A "user friendly" version of the truth about WTC7

I acknowledge that people are more open to a message if it is professionally delivered.   I think it is a human weakness to require this and that it has led to us electing leaders that are good looking and well-spoken instead of being intelligent, educated and insightful.  But I cannot deny that it is what the herd sometimes demands.  So here is a more herd friendly version of the facts around the collapse of WTC7:

http://www.youtube.com/watch?feature=player_embedded&v=A7tSfwkKaUo

Note: I am not a big fan of using polls as a source of data as is done at the end of the above video.  Polls are really just popularity contests, not facts.  Just because the majority believes or disbelieves in something means very little; most of the herd members are not subject matter aware.  Instead they are busy running their own lives (as they should be).  But I do know why the above video put these polls in there and I want to provide some graphic, even comical proof to the matter.   

They did it so that herd members will not think they are outliers for wanting to rethink 911.  They did it to reduce the individual's fear of being ostracized by the herd for thinking independently.  As I have said for a long time (after learning it from Prechter), humans are a herding species.  Going against the herd is uncomfortable for most of us despite the fact that we all like to believe we are independent thinkers.  You might find the following short video “experiment” from the old time U.S. TV show, “Candid Camera” both entertaining and enlightening along these lines.  Note the age of the video. 

http://www.youtube.com/watch?v=zNNz0yzHcwg

Look how funny it is to be on the outside of the herd looking in while the individual herd members behave in irrational ways.  Did you find yourself chuckling at the victim's behavior and complete lack of real situational awareness?  The victims of these experiments don’t understand they are being manipulated and they probably would not find it amusing if they found out later on.   They don’t know how easy it is for enlightened outsiders to manipulate nearly their every move and reaction.   

Smart people, the top rung of our society, have known about the power associated with understanding human herding for a long, long time.  Being able to predict the movement of the herd is powerful as heck.  But being able to control the herd?  Priceless.  So don’t feel bad if you got suckered into the official version of the 911 story.  Don't feel bad if you were not aware that 3 steel frame buildings all collapsed into their own footprints at the speed of gravity accompanied by clouds of pyroclastic dust (means explosives were involved) and within a few hours of each other.  It just means that you were the man in the elevator this time.  Don't feel badly.  Most people were initially fooled as well.  It was a professional, high dollar con.

Amazing chart shows one face of the debt Ponzi in graphic detail.

Long time readers of this blog know my long time, unwavering, dyed in the wool stance on things: that the world is a massive, pervasive and global Debt Ponzi.  Also, that no Ponzi lasted forever and when the collapse arrives, it generally does so with exponential speed such that most people get screwed.  Through the use of IOUs, debts, promises of all kinds (including contractual promises such as derivatives), the con men running this show are able to achieve a better quality of life for themselves at the expense of everyone else.  The really sad part about this (and any other Ponzi) is that it would have been a LOT cheaper to just pay off the con men up front to go away rather than to have them run the entire global economy into the ground.

In any case, one (but certainly not the only) aspect of the Debt Ponzi is public pensions.  Government has been telling these willing patsies all these fairy tales about how they are going to get all this money in retirement if they will just work for government today.  All of the patsies receive their monthly Madoffian feel good account statements which assure them that they can go ahead and spend more money today because they will have fat retirements waiting for them.

But, as I have always stated, the money is not there.  I know this because it is the one fact in common to all Ponzis: the stated value does not exist.  Not all participants can get out whole.  In fact, very few of them will.  This chart shows the math behind these statements.  It was created by John Mauldin (link is to a PDF that contains other charts and commentary worth your time) based on a database that was assembled from public records.  In fact, it is the assemblage of an admission of guilt by the collective con men.  What is says is that all states which are not colored green or blue have effectively admitted that they cannot meet their pension obligations by a long shot.  This might not be too concerning if the money would not be needed for another 10-20 years but the boomer retirement bubble is going exponential right now. These funds will be needed in just 2-5 years.

Some people might look at the map and say, well, yeah, there are some train wrecks in there but look at WA and  SD and NY and NC.  They are all blue.  Also, TX and FL and ME and a few others are green.  Well let me first say that green is normally associated with good and healthy but in this chart green mean that pensions are underfunded 10-25%.  Does that sound good?  What if they told you that you would only be receiving 75% of your previously promised pension?  Would that be good news?

Additionally, it's still early.  Give it time and all of these colors will certainly red-shift.  Why?  Because most of their "assets" are paper based and are probably held on the books at ridiculous valuations, just like the banks and their shadow properties.  It is in the best interest of the Ponzi operator to cook the books in ways that keep them within the law while screwing the patsies out of their retirements. Since that is what is in their best interest, that is what I am convinced will happen.  Too much control has been ceded to strangers and that is what always happens when this mistake is made.  And no, it's not going to be different this time.  Absolute power corrupts and when someone is in 100% control of the retirement money of millions of people, well, that is pretty much absolute power folks.

To paraphrase Warren Buffett, we will only know the truth about who is skinny dipping here and how much a$$ they are actually exposing when the tide goes out (meaning when the wave of boomers entering retirement begins to pick up with a vengeance).  This is going to require the sale of said assets in order to make required payments.  Stalling will not be possible.  Deferring this and that to hide the situation and to kick the can will not be possible.  Pensioners will want their checks, every single month.

So multiple things will happen which will result in a neap tide for the skinny dippers:

• real price discovery will occur on assets which have been kept off the market for the very reason that there is no market for them (at least not at the fantasy prices which they are being held on the books).  These assets will fetch pennies on the dollar, not full face value as is being reported by the con men running the pension funds.
• a lot of these assets will be dumped by all the various pensions onto the market at the same time in order to satisfy redemption demands by pensioners, thus lowering even more the street value of them due to simple supply and demand economics.
• assets that have been providing a real return will have to be sold simply because they will have some value at a time when the pensions need to raise cash.  So the pensions will be forced to sell their geese that lay golden eggs in order to meet "payroll" of the pensioners and they will be forced to do so at unattractive prices.  This act will in turn reduce their ability to pay future claims. It is in fact the driving force of the Debt Ponzi Death Spiral.

The result will be that Green states shift red and red states simply declare BK and tell the patsies it was nice knowing you but now can you please just Flock Off.  So, how should we model the workforce exodus?  Well, I always find it entertaining to use government's own numbers with an EW model overlay.  And so here you go.  The increase in civilian participation in the labor force took off into a bubble and perhaps into a mania starting in the early 60s.  That was when 1 man would work to feed a wife and several children.

But then money, driven by the increasingly obvious inflationary aspects of Bretton Woods, became the focus of our lives instead of family.  We began to live for making money instead of the core values of humanity.  Wives stopped taking care of kids and went to work.  We were taught that "greed is good" when in fact the truth that ambition is good but that ambition is not greed as the spin meisters would have us believe.  In fact, real ambition is the pursuit of happiness for the herd, not for the individual.  People, being a herding species, are only really happy when the herd is calm.  Those who are rich right now might have creature comforts but they live nervous, paranoid and in many cases downright uncomfortable lives, always worried that someone else in the herd will steal from them or harm them.

But I digress.  Bottom line is that the collapse of the Debt Ponzi will not feel good, just like going through drug withdrawal does not feel good.  In fact, that is a soft sell of the situation.  But if the Ponzi is allowed to go on too long then there is no hope for the addict.  An overdose will occur at some point.  Same for the Ponzi.

This is why we should be aware of the situation but that we should welcome it rather than fear it.  We should mentally prepare ourselves for the withdrawal pains and demand that it be allowed to occur quickly instead of stringing it out to consume what little number of years that any of us have on this planet.

We should laugh at those in power who tell us to be afraid of the truth and also to be confident in their lies.   They deserve our ridicule and our derision and nothing more.  Their only goal is to stay in power and to live beyond their means on the backs of the people.  We should brush them aside and throw the bums out. These are in fact the reasons that I have invested countless hours in writing this blog and with the inviolable ground rule that it never be used for ads or other distractions whose goal is to profit me.  I want to do my small part in helping people wake up and understand the problem so that we can all face the solution together.

Next watchpoints for silver.

Bernanke's failure to taper as promised pushed the odds for short term silver moves well into the bull's corner IMO.  Here's how I model it at present.

First, let's review the high level chart because it's important to any short term EW modeling.  As you can see, I think the bullish run to $50 was a 1st wave up, the pullback to the $17s was wave 2 and now we have an inclining double bottom that has an excellent chance of propelling silver up to a new all time high.  I think that if we see wave 3 of 1 up breaking through the top, descending resistance line (green) then it will be a good and primary confirmation of this model.  There are other possibilities as I have pointed out in prior post, but this is my primary count (and always has been).

Here is the close up chart that clearly shows how the breakout of the interior down trending resistance line happened during 3 of 1.  Bernanke's failure to taper most likely marked the bottom of wave 2.  So what we should have before us, if this model is correct, is a monster 3rd wave up in which, most likely, its 3rd wave breaks out though the resistance line that has been in place since early 2011.  If this happens it will massively reduce (perhaps to 5% chance or less) the odds that the bottom as I called it in June was not actually the bottom.  In other words, a 3rd wave up cannot also be an E wave down (see prior post if this doesn't mean anything to you).

As with any 3rd wave, the odds support the concept of large gaps up per unit time.  This is where the sheeple who were laughing at "prepper" "end of world" types start to worry that Bernanke is really not in control and that the "tin foil hat" crowd is not as crazy as the main stream herd would like to have believed.

Of course, I don't know what will happen next and nobody else does either.  All I'm doing is trying to model the sometimes seemingly irrational movements of the herd.  In fact, government has been doing it for a long time.  They call it "opinion polls".  They spend big money pouring through the data to see just how much scammery they can get away with without getting the herd catching on and getting too angry or scared as a result.  In fact, Facebook is now on record as working to put AI in place in order to go through your posts in order to understand the mood of the herd.  Trust me, they are not doing this for your benefit either.  They will put nice, "we're trying to help" lipstick on that pig but the real reason for trying to figure out the herd is for the sole purpose of being able to extract more value from it in some form or fashion.  In other words, they are working to put computers in place in order to use our human nature against us.  It is aggressively parasitic yet few will see it for what it is until it's waaaay too late.

Bill Fleckenstein weighs in on the non tapering event.

Today at King World News (KWN) Bill Fleckenstein voiced his views regarding the fed, today's non-tapering event, the future of gold, the future of bonds.  To be honest, it sounds an awful lot like the post I made around noon today.  I don't know when KWN released their blog post but I only saw it just now.  The similarity of what Fleckenstein said and what I wrote revolves around our like views of the economy.

Like the last time I commented on a Fleckenstein interview, I think Bill is absolutely correct in his direction but that his explanation of the situation is not completely accurate.  I don't know if he's just giving a polite version of what he really thinks or if he hasn't made the connections yet.  Somehow I have to believe the former given how smart that guy is.  But let me give some examples from the article.  I quote (italics and bold emphasis are mine), "Over and over and over again we see people who do not understand how the economy really works.  They don’t understand these Fed policies only misallocate capital and create inflation.  These policies don’t create any sustained economic activity, and yet they keep making the same mistakes.

A lot of those people want to believe that everything is going to be OK because they want to believe in the silly concept of ‘Goldilocks.’  So all of these people were rooting for the Fed to tighten today because they believed it would have meant that they were right, when it doesn’t.  So, now there are a lot of people that were wrong."

What's really happened is that most people have given up thinking for themselves.  They wait for the fed's guidance and then they form clever strategies around it.  The fed has been burning up the good faith and credit that the US earned over the past 100 years in pursuit of achieving stated fed goals.  Meanwhile, the moneymen who have been listening to him, almost worshiping him, have been patting themselves on the back for making gains by "not fighting the fed".   And the fed has appeared to have been right for a long time.  So why should the herd not follow it?  After all (they think), how can the fed be wrong when it has the entire economic resources of the US taxpayer to use as a bludgeon against anyone who doesn't toe the line?

Well, this is the nature of a con.  It seems to be true for soooooo long that people actually believe it is true from an emotional standpoint even though their calculating side knows that something isn't adding up.  The real problems start to pop up when the wizard behind the curtain is finally exposed as a conniving little con man who has only looked good by cooking the books and playing on the backs of the American taxpayer's ability take on debt.  You can tell that time is running short for the con when the promises made by the con man start to not come true.  I can guarantee you that a lot of money managers got strung out on high leverage hoping to make a quick buck by betting on the "sure thing" that the fed would taper today as per its earlier guidance.  Getting into an overleveraged position is not hard to do.  The use of margin and credit and derivatives make it pretty easy.  But today, that took a bite out of a lot of people.  As Bill said, so now a lot of people are wrong.  They lost money betting with the fed.  You don't get too many Mulligans with the finance crowd.  It adapts to the new reality very quickly (or it dies).

Another aspect of what Bill said is that people want to hear good news even if they suspect it is BS.  People want to be lied to.  If this were not true then no con man would ever have gotten to the level of Madoff (or of the federal reserve).  The herd likes to huddle together in its belief system, rejecting anything and anyone who exists outside of those core beliefs.  So Bill said basically that the fed does nothing of value for the economy but that it has been successful in selling a false sense of control to a lot of willing money manager patsies.  Bill is talking about the art of the con.  Maybe he knows it, maybe not.

Fleckenstein goes on to say, "Today is truly shocking to the people who have had it dead wrong.  This is shocking because the Fed had been laying the groundwork for tapering for so long.  But, remember, in 2009 the Fed was talking about ‘exit strategies.’  Now we are just talking about cutting back on a part of the stimulus and they can’t even do that.  So, one of these days people are going to realize that they are totally trapped.  I just can’t tell you when the crowd is going to change its mind.". 

Well, he's got that right.  At some point the herd will, in near unison, figure out what a fracking scam the fed is, how right and honest Ron Paul has been all these years, and yes, what a bunch of flipping fools we've all been as a nation and a world to be taken in by the greatest Ponzi scheme of all time.  Literally, OF ALL TIME.  When you consider this, is it really so strange to find the police and feds practicing urban pacification drills, buying MRAPS (bomb proof military vehicles) for local police departments while outfitting them with military assault type weapons and tactics...?  Trust me, the money powers running this con are far above Bernanke's pay grade.  He is just a pawn, a front man for the illuminati.  A willing, traitorous, shameless pawn, but a pawn just the same.  The money powers have a lot to lose if people break free of this fractional reserve, wimpy promise system.  And the problems are indeed so great, so structural, that there is no fixing it.  There is only massive reform of some type coming.

Bill goes on to say, "
This should be a major turning point for gold because so many people have hated it for the wrong reasons.  Since gold peaked in the fall of 2011, the Fed has printed another $1 trillion.  So gold has a lot of catching up to do.  This ought to be gold’s moment, right here, right now.  Gold should start a huge leg higher.  Certainly the gold stocks have a pretty good setup from a risk/reward standpoint, from where they are today.  You certainly can’t find a more hated group on the planet.”.  Again, absolutely correct and in fact just today I provided my opinion that gold miners, as a group through the GDX ETF, are a screaming buy.

Fleckenstein finishes with, "Since April, the 10-Year has gone from about 1.6%, to as high as 3% recently.  Now we have to see when this rally in bonds stops.  The bond market will then roll over and then the Fed won’t have the tapering as an excuse.  It means the bond market has ceased to price in the scenario that the Fed wants, and the bond market is not responding to the Fed’s moves in the short-run.  In the old days we would call that ‘losing control of the bond market.’  And if that starts to happen, all hell is going to break loose.” 

For those who do not follow such things, below is a recent chart of an ETF which closely tracks but which is not a direct match for the 10 year treasury interest rate (the ETF managers decided to track the 10 year bond interest rate with a 100x multiplier in order to give it a higher share price).  So what Fleckenstein is suggesting is that the recent increases in interest rates were a false rally based on the promise of tapering.  Now that tapering has been exposed as a very difficult choice for the fed, it
will still be printing plenty of money with which to buy treasuries and that will bring the interest rates down again.  This is not what the sheeple money manager's strategies had planned on!!  Doesn't Bernanke know how long it takes to slip into and out of large positions for pension funds, insurance companies and the like?  So, Bill is saying that springing this new direction on the markets all of a sudden will detract even further from the fed's now declining credibility.

Now, if Fleckenstein is correct, and he well may be, we are going to see another big round of deflation (low velocity of money and high cash hoarding) as the markets unwind their "we expect tapering" strategies.  That is modeled by the black wave down.  But after that, I don't know where interest rates have to go but up. 

In other words, if Fleckenstein is correct then perhaps the TNX chart is tracing out the E wave of an ending diagonal as shown in black above.  When it gets to the E wave, the herd (money managers) will have gotten their money printing game back on.  But that means the entire herd will be all on one side of the boat and as a result the boat will begin to capsize.  So I expect that after the E wave plays out there will be a massive rise in interest rates.  I dare not speculate on what could cause it.  I think that if E plays out then the next step is shown in blue. 

The reason I don't care to speculate is that when the con is in the very final portion of the collapse as it will be when the blue line is in play, I expect old norms to no longer work.  I have stated this belief and made this prediction many times in the past, it is not new thinking for me.  In other words, money managers will say "condition A was supposed to mean I do action B" and so they will do action B but it will prove exactly the wrong thing to do this time and it will cause havoc as a result.  In fact, I predict that the market will do whatever it has to do in order to fool the maximum number of patsies because the value they think is there for them in the system is not really there and in fact never was.  Behaving unpredictably is how the market will likely balance the books.

Well, the next step is to see if the bond market yield rally is indeed over as Fleckenstein suspects.  Now that I look at this chart, I'm inclined to agree with his views on this.

For my friends...

Today, after a discussion of my views on the economy, a friend asked me for a stock pick based on my views.  Well, I don't "do" personal stock picks.  There are many reasons for this.  First, the advice is generally wasted.  People use it as a test to see if you know what you are talking about.  If the market goes against you, you are an idiot (despite the fact that pro money managers aren't always right either).  If the chart plays out like you thought it would, then of course you just got lucky (I have been getting lucky quite a bit of late). Another reason for not wanting to give specific stock advice to a person is that they profit if the advice pans out while giving you nothing.  But if the advice doesn't work out then they don't want to take personal responsibility for their own actions and so you hear "you lost me money"...

In other words, unless you are a paid professional who is compensated for the risk of having to hear customers whining, its a no win scenario.  So I don't give stock picks or investment advice, period.  But I do like to draw people's attention to situations that I find interesting so that they can do as they please with the data point.  Under these rules of engagement I think that GDX is... wait for it, a screaming buy.  Yes, that's right, I just used the uber secret buzz phase for the 2nd time in the history of my blog.  Here was the first time I used it, right at the exact bottom of the solar bust.  Since then solar has skyrocketed.  What else can I say except that it was indeed a screaming buy?

So why are the gold miners a screaming buy IMO?  Well first of all I would not buy any single miner.  I would buy the GDX Gold Miners ETF.  With this basket of companies you are less exposed to the potential shenanigans of any individual CEO or company.  As for "why now", well, first rule is buy low sell high, right?  the miners have clearly taken a beating since late 2011.  Of course, they could always go lower.  But not, I think, any time soon. 

In other words, my EW modeling of this chart tells me that after a series of waves up into what I have marked as red 1, the shares got killed in a big A-B-C swoon.  That swoon led to an inclining double bottom.  And it did so not on great volume but on ridiculous, exponentially rising, panic stampede volume.  That volume is now declining.  This means the panic sellers have all sold.  The selling mania is over.  The downside is most likely (as in 90+% likely) already on the chart.

In addition, this smash down improved the fundamentals of the miners greatly and, in several highly visible cases, convinced them to cut costs across the board.  So now their PEs are much more reasonable, and their P/B and P/S are just down right low in many cases.  Their dividends exist and in several cases are better than average.  The smash down just made them better investments IMO and in many cases it woke management up.  So they will not just go back into their spendy ways again as gold price rises IMO.  They will be reporting record profits over the next few years as a result.

There is also another important "fundamental" at play here: the fact that the federal reserve is fundamentally screwed in achieving its stated goal of tapering by now.  The fed was supposed to taper its monthly economic manipulations (AKA stimulus) today but in reality the fed could not taper.  Instead, it soft-sold the fact that the economy is still fundamentally weak (in spite of 85 billion worth of entitlements being printed from thin air each month).  But the simple bottom line is that they have to remain in the mode of propping up the economy to the tune of $85 billion per month.  Smart people should be thinking to themselves, "If they could not taper right now, then when?  When will it ever be a good time in the future to pull the drugs from the drug addict?  There will never be a good time for less debt drug and in fact a case will likely be made for MORE debt drugging going forward".

With socialists running the show, entitlements drive their thinking.  Without the new debt, treasury cannot fund all the current entitlements.  And so we will have new debt, and lots of it.  But without someone to buy that debt, interest rates will skyrocket.  In doing so, all new debt will require huge wads of cash to pay the rising debt service on it.  That cash will either have to be taxed from the weak economy (good luck) or printed up from thin air (ding ding ding).  But worse still, existing debt that is short term will need to be rolled over and it will be hit with higher interest rates if the fed stops printing and buying treasuries with the cash.

In any case, my current target price on GDX is $75.  Today it rose nearly 9% based on the non-tapering admission by Bernanke and the con men to close at 28.51.  Buy the dips, not the peaks IMO but do consider buying.  Dollar cost averaging into a position over a period of weeks is really a great strategy IMO.  For real chart followers out there, yeah I know that this is looking more like an expanding triangle than a standard 1-2-3-4-5 motive wave.  Where do you think the $75 price target came from?  Draw the lines and see for yourself.

Alcoa breaks out as Bernanke admits tapering not possible. [AA]

I called the bottom for Alcoa in June.   The most recent post in this Alcoa series was just done early this morning, long before the markets opened.  That post contained an important model chart which I have reproduced below.  As you can see, I clearly modeled a massive and imminent break out of the long standing down trending resistance:

Today, in a clear showing of loss of confidence in Bernanke's ability to control future inflation in light of his inability to taper (ever), Alcoa broke out of that trend line as expected and "with gusto". 

This is the biggest single day upward move for Alcoa in years.  It is meaningful.  The market is voting against Bernanke's funny money con here.  The con is that government can print money endlessly without eventually causing inflation and even a so called "currency event".  This move by Alcoa is less about business improvement in Alcoa than it is about loss of confidence in fiat currency and fractional reserve banking.   This break out is clear confirmation that Alcoa is now in a bull market (just as my EW model predicted in my first piece on AA back in late June of this year).

By the way, I didn't just choose to follow AA by accident.  I chose it because it is a plodding commodities producer who nobody is willing to assign a fantasy "tech" or "new reality" PE to.  I chose it because it is more real world than stocks like NFLX, and other high fliers like AAPL who might or might not produce something uber kewl next year.  We all know what AA is going to produce next year.  We know how much they will produce and how much it will cost them.  It is a completely understood business that is fully mature.  That is why I posted 4 times about AA already.  Because I knew it would be a good indicator of CONfidence loss at some point.

Big surprise from fed: tapering not possible, ever.

Today's big story, at least in the eyes of the lame stream media, is that Bernanke is not going to taper as everyone expected.  This is big news, I guess, to those who listen to the party line.  Of course, it is no news at all to people who know what is really happening.  In short, the global debt Ponzi is collapsing and arrogant Ben Bernanke has shot a full, 20 round clip of economic terrorism bullets at it but they just bounced off.   Printing new money, it seems, is not the panacea that everyone hopes it to be.  The economy, that is, the mood of the people, turns out to have a free will after all.

Now, for people who still don't get it, here is what will soon unfold.  But before I tell you these things I will tell you the real reason WHY I know they are going to happen.  Thus, when they do happen there will be no question as to how I was so sure of these events in advance.  In other words, I don't want anyone to think I got a lucky guess in, etc.  So the real reason that these events will transpire is that Ben Bernanke and the USA are leading a willing coalition of Keynesian con men at the global level who are running a global debt Ponzi.  This has been in the works since Bretton Woods in 1945 but its fate was sealed in 1971 when the US delinked the USD and by proxy ALL global currencies from gold.  That move turn them from something resembling money into pure fiat currency which is a confidence game.  No con ever ran forever and the debt Ponzi based on fiat currency and fractional reserve banking is a con as it relies on the CONFIDENCE of the participants in order to appear normal.  But the participants (AKA patsies) have now lost confidence.  This is the reason that the con is dying right here, right now.  It may or may not be a quick death (nobody can predict the timing) but it will be a sure one.

And with that said, here is what will now come to pass:

• Step 1 happened today.  Bernanke essentially admitted that tapering is not possible right now.   He listed things that were improved but that is all marketing bull$hit for the con.  Millions of people are on food stamps and millions more on fraudulent disability.  The federal government keeps racking up more debt to feed them in order to maintain control and to stay in power.  But the control will be lost as soon as the money runs out and so the treasury must continue to go into deeper debt.  Well, nobody is buying the debt except the fed!!  So if the fed tapers then interest rates will rise, the economy (especially the housing sector) will collapse and banks will die with it.  Because of this, the fed cannot taper now.  In fact, it cannot taper ever.
• Step 2 is coming up and that will be where maintaining the current level of money printing is not enough to keep interest rates low.  They will begin to rise despite the fed's promises to continue buying 85 bn of treasury debt each month.  In order to keep interest rates low, the money printing will not be tapered but rather INCREASED.  Failure to do so will result in instant confidence loss and so the fed will do it.  They will have a whole marketing story explaining why it is needed and they will likely find some sneaky back door way to implement it so that it sounds like something other than money printing but money printing it will be.
• Step 3 will be a rapid rise in interest rates despite increased money printing.  This is how the market will be signaling complete loss of confidence in the fed.  Once the market loses confidence in the con men, the con is over.
• Gold and silver will take off in price as everyone exits the debt of US and other sovereigns.  In other words, the owners of these electronic accounts will go looking for safe havens to "ride out the storm" and there is nothing safe when the sovereign debt is considered risky because all other asset classes besides gold and silver (and hard commodities) have been pumped up by actions of the con men.  The rule of "something in the hand is worth two in the computer files of your broker" will become clearly understood by the sheeple.
• The real economy will expose itself as the GDP actually falls in lock step with the treasury's inability to conjure up new debt at interest rates that the taxpayer can afford.  Why will they have problems now??  Because the confidence in US government and in the fed will have been lost.  So the days of very low interest rates for US debt are coming to an end no matter what Ben the con man says.  When the GDP falls it will be like the receding tide that Warren Buffet famously warned about: we will see who is skinny dipping.   In other words, the debt will remain but the GDP which was pumped up temporarily by the use of that debt will plummet.  This will leave the US with a much, much higher debt to GDP ratio than the con men are advertising it to be today.  High debt to GDP will lead to more sovereign debt downgrades and thus higher interest rates.  The virtuous, self feeding cycle on the way up will reverse into a vicious, self destroying cycle on the way down.   You know, just like the model of any Ponzi scheme.
• Finally, and nobody knows when, there will be a currency event of some sort.  It will likely be associated with bank closures, "bail ins", civil unrest and perhaps martial law (looks like government would rather shoot at the people than to be held accountable for running a debt Ponzi of historical size and importance).  Government will steal everything it can from anyone who is within their grasp.  People's retirements will be haircutted.  Insurance annuities will default.  Social security and medicare will be "reformed" (AKA "ripped off").  Taxes will be raised.

These things are coming, sure as sunrise.  Some people will find this post humorous or "extreme".  I find these people to be thick headed and unable to do math.  We'll see who is right about what soon enough.