US Politics: Reason Why the Fed Didn't Raise Rates? Donald Trump

One recognizes that the political season is heating up with comments like this. From New York Posts' John Crudele 

The upcoming election and, especially, the surprising strength of Donald Trump also make it almost impossible for the Fed to boost rates. If Trump gets elected, the Fed will almost immediately be hit by audits that will reveal lots of secret, sinister things. 

So Fed Chair Janet Yellen and her fellow central bankers can’t do anything — like raise the cost of money — that might slow the economy down and give Trump a better shot at winning the presidency.

Presidential aspirant Donald Trump seeks to have the FED audited. And this is probably why a FED official has recently been under fire for donating to rival Hillary Clinton. Fed employees have placed big bets on Democrats while campaign donation to the Trump: ZERO!

Germany’s Bundesbank Consolidates Gold Holdings

Possibly in response to German’s federal authorities call for the audit the gold holdings of their central bank, the Bundesbank—which has the second largest after the US of nearly 3,400 tonnes (valued at 133 billion euros $174 billion) held at foreign central banks, particularly at the vaults at Federal Reserve Bank of New York, the Banque France and the England—has begun to redeem them, despite their disagreements with the Feds.

Writes Telegraph’s Ambrose Evans Pritchard 

Roughly 66pc is held at the New York Federal Reserve, 21pc at the Bank of England, and 8pc at the Bank of France. The German Court of Auditors told legislators in a redacted report that the gold had "never been verified physically" and ordered the Bundesbank to secure access to the storage sites.

It called for repatriation of 150 tons over the next three years to test the quality and weight of the gold bars. It said Frankfurt has no register of numbered gold bars.

The report also claimed that the Bundesbank had slashed its holdings in London from 1,440 tons to 500 tons in 2000 and 2001, allegedly because storage costs were too high. The metal was flown to Frankfurt by air freight.

Has German’s federal government smelled something fishy? Or have they been influenced by the concerns of US Texas Congressman Ron Paul whom has urged, through a bill, for the audit of the US Federal Reserve’s gold?

What if central bank vaults have indeed over-declared their holdings through accounting wizardry? What if central bankers have used of gold for loans, swaps and repurchase agreement partly to control or manipulate or suppress gold prices?

If the suspicions of gold bugs are exposed as true, will the German “audit” prompt for a wider international or domino effect of gold audits that would force central banks, who could have been naked short on gold, to cover or buy them back which should drive gold prices significantly higher?

Or will this be just another white wash? Thus, perhaps the recent price pressures on gold?

Or by securing their gold holdings, have German federal authorities been dabbling with the prospects of an eventual departure from the euro?

More questions than answers from such interesting turn of events.

Jim Grant On Federal Reserve Policies, Federal Reserve Audit, and Gold

Jim Grant at CNBC.com deals with Federal Reserve policies, the possibility of the Federal Audit and its repercussions and gold.

The interesting part comes from Mr. Grant's reaction to Congressman Ron Paul's initiative to have the Federal Reserve audited.

This from lewrockwell.com ``The Federal Reserve's balance sheet is so out of whack that the central bank would be shut down if subjected to a conventional audit, Jim Grant, editor of Grant's Interest Rate Observer, told CNBC.

``With $45 billion in capital and $2.1 trillion in assets, the central bank would not withstand the scrutiny normally afforded other institutions, Grant said in a live interview."

``If the Fed examiners were set upon the Fed's own documents – unlabeled documents – to pass judgment on the Fed's capacity to survive the difficulties it faces in credit, it would shut this institution down," he said. "The Fed is undercapitalized in a way that Citicorp is undercapitalized."(bold highlights mine)

Ouch!