Jim Grant appeared on CNBC’s Closing Bell to discuss the Fed’s latest non-move in interest rates, noting that “it seems awful familiar.”
Grant offered a stinging indictment of the Fed’s role in the world, pointing out that central planners simply can’t juggle all of the varying factors in the economy. Every move the Federal Reserve makes to “fix” a problem brings about another set of unintended consequences.
The Fed is in the business of making things worse as it seeks to make things better.”
Grant went on to discuss the notion that sovereign debt is some kind of “risk free” investment. “Of course it has risk,” he exclaimed, noting that in 2005, mortgage debt was the favored asset of the cycle.
The asset of the cycle now is sovereign debt yielding just about nothing.”
With the Federal Reserve preparing for another meeting, pundits are talking interest rate hikes. Even AP is speculating that a rate hike is unlikely this go-around, blaming problems the “global economy.”
The US job market is healthy. The stock market is up. Home prices are rising. Yet as the Federal Reserve prepares to meet this week, it seems in no mood to resume raising interest rates from ultra-lows. With the global economy struggling and US inflation still below the Fed’s target rate, many economists see little likelihood of a rate increase even before the second half of the year.”
But James Rickards appeared on Bloomberg and said it isn’t just about the world economy. He pointed out that the US economy is “hanging by a thread,” and an interest rate hike would likely throw the country into a full-blown recession. Rickards reminded Bloomberg’s Francine Lacqua that the small hike last December sent the stock market into 10% free-fall, and he said the only reason the market is climbing again is because everybody knows the Fed isn’t going to normalize rates. That, Rickards says, is good news for gold.
The reason stocks are going up is Janet Yellen has gone full-dove. She’s sprouted wings and flies around the room. There is nothing the stock market doesn’t like about free money, and maybe negative interest rates are on the table for the next year or so. That is sort of bullish for stocks, but it’s also bullish for gold.”
ReasonTV asked Californians what they thought the “right” minimum wage is. Unsurprisingly, most of the people in the “trendy, hipster enclave” of Silver Lake in Los Angeles just assumed a higher minimum wage is simply a no-brainer, win-win for society and workers. They didn’t hesitate to insist a $15-20 minimum wage was a necessity for the common decency of low-wage workers, even when presented with the prospect of major job losses if the minimum wage were raised. The video reminds us of when Peter Schiff asked Walmart shoppers if they would be willing to pay 15% more for their groceries if Walmart employees got a 15% raise.
Earlier this week, China launched twice daily gold fixing to establish a regional benchmark that will bolster the country’s influence in the global gold market.
What is the significance of the move?
Greg Collett, director of investment products for the World Gold Council talked with Kitco News about the new Chinese benchmark. He said it reflects the country’s growing appetite for gold and its increasing influence in the world market:
China is the largest consumer of gold in the world and this is just reflective of their growing place, and their growing demand for gold in China.”
Collett also discussed the current bull market for gold, pointing out that negative interest rates in Europe and Japan are a big driver, and that won’t likely change any time soon.
Jim Grant appeared on Bloomberg and offered some advice to the Fed when prompted by the hosts.
I think they should do less of almost everything they now do. They pretend to things they can’t know, and they undertake actions that are mainly unhelpful.”
Grant went on to explain why interventions into economies by central bankers ultimately fail. He also agreed with Peter Schiff, saying that the Federal Reserve has painted itself into a corner. It wants to raise rates, but it can’t because the economy is bad and getting worse. Grant closes out the discussion by pointing out the absurdity of “data dependence.”
Peter Schiff appeared with Alex Jones on InfoWars Friday and made the case that the real economic earthquake is in our future, not in the past.
Peter said that despite all of the positive spin coming out of the mainstream media, the Federal Reserve, and the Obama administration, the US economy is weak and spiraling toward trouble.
If you look at most of the economic indicators out there, they’re flashing recession.”
Peter went on to analyze some of the recent economic data that supports his case, and emphasized that the great 2008 recession was just a tremor:
I saw 2008 coming, and unfortunately, I also saw how the government responded to 2008, and they did exactly what I feared they would do and what I warned they would do. That is exactly why the real earthquake is still in our future and not in our past, and people have to prepare for that.”
Here’s some free advice for the Federal Reserve.
It’s OK. You can tell them. They already know.
The economy is not good.
As Peter Schiff pointed out on CNBC yesterday, the Fed doesn’t really want to raise interest rates. We just witnessed what even a small nudge upward did to the stock markets after years of low rates and monetary policy artificially pumped them up. But on the other hand, the Fed doesn’t want to admit the US economy really isn’t in great shape:
The Fed is trying to walk a fine line, because they don’t want to admit how weak the economy is when President Obama is trying to elect Hillary Clinton based on the strength of the economy.”
Last month, hackers managed to get into the Federal Reserve Bank of New York’s computer system and swipe some $100 million from a Bangladeshi government account.
As James Rickards pointed out in an interview last week on Fox Business, the vulnerability of digital wealth to hacking and cyber manipulation provides yet another reason to own gold. It is a tangible, physical asset that you can keep in your personal possession:
There are new reasons to have gold…21st century reasons. Vladimir Putin has a 6,000-member cyber brigade working night and day to erase digital wealth. So many billionaires will say, ‘what do you have, stocks, bonds?’ No you don’t; you have electrons. Putin can wipe those out. The thing about gold, you can’t hack it, you can’t erase it, you can’t delete it. It’s tangible,”
Crushing Myths and Building a New Case for Gold: Peter Schiff’s Gold Videocast with Albert K Lu (Video)
In the last seven years, China has acquired more than 4,000 tons of gold – more than 10% of the official gold in the world. Why?
Jim Rickards delves into this question in an interview on Albert K Lu’s latest Gold Videocast:
Are they stupid? No…if the Americans don’t like gold, the Chinese know something the Americans don’t.”
Central bankers and the financial elite have good reasons why they don’t want you to buy gold. They perpetuate many myths about the yellow metal to dissuade the public from owning gold. In this interview, Rickards and Lu knock down some of those myths and begin building a new case for gold.
Why Bother with Cash When You Can Own Gold? – Peter Schiff’s Gold Videocast with Albert K Lu (Video)
The conventional knock on gold is that it is inconvenient and expensive to hold, and doesn’t provide yield. But as Albert K Lu shows in his latest Gold Videocast, in a world of negative interest rates, this argument is becoming applicable to cash.
For instance, the world’s second largest reinsurance company has decided to pull cash from banks and store it in its own vaults to avoid negative rates. If you are going to do that, why not buy gold? Especially in a very weak economic environment.
I think people are figuring out that if you’re going to go to all this trouble holding physical bills, taking your deposits out of the bank where they once were very liquid and apparently very safe, and go to the trouble of vaulting them at home or in your company’s vaults as in Munich Re, maybe you should start thinking about gold.”