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Achtung Baby: 'Getting Close to the Day of Reckoning'

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By: CAPTAINHOOK / GoldSeek.com

We’re getting close. We are getting close to the day of reckoning this fiat currency economy suicide mission the Fed(s) has engineered for us. So you better get ready, because they will not ring a bell at the top of the stock market to warn the party is over – so Achtung Baby. Because the end of the line in QE debt monetization related economic growth is almost here – with diminishing returns in money printing and central bank balance sheet growth re-accelerating. And while it’s true central authorities can still increase QE to offset diminishing returns, and in fact have stated they intend to do just that in Europe and Japan early next year, still, as the attached above clearly demonstrates, by 2015, the effects of all this money printing will be negligible. And before it’s all over don’t be surprised to see QE in the States moving from $1 Trillion per year (where we are now) to $1 Trillion per month, and to infinity essentially.

Because it will never stop until the system blows-up, as unscrupulous high level bankers and their consorts have a grip on the system and will not give it up voluntarily, where their insane practices and comply or die tactics prove this without a doubt. Add to this picture a new and naive Fed chair, with visions of sugar cookies in her head, and one does need wonder how US Treasury yields remain sanguine in coming years. Because once confidence is lost a negative spiral can grip macro-conditions quickly given the hollow nature of the much talked about ‘economic recovery’ in official circles, making increased QE necessary, which would in turn feed a death spiral in Treasuries. One must wonder however, just how the bond market bubble will be popped with QE to infinity on tap. Will it come from internals or externals, or a combination of both? Perhaps the answer to this question lies in the East.

What’s more, it’s not just the bubble in Treasuries one should be worried about, which up until this point has been no trouble at all with the QE backstop. There are also stocks and real estate to worry about as well, where you know a problem exists when the speculators are speculating on the degree of speculation. Because there’s no free lunch despite what lying bureaucrats would like you to believe, given this lunacy can obviously continue for longer than anybody with a whisper of common sense could conceive. The sad part of this entire mess is the crazier it gets, the more anxiety is created, the more people will hold back, the more the Fed will have to print money, the more stocks will go up – until we reach the point of ‘heart attack’ for the over-drugged junkie. Then, the bond market is going to blow up, and it’s all over.

Because we are all Fed junkies in one-way or another – whether you depend on them directly or not. We are caught in a liquidity trap that demands the Fed monetize some 70% of all net bond supply; meaning rates would be considerably higher if they were not doing so. So, don’t fall for any of the BS ‘taper talk’. This is just Kabuki Theater for fools because key debt markets are becoming increasingly stressed. Again, with the steaks so high now, crazier than any other time in history, as measured in all-important credit markets, you should realize the Fed(s) have no choice but to keep accelerating the craziness, which will become a problem for the bond market once rigging efforts on the part of the bureaucracy’s price managers begin to fail noticeably. You will know this is the case when they can’t keep credit markets supported anymore, which will tip diminishing returns into freefall. (i.e. and in turn re-accelerate the need for more money printing as things spiral out of control.)  

And of course the same is true for stock market. Things will just keep getting crazier, where what may appear to be crazy talk today will look obvious in hindsight. We already know the Fed intends to accelerate QE next year because they have said so. So again, don’t be fooled by taper talk, which has the effect of catching offside short sellers when weak data points come out, causing a short squeeze. (i.e. that’s what happened last week post the Fed minutes release.) What market participants don’t realize yet is such talk is just expectation management on the part of the Fed so that people are not surprised when it happens, which will be especially important as the pace of change continues to accelerate, and sensibilities are challenged further. This will be particularly important when the stock market finally tops out and the collapse in the larger economy accelerates. One would think this can’t be too far out given increasing divergences in fundamentals, however again, it appears one would do well to allow for liberal doses of craziness all things considered. (See Figure 1)

Figure 1

In this regard, and why the chart above is displaying a ‘bubble profile’, likened to both the year 2000 and 2008, associated with the tech and housing bubbles respectively, we now have the mother of all bubbles, the central bank (planning) bubble in everything except commodities and gold, however these bubbles are coming. In the meantime however, and as one can see above, the present bubble building process in stocks appears to have further to go, likely sending the S&P 500 (SPX) at least another 100 points higher in coming days and weeks, and even higher next year. Again, such an outcome should not be surprising to anybody given the liquidity that is floating around out there, where it appears investors are piling into stocks like never before at present. And we get the same picture in the long-term Dow plot from the Chart Room, now over 16,000 and pushing towards ‘broadening top’ and Fibonacci (Fib) resonance related resistance, which could take it as high as the next large round number at 17,000 before a Supercycle Degree to is put in place. (See Figure 2)

continue article at GoldSeek.com:

http://news.goldseek.com/CaptainHook/1386604980.php

 



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    • Kwisatz Haderach

      I do believe a day of reckoning will come. But. We have had a parade of experts for years now telling us how close it is. At some point you just stop paying attention to the “when” and stay prepared for the event itself. Tomorrow. Next year. Whatever, I will deal with it as well as I can whenever it hits. I have made the preps that I am going to make.

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