Game Change?

In my last post I explained how there's two options, inflation or deflation.  Print more money, sell more bonds, or stop and reverse course causing deflation and a depression. According to my chart I drew almost 3 weeks ago now pointed to deflation/depression.

Well today we had quite the day in the markets.  Why?  Inflation.

http://www.zerohedge.com/news/here-comes-global-liquidity-bail-out

As you could see in the article, the Federal Reserve released this note at 8:00am EST along with Central Banks throughout the world coordinating a decrease of US liquidity swap rates.  On the chart below you can see at 8:00am EST the DOW went up $200 in 5 min.  This is one of the main ways inflation looks on a chart.  Instantaneous rises on news.

5 minute chart showing a $200 rise right at the 8am release of the Federal Reserve notice.

So the next question is, does that change the picture of my previous chart here?

For the time being, yes.  There was a nice rally today of almost $500 from the previous close that busted the similarities of this chart.  So where do we go from here...well let's check out some other posts.

http://www.zerohedge.com/news/did-fed-just-buy-europe-week

http://www.zerohedge.com/news/risk-rally-real

http://www.zerohedge.com/news/here-what-happened-after-last-global-coordinated-central-bank-intervention

So according to these three, nothing has fundamentally changed all that much.  There's other's that say this is great for the precious metals and show that risk is "on."  I am very tempered in my optimism.  I would tend to think this alone will only keep things up for a week, maybe a little longer depending on what news comes out, but maybe just the idea of breaking the very scary looking chart above will give enough people the idea that the economy is better.

If you couple that with a lot of fundamental upbeat news items today with the ADP payroll report being way higher than expected, the Chicago Purchasing Manager survey was much higher than expected and home sales as well, you begin to see how things could keep that chart from continuing it's decline.  I'm skeptical of these "fundamental" numbers until I see a couple weeks or months more of similar data, but it all added up for a great day.  But when the goal of the federal government, the mainstream media and the Federal Reserve is the Management of Perceptions to control economics, you can see why they would want everyone to believe that chart was busted and everything looks good.  Because in their world, the proper functioning of the economy is all about spending, even if they print money to give to you to spend.  As long as we're all spending, there's no problems, no matter the actual problems.  See they could care less that unemployment is 9% (by their numbers) as long as the government or everyone else makes up that spending decrease.  I'll get into all this some other time.


So one other thing I wanted to discuss is what's going on in the Middle East.  There's definitely growing "tensions" to put it mildly between Iran and pretty much everyone else in the area, including the US.  Turd Ferguson over at TF Metals Report has been all over this.

Here's a post with a lot of info.
http://www.tfmetalsreport.com/blog/3051/war-drums

Then today I see this...
http://www.zerohedge.com/news/china-will-not-hesitate-protect-iran-even-third-world-war

Needless to say, whatever is happening over there is nothing good.  Let's just hope our idiots in Washington don't do more stupid things to instigate Iran or anyone else to start a fight.  This would obviously be the biggest game changer imaginable.  It should definitely be watched closely.