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QE4 is the Drug of Choice

By: GE Christenson | Thursday, December 20, 2012
QE4 - Drug of Choice

Goldman Sachs recently announced regarding gold, "We see growing downside risks." Their (GS) forecast for 2014 is only $1,750 per ounce. With their history of lies and deception and their reputation as insiders who front run markets, this looks like a contrary indicator. Perhaps they are preparing to buy at lower prices.

Should we believe Goldman Sachs? My answer is definitely not!

Chris Martenson wrote regarding the announcement of QE4:

"Instead stocks initially climbed but then closed red. Gold was mysteriously sold in the thinly-traded overnight markets and again right after the announcement in large, rapid, HFT blocks that swamped the bids. U.S. Treasury bonds actually sold off on the news. The dollar hardly budged. Commodities were mixed across the board but more or less flat on the day, with the exception of the metals, and especially the precious metals, which were sold vigorously.

The markets are now well and truly broken. Not because they don't conform to my predictions, but because they are no longer sending useful price signals. Instead, my hypothesis here is that the markets are now just a giant and rigged casino, where a relative handful of big firms and other tightly coupled players are gaming their orders to take advantage of this flood of money."

Michael Pento wrote:

"The plain truth is this is a balance sheet recession and not one due to onerous interest rates. More of the Fed's monetization may be able to bring down debt service payments a little bit further on consumer's debt. However, it will also cause food and energy prices to be much higher than they would otherwise be.

The damage done to the middle class will be much greater than any small benefit received from lower interest rates. Therefore, the net reduction in consumer's purchasing power will serve to elevate the unemployment rate instead of bringing it lower.

Rather than aiding the economy and fixing the labor market, what the Bernanke Fed will succeed in doing is to ensure this unshrinkable balance sheet will not only destroy the economy, but also drive the rate of inflation to unprecedented levels in this country." (Emphasis mine - the DI)

It appears that the Fed will purchase nearly 100% of the government's new debt for the next several years. The Fed must purchase most of the debt to keep interest rates low. This can only work for a limited time since it is the best political solution when the choices seem to be:

So What Do We Have?

What To Do?


Author: GE Christenson

GE Christenson aka Deviant Investor

GE Christenson

I am a retired accountant and business manager who has 30 years of experience studying markets, investing, and trading futures and stocks. I have made and lost money during my investing career, and those successes and losses have taught me about timing markets, risk management, government created inflation, and market crashes. I currently invest for the long term, and I swing trade (in a trade from one to four weeks) stocks and ETFs using both fundamental and technical analysis. I offer opinions and commentary, but not investment advice.

Years ago I did graduate work in physics (all but dissertation) so I strongly believe in analysis, objective facts, and rational decisions based on hard data. I currently live in Texas with my wife. Previously, I spent 20 years in Barrow, Alaska, the northernmost community in the United States, 330 miles north of the Arctic Circle.

Copyright © 2012-2014 GE Christenson