Last Wednesday, the Federal Reserve…that criminal cabal of international bankers and global purveyor of monetary/financial/personal wealth destruction…shocked the so-called experts of Wall Street by continuing their shell game of Quantitative Easing (QE). The FED is moving forward with their unprecedented level of fiat money printing, rather than announcing a “tapering” of their $85 billion/month government debt purchase program. 9 out of 10 economists and stock market experts had predicted that the FED would reduce these purchases by $10-20 billion a month, which would have seen the FED buying ONLY $70 billion/month in various sovereign debt vehicles. As usual, this overwhelming majority of guru’s was wrong. Dead wrong.
Instead, and as I have predicted and written for more than a year, QE is here to stay…PERIOD. And if we ever see an actual reduction in the FED’s QE, that reduction will be incredibly short-lived…and once renewed, will only ramp-up on steroids…bringing an eventual collapse in the US dollar and a brutal period of stagflation/hyperinflation with it.
Will the US survive? Will the world survive? And most importantly, will WE survive as individuals when the next wave of dominos begin to fall??
The quick answer is “of course” we will survive…but the brutal reality is that “survival” will come in the form of widely different realities…and whether a country, a company, a state, a municipality or an individual, the world has never seen the kind of storm that’s headed our way. After more than 28 years of following economics and markets I wish for a much different outcome. Unfortunately, this is how I see things playing out. It’s also how every top economic/market expert that I know and trust sees things as well.
To date, the FED has purchased more than $2 trillion of OUR OWN debt (the biggest two-card monte game going), in the hopes of buying enough of our own debt to keep interest rates below what they would have otherwise been in an un-manipulated, free market economy. You know…the same free market economy that was responsible for the US becoming the world’s largest and most powerful economy known to man.
Here’s a most important reality that you will never hear discussed in the MSM; there is no longer any distinction between the US government and the FED. Historically, Central Banks maintained at least some degree of independence from their government, and acted based on their own views about the economy, money supply and interest rates. This is no longer the case. Instead, Obama and Bernanke act hand in hand on everything financial, and they will do anything and everything to pump up the markets and enrich their fellow elites and banking buddies…including printing trillions upon trillions in fiat currency, and issue trillions upon trillions in government debt…in complete disregard of the long term consequences.
Unintended Consequences and Black Swans
Make no mistake about it, the unintended consequences of taking our already bankrupt governments further and further into debt will soon devolve into global financial devastation. Led by Bernanke, the US is pushing the rest of the world into an all-out currency war…caused by today’s obscene level of money printing…and in the near future, governments around the world will battle each other for the funding required to keep their Ponzi schemes intact. There WILL be a black swan event, and much like the Lehman Brothers bankruptcy of September 2008, this future blow-up will also catch the lemmings completely off guard.
What will be the next major Black Swan event? My money continues to be on a financial panic created within the derivatives markets. The size of this STILL 98% unregulated market is gargantuan, with conservative estimates in the $1 quadrillion plus range, along with $10-15 trillion in actual cash at risk globally. In 2003 Warren Buffet came up with the quote that best sums it up; “derivatives are weapons of mass financial destruction”, and all it will take is the overnight collapse of a large financial institution somewhere on the planet…maybe Japan or China…that originated from a large and un-hedged derivatives position in government debt or the currencies markets. Something big enough and politically untenable that the local central bank cannot bail it out or paper it over…at least not without the help of the rest of the worlds central banks.
Or, maybe the next Black Swan will come in the form of a “mistake”. A mistake in someone’s military (honest or false flag)…one that could easily erupt into WWIII, especially with the existing tensions in the Middle East today. Or an economic mistake, like launching an untested and unproven health care system onto the world’s largest economy. At time of passing, Obamacare was to cost around $900 billion, yet according to the CBO, the costs will have already grown to more than $2 trillion by just the end of 2014. Health care costs make up a full 1/3 of US expenditures, and if the concerns expressed by many turn out to be correct, not only will health care costs skyrocket by an even greater degree than they already are, but the losses in employment nationally could quickly push us “officially” back into negative GDP.
The mistake that I fear most is of the intellectual variety. There is not a single leading figure in this country today that voices their concerns about the extraordinary actions of our central bank…at least not with Ron Paul out of office. Our leaders have supported and allowed Bernanke’s FED and Central Banks globally to act without ANY level of oversight whatsoever…common sense dictates where this lack of restraint will wind up. The history books will not be kind to the leaders, elected and otherwise, of our time.
The reality is this; with the known economic and geopolitical risks that already surround us, the next surprise could come from any number of places, and it will most likely come from one that is of the unknown variety. This is, after all, the very definition of a black swan event.
The smartest moves that we can make today to avoid these risks are the ones that I write about on a regular basis. Resist the urge to plow money back into the stock market. Instead of trusting that the banks of today will remain open with all of your money tomorrow, diversify into real money…gold and silver. The 12 year bull market in precious metals has been incredible, but in a world of funny money backed by nothing, which will bring skyrocketing interest rates as currency wars pick up speed globally, we will soon see that we are only in the early innings of where gold and silver prices will eventually be priced at.
Start your own business, and control your destiny…financial and emotional. And most importantly, continue to search for the truth about the realities we have learned from history books. Bankrupt governments do not survive…regardless of the amount of money they can print into existence, or the amount of tax increases they can force on their citizenry. Instead, they print, print print…until the party is over and the punch bowl is empty…until no one else will even accept their paper money.
Watch Their Actions...NOT Their Words
Regardless of the promises and assurances we hear from the Bernanke’s and pseudo intellectuals of our day, deep down they know that the one thing they can never do is “come clean”…they cannot tell people the truth. This is why we watch their actions rather than their words. This is why the talk of reducing QE is just that…talk. Trust me when I tell you that there is one reason and one reason only that the FED decided against “tapering” QE. Bernanke and Obama’s minions know that QE is here to stay because the credit card bills wont stop coming, and there’s no other way to keep the shell game from imploding. That’s why there will soon come a day when the stock markets of the world drop by 10% plus on the same day that the FED announces an increase in QE. This, my friends, is when you will absolutely know that the medicine has ceased to work…and that the patient is near death.
Today, “don’t fight the tape and don’t fight the FED” continues to win the day…but when the next phase of economic turmoil kicks in, those that trust the old paradigm will be incredibly unprepared for the future we are being left with. The only question in my mind is timing…and that’s the only question.
Until next time,