Why the FED can not taper.

Some people believe that the "taper talk" from the FED is designed to add to the downward pressure on gold prices. That in reality, we are in a recession and that reducing the stimulus by the FED would put us into a Depression. Here is a short explanation of why this is so:

"

Uncooking The Books – 3Q GDP DECREASED $58.4 Billion

November 7, 2013 by Karl Demminger           
   

                                                 
That’s the real headline, by the way.
But what you have from the BEA is this:

Real gross domestic product — the output of goods and services produced by labor and property located in the United States — increased at an annual rate of 2.8 percent in the third quarter of 2013 (that is, from the second quarter to the third quarter), according to the “advance” estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 2.5 percent.

Nope.
And here’s why not.

The Fed is “creating” $85 billion a month in “QE”, injecting it into the economy.  These funds are immediately spent and thus “count” in GDP (all goods and services sold, remember?)

So the actual amount of economic activity for which trade occurs must have the QE amount subtracted back out.
The BEA’s GDP tables tell us that the gross change in GDP from 2Q -> 3Q was $196.6 billion.  But the Fed’s QE program injected $255 billion, so in fact the economy shrank during the 3rd quarter.
When people tell you that they believe the economy is in a recession, as a recent survey said was commonly believed – they’re right.
- See more at: http://www.libertynews.com/2013/11/uncooking-the-books-3q-gdp-decreased-58-4-billion/#sthash.huSEoh0o.dpuf