On October 4th, as I expected would happen, the Fed announced that it was extending its overnight and term repo operations out to November 26th (the November 12th two-week term repo matures on the 26th).
The Fed added 7 more 2-week “term repos, ” plus a 6-day “term repo,” with the next three operations upped to $45 billion. It extended the overnight repos until at least November 4th. Well then, I guess the “end of quarter” temporary liquidity issue with corporate tax payments was not the problem.
Follow the money -The Fed’s repo operation extension further validates the analysis in my last post in which I made the case that an escalation in the non-performance of bank assets (loan delinquencies and defaults and derivatives), caused by contracting economic activity, has created a liquidity void in the banking system that is being “plugged” by the Fed. The Fed’s balance sheet has increased $186 billion since August 28th.
Not only did the Fed end “QT” (balance sheet reduction) two months earlier than originally planned in January, the Fed has effectively reversed in the last 5 weeks all of the QT that occurred since March 28th.
The evolution of Orwellian propaganda terminology for “money printing” has been quite amusing. It seems that the Fed has subtly inserted the phrase “balance sheet growth” into its lexicon. While Jerome Powell referenced “organic balance sheet growth” in his press circus after the last FOMC meeting, expect that it will be considered politically/socially incorrect to use “QE” or “money printing” instead of “balance sheet growth” in reference to this de facto banking system bailout.
Meanwhile, thank the Fed for providing the amount of money printing/currency devaluation needed to offset China’s absence from the physical gold market for the last week:
Given the technical set-up in gold plus the enormity of the Comex bank/commercial short position in paper gold, many gold market participants, including me, expected a much bigger price-attack on gold during Golden Week than has occurred. In fact, gold has held up well, with the December future testing and holding $1500 three times in the last week. Business activity in China, including gold and silver trading, resumes tonight.
The Fed’s QE Light program will likely transition into outright permanent money printing before the end of 2019. The November meeting is scheduled for the end of this month (Oct 29-30). But I doubt the Fed will turn its repo money printing into permanent money printing – aka “POMO” or “balance sheet growth” – until the December FOMC meeting (Dec 10-11).
I believe the repo crisis is the direct result of JP Morgan and the other large banks that have been shorting gold & silver on the Comex to surpress the metal prices. They got squeezed by the precious metals rally and the FED is bailing them out. The issue now is does the FED require them to slowly cover, or continue to facilitate their crimes by continuing the repo operations into next year and beyond?
Looking at the FED chart above, it seems to me the whole “economic recovery” has been little more than manipulation via FED balance sheet growth.
Shortly after significant reduction of that balance sheet, in early 2018, the economy has begun contracting (GDP retracting since 4q18).
We’re told that the U.S. is a market economy, but reality & facts seemingly contradict that to reveal it to be crony-capitalism fueled by socialist policy, i e. central planning (billionaires controlling public policy, via special interest legislation).
-ism: an attachment to something. Thus capitalism, rather than an economic model, is simply a condition, an attachment to capital, i.e. wealth hoarding by a few billionaires and their banks (courtesy of the FED) and money-management firms.
Central planning is a primary tenet of socialism.
Yes, contrary to popular belief, capitalism (wealth hoarding) and socialism can go hand-in-hand (just look at Russia, India, Vietnam, N. Korea, etc. – each of which have a billionaire-class fueled by centrally-planned public policy).
In fact, capitalism (wealth hoarding) is often a destructive force operating against market economies.
The more a few have & hoard, the less there is for more to have, to spend & invest in actual growth.
Economic stagnation results.
• Massive amounts of wealth have been flowing to the .001%.
• Excess reserves of the largest banks has been growing by leaps & bounds.
Yet now the public are actually paying banks for interest on those reserves (thanks to recent revisions to FED policies).
Meanwhile the U.S. economy is seeing an embarrassingly pathetic 2% “growth” (again, contracting each quarter since 4q18).
M3 growth since September has seen its biggest gain in over 10 years, which I’m guessing is related to the recent FED’s QE 2.0 policy.
“The M3 measurement includes assets that are less liquid than other components of the money supply and are referred to as “near, near money,” which are more closely related to the finances of larger financial institutions and corporations than to those of small businesses and individuals.”
QE seems little more than more welfare for the .001%.
Can someone prove me wrong here?
Can you please elaborate?
Where that has been true over the past few years, it seems quite the opposite now.
JPM has acquired some 850 mln ozs of silver, & 25 mon ozs of gold since 2011, at average prices of $18/oz & $1,200/oz respectively.
Thus they stand to now profit via helping to drive metal prices higher now.
Buy low, sell high.
It seems to me that the largest banks & money-managent firms (the CARTEL) are now doing to metals what they’ve been doing to stocks, i.e. buying inventory to drive prices to drive profits, getting more unsuspecting people to jump on the bandwagon in the process (manipulating the “fear of loss” fear of losing out psychology).
Buy low, sell high.
Effective propaganda only works when it isn’t recognized as such.
It’s accumulation time.
I am not worry much.
The real issue is not the inevitable and parabolic rise of gold that we will see in the years to come. The most important subject should be the criminality of the deep state and its threat to humanity. What good is it to have gold if it will be confiscated by the “state”? What good is it to have gold if a SWAT team arrests you without a warrant or a fraudulent one? What good is it if the “state” puts you on a ration card of 1000 calories a day?