My summary answer to this question is “no”. The debate spurring my remarks here, which is presently raging in the Fed-skeptic/hard money camp, has splintered into the “austere Fed” vs. “profligate Fed” sub-camps. There are assumed to be important practical ramifications of the answer to this question regarding investing, trading, and the health of the economy. And there are. However there is a major problem with each side’s position: the austerity camp, which argues that “the Fed is shrinking the monetary base” is correct, but only about a different (and as I’ll argue, narrower) question than the one posed above. And the profligate Fed side, with its “the Fed is pumping inflation” argument (often pointing to M3) is generally right — but for the wrong reasons.I will argue here that the Fed is in fact (or almost certainly) adding more credit to the system — which is just what most hard-money cynics would expect — but is not doing so in any way the monetary aggregate-watchers would tend to see. Here’s why.
In watching the Fed, WSEers, especially my colleague Lee Adler, have focused on the lower monetary aggregates, and have pointed out that the Fed has actually been “subtracting liquidity” (viewed through that lens). In a recent article, Gary North makes essentially the same point, leaving little room indeed for debate on whether M1 and connected monetary aggregates are decreasing. To round out the group, I should mention that Mish has also in the past few months pointed out that his M’ — an M1 modified essentially to add back in banking shenanigans called “sweeps” — has also crested and taken a turn south. One important upshot of this is that we are likely headed for a recession, if we’re not there already (I’d say we are).
I think most readers here can agree on that. But the other big reason for looking at these monetary aggregates is to try to figure out if deflation or inflation is headed our way; what is going to happen to the banking system; and how to invest one’s wealth to safeguard it in such tumultous times. And I think some incorrect normative conclusions are being derived by both sides.
By now I agree with North, Adler, Mish et al., that M1 and other related low money aggregates are decreasing. The big spike in August examined in North’s article is comprehensible as a large initial increase in repos to big banks, followed by massive sales of Treasuries to small investors (echoing the discussion amongst WSE/stoolers of buying Treasuries as a flight to safety) — perhaps in a conscious effort by the Fed to impose austerity (but probably not).
But the key element I see missing from the debate of recent weeks is discussion of what the Fed is really doing with respect to the deeper meaning of “liquidity.”
While as an Austrian-leaning monetarist I certainly see the monetary base as important, liquidity is more than just “money”. It is also credit (if you want to be nitpicky, all money is really just a form of credit — the question is just what the terms of the note are, and what it may be tendered for). Liquidity is technically “the ability to transact”, which is fostered not only by what one thinks of traditionally as “money”, but also by other forms of credit (such as margin loans) and “insurance” (such as credit default or interest rate derivatives).
When one expands one’s notion of credit, it is possible to see a very different reality than one might presume from looking at just the monetary base. I contend the Fed isn’t “exercising restraint” at all; it is expanding credit in the system dramatically, in ways that are very difficult to measure and track (this may not be so unintentional). It also doesn’t necessarily imply net inflation or deflation in the near term one way or the other — I still say we’re having both, in different segments of the economy.
Of course, given that the Fed is open about its intent to “preserve liquidity”, it should be pretty obvious that they are providing that liquidity somehow — and that is with more credit, not less. Liquidity can only be increased in three ways: more counterparties (market participants), better market systems (technology), and credit. I know which one the Fed controls directly.
First, a comment on the funds rate drop in specific. Naively, one would assume a lower interest rate means net inflation (growth in the monetary base). But what North et al. don’t mention is that a lower statutory funds rate does mean that international arbitrage moves against the dollar — flight elsewhere for those delicious basis points. This is why, after Bernanke made his .5% rate cut, the long bond yields jumped! Offers were having to go higher (or lower price to par) to attract the same foreign bidders. This was predictable.
So despite what one might naively conclude after noting the monetary base has declined, being in short-term dollars (cash or notes) was not the best play here — and being in long USD bonds was even worse! North doesn’t mention this, and neither have most others I’ve read. But it seems pretty important to me.
So that’s one reason to be careful with how you act on the insight that the “Fed is contracting the monetary base.”
Now back to the point on credit.
A general remark on that subject, relevant here (but also relevant in general when talking about the Fed’s open market transactions), is that, while it does technically mean “money has disappeared”, the Fed selling Treasures doesn’t really mean that “credit has disappeared” at all! This is because Treasuries are almost universally acceptable as collateral! For example, rather than posting $10k in cash to my margin account, I can put up a $10k Treasury bond, for the exact same effect! In fact — there’s actually an incentive to do this, because it adds the bond yield to my total returns! So anyone speculating on margin would be stupid not to do this (if they had the means).
Somehow I don’t think the money center banks (such as Goldman), whom are now hyper-traders, have missed this fact. You’d better believe they double over laughing when the Fed “removes money” from the system. It doesn’t matta to them. The Fed’s pithy open market operations withdrawing money now are at best akin to parents suddenly attempting to control an unruly adolescent who has gotten their way their whole life — not likely to succeed in bringing about the desired effect.
Immediate consequences? The stock market goes Weimar. Think about it. For all the very public housing market-related and consumer-spending-related hits to the market, its still up for the year! North, and others making similar arguments, don’t explain how this could be happening otherwise, given the alleged monetary base decline, plus all the news of the credit crunch!
So these open market transactions and their impact on monetary base have to be taken with a huge grain of salt.
The coup de grace, however, is found in other Fed machinations. My nitpick and refrain for well over the past year has been “reserve requirements matter (big time)”. As most analysts acknowledge, but forget all too easily, reserve requirements (not interest rates) are the main lever available to the Fed for controlling the amount of credit in the financial system. The reserve ratio and other rules bearing on the quantity of reserves effectively control the “money multiplier” in a fractional reserve banking system such as ours. Lower reserve requirements allow more credit to be created — of all sorts. Reserves are the floodgates of the fiat money/credit system.
With this in mind, those generally suspicious of the Fed might not be surprised to find out that the Bernanke bunch is busy suspending even more reserve requirements for many major banks amidst this credit crisis. Specifically here I am referring to bank off-balance-sheet conduit subsidiaries (this is now how money market and similar vehicles are handled… which is a sketchy fact in and of itself). The Fed is apparently piling up exceptions to its regulation 23A, which normally mandates 10% reserves for such conduit entities. The exceptions “temporarily” suspend these reserve requirements. They are open-ended. Hmmm.
One would think in a time of financial crisis that the monetary authorities would be increasing capitalization requirements. Not so in the bizarro-world of the US Fed — maintaining the con a little longer is top priority. The Fed is doing this because it wants to forestall very visible outright collapses such as those seen in Germany (Sachsen, WestLB), France (BNP Paribas), The UK (Northern Rock) and Canada (Coventree), regarding bank off-balance-sheet vehicles imploding due to the credit crunch. Don’t you think its a just a little bit funny that most other 1st world nations have seen major bank entity collapses due to our credit crisis, but we haven’t? I say again, “hmmm”.
In order to “prevent” such repeats here, the Fed is apparently allowing at-risk US banks to prop up to their conduit vehicles at the same time as reducing their collateral holding requirements for maintaining such vehicles. This makes such props look “free” — rather dishonestly (to say the least). I can’t see how this could be interpreted as anything but incredibly imprudent in the long term. Anyone who needs such an exception probably shouldn’t be given it.
In sum, this is a significant expansion of available credit, in a key manner, which, I might add (as does Karl Denninger), puts all of the effected banks and conduit vehicles at greater risk — unless the problems in the credit markets magically go away very quickly, which I think they will not (because the economic fundamentals that triggered this mess continue to deteriorate). But the banks do think the problems will “just go away” — as the recent revelations regarding Northern Rock’s rebuffing a JP Morgan-led rescue months ago show. Their arrogance knows no bounds. And what do they care if they screw up, anyway — the central banks and governments will ultimately ride to their rescue, as virtually all of these bank conduit “implosions” illustrate (yes I know Barclay’s bailed out a bunch of them, but guess where Barclay’s got that “quick cash” — that’s right, the Bank of England…)
That’s just one aspect where reserves come into play in the current crisis and the Fed’s response. Consider also the fact that most mortgage-backed security pools themselves have not been downgraded, and that the ratings of these pools dramatically impacts the reserve holding requirements (I believe it is something like $.50 on the $100 for AAA-securities, and $50 on the $100 for BBB-securities). Don’t think that the Fed and the entire banking industry (> 50% of its assets being in real estate holdings and MBS) isn’t aware of this.
On top of this, we still have the looming spectre of over the counter derivatives, which are likely near or in excess of $500 trillion in notational value worldwide these days — to which little if any collateral holding requirements apply. The monetary authorities have simply opted not to regulate these, while providing a cozy central-bank-backstopped and FDIC-”insured” banking system as a breeding ground for the pestilence. And lest we forget, none of these have been subject to market valuation, even though right about now, a good chunk of them are worthless.
All these are reasons I have to chuckle when people look solely at M1 or M2 and conclude that we are seeing “central bank austerity.” M1 and M2 — heck, even M3 — are a tiny, tiny portion of the credit-sphere, and it all threatens to come crashing down on the traditional ‘ol monetary system.
The gears of the banking system are certainly gumming up, and the Fed can only push harder; it can’t unstick them. The more they pull dangerous manipulations like the 23A excemptions, the bigger the problem gets. And they certainly have no latitute to start regulating derivatives or pushing for MBS downgrades now. So the Fed is “imposing austerity” everywhere but the source of the problem — the very heart of the banking system and financial economy.
So what about inflation or deflation? My position continues to be that these are really the same event — whether we have net inflation or deflation is just a matter of policy and timing. As far as investment in safe haven assets, it doesn’t matter at all — as we have seen this week, when foreigners flee a nation’s financial system, it bolsters safe havens and, relatively speaking, most foreign assets. For more discussion of the evolution of the “event” we are going through (an Austrian debt collapse/repudiation, or “Minsky moment”), see Eric Janszen’s “ka-poom theory“. He called it a while ago.
There is much more turmoil lay ahead, directly stemming from the reserves loosening the Fed is doing (and don’t think that they won’t do more, as there now exist no laws to stop them). Monetary base contraction is a red herring — per se, it doesn’t hurt the money center banks at all.
So: problem not solved. There will be more banking implosions, unless there is a massive and unprecedent prop of the entire banking system (translation: inflationary bailout — you and I foot the bill). I can think of little that is more bullish at this early stage for safe haven investments than what the Fed is doing. And last week’s moves prove that US Treasuries are not a safe haven — hence my mention of gold (on the last RFWS podcast I joined) while my esteemed colleagues were talking about money market accounts and Treasuries!
24 Comments
A wonderful post Aaron tht puts a lot of things into proper perspective.
Do you think the fact that 2008 is an election year is playing any role in the Fed pumping? After all Benanke was appointed by Bush and is a conservative Republican.
Good article Aaron.
I think we also need to look at what happened with Northern Rock here. Under UK law the BOE is supposed to be independent but at the sight of queues lying up outside the bank the politicians stepped in, guaranteeing the deposits, and we saw the limits of central bank independence. (My guess is that the pictures from the UK had also something to do with Ben decision to go for the 0.5% cut). What happens when similar queues (outside God knows where) appear in the US? I am not putting my money on Ben, thats for sure.
Thanks for a fascinating post that addresses the question many of us who frequent the WSE & related blogs have been wondering about.
I’d be really interested in reading Lee’s response.
In a round-about way, you’ve identified that the “zero bound” problem is not that interest rates cannot go below zero, but that reserve requirements cannot go below zero.
And they are very near zero now…
View from the UK:
The real kicker about the NR meltdown and BOE volte-face is
that the BOE will now accept RBMS as collateral against discount and
emergency loan faciilites.
Mervyn King is widely regarded as a safe pair of hands, and has done a fair job of trying not to feed the beast.
Suspect he was leaned on fairly heavily by panicking politicians - the new Chancellor, and his predecessor the former Chancellor.
GB was selected, not elected, and so needs to hold an election soon to have a legtimate ‘mandate’. He probably doesn’t want things to go belly up just yet.
The real villains are the directors of NR, and the FSA (=your SEC), who were definitely asleep at the wheel.
Good aalysis btw - the use of this toxic paper as an alternative to money was something I hadn’t really thoguht too much about in terms of its effect in increasing liquidity.
ABB
Aaron,
Wonderful post, great clarity. Thanks
nice post aaron.
i cant help but think along these lines: lowering reserve requirements increases risk of being forced to freeze accounts when large numbers of people decide they want out. which in turn increases fear of losing money, and hence withdrawals.
so how many times does somebody (fed/boa/citi/boe) step in and bail out an institution getting run on, before they just give up the ghost? they know they are losing money by bailing out, but they do it anyway because it supports the system as a whole. but at some point, its just a waste of money because fear and panic has gripped too wide a swath of depositors.
it seems to me that the shit cant really hit the fan unless and until there is a large-scale bank run. but whats the time frame? and how to play it? obviously gold/silver is a clear winner in a situation like that. but it does seem important to talk about tbills and money markets in a situation like that. money markets are an easy way to lose everything. but tbills, or savings deposits in large banks maybe?, may also be great bets because a large run means cash shortage, which means low prices in selective markets (at least in the short to medium term).
but if they just weimar in the face of bank runs, and bail everything out with new cash, then having money in cash right now would look pretty stupid. but how likely is that? if they weimar they lose all of their debt slaves. (i also think the us would look more competitive in a highly deflationary scenario than a highly inflationary scenario.)
another thing that crossed my mind this weekend: lee adler and others at this site have provided a great service by looking closely at M1 kinds of measures, when most of the contrarian writers on the net just focus on “money supply” in vague terms and of course can only come up with a massive inflationary situation from there. most people dont see the difference, and find the fed responsible for M3 growth, etc. the money analysis on this site and capitalstool has taught me a lot. but what occurred to me this weekend is: lee and others are relying on goverment (well, fed is not officially government, and its real important to remember that, and that the interests of the fed may differ in some subtle but highly significant ways, but that is kind of beside the point here) statistics to do their analysis. and i dont think i am alone in finding just about every goverment statistic about the economy to be complete lies and/or utter nonsense. so, what if those numbers are false? surely the fed and the treasury could find an easy way to collude and create new money (M1) to make payment on maturing paper, while hiding the event off-book somewhere so it never hits the reports lee et al base their analysis on? when i think about it, its pretty much a no-brainer. question is, what does it mean in the face of this whole mess?
pretty much says it all. This is not going to end well at all.
I’d love to address some of the brilliant points Aaron has made but unfortunately, I am leaving this afternoon to visit my grandchildren, and to head back to FL. I don’t even have time to read the whole article, but from the first half that I have read, I think Aaron probably has a point about the conduits. I have to think more about whether that really matters for more than a month or two, when it comes to commercial paper, when very real payments are due on the other side.
As for the Fed selling Treasuries, they haven’t done it yet. They have reduced their holdings by allowing some paper they held to expire, which required the Treasury to sell more paper to replace it. Since the Fed did not monetize that, it did take some reserves out of the hands of the PDs. Again, this will require some deeper thought and explanation, but intuitively I feel there’s a flaw in Aaron’s position.
I do have a theory about where the liquidity has come from in recent weeks, and have discussed that in detail in the material I publish for subscribers, as well as having mentioned it on our message boards at Capitalstool.com. If I am correct, the effects of those flows will be temporary, and the markets in general should begin to feel the effects of massive, broad based liquidation beginning probably around mid October.
Overall, I think Aaron has made some brilliant points. I don’t know if he is right or not. The proof will be in the pudding. I think that the market will give guidance soon by either clearly breaking out, or failing as it tests the highs and turning down.
That’s all I have time for.
very good article, well presented points and reasoning
Ignore stocks — a world all its own. Don’t worry about re-rating MBS on bank sheets: most are Agency and fine. The suicidal mortgage trouble and related leverage is off in CDO land, largely not on US bank sheets. You are very right that we are in an extended moment of balance-sheet evaporation. Consider that we may not be in a Ka-poom situation (that was last war), but in a persistently deflationary one (Asian wage undercut compounded by soaring oil and — properly — by global central bank 2% peg). Consider further that proper Fed action in a debt meltdown is to guarantee debt assets ASAP — one quick way is to haul as much as possible behind commercial bank moat, where 23A violation can be watched. Not inflationary, just second-stage loss-prevention and structure-extinguishing. The idea is to get out of this alive and then permanently remove fatal structures. Credit availability (as opposed to technical “creation”) is VASTLY tighter today than it was six weeks ago, and Fed has no way to restore it (and shouldn’t, in cases of idiot mortgages and stock LBOs). Fed has one way to create new bank capital: hyper-positive curve, a la 1993. In a severe credit meltdown (nothing like this since 20s-30s sequence; 00-06 credit party on back-side of Street has many similarites to stock market in 20s), Fed traditional liquidity injection and discount window cannot offset deflationary effect on balance sheets (should be clear after last 6 weeks). Only 30s-style guarantees can stop contraction, and that’s what they’re trying, without benefit of waiting four years for Acts of Congress. Funds cut may put a floor under aggregate demand before things get really ugly. May.
Why doesn’t the American people show some initiative like the British? Bank run those 23A excemption receivers, and get the foul play out in the open. Bernanke has shown you who to target. It’s not wise to let the most insolvent banks play with your savings anyway.
Aaron,
This is great work! I don’t really understand the third paragraph from the end. I have a feeling others may not either. Perhaps some of my confusion has to do with how you define “safe haven”. Could you expand on this paragraph somewhat?
All the best, Matt C
American’s will soon be wailing and none will come- it is of their own doing
Great job Aaron!
What I find most troubling is that millions of Americans have been enslaved from this rampant fraud. This is not just evaporation of wealth or loss of money…this debt will indenture them/us for decades, unless…
What I find most interesting is that we are willing to prognosticate instead of creating an outcome.
Moin from Germany,
excellent catch on the conduits!
Danke
Just a few things to think about on this.
1. The Fed doesn’t expand (or contract) credit or Ponzi finance, the financial sector and wildcat finance does. If the financial sphere is concerned about conditions, a few billion from the Fed will have as much effect as pissing in the Puget Sound. The real result is nothing more than trading fictitious capital with each other.
2. Actual credit conditions are influenced more by regulation, and variables like credit ratings, than statements from the Fed. The Fed has a psychological influence, but much akin to the Wizard of Oz behind the curtain than real. And Toto is going to pull back the curtain.
Like Matt C above, I’d like to know what you consider safe haven instruments these days (other than the obvious gold and silver bullion).
Thanks
Knowing Fed reserve requirements are nearly zero we still have ABCP contracting at significant pace. Banks refuse to lend to one another as they all know the structured finance holdings are worthless. Seems like the bozos in DC will resort to some type of mortgage gaurantee program beginning with FHA.
Aaron,
Thanks for an excellent explanation in regard reserves. I had previously read Gary North’s article, wherein he asked for an alternative explanation. I think you have put the irresponsible reg 23A expemptions into their correct perspective. Another part to this, which I’ve not seen anyone write about, is in respect to the repatriation of dollars back into the USA. I seem to recall some time ago the many commentators were confounded that price inflation was tame when monetary inflation was so high. A ready explanation for this was that much of this money was moving off shore in payment for cheap imported goods, etc. It seems to me (given recent moves in Fed policy, economic weakening) that these off shore dollars now have one ultimate destination - USA. Hence monetary statistics, while correctly showing a slowing in production of money at this time do not reflect the reality of many USD returning their home market. More dollars are therefore available in America than a slowing in monetary statistics would indicate. Hope this made sense.
An omnibus post, replying to many of the key points raised above:
sullymandias:
Not necessarily. Besides, literal bank runs are a bit of a distraction. The loss of confidence in the financial infrastructure can take a variety of forms, and has (i.e. the asset-backed securities secondary market is on strike).
Regular ‘ol individuals are largerly kept dumb and complacent by the FDIC blanket government guarantee. All the government has to do is promise to print money to back up deposits, if it comes to that. Its a shame, because obviously this is a pretty wreckless “solution”, but people have been trained not to care.
The “printing” point hints at the normative interpretation of these facts. So we have a dilemma: eventual monetization-driven inflation, or present rapid deflation? In either case, you want to take the safe haven play, relative to the financial economy in question. I say, out of dollars, and to a meaningful extent, out of fiat money anywhere. If it’s good enough for Dick Cheney and Alan Greenspan, its good enough for me. Money markets are obviously foolish given that no one knows what is under their hood nowadays. Treasuries are “safe”, but only if you’re OK with the inflation we’re already experiencing and the future inflation we will see if government (and possibly private banking) financial guarantees are honored the Weimar way.
Yes I agree the analysis here has helped advance all of our understanding… and I do believe what Lee A. does helps facilitate trading on a day to day basis (I just happen not to do that). I’ve come full circle in the past year or two from being a bit dogmatic or facile in my acceptance of the conventional Austrian/libertarian prognosis, to becoming more sophisticated and suspecting the outcome will be much different, to arriving basically back at the same conclusions but with a more sophisticated understanding. I’m not sure there’s any point in this sojourn for most people, except those who simply like to learn and understand, like myself (and probably most of the other regulars here).
Lee A.:
Here is my prediction: even if the 23A exemptions are reversed, it will only be because credit has been loosened somewhere else to make up for it. The underlying problem is that credit has already gotten as loose as it could possibly get in this cycle through the market’s own willingness-to-transact, so the only way to preserve the same liquidity is with more and more leverage. There is no going back.
Alternatively, more write-downs and deflation.
Right… $60,000 question is “what is powering the stock market’s levity in the face of all of this?”, and it sounds like you at least have a theory that would address that specifically. Would love to have a peek at it.
Lou Barnes:
I’ve thought about this. My most charitable model for the Fed assumes that they plan not to spend a dime on “bailouts” in the long haul — they just want to act as a “shock absorber” to attenuate the market process that sends potentially-toxic asset-backed securities to zero (or close to it) when otherwise transacted in ambient conditions. If they are successful, what will the upshot be? The fetch price on sub-prime securities and other complex and questionable structures goes from say 30 cents on the dollar to 90 cents (optimistically)? Fine; let’s assume that. And if we go beyond subprime there are maybe $1-2 trillion of suspicious assets (mostly tied to mortgages), so that is $100-200 billion of losses.
That ain’t nothing. So in sum, seems like it will be impossible to prevent some dead bodies from floating to the surface (by this I mean large banks) and a huge loss of confidence in the US financial system.
You’re certainly right, a positive yield curve would help somewhat, but this would just be tantamount to “bail out”, assuming the guarantees are government-based.
Russ:
Hmmm… well can you both acknowledge the suspension of reserve requirements and claim that the Fed doesn’t expand credit? This is simply banking system leverage, and its been going up-up-up aggressively for 15 years, all on the Fed’s watch (or with their direct mandate).
That I agree with, and in fact reserve requirements are a regulatory area. So I’d agree that effective liquidity has plummetted (and effective credit too). My complaint is really that the seeds for more unsoundness have been planted in the form of lower capitalization requirements.
But the Fed has more power than people realize; it just chooses not to exercise much of it, because it is more convenient to let the lucre flow, and blame external factors when there’s a catastrophe. In the present catastrophe, yes, most Fed actions will essentially be “pushing on a string”. My general point is that they shouldn’t set the parameters of the system such that the door has been opened to even bigger problems later (or sooner).
Keith:
I don’t think money moving off shore is necessary to sweep price inflation under the rug — plenty went into the financial economy too. It is in fact kind of ridiculous to leave these “asset” prices out the account of “inflation” (a move enshrined in government policy in the 1983 CPI switch from home prices to OER), but that is the convention that prevails.
As dollar cash repatriates, it too can flow into the financial economy. That may be some of what we’re seeing happen in the stock market. There’s no law that says it all has to monetize.
However, I think sooner or later, it will. The move into the financial economy (i.e. the stock market) may just be a “Wil-e-coyote” suspended animation moment. Assets will ultimately be sold off, and asset prices will crash, and there will be something of a corresponding flight into foreign currencies and real goods. Too many foreigners are holding dollar-assets for no good reason, and this condition will revert to the median.
LLC, Matt C:
I don’t get much cuter than the obvious for safe havens. Gold and silver definitely (though I’m not particularly keen on the “creative finance” ETF versions of these); foreign currencies, especially the Canadian dollar and Yen; traditional energy equities (though I like the Canadian oil sands plays as a double-whammee); other natural resources stocks; a select few highly-internationalized but still US-based goods stocks (such as Coke and 3M); some recession-benefitting stocks in low-end dining, retail, and “non-bank banking”, etc. I like agricultural products and base metals. I really like silver.
As far as true speculation, the hobby I’ve developed this year is shorting housing and financials companies that I consider the “walking dead” because of the crisis that is now in full view. That has become fairly profitable. And there will be much much more.
Back to gold and silver. I think anyone who cares should own a meaningful amount. I think people are so obsessed with not appearing to be a “gold bug” now that they will avoid it and stick with paper assets almost purely to avoid being chastised.
I don’t think that’s a very good reason — but then again, I spend a lot of time as the odd man out!
Thank you Aaron,
Your safe havens are in the same asset classes as mine. The greatest % of the portfolio should be in bullion, then divide the rest into resource stocks like BHP, energy ETFs like DKA, some uranium, some food stocks or the new ETF MOO, and whatever small cash position you want in Canadian dollar Treasuries and Swiss Franc short term bonds, with a leveraged long position in the the Yen.
Really good, thank you.
Interesting…
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