All Money Printing, All the Time!

30 Oct

All Money Printing, All the Time!

Just like in Alice in Wonderland, the Federal Reserve has to run faster and faster just to stay in the same place.  

The Fed has had to buy a growing share of US government debt instruments to keep interest rates low and to keep Washington afloat.  

Here are recent remarks from Federal Reserve Vice Chair for Supervision Randal Quarles:

“It may be that there is a simple macro fact that the Treasury market being so much larger than it was even a few years ago, much larger than it was a decade ago and now really much larger than it was even a few years ago, that the sheer volume there may have outpaced the ability of the private market infrastructure to support stress of any sort there.”

Let me translate this from Fed-speak.  The US debt is now so great that it may be more than the market can absorb, which would mean the Fed would have to keep printing money at accelerated rates forever to fund Washington.

The chart above represents the ratio of Fed Treasury holdings, now at a record 22 percent.  But it doesn’t reflect the explosion in Treasury debt issuance itself.  So the Fed’s holdings reflect a rising percentage of a rising debt problem.

In an opinion piece on Bloomberg.com, writer Brian Chappatta says, “It’s not so much that the concept [Quarles’ mention of an ‘indefinite need’ to support the Treasury market] is at all surprising to bond traders, but rather saying so in a public setting shines a light on the Fed’s thinking about just how much of a role it needs to play in the world’s biggest bond market to prevent breakdowns in the financial system [emphasis added]….

“Put it all together, and it sure sounds like infinite QE.  Just don’t expect many more Fed officials to say it.”

Let me simplify the entire discussion.  It’s all about money-printing.  Only the manner and rate are at issue.

We imagine these same issues – manner and rate — were the subject of deep discussions in Weimar Germany in the 1920s, as well as all the other economies that have been destroyed by money printing.  

Manner and rate.

How many people in how many countries wished in retrospect that they had moved their wealth to precious metals at the time the monetary authorities were reduced to talking about just how, and just how fast, to print money?

Take steps at this critical juncture to protect yourself, preserve your wealth, and profit with gold and silver.  Speak to a Republic Monetary Exchange professional today.

jim-sign