QE binge and its affects

The whole world is playing a game of financial fiat musical chairs on a tilt-oh-whirl that is spinning to fast it gives it a sense of stability, artificial gravity if you will, but the bolts and structure are eroding exponentially. It's a perfect storm of government failure and banking greed about to change the face of the earth...what might have been a worldwide systematic crash due to fraud and misallocated resources has now been exasperated by Benocide Bernanke's monetary polices, coupled with wallstreets symbiotic relationship with the federal government, which is bringing the world wide foundations of civilization to its knees

The whole US monetary system is a ponzi scheme in which money is created out of debt. There is always more debt in the system than there is money to pay off the debt. New money must always be created to pay off the old debts, which are compounding. This means that money creation in itself, is exponentially increasing, as is the debt. It is inherently inflationary and punishes savers, which in turn undermines capital investment and promotes speculation which leads to even more inflation. This system is clearly unsustainable, and will inevitably reach a tipping point in which even if the citizens are taxed 100% of their income, it is not enough to even pay the interest on the new money creation. With National debt at $14 trillion, social security and medicare at $77+ trillion, and fannie mae and freddy mac debt (which is kept off US balance sheets, along with medicare, medicaid, and social security) the total debt balloons to multiple times the US GDP.

We have reached that tipping point after 40+ years of this fiat system. The only choices are a US default on the debt, or a slow inflationary default on the debt. The Fed Reserve has chosen the latter with its QE policies. A slow inflationary default on US debt by printing money and saying "here is the money we owe you!"

With QE the federal reserve is trying to get rid of banking debt and national debt via printing money and buying treasuries from dealer banks (such as JPM, Morgan Stanley, Goldman Sachs, etc.) The Federal Reserve is now the largest single owner of US debt, surpassing China this last fall. These banks are investing excess liquidity into the equities market, which is a huge reason why stocks have been rallying despite 3 years straight of mutual funds pulling out of the stock market. The powers that be have manipulated the economy in a way that the only way markets can function is ever increasing deficit spending, since the government must always borrow more and more because expansionary monetary system requires it.

The thing about QE is that excess liquidity that the banks got from dealing treasuries to the Fed are pouring into commoditties, causing inflation. Inflation fears are causing long term treasury yields to rise, meaning people are starting to dump them. It's a two sided coin as Ben must impose QE to keep the ponzi scheme together, however the money printing he is creating is pouring into commodities and adversely affecting the bubble he has blown in treasuries.

Inflation hasn't been felt too bad here yet, minus food inflation and commodities. This is because with world reserve currency status, the US can print, monetize debt, then export the inflation to the rest of the world. US monetary policy is the number one driving force behind these food inflation riots world wide, despite Paul Krugman insisting to his readers that it is global warming and not his own monetary policies he supports.

There is no end in site for QE, no exit strategy at all, with exponentially increasing money and debt, we have passed the point of no return. Who is the Fed going to unload these treasuries to at the rate of $15B per day? Ben Bernanke, in his hubris and desperation to keep the ponzi going, has blown the last bubble he can, the treasury bubble. This is the most dangerous bubble as when it bursts, it won't be an asset like housing, or equities like in the nasdaq bubble, thats get affected, but the currency itself. The dollar becoming toilet paper.

The problem Bernanke faces is that he might have to sacrifice the equities market, hoping people pour their liquidity into treasuries (the standard fall back) to keep the bubble alive, or they could pour it into commodities, which would spur a treasury dump and massive inflation.

It is possible that this system can go on for years, as the world has no alternative to the dollar and the US military industrial complex protects the system in which the world must accumulate dollars because all OPEC nations require oil be purchased in dollars. They are trying all they can to get out of the US dollar ponzi scheme run by our overlords..

When QE2 ends in June, I expect there to be plans for QE3, which will buy state and muni bonds, and QE will go on forever until the treasury bubble bursts or the dollar loses its reserve currency status as it is inflated away to toilet paper.