I spent several hours today listening to and summarizing Tom Luongo’s (TL) podcast discussion with Danielle DiMartino Booth (DDB). I won’t pretend that I understand it all—a fair amount is framed in what I consider “insider” lingo—but it does seem to me that in the context of a world war that is as much economic and monetary as military these issues are supremely important. Understandably, Luongo wanted to sound out DDB on here views of his Theory of Everything—the conflict between the Fed and Davos. To my way of looking at it, DDB is more or less on the same page in a practical sense, but might question where Fed Chair Powell is actually coming from on a theoretical level—does he really have a worldview of where he wants to go, or is he simply trying to do the best he can as a public servant of the United States?
Thank you very much for the great work, Mark! I think you have captured the tone and the highlights well.
It was very interesting to hear DDB's view that Powell is basically a very competent bureaucrat who cares about his country and about it securing independent control of its own monetary policy. Although his purpose might not be explicitly to be a foil to Davos and the ECB, he is certainly acting in a way that is at odds with their needs and desires, as evidenced by Lagarde's reaction to him.
DDB also mentioned that Powell has no need for money and is adept at wielding political power so is incorruptible in that way; and that he is certainly not a puppet of some behind the scenes force. It strikes me how hard it is for us to even conceive of this level of integrity and independence in this day and age. To state the obvious, we are very fortunate that he is chair of the Fed at this moment in history.
Exactly my opinion too about Powell - as far as we can be sure of anything here. And if he's pissing off Lagarde, Yellen, Zhou and Davos, he must be doing something right. I'm amazed he hasn't been Seth Riched.
I'd like to see Powel make the City of London (it's not London proper, it's the Financial district a city within a city) feel a lot of pain. These are truly bad people running these banks.
Agreed. Every day on this news, all I hear is "The EU will do.."; "The EU has decided..." Brussels is acting more and more like a unitary sovereign state. The only comfort is that they simply don't have the force majeure to make anyone take them seriously.
In the old days when the US and UK were on the gold standard and the dollar/pound were strictly tied to the yellow stuff, if you no longer had confidence in the paper currency, you could go to the bank and exchange it for gold. That is what China and Russia (and most other BRICS nations) are doing now. We talk fiat and CBDCs built on hot air; they talk commodities, gold and, increasingly, the armed might to back up their currencies.
I have no idea what the proper price of gold is, and neither does anybody else. It has value, and always will always be worth something, but it is a commodity and that something is what people will be willing to pay for it. Our real problem is maintaining a healthy economy, and that involves productivity and maintaining a manageable debt. It would be advisable to get our own house in order, and let the rest of the world take care of themselves. The risks are too great, and our imbecile politicians and their crony capitalists are too greedy. Then there is that nonsense of Modern Monetary Theory!
And at one time per Tom Luongo paper gold was at a 100 to 1 ratio. And somehow this paper gold is used to keep the price of physical gold down. There have been some major fines paid in the areas of precious metal trading.
Keeping the price off gold low seems to help the US dollar. My gut feeling is somehow Russia and China are going to destroy the Western paper gold markets. I have no idea how.
Thank you, thank you, thank you. This is the first cause for optimism I have seen all year.
" globalist blackmail to force the Fed to monetize more debt. Powell has no desire to get back on that train. So how do "they" get Powell to monetize another $5-10 trillion?
DDB: That will not happen with a McCarthy House of Representatives. Not in 2023. The GOP wants its pound of flesh. Plus the credit agencies are demanding that Congress address entitlement spending. It's not because the GOP are good people--"politicians are not good people." But they hope to appear responsible and try to remain king of the world. The Fed's not going to have to monetize squat."
There is hope. We may finally have adults in charge. I do feel a need to defend poor Keynes. He advocated deficit spending in a depression. "TL: Bernanke/Yellen are doctrinaire Keynsians and the Fed is a Keynsian institution", meaning borrow, borrow and borrow all the time? Keynes was not stupid. In good times you repay your debts.
Thank you very much for the great work, Mark! I think you have captured the tone and the highlights well.
It was very interesting to hear DDB's view that Powell is basically a very competent bureaucrat who cares about his country and about it securing independent control of its own monetary policy. Although his purpose might not be explicitly to be a foil to Davos and the ECB, he is certainly acting in a way that is at odds with their needs and desires, as evidenced by Lagarde's reaction to him.
DDB also mentioned that Powell has no need for money and is adept at wielding political power so is incorruptible in that way; and that he is certainly not a puppet of some behind the scenes force. It strikes me how hard it is for us to even conceive of this level of integrity and independence in this day and age. To state the obvious, we are very fortunate that he is chair of the Fed at this moment in history.
Exactly my opinion too about Powell - as far as we can be sure of anything here. And if he's pissing off Lagarde, Yellen, Zhou and Davos, he must be doing something right. I'm amazed he hasn't been Seth Riched.
I'd like to see Powel make the City of London (it's not London proper, it's the Financial district a city within a city) feel a lot of pain. These are truly bad people running these banks.
TL: The EU types have no accountability to national governments--I'd love to see the EU pushed to the dustbin of history.
Me too Tom! The EU, UN, NATO and etc. all of the Cold War artifacts should have been trashed 3 decades ago.
Agreed. Every day on this news, all I hear is "The EU will do.."; "The EU has decided..." Brussels is acting more and more like a unitary sovereign state. The only comfort is that they simply don't have the force majeure to make anyone take them seriously.
Some good news for a change but no mention of the hoards of gold China and Russia are supposedly accumulating. Doesn’t that play into this somehow?
In the old days when the US and UK were on the gold standard and the dollar/pound were strictly tied to the yellow stuff, if you no longer had confidence in the paper currency, you could go to the bank and exchange it for gold. That is what China and Russia (and most other BRICS nations) are doing now. We talk fiat and CBDCs built on hot air; they talk commodities, gold and, increasingly, the armed might to back up their currencies.
That’s China and Russia communicating we don’t trust Western institutions, much less Western currencies.
If Russia and/or China deploy some type of gold backed currency for financial settlements, that will be major.
The problem is the West has been keeping the price of gold down through financialization. Basically trading paper gold.
I have no idea what the proper price of gold is, and neither does anybody else. It has value, and always will always be worth something, but it is a commodity and that something is what people will be willing to pay for it. Our real problem is maintaining a healthy economy, and that involves productivity and maintaining a manageable debt. It would be advisable to get our own house in order, and let the rest of the world take care of themselves. The risks are too great, and our imbecile politicians and their crony capitalists are too greedy. Then there is that nonsense of Modern Monetary Theory!
The challenge is you have physical gold.
And then there is the paper gold.
And at one time per Tom Luongo paper gold was at a 100 to 1 ratio. And somehow this paper gold is used to keep the price of physical gold down. There have been some major fines paid in the areas of precious metal trading.
JP Morgan’s 2020 billion dollar fine:
https://www.nasdaq.com/articles/jpmorgan-to-pay-%24920-mln-fine-for-manipulating-precious-metals-treasury-market-2020-09-29
Scotia Bank 127 mill
https://www.cbc.ca/news/business/scotiabank-spoofing-fine-1.5692117
Keeping the price off gold low seems to help the US dollar. My gut feeling is somehow Russia and China are going to destroy the Western paper gold markets. I have no idea how.
Thank you, thank you, thank you. This is the first cause for optimism I have seen all year.
" globalist blackmail to force the Fed to monetize more debt. Powell has no desire to get back on that train. So how do "they" get Powell to monetize another $5-10 trillion?
DDB: That will not happen with a McCarthy House of Representatives. Not in 2023. The GOP wants its pound of flesh. Plus the credit agencies are demanding that Congress address entitlement spending. It's not because the GOP are good people--"politicians are not good people." But they hope to appear responsible and try to remain king of the world. The Fed's not going to have to monetize squat."
There is hope. We may finally have adults in charge. I do feel a need to defend poor Keynes. He advocated deficit spending in a depression. "TL: Bernanke/Yellen are doctrinaire Keynsians and the Fed is a Keynsian institution", meaning borrow, borrow and borrow all the time? Keynes was not stupid. In good times you repay your debts.
As Tom/DDB said, Bernanke and Yellen were academics. In other words, ideologues with no real world experience. Say no more.
I hope there are a few equivalents of Powell in the Pentagon. Maybe they can apply a military version of QT to the Forever Wars.