"CNBC is an electronic shaman for investors... The situation resembles George Orwell’s Nineteen Eighty-Four, where the protagonist Winston Smith tuned out the massive telescreen on his apartment wall that issued endless streams of positive news."
When and what will break the chains on gold by those seemingly omnipotent forces that so assuredly keep its price in check? In essence, the belief is (and I expect for most honest and impartial analysts this is true) that because there is potentially significant downside risk to a global monetary system built upon a currency to which gold represents the proverbial kryptonite (we’ll discuss why), there are checks in place within the system, to ensure that kryptonite doesn’t become too potent. The architects of the existing system would have been foolish not to implement checks on gold.
"It's starting to get ugly..."
The current bubbles are so large and fragile that air is already coming out with rates still locked at zero. However, unlike prior bubbles that pricked in response to Fed rate hikes, the current bubble may be the first to burst without a pin. It appears the Fed fears this and will do everything it can to avoid any possible stress. That is why Fed officials will talk about raising rates, but keep coming up with excuses why they can’t. Larry Lindsey will be right that the markets will eventually force the Fed to raise rates even more abruptly if it waits too long to raise them on its own. But he grossly underestimates the magnitude of the rise and the severity of the crisis when that happens. It won’t just be the end of a raging party, but the beginning of the worst economic hangover this nation has yet experienced.
"Bernanke & Greenspan Have Destroyed America" Schiff & Maloney Warn "People Don't Realize What Is Coming"Submitted by Tyler Durden on 06/03/2015 17:00 -0400
Ali and Frazier, Laurel and Hardy, Mayweather and Pacquiao, Liesman and Santelli, and now Schiff and Maloney. Peter and Mike join clash of the titan-like to discuss their investment strategies and expose the charts the government doesn't want you to seeas "people like Bernanke are taken seriously still and the people that did predict [the crisis] are dismissed as lunatics half the time." The wide-reaching conversation covers everything from gold and stocks to The Fed and The Dollar - Bernanke "took the coward’s way out because all he did was exacerbate the problems to postpone the day of reckoning." The air is coming out of the bubble, they warn, "Bernanke and Greenspan have absolutely destroyed America. People don’t realize what is coming..."
"The real disconnect lies in the failure of the economy to grow, as most people assumed that it would, after the Fed's quantitative easing and zero interest rates had supposedly worked their magic. But as I have said many times before, these policies act more as economic depressants than they do as stimulants. As long as these monetary policies persist, our economy will never return to the growth rates that would be considered healthy.... We prefer the ability to manipulate figures rather than allowing the figures to tell us things that we don't want to hear."
"To critics who warn that pumping trillions of dollars into the economy in a short period is bound to drive up inflation, today's central bankers point to stagnant consumer prices and say, 'Look, Ma, no inflation.' But this ignores the fact that when money is nominally free, strange things happen, and today record-low rates are fueling an unprecedented bout of inflation across asset prices."
"You said you weren’t monetizing the debt when you talked to Congress. You said the Fed was going to sell the bonds, but none of them have been sold. They’ve all been rolled over. So how are you claiming victory when you haven’t exited? You haven’t raised rates, you haven’t shrunk the balance sheet. You were wrong in the past. You didn’t see the financial crisis coming. You told us there was no housing bubble. You said subprime was contained. So you were certainly wrong then. So how do you know you’re not wrong now? Is there anything that might change your opinion and get you to rethink and maybe admit that your outlook is wrong?"
The oddest couple out there? Probably.
In the eight years that the Fed has issued GDP forecasts in the prior Fall, only once, in 2010, did the actual economic performance come in the range of its expectations. A more sinister possibility is that the Fed is not really forecasting at all but cheerleading. By forecasting strong growth, the Fed may be hoping to engender optimism, with more spending and hiring hopefully to follow. Kind of like a field of dreams recovery -- if the Fed forecasts it; it will come. Based on what we have seen thus far in the year, fantasies about a 2015 recovery should be evaporating.
Recently, France decided to crack down on those people who make cash payments and withdrawals and who hold small bank accounts. The reason given was, not surprisingly, to “fight terrorism,” the handy catchall justification for any new restriction governments wish to impose on their citizens. French Finance Minister Michel Sapin stated at the time, “[T]errorism feeds on fraud, money laundering, and petty trafficking." What we are witnessing is the creation of totalitarian control of your finances. The implication that you may have some sort of terrorist involvement is a smokescreen.
The day after the crash (and thereafter), what will be the currency that is used to buy a bag of groceries, a tank of petrol, a meal at a restaurant? Certainly, the need will be immediate and will be on a national level in each impacted country, affecting everyone. Many believe the US will be prepared ahead of time with a new, electronic currency - US citizens will then become the most economically controlled people in the world, overnight. A further possibility is taking place in Mexico today. Mexico is remonetising silver. As the Great Unravelling proceeds, we would be wise to monitor what happens with the Libertad in Mexico and watch for a similar return to precious metals in other jurisdictions.
In a fiat currency system, perception is, by definition, everything. Paper money has no intrinsic value. So the people saving it and accepting it in exchange aren’t expressing faith in the money itself but in the competence and honesty — and power — of the institutions managing it. Let that faith erode and those slips of colored paper and ephemeral computer bits revert to their intrinsic value. And on the credibility front, the trends aren’t encouraging.
"I was having lunch with a very dear friend of mine yesterday, who is also a very successful financial planner and advisor, who stunned me with an obvious question: 'Has the dumb money become the smart money?'"
The transparent truthlessness of the Fed’s basic premises go far to explain the chasm between official policy and reality - though it does not explain the appetite for plain lying of the supposedly informed minority cohort of the public, the deciders among us in business, politics, and media. Within th enext few months (between "patient" removal, token rate hikes, and reversals to QE4), the Fed will be completely out of cred. This will be the biggest disaster of all, since the loss of faith in august institutions will rage through every polity in the advanced economies. Nobody will believe any longer in anything they say or do, and especially the value of the papers (or digits) they denominate as money.