It is an irony stuffed with gallows humor that the institution billed & installed as "stabilizing" turns out to be the most DEstabilizing force in markets & economy. Yuck, yuck.
Federal Reserve Open Mouth committee announced today it was not raising its federal funds rate this month while threatening again to raise it later this year. Also said that it would begin shrinking its balance sheet, which under threat of 2008's crisis ballooned from about $0.95 trillion to $4.5 trillion today. And this sent me scrambling for zeros to put to the right of my decimal point: Fed will begin reducing its balance sheet by $10 bn a month, gradually raising it over a year to $50 bn a month.
Right. $10 bn of the $3.55 trillion increase is 0.28169%, and would work off the excess in a speedy 355 months. If they sell off $50 bn worth of bonds, that would reduce the overage by 1.4% and take 71 months, which I call for generosity's sake six years.
But this is mere minnows biting the ankles. Real issue is that the Fed by blowing up its balance sheet created oceans and seas and Great Lakes of new money, to which markets and economy have become addicted. A boom, after all, is fueled by debt and all the money we use must be borrowed into existence. Now the Fed, which professes to fear deflation more than Count Dracula fears sunlight, crucifixes, and silver bullets, is fixing to DEFLATE the money supply by selling bonds off its balance sheet.
Dad durn, if it don't take a knotted rope brain to come to that conclusion, I am Janet Yellen.
Never mind, what did markets thing? Precisely at 2:00's announcement, the US dollar index rocketed skyward, up 58 basis points for the day (0.6%) to 92.22. 'Tain't much, especially since a relief rally was due anyhow.
But that cursed announcement was enough to knock down silver & gold. On Comex they closed higher, silver up 5.6¢ to 1725.1¢ & gold up 45.80 to $1,312.00. But recall that Comex closes at 12:30 eastern time while the announcement was blathered out at 2:00. Had the same effect as it did on the dollar index, 'cept upside-down. Gold and silver both tumbled, gold as low as $1,297.45 silver to 1699.1¢.
Rest easy, that's pretty good. Back trading as I write this at $1,301.35 and 1718.5¢. Remember I have been expecting that today or tomorrow would mark the low. Well, gold hit $1,297.45, a smidgen above the bottom of the $1,296 to $1,306 support.
If tomorrow they slip lower but remain above that support, it's buy time. If they break that support, wait to see where they'll land. If they're higher tomorrow, that's a buy, too.
SUSAN'S CORN BREAD. Several of y'all wrote asking for Susan's cornbread recipe I mentioned yesterday. Easier to give it to everybody at once. You'll need
2 cups yellow organic corneal
2 eggs & enough buttermilk to fill the measuring cup to 2 cups (right in with the eggs)
1 teaspoon baking powder
one-half teaspoon baking soda
one-half teaspoon salt.
one-third cup hot bacon grease or lard. Forget Crisco or olive oil. Won't work.
Here's what you have to get straight: you MAY NOT put flour or sugar in this mix. You may add jalapeno peppers or pork cracklins, maybe a little shredded cheese ON RARE OCCASIONS. But the secret and key is that you must cook in cast iron, whether you use those cornbread stick pans like my grandmother used or a 9 or 10" skillet like Susan used. ONLY if you heat that cast iron a long time before you cook the cornbread will you get the scrumptious, bodacious crust all over the cornbread.
Put your skillet on to heat. Turn the oven on to preheat at 400 degrees for 25 minutes. When about 15 minutes are left, put the skillet with the grease into the oven. Or, you can heat the skillet on the stovetop 10 minutes until the grease is nearly smoking or sizzles when you drop a drop of water into it.
Meanwhile, mix the cornmeal, banking powder, baking soda and salt and buttermilk/egg mixture. Put about half the grease into that mix and stir it in.
Next pour the cornbread batter into the hot skillet. It MUST sizzle and steam when you do. Stick the skillet into the oven and bake at 400 degrees for 25 minutes.
Is it ready? Susan used to test the middle with her fingertip to see if it was done clean through. Must be firm.
When you take the skillet out of the oven, have a large cutting board ready. Very carefully (it's hot!) slam the skillet face down on the board. The whole cake of cornbread ought to come out. If some of the crust sticks to the cast iron, just scrape it out.
I'm telling y'all, this cornbread is so good it'll make your tongue slap your jaws!
Argentum et aurum comparanda sunt —
Silver and gold must be bought.
— Franklin Sanders, The Moneychanger