Tuesday, September 25, 2012


We have a new said program.  Not only did we know it was coming we knew it was never ending.  I had long dubbed this one "QEX" because it is the tenth round of easing since the Fall of '08 but little did I know the X would stand for infinity.

I read the white paper that details the program from the NYFRB and I found it to be vague.  I did take some tid bits from it however.

The majority of the buying will be on the eighth business day of the month, but MBS buying will continue until the end of the month.  The $40B monthly program is also only targetting that stated amount.  They will buy more all the way until the end of the month if needed.

The unsaid part is even more scary.  Since the Fed is like any other bank they will be able to fractionally reserve their assets and rehypothicate them at will.  This means the new program will total over half a trillion dollars per month of unsterilized dollars.  Combine this with the OT2 program which is sterilized and we get another half trillion dollar program.  This means that the Fed balance sheet will expand to at least $1T per month.  Yes, that's right - per month.

By my best guess the new program will begin on October 10th.  I expect it to blow asset prices out of the water from the get go, so the window to buy precious metals and get your house in order is closing.

I will also add my bugout bags were completed a couple weeks ago when I bought a ceramic water filter hand pump.  I have food, PM, friends and family and a way to get water.  I think that this financial and economic system will last only months from here.  Please make sure you have everything you need now.

I will point out that after the dust settles the world will be better off without the current financial system.  It will be harder for Americans, because oil will not be as easily procured due to the loss of a world reserve currency, but I think it will make us appreciate life that much more.  People will have to make their own clothes, garden, etc, but I think that work is good and it will bring us closer to the earth.  I think that we will keep the power plants on, even if they run at a lower capacity.  I do not see us going head first into a Mad Max scenario.  But I do think there could be weeks if not months of confusion which is why it is important to have that amount of food and water and barter and money.

1 comment:

  1. Do you really think they will be expanding their balance sheet at that kind of pace? That seems way too reckless.