Fish or Cut Bait
by Rob Kirby, Kirby Analytics. June 2, 2008
Last week the buzz was all about Scott McClellan's new tell-all book, What Happened. One of the key points former Press Secretary McClellan made in his book – which is frequently mentioned on this site and in this space -- was "the failure of the press to ask the critical questions and report accordingly."' In referencing how the Bush Administration generally viewed the press, McClellan added,
"If the press had any useful role at all, writes McClellan, it was as intermediaries in a propaganda campaign…"
Speaking of propaganda campaigns, haven't we all heard enough utterances of Federal Reserve lackeys? On May 28, 2008, Dallas Fed President and current FOMC member Richard Fisher had the gall to "lay on" this disingenuous clap-trap last week as he stood before the Commonwealth Club of California:
"I am also not going to engage in a discussion of present monetary policy tonight, except to say that if inflationary developments and, more important, inflation expectations, continue to worsen, I would expect a change of course in monetary policy to occur sooner rather than later, even in the face of an anemic economic scenario. Inflation is the most insidious enemy of capitalism. No central banker can countenance it, not least the men and women of the Federal Reserve."
Notice how Fisher speaks about the importance the Federal Reserve places on inflation expectations? Here, Fisher reveals how the Fed could care-a-less about people's reduction in living standards through actual debilitating price increases which have already occurred, so long as they don't realize what is occurring and incorporate this reality into their expectations going forward. Ladies and gentlemen, this is akin to worrying about the welfare of horses AFTER they've bolted from the barn. It was the Fed's solemn duty to ensure that the barn doors were secure in the first place!
In an act of misdirection, Fisher fails to mention that inflation IS a monetary event while speaking of Fed Governor's willingness to "countenance" inflation. Ladies and gentlemen, money/credit creation IS the lifeblood of fiat money systems which Central Banks promulgate, and the Fed controls the spigot. On my planet this renders these remarks insincere doublespeak.
Why does Mr. Fisher not come clean with an admission that past Federal Reserve mishandling [manipulation of data and markets] has created the anemic economic state [or financially debilitated Republic, perhaps?] that he speaks of in the first place?
Fisher finishes this passage with this dilly:
"Inflation is the most insidious enemy of capitalism."
I've never heard such guffaw in all my life. The most insidious enemy of capitalism IS NOT INFLATION – as Mr. Fisher is no doubt well aware - but instead, it is CENTRAL BANKING. Lest anyone forget, Central Banks and "central planning" are "of Communism" and, in fact, represent one of key tenets of the Communist Manifesto:
In the mid 1800's, Karl Marx and Friedrich Engels were faced with the question of what the perfect communist state would look like. In other words, what condition would be necessary to facilitate a "perfect implementation of collectivist principles". The short essay Marx and Engels wrote has become one of the most famous written documents in history. The document is known as the communist manifesto.
Here is a summary of the 10 planks:
- Abolition of private property
- Heavy Progressive Income tax
- Abolition of all rights of inheritance
- Confiscation of property of all emigrants and rebels
- Central Bank
- Government control of communication and transportation
- Government ownership of factories and agriculture
- Government control of labor
- Corporate Farms, regional planning
- Government control of education
You see, as a FOMC member at the Federal Reserve, Mr. Fisher is no doubt very cognizant of the precious metals markets, after all, Article 1, Section 10 of the U.S. Constitution clearly states:
No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.
So it would appear that Mr. Fisher and his cohorts at the Federal Reserve - with their "fiat money" – have subverted the U.S. Constitution, no?
Interestingly, a recent report by DeepCaster, right here at Financial Sense makes the claim that Mr. Fisher's Fed and/or its agents have in fact been rigging the precious metals markets in an attempt to make their beloved fiat money look good:
"Consider moreover, in the face of the [silver] shortages and delays this year in delivering actual physical silver, whether bullion or coins, (and given the horrible fundamentals in the economy and the financial markets) what should be happening to the price of silver? It should be skyrocketing, right?
But, on the contrary, however, the price of silver peaked in mid-March, 2008 at around $21 an ounce and was violently taken down in the last week of March, and appeared to bottom at nearly $16 an ounce in early May.
And yet all the while that Price Takedown was occurring, there were great and obvious shortages in the supply of physical silver around the world.
So what gives? That dramatic two-month Takedown in the price of silver from mid-March to mid-May can only be adequately explained by one factor: Intervention in the Silver Market via capping and taking down the price of Silver by The Cartel* of Central Bankers and their Allies."
Perhaps Mr. Fisher and the mainstream financial press would like to investigate and explain some of these recent incredulous, often repetitive, counter-intuitive market moves:
Mr. Fisher and the rest of his cronies at the Federal Reserve know very well that rapid rises in the prices of precious metals can and do "lay bare" the ineffectiveness of Central Bank policy and bring into question the viability of fiat money or need for the institution itself. This is why, despite glowing fundamentals, their prices are deliberately rigged and engineered lower.
Mr. Fisher, despite your claims to the contrary, I'm not biting; you are no friend of capitalism.
Overseas equity markets began the week on a positive note with Japan's Nikkei Index adding 101 to 14,440. North American markets didn't fare as well with the Dow losing 134.5 to 12,503.80, the NASDAQ falling 31.13 to 2,491.53 and the S & P losing 14.70 to 1,385.70. NYMEX crude oil futures gained .37 to finish the day at 127.72 per barrel.
On foreign exchange markets the U.S. Dollar Index added .04 to finish at 72.94.
In the interest rate complex the benchmark 5 yr. bond ended the day at 3.29% while the 10 yr. bond ended the day at 3.97%.
Precious metals finished the day mixed with COMEX gold futures up 5.40 to 892.30 per ounce while COMEX silver futures fell .06 to 16.84 per ounce. The XAU Index added .32 to 181.76 while the HUI Index gained 3.49 to 425.28.
On tap for tomorrow early a.m., May auto sales – last 4.9M and May truck sales – last 5.6M. At 10:00 a.m. April Factory Orders data is due, expected -.5% vs. prior +1.3%.
Wishing you all a pleasant evening and prosperous investing!
© 2008 Rob Kirby