"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat

Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput

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Monday, October 31, 2011

Bank of Japan Intervention in Yen is doomed to Fail

The Bank of Japan stepped into the Forex markets overnight in an attempt to punish the impertinent speculators who have dared to nullify their former intervention efforts undertaken back earlier this year when the nation suffered the onslaught of the earthquake/tsunami.

Note the previous intervention, which I might add was a VERY RARE example of COORDINATED CENTRAL BANK EFFORTS involving the BOJ, the ECB and the FED. If intervention is going to be effective, it will generally need to be coordinated, sustained and have an eventual fundamental backing. Without those factors, it always ends up being a gigantic waste of money.

Note that even this coordinated intervention failed to stem the advance of the Yen. Now are we to believe that the Lone Ranger effort by the Bank of Japan this time around is going to be successful? Hardly. They have bought a bit of time but all that will happen is that speculators will use the intervention to step in on the buy side of the Yen and get it at a lower level.

In the process of intervening however, the Bank of Japan is devaluing the Yen when measured against Gold. Gold still remains a store of value protecting those who own it against the depradations of their own monetary authorities.


  1. Dan, thank you for your insight on this one!

    It seems to me the various money-miesters are posturing each other and occasionally pushing each other around in a futile effort to establish the value of all the different pieces of paper. I don't think it can be done. We’ll see.

    It’s a good time to buy the metals…

  2. they're piling into the glue-factory one after another....taking turns now.


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