Manipulation, manipulation.

Manipulating the Markets has become so ubiquitous that there is hardly a mention of it any more. However, there is a cost to these manipulations. First, the direct cost, which is significant. Banks can hold the price of gold down by selling delivery contracts, but they have to fork over the money in fiat currency for the price of those contracts. So what, you say? They can print the currency. Yes, they can, but it reduces their ability to use printing to stimulate the economy. Not even speaking of the harm manipulation does by reducing the efficiency of capital allocation by a free market.

Manipulation is done for economic and political reasons. For example, Mr Mario Draghi, President of the ECB, let it be known that the ECB will do whatever it takes to save the Euro and did not rule out buying Italian and Spanish sovereign bonds. Just this declaration has dropped the interest demanded on Italian 10 year bonds to 6.04%, down .279 and Spanish bond rate to 6.848%, down .317. These are large changes. Will the ECB do it? YES, shout the pundits. Maybe (and within the mandate of the ECB, whatever those are), says Mr Draghi and NO, say members of the Bundesbank. This kind of song and dance does not really solve the problem, it just manipulates.

Then there is the matter of interest rates, the value of the US Dollar and gold price. I hardly need to point out that the FED manipulates interest rates, because they actually admit it doing it. What is harder to see is why the US Dollar goes up, while interest rates are kept artificially low. Low interest rates should reduce the value of the US Dollar, but it went up. The explanation we are offered is that Europe is buying the Dollar. That is possible, but what is much more likely is that the FED is buying currency other than the Dollar.

Interest rates controlled by the FED are artificially low, which raises the interest rate on gold, since that is not kept low by the FED. The result? Low gold prices and continuous deflation that weighs on the economy.

The reporting of unemployment is nothing short of a mockery. Pundits are breathlessly reporting a job creation of 163,000 for July, much better than anticipated. Obama's policies working? Hardly. According to the figures, unemployment actually went up. If we examine the reported figures, we get a very uncertain picture. Due to "seasonal adjustment and the births/deaths ratio, the statisticians added 429,000 to the jobs column. This would make the actual change in job numbers 163,000-429,000 or a job loss of 266,000. No wonder the economy is reported as weak. How can we trust the figures is they are manipulated like this? In other countries, where jobless figures are not manipulated, unemployment is 25%, 50% among the youth. Our unemployment figures are close to 23%.