The numbers are in. Banking as indeed seen its peak. Banks in Europe and the US have dismissed 100,000 people last year, the bulk after 2015.75 . The decline is just starting. We are even witnessing the decline in bank employment now in China as well. The high flying jobs in banking have seen their best days. Young bankers use to brag which bank they worked for in New York trying to impress girls. Nowadays, they tend to be silent since bankers are up there in the unfavorable perception with politicians. The bankers have become the most hated profession the world – topping even politicians and physics, so that is saying a lot.

With the ECB expanding its quantitative easing program to include corporate debt, European companies are now scrambling to issue as much debt as they can as cheap rates. These issue are selling BECAUSE it is assumed they have a guaranteed bidder being the ECB. At least this part of the QE is far better than buying government paper. Ferrovial Emisiones SA of Spain sold bonds maturing in September 2022. Schaeffler AG of Germany is now looking to sell €2.8 billion euros of securities. The German household product manufacturer Henkel AG actually issued notes with negative yields, which is again the flood of cash trying to buy German paper as the hedge against the collapse of the euro. Things are heating up in Europe on the debt scene.

QUESTION: Why are there so many Fed branches? It seems this is another way for government just to create jobs and pensions.

ANSWER:I wrote several times that the original design of the Federal Reserve would have been a good, stabilizing entity for the economy had the politicians left it alone. At first, to ease recessions and “stimulate” the economy, the Fed only bought corporate paper to provide liquidity directly to the economy.

Then World War I came and this short-lived mechanism was altered. Congress ordered the Fed to buy only government bonds so they could fund the war. They never put that system back in place, so today Quantitative Easing no longer works because the Fed ONLY buys in government bonds from banks who never lend the money out. The Fed embarked on then buying in mortgaged backed securities, again, to help the banks get rid of real garbage. Once more, there was no direct stimulation, for the banks hoarded the cash by depositing it at the Fed in excess reserves.

The second structural change to the Fed came at the hand of Roosevelt, who used the Great Depression as his excuse. FDR usurped all the power to Washington, eliminating the very purpose of the Fed to manage the regional capital flows. Each branch of the Fed maintained an autonomous structure to balance out the regional capital flows, which are ignored today. That meant that each branch maintained its own interest rates to either deflect excess capital (lower rates) or attract capital when there was a shortage in that region (higher rates).

These two primary structural changes to the Federal Reserve have eliminated the government’s power to properly manage the economy. It also feeds the conspiracy theories, for at first the Fed was a private entity funded by the bankers, not taxpayers. So today, people cook up conspiracies because the Fed still has the shareholder structure, but has become a government controlled agency all because Congress made these two changes and never restored the Fed to its original purpose – to act as a rescue fund for banks in trouble WITHOUT taxpayer money. We have SPIC insurance where brokerage houses must pay in for that insurance, which was the same scheme originally designed for the Federal Reserve.

Margaret Thatcher was spot on when she warned that Britain would not join the Euro for the covert maneuvers behind the scenes was to create the federalization of Europe – their real dream to be the United States of Europe. Thatcher was betrayed by her own cabinet because some members also were dreaming to federalize Europe.

Most people have no idea that the idea of creating the euro actually took place back in 1985 and was proposed as well as supported by the the United States. The idea was put forth at the Plaza Accord when the birth of the G5 was established. The idea was that the dollar was too high and that its strength was because it had emerged as the only major world currency. The idea was born that if Europe created a single currency, there would be a rival to the dollar. This was really hatched in France. Germany saw this as a means to an end to expand its own exports throughout Europe by eliminating the currency risk for its manufacture base. Make no mistake, the United States wanted a strong euro to reduce the US trade deficit. The participating countries were USA, Germany, France, Britain, and Japan.

People are generally unfamiliar with the timeline and assume the euro only began in 1999. Margaret Thatcher’s historic speech known as the “The Bruges Speech” was delivered on September 20, 1988. It was at that stage she was taking the position against the federalization of Europe supported at the Plaza Accord just in 1985.

I wrote to the White House objective to this currency manipulation back in 1985. The White House responded disagreeing with our forecast. “The volatility of the exchange rate is also cited as evidence of disarray in international financial markets. We do not believe this to be the case.” The dollar had risen to historic highs in 1985 driving the pound to $1.03, which had been over $7 during the US civil war and $4.86 below World War I.

Nonetheless, the White House disagreed since we were the only people with such a model warning that volatility would rise if they embarked on such a path or coordinated manipulation of currency markets. I was flat outright told back then that nobody else had such a model and until others agreed with our forecast, they could not rely upon a single model. We can see that forcing the creation of the euro has not relieved the long-term bull market in the dollar. All it has done is set the stage for a massive dollar rally as more and more countries being to move to try to exit the EU.

Of course, the volatility has been an integral part of the FOREX markets. The earliest we see for a major monetary reform on par with the 1985 Plaza Accord will arrive in 2018.895 or Friday, Nov.  9,  2018.

We must keep in mind that everything must move to an extreme. In doing so, that is what creates the political reaction. Nothing will change without the chaos. As they say: If is ain’t broken, don’t fix it.