Next up: QE4 - 9/14/12

 

Dear All,

The latest chapter of the perpetual, global central bank liquidity drop was formalized with the U.S. Federal Reserve’s announcement yesterday of another (open-ended) phase of Quantitative Easing on top of its two prior ones of $2.5 trillion. Although heralded as an attempt to stimulate the economy and employment, it is rather another liquification effort to de-leverage the banking system and prop up the stock market.  Its main achievement will be to ensure that inflationary hell arrives that much sooner and that the middle class is pummeled.

 

Government — the supreme incubator of malinvestment, has done for the education market what it did for the housing and medical markets — pushed up costs by giving away free stuff.  Artificially cheap and abundant credit has the same effect on markets as does third -party medical payments: Azizonomics: Student Debt Malinvestment

 

Ignore the partison title of this piece and simply view the chart for a lesson in the relationship between the quantity of dollars placed in government operations and the qualitative result:

“As the chart makes clear, enrollment is only up 8.5% since 1970, whereas employment is up 96.2%. In other words, the public school workforce has grown 11 times  faster than enrollment over the past 40 years. What difference does that make in economic terms? If we went back to the staff-to-student ratio we had in 1970, we’d be saving… $210 billion… annually.” 

 

Bootlegging redux?…One wonders if we learned anything from Prohibition: Sugary drinks over 16-ounces banned in New York City 

 

Must watch…Peter Schiff: DNC delegates – Let’s ban corporate profits!

  

Worth the read…

How “Crazy Survivalists” Make The World A Better Place

James E. Miller: The Bill Clinton Myth

Former U.S. Treasury Undersecretary Paul Craig Roberts has written a compelling piece on the implausible official versions of the 9/11 attacks. Roberts is an insider, not a fringe conspiracy zealot:

“Washington’s explanation of the attack implied a security failure too massive to be credible. Such a catastrophic failure of national  security would mean that the US and Western Europe were never safe for one second during the Cold War, that the Soviet Union could have destroyed the entire West in one undetected fell swoop…As a person whose colleagues at the Center for Strategic and International Studies in Washington were former secretaries of state, former national security advisors, former CIA directors, former chairmen of the Joint Chiefs of Staff, I was troubled by the story that a collection of individuals unsupported by a competent intelligence service had pulled off the events of 9/11.”

 

The trend…

MarketWatch: Why is Putin stockpiling gold?

Dollar no longer primary oil currency – China begins to sell oil using Yuan

China/Russia Ruthlessly Cutting Legs Out From Under U.S. Dollar

Reuters: India gold demand jumps as jewelers buy at record price

 

Regarding gold and silver…

Increasingly, the investment world is recognizing that the prices of the precious metals have been suppressed for years and that banks have been operating a fraudulent gold fractional reserve system (this includes gold and silver ETF’s) to divert physical demand.  This growing awareness is causing, perversely for the paper schemers, increasing physical demand. The Eastern central banks in particular are on to the games and their appetite for physical is keeping a strong bid under the metals. The stocks of gold and silver companies remain at absurdly low valuations relative to the gold and silver price, notwithstanding the fact that precious metals have been the best performing stock sector the past few months.

With the silly guessing game as to whether and when there would be QE3 we can now move onto the next chapter of pundit pontification as to whether there will be a QE4, which rest assured, is coming.

I take one exception to Dan Norcini’s comments posted at top; I believe that before this gold bull market is over you’ll be able to buy the Dow with a single ounce of gold.

Sit tight. The big fireworks are still ahead.

 

All the best,

Jeff

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