Bill Gross: Federal Reserve to Continue QE to At Least 2014, Currency Wars A Danger To Bond Market

and then tell me you think they are going to stop...

http://www.dailypaul.com/275962/the-declining-standard-of-li...

A good analogy for QE is the economy on a Meth addiction. After a the housing market bubble (The first week long meth binge) the economy crashed (like at the end of a real meth binge) but instead of facing the music and letting the market adjust (facing the comedown effects) the FED then created QE 1, 2 and 3 (Simply taking more meth to prevent the comedown) and now has resulted to the continual printing of QE4 (Getting a meth IV and having it drip into your system perpetually). The Meth economy feels great and thinks they are on top of the world (Great DOW numbers) but soon will die from the real effects of the drug (currency collapse) which will be much worse than if when just faced the comedown in the first place...

If you need further proof, look up pictures of Meth addicts then look up pictures of Detroit and you will see some stark similarities.

I heard Bill gross say in that interview that he thought an end to QE3/4EVER would be more likely to send long term bond yields higher. Hasn't he learned anything after his last disastrous call that rates would surge higher when QE2 ended in Jun 2011? Anyone who still believes that and end to QE will cause bond yields to surge higher has not been paying attention to to how the bond market has reacted to QE since 2008. Just look at the charts. Every time QE operations commence, yields shoot dramatically higher and when QE programs come to an end, bond yields fall just as dramatically.

This is not rocket science. Rightly or wrongly most market participants perceive that Fed QE operations equate to printing money and are therefore inflationary. So, they make the logical adjustments to their portfolios. As soon as it becomes clear that another round of QE is in the cards they sell the dollar and bonds and buy equities, commodities and credit -- i.e. RISK ON. And, as QE comes to an end they reverse that trade an take RISK OFF.

The Fed has a failure to communicate because they say they are doing QE to bring down long term interest rates down but at the same time they say they are trying to raise inflation. The Fed can't have it both ways. How can they say that they are trying to raise inflation and not scare bond holders?

BUMP. Thank you for posting this, fonzdrew! Glad I didn't miss that one.

Yeah... TPTB is decided to continue with us as their Boiling Frog of choice, and to defer the collapse as long as they can.

Guess what. At least that "buys" us a little more time, as a bitter consolation. We know what to do.

He who has ears...

The sooner the better

Bump