Tapering is the last weapon the Fed has to combat the reality of money printing. Did you ever wonder why there is so much discussion BY THE FED on tapering. Its actually quite simple, and that is because without tapering then everyone would realize there is no escape mathematically from the literal counterfeiting the Fed is engaged in now. One can argue the first QE was necessary to maintain the system and allow a foothold to be gained for some kind of attempt at recovery (I disagree). However, no one can make a case for the following barrage of QE. It has created a monster that can only end in a debt collapse and/or fiat collapse...take your pick.
So why the taper talk? ...... Without taper talk, the illusion the Fed has any control of the creation of money out of thin air...ie debt..........would evaporate and a virtual panic would ensue. Of course the smart money already knows this and has been taking the necessary precautions for this eventuality for several years and are accelerating (see Asia's accumulation of gold and hard assets). Arguments are made daily (and accelerating) by Western economist and money managers for the success of QE. In fact if you have followed this chatter, you would notice it has noticeably increased as the (rigged) numbers on the economy grow weaker and weaker.... We have been promised by the Fed better GDP numbers going forward for several years and THEIR numbers are actually more and more disappointing. We have had job predictions each year that have only resulted in fewer and fewer BLS jobs.....an that is THEIR BLS numbers. These numbers when parsed are horrific. Millions of working age Americans falling off the payrolls due "giving up" looking for work. Many of these are Americans with degrees in engineering, computer services, skilled manufacturing, that were the lifeblood of a healthy economy. Instead we have high paying government jobs that have supplanted these. Not only that we have had government (malinvestment) money that is being diverted into the remaining "private sector" job market that is creating the distortion/illusion of a "recovering economy". I know this because I am a recipient of this money and am amazed daily by how it continues to flow......but I know it will stop.....many do not.
Malinvestment is a natural result of money printing since its NOT true capitalism directing the money flow, but government. They will always misallocate capital, creating bubbles that weaken and destroy countries eventually. The U.S. just happens to have had the World's reserve currency for over 70 years and could withstand the previous bubbles.
Back to taper. Taper talk is all that's left. One can argue there will be no taper. I'm not sure. They may try a "faux taper" but that would be risky for them and mathematically it would be laughable. BUT.....they will talk taper to keep the illusion they can escape the money printing (counterfeiting) . This is why gold has been kept down. Volker famously noted after he was out of the Fed that he should have suppressed the price of gold in the late 70s while he massaged the interest rates. This time THEY did. Unfortunately for a lot of people/Western nations there will be hell to pay when they lose the dollar status because there is no gold to back it. Germany has a very strong currency but it has no gold now and it knows its in deep trouble. Anger is building between Germany and the Central bankers so stay tuned for that resolution in the next few years.
Enjoy the illusion......I have. gl