The chart below is WMT weekly. I see a rising head and shoulder that just broke neckline support, and then back-tested the support-turned-resistance line from below to confirm that the breakdown is real. I think the market is beginning to price in the new reality which is that pumping new money into the economy that was printed up from thin air is not helping in any real way and that the federal reserve is just about out of gas. Its balance sheet, which it would like to think of as an economic shock absorber, is bloated with treasury and housing debt, both of which will receive a hair cut if they ever try to sell any of it in significant quantity.
At some point a decision will have to be made. They will either choose to save the people at the expense of the central bank or they will choose the central bank over the people. In the first case they will protect the dollar by actually stopping the money printing. This would cause all assets to plummet in a deflationary crash followed by outright depression - something right out of the Prechter Playbook. This option is certainly on the table and I think plans are being made to control riots and other civil unrest that will threaten to relieve the con men of their prominent positions of Ponzi power. Look no further than the gifting of MRAPs to local police by the feds. They are supposedly getting these vehicles from "surplus" even though they are brand new. I call bull$hit on that notion. That is a cover story for pre-positioning material around the nation, just like this Marine Corps Col recently said at a town meeting.
The second option is to not only NOT taper, ever, but instead to increase the rate of money printing and in fact to begin letting this new money out into the economy in a broad way - interest free loans to corporations and more free grants to poor people (welfare). The problem with the second option is that very soon the price of a loaf of bread would be $10, gas would be $15 per gallon and salaries would not keep up with the price increases.
Either way, real buying power will diminish. There is no possible escape from the effects of the collapse of a debt Ponzi just like a drug addict cannot simply walk away cold turkey without getting very sick and in some cases even dying as a result.
The decision as to which poison we are fed will certainly revolve around what is best for the military industrial complex, not the people (even though it will all be pitched as being done for the people). If they think they have extracted all value from having the US own the world's reserve currency and now they want global money instead of the dollar so they can re-start the Ponzi then hyperinflation is the way to do it.
If on the other hand, they think they can deflate everything and still retain control of a very pissed off and well armed populace then they will allow the deflationary crash with people and try to use threat of military force to keep the dissenters in line. If they are successful in doing this then they will restart inflation again from a lower level hoping for another 50 years of scammery. I think, however, that once the people figure it out that the money will not live 5 more years past the point of awakening. All fiat currency dies eventually and the dollar will eventually be no different.
2 comments:
What happens when a loaf of bread is $10 and a gallon of milk, $20? Civil unrest.
Thus, either way, the militarized police will perform its charter role of protecting and serving the status quo and won't have time for the token role of protecting and serving the people.
Indeed, during times like that, the police view ALL citizens as criminals and terrorists. They don't bother to differentiate anymore. They in fact use the unrest as an excuse for police state takeover.
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