Why QE Will Never End

Regardless of the MOPE and the SPIN, QE can never end.

Thanks to the good Tylers at ZH for this very simple explanation. PLEASE TAKE THE TIME TO READ THE LINK BELOW AND PLAY WITH THE SPREADSHEET PROVIDED.

http://www.zerohedge.com/news/2013-01-06/magic-compounding-impact-1-change-rates-total-2022-us-debt

Again, for fiscal 2011, the interest on the U.S. national debt was $454B. http://www.treasurydirect.gov/govt/reports/ir/ir_expense.htm

This is at an average coupon of around 3% and an average maturity of under 5 years. So, with a funding cost of 3%, the interest on the national debt was roughly 1/3 of the 2012 deficit. Aha, but what would the funding cost be if rates were 6% instead? The interest on the debt would have been $900B and the total deficit would have approached $2T!

AND THIS IS WHY QE∞ EXISTS AND WHY IT WILL NEVER END. PERIOD. END OF STORY.

Please, I beg you, do not fall for the misinformation promulgated last week in the mainstream media. QE will not be ending in 2013. It will not be ending in 2014 and it will not be ending in 2015. It can't and it won't. The only option for the Fed and TPTB is to "extend and pretend". Extend the Great Ponzi as long as possible by pretending that there is adequate demand for treasuries to keep rates low. You must understand this!

This process involves rampant and illicit fiat money creation, which devalues the dollar and makes all of your savings worth less and less each day. Your only protection from this madness is the physical possession of precious metal. Please use this current and any future price weakness to add to your stockpile.

TF

127 Comments

Mr. Fix's picture

By now, everyone in "Turdville" knows this is obvious.

We know that Quantitative Easing is now permanent, they are just trying to find new ways to make it palatable.

Their only question now is: “How can we fool them today?”

The end of the great Keynesian experiment is upon us.

All we can do here now is  try to figure out exactly how the collapse will unfold, and prepare accordingly.

Continuing this farce  through 2013, and 2014, and 2015, is highly unlikely.

Because this is an engineered collapse, the script has already been written,  and it will be a well coordinated event. 

  At least we have each other.

Thank you Turd, you are doing a fine job of cutting through the crap for us.

PS,

 Gold and Silver are trending up tonight.smiley

PPS,

(FIRST!)wink

Bum in the library...'s picture

word.  

word.  

erewenguy's picture

what?second!

what?

second!

edit: Ah well, Turd.

arch stanton's picture

thurd

read doug noland on prudent bear

fertzeltwist's picture

Top ten!

My mama would be proud!

القراع عصفور's picture

another good read

http://jessescrossroadscafe.blogspot.com/

good discussion on the platinum coin thingy - and yes, Krugman thinks it is a great idea.

also this next link is on topic for this thread. 

http://truthingold.blogspot.com/

old tradesman's picture

not all know this

but dp is coming along

القراع عصفور's picture

i don't get it

old tradesman. 

Warren Peace's picture

More of the same....

until it isn't.... then things get very interesting, indeed!

Paper bonds, and trillion dollar coins will work.....because Brawndo's got electrolytes......and the Bernanke says "I like Money".

old tradesman's picture

i don't get it

we know

Missiondweller's picture

Fantastic! That's the Turd I know!

Welcome back!

Marcus's picture

QE will never end?

Never say never. QE will end, but the world will be a very different place when it does.

ClinkinKY's picture

LOL

Hat Tip!
5

we know

Nana's picture

One Day

Interest rates will go up and not just a little, it will be a lot.....Hyperinflation is coming....prepare while you still can.

TPTB always do the opposite of what they say in the long term.

old tradesman's picture

lol

still laughing love the 5

philipat's picture

Agreed

As I opined right after the waterfall on the "News" that QE MIGHT end in 2013, it's important to stay rational.

Who, other than The Fed would now buy US Treasuries? Not the Chinese, not the Japanese not the EU.

And as for starting to reduce its Balance Sheet, let's be clear that the "Assets" comprise Treasuries (See above) and crap Mortgage securities bought from its Shareholders (The TBTF Banks) as an indirect bailout to allow the Owners to get this crap off their own Balance Sheets. These are worth probably 20 cents on the dollar or less. So, again, who is going to buy these without the Fed incurring huge losses.

The Fed Minutes, which are pure propaganda, were carefully worded to assure that "All is well" in Wonderland so to calm the sheeple and provide another opportunity to slam PM's down. They would have done the same with the BLSBS but an increase in the unemployment rate doesn't work for this purpose.

So there is NO exit strategy and there is NO exit other than default and/or trashing the Dollar. When TSHTF, they will not be able to manipulate PM prices. And there won't be any physical PM's to buy at any price.

Corto's picture

Serious Investment Question

Turd, all:

I am a firm believer in stacking, been doing it for 5 years.  Just saw in the paper today the 2012 investment results list.  All were green (large cap, small cap, bonds, etc) except precious metals and miners (as a category).

Again, I have >60% in metals.  But, my question, if QE can never end, but TPTB do everything they can, almost exclusively to prove to people they shouldn't invest in gold, while allowing every other equity class to be jacked up, there are many times I am sitting at the end of the day scratching my head and wondering where is this going to get me?

If gold continues on it's course of x% positive per year, but it constantly maniupulated downward mostly, why should I not have a decent chunk in something like SPY which is  the target beneficiary of all the manipulation and QE?

What event would cause gold and miners to rise would also not have SPY rising, possibly even more?  It's a question I struggle with esp. after holding GDXJ for so long and sitting pretty negative for me.

Thanks!

erewenguy's picture

Ok Turdville - Go sign the

Ok Turdville - Go sign the petition on the White House website:

https://petitions.whitehouse.gov/petition/produce-trillion-dollar-coin-every-us-citizen-purpose-paying-taxes/6rPprh5c

Produce a Trillion Dollar Coin for Every U.S. Citizen for the Purpose of Paying Taxes

Activities and services pledged by the U.S. government exceed the ability to pay based on current tax revenue. The budget deficit is added to the national debt, and federal taxes are used in part to pay for the debt and interest.

"Trillion dollar" coins are being considered to pay the national debt, however, we petition the U.S. Government to mint an adequate quantity of "trillion dollar" coins to pay off the national debt, and enough additional coins to provide one for each citizen of the United States.

These coins can only be used to pay federal, state, and miscellaneous taxes for the lifetime of the recipient. Residual funds from each coin will be available to heirs of the recipients, and will be exempt from inheritance tax.

Dr Jerome's picture

silver's up

I like the opening tonight. Remember the days when Asia would push AG up a buck or two on Sunday overnight before the US started trading? Pre May 2011? I'd sure love to see that kind of action again.

Nick Elway's picture

Sprott's interview from December 24

I almost missed this, apologies if already posted.

Sprott:

Quote:
Some of the people I rely on suggest there is about a 40% chance of hyper-inflation starting in 2013 and about a 90% of it starting in 2014, so that's what I would imagine happens.

Nice words for silver..and he's working on a platinum/palladium fund

http://seekingalpha.com/article/1080891-eric-sprott-i-think-we-are-in-for-a-shortage-of-physical-gold

old tradesman's picture

When I play this on stage

I change the words (I)to(some poor friend in the crowds name) and from (cant get it on my own,) to (up on my own) changing the lyrics 

Boswell's picture

Borrow To Pay Back Borrowing

From the last thread, Hat tip to "Lurknomore"...

Financial Genius, new Senator from Maine, Angus King, explains the Debt Ceiling. WTF???
 
He said: "What raising the debt ceiling does, is it allows us to borrow money, in order to pay back money that we have already borrowed..."
 
The blank stare from Javier Bracera half way through pretty much sums it up.
 
That is like getting a new credit card to make payments on your old credit card.
Yeah, I tried that ONCE. Can you say... BK!??? Looks like that is where the good ol' USA is headed with guys like this in charge.
 
Full Clip if you can bear it... http://www.msnbc.msn.com/id/3032608/#50378996
wildstylechef's picture

Basil III and the US Downgrade

And just wait for gold to become a level 1 asset under Basil III because god knows they have little assets as it is.

Also just wait while Fitch downgrades the US while donkey Kong Boehner proclaims god and country is on his side and takes the US  and the world to the brink of depression via the debt ceiling.

I say we just created a Andrews pitchfork with the January 2nd and 4th rise an fall. We should scream past 1700 very shortly.

old tradesman's picture

@ Mr fix

If I work at mcDs and you work at bergerking.   But I eat there and you eat at McDs.  What is the GDP?

agNau's picture

@fed lied their way through...

continuing the lie is not possible. Without the print/bond purchase, they WILL lose control.
Fedspeak exposed!

They have " Talked the talk,.....They MUST walk the walk!"

My prediction:
The "catch-up" payments will be over the top!

S Roche's picture

@ Old Tradie

It's called taking in each other's washing...a service economy.

Turd Ferguson's picture

Also from goldseek

MODERATOR

A very good article: http://news.goldseek.com/GoldSeek/1357484882.php

with this handy chart:

old tradesman's picture

@ Old Tradie

thanks for clarifying that for me.   lol

Edward G's picture

1T $ coins n stuff

prompted another of my little journeys into MMT-land this morning.

Even if you give them that if you have your own currency, national debt is not like a household budget in that you are the debtor and the creditor, and to replace private credit creation a country (or currency zone!) can hold but not distribute public credit(?) and then 'retire' it one fine day: like it is said above and elsewhere, this is insular thinking given that countries are in a competitive bond market and it would be nice if other countries actually bought bonds from one another!... Another little prob appears to be that if the credit never reaches the real economy, the banks don't lend, and credit can't continue to fuel mainstreet properly in the fractional reserve model. It is also strange that the only 'collateral' appears to be every worthless piece of s**t one can find.

What has been out of the news consciousness lately?

1. Europe: Have the Germans heard of Mises? (Sure have)..Do they agree on stuff with U.Sam?(Erm, not entirely) On MMT thinking, it must have to be a RUSH to Eurobonds so that Euro countries can get in the game and the (Twighlight) (Euro) Zone can start to work the money magick.

2. Banks: QE keeps them in the loop to some degree, but they are far from being self-supporting or trusting one another, or replacing credit-creation into a completely screwed-up 'demand'.

I am only a layman, so much is written on MMT vs Austrian, or "Classical Liberalism"... but it does beggar belief that the former seems to be the established religion. Can't help thinking that the credit of all major economies, esp the US, has to be heading for a major downgrade.

Can the brains of the market and the public not hold all the 5 or so pieces of data necessary to do the maths on this at the same time?

(All kind corrections to mine are welcome!)

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