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Sprott Remains Very Bearish


Parsad
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I guess the real question is whether the government will print more money or allow the long term rates to rise.  My thinking is that in the short term (12-18 months) the government will extend the program to buy up treasuries and risk a devalued currency.

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Nice sleuthing.

 

That 500M+ is effectively the amount of 2009 easing - & it is the boost to the money supply that was needed to offset the velocity decline. If all the other participants simply cut back their purchases by a collective 10%, the ease would have to increase by at least 200M (40-50%), & the money supply would immediately inflate (all other factors equal)

 

Not that long ago (15-20yrs) Canada 'hit the wall' & a Federal Cdn treasury auction essentially went 'no bid'. The BOC had to do a similar emergency type purchase, & within 12-18 months Cdn mortgage rates went to 20%+ (from memory) - & at a time when there was very little 'crowding out'. Today everybody needs money, & to get it they will have to competitively increase yield. Rapid rate hikes.

 

The alternate is a synchronized global devaluation, via a global easing big enough to retire the total global easing to date. ie: The entire G8 prints 10% more currency to devalue 10%, & uses the new paper to retire the debt - but there's no internal trade impact on them as they've all devalued proportionately. If you're not G8 you either move with them & risk hyper inflation, or you revalue.

 

We live in interesting times.

 

SD

 

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