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To: GROUND ZERO™ who wrote (53660)	8/16/2013 10:57:46 AM
From: Hawkmoon	4 Recommendations Recommended By Brian Sullivan GoodGord GROUND ZERO™ Machaon Read Replies (1) \| Respond to of 218587

the FED is trapped in its own weave of deception... with all that easing, the economy has not budged... Yep.. totally concur.. I've increasingly adopted the analogy of "pumping air into a leaking tire" to represent the financial system and economy.. There is always a certain amount of "deflation" as money is destroyed via default and repayment of debt. It's the nature of "creative destruction".. We all know that debt creation is essentially the creation of money, right? Fractional reserve lending.. etc, right? So a balance has to be maintained between the creation and destruction of money, in order to maintain the value of the currency, right? With the level of debt that we see now, there is a major incentive to pay it down, or default on it (due to lack of ability to repay it). So the Fed has been pumping in money to counter the lack of monetary velocity (transactions) and maintain GDP (more $$$ in the financial system don't have to turn over as many times to sustain GDP numbers). But there really isn't any TRUE demand for credit in the current economy, from what I read. Just demand from the TBTF banks to receive .25% loans for speculative investment and the purchase of 2-3% Treasuries. The Fed is pushing on a string.. and I think the deflation in the monetary base due to lack of velocity may be at the point of overpowering the QE. But that doesn't mean the Fed won't "pile on" and continue their existing policies. And maybe the Gold market sees that in the data. But that doesn't mean the Fed's pumping will be able to overcome the deflationary forces represented by the WMT data. Also, don't get me started on the continuing problem with CDS and the ability for financial speculators to bet on the destruction of an asset they do not own. I still think there is the threat of such CDS speculation undermining the value of collateral posted against commercial debt, thereby weakening the entire foundation of the credit markets. It's one thing for me to buy insurance against my house burning down, but quite another for every Tom, Dick, and Harry, being able to buy fire insurance on my house, and then set a match to it in order to collect on their policy.. It seems that, right now, the only remaining "credible" collateral is sovereign debt, financed by a declining tax base. Which, IMO, is one of the reasons we saw the national debt increase by $7 Trillion since 2008. Just my .02 on the subject. And I stand ready to have my theories challenged and my thinking changed.. Hawk