March 18, 2014… spring 91st day

The solar calendar and 91st days for 2014 to 2015…


Psalm 91    King James Version
1 He that dwelleth in the secret place of the most High shall abide under the shadow of the Almighty.

2 I will say of the LORD, He is my refuge and my fortress: my God; in him will I trust.

3 Surely he shall deliver thee from the snare of the fowler, and from the noisome pestilence.

4 He shall cover thee with his feathers, and under his wings shalt thou trust: his truth shall be thy shield and buckler.

5 Thou shalt not be afraid for the terror by night; nor for the arrow that flieth by day;

6 Nor for the pestilence that walketh in darkness; nor for the destruction that wasteth at noonday.

7 A thousand shall fall at thy side, and ten thousand at thy right hand; but it shall not come nigh thee.

8 Only with thine eyes shalt thou behold and see the reward of the wicked.

9 Because thou hast made the LORD, which is my refuge, even the most High, thy habitation;

10 There shall no evil befall thee, neither shall any plague come nigh thy dwelling.

11 For he shall give his angels charge over thee, to keep thee in all thy ways.

12 They shall bear thee up in their hands, lest thou dash thy foot against a stone.

13 Thou shalt tread upon the lion and adder: the young lion and the dragon shalt thou trample under feet.

14 Because he hath set his love upon me, therefore will I deliver him: I will set him on high, because he hath known my name.

15 He shall call upon me, and I will answer him: I will be with him in trouble; I will deliver him, and honour him.

16 With long life will I satisfy him, and shew him my salvation.


Psalm 1:4 (NIV)
Not so the wicked! They are like chaff that the wind blows away…


The parasite’s world view…

Call it whatever you like… It is what it is…   —Editor
Exodus 20:15 (KJV)
… Thou shalt not steal…
no free lunch
Published on Feb 24, 2014 by RealityAlwaysWins (youtube)

Related posts…

Stealing is what thieves do…

Illustration of communism/socialism in nature…

Why the European Union had to fail… (socialism=stealing)

From Exodus 23:2 (NASB)
… You shall not follow the masses in doing evil…

Intelligent design…

Men do not have a track record for pure motives…   —Editor
From Genesis 11:6 (ESV)
… and this is only the beginning of what they will do…

dna editing

Article from

A Powerful New Way to Edit DNA

In the late 1980s, scientists at Osaka University in Japan noticed unusual repeated DNA sequences next to a gene they were studying in a common bacterium. They mentioned them in the final paragraph of a paper: “The biological significance of these sequences is not known.”

Now their significance is known, and it has set off a scientific frenzy.

The sequences, it turns out, are part of a sophisticated immune system that bacteria use to fight viruses. And that system, whose very existence was unknown until about seven years ago, may provide scientists with unprecedented power to rewrite the code of life.

In the past year or so, researchers have discovered that the bacterial system can be harnessed to make precise changes to the DNA of humans, as well as other animals and plants.

This means a genome can be edited, much as a writer might change words or fix spelling errors. It allows “customizing the genome of any cell or any species at will,” said Charles Gersbach, an assistant professor of biomedical engineering at Duke University.

The enzyme Cas9, shown in blue and gray, can cut DNA, in gold, at selected sites, as seen in this model from electron microscope images. Credit David Taylor and Jennifer Doudna

Already the molecular system, known as Crispr, is being used to make genetically engineered laboratory animals more easily than could be done before, with changes in multiple genes. Scientists in China recently made monkeys with changes in two genes.

Scientists hope Crispr might also be used for genomic surgery, as it were, to correct errant genes that cause disease. Working in a laboratory — not, as yet, in actual humans — researchers at the Hubrecht Institute in the Netherlands showed they could fix a mutation that causes cystic fibrosis.

But even as it is stirring excitement, Crispr is raising profound questions. Like other technologies that once wowed scientists — like gene therapy, stem cells and RNA interference — it will undoubtedly encounter setbacks before it can be used to help patients.

It is already known, for instance, that Crispr can sometimes change genes other than the intended ones. That could lead to unwanted side effects.

The technique is also raising ethical issues. The ease of creating genetically altered monkeys and rodents could lead to more animal experimentation. And the technique of altering genes in their embryos could conceivably work with human embryos as well, raising the specter of so-called designer babies.

“It does make it easier to genetically engineer the human germ line,” said Craig C. Mello, a Nobel laureate at the University of Massachusetts Medical School, referring to making genetic changes that could be passed to future generations.

Still, Crispr is moving toward commercial use. Five academic experts recently raised $43 million to start Editas Medicine, a company in Cambridge, Mass., that aims to treat inherited disease. Other start-ups include Crispr Therapeutics, which is being formed in London, and Caribou Biosciences in Berkeley, Calif.

Agricultural companies might use Crispr to change existing genes in crops to create new traits. That might sidestep the regulations and controversy surrounding genetically engineered crops, which generally have foreign DNA added.

The development of the new tool is an example of the unanticipated benefits of basic research. About 15 years ago, after it became possible to sequence the entire genomes of bacteria, scientists noticed that many species had those repeated DNA sequences that were first noticed a decade earlier in Osaka. They were called “clustered regularly interspaced short palindromic repeats” — Crispr for short.

But what was their purpose? In 2007, researchers at Danisco, a company that supplies bacterial cultures used in making cheese and yogurt, confirmed hypotheses that Crispr protects bacteria from viruses.

It is part of an adaptive immune system — one that remembers a pathogen so it is ready the next time that same invader appears. The human adaptive immune system is why people get measles only once and why vaccines work. But it was not imagined that single-cell organisms like bacteria had such systems.

Here is how it works. The repeated DNA sequences in the bacterial genome are separated from one another by other sequences. These “spacers” are excerpts from the sequences of viruses that have attacked the bacterium or its ancestors. They are like genetic mug shots, telling the bacterium which bad guys to watch for. The Crispr defense system will slice up any DNA with that same sequence, so if the same virus invades again, it will be destroyed.

If a previously unseen virus attacks, a new spacer, a new mug shot, is made and put at the end of the chain.

That means the Crispr region “is like a tape recording of exposure to prior invaders,” said Erik J. Sontheimer, a Northwestern University professor who helped unravel the mechanism.

And it provides a way to tell two bacterial strains apart, because even two strains from the same species are likely to have encountered different viruses. This is already being used to identify sources of food-poisoning outbreaks.

Cheese and yogurt companies can examine Crispr regions to see if their bacterial cultures are immunized against particular viruses that could slow production.

“Now you can extend the shelf life of that great strain,” said Rodolphe Barrangou of North Carolina State University, who previously worked at Danisco and was the lead author on the 2007 paper. “That has changed the game quite a bit for the dairy industry.”

The real frenzy, however, started in 2012, when a team led by Emmanuelle Charpentier, then at Umea University in Sweden, and Jennifer A. Doudna of the University of California, Berkeley, demonstrated a way for researchers to use Crispr to slice up any DNA sequence they choose.

Scientists must synthesize a strand of DNA’s chemical cousin RNA, part of which matches the DNA sequence to be sliced. This “guide RNA” is attached to a bacterial enzyme called Cas9. When the guide RNA binds to the corresponding DNA sequence, Cas9 cuts the DNA at that site.

The cell tries to repair the cut but often does so imperfectly, which is enough to disable, or knock out a gene. To change a gene, scientists usually insert a patch — a bit of DNA similar to where the break occurred but containing the desired change. That patch is sometimes incorporated into the DNA when the cell repairs the break.

Would this work in organisms besides bacteria? “I knew it was like firing a starting gun in a race,” Dr. Doudna said, but sure enough, by early 2013 scientists had shown it would work in human cells, and those of many other animals and plants, even though these species are not known to have Crispr-based immune systems.

“I don’t know any species of plant or animal where it has been tried and it failed,” said George Church, a professor of genetics at Harvard Medical School. “It allows you to do genome engineering on organisms that are very hard to do otherwise.”

In the past, making an animal with multiple genetic changes usually required creating separate animals with single changes and then crossbreeding them to produce offspring with multiple changes. With Crispr, multiple genetic changes can be made in one step, by putting multiple guide RNAs into the cell.

“It just completely changes the landscape,” Dr. Doudna said. Berkeley scientists used to farm out that work to specialized laboratories or companies. Now, she said, “people are able to make mice in their own labs.”

There are other techniques that can do what Crispr does, though Crispr is “the easiest by far,” Dr. Church said.

RNA interference, for instance, can silence particular genes. It is similar to Crispr in that it also uses RNA that matches the gene to be silenced.

But RNA interference works by inhibiting messenger RNA, which translates a gene into a protein. That usually provides only a partial and temporary disabling of the gene, because the cell can make new messenger RNA. Crispr disables the gene itself, potentially a more complete and permanent inactivation.

The dairy industry can use the Crispr immune system to protect important bacteria like Lactobacillus acidophilus, which is widely used in yogurts and dietary supplements, from viruses. Credit Todd Klaenhammer/North Carolina State University

There are also already ways to change genes, namely zinc-finger nucleases and transcription activator-like effector nucleases, or Talens. The biotechnology company Sangamo BioSciences is already conducting a clinical trial of a treatment for H.I.V. that uses zinc fingers to alter patients’ immune cells to make them resistant to the virus.

Both techniques use proteins to guide where the DNA is cut; it is more difficult to develop a protein that binds to a specific DNA sequence than it is to make a piece of RNA with the matching sequence.

With zinc fingers “it might take you months or years to get something to work well for one gene,” said Dr. Gersbach at Duke. With Crispr, “it takes days to weeks.”

Quick is not always accurate, however. While Crispr is generally precise, it can have off-target effects, cutting DNA at places where the sequence is similar but not identical to that of the guide RNA.

Crispr “may not yet have adequate specificity to completely displace” the older techniques, Dana Carroll, a biochemistry professor at the University of Utah, wrote in a commentary in Nature Biotechnology in September.

Still, scientists are already figuring out how to make Crispr more specific.

Another obstacle for treating diseases will be the delivery of the genetic changes to all the cells in the body that need it.

For some diseases, it may be possible to extract blood stem cells from the body, alter them using Crispr, and put them back. If that is not possible, the DNA needed to make Cas9, the guide RNA and the corrective patch might be put into a disabled virus. This technique is used for gene therapy, but does not always work well.

It is likely to be a few years before Crispr is tested in people. For now, there is a lot more to learn about it.

Chase L. Beisel at North Carolina State reported that Crispr could be used to kill one strain of bacteria in a mixture of strains, by targeting a sequence unique to that strain. That might one day lead to antibiotics that can kill the bad bugs without also killing the good ones.

David S. Weiss of Emory University found that some bacteria use Cas9 to silence one of their own genes, rather than that of a virus, to help them evade detection by their host’s immune system.

The pace of new discoveries and applications is dizzying. “All of this has basically happened in a year,” Dr. Weiss said. “It’s incredible.”

The simplest reason “They” do what they do…

Because they can… They see no oppostion, have no moral scruples, no humanity, no belief in God or obligation to follow any rules… They will not change their destructive behavior unless they are compelled to change, or have their existence ended…   —Editor
Micah 2:1 (NIV)
… Woe to those who plan iniquity, to those who plot evil on their beds! At morning’s light they carry it out because it is in their power to do it…Financial Times censorship

Article below clipped from

Here Is The FT’s Gold Price Manipulation Article That Was Removed

Tyler Durden's picture

Two days ago the FT released a clear, informative and fact-based article, titled simply enough “Gold price rigging fears put investors on alert” in which author Madison Marriage, citing a report by the Fideres consultancy, revealed that global gold prices may have been manipulated on 50 per cent of occasions between January 2010 and December 2013.

To those who hve been following the price action of gold in the past four years, gold manipulation is not only not surprising, but accepted and widely appreciated (because like the Chinese those who buy gold would rather do so at artificially low rather than artificially high fiat prices) and at this point, after every other product has been exposed to be blatantly and maliciously manipulated by the banking estate, it is taken for granted that the central banks’ primary fiat alternative, and biggest threat to the monetary status quo, has not avoided a comparable fate.

What is surprising is that where the FT article once was, readers can now find only this:

And since we can only assume the article has been lost to FT readers due to some server glitch, and not due to post-editorial consorship or certainly an angry phone call from the Bank of England or some comparable institution, we are happy to recreate it in its entirety. Just in case someone is curious why gold price rigging fears should put investors on alert.

Gold price rigging fears put investors on alert

By Madison Marriage

Global gold prices may have been manipulated on 50 per cent of occasions between January 2010 and December 2013, according to analysis by Fideres, a consultancy.

The findings come amid a probe by German and UK regulators into alleged manipulation of the gold price, which is set twice a day by Deutsche Bank, HSBC, Barclays, Bank of Nova Scotia and Société Générale in a process known as the “London gold fixing”.

Fideres’ research found the gold price frequently climbs (or falls) once a twice-daily conference call between the five banks begins, peaks (or troughs) almost exactly as the call ends and then experiences a sharp reversal, a pattern it alleged may be evidence of “collusive behaviour”.

“[This] is indicative of panel banks pushing the gold price upwards on the basis of a strategy that was likely predetermined before the start of the call in order to benefit their existing positions or pending orders,” Fideres concluded.

“The behaviour of the gold price is very suspicious in 50 per cent of cases. This is not something you would expect to see if you take into account normal market factors,“ said Alberto Thomas, a partner at Fideres.

Alasdair Macleod, head of research at GoldMoney, a dealer in physical gold, added: “When the banks fix the price, the advantage they have is that they know what orders they have in the pocket. There is a possibility that they are gaming the system.”

Pension funds, hedge funds, commodity trading advisers and futures traders are most likely to have suffered losses as a result, according to Mr Thomas, who said that many of these groups were “definitely ready” to file lawsuits.

Daniel Brockett, a partner at law firm Quinn Emanuel, also said he had spoken to several investors concerned about potential losses.

“It is fair to say that economic work suggests there are certain days when [the five banks] are not only tipping their clients off, but also colluding with one another,” he said.

Matt Johnson, head of distribution at ETF Securities, one of the largest providers of exchange traded products, said that if gold price collusion is proven, “investors in products with an expiry price based around the fixing could have been badly impacted”.

Gregory Asciolla, a partner at Labaton Sucharow, a US law firm, added: “There are certainly good reasons for investors to be concerned. They are paying close attention to this and if the investigations go somewhere, it would not surprise me if there were lawsuits filed around the world.”

All five banks declined to comment on the findings, which come amid growing regulatory scrutiny of gold and precious metal benchmarks.

BaFin, the German regulator, has launched an investigation into gold-price manipulation and demanded documents from Deutsche Bank. The bank last month decided to end its role in gold and silver pricing. The UK’s Financial Conduct Authority is also examining how the price of gold and other precious metals is set as part of a wider probe into benchmark manipulation following findings of wrongdoing with respect to Libor and similar allegations with respect to the foreign exchange market.

The US Commodity Futures Trading Commission has reportedly held private meetings to discuss gold manipulation, but declined to confirm or deny that an investigation was ongoing.

II Peter 2:3 (Weymouth New Testament)
… Thirsting for riches, they will trade on you with their canting talk. From of old their judgement has been working itself out, and their destruction has not been slumbering…
Obadiah 1:18 (ESV)
… The house of Jacob shall be a fire, and the house of Joseph a flame, and the house of Esau stubble; they shall burn them and consume them,
and there shall be…


… for the house of Esau, for the Lord has spoken…

Related post…

Ancient evidence of a “wicked seed”

What’s eating the world…

The way satan feeds and rewards his children… and yes, if they continue to be allowed to live, then God Almighty’s children will continue to die…   —Editor
Psalm 53:4 (NIV)
… Do all these evildoers know nothing? They devour my people as though eating bread; they never call on God…
corporate greed
Article below is from

Why Are U.S. Corporate Profits So High? Because Wages Are So Low

January 27th, 2014

Automation is the key, but this piece doesn’t mention it.

The companies have, “Still managed to boost profits beyond anything ever seen before because they’ve got away with employing as few workers as possible at as low a rate as possible.”

I’ve got news for Jamie McGeever at Reuters: Companies only ever employ as few workers as possible at as low a rate as possible.

How, then, are companies managing to keep increasing profits with fewer people?

Race Against The Machine: How the Digital Revolution is Accelerating Innovation, Driving Productivity, and Irreversibly Transforming Employment and the Economy by Erik Brynjolfsson and Andrew McAfee

The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies by Erik Brynjolfsson, Andrew McAfee

Smart Machines: IBM’s Watson and the Era of Cognitive Computing by John E. Kelly III and Steve Hamm

Jobocalypse by Ben Way

Eventually, all of this hits the wall because there aren’t enough people with enough income to keep consuming stuff.

In any event, with one in seven people requiring the dole to avoid starvation in the U.S., I think it’s safe to say that we’re not going to get the Star Trek package when it comes to how all of the whiz-bang technology is impacting society.

Via: Reuters:

U.S. businesses have never had it so good.

Corporate cash piles have never been bigger, either in dollar terms or as a share of the economy.

The labor market, meanwhile, is still millions of jobs short of where it was before the global financial crisis first erupted over six years ago.


Not in the slightest, according to Jan Hatzius, chief U.S. economist at Goldman Sachs:

“The strength (in profits) is directly related to the weakness in hourly wages, which are still growing at just a 2% nominal pace. The weakness of wages and the resulting strength of profits are telling signs that the US labor market is still far from full employment.

Companies have not been unable to raise prices much because of the economic recovery has been fragile. But they’ve still managed to boost profits beyond anything ever seen before because they’ve got away with employing as few workers as possible at as low a rate as possible.

Deuteronomy 32:43 (NIV)   Especially if He is asked to carry out His vengeance…
… Rejoice, you nations, with his people, for he will avenge the blood of his servants; he will take vengeance on his enemies and make atonement for his land and people…

Obamacare… just another bailout

When someone is either forced or tricked into paying someone else’s way, that is a very good example of favoritism…   —Editor
Psalm 82:2-4 (ESV)   How long??? As long as no one calls them into account…
… “How long will you judge unjustly and show partiality to the wicked? Give justice to the weak and the fatherless; maintain the right of the afflicted and the destitute. Rescue the weak and the needy; deliver them from the hand of the wicked.”
Article below is from

Bailing Out Health Insurers and Helping Obamacare

8:01 AM, Jan 13, 2014 • By JEFFREY H. ANDERSON

Robert Laszewski—a prominent consultant to health insurance companies—recently wrote in a remarkably candid blog post that, while Obamacare is almost certain to cause insurance costs to skyrocket even higher than it already has, “insurers won’t be losing a lot of sleep over it.”  How can this be?  Because insurance companies won’t bear the cost of their own losses—at least not more than about a quarter of them.  The other three-quarters will be borne by American taxpayers.


For some reason, President Obama hasn’t talked about this particular feature of his signature legislation.  Indeed, it’s bad enough that Obamacare is projected by the Congressional Budget Office to funnel $1,071,000,000,000.00 (that’s $1.071 trillion) over the next decade (2014 to 2023) from American taxpayers, through Washington, to health insurance companies.  It’s even worse that Obamacare is trying to coerce Americans into buying those same insurers’ product (although there are escape routes).  It’s almost unbelievable that it will also subsidize those same insurers’ losses.

But that’s exactly what it will do—unless Republicans take action.  As Laszewski explains, Obamacare contains a “Reinsurance Program that caps big claim costs for insurers (individual plans only).”  He writes that “in 2014, 80% of individual costs between $45,000 and $250,000 are paid by the government [read: by taxpayers], for example.”

In other words, insurance purchased through Obamacare’s government-run exchanges isn’t even full-fledged private insurance; rather, it’s a sort of private-public hybrid.  Private insurance companies pay for costs below $45,000, then taxpayers generously pick up the tab—a tab that their president hasn’t ever bothered to tell them he has opened up on their behalf—for four-fifths of the next $200,000-plus worth of costs.  In this way, and so many others, Obamacare takes a major step toward the government monopoly over American medicine (“single payer”) that liberals drool about in their sleep.

Laszewski adds, “The reinsurance program has done and will continue to do what it was intended to do; help attract and keep more carriers in Obamacare than might have otherwise come.”  Thus, Obamacare is being aided by having taxpayers subsidize big insurance companies’ business expenses.  (Who could ever have guessed that big government and big business might be natural allies?)

But, amazingly, it doesn’t stop there.  Laszewski writes that Obamacare also contains a “Risk Corridor Program that limits overall losses for insurers.”  So insurers not only don’t have to pay out all of their costs; they also don’t have to swallow all of their losses.

Laszewski explains that if an insurance company expects its costs in a given year to be X, and those costs end up being more than X plus 2 percent, taxpayers will come to that insurance company’s rescue—thanks to Obamacare.  In fact, once an insurance company covers that initial 2 percent in unexpected costs, taxpayers will cover at least 80 percent of any additional costs the insurer accrues.

Laszewski provides a couple of examples to help illustrate taxpayers’ unwitting generosity toward these “participating health plans” (plans sold through Obamacare’s government-run exchanges):

“[I]f the health plan has costs at 110% of the medical cost target [the costs that the insurer expects to accrue], it will be responsible for only 102.4% of the target (a 2.4% shortfall)—only about a quarter of its losses.

“If the health plan’s medical costs come in at 120% of the expected claim cost target level, the health plan will only be responsible for 104.4% of the target (a 4.4% shortfall)—again only about a quarter of its losses.”

It’s actually only about a fifth in this example, as taxpayers would cover 78 percent of the losses, with the insurer covering just 22 percent.

Importantly, Laszewski (who’s in a position to know) says that “my sense is that health plans, because they are so insulated from big losses, will generally stand pat with their 2014 rate structures for 2015—no matter how bad the early claims experience looks.  I expect that the health insurance industry will be content to give the Obama administration one more chance to reboot Obamacare in the fall of 2014, when the 2015 open enrollment takes place.”

In other words, because taxpayers will bail them out (through both the “Reinsurance Program” and the “Risk Corridor Program”), insurers won’t raise their premiums as much for 2015 as they otherwise would in response to the sicker, older risk pools that Obamacare is clearly attracting.  This in turn will make Obamacare look better going forward than it should and will give its government-run exchanges another good swing at the “young invincibles,” who so far don’t seem too enamored with the product that Obama and his insurance cronies are hawking.

All of this puts two things in sharp relief:  First, Republicans should attach a no-bailout provision to any debt-ceiling increase—as Charles Krauthammer has suggested—along with a provision delaying Obamacare’s liberty-sapping individual mandate (the delay of which would further undermine Obamacare’s exchanges).  Second, Obamacare needs to be comprehensively repealed in January 2017, not modified or “fixed”—and Republicans need to advance a winning alternative to pave the way to that crucial result.

UPDATE: Senator Marco Rubio introduced a bill in November to stop the part of the bailout that would take place through the Risk Corridor Program.

Related posts…

Cruelty, Hypocrisy, Favoritism…

America’s real problem…

The gods you made for yourselves…

Psalm 82:5-8 (ESV)   Whoever or whatever these “gods” are, they can and should and if we pray for this, they will die…   —Editor
… They have neither knowledge nor understanding, they walk about in darkness; all the foundations of the earth are shaken. I said, “You are gods, sons of the Most High, all of you; nevertheless, like men you shall die, and fall like any prince.” Arise, O God, judge the earth; for you shall inherit all the nations!

Still printing after all these years…

Proverbs 22:3 (NLT)
… A prudent person foresees danger and takes precautions. The simpleton goes blindly on and suffers the consequences…

What follows below is reposted from

Will the Dollar Crash in 2014?
Posted by: webmaster on December 31, 2013 Dollar Comments Off


(Gonzalo Lira) Everyone’s talking about Quantitative Easing, and the famed “taper”. Smart people have claimed that it’s “the end of QE”, when with just a glance, you realize that it’s just a slow down of QE: I mean really, the Fed is still printing—it’s now printing “only” $75 billion a month, down from the previous $85 billion a month. Not much of an end, hmm?

Anyway, along with claiming that the end of QE is well nigh here, people have been claiming that QE worked: That all those heroic measures to get us out of the 2007–‘09 recession got the job done and put the American economy on the road to recovery.

Oh really . . .

I’ve never been one to approve of measuring the health and growth of an economy by way of gross domestic product. But for the sake of this piece, let’s look at GDP, shall we? Here is a chart of the last eight years:

GDP fell during 2008, during the Global Financial Crisis, then rebounded starting in 2009. In the aggregate, from 2009 through 2013, the U.S. economy grew some $4.25 trillion dollars.

Very respectable growth, wouldn’t you think?

But then, why don’t you take a look at this chart, of Federal government debt:

As you can see, between 2008 and 2013, the Federal government debt grew some $6.75 trillion.

In other words, had there been no growth in the Federal government debt, the U.S. economy would have had a net loss of some $2.5 trillion over five years. Averaged out at $500 billion a year, that’s roughly –4% growth per year. In other words, without the increased government debt, the U.S. economy would have contracted some 4% per year from 2009 through 2013.

Those are Greek numbers.

So much for the “recovery”, which to me sounds like an NFL player who got both his legs broken—but got pumped with so much morphine that he’s still out there playing full-throttle, when in fact he ought to be lying in the hospital.

But be that as it may, let’s look at the growth of the Federal government deficit over the last five years, those ugly-looking $6.75 trillion. How much of it is Fed “heroic measures”?

Here is a chart of the size of the Federal Reserve’s balance sheet from 2008 through late 2013, just before the taper:

This chart is courtesy of Zero Hedge, helpfully labelled with the various iterations of QE: QE-1, QE-2, QE-Twist, and QE-3.

Remember, the whole point of this balance sheet expansion was so that the Fed could go and buy bonds on the open markets: Mortgage-backed bonds originally (the Maiden Lane vehicles), and both agency and Treasury bonds during QE-2 and -3.

As you can see, the Federal Reserve increased its balance sheet—that is,printed—some $3 trillion. The “balance sheet expansion” especially during QE-3 has outpaced the growth of the Federal government’s budget deficit—the Fed’s been printing more than the Federal government needed.

Now, in fiscal 2013, the Federal government was $680 billion, while Fed QE-3 was $1.02 trillion, of which $540 billion went to buying Treasury bonds. In fiscal 2014, the current estimate is that the deficit will be $675 billion, with the Federal Reserve supporting the Federal government deficit by printing $480 billion a year for Treasury bonds. (The current ratio of bond purchases by the Fed is $35 billion a month for agency bonds, $40 billion a month for Treasuries.)

Question: What if there’s a recession?

If there is a recession, the Federal government will have no choice but to go into further deficit spending in order to “save the economy”, while the Federal Reserve under incoming Chairwoman Janet Yellen—who is an avowed “dove” when it comes to QE—will quite naturally raise the level of Quantitative Easing. Retracing the taper and going up to $100 billion a month would not be outlandish inference, with a ratio of bond purchases more skewed towards buying Treasury bonds than agency bonds, in order to keep interest rates low.

Now, if this happens, there is no way that the Fed or the Federal government would allow an increase in interest rates. ZIRP would continue, bond yields would remain minuscule precisely because of QE. In fact, the Fed would want there to be a bit of inflation, for the Keynesian “pump-priming”.

Here is the mistake I believe will happen: Once consumer price inflation begins, it will not be possible to rein it in, the way Chairman Paul Volcker did in 1980 following the inflation brought by the Iranian Oil Shock of ‘79. The Fed will not want to rein it in, as they will see it as a sign that the economy is improving. And once inflation reaches double digits—as it did just before Volcker slammed the brakes hard via 22% interest rates—the Federal Reserve under Janet Yellen will not have either the room-to-maneuver or the inclination to raise rates to fight inflation.

Inflation can easily spiral out of control. I personally have seen it in South America—Chile, Argentina, Brazil. Once that genie is out of the bottle—and once a central bank proves itself unwilling to apply the strong medicine necessary to stop it—inflation will accelerate and blow up.

We are already seeing excessive asset price inflation due to the Federal Reserve’s QE and ZIRP policies: Equities are at historic highs while being completely divorced from fundamentals, bonds are yielding historic lows.

Commodities are where you want to keep your eye on. Even as production and manufacturing slow down—as they currently are slowing to a crawl—you will see industrial commodities maintain their prices. Look at copper: $3.34 a pound, even as construction in China, the world’s largest consumer of copper, has virtually stopped. As to precious metals, the lows we are seeing now are likely the calm before the storm.

We are one good shove away from a dollar crash—and 2014 looks like it’ll be the year. The U.S. economy is due for a recession, and the Federal Reserve will have to apply the same medicine of yore, QE. Only this time, it won’t succeed.

Time to batten down the hatches, and get ready for a bumpy ride!

Related posts…

Fiat money…

The way of the world is extremely wasteful…

Some will call murder a mistake or an oversight…

Proverbs 1:17 (NLT)
… If a bird sees a trap being set, it knows to stay away…