I continue to be more than surprised at the total lack of outrage that should be taking place as the Fed and other central banks are continuing to destroy our US dollar and probably most other developed currencies around the world.
Just a month ago the Fed announced that for a few days they needed to prop up the banks because of taxes due and a quarter-end cash crunch.
In the meantime, the banks have been reporting record profits. This seems pretty interesting to me since the banks have been demanding more and more cash daily.
A month later and now, as I expected once this started, the facts are as follows. As of yesterday, the New York Fed announced that the $75 billion per day in repos has been increased to a minimum of $120 billion per day until at least January 2020. The stock market liked the news since it erased all losses and wound up with a gain right after the announcement.
Don’t count on it ending there. I would bet it will increase markedly prior to the supposed end date. In addition, the longer- term loans that were being offered twice a week at $30 billion has now been increased to $45 billion for the foreseeable future. Oh- and by the way- in addition to all of that $60 billion per month will be conjured up out of nowhere (like all of the rest of the fake “liquidity”) to purchase US Treasury bills.
I believe all of this “printing” by central banks is masking (as it has been since at least 2009) the fact that our economy is in freefall. Many will argue that unemployment is low but that is because they are brainwashed with the U3 number which conveniently omits 95 million working age people which, when added back in, gives us an unemployment rate of nearly 20% according to John Williams of Shadow Government statistics.
Many will say that their portfolios are up so all is well. That is fake also. If you have fake money buying assets the price of those assets (mainly stocks, bonds, real estate, etc.) is also fake. The day reality hits is the day many will realize the fact that they were lulled to sleep by the bankers and their partners on the financial game shows.
It is also important to notice that those assets being managed lower (fake price also) have been weaker since the monetary spigot has been opened wide again by the merry money-“printers”.
I am not going to pretend that I have a handle on WHY this is taking place. I still have a hard time wrapping my head around hundreds of trillions in currencies being conjured up out of nowhere and yet there is a lack of liquidity. My guess is that all of the monetary stimulus has been buying assets that are illiquid and all of the faux money has either been spent by governments making transfer payments or central banks and major banks purchasing assets (or selling assets that they may or may not own like gold, silver and platinum to stunt price growth) and this has left them with a basket of assets that are hard to value. If they actually tried to sell them on the street there are likely no buyers at anywhere near the price that they are using to report on their books. Remember, mark to market (determining the value of assets daily based upon current market price) was turned to mark to myth back in 2009 to hide the quality or lack of quality on the bank’s balance sheets. Do you think after the last 10 years things have gotten better?
Those in charge are actually encouraging the banks to misstate the value of their “assets”.
Eventually, the stuff hits the fan and reality rears its ugly head.
I can’t think of a better reason as to why this might be happening UNLESS there is a serious problem with a bank, or multiple bank’s, derivative books. The best guess, because the derivatives are not regulated, is that the banks have at least a quadrillion (a thousand trillions) in bets amongst themselves. This MIGHT be why every time we turn around the banks need more and more billions to keep the economy going. This seems like monetary life support for our economy. If this were a patient I would be extremely concerned about the survival of the patient.
By the way, McKinsey and Company came out with a report that more than half of the world’s banks will likely not survive the next downturn which we may be witnessing the beginning of right now.
Mervyn King, former leader of the Bank of England said “The world is sleepwalking towards a fresh economic and financial crisis that will have devastating consequences for the democratic market system” (The Guardian 10-20-2019). He also said “It is time for the Federal Reserve and other central banks to begin talks behind closed doors with politicians to make legislators aware of how vulnerable they would be in the event of another crisis”. This guy ran the Bank of England!
I believe they knew this day was coming and that is why the banks, central banks, countries and those “in the know” are loading up on gold and silver in record amounts as we speak and have been for the past few years.
There is nothing normal about what we are seeing right now. Trillions of currencies are being conjured up out of nowhere to pretend that “all is well” and we have the “greatest economy of all time” even though virtually all of the economic reports are screaming RECESSION. Or worse.
It appears to me that, as I wrote in January, the die was cast in December. Just a slight decrease in the increase of debt caused the stock markets to react violently and caused the Fed to reverse course on their tightening plans. Since then, we have come full circle and are faced with ever increasing QE (or not QE). It appears to me that we are in a situation where they can’t keep up with the pace of decline and that is why we are seeing such massive increases in stimulus week to week.
By the way, after all of this, the markets still have not hit another all-time high which bolsters my thesis that they are preventing a collapse rather than stimulating another bull market.
In the meantime, it appears that there is no amount of “money” that they will not conjure up out of nowhere to keep the masses blissfully unaware of the rot that is at the core of this financial system. It appears to me that the problem is now so large that there is no hiding it anymore.
This should be a sure sign that our currency, along with most others are at risk of a major devaluation which could lead to massive price increases to things we need to survive like food, water, energy, electricity, etc. It should also lead to far higher prices for gold, silver, platinum and many other assets that have been manipulated lower to further confuse anyone trying to figure out what is actually happening under the economic hood.
If you are still in traditional assets and have not at least partially diversified I believe these latest actions are showing your time is growing short.
Financial Advisor, Raymond James Financial Services, Inc.
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Pocono Summit, Pa 18346
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