There is a reason why every fiat currency in the history of the world has eventually failed.  At some point, those issuing fiat currencies always find themselves giving in to the temptation to wildly print more money.  Sometimes, the motivation for doing this is good.  When an economy is really struggling, those that have been entrusted with the management of that economy can easily fall for the lie that things would be better if people just had “more money”.  Today, the Federal Reserve finds itself faced with a scenario that is very similar to what the Weimar Republic was facing nearly 100 years ago.  Like the Weimar Republic, the U.S. economy is also struggling and like the Weimar Republic, the U.S. government is absolutely drowning in debt.  Unfortunately, the Federal Reserve has decided to adopt the same solution that the Weimar Republic chose.  The Federal Reserve is recklessly printing money out of thin air, and in the short-term some positive things have come out of it.  But quantitative easing worked for the Weimar Republic for a little while too.  At first, more money caused economic activity to increase and unemployment was low.  But all of that money printing destroyed faith in German currency and in the German financial system and ultimately Germany experienced an economic meltdown that the world is still talking about today. 

Bernanke taperJames Bullard successfully sells markets on an Oct. taper. When will traders learn that it’s not what Fed officials say that matters, but what they actually do? It reminds me of Lucy holding the football for Charlie Brown. No matter how many times she assures him that she will hold the ball in place, she always yanks it away just before his foot makes contact. Yet Charlie Brown falls for it every time.

Bernanke fedWhat Bernanke did Wednesday, Mises Institute’s Peter Klein explains in this excellent clip, was expose that he believes the economy is too fragile to sustain any sort of tapering or scaling back of government stimulus.  What does that tell us?
That the economy is in the early stages of an artificial boom, just like the artificial boom we have been trying to get out of.  Any signs of economic growth or progress that we have experienced since 2008 are solely the result of government stimulus; in other words, more malinvestment.”
Klein presents the Austrian view of what caused the original crisis (Greenspan & Bernanke), and what the effects of no-taper will be on the economy down the road.
Hint: Think Bigger.

taperThe Federal Reserve shocked the financial world this week, defying universal expectations.  It failed to start reducing the pace of its third quantitative-easing campaign’s debt monetizations, delaying the long-anticipated QE3 taper indefinitely. 
This surprise ignited sharp moves in nearly all major markets, but gold’s was certainly the most impressive.  It rocketed higher on the Fed’s startling new paradigm shift.

economic collapseMassive and Increasing Public and Private Debt, $700 Trillion or perhaps as high as $1.2 Quadrillion in Derivatives (see bis.org) and the 2005 Bankruptcy Reform Act, appear to put our Bank Deposits, Pension Fund Assets and many other financial “Assets” at Greater Risk than ever before.
And for those U.S. Bank Depositors who think, for example, that FDIC Insurance will protect their Deposits consider that the FDIC’s Reserve Fund holds only $37.9 Billion, but the Total Insurable Deposits are $5.25 Trillion.  And, as Ellen Brown points out, the “Bail-Ins” (i.e., Bank Deposit Confiscation) which Cyprus (and now it appears Polish) Depositors suffer, are arguably applicable worldwide via the Financial Stability Board’s “Bail-In Templates.”
The Fed’s refusal to even begin Tapering is ominous and indicates that Financial Armageddon may be closer than we think.
Worst of All, that Destruction could, at any time, be only hours, or minutes, away – read on.

At some point, the Fed will either have to put up or shut up.  Talking tapering and then repeatedly not-tapering will only work for so long until they lose credibility.  And I’m not talking about credibility with you or me, I’m talking about the ability for them to move the market through jawboning.  We must judge the market’s view of them by price action; from that viewpoint, they remain credible – although not all markets see things the same way.  The buck was not impressed by Bullard’s October Taper threat, but gold and silver sure were, and the equity market looked relatively concerned as well.  Treasurys remain on the fence.
I hate to say it, but: next Fed meeting 29-30 October-  No press conference.

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Fed monkeyOn this week’s Metals & Markets, Turd Ferguson returns to the show  to discuss:

  • Fed lunacy: placing this week’s no-tapering and Friday’s MOPE with manipulative metals smash into perspective
  • Political trends:  US “peak empire” and dollar trade settlement standard, Debt limit deadline nears; will gold respond with another 2011 like rally?
  • Precious metals as the ultimate insurance asset against coming monetary order reset
  • Near-term supply and demand conditions in the metals

 You won’t want to miss this week’s Metals & Markets with special guest host Turd Ferguson!

One of Einsteins great contributions to mankind was the theory of relativity, which is based on the fact that there is a real limit on the speed of light. Information doesn’t travel instantly, it is limited by the speed of light, which in a perfect setting is 186 miles (300km) per millisecond. This has been proven in countless scientific experiments over nearly a century of time. Light, or anything else, has never been found to go faster than 186 miles per millisecond. It is simply impossible to transmit information faster.
Too bad that the bad guys on Wall Street who pulled off The Great Fed Robbery didn’t pay attention in science class. Because hard evidence, along with the speed of light, proves that someone got the Fed announcement news before everyone elseThe evidence is overwhelming.
There is simply no way for Wall Street to squirm its way out of this one.

Why mince words?  The last 48 hours of price movement are transparent for those with eyes to see (and in the case of the CFTC, maybe a brain to process data, and a spine to fulfill their mission would help).
Leading up to the Fed’s surprise “no taper” decision, and during the lead-up to what was initially going to be a near certain US attack on Syria, gold and silver prices were managed lower by cartel action during the first week of September.  Hedge funds and “hot money” followed the trend, justified by increasing worries of consensus-view tapering.  This brought gold and silver lower in advance of the “no taper” surprise.  Silver would have been in a position to possibly retake it’s 200 day moving average were it not savagely managed downward since early September in advance of the “no taper” news.

Jim SinclairThe implications of the Fed not going ahead with tapering are bad for the dollar and won’t stop bond yields at the long end from risingIt shows that the whole US economy is in a massive debt trap that cannot be addressed for powerful reasons. The reality is the expansion of cash and deposits in the US banking system is tending towards hyperinflation and is proving impossible to stop. That is the message from this week’s FOMC meeting, and I expect it to gradually dawn on investors world-wide in the coming weeks.

First off, I’d like to say that I’m really quite amazed at the degree of “surprise” over the FOMC policy statement yesterday.  Anyone who understands the nature of QE and why it’s being done knew back in May when Helicopter Ben first mumbled the word “taper” that the Fed wouldn’t reduce QE
If Wall Street’s overpaid finest – and paid with taxpayer largesse, I might add – wants to figure out when the Fed will “taper,” then they should spend their time figuring out what it will take to get unemployment below 6.5%.  Here’s my call:  we won’t see that number in our lifetime.

Now I’ll explain for Zerohedge, CNBC, Fox Business, Bloomberg News and ALL the severely mentally challenged Wall Street analysts exactly why the Fed is printing money.  
Follow the f#cking money!

financial collapseThe U.S. stock market is near all-time highs, while politicians and economists are blathering about recovery, low inflation, and good times, but instability and danger are clearly visible in our debt based monetary system. To the extent we rely upon the fantasies of ever-increasing debt, money printing, and credit bubbles, we are vulnerable to financial collapses. Perhaps a collapse is not imminent, but it would be foolish to ignore the possibility.

house-of-cardsFormer World Bank Senior Counsel Karen Hudes says, “It’s pretty clear where we’re headed, and that is something called permanent gold backwardation. That’s a fancy word for people losing confidence in paper currency. That means the value of currency in the future is less than today.” How bad is “permanent gold backwardation”? Hudes, who spent 20 years at the World Bank, says, “This is not just a bad event. This is like the meltdown of all meltdowns. What it means is you cannot finance international trade.” Hudes goes on to say, “It’s going to make any depression we ever had (the 30’s, 2008) pale in comparison.” Hudes says even though the credit ratings agencies rate U.S. debt high, they know just the opposite is true. Hudes contends, “This is actually an underhanded move because they know the U.S. dollar is going to lose its status as an international currency.” What would that look like to the man on the street? Hudes predicts, “Prices would change on a daily basis. They would double. The number of families that would be employed would be in the minority . . . there would be lawlessness.” Join Greg Hunter as he goes One-on-One with former World Bank lawyer Karen Hudes.

silver pricesIn the aftermath of The Fed shocking the market by failing to taper QE Wednesday, igniting a $2 rally in silver and $75 in gold, legendary gold trader Jim Sinclair has sent subscribers an email alert titled Reasons to Sell Your Gold, destroying 12 false MOPE arguments against gold.
Sinclair states that as a result of the market realizing that QE is going to infinity, gold will NOW return to and exceed its all-time high of $1915, gold shares NOW enter into a new bull market, and NOW those short gold and the shares receive the spiritual experience they deserve.
Sinclair’s MUST READ alert on gold is below:

Gold has gone from $250 to $1900 and they’ve been printing willy-nilly the whole time.  So gold is irrelevant to the central banks. But it is in a bull market, a secular bull market because of that printing.
But in terms of the manipulation–as far as I can tell, all the corrections up until about 2013 looked normal to me for a regular bull market with periodic profit-taking events. It all looks normal. Sure, you get some short term manipulation around options expiration but nothing really looked out of the ordinary to me until we got to the QE 4 announcement in December, when basically everything in the world started going up as it should when the world has been flooded with liquidity- except for gold.

James TurkJames Turk remains extremely bullish on the yellow metal and for good reason.
Turk believes gold will finish positive for the year and that this will be the 13th winner in a row. Perhaps he’s a bit overly optimistic, but he’s been right twelve years running and that’s good enough for us. He’s still seeing extremely powerful Asian buying, with China picking up Indian slack and we are heading into the strong gold buying season. Indian brides are happier when showered with gold.

cumulative-mintage-gold-coins-1970-2012Ever wondered exactly how many oz of investment gold has been minted and consumed by the public?  Today’s Chart of the Day provides the answer, demonstrating the cumulative bullion gold mintage by the South African, Austrian, Canadian, US, Mexican, and Australian mints from 1970-2012.
The 6 national mints have combined to produce over 110 million ounces of investment gold over the past 40 years.

SProttIs Eric Sprott selling out of his massive silver positions, exiting the market he’s long evangelized?
Casey Research’s Marin Katusa sat down with Eric Sprott, chairman of the eponymous Sprott Inc. group of companies, to directly ask him some of the tough questions the blogs have been buzzing about.
Eric Sprott’s full interview with Marin Katusa on whether he’s selling his silver positions, possible successors to the Sprott Empire, and Sprott’s outlook for the metals and the economy is below: