The Feds Add Liquidity to Sustain Economic Expansion -Bonner/Bonner And Partners
"When you know what cards the biggest, dumbest, richest, drunkest player will lay on the table… you ought to be able to profit from it....Neither markets nor economies will be allowed to exhale or retreat - not if the authorities at the Fed can prevent it. And they believe - against all evidence, logic, and reason - that they can stop it with 'liquidity.' When the going gets tough, they say, they'll add more juice.
Heck, they won't even wait for the going to get tough. Now, they're adding some 'insurance liquidity,' like a glass of sherry in the afternoon to keep their spirits up. The Wall Street Journal reports: 'The Federal Reserve Bank of New York injected $104.15 billion in temporary liquidity into financial markets Thursday. The intervention came in two parts. One was via a term-repurchase-agreement operation that will last for 15 days that added $30.65 billion. The other was via a one-day repo operation that totaled $73.5 billion.' But it won't be long before the authorities bring out the hard stuff - even more liquidity. And this noxious brew comes in only one form - new money. It is the money launched in 1971, which has since lost 97% of its value, compared to the pre-1971 model. How to front-run the feds' cheap new money? Simple: Just hold on to the old money - gold....As our old friend Richard Russell put it, coming up is the most vicious, dangerous, devastating melee in U.S. financial history. But when the dust settles, gold will be the last man standing."