QE To Infinity

432
Thu, Sep 13, 2012 - 1:23pm

Long-rumored and oft-discussed, QE to infinity is finally a reality.

Here are the Bernank Fedlines from ZH:

*FED TO KEEP POLICY STIMULATIVE FOR `CONSIDERABLE TIME'
*FED WILL ADD TO PURCHASES IF LABOR MARKET DOESN'T IMPROVE
*FED DOES NOT SAY WHEN MBS PURCHASE PROGRAM TO END
*FED TO BUY $40B MBS MONTHLY, CONTINUE `OPERATION TWIST'
*FED TO BUY MBS, EXTENDS ZERO-RATE POLICY INTO 2015

Here's the key take-way: This is it. This is open-ended, QE to infinity.

Note the Fedline: FED WILL ADD TO PURCHASES IF WHEN LABOR MARKET DOESN'T IMPROVE

I also saw a headline on CNBS that stated that Operation Twist will end at the end of the year. Of course it will. As noted a few weeks ago, The Fed is nearly out of short-term paper to exchange for long-term paper. The end of Twist will surge new printing from this $40B number to the full $85B number.

Now note this Fedline: FED DOES NOT SAY WHEN MBS PURCHASE PROGRAM TO END

This is QE to infinity. It has begun and it will not end.

The important thing here is patience. Gold and silver will continue surging higher. There will, undoubtedly, be bouts of profit-taking that will last minutes and sometimes hours. Sometimes maybe even days. But these periods will be brief and ALL DIPS MUST BE BOUGHT.

Maintain and build core positions. Add to your stack at every opportunity. The perennial shorts of paper metal are going to be squeezed with ever-increasing intensity even while the "historic" aspects of this rally have still yet to be realized. Cartel banks will be left with no choice but to systematically cover their positions. They will attempt to do this in an orderly fashion but a rush toward physical ownership will likely disrupt their plans.

Gold and silver will both soon trade at new all-time highs. Again, this will not be a straight line up as there will most certainly be dips and pauses along the way. However, everyone reading this must realize that today is the first day of new paradigm.

We haven't even discussed yet the spiraling situation in the MENA or the strikes in South Africa. Maybe we will later today. For now, though, if I were you, I'd head out to my local coin shop or maybe click the HardAssetsAlliance link on the homepage. If you have to ask yourself "do I have enough physical?", you probably don't. Buy some today. Buy some tomorrow. Buy some more next week. The end of The Great Keynesian Experiment is upon us. Prepare accordingly.

TF

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  432 Comments

ancientmoneyVic
Sep 13, 2012 - 2:53pm

@Vic

You said,

"

I am, like many of you, the only one in my "circle" who is even remotely interested in this kind of topic (the economy, inflation, PMs, etc.).

I'm going to need to be able to explain what happened today and what it means going forward. I don't think I can explain it because I don't understand the flow of things into the future. Help me fill it in, if you would be so kind.

1. The economy collapsed in 2008 because of massive drops in the value of mortgage property and resulting mortgage-backed securities and swaps.

2. To bail out the banks, the Fed bought a huge number of these toxic assets at full value. Now the Fed is (theoretically) on-the-hook for the value of these mortgages and derivatives while the banks now have cash.

3. The banks took all this new cash and ______________ ( I don't know).

4. Fast forward to today when this pattern will apparently continue to infinity. The banks get relieved of their less-than-desirable mortgages and derivatives in exchange for cash. With this cash the banks will _________.

5. As a result of ________, we will have massive price spikes in food, PMs, oil/gasoline, and other essentials because ______.

I should know this already, I admit. I just don't understand the mechanics of it. The banks were short on lending capital because of their bad bets in the mortgage markets. Now that they will have all this capital back as a result of this never-ending QE, what is the step-by-step that leads to massive inflation? I can imagine the RESULT, but I don't know the steps of the PROCESS."

Answers: 3. bonuses; 4. bonuses; 5. QE and more money chasing same amount of goods.

AndrewJackson
Sep 13, 2012 - 2:59pm

First post tf. Read a decent

First post tf. Read a decent amount of your stuff and have learned and enjoyed from it. I agree with this post fully. We have crossed the Rubicon. This is QE to infinite explicitly stated. Buy the physical and invest in security. The bull has just been injected with steroids.

Sep 13, 2012 - 3:00pm

Now what about the big JPM short against silver?

Don't worry, Blythe- you're just hedging on behalf of your clients.

cavalier
Sep 13, 2012 - 3:04pm

Obama has just been reelected

With QE to infinity

Obama has just been reelected

Turd said all along he would be reelected and free money for everyone should do it

God help us

ReachWest
Sep 13, 2012 - 3:06pm

Sheesh

Bernanke talks about the Fed maintaining the trust of the public?? Most in the public don't even know what the Fed is. And, those of us who do have knowledge of the Fed - have ZERO trust. Sheesh.

thesandbox
Sep 13, 2012 - 3:12pm

volume

take a look at the volume on the daily and weekly netdania charts....now just wait until the volume they drove away comes back starting at these higher prices. https://www.netdania.com/Products/live-streaming-currency-exchange-rates...|netdania_rta&name=Silver,%20spot

DavidSilverSwe
Sep 13, 2012 - 3:12pm

im long too

but im not super happy about the death of USAs middle class and continued deteriation of society until it blows up.

QE3 is bad for most people imo, so im not overjoyed about it, it's good for my portfolio though.

I find it a bit odd people screaming Yipiiii and yahooo, when something that's really bad happens. they must be way more exposed to the paper market than me :) but good for the wallet undoubtedly.

hopefully this destruction will lead to a better rebirth or something in the future :)

landplanner
Sep 13, 2012 - 3:15pm

Break on Thru

Hello Folks,

Been around since the old blog days, read nearly every post, soaked up the rays of enlightenment, and have profited in more ways than can be stated. Will be paying back a little today with the feed the turd option. Sit tight and be right!

landplanner

Be Prepared
Sep 13, 2012 - 3:19pm

The End of the Beginning...

I am not sure today marks a beginning, but rather it signifies an end...

An end to much of what we have know has been cavernously been eaten from within by the Banking Cartels, the Military Industrial complex and the Corporate Body.... and we, The People, having been lulled into our stupor...have let this happen. When the actions of the Fed were covert and hinted at the hedonistic predilections of our PTB, we could all keep a certain hope alive that they wouldn't take the cart completely off the cliff. They would shoot us, scar us and kick us, but they wouldn't kill us. Benny has just pulled this all out in the open and the world and the markets now know it. Great celebrations are being held in the vaults of the Fortune 500 companies that will be closest to the spigot, but we are at the end of the stream and it will only render us asunder.

I am glad that we few, we proud few are here today to mark the end..... the end of all the potential our nation could have risen to... now to see it all doomed to the morass of its own mountain of paper that will one day come rumpling back to our shores like a tsunami to drown us. It is only the end of the beginning.... the storm and the real rough waters lie before us. Batten down the hatches, my friends, it will be mighty cold out there in the months and years to come.

Keg
Sep 13, 2012 - 3:19pm

From Trader Dan

Sums it up perfectly IMO:

While Wall Street cheers the actions by the Fed to further enlarge its already bloated Balance Sheet, those of us who live on Main Street should get accustomed to further increases in our food and energy costs. What I find rather perverse, is the statement by the FOMC that "longer term inflation expectations remain stable". Yeah, maybe on the salaries and wages front but sure as hell not on the raw materials front.

Take a look at where hedge fund money is now flowing - right back into the hard or tangible assets category again. Get used to higher gasoline and heating oil prices and brace yourself for the food sticker shock you are going to experience in the weeks and months ahead.

Full post:https://traderdannorcini.blogspot.com/2012/09/the-fed-and-ecb-determine-to-destroy.html

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