Im going to refer to Jims recent email about the FOMC outcome to be announced on the 29th. Now, not that I am anyone to query the likes of Jims experience or opinion, but Im actually of the view that the FED is taking orders from the White House at the moment and not independently exercising its academic preferences. Now this notion is not really at odds with Jims views either - but in this email he is stating that Yellen has an academic preference to never pull back from accommodation (the opposite of which caused the 1930s debacle) and will never add to the TAPER under current circumstances - in complete reverse to the guidance that has been given, not only by other FED governors in recent weeks but also Hilsenrath at the WSJ, that being, that more TAPER is coming in January - another $10B in addition to Dec. Jim states that if they TAPER more the EMs will crash and take the US equities with them and so therefore the FED will not do it because it will expose the current problems for what they are and Gold will immediately go to the upside completely out of control as a consequence. So here is my take - (as I have discussed before) - The FED has been told they will TAPER whether they like it or not (Obama even announced this at the G20 in Russia). This is a conscious effort on the part of the west to ensure that all markets crash - and take commodities with them - so the banks can goad Producers out of fear into forward sales such that the banks can load the boat at depressed prices and hedge the coming MENA conflagrations that are determined in the stars. This in addition, will enable the Bullion Banks to take control of the producers via share dilution when those producers can no longer meet margin cash requirements on their forward Hedges at $3,000/Ozt Gold, and are bankrupt when the MENA wars are raging. This action of TAPER will ensure therefore, very short term IMO, the crash Gold, Silver, and other key commodities. I guess I am concerned that this highly likely scenario is completely counter to Jims advice in this email and if it occurs brings Jims credibility into question. The attached text of the email: My Dear Extended Family; A key element of Chairperson Yellens intellectual position is that cutting down on stimulation prematurely would be the most serious mistake that can be made economically. She blames the long term desperation of the 1930s on the central banks then retreat from their form of QE prematurely in the early 1930s. That was before the incipient 1930 recovery had solid legs. Assuming that Yellen did not follow her well known dictum and tapered seriously now, the emerging markets will implode. Should the emerging markets implode, the US major markets will also implode. The dollar would lead on the downside. She knows this. The Plunge Protection Team cannot manipulate the entire world equity market so control would be lost. The US markets would tank, and gold would explode on the upside because of the implication on monetary aggregates. The Exchange Stabilization fund would be so busy attempting to hold US market from implosion to pay equal attention to the dollar. Sincerely, Jim
Posted on: Tue, 28 Jan 2014 11:03:01 +0000
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