Media Scare – And The Drones Fly

I find it fascinating that the U.S media is absorbed with the potential cuts of some 85 billion dollars – while the printing presses currently rattle that off  – every single month. How interesting it is, as the media suggests “country-wide job losses” as a result  – that 85 billion in printing per month can’t produce an increase in jobs!

The graphic in the post below puts things in perspective:

Quantitative Easing For Dummies

The gig is up here soon I imagine – as I seriously can’t understand for the life of me – how American citizens continue to accept/trust that the “powers that be” have their best interests in mind.

You’ve got 85 billion a month going up in flames ( well…..actually just being deposited with the big banks on Wall Street ) while the “media machine” continues to scare the living daylights out of you – with concern of potential “cuts” – and how they will affect your daily lives.

These are not cuts – the “proposed cuts” only mean – LESS GIVEN.

So…..If I told you I was gonna give you ( a defense contractor ) “x” number of dollars MORE next year in INCREASED SPENDING…..then call you back and let you know that I’ve got a couple other bills to pay etc…and the amount of “EXTRA MONEY” will be a touch less – THEY CALL THAT  A CUT?

And the drones fly.

Click and read.

The Currency War Reality: What QE Really Means for Forex Traders

Dollar Debasement and the Flight to Real Assets

While the mainstream media focuses on budget theater, currency traders understand what’s actually happening. Every month that $85 billion gets created out of thin air, it dilutes the purchasing power of every existing dollar in circulation. This isn’t rocket science – it’s basic supply and demand. When you flood the market with more of anything, its value decreases relative to everything else. The Federal Reserve knows this. Wall Street knows this. Yet somehow, the general public is supposed to believe that printing money creates prosperity.

Smart money has been positioning accordingly. Look at the USD/JPY pair over the past decade – the Dollar’s strength against the Yen isn’t because the Dollar is fundamentally sound, it’s because Japan is printing even faster. It’s a race to the bottom, and the “winner” is simply the currency that debases slower than its competitors. Meanwhile, commodities priced in Dollars continue their long-term upward trajectory, reflecting the currency’s declining real value.

The Forex Implications of Monetary Madness

Currency markets don’t lie the way politicians do. When central banks engage in competitive devaluation, forex traders see the reality immediately. The EUR/USD pair has become a reflection of which central bank can destroy their currency faster – the European Central Bank or the Federal Reserve. Both are printing, both are manipulating interest rates to artificially low levels, and both are creating massive distortions in their respective economies.

Consider the carry trade dynamics this creates. With interest rates artificially suppressed through QE programs, investors are forced into increasingly risky assets to generate any meaningful return. This drives speculative flows into emerging market currencies, creating bubbles that inevitably burst when the music stops. The AUD/USD and NZD/USD pairs have been prime examples of this phenomenon – elevated far beyond their fundamental value by hot money flows seeking yield in a zero-interest-rate world.

Central Bank Credibility and Market Positioning

The real question forex traders should be asking is: what happens when market confidence in central bank omnipotence finally cracks? We’ve seen glimpses of this during various “taper tantrums” when the mere suggestion of reducing QE caused massive market dislocations. If the threat of slowing down the printing press creates panic, what does that tell you about the underlying health of the system?

Professional traders understand that central bank communications have become more important than actual economic data. Fed speeches move markets more than employment reports. ECB meetings generate more volatility than GDP releases. This is not normal market behavior – it’s the behavior of markets completely addicted to monetary stimulus. When your trading strategy depends more on parsing central banker speeches than analyzing economic fundamentals, you’re operating in a manipulated market environment.

Positioning for the Inevitable Reckoning

The mathematics of this situation are inescapable. You cannot solve a debt crisis by creating more debt. You cannot create sustainable prosperity by devaluing your currency. And you certainly cannot maintain market confidence indefinitely when your monetary policy requires printing $85 billion monthly just to keep the system functioning. Every forex trader should be asking themselves: what happens when this stops working?

The answer lies in understanding that fiat currencies are confidence games. The Dollar’s reserve currency status provides temporary insulation, but it’s not permanent immunity. History is littered with reserve currencies that eventually collapsed under the weight of their own fiscal and monetary excess. The British Pound held reserve status for centuries before losing it. There’s no law of physics that guarantees Dollar dominance forever.

Savvy traders are already positioning for this reality. Gold has maintained its purchasing power for thousands of years not because of speculation, but because it cannot be printed. The CHF/USD pair reflects Switzerland’s relatively conservative monetary policy. Even Bitcoin, despite its volatility, represents an attempt to create a currency immune to central bank manipulation. These aren’t just trading opportunities – they’re insurance policies against monetary insanity.

The sequester debate was just another smokescreen, another distraction from the real issue: a monetary system built on perpetual money printing is unsustainable. The only question is timing.