Wednesday, April 13, 2011

It's all Circular

Treasurie issues debt, and the Private Dealers and Indirect Bidders buy it.  Then the indirect curse the day they got involved in the dollar meltdown, while Private dealers flip the bonds to the Direct bidder, which happens to be the Fed.  The Fed then monetizes the bonds via the POMO.  That is today's way of creating a budget in America.

The world must have been ready for this when equity crashed in the Fall of '08.  The dollar was hoarded one last time, and since then commodities have been bought and held in hope that they would soften the inflation being unleashed by the dollar.

There is also the deflation side, which has housing all over the world crashing to epic levels.  A city in China that would be one of the largest in America saw home prices drop 25% last month.  This is a good example that all markets are eroding, except precious metals, and that of the lifeblood of the economy, oil.

Peak oil is rearing its head in front of the global meltdown by showing the House of Saudi Arabia has no spare capacity, even though they say they do.  They say a lot of things.  Since the dollar is in a Catch 22, so are all markets.  If anyone is trying to keep the dollar afloat, they would need to change Neo Keynesian policy, and the time for that was decades ago.

Back to square one, the precious metal market is oh so very small, yet oh so very real.  The only way to store actual wealth is with monie, and monie by definition is precious metal.  While the dollar and the economy spin down the proverbial toilet, precious metals stay high and dry.  They are the anchor that keeps one's wealth safe.

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