Thursday, June 16, 2011

QE Support Broken

The support level that was holding up the market was taken out over the last few days.  QE is now a necessity.  What is Bernanke waiting for?  The system is crashing.  They need QE now, or else yield turns negative.

Well, I guess people with money are now buying at fire sale prices, but if they wait to long, then GDP turns negative and it will be well known that Bernanke's policy does not work.  That is the point when people would turn on the system, when then people figure out the big lie of fiat "money".  It is now a fine line between what would be a fiscal stimulus that could trigger hyperinflation (if the world all spend dollars at once) and a deflation that will turn return hugely negative.

Bernanke and Co. have two weeks to issue a new fiscal stimulus.  If not, then stocks continue to crash (hello FNSR/RIMM/etc), while the fiat "money" flounders about, and precious metals and oil remain at a premium.  Imagine DXY 77 while the Dow is at 2k, while gold is at 2k.  Yes, this is a realistic scenario.  The problem is, pensions, including the SSTF (Social Security), turn negative, and then the system will continue eating itself.  This is why Bernanke must print money, and monetize the debt like there is no tomorrow.  The problem with that is it will spur hyperinflation.  We are now one week away from deciding if it will be hyperinflation, or deflation beyond deflation.

Austin-Fitts today said the Grovers will decide QE.  If the Grovers think they can wait that long, the are not only insane but stupid.  Yet there is a line from there main play that always comes to mind when I think about economic collapse.  It is, "Here in the Grove we are safe from care".  They may know the system will crash next month, and wish to be away from their cares, in the midst of the redwoods, in the safety of nature.


  1. Dude,

    You sound like YOU'RE freakin' jonsing' for
    more Stimulus!!

  2. Hendrix is right,

    Flood the markets with money or face a deflationary collapse. Confidence is very low and if a liquidation panic sets in, no monetary policy will reverse it.

  3. I ain't jonesin' for shit. Let them all fail. You think I care?

  4. And wait, let me explain....

    The system realizes the fiat ponzi is a loose absolute and the rhetoric changes on a dime....

    All of a sudden premium is set on oil, and its monetary equivalent, precious metal....

    Work becomes practice....

    This is the real.


  5. The ONLY way for PM's to increase in value during a deflationary episode is if the USA defaults on its debt. This would destroy the value of the dollar and cause PM's to skyrocket.

    Otherwise, should the USA manage to find buyers of their debt, PM's will decrease in value and the dollar will become king again.

    For the short run, PM's will be able to hold their present levels but without defaulting on debt, or monetizing more debt, they will not go up in value. Only sideways or down.

    That said, if USA enter's sustained deflation, I do not see how they could avoid defaulting on their debt...

    - Samseau

  6. Samseau,

    The stronger fiat between the dollar and the Euro has followed gold since the Fall of '08. Each have made runs and subsequently fallen, but each time there was panic in the FX, gold traded higher. This means that if the dollar becomes a safe haven again, it will only rival gold, because gold is monie.

  7. Great new CHS article up on ZH. LH, not sure who the Grovers are but agree with your comments.

    The Turning Point
    Submitted by Charles Hugh Smith from Of Two Minds
    The Turning Point

    "So which do you think is all-powerful, smart money--the Fed or gravity? We're about to find out."

  8. Hypothetically, if there is NO QE3 and the system crashes, do PM's go as well?
    What is the likliness of them doing QE3? Do you strongly believe we will get QE3 is some shape or form?
    Are you still a fan of platinum; what do you think of the last week or so and the loss of $100/ounces?


  9. Platinum's trading range is $1750-$1850. It has been stuck in this range for a long time. It is monie, and it will trade very close to gold and silver.

    Anything could happen if there is no QE. I will try to make this a topic for next week.

    Thanks for the questions!