The International Forecaster
February 18, 2011
Rather than have designation to what the Fed is doing we believe to a great extent the term quantitative easing will fade from the major media and Fed announcements, probably to be replaced by a term such as accommodation. As time passes more and more professionals and investors will realize that this massive creation of money and credit is destroying the capital structure and the dollar.
Other countries are emulating the Fed in various ways and degrees and that is why the USDX, the dollar index versus six major currencies has not plunged as it should have. It is lower, but it is not a true reflection of what is really in progress. Gold has spent the last 2-1/2 years directly competing with the dollar for supremacy as the world’s reserve currency and hands down the dollar has lost in an accelerating flight to quality to gold and silver.
Over the past ten years versus nine other major currencies the dollar’s loss in value over each of those years has averaged 15-1/4% and versus silver 20-3/8%. If you widen the spectrum to 50 currencies, the currencies value versus gold and silver have had an even greater fall. The longer the Fed, and other central banks continue to work this charade, the worse the final outcome is going to be. Every step that has been taken since 2000 to extend the problems rather than solve the problems has been futile and makes the final deflationary depression more gruesome.
The Fed has done a dreadful job, as has other central bankers and the public has become aware of that over the past few years. In the US polls they show 70% of the public wants the Fed replaced. This is significant because understanding what the Fed does is not easy for most people. We have been trying to expose the Fed Ponzi scheme for more than 50 years with only limited success. Then about 15 years ago along came talk radio and the Internet and they both opened the information spigot, allowing the average person to understand what the Fed was all about.
During this learning process people are outraged at what the Fed have been doing for many years. The owners of the Fed are always in possession of inside information because they create such information, thus, in an ongoing basis they can never be losers. As a trader for 25 years we know you cannot have three months of trading without a daily loss and produce unbelievable profits without this information.
These banks and brokerage houses simply cannot lose and you get to pay the bill one way or another. People now understand and that is one of the prime reasons Rep. Ron Paul just won 30% of a Republican-conservative straw pool. Romney in 2nd place pulled 24%, one of the main elements of Mr. Paul’s platform is to end the Fed, so that had to be a strong element in his victory.
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