Quantitative Easing

Global Assured Destruction, Or How Bernanke Now Holds The Entire World Hostage

Zero Hedge,

21 May, 2013

The one headline we have been waiting for for over four years has just hit:

BOK KIM SAYS WORLD MAY FACE RATE RISK IF U.S. EXITS FROM QE

Not when, if. 

And there you have it: if the Fed exits, the world (and most certainly Japan) gets it. 

Thus, for the sake of the children (who will have inhert about $100 trillion in debt but don't worry: debt is an asset as some "analysts" will promise) Bernanke can never exit. QE...D

And since never is a litte longer than 2016/2017, at some point in the next few years Bernanke will be the proud owner of all marketable Treasury paper. 

All of it.

Currency wars

"Doubling down on QE3, the Federal Reserve (Fed) Chairman Bernanke tells China and Brazil: allow your currencies to appreciate. One does not need to be a rocket scientist to conclude that Bernanke wants the U.S. dollar to fall."
 

Currency Wars: U.S. Attack

BY AXEL G MERK

Financial Sense,

17 OIctober, 2012

Doubling down on QE3, the Federal Reserve (Fed) Chairman Bernanke tells China and Brazil: allow your currencies to appreciate. One does not need to be a rocket scientist to conclude that Bernanke wants the U.S. dollar to fall. Is it merely a war of words, or an actual war? Who is winning the war?

The cheapest Fed policy is one where a Fed official utters a few words and the markets move. Rate cuts are more expensive; even more so are emergency rate cuts and the printing of billions, then trillions of dollars. As such, the Fed’s communication strategy may be considered part of a war of words. Indeed, the commitment to keep interest rates low through mid 2015 may be part of that category. But quantitative easing goes beyond words: QE3, as it was announced last month, is the Fed’s third round of quantitative easing, a program in which the Fed is engaging in an open-ended program to purchase Mortgage Backed Securities (MBS). To pay for such purchases, money is created through the strokes of a keyboard: the Fed credits banks with “cash” in payment for MBS, replacing MBS on bank balance sheets with Fed checking accounts. Through the rules of fractional reserve banking, this cash can be multiplied on to create new loans and expand the broader money supply. The money used for the QE purchases is created out of thin air, not literally printed, although even Bernanke has referred to this process as printing money to illustrate the mechanics.

Why call it a war? It was Brazil’s finance minister Guido Mantega that first coined the term, accusing Bernanke of starting a currency war. Here’s the issue: like any other asset, currencies are valued based on supply and demand. When money is printed, all else equal, supply increases, causing a currency to decline in value. In real life, the only constant is change, allowing policy makers to come up with complex explanations as to why printing money does not equate to debasing a currency. But even if intentions may have a different primary focus, our assessment is that a central bank that engages in quantitative easing wants to weaken its currency. It becomes a war because someone’s weak currency is someone else’s strong currency, with the “winner” being the country with the weaker currency. The logic being a weaker currency promotes net exports and GDP growth. If the dollar is debased through expansionary monetary policy, there is upward pressure on other currencies. Those other countries like to export to the U.S. and feel squeezed by U.S. monetary policy. Given that politicians the world over never like to blame themselves for any shortcomings, the focus of international policy makers quickly becomes the Fed’s monetary largesse.

Bernanke speaking at an IMF sponsored seminar in Tokyo pointed to the other side of the coin: if China, Brazil and others don’t like his policies because they create inflation back home, they should allow their currencies to appreciate. But these countries are reluctant as stronger currencies lead to a tougher export environment.

Now keep in mind that it is always easier to debase a currency than to strengthen it. Switzerland, the previously perceived safe haven by many investors, has taken the lead. Using a central bank’s balance sheet as a proxy for the amount of money that has been printed, the Swiss National Bank’s printing press has surpassed that of the Federal Reserve considering relative growth since August 2008. Again note that no real money has been directly printed in these programs; also note that some activities, such as the sterilization of bond purchases by the European Central Bank, cause a central bank balance sheet to grow, even if sterilization reflects a “mopping up” of liquidity:

Japan has warned about intervening in the markets on multiple occasions, but the size of the Japanese economy as well as the lack of political will make an intentional debasement more difficult. Indeed, the Japanese did their money printing in the 1990s, but forgot we had a financial crisis in recent years.

Bernanke does acknowledge the concerns of emerging markets, but argues they are blown out of proportion. He elaborates that undervaluation and unwanted capital inflows are linked: allow your currencies to appreciate (versus the dollar) and you won’t have to be afraid of excessive capital inflows, inflation and asset bubbles. Ultimately, and importantly, Bernanke says the Fed will continue its course, suggesting that it will strengthen the U.S. economic recovery; and by extension, strengthen the global economy.

Let’s look at the issue from the viewpoint of emerging markets: policy makers like to promote economic growth, among other methods, through a cheap exchange rate, up to a certain point. They don’t want too much inflation or too many side effects. Historically, they manage these side effects with administrative tools. However, taking China as an example, taming price pressure through, say, price controls, has not been very effective. We believe that’s a good thing, as China would otherwise experience product shortages akin to what the Soviet Union experienced. Conversely, however, China must employ a broader policy brush to contain inflationary pressures. We believe – and Bernanke appears to agree – currency appreciation is one of the more effective tools.

So how will this currency war unfold? The ultimate winner may well be gold. But as the chart above shows, it’s not simply a race to the bottom. If one considers what type of economy can stomach a stronger currency, our analysis shows an economy competing on value rather than price has more pricing power and therefore the greater ability to handle it. Vietnam mostly competes on price; as such, the country has, more than once, engaged in competitive devaluation. At the other end of the spectrum in emerging markets may be China: having allowed its low-end industries to move to lower cost countries, China increasingly competes on value. Within Asia, we believe the more advanced economies have the best potential to allow their currencies to appreciate. It’s not surprising to us that China’s Renminbi just recently reached a 19-year high versus the dollar.

What we have little sympathy for is an advanced economy, e.g. the U.S., competing on price. We very much doubt the day will come when we export sneakers to Vietnam. As such, a weak dollar only provides the illusion of strength with exports temporarily boosted. Yet the potential side effects, from inflation to the sale of assets to foreign investors with strong currencies, may not be worth the risk.

On the Edge with Charles Hugh Smith

Bernanke's inflation paradox: Three times's a charm with Max Keiser

In this edition of the show Max interviews Charles Hugh Smith from oftwominds.com. He talks about the newly released third round of quantitative easing and its effects on US economy. Charles Hugh Smith has been an independent journalist for 22 years. His weblog, www.oftwominds.com, is a daily compendium of observations and analysis on the global economy and financial markets, as well as notable political, social, and cultural trends.

Bernanke

Bernanke Begs Congress to Address "Fiscal Cliff", Pledges to Hold Interest Rates Near Zero Through Mid-2015 Even If Economy Picks Up

Mish's Global Economic Analyis,

1 October, 2012

Fed Chairman Ben Bernanke was yapping about jobs today in his speech Five Questions about the Federal Reserve and Monetary Policy in Indianapolis.

Bernanke asked five questions of himself and gave five self-serving responses, all absolving the Fed of its role in the global financial crisis.

Bernanke also patted himself on the back numerous times (indeed in the answers to nearly every question).

In particular, Bernanke bragged about the inflation-fighting prowess of the Fed, not pointing out the Fed and fractional reserve lending are the source of inflation.Direct Lies

In the direct lie category, Bernanke stated "The Federal Reserve is also very open about its finances and operations."

In reality, it took freedom-of-information lawsuits from Bloomberg and others to get information from the Fed. The Fed still does not want to be audited.

Here are a couple of key snips regarding monetary and fiscal policy.



Pledge To Hold Rates Low


In the category of communications policy, we also extended our estimate of how long we expect to keep the short-term interest rate at exceptionally low levels to at least mid-2015. That doesn't mean that we expect the economy to be weak through 2015. Rather, our message was that, so long as price stability is preserved, we will take care not to raise rates prematurely. Specifically, we expect that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economy strengthens. We hope that, by clarifying our expectations about future policy, we can provide individuals, families, businesses, and financial markets greater confidence about the Federal Reserve's commitment to promoting a sustainable recovery and that, as a result, they will become more willing to invest, hire and spend.




Bernnake Begs Congress to Address "Fiscal Cliff"


I certainly don't underestimate the challenges that fiscal policymakers face. They must find ways to put the federal budget on a sustainable path, but not so abruptly as to endanger the economic recovery in the near term. In particular, the Congress and the Administration will soon have to address the so-called fiscal cliff, a combination of sharply higher taxes and reduced spending that is set to happen at the beginning of the year. According to the Congressional Budget Office and virtually all other experts, if that were allowed to occur, it would likely throw the economy back into recession. The Congress and the Administration will also have to raise the debt ceiling to prevent the Treasury from defaulting on its obligations, an outcome that would have extremely negative consequences for the country for years to come. Achieving these fiscal goals would be even more difficult if monetary policy were not helping support the economic recovery.



Bernanke Tosses Monetarist and Keynesian Hats Into

the Ring

Although Bernanke does not want Congress meddling in monetary policy at all, he meddles in fiscal policy all the time. Bernanke cannot make decisions or pass laws, however, Bernanke is clearly warning Congress the alleged "Fiscal Cliff" of tax hikes and automatic budget cuts "would likely throw the economy back in recession".

I suggest the US economy is already back in recession. Regardless, Keynesian and Monetarist clowns (Bernanke wears both hats when he attempts to manipulate Congress),  never want to do anything "now" to fix structural problems.

Indeed, Bernanke does not even want to do anything until at least mid-2015 regardless of what the economy is doing.

If you want to know why the boom-bust cycles have ever-increasing amplitudes and troughs, look at the policies of the Fed.

Bear in mind that I side with Bernanke that price inflation is not going to get out of hand. However, His policies have destroyed those on fixed income (a claim he tries but fails to address in his five questions). More importantly, those with first access to money (primarily banks and the wealthy) are the biggest beneficiaries of monetary printing exercises.

Those wondering how the 1% got so wealthy need only look at the Fed for the answer.

That was a question Bernanke did not address, but I addressed in detail a few days ago in Can the Fed Fight Droids and Win? Apple's SIRI, Driverless Trucks, What's Next? Riveting Video: Are Droids Taking Our Jobs?

Please take a look at that post if you have not yet done so.

Bernanke Says Don't Worry,

 

  "It's Only Temporary"

 

 

Mish's Global Economic Analysis,

1 October, 2012

Earlier today, in Bernanke Begs Congress to Address "Fiscal Cliff", Pledges to Hold Interest Rates Near Zero Through Mid-2015 Even If Economy Picks Up I commented on the Bernanke's self-serving responses to his own questions.


In this post I want to focus on another disingenuous part of his speech that I did not comment on previously. Specifically ...


With monetary policy being so accommodative now, though, it is not unreasonable to ask whether we are sowing the seeds of future inflation. A related question I sometimes hear--which bears also on the relationship between monetary and fiscal policy, is this: By buying securities, are you "monetizing the debt"--printing money for the government to use--and will that inevitably lead to higher inflation? No, that's not what is happening, and that will not happen. Monetizing the debt means using money creation as a permanent source of financing for government spending. In contrast, we are acquiring Treasury securities on the open market and only on a temporary basis, with the goal of supporting the economic recovery through lower interest rates. At the appropriate time, the Federal Reserve will gradually sell these securities or let them mature, as needed, to return its balance sheet to a more normal size. Moreover, the way the Fed finances its securities purchases is by creating reserves in the banking system. Increased bank reserves held at the Fed don't necessarily translate into more money or cash in circulation, and, indeed, broad measures of the supply of money have not grown especially quickly, on balance, over the past few years.



Gradual Bullsheet



Bernanke knows damn well that the Fed will never "gradually sell these securities". Rather, the only way the Fed would be willing to sell securities is at break-even or a profit.

Yet, if Bernanke honors his pledge to hold those securities until after a recovery is well underway, interest rates will be higher and the Fed will have losses.

Thus, it is the clear intent of the Fed to hold assets it buys from now until maturity (perhaps a decade from now, which for all practical purposes is "permanent"). At that point in the distant future, the Fed may even roll the securities over.


Who Benefits From This?


As I did note previously    ...

Bernanke's policies have destroyed those on fixed income (a claim he tries but fails to address in his five questions). More importantly, those with first access to money (primarily banks and the wealthy) are the biggest beneficiaries of monetary printing exercises.

Those wondering how the 1% got so wealthy need only look at the Fed for the answer.

That was a question Bernanke did not address, but I addressed in detail a few days ago in Can the Fed Fight Droids and Win? Apple's SIRI, Driverless Trucks, What's Next? Riveting Video: Are Droids Taking Our Jobs?

Finally, when it comes to "printing" let's flashback to December 8, 2010: Caught in a Massive Lie: Daily Show Comments on Bernanke's Lies Regarding "Printing Money"

The Daily Show
Get More: Daily Show Full Episodes,Political Humor & Satire Blog,The Daily Show on Facebook

Marc Faber on QE3

Marc Faber: Fed QE3 Policy Will 'Destroy the World'

the Market Oracle,

14 September, 2012

Marc Faber, publisher of the Gloom Boom & Doom Report, told Bloomberg Television's Betty Liu on "In the Loop" today that "the fallacy of monetary policy in the U.S. is to believe this money will go to the man on the street. It won't. It goes to the Mayfair economy of the well-to-do people and boosts asset prices of Warhols.

Faber said that he is "very happy. Very good for the Fed. Congratulations, Mr. Bernanke. I'm happy. My asset values go up but as a responsible citizen I have to say the monetary policies of the U.S. will destroy the world."

Faber on more Federal Reserve stimulus:

"It is difficult to tell what will happen. I happen to believe that eventually we will have a systemic crisis and everything will collapse. But the question is really between here and then. Will everything collapse with Dow Jones 20,000 or 50,000 or 10 million? Mr. Bernanke is a money printer and, believe me, if Mr. Romney wins the election the next Fed chairman will also be a money printer. And so it will go on. The Europeans will print money. The Chinese will print money. Everybody will print money and the purchasing power of paper money will go down. And I don't like bonds. I don't particularly like equities, but I think equities are a better space to be in than bonds."

On what he will do with his portfolio in reaction to yesterday's move:

"I own corporate bonds and I recently, as I wrote, I pulled some bonds from Kazakhstan because Kazakhstan economically is a much sounder country than the United States or any European country. But it is in small doses. I wouldn't put all of my money in corporate bonds. They have an equity character. I also own equities still in Asia and as I pointed out already four months ago for the first time in my life I bought equities in Portugal, Spain, Italy and France because they were unbelievably distressed. I think what people overlook today is they look at markets but they don't look at what happens within the market. In the last 12 to 18 months the U.S. has massively outperformed European markets, Asian markets with a few exceptions and now some markets are relatively depressed. I could argue the Chinese stock market is now relatively depressed. So the asset allocators may move some money in Chinese stocks and then they can rally 10% to 20%."

"The fallacy of monetary policy in the U.S. is to believe this money will go to the man on the street. It won't. It goes to the Mayfair economy of the well-to-do people and boosts asset prices of Warhols...Very happy. Very good for the Fed. Congratulations, Mr. Bernanke. I'm happy. My asset values go up but as a responsible citizen I have to say the monetary policies of the U.S. will destroy the world."

On whether there's any credibility in the Federal Reserve trying to bring down the unemployment rate and improve the housing market:

"I think there is a huge misconception and fallacy that money printing can actually improve the rate of employment because the money flows down into the system. It goes first into the banking system and into financial institutions, into the pockets of well-to-do people. If you drop money into my pockets and you have at the same time increased government involvement in the economy and we have the government growing with its regulation and legislation that stifles economic development. I don't want to build a new business. But what I may do is look around the world, where are the distressed assets. So I will go and buy existing assets, takeovers. But takeovers don't add to employment. They destroy employment. Secondly, I would just like to mention one thing. This money printing business, they have been saying that for the last 15 years that bailing out LTCM were necessary. Then they say the NASDAQ collapsed after March of 2000. We need to create another bubble, print money. They created a gigantic credit bubble and the misery that we have today."

On where gold prices are headed:

"I think that the trend for gold prices will be steady, but the trend for the dollar and other currencies will be down. In other words, in dollar terms the price of gold will trend higher. How high it will go, you have to call Mr. Bernanke and at the Fed, there are other people actually that make Mr. Bernanke look like a hawk. So they are going to print money. And they have done it for ages already and where has it led? To record high unemployment essentially since the Great Depression and structural unemployment. Unemployment goes among low paying jobs, not high paying jobs. So, you ought to own some gold, but don't store it in the U.S. because the Fed will take it away from you one day."

On whether he would buy property in the United States:

"Yes. Property prices in the south of the U.S. are very inexpensive compared to property prices around the world. The tragedy is that the people that were evicted from these homes have no access to credit. They have no money. They can't buy them. So, with easy money by the Fed well-to-do people can buy these properties and then rent them out to the people that were kicked out of these homes. What a great achievement of the Fed. First they create the property bubble and destroy the wealth of poor people, then the poor people have to rent and the rents have been up over the last 12 months. What a great achievement. Thank you, Mr. Bernanke."

More on QE3

As Predicted, Bernanke Launches QE3 to Help the Big Banks … Which Will Destroy the Economy

Image via Max Keiser

Zero Hedge,

13 September, 2012

We predicted last week that Bernanke would launch QE3 this week.

Today, the Fed announced that it will buy $40 billion dollars of mortgage-backed securities per month ... indefinitely.  

This is just another bailout for the big banks. (If the government had instead given money directly to the consumer, we would be out of this economic slump by now).

Bernanke claims that the main justification for QE3 is to boost employment.  This is slightly ironic, since Bernanke's policies are largely responsible for creating high unemployment in the first place.

The real justification is to try to artificially prop up asset prices.  But that approach has been proven to be an absolute failure.

This is in addition to numerous other easing programs. As CNBC notes:

In addition, the Fed said it will continue its program of selling shorter-dated government debt and buying longer-term securities, a mechanism known as Operation Twist. It also will continue its policy of reinvesting principal payments from agency debt and mortgage-backed securities back into mortgages.

***

“These actions, which together will increase the Committee’s holdings of longer-term securities by about $85 billion each month through the end of the year, should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative,” the Fed statement said.

And the Fed isn’t stopping there:

“There’s strong hints that they’ll do Treasurys next,” Joe LaVorgna, chief economist at Deutsche Bank Advisors, said in a phone interview from London. “They’re pulling out all the stops to try to get this economy to gain some traction and, most important, to get unemployment down.”

This sounds nice … except that the experts say that quantitative easing destroys the economy and – despite the initial optics of it – hurts the little guy.

As we said in 2008:  welcome to the Fed’s Weekend at Bernie’s.

P.S. Yes … if you’re a homeowner, you will probably want to re-fi.

Ron Paul: "Country Should Panic Over Fed's Decision"

What took Ben Bernanke sixty minutes of mumbling about tools, word-twisting, and data-manipulating to kinda-sorta admit - that in fact he is lost; Ron Paul eloquently expresses in 25 seconds in this Bloomberg TV clip. Noting that "we are creating money out of thin air," Paul sums up Bernanke's position perfectly "We've Lost Control!"

25-second quick clip

QE3 announced

No doubt there will be lots of commentary over the next days of Bernanke's QE-3 'to infinity'. Take a policy that has never worked and keep applying it until it does. It looks as if it will be all down-hill from here.

Federal Reserve announces QE3

The Federal Reserve announced Thursday that they will spent $40 billion a month on bond purchases in an effort to kick-start the US economy, the Associated Press reports.

RT,

26 April, 2012

Federal Reserve Chairman Ben Bernanke is expected to make a public address later today to discuss the results of this week’s Federal Open Market Committee (FOMC) meeting, but in the FOMC confirms that it will keep interest rates "exceptionally low" at least through mid-2015, AP confirms, with the Fed failing to reveal and an end date to the effort at this time.

"If the outlook for the labor market does not improve substantially, the committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability," the Fed reports in a Thursday afternoon statement. The decision to issue the announcement was approved on an 11-1 vote.

Economists had predicted that the central bank would unveil plans for a third-round of a quantitative easing, or QE3, but the Fed has only hinted at plans for a bond purchasing program until now.

Last week, Goldman Sachs said, “With today’s August employment report showing a nonfarm payroll gain of 96,000 and an unemployment rate of 8.1% because of a drop in the participation rate, we expect a return to unsterilized and probably open-ended asset purchases at the September 12-13 FOMC meeting.”

Some critics, including noted investor Jim Rogers, have attested that previous rounds of quantitative easing did little to aid the faltering economy, and that a third attempt may be met with the same respojnse.

"QE1 failed, QE2 failed, so I'm not so sure they would announce QE3, because they'll look like fools again," Rogers told Yahoo this week.

Less than one month ago, Bernanke warned that QE3 was becoming more and more likely, saying, “Taking due account of the uncertainties and limits of its policy tools, the Federal Reserve will provide additional policy accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability.”

The One Big Problem With QE To Infinity

Zero Hedge,

13 September, 2012

There is one big problem with the Fed's announcement of Open-Ended QE moments ago: it effectively removes all future suspense from FOMC announcements. 

Why? Because the Fed has as of this moment exposed its cards for all to see from here until the moment it has to start tightening the money supply (which may or may not happen; frankly we don't think the Fed tightens until hyperinflation sets in at which point what the Fed does is meaningless). It means easing is now effectively priced into infinity. 

Now rewind back to that one certain paper by the New York Fed, which laid it out clear for all to see, that if it wasn't for the expectation of easing in the 24 hour period ahead of the FOMC meeting, the market would be 50% or lower than where it is now, and would have been effectively in negative territory in the aftermath of the Lehman collapse. 

What Bernanke did is take away this key drive to stock upside over the past 18 years, because going forward there is no surprise factor to any and all future FOMC decisions, as easing the default assumption. It also means that Bernanke may have well fired his last bullet, and it, sadly, is all downhill from here, as soaring input costs crush margins, regardless of what revenues do, and send corporate cash flow to zero. 

Unfortunately, not even in the New Normal can companies operate without cash flow.

This is the chart.

Than you Fed for telling us what comes next.

Shares are up naturally, but gold has also spoken

 

For Business Insider's video background GO HERE

Capital Account

ZeroHedge Blogger Bob English outlines how Bernanke and the Fed could finally go Bankrupt!

'The more cornered they have become they more aggressively they have acted'

If nothing else please read this article today.

Mike Krieger Explains Central Planning for Dummies

Zero Hedge,

6 April, 2012

From Mike Krieger of KAM LP

The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent private meetings and conferences. The apex of the system was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations.

Each central bank... sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world.

- Carroll Quigley (Bill Clinton’s mentor at Georgetown) from his 1964 book Tragedy and Hope

Crime Once Exposed Has no Refuge but in Audacity.

- Tacitus

Central Planning for Dummies: There Will Be QE

For several years now I have been sounding the alarm that if you want to be engaged in the financial markets you need to assume that markets are being managed (rigged) more aggressively than at any moment in any of our lives. The Bernank and others on Wall Street and the District of Criminals understand that the situation is pretty much hopeless. Ever since 2008 they have had one strategy. From a monetary and fiscal standpoint, that strategy has been to pump massive amounts of liquidity into the system while at the same time borrow enormous amounts of money. The thinking was that this would stabilize the situation, create confidence and thus ultimately a dynamic sustainable recovery. They certainly bought a few years with this plan but confidence has not returned, nor has there been any sustainable recovery.

What we need to understand at the moment is that The Bernank and all of his fellow Keynesian Central Planning magicians know that they have failed. This is why he is running around on college campuses presenting his sad and intellectually dishonest presentation of propaganda that even a six year old could refute. In fact several people have done just that. Here is one good article on it. http://www.zerohedge.com/news/guest-post-open-letter-ben-bernanke. Moreover, Jim Grant recently gave an incredible speech at the belly of the beast itself -The New York Federal Reserve –where he completely undresses the Fed right to their face. You must read this one. http://www.zerohedge.com/news/must-read-jim-grant-crucifies-fed-explains-why-gold-standard-best-option

So what we need to understand is that we are in one of the most dangerous phases of this crisis at the moment. The priests of fiat are being attacked from all sides. People have awoken to the Fed and how criminal and deceitful this organization is and the existential threat it poses to economic freedom and hence human liberty. The arguments against the Fed are blistering and the only rebuttal the Fed has is to spout the same old nonsense like “we saved the world” or some trite derivative of this fallacy. The only thing they saved are untalented speculators from their bad bets. What the Fed has systematically done is literally transfer all of the bad debts and bets from the banks to the taxpayer. We are living this reality to this day. This fact is becoming increasingly understood throughout society, hence the emergence of the tea party and then last year’s Occupy Wall Street movement. So the thing I want my readers to really internalize is that the Fed and indeed TPTB generally are getting slaughtered in the intellectual arena and they know it. As a result, they feel cornered and will thus act increasingly aggressive to prove they are right and everyone else is wrong.

As I have said many, many times before, The Bernank needs to create more money and he knows it. He is irate beyond belief that his academic theories have not worked. He is furious that he can’t make the housing market come back to life. He is having a temper tantrum that people actually have the nerve to link printing trillions of dollars to the rise in commodity prices. He wants to launch QE3 this quarter but he feels like public opinion is against him (he’s right) and Obama is having his own little panic attack about gasoline prices and the election. So what’s a Central Planner to do? Well, exactly what they have been doing as of late. Lie.

The release of Tuesday’s Fed minutes was unlike any I have witnessed before. The Fed minutes are usually interesting to read through and every now and again have some very useful nuggets in them. That said, I have never seen them used as a way to make a statement and impact markets as was the case with the latest release. As soon as it came out there was the red Bloomberg headline “FOMC Saw No Need to Ease Anew Unless Growth Slows, Minutes Show.” After this came out the markets sold off but in particular gold was raided aggressively. I had noticed the weakness in mining shares in the morning (which is almost always a signal a raid is coming) and I mentioned this to a few friends. There is no way in a free market I could have foreseen this raid so easily. The reason I could see it ahead of time is because this was a very well orchestrated attack on an asset TPTB are desperately afraid of. Gold to Central Bankers is like Sunlight to Vampires.

What I found most interesting is that several people seemed confused. I read statements like “ I don’t know why the markets reacted this way, they said nothing new!” The markets reacted the way they did because that was what the Central Planners wanted. I mean who “reacted” that way to the minutes? A few PPT machines? There is no volume in the markets, retail is dumping stocks week after week and prices are being set at the margin by manipulators in a futile attempt to bolster confidence (hasn’t worked in four years so they are doubling down on the strategy of course!) Despite the nonsense they say about not needing to do QE3 because the economy is better, the exact opposite is true and they know it. They also know the minute they announce anything gold, silver, oil and other commodities will surge to the stratosphere. That said, the goal is to try anything they can to get oil and precious metals as depressed as possible ahead of the announcement. That is what the Fed minutes announcement operation was all about. While they have knocked precious metals down, oil is proving to be a much harder nut to crack. This is very interesting because it appears that these clowns have gotten as much mileage as they can out of the “we don’t need more stimulus” lie. What will they come up with next? I don’t know but I do know that the Federal Reserve and TPTB understand they are fighting for their lives and their survival. They will pull out any and every trick in the book before they die. The more cornered they have become they more aggressively they have acted. Watching the most powerful people on the planet fight their inevitable demise has been and will continue to be fascinating and frustrating. They will fight and fight. They will rig and rig. They will lie and lie. Until one day the whole thing will end seemingly overnight. They will vanish into history, disgraced and remembered for time immemorial as some of the biggest fools in world history.

Dave Janda Interview

Recently I recorded another radio interview with Dr. Dave Janda out of Michigan. Dave is one of the most tireless freedom fighters I have ever encountered. He has been doing it all of his adult life and I am very proud to be in the trenches with him during the most important battle of any of our lives. You can hear my interview here.

http://www.davejanda.com/audio/MichaelKreiger032512.mp3 Please take a listen.

Belligerent Act.Org

A friend of mine recently created this website to help protest the NDAA and get the word out http://belligerentact.org/. Not only is it a good summary of how TPTB are attempting to put a police state in place ahead of the increased rebellion they know is coming once a critical mass of the citizenry get a handle on just how badly they have been systematically looted by the crony capitalist mafia, but it also allows you to put a “Belligerent Act” banner at the top of your website as a sign of support and means of getting the word out.

Owe The IRS? Bill Would Suspend Passport Rights For Delinquent Taxpayers

I want to end with a very short but very telling article regarding the potential loss of travel privledges at the hands of the IRS. Here are some key quotes:

A bill authored by a Southland lawmaker that could potentially allow the federal government to prevent any Americans who owe back taxes from traveling outside the U.S. is one step closer to becoming law. Senate Bill 1813 was introduced back in November by Senator Barbara Boxer (D-Los Angeles) to “reauthorize Federal-aid highway and highway safety construction programs, and for other purposes”.

However, there does not appear to be any specific language requiring a taxpayer to be charged with tax evasion or any other crime in order to have their passport revoked or limited — only that a notice of lien or levy has been filed by the IRS.

http://losangeles.cbslocal.com/2012/04/04/owe-the-irs-bill-would-suspend-passport-travel-rights-for-delinquent-taxpayers/

Hmmmm, interesting isn’t it. You don’t need to be charged! All that needs to happen is a notice filed. Just like the NDAA allows the government to imprison you without a trial. Just like the recent executive order Obama signed that allows him to take over the entire economy in any “emergency” whether in peacetime or war. The bottom line is this. This sort of legislation doesn’t happen ahead of an economic recovery. It happens ahead of a collapse. 

 Welcome to the recovery!