to BOOM’s Quantitative Boosting system — not quite as good — but good nonetheless.

Reference: https://www.bloomberg.com/news/articles/2020-08-01/two-ex-fed-officials-offer-a-faster-way-to-make-stimulus-payments?sref=MqXWNJU8 

In economics, things work until they don’t. Until next week …………  Make your own conclusions, do your own research.  BOOM does not offer investment advice.
CLICK HERE FOR PODCASTS:
   OUR BRAVE NEW ECONOMIC WORLD

EMAIL: gerry {at} boomfinanceandeconomics.com

Return to the BOOM Main Website –  BOOM Finance and Economics at  http://boomfinanceandeconomics.com/

=============================================================

HOW MOST MONEY IS CREATED

BANKS CREATE FRESH NEW MONEY OUT OF THIN AIR (but they always need a Borrower to do so)

THERE IS NO SUCH THING AS A DEPOSIT
BANKS PURCHASE SECURITIES, THEY DON’T MAKE LOANSBANKS DON’T TAKE DEPOSITS, THEY BORROW YOUR MONEY
Watch this short 15 minutes video and learn as Professor Richard Werner brilliantly explains how the banking system and financial sector really work.
https://www.youtube.com/watch?v=EC0G7pY4wREhttp://

How is Most New Money Created ?

LOANS CREATE DEPOSITS — that is how almost all new money is created in the economy (by commercial banks making loans).

From the Bank of England Quarterly Bulletin Q1 2014    —
“Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.“Most money in the modern economy is in the form of bank deposits, which are created by commercial banks themselves”.

Youtube Video —  https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-in-the-modern-economy-an-introduction

and

https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-creation-in-the-modern-economy

Paper:  Money in the Modern Economy  PDF —  CLICK HERE

Quarterly Bulletins Indexhttp://www.bankofengland.co.uk/publications/Pages/quarterlybulletin/2014/qb14q1.aspx

Most economists are unaware of this and even ignore the banking & finance sectors in their econometric models.

On 25th April 2017, the central bank of Germany, the Bundesbank, released a statement on this matter —

“In terms of volume, the majority of the money supply is made up of book money, which is created through transactions between banks and domestic customers. Sight deposits are an example of book money: sight deposits are created when a bank settles transactions with a customer, ie it grants a credit, say, or purchases an asset and credits the corresponding amount to the customer’s bank account in return. This means that banks can create book money just by making an accounting entry: according to the Bundesbank’s economists, “this refutes a popular misconception that banks act simply as intermediaries at the time of lending – i.e. that banks can only grant credit using funds placed with them previously as deposits by other customers”. By the same token, excess central bank reserves are not a necessary precondition for a bank to grant credit (and thus create money).”Reference: https://www.bundesbank.de/Redaktion/EN/Topics/2017/2017_04_25_how_money_is_created.htmlThe Reserve Bank of Australia (Australia’s central bank) has also contributed to the issue in a speech by Christopher Kent, the Assistant Governor on September 19th 2018.“…… the vast bulk of broad money consists of bank deposits”“Money can be created …….. when financial intermediaries make loans““In the first instance, the process of money creation requires a willing borrower.”“It’s also worth emphasizing that the process of money creation is not the result of the actions of any single bank – rather, the banking system as a whole acts to create money.”
================================================================

Disclaimer:   All content is presented for educational and/or entertainment purposes only. Under no circumstances should it be mistaken for professional investment advice, nor is it at all intended to be taken as such. The commentary and other contents simply reflect the opinion of the authors alone on the current and future status of the markets and various economies. It is subject to error and change without notice.The presence of a link to a website does not indicate approval or endorsement of that web site or any services, products, or opinions that may be offered by them.

Neither the information nor any opinion expressed constitutes a solicitation to buy or sell any securities nor investments. Do NOT ever purchase any security or investment without doing your own and sufficient research.  Neither BOOM Finance and Economics.com nor any of its principals or contributors are under any obligation to update or keep current the information contained herein. The principals and related parties may at times have positions in the securities or investments referred to and may make purchases or sales of these securities and investments while this site is live. The analysis contained is based on both technical and fundamental research.

Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.

Disclosure: We accept no advertising or compensation, and have no material connection to any products, brands, topics or companies mentioned anywhere on the site.

Fair Use Notice: This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of issues of economic and social significance. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.

==============================================================

MOLS Denmark

BOOM as at 23rd August 2020

The American Institute of Economic Research published an interesting article titled “Fear is a Viral Monster” on August 17th. The article refers to the psychological damage being caused by governments to entrepreneurs in the business world. Quote:-

“Why build, or build grandly, when some pompous governor or mayor – someone whose only ‘skill’ and most intense itch is to exercise power over fellow human beings – can, with a mere signature, smash down a sledgehammer and turn to mush the fruits of years of hard work and sacrifice?”

This paragraph sums up a major concern of BOOM’s for the future health of all advanced economies. Small to medium sized businesses in most nations provide the bulk of the employment. Entrepreneurs must be incentivized to take risks in order for the economy to be healthy. But now, politicians have decided that they can unilaterally stop “non-essential” commerce and destroy businesses because of the perceived threat from an “extraordinary epidemic” when it is clear that the Covid 19 epidemic is not extraordinary. BOOM’s analysis in last week’s editorial demonstrated that with great clarity.

So WHO will be prepared to employ anyone in future?

Reference:  https://www.aier.org/article/fear-is-a-viral-monster/

LETTER TO A BOOM READER

A key phenomenon which BOOM often refers to in Editorials is the subject of the degree of central bank intervention. A BOOM reader asked me this recently. In other words, just how desperate will the central banks of the advanced economies become in endlessly trying to “return to normal”? This question has been unanswered for 12 years now since the great financial and banking failure crisis of 2008.

BOOM always says — “we ain’t seen nuthin’ yet” — expecting that the central bankers will create more and more Quantitative Easing (QE) programs. And, in doing that, they will obviously encourage governments, companies and municipalities to issue more and more bonds to fund their budget deficits and ambitious expenditure programs. After all, this is not a new process.

Japan has been doing it for the last 28 years. They are the deficit Kings. The Government there has been running huge deficits since 1992 around 4 – 8 % of GDP.  And they also ran large deficits for 11 years prior to that from the mid 1970’s to mid 1980’s. Their central bank is now buying almost all the bonds issued by their government in an endless Quantitative Easing program.

The USA has been running deficits since 1960 with just a few years exception in the late 1990’s. Their deficits have not been as large as Japan’s, usually averaging around 2 % of GDP. However, since 2008, their deficits are becoming larger and larger. And now, the Donald is really pushing for more and more deficit spending in the land of so-called capitalism. Germany has also been a deficit spender since 1995 except for the last 6 years when it has run a small budget surplus. The United Kingdom has run deficits since 1950 except for just 5 years when it managed to achieve a surplus. That is 65 years of deficit spending.

China is good at it too, running budget deficits every year except one for the last 30 years. France has had a budget deficit evey year for almost 50 years and so has India.

Normally, when the central banks are not buying bonds in QE programs, if taxation revenues don’t cover government expenditure programs, then the government must issue bonds to the investment markets to cover the difference. The funds raised are immediately expended into the economy. However, in most cases, the money supply does not increase as almost all the funds applied are already in existence. And as CPI inflation has progressively fallen since 1981, the bond prices have progressively risen. So investors have done very well from their bond investments over the decades from coupon payments and capital gains.

JUST HOW BIG IS THE QE SO FAR?

In September 2019, the Fed Balance Sheet assets were at $ 3.7 Trillion. Did anyone expect (or imagine) that the Fed would soon begin to expand its Balance Sheet by another $ 3.5 Trillion before June 2020? BOOM told correspondents that this would happen but very few agreed. Most thought that BOOM must be mad to expect such government “profligacy”.

Despite much panic from the Doomsayers, the Gold Bugs and the “US Dollar will Collapse” Crowd, the current US Fed Balance Sheet expansion is actually not large. It has taken over 12 years to reach an asset holding of $ 7.2 Trillion. That represents just 3.6 % of the total cumulative GDP of well over $ 200 Trillion during that period (since 2008).

Before the recent expansion occurred, it was just 2 % of cumulative GDP ($ 4 Trillion/$ 200 Trillion).

2 % – 3.6 % is not a great amount of “stimulation” to the economy. That is why it has not had any great effect.

I am expecting that the US Federal Reserve will steadily expand their QE asset purchases towards $ 50 Trillion (minimum) over the next 10 years — unless they see the light and adopt BOOM’s Quantitative Boosting program to send fresh new digital, interest free, sovereign money straight into the real economy. Quantitative Boosting is designed to avoid distortion of bond market prices. However if they continue to just buy Government Bonds in Quantitative Easing programs, distorting the bond market in the process, then the Federal deficit will expand towards $ 5 Trillion per year (every year).

Further QE asset purchases however will have little effect on the real economy which will probably continue to wallow in poor growth, low CPI inflation, high unemployment and worsening productivity. Asset Price Inflation will therefore continue to unimaginable levels. The rich will get richer and richer and richer as the Fed “solution” will guarantee it.

I cannot see any reason for the bankers at the Fed or any other central bank to adopt my QB system. Why? Because it is not in their interests to do so. They are not the representatives of the people, they are the representatives of the banker class.

Please bear in mind that I can only guess how “mad” they can become. I can only guess how high their Balance Sheet can be expanded to. I can only guess how large the Government deficits will become as a nominal figure and as a percentage of GDP.

The only constraint on their expansion is rapid CPI Inflation and/or currency collapse. And neither looks likely in the next 10 years if CPI dis-inflation and deflation continue.

MADNESS BEGETS MADNESS

When madness or mass hysteria arrives, we can only guess how bad it will get. Who would have thought in 1933 that Germany would start a world war 6 years later in which 60 Million people would die and in which the German national infrastructure would be damaged by massive bombing raids leaving it in ruins?

The bizarre responses to the Covid 19 phenomenon is feeding the frenzy with governments crashing their economies on purpose. BOOM showed in last week’s editorial that the death numbers of Covid 19 in Europe this year are no different to the death numbers from Influenza in the winter epidemic of just two years ago in the winter 2017/2018.  In that epidemic of death, there were no lock-downs, no masks, no government panic. But madness begets madness. Hysteria is infectious.

“Madness is something rare in individuals — but in groups, parties, peoples, and ages, it is the rule.”     ― Friedrich Nietzsche, Beyond Good and Evil

In economics, things work until they don’t. Until next week …………  Make your own conclusions, do your own research.  BOOM does not offer investment advice.
CLICK HERE FOR PODCASTS:
   OUR BRAVE NEW ECONOMIC WORLD

EMAIL: gerry {at} boomfinanceandeconomics.com

Return to the BOOM Main Website –  BOOM Finance and Economics at  http://boomfinanceandeconomics.com/

=============================================================

HOW MOST MONEY IS CREATED

BANKS CREATE FRESH NEW MONEY OUT OF THIN AIR (but they always need a Borrower to do so)

THERE IS NO SUCH THING AS A DEPOSIT
BANKS PURCHASE SECURITIES, THEY DON’T MAKE LOANSBANKS DON’T TAKE DEPOSITS, THEY BORROW YOUR MONEY
Watch this short 15 minutes video and learn as Professor Richard Werner brilliantly explains how the banking system and financial sector really work.
https://www.youtube.com/watch?v=EC0G7pY4wREhttp://

How is Most New Money Created ?

LOANS CREATE DEPOSITS — that is how almost all new money is created in the economy (by commercial banks making loans).

From the Bank of England Quarterly Bulletin Q1 2014    —
“Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.“Most money in the modern economy is in the form of bank deposits, which are created by commercial banks themselves”.

Youtube Video —  https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-in-the-modern-economy-an-introduction

and

https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-creation-in-the-modern-economy

Paper:  Money in the Modern Economy  PDF —  CLICK HERE

Quarterly Bulletins Indexhttp://www.bankofengland.co.uk/publications/Pages/quarterlybulletin/2014/qb14q1.aspx

Most economists are unaware of this and even ignore the banking & finance sectors in their econometric models.

On 25th April 2017, the central bank of Germany, the Bundesbank, released a statement on this matter —

“In terms of volume, the majority of the money supply is made up of book money, which is created through transactions between banks and domestic customers. Sight deposits are an example of book money: sight deposits are created when a bank settles transactions with a customer, ie it grants a credit, say, or purchases an asset and credits the corresponding amount to the customer’s bank account in return. This means that banks can create book money just by making an accounting entry: according to the Bundesbank’s economists, “this refutes a popular misconception that banks act simply as intermediaries at the time of lending – i.e. that banks can only grant credit using funds placed with them previously as deposits by other customers”. By the same token, excess central bank reserves are not a necessary precondition for a bank to grant credit (and thus create money).”Reference: https://www.bundesbank.de/Redaktion/EN/Topics/2017/2017_04_25_how_money_is_created.htmlThe Reserve Bank of Australia (Australia’s central bank) has also contributed to the issue in a speech by Christopher Kent, the Assistant Governor on September 19th 2018.“…… the vast bulk of broad money consists of bank deposits”“Money can be created …….. when financial intermediaries make loans““In the first instance, the process of money creation requires a willing borrower.”“It’s also worth emphasizing that the process of money creation is not the result of the actions of any single bank – rather, the banking system as a whole acts to create money.”
================================================================

Disclaimer:   All content is presented for educational and/or entertainment purposes only. Under no circumstances should it be mistaken for professional investment advice, nor is it at all intended to be taken as such. The commentary and other contents simply reflect the opinion of the authors alone on the current and future status of the markets and various economies. It is subject to error and change without notice.The presence of a link to a website does not indicate approval or endorsement of that web site or any services, products, or opinions that may be offered by them.

Neither the information nor any opinion expressed constitutes a solicitation to buy or sell any securities nor investments. Do NOT ever purchase any security or investment without doing your own and sufficient research.  Neither BOOM Finance and Economics.com nor any of its principals or contributors are under any obligation to update or keep current the information contained herein. The principals and related parties may at times have positions in the securities or investments referred to and may make purchases or sales of these securities and investments while this site is live. The analysis contained is based on both technical and fundamental research.

Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.

Disclosure: We accept no advertising or compensation, and have no material connection to any products, brands, topics or companies mentioned anywhere on the site.

Fair Use Notice: This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of issues of economic and social significance. We believe this constitutes a ‘fair use’ of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.

==============================================================

MOLS Denmark

BOOM as at 16th August 2020


A SHOCKING COMPARISON OF EXCESS DEATHS
EUROMOMO DATA REVEALS THE TRUE FACTS ON COVID 19

BOOM has compared the excess death numbers in Europe from Covid 19 this year to the excess death numbers that occurred in the Influenza epidemic of 2017/2018.  Here are the facts of the comparison —

Influenza  — 178,575 Excess Deaths in the European Population (Winter 2017/2018)

VERSUS

Covid 19  — 177,545 Excess Deaths in Europe 2020 (Late Feb – Mid May)

The only conclusion that can be reached is that the European winter Influenza epidemic of 2017/18 caused approximately the same number of excess deaths as has occurred in the spike of excess deaths in Europe this year attributed to Covid 19.

That is a shocking comparison. So why has Covid 19 been given so much media attention and governmental reaction?  Why have our economies been savaged? Who has been advising our politicians?

Is this an epidemic of fear rather than an extraordinary epidemic?

EuroMOMO is a European mortality monitoring organization. It aims to detect and measure excess deaths related to seasonal influenza, other pandemics and other public health threats. It has collected many years of data and its website has excellent graphs showing death patterns over time. They show winter Influenza epidemics occurring every year causing spikes in death numbers (excess deaths).

Official national mortality statistics are provided weekly from the 24 European countries (including the UK)  in the EuroMOMO collaborative network. It is supported by the European Centre for Disease Prevention and Control (ECDC) and the World Health Organization (WHO), and hosted by Statens Serum Institut, Denmark.   Link: https://www.euromomo.eu/

The World Health Organization defines ‘excess mortality’ as:

“Mortality above what would be expected based on the non-crisis mortality rate in the population of interest. Excess mortality is thus mortality that is attributable to the crisis conditions. It can be expressed as a rate (the difference between observed and non-crisis mortality rates), or as a total number of excess deaths.”

To calculate ‘excess mortality’ in a given period they look at the number of people who died over that period, and compare it to the number they would have expected to have died. In other words, it is calculated as:

Excess Deaths = Observed Number of Deaths – (Minus) Expected Number of Deaths under Normal Conditions

In today’s analysis, BOOM used a slightly different methodology to calculate Excess Deaths numbers above an average of 50,000 Deaths per week from all causes. Why? Because 50,000 deaths per week seems to be a baseline in those nations throughout any year and using a static number allows us to compare different epidemics more easily.

Excess Deaths = Observed Number of Deaths – (Minus) 50,000 Deaths per week under Normal Conditions

The total death numbers are readily available on a weekly basis and the graphs at EuroMOMO show that there is normally a rough baseline of 50,000 deaths per week from all causes in those nations. Fluctuations above that figure occur during winter epidemics. It is these epidemics that are of interest in this discussion.

Looking at the EuroMOMO Excess Deaths statistics, so far this year 2020, BOOM has calculated there were 177,545 extra deaths above the baseline of 50,000 deaths per week in the 11 week spike period from week 9 in March to week 20 in May. The cause of most of those extra deaths is presumably Covid-19. 

Now — let’s make a comparison with the winter of 2017/18 when a bad Influenza epidemic hit Europe. All the excess deaths were presumably due to influenza (because Covid 19 was not a factor then). That influenza epidemic occurred from week 45 in 2017 to week 15 in 2018. The number of excess deaths above 50,000 per week during that period calculated by BOOM from the graphs supplied by EuroMOMO was 178,575

The total population of the 24 nations involved in the EuroMOMO dataset is approximately 477 Million. So, this year, just 0.037 % of the population have died from Covid (or with it).  Here are the summarized facts of the matter again from the BOOM analysis —

INFLUENZA  (Winter 2017/2018) — 178,575 Excess Deaths

VERSUS

COVID 19 (Late Feb – Mid May 2020) — 177,545Excess Deaths

Note: BOOM would like to thank the staff at EuroMOMO for their assistance to BOOM in regard to making this analysis.

Data: https://www.euromomo.eu/graphs-and-maps#excess-mortality

UK GDP PLUNGES
INFLUENZA IS NOW THE KILLER

Britain’s gross domestic product slumped by 21.7 percent year-on-year in the second quarter of 2020, the biggest fall since comparable records began in 1956. Compared to the previous quarter, it contracted by 20.4 percent in the second quarter of 2020. This is an economic disaster in real time. Unemployment numbers will surge to unimaginable levels for a very long time — all due to political foolishness, media fear campaigns and bizarre governmental responses to a virus that is now already ebbing away.

Statistics recently published by the Office for National Statistics in the UK show that influenza caused more deaths than Covid-19 from June 19th to July 31st. 

Over that seven-week period, 6,626 Britons in total were killed by flu or pneumonia – compared to 2,992 deaths attributed to Covid 19.

And the current death rate from influenza and pneumonia is now over 4 times greater than the death rate from Covid 19.

References: https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/deaths/bulletins/deathsregisteredweeklyinenglandandwalesprovisional/weekending31july2020

NEW ZEALAND SHOCK, HORROR

The Coronavirus has broken out spontaneously again in New Zealand after 102 days free of new cases. Four new cases with unknown transmission occurred in Auckland last week. The political response was immediate lock-down. Is that a panic reaction?

Then another four people tested positive, then another nine. Then the total rose to 30, then 56 and the health authorities were apparently perplexed. They have no idea where it came from. Note what BOOM said last week ….. before this happened.

“Viruses cannot be “controlled”, “contained in the near future”, “brought under control” or “eliminated” easily. This is magical thinking. The whole analysis seems underwritten by the assumption that this is a temporary event and that previous economic activity will return as a matter of course, sooner rather than later. False assumptions almost always lead to false conclusions.”

WE NEED TO CHANGE OUR COVID 19 STRATEGY

This is an excellent article on Covid 19 by Gail Tverberg — please read it. The title says it all — We Need To Change our Covid 19 Strategy.

Link: https://ourfiniteworld.com/2020/08/10/we-need-to-change-our-covid-19-strategy/

THE DANCE PANIC

The dancing panic also known as the dance epidemic of 1518 was a case of dancing mania that occurred in Strasbourg in Europe. Somewhere between 50 and 400 people took to dancing for days. Some reports indicated that deaths occurred.

Reference:  https://www.youtube.com/watch?v=oEM_GNIAWxg

MASS HYSTERIA IN HISTORY

Here is a list of Mass Hysteria in history. In view of what has happened with Covid 19, it is worth reading and is strangely fascinating.

Reference: https://en.wikipedia.org/wiki/List_of_mass_hysteria_cases

CORE CPI INFLATION BOOST

Core CPI inflation rose last month in the United States by 0.6% compared to the previous month. Annualized that takes US Core inflation to 1.6%. The bond market dropped in price on this news, anticipating higher long term interest rates. This will steepen the sovereign bond yield curve further which is a positive development for the banking sector. Regional bank shares and large bank shares rose in response. And Real Estate Investment Trusts (REITs) also responded positively. Hopefully, these are all positive signs for the US economy going forward.

In economics, things work until they don’t. Until next week …………  Make your own conclusions, do your own research.  BOOM does not offer investment advice.
CLICK HERE FOR PODCASTS:
   OUR BRAVE NEW ECONOMIC WORLD

EMAIL: gerry {at} boomfinanceandeconomics.com

Return to the BOOM Main Website –  BOOM Finance and Economics at  http://boomfinanceandeconomics.com/

=============================================================

HOW MOST MONEY IS CREATED

BANKS CREATE FRESH NEW MONEY OUT OF THIN AIR (but they always need a Borrower to do so)

THERE IS NO SUCH THING AS A DEPOSIT
BANKS PURCHASE SECURITIES, THEY DON’T MAKE LOANSBANKS DON’T TAKE DEPOSITS, THEY BORROW YOUR MONEY
Watch this short 15 minutes video and learn as Professor Richard Werner brilliantly explains how the banking system and financial sector really work.
https://www.youtube.com/watch?v=EC0G7pY4wREhttp://

How is Most New Money Created ?

LOANS CREATE DEPOSITS — that is how almost all new money is created in the economy (by commercial banks making loans).

From the Bank of England Quarterly Bulletin Q1 2014    —
“Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.“Most money in the modern economy is in the form of bank deposits, which are created by commercial banks themselves”.

Youtube Video —  https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-in-the-modern-economy-an-introduction

and

https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-creation-in-the-modern-economy

Paper:  Money in the Modern Economy  PDF —  CLICK HERE

Quarterly Bulletins Indexhttp://www.bankofengland.co.uk/publications/Pages/quarterlybulletin/2014/qb14q1.aspx

Most economists are unaware of this and even ignore the banking & finance sectors in their econometric models.

On 25th April 2017, the central bank of Germany, the Bundesbank, released a statement on this matter —

“In terms of volume, the majority of the money supply is made up of book money, which is created through transactions between banks and domestic customers. Sight deposits are an example of book money: sight deposits are created when a bank settles transactions with a customer, ie it grants a credit, say, or purchases an asset and credits the corresponding amount to the customer’s bank account in return. This means that banks can create book money just by making an accounting entry: according to the Bundesbank’s economists, “this refutes a popular misconception that banks act simply as intermediaries at the time of lending – i.e. that banks can only grant credit using funds placed with them previously as deposits by other customers”. By the same token, excess central bank reserves are not a necessary precondition for a bank to grant credit (and thus create money).”Reference: https://www.bundesbank.de/Redaktion/EN/Topics/2017/2017_04_25_how_money_is_created.htmlThe Reserve Bank of Australia (Australia’s central bank) has also contributed to the issue in a speech by Christopher Kent, the Assistant Governor on September 19th 2018.“…… the vast bulk of broad money consists of bank deposits”“Money can be created …….. when financial intermediaries make loans““In the first instance, the process of money creation requires a willing borrower.”“It’s also worth emphasizing that the process of money creation is not the result of the actions of any single bank – rather, the banking system as a whole acts to create money.”
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