19 March 2009

That's it. We're scroomed.

Rasputin - Wed, Mar 18, 2009 - 05:57 PM

Anyone who has followed my numerous, boring, repetitive posts through the years is painfully aware that I have spent inordinate amounts of time harping about Ben Bernanke's November 21st, 2002 speech entitled:

"Deflation: Making Sure it Doesn't Happen Here".

...the link to which can be found here:


In this lengthy speech, Bernanke essentially laid out the "Road to Weimar" regarding the steps the Fed could take to fight a major-league deflation/depression.

Many people derided my dissections of Bernanke's speech through the years as they just couldn't accept the fact that the Fed would resort to such drastic measures as Bernanke was threatening to do.

The nay-sayers stated that the Fed would NEVER buy Agencies, NEVER prop up private financial institutions, NEVER resort to outright monetization to fend off "Great Depression II"

Well, today the Fed officially "crossed the Rubicon" with their statement that not only are they going to massively bump up buying dead Agency MBS, but also dive into buying Treasuries as well.

And in no small amounts either.

So, Bernanke is finally making good on every single threat he made in that fateful speech made in 2002.

The Fed will literally burn the currency to the ground to impel the masses to start spending and borrowing again.

And please don't make the fatal mistake of believing that the Fed will now simply fold up its tent and walk away from this "to-the-death" fight between the forces of debt and derivatives destruction and the central bank's efforts to overcome it: There is no turning back now.

Furthermore, today's statement by the Fed makes it painfully clear that the Asian central banks are pulling back on their Treasury/Agency purchases and the Fed has to step up and monetize the MASSIVE amounts of new U.S. government debt that is being issued.

So, this is it. We're scroomed. The Fed just threw the panic switch and admitted they are now totally desperate. And remember, this action comes a FULL YEAR AFTER the Maiden Lane, LLC creation and trillions of fiatscos already flung at the debt and derivatives collapse. One would have thought that by now the central banks would have the situation well under control.

But they don't.

So, the bottom line is this:

The gloves are off. This is a fight to the finish.

And the Fed doesn't care if it totally destroys the U.S. fiatsco in order to re-ignite the "Animal Spirits" of rampant spending and speculation.

In fact, they are encouraging it.

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