Quantitative Easing

Governments and their central bank creations usurped market-based monetary and banking systems to serve the plundering purposes of kings, princes, parliaments, and special interest groups who all wanted to hold the magical hand of the monetary printing press. Print up money (or its digital substitutes and surrogates in more modern times) and you can have access to all the hard work of others without the reciprocal effort. The monetary social engineers' century-long legacy in the arena of money and banking has been the booms and busts of the business cycle. The time has come to end the tragic and disruptive reign of monetary central planning.

"The collapse in inflation expectations tells us that the market believes the central banks, despite their monetary profligacy, are failing to prevent the western economies from turning Japanese, and thus at risk of repeating their devastating slide into outright deflation in the 1990s."

The future direction of the planet is a choice between independent money and the central bankers counter-party paper Ponzi. Gold is independent monetary wealth that cannot go broke.

"Central bank credibility is priceless and they desperately need to reclaim the intellectual high ground. The continuous public back-and-forth through speeches and attempts at expectation management just aren’t working."

Overnight Barclays looked at the link between the current state of corporate profits, plunging by 60bps, and the broader economic cycle. It used data set stretching to the last seven business cycles, dating back to 1973, and found that on 5 out of 6 occasions, such a drop in margins resulted in a recession. In Barclays' own words: "the results are not encouraging for the economy or the market."

The popular belief that the U.S. economy has been steadily recovering has endured months of disappointing data without losing much of its appeal. But the downright dismal September jobs report that was released last Friday may prove to be the flashing red beacon that even the most skilled apologists can't explain away. But rather than questioning the Fed's credibility in missing another forecast, most economists are lauding it for supposedly seeing weakness that others missed, which allowed it to wisely do nothing in September. But this is simply a continuation of the Fed's long-standing playbook: Talk the economy up through optimistic statements while continually holding off an actual rate hike that the Fed is concerned could undermine an economy teetering on the brink of recession.

"There’s a lack of faith in monetary policy -- you’ve thrown the kitchen sink at it, you’ve cut rates to zero, you’re printing money -- and still inflation is lower. I think this is a dangerous situation if people perceive that it has the responsibility and it doesn’t have the tools."

Japan has a nigh endless supply of insane Keynesians doing the same thing over and over and over again. But support is now growing around the world for the next round ofspending to be funded by “People’s QE.” The idea behind “People’s QE” is that central banks would directly fund government spending... and even inject money directly into household bank accounts, if need be. And the idea is catching on. That’s the monster coming to towns and villages near you! Call it “overt monetary financing.” Call it “money from helicopters.” Call in “insane.” But it won’t be unpopular. Who will protest when the feds begin handing our money to “mid- and low-income households”?

The results from Portugal's elections are beginning to trickle in and according to exit polls, Coelho's coalition has prevailed. According to Bloomberg, the ruling coalition of Prime Minister Pedro Passos Coelho has won 38%-43% of vote and 108-116 seats.

“There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.”

"It's obvious the U.S. is headed for deep deflation, hurt by the strong dollar... The Fed raising rates in this environment is not only ridiculous but harmful. U.S. stocks are plunging, not because of the prospect of a Fed rate hike, but to prevent it."

According to the Fed, there is about $60 trillion of US Dollar credit or claims for US dollars. Also according to the Fed, there are about $12 trillion US dollars.  So, the data show plainly there are five times as many claims for US dollars as US dollars in existence. Does this matter to investors? Well, yes, it matters a lot.

But the question remains whether financial condition concern should manifest itself through unemployment and inflation dual mandate forecasts or be a separate consideration all together? To me, the danger in the latter is it turns central bankers into traders and market timers and that is something they are unlikely to have trained for

Most people believe that low oil prices are good for the United States, since the discretionary income of consumers will rise. There is the added benefit that Peak Oil must be far off in the distance, since “Peak Oilers” talked about high oil prices. Thus, low oil prices are viewed as an all around benefit. In fact, nothing could be further from the truth...