Chart Of The Day: From Here To QEternity - Here Come The Central Printers

Tyler Durden's picture




 

With the liquidation driven collapse in the precious metals one of the most discussed events in the past two days, some are wondering: is the era of sound money over? Is the world suddenly a better place, and does infinite money dilution - the only source of nominal, not real, stability in the world - mean paper money will soon be seen as a safe haven once more? No, no and no. Obviously. And no, the sell off is not driven by the Mayan apocalypse due in a few hours. In fact, it is very amusing how quickly a snapback in paper prices of any one product can shift trader (we would say gambler, but that is an insult to gamblers everywhere) sentiment, especially when it has been reported time and again that unlike stocks, precious metals are the only commodity that is looked upon by central bankers with nothing but disdain.

So what do these central bankers propose as an alternative to sound money? The chart below shows precisely that, by projecting where the balance sheets of the final backstops of the modern financial world will be in one year. In short: far higher - driven by what? Why even more paper money dilution of course. Which is precisely the issue at hand - in a closed loop world in which relative currency devaluation does nothing to raise absolute global value, and merely shifts relative benefits from one actor to another, the only way the world can "grow" now that it has reached maximum leverage capacity is to devalue currencies but not against one another, but in a coordinated fashion against a hard asset(s). Which is precisely what will eventually happen. And that hard assets will be gold, silver and/or anything else that historically has had monetary equivalency. That daytraders seem to ignore or forget this fact is, well, expected. After all there are margin call demands to be met: everyone else should be delighted that real money is suddenly on sale.

Central Bank Balance Sheet as a % of total host GDP (via Guggenheim):

And a chart showing how much gold and silver the central banks will print in the next year: 

 

 

 

       [Insert chart here] 

 

 

 

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Thu, 12/20/2012 - 11:59 | 3082760 Pharming
Pharming's picture

I had to put it in perspective to fully grasp this large economical pile of horse shit.

So, I put my own finances in relation to the good ol'United States...(approx with USDEBTCLOCK.ORG)

 

My wife and I bring home approximately $195,600 per year.

So, $16,300 / month.

We have monthly mortgage/bills/expenses of $23,600 / month.

I have outstanding liabilities of $1,360,000.

I have future unfunded liabilities of $9,800,000.

My inlaws and parents live with us (I give them an allowance).  My son is unemployed, I loaned my daughters money for school but they can't repay me and are working part time. I maxed out my 19th Cabela's Card.  Lot's of points though.  My printing press is working 24/7 but I just can't stop buying stuff with my Amazon App.  My wife doesn't really care about decreasing her spending for our spoiled little brats even though they are in their 20's and should be supporting themselves by now.  NOT to mention my daughters, who live with us, can't keep their legs together AND they know if they have another kid, my wife and I will be pitchin in more to support em.

Did I mention that our refrigerator is completely out all the time from all of my "family, parents, kids, grand kids, pets..." But you know me, if you want to eat out of my fridge, I'll buy more food...

I want to buy more.  I want a bigger house.  I want a better paying job, but those just aren't out there.  I wonder if I can get a couple more credit cards to get my by...at least till my kids can pay it off...  

What do you think?

Thu, 12/20/2012 - 12:02 | 3082781 RallyRoundTheFamily
RallyRoundTheFamily's picture

I think it was a great post.

Thu, 12/20/2012 - 12:09 | 3082816 GetZeeGold
GetZeeGold's picture

 

 

at least till my kids can pay it off...

 

So Ben Shalom uses your kid's future paycheck to force the metals down so he can buy with his money and then he moves to Idaho.....works for him.

Thu, 12/20/2012 - 12:33 | 3082961 TheSilverJournal
TheSilverJournal's picture

Just make sure you don't stop borrowing, or else you are putting yourself at risk of going broke!!

Thu, 12/20/2012 - 13:15 | 3083175 Pharming
Pharming's picture

Hahaha...fools...What me worry?  I own the banks!   hahahah....suckas....

Thu, 12/20/2012 - 14:11 | 3083396 francis_sawyer
francis_sawyer's picture

Your kids are the 'kick the can' bait [promise] that made the last 100 years of jew bankers live fat & happy... Now go remind them how persecuted the jews have been throughout history and how ahamed they should be... Convince them that they should give their 100% support for the Apartheid State of Israel...

Thu, 12/20/2012 - 15:34 | 3083760 weburke
weburke's picture

If you will do better analysis, by reading at zero hedge actually, you should be able to discern that it is not Jews at the top. Also, guess why media always refers to the "state" of israel. You dont hear them say the "state" of russia, england, francec, india, ect. Hello 51'st state. Lots you dont know Francis !

Thu, 12/20/2012 - 12:47 | 3083007 Ghordius
Ghordius's picture

me too. I'd wish some mention of the foreign creditors and suppliers, though

btw, "expenses of $23,600 / month"? this means your hobby with weapons costs some $4'000 / month, doesn't it?

perhaps, just perhaps you should have a talk with your arms and ammo dealer

Thu, 12/20/2012 - 15:44 | 3083797 Frozen IcQb
Frozen IcQb's picture

It would actually be hilarious if some parts of it weren’t true.

Thu, 12/20/2012 - 12:06 | 3082812 Navymugsy
Navymugsy's picture

You should run for office as you appear to be highly qualified in economical matters.

Thu, 12/20/2012 - 12:28 | 3082911 Pharming
Pharming's picture

I thought about it...but I'm on too many watch lists.  

Thu, 12/20/2012 - 12:31 | 3082951 PlausibleDenial
PlausibleDenial's picture

Are your daughters hot???  I can think of an alternative cash flow source....:)

Thu, 12/20/2012 - 12:38 | 3082983 AgShaman
AgShaman's picture

19th Cabelas' Card?

You're my hero.

Thu, 12/20/2012 - 13:12 | 3083168 Pharming
Pharming's picture

Actually, while you were reading this...I just got my 20th!

Thu, 12/20/2012 - 12:52 | 3083061 Tombstone
Tombstone's picture

You might need to kidnap Benny and his printing press.  Then again, raiding Fort Knox might help a bit.

Thu, 12/20/2012 - 13:11 | 3083165 gmrpeabody
gmrpeabody's picture

You may be greatly disappointed with your take at Fort Knox.....

Thu, 12/20/2012 - 13:11 | 3083161 jbvtme
jbvtme's picture

how about you and the bride in a three way with your accountant?

Thu, 12/20/2012 - 13:22 | 3083196 Pharming
Pharming's picture

By the way, my neighbors?  They're awesome...I throw these huge parties...(I flip the bill)...girls, prime rib, Red Hook kegs, Estancia.  Then after the parties...get this...my neighbors let me come over, punch holes in their walls, blow up their shit...   My neighbors?  They really don't care.  It's crazy.  Maybe it's because I let em sleep with my wife, and I pay for all the damages.  What a bunch of suckers.   Man...  Yeah..  I just can't get enough.  Whoooo....!

Thu, 12/20/2012 - 15:23 | 3083712 yogibear
yogibear's picture

Your not alone. You have better income than many I know. Bubble Bernanke and the fed will just massively devalue the debt and currency. It's their only solution and it's currently in-progress.

Thu, 12/20/2012 - 15:57 | 3083848 Lore
Lore's picture

Pharming: "What do you think?"

Pity nobody seems to have the personal grit to raise a hand and say STOP.

Whatever happened to American PRINCIPLES and GUTS? 

Only one congressman showed willingness to stand up, and he was shown the back door.

Thu, 12/20/2012 - 12:01 | 3082769 Cognitive Dissonance
Cognitive Dissonance's picture

When all you produce is fiat, every problem looks fixable with fiat.

Thu, 12/20/2012 - 12:05 | 3082807 Unprepared
Unprepared's picture

"When all you have is a printer, every problem looks it can be fixed with a Ctrl+P"

Fabbrica Italiana Automobili Torino quote

Thu, 12/20/2012 - 12:04 | 3082787 SelfGov
SelfGov's picture

The economy isn't happy.

People are needing money fast to cover paper losses so they sell the only thing of value they really have, grudgingly.

 

Gold and silver should be honored everybody is turning to them in a pinch...

Thu, 12/20/2012 - 13:41 | 3083287 sitenine
sitenine's picture

Not really. No one is selling phyz (unless they are playing the backwardation spread). Selling gold and silver paper to cover other paper losses might make some feel smart, but all they are really doing is driving the price of phyz down so that I can buy more.  I'm not into contracts either - I buy at spot and stack immediately because delivery will be impossible shortly. Backwardation will grow in magnitude as more and more folks start to realize this inconvenient truth.

Thu, 12/20/2012 - 12:04 | 3082794 Winston Churchill
Winston Churchill's picture

a 1933 redux perhaps.

A total deflationary collapse in progress ?

We just can't see the wood for the trees.

Thu, 12/20/2012 - 12:04 | 3082802 A. Magnus
A. Magnus's picture

What if they're taking all that new fiat from QE4 and piling it into gold and silver shorts to suppress the price? How long could they keep THAT up?

Thu, 12/20/2012 - 12:23 | 3082902 SelfGov
SelfGov's picture

Fortunately, not longer than I can keep buying...

Thu, 12/20/2012 - 12:04 | 3082804 DoChenRollingBearing
DoChenRollingBearing's picture

The Central Bank of DoChenRollingBearing has decided that only two assets are worth holding.  Both are precious metals related.

1) Au, Pt, Ag, Pd and some Pb (and Pb delivery devices)

2) Products made out of 52100 bearing steel:

http://tinyurl.com/d8fhlg9

Thu, 12/20/2012 - 12:37 | 3082976 CPL
CPL's picture

Hard to beat the investment quality of a 50 pound box of steel, heavy gauge, framing nails.

 

2005:  Let's see $12.48 cents with tax (%15 PST+GST) in 2005

2012:  Currently $167 (working in taxes now at 13%) Canuckbucks for the same box of nails at Home Depot.

 

I'm glad I bought 800 lbs of good fixtures to combat all the non inflation we are having.

 

Thu, 12/20/2012 - 15:38 | 3083179 gmrpeabody
gmrpeabody's picture

But, really...., there is no inflation because you can substitute those steel nails with iron..., or even wooden pegs. Eventually, you may be tying your home together with strips of hide or hair, but that in and of itself is not evidence of inflation.

Thu, 12/20/2012 - 14:13 | 3083407 TuPhat
TuPhat's picture

Good luck with the high speed Pb trading.  Don't be caught short of delivery devices.

Thu, 12/20/2012 - 12:07 | 3082813 Au_Ag_CuPbCu
Au_Ag_CuPbCu's picture

Damn!  I bought some physical AG yesterday, timeing the bottom is a bitch!

Thu, 12/20/2012 - 12:56 | 3083094 SmallerGovNow2
SmallerGovNow2's picture

Keep stackin'....  in the long run price is got no where to go but up...

Thu, 12/20/2012 - 13:01 | 3083122 Snoopy the Economist
Snoopy the Economist's picture

You really thought the bottom was in when the monthly and weekly stochastics were rolling over and the VIX is so low?

Thu, 12/20/2012 - 13:36 | 3083253 Au_Ag_CuPbCu
Au_Ag_CuPbCu's picture

Actually no, but I don't buy on technicals I buy on weakness and if I ever do time the bottom it will be pure luck and nothing more.  Happy stacking!

Thu, 12/20/2012 - 14:02 | 3083348 Whalley World
Whalley World's picture

I hate to say this but i have a sizeable commission coming at month end and hope they can keep the prices down till then.

 

Thu, 12/20/2012 - 12:07 | 3082815 Unprepared
Unprepared's picture

B. Shalome B. is slacking. Get to work Mr. Chairman!

Thu, 12/20/2012 - 12:07 | 3082819 Dr. Engali
Dr. Engali's picture

Let the day traders ignore this fact to their own peril. I will gladdly capitalize on any weakness I can.

Thu, 12/20/2012 - 12:07 | 3082821 youngman
youngman's picture

It will happen...the question is when....at what point does the "world" finally quits playing this game...I drink way to much pondering this question...

Thu, 12/20/2012 - 12:08 | 3082823 mdtrader
mdtrader's picture

That should send gold below $1536 and into a bear market.

Thu, 12/20/2012 - 12:13 | 3082847 GetZeeGold
GetZeeGold's picture

 

 

So short it and save up to buy first printings of the new $100 dollar bills on QVC. Only costs $250 each....but there is a strict limit of five per customer.

Thu, 12/20/2012 - 12:38 | 3082982 CPL
CPL's picture

Shut up and put your money were your mouth is.

 

Short DUG and we'll talk in a month.

Thu, 12/20/2012 - 16:02 | 3083846 Frozen IcQb
Frozen IcQb's picture

I would prefer shorting both DUG and DIG simultaneously. The basis convergences on these products are steeper than your borrowing costs.

Thu, 12/20/2012 - 12:11 | 3082835 buzzsaw99
buzzsaw99's picture

everyone here would agree that the multi trillion $ stock market ponzi could collapse at any time, same same for the mega multi trillon $ bond market yet everyone is expecting hyperinflation. whatever.

Thu, 12/20/2012 - 12:17 | 3082877 adr
adr's picture

Basically you're fucked unless you figured out a way to make money without working.

Sadly millions have, along with everyone for the last few thousand years whose last name ends with ein.

Thu, 12/20/2012 - 13:42 | 3083291 halodoc
halodoc's picture

Of course there will be hyperinflation, after the self-correcting, hyper-deflation that is.

Thu, 12/20/2012 - 12:10 | 3082837 praps
praps's picture

 

Stocks and bonds to be liquidated next.

Thu, 12/20/2012 - 12:11 | 3082843 Schmuck Raker
Schmuck Raker's picture

The US is waaaaaay behind in this horse race(to the glue factory).

"Get to work Mr. Bernanke", and fuck you.

Thu, 12/20/2012 - 12:12 | 3082853 jbvtme
jbvtme's picture

check out tulving and how much product they are sold out of...

Thu, 12/20/2012 - 12:33 | 3082924 LeisureSmith
LeisureSmith's picture

derp.

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