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Chicago's Charles Evans Joins Call For QE2 As Spot Gold Passes $1,340 Barrier
From the Fed's Evans:
"If we were to do more large scale asset purchases, namely Treasurys, that would have a beneficial effect. There would be some reduction in long-term yields. That would be of some help. But given the nature of the outlook, much more accommodation than that is probably what’s called for. We have to think a little more carefully about the potential tools that we have available to us."
$10 gallon gas is one step ever so closer. The administration is committing suicide by pursuing a hyperinflationary path. Never too late to the party, spot gold just passed $1,340 for the first time ever.
And courtesy of Mark's Market Analysis we have a summary of an interview conducted with Evans:
Chicago Fed President Charles Evans - How has your forecast changed in the past few months?
Evans: My forecast has certainly moderated a bit in the last few months. We’re looking for growth later this year to be 2% to 2.5% and next year somewhere around 3%, maybe 3.5%. Then it picks up after that. What everybody has been disappointed about is the eventual return to growth above potential output continues to be pushed out further into the horizon. With growth like that we’re not going to see much improvement in the labor market at all. This could be consistent with continued positive employment growth but really not enough to lead to noticeable improvement in the unemployment rate, which is 9.6%. In the last several months I’ve stared at our unemployment forecast and come to the conclusion that it is just not coming down nearly as quickly as it should at this point in the recovery. Correspondingly the inflation data have been under-running what I would say is price stability. We put out a forecast for inflation five or six years out. For me price stability is 2%. If I look at a forecast for 2012 core PCE inflation, it is not unreasonable for that to be 1%, and that is low compared to 2%. The unemployment rate is very high. Inflation is low. To me that means we need an accommodative stance of monetary policy we need.
It’s not accommodative enough?
Evans: We need more accommodation. A lot of people respond that their take on monetary policy depends on the data coming in from here on out. For me, the data have spoken very clearly. As I stared at the forecast even before the August FOMC meeting, I had come to the conclusion that things were very different than what I had been expecting in previous meetings. This is a far grimmer forecast than we ought to have. So yes, I’m in favor of more accommodation.
Looking out to 2013 do you see the same kind of story?
Evans: It is not unreasonable to expect inflation in 2012 of 1%. In 2013, it is going to be less than 1.5% unless something very different were to occur. My forecast is premised on the idea that inflation expectations are relatively well maintained. There continues to be a large resource gap that is going to hold down pricing pressure for firms. And that will hold down inflation. That would continue for quite some time under that forecast. The unemployment rate would come down only slowly.
Gold prices and commodity prices have risen quite a lot. Does that register?
Evans: I don’t put a lot of weight on those indicators. Gold moves up and moves down. Commodity prices are often driven by stronger demand around the world and with emerging markets doing better at this point in the cycle that is part of it. Does it worry me about inflationary expectations? I just don’t see that at the moment. When I talk to people in the business community there is not a lot of pricing power.
There has been a lot of focus on divisions within the Federal Open Market Committee. Is that an impediment to action?
Evans: We’re at a very difficult point in the economic cycle. We’ve just come out of a very deep recession. We’re experiencing a recovery. Don’t misread what I’m saying. The recovery continues. It’s moderate. I’m really not looking for a double dip. But this is a time that challenges your thinking on how economies work and the theories underlying them. The unemployment rate is very high. Is it high because of weak aggregate demand? That is my viewpoint. Is it high because there is a lot of job mismatch and the natural rate is higher? Some of that but not nearly as much as others have indicated. But there is a wide scope for disagreement, and that does make any discussion among a large number of people challenging. But I’m confident that the committee will talk this through robustly and come to good decisions.
Where is the common ground on the committee right now?
Evans: The statement is fairly clear on that. We see the economy is recovering. We see inflationary pressures lower and we see the unemployment rate high and it is going to be slower to come down. With the funds rate already at zero, there is a pretty valid question as to how accommodative is monetary policy. Some people would point to the size of our balance sheet and say there is an enormous amount of accommodation. Just look at the amount of excess reserves in the system. Milton Friedman looked at the U.S. economy in the 1930s and he saw low interest rates as inadequate accommodation, that there should have been more money creation at that time to support the economy. That wasn’t based upon the narrowest measure of money, like the monetary base or our balance sheet. It was based on broader measures like M1 and M2 and how weak those measures were. I’ve come to the conclusion that conditions continue to be restrictive even though we have a lot of so called accommodation in place. An improvement would be a dramatic increase in bank lending. That would be associated with broader monetary aggregate increases. Then we would begin to see more growth and more inflationary pressures and then that would be a time to be responding.
How do you assess the costs and benefits of additional quantitative easing?
Evans: The forecast is not commensurate with what I take our dual mandate responsibilities to be. The unemployment rate is too high; inflation is lower than what I think price stability is. I would clearly favor more accommodation. If we were to do more large scale asset purchases, namely Treasurys, that would have a beneficial effect. There would be some reduction in long-term yields. That would be of some help. But given the nature of the outlook, much more accommodation than that is probably what’s called for. We have to think a little more carefully about the potential tools that we have available to us.
The other tool to look at is communication.
Evans: That’s largely right. The question is how to implement those communication strategies.
What’s on your mind on that front? Does the Fed need to make a more clear commitment to have a higher inflation rate?
Evans: It is a very challenging topic for a central banker. We all know that price stability is fundamentally important for a vibrant economy. We had Paul Volcker here last week at a conference. There is nobody who would in want to in any way to lose what Paul Volcker won for the American people by fighting inflation and achieving price stability, and the Greenspan Fed. But the current circumstances are really extraordinary. It seems to me if we could somehow get lower real interest rates so that the amount of excess savings that is taking place relative to investment needs is lowered, that would be one channel for stimulating the economy. That could be done through communication. I take our price stability mandate to be 2% inflation. We’re not at 2%. I foresee 2012 inflation as 1%. If we could indicate to the public that we want inflation to increase toward that price stability goal, that would serve to lower real interest rates given that short-term nominal interest rates are close to zero. Thinking about the fact that we’re running our inflation objective and what it might mean to make up some part of that somewhere along the line, that would also give rise to lower real interest rates. Convincing the public that this is what we intend to do, that could be a useful tool.
New York Fed President William Dudley talked about making up lost ground on inflation later. You support that?
Evans: That is a potentially useful policy tool at this point and I definitely think we should study that more. That comes out of the literature.
Core inflation has been around 1.5% for the last few months. Why is it an issue now?
Evans: It’s been trending down for a while. When you superimpose on that the resource slack in the economy, the high unemployment rate the output gap, that’s what leads me to think that a forecast of 1% in 2012 is not unreasonable. From here on out, as you think about how the economy is likely to recover if inflation falls and nominal interest rates are as low as they can go, that’s not helpful.
Real rates are already negative. Some people argue that negative real rates could cause another asset price bubble or a commodity price bubble, which could hurt the U.S. economy for instance if oil prices rise lot. Does that give you pause, the risk that negative real rates could stimulate parts of the economy or financial system that you’re not looking to stimulate?
Evans: I think we’re in a liquidity trap where there is excess savings, greater than investment. It would take a lower real interest rates to address that. Lower real rates would be helpful. I’m not as concerned about the risk that your pointing out because of that. When it comes to commodity prices, global conditions are unbelievably important for how high some commodity prices are right now. There is not that much that changes in U.S. policy will influence that, within a range. That doesn’t worry me quite so much, though we’re mindful of it. On the financial risk side, I’m well aware of criticisms that previous periods of lower interest rates could have played a role in previous financial exuberance. I don’t agree with that per se. But it is the case that I think you need to use macro prudential regulation to keep an eye on risks within the financial system. But, look, if the right thing to do for the macro economy is to have lower interest rates but that comes with some risk for the financial system, we’ve only got one monetary policy tool and we have to focus on our mandate. But we have other supervisory tools which are supposed to be address emerging risks in financial market. I think they have to be used.
Is quantitative easing by itself enough without a different communication strategy by the Fed?
Evans: I think that additional asset purchases would have an effect. I think it would be beneficial. I worry that that alone would not be enough to address the particular view that I have.
What is your view of the James Bullard (St. Louis Fed president) approach to asset purchases, the idea of some kind of state contingent asset purchase program, as opposed to some kind of shock and awe type program?
Evans: I’m favorably disposed toward the approach that Jim has mentioned… I just think that far more accommodation is required.
It sounds like your thinking has evolved quite a bit in the past few months. What brought you to this strong view?
Evans: Short term interest rates are at zero. That’s a classic tell for a liquidity trap. People are saving tremendously. Businesses are sitting on a pile of cash. They’re doing what they need to do to make good profits, but through cost cutting and not by growing the top line. There is a lot of caution and risk aversion. Households feel that. The employment risks that they face, that limits spending, so saving is high. That is a classic tell for a liquidity trap as well. Staring at our forecast, I knew this when we first put out those projections. I knew it was going to be bad. And it is not improving. We’re pushing out the growth prospects. I just think it calls for much more than we’ve put in place. My view on accommodation at the moment is not data dependent. I think we’re there.
What mistakes did the Japanese make in dealing with their liquidity trap that you as a policy maker want to avoid?
Evans: We’re staring at a pretty grim outlook and others have done that in the past and I don’t think we should wait until 2012 to find confirmation that things are going to continue along this path. I just think additional action would be helpful.
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The big up in gold has also something to do with the cartel being squeezed. The linear ups are very unusual on gold, so I guess JPM & Co don't have a lot of bullets left.
Or maybe they just have loosen the leash a bit so doomsday callers can blackmail government for QE1.99 ...
Guillotines, bitchez!
And silver is up 3.5 % in half a day...I've nevver seen that before, but I'm not a financial type.
there must be some bad shit coming down the pike...listen to these guys talk
+1.
Their tone has certainly changed...they aren't worried about rising commodity prices at all right now.
I wonder what's sneaking up behind us?
I find it is almost impossible to consume enough alcohol to allow sleep as I stare into the abyss.
With the slight mortgage "problem"....gee, when does the derivative death star go off?
Gold and Silver going hyperbolic.....I wonder if I can get paid daily?
I feel tied to the train tracks as the mile long freight train going 80mph approaches.I can see it coming so clearly...indeed, I have seen it for years.But now I can hear the horn.
And I am nailed to the fucking tracks.
Oh shit!
Yes, there is some shit coming: The economy is contracting pretty viciously right now, and all the QE in the world is not going to fix it -- not when a $100+ billion rolling monthly deficit spending spree plus ZIRP have so far failed to staunch the flow.
Full gold Rush!
Gold has risen about 500% since 2001, and during all that time there was no QE ... and it is not rising now because of QE2
"hyperinflationary path"
There is no hyperinflation path, there is inflation or you start to deflate. After hyperinflation there is hyperdeflation. You are coming to the end of the system and GAME OVER will appear on the screen.
You will continue to get spikes in both direction as the system goes further along in it's death collapse phase.
Define your terms. If you are talking about paper currency, you are dead wrong, as there has never in the history of man been a fiat currency that hyperinflated and then returned to its previous value (what I assume you mean by hyperdeflation).
Inflation ends with deflation, hyperinflation ends with hyperdeflation.
If things continued to hyperinflate you would still be trading those old fiat currencies around. In Rome they resorted to chipping off the corners of their silver coins in a failed attempt to start inflation. It failed and Rome went from a population of 1+ million to less then 50,000. Rome inflated or hyperinflated to the max. then deflated to it's max. The Roman silver mines could no longer produce enough silver to keep the system going... peak, collapse, then liquidation.
Sorry the system is coming to an end, just like they all come to an end, whether fiat or silver based or gold based or food based. GAME OVER.
Use the equation... it works for a while... then peak happens, then it's collapse and game over liquidation time. The fun hasn't even started yet, I have no idea why everyone is bitching now, you'll have decades and decades to really have something to bitch about... this is the good times, heck this is the super duper good times compared to where it's going this time.
you did not answer his question about hyperinflation in currency terms. you just "cut and paste" from your repetetive posts.
Are you promising that a dollar in 10 years will buy more than now ? Roman Silver was not fiat currency and they could not have been produced using keystrokes. Had to junk you.
I'm sorry you can't tell the difference between a silver currency and a fiat one.
Rome clipped silver coins not to induce inflation, but to increase the government's purchasing power. It was never about the silver. It was about the fact that Rome never produced anything, instead getting it's goods through conquest and export of gold and silver.
Also, you AGAIN failed to define your terms. Tell me what you think inflation is. Tell me what you think deflation is. Tell me what you think hyperinflation is. Tell me what you think hyperdeflation is.
No-one in Zimbabwe is trading with old Zimbabwe dollars. No hyperdeflation in terms of currency. In terms of gold, perhaps. But there was never price inflation in terms of gold in that country. Only deflation.
Everything gains value against the dollar. Even grilled rats are up these days.
Peter Schiff did a clever vlog the other day along those same lines. Worth a watch.
http://www.youtube.com/watch?v=MPtFLNq7NWU
LOL great video.
Poor DOW it's getting ganged up on.
10 swords in the back is tooooooo much. (Use Ace Ventura voice).
http://books.google.com/books?id=c1OOvvnefj8C&pg=PA226&lpg=PA226&dq=10+o...
Heph, I can't see your avatar, even blown up. What is it?
Leet from anarchy online.
http://www.google.com/imgres?imgurl=http://static.ao-universe.com/websit...
http://www.youtube.com/watch?v=G14Llp1NEQk&feature=related
The leet joke in anarchy online was that leets were the absolute lowest level mob in the game and couldn't defeat anybody. There was a slightly higher mob called eleet.
Just jogged my memory. The leets would be in the newbie hunting grounds. They would talk to you and say things like. R U NUBI? and if they killed you U SUXXOR. Or if you did a lot of damage to them. Can I have ur sword?
They look so innocent.
The only reason to hear angels singing when AU is going up is that you are not losing as much wealth. When converting FRN's to AU you only increase the probability of having a better life in the future (not to mention that you are crashing the Oli's invite only party). When gold goes up it means that your ice-cream containers are going to get smaller, you will need more shock absorbers for your car, and the gov is going to get a whole lot nastier. Gold on Viagra is NOT a reason to whip it out and start stroking, nurse at the keg, or do a Mexican hat dance around your sombrero.
And the S&P on FED Viagra pump to stratosphere is also no reason at all to party either. The print to pump stocks party is over.
S&P boner today is still a net LOSS against gold.
are they timing this last outburst to goose /ES up over 1150ish ya think? Just seems desperate for some reason.
HURRY print us some more totaly fake money its makes us central banksters at least feel better about the total collapse!
I dont care how much theyre propping up dead stocks at the price of $5 billion Benny Bux daily, this party is over, the hangover will be a skull splitter. Before 2010 end.
you don't need to be a "financial type" to get this market. gold hit a resistance at 1300 and even though i'm not a "technician" that's because i really have no clue "what a technician is." so...i'm getting my book out and have started with the technical term "resistance." well...it would appear "resistance is futile" because while it appeared the gold bears made a pretty concerted effort to "keep a lid on it" once 1300 was breached it was "off to the races." there's a great line by former Senator Thompson of current Law and Order fame. He played a Carrier Captain in the movie "The Hunt for Red October" and upon seeing a plane smash into his flight deck he blurted "these things will get out of control and no one will be able to put any of it back in the bottle."
why more accomodation why?? :))))))))))
sorry i'm kind of stupid.. please explain me.. everything sems so ##ucking rosy.. US GDP is up.. labor is getting better.. ISM-services is up..
why??????????? please explain me
alx
ps
it was joke who dont get it ...
psps
US economy is fucked up.. totaly.. DEFICIT is 1.6 trln$ ... its actually ~12-14% of gdp... federal revenues is flat at best,, but expenses is up 5%.. ssems things getting fucked faster..
GOLD IS $2000 BY WINTER.. its GONNA BE GOLD WINTER...
Go ahead pump maniac monetizers, print $20 billion a day to prop stocks, makes not a bit of difference. May as well be using Qtips to swab up the water rushing into the Titanic's hull.
"Gold moves up and moves down."
Genius.
Holy shit dude.
Not today.
http://www.kitco.com/LFgif/au3650nyb.gif
http://static.seekingalpha.com/uploads/2009/12/22/saupload_asset_class_r...
Sure, QE will cause $10 gas--whenever reality changes so that the quantity theory of money becomes true. It is not true today that if M0, or M1, or M3 or whatever doubles, that prices double.
Well, looks like my october puts are toast. Unless we get a reversion-to-the-mean, so are everyone elses. Guess it is time to move on to the next trade. After witnessing the massive red candle on the AUDJPY last night, thought we might be seeing a true 'break' event.
Woke up to a POMO day and massive buying interest, finding out that the yen retraced all of its spike. Gold higher, stocks higher. Are there any correlations at all? I mean ones that have either inverted or 90%+, because I have no idea what to look at now.
New 'normal' is low volume melt-ups? One day declines? Guess I'll just go long straddles and let the volatility make some back for me.
Open to suggestions...
do not fight the Fed. This site does it everyday. Which i respect by the way.
I had been posting here since couple of months to go long S&P till End of the year.
Then looking how things are at that time - to short S&P and short Dollar with tight stops.
LaydeezunGennelmen,
This man is a fool. Does he know nothing about the exponential function? Growth of "3%, maybe 3.5%" - OK, that's a doubling in 20 to 23 years. I don't think so.
DavidC
look at the face of this f#cking dork..
how did he even go that far.. i'd not allow him to manage DQ stand .. he seems totally clueless..
sorry pals country is #ucked..
:( alx
http://www.google.com/images?client=opera&rls=en&q=Chicago%20Fed%20Presi...
THE FED NEEDS TO BE SHUT DOWN
IT IS A CANCER AND IT IS POPULATED WITH FOOLS
On the contrary, they aren't fools. These are calculated moves.
Gimme da Gold!
http://www.youtube.com/watch?v=bZfyrIPw3wY&feature=related
Good one. The rappers timed the GOld mania correctly than those Hedge fund MBA's
Grains are also UP alot - These CB guys are playing with fire
##Does it worry me about inflationary expectations? I just don’t see that at the moment. When I talk to people in the business community there is not a lot of pricing power
cant #ucing beliebe..
HE IS FUCKING IDIOT.. HE EVEN dont understand pricing power of corp is one thing,, but COMMDS PRICES AKA cost of stuff,, cost of living is another..
whoa... whoa... someone need to call ambulance.. im scared really scared
alx
This quote was the one that bothered me the most. Pricing power and inflation are two different things. And his input material inflation will lower profit margins and lead to further layoffs and consumer pain. F*cktard.
I guess Chuck here must either be a true believer or is long on gold.
Fed marching orders for WSJ.
1. Personnel Journal is now the first section.
2. Weekend Journal is now 3 days per week.
3. Buyers Guides for Real Estate, New Cars, Fashion, and Jewelry shall now represent at least 80% of the newspaper.
4. At least one credit card company advertisement on each page.
5. Daily interviews depicting individuals without an iPad as freaks, social retards, and unpatriotic pariahs.
wtf is Evans smoking, because I want some.
The change will come when the title of this thread (or other threads) is:
"
Chicago's Charles Evans Joins Call For QE2 As Spot $USD Passes oz. 0.00075 Barrier"
QE2 and TARP2, am sure we hear Pelosi yelling PRINT PRINT PRINT on national TV. Thank goodness i do not watch TV.
Wrong. Dead as a doornail, deceased, gone to heaven, just plain BS wrong.
Another 25 or 50 bp on longer term debt ain't gonna spur economic activity if rates as low as they are haven't done so yet. Simple behavioral economics.
The banking system is absolutely drowning, awash, can't surface above the absolute overwhelming oversupply of net free reserves in the system already. The monetary base growth over the past 3 years has been enough at historical trend rates to accommodate real growth for decades.
Other than assuage the egos and fears of the Neo-Keynesians, additional monetary stimulus is doomed to failure. T'will drive up inflationary expectations (re; gold, etc.) and thus, ultimately drive up rates and inflation once the "V" in MV=PT recovers, which it ultimately shall. (Debating when and how is another discussion for another time, but it will ultimately happen. As one of the most famous philosophers of the 20th century once said; "To assume all things remain constant is illogical, Captain.")
This is a recipe for disaster. Near term, until V rebounds we're dealing with the a true and real threat of deflation. Moreover, I'd suggest that the recent rise in gold, unchallenged by the "cartel" or whoever, represents a major change in policy. In that, contemporaneous with the latest Fed minutes where deflation was placed front and center, any efforts to seriously reflate should be accompanied by allowing the price indeed encouraging the prices of PMs and commodities to accelerate.
But somewhere down the road, inflation is gonna make the pre-Volcker days look like a kids play. And ain't no bell or buzzer gonna tell us the day before.
Well said.
it seems like the US with the reserve currency, which is fiat, is in excellent shape compared to other trade-deficit countries (hello non Deutschland Europa). I.e. US cannot 'go bankrupt'.
Will we have a FX race to the bottom? USD could become "strong" despite the fundamentals
Will the dollar come to an end as the reserve? Or is the right question, when?
Record low TY week after week, so where is the problem? However, when things fall over, they can fall over fast. I think it's extremely premature to bet on dollar collapse until after the euro falls over and until we see a failed auction.
Ah, another bit of anecdotal evidence.
CNBS had a segment on "Investing Your IRA in Gold". Nope, not an ad, but Sue Herrera and ac ouple of others outlining the options.... physical coin and bar, ETFs, etc., ad hoc, vootie.
Opssssss! The barbarous relic has within an instant on CNBC been officially transformed into a suitable investment for Ma and Pa Kettle in Dubuque. Now, with just a little imagination, I take that change of heart on the Gubamint's Official Investment Advice Organ of Wealth-A-Plenty and suggest that the paradigm shift toward "official" higher gold prices which I noted above, is somewhat, in part, sneakily and surreptitiously, confirmed.
"It's not dead, it's pinin'!"
Ho ho.
Gold is being driven by expanding emerging market economies? Really? Do they use gold-plated heavy machinery?
Bullshit.
Let's rumble, bitches.
The people in emerging economies like gold, so they use their increasing purchasing power that flows from their industrialization to buy gold. This has been the pattern everywhere for hundreds of years. Gold increasing in purchasing power as more goods are produced. Of course, it also increases in purchasing power as people seek liquidity. It's the best of both worlds, which is why it makes such a fine currency.
Sure, but that's not what he's saying.
The primary driver of gold right now is monetary expansion. Mo' dollars, the same amount of gold. If foreigners are buying gold, they're doing it to increase their purchasing power.
This twerp says that gold is increasing because foreign economies are growing. That's an expression of the fallacy that inflation results from an "over-heating" economy.
Other than pumping stocks and other assets what economic benefit does QE have?
Keeps the plebs from making runs on banks & grocery stores. It also stops businesses that are 'market reactionaries' from making arbitrary layoffs.
Yeah, I hope they keep telling themselves that when it stops "working" and the rioting starts. They are taking what even Keynesians would call the last resort policy and using it like an ATM card.
Perhaps. True Keynesians are calling for fiscal stimulus not monetary, though. There is a lot of slack due to insufficient demand. Pushing from the supply side will just let financials pile up more cash. Job creation isn't going to come from QE or tax cuts.
At this point, the only way to turn things around is for Obamatron to issue an Executive Order, cutting electricity to the printing presses, and putting Bernanke in the penalty box -- for about 5 to 10 years!
QE2 and global competitive currency devaluations.
...and for those worried about a gold 'bubble'...take a look at this chart to see what a real bubble looks like: http://www.planbeconomics.com/2010/09/07/chart-what-gold-bubble/
According to this, gold would need to hit $3,100/oz to rival the Nasdaq bubble.
On a realistic basis, other than airplanes, weapons, and entertainment we don't export anything else of value so I think any proposed "export gains" are a laugh.
Can't wait for the flash crash in paper gold. That's gonna be messy!
Here's hoping there will be a few dumb retailers that continue to sell according to spot+premium where spot>>premium.
"Evans: We need more accommodation."
I understand Evans' nervousness about unemployment, but why doesn't he get that monetary solutions have limits? They need to look elsewhere for a solution to unemployment.
They are not trying to provide a solution for unemployment. They know their tools are too crude by using monetary policy alone.
The Fed is using "unemployment" and "asset price support" as convenient reasons to paper over the real problem here-- insolvencies. They see something the masses don't-- and it is very deflationary.
If outright fraud in foreclosures isn't a "real problem", then I don't know what is!
You will find out in due course that these issues are closely linked, my friend. The many servicers that were linked to fraudulent activity and potentially liable are banks with otherwise insolvent balance sheets.
The nuts of the game is as Brian Sacks said yesterday..."QE will keep asset prices higher than they otherwise would be"..... in other words you fools are paying more for an asset (stock & bond) than its intrinsic value.....that is not a good thing....and only the stupid and those who assume they will get out before prices adjust back to intrinsic value (but never do because it is impossible) are buying on lower and lower volume. This is a ponzi and Sack admitted it....if you are a long term investor.....stay away from the fat tail.
Gotta love this:
'Just say no to gold,' private bankers advise
http://www.financialpost.com/Just+gold+private+bankers+advise/3626983/story.html
So let me get this straight. You're a high level crony in a company that sits at the pinnacle of our financial ponzi system, and you have NO IDEA why gold has been going up,...for ten straight years?
Really?
No idea?
Hmmm.
http://senorgif.com/2010/04/24/its-caturday-already/
went massively short 6 weeks ago, covered it up last week (ouch, but less than it could have been).
All signs point to QE as a done deal, risk assets grossly undervalued, er, underpriced. Real 5Y yields are at an all time low of -10bps, yet equity multiples are pricing in something entirely different. This can only end badly for someone & I bet it will be the holders of bonds, though we could still get intermediate term deflation...
2010 put holders, take comfort that you were insured, though your premiums are gone...
S&P looks to run to 1300 or so pretty fast now through election. However, once the reality sets in that 2011 earnings might not actually be $95 we could see retreat to 750.
it's ugly out there for the economy but rosy for the near term market
This is not, per se, a liquidity trap.
It's a solvency trap.
ZIRP/QE isn't being used as a tool to skirt illiquidity. They are using it in TRYING to avoid the insolvency of the financial system. We are in the late innings.
Look... inflation at 1 percent isn't dire. We've been in that environment plenty of times before-- it's called disinflation. And with decent economic growth prospects, that's certainly okay.. even beneficial of productivity is there to lend a hand.
And savings rate at 6 percent? Hell, even THAT isn't dire-- especially in the context of high unemployment. That's pretty much normal. People SHOULD be saving after a period of negative savings rates-- but there is little incentive to INVEST those savings. That little process is called "capital formation"-- and these fools at the Federal Reserve have been doing their best to destroy it for over the past 18 months. Little wonder that corporations are taking excess cash and consolidating-- the Fed is ENCOURAGING such behavior by keeping the rate of "riskfree" debt at zero.
The thieves are now desperate to reignite growth by any means possible-- these folks are scared sh!tle$$. They don't care if their projections for inflation are off by 10%-- so long as it's on the high side. They want to avoid deflation AT ALL COSTS, because deflation ensures rapid unprohibited insolvency. 'Liquidity trap' is much too kind a phrase here. My view is that the system is insolvent regardless of what is done from a monetary standpoint-- but the USD as a currency is almost guaranteed to be buried. You can kiss that reserve currency status goodbye.
I get the sense that Chuck Evans started changing his views about the time the truth started coming out on the foreclosure/title scandal. That alone is going to be a HUGE deflationary factor-- which appears to be forcing the Fed's hand. And I would expect to see a big nasty announcement on the bailout of that shortly after the midterm elections. People are going to be fuming after all this comes to the forefront, as moral hazard will rear its ugly head once again. QE 2.0 is being baked in, and the masses don't even know WHY.
Whoa, this stuff is getting real. Let's see if it's enough to get people in the streets.
I want to focus on one of your statements, "the system is insolvent."
A system of debt-based money requiring aggregate growth to pay today's interest in the future is by definition insolvent as soon as the future holds contraction. That is where we are.
The entire INSTITUTION is insolvent.
To your credit, trav, you have been as on point on this issue as anyone here at ZH. You knew we were arriving at this point well before most of us, and the point of contraction has come.
And thanks for the clarification-- the entire institution IS insolvent.
Anyone think the COT reports are wrong and the commercials are covering/have covered their short positions in PMs? I can see an announcement a few weeks from now where they'll announce that the COT reports contained faulty data and they'll restate the figures showing the commercials were long all this time. I just can't fathom that JPM is short Silver while it is going vertical like it is.
I think BEN B is gonna go blind from all his pumpin'.
merry POMO day markets.
and then the orders are sent out to MSM to say the service sector is growin and that is why stocks lifted 200points...hurray recovery...and the peeps want to believe in recovery ....so a belief is created and re-inforced. that is why talk of pomo pumpin and fake recovery often get the cold shoulder....people don't want to hear that.
If what TPTB was hyping were true, Gold would be falling in price -- Gold is proving them to be prevaricating!
TPTB wanted to kill deflation. Too bad they killed everything. I am shocked at the DOW today and bread went from 4 dollars to $4.60 a 500gram loaf. I expect 4 times a year increases from the cable company.
I didn't buy gold or silver because I didn't expect a scorched Earth policy.
Told ya, these people are imbeciles.
Hasn't got a clue, believes his own numbers, total faith in his religion.
He will NOT accept what his lyin eyes are tellin him, he'll talk about "business pricing power" if bread costs $20 a loaf.
He thinks exponential growth is some kinda linear thing.
If an auction fails its because it was intended to fail.
What is the point of re-establishing a fiat based currency if the goal is to have a feudal/serf state. One operating via AU would work just fine. It's true that by having a fiat currency, it allows a 'democratically' elected power to stay in power through vote buying. But why would a fascist/authoritarian state need such device? Why use fiat to evaporate purchasing power when there is no more assets to steal (with the exception of labor)?
Again, if an auction fails its because it was intended to fail.
Here comes the new and improved government.
What's so special about Tuesdays in the PM markets? Why are the big upswings in PMs happening on Tuesdays?
Hourly gold:
http://finviz.com/futures_charts.ashx?t=GC&p=h1
Hourly Silver:
http://finviz.com/futures_charts.ashx?t=SI&p=h1
COT report cutoff day. Trying to hide/stall/deflect/manage what the big shorts (JPM) are up to and bury it until the next reporting period.