what is the bond market discounting?
We obviously can’t say for sure, but there’s a distinct possibility that it is discounting central bank manipulation. With the yield on the 13-week T-Bill at zero and with the Fed Funds rate target likely to be only 0.50% after this month’s FOMC Meeting, there is little additional room for the Fed to promote inflation by reducing short-term interest rates. The bond market might therefore be sensing that the Fed is about to turn its attention to longer-dated interest rates. If it chose to do so, the Fed could push T-Bond yields down to some arbitrary target by purchasing bonds using newly created money. A central-bank price-fixing operation targeting long-term yields could be sustained for a while, but it would add to the inflation problem that continues to develop outside the viewing range of deflation-phobic analysts and financial journalists. Therefore, if the Fed chose to go down such a path it would bolster the already-strong bullish case for gold. Should counterfeiting be encourag
