Dear CIGAs,
QE works and It will continue to work if you understand the tool and the target of the tool. All those that so righteously declare that QE does not work are dead wrong and making public jerks of themselves among those that know.
It works alright, but employment and general economic activity are not the primary focus of this tool. The primary focus of QE is to prevent bankruptcy in financial entities and countries so far. It will be used to prevent state and pension fund bankruptcies. That is fact, not conversation.
I am not speculating that this will occur. I am telling you there is no other tool and like QE to infinity, before anyone noticed it arrived, is now focused on countries. I know it, not think it.
Those that converse or write both inside and outside of our community declaring QE failed and will fail again demonstrate zero knowledge of monetary science. QE has worked as it is designed to work, and will continue to do so as it adds new targets to prevent bankruptcy. The impact of QE will be a colossal impact, but it is not what the writers who aim at sensationalism even know about.
There is nothing sensational here. It is as simply a one plus one equals two.
Bernanke has succeeded so far in saving the financial world from bankruptcy. Now Bernanke and Draghi are in the business of saving countries from bankruptcy. It will work and that is why the wild bears on the euro are wrong. It will work. That is why the wild bulls on the dollar are wrong. Even the cartoon below is wrong.
Main Street’s economy did not get the QE treatment but rather Western banks and financial entities got it instead. Study history or relive it. It looks right now like we will certainly relive it.
Currency induced cost push inflation will grab the entire Western world. I do not think it. I know it. That is a form of hyperinflation
Gold is going to $3500 and beyond. $1775 is a game that will eventually be won. $1775 is not a magnet point.
Jim,
I have a similar view on QE and the Euro.
In my view, the Euro is a grand experiment by the Banksters. It is a system devised to determine how a single currency can work for many different and diverse countries. As such, failure of the Euro model experiment would make a difficult case for the idea of a single world currency project.
A single world currency may be a proposed reset solution after the current fiat currency system defaults or is printed into oblivion.
The Euro will not fail. It is in the interests of all Central Banks that it not fail.
The Euro is indirectly supported by the world’s largest gold reserves.
As you say,” QE works and it will continue to work”, in order to, I believe, save the single currency experiment.
CIGA Bohdan
Dear Bohdan,
Your email is absolutely correct, and not at all appreciated inside or outside of our community. It deserves publication.
Thank you for saying something that I have not wanted to say.
Jim
Fed Confused Reality Doesn't Conform To Its Economic Models, Shocked Its Models Predict "Explosive Inflation
Below are several excerpts only the brains of those practicing the
world's most useless profession (and we are very generous with that
assessment) could possibly come up with, in attempting to explain the
shocking outcome of reality continuously refusing to comply with their
exhaustive and comprehensive Dynamic Stochastic General Equilibrium models.
- Given that policymakers seldom if ever experimented with forward
guidance this far in the future, there is little data to guide them. The
problem, however, is that these DSGE models appear to deliver
unreasonably large responses of key macroeconomic variables to central
bank announcements about future interest rates (a phenomenon we can call the "forward guidance puzzle")
But the absolute punchline you will never hear admitted or discussed anywhere else:
- Carlstrom et al.
show that the Smets and Wouters model would predict an explosive
inflation and output if the short-term interest rate were pegged at the
ZLB (Zero Lower Bound) between eight and nine quarters. This is an
unsettling fi nding given that the current horizon of forward guidance
by the FOMC is of at least eight quarters.
In short: the Fed's DSGE models fail when applied in real life, they
are unable to lead to the desired outcome and can't predict the outcome
that does occur, and furthermore there is no way to
test them except by enacting them in a way that consistently fails. But
the kicker: the Fed's own model predicts that if the Fed does what it
is currently doing, the result would be "explosive inflation."
Americans CAN be indefinitely detained – NDAA supported by court
from RTAmerica:
On Tuesday, a federal appeals court ruled that the US government can indefinitely detain anyone under the National Defense Authorization Act. This comes as a blow to the ruling that was given earlier this year, when US District Court Judge Catherine Forrest ruled that the NDAA was unconstitutional. So what does this mean for journalists and why was it overturned? Carl Mayer, attorney for The Mayer Law Group, joins us with the latest.
On Tuesday, a federal appeals court ruled that the US government can indefinitely detain anyone under the National Defense Authorization Act. This comes as a blow to the ruling that was given earlier this year, when US District Court Judge Catherine Forrest ruled that the NDAA was unconstitutional. So what does this mean for journalists and why was it overturned? Carl Mayer, attorney for The Mayer Law Group, joins us with the latest.
Hyperinflation Has Arrived In Iran
Since the U.S. and E.U. first enacted sanctions against Iran, in 2010, the value of the Iranian rial (IRR) has plummeted, imposing untold misery on the Iranian people.
When a currency collapses, you can be certain that other economic
metrics are moving in a negative direction, too. Indeed, using new data
from Iran’s foreign-exchange black market, we estimate that Iran’s monthly inflation rate has reached 69.6%. With a monthly inflation rate this high (over 50%), Iran is undoubtedly experiencing hyperinflation. The rial’s death spiral is wiping out the currency’s purchasing powerComplete Fed Failure: Retail Investors Pull Out Most From Domestic Equity Funds In Two Months
Just as we had suspected for months, Bernanke's attempt to herd cats and to drive retail investors into equities is now a complete and unmitigated catastrophe. According to just released ICI data, in the week ended September 26, the second full week after the announcement of QE3, retail investors pulled $5.1 billion from domestic equity funds, following a massive $4.8 billion outflow the week prior, and the most in 2 months. This is also the sixth largest weekly outflow in 2012 to date, a year in which over $100 billion has already been pulled from equity mutual funds. And since we now know that Bernanke's only motive for QE3 is to stimulate a wealth effect and to push everyone into the broken casino, where such trading farces as Kraft's flash smash today, as Knight Capital's implosion a month ago, and FaceBook's IPO, not to mention the virtually daily Flash Crash in at least one name, have killed every last shred of faith in equities, it can be safely said that QE3 has failed three short weeks after being launched. As to where the money did go: why taxable bonds of course - not even the "dumb money" is that dumb to go where the Fed tells it to, and instead merely does what the Fed does: it keeps on frontrunning the Fed's monetization of the US deficit, which is now going on for the 3rd year in a row. Eventually "this time may be different." But not yet.
Would you let the price of oil rise... before a presidential debate?...
Stocks Up, Bonds Up, USD Up, Gold Up; Oil Plungapalooza
It
wouldn't be the new normal markets if something freaky did not happen.
WTI crude was crushed lower (back under $88) and now down almost 10%
from pre-QEternity on supply build (totally ignoring the Iran and
Syria-Turkey SNAFUs). HPQ stunned investors back to reality and fell 13%
to nine-year lows. AAPL did it again - same 310ET time, same velocity
of liftathon - which dragged indices up off what could have been a red
close. Equities entirely disengaged from risk-assets soon after the US equity open this morning and never looked back
as Treasury yields pushed higher into the open and slid lower all day,
the USD rose quietly all day long, and gold drifted sideways to
modestly higher on the day. VIX limped lower on the day but on
the week stocks are up around 1%, Treasury yields down 1-2bps, USD
unchanged, and gold/silver marginally higher (with WTI -4.6%). Healthcare and Financials are up around 1.75% on the week with Materials and Energy down 0.6%. Gold and Stocks are recoupled.I'll bet this really scared them...
NATO Issues Statement On Syrian-Turkish Hostilities
The most recent shelling on 3 October 20l2, which caused the death of five Turkish citizens and injured many, constitutes a cause of greatest concern for, and is strongly condemned by all Allies.
In the spirit of indivisibility of security and solidarity deriving from the Washington Treaty, the Alliance continues to stand by Turkey and demands the immediate cessation of such aggressive acts against an Ally, and urges the Syrian regime to put an end to flagrant violations of international law.
Same Play - Different Act
Trader Dan at Trader Dan's Market Views - 13 minutes ago
Nothing much has changed since my last post which is why I have refrained
from posting any recent comments since this past weekend.
Gold is stuck below $1785 - $1800 and Silver is stuck below $35. Until
these respective resistance levels are convincingly cleared, the market is
going to sit here with the risk of the shorter-term oriented speculative
longs getting impatient and bailing out.
Thus far bears cannot break down either market but neither can the bulls
blow past the obvious overhead capping action. This week's COT report will
be informative in allowing us to see what kind of... more »
N.Y. attorney general expects more mortgage suits
Eric De Groot at Eric De Groot - 42 minutes ago
Lots of talk of litigation doesn't necessary mean change lies around the
next corner. Only when humans are standing at the precipice of their own
destruction do they embrace real change. Change is coming, but only after
significant economic, financial, and political turmoil. Headline: N.Y.
attorney general expects more mortgage suits 7:30PM EST October 2. 2012 -
The New...
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The Secret Deal Between the Democrats and Republicans To Control the Presidential Debates
NY Mass Transit Fares Will Rise 35% From 2007 To 2015, And Surge From There
While
Bernanke may see deflation here and there, and everywhere, don't tell
that to your average NYC commuter (or anyone else for that matter who
can't simply expense all non-core activities, such as living and
getting around to the taxpayer debit card), who has seen relentless fare
hikes by both the MTA and, recently, taxi cabs. But that is only the
beginning. While according to a report issued by the State Comptroller
Thomas DiNapoli total cost inflation between 2007 and 2015 will hit at
least 35%, it is after 2015 that things get really aggressive. According to Reuters, New York's Metropolitan Transportation Authority will need at
least $20 billion from 2015 to 2019 to keep its system in good repair,
but the mass transit operator has yet to figure out how to pay for
these upgrades, a report said on Tuesday. (For those unaware
the MTA, the largest U.S. mass transit system, runs New York's buses,
subways, commuter railroads and some major bridges and tunnels). As for
how the MTA will fund its massive CapEx spending here is the simple
answer: it will request, some time in 2015, that then president Barack
Obama bail it out, to which he will promptly comply. After all, with
total US debt crossing $23 trillion shortly thereafter, who will care
about some paltry $20 or even $200 billion (as the number will
eventually be revised to).Point Out The Auto Sales Recovery In These Charts
It seemed yesterday's channel-stuffed and hope-ridden car-maker data in the US was seen by some as evidence that we are right back on track. However, ever ready to separate the reality from the fantasy, we offer the following charts, via Barclays' Julian Callow, that vividly illustrate the rapid decline in the pace of auto registrations (the actual end-users that is) over the past year. In particular, Callow notes, the pace of seasonally-adjusted auto registrations in Q3 for the four largest European countries was the weakest in the series history (back to 1995).
Wake Up America, We Are Being Distracted From the Real Issues by MSM Lackeys
10/03/2012 - 17:10
Dumb bankers love government bailouts. So do Keynesians. Dumb bankers
abhor negative economic feedback for stupid decisions. So do
Keynesians. Dumb bankers love monetary inflation that leads to banking
profits. So do Keynesians. Dumb bankers love national governments large
enough to bail out large banks. So do Keynesians. Dumb bankers hate bank
runs. So do Keynesians. Dumb bankers want tenure without personal
liability. So do Keynesians.
This past Sunday, I had the privilege to once again talk to Dr. Dave
Janda about the most pressing economic, social and political issues
facing our nation (and the world) four years after the bankster coup of
2008. I am certain you will enjoy!
The Monsanto company has forged a new partnership with Alnylam
Pharmaceuticals, Inc., a biopharmaceutical company whose primary focus
seems to be on figuring out how to best crack the genetic code so as to
manipulate the way genes inherently express themselves. And based on the
agreement the two companies have made publicly with one another, it
appears as though Monsanto is planning to utilize Alnylam’s proprietary
gene-silencing technologies in its emerging agricultural pursuits, which
will likely spawn a whole new category of problems for humanity and the
planet at large.
2,362 Americans in households with $1 million or more in annual income
received unemployment insurance in 2009, according to a recent report
published by the nonpartisan Congressional Research Service. Lawmakers
like Oklahoma Republican Senator Tom Coburn are attempting to cease this
practice of awarding millionaires Unemployment Insurance, potentially
jealous of the kickback lifestyle Uncle Sam is providing the decaying
nation. Bills have been introduced in Washington, though none have been
part of legislation aimed at extending unemployment benefits, which one
can now receive for up to 99 weeks.
Nobody ever said mining was easy – all kinds of things can, and
probably will, go wrong with an operating mine. And the world’s top 10
gold miners, despite their years of mine-building expertise, are no
exception, with most of them experiencing significant difficulties with
one aspect or another of their operations over the past year or so.
Indeed they have, as a group, come in for a significant amount of flak
over their poor stock price performances vis a vis the gold price. In
part this is because of a perception that ever rising production costs
are eating into the profit potential generated by high gold prices, but,
in truth, most of them have seen other factors coming into play which
have also led to sometimes significant underperformance against the
metal price – and even against their own past growth patterns.
The roots of the LIBOR crisis can be found in the broad based sub-prime
FRAUD in America circa 2000 – 2007. The sub-prime fraud involved
American investment banks securitizing [bundling] poor mortgage credits
into “pools” – then working hand-in-hand with credit rating agencies
like S & P and Moodys – having these pooled securities rated AAA.
Monsanto, Bill Gates, the Rockefellers, Craig Venter and other
investors are working behind-the-scenes to bring genetically engineered
(GE) algae to market with products that include fuel, animal feed made
with manure, human food and vaccines.
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