The Black Eyed Peas - Pump It - YouTube
Video - Fed Chairman Bernanke Appears Before Senate Banking Hearing in Semiannual Address - WSJ.com
Bernanke has done it again as they are trying desperately to keep the Titanic floating a little longer.
He has a tough job as the Titanic keeps developing holes and springing leaks. Gold will always react to this type of news from the fed, but gold already bottomed 6 days ago so you cannot blame news for making gold go up. If anything Gold moved in anticipation of news not the news itself.
This chart is called the 30-day Fed Funds and it is the opposite of the rates. On the bottom of the left side we can see the high rates crashed the markets and after they crashed this Fed inter bank chart shot up. (Lowering the fed fund rate) When this chart crashes then this tells me that there is a liquidity problem developing. I show a small difference of about .14500 with 100 being the max. 100 would be as good as zero interest rates between banks. The Fed can only control things that the bond markets allow him to do.
The fed is not trying to bring inflation numbers down they are trying to pump them up!