BIS Quarterly Review Warns Of Disaster Re $17 Trillion Negative-Yield Debt

Claudio Borio, Head of the Monetary and Economic Department at the BIS, published the BIS Quarterly Review, September 2019on Sunday, revealing how the increasing acceptance of negative interest rates has reached “vaguely troubling” levels.

The statement comes after the Federal Reserve and European Central Bank (ECB) cut interest rates to flight a global manufacturing slowdown — Borio said that the effectiveness of monetary policy is severely waning and might not be able to counter the global downturn, in other words, JPMorgan Global Composite PMI might print sub 50 for a considerable period of time.

“The room for monetary policy maneuver has narrowed further. Should a downturn materialize, monetary policy will need a helping hand, not least from a wise use of fiscal policy in those countries where there is still room for maneuver.”

The BIS, known as the ‘central bankers’ bank,’ said the recent easing by the Fed, ECB, and PBOC, has pushed yields lower across the world, contributing to the more than $17 trillion in negative-yielding tradeable bonds.

From Germany to Japan, 10-year government debt rates have plunged into negative territory, in recent times.

“Against this backdrop, sovereign bond yields naturally declined further, at times driven by the prospect of slower economic activity and heightened risks, at others by central banks’ reassuring easing measures. At one point, before the recent uptick in yields, the amount of sovereign and even corporate bonds trading at negative rates hit a new record, over USD 17 trillion according to certain estimates, equivalent to roughly 20% of world GDP. Indeed, some households, too, could borrow at negative rates. A growing number of investors are paying for the privilege of parting with their money. Even at the height of the Great Financial Crisis (GFC) of 2007-09, this would have been unthinkable. There is something vaguely troubling when the unthinkable becomes routine,” Borio warned.

Central bankers have already acknowledged that the flurry of recent rate cuts had continued to deplete their already-limited firepower – which would make their ability to fight a prolonged downturn less effective than ever before.

ECB President Mario Draghi said earlier this month that “it’s high time for the fiscal policy to take charge,” an indirect admittance that monetary policy has run its course.

“Almost all the things that you see in Europe, the creation of more than 11 million jobs in a short period of time, the recovery, the sustained growth for several quarters, were by and large produced by our monetary policy. There was very little else… Now it’s high time for the fiscal policy to take charge.”

Borio said global markets were alarmed this summer by the inversion of the US and other major countries’ bond yield curves.

He also warned about the corporate debt market, specifically major imbalances in leveraged loans known as collateralized loan obligations (CLOs) which “represent a clear vulnerability” to the global financial system.

And perhaps gold is ‘fearing’ the same “unthinkable” status quo that Borio warns of as it rises alongside negative rates…


Actual US Debt May Be $400 Trillion, or 20 Times GDP | Wall Street Report

The last combined debt figure was $200+ trillion. Now, a new Wall Street report says it’s actually 2000% of US GDP. Yet, the US government still has maintained its $750 billion annual Pentagon budget. How can the Americans tolerate that? $400 TRILLION HOLE? Actual US debt may be 2,000% of GDP, says Wall Street report … Continue reading Actual US Debt May Be $400 Trillion, or 20 Times GDP | Wall Street Report →

Federal Reserve Bank of St. Louis Releases Data Showing Absolute Economic Destruction During Obama Years

Obama’s eight years did more to destroy America than any other past presidents, be they Democrat or Republican.

Look and study these few charts:

Student loans exploded and are a literal time bomb ticking away at he millennial generation.

Food stamps soared as poverty dramatically increased.

Federal debt went through the roof as we added more debt than all other previous periods combined.

We printed lots of money to paper over the monetary effects.

Health costs went way up when we were told they would drop. Obama care was a flop.

Labor force participation went down as unemployment increased and many just dropped out of the workplace altogether.

Inequality went up and up, as the rich got richer and the middle class shrank.

Median income dropped.

Home ownership also fell way down.

Overall, Americans were far worse off than before and we were told there was NO hope.

The country was losing to China and our children and grandchildren would not live as well as their parents and grandparents had.

Jobs would never return.

Now look at what has happened in the short years since Donald J. Trump was surprisingly elected President.


Even the Clinton’s knew: “It is the economy stupid” that gets you reelected.

We cannot go back to Democrat or socialist economics.

Economic growth at 3% solves lots of problems and serves up a true wealth effect.

Everyone benefits, especially minorities, women and youth.

Hope returns.

Which do you want?

Which does America deserve?

Source: Gateway Pundit

GOP-controlled House Added Nearly $8 Trillion to National Debt

During their eight years in control of the U.S. House of Representatives, Republicans added $7.9 trillion to the national debt. In a report published by the U.S. Treasury Department entitled “The Debt to the Penny and Who Holds It,” one need only set the correct date parameters to find out how much the money the […]

The Newburgh Conspiracy and George Washington’s Powerful Speech to Calm It

One of the early threats to the republic came in March 1783, when a group of officers in the Continental Army decided to challenge the authority of the Congress. The incident was caused by the inability of Congress to pay the members of the military.

Under the Articles of Confederation, the Congress could not tax the states to raise revenue. Instead, it relied on voluntary payments from the states, which were made on an irregular basis. In 1780, Congress passed a resolution to provide half-pay for retired soldiers. In late 1782, Congress was still waiting for the money.

With the end of the Revolutionary War in sight, high-ranking members of the Army began to fear that if the Army disbanded the soldiers would never receive their pay. A faction, which included Horatio Gates, developed that accused Congress of trampling on the rights which the soldiers were told — and believed — they were fighting for.   In March 1783, a letter circulated the Army’s encampment at Newburgh, New York. The letter stated their concerns and called for a meeting to be held on March 11.

“After a pursuit of seven long years, the object for which we set out is at length brought within our reach! — Yes, my friends, that suffering courage of yours, was active once — it has conducted the United States of America through a doubtful and a bloody war! It has placed her in the chair of independency, and peace again returns to bless — whom? A country willing to redress your wrongs, cherish your worth, and reward your services; a country courting your return to private life, with tears of gratitude, and smiles of admiration; longing to divide with you that independency which your gallantry has given, and those riches which your wounds have preserved? Is this the case? Or is it rather, a country that tramples upon your rights, disdains your cries, and insults your distresses? Have you not, more than once, suggested your wishes, and made known your wants to Congress? Wants and wishes which gratitude and policy should have anticipated, rather than evaded. And have you not lately, in the meek language of entreating memorial, begged from their justice, what you would no longer expect from their favour? How have you been answered? Let the letter which you are called to consider to-morrow, make reply.”

On March 11, General Washington’s General Orders to the Army for the day read as follows:

“The Commander in Chief having heard that a General meeting of the officers of the Army was proposed to be held this day at the Newbuilding in an anominous paper which was circulated yesterday by some unknown person conceives (altho he is fully persuaded that the good sense of the officers would induce them to pay very little attention to such an irregular invitation) his duty as well as the reputation and true interest of the Army requires his disapprobation of such disorderly proceedings, at the same time he requests the General and Field officers with one officer from each company and a proper representative of the staff of the Army will assemble at 12 o’clock on Saturday next at the Newbuilding to hear the report of the Committee of the Army to Congress.

After mature deliberation they will devise what further measures ought to be adopted as most rational and best calculated to attain the just and important object in view. The senior officer in Rank present will be pleased to preside and report the result of the Deliberations to the Commander in Chief.”

These orders pushed the meeting to March 15, buying Washington time to notify Congress of the development. The orders also gave the impression Washington would not attend the meeting. Washington used the time to prepare remarks, which he intended to deliver, in person, to the conspirators.

General Horatio Gates

General Horatio Gates opened the meeting on the morning of March 15. In Washington’s absence, he was the ranking officer, and in charge of the proceedings. Within moments, Washington entered the room, to everyone’s surprise. He asked to speak to the assembly. Gates granted permission, and Washington proceeded to deliver one of  — if not the most — crucial speeches of his career.

He began by scolding the author of the letter (and a follow-up letter), and its supporters, “By an anonymous summons, an attempt has been made to convene you together? How inconsistent with the rules of propriety! — how unmilitary! — and how subversive of all order and discipline, let the good sense of the army decide.”

He made his astonishment at such a proposal clear, saying, “My God! What can this writer have in view, by recommending such measures? ? Can he be a friend to the army? — Can he be a friend to this country? — Rather is he not an insidious foe? — Some emissary, perhaps, from New York, plotting the ruin of both, by sowing the seeds of discord & seperation between the civil & military powers of the continent? — And what compliment does he pay to our understandings, when he recommends measures in either alternative, impracticable in their nature?”

Further, he clarified his own stance, saying “With respect to the advice given by the author to suspect the man, who shall recommend moderate measures and longer forbearance. I spurn it as every man, who regards that liberty, & reveres that justice for which we contend, undoubtedly must.”

He asked the men in the room to trust his judgement, and to trust that Congress would come through for them, saying “While I give you these assurances, and pledge my self in the most unequivocal manner, to exert whatever ability I am possessed of, in your favor let me entreat you, gentlemen, on your part, not to take any measures, which, viewed in the calm light of reason, will lessen the dignity, & sully the glory you have hitherto maintained let me request you to rely on the plighted faith of your country, and place a full confidence in the purity of the intentions of Congress.”

Finally, he called on them to put aside further thoughts of conspiracy and action towards the Congress, asking them to “pursue the plain & direct road to the attainment of your wishes. You will defeat the insidious designs of our enemies, who are compelled to resort from open force to secret artifice. You will give one more distinguished proof of unexampled patriotism & patient virtue, rising superior to the pressure of the most complicated sufferings; — And you will, by the dignity of your conduct, afford occasion for posterity to say, when speaking of the glorious example you have exhibited to mankind, had this day been wanting, the world has never seen the last stage of perfection to which human nature is capable of attaining.”

Then, he proceeded to read a letter to the room, which he had received from Joseph Jones, a Congressman from Virginia. In order to read the letter, Washington was forced to put on his new reading glasses. He told the men, “Gentlemen, you will permit me to put on my spectacles, for I have not only grown gray but almost blind in the service of my country.”

As he read the letter, some men in the room began to openly cry. Major Samuel Shaw remembered the moment in his journal, where he wrote, “There was something so natural, so unaffected in this appeal as rendered it superior to the most studied oratory. It forced its way to the heart, and you might see sensibility moisten every eye.”

When he finished reading the letter, he folded it up, took off his glasses and left the room. General Henry Knox and others who were faithful to Washington offered resolutions confirming their support for the General and the Congress.

The conspiracy to revolt against the Congress was quelled right then and there, as the officers voted against the measures. Instead, they asked Washington to negotiate with Congress on their behalf.

Documents — such as the letters that circulated the camp — were collected by the Army and preserved.

According to later accounts, many of the soldiers who heard the speech were moved to tears. As one veteran of the war recalled, “I have ever considered that the United States are indebted for their republican form of government solely to the firm and determined republicanism of George Washington at this time.”

The Continental Congress in Philadelphia was shocked when they received news of the averted rebellion. Alexander Hamilton immediately sprang into action, proposing a five-year commutation of the soldiers’ pensions that Congress immediately approved. The Newburgh Conspiracy would not be the last crisis over soldiers’ pay that will shake the nation, however. The Continental Congress’ inability to raise revenue and pay soldiers would later prompt the Pennsylvania Mutiny of 1783 and Shays’ Rebellion of 1786, demonstrating the urgency of the Constitutional Convention of 1787.

Still, the Newburgh Address reminded the soldiers and the nation that liberty does not come cheap – it is never more than one generation away from extinction. It is preserved through the patience, sacrifice, and conscience, of those we trust with power.