Baltic Dry Index. 663 +02
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
What is needed for
a sound expansion of production is additional capital goods, not money or
fiduciary media. The credit expansion is built on the sands of banknotes and
deposits. It must collapse.
Ludwig von Mises.
Stay long physical precious metals this morning. In
a widely anticipated move, the Fed yesterday announced QE3, the nuke option.
America’s version of Super Mario’s “whatever it takes”, is the Fed said it will persist with the policy until
the outlook for the job market improves "substantially". Whatever substantially is. The
dollar has re-joined the euro in the race to the fiat currency bottom. Nothing
bad happens all the time the new policy doesn’t work. The new money from
nothing on both sides of the Atlantic merely keeps goosing over priced stocks,
encouraging oil speculation, and encouraging savers to switch to increasing their
maximum holdings in physical precious metals. It will also encourage Asian
central banks to keep adding to their gold reserves.
Where it all goes
wrong is once the policy works, assuming that it ever works at all. Once a
sustainable recovery gets underway, all the new money pours into a massive
speculation on just about everything, as it surges out from being parked with
central banks paying a pittance, to hedge funds, private equity pools, and any
City spiv with a get rich scheme of the day. Today’s sovereign bonds all get the
Greek treatment as everyone realises that interest rates have nowhere left to
go but up. A new boom is getting underway after all.
Happily or
unhappily, depending on one’s point of view, QE3 isn’t likely to work any
better than QEs 1 and 2, plus operation twist on top. Once on money from
nothing, it’s probably not possible to stop without triggering the event QE was
started to prevent. We are headed for a “reset” in the fiat money system, with
the only safe form of savings now, debt free assets with intrinsic value. Both the
FED and the ECB now have their blank cheques, though the FED’s is considerably
easier to draw upon. I wonder if it’s enough to get President Obama re-elected
and keep “Helicopter Ben” in his job?
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 the 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. Human Action
Federal Reserve announces QE3 to aid US recovery
The Federal Reserve has embarked on what could prove its biggest round of quantitative easing so far in a bid to strengthen the US recovery.
America's central bank said it will purchase $40bn (£25bn) of mortgage-backed bonds a month to stimulate the housing market and keep long-term interest rates low.In a major departure from the two previous rounds of stimulus, the Fed said it will persist with the policy until the outlook for the job market improves "substantially".
The Dow Jones Industrial Average and the Standard & Poor's 500 both closed up more than 1pc after one of the most-eagerly awaited decisons from the Fed's rate-setters in months. The Dow is now at its highest level since 2007.
"They are targeting mortgage bonds in an effort to drive rates lower," said Stewart Cowley, head of fixed-income at Old Mutual Asset Management. "But they are writing a blank cheque."
Era of 'jobs-targeting' begins as Fed launches QE3
Quantitative Easing has become banal, a fine-tuning tool like any other. It is by now drained of all drama. Even the Federal Reserve’s hawks have lost the will to resist. Five of the six critics acquiesced.
---- Fed chairman Ben Bernanke no longer faces a banking collapse, or an imminent spiral into debt deflation. He has launched QE3 at a time when credit is expanding, M3 money is growing at 5pc, and core inflation is above 2pc. This is QE by choice. The extra juice is insurance against a clutch of nasty risks ahead: a Chinese hard-landing, deepening slump in Europe, and the looming “fiscal cliff” in the US – net tightening of 4pc of GDP if Congress lets it happen.
This is well-advised. The manufacturing ISM index in August flashed contraction. New orders were awful.
The economy is close to a tipping point, and that matters for the whole world.
A study by Nathan Sheets at Barclays Capital found that once US growth drops below 1.5pc on “a rolling four-quarter basis”, it then falls by nearly 3pc over the next year. “We find that the spillovers are much larger as the US economy cuts through its stall speed, with the sensitivity of foreign growth roughly twice as large as at other times,” he said.
September 14, 2012, 2:40 a.m. ET
India Inflation Accelerates Sharply
NEW
DELHI--India's inflation rate accelerated more than expected in August, according
to data released Friday, maintaining pressure on the central bank to continue
with its tight monetary stance at its next policy meeting Monday.
August
inflation was 7.55% from a year earlier, sharply higher than July's reading of
6.87%.
The
reading was far above the median 7.0% forecast in a poll of 16 economists. It
also exceeded the poll's highest estimate of 7.4%.
The
wholesale price index, used as a measure of inflation, rose to 166.6 in August
from 164.8 in July, according to data released by the Ministry of Commerce and
Industry.
“The
U.S. government has a technology, called a printing press (or, today, its
electronic equivalent), that allows it to produce as many U.S. dollars as it
wishes at essentially no cost…We conclude that under a paper-money system, a
determined government can always generate higher spending and hence positive
inflation.”
Dr. Ben Bernanke
At the Comex silver depositories Thursday final figures were: Registered 39.42
Moz, Eligible 101.66 Moz, Total 141.08 Moz.
Crooks and
Scoundrels Corner
The bent,
the seriously bent, and the totally doubled over.
Today, it’s those
rouge Greeks again. They’re back for more. Luckily it’s only fiat euros, and
there’s plenty more where they come from just ask Super Mario.
“The problem with fiat money is that it rewards the minority that can handle money, but fools the generation that has worked and saved money.”
“Adam Smith” aka George Goodman.
September 13, 2012, 3:16 p.m. ET
IMF Official: Greece Will Need Extra Funding
Greece
will need additional funding from its creditors to overcome its budget gap, the
country's representative on the International Monetary Fund's board said
Thursday.
"Greece
will require additional financing, which may take the form either of Official
Sector Involvement or of additional loans, hopefully on more-favorable
terms," Thanos Catsambas, an IMF alternate executive director, said in an
interview.
"Official
Sector Involvement" is the official jargon for a restructuring of the
debts held by Greece's official creditors, the European Union, the IMF and the
European Central Bank, analogous to the "private-sector involvement"
deal in March, which wrote down the debts held by private investors by more
than €100 billion ($128.8 billion).
For many,
such a plan would be tantamount to a third bailout of the country in as many
years, although Mr. Catsambas rejected that characterization.
Mr. Catsambas doesn't represent the IMF's official
position within the so-called troika of creditors, the Greek government also
distanced itself from his comments, but his thinking is informed by his years
as an IMF staff member between 1979 and 2010, and overlaps in many places with
the official position and the charter of the Fund. He has experience with fund
programs in Europe, Asia, Latin America and the Middle East.
Troika
representatives are currently in Athens to assess Greece's situation and the
possible disbursement of a €31 billion loan, part of a second bailout package
that totaled €173 billion. The payment is imperative for the Greek government
to avoid running out of cash, but officials now say they don't expect a final
decision on how to proceed with Greece until November.
Prime Minister Antonis Samaras's coalition
government is facing growing public anger as it tries to revive delayed
structural overhauls and implement fresh cutbacks of around €11.5 billion over
the next two years.
More
Another
weekend, and our world gets more unpredictable with each passing week. This
week we had a bizarre Egyptian Coptic Christian convicted thief, living in
California, passing himself off as a joint nationality Israeli American, set off via the internet
moslem riots that resulted in the death of America’s Ambassador to Libya and
three of his colleagues. In the economy, America and Europe opted this week for
the Zimbabwe printing plan. Britain’s BOE will soon join them if only to weaken
the British Pound. Our central banksters long ago lost control of the
Frankenstein fiat money casino capitalism they invented. After a suitable
pause, is a great inflation next? Have a great weekend everyone.
"All of the government's monetary, economic and political power, as well as its extensive propaganda machinery, will be enlisted in a constant battle to drive down the price of gold - but in the absence of any fundamental change in the nation's monetary, fiscal, and economic direction, simply regard any major retreat in the price of gold as an unexpected buying opportunity."
Irwin A. Schiff
The monthly
Coppock Indicators finished August:
DJIA: +76 Up. NASDAQ: +97 Up. SP500: +69 Up. All
three indicators have reversed from down to up.
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