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Tag Archives: inflation

Those Three Weeks of Hysteria

Is three weeks a new record? That’s about how long Jay Powell’s performance bought him across most major markets. It was May 17, a Sunday night, when he appeared on 60 Minutes and, pardon me again, lied his ass off. One right after another, starting with the most obvious falsehood that his gang at the Federal Reserve “saw it coming.” It’s hard to square that claim with one bungled measure after another, the central bank’s full “rescue” operation nowhere near what it was in early March by...

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It Was Bad. The End. (not quite)

If that wasn’t the most anticlimactic worst economic quarter in history. The numbers were just as bad as people were expecting – which is the point. It’s not like this economic collapse snuck up on anyone, nor did its scale and depth. We’ve all known from the very beginning what the deal was going to be. Headline real GDP fell by a just about a third, -32.9% (seasonally-adjusted annual rate) and pretty much right on the nose of the most recent analyst estimates. In more appropriately...

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Strike 1: Gold; Strike 2: Dollar; Strike 3: Inflation Expectations

When people accuse the Federal Reserve of anything when it comes to inflation, they say the central bank is cooking the books to hide it. Back in 2000, for example, monetary observers were aflutter as policymakers shifted away from the CPI and to the PCE Deflator as their ultimate standard for broad consumer price behavior. The bastards, the latter widely known for its much slower pace than the former. In late 2005, one of Alan Greenspan’s final acts as Chairman was to announce he was...

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Gold’s Tower Of Terror Trade & The Coming Of Stagflation

I was just explaining to a close friend earlier today how gold can sometimes be a “Tower of Terror” trade where the bottom falls out of the price for no apparent reason.  In addition, the metal is mainly driven by sentiment around a central bank’s long-term resolve and ability to maintain the currency’s purchasing power, which makes gold just a “date” and never a “long-term marriage.” Gold Is Going Much Higher Though we do expect this move to be a relatively long and thrilling date,...

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Exposing The Golden Lie

To hear it told nowadays, you’d think that gold’s amazing run began when Jay Powell started cranking out bank reserves. Those telling the story equate those bank reserves to effective money printing, so it conforms to the conventional myth about gold’s relationship to the money supply (whatever that is). Throw in a federal government, every federal government, recklessly borrowing and spending, and bullion nearing its record high makes for an inflationary confirmation to Jay Powell’s...

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Not This Again

Not this again. When you really have run out of ideas, just set something aside for a time and then when it comes time again simply dust it off and pretend it is new and inspired. You can make it sound great, so long as no one remembers and realizes just how tired and ridiculous it actually is.It’s almost as if officials at the Fed are making another major, concerted inflation push. I doubt very much this is coincidence that Lael Brainerd, a member of the Board of Governors, and Patrick...

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A General Sense of Treasury’s General Account

It’s another one of those crisis-era programs, GFC1, the Fed probably hopes you never think too much about. Almost nobody noticed while the thing was operational. It was called the Supplementary Financing Program (SFP) which was thought up and initiated during the middle of September 2008 just two days after Lehman Brothers and AIG. Its purpose was, unbelievably, to drain reserves from the banking system. Drain, as in remove.At the time, the Federal Reserve actually believed it had created,...

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Transitory, The Other Way

After a record three straight months of decline for the seasonally-adjusted core CPI March through May 2020, it turned upward again in June. Buoyed by a partially reopened economy, the price discounting (prerequisite to the Big D) took at least one month off. No thanks to Jay Powell, of course, who sits on the sidelines while consumer prices (like the dollar) are temporarily suspended in this wait-and-see interim. While the losing streak has been broken, the lack of immediate downside,...

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So Long As The Bucket Is Full of Holes, Treasury Demand Comes First

Foreigners are dumping their Treasuries! The Fed is monetizing the debt! The federal government has gone insane! Mass fiscal hysteria!Yet, yields on these things are comfortably within sight of their record lows as prices have never been higher. Supply is very obviously off-the-charts, but so, too, must be demand. Every time we hear about “too many” Treasuries the market yet again proves it nothing more than fallacy, a myth that just won’t die.The demand comes first. That’s the thing. So...

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Sign of the Times: Gold Has Its Most Vocal Proponents Helping Sell Jay Powell’s Fiction

Gold at $1800 an ounce has a lot of people you wouldn’t expect lining up in Jay Powell’s camp. What else could it be, right? Bullion is an inflation hedge, that’s what everyone says. Therefore, quite obviously, skyrocketing gold must indicate the dollar destruction gold aficionados are always predicting. Unbeknownst to them, and likely to agitate the hell out of them when they figure this out, they are actually doing the Fed a favor. Powell is trying very hard right now to push up inflation...

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