Comedy, Tragedy or History?

Since The Bernank clearly believes that all's well that ends well, measure for measure this comedy of errors most certainly should be categorized as a comedy.

So now we get this:

  • $85B/month of QE continues. No changes.
  • Inflation expectations, which The Fed wants to see at 2.5%, have been ratcheted down to 1% for 2013. This is a Fed "green light" for more QE, not less.
  • The fact that the unemployment rate has fallen from 8.1% to 7.6% is a "substantial improvement" due, in large part, to Fed policies. This despite that fact that most of the drop is because the labor force participation rate has fallen to 30-year lows.
  • The economy would be growing at 3% instead of 1.5% if it weren't for "bad fiscal policy". And these "bad policies" are going to improve soon? Good one.
  • The Fed Funds rate will stay at 0% for at least two more years. (Doesn't that say something about the overall economic condition?)
  • IF...and this is a huge, qualified IF..."continued improvement is seen in the economy", The Fed will begin to reduce asset purchases and end them outright by this time next year.

And it kills me that so many people continue to take this nonsense so seriously.  The Bernank offers conjecture, guesswork and hope and the internationally-recognized price of gold drops by over 1%. Stocks plummet and The Pig rallies. Why? Traders react instantly to the forecast of less economic stimulus by The Fed. Bullshit. A bunch of computers are mindlessly swapping paper assets back and forth at light speed, hoping to profit from each and every, mind-numbing mumble. Ridiculous.

So, I really don't know what's going to happen next. The paper gold and silver markets are primed for a very sharp, short-covering reversal and rally but until some type of spark settles upon all of the dry timber, The Cartel banks will be content to simply buy what the specs are selling. The longer this continues, the greater the gain will be for The Cartels once price inevitably turns.

For now, let's just watch and see how $1350 holds for gold. This level has been a stout floor for almost two months. Can it withstand this current onslaught of selling? We'll see. And $21.40 has held well for silver since $22 was broken two weeks ago. Watch that level closely as a drop through there will likely lead to a test of the 5/19 panic lows just above $20.

In closing, I beg you again: Please ignore the SPIN and the MOPE. The U.S. federal deficit will likely exceed $1T again in fiscal 2013 (which ends 9/30/13). It will likely exceed $1T in fiscal 2014, too. IF THE FED STOPS BUYING TREASURIES, WHO IS GOING TO STEP IN AND DO IT FOR THEM? (The Chinese? The Russians? How about PIMCO?) AND WITHOUT THE FED DIRECTLY MONETIZING A MINIMUM OF $570B OF U.S. DEBT IN FISCAL 2014, FROM WHERE WILL THE U.S. GOVERNMENT RECEIVE FUNDING? (An improving economy leads to higher tax revenues? Rrrrright.) IF THE FED EXITS THE TREASURY MARKET, INTEREST RATES WILL RESET MUCH, MUCH HIGHER. WOULD DRAMATICALLY HIGHER RATES HELP OR HURT "THE ECONOMY"? (Any semblance of growth dries up and we're right back to where we started, needing to jumpstart QE∞.)

You know, maybe I'm wrong in my assessment. It's not a comedy, it's a tragedy, which you are taught in English 101 is "a form of drama based upon human suffering". Yep. That sounds about right.

Just keep stacking, while there's still time.

TF

192 Comments

Wallace Hartley's picture

No 'Effin Way!

First first! It's even better than you think it will be!

cpnscarlet's picture

Second to none

in pessimism.

TreeTop Dweller's picture

Turd Stamina

Turd,  

Your stamina in keeping us informed is true inspiration!

Dang, I should have taken that Evelyn Wood Speed reading course!

StevenBHorse's picture

Gangster

Great post.

ctob's picture

10Y

getting to 2.35.  Everyone seems oblivious to the fact its risen like 50% in the last 6 months.  The lotus eating depresses me, but I know in the end its mostly because they all know their trapped and they know why the cage bird sings.

Robespierre's picture

Sixth....

What bullshit. I can't take I tell you. This is really going to end bad.

Robespierre's picture

Sixth....

What bullshit. I can't take I tell you. This is really going to end bad.

dgstage's picture

At These Prices

There  should not be any au are ag left

wildstylechef's picture

Bring on the Trimming!

Bernake really really should just stop talking to the idiots and make the statement and just reply to real questions not people fishing for answers that cannot be answered. When is the bond buying going to end? Sorry already told you NEXT. The more he try's to be liked the more people hate him.

Here is a question, lets say the bond buying ends ? What happens to the price of Bonds??? and their yeilds????

The price of bonds will dive like a rock and the yeilds will rocket!

What happens when the US bond rockets? The price of borrowing money skyrockets. Morgtages costs sktrockets

Then inflation happens. the cost of running a 17 trillion $ deficit becomes more than revenues.

House buying ends because of costs. More people turn in their houses

Unemployment goes screaming up

10 YEAR BONDS ARE ALREADY UP 8%

BOOM we are right back where we started

Oh and wouldn't Gold be worth a whole lot more?

ChewYourOwnFaceOff's picture

It matters not...

what Benny B does. What matters is what he says, and what he says causes what we're seeing right now across the markets, comedic or not.

Now each seemingly inconsequential .21 drop in silver is another 1%. Drip, drip, drip.

Robespierre's picture

Got this from a friend

breakoutpullback.png

rocoach's picture

If the Cartel ends up owning

If the Cartel ends up owning or controlling the majority of gold and silver, surely they will be able to dictate their prices?  In which case, the long-awaited price squeeze may never actually occur.

zman's picture

It's a tragic comedy

Nothing funny about this story,  something tells me it won't be a happy ending, and having a form of protection (gold and silver) will do little to soften the painful tragedy.

tyberious's picture

  "You have to be smart. The

 
"You have to be smart. The easy days are over."  Robert Kiyosaki
 
Dear FutureMoneyTrends.com Subscriber FMT,
 
I want to discuss 3 undeniable trends that you have to not only be aware of, but you need to plan your financial life around them. We will spend the next 4 weeks discussing them and I want to include you in the conversation. Please review this short summary of what we will be discussing over the next 3 weeks starting next Wednesday, if you have a personal story to share or question, please email us by replying to this email and I will do my best to direct our conversation to your concern.
 
Before I get into this important review on the 3 biggest trends than will directly affect your life, please visit our blog everyday for daily updates, we seek out only the best and most relevant articles to share with our members. If you are busy, I believe this is the perfect blog for you; we post 1 to 2 articles per day that are must reads. Also, if you are not a paid member yet, please consider one of our wealth building packages, it's about $1.50 per day, less than what you spend for a coffee these days.
 
3 Undeniable Trends that Will Absolutely Affect Your Life and Those You Love
  • Destruction of America's Middle Class
  • Peak Sovereign Debt
  • Globalization
I know we have discussed each of these trends before, but I was really reflecting on just how important they are for each of us to always keep in mind in every financial decision we make. Being with my children, 3 year old son and 1 year old daughter, the future is something I think about a lot. What do I as a father need to teach them to prepare them for the future? They need the right education because today's conventional wisdom will be history by the time they are teenagers.
 
Week 1
Planning for the future... Do you know that nearly 100 million people in the U.S. are on some sort of welfare? That is 1 in 3 Americans (including children). This trend of government dependence comes from our educational system, we have all been taught to seek out government aid, that the government is there to help and that its authority is righteous. Well today we have a big problem because our laws, regulations, and dependency education are destroying our middle class. This isn't a political statement, it just is what it is.
 
Week 2
The U.S. annual deficit is so bad that even if we cut all of government, except for our entitlements like social security and medicare, we would still run a deficit. That's right, even if you cut the entire military, congress, and all other federal workers, we would still be running a deficit. Detroit is America's future, if you really want to get ahead, look at Detroit's economy, what has thrived during this city's 15 year depression...This is one of the things we will be analyzing in week 3 of this special trend update. Will there be deflation or inflation, or both? Our view is ultimately we have a currency crisis, but prior to it, we could see a deflationary shock to the system as defaults from state and local governments spread over the next 5 years. Detroit is just the tip of the iceberg, we are literally living through the bursting of the debt bubble that has been growing since the 1940's! Preparing for this is important, but you need to think long term, and that's what we will do.
 
Week 3
Lastly we will discuss globalization, you often hear people complain about emerging markets stealing jobs from Americans since they charge less for the same services; however it is not all bad, if you look at the worldwide customers businesses have available today. We should also point out that many businesses are thriving, take Coca Cola for example, 70% of sales come from overseas, and Coke is about as American as you can get. We need to profit from this trend, there is no fighting it, this is the one trend that is overwhelming due to communication around the world being easier than ever. This trend is typically hated, but it is hated because people are hanging onto the past. If you think you have a right to some high paying job out of school, then you have a big surprise coming; however if you look at the access you have to available people to work or buy your products, the opportunity is global. 
 
I will also point out with macro economic data and demographics that these emerging markets are NOT about to host a world reserve currency or even an 'American' type middle class in our lifetimes. This doesn't mean they won't grow, but it is more likely that the U.S. remains a dominant power, even if it is just a shadow of its glory days, the emerging markets have a lot of catching up to do in education and incomes. The west for all its faults, dominates the world in new technology, which will continue to drive economies. 
 
I look forward to helping you plan for the future.
 
Kind Regards,
 
Daniel Ameduri
Editor in Chief, FutureMoneyTrends.com
 
Share Disclosure: I am long Coca Cola (KO).

 
P.S. Please check our NEW blog at FutureMoneyTrends.com/blog
SilverSurfers's picture

vote

Comedy, complainers v racketeers. Its all a joke.

History, nope, first time people actually voted for self enslavement.

Tragic, not for everyone. Comedy wins hands down.

pick the bottom, not me, unless a yellar is up for grabs then out come the darts.

tpbeta's picture

$17.50 will be the moment...

..when silver has lost roughly half it's value from it's peak, back when all the bulls were screaming buy.  For some reason I think this might be the real bottom.

ABQBear's picture

FOFOA

FOFOA touches on a similar time of desperation in PMs today... an interesting read in the way-back machine. Truck in reverse... clutch reaching friction.

dropout's picture

Positioning

JPM and the merry band of thieves that they lead, "da boyz" as Ted Butler calls them, have done it.

The four largest FOREX traders, no doubt led by JPM, hold a bit over 80% of the entire short position in the US dollar index, as traded on the I.C.E. In conjunction with their large long position in gold and their much improved (smaller) short position in silver, they are positioned to ring the cash register big time!

The gold and silver charts are really something to see. The RSI and MACD indices together, are the lowest they have been in a very long time. This market is over sold and under valued. A tightly coiled spring about to let go. Yet the USD levitates on Benny's mouthing's and gold and silver fall? Indeed - a tragic comedy.  

ChewYourOwnFaceOff's picture

I've heard every metals 

I've heard every metals  bull's argument for the past 2 years as to why metals should go up.  They've all been wrong. I don't know why now, today, people would expect him to be correct.  Look at that slope from almost $50 to almost $20. Suddenly it will change?

PaPaSpeed's picture

Silver Pills

A new study from Boston University revealed that adding silver to antibiotics enhanced the drugs’ abilities to fight off lethal infections in mice.  Even more encouragingly, the added silver component also helped make an antibiotic-resistant strain of bacteria more sensitive to antibiotics once again.

Read more: http://www.foxnews.com/health/2013/06/19/bacterial-bling-adding-silver-to-antibiotics-boosts-effectiveness/?test=latestnews#ixzz2WhLkEzc3

tyberious's picture

Gotta Love Pento

Pento:  “We all knew that the Fed suffers from acute schizophrenia, but let’s take a look at what their statement really said today.  Of course there was no change in the amount of bond purchases.  They are still doing $85 billion every month.

But the Fed downgraded the outlook for inflation.  The outlook was for 1% inflation for the totality of 2013.  At the Fed’s last meeting in March, the outlook was for 1.5% inflation.  So they lowered their outlook for inflation which is half of their mandate.

They then said, ‘The risks to rising unemployment have diminished.’  They mad that bold claim even though the unemployment rate was up last month....

“So the Fed is suffering from acute schizophrenia.  Half of the Fed wants to meet and exceed the inflation targets.  The other faction of the Fed wants to start attenuating QE right away.  But they can’t even agree on how to do it, what to do, or even on the data which is being produced.  So it’s a Federal Reserve in complete disarray.  

Bernanke will continue to be data dependent going forward.  He wants to lower the unemployment rate while he is increasing the rate of inflation.  I think that guarantees us $85 billion every month until he sees significant improvements in both of his metrics.  I can tell you that the inflation target is likely to be breached before their unemployment target is breached, which is 6.5%. 

Just to give you a little color on what the Fed is doing, the Fed’s balance sheet is now $3.45 trillion and everybody knows it’s going to grow by $85 billion each month.  Here is an interesting fact for KWN readers:  The Fed’s balance sheet is up 16% year-over-year, and by the end of December it will have jumped a staggering 30%.  Again, that’s the size of the Fed’s balance sheet expanding 30%!

So when the people in the mainstream media repeat like parrots, ‘Where is the inflation?’  The inflation is here, Eric.  Inflation has come into the size of the Fed’s balance sheet.  This means that inflation has been directly infused into the bond market.  This also means that when these banks have their assets purchased by the Federal Reserve, from freshly printed credit, those banks buy stocks, bonds, and real estate.  This is why we are reigniting the stock bubble and the real estate bubble.  Of course the biggest bubble of all is the bond market. 

Meanwhile, the price of oil is basically back to $100 a barrel.  In the Federal Reserve’s mind, the rising price of oil doesn’t count in its inflation metric because it is stripped out the headline CPI reading—along with food.  And, Mr. Bernanke believes the process of re-inflating asset prices; like stocks, bonds, real estate and commodities into their bubble formation is tantamount to deflation, which is absolutely insane. 

Specifically, the Fed believes that having the price of oil go from $25 to $30 a barrel, which is where it was in the 1980s, 1990s and early 2000s, and then printing money until it once again approaches $100 per barrel, which it reached in 2008, is a sign of stable prices!

So again, the Fed is completely in disarray.  They are also confused on what they want to do and how to get there.  But what we do know is that they are counterfeiting $85 billion every month, and investors should be hedged against this prospect of ever-rising inflation.  In that environment, the ownership of hard assets is still mandatory, especially as gold and silver prices are ending their cyclical bear phase.

Right now the gold market is consolidating at lower levels from its nominal high of just over $1,900 an ounce.  The reason gold is consolidating here is because the entire world is waiting for the exit of Ben Bernanke and his record balance sheet of $3.45 trillion.

The gold market, and in particular the mining shares, have already priced in this exit, but this exit is not going to occur to any degree that is currently anticipated.  So the risk in the gold market is now to the upside, and the risk to the downside in the mining shares is negligible at this point because they are pricing in the draining of the Fed’s balance sheet which is not going to occur.”

R man J's picture

@Chew

It is the abundance of comments like yours that I have grown hardened to, as I earn my future holding on to metals at these low USD prices.

Spicoli's picture

reposting: Photoshop Request

Hoping to catch the right set of eyes... ;-)

Did you guys & gals catch uncle Ben's aircraft carrier analogy for the economy?  It went something like "as we try and land this ship on an aircraft carrier."  Right after that comment the market really began to tank before he did a 180 and changed his tune to more market positive rhetoric.   I think that comment was the only transparent thing he said today.

I'd love to see captain Ben piloting the Starship Enterprise attempting an impossible landing on a postage stamp of an aircraft carrier.

BOG, you up for this?   I'd love to see your delightfully twisted take on this.  ;-)

Thanks, C

The Watchman's picture

GLD Continues to be DRAINED-2.1 Tonnes Gone

Tonnes999.56

Ounces32,136,872.89

Value US$44,102,345,658.86

ChewYourOwnFaceOff's picture

Same as I have been

hardened by the perma bulls. Fair is fair =)

ballyale's picture

NSA has copyrighted "NSA".

They have also warned the cartoonist Bonzai not to use NSA anymore.

What they didn't intend is that NSA means Nazi Security Agency and they are now stuck with it.

waxybilldupp's picture

FFF ... Less = More

What did I learn from today's FFF (FedFunFest)?  I learned that Less = More.

Traders ("traders", I say. There are no "investors" anymore) heard the Bennie Mumbo Jumbo (BMJ) and in unison said "I want less so I can have MORE!"

I want LESS equities!  (Equities DOWN about 1.3%)

I want LESS precious metals!  (gold/silver DOWN over 1%)

I want LESS bonds!  (10 yr. jumps from 2.19% to 2.35%)

Ben says, "I will continue to poof $85 billion new FRNs out of my marvelous BennyAss, every month, as far into the future as it takes."  Econ 101 says more of something makes it worth less.  Ergo, more BennieBucks should be worth less.   

But wait!  Not so fast little buckaroos!  More BennieBucks (now theoretically worth less) ARE ACTUALLY WORTH MORE!  Flippin' sweet!  The little buckaroo ended UP 1%.  Traders say, "WE WANT MORE, BECAUSE LESS IS MORE!"

And that, my fellow Turdites, is how Less = More.  Lesson concluded.  Smoke'em if ya got'em.

wax off

SV's picture

HISstory. Bullion dealers' perpetual sale

HISstory.
Bullion dealers have more sales than anyone

Http://goldsilverbitcoin.com

wouldyoubelieve...'s picture

ballyale, was that a joke?

govt names, symbols etc are considered in the public domain, but then again, you need a fair court system and govt for that to work, so, never mind 

P.S.- the IRS and Fed COULD sue for using their symbols/names without permission, but that would let the cat outta the bag, ssshhhhhhhh

Zoltan's picture

Silver Lease Rate Update

Kitco didn't update today's rates until the market closed (4:16 To be exact) and they are basically unchanged (ie. still negative).  Huge volume on ND today after the fedspeak was released.

Silver and gold getting smashed was (and is) standard operating procedure now, how I miss the days when every lip quiver from the Bernanke would make gold go up. 

Thanks for everything Turd, you are the best.

Z

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