QE Failure – By the Numbers!

[mamboni]

QE Failure – By the Numbers!

Author : Andrew Hoffman
Published: October 28th, 2013




In my very strong opinion, we’re very close to the “financial rubber” hitting the road. Regarding Wednesday’s FOMC meeting, the “jig” is close to be up – as the ENTIRE WORLD will soon realize what Egon von Greyerz wrote this weekend…

It serves no purpose to wait for their next decision or policy statement. They know what they have to do, and we know what they will do, which is to continue to pump unlimited amounts of money into the economy. The money supply is expanding exponentially, and so is the Fed’s balance sheet. For that matter, so is the federal debt. The next phase will not be exponential, it will be parabolic.
-King World News, October 26, 2013

Later this week, I’ll write of this burgeoning global perception of Fed failure; although, to be fair, the ENTIRE WORLD has the exact same problem. In fact, worse so; as without the world’s “reserve currency,” the vicious, Catch-22 circle of money printing and eroding economic activity becomes exponentially worse.


The world round, “dependency nations” are becoming the norm, as economic activity continues to weaken. For instance, remember the “meme” that we are amidst a new U.S. housing boom? You know, the one I said would come crashing to the Earth once rates started to rise? Well what do you know, here’s today’s “pending home sales index” for October. Nuff’ said!


http://blog.milesfranklin.com/wp-con...ales-Graph.png


Worldwide, MONEY PRINTING will exponentially expand ad infinitum; and the more that is printed, the more inflation the average person will experience. Sure, the bankers will benefit for a short amount of time – as PPT efforts to hyper-inflate stocks yield temporary nominal gains. However, whether one speaks of Europe, Japan, or the U.S., “the 99%” are being universally exploited – even in the so-called “Land of Opportunity”; enslaving them and their heirs to generations of financial serfdom.


Fortunately, TPTB’s best laid plans are guaranteed to FAIL. There is only so far one can kick a can; and today, evidence SCREAMS that the end of the road is upon us. Just watching the dissension in the “elite’s” ranks should be sign enough that their seemingly iron-clad grip on the populace is slipping; such as the incredible, spreading anger at the U.S. for spying on EVERYONE – including its own allies. It’s one thing when Brazil is angered by U.S. spying; but now we’re talking about Europe, including its most powerful nation, Germany– and, oh yeah, China. I know some believe a grand conspiracy to control the world emanates from a handful of Anglo bankers; but considering how much they seem to dislike each other; such a scenario appears highly improbable, in my view. More likely, the “every man for himself” scenario dominates daily financial developments; and on a sinking shiplike the Titanic, all the money and power in the world is no substitute for a good lifeboat.
Since the global economy peaked at the turn of the century, ALL nations have resorted to increasing use of the final economic weapons in their arsenal; i.e., MONEY PRINTING, MARKET MANIPULATION, and PROPAGANDA. To think that the Fed, the President’s Working Group on Financial Markets, and the Exchange Stabilization Fund were once utilized solely as stopgaps amidst volatile market conditions is quite amazing, given how they are now 24/7 vehicles for masking reality. And oh yeah, the GOLD CARTEL lurking behind every PAPER trade from Sunday night through Friday afternoon.


This week, the Fed meets on Tuesday and Wednesday. Back in June, Helicopter Ben hinted QE tapering might occur if the economy sufficiently improved. Well, it decidedly has NOT; and in fact, has never been worse. With 436,000 ounces worth of October gold futures contracts still open – versus just 707,000 ounces of registered COMEX inventories – the Cartel is desperate to hold prices down this week; and thus, prevent the inevitable run on whatever PHYSICAL gold still remains in COMEX vaults – like the one owned by JP Morgan, but contracted to be purchased by the Chinese!


Sure, most COMEX contracts are rolled over to future months. However, the fact remains that registered inventories have plummeted from 3,000,000 ounces in April – upon commencement of the “ALTERNATIVE CURRENCIES DESTRUCTION” – to just 707,000 today, as trust that actual, PHYSICAL metal actually exists dwindles; or worse yet, that it will be commandeered by a desperate U.S. government via shady CME rule changes. December, by the way, is historically, a FAR LARGER PM delivery month; and thus, FAR MORE than 436,000 ounces of gold will stand for delivery in the days leading up to the December 27^th options expiration. Will December be the month where the COMEX rig inevitably ends? Or March of next year? Or perhaps, if the bad guys lose control the October contract this week?


Trust me, the Cartel will pull out every imaginable stop to hold prices down this week; particularly with so many contracts in the money following last week’s PM surge. Already today, we’ve seen a typical “Sunday Night Sentiment” PAPER attack, as well as the 103^rd visit from the 2:15 AM suppression algorithm in the past 115 trading days. However, gold and silver remain stubbornly at $1,360/oz. and $22.65/oz., respectively (both up on the day); and if they can remain there through tomorrow’s option expiration and Thursday’s First Delivery Day, this will put considerable pressure on the Cartel’s attempt to mask said reality with weak PM prices. And if they can’t – BIG DEAL – as all they will have accomplished is a further delay of the inevitable; and with it, continued surges in global, PHYSICAL demand.


Making their job that much more difficult is said FOMC meeting; as at this point, there is not a person on earth expecting tapering any time soon. In fact, my year-long forecast that QE5 will be announced before any “tapering” is growing more likely each day; and frankly, it wouldn’t surprise me if it occurred before the first quarter of 2014. You know, when Congress is forced to admit it has FAILED to create a budget or cap the debt expansion. Heck, if they don’t play their cards right, we may well have a second government shutdown; and if such a scenario unfolds, make no mistake, the dollar will plunge into oblivion.


As for today’s topic, I did a good deal of “grunt work” this weekend to memorialize the abject FAILURE that has been the governments “bailout” and “QE” programs. And notice how I said the “government,” and not the Fed. Theoretically, the Fed is independently owned; but who are we kidding? The GOVERNMENT appoints Fed governors, and the GOVERNMENT can abolish the Fed at will. The Obama Administration – and the Clinton and Bush Administrations before it – tell the Fed what to do; and ALWAYS gets their way. In turn, the banks are the top lobbyers of government officials; completing the bizarre, corrupt loop.


Below is a list of post-Global Meltdown I (2008) and Global Meltdown II (2011) U.S. MONEY PRINTING schemes. Not including “off-balance sheet printing” like the secret $16 trillion of “loans” we recently learned of; not to mention, the 2011-12 “swap agreements” enabling the Fed to bail out dozens of European banks with essentially interest-free loans without reporting the funds as newly printed money. Just on an overt basis, the Fed has printed $10 TRILLION in the past five years; and as we speak, continues to print $1 TRILLION annually – which as I noted above, is likely to be increased in 2014…


http://blog.milesfranklin.com/wp-con...0/Graph-21.png


And what has the WORLD received in return; aside from surging debt and inflation? Not to mention, a dead and buried global economy featuring record unemployment? Sure, TPTB will continue with to issue rosy forecasts of imminent “recovery”; but given their HORRIFIC track record – none worse than Ben Bernanke and Janet Yellen – why is ANYONE still listening? By the way, when QE3 was announced in September 2012, the Fed forecast 3% GDP growth in 2013; which as you’ll see below, decidedly ain’t happening.


In fact, the 2010s are shaping up to be America’s second worst decade – real GDP-wise – in more than two centuries. Per below, it has averaged 2% for the past four years – assuming the GDP “price deflator” is not an abject LIE…


http://blog.milesfranklin.com/wp-con...P-since-QE.png


For the record, said “deflator” is the Bureau of Economic Analysis’s measure of quarterly inflation, utilized in real GDP calculations. It tends to be highly correlated with the Bureau of Labor Statistics’ Consumer Price Index; which, as we know too well, dramatically understates REAL inflation. Per below, John Williams’ Shadow Stats projects REAL U.S. inflation has been roughly 9% annually over the past five years, compared to the BEA’s estimate of less than 2%. Likely, the answer lies somewhere in the middle; and irrespective, said 2% GDP growth was in actuality, negative…


http://blog.milesfranklin.com/wp-con...-vs-Shadow.png


Worse yet, the cost of such “growth” has been the exponential DEBT that cripplesthe nation at an acceleratingrate, guaranteeing destruction of the dollar – just like all 599 failed fiat currencies before it; and with it, the ENTIRE dollar-anchored, worldwide monetary system.
Below are two shocking charts, depicting just how much damage government MONEY PRINTING has caused over the past five years. The first compares the rate of growth of “real GDP” to the U.S. national debt, excluding $5 trillion of “off balance sheet” debt incurred by nationalizing Fannie Mae and Freddie Mac. I won’t even go into the tens of trillions of “unfunded liabilities” the U.S. government has racked up during this period as well; but suffice to say, their inclusion would make take this chart parabolic…


http://blog.milesfranklin.com/wp-con...ional-Debt.png


Secondly, here is what the National Debt chart looks like when including the Fannie Mae and Freddie Mac off-balance sheet debt. Yes, a 250% increase in just five years, against real GDP growth that can only be considered flat when LYING about inflation…


http://blog.milesfranklin.com/wp-con...wth-Fannie.png


And thus, as the Fed prepares to yet again announce unabated MONEY PRINTING on Wednesday, ask yourself this. HOW LONG can this failing scheme continue, before the entire fiat currency system relies on it collapses? Not to mention, do you think there will be ANY chance to acquire the REAL MONEY that will replace it – already in extremely short supply – when it does?

http://blog.milesfranklin.com/qe-failure-by-the-numbers