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 - 11:29pm

    IRB....that's some frightening sh-t

    the parallels are making me sick..... it's no doubt that the dilution to our culture is intentional...... both parties have turned a blind eye to immigration policy....and some claim it's for the votes, i don't buy that because when both parties are pandering to the same audience, (the illegals they are accommodating) i can see no strategic advantage........and as for the cultural destruction, just turn on all the homosexual primetime tv shows....... (modern family/glee/etc etc..) dont get me wrong, you wanna be gay? go for it.....behind closed doors, not on my front of my children, no....i'm not good with that. The whole society is materialistic......each man for himself.... and no where is that more obvious than in government and wall st.. So really.......what do we expect? it's a f--kin disgrace. Thank God my grandparents are long gone.....

    Sep 18, 2012 - 11:30pm


    I think we have reached 'peak optimism' as well.

    It takes $6.25 Fiat, to buy a pre 1965 quarter.

    That Pre 65 quarter bought over a gallon of gasoline back then, and buys MORE of it today.

    Assuming 3.50/gal gas, the FIAT quarter buys you squat.

    I understand why you would worry about you kids future. It's been stolen and they were born with debt.

    Sucks don't it,


    Sep 18, 2012 - 11:30pm

    States With Highest Percent of People Who Do Not Pay Federal Inc

    Ten States With Highest Percent of People Who Pay No Federal Income Tax

    Just who are these people who don't 'take personal responsibility for their lives' and 'who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it -- that that's an entitlement.'

    Red marks the ten states with the highest percentage of non payers of Federal Income Tax. Blue is for the ten states with the lowest percentage.

    Many people who pay no Federal income tax do so because they are elderly, students, unemployed, or working people with very low incomes.

    Why Do Some People Pay No Federal Income Tax

    These people may pay many other taxes including the payroll tax, state tax, sales tax, gasoline tax, property tax, fees, tolls, and so forth.

    As you may recall, the move to the Earned Income tax credit and child credits for working parents was part of the move away from welfare enacted during the 1990's as a means of giving people more incentives to work. It allowed them to subsist on low incomes by providing income tax credits in lieu of direct government assistance.

    There is no question that the economic collapse has considerably increased the number of people who pay no income tax because of underemployment and unemployment. Additionally the median wage has been stagnant for decades, and the steady increase in inflation has been driving more people into the ranks of the working poor.

    One way to impact this would be to enact policies that would increase employment AND the median wage, so people would have more disposable income for tax purposes.

    However, this runs counter to the current extractive policies that favor the top few percent through tax loopholes, financialization schemes, and various forms of subsidies achieved through lobbying and the weakening of long standing regulation against frauds, monopolies, insider dealing and cartels.

    The wealthiest complain that, on the whole, they pay the most taxes, even though the amount they pay may be a smaller percentage of their income than many ordinary wage earners. This is like the young man who killed both his parents appealing to the mercy of the court because he is an orphan.

    One of the reasons they pay the most taxes is that they have gamed the system to take the most income, not by productive activity that enriches everyone, but through fraud and loopholes and influence peddling and government bailouts and subsidies. The growth of a monied interest, wielding inordinate political influence and economic power in the US, is becoming a problem of historic proportions, not seen since the last Great Depression. It is often a precursor of significant social change.

    This tension of wealth inequality seems to repeat every couple of generations as reforms are enacted, and then people forget why they were put in place. This will be resolved as well, one way or the other. The urge to self-destruction is very strong among the monied interests. Its what they do as a form of revenge, for being born.

    Sep 18, 2012 - 11:31pm


    great idea maybe we should switch to works of art and youtube the curator's reaction when we check the Monet or Van Gogh!!!


    Sep 18, 2012 - 11:32pm


    Lindsey Williams, just repeated Turd, "the banks will take that 40B and roll them into treasuries"!

    Sep 18, 2012 - 11:34pm

    Interesting Article from 2009


    A Slow Motion Train Wreck, Years in the Making

    An obscure news item originally published in the N.Y. Post [written by Jennifer Anderson] in late Jan. 04 has always ‘stuck in my craw’:

    DA investigating NYMEX executive - Manhattan, New York, district attorney's office, Stuart Smith - Melting Pot - Brief Article – Feb. 2, 2004

    A top executive at the New York Mercantile Exchange is being investigated by the Manhattan district attorney. Sources close to the exchange said that Stuart Smith, senior vice president of operations at the exchange, was served with a search warrant by the district attorney's office last week. Details of the investigation have not been disclosed, but a NYMEX spokeswoman said it was unrelated to any of the exchange's markets. She declined to comment further other than to say that charges had not been brought. A spokeswoman for the Manhattan district attorney's office also declined comment.

    The offices of the Senior Vice President of Operations - NYMEX – is exactly where you would go to find the records [serial number and smelter of origin] for EVERY GOLD BAR ever PHYSICALLY settled on the exchange. They are required to keep these records. These precise records would show the lineage of all the physical gold settled on the exchange and hence "prove" that the amount of gold in question could not have possibly come from the U.S. mining operations – because the amounts in question coming from U.S. smelters would undoubtedly be vastly bigger than domestic mine production.

    We never have found out what happened to poor ole Stuart Smith – after his offices were "raided" – he took administrative leave from the NYMEX and he has never been heard from since. Amazingly [or perhaps not], there never was any follow up on in the media on the original story as well as ZERO developments ever stemming from D.A. Morgenthau’s office who executed the search warrant.

    Are we to believe that NYMEX offices were raided, the Sr. V.P. of operations then takes leave - all for nothing?

    These revelations should provide a “new filter” through which Rothschild exiting the gold market back in 2004 begins to make a little more sense:

    “LONDON, April 14, 2004 (Reuters) - NM Rothschild & Sons Ltd., the London-based unit of investment bank Rothschild [ROT.UL], will withdraw from trading commodities, including gold, in London as it reviews its operations, it said on Wednesday.”

    Interestingly, GATA’s Bill Murphy speculated about this back in 2004;

    “Why is Rothschild leaving the gold business at this time my colleagues and I conjectured today? Just a guess on my part, but suspect:”



    Coincidentally [or perhaps, not?], GLD Began Trading 11/12/2004

    In light of what has occurred – regarding the Gold ETF, GLD – after reviewing their prospectus yet again, it becomes pretty clear that GLD was established to purposefully deflect investment dollars away from legitimate gold pursuits and to create a stealth, cesspool / catch-all, slush-fund and a likely destination for many of these “salted tungsten bars” where they would never see the light of day – hidden behind the following legalese “shield” from the law:

    Excerpt from the GLD prospectus on page 11:

    Gold bars allocated to the Trust in connection with the creation of a Basket may not meet the London Good Delivery Standards and, if a Basket is issued against such gold, the Trust may suffer a loss. Neither the Trustee nor the Custodian independently confirms the fineness of the gold bars allocated to the Trust in connection with the creation of a Basket. The gold bars allocated to the Trust by the Custodian may be different from the reported fineness or weight required by the LBMA’s standards for gold bars delivered in settlement of a gold trade, or the London Good Delivery Standards, the standards required by the Trust. If the Trustee nevertheless issues a Basket against such gold, and if the Custodian fails to satisfy its obligation to credit the Trust the amount of any deficiency, the Trust may suffer a loss.


    Sep 18, 2012 - 11:40pm


    nice tie-in article........very nice.yes

    Sep 18, 2012 - 11:42pm

    @ Karankawa-

    I'm here because I agree with you guys

    Sep 18, 2012 - 11:49pm

    Game Over Man, Game Over!

    @reefman Nice trades.

    Bought a 1000 dust today with a 3 point stop loss. Stop at 19.89. May be able to get 5ok before Christmas


    TF folks may want to get familiar with Private Hudson.

    Supercut: Private William Hudson in Aliens
    I Run Bartertown
    Sep 18, 2012 - 11:50pm


    "Cranston bans 'father-daughter' dances as violation of state law

    Supt. Judith Lundsten said the move was triggered by a letter ifrom the American Civil Liberties Union on behalf of a single mom who had complained..."


    "In a first-of-its-kind ruling, a federal judge in Boston has ordered Massachusetts authorities to provide a taxpayer-funded sex-change operation for a transgender prisoner...Kosilek, who used to go by “Robert,” is serving life in prison without the possibility of parole for the 1990 murder of his wife."


    In so many ways, large and small.

    Sep 18, 2012 - 11:51pm

    Getting Out The "Brass Tacks"

    Is much easier said than done! The corporate/politico cabal will see to that.


    1500 Newspapers

    1100 Magazines

    9000 Radio Stations

    1500 TV Stations

    2400 Publishers

    All owned by just 3 corporations. Talk about manipulation and control! Meanwhile...

    Sep 18, 2012 - 11:52pm


    I see your "father-daughter dance" and raise you a "pledge of allegiance".......

    i think i just puked in my mouth..

    Sep 18, 2012 - 11:55pm

    I'm here because I agree with you guys

    I don't speak for this community.

    I think you are an Idiot, but that is my personal opinion, and I hold no one else responsible. I just respect my BS filter.

    I don't want a fight, and I don't want a conversation. Just go on with what you do.


    S Roche
    Sep 18, 2012 - 11:55pm

    @Hobo re CoT Spec positions...

    Interesting correlation, I note you are using Dan Norcini's preferred measure of Futures & Options which makes sense.

    It also makes sense as your chart reflects the speculative money moving from one side of the boat to the other. It would be interesting to see volume on that chart as well if possible.

    $35 has checked silver's advance several times now, let's see what happens...or as was said: "you won't know 'til you bet"

    Good luck.

    (Disclosure: trading account has a small short position in silver, coming into Wednesday)

    Sep 18, 2012 - 11:56pm

    China & Japan

    Could this be one of the reasons the US could benefit by the current turn of events between China & Japan ?

    Seems like this deal could be unfavorable to the dollars hegemony.

    Hagarth Hammer
    Sep 19, 2012 - 12:02am

    Elections Anyone?

    This is merely a strong arm tactic for the current gov. in China to get re-elected. The Senkaku Islands really could have been brought up during the Yuan-Yen negotiations and resolved then. All of this bluster right before an election has been done over and over and over. But it seems to really work up the natives and get all that warm fuzzzy nationalist feelings going, doesn't it?

    Not just in China.

    "USA, USA, USA"....don't you just love Homer Simpson.....

    Sep 19, 2012 - 12:10am

    BOJ joins the party courtesy

    BOJ joins the party courtesy of MarketWatch as they don't want a strong yen etc etc yada yada yada

    1. Japan's Nikkei jumps 1.3% after BOJ decision

    2. 9/18

      Bank of Japan to expand monetary easing program

    3. 9/18

      Bank of Japan leaves its interest rate unchanged

    Sep 19, 2012 - 12:10am


    It feels like the height of hutzpah to challenge you, but for the people who were not a part of the system, that is not part of the elite and not part of the dependent class, the fall of Rome was kind of a non-event. Taxes and corruption had gotten so bad toward the end that Rome itself had been more or less depopulated. All the productive people had moved out to the boonies and taken up farming. I'm too lazy to track down sources to back this up. (I'll just say I've read Edward Gibbon and Barbara Tuchman). For those people, the glory of Rome was pretty much a fading memory anyway. As long as it did not affect them directly they couldn't care less which remote legion had elected its general Emperor, they had more important things on their minds like getting their crops in.

    There is quote from Will Durant that I love:

    “The history of civilization is a river on whose waters soldiers and politicians are fighting and shedding ballots and blood; but on the banks of the river, people are raising children, building homes, making scientific inventions, puzzling about the universe, writing music and literature.”

    Now, this is not to say that we are not going to go through an upheaval as the system dies and many people are going to suffer, but the trick will be to move away from the river before the flood comes.

    Dark ages?

    I know people often dismiss Wikipedia as a source, but...

    Originally the term characterized the bulk of the Middle Ages, or roughly the 6th to 13th centuries, as a period of intellectual darkness between the extinguishing of the "light of Rome" after the end of Late Antiquity, and the rise of the Italian Renaissance in the 14th century. This definition is still found in popular usage, but increased recognition of the accomplishments of the Middle Ages since the 19th century has led to the label being restricted in application. Since the 20th century, it is frequently applied only to the earlier part of the era, the Early Middle Ages (c. 5th–10th century). However, many modern scholars who study the era tend to avoid the term altogether for its negative connotations, finding it misleading and inaccurate for any part of the Middle Ages.

    The term Dark Ages has about as much relevance as the myth of the Wild West. That is to say, it makes great Hollywood, but doesn't really reflect the historical reality.

    It's kind of that river thing again. Because of the lack of great leaders strutting across the stage and momentous events--the kind of thing historians and Neocons love, it must have been horrible. Not. Once again, most people were just trying to get their crops in.

    I think you are correct in your assessment that things are going to be different. I'm just not so sure that will necessarily be a bad thing.

    I may just be trolling, but I like to think I've elevated it to an art form.


    Sep 19, 2012 - 12:15am

    three leaders' jobs policy

    steve jobs: jobs = hiring people to make things for sale.

    sleazy willy: jobs = blow jobs

    obozo: jobs = no jobs

    Sep 19, 2012 - 12:17am

    Silver coin and Rome empire

    It's "an image better than one thousands words" time again.

    Sep 19, 2012 - 12:21am


    @Rui: That's a fabulous Cicero quote at the bottom of the Silver Content chart! Sounds a little all too familiar - I think Cicero would have been a Turdite!

    Sep 19, 2012 - 12:32am

    Gold Money check their bars

    Fake Gold Bars - How to detect them using ultrasound testing
    Sep 19, 2012 - 12:46am

    Japan Asset Purchase programme

    The Bank of Japan took surprisingly strong steps to further ease its monetary policy following similar steps by the Federal Reserve, as it tries to tackle entrenched deflation, an export-sapping strong yen, and the impact of slowing global growth. The central bank's policy board decided at the end of a two-day meeting to increase the size of its asset purchase program—the main tool for monetary easing amid near-zero interest rates—to ¥80 trillion ($1.01 trillion) from ¥70 trillion. The dollar rose quickly against the yen following the announcement, to ¥79.02 from ¥78.69.
    Sep 19, 2012 - 12:50am

    try that again :Japan asset purchase programme

    having hard time getting this post to format correctly: The Bank of Japan took surprisingly strong steps to further ease its monetary policy following similar steps by the Federal Reserve, as it tries to tackle entrenched deflation, an export-sapping strong yen, and the impact of slowing global growth. The central bank's policy board decided at the end of a two-day meeting to increase the size of its asset purchase program—the main tool for monetary easing amid near-zero interest rates—to ¥80 trillion ($1.01 trillion) from ¥70 trillion. The dollar rose quickly against the yen following the announcement, to ¥79.02 from ¥78.69.
    Sep 19, 2012 - 12:55am

    Submitted by Puck T. Smith on September 19, 2012 - 12:10am.

    Well said.

    And the John Prine song was a nice touch.

    Reality Never goes away. But people go to great lengths to subvert it.


    Sep 19, 2012 - 12:55am

    Levity time :)

    Levity time :)

    Tommy Tiernan - Who Do We Owe Money To? And Why Don't We ...
    Grumpy Bastard HAVEFAITH
    Sep 19, 2012 - 1:07am

    All roads lead to....

    Turd, I'm sorry that you took the Vatican Assassins video down. The religious blind spot is how these Roman Cult/Black Nobility families have stayed in power throughout history. Check out this website:

    Also, Frank O'Collins-Western Roman Law Pt.1/4.mp4

    Joseph Atwill: The Roman Conspiracy to Invent Jesus

    I Run Bartertown
    Sep 19, 2012 - 1:07am

    @IRB re:Decline and Fall

    I guess Gibbon is a lot like the Bible. You can pretty much read anything you want into it.

    I think it is a little simpler than that, but I'm kind of simple to start with.

    1. A relatively free society produces a high level of prosperity
    2. The increased prosperity allows for the funding of the state apparatus
    3. As the state increases in power relative to the private sphere freedom diminishes, leading to eventual economic collapse
    4. With economic collapse the state fails
    5. Go to #1.

    It happened in Athens, it happened in Rome, it happened in Spain, it happened in France, it happened in England and it's happening in the United States

    The common factor is the presence of a state apparatus, that is an agency which claims a monopoly on arbitration in cases of conflict, including conflicts to which it is itself a party, and a monopoly on taxation. That is, it is able to dictate the cost of the arbitration services which it provides, free of competition. This inevitable leads to loss of property rights and the perversion of justice.

    The state always leads to its own destruction.

    Strike the root and the tree will fall.

    Sep 19, 2012 - 1:09am

    Tuesday, September 18,

    Tuesday, September 18, 2012

    2012 Survival Investing - John Talbott

    Coast to Coast AM ~ Sept 17 2012: Corporate Takeover & Geopolitics with author John Talbott discussing 2012 survival investing and Craig Hulet [author: Hydra of Carnage] discussing US gov. controlled by corporatism .“There are NO Governments only CORPORATIONS”, masquerading as Organic Governments owned by the Vatican World Banks. ... The People voluntarily participate through consent, 'registration' & words-of-art to the CITY OF LONDON Corporations known as UNITED STATES, CANADA, AUSTRALIA, etc...Corporatocracy elitists in the CFR, Fed, and the 5 big banks run the world. The Bankster Cartel literally party with the SEC officials who are supposed to be regulating them. Senators become lobbyists with shocking regularity. We haven't lived in the Founding Father's America since 1913, when the illegal Fed(private bank) and the illegal Income Tax (16th amendment) became law.

    Sep 19, 2012 - 1:19am

    BOJ QE

    Yawn. I bet gold doesn't hit 1790.

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    Key Economic Events Week of 2/11

    2/12 12:45 ET GCP speaks
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    2/14 8:30 ET Retail Sales (December)
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    2/15 8:30 ET Import Price Index
    2/15 9:15 ET Cap. Util. & Ind. Prod.

    Key Economic Events Week of 2/4

    2/5 8:30 ET Trade Balance
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    2/5 9:00 pm ET Trump SOTU
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    2/6 7:00 pm ET CGP speech
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    Key Economic Events Week of 1/28

    1/29 10:00 ET Consumer Confidence
    1/30 8:30 ET Q4 GDP first guess
    1/30 2:00 ET FOMC fedlines
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    1/31 8:30 ET Personal Inc, Cons. Spending and Core Inflation
    1/31 9:45 ET Chicago PMI
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