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There is no bigger sign post about the state of the U.S. economy than the Federal Reserve’s announcement in September of “open ended” QE.  This is unlimited money printing that is being done by the Fed until further notice.  All the talk of the so-called “recovery” was reduced to a gigantic lie perpetrated on the American people.  If the economy was in a “real recovery,” the Fed would be raising interest rates, and there would be no need to create $85 billion each and every month to “stimulate” the economy.  Former Reagan budget director David Stockman says the Fed is on a “money printing binge.”  He said three weeks ago on FOX, “We’ve never had a central bank that has printed this much money. . . . I don’t think they can whistle this tune very much longer.”  To that, host Neil Cavuto said, “So if you had a lead suit, you would buy it.  If you had a cyanide pill you would take it.”  I think Mr. Cavuto was trying to make a joke, but nothing is funny about a dying empire.   

Renowned investor Jim Sinclair explained money printing by the Fed on his JSMinenset.com website recently by saying, “The economy is a drug addict. The creation of money is history making in a modern economy and money creation acts exactly like a drug. Like a drug the more you take, the more you need. The more money you create, the more money you must continue to create until it goes to infinity. You go cold turkey on money creation, you unleash the economic wrath of hell in the entire Western world. It all comes down in one great implosion.”  How much trouble is the U.S. economy in that its central bank has to create unprecedented amounts of currency to keep it from “one great implosion”?  Is there any wonder why Mr. Sinclair predicts gold is going about $3,000 per ounce in the not-so-distant future, and will ultimately hit $12,000 per ounce.  (I would take Mr. Sinclair seriously.  He has a track record of making very big calls on gold that date back to the 1970′s.  I wrote about this 2 years ago.) 

Countries around the world are shunning the dollar in trade.  The biggest blow to the buck came earlier this year with a trade agreement between China and Japan.  These are the second and third biggest economies in the world behind the U.S.  Other countries such as Russia, India and Brazil are just a few more countries moving away from the dollar in trade.  As the dollar loses world reserve currency status, it will decline in value.  Its buying power will be reduced.  The only question is how much will it fall?  Will we see $8 a gallon gasoline or $18?  Remember, the Fed’s money printing policies are “open-ended.” In 2011, the Fed bought 61% of America’s debt.  At a rate of $85 billion a month, it will be buying more than $1 trillion a year.  How long will this go on?   

Forget all the rigged government numbers on unemployment.  If calculated the way Bureau of Labor Statistics did it in 1994 and earlier, it would be near 23% (according to Shadowstats.com).  Don’t look for an improvement there because business spending just took a nose dive.  Last week, the Associated Press reported “. . . equipment and software likely declined 4.9 percent in the July-September quarter, economists noted. It would represent the first drop in that category since the recession.  Corporate investment helped the U.S. economy emerge from the Great Recession three years ago. But businesses have grown more cautious since spring, seeing tepid growth in consumer spending and declines in exports.”  (Click here for the complete AP story.)  A slowdown in business spending and exports spells future layoffs.     

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