Quantitative Easing: The Fed’s Big Lie

MBA, Market Analyst & Author @ The Mining Stock Journal
December 29, 2020

“How do you print out of thin air $3 trillion and get it into the stock market this year without anybody seeing you do it? ‘Stock market’ meaning ‘stock market and other high risk/high yielding assets…’ The answer as it turns out is you don’t print $3 trillion, you print $6 trillion. You print a $3 trillion original, a master, and you print a $3 trillion clone right behind it.” – John Titus, Best Evidence

“QE is intended to to boost the amount of money in the economy by purchasing assets, mainly from non-bank financial companies. QE initially increases the amount of bank deposits those companies hold (in place of the assets they sell). Those companies will then wish to rebalance their portfolios of assets [i.e. reinvest the cash they receive from the  Central Bank via the QE transactions] by buying higher-yielding assets, raising the price of those assets and stimulating spending in the economy.” – Bank of England Quarterly Bulletin, 2014 Q1, “Money Creation in the Modern Economy

John Titus of Best Evidence has produced a must-watch video which explains how the Fed has, in effect, printed $6 trillion, or double the $3 trillion to which the Fed admits.  The analysis also explains why stocks are at all-time highs, bond spreads at all-time lows and why QE is doing very little to stimulate REAL economic activity.  By the way, the BoE’s proposition that rising financial assets stimulates spending in the economy is a complete load of bullshit. This is because 95% of all households have very little in way of financial assets.

The next big move in financial assets will come from the mining stocks.  Mining stocks offer  potential wealth enhancement through exposure to the “optionality” upside of price gold and silver prices.  If you would like some ideas for investing in mining stocks, take a look at my  Mining Stock Journal.

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Dave Kranzler spent many years working in various analytic jobs and trading on Wall Street. For nine of those years, he traded junk bonds for a large bank. He has an MBA from the University of Chicago, with a concentration in accounting and finance. He currently co-manages a precious metals and mining stock investment fund in Denver. My goal is to help people understand and analyze what is really going on in our financial system and economy. Dave publishes the The Mining Stock Journal a bi-weekly subscription newsletter that features junior mining ideas as well as relative value ideas in large cap mining stocks.

 

Gold is still being mined and refined at the rate of almost 2,600 tonnes per year.

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