Friday, August 1, 2014

Man Who Executed QE1 Exposes True Horror Of 2008 Collapse

The truly frightening thought is the next financial crisis will be orders of magnitude worse than the 2008 crisis.  Because the next bubbles to burst will be the dollar and US Treasury bond bubbles.

In the short-term, the dollar and US Treasuries may gain strength in a perceived flight to quality.  When wars and geopolitical hot spots erupt, or when there are natural disasters, or deadly viruses spread (see ebola), the dollar has been a traditional safe haven.  This creates demand for the dollar and US Treasury bonds.

But the world is catching on to dollar debauchery by the Fed and trading nations are "diversifying" away from the dollar.  This will create a flood of dollars sold back to the US.  This is extremely bearish for the dollar. and will ultimately cause the end of dollar hegemony.

The Fed and Treasury are deathly afraid of deflation, as it causes markets to implode (even if it has the added benefit of dollar strength--or cash).  But they are tone deaf to the ravages of inflation, which harm the poor and middle class the most.  A country's central banks first duty is to maintain price stability and currency integrity.  The fact that central banks globally are pursuing a policy of inflation is borderline insane.

The Fed masks currently inflation with official CPI statistics of 2% when true inflation rate is 9-10%, according to, which uses pre-1994 calculation methodologies.  This inflation is showing up in financial assets, high end art, real estate, as well as in staples like food and energy.  Other sectors affected include education and healthcare.  Inflation reduces the standard of living for all--that's what the financial elites don't tell the masses.

The powers-that-be equate inflation with GDP growth.  GDP growth can also be overstated by car manufacturers' inventory bulging due to unsold cars, for example.  Unemployment is understated due to chicanery and smoke and mirrors.  Inflation is understated--all done to mask economic malaise.

This short interview gives a behind-the-scenes look into how the financial elites really don't have a clue on why their economic models aren't working.  The previous Jim Rickards interview analyzes the disconnect.
“Yes.  Every bank, I don’t care what people say, every U.S. bank in the week after Lehman would have gone bankrupt.  Any major U.S. bank was done...."

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