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The City of New Orleans arrives in ChiTown
https://railpictures.net/photo/796870/
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Mr.Copper
If memory serves Volker’s actions in raising interest rates so high took place around 1980 … some years after Nixon closed the gold window.
I think it was Greenspan who looking back at this time remarked that the US gov should have suppressed the gold price but didn’t. Looks to me that they’ve taken that lesson to heart, although this suppression will fail eventually.
Cheers
This couldn’t possibly be bullish for gold, could it?
[Definitely not-everyone knows gold is moved by interest rate differentials and other arcane nonsense]—currency collapse!—preposterous to think it could make gold rise—wink! wink!]
THE ECBs LONG JOURNEY INTO CURRENCY COLLAPSE JUST GOT A LOT SHORTER
The ECB’s announcement on Thursday July 21 of a “new instrument” for tackling “fragmentation risk” is ominous for the future of the euro. The idea is to pre-empt the emergence of serious break-up risk for the euro-zone as the policy interest rate continues to move higher in coming quarters towards “neutral.”
The new instrument, born under the name “transmission protection instrument” (TPI), will be the catalyst to the accelerated full transformation of the ECB into a bloated European “bad bank” fund. The European public at some stage should become alarmed about the danger of default by inflation spilling over into their holdings of the money issued by this bad bank fund.
If Germany exits EMU, then the ECB’s monetary liabilities just become worth a lot less in real terms (via currency collapse and inflation). Ultimately these monetary liabilities might cease to be monetary – that occurs if monetary union comes to an end. Then the monetary liabilities of the ECB would have to find a market price (in terms of real purchasing power) as the paper of a giant bad bank devoid now of monetary function.
No-one expects the present coalition government in Berlin to be taking any such decision. But market valuations including of money do reflect shifting probability of future catastrophe even far ahead. The dangers highlighted here of ultimate monetary collapse have just got a lot worse due to the ECB’s launch of its new instrument.
@ ipso facto re “Powell’s belief that he still has a choice of being Volcker,”
Things are totally different these days. After 1971 Because of excessive money printing 1934 to 1971 we lost a lot of our gold reserves from trade deficits, the gold backing had to removed from the Fed Note Dollar. Because they were backed at $34 but Gold was worth $140, we were getting screwed.
The increasing money supply (inflation) 1934 to 1971, on top of dropping the gold standard led to very high prices during the 1970s, as the fed was contracting the money supply (deflation) with higher rates to 21%. The lagging higher prices. The so-called inflationary 1970s was the lagging result of 1934 to 1971 increasing money supply.
So after 1971 they started importing cheaper imports to get inflation numbers lower. So they can’t do that again, because they already did it and its still ongoing. I saw some tires yesterday made in Thailand.
On top of all that the US Consumer was doing very well during the 1945 to 1975 era so the stupid high rates agenda and the job losing imports were more affordable. The US consumer declined 1975 to 2008 as the blow off bottom. The gov’t and Fed have just been giving people free money after that, even GM got a hand out. And the Covid made more hand outs available.
Paper counterfeit money that works is a great thing, many things can get accomplished, like moon landings and new telescopes in orbit. But naturally the taxed paychecks lost value after 1971 and unfortunately the money managers neglected adhere to Minimum Wage and Maximum Hours act of 1937.
That all means the OLD powers that be were a lot smarter than the more recent ones. And simply creating higher interest rates are not a solution in my book. Its far easier to BLUNT or over ride higher costs with higher profits and higher wages. In fact if the wages OUTPACED inflation, everybody at the low end would be better off. The system can’t survive if low end wages lag inflation.
There is something fishy going on with them bringing in all these refugees. Is there a plan? To block imports? Will the USA start producing its own consumer products again? And we have a nice new wage price spiral? LOL.
“Powell’s belief that he still has a choice of being Volcker, instead of Arthur Burns, is the Fed Chair version of me thinking I can be LeBron James.”
– Luke Gromen, July 2022
[IN 1979-80 GOLD WENT FROM 250 TO 850 WITH 18%-20% INTEREST RATES]
So, it is nonsense, as some analysts insist, that “high” interest rates of 3% have caused gold to crash–they just won’t admit the rig.
100 yr silver chart
Will this be a retrace or the biggest cup in handle you ever seen.
