"The reality IMO is that the Fed is actually fighting a fight for its own existence now. If the banks were allowed to truly fail as they would without the Fed's constant bailouts the Federal Reserve bank would also fail as an institution. The printing press is all that stands between them an their own demise."... exactly the point. It's not a free and fair market, fight the Fed and printing presses at your own risk. The only thing that can stop the printing presses is inflation and breakdown in supply of the goods society needs to survive. The world is a long way away from inflation, especially wage driven inflation. Try as the CB's might to create jobs and wage inflation, automation, productivity,technology, globalisation all take way more jobs and bring ever cheaper prices.
Ironically, it's a situation partly of their own making driven by zero interest rates. Carl Marx had it pegged a long time ago, production is a balancing act between the cost of capital and the cost of labour, the profits of which are a fight between the owners of capital and labour. ZIRP and ultra cheap and available debt means that replacing human jobs with some machine/technology driven innovation has never been financially more attractive. Interest rates determine the cost of capital (as in monetary capital), a lower cost of capital unfairly favours machines/tech over humans who must get paid real wages irrespective of the cost of capital. CBs have massively tilted the scales in favour of automation of human jobs then wonder why when they keep reducing interest rates more jobs go instead of less. I digress.
Below is a post I just made on CDV explaining my concerns over where this CV panic might lead by way of explanation.
I think you may have misunderstood me. I'm not that worried about catching CV myself, I'm just observing the incredible pace of change governments and companies are having in response to the crisis. A response driven by the fear of lots of old people or those with pre-existing conditions catching CV at once, crashing our hospital system and needlessly dying (death rate in Italy atm is over 6% of cases).
In the last week alone we've had-
Italy go into internal and external travel lock down.
US ban flights from Europe,
Large gatherings banned (eg crowds at sporting events, concerts etc) right down to recommending no church etc
NZ just said anybody arriving to the country after Sunday faces a compulsory 2 weeks quarantine
KFC closed two stores where a worker was diagnosed +'ve to CV with all staff sent home to self quarantine for 2 weeks,
Many companies banning non-essential travel, all face to face meetings etc etc
How much of the workforce in Oz managed West African mines are western ex-pats do you reckon? I'm talking about the managers, geos, engineers, surveyors, metallurgists, IT guys, various experienced foreman all the way through the specialist u/g jumbo operators, digger operators, mill operators, diesel mechanics, fitters etc. How many of those employees can you go without and still run a gold operation?
I don;t know whats going to happen, but it's clear countries like Australia want to protect the vulnerable from getting sick and dying all at once, which means extreme quarantining measures. If a worker comes back from Africa where CV is maybe out of control, will they be happy if they have to spend 2 weeks at home on quarantine before going back to work (if the planes are flying in and out from areas with CV outbreaks). When does an Aussie company stop sending Aussies into a country and mine camp where locals all have CV and are turning up for work at the mine (because there are hundreds of locals working at the mine in less skilled jobs).
It doesn't really matter what you or I think. What matters is what governments decree, and what the markets think and prices that risk at. At this stage it is only a risk, but you haven't convinced me that West African mines can run without a large skilled ex-pat workforce. Nor have you convinced me that bringing workers in and out of Africa will be possible if Africa turns into Italy. Italy if you haven't noticed is a no go zone now. Lets hope that CV really does struggle to transmit and stay infectious in hot climates...
Cheers
(20min delay)