Taper? No

So, the Fed “tapered”. Or did they? It appears that the “markets” doesn’t seem to be buying it one bit.

If there was actually a threat of lower liquidity going forward the “markets” would have likely reacted by moving violently lower. Instead, they reached yet another all-time high post meeting.

Just last week we got a glimpse of what happens when the central bank doesn’t pony up as expected. In Australia the interest rate on government bonds DOUBLED in minutes after their central bank didn’t buy.

So, what is it they actually did? It appears that the sleight of hand was played well by Powell and the gang. According to CNBC the “process will see reductions of $15 billion in each month” starting in November. $10 billion less in treasuries and $5 billion less in mortgage- backed securities.

That sounds like an awful lot less liquidity for our propped up “markets” so what are we MISSING here?

If we remember how they are working this scheme, they are talking about MINIMUM levels of purchases that they are reducing. They are reducing the FLOOR but there is no ceiling. Basically, they can buy ANY amount necessary to keep the zombie “markets” alive.  In addition, Fed Chair Powell also said that they could “make adjustments to the policy if necessary”. My guess is that is so when they purchase unlimited amounts, he will have already told us that that was the plan.  I believe eventually they will have to have some excuse when the truth finally comes out that we are only seeing the tip of the iceberg and our money is likely being debased far more than we can imagine.

Remember, when you see the dollar “strong” it is only strong against other currencies that are falling faster. King World News reported that  between 1971 and now gold has appreciated at over 8% per year against the dollar and it has been FAR more impressive in the 21st century as gold has risen from $250.00 an ounce in 2000  to $1800.00 an ounce even though the banks are rigging the “market” lower every day- just like they manipulate most all other “markets” also- for their benefit and their  benefit alone. By the way, the move from $250.00 to 1800.00 is over 600%. No wonder they want to keep all of us on the sidelines as they are loading up in record amounts for the last 4 years- and that is with virtually NO input from China which likely has the largest stash of gold in the world. Many people who watch imports into China, like Stephen Leeb and others, estimate that China may have as much as 40 TONS of gold stashed away. Others, like Ted Butler has reported (by watching their own reports) that JP Morgan now has 1 BILLION ounces of physical silver and 25 Million ounces of gold. (Info from last year).  

My opinion here is that, similar to jawboning, they are trying to slow down inflation without actually taking any action to contain it. They are also saying inflation will be transitory but will last at least another year. Just how long IS “transitory”?

This is just another clue that all the “markets” care about is the unlimited “printing and buying” by central banks, their owners- the major banks and their buddies at the major firms and hedge funds. Just on Thursday we found out that another 269,000 people filed first time unemployment claims, US 3rd quarter industrial production plunged 5%, and labor costs rose 8.5%. If the “markets” had any bearing on reality, they would be crushed by numbers like these BUT in the Fed fantasyland the S&P and NASDAQ are at all-time highs as I am writing this.

As everyone is being distracted by a rising stock market the American economy is crumbling but being disguised well with “money” from nowhere filling the void in economic activity. The only problem there is that this has been tried hundreds of times and has a 100% failure rate over time.

In China things are not any better and they are trying to extricate themselves from the PONZI real estate “market” there along with some other bubbles that have been blown with their unlimited “money Printing”. Since they are trying to slow the pace of growth down some signs are showing what happens when the central banks step back.

In China their China dollar junk bond yield has spiked from 5% a month ago to over 20 percent as of Thursday. Many other bonds- particularly in the real estate sector are now trading at pennies on the dollar. As with any PONZI scheme when new money stops coming in the fraud is exposed. The new investment in the real estate sector is down 40% year over year leading me to believe that there may be a lot more pain dead ahead.

Because of these examples I believe that the Fed will pretend to “taper”, etc. but in reality will continue to “print and buy” until the jig is up. I also believe that they will continue to mis-report inflation, unemployment rates, etc. to keep most people clueless as to how bad things are. All I can say is look around folks. Does anything we are seeing today square with the numbers they are coming out with?

One day- hopefully real soon the veil will be withdrawn from the fraud and corruption that have taken place and true prices will be revealed.

If your time horizon is over 4 years I would suggest that you get a good hard look at what you are holding and ask yourself: “Is this asset being artificially propped up or held down? If the scheme fails what is the likely outcome for this asset? Am I adequately protecting myself from the next downturn in the “markets”?

If your answer is “My broker says buy and hold” you may want to re-think that. After the crash that took place in 1929 it took until 1955 to recover.  By recover I mean to get back where you started from with no withdrawals. With stocks, bonds and real estate at all time highs and gold, silver and other hard assets being artificially repressed does it make some sense to have exposure to those assets that just might fly the other way when the reality of the situation becomes clear?

Be Prepared!

Any opinions are those of Mike Savage and not necessarily of those of RJFS or Raymond James. Expressions of opinion are as of this date and are subject to change without notice. The information in this report does not purport to be a complete description of securities, markets or developments referred to in this material. The information has been obtained from sources deemed to be reliable but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct.

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