Additional Covert QE On The Way?
An alert Turdite sent me an email last evening where he connected some dots about additional quantitative easing. I've been thinking about it off and on today and I've concluded that it deserves a discussion here.
Before we get started and, as background, please take a few minutes to watch this video:
The email that Turdite "David" sent me last night included this post from a message board at market-ticker.org. A poster named "throxx" said this:
"IMHO, QE3 is presently being implemented via the Chartering of NEW Bank Holding Companies in the United States which will utilize Chinese held U.S. Treasuries as their BASE Capital.
-The Chinese held US Treasuries will be utilized as BASE CAPITAL upon which to create TRILLIONS of digital FRN via fractional reserve.
While these Treasuries were held outside of the U.S. Banking System FRN could not be created via fractional reserve; -but, now these Treasuries WILL be used as a basis to generate digital FRN out of thin air.
IF China holds $1.2 Trillion of U.S. Treasuries....
...THEN $1.2 Trillion in U.S. Treasuries = the possible creation of $10.8 Trillion new digital FRN via fractional reserve banking.
Sounds kinda like a money printing scheme doesn't it?
-NO 'Dollar of Capital' rule as Our Host would say...
Sounds a tad inflationary doesn't it?
THIS is exactly how the U.S. Banks Counterfeited FRN and ramped up inflation during the housing bubble.
-It is going to be done again with the help of the Chinese.
The Chinese ARE NOT going to 'dump' their Treasuries: the Chinese are going to print Trillions of digital FRN and go on an unprecedented .GOV/FED sponsored Leveraged Domestic Buying Binge!"
This rather interesting idea seems to have been generated by this little-noticed story from last week.
The banks in question are: (from the article)
- China Investment Corp., or CIC, and other Chinese entities were permitted to acquire an 80% stake in New York's Bank of East Asia (U.S.A.) NA. CIC manages a portion of China's huge foreign exchange reserves.
- Separately Wednesday, the Fed also allowed the Agricultural Bank of China Ltd. to establish a branch in New York and the Bank of China Ltd. to have a branch in Chicago.
Now, for those of you unfamiliar with fractional reserve banking, I suggest you watch this:
So here's the question for you to ponder: With everyone expecting/hoping for overt QE3 by June or July or November, what if the more politically palpable covert QE continues, instead? And if covert QE continues, will the price of paper metal continue to decline through the balance of this year and maybe even beyond?
Having answered those questions, now ask yourself: Does it even matter? If the "market" chooses to ignore covert QE, will you? Are you going to convert your metal back into fiat or will you simply buy more at "sale" prices? Does this chart help?
Whether it's overt or covert QE, growth of the money supply equals growth of debt and vice versa. And, as you can plainly see on this chart, rising debt causes equally rising gold prices.
Put it all together and what do ya do? BTFD and keep stacking.