March 14th 2013; FRB (U.S.), Eco. recovery and gold

The agenda presented by the club secretary Mr. D. Brooke
Subjects presented in order

1. Recorded Introduction:
Link to Google Sites ["client-asc-03-13"]
ASC Secretary's Introduction

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Club opened to all as advertised in foregoing invitation was to be a short meeting. A members meeting preceded.


Three audio visuals from the same economic assessor.

1. Spokesperson critical of Pres. Obama Recovery strategy covering the period late 2012 to early 2013: stock market indices down, government exaggerates GDP figures, fewer jobs in manufacturing with gradual economic uptake, inflation an ongoing concern as was the Trade Balance.  The QE [QE2 link at www.investopedia.com/terms/q/quantitative-easing-2-qe2.asp] is invoked to check interest rates. Moving on to the nexus of gold, stock market and bonds, government plays its part in investor reactions.  An analysis of consumer confidence followed resulting from Obama strategy since GFC questioned (i.e. government expenditure curtailment a consequence).  Concludes with criticism of Feds actions with QE, inflation and mounting debt and prices.  Inflation 2 yrs hence can be contained (Fed prediction) with unknowns incapable  to be foreseen is ludicrous.

Discussion among members and supporters
Link to Google Sites
712_0029
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 http://www.spreaker.com/user/5121380/712_0029_wav

2. Two terms associated "sequester" and "exit plan" aspect of this report.  FRB chairman has no exit strategy (plan) if budget cut postponed and government securities possibly sold at lose; alternatively, government securities over a longer term to mature (not sold), the reporter asks who can buy, where will the money come from, suggests government treasury and ramification of this UNSATISFACTORY!  Another strategy is to "raise interest rates on what Fed pays on excess bank reserves" to stimulate eco. growth.  The control of inflation is paramount and "unraveling" of gov. Balance Sheet over a longer period is not conducive.  Apparently securities (bonds) earn interest income, income to treasury, a loss at maturity a bill (cost) to be borne by treasury.  Reporter turns attention to mortgage market pre-GFC and post-GFC, NOW (post-GFC) Fed buying long term mortgages, thereby forcing interest rates lower this stimulates housing market BUT this is not where stimulus should be applied.  The talk then turns to monetise/monetize of debt and that the Feds policy are wrong -- another crises is proposed to effect a correction.  Indebtedness grows with foreign capital attracted to US from countries experiencing eco. stress.  However, regardless of where the investment money comes from it's suggested to much (inflationary); or coming too late, possibly to do good?!?!

Discussion among members and supporters
Link to Google Sites
712_0030
Link to alternate site for immediate download
http://www.spreaker.com/user/5121380/712_0030_wav

3. Following from the previous report, this on gold.  As in the earlier -- date order not important -- FRB buys bonds and mortgages by printing money.  Reporter's attention (and ours) turns to gold price comparison with stock market fluctuation.  The psychology of the average gold buyer/seller is brought into question.  Also mentioned gold and stock market once in lock-step, during the 1st quarter 2013 ceased to be coupled.  It being stressed the astute reason for acquiring gold is to counter inflation.  Not only individuals buy gold also governments.  Other than by QEs, central banks in the case of New Zealand and Norway currencies can be sold down; apparently, this can have a similar effect as bond market involvement.  Interestingly "price stability" is now a criterion of central banks, in a World where countries are monetizing debt and inflating currency.  So gold is being further de-coupled as a store of value backing money.

Discussion among members and supporters: CONCLUSION to the evening's convene.    
Link to Google Sites
712_0031
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