Guest Post: "Deranged Central Bankers Blowing Up The World, by Jim Quinn

Mon, Feb 15, 2016 - 9:07am

With The Comex and other U.S.-based "markets" closed today, we thank Jim Quinn for this tremendous summary of the current situation.


by, Jim Quinn

It is now self-evident to any sentient being (excludes CNBC shills, Wall Street shyster economists, and Keynesian loving politicians) the mountainous level of unpayable global debt is about to crash down like an avalanche upon hundreds of millions of willfully ignorant citizens who trusted their politician leaders and the central bankers who created the debt out of thin air. McKinsey produced a report last year showing the world had added $57 trillion of debt between 2008 and the 2nd quarter of 2014, with global debt to GDP reaching 286%.

The global economy has only deteriorated since mid-2014, with politicians and central bankers accelerating the issuance of debt. These deranged psychopaths have added in excess of $70 trillion of debt in the last eight years, a 50% increase. With $142 trillion of global debt enough to collapse the global economy in 2008, only a lunatic would implement a “solution” that increased global debt to $212 trillion over the next seven years thinking that would solve a problem created by too much debt.

The truth is, these central bankers and captured politicians knew this massive issuance of more unpayable debt wouldn’t solve anything. Their goal was to keep the global economy afloat so their banker owners and corporate masters would not have to accept the consequences of their criminal actions and could keep their pillaging of global wealth going unabated.

The issuance of debt and easy money policies of the Fed and their foreign central banker co-conspirators functioned to drive equity prices to all-time highs in 2015, but the debt issuance and money printing needs to increase exponentially in order keep stock markets rising. Once the QE spigot was shut off markets have flattened and are now falling hard. You can sense the desperation among the financial elite. The desperation is borne out by the frantic reckless measures taken by central bankers and politicians since 2008.

  • 637 rate cuts since Bear Stearns
  • $12.3 trillion of asset purchases by global central banks in the past 8 years
  • $8.3 trillion of global government debt currently yielding 0% or less
  • 489 million people currently living in countries with official negative rates policies (i.e. Japan, Eurozone, Switzerland, Sweden, Denmark)
  • -0.92%, the most negative yield in the world (2-year Swiss government bond)

Massive levels of debt and negative interest rates have done nothing to revive U.S., European or Asian economies. The natives are growing restless, as the early electoral success of political outsiders like Trump and Sanders substantiates. Far right parties in Europe are gaining traction as hordes of Muslim refugees overwhelm their countries. Central bankers, who formerly graced the covers of Time Magazine as saviors and heroes, are now being revealed as nothing more than glorified money printers with PhDs and no plan B.

The trillions in low grade junk bonds are beginning to go bad. The bond market is the canary in the coal mine. A tsunami of defaults is approaching the shoreline, investors are running for the hills, and deranged central bankers are telling people to come a see the colorful shells in the surf. As John Hussman points out, following their advice will be fatal.

Despite short-term interest rates being only a whisper above zero, we increasingly hear assertions that “financial conditions have tightened.” Now, understand that the reason they’ve “tightened” is that low-grade borrowers were able to issue a mountain of sketchy debt to yield-seeking speculators in recent years, encouraged by the Federal Reserve’s deranged program of quantitative easing, and that debt is beginning to be recognized as such. As default risk emerges and investors become more risk-averse, low-grade credit has weakened markedly. The correct conclusion to draw is that the consequences of misguided policies are predictably coming home to roost. But in the labyrinth of theoretically appealing but factually baseless notions that fill the minds of contemporary central bankers, the immediate temptation is to consider a return to the same misguided policies that got us here in the first place, just more aggressively.

Based on the CDS market, fear is rising rapidly and European bank stocks are collapsing faster than they did in 2008. The Too Big To Trust Wall Street banks have seen their stocks fall 25% thus far. Bank debt has fallen even faster. The lying and denials by bank CEOs sounds exactly like the summer of 2008. The most smoke is coming from Deutsche Bank, and where there’s smoke there’s fire. The papering over of billions in bad debt with more bad debt is reaching its logical and expected disastrous conclusion. John Hussman notes when credit default swaps soar, the massive level of defaults are only a quarter or two away, despite the propaganda and lies perpetuated by Wall Street to cover their asses as they scramble to escape again.

Credit default swaps continued to soar last week, particularly among European banks. Given that risks surrounding China and the energy sector are widely discussed, European banks continue to have my vote for “most likely crisis from left field.”

In the fixed income market, we wouldn’t touch low-grade credit at present. Once credit spreads widen sharply, the default cycle tends to kick in several quarters later. The present situation is much like what we observed in early 2008, when we argued that it was impossible for financial companies to simply “come clean” about bad debts, because then as now, the bulk of the defaults were still to come.

The mainstream corporate media has been assuring the masses the recent 10% to 20% plunge in stock market indexes is just a temporary hiccup and isn’t anything like the 2008 worldwide financial collapse. They’re right. The situation today is far more dire and widespread than it was in 2008. Global debt is 50% higher, rates are at zero or below, the global economy is already in recession, with war and civil chaos spreading around the globe.

There are no more rabbits for central bankers to pull out of their hats. U.S. annual deficits are headed to $1 trillion without Keynesian shovel ready stimulus packages. The Fed increased their balance sheet fivefold while creating speculative bubbles in stocks, bonds and real estate simultaneously. As John Hussman points out, the bubbles are bursting again and economic collapse is baked in the cake.

The Fed’s real policy error, as it was during the housing bubble, was to hold interest rates so low for so long in the first place, encouraging years of yield-seeking speculation and malinvestment by doing so. Put simply, the Federal Reserve has created the third speculative bubble in 15 years in return for real economic improvements that amount to literally a fraction of 1% from where we would otherwise have been.

The entire global economy seems condemned to repeatedly suffer from deranged central bankers that wholly disregard the weak effect size of monetary policy on policy targets like employment and inflation, and equally disregard their responsibility for the disruptive economic collapses that have followed on the heels of Fed-induced yield-seeking speculation.

This stock market crash in progress is following the exact pattern exhibited in prior crash periods. The market has gone nowhere since QE3 ceased and had fallen by 14% since November. The tremendous rally on Friday is nothing but the beginning of a 5% to 8% retracement of the initial loss. Once this head fake lures in more muppets, the bottom will drop out. As Hussman discusses below this crash is following the 2000 and 2007 pattern. When the 1,800 level is breached a vertical drop to the 1,500’s will happen in the blink of an eye. That will get the attention of a few 401k holders.

With regard to the stock market, I suspect that the first event in the completion of the current market cycle may be a vertical loss that would put the S&P 500 in the mid-1500’s in short order. I’ve often noted the historical signature of market crashes: a sustained period of overvalued, overbought, overbullish conditions that is then coupled with a clear deterioration in market internals and hostile yield trends, particularly in the form of widening credit spreads. See my comments from the 2000 and 2007 market peaks about the identical syndrome at those points. Historically, what we know as “crashes” have followed only after a compressed, initial market loss on the order of about 14%, a recovery that retraces 1/3 to 2/3 of the initial decline; and finally a break below that initial low. That threshold is currently best delineated by the 1800-1820 level on the S&P 500.

Not only have deranged central bankers created the conditions for a catastrophic collapse, but they have encouraged crazed sociopathic mega-corp CEOs to borrow billions to buy back their own stocks at all-time high prices. These Ivy League educated MBA lemmings have done this to boost their compensation because they are too incompetent to grow their businesses through true investment. These rocket scientists have managed to lose $126 billion on their highly leveraged stock purchases in the past three years. Some of the top losers include:

  • IBM – $9.8 billion of losses
  • American Express – $4.1 billion of losses
  • Chevron – $2.8 billion of losses
  • Macy’s – $1.5 billion of losses
  • Ford – $500 million of losses
  • Starwood Resorts – $500 million of losses

The CEOs of these companies should be fired for their idiocy, greed and ineptitude. Instead they will receive multi-million dollar bonuses. Ben Bernanke, Janet Yellen and their cohorts at the Federal Reserve have already destroyed the lives of millions of senior citizens and savers with their deranged zero interest rate policy while contributing to the wage stagnation of the middle class with their QE policy.

Janet Yellen looked like a deer in headlights last week while testifying before Congress. She realizes, along with the other central bankers around the world, their Keynesian lunacy is about to create a crisis that will make 2008 seem like a walk in the park. The coming destruction of trillions in wealth ($1.2 trillion already), along with the accelerating currency wars, and the further impoverishment of billions will ultimately lead to global war.

In short, what we should fear is not the slight impact of recent policy normalizations, but the violent, delayed, yet inevitable consequences of years of speculative distortions that are already fully baked in the cake. What we should fear are the Fed’s repeated and deranged attempts to achieve weak effects on the real economy, at the cost of speculative distortions that exact ten times the damage when they unwind. What we should fear is more of the same Fed recklessness that encouraged a yield-seeking bubble in mortgage debt, enabling a housing bubble that collapsed to create the worst economic crisis since the Great Depression. What we should fear is Fed policy that has encouraged a yield-seeking bubble in equities, debt-financed stock repurchases, and covenant-lite junk debt; that has carried capitalization-weighted valuations to the second greatest extreme in history other than the 2000 peak, and median equity valuations to the highest level ever recorded. That’s exactly what the Fed has done in recent years, and the cost of that unwinding is still ahead.

The fiat currency system, fractional reserve banking fraud, insane Keynesian fiscal policies, and consumer debt based consumption economy are mathematically unsustainable, so they won’t be sustained. The world is about to sit down to a banquet of consequences, served by deranged central bankers.

“Sooner or later we all sit down to a banquet of consequences”Robert Louis Stevenson

About the Author

turd [at] tfmetalsreport [dot] com ()


lnardozi · Feb 15, 2016 - 9:09am


I mean, of course since like man I breathe the site. Breathe man, breathe.

donnojackshit · Feb 15, 2016 - 9:14am

Turd, I mean Thurd, and I love Quinn

Now to read, oh and as we used to say in primary school "Sucked in, Marchass"!

donnojackshit · Feb 15, 2016 - 9:26am

Banquet Of consequences for the banksters...

I fervently wish they have to dine on a monster shit burger, in perpetuity...

When the rule of law disappears, as much as the peasants get shafted, the banksters only have so many places to hide, and eventually, they will be found...

canary · Feb 15, 2016 - 9:27am

Seems to me that the panic buying of miners late last week......

Was due to the expectation that the Chinese coming back to the market on Monday would start buying more......And now we have a surprise.

Angry Chef · Feb 15, 2016 - 9:37am

Happy Family Day !

Insolate bastards ! Russia, Iran, Syria, China,,, how dare they !!! They will use our fiat currency or else !!!!

Mr. Fix · Feb 15, 2016 - 9:40am

The coveted 4th place!

At least we'll get to watch the world blow up together!:)

donnojackshit · Feb 15, 2016 - 9:41am

If the Saudis attack Russia

It may be the last mistake those inbred dictators ever make...

Silly Rabbits...

donnojackshit · Feb 15, 2016 - 9:43am

TRX very sad

If I had had spare dosh, I would have bought some...

Jim Sinclair is up against it...

I feel this is more and more, exactly what is going to happen everywhere...

Collapsing rule of law as people become desperate...

Collapsing rule of law means collapsing investment capital, deflationary pressures and depression.

Governments are increasingly going rogue, rogue on their citizens, rogue on their businesses, rogue on their neighbouring countries...

Central Banks are a scourge on humanity, BUT, most people in crisis, look to the architects of the crisis, to solve them...

I don't hold out much hope for humanity in general, but there will be enclaves of individuals looking for payback against these destroyers of men...

Payback will be a bitch for them...

silver66 · Feb 15, 2016 - 9:48am

Very good article

Here is the link to the McKinsey report Mr Quinn references

To go with the theme of a recent post of mine. With this information, what are the implications? What actions can you take if this information is true and accurate to protect your wealth.

See IMF research from 2013. The deck has been shuffled and the cards dealt, how are you going to play them. I suspect many will play them well that frequent this site.


canary · Feb 15, 2016 - 9:53am

Looks like our California Lawyer was right last week

He said something like this: "Don't chase the price, the metals will come back to test their 200MAs....They always do". 

My personal congrats Sir.....You perform well under pressure.

LostMind · Feb 15, 2016 - 9:55am


Good morning Turdville!!


Just following up with the new shotgun and Valentines Day gifting... Would I keep her or the gun?

Took my sweetie shooting on Sunday and she FELL in LOVE with her new Benelli. After shooting a 100 rounds and shooting my 12 ga., she "woke" up to MY love for her and wanting her to enjoy herself while shooting... My shoulder hurts and her's does not!

Anyway, she has always been "Aware" of things, but just didn't want to always believe my tinfoil hat crap. This morning she sent me copies of her recent GOLD purchase of 4 oz coins :)

In a funny way, this was her way of Apologizing for not understanding the shotgun gift, while also acknowledging that following my lead is in her best interest!

Yes, I decided to keep her and the shotgun:) Damn great woman!!!

LostMind · Feb 15, 2016 - 10:03am

OK, another sign of manipulation

Bitcoin was about to go parabolic when the little bastard sold all his bitcoin and sent out a world notice that bitcoin was going to fail. This was just as the markets were looking for some alternatives. Bitcoin fell over 20% and has slowly rebounded. But just imagine where it would have been if not for the TPTB plant that "Waited" until just the right time to create confusion?

I also believe this is why people are coming back to gold and silver. Timing is everything.

See the new article. Another new digital currency... How many of these will hit the market and make all digital currencies worthless or "force" the FEDCOIN to enter the market to stabilize the "market".... UGHHHHHHHHHHHH

· Feb 15, 2016 - 10:04am

No Vault post this morning

With the Comex and other "markets" closed, MrsF and I have scheduled today as our Tax Day and we'll be headed out soon to meet with our accountant.

Just some thoughts, however...

I mentioned last evening that there was going to be a podcast today. This was before the total beatdown of over 2%. Ever since the CoT and podcast of Friday, I've been troubled and I spent most of the weekend ruminating over gold and silver. I even found myself sitting in mass Saturday evening, recapping all that had happened these past three weeks.

There's A LOT of bullish sentiment out there and one doesn't doesn't have to look very far to find it. "Gold Bull Market Resumes" and "Gold Smells Blood In The Water" kind of stuff. And, to a large part, this stuff has some validity. However, I'm left with the unshakable feeling that not much has changed...and now we have this $30 selloff.

So the point of today's podcast will be a realistic least from my perspective. Yes, it's great that we've made higher highs versus October AND May, and this has the possibility of helping the metals to finally turn the corner as HFTs may now be buying the dips rather than selling the rallies. But this spike in price is almost entirely due to the historic, HFT-driven slow-motion flashcrash of the USDJPY, NOT some new least not yet. Instead, as the USDJPY fell 10% in three weeks, gold rallied 10% as the HFTs that control everything reacted instantaneously. Why was gold up $45 at the open in Thursday (unprecedented)? Because the USDJPY had cratered overnight all the way to 111 (also unprecedented).

And now you see the USDJPY back above 114 and gold back down over $50 from its highs.

In the long run, loss of faith and confidence in the central bankers planners will fundamentally drive gold and silver higher. For now, though, I really don't think that anything has changed at all. "Price" is still determined by HFT algos trading against the limitless ability of Bullion Banks to create paper derivative contracts. 

Again, I'll try to elaborate more later today, once I have the time to record a podcast.

LostMind · Feb 15, 2016 - 10:24am

This should make you want to vomint!

Any doubt you may have had about the "fix" not being real, should be completely obliterated now... Looking for listerine to rinse my mouth.... yuck!

TF · Feb 15, 2016 - 10:28am

To that end. What do you see here?

Do you see "a new bull market"? Do you see "gold smelling fear"? Do you see "financial panic driving investors back into the safe haven of gold"? Do you see a "market breakdown"? Do you see "the physical markets finally reclaiming dominance from the paper markets"?


Do you see the absolute and total control that HFT has over gold and all other "markets"? For now, if you want gold to go to $1300 and $1400, then you're going to need to see 110 and 105 in the USDJPY. Otherwise, this is just the same old hokey-pokey.

The past week of yen (inverse USDJPY) overlaid with gold in bars:

Barfly · Feb 15, 2016 - 10:30am

looks like I was right

About the 2 AM price raid. And now we get the bonus cliff dive on the fix. Got to break gold down below that 1200 psychological barrier to keep faith in the ponzi dollar. In ponzi we trust!!!

Mr. Fix · Feb 15, 2016 - 10:32am

The price action

It is my understanding, that there is absolutely zero percent correlation between the paper price, and physical demand.

From this perspective, it stands to reason that in a systemic collapse, the paper price will be driven to incredibly unnatural lows, so that those that actually hold paper contracts, or even physical for that matter, will have little to no market value in the impending chaos.

For the past couple of years, there has been a clear-cut strategy to close all the exits, and gold and silver is clearly an exit strategy.

This is why I have surmised that gold and silver will not be allowed to reflect their true value until AFTER a systemic collapse,

And last weeks apparent blast off was little more than a bull trap.

This is also why I have repeated for years, that the fundamentals will point you in exactly the wrong direction.

But that's just my theory, everyone is entitled to their own.

But keep stacking, someday it's probably going to be worth something.

That day will not arrive until a new system has been established, and the Evil Empire, and Bankster overlords will still need to be defeated.

Speculative at best, but I always root for the good guys. It's my nature.

canary · Feb 15, 2016 - 10:36am
canary · Feb 15, 2016 - 10:37am



AIJ · Feb 15, 2016 - 10:41am

What I can't believe is

This board goes from elation to despair in two trading days.

J Siefert · Feb 15, 2016 - 10:41am

Re. No Vault post this morning

Let's hope the USD/JPY finds that "air pocket" again !!

· Feb 15, 2016 - 10:50am

Now, if you think this is just a blip

And you expect reality to return later this week with a falling USDJPY, crashing equity markets and rallying bonds, then be on the lookout to grab a dip into the blue circle:

LostMind AIJ · Feb 15, 2016 - 10:50am

@AIJ - don't be to hard!

Two things.

First, I believe it was you that mentioned how and why the Millennials were voting for Socialism. Kudos to you for that thought! I pondered on it all weekend and have no choice but to concur with you on that point. It makes absolute sense for them to WANT TO TAKE ANYTHING from those who ruined their future with debt...

Second, to the post above. I think the "traders" are more hurt because it impacts their pocket today and we all want it now! Stackers, preppers, and traders have waited a long time for the "comeuppance" that is required for a necessary reboot/debt jubilee etc... watching any sign of casino destruction and PM's success is like an oasis in the desert, the reality turns to mirage and dying of thirst is just to immediate.

I am more prepper/stacker than trader, but I do have money in the casino and feel that disgust as more manipulation is evident, even though the prepper/stacker in me says "see, told you so!" Self hate would run rampant in me if I let it! The "what ifs" is like the flu...


canary · Feb 15, 2016 - 10:51am

So much despair this morning

We invest against the Central Banks actions........Would you rather be in their shoes?........Not me!

Looks like a sunny day where I live....and much wormer than yesterday, anyway.....Nice!

AIJ · Feb 15, 2016 - 10:56am

It's not despair

What I'm attempting to explain is what I think and how I've felt since Saturday.

Yes, things have turned nicely and $1205 sure beats the heck out of $1050...but...I keep getting asked if "the bear market is over" and if "gold has finally turned". Well, sort of. But it's really ONLY DUE TO the HFTs reacting to the historic drop in the USDJPY. Nothing more. Can this eventually feed off itself in a virtuous cycle of higher prices? Yes. But my point is that anyone who claims that there are real people buying real gold and driving real prices higher is simply naive. These past two weeks have been about HFT chasing a rising yen. That is all.

Is the chart below a 2-month chart of gold or is it a 2-month chart of the yen? Can anyone tell the differnce?

koan · Feb 15, 2016 - 10:57am

What's all the fuss?

Just had a quick glance at my US miners and they are still going like champs, in fact up remarkably similar amounts to the other day, woohoo, giddy up!

...sorry, what? Closed? What's closed...?!

· Feb 15, 2016 - 11:00am

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J Siefert · Feb 15, 2016 - 11:06am


Surely the fundamental reasons for the USD/JPY falling last week are still given. What has changed if anything in that respect?
(Could it have had anything to do with the Chinese being on their holidays and the Yuan Yen carry trade that was hinted at once?)

J Siefert · Feb 15, 2016 - 11:15am

My view...

Last week we flew into a USD/JPY air pocket as Turd had been predicting with resulting benefits for metals and a down-draght for the markets.
Now we have had a long weekend and 'men in the backrooms' have managed to realign things against us.
Tomorrow (or soon afterwards) reality should kick in and what was started last week will continue again.

sander25nl · Feb 15, 2016 - 11:16am

Dutch news about China

on the news here in Holland , this weekend chairman Ziaochuan Chinise central bank , said in an interview this weekend that they dont want to lower the Chinses Yuan more .

Now lets hope the JPY stays high as well and the $$ goes lower and gold goes up ;) 

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