The Big Picture (What's Really Going On)

Never lose sight of the big picture. Perhaps today is a good day for a reminder.

The U.S. government is broke/bankrupt. We are currently $14T or so in debt with future obligations of almost $75T. There is absolute zero desire from our political class to address this issue because “austerity” will cost a lot of power-hungry politicians their power.

The goons and hacks at the U.S. Federal Reserve understand this. Besides default, which isn’t possible, the only way out of this overwhelming debt burden is through inflation of the money supply. Simply stated, you pay off yesterday’s bills with the devalued currency of tomorrow. This is what will and must happen. There is no alternative. The responsibility of The Bernank and his cronies is too attempt to bring the dollar slowly. A steeply descending and crashing US$ would have grave consequences for world inflation and stability. Therefore, though the decline and devaluation of the dollar is inevitable, every attempt is and will be made to manage the decline in stages. Economic reality dictates that the only viable tool the Fed has to manage this process is MOPE (Management of Perceptions) and SPIN (disinformation and outright distortion of data).

This is exactly what we have seen in the past 24 hours. Take a look at this 2-hour chart of the June POSX (our new name for the USDX):

We continue to be rangebound between 1415 and 1445. There should be LOTS of support near 1415. We’ve already seen it in the time its taken me to print this chart and write this blog. Gold bottomed at 1413.50 and is now already back to 1422.30.

Here’s your silver chart:

Again, lots of support (buying pressure) between 36.50 and 37. As we learned yesterday, even The Wicked Witch wants to buy there: http://www.youtube.com/watch?v=mOnKAh1L9e8
Again, in the time its taken me to type this, we’ve dipped to 37.08 and recovered to 37.30.

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