"Everything you need to know about gold"
A VISIT TO JEKYLL ISLAND
Earlier this year, I had the opportunity to visit Jekyll Island and see some of the landmark buildings where secret meetings took place which led to the origin of the Federal Reserve in 1913…
With all the attention that the Federal Reserve gets today, it might be a good idea to learn a bit more about that origin which is steeped in controversy regarding claims of conspiracy.
As investors, analysts and commentators warm to the idea that “inflation is likely transitory”, much of what we have been hearing from the the Fed and the United States Treasury seems to encourage and support that interpretation.
Team Fed member (aka Secretary of Treasury) Janet Yellen, who has used the word ‘transitory’ on other occasions, followed up her own attempts (here and here) to introduce the word into mainstream financial vocabulary with additional comments in a press conference after the G-7 meeting in London…
OVERHEATED ECONOMIES AND MARKET PREDICTIONS
Janet Yellen said the following last week…
“It may be that interest rates will have to rise somewhat to make sure that our economy doesn’t overheat”
Later that same day, she said this…
“It’s not something I’m predicting or recommending. If anybody appreciates the independence of the Fed, I think that person is me, and I note that the Fed can be counted on to do whatever is necessary to achieve their dual mandate objectives.”
Also last week, we heard from the Federal Reserve which released the following statements on Thursday, May 6, 2021…
Before we can understand how to interpret these statements and any possible conflictions, there are four key topics which need to be explained: inflation, the Federal Reserve, interest rates, and the economy.
FED HAS NO FEAR OF INFLATION
The Fed wants to have their cake and eat it too, but the cake is stale. Jerome Powell’s remarks in testimony before the Senate recently provoked considerable attention.
Responses, interpretation, and analysis by observers were many and varied. Unfortunately, no one learned anything different from what they thought they knew before Powell’s testimony.
The Fed is well aware of the problem. It is systemic in nature and goes far beyond corporate due diligence, bank liquidity, and the safety of your broker.
Most everyone else (with the exception of Janet Yellen, Ben Bernanke, and Alan Greenspan) thinks they understand the problem, but their limited understanding doesn’t allow for the subtleties of Fed Chair behavior.
POWELL AND YELLEN…
Flashback 11/21/2017:
“President Trump nominated Jerome H. Powell as the new Chairman of the Federal Reserve Bank. Don’t look for much to change. And Janet Yellen’s announcement that she will resign from the board upon Mr. Powell’s induction as board chair is pretty much a non-event.” (see New Fed Chairman, Same Old Story)
Currently, comments by Jerome Powell last week regarding inflation and its effects spooked some investors and analysts. Investors in leveraged Treasuries were dealt a severe blow when yields spiked and bond prices fell. Others have claimed that the sky is falling and that inflation is all around us.
JUDY SHELTON AND JANET YELLEN…
Last week the Senate failed to confirm the nomination of Judy Shelton as a member of the Board of The Federal Reserve. Some thoughts and observations.
If it had done so, and once she was occupying a currently vacant seat on the board, we might reasonably have expected some fireworks.
The Fed always does its job. So, just what is their job? And, how well do they perform?
For the answer to the first question, one statement will suffice: The Fed’s job is to create money; at all times and in all seasons.
The Federal Reserve Bank creates money for the US government to spend and for banks to loan. It is a partnership that dates back more than one hundred years.
FEDERAL RESERVE VS. JUDY SHELTON
Those in favor of Judy Shelton’s approval by Congress, pursuant to her nomination to the Federal Reserve Board Of Governors, should not be surprised by the torrent of criticism directed at her.
A letter published and signed by former Federal Reserve officials and staffers called on the Senate to reject her nomination, stating that “Ms. Shelton’s views are so extreme and ill-considered as to be an unnecessary distraction from the tasks at hand…”
GOLD MARKET MANIPULATION
Some gold bulls have bought in heavily to the argument that gold price suppression has been an ongoing activity for years, even decades. Supposedly, trading in the gold market is manipulated in ways that depress the market price for gold.
Assertions are made that the manipulation takes place in a shroud of secrecy; and the unexpected lower prices for gold, or prices that don’t meet wildly bullish expectations, are cited as evidence of conspiratorial activity.
The claim is made that the price of gold would be much higher if this manipulative trading activity were exposed, acknowledged, and prohibited. But…
FED ACTION ACCELERATES BOOM-BUST CYCLE
The 21st century was ushered in by fears about Y2k and how it might impact computer programming that was already in place. Part of the concern centered on the financial markets.
The Federal Reserve announced that they were ready to support the stock market and provide backup for financial institutions that might encounter difficulties.
The big day arrived and, other than an occasional glitch that seemed to be unrelated to the heightened global fears, the birth of the new century was pretty much uneventful. Overall, the markets remained relatively quiet. However, trouble was still brewing.