15 December 2015

Gold Daily And Silver Weekly Charts - FOMC Tomorrow, Cargo Cult Economics

Gold and silver went sideways to slightly lower in a choppy trade today ahead of the FOMC announcement tomorrow afternoon. There is a heavy lean towards believing that the Fed will raise rates 25 basis points.

Fed Funds futures are indicating expectation of a move to 100 basis points total by the end of next year. Let's see if they can pull that one off. It seems aspirational,  as if one wishes to have room to cut recently risen rates when their latest folly falls back upon them.  And so I think this is that sort of self-referential exercise.

The idea that since recoveries are often accompanied by inflation, if we can only use monetary policy to create inflation then the recovery will come, is so wrong-headed that it leaves me aghast.

Even Keynes recognized that the point of stimulus was to provoke aggregate demand, which is the organic form of growth in the economy that will provide all the inflation that one might expect.  It is stimulus from the bottom up, from the productive side up.

But to pursue this effete, top down stimulus focused primarily on the still unreformed Banking system and the wealthiest top few percent is beyond policy error, and more like policy malpractice. 

And of course, if one puts austerity and financial parasitism into the mix, then we just aren't in Kansas anymore, Toto.  We are in the makings of a kind of a policy hell on earth.

So let's see how things go this week, keeping in mind that there may be antics aplenty after the Fed announcement and into the quad witch for stocks on Friday. The miners have been beaten bloody.

The Bucket Shop was dead quiet for silver yesterday, but there was another large house-to-house delivery of gold from Nova Scotia to JPM.

Have a pleasant evening.