Global Meltdown of Historic Proportions & A Fork in the Road

"With continued volatility in many of the key global markets, 40 year veteran, Robert Fitzwilson wrote this exclusive piece for King World News.  Fitzwilson is founder of The Portola Group, one of the premier boutique firms in the United States.  Here are Fitzwilson’s observations:  “The Central Banks have been pursuing a very flawed strategy.  Unfortunately, full speed ahead might be the only remaining alternative.  Printing money to stimulate growth, in the face of declining/aging workforces and falling productivity, will result instead in lowering aggregate real returns for investors and exponential depreciation of fiat currencies..."

at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/5/9_Global_Meltdown_of_Historic_Proportions_%26_A_Fork_in_the_Road.html

Jim Sinclair - Expect Another $17 Trillion of QE & War in Gold

"On the heels of the Fed members commenting publicly, legendary trader and investor, Jim Sinclair, told King World News that even though we have already seen $17 trillion of money printing, we should expect another $17 trillion going forward. KWN also asked Sinclair how he knew, from the beginning, that there would be ‘QE to infinity,’ before anyone else. But first, here is what Sinclair had to say about the action in gold: “$1,650 is a comfortable number (for central planners). Haven’t you seen the tremendous jawboning and market intervention to hold gold in that range at $1,650? $1,764 and they lose control. That begins the move which is exponential.”

Jim Sinclair continues:

“It’s a formidable challenge (keeping gold below $1,800). The true range of gold is $1,700 to $2,111, but these guys are going to try to fight it like nobody’s business. Do you think for a moment they are not listening to you and I speaking right now? Forget it, Eric, we are the morning ‘Squawk Box’ tomorrow.

Now comes the payback. The hope and desire that things would improve is ignorant because of the fact that the trillions which have come in have been to save the financial organizations, not Main Street..."

at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/4/13_Jim_Sinclair_-_Expect_Another_$17_Trillion_of_QE_%26_War_in_Gold.html

Eveillard - Mass of Government Debt Underpinning Gold Market

"He figures and I think he’s probably right, that government debt is gigantic today because in order to fight off the deleveraging of the private sector, most governments have gone into debt in a major way

I mean not just the US, but the UK, Continental Europe, Japan, of course, even more than the others. That’s where Spain comes in. Some government debt is already suspect. Greek debt, of course, they just, in essence, defaulted.

Spain and Italy have become suspect too. I think at some point the American government debt, along with British German, French and Japanese government debt, will all become suspect. At that point the crisis will be such that the public will want something different.

I think when the public begins to accept that the governments have their backs against the wall, that government debt has become worse than suspect, that’s when the time will come to sell gold. But we are not there by any stretch of the imagination. 

The money printing is prevalent practically everywhere. That’s why I think the price of gold is simply in a correction.”

at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/4/6_Eveillard_-_Mass_of_Government_Debt_Underpinning_Gold_Market.html

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Greyerz - European Leaders Lying, Trillions Need to Be Printed

“Spain now has over 700 billion euros of debt, and of that about 14% has been issued in the last three months. That’s over 100 billion euros of debt issued in the last three months. So Europe is hemorrhaging and Spain will be the next Greece.
The Spanish problem is a lot bigger and will be a lot worse. Spanish banks have never taken the correct provision for their property collapse...."

at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/3/28_Greyerz_-_European_Leaders_Lying,_Trillions_Need_to_Be_Printed.html

Paul Mladjenovic: Economists Exhibit Lunacy and Confusion over the Gold Standard

"Some conventional and well-known economists have expressed the idea that a gold standard is a bad idea and that the gold standard was a major (and possibly THE major) catalyst for the Great Depression. One well-known fellow surmises that an equivalent of the gold standard is the reason why today’s European financial crisis is going on. In due course, I am sure that they will blame the gold standard for global warming and probably the heartbreak of psoriasis…

The point that critics make is that the gold standard “removes financial flexibility” when a system-wide financial crisis unfolds. They don’t like a gold standard because it is viewed as a “rigid constraint”.
In a monetary system that is on the gold standard, the amount of currency you can produce at will is indeed greatly constrained since the amount of currency (dollars or euros or whatever) is limited to the amount of gold that is on reserve. This condition puts the breaks on the unlimited creation of a currency.

The real problems behind today’s (and yesterday’s) financial crises and depressions have nothing to do with constraints such as a gold standard; the problems come from mismanagement of spending and debt… and governments that are too expansive in their size and scope.

Economists don’t blame governments for spending too much or creating too much debt or printing up too much of their currencies; they blame whatever may stop them from doing so (such as a gold standard). This is insane; it is like blaming the seat belt for a car crash..."

at http://www.munknee.com/2012/03/paul-mladjenovic-economists-exhibit-lunacy-and-confusion-over-the-gold-standard/

On Europe's 'Stealth' Money Printing

"While much has been made of the public side the ECB's money-printing facade whereby any and every piece of junk collateral can be lodged with the lender-of-first-last-and-only-resort in return for shiny new Euros to spend on government bonds (or save as the case seems to be), there is another facility - the Emergency Liquidity Assistance program (ELA) - that skirts under the radar. As Goldman notes today, the ELA enables the National Central Banks (NCBs) to provide 'liquidity' beyond and above the regular refinancing operations. While the amounts are not quite on the scale of the LTRO, they are large and continue to play a crucial role in stabilizing certain segments of the Euro area banking sector. But, of course, as seems always to be the case, the unintended consequence of this temporary emergency facility is that it appears to have become a permanent facility. This consequence has two rather ugly consequences, it removes still further collateral (assets encumbered) from bank balance sheets and further delays the needed adjustment process (read deleveraging) across the banking sector..."

at http://www.zerohedge.com/news/europes-stealth-money-printing

Why money-printing is like 'global warming'

"Here's a must-read post by Aussie blogger Jo Nova – and it's not on her usual topic climate change. The title says it all: The Ground Zero of Global Corruption: it starts with The Currency.

It’s like this. The governments and their central banks make as much free money from thin-air through fractional reserve banking and other methods as they can get away with — it benefits those who “spend that new money first”. They spend it at current prices, and pay it back later, after inflation has decreased its value. The people who pay the difference are those who saved and held money while its purchasing power fell. Speculators grow rich, while retirees and savers get poorer.
In a free market this would quickly lead to inflation, and people would rush to the only currencies the government can’t inflate (or “print” for free) — they’d buy and hold gold or silver and keep their purchasing power. Remember, gold and silver are the currencies that evolved in the marketplace over the last 5,000 years and are not directly under the control of government. (And “so?” you say?). The point is, if the prices of gold and silver rise fast, people would abandon bonds and get into metals instead, thus correcting the situation by making the printing and speculating game vastly less attractive while saving and production became more attractive. Essentially, people dump the government money and go for the competitor, which means the government (and or Fed) has to increase the interest rate and pay more for its money, and nobody wants that: God forbid that Governments or Banks should pay people a fair rate for borrowing “their” money.
Bonds and “treasuries” (US Treasury Bonds) are fancy words for loans to the government. But if no one wants to buy them, then the government has trouble raising funds for its massive pork barreling vote-buying schemes, and the investment bankers pay higher interest payments which takes all the fun out of Grossly Huge and Obscene Mergers, the SubPrime Parties and the High Frequency Festivals.

I had a similar awakening a few months back when I went to see Detlev Schlichter talk to a small group of (somewhat terrified) MPs about his book Paper Money Collapse in a meeting organised by the Cobden Centre. Here is Schlichter explaining why Ben Bernanke's, George Osborne's and the European Central Bank's money printing experiment will only prolong the depression..."

at http://blogs.telegraph.co.uk/news/jamesdelingpole/100146037/why-money-printing-is-like-global-warming/

Chris Martenson And Marc Faber: The Perils of Money Printing's Unintended Consequences

"Marc Faber does not mince words. He believes the money printing policies of the Federal Reserve and its sister central banks around the globe have put the world's currencies on an inexorable, accelerating inflationary down slope.
The dangers of money printing are many in his eyes. But in particular, he worries about the unintended consequences it subjects the populace to. Beyond currency devaluation, it creates malinvestment that leads to asset bubbles that wreak havoc when they burst. And even more nefarious, money printing disproportionately punishes the lower classes, resulting in volatile social and political tensions.

It's no surprise then that he's feeling particularly defensive these days. While he generally advises those looking to protect their purchasing power to invest capital in precious metals and the equity markets (the rationale being inflation should hurt equity prices less than bond prices), he warns that equities appear overbought at this time.

On Inflation

First of all, I do not believe that the central banks around the world will ever, and I repeat ever, reduce their balance sheets. They’ve gone the path of money printing and once you choose that path you’re in it, and you have to print more money..."

at http://www.zerohedge.com/news/chris-martenson-and-marc-faber-perils-money-printings-unintended-consequences 

Eurozone Debt Crisis: Hope for the Best, Plan for the Worst

"...With all major countries printing money, the problems in the eurozone may ease for now. Add to that the large degree of short positions previously built up in the euro that still need to be wound down, and the single currency should do just fine for the time being.
There's a price to be paid, though: we don't see how the ECB, in three years' time, will be able to mop up the trillion-euro liquidity it has provided. The ECB has now introduced a structural rigidity into its monetary policy, akin to what the Fed is faced with. In many respects, central banks have disrupted the natural transition of market-ascribed economic health by imposing their colossal might (balance sheets) onto the markets. This should be alarming. Central bankers are increasingly manipulating rates all along the yield curve.
Such policies take away crucial economic gauges (market-based interest rates across the yield curve) from investors and policymakers. As result, policymakers can no longer rely on these metrics in setting appropriate monetary policy.
Politicians, too, no longer get market feedback to encourage reform. Spain has already indicated it will further soften its budget goals. Yet, without the ECB's liquidity provisions, the bond market might have responded with its own "encouragement" to run less of a deficit, by selling Spanish debt.
This is not just a European problem. Look at the proposed 2013 US Budget and it becomes clear that, without the encouragement of the bond market, policymakers may have little incentive to pursue fiscally sustainable policies. With its significant current account deficit, the US dollar may be much more vulnerable than the euro should US bond markets act up.
In the meantime, Greece is experimenting with a carrot and stick assortment of incentives. That approach may be doomed to failure as each time a target is missed the ire will be directed at creditors, most notably Germany. To move beyond planning for the worst, Greece and others must learn to own their own problems rather than rely on central banks and other people's money."

at http://www.marketoracle.co.uk/Article33584.html