The Federal Reserve's new whiz-bang - - -

"Forward Guidance" is the FED's main new whiz-bang financial manipulation toy. Here's what they themselves say about it - - -

With short-term interest rates at the zero lower bound, forward guidance has become a key tool for central bankers, and yet we know little about its effectiveness. Standard medium-scale ...models tend to grossly overestimate the impact of forward guidance on the macroeconomy -- a phenomenon we call the "forward guidance puzzle." The Forward Guidance Puzzle - Federal Reserve Bank of New York

So, basically, they don't know what the un-fuck they're doing with something that "has become a key tool for central bankers."

"Forward guidance" is just FED spokes-folks publicly explaining what they think they're going to do. Before this, it was unofficial, minor, and called "jawboning." Before that, the FED kept everything hidden as if they were bluffing in a high-stakes poker game.

So the future of the fiat-based world economy hangs on something of which the FED admits, "we know little about its effectiveness," our "models tend to grossly overestimate the impact," and in fact, "forward guidance" is a "puzzle."

(rofl)

I've fallen and I can't get up - - -

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Where all the inflation has gone - - -

The U.S. Federal Reserve (the FED), in addition to setting interest rates to the lowest in history, is creating $85 billion in money-equivalent every month by buying various bonds. This is all inherently inflationary, but so far, not much inflation is showing up in the U.S. economy. Why not?

Because for the time being, it's going elsewhere - - -

Brazilian President Dilma Rousseff criticized U.S. monetary policy saying it has harmed Brazil and other developing countries. Rousseff said the U.S. decision to leave benchmark lending rates near zero has created an overload of speculative money that floods into economies like Brazil.
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Brazilian President Dilma Rousseff: "Such expansionist monetary policies in and of themselves, is isolation, regarding the fiscal policies, ultimately lead to a depreciation in the value of the currencies of developed countries thus impairing growth outlooks in emerging countries." --Democracy NOW! Headlines, Tuesday, April 10, 2012

And here - - -   

Annual [Argentine] inflation, clocked by private analysts at over 20 percent... --Argentine leader's image falls as inflation soars | Reuters

Now we have this logical evolution:

Brazilian authorities are likely to tighten monetary policy faster than expected to combat resurgent inflation ...the central bank's monetary policy committee will hike rates by at least 25 basis points to 7.5% when it meets on Wednesday.

"We have passed the point of no return," said Marcelo Carvalho head of Latin America economic research at BNP Paribas, who predicted a 50 basis point hike. "Inflation has been too high too long and it's time to wake up." Brazil poised to hike rates: analysts | LatinFinance

But hey, what's a little more Krugmanite collateral damage among friends?

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How to control inflation

Annual [Argentine] inflation, clocked by private analysts at over 20 percent, was another worry voiced in the survey. The government fines economists who publish their inflation estimates, which tend to double or triple the official figures... --Argentine leader's image falls as inflation soars | Reuters

Argentina's government apparently forced McDonald's to sell the Big Mac at an artificially low price to manipulate the country's performance on the "Big Mac index"

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What's with gold? The Bigger Picture - - -

The titular price of gold dropped about $84 dollars on Friday, April 12, 2013 in an obviously unprecedented manner. Yet, at the same time, ABN AMRO, one of the largest banks in Europe, failed to deliver the PHYSICAL gold it had contracted to deliver and defaulted, Venezuela, Germany, and apparently the Netherlands are repatriating their gold from the U.S. Fed -- and the U.S. Mint has periodically suspended sales of precious coins because of a lack of metal to cast them with.

SOMETHING is going on. Maybe it's just a normal trashing of the gold price by the government-banking axis, but to an extreme degree.

The question is, "Why NOW?"

Hopefully the answer is, "Because we've been trying to do this to protect our Keynesian zero-real-interest-rates against gold ever since it hit $1900/oz and threatened them -- and just NOW all the factors were finally right." Former U.S. Assistant Secretary of the Treasury Paul Craig Roberts thinks this is the case.

That's most likely.

BUT if the answer is, "We see a serious ripple in the fiat force, and we're trying to head the disaster off at the pass," they may be right. Worse, their blatantly obvious action against gold may precipitate the very disaster they fear and perhaps are even semi-aware of from history.

In that case, here's what that would likely look like - - - My Blog Former U.S. Under Secretary of Treasury Paul Craig Roberts explains what the bankster-government axis may be worried about.

According to veteran metals trader Andrew McGuire, the western banking-government amalgam, spearheaded as usual by Bankster Goldman Sachs, dumped more than an unheard of 500 tons of PAPER gold on the market late last week. And pimped, cajoled, and forced other weak hands to play along.

What's paper have to do with it? "Paper gold" merely means it was promises to deliver gold, not gold itself. Which is what makes the failure of ABN AMRO to deliver promised gold very interesting indeed.

It's directly analagous to the beginning of an old fashioned run on a bank where the bank was unable to redeem its "Redeemable in Gold on Demand" dollars -- the only Constitutional kind -- because they'd printed those redeemable I.O.U.s for more gold than they actually had. If anyone else had done that, it would be called "counterfeiting."

And because the banks are so interconnected, this isn't just a run on ABN AMRO.

AND maybe the repatriation movement, besides being interesting, is the straw that lit the fuse as Venezuela, Gremany, probably Holland, and perhaps some other countries are repatriating their gold which has been theoretically stored in the valuts beneath the Federal Resreve Bank of New York -- made famous in Die Hard With a Vengeance, the third in the series.

History? That was when France, a few other countries, and most importantly, the markets, called Uncle Scam's Bretton-Woods "London Gold Pool" paper-gold bluff by taking delivery of actual physical gold from the U.S. and its other eight dragooned central banks. In stupidly trying to again raise the market bet and cap the price of gold, Uncle airlifted a bunch of gold to London, ultimately collapsing the floor of one storage vault. But that was all to no avail. Being caught with its counterfeit shorts down, finally, on August 15, 1971, with Executive Order 11615, Nixon "closed the gold window," thus abrogating the international convertibility of the U.S. dollar to gold and finalizing the biggest default in history. So far.

P.S. As of April 14, 2013, 22:57, it looks like Goldman et.al. are still working the plan. Be interesting to see just how far they can go before the markets once again slap them upside the head.

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Ron Paul: Putting your money where your mouth is - - -

Putting your money where your mouth is - - -

--Greg Mankiw's Blog: The Ron Paul Portfolio

- - - AND loving it - - -

--Ron Paul's Long-Term Holdings Outperform The Market And Most Pros - Seeking Alpha

L. Reichard White, Monday, December 26, 2011 11:49 AM

ECONOMICS IN ONE EASY LESSON

Economics is simpler than you think -- if you're an Austrian Economist (Hayek, Mises, etc.) rather than a Keynesian Economist (J.M. Keynes), monetarist (Milton Friedman), neo-Keynesian economist (Bernanke, Krugman, etc.).

1. The "law of supply and demand" applies to "money."

2. An increase in the "money" supply greater than the increase in production -- because of the law of supply and demand -- causes a general price inflation across the boards.

3. Credit (I.O.U.s of various types, including stock certificates, bonds, etc. -- that note on the back of granddad's cigarette pack), as Daniel Webster put it, is equivalent to "money" and has all the effects of "money."

3A. Most I.O.U.s start out as limited circulation I.O.U.s -- and stay that way unless a market is established which allows them to be traded, that is, makes them "liquid."

4. A sudden change in the amount of either "money" or credit -- in either direction -- disrupts trade and thus the advantages of specialization and division of labor -- which ultimately determine the physical level of well-being of the human race -- and make the "modern" large populations possible.

5. Without the advantages of trade (and thus division of labor), extremely large numbers of men, women and children would die.

6. Barring the crash of a solid gold or silver asteroid, a sudden change in the supply of gold and silver (transactional hard money) are highly unlikely.

7. Because their value depends on psychology rather on a directly perceived value of a strictly limited physical commodity, the effective supply of both credit and paper/megabyte money can change suddenly.

8. The supply of both credit and paper/megabyte money CAN change with extreme rapidity, paper/megabyte because it's easy to create, credit because it completely depends on confidence that the debtor can and will pay, and without that confidence, a credit vehicle becomes devalued or even worthless. That is, because people can lose confidence in an I.O.U. and so don't want it, it becomes less, or even completely, "illiquid." That is, "people don't want it" = "illiquid" = "devalued" or even "worthless."

9. Since most people hold money for later use, at least partially, it's important that people have confidence it will hold its trade value and NOT devalue. Thus, the main "psychology" that determines whether or not people will hold a particular I.O.U. is their expectation as to its future value. If they expect its value to drop -- or equivalently, expect prices to rise -- they will spend it quickly. That is, if they expect a general price inflation, they will lose confidence in their money and spend it quickly.

10. Once people in general start to spend quickly, this puts more money into circulation quickly, thus increasing its effective supply, which causes more inflation, more inflationary expectations, destroys more confidence, and so forth. The Austrian School of economics calls the rapid spiral that results a "crack-up boom" or "catastrophenhause." Others call it "hyperinflation." Which is why U.S. Federal Reserve Chair Bernanke and the FED are so concerned by peoples' "inflationary expectations." This is, of course, not a problem with transactional hard money -- which, barring that solid-gold asteroid, can't suddenly inflate -- or suddenly deflate.

Just another I.O.U.

There's always a discount on an I.O.U. The amount depends on its perceived likely-hood of being paid. The dollar is, in essence, such an I.O.U. The perception of repayment is dropping and you can follow it by watching the value of dollars on the market. --L. Reichard White, Thursday, November 11, 2010 3:22 AM

More symptoms - - -

- - - of unsound money:

Our parents were "The Greatest Generation," and they earned that title by making enormous sacrifices and investments to build us a world of abundance. My generation, "The Baby Boomers," turned out to be what the writer Kurt Andersen called "The Grasshopper Generation." We've eaten through all that abundance like hungry locusts. --Op-Ed Columnist Thomas L. Friedman, Root Canal Politics - NYTimes.com

These are just two more symptoms of unsound money. The boomers - - - and everyone in line behind us - - - are just following the incentives implicit in fiat (paper/electronic) money: Because of chronic yearly inflation caused by central bankers and politicians, this kind of "cash is trash" and thus saving is stupid. Our parents on the other hand, behaved in accordance with the incentives implicit in real Constitutional "hard" money (gold and silver) -- which can't be inflated.