Is Fed Privately Owned?

By Steve Saville

Is the Fed Privately Owned? Does it Matter?

The answer to the first question is ‘sort of’. The answer to the second question is no. The effects of having an institution with the power to manipulate interest rates and the money supply at whim are equally pernicious whether the institution is privately or publicly owned. However, if you strongly believe that the government can not only be trusted to ‘manage’ money and interest rates but is capable of doing so to the benefit of the economy, then please contact me immediately because I can do you a terrific deal on the purchase of the Eiffel Tower.

Continue reading Is Fed Privately Owned?

“FrankenMarket”

By Biiwii

“…this is a Frankenmarket of their own creation…”

Ha ha ha, good one Chris.  I see my phrase resonated well in 2004.

Anyway, Chris Martenson can talk like nobody’s business.  I cannot verbally express myself the way he does.  Not nearly, not publicly.  He once woke me up with a late night phone call going on with the energy of a true believer, and I’m like ‘wow this guy is driven and on a mission’.  Me paraphrased:  ‘Ya ya ya Chris, things are bad and I think it’s great you are going to [oof, I am still listening as I post and I just heard “deflationary impulse”, another Biiwii-ism, although to be fair I’ve heard that one around elsewhere over the years.  At least I have not heard ‘Inflation onDemand’© or the ‘Continuum’© going around the internet] try to tell the world about it… hey, what time is it, anyway?’

Doctor Martenson came from the same group of alarmists that I came from early in the Greenspan Inflation around 2002-2004.  It is one thing to be alarmist (we were proven correct in 2007-2009, but my preferred tack was to play these macro swings driven by out of control policy.  First off, secure true monetary value (hint hint) and second, get rid of personal, and in my case business, debt.  Then go forth and speculate (this included bullish stock market positions in 2003-2007).

Where I disagree with certain types of gold bugs and alarmists is that you do not live your ideology or even your deepest held beliefs on a daily basis; not in the financial markets you don’t.  You continually remain vigilent as to negative potentials and you go forth and you enjoy life as best you can in sometimes insane circumstances.  But you do not scare the shit out of people in the here and now, because most of those people receiving the information are going to make emotional moves in real time and then… the macro crawls along ever so slowly to where it is going.

That is why I tune these things down, despite the obvious intelligence of the speaker.  It’s all psychology my friends.  I put the Armstrong input I get in the same category.  These are the financial markets, not some war of ideology.

This interview came my way via LinkedIn.

[edit]  I have not listened to Chris in a long time.  How long has he been talking about deflation?  I thought the big focus had been on inflation.  The contrarian in me is curious.

Money and Spheres

By Doug Noland

Credit Bubble Bulletin

In a tiny subsection of the analytical world, analysis is becoming more pointed and poignant. I appreciate Bill Gross’s August commentary, where he concluded: “Say a little prayer that the BIS, yours truly, and a growing cast of contrarians, such as Jim Bianco and CNBC’s Rick Santelli, can convince the establishment that their world has changed.”

I’ll include the names Russell Napier, Albert Edwards and David Stockman as serious analysts whose views are especially pertinent. I presume each will exert minimal effect on “the establishment.”

Back to Bill Gross: “The BIS emphatically avers that there are substantial medium term costs of ‘persistent ultra-low interest rates’. Such rates they claim, ‘sap banks’ interest margins…cause pervasive mispricing in financial markets…threaten the solvency of insurance companies and pension funds…and as a result test technical, economic, legal and even political boundaries.’ ‘…The reason [the Fed will commence rate increases] will be that the central bankers that are charged with leading the global financial markets – the Fed and the BOE for now – are wising up; that the Taylor rule and any other standard signal of monetary policy must now be discarded into the trash bin of history.”

Continue reading Money and Spheres

NFTRH 354 Out Now (both of them)

By Biiwii

NFTRH 354 was produced as an online edition at NFTRH.com on Friday morning before the US opening bell and this morning a 13 page PDF ‘add-on’ went out to add color and perspective, especially on the bigger picture using mostly long-term charts.

nftrh354

…Same Dollar ‘Rampage’

By Alhambra Investment Partners

July Closes With Same ‘Dollar’ Rampage

The “dollar” has ended the month much the way it started. Despite headlines suggesting the dollar is “down” today, it is very much proving to be disruptive across every proxy. Gold was down to $1,080 at the AM fix before rebounding. Commodities were sold broadly, with copper back near $2.359, down almost $0.02 at some parts of the futures curve; oil is down too, with WTI in the front back close to $47.

ABOOK July 2015 Dollar Copper 31st Continue reading …Same Dollar ‘Rampage’

How Does it Feel?

By Biiwii

Kind of a dumb rock song I guess.  Somehow Chris using his software, took my guitar and turned it around; inverted it or something, for the intro, which I think is really cool.  Jim’s got a great solo on this thing.  There is a weird part near the end that was actually a drum screw up, which we kept in and worked with by making it another section for a song that already had the verse-chorus-bridge thing going on.

How Does it Feel?

Va va va voom… Nancy Sinatra made an album of the same title.  Much better than 4 middle aged guys making loud rock music.

nancy.s

Armstrong Phenomenon

By Biiwii

I call it a phenomenon because not since being bombarded with Jim Sinclair-isms last decade have I taken in so much input centering around one man and his unique view.  Not since ole’ Jim has this input been so unquestioningly in line with the view of the guru producing it.

Usually I use the word guru in a negative light, meaning something closer to charlatan or promoter than anything positive.  But with Martin Armstrong I don’t feel that way.  Indeed, the main thing that makes me uncomfortable is not his theses (from what I gather from my email contacts).  It is that he seems to have come from the very place he scorns, the gold “community”.  I seem to remember him being held up by Sinclair many a time as a bullish gold forecaster.  I have heard from several people who have pretty much converted to Team Armstrong from Team Sinclair (CIGA anyone?).  :-)

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The Fed and Inflation

By Tom McClellan

Debunking the Fed as the Controller of Inflation

Global temperatures and CPI Inflation Rate
July 31, 2015

A commentator on CNBC recently stated that former Fed Chairman Paul Volcker is “revered” in the bond market for having slayed the inflation dragon.  While that version of history is widely believed to be true, and while then-Chairman Volcker did take aggressive action with interest rates, the causal relationship between Fed action and inflation rates has now been debunked by revelations from other data.

Continue reading The Fed and Inflation

What Difference Does ‘Some’ Make?

By Alhambra Investment Partners

At This Point, What Difference Does ‘Some’ Make?

Despite being the last FOMC meeting before the ever-expected rate hike in September , there was a whole bunch of nothing in markets before and even after the policy statement. Even the typical knee-jerk was less than on prior meetings. Maybe traders have come to expect so very little from the policy statement, focusing more on the inanities and silliness of the broader minutes. Whatever the policy thinking, markets were not much moved.

If anything, there was the familiar “dollar” bias of the past few weeks, which is not a positive sign. Copper remained slightly higher throughout the session, with August futures picking up a penny to stay above $2.40, unmatched to the 13:00 CT statement issuance. WTI futures, on the other hand, gave back half the gains accrued at the open (likely more so on production cuts) without really much volatility – a negative drift rather than a forceful execution of any change in policy expectations.

ABOOK July 2015 WTIAug15 Continue reading What Difference Does ‘Some’ Make?

Some Stock Market Leaders Wobbling

By Biiwii

As the bid shifts back to the venerable likes of the S&P 500, certain momo leaders like the Biotechs and the Internets are hiccuping and others, like the Semi’s and Small Caps, are downright on the verge of breaking down.

SOX-SPX

sox.spx

RUT-SPX

rut.spx

While BKX-SPX flounders around trying to get its leadership back in alignment with interest rates, which we knew it would do eventually after going the wrong way the previous 2 weeks as yields dropped.

bkx.spx

More Ritholtz on Gold, and Another Response

By Biiwii

Anyone who has been bearish on gold for the last 4 years has been right.  They have been right in Euros and though the trend appears to have been gently changing over the last year or two, they have been right in Canada & Aussie (i.e. commodity currencies) dollars as well.  Certainly, they have been right that gold as measured in most global stock markets has been (and remains) bearish.

They have also been right in that gold as a hedge against the kind of inflation that global policy makers have promoted non-stop for years now, has utterly failed.  And for gold as an insurance and value asset, a small phase like 4 years is like a blip.  Yet still, so many people throw their hats into the ring on gold, constantly micro-managing its every twist and turn.

In 2011 it was what we used to call the “Gold Generals” touting hyper inflation, even as the second to last arrow was about to be inserted on our ‘Continuum’ © chart, indicating that anyone taking an aggressive inflationary stance in their investments was also taking a big chance that it would be different this time and the Continuum would break the limiter AKA the 100 month EMA.  It wasn’t and it didn’t.

tyx

This brings me to Barry Ritholtz again.  His piece at Bloomberg titled Good Luck Bargain Hunting for Gold Miners at Bloomberg is more about the valuations of the miners vs. the metal, but it is some of the wording that I want to address here.

The primary reason is straightforward: Gold is bought and sold based on a narrative that has turned out to be patently untrue. As we move further away from the great credit crisis of 2008-09, the global financial system has stabilized, undercutting the appeal of gold as a hedge against catastrophe. The U.S. economy is improving, as are those of many other countries. The wild inflation and collapse of the U.S. dollar that was going to lead to the demise of civilization and make gold an essential for investors? None of that has happened. Instead the world has low inflation or even deflation and the dollar, the world’s reserve currency, has risen to multiyear highs.

He is right to criticize the hyper inflationist ‘death of the dollar’ contingent of the gold bug “community”, itself a word that belies group-think and susceptibility to bias reinforcement by the group.  Did you catch the little ‘Overt Inflationary Effects’ planet in our handy Macrocosm graphic (don’t take its planetary guide literally, it was mostly for fun) from last weekend?  There is a reason that I assigned that gold input to the second tiniest planet in the Macrocosm; because it was a wrong headed thesis when Uranium, Crude Oil, Copper and Silver were proven to be bubbles (with relentless inflationist touting of the ‘resources’ and ‘hard assets’ sectors in each case) and it is obviously still wrong now.

macrocosm

This is not to say that inflation cannot be a fundamental input for gold.  It has often been a major input.  But on this cycle the inflation is not manifesting in rising prices, at least not in relation to the stock market, investment in which can be seen as a ‘hedge’ against price inflation bubbling up in certain services sectors of the economy.

The commodity bubble is all done.  The inflation, with the aid of a persistent and powerful global deflationary force, is working in a ‘Goldilocks’ manner and flowing into risk ‘ON’ speculation in paper of all kinds and in some hard assets, just not the kinds that traditional commodity and resources gurus had foreseen.  Mainly, the public is doing just fine buying and selling appreciating homes.  Who needs several tons of Copper sitting in the garage?

Anyway, back to Barry Ritholtz…

“Gold is bought and sold based on a narrative that has turned out to be patently untrue”

Agreed; the majority of gold bugs have believed the wrong narrative.  It was wrong in 2008 and it was wrong again in 2011, and you are using an incorrect narrative as the foundation of your stance in these mainstream media articles that are so cartoonish even the public can understand it.

“the global financial system has stabilized, undercutting the appeal of gold as a hedge against catastrophe”

Again, agreed.  The system has stabilized but how many times do we have to review this chart before we can all agree that it has taken extraordinary (and incredibly, ongoing) measures with the implication being that neither you Barry, nor I, know how the fallout is going to go based on embedded distortions that no one can fully understand?  You call gold a “hedge against catastrophe”.  I have never called it that because I don’t see it that way.  I have always called it monetary value (which can fluctuate depending on market sentiment) and insurance.  Period.

irx.spx

“The wild inflation and collapse of the U.S. dollar that was going to lead to the demise of civilization and make gold an essential for investors? None of that has happened.”

Barry (not that you read this little out of the mainstream website, but work with me here), do you see the larger planets in the Macrocosm above?  They represent the kinds of things that drive people to liquidity and a risk ‘OFF’ stance.  What is the ultimate risk ‘OFF’ hard asset in a monetary world that while still working fine, has gone utterly mad in its pushing of traditional policy boundaries?  Why, it’s gold.  But what is the first and most intense repository of that liquidity?  It is none other than dear old Uncle Buck, for US citizens and the way things are currently structured, much of the rest of the world as well.

I have criticized the ‘death of the dollar’ and ‘hard assets/resources’ promotions every which way from Sunday for years now and it is due to a view that before the US dollar falls apart it is likely to totally annihilate hyperinflationists first (per Prechter and Hoye to name two).  Hence the big planets above are economic contraction, gold rising vs. stock markets, confidence declining and yield spreads indicating systemic stress (inflationary or deflationary).  This is why I have remained completely out of the way of the gold sector destruction for 4 years now, with my market report well in tune with that stance.

So yes Barry, “none of that has happened”; thankfully, or I’d have been wrong in my own thinking (always a possibility).  But I have seen nothing to dissuade me yet that I am, as a once and future gold bull (and constant valuer of gold as insurance), on the right course.  Several macro fundamental aspects need to come into line and we need to find a bottom technically, sure.  But your article adds another input to the bullish camp because you are teaching people who should not be in the gold market (mainstream public) at a real bottom lessons based on the same incorrect assumptions made by the Gold Bug “community” that you seem to provoke.

Maybe you even enjoy stirring the pot and getting the hate mail.  I can relate to that.  While he did not give me permission to reprint his email, a long-term gold bull emailed me the other day noting my “subjective, gold bashing rhetoric” and my “delusional, fiat money bliss” (ha ha ha).  This despite the fact that he and I are of the same long-term orientation.  It’s just that our inputs are different and so he sees me as basically one step above Satan (what does that make you Barry?  Just kidding, but  you get my point).

Misconceptions are everywhere and the stuff you base your articles on do not help that situation.  I write that as the other side of the coin that gives much critique to misconceived pro-gold promotions.