torch fire

The Federal Reserve exists for the sole purpose of enriching big banks…The Fed does whatever it takes to keep a yacht filled of failed executives and their friends unimaginably rich.  If this requires an economy of 300 million people to be blow-torched, then a blow-torching is what that economy will get.John Titus, “Bailout Films” and “Best Evidence”

20121003_grant_0

Our favorite critic of the Federal Reserve, Jim Grant was back on CNBC to provide his perspective on Janet Yellen & the Fed preparing to hike interest rates. 
Grant unleashes another epic rant against the Fed, and ‘the virus of radical monetary policy‘. 
Full must see interview is below: 

gold

What is not often covered in the media are the audits of the US official gold reserves stored at the US Mint, which is the custodian for 95 % (7716 tonnes) of the stash – also referred to as deep storage, and at the Federal Reserve Bank Of New York that safeguards the remaining 5 % (418 tonnes).
The lawful owner of the US official gold reserves is the US Treasury

Part one covered the most recent records I could find published by the US government, in this post we’ll examine more historical records and approach this matter from a more critical angle.

bernanke

The current set of fiscal and monetary policies pursued by central banks and states are all based on lessons drawn from the Great Depression of the 1930s. The successful (if slow and uneven) “recovery” since the 2008-09 global financial meltdown is being touted as evidence that the key determinants of success drawn from the Great Depression are still valid: the Keynesian (or neo-Keynesian) policies of massive deficit spending by central states and extreme monetary easing policies by central banks.
Are the present-day conditions identical to those of the Great Depression?  If not, then how can anyone conclude that the lessons drawn from that era will be valid in an entirely different set of conditions?
We need only consider Japan’s remarkably unsuccessful 25-year pursuit of these policies to wonder if the outcomes of these sacrosanct monetary and fiscal policies are truly predictable, or whether the key determinants of macro-economic success and failure have yet to be identified.

gold

The lawful owner of the 8,134 tonnes of official gold holdings of the United States is the US Treasury.  The Federal Reserve handed over the official gold reserves to the Treasury in 1934 and in return received gold certificates – which, by the way, are not redeemable for gold, only for dollars, but that’s not the point now. The point is these gold certificates are still valued on the Fed’s balance sheet at $42.22 an ounce.
The free market price of gold is currently about $1,200
.  The reason the US capped the value of gold on their books at $42.22 in the seventies is because they wanted to phase out gold from the international monetary system to increase the power of King Dollar; denying the true value of the yellow metal supported this ambition.
And so the Fed pretends until this day gold is worth $42.22, all in an effort to make us believe in the strength of the dollar. However, the US can’t pretend forever the price of gold is $42.22…

gold

Recovering gold and other valuable metals from retired nuclear weapons had been a little-known mission of the government’s uranium enrichment plants over the past five decades.   At Paducah, the process began in the 1950s and was conducted under extraordinary security, with heavily armed guards escorting warheads into the plant under cover of darkness.
Based on available records, DOE estimates that between 2,800 and 5,300 pounds of gold from retired nuclear weapon assemblies and scrap parts was recovered and shipped from the Paducah Plant from 1964 to 1985.
The operations used to reclaim gold were kept separate from other materials and contaminated processes onsite, but were conducted in contaminated areas of two buildings.   For much of this period, recovered gold was shipped to the U.S. Department of Treasury for refinement and reuse

So, as the lights go out at the only uranium enrichment plant in the United States, there is high probability that gold bars are glowing brightly at some lucky vault
The real question is this… are they part of the remaining gold at Fort Knox, or is some unfortunate Central Bank now the owner of the HOTTEST GOLD on the planet?

fed

Former Fed Chairman Alan Greenspan was the keynote speaker at last week’s New Orleans Investment Conference.
When questioned as to why he left his Austrian roots, Greenspan claimed he has always remained true to Austrian economics and the principle of sound money.

He fell into his role as Fed Chairman purely by accident, he claimed, and what he did there, he did it because he had to.
He explained that the capital needs of the Federal government were so massive that the only way to prevent disaster for the rest of the economy was to keep feeding the beast with cheap money. If the Fed hadn’t created and circulated new money, the Treasury’s insatiable demand for capital would certainly have ‘crowded out’ the rest of the economy, wrecking the entire private credit system.
Political realities, he explained, in the form of entitlement spending and off-balance sheet obligations of the US government, trump the need for sound money every time.
Regarding whats in store for the US economy, Greenspan might have an inkling of something he’s not telling.
Here’s what the former Fed Chairman had to say about the direction of gold and interest rates:

HarveyOrgan1

Gold & silver were whacked by the cartel in the access market today as Janet Yellen and the Fed announced QE will end at the end of the month. 
Expect gold and silver to be under the weather for the remainder of the week.
Let’s head immediately to see the major data points for today:

Source: Banzai7

What we saw in 2008 was a massive containment. The mainstream was taken by surprise. I remember watching it all finally unfold, thinking that this was it. Playing out exactly as expected.
The most obvious bubble, housing, was imploding. But something happened that felt strange. The real punishment.
The event that should have ended housing as a financial asset never came.
In the process they have reduced the standard of living for 90% of Americans.
Fed policy tools guarantee that everyone is so inured to their system that when they implode the whole thing to rubble next, no one will have any choice but to be under their centralized world total control system.

Or so THEY think anyway.

panic

Something nasty is going on behind the scenes in the financial system that is not yet apparent.
Treasury futures opened in the early evening and the 10-yr traded down to 2.25%
.
Something has the market incredibly spooked and I find it interesting that the U.S. Treasury Secretary and the UK’s equivalent will be running a big bank fail simulation test next week.
The movement in 10-yr Treasury yields AND the blatant smashing of the gold price since mid-July is exactly what occurred in 2008 before Lehman collapsed.

Is another TBTF mega bank on the brink of insolvency??

Jim Grant

I think this is a time where people will look back on us and see it as a period of practically central bank worship.
The central bankers – Draghi, Yellen, Bernanke – have become almost celebrities in America.  People have invested unreasonable hopes in what these central banks can know, and what they can do.   I think that, sooner or later, the investing public will become disillusioned of these ideas….
I dare say that stock prices will not continue to rise uninterrupted at the same pace.  That’s not a very interesting prediction, but the stock market is certainly a cyclical thing.  I think it’s fair to observe that today’s ultra-low interest rates flatter stock market valuations.  Stock prices are partly valued based on a discounted flow of dividend income.  To the extent that the discount rate you use to value that stream of dividend income, which depends on interest rates, is artificially low,stock prices are artificially high.
I think that the burden of proof is on anyone who would assert that we are in a new age of persistently and steadily rising stock prices.