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The Fed’s Gone “ALL IN”… Here’s What’s to Come
Well, it’s
official, Ben Bernanke has officially gone “all in” regarding currency
devaluation in the name of pumping the stock market. I have to admit, even
though I knew this was going to happen, I’m still in shock. After all, it’s not
every day that you see a superpower collapse and lose its reserve currency
status courtesy of a deranged mad man.
Regardless
of your feelings on the matter, these are the cards the Fed has dealt us, so
rather than devote space to critiquing our insane and corrupt Fed Chairman, I
thought it better to devote today’s article to detailing what is to come as a
result of the Fed’s policies.
1)
QE 1
Failed, so Will QE 2= The Fed Doesn’t Have a Clue
This is the most obvious, but most commentators
seem to be missing it. We were all sold on QE 1 as being an emergency measure meant to keep the
financial world afloat. Now we find out that the Fed considers this formerly
emergency measure to be one of its normal tools (it’s not yet been a year since
QE 1 ended and we’ve already got QE lite and QE 2).
In plain terms, the Fed’s decision to
implement QE 2 proves not only that QE 1 FAILED but that the Fed doesn’t really
have a clue on how to fix the financial system. Bernanke is literally making it
up as he goes, which is truly horrifying if you consider the implications of
this.
In light of this, you can bet that the
Financial Crisis is nowhere near over. QE 1 failed. QE 2 will fails as well.
Moreover, you can bet that additional,
GREATER systemic risks will be playing out in the next year. The problems that
caused the 2008 disaster are still out there. The only difference between now
and back then is that we’re running out of band-aids to cover them up.
2)
Currency
intervention, trade wars, and volatility will become the norm
Currencies are relative, meaning their
values move relative to each other (you can’t have the Euro, Yen AND Dollar go
to ZERO at the same time). In light of this, the Fed has officially challenged
the major currencies’ central banks to a game of “devaluation chicken.” Expect
to see most world central banks, especially the Bank of Japan, European Central
Bank, and China’s central bank engage in similar practices of their own. All of
these guys have a choice, devalue or kill exports. They’ve all proven to choose
the former time and again.
Expect to see trade wars break out in
a major way as this game progresses. We’ve already had a hint of this with
China’s decision to cut rare earth elements exports. However, this is just the
tip of the iceberg. Things are going to be getting very messy going forward.
Expect to see capital controls, tariffs, and outright trade wars break out. As
a result, prices of various goods will skyrocket (remember the rice scare in
2008?). Which brings me to the final point…
3)
Inflation
is coming sooner rather than later
The cost of just about everything is
going to be going up… a LOT. In
fact it already has. Most commodity prices are up double digits in the last
year. This is just the beginning. Combine currency devaluation with trade wars
and you’ve got a recipe for MASSIVE spikes in the price of goods.
In plain terms, the cost of living in
the US will be going up sharply in the coming months. Oil is already at $86 a
barrel. Food costs are rising. In fact, virtually everything but housing prices
has risen in the last year. Forget future inflation, inflation is coming NOW.
We’ve already seen the Dollar lost 15% of its value in the last six months.
What will this do to a middle class
whose savings have already been eviscerated by two stock Crashes, no private
job growth, and a 37% decline in the US Dollar in the last ten years?
Also, what will this do to corporate
profits? Companies will either try to pass their increased costs off on
consumers (good luck with that) OR will eat the costs themselves. Either way
profit margins will shrink. I’m guessing the “stocks are cheap” crowd didn’t
bother considering whether those future earnings projections were illusory.
The simplest
forecast from this would be a portfolio emphasizing commodities particularly
precious metals and agriculture: the former will be the largest beneficiary of
ongoing currency debasement while the latter is one of the few areas in the
investment world where an argument for “value” can be made.
Stocks will
also benefit from all of this in the near-term. But in the long-term look for
pronounced weakness, particularly as trade wars and increased costs bite into
profit margins.
Also, on a
final note, it’s a good time to stockpile on food and other items that are
sensitive to price increases. I suggest having 3 months worth of supplies on
hand at all times. The worst thing that can happen is everything turns out fine
and you eat the food anyway.
Good
Investing!
Graham Summers
PS. If
you’re worried about the future of the financial markets and have yet to take
steps to prepare for the Second Round of the Financial Crisis… I highly suggest
you download my FREE Special Report specifying exactly how to prepare for
what’s to come.
I call it The Financial Crisis “Round Two” Survival
Kit. And its 17 pages contain a wealth of information about portfolio
protection, which investments to own and how to take out Catastrophe Insurance
on the stock market (this “insurance” paid out triple digit gains in the Autumn
of 2008).
Again, this
is all 100% FREE. To pick up your copy today, got to http://www.gainspainscapital.com
and click on FREE REPORTS.
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I havent posted here in a while... Thanks man, so many people here are missing the simple points. I am looking into the currency that was printed by the treasury during the civil war by Lincoln... I suggest everyone do the same.
In economics as in nature, there is only one way to do things right, vary from that and disaster looms... eventually
http://www.metacafe.com/watch/479780/strange_gyroscopic_effect_weird/
In economics as in nature, there is only one way to do things right, vary from that and disaster looms... eventually
http://www.metacafe.com/watch/479780/strange_gyroscopic_effect_weird/
+1 Buy More Silver
+ 1 buy more silver.
OK to buy gold and platinum too. Platinum was up a magisterial $76 / oz today.
Thank you to Fleck and KWN.
Buy Silver.
I bet China is really, REALLY pissed. This can't be good....for anybody.
I hate to be cynical but this is a buying opportunity - that includes PM.
Happy Anniversary Fed's! Wooo hooo! way to F-ing go jack nuts. Did you send Ben Bankbrokie to the meeting after party drunk?
This sort of thing often ends with guns and bullets...and yes very badly.
If I may posit: Ben Bernanke is NOT a 'madman'. The Federal Reserve is a PRIVATE institution! He is an employee. (A messenger?) A vehicle to deliver the 'will' of the bank cartel that controls the Fed; nothing more, nothing less...
If so, maybe somebody can shoot the messenger.
How are your equestrian skills?
War Famine Pestilence Death
http://en.wikipedia.org/wiki/Four_Horsemen_of_the_Apocalypse
Ah yes, the Horses of Evil.
Helicopter Ben is not a "madman", he is just unleashing his weapons upon the world. Who are we kidding? Here are the results of the money drop.
1) China is going to have more inflation from commodities surging and the dollar peg. Whatever wealth is there will soon be eaten away.
2) Countries on the verge of default will be pushed closer. They are now priced out of exports to the US and China will undercut them. Europe and Japan are in this boat. Europe most likely will force a PIIGS country to default and leave the Eurozone. The Euro crashes and the dollar spikes.
3) Someone has to keep rolling over the excessive US gov't debt. Who want to roll over $100 billion+ a month?
4) Wall Street got what they wanted, free money. If everyone is on one side of the trade though it will go the opposite. In this case, market crash wiping out the smaller investors at expense of the big boys.
Never underestimate the enemy.
Remember all the talk about how the Fed was going to "back out" all the first stimulus? What are the current talks on how to back out all this new cash?
It's really very simple, Rocky --- they are just going to use all the new "money" from QE n to (partially) back out of the prior QE n-1. Kind of a Ponzi squared. Or maybe a matrushka doll of one Ponzi inside another, inside another, inside another ...
One has to stand back and admire the sheer elegance of their sociopathic and malevolent schemes.
hehe...Good One. Too bad all the Ponzis are interdependent. What happens when the smallest doll blows up inside the other dolls?
(**<BOOM>**)
Hahahaha, a fucking logarithmic ponzi scheme...I love it. It's sort of like realizing that you've been shot, so you set yourself on fire as a treatment.
It's a twofer.
1. Any fall in Wall St profits constitutes a National Emergency. This must be avoided at costs. Hence QE1, QE2, ...QEn, ...
2. BoC is playing chicken with the CNY. So Ben jams the pedal to the metal and drives the USD at the brick wall of commodity prices. Will the BoC swerve first (revalue)?
'So Ben jams the pedal to the metal and drives the USD at the brick wall of commodity prices.'
I've never heard it put like that. It makes Ben sound more like Fonzi, than like the Hamburgler
Bernanke is the Fonzi of Ponzi.
This is going to end very badly
May god help us all
for a year and a half im hearing this crap, and the spoos move fro 700's to 1200. what a fuc_ kin fool Ive been buying into to this line. i 'm the only one to blame.
when the tide goes back there will be severe deflation of broken markets[ housing, S&P etc] and a mad rush into intact markets[Brazil,India,etc] and commodities.
Get out of the train while it is hanging at the edge of the cliff
Correct on the first line, not so much on the second...if there is a god, what would it say in response to such a supplication? Probably something like, "What the fuck?! I gave you idiots a perfect little cradle in an otherwise violent and unforgiving universe, and THIS is what you did with it?!" Sadly, the next words wouldn't be, "Now, go to your room!" In fact, I think that the ensuing silence would be answer enough.
God is real and you dont have to guess about His view on this. There will be an account and nothing will be hidden or unknown.
I'm guessing his view is pretty much your own view, whatever that is.
Funny how that always seems to work, whether it's God whispering in someone's ear about invading the middle east, drowning their children in a bathtub, or some "end times" cow and tent theology.
I look at your junking as evidence that those people are wrestling with God...that's far better than apathy.
This is going to end very badly
"Going" to end? This is a parabolic catastrophe.
Tell me that this is nothing more than a bad dream.
did you already try to pinch yourself?
It's just a naughty nightmare, baby. Go back to sleep and daddy promises it will all be better tomorrow.
Since I'm not in the habit of lying, I won't tell you that.