The Fed Resumes “Printing”

One conclusion from the Fed’s actions is that it doesn’t care as much about its inflation target as it does about improving the unemployment rate. Thus, it will err on the side of letting inflation rise, if it would improve unemployment. But holding rates too low too long fueled the housing bubble. Repeating the same game will have consequences of malinvestment in the form of new bubbles in the economy. The Fed hopes to restore employment before the negative consequences of loose monetary policy show up

Auerback: Austerity during recession is equivalent to medieval bloodletting

Here’s a good video performance by Marshall Auerback on BNN’s Business Day program. Marshall thinks the Greek default deal is actually a relatively good one. But sees a Portuguese default after the Greek default as a real possibility and envisions a scenario in which Portugal and Spain look to extract similar terms. Moreover, the quid pro quo for Greece is austerity – and that makes getting debt loads down harder when implemented during a downturn

Chart of the Day: Gold reacts to FOMC rate easing

The Fed has come out 9-1 in favor of rate easing i.e. capping medium-term treasury rates. The interesting bit is that while the Fed did the exact same thing in August out to two years, this announcement takes permanent zero out to nearly three years. That’s rate easing. Some people call it financial repression. And it’s gold bullish

Chart of the Day: Is Gold About to Get a Monetary Blast (Off)?

Watch gold as it pushes up against the downtrend line. Any hints from the Fed of QE3 could send it “to the Moon, Alice!” The Fed rejoining the party and the LTRO2 coming next month could be an explosive mix

Edward Harrison’s Ten Surprises for 2012 (short version)

Yesterday morning, I did the first weekly newsletter on my ten surprises for 2012. Here’s a brief version of the list

John Mauldin: The Matterhorn Interview

Investment advisor John Mauldin explains his attitude towards austerity measures; a return of the gold standard; the euro crisis; and the willingness to bailout everyone that makes capitalism and monetary systems stop working

Video: Gold Bubble Seen by Soros on Brink of Bear Market

Gold is poised to complete its 11th consecutive annual gain, the longest winning streak in at least nine decades, on the brink of a bear market. George Soros, the billionaire who two years ago called it the “ultimate asset bubble,” cut 99 percent of his holdings in the first quarter, Securities and Exchange Commission data show. Betty Liu reports on Bloomberg Television’s “In the Loop.” (Source: Bloomberg Television)

The ABCs of Re-hypothecation in Gold and Securities Markets: What You Need to Know

The downfall of MF Global has exposed yet another patch of the underbelly of the brokerage industry. Practices that are routine and legal – and hitherto largely unknown to most investors – can leave a company vulnerable when abused

Chart of the day: Hours of work needed to buy an ounce of gold

Central banks have done a great job at driving up the price of gold but a horrible job at creating wage inflation. If it now takes 88 hours to buy an ounce of gold versus 20 hours in 2000, hasn’t that grossly deflated real wages in a strict monetary sense? Just askin’

Running through Italian default scenarios

The most important debate of our lifetimes is now ongoing. The question: Should the ECB “write the check’ for the euro area national governments? In thinking about the answer to this all-important question, I prefer to shift the focus by changing the verb “should” to “will”.

Answering this slightly different question is much more important than answering the first question for you as an investor, a business person and as a worker. If the ECB writes the check, the economic and market outcomes are vastly different than if they do not. Your personal outlook as an investor, business person or worker will change dramatically based upon this one policy choice. The right question to ask then is: Will the ECB “write the check’ for the euro area national governments

This is why people are buying gold now

Right now everyone is looking at monetisation and thinking this will save the day. You saw the Lakshman Achuthan video; clearly punters don’t think the US is going to double dip. Buy gold then.

Maybe they are right, but I see weakness ahead in

Is Iran About to Get Hot?

Here is something brewing off radar. We’re wondering if this is a factor as to why crude is bid and gold is coming back