QE to INFINITY! Ben Bernanke = Buzz Lightyear with a printing press!!!
Here's what I said in June: There Will Be No Taper
Just for the record, Zerohedge was adamant for months that there would definitely be a taper. Let me just say - even though they refuse to publish my work - that they do a great job reporting news, and especially hard to dig out news, but their analytic work functions on a grade school level.
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/images/sp_en_6.gif)
"Surprise,surprise,surprise". "Shazam" "Gollee"
ReplyDeleteGomer Pyle, Next fed chairman.
All about the debt ceiling.....we are not going to get an announcement
ReplyDeleteabout it....it will just happen. Those waiting for a bell will be hurt the most. They HAVE to taper if they let the debt issue go past Oct. 15th. That they don't even perceive a need to start backing off is the tell.
There is no choice. They r running out of things to buy but that is not entire issue.......the system (primary dealers, hedge funds etc) has run out of non-performing assets to off-load to FED, they have plenty of the crap to sell just not at what they perceive as a fair-price. If you can show something levered at 50-60x and produce a statement that shows (and really thats all it is, just a statement)cash flow-think MERS- you as an entity are less willing to give those things up because its the only thing standing between you and insolvency.
They don't have to taper *ever*. And how will tapering help anyway? This ridiculous notion of tapering contemplates only SLOWING THE PACE of purchases. Not reversing them. So the debt would continue to grow.
Delete"They r running out of things to buy"
That's just funny. There's plenty of crap assets on bank balance sheets, and make no mistake: QE is nothing more than a bailout of the big banks via Fed purchases of exactly those assets. If they decide to bail the banks out of the *really* nasty stuff, there's enough to keep buying until the Second Coming of Christ.
"If you can show something levered at 50-60x... If you can show something levered at 50-60x"
Even more conventional, thoroughly in-the-box thinking: you appear to be assuming QE purchases occur at market rates. Pshhhhhhhaw! Hope your box is well insulated, lol.
Actually Michael, I hope you weren't smoking the Zerohedge argument for why the Fed would taper. As I stated in my post ZH does fine job posting good news items, but they're analysis sucks raw ass. It's horrible. They were pimping the "must taper" mantra for months on the theory that the Fed is running out of Treasuries to buy.
DeleteHuh? WTF? Last time I looked the Fed owned about $2 trillion in Treasuries: http://www.federalreserve.gov/releases/h41/current/
Also, last time I looked, foreigners owned about 4.5 billion, of which China and Japan own over $2 trillion. There's another 2-4.5 billion in QE buying at some point.
But that's not the point, as Brian says, the Fed has all kinds of "assets" it can buy. "Assets" = the balance sheet holdings of the TBTF banks that are offset by an even greater amount of liabilities on the TBTF balance sheets. And as he says, the Fed is buying a lot of that mortgage shit at god knows how far above market. We don't know because the Fed is very opaque about that.
Finally, I suspect that sooner rather than later, the Fed will roll out "unconventional" asset buying, just like ECB did a few years ago. We're talking CDO paper, munis, auto receivables, etc.
It's just a matter of time
Remember: The QE program is first and foremost about keeping the banks from going insolvent, like they did briefly in 2008
Agreed! Like your commentary. Found your blog earlier this year courtesy of Jesse, and I like the fact that you don't mince words. LOL! Growing tired of the closeted intellectuals over at Naked Capitalism who keep bantering about MMT in the land of Utopia. Looking for more relevant conversation concerning gold, because there's obviously a lot more going on that what they're telling us. The fraud in the financial system continues to amaze me, and the manipulation of the gold market amazes me even more.
Delete@Dave Exactly, while I thought the analysis from ZH interesting enough to add it to my thinking, I never was convinced that it was more important than the supply of treasuries being unloaded by foreign investors/CBs. The world is swimming in USTs and without the Fed to soak them up rates would skyrocket from here.
DeleteWe'll get a short-term bounce in bond prices and then the trend will resume as I expect Congress to blink on the debt ceiling and the budget deficit to continue to explode.
It's all about the Fed saving the bond market from higher rates.... which is far more of an acute worry than the % of the issuance owned by the Fed.
the two of you certainly know how to cherry pick and not getting the point of what I was saying....thats ok.
DeleteWhat I said is that the system is running out of crap non-performing assets and is unwilling to surrender the ones they perceive as having some value.
Zero hedge doesn't get this either.....
It only becomes a problem if the debt ceiling is breached and is allowed to become the issue du jour.
What I said had nothing to do about treasury's and I never even mentioned that.
"Remember: The QE program is first and foremost about keeping the banks from going insolvent, like they did briefly in 2008"
Ha.....too funny...they were all insolvent as early as 2003 and I know you know that.
It is all part of a script that none of you, including myself, know the outcome of.
"unknown" certainly an apt title for what you think you know.
This news was all about boosting the stock market and creating utopia to cause mortagae rates to come down. Any drug on the black market can produce the same results.
ReplyDeleteWe keep seeing the same sh*t day in and day out and I'm getting a bit impatience. Gold and Silver haven't climbed but stagnated. I'm not willing to sell out but I'm getting impatience at the games being played in US Economics right now. Perhaps more time to prepare but the bigger this gets, the worse it'll be - even for us.
Yes , at first it will suck out for everyone if it keeps getting bigger. Everything will nose dive ...BUT if you are holding physical gold and silver and stay put you will see a resurgence in the metal prices like never before.
DeleteConsider it to that of a tsunami.
"Thus it is understood that the Fed no longer controls anything and that the effects of its subsequent announcement only serve to make believe that it still controls the situation. Anyway, QE3 is of no help at all to the real economy because it only supports the formation of a bubble in the financial and real estate markets, which is why it doesn’t balk too much at reducing it by disguising it as a consequence of a so-called consolidation of the economy. Everything is only a matter of image, the only thing that the Fed still succeeds in keeping at the moment.
ReplyDeleteIn reality, it doesn’t really have a choice: in addition to its balance sheet which is growing dangerously, the general opinion now is that the cure is worse than the disease by constantly deferring the confrontation with reality and the bursting of the above-mentioned bubbles. Not to mention, of course, the political pressure undoubtedly exercised by China and other countries. In addition, the Fed must, above all, preserve the Dollar’s international role, which is vital to the American economy which wouldn’t emerge unscathed from a change in the international reserve currency: in particular, that requires maintaining its value and, for that, increasing US bonds’ attractiveness. Thus, it’s remarkable to note that despite the rumours of a tapering from September (6) which would reduce the amount of dollars printed every month, despite the rumours of a war in Syria which would have usually caused a “flight to the dollar”, the dollar hasn’t risen against the Euro, proof that it really needs a boost to avoid an extremely damaging sharp depreciation. We will return to the absence of a “flight to safety” caused by the risk of an attack on Syria, a tell-tale sign of a worrying change of mind for the United States. This loss of control over interest rates is the second spark close to the powder keg, a huge spark which looks more like a blow torch.
The next Cyprus will be American
But it’s not only government bonds that are in freefall. Following Detroit’s bankruptcy, the Munibond market (US municipal bonds) is itself also extremely tense (7) as the following chart shows.
This is an alarming situation for many American cities which will inevitably lead to other significant bankruptcies in the coming months. In separating municipal and national debts, better numbers are shown certainly, but the risks are doubled."
http://www.leap2020.eu/GEAB-N-77-is-available-Finance-the-economy-politics-and-the-world-situation-at-the-end-of-2013-3-sparks-and-a-powder_a14656.html
http://www.ftense.com/2013/07/ernest-hemingway-was-once-asked-how-it.html
ReplyDeleteI HOPE the Federal Government shuts down this time cause it'll send a message and shock waves through the country and the Global Community!
I love that quote. I've used it a few times on here.
DeleteI find the decision by the FED not to taper a surprising one. They have been telegraphing their taper intentions for many months now. Beyond today's surprise, doesn't the FED also run the risk (and it's hard to say this with a straight face) of losing credibility? (they say one thing but do the other).
ReplyDeleteIs the economy really so lousy and does the decision not to taper in effect amount to an increase in stimulus, at least as far as the markets are concerned?
CIA Informant at HSBC
ReplyDeleteGovernment regulations are over the top, especially in the banking sector. Banks try their best to work around these regulations, which make it difficult for black market drug dealers to use the banking system. It's also difficult via the banking sector to support organizations you believe in that are perceived by the USG as enemies. Apparently some employees at HSBC developed a workaround to enable these transactions to go through. This all worked fine until a wannabe James Bond joined the bank. Luke Rudkowski interviews the character.
http://www.economicpolicyjournal.com/2013/09/cia-informant-at-hsbc.html
they're=their="grade school level"
ReplyDeletenitpicking someone who does a lot of writing and publishing everyday on an occassional typo = the kind of person who got a lot of spitballs in the back of the head from me in grade school.
DeleteNitpicking
DeleteAdd to the long list of what the Fed can buy in future QE the $1 trillion+ of student loans out there.
ReplyDeleteGood point.
DeleteJohn, If we learned anything from today it is that the Fed will buy whatever it has to to keep the system from imploding. I think the point lost on ZH's analysis is that QE can easily morph from bond buying to stocks/agencies/munis/mortgages/consumer loans/etc.
DeleteIt will also come in the form of bail-ins and not just commercial savings accounts but brokerage/retirement accounts as well. The bond market will be bailed out regardless of what anyone says.
That's what QE to infinity truly means.
Thanks Aaron. Jesse is friend of mine and he's a great write/analyst, although he and I definitely have different styles of presenting our thoughts.
ReplyDeleteI got really burned on crafting fancy, dense prose as an English major in college.
Yes, ZeroHedge was banging on for months about a taper,could not have made a worse call. Dont know how they could have got it so wrong. If they had said- there will be a taper used as a short term bluff - I could forgive them but to insist that there MUST be a taper is bordering on suspicious for a site like that!? It never made sense to me so I ignored their analysis entirely on the taper.
ReplyDeleteYes indeed Dave,it was pure Fed jaw boning.They know, the BIG topic and most under covered by US generic media is the reckoning of the Debt limit,pure and simple.Was destined to be the whole time.We live in interesting times! Congrats-good call.
ReplyDeleteAaron, I suggest your reading Koos Jansen's, SRSRocco's and Alasdair Macleod's blogs if you want more in-depth info on gold. Dave specialises in analysing the fixed income market and macro issues.
ReplyDeleteThe household debt to GDP in Canada has now risen to over 95%.
ReplyDeleteCanada's Housing Bubble Creates Deja Vu For Those Looking In
http://www.ftense.com/
Can you say "B-O-O-M!!!!"
Marc Faber on higher education & protecting yourself in the coming economic collapse.
ReplyDeletehttp://www.youtube.com/watch?list=PLONC-N9USUpqo2x5rvsEqjvabrxoPml8A&v=F-hTffVyB9U
Hua Xia Bank introduces five gold and silver coin ATMs in Beijing
ReplyDeletePeople in Beijing can now buy gold or silver coins at ATMs after the Beijing-based Hua Xia Bank introduced five of the machines earlier this month, according to Hong Kong's We Wei Po.
The bank installed the five machines at its branches across the city in Xidan, Fangzhuang, Zhongguancun, Dongdan and on Qingnian Road.
The ATMs look like ordinary teller machines but have an additional compartment to dispense the gold and silver coins. The machines currently offer panda souvenir gold or silver coins and Year of the Snake silver coin and plate sets.
A single 1-oz panda silver coin priced at 268 yuan (US$40) is the cheapest item available, while the panda gold coin set is the most expensive at 23,800 yuan (US$3,800).
Buyers can purchase the coins using their bank cards. After they place their orders using the machine's touchscreen, their payments are verified through bank card organization China UnionPay and they can pick up their purchased items through the opening on the lower part of the machine.
http://www.wantchinatimes.com/news-subclass-cnt.aspx?id=20130919000003&cid=1206
Dave,
ReplyDeleteJim Rogers (whose opinion I respect) was just interviewed by Lauren Lyster on YahooFinance where he says it is likely that gold will go down several hundred dollars over the next few years (see below). Shouldn't we be seeing an INCREASE in gold given that we did have the correction AND because it is increasingly obvious that it is QEforever now?
http://finance.yahoo.com/blogs/daily-ticker/gold-rallies-fed-taper-delay-jim-rogers-forecasts-124054059.html
LOL. You think Rogers is going to tell you what he really thinks about gold?
ReplyDeleteI remember in like 2003, when gold was getting ready to bust through $400, Rogers was promoting silver but said gold would go back to $200.
Don't forget, he's an insider elitist - he's part of The Club - and I have that on the good word from someone who knows - in fact, I saw the email sent to this someone explaining why - from someone who knows Rogers - that Rogers won't admit that gold is manipulated. "He likes being part of 'The Club.'"
If you're worried, sell your gold. I can't hold anyone's hand.
FYI - did Rogers ever explain - with fundamental-based reasons - why gold would drop in price from here? I didnt' hear any...
I am not worried, as I never planned on selling Just wanted your take on Rogers an you explained it well. Thanks for the excellent discourse on what's going on.
Deleteyes, you were correct. but even someone with zero knowledge of economic matters would have a 50/50 chance of making correct call.
ReplyDeletetaper or no taper?