Living In A QE World | The Big Picture

All Central Bank Balance Sheets Are Exploding Higher, Or Engaged In QE

The degree to which central banks around the world are printing money is unprecedented.

The first eight charts below show the balance sheets of the largest central banks in the world. They are the European Central Bank (ECB), the Federal Reserve (Fed), the Bank of Japan (BoJ), the Bank of England (BoE), the Bundesbank (Germany), the Banque de France, the People’s Bank of China (PBoC) and the Swiss National Bank (SNB). Noted on the charts are significant events or growth rates.

Shown is the size of each respective balance sheet in its local currency. Note that all are exploding higher as every chart goes from the lower left to the upper right. Most are still making new all-time highs. If the basic definition of quantitative easing (QE) is a significant increase in a central bank’s balance sheet via increasing banking reserves, then all eight of these central banks are engaged in QE.

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via Living In A QE World | The Big Picture.

The Federal Reserve’s Explicit Goal: Devalue The Dollar 33%

This is very troublesome for those planning to live on a fixed income long term.  This type of planned devaluation is a structured default on government obligations like social security payments.  It is also a blatant  transfer of wealth(ie tax) from the savings and wages of the people  to the Federal Reserve and the government.  What is worse, is the the planned 2% rate of inflation is based on Core Inflation, which omits the impact of food and energy, where most inflation frequently occurs.  This type of systemic criminal behavior on the part of the Federal Reserve is another reason to own gold, silver and other commodities as a way to opt out of this insidious transfer of wealth and it’s destructive impact on the middle class. 

JT

The Federal Reserve Open Market Committee (FOMC) has made it official: After its latest two day meeting, it announced its goal to devalue the dollar by 33% over the next 20 years. The debauch of the dollar will be even greater if the Fed exceeds its goal of a 2 percent per year increase in the price level.

An increase in the price level of 2% in any one year is barely noticeable. Under a gold standard, such an increase was uncommon, but not unknown. The difference is that when the dollar was as good as gold, the years of modest inflation would be followed, in time, by declining prices. As a consequence, over longer periods of time, the price level was unchanged. A dollar 20 years hence was still worth a dollar.

But, an increase of 2% a year over a period of 20 years will lead to a 50% increase in the price level. It will take 150 (2032) dollars to purchase the same basket of goods 100 (2012) dollars can buy today. What will be called the “dollar” in 2032 will be worth one-third less (100/150) than what we call a dollar today.

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via The Federal Reserve’s Explicit Goal: Devalue The Dollar 33% – Forbes.

Jim Rogers – CNBC 28 December 2011 – YouTube

Jim Rogers – CNBC 28 December 2011 – YouTube.

BIS Calls for Hyperinflationary Depression?

Monday, December 12, 2011 – by Staff Report

The Bank for International Settlements Sunday issued an oblique endorsement of coordinated action by the world’s largest central banks to ease funding conditions for banks. “A freezing of interbank markets in major funding currencies, as during the recent crisis, may require the ability to supply official liquidity in major currencies in an elastic manner,” the BIS wrote in its regular quarterly report.” – MarketWatch

Dominant Social Theme: Inflate! And everything will work out.

Free-Market Analysis: We’ve already indicated that we believe the Anglosphere power elite is attempting to create a kind of Great Depression in order to ease the path of world government. This squib of an article in MarketWatch (excerpted above) – unnoticed by most of the mainstream press – only reconfirms our impression.

It endorses recent “coordinated” central banking loosening. But it does more: “A freezing of interbank markets in major funding currencies, as during the recent crisis, may require the ability to supply official liquidity in major currencies in an elastic manner.”

Think about that. The BIS, whatever it is, is all for printing lots of money. And the BIS is no small-time trade group. It is perhaps the most powerful (and least known) global business body in the world. Its mysteries are manifold. its workings are well-hidden.

Of course, somebody actually set up the Bank for International Settlements in the late 1930s. And since then someone has set up or helped set up about 200 central banks around the world, many of them reporting directly to the BIS.

But who? And how did it happen? Dunno.

Who speaks to the head of a state, asking him or her to set up a central bank? Dunno. Do you?

Why is that Libya, Afghanistan and Iraq have central banks when they didn’t before, or not the kind they do now? Did you read about it?

Meh … this ruinous financial system is not a plant or a tree. It did not grow spontaneously. It did not grow naturally. And we would submit to you that those who created it know what they’re doing.

The key as always is to pretend that one does NOT know. The key is to create cognitive dissonance. Even today, if you asked the average person-on-the-street if the powers-that-be are trying to create a Depression (let alone a hyperinflationary one), you would get the ol’ crazy look, as in … “What is this fellow … nuts?”

But, no, nothing nutty about it. The European Union and the euro are grinding a whole European generation into dust. China’s burgeoning middle class is about to get walloped if China ends up in a proverbial hard landing, as well it might. The US has NEVER recovered from the disaster of the mid-2000s (first decade) nor shall it for the foreseeable future.

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via The Daily Bell – BIS Calls for Hyperinflationary Depression?.

via BIS Calls for Hyperinflationary Depression?.

How to Position Yourself for the Future: Step 1 – Financial Security

By Chris Martenson

What we care about most here is helping people adjust and adapt — happily, profitably, and safely — to what is likely to be a very different future.

Our framework centers on the idea that humanity is facing a set of predicaments quite unlike anything else in the history books. Because this time there are no borders to cross in search of safety; the entire world is involved. On a global basis, we’ve never experienced collective debt loads of this magnitude. Never before has an entire set of intertwined currency systems — all debt-based money — collectively been backed by nothing more than the hope of a larger future, and never before have this many people had to figure out how to move from more-concentrated to less-concentrated energy sources (from fossil fuels to sun- and wind-based alternatives).

The convergence of exponential trends in population, energy depletion, debt accumulation, and an economic model that is hooked on growth will combine to produce quite an interesting, if not challenging and disruptive, future. The funny thing about complex systems is that they are unpredictable, and therefore preparing for what may come is a non-trivial (yet absolutely essential) task.

All of this is spelled out in the Crash Course and more recently in a succinct presentation that I gave at the Madrid Gold Conference in November.

The immediate question for most people is What should I do? We break down the intelligent responses into three big buckets: financial, physical, and emotional. In this report, I detail the financial steps that everyone should undertake right now to manage future risks using the framework that I use to assess and understand the financial world and markets.

My approach is founded as faithfully as possible on facts and data. But my views on how the markets operate are formed from personal experience, observation, and connecting a few dots that rely on opinions and sometimes beliefs. Therefore, this financial and investing framework is something that you should only accept if it works for you — and reject if it does not.

The Basics

I am of the opinion that we are in a gigantic structural bear market. The role of any bear market is to get the most people to lose the most wealth. And so our first goal is to help you be among those who lose the least, as they are the ones who win the most.

This bear market, however, has more to it than the usual bust the follows a typical period of irrational exuberance. Where past bear markets could always count on the natural world helping to induce a recovery by providing more natural resources (especially energy) in whatever quantities and qualities that were necessary, it seems that this time oil will be playing a spoiler role.

Because this bear market has the additional complicating factor of being global in nature, mauling a global financial edifice saddled with the most debt and liabilities ever recorded in addition to stubbornly high oil prices, it is my view that the economy will not respond in the same ways as it has in the past. Further, we need to be mindful of the idea that the risks are large (derivatives, anyone?), they are actively and collusively hidden from view (what are banks really holding?), and where they are concentrated is mostly unknown — something I spell out in greater detail in Part II of this report.

Even more troubling, it is no longer unthinkable that one or more major currencies will lose some or all of their value over the next few years.

The conclusion I draw from all of this is that this is a period of time to be concerned with return OF capital instead of return ON capital. Maximum safety has its own rewards these days, not least of which is the value of having a good night’s sleep.

Our basic advice has changed little over the years.

Gold (and Silver)

The first step is to have physical gold in your possession. By this we mean bullion coins or bars stored somewhere very secure that does not place you at risk. I keep mine in vaults and safe deposit boxes, mainly because I lead a very public life and find it too risky to store it in my home. You may wish to protect yourself similarly.

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via How to Position Yourself for the Future: Step 1 – Financial Security.

World’s Central Banks Act to Ease Market Strains

Major central banks around the globe took coordinated action Wednesday to ease the strains on the world’s financial system, saying they would make it easier for banks to get dollars if they need them. Stock markets and the euro rose sharply on the move.

The U.S. Federal Reserve, European Central Bank, Bank of England and the central banks of Canada, Japan and Switzerland were all taking part.

“The purpose of these actions is to ease strains in financial markets and thereby mitigate the effects of such strains on the supply of credit to households and businesses and so help foster economic activity,” the central banks said in a joint statement.

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via World’s Central Banks Act to Ease Market Strains.

John Williams: Hyperinflation Warning, Preserve Value with Gold

Among the specters lurking in ShadowStats.com’s Editor John Williams’ gloomy outlook for the U.S. are the demise of the dollar, hyperinflation and the ongoing lack of political will to take sound corrective measures. Still, as he tells The Gold Report in this exclusive interview, investors have options. Williams contends that turning to gold, silver and strong foreign currencies would protect wealth and position savvy investors to take advantage of extraordinary opportunities likely to flow out of the turmoil ahead.

The Gold Report: When we talked in May, you predicted that hyperinflation could be a reality as soon as 2014, something you addressed at length in your Hyperinflation Special Report. Have six months of euro debt crises, Middle East revolts and U.S. Treasuries’ downgrading altered your outlook?

John Williams: Not a bit. We still seem to be moving down that road to a relatively near-term break toward hyperinflation. The most important thing that’s happened since we last talked was the global response to the U.S. legislators’ negotiations over the debt-limit ceiling and the deficit reduction problems at that time. Clearly, no one controlling the White House or Congress was serious about addressing the nation’s long-term solvency issues. That sparked a panic selloff on the dollar against currencies such as the Swiss franc, and of course gold, which made the gold price rally sharply.

TGR: Did the politicos learn anything from those “negotiations,” as you just described them?

JW: Not at all. In fact, I’ll contend that everything that’s happened since then has been just a playing out of what resulted in a complete collapse in global confidence in the dollar. The ensuing rapid shift of market focus to crises in the euro area was really more of a foil to distract the global markets from the dollar. Following that horrendous performance by Congress and the White House, the global markets indicated a major loss of confidence in the dollar that had been coming. I think that’s now established and in place. The dollar is doomed to lose its reserve status eventually, and any day now, we may see things heat up again over the deficit negotiations.

TGR: What steps would we see on the way to the dollar losing its reserve status?

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via The Gold Report – John Williams: Hyperinflation Warning, Preserve Value with Gold.

An Overpriced Market Meets The Global Economic Slowdown | Bob Chapman

October 19 2011: A stock market that is still overpriced, what can leverage do for bailouts, debt is endemic worldwide, injections of money and credit cant stop the global economic slowdown, no viable solutions for Europe.

It could then be that this is the top of the stock market, which is fundamentally very overpriced. The latest rallies are the result of statements by French President Sarkozy and German chancellor Mrs. Merkel that a financial solution is at hand for Europe. This announcement named the end of the month as the date for release of this information. Thus far there has been no further comment. This was the justification for a very strong rally. In the wings there are large short and put positions, which tell us that there is a body of speculators that believe the fundaments are not in place, nor was the recent rally justified. In relation to Europe we see two possibilities; countries bailing out their own financial sectors and the use of leverage to extend bailout funds into trillions of dollars to assist the six insolvent nations. Some nations currently prohibit the use of leverage. Needless to say, rules do not impede adventurous politicians in the control of elitist interests such as the banking community. We will have to wait for this new formula, but in the meantime its results have already been discounted, or military action increases in the Middle East, perhaps in connection with Iran?

Debt problems are endemic worldwide. We all know of the problems in the US, UK and Europe, but they extend all over the world. We are in a major financial crisis, which is as bad and will be as damaging as the credit crisis of three years ago. In fact we never exited that crisis. Debt is the problem and creating more debt does not solve the problem. We have written often about debt and currency problems and as yet nothing is being done to solve these problems. It is as if these powers wanted a collapse. How long can the US dollar continue to take this thrashing? Unfortunately it is not only the dollar. Over the past 1-1/2 years nine major currencies have fallen on average more than 20% vs. gold and silver. Thus many countries and their financial institutions are going to be in serious trouble. The dollar and the euro are both overvalued and even after a 15% devaluation the Swiss franc is undervalued. It is not only going to be currencies, but everything financial that is going to be affected. That includes bonds, stocks, savings accounts, CD’s; cash value life and annuity policies. The only things that will benefit will be gold and silver related assets. For all intents and purposes in the US, the FDIC has no funds and has to have them allocated in the form of debt by the government. More debt means more inflation and higher precious metal prices. The global financial community has to be terrified because their whole world is coming unraveled around them.

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via An Overpriced Marked Meets The Global Economic Slowdon | International Forecaster Weekly Bob Chapman The International Forcaster | Economy News | Investing | US Market Information | Gold | Silver | Wall Street Bailouts | Investment Trends | Money Resources | US and Worldwide Politics.

Goldman Sach’s Hatzius: Fed to Stave Off Recession With QE3

Did anyone think this was not an eventual certainty in the economic mess we are in?  The FED prints money…it’s what they do.  JT

The Federal Reserve will roll out a third round of quantitative easing — asset purchases from banks — and steer the economy away from a fresh recession, says Goldman Sachs Chief Economist Jan Hatzius.

The Fed, under Chairman Ben Bernanke, has already launched two rounds of quantitative easing, known widely as QE1 and QE2.

QE1 saw the Fed buy $1.7 trillion in assets from banks, mainly mortgage securities, while QE2 saw the monetary authority snap up $600 billion in Treasurys.

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via Goldman Sach’s Hatzius: Fed to Stave Off Recession With QE3.

Inflation, Money Circulation = Gangrenous Liquidity, Rising Gold Price

According to Oxford,

Inflation, the general increase of prices and fall in purchasing value of money.

Deflation, reverse or reversal of inflation.

Stagflation, state of inflation without the corresponding increase of demand and employment.

A situation arises where the quantity of money is not as important as how far its circulation reaches. It slowly becomes insufficient to buy the needs and wants of the population at the periphery of the economy.

For instance in stagflation, there may be money around but it’s not producing the economic flows that it should. This can also be tied to the extent of the circulation and the velocity of money itself. There may be sufficient money around but is becomes locked up in Treasury bonds and not lent into the economy to stimulate economic activity (such is the case now). Asset prices rise in this environment and further make inadequate the money for purchasing such assets.

Alternatively, the reduction of money can happen in situations, like today, when mortgages are at an all-time low of 3.94%, but through fear of falling house prices (reducing creditworthiness) potential job losses and the consequential need to save for the rainy day, house buying drops off. Every situation produces a reduction in the available supply of money and precipitates liquidity crises. This is from where the major threat to monetary stability comes. In our global world, with its plethora of national currencies, a non-national asset becomes protection against inflation, deflation, and stagflation across the globe.

Why should this be good for gold? Gold is both an international asset and international cash. It’s the combination of these qualities (and the liquid nature of gold, in the most difficult of situations) that set it apart from paper money and other assets. It’s these qualities that will force the monetary system to bring gold back into the global, monetary system in one way or another.

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via Inflation, Money Circulation = Gangrenous Liquidity, Rising Gold Price – GoldSeek.com.