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FOMC Meeting

 

Will employ all necessary tools :o:o

 

Target rate 0 - 0.25% !!!!!!!!!!!!!!!! :blink::blink:

 

Release Date: December 16, 2008

For immediate release

 

The Federal Open Market Committee decided today to establish a target range for the federal funds rate of 0 to 1/4 percent.

 

Since the Committee's last meeting, labor market conditions have deteriorated, and the available data indicate that consumer spending, business investment, and industrial production have declined. Financial markets remain quite strained and credit conditions tight. Overall, the outlook for economic activity has weakened further.

 

Meanwhile, inflationary pressures have diminished appreciably. In light of the declines in the prices of energy and other commodities and the weaker prospects for economic activity, the Committee expects inflation to moderate further in coming quarters.

 

The Federal Reserve will employ all available tools to promote the resumption of sustainable economic growth and to preserve price stability. In particular, the Committee anticipates that weak economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time.

 

The focus of the Committee's policy going forward will be to support the functioning of financial markets and stimulate the economy through open market operations and other measures that sustain the size of the Federal Reserve's balance sheet at a high level. As previously announced, over the next few quarters the Federal Reserve will purchase large quantities of agency debt and mortgage-backed securities to provide support to the mortgage and housing markets, and it stands ready to expand its purchases of agency debt and mortgage-backed securities as conditions warrant. The Committee is also evaluating the potential benefits of purchasing longer-term Treasury securities. Early next year, the Federal Reserve will also implement the Term Asset-Backed Securities Loan Facility to facilitate the extension of credit to households and small businesses. The Federal Reserve will continue to consider ways of using its balance sheet to further support credit markets and economic activity.

 

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Christine M. Cumming; Elizabeth A. Duke; Richard W. Fisher; Donald L. Kohn; Randall S. Kroszner; Sandra Pianalto; Charles I. Plosser; Gary H. Stern; and Kevin M. Warsh.

 

In a related action, the Board of Governors unanimously approved a 75-basis-point decrease in the discount rate to 1/2 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of New York, Cleveland, Richmond, Atlanta, Minneapolis, and San Francisco. The Board also established interest rates on required and excess reserve balances of 1/4 percent.

 

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Will employ all necessary tools :o:o

That'd be it then. I don't suppose the interest rate makes much difference at this point, but printing money's got to scare people.

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So... has Hugh Hendry got it wrong?

 

Are things moving at a faster pace than he expected?

 

Or is this just a reactionary blip in the run-up to Christmas?

 

Interesting times. Glad I'm invested in gold. Part of me wishes more so... But part of me is expecting a pullback.

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So... has Hugh Hendry got it wrong?

...

If physical is so rare NOW, how will he as a fund be able to by meaningful amounts THEN?

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So... has Hugh Hendry got it wrong?

 

Are things moving at a faster pace than he expected?

 

Or is this just a reactionary blip in the run-up to Christmas?

 

Interesting times. Glad I'm invested in gold. Part of me wishes more so... But part of me is expecting a pullback.

 

Hugh Hendry is going to lose his shirt on those war bonds. Deflation will not be tolerated.

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Whilst I heartily welcome the rate decision insofar as my physical gold stash is concerned, I've got this sneaking suspicion that the aggressiveness of the Fed's action suggests there's something brewing that no one else knows about just yet.

 

Too early for the rockets, though :P

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So... has Hugh Hendry got it wrong?

 

Are things moving at a faster pace than he expected?

 

Or is this just a reactionary blip in the run-up to Christmas?

 

Interesting times. Glad I'm invested in gold. Part of me wishes more so... But part of me is expecting a pullback.

 

 

Hugh Hendry

 

well hendry is short gold shares right now! (even though in part 5/8 of the interview he says he's not good at shorting stocks)

 

 

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Too early for the rockets, though :P

 

For those thinking in US$, there really was no alternative :D

Specially for silver !!!

 

I'm sure we can agree that 7% in a day is quite a reasonable move up :lol:

 

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The Duckmeister.

 

bushoes_3.gif

 

George W Bush avoiding the dropping shoes. :lol:

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Dear CIGAs,

 

Policymakers have a duty to “Eliminate as completely as possible all of the inbuilt elements that are amplifying the booms and busts,” a quote in today’s Financial Times by Jean-Claude Trichet, the President of the European Central Bank.

 

Let us hope that Mr. Trichet is speaking of derivatives and not just excessive leverage. If derivatives continue to be manufactured we will have more busts and more booms. Derivatives which amplify leverage must stop being created and must be transacted through a documented clearing intermediary. Derivative sellers must use only strong and viable counterparties.

 

We believe that today was a major cycle turn day and the rally in gold was a result of dollar weakness. Today’s price action demonstrates to us that the dollar strength has ended and a new downtrend in the US dollar was established about 8 trading days ago. In our opinion, this is bullish for gold.

Respectfully yours,

 

Monty Guild

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Hugh Hendry is going to lose his shirt on those war bonds. Deflation will not be tolerated.

 

According to the Kondratieff Cycle Wheel bonds should be bought during the winter, but only after the credit crunch.

 

 

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Whatever It Takes by James Turk

 

The Federal Reserve today made clear its intention to continue flooding the system with newly created dollars. It says in effect that it will do whatever it takes.

 

Its Federal Open Market Committee (FOMC) lowered the federal funds interest rate target to a range of 0%-to-0.25%, which is an historic low, but it didn't stop there. The FOMC also announced that it would "employ all available tools" in an attempt to jumpstart the moribund economy. That means it will monetize assets of all sorts. It will turn debt into more US dollar currency.

 

The Fed would have us believe that low interest rates and easy money will solve today's monetary and economic problems. It was of course low interest rates and easy money that put the US - and much of the world - into this monetary and economic mess in the first place. Is it reasonable to expect that the cause of today's problems is also the cure? No, of course not, and the Fed knows that too. But there is some method to their madness.

 

They hope - and it is nothing more than that - that low interest rates and easy money will spur consumer confidence, causing banks to lend and people to go out and spend. It won't work though, as can be easily proven by picking up a good textbook or two. Monetary history makes clear the recurring boom/bust cycle.

 

Banks lend too much, creating the boom. The bust then follows after it becomes clear that the boom was built upon easy credit that fostered bad decisions.

 

We have had the boom. We are now in the bust. We have moved from a period of over-spending and over-borrowing to one in which the bad loans and bad decisions from the boom years come home to roost, creating the bust.

 

The Federal Reserve wants us to believe that the sole problem reverberating throughout the world is simply a lack of liquidity, but it is nothing of the sort. It is in fact one of solvency. Most banks and many consumers and companies are over-extended, and their precarious financial position cannot be put right with newly created dollars.

 

Many loans were made recklessly and imprudently, and the borrowers as well as the lenders are suffering the consequences. Low interest rates and easy money will not make economic those houses built on speculation, those shopping malls built unnecessarily, and those companies whose business models rested upon ill-founded assumptions about the health of the US economy. The debts of imprudent borrowers cannot be repaid in a timely way because they own assets acquired in the boom that with the benefit of hindsight are uneconomic even with zero interest rates.

 

What's needed today is the same medicine that has over time inevitably cured every other bust. It is capital and savings, and unfortunately, they are in short supply in today's America. But the Federal Reserve will not be deterred from pursuing the reckless path it is on. They seem to think that they can avoid the bust, and further, that the economy can emerge unscathed from years of imprudent and reckless credit extension by the banks.

 

History says the Fed is mistaken, but history also tells us something else. The consequences of the Fed's actions will debase the dollar, perhaps irreparably so. It is the same message being given by the market, as indicated by the following chart of the US Dollar Index.

 

alert_2008-12-16.gif

 

The dollar's bear market rally that began in July ended last month. Based on closing prices, the US Dollar Index has dropped 8.5% since last month's peak. The drop so far this month is a stunning loss of 6.7%.

 

Since last month's peak in the Dollar Index, gold has climbed 6.3%, while silver did even better. It has climbed 12.6%. These precious metals are clearly the place to be, given the path of monetary debasement being taken by the Fed.

 

Published by GoldMoney

Copyright © 2008. All rights reserved.

Edited by James Turk, alert@goldmoney.com

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David Morgan joins the optimistic camp populated by Al, Bob Moriarty and Roger Weigand.

http://www.kereport.com/DailyRadio/Daily121608-2.mp3

 

Al talks with Roger Weigand – both are convinced that gold’s price will again move upward with a vengeance.

http://www.kereport.com/WeekendSpecial/WS121608-1.mp3

 

Edited to add 2nd link

 

Roger's website: http://tradertracks.com/

 

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