The Federal Reserve has spent three years pumping the US economy with the Keynesian ‘pump-prime’ machine, to stimulate the Keynesian ‘multiplier’, and yesterday the net result of all this money printing, in terms of new US jobs, was a big fat zero. Oh dear.
So what to do next?
Spend two days in a room rewriting and redrafting ‘We do not know what to do’ in such a way that everyone in the Federal Reserve banking system gets to keep their lucrative jobs and pensions.
Jim Rickards outlines all of their cockamany ideas that will be in this final draft of ‘We do not know what to do’ (operation twist2, targetting 3% CPI inflation, etc.) in the KWN interview below, plus their final endgame tactic, which is basically ‘Hyperinflation in a Day’.
The only way out for the Fed, says Rickards, is to engage in open market operations in gold.
They will put a bid-offer spread around gold, such that they will buy it at $4,950 dollars and sell it at $5,050 dollars an ounce, and try to hold the line on that range. All other commodities would adjust fairly instantaneously (multiplying up by approximately 5/2) and Marc Faber’s great reset would be instituted.
I suppose the idea is that many would sell their gold at this price, to the Fed, who could then use this accumulated gold to hold that price range to effectively revalue the dollar from $20 dollars in 1913, when the Fed was founded, to $5,000 dollars an ounce now, to complete their miserable war-splattered century of failure.
But who knows what would actually happen if they tried it? Would you like your wages to be effectively slashed to two fifths of their current purchasing power overnight? Well, we shall see.
Whatever the case, Rickards reckons this is their only eventual way out, though they will put it off for as long as they can to avoid the pitchforks of the peasants. See what you think: