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Economic Light at the End of a Long, Long Tunnel? Maybe Not, But SOMEONE is Worried about ‘Sound Money’ Coming into the System, Your Central Bankers’ Worst Nightmare…
“This could be considered as an involuntary trend towards “Sound Money“ , that would be your basic central bankers’ worst nightmare.”
“As average middle class investors realise the size of the ‘holes’ in the current casino rule that the House always, always wins, and that the House is also criminally cheating they are beginning to collectively withhold the taxes that pay the House profits. They are also deliberately withholding usurious and illegal credit card penalties and refusing to pay banks for the privilege of lending them their money.
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This is giving strength to an emerging on-the-ground trend toward Itheca Hours type local currencies ( http://en.wikipedia.org/wiki/Ithaca_Hours) and barter systems that have a ‘negative’ impact on both government and Wall Street casinos – if the ‘marks’ don’t play, there’s no game”
Tom Dennen, beforeitsnews.com/
That’s the good news; the bad news is for the government riverboat gamblers and horse thieves on Wall Street:
Below is a slightly edited and only marginally simplified ‘economic analysis’ from which my observation above is condensed. It’s written in the kind of obfuscatory ‘insider language’ that gives rise to phrases like “Bullshit Baffles Brains”, but bear with it to the revealing last paragraphs because in this case, it ain’t bull and may be the light at the end of a long, long tunnel:
“SHRINKING CREDIT MARKETS”
“Ross noted in September that trends in money market stuff run “forever”. That’s the instruments with maturities of less than a year. Specifically, the Ted-Spread (the difference in interest rates between US Treasuries and Euro-Dollars; entry-level cost: $1m per share so get a big bunch of friends together – td) continues to narrow. At 0.581 as the mini-panic ended in late 2011, the spread-ratio has narrowed to 0.203 this week – clocking 19.4 on the Weekly RSI (Relative Strength Index, one of many indicators of investor ‘mood’ expressed in seriously cool terms like Head and Shoulders, Cup and Handle, Double top and Double Bottom, Doji, Hammer, Inverted Hammer (!), Shooting Star, Marabozu, Hikkake Pattern and Spinning Top.
Gone are the Black Swan Days… but please continue reading:
”The chart begins in early 2008 and the previous most extreme was 23 in 2009. The trend change, and it is uncertain when it starts, will reflect a profound change in the main credit markets.
”Within the Ted is the 3-month London Interbank Offered Rate (Libor – remember the Barclays Bank Lobor rate-fixing scandal?) and its Weekly RSI is down to 6.6. It was as low as 8 with the reversal in March 2008. The jump that began in that fateful September marked that disappearance of liquidity in the Libor. That was a shock to the current generation in the money markets, as well as in central banking.
”Can this reverse?
Yes!
When?
????
“What would be the mechanism?
“The ability of governments to run increasingly reckless policy through their central banks has always depended upon the gullibility of the general public. Also prevalent has been the assumption of unlimited funding through confiscatory tax collections and unlimited abilities to issue credit/currency (mortgaging your future – td).
“Obviously, taxpayer complacency is ending.
“Most taxpayers have had to tighten their belts and have been attempting to force thrift upon their extravagant governments. The more immediate effect has been upon local governments. State or provincial governments are one-step more remote, but will eventually be forced to be accountable.
“In so many words, the “makers” (Taxpayers) have had it with the “takers” (government).
“The paramount evil has been (at) the Federal level with not just the prerogative of issue, but increasingly evident lately, the ability to buy endless amounts of bonds out of the market.
“Historically, practically and morally this has been absurd and will be overwhelmed by political and market forces.
“The drive to today’s outbreak of bureaucratic despotism began around 1900 (it actually began about 70 years before the first economic “Bust”: the South Sea Bubble in 1720) and where traditional means of US finance were limited by the constitution, the (privately-owned, for-profit) Federal Reserve System subverted this on the way to providing virtually unlimited finance (through the use of the fiat currency system which has devalued the US Dollar by 96% since its inception -td).
“As late as the mid-1960s the latter was considered impossible, but lately it has been widely accepted and widely discounted as “printing money”. The latest belief-surge maxed out on September 14th (this year - td) and a significant decline seems to have started.
“This would mainly involve stocks and commodities and it is doubtful that even the most desperate of central bankers would be willing to add these to their buying mania. Stocks and commodities don’t have a maturity date.
“Some may ask about the distress we expected “this fall” in most bond markets. In June/July the bond future soared up to a magnificent high that triggered our technical models.
“A significant price decline was possible. Maybe twenty points but the ten-point slump finished the move and stability is easing the overbought condition.
“Similar strong overboughts were sequentially registered on corporates (LQD) and emerging debt (EMB). There are two ways of getting rid of an outstanding overbought condition. The one we prefer is the straight down; the other is a period of consolidation.
“The latter has prevailed and perhaps the continuous and big bid by central bankers is helping.”
(It gets better – td)
“The long bond has been rallying with the setbacks in stocks and commodities. There is nothing new to this, and it could continue over the next number of weeks.
Treasury bill rates are at “Depression” lows (0%) but corporate bond yields are not at “Depression” highs. This “divergence” can’t last forever.
CURRENCIES
“China’s announcement of massive stimulus prompted a review of their currency system, which used to have holes in each coin. Today’s coins no longer feature these, but their monetary theories are full of holes.
To be serious, the Dollar Index traded down to 79.1 on Wednesday, which level was support from early October. Today’s jump marks that as a successful test of the low and reaching 80.5 marks the break above 80.25 resistance.
Tuesday’s ChartWorks pointed out that with the break out the initial move could be to the 82 to 83 level. After consolidating the gain, the next target is around 90.
“This could be considered as an involuntary trend towards “sound money”, that would be your basic central banker’s worst nightmare.
“In time, this trend and widening popularity of “sound money” could fill the holes in Western monetary theories.”
Thank you, Readers, Mr. Ron Paul, Dr. Ludwig von Mises and the Austrian School for still being here.
BOB HOYE, INSTITUTIONAL ADVISOR
E-MAIL [email protected]
