banking

US Bank Reserves 10% – EU Bank Reserves 1% | Armstrong Economics

Posted on by johnbarleycorn12

QUESTION: What mechanism prevents banks from creating fraudulent electronic deposits of currency? As an IT systems admin, I have the ability to add / subtract / adjust ERP systems inventory / costing outside the normal users ability. I could add widgets to the system at will, but fraud can’t be sustained very long, as the physical widgets can’t be sold, they only exist in the system. Electronic currency, however, is only a ledger entry, and since new currency units are created as loans – What prevents any bank from just changing the numbers in their systems to create more currency units at will? Can’t get my head around this. Thanks for all you do from a little guy just trying to get by! ANSWER: The creation of money electronically in the banking system is the degree of leverage. Reserve Requirement Ratio at the Federal Reserve was increased on January 18th, 2018. It required that all banks with more than $122.3 million on deposit maintain a reserve of 10% of deposits. Banks with $16 million to $122.3 million must reserve 3% of all deposits. They create money that is purely electronic and we do not see it. I deposit $100 and they lend it to you. Now we both have $100 on deposit and the reserve requirement will be $20 for most banks. They then lend it out a third time and there is now $300 on deposit requiring $30. They cannot create entries out of thin air. They are audited and the reserve ratio is strictly enforced in the USA. The Fed will raise and lower that reserve ratio as they see fit based upon economic conditions. At the European Central Bank, things are substantially different. Eurozone banks are required to hold a specified amount of funds as reserves on AVERAGE in their current accounts at their national central bank in each member state which are called “minimum reserves”. Remember, each member retained its own central bank! A bank’s minimum reserve requirement is set for six-week periods called maintenance periods. This minimum reserves level is therefore calculated on the basis of the bank’s balance sheet prior to the start of each six-week maintenance period. Banks have to make sure that they meet the minimum reserve requirement only on an AVERAGE over the course of the maintenance period. This introduces serious risk. The bank can dip below the minimum reserve in the middle of a crisis and at the end of the six-week period, there can be no reserves remaining. So they do not have to hold the total sum in their current accounts at the central bank on a daily basis! Therefore, this is a flexible arrangement that allows the banks to react to short-term changes in the money markets, but it exposes them to tremendous risk in a financial panic. The design was claimed to help stabilize the interest rate banks charge each other for short-term funds. I totally disagree with this concept. Up until January 2012, European banks had to hold a minimum of only 2% of certain liabilities, mainly customers’ deposits, at their national central bank. As the economic crisis has continued in Europe, this 2% level has been to 1%! The total reserve requirements for Eurozone banks stand at only around 113 billion euro currently. Perhaps now people will understand why I have been warning about a MAJOR financial crisis starting in Europe and spreading thereafter around the globe. The general media and the public will NOT understand the reserve ratio disparity so a banking crisis in Europe will be assumed to be the same around the world. Unfortunately, what happens in Europe will NOT stay in Europe. This is also why I STRONGLY urge Europeans to create a stash in the US banks for now. The ECB is seriously looking at creating a cryptocurrency to defeat hoarding just canceling Euro notes. That will end hoarding and they will be able to then enforce negative interest rates. From the ECB view, they are concerned about the coming bank crisis in Europe so the best way to prevent a bank run is to eliminate cash! Europeans should open accounts outside the Eurozone before it is too late. And Prime Minister Theresa May wants to stay linked to Europe. This is when we need people who REALLY are qualified to understand the world financial system. I cannot express how dangerous it has become with politicians who are clueless about how the world economy even functions. UK banks operate under a completely different scheme. In May 2006, the Bank of England began paying interest on bank reserve deposits at its official Bank Rate. This inspired US banks to demand the Fed pay interest on excess reserves. The Bank of England had the ‘reserves averaging’ regime back then whereby the quantity of each bank’s reserves that the Bank of England would pay interest on was restricted to a range around a ‘target’ level of reserves that the bank was obliged to pre-declare. The used to be set on a daily basis but was changed at this time to an average over each monthly maintenance period. The objective was to establish a marginal cost of reserves to the banks which would remain very near to Bank Rate. However, this was dependent upon the provision if the Bank of England supplied the right amount of reserves to enable the banks’ reserve deposits to be within this range. In view of the Bank of England’s desire that wholesale market rates should remain close to Bank Rate was considered to be an improvement over earlier procedures prior to 2006 when reserves were mot paid interest and the Bank of England then had to supply reserves in quantities that exactly matched demand. Consequently, market interest rates tended to move towards the boundaries of the corridor formed by the Bank of England’s deposit and lending facilities. Nonetheless, under the new reserves-averaging regime post-2006, the Bank of England still had to supply reserves in appropriate amounts to meet demand, but it was more flexible. However, the new regime was still ill-equipped to cope with the expansion of reserve supply that the Bank of England then undertook to overcome the breakdown of interbank markets during the financial crisis of 2007-2009. To maintain interest rate transmission within the reserves averaging regime, the Bank of England then widened the range of reserve deposits that they paid interest on from 1% to 60% trading around the Bank of England’s targets. This required the Bank of England to then take steps to reabsorb the excess reserves. The introduction of Quantitative Easing, which began in March 2009, merely created another problem from the reserve perspective. Suddenly, Quantitative Easing caused another larger expansion increase in reserve deposits. Rather than trying to offset this by selling other assets or making further adjustments to the reserves averaging scheme, the entire scheme was simply suspended in favor of paying interest unconditionally on ALL reserve balances. Consequently, I have stated NUMEROUS times before, all central banks are NOT the same!!!!!!!!!!!!!!!!!!! Central Bank Reserve Ratios COUNTRY Bank Reserve Ratio ALBANIA 10.00% ANGOLA 24-May-18 19.00% ARMENIA 24-Feb-14 2.00% ARGENTINA 28-Sep-18 44.00% ARUBA 11.00% AZERBAIJAN 1-Mar-15 0.50% BANGLADESH 3-Apr-18 5.50% BARBADOS 5.00% BELARUS 16-Mar-16 7.50% BULGARIA 28-Nov-08 10.00% CAMEROON 7-Apr-16 5.88% CAPE VERDE 16-Feb-15 15.00% CEN. AFRICA REP 7-Apr-16 0.00% CHAD 7-Apr-16 3.88% CHINA 15-Oct-18 14.50% DEM. 8-Apr-15 2.00% REPUBLIC 7-Apr-16 5.88% COSTA 15.00% CROATIA 11-Dec-13 12.00% CZECH REPUBLIC 20-May-99 2.00% CURACAO 10-Oct-13 18.00% DENMARK 2.00% EGYPT 3-Oct-17 14.00% EQUATORIAL 7-Apr-16 5.88% EUROZONE 18-Jan-12 1.00% FIJI 7-Jul-10 10.00% GABON 7-Apr-16 5.88% GAMBIA 19-Jun-13 15.00% GEORGIA 13-Jun-18 5.00% GHANA 12-Nov-14 10.00% HUNGARY 1-Dec-16 1.00% ICELAND 1-Jun-16 2.00% INDIA 1-Jul-13 4.00% INDONESIA 18-Feb-16 6.50% IRAQ 1-Sep-10 15.00% ISRAEL 6.00% JAMAICA 1-Jul-10 12.00% JORDAN 12-Mar-09 8.00% KAZAKHSTAN 2.50% KENYA 5.25% KYRGYZ REPUBLIC 14-Dec-15 4.00% LITHUANIA 3.00% MACEDONIA 9-Sep-13 8.00% MALAWI 23-May-08 15.50% MALAYSIA 16-May-11 3.00% MALDIVES 20-Aug-15 10.00% MAURITIUS 2-May-14 9.00% MOLDOVA 4-Sep-18 42.50% MONGOLIA 23-Mar-18 10.50% MOROCCO 21-Jun-16 5.00% MOZAMBIQUE 26-Oct-17 14.00% NEPAL 11-Jul-18 4.00% NICARAGUA 15-Jun-18 10.00% NIGERIA 22-Mar-16 22.50% PAKISTAN 12-Oct-12 3.00% PERU 30-Apr-17 5.00% PHILIPPINES 24-May-18 18.00% POLAND 31-Dec-10 3.50% QATAR 16-Mar-17 4.50% ROMANIA 6-May-15 8.00% RUSSIA 27-Jun-16 5.00% RWANDA 5.00% SERBIA 19-Jan-11 5.00% SOUTH 2.50% SRI LANKA 14-Nov-18 6.00% TAIWAN 1-Jan-11 10.75% TAJIKISTAN 20-Mar-17 3.00% TANZANIA 21-Mar-17 8.00% TRINIDAD & TOBAGO 17.00% TUNISIA 1.00% TURKEY 13-Aug-18 8.00% UNITED STATES 27-Oct-16 10.00% URUGUAY 1-Apr-13 25.00% UZBEKISTAN 1-Sep-09 15.00% VENEZUELA 25-Oct-13 19.00% VIETNAM 1-Sep-11 3.00% WEST 16-Mar-17 3.00% ZAMBIA 21-Feb-18 5.00%
— Read on www.armstrongeconomics.com/international-news/europes-current-economy/us-bank-reserves-10-eu-bank-reserves-1/

Central Banks Looking at Creating Their Own Cryptocurrencies | Armstrong Economics

Posted on by johnbarleycorn12

The IMF has recommended that all Central banks should issue their own cryptocurrencies. Indeed, they are looking at using Block Chain to keep track of taxes and to enforce negative interest rates with cryptocurrencies which would allow them to impose negative interest rates whenever necessary. With adopting cryptocurrencies that governments would control, we will come one step closer to losing all our freedom. Central banks could enforce negative interest rates with cryptocurrencies and thus people would find their accounts just garnished. This technology is also causing those in hunt of tax revenues to lick their lips. The issuance of digital currencies would allow central banks to remain in control of the money supply far more so than they are today. Sweden is moving forward and there we see that the use of cash is rapidly disappearing. Cryptocurrency technology would allow also the taxman to just cometh and take whatever he desires in the midst of the economic crisis we face. The Central Banks would be able to maintain greater control over the creation of money through the process of leverage (bank lending). While policymakers in Canada have already researched the idea. The IMF head Christine Lagarde called on central banks to focus on issuing digital currencies. All of this attention is being applied as the fear of rising interest rates in the marketplace is really beyond the control of central banks. It is true that central banks can control the short-term rates, but long-term rates are established by the free market. This is why the Federal Reserves was buying in 30-years bonds hopefully to impact the long-term rates which the Fed cannot directly control.
— Read on www.armstrongeconomics.com/world-news/cryptocurrency/central-banks-looking-at-creating-their-own-cryptocurrencies/

Abu Dhabi file suit Against Goldman Sachs for Criminal Fraud | Armstrong Economics

Posted on by johnbarleycorn12

The real curious thing is that the Abu Dhabi sovereign wealth fund filed a lawsuit against Goldman Sachs precisely on the Pi Target Wednesday (Nov 21) for allegedly conspiring against the Middle Eastern fund to further a criminal scheme by Malaysia’s scandal-plagued 1MDB. So here we have the suit filed precisely on the Pi Target and precisely at the top of the ECM back in 2007, that is when Goldman Sachs sold ABACUS2007-ACI which was a $2 Billion Synthetic CDO. The SEC charged Goldman Sachs with fraud back in 2007 for that transaction, but of course, did nothing criminal because Goldman Sachs controls the SEC. Now the top adviser in the SEC is Alan Cohen who was head of Global Compliance and would have signed off on the Malaysian deal. Them, on the Pi Target from the previous 8.6-year wave, April 16th, 2010, that is when the SEC charged Goldman Sachs with fraud with regard to the ABACUS2007 product. Here we now have Abu Dhabi filing suit for criminal fraud against Goldman Sachs precisely on the Pi Target of November 21, 2018. We may FINALLY be witnessing the decline and fall of Goldman Sachs. Will do a more detailed report tomorrow – Black Friday.
— Read on www.armstrongeconomics.com/world-news/corruption/abu-dhabi-file-suit-against-goldman-sachs-for-criminal-fraud/

Goldman Sachs was luckier with the Greece fraud

Goldman Sachs v JP Morgan | Armstrong Economics

Posted on by johnbarleycorn12

QUESTION: You mentioned that Goldman Sachs can take down the entire banking sector. Do you see this correlating in the future? JF ANSWER: Here is Goldman Sachs and JP Morgan. The first thing you will notice is that JP Morgan has been in a REAL bull market. Goldman has not. I am a firm believer that the markets instinctively forecast major future trends if you know how to read them. Now, look at the arrays. They both are showing the major target as the 4th quarter of 2020. JP Morgan shows the 2nd quarter of 2019 as a turning point. Look at the pattern difference with Goldman Sachs. There is no question that Goldman will do whatever it takes to try to survive calling in every political marker possible. However, because of this Malaysia scandal is worldwide involving four countries, pulling this off is not going to be easy. Its huge fees that were 10x that of any other firm to do this deal smells of something wrong. I know brokers who were denied the right to even bid on this project. The bottom line is clear. Just go by the Reversals. Not even Goldman Sachs can overcome them.
— Read on www.armstrongeconomics.com/world-news/corruption/goldman-sachs-v-jp-morgan/

Goldman Sachs – Preparing for Waterfall Event? | Armstrong Economics

Posted on by johnbarleycorn12

The rumor mill has been hot concerning Malaysia and Goldman Sachs for the past two years. As it was turning into a criminal investigation Lyod Blankfein coincidently decided to step down at age 63. That was announced last March when he said he would step down by the end of the year. Then in July, Blankfein said his goodbyes. The London Financial News claimed it was an emotional departure. Was it really a coincidence that Blankfein stepped down which appeared to be running for the exit door and then within three months the news breaks that he was deeply involved in the corruption scandal in Malaysia. As Bloomberg wrote: “Years before Goldman Sachs Group Inc. arranged bond deals now at the heart of globe-spanning corruption probes, the firm’s then-CEO Lloyd Blankfein personally helped forge ties with Malaysia and its new sovereign wealth fund, according to people with knowledge of the matter.” It is interesting how those of us in the industry outside of Goldman Sachs have been waiting to see if the shoe will ever drop and the US Department of Justice will EVER do its job along with the SEC and CFTC. They have all been in the pocket of Goldman Sachs for quite some time. The share actually peaks intraday during March 2018 curiously when Blankfein announced he would leave at the end of the year. The highest monthly closing remains that of January 2018. Since then, the shares of Goldman Sachs have entered a decline and in the process, UNLIKE the Dow Jones Industrial Index, Goldman Sachs elected a Monthly Bearish Reversal. Now a monthly closing BELOW 215 will signal a Waterfall is unfolding with a drop back to 185 for starters. However, we have a Monthly Bearish Reversal at 220.25 and the lowest monthly closing has been 220.57. Clearly, this is hanging in there by the skin of its teeth. Last year’s closing was 253.15. A simple lower closing at year-end will warn that Goldman Sachs is in trouble. However, even a breach of last year’s low was 206.94 intraday will signal this stock is in SERIOUS trouble. A closing for 2018 below that number will technical warn that this is an outside reversal to the downside. This will signal a drop to the 165-185 zone becomes likely. The problem remains that Goldman Sachs has way too many people in strategic places to manipulate governments such as Alan Cohen who now serves as advisor to the Chairman of the SEC on emerging risks and regulatory developments, including the impact of Brexit, new European Union regulations (e.g. MiFID II), and issues related to domestic and international clearing and settlement of securities and derivatives transactions. Cohen was a board member at Goldman Sachs after joining the firm in 2004 as the Global Head of Compliance and a member of the management committee, where he supervised a global team that was responsible for compliance across all business and financial products, and in every major international market. That means that Cohen should have been in charge of the Malaysia agreements and as head of Global Compliance, he should have sounded the alarm over any bribes to foreign governments. Goldman Sachs has been long called on dealing desks – Government Sachs. With Cohen as part of the executive decision process in the SEC, this calls into question whether the SEC can even be trusted to conduct an honest investigation into the Malaysia affair no less Goldman Sachs. The Foreign Corrupt Practices Act of 1977 (FCPA) (15 U.S.C. § 78dd-1, et seq.) is a United States federal law known primarily for two of its main provisions: one that addresses accounting transparency requirements under the Securities Exchange Act of 1934 and another concerning bribery of foreign officials. The penalty is: (2)(A) Any natural person that is an officer, director, employee, or agent of a domestic concern, or stockholder acting on behalf of such domestic concern, who willfully violates subsection (a) or (i) of this section shall be fined not more than $100,000 or imprisoned not more than 5 years, or both. Prosecutions have taken place if you simply pay for a vacation for some official’s children to visit Disneyland. This act makes it criminal for any such offer, gift, payment, or promise. If Cohen remotely knew of the deal and took no action, that is 5 years in prison. The same is for Blankfein. Now considering that Goldman Sachs earned over $500 million as a fee, you can probably assume that ANYONE on the board knew the deal and what the fee was exceptionally many more times what was industry standard. Actually, I previously wrote back in 2015 about this Malaysian scandal which we all knew about behind the curtain and how it involved Goldman Sachs. In 2016 I wrote that the Federal Reserve was preparing an enforcement action against Goldman Sachs related to confidential government information that was leaked from the Fed to one of its bankers. I also wrote that Swiss prosecutors said they were helping the U.S. on the investigation. The Swiss also opened their own criminal proceedings in August 2015, against two former officials of the fund on a string of corruption charges. Their investigation has since been extended to other officials as well. It is really not a wonder why it has taken three years in the USA to even look at Goldman who has been viewed as walking on water. Don’t forget, it was Blankfein who once said that Goldman Sachs was doing “Gods work” here on Earth. If the prosecutors in Brooklyn really want to make a name for themselves, they have the key to allegedly unlock Goldman which may lead to the biggest political corruption case ever to have existed which just make the Rothschilds look like kindergarten. So stay alert. This could be far worse than anyone knows for the tentacles go everywhere and extremely deep even into the pockets of the Clinton Foundation. Trump himself better stay alert for this could be the key that might even ensure the decline and fall of the Democrats and the rise of third-party activity into 2024. The number of politicians who have been for sale around the world allegedly to Goldman Sachs may even be beyond count. Don’t forget, Goldman went as far as to instruct staff they were NOT ALLOWED to donate to Trump. Mueller was also on the paid-speaking circuit in recent years and paid by none other than Goldman Sachs. Hillary got $675,000 for three speeches at Goldman Sachs. It has been known that Hillary got $22 million in speaking fees that were all to buy “influence” in government. She has NEVER been prosecuted for obvious bribes.
— Read on www.armstrongeconomics.com/world-news/corruption/goldman-sachs-preparing-for-waterfall-event/

More of the same, no jail time for the upper crust. The laws are just for us little folks.