Wow, the situation is deteriorating rapidly!
As noted yesterday, it is becoming more and more difficult to focus solely on “big picture” topics when the global financial situation has become so unstable; and thus, we’ll further hone our ability to provide as much valuable, concise information as possible into the Miles Franklin Blog’s daily commentary. By the way, I recommend everyone to listen to the 90 minute podcast I gave yesterday regarding our 2014 trend predictions; some of which have already come to fruition.
We’re less than six hours from the “big lie”; i.e., the FOMC’s last policy statement under the soon-to-be-infamous Ben Bernanke. We already know tapering is but a mirage – and better yet, so-called “monetarists” like Bernanke and Greenspan know the truth about real money. However, what really scares us is just how close the entire world is to realizing QE is part and parcel to the fiat currency Ponzi scheme that must be expanded to avoid instantaneous economic implosion; until ultimately, it is destroyed by hyperinflation. The great Ludwig von Mises once stated the following truism about fiat currency; and never has a more prophetic maxim been averred…
There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.
Yesterday’s IMF pleading for the Fed to stop “tapering” highlights this point perfectly; not to mention, the swarm of negative economic data emerging worldwide, such as this horrifying chart depicting December computer and electronics orders (during the year’s peak spending season, no less) plunging to their lowest level since 1993. And how about Mediobanca’s warning that Italy is on the verge of another bailout? Or one of Russia’s largest banks banning cash withdrawals, presumably fearing a bank run as the Ruble continues to plunge? Or the Nigerians announcing their intention to immediately sell dollars to “diversify” into Chinese Yuan – just as we learn foreigners executed record U.S. T-bill sales in December? Or JP Morgan experiencing its second straight record customer withdrawal from its COMEX gold vaults in the past week – as the February gold contract expires with a whopping nine million ounces of remaining open interest, just two days before first delivery notice day? Or central banks the world round – from Brazil to India – executing emergency rate hikes this week to slow their respective currencies’ crashes – and decidedly failing?
Cumulatively, the mosaic being painted is the commencement of the END GAME of global fiat currency collapse; and recall, it was just six days ago when we wrote “looking back, we may well view this week as a major inflection point in financial history.” Even I’m shocked at how fast things are imploding, starting with yesterday evening’s emergency Turkish rate increase – whilst Obama lied to the world of the “lowest U.S. unemployment rate in five years,” and introduced myRA; i.e., a backdoor extension of QE, presaging the inevitable confiscation of U.S. retirement plans we have warned of for years.
Regarding the Turkish Lira and other collapsing currencies, I’ll get to that in a moment. But as for myRA, we cannot shout loud enough about the ominous, blaring red flag it is signaling. We have long discussed how, amidst the 2008 financial meltdown, Congress actively debated the mandatory investment of IRAs into “Guaranteed Retirement Accounts” – which would purchase U.S. Treasuries and return capital sometime in the future, at the government’s whim, with a measly 3% yield. Now that a new crisis appears to be emerging – in which the Fed no longer has the balance sheet, or credibility – to expand its balance sheet without destroying the dollar, the myRA clearly has the look of a GRA in disguise. And thus, we cannot plead more vehemently to consider withdrawing IRA assets ASAP; if anything, to escape the inevitable tax rate explosion that the budding Socialist States of America is likely to enact.
As for the Turkish rate increase, from 4.25% to an incredible 12.00%, it occurred yesterday afternoon at roughly 5:30 PM EST; i.e., amidst the 45-minute period when gold futures trading actually closes for the day. My initial thought was that the end game was commencing; as the odds of staunching the Fed-catalyzed global inflation conflagration by simply raising emerging market interest rates are slim to none. Not to mention, that such a draconian increase, even if it did stabilize the Lira temporarily, would utterly destroy what’s left of the Turkish economy. Initially, the Lira bounced modestly; and with it, global stock futures, as clearly the PPT was attempting to convince the dumbed down masses that a virally spreading currency crisis somehow a positive event.
Fresh off of yesterday’s comical PM attacks, this enabled gold and silver to close at exactly the $1,250/oz. and $19.50/oz. strike prices at precisely the 1:30 PM EST expiration of the COMEX February options contracts, the Cartel went into action again. As you can see, when the ultra-thinly traded Globex futures market opened at 6:00 PM EST, they took gold down to $1,249/oz.; but that was all she wrote – as the two-month “line in the sand” at the very key round number of $1,250/oz. quickly switched from “ceiling” to “floor.”
Sure, they again got attacked at “2:15 AM” EST – for the 18th time in this year’s 19 trading days – and as I write at 9:55 AM EST, gold is comically up EXACTLY 1.0%, whilst silver is being held just under its seven-month “line in the sand” at $20.00/oz. However, the end game is clearly underway, as global stock markets are again plunging; and more importantly, essentially all emerging market currencies.
The Turkish Lira – ticker TRY – has now surrendered all its post-rate hike gains; and just an hour ago, the South African Central bank’s emergency rate hike not only backfired, but did so miserably – as the Rand is about to breach the all-time low achieved amidst the 2008 financial crisis. Yes, the PPT has thus far stopped the “Dow Jones Propaganda Index’s” losses at exactly 1.0%; i.e., the “PPT ultimate limit down” level. However, this time around, they’re going to find that masking reality with market manipulation and propaganda won’t work – particularly when accompanied with hyperinflationary money printing.
Which brings me back to the FOMC’s decision, just four hours from now as I edit just after 10 AM EST. Last Tuesday, when Jon Hilsenrath of the Wall Street Journal wrote that the Fed would further “taper” at today’s meeting, we noted that not only was he dead wrong in his relentless prognostications of a September 2013 taper, but that this particular article was written solely to provide cover for Cartel attacks ahead of this week’s momentous trifecta of “key attack events”; i.e., yesterday’s COMEX options expiration, last night’s State of the Union speech, and today’s FOMC policy decision.
Frankly, it’s difficult to see how the “consensus” could have ever assumed further tapering in the first place given that:
1) The vehemently “data dependent” Fed has seen nothing but horrific economic data all month
2) Global stock and currency markets are collapsing – with the MSM blaming it on Fed “tapering”
3) Perma-dove Janet Yellen is set to take office on Friday – en route to instituting a hyperinflationary policy of “Yellenomics.”
Frankly, we believe the relentless commentary speaking of the “consensus” expectation of an additional $10 billion/month taper was nothing more than propaganda, aimed at slowing the burgeoning real money rally. And thus, four hours from now, the Fed will be faced with the ultimate financial “Hobson’s Choice”; of either “tapering” – and likely, catalyzing an all-out currency crisis now; or “pausing” – and thus, dramatically increasing the odds that John Williams’ forecast of 2014 U.S. hyperinflation will come to fruition.
No matter what happens today, it should be crystal clear that what the Miles Franklin Blog has written of all these years is coming to pass. The global fiat currency Ponzi scheme will collapse; gold and silver will re-establish themselves as the dominant forms of money (possibly, aided by Bitcoin and/or other “alternative currencies); and those storing their wealth principally in dollar-denominated assets may well lose most, if not all, of it. Whether it’s now, later this year, or sometime slightly further into the future, the “day the dollar died” is coming; and when it does, if you haven’t already prepared, it will be too late.