Perpetual QE foreva!

QE3 was announced yesterday, right on schedule.  This more than likely will give the stock market enough steam to keep it from topping out, and having a serious market correction before the November election.  The fact that Bernanke announced QE3 while the S&P 500 was at multi-year highs shows that i)they knew something bad would happen if they didn't do it right now, and ii)this is an extremely political move to help his friend Obama look good.  

Gold and silver moved sharply higher off of multi-month lows a couple weeks ago, both breaking through multi-month descending trend lines.  This IS the next big move in Gold and Silver.  The last year has given all of us plenty of time to accumulate the physical metal cheaply, and or move more assets into physical metal.  This time silver will go through $50, and Gold through $2000.  They have just announced perpetual QE forever!  The Fed said they will continue to buy mortgage backed securities until things look like they are improving.  Well I've got some news for ya, their zero interest policy now through 2015 is exactly what is killing the economy!  So things are virtually guaranteed to never get better!  I am still sticking to my guns that next year will be a horrible year for the economy, the stock market, and our freedom.  Eventually the stock market will not increase on new rounds of money printing, and this stock rally will not be as much as the last two doses of QE.  Each new round has had less and less of an effect, until it has none at all, and then the game is pretty much over.  

What this means is extreme dollar devaluation, higher prices(oil has already spiked), and a large shift to inflation-hedging assets.  These are the last stages of a collapsing empire, almost textbook historically.  It is very easy to see where things go from here, if you are willing to open your eyes and see it.  I wish everyone good luck.

This article below is just a warning as to how your investments are treated today in a big financial firm.  If you keep a lot of money with a big financial firm, and that firm files for bankruptcy, do not expect to get a penny back.  They do not keep client funds segregated anymore, and they WILL use your account money as collateral in bankruptcy court to pay off their debts and expenses.  This has happened twice now with very large firms, MF Global(billion dollar plus) and Peregrine Financial(multi hundred million).  This is another reason I push precious metals so hard, if you don't hold your asset in your hand, you do not own it!  This also goes to those who keep their precious metals in safety deposit boxes.  When this whole thing comes crashing down, and you need your gold and silver the most, the banks will be closed!  It is called a bank holiday, and it could last from weeks to months.  It happens for several reasons, and a financial crash is the main one.  This is a repeating historically documented event designed to separate you from your assets and money.  So be aware!  This is the new reality, and the future is not pretty.  But there are still things you can do to protect yourself.  

http://www.jsmineset.com/2012/09/12/sentinel-ruling-and-what-it-means-for-your-street-name-shares/

Out of Order

I guess the billions of dollars the FHA along with Freddie Mae and Freddie Mac are losing, and continue to lose is not a good enough reason to look at the housing market from the other side of the coin.  It is amazing how ignorant some of these congress people are.  It is of my current belief, that another main reason we are in such a mess is that congress doesn't weigh the NEGATIVES appropriately along with the positives in the legislation they create.  It is obvious that they do not approach anything from a realistic nor logical standpoint in Peter's testimony to congress.  They decide they want to pass a bill, so they bring in several other "experts" in the field that benefit most from the government subsidies they look to create!  Well of course they are going to back your plan if they are going to get a piece of the pie!  Where are the congress women and men that play devil's advocate, and look at the negative consequences as well as the positive.  Why isn't congress asking the tough questions along with Peter, and not asking, then ignoring his answers because he doesn't agree, and don't like what he has to say?  Is it really that hard to understand why we have such large problems in this country, and can't move forward on anything, when our whole legislative process is fundamentally flawed from the beginning?  

This is such a basic concept in regular business it's almost hysterical that congress acts like this.  Just as Peter says, before a private enterprise is willing to embark on a business venture, to ensure success, all potential risks must be weighed, and priced in to the final product.  When government guarantees ANYTHING, you completely bypass that process because who cares if the thing goes bust, the taxpayers will pick up the tab if it doesn't work out.  This is why Peter emphasizes so much on the mispricing  of risk.  Government itself is the reason!  No wonder they can't fix it, they are the problem, and would rather sign a new bill than do enough due diligence to realize maybe they just need to back off.  This stuff is gonna go down in the history books gentlemen, and we are all gonna look like idiots for supporting such a silly democratic process.  And this is why I cannot, and will not choose to support the choices of government that cannot make choices based on rational thought, but chooses to do so out of arrogance.  This will end very badly.  Revolution will come to America one day, it's the only way the establishment will be torn down and started anew.  It's a slippery slope all downhill until that day comes.

http://www.europac.net/commentaries/out_order 

Economic update: Something's a brewin'!

Well first off it looks like the metals may have finally bottomed at yesterday's lows of gold @1628 and silver @31.20.  Daily indicators are turning up, and we have had a strong rally since then.  Keeping my fingers crossed for a good rally here.

Ok now into the not so good news.  Stock market recently hit new 52 week highs, but as in 2008 the market was not a very good indicator of underlying economic issues.  And with our disastrous highly inflationary monetary policy, along with record low volumes, more than likely the market will drift higher until it just doesn't.  So don't let this fool you, bad things are brewing under the surface.

11 out of 13 economic indicators have missed expectations, and the two indicators that beat expectations are questionable at best.  They were jobs and car sales.  Well you should know by now of the manipulation, and the massaging of the jobs numbers.  Remember that this is an election year, and things must look rosy until November for Obama's re-election campaign.  And car sales are up due to channel stuffing.  Whenever a car is shipped from the manufacturing plant to the dealer it is considered a sale(I know, doesn't make much sense does it?).  So when actual sales are looking bleak, dealerships boost inventory to get this number to rise.  This is a perfect example of why you must look into the details of government's statistics and indicators vs. taking them for face value.  Under the surface, another bailout of GM is in the rumor mill.

http://www.zerohedge.com/news/bursting-permabullish-bubble-11-out-13-economic-indicators-have-missed 

13 month lows in January for the new home sales MoM(month over month) change, and the largest downward 'reality' revision since March 2009.  New home sales make it 12 out of 14 economic misses.  As I have said before, this housing thing still has a ways to go.  I was talking to my buddy Chris that grew up in my hometown of Port St. John, and told him it was possible that home prices could see 1980's levels due to an over-correction, from an extreme over-valuation from last decade.  Sure enough, he looked it up and the house his Father bought in 1984 for $74k is now worth a staggering $76k.  Prices will remain stagnant to slightly down for the next few years at best.  And these are at record low interest rates, with 3% down FHA mortgage offerings.  Just wait until interest rates rise....

 http://www.zerohedge.com/news/new-home-sales-make-it-12-out-14-economic-misses

And although Europe and Greece was just bailed out again by their central bank this month, the charts are looking no bueno for the short to medium term.  Bailout number 3 was being talked about as the 2nd deal was being wrapped up.  Kind of silly isn't it.  Eh, forget about the fundamental problem, let's just throw some more money at it, and see if we can't grow(print) our way out of the mess.  Leverage in the Euro banking system is still huge, and debt to GDP levels are growing exponentially.  

http://www.zerohedge.com/news/3-charts-why-eurosis-never-really-went-away 

Every time you print a trillion dollars, the effects it has over the broader economy decrease.  So eventually as debts grow, and you print money to cover your deficit, the stimulus side of it turns to nada.  And when inflation increases sharply without wage growth doing the same, more citizens turn to the government for aid, increasing government expenditures.  This inflation in turn causes squeezed margins in businesses, forcing them to close shop or send more jobs overseas.  Sending more people to the government for handouts, causing government revenues to fall, and expenditures to rise once again.  This is called an inflationary death spiral.  It's simple math really.  If everyone could just print their way to prosperity, everyone would be doing it!  But alas, the ones who have tried(most recently Zimbabwe) have destroyed their currency in the process.  Well we are well on our way, and we are about to enter another major war to help speed up the process!  So this is why I so strongly believe in opting out of the system, and I rely on the four G's, and NOT on the government.  Those four are God, Gold, Guns, and Grub.  If you have those, you should come out alright.  Have a great weekend!

Terminated CBO Whistleblower Shares Her Full Story With Zero Hedge, Exposes Deep Conflicts At "Impartial" Budget Office

And deeper into the rabbit hole we go. I know I have been pounding the table about corruption in government, but this is more absolute evidence that numbers are being fudged, and extremely important issues are being swept under the rug. These are Harvard and MIT professor's with Ph.D.'s advising the government inaccurately, and terminating anyone who doesn't share their views. This is absolutely ridiculous, as diverse views in extremely important future and current issues helps to cover all aspects of what could go right or wrong in various policies. So now it is obvious that the government's view of certain issues are being blurred by their so called "professional advisers".

So now we have to assume a couple things about the graduates coming out of these Ivy League schools, from which our famous Obama, Bernanke, and several others have graduated from. Either the information they are taught about finance and economics is bad information, or someone else is behind the scenes pulling the strings here. And I am pretty sure it is a bit of both. Let me explain. Most colleges teach Keynesian economics in some form or another, and I believe at its extremes in the Ivy Leagues. Keynes was the one who believed in using stimulus and money printing during bust cycles to help boost the economy. Well we have Keynesian policies in overdrive right now, as we are printing ourselves into oblivion to cover massive deficit spending. Isn't it funny how virtually no one talks about the other side of the coin? That maybe Keynes was wrong? That maybe things aren't getting better because we are using the same failed policies? Well Ron Paul talks about it very openly and bluntly, and we all know what the media have to say about him now don't we? Right wing conspirator, crazy, and nutty libertarian come to mind. These guys beliefs that they are right is so entrenched in their mind, that if you think differently you are either shot down, re-located, or fired. To me that smells trouble, big time.

But at the same time central bankers of nations all over the world control the monetary policy of each of those nations, and in turn force the hand of the governments of each nation. And if they are all Keynesians(which they are) then it's easy to see why we are headed where we are. But, and this is a big but, there is something going on here that can't be denied. When you read what she has to say about her experiences with her superiors at the CBO, how they get rid of her, and how shady it all seems, you really have to ask what is really going here? I know there is lobbying, and those guys have a huge influence over legislation that is passed. But this is different. Reading the article you can feel the fear from these guys who railroad anyone with a different opinion, and then get rid of them as they expose the truth to the very people they are trying to hide it from.

"After my termination, Director Elmendorf stated that I should have followed directions from the more knowledgeable and experienced Chief Economist Lucas, taken the opportunity to learn from her."

Even though this woman had a Ph.D. herself, it is very obvious from this statement that her opinion was neither needed nor wanted, unless it lined up with their views. Unfortunately I feel this is all too common, and deeply ingrained throughout the culture of Washington. And until this changes, real change will never be allowed. And it is truly unfortunate that it is a high probability that we will never find out what this "dark force" is that keeps these officials from telling the truth, and more importantly why they cover it up as if their life depended on it.

http://www.zerohedge.com/news/terminated-cbo-whistleblower-shares-her-full-story-zero-hedge-exposes-deep-conflicts-impartial-

Some quick thoughts on the federal government, and a free market economy

So obviously abolishing the EPA, and federal regulation would not be an overnight fix. The whole idea for a free market to operate, is that it will eventually regulate itself. As an example, in a free market without lobbyists, companies would be required to uphold stricter guidelines without being able to buy out of or around issues. Then if something bad happens(like a BP type accident) they would be held fully accountable, and have the risk of actually going bankrupt. So now it is in the companies best interest to absolutely make sure your emergency close-off valves(or whatever the case may be) are in working order. Rather than just not giving a damn, and knowing that your political ties can spin the whole ordeal, and partially/fully bail you out. But when you read deeply into the federal government's individual departments, you find extreme levels of corruption and a serious lack of over-sight. Truth is there is no accountability at the federal level. And when it comes up that some large level of corruption is exposed, there is mass cover-up instead of it being corrected, and the proper persons being held accountable and fired.(Recent examples of MF Global, and Solyndra) 


"Fooling some of the people all of the time", written by David Einhorn is an amazing book and a perfect example of this. The level of corruption just from 2001-2008 in the SEC and the SBA will make you sick. Especially at the great lengths they go to cover things up, just because they are up to their eyeballs in their own shit. The DOE is a joke, and its biggest role is indoctrinating the American people, and controlling what and how our kids learn. There is no other reason to have some of the world best schools, and smartest graduates, yet have our school system rated in the high twenties out of the entire developed world. It is in the constitution that the federal government should not have this much power, because there is no level above that to regulate it. It is supposed to be like a court system, where the judge is like the federal government, it is supposed to enforce the law when the states get out of hand, or overstep their jurisdiction. And uphold the constitution, that's it. And the states act as the lawyers, who write new laws and regulations specific to what is best for their state. The states with the best regulations and laws will get the largest inflow of citizens and businesses, and the ones with shitty regulation will get the largest outflows. So it will bring about competition, which again ends up as self regulation. But right now, the federal government has its tentacles so deeply entrenched everywhere you go, it is a stranglehold on our progress as a society. And that stranglehold gets tighter as it feels like it is loosing control. That is a very scary place to be.


Right now I am heavily invested in precious metals, fire-arms, and long-term food storage. Commodities, guns, and agriculture are the highest performing assets at this time, when that ship changes course I will be right there along with it. But the the best thing you can do right now is invest time and resources into your community. We will have to rebuild at the local level, so the sooner all your neighbors are on board, the easier the re-building process will be IMO.

Housing continues its death spiral

http://truthingold.blogspot.com/2011/10/housing-continues-its-death-spiral.html

Here is the projected bottom, but could overshoot to the downside.  We have a long ways to go to reach a fair market for both buyers and sellers.  Unfortunately since the government is in the way, it is stretching out the process. 

It SHOULD have looked like this and been done in one or two years.

1.Peak of bubble reached in 2006, asset values start to collapse, market is flooded with property and people trying to get out.

2.Massive wave of foreclosures and bankruptcies, including many big banks going out of business due to over-leveraging and mortgage backed securities(MBS) and collateralized debt obligations(CDO's) going to or near zero.  

3.Big banks are nationalized, bad debt is wiped from the books, good assets sold to smaller stronger banks, CEO's of large banks FIRED.

4.Big banks are now small banks, put back out onto the market with clean balance sheets.

5.New regulations put into place to prevent old problems from reoccurring.

6.Market is now reset, and prices would be back to pre-bubble levels, and once again supply and demand has been re-balanced.

We probably would be completely back to normal by now, but that would cause too much pain.  So we are now 6 years into this mess almost, and are still in step 2.   This is how government intervention screws things up.  What is listed above is true capitalism, what we have now is not.  I think we have at least another 6 years of this mess, unless we have a collapse.  Japan did what we are doing now, and their real estate prices have been falling for 20 years.  So I will let you guess.

One of Ron Paul's best speeches

This could have detrimental consequences

We are about to find out what the real physical market in gold truly looks like, and if the central bankers even have any real gold vs. paper gold transactions on their books.  Hugo Chavez is beginning to repatriate his gold in mid-November from central banks from some of the strongest countries.  We will know soon if they have all the gold or if he gets screwed.  My bet is that he only gets part of his gold back, and that this sets all kinds of fun reactions off.  This could be the first domino to fall in the separation of the physical vs. the paper market in precious metals.  In which real holders of the metal have the most to gain.

*Quick Market Update*  The dollar has taken a breather from its rally the past few days, due to strengthening of the Euro, as they nationalized a large bank in Belgium that was about to fail.  This has allowed the equity markets some relief, but I expect the rally to be fairly short as the macro picture has not changed.   More taxpayer dollars bailing out more banks, what a shame.  Especially since the debt of that bank is $180 billion dollars, or the equivalent of 100% of the GDP in Belgium.  Another shitty deal for the citizens. 

There is heavy resistance at 1200 on the S&P 500, so watch that level.  Should be a good level to short from, but a strong rally past 1220 would gainsay that, and we could have some serious short covering along with a strong rally.  I don't see that happening, but it is the other side of the coin.


http://truthingold.blogspot.com/2011/10/hugo-chavez-issues-wake-up-call-to.html

The new Bear stock market will add to Silver and Gold's shimmer

The bear market means it will pay off to be more on the short side of equities vs. long.

Here is Louise Yamada explaining it.  She has been in the business a LONG time and is a pro and well respected technical analysis.  Watch the first video, then it will skip to the second video.

http://finance.yahoo.com/blogs/breakout/market-death-cross-mode-stay-sidelines-says-louise-152153683.html?sec=topStories&pos=1&asset=&ccode=

Here is a long term chart of the S&P 500 showing the falling trend-line of lower highs.  10 year chart.

Now of course QE3 could possibly turn the ship around, but it will have to be huge, like 2+ trillion dollars, to have any kind of decent affect to a rise in the stock market.  I would pretty much advise against buying much of anything here except for the precious metals.  But like I said QE changes everything and it could be a reason to go long.  Right now it is best to stay on the sidelines.

Here is what I think will happen with the precious metals going forward.  Gold is kicking ass and may continue to do so in the near term.  While it is getting overheated, they have introduced one margin hike(which usually takes the wind out of the sails of a security), and we are already back towards the highs just two days later.  This shows a lot of strength.  And you can see the large volume coming in during the broad market selloffs during the day.  So it is like the ultimate safe haven right now.  So it's gonna take a lot to slow this puppy down.  But the CME group did raise margin requirements 5 times in 9 days for silver, and that came to a screeching hault.  The same thing could happen to gold.  So I say this run tests the $2000 level if there are no more margin hikes.  But it will have a nice correction at some point, and that is where you step in and buy physical gold.

Now on to silver.  Silver is finally staging a solid recovery, and should start to look much stronger here above $40.  It will basically start to look like last August, but its ascent will be much faster.  The trading community has seen what silver can do, and they will not be afraid to jump on that bandwagon again when the time comes.  The public might not, but it's the institutions that really move prices, and reports show they were jumping ship last April when silver was still less than $45 an ounce.  They know better.  This is the move that will be just as good as gold's if not better, and Dec-Jan is usually the time frame we get a mid way breather before another run into the spring.  I still have a target of $75-$80 for silver by year end.

Print this out and let me know how I did later in the year!

P.S.  The only reason for more QE this time will be to blatantly push up equity prices.  And with so many retirement and pension funds tied to the stock market, don't think that the government isn't crazy enough to do it.  That will be one of the final nails in the coffin.


                                                                                     Gold- go baby go!

Sincerely,
Chris Criner

Criner Investments, LLC
CrinerInvestments@yahoo.com

The Sons of Liberty

Check this website out, and sign up if you feel so inclined.  The information found within the site is invaluable, and I commend this guy for putting it out there for free.  I strongly recommend checking this out, and at least getting through module 1.


http://members.sonsoflibertyacademy.com/

The implications of $5 a gallon gasoline, and what you can do to prepare

Now this is kind of a hard post to write, due to the wide range of effects high gas prices will have on the economy, and in our daily lives. But here we go.

For kicks, I thought we would start this off by a list of items we depend on oil for. Since there are so many, I found a website that will better serve this purpose. Scroll down through the site. Scary isn't it?  

http://www.saskschools.ca/~carnduffelem/oilpages/uses.htm

Sustained higher oil and gasoline prices will have a detrimental impact on our so called economic "recovery". I for one believe we have not recovered at all. I believe the government has done an absolutely horrible job, of initiating shitty programs that have done anything but make things worse, and extend the mess we are in. WE ARE IN, AND HAVE BEEN IN A DEPRESSION. One that is about to get a lot uglier. It will now start affecting you and I, on a daily basis. Another thing they have done a terrific job at is wean us off of cheap oil.(A little sarcasm there) We use oil(petroleum) for almost EVERYTHING. And our dependency has actually increased, especially on foreign oil. Makes you feel all warm and fuzzy when you see that everything is falling apart in the middle-east. We get most of our oil from Canada and Mexico, but they set the prices. Not good for us.

When you look at how deep the effects of expensive petrol run through our daily lives, it can be downright shocking. Did you know that your average grocery store item travels 1500 miles on average to get to your local grocer? Makes you feel safe doesn't it? Let's see how deep this rabbit hole goes, shall we?

Oil is in the fuel that's in the boat to ship it to our country. Then more fuel is burned in the big cranes unloading it from the ship onto the truck. Then more oil is used in the rubber for the 18 tires of the truck, and in the diesel fuel to drive it to the warehouse. The warehouse uses electricity that comes from the local power plant, who uses fuel to make the electricity. Then the goods are loaded up again on another diesel sucking 18 wheeled-rig to deliver it to your local Walmart. I may have missed a few things here, but you get the point.

And that my friends is the average travel life of the banana on your kitchen counter top. Now a lot of things are shipped by train, which are incredibly fuel efficient. But they are not reliable for refrigerated goods, and are not as time efficient. Remember in America we have to have everything NOW. Businesses have adjusted to accommodate that need.

Ultimately what this boils down to is: When it costs more to ship a product, a portion, if not all of that cost, is passed onto the consumer. That would be you and I for those paying attention. So basically every part of the economy will start to break down, as we get closer, arrive, and move past $5 a gallon gasoline. From what I can see, we have a good chance of being closer to $8 by the end of year.

I for one am not looking forward to a $60 gas bill at the pump, every time I fill up the stang. But that again is being short sighted. Everything will cost more. Ever since gas hit $3 a gallon, the price of food has skyrocketed. There is a large element of inflation fueling all of this, which you can read about in other posts. I'm just making the point that rising gas hasn't caused all of this, just makes it worse. A lot of the time businesses will suck up the rising costs, until they can no longer afford to. Basically until profitability starts to dwindle and they have no other choice. It's either close up shop, or charge the customer more. Remember that not everyone wants to raise prices, times are hard. And sometimes raising prices will cause the volume of customers to deteriorate, and they will have to close down anyway. It's called a margin squeeze, and A LOT of businesses are already feeling the pain. But they do have an interest in keeping prices down as long as possible. Restaurants will be decimated, not good for me :(

Did I mention that Iran and Saudi Arabia might be going to war? This kind of instability could cause to go to $10 a gallon overnight. So it will do you some good to act on this sooner than later.

Alright so what can you do about all of this? Well for starters, since now you know that everything will be rising in price, you can buy more now of what you will need tomorrow. Basically, stock up. Buy two tubes of toothpaste instead of one. Pick up 24 rolls of toilet paper instead of 12. Particularly anything that comes to the top of your mind, that you can't do without. But do not neglect your pantry! Sock up on long term non-perishable food items. Most canned name brand items last 3 or 4 years, so you really can't buy too many.

We have to accept the fact, that soon life will not be as great as it once was. We won't have everything on a silver platter, and the things we take most for granted will be either gone, or much harder to come by. Be thankful for everything you have, it's a good virtue, and will help you through the hard times. There are always people worse off. Gas prices are $9.50 a gallon in Norway. Yikes!

And of course, like I have always advocated and encouraged, you need to protect your purchasing power. Gold and Silver will become a currency(they already act like it) just like the dollar in the near future. You are better off having it now while it is cheap, and it will rise with the price of everything else. So you will always be able to buy what you need in the future without much worry. Something to think about.

Good luck guys, comments and thoughts are always welcome.

Something to throw a little fun into the mix: The Poor man's trader mentality

This cracks me up at how accurate this chart is.

Wow, this guy called the end game back in 1986!

The following correspondence was the reply to our objections in the establishment of the G5 in 1985 to “manage” the global economy through intervention on a coordinated basis.  Given the fact that the floating exchange rate system affords governments the freedom to now spend as they like pursuing their domestic policy objectives separate and apart from the international fiscal responsibility behind the value of the currency in global capital flows, it is simply unlikely that the current system will be sustainable long-term.  Volatility will rise and will spread among the markets driven by swings in currency values.  Eventually, in the course of events that will now follow, the global economy will become increasingly more unstable and reflect much higher degrees of volatility as historically has always taken place under floating exchange rate systems.  In the end game, the global economy will be attracted to the next major sovereign debt crisis that should appear going into 26 years from the 1985 birth of the G5 (2011) and perhaps culminate in a new global monetary system by 2016.

- Written by Martin A. Armstrong’s Princeton Economics International in 1986

Quick neat video on why you should hold Gold versus cash

Oh and with silver hitting fresh 30 year highs today, you should own some of that as well ;)

Guest Post: QE Is The End Of America As We Know It

 Via www.zerohedge.com

Guest Post: QE Is The End Of America As We Know It

Submitted by Tyler Durden on 03/21/2011 07:46 -0400

• Ben Bernanke
• Fail
• Federal Reserve
• Guest Post
• Purchasing Power
• Quantitative Easing
• Recession
• recovery
• Transparency

Submitted by The Paper Empire
QE is the End of America as We Know It
Each time we begin to approach the end of an announced QE period, the nervous jitters of financial markets start to set in. Will Bernanke continue with QE(n+1) or won’t he? Now it’s true that professional traders live and die by their ability to front run rumor and perception, but for long term investors who fret over such decisions, it demonstrates a fundamental lack of understanding of what QE really is. To put it succinctly, QE is an economic deal with the Devil. Once it is begun in earnest there can be no turning back. It must be played to its ultimate conclusion.

In Bernanke’s 2009 interview on 60 Minutes, he suffered a momentary lapse into honesty and stated that Quantitative Easing was effectively money printing. So why then the complicated euphemism of Quantitative Easing? Because that is what modern central banking sponsored economics is all about – the intentional obfuscation of otherwise simple economic principles to cause the eyes of normal people to glaze over. Once accomplished, the central bankers (and their financial community brethren) are able to pursue policies that greatly benefit themselves but are devastating to everyone else.

Long term investors who worry about whether QE will continue clearly recognize the fact that everything is now correlated to the Fed’s balance sheet. What they don’t understand is how QE is related to the larger economic cycle and its mission of preventing economic recessions.

Keeping the tent inflated
Sometimes physical analogies are the most helpful in understanding complex relationships. Let’s think of the economy as a large inflated tent. The extent of the tent’s inflation is the health of the economy. Under normal economic conditions the tent is fully inflated. In the course of time, events take place that cause the need for a correction to the economic system. New technology can come along which obsoletes old industries, bad investments and debt must be liquidated etc. When this happens a free market economy will correct itself. Capital tied up in failed industries will be reallocated and invested in new businesses. New jobs will ultimately be created and people will go back to work. Of course this reorganization takes place over time and this is what a recession is – a healing process for the economy. In our tent we can think of this as a tear that forms in the fabric. While this hole is being repaired, air escapes and the tent begins to sag a little. The extent of the drooping is the extent of the recession. Once fixed, the tent and the economy go back to normal.

QE is a wholly different method of keeping the tent propped up. It does not repair the hole, but rather attempts to keep the tent inflated by pumping more air in than is escaping through the hole. This is the new money being created and pushed into the economy to offset the credit destruction in the banking system. This is a dynamic process that must be maintained. The catch is that the hole doesn’t just stay a fixed size. The tear begins to lengthen allowing greater amounts of air to escape. The economic tent begins to sag until the volume of air being pumped in is increased to overcome the outflow. This is why QE can never end. To stop now, with such a large hole, would result in a severe and frightening recession. The tent would lose a tremendous amount of air in the time it takes to make such an extensive repair.

This process continues until eventually the hole is so large that the tent collapses around the massive flow of pumping air. This is the ultimate fate of money printing as policy – a currency crisis – the endless flow of new money loses purchasing power faster than it can be created. We are left with an inflationary depression in which savings are decimated and the standard of living of most Americans is dramatically lowered.

QE is economic central planning
When an institution such as the Federal Reserve is allowed to create as much money as it wants and do with it whatever it pleases, without any oversight or transparency, then the free market and its self correcting mechanisms no longer exist. How can capital from failed business and banks be reallocated to more efficient uses when these institutions are bailed out and not allowed to fail? Prices and interest rates are the nervous system of a free market economy. They are the feedback mechanisms that direct all of the individual participants to behave in the most productive and efficient manner. There can no free market when prices and interest rates are de-linked from supply and demand. We are now a centrally planned economy run by our central bank.

But here’s the really insidious part of QE that almost no one in the general public understands: A free society cannot exist independent of free markets. There is a disequilibrium that occurs between the two and over time one will win out over the other. And so here we are, stuck in a decaying economic system that prevents resources from being used in their most efficient manner. We simply can no longer compete with freer markets in other parts of the globe. We are saddled with the weight of central economic planning much like the old Soviet Union was. There will be no recovery and no rush of new jobs created. We will live under the burden of a burgeoning Federal government that operates completely independent of the will of its citizens. It is now beholden only the money manufacturers at the Federal Reserve and will spend money as fast as Bernanke can add zeros to its account.

The problems we are experiencing have been a long time in the making. They began in earnest in 1913 with the formation of the Federal Reserve. It’s taken several generations for the Federal government and its central bank to usurp the world’s monetary system and as such few have noticed. But what’s different now is that we have hit the knee in the curve, the point at which events start to accelerate dramatically as we approach the end of the line. Those who understand QE realize that America as we knew it is already gone. Over the next decade the rest of America will become painfully aware of that fact as well.

The road to QE3 and the U.S. rigged stock market

You know it's amazing that as soon as some headlines come out saying "The economy is getting stronger!  We no longer need quantitative easing and the government's help.  Things are turning around!" and that's exactly when the stock market falls out, and starts its decline.  Throw a huge devastating earthquake in the mix, a war in the middle-east, and you have one hell of a fallout.

Now, with the stock market going up every day, and fudged government statistics coming out on a monthly basis, it's hard to not think things are at least getting a little better.  But let me clarify and re-assure you, they are not.  The big boys of wall street know this. And they know that without some market intervention from the Federal Reserve and their crony bankster friends, the market as a whole would be tumbling and volatility would be out the wazoo.  Remember that they do not care about your retirement, or your 401k.  They are focused on making cash, and lots of it.  Bet you didn't know that the average time a stock is held on wall street, is less than 30 seconds.  So much for the "buy and hold" for the long term strategy BS that they sell you.  This is no self sustaining recovery.  It is a government perpetuated recovery, and without it, the whole lot would come crashing down. They know it, and you should to. 

This is why unless you are a trader, your assets, and especially your retirement should be no where near this mess. 

This is the truth we can rely on.  When the Federal Reserve comes out and says we will be buying a specific amount of Treasuries and Securities for the next (throw in any number) months/years.  You can now smile, because we have evidence that the market will be propped up for a few more months, and it's all aboard the gravy train from here.  That is until that time starts to run out (like it is now), and they aren't so sure they will continue the tax-payer fraudulent and corrupt program.  Let's call it for what it really is, since we are all being duped to think things are getting better.  But their plan is backfiring as this is becoming ever more mainstream, and having a less of an effect on the overall market(s). 

And as they pretend to wind down their beloved QE program, the market starts to fall, volatility increases, and people start to panic.  Before all this negativity can spark a market reversal, and start the trend down, they step in.  This is generally the last step before the Federal Reserve magically shows up and announces another round of securities purchases, and voila!  The birth of QE3, QE4, and so on. This whole process happened at the beginning, and end of QE1, and ultimately is what gave way to QE2.

Well guess what?  We are on that last step, with even more global and economical harbingers.  Buckle your seat belts, and get ready for QE3.

The real reason behind rising gas prices.

A lot of large oil and gas companies will come under scrutiny as they post record profits(yet again) as the gas prices skyrocket.  This is set in the wrong direction in which we target the problem and not the source.  Remember that it's the government who sits idly by and lets all of this happen.  Just like they sat by and watched the large banks rape us, the taxpayer.  If we as America would stand up to the government and real in the Federal Reserve the speculation would implode and commodities along with everything else would fall through the floor.  The Fed is providing the excess liquidity in the market to push the stock market higher, and cause speculation in the market in a flight to hard assets, including oil,  as they debase our currency. 

This is a direct result of their inflationary QE policy in which now that we are on it, they will never be able to end it.  And more and more people are waking up to this fact, and questioning it at the congress meetings with Fed Chairman Ben Bernanke in which he lies about it every time.  He says there is no inflation under oath, even though prices are going up every day.  He should be charged with treason for either lying under oath, or being a total idiot.  And this guy is in charge of Americas future!  Nothing has brought down an empire faster than misuse of its monetary policy. 

If you look at the Dow Jones, and the time lines in which QE was started and then re-initiated, then you can see just how propped up by the program it is.  It was initiated pretty much at the bottom of 2009's market crash.  And remember that QE1 were purchases of over a trillion dollars of Mortgage backed Securities and treasury bonds.  The only thing providing some stability to the market, as its ass was falling out.  Basically it's what has kept this whole ponzi scheme(our government) afloat.  If the Fed had not intervened, the businesses that should have been forced into bankruptcy would either be gone or have to completely change.  There would actually be people in jail for all of the fraud that took part in this whole mess.  And we would more than likely already be on a steady natural recovery.  Which is what we needed, but the system is even more fraudulent now!  And it has put our entire future in jeopardy.

QE2 was initiated after QE1 ended, along with all their other failed programs(cash for clunkers and home-buyer tax credit) and as soon as the market showed some volatility in mid 2010, they leaked news of QE2 in August.  This time severely affecting the commodities market.  Here is a chart here for QE and the Dow's reaction.  http://calculatedriskimages.blogspot.com/2010/10/s-500-and-quantitative-easing.html  Smooth sailing ever since.  And just look at any commodity chart from August 2010 forward, and you will see a direct correlation to the rise in commodities!

Pretty soon we wont be able to afford anything much less than gas, and we have control as the people to stop it, yet we sit idly by and complain about gas prices.  Our government allows all of this to happen in the first place!  And another thing you should focus on is OPEC, they said they wont even consider having a meeting to increase oil production until it's over $120 a barrel!   Why don't we have our hand in this??  We provide foreign aid to almost every oil producing nation!  Rising oil prices is just the start, and we have to focus on why this is happening in the first place.

Silver reaching 30 year highs! and why it's still a great time to get in.

Well I have just about doubled my money from when I got into silver at about $18 an ounce last August, but don't get discouraged if you haven't joined in on the fun yet.  There is still plenty of room for this puppy to grow.  See, even though we hear about it every time Gold makes a large move (and sometimes silver too, but only when it's headed down) the mainstream media does an excellent job of leaving out silver and all its glory, for the majority of Americans to hear about.  Which I think is an atrocity to the public!  Some of you, will more than likely never be able to buy Silver for less than $30 an ounce!  And just maybe, if something had caught your attention on MSNBC money, or some other program, you might have been interested enough to check it out.  Maybe that's just wishful thinking on my part, but how can you know if no one ever talks about it!  And that is exactly my point.

We are nowhere near the end of this secular bull market, it has only just begun.  And it is gonna be exciting!  As I write this, Gold is teetering underneath its all time high of $1433 by a dollar!  And Silver is actually at a new 30 year high of $34.50 as of today.  If I had a little more capital (investment cash) and more patience I would be in the oil game right now.  That is about to blow up in our face, and send gas prices through the roof!  Now that does indeed suck for most people, but over the course of history, Silver and Gold have done very well in rising in value compared to oil.  So if you own some and keep accumulating them on a regular basis (as I do, and encourage everyone to do) then you will be just fine.  But if you keep your dollars in cash, you can guarantee you will be losing purchasing power on a weekly, and even daily basis.

But back to the main point, it's very easy to tell when something is overbought or becoming what some would call a "bubble".  Just ask yourself a few questions.  Have I seen or heard about it on TV?  Have I overheard anyone at work, friends, or strangers out at a restaurant or bar talking about it?  If you asked 100 people if they owned even an ounce of Silver, or know anything about how rare it is, would even one person say yes?  Just think back to the tech stock boom and bust, or the real estate boom/bust.  Everyone towards the end was either talking about it, or making money off of it.  Those that do not rely on the fundamentals get burned 99.9% of the time, and usually show up late or at the end of the game. 

Obviously we are nowhere near a bubble in Silver and the price has been rising significantly for over the past 10 years now, due to solid supply and demand fundamentals.  And the fundamentals have never been more bullish for precious metals, there is already a supply deficit in Silver and the media hasn't even started mentioning it on a large scale!  As our financial system deteriorates on paper, and the majority start shifting there assets into Gold, Silver and Platinum the price will explode!  There are already shortages of the shiny white metal now, and the shift has already begun. 

Just ask yourself this simple question.  Would I rather buy Silver now at $35 an ounce, and rely on the fundamentals and take a chance.  Or would I rather buy when it's every days' news headline, and feel comfortable because everyone else is doing it at $100 an ounce?  Believe me, it is gonna happen.

For thousands of years Gold and Silver have been money, even in Chinese the word Silver means money.  Paper currencies like our Federal Reserve Note, which is not even money, it is a debt instrument (if you don't believe me pick up a dollar bill and read it) have only lasted an average of fourty years, from its inception to its demise. Well it's 2011 and we got off of the gold standard in 1971, it is time for change.  But I bet Obama wont see this one coming ;)

Take care and have a great day!

New York Stock Exchange volume now at pre 2001 levels

This is what I meant by lack of retail investors in the stock market.  The stock market is now traded mainly by hedge funds, and large banks being funneled money by the federal government.  How else do you explain an increase in prices with a decrease in volume?  It can happen, but it doesn't justify the move.  It is the most dangerous place to trust your money over the long term.  But then again with the Fed program QE to infinity, the stock market may never come down.  It may actually accelerate.  But then again so did the stock market in Weimar Germany in its early days of hyperinflation. 

Just something to think about. 

If they were ever to stop the QE program(which they can't) stocks would fall over a cliff and make the crash of 2008 look like a picnic.  The only thing holding this thing together now is speculative money.  Which changes its mind all the time.  The last place I would choose to be.

http://www.zerohedge.com/article/nyse-common-stock-volume-plunges-sub-2001-levels

A REAL look at the U.S. Government's CPI number

Generally speaking, we are the richest nation in the world, which means that goods and food(particularly) are generally cheaper for us to consume.  Our number 1 export is inflation/excessive printed cash.  And it has been now proven that the largest part of our GDP is in our government's spending.  It is the only reason why the GDP number is growing!  Now all that cash that is exported, will ultimately find a home to roost and it has found a particularly dangerous one. Commodities in general, but particularly food.  So prices have been rising sharply along with the now inflated Dow Jones(but that's another story) since the start of Ben Bernanke's Quantitative Easing 2.

This is exactly why loose monetary policy is extremely dangerous.  Particularly excessive money printing and low interest rates.  With no gold standard or anything else to back our currency with our money is losing significant value on a daily basis.  This is why the gold standard was placed in the constitution.  They knew that backing the currency with Gold and Silver would force the government's hand in spending, and ultimately in its ability to grow.  Obviously the farther we have gotten away from this policy, the worse off we have become.

So now we take a look at the CPI number which I will let the article below do most of the explaining.  But basically it states that the percentage of food price increases that we include in the CPI are so low that they are basically irrelevant.  Particularly compared to other nations.  India has a weighting on one end of the spectrum of 50%!  We are on the completely other end with it as low as 7.8%!  No wonder the CPI never rises.  As you have real estate that is over weighted, and have falling prices.  Food prices are steeply rising everywhere in the world but it not even on our government's radar! This is the idea that the world will be going up in flames, with the american people starving yet the government still saying inflation is still low.  All depends on what the number is based on, now isn't it?

And the government is in collusion with the big banks to keep real estate prices slowly falling, but still not yet falling at a fast enough rate so we can actually find a bottom and move on.  They actually changed the accounting standards so that the large banks don't actually have to mark-to-market any of their assets, and have actually maintained pre-recession values on their balance sheet.  For if they did have real accounting standards, these large banks would immdeiately fail again and TARP 2 would be issued.  The large banks such as;Morgan Stanley, HSBC, JP Morgan Chase cannot be allowed to fail.  They are the only ones doing business with the federal government!  It's all one gigantic crap shoot just waiting to implode.  But you will see more of this, this year as 2011 will be the worst year for foreclosures. As the banks begin to pick up steam on handing out default notices to millions of Americans that have been living in their houses rent free for a year or more.  All the while the banks have been covering up the latest and largest fraud in mortgages that America has ever seen.  Yet Not One Person Has Gone To Jail.  Hmmm guess we support corruption now, and turn our head the other way.  But if you and I steal a candy bar we go to jail.  But apparently stealing from people is A OK.  Guess it just depends on who you know ;)


Article on the CPI is here.
http://www.zerohedge.com/article/tale-two-inflations-here-why-us-cpi-indicator-flawed-and-why-bernanke-will-maintain-zirp-rev