The biggest policy error is the Fed’s fantasy that it knows what it is doing... and makes any policy decisions at all. And if we are right, the Primary Trend will tell the tale.
The founding fathers knew what they were doing when they rejected Alexander Hamilton’s proposal for a version of today’s Fed in favor of FREEDOM. We’ve got to get rid of this and the other statist monstrosities created by the Wilsonian control freaks.
They reinstalled the permanent war and BIG government which the patriots of 1776 sacrificed and fought to eliminate, did they not?
You are so correct but our current politicians will never give up control. A long time ago we had a ethical press but now all the rich elites own the media outlets so this will never happen. Fox and WSJ are on the right, CNN, all the networks and newspapers are on the left and MSNBC is to the left of Lenin.
Fox and the WSJ are both controlled opposition. They are serving a different market and must serve up a fake version of conservativism to keep their subscribers and viewers in the stable. There is much that neither will address head on, like the vaccines and a stolen election. Witness Tucker Carlsons dismissal from Fox. He was a cash cow but he wandered way too far off the reservation and had to go.
Sadly true, “… our current politicians will never give up control.” Until such time as they are faced with a form of tutelage which can no longer be ignored.
POTUS #3 aptly remarked, "When government [and bankers] fear the people, there is liberty. When the people fear the government, there is tyranny." POTUS #3 also expressed in a letter sent to James Madison in 1787: "What country can preserve its liberties if their rulers are not warned from time to time that their people preserve the spirit of resistance.”
My suspicion is that the Fed does know what it is doing, not that they know what interest rates should be since that has almost nothing to do with it, but that they have to play the leftist game to some degree currently to stay in office. On the other hand they are fighting the leftists because they are owned by the big banks which don't want to be run by communists. The big banks are somewhat freer than the leftists although always paying off Wall Street and themselves. It's kinda complicated.
Just a thought, but how will “market psychology “ work now that most of us no longer trust our government agencies and mainstream media, after all of the COVID experience and the continuing failures of our government agencies? I am starting to wonder how much the market values the decisions of the Federal Reserve. Maybe this agency has an expired shelf life as well?
Why trust the Federal Reserve…..(btw), it’s not federal, it’s not a reserve….. it was created operated by the self serving international banking community. Reference “The Crea
….Creature from Jekyl Island”, or Murray Rothbard’s many treatises on the subject.
We all know that government in general is a self advancing entity, staffed by elected lifers that love their jobs which enriches them and their pals. You know it, I know it…..hell…..we all know it.
And, the lifer staffers have no downside. Zero. Nothing. They do not have to perform - that is the beauty to them in Government. Like Biden - rich beyond his wildest imagination and never had a job. Just one government position after another and thinking how smart he was. And, frankly, he was - it is proles that suffer from the governmental/big business lifers.
Oh, really? Would you like to set me straight? Other than a brief job as a lawyer, then a public defender until he was elected to Congress at age 30 - how did good old Joe and family accumulated their wealth? I am NOT maga republican and certainly not a republican either just out bashing ol' Senile Joe. There isn't anyone running worth voting for.
You're wasting your time if you wait for Dorothy to ever back up anything she says. I used to think she was just a kindly old grandmother, and so I tried not to let her tripe bother me. But after a while I couldn't take it any more. Her modus operandi is tossing 💩 claims into a thread hoping that no one calls her on it, and then if they do she either ignores the correction or she pretends never to have seen it. She really is pathetic.
AOL: You know there are a lot of rich people in politics. Some had their money before going in. What bothers me is no one says those things about republicans, at least on this blog. If you are really interested in Biden's wealth, one is from R/E, Mutual Funds and Annuties. But compared to other’s $10 million is not that much! You know, with just a little checking, you could have found this info out yourself. Have a nice day!
Dorothy, you have been drinking the kool-aid way too long. You need to get a grip, girl! Look at what they have done - Obama, Biden, and even Trump. They are not what made America what it was. They have done nothing but tear it down while solely set on becoming more and more wealthy with more and more privileges. They have done nothing for the hard working proles.
Wishful thinking that the Fed has a shelf life. Read the book The Monster from Jekyell Island and you will see the fellas that were involved in forming the Federal Reserve. Ain't no going back or away ever until the US has another revolution and the commoners oust the rulers.
Bill, I think you are incorrect when you say the Fed doesn't know what it's doing. With the vast majority of the "easily created money" going to the top 1%, as you keep telling us, I think the Fed knows EXACTLY what it is doing.
The feds are lazy. They established models to go by and they use them. What's the problem ? The models are wrong . You cannot build an economic model based on mmt and even come close to the truth. And that's the truth. Goodnight Mr. And Mrs. America and all the ships at sea.
So true, the Fed’s Countless PhD’s do not employ models capable of forecasting, and they easily could because there are those models too. Those same Fed PhD’s consistently prefer to eyeball their plot dots in the review mirror.
I must question the use of comparisons involving gold that occurred before gold was free-trading.
Before free trade in gold was permitted (at least for Americans), the "price" of gold was set by the government, as we know. It had an artificial value of $20, then $35, then finally $42, through portions of the time frame you discussed. I would argue that using gold during these periods of price-fixing negates the value of any comparison involving gold to the value of another asset.
An interesting table of gold prices from 1833-2016. I'm thinking the price of gold that was set was a more or less market price else there would have been a blackmarket in gold and I see no mention of that?
Though, I did take a quick trip back down memory lane. Back to my $1.25/ hour minimum wage days dish washer, busboy, car wash worker, lawn mower.
lol, No wonder back in my teens, I didn’t know spit about gold; but I sure figured out fast that a [US] Silver Dollar tip meant that person was going to be etched in my memory to deliver great service… repeatedly ;)
Reading the commentary, it talks about a fixed price for gold. But then the article gives up the ghost in the final sentence, when it talks about a free-floating market price after 1968. When I read "fixed price," I interpret that as one enforced by law; a government fixed price. But a free-floating price seems to be one that will not be enforced by government; in other words, no government will purchase or sell gold in the open market to maintain the price within a small band.
Maybe this chart implies that we didn't have fiat money from the major currencies of the world during those years that the price of gold was fixed. But you can have a fixed price if someone is willing and able to buy or sell gold in the open market within a small range.
I like your commentary and follow it each day. Very interesting. Having said that, I believe your gold to SP500 analysis is flawed. The gold supply is not fixed -- it increases by 2-3% per year. Based on this, the gold necessary to purchase the SP500 should not be 2 oz today vs 1 oz in 1928. It should be more like 3-5 oz. Using that data, the sp500 has done pretty well.
I am not quite sure that adding gold to amount is the same as adding fiat paper. The price of gold "stays " the same. No matter the quantity. But then I could be wrong. Not being a figures manipulator and all !
I do NOT think you are wrong Mr Hrehirchek about fiat & gold. Gold’s price in **Weimar papiermarks is an example. Namely, gold had reached 100+12 zeros in German Marks.
I suppose that the price of gold today, certainly has followed the inflation of fiat dollars. And gold has followed the price of inflation and seems to follow. The explanation, I do not know. I seem to have missed that lesson in life!
In the middle 20th Century teens we got the Federal Reserve enacted into our lives. One of the worst things that could have happened, but here we are. While getting to the crux of things is the answer, what do we do now that we know the answer, hmm? Hindsight is the revolution of all progress, right?
I think you should lock it in and you have my endorsement to let the cash register ring. But save some proceeds to buy my book of poetry here. https://www.lulu.com/
Do a search on Weston Parker and you'll find it, hardcover or paperback. Ka-ching!
Bill, Isn't it interesting that we have arrived at one indicator that determines the economy, and the Fed along with our politicians think their only job is make sure the wallstreet temperature gauge needle goes up.
Coattailing onto today’s subheading, “And if we are right, the Primary Trend will tell the tale.” here is an informative 44min video entitled: “Is The Fed Trapped? Inflation, Debt, and De-Dollarization Challenges” (Aug 6, 2024) on Kitco News host Jeremy Szafron in a discussion with guest Daniel Lacalle.
https://youtu.be/cXrEmAOpQ0Qm - All of this 44:40 min video is good. If your time is limited, jump ahead to 33:55 min mark to catch at least the last 10 min or so.
Cheers, Mark
Summary
The global economy is facing challenges of volatility, potential downturn, and unsustainable debt levels, leading to a need for diversification in investment portfolios with at least 20% in gold for defense in a market with high correlation and concentration between bets.
▫️Economic Challenges and Consequences
▫️Central banks are caught between a rock and a hard place, having to decide whether to combat inflation or maintain elevated valuations of stock markets and bonds.
▫️Investors are discounting monetary destruction and massive deficit spending, making markets go back to a bullish trend.
▫️The Fed’s reliance on backward-looking data like GDP and job figures may not accurately reflect the future.
▫️Governments continue to deficit spend, disregarding high rates, which will result in more taxes, more spending, and more debt in the future.
▫️The consumer is powering the US economy with elevated levels of debt, which is very dangerous and unsustainable.
▫️The unsustainability of debt manifests itself in the level of persistent inflation and the weakening of the currency’s purchasing power.
▫️You need to have something that gives you defense and that is gold.
▫️The level of monthly inflation in Argentina was 25% in less than six months it has brought it down to 4%. It is still a phenomenal level of inflation but at least what we are seeing is that when you really want to reduce inflation the only way in which you can do.
▫️Inflationist policies and constant monetization of government spending have destroyed equality and wealth in Argentina, creating poverty and economic disaster.
▫️Capitalism always prevails because it evolves and adapts, unlike socialism which assumes the government has all the ability to generate wealth and redistribute it.
▫️Global Currency Competition and De-Dollarization
▫️“You cannot have a world Reserve currency that dethrones the dollar if you don’t have at the same time opening complete open.”
▫️China’s strategy to promote the RMB as a global currency is a logical move in a polarized world with a shifting global economy.
Thank you for the link to the discussion by Daniel LaCalle. Mr. LaCalle makes world economics understandable. I have saved the link for future reference.
‘CNN’s Fear & Greed Index, which measures seven barometers of market sentiment, closed in “extreme fear” territory.’
Only seven barometers?
If CNN & other wizards, were to look at 20 barometer, then check some tarot cards and spin-the-bottle, probably would have that we are “all ROON’D” or then again “buy now - can’t go lower” territory,
Roll the dice you may get just a pair of 10s or a Royal Flush.
The founding fathers knew what they were doing when they rejected Alexander Hamilton’s proposal for a version of today’s Fed in favor of FREEDOM. We’ve got to get rid of this and the other statist monstrosities created by the Wilsonian control freaks.
They reinstalled the permanent war and BIG government which the patriots of 1776 sacrificed and fought to eliminate, did they not?
You are so correct but our current politicians will never give up control. A long time ago we had a ethical press but now all the rich elites own the media outlets so this will never happen. Fox and WSJ are on the right, CNN, all the networks and newspapers are on the left and MSNBC is to the left of Lenin.
Fox and the WSJ are both controlled opposition. They are serving a different market and must serve up a fake version of conservativism to keep their subscribers and viewers in the stable. There is much that neither will address head on, like the vaccines and a stolen election. Witness Tucker Carlsons dismissal from Fox. He was a cash cow but he wandered way too far off the reservation and had to go.
Sadly true, “… our current politicians will never give up control.” Until such time as they are faced with a form of tutelage which can no longer be ignored.
POTUS #3 aptly remarked, "When government [and bankers] fear the people, there is liberty. When the people fear the government, there is tyranny." POTUS #3 also expressed in a letter sent to James Madison in 1787: "What country can preserve its liberties if their rulers are not warned from time to time that their people preserve the spirit of resistance.”
My suspicion is that the Fed does know what it is doing, not that they know what interest rates should be since that has almost nothing to do with it, but that they have to play the leftist game to some degree currently to stay in office. On the other hand they are fighting the leftists because they are owned by the big banks which don't want to be run by communists. The big banks are somewhat freer than the leftists although always paying off Wall Street and themselves. It's kinda complicated.
Just a thought, but how will “market psychology “ work now that most of us no longer trust our government agencies and mainstream media, after all of the COVID experience and the continuing failures of our government agencies? I am starting to wonder how much the market values the decisions of the Federal Reserve. Maybe this agency has an expired shelf life as well?
Hi Dad,
Why trust the Federal Reserve…..(btw), it’s not federal, it’s not a reserve….. it was created operated by the self serving international banking community. Reference “The Crea
….Creature from Jekyl Island”, or Murray Rothbard’s many treatises on the subject.
We all know that government in general is a self advancing entity, staffed by elected lifers that love their jobs which enriches them and their pals. You know it, I know it…..hell…..we all know it.
And, the lifer staffers have no downside. Zero. Nothing. They do not have to perform - that is the beauty to them in Government. Like Biden - rich beyond his wildest imagination and never had a job. Just one government position after another and thinking how smart he was. And, frankly, he was - it is proles that suffer from the governmental/big business lifers.
AOL: It would be nice if you knew what your facts were. Your facts on Biden are all wrong.
Oh, really? Would you like to set me straight? Other than a brief job as a lawyer, then a public defender until he was elected to Congress at age 30 - how did good old Joe and family accumulated their wealth? I am NOT maga republican and certainly not a republican either just out bashing ol' Senile Joe. There isn't anyone running worth voting for.
You're wasting your time if you wait for Dorothy to ever back up anything she says. I used to think she was just a kindly old grandmother, and so I tried not to let her tripe bother me. But after a while I couldn't take it any more. Her modus operandi is tossing 💩 claims into a thread hoping that no one calls her on it, and then if they do she either ignores the correction or she pretends never to have seen it. She really is pathetic.
AOL: You know there are a lot of rich people in politics. Some had their money before going in. What bothers me is no one says those things about republicans, at least on this blog. If you are really interested in Biden's wealth, one is from R/E, Mutual Funds and Annuties. But compared to other’s $10 million is not that much! You know, with just a little checking, you could have found this info out yourself. Have a nice day!
Kennedy might be worth voting for
Hi LSO,
Yeh and look how his lofty government position benefited his white trash son.
How ‘bout Obama? Three mansions around the world…… great professionals all……
JG: Jealous? Why pick just on the Dems. You think that goes to only one party?haha. How naive can you get?
Dorothy, you have been drinking the kool-aid way too long. You need to get a grip, girl! Look at what they have done - Obama, Biden, and even Trump. They are not what made America what it was. They have done nothing but tear it down while solely set on becoming more and more wealthy with more and more privileges. They have done nothing for the hard working proles.
AMEN
Wishful thinking that the Fed has a shelf life. Read the book The Monster from Jekyell Island and you will see the fellas that were involved in forming the Federal Reserve. Ain't no going back or away ever until the US has another revolution and the commoners oust the rulers.
Excellent read!!
Bill, I think you are incorrect when you say the Fed doesn't know what it's doing. With the vast majority of the "easily created money" going to the top 1%, as you keep telling us, I think the Fed knows EXACTLY what it is doing.
The feds are lazy. They established models to go by and they use them. What's the problem ? The models are wrong . You cannot build an economic model based on mmt and even come close to the truth. And that's the truth. Goodnight Mr. And Mrs. America and all the ships at sea.
So true, the Fed’s Countless PhD’s do not employ models capable of forecasting, and they easily could because there are those models too. Those same Fed PhD’s consistently prefer to eyeball their plot dots in the review mirror.
I must question the use of comparisons involving gold that occurred before gold was free-trading.
Before free trade in gold was permitted (at least for Americans), the "price" of gold was set by the government, as we know. It had an artificial value of $20, then $35, then finally $42, through portions of the time frame you discussed. I would argue that using gold during these periods of price-fixing negates the value of any comparison involving gold to the value of another asset.
An interesting table of gold prices from 1833-2016. I'm thinking the price of gold that was set was a more or less market price else there would have been a blackmarket in gold and I see no mention of that?
https://nma.org/wp-content/uploads/2016/09/historic_gold_prices_1833_pres.pdf
💯Good one, thank you Clem.
Though, I did take a quick trip back down memory lane. Back to my $1.25/ hour minimum wage days dish washer, busboy, car wash worker, lawn mower.
lol, No wonder back in my teens, I didn’t know spit about gold; but I sure figured out fast that a [US] Silver Dollar tip meant that person was going to be etched in my memory to deliver great service… repeatedly ;)
Thanks Clem,
M
Reading the commentary, it talks about a fixed price for gold. But then the article gives up the ghost in the final sentence, when it talks about a free-floating market price after 1968. When I read "fixed price," I interpret that as one enforced by law; a government fixed price. But a free-floating price seems to be one that will not be enforced by government; in other words, no government will purchase or sell gold in the open market to maintain the price within a small band.
Maybe this chart implies that we didn't have fiat money from the major currencies of the world during those years that the price of gold was fixed. But you can have a fixed price if someone is willing and able to buy or sell gold in the open market within a small range.
I like your commentary and follow it each day. Very interesting. Having said that, I believe your gold to SP500 analysis is flawed. The gold supply is not fixed -- it increases by 2-3% per year. Based on this, the gold necessary to purchase the SP500 should not be 2 oz today vs 1 oz in 1928. It should be more like 3-5 oz. Using that data, the sp500 has done pretty well.
I am not quite sure that adding gold to amount is the same as adding fiat paper. The price of gold "stays " the same. No matter the quantity. But then I could be wrong. Not being a figures manipulator and all !
I do NOT think you are wrong Mr Hrehirchek about fiat & gold. Gold’s price in **Weimar papiermarks is an example. Namely, gold had reached 100+12 zeros in German Marks.
As hyperinflation accelerated; and the gold price increased from 400% to 2,000% per month - and in some cases per week. Here is a graphic illustration- https://www.bullionvault.com/gold-news/files/06252012-gold-price-in-weimar-marks.png - notice the oval encircling the (deflation period) in the years 1920 to 1921.
This, for me, is a very sobering image as in my 75 years I have not personally experienced hyperinflation…and hope and pray not to personally.
** officially just Mark, sign: ℳ︁) was the German currency from 4 August 1914 when the link between the Goldmark and gold was abandoned.
I suppose that the price of gold today, certainly has followed the inflation of fiat dollars. And gold has followed the price of inflation and seems to follow. The explanation, I do not know. I seem to have missed that lesson in life!
Currently, as we already know, all fiat confetti paper money faces challenges not too different from the extreme of Weimar Republic’s papiermarks.
It's known as Gresham's Law…bad money drives out sound money…
In the middle 20th Century teens we got the Federal Reserve enacted into our lives. One of the worst things that could have happened, but here we are. While getting to the crux of things is the answer, what do we do now that we know the answer, hmm? Hindsight is the revolution of all progress, right?
No plant can survive indefinitely on Miracle-Gro and no stock market will be healthy in an environment of suppressed interest rates.
Oohh, I am going to use the heck out of your **Miracle-Gro market(s)** idea.
a.s.a.p. Mr Parker, lock-in all the ©️™️®️ rights and let the 💵 cash register ring.
https://www.espn.com/nba/truehoop/miamiheat/story/_/id/10965180/pat-riley-miami-heat-riley-files-3-peat-trademark-jewelry-rings-sports-memorabilia
I think you should lock it in and you have my endorsement to let the cash register ring. But save some proceeds to buy my book of poetry here. https://www.lulu.com/
Do a search on Weston Parker and you'll find it, hardcover or paperback. Ka-ching!
And stocks/bonds ain’t shiny either!
Bill, Isn't it interesting that we have arrived at one indicator that determines the economy, and the Fed along with our politicians think their only job is make sure the wallstreet temperature gauge needle goes up.
Coattailing onto today’s subheading, “And if we are right, the Primary Trend will tell the tale.” here is an informative 44min video entitled: “Is The Fed Trapped? Inflation, Debt, and De-Dollarization Challenges” (Aug 6, 2024) on Kitco News host Jeremy Szafron in a discussion with guest Daniel Lacalle.
https://youtu.be/cXrEmAOpQ0Qm - All of this 44:40 min video is good. If your time is limited, jump ahead to 33:55 min mark to catch at least the last 10 min or so.
Cheers, Mark
Summary
The global economy is facing challenges of volatility, potential downturn, and unsustainable debt levels, leading to a need for diversification in investment portfolios with at least 20% in gold for defense in a market with high correlation and concentration between bets.
▫️Economic Challenges and Consequences
▫️Central banks are caught between a rock and a hard place, having to decide whether to combat inflation or maintain elevated valuations of stock markets and bonds.
▫️Investors are discounting monetary destruction and massive deficit spending, making markets go back to a bullish trend.
▫️The Fed’s reliance on backward-looking data like GDP and job figures may not accurately reflect the future.
▫️Governments continue to deficit spend, disregarding high rates, which will result in more taxes, more spending, and more debt in the future.
▫️The consumer is powering the US economy with elevated levels of debt, which is very dangerous and unsustainable.
▫️The unsustainability of debt manifests itself in the level of persistent inflation and the weakening of the currency’s purchasing power.
▫️You need to have something that gives you defense and that is gold.
▫️The level of monthly inflation in Argentina was 25% in less than six months it has brought it down to 4%. It is still a phenomenal level of inflation but at least what we are seeing is that when you really want to reduce inflation the only way in which you can do.
▫️Inflationist policies and constant monetization of government spending have destroyed equality and wealth in Argentina, creating poverty and economic disaster.
▫️Capitalism always prevails because it evolves and adapts, unlike socialism which assumes the government has all the ability to generate wealth and redistribute it.
▫️Global Currency Competition and De-Dollarization
▫️“You cannot have a world Reserve currency that dethrones the dollar if you don’t have at the same time opening complete open.”
▫️China’s strategy to promote the RMB as a global currency is a logical move in a polarized world with a shifting global economy.
Thank you for the link to the discussion by Daniel LaCalle. Mr. LaCalle makes world economics understandable. I have saved the link for future reference.
‘CNN’s Fear & Greed Index, which measures seven barometers of market sentiment, closed in “extreme fear” territory.’
Only seven barometers?
If CNN & other wizards, were to look at 20 barometer, then check some tarot cards and spin-the-bottle, probably would have that we are “all ROON’D” or then again “buy now - can’t go lower” territory,
Roll the dice you may get just a pair of 10s or a Royal Flush.
Now what? Double bet or quit?