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Sunday, February 24, 2013

How long can this go on?

According to Zero Hedge, somewhere between 10 months and four years:
As we showed last week, the rate at which NIM goes negative and the above feedback loops begins would be at approximately 4.5% on December 31, 2013. The "breakeven" rate unleashing the inflationary cycle would then decline by about 1% each year assuming the Fed's balance sheet continues rising at a pace of $1 trillion per year.

So the good news for all those who have been wondering just how much longer the Fed can continue doing more of the same while providing a free lunch for all is that we now know there is a temporal bound: the longer the Fed does nothing to change the status quo, the lower its "rate buffer."

Of course, there is a resolution: the Fed simply begins to sell its assets, and in doing so, destroys the reserves created when said assets were onboarded on the Fed's balance sheet. But there lies the rub: because the second the Fed enters open deleveraging mode, everyone will sell everything they can to lock in the profits generated from the past 4+ years of Fed balance sheet expansion. Furthermore, at that moment, the market will begin pricing in the unwind of some or all of the $15 trillion in central bank liquidity which is the only reason the S&P is where it is today. The result would be a market crash so epic it would make the market response to Lehman and AIG's failure seem like a walk in the park by comparison.

Which is where you come in dear retail investor, and the whole myth of the "Great Rotation." Because unless there is someone who will start providing a bid into which the banks can offload their securities in exchange for cold hard cash, as was explained earlier, the entire stock market ramp of the past 4 years will have been for nothing. It is also why day in and day out the media bombards everyone, as it has in the beginning of every year for the past three, that the time to enter the market is now, and there has never been a better time (ignoring that the market is now more expensive on a forward multiple basis than it was at the last market peak in 2007). 
What concerns me is that the Federal Reserve and its figureheads appear to have given up on the repeated "green shoots" announcements and shifted into half-hearted "it's not our fault" mode.  This makes me suspect that the implosion date will be closer to 10 months than four years.  I don't think it will be hyperinflationary, as will soon be discussed in detail, in part due to the nature of the financial system, but also because it should be perfectly clear that the Federal Reserve is not going to sacrifice itself and the interests of its owners for the economy or for the federal government.

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50 Comments:

Anonymous Stilicho February 24, 2013 9:52 AM  

it should be perfectly clear that the Federal Reserve is not going to sacrifice itself and the interests of its owners for the economy or for the federal government.

And it's not like Debt-we-owe-to-ourselves-doesn't-matter when actual interest has to be paid instead of being forgiven. As we learned watching Goodfellas:

The Fed to Treasury: "Fuck you, pay me." And eventually, it burns down "unexpectedly".

Anonymous Stilicho February 24, 2013 9:56 AM  

Of course, if the Fed actually gets off of the Treasury tiger it's riding, it may not like the result.

Anonymous Stilicho February 24, 2013 10:26 AM  

On a more practical level, I can see this resulting in a deflationary crash with dollars (and Treasuries as dollar substitutes) becoming more valuable right up to the point that the market realizes that the Treasuries must default too. We could be in the unique situation of Federal Reserve Notes becoming more valuable while Treasuries become less valuable. Brutal.

Anonymous JCB February 24, 2013 10:35 AM  

They will nationalize retirement accounts first. That may buy them another year or two.

Anonymous Red February 24, 2013 10:39 AM  

The left always always favors inflating their way out of a fiscal mess.

Anonymous LES February 24, 2013 11:02 AM  

What will happen to precious metals?

Anonymous scoobiuis dubious February 24, 2013 11:08 AM  

"The left always always favors inflating their way out of a fiscal mess."

Who was it that said, "We will grind down the bourgeoisie by the twin mill-stones of inflation and taxation." Oh, right, it was V.I. Lenin, wasn't it. Funny, that. Of course, he didn't really have a particularly good reason for grinding down the bourgeoisie, it's just that some people are kinda into burning things down just to watch them burn.

They never, ever stop. It's just a subconscious rage and urge for destruction, the left is motivated by envy and hate. That's really all they are, is filled with sin incarnate. But of course the real problem is, we don't up and stop them.

Anonymous scoobius dubious February 24, 2013 11:12 AM  

"What will happen to precious metals?"

They will be seized by the sword from all you piteous skraelings and brought to my frozen mountain fastness in Skull Castle, where they will be melted down and used to build my giant megalomaniac Throne of Pain, a vast and ridiculous solid-gold royal court which will be supported day and night on the backs of a thousand of your shivering, squealing sons. What did you think was going to happen?

And yet, for all my ludicrous and pointless cruelty, it's still better than letting leftists get their hands on it.

Blogger IM2L844 February 24, 2013 11:24 AM  

I think scoobius is on to something. It sure smells like a set up to make much higher taxes look like the only reasonable option.

Anonymous The other skeptic February 24, 2013 11:34 AM  

They never, ever stop. It's just a subconscious rage and urge for destruction, the left is motivated by envy and hate. That's really all they are, is filled with sin incarnate. But of course the real problem is, we don't up and stop them.

If you are the unproductive class, you have to take from the others. The best place to take it from is those who, in aggregate, have something you can take and who are least able to oppose you.

All the rest is rationalization.

That is not to say we should not hate the takers and wish to exterminate them.

Blogger Dominic Saltarelli February 24, 2013 11:52 AM  

The other skeptic
That is not to say we should not hate the takers and wish to exterminate them.

I'm OK with hating the takers and wishing to exterminate them. There is a liberating clarity in knowing exactly who your enemy is and knowing there is no reason at all to try and reason with them. It's good for the skin, you know.

Anonymous David of One February 24, 2013 12:33 PM  

Oh, the USG could just stamp out 20 $1 Trillion dollar coins! (sarcasm intended)

Vox and the Ilk in general,

I do have a question for which I think is related.

What of the concept of a "Reset" or "Jubilee"?

It would seem that the concept of a financial Reset or Jubilee is viable.

Essentially it is the nullifaction of "debt" worldwide. Conversely it seems it would also mean the nullifaction of "assests" worldwide.

This concept has been applied now and then over thousands of years but certainly never on a global scale. (It occurs to me that the "global" part is untrue if you consider what "global" was a few thousand years ago.)

I mention a global scale since such a concept doesn't seem viable individually by any single nation, especially the United States as the dollar is the reserve currency.

So there is the concept of nullifying all debt, its history and then there is a modern day "grassroots" push for "Jubilee" for only the poor and poor nations around the world. The later is more than a curiousity to me as it involves liberal participants such as "Occupy". This in itself warrants extreme scutiny and caution as the liberal push is for "poor" only which to me seems that the "debt" of the poor would be piled upon the "rich" (yet again).

My question is really about the viability of the concept ... pros and cons.

I've spent some time trying to grok the concept but I continually end up concluding that such a concept wipes out "wealth, power and control" for a time. On this basis, I don't see that it would be easliy accepted enough to implement.

Essentially I am of the opinion that money and debt are abstract constructs. And that the subversion or bastardization of the concept of "money" and "debt" is the intentional excessive printing or issuance of money and debt.

Anonymous Michael of Charlotte February 24, 2013 12:53 PM  

So where do I invest my money right now? The stock market is being pumped up by the Fed and looks like it will crash in the 10 months to 4 years. Precious metals will likely be seized (again). I can buy farm land which can be emanate domained in the name of more tax money, hell maybe in the name of the public good, gotta feed all those welfare people.

So where do I invest? I will retire in 30 years.

Anonymous Geoff February 24, 2013 1:06 PM  

@David of One,

"It would seem that the concept of a financial Reset or Jubilee is viable."

Viable to whom? If someone owes me money, I want my money. And if I'm a bank, I'll call up Congressman Smith in my district to ransack your house. Hope they get the address right but if not, as long as I get my bank's money, I'm good.

Printing more money is what governments and central banks have always done. They'll continue doing it incrementally, then more incrementally, then hit the "Create more dollars in order to buy more Treasuries" button faster and faster until it costs $238 for a sixpack of beer at Albertson's. Then $2,089 the week after that. Then "Engage Zimbabwean Warp Drive" printing.

Things get really sad and scary after that. I'm sure Nate will do a better job than I could of explaining why it's going to be hyperinflation versus deflation (I lazily wave my arm at history books, Nate will explain in painful detail). And I agree that Vox is whip-smart...but he missed a key point in my estimation: the right side of the equation is the limitless ability of govt/central banksters to print unlimited amounts of money. Please no one tell me that's illegal and the Fed can't do it, because I will urinate in my pants laughing at the very concept of the Fed not doing whatever it feels like in this environment.

Blogger IM2L844 February 24, 2013 1:08 PM  

I've spent some time trying to grok the concept but I continually end up concluding that such a concept wipes out "wealth, power and control" for a time. On this basis, I don't see that it would be easliy accepted enough to implement.

Essentially I am of the opinion that money and debt are abstract constructs. And that the subversion or bastardization of the concept of "money" and "debt" is the intentional excessive printing or issuance of money and debt.


The Juilee concept is brought up from time to time and the general consensus seems to be that while it is easy to be sypathetic with many of it's goals, it is not a practical and workable solution in the real world for technical reasons that I don't really understand.

I said earlier that I thought the situation with the Fed and the economy was being used to set up a tax hike as the only reasonable strategy. I said pretty much the same thing back in October of last year when Quinfinity was announced and I still believe that, but I really think that is only the tip of the iceberg.

Keep in mind that I have zero authoritative credibility when it comes to economics, but my instincts have been pretty good over the years and what I think is really happening, at the core of this whole mess, is a concerted effort to make the entire concept of capitalism appear to be fundementally untenable for the new global economy. Time will tell.



Anonymous Geoff February 24, 2013 1:12 PM  

@Michael of charlotte,

"Precious metals will likely be seized (again)."

They gotta find it first, don't they? If you pay cash at a coin show (use a Fisch from www.fisch.co.za to validate it's real Au), no paper trail. Bury it so deep in your backyard that a metal detector can't find it (or floor safe inset in concrete with a false floor on its top).

Having said that, don't spend money on PMs until you have crazy levels of water storage containers, water purifiers, freeze-dried food, high-speed lead delivery devices and lead (to protect the previously listed items). Tell no one you have this stuff in your basement. Most important? Prayer. Lots of it.

Blogger David of One February 24, 2013 1:13 PM  

Michael of Charlotte,

I too can't escape the conclusion that possession of precious metals and land can be taken or taxed more. The ability for the people to barter or profit from frugality and responsible forethought equates to a loss of power and control. Consequently, it will be attacked just like any investment/retirement accounts.

I contend this is by explicit intent in order to "transform" and garner more power & control.

If you, again, exercise any personal responsibility for yourself and prepare by increasing your personal holdings of food, gas ... etc. then you will be hunted, paraded and potentially jailed or executed as a "HOARDER!!!!" by those who crave or wield power and control and by those that practice no self-control or personal responsibility (aka, "The Poor", "The Takers") ... keep in mind that it appears that at this point in time and history that those of us who do prepare for the future and exercise responsibility for ourselves will be made to be dependent or killed for our independence as free men.

Anonymous scoobius dubious February 24, 2013 1:19 PM  

"what I think is really happening, at the core of this whole mess, is a concerted effort to make the entire concept of capitalism appear to be fundamentally untenable for the new global economy"

It's simpler than that. The concept, and the plan, is white genocide, plain and simple. You see, evil whites still have "too much" money relative to virtuous but stupid blacks and browns, who've been to de mountaintop on top ub de ribber Jordan where dey had dem a Dream, or whatever that bullshit was, not to forget de nebber-ending lebacy ub de slabery and the sinister imaginary theft of imaginary Aztlan and whatever other nonsense they can cook up. Therefore, excess white money must be eternally siphoned away from whites and given to shit-colored people who don't deserve it. Once the siphoning has gone on long enough and everybody is finally equal, whites will no longer be able to economically self-segregate from non-whites, and then natural non-assortative mating due to diversity propaganda will take its natural course, and whites will be genetically blended out of existence, permanently. That's the true goal.

And who will be so happy about this? I think you know exactly Who.

Of course once whites are finally gone, capitalism will be mysteriously primed to make a roaring come-back, except this time with a much smaller set of capitalists. And who will they be? Again, I think you know exactly Who.

Blogger David of One February 24, 2013 1:22 PM  

I think that being able to use precious metals will be difficult without being taxed or imprisoned by attempting to use it, posses it and/or not paying taxes on its possession or use.

Was all the gold confiscated/outlawed needed for digging out of a depression or war effort? Or was it necessary to implement a monetary system that was controlled by the government and then by those who control the Reserve Banks?

Blogger David of One February 24, 2013 1:27 PM  

scoobius dubious,

Do you think it is just racism? Or is it, at least in the US, that White Americans are more self-reliant, value liberty, value and believe in the Constitution and stand in the way of "progress" ... that being socialism/communism/Marxism/Tyranny?

I suspect both, but I'm curious as to your thoughts.

Blogger Positive Dennis February 24, 2013 1:31 PM  

I am at a "hard money" conference in Palm Springs @ Cambridge house. The purpose is to sell Jr. Mining stock. I am not buying. You can almost taste the fear. The consensus seems to be that we are headed for the "wall." Schiff is here so you can imagine what people are saying. I am guardedly pessimistic as very modest changes, like the proposed sequestered budget cuts, can have a much bigger impact than is realized. But unless things change we have 3 to 7 years in my opinion. By that I mean 3 to 7 years to the next crisis like 2008, not Ragnarok.

Anonymous The other skeptic February 24, 2013 1:35 PM  

Yahoo starting to tighten up things ...

Wonder when they will decide to cut off medical insurance for employees.

Blogger IM2L844 February 24, 2013 1:52 PM  

And who will they be? Again, I think you know exactly Who.


Who-who, who-who?
Dying clowns with streaks of Rin Tin Tin?
Spill.

Wonder when they will decide to cut off medical insurance for employees.

I expect a boat-load of people will be forced to become part-time employees to avoid the whole insurance mandate issue by 2016, but at least more people will be employed to take up the slack and it will be reported as an "I told you so" win/win scenario for both the left and the right.

Anonymous Ferd February 24, 2013 1:53 PM  

I have started investing all my gold,,,in my vest! And, in my mountain redoubt in a Northern area of Nevada.

Anonymous Noah B. February 24, 2013 2:54 PM  

Another option would be for the Fed to stop paying interest on bank reserves and increase the reserve requirement for banks. Yes, the Fed would be going against its own interests in doing that, but the Fed is still under the control of Congress (at least theoretically) and may mind that it has no choice.

Blogger Son of Brock Landers February 24, 2013 3:13 PM  

I'm in the camp that we'll continue to see massive inflation in what we need but deflation in what we don't need, until the end game. The FED, USG and Wall St. syndicate will encourage inflation in assets they can game for their gain while they do not write down any debt that we little people owe them. Wall St. in fact can't write it down or mark it to market or they'd be done for. This will continue until our creditors call the bluff and even after a crash with the rush into the dollar and TSYs, as noted by another comment, people will then panic and driven by fear rush into tangible assets with gold being the big beneficiary.

Two things to note: the Chinese will at the current rate of production and importation have more gold than the US claims to have by 2018. The Chinese, as well as Russians, Brazilians, Arabs and Indians, want a multipolar monetary system, not the current Anglo-banking cartel we have today. When this game is nearing its end, the Anglo-bankers will probably push for a one world currency system that they can game while the BRICs + Co will push for the multipolar system. I'm not shocked to type that I'd trust a multipolar system over our bankers. It'll starve the progressive beast, too.

I'll hold onto my precious metals, but my wife will probably get gold jewelry for every birthday and anniversary for as long as this game goes on. They can't confiscate that.

I'd predict 2015 because that would be the 7 year mark, and the Wall St. guys would then all be beyond the 7 year statute of limitations for many federal crimes.

Anonymous David of One February 24, 2013 3:17 PM  

That's an interesting thought Noah B..

It is curious indeed and would seem to beg the question of what the "Fed" does with their "profits". At that level do they even have or account for "profits"?

Your question causes me to wonder why a nation would sell their treasury notes to outside interests when the treasury could simply borrow more from the Reserve. Borrowing from the Reserve and then selling and paying interest on your own treasury note would seem to be double interest on the same dollar.

Blogger Kentucky Packrat February 24, 2013 3:34 PM  

it should be perfectly clear that the Federal Reserve is not going to sacrifice itself and the interests of its owners for the economy or for the federal government

The new Japanese PM has effectively taken over the Bank of Japan by running off its last president/chairman/whatever.

The 64 million USD question is whether the power-grabbers in this government will bow to the bankers, or whether they will stab them in the back and run over them when the chips go down. If the former, then we're up for deflation and a federal government that collapses (to protect the banks). If the banks are the patsies, then they die in a hyperinflationary mist of blood and guts so that the government can try to live.

I wouldn't lay coin on either outcome, myself.

Anonymous David of One February 24, 2013 4:01 PM  

Wow!

There are 11 US States where there are more folk on welfare than people working.

More surprising, at least to me, is that the amount of payout in benefits & services equals about $168 per day.

The data is from 2011 given to the Senate Budget Committee revealed last month.

Source: http://www.michaelsavage.wnd.com/2013/02/11-states-with-more-people-on-welfare-than-employed/

No ... this can't go on very long. Especially when every single month it seems that there is some contrivance/emergency/political fight that distracts from the source of the problems being exacerbated by O and his cronies ... now it is "Sequestration".

We can point fingers in all directions but it hard to imagine this happening without intentionally Mal-educated masses and the willing participation of the MSM.

Anonymous Noah B. February 24, 2013 5:07 PM  

"I don't think it will be hyperinflationary, as will soon be discussed in detail, in part due to the nature of the financial system, but also because it should be perfectly clear that the Federal Reserve is not going to sacrifice itself and the interests of its owners for the economy or for the federal government."

Continuing with this line of reasoning, wouldn't a deflationary collapse pose just as much danger to the Fed's owners as an inflationary spiral? In the event of a deflationary collapse, there would be assets that a bank could foreclose upon, but what good would that do if the banks couldn't resell those foreclosed assets to generate an amount of cash comparable to what they're owed?

Walking the line between inflation and deflation, just as the Fed is doing now, seems to be exactly what most benefits the banks.

Anonymous Noah B. February 24, 2013 5:08 PM  

"There are 11 US States where there are more folk on welfare than people working."

That is sickening. And it sounds like it doesn't take Medicare and Social Security into account.

Anonymous Stilicho February 24, 2013 5:19 PM  

Walking the line between inflation and deflation, just as the Fed is doing now, seems to be exactly what most benefits the banks.

1) what happens to the value of FRN's during a deflationary collapse?

2) what does this do to the ability of the Fed to protect its interests based on its power to create FRN's?

3) what, then, is the FED likely to do for its constituent banks if they need some FRN's to shore up their books during a deflationary collapse?

Anonymous Noah B. February 24, 2013 6:49 PM  

Stilicho, it's not what I would call a deflationary collapse if the Fed prevents it from ever happening by buying bad debts and/or recapitalizing the banks. In my definition of a deflationary collapse, most debt goes bad, no one comes to the rescue by printing buildings full of cash to offset the bad debts, the courts get hopelessly bogged down in the ensuing mess to the point of being useless, and people are left with whatever cash or other assets they have on hand. Most importantly, holders of debt get wiped out.

The process you're describing could prevent (or delay) a deflationary collapse, but isn't that basically what happened in 2008?

Anonymous Stilicho February 24, 2013 9:03 PM  

Noah, on a small scale, that did happen in 2008. What I was describing was not the Fed preventing it from happening (they're trying that right now) but rather the Fed recapitalizing favored banks after it happens with zero interest loans to offset the losses on the bad debts. The ability to lend money into existence after massive deflation is a powerful and valuable tool as long as that money is still valued. Now, whether they'll be able to pull it off successfully is a different question from whether they would try in those circumstances. To Bernanke, the Fed actions in response to the Lehman collapse was a huge success. The reality was more of an exercise in can-kicking and loss transference.

Anonymous FUBAR Nation Ben February 24, 2013 10:03 PM  

Where are investors going to park their money if they pull it out of the market? Treasuries? Push the yield curve to negative? The big move to treasuries has already happened, Vox. Your proclamations, just like Prechter, are good contrary signals that the stock bull market isn't dead.

The bottom line is that capital is fleeing the public sector and trying to find safe harbor in the private sector. The days of massive treasury inflows are over.

Anonymous Noah B. February 24, 2013 11:48 PM  

"The big move to treasuries has already happened, Vox. Your proclamations, just like Prechter, are good contrary signals that the stock bull market isn't dead."

Sentiment toward the stock market is overwhelmingly bullish right now. You are really stretching if you're trying to make "contrarian" case for continued increases in equities over the near term.

Anonymous The other skeptic February 24, 2013 11:51 PM  

Seems diversity is strength in the Islamic world as well

Anonymous Noah B. February 25, 2013 12:31 AM  

@Stilicho

I have no reason to doubt that the Fed will attempt to do what is in its shareholders' best interests, which would certainly include loaning/gifting large sums of money in the event of a deflationary spiral. For now, they're monetizing to the tune of about $100B per month and meeting little resistance. The real question is how much freedom to act the Board of Governors actually has and at what point, if any, Congress would be willing to either dissolve the Fed or amend the laws to appoint new governors and bypass the banks completely. Like Kentucky Packrat, I really don't know what's going to happen. I can see it going either way, but I think money printing ad infinitum is more likely.

Anonymous Outlaw X February 25, 2013 1:31 AM  

Life thows curves. This is relaed so not to mess with the thread. My dad died in 2003 one of the best engineers for the military there ever was. In the 40's in grade school he would go hide in the corn fields. He was caught of course and they asked him why? He said the teacher is crazy and they pissed it off, and six months later she was commited to an instituion. He then became one of our great engineers, after he went to college aa a Physic major with a minor in math,

A farm boy who created thr TFR radar for the F-111B that was on the military channel this evening.

Anonymous Roundtine February 25, 2013 2:16 AM  

Stilicho, my take on your questions.

1) Physical FRNs go up and up and up in value because everything else is collapsing in value. Virtual FRNs depends on the banking system.
2) As we saw in 2008 and in the ensuing years until now, the demand for FRNs is very high during a deflationary collapse. The Fed could print $10 trillion FRNs and it may not stop the crisis. (I'm assuming you are asking about the big one, a large scale deflationary collapse.) Most likely, USG would nationalize the banking system and reset it. Of note, the Fed and Treasury cannot rapidly print a physical $10 trillion (100 billion $100 bills). They literally do not have the printing capacity.
3) Deflationary collapse means the failure of the Federal Reserve. It will be unable to save banks because the banking system and financial markets will be broken.

If such a collapse takes place, people will be afraid to spend cash for fear that they won't have any later.

Anonymous Outlaw X February 25, 2013 2:25 AM  

I screwed up. My post wa meant for "Scientists are stupid
."

Anonymous Noah B. February 25, 2013 2:52 AM  

I don't know if we'll ever see another generation of engineers like your dad was, Outlaw. The way you describe him, he reminds me a bit of one of my favorite professors.

Anyway, there seem to be a lot of guys around today who can do very impressive simulations with Matlab but can't explain Maxwell's Laws. Crazy times.

Anonymous dh February 25, 2013 2:57 AM  

No ... this can't go on very long. Especially when every single month it seems that there is some contrivance/emergency/political fight that distracts from the source of the problems being exacerbated by O and his cronies ... now it is "Sequestration".

This is basically because the GOP are idiots.

Here are the facts:

#1 - The administration - President - can't spend one red nickel without Congressional approval.

#2 - The GOP says they want to balance the budget and cut spending.

#3 - The GOP is full of liars who do not want to make the hard choices required to actually cut the budget (hence they rarely if ever name specific cuts or ways to balance the budget).

#4 - The GOP wants to keep saying they are for cutting spending but can't stomach it. So far, they've cut less than 1% of the Federal budget, and only about $50B of that is below baseline budgeting. Basically nothing.

#5 - All of the noise is about creating crises so that the GOP can vote for the status quo, but still be able to say they are cutting spending. All of the noise has been created by the last crisis.

Now opinion.

I suspect strongly that the GOP leadership desperately are trying to lose their House majority so that they do not have to lose face to their base, and they don't have to be in charge when the hard choices come.

Anonymous Noah B. February 25, 2013 9:06 AM  

"I suspect strongly that the GOP leadership desperately are trying to lose their House majority so that they do not have to lose face to their base, and they don't have to be in charge when the hard choices come."

It makes you wonder, doesn't it? I thought the same thing about the Democrats in 2010, too. Maybe the Congressional majority has turned into a hot potato that no one really wants.

Anonymous Thales February 25, 2013 9:30 AM  

"On Feb. 21, the president of the Federal Reserve's regional bank in Dallas admitted in an interview that the recent gains in the stock market have come not through improvements in corporate fundamentals, or sustainable economic recovery, but instead through the artificial manipulation by the U.S. central bank in the markets themselves."

Blogger James Dixon February 25, 2013 10:18 AM  

> This makes me suspect that the implosion date will be closer to 10 months than four years.

While that make sense, they'll undoubtedly stretch things out as long as possible, and they're not adverse to changing the rules when they feel the need. They'll do their best to keep things stable as long as Obama is in office. So it may very well be 4 years.

Blogger James Dixon February 25, 2013 10:21 AM  

> ...but instead through the artificial manipulation by the U.S. central bank in the markets themselves.

To be fair, I don't think that's the Fed's goal, merely a beneficial (to stockholders) side effect of their current policies.

Anonymous civilServant February 25, 2013 1:01 PM  

The Chinese, as well as Russians, Brazilians, Arabs and Indians, want a multipolar monetary system, not the current Anglo-banking cartel we have today.

Incorrect. Having seen the benefits that accrue to possessing the world reserve currency each of these nations wish their currency to be the world reserve. Any multi-polar monetary system is merely a way-station to that goal.

Anonymous Stilicho February 26, 2013 3:09 PM  

To be fair, I don't think that's the Fed's goal, merely a beneficial (to stockholders) side effect of their current policies.

I wouldn't be too sure of that, James. See Bernanke's comments about the wealth effect vis a vis the stock market.

Blogger James Dixon February 26, 2013 8:54 PM  

> I wouldn't be too sure of that, James

I'm not sure. It's merely my best guess.

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