FOMC: Burning Bone Update

POSITION: Sold US Dollar today

Like Jimmy Carter had former 1970s Fed Head Arthur Burns’ back on this, the President of the United States has Ben Bernanke’s. In the last 24 hours neither Obama or Bernanke did as much as mention the US Dollar. These are both sad and fascinating times in American history.

Don’t forget that Burns was the last Federal Reserve Chairman who tried to monetize the debt as President Carter tried to convince the American people that real-world inflation was a mirage.

According to The Ber-nank’s FOMC statement, there is no inflation. Or at least according to his conflicted and compromised US government calculation of “core” CPI (which they’ve changed 9 times since 1996) says so…

Given what happened to market prices in December, this is a reckless and/or politicized conclusion: 

  1. Stocks went straight up
  2. Commodities went straight up
  3. Interest rates went straight up 

The corollary to all of this inflation being marked-to-market has, of course, been the headwind that inflation usually is for bonds and emerging markets (they went down).

On the news, the Bone is Burning alongside the Fed’s credibility.

Best of luck trading the inflation casino,

KM

FOMC: Burning Bone Update - 1