US starts Quantitative Easing ... including TIPS!?

Some fishy things happened yesterday. I blogged my reasons for hanging on to gold, when it dropped $30 in the morning, and then it popped back up and then some (I'll return to this).

Everyone should know why, by now. The US Fed announced that they are printing money to buy US Treasury bonds. This is Quantitative Easing, or what Bernanke calls Credit Easing.

John Maudlin said, "Gentlemen, Start Your Engines!" but it's sooner than I thought for the U.S., and Marc Chandler argued convincingly that it wouldn't happen soon. What's up?

There was something very interesting in the announcement. They said they will "begin a Treasury purchase program of up to $300 billion to help improve conditions in private credit markets. ... concentrate purchases in the 2- to 10-year sector of the nominal Treasury curve, although purchases will occur across the nominal Treasury and TIPS yield curves. ... two to three times per week. ... the first purchase operation late next week."

Steven Hansen, a dedicated amateur blogger that I admire, offers this analysis: "Why TIPS (Treasury Inflation-Protected Securities)? Our inflation rates are controlled by the Fed’s actions. Is this the signal that they are not sure they can control inflation? The only conclusion I can draw is that the government must believe they will not be able to finance the growing American debt . ... Debasing a currency is a very serious event – and has consequences which will damage certain sectors of our economy. Something very bad was being anticipated by the Fed, and was not revealed." Indeed.

Back to gold. Yesterday gold fell from $910 to $880 before soaring to $940. I've noticed this kind of "head fake" before nearly every move. The bigger the move, the bigger the head fake. Lately even when gold is falling gradually, it rises $10 each day just before dropping $20 lower. Are these moves engineered? Are insiders using that knowledge for profit? Seems plausible. Seems criminal, if it's true. When this is all over, the Gold Anti Trust Action (GATA) committe may be suing quite a few more people.