Trump To "Bully" Fed Into Printing Money - Negative for Stocks, Positive for Gold

GoldCore's picture

Trump To "Bully" Fed Into Printing Money -  Negative for Stocks, Positive for Gold

David McWilliams has written an interesting article in which he puts forward the case that Trump is likely to turn on the "enemy within," the Federal Reserve and bully them into "printing money."

He points out that this was seen in 1971 when Nixon bullied the Fed into printing and debasing the dollar. McWilliams says this would be bad for stocks markets which would fall in value as was seen in the 1970s.

This would be positive for gold as the printing of dollars, rising inflation and stagflation saw gold surge in the 1970s when it rose from $35 per ounce in 1971 to over $850 per ounce in January 1980 (see chart). Along the way there was a significant correction when gold prices fell by nearly 50% - very much akin to gold's price falls from 2013 to 2015.

Gold in USD in 1970s

McWilliams does not expressly say that it is positive for gold but the 1970s, the historical record and the data shows that the printing of money and currency debasement is positive for gold in the long term.

McWilliams writes:

"What happens if Trump bullies the Fed into accepting his higher growth rates which he achieves by boosting government spending and borrowing billions? Could it happen in the first place?

Yes it could. In the 1970s, Richard Nixon bullied the Fed into printing money so that he could win the 1972 election. It can happen because it has happened. This would mean that all the old rules go out the window. American wages would rise much quicker than they have in the past few decades. The average guy will feel richer and then he will be persuaded to vote for Trump again.

 

Wall Street would wobble and the stock market fall, but the vast majority of people don’t own stocks, so they won’t care. And Trump will get his re-election and the only people who will squeal in the short term are rich bankers and investors on CNBC.

Sounds logical? That’s because it is. The Fed gets put in its technocratic place, the White House spins it as a victory for democracy over technocracy, and the Democratic Party is robbed of its electoral clothes.

From a Trumpian perspective, what’s not to love? That’s exactly why it’s likely."

Full article here When Trump turns on the enemy within — the Fed 

 

News and Commentary

Gold prices hold up, expect increased volatility (BullionDesk.com)

Dollar Drops as European Stocks Climb on Earnings: Markets Wrap (Bloomberg.com)

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Architas ups gold allocation amid heightened market uncertainty (InvestmentWeek.co.uk)

Gold's Top Forecaster Says Prices May Hit $1, 350 by Year-End (Bloomberg.com)

Markets Start to Ponder the $13 Trillion Asset Gorilla in the Room (BBG) (Bloomberg.com)

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Investors’ Nightmare Scenario Takes Shape in French Election (WSJ) (WSJ.com)

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DGS blog's picture

Well the more it changes the more it remains the same but I don't think any of us have enuf cheese, just like the mice involved here - Three Blind Mice

 

http://denaliguidesummit.blogspot.ca/2017/04/gold-up-1296-us-oops-gold-down-1274-oh.html

brushhog's picture

It doesnt work the way it used to, it could easily be bullish for stocks and bearish for gold. Or bearish for both, or BULLISH for both. Its not a simple system where A + B = C, its a complex system where an increase in A effects X,S, and D in ways we dont fully understand which curl back onto B and effect the global supply of C.

"The curious task of economics is to demonstrate to men how little they know about what they imagine they can design"

mavenson's picture

Not that it makes much sense, but in Trump's mind he is telling them to weaken the dollar so if they hike rates and things crash, he can say he said the opposite. Pretty stupid, but that's the only sense I can make of this through Trumpian type thinking. Then again, what if it were as sleazy as him telling Goldman "OK Go short, one sec" ..."*ahem*...We need a weak dollar." Or could it be as stupid as loosely suggesting mercantilism which is a similar turbulent path as tarriff talk, things that you don't just casually suggest here and there, but have severe repercussions and require war-like dedicated application, or are just a terrible idea outright.  I don't know, I think part of this guy's strategy is being a moron most of the time and then catching people offguard with something smart every so often. Yet, it's becoming clear that the idea of Trump as deceptively lucid and in full control of his finely crafted, deliberately outrageous public persona... is a humorous fantasy. No no, I think we are dealing with an actual moron. Remember, TPTB in NYC have been entrenched for quite some time. Sometimes all it takes is saying Mazeltov enough and certainly not by having any kind of moral ideology, let alone a libertarian one. Integrity and NYC? Oil and Water.

artichoke's picture

I'm sorry, did you say anything that made sense there?  Because if you did, I missed it.

The article's argument is just standard macroeconomic and political analysis.  It was obvious a year ago that if Trump won he would want a weak dollar.

Silver Savior's picture

I know the dollar will be worthless anyway so printing does not matter. Print away chump. But spending all that whatever it is on as wall? It would be better spent on programs for the poor.

Reaper's picture

Just end the Fed.  Let the Treasury print that same money and not incur more debt.  Better yet, seize the $4 trillion at Fed which is entirely our printed money to further reduce the debt.

silentboom's picture

Bully them?  Yea he is really going to have to twist Janet's arm.  Everything is awesome!  Print Print Print.

bshirley1968's picture

As if that cheesey, NY, SOS could "bully" anyone. LMAO!

All you got to do to an arrogant prick like him is ingnore them.  They will come unglued.  Just another crybabyegomaniac that needs constant attention or they throw a fit.

steve2241's picture

Since when has the  printing of money been negative for stocks???

Fahq Yuhaad's picture

Correct, the above article is bullshit.

Printed money will be used to finance more COMEX short selling of gold and silver.

BSHJ's picture

Since when is ANYTHING negative for stocks?

Gnostech's picture

Stupid goyim. Only the chosen are allowed to have money.

Anon2017's picture

My gold stock still has a long way to go to break even and silver is still trading way below its 1980 peak.

DEMIZEN's picture

whatever.  trumpo or not. there is only one way out of this mess. print print print...

Osmium's picture

Not sure I understand.  The FED has been printing money hand over fist for EIGHT years and the market has gone straight up.  Now all of the sudden if they print more money stocks will fall?

DEMIZEN's picture

what plugged in part is it that you dont understand, click on that fucking link and buy some bullion bars

847328_3527's picture

The funny news is the IMF first stated the global outlook is bleak then by the end of the day they issued another statement saying everything looks awesome with solid growth.

 

However, anyone who reads between their lying lines sees the huge number of bankrupt retailers and store closings (over 8,500 this year) and restaurants going under has to doubt the IMF and conclude it's Fake News.

Bottom line: I don't know how they will do it or whom they will blame for it but the Fed will print lots more money as bankruptcies and the economy sink alot more and joblessness rises.

The biggest problem now (and has been) is that very little of that printed money is finding its way into the hands of the American middle class.

Perimetr's picture

What would really be positive for gold (and silver)

would be for the Treasury Dept to stop ordering the bullion banks

to dump billions of dollars of paper shorts every time gold (and silver) start to go up.

Don't hold your breath