More Economic Reasons for Anti Capitalist Elites to Call for Helicopter Money

As I have written lately, there is growing panic among the elite that they may actually be able to replace God after all. Since in their arrogance the gods of the Fed have ruled out free-market economics and like any good fascists or communists they have decided that with their Harvard, Princeton, and Yale degrees they are smarter than the collective wisdom of the markets, they have collectively, step-by-step eliminated price discovery for capital and hence capitalism itself. Is it any wonder the entire world, which has signed on to the pathological Keynesian ideology, is heading into a global depression and poverty?

As the globe sinks deeper and deeper into the economic depths of despair, they have, as Peter Fisher recently said on CNBC, “decided that to remain credible they have to say things that are not credible,” such as entering into a negative interest rate regime and/or start to literally shower the masses with money created out of nothing. Whether the U.S. actually starts with negative rates or bypasses that lunacy with the equally lunatic policy of starting to pass out money by helicopters (actually electronic transfers, just like tax returns) remains to be seen. In any event, I can’t help but see how that would not be positive for gold. Here is what a truthful economist, John Williams, is telling his subscribers here on March 18, 2016.

Bad News for the Dollar and for Central Bank Efforts to Stabilize the System.  Despite some relative monthly boosts to headline January 2016 data from likely poor-quality seasonal adjustments, headline economic reporting is about to offer a new round of downside “surprises,” in the week ahead.  That should re-intensify the movement of market expectations towards a pending “new” recession.

The U.S. Federal Reserve’s recent actions to back away from its quantitative easings peaked in December 2015, with the FOMC’s hiking the targeted federal funds rate by 0.25%.  Expectations then were for regular rate hikes to follow, with the next one possibly as early as March (next Wednesday, March 16th), based on the ongoing strength and recovery in the U.S. economy.  Yet, the economy never recovered, and it is not likely to rebound in the foreseeable future.  As faltering business activity increasingly stresses the still-unstable banking system, as the budget deficit explodes well beyond current expectations, the Fed will need to keep pumping liquidity into the banking system as well as into the U.S. Treasury.  Quantitative easing is not about to disappear.

Discussed in No. 777 Year-End Special Commentary, when the Federal Reserve and the U.S. Treasury acted to forestall the collapse of the banking system in the Panic of 2008, the decision was to save the system at any cost.  Yet, the actions taken were stopgap only; underlying issues that had led to the crisis generally were not addressed.  Still living under the weight and fear of systemic failure, the Fed will move again, as needed, to save the system.  The ultimate cost eventually will be in the total debasement of the U.S. dollar.

About Jay Taylor

Jay Taylor is editor of J Taylor's Gold, Energy & Tech Stocks newsletter. His interest in the role gold has played in U.S. monetary history led him to research gold and into analyzing and investing in junior gold shares. Currently he also hosts his own one-hour weekly radio show Turning Hard Times Into Good Times,” which features high profile guests who discuss leading economic issues of our day. The show also discusses investment opportunities primarily in the precious metals mining sector. He has been a guest on CNBC, Fox, Bloomberg and BNN and many mining conferences.