Economics: Ponzi Schemes & You

A few things before we get started:

  1. Lack of regular (and good) posting bothers me too. I’ve taken on a second day gig because it’s an opportunity that cannot be ignored. I guess I will sleep when I’m dead.
  2. Regular day gig is still in transition.
  3. Family outranks all of this.

So, I wanted to talk about this Zerohedge post from yesterday afternoon.

Here’s the summary:

Foreign, central banks are directly investing into US stocks with their reserves.

Now, under the Fed’s mandate, this in itself is not only unethical, but illegal based upon the explicit wording in it’s own charter. Not that it matters as the Fed has gone so far past it’s mandate at this point, that actually adhering to the rules set would be laughable. BTW, never throw out a complicated conspiracy when you can just chalk it up to shocking levels of incompetence.

Denninger covers it here as well.

Extend. Pretend.

There is no evidence that this trend will cease. Based on previous history, it is only a matter of time before this comes to an end. I stand behind the statement that at some point they will run out of places to blow these bubbles.

From the Zerohedge piece:

In other words, while the Fed’s charter forbids it from buying US equities outright, it certainly can promise that it will bail out such bosom friends as the Bank of Israel, the Swiss National Bank, and soon everyone else, if and when their investment in Apple should sour.

Luckily, this means that the exponential phase in risk is approaching as everyone will now scramble to frontrun central bank purchases no longer in bonds, but in stocks outright, leading to epic surges in everything risk related, then collapse and force the Fed to print tens of trillions to bail everyone out all over again, rinse repeat, until this chart becomes asymptotic. We say luckily, because it means that the long overdue systemic reset is finally approaching.

Do you see the trend/ What did the Dow close at yesterday? 12,900?

Harkening back to a discussion I had in 2005 with John Dvorak, I believe we have one hell of a ramp up, but when you start to approach 20,000, it’s time to run for the hills.

BTW, on another note, expect a run on ammo and guns sooner rather than later – meaning prior to the election. I’m starting to see incremental price increases based upon demand alone. My favorite vendors are running low on bulk, but doing ok on the premium stuff. If you are inclined to spend some cash on ammo stocks, I would advise that now is a good time.

I still think we have a long way to go. However, the darkness approaches, and at a steady pace. Keep your wits about you. Watch your six & keep your powder dry.

 

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