Brass Tacks

Tue, Sep 18, 2012 - 10:13am

OK, so it has been a few days since QE to infinity became official Fed policy. There is certainly an abundance of swirling news and discussion out there that dances around the real significance. Today, we cut to the chase.

Let's go back and hit on the main FED points:

  • The Fed will keep rates "extraordinarily low" through 2015
  • The Fed will continue $45B/month in Operation Twist through year end
  • The Fed will begin buying $40B/month in mortgage-backed securities (MBS) with no end date or target purchase amount given
  • So many of us have been seemingly immunized against the jolting effect of these headlines. Not just here at TFMR but nearly everywhere that "awakened" citizens congregate on the internet. We take the headlines at face-value but rarely stop to consider things on the next level. But we need to go there today because without a full understanding of what the true meaning and implications are, you're likely to delay actions that you should be immediately taking.

    So, let's go back to the three bullet points above and take them, one-by-one. First,

    • The Fed will keep rates "extraordinarily low" through 2015

    What is The Fed telling you here? Well, a couple of things. First of all, 2015?? That's three freaking years from now! It's one thing to say that rates will stay low for the next 6-12 months. It's something entirely different to say three freaking years! The negative implications of this are dramatic as institutions such as pension funds and insurance companies will be ravaged by the continuance of ZIRP. Additionally, however, what is The Fed telling you about their expectations of economic "recovery"? Despite all of their official forecasts of growth and jobs, it sure doesn't seem that they believe it. Like the old adage says: Watch what they do, not what they say. We talk here incessantly about the miserable economy and the dim prospects for recovery. It is now clear that The Fed feels this way, too.

    • The Fed will continue $45B/month in Operation Twist through year end

    First of all, remember what Operation Twist is. The Fed is selling their short-term maturity holdings (where there is actual demand for "safe havens") and using the proceeds to purchase longer-term notes and bonds. This process is considered "sterilized" because, allegedly, The Fed isn't creating any new money. They are simply "re-positioning" some of their "assets". Whatever. I don't care to get sidetracked as to whether or not this is really a "sterile" process. All that matters is that The Fed is currently executing this strategy to the tune of about $45B/month. The problem for them is, they're almost out of short-term bills and notes to sell and, once this inventory of paper is depleted, the $45B/month is going to have to come from other, "non-sterile" sources.

    Fed vs. Private Sector Treasury Holdings

    The Primary Dealers! Goldman, The Morgue, MorganStanley, Citi, BoA...all of them. They own or purchase new the MBS which The Fed buys from them. And here's the very important next step: The Primary Dealers turn around and use the proceeds from these sales to buy U.S. treasuries! To the tune of $85B/month. Let me do the math for you...that's slightly more than one trillion dollars over the next year. And what does the Congressional Budget Office project the U.S. federal deficit to be in fiscal 2013? It will again be north of one trillion dollars, at a minimum.

    At the end of the day...and here's where we get down to brass tacks...last week The U.S. Federal Reserve announced a plan whereby they will be almost completely and directly monetizing the deficit spending of the U.S. government. Though the illusion of legitimate borrowing will be maintained and politicians will continue to claim that "we're borrowing all of this from China", you should not be fooled. We have entered a new paradigm of direct debt monetization. By doing so, The Federal Reserve has begun the process of overt currency debasement and devaluation.

    Your only financial protection from this game-ending disaster is the ownership of physical precious metal. Though, in the short-term, dollar-denominated paper assets may perform reasonably well, they offer no long-term protection against your inevitable loss of purchasing power and wealth. Only physical precious metal can protect you in the days ahead. Buy some and add to your stack before it's too late.


    p.s. I plan to discuss this post in greater detail later today at

    About the Author

    turd [at] tfmetalsreport [dot] com ()


    Sep 18, 2012 - 10:06pm

    Marched in

    We are being marched into this one- beware of WW3.

    Sep 18, 2012 - 10:10pm

    fake gold fake money

    maybe silver will get to parity with gold


    Sep 18, 2012 - 10:13pm

    What are the odds?

    What are the odds of some dude drilling into a few gold bars in his inventory and hitting one with tungsten? I call Bullshit on this story! I think the fake bar was planted to discourage people buying physical gold! I can't see any merchant drilling into gold bars. What does he do with the gold bars with holes in them? Don't they have to be re-refined? and who pays for it?

    Sep 18, 2012 - 10:14pm

    Do you really think that

    Do you really think that China is going to physically attack Japan after one of the most devastating earthquakes and tsunamis in history ? I think not.............and I live in Japan for the record. Sure throw a "we're gonna dump 200B" of bonds out there as a spook but that's it. If japan pulls the plug on their investments in China, the Chinese government will have a bigger local problem as millions of disenfranchised and out of work Chinese turn against their own government. So, I say again, there will be handbags and then it will be pushed off to fester for another decade or so until it suits one or the other country to use it as a toy for self furtherment of their agenda.

    Sep 18, 2012 - 10:20pm

    Good Point

    Good Point MUDbone-

    Sep 18, 2012 - 10:20pm

    Odds? Hmm

    @MUDbone: You make a good point and I have to say when I watched the video I was struck by a similar thought.

    How many bars did this dealer drill? And what pray tell tipped him off to start drilling (?) - the story seems to say it was because he heard about fakes. I've heard about fakes too - but I won't be drilling anything in the stack.

    The more I think about this story, the more fishy it sounds.

    El Gordo
    Sep 18, 2012 - 10:22pm

    Fakes and tungsten filled bars...

    I seriously doubt the tungsten filled bars are being faked by the banksters. After all, they can rehypothecate their existing portfolio as many times as they wish and still have some left over, so engaging in all the work required to produce a master fake would seem to be much beyond their capabilities. Paper generation is much easier. Some guy in his garage would have a hard time pulling it off too given the precision work required. Looks to me like to do it properly almost requires a remelt and repackage the fake insert to keep it from rattling around or otherwise being detectable by an experienced dealer. So who is left? I could see the counterfeiter being in cahoots with a dealer/bankster who my pawn a few fakes off a poor schmuk who was demanding physical delivery, but who knows. For real no one knows where all the gold is located, how may times it is pledged to various owners, who has what, etc. anyway. And then of course, you still have the people who want to scare folks out of gold investments anyway. A real mystery that will never be solved.

    Sep 18, 2012 - 10:23pm

    (No subject)

    Japan Azumi: To Keep Yen-Yuan Direct Trading, Cross Bond Buys

    TOKYO (MNI) – Japanese Finance Minister Jun Azumi said on Wednesday
    that Japan and China are expected to maintain direct yen-yuan trading
    and cross-holdings of each other’s government bonds despite the
    simmering bilateral territorial dispute.

    “I think it is unlikely to terminate” what he and his Chinese
    counterpart agreed on earlier this year, Azumi told reporters.

    The direct yen-yuan trading, which began on June 1 in Tokyo and
    Shanghai, is aimed at facilitating trade settlements between the two
    countries and lowering currency transaction costs.

    Azumi said Beijing should crack down on violent anti-Japanese
    protests in China that have damaged Japanese factories and retail
    stores. The two countries should “calmly” defuse the long-standing row
    over small islands, he said.

    Courtesy of Market News International.

    Sep 18, 2012 - 10:24pm


    Made in China?

    Grigeo ReachWest
    Sep 18, 2012 - 10:24pm

    Sounds like a real investigation to me

    MTB, the Swiss manufacturer of the gold bars, said customers should only buy from a reputable merchant. The problem, he admits, is Ibrahim Fadl is a very reputable merchant.

    Raymond Nessim, CEO Manfra, Tordell & Brookes, said he has reported the situation to the FBI and Secret Service.

    The Secret Service, which deals with counterfeits, said it is investigating.

    Sep 18, 2012 - 10:26pm


    bundle of sticks with an axe blade attached symbolizes strength through unity turdville? official name winged liberty dime commonly called mercury dime (not an image of the god mercury) ms67fsb for you collectors out there PS stack

    benque fertzeltwist
    Sep 18, 2012 - 10:27pm

    Holy gold bars

    If I were looking to buy a 10 oz or greater gold bar, I'd feel more secure buying one with a hole in it than one without...suitably marked to reflect the new weight.

    Anyone selling "gold holes"?

    Sep 18, 2012 - 10:31pm

    Draghi and Benny have clearly

    Draghi and Benny have clearly done this shopping spree to mask the real game, that of weakening their currencies.

    Benny, with open ended purchases, now has the option of stopping the purchases, should the interest rate go up. That is about the only thing understandable - that and the buying of time as currencies depreciate in order to cheapen the debt payable in the hope that jobs will be created as exports become "cheaper" to importing countries. Problem with that is, the ordinary saver, person on a fixed income, the poor, and pensioners will take a right drubbing.

    Plus ca change..........

    Sep 18, 2012 - 10:33pm


    i am split on the fake gold bar being planted or not.. it does seem unlikely they would happen drill it and find a fake so i agree with the BS call; but i do know they manufacture plenty of jewelry in that part of town. i am not sure if they would buy that bar quality for the making of jewelry.


    Sep 18, 2012 - 10:41pm

    Tungsten-gold bars

    Easy problem to solve. Next time you go to your LCS, pull out your cordless drill and tap into the coin/bar. If you see Tungsten don't buy. Make sure you video the clerks reaction as you are doing this, might get you a few million hits on Youtube!

    Sep 18, 2012 - 10:43pm


    I would expect it bogus as well. Why would MSM be running it.

    What a tizzy, and that's the intent.

    Sep 18, 2012 - 10:52pm

    Fakes and tungsten filled bars...

    Does anyone think that this would be running on MSM to discourage people from getting out of the banking system?

    Would the MSM run a story to confuse the masses?

    There was a story such as this about Gold Eagles being radioactive, being made from nuclear recycled gold in the 1990's, when gold was in the 200's.

    I'll ask again, would a story on the MSM be done for the ONLY purpose of shaping your thoughts? LOL

    Sep 18, 2012 - 10:52pm


    FOR THE OPTIMISTS who are in a EXPONENTIAL NEGATIVE TRENDING WORLD... I see there are people who continue to think that we will just keep growing and keep expanding technology until we reach the heavens. I would like to remind the folks who think this way... NOTHING LASTS FOREVER.

    The Roman Empire collapsed while they were sitting on huge amounts of coal, metals, oil and etc.

    I don't know how many believe in climate change, but I think we are heading into a climate runaway collapse. I am not going to debate on whether its due to WHITEY or just CYCLES... it doesn't matter. And yes, it has happened before. However, we live in a very highly leverage technological system. So when the climate really changes, we will not be able to adapt fast enough. Whether WHITEY did it or not, does not matter.

    I heard an interesting thing from Mike Ruppert's LifeBoat hour on this past Sunday. He has read that HAARP along with CHEM TRAILS are trying to break-up the methane before it reaches the upper atmosphere. Maybe it is... maybe it isn't... interesting theory though. As most here know, Methane is 20 times worse than Carbon in heating up the climate.

    It looks like the methane vents coming from the North Russia are starting to BLOW FULL blast. What used to be one meter holes are now one kilometer. I do realize most of you all know this by now.. nothing new.

    Anyhow, I don't see a long transition going forward for the world. I see this instead:

    According to UGO BARDI's article:

    Don't you stumble, sometimes, into something that seems to make a lot of sense but you can't say exactly why? For a long time, I had in mind the idea that when things start going bad, they tend to go bad fast. We might call this tendency the "Seneca effect" or the "Seneca cliff," from Lucius Anneaus Seneca who wrote that "increases are of sluggish growth, but the way to ruin is rapid."


    This is how I believe it will occur. I don't see advanced technology 100 years from now and space ships a mile long as we see on Science Fiction movies. I see a collapse back to the dark ages. Not because that is what I hope for... instead, it is what has taken place over and over again.

    So, if you look around and see who is running the show... you cannot really see any other outcome. Humans have never learned from their mistakes...

    Why do we think we will change now?


    Sep 18, 2012 - 10:53pm


    If the tungsten wasn't Epoxied in wouldn't it have a hollow or flexible feel or sound in such a thin gold veneer?

    Sep 18, 2012 - 10:57pm

    I don't buy any bars/rounds over 5OZ

    Harder (but not impossible) to fake 1 OZ or 5 OZ rounds / bars.

    Sep 18, 2012 - 10:58pm

    Romans lost faith in their

    Romans lost faith in their debased currency, didn't know how to make anything, and had run out of other people to steal from. Their collapse was inevitable. Their Eastern brothers, however, lasted for an additional thousand years. Sound money will do that to a civilization.

    Sep 18, 2012 - 10:59pm

    (No subject)

    ANALYSIS Beijing playing both sides with protests

    Foreign threats seen as useful diversion from internal issues

    By WILLIAM WAN The Washington Post

    BEIJING — As anger increases over the territorial dispute between China and Japan, Chinese authorities have been playing both sides of the issue by quietly encouraging recent anti-Japanese protests, then publicly reining them in.

    Experts point to signs that the Chinese authorities have cleared the way and, in some cases, even fueled some of the protests that have erupted in recent days. At the same time, officials have been careful to keep control over the masses, leery that gatherings of malcontents could easily turn against their own government.

    China analysts say that the two-pronged approach is carefully calibrated to increase pressure on Japan, but that it is also driven by domestic politics, as officials jockey for position ahead of the fast approaching, once-in-a-decade leadership transition.

    "The party is skilled at manipulating such public opinion . . . and the signs that these demonstrations were organized by the government is very high," said Liu Junning, a former researcher at a government-related think tank and now an independent political analyst. "The protests come when the leaders need one to come, and the protests will stop when they want them to stop."

    On Monday, Chinese officials sent signals that they were looking to taper the protests over the islands — called Senkaku by Japan and Diaoyu by China — especially in the face of the potential economic impact on China-Japan trade.

    maravich44 fertzeltwist
    Sep 18, 2012 - 10:59pm
    Sep 18, 2012 - 11:01pm

    BofA reports

    attempted hacking into their system. Customers could not access accounts for a period of time. Blamed on Islamest's? Ann Barnhart warning comes to mind. The terrorist's create ALL our problems.

    Sep 18, 2012 - 11:02pm


    @SRS - Dam - that's dark - I think I need a stiff drink, before bed.

    SRSrocco wrote:
    I don't see advanced technology 100 years from now and space ships a mile long as we see on Science Fiction movies. I see a collapse back to the dark ages. Not because that is what I hope for... instead, it is what has taken place over and over again.

    I understand where you're coming from - but - for the sake of my kids - I'm going to try to stay as optimistic as possible. Sometimes the very en-visionment (is that a real word?) of a dark future can be a self fulfilling prophesy.

    Sep 18, 2012 - 11:10pm

    Lindsey Williams on Jeff Rense

    The Fed will own all mortgages.

    GUESTS 9-17-12 thru 9-23-12


    Terry Arnold
    Mideast On The Brink
    Of Mass War

    Lindsey Williams
    The Fed Will Soon
    Own Your Home

    Dean Henderson
    Geopolitical Analysis

    Sep 18, 2012 - 11:14pm

    @ fertzeltwist

    You speak with authority at times, and you ask questions in the same venue prompting a response.

    It's my hope that this community focuses on the truth, an not political manners.

    I respect peoples rights and don't think I should better my life from stealing from them.

    I understand that I was 'educated' to respect people that can steal from others with impunity because they are special.

    This is a forum that draws people that respect honesty, if they know it or not.

    That brings me to my question. Is that why you are here?

    Please don't see this as an insult, but more of what you came here for if it was done for the right reason.


    Sep 18, 2012 - 11:15pm
    I Run Bartertown
    Sep 18, 2012 - 11:16pm

    Fall of Rome

    Book Review: Decline and Fall of the Roman Empire

    "The Gist: This was a massive, and I mean massive, set of books that chronicled several centuries of the Roman Empire from immediately before its apogee to the breakup into the short-lived Western empire and comparably longer-lived Eastern Empire. ... Rather than attempt to poorly encapsulate what Gibbon wrote, I will instead discuss some of the key take-aways I had from the book...

    My first takeaway from Fall was the role that (im)migration and multiculturalism played in the demise of the Roman Empire. Whereas the Romans used their techniques of cultural and ethnic cleansing to great effect during the expansion of the empire, namely insisting that conquered peoples speak Latin (much culture is embedded in a language), utilize a Roman-style civil and military government, and no longer practice their religions, my sense was that Rome grew too large to effectively implement this course of action.* Indeed, if there was anything to conclude from Gibbon’s history, it was that, in the end, the far-flung roman empire collapsed under the weight of attempting to implement an e pluribus unum.

    The second take-away from Gibbon’s tome was the corrosive effect that “arriving”, of achieving what it sought to achieve, has on a culture...Long peace and uniform government of the Romans introduced a slow and secret poison into the vitals of the Empire...This “slow and secret poison” combined with the blessings of luxury, the hardships associated with the colonization of foreign lands, an aversion to marriage, increased acceptance of homosexuality, and what Gibbons called a “depravity of manners that interfered with procreation, birth, and the rearing of children”, served to depress birth rates and turn the minds of Romans away from the harder business of patriotism and toward voluptuous dissipation.

    The fourth take-away is that Roman society succumbed to pressure by more dynamic and vigorous cultures. Rome had the misfortune to peak just before the Volkerwanderung, or the “Great Migration”. Weak, tired, effete, and decadent, Rome was unable to defend her frontier provinces from the virile and martial Nordic and Eurasian hordes that pushed their way into the vacuum created by Rome’s decaying and retrenching political and economic power. That a once powerful and mighty culture would yield to a more masculine, a more martial, and more aggressive culture is a lesson repeated throughout history and we Westerners would do well to consider the application of such a take-away to our present lot."

    Sep 18, 2012 - 11:26pm

    To whom it may concern

    Dudes, Anonymity is like a warm blanket.

    But dang, how about those tungsten bars eh?

    Probably sold to the coin shops by pissed off Chinese businessmen...

    Or the MSM is trying to shape my thoughts.........again.

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