BernankeYesterday we published commentary from Truth in Gold on why the Fed taper won’t happen- namely that the entire Western financial system cannot survive without the Fed’s $85 billion a month, and that rather than taper, the Fed will soon have to INCREASE the rate of QE.

Today, ahead of the FOMC meeting this week, SD’s Eric Dubin explains why on the contrary- the Fed could potentially cut MBS purchases by $10 billion a month as soon as September, in a massive public relations stunt that will likely have a half-life of 3-6 months before QE to infinityer is announced.

Eric Dubin’s take on whether the Fed will taper:

I think there’s a reasonable chance that the Fed will do one cut of about $10 billion off MBS purchases strictly for public relations and in order to instill the false idea (so-called preserving credibility) that the Fed stands ready and able to remove the punch bowl.  All that will do is extend the life of the program and/or force the need for larger injections as early as just three months later (but probably about six months later). 

I’m in the camp that they can’t end in toto for a very long time.  But knowing how these arses work, I expect some public relations stunt at some point this year and the most likely FOMC meeting for this to happen is in September, given that there is a formal and full press conference scheduled for that meeting (not all FOMC meetings have the full press conferences).  If the long duration end of the bond market has already backed up quite a bit higher in rates by then, perhaps this PR target date will be moved.  But so far, it looks doable.


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  1. Yep, exactly as I posted yesterday.  They will taper the QE by a slight amount.
    This will keep the metals and commodities like oil under control through the summer.  However, once the taper begins expect interest rates to rise along with a slowing economy.  Probably within 6 months after the taper they’ll need to release the Mother Of All QE’s.

    • @Bay of Pigs and @Canadian Dirtlump — actually, guys, you’re comments underscore something that is both funny and sad at the same time.  Technically, propaganda usually contains mostly truth, with a small desired distortion injected into the mix that is not “blocked” by the target of the message given the abundance of truth throughout the rest of the message.  But in the case of “Western” economies – and especially Americans – the population is so ridiculously dumbed down when it comes to financial maters that Uncle Ben can come darn close to blathering 100% bullshit 24/7/365 on many subjects and the gullible public eats the BS up as if god himself has spoken.

  2. They’ve been saying this for the last 4 years.  They said they only needed a trillion or two.  They said, they said they said…  Keeps getting bigger and longer just like someone’s nose, I know…
    Just let it all end, already…!!!  🙂

  3. This gels with what Celente has been saying lately – modest tapering, which will only exasperate economic ills, followed by a serious dose of more QE, followed by a meltdown in early 2014.
    He expects that PM will be a force to be reckoned with when this occurs.

  4. ‘Infinityer’. Holy Cow, man! That’s like … God stuff. Like all the dimentional ‘branes’ linking into a singular continuum going on further than … foreverer.

    The transcendental implications aside, I have to suspect that if a psy-op decrease of QE is claimed, it will be a complete fake while as much or more currency is manufactured to delay the inevitable implosion. The complex compounding of interest on the world’s float of currencies is in an inexorably ongoing process of exponential growth, so NO decrease or leveling off is likely even possible at this juncture. The mere fact of all this printing around the world is proof enough that the economies are dead and this parlor trick of artificial muscle stimulation to make the cadaver appear to be alive can only last until the stench is overpowering. Try as mightily as they may, these charlatan bankers are no Doctors Frankenstein.

    It seems pretty plain that the interest service burden has surpassed any hope of ‘out-growing’ it. Productive capacities are probably severely suffering under the load, causing any real capital investment expenditure to have long disappeared. Moreover, that erosion of productive capacity appears to have seeped deeply into provision of domestic consumables also, given the regularity of food and cost-of-living related riots erupting so many places.Without the futile PPT ‘pump priming’, disgorgement of equities is a certainty that, when it DOES come, will be absolutely stupefying in its depth and range.

    If, in the finality of all this, metals fall too, it may be a pittance in comparison to the cavernous plumet of everything else.

    • “The mere fact of all this printing around the world is proof enough that the economies are dead and this parlor trick of artificial muscle stimulation to make the cadaver appear to be alive can only last until the stench is overpowering.”
      Well, you know what they say, Pat.  “He ain’t dead.  He just smells funny.”   lol

  5. Since this is now an article, I should flesh-out more of the thinking behind my original comment.  

    If you look back over the year, we’ve gone through a “jawboning” cycle regarding QE/Tapering.   Generally speaking, when the mainstream equity world starts rolling over, we see the dovish Fed governors making speeches about QE going on as far as the eye can see.  Lately, you can add concerns about the long-end of the yield curve rising, along with the big correction Japanese equities are undergoing right now and the periodic freak-out sell-offs of Japanese bonds.  It was only late last week that the S&P 500 bounced off it’s 50 day moving average and if Uncle Ben and company comes out this week with premature tapering nonsense, the stock market could turn down very quickly and bust the 50 day moving average, sending all the hot money to the sidelines.  Add to this backdrop modest weakening in leading economic indicators and again, all the instability in Japan and I think it’s fair to assume Uncle Ben and his merry band of talking heads are going to play nice and give the markets a positive message about QE going on for quite some time.  

    That will ramp the stock market higher through the summer and into September, giving the Fed a new opportunity to flip-flop once again and do their credibility restoring tapering — and they’ll have another meeting with a formal press conference to explain everything.

    From September on through the rest of the year, as long bond yields rise still further, the Fed will come under renewed pressure to ease and we’ll flip-flop yet again as the Fed sets expectations for continued strong QE injections.

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