Since the lousy jobs report, there has been a veritable orgy of Fed Speak with juicy morsels and contradictions, interspersed with leaks and rumors, that climaxed today with Chairman Ben Bernanke’s words of wisdom. It whipped markets into a frenzy, drove the Dow up 500 points, knocked yields to historic lows, and caused gold, the safe-haven, to bounce up and down like a rubber ball. And everyone was eagerly waiting for the big lie.
Federal Reserve
Squeezing The Fed From Both Sides
by Wolf Richter • • Comments Off on Squeezing The Fed From Both Sides
The ugly jobs report gave Mitt Romney what he’d been waiting for: a huge boost. He’s out making hay, calling it “devastating news for American workers and families.” An army of Republican talking heads swarmed over the land and pummeled President Obama with the jobs report. And just as Republicans see victory edge closer, shrill voices are calling for the Fed to launch the next round of quantitative easing. Collision alert!
“Confiscate, Secretly and Unobserved”
by Wolf Richter • • Comments Off on “Confiscate, Secretly and Unobserved”
When inflation isn’t particularly hot, it’s praised as something desirable…. Alas: “Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily.” John Maynard Keynes.
Ron Paul Slugs At The Fed One More Time
by Wolf Richter • • Comments Off on Ron Paul Slugs At The Fed One More Time
Before retiring from Congress, Rep. Ron Paul, Chairman of the House Financial Services Subcommittee on Domestic Monetary Policy and Technology, slugs at the Fed one more time: Tuesday, his committee weighs six bills to reform or abolish the Fed which “continues to reward Wall Street banks while destroying the dollar’s purchasing power and driving up the cost of living for average Americans,” he said.
Gold Confiscation, Inflation, And Virtuous Central Bankers
by Wolf Richter • • Comments Off on Gold Confiscation, Inflation, And Virtuous Central Bankers
When the world’s major central bankers get together, as they did at the Fed conference in Washington this weekend, ironies abound. Off to the side, Turkey had just floated a plan to get its people to turn in their physical gold in exchange for “certificates,” a first if still voluntary step in what may become a process of gold confiscation. In the background: the Fed, which had promised to keep interest rates at record lows through 2014, come hell or high water, after having purchased $2.3 trillion in bonds. In the foreground: the money printers of Japan and Europe.
The Astounding Fuel Price Conundrum
by Wolf Richter • • Comments Off on The Astounding Fuel Price Conundrum
Republicans are trying to tar President Obama with gas prices that are creeping up on $4 a gallon and are shooting for an all-time high. The strategy is working. Obama’s approval rating on handling gas prices has plunged. In San Francisco, gas is already $4.50. Yet across the Bay are five oil refineries that together are the largest exporters of petroleum products in the nation.
The Fed’s Rain Dance at the Bottom of the Stairs
by Wolf Richter • • 3 Comments
Apparently, Charles Plosser, president of the Philadelphia Fed, failed to check with his handlers when he said that the Fed might have to raise interest rates later this year—from practically zero to almost zero, I guess—though just last Thursday, the Fed had announced the extension of its zero-interest-rate policy through late 2014. The umpteenth extension since 2009. Now, the economy is addicted to free money, and the damage is severe.
Crap, Sovereign Debt Downgrades Matter?
by Wolf Richter • • Comments Off on Crap, Sovereign Debt Downgrades Matter?
After they were downgraded in early August, US government bonds gained upward momentum and yields fell. Japan, which has danced the downgrade tango for years, is contemplating the next step, from AA- to A+, yet 10-year Japanese Government Bonds are yielding below 1%. Downgrades of sovereign bonds of developed countries make good headlines, but the impact on bond markets has been nil. With one exception: the Eurozone.
Cutting The Deficit: They Won’t Because They Don’t Have To
by Wolf Richter • • Comments Off on Cutting The Deficit: They Won’t Because They Don’t Have To
When The Truth About The US Economy Comes From China
by Wolf Richter • • Comments Off on When The Truth About The US Economy Comes From China
In his “enough’s-enough” speech in Hawaii, Obama castigated China for its currency peg, a perennial complaint. Congress too regularly hyperventilates about the yuan being “artificially undervalued.” If China just allowed the yuan to trade freely, they say, it would solve the U.S. economic quagmire. Cheap political posturing—and full of bitter ironies.