"When the dollar goes, Washington’s power goes, which is why the bullion market is rigged." - Former U.S.Treasury Undersecretary Paul Crag Roberts, 5/18/13
"Patience, the markets always do what they're supposed to -- but never when." - Richard Russell, 5/1/13
In a story dictated to The Wall Street Journal, its print media disinformation vessel -- the Federal Reserve released a narrative on May 10th claiming that it has "mapped out a strategy" for winding down Quantitative Easing: WSJ: Fed Maps Exit From Stimulus
With the plethora of opinion and conjecture as to if and when the Federal Reserve will end -- or using its new trial balloon term -- 'taper'-- Quantitative Easing, I have yet to read a cogent explanation of exactly how it would do so without collapsing the economy. This is not to suggest that the Fed's primary concern is the economy -- the Fed is after all the servant of its establishment private stockholders -- but there are the bothersome matters of the U.S. housing market, the U.S. Treasury market and the stock market all now being entirely dependent on a substantive continuance of suppressed long term interest rates.
The talk of 'tapering' obscures the more pointed reality that the Federal Reserve cannot by any realistic means withdraw the $trillions in liquid heroin it has already injected. Any interest rate surge on the long end of the curve resulting from the Fed's withdrawal from these markets would inflict havoc upon the housing market, the economy and notably, upon the hyper-fragile OTC derivative complex.
There are ominous headwinds that further dispel the notion of the Fed somehow reversing the policies to which it is now wed. Already forced to purchase 60% of new Treasury issuance, it is hard to envision the Fed not increasing its presence at these auctions: FT: Ivy League university endowments trim treasury holdings.
The stock market's only foundations are continued Fed liquidity and to some degree, capital flight from countries perceived to be undergoing more aggressive currency debasement. The myth of a U.S. economic "recovery" was further borne out this past week with Walmart reporting declining revenues and the worst U.S. housing starts number since 2006 (lumber prices have collapsed).
Perhaps the central bank's ultimate quagmire is the matter of dishoarding the $2 trillion of cesspool assets acquired at par from the TBTF banks during the depths of the financial crisis. The reason these assets were taken off the banks' books and onto the Fed's at overstated prices are precisely what precludes their resale; the purpose was to hide the devastating losses TBTF banks had incurred. To now enter into market transactions on this muck would open the Pandora's Box of revealing the fictional asset valuations across the entire banking system. The Fed cannot sell these assets. Ever.
The U.S. Federal Reserve is in a propaganda campaign to create the illusion of control by insinuating that it is weighing options it does not actually have. There is no exit, only talk. Quantitative Easing is permanent until such time as the entire financial infrastructure is re-configured. Delaying that day of reckoning is the Fed's only agenda.
The April Non-farm Payrolls and Unemployment report...The headline numbers -- the only aspect of this or any month's report that Wall Street pays attention to -- alleged 165,000 net jobs added, beating expectations of 145,000. Beneath the surface are some problems. First, the qualitative aspects of the jobs created are not pretty. Total hours worked declined by 0.4% in April over March, no manufacturing jobs were created and most new job creation was in the low-paying service sector.
More disturbing is that as usual so much of the report is bogus. The Bureau of Labor Statistics asserted that 193,000 of the April job additions were not actual jobs but rather theoretical entries under its trusty "birth/death" model. Without these fake jobs the BLS would have reported a loss of 28,000 jobs for April. Further, any reasonable review of the report's industry components would find it entirely inconsistent both with supposed sector strength in an improving economy as well as those areas clearly losing jobs.
John Williams, proprietor of Shadowstats referred to the report as "nonsense," reiterating the true U.S. unemployment rate at 23.0%. Paul Craig Roberts pulled no punches in this interview with Erik King: Former US Treasury Official - Today’s Jobs Report A Total Farce.
Jim Willie is terrific. His latest: Financial Treachery & Harsh Consequences
"Gold price has no real supply. The false Bond price has no real demand. The claimed price is not where Supply meets Demand to clear the table on the market. Therefore the claimed price is not the real price. Neither Gold nor the USTBonds are a real market. Witness pure heresy."
Lexapro Alert: This is what it means to be Free in America, "where collecting rainwater, consuming raw milk, or seeking a second opinion on your child’s medical care is now criminalized."
Are all telephone calls recorded and accessible to the US government? Yes, but you are already aware of the NSA's Bluffdale, Utah facility having read this March 2012 post. This was further confirmed by a former FBI counterterrorism agent in a CNN interview last week regarding the Boston Marathon investigations. A reported 1.7 billion telephone conversations and emails of law abiding Americans are recorded and stored daily without cause or warrant, in the event that one should become "a person of interest" years later.
"If you see something, Say something?"...The 'dial 911' culture has transitioned to full paranoid dependency. We are now in Stasi mode:
Here is an interesting story of the superiority of private enterprise over the public sector. After the Detroit police department stopped responding to 911 calls, a private firm filled the gap. There is an alternative to the public police mediocrity that we mindlessly accept as the way it needs to be.
Retirees on fixed incomes are increasingly under pressure making ends meet in a zero interest rate environment. These two resourceful seniors recognized a need among their younger neighbors and filled it: Heartwarming tale of neighborly outreach
Gold and Silver...
I refer you to three excellent broadcast interviews. Erik King this past week interviewed market elder statesman Art Cashin: Shorts Being Squeezed & Market May Go Parabolic/Money Supply Going Parabolic, Gold & Inflation and hedge fund manager William Kaye: Global Banks Massive Criminal Conspiracy In The Gold Market
"Show me another bear market where demand goes up as prices collapse. You can’t. It hasn’t happened in history. So what that confirms is this (drop in the price of gold) is all mythology."
Fund manager John Butler discussed the distortions being created by ubiquitous central bank manipulations. The interview with Max Keiser begins at 14:25.
The fact that nation's largest wholesaler was cleaned out two weeks ago of its entire May allotment of 100 oz. silver bars (Delivery for 1 oz. silver Eagles and Maple Leafs is now 4-5 weeks) will probably not impress you as you've watched the paper price of silver continue to fall. I could tell you that U.S. Mint sales of gold Eagle coins in April set a record or quote scores of dealers with similar comments as appear in this Reuters article: "There is no supply," said Prithviraj Kothari, managing director of Riddhi Siddhi Bullions Ltd., a gold importer in Mumbai, adding some sellers charged a premium as high as $20 an ounce." but you would still be frustrated by what's happening to the paper price on the New York and London exchanges and the falling prices of precious metal equities. I get it.
I can only tell you that the intensity of this smash -- the shear ferocity with which the U.S. central bank is at work concealing the true price of the monetary metals -- reveals the rot that underlies the financial system and is a "tell" of how powerful the price explosion will be once the physical market can no longer be controlled. It also tells me that day is nearer than one would otherwise be prone to believe.
America's once great financial markets have become perverted playgrounds with criminality a daily occurrence and prosecutions a rarity, our debt markets are centered on false interest rates and central bank support, equity markets are goosed with liquidity and futures manipulation, and all of this is magnified by a monsterous and fraudulant derivatives market. It is all one huge circus of malinvestment. All of this may very well get worse before it gets better, including the suppression of precious metals. But it will end terribly and with silver and gold prices multiples of where they currently are.