LIVE Gold Prices $  | E-Mail Subscriptions | Update GoldSeek | GoldSeek Radio 

Commentary : Gold Review : Markets : News Wire : Quotes : Silver : Stocks - Main Page 

 GoldSeek.com >> News >> Story  Disclaimer 
 
Latest Headlines

Gold Mid-Tiers’ Q1’19 Fundamentals
By: Adam Hamilton, Zeal Research

GoldSeek Radio Nugget: Laurence J. Kotlikoff
By: Chris Waltzek Ph.D., GoldSeek Radio

Does Ray Dalio really not know better than to invest in GLD?
By: Chris Powell, GATA

Precious Metals Update Video: Run for the safe havens!
By: Ira Epstein

Why Microsoft Shares Have Become a Safe Haven
By: Rick Ackerman, Rick's Picks

Asian Metals Market Update: May-24-2019
By: Chintan Karnani, Insignia Consultants

How to Unrig the Gold Market, According to GATA’s Chris Powell
By: Frank Holmes, US Funds

Precious Metals Update Video: Gold at strong support area
By: Ira Epstein

The Fed Is Caught Behind The Curve
By: Avi Gilburt

Why Jim Grant Thinks It's Time to Abolish the Fed
By: Rick Ackerman, Rick's Picks

 
Search

GoldSeek Web

 
Fed Experts Call for NIRP… is a Physical Cash Ban Next?


 -- Published: Tuesday, 13 October 2015 | Print  | Disqus 

By Graham Summers

 

More and more “experts” are calling for Negative Interest Rate Policy or NIRP.

 

The US Federal Reserve is obsessed with market reactions to its policies. Because of this, anytime the Fed plans to announce a major change in policy, it preps the markets via numerous leaks and hints… oftentimes for months in advance.

 

An excellent example of this concerns the Fed’s decision to taper QE back in 2013.


At that time, the Fed had been engaging in two open ended-QE programs… programs that had been running for over six months.

 

Rather than simply beginning to taper the programs, then-Fed Chairman Ben Bernanke, hinted that the Fed was contemplating a taper in June.

 

The markets reacted sharply with bond yields rising.

 

The Fed then spent six months allowing the market to get used to the idea of a taper, before the actual taper finally began in December 2013.

 

Put another way, the Fed gave the markets a full six months to adjust to a change in policy, before actually implementing said change. This only highlights just how focused the Fed is on market reactions to its policies.

 

In the simplest of terms: the Fed will NEVER surprise the market. This is particularly true now that the Fed is in the political cross hairs due to ample evidence showing its policies have increased wealth inequality.

 

If the Fed is planning on something new, particularly something that might have political repercussions, we’ll see numerous hints and suggestions well before the actual policy is unveiled.

 

With that in mind, we need to consider the number of Fed officials who have recently been hinting at Negative Interest Rate Policy or NIRP.

 

1.    First we find that a Fed official hinted at NIRP during the Fed’s September 2015 meeting.

 

2.    Then, on October 9th, Fed President Bill Dudley stating that negative rates were “an option” though not a “relevant conversation” right now.

 

3.    This statement was followed up by Minneapolis Fed President Narayana Kocherlakota stating point blank that the Fed should “consider negative rates.”

 

The Fed has never once hinted at or discussed NIRP during its policy meetings. Then, in the span of three weeks, we’ve not only had an anonymous Fed official state that he or she believes NIRP is coming to the US, but two highly visible Presidents have called to NIRP consideration.

 

This is simply part of the Fed’s larger War on Cash.

 

For six years straight, the Fed has been trying to “trash” cash.

 

First it cut interest rates to zero… making it so that savings deposits produced almost nothing in the way of interest income. Consider that at current rates, a retiree with $1 million in savings earns a measly $2,500 per year in interest income.

 

The Fed’s hope was that by making it painful for savers to sit in cash, said savers would move into risk assets such as bonds and stocks. This has worked in that stocks are now in one of, if not THE biggest bubbles in history… while bonds are trading at yields never before seen outside of wartime.

 

However, the Fed overlooked two outlets for investors who didn’t want to be forced into risk. They are: Gold bullion and physical cash.

 

The Fed has been dealing with bullion via clear manipulation of prices for years (that’s an article for another time). And now it is moving to make physical cash obsolete.

 

Best Regards

 

Graham Summers

Chief Market Strategist

Phoenix Capital Research

 

Our FREE daily e-letter: http://gainspainscapital.com/


| Digg This Article
 -- Published: Tuesday, 13 October 2015 | E-Mail  | Print  | Source: GoldSeek.com

comments powered by Disqus



 



Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to GoldSeek.com

 news.goldseek.com >> Story

E-mail Page  | Print  | Disclaimer 


© 1995 - 2019



GoldSeek.com Supports Kiva.org

© GoldSeek.com, Gold Seek LLC

The content on this site is protected by U.S. and international copyright laws and is the property of GoldSeek.com and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on GoldSeek.com. This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Live GoldSeek Visitor Map | Disclaimer


Map

The views contained here may not represent the views of GoldSeek.com, Gold Seek LLC, its affiliates or advertisers. GoldSeek.com, Gold Seek LLC makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of GoldSeek.com, Gold Seek LLC, is strictly prohibited. In no event shall GoldSeek.com, Gold Seek LLC or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.