There is a connection between the 3% plus jump in retail sales and the fed’s auctions.
Above is what the Fed is auctioning off, probable to buy more foreclosed homes, and as you can see in my previous post “Households” are the biggest buyers at these auctions, so we all must have gotten bonds and t-bill’s under the tree. Another 175 billion.
This money printing bailout better work or we all are gunna be in very big trouble. I guess the headline would be: “US bluffs it’s way out of recession and avoids inflation with exceptional quant. easing by the Fed.” One interesting thing about monetary crisis ending in hyperinflation, they occur rather quickly. Already folks are living rent free in their lost equity homes because even the banks are dragging their feet in booting people out. Not a good sign in my book, that there is a recovery in place. And over the next quarter the gov will hire millions of censes takers and then report reduced employment figures, driving up the market in another “bluff rally”. So stay fully invested with trailing stops, but is that real employment? This is a dangerous game of poker here.
If the bluff succeeds, silver will again be 7 bucks an ounce but if this great money printing experiment aborts, silver will be 75 an ounce and those who hold silver will be trading at the 7-11 for gas and potato chips. Which would be better than trying to trade worthless paper an alternative, which I don’t even want to think about.
The steepening of the long end of the yield curve is being spun as helpful for bankers to make more profit but it could also be seen as the beginning of a fast inflation cycle. A long bond at 6% is not the same as a long bond at 18%. Anyone trying to pay off their credit card debt in 1981 can tell you that, and that was only small potato inflation of 16 or 18% per year not 20 to 50% per month.
A hedge of silver coins in small denominations isn’t such an outrageous game plan while we all play the “Bluff Rally”.