Back in the Middle Ages something called alchemy was attempted. It was a craft that took something ordinary, plentiful and of little value and tried to miraculously transform it into something rare,
precious and therefore valuable. Of course, we all know that the experiment failed.
But alchemy has
returned to the world in the form of the Federal Reserve and its fellow central
banks. Their goal is the same as the quacks of the Middle Ages. They are
certain that they can create paper and turn it into something very special.
Instead of calling it alchemy, since that would not sit well with even the
comatose public, they call it quantitative easing, bond buying, inflation and
employment targeting etc.. But the Federal Reserve’s alchemy is on steroids. It
takes debt and magically turns it into something of value by declaring it an
asset. As the governments of the Western developed world sink ever deeper into
the debt abyss, these Central Banks
"buy" this debt (government IOU's from technically insolvent nations)
by the creation of electronic digits in a computer which they then credit to
the too-big-to-fail banks. These banks then
place this debt as an asset on their balance sheets which they use to make
loans and therefore create more debt. Including the unfunded liabilities i.e.
Social Security, Medicare and Medicaid, the debt has been estimated to be near
$220 trillion.
The insane
number of dollars created have to find their way into something. This causes asset bubbles to
blow up in stocks, commodities and bonds. (The U.S. Treasury bond bubble is the
largest in financial history). Anyone with a functioning brain cell knows that all asset
bubbles end badly. But the central banks only know one thing: keep increasing
the quantity of paper money until inflation destroys the poor and the Middle
Class. In the meantime, the bubbles may continue to expand thanks to the paper
money creation and the main stream press which assures everyone not to worry because
everything is OK. But it’s not OK. Nothing that caused the financial crisis in
2008 has been fixed or even addressed.
Modern-day
alchemists are guaranteed to fail. All you have to do is to keep your eye on
the Treasury
bond market and the U.S. dollar. When they start to plunge, head for your bunkers.
bond market and the U.S. dollar. When they start to plunge, head for your bunkers.