"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat

Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput

Trader Dan's free work will soon be available at www.traderdan.biz

Thursday, September 13, 2012

The Fed and the ECB determine to Destroy the Middle Class

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.

I do not know whether to laugh at such utter stupidity or to weep for my nation's future. After the Fed has already conjured into existence the piddly sum of $2.5 Trillion for QE 1 and QE2, we now get another $40 billion/month of agency debt purchases for as far as the eye can see. A lot of good the first $2.5 Trillion did. this latest one will do the same - nothing as far as curing what the real problem is in the US economy.

This is supposed to keep long term interests rate low to encourage home mortgage borrowing. Right, I am sure all those folks who were holding their breath waiting for the yield on the Ten Year to drop further from the 1.4% level it was trading at six weeks ago before taking out that mortgage. Guess what, thanks to all this money creation from the both the Fed and the ECB, the bond market is now shifting away from the deflationary scenario towards one of inflation, regardless of the Bullsh*t in the FOMC about inflation expectations remaining subdued. The yield on the Ten Year is now 1.8% AFTER all this FOMC nonsense. NIce work guys! Maybe you can do yet another round and drive the Ten year over 2% for us.

It also looks as if the long bond might be breaking down the technical charts also. That tells us that LONG TERM INFLATION EXPECTATIONS ARE INCREASING. the exact opposite of what these serial liars told us this morning.

Make no mistake about it, the bond markets and the commodity markets are signaling inflation. Pay no attentiont to the worthless claptrap being spouted by these monetary buffoons. The real picture is in the price charts which are always forward looking.

by the way, the rally in the stock market, which is now sitting at higher levels than when the current inept-in-chief took over, is a perfect picture of what happens when inflation hits the paper asset category.

By the way, in case anyone did not notice, I am particularly incensed to see this QE nonsense. I am disgusted at what the long term impact is going to be on my children and their future. so, today, you all who are reading this, get to read a written rant instead of an audible one!


  1. Nice! I have to believe Ben B is insane, the definition seems to imply it...

    to state that savers will be rewarded in his press conference is the lie of the decade...

    I too weep for my kids and their friends....the FED and corporate Govt. elite are taking them down an ugly path....

  2. I'm sure that the monetary masters can and will plausibly deny that they are bound and determined to destroy us. Despite all the dual mandate BS, the Fed really exists to maintain the stability (existence) of the current banking system. After all, they're doing God's work and if we should become collateral damage in their valiant fight to "save" the big banks, we should be grateful for their efforts even if it kills us. Thanks for posting that rant Dan, maybe you can give us an audible version this week-end on KWN.

  3. Rant, mild. Tossing solid objects at walls is far more comforting. Sort of like tossing paper money at real economies; fun, an emotional release, but ultimately immature and futile.

  4. do gold and silver pause or consolidate here?

    1. Good question. Jim Sinclair warns of extreme volatility when gold price is north of his $1764 Angel. I suppose we shall see soon enough.

  5. The banking system is no more insane than the voting public that has been voting for entitlements that are bankrupting us. Now there is no way out. Cut government spending? Most won't accept reduced benefits. Raise taxes? Into a debt super cycle collapse is economic suicide, depression. QE is the last act of a banking system trying to survive. Of course it's madness, but owning gold and silver is sanity.

  6. I hope there's a consolidation here, JESSE'S CAFÉ AMÉRICAIN hints at Cup/handle pattern, so hopefully we see gold consolidate a bit before advancing more.

  7. Hats off to you and your legitimate anger.
    A french dude who regularly reads your blog (we french dudes like to trade from a cafe terrace with our ipad, expressos and croissants as everyone knows :))


Note: Only a member of this blog may post a comment.