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Have your kids include the Fed in their prayers

As far as the theme of da gummint working to knock back prices, who am I to say that one or more of the heads of that multi-headed beast might be up to.


But it seems to me that one of the heads, the Federal Reserve, has been trying to put some air under risk assets for a few weeks with a steady daily flow of Permanent Open Market Operations- i.e., something that has always been in their purview, to buy in government treasuries to put more cash in the banking system.


Everybody has their right to an opinion, including me, and I'm thinking that the gold crash and general weakness across the commodity sector a few weeks back got their attention. Even though I'll go to my grave maintaining that forcing risk money into stock and commodity speculation doesn't constitute inflation (or the reverse), per se, they are scared #@$@less of deflation and in all fairness, half of their legal mandate is to foster price stability.


Of course the problem with that is that the Fed is a lot like the old saying about how if you only have a hammer then every problem looks like a nail- and the Fed's hammer isn't even a very good one, more like the back end of a ballpeener but it is all they got.


It has goosed the stock market nicely and at least created some stability in the metals. Historically, the limit to this is crude oil prices and with crude hitting over $96 yesterday I think they might be nearing their outer bound at least until events scare them even worse.


I notice that hedge fund uber-guy Stan Druckenmiller is shorting the Aussie Dollar as a play on the end of the commodity bubble. He may be early and he may be wrong. It may be that industrial commodities take it a lot harder than the grains- that seems likely to me. But I've always believed that the there would be a change in the direction of the wind and just like few of us were completely prepared for the timing and magnitude of the boom, it won't be easy to see the shift when it comes.


I've always said that the overhand of untold $billions in commodity index funds, ETFs and such will be a problem someday, as will the fact that if the Fed loses control of things the hot money will turn short with a vengeance.


But I guess not to talk out of both sides of my mouth, which I guess I am sort of, you can take a little comfort in the belief that the Fed will fight it- because they don;t know what else to do.

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Senior Contributor

Re: Have your kids include GC bugs in their prayers


Or we yes have opinions ,,  maybe there is demand for some reason why things can’t be as they are, so we dream, up all kinds of FED conspiracies—gold,, gold.  Gold is archaic it isn’t even on anyone’s radar.  Xon is far bigger than  all the GC and GC stks in existence.  The GC bug community gets small and smaller..  It topped 33 yrs back in 1980!


The economy got hit in 08 09, barely moving up since then. We produce more today than in 2007 with less workers,, more efficient.  15TRILLION  economy…  yr in yr out.


How long might it take to notice             ,,,   

How many yrs is the STK mkt a joke, there is nothing good going on ?



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Senior Contributor

Re: Durkenmiller...

Drukenmiller is one very smart guy. He is 1000% intelletually honest and 1000% hinest as well.  Giant record, he is not a manipulator but a fundamental, lage trend trader.   He went private and is running his onw $$ only now. Therest is managed by formwr employees.    Odd is yiu say he is quoted re teh Aussie ? He neveeer    never wnts attention and has offered views but 3-4 Xs in his life.


Did you mean Soros ??


HFs had RIS rulings in place o over 25 yrs, they take their 20%, compound it in their own funds and than take in as CAP GAOINS    a gross misue of capital.


Stan   is the ONLY one who says,, it is wrong,  ordinary income needs to be taxed at ordinary rates like for teh reat of us.


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