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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: orkrious who wrote (103711)6/18/2009 5:16:41 PM
From: TH  Read Replies (1) of 110194
 
Brother Ork,

Same question. The direction was just different.

He has no choice but to STOP buying bonds.

The Chinese have warned. Ben is an ivory tower academian who writes wonderful papers on how the big machine works. And of course the implication is that he, the one that can understand the big machine, is the one to pull the levers. Too bad 5000 years of the immutable laws of economics will prove him wrong, and the market is doing just that.

Ben is checkmated, and the question is not what moves he can make, but rather if he can make the move that will keep the other player playing.

Ben has to abandon QE, drain some token liquidity, and convince the players with real choice to keep playing. He can only do this by establishing a real return for their participation.

And we have reached that exact point.

Now I love gold and will retain it, for the math does not change, and thus gold will have it's day. It is just the timing. While there is still a possibility to make a single choice and continue the game, then that choice will be made.

Ben will stop buying bonds, for doing so no longer has the "play" in the play to have cake and eat it to. Now the only way to get bonds lower is to allow reality to express itself (which unfortunately is still deflation) and keep the other players engaged.

I do think this is last round. And next time it will be boy that cried wolf, and POG just goes parabolic. I'm thinking fall, but maybe early 2010.

GT
TH
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