Monetary Base Skyrocketing & Bail-Ins Already Well Under Way

"On the heels of some chaotic trading in key markets, today a 40-year market veteran sent King World News a powerful piece which warns that the monetary base is skyrocketing and bail-ins are already well under way.  Included are 3 incredibly powerful charts.  Robert Fitzwilson, founder of The Portola Group, put together the following piece exclusively for King World News...

There are a few charts, however, that continue to give us long-term direction that we are in unsustainable waters and that we are heading toward economic disaster.  One of the most visually disturbing is the Monetary Base shown below.

We find it useful as a reliable navigational tools.  The chart is disturbing. While the Fed takes our focus to tapering, the monetary base grew by $105 billion just in the month of February.  Through March 5th, the year-over-year increase has been a staggering 36 percent.  Bank loans have been increasing at an annual rate over about 9% for the past 14 weeks.  Perhaps this is the moment that at least some of that “dry tinder” is ignited.

The Fed also announced the results of the bank stress tests this week.  We have come to expect it, but even this announcement was revised within a few days.  While the results were good news on the surface, It reminded us of the talk surrounding the potential need for bank bail-ins.  The truth is that the bail-ins have already occurred and have been implemented continuously since the meltdown in 2008.

Instead of a Cypress-style bail-in whereby deposits are skimmed or confiscated, the bail-ins we have had so far were a combination of the confiscation of hundreds of billions if not trillions of dollars of income around the world by the zero interest rate policy as well as the maintenance of extremely high rates of interest on loans and credit card balances.  What makes it more painful is that the banks were receiving free money with which to lend.  The charts below give a sense of the magnitude of the deposits and the loans just for the U.S.

 

The wealth transfer from the borrowers and depositors was just the same as if the money had been overtly confiscated along the lines of Cyprus.  If the stress tests are to be believed, the result was due to an ocean of money flooding the banking system, the transfer of toxic assets to the Fed via purchases done under QE 3, regulatory policies such as “mark-to-fantasy” accounting as well as the income and payment transfers suggested above..."

at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/3/24_Monetary_Base_Skyrocketing_%26_Bail-Ins_Already_Well_Under_Way.html