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gold crashIn his most explosive interview with SD ever, CEO of Sprott Asset Management Eric Sprott discussed his thoughts on the Fed’s no-taper, why he believes the cartel took down gold this spring, the evidence that a bail-in is coming to the US and Canada, and the US fiscal debt crisis.
Sprott stated the Fed could not taper QE because it has lost control of the bond market!
We have never printed on a daily basis more than we are printing right now, and all the while, interest rates doubled!   Just the talk of tapering moved the rates significantly higher.  I happen to believe that they have lost control of the bond market Just by talking the talk the rates doubled and if they walked the walk, I think we would see a dramatic increase in rates here and severe carnage in the bond market.

Sprott went on to claim that the paper gold market was crushed by the Western Central banks this spring in order to free up gold supply from the ETFs as a massive gold shortage threatened the banking system, and that this is a battle the Western Central banks are doomed to lose as global physical demand will soon overwhelm Central bank supply.

Eric Sprott’s EXPLOSIVE INTERVIEW with The Doc covering tapering, the motive behind the PM take-down, and much more is below:

90 Sale 2(2)

 

 

The Doc asked Eric how much longer until the Fed loses credibility among the mainstream, such that jawboning fails to move markets, and what does it mean for the Fed when a move in the 10 year from 1.4% to 3% forces the Fed to re-nig on even a modest $10 or $15 billion reduction in Quantitative Easing? 

When you look back to recent history, the Fed doesn’t have alot of credibility in terms of walking the walk.  They were talking about an exit plan in 2009, and then they threw up this trial balloon of tapering, and everyone kind of went there- all the major investment houses suggested there would be tapering.  I personally didn’t think there would be any tapering because already just the talk of tapering moved the rates significantly higher.  I happen to believe that they have lost control of the bond market.  I was somewhat shocked that Chairman Bernanke at the last Senate hearing said he was puzzled by the move in interest rates.

I thought, the Chairman of the Federal Reserve is puzzled by an increase in interest rates?  I think it was obviously a disingenuous answer.  Obviously the market has had various things going on which has caused rates to go higher, and I just don’t think he wanted to go there.

So in my mind the Fed never had much credibility, and I think the fact of the non-taper just makes that ever more apparent to everyone.   I think the one thing we would look at for a confirmation and it has confirmed it is the weakness in the US dollar, because I think more and more the non-Western central banks would be viewing whats going on in the US as essentially a Ponzi Scheme- zero interest rates – a target of zero, and the massive printing of money.  I just don’t think they can turn the tap off because just by talking the talk the rates doubled and if they walked the walk, I think we would see a dramatic increase in rates here and severe carnage in the bond market.

The Fed is way more concerned about interest rates than even the stock market for that matter, because interest rates kill governments, and they kill the economy too.  We’re already seeing the impact of that in housing and auto sales.

To me the increase in the interest rates was a fact of what’s going on in the debt markets.  In July we saw some very large selling by China and Japan, and there must be many, many other governments who are selling US treasuries because the cost of taper caused all their currencies to weaken, and in order to support their currencies they were sellers of US bonds to convert into their own currencies, so there must have been alot of selling.

So if it wasn’t for the Japanese in August, who were the purchasers of something like $50 billion in bonds for the month (via their own Quantitative Easing), rates would have already moved well through 3%.  As you and all your listeners I’m sure would appreciate- this co-operation amongst all the Central Banks is just overwhelming, whether its the Fed supporting Europe through loans to its European banks or The Fed going up to Japan and saying, We’ve got to have someone buying the bonds, which of course they dutifully responded to (and of course the opposite thing will happen in Japan if rates get out of control, the Fed will get involved).  I think the important thing to keep in mind is that we have never printed on a daily basis more than we are printing right now, and all the while, interest rates doubled! 

If anybody ever attempts to pull back on QE, it might be shocking to see what truly could happen to interest rates if they ever reverted to the mean, and if we ever reverted to the mean, the economic consequences would be dire, the effect on the US deficits would be very, very meaningful, and according to GAAP, in my mind the US is already insolvent!  They just haven’t faced the day of reckoning yet, but the day of reckoning is coming!

 

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When asked whether we’ve seen a bottom in gold and silver at $1179 and $18 and what the implications of last week’s no-taper will be for the metals, Eric responded:

Well Doc, I go back to what I believe is truly happening here.  We are seeing a huge increase in demand for gold.   I wrote 3 articles asking whether Central Banks had any gold left.   I thought it was getting pretty extreme back in 2012.   I think that’s why these things that happened all of a sudden manifested themselves in the beginning of the year. 

The first thing was Germany asking for their gold back, and I think its going to take 7 years to get back 300 tons.  I mean China imports 100 tons a month from Hong Kong!   Other signs of stress in the market with it be ABN Amro failing or the COMEX inventories declining , the GOFO rate going negative- these are all signs of shortages of gold!

I think they released this trap door in the paper markets (which was very effective by the way) in pulling 700 tons of gold out of the various trusts and ETFs.  If you put that in perspective, 700 tons in 6 months is 1,400 tons annually!   We only sell on the open markets 2200 tons from mine supply.   That’s fully a 2/3rds increase in mine supply, and I think that was meant to happen.   That’s why they slammed gold, so they could drain the ETFs. 

The other side of what’s going on is India where the central planners have said to the Bank of India, You’ve got to stop your people from buying gold because we have a shortage!  Had the Indians continued to buy the roughly 100 tons a month they were buying in April and May, we would have had a combination of China and India buying more than global mine production each month- just China and India!  So I think that’s why we’ve had these rather draconian moves in India, because we have a shortage, and it would just be manifested that much quicker if the Indians were allowed in the markets!

There’s hardly a week that goes by, including last week when they increased the tax from 10 to 15% that the Indians don’t keep putting pressure on their gold market.  If things ever got back to normal we would find out that between China and India, they’re buying over 100% of all the gold that’s produced, which would open up the questions- where is all this gold coming from?

Of course, the answer is its coming from the Western Central banks who are leasing it into the gold market, and sooner or later they’re going to realize that they’re going to fail on this because this demand is not going away.  Demand will increase, and I think the non-taper announcement will cause it to increase.  The fact that the US and Europe are not really recovering will make it increase.  The volatility of the currencies of the developing markets would make their people want to own gold.  The decline of the Rupee would make people want to own gold.  There’s so many examples of why people should be coming into this market and owning gold in the present environment- above and beyond the fact that we’ve already got more demand than supply.

I think you correctly state, we saw the bottom on June 28th, I think the price is going to rise dramatically here as everyone realizes yet again that these QEs don’t work, that they don’t create any economic growth whatsoever, the middle class is getting poorer and poorer as inflation is well beyond what is stated and there’s no increase in income.
I think the outlook for both metals is great, and of course I think that the outlook for silver is greater than that for gold.

This was just the first portion of The Doc’s explosive interview with Eric Sprott, check back Wednesday for the rest of this important interview, in which Eric also discusses the Cyprus bail-in and whether he believes a full banking system bail-in collapse is in store for the US and Canada, as well as how gold, silver, and the bond market will react to the coming debt ceiling crisis!

Sprott

  1. “they lost control of the bond market”     The 10 year is at 2.68% today, this is not a loss of control at all.   The Fed is buying the bonds, so I would expect to see interest rates low for a very long time.

  2. Nice “Get’ Doc.  I remember the first big interview at Silver Doctors when  Eric Sprott made an appearance then.
    This new interview is telling and move away from the simple silver story. GLD is a complete fraud with no movement in inventory growth when gold bumped back up to $1,420   Complete crap accountability at GLD   Ditto for SLV  No movement in the last few months even with silver drop drop of $6.  What fraud!
    I think it’s time to STOP talking about the bond market and interest rates.
    It’s absolutely clear that all bond markets is always rigged all the time.  This is a world wide phenomenon.  Instead of wringing our hands in anguish over every twitch in the rate and how it will affect borrowing costs to the central banks;  how it will affect the derivatives, one needs to think of the bond rates as the barometer of what I’ll call the Bullshittt-O-Meter
    Picture a gauge with 0 on the left side and 100 on the right.  When the bond rates go down the needle pegs right.  The BS and MOPE are flowing,  with rigging on the move. 
    When the bond rates go up, truth is striving to break free. The needle pegs left.  
    We are once again seeing the needle move hard to the right as rates dropped 30 BPS since the Bull Sheep taper vapor fumes flowed from the bald headed skunk,  AKA Fed Head.
    When truth breaks out and the needle snaps off at its left side detente, yes, there will be a wretched reckoning. But it must happen. 

    • Bingo. One of main reasons I read comments here is your clarity and grasp on the big picture. And rock throwers and critics around here just reinforces my iron fisted determination that the gold and silver bugs are correct in their thinking.

    • @AGXIIK
      I hear ya bro. The tension in ‘the room’ is sooo predictable, LOL. I might stop trying to predict the Fiat/Oz movements and start trying to predict the Mood-O-Meter of Silver Doctors and other PM’s blogs every time ‘Gold’ or ‘Silver’ rallies on the back of some FedSpeak and then inevitably falls. All the physical buyer should care about is whether they still have the same QTY or more in weight of physical in the safe for when the Fiat system fails which it has to, then the silly little graphs we all stare at will collapse down also … right down to bare bottom … and then the people who control the markets will CLOSE THE PM’S MARKET AT A BS PRICE!!! Nobody will have a graph to look at!!! OMG, THE SKY WOULD FALL IN IF I HAD NO ‘GOLD’ AND ‘SILVER’ GRAPH TO LOOK AT! *<SARCASM>*
      Does this mean that many of the people looking to make a killing in Fiats/Oz will be just as pooped and angry and corrosive as is always the case on PM’s blogs when the inevitable FIXED and RIGGED market continues to show its true BS Nature??? Of course; is the sky blue? There will be no ‘official’ skyrocket in Gold or Silver on the Western Governments Watch! IT WILL NOT HAPPEN, and if it is ever about to happen it will be covered up by a diversion (Political Machination).
       
      Doc made a very good point in this interview though, and it is something to hang our hats on. When the Bail In legislation’s are played for real, corporations will become insolvent as they will not be able to pay their creditors and workers. This is completely correct, but the Doc then said that there would be strife in the system, which is correct, but I believe this is exactly what large Multinational’s would want. The only companies that will truly suffer at this are small to medium sized domestic business that do not have large floats of liquid capital sitting in the shadow banking system that they can draw down on. Whilst all the small and medium guys go bankrupt the Multis and asset strippers will have a feast, and this is all part of globalism, the S&P500 would rocket up after a reset after the large corporations gobble up all of the smaller players as well as mergers. This has the effect of making fixed#top company indexes look larger and thus indicating an improvement in business when in fact competition has been destroyed and there could have been a net diminishing in turn over in real terms nationally. Multinationals are sitting on very large capital accounts in hedge funds and safe havens and smaller businesses don’t have this. The TBTF Banks and the Multis will feast on their flesh and simply bounce off of the crisis using the smaller guys as a trampoline so that when the new Debt Restructure comes, and the Western world gets its new Fiat which the nitwit public will accept readily, there will be no Middle Class, no Entrepreneurs, no chance for anyone who doesn’t work for a VERY large corporate shark with a big brand logo, lawyers, and lobbyists to even get off the ground. At this point the Capstone will have well and truly launched off from the foundation. I happen to think however that the system these fools have created is too complicated for them to understand or track (ie, Derivatives), and that the left hand doesn’t know what the right hand is doing because there is more than one brain and the overriding fault is human greed.
      It will be a cold day in Hell before TPTB allow Physical Gold to rally against the USD for real, and as soon as the cold day comes the Federal Govt will create a diversionary crisis to cover up the collapse, whilst restructuring the debt and as I have said they will make the best out of the feast for the fascist alliance that is Banks & Government & Multi-National Business (the Trinity of Evil). NAZI Germany eat your heart out!
       
      FedZilla will eat whatever nobody else wants, and support whatever ‘market’ it needs to, and the Govt will feed the tax into it at whatever speed necessary to keep the Banker Bonuses flowing and the Govt Champagne Pouring until FedZilla can eat no more and the sh*t Super Novas! USA flips the world the bird and says ‘SUCKERS’ … even the biggest most arrogant bully has his day of reckoning, and how much of the world has to hate our guts fully before that day arrives?

  3. OH BU THE WAY. KING WORLD NEWS HAS A NEW ARTICLE OUT  WITH A FAMILIAR HEADLINE ” GOLD AND SILVER READY TO SOAR” LOL…THE SAME HEADLINE HAS BEEN USED OVER 4 TIMES IN THE LAST TWO YEARS AND EVERYTIME THEY ARE DEAD WRONG.

  4. Actually as much as I hate headlines such as this, they really aren’t “wrong” if you actually think about it. I do think we have reached a point where they could lose control any day really. If it happened tomorrow, it woudln’t at all surprise me. I think everything that needs to be in place for a huge rally in the metals is there–it’s just all about control at this point. And with every passing day they do NOT lose control, it becomes harder to maintain that control. When will they lose control? Well, as Sprott likes to say “That’s the $64,000 question.” Yes, it could happen tomorrow, or they could stretch it out for a few years longer, perhaps. The ending is more or less the same–that is the point of stacking.

    • “I do think we have reached a point where they could lose control any day really.”      Why, as long as inflation remains tame, the bonds will hold value.
      Spain 10 year at 4.28%, Italy 10 year at 4.27%, Japan 10 year at .70%, if there is no panic in those bond markets, why would the US bond take a hit anytime soon?  
      Remember everyone telling us that Japan was going into hyper inflation 6-7 months ago, they can’t even get a 1% inflation rate. Developed economies have so much deflation, that is cancels out any inflation that results from money printing.
      The point is, the central banks of the world have NOT lost any control, and they can most likely keep this gig up for many more years than anyone would think. Sure, in 5-10 years the world will know they debt is unpayable, but that’s a long way off.

    • zman and Eboy, your ignorance of what is going on in the bond market and in regard to inflation is astonishing and shameful.
       
      Not defending any predictions of “guru’s”, as they are pretty well useless right now, even as physical demand is setting all time records worldwide.

    • No doubt it will happen, I just keep dusting off the cob webs on all the rhetoric.
      When the dollar fails is what I see personally.
      If the demand is so high, the futures don’t reflect that. Respect the fact as well that when Gold and Silver tank down, so do a shitload of all other commodities. IMO we are still 12-18 months away from a final meltdown, which gives the Gold and Silver peddlers more time to sell you their specials!

  5. ‘They’ have not lost control of anything….. They control/rig/manipulate pretty much EVERYTHING. This is all planned out and has been for some time. It’s only a matter of the timing on when they decide to pull the plug and cause the most damage/pain.
     
    There is no such thing as happenstance!

  6. “Remember everyone telling us that Japan was going into hyper inflation 6-7 months ago, they can’t even get a 1% inflation rate. Developed economies have so much deflation, that is cancels out any inflation that results from money printing.”
    This is nonsense, I don’t recall any such forecasts for Japan. One of the most respected analysts on Japan, namely Kyle Bass, said they are nearing the end of their financial experiment. When asked “How long?” he said his analysis gives Japan about 2 years (since their new QE program), before it rapidly falls apart. I advise you seek out some of his reports/analyses on the subject.
    I think you are missing the point that the entire system is contingent upon confidence, that is all. The yields you have mentioned are as low as they are because Central Banks, are supporting them. Have you not thought to yourself that it’s amazing that nominal rates are not negative at this point given all of the money printing globally, and central bank demand? The fed is printing 1 trill annually, with an annual deficit of less than $800 bill! The fed’s programs have continued to increase in size and scale, as well as in Japan. This is approaching the end. When central banks become the only purchasers of their own debt, confidence is eventually lost in the currency. If this could work, any economy could print its way to prosperity. Confidence can turn on a dime, and it will. It will not be a linear process, it will be much more exponential in nature.
    Central banks are not losing control in your view because interest rates appear tame. But that is because they are printing now more than ever to keep rates in check.  This is why I say they are losing control.
    As for inflation: you are one of the only people I see who actually believes the fed’s CPI and inflation data. You can even talk to people who couldn’t care for silver, gold, economics, finance, etc.  and they will acknowledge that prices are rising rapdily for most of the things they need.
    The western central banks are trying to balance, interest rates, inflation and confidence in fiat currency all at once, and it is an impossible task.
    And have you at all thought about the next recession? Recessions happen on average every six years. What happens when the next one inevitably occurs? Massive imbalances are growing throughout the economy, and at least one will force a readjustment. Will the fed increase its balance sheet to $10 trill? $20 trill? There are limits to this–and that limit is confidence.

    • I agree with you 100% silversavings, the only thing is obviously the time frame, and what political measures can be taken to ease the general public into a 2 layered Wage-Slave and Small-Super-Class structure. This destruction of middle tiered capitalism (Middle Class and even most Upper Class) is bound to happen and the deflation proves that it is happening. If TPTB can achieve this through global simultaneous currency debasement then the result will be an atrophied world system that is almost like a patient in a coma on a drip slowly wasting away. We can already see the effects in Greece, Spain, Ireland, India, Indonesia etc… As long as every country is playing the same printing game, the outcome is controlled chaos as Governments move towards martial law. The only thing that can upset it all is if an alternative super-bloc (SCO, BRICS) can successfully swing liquid capital and moveable assets out of the grip of the West and set up a solid (or even semi-solid) money system (which would mean we are still all screwed in the West unless you learn a South East Asian language and perhaps marry a local), but it looks like the BRICS are biding their time as they know the West will simply start a world war to prevent loss of fiscal Empire. This is a war of economic attrition most certainly, which will lead to controlled civil wars (police vs paupers) and finally to world war … IMO. Hitler would not have come to power without the Wiemar Crisis, and the whole world is going through a Wiemar, we are just in the deflation stage where the flesh slowly rots on the skeleton… a bit like leprosy :-] funny but true.

  7. It is all a dummy market for sure but the ‘lost control’ part? Doubt it. In a logical world this statement by sprott would make sense, but these gurus can not seem to get their grips on an ‘illogical reality’ now in existence. Does an ‘illogical reality’ make sense? I think not, but it exists. Gurus have been spouting this bond stuff for a long time now and many a dollar has been lost betting on these predictions. What these gurus cannot seem to get their grips on is the ‘illogical reality’ now in existence, kinda like lord Blankenfeld of GS doing Gods work in the warped parallel universe we live in now, I suppose…..
    And a biker bar? Yep, hi ho silverrrr– Locked in a 10,000+ mile, I’m outta here, 7 week camp trip around the good ‘ole USA this summer on my Harley….stories like this will make me want to put on my rain gear and get back out there again! 
     

    • @scott
      …or a Paris bullion supplier said they would pay up on a Swiss physical delivery, didn’t have the goods, and faked a heist??? then claimed the insurance money to purchase some real Gold?
      A bit like smacking yourself in the eye on rent day and telling your land lord you were mugged for your rent money to buy time??? I expect to see much more of this as the Circus called Planet Earth enters further into the wondrous ‘Age of Aquarius’ LOL.

  8. I didn’t hear Sprott make the claim that the Fed has totally lost control of the bond market.  The context of his statement about the Fed having lost control is important.  He made the observation that as rates doubled off the May low, the Fed lost control during their taper talk.  He made the observation that going forward, it will be more difficult for the Fed to control the market, particularly if they were to actually implement true tapering.

    • Eric,  I’m glad “The Admiral” is on our side. Have heard him speak personally and find him an honorable man.
      As for –guru’s– being wrong or right…Who cares?
      So, someone sticks a mic in their face and asks, ‘Whattya think…?’
      They are just killing time too…..and seems to me  that time is moving much too fast as it is.
       
      Not sure what’s with so many being so impatient.  Greed maybe. Must be actually. As difficult as it might be to wait for drastically under valued PM’s to reach fair market value—It’s likely to be FAR MORE difficult on many levels in the day they do.
       
      I went round and round with a good guy this weekend, who sharp as he is professionally, is totally deceived and a card carrying Sheaple.  He was astonished at just the most basic things I was saying…and in the end said he was sorry he’d asked had he known hearing my thoughts, “would be such a downer” and “so negative.”  Guys like him–good, honest people & their families are likely going to be wiped out financially completely ripped off of their lifes savings & investments  and suffer horrifically; And sheesh—some of you ‘tards  are whining about headlines on SD or KWN??

    • 4oz…Ditto that brother.  Amazing how smart, successful people can be be so ignorant re monetary history and the true state of the global financial situation.  They’re hooked on hopium.  Most(pretty much all) of my high net worth friends are going to be in for a rude awakening.

  9. I would say, with due respect to all posters and essayists, the situation now is so confusing, misleading and fraught with data that is completely and totally contradictory, that to get one right guess out of fice or ten might be as good as it gets in a day. 
      Whatever will happen, I think it’s clear to  all of us thoughtful concerned people  that we are in the middle of the biggest liars contest the world has every seen.  I’ve been wrong so many times I don’t care any more if I find that my proposition last week or even yesterday is off base. 
    It was a guess, maybe a good one or not, but at least a guess is one step closer to having enough input, right or wrong, and guesses, right or wrong, to at least connect a few dots.  Tonight I will continue reading Dr Willies (Unless 24 has a new episode) latest monthly newsletter and evenhe  admit he’s wrong some of the time.
    But for me, he is probably one of the closest to the truth of what will happen, using hard raw numerical data to back up his assumptions. And he’s still wrong half the time or more.  It’s just the way it is.  I think the best we can do is hunker down and dodge the incoming rounds. 

    • I look at it a bit differently.  We know with mathematical certainty the U.S. gov’t financial situation becomes increasingly dire starting in 2015.  One approach would be to hunker down like you suggest and I’m prepared to do just that.  But, also there will be tremendous opportunities.  Mike Maloney, in his outstanding video series, teaches the concept that wealth is not destroyed, it is only transferred. 
       
      My point being that when you know an event will occur, that presents a golden opportunity (literally) to multiply your wealth.  That’s how guys like Eric Sprott and Rick Rule made their money to begin with.  And I believe that is what Sprott and Sinclair are trying to communicate to the masses.  There’s never been such an  incredible wealth building opportunity as the one headed our way.

    • @AGXIIK >>>I’ve been wrong so many times I don’t care any more if I find that my proposition last week or even yesterday is off base.
      It’s OK AG, if you were wrong 9 out of 10 times you would still be more correct than ‘official’ ‘economists’. The Fed is the lender of last resort and it is buying bonds at half a Trillion a year and MBS’s at half a Trillion a year, Ie, it is in Last Resort mode, which by definition is WRONG!!! And when you hear Janet Yellin saying she thinks negative interest rates would be a good idea, then we really are at the bottom of the barrel… heck, I reccon if she announced the Govt would start building Chinese style ghost cities just to create some employment it would be a better idea than negative interest rates.
      It is all by definition -> WRONG! So don’t be worried about getting it wrong sometimes AG, if you were a banker at TBTF you would get a promotion, you might even get a position at a Federal Reserve Branch, and if you managed to crash a massive Bank you might even get to be a Fed Chairman some day, aim high and lose big, the taxpayer will cover it!!!

  10. It is cowardice to think ‘the fed’ is in control of everything, because if they are, what is the point of seeking safety in Gold and Silver?  One might as well keep their ‘money’ in the banks and ‘trust’ that ‘the fed’ has their best interest at heart and will do everything that they can to keep their ‘money’ safe.  Many are those who conform to the ways of ‘the fed’.
     
    “The opposite of courage in our society is not cowardice, it is conformity.” –Rollo May

    • The Fed IS in charge of EVERYTHING. If there is ONLY a Collapse in progress and the Fed is pulling the levers then it IS in control of everything! The Fed is like a skydiving instructor that packed a bed sheet for a tandem jump, it is in control of its own and your fate, and it was only ever wanting one last thrill ride….. SPLAT! 100% Controlled Suicide! Just as planned
      LOL

  11. The only thing the Fed has lost is their, “touch with reality”.  They believe their own lies.  Their games of manipulation profit them now and that is all that concerns them.  They see no destructive force against them that could be strong enough to topple their game.  (at least for now). 
     
    The guru’s can speak from past experiences and explain how things panned out the last time such and such happened, but this time around the entire globe has their stake in the pot, and each hand is determined not to fold.  Unfortunately, we as the rest of the world see it, are forced to stumble along while the Fed bluffs its way through each dilema its money printing scam creates.  While the Fed might have several hands at the table, there are too many wild cards out there that have the possibility of creating the end game. I feel the most destructive wild card will be when all the financial institutions that have their claims on physical gold come to the conclusion that they are not going to ever have physical gold in their possession.  How the Fed is keeping this fact snuffed out is nothing short of amazing.  This could happen when sides are drawn on a limited military action in the middle east, or safer yet, when greed amongst a lesser player is threatened.  There are too many cracks in the dam to not have a drastic event happen at some point in time, in the very near future. 
     
    To not use analogies would mean we would have to take the events that are unfolding as facts.  And nothing I see in the markets today function based on facts.  They use analogies to put the next piece of the puzzle together, so I use analogies to try to see through their smoke and mirrors.
     
     
     

  12. The FED wiil retain controll of the bond markets until the final moment of ‘collapse’ (which we’re already in by-the-way – just in first/second gear).
    If the bonds aren’t purchased by foreign central banks/governments or domestc demand falls to zero, then the FED will simply buy all the debt bonds.
    For velocity to occur (velocity being the primary driver of a hyperinflation), the extra currency would need to filter down to the masses, but the masses are being squeezed dry of funds and will merely recive the basic amounts necessary to get simple food stuffs, with the majority of cash given to those close to the FED who’ll use it to buy all the US infrastructure.
    To think this wasn’t planned is naive.  Whether they’ll pull it off is uncertain.

  13. I think the real story here is the timing of TBTF banks, just before Bernanke spoke. Trades were executed fractions of a second prior to the release of the data. How is this possible? They had the data prior to the announcment. No other conclusion is possible. What does this mean?
    THE FED, AND THE ENTIRE GOVERNMENT, ARE ALL IN THE POCKETS OF THE TBTF BANKS.
     
    NO OTHER CONCLUSION IS POSSIBLE.

  14. Willnotbeaslave  Your comments kicked off a few thoughts about the Fed and cyprussing.
    1.  There were several posts many months ago regarding the ‘emergency’ bail in propositions along with much of the world’s central banks writing in these rules—including even Japan and China,  as to when, why and how much of a bail in would take place. 
    In the case of Cyprus the Russian Oligarchs got plenty of warning. Some got a week, others a day or two but most, if  not all were,  alerted to this taking place. They were able to execute transfers of funds either from the Cypriot banks or via their affiliate banks in other countries. Anyone with deposits in Cyprus were locked out of their accounts but those banks affiliated with Cyrpriot banks were not locked down.  Rumors had it that those last minute transfers were many times the amount of the 30 billion Euros taken from the locals.
    2.  Cyprus at 30 billion was small potatoes compared to what could happen in the UK, Spain, Italy, France and US / Canadian banks  resorted to bail in  if needed.  Those bail ins could amount to hundreds of billions in any Euro country or the US.  In that case there will be millions of small to medium sized businesses where the accounts are stripped of their funds. Thousands of businesses in Cyprus resorted to cash and carry. There was no credit and no floating funds. They were stolen.
     That would cause much greater damage  than the terrible suffering to the businesses and 600,000 population of Cyprus.  If this bail in happened in a large GDP country, say 500 billion euros or so, this would be devastating. Tens of millions of people would be financially devastated.  The ongoing theft of pension plans is impoverishing hundreds of thousands on retirees.  The attitude of the central banks, central governments and TBTF banks is that these pension holders can simply go somewhere to die.  I read that the measure of of a civiliation is how it takes care of its most vulnerable citizens.  That the young and the old citizens. 
     This would be like killing the patient to save a hospital in another country. Apparently though, that is on the table. Steal the pensioneers money and kill them. 
    If a bail in of this size happened in a large country, even larger than Poland and its pension fund bail in, there would be hell to pay.
     
    Yes, these bail ins are occurring in larger and larger countries with Spain stealing its pension plan funds while Poland and Cyprus commmit outright theft of the common man’s money. 
    Think Big Steal Big. 
      Coming to a country near you. 
    All it will take is a larger bank, Banca Monti DiPaschi, So Gen, RBS or Morgan Stanley to go under and you have a cataclysmic collapse.  
    The question I have is who will receive foreknowledge of this bail in event.  Just like the taper caper front running that happening in microsceconds or perhaps even days before the verbal announcement, someone will leak this momentous announcement.  The results will be interesting to see. It will also be interesting to see where the big money will go to hide.   If a bail in is country-wide where do the big money people, hedge funds, crony capitalists, Fortune 500 firms go to seek safe harbor, like the Russian oligarchs when they got the high sign. If the bail in is world wide these people must be talking about safe havens.
    3. The other thing that we talked about several months ago was the written actions of the Fed, along with the bail-ins, that made it clear that money market funds could actually go to negative interest rates  (NIRP), a commonplace situation in Europe starting in late 2012.
      With the jump in UST rates that is probably off the table for now.  But this action created a herding effect, causing the astute investor to move to a fund that offered better rates, like USTs.  That subtle effect produced similar effects to the FDIC dropping its unlimited insurance coverage.  $140 billion in  bank funds moved to safer havens once the FDIC dropped its guise of unlimited insurance against bank account loss. Those funds moved to money market accounts.  Herding. Then ZIRP and the MMA accounts saw hundreds of billions moved to other accounts that offered even 1%.  Herding.
    Not that the FDIC has enough to cover more than a mid sized bank failure but that reduction was noticeable. Over 70% of all busiess accounts are now placed with the TBTF banks in the thought that these banks would be safer. Herding.
    The key in this Herding effect was to provide pressure to to large investor pools and funds to move to that safe haven.  Herding is very effective when controlling cattle. It is also quite effective in putting subtle pressure on money, currencies and its holders to get to higher safer  ground.  But herding also makes it much easier to take down the herd since such a large concentration of funds/herds are within easy grasp.
    That’s why pension plans are nothing more than fat low hanging plums waiting to be taken when the time is right.$19 trillion in pension plans exist in this FIAT killing field.   Frozen in place by enormous tax penalties and rules against movement, they can be plucked with ease and little more than a snapshot executive order or national emergency.  Even a failure to increase the debt, running out of funds to pay government bills, a large downgrade of the US credit rating.  Any one of these events could prove to be the undoing of this house of cards.
    That’s why the Polish pension plans were taken within 24 hours and with little chance of compensation. Blatant outright theft can be done anywhere and at any time without any more reason that because “I said so”  The government that is generous enough to give you everything is large enough to take it from you
    DISARMED POPULATIONS have no more recourse than a group of sheeple being herded to the slaughterhouse.   The second after the Second Amendment firewalls are breeched in earnest, the looting will comment in earnest. Mark my word on that.  The only reason our government has not taken these confiscatory actions is that the people of this country are very high armed.  That is why we see KLUUMAC up on his bully bullsheet pulpit excoriating us to put down our arms and surrender.
    Rest assured it will not happen in my lifetime, even if it’s shortened by the governments attempts to disarm me. 

    “The strongest reason for the people to retain the right to keep and bear arms is, as a last resort, to protect themselves from the tyranny in government’ Thomas Jefferson
     

    • @AGXIIK
      Yep, the Herding Effect, I hear you loud and clear on that one. Why doesn’t the Fed and the top 6 banks simply merge and call themselves 666 LTD and then we will have only 1 Herd with One common future … “oops, we just went under also, looks like we confiscate all of your everything and pay off the faceless men first with barely anything left over, we can restructure all the debt but will have to remove hard cash, you get 1cent on the dollar and a nice shiny Plastic 666 Card, 2 cents on the dollar for those who take a 666 RFID Implant, 3 cents on the dollar for those who also sign a pact with the devil and consign themselves and their children as perpetual labor slaves to any Master willing to bail you out of your self imposed destitution down at the daily auction at the local Slave Market … you get a free GMO lollipop though so its not all gloom and doom, think positive!!!”.
       
      “Land of the free, home of the … Brave?”
       
      >>>That’s why the Polish pension plans were taken within 24 hours and with little chance of compensation.
      Polish MP’s will have inviolable pensions though, so at least the real hard working people will be OK. The Polish bankers and oligarchs have all their future credit requirements in nice inviolable physical Gold accounts and inside hedge funds, so they will all be ok also. Just the peasant class who got stuck with the Fiat Bills when the music stopped … ended up ass down on the tiles. Old people? Plenty of use for them at the knackers yard, oligarchs house dogs and the Royal Corgis and such need to eat after all.

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