The Daily Blog Open Mic Thursday 26th November 2015 – See more at: https://thedailyblog.co.nz/2015/11/25/t

1. Episode 840

   https://www.rt.com/shows/keiser-report/323218-episode-max-keiser-840/

   In this episode of the Keiser Report, Max Keiser and Stacy Herbert discuss Japan falling into recession as US businesses are stockpiling at recession era levels. In the second half, Max continues his interview with chartered accountant, tax justice campaigner, professor and definitely NOT Jeremy Corbyn’s paid adviser, Richard Murphy about QE, tax reform and property bubbles.

2. Why the great era of printing money is gone

   Manufacturer of banknotes are in a deep crisis. There are reasons – Money Hygiene being one of them. Now one might think that at least the central banks flooding the markets with fresh money makes for good business. Not even close.

   By Frank Stocker

   It may sound absurd. Central banks around the world are currently frantically printing money, but the banknote printers are having a crisis. The British company De La Rue just announced a drastic slump in profits, down almost 40% from last year. In recent months, German competitor Giesecke & Devrient even closed a printing company and dismissed hundreds of employees.

   On closer inspection, it is not illogical. Although central banks everywhere have been creating new money for years, they do not do it by issuing more bills. The money only exists virtually, on accounts, in computers, in the banks’ balance sheets. The note printers’ problems therefore are only indirectly related to their clients.

   Competition is good for business

   Rather, competition has also been introduced in this business in recent years. In the euro zone, for example, the printing of bank notes is distributed by a fixed scale to the individual members. Earlier on, these then automatically commissioned their ancestral home banknote producer.

   Today things are different. “The Bundesbank calls for tenders on their orders for printing banknotes all over Europe,” says Bundesbank Executive Carl-Ludwig Thiele, who is responsible for the cash department.

   The company must then submit tenders, and the best gets the nod. This suddenly caused real cost pressure to arise, something the industry did not know for centuries. It is now possible, for example, that a Spanish or Finnish company prints 50-euro notes on behalf of the Bundesbank.

   According violently are the distortions. In early October, Giesecke & Devrient, the private banknote printer in Germany in addition to the Bundesdruckerei [federal printer], closed its location in Munich. 700 people had to leave. Bills are now produced only at the Leipzig plant.

   Emerging markets need more bills

   And in Malaysia. There is another plant, which is also a sign of the changes in the industry. For although every year around 160 billion banknotes are printed worldwide. “And that number is growing annually by around five percent,” says Ralf Winter Gerst, Business Unit Manager banknotes at Giesecke & Devrient. This growth is, however, mainly taking place in the emerging economies.

   In countries like India or China, there are hundreds of millions of people who will be involved at all in the economic cycle only in recent years for the first time, no longer living only from what they themselves produce. At the same time, cashless payments are not yet as widespread there as in the western industrialized countries.

   While only a third of the payment volume is settled in cash Netherlands, for example, less than a quarter in the US and even only 15 percent in France. Germany is the major exception. Here, more than half of the amounts is still settled in cash.

   Finally, a very different technical advance also undermines the banknote printers’ business. They profited in recent years, first from the fact that more and more central banks worldwide committed to the so-called “Clean Note Policy”. Only bills as perfect as possible should be in circulation. Once they were slightly dirty or even folded, they were withdrawn from circulation.

   Polymer makes notes durable

   Especially in many emerging markets, this was supposed to help to increase public confidence in the money. Besides, it obviously increased the printing plants’ sales, as correspondingly more banknotes were needed.

   In the euro zone, for example, a five euro bill of the first series in the section was only in circulation for about a year.

   Therefore, the new five-euro note has been provided with a layer of varnish. Thereby, the printing costs will increase slightly, but the bills can remain in use much longer. Other countries are taking an even more radical step, turning to so-called polymer notes. The Bank of England, for example, will publish such a new series of banknotes in 2016.

   More expensive, but more durable bills

   These are made of a material that feels like plastic. However, it can be printed exactly as good as the traditional cotton paper and, most importantly, it is much better protected from dirt and cannot crumple or fold so easily. Such bills are therefore a little more expensive, but survive for much longer.

   De La Rue clearly considers this new material the future of banknote printing. But in the medium term, this could cause less contracts.

   In the euro zone, a conversion to polymer notes is not yet to be expected as a new series printed on ordinary paper is brought into circulation. But the next series that may come in ten or 15 years is already being planned. It is still written in the stars which material will be used then.

   Article taken from here: http://www.welt.de/?homescreen&wtmc=bookmark.safari.tablet.ios..bookmark_safari_ipad

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