Gold Price vs. "Flattening" Yield Curve
- In 2004 Alan Greenspan began to get the memo that his ultra lenient monetary policy had instigated a growing bubble in commercial credit.
- As the stock market and economy began to show favorable signs this policy was incrementally withdrawn, which in normal times would be the thing to do. The curve flattened in line with policy making goals (of tamping down inflation expectations).
- Unfortunately, it also tipped the leveraged system into a domino effect of high profile corporate financial failures, that resolved into the crash of 2008.
- Enter ZIRP in December 2008. This was brave new policy decreed by the will of man and endures to this day.
- The curve has been flattening for over a year now.
- Some Fed jawbone "you know", about a withdrawal of ZIRP sometime well out in 2015, "that sort of thing".