I am working though the details of an updated version of the classic Monopoly board game, to give players a sense of how the game is played in light of QE. A few new elements to be incorporated:
 Value of properties fluctuate wildly, boom and bust, rather than remain static throughout the game.
 Value of the awards given in the cards inflate dramatically during the game
 Wages for passing 'go' remain unchanged during the game
 Holding cash for strategic reasons pays no interest ... wait, that's already in the game
And of course the most important new rule:
 The player with the absolute least real-world financial experience is put in charge of the bank
Comment from Ask Fleck
" Maybe this will be as invisible and painless as the last monetary change."
Well I guess its all relative, all we have to do is Whip Inflation Now and whistle past the double digit interest rate graveyard. (LOL)
Taper is just a way the Fed can "control" things in the mind of investors, because they can turn off the taper. That should be good for a massive rally in the stock market, so going short here is dangerous. What if that massive rally is a failed rally?--then all those charts that show now vs. 1929 might ring true, because this time the FED IS THE BUBBLE.
No hope for all of us ultimately. Paul Craig Roberts said it well when he opined that the Fed can save the banks or the US dollar but cannot do both. Fleck said the Fed doesn't care about the US dollar and history of its 100 year existence and the US dollar's 95%+ devaluation since the Fed was created, back that up.
Forces are gathering to end the US dollar hegemony, and are well documented. As long as the bankstas are preserved they can operate in a new regime--no different than all the previous bailouts they have been afforded. That's why its important to have a chunk of change here and in other anti-dollar investments. The day to day stuff is just noise, and last years big dump was the back up the truck moment.
QE--keeping banks alive. Mark to market was suspended in early 2009 and mark to unicorn is now the law of the land. Once you get people to believe in the unicorn you have to feed it and QE is the feed. It's a castle of cards and can never really be stopped because the unicorn is a Fed creation and can not survive without the Fed feed.
Even with the massive pumping the bond market is showing signs of revolt. Initially the Fed can point to "recovery" and the fact that interest rates go up then. But you can bet they are scuffling to find a way to control things. In the late 1940s and early 1950s they capped the 10 year bond at 2.5%. Truman wanted this because he got burned after WW 1 on war bonds when rate soared after the war. " Forward guidance" may include some sort of cap at some point, else they lose control the the bond market, which would certainly kill their unicorn.
"Does this mean that Yellen wants us to move our money into brokerage accounts in order to drain the banks of their excess savings?"
Yes nothin to worry about there--your money is fully insured by the Mrs. Debtfire put. What could go wrong?
Let's see excess savings--what a darned nuisance--who is responsible for issuing all these excess monies--oh, nevermind :)!!
"NO WORRIES ON NIRP."
Thanks--now we can get a good night sleep knowing that all we have to look forward to is more of the same QE and forward guidance--should be good for another new nosebleed higher in the scam market--if we you only bring the the man back--Alan GreenSCAM himself!!
"it would only take the right black swan to send many country's economies into a death spiral when it became clear that holders of government debt werer NOT going to be repaid."
Learning from the German Wiemar experience, governments will not bother to reneg--and its a lot easier today to "print" since all it is is cyber-chits anywhos :)
Too easy lately and some are getting excited about gold miners--what a change. Anyway the 50 day moving average is going up and I hope it provides a floor for BGEIX in a progression toward higher lows and highs. I would definitely add a little if we briefly fall below the 50 day, especially if we are below 10. Not that I need more, but it would be a good buy point.
We shall see as always, the future is uncertain and the end is always near (Sorry Mr. Mojo-risin!)
We have witnessed an insane amount of synthetic engineering, not just by financial institutions, but at the Federal Reserve, Bank of Japan, and ECB. My primary concern is that the unintended consequences of those actions will manifest into unforeseen catalysts, be it the continued devolution of social mood or something entirely more structural.
To borrow a quote from 2009, "As governments take on more risk -- as they price assets on behalf of the market and transfer debt from private to public -- the common denominator, or release valve, becomes the currency...and if we inject drugs that mask the symptoms rather than medicine to cure the underlying disease, the likelihood of a seismic readjustment increases in kind."--Todd Harrison
So. how many times can the Fed throw the $USD under the bus, to make things "work."
The Yellen monster
Since Yellen was lurking in the background last year..and once it became clear that she would be the successor to Bernanke, I've been very concerned. What is my concern about this tiny little old lady? Well, she is one of the most well known supporters of negative interest rates.
The very basis of the modern economy - one that many expect to grow in 'perpetuity', requires capital formation. ALL capital formation is the result of savings. Yet...we have a number of high profile 'experts' not least the new Fed chair, who are open to the notion of negative interest rates, if it might mean people spend more of their savings, helping to boost the consumer based economy.
We can probably all agree there are a great many ongoing serious economic issues, and that another financial crisis will hit within the next few years. The problem is that next time, not only will bank bail-ins be the chosen 'solution', but you can bet the USA, along with the EU would likely move to NIRP - negative interest rate policy, from ZIRP (zero interest rate policy'....
Quite frankly, anyone with savings - of whatever amount, has a great deal to be concerned about, as they watch the Yellen tomorrow morning.--Permabear Doomster blog
...closed under 10 on a non-dividend adjusted basis (I'm using that because that is what yahoo charts show) has been 5.15% of the time since the beginning of 2005. (118 days/2292 total business days=5.15%)
The Treasury Department will all but completely exhaust its abilities to pay the nation's bills by Feb. 27 unless Congress raises the debt ceiling, according to a new letter sent to lawmakers Friday by Secretary Jack Lew.
Lew's warning moves up the deadline for action by Congress, since the Treasury secretary had previously only offered "late February" as a deadline.
“Based on our best and most recent information…we are not confident that the extraordinary measures will last beyond Thursday, February 27,” he wrote. “At that point, Treasury would be left with only the cash on hand and any incoming revenue to meet our country’s commitments.”
Lew warned that it will be incredibly difficult to predict exactly how long Treasury's cash would last before the government would miss a payment.
At this time of year, the government’s cash flow is especially hard to predict given tax filing season. Furthermore, he warned the government would diminish its meager cash reserves very quickly as the IRS cuts a large numbers of tax refund checks.
The nation’s borrowing cap took effect once again on Friday after it was suspended as part of the deal to end the government shutdown in October.
With no hike in sight, the Treasury has begun employing its “extraordinary measures” to free up space beneath the cap to continue borrowing to pay bills.
Lew estimated, with caveats, that the government would have just $50 billion in cash after Feb. 27. And those dollars would dissipate quickly, he said as the government has doled out as much as $15 billion in tax refunds on any given day. Net expenditures for the government could exceed $60 billion on any given day.
Given that unpredictability, Lew again urged Congress to act quickly to boost the cap.
“Extraordinary measures are likely to be exhausted in less than three weeks,” he warned. “Congress is scheduled to be out of session for part of that time, and it would be a mistake to wait until the last possible minute to act.
Suspicious Death of JPMorgan Vice President, Gabriel Magee, Under Investigation in London
By Pam Martens
February 9, 2014
London Police have confirmed that an official investigation is underway into the death of a 39-year old JPMorgan Vice President whose body was found on the 9th floor rooftop of a JPMorgan building in Canary Wharf two weeks ago.
The news reports at the time of the incident of Gabriel (Gabe) Magee’s “non suspicious” death by “suicide” resulting from his reported leap from the 33rd level rooftop of JPMorgan’s European headquarters building in London have turned out to be every bit as reliable as CEO Jamie Dimon’s initial response to press reports on the London Whale trading scandal in 2012 as a “tempest in a teapot.”
An intense investigation is now underway into the details of exactly how Magee died and why his death was so quickly labeled “non suspicious.” An upcoming Coroner’s inquest will reveal the details of that investigation.
It’s becoming clear that when JPMorgan tells us “nothing to see here, move along,” that’s the precise time we need to bring in the blood hounds and law enforcement with the guts to get past this global behemoth’s army of lawyers...
It’s a point of interest that the only time the Dow Jones saw gains that exceeded the expansion of monetary inflation as measured by CinC occurred during its bull market of the 1920s. That means that even before taxes and commissions, American blue-chip stocks have been at best a break even investment during all the good markets of the past eight decades. This has not been so for the BGMI, whose bull markets of the 1930s and 1960-90s have seen gains far greater than Federal Reserve created inflation of the currency in circulation, making gold miners a very profitable investment during their bull markets.
But money could certainly be lost if someone insisted in buying the gold miners at 2.0 or more then sold when the BGMI declined back to 1.0. The same holds true for the Dow Jones, but since 1937 the Dow Jones has never seen inflationary adjusted gains above the 1.0 inflationary breakeven line. Even now just a month after the Dow Jones’ last all-time high (16,576) it’s currently only at 0.53 on the chart. That’s 50% below the rate of inflation of the currency and 40% below the Dow Jones’ 1982-2000 bull market high of 0.87, when the Dow Jones topped out at 11,722. This makes no sense to those who naively believe a dollar is still a dollar. But to those who understand the pernicious effects of monetary inflation, it’s clear that the Dow Jones at 11,722 in 2000 represented more wealth than 16,576 does today.
There’s another pattern in the chart above that I believe is important to note; first the Dow Jones (the general stock market) sees a bull market as financial assets are inflated by the Federal Reserve, but the BGMI’s bull markets don’t become interesting until after the Dow Jones has entered into a bear market. That’s no accident as bull markets for the gold mining shares are driven capital fleeing deflating stocks and bonds, and that’s been true since the 1920s.--good chart at the Gold-Eagle site that goes with this commentary by Mark Lundeen
From a technical analysis standpoint, the hedge fund computers are now back to buying across the sector again and those guys will buy and buy and buy until the market stops going higher. Then they will sell and sell and sell until the market stops going lower at which time they will reverse and go back to buying and buying and buying. Get the picture yet? There is no thinking - there is just computers reacting to movements in price. That is why trying to come up with explanations at times as to why prices are doing what they are doing is an enormous waste of time and mental energy. The machines are driving the market around - that is all one needs to know. Sometimes there is a underpinning fundamental reality to the movement in price caused by these distorting computers. Many times there is not.--Latest commentary by Trader Dan
He is still bearish on gold and silver and relatively constructive on the US Dollar--would like to link but of course impossible here. It is the conventional opinion much like the above--My guess is the dollar will see much weakness for the rest of 2014--but I have no great crystal ball.
Think of a little sliver on top of it that is the floating supply available for trading.
Gold that’s in the Comex or JPMorgan or GLD vaults is available for trading. Gold purchased by the Chinese will not see the light of day again for the next 300 years, and is not available for trading. So with the gold going from West to East, and from GLD to China, the total amount of gold is unchanged, but the floating supply is declining rapidly.
This means that the paper gold that sits on top of the floating supply is becoming more and more unstable and vulnerable to a short squeeze, because there is not enough physical gold to support it. So that’s likely to collapse at one point and lead to a short squeeze and heavy buying.--Epoch Times interview Feb 2014
People say there is not enough gold in the world. The answer is there is always enough gold in the world. It’s just a question of the price. Now, at $1,300 an ounce, there is not enough gold to support world trade and finance. But at $10,000 per ounce, there is enough gold. It’s not about gold, it’s about the price.
If you go back to a gold standard you have to avoid the blunder that England made in 1925, by going back to the gold standard at the wrong price, which proved to be highly deflationary, and contributed to the Great Depression.
I’ve done the math on that and the non-deflationary price for a gold standard today is about $9,000 per ounce.
Epoch Times: What is your target price based on?
Mr. Rickards: It’s based on supporting the paper money supply with gold. That would be using M1 [paper notes, coins, and checking accounts] as the monetary base, with a 40 percent backing. If you were to use M2 [M1 plus savings accounts and money market funds] with a 100 percent backing, that would be $40,000 per ounce.
Epoch Times: Gold investors would make a killing!
Mr. Rickards: It wouldn’t mean gold would be worth any more [in real terms]; it would just mean the dollar has collapsed. But yes, you get more dollars for the ounce. Let’s call that the three- to five-year forecast.
For the year ahead, those fundamentals are unlikely to play out in a year. But the technicals can play out. Technically, gold is set up for a major rally based on the decline in floating supply...
Epoch Times: So what now?
Mr. Rickards: You can’t loot the warehouse twice. Once you take all the gold out, you can’t take it out again. JPMorgan’s vault is low, Comex’s vault is low, the GLD’s vault is low.
Epoch Times: So why will gold rally then?
Mr. Rickards: There is a total supply of gold in the world. But to corner a market or squeeze a market, you don’t need to buy all the gold, you just need to buy the floating supply. Think of all the gold in the world, it’s about 170,000 tons...
Gold is moving from West to East. What does it mean?
And what is left is all that prowling paper, empty of value, looking for more wealth to devour.
The bankers' boys say not to worry. But do not ask to see what remains behind the central banks doors.
Trust, and believe, for the good of the system. Our system, the one that keeps us rich.
If you open your eyes, you'll spoil everything.
Dead bankers and hollowed vaults.
Such goings on. My, my, my.—Jesse's Café
One of the world's largest money managers, Mohamed El Erian, just up and quit; while three other bankers apparently committed suicide this week. (Just a coincidence?)
One former Deutsche Bank executive, William 'Bill' Broeksmit, was found dead after police received reports of a man found hanging at a London house. (Who’s House?)
Later that day, JP Morgan’s tech executive Gabriel Magee fell to his death from the bank's London headquarters. Those close to him where shocked, citing there was absolutely no indication that there might be anything in his private or professional life that would've cause him to take his life.
A few days after the deaths of the two London finance workers, former Fed member and chief economist at Russell Investments, Mike Dueker, was also found dead after falling from a 50-foot embankment. Pierce County Detective Ed Troyer said the death appeared to be a suicide.
Last week, a UK based communications director at Swiss Re AG - the world's second-largest reinsurer with focus on risk transfer, risk retention financing and asset management died. The cause of death has not been made public.
In a few short days, four finance workers have (apparently) committed suicide, while one of the largest bond fund managers quit the business. Were these events coincidence? Or did these men know something we don't? Were their deaths even suicides? Many are speculating that something serious is brewing in the halls of the global financial markets; that the men who died knew that something--A Baltin