Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
WARNING - AI STOCK MARKET CRASH / BEAR SWITCH TRIGGERED! - 19th Jan 22
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
NVIDIA THE KING OF THE METAVERSE! - 10th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
MATTERPORT (MTTR) - DIGITIZING THE REAL WORLD - METAVERSE INVESTING 2022 - 7th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
METAVERSE - NEW LIFE FOR SONY AGEING GAMING GIANT? - 6th Jan 2022
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Financial Fire Hoses and Helicopters

Stock-Markets / Financial Markets 2016 Aug 08, 2016 - 06:07 PM GMT

By: Dr_Jeff_Lewis

Stock-Markets

“The U.S. government has a technology, called a printing press (or today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at no cost.” – Ben Bernanke

Modern finance ultimately comes down to managing serious crises and transitions in a way that is profitable for policy makers and elite. The inevitable chaos, like the death of a fiat currency and the return to a real market price equilibrium, is much more dramatic.


History will only report the extremes. But we are now living through “in-between” times, watching it all unfold amid the bungling of sociopath leaders. Economic theory and practice is borrowed extensively from the future.

When we enter a state of economic emergency, the need to keep funding the present eclipses completely any hope for a future.

In this pregnant moment we have colossal debt forcing its own absurd kind of austerity. Consumers stop spending – not out of prudence, but because they simply cannot.

The irony is painful.

The system breeds massive debt allocation from the top, where low interest rates make it foolish ‘not’ to take on more debt, where it trickles down to the gadget-addicted and largely brainwashed mainstream consumer feeding off the constant bread and circus after circus.

Money is sent back to the financial service debt, instead of flowing in to the real economy. At the end of the day, it is worse than a Ponzi. It’s a scam that artificially inflates the asset at the top of the basic hierarchy of needs – the home…

Whether rented or owned.

Again, it is the gradual revelations we see before us, stacking up to create an avalanche like nothing seen before.

The fact is the financial system, like the shark, must be constantly flowing to survive. If the machine begins to stall, all of the peripheral mechanisms begin shutting down.

No one understands the complexity.

Even the regulators, if they weren’t already totally captured, could not unravel the issues.

When we freeze again, we will be politically positioned to unleash all that we understand, such as:

  • Interest rate reduction.
  • More outright balance sheet expansions.
  • Incentives that either step in to assist or indirectly force banks to lend to the consumer.

We thought QE was large; just wait until it grows exponentially.

Nationalization will look benign in comparison.

Dollar reserve currency status

The U.S. dollar reserve is slowly being painted as a pariah. A statement which is meant as a preparation.

A way of talking down the dollar as Europe implodes and safe haven money flows bid treasuries.

It’s nothing new that calls for the end of dollar hegemony have been ubiquitous, here are a few headlines from the recent past:

Nothing Lasts Forever; World Bank Ex-Chief Economist Calls For End To Dollar As Reserve Currency

Russia Holds “De-Dollarization Meeting”: China, Iran Willing To Drop USD From Bilateral Trade

China’s Official Press Agency Calls For New Reserve Currency, And New World Order

Canadian Billionaire Predicts The End Of The Dollar As Reserve Currency; Warns “It’s Likely To Get Ugly”

And the real kicker is this one:

Obama’s Former Chief Economist Calls For An End To U.S. Dollar Reserve Status (Originally posted as an Op-Ed at The NY Times – of all the carefully concocted places.)

 “….new research reveals that what was once a privilege is now a burden, undermining job growth, pumping up budget and trade deficits and inflating financial bubbles. To get the American economy on track, the government needs to drop its commitment to maintaining the dollar’s reserve-currency status.”

If that were not enough…try this one on for size and consider how far we've come since 2014 with this:

It begins: “Central Banks Should Hand Consumers Cash Directly”

“Governments must do better. Rather than trying to spur private-sector spending through asset purchases or interest-rate changes, central banks, such as the Fed, should hand consumers cash directly. In practice, this policy could take the form of giving central banks the ability to hand their countries’ tax-paying households a certain amount of money. The government could distribute cash equally to all households or, even better, aim for the bottom 80 percent of households in terms of income. Targeting those who earn the least would have two primary benefits. For one thing, lower-income households are more prone to consume, so they would provide a greater boost to spending. For another, the policy would offset rising income inequality.”

And so here come the helicopters.

However, even nearly three years ago, the problems with Helicopters and adding liquidity were obviously apparent. 

From "A Printer And A Prayer" - The Three Problems With The Fed "Liquidity Coverage Ratio" Plan:

http://www.zerohedge.com/news/2014-09-03/printer-and-prayer-three-problems-fed-liquidity-coverage-ratio-plan

“…..this whole “macroprudential” scheme crashes under the weight of its own illogic, is when one considers that the source of the funding of any one bank’s debt issuance proceeds are other banks and financial intermediaries, all part of the same group of chain-linked counterparties, which hold on their shoulders over $200 trillion in notional derivatives, and where even one collateral chain breach means net becomes gross and the derivative exposure collapse into the singularity of the next bailout. Basically stated, bank X will be selling debt to bank Y in exchange for cash, thus boosting bank X’ capital line item, while depleting bank Y’s. And when the moment comes to rescue the liquidity depleted bank Y, what then?”

In other words, not only is this latest window dressing too little to make a dent, or that there simply isn’t enough of the high quality liquid collateral needed to pre-fund a disaster fund, but at the end of the day, all that is happening is a circular pickpocketing where liquidity is simply rotated in a circle without any exogenous funds entering or leaving the banking sector. And as everyone knows, it isn’t any one bank that is insolvent: it is the entire banking sector in total, confirmed quickly when one recalls that Hank Paulson “forced” all the banks to accept TARP funding to restore confidence in the U.S. banking system: not a piecemeal bailout.

Fast forward to today. Here we are, skating across the thin ice without a (collective) care in the world. This is also the reason the financiers eventually must turn to government to continue spending.

No real spending constraints apply to government. And politically acceptable by the majority increase in spending — which will put more pressure on the velocity of money — the transfer mechanism being the government.

Officials are preparing, paving the way for the eventual storm. They are making these official statements, while the market “looks” the other way.

But the market can’t look the other way forever. How long is anyone’s guess.

It’s like waiting for the next big earthquake.

1. To receive early notification for new articles, click here. 

2. Or to view all of our products and services, click here. 

3. Or...support the cause, and buy me a cold one! 

By Dr. Jeff Lewis

    Dr. Jeffrey Lewis, in addition to running a busy medical practice, is the editor of Silver-Coin-Investor.com

    Copyright © 2015 Dr. Jeff Lewis- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Dr. Jeff Lewis Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in