Market Talk – January 6, 2024
ASIA: The major Asian stock markets had a mixed day today: • NIKKEI 225 decreased 587.49 points or -1.47% to 39,307.05 • Shanghai decreased 4.51 points or -0.14% to 3,206.92 [...]
Interest Rate & Currency Pegs
QUESTION: Martin,
I went over three blogs this morning (both public and private); they are The FED Between a Rock & a Hard Place, Manipulating interest rates & Public vs Private Interest Rates. A common theme of the FED possibly pegging interest rates and inflation. My question is: If the FED is induced to peg rates at artificially low levels and the traditional method of combating inflation is raising rates, something must give, so are metals and commodities getting ready for “prime time?”
CF
ANSWER: Behind the curtain the system of pegging rates, as I have stated, is viewed substantially differently than QE. The rates on the U.S. debt will be pegged, but not the Fed funds rates. They will be able to raise rates to the marketplace, but the bonds will be “pegged” like the Swiss attempted to “peg” the franc/euro.
This is a hybrid interest rate system that would eventually collapse as all pegs do. But it will allow, initially, for a bifurcation of rates.
They REALLY REALLY REALLY REALLY REALLY do not want me to talk about this publicly.
This is feeding into what we see coming for the next wave. They realize QE has failed. They cannot allow rates to rise as it would blow out the budgets.
This is not a long-term solution. The interest rate peg collapsed in 1951 due to Korean War inflation.
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