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Jackson Hole: Myth of the All Powerful Central Banker Continues ... For Now

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Myth of the All Powerful Central Banker Continues In Jackson Hole  
The myth of the all powerful central banker continued in Jackson Hole.

Markets waited with bated breath for Fed Chair Janet Yellen's and ECB Mario Draghi’s speeches at the annual gathering of central bankers in Jackson Hole, Wyoming.



Market participants were once again focussed on the short term and the silly ‘will she, won't she?’ debate regarding Bernanke’s successor Yellen at the Jackson Hole symposium.

Yellen and Draghi obfuscated and did not give clear guidance regarding monetary policy as Trichet, Bernanke, Greenspan were past masters at.

We believe that further U.S. QE and money printing remains very likely given the poor structural state of the U.S. economy. We advise investors to fade out the short term noise emanating from Jackson Hole and from assorted policy makers on both sides of the Atlantic and focus on the reality that further monetary easing and currency debasement will continue for the foreseeable future.

ECB President Mario Draghi is under pressure to use his last remaining tool -- printing money to buy huge amounts of bonds.

"We stand ready to adjust our policy stance further," Draghi said.
The bank has cut interest rates, offered cheap loans to banks and is weighing up making asset purchases to pump more money into the economy, but Draghi did not offer new guidance on when the bank might take action.


There are continuing hopes that the ECB will embark on QE even though it has been less than successful in Japan and the jury is still out regarding its efficacy in the U.S.

The market believes EU QE is unlikely in the short term but there is a growing consensus that it will be seen in 2015. This would be bullish for gold prices, especially in euro terms.

Gold prices fell after minutes from the Fed's July meeting on Wednesday showed policy makers debated whether interest rates should be raised earlier. Gold has fallen this week and there is speculation that it was due to fears that the Federal Reserve could hike interest rates sooner than expected.

However, if that were the case then stock markets would have also come under pressure instead of marching on to new record highs. From a market perspective this is very counter intuitive and suggests gold’s falls were for another reason.

A four-day rally for U.S. stocks carried the S&P 500 index to a fresh record yesterday. The S&P 500 reached 1992.37, its 28th record finish of 2014 and first since July 24.

Market talk is of Yellen pushing the S&P to new records at the psychological 2000 level. Irrational  exuberance is alive and well on Wall Street and being stoked by the ultra loose monetary policies of Yellen and her merry band of Jackson Hole cohorts.

It is worth noting that copper is heading for a 3% gain this week as are some other commodities. If markets were genuinely concerned regarding a sudden rise in interest rates, commodities and all risk assets would be under selling pressure.

Some market participants will rightly ask - why is it only gold and silver that have seen sudden declines this week?

The dollar hovered just below its 2014 peak against a basket of major currencies today. Dollar gains this week have pressurised gold. Speculators fear that better than expected data might prompt the Fed to raise interest rates.

Rising rates would hurt bonds and equities but would support gold. This was clearly seen in the 1970s when rising interest rates corresponded with rising gold prices. Gold becomes vulnerable towards the end of an interest rate tightening cycle when there are positive real interest rates and savers earn something on their deposits.

It is important to remember that central banker’s strategies of ultra loose monetary policies contributed in a significant way to the global financial crisis. Low interest rates by central bankers and Alan Greenspan in particular led to rampant speculation and risk taking on Wall Street, collateralised lending, the sub prime crisis and the stock and property bubbles.

Will a continuation of the same monetary policies that got us into the financial crisis really get us out? Conventional wisdom is that yes it will. However, the jury remains out on that question and time will tell.

History suggests that currency debasement on the scale we are seeing will end in significant inflation.  

Inform yourself of the 7 Key Gold Storage Must Haves here

 

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Tue, 08/26/2014 - 07:21 | 5144069 NoPension
NoPension's picture

We watch this game. Some are better equipped than others,to understand some of the finer points. But we all understand it's all one big sham. It has to be. 1-2% interest rates? 6.5 billion people. 1/2 the population of the US living off .gov. Chinese building whole cities no one lives in. Japanese nuked, again. Just in time supply chains.
And so much more, there isn't room to print.

And they tell us they have it under control. And, so far, so good, all in all.
But we , if lucky and haven't lost everything already, go out and bust our ass every day, and hope to get by another month. While watching commercials for " managing our wealth". Who the fuck are these commercials for? Who has aquired wealth, who will turn it over to these cretins for " managing"?

I come here for a clue. For insight. The comments are the insight, not the articles. And I don't see a path, other than keep slogging ahead, and keep my little stockpile safe. Am I missing something?

Tue, 08/26/2014 - 05:23 | 5143915 HYPERTlGER
HYPERTlGER's picture

Yield rates have been dropping the past 33 years in the USA and the world...Because the net producers of yield or lower class slaves like farmers and miners/raw materials producers and manufacturers have been imploded down towards absolute 0 by the net consumers of yield or masters and servants to power the explosion of the masters and servants or net consumers of yield up towards absolute 1.

In 2008 the USA reached the maximum potential inflation after 64 years from 1944...and began collapsing to oblivion.

The roaring 6 decades boom is ending and turning into a bust.

Yield rates rising is a demand for the lower class slaves to produce more yield than they are currently which is insufficient.

The systsm is yield starved now...demanding more yield is not going to cause the net producing slaves to increase their supply to the demand by net consuming masters and servants above.

It's like a poor workhorse and a rich rider...and the rich rider whips/taxes the poor workhorse to gallop as fast as possible to the bright glorious future...but the horse slows down...this is a recession...and the rider whips/taxes it until it gallops again.

this has been going on for 6 decades...and now the poor workhorse is exhausted and slowing down...and the rich rider is whipping/taxing it more and more.

Eventually the horse will stop and the rich rider will whip/tax it to death...of course the rich rider will blame the poor workhorse for failure to take the rich rider to the bright glorious future.

Yield rates have been imploding down for 33 years searching for suppoting volume...and now can not find any...rasing rates will only cause volume or aggrate demand which is already not enough to collapse not expand.

There is going to be some kind of global emergency event showing up to cover this all up at some point.

The only people that believe the FED has magical powers to set yield rates lie...are those that live off of yield..the worshipers of the compounding interest equation as the path to eternal salvation.

People that actually work for a living know that the FED does not have the power to demand they produce more or less than is possible.

you can not suck more oil out of the ground or demand the crops to grow faster or the sun to rise later or earlier....once the demand by the master and servants for mud bricks from slaves in the mud brick pits becomes greater then the slaves in the mud brick pits can supply...it's game over...whipping/taxing the slaves into skeletons is not going to work.

The take more power than is given equation at the core of the systsem...basically cuts down trees faster than they regrow or causes the exponetial decay of real 1's into real 0's to power the exponetial growth oof 0's into fake 1's.

The cause exponetial decay = exponetial growth effect equation.

The cause negative = positive effect equation.

When the supply of real 1's or fractional reserve of reality is imploded down to the absolute 0 point to power the explosion of the fake 1's or created out of thin air fantasy up to the absolute 1 point...game over. 

When the demand by the rich liberal fantasy becomes greater than the poor conservative reality can supply...The rich liberal systsem goes bye bye.  

Mon, 08/25/2014 - 22:05 | 5143189 I Write Code
I Write Code's picture

 

Rising rates would hurt bonds and equities but would support gold.

Um, say wot?  Probably not.   Rising rates do NOT generally support gold which does not pay interest, y'know.  Your example of the 1970s missed a big factor - *first* came inflation, *then* came high rates, and the *inflation* justified the gold price, NOT the rates.  In this case everyone thinks rising rates will cause the economy to tank and could easily drop gold prices too even if there's increased US demand.

What could spike gold anytime is if China/India eat up the physical supply, as it sure seems they are trying to do, but so far has not outstripped production.

Tue, 08/26/2014 - 00:40 | 5143693 Squid-puppets a...
Squid-puppets a-go-go's picture

well, as a proxy, check out the shanghai silver inventory evaporation 

http://srsroccoreport.com/update-shanghai-silver-warehous-stocks-fall-24...

it dont take much now for one cashed up player to see the opportunity of snapping up the last 100 tonnes - thats only, what, $66 million?

just one oligarch to step outta line... just one 'new money' opportunist to make a play, and the knock on effect will likely crack the comex within weeks

they can rehypothecate all they want, investors will start asking for delivery of the real thing en masse

 

Mon, 08/25/2014 - 13:58 | 5141253 walküre
walküre's picture

Their hubris is nauseating. To make matters worse, the CBs are dealing with a brainwashed dumbed down collective who could not survive a day in this world if the system would break. No wonder that this collective does not realize that they're being paid in diluted paper from nothing but thin air instead of demanding to be paid in a commodity that could not be endlessly reprinted or restocked into their digital bank accounts.

If it wasn't for Russians, Chinese and Indians who still have a brain to figure out what creates long lasting value, the Western CB's plan to take over the world with worthless paper would succeed.

Demand payments in gold and silver, fuckers. Don't settle for the CBs toiletpaper. Russia could ask Germany and Europe to settle the bills in tangible assets. China could sell gold to Europe for Euros at prices that are not driven down by Disney Dollars. Heck, they could even create an exchange around that.

Until the day that someone sensible and powerful enough demands to be paid in gold and silver, the CBs and their henchmen can rake in payday after payday without lifting a finger and gobble up real assets for their worthess paper. Prices don't matter as long as they can reproduce the paper from nothing. Everyone else living on wages and fixed incomes be damned.

Tue, 08/26/2014 - 06:07 | 5143967 HYPERTlGER
HYPERTlGER's picture

The USA has been imploded down towards the absolute 0 point the past 33 years to power the explosion of China up to the absolute 1 point the past 33 years.

The USA has been imploded down towards absolute 0 by the 1944 bretton woods global trade agreement to power the the explosion of the world up towards the absolute 1 point since 1944.

The USA and world is now imploding to oblivion in a controlled collapse...Russia is crumbling...China has stopped exponetially growing by 10% per year like it was for the past 3 decades...

tangable assets?

The absolute capitalist hierarchial food powered make work enterprise or city state of existance is food powered...not gold or silver powered.

money started out as a food substitute...food is power.

the medium of exchange is power.

real power or food sustains fake power or money.

without food or reality to power money or the fantasy believed to be reality

money becomes worthless.

When the demand by gold or 1 for gold or 1 from the hole in the ground or 0 becomes greater than the hole in the ground or 0 can supply...The boom civilization up to absolute 1 turns into the bust civilization and then the ghost civilization down to absolute 0.

That is the gold standard game...

It's all just an accouting game...gold and silver were used as money because they are hard to counterfit ultimately...money is a tool invented by superior forms of life to manipulate lower forms of life into doing the bidding of the superior forms of life.

money is an example of a positive reinforcement tool or servant...while a whip is an example of a negative reinforcement tool or servant...invented/discovered by superior life forms or masters to manipulate inferior life forms or slaves into doing the bidding of the superior life forms or masters.

The masters of money rule the slaves of money. 

Mon, 08/25/2014 - 13:47 | 5141205 lasvegaspersona
lasvegaspersona's picture

Draghi won't/can't/shouldn't print....there has to be one surviving currency when the dollar's pulse is finally taken and found to be absent. The world needs some medium of exchange or we will be back to trading in physical gold and that would put us back to the time when the Earth could support a population of fewer than 1 billion souls. Unless there are 5.5 billion volunteers I see that situation as undesirable. 

Mon, 08/25/2014 - 13:28 | 5141120 Joebloinvestor
Joebloinvestor's picture

A fucking LIAR and a fucking TROLL.

Mon, 08/25/2014 - 11:33 | 5140679 Farqued Up
Farqued Up's picture

JACKPOT HOLE is a debt-death trap, OURS!!

Mon, 08/25/2014 - 11:05 | 5140548 Atlantis Consigliore
Atlantis Consigliore's picture

http://youtu.be/hCDAfa-NI-M

"You know me, Im your boy, Im your friend, thick and thin, Im Your Pusher Man"

I'm your Pusher Man.....,  FED Yellun Hokum-  Draghi  Centeral Bankers Theme song.   

 

Mon, 08/25/2014 - 10:45 | 5140480 Captain Willard
Captain Willard's picture

The central bankers couldn't agree on much, but they agreed that the conspiracy against precious metal prices will continue. Those prices are a constant referendum on the quality of central banking and therefore must be manipulated.

Mon, 08/25/2014 - 09:27 | 5140054 lester1
lester1's picture

Is Peter Schiff the only one who sees the big time financial problems that are coming because of the FED??

Peter Schiff was banned from Bloomberg TV because he predicted the crash of 2008 and made many Bloomberg analysts look like fools.

Peter Schiff is also banned from Cavuto on Fox because he made Neil Cavuto look like a know nothing fool for saying in 2006 the subprime housing is not a problem. It's amazing Cavuto still has a show after being so wrong.

Mon, 08/25/2014 - 20:51 | 5142886 W.M. Worry
W.M. Worry's picture

"it's not what you know, it's who you know!"

scratch that

"It's not who you know, it's who you blow!"

Mon, 08/25/2014 - 08:50 | 5139926 AdvancingTime
AdvancingTime's picture

Much of the economic landscape is beginning to look like something out of  "Alice And The Looking Glass" A bizarre  and unrecognizable land, a land that is distorted and papered over by ream after ream of paper. This paper has been rolling off the printing presses of central banks all across the world in an attempt to mask reality.

Peter Schiff says, printing money is to the economy what taking drugs is to a drug addict. In the short term it makes the economy feel good, but in the long run it is much worse off. What was once the "long run" or "distant future" may be getting much closer. More on what happens when the momentum ends in the article below.

http://brucewilds.blogspot.com/2013/01/what-happens-after-momentum-ends_...

Mon, 08/25/2014 - 16:46 | 5141985 Clesthenes
Clesthenes's picture

It is much worse than “money” “rolling off the printing presses of central banks”.

It is evidence of a society that cannot survive, and does not deserve to survive.

You see, all paper currency (in this day and age) is issued against government debt, which is the process by which a generation of tax consumers financially cannibalizes future generations of tax payers.

There is enough such debt on the books now to cannibalize following generations of Americans to the end of time.  You don’t need to take my word for it; a former comptroller of the US almost says the same thing (he was less diplomatic than I).

Is there a solution?  Of course there is; but hardly anyone will point to it.  From concerned bureaucrats to financial analysts, they suggest three remedies or a combination of them: raise taxes (which realizes the cannibalization of our children to the end of time), cut government expenses, or more debt.

A much better solution is to go after the $9-11 trillions that went missing from Dept of Defense, HUD, SSA among others.  It’s kind of simple isn’t it?  But those who shared in this booty (Congress, Defense contractors, banks, judges and bureaucrats (thru their pension systems) will not even allow discussion of such solution.

It is a solution that could solve a host of problems; and if it is to be done, we will have to duplicate what American Founders did, minus their mistakes.  Trouble is, no one today knows how they did it: the real history of the law and procedures Founders employed (an intro)  have been erased from current law and history books.

(Follow my other comments: click my name, thanks.)

Mon, 08/25/2014 - 10:06 | 5140295 The Wizard
The Wizard's picture

Not only is it the paper, it is the words they use to describe the "paper"

 

Alice with Humpty Dumpty in Through the Looking Glass

“I don’t know what you mean by ‘glory,’” Alice said.

Humpty Dumpty smiled contemptuously. “Of course you don’t—till I tell you. I meant ‘there’s a nice knock-down argument for you!’”

“But ‘glory’ doesn’t mean a ‘nice knock-down argument,’” Alice objected.

“When I use a word,” Humpty Dumpty said, in rather a scornful tone, “it means just what I choose it to mean—neither more nor less.”

“The question is,” said Alice, “whether you can make words mean so many different things.”

The question is,” said Humpty Dumpty, which is to be master—that’s all.”

Alice was too much puzzled to say anything; so after a minute Humpty Dumpty began again. “They’ve a temper, some of them—particularly verbs: they’re the proudest—adjectives you can do anything with, but not verbs—however, I can manage the whole lot of them!

Impenetrability! That’s what I say!”

“Would you tell me please,” said Alice, “what that means?”

“Now you talk like a reasonable child,” said Humpty Dumpty, looking very much pleased. “I meant by ‘impenetrability’ that we’ve had enough of that subject, and it would be just as well if you’d mention what you mean to do next, as I suppose you don’t mean to stop here all the rest of your life.”

“That’s a great deal to make one word mean,” Alice said in a thoughtful tone.

“When I make a word do a lot of work like that,” said Humpty Dumpty, “I always pay it a little extra.”

“Oh!” said Alice. She was too much puzzled to make any other remark.

“Ah, you should see ‘em come round me of a Saturday night,” Humpty Dumpty went on, wagging his head gravely from side to side, “ for to get their wages, you know.”

(Alice didn’t venture to ask what he paid them with; and so you see I can’t tell you).

“You seem very clever at explaining words, Sir,” said Alice. “Would you kindly tell me the meaning of the poem called ‘Jabberwocky’?”

“Let’s hear it,” said Humpty Dumpty. “I can explain all the poems that ever were invented—and a good many that haven’t been invented just yet.”

This sounded very hopeful, so Alice repeated the first verse: --

“’Twas brillig, and the slithy toves

Did gyre and gimble in wabe:

All mimsy were the borogoves,

And the mome raths outgrabe.”

“That’s enough to begin with,” Humpty Dumpty interrupted: “there are plenty of hard words there. ‘Brillig’ means four o’clock in the afternoon—the time when you begin broiling things for dinner.”

“That’ll do very well,” said Alice: “and ‘slithy’?”

“Well, ‘slithy’ means ‘lithe and slimy.’ Lithe’ is the same as ‘active.’ You see it’s like a portmanteau—there are two meanings packed into one word.”

“I see it now, “ Alice remarked thoughtfully: “and what are ‘toves’?”

“Well, ‘toves’ are something like badgers—they’re something like lizards—and they’re something like corkscrews.” ……………………………………………………………………….

……………………………….

Mon, 08/25/2014 - 08:43 | 5139907 lunaticfringe
lunaticfringe's picture

Meanwhile back at the lake, the 3 year bear market in gold continues whilst the bankers continue to print trillions. Oddly reflecting the real realities of supply and demand, oil continues to drop. 

We are living the Japan Syndrome and we will continue to do so for decades. Any talk of raising rates would mean that all of those trillions we refinance every year- would have to be refinanced into higher rates. All the sabre rattling and tough talk is just theater. These folks have indeed screwed the fucking pooch and we are just waiting to see what the litter looks like.

I am not Chumbawamba.

 

Mon, 08/25/2014 - 11:42 | 5140723 Farqued Up
Farqued Up's picture

You betchie, the ponzi has taken over all financial life, the eternal lies are to allow the elites time to escape out the back door before the shitola hits the fanola.

Mon, 08/25/2014 - 07:28 | 5139722 disabledvet
disabledvet's picture

"Will end" in significant inflation?

Prices have already soared you moron. 4 bucks for a gallon of diesel? Bwhahahahahhahahhaha. Highway robbery. Why buy gold when I can get a 90% profit margin in oil?

These clowns get this stuff out of the ground for a buck a barrel.

Mon, 08/25/2014 - 07:20 | 5139707 Moonrajah
Moonrajah's picture

Does a bear shit in the woods?

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