1. All Systems Are “Go” for a Fed Rate Hike in December, With More to Follow

    Federal Reserve Vice Chairman Stanley Fischer is seen during the Federal Reserve Bank of Kansas City’s annual Jackson Hole Economic Policy Symposium in Jackson Hole, Wyoming, August 29, 2015. REUTERS/Jonathan Crosby

    We’ve warned you for months that the Fed is on target for a rate hike in December. We said this before the election of Donald Trump as president and made the point that the rate hike was not dependent on the outcome of the election. The December rate hike was baked in before the election. This was due to rising inflation fears, the desire to hike rates so the Fed can cut them in a recession and the Fed’s political decision not to raise rates at the November FOMC meeting because of the pending election and a desire to lay low.

    We’ve also told you that there are only four voices at the Fed worth listening to — Janet Yellen, Stanley Fischer, Bill Dudley and Lael Brainard — all of the other Fed heads can safely be ignored.  Click here to see how one of those power players, Stan Fischer, has now confirmed our view that the rate hike is coming. That comes as no surprise. What is surprising is Fischer’s comment that he is “reasonably confident” that a Fed rate hike would have no spillover effects in emerging markets. That’s troubling and almost certainly represents wishful thinking on Fischer’s part. In fact, there’s already a global dollar shortage. A stronger dollar resulting from a Fed rate hike could tip emerging markets into a full-blown liquidity crisis.

    November was volatile because of the election. December may be even more volatile as the Fed leans into the dollar shortage and makes matters much worse.

    – Jim Rickards, Meraglim Chief Global Strategist

  2. India Abolishes 500 and 1,000 Rupee Notes to Fight Corruption

    We’ve been warning investors for months about the war on cash. This war has been in full swing in Europe and the U.S. for a long time. Governments plan to use negative interest rates, confiscatory taxes and other techniques to rob savers of their wealth.

    In order to do this, they have to force savings into digital accounts at large government-controlled banks. As long as savers can hold cash, they can avoid many of these confiscation techniques. Therefore, governments must eliminate cash.

    The latest battleground in this war is India. In a shock announcement on Nov. 8, India declared that 500- and 1,000-rupee notes are no longer legal tender. Imagine that — the money in your wallet or purse is instantly made worthless by government decree. That’s what happened. There were limited exceptions for hospitals and gas stations. Naturally, gas lines formed everywhere, and some people rushed to hospitals to prepay for future medical care with now worthless bank notes.

    The other exception to worthlessness was if you deposited the notes in the bank. There you would receive “digital credit” in your account. Of course, the tax man was waiting at the bank to ask you where you got the money. Those without an acceptable answer can expect trouble from the Indian Revenue Service. 

    Click here to read why  this is not the end of the war on cash. It’s just the beginning.
    – Jim Rickards, Meraglim Chief Global Strategist