Keynesian Model Exhausted and Screwed
There is talk that the Federal Reserve is thinking about pulling back away from the major support it has been giving to the world’s most propped up–we mean world’s largest economy. We highly doubt that the Federal Reserve is just going to pull the cord on the U.S. economy with anything drastic all at once, but they’re in a spot where they are damned if they do, damned if they don’t–to continue quantitative easing, could lead to an inflationary nightmare. However, to stop quantitative easing will lead to truth about our economy, a massive contraction in assets will occur only adding to the current deficit problems.
Remember, two of the most powerful forces in America will want the FED to continue quantitative easing, one, the Federal Government and two, Wall Street. Think back to August of 2010 when the stock market was stalling out, well since August 27, 2010, the day the FED started talking about QE2, stocks are up 28%. This is a $3.6 trillion market capitalization, of course much of this increase comes from soaring commodities, but remember, Wall Street doesn’t care, that’s Main Streets problem. When it comes to the Federal Government, the FED now accounts for 70% of treasury purchases, who is going to replace them? Not China, China has reduced their holdings for the past 5 consecutive months.
The Fed is now planning on unloading some of the mortgages they accumulated during QE1 in order to roll it into U.S. government bonds. Anyone want to buy some worthless mortgages? Unfortunately, it will probably be easier to sell a used car to an Amish minister than trying to unload mortgage backed securities. The Fed is talking about wanting to ease away from the stimulus but knows that whatever it does will have serious ramifications on the economy. Even during the FOMC minutes, the Fed acknowledged that unwinding from the unprecedented stimulus could have major impacts on the recovery.
In our opinion, the Keynesian model has exhausted itself and over the next decade we will see a complete restructuring of our economy regardless of what policy makers attempt to do.
There is a serious paper ponzi scheme that is referred to as a silver market charade by James Anderson of Goldsilver.com in a recent interview done by SGTBull07. Physical silver is at a severe discount according to James Anderson and anything under $50 is a true bargain. Recently, 5000 silver options changed hands in a minute which was equivalent to 25 million ounces of physical silver being exchanged. Some serious leveraging to say the least.
Please visit our front page to see this jaw-dropping interview, VIDEO CLICK HERE!!!
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