Wednesday , 16 August 2017


Peter Schiff: QEternity Has Its Limits – Here's Why

The latest round of quantitative easing (an additional $40 billion a month until conditions improve) has been dubbed as “QEternity” or  “QE-Infinity” by its critics but it will end much before that. We are witnessing a  massive bubble in US government debt, and we’ve reached the point where  no one in charge believes it will ever end – an excellent  contra-indicator. [Let me explain.] Words: 720

So says Peter Schiff (www.europacmetals.com) in edited excerpts from his original article* entitled RIDING INTO THE SUNSET OR A BRICK WALL?

Lorimer Wilson, editor of www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) and www.munKNEE.com (Your Key to Making Money!), has edited the article below for length and clarity – see Editor’s Note at the bottom of the page. This paragraph must be included in any article re-posting to avoid copyright infringement.

Schiff goes on to say, in part:

Rather  than going on for eternity, this third round of QE is only hastening  the day when there is a flight of confidence from the dollar and US  Treasuries. This will cause a sharp rise in market interest rates and  surging consumer prices across America. If you think $4 a gallon gas is  bad, wait till you see it going up by 25¢ or more per week.

At  this point, the Fed Chairman will have a choice to make: keep printing,  which will push the dollar into uncontrollable hyperinflation, or begin  tightening, which will bankrupt the US government and banking system.

I  have long written about this Sophie’s choice confronting the Fed, but  so far the printing option has been too easy. With the world only slowly  abandoning the dollar as the reserve currency and the euro crisis  offering a distraction, the Fed has been able to more than double the  money supply without US consumers seeing out-of-control price hikes at  the store. Not that there hasn’t been inflation – look at housing, gas,  or the stock market – but it hasn’t reached crisis proportions. When  prices start rising fast enough for the average person to figure out  he’s being screwed, then there will be riots in the streets.

The good news for precious metals investors is that either scenario is bullish for gold and silver.

  1. If  the Fed pushes this insanity to the point of hyperinflation, precious  metals will quickly be seen as a form of money that can purchase the  same amount of goods week-after-week, month-after-month.
  2. If  there is tightening, prices might stabilize, but the federal government  and its banking cartel will likely go bankrupt in tandem. That means no  bailout money will be forthcoming, no FDIC insurance can be paid, and  banks may go on holiday for lack of reserves. This is what  happened in Iceland in 2008, when its big banks had debts 10X the size  of the country’s GDP. There was no way for the government to offer a  bailout, so the whole edifice came crashing down. While the 320 thousand  citizens of Iceland didn’t make a big dent in the currency markets  during this transition, you better bet the 320 million citizens of the  United States will.

As  we’ve seen in cases like Argentina’s in the ’90s and Hungary’s in the  ’40s, when the banking system freezes, hard assets trade at a premium.  Gold and silver coins may be at a disadvantage in terms of convenience  in an era of credit cards and Paypal, but what happens when those funds  are no longer available? Already, regulations and lower profit margins  have driven banks to add fees to debit card transactions. Not to mention  that every digital transaction is traceable by the tax authorities.

HAVE YOU SIGNED UP YET?
  • Go here to receive Your Daily Intelligence Report with links to the latest articles posted on munKNEE.com.
  • It’s FREE and includes an “easy unsubscribe feature” should you decide to do so at any time.
  • Join the informed! 100,000 articles are read every month at munKNEE.com.
  • All articles are posted in edited form for the sake of clarity and brevity to ensure a fast and easy read.
  • Get newly posted articles delivered automatically to your inbox.
  • Sign up here.

If  everyone starts to carry rolls of cash everywhere, it’s not a big leap  to carry coins. A silver coin the size of a dime is currently worth  about $3.50. Two could buy you lunch.

While  I believe a tightening and national default would put the U.S. on the  road to recovery, the transition period will be messy. Bread lines,  rampant foreclosures, and a spike in crime are likely results. In this  situation, gold and silver may be the only things people can count on.  In fact, they are likely to not only hold their value, but dramatically  appreciate as millions of people flood the metals market and the dollar  economy deleverages. In plain English: maybe it will only  take one of those dime-sized silver coins to buy lunch. Maybe that coin  will buy lunch for you and a friend.

Conclusion

Bernanke   and his Wall Street supporters see cheap money until the horizon – but  that horizon is really a painted brick wall. So it’s not QE-Infinity,  it’s QE until the Fed either recognizes the brick wall and slams on the  brakes, or doesn’t and crashes into it. Either way, the only way to  get off this locomotive is to invest in hard assets.

*Source of original article: http://www.europacmetals.com/commentaries/newsid416/166/riding-into-the-sunset-or-a-brick-wall.aspx

Editor’s Note: The above post may have been edited ([ ]), abridged (…), and reformatted (including the title, some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.

 

Related Articles:

1. QE3 Will Be More Effective Than Previous Versions – Here’s Why

money printing

The analysis of current Fed policy has included the usual parade of mistaken pundits [whose views have] been obscured by… an agenda based upon their politics or their business models [and then there]…are the correct answers which are pretty obvious to anyone with any training in economics. Here is that reality. Words: 734

2. World’s Largest Economies Have NO Choice But to Engage in Massive Money Printing – Here’s Why

The choice facing the leaders of the world’s largest economies is a simple one: Either they engage in massive money printing, or they let the world slip into another great depression. This article examines why they have no choice but to print money, something which will have significant consequences for everyone. Words: 560

3. Continued Money Debasement Means More Unintended Consequences, Social Disorder & Further Debasement of Society – Here’s Why

money printing

I keep wondering to myself, do our money-printing central banks and their cheerleaders understand the full consequences of the monetary debasement they continue to engineer? [Below is what I think awaits us.] Words: 1013

4. QE3: Impact on Gold & Silver Returns Should Outshine Impact on Economic Growth – Here’s Why

crowne-gold-silver-bullion_l

While the Fed’s third round of quantitative easing is fairly aggressive it is unlikely to have a significant impact on the economy – especially if policymakers in Washington lead us over the fiscal cliff. Where QE3 may have an impact, however, is in the commodities market, and in particular gold. Here’s why. Words: 400

5. Almost 3 Million Views! Why U.S. Debt & Budget Will NEVER Balance

This short video – on the sustainability of government spending – should be watched by everyone, including those not yet old enough to vote. It should be shown in every high school and college classroom.

6. Richard Duncan: IF Credit Bubble Pops Civilization Won’t Survive the Depression that Follows

Our civilization would not be able to handle such a transition from an expansionary credit based economy where goods and services were readily available into a paradigm of credit contraction, supply shortages and destitution and this is what is coming. There is no way to prevent it – only to defer it until a later date – and that day will soon be upon us. Words: 590

7. Regardless of Who Wins in November the U.S. Is Going Over the Financial Cliff! It’s Just a Matter of Time – Here’s Why

The outcome of the election of 2012 will [only] determine the rate of speed at which we approach the [financial] cliff [because] neither political alternative is willing to change course, to steer away from the cliff. The cliff is so high that whether we go over it at 200 mph (Obama) or whether we merely slip over the edge (Romney), the end result is the same — fatal for the economy and perhaps our entire political system. It is the fall that will kill us. [This article explains why that is going to be the case.] Words: 1135

8. U.S Likely to Hit the Financial Wall by 2017! Here’s Why

The deficits aren’t going to stop anytime soon. The debt mountain will keep growing…Obviously, the debt can’t keep growing faster than the economy forever, but the people in charge do seem determined to find out just how far they can push things….The only way for the politicians to buy time will be through price inflation, to reduce the real burden of the debt, and whether they admit it or not, inflation is what they will be praying for….[and] the Federal Reserve will hear their prayer. When will the economy reach the wall toward which it is headed? Not soon, I believe, but in the meantime there will be plenty of excitement. [Let me explain what I expect to unfold.] Words: 1833

9. This Will NOT End Well – Enjoy It While It Lasts – Here’s Why

…The US Government and its catastrophic fiscal morass are now viewed by the world as a ‘safe haven’. This would easily qualify for a comedy shtick if it weren’t so serious….[but] the establishment is thrilled with these developments because it helps maintain the status quo of the dollar standard era. However, there are some serious ramifications that few are paying attention to and are getting almost zero coverage from traditional media. [Let me explain what they are.] Words: 1150

10. Events Accelerating Towards an Ultimate Dollar Catastrophe! Here’s Why

With the U.S. election just months off, political pressures will mount to favor fiscal stimulus measures instead of restraint. Such action can only accelerate higher domestic inflation and intensified dollar debasement culminating in a Great Collapse – a hyperinflationary great depression – by 2014. [Let me explain why that is the inevitable outcome.] Words: 2766

11. Major Inflation is Inescapable and the Forerunner of an Unavoidable Depression – Here’s Why

Whether our current economic crisis will end with massive inflation or in a deflationary spiral (ultimately, either one results in a Depression) is more than an academic one. It is the single most important variable for near and intermediate term investing success. It is also important in regard to taking actions which can prepare and protect you and your family. [Here is my assessment of what the future outcome will likely be and why.] Words: 1441

12. An Inflation Inferno is Expected – but When?

Daniel Thorn­ton, an econ­o­mist at the Federal Reserve Bank of St. Louis, argues that the Fed’s pol­icy of pro­vid­ing liq­uid­ity has “enor­mous poten­tial to increase the money sup­ply,” result­ing in what The Wall Street Journal’s Real Time Eco­nom­ics blog calls “an infla­tion inferno.” [Personally,] I think it’s too soon to make sig­nif­i­cant changes to a port­fo­lio based on infla­tion fears. Here’s why. Words: 550

13. Major Price Inflation Is Coming – It’s Just a Matter of Time! Here’s Why

The developed economies of the world have opened the money spigots…[and this] massive money and credit creation is sitting in the banking system like dry tinder just waiting for a spark to set it ablaze. How quickly it happens is anyone’s guess, but once it does we are likely to be enveloped in a worldwide inflation unlike anything before ever witnessed. [Let me explain further.] Words: 625

14. 2012: More Money-printing Leading to Accelerating Inflation, Rising Interest Rates & Then U.S. Debt Crisis! Got Gold?

Evidence shows that the U.S. money supply trend is in the early stages of hyperbolic growth coupled with a similar move in the price of gold. All sign point to a further escalation of money-printing in 2012…followed by unexpected and accelerating price inflation, followed by a rise in nominal interest rates that will bring a sovereign debt crisis for the U. S. dollar with it as the cost of borrowing for the government escalates…[Let me show you the evidence.] Words: 660

15. The U.S. Debt Spiral: When Will it End? More Importantly, HOW Will it End?

The U.S. already has more government debt per capita than the PIIGS (Portugal, Italy, Ireland, Greece and Spain) do and it just keeps getting worse and worse thanks to both political parties. We are on the road to national financial oblivion yet most Americans don’t seem to care. They don’t realize that we have enjoyed the greatest prosperity we will ever see…and that when the debt bubble bursts there is going to be an immense amount of pain. That is a very painful truth, but it is better to come to grips with it now than be blindsided by it later. [Let me explain.] Words: 1140

16. Hathaway: Next Round of QE Will See Gold, Silver and Mining Stocks Go Ballistic! Here’s Why

“Even with the prospect of no QE, if you believe the Fed, gold has not made a new low [since December] so, in my opinion, the absence of QE is priced into gold. On the other hand, if market conditions hit emergency levels, the central banks will be forced to their knees and they will be doing QE by whatever name it’s called. I think at that stage you are going to see gold go ballistic because it will be an admission of failure on the part of policymakers….If investors don’t do something now and take advantage of this funky period we are in, this daily grind of back and forth, they are going to be paralyzed. They will just be bystanders when gold finally takes off.”