Daily Money & Banking News Update: 12/02/2016

  1. The Opportunities and Challenges of Fintech: Speech by Governor Lael Brainard (Federal Reserve Board)
  2. Fed’s Brainard Cites Promise, Risks of “Fintech” (CNBC)
  3. QE Infinity Eyed in Europe If Renzi Loses Crucial Italian Referendum (CNBC)
  4. Bank of England’s Haldane Warns Against Hasty Rate Hike (Reuters)
  5. Traders Keep Bets on Fed Rate Hike Later This Month (Reuters)
  6. Russian Central Bank: Hackers Stole Over Two Billion Rubles From Accounts in Central Bank (Reuters)
  7. India Cash Crunch to Ease by Year End – Jaitley (Reuters)
  8. Russian Central Bank Said It Was Victim of Attempted Cyber Heist (CNBC)
  9. Hot Trend in 2017: Rise of Islamic Banks on Main St. USA (CNBC)
  10. A Long Winter for Cash? Deutsche Bank Says Cash Is Still King (CNBC)
  11. Italy Has Requested Possible Monte dei Paschi Bailout: Report (CNBC)
  12. US Banks Regulator Seeks to Oversee Fintech Groups (Financial Times)
  13. OCC to Start Issuing Bank Charters to Fintech Companies (MarketWatch)
  14. Financial Regulation Since the Crisis: Speech by Governor Daniel Tarullo (Federal Reserve Board)
  15. Do We Even Need Banks? Ireland Didn’t for Most of 1970 (Cointelegraph)
  16. The Monetary Meltdown in Venezuela (Washington Post)
  17. Fed’s Tarullo Warns Against “Backsliding” on Bank Regulations (Reuters)
  18. US Regulator Clears Way for Online Lenders to Have National Charter (Reuters)
  19. Deutsche Bank to Pay $60 Million to Settle US Gold Price-Fixing Case (Reuters)
  20. The Indian Government’s $100 Billion Heist (Foundation for Economic Education)
  21. Venezuela Says to Issue Bigger Notes “Very Soon” as Inflation Surges (Reuters)

The War on Cash in South Korea

The South Korean government is preparing to move to a cashless society as the Bank of Korea plans to phase out all coinage by 2020. Apparently not all governments are proceeding as quickly as the Indian government. South Korea’s government hopes to get its citizenry to deposit their coinage onto electronic travel passes that are widely accepted throughout the country. The Bank of Korea will undoubtedly watch to see how smoothly the phaseout of coinage proceeds in order to set a deadline further in the future for the eventual phaseout of paper notes. Since only 20 percent of South Korea’s purchases use cash, the phaseout will likely be less severe than it would be in countries more dependent on cash, such as Germany, India, or the United States. Still, even though there are advantages in certain situations to using non-cash means of payment, an all-electronic payments system is fraught with danger. The BOK’s decision shows us that the war on cash is a worldwide phenomenon that governments are undertaking under a variety of different pretenses. This particular decision demonstrates the roadmap that will most likely be used by most governments: gradual phaseouts of coinage, followed in the future by eventual phaseouts of paper notes. Unless this creeping gradualism is able to be stopped, the war on cash may result in victory for governments and defeat for consumers and their financial privacy.

Daily Money & Banking News Update: 12/01/2016

  1. US Federal Court Approves IRS Collection of Coinbase User Database (Cointelegraph)
  2. Fed’s Kaplan Sees Rate Hikes Ahead, and No Recession (CNBC)
  3. Bank of England Looking at Ways to Make Its New £5 Note More Animal-Friendly (CNBC)
  4. Carstens Quits Mexican Central Bank to Join BIS (Financial Times)
  5. South Korea to Kill the Coin in Path Towards “Cashless Society” (Financial Times)
  6. Trump Reverses Stance by Turning to Goldman Alumni for Key Roles (Financial Times)
  7. Fed May Face Unnerving Shakeup Under Trump Administration (Reuters)
  8. India’s Cash Dash Stuffs Banks With Problems (Wall Street Journal)
  9. China Limits Gold Imports and Renminbi Outflows (Financial Times)

Daily Money & Banking News Update: 11/30/2016

  1. A View From the Fed: Speech by Governor Jerome Powell (Federal Reserve Board)
  2. Fed’s Kaplan Backs Rate Hike But Says Fed Will Keep an Eye on Trump’s Policies (CNBC)
  3. Fed’s Kaplan Says Central Bank Must Take Wait-and-See Approach to Trump Policies (MarketWatch)
  4. Eurozone Inflation Rate Hits Highest Since April 2014 (CNBC)
  5. China’s “Extraordinary Leverage” Tops Bank of England’s Growing List of Concerns (CNBC)
  6. RBS Fails Stress Test From the Bank of England; Announces Revised Capital Plan (CNBC)
  7. Trump’s Treasury Pick Targets Taxes, Trade Reforms: Media (Reuters)
  8. Fed Speakers Have Focused Too Much on Rate Increases: Powell (Reuters)
  9. New Bank Rules Must Be Fair for All Regions – Bundesbank (Reuters)
  10. Bank Capital Deal Takes Shape Despite Impasse Says Basel Head (Reuters)
  11. Fed’s Mester: Rate Hike Now Would Help the Economy (CNBC)
  12. Steven Mnuchin, Expected Treasury Pick, Is an Outsider to Public Policy (CNBC)
  13. ECB’s Draghi: Populism Has Weakened European Integration (CNBC)
  14. Trump Treasury Pick Could Boost Small Banks (Wall Street Journal)
  15. Federal Reserve Beige Book (Federal Reserve Board)
  16. Why It’s Important to Define Money Correctly (Mises Institute)
  17. Subprime Auto Debt Grows Despite Rising Delinquencies (New York Fed)
  18. Fed’s Beige Book Reveals No Sign of Postelection Euphoria (MarketWatch)
  19. Some Six Million Americans Are Delinquent with Auto Loans and It’s Going to Get Worse (MarketWatch)
  20. China Sets New Rules on Overseas Yuan Loans in Battle to Curb Outflows – Sources (Reuters)
  21. Coinbase Says “Look Forward to Opposing” DOJ’s Request in Court After Company Is Served with Subpoena (Reuters)

Daily Money & Banking News Update: 11/29/2016

  1. Opportunities for Economic Growth in Puerto Rico: Speech by President William Dudley (New York Fed)
  2. India Dreams of Cashless Society as Demonetization Nightmare Unfolds (Cointelegraph)
  3. Trump’s Economic Proposals: Interview with Joe Salerno (LewRockwell.com)
  4. The Swiss Private Bankers Should Be a Model for Bankers Everywhere (Mises Institute)
  5. Italy’s Referendum Could Spark Another European Banking Crisis: Economist (CNBC)
  6. City Must Apply EU Rules to Keep Lead Role, Says Eurogroup Chief (Financial Times)
  7. Product Fatigue: The Rise in the Number of US Mint Products Since 1990 (Mint News Blog)
  8. ECB Ready to Buy More Italian Bonds If Referendum Rocks Market – Sources (Reuters)
  9. US Banks See Higher Net Income, Fewer Unprofitable Lenders: FDIC (Reuters)
  10. FDIC’s Chairman Gruenberg Says Intends to Serve Full Term (Reuters)
  11. BOE’s Monetary Actions Have Helped Stimulate Economy – Hammond (Reuters)
  12. China State Banks Step Up Support for Yuan, Sell Dollars Onshore for Second Day – Traders (Reuters)
  13. Italian Banks Hold Nearly a Third of Eurozone’s Bad Loans: ECB (CNBC)
  14. Modi’s Currency Swap Won’t Root Out Tax Cheats (CNBC)
  15. The Banking Non-Apprentice (Wall Street Journal)
  16. Recent Economic Developments and Longer-Run Challenges: Speech by Governor Jerome Powell (Federal Reserve Board)
  17. Trump to Tap Ex-Goldman Sachs Banker Steven Mnuchin as Treasury Secretary (MarketWatch)
  18. Minutes of October 11 and October 31, 2016 Discount Rate Meetings (Federal Reserve Board)
  19. Fed’s Powell Says Case for Interest Rate Hike Has Strengthened Over the Past Few Weeks (MarketWatch)
  20. How Italy’s Referendum Could Spark a “Systemic Crisis” in the Eurozone (MarketWatch)

To Really “Make America Great Again,” End the Fed!

To Really “Make America Great Again,” End the Fed!
By Ron Paul

Former Dallas Federal Reserve Bank President Richard Fisher recently gave a speech identifying the Federal Reserve’s easy money/low interest rate policies as a source of the public anger that propelled Donald Trump into the White House. Mr. Fisher is certainly correct that the Fed’s policies have “skewered” the middle class. However, the problem is not specific Fed policies, but the very system of fiat currency managed by a secretive central bank.

Federal Reserve-generated increases in money supply cause economic inequality. This is because, when the Fed acts to increase the money supply, well-to-do investors and other crony capitalists are the first recipients of the new money. These economic elites enjoy an increase in purchasing power before the Fed’s inflationary policies lead to mass price increases. This gives them a boost in their standard of living.

By the time the increased money supply trickles down to middle- and working-class Americans, the economy is already beset by inflation. So most average Americans see their standard of living decline as a result of Fed-engendered money supply increases.

Some Fed defenders claim that inflation doesn’t negatively affect anyone’s standard of living because price increases are matched by wage increases. This claim ignores the fact that the effects of the Fed’s actions depend on how individuals react to the Fed’s actions.

Historically, an increase in money supply does not just cause a general rise in prices. It also causes money to flow into specific sectors, creating a bubble that provides investors and workers in those areas a (temporary) increase in their incomes. Meanwhile, workers and investors in sectors not affected by the Fed-generated boom will still see a decline in their purchasing power and thus their standard of living.

Adoption of a “rules-based” monetary policy will not eliminate the problem of Fed-created bubbles, booms, and busts, since Congress cannot set a rule dictating how individuals react to Fed policies. The only way to eliminate the boom-and-bust cycle is to remove the Fed’s power to increase the money supply and manipulate interest rates.

Because the Fed’s actions distort the view of economic conditions among investors, businesses, and workers, the booms created by the Fed are unsustainable. Eventually reality sets in, the bubble bursts, and the economy falls into recession.

When the crash occurs the best thing for Congress and the Fed to do is allow the recession to run its course. Recessions are the economy’s way of cleaning out the Fed-created distortions. Of course, Congress and the Fed refuse to do that. Instead, they begin the whole business cycle over again with another round of money creation, increased stimulus spending, and corporate bailouts.

Some progressive economists acknowledge how the Fed causes economic inequality and harms average Americans. These progressives support perpetual low interest rates and money creation. These so-called working class champions ignore how the very act of money creation causes economic inequality. Longer periods of easy money also mean longer, and more painful, recessions.

President-elect Donald Trump has acknowledged that, while his business benefits from lower interest rates, the Fed’s policies hurt most Americans. During the campaign, Mr. Trump also promised to make audit the fed part of his first 100 days agenda. Unfortunately, since the election, President-elect Trump has not made any statements regarding monetary policy or the audit the fed legislation. Those of us who understand that changing monetary policy is the key to making America great again must redouble our efforts to convince Congress and the new president to audit, then end, the Federal Reserve.

This article originally appeared on the website of the Ron Paul Institute for Peace and Prosperity.

Daily Money & Banking News Update: 11/28/2016

  1. The Banking Industry: Struggling to Move On (Bank for International Settlements)
  2. Senegal Introduces Cryptocurrency Based on Its National Currency (Cointelegraph)
  3. India to Ban Gold Importation? (Cointelegraph)
  4. India’s Currency Cancellation: Seigniorage and Cantillon Effects (Alt-M)
  5. Minutes of November 1-2, 2016 FOMC Meeting (Federal Reserve Board)
  6. IRS vs. Coinbase: Massive Implications for Bitcoin, Digital Currencies (Bitcoin Magazine)
  7. ECB Warns That Risks of Global Market Corrections Have “Intensified” (CNBC)
  8. ECB Seeks to Lend Out More Bonds to Avert Market Freeze: Sources (CNBC)
  9. These New Plans for Bank Reforms in Europe Could Hit Wall Street Lenders (CNBC)
  10. India’s Demonetization in Four Charts (Financial Times)
  11. Modi Defends Demonetization as India Backlash Mounts (Financial Times)
  12. Indian Cash Crunch Hits Gold Demand During Peak Wedding Season (Reuters)
  13. Payday Lenders Seek Emergency Court Help, Fearing US Cutoff (Reuters)
  14. India’s Central Bank to Review Cash Deposit Rules for Banks: Report (Reuters)
  15. Zimbabwe Launches “Bond Notes” Currency in Bid to Ease Cash Crunch (Reuters)
  16. Best for UK Economy to Keep Rates on Hold, Says BOE’s Vlieghe (Reuters)
  17. Bernanke Tells Fed Officials to Clam Up (MarketWatch)
  18. Here’s Why Indians Are Angry About the Rupee Ban (MarketWatch)
  19. Brexit Will Be Tougher for UK Than for Eurozone, Warns Draghi (Financial Times)
  20. Bank of Canada’s Poloz: Prepared to Use Unconventional Measures If Necessary (Reuters)
  21. ECB’s Mario Draghi Warns of Risks of Prolonged Low Interest Rates (Wall Street Journal)

Daily Money & Banking News Update: 11/22/2016

  1. Five Ways Indians Are Dodging “Black Money” Crackdown (Yahoo News)
  2. Founding Father of the Euro Less Enthusiastic Over Currency’s Future Amid Rise of Populism (CNBC)
  3. Eurozone Nations Turn to Hedge Funds to Meet Borrowing Needs (Reuters)
  4. European Companies Happily Take ECB’s Cheap Cash But Don’t Spend It (Wall Street Journal)
  5. IRS Effort to Access Coinbase Records Could Take Months (CoinDesk)
  6. Greece to Continue Bailout Talks, Aiming to Finish Before December 5th (Reuters)
  7. Gold Sales Heat Up in Europe After Trump Win But Not in US (Reuters)

Daily Money & Banking News Update: 11/21/2016

  1. Longer-Term Challenges for the US Economy: Speech by Vice Chairman Stanley Fischer (Federal Reserve Board)
  2. Germany’s Central Bank Is Hosting a Blockchain Conference (CoinDesk)
  3. Washington Can Now Help Relieve “Only Game in Town” Fed, Fischer Says (CNBC)
  4. Citi and JPMorgan Top List of Globally Systemic Banks (CNBC)
  5. Indians Return $80 Billion Worth of Banned Banknotes (Financial Times)
  6. US Economy Is Running Below Potential, Chicago Fed Gauge Shows (MarketWatch)
  7. Eurozone Inflation Recovery Needs Continued Support: Draghi (Reuters)
  8. Bosnian Banks Say Under Pressure After EU Risk Designation (Reuters)
  9. Dollar’s Rise Won’t Blind Fed to Its Goals, Fischer Says (Reuters)
  10. UK to Raise Deposit Guarantee After Pound’s Brexit Plunge (Reuters)
  11. 2017 Is When a Decade of Global Monetary Easing Ends, Says BAML (Reuters)
  12. ECB’s Villeroy Says After Brexit Europe Should Develop Attractive Financial Industry (Reuters)
  13. EU to Retaliate Against US Bank Capital Rules (Financial Times)
  14. Venezuela’s Currency Weakens Past 2000/Dollar on Black Market (Reuters)
  15. ECB’s Draghi Says Consequences of Trump’s Win Hard to Assess (Reuters)
  16. EU Rules to Stem Payment Fraud May Disrupt Six Billion Euros of E-Commerce: VISA (Reuters)

Weekend Money & Banking News Update: 11/19-11/20/2016

  1. Italy’s Banks Are in a Slow Motion Crisis and Europe May Pay (New York Times)
  2. Mnuchin, Hensarling Seen as Trump’s Finalists for Treasury Job (MarketWatch)
  3. Indians Rush Frantically to Launder Their “Black Money” (New York Times)
  4. Trump to Be Held to His Word on Fed Independence: Bullard (Reuters)
  5. Stranded Trucks, Unpaid Workers: India Inc. Counts Cost of Cash Crunch (CNBC)
  6. Hackers Program Bank ATMs to Spew Cash (Wall Street Journal)