There was intraday commentary about the lack of serious reform in the financial system here.
Stanley Fischer noted today that Q1 was bad, but sees the economy rebounding according to the CNBC headlines, and that the Fed cannot wait forever to raise rates.
As you may recall I think we will get a symbolic raise from the Fed sometime this year, maybe even a second. And then they will take that back when it finally occurs to everyone that The Recovery™ is more of a public relations event than an economic reality for the general public.
Bonds and the precious metals were immediately slugged.
Stanley's speech was a trigger for a major market move. Whether he knew about this in advance, or his text had been given out in advance, or the news algos are that much in control now of the markets, it is hard to say. The financial news certainly spun it the way they wanted. But there it is.
We ought not to be surprised. After all the precious metals are priced in a bucket shop in the States, so that is no great surprise. But Treasuries? Now that is some scary flash crash scenario concern.
I do think that his saying that 'rates cannot stay this low forever' is a tautology. Obviously they cannot stay there, and that is how his remarks were eventually couched by the end of the day.
Speaking of bucket shops, we had some deliveries taken on the gold contracts as noted below with nothing happening in silver, except the usual shoving of bullion around the plate in the silver warehouses.
The amount of 'delivery' action on the Comex is a rounding error on the Asian exchanges. That is a phenomenon worth noting.
I would like to reiterate what I said last night, that it is highly unlikely that a hedge fund initiative to change the charter of the Central Gold Trust to allow for bullion redeemability is unlikely for the Central Fund, CEF. CEF's shares that trade are non-voting and the voting shares are closely held by management. I do not know why the Gold Trust was arranged differently, but there it is.
I was interested to see an essay published in American Affairs by the NY Fed Head Beardsley Ruml in 1946 that contended that Taxes For Revenue Are Obsolete. The author asserts that with a fiat money system a country needs only print the money it requires to support their spending needs, although they must keep the value of the currency in mind. Taxes are only used for shaping and engineering social and economic goals.
Now doesn't that sound like Modern Monetary Theory? As I have said, I find it amusing that this notion is presented as some new discovery, but even moreso, it is something that the obtuse bedfellows of a group of social spending Liberals and Libertarian 'less government' austerians both agree. Apparently the beauty of not having to bother with taxation is in the eye of the beholder.
I wonder how the Miserians feel about trillion dollar platinum coins?
Have a pleasant evening.
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