It appears that Federal Reserve Governor Janet Yellen will be taking over as Fed Chairman soon. (Although, I suppose that in the politically correct Newspeak, she will ignominiously be called a “Chair.” ) As she assumes command of that soiled centenarian private banking cartel, all that I can say to her is: Welcome to the Crack House.
Back in April of 2012, I wrote: “Remember when I compared Quantitative Easing debt monetization to crack cocaine addiction? It appears that Tim Geithner and Ben Bernanke have moved up to the level of co-dependency and are only one step away from collapsing on an uncovered mattress on the floor of a squalid roach-infested apartment.”
I still stand by my assertion that the Fed banking cartel and the Treasury Department are hopelessly addicted to debt monetization, commonly called Quantitative Easing (QE.) At this stage, the Fed cannot stop monetizing without triggering an economic tsunami. Presently, they are creating $85 billion per month out of thin air. The Fed is now consistently buying 70% of the bond supply each month, and now owns 32.47% of all 10 Year equivalents. The net effect of the continuing Free Money Fix has been a false economic recovery, artificially low interest rates, and a zombie housing market. (It looks like it is breathing, but in reality it is still putrefying.) Again, the Fed cannot stop or even slow down their monetization, or the entire system will collapse. Mutual fund manager Peter Schiff has called the Fed’s predicament “QE To Infinity,” and he’s right. There is presently no exit strategy for the Fed, and in fact there can be no exit strategy. I now foresee monetization increasing in the months and years to come. Then there will come that inevitable Gideon Gono moment, when confidence in the Dollar is lost and it becomes effectively worthless.
You’re now the Madam of the Crack House, Janet. You might as well accustom yourself to your new surroundings, and buy yourself a dress suitable to playing the part. This is your new life, so get used to it. There is no rehab available. Tell your Wall Street buddies that their “fix” will continue to be handed to them through that hole in the door. Keep that QE money pumping, Janet. Laissez les bon temps roulez.
There is nothing more addictive than a free money fix, is there? – J.W.R.