As we approach the Fed’s vaunted “taper decision” Wednesday – which as we have noted, is utterly meaningless in the context of a fiat Ponzi scheme that must expand to survive – we thought it would be useful to demonstrate just how universal the need for unfettered money printing is.
Remember, now that the “final currency war” is upon us, not only is money printing required to prop up zombie economies – at incalculable long-term damage, of course – but fund the retirement of rapidly aging populations. Nowhere is this more evident than Japan – whose “demographic hell” is well-known, given it has the world’s oldest population, and lowest birth rate. And thus, with the Bank of Japan committed to doubling its money supply by the middle of 2015 – and using the “proceeds” to purchase JGBs (Japanese government bonds) and equities – the “QE black hole” has being noticeably exposed.
With the Nikkei hitting multi-year highs as the Yen plumbs multi-year lows – amidst record-low approval ratings for its hyperinflationary Prime Minister, Shinzo Abe, Japan’s largest pension fund is on the verge of selling a huge chunk of its JGB holdings. With $1.2 trillion in assets, the Japan Pension Panel actually said it should “take advantage of BOJ bond purchases” to unload nearly zero-yielding bonds to fund retiree withdrawals. With inflation hitting new highs in what was already the world’s most expensive country, citizens desperately need income to fund retirement spending; and since the BOJ has “graciously” announced its intention to monetize what’s left of the JGB market, pensioners are happy to oblige it with potentially limitless sales. And hence, per what we discussed in last week’s “sucker of last resort,” the BOJ couldn’t “taper” its QE scheme if it wanted to.
And if you think Japan is in dire straits, than take a gander at the chart below – depicting how China is currently printing 25% more money than the U.S. and Japan combined.
Yes, gold reserves or not, China’s Yuan is still just a fiat currency – with a partial peg to the hyper-inflating dollar. And thus, as long as the Fed continues to expand dollar supply – ultimately, “to infinity” – the PBOC must inflate the Yuan in parallel. That is, until it decides to end the current, catastrophic monetary system by decoupling the Yuan from the dollar, and backing it with soon-to-be-announced, massive gold holdings. Until then, China is clearly on much thinner ice than perma-China bulls have thought; as aside from having the most indebted corporate sector on Earth – FYI, matched only by British banks – it is clearly experiencing much weaker economic growth than most believe; and oh yeah, the world’s largest real estate bubble.
And thus, for those that believe QE – on a worldwide basis – has even a chance of ending, think again. Whether the Fed announces a pathetic, token “taper” on Wednesday is immaterial; as if it did, it would simply be a political ploy that will ultimately backfire – and subsequently, be reversed – for reasons we have discussed ad nauseum. In the big picture, the Ponzi-esque nature of fiat currency forces QE into existence; ultimately, creating a “black hole” that can never be escaped. Which, of course, is why it’s so fortunate that not only are physical gold and silver still available for widespread purchase (except in India, Vietnam, and a growing group of financially repressed nations); let alone, at historically low prices.