5p ET Friday, April 12, 2013
Former Assistant Treasury Secretary Paul Craig Roberts tells King World News today that the smashing of gold and silver prices is a Federal Reserve campaign to defend the U.S. dollar against a hyperinflationary scenario.
"The exchange value of the dollar is threatened," Roberts says, "and if that collapses the Fed loses control over interest rates. Then the bond market blows up, the stock market blows up, and the banks that are too big to fail, fail. So it's an act of desperation because they've got to establish in people's minds that the dollar is the only safe place, it is the only safe haven, not gold, not silver, and not other currencies."
Sentiment: Strong Sell
What exactly would be the fed's mechanism? I doubt the fed owns much gold so they aren't selling what they have. They would have to be short selling to push the price down and I would think someone would notice that.
I see you bumping your own post, nice.
Many believe the Fed is motivated to lower gold prices. But this is not their largest worry. The bigger problem is unemployment; not the rate of U2 rate, rather U6. Even if the Fed prints another $5T, unless this money gets into hands of those that represent the bottom of the pyramid, it does little else other than allow the wealthy to earn interest on their 0% dollars. In time, inflation goes higher with people buying fewer goods because the cost of any one good takes more of whatever disposable income they have to purchase it.
As a side thought, think about how the Fed quotes the GDP, it is in terms of dollars spent. Just because more dollars are spent does not mean more items are being purchased if the price of items purchased have increased. GDP is as much a measurement of inflation as it is economic activity. Given what the employment numbers are saying, I would submit that US "real" economic growth is stagnant and simply inflation driven.
I think the Fed lost of control over the monetary system (illusion) in 2007 with the TBTF scandal that has created a lingering lack of confidence in banks and the credit system. Yes, consumers still use credit, but their faith and confidence in the system has been shaken at the core and they are more aware of what is happening.
These fools have opened Pandora's box and naively believe themselves to be the only ones smart enough to close or control it. History is filled with examples of governments that have debased their monetary supply and think they have successfully deceived their citizens; it has never worked. Action/ re-action. People, although not always acting in the smartest ways, inherently know when they are getting taken advantage of. That is reality, no matter how much money or power you have.
Sadly, in the end, greed is much more powerful and persuasive than intelligence; just look at the fools running our country now!