'Secret Monetary Policy': Who Manipulates Gold Prices and Why

https://sputniknews.com/business/201709201057560325-who-manipulates-gold-prices/

Boston Fed Admits There Is No Exit, Suggests QE Become "Normal Monetary Policy"

QE to infinity, bitchez!

http://www.zerohedge.com/news/2015-04-26/boston-fed-admits-there-no-exit-suggests-qe-become-normal-monetary-policy

Former Bank Of England Head Mervyn King "Monetary Policy Isn't The Answer"

http://www.zerohedge.com/news/2014-08-11/former-bank-england-head-mervyn-king-monetary-policy-isnt-answer

 

Why is it that central bankers always wait until after they quit their job before telling the truth?

In his keynote address, former governor of the Bank of England Mervyn King gave the Australian mining industry some hope for a brighter future, arguing world insecurity could have a positive impact on the price of gold and other commodities.

He said the geopolitical and economic uncertainty will boost commodity prices.

But he argued globally countries would have to face up to mounting debt, while warning central bank adjustments were not the answer.

"We are beginning to discover that the reason the world recovery is so slow is that monetary policy isn't the answer now, and other policies need to be put in place to rebalance the world economy," he said.

Dishonesty and Candor in Monetary Policy

http://bastiat.mises.org/2013/08/dishonesty-and-candor-in-monetary-policy/

This blatant double talk just further compounds the basic dishonesty of the underlying  term “quantitative easing”. It is of course intended to disguise the truth which is that the Fed is creating money. Another favorite circumlocution, favored by nearly all mainstream journalists, is “bond buying.” Nobody ever mentions that the Fed is “bond buying” with newly created money, which is the relevant point.

The origin of today’s monetary policy of course lies in Keynesian economics, and Keynes was quite explicit that monetary authorities should intentionally use deception as a primary tool. He spoke of the need to gull workers into thinking that wages were going up even if net of inflation they were going down. At least he had a sense of humor about it, calling a central bank a “green cheese factory” that would persuade the public to accept ” green cheese” ( newly created money)  as the real thing.

Hoenig Says Lower And Middle Classes Pay "Dear Price" For Fed Mistakes, Accuses Fed Of Commodity Price Inflation

Good timing on Fed governor Hoenig's part:  he speaks the truth as he is about to retire.


http://www.zerohedge.com/article/hoenig-says-lower-and-middle-classes-pay-dear-price-fed-mistakes-accuses-fed-commodity-price

"While some of the increase may reflect global supply and demand conditions, at least some of the increase is driven by highly accommodative monetary policies in the United States and other economies."

For those terrified by the ravages of deflation: "I tracked the average growth of money and the price levels in the United States from the 19th century to the present (Chart 3). It should surprise no one that there is a striking parallel between the long-run growth of money and the growth in the price-level index. From the end of World War II alone, the price index has increased by a factor of ten. With such a track record, it is hard to accept that deflation should be the world’s dominant concern."


"Central bankers must look to the long run. If current policy remains in place, we almost certainly will stimulate the growth of asset values and inflation. This may temporarily increase GDP and employment, but in the long run, we risk instability, damaging inflation and lost jobs, which is a dear price for middle and lower income citizens to pay."

Bank of England attempting inflation 'confidence trick', says former MPC member Kate Barker

http://www.telegraph.co.uk/finance/economics/8304054/Bank-of-England-attempting-inflation-confidence-trick-says-former-MPC-member-Kate-Barker.html

Ms Barker, who served nine years on the Bank's Monetary Policy Committee (MPC), said rising prices may have already damaged the Bank's credibility and threaten a "more profound" loss of faith among the public.

A loss of credibility is dangerous as people begin to assume inflation will remain over target and so put up wages and prices accordingly, resulting in a self-perpetuating spiral of rising prices.

"If you believe inflation is going to come back to 2pc, you are going to behave as if that's going to happen when you're setting wages and setting prices," said Ms Barker.

"Once you start to think this monetary policy isn't all that it's cracked up to be, and things need to be changed in some way, then things inevitably become more difficult."

She added: "It's like a confidence trick."

China Is `Scared' of U.S. Monetary Policy, Rogoff, Rickards Say

http://www.bloomberg.com/news/2010-12-02/china-is-scared-u-s-policy-is-debasing-currency-rogoff-rickards-say.html

And here is China's response to allegations of currency manipulation

http://www.reuters.com/article/idUSLDE68S24D20100929

China said the United States should take action to stabilise the dollar, criticising Washington's expansionary monetary policy for weakening the currency despite its key role in the global financial system.

The comments by a Chinese official at a meeting of the World Trade Organization came as the U.S. House of Representatives was set to pass a bill putting pressure on China to let the yuan rise faster.

BIS warns financial system vulnerabilities

Speaking of the BIS, their report warns of another impending financial system collapse if structural debt problems aren't treated.

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2010/6/28_Secretive_and_Powerful_BIS_Annual_Report_Released.html

“When the transatlantic financial crisis began nearly three years ago, policymakers responded with emergency room treatment and strong medicine: large doses of direct support to the financial system, low interest rates, vastly expanded central bank balance sheets and massive fiscal stimulus. But such powerful measures have strong side effects, and their dangers are beginning to become apparent.”

“Here are the worst problems arising now from the continued use of the extraordinary programmes: Direct support is delaying vital post-crisis adjustment and runs the risk of creating zombie financial and non-financial firms. Low interest rates at the centre of the global economy are discouraging needed reductions in leverage, thereby adding to the distortions in the financial system and creating problems elsewhere.”

“The sustained bloat in their balance sheets means that central banks still dominate some segments of financial markets, thereby distorting the pricing of some important bonds and loans, discouraging necessary market-making by private individuals and institutions, and increasing moral hazard by making it clear that there is a buyer of last resort for some instruments. And the fiscal stimulus is spawning high and growing government debt that, in a number of countries, is now clearly on an unsustainable path.”

“The financial disruptions in the first half of 2010 have brought the fragility of the industrial world’s financial system into stark relief: a shock of virtually any size risks a replay of the events we saw in late 2008 and early 2009. The sovereign debt crisis in Greece is clearly jeopardising Europe’s nascent recovery from the deep recession brought on by the earlier crisis.”

“Unlike then, however, we have hardly any room for manoeuvre. Policy rates are already at zero and central bank balance sheets are bloated. Although private sector debt has started to decline, public debt has taken its place, with sovereign fiscal positions already on an unsustainable path in a number of countries. In short, macro-economic policy is in a vastly worse position than it was three years ago, with little capacity to combat a new crisis – it will be difficult to find a source of further treatment should another emergency arise. Regaining the ability to react to economic and financial crises, by putting policies onto sustainable paths, is therefore a priority for macroeconomic policy.”

Sovereign debt and central banker self-delusions

http://www.zerohedge.com/article/just-how-ugly-sovereign-default-truth-how-self-delusions-prevent-recognition-reality

Behavioural psychology applies to central bankers, regulators and politicians as much as it does to investors. In promising to ‘fiscally retrench tomorrow’, finance ministers are exhibiting the behavioural phenomenon of overconfidence in their future self-control. The bitter fiscal medicine required to stabilise debt levels won’t become more palatable today relative to tomorrow until the bond market makes it so. It can only do this through higher yields. Thus, Ireland and perhaps now Greece lead the way. For the Japanese it’s too late.

As the housing bubble inflated, Bernanke in a quite staggering display of logical sloppiness, concluded that the risk of a housing collapse in the future was small because there had never been one in the past ? Weren't they then guilty of "framing" their analysis in a way guaranteed to preclude an uncomfortable conclusion? If you don't expect to see something, you're less likely to see it. Similarly cringe worthy logic was used when sub-prime rolled over, and Bernanke concluded that there was no risk of contagion to the rest of the economy because... er... there had been no contagion to the rest of the economy yet... wasn't this textbook "recency bias" whereby the importance of recent events is over-weighted?

It probably was, and it probably demonstrates that central bankers are as prone to be as systematically silly as the rest of us. Indeed, just last year a study by yet more of Bernanke's "best and brightest" concluded that “monetary policy was not a primary factor in the housing bubble”. I don?t want to pretend I?m any kind of behavioural expert, but isn't this the well documented "attribution bias" by which people attribute positive outcomes to themselves, but negative ones to others?

So here we are today, with regulators rounding on investment banks, hedge funds and tax havens, apparently in denial of the reality that the problem was not the regulations but the regulators. After all, heavily regulated institutions like Fannie Mae and Freddie Mac were at the epicentre of the crisis.

Oscar Wilde said he could resist anything but temptation. But doing something you know you shouldn't is easier if you can convince yourself that this will be the last time you indulge, that you won't do it again. So we convince ourselves that since we'll be strong in the future, we can still indulge today. Whether it?s smoking, eating too much or going to the pub instead of the gym, we delude ourselves into thinking that we will take the more difficult path next time.

Apparently heroin addicts can become so drug dependent their bodies cannot withstand the shock of withdrawal, and failure to continue taking the drug triggers multiple organ failures. I just wonder how apt that analogy is to our governments' debt dependency today. As long as governments think that taking these difficult decisions to end the addiction will be easier in the future than it is today, they will never take the decision "today." At the very least, there will have to be a sufficiently large bond market "event" to force the issue.

At some point, sovereign governments and central bankers will have to withdraw stimulus programs. Will they have the political will?

Central bankers' secret meeting

An excerpt from Ed Steer:

Central banks meeting in secret it Australia... it sounds like The Creature From Jekyll Island all over again. Greece, Portugal and Spain et al on the brink. A stock market [the Dow] that wants to die. It appears that the central banks are watching their control of world financial and monetary events slip away... and are in a full panic mode.

From what I can see at this juncture, there are only two possible ways this economic, financial, and monetary situation is going to resolve itself, and they are... a hyper-inflationary depression... or a complete deflationary collapse. Both of which will result in the destruction of most of the world's currencies. But, somewhere along either of those paths, or a combination of the two paths... individually or collectively, the central banks will be forced back into using gold as a convertible currency. When [and notice I didn't say 'if'] that happens, gold will have to be revalued to some fantastically high price. At that moment, the Golden Rule will come into play... He who has the gold, makes the rules!

Then, and only then, will we find out which countries and their respective central banks have gold reserves of any kind... and how much they really have left.

In the interim, things are going to get incredibly ugly. And, without doubt, the world's central banks will resort to anything to prevent 'all of the above' from happening.

Deflation or inflation?

With much of the focus in the commodities sector on crude oil and the precious metals gold and silver, what's been somewhat lost among the mainstream media and audience is the surge in the "red" metal, copper. Since copper is used in many industrial, housing, and information technology industries, it's been dubbed the bellweather for economic activity and inflation.

http://stockcharts.com/h-sc/ui

The deflationists correctly claim economic activity is dormant in the US and other developed countries, but they are not accounting for the unintended consequences of the carry trade, where Fed easy monetary and interest rate policies are causing asset bubbles and booming economic activity in emerging countries such as China, India, and Brazil. In essence, the hot money is borrowing at 0% interest rates in the USDollar, and investing in commodities and equities in foreign currencies, hence driving asset values higher.

Deflationists also point to official consumer price index (CPI) numbers--benignly low at 0.1% in November, 2009, as further proof that inflation is not an imminent threat.

To which I say "hogwash", as the increase in copper and commodities prices overall reflect inflationary pressures. Banking lending has not returned to nominal levels and wage labor prices have not increased due to a loose employment market; these two scenarios should be keeping a lid on prices. But commodities prices continue to rise despite an absence of these two inflationary factors. When and if the two components do return, inflation could potentially soar due to the exploding monetary base and resultant increased money supply.

While I expect asset values in US housing and equities in certain sectors to continue to be under pressure, the Fed's easy money policies will continue to debase the USDollar, deteriorating the purchasing power of consumers.

Bernanke's dilemma

Fed Chairman Ben Bernanke and Treasury Secretary Tim Geithner are walking a tightrope. Keep interest rates low and keep the printing presses humming along are stimulative to the economy and help exporters remain competitive. But it also induces asset bubbles and devalues the USDollar.

Raise interest rates and tighten monetary policy, and equities and bond markets will tank, roiling any chance of an economic recovery.

The 800-pound gorilla is the huge debt--and servicing that debt, which increases the deficit--which forces debt monetization again. And round and round we go...

http://www.nytimes.com/2009/11/23/business/23rates.html?_r=1