Posted: Mar 18 2009 By: Jim Sinclair Post Edited: March 18, 2009 at 4:38 pm

Filed under: In The News

Dear CIGAs,

I would honestly suggest with today’s action this young man make his total $36,000,000 by the time he is 11.

Jim Sinclair’s Commentary

Mugabe is the Chairman of the Federal Reserve.

What a horrible mistake this is! Now you can count on Confetti Money.

Now you know how truly horrible the OTC derivative meltdown is. What a mess the main manufacturer and distributor of this toxic paper, the USA, is in

There is no practical solution to this problem so ignore the ignoramuses on the Comex. Use the Comex to buy every time the ignoramuses raid and sell the short squeeze if you must trade.

Fed to Buy $1 Trillion in Securities to Aid Economy

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WASHINGTON — Saying that the recession continues to deepen, the Federal Reserve announced Wednesday that it would pump an extra $1 trillion into the mortgage market and longer-term Treasury securities in order to revive the economy.

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Federal Reserve Press Release

“Job losses, declining equity and housing wealth, and tight credit conditions have weighed on consumer sentiment and spending,” the Fed said, adding that it would “employ all available tools to promote economic recovery and to preserve price stability.”

As expected, the Fed kept its benchmark interest rate at virtually zero. But in a surprise, it dramatically increased the amount of money it will create out of thin air to thaw out the still-frozen credit markets that have cramped lending to consumers and businesses alike.

Indeed, the immediate effect on the bond markets was striking, with prices rising and yields dropping sharply on the news. The yield on the 30-year Treasury bond, about 3.75 percent before the announcement, fell quickly to 3.4 percent and remained volatile. At the same time, the dollar plunged about 3 percent against other major currencies.

Stocks moved higher on the Fed action. The Dow Jones industrial average was down about 50 points before the 2:15 p.m. announcement, but within an hour it was up 120 points for the day.

The Fed said it would purchase an additional $750 billion worth of government-guaranteed mortgage-backed securities, on top of the $500 billion that it is currently in the process of buying. In addition, the Fed said it would buy up to $300 billion worth of longer-term Treasury securities over the next six months. That would tend to push down longer-term interest rates on loans of all types.

All of the Fed’s measures would come in addition to what has already been an unprecedented expansion of lending by the Fed. Since last September, the central bank has roughly doubled the size of its balance sheet from $900 billion to nearly $2 trillion — even before Wednesday’s action — mainly because of its efforts to rescue credit markets.

Despite a trickle of encouraging economic data in the last few weeks, Fed officials were clearly unimpressed and in no mood to cut back on their emergency efforts.

Fed policy makers sharply reduced their economic forecasts in December, predicting that the economy would continue to experience steep contractions for the first half of 2009, that unemployment that could approach 9 percent by the end of the year and that there was at least a small risk of an across-the-board drop in consumer prices akin to what Japan experienced for nearly a decade.

Hours before the Fed announced its decision on Wednesday, the Labor Department reported that consumer prices climbed 0.4 percent in January, the second consecutive monthly increase. The news provided some relief from deflation worries, but most analysts still expect prices to remain nearly flat for the foreseeable future. In their most recent forecast, Fed policy makers predicted that consumer prices would rise 0.3 to 1 percent this year — well below the central bank’s unofficial inflation target of nearly 2 percent.

The Federal Reserve slashed its benchmark interest rate to virtually zero in December, declaring that it would keep the rate at that level for “some time” and focusing its additional efforts to revive the economy on a wide range of new lending programs.

In a sign that it is even more worried than at its last meeting in January, the Fed said on Wednesday that it would keep its benchmark rate, the federal funds rate, at virtually zero for “an extended period.” While the central bank had said for some time that it was considering the possibility of buying longer-term Treasury bonds, Fed officials had played down that idea in the past month as they focused their attention instead on more targeted intervention in the credit markets.

In their statement on Wednesday, however, the Fed policy makers offered little explanation for the decision to go ahead with the Treasury purchases after all, saying only that the move was intended to “improve conditions in private credit markets.”

Since last September, new lending programs — including money for bailouts of individual companies like Citigroup, American International Group and Bank of America — have caused the Fed to print new money at the fastest pace in history. But much of that money has remained dormant, because the economic downturn has made banks reluctant to lend and businesses and consumers either reluctant or unable to borrow.

The Fed and the Treasury are in the process this week of starting a joint venture called the Consumer and Business Lending Initiative in their latest effort to revive the still-frozen credit markets. The program will start out by offering $200 billion worth of financing for consumer loans, small business loans and some corporate purposes like equipment leasing.

Fed officials have said they hope to expand the program next month, possibly to include the huge market for commercial mortgages, and both the Fed and Treasury hope the program will eventually provide up to $1 trillion in total financing.

Jim Sinclair’s Commentary

This is right out of the Great Depression 101 text book.

We are embarking on the 1930s Civilian Conservation Corp of a modestly different mode.

This along with the central bank monetizing your own debt (Zimbabwe 2005-2009), the reinstitution of the failed SDR and the political AIG bonus straw man means that this thing is so out of control our leadership is flailing wildly in the wind.

We are in huge trouble as a nation.

Alf you are so right!

Dear CIGAs,

This shall be.

Jim Sinclair:
Gold will appreciate to $1224 and then to $1650. All this will be history by January 14th 2011

Alf Fields:
Major ONE up from $256 to $1,015 (actually 4 times the $255 low);
Major TWO down from $1015 to $699, say $700 (a decline of 31%);
Major THREE up from $700 to $3,500 (a Fibonacci 5 times the $500 low);
Major FOUR down from $3,500 to $2,500 (a 29% decline);
Major FIVE up from $2,500 to $10,000 (also a 4 fold increase, same as ONE)

Martin Armstrong:
A major high is possible as early as 2010-2011 with the potential for an exponential rally into 2015 if there is any kind of a low going into 2011.

BUY BUY SHORTS