Saturday, May 15, 2010

The Great Debate On The Financial Sense Newshour

The second segment of this week's Financial Sense Newshour podcast was a debate between Jeffrey Christian and Bill Murphy on the subject "Is the Gold Market Being Manipulated?" - or, "Are GATA's Allegations True?" [.mp3 file]. It took the form of Jim Puplava presenting GATA's main claims to Christian for rebuttal, and then allowing Murphy to counter-rebut. I have my own preconceptions on the subject, but the most telling point to me was Christian saying that the gold market isn't seen by central banks as important enough to manipulate now.

From what I've read, the typical central banker is a monetarist who believes that a system of fiat currencies in a floating-exchange-rate framework is the best monetary system. When central bankers say that the gold standard is obsolete, they're not being disingenuous; they really mean it. I have this suspicion that presiding over the gold desk is regarded by Fed employees the same way as CIA agents regard a posting to Alaska to keep an eye on the Russians: a career-killer. A job that a high-flyer avoids at all costs; the real-world equivalent of the War Graves Commission in Truro on the show Yes, Minister.

To be blunt about this, I believe the central bankers don't see the gold market as worth manipulating. It ain't worth the ammo. This belief can easily be checked by looking at the career path of high-flyer employees at the Fed, or at any other central bank. If managing the gold market were that important, there should be promotions out of the gold desk. I don't think they are.

I also have something else to mention. One of the comments on the Q-line part of the first segment [.mp3 file] is mine; I identify myself as "Daniel from Toronto." Thanks to Mr. Puplava for airing it.

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