We know.

Given the manifold domestic issues Russia is facing, readers here are not surprised that Putin will further his nationalistic agenda for the express purpose of continued control.

That nationalistic agenda includes reclaiming some of the old satellites, and of course the dream of Asia, the Black Sea, and Constantinople (the holy land for Orthodox Christianity, one of the pillars of the new Russian nationalism.)

It matters not about capability, this is simply a statement of inent.

Nato is getting ready to fight back against Russian aggression as it poses a ‘real and present danger’ to the Baltic States, Defence Secretary Michael Fallon said yesterday.

He told of the threat to Latvia, Lithuania and Estonia as Vladimir Putin continues to ‘test us’ by deploying submarines and warplanes near British territory.

Warning of a new Cold War, he also said the UK must renew Britain’s nuclear capabilities as Russia steps up its own defences – but denied suggestions of an arms race. 

OK.

Thank goodness we have the Fed to provide these prognostications...and as a  student of obfuscation, I personally love the use of "basically" in this instance.

“There’s basically an 80 percent chance over the next 10 years that productivity growth will average between 1 and 3 percent,” the Fed official said.

And of course, "leading economists" would have more economists working on an issue (predicting productivity gains) that is inherantly un predicatble.  Is it infinite regress or recursive?

History shows how important it is that the central bank get the productivity outlook right. A sudden slowdown in the 1970s blindsided the Fed and led to a double-digit increase in inflation because officials kept monetary policy too loose as oil prices surged. In the late 1990s, then Chairman Alan Greenspan correctly saw that output per hour was accelerating and held back from raising interest rates, allowing unemployment eventually to fall below 4 percent.

Blinder, now a professor at Princeton University in New Jersey, said he’d have more economists at the central bank working on the issue if he were still there, adding this would be a “productive” use of their time.

Follow the bouncing ball...

Sweden dives into the Negative Rates pool.   When banks start getting paid for borrowing money, it will truly be a strange new world.

The Swedish Riksbank unleashed unprecedented stimulus with a negative interest rate and quantitative easing in a race to stem a deflationary spiral blamed by some economists on premature policy tightening.

The Riksbank lowered its repo rate to minus 0.10 percent from zero. A cut had been predicted by six of the 18 economists surveyed by Bloomberg, while the remainder forecast no change.

Interesting article...

...which demonstrates that the journalistic public is groks the implications of the current global monetary system.  One of the major themes of this blog is to point out that definitions like "leverage" and "debt" are consistantly misapplied.

But this is besides the point. It doesn't matter how "leveraged" the Fed is. It doesn't even make sense to talk about it. Leverage, after all, is how much money a bank is borrowing. But a central bank doesn't borrow money. It prints money. So its "leverage" is meaningless. Think about it this way. When the things a bank has bought are worth less than the money it's borrowed, it's insolvent—and if its lenders figure that out, they'll push it into bankruptcy by asking for their money back all at once. So we care about leverage because more of it makes this easier to happen. But what would it take for this to happen to a central bank? Well, suppose the Fed's assets, in this case, Treasury and mortgage bonds, lose so much value that it's technically insolvent. Who would the "lenders" asking for their money back even be?

The Fed's hubris...

quote of the day from Dallas Fed president Fisher in this article:

Fisher said lawmakers are looking to shift blame, having proven “unable to get together with their own colleagues on a working fiscal policy or construct a regulatory regime that incentivizes investment and job creation.”

“So they simply find it convenient to create a boogeyman out of an entity that does its job efficiently — the Federal Reserve,” Fisher said. “To some outsiders the Fed appears to be some kind of combination of Hogwarts, the Death Star, and Ebenezer Scrooge — especially to those who don’t take the time to read the copious amounts of reports and speeches and explanations we emit.”

What arrogance.   One need only imagine an agent had taken the time to read every report and listen to every speech...would such an agent have a full understanding of what, precisely, the Fed is doing?  This is akin to the kind of recondite confusion by quantity practiced by political interests across the globe.  Only those closest to the Deity of Monetary Policy truly understand it.  All others are mere sophists who cannot possibly fathom the secrets contained and assidously guarded by The Modern Eunuch Class.

Well, that solves the Greek banking crisis...

"TSIPRAS SAYS GOVT GUARANTEES GREEK BANK SYSTEM DEPOSITS SAFE"

Gold

Interesting article in Bloomberg with respect to Gold and the possiblilty that multiple financial claims exist for the same caches of gold.  This is something I have written about previously and every Gold investor must be actutely aware of what, precisely, do they "own" when entering into these contracts...because all manner of useful idiot have surfaced to drum up eschatological fantasies of the end of society and the re-emergence of Gold as "the" currency of value.

Boehringer speculates that individual bars may have several owners, perhaps as the result of bars being leased, sold, or subject to complicated financial arrangements. “I can’t prove it,” he adds, saying the onus of proof should be on the central bankers, not him. He isn’t alone in raising doubts. John Hathaway, co-manager of the $1.3 billion Tocqueville Gold Fund, says Germany might need the slow, seven-year repatriation window to unwind complex financial arrangements by which the gold was loaned out, perhaps several times. Their questions about multiple owners aren’t completely out of left field, as there is a loan market in which gold bars are put up as collateral and then sold to third parties for the duration of the deals.

First they came...

...for the Gold and I said nothing.

Physical ownership of gold is not a guarantor of security.

The son of the son of QE coming soon?

I have written about the unkillable beast that is QE and other forms of Central Bank asset purchases before.  At best, they are some sort of signaling mechanism that "demonstrates" a "commitment" to avoid deflation.  At worst, they are useless and massively deflationary.  And yet, they always go back to spin the wheel.

Kocherlakota said Tuesday that it is a mistake to assume that just because the real economyis healing, inflation will automatically return to healthy levels.

Among the most dovish of the Fed's current policymakers, Kocherlakota wants the U.S. central bank to hold off on rate hikes until next year.

Bond-market investors, he said, are flagging their worries about simultaneous low growth and low inflation by driving yields down. The Fed needs to take action to turn those expectations around, he said, or risk losing its credibility and with it, its ability to conduct effective monetary policy.

"It is not enough to have a goal, you have to live up to the goal," he said.

Kocherlakota said he has not thought through how much more bond buying the Fed would need to do to lift inflation more rapidly back to target.

"I think it is really more a question of making sure that people are aware that asset purchases are on the table as a tool in case we do not see inflation going back to 2 percent with sufficient alacrity," he said. "Frankly, even that statement by itself would be very helpful."