Can you solve a crisis of too much indebtedness by increasing debt and suppressing interest rates?
The collapse of the Soviet Union should have been a lesson. The world should have learned that central planning cannot work, even in something simple like food or iron production. The USSR was plagued with shortages of everything.
America today does not have central planning of simple things like food. Farmers make the allocation decisions for corn, and ranchers determine the size of their herd for the most part.
We have central planning of the most complex thing of all, credit. Credit affects everything else including corn and beef.
It’s not only unstable, but it is moving inexorably towards collapse. This disaster is way beyond the pay grades of the economists who would be our economic dictators, like Ben Bernanke and Janet Yellen.
The Fed is naught but a whole pile of perceptions.
One way or the other, we are going to rediscover the use of gold as money. When that happens, the perceptions that prop up the Fed will be dispelled. Strip those away, and there is no case for the Fed to exist at all.
- Yellen lays out Federal Reserve’s plans to “normalize” monetary policy
- Fed to officially DC QE at next meeting if economic outlook holds
- “Normalization” will not necessarily occur immediately
- Fed will use an overnight repo facility as needed during normalization process
- Fed may raise interest rates as early as 2015
- Committee is prepared to adjust its approach if necessary (translation- we’re going to try to pull the punchbowl, but we’ll eventually bring back MOAR QE )
- Gold & silver smash commences on que as gold sent down a mineshaft below support at $1230
Full FOMC statement is below:
The Federal Reserve’s third quantitative-easing campaign is on track to wind down in late October. At that point the Fed will likely stop printing new money to buy bonds, a sea-change shift with ominous implications for the stock markets. Their entire surreal levitation during QE3 mirrored the huge growth in the Fed’s balance sheet from QE3’s bond monetizations. When they cease, another major selloff is likely.
Prudent investors and speculators today don’t have to guess about what the end of QE3 means for the lofty Fed-inflated US stock markets. We have the precedent of the ends of QE1 and QE2. This next chart looks at the flagship S&P 500 stock index superimposed over the Fed’s balance sheet.
And out of all the many thousands of charts I’ve created over the years, this probably tops the heap as the scariest.
Global annual silver production is approximately 820,000,000 ounces or a bit more than 25,000 metric tons. What does that mean in terms that we can more easily understand?
If the global annual mine production of silver were cast into one large silver pyramid, it would be approximately – wait for it – only 65 feet high on a base of only 65 feet square. Rather tiny! For future reference, this is one “silver pyramid.”
The Federal Reserve was conjuring up enough dollars for QE to buy the equivalent of one silver pyramid every 6 days in the Bernanke era.
In that context silver seems inexpensive and dollars seem overvalued.
The US military spends the equivalent of one silver pyramid about every 8 days and the official US national debt increases by one silver pyramid every 7 days. Borrowing and “printing” this many dollars cannot continue forever. Silver and gold will remain valuable long after the dollar has been inflated to near worthlessness.
People who were sitting on the board of the NY Fed, were directing some of these bailout funds directly to their own banks in a blatant, absolutely undeniable conflict of interest that again represent the very heart of this system: it is a system run and operated by bankers, for bankers, and in which bankers tend to do very well, while the rest of the country MELTS DOWN.
One of the keys we watch here along with the US dollar is the price and movement of gold.
If you do any research on gold at all, you will quickly discover that there is a commonly held view that Central Banks hate gold and think of it as a useless asset that does not earn interest.
As usual, if you dig a little deeper and do more research you discover a different story.
Yellen continues QE taper down to $35 billion/month:
- Fed to taper QE an additional $10 billion beginning in July
- Beginning in July, the Committee will add to its holdings of agency mortgage-backed securities at a pace of $15 billion per month rather than $20 billion per month, and will add to its holdings of longer-term Treasury securities at a pace of $20 billion per month rather than $25 billion per month.
- Waiting on the inevitable Gold & silver smash to commence…
Full FOMC Statement is below:
In the MUST WATCH video below, Sovereign Man’s Simon Black breaks down in explicit detail how exactly the Fed works, as well as its massive conflict of interest.
The collapse of the dollar began in 1913…it is nearly complete.
Congressman & former Presidential Candidate Ron Paul joins the show this week, discussing:
- Putin’s response to US sanctions with economic retaliation- implications for US economy & the US Dollar- It is very significant, dumping of US dollars has begun…The dollar can’t be maintained. One reason the dollar has been sustained as well as it has been is who wants to buy yuan or euros? But ultimately they will buy the real money, and that’s gold!
- Paul on the Coming collapse of the dollar & all fiat currencies: Officials in charge of monetary policy are very aware of what’s coming- they believe as long as it is orderly they will be ok…The problem is when people lose confidence in a currency, they lose confidence completely. There’s nothing orderly about it! There’s always a panic, and that’s hard to manage. There will be a day when people will panic in the financial markets, not only in the dollar, but in the world-wide system!
- The former member of the House Financial Services Committee explains why his nemesis at the Federal Reserve works so hard to discredit gold, and what he wishes he would have asked Ben Bernanke during his grilling of the Fed Chairman at his House Hearings on the Fed’s Monetary Policy.
The MUST LISTEN SD Metals & Markets with Former Presidential Candidate, Sound Money & Freedom Champion Ron Paul is below:
In response to our account of the mysterious large rise in Belgium’s Treasury purchases , it was suggested that the transaction would show up on the Fed’s balance sheet. However, the Fed is under no obligation to show the transaction.
The $141.2 billion in Treasuries purchased into the Belgium account represents 3.2% of the total current size of the Fed’s balance sheet. The Fed is a private corporation and is therefore not beholden to GAAP accounting standards.
However even with GAAP standards applied, a corporation does not have to itemize and disclose the details of any event that represents less than 5% of its assets. In other words, the Fed can easily bury a 3% transaction in its financial statements.
Tuesday, a whopping 4,307 contracts hit the Comex instantaneously at 8:20 a.m.
To put that size in context, at 8:00 a.m. (EST) the CME was showing a total of 45,000 contracts had traded from 6 p.m. the previous the evening until 8:00 a.m. Tuesday morning. That’s an average of 54 contracts per minute over the 14 hour period. All of a sudden someone decides they need to sell 4,307 contracts all at once?
The “art of selling” a big position when you need to sell involves hiding the size of the position from the market and feeding your position into the market over time as the liquidity lets you do it without giving away what you are trying to do.
The Fed’s “art of war” on gold involves dumping large quantities of gold contracts, often at times when it wants to make a statement.
The real question is, why has the Fed all of a sudden become very blatant about its intent to wage a war on gold?
A recent Chairman of that private corporation in control of the finances – perhaps even, the destiny – of the USA for the past 100 years, famously referred to the yellow metal as “a barbarous relic”. Although this Ph’d prophet of policy-managed markets has hardly been a fount of wisdom in the course of his career… in this case he stumbled upon a truth.
Yes. Bernake got it right! Gold has all the attributes of a primitive thing – and as such belongs in essence to a different cycle in humankinds’ journey. In fact, it’s the very primitive nature of gold [& silver] which renders it a potentially deadly kryptonite to the modern financialized world.
Is the Fed “tapering”? Did the Fed really cut its bond purchases during the three month period November 2013 through January 2014? Apparently not if foreign holders of Treasuries are unloading them.
From November 2013 through January 2014, Belgium with a GDP of $480 billion purchased $141.2 billion of US Treasury bonds. Did Belgium’s central bank print $141.2 billion worth of euros in order to make the purchase? No, Belgium is a member of the euro system, and its central bank cannot increase the money supply.
So where did the $141.2 billion come from?
There is only one source. The money came from the US Federal Reserve, and the purchase was laundered through Belgium in order to hide the fact that actual Federal Reserve bond purchases from November through January were $112 billion per month, necessitated by the actions of an unknown country or countries who dumped $104 billion in Treasuries in a single week.
But it is now clear that Geithner never believed his own talking points. To him, too-big-to-fail and the so-called moral hazard, or safety net, that it would create can’t really ever be fully taken away. During his lecture to Summers’s class, one student asked a question about “resolution authority,” a provision of the reform laws that is supposed to let the government wind down a complex financial institution without creating a domino effect. The question prompted Geithner onto a tangent about too-big-to-fail. “Does it still exist?” he said. “Yeah, of course it does.” Ending too-big-to-fail was “like Moby-Dick for economists or regulators. It’s not just quixotic, it’s misguided.” - From The New York Times Magazine article, What Timothy Geithner Really Thinks