America Hits The Financial Brakes. Why?

I’m getting deja vue

Reading comments on this blog and watching media reports, I get the feeling that most people have failed to spot the key events of recent days.  In the UK that would not be surprising as minds have been preoccupied with why the government allowed hundreds of looters to ‘riot’.


That hopefully is not going to be a weekly event.  The riots shocked due to their rarity.


The things that will really make a big difference in the months ahead is the complete change in American fiscal and monetary policy that took place in the last two weeks.


Obama has agreed to cut the deficit by at least $1.5 trillion – more than 10% of it, and possibly $4 trillion, or 25%.  Every other year since 1990, when the total deficit was $1 trillion (now $16 trillion), the deficit has been raised.  Suddenly, for the first time in twenty years, the US government has decided to cut.  That’s the fiscal change.  If anything Obama is now talking of cutting at least that amount.


Next up is the monetary policy of The Fed.  Two months ago the gold price was fading away at $1475, and it looked like the party was over, when Bernanke hinted that another third tranche of QE was going to be released.  The gold price took off the moment he spoke, and hasn’t stopped since.  The only problem is that The Fed has since changed its mind saying QE is not appropriate as they are worried about inflation.


Bernanke also stated that interest rates would be kept low, possibly until 2013.  People have gone away assuming that that’s a cast iron promise, which it was not.  It was what’s known as a definite maybe. Interest rates are set by market forces.


Jon Nadler explained today on kitco –


It was announced yesterday that US President Obama plans to ask Congress for long-term spending cuts that go well beyond the $1.5 trillion that the bipartisan “super-committee” will try to shape into existence by around Thanksgiving time and that he will also ask legislators to earmark some sizeable amount of money towards creating the jobs that the US economy appears to be in need of. In all, the Obama plan is said to contain deficit reduction measures that more than countervail the short-term expenditures aimed at boosting the flagging US economy and jobs scene.
Also yesterday, we heard from one of the Fed’s “traitors” as to why he dissented from the recently adopted language that implies low rates for a couple of more years. Dallas Fed President Fisher flat-out told an audience in Texas that the Fed’s “easy money” policy is doing very little to bolster economic conditions and that it might be interpreted by some as the “Dow wagging the Fed’s tail” in a manner of speaking.
Other dissenting members of the Fed’s FOMC also made clear their actions by saying that either a) current conditions did not warrant a policy (or language) change or that b) the Fed might have just waited until at least September to consider any action and not acted so quickly (too quickly). The “extension” is seen by many as a pledge but is has not done a whole heck of a lot for the Dow since it was first aired. We remind readers that the FOMC did not commit to actually hold rates at present levels through mid-2103, albeit that is the commonly held view by many.
This is a triple financial whammy.  Steep actual fiscal cuts, not a reduction of the rate of growth of the deficit as in Britain’s softer approach to ‘cuts’.  No more QE despite the promises.  And probably an interest rate rise to boot somewhere along the way.  No wonder the share market has cracked.

The insiders all know what the game is.  They have been cashing out their money from all markets over the last year while QE1 and QE2 lifted the price of all assets.  Soros was boasting that he’s now 75% cash only last week.  If he’s typical, the ‘gang’ will now want markets tipping out so that prices tumble and they can buy back in at one quarter where they sold, and then sit on treble their current worth after the recovery (when they miraculously turn on the flow again).


It’s the oldest game in the book.  The people who issue the world’s money can turn on and turn off the tap to order.  The clever thing is that they’ve made it all look like the work of political opponents, who’ve been demanding cuts to the deficit, and as if the latest moves are being made in the name of financial prudence.  They are not.  This is how central bankers have always behaved over the ages.  The rules stopping them from doing so, which were brought in after the 1929 crash have all been removed by Clinton and Bush.


Just as the QE boom sent waves around the world, so now will the QD (quantitative distress) have exactly the opposite effect in every corner of the globe.  For some reason people seem to have missed the key elements of this situation.  The news media has done an excellent job of disguising what’s actually going on.


UPDATE –  amusingly google stats shows this post has nil traffic!  It even has comments!  It is a standard technique to manipulate viewing stats to keep undesired posts and videos from going up the rankings (Ron Paul and Piers Morgan on CNN was showing 100 views earlier this week!!!).  I’ve seen pieces held back by deducting from the totals on here before, but I’ve never had a nil before!  It’s getting to the stage when you will know that your blogs doing well when it isn’t getting any traffic!!!


(Sitemeter shows this is getting read.  Referals show that it’s found its way into chatrooms.  Only in Google rankings is it dead.  Googlebot is crawling all over the blog this morning!)

The Tap Blog is a collective of like-minded researchers and writers who’ve joined forces to distribute information and voice opinions avoided by the world’s media.
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16 Responses to “America Hits The Financial Brakes. Why?”

  1. Me says:

    So why do you think the gold price will tumble along with the stocks? Many will agree that the latter will occur, and that they will buy back cheap. But where you differ with many analysts is your suggestion gold is in a bubble and is primed for a the lawnmower treatment.

  2. Tapestry says:

    let’s see.

    silver’s had a fair chop, falling $50 to $32 recently. Silver was said to be unassailable until then.

  3. Anonymous says:

    Hi Tapestry

    I know this post is about QE and economics but I just wanted to address a point you made at the beginning of the post.

    Surely the question isn’t why the ‘government’ allowed the criminality and looting but why the men and women of England allowed it. The issue is the neutering of the populus and what is to be done about it. I want nothing from the government – they screw everything up (back to economics again). We, the people, need to take back our power and our country, then maybe it wouldn’t be in such a mess

    David

    PS Great blog by the way. You’re in my bloggers top twenty – I voted earlier this week.

  4. Jacobite says:

    Excellent post, The market is a rigged game for the benifit of the in siders the sooner people realise this the better.

  5. Me says:

    //silver’s had a fair chop, falling $50 to $32 recently. Silver was said to be unassailable until then.//

    Nobody said it was “unassailable”. On the contrary, silver is the principle battleground.

    Silver is a small market and it is easily manipulated by JP Morgan/Federal reserve. The silver plunge occurred when it exceeded JP Morgan’s stock price.

    You are talking about market manipulation but are oblivious to the manipulation of the metals market!

  6. Tapestry says:

    I agree with your take on manipulation of the silver market and all other markets, Me. But markets still have to connect to the real world at some point. People have to buy the stuff in the end of the day. Once the only reason people are buying is because they believe the price will rise forever, the market will turn round.

  7. Tapestry says:

    David,

    I don’t get much of a go in rankings these days. I did better when I had 10% of the readers the blog gets now! But thanks for mentioning The Tap, which is fed by many contributors and is a great place to learn stuff – for me also!!

  8. Me says:

    //Once the only reason people are buying is because they believe the price will rise forever, the market will turn round.//

    Obviously!!111

    Do you have an objective way to measure this?

    With regard to gold… elite are buying, states are buying, and an informed, vocal minority on internet are buying.

    That’s it. Does that sound like a bubble top mania to you?

    Alex Jones uses the phrase false flag type event with reference to London riots

    great interview
    http://www.youtube.com/watch?v=n0Q3ugdtxTo&feature=player_embedded#!

  9. Tapestry says:

    Do I have an objective way to measure a bubble mania? No. I don’t.

    But as the stock market fall gathers momentum, the need for cash, and the opportunity for holders of cash will grow exponentially.

    Why hang in on gold for the final 10-20% when you can clean up buying up the rest of the globe at say 90% discount?

  10. Tapestry says:

    Me. Soros is 75% cash. Which are the elite you mean? They’ve been cashing out under the protection of QE2. Now there’s no more QE coming. Two weeks from now the crash will be in full flow.

    Mines are starting to hedge output again. Government purchases of gold are very small currently. Commodity and gold tops are always very sharp turnarounds. Watch out.

  11. Me says:

    //Why hang in on gold for the final 10-20% when you can clean up buying up the rest of the globe at say 90% discount?//

    Gold is cash.

    //Soros is 75% cash. Which are the elite you mean? They’ve been cashing out under the protection of QE2. Now there’s no more QE coming. Two weeks from now the crash will be in full flow.//

    How do you know this is accurate information? It was announced, obviously to have an effect, otherwise they would have kept it quiet.

    It’s just one fund, anyway. Soros will have plenty of gold.

    //Mines are starting to hedge output again. Government purchases of gold are very small currently. Commodity and gold tops are always very sharp turnarounds. Watch out.//

    There will be a correction. That will be a good time to buy. Bob Chapman recently said it might go to $1600 for a very short time before $2000 by year’s end.

    I don’t know where you get the figure of $800 and the time period decade from… you seem to think anyone buying gold is completely stupid and is not aware of mass psychology or market fixing. Watch the Maloney video. Look at the Stock-Price Gold ratio chart.

  12. Me says:

    Another idea about Soros 75% cash.

    Maybe he knows after the drop certain stocks are going to increase in value by a higher percentage than gold will increase over the same time period.

    So he will buy cheap stocks, sell high and then buy gold at the higher price.

  13. Tapestry says:

    The world’s central bankers are meeting at jackson Hole tomorrow. If the Fed launches more QE they might reverse the stock market falls, and boost gold further. If they don’t, the crash will continue.

  14. Me says:

    What do you mean continue? Stocks, yes. But I hope the crash in gold starts. Recently it’s been going up as fast as the stocks have been going down. For people who don’t have a lot of money and are reliant on the fiat wealth that is bad news.

  15. Tapestry says:

    The manipulation is capable both of depriving currency of buying power, and of increasing it. The trick is to anticipate which kind of manipulation is taking place at any given time.

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