Tuesday, December 7, 2010

The FED Can’t Get Money Printing Right? Buy Silver, Crash JP Morgan!

12/7/2010 Portland, Oregon – Pop in your mints…
We can't believe it!  It appears that the Federal Reserve can't even get their insane money printing experiment right.  Apparently $110 billion of their new $100 bills have a small crease in them rendering them, well, worthless.  Not that they were worth much before, they only cost $0.12 each to make.  All the same, there is debate now as to what should be done.  Apparently 30% of the bills are bad.  Should they burn them all or sort through them and pull out the good ones?  We have an idea, invite the general, unemployed public to sort through a few stacks and let them keep 0.12% of the bills that they sort.  I'll bet the job would be done in a week.  But no, the overpaid bureaucrats are seizing the moment to blame each other and calculate that it could take them up to 30 years to sort them.  Apparently the "frustration level is off the charts" amongst those to blame for the error.

The FED's Printers go on the Fritz
The irony that these were to be the first bills printed with Timothy Geithner's signature is not lost on us.

But the American Feds aren't the only ones making large scale mistakes.  The National Australia Bank (NAB) had a huge computer system meltdown caused by a corrupted computer file in its payment system which left many of their customers without access to cash.  Property and Car deals couldn't go through, payroll direct deposits did not process, credit and debit cards did not work.  As the 4th largest bank, retailers were very concerned that commerce may screech to a halt over the weekend as shoppers could not access funds.
And while we are talking about errors, it seems that GE may have had a hunch that its GE Capital unit (which is a bank) may have been taking unnecessary risks and endangering GE as a whole during the height of the credit bubble.  Acting on this hunch, Jeffery Immelt did what any self respecting CEO would do, he passed the buck on oversight and brought in McKinsey & Company, the world's premier business consulting firm, to see how the unit was doing.  After 60 days of thorough analysis of global credit markets in 2007, McKinsey reported back that it was smooth sailing, full speed ahead!

These are but three of numerous examples that should go to show that what we sometimes consider the best and the brightest may actually be making errors on a grand scale.  Meanwhile, Gold and Silver, what the wise have traditionally used as money, have been making tremendous gains over the past decade.  According to any number of analysts their price is poised to go much higher and the "best and brightest" attempt to fix the mess they have made of the world's financial system.  God loves to humble the proud!

A campaign, which we have included as part of our title today, is sweeping the internet.  They call it, "Crash JP Morgan, Buy Silver."  This is a campaign where the consequences of simply buying physical silver will have two supposedly desired effects.  It will crush JP Morgan's balance sheet and will make you a lot of money.  You can read about it here at Jason Hommel's Silver Stock Report.  As we recently mentioned here at The Mint, silver has the largest net short position on any commodity exchange.  Much of that position is a liability of JP Morgan.  Buying silver drives the price up and eventually, JP Morgan will have to buy that silver from you at a very high price.

If you were just to watch the stock market you would think that today was just ordinary day.  Bonds would not tell much of a tale either.  But take a look at precious metals and you can see the cauldron of the volcano begin to bubble and steam.  The latest rumblings come as the prospect of a third round of "Quantitative Easing" ("legalized counterfeiting for a select few") moves closer to reality every day.
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Key Indicators for Tuesday, December 7, 2010

*See FED Perceived Economic Effect Rate Chart at bottom of blog.  This rate is the FED Target rate with a 39 month lag, representing the time it takes for the FED Target rate changes to affect the real economy.  This is a 39 months head start that the FED member banks have on the rest of us on using the new money that is created.