Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Why You Shouldn’t Get Excited About Gold Price Mini-Rally - 26th Jan 21
The Truth About Personal Savings Everybody Should Know and Think About - 26th Jan 21
4 Economic Challenges for 2021 - 26th Jan 21
Scan Computers 2021 "Awaiting Picking" - 5950x RTX 3080 Custom PC Build Stock Status - 26th Jan 21
The End of the World History Stock Market Chart : Big Pattern = Big Move - 26th Jan 21
Stock Market Recent Sector Triggers Suggest Stocks May Enter Rally Phase - 26th Jan 21
3 Top-Performing Tech Stocks for 2021 - 26th Jan 21
5 Tips to Manage Your Debt - 26th Jan 21
Stock Market Intermediate Trend Intact - 25th Jan 21
Precious Metals Could Decline Before their Next Attempt to Rally - 25th Jan 21
Great Ways of Choosing Good CMMS Software for a Business - 25th Jan 21
The Dark Forces behind American Insurrectionists - 25th Jan 21
Economic Stimulus Doesn’t Always Stimulate – Pushing On A String - 25th Jan 21
Can Karcher K7 Pressure Washer Clean a Weed Infested Driveway? Extreme Power Test - 25th Jan 21
Lockdown Sea Shanty Craze - "Drunken Sailor" on the Pirate Falls Crazy Boat Ride - 25th Jan 21
Intel Empire Fights Back with Rocket and Alder Lake! - 24th Jan 21
4 Reasons for Coronavirus 2021 Hope - 24th Jan 21
Apple M1 Chip Another Nail in Intel's Coffin - Top AI Tech Stocks 2021 - 24th Jan 21
Stock Market: Why You Should Prepare for a Jump in Volatility - 24th Jan 21
What’s next for Bitcoin Price – $56k or $16k? - 24th Jan 21
How Does Credit Repair Work? - 24th Jan 21
Silver Price 2021 Roadmap - 22nd Jan 21
Why Biden Wants to Win the Fight for $15 Federal Minimum Wage - 22nd Jan 21
Here’s Why Gold Recently Moved Up - 22nd Jan 21
US Dollar Decline creates New Sector Opportunities to Trade - 22nd Jan 21
Sandisk Extreme Micro SDXC Memory Card Read Write Speed Test Actual vs Sales Pitch - 22nd Jan 21
NHS Recommends Oximeter Oxygen Sensor Monitors for Everyone 10 Months Late! - 22nd Jan 21
DoorDash Has All the Makings of the “Next Amazon” - 22nd Jan 21
How to Survive a Silver-Gold Sucker Punch - 22nd Jan 21
2021: The Year of the Gripping Hand - 22nd Jan 21
Technology Minerals appoints ex-BP Petrochemicals CEO as Advisor - 22nd Jan 21
Gold Price Drops Amid Stimulus and Poor Data - 21st Jan 21
Protecting the Vulnerable 2021 - 21st Jan 21
How To Play The Next Stage Of The Marijuana Boom - 21st Jan 21
UK Schools Lockdown 2021 Covid Education Crisis - Home Learning Routine - 21st Jan 21
General Artificial Intelligence Was BORN in 2020! GPT-3, Deep Mind - 20th Jan 21
Bitcoin Price Crash: FCA Warning Was a Slap in the Face. But Not the Cause - 20th Jan 21
US Coronavirus Pandemic 2021 - We’re Going to Need More Than a Vaccine - 20th Jan 21
The Biggest Biotech Story Of 2021? - 20th Jan 21
Biden Bailout, Democrat Takeover to Drive Americans into Gold - 20th Jan 21
Pandemic 2020 Is Gone! Will 2021 Be Better for Gold? - 20th Jan 21
Trump and Coronavirus Pandemic Final US Catastrophe 2021 - 19th Jan 21
How To Find Market Momentum Trades for Explosive Gains - 19th Jan 21
Cryptos: 5 Simple Strategies to Catch the Next Opportunity - 19th Jan 21
Who Will NEXT Be Removed from the Internet? - 19th Jan 21
This Small Company Could Revolutionize The Trillion-Dollar Drug Sector - 19th Jan 21
Gold/SPX Ratio and the Gold Stock Case - 18th Jan 21
More Stock Market Speculative Signs, Energy Rebound, Commodities Breakout - 18th Jan 21
Higher Yields Hit Gold Price, But for How Long? - 18th Jan 21
Some Basic Facts About Forex Trading - 18th Jan 21
Custom Build PC 2021 - Ryzen 5950x, RTX 3080, 64gb DDR4 Specs - Scan Computers 3SX Order Day 11 - 17th Jan 21
UK Car MOT Covid-19 Lockdown Extension 2021 - 17th Jan 21
Why Nvidia Is My “Slam Dunk” Stock Investment for the Decade - 16th Jan 21
Three Financial Markets Price Drivers in a Globalized World - 16th Jan 21
Sheffield Turns Coronavirus Tide, Covid-19 Infections Half Rest of England, implies Fast Pandemic Recovery - 16th Jan 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

The Central Banking Prisoner’s Dilemma: Fed Freezes, BoJ Stammers, Dollar Drops 2% Overnight

Politics / Central Banks Apr 28, 2016 - 04:01 PM GMT

By: Jeff_Berwick

Politics

In today’s communist-style, centrally planned world, when big central bankers meet and make decisions, no matter how small, markets quake and currencies shake. And that’s what just happened.

Bankers at both the Federal Reserve and the Bank of Japan met in the last 12 hours to decide where they would take monetary policy next. But when they sat down to make decisions, they were faced with a classic prisoner’s dilemma: Options were precluded. There was a lot they wanted to do but little they could do.


Both the Fed and the Bank of Japan (BoJ) and the European Central Bank (ECB) as well, want to debase their respective currencies. But each wants the other to take the plunge first.

The Fed has been the least reluctant to announce easing in the past. And even Wednesday, after moving toward a tightening stance, the Fed remains vocal about potential loosening. The ECB and BoJ are more circumspect.

BoJ governor Haruhiko Kuroda’s is standing pat – thus betting a stronger yen won’t damage business momentum. He’s obviously hoping a recovering US economy will generate a tighter US monetary policy and reduce the strength of the yen.

But Kuroda’s decision moved the yen up hard against the dollar – by some two percent overnight. Japanese equities sold off as well as investors were disappointed about the lack of near-term stimulus on the part of the BoJ.

The prisoner’s dilemma: Kuroda is reluctant to debase too obviously. Same with Mario Draghi at the ECB.  It’s bizarre to watch them prostrate and wiggle… like a really bad poker game played by awkward teenage girls hoping the other folds first.  It’s no surprise for us, however.

What just happened to international currency and equity markets – specifically the dollar and yen – is predictable if you understand the forces at work throughout the West and in Asia too. In fact, I have been saying since 2009 that the Fed would never raise rates significantly again (0.25% is not significant).  After seven years, Yellen finally raised rates a whopping 0.25% last December and I said that was probably the extent of it.  And so far, again, I’ve been right.

Basically, the plan is to continue to pound the dollar. And as the dollar debases, that gives other central banks wiggle room to debase their currencies as well.

This Jubilee year especially, it’s all downhill for paper currency. Less and less value. And that’s why I wrote that Yellen wasn’t going to raise rates. And, yes, as you know, the Fed has just announced it is too scared to increase rates by another 0.25% or it may implode the entire financial and monetary system.

TDV’s Senior Analyst, Ed Bugos, has made a number of accurate predictions of his own. He wrote an alert to subscribers earlier this week that the BoJ would not ease further. Bingo.  That just happened… and surprised a lot of people.  Not us though.  As a result, Ed’s recently purchased Yen currency options are way up overnight while the dollar is crashing.  More big gains for TDV subscribers (subscribe to TDV Premium here for all of Ed’s picks)… this is actually starting to get ridiculous how much we are profiting from this whole stupid system.

The US dollar is at the beginning of a new bear market. The foreign central banks don’t want to see it because that will mean they will have to inflate more in order to stay competitive with exports.

The ECB and BoJ are happy to talk up monetary inflation while not really initiating it. This makes their currencies undervalued.  The upshot is that the ECB and the BoJ are going to stand pat in the near term, as they have before. Thus the undervalued yen and euro will climb while the US dollar gets a double whammy. The Fed is not tightening and other central banks aren’t loosening. It’s a dead man’s standoff.  And, that inevitably weakens the dollar.

Once the US dollar breaks even further lower, you can look for other central banks to begin to ease. Each bankster wants the other’s currency to go first for political and professional reasons. But they’re all going down sooner or later. And metals are going up.

Who else, of all the analysts out there, has been saying gold, silver, mining stocks and bitcoin were headed higher for the last six months?  Ahem.

Bitcoin has doubled.  Gold mining stocks have skyrocketed.  Gold had its best quarter in seven years last quarter.  And silver is now breaking out.

But, this is just the beginning.  By the time this is all over no one will believe they didn’t see it coming.

“You mean to tell me, grandpa, that when you were younger the world was ruled by a secretive cabal, people thought money was paper and the only thing investors thought was important was what some people in a secret boardroom decided?”

“Yes, kiddo.  We couldn’t believe it either.  But that’s why we are so rich now.  Here’s 0.1 bitcoin and an ounce of gold, go buy yourself an NFL franchise.”

Am I fantasizing just a tad?  Yes, maybe.

But while I’m at it, let’s hope that this current prisoner’s dilemma of the central bankers ends up with them all behind bars.

Anarcho-Capitalist.  Libertarian.  Freedom fighter against mankind’s two biggest enemies, the State and the Central Banks.  Jeff Berwick is the founder of The Dollar Vigilante, CEO of TDV Media & Services and host of the popular video podcast, Anarchast.  Jeff is a prominent speaker at many of the world’s freedom, investment and gold conferences as well as regularly in the media.

© 2016 Copyright Jeff Berwick - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Jeff Berwick Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules