The Calm Before The Storm

Have you noticed that things have gotten eerily quiet in the month of October?  After the chaos of late August and early September, many had anticipated that we would be dealing with a full-blown financial collapse by now, but instead we have entered a period of “dead calm” in which things have become exceedingly quiet in almost every way that you can possibly imagine.  Other “watchmen” that I highly respect have made the exact same observation.  Even though the economic numbers are screaming that we have entered a global recession, they aren’t really make any headline news.  A whole host of major financial institutions around the planet are currently in danger of collapsing and creating the next “Lehman Brothers moment”, but none of them has imploded just yet.  And of course Barack Obama seems bound and determined to start World War III.  On Monday, it was announced that he is sending a guided missile destroyer into Chinese waters in the South China Sea.  The Chinese have already stated that they might just start shooting if this happens, but Barack Obama doesn’t seem to care.  But until the shooting actually begins, that is not likely to upset the current tranquility that we are enjoying either. Continue reading

The Coming Public Debt Crisis

 

COMMENT: Hi Martin

I am a macro manager. I read your article on April 9th about Public/ private.

I agree it will happen but Commercial banks hold only a tiny part of the US Treasury as you will see from the graph attached. They will probably buy on the way up and China reserve growth is slowing making domestic buyers the prime target . There is scarcity of quality collateral with all new type of regulations (Dodd, Basel III etc..)

Thanks for your good work. Continue reading

One Last Look At The Real Economy Before It Implodes – Part 1

We are only two months into 2015, and it has already proven to be the most volatile year for the economic environment since 2008-2009. We have seen oil markets collapsing by about 50 percent in the span of a few months (just as the Federal Reserve announced the end of QE3, indicating fiat money was used to hide falling demand), the Baltic Dry Index losing 30 percent since the beginning of the year, the Swiss currency surprise, the Greeks threatening EU exit (and now Greek citizens threatening violent protests with the new four-month can-kicking deal), and the effects of the nine-month-long West Coast port strike not yet quantified. This is not just a fleeting expression of a negative first quarter; it is a sign of things to come. Continue reading

Sayonara Global Economy

“There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.”Ludwig von Mises

The surreal nature of this world as we enter 2015 feels like being trapped in a Fellini movie. The .1% party like it’s 1999, central bankers not only don’t take away the punch bowl – they spike it with 200% grain alcohol, the purveyors of propaganda in the mainstream media encourage the party to reach Caligula orgy levels, the captured political class and their government apparatchiks propagate manipulated and massaged economic data to convince the masses their standard of living isn’t really deteriorating, and the entire façade is supposedly validated by all-time highs in the stock market. It’s nothing but mass delusion perpetuated by the issuance of prodigious amounts of debt by central bankers around the globe. And nowhere has the obliteration of a currency through money printing been more flagrant than in the land of the setting sun – Japan. The leaders of this former economic juggernaut have chosen to commit hari-kari on behalf of the Japanese people, while enriching the elite, insiders, bankers, and their global banking co-conspirators. Continue reading

Top German body calls for QE blitz to avert deflation trap in Europe

Head of German Institute for Economic Research demands €60bn of bond purchases each month to halt contraction of credit and avert Japanese-style trap

A leading German institute has called for full-blown quantitative easing by the European Central Bank (ECB) to head off a deflation spiral, marking a radical shift in thinking among the German policy elites.

Marcel Fratzscher, head of the German Institute for Economic Research (DIW) in Berlin, demanded €60bn (£50bn) of bond purchases each month to halt the contraction of credit and avert a Japanese-style trap. Continue reading

QE3: Dollar Killer

Until recovery or destruction of the Dollar. As surely as the sky is blue, the latter will happen. QE3 is the nail in the coffin. When was the last time you borrowed your way out of debt?

If you really want to know what is going on in the economy, ignore what the Fed says and watch what it is does.

So what is the Fed doing? Bernanke’s announcement says the Fed will now spend a whopping $40 billion per month—$480 billion per year—purchasing mortgage-backed securities from the big Wall Street banks.

He says this is an effort to push down mortgage rates and get more people buying and building houses, and thus create jobs. If this is the best the Fed has to offer, America is in big trouble. Mortgage rates are already at historic lows, and people are not buying houses. Pushing record low rates a few fractions of a percent lower won’t do much. What is more likely to happen is that the big banks will finally have an opportunity to unload all their garbage subprime-mortgage-backed securities at the expense of taxpayers. This is probably the real unspoken motive.

But if that part of the Federal Reserve’s announcement wasn’t shocking enough, what it said next should blow your socks off. The Fed said it was writing itself a blank check for how much it could spend until the labor market improved “substantially.” It gave itself no predefined limit on how long, or on how much it could spend under this new QE3 program. It is completely open ended. It can go on forever.

Printing money to buy things is “Zimbabwe policy.” We all know what happened to Zimbabwe when it tried this. Eventually it cost Zimbabweans billions of dollars to buy a banana. This is where the QE road leads.

It is happening already. Within just a few hours of Bernanke’s statement, the dollar had lost over half a percent in value. On Friday it lost more than half a percent again.

In two days, the dollar lost more than a percent of its value. And that was due to just the announcement. The dollar printing has barely started.

The Federal Reserve’s QE policy will drive the dollar “through the floor,” says Peter Schiff, ceo of Euro Pacific Capital.

“This is a disastrous monetary policy; it’s kamikaze monetary policy,” Schiff told cbnc. “The dollar … is going to be in free fall at some point … ultimately there’s going to be a currency crisis.”

America needs to prepare for massive economic upheaval. America’s top banker has signaled that it is quantitative easing or sudden death for the economy. There is no choice. If the money printing stops, America stops. But that means the dollar is going to get killed. QE will destroy the dollar, and America’s standard of living.

Tough times are coming.

Full article: QE3: Dollar Killer (The Trumpet)