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Clueless Bank of Japan Exemplifies the Awe Inspiring, Irreversibly Destructive Power of the Printing Press

by Andy Hoffman, Miles Franklin:

It’s Friday, and the astounding long, massively broad list of “PM-bullish, everything-else-bearish” headlines since Wednesday afternoon’s post-FOMC Audioblog is incredible to behold.  Which is why it’s never been more obvious that Precious Metals are the imploding fiat Ponzi’s “canary in the coal mine”; “Achilles’ Heel”; and all other similar analogies, metaphors, and comparisons combined.  Or, for that matter, the “enemy” of all financial markets – which since 2011 in the West, and 2015 in the East, have been commandeered by desperate, dying governments.

To no avail, I might add, as the average global currency is at, near, or well below previous all-time lows; whilst commodity prices are at multi-decade lows, led by the world’s most important industrial product, crude oil, which is about to breach $40/bbl as I write; sovereign yields are at all-time lows, with many below zero; and aside from “last to go” markets like the blatantly manipulated “Dow Jones Propaganda Average,” most equities have been in bear markets for the past year-plus.

Worse yet, to achieve such “positive” results, already record-high debt levels have been increased exponentially; whilst the world has been cast into a state of expanding political and social revolution, which will parabolically expand as the “99%” whose lives have been compromised by such maniacal, self-serving, suicidal policies fight back.

Yes, the game is truly over – although the dénouement, of exploding Precious Metal prices, has yet to wash over TPTB’s best laid plans like a tsunami.  True, gold prices have reached, or are very close to, record highs in the vast majority of global currencies.  However, until it breaks out in the land of PM suppression, the United States of Criminality; taking silver with it; the powers that be will continue to destroy our lives further, by hyperinflating currencies toward their final resting place in Davy Jones’ currency locker.

To wit, yesterday alone, we saw Deutsche Bank’s stock, just one day after a horrifying earnings report – which all but guarantees its inevitable downgrade to junk status – fall to within a dollar of the all-time low achieved in last month’s post-BrExit crash.  Which, I might add, will unquestionably be breached if it fails the ECB’s “stress test” tonight – assuming, of course, the results aren’t fraudulently altered to defer Deutsche Bank’s, and the entire European banking system’s, certain death.  Heck, Bank Monte Paschi, Italy’s third largest bank, is so obviously going to fail, it is desperately seeking a bailouttoday, with the results mere hours away.

Sticking with the theme of a collapsing Europe, Catalonia’s Parliament voted to secede from Spain Wednesday, taking 25% of the dying, massively over indebted PIIG’s tax revenue with it.  But don’t worry, there’s nothing to see here.  Then, this morning, it was reported that Eurozone 2Q GDP “growth” – you know, before the impact of the June 23rd BrExit referendum – plunged to just 0.3% on an annualized basis; whilst “inflation,” despite an historically high European cost of living, was just 0.2%, giving the ECB the “all systems go” to continue destroying the Euro, in “whatever it takes” fashion.  But don’t worry, such results were “in line” with expectations, so all’s well.

Around the world, the Nigerian Naira, used by 175 million citizens of Africa’s most populous nation, is on the verge of Venezuelan-style hyperinflation.  In China, stocks are plunging anew; in Australia and the UK, Central banks are expected to cut rates in the coming weeks – in the latter’s case, to zero or below.  And in Turkey, possibly the most dangerous geopolitical hotspot on the planet, has in its post-“coup” world, transformed from a borderline civilized nation, to a pro-Islamic dictatorship run by a murderous, psychotic madman.

Here in the States, whilst the treasonous criminal Hillary Clinton was nominated for the well-deserved humiliation and legacy destruction she will suffer at the hands of Donald Trump, Ford Motor’s stock plunged, after signaling the end of the biggest auto production – and sub-prime auto lending and leasing – bubble in U.S. history, per the quotes in its earnings report that “we don’t see growth…in the near-term” and “the U.S. industry has started to plateau.”  This, with auto inventories at all-time highs, suggesting an inventory-to-sales ratio already near 2008’s spike top high will imminently surge – yielding massive corporate losses, and equally massive layoffs in the years to come.  This, amidst an 18-month streak of year-over-year durable goods order declines, for the nation at large – which will plunge to Hades once the aforementioned, psychotic rate of superfluous auto inventory is shut down like a winterized sprinkler faucet.

For that matter, an hour from now, second quarter GDP will be announced.  Which incredibly, the “Street” expects to be +2.6%, despite the aforementioned, ongoing plunge in durable goods orders.  Not to mention, factory orders; industrial production; retail sales; corporate earnings; and now, commodity prices and currencies as well.  But wait, just yesterday, less than 24 hours from the release, the Atlanta Fed’s “GDP Now” estimate was slashed from 2.4% to 1.8% (in reality, such figures should have negative signs in front of them) – based not just on Wednesday’s miserable, minus 4% durable goods number, but yesterday’s trifecta of “worse than expected” economic data, including weekly jobless claims, the Kansas City Manufacturing Index, and the international trade deficit.  Throw in the tell-tale signs of collapsing high-end real estate markets and sales at Christy’s auction house, to give but a few examples, and you can see just how close the U.S. to finally ending the, LOL, third longest “expansion” in its history.  And why, I might add, the title of Wednesday’s post-FOMC audioblog was “the Fed died today.”  AND WOW, WOW, WOW – AS I EDIT, 2Q GDP “GROWTH” WAS REPORTED TO HAVE BEEN A MEASLY 1.2%, VERSUS “EXPECTATIONS” OF 2.6%.  WORSE YET, 1Q GDP “GROWTH” WAS REVISED FROM 1.2% TO 0.8%!

Amidst this gloom and doom – which I assure you, is just getting started, the PPT “dead ringer” the “Dow Jones Propaganda Average” higher – whilst gold was again capped at $1,350 ounce; and, more importantly, silver at the Cartel’s “ultimate line in the sand” at $20.50/oz.  Which, as I’ve discussed ad nausea since the Independence Day Eve surge – will utterly destroy the Cartel when broken, as it represents its 50 month moving average.  NOTE:  AS I EDIT, GOLD’S BACK UP TO $1,348, AND SILVER $20.35/OZ.

2016.07.29_chart1

Which brought us to last night’s “most important Bank of Japan meeting ever”; in which, it was expected that Kamikaze – I mean, Haruhiko – Kuroda would support Shinzo Abe’s psychotic $265 billion fiscal stimulus initiatives with its own bazooka monetary stimulus.  “Unfortunately” for the “1%” desperate for the Yen to be vaporized instantly, he “only” decided to double the BOJ’s lunatic equity monetization scheme.  I mean, it’s been ten months since we learned the BOJ owned 52% of all Japanese equity ETFs; and four months since it was reported the BOJ was a top ten holder of 90% of the 225 Nikkei stocks.  Yet, that apparently wasn’t enough, as starting now, the BOJ is doubling its annual equity ETF purchases from $30 billion to $60 billion.  My friends, this  is pure, unmitigated insanity, as 1) the cost of living in Japan, already one of the world’s most expensive nations, despite the “deflation” it is purported to be suffering, will surge further; 2) as I wrote in April’s “myth of QE to infinity,” the BOJ will soon run out of stocks to buy; 3) per May’s “communism, the ultimate end game,” the Japanese government will shortly become a significant – and in some cases – majority stockholder in countless, diverse corporations.  This, amidst an economy already in free fall, as evidenced by nine months of dramatically falling exports, before the current commodity price plunge (see today’s horrifying ExxonMobil earnings release), and post BrExit European contraction has even set in.  And oh yeah, the Japanese “demographic hell” that will only cause citizens’ spending to plunge further, particularly now that the Yen is being devalued, against real items of value, at an historic rate.  Which is probably why, despite 20 years of zero – and now, negative – interest rates; and the aforementioned, psychotic levels of QE, the Japanese stock market remains 60% below its 1989 peak.  Which is particularly scary given that the nation’s debt/GDP ratio is approaching 300%, its currency is being hyperinflated, its economy is collapsing, and said demographics will exacerbate all of these horrifying trends.

But LOL, what did the Yen do upon this announcement?  Yep, it surged higher – yet again, proving the BOJ’s credibility has died; just as we saw when the Yen rose after negative interest rates were “unexpectedly” announced in February.  Side note – yet again, proving what I have said all along about Precious Metals “relationship” to the “all-important” dollar/yen exchange rate – as despite the Yen rising, gold and silver were viciously capped when they tried to surge following this violently PM-bullish announcement.

To that end, I have pounded the table all year of how no matter what the BOJ does, they will not be able to weaken the Yen further against the dollar – despite the fact that essentially all other fiat trash will continue to free fall against the, for now, “reserve currency.”  The reason being, that despite the fact that a collapsing Yen will only destroy Japan quicker, this is what the BOJ wants.  And since the BOJ has destroyed itself after two decades of monetary lunacy, the markets won’t allow this to happen – principally because the Yen, as the “funding currency” of global “carry trades,” will face relentless upward pressure as these trades are “unwound.”  And by unwound, I mean “max pain” for the thousands of hedge funds and institutions being bankrupted by their idiocy, in following the Central bank Pied Piper too long.  I mean, just read what industry insiders are saying about what it’s like investing in today’s (rigged, overvalued) financial world, despite the “Dow Jones Propaganda Average” trading at a record high (in nominal terms, excluding survivor bias).

“We have never had so many traders saying, we are totally lost.”

  • Andrew Garthwaite, Credit Suisse Chief Strategist

Watching the epic battle scene in this season’s penultimate episode of Game of Thrones should give investors a sense of how it has felt to manage money during some periods over the past year.”

  • Dan Loeb, Manager of Third Point Partners, one of world’s largest hedge funds

Boo hoo, cry me a river, Andrew and Dan.  You’ve had the Fed, PPT, ESF, and every manipulative organization on the planet supporting your stupid trades, in massively overvalued securities, for the past two decades.  Meanwhile, we’ve been prudently investing in the right place, for the right reasons, but been punished by equally vicious manipulative suppression.  But do you know what?  It is us in the bull market now, and you on the way to the poorhouse.  Not that I look forward to the scary world directly ahead of us; but at least I know that I, and Miles Franklin Blog readers who have prepared beforehand, will be saved.  And for those that haven’t yet done so, I vehemently ask, what on Earth are you waiting for?

Read More @ Milesfranklin.com

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1 comment to Clueless Bank of Japan Exemplifies the Awe Inspiring, Irreversibly Destructive Power of the Printing Press

  • MEFOBILLS

    This movie is over an hour long, but worth the effort.

    BOJ caused Japan’s property bubble on purpose. Subsequent balance sheet recession (debt depression) then leads to QE. Werner analyzes the actual economics, and his QE has no relation to that used by BOJ and Bernanke.

    In other words, it looks like BOJ is incompetent, but it is not.

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