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Jim Grant: "The Fed Has A 3rd Mandate... The Administration Of American Equity Prices"
Having recently given us a two paragraph synopsis of all that is wrong with our financial market faith in fed officialdom, Jim Grant unleashes his critical wit and insight on CNBC to explain the Fed's new remit, as Bill Dudley recently explained, "the administration of American equity prices." The Fed will find it difficult ro raise rates - both technically (for reasons we have explained in detail previously) and "they will find many blocks in the way having to do with financial markets' reaction." Simply put, the Fed wants to raise rates but mostly it wants peace and quiet, which it does not have: "The Fed is America's central bank but it is the steward of the world's currency," and as Grant concludes, "it is raining currencies around the world... and the Fed must be coginizant of that."
Jim Grant...
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As he notes, it is indeed raining currencies around the world...
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Jim Grant: Gold Is The Innoculation Against Hairbrained Doctrines Of Central Banks
http://investmentwatchblog.com/jim-grant-gold-is-the-innoculation-against-hairbrained-doctrines-of-central-banks/
4th and 5th..
The destruction of real price discovery and the termination of the free market capitalist system.
Com on, the Fed is completely morally bankrupt here, anyone who can't see it, is part of it.
Choomboy and Rahm Emmanuel have had many man dates. Reach arounds included.
Oh you mean MANDATES.
Never mind....
I wish Jim Grant looked and talked a bit more like Joe Plumber...
I wish Joe the Plumber (and every other adult male American) talked a bit more like Jim Grant.
Jim Grant is the only solution to the FED.
Hopefully he gets offered the job one of these days, if an alternate universe opens up with Ron Paul in leadership.
It would be fast and fun.
Funny, all the down arrows.
Jim's ideas are fine, the problem is he can't communicate them to Joe. If he could, we'd have something. And if Jimran the fed, I bet more adult American males would speak a bit more like him. The system sets the incentives.
That was Lenin's gift by the way, he could communcate directly to the working man.
Yes and dumbing down to the most idiot of idiots leads to:
http://www.quickmeme.com/img/56/560dac2ec21db7b008fa304daad09fa4511b73b3...
Funny, all the down arrows.
Jim's ideas are fine, the problem is he can't communicate them to Joe. If he could, we'd have something. And if Jimran the fed, I bet more adult American males would speak a bit more like him. The system sets the incentives.
That was Lenin's gift by the way, he could communcate directly to the working man.
no, please no. let him be him and let
the plumbers be plumbers. he is a sort of
master plumber, jim is
Yes, because stupidity should be celebrated and cherished.
The dumbing down of the world has progressed enough.
Let's see if the 15 months Rickards theorized between QE holds true. We'll see QE 4 late next year. Perhaps a larger than $85 billion/month.
The Fed is stuck keeping rates at essentially 0 and just turning QE on or off.
Plus William Dudley and hi NY Fed buying stocks.
JG is the man. I'm surprised they haven't wacked him yet to shut him up.
He's not enough of a threat. The lame stream media will play him off as a nut like they did Ron Paul.
Yes, his demeanour is too academic for him to be a threat; it would be like assassinating a mildly influential college professor.
Raining currencies & gold droppings. Sometin's fishy.
Mr.Yellen's fly open ?
He just creamed himself. He reads zh you know.
Looking at the events of recent years from a cynical point of view, what is occuring in financial markets could be the last ditch effort of the United States' central planners to maintain the upper hand in a rapidly changing global economy:
1) Fed policy since the Global Financial Crisis (2008-2009) facilitates the growth of a massive bubble in emerging market debt. In 2013 after the Taper Tantrum it becomes increasingly apparent to analysts that U.S. dollar liquidity has been one of the most influential factors in the emerging market debt boom. It is a problem in plain sight. Turning off the spigots will lead to economic crisis in developing countries. The United States Fed does not anknowledge the collateral damage that their policies are creating but continues to pump liquidity and the problem grows. This is despite the fact that financial analysis of all types is now widely desseminated and the Fed membership is well aware of the blow back from their policies. As U.S. central planners have famously declared in the past when other nations issued warnings about their economic policies: "Its our currency and your problem."
2) At the same time that massive stimulus is creating a bubble in emerging markets, it is also financing the shale oil / gas extraction boom in the United States. Governmental research in the U.S. , which has now been refuted in many cases, is very influential in building investor enthusiasm for these oil and gas company prospects. Huge money flows into shale oil and gas equities and debt, and investors are repeatedly fleeced throughout this period as projects do not live up to potential. Private investment money has now financed a strategic asset for the United States. There is now infrastructure built so that the U.S. can remain close to energy independent for a period of time, and private investors are left holding the bag.
3) A combination of a final retrenchment of U.S. quantitative easng under the auspices of an improving economy and an oil supply glut leads to economic crises in numerous developing world economies (2015 - 2016?) Contagion spreads and the European and U.S. markets are also hit. However, as the "king currency" the U.S. dollar experiences a continued appreciation, and the U.S. multinationals in the S&P 500 are viewed as a relative "safe haven" during this period. Therefore, they make it through the turmoil relatively much better off.
4) It is during this period of "blood in the streets" that U.S. multinationals are able to use a strong dollar and share prices to swoop in and once again acquire cheap assets globally. The U.S. government also regains relevance as they are called upon for aid from some of these countries that fell into crises.
The U.S. has now bought itself more time as the world hegemon without use of its military. Where things play out after this point is difficult to tell.
The U.S. has only $bought itself more time because the final stick in the incremental foreign policy actions taken against Russia and to a lesser degree, China, has yet to be snapped. Such is the great deception - Americans thinking they actually hold the cards, when in fact, they hold nothing, save for various carrier groups and submarines on intimidation patrols in and around the seas of other nations. 'This too shall pass'...
Your brief exchange with RatKing is a perfect summary of what is going on. The only question I have is: Is it possible that the US does play such an important role such that countries like China and Russia are simply not able to break free and prosper on their own? Are the other nations autonomous enough? Is the US the "enabler" following a policy that enagages and "sucks in" other nations to eventally be part of the OWG. Now, I'm not blind, I see the cracks forming. On the other hand, with so many people and countries involved is that so peculiar? Cracks and dissent are to be expected.
In any case, this is one of the main questions as I see it. I hope I get an actual answer as opposed to "Fuck you, Putin looks good with his shirt off."
i find the increasing number of currency swaps between China and others reassuring. i think they are up to 25? now, including major european countries.
Whoops, dupe.
I think it has been said already several times. None of this is a revelation. The hedge here someplace as well as over at Jesse's maybe Mish? It is the deflation ala Japan that has to take place as the final phase of US$ relevance falls into the abyss, followed by a hyperinflation.
If investing fundamentals was ever real, then the $ losing 97% since '13 has got to be a trend to be ackknowledged. The 800 lb. chimp of unfunded liabilities is still in the room. I don't have the funds to be a gold bug, however looking at this from a poor mans perspective I do have some silver. Hope for the best and plan for the worst.
I was just reading my local paper and the "morgue" is offering to take over our sewer, I guess no one has talked with Atlanta.
My dad who came through the great "D" always told me, "if you don't have it in your hip pocket" you don't own it. It has been said different ways, but the meaning is the same.
Rat
I'm not so sure of the benefit of building infrastructure in the shale oil/gas industry. The fact that mutiple wells must be drilled to keep these patches producing seems more of a variable cost than 'infrastructure. Sure the technology has been developed and there are now roads where there were none but what has private money purchased that will be to the governments benefit in the future?
q
The Fed's only mandate going forward is this: To keep the entire world's monetary system from exploding as debt builds up like the gas inside of a cow's carcass....and that is saying it politely.
So if oil prices keep collapsing why not start off by saying "yee-haw! I'm buying gold hand over fist and glad to be an American too!"
I mean seriously this is like a Dollar Dream..."go ahead Fed Heads! Take out the Golden State! I think they're doing a GREAT job! 25 billion for an Aircraft Carrier? I want TEN of those pronto!
Unleash the Poopie Paper!!!!
What's that? My view on silver? Hablo espanol bro?!!! Hell yeah! Back it up. I'm building a silver shit house! Oh, I'm sorry. You can't say that on television?....
We used to call centrally planned economies like this Communist but that was back in the day when we hung some folks for torturing some other folks.
Hyper deflation is to petro-currency debt valuation as low tide is to a tsunami.
good one.
http://trinitysyracuse.org/sve/sve%20concert%202014-12-14%20StPauls.mp3
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42
https://www.youtube.com/watch?v=bwUj0gjyh6A
Mink DeVille - Where Angels Fear to Tread ( Full Album ) 1983
Just bought the CD. Thanks.
stiletto spiking on the vix
http://finance.yahoo.com/tumblr/blog-stiletto-spiking-on-the-vix-2012240...
Hey Jim Grant,
YOU CAN END the big con, just show people these
http://patrick.net/forum/?p=1223928
It's the first mandate, but either way.
So the dollar just got a lot stronger compared to other currencies but the Fed has printed $2 trillion worth of funny money to cover up a debt problem, federal and corporate, and so what happens now? I'll tell you - there is a dump in Federal Reserve Notes as an asset to buy gold. That's what happens.
Bonds should be viewed as the Achilles heel of this low interest rate but inflationary period. Anyway you look at it I have a problem lending my hard earned money out for a long period of time based on predictions of future government deficits.
These forecast are often formed and made on assumptions based on rosy scenarios or politically skewed to benefit those in power. Like many investors I think the bond market is a bubble ready to pop and won't touch bonds with a ten foot pole. Knowing what we know about the effect that interest rates have on the value of bonds one might deduce that the 30 year bull run on bonds will have to come to an end the moment rates are expected to go up.
To give you a sense of what this may mean to U.S. Treasury Bond investors a 10 year treasury bond issued at a 2.82% interest rate could see a 42% loss in value from a mere 3% rise in interest rates. This means if you’d held $100,000 in these bonds prior to the rise in rates, you would only be able to sell those bonds for $58,000 in the secondary market after the 3% rise. Not only would bond holders be stripped of wealth if rates rise or even worse soar, but it would magnify the nations debt service and rapidly impact our deficit in a negative way. The article below delves into just how big a problem it could cause.
http://brucewilds.blogspot.com/2014/12/bond-market-bubble-has-ugly.html
Jim has been tricked.
What he refers to is the FOURTH mandate.
The first three, in the Fed Mission Statement are
1 Promote maximum employment
2. Promote STABLE prices (not promote inflation)
3. Maintain MODERATE interest rates (zero isnt moderate by any metric)
now the fourth ... maintain equity prices. Correct here Jim
Ron Paul will eventually get his wish. I just hope he lives long enough to see The Creature from Jekyll Island discredited and dismantled...
http://www.globaldeflationnews.com/the-creature-from-jekyll-island-the-e...
The Federal Reserve has failed to take serious efforts in pushing the government to take the necessary reforms needed to move the economy forward. Policy makers aided by the media thrive at presenting simplistic answers that solve both economic and society’s problems with little or no effort required from the masses.
What started as a program to support and prop up the economy as well as derivatives has morphed into the main driver of economic data. Between the low interest rates that has propelled investors into high risk assets in search of a positive return on their money, and money being pumped into the system, the markets have become distorted and disconnected from the economy. The idea that investors will continue to pour money into the sky high equity market is flawed. More on why an exit strategy from easy money remains elusive in the article below.
http://brucewilds.blogspot.com/2014/06/exit-strategy-from-qe-remains-elusive.html