Fair or not, like it or not, the US Fed is currently the most powerful financial organization on this planet. Today, during a press conference after a two-day meeting of the Fed (FOMC), the chairman of the Fed took almost all markets down. Precious metals, equities and bonds went sharply lower. There was something going up though: the dollar and the 10 year interest rate.
Tag: money printing
There are many more insanities in our financial and political systems than have been mentioned here. The consequences will be unpleasant, but we expect no material systemic change without a major crisis. This suggests a crisis is inevitable. When? It will occur when some event destabilizes the system and interrelated cascading failures occur. Cyprus was the warning! Cyprus was the “Mayday!” and the “SOS” to the world. Are you prepared?
We have two things going on at once right now. You have deflation which is perfectly natural and what you would expect in a depression. Against that, we have inflation from the Fed money printing. In rough numbers we might have 4% deflation and 5% inflation at the same time which net out to about 1% inflation in the CPI. That is not a stable series; that is actually two forces pushing against each other.
In a short educational video message, Professor White answers the question “why isn’t there any more in the US?” The truth of the matter is that the fate of the dollar rests with a handful of political appointees. Mr. White asks the question under which system the quantity and purchasing power of money are more stable. The answer to that question: gold and silver standards have dramatically outperformed fiat standards around the world in providing stable currency.
Our current Quantitative Easing process is creating about $85,000,000,000 in digital currency each month, or about $1 Trillion per year. About half a century ago we could buy a cup of coffee for $0.15, gasoline for $0.19 and a new car for under $2,000. What changed was the value of the money. We increased spending, budget deficits, national debt, and the money in circulation, and prices increased as a result.
As history has shown, the government can control the monetary system for a certain time but not endless. As time progresses, the market can take over control. With the global monetary system at risk levels never seen before, Holders of paper money should ask themselves what exactly they are owning … and what would happen if history is about to repeat itself.
If you have the printing press you can let it run for yourself, the governments and the banks. Central banks gain enormously when they print the money first before anyone else get inflationary losses which is exactly a hidden tax on everybody’s bank account in dollar denominated value. It is like raising taxes without raising taxes.
What is frightening is that politicians believe their own stories and think that the printing press will bring prosperity to their country and citizens. At least, they pretend to do so. Let’s get serious, who in this modern world reigned by the homo economicus still believes that adding huge quantities to the money supply comes without consequence?
All we need to do is to use our common sense to consider that if manufacturing is robust, there is a real demand for the raw materials, commodities, natural resources, etc., used to create those goods or products. When I see Dr. COPPER going one way, DOWN, and I see the equity markets going the other, UP, I know something is terribly, terribly wrong.
The Austrian view on economics – many know it from the surface, but a minority has studied the principles. This article explains the basics and applies it to today’s economy. It appears that the world could avoid a lot of suffering by applying the sound principles of Austrian economics.
The media encourages us to believe that practically everything in our economy is either good or getting better. It is not. Trust your instincts and observations more and government statistics and the mainstream media less.
At a certain point in 2011, the Chinese let their currency go up. Amazingly, right after they did it, their inflation, trade surplus and economy “cooled off”. So the exchange rate was pegged at a new level. That’s when the Fed announced QE3, and the same process started all over.
Author GE Christenson describes in this article his outlook for 2013, by simply looking at today’s reality. Obviously, no crystal ball is needed to come to the same conclusions, only some courage to look at the truth which is visible through the daily main stream “noise.” What we know for sure, is that a train wreck is in process. Time to protect your finances, investments, and retirement. The official numbers may not represent reality in 2013 and beyond.
There is no way that the implications and consequences of what has been done up to now can be talked or manipulated away. There is no practical way that QE can cease here or in Euroland without a total and final collapse of the financial system. Just go back to the IMF report on OTC derivatives I posted this morning. If QE ceases, the US bond market collapses and the Fed must debt monetize all required debt, which means if QE stops, it starts up again immediately and in a crisis mode.
Dollar bills glide effortlessly to the ground, dropped from the giant QE machine in the sky. All is quiet, all is calm. There is peace on earth, well, at least in Washington D.C. and on Wall Street. And then with a horrible crash, another Mortgage Backed Security (MBS) explodes and collateral damage spreads far and wide. Cut to three am in the Big Ben bedroom …