A Trapped Fed
The clearest way to understand current Fed policy and its effect on markets is to view it through interest rates. Interest rates are the price of credit. Credit is not money. When a bank creates credit, it does not create…
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Tag Archive: Federal Reserve
The Basics of Money
Start with the basics of money. Money is not wealth, it is the measurement of wealth. All money does is value the exchange of goods and services—the productive economy—similar to any other basic unit of measurement in the International System…
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Trump vs the Fed
Trump Bashes the Fed Over Rate Hikes The Federal Reserve and the Holy Natural Rate of Interest The Federal Reserve is on a Monty Pythonesque search for the Holy Grail of natural interest rates—the Wicksellian natural rate of interest. As…
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Kendall Rule Revisited
Yellen’s Inadvertent Gold Standard Nathan Lewis posted an excellent piece on Forbes about gold’s correlation with the dollar during Yellen’s tenure as Fed Chair. Lewis asks the question, “have we effectively recreated the Bretton Woods gold standard system?” Bretton Woods linked…
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MotM Brief: The Shanghai International Energy Exchange
The Shanghai International Energy Exchange, INE, began trading oil futures denominated in yuan, today, March 26, 2018. I wrote about the upcoming significance of this event in China, Gold, and the Dollar. The initial report was that yuan petro futures…
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Inflation, Deflation
Inflation and deflation are a basic component of economics. Yet, the Federal Reserve, which has monopoly control of the value of the dollar, admits that they “aren’t sure they understand how inflation works anymore.” That a currency must be stable…
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Market Memo: Market Inflection
The Fed unleashed a coming market inflection with the onset of normalization. In our global fiat system, as long as the dollar remains the world’s reserve currency, the Fed forces global central banks to adopt its policy. A Fed balance…
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Market Memo: Gold
On October 2, 2017, Market Memo: Normalization, Tax Cuts, Geopolitical and Gold, I wrote: What this means is that the price of gold (POG) will continue to adhere to the Kendall Rule. The initial steps of normalization, tax cuts, and…
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China, Gold, and the Dollar
Global reserves preference in fiat U.S. dollars or gold The Nikkei Asian Review reported a global financial bombshell on September 1, 2017. “China is expected shortly to launch a crude oil futures contract priced in yuan and convertible into…
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Fed Normalization III
One way to look at central bank normalization is to envision optimum monetary and fiscal policy and work backward to what is actually possible. Optimum policy is the magic formula of stable money and low taxes. Stable money and low…
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