Now, the GSR would be hammered down again by the global monetary fixers. Hey, they think they can control our worlds at will, after all. But for now, GSR remains in an uptrend and as long as it remains above the green shaded support zone, it paints the Santa party as a bunch of drunks at the punch bowl back slapping, telling crude jokes and not much more.
In other words, they have likely created another counter-trend move, that will be unwound shortly after the holidays on the near end or, if they really get the suck in going again, after the President is re-elected on the far end.
Alternatively, if they break the GSR down and send it back to the hell it came from, enter the pervasive 'El Hyper' noise, which would take the place of the deflationary depression discussion that has dominated since the Long Bond's yield turned down early in the year.
There is no guarantee that the system will not break one way or the other at any given inflection point, but thus far over the decades that the 'continuum' has been in force (post-gold standard and 'gold window' closure) casino patrons have stood to be played by the dynamics within the parameters shown in the chart above. Each green arrow has represented a reloading of the inflation gun, renewed power for the Wizard and/or an invitation to the Vampire. You see?
Choose your metaphor, but be on the right side of this thing.
Edit (11:19) Of course, there are always disbelievers, and that is everyone's right; to go forth with what works for them. The continuum on which the markets periodically pivot plays out in months and years, not days and weeks.
There may be nothing actionable happening in the GSR right this moment, but it is what is down the road that we are interested in, along with what is happening right now. I never like to see this type of chest thumping in the face of a potentially significant market risk and liquidity signal, no matter how safely out in the distance it may be. But again, to each their own.
Edit (1:06) We are friends, Otto and me. Friends with an ongoing tension between the fundamentalist and the chart twittler. ;-)
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Gotta admit your $TYX chart is pure magic.
ReplyDeleteWhat do you think the odds are that we can make it all the way up to that EMA this time?
I think that with the global bazookas pulled out, the odds are at least 50-50. A hit of the EMA 100 would again bring on the Hyperinflation hysterics. Could be a choppy, extended road getting there, however.
ReplyDeleteFrom what I've read, the best explanation for the Euro crisis is that it's happening because of deflation. The loss of confidence in Euro debt has left the banks with insufficient collateral to leverage against, and this has happened at the same time as they are being required to deleverage under Basel rules.
ReplyDeleteThe banks' deleveraging then is causing a heavy contraction in money supply - I've read 2 trillion Euros as an estimate. That's the argument behind the economists' assertion that money-printing of Euros (at least 2T worth, anyway) can't cause hyperinflation right now. All it will do is fight the contraction in money supply.
Given that, maybe we can't even reach the EMA limit line... we'll move towards it, peter out, then fall heavy again as the next deflationary crisis hits. Maybe heavy austerity measures will bring the second deflationary spike... cos god knows we have to punish poor people to bring our budgets in line, we can't go back to taxing the rich again.
Deflation would be better for the poor than for the rich. The rich, the asset owners compound their assets due to the funny munny printing, which eventually manifests in higher prices of assets.
ReplyDeleteOf late however, more assets are under performing gold in a sign that deflationary pressures are indeed mounting. Remember the days of the uranium, crude oil and copper hysterias? Now, there is one asset left, steadily rising with the barometric pressure put on paper money.
They are TRYING to inflate. But the returns are diminishing and one could envision your scenario taking place when the continuum finally is broken. It could be broken in a deflationary collapse.
But for now, these freaks still have power to inflate, and inflate they shall.
Rhetorical question: Why is no one talking about public and private debt repudiation as a viable way forward?
ReplyDeleteI know, I know, can't have risk punished at the highest levels now, can we..
Note to the Cat: you talk of the insignificant effect of money printing in the face of the massive deflationary pressures. I agree. And yet you imply that taxing the rich will have some sort of a positive effect? Obviously, for the same reasons, it won't. The special interest tax loopholes must be eliminated in lieu of a fair tax. Allow risk takers to be punished and deflation to run its course. All hard to do in the face of a government gone rogue..