Next Monday is the 100th anniversary of the Congress ramrodding a midnight vote to create the Federal Reserve. We all know how that has worked out, the “dollar” which had held its value for the prior 100 years has lost 98%+ of its purchasing power since then. How fitting that Ben Bernanke will preside today over his last Fed meeting (or second to last) on this anniversary since he is the one who captained the ship onto the shoals? Don’t get me wrong, Bernanke is not the one who “did it,” he is merely the one who delusion ally thought he could “fix it.”
Today we will hear from the Fed on the issue of tapering (slowing the printing press) or not (continuing full steam ahead). Early this morning I caught the tail end of debate on CNBC where Rick Santelli went on a rant regarding where interest rates “ought to be.” The guest suggested that they should be negative to “get the economy going” while Santelli argued there shouldn’t even be a Fed or a model that sets rates…the free market should do this. Where do you think interest rates would be if let alone to seek a free market level? Higher? Lower? Negative (LOL)?
I would chime in with the obvious. How much in the way of deposits would the banks gather if they “charged” to “safeguard the money you lend them?” I know this doesn’t really matter anymore because the banks are not really banks anymore and deposits are not their lifeblood anymore. The flip side of this is lending. Negative interest rates would mean that borrowers got “paid” to borrow. In effect, negative interest rates would make debt balances smaller over time…who couldn’t like this right? I would also add that we are told almost daily that the economy is “recovering” (but not expanding), so then why the need to push rates negative?
Five full years after the fact and no “expansion?” What’s up with this? Never before (well maybe in the 30’s) has the economy gone flat and bottom bounced like this. I can’t even believe that “rational” human beings are even debating any of this; 6 years ago ALL of this would have been unheard of and laughed out of town! Now, “high level” and “important” people are actually debating over pure idiocy.
Think about negative interest rates for a moment. Isn’t this just another “bullet” that would debase the currency even further? Isn’t each and every “policy” that is trotted out basically just another way to debase the currency? Fiscal policy, monetary policy…they’re all the same with respect to “hoped for goals.” All policy today has is this one goal in mind, create inflation and debase the currency, period. Never mind what they say, just look at what they do. You see, “inflate or die” really does exist and without inflation we really will die (financially).
This is an odd concept because “verbally” the Fed must talk “no inflation” and have the perception that they really are the “guardians” of the currency. The reality is that they know, they know that without inflation the system will collapse upon itself AND take the value of the dollar with it since dollars are “debt based” (have value supported by the debt). Do not be fooled by this “accelerator and brake” action simultaneously which is exactly what “taper no taper” is. As I’ve said before, you cannot ever taper a Ponzi scheme even for a moment. Were Ben Bernanke was trying to save his legacy with a “minute before midnight” taper, the markets would convulse so badly that an opening for Jan. 1st would probably be less than a 50/50 prospect.
Before I finish I want to remind you that for all intents and purposes the COMEX has ALL registered gold already spoken for. Will they have gold delivered in to make full deliveries? Where exactly will it come from? It seems to me that obvious (if you are looking) monkey business is already going on there as JP Morgan has reported 5 straight days of “triple zero” deposits. “Triple zero” as in EXACT weights. They have now supposedly taken in EXACTLY 2 tons each day for 5 days. Yes we will hear that “these are kilo bars” and are exactly two tons each day, I don’t buy it. Are you going to tell me that “kilo” gold is shipped in from Switzerland only to then be shipped out again to the East? There have been far too many other days with “.000” that are not divisible by kilo weights to be “coincidence.” Statistically a “.000” deposit or delivery can only happen once every 1,000 times, 25 or more in a year have less odds than winning the lottery.
February has open interest that represents over 20 million ounces, what if that month ends with another 500,000 or 1 million ounces that stand? Where will the metal come from? China will import nearly 100% of global production this year and the ETF’s, COMEX and LBMA have lost massive weight already, how much more is Western central banks willing to lose? How much more do they even have left to deliver? I will leave you with this quote from Harvey Organ, “I don’t know how much gold is left or where future gold will come from but I do know one thing, China will get their gold before anyone else does.” This quote is spot on and you can bet your financial life that when the day comes that “they don’t get their gold,” you will know it within 24 hours!