fed-ponzi-scheme

This week will be filled with garbage, double talk, lies and enough hot air to fill millions of balloons. On the agenda for this week is the Bank of England, the Bank of Japan and of course, the all-powerful FED. We will hear many fairy tales, none of which will have a happy ending. The central bankers will be spinning their tales trying to convince us that they have some clue as to what they are doing.

We all know that the central banks around the globe are not only clueless and incompetent, but experts at talking about everything but he truth. Look at the damage that the Bank of Japan has done over the last 30 years of financial engineering. They are worse off than they were when they started and have added billions of dollars of debt.

Let us take a walk back in history and look at how the central banking system got its start. The first central bank in the world was the Swedish Riksbank, founded in 1668 and then the Bank of England in 1694, on request of the British government to finance a war. We have gone downhill ever since. Central Banking is a farce as it is a legalized Ponzi scheme for the bankers. The theory of the Central Banking system is good in theory, but lousy in practice. Their entire mandate is to be the lender of last resort, period.

Unfortunately, for the average person in the world, central banks abuse and legally steal from the middle classes while lining the pockets of the rich. The legalized stealing is done through taxation and inflation, not free markets and price discovery. Currencies are financially engineered by the central banks and each time they make a move, they are reaching into your pocket and reducing the value of the cash you are holding. In stock market terms, they are issuing a secondary on your cash, putting out more shares while making yours worth less.

While you listen to the details they all talk about this week, especially the FED on Wednesday at 2:00 PM EST, you will hear the biggest bunch of crap and double talk as Janet Yellen will once again tell us about the objectives and how we have not met them yet. The FED consists of a group of economists with a mathematical theory, which is generally wrong when it comes to free markets.

Theory, like mock court, is simply practice and never relates to the real world. Central Bankers can spew their theories on how things are supposed to work, but in life, they never do. In the heat of battle, soldiers are not reading the manual of theory; they are reacting to the situation in which they are facing. All battles are won by those who are willing to take risk and step outside theory and use good old fashioned common sense.

While you are listening to Janet Yellen or hearing the recap from the other Central Bankers this week, remember that they are all full of hot air. They are good at building debt and bubbles. They are not good at allowing the free market system to work itself out and let asset classes price themselves. There will be no surprise this week; this will be like another rerun of a lousy television show and nothing more.

To end the week, we will get the jobs number, which promises to be a gangbuster report just in time for the election, great for those who like the status quo. Like the magical GDP number we had last week, this number will be revised next month when the election is over. 

You had better duck for cover, the hot air will be blowing, hopefully we won’t get burned.

 

Keep those stops tight

Todd “Bubba” Horwitz