“The Fed Is In Some State Of Panic Over Something That Is Not Entirely Clear” – Bill King - a podcast by McAlvany ICA

IMF warns “normalization of rates may be more difficult than previously envisioned”

“Not QE” is in high gear, $7.5 billion in one day

Elizabeth Warren promises to tax wealth



 



The McAlvany Weekly Commentary

with David McAlvany and Kevin Orrick



“The Fed Is In Some State Of Panic Over Something

That Is Not Entirely Clear” – Bill King

October 23, 2019



“You can see why wealthy families have a little bit of money in art, a little bit of money in gold, a little bit of money in international real estate. These are forms of wealth storage that are either quiet, or they are beyond the arm of whatever treasury you might be concerned about. Come back to this issue of building tax capacity in the IMF paper. Building tax capacity – maybe Elizabeth Warren is just what the IMF doctor ordered.”



David McAlvany



Kevin: David, something is not right. It just doesn’t feel right. Our friend, Bill King, said just recently, “The Fed is in some stage of panic over something that is not entirely clear.” When you know something is not quite right – have you ever met a person and they seem very, very genuine, and you think, “This guy, boy, he would be a good hire.” And then as you call references and look around and get context for him, you start to realize that not only is this a person who can’t keep a job, but he leaves disaster in his path.



David: Oh, like he’s been fired from every previous job he has had? That’s an interesting thing.



Kevin: Well, you need context and you need references, because people can put on a face, and what I’m saying is the Fed is putting a face on right now.



David: (laughs)



Kevin: And that’s probably not what is actually happening.



David: When my wife came to visit me, before we were married, about 20 years ago, she watched my family, she watched friends, and she was curious about how they reacted to me when we were all together. Was this the genuine Dave, was I acting strangely? Were there clues from my sister, my brother-in-law, from my friends?



Kevin: She was getting references. That’s what she was doing.



David: What did my actions say? And a part of this was she was unable to judge the context from afar. We were living 2000 miles apart. What did my actions, what did the actions of others tell her about sincerity, or about the reality of the man that I was presenting myself to be, the reality of our circumstance, the future, maybe potentially, our future together?



Kevin: Fortunately for you, you turned out to be genuine, but what if we were behind the doors of the Fed – I’m not talking about the Wednesday announcements when the Fed comes out and actually does the pre-prepared announcement, but when the doors are closed, and behind the doors, what is the context going on there?



David: In a similar way we observe the Federal Reserve and we’re trying to judge the context. We know that one major transition occurred from Greenspan to Bernanke where Greenspan was intentionally opaque, he was guarded, and he riddled his words, so much so, that in that era when we spoke about what he was saying it was referenced as Greenspeak. I think it was only intelligible to him. But Greenspeak was how we described his language. And there was a cultural shift during the Bernanke era which included telegraphing in advance what moves you were considering and communicating.



Kevin: “Tell them what I’m going to tell them, tell them, and then tell them what I just told them.” And that controlled the market.



David: We call that forward guidance, and it hasn’t been that long since this new strategy of “transparency” has come into vogue, and it serves a purpose, not always to telegraph what will happen, but perhaps to direct the flow of decisions toward desir...

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