Ben Hunt put out a great piece today showing how Jay Powell has slumped into another Arthur Burns, the Fed Chair that Nixon cajoled into pumping to help his own political cause of getting re-elected.
The result was a raging inflation that took a far more disciplined and full of integrity Paul Volker to tame.
In 1971, Richard Nixon had a problem. The US economy was pretty strong and the Fed wanted to tighten. But Nixon had an election to win in 18 months, and he needed loose monetary policy to do that. Also, the global economy wasn’t that strong, and the rest of the world needed an expanding supply of dollars and an expanding US trade deficit to keep its motor running.
Nixon didn’t really care about that, but a lot of his oligarch cronies did. So Nixon alternately bullied and cajoled and threatened and rewarded his hand-picked Federal Reserve Chair, Arthur Burns, to do the right thing and keep the money spigot open … wide open.
Complaints about too much liquidity sloshing around were “bullshit”, and so what if they were running the economy hot? Good lord, man, imagine who would take over the White House in 1972 if he were defeated! Imagine the insane fiscal spending policies that those Democrats would push on the country if he lost!
Donald Trump has EXACTLY the same problem.
Donald Trump has found EXACTLY the same solution.
Jay Powell is the Arthur Burns of our day.
The only difference is that Nixon did all of his bullying and cajoling and threatening and rewarding in private, and Burns wouldn’t dream of saying out loud what Powell is shouting about the “important signal” of financial market “volatility” on monetary policy decisions.
They’re not even pretending anymore.
No, theya re not even pretending anymore.
We can see the signs daily in the pumping of equities and the selling of gold.
Here’s today’s crime scene in gold:
The world buys gold, and the US sells gold. Day after day that’s what happens in the US paper “”markets.””
Everyone should be prepared to put on their surprised faces someday when the buyers of that paper gold try to take delivery and JPM, et al., throw a hissy fit and get the ‘regulators’ to force a paper settlement at prices that are deeply unfair to everyone except the bullion banks.
The reason for all this gold capping?
Simple. A rising gold price telegraphs a lack of faith in the monetary masters and their plans. They can’t have that. Hurts their massive but brittle egos, and it threatens to expose their entire game as a fraud, which it is.
The “master plan” has always been the same thing. It goes under the name of ‘financial repression’ and that game, which steals form the many to support the few, requires that there be no exits, no escape hatches. Gold is an escape hatch so they’ve nailed it shut, as much as they can.
The motto of the Fed ought to be “All for one, and one for one!”
They are an institution fully based on the idea of taking from the many to give to the few…the fewer the better. They are the reverse Robin Hood organization.