Best of the Week
Most Popular
1. Dollargeddon - Gold Price to Soar Above $6,000 - P_Radomski_CFA
2.Is Gold Price On Verge Of A Bottom, See For Yourself - Chris_Vermeulen
3.Dow Stock Market Trend Forecast 2018 - Nadeem_Walayat
4.Gold Price to Plunge Below $1000 - Key Factors for Gold & Silver Investors - P_Radomski_CFA
5.Why The Uranium Price Must Go Up - Richard_Mills
6.Dow Stock Market Trend Forecast 2018 - Video - Nadeem_Walayat
7.Jim Rogers on Gold, Silver, Bitcoin and Blockchain’s “Spectacular Future” - GoldCore
8.More Signs That the Stock Market Will Rally Until 2019 - Troy_Bombardia
9.It's Time for A New Economic Strategy in Turkey - Steve_H_Hanke
10.Fiat Currency Inflation, And Collapse Insurance - Raymond_Matison
Last 7 days
Golden Sunsets in the Land of U.S. Dollar Hegemony - 20th Sep 18
5 Things to Keep in Mind When Buying a Luxury Car in Dubai - 20th Sep 18
Gold Price Seasonal Trend Analysis - Video - 20th Sep 18
The Stealth Reason Why the Stock Market Keeps On Rising - 20th Sep 18
Sheffield School Applications Crisis Eased by New Secondary Schools Places - 20th Sep 18
Precious Metals Sector: It’s 2013 All Over Again - 19th Sep 18
US Dollar Head & Shoulders Triggered. What's Next? - 19th Sep 18
Prepare for the Stock Market’s Volatility to Increase - 19th Sep 18
The Beginning of the End of the Dollar - 19th Sep 18
Land Rover Discovery Sport 'Approved Used' Bad Paint Job - Inchcape Chester - 19th Sep 18
Are Technology and FANG Stocks Bottoming? - 18th Sep 18
Predictive Trading Model Suggests Falling Stock Prices During US Elections - 18th Sep 18
Lehman Brothers Financial Collapse - Ten Years Later - 18th Sep 18
Financial Crisis Markets Reality Check Now in Progress - 18th Sep 18
Gold’s Ultimate Confirmation - 18th Sep 18
Omanization: a 20-year Process to Fight Volatile Oil Prices  - 18th Sep 18
Sheffield Best Secondary Schools Rankings and Trend Trajectory for Applications 2018 - 18th Sep 18
Gold / US Dollar Inverse Correlation - 17th Sep 18
The Apple Story - Trump Tariffs Penalize US Multinationals - 17th Sep 18
Wall Street Created Financial Crash Catastrophe Ten Years Later - 17th Sep 18
Trade Wars Are Going To Crash This Stock Market - 17th Sep 18
Why Is Apple Giving This Tiny Stock A $900 Million Opportunity? - 17th Sep 18
Financial Markets Macro/Micro View: Waves and Cycles - 17th Sep 18
Stock Market Bulls Prevail – for Now! - 17th Sep 18
GBPUSD Set to Explode Higher - 17th Sep 18
The China Threat - Global Crisis Hot Spots & Pressure Points - 17th Sep 18 - Jim_Willie_CB
Silver's Relationship with Gold Reaching Historical Extremes - 16th Sep 18
Emerging Markets to Follow and Those to Avoid - 16th Sep 18
Investing - Look at the Facts to Find the Truth - 16th Sep 18
Gold Stocks Forced Capitulation - 15th Sep 18
Hindenburg Omen & Consumer Confidence: More Signs of Stock Market Trouble in 2019 - 15th Sep 18
Trading The Global Future - Bad Consequences - 15th Sep 18
Central Banks Have Gone Rogue, Putting Us All at Risk - 15th Sep 18
Gold Price Seasonal Trend Analysis - 14th Sep 18
Growing Number of Small Businesses Opening – and Closing – In the UK - 14th Sep 18
Gold Price Trend Analysis - Video - 14th Sep 18
Esports Is Exploding—Here’s 3 Best Stocks to Profit From - 13th Sep 18
The Four Steel Men Behind Trump’s Trade War - 13th Sep 18
How Trump Tariffs Could Double America’s Trade Losses - 13th Sep 18
Next Financial Crisis Is Already Here! John Lewis 99% Profits CRASH - Retail Sector Collapse - 13th Sep 18
Trading Cryptocurrencies: To Win, You Must Know Where You're Wrong - 13th Sep 18
Gold, Silver, and USD Index - Three Important “Nothings” - 13th Sep 18
Precious Metals Sector On a Long-term SELL Signal - 13th Sep 18
Does Gambling Regulation Work - A Case Study - 13th Sep 18
The Ritual Burial of the US Constitution - 12th Sep 18
Stock Market Final Probe Higher ... Then the PANIC! - 12th Sep 18
Gold Nuggets And Silver Bullets - 12th Sep 18
Bitcoin Trading - SEC Strikes Again - 12th Sep 18

Market Oracle FREE Newsletter

Trading Any Market

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

© 2005-2018 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