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Tag Archives: Monetary Policy

Monetary economics: The three heresies

In the wake of the Great Recession, the field of monetary economics has developed at least three heresies—schools of thought that reject mainstream monetary models. In my view, all three models are largely reactions to an important failure in mainstream models. The fact that these three heresies differ from each other largely reflects the fact that they came from different ideological perspectives. In Thomas Kuhn’s theory of scientific progress, a widely accepted...

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Ron Paul: The Fed Is Getting Desperate

Peter Schiff has called the Federal Reserve’s response to the economic “a monetary hail mary.” The central bank has printed trillions of dollars out of thin air through QE infinity, taking the Great Recession quantitative easing programs and putting them on steroids. And the Fed has gone beyond the “standard” extraordinary policy of the 2008 crisis, plunging its hands into the corporate bond market.Peter has argued that none of this is actually helping the economy. In fact, it’s hurting,...

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Gold’s Long Bull Run: SchiffGold Friday Gold Wrap Podcast July 3, 2020

Gold just finished Q2 at its highest level in over 8 years, wrapping up its best quarter since 2016. The Fed monetary policy in response to the coronavirus pandemic has put a strong tailwind behind gold. But as host Mike Maharrey details in this week’s Friday Gold Wrap podcast, gold has been on a bull run for quite some time – long before COVID-19 reared its ugly head. Why? And what might this tell us about what’s ahead?The SchiffGold Friday Gold Wrap podcast combines a succinct summary of...

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Gold Has Charted Gains for Seven Straight Quarters

Gold just had its best quarter since 2016 and finished at its highest level in over eight years. But Q2 2020 wasn’t an anomaly. Gold has charted gains for seven consecutive quarters.That represents the longest quarterly run of gains for the yellow metal since the 2008 financial crisis.Looking at the price chart, it’s clear gold actually began its bull run in the final quarter of 2015 as it became apparent the Fed wasn’t going to be able to quickly normalize rates or shrink its balance...

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Fed Minutes Show No Sign of Backing Off Monetary Hail Mary

Don’t expect the Federal Reserve to pull back on its monetary Hail Mary anytime soon.The central bank released the minutes from the June meeting yesterday. There were no big surprises, but they did reaffirm the Fed’s commitment to continuing its unprecedented monetary policy into the foreseeable future.And it truly is unprecedented. It’s not just zero percent interest rates and QE infinity. The Fed is buying everything but the kitchen sink. It’s now even become a player in the corporate...

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Gold Finishes Q2 at Highest Level in Over 8 Years

Q2 was one heck of a quarter for US stock markets. But in his podcast, Peter Schiff called it a “phony rally.” The real bull run to watch is gold.The Dow Jones just wrapped up its best quarter since 1987. The S&P 500, finished out its best three-month run since 1998 during the dot-com bubble. But as Peter pointed out, you have to put the big gains in perspective. Stocks were coming off an abysmal first quarter, and other than the NASDAQ, the major indexes remain negative on the...

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If History Is Any Guide We Could See $4,000 Gold

If history is any guide, we could be heading toward $4,000 gold. This according to analysis by US Global CEO Frank Holmes.Holmes recently appeared on Kitco News and showed how the price of gold has historically correlated with the expansion of the Federal Reserve’s balance sheet. We’ve already seen the balance sheet balloon by over $3 trillion in response to the coronavirus pandemic and it currently stands at over $7 trillion. Holmes said he thinks the central bank will likely grow its...

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Which Corporate Bonds the Fed Has Bought So Far?

Earlier this month, the Federal Reserve announced it would begin buying individual corporate bonds. Now we have our first glimpse at what that means in practice.On Saturday, the Fed released a disclosure statement that lists the bonds purchased by the central bank.The amount so far is relatively modest $428 million. Junk bonds made up $15.5 million of that total.So far, the Fed has engaged in its intervention into the corporate bond market primarily through the purchase of corporate ETFs....

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Living on a one dimensional planet

This post is a bit long and slightly technical, but I also believe it is important. Think about the following pairs of statements: The Wicksellian natural rate of interest is the policy rate that leads to stable prices. The Wicksellian natural exchange rate is the policy exchange rate that leads to stable prices. Monetary policy affects the economy by moving the policy interest rate relative to the natural rate. Monetary policy affects the economy by moving the policy...

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More Mainstream Bullishness for Gold

Earlier this week, we reported Goldman Sachs now forecasts record gold prices within the next 12 months. Well, Goldman isn’t the only mainstream player turning more bullish on gold.In a note published Tuesday, Bank of America said gold can hit record highs before the end of 2020 if its rally continues to breach key resistance levels.The breakout occurring now that is ending Q2 completes an eight-week trading range that has resumed higher,” Paul Ciana, technical strategist at Bank of...

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