Pater Tenebrarum's Blog

I noticed a lot of women wearing sparkling red shoes this holiday season, now I know why. They all want to follow the yellow brick road to Kansas, the land of no cliffs.

The erroneous belief that one can get something for nothing by cranking up the printing presses is of course deeply ingrained all over the world, but as policy options go, it is an especially bad one for Japan with its graying and society and declining population. As we have mentioned before, inflation is about as useful to Japan's citizens as a hole in the head.

Many of our readers have probably seen this widely circulated article at the WSJ: “Secret Talks Behind Central Banks' Bets”, in which the Fed's favorite press mouthpiece Jon Hilsenrath talks about the 'secret meetings' the world's central bankers regularly hold in Basel at the BIS (the Bank for International Settlements, the nexus of global central banking).

Although it was widely expected, it still is slightly disquieting to know that 'QE3' has just become 'QE4', with the total size of outright asset purchases per month henceforth running at a nearly 50% higher rate than 'QE2' had.

Every discussion of the ‘political metal’ gold should probably be prefaced with an anecdote of this sort so as to make clear what the main difference between a market chosen money like gold and government-imposed legal tender actually is: the latter depends on promises that are rarely kept.

It is incredible how a bearish social mood often leads to actions that will only tend to make it even worse and are likely to result in a plethora of usually very costly unintended consequences.

It is widely held that China's economic boom of the past several decades is the chief reason for the big rise in nominal commodity prices since about 2001 (depending on which commodity one picks, the boom began for some in 1998 already, for others as late as 2002).

Keep in mind that Moody's actually had France rated Aaa hitherto and has now altered this to Aaa minus, which is only a minor change. However, the credit outlook rightly remains negative.

We always stress that the great financial crisis has indeed left the economy with what one might term a 'deflationary undertow'. To the extent that households try to deleverage and are paying back debt and to the extent that banks refuse to expand credit concurrently...

John Williams, president of the San Francisco Fed, yet another noted dove, thinks nothing can go wrong by printing gobs of money. There is no inflation, and there never will be. They have the 'tools' to avert it. Never mind the explosion of the money supply over the past four years – it is all good.