QE4 Begins - Fed Printed An Extra $161.7 Billion Last Week
by: Avery Goodman
- Fiction seems to be turning into fact as the Federal Reserve follows the ECB in reactivating the money printing presses.
- The Federal Reserve announced that it will print $165 billion by the end of this week, but denies that it is "QE" by claiming it is a "temporary" measure.
- Precious metals prices and mining shares will continue to rise, whereas the general stock market is probably near its highs.
"...Try the week of March 18th, 2009. It was just before the Fed first announced its multi-trillion dollar “QE” money printing program. That morning, they mercilessly attacked the price of gold..."

The Federal Reserve hasn't been open and obvious about returning to printing money.
Modern central banks print money via "open market operations". "An open market money printing operation (OMO) occurs when a central bank gives money to a commercial bank or group of banks."
The money is newly created by the central bank for the purpose of bank assets that might, otherwise, be hard to sell.
But, if the central bank is willing to admit it never expects to be repaid, the operation is known as a "permanent open market operation" or POMO.
TOMOs and POMOs essentially do the same thing, however, in that both increase the money supply.
A series of POMOs, for an extended period of time, is known as quantitative easing ("QE").
Some speculate that the actions of the ECB and, now, those of the Federal Reserve, as we are about to discuss, are all about the alleged insolvency of Deutsche Bank.
This is not the first time that the Fed printed money via TOMOs.
As a result, no one accused it of "printing money."
The operations were, supposedly, "loans" with an obligatory "next day", "next week" or "in a few weeks" repayment date.
In practice, the running total of overnight, week long, and multi-week supposed "loans", was never repaid until QE began in March 2009.
But, the amount rose from a few billion in 2001 to hundreds of billions of dollars by the time they were finally repaid.
The next day, September 18, 2019, when those alleged "loans" (a/k/a gifts) were due to be repaid, instead of demanding the money back, the Fed reissued the $53.15 billion and added billions more, bringing the total loan to $75 billion.
The next day, September 19, 2019, instead of getting its money back, the Fed renewed all $75 billion again.
Then, on September 20, 2019, it did the same thing.
The Fed reissued only $65 billion worth of new money that day. We can only assume that the borrower(s) managed to repay $10 billion for the first time, although it is possible that the numbers were massaged by sleight of hand accounting.
But, regardless, by the very next day, Tuesday, September 24, 2019, the Fed had not only reissued the original $75 billion worth of "overnight" loans, but added $30 billion in two week "loans", for a grand total of $105 billion.
It announced it will issue two more $30 billion dollar TOMOs before the end of the week.
Potentially, the running total TOMOs could have run up to $280 billion.
Thankfully, the printing press didn't reached that lofty potential... not yet, at least.
As of Friday, September 27, 2019, Federal Reserve money printing operations included $30 billion supposedly due back on October 8th, $60 billion supposedly due back on October 10th, $49 billion supposedly due back on October 11th, and $22.7 billion supposedly due back on September 30th.
In summary, it added an extra $161.7 billion dollars to its balance sheet in one week alone.
One bank could have taken $1 and the other could have taken billions. Will the bank(s) be able to pay it back in a timely manner?
They never have in the past, so it's not likely now.
You can be sure that when the bank(s) can't come up with the money as payment time arrives, unlike the treatment you or I would get from our creditors, the Fed will renew and expand the loans without limit.
This isn't the first time for that.
These TOMOs will be as endlessly renewable as the ones from 2001 to 2009.
All the while, you can be sure that the Fed will claim they are addressing nothing more than "temporary" issues in the money market.
The borrowing bank(s) will be called upon to repay only when the Fed decides that the coast is clear.
Then, the "loans" will be converted into POMOs (a/k/a "QE"), as in 2009, and the banks will "repay" the funny money with permanent money given to them by the central bank.
The opening salvo is ten to fifteen times higher than it was back in the early part of the 21st century.
If history is any judge, both the frequency by which this new money is released, and the total amount of it, will slowly and steadily build up over time.
It will happen month after month and year after year.
It seems likely that this second round of TOMOs will add up to trillions before it is finished.
It has already mounted to $165 billion and we are just a few days into the process!
This compares to a couple hundreds billion near the end in 2009.
Whoever it is can't get anyone to lend to them in the free market in spite of the fact that big American primary dealer banks are sitting on trillions of dollars in reserve deposits, created during ten years of QE.
Instead, the big banks are allowing the NY Federal Reserve branch (which they closely control) to do the "lending".
The banks in question are not in the charity business.
Therefore, the most likely reason is that failure of an insolvent bank(s) would cause their intricate web of hundreds of trillions worth of cross guaranteed derivatives to fail.
The end result would put JP Morgan Chase, Goldman Sachs, Morgan Stanley, and Citibank into bankruptcy too.
An insolvency of Deutsche Bank would fit the bill.
Precious metals prices are going to rise as they did then.
But, the rise will be more dramatic this time because we're now dealing with a lot of central banks printing money at the same time.
The Bank of England, the Japanese Central Bank, the Chinese Central Bank and many other central banks will all follow and contribute to the tidal wave of new funny-money.
I expect the printing extravaganza to take precious metals and mining share prices on a fantastic ride upward.
The bottom line is that the money supply is, once again, increasing at a fantastic rate.
The value of the existing stock of currency is just as effectively being diminished as it would be if you called the operations POMOs (a/k/a "QE").
But, as opposed to precious metals stocks, which are still depressed well below their 2011 highs, the prices for equities in general are historically high.
And, if we glance back at the period 2001 to 2009, it is plainly obvious that, in the midst of the heavy money printing via TOMOs, there were still a significant recession and heavy stock price pullback because stocks became overvalued from the post dot.com TOMO-based money printing.
That said, it really depends on how much of a flood of funny money the Fed is willing to create.
It can float all boats if it is big enough, but might also trigger heavy stagflation or hyperinflation at the same time.
Precious metals mining stocks seem to be a very good bet at this point in time, especially those that are still depressed.
Remember that whenever there is a sharp increase in prices, as over the last few months, the market for physical metal, which is always price sensitive, will inevitably slow dramatically.