Monday, February 28, 2011

Headlong Into Hyper-inflation

After last week's mini-correction - which is probably the worst decline we'll see for a while - stocks and the Fed are back on track, pumping newly-created POMO dollars into the system for the banking crooks to parlay into stocks. Up, up and away!

According to the Fed's published schedule of monetary injections, today was slated for $6-8 billion in outright coupon purchases. In other words, the Fed is buying back bonds from the Primary Dealers which were purchased just a few weeks ago, presumably at a loss, a small loss, but, nevertheless, a loss, so that the banks will remain willing participants to the Zimbabwe-ification of the US financial system.

These continued injections have become so commonplace that nobody bothers to report on them or even think about them. For those unfamiliar with the process, let's recap:

Step 1: The US Treasury issues bonds in certain amounts and maturities.

Step 2: Primary Dealers (AKA Too Big To Fail (TBTF) banks) buy the bonds.

Step 3: The Federal Reserve buys the bonds from the TBTF banks.

This is the simple process by which our currency is devalued every day and how the banks are shoring up their horrifically-insolvent balance sheets. While the Fed takes a loss of say, half a billion a day, the banks record the transaction as a profit. Viola! The banks are once again sound. The only problem is that the Fed is holding huge amounts of government debt.

Now, if you've been following carefully, you might question the process. Why bother? Why not just give the banks the money directly from the Federal Reserve, since they have the ability to just create money out of thin air?

Ah, what about the government's obligations? They must issue debt, so the game must continue. The auctions, however, conducted in secrecy, electronically, so that only a few people - ostensibly Fed Chairman Ben Bernanke and Treasury Secretary Tim Geithner - know who's buying what and for how much.

That's a problem, for obvious reasons, and explains, in part, why some people are beginning to think that the entire economy of the United States has already sunk and is being kept afloat by a massive fraud, perpetrated by the Federal Reserve, Treasury Department and the nation's six to eight largest banks (with assistance from European Central banks who are doing pretty much the same thing).

Nobody is buying US government debt. Nobody could be that stupid. The Fed is buying it all, monetizing the debt, smashing down interest rates and destroying the currency. The tiny little secret nobody wishes to speak of is that the rest of the world had better play along or their currencies will be flushed straight into the toilet along with billions of Ben Bernanke Bucks.

Yes, the Federal Reserve is buying all Treasuries issued, cooking their own books and helping out the banks, because, if they don't do it, we'll just have to liquidate those TBTF institutions and Jamie Dimon (our next Treasury Secretary) and his wealthy friends wouldn't like that. Besides, the Fed and the banks and the politicians they control would no longer be able to sway the American public every which way, as they choose.

Think about it. The Chinese stopped buying our debt at least a year ago. They are trying to unload it as fast as they can without causing a panic. Japan is also no longer interested. Reportedly, the UK has been buying scads of the stuff, but they're even more broke than we are, so that's a gigantic canard.

The Fed is buying all, or nearly all, of US debt issuance. We are a self-dealing, Ponzi-fied, Zimbabwe on steroids. There's no doubt about it and there's also no way out. The Fed cannot stop creating money because it just gets more and more worthless every day. It's being spent as quickly as they can put it into circulation, forcing prices higher and higher, inflating everything on the planet - including stocks - in a very devious, vicious cycle all caused by the bankers who imploded the world's economy back in 2008 when they couldn't figure out a way to cover all their bets without all of them failing.

That is when Hank Paulson, then Treasury Secretary, with Ben Bernanke as his willing accomplice, figuratively held a gun to the heads of the President, George W. Bush, and the leaders of congress and demanded $700 billion dollars with no strings attached. It was the crime of the century, committed in broad daylight, in front of hundreds of millions of people worldwide.

Ever since then, all we've gotten for our time and money is a song and dance, orchestrated to keep us all in line and dong the "recovery boogie." It's such an absolute charade, a sham and a complete lie that a lot - and I do mean a lot - of people are coming to the conclusion that it's not working, that we're stuck in this no-jobs, no-growth, high-inflation limbo until the the bar finally falls to earth.

The big holders of mortgage-backed securities are suing the banks with regularity. They want their money back for all the bad securities issued by the banks, backed by mortgages which were written with no other purpose than to have the homeowner default.

Insurance companies suing banks, with the Fed printing money as fast as they possibly can and prices rising globally because of it results in an unsustainable situation. It's already bad, and quickly getting worse. The rest of what suffices for news these days is just for show.

Think about it. In Wisconsin, they're trying to fill a $3 billion void in their budget. Why, the Fed issues twice that amount through their Treasury purchases EVERY DAY! Oil hitting $100 a barrel? All caused by uncontrolled speculation and outright thievery. There's a glut of oil out there and what the big energy companies are really worried about is people rationing their use of gas, taking fewer trips and buying less. with so many people out of work, they have little driving to do, and the oil companies are just trying to remain as richly profitable as they've always been by CHARGING MORE TO FEWER CUSTOMERS.

QE2, the Fed's gambit to restore economic prosperity by issuing more paper money, is slated to end by June. After that, it's anybody's guess, but the path of least resistance - and most sense, from an OMG mentality - would be to continue printing more. There's no economy, tax revenues have fallen off a cliff, and the Fed, because they've chosen to keep insolvent banks operating instead of closing them down, is powerless to do anything but what they've been doing for 2 1/2 years: print, print, print, and when you're done printing, print some more. Hello hyperinflation, followed by an acute depression, the worst ever seen. See you in Hades, Mr. Bernanke, because that's precisely where you and your policies are sending everyone else.

Dow 12,226.34, +95.89 (0.79%)
NASDAQ 2,782.27, +1.22 (0.04%)
S&P 500 1,327.22, +7.34 (0.56%)
NYSE Composite 8,438.55, +60.51 (0.72%)

Advancing issues outpaced decliners, 4051-2535. NASDAQ new highs: 144; new lows: 21. NYSE new highs: 258; new lows: 15. Volume was back down in the doldrums again, so everything is back to normal.

NASDAQ Volume 2,057,503,500
NYSE Volume 4,593,278,500

Oil prices fell again today, down 91 cents, to $96.97, but the damage has been done. Regular unleaded gas is now at a national average of $3.37 per gallon. Seven states are already over $3.45. Want to see a recession created almost overnight. Push ol to $115 a barrel and gas to a national average of $3.75 and see what happens. The protests in Wisconsin will look more like a picnic compared to the mass outrage that induces. Already, people are reconsidering their choices of paying $75-150 a week to get to and from a job that pays them less than $400 a week, taking home $300-340. For many, it's just not worth it any more.

Meanwhile, gold bugs and silver surfers are loving the chaos. Gold was up again today, but only by 60 cents, to $1,409.90. It was as high as $1,416 in earlier trading. Gold is now being pressured downward, or at least held down, for two reasons. First, the banker's know that everyone watches gold as a proxy to fiat currencies, so they are suppressing demand. Second, the very same banks want to hoard it, because they know everyone is right. The global economy is as close to complete meltdown as it was in the fall of 2008.

Silver got all the gains today, up 91 cents (same as the drop in oil, coincidentally), to $33.80. We're unsure whether or not that's a new 30-year high; we only know that $50 per ounce is the number that stopped the Hunt brothers back in 1979-80. When the bubble they created finally burst, Nelson Bunker Hunt, who purportedly lost more than a billion dollars in one day, said, "a billion dollars isn't what it used to be."

And, so, those immortal words, while the Fed pumps billions into an eventual oblivion, ring more true than ever, today.
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