Monday, February 22, 2010

You're on your own!

Quote of the week:

"...I talked about the hyperdeflation scenario. Brought about by the collapse of the Eu and European countries defaulting on their debt and the Unites States like california collapsing defaulting on their debt and a trillion dollars worth of mortgages that are going to reset over the next two years. Forcing housing crises ...as the homeowners walk away from those mortgages. Now yesterday China announced that they've decreased their treasuries that they're holding. Those treasuries were not sold in the open market. There was a conference call between China and the Federal Reserve saying that we're going to unload these treasuries. We don't want to sell them in the open market. That will destroy the price we'll get on these treasuries and the Federal Reserve calling Japan and asking them to buy those treasuries and I think the Federal Reserve printed the money for Japan to buy them. Essentially monetising the debt which is what they have done in the past through backdoor channels like this one. But it's still monetisation of the debt. We just saw the collapse of the Euro or at least their decline. As the Greek government started to collapse. And eventually those other countries are going to collapse as well over the next two years. Spain Ireland Greece and Portugal. All going to default. Here's what concerns me: I said we'd be on a rocky road of deflation followed by inflation. Hyperdeflation hyperinflation. This stuff is happening too fast. We've got the convergence of hyperdeflation and hyperinflation happening at the same time. That's like matter and anti-matter colliding. Now when that happens, folks, we implode and explode concurrently. Turning into a huge black hole. Frankly I don't know what to do. Do I buy the dollar or short the dollar. I don't know. I really don't know. I don't know what's going to happen to commodities in the crisis and I don't know what's going to happen to the stock market. Will interest rates go up or will they go down? I don't know folks. We've never been down this road before. I don't know what to tell you. You're on your own!" **




** http://eclipptv.com/viewVideo.php?video_id=10316
Viewed tonight (22nd February 2010). I don't know who this guy is but I like the way his face contorts!

3 comments:

Suffern AC said...

>>Those treasuries were not sold in the open market. There was a conference call between China and the Federal Reserve saying that we're going to unload these treasuries. We don't want to sell them in the open market. That will destroy the price we'll get on these treasuries and the Federal Reserve calling Japan and asking them to buy those treasuries and I think the Federal Reserve printed the money for Japan to buy them. <<

Could the reason that he is confused whether to short the dollar or buy the dollar is that somewhere in that story, he invented a fact regarding the monetization of the debt and is treating it as real?

Brenda Rosser said...

This story rings true to me.

After all (as I mentioned on another thread tonight)The US and UK governments have been engaged in 'quantitative easing'(QE) since March last year (that I know of).

See:
Bank of England halts quantitative easing
UK's £200bn programme of asset purchases – known as quantitative easing – on hold, Bank of England announces
* Ashley Seager
* guardian.co.uk, Thursday 4 February 2010 18.25 GMT
http://www.guardian.co.uk/business/2010/feb/04/quantitative-easing-bank-of-england

and
May 7, 2009, 2:10 p.m. EDT · Recommend (34) · Post:
China's central bank frets over Fed bond purchases
http://www.marketwatch.com/story/chinas-central-bank-fed-moves-put-bonds-at-risk

Other evidence of the US Govt printing money (out of nothing) to pay off its debt:

"....Now yesterday China announced that they've decreased their treasuries that they're holding. Those treasuries were not sold in the open market. There was a conference call between China and the Federal Reserve saying that we're going to unload these treasuries. We don't want to sell them in the open market. That will destroy the price we'll get on these treasuries and the Federal Reserve calling Japan and asking them to buy those treasuries and I think the Federal Reserve printed the money for Japan to buy them. Essentially monetising the debt which is what they have done in the past through backdoor channels like this one. But it's still monetisation of the debt...."

** http://eclipptv.com/viewVideo.php?video_id=10316
Viewed tonight (22nd February 2010).

Also consider the history of the Plaza Accord (1985). Central bank interference in global exchange rates in order to lower the US trade deficit. This type of manipulation has continued ever since.

vimothy said...

The Fed cannot monetize anything. It has to sell debt whenever it injects reserves in order to maintain its target rate.