Stocks And Precious Metals Charts - Malice Domestic

“Several centuries ago the greatest writer in history described the two most menacing clouds that hang over human government and human society as 'malice domestic and fierce foreign war.' We are not rid of these dangers, but we can summon our intelligence to meet them.

Never was there more genuine reason for Americans to face down these two causes of fear. 'Malice domestic' from time to time will come to you in the shape of those who would raise false issues, pervert facts, preach the gospel of hate, and minimize the importance of public action to secure human rights or spiritual ideals. There are those today who would sow these seeds, but your answer to them is in the possession of the plain facts of our present condition.”

Franklin D. Roosevelt

The financial asset bubbles since the turn of the 21st century have been enabled by three basic tools of monetary policy: Greenspan, Bernanke, and Yellen.

Whether we will have a third major collapse and crash to follow this latest asset bubble, as a consequence of misguided monetary policy, economic priorities, and bank regulation is not the issue. The question is, shall we have a system that holds together long enough to have a fourth?

Certainly, the Fed is not alone in this. But in addition to their power to set short-term interest rate targets and engage in open market operations, they are also a singularly powerful banking regulator, wield through this office tremendous power in all the financial asset markets, right down to reserve and margin requirements, and the activities in them of the Banks.

Stocks rebounded somewhat today. Whether this bounce will stick, and increase to allow yet another top in equities is certainly an open question.

It seems probable that the Fed will keep raising their benchmark rate as long as the fig leaf of recovery permits, as they recoil in horror from ZIRP. For they maintain as their highest priority the process itself, and the banking system to which they are beholden.

This is the great challenge of our day. The system has been co=opted by and for the benefit of the few, and the people as a whole are suffering for it.

Gold and silver bounced a little today, as the Dollar shows continued weakness.

Tomorrow we will have the decision of the FOMC.

On Friday we shall be treated to the Non-Farm Payrolls Report.

(Click on image to enlarge)