I am pleased to be back writing after a few days off for the penultimate Jewish holiday of the calendar year. It feels like today is a big day in the Middle East; please G-d we are closer to a brighter future.

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I came across an article where the ECB was shown to be much more aggressive at its QT (quantitative tightening). I was curious, so I went to the ECB website and downloaded all the data relevant to its balance sheet. The analyst had actually taken a sub-series that made his headline more effective. I went macro and included the entire balance sheet. While I was playing around, I went to the BOJ website and downloaded its data. I lie because I was actually routed back to FRED, which is the St Louis Fed's incredible database.

In a nutshell, the ECB has been slightly more aggressive (29.4%) than the Fed (26.5%) in tightening its balance sheet. The Bank of Japan (BOJ), relative to its economy, has a gigantic balance sheet in percentage terms, and it has only tapered in single figures (9%).

We have a new prime minister in Japan; Sanae Takaichi is the first woman to lead the land of the rising sun. She is expected to pursue an expansionary economic policy, which is clearly leading the long end of the yield curve much higher as bond investors are nervous about what effect it will have on inflation. It feels weird talking about Japanese 10-year bonds with a 3%+ yield.

This is where I become less clear on how to play the yen. I believe inflation is more likely than not with an expansionary government in power. With a government already so heavily indebted, it is likely to lead to even more monetary and fiscal stimulus. Such stimulus in turn is likely to lead to higher bond yields, which is usually beneficial for a currency. However, I think the higher yields will not be able to stem the weakness of the currency in the land of the rising yen. I guess that means I am better on rising yields and yen (rising USDJPY is weakening in case you are unfamiliar with the way the yen works).

In conclusion, the people who have the greatest influence over an economy are not necessarily the political leaders. Rather, it is those people yanking the lever of interest rates and the on-and-off switch of the printing press. Central bankers are the true power players. The high priests of financial markets.

Can you actually believe Gold has killed the S&P 500 and the Nasdaq over the last 25 years.

In the following chart you can see gold in various currencies. As you can see, gold has gone parabolic. Gold is not a growth asset, and neither is Bitcoin. Their job is a store of wealth, a mechanism for transacting and a hedge against inflation. When sound money becomes the leading performer against growth assets, it means fiat money is not so sound. Thank the economic gods for restoring some semblance of reasonableness in a world that seems totally unreal.

Silver finally makes a new ATH.

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