If you still harbor a shred of doubt that your government and its institutions really care about Main Street America, this should put those doubts to rest once and for all. And make you mad as hell in the process.
In the Wall Street Journal, former Federal Reserve bond buyer Andrew Huszar wrote a piece I’m sure he hopes will clear his conscience, even though, despite his own initial apprehension, in 2009 he became part of the biggest ongoing swindle of the American taxpayer in the history of the country.
Forget ballooning welfare and food stamp fraud. Put aside your concerns about Obamacare and its rate hikes and fees for a moment. Those of you still paying income taxes, lay down your resentment for the time being.
Because according to insider Huszar, your federal government – at the behest and direction of your Congress and your president – has stolen $4 trillion from you and your children, and in the process has once again created a looming economic crisis that will devastate Mr. and Mrs. America, while enriching the fattest of the fat cats on Wall Street.
At this point I must say that I’m a free-marketeer through and through. But like many of you, I’m sick and tired of taking it up the shaft by elitist members of America’s newest criminal class: Crony capitalists.
Here’s how they did it this time.
In case you’re not aware, the Federal Reserve has been purchasing a record number of bonds – $85 billion a month – through a process called “quantitative easing.” When the program began following the passage of the Troubled Asset Relief Program in 2008, its goal was to stem the financial hemorrhaging of the nation’s largest banks, while creating cheap lending conditions for average Americans so We the People could reestablish purchasing power and shore up the badly damaged economy.
What quantitative easing has turned into, according to Huszar, is the financial crime of the century:
I can only say: I’m sorry, America. As a former Federal Reserve official, I was responsible for executing the centerpiece program of the Fed’s first plunge into the bond-buying experiment known as quantitative easing. The central bank continues to spin QE as a tool for helping Main Street. But I’ve come to recognize the program for what it really is: the greatest backdoor Wall Street bailout of all time.
Five years ago this month, on Black Friday, the Fed launched an unprecedented shopping spree. By that point in the financial crisis, Congress had already passed legislation, the Troubled Asset Relief Program, to halt the U.S. banking system’s free fall. Beyond Wall Street, though, the economic pain was still soaring. In the last three months of 2008 alone, almost two million Americans would lose their jobs.
The Fed said it wanted to help—through a new program of massive bond purchases. There were secondary goals, but Chairman Ben Bernanke made clear that the Fed’s central motivation was to “affect credit conditions for households and businesses”: to drive down the cost of credit so that more Americans hurting from the tanking economy could use it to weather the downturn. For this reason, he originally called the initiative “credit easing.”
Four trillion dollars later, however, this is what happened:
Where are we today? The Fed keeps buying roughly $85 billion in bonds a month, chronically delaying so much as a minor QE taper. Over five years, its bond purchases have come to more than $4 trillion. Amazingly, in a supposedly free-market nation, QE has become the largest financial-markets intervention by any government in world history.
And the impact? Even by the Fed’s sunniest calculations, aggressive QE over five years has generated only a few percentage points of U.S. growth. By contrast, experts outside the Fed, such as Mohammed El Erian at the Pimco investment firm, suggest that the Fed may have created and spent over $4 trillion for a total return of as little as 0.25% of GDP (i.e., a mere $40 billion bump in U.S. economic output). Both of those estimates indicate that QE isn’t really working.
Unless you’re Wall Street. Having racked up hundreds of billions of dollars in opaque Fed subsidies, U.S. banks have seen their collective stock price triple since March 2009. The biggest ones have only become more of a cartel: 0.2% of them now control more than 70% of the U.S. bank assets.
As for the rest of America, good luck. Because QE was relentlessly pumping money into the financial markets during the past five years, it killed the urgency for Washington to confront a real crisis: that of a structurally unsound U.S. economy. Yes, those financial markets have rallied spectacularly, breathing much-needed life back into 401(k)s, but for how long? Experts like Larry Fink at the BlackRock investment firm are suggesting that conditions are again “bubble-like.” Meanwhile, the country remains overly dependent on Wall Street to drive economic growth.
So in the end, TARP, the QE and the other measures taken by the government (think “Dodd-Frank” financial reform) and the Fed to ensure that “too big to fail” didn’t happen again – has not occurred.
All that has occurred is the preservation and enlargement of the same criminal banking cabal that has existed for a century, all at taxpayers’ expense. In other words, it is the same shit that former Congressman Ron Paul – you know, “that crazy guy from Texas” – warned about for years.
Perhaps now you know why scumbag posers like Barack Obama, Harry Reid, John McCain, Lindsey Graham, Nancy Pelosi and the rest of the Big Government Establishment fight so hard against guys like Ted Cruz, Mike Lee and Louie Gohmert. The same Establishment turds who just extracted $4 trillion from yours and your kids’ future are not about to voluntarily relinquish their control over your destiny.
I have no doubt that, were the founding fathers somehow reincarnated today, they would be leading a second American revolution.
It’s Not ‘Unreasonable’ To See Gold Prices Soar To $4000 During Bull Market
Despite gaining 35% this year, gold prices have plenty of room to run, says Michael Cuggino, the CEO of the Permanent Portfolio Family of Funds.
Cuggino says that since gold formed a triple bottom from the end of 2015 through November of 2018, it has consistently climbed higher and has really soared this year.
“Ever since then, it has been a gradual move up, then some down. It moves sometimes in big chunks, gives some back, sits around and does nothing, reacts to stimulus, inflation, the value of dollar and euro … but it has had an aggressive move this year,” Cuggino said.
Possible Setbacks Along the Way?
With gold climbing so quickly in a relatively short period of time, Cuggino warns there could be sharp pullbacks along the way. But he says the overall trend is for higher gold prices.
Cuggino says the recipe of continued money printing by the government, the dollar steadily declining and growing inflationary fears mean it would “not be an unreasonable move” to see gold prices soaring to $4,000 an ounce.
He points to a metric that compares gold prices to the closing levels for the S&P 500 index. Gold is currently trading at 0.6 times the level of the S&P 500 and it hasn’t climbed above 0.7 since 2014. But when you go back to August 2011, gold traded as high as 1.7 times the S&P 500, so there’s plenty of upside for gold prices.
Gold Still Has a Long Way to Go
Just adjusting for inflation, gold would need to climb above $2,800 per ounce to equal 1980 levels, which means this gold rally has a long way to go.
Mike Shedlock, the Mish Talk blogger and investment adviser at SitkaPacific Capital Management, thinks the fuel that could push gold to $2,800 per ounce could come from all the hedge funds that are currently on the sidelines and missed the early innings of the gold rally.
“There is ample room for Fear of Missing Out to kick in as the managed money and big spec hedge funds sat out much of the recent rally,” he writes. “And with 105,025 short contracts there is plenty of fuel for a short squeeze too.”
E.B. Tucker, director of Metalla Royalty and Streaming, believes that the current rally will continue, and he thinks gold prices could hit $2,500 by the end of the year.
“Normally I would say [the bull run is overheated] but what I’m seeing in the daily action is that gold is rising in a very measured way and is not meeting much resistance, so when that’s happening you just step out of the way and let it go, that’s what you do,” Tucker said.
Like Cuggino, Tucker says there could be pullbacks in price along the way, but he says we’re in a secular bull market like we may never see again.
“This is a secular bull market. This is a bull market in gold that you’re probably never going to see in the course of your life again.”
Nasdaq Sets A New Record, Dow Forms A ‘Golden Cross’
Since bottoming in late March, the stock market continues to set records in what seems like an almost invincible climb higher.
Nevermind that Jim Cramer said the rally is being driven by the “power of enthusiastic buyers who do not know what they’re doing” and that he can’t fathom “how stupidly bullish this market can be,” the fact is that stocks are climbing higher.
The latest evidence for a runaway stock market is that the Nasdaq Composite Index just gained 1,000 points. It happened in the shortest amount of time in the last 20 years.
It took 114 days for the index to climb from the 9,000 level to the 10,000 level. That milestone was hit on June 10 of this year.
In just 40 days since, the Nasdaq has tacked on another 1,000 points, climbing above the 11,000 level.
That is the fastest 1000-point gain for the index since it took a blistering 38 days in 1999. Back then, it climbed from the 3,000 level to the 4,000 level.
You might recall that period, it was during the dot-com bubble. We know how that ended.
Today’s 1000-point climb is only a 10% overall gain (from 10,000 to 11,000) compared to the 33% overall gain during the ‘99 surge (from 3,000 to 4,000). However, it’s still a blistering pace that investors pay attention to.
“Although 11,000 by itself doesn’t mean much, these big round numbers are a nice reminder of just how strong this rally has been since the March lows,” said Ryan Detrick, the chief investment strategist at LPL Financial.
A ‘Golden Cross’
Not wanting to miss the fun, the Dow Jones Industrial Average just flashed its own bullish signal to investors.
The index just formed a “golden cross,” where the shorter-term 50-day moving average crosses above the long-term 200-day moving average.
Investors consider this to be a bullish signal for the index, as it shows the short term momentum is strong.
Conversely, when the 50-day moving average crosses below the 200-day it’s called a “death cross” and is a bearish indicator. The last “death cross” was on March 20. On that day, the stock market was pummeled by the economic shutdown caused by the coronavirus pandemic.
With the rally being led by technology stocks, the Nasdaq – which is more than 50% tech stocks – has gained more than 60% since the March lows. The S&P 500 is made up of about 25% tech stocks and has gained nearly 50% since March, and only 20% of the Dow is tech stocks so it’s lagged behind, gaining only 47% since March.
How reliable is the “golden cross” for stocks to move higher? According to Dow Jones Market Data, the last time a “golden cross” failed was in January 2016. That was also the last time the market slipped lower.
Day 10 of Stimulus Stalemate Yields Concessions From Both Parties
Republican and Democrat leaders appear to finally be willing to make concessions. This comes in an effort to finalize the next stimulus package. Meanwhile, President Trump has hinted that he may use an executive order to push through his own stimulus plan.
There are rumors swirling around Washington that Trump has met with his key advisers. He is also reportedly considering an executive order to pass his own stimulus bill. Indications are that the bill would include a payroll tax holiday and an extension of unemployment benefits. It would also include a moratorium on evictions and another round of stimulus checks for most Americans.
An Unexpected Move
Trump is considering the unorthodox move in an effort to sidestep the Democrats’ efforts to hurt the economic recovery by delaying the passing of the next stimulus bill.
President Trump’s only focus is on the economic recovery, says White House economist Joe Lavorgna during an interview yesterday with “America’s Newsroom.”
“The president is just trying to work in the best interests of the American people and trying to get the economy moving. We have reopened and been very successful,” he said.
Lavorgna added, “The president right now is hyper-focused on getting a deal done because while we have this V-shaped boom, why not take out an insurance policy and solidify what looks like we’re going to see, a record second-half economy. The Democrats have fought against it.”
Trying to End the Stalemate
Recent meetings between House Speaker Nancy Pelosi, Senate Minority Leader Chuck Schumer, Treasury Secretary Steven Mnuchin and White House chief of staff Mark Meadows have resulted in what Schumer calls “concessions” from both sides.
According to reports, the Trump administration has offered to extend the additional federal unemployment insurance until December at $400 per week. This is lower than the previous amount of $600 per week. Senate Republicans have proposed a different plan. Their plan would pay unemployment insurance at $200 per week through September. Then, it would change the benefit to 70% wage replacement once states were able to update their unemployment systems.
In a small sign of compromise, Mnuchin and Meadows offered to extend a moratorium on evictions from federally backed housing into December. Meanwhile, Democrats reduced their funding request for the U.S. Postal Service from $25 billion down to $10 billion.
There remains no agreement on other Democratic requests like aid for state and local governments. No deal has also been made funding for schools, and assistance for food, rent and mortgage payments.
Some Republican Senators, like Marco Rubio, appear willing to sign a bill that includes concessions for Democrats. They are willing to do so in an effort to get something approved.
Appearing on CNBC’s “Squawk Box” yesterday, Rubio said, “We have to act. We have to do something. And that will require us to vote for a bill that has things in it that I may not necessarily like.”
Rubio did say “there’s a limit” to what concessions he would accept. Additionally, those don’t include much of the $3 trillion legislation House Democrats passed in May.
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