The Fed Balance Sheet Reduction is a Distraction From the REAL Crisis

Phoenix Capital Research's picture

Everyone is making a big deal about the Fed's so-called "balance sheet reduction” which starts next month.

Let’s assess some facts.

First of all, the Fed plans on shrinking its balance sheet by $10-$30 billion per month. The Fed balance sheet is currently $4.5 trillion. So at this pace of unwinding it would take somewhere between 13 and 33 years for the Fed to normalize its balance sheet back to pre-2008 levels.

So the notion that this is significant is off base. It borders on irrelevant.

Second of all, the only reason the Fed is even discussing a balance sheet reduction is because stocks are soaring. The second that stocks begin to correct, multiple Fed officials will appear on TV talking about how it’s time to “slow the pace” or even “halt” its balance sheet reduction.

Let’s get real here.

The reality is that the stock market is the ONLY thing the Fed can point to as a success. The economy from 2008 to 2016 was in the weakest recovery in 80+ years. Indeed, the Fed has all but given up on the farce that it cares about the economy: yesterday, Fed Chair Janet Yellen herself admitted publicly yesterday that the Fed takes account of “asset prices” when it comes to rate hikes.

In Fed-speak, asset prices=stocks. And that’s the #1 focus for the Fed when it comes to monetary policy.

So what does this mean?

The Fed is going to engage in some symbolic shrinking of its balance sheet, but the second things get messy for stocks, the Fed will start walking back this policy.

And THAT opens the door to the REAL crisis.

A crisis of inflation.

The $USD is imploding. It bounced a bit courtesy of the Fed announcement yesterday, but it's in SERIOUS trouble having taken out critical support.

The long-term chart is even uglier.

The real CRISIS is the collapse of the $USD. And it's one the Fed doesn't want to stop. Indeed, as soon as stocks begin to correct, the Fed will start walking back all talk of a balance sheet reduction. And if we enter another crisis, the $USD will drop even farther as the Fed cranks up the printing presses with more QE.

Put simply, the big crisis will be  the collapse of the $USD. And it's already underway.

If you’re not taking steps to actively profit from this, it’s time to get a move on.

We just published a Special Investment Report concerning a secret back-door play on Gold that gives you access to 25 million ounces of Gold that the market is currently valuing at just $273 per ounce.

The report is titled The Gold Mountain: How to Buy Gold at $273 Per Ounce

We are giving away just 100 copies for FREE to the public.

As I write this, there are 9 left.

To pick up yours, swing by:

https://www.phoenixcapitalmarketing.com/goldmountain.html

Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

 

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buzzsaw99's picture

i'm scared.  it seems as if phoenix has a clue for a change.  hold me.

GreatUncle's picture

Beyond caring now ... it is so open and in your face all the economic and any other type of fraud you could mention etc. that it is pointless being afraid.

While you remain afraid like the sheeple they have control over you.

Lose that fear when their is nothing left to lose you now have power over them ... its called a rope and a guillotine.

Davidduke2000's picture

$4.5 trillion of crap is still crap. the worthless papers that the us central banks purchached to save banks and large corporations from bankruptcy are worthless papers  that nobody wants not even another central bank.

JailBanksters's picture

With NO audits, that every other company has to abide by, how do you know it's

not twice as big as they are reporting ? We trust you Federal Reserve.

If they were honest, why would they be so against anyone checking the books.

I think there accounting is so dodgy, they actually have no idea.

It's no different to a drug dealer denying access to the property without a search warrant.

Don Sunset's picture

I see homes for sale that are now sitting for months.  SOCAL home prices have achieved orbit.  People that bought houses in the last 12 years or so will struggle with property taxes alone down the road.  And resale of homes bought in the last 4 years will be a loser deal soon for current owners.

Inflation has been here for years.  Renters and recent home buyers are screwed big time and are probably jacking up their credit card balances.  The economy is going to turn south in a big way soon.  No spending and no lending.

USofAzzDownWeGo's picture

Gold gets whacked AGAIN today.... you're still uber bullish on it...... what's new? lol

webmatex's picture

We have never lived in such finacially catastophic times, the decline, complexity and chaos, on a day to day basis, and the change, make PM's the only thing you can trust for more than a few days.

The old moonshot may happen tomorrow but in the meantime i'm hanging on to the only thing that has value that the bankers cannot touch.

Ive been holding for over 12 years and given the conditions over the last 10 years i consider PM's  essential as the only day to day protection left, regardless of manipulated price.

Watch my lips, this suckers going down!

Davidduke2000's picture

gold hold its value regardless what papers show. can you imagine they start printing future contracts for houses and your house is worth now $500??? it is silly to think that the comex is the real price of gold and talking about whacking is laughable. the day when there will be no sellers at all is not very far.

LawsofPhysics's picture

So, dollar down means equities go up, way up....

 

"Full FAITH and Credit" Graham now where the fuck are you going to run to motherfucker?

 

THE YUAN?!?!?  LMFAO!!!!

Nobodys Home's picture

I picked up a 3gram gold Chinese panda just in case they invade and I need a bribe.

webmatex's picture

Those little panda's have enough chance of invading as those little bears - three grams - just step on the suckers!

Nobodys Home's picture

How can I buy gold at $273 an ounce? I just paid 670 for a 1/2 oz Australian Kangaroo which is the best price over spot at the place with the best prices for phyzz I can find.

. . . _ _ _ . . .'s picture

Lots of Perth mint fake kangaroos floating around. Check it.
The article refers to buying stock in gold mines. Clickbait.

Nobodys Home's picture

"Put simply, the big crisis will be the collapse of the $USD. And it's already underway."

Umm...It has been since 1913! Since then it's worth between 3 to 5 cents on the 1913 dollar.

Anon2017's picture

Since 1913, the British pound has actually declined a lot more in purchasing power than the US dollar has. The pound has lost more than 2/3 of its value against the $US during that time. 

ali-ali-al-qomfri's picture

Back in 1913 I think, pennies were full copper.

Not so today, so we need to revise your $.03-05

and bring it to about $.0099.

 

GreatUncle's picture

Rome did the dilute the siver in coinage also.

So that is an old trick they are still using there.

When you get to $.000001 it will be electronic and = $0.

justdues's picture

Up until 1919 British coinage was literally £Pound Sterling i.e 92.5% sterling silver ! That had to end as (((Banksters))) World War 1 bankrupted the nation and set in train the final debt servitude Empire destruction of WW2.

Nobodys Home's picture

Maybe even less. I think we still had "large cents" back then. Maybe not, I forget.
I'll take a few rare date flying eagles and indian heads in trade for my loss. Sheesh. Even a few unc. MS70 1909-s VDB's would be nice.

Billy the Poet's picture

Small cents were introduced in the 1850s and were made of copper until mid-1982. Local coin shop has a Lincoln penny book which was stored in less than ideal circumstances. The pennies look great up until 1982 and the rest are coated with oxidation.

NumbersUsa's picture

JERUSALEM (AP) — Israel is looking to hire university students to post pro-Israel messages on social media networks — without needing to identify themselves as government-linked, officials said Wednesday.

The Israeli prime minister's office said in a statement that students on Israeli university campuses would receive full or partial scholarships to combat anti-Semitism and calls to boycott Israel online. It said students' messages would parallel statements by government officials.

"This is a groundbreaking project aimed at strengthening Israeli national diplomacy and adapting it to changes in information consumption," the statement said.

An Israeli official said Wednesday that scholarship recipients would be free to decide whether or not to identify themselves as part of the program, which would begin within months.

"Everyone who believes in the cause, and wants to join, can join," he told The Associated Press. He said the office was looking to budget $778,000 for the project, and that the national Israeli student association would select participants from a pool of applicants.

The official spoke on condition of anonymity as the project is still under development and he wasn't authorized to speak publicly about it.

webmatex's picture

Then we can expect intrusions from them here on ZH along with the pantheon of already barking trolls - sad!

taketheredpill's picture

Either the US economy can stand alone .... or not.

If NOT, given that QE (Global) was responsible for Risk Assets increases, it stands to reason that as QE is reversed (for the FIRST TIME since 2009 so yeah, kind of a big deal) Equities should be under pressure.

If Equities do correct, expect TReasury/USD (flight to quality) strength to be short lived as market prices in a Fed reversal on QE.  Another round of QE wouild destroy Bonds, USD, and FED Credibility.  Ideally Gold gets bid at this stage.

 

 

 

 

Manthong's picture

 

It’s just a good thing that the deep state, neocons and their subservient Trump are doing everything in their power to drive a good chunk of the world away from the dollar.

We don’t need no stinking Russia or China…

If you do business with countries we don’t like, you’re outa here.

We are the US.

We are the standard of virtue, world policeman and hegemon in perpetuity...

..and we have the largest and most costly intelligence and military dollar sinkhole on the planet.

 

JRobby's picture

It's PR for dopes. They can publicly sell bits and pieces and continue to secretly buy all kinds of assets through surrogates. Without an audit of where the electronic debits and credits go, without any paper trail, who will really know???????

As always, who do you trust? The FED? (Laugh Track Deafening !!!)

jeff montanye's picture

i like china's plan to buy oil for yuan to be exchanged for gold in london, etc.

http://kingworldnews.com/alert-multi-billionaire-hugo-salinas-price-says...