Currencies Get Back To The Task At Hand…

January 21, 2021

* Gold & Silver soar on Wednesday! 

* New Treasury Sec. Janet Yellen dominates today’s letter

Good day… And a Tub Thumpin’ Thursday to you! Well, we have a new President and House and Senate, and they all lean left… No longer are there checks and balances in our Gov’t… But what the heck, we can give this new arrangement a try, right?  Before the new arrangement turns its back on the 80 Million people that didn’t vote for them, they might want to keep in mind what happens when you get those 80 Million people riled up…  I’m just saying…  Our Blues were playing again last night and I was able to watch the game that began at 9 my time here…  The Rock Classic band, Blind Faith, greets me this morning with their song: Can’t Find My Way Home…   I’ve been there believe me on that one folks!

Well… yesterday, I said that I didn’t think that much would happen with the currencies for everyone’s attention would be on D.C. And the Currencies drifted, albeit a bit lower on the day.   But while the cat was away, the mice did play, and Gold gained $32 on the day to close at $1,872.00, and Silver gained 62-cents to close at $25.90…  I guess that Gold traders and investors got the memo that the new Administration is going to push harder on the Cold War with China… Ahhh… Those geopolitical problems… And while we’re at it, maybe they also heard the news that the next Stimulus Bill will be a DOOZY   And that, my friends, is exactly what I talked about in an interview with Dennis Miller of a few months ago. I said that once you start giving out currency, the next time will require a bigger payout, and the next one will require a larger payout than the last one, etc. etc. ….

I know that I’ve been remiss in not mentioning what’s going on overseas each day… I actually have done this on purpose, because as always, it’s all about the dollar… So, I focus on dollar stuff each day… I will tell you that tomorrow is a HUGE day for economic data overseas… So, Monday, I’ll try to recall to go back and look at it and see what’s happening… The European Central Bank (ECB) is meeting today, and I’m thinking that ECB President will be looking to move interest rates more negative… I guess, we’ll see, eh? 

In the overnight markets, the currencies are getting marked up VS the dollar, and Gold is flat to down a buck or two…  The Petrol Currencies are leading the pack today, with good gains in Russian rubles, Canadian dollars/ loonies, Brazilian real, Norwegian krone, and even pound sterling!   Yesterday, was a real nothing for the currencies, and today, they’ve gotten back to the business at hand, which is pushing the dollar toward the currency woodshed… 

OK… Well new Treasury Sec. Janet Yellen was in the news quite a bit this week as her nomination was voted on.  Here are some thoughts from Janet Yellen, that caught my eye… when asked about how seniors have been damaged greatly by the zero interest rates policy that was partly under her regime at the Fed… She responded:

“I believe the benefits will far outweigh the costs, especially if we care about helping people who have been struggling for a very long time,” she said in the statement, which was obtained by Reuters.

And those words got publishing guru, Bill Bonner sitting up to respond to her: “Who are these people who have been struggling? American household income (thanks to the feds’ bailouts and giveaways) was at its highest point ever last year – with $1 trillion more in earnings than the year before.

And we need not remind dear readers that the U.S. government is broke – with a $2 trillion deficit already on the books for this year” – Bill Bonner

Well… I want to thank the good folks at GATA for this next blurb, as they highlighted it from an article on the  Apparently new Treasury Sec. Janet Yellen is not a fan of currency manipulation.. Let’s listen in: “Janet Yellen warned U.S. trading partners against currency manipulation and touted the importance of market-based exchange rates in her most exhaustive comments yet on the incoming Biden administration’s approach to international economic policy.

Ms. Yellen, who is Joe Biden’s nominee to serve as Treasury secretary, said “the intentional targeting of exchange rates to gain commercial advantage is unacceptable” and that she would “oppose any and all attempts by foreign countries to artificially manipulate currency values to gain an unfair advantage in trade.”

Chuck again… So, who wants to set the over / under on how long it takes Yellen to change her mind and put some of those Billions, with a capital B, in the Exchange Stabilization Fund (ESF), or Slush Fund, as I call it, to work?  

Ok, currency traders you heard it straight from the horse’s mouth, that using the ESF to protect the dollar is not going to happen going forward….   What are you waiting for now? Take the dollar to the woodshed and leave it there! Because that’s what it deserves!

Well, let’s see what else is there to talk about this morning?  It is a Tub Thumpin’ Thursday, so we will see the Weekly Initial Jobless Claims this morning right out of the starter’s blocks…  This unemployment problem has become a rash that won’t go away… A lot of businesses that these unemployed people worked for, will not be coming back, so there will be no job for the Unemployed person to go to once things open up again… What will they do?  It’s a sad, sad situation… and it’s getting more and more absurd… (in case you didn’t catch it, those lyrics are from an Elton John song titles: Sorry Seems To Be The Hardest Word…

You know 3 years ago, I didn’t really care for the decision that was made to show me the door… But as time goes buy, I think it was the best thing I could do, given my health, age, and my willingness to keep writing my letter, which the new company wasn’t going to tolerate one iota…   So, there was no Unemployment Claim by me… I simply walked away, found a new publisher, and retired…  But I had been there where a lot of the unemployed people are now, back in 1998… And I didn’t like the feeling of not going somewhere to earn money each day, so I know what it feels like, folks… And it’s not a happy place! 

There’s really nothing else, unless you are tied to the Home Building, Housing starts, and existing home sales data to look at today or tomorrow… But before we close out the week I wanted to circle back to what I talked about on Tuesday, and that is that U.S. Retail Sales were negative the last 3 months, which included the Christmas shopping season!  How on earth can that be? Unless of course the U.S. Consumer is tapped out…  They can’t put any more on their Credit card, and they’re savings have dwindled greatly…  And without Consumption the economy is going nowhere, folks…  There’s just no way the Gov’t can make up for this lack of consumer spending… of course that won’t stop the Gov’t from trying! So, look for more deficit spending and currency printing…   Got Gold?

To recap… It was Inauguration Day in the U.S. yesterday, and the currencies basically drifted, albeit a bit lower on the day.. Gold on the other hand rallied by $32, and Silver by 62-cents on the day… The overnight markets have gone back to pushing the dollar toward the currency woodshed. Chuck has read and heard some interesting things about new Treasury Sec. Janet Yellen, so he spends a large part of today’s letter talking about her…

Before we had to the Big Finish today, I wanted to highlight another quote from someone that should be revered, Ayn Rand, talking about Freedom of Speech…  Here’s Ayn Rand, “Once a country accepts censorship of the press and of speech, then nothing can be won without violence. Therefore, so long as you have free speech, protect it. This is the life and death issue in this country: do not give up the freedom of the press, of newspapers, books, magazines, television, radios, movies, and every other form of presenting ideas. So long as that’s free, a peaceful intellectual turn is possible.” – Ayn Rand

For What It’s Worth… Well, I began today with some quotes from new Treasury Sec. Janet Yellen, and the responses to the quotes, and then I saw this from James Rickards, who chimed in with his own response to a Janet Yellen quote, and I thought it played nicely in the sand box with my other highlights, so here it is for your FWIW today : “The Smartest Thing We Can Do Is Act Big” – The Daily Reckoning

Or, here’s your snippet: “Today, Treasury Secretary-nominee Janet Yellen addressed the Senate Finance Committee during her confirmation hearing.

In her statements, she argued that major fiscal stimulus is justified to support the economy while the pandemic still rages.

She stressed the need to address income inequality and pledged support for the incoming Biden administration’s climate change policies.

In other words, she plans to support large amounts of government spending to stimulate the economy.

She acknowledged that debt is a potential problem. “But,” she added, “right now, with interest rates at historic lows, the smartest thing we can do is act big. In the long run, I believe the benefits will far outweigh the costs, especially if we care about helping people who have been struggling for a very long time.”

Let’s just say that’s wishful thinking.

We cannot spend our way out of a debt trap. As I’ve explained before, fiscal policy is not stimulus because the U.S. debt-to-GDP ratio is now over 130% and rising quickly. Extensive research shows that at debt-to-GDP ratios above 90%, the multiplier on new debt is less than one.

This means we’re in a debt trap (in addition to a liquidity trap caused by Yellen’s previous organization, the Fed).

But Janet Yellen has no real understanding of money and monetary economics. Her tenure at the Fed proves it.”

Chuck Again… Well, I would say that Rickards comments qualify him to be banned from Twitter and Facebook!  HA! Seriously, he sure doesn’t pull any punches talking about Yellen does he? 

Market Prices 1/21/21: American Style: A$ .7780,  kiwi $ .7222, C$ .7926, euro 1.2150, sterling 1.3724, Swiss $1.1283, European Style: rand 14.7908, krone 8.4254, SEK 8.3014,  forint 294.05,  zloty 3.7260,   koruna 21.4770, RUB 73.52, yen 103.39, sing 1.3220, HKD 7.7516, INR 72.94, China 6.4669, peso 19.56,  BRL 5.3300,  Dollar Index 90.17,  Oil $53.02,  10-year 1.09%, Silver $25.97, Platinum $1,131.00, Palladium $2,419.00, Copper $3.64, and Gold… $1,871.30

That’s it for today and this week… Yesterday, was an absolutely beautiful day here, I sat out on the deck reading my book, 1984, for about 2 hours and then I had taken in enough sun for the day…  Another beautiful sunrise this morning, with an orange sky, not red…  My next book is Fahrenheit 451, which I have sitting here waiting for it to be read!  Oldies but goodies, right? Well, that’s pretty much how I am with my music too!   Dan Fogelberg takes us to the finish line today with his song: Late For The Sky…  I think I’ve told you before, that this song always brings me to tears, as it so sad…  You know, come to think of it, ever since 2007, I’ve become a big cry baby, over anything that’s sad…  Now there’s something that I’ve never talked about before to anyone… So, you dear reader know something about me that others don’t!  So, any way, it’s time to go, so I hope you have a Tub Thumpin’ Thursday today, and a Fantastico Friday tomorrow… And Please Be Good To Yourself! 

Chuck Butler