Saturday, May 11, 2013

And Yet, Another Big Joke: Fed QE Tapering? Riiiiight

The Fed is thinking about cutting back on QE like I think about becoming a scratch golfer.  I do think about it.  - FACOD - Friend and colleague of Dave, who plays a lot of golf but has no hope of ever becoming even close to a scratch golfer
The Fed is now serving up rainbows, unicorns and fairy tales.  And that mindless, moronic mouthpiece of Federal Reserve intentional deceit, Jon Hilsenrath,  is more than happy to put it all in print. Our system, especially as it operates in NYC and DC has become analogous to one big New City street shell game.  Keep your eye on the ball, NOT where they want you to think the ball is so that they can fleece you of your money.

So the rumor of the Hilsenrath article about Fed QE "tapering," curiously released 20 minutes after the Comex close Thursday in order to enable the paper gold market manipulators dump a lot of paper in one of the most illiquid trading periods for paper gold in any given 24 hour period, finally hit the tape Friday afternoon.

The timing of a late day Friday release, after the stock and bond markets had closed for the weekend, is curious as well.  I'll let the readers decide why.

Having said that, I know for a fact that the Fed will not be "tapering" anytime soon.  I know a bank executive who recently met with Fed staff in DC.  To a man they admitted to this person that no one - as in "nobody" - at the Fed has any clue whatsoever how Bernanke and the Fed can possibly even begin to extract itself from QE, let alone start unloading it's massive $3 trillion portfolio of Treasuries, mortgages and insidiously toxic assets.

But why do we need inside word on that?  Play the tape forward.  Think about what happens if the Fed tries to stop, or even reduce, its rate of bond buying.  In the first 7 months of its fiscal year, the Government ran up  a deficit of $700 billion, or $100 billion per month. This includes a tax revenue windfall in December from asset selling ahead of the new tax laws that kicked in Jan 1 and it includes the big jump in tax revenues associated with the timing of tax deadline filings.  And the economy was not quite in decline, like it is now.

So with all the stars aligned, the Government was still running a $100 billion a month deficit, requiring about $80-$90 billion per month in new Treasury issuance.  The Fed was buying more than $45 billion - or more than half of this new issuance - because it is also rolling cash flow from interest into more purchases.  I'll leave it to your imaginations to decide what happens if the Fed pulls back on its Treasury purchases, but keep in mind that the economy is tanking and corporate taxable income and worker wages are in decline - all of which means lower tax revenues than planned.

How about mortgages?  See previous posts this week for my view on that.  But keep in mind that the housing market is starting to soften in most areas and the "organic," buy a home and live in it purchasers, are having to resort to using - more often than not now - subprime quality FHA financing.  That paper, my friends, is being bought by the Fed and is guaranteed by you and me.

One more point:  how quickly we all forget that just last week the FOMC issued a statement which implied that it stands ready to lower interest rates if necessary.  I guess that moron Hilsenrath doesn't get that particular information feed from his Fed source.  

Sure the Fed can start "tapering" QE, but it would also have to be willing to live with the consequences.  We know Bernanke isn't willing to live with the consequences of what he's done, which is why he's leaving in January.  And there isn't a politician alive - except may Ron Paul - who is willing to live with consequences of the Fed reducing QE.  Even more catastrophic, the Fed itself has no clue how it will unwind QE.  Keep your eye on that little red ball - not the criminal hands moving the shells around in a manner designed to rob you of your money.


  1. Dave I would say that the FED knows EXACTLY how it's going to unwind QE, but can never admit it, as it would cause the collapse prematurely.

    They might not want to do it Bernanke's watch, as he's been a GREAT CEO for the primary shareholders, and should really be bonused out nicely.

    As a board member of the BIS you have completely diplomatic immunity, pay no taxes for anything ever, and are literally above the law as long as the current law is dictated by the current system.

    He is a made man.

  2. The prevailing and erroneous assumption regarding the Fed and the US government itself is that their intentions are benign and thus are attempting to accomodate fiscal and monetary policy which is intended for the good of our economic and thus our social order. Basing our own understanding of the roots and origins of our significant economic malaise upon such misplaced presumptions is proving fatal for most Americans.

    Of course the mainstream corporate owned media is complicit in disseminating and approving these fictions. The increasingly irrational pronouncements emanating from the economic and political corridors of power and mindlessly parroted by the shills inhabiting the TV idiot box and radio waves are, rightly construed, shameless and bald faced lies attempting to elicit the unwavering confidence of the majority of the blind and unthinking citizenry in their own destruction.

    Fortunately and mostly due to the incessant efforts of blogs such as this, personal efforts can still be undertaken to prepare for the economic collapse and societal anarchy which is being incrementally engineered by the oligarchs and plutocrats who are openly plundering not only the sovereign treasuries but also pillaging the savings and assets of individuals.

    Wake up people. The wolf is at the door.

    1. Damn right the wolf is at the door. After reading this you will ask yourself where you want your bar code tattoed. As far as I'm concerned the Fed's can put that bar code tattoo on my ass, after they kiss it!

    2. In Time

  3. More clues about what happened in the April gold swoon.

  4. Dave, how about this possibility? The Fed continues QE and then resorts to Operation Twist 3.0. when it has enough short-term notes. Since the Fed fully controls the front-end, it only needs to absorb the long end issues. What I mean is: the Fed uses Outright QE and Operation Twist alternately.
    By the way, you really should run for president. Ron Paul has retired. We really need somebody steadfast to replace him.

    1. Dave, Do not run for President, with your views and intentions of reforming govenment you would be heart attacked.

    2. There is _ZERO_ chance any significant change coming from the political process when a citizenry is so ignorant, apathetic, and so successfully propagandized and when the political process itself has devolved into nothing more than a machine to maintain the status quo for a two party duopoly of corporate owned pols.

      Political change may only come after a massive economic crisis that gets Joe and Jane Sixpack off of the sofa and away from the idiot box (the end of the games and circuses). However, at that point, the abject ignorance of the citizenry might very well lead to the rise of some charismatic and talented public speaker who offers easy (but incorrect) answers, perhaps this time one without a funny mustache.

      "If a nation expects to be ignorant and free in a state of civilization, it expects what never was and never will be."
      --Thomas Jefferson to Charles Yancey, 1816.

    3. Russia's Plan For The BRICS To Dismantle The Dollar System

      A whole chapter of the strategy document is dedicated to step-by-step instructions on dismantling the existing global financial system. The list of measures includes:

      Reformation of the world currency system in order to create a representative, stable and predictable system of world reserve currencies;
      Reduction of the risks of destabilization of currency and equity markets linked to massive cross-border flows of capital;
      Increasing the use of national currencies in the trade between BRICS countries;
      Increasing the level of cooperation between BRICS countries in order to promote their interest in the domain of world trade;
      Strengthening the BRICS Exchange Alliance;
      Creating independent rating agencies.

      Since the Durban Summit, at least one of those measures has been implemented: RT reported that “China’s Dagong Global Credit Rating agency is to set up the joint venture with US-based Egan-Jones Ratings Co (EJR) and Russia's RusRating JSC to challenge the three major US ratings agencies.” As BRICS countries try to achieve the rest of their stated goals, it remains to be seen if the dollar system survives the joint onslaught of the biggest emerging economies.

      never say never....

  5. yes I agree, good post.

    I like the guy from who has awesome calls on the market. The market is rigged, and will go higher.

    the fed have their own special way dont they, of what? of going and getting everyone paniked thinking the market will crash, only to come out 24 hours later wish some magic trick or new name, and we are all saved.

    This is all become too predictable now hey!

  6. "The disinformation campaign will be complete when everything the American public believes is false" William Casey. ex CIA Director. I'm thinking we're almost there.


  7. HK man caught smuggling 4kg gold to China in his shoes

    A Hong Kong resident was caught trying to enter mainland China with four kilograms of gold bars in his shoes, reports Guangdong-based news portal Southern Metropolis Daily.

    The man wearing sports shoes and carrying a duffel bag was stopped by customs officials at the Lo Wu Control Point, where Hong Kong crosses over into Shenzhen, and was later discovered to be hiding 4kg of gold bars in his shoes with a total value of 1.2 million yuan (US$195,000)— the control point's biggest discovery this year.

    Chinese laws stipulate under ordinary circumstances, any amount over 50 grams of gold must be declared, with excessive amounts subjected to domestic tax laws.

    The smuggler is said to have been trying to take advantage of the recent drop in gold prices, which has sparked a buying frenzy in Hong Kong from April 15. According to Hong Kong government figures, the number of visitors from the mainland during this year's May 1 Labor Day holiday increased by over 15% from the previous year to 394,000 people. Although the number of visitors from other locations fell by 7.8%, the total number of visitors to Hong Kong still rose by 9.5% for the period.

    Peter Lam, chairman of the Hong Kong Tourism Board, said this year's influx of mainland visitors during the break was fueled by gold purchases. Hong Kong jewelry chain Chow Sang Sang has confirmed that it is experiencing gold shortages after reporting sales increases across all stores by at least 10%, the Southern Metropolis Daily said.

  8. Dowa Boosts Silver Output for Japan Post-Quake Solar Demand

    Dowa Holdings Co. (5714), Japan’s biggest silver producer, will raise output 40 percent this year to meet solar-cell demand after the 2011 Fukushima disaster crippled a nuclear power plant and sent fossil fuel costs higher.

    The Tokyo-based company plans to produce 500 metric tons of silver in the year that began April 1 from 357 tons in the previous year, said Hiromitsu Takagi, manager of the strategic planning and public relations department at Dowa Holdings. That would be the most since 2006, the company said.

    Dowa Electronics Materials Co., a unit of Dowa Holdings, is the largest global supplier of silver powder for solar cells and expanded output capacity 38 percent to 110 tons a month in 2011, Takagi said. Global demand for silver powder will increase to 3,900 tons in 2014, a 44 percent jump from 2010, according to management consultant Fuji Chimera Research Institute Inc.

  9. "Keep your eye on that little red ball - not the criminal hands moving the shells around in a manner designed to rob you of your money."
    Speaking of robbing your money...just saw a e-commercial showing a babysitter gladly accepting an iphone payment using Chase bank. It wouldn't be so strange if not for how devious that this company has been proven to be. One can just imagine how the corporate are licking their chops devising ways to be controlling every facet of the masses finances, eventually enslaving them once there's no way out!


  10. Fed's rise to tyranny has no end in sight

    A country needs a constitution for the sole purpose to protect citizens against totalitarian government. Confiscating wealth of citizens via money inflation is totalitarian power. To protect against this power, the US Constitution entrusted congress with the authority to coin and regulate the value of money. The US Constitution sought to protect citizens against totalitarian power of government.

    The US Federal Reserve, founded in late 1913, acquired the power to create money. Its original purpose was modest; namely to provide an elastic money supply for the economy. Soon after, it monetized the US debt; it extended its powers to subsidize traders in capital markets, abolish the gold standard, and then to assume the mandate of full-employment of labor.

    Now it is the central planner of the economy with unlimited power to create money and manage all segments of the economy. It observes no rules. It bails out banks at the expense savers and workers. It is a tool of politicians seeking votes. Speculators in capital markets earn fortunes on Fed's cheap liquidity and the government relies on it to force near-zero interest rate and monetize monumental fiscal deficits.

    Through its negative real interest rate and money expansion it inflicted severe financial crises in the 1930s, 1970s, 1980s, and recently the 2008 financial crisis. It has impoverished masses of people and pushed food prices to forbidden levels - in 2013, close to 50 million US citizens live on food stamps. It caused trillions of dollars in fiscal deficits to cope with bailouts and welfare spending caused by the crisis.

  11. Presidents at Public Universities Make Millions as Tuition Soars

    The millionaires club include:

    Former Pennsylvania State University President Graham Spanier, who was fired as a result of a sex abuse scandal. His total compensation: $2.9 million.
    Auburn (AL) University President Jay Gogue: $2.54 million
    Ohio State University President E. Gordon Gee: $1.9 million
    Former George Mason (VA) President Alan Merten: $1.87 million

    Are these academics paid too much at a time when students not only are paying more for college but graduating without a job or at least a good-paying one?

    “It feels like a big disconnect,” says Michael Santoli, senior columnist for Yahoo! Finance. “I don’t know if this should be a focal point for why college costs are out of whack….but probably, along with health insurance, a big driver for why costs go up,” says Santoli, about the rising pay for public college presidents.

    reset the system already...