USFed QE Volume to Triple, Not Taper- Jim Willie

By: Jim Willie CB, GoldenJackass.com

The US Federal Reserve bond monetization support for government finance support, financial markets, banker welfare, economic props, redemption coverage, and liquidity fire hose functions will continue to expand and definitely not diminish. Only the brain-dead, the system wonks, and the deeply deluded believe the QE volume will taper down. They are paid to think that way in the public forum, their minds compromised, their hearts darkened, their paychecks dependent. As preface in order to properly comprehend the national situation, keep in mind that the USEconomy is stuck in a nightmarish quagmire, with growth steadily in decline at between minus 3% and minus 5% annually, when reality is required. The propaganda must be pushed off the road, the price inflation not labeled as growth, and the system perceived for what it is. The USEconomy is in grotesque deterioration with absent critical mass of industry, widespread debt defaults, retail liquidations, idle plant and equipment (including malls), and systemic capital destruction from the monetary hyper inflation and the imminent specter of ObamaCare tax. In queer fashion, the modern day US factories have become shopping malls. They suffer from at least a 25% vacancy rate nationally.

Therefore the USGovt deficits will rise, not fall. All economic forecasts offered from official podiums and stages are loaded with nonsense, deceptions, and propaganda at worst, but wishful thinking, delusion, and hope at best. None contain any accuracy required like in a business setting where competence is rewarded and excellence is expected. In the national offices, loyalty, marketing, and toeing the party line are rewarded, just like in a Central European nation in the 1930 decade. The Jackass prefers to call it Reich Economics laced with Soviet Central Planning. The United States has become an unsavory mix of fascism and marxism, the common threads being systemic decay during the eradication of civil liberties.

The major channels will force the USFed to turn up the volume. The May Taper Talk was definitive in its result. The entire financial markets, credit market, liquidity pipes, and economy depend upon the USFed funding. The system cannot sustain itself through vitality, and surely not through savings. So the USFed relented, they blinked, and when they briefly told the truth, they admitted the QE volume would continue forever and a day. Given the political pressures, and some reflection in corner office lavatories, they toy with the concept of tapering again. They realize the hyper monetary inflation has turned into a deadly toxic dependence. It is useful for the mere mortals among the 99% crowd to absorb the realities behind QE and its true nature, better described as QE to Infinity. The sidebar is Zero Percent Forever. The USFed is stuck in the destructive monetary policy, as the Jackass has described since early 2009. The ultra-low rate would not be temporary. The bond purchase plans with printed money would not be temporary. Many are the channels that must be covered by USFed bond monetization. They run parallel to the channels of USTreasury Bonds being returned to sender, listed in July. Regard this article as an update, required to counter the never ending propaganda and deception directed at the public with media scatterguns. It will be illegal someday before long to warn the masses.

PREFACE ON USECONOMY IN DETERIORATION

People must always bear in mind two concepts. When the USGovt, directed by its Wall Street handlers, marshaled the movement of industry to China, it delivered the nation a death sentence with a timer. The low cost solution was a legitimate income drain that led to deeper asset bubble dependence. The inevitable outcome of systemic failure motivated the launch of the Hat Trick Letter. The results are obvious to those with open eyes, which means only 10% of the masses. Secondly, the USFed monetary policy of hyper monetary inflation, directed at covering USGovt debt issuance and turnover, has a clear effect to kill capital. The rising cost structure from inflation hedging results in reduced profitability, followed bybusiness shutdown and retirement of equipment. This too is obvious to under 10% of the masses, including the crack corps of clueless economists. Review some features.

The October 2012 pre-election Non-Farm Jobs Report was falsified. Nothing new in following orders from the camp commandants in officialdom. The reduced jobless rate from 8.1% to 7.8% permitted the occupant of the White House to report the success of the economic recovery. With dark humor unintended, the new catch phrase has become the non-recovery recovery. Jack Welch was proved right in doubting the data, accusing in tweets that the Administration had altered the numbers. So the BLS, the Bureau Of Lies & Scatology, manipulated the most important jobs report in Obama’s career. At least Obama looked presidential as he reviewed the Hurricane Sandy damage, where no natural hurricane had ever hit in the NorthEast corridor so brutally, and where microwave patterns were detected from its August hatching. (Psst: microwaves are man-made and not natural.) In the most recent quarter, the Q3 Gross Domestic Product has been managed at 2.8% in a travesty of deception. The same tricks are used with hedonic adjustments and calling price inflation as growth. The king is dead, long live the king. The QE to Infinity will be needed in defense and support.

A tell-tale report came from California. The multi-unit properties in California are not being foreclosed, despite being in deep arrears. The banks seem unwilling to take on more REO property on their loaded portfolios. Perhaps private equity firms are only pursuing single family residence properties. The reporter has been in contact with numerous people not making payments and not making decisions, since no pressure. The dire signal is that 20% of all mortgages are delinquent but with no foreclosure activity. Even short sales are prevalent, meaning final sales below the equity level of the seller. Chase has not foreclosed and not responded to a short sale of a delinquent $3 million home in San Diego. The implication is that the bank suffers the loss, the difference. Rumor has it that the USFed is purchasing all the bad debt and will then sell it for deep discounts for other parties willing to take the risk with the courts in the foreclosure process. Think Wall Street cousins in private equity firms like Blackstone. The problem is so deep that foreclosures of condominium units are occurring, for failure to make payment of homeowner association fees. Reports are of HOA non-payment rate of 25% in the sketchy areas. The HOA entities are not dumping the properties. A gaggle of properties that the HOA foreclosed on three years ago are still owned by the HOAssns, many in Riverside and San Bernardinocounties. The entire commercial trade has gone underground between the banks, private equity firms, and foreign buyers. A colleague in Los Angeles reports that the same is true with small strip malls, which sport 50 to 90% visible vacancies. The QE to Infinity will be needed in defense and support.

Ten US cities are almost totally out of cash. Their bankruptcy will soon be tested. Meredith Whitney was not wrong, just way too early to earn the acclaim. She will be back in the spotlight to take credit for a correct call. The report is that the ten cities have under ten days of cash on hand. The Detroit court ruling is also interesting. A judge ruled the city pensions and bonds can be reduced in value (called haircut) under legal applications. Next comes the outcome, as the percentages are to be decided. Some bold economists like Laurence Kotlikoff of Boston University have openly declared the USGovt finances worse than Detroit’s. The wave appears next to strike Chicago. The QE to Infinity will be needed in defense and support.

Recovery is nowhere as 4.6 million mortgages going unpaid in the United States. Either the people cannot pay under duress and pressure to make payment, or they scoff at the banks and dare them to take possession, even to locate the property title. At least a couple million Americans are living in soon-to-be bank owned homes for free. That aint recovery. Furthermore, the American consumers are going for the 7-year car loans, as the banks adopt a stupid lending policy. Within 18 months, the loans will have zero collateral from basic car depreciation. The important point is that the bank holds negative equity loans after 3 years or less, with false accounting on the bank books as well. The break to people is a curse for banks, a stupid desperate policy. That aint recovery. The QE to Infinity will be needed in defense and support.

A handy comatose meter is found in the Chicago Economic Diffusion index. It fell in October. The more representative three-month moving average improved to 0.06 from -0.02, indicating the economy has leveled off in its coma. The employment indicators fell, as the labor participation rate is at its most dismal level ever, working its way under the magic 60% level. No recovery is evident. The QE to Infinity will be needed in defense and support.

So conclude that with continued USEconomic deterioration, the tax revenues will be way short. The USGovt deficits will rise above $1 trillion per year again easily. The USFed will be forced to cover the deficits, since national savings is nowhere. The debt issuance will continue to from the capital dome, covered by phony money coming off the press running side by side. The Jackass has not even mentioned the wet blanket known as ObamaCare, with its forced membership, higher costs than advertised, deceptions in keeping other health plans, refusals of cancer treatment, refusals of joint replacement, and broken website done by Michele Obama’s classmate atPrinceton. Remember in a fascist business model system, loyalty and crony win over competence and quality, always.

CHANNELS TO BE FUNDED BY Q.E. TO INFINITY

a) Government Finance Support

Axel Merk has concluded that the USFed is monetizing 50% more than the USGovt deficits. The key elements are USTreasury Bond issuance, refund activity of USTBonds, along with the ample coverage of USAgency Mortgage Bonds and some private label mortgage bonds. The printing press with Weimar nameplate is under heavy pressure. Those refundings (bond turnover at maturity) are a bitch, and rarely figure in the rosy analyses put out by the wonks, hacks, and stooges. One should really brace for a reality check. The USFed has announced repeatedly that it is executing on $85 billion in bond monetizations per month. The disclosed level represents a staggering volume of $1.02 trillion per year. Amazingly, few economists or bank analysts are troubled by the official steady unrelenting hyper monetary inflation. To be sure, some competent and responsible members of officialdom express their reservations, without much disgust, but with some courage. What would have passed as insanity and reckless policy in the 1990 decade, nowadays is accepted as the norm, the present reality, the exigent necessity, the urgent requirement, the responsible obligation. Focus on the true volume of the USFed bond purchases, the real QE volume when all items are added together. The reality is much worse than admitted reported. This is a banking crime syndicate, which should never be accepted for its word. They are the greatest bond fraud kings in modern history, the greatest thieves probably in world history. They steal the wealth of entire nations, if not from central bank gold bullion then from bonds and home equity, with a kicker in near zero interest loans to themselves.

Some hedge fund managers and bank analysts have come forward to share their privileged information from contacts deep within the USFed system, whether regional bank presidents or economists within the USFed marbled offices on Weimar Street. THE REALITY IS THE USFED IS MONETIZING AT LEAST $200 BILLION PER MONTH, MORE THAN DOUBLE THE OFFICIAL VOLUME STATED AND ADMITTED. The USFed is monetizing much more than basic USTreasurys and USAgency bonds to cover the USGovt deficits, their rollover refunding, and the raft of mortgage bonds. The USFed is monetizing a small mountain of Fannie Mae bonds and collateralized debt obligations with a mortgage core, which went bad, turned worthless. The USFed is monetizing a large mountain of interest rate derivatives that went deeply in the red in the last year, especially this past summer during the self-inflicted Taper Talk disaster. The mortgage debt and its leverage toxic vat amounts to a few $trillion yet to be fully monetized. Furthermore, the interest rate derivatives amount to hundreds of $trillion yet to be fully monetized. This hyper inflation output does not hit Main Street, which would result in price inflation for products and services. Worse, this hyper inflation output wrecks the USDollar and its primary vehicle the USTreasury Bond. It burns the King Dollar throne. The United States isGreece times one hundred.

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