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Every One Wants Dollars (Again)
A new phase in the markets began this month. The Federal Reserve ended its QE3+ purchases. The Bank of Japan unexpectedly and dramatically stepped up its asset purchases under its QQE operations. The government's largest pension fund announced aggressive portfolio diversification plan.
Contrary to some press reports, the ECB remained unanimous in favor of additional measures to arrest the deflationary headwinds, if needed. The staff was instructed to accelerate work on other assets that can be purchases to expand the ECB's balance sheet back toward the 2012 peak.
The softening of the flash PMI, and expectations that next week's flash HICP inflation estimate shows softer prices, underscored the likelihood that more measures will be needed, and before the weekend, Draghi expressed some urgency. This raises the prospects of more action at the ECB meeting in early December. Previously, it appeared more likely that the ECB would wait until next year, to see the participation in the next month's TLTRO and the beginning of the ABS purchase plan.
In the UK, official guidance, including the Quarterly Inflation Report validated the investors deferring the first hike from next spring until the end of the year. An increasing number of economists are pushing it out until 2016. Whereas the BOJ and ECB are providing more monetary support, the BOE indicates it will not make conditions less accommodative for longer.
The People's Bank of China joined the party before the weekend. It announced the first cut in the benchmark one-year deposit rate. The 25 bp cut took many by surprise, as the PBOC was seen continuing to target liquidity injections, in part, ostensibly to minimize stimulating shadow banking activities.
The divergence has driven the dollar higher. There are two notable exceptions among the major currencies. The New Zealand dollar has been the strongest this month, gaining 1.6% against the US dollar. This is most a function of favorable economic news, leaving aside the decline in milk prices, for the domestic economy. The other exception is the Canadian dollar. As we have noted, it is common for the Canadian dollar to do well on the crosses in a strong US dollar environment. In addition, firmer than expected inflation data ahead of the weekend helped spur a short-squeeze, helping lift the Loonie to its best level since October 31.
The yen has been the weakest of the majors this month, losing about 4.7% against the dollar. The swing in interest rate expectations for the BOE has seen sterling slip 2.0%, more than twice the euro's 0.9% decline, thus far, in November. The Australian dollar is still off about 1% this month, even after recovering about 0.8% in response to the Chinese rate cut.
The prospects of the ECB taking more action as early as December will likely continue to weigh on the euro. In the middle of last week, the euro rose to a 3-week high near $1.2600. This corresponds to a downtrend line drawn off three highs in the second half of October, beginning with the October 15 high near $1.2885. Being turned back from the trend likely signals the resumption of the downtrend, even though market positioning (in the futures market) and sentiment seem nearly as extreme as ever. A break of the $1.2360 area would target $1.2230, on the way to $1.20 in the coming weeks.
The dollar was trading below JPY110 on before the October 31 surprise moves from Japan. There were very little official comments about the currency market until the dollar approached JPY119. Then Finance Minister Aso expressed concern about the pace of the move, spurring a modest pullback. However, economic adviser Hamada comments suggest two things. One, if the pace is a bit troublesome, the direction is desirable. Two, official jawboning, as we anticipated, is likely to raise as the JPY120 level is approached. Dollar support is pegged around JPY117.30, which also corresponds to the 5-day moving average, which it has not closed below since October 16.
Sterling is trading sideways in a box. The $1.5600 area has repeatedly been tested in recent sessions. The $1.5740 area marks the top of the box. Above there is what may prove to be a more formidable resistance near $1.58. While we expect sterling to outperform the euro on a trend basis, it is still likely to decline against the dollar.
The dollar-bloc looks to be in a superior technical position compared with the euro, yen, and sterling. The RSI and MACDs are consistent with follow through gains in the Canadian dollar after the strong advance before the weekend.
There are some important caveats though. First, the Canadian dollar has had several short-lived bounces during this five-month downtrend. This one is already getting large in terms of the magnitude of past corrections. Second, the US dollar found bids near the 50-day moving average (~CAD1.1215), which has generally acted as support for the greenback in trek from around CAD1.06 in July to CAD1.1470 earlier this month. Below CAD1.1200 nearby support is seen around CAD1.1160 and then CAD1.11.
The Australian dollar bounced strongly in response to the surprise rate cut by the PBOC. It does look like it is trying to carve out a bottom. However, the key level is $0.8800, and the Aussie first needs to close above its 20-day moving average which comes just below $0.8710. The technical indicators are constructive, but it is a counter-trend move.
The dollar edged higher against the Mexican peso over the past week but showed little momentum as it approached the multi-month high set on November 4 near MXN13.68. It requires a break of MXN13.50 to signal something of interest. The political backlash against the government may endanger its larger reform efforts.
Turning to the US 10-year Treasury yield, technical indicators are not given strong signals of the direction of the breakout from the 2.30%-2.40% range. Next week is holiday-shortened, and it very well may mean that the ranges are largely respected, perhaps until the run-up to the employment data.
The S&P 500 gapped higher before the weekend, arguably lifted by Draghi's sense of urgency and the PBOC's rate cut. That gap exists between 2053.84 (Thursday's high) and 2057.46 (Friday's low). This gap is technically significant, and short and medium-term traders will monitor it. Just as nature abhors a vacuum, so do prices, and if it is a "normal" gap it will be filled over the next few sessions. It could be a breakaway gap, suggesting an acceleration of the advance. It might turn out to be an exhaustion gap, typically at the end of an advance, a last hurrah, if you will, before a correction unfolds.
Another insight we'd like to share is about the relative performance. The S&P 500 has generally outperformed the European bourses, but this may be changing. Over the past week, the Dow Jones Stoxx 600 advanced twice as much as the S&P 500, and this brought the month-to-date gain into equilibrium. Of course, one week a trend does not make, and the outlook of the exchange rate should be integrated into the decision process. All we are saying is that it may be worth monitoring. If the global liquidity conditions are still ample post-QE3+, and one expects the business cycle to bottom, European equities seem to be a good risk-reward way to expect that view.
Observations based on the speculative positioning in the futures market:
1. Position adjustments were minor in the Commitment of Traders reporting week ending November 18. There were only two gross positions adjusted by more than 5k contracts. The gross short yen position grew 9.2k contracts to 139.1k. The gross short sterling position rose 12.1k contracts to 65.7k.
2. The net short position in the US 10-year Treasury futures rose to 127k contracts from 112k. This was the result of a small add by the longs (8.3k contracts to 398.9k) and a larger sale by the shorts (+23.2k contracts to 526.2k).
3. Given how closely the capital markets are watching oil, we note that the speculative long position in the futures market eased 21.5k contract to stands to 255.3k. The gross longs were culled by nearly 38.5k contracts to 403.7k. Almost 17k gross short contracts were covered to leave 148.4k.
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This site continues its run of wrong calls. Dollar, gold, markets, interest rates, inflation, deflation and commodities. The negative nabobs of negativity don't get the fact that they were wrong, are wrong and in all probability will be wrong into the near future. Saying that you maybe eventual be right when dealing with the markets is totally bogus. All these wrong calls either lead to actual losses or loss of opportunity. These are markets not religion. You can not say God said and get a pass. When your wrong you lose money, period. I started reading Zero Hedge about six years ago because I thought there was fairly intellignet conversation happening here. That was a long time ago. Now all you get are gardening tips for living off the grid.
Yeah and everyone was right in 2000 and 2008 until they were wrong.
My whole point is reflective of your answer. What about the 10 years before 2000 and the eight years after? People still are alive and investing. Costantly proclaiming wait until the next shoe drops is not commenting on how to most effectively invest. It's moronic.
Wanna know how to skin a financial wabbit?
In the long run if you don't control it you don't own it. If you have to turn on your computer everyday to see what you are worth you have a problem. It doesn't matter if it is cyberwar or tricks from the mic you will be staring at a blank screen at sometime in the future. Think about that.
"Contrary to some press reports, the ECB remained unanimous in favor of additional measures to arrest the deflationary headwinds, if needed."
Inflation causes deflation, so there is no arresting it. 100% of bubbles deflate. It doesn't matter how big they blow the bubble, it will deflate.
After blowing the global debt bubble to 150 trillion since 2009, why is anyone still talking about deflation? Because 100% of bubbles deflate. The FED didn't make sure deflation wouldn't happen here, it guaranteed it would happen here.
All these countries destroying their fiat currencies........there is a part of me that is very much looking forward to it.
Couldn't disagree with this read more.
http://sputniknews.com/radio_red_line/20141122/1015010443.html
Dollars are debt, or evidence of debt. The pseudo-intrinsic "value" of a dollar is the value of bonds, coupled with the weakness of equity.
Dollars will continue to get stronger and stronger right up until they fail completely. Gold (i.e. equity) will get weaker up until that time also.
There is widespread demand for dollars because there is widespread debt which people are trying desperately to extinguish. When they finally give up trying is when the dollar starts to actually fall apart.
This is why 2008 happened, because of huge defaults in mortgages and other debts. The central banks see this as their kryptonite, so they will do anything and everything to "print more dollars" as their argument is smokescreen about deflation. So they are synthetically creating a "different kind of dollar" (i.e. short-duration or "M1") to prop up the "other kinds of dollars," i.e. long term debts like mortgages.
So the lesson is this: forget about your dollar-value mark to market in gold, silver, copper/lead and food. Just get as much as you can while it's still on sale.
Now listen up all you blowhards... yeah, that means you you commenting fool. This might make me sound a bit like a panzy, but i can assure you that i'm not since my lead holdings are twice the wieght of my silver if not more. I just wanted to say THANKS to all of you who post pertinant shit. I learn more from ZH comments than just about any other source of info. If only we could take over and run things. sure we'd have to come to a consensus but i'd bet my entire stack of metals on the random ZH commenter doing a better job of fixing this f'd up monetary debacle we're in than Yellen or Helicopter ben or the entire plunge protection team, one of whom i know personally. He is essentially clueless but he did have some advice for me when i confronted him on the inevitable outcome of QE crap. He said, "get to know a farmer with a cow and a few chickens..."
Here's another good source of info: http://rdwolff.com check out his lecture on marx and prepare to have your mind blown.
As would be expected, the public is the last to jump on board before the trend change...
http://www.globaldeflationnews.com/introduction-to-the-elliott-wave-prin...
The dollar has had a great ride which will continue sometime in 2015, but for the moment, it will take a significant break...
http://www.globaldeflationnews.com/u-s-dollar-indexelliott-wave-update-f...
You can only pull demand forward for so long.
USD is up another 1.6% in November - the USD trades about $5.5T per day.
US indexes are another story - with a USD strong like bull, the indexes should fall:
http://bullandbearmash.com/spx-inverted-relationship-usd-usd-sharply-spx...
We've had one warning shot since September. More to come.
Not that I want to confuse you with the facts, but the $5.5 trillion you cite, is the turnover of the foreign exchange market, not the turnover of the dollar. Also, the correlations between currencies and the stock market are not constant. That is to say that most recently, the correlation between the euro-dollar exchange rate and the S&P 500 and DAX is the most inverse in nearly seven years. Under certain conditions, like now and second half of the 1990s, a stronger dollar was correlated with a stronger stock market.
I am just sayin'....
Schiff is not wrong. He should be praised for having the guts to keep going on screen and taking the flak.
All of these people were right, but very few of them/us saw that the machine would just ride straight thru every rule and law in the book, and protect themselves at all cost. Hoodathunk they would be determined to go all doomsday, for a short period of gain.
How many of us realised that -after the investment bankers screwed their banks for bonuses and cash-out options- that all the corporation executives would do the same and destroy their companies. Most of us were too smart to entertain that idea.
The folks that were just smart enough to take the daily figures, rode the Dow boom. Of course their day of judgement will come and they'll be crushed, but it hasn't happened yet.
Who could have thought Abe would fool the whole of Japan, that Draghi would con Europe with a few hollow promises, that Jamie and Lloyd and all these crooks would own the entire legal and regulatory systems, and never have to admit guilt. And worst of all, that the MSM would just stand back and say 'not our fight, pal'.
We could appreciate that Helicopter Ben and Yellen and of course the Krugster would print until they were pile-driven into the base of the canyon, but to be held in awe for it?
Of course Schiff is right, but not yet. And he wont be right until they are all dragged out of Wall St and Washington by their glued on toupees. Who is to stop them, Hillllary, Jebbush, Rand, Lizzie W? Maybe only George Soros or Putin, and why would they...
The most critical element in the mix keeping the US dollar strong is the MIC, without it, the dollar is toast. So until somebody upstages the USM on the field or sea of battle it just ain't going to matter a hill of beans and whatever else these criminals do to manipulate the games they play. So pick a shovel and dig.
You get the biggest part of it. So the answer really is: under what conditions the MIC fails to enforce the petrodollar and reserve currency status. A battlefield loss in this context means a major loss of naval projection, that is, carriers. Short of a nuclear exchange, that kind of conflict not going to happen anytime soon because the result will be total US dominance oil and trade for decades to come. Russia and China know that. So, the collapse, if it happens, will be internal. If you look at these internal possibilities, then it becomes more plausible sooner than later.
China and Russia will upstage them - and without the dollar as the worlds trade currency the MIC will die on the vine - hard to fund it without $$ - though they did just steal Ukraines gold....
The advantage enjoyed by the Wehrmacht in the early stages of WWII was not so much in equipment or organization but in terms of the veteran leadership that comes from sending an army that has already been blooded in battle to face a succession of opponents that have not been so "fortunate".
With the exception of a few survivors taken from the "volunteers" fighting for East Ukraine, the army of the Grand Duchy of Evil as well as the PLA are both military virgins staffed with peacetime bootlickers for officers and unmotivated draftees in the ranks.
This is not to say that the US military does not have its share of peacetime bootlickers, particularly in the upper ranks, but this is a problem endemic to all large military forces. The key is that the US force has been shooting at people, and been taking casualties in return, for more than a decade. Troop rotation to the seat of war means that virtually everyone -- Active, Reserve, Guard, and even Inactive Reserve -- has had the opportunity of practicing their craft in real world conditions.
They would make very short work of the peacetime cadres of both of these nations combined. The question would then turn to whether the new Axis powers could learn from their mistakes fast enough to avoid military submersion. The Soviet Union managed to do it by a very thin margin against about 60-70 % of the military power of Germany but there was a series of still-standing world-record military catastrophes to mark their education.
Having the dollar as the world reserve currency is both a blessing and a curse. The world is currently engaged in a massive game of speculation and chance that contains a lot of risk. Political considerations and insider deals between both nations and Central Banks play a big roll in this game.
A chart I saw recently touted how the percentage of funds held by foreign governments in dollars has fallen in recent years. Even after many countries have reduced their holdings in dollar reserves the dollar still carries a major wallop and place in the world economy and will effect everyone going forward. More on how the dollars role as the reserve currency effects all of us in the article below.
http://brucewilds.blogspot.com/2014/11/reserve-currency-status-both-blessing.html
Save the clickbait, I'll tell you right here.
We have the world's reserve currency. We get to charge shit up like crazy on our Fed Card and then default, after which we use the Marine Corps to answer the phone from anyone stupid enough to try and collect what we owe them.
After that, we are still the world's largest market, so people will have to sell to us anyhow, no matter how much they hate the fact that we just took their life savings and left them naked on the side of the road.
"Having the dollar as the world reserve currency is both a blessing and a curse."
Don't see the curse part of that equation at all, unless you are on the other side of the transaction.
So how have those marines done in the Middle East,I'm sure the grunts are getting tired of war.
Bear markets return the product to it's rightful owners.
The problem you all have is time. You dont know the time of these cycles
but will submit everything that happens from 911 is a gold war.
Maybe its my age, I got time to work it in the cadence that it presents, I
cant make it do what I want in my time.
Starting to rebuild just two years ago from divorce and BK, first I bought silver,
then I bought stocks, building the 401k all along anyway lousy mutual funds,
then I went to gold on Dec 2013 low and again in the next two lows.
Everything in its time it presents. But you know, I sure wish I was able to keep
my 1999 $400 gold through the divorce. Time is how the market can screw you,
this stuff is glacial, the elite work generationally, the amateurs use daily charts.
"this stuff is glacial, the elite work generationally, the amateurs use daily charts."
A parabolic arc starts out glacial. It looks little better than a flat line at the beginning. It is when the arc is approaching the vertical, that people sit up and take notice, as that is when the price is moving up most rapidly.
The elites always have time on their side, as they are rich. Amateurs are looking to get rich quick, as they are not rich to begin with.
The elites also have the advantage of inside knowlege. I remember reading, i believe it was in 2001, that Goldman had bought literally tons of gold. They knew gold was going to rise in value and positioned to take advantage of it.
The trend on gold is down. The time to sell it was in 2011, when everyone wanted it and the price was going parabolic.
The current trend will end. As always, the question is when.
I dont understand the dollar as well.
It's a perception that US is least worse than other currencies which is a function of global
warfare hegemony. So what. What if someone has a death star circling the planet.
I dont pay much attention to dollar, I might pay attention to price of beef.
I notice in markets, when a secular trend is developing there is a counter move, almost like the
operators flush out the stops and weak hands and it goes a while for example always seeing small speculators
in the COT data, always loaded the wrong way at turns, they can work those speculators a bit.
Now I buy gold and silver on lows. I take money from whole life permanent insurance bank to do it.
My average gold price is just a few dollars negative, maybe 25 dollars right now. It doesnt interest me,
I just want to to buy on lows because I dont have a lot of money to buy all at once. We cant explain how
markets work it is ofter counter intuitive.
Here is my work on $gold weekly basis, I am preparing to back up the truck in March. I hope it is up to Dec 10 where I
could use some hedge on my capital until March, it may not be depending on swiss gold vote.
The coup will be to take their funny paper out of stock in 2015 July and Sep and buy a lot of gold with that,
indirect investment. The 5th year of decade is best for stocks, the 3rd year presidential term is best, I am still
working the stocks. For sure if gold is low in March and I have some good stock gains then I can peel some funny
paper off in March as well.
http://i1129.photobucket.com/albums/m504/mtimothyj/goldW_zpsf1446b19.png
Not anymore:
http://failedevolution.blogspot.gr/2014/08/a-perfect-timing-for-argentin...
Schiff and others inline with same views have never, past to present in economic history, had to make calls on this monster. Manipulation containing this beast for now.
People listen to Schiff just to hear validation their poorly performing gold holdings weren't a mistake.
Schiff is the mirror image of Ben Bernanke. He insists he is right because his academic arrogance makes room for no other possibility.
Everybody, perhaps save for Turd and Jim Willie, gets at least one thing right. Schiff got 2007 right. Lots of people did. Lots of people also saw the writing on the wall and have gotten 2009-2014 right. As Jamie would say, “That’s why I’m richer than Schiff”.
The markets---all markets---are driven by psychology and navigated with luck. Those who achieve success trading, if they hope to continue, do two things: they admit that luck had a lot to do with it, and second, they don’t marry a position.
Schiff married his position. His ego became more important than being correct. Lots of people got on the PM train, and many did so in 1999. A good many exited the train in 2011 before it derailed. Schiff did not. Most of the vocal ZH membership did not. For those two parties, the last three years have been all about excuses, rationalizations and hope. The lower PMs tumble, the tighter some hold on to their belief system, because that is the only shield their ego has left. They are Irish Catholics, prohibited by law from ending the marriage. The Arabs have a saying about marriage, calling the groom ‘the man in the cage of gold’.
Assets, all assets, experience ebbs and flows. PMs will have their day again, but in the meantime there are plenty of other opportunities to be had. Folks can be endlessly bitter, or they can accept the challenge, test their mettle, play the game, and try to have some fun in this all too brief existence. Schiff, like many of the stackers, are getting on in years. They may see the golden sunrise again, but maybe not. I expect the next stage will be lots of talk about “handing down” to the next generation, as if that was the original intent and not just another ego-saving rationalization. Then the kids will dump the stuff and buy an iPhone.
One thing is abundantly clear: EVERYONE, no matter whether he is a Fed lover or a die-hard stacker, is using fiat as a measure of success. That is why each PM down draft brings out the angst, bitterness, scorn, and accusations, just as every surge up until 2011 brought out such comments as “I’m up 73% so far this year” (go back to the ZH archives and see all the self-congratulations).
Exactly. All these guys who claim to hate dollars want more of them, and they probably fear a downdraft in gold if/when they "back up the truck" to buy pms with said dollars.
You have to invest in what you understand. Current stock prices make no sense to me. The U.S. government is broke, so why is anybody buying its bonds? But gold and silver have been money for thousands of years. I get that.
"I take donations from all denominations, in any currency."
Reverend T-A-C-K
"Stealing", Tackhead, 1989
Poor "devo" going off about Shiff, not being right. Afterall, "Shiff" and many others have not been right about knowing when this market will crash...But like "schiff", we choose not to go along, whether that meant staying on the sidelines or "shorting".
Sleep easy and keep a close eye out if investing in this Fed induced CRIMINAL market!...No Gold & Silver? Oh my
Good comment! ;-) Shiff underestimated the hopelessness of central banking... I'll bet he's shared a few "piano bar" moments with Kyle Bass.
King Dollar sucks the least
According to market historian Bob Hoye, during a credit contraction, the senior currency strengthens as the supply dries up. Also People rush to buy the dollars as the commodities priced in dollars become more expensive in their own currencies. Look at what buffet is doing. He's buying resources and railroads that move them. As for us regular folks. keep stacking
It's not an issue of everyone wanting the $usd it's a matter of liquidity for Asian and BRIC markets being able to transact. Most of their swaps and trade lines of credit are $usd denominated.
The $usd isn't stronger, it's just endless devaluation from other central banks making it appear that way. Look at the price of food, healthcare, travel, education. Commodities aren't cheaper in inflation terms... They're cheaper in $usd terms. The fact that commodities that matter aren't cheaper (food) just shows how the markets are moving away from the $usd.
The stronger the $usd gets the more pressure is put on credit spreads for these economies, increasing risk through devaluation of their sovereign currencies being pegged to the $usd. ( there's going to be a massive tsunami of deflation from Asia and all emerging markets next year)
Dollar death chatter? Small specs are longer the dollar now than at any other point in history. I hear more "king dollar 4eva" talk than any "death chatter".
Best investment on earth is earth- get yourself a small farm house and some land to grow food on and hunt and fish -and then worry about stacking PMS. PMS are a great way to go - after you cover all the other major bases (food, ammo, gasoline etc) Its pretty clear even to my neighbors teenage kids that The dollar will float higher for awhile, and then tumble like a lead balloon- 2015.75 sounds like as good a date as any FWTSHTF.
What point is this guy trying to make?? All this is is a load of lines, divergences, moving averages, crosses, trendings and techno-babble. Some fundamentals analysis, please...
I purposely wrote slowly so Kreditanstalt could read it, if she wanted to. Did I not paint a picture in the first several paragraphs arguing that the Europe and Japan are easing and China surprised by cutting rates, and the market has pushed out a BOE rate cut by several months, while the Fed stopped QE, which was never QE infinity despite how many times it was called that here at ZH?
If Japan is actually an independant entity to the FED, then QE purchases have stopped. Although they are still reinvesting and we are still trapped in a QE, not a rates, monetary regime. I look at Japan as a vassal state. So do the US Marines, et al. Tricky business, global dollar hegemony. And whatever else it is, it is certainly not transparent. The BoJ is just a hired sword, a ronin.
Anytime you're holding rates at or near zero (ZIRP), THAT - I dont care what ANYBODY says - is QE. End of story, full stop.
We are in uncharted territory so all statements are simply opinions, though some will most definitely be spot on with timing and outcome because of pure coincidence.
I believe the cure to our..."OUR" problems as a result of...our fed's monetary policies will be actually very simple.
Taxes will be raised. How much? I bet it will be incredible!
WE WILL HAVE TO PAY FOR THIS MARKET, THESE HIGHS REPRESENT THE MONEY WHICH WILL COME FROM US, the people.
I hope I'm wrong but how else are we going to subsidize these policies?
Taxes will go up. An economic system that channels all wealth to the top 1% is unsustainable. Mass starvation and food riots are negative for the life expectancies of those in power. At some point, this has to end. Otherwise, eat the rich; their flesh is well marbled with fat. Just avoid the brain and spinal cord; don't want to get those nasty prion diseases. Could Creutzfeldt–Jakob disease make you think like a central banker?
There is no level to which taxes could be raised that would save the dollar. The people will pay but it will be a loss of the dollar and all wealth held in the dollar that will be the price. One way or the other it will look a lot like hyperinflation when it is all over. The idea that our grandchildren will pay is wrong. It will be us and probably sooner than most think.
So far the Fed has only converted worthless credit money into base money. It has taken piles of underperforming MBS and replaced them with cash (or cash equivalents). It has also 'lent' to the USG gobs of cash which the governments spends and therefore inflates the GDP.
So far the balancing act has not caused outright hyperinflation but this is the path to HI. Eventually all the wealth held in bank accounts, bonds and real estate is made into physical cash and then come the wheel barrows.
The fed has been skillful enough not to allow HI but it has ruined the economy in doing so. It has greatly empowered the government at the expense of the real economy and this can only be horrible. The wisdom of the crowd, even though individually average, will always be better than the genius of a limited group smart folks at the Fed.
I think gold is more likely to cause a terminal event that the Fed's monetary activities. Gold is still the best way to carry wealth into the future and all major producers need some as they want to save as well as spend. Physical gold is what is needed and the paper (gold derivative) market we currently use to determine the price of gold is flawed. Inherently it drives the price lower by allowing shorting of a commodity that is always in good supply if the price is correct (which it never is in this system). As miners are unable to continue to produce their 3,000 tons per year and current holders refuse to part with what they have we are seeing the supply dry up. GLD is still dropping and already we are told that no large buyers can get what they want (at current market prices).
At Fofoa's site some of us watch the various supply sources and while the supply does seem to still be there it is not possible to predict when enough gold to satisfy major producers will run out.
In the end, it will end. Whether by loss of faith in the dollar reserve system itself or forced by a gold shortage we can't predict. We do know that a purely symbolic currency, backing up and representing most of the worlds ownership of real things can't work as this very currency rises in value. The planet simply won't tolerate the Fed printing a few pieces of paper with which to buy the rest of the world. It is also watching to see if the Fed decides to overprint the dollar in a panic to prevent deflation an in doing so create a panic out of dollars.
It is all a mess and folks are feeling antsy.
"So far the balancing act has not caused outright hyperinflation but this is the path to HI. Eventually all the wealth held in bank accounts, bonds and real estate is made into physical cash and then come the wheel barrows."
Inflation causes deflation. Inflate a bubble, it deflates.
Money is created out of debt. Kondratieff Winter is the season of deflation. The FED has QE'd for 6 years, yet right now everyone is talking about a deflation threat.
What happened when the FED QE'd? The debt bubble grew. Creating more debt, created more money. It is self defeating.
What he said ^
Everyone wants dollars -- I know right? Like the car dealer wanting $25K for a van the wife wants -- he sure wants a lot of dollars for that sheet metal -- and when I say sheet I mean sheet beaches!!!!!!!!!!!!!!
You can't eat dollars or yen or euros but it does take more of them to eat