Saturday, May 14, 2011

Off the Cliff

Bernanke and Geithner may be happy with the way finance looks right now, but whatever their plans are they have to be sweating.  As for now, oil and silver are still below their respective breakout resistance, gold has made no charge ahead, and platinum is still lagging.  Equities are still pinned at highs, even while the algo machines flash crash every one of them.  The dollar although devalued has some value.  Everyone is happy, seemingly.

Yet there is now a cliff only a moment away, and the only thing stopping the economy from going over it is a smallish wall.  This wall is like the American infrastructure:  people talk about it like it is a grand thing, but it has not had repairs or updates for a long time.  The wall will be breached with an increased deficit, or the failure to raise the debt ceiling.  Obviously the bottom of the cliff is an inevitable destination.

Bernanke and the Private Dealers need quantitative easing to continue to monetize the debt, because the cost otherwise would be far too large for the Federal Reserve's balance sheet to handle.   If there is no continuation of quantitative easing then there will be no demand for US Treasuries; not from the indirect bidders and not from the private dealers.  Without this demand the fiat ponzi is finished.

So while everything looks honkey dorey, it is not, and this summer, while the Bohemians are safe in their Grove, the world will wake up to the fact that money does not grow on trees.


  1. im curious to know if you have heard of "ANOTHER" and his writings from roughly '97 to '99 on an old kitco forum about gold?? although most of what he said back then hadnt come to fruition in the time frame he suggested, it almost seems like it is coming to fruition today. regardless it seems that he has great insight to the inner workings of gold, oil, currencies, central banks, the BIS, and many other things. so have you read this individuals "THOUGHTS"?

  2. Never heard of "ANOTHER". Wish I had though, might have started on all of this sooner.

  3. i have been following a lot of blogs about PM's. i really like and enjoy your insight. im very curious to know what you think about "ANOTHER". im really new to all of this stuff. and i find it fascinating. if you have the time or curiosity i would really like to know what you think about this individual and what they have to say. i would encourage you to read through all 4 pages of his thoughts and back and forth with other readers. here is a link to it.

    like i have stated, im really new to all this stuff. im not tooting my own horn here, but i learn things pretty fast, and i understand concepts very well (i have an IQ in the 160 range). but im still trying to completely wrap my mind around how gold and oil work. i think i get it, but someone who has more experience, than i could ever have, might understand this better. and not only understand it but also might be able to figure out where things will go from here. thats why im curious about what you think. please let me know if you will read through all of it. i will check back here as i come to your site on a daily basis. thank you once again.

  4. Brian,

    Considering the author of my favorite book is quoted in the beginning of this text, I am very excited to read this tome. Thank you very much for the intel. I will be reading this link in my spare time. And when I see you commenting here I hope to remember to tell you which details have most affected me.

    Thanks again!