New Feature - The Martenson Insider

Welcome to the start of a new feature for enrolled members called the Martenson Insider.  We are pleased to offer this new enrolled benefit, which replaces the In Session forum threads with a blog-style format that will support easier access, viewing, searching, and comment-threading beneath each post. 

I've granted full access to today's postings for everyone to see, which includes all comments, by the way.  After today, the content and comments will be only viewable by enrolled members (unless I grant access for a given posting, and then everything will be viewable for that post).

Here's the first post of the day:

Trust Actions, Not Words

The "green shoots" idea is trotted out in Europe, especially in the UK, just like it is in the US. The purpose is to use words and statistics to try and convince everyone that "we've turned the corner."

While admirable, it is also a source of amusement to those paying attention. Here we might note the humorous gap between what they are saying and what they are doing.

Check out the next two articles from yesterday (8/5/09), which contain the words, and then compare them to the third article, which has the actions.

Yesterday:

U.K. House Prices Jump, Confidence Rises to Highest in a Year

Aug. 5 (Bloomberg) -- U.K. house prices jumped almost twice as much as economists forecast in July and consumer confidence rose to the highest in more than a year, adding to evidence that Britain is shrugging off the recession.

The housing market is “significantly more stable” and in a better condition than expected, Peter Redfern, chief executive officer of homebuilders Taylor Wimpey Plc, told Bloomberg Television today. The Bank of England will assess tomorrow if signs of an economic recovery are strong enough for it to stop buying assets with newly printed money.

U.K. Recovery Signs Mount as Services, Manufacturing Expand

Aug. 5 (Bloomberg) -- U.K. services expanded the most in 1 1/2 years, manufacturing unexpectedly rose and home prices jumped as evidence mounts that the worst recession in a generation is easing.

Today:

BOE Extends Bond Purchases After Recession Deepened

Aug. 6 (Bloomberg) -- The Bank of England increased its bond purchase program by 50 billion pounds ($84 billion), saying the U.K.’s economic recession is deeper than policy makers expected.

The nine-member Monetary Policy Committee, led by Governor Mervyn King, kept the key interest rate at 0.5 percent and said it will increase its purchase program to 175 billion pounds. 

“In the United Kingdom, the recession appears to have been deeper than previously thought,” the central bank said in a statement in London today.

Exactly as is the case in the US, the fiscal and monetary authorities are saying that everything is stabilized and getting back on track, even as they are liberally applying monetary stimulus at levels well beyond those applied in any prior emergency. 

If they really believed their own words, then we might expect them to at least cease additional stimulus measures (if not reverse them).  Instead, we see more being applied, which is completely out of alignment with the words.

As always, I listen to what they say, but only trust what they do. This is a cornerstone of my gold investment stance. Whereas central banks put up a good show of bad-mouthing gold as a barbarous relic and an 'asset without a yield,' one might note that central banks have not managed to appreciably trim their holdings over the 38 years that the global floating-rate fiat money experiment has been running. They've had plenty of time; what's the holdup?

Trust what they do, not what they say.

I will personally begin to believe that we've approached the bottom when the BoE, the Fed, and the ECB stop dumping tens of billions of dollars a day into the banking system. 

Until then, not so much.