For Donald Trump, it seems that these are the best of times except that they are the worst of times. How else to explain his contradictory demand that the Federal Reserve cut interest rates by 100 basis points despite his repeated claims that our current economy is "the best in the history of the United States?" That kind of "break glass in case of emergency" monetary policy is something that even the eldest among us have only seen once or twice. And those times have certainly been desperate. Full Story
And it’s also a reminder of why the Donald doesn’t give a whit about the nation’s hemorrhaging fiscal accounts. During his first 31 months in office – and at the very top of the longest business cycle in history – he has added $2.7 trillion to the net public debt, yet he thinks it’s just ducky that the German government is getting paid to borrow money.
To the contrary, the race to the interest rate bottom is a historic financial catastrophe in the making, not some kind of international sports contest the Donald is losing; and if the other G-7 leaders were actually “giddy” about the slow-motion destruction of their bond markets and banking systems wrought by the ECB – then Drunk would be a better term for their mental condition.
The Fed going dovish at a time of a near yield curve inversion did indeed produce a tripling in the NASDAQ (matrix row 2), that ultimately proved to be fleeting and ended in disaster. Yet, if we look carefully at the graph above, there was another tripling that occurred over a much longer time period and was much more persistent - with this being the tripling of inflation-adjusted gold prices (matrix row 5).
Gold prices had been falling in inflation-adjusted terms for almost two decades. "Dovish" Fed policies during a time of fast falling long term bond yields and near yield curve inversion then created a historic asset bubble in stocks. And we then saw a historic move in gold prices, breaking the near two decade decline and moving upwards to far higher levels - but not in response to inflation or monetary collapse. Full Story
Gold and Munis Look Attractive With Limited Supply
Gold is an obvious example. The precious metal is both rare and finite, making it an ideal global currency. Although output continues to grow, the number of large, high-grade gold discoveries has been declining for decades now. Some experts, myself included, believe peak gold is already here.
Copper could soon be in the same boat. The red metal isn’t nearly as rare as gold is, but because of surging global demand, mostly for use in electric vehicles and renewable energy, it’s expected to go into deficit in 2021. Full Story
If current FOMC members agree with Dudley and work to undermine Trump’s campaign, it will be another confirmation this President is up against an adversarial Deep State.
Unless the FOMC plans to surprise markets with their next move, something officials have carefully avoided in recent years, the most likely action at their next meeting is a quarter point cut.
But that small cut may be insufficient to reverse the inverted yield curve, halt recession talk, and quell speculation that the Fed is gunning for President Trump. Full Story
By: Keith Weiner, Monetary Metals - 3 September, 2019
A paradigm is a mental framework. It has a both a positive pressure and a negative filter. It structures one’s thoughts, orients them in a certain direction, and rules out certain ideas. Paradigms can be very useful, for example the scientific method directs one to begin with facts, explain them in a consistent way, and to ignore peyote dreams from the smoke lodge and claims of mental spoon-bending. Full Story
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