Why QE3 Will “Work” — 47 Comments

  1. Ignoring variance in the gold price over this given two year period, a monthly increase in demand by $20 billion (say for sake of argument half of this $40 billion a month is going to gold) would imply a $240 billion per year increase. Considering the US govt has a *documented* 8133.5 tonnes of gold, at a $1750 spot price that’s only ~$450 billion. I think we can all agree that this gold tonnage number is probably wrong, but that still seems like a massive pouring of money into the gold market that would easily be noticed by both a huge spike in price of gold due to a massive demand increase and evidence of the large purchases by the big banks.

    That will let us know, at least in a term of 3-4 months, whether or not this theory is sound. I find it slightly implausible just by the amount of tonnage of gold we are talking about with this scheme, but it certainly sounds possible.

    *NOTE* I’m no expert */NOTE*

    • @Grant we already know that Central banks ARE BUYING 10% of the gold reserves per year. That is 10% of all that is available. The banks won’t put all the money in gold I never said that, they will buy as much as they can on the sly without letting the market on to what is happening to early. I also really agree with Roberto’s comment watch these assholes drive the market to all time new highs, holding short positions all the while, whey they pull out they clean up in more then one way.

      Big institutions can and do short a stock, drive it up, take the profit on the sale as it falls back down and collect the short side larger profit on the back end.

  2. Wow. Just awesome, Jack. I could see these videos going viral (well, as “viral” as a video about QE3 can go).

    The last 3 minutes really rocks, because you circle back to your core message of providing solutions. Thanks again.

  3. If you go to yahoo finance and look up AAPL as an example and look under major holders. You will find JP Morgan as a top institutional holder of Apple Inc. It is another area where banks invest the money they will get from the Fed. I can see the stock market being driven up by the banks buying. We can do the same and invest in the stock market. But keep in mind that if the banks can drive a stock up, they can also take it down. I would be looking at buying mining stocks.

  4. Governments and large institutions don’t need to buy gold in the commodity markets. And of course its in their best interests to hide their actions and intentions for as long as possible.

    As an example, the Chinese government purchases mining companies or directly buys the entire output of mines from mining companies. While this shrinks market supply, and therefore may have an impact on market pricing, there’s no way to know how much gold they’ve purchased or control.

    Markets are manipulated, and these are very powerful/rich entities that have a vested interest in keeping the prices down.

    Here’s a recent example:

    Personally, I hope they hold the prices down as long as possible.. so I can buy more. =)

    • @cohutt thanks that lets me bring up a good point, when China buys gold the central bank of China is buying gold because they are one in the same. When the US Government buys gold (almost never anymore) it does the Fed Reserve no good and when the Fed Reserve buys gold it doesn’t do the US Government any good though the Fed is now buying lots of gold.

      Again folks most of our people are playing checkers and doing so at a 1st grade level while those in power are playing 3d space chess. Think about that comment and the above statement folks, THINK, really use your God given reason here.

      Again cohutt great point.

  5. Isn’t the logical outcome of these videos the eventual confiscation of most property. People who have loans will not be able to pay for the basics. They will be forced to take out loans or mortgage their homes that they now own, free and clear.
    Since most people do not get raises equal to the inflation rate, the feds will own a higher percentage of the economy. The faster they print, the more they own.
    This is going to be worse that I ever imagined.

      • In most instances the bank servicing the loan will foreclose on behalf of the lien holder. Understand they are actually more accurately buying the mortgage backed securities. The bank still holds the loan technically but the Fed holds the claim on the cash flow from it and therefore the risk if it isn’t paid.

        • right, remember that the FED is actually a Banking Cartel made up of member banks. So if Bank of America has a underwater loan and the FED buys it, they are essentially buying it from themselves. So what do they benifit from doing this? The FED shows a loss so now any profit the FED makes will not have to be paid back to the tax payers like they are required to do. The video charts the banks and FED as being separate, when in actuality they are one in the same, more like a self serving revolving door.

        • another consequence of QEF is that smaller independant banks (not member banks tied to the Federal Reserve banking cartel) are now at a huge dissadvantage. There will be no one to buy their bad loans. This could squezze them out of existance. This is what cartels do.

  6. Listening to this made me entirely rethink the purpose of a ‘down payment’.

    Purpose 1: Home buyer provides ‘reserve’ cash (+ a little more) for bank’s journal entry
    Purpose 2: Home buyer provides cash to Bank to purchase assets (gold etc.) with. Bank makes journal entry.

    Bank 2, Purchaser 0

  7. That was a great explanation and very well may be what the plan is. But the issue I see is that the western central banks don’t call all the shots. There are other nations like China and Russia and they can see what is up and will look after their own interests. China especially is buying gold like there is no tomorrow and the Fed’s game isn’t going to work if gold and silver go up too fast. If they go up too fast, then more people will lose faith in the dollar, and eventually enough will wake up and get rid of dollars to get precious metals. In fact just yesterday silver exploded to over $35 an ounce and between 10:35 and 10:50am EST, an astonishing 62.5 million ounces of paper silver were indiscriminately dumped on the market to induce the sell-off- nearly twice US annual silver production of 36 million ounces!! This took the price back to under $35 again. Will they be able to continue to do this forever? I don’t think so. Every time they do will mean more buying by China, etc. It can’t continue. The markets have a life of their own and eventually the central banks will lose control, and probably sooner than anyone thinks. They won’t have 3 or 4 years to complete their plan. It will probably start to blow up 6 to 12 months from now and then the question will be how orderly a new paradigm can be slipped in. So as Jack says, start preparing now because difficult times are coming.

    • No, no it won’t. Let me ask you what percentage of inflation must you have in a single year to equal hyperinflation officially?

  8. I keep telling myself, ‘this hard work will pay off.’ as we’re doing things. In all reality it already has. I’m like my grandfather more and more everyday. Thanks Jack and everybody else who’s leading this fight for consciousness.

  9. What happens to those that are not fortunate enough to have land/home paid off and now rent due to relocation for jobs but have food storage?

  10. Brilliant two videos Jack. I wonder how things will be up here in Canada. We don’t have a Fed as it were. Although we will be feeling the effects.

    • Honestly every major central bank including yours is basically doing the same thing. Canada is minding the store a bit better then others but it won’t matter, this will be a global shift, take a look at the biggest debtor nations, said will fare the worst and look at the ones with the least debt (guess where China is on that list) will fare the best. As for the common man, it won’t be good for any of us.

  11. Thanks for the great videos. I tend to believe that all QE was instituted for an additional reason you did not describe: competitive currency devaluation. We are in a currency war with China. Unfortunately currency wars always lead to trade wars, which often lead to real wars.

    China has debt problems too, it is just internal debt owed by city and provincial governments to the central government. There is an imbalance, and they are much more internally politically unstable than we are led to believe.

    So what do you do when things are going bad at home? Blame the external “other” at pick a fight. And no I am not describing what China will do, but rather what the US will do.

    • @Tunnel Rat nope all the currencies are being devalued concurrently and China is pegged to the dollar at a fixed ratio. Tune in to today’s show, Episode 984 for the China (more accurately the BRIC) play in all of this. You are right to look there you just need to see the Chess game not the Checkers game.

      • Thanks Jack. This is my first time participating in the comments. I referenced just China, but I meant to infer that all the major currencies worldwide are being devalued at the same time. The ECB is doing QE now too, and the BRIC can’t afford to have their exports rise in price relative to the dollar either. The Chinese depend on the cash flow from current trade imbalance. As you stated they are using that cash to purchase gold.
        My point being that this makes for a potentialy unstable national security situation. While the banksters have their endgame in mind, there are people in non financial and political sectors of power who may not wish to go down without a fight, once they realize what is happening. It may be to late at that point, but that makes the danger even greater in my opinion. I am a new listener (about 50 shows so far). I will send you an e-mail PM introducing myself.

        • The Chinese and other BRICs are happy to play the game for now. Everyone already knows the ending, they are playing based on that knowledge.

  12. I found Canada’s debt clock and we are sitting at 591 billion, which would be about the same as the U.S having a 5.91 trillion debt (Assuming Canada has 1/10 U.S population) .
    Which is what I think the U.S was at in 2000. We are attempting to tighten further at the federal level but it is very difficult due to sluggish growth.

    • @Brent the problem is it doesn’t matter how big or small a debt really is all that matters is can you service the debt? Check out Canada’s export income, see where you money is coming from.

  13. Jack, this was an AWESOME summation of what the Fed and the big banks are currently doing. One of the reasons I listen to your shows is that you have a rare talent for taking complex financial matters and distilling them down to something that most non-financial types can easily understand. In fact, the only other person I’ve come across who has a comparable talent toward that end is Chris Martenson.

    One question I have as we move into the future, however, is regarding property tax. I know that we are looking at the end of our currency “as we know it,” and that one of the recommendations you gave at the end is to get your own piece of productive property if you can — which I fully agree with and am in the process of paying off. However — given that state and local governments cannot print their own money, and will likely be squeezed even further as what we’re currently experiencing moves further along, doesn’t it logically follow that localities will continue to raise property taxes in order to maintain their operating budgets? I can see that if the Fed succeeds in re-inflating the housing market, that this could take some of the pressure off of the local governments. But I have trouble seeing property taxes going anywhere but up in the near-term future — which in turn makes the property ownership thing a little less tenable. I mean, here in Orange Co., NY where I live, we already pay $550/mo in property taxes — which pales in comparison to Westchester and Long Island, where most people pay over $1000 per month. Do you think that property taxes might very well be the other side of the vise that the financial powers-that-be use to really squeeze those who try to maintain control over their own means of production (productive land)?

    • I too am worried about property tax. We own two properties and are debt free. But if we have unemployment, we could lose it all to the gov’t b/c of unpaid taxes. I think they’ll go after property owners with increased taxes b/c we can’t change our position quickly to escape the increased taxation. If we try to sell after things go south, I think prices will be very depressed b/c of the fed dumping so many foreclosed homes. How do you plan for this?

      • You fight any and all claims your property increased in value. You save money and keep a good budget and stay prepared like anyone else. You don’t see a benefit (no debt) as a liability simply because you still have to pay taxes.

        • IOW, it sounds like you’re saying that we should deal with property taxes the same way we deal with getting ourselves out of debt — live below our means, save money, use common sense. No disagreement here.

        • No disrespect to you Jack, I also agree that owing your property free and clear is a good thing, but the point is, it’s not really as free and clear as we would like to think, $550/mo sound more like rent. I remember a timeshare salesman trying to convice me why I needed to “own”, but with all the maintainace fees it does become a liability. Were not at that point yet but it does raise the question, how much property tax is to much? I know some Amish that do not use the school system yet the property taxes push them below the proverty level if not the loss of their home

  14. This is a very good point. I am trying to figure this out myself.
    If your paying $550 to $1000/month for property taxes you don’t own your property, this is insane! How can we truly own property and be self-sufficient when we are paying rent (property taxes) This is a very important issue I would like to see addressed.

  15. I’m posting two websites from the same blog, from

    One visually explains Deflation.
    The other visually explains Inflation.

    This should help you all understand Inflation, Deflation, and QE3.
    I haven’t watched Jack’s Presentations yet. After I watch them, I will comment.
    I think it is important to understand why QE3 is necessary. Growing GDP requires spending. Austerity reduces growth. The visual explanations in my posts should be self explanatory.

    • “For better or worse…” Usually when this cliche is used the author/speaker means worse. So much for the “positive attitude” needed to fight deflation. Thanks for the links.

  16. Can someone point me to where the gold holdings are listed on the Fed’s balance sheet? I see something like 11 Billion. Seems small to me, must need to look somewhere else..

  17. I think you are totally correct in what’s going on. What I wonder is, what is going to happen with student loans and such? I also fear they are going to try to tax us to death, so that the low income people just don’t have a chance. I am preparing the best I can, and listening to you evey day. I pray all those who just cannot open their eyes enough. to see what is happening.

  18. I agree with your assesment, and as aside I just found the podcast and love it, and would to add in about China. The reason why China is going along with it is because they don’t have much choice and the central government needs as much time as possible to shore up their position. While it may be strange to say this, China is actually a very unstable and weak nation, and they are going through a very delicate period of leadership transition.

    Ultimately China’s economic model is unsustainable, planned economies always are, and the Chinese government has made their legitimacy rest entirely on continued economic growth. This won’t continue, previous examples of rapidly rising export economies show this. Many of their industries would have negative return rates if it were not for government subsidies.

    They also have a real estate bubble that far dwarfs the one we had back in 2007, and they have an infrastructure bubble as well. What does this mean? That Chinas economy will crash at the worst or, at the minimum, experience a major set back. This will queue major unrest in a nation that already experiences thousands of major protests a year, something that most mainstream media doesn’t report.

    This is why the Chinese government encourages their people to buy commodities as they hope to try and have as little unrest as possible. Unrest is coming, but the Chinese governments goal, surprise surprise, isn’t so to help their people so much as to ensure that they will remain in power. If the US has a fascist economy then the Chinese have a gangster one.

    Moreover China holds trillion of dollars in debt that they will never see a payment on, or if they do, at such a significantly reduced rate, due to inflation of the US dollar, that it won’t matter. Once again, the Chinese government is playing it so well because their survival depends on it. China lacks many of the natural advantages in terms of resources, geography, and wealth that the US does. Like Russia they are playing a game against time in terms of demographics, they know this, and they are acting accordingly.

    Provided that the collapse isn’t so bad that the US has to deal with real secessionist movements, paticularly around the Mississippi river basin which is one of the major reasons why the US is a global power, then I expect the US to remain the worlds super power. But that doesn’t mean much for the average American. Power is relative, and the king of the mountain and the king of a mole hill are still technically both kings.

    Anyways love the podcasts and I will continue to follow them in the future to help plan my prepping needs. Unfortunately for me I live in an urban area and will continue to do so because of job requirements and family needs.