Nope, I can't prove that it won't happen - and even if I did, I doubt I could prove it to your satisfaction. I'm just saying that the Fed is not incompetent.
Anyway, I think this is one of the things we're going to have to agree to disagree on. Unless you'd like to put your money where your mouth is with some inflation options? I'm thinking Europe is where you want to look: Eurozone inflation caps will be dirt-cheap at the moment given how inflation's falling out of bed there right now; they're running the QE printing presses for trillions of euros, so they're right in the crosshairs for your monetary-driven inflation theories; and the ECB is frankly a hell of a lot less competent than the Fed is.
How about a little bet? Eurozone inflation over the next 5 years,
measured by the HICP ex-tobacco number, above or below 10%
total (not per annum), even money, $100 SGD?
Yeah, actually, I am saying that - governments and SWFs are pretty much the worst traders in the world. They're just like retail traders - chasing fads, buying high selling low (I'm sure you remember Gordon Brown flogging the BoE's entire gold holdings below $300), every single trading flaw - but they're doing it in absolutely gargantuan size with their constituents' money. (The exceptions are the Fed and the RBA, neither of whom you should fight. They're both very very good.)
"But wait", I hear you cry. "The Russian central bank - the CBR - is hoovering up tonnes of gold right now at four-year lows!"
So this is absolutely true, but the reason for it is fascinating.
Russia's gold miners are having a bit of a hard time at the moment. They would usually sell their gold production to the Russian banks, which would then on-sell the gold to the global gold market. But right now, Russian banks are about as popular as herpes. They can't buy the gold, because nobody will subsequently buy it from them - and that means that the Russian goldminers have nowhere to sell their gold. Which is a problem, because apparently miners do not want to get their salaries paid in gold, and heavy-equipment makers and oil refiners don't want to get their invoices settled in gold. They want actual money. (Don't tell the "gold is money" crowd, they won't like to hear that.)
So the Russian central bank has stepped in and become the buyer of last resort for Russian-produced gold - nearly four million ounces of it this year alone. They're not doing it because they think it's a smart trade, though: they're doing it because it's convenient for both parties.
Russian gold miners, as we already established, are desperate for liquidity. They need rubles. And the CBR needs foreign-exchange reserves - it needs "anything but rubles", but it can't buy "anything but rubles" in the global FX markets because
it's too busy selling anything-but-rubles to prop up the collapsing ruble. So buying four billion dollars' worth of gold (and printing the rubles to buy it) is a very clever way for them to prop up their FX reserves.
Russian gold-miners get rubles to keep the lights on; the CBR gets FX reserves to stave off the collapse of the ruble. It's a shotgun marriage of convenience, not sharp trading by the CBR.
Also, this is Russia we're talking about. It takes an awfully big leap of faith to think that the Russian central bank is the sharpest gold trader in the world and also incapable of defending its own currency.
Anyway, I'm not getting involved in this particular discussion any more. We disagree, and we're not going to persuade each other otherwise. Inflation bets above. Deal or squeal.
Erm, So I'm not going to respond to the second point, because you've just accused the BLS of falsifying employment data; but the first one - yep, couldn't agree more. Geopolitics is great fun. And although the Saudi price cuts seem to be targeted more at the US shale-oil producers, I'm sure they aren't shedding any tears for the Russian kleptocrats either. Saudi Arabia is explicitly launching a price war.