The market always creates excuses when it drops. Now short sellers are finally winning! The correction that I have been waiting for has finally happened. But for how long?
I have cut my correction estimates to only 3%. And yes, that’s equal to today’s low 11150.
That’s the level I am buying. I will continue buying the dip. But this level.. 11150 is a support level and it should bounce upwards.
The trend is upwards. FED money making machine is churning out $8 billion of free money into the US economy. With the money multiplier of 10X… we will have $80 billion more in the US economy after FED finish doing its open market operation today.
The FED plans to buy $105 billion of treasuries this month. That’s 1 trillion of free US dollars floating in the economy (based on 10X required reserve ratio and the multiplier).
FREE MONEY equal semi hyperinflation… = inflated stock market prices too. Protect yourself from inflation... Thanks to Bernanke.
This is a video explaining how purchasing $105 billion of treasuries can create $1 trillion of new money into our economy!
The formula change in money supply is 1/RRR * change in reserves
When the FED buys $105 billion of treasuries from say Bank Of America, then Bank Of America will have $105 billion of CASH RESERVES. Bank Of America is now allowed to lend out 90% of that cash, and keeping 10% of it.
So if it lends out $90 billion… a customer borrows it and say buy a factory. The factory maker collects the $90billion and then he deposit his money with Wells Fargo….
Wells Fargo now can lend out 90% of $90 billion and so on ….. the multiplier effects come in… Its usually 1/RRR (RRR= required reserve ratio and that is 10% in the US).
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