Friday, September 14, 2012

Money Printing to Infinity

How can we say this any different than, "This is it, money printing forever."

Now infinity is a large amount. Thinking about the concept of infinity has been known to drive people insane. Literally. Infinity has no end. Before this fiat party ends, many will not only be insane, but very angry. The riots you see in Egypt today will be a childrens party in comparison.

This latest round of stupidity has these main takeaway headlines (courtesy of ZeroHedge):

*FED TO KEEP POLICY STIMULATIVE FOR `CONSIDERABLE TIME'
*FED WILL ADD TO PURCHASES IF LABOR MARKET DOESN'T IMPROVE
*FED DOES NOT SAY WHEN MBS PURCHASE PROGRAM TO END
*FED TO BUY $40B MBS MONTHLY, CONTINUE `OPERATION TWIST'
*FED TO BUY MBS, EXTENDS ZERO-RATE POLICY INTO 2015

OK, so the Fed says it is for a 'considerable time'. Not really infinity. But in monetary debasement terms, a considerable time is long enough to destroy a currency. Just ask Germany in 1923.

Make no mistake, this is the end of fiat currencies as we know them. The $40 billion per month headline limit will be but a reference point and will shift upwards as quick as you can say 'inflation' or 'deficit'. Much like the German Constitutional court ruling that Germany will have an upper limit of €190 billion. Yeah, right...

There's a certain book, that has been around a while, that states, "Claiming to be wise, they instead became utter fools". OK, so give them some slack, what are they supposed to do. Remember the French King Louis XVI in 1789, he couldn't stop the runaway revolution train that was heading for him. He had to play with the cards he was dealt with. Likewise, Mr Bernanke has been dealt a set of cards called the fiat money system that was previously destroyed by Mr Greenspan. What's the poor man to do?

The NZD has also risen today on this news. That's a good thing if you hold wealth in NZ dollars. But New Zealand can't hold on much longer in this worldwide 'race to debase' and must decrease the value of the NZ dollar before export receipts get annihilated.

Fun times. Got gold and silver?

Gold in New Zealand dollars: $2125.72 per oz
Previous all-time high: $2311.02 per oz (15 Nov, 2011)

Silver in New Zealand dollars: $41.75 per oz
Previous all-time high: $59.19 per oz (30 Apr, 2011)
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