Financial Sitdowns Continue in DC

Today, Treasury Secretary Jack Lew will meet with G-20 Finance Ministers and Central Bank Governors to discuss, according to the Treasury, "measures to promote global growth" [i.e. to discuss coordinated money printing rates].

In the morning, Secretary Lew will also conduct a bilateral meeting with Chinese Finance Minister Lou Jiwei.

In the morning, Deputy Secretary Raskin will deliver remarks at the Global Connect Initiative at the World Bank.  This event will be livestreamed.

Following this event, Deputy Secretary Raskin will hold a bilateral meeting with Nigerian Finance Minister Kemi Adeosun

Later in the morning, the Secretary will host the Sixth Annual U.S.-India Economic and Financial Partnership at the Treasury Department.

In the afternoon, Secretary Lew will conduct a bilateral meeting with Japanese Deputy Prime Minister and Finance Minister Taro Aso.

In the evening, the Secretary will attend a G-20 working dinner on Global Economy and Growth Framework.

 -RW

Also see: MAJOR SITDOWN: The Global Financial Plotters are in Town

Assorted Criminals, Keynesians, Crazies and Other VIPs

The Milken Global Conference 2016 is scheduled to take place between May 1and May  4 in Los Angeles. It appears that there will be more than the usual security at the event this year. From the event website:

NEW SECURITY POLICY

We have implemented new security measures at the Beverly Hilton in the interest of improving conference and guest security. 

Access to the Beverly Hilton will only be available to pre-registered conference participants and their guests who present their Global Conference credentials (photo ID badge).

All participants will be required to pre-register and receive a Global Conference credential (photo ID badge) before they access the Hilton. (See credential pick-up details here).

Non-conference attendees will be required to have a Global Conference credential (photo ID badge) in order to access the hotel premises. Guests and Visitors must be pre-approved and pre-registered before receiving a Global Conference credential.

When entering and exiting the Beverly Hilton, your Global Conference credentials (photo ID badge) will be verified with security and scanned at all entrances.
Global Conference credentials must be displayed at all times.

Of the 700 speakers scheduled to speak during the 4-day event, EPJ readers may find noteworthy that the below are among the cast of characters that will speak:

Tyler Cowen

Professor of Economics, George Mason University

Wesley Clark

Chairman and CEO, Wesley K. Clark & Associates; Army General (Ret.) and Former Supreme Allied Commander, NATO

Mohamed El-Erian
Chief Economic Advisor, Allianz; Chair,President’s Global Development Council

Niall Ferguson
Laurence A. Tisch Professor of History, Harvard University; Senior Fellow, Hoover Institution, Stanford University

Jason Furman
Chairman, White House Council of Economic Advisors

Al Gore
Chairman, Generation Investment Management; Former U.S. Vice President

Alan Krueger
Bendheim Professor of Economics and Public Affairs, Princeton University; Former Chairman, White House Council of Economic Advisers

Justin Rockefeller

Global Director, Family Offices and Foundations, Addepar; Co-Founder, the ImPact

Nouriel Roubini

Chairman, Roubini Global Economics; Professor of Economics, Stern School of Business, New York University

David Rubenstein

Co-Founder and Co-CEO, The Carlyle Group

David M. Solomon

Co-Head, Investment Banking Division, Goldman Sachs

Darren Walker

President, Ford Foundation

Dow, S&P; to New Highs for the Year

Oh yeah, I'm sure the Austrian-lites are correct and that any day the Fed is going to reverse its December rate hike and move toward negative rates. Not.

The DJIA rose 1.1% to its highest closing level since Nov. 6. The S&P 500's 1% gain pushed it to its highest closing level since Dec. 4. The two indexes are now 2.2% and 2.3%, respectively, from their all-time highs.

There are not going to be any rate cuts anytime soon.We are in the boom phase of the Fed-created boom-bust cycle. More than likely, the indexes will break to new all-time record highs.

With interest rates climbing, not falling.

-RW

How Wealthy Are the Elite? Harvard Just Raised $6.5 Billion (More Than 2 Years Ahead of Plan)

Harvard has raised at least $6.5 billion in its capital campaign, breaking a higher education fundraising record after only two and half years of its planned five year-long public drive, reports the Harvard Crimson.

With $6.5 billion raised, Harvard has surpassed its public goal and Stanford’s $6.2 billion capital campaign, which ended in late 2011 and set a higher education record.

Harvard also has a $37.6 billion endowment.

-RW

The Great Nobel Prize Committee Error: Frisch Over Mises

By Karl-Friedrich Israel

In my first semester as a major in economics at Humboldt University in Berlin back in 2008, I attended a lecture on Nobel Prize winning economists by one of my professors. Another student in the audience asked him whether there were any economists who would have deserved a Nobel Prize, but never got one. His answer was close to the following: “John Maynard Keynes would have almost certainly received the prize, but he did not live long enough for that to happen. Among the economists who potentially could have won the Nobel, but didn’t, I think it is Ludwig von Mises who would have deserved it for his life’s work.”

Most Austrian economists would certainly agree. In fact, Mises died on October 10, 1973, which would, with a bit of good luck, have made five opportunities to win the prize, namely each October from 1969 to 1973.1Interestingly, Hayek won the prize just one year later in 1974 explicitly for his early works on monetary theory and economic fluctuations, which essentially were elaborations on Misesian business cycle theory. Murray Rothbard, who praised Hayek for his numerous contributions to economics and other disciplines, called the Nobel committee’s decision “ironic”:

Ironic because if anyone deserved the Nobel Prize more than Hayek, it was clearly his mentor, Ludwig von Mises. Those of us given to cynical speculation might judge that the Nobel Prize Committee of Sweden deliberately held off the award until Mises’s death, for otherwise they would have had to give the award to someone they considered impossibly dogmatic and reactionary.

We cannot know what the committee’s reasons and motivations were behind awarding the prize in 1974 to Hayek, but it is obvious that Hayek, as a free market economist, was the exception among the first recipients. Mises would have been too, and possibly more so. All other recipients prior to Hayek, and also Gunnar Myrdal who won the prize jointly with Hayek, were advocates of economic planning, and had to a greater or lesser degree contributed to the transformation of economics into a quantitative-mathematical discipline designed after the natural sciences.

A case in point is the first recipient of the Nobel Prize in 1969, Norwegian economist Ragnar Frisch (1895–1973) — the first economist chosen over Mises.2 Frisch has been called

VC Peter Thiel Says Just About Everything Is Overvalued, Not Just Tech

Peter Thiel, the venture capitalist who co-founded PayPal and was the first outside investor in Facebook, doesn’t think the technology sector is in a bubble, but he’s looking to diversify some investments anyway, reports Bloomberg.

“Startup tech stocks may be overvalued, but so are public equities, so are houses, so are government bonds,” said Thiel, speaking Tuesday at the LendIt USA Conference in San Francisco. “Silicon Valley is quite far from it. If the bubble is in cash, illiquid startup investments may be a place to hide.”

Thiel is correct when he says the US is in a broad-based bubble. The economy, thanks to Fed money pumping, is in a major boom phase. But Thiel is wrong to think the technology sector is not in a bubble phase and it is positively insane to think  illiquid startup investments are a safe investment for when the overall bubble burts.

To the degree there is a "bubble in cash," you protect yourself by holding assets such as gold and silver that will perform well during any flight from cash.

When the Fed-induced capital flow bubble bursts, though, the last place you want to be is in an illiquid Silicon Valley startup-----that is all about Fed money pumping.

-RW

CRIMINAL Former US State Department Official to Buy Ukraine's Largest Telecom Company

By Robert Wenzel

This is just about as insane and open of an inside look, as to how  US empire operators grab the spoils of their interventions that result in turmoil, that you are ever likely to get.

As is clear, the US played an important role in the Ukrainian revolution as revealed by the release of a recording of a phone call between Assistant US Secretary of State Victoria Nuland and U.S. Ambassador to the Ukraine Geoffrey Pyatt (SEE: An Important Second Listen to the "F--k the EU" Ukraine Recording).

But, Nuland isn't the only US State Department official playing a major role in Ukraine.

A US citizen, the Elmhurst, Illinois-born Natalie Jaresko, obtained a second citizenship (Ukrainian)  on  December 2, 2014, the day of, get this, her appointment as Minister of Finance of Ukraine.

Natalie Jaresko

Prior to Jaresko becoming Ukraine's finance minister, she, according to Wikipedia:

....held several economics-related positions at the US Department of State in Washington, D.C., and eventually coordinated activities of the State Department, the Departments of Commerce, Treasury, the United States Trade Representative, and Overseas Private Investment Corporation (OPIC) in their economic relations with the Soviet Union and its successors. As part of her work she interacted with the International Monetary Fund, World Bank, and the European Bank for Reconstruction and Development. Later from 1992 to 1995, she was the first Chief of the Economic Section of the U.S. Embassy in Ukraine, responsible for strengthening economic cooperation between the two countries.[8] In 2003 she was awarded the Ukrainian Order of Princess Olga for her contributions to the Ukrainian economy. 

Between 2005 and 2010 Jaresko was a member of President Viktor Yushchenko's Foreign Investors Advisory Council and the Advisory Board of the Ukrainian Center for Promotion of Foreign Investment under the auspices of the Cabinet of Ministers of Ukraine.

So what is Jaresko up to as finance minister of Ukraine?

She is about to take control, for herself, of Datagroup, the Ukraine telecom company that controls 85% of the Ukranian telecom market.

Datagroup is owned by Oleksandr Kardakov but his personal empire has collapsed due to foreign currency loan debt.

Foreign loan debt is an old muscle trick of economic hit men (SEE John Perkins, Confessions of an Economic Hit Man). Banksters and international global financial organizations (think the World Bank) load up third-world governments with debt that can't possibly be repaid and they go in to pick off the juicy meat when the third-world governments can't make the debt payments.

The loans to Kardakov were a spin-off on the basic maneuver. With Nuland fomenting revolution and turmoil in Ukraine, the Ukranian currency, the hryvnia, has collapsed on foreign exchange markets.

This has made it impossible for Kardakov to pay off his US dollar-denominated loans.

Enter Jaresko.

Ukraine Today reports:

In late February, the company began its liquidation procedure. The company's other major asset - 'Datagroup' telecom operator - may soon be sold out to pay off debts. It may be purchased by its current minority shareholder - investment company 'Horizon Capital', co-founded by Ukraine's current Finance Minister Natalie Jaresko.

 Robert Wenzel is Editor & Publisher at EconomicPolicyJournal.com and at Target Liberty. He is also author of The Fed Flunks: My Speech at the New York Federal Reserve Bank. Follow him on twitter:@wenzeleconomics

CFTC Commissioner on the Potential for Blockchain Technology

CFTC Commissioner J. Christopher Giancarlo recently delivered remarks on the blockchain, that is, the distributed ledger that is at the epicenter of Bitcoin.

I have long argued that, although the future for Bitcoin itself is somewhere between extremely limited and zero, that is not the case for the blockchain.

The blockchain has significant potential in finance and beyond.

Giancarlo does an excellent job in his speech of explaining how the blockchain could be used in finance. If you wanted to get an overview of how the blockchain can work in finance, this is the speech to read.

A couple of cautionary notes: Giancarlo is a regulator so he does look at the blockchain through the glasses of a regulator. I would advise that those examining the speech look beyond the questionable need for government to monitor financial transactions that is part of his theme and simply attempt put focus on his explanation of  how the blockchain could be used to record transactions and how such would of benefit to the private sector.

Also, of note, out of nowhere, Giancarlo states in the speech:

A recent report by Citigroup forecasts that retail banking automation including blockchain could spur a 30 percent decline in banking jobs across the U.S. and Europe over the next decade, the equivalent of eliminating nearly 2 million jobs.

He makes this remark with the seeming hidden implication that this is somehow a negative. The world changes, job opportunities change, until we are back in the Garden of Eden, there will always be job opportunities (though where the opportunities are in the economy may change over time). It is an internal contradiction to think a job loss means no other job opportunities.

The speech is here,

-RW

MAJOR SITDOWN: The Global Financial Plotters are in Town

Zhou Xiaochuan

So there is a rumor circulating that some kind of deal was made, at the late February G20 meeting in Shanghai, to weaken the dollar to help out the Chinese economy, and who does US Treasury Secretary Jack Lew have a meeting with first, as global financial officials fly into Washington DC for the Committee for Economic Development’s Spring Conference?

 People’s Bank of China Governor Zhou Xiaochuan.

This afternoon,  Secretary Lew will conduct a bilateral meeting with Zhou.

Also in the afternoon, Deputy Treasury Secretary Raskin will deliver welcome remarks at the Conference.

In the evening, Secretary Lew will conduct a bilateral meeting with French Finance Minister Michel Sapin.

-RW

SF Fed President Addresses the Speculation That a "Shanghai Accord" Was Reached at the Recent G20 Meeting

On Tuesday, a keynote speaker at the LendIt conference in San Francisco was San Francisco Federal Reserve president John Williams.

Williams is a particularly important member of the Federal Reserve to monitor, not because he is a driver of Fed monetary policy, but because he worked, for 6 years, under current Federal Reserve chair Janet Yellen, when she was president of the SF Fed. He appears to remain close to her and tends to reflect her thinking when he comments publicly.

Following his formal remarks, I took the opportunity to ask about the seeming switch in policy thinking where Fed members appear to have become more dovish (SEE: Is This Fed President An Idiot? Read These Two Headlines And Decide ) and ask him aboout the speculation that a "Shanghai Accord" was reached  by top financial officials  to help out China by driving the US dollar lower against the yen and the euro (SEE:Has a Secret International Deal Been Made to Drive the Price of the US Dollar Down?), when they met for the G20 meetings in Shanghai

My questions and his responses are below (From 11:33 to 16:00) 

-RW

Silicon Valley Financier: The Department of Education is the Country's Largest Predatory Lender

The LendIt conference is going on this week in San Francisco. Today, among the featured speakers was Mike Cagney, CEO, Chairman & Co-Founder of SoFi.

He is also co-founder and a managing member of Cabezon Investment Group, a global macro hedge fund, and non-executive Chairman of ReFlow. Before Cabezon, Cagney founded, was CEO and then Vice Chairman and Chief Architect of Finaplex, a leader in wealth management software that was sold to Broadridge. Prior to Finaplex, Mike was Senior Vice President and head trader for the proprietary trading and financial products group at Wells Fargo Bank.

He told the conference that he considers a predatory lender one who pushes a loan on someone where it does not make sense for the borrower to take out the loan based on the economics of the situation.

He called the Department of Education, with its student loan guarantees, the greatest predatory lender in the country,

He said that of the $1.3 trillion in student loans outstanding, only $300 billion of the paper could be refinanced. He said the rest of the loans are to those still in school or junk.

But in the end, he is a technocrat and mumbled something about his plan to reformulate the government-backed loan program. As though, for some undisclosed reason, free market education was not even a possibility.

These Silicon Valley guys generally get part of the problem---because they are smart. But don't be fooled into thinking they understand free markets.

To a financial engineer, just like most other engineers, engineering solutions seem to be the only solution---that's central planning.

  -RW

About That Wise-Ass Email I Sent You

An EPJ Daily Alert subscriber emails:

Hey Robert,

Last month I emailed you a wise-ass email (redundant?) anyhow,

I busted yer balls because your portfolio was DOWN. Well, hell, I knew
that that was part of the strategy, but I couldn't resist.

So at that time, while I was busting yer balls, I also picked up your
latest tip for my portfolio.

Well, we know that your predictions are coming to fruition, and I am
profiting quite well, thanks.

My rationale was: hey, he's GOTTA be smarter than me! So true.

Anyhow, thanks, and best to ya.

Capn mike

As far as buying a stock when it is going down as part of my strategy, he is referring to this, which I have recently started sending out to new EPJ Daily Alert subscribers as part of the welcome package:

Insanity Squared: Union That Agitated for $15 Minimum Wage Wants to Be Exempt From It

Unions have spent big championing a $15 minimum wage.

So now that California and New York are on their way to a $15 minimum, what is its next union move?

An exemption from the new higher minimum wage.

The Guardian reports:

Los Angeles city council will hear a proposal on Tuesday to exempt union members from a $15 an hour minimum wage that the unions themselves have spent years fighting for.

The proposal for the exemption was first introduced last year, after the Los Angeles city council passed a bill that would see the city’s minimum wage increase to $15 by 2020. After drawing criticism last year, the proposed amendment was put on hold but is now up for consideration once again...

The amendment was originally proposed by Rusty Hicks, executive secretary-treasurer of the Los Angeles County Federation of Labor, AFL-CIO. AFL-CIO is the largest federation of labor unions in the US, with about 12.5 million members. Hicks is also the co-convener of the Campaign to Raise the Wage.

At the time of its passage, Hicks lauded the $15 minimum wage.

“We are one step closer to making history in Los Angeles by adopting a comprehensive minimum wage policy that will change the lives of hundreds of thousands of hard-working Angelenos,” said Hicks. “The city council’s action today creates a path for workers to succeed and gives our economy the boost it needs to grow.”

If an object lesson was needed to point to the fundamental economic fact that a higher minimum wage causes unemployment and that union advocacy of high minimum wage laws is all about blocking non-union members from gaining jobs, this is it.

If it was possible to simply raise minimum wages by law, unions wouldn't be calling for exemptions now. Wages are set by supply and demand. This is economics 101. Union leaders at some level understand this. They also know that a high minimum wage, with a union exemption, blocks non-union workers from competing for union jobs---and keeps the union coffers filled with dues from members who can't get work without the union exemption.

It's crony union activity, surrounded by nonsense Marxist labor slogan camouflage that confuses the workers.

-RW

Major Surprise Changes Coming to US Currency

By Robert Wenzel

For some time now, the reports have been that the US Treasury was going to replace Alexander Hamilton on the $10 bill with the portrait of a woman.

That resulted in uproar from the statists in the financial sector who consider Hamilton their hero.

The statist eruption was led by Ben Bernanke.

He wrote:

I must admit I was appalled to hear of Treasury Secretary Jack Lew's decision last week to demote Alexander Hamilton from his featured position on the ten dollar bill. My reaction has been widely shared, see for example here, here, here, here, and here. 

Hamilton, the first Secretary of the Treasury, would qualify as among the greatest of our founders for his contributions to achieving American independence and creating the Constitution alone. In addition to those accomplishments, however, Hamilton was without doubt the best and most foresighted economic policymaker in U.S. history.

But make no mistake, Hamilton's "foresighted economic policy" was pure statist.

Thomas DiLorenzo informs:

The current economic crisis is the inevitable consequence of what I call Hamilton’s Curse in my new book of that name. It is the legacy of Alexander Hamilton and his political, economic, and constitutional philosophy. As George Will once wrote, Americans are fond of quoting Jefferson, but we live in Hamilton’s country.

The great debate between Hamilton and Jefferson over the purpose of government, which animates American politics to this day, was very much about economic policy. Hamilton was a compulsive statist who wanted to bring the corrupt British mercantilist system — the very system the American Revolution was fought to escape from — to America. He fought fiercely for his program of corporate welfare, protectionist tariffs, public debt, pervasive taxation, and a central bank run by politicians and their appointees out of the nation’s capital....

Hamilton complained to George Washington that "we need a government of more energy" and expressed disgust over "an excessive concern for liberty in public men"...

Hamilton was neither the inventor of capitalism in America nor "the prophet of the capitalist revolution in America," as biographer Ron Chernow ludicrously asserts. He was the instigator of "crony capitalism," or government primarily for the benefit of the well-connected business class. Far from advocating capitalism, Hamilton was "befogged in the mists of mercantilism" according to the great late nineteenth century sociologist William Graham Sumner....

When Hamilton and George Washington led some 15,000 conscripts into Pennsylvania to enforce the hated whiskey tax, the purpose was not only to collect the tax and reassure bondholders, but also to send a message to any future tax resisters....

James Madison remarked that this episode revealed Hamilton’s agenda of "the glories of a United States woven together by a system of tax collectors."

In other words, it would be an upgrade for the currency if  even Bernie Madoff were to replace Hamilton on the Ten.

That said, it appears that something much more horrific is about to be announced.

Lew, stuck between mad politically correct non-make-up wearing, short-haired females and mad statist financial criminals, is about to go full circus. During a recent interview with Kai Ryssdal of MarketPlace, the following exchange took place::

Lew: We’re doing something bigger than just one face on one bill and we’re going to be looking at a whole series of bills: the $5 bill, the $10 bill, the $20 bill. And we’re looking at how to use the front and the back of the bill to tell stories, and it is going to be a little bigger than people think because they kind of focus on the one piece of it. But stay tuned we’re going to have an interesting announcement.

Ryssdal: Soon? Soon? Can you say?

Lew: Yeah, very soon.

 Robert Wenzel is Editor & Publisher at EconomicPolicyJournal.com and at Target Liberty. He is also author of The Fed Flunks: My Speech at the New York Federal Reserve Bank. Follow him on twitter:@wenzeleconomics

Jack Lew: The Empire is in Charge and Will Stay in Charge

US Treasury Secretary Jack Lew spoke to Kai Ryssdal of MarketPlace recently and made clear that the US expects to remain the Big Dog in the economic and financial room. The US will let China and other emerging countries "sit at the table," but only if they play by the rules already put in place by the Big Dog:

So I don’t think that there’s anyone on the horizon to take the place of the United States, either in terms of our economic position or in terms of the dollar as the reserve currency. Clearly, there are different forces at work in the economy today than there were in 1944, when half the world, most of the world, was coming out of a war where it had no manufacturing capacity, it had no hard currency, and we were the place with both manufacturing capacity and hard currency. I think now we’re in a world where population growth and economic growth is taking place in the countries that we’ve called the emerging economies. We’re making sure that they take seats at the table, adhere to the rules that we adhere to when you have a seat at the table, and that as we make decisions in the future, we have a very strong voice in what all the rules of the road in the future are.That’s the way for the United States to maintain its power.

Lew was remarkably clear that the US would use muscle if China got out of line:

 We’ve seen this in the world of currency, where for years there has been a huge focus on was China doing things to gain unfair advantage? They now stand up and say they oppose competitive devaluation, that they will not, they don’t see a need for the depreciation of their currency.  That’s very different from just a few years ago. Does that mean we take our eye away? No. We’re going to watch very carefully. If we don’t see actions consistent with those words we will keep the pressure on them.

-RW

State Taxes and Flight

As a follow up to my post, New Jersey: It Used to Smell, Now It Just Stinks, Tim Wangelin emails:

 About your posts today about David Tepper and the New Jersey taxes, California, especially after Prop 30, has the highest marginal rate in the country. Is there an exodus from California? Why are there so many high-income, high-profile, people living in California? Are people are willing to pay a premium to live in California or can effective California state tax rates be lower than the specified rates? I have been curious about this for the past couple years.

The effective tax rates in California and New Jersey are not much different from the nominal rates.

There has been and continues to be an exodus from both New Jersey and California. With regard to California, see, for example:The Great California Exodus: A Closer Look.

It's always dangerous though to think in terms of aggregates. Change often happens at the margins. In the case of high taxes, it will cause some people out but not necessarily all. Depending upon the severity of the taxes, some may stay becasue they have relatives in the area or a great many friends in the area. They may stay becasue they have jobs that would be difficult to replace in another geographic location. A business owner might have the type of business that is difficult to relocate, etc.

That said, the more oppressive the taxes, the more value scales tilt in favor of leaving.

In places where things are extremely oppressive, not necessarily in terms of taxes but overall oppressive, lots of people will leave, see Syria and Libya.

 -RW

NEW Global Monetary Policy Tracker

Benn Steil, Senior Fellow and Director of International Economics at the Council on Foreign Relations, emails:

Dear Mr. Wenzel,

Emma Smith and I have created a new web-based tool for tracking monetary policy developments around the world.

The CFR Global Monetary Policy Tracker is an innovative visual interactive that allows you to see quickly and easily what the world’s central banks are doing at any point in time, individually and in aggregate. All on one screen.

Who is tightening policy? Who is loosening policy? And what is the policy stance of the world as a whole? Just look at the color-coded map!  You can also find inflation, growth, and other data just by tapping or mousing over individual countries.

We trust you’ll find the Tracker both informative and enjoyable

.

All best regards,

Benn Steil