Central Banks Pushing Monetary Heroin

It's probably going on about 8 years now that we (at this blog) have been asking the question, "How much money can a government print/create simply based on faith and confidence?"

Of course no one can truly answer that question because faith and confidence are not measurable entities.

Here is what we do know for certain; FIAT CURRENCIES (currencies issued on faith) ALWAYS fail.  It might take 100 years, 200 years or 500 years.....but they always get mismanaged, everyone with savings loses their money, the issuing government declares itself bankrupt and they start up a new currency based on tangible assets used to underwrite the currency....until they move to fiat again....and repeat.

Of course wars, chaos, disruptions and mass immigration usually coincide with collapsing currencies.

We now appear to be in the part of the cycle where the Central Banks have no choice but to keep pulling the lever and shoving "out of thin air" currency and debt onto everyone.

We hear a lot about the role of central banks in the world’s economies. But what exactly have they been doing over the last few years, and what has the actual impact been?

Central banks have the authority over the interest rates and the quantity of a nation’s currency. Their official responsibility is to regulate price stability. By law some central banks, such as the Federal Reserve, operate under a dual mandate and must also promote full employment. Central banks hold the reserve assets that support the integrity of their issued currency.

The Federal Reserve holds the enviable position of being the issuer of the world’s primary reserve asset, the Federal Reserve Note, also known as the United States dollar. The Fed, in many ways, has led the charge in terms of the size and scale of unorthodox monetary policies practiced over the last few years. The impacts of these monetary policies are incredibly profound, and the world will soon see the true extent of their economic consequences.

Basically, the Fed and other central banks have played the role of a drug dealers pushing more heroin on addicted economies.

Shortly after the global economic slowdown of 2008, we saw massive surges in currency debasement. Central banks of the world have been practicing unprecedented levels of monetary expansion ever sense. A large degree of the foreign currency manipulation outside the United States has been driven by the Keynesian “beggar thy neighbor” economic policy. In this currency war Keynesian economists believe the greater a nation’s currency devalues relative to other currencies the greater competitive advantage that nation holds in exporting. This mentality is mercantilism at its finest.

But monetary expansion by the Federal Reserve has been less about debasing the dollar relative to other currencies and more about promoting asset prices, specifically the prices of stocks, bonds and real estate.

The QE program has been terribly unsuccessful and has only temporarily held back the symptoms of our increasingly sick economy. The economic disease is getting worse and the symptoms are showing up again. The Fed will have to engage in another wave of monetary easing in the form of QE4, an economic stimulus package, or even as Dickson Buchanan pointed out in his recent article, negative interest rates, which have already been plaguing Europe, and now Japan.


Regardless of which tool the Fed uses, they will have to keep injecting their monetary heroin in an effort maintain this false illusion that we are in a legitimate recovery. The ultimate price the Fed will pay for this unprecedented monetary policy is the value and integrity of the world reserve currency, the United States dollar.

Here;  http://schiffgold.com/commentaries/central-banks-are-pushing-monetary-heroin-to-addicted-economies/

Wait a second.....you mean if I had owned General Mills stock 10 year ago when there were only $3 trillion dollars in circulation.....and the Fed doubled that amount to $6 trillion (out of thin air) that just that fact of doubling the money supply alone could double the price of my stock?

Yep.  It makes sense right?  The money is just paper....and if I believe that 1 can of beans is worth $1 today.....if the Gov't double the supply of money overnight, that same can of beans should be $2 tomorrow.

Now here's the funny part....If I bought a can of beans for $1 on one day and the Gov't doubled the money supply overnight....if the next day I found out my beans with worth $2 per can, I would yell to my wife and say, "Honey!  I just doubled our money in beans!"

Now take that exact lesson and cut and paste it into your real estate values, stock prices, corn prices and anything else that has REAL value.

So when all the Media talking heads say, "The stock market is up today!  In fact the price of stocks have doubled since the Great Recession of 2008-2009!"......what are they REALLY telling us?  What REALLY is happening?

And of course the $100,000 question is, "How long will the world continue to have faith and confidence in the money issued by Greece?  Italy?  Japan? Argentina?  Bolivia?  Zimbabwe? USA?'

Greece might collapse their banks and currency and cause some ripples, BUT when the USA collapses and takes the entire world's RESERVE CURRENCY status down along with it....the world's merchants, bankers and currency traders will stand around in shock as they wait for the shock wave of what just happened to wash over everyone.

Make no mistake, THIS WILL HAPPEN ONE DAY....we just don't know when.

It may be a good idea to lay up our REAL TREASURE in heaven where moth, rust, currency debasement, corrupt governments and central banks can't destroy it.