Well well well, score one for the good guys! Last week’s post “Central Banking is a Joke, And You Are the Punchline” was about how central banking is a joke played by the rich against regular people.
We really took Fed employees Kaplan and Rosengren to task for trading and owning securities whose markets are actively influenced by the Fed.
To reiterate, central bankers have extraordinary inside information on the matters of interest rates and money printing done in furtherance of propping up the equity market, so why should they be allowed to trade equities?
Two Out of Three are Bad
We cannot be sure that Fed Chair Jerome Powell read our post, but neither are we sure he did not. What is important is that four days after we posted, both Rosengren and Kaplan have announced their impending retirements from employment at the Fed!
These two investors will not likely be as successful away from the corridors of power as when they walked the halls.
Here is a linkage to reporting on the resignations from Reuters titled: Fed resignations don’t blunt calls for broader ethics changes.
Notable quotes from that article include
As Powell looks to be appointed to a second four-year term, “The Federal Reserve from Powell on down is desperate to end this scrutiny without looking into whether there should be legal repercussions,” for Dallas Federal Reserve president Robert Kaplan and Boston Fed president Eric Rosengren, said Jeff Hauser, head of the progressive Revolving Door Project.
We find the above quote to be quite rich ironically. It seems that Chair Powell is helping Rosengren, and Kaplan walk the plank quickly and quietly. Since doing so is Powell’s best way to sweep this scandal under the rug prior to his own reappointment.
How it is possible then that anyone anywhere believes that central banks are somehow independent of their sponsoring governments?
And here is the joke of central banks laying bare for all to see…
Fed critics have said the U.S. central banks needs stricter ethics standards. Noting that both men have said their investing activity was approved by ethics officers and comported with rules against using the Fed’s troves of market-moving information for personal gain. The resignations are “grossly insufficient,” said Dennis Kelleher, head of the Better Markets think tank on financial regulation. He called for Powell to make a “full disclosure of everyone at the Fed who traded during the pandemic while in possession of nonpublic information .”
Conflict of Interest in Central Banking
How can it be that bad behavior which is worth resigning over is also behavior good enough to have been explicitly approved by ethics officers?
Moreover, the only possible answer is central banks themselves are an immense inherent conflict of interest which no amount of box checking by compliance staff can put right.
Moreover, what are the repercussions for these resigning employees? Likely none. There is no sign either Rosenberg or Kaplan will be sanctioned by their superiors.
Also, no discussion has come to light about the requirement for disgorging these investment winnings in the pursuit of fairness. Once again, the ‘heads I win, tails you lose’ approach to risk taking is applied to bankers.
And do you know who does not need ethics officers? A physical bar of silver – that’s who!
The point is that physical precious metals are no one’s counterparty risk. This means no bureaucrat or compliance person can deny the wealth by scooping some of it for themselves.
Here is what we are looking at right now. Stocks are cheaper than government bonds. Oil is cheap than stocks. Gold is cheap than Oil, and Silver is cheap than gold.
Since all of these things will snap reverse like a snake once rates start to rise. We are looking forward to that moment when central banks are no longer able to suppress interest rate for the benefit of their own employees.
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Continued inflationary pressures are finally being admitted by the Fed which is supporting their tapering narrative.
While inflation ultimately is positive for precious metals, they have benefited from the excessive money printing of the last few years.
Moving the tapering up in the schedule or even the increase in the tapering narrative has kept gold and silver relatively capped to the upside and vulnerable still to the downside in the short term.
The Fed is being cautious with regards to the intensity of the taper-talk so as not to spook equity markets too much.
It is definitely a case of trying to influence the market with their words rather than their actions at this point.
Gold and silver have not fared well in this environment.
The further downside expected in metals is short-term if either the taper-talk increases or the stock markets react negatively to the same.
A realisation that the Fed has painted itself into a corner and in reality has little scope for any sort of a meaningful taper will see gold and silver break to the upside once again.
GOLD PRICES (USD, GBP & EUR – AM/ PM LBMA Fix)
29-09-2021 1741.65 1737.15 1288.65 1290.88 1493.12 1492.39
28-09-2021 1739.65 1733.75 1273.25 1280.55 1489.84 1484.44
27-09-2021 1749.15 1755.30 1277.75 1279.61 1495.35 1500.08
24-09-2021 1755.15 1746.80 1280.56 1275.86 1495.74 1491.24
23-09-2021 1771.05 1750.00 1295.88 1274.18 1510.00 1490.65
22-09-2021 1775.35 1773.40 1302.40 1300.79 1513.31 1512.00
21-09-2021 1766.45 1774.45 1290.57 1299.25 1505.37 1513.25
20-09-2021 1757.15 1757.75 1284.83 1285.62 1501.48 1500.24
17-09-2021 1766.10 1755.95 1280.25 1275.00 1499.24 1493.79
16-09-2021 1781.45 1747.95 1289.41 1269.19 1513.52 1486.81
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