The Real Fear Of The Fed

You’ve heard about deflation and how afraid the Fed is of deflation. Well of course there is truth to this but what is not discussed is the real fear and that is inflation. Its not discussed because its going to blow the entire ponzi to hell. Right now we have inflation. Its kept hidden through a number of statistical tricks that maintain the illusion we have slow growth with low inflation. The reason I bring this subject up again and again is because it is essential to the ponzi. 

The “velocity of money” is at an all time low. Even lower than the Great Depression, but this time we are in a “recovery”. So why is all of this a problem? We popped a major “debt bubble” in 2001 and in 2008. After each “pop”, we pumped them right back up with even more debt…..doubling the debt each time. So we have just infused more and more debt into an unsustainable debt system within a dying demographic time bomb. It not only will end badly, but it has no choice but to end badly. Boiling the frog has been the decided upon strategy but it too has limitations. 

Simply put, something is going to give. Either we allow this current bubble to implode into a deflationary orgy of pain or we pour money into this until obvious inflation occurs and the velocity of money takes over with a collapse in the value of most debt currencies. Two choices but only one outcome and that is collapse. Central bankers will not allow a complete deflationary collapse but they may try and engineer a “controlled demolition”.  This is the crux of what I believe they may try this year. 

A controlled demolition of selected asset classes allows the Fed to do what they do best and that is print more money to reflate a “popped bubble”.  Once again they get to pick the winners and the losers. Once again the bankers maintain there control of the financial system and economy (or at least what is termed an economy).  For this game to play out, they must infuse an element of  “growth/inflation” with a cry for higher interest rates this year. To make this scenario believable, I think they will allow silver and gold to have a controlled move up but possible not breaking out this year over previous all time highs. Put more simply, they need higher interest rates and these will terminate the stock market asset parabolic rise. The bankers know the resulting collapse will be heralding in a whole new round of negative interest rates and QE. They’ll make money on the volatility and then position themselves in the cheaper shares for the next pump up.

Sounds simple. Its not. This time the debt is not going to allow the same long term pump to new highs. The rest of the World’s Central Banks are sick of us using the dollar and therein lies gold and silver’s next resurgence to massive highs. I think that gold and silver are in a new bull market and have been since December of 2015. It may not feel like it, but the price and charts say other wise.