Lear Capital: The Future of QE and Gold

Zero Hedge's picture

Sponsored Post by Lear Capital

Everyday Congressman Paul Ryan steals a few headlines with his plan to balance the Federal Budget. Ryan's plan is to cut $650 billion a year from the deficit.

To get a better feel for what this really means, let's take a few steps back to the beginning of the credit crisis. To rescue banks and stimulate the economy, the budget deficit increased from $455 billion in 2008 to $1.416 trillion in 2009. This deficit funded TARP and a variety of stimulus efforts from Cash for Clunkers to Energy Efficient Appliance credits.

Essentially $1 trillion of the deficit was due to stimulus.

Then in 2010 another $1.294 trillion deficit was incurred and in 2011 an additional $1.65 trillion is projected.

I think it's safe to conclude that since 2009, $1 trillion per year has been added to the budget for stimulus purposes. And, before I forget - Did anyone else hear that TARP had been paid back? Just wondering . . .

Now the trillion dollar question. What is it that Congressman Ryan is trying to cut from the budget? Ryan's deal should be a no-brainer as his proposed cuts do not even bring us back to pre-stimulus budget levels. Is opposition stemming from a concession that an ongoing effort to print more money must be maintained in order to keep the economy alive?

How is it now that a debate to cut just $100 billion per year, ($61 billion over the remainder of fiscal 2011) has been spun as an effort to starve the elderly?

As Dick Morris said to Sean Hannity, let the government shut down then defund things like $730 million of foreign aid to Kenya. In so doing, Republicans would soon have their cuts.

Nope! Can't do that. Dick Morris you are way too smart for our own good.

If the concession has been made, that we need to keep printing more money to keep the economy at some stage of almost recovery, then say hello to inflation. If you want an explanation as to why Gold prices and and now Silver prices are pressing to new highs, maybe it's because there are those who listen to this meaningless rhetoric and see massive inflation on the horizon.

And, what if Congressman Ryan has his way? If we have conceded to the need for "forever stimulus" and resigned ourselves to accepting perpetual "Transitory Inflation", who continues to carry the Stimulus ball?

I think Tyler Durden, mastermind of the ZeroHedge.com website said it best. "This simply means that even more stimulus will reside with the Fed, and with monetary policy, which also means that not only is QE3 guaranteed, but so is QE33."

Indeed, there is more than one way to skin a recovery. Larry Kudlow asked a guest today if the sky was the limit as to how high commodities like gold and silver could rise. The answer was "Yes!"

Join Learcapital.com's inflation watch and see why Gold demand and Silver demand are rising on a global level. And for the best prices on American Gold and Silver Eagles, check out Lear Capital's online real-time pricing. Lear is also the only gold company that posts a real time buy back price for each coin offered online.

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The Deacon's picture

Ryan can do it i tell ya!  With enough tax breaks for the top 1% and ending or severely cutting back most entitlements for the bottom 90%, it just might work.  It looks great on paper.  The only fly in the ointment is the bottom 90% might not like it.  C'est la vie baby, i guess.


PS - A great American writer, Joe Bageant just passed away (Deer Hunting with Jesus).  A member of the American underclass who rose above now writes objectively about 'his people'.  It might sound mundane, but he is a great storyteller.  Find some recent podcasts of him being interviewed.  He has great flair for writing and speaking.  He also explains the idea of the Tea Party, what happenned and how the poor underclass of the midwest changed to the GOP, even though they keep sticking it to 'em.

dumpster's picture

who listens to morris and hannity,, mouth pieces for the great merkin

david3549tw's picture

Obama vows to double the U.S. export by 2015(?).  That guarantees Bernanke's maintaining super low interest rate and thus QExx. 

honestann's picture

Finally, a promise Obama can keep!  Wow!!!

When Obama says "exports will double by 2015" he means "measured in dollars".  No problemo!

By 2015 the dollar will be worth about $0.10 so "doubled exports" means the USSA will export 5 times LESS goods.  But the price of those goods measured in dollars will be 2x higher.

Get it?  Obama brags about cutting exports by a factor of five.  Amazing!

goldenbuddha454's picture

All I can say is Paul Ryan and better yet, Rand Paul are the lone voices of reason in this debt crisis.  Noone wants to believe the end is near for the U.S. economy.  It will be 2 maybe 3 years and your dollars will be completely worthless.  IMO

JollyRoger's picture

Compare the situation this year to the situation last year.  Silver remained relatively flat through last year's end of QE and Europe crisis events.  That is until QE2 was leaked.



tomster0126's picture

Don't believe the gold gurus who say there's no limit, gold will keep rising for a bit more but it's not going to be the game-ender here.  Ryan's full of it.



Waterfallsparkles's picture

The Congress needs to stop the printing of Dollars.  Start with the real problem, the FED printing Dollars indiscriminately and giving the Money to the Banks which transfer the Money to the Banksters for their Bonuses. 

Reverse Robin Hood.  Take from the Poor and give to the Rich.

The people that received the 3 or so Trillion should have to pay to reduce the Deficit not the average American and the Poor.

blindfaith's picture

For God's sake, every time some writes something with a bit of interest they go and quote some ass from CNBC like Kudlow(as meat and potaotes for the point) and destroy the entire illusion that the essay had any worth.


Quote your grandmother before you quote one of those paid-to-say idiots on CNBC.


As for Paul Ryan, just what America needs another worthless screwball in Congress wasting time and taxpayer money on a half baked notion that your grandmother would not buy in a heart beat.

Everyone is DC knows the only way to fix this train is to let it hit the wall and start over without lobbyist, bribes, and black-books with dirtysex secrets inside.  In other words, it ain't gone happen in our lifetimes.