Is sleep not on the agenda for these two?

Gold price jumps $40 as Fed's Powell says the U.S. still 'far from full employment' (KITCO News)

The gold market rebounded from six-week lows as Federal Reserve Chair testified that the U.S. is still "far from full employment."

All eyes were on Fed Chair Jerome Powell and U.S. Treasury Secretary Janet Yellen. The duo testified before the House Committee on Financial Services on their agencies' response to the COVID-19 pandemic.

Gold saw quick double-digit gains Thursday morning as bargain hunters stepped in to buy the dip in prices, and the U.S. dollar index fell to daily lows after surging in the previous session. December Comex gold futures were last trading at $1,762.80, up 2.32% or $40 on the day.

The move higher in gold accelerated after Powell sounded slightly dovish when stating that the U.S. is "far away from full employment."

According to Powell, this gives the fed room to keep the rates low and keep accommodation in place.

"We have to balance inflation and employment. Our expectation is inflation will come down, and we won't have to have the two goals in tension," the Fed Chair noted.

At the September monetary policy meeting, Powell said the Fed could start to taper in November, which would last until the middle of next year.

When grilled on inflation, Powell also sounded unsure when the price pressures would abate.

"We do think that inflation will remain elevated until supply bottlenecks are resolved," he said. "Exactly when that will happen is not possible to say. We should see relief in the next coming months and beginning of next year."

The debt ceiling was another heated topic of discussion during the hearing. Yellen once again warned that it would be "a catastrophe" if Congress failed to raise the debt ceiling.

The U.S. Treasury Secretary also described a worrying picture if Congress waited until the last minute to raise the debt ceiling.

"As we saw in 2011 when the debt ceiling was raised at the absolute last minute, [we saw] investor and consumer confidence shaken," she said.

What would happen this time around is an increase in interest rates and a selloff in stocks. "Anyone who has a loan would see higher interest costs on their debt," Yellen noted.

The U.S. government will run out of money on October 18, and if the debt limit is not raised, the U.S. will default for the first time in its history, Yellen added. "Credit of the U.S. would be impaired, and our country will face financial crisis and an economic recession. It's necessary to avert a catastrophic event for our economy."

Yellen also continued to urge Congress to work on a bipartisan basis.

"It's important this be done on a bipartisan basis in recognition of the fact that both Republican and Democratic [administrations] have run budget deficits for most of the post-war period with only a few years serving as an exception," Yellen said.

And no hearing can end without questions about cryptocurrencies. Powell was asked to clarify his July comment stating that one of the stronger arguments for a central bank digital currency is that it could replicate the role crypto plays.

Here's Powell's full quote from July: "I think that may be the case, and I think that's one of the arguments that are offered in favor of digital currency," Powell said during a hearing before the U.S. House of Representatives Financial Services Committee. "That, in particular, you wouldn't need stablecoins, you wouldn't need cryptocurrencies if you had a digital U.S. currency - I think that's one of the stronger arguments in its favor."

This time around, Powell clarified that the Fed has "no intention to ban cryptocurrencies."

While clearly trying to remain optimistic, not only is Janet Yellen concerned about the debt ceiling . . . Jerome Powell no longer seems so steadfastly insistent that recent inflationary measurements are "transitory". In fact, I get the sense neither of them is sleeping very well at night.

Buckle up . . . it's going to be a very rough ride.

 

I've been suggesting in other threads that it's a good time to Dollar-Cost-Average into PMs at these "low" prices. No one has a crystal ball, but if these spending bills pass, the Fed will likely remain accommodative to keep interest rates from rising too fast prior to the election.

That scenario will likely put downward pressure on the Dollar. The other scenario is that the Fed does what it says it will do and taper bond purchases beginning in November. The Fed has nearly $8.5 Trillion it needs to work off its balance sheet. Who knows how long that will take or its affect on interest rates.

Hyper-inflation or Recession ...pick your poison. The current Administration wants to spend gads of money now and pay it back with grossly inflated Dollars. The Dollar now has the value less than a 1964 Dime. The Dollar will be worth less than the 1964 Cent soon. When the Dollar drops, there's an equal and opposite move in gold.

 

trump sank the debt 7 trillion in 4 years. Dems want to spend 3.5 trillion on actual infrastructure in 10 years. why are you having a hissy fit?

 

Free healthcare for illegals and tree equity is not infrastructure. 10 years? So Obama’s shovel ready jobs wasn’t really infrastructure. Your getting there, just keep working on your 12 step program.

 

I'm proud of Republicans for standing their ground on the debt limit and on the absurd amounts the Democrats want to spend.

Drunken sailors, the extremist of liberals are . . .

 

It is far too easy to spend money that other people have earned. or are yet to earn. Just like we do with our kids, we need to take every politicians "credit cards" away from them. All of them, left and right.

 

The average liquid household wealth is in the general form of 2/3rds Equities and 1/3rd Debt. Whenever expenses increase faster than income (and taxation is an expense), the money has to come out of one of these markets. Marxists ignore this in their calculus and their presentations.



https://www.sifma.org/resources/research/fact-book/

 

I been screaming this at the top of my lungs as long as I have been here. When you are I have more expenses than we do income, we tighten our belts. Our lawmakers should do the same.

 

Modern Monetary Theory (MMT) is a ridiculously flawed "theory" that the U.S. government issues sovereign debt that must be accepted to pay taxes. Therefore, as long as taxation remains proportional with the money supply (keeping inflation in check), both taxation and debt can expand to infinity.

Of course, they don't mention what happens during periods of economic shock (e.g. the U.S. Dollar losing its World Reserve Currency status). Their answer to the ensuing depression is the "guaranteed government job" (aka. the "mandatory government job"). This is the path to Marxism (aka. "slavery").

 

I believe that it is a big reason so many young people find themselves in credit crisis. They follow the lead of our lawmakers that they assume know what they are doing.

 

The Democrat party is the party of trial lawyers and unions (aka. Marxists). It's a travesty what they've done to the Youth of America just to build out their power. The huge infusion of cash drove up the cost of education and drove down the quality...all at the expense of Students.

Democrats did the same for healthcare...they drove up prices while driving down the quality of care...all the while the political criminals and their union cohorts get richer and richer. That's why JN doesn't listen to you...he's a Union Man. Joe Biden could literally shoot someone on 5th Ave. and JN wouldn't say a thing.