Reliable sources are reporting that the European member states are going to rush out debt to try to lock in the low-interest rates before they start to rise and the ECB is still buying very aggressively. We are likely to see new issues of debt to increase before the ECB stops buying

Mario Draghi said the euro-area economy is strong enough to overcome increased risk,  and therefore this justifies the European Central Bank’s decision to end bond purchases bringing to an end a decade-long failed experiment. The truth behind this statement is starkly different than being portrayed in the press. Draghi also pledged to keep interest rates unchanged at current record lows until his personal term is finished next year. There is the contradiction for if the ECB stops buying debt, who will do so at artificially low rates of interest?

Draghi knows full well that he has utterly destroyed the bond markets in Europe. The ECB has also made it clear that they will REINVEST when the bonds previously purchased mature. The Federal Reserves has taken the opposite position and will NOT reinvest allowing their balance sheet to shrink.

If the economy is that strong, then why not end the QE right now? The fallacy here is that this has nothing to do with the economy. The ECB has simply had the member states on life-support. Interest rates will soar in Europe on long-term debt or there will be no buyers. Pension funds cannot buy 10-year bonds at even 3% when they need 8% to cover liabilities.

The statement by Draghi is creating a total paradox. You cannot keep short-term interest rates where they are and charge negative rates for deposits and simultaneously end QE and expect to sell bonds to the public at insanely low levels.

The press interprets this as the ECB with ending QE because they are “betting that the euro-area economy is robust enough to ride out an apparent slowdown amid risks including U.S. trade tariffs and nervousness that Italy’s populist government will spark another financial crisis” reported Bloomberg. What is seriously omitted here is that the member states will be UNABLE to sell long-term debt at these low levels to the private sector and the free market will send rates higher. This means that the states will have to then raise taxes to stay within the EU criteria and that will further suppress the European economy.

We are simply at the end of the road of this complete insanity. So buckle up. Get ready for the ride of a lifetime and make sure you keep your hands and feet safely inside the vehicle. Is the ECB risking a total collapse in public confidence when they discover you cannot keep rates artificially low and end QE simultaneously

May was an important turning point in Southeast Asia. The corruption that has engulfed the previous Malaysian government centered around a sovereign wealth fund involving Goldman Sachs has rocked the entire Malaysian peninsula. The national debt, which was believed to have been $170 billion, appears to be more like $250 billion of 80% if the national GDP.

Prime Minister Mahathir Mohamad was sworn in on May 10th. When his aides first entered the government offices, they were confronted with a shocking sight. There were garbage bags filled with shredded documents intermixed with left-over food half eaten thrown everywhere. It was clear, the previous government sought to destroy all the evidence of their corruption.

The new finance minister discovered computers that even the highest-ranking bureaucrats could not access. Computers were set up to prevent access by anyone other than one or two people. Evidence of massive corruption was what turned the election on May 9th, 2018.

Goldman Sachs’ role, I wrote back in 2015, has been highly criticized in the Malaysian media and political circles after it emerged that 1MDB sovereign wealth fund paid hundreds of millions of dollars to the bank for helping it raise $6.5 billion in three bond deals in 2012 and 2013. Goldman Sachs earned around $590 million in fees plus commissions and expenses from underwriting the bonds, according to Reuters. The reported fees are highly excessive, nearing 10% when such fees are typically only 1% in bond underwriting.

There is now talk about filing suit against Goldman Sachs for its role in this scandal. The likelihood of filing a lawsuit against them in New York City being successful is probably zero. They will have to deal with the most corrupt court perhaps in the world that is notorious for protecting its local banks – Southern District of New York and the Second Circuit. My recommendation is to petition the Supreme Court to bring the suit in Washington DC that they will NEVER receiver a fair trial in New York City and they should get on the phone to Donald Trump to start applying political pressure

The State of New Jersey just keeps making it more expensive to operate a business in the state. New Jersey has now become the 10th state to adopt mandatory paid sick leave. It goes into effect on October 29, 2018. Giving sick leave to employees has been generally a standard in America. What these new regulations do is go much further. All employees, whether temporary, part-time, full-time, salaried, hourly or paid on commission, must now accrue one hour of sick leave for every 30 hours worked. Employers may cap an employee’s sick leave accrual and use at 40 hours per benefit year.

The crazy thing is hiring a temp worker because someone else is out sick or on maternity leave now involves given such a person also gets sick leave benefits. Then the employer and employee may mutually agree to a payout in the final month of the benefit year of 50% or 100% of the employee’s unused sick time. If unused time is paid out in full, carryover is not required. If 50% is paid out, the remaining 50% will carry over. If the employee does not want to be paid out, or the employer chooses not to offer this option, all unused time will carry over up to 40 hours.
Employers may grant sick leave up front in a lump sum. When using the lump sum method, employers may either pay employees for unused sick leave at the end of the calendar year or allow carryover. With lump sum plans, whether to pay out or allow carryover is the employer’s choice – the agreement of the employee is not required. In no case will time be forfeit, unless it is in excess of the carryover limit of 40 hours.

This is now extending benefits to people who are not regular employees. Retail stores hire workers just for the Christmas season. That means they will need to account for sick leave and carry this over if the person returns for a temporary job in the future year? The accounting this imposes on small business is just insane. Of course, politicians want to pretend to be caring for the people when in fact they may be reducing job opportunities for them in the end. Automated registers are showing up everywhere. A grocery store to Home Depot have registers you scan in your own purchases, pay, and leave. The more regulations, the more we will see auto-registers expand into many retail operations to solve the rising regulation and costs.

And they wonder Why New Jersey is #2 State behind NYC with net-migration leaving and business as well?

QUESTION: Mr. Armstrong; You have mentioned that when money was gold and silver in ancient times, there was the problem of shaving the genuine coins as well as counterfeiting them. I have seen counterfeit shield for US fractional money during the 19th century, where there examples such as that to distinguish genuine from counterfeit coins?

PS Your site is fascinating. The wide range of subjects covered is real food for the mind.

Cheers

PY

ANSWER: No, there were no examples as was the case with the counterfeit shields that were produced and sent to the banks in the United States.

What has survived are commercial weights such as this one from our collection in the shape of an amphora from ancient Athens. This is rather heavy weighing 319.50 grams so it was not used for coins, but a standard weight in commercial transactions.

Above is an Exagium, which is to weight and verify coins. The was the weight of a gold solidus so one would test the coin against this weight.

The Greek banks tended to put test cuts directly into the coin to ensure it was real. It is common to see this type of test cut deep into the Athenian silver Tetradrachms. In Contrast, the even ancient bankers relative to the Athenians more than 200 years before would place a stamp on the edge of the coin of that banker. Here is a coin from Lydia who nine banking marks showing the coin saw a lot of circulation.

The Roman bankers used a different method. Instead of cutting the coins the bankers would us a test punch mark. Some appear to have been more elaborate and the punch mark was probably their initials so they knew they tested the coin previously.

By the Middle Ages, this problem of dealing with counterfeit gold and silver coins is what began banking. You would deposit your coins in the bank and then this began gyro banking. You would effectively write a check transferring money from your account to another. There was no testing of every single coin to complete the transaction.

This was the real impetus behind banking to reemerge after the Dark Ages