Bank of Japan

Jim Rogers: “This Is Too Insane – And I’m Afraid We’re All Going To Suffer For The Rest Of This Decade From This Crazy, Crazy Money Printing”

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– Jim Rogers: “This Is Too Insane–And I’m Afraid We’re All Going To Suffer For The Rest Of This Decade” (Bull Market Thinking, June 26, 2013):

I was able to reconnect with Jim Rogers this morning out of Spain, legendary co-founder of the Quantum Fund with George Soros, author of Hot Commodities, and chairman of the private Beeland Holdings.

It was an especially powerful interview, as Jim spoke towards the relentless downward pressure on gold, the upward explosion in interest rates, central bank money printing, and how to protect yourself ahead of the disastrous times he sees coming.

When asked if we’re seeing forced liquidation leading the smash down in gold this morning, Jim said, “We certainly are. There are a lot of leveraged players who are now being forced to sell. Usually when you have this kind of forced liquidation, you’re getting closer to a bottom, maybe not the final bottom, but certainly close to a bottom. I even bought a little bit [today].”

With regard to the intense bearish news stories being published on gold, Jim suggested investors shouldn’t ”Pay [much] attention to other people. I pay attention to what’s going on…Obviously with gold collapsing I know about that—but I don’t listen to other people.”

Read moreJim Rogers: “This Is Too Insane – And I’m Afraid We’re All Going To Suffer For The Rest Of This Decade From This Crazy, Crazy Money Printing”

U.S. Treasury Sales By Foreigners Hit Record High In April

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– Treasury Sales By Foreigners Hit Record High In April (ZeroHedge, June 14, 2013):

The monthly TIC (foreign capital flows) data gets less respect than it should. Perhaps it is because it is two months delayed, or perhaps due to the Treasury Department labyrinth one has to cross in order to figure out what is going on. Either way, for those who do follow the data set, will know by now that in April, foreign investors, official and private, sold $54.5 billion. Why is this number of note? Because it is the biggest monthly sale of Treasurys by foreigners in the history of the data series. The TSY revulsion was somewhat offset by a jump in MBS purchases, which saw $23 billion in acquisitions, while corporate bonds were sold to the tune of $4.5 billion. Finally, looking at equities, foreigners were responsible for some $11.2 billion in US stock purchases. The great rotation may not be working domestically, but it seems to be finally impacting foreign investors.

As for the question who sold the most US paper, the answer is below: not surprisingly, Japan is at the top, and we can only imagine the proceeds from the sale were used to fund (currently even more money losing) purchases in the Nikkei, which is currently at levels last seen in March, or before the great BOJ intervention.

Japan Has Officially Gone TOTALLY INSANE

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– Japan Has Officially Gone Insane (ZeroHedge, May 23, 2013):

On one hand:

  • BOJ OFFERS TO BUY 300B YEN DEBT WITH MORE THAN 10YR MATURITY
  • BOJ OFFERS TO BUY 600B YEN IN 5-10YR GOVT DEBT

and on the other

  • ABE SAYS BOJ ISN’T DIRECTLY BUYING GOVERNMENT DEBT

We give up: raging schizophrenia and a sado-maso fetish is now a core prerequisite for anyone who wishes to follow the daily lies these central planning sociopaths spew with impunity.

Deutsche Bank: ‘We Fully Understand Why The Authorities Wouldn’t Want Free Markets To Operate Today’

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– Deutsche Bank: “We Fully Understand Why The Authorities Wouldn’t Want Free Markets To Operate Today” (ZeroHedge, May 9, 2013):

A brief stroke of brilliance from Deutsche Bank’s Jim Reid:

Read moreDeutsche Bank: ‘We Fully Understand Why The Authorities Wouldn’t Want Free Markets To Operate Today’

Bill Fleckenstein Of Fleckenstein Capital: Hold Tight To Your Gold (Video)

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Click the play button below to listen to Chris’ interview with Bill Fleckenstein (28m:26s)

– Bill Fleckenstein: Hold Tight To Your Gold (PeakProsperity, April 21, 2013):

Why it’s going to go “one hell of a lot” higher

The bond market is an accident waiting to happen.

When the bond market finally does crack, it is going to be one epic nightmare that is going to make 2008 and 2009 seem like a picnic. It will be a different kind of a crisis; but it will be an enormous crisis. These people that are bullish about stocks and bonds and the bond market, they do not understand anything.

We will hit a moment in time where there will be a rapid acceleration of the perception that people are being cheated via inflation by these money-printing policies. Why Americans seem to think there is no inflation just because the CPI says so, when their checkbooks every day ought to tell them there is, I cannot explain that. But there will be a change in psychology, and there will be a massive stampede into gold here and everywhere else around the world, because it is the only way you can protect yourself against these policies.

Pity the wise money manager these days. Our juiced-up financial markets, force-fed liquidity by the Fed the other major world central banks, are pushing asset prices far beyond what the fundamentals merit.

If you see this reckless central planning behavior for what it is – a deluded attempt to avoid reality for as long as possible – your options are limited if you take your fiduciary duty to your clients seriously.

Read moreBill Fleckenstein Of Fleckenstein Capital: Hold Tight To Your Gold (Video)

Federal Reserve And Bank Of Japan Caused Gold Crash (Telegraph, Ambrose Evans-Pritchard)

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Compare Ambrose Evans-Pritchard’s article to …

– Former Assistant Secretary of the Treasury Dr. Paul Craig Roberts: The Assault On Gold – Assault On Gold UPDATE

– Fed and Bank of Japan caused gold crash (Telegraph, Ambrose Evans-Pritchard April 17, 2013):

Commodity prices have been falling since September, culminating in a rout over the past two weeks. That is a classic warning for the global economy.

It is becoming ever clearer that the roaring boom in global equities since last summer has priced in an economic recovery that does not in fact exist. The International Monetary Fund has had to nurse down its global growth forecasts yet again. We are still stuck in an old-fashioned trade depression, with pervasive over-capacity in manufacturing plant and a record global savings rate of 25pc of GDP.

German car sales fell 17pc in March. That should puncture the last illusions that Germany is about to pull Europe out of a self-inflicted slump.

As you can see from the chart below, the divergence between stock markets and the Deutsche Bank index of raw materials is astonishing to behold, so like the pattern in early 1929.

Read moreFederal Reserve And Bank Of Japan Caused Gold Crash (Telegraph, Ambrose Evans-Pritchard)

Ex-Soros Advisor Sells ‘Almost All’ Japan Holdings, Shorts Bonds; Sees Market Crash, Default And Hyperinflation

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Don’t miss!

– Ex-Soros Advisor Sells “Almost All” Japan Holdings, Shorts Bonds; Sees Market Crash, Default And Hyperinflation (ZeroHedge, April 14, 2013):

Previously, we have pointed out why Japan’s attempt at reincarnating its economy, geared solely at generating a stock market-based “wealth effect”, and far less focused on boosting the country’s trade surplus or current account, is doomed to failure, namely due the drastically lower equity participation by the general population and financial institutions in the country’s stock market. Sure, foreign investors will come and go renting each rally for a period of time, but unless the local population participates in the “reflation attempt” (which has already sent the price of luxury goods, energy and food through the rood), or in other words change the behavioral patterns of two generations of Japanese in under two years, the inflationary shock will simply leads to a loss of faith in the government and ultimately Abe’s second untimely demise. Not surprisingly, 4 months after Japan set off on the most ludicrous economic experiment in history, and one week after the BOJ announced its plans to double its balance sheet, Abe’s approval rating has already begun sliding with a poll by Asahi just reporting that popular support of Abe’s cabinet is already down to 60%, down from 71% a month ago.

Read moreEx-Soros Advisor Sells ‘Almost All’ Japan Holdings, Shorts Bonds; Sees Market Crash, Default And Hyperinflation

Japan’s Debt Crisis Visualized (Video)

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– Japan’s Debt Crisis Visualized (ZeroHedge, April 4, 2013):

In just a few short minutes, inspired by Kyle Bass, Addogram presents a short visual explanation of Japan’s debt problem. In the time it takes Ben Bernanke to print $13.7 million you’ll have a deep understanding of Aso, Abe, and Kuroda’s impending debt crisis.


YouTube

Hedge Fund Manager Kyle Bass: ‘Japan Will Implode Under Weight Of Their Debt’ (Video)

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– Kyle Bass: “Japan Will Implode Under Weight Of Their Debt” (ZeroHedge, April 4, 2013):

As the fast-money flabber-mouths stare admiringly at the rise in nominal prices of Japanese (and the rest of the world ex-China) stock prices amid soaring sales of wheelbarrows following Kuroda’s ‘shock-and-awe’ last night, it is Kyle Bass who brings these surrealists back to earth with some cold-hard-facting. Out of the gate Bass explains the massive significance of what the Japanese are embarking on, “they are essentially doubling the monetary base by the end of 2104.”

It is a “Giant Experiment,” he warns, but when you are backed into a corner and your debts are north of 20 times your government tax revenue, “you’re already insolvent.” Simply put, Bass says they have to do something and they have to something big because they are “about to implode under the weight of their debt.” For a sense of the scale of the BoJ’s ‘experimentation’, Bass sums it up perfectly (and concerningly), “the BoJ is monetizing at a rate around 75% of the Fed on an economy that is one-third the size of the US!”

What they are trying to do is devalue the currency to attempt to become more competitive while holding their rates market flat – the economic zealots running the world’s central banks believe they can live in that Nirvana – and Bass believes that is not the case, as they will lose control of rates, since leaving the zone of insolvency is impossible now. His advice, “if you’re Japanese, spend! or take it out of your country. If you’re not, borrow in JPY and invest in productive assets.” Do not be long JPY or Japanese assets as he concludes with the reality of Japan’s “hollowed out” manufacturing industry and why USDJPY is less important that KRWJPY.

The Reflation Party Is Ending As China Withdraws Market Liquidity For First Time In Eight Months

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– The Reflation Party Is Ending As China Withdraws Market Liquidity For First Time In Eight Months (ZeroHedge, Feb 19, 2013):

Since institutional memories are short, it is time to remind readers that it was the threat, and subsequent reality, of China overheating in the spring and summer of 2011 (when record high food prices sent the entire North African region in a state of coordinated revolt and gradually moved far east), when even the Great firewall of China could not block news of frequent break outs of localized violence from hungry and angry mobs, that halted and broke the spine of the great reflation trade then (and yes, 2013 has so far been a carbon copy replica of 2011 as we summarized in “It’s Deja Vu, All Over Again: This Time Is… Completely The Same“).

Furthermore, as only Zero Hedge forecast back in mid-2012, when ever other commentator was shouting over the rooftops that an RRR or interest rate cut out of Beijing was imminent, the PBOC would be the last to stimulate the market with monetary easing as it was well-aware that an entire developed world reflating at the same time would hit none other than China the fastest as the hot money flew straight into Shanghai. Just as it did in 2011. So instead China proceeded to engage in a series of daily reverse repos, or ultra-short term liquidity injections that prevented the advent of wholesale inflation: after all the Fed, the BOJ, the ECB and soon, the BOE, were doing it for them. And the last thing the country with the highest allotment of CPI, or book inflation, to food and energy can afford, is to let foreign central banks dictate its price level. After all, it has more than enough of its own.

Well, the Chinese New Year celebration is now over, the Year of the Snake is here, and those following the Shanghai Composite have lots to hiss about, as two out of two trading days have printed in the red. But a far bigger concern to not only those long the SHCOMP, but the “Great Reflation Trade – ver. 2013″, is that just as two years ago, China appears set to pull out first, as once again inflation rears its ugly head. And where the PBOC goes, everyone else grudgingly has to follow: after all without China there is no marginal growth driver to the world economy.

End result: China’s reverse repos, or liquidity providing operations, have ended after month of daily injections, and the first outright repo, or liquidity draining operation, just took place after eight months of dormancy.

From the WSJ:

Chinese authorities took a step to ease potential inflationary pressures Tuesday by using a key mechanism for the first time in eight months.

The move by the central bank to withdraw cash from the banking system is a reversal after months of pumping cash in. That cash flood was meant to reduce borrowing costs for businesses as the economy slowed last year—but recent data has shown growth picking up, along with the main determinants of inflation: housing and food prices.

Read moreThe Reflation Party Is Ending As China Withdraws Market Liquidity For First Time In Eight Months

Back To The Future For Japan? (Japan Times)

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– Back to the future for Japan? (Japan Times, Jan 1, 2013):

As the new year kicks off and the coalition government of the Liberal Democratic Party and Komeito gets into full swing, Japan will see a drastic change in the direction of policies set by the DPJ government during its rule of three years and three months. It will not be a new direction, however, but rather largely a revival of the policy direction that Prime Minister Shinzo Abe adopted — or tried to adopt — during his first administration from September 2006 to September 2007.

People will likely soon feel the effects of the new Abe administration’s policies, but it is unclear whether his approach to the economy will improve their lives.

Read moreBack To The Future For Japan? (Japan Times)

Japan: Presenting Shinzo Abe’s ‘Super-Secret’ Devaluation Plan – Double-Down

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– Presenting Abe’s ‘Super-Secret’ Devaluation Plan – Double-Down (ZeroHedge, Dec 28, 2012):

Much has been made of newly appointed uber-easer Abe’s plans to weaken the JPY by any means possible. Since the global financial crisis began in early 2008, USDJPY has tracked remarkably closely with the ratio of Federal Reserve assets to Bank of Japan assets – as the currency wars escalated. Assuming the Fed proceeds with its planned QE3/4 $1tn expansion, then BoJ assets would need to expand by around JPY100tn to meet this target. The current BoJ holdings of JGBs just crossed JPY100tn – so this new printing is double the current holdings and considerably more than double the planned JPY44tn purchases for the year. Good luck with that given the expected JGB issuance this year is only around JPY44tn and good luck persuading anyone that the BoJ is not directly funding the government in the ultimate reacharound. As the Fed monetizes 1 year of Treasury issuance so the BoJ has to monetize over 2 years of JGB issuance – sustainable?

Read moreJapan: Presenting Shinzo Abe’s ‘Super-Secret’ Devaluation Plan – Double-Down

As BOJ Holdings Surpass ¥100 TRILLION, It Gets An Ultimatum: ‘Stop Being Independent Or Lose Your Independence’

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– As BOJ Holdings Surpass ¥100 Trillion, It Gets An Ultimatum: “Stop Being Independent Or Lose Your Independence” (ZeroHedge, Dec 23, 2012):

2013, which is still a week away, is already off to a ‘crazy pills’ bang. Because while the bulk of the politipunditry is shocked, shocked, that it was dead wrong about the Cliff outcome which is now set to ram the country front and center on January 1, the most amusement appears to be emanating from the land of the rising sun, where the brand new PM just issued an ultimatum to the central bank, which can be summarized as follows: stop being independent, or we will change the laws and take away your independence.

This is merely the latest attempt by a government – which obviously knows better than the collective known as the market (or was the market before central-banks decided to make a mockery of the term) to define both fiscal and monetary policy, the way Goldman Sachs has been able to do for decades in the US, Europe, and now UK.

What, however, guarantees the fun factor this time is that Abe, as the FT summarizes, already had a stint in control back in 2006-2007 which “ended amid ill health, scandal and policy failure.” Specifically, it ended in a bout of explosive diarrhea as we reported previously (no seriously) which was the scapegoat to “justify” Abe’s early retirement. So where Abe failed, with limited intervention, he will now succeed with virtually unlimited control over both the fiscal and monetary apparatus. One can now see where the amusement possibilities are virtually unlimited.

From the FT:

Read moreAs BOJ Holdings Surpass ¥100 TRILLION, It Gets An Ultimatum: ‘Stop Being Independent Or Lose Your Independence’

Japan’s NO EXIT Strategy

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– Japan’s NO EXIT Strategy (Testosterone Pit, Dec 17, 2012):

One of my sources in Japan was told about a yearend Bonenkai party where an official from the Ministry of Finance, the most powerful ministry at the core of Japan Inc., had let slip some things, perhaps after one too many drinks. He confirmed the view propagated by the Liberal Democratic Party, the victor in Sunday’s election, that the Bank of Japan wasn’t doing its job, that it was just giving away money to the banks which then bought Japanese government bonds instead of channeling it into the real economy.

“That’s why the Ministry of Finance is trying to gain control over the Bank of Japan,” he said. “The Ministry of Finance has pride in its ability and is much more qualified to run things than the Bank of Japan.”

Turf war. For him and his ilk, independence of the central bank is a non-sequitur. And elected politicians, when they try to bring the powerful bureaucracy under democratic control, are a nuisance. Prime Minister Yoshihiko Noda and his Liberal Democratic Party had attempted to do that. Now they’re out.

So a new government is being formed by the party that ran the show for fifty years after World War II and is responsible for building the very institutions and structures that got Japan to where it is today. With a new prime minister, Shinzo Abe—who’d already been through the annually revolving prime-ministerial door in 2006/2007. This “new” government is going to fix whatever ails Japan by spending even more money and by wrestling control over the printing press away from the Bank of Japan.

Alas, Japan engaged in “quantitative easing” on a massive scale long before the term had been invented. It has followed the most profligate Keynesian stimulus policies for two decades. Well over half of its current budget is paid for with borrowed money. The country is drowning in liquidity. Interest rates have been at zero or near zero for over a decade. And by the end of this fiscal year, gross national debt will hit 240% of GDP, the highest in the world [for how the MoF plans to deal with that debt, read…. Japanese Ministry of Finance To Bondholders: You’re Screwed!].

Read moreJapan’s NO EXIT Strategy

PIMCO’s Bill Gross Warns ‘Very Likely’ Central Banks Will Cause 1987-Like Crash

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– Bill Gross Warns “Very Likely’ Central Banks Will Cause 1987-Like Crash (ZeroHedge, Oct 19, 2012):

What takes other Political Journalism majors (and CTRL-C/V minors) pages and pages of verbose essays full of acronyms and meaningless gibberish to refute, Bill Gross asserts in less than 140 characters.

Read morePIMCO’s Bill Gross Warns ‘Very Likely’ Central Banks Will Cause 1987-Like Crash

China Central Bank Refuses To Join Global Print Fest, Warns About Inflation Risks

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– China Central Bank Refuses To Join Global Print Fest, Warns About Inflation Risks (ZeroHedge, Oct 12, 2012):

While the entire ‘developed’ world is now openly engaged in destroying the balance sheet of its assorted central banks – the sole means to devalue local currencies, a liability, by accepting ever more toxic ‘assets’ as currency collateral – thereby pursuing strategies which until now were strictly relegated to the banana republic playbook, there are some countries who see what is coming over the horizon, and refuse to join the printing frenzy. One such place is China, for whom, as we have repeatedly shown the threat of a fast onset of inflation is far greater (3x more bank deposits as a % of GDP than in the US, means a soaring capital market as a result of inflation will benefit far less while a deposit exodus will cause hyperinflationary havoc in minutes) than any other developed world country. And with the inability to hide “non-core” CPI as a result of food and energy being such a greater portion of overall inflationary bean counting than in the US, it means that despite the demands of Tim Geithner for immediate more easing by China, the PBOC is now stuck waiting to import everyone else’s inflation: this includes the Fed, ECB, BOE, BOJ, Korea, Australia and all other bank engaged in adding liquidity, while its own hands are quite tied. Because recall that it was only last year that the NYT said that: “Inflation in China Poses Big Threat to Global Trade.” Now we are told that lack of inflation poses the same threat, when in reality what they mean is that with the world tapped out, one more source of marginal liquidity is needed. Judging by overnight comments from the PBOC’s head Zhou Xiaochuan that liquidity, suddenly so very needed to keep the game of musical chairs going, is not going to come from China just as we have warned for months on end.

From Reuters:

China’s central bank governor has warned that quantitative easing policies worldwide could cause inflationary risks, state news agency Xinhua said on Saturday.

Read moreChina Central Bank Refuses To Join Global Print Fest, Warns About Inflation Risks

Japanese Ministry of Finance To Japanese Bondholders: YOU’RE SCREWED!!!

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Related info:

– Bank Of Japan Increases Asset Purchases By Y10 Trillion, Total Program Now Y80 Trillion, Total Debt Still Y1 Quadrillion

– Bond Wars: Chinese Advisor Calls For Japanese Bond Dump (… Leading To A Long Anticipated Japanese Bond Market Collapse)

– Japan’s Debt Crisis (Infographic)

– Japanese Ministry of Finance To Japanese Bondholders: You’re Screwed! (ZeroHedge, Sep 24, 2012):

This has got to be the icing on the Japanese cake. The otherwise bland website of the Japanese Ministry of Finance, more specifically the FAQ page on government bonds, has been catapulted to stardom on Facebook and Twitter. Not in a good way. As you flip through the MoF’s website, page after page, you will mostly see zero Facebook likes and zero tweets. Social media and the MoF ignore each other.

But go to the FAQ page, skip down past the categories of Budget, Taxation, and Tariffs to item 4, Government bonds. Under the second group, skip past Tax questions for individuals, Miscellaneous (Is it a crime if I make a copy?), Price and yield questions, and Coupons to the infamous question 5: “In case Japan becomes insolvent, what will happen to government bonds?“

Tweeted 1,645 times, liked on Facebook 3,733 times!

The MoF website isn’t some blog to be ignored (at your own risk) but the official voice of the most important ministry of the most indebted country in the world, whose debt will reach 240% of GDP by the end of this fiscal year. The country borrows over 50% of every yen it spends, and it spends more every year. With no solution in sight. Other than more borrowing. Certainly not cutting the budget, which would be too painful. It wouldn’t be enough anyway. Even cutting the budget in half would leave a deficit. And the recently passed consumption tax increase? It will raise the tax from its current 5% to 8% in 2014 and to 10% in 2015, way too little to deal with the gigantic problem, and years too late. Yet it won’t kick in unless GDP grows at least 2% per year—which has practically no chance of happening.

No, there is no longer a good solution. And everyone knows it.

Read moreJapanese Ministry of Finance To Japanese Bondholders: YOU’RE SCREWED!!!

Bond Wars: Chinese Advisor Calls For Japanese Bond Dump (… Leading To A Long Anticipated Japanese Bond Market Collapse)

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And the consequences for the country represented by the question market in the chart below, would be tragically severe, as would they for the entire “developed”, insolvent and daisy-chained world.

– Bond Wars: Chinese Advisor Calls For Japanese Bond Dump (ZeroHedge, Sep 18, 2012):

Earlier today we casually wondered whether the US stands to lose more by supporting China or Japan in their escalating diplomatic spat, considering the threat of a US Treasury sell off is certainly not negligible, a dilemma complicated by the fact that as today’s TIC data indicated both nations own almost the same amount of US paper, just over $1.1 trillion. In a stunning turn of events, it appears that China has taken our thought experiment a step further and as the Telegraph’s Ambrose Evans-Pritchard reports, based on a recommendation by Jin Baisong from the Chinese Academy of International Trade (a branch of the commerce ministry) China is actively considering “using its power as Japan’s biggest creditor with $230bn (£141bn) of bonds to “impose sanctions on Japan in the most effective manner” and bring Tokyo’s festering fiscal crisis to a head.” I.e., dump Japan’s bonds en masse. Should this stunning recommendation be enacted, not only would it be the first time in world history that insurmountable credit is used as a weapon of retaliation, it would mark a clear phase transition in the evolution of modern warfare: from outright military incursions, to FX wars, to trade wars, culminating with “bond wars” which could in the span of minutes cripple the entire Japanese fiscal house of cards still standing solely due to the myth that unserviceable debt can be pushed off into perpetuity (as previously discussed here).

Not needing further explanation is the reality that should China commence a wholesale Japanese bond dump, it may well lead to that long anticipated Japanese bond market collapse, as creditor after creditor proceeds to sell into a market in which the BOJ is the buyer of only resort in the best case, and into a bidless market in the worst.

Read moreBond Wars: Chinese Advisor Calls For Japanese Bond Dump (… Leading To A Long Anticipated Japanese Bond Market Collapse)

Federal Reserve Is Losing The ‘Race To Debase’

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– The Fed Is Losing The “Race To Debase” (ZeroHedge, Mar 25, 2012):

As we pointed out about a month ago, in “While You Were Sleeping, Central Banks Flooded The World In Liquidity” as the world was focused on headlines whether or not the Fed would step up as it always does when the market is sliding, and unleash the monetary floodgates, it was not Ben Bernanke, but eveyrone else that hit CTRL+P and took the place of the Fed, of note the primary central banking peers among the Final Four – the ECB, the BOE and the BOJ. And why not: after all the hope was that since electronic money is electronic money, and can be moved from point A to point B at the push of a button, it would be used primarily to reflate stocks around the world, but mostly where the path has least resistance – the US. What was not accounted for was that money would also be used to inflate commodities such as oil – a key factor when delaying further US-based easing in an election year. However, more than even record for this time of year gas prices, there was one even more important outcome from this chain of events. As the following chart from Willem Buiter shows, in its fake attempt to show monetary restraint, the Fed has gone straight into last place in the “race to debase.” Needless to say, in a world with $25+trillion in “excess” debt (debt which would need to be eliminated simply to reduce global debt/GDP to a “sustainable” 180% per BCG), last is a very bad place to be…

Of course, our frequent readers will note that this is the same chart that we have presented, however in the form of the main correlation chart for 2012 as we have dubbed it – i.e,  the ratio between the size of the ECB and the FED vs the EURUSD. What is probably also quite disturbing is that the Fed is “losing” even after expanding by a massive 232% in the past 5 years, a number that is only topped by the Bank of England. To quantify, the Fed is now responsible for “only” 20% or so of US GDP, compared to 30% for the ECB and BOJ. To further quantify, to get back to first place in the race to debase, the Fed will have to do at least another $1.5 trillion in QE.

Also, having become a buyer of last reserve for credit money, it is easy to see why one should be outright skeptical of US GDP “numbers” – from 6% of US GDP, the Fed now accounts for a whopping 19% – this is “growth” that would not have happened unless the Fed, via debt monetization would have allowed it. Said otherwise, net of Fed deleveraging (if it ever unwinds its balance sheet of course), US GDP would be a 13% lower!

Not only that but as the chart above shows, global GDP has about $6 trillion in “one-time, non-recurring” growth factored in.

Read moreFederal Reserve Is Losing The ‘Race To Debase’