The Fed Is STUCK! If They Stop Printing All The Markets Will Tank!

david morganSilver guru David Morgan discusses the corner that Bernanke and the Fed have backed themselves into by threatening to taper QE over the past few months. 
While 60% of economists reportedly now expect The Fed to officially announce a taper in September, Morgan states that The Fed cannot stop printing because if they do, all the markets will tank- particularly the bond market.
Morgan’s full interview and thoughts on taper and the metals is below:

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Comments

  1. The Fed admits the last 8 months increase in the equities is 100% POMO driven.  If they stop POMO and  QE,  the market will be crushed, for more reasons than the fact that the S&P dividend average is about 2% on a good day.
    With UST 10 yr at 2.83%, this might draw funds to UST, maybe even enough to help fund some the deficit. 
    Selling 1.6% USt 10 yr showed the investors would not take  thr risk to UST debt. The Fed took over with QE.
      And it is ending badly now.  QE Taper will be nothing but bad news  It is nothing if not a brief stabilizer but that can only last until the Fed pukes up the paper they are buying and that paper grows increasingly less valuable.  The other source for funding debt is the MMA accounts and private retirement funds.  Those are tempting targets when the Federal Reserve finds it has become another too big to fail bank and requires a bail-in.  It could happen   All banks fail eventually. Always

    • The thing that stands out to me is that the Fed et-al have more brains working there side than we have trying to guess what they may or may not do. They certainly arent going to remove QE just like that!  A taper starts thin ie maybe just a few million but it would still be a taper and it would still have started tapering. Take nothing for granted, they will wriggle for longer than we expect and when all is said and done they will re-incarnate themselves in whatever pops up after. They are legion, they lIve!

    • jonl  Yes I remember the pucker factor when Lehman tanked.  The world was pretty much coming to an end.  I can’t say with certain if the Fed will reflect the damage to their holdings but the world wide market for bonds is so large, that the Fed and UST may find they aren’t late ot the party, they were not even invited.

  2. The Chinese have warned about market manipulation in the last two days of gold by our government. Asian countries want to go back. Does China have all the gold they need now?  Is this why there talking. 
     

  3. Jon I think China has an insatiable appetite for gold.  With a ton costing $44 million and $1.7 trillion in US debt, they could spend about 25% of their entire stack of this debt and pick up 10,000 tons in  a heart beat   The problem is that 10,000 tons is 400% of the world annual supply.  That’s tricky since everyone else on their block wants gold so they have to be satisfied with maybe 1000 to 1,500 tons this year.  That’s what we know of.  Otherwise they buy gold and silver miners to home grow their gold from SA, Aus and South America.
     They sell nothing of their 600 tons of domestic gold production. 
    5 years from now we could see something much different. If China accumulates 20,000 tons total from past, present and future stacking, they could stun the world with their prodigious totals. The dollar would shrink faster than Mr Happy in 40 degree water.

    • “They sell nothing of their 600 tons of domestic gold production.”
       
      And that’s if the 600 ton figure is at all accurate.  Somehow, I doubt that it is.  It is probably at least 2-3 times that figure.  China tends to play its cards pretty close to whatever they wear for a vest.  They also consider accurate numbers on many things, no doubt gold included, as state secrets, so are not about to go around blabbing what they know.  Knowledge IS power and they will not give up either of those easily.

  4. AG, and therein lies the rub…

  5. I don’t think so they have enough load reserve for 5 years if they actually put 80 billion a month in. Here is why the plan I believe they took. They did put print up credits an deposit in huge mega banks this 80 billion. Then they can lend out 10 times that amount with is totally legal. So just in one month this 80 bill turned into 800 billion. An they go buy usa treasures an other countries debt also. So this is why iam saying they have enough money to pay the nation all debt off if they wanted. Just 1 year worth 80 billion times 12 that’s 960 billion then take that times 10 the fractional reserve banking law. that 9trillion? an if they took any of this money an reinvested it into another bank we are talking series shit. My knowledge is they have plenty of money an also time on there side.

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