|Forget the market machinations utilized to put lipstick on yesterday’s FOMC pig, and the MSM’s brain-dead “take” on Fed policy. Forget the gold plunges and Dow surges, calls for an “end to QE,” and – conversely – its expansion to “INFINITY.” Instead, consider what the Fed has done – and ALL Central banks throughout history – what they are doing now, and what options they have for the future.Throughout the annuls of history, no fiat currency has ever survived – EVER. Moreover, in nearly all cases, 40 years has been the longest period before either a major devaluation or collapse has occurred. in fact, the vaunted United States has already lost two currencies, nearly three, and shortly the 41-year old post gold standard dollar. The U.S. Continental and Confederate Dollar were hyperinflated to pay for the Revolutionary War and the South’s Civil War costs, while Abraham Lincoln’s Greenback was within months of the same fate when the Civil War ended.
I don’t use the term “Ponzi Scheme” loosely, but that is EXACTLY what the Federal Reserve perpetrates. By definition, a Ponzi Scheme must endlessly GROW to remain viable, despite the fact that its infrastructure rapidly weakens. Once confidence in the fragile base breaks, the pyramid collapses. Which is what happened to EVERY fiat currency in history, and will shortly with the ENTIRE GLOBAL MONETARY SYSTEM, tethered at the hip to the “world’s reserve currency” – the U.S. dollar.
The title of this RANT relates to Bernanke’s “EMPTY SACK” of policy tools, having exhausted ALL but its “last ditch” DOOMSDAY weapon, which in many respects has already been deployed. Interest rates were lowered to ZERO three years ago, and even “comforting” the market by stating they will stay there until “at least late 2014” – or perhaps “late 2015,” per recent comments from Fed Vice Chair Janet Yellen – have done NOTHING to slow debt creation, unemployment, inflation, or the housing bust.
The Fed has also utilized a number of confusing MONEY PRINTING schemes – couched in confusing “Fedspeak” to obfuscate their meaning – including the “swap facility”, “Operation Twist”, and the ridiculous, oxymoronic “Sterilized QE.”
However, NONE of these policies have resolved the nation’s – or world’s – problems, which, conversely, have dramatically worsened. Economic data is collapsing – as are most financial markets – while global INFLATION has reached its highest level in decades, led by gasoline prices, currently at an ALL-TIME HIGH. Worse yet, the two nations home to nearly half the world’s population – China and India – have among the highest inflation rates, yielding fears of food shortage, gas rationing, and social unrest. The dollar-anchored fiat monetary system is the root cause, and until it is DESTROYED and REBOOTED with gold backing, the vicious circle of inflation, unemployment, and social instability will continue.
Yesterday’s FOMC statement resembled a “deer in headlights,” in my view. The Fed KNOWS its policies are failing, KNOWS the global economy is rolling over, and KNOWS inflation is so high, it cannot afford to overtly announce a new QE round. That’s why Bennie is praying for a market collapse, hoping with all his might that a late 2008 scenario will occur – plunging stock prices AND commodities, enabling his DOOMSDAY weapon to be deployed. However, methinks he won’t be so lucky this time.
In 2008 – and even 2011 – the Fed’s “SACK” was full of MONEY PRINTING REMEDIES, engendering TBTF bailouts and dramatic expansion of its own balance sheet – i.e., that of the TAXPAYING CITIZENS. This time, however, his sack is “EMPTY.” This is why the PAPER PM attacks have been so strong since last Fall’s Global Meltdown II – and conversely, the PPT’s maniacal support of the “DOW JONES PROPAGANDA AVERAGE.”
Bennie also KNOWS he cannot even remotely pretend QE might be discontinued – overtly, that is, as covert QE will NEVER stop. However, due to the aforementioned issues, the best he can muster is letting us know he’s “open-minded,” issuing the following, feeble, pathetic comments. But make no mistake, “more balance sheet actions” means MASSIVE, OVERT QE – and hence, exploding inflation – and nothing more.
As for “tools on the table,” he is bluffing. There are NONE, just an “EMPTY SACK,” and LIES, LIES, LIES…