Ray Dalio, the founder of the world’s largest hedge fund, warns CNBC what SD readers have known for months:
There will be no series of rate hikes- rather, the Fed’s next move is likely to officially re-introduce quantitative easing:
The gimmicked rigged corrupted USTreasury Bond market is currently cruising along with about $40 billion Failures to Deliver on a DAILY basis in the bonds.
It indicates counterfeit or naked shorting by Wall Street banks. They have found a way to bring in liquidity to their broken insolvent big banks, selling USTBonds they do not own.
The central bank helm is managing a gigantic volume, hidden in numerous ways.
In reality, QE kills capital and ASSURES an economic collapse.
It is happening before our eyes…
The current set of fiscal and monetary policies pursued by central banks and states are all based on lessons drawn from the Great Depression of the 1930s. The successful (if slow and uneven) “recovery” since the 2008-09 global financial meltdown is being touted as evidence that the key determinants of success drawn from the Great Depression are still valid: the Keynesian (or neo-Keynesian) policies of massive deficit spending by central states and extreme monetary easing policies by central banks.
Are the present-day conditions identical to those of the Great Depression? If not, then how can anyone conclude that the lessons drawn from that era will be valid in an entirely different set of conditions?
We need only consider Japan’s remarkably unsuccessful 25-year pursuit of these policies to wonder if the outcomes of these sacrosanct monetary and fiscal policies are truly predictable, or whether the key determinants of macro-economic success and failure have yet to be identified.
It is widely expected that the Federal Reserve is going to announce the end of quantitative easing this week.
Will this represent a major turning point for the stock market?
As you will see below, since 2008 stocks have risen dramatically throughout every stage of quantitative easing.
But when the various phases of quantitative easing have ended, stocks have always responded by declining substantially.
The only thing that caused stocks to eventually start rising again was a new round of quantitative easing.
Most Americans don’t even understand what derivatives are, but when the next great financial crisis strikes we are going to be hearing a whole lot about them.
The big banks have transformed Wall Street into the biggest casino in the history of the planet, and there is no way that this is going to end well.
A great collapse is coming. It is just a matter of time.
In this MUST WATCH interview with CNBC, the Interest Rate Observer’s Jim Grant explains why the 2 greatest opportunities for investors right now are Russia & gold.
“Gold, to me is a very sound inoculation against the harebrained doctrine of modern central bankers. If you harbor doubts about the efficacy as do I of five years of monetary printing via quantitative easing & suppressed interest rates, and wonder how this unprecedented experiment is going to pan out, you can do worse for yourself than to hedge (with gold) from an unscripted monetary outcome.”
Grant concludes that investors should own gold because: “It stands to benefit from the demonstrated, as opposed the theoretically likely, crack up of the current monetary arrangements.”
Grant’s full interview on opportunities in Russia & Gold is below:
Jim Rickards joined FoxBusiness for an excellent interview regarding Janet Yellen’s first months as Fed Chairwoman. Rickards informed the MSM viewers that The Fed has tapered into weakness, and explains why counter to what the BL(B)S report would have one believe, the labor force is falling off a cliff.
Perhaps Rickards tunes into the SD Metals & Markets, as he informs Diedra that he expects the Fed to end the taper by July, and increase asset purchases by 2014– something we have been predicting for over 6 months.
Rickards full interview is below:
– No taper next week, but expect jawboning and an attempt to smash gold & silver– will June’s lows hold?
– The Doc, Eric, & AGXIIK to host a live chat event @ The News Doctors Wednesday for the FOMC statement
– Precious metals trading this week- raid fails to break gold & silver below $1200 and $19
– The Doc’s report on retail physical trends as US Mint shuts down for 6 weeks
– The stock market and 2014- Why the Fed’s actions to attempt to taper QE in 2014 will precipitate a stock crash & the brown stuff exploding off the fan between late 2014 and 2016
The SD Weekly Metals & Markets Wrap is below:
When QE1 ended there was a substantial stock market correction, and when QE2 ended there was a substantial stock market correction. And if you will remember, the financial markets threw a massive hissy fit a few months ago when Federal Reserve Chairman Ben Bernanke suggested that the Fed may soon start tapering QE3. Clearly Wall Street does not like it when their supply of monetary heroin is interrupted. The Federal Reserve has tricked the American people into supporting quantitative easing by insisting that it is about “stimulating the economy”, but that has turned out to be a massive hoax.
So what is going to happen when the Fed starts pulling back the monetary crack and the bubble bursts?
The Fed, through ZIRP and QE, has created $Trillions of benefits for the financial industry and much of that benefit has been created at the expense of government pension plans and individuals who depend upon interest earnings. This has a direct and negative consequence to many retirement plans, especially city and state public pensions.
It is especially destructive to those individuals who depend upon interest earnings to fund their cost of living.
Thanks to QE Your savings (fiat ones anyways) are unlikely to last as long as you hoped.
Already beleaguered, gold suffered another sharp drop this week. When the minutes from the Federal Reserve’s latest policy meeting implied it might slow its QE3 bond-buying campaign “in coming months”, futures speculators responded with heavy selling. But their extreme gold bearishness is highly irrational, they are missing the forest for the trees. Taper or not, quantitative easing remains super-bullish for gold.
Not only is the USD playing “pass the printer” in a relay race to the bottom with other dollar index currencies, but gold is for the moment included within this arrangement – for the necessary purposes of non-transparency of the pact between Central Banks.
Bond support= gold suppression.
- Fed continues monthly asset purchases of $85 billion/month
- ZIRP to continue as long as the unemployment rate remains above 6-1/2 percent
- Fed stands ready to INCREASE or decrease QE
- Gold and silver waterfall-smash in progress
Full FOMC statement is below:
Peter Schiff joins BNN’s The Street to discuss the Fed’s monetary policy ahead of this week’s October FOMC meeting, and the fact that the taper discussion is irrelevant- the Fed will be forced to do the opposite, and announce MOAR QE!
Schiff, one of the few economists to correctly state the Fed would continue with $85 billion a month in asset purchases ahead of the September FOMC in which a taper announcement was nearly universally expected, is forced to repeat himself over and over again as the BNN hosts simply are unable to fathom the reality of the US economic condition.
Schiff’s Must watch interview on QE ahead of this week’s FOMC statement is below:
On this week’s SD Weekly Metals & Markets, gold expert Alasdair Macleod joins The Doc & Eric Dubin to discuss:
- QEternity: Indications of a renewed bias of global monetary easing
- Negative GOFO rates continue, physical gold supply tightening again
- Bond market implications of the Federal Reserve as bond “buyer of last resort”- how much longer can the Fed maintain control of interest rates?
- China’s golden global hoover: China’s intentions vis-à-vis the US Dollar as reserve and trade settlement currency and how gold fits into China’s strategy
- Alasdair provides an inside look at a Swiss refiner: “They are working 24 hours a day, 7 days a week turning every ounce of gold they see into 1 kilo bars headed to China“.
Gold’s support break last week was met with several attempts to break the market down further. Each of these attempts were met with buying – buyers finally showed up whenever the price dropped below 1275. And then after the government shutdown/debt limit crisis was averted (for the moment) on Wednesday night, and various Fed members suggested there would be no tapering because of the chaos from the shutdown, gold raced higher while the buck plunged.
It is possible we have a catalyst for a move higher in COMEX futures and GLD shares at this point. The gang at the Fed has now twice found a reason to avoid tapering – reducing the rate of increase of its balance sheet. There is a saying in Japan: if something happens twice, you can be sure that a third time will come soon. With a government budget crisis baked into the cake 3 months from now, I imagine that the Fed will once again find a reason to avoid “rocking the boat.” Will futures buyers chase gold higher? A close above gold 1331 is the next signpost to look for.
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.
The myth is that the QE programs are stimulus to the US financial system. The myth is that the US is still a beacon of freedom.
The myth is that both Russia and China have no concept of leadership, no concept of capitalism, and are fraught with corruption, if not broken systems.
The greatest myth of all is that the USDollar is money.
The reality is that the United States is caught in the mire of profound insolvency, a lopsided economy lacking industry, a government incapable of managing its spending, and a lethal devotion to war. The United States has created some powerful enemies over the last couple decades. The Russians & Chinese are dedicated to establish a new fair monetary system, and a new fair trade settlement system. A new Gold Standard is coming, led by the East, driven through trade.
The United States will be outside looking in, no longer able to control the system.
In what has become one of the most absurd rituals on Wall Street – and is really a sign of just how broken our system is – the entire financial media and all the Wall Street “Einsteins” are debating whether or not the Fed will begin to slow down its money printing when it announces its latest fatuously palaverous policy statement in September.
The golden truth is that gold doesn’t care.
According to investment banker James Rickards, rumors of the Federal Reserve ending the money printing propping up the markets is not going to end anytime soon. Rickards predicts, “My view is they won’t. The economy is fundamentally weak. We have 50 million on food stamps, 24 million unemployed and 11 million on disability, and all these numbers are going up.” When the subject of gold confiscation came up, Rickards said, “I just don’t think it will happen because the government will find it will be very hard to enforce.” Join Greg Hunter as he goes One-on-One with Jim Rickards, the best-selling author of “Currency Wars.”
Bob Wiedemer, author of “The Aftershock Investor,” says, “People are defiantly in denial about what we’re doing. . . . Nobody mentions the $85 billion a month we’re printing now. . . . We’ve only printed about $800 billion in the last 100 years. We’re going to print more than that next year. So, literally 100 years of printing next year.” Wiedemer says you think of your mortgage as rent because you will never get it back. Wiedemer contends, “When interest rates rise, the value of homes drop. We’re assuming interest rates will never rise. Well, when you print as much money as were talking about, it’s inevitable. Interest rates will absolutely rise one way or another.” In his latest book, Wiedemer says to get out of stocks and bonds. He predicts, “Between now and 2014, I think you’re going to fall out of bed. . . . Stock investors could take a very big hit—well over 50%.” Wiedemer calls gold “the once and future king” and goes on to predict “gold will go to $6,000 to $7,000 per ounce.” Join Greg Hunter as he goes One-on-One with Bob Wiedemer.
While Obama is busy distancing himself from Bernanke and preparing to give the Fed Chairman the boot and bring in likely Yellen, Dudley, Summers, or Turbo Timmy, legendary gold trader Jim Sinclair states that it is QE to Infinity or Infamy for Bernanke.
Ahead of today’s much anticipated FOMC statement, with rumors of Fed “taper” swirling, is Bernanke and the Fed ready for what is sure to come should the market be convinced the Fed will actually taper down QE?