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Thursday, January 3, 2013

FG Interpretation for Laymen and Dunderheads on the Dec. FOMC Meeting Minutes

Tonight after hours, with no other trigger than the Federal Open Market Committee meeting minutes from the Dec meeting, worldwide currencies and metals are getting crushed. Gold is off 26 dollars and silver is off 4%.

So I read the minutes myself. If you want the same kind of pain, have a ball- here's the link.

In a nutshell, markets are reacting to the statements of members with regard to withdrawing QEternity. This is the 85 billion dollar a month fiscal stimulus program that they are currently engaged in. It is addressed near the bottom of the minutes.

Members think the economy is doing far better than it actually is. Some of these members are discussing the possibility of stopping QE as the economy gets stronger. I want you to remember something. The FOMC has the same problem the rest of us do. They are relying on doctored numbers from the Bureau of Labor Statistics or BLS and they have no way of gauging numbers looking forward. In short, sans the doctorate degrees their blue blood families bought them...

Their opinion is not much better than ours.

In other words, they use the same crappy information we do. They may get that information a little sooner than the rest of us- but the stark reality is- is that it's the same garbage in- garbage out- numbers for all of us.

We have something they don't have. Truth. We see truth all around us. We are not beholden to some Reserve Chairman who is experimenting and thus trying to defend his collegiate thesis that giving trillions to banks will avert a depression. Many of us think Dr. Bernanke is wrong.

This is a guy with perfect SAT scores. He's a genius by any measure we have. So how could a guy like me, a run of the mill Joe with half a brain argue with a full brained guy like Ben?

Because I have truth and history on my side. And one of those truths is rather simple. There is nobody willing to buy American debt or treasuries. Not on the scale we are selling. Think about this for a moment.

The US has to refinance 4 trillion dollars in debt this year. Who in the fuck has 4 extra trillion laying around to buy treasuries from a bankrupt government paying 2 or 3% interest? Who has 4 trillion period?  

The answer- only China. And their purchases are going the other way. In fact- there is nobody other than the Fed to monetize our debt because here is the other simple truth.

We have more debt than the rest of the world can swallow even if they wanted to. That gap will only get larger. Remember- most of that world has debt issues of their own. And the first thing you do with your excess capital if you have any- is you have to use it on your own solvency. Except in the EU. There the member countries waste their money bailing out other countries like Greece, Spain, and Italy.

There is not a chance in hell that the Fed will quit monetizing the debt. They have to. If they don't- the US would suffer its first failed treasury auction and then the financial world would collapse. So they can talk all the shit they want to in their meetings to try and drive other currencies and metals into the ground. Pretend everything is hunky dory when it's not. We have a horrible, horrible problem and nobody wants to talk about it. The truth is, we are bankrupt. Completely fucking insolvent with an absolute tsunami of Social Security, Medicare/Medicaid, Obamacare, a one trillion dollar student debt tidal wave, a few other debts, all coming due at the same time.

And nobody has enough money to lend us. So we are doing it ourselves.

What do we put up for collateral when people buy our debt? Nothing. The Fed has guaranteed payment only by promising the labor of U.S. citizens and their ability to tax and confiscate the proceeds of our labor. That is the Feds promise to the world. A signature loan.

So the lemmings who think that there is some shred of integrity left in the Fed and their statements about our "improving" economy are unloading positions tonight. Not me. This is the endgame. I know it and a few others know it.

I dare them to stop QE. Go ahead. Please. Our robust economy is about to ignite. They've been spouting that garbage for 5 years.

Unfortunately, the world's bankers are going to do everything within their power to survive and pretend that the inevitable cannot happen. It can and it will. It doesn't take a doctorate degree to understand that this has been the history of every great republic and fiat currency system since the dawn of time. They all fail. With or without men with perfect SAT scores.

Here is the current 4 billion dollar a day deficit burn. We are already 30 billion above the limit.


Anonymous said...

People believe what they have to believe, when they have to believe it most.

Anonymous said...

When is the bond market going to say enough already?