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What Happens When the Fed FINALLY Reduces Its $4.5 Trillion Balance Sheet?

Bloomberg Barclays Global Aggregate Credit index yield spread

So, there we have it. Deflation has started. The Federal Reserve announced last month that they would start to reduce their $4.5 trillion balance sheet in October, thereby starting the process we call Quantitative Tightening (QT). As expected, they are aiming to do it gently and quietly, by not reinvesting bonds as they mature, starting with sums of around $6 billion of Treasuries and $4 billion in Mortgage-Backed Securities (MBS). The scale of non-reinvestment will gradually increase. Once in full swing, the Fed’s balance sheet could reduce by up to $150 billion each quarter. Conventional analysis might conclude that the […]

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The Fed May Show Trump No Love

Our weekly commentaries provide Euro Pacific Capital’s latest thinking on developments in the global marketplace. Opinions expressed are those of the writer, and may or may not reflect those held by Euro Pacific Capital. By: Peter Schiff Thursday, July 20, 2017 Email Typically, U.S. Presidents are wary of claiming stock market performance as a referendum on their success. Most have seemed to understand that taking credit also means accepting blame, and no one would want to make the tortured argument that the positive moves reflect well on their presidency but that the negative moves do not. But Donald Trump has […]

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Inflation – The Simple Explanation is Theft

Inflation is theft. It is a simple concept that a single mother and a retiree understand but a PhD in Keynesian Economics probably does not. Examples: In 1971 take $ 1,000 in crisp new $ 20 bills and place them in a safe while watching President Nixon blame speculators for the loss of Fort Knox gold. (He “temporarily” severed the last connection between gold and the U.S. dollar.) Spend those dollars in 2016 and you will feel ripped off because they would have bought most of a car in 1971, and in 2016 they might buy only four tires. Take […]

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Give Me Control Of …

“Give me control of a nation’s money and I care not who makes its laws.” Supposedly this is a quote from Mayer Amschel Bauer Rothschild. Ignore the distinct possibility that he did not make this statement, but let’s assume the concept, if not the quote, is accurate. The Federal Reserve and other central banks exercise considerable control over our economies via interest rates, debt creation, QE and more. They create massive profits for the financial industry that in turn purchases many politicians and Presidents. Now expand the concept into other areas and see if the results ring true. Give me […]

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Gold in 2016

We all know that gold prices in US dollars have been in a downtrend for about 4.5 years. We all know that gold prices rise, on average, as the underlying currency declines in value.  Gold in the US was priced under $ 21 per ounce when the Federal Reserve was established.  Since then the dollar has been devalued and gold has increased in price by a factor of about 50. It is the same story around the world, whether you evaluate in terms of British pounds, euros, rubles, yen, or any other debt based fiat paper currency. So what are […]

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Silver and S&P Similarities – Tops and Bottoms

Examine the 30 year log scale chart of the S&P 500.  What I see: Tops occurred about every seven years. Tops were usually rounded, followed by intense drops. Tops were approximately Aug. 1987, Jan. 1994, March 2000, Oct. 2007, and May 2015. Once the S&P broke below the red up-trending support lines in 2000, 2007, and (probably) in 2015, the rally was over and large corrections occurred. The next large move in the S&P looks like it should be, based on history, a substantial correction to the 600 – 1,400 range. Other Considerations: Federal Reserve easy money has helped create […]

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Why 2 of U.S. Dollar’s Recent Bottoms Have 1 Thing In Common

Elliot Wave - Ending Diagonal

In 2009 and 2014, a simple chart pattern enabled us to turn bullish the dollar, just in time for HUGE rallies. Learn to use this pattern now. Imagine you’re on an airplane, mid-air, when the intercom from the cockpit accidentally turns on. You and the entire cabin crew overhear the pilot say this to his copilot: “I know we’re heading northeast at 430 mph. But… I have no idea when or where I’m supposed to land.” That’s when you cough up your bag of peanuts! Dramatic? Sure. Imaginary? Yes. But it also highlights the real limits of mainstream financial analysis, […]

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Deflation Watch: Key Economic Measures Turn South

Corporate profits peter out before highs - Elliot Wave

A developing deflationary trend hinders the economic “recovery” Lots of media stories say the Federal Reserve is weighing signs of economic strength to see if the economy is ripe for higher interest rates. In truth, economic weakness has appeared on various fronts. Such as, for example, the financial health of U.S. companies. Profits for US companies are expected to decline over two consecutive quarters for the first time in six years… . Not since the aftermath of the financial crisis have S&P 500 companies recorded two straight quarters of falling profits on a year-over-year basis. Financial Times, March 6 Elliott […]

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