The Government does not run the printing press. Consumer requests do. And when the consumers are full and the buttons on their clothes are popping off...checkmate...game over...
The compounding interest commercial banking monetary system is 600 years old...There is very little lending...
Money is manufactured.
Stop that and kiss technological civilization good bye.
Rich people take more than they give.
Poor people give more than they take.
Eventually the power supply is sucked dry.
Just like a horse ridden to exhaustion...The rider can dismount and whip it to death...It's not going to budge.
It's inevitable...whether a mob of peasants stops the system from inflating or the system inflates to maximum potential and is stopped by GOD
The implosion is inevitable.
And the postponement of the inevitable has almost reached the end. Just watch the growth of the total money supply. Currently US consumers are requesting commercial banks to manufacture 11 Billion dollars a day or 1 Trillion dollars of new money every 90 days.
To simplify I'm leaving out collateral complications...The home builder has a long standing relationship with the bank and they trust the home builder and that is the collateral and the Home buyer has a good high paying job and that is his collateral.
Lets say a home builder builds a house...They go to a commercial bank and request lets say $100,000 at short term wholesale rates to be manufactured to construct a house then mark it up to $200,000 and put a for sale sign on it.
A home buyer sees it, falls in love and runs to a commercial bank and requests $200,000 to be manufactured at long term retail rates.
And buys it.
Now lets say after the whole operation is balanced...The Home builder comes out with a yield of $30,000 free and clear profit to buy hookers, blow in Las Vagas or donate to the Bill and Melinda Gates foundation.
The Bank gets a Mortgage asset worth $200,000 plus $5,000 of interest from the short term money creation requested by the Home builder that the home builder paid off when the Home buyer bought the house.
The home buyer gets a dream home and owes $200,000 that they will spend around 30 years working to pay off.
And the total money supply has now expanded by $200,000
That is the basics.
All the workers that built the house get paid as well...Lawyers, home inspectors...etc...all the people involved.
It's where the paychecks basically come from.
Almost everyone on Earth is a debt slave...There are 6 Billion in the hierarchy.
Top lives off the yield from the bottom...
Zero is nothing....adding more zeroes onto the ends of numbers is adding nothing. Whether a paper clip is 1 cent or 1 Trillion dollars it's still a paper clip.
A well rested horse is not an exhausted horse. And an exhausted horse is zero.
Top lives off the yield from the bottom. When the yield from the bottom to the top becomes zero...The top goes nowhere. The top needs to find a well rested horse to ride...You can add as many exhausted horses to the equation as you want...You are not going anywhere.
The money supply I'm looking at currently has to inflate by 11 Billion dollars a day...1 Trillion dollars every 90 days...
The next acceleration is 5 Trillion in 6 months. Then 3 months then 45 days then 23 days then 12 days then 6 days then 3 days then 36 hours then 18 hours then 9 hours then 4 hours then 2 hours then 1 hour then 30 minutes then 15 minutes then 8 minutes then 4 minutes then 2 minutes then 1 minute then 30 seconds then 15 seconds then 8 seconds then 4 seconds then 2 seconds then 1 second...to infinity and beyond.
How about a Quadrillion dollars (1000 Trillion) in a Nanosecond? (1 Billionth of a second)
I'm sure you can create that amount of money on a whim. And then double that in less than a blink of an eye.
A horse can be ridden to exhaustion...The rider can dismount and whip it to death if they choose...The horse won't budge once it's reached maximum potential...
The only variable you account for is yourself. There is no solution to free will...You choose to be ignorant...And that's it...Nothing can be done about that.
All that the system you are in can do is inflate to maximum potential then implode...poof
That's all it does.
Actually none of you realize what you are in...An absolute capitalist Hierarchial food powered make work enterprise...
GDP break down...
Agriculture: 1% The producers of the power...
The consumers of the power.
Industry: 20.7%
Services: 78.3%
Sorry but none of you eat Gold and Silver or copper or crude oil, etc. to sustain the continued existence of your bodies...
Total labor force out of the population of 300 Million...150 million.
farming/food production 0.5% or 7.5 million people...
The total debt/money supply...What everyone owes right now is about 49 Trillion dollars...
The total Labor force is 150 million...Those not working can not sustain the existence of the USA...That works out to $326,666 a worker...at 5% which is basically what the average Yield is...
$2,450,000,000,000 just to sustain the existence of the money supply...To pay the rent on the 49 Trillion money supply you are all renting...And that does not include anything else...food, shelter, clothing...etc.
That is just how much the money supply of $49 Trillion you are renting from the top has to increase by per year, 2.5 Trillion, so that you can continue paying the rent to sustain its existence...
Or $16,300 per worker/year
Currently consumer/worker drones are requesting the commercial banks to manufacture 1 Trillion every 90 days or 11 Billion dollars a day or $4 Trillion a year compounding to...
Sustain the delusion of freedom you all are living in...And have been since you popped into existence within it...Failure to sustain the required inflation will cause the delusion to stop inflating and it will shatter and all the consumer/worker drones are forced to wake up from the daydream into a nightmare beyond your abilities to comprehend...
There are billions of people below you in the global hierarchy holding you up...
A horse can be ridden to exhaustion...The rider can dismount and whip it to death if they choose...The horse won't budge once it's reached maximum potential...
Looks like the USA whipping operation in Iraq still is not working...It appears that the Iraqis have had enough of you and won't budge.
It's all going to come crashing down...poof.
Rich people get all the power they have from the bottom...and when the bottom is exhausted...There is nothing they can do...They have no power other than what you all give them.
And you think when you can no longer pay the top what you owe them that they are going to print up what you owe them...hand it to you and then you hand it back to them to pay them what you owe them...
Sorry...When the bottom is exhausted...It's game over.
No magic printing press or anything else is going to work....The only thing that works is liquidation.
But you all don't like that.
Oh well...The Universe is not interested in what you all like or don't like. The Universe does not care about your opinion.
And don't cry to me...I just popped into existence in the Universe...Nothing I can do about it...
There is no solution to the have your cake and eat it too problem.
If you collectively tighten your belts the system implodes...sorry you blew it...
Debt is money and money is debt in a compounding interest commercial banking monetary system...You all stop requesting the commercial banks to manufacture money and the system implodes...Whether by choice or consumers reach maximum potential and are forced to stop.
And the top knows about the implosion you think is impossible...
Not a mystery at all...
Consumers use their income which is mostly previously manufactured money or an asset/equity that has been inflated in price by previously manufactured money as collateral for their request of a compounding interest commercial bank to manufacture new money.
"The process by which banks create money is so simple that the mind is repelled."--John Kenneth Galbraith
And when consumers have requested all they can request...game over.
The red line on the below chart is wages and salaries growth it's flat...But the total debt line is shooting up like a rocket to infinity and beyond and the trade deficit is shooting down like a rocket to infinity and beyond...
The below charts...that's what economic doomsday looks like prior to realization...It won't be long now.
The compounding interest commercial banking monetary system is 600 years old...The current global system based in the City of London is 314 years old.
It's almost inflated to maximum potential...and it's about to implode to oblivion.
The USA has been in this system its entire existence. In 1944 Bretton Woods the USA was set up as the demand of the global system...The inflationary engine...
It's GLOBAL - everyone on Earth needs US dollars to buy oil...80 million barrels a day globally...Just the oil requirements cause a 5.6 Billion dollar a day demand for US dollars globally.
All GLOBAL trade is in US dollars.
When the US consumer reaches exhaustion the USA along with the rest of the world will implode since they are dependant upon US consumers...US consumers are the source of US Dollars...China is not selling all that stuff produced with child slave labor to the FED.
You do know there are 100's of 1000's of Children working in Communist controlled factory hives in China 14 hours a day 6 days a week for $200 a month producing happy meal and Christmas toys for western consumers...been going on for years...Decades.
It's a Nightmare...All to support the Delusional lifestyles of the wannabe rich and famous...
To keep the Internet functional so you all can tell me how stupid or wrong I am...
Well good news...It's almost reached game over...
The biggest lie that ever came out of the FED...Don't worry children the deflationary dragon is never going to get you because we have a magic weapon that can slay the dragon forever...It also happens to be the most accepted of all the lies that ever came out of the FED...
And since 2002 when it was told...I have had to put up with zealots...Really it's a religion now...
From the point The Germans were told by the City of London to print money to buy GOLD in 1920 until maximum potential gong show was reached was 4 years...and the actual Hyperinflation lasted 14 months...from early 1923 to late 1924...The whole situation comedy imploded into food riots and the German army was machine gunning people in the streets.
It fueled the roaring 20's in the USA...It took until 1927 for the German implosion to spread out into the system and hit the USA with the climax the 1929-1933 crash followed by the 1933-1945 bankruptcy reorganization of the now 314 year old global system...The whole global system collapsed...England was dumping grain at sea while the population starved trying to cut supply so that demand could bid up prices and get inflation started again.
And that was minor compared to the insanity we are headed into.
The FED is not going to print anything it does not print money...or electronically inflate...It's consumer requests...and when consumers are maxed out...thats it...The FED is not going to buy all your food to feed you or pay all your bills.
It's liquidation time.
In Germany a different situation played out. Basically the winning powers had Germany on the run retreating back into Germany in 1919...At the start France crossed Germany's border first, were repulsed and then Germany invaded France...That was a big mistake...
"ARTICLE 235 The Versailles Treaty June 28, 1919
In order to enable the Allied and Associated Powers to proceed at once to the restoration of their industrial and economic life, pending the full determination of their claims, Germany shall pay in such installments and in such manner (whether in gold, commodities, ships, securities or otherwise) as the Reparation Commission may fix, during 1919, 1920 and the first four months Of 1921 , the equivalent of 20,000,000,000 gold marks."
2790 Gold marks equalled 2.2 Lb of pure gold.
15,770,609 Lb of Gold or 7885 short tons of gold or 229,935,483 oz of Gold...
Quite a bit of GOLD...Especially when the total above ground stock around that time was 50,000 tons with around 25,000 tons monetary Gold world wide...
And Germany certainly did not have 7885 short tons of gold in 1919 1920 or 1921...
What to do then? The British (Bank of England) basically told Germany to print marks to buy GOLD...From? The winning powers...
The Looting of Germany carry trade...Germany printed marks and then bought Gold then the amount of GOLD they owed dropped and the winning Powers still had GOLD and loads of marks...what to do with all those marks? Send them home to roost buying raw materials and finished goods...
The marks flooded into the German commercial banking system allowing it to inflate the debt supply in Germany...The more GOLD Germany bought the more marks they had to print...Which caused the purchasing power to drop...It was quickly losing its value...
But outside of Germany all the currencies were quickly gaining value...Basically German exports were getting constantly cheaper and cheaper...A free give away of German raw materials and finished products basically...
This fueled the Roaring 20's until the mark was losing value so fast that it basically caused prices inside Germay to hyperinflate until it was impossible to account...The looting of Germany carry trade collpased in 1924 after about 14 months of Hyperinflation of prices or a hyperdeflation of the value of the mark ...
side note...
Winston Churchill was Chancellor of the Exchequer (Treasury) of the United Kingdom from November 6, 1924 - June 4, 1929...
The collapse of the carry trade caused a hyperdeflationary implosion of the banking/monetary system in Germany and the shockwave spred out into the Global system and reached the USA by late 1926 and visibly manifested with the market crash October 21 1929...Since real estate began caving in first and the sell off there flowed into the Stockmarkets in search of yield inflating them from 1927 to 1929 in a massve mania...
The Great depression inside of the USA was caused by a collapse in debt inflation in the USA due to the implosion of the roaring 20's post World War 1 looting of Germany bubble..
It bankrupted the crown system which began to rapidly implode...It was stopped in 1933...1933-1945 was the bankruptcy reorganization of the now 314 year old crown system...
The top is not going to avoid the implosion...They have known about it all along...It's the logical conclusion of the taking more power than you give equation...
The top capitalizes on the bottom's ignorance to sustain their position. Really...You all are basically fighting to stay asleep...Because when you wake up you find that you are incompatible with all those around you...You can see all the games that people play, all the lies self destruct and the delusions shatter.
I do realize you are deeply integrated in your surroundings.
The top has engineered the system for decades and if you look at the Global system that is 314 years old...centuries...to postpone the inevitable...
The USA is just a component in a global system that began operating before the USA even existed.
Currently the most significant component since 1944...The demand or inflationary engine of the 314 year old global system...and when US consumers reach maximum potential...That's it...there is not going to be a brief flicker of the lights and the back up global system kicks in...
There is no back up system...
Consumers request 1 dollar and the printing press or electronic equivalent spits out a dollar.
Consumers request zero dollar and the printing press or electronic equivalent spits out zero dollar.
You all going to run to work camps to get your hands on any Federal Government created credit like in the 1930's?
To rebuild the US manufacturing sector/economy you would have to cut all trade and start from square one basically. And if you used the same system all it would do is inflate and implode again.
The USA imports 60 billion dollars a month of raw materials and finished goods and now with the Internet many services to sustain itself...
Any silver and gold coins spent into an economy dependant upon imports would circulate out and never come back. The gold in the Treasury has a book value of 11 billion dollars...that would be sucked out in days if used to pay for imports and if sold in the market would be 159 Billion or enough to pay for imports for 3 months tops.
When the horse is ridden to exhaustion...That's the end of the race to the glorious future...sorry. Somehow you seem to think that an exhausted horse can be motivated to gallop at full speed past the point it drops dead.
Hey I know pass a rule making it illegal for exhausted horses to stop galloping at full speed.
That should solve the problem.
The top is not going to let the system implode...They whip you all to gallop at full speed...Until you become exhausted...Then thats it...
All the power that the top has is supplied to them from the bottom.
You are all hired to keep the system going and when you won't or can't...That's it...
Maximum potential power is maximum potential power. Maximum potential is infinite and indestructible.
The total power the Universe has access to is always less than infinite and indestructible.
Or the Universe would have no structure.
Your awarenesses of the Universe are not inside the Universe.
They have no structure...It's why all that you dream up when put into practice within the Universe has consequences you never dreamed of.
Because you did not dream of them.
Peak oil is where you run out or you can not afford to buy it. There have been billions of people that have been at peak oil for decades. For the entire history of the oil industry there have been millions and now billions that can't get their hands on it.
Those who choose to take more power than they give become richer in power or powerful.
Those who choose to give more power than they take become poorer in power or powerless.
There are billions of drones in the global hierarchy supplying power to the bottom of the American sub hierarchy. And within the American sub Hierarchy there are 100's of millions of drones supplying power to the top of the top of it which is ultimately supplied to the top of the top of the Global hierarchy in Europe. The USA is just an asset ultimately.
And the top of the top of the Global hierarchy then takes their cut or Yield of power and distributes what's left back down to reward all the billions of worker drones...
At the bottom of the bottom of the Global hierarchy many drones are sucked dry and drop dead every day.
Ultimately since the Absolute capitalist hierarchy takes more power than it gives...
The dividing line gets sucked up the hierarchy and spreads to all the other sub hierarchies in the Global hierarchy and begins being sucked up the sub hierarchies...and at the maximum potential point the bottom of the structure collapses...and the whole monstrosity implodes...
All the ignorant drones enjoying the delusional lifestyles of the wannabe rich and famous...
HAVE NO CLUE WHAT IS GOING ON...oblivious...Quaking in Terror wondering when their glorious leaders are going to tell them whats going on and what to do next now that all their hopes and dreams for the future have been blown out like candles...
Been like this for 1000's and 1000's and 1000's of years.
But Hyper the Top needs us and has to save us...
Yes the top needs assets and saves assets...But once the bottom is used up...They are not assets anymore...They are liabilities and either self liquidate or are wiped off the face of the ledger...
Can't feed 6 Billion boot lickers anymore...well...liquidate them until you get to the point that you can.
The above is real economics...Not the wishful thinking fantasy economics you all are devoted to and promote.
The Just think positive ignore the negative economic school of thought you all have been floating around in dazed and confused your entire lives.
Just so you can comprehend better
In the below equations you have the terms Initial principle and Future value.
The Future value is the initial principle and the initial principle is the Future value
If you have 1 bottle of wine initial principle and you never drink it and keep it in the wine cellar for 5 Years then the Future value is ultimately 1 bottle of wine.
But if you lend 1 bottle of wine out under the condition that you get 2 back in return in a year or 100% interest...Then many accounting irregularities begin to arise.
If you are not responsible for obtaining the future value then you are irresponsible and someone else is responsible but then what If they choose to refuse or can't no matter what obtain the future value...Then what?
Are they responsible for your irresponsibility?
That is the key accounting irregularity within the compounding interest equation.
It's not really an equation...It's actually a very simple algorithm or program at the core of the power accounting algorithms within the Absolute capitalist hierarchial food powered make work enterprise. The 6000 + years old city state or civilizational system.
And a key fixture of the 600 year old compounding interest commercial banking monetary system operating within the absolute capitalist hierarchial food powered make work enterprise.
There is no flexibility at all...
You either supply the required inputs to the equation or you don't...It can not predict future value by itself. And once you fail to supply the required input...The output or future value changes.
Once the future value begins decreasing it takes more power input to reverse the deflation of future value.
There comes a point where the equation requires infinite power to stop the future value from decreasing.
The logical conclusion of the compounding interest equation is the total annihilation of all opposition to the total annihilation of all oposition to the logical conclusion of the compounding interest equation.
Or implosion.
Because it's not really an equation its an algorithm.
The compounding interest algorithm = EVIL
Unless of course you enjoy inflating to maximum potential and then deflating to maximum potential over and over again forever...Then the compounding interest algorithm = GOOD.
Simplicity adds up to the multiplication of complexity which is then divided unequally to obtain the required yield of power the absolute capitalists want to manipulate the Universe how they desire.
The worshippers of the compounding interest algorithm will bear its burdens without complaint and perhaps without even suspecting that the equation is inimical to their interests while those who follow the worshippers will complain about the effects but will be ignorant of the cause.
The TOP of the TOP of the Hierarchy know that the absolute capitalist system can not be sustained and that the implosion of it is inevitable...
Those below them are the worshippers and below them are the followers.
There is a maximum potential to inflation is my point.
Reguardless of what all you all think, believe, or have faith in to the contrary.
The top or those with the ability to inflate the money supply need a reason to.
Saving your asses or causing the price of Gold or other commodities to inflate to infinity and beyond are not reasons the top will use as excuses to inflate the money supply beyond what the bottom can accomplish.
And ultimately there is no way to smash through maximum potential so it's doomed to implosion reguardless.
Inflation in human affairs can be traced ultimately to reproduction.
You are looking for salvation where there never was any, is not now, and never will be.
Money is debt and debt is money.
Someone owes you or you owe someone in the absolute capitalist hierarchial food powered make work enterprise...
It was designed by the owners of it and ultimately all below owe the top everything and the top owes all below nothing.
The top does not owe you all any money...You owe all the money in existence to the top...You all rent. The top are the LANDLORDS.
And ultimately power is the medium of exchange.
The purpose of the Police and military is to protect the top from the bottom...
To protect cause from consequence...
The easiest prey of the hunter gatherer is the farmer and the simplest operation is the protection scheme...
You are either with them or against them...
All money is decreed money...fiat...
The top says this is money...Or else...period end of story....
You Farmer are on the Land owned by the LORD of the land and will pay tribute to the LORD of 1 Gold coin a year...
Where do I get this GOLD coin?
You can take one short ton of grain to the grainery of the LORD and there you will be given a GOLD coin for it and then you can give the gold coin to the servant of the LORD...
What if I refuse?
Then the LORD will drive you from the Land that the LORD is the LORD of...
There you go an abundant supply of free food to power your wildest hopes and dreams...Lies and delusions...
22 And The LORD said, Behold! The man has become as one of Us, to know good and evil. And now, lest he put forth his hand and also take from the Tree of Life, and eat, and live forever,
23 The LORD sent him out of the garden of Eden to till the ground out of which he was taken.
24 And He drove the man out. And He lodged the cherubs at the east of the Garden of Eden, and the flaming sword whirling around to guard the way of the Tree of Life.
Well what is done with all that Food the tillers of the LORD's land give the LORD as Tribute?
It powers the Absolute capitalist Hierarchial food powered make work enterprise...
The city state...Or Civilization...
Those who choose to take more power than they give become richer in power or powerful and those who choose to give more power than they take become poorer in power or powerless.
Allow me to take more power than I give from another and I care not who makes the rules
Since I will eventually suck all the power from the hands of the many into the hands of the few or one...
And then they who have the power will make the rules of the game you are all playing...
Money is a food substitute...Ultimately a tool that allows the exchange of power to be easier to accomplish and account for.
Ultimately the medium of exchange is power.
You need to amass the required amount of power to create money.
Once you have enough power you say this is money...or else.
The FED creates nothing it's just a regulator. A connection between the Federal Government and the rest of the Central banks in the 314 year old Global network based in the City of London. The biggest thing the FED did was introduction of a standard Bank note...prior to the 1900's there were easily a 1000 different banknotes in circulation in the USA
The commercial banks funded the creation of the FEDERAL RESERVE not the other way around....
And consumers funded the creation of the commercial banks.
People fund the creation of rich people and in the process the people funding the creation of rich people become poor people.
Those that choose to take more power than they give become richer in power or powerful.
Those who choose to give more power than they take become poorer in power or powerless.
The Creature from Jeklyll Island is a book directed at a target audience to obtain money...It explains very little. An most of it was ripped off from The first book called Secrets of the FEDERAL RESERVE The London Connection.
The FEDERAL RESERVE is just a branch in the Global central banking network.
G. Edward Griffin takes more power than he gives and becomes richer in power.
If he told truth he would lose power and his Creature from Jeklyll Island cult would implode to oblivion.
And he would have to figure out some other method/scheme to sustain the delusional lifestyle of the wannabe rich and famous he currently enjoys.
I know about the path of least resistance...Animals and lightening bolts follow it to the logical conclusion...Human beings have to choose to follow it...But since it's the path of least resistance it is the easiest choice...
Animals and Lightening bolts are ignorant by default...human beings have to choose to be ignorant...And invest effort into avoidance of effort. As long as you all don't mind inflating to maximum potential and then deflating to maximum potential then there is no problem or debate...
Just march to your doom with glee like bacteria and accept the fate you have all chosen and quit crying to me about it...Or attempting to explain to me what I'm well aware of.
You are the Government of you...if you become a threat to the continued existence of another Government then that Government will attempt to eliminate the threat to its continued existence and of course you desire to exist as long as possible so then you will attempt to eliminate the threat to your continued existence...
The ancient power trade imbalance/Power struggle.
Could just throw chains around all your necks again and start at square one.
You have to choose to be ignorant. Most of you are just emotional animals since your emotions are your masters...The top exploits this weakness to manipulate and ultimately gain control of you...
You can't gain control of yourself until you subdue your emotions and turn them into servants...
They are your emotions.
Just because something feels good does not mean that it is good and just because something feels bad does not mean that it is bad.
Every mistake I have ever made felt good when I choose to make it...
Like connecting to the Internet and posting on message boards.
Most people are just drones hooked up to the feeding tube.
Sure you vastly out number the top but you don't know where your masters are. You don't know how to function any way other than how you currently are which is the way your masters want you to.
The way you have been programmed.
You all are working for your masters right now and doing exactly as they want you to.
The bottom does all the work...The top just lives off the yield.
George Bush? Not the top just a drone like all of you.
The key problem is you all have no clue how to break free and as I pointed out above you don't know when it's time to either.
This is Universal...It's been like this as long as people have existed...
The entire 6000 years of recorded history...This is nothing new and you all have never ever escaped the rich getting richer poor getting poorer cycle.
You all just cry about it, then you die...
Its funny how voicing a contrarian opinion instantly makes you a megalomaniac. 'Thou shalt not rock the boat'. You, Hyper, are a boat-rocker, and therefore on the red-list. My hear no-, see no-, speak no evil monkey mind cannot allow you to challenge my world view, therefore I will attack the messenger out of hand, not give thought to the message, and tell Daddy on you. Oh, are you gonna get it when Daddy CorpGov hears about this.
ReplyDeleteBut WHAT IF... you are correct????
"The key problem is you all have no clue how to break free and as I pointed out above you don't know when it's time to either."
ReplyDeleteCare to elaborate?
Joe: i have made less each yr for the past three
ReplyDeleteno cost of living
that's part of why i want to take one of these other jobs
because i know the wage is more than i'm making now
i see some people in other areas making much more $$
but then they have to live in chicago and st. l
i don't want to do that
i just want to make a good & fair wage here
me: i wouldn't worry too much about...it's all going to implode soon anyway
Joe: haha
naysayer
me: was not a joke
http://hypertiger.blogspot.com/
Joe: i was just looking at that the other day
Joe: i guess i'm like the other 90% of the world and think this is like chicken little
me: 99.999%
Joe: it seems so "world's going to end"
and only 00.000001% wants to think that way
me: God must be too...He put more than a little "world's going to end" in the B-i-b-l-e
Joe: yes, of course, and how many christians and christian leaders lead their life that way?
me: proverbs says "A wise man sees trouble from a far off and prepares himself"
Joe: yes, and the bible ansl says to give no thoughts on the things of today, because god will take care of those things
me: All i'm doing is seeing trouble from afar off...which is not as afar off today as it was yesterday. Bear Stearns collapsed in a weekend and many people lost their life savings.
You can put your head in the sand...your choice
Joe: thanks
me: now back to our regularly scheduled programming....
Joe: haha
me: so how about those cubbies
Joe: looking good
but i'm sure they'll find some way to screw it up
and bury their head in the sand at the end of the season
me: actually, the rest of that verse says "what you will put on, what you will eat" He was talking about trusting God for your daily needs. He wasn't saying ignore what's going on around you.
me: people will say "why weren't we warned...why didn't someone tell us"....b/c they wanted to cling to their delusional fantasies
Joe: ok, but go back to the blog you sent...
how many people can make sense of what he wants to say?
you can warn someone over and over and over again, but if they don't understand what you're warning them of, or what they can do to change it, then people will do n-o-t-h-i-n-g, and just move on
that blog is more babble thananything, if it doesn't give anyone
practicle things to change
me: people have no trouble learning something if they WANT to learn....people are smarter than that....it's all about CHOICE
Joe: true
me: so you want to be spoon fed all the answers so you can promptly dismiss them and go back to your life
Joe: but people don't know if you can't explain it in layman terms
unfair, Mike
me: that's just what i'm hearing
Joe: that's what you always hear
me: how so
Joe: I have to run to a b-day lunch
we'll talk about this later
cya
me: ok, ttyl
You know, if you get rid of all the religious bullshit and unjustified presuppositions from the above post, it can be condensed into a single sentence.
ReplyDeleteThat's a lot of wasted breath...
"The money supply I'm looking at currently has to inflate by 11 Billion dollars a day...1 Trillion dollars every 90 days...
ReplyDeleteThe next acceleration is 5 Trillion in 6 months. Then 3 months then 45 days then 23 days then 12 days then 6 days then 3 days then 36 hours then 18 hours then 9 hours then 4 hours then 2 hours then 1 hour then 30 minutes then 15 minutes then 8 minutes then 4 minutes then 2 minutes then 1 minute then 30 seconds then 15 seconds then 8 seconds then 4 seconds then 2 seconds then 1 second...to infinity and beyond."
Hyper T
So when was this statement made? Presumably one could do the math and determine a theoretical time of collapse if known. So what would be the current time frame which we should be looking at?
Also,
Isn't there some sort of "kinder and gentler systemic collapse" scenario that might play out?
The picture you paint is a bit grim . Aside from converting cash to silver you offer little if any advice on preparation for such an event.
Perhaps that is not your role to play, however reading your blog often leave me wanting to cry out for my Mommy, and that is just a bit unseemly for a grown man.
So anything you could do to make your message more palatable would be appreciated. For instance, you would warm it (just a bit) on the stove before you put it in the bottle.
Thanks!
In our Babylonian captivity, God was merciful enough to blind us so that we would not realize that we were even in a captivity. No uniformed troops were needed. And, of course, the prosperity of Babylon itself helped to hide the fact that our nation had been conquered.
ReplyDeleteThe prosperity was brought about by the creation of money that was loaned into circulation at interest. This meant that a greater amount of money than was created would have to be returned to the money-creators of the Fed at some point. If the government borrowed a billion dollars from the Fed, it would have to return more than that eventually. An ever-increasing amount of money would have to be borrowed to cover the interest payments until finally it would implode.
I believe that is what we are seeing today. After 70 years, Babylon's debt-usury money system has become unsustainable and is collapsing under its own weight of debt. In a global economy, Americans are no longer able to generate enough income to keep funding the debt load, because we are sending so many jobs to other countries who have people willing to work hard for a much lower wage.
The fall of Babylon is only half of the story, however. Not only is God pulling down the world-city of Mystery Babylon, but He is also planting and building the New Jerusalem, which is His Kingdom. It is being built upon the foundation of the feast of Tabernacles and the love of God. It is being built in a post-Pentecostal Age upon the foundations of the feast of Tabernacles.
http://www.gods-kingdom-ministries.org/WebLog/WebPosting.cfm?LogID=921
"Step one Get over the shock...
ReplyDeleteStep two Reduce the cost of existence to as low as you can
Step three Get out of and avoid long term debt...If you have alot of equity in Real estate then it is up to you if you want to sell...A motorhome might come in handy...
The key is time...Now you have it, the above is not radical...When the main event takes place...There will only be enough time to panic...for 100's of Millions of people...They will not have time to get over the shock...reduce their cost of existence or get out of long term debt...
Silver and Gold coins will be money...Even cash will be if it exists in people's minds as money..."
http://hypertiger.blogspot.com/2008/01/thanks-for-showing-up-to-planet-earth.html
Gold was confiscated many times before, what makes you think it won't be again? Also, a motorhome? Without gas, what would you possibly do with it? A 40 foot cruise sailboat can store enough food and water to take you and your family to a different country or to international waters, and keep you autonomous for several months, if not longer. And all it needs is wind.
ReplyDeleteOnce the fractional reserve banking system collapses, what will be the new "solution"?
ReplyDeleteYou say people have been duped for 1000s of years and I do not argue the point - but more people today are aware of the fallacies of paper money.
The top will need to be more clever and evil than ever to try and push another fallacious economy past us. We aren't the ignorant superstitious serfs of 1650 anymore who believed diseases were demons.
People aren't nearly as easily controlled as that anymore.
How will the top get us to WANT to be slaves?
"People aren't nearly as easily controlled as that anymore.
ReplyDeleteHow will the top get us to WANT to be slaves?"
Taken a good look at American wimps lately?
snip:
Security Tightened at U.S. Airports Following Discovery of Terror Plot
Thursday, August 10, 2006
CHICAGO — Long lines of irritated travelers snaked through U.S. airports Thursday as people waited hours to reach security checkpoints, then had to dump their water bottles, suntan lotion and even toothpaste following the discovery of a terror plot in Britain.
Guards with rifles stood watch in several U.S. airports, and the governors of California, New York and Massachusetts sent National Guard troops to bolster security.
The hours-old ban on all liquids and gels from carry-on luggage left travelers Thursday with little option but to throw away bags of makeup, perfume and bottles of liquor and wine. Baby formula and medicines were exempt but had to be inspected.
"They're ridiculous, but that's part of the price you pay for traveling during a time like this," Julius Ibraheem, 26, a college counselor from Chicago, said as he stared at the long lines leading toward the checkpoints at O'Hare Airport.
At Baltimore/Washington Airport, security workers opened every carry-on bag that passed through one terminal, and all the morning flights there were delayed.
"It's better alive than dead," said Bob Chambers, whose flight from Baltimore to Detroit for business meeting was delayed more than an hour. "It's inconvenient, but we'll make it."
Laura Yeager left four bottles of Gucci and Cartier perfume for the hotel maid before heading to the Atlanta airport for her flight back to Philadelphia. She still had to give up her lip gloss at the security checkpoint.
She just shrugged and tossed it. "It's better to feel safe."
http://www.foxnews.com/story/0,2933,207709,00.html
"Gold was confiscated many times before, what makes you think it won't be again?"
ReplyDeleteIf 'they' don't know you have it, how can it be confiscated?
"Also, a motorhome? Without gas, what would you possibly do with it?"
Keep the tank full, leave when you need to, find a safe area to park it and live.
"They" may not know you have a kilo of heroin at your house, but I doubt this will do much to alleviate your fears.
ReplyDeleteYou have to spend gold, i.e. give it to others. (Otherwise, why have it?) And if you give it to others, they will know you have gold and the word will spread.
"They" can make benefits of reporting your ass to them irresistible, and/or punishment for not reporting (or for not turning in gold) unacceptable. Which is really what happened before. It's not like they tried to take the gold away, they pretty much did. And that was before computers, spy drones, through-wall radar and all the other crap.
Oh, and motorhome escape plan. Great idea! You know of any areas within ~300mi of your city, served by high quality roads such vehicles require, with access to food and water? Places you won't get kicked out of after a few days? I haven't seen any around where I'm from..
"You have to spend gold, i.e. give it to others. (Otherwise, why have it?) And if you give it to others, they will know you have gold and the word will spread."
ReplyDeleteIf you choose to flee the country, you will have better luck with gold coins than FRN's. If it is in your hands, it is doubtful it will be seized. If you deal with others, take care who you deal with.
And remember, gold is only money because those in charge say it is.
My grandfather (who was a banker!) didn't turn his gold in and eventually discretely sold it in the 60's.
snip:
"We should clarify the terms of "confiscation". The US Government did not send armed soldiers house to house to search for and seize gold without compensation. Gold coins that were turned in were exchanged for legal tender Federal Reserve notes (paper money) on a dollar for dollar basis. A $10 gold coin was taken and the presenter given a $10 bill. Gold bullion was evaluated for its purity or fineness and compensated at a rate of $20.67 per ounce of fine gold. This was the official US government figure for what one ounce of gold was "worth" or "priced at" in dollars.
There were some exceptions to the rules. Special licenses were available from The Secretary of the Treasury via the Federal Reserve banks for certain professionals who used gold in the normal course of their business such as artisans, jewelers, dentists, etc. They were allowed to have only "reasonable" quantities on hand, i.e. they couldn't hoard large quantities of it either. Each US citizen could legally keep a total of $100.00 face value of US gold coins or US Gold Certificates. A family of four could have kept $400.00 face value of coins and so on. Banks could continue to deal in it with other banks for international settlement with additional controls and regulation, and store it for others. The wealthy financiers could still play with it in most every manner. Gold mining, refining and exporting companies could of course still deal with it. Just plain folk like you and me couldn't, at least not "legally"."
http://www.gold-eagle.com/editorials_04/willis112804.html
Under various Executive Orders that already exist, once a national emergency is declared EVERYTHING YOU OWN CAN BE CONFISCATED!
But you want to have options. A motorhome is an option. There are plenty of areas within a tank of gas from my house that are safer, they are options. My brother has land (with well water) - that is an option for me.
Gold, silver, cash on hand are options. Cash is worthless? Use gold and silver. Don't trust anyone to trade your gold/silver? Eat your storage food.
If I wanted to be prepared, I would have cash, gold, silver, food (and anything else I think I might need - seeds, gardening tools, clothing, cosmetics!) stored.
Now is the time to look and make the best - for you - arrangements for 'what if's.' Unless your plan is to give up, lie down and die...
You all have brains - use them!
This is one of my favorite articles of the year. Very condensed set of views that seem to make a lot of sense. No doubt thousands of hours of open questioning processes went into this type of study.
ReplyDeleteOK, now moving beyond the sincere compliments and into the sincere solutions area.
Problem is defined - big crash coming and most are totally unprepared.
Solution is not simple, but some simple truths can be applied to our unique personal solutions.
Silver and gold are a solution that we can use. Come on Hyper, let's just admit it. For 5 or 6 thousand years these compact pieces of metal have held value and never have they lost value. Yes, they can be confiscated. So why don't you come over and find them? No tracking chips in them.
It is a partial solution.
Also partial solutions include getting self-sufficient in food. Moving to a place where arable land is relatively plentiful and the distance from a mega-city or densely packed suburban sprawl is quite far. Get networked in with like minded producers on a mutually beneficial barter system where friendships matter as much or more than the trades themselves.
Lots of pieces of soul-ution here if we just look.
Nice work!
anonymous doesn't know what he is talking about. Things are as they are and for some reason the idiots in this country think the government does something besides screw things up and take credit for time. I find what Hyper writes as a stroke of genius, as I have come to a lot of the same conclusions myself, except for the end of the world as we know it. But, having read Prechters book, At the Crest of the Tidal Wave, I have kind of questioned if we might in fact be ending a cycle as happened at the end of Rome. It is clear they have continually fooled with the banking system until we have nothing of substance except paper houses circulating as currency. Some people think they just print this stuff and give it out, but instead it is a note to pay your mortgage. If your mortgage payment is $1000 a month, $1000 of these buys your house every month. If you don't have $1000, the trustee sells your house on the courthouse steps or you can just print some up. Of course you might get 20 years to life.
ReplyDeleteIt is clear the next step in this process is for the government to attempt to make the foreclosure process manageable. I think they are leaning to paying off a portion of the mortgages which would remove the foreclosure threat, but it wouldn't solve the problem of excess in housing. The government bonds would merely be bought by the banks in exchange for he money put in the accounts and there would no net new borrowing, only a shift of liabilities. Of course the bailed out homeowners aren't good credit risks any more so forget them buying anything and in fact they might owe the government for the balance assumed at some negotiated subsidized rate.
In any case, most people that know how the system functions do not discount the possibility of deflation. In fact, there isn't really any reason to manage the money supply if we only fear inflation. Let the market handle inflation, as the rate of interest and natural levels of pay would solve that problem quickly. Don't bail out the banking excess and we won't have inflation to any degree, except what the system requires. That is the point, the system has to inflate or it collapses.
If they taught third graders then taught it again in 4th grade how money is created, by the time 40 years had passed, we would have a Congress and executive branch full of people who knew the truth and the system would be abolished. I have a degree in finance and they didn't teach me anything except banks created money and deposits. They didn't go into details that money was created with compound interest due back attached and that the interest was never created. Any idiot that could look at what they taught me carefully would find that fact so clearly that he couldn't deny it. But, having been conditioned to believing that the money the banks were lending out was the money I deposited in the banks, and even so, the multiplication was the limit, the reserve requirement divided by 1, so I missed it until someone told me like they told Hyper the obvious. Anyone that can grasp the idea that banks create money by lending it as credits on their balance sheet can figure out that there is never enough created to pay back the debt. Thus in a boom we end the boom with more debt than could ever be paid back and if the debtors to a great degree are different than the people who control the cash balances, then the sureties, the banks are in trouble. Thus the money supply is unsustainable and must contract.
Well, how many people can stand for their assets to reduce in value while their liabilities remain the same? How many people can afford to lose 50% of their customers because their customers need a loan to buy what they sell? Pharaoh has picked up all the money and it has failed.
Does anyone really believe the real Dow Industrial is at 12,300? The real Dow is somewhere near 100, but it is inflated. The number is inflated and the degree or level of dollars in business are inflated. Deflate the amount of business the Dow companies do, and revalue the money and the numbers drop. In fact, growth becomes contraction.
Hyper has a crusade against the fractional reserve banking system. He isn't the only one. I think Jesus Christ had a crusade against them as well and so do the Austrian economists of note. They don't get much ink because the truth doesn't sell too well. And it threatens the gravy train of the super rich that live in places like Buckingham and Versailles.
I wonder if the tree of knowledge was the knowledge of a lie and not the knowledge of the truth. If you try to describe how banking works to 100 people, 98 of them will get mad at you and dismiss you as a nut. 1 will fight you and debate you and one will actually investigate rather than have contempt. I have worked through these ideas as well. Maybe they could just print out some paper and the government could own everything so that you never have any debt and the bosses could get their food served on silver plates and the rest of us peons could get paper plates. I think they would call it the USSR. Those people forgot how to take care of themselves and they were rapidly looted by those in charge once the wraps come off the grab game. In places like that, they shoot 30 million people to give the other 100 million something to think about. Are we headed there as a solution?
"Those people [USSR] forgot how to take care of themselves and they were rapidly looted by those in charge once the wraps come off the grab game."
ReplyDeleteSimilar to what's going on in the US today.
GLOBAL REPORT
ReplyDeleteA DECEPTIVE LULL
After the many dramatic events over the past two weeks - we're all saved! At least that is the message being preached in the US.
The Dow is above 12,000 again. The S&P 500 is above 1300. The US Dollar even had a global rally in the lead-up to Easter. Its nemesis, Gold, fell nearly $US 86 in three trading days and Oil went back to $US 100.
That General Perception Is Entirely False:
In principle, not one economic or financial issue has been solved or even addressed. All the fundamental US problems are still there. They have been literally papered over. The Fed cut interest rates and slammed still more new fresh money into the US financial system to keep it liquid. The Fed is exposing its own balance sheet to an amazing degree, offering up $US 400 Billion in Treasuries as short duration "swaps" in return for unmarketable toxic sludge of US mortgage paper.
The Fed had held about $US 800 Billion in Treasury paper, paper that it acquired by "monetising" the US Treasury's debts. This paper is at the core of the Fed's financial holdings. It is the Fed's major "asset". Now, by having sent $US 400 Billion out the door, the Fed has in fact sold down its capital by half. Please note here that the Fed's liabilities - the US Federal Reserve Notes (US Dollars) - have not fallen in quantity.
If any private financial company had done what the Fed has done, most people in finance would instantly recognise that its liability to asset ratio had doubled. That alone would make holding its liabilities, US Dollars, much more dangerous. What is certain is that the Fed cannot repeat what it has just done. To do so would strip it entirely of capital on its own balance sheet. If the Fed is not now "done" - then it is done for!
A Financial Strategic Overview Of The US:
There are three main economic forces at work inside the US economy. The first is monetary and financial and involves an involuntary de-leveraging of US banks and financial institutions. Everybody is trying to contract credit issued while holding the cash still rolling in. This is contracting the volume of credit quite dramatically and adding to the liquidity crisis inside the US. The second is the situation inside the US economy as it rolls into recession, seen in the fact that nearly nine million US households now have "upside down" mortgages. For the first time ever, aggregate mortgage debt is bigger, by $US 836 Billion, than the total value of homeowner equity. A credit contraction augmented by (real estate) price deflation is a huge monetary and economic force. These two forces are mercilessly squeezing the third force, which is the Fed (aided by the US Treasury). The Fed is caught in a vice from which there is no escape.
The Walls Are Closing In On The Fed:
On March 18, the Fed Funds rate was cut by 0.75 percent to 2.25 percent. The Discount Rate was cut by 0.75 percent - after having been cut by 0.25 percent two days previously - to 2.50 percent. Here too the Fed's back is up against the wall. Having exposed its capital to genuine market risk, the Fed cannot make a similar move again or it would stand stripped of all its core capital.
In terms of the interest rates it offers to US banks and other US financial institutions, a few more emergency cuts would put the Fed in the same position as the Bank of Japan with rates of 0.5 percent. The Fed Funds rate is absurd with US internal consumer prices climbing at 4.3 percent annually.
The Climbing Danger To The US Dollar AND The US Treasury:
The alarm bells should be ringing all over New York and in Washington DC. Foreigners have noticed these recent massive falls in the US Dollar. On their own balance sheets, when accounted back into their own currencies, they are looking at enormous losses. So far, these losses have not been brought to book since that would knock huge holes in the balance sheets of their own commercial banks' and other financial institutions which hold US Dollars and/or US paper assets. That will come later this year. Most private banks normally only have to report in depth once a year. When large losses start appearing on the books of a bank - and they will - the usual reaction is a buyers' strike, followed by sales of the "asset".
International investors are now avoiding US financial assets, making it harder for the Treasury to fund a growing budget deficit. NET sales of US stocks and bonds by private foreign investors totalled $US 38.2 Billion in January, the most since September, the US Treasury Department reported on March 17.
This is the precise point where any further cuts in interest rates by the US Fed become deadly dangerous. The Fed could end up in a situation where its official interest rates are so low that no foreign buyers show up at a scheduled US Treasury auction! Were that to happen, it would be like a global call to all the rest of the world to STOP CREDIT to the USA! We are not there yet, but foreigners are slowly leaving.
To see this, examine what happened to Bear Stearns the week before it nearly crashed. It could not borrow funds from anywhere but it still had its scheduled payments to meet. In mid March, Bear Stearns' cash holdings fell from $US 17 Billion to less than $US 2 Billion. This is the direction in which the US Treasury is now heading. If the US Treasury cannot borrow from foreign sources of money, it cannot fund its fast climbing budget deficit! But the Treasury too still has to pay money out to finance the US government's $US 3 TRILLION plus budget. When the Treasury's till is empty, it will have to send all the sequential truckloads of debt paper over to the Fed, which will have to accept all it gets. Then, the Treasury's debts will be "monetised" to an extent never seen before!
It is this, a Fed "monetisation" of US Treasury debt paper - where the Fed creates new US Dollars as fast as US Treasury's debts arrive - which is the greatest danger to the international value of the US Dollar.
Travelling Further Along The Road To Weimar:
This process too was a part of the three-year Weimar Republic sequence which destroyed Germany's currency. Back then, even if the German Treasury could report that total tax revenue had climbed by 600 percent, this was totally overpowered by the fact that internal prices in Germany had climbed by 8000 percent over the same time period. In fact, the German Treasury was short of money and government services all across Germany were contracting at ferocious speeds on that account alone.
The need to overcome this involuntary contraction of government services forced the German Treasury to send its debt paper straight over to the central bank which then looked at the face value amounts and printed ever more paper money, simply adding ever more " zeroes" to all of it.
The US Commercial Banking System - Leveraged To Cloud Nine:
Historically, all credit expansions end as credit contractions. This is what is now happening to the US commercial banking system. It is therefore time to take a closer look at their "gearing", i.e. their real liabilities and assets. Here, it must be noted that banks count as "assets" the loans they have made while their "liabilities" are the deposits they have created as book keeping entries and "credited" to the accounts of borrowers. The latest official US data puts the total capitalisation of US banks, government agencies and savings banks at $US 1.681 TRILLION ($US 1,681 Billion). Note this number - it matters.
Very Basic Accounting - Assets And Liabilities:
The direct exposure of US commercial banks to mortgage securities totals $US 5,591 Billion or half of the outstanding total amount of US mortgages. They are faced with write-downs of up to $US 1,375 Billion - which is very close to their total capital. That fact alone makes it mandatory to take a closer look at their assets and to find out how well these assets function as collateral. The latest Case-Shiller US home price index shows US home prices falling a record 2.4 percent in January, the eighteenth month of decline in a row, bringing prices down a record 10.70 percent in the last 12 months. US aggregate mortgage debt is already bigger than total US housing equity to the tune of nearly $US 1 TRILLION and slid a further huge 2.4 percent in January. The collateral foundation underpinning the liabilities of the US commercial banks is hollowing out the US banking system. Ahead is the certainty that some of these hollows will be big enough to swallow several US commercial banks which will fall into them as into a sink hole and not be there the next day. Now, again, note all the US banks' actual capital.
Desperately, Still Lending Up A Storm:
It is an old ploy of commercial banking that if a particular bank finds itself infested with a large dollop of very bad loans, the bank storms off in another direction and lends up a storm of new loans in the hope that the new loans will make its books look somewhat better. This is now happening in the US with the Fed cheering silently on the sidelines while adding new reserves, cash and Treasury paper on a weekly basis in the vain hope that an acceleration of the banks' credit expansion will offset the fast developing nationwide credit contraction. Total US Bank credit surged $US 38.8 Billion in the latest reporting week to reach a record $US 9.453 TRILLION. US bank credit is increasing at an annualised 12.3 percent rate.
But no matter how hard the US commercial banks try to restart credit expansion, the much broader deflation effects on a broader financial front are overwhelming their efforts. Instead, all these new loans seem to have had another effect across the US as more and more people borrow simply to meet increased living expenses. At the end of 2007, 36 percent of consumer disposable income went to food, energy and medical care. This is the biggest slice of income since records were first kept in 1960, according to a recent Merrill Lynch report. As never before, the paycheck is running out before the week does.
A Cold Eyed Look At The Top US Money Center Banks:
The US money center banks are the superstars of the US financial system. They are all deemed to be too big to fail. But what is their actual standing, again using very basic accounting? Goldman Sachs is using about $US 40 Billion of equity as the foundation for $US 1.1 TRILLION of assets. That comes to a "gearing" of 27.5, which is the same as saying that were $US 40 Billion of its loans to go sour, then Goldman Sachs would have lost ALL its capital. Over at Merrill Lynch, which is now the most leveraged, $US 1 TRILLION of assets is placed on a foundation of around $US 30 Billion of equity. That's a "gearing" of 33.3, which is the same as saying, that should about 3 percent of its loans go sour Merrill Lynch would be stripped bare of its capital. There are no safety margins here at all.
The US money center banks are cardboard houses. If they had to take their "balance sheets" to the marketplace to seek credit, they would be summarily refused.
On The Ground In The US Economy:
In any evaluation of the actual state of an economy, the intellectual tools of historic comparison are invaluable. When those tools are used today to examine the US economy, what one finds is a massive multi-generational retrogression which has been constant since the mid-1960s. To give just one example of this, today, the US manufacturing base takes up a mere 9.9 percent of total employment.
If the gargantuan and grotesque US military-industrial complex is subtracted, as it ought to be as sheer economic waste, what would remain are those still employed in the US civil and private economy. In reality, genuinely productive employment in the US economy is much lower than 9.9 percent.
De-Industrialisation In Broad Daylight:
To find a comparable situation in the US, one has to go back to the 1830-40s when most Americans lived and worked on farms and when the early version of the first US industrial revolution was just beginning. To find a modern comparison today is not easy unless the nations being compared are scaled to the same economic size to make the difference stand out in stark relief. Doing that, the best comparison to the US is a small third world nation where capital production forms a small percentage of the total economy. Any comparative analysis places the US in the third world category in real physical economic terms. What identifies a modern nation today is the gearing between industrial capacity and the percentage of the workforce employed there. Even more important is a CLIMBING ratio between total REAL capital and population. On both these measures, the US has been going backward for more than 40 years.
What The US Has Lots Of - Consumers:
The latest US data shows that consumers and their personal consumption expenditures make up 70.5 percent of total US GDP. This is anything but a typical historical situation. In fact, neither at present nor in the past is there or has there ever been another nation in a similar situation. But the fact remains that today, the US IS in this situation. When dealing with such unique historical events, one has to be careful. The English Industrial Revolution which began slowly in about 1760 had a mighty surge in two waves between about 1820 and 1848. That was followed by an industrial explosion in real capacity after 1855. This was one such unique historical event. Nothing like it had ever happened before. The English living through these times were themselves stunned into near disbelief as they saw real physical poverty disappearing amongst themselves. Other nations followed Britain with the US setting the example between about 1870 and 1900. Over those three decades and all by itself, America, created more new capital than had ever existed before on earth. By the end of the nineteenth century, US output exceeded all of Europe. Now, it is China which is doing the same thing. Its advance over the past twenty years exceeds in its speed of capitalisation ALL of these preceding examples. China too now sees the economic event where people leave their small farms to make money in all the factories.
The Exceptional Event Of US De-Industrialisation:
Many nations in history have made absolute messes of their own initial industrial revolutions. Here, Germany is the stellar example. Germany blew itself apart in WW I and then went right back to start all over again only to waste it all in another futile war which left it in a field of physical ruins and under the occupation of the four victorious powers. But the Germans picked themselves up for a third time and became the richest nation in Europe by 1965. This shows that re-starts can be achieved.
The current unique historic event in the US is truly exceptional because its de-industrialisation has taken place for everyone to see ever since 1965, the apogee of US industrial power. In historical terms, the most astounding thing is that next to nothing has been done to arrest the descent. There have been many warning voices, all of which were ridiculed or ignored. The fact remains that REAL capital cannot be consumed with impunity. Once it is gone, it no longer exists. As an economic power, the US is done.
The GLOBAL Economic Effect Of The US Recession:
The factual economic data is now beginning to roll in concerning the combined effects of the global credit crunch and the beginning of the US economic recession. This data is truly alarming. Even more alarming is the speed with which global trade is contracting. Global trade has slowed to all but a standstill since the start of this year and is now threatening to shrink for the first time since the US economy went into recession in 2001. An indicator produced by the Bureau for Economic Policy Analysis, a Dutch research institute, shows that in the three months to January, world trade in goods rose at annualised rate of 0.2 per cent over the previous three months. The equivalent growth rate in the three months to October 2007 was 6.9 per cent. Note the difference between these two quarterly numbers. From 6.9 percent to only 0.2 percent in the following quarter. Three months more of this and global trade will be in free fall.
The FINAL Accounting For The US Economy:
This is an excerpted quote from US House of Representatives member Ron Paul: Total US government obligations are $US 53 TRILLION, while total net worth of US households is just over $US 40 TRILLION. The country is broke. This statement by Mr Paul is fully authoritative. He has been on various House of Representatives finance and banking committees for decades, so he knows. What this means in basic accounting terms is that the assorted levels of US government have so loaded the US civil economy with debts that even the forceful expropriation of the full net worth of all Americans will not be enough to bring the US back to a state of solvency. Further, this overhang of debts only deals with official US government debt. The private debts of Americans are not included at all in Mr Paul's calculation. All these private debts have to be added on top.
Double Jeopardy Debts:
It is this DOUBLE load of debt under which the US economy is now crumbling. Since what is left of the US private and civil economy is now crumbling under its own debt, there is no way that it can even assist the several levels of US government with their debts. Conversely, the US government cannot act to save or assist the US private and civil economy, precisely because of its own overhang of debts.
An International Chain Of Debt:
The US is in debt to itself to the tune of $US 65 TRILLION in unfunded political mandates. It owes its foreign creditors another $US 7 TRILLION. There is no way that such a situation can last.
The Approaching End Of The Deceptive US Lull:
In the background, an invisible global economic clock is counting down. The clock will strike when the rest of the world or Americans themselves realise that the US is flat broke, illiquid, unable to pay its debts and insolvent without the economic means to cover its own debts with its own economic assets.
A Dead (Bankrupt) Economy Walking:
This is a full national bankruptcy situation. At present, what is defeating most Americans in understanding the actual financial and economic circumstances they are in is the gargantuan scale of the real problems. For most, they are too vast to be grasped. The rest of the world outside the US has the same problem in grasping that the most powerful nation in the world since WW II is now a hollow shell of what it once was in economic terms. No machinations with interest rates or infusions of credit or paper money will be able to disguise this fact. They may confuse the issue - for a while. The fundamental issue is about physical wealth. It is about REAL capital.
The US today is a de-capitalised nation. It simply does not have enough capital to supply itself.
INSIDE THE UNITED STATES
DEAD END STREET
According to the latest US statistics as reported in the February 28 issue of Manufacturing and Technology News, in 2007, imports were 14 percent of US GDP while US manufacturing comprised 12 percent of US GDP. Economically, this means in international terms of trade, the US is at a dead end.
A country whose imports exceed its industrial production cannot close its trade deficit by exporting more.
A Confirmation Of Ron Paul's Statement:
The GAO report pointed out that the accrued liabilities of the federal government "totalled approximately $US 53 TRILLION as of September 30, 2007." The GAO is the General Accounting Office and acts as the US Congress agency overseeing US federal government accounts. Nobody there is listening.
No funds have been set aside against this mind boggling liability. This is living in a world of illusions.
The Industrial Cave In:
Orders for US durable goods unexpectedly fell in February, led by a slump in demand for machinery, as the housing downturn and the prospect of recession made companies hesitant to invest. The 1.7 percent drop in demand for products made to last at least three years in February followed a 4.7 percent decrease in the prior month, the Commerce Department said on March 26 in Washington. The slump in durable orders was exceeded by a huge 13 percent decline in demand for machinery. That was the biggest fall since comparable records began in 1992. These are tragic and desperate numbers. US industry is dying.
Don't Mention The Bush Wars:
The general US media is an amazing system. Over the last three months or so, it has managed to reduce its coverage of the ongoing fighting in Iraq between the US occupation forces and the Iraqi resistance to only three percent of its national coverage. That includes print, televison and radio news, according to reliable US media watching organisations. Iraq coverage has been replaced with Obama and Hillary.
With US Allies Like These ...:
With more than 730 military bases spread across the world, as recorded by the renowned historian Chalmers Johnson, the US is a de-facto global empire. These US bases are still expanding regardless of the failing wars in both Iraq and Afghanistan. During President Bush's presidency, NATO itself has added seven new members - Bulgaria, Romania, Slovakia, Slovenia, Lithuania, Latvia and Estonia, bringing the number of US NATO allies to 26. While the US economy is caving in behind him, President Bush has rolled out not only his two wars but also vastly extended his alliance and global bases system.
America's ongoing reliance on imports of foreign capital is continuing. Though the current account deficit shrank in the fourth quarter, it was still 5.3 percent of US GDP last year. This continuing military buildup is a strategic move counteracted by the backwards pull of the US financial and economic recession. It is a geo-political and geo-strategic absurdity. It is the strategy of assured future collapse.
General Notice To All Privateer Subscribers:
In The Privateer's judgement, this is the turning point around the vast pivot which was the US economy. This pivot is now crumbling. The most important centre point of the post WW II world has been undone. After this false lull, there are tumultuous events ahead financially, economically and geo- strategically.
INSIDE CHINA - AND - JAPAN
CHINA TAKES US SUBPRIME LOSSES - AND - JAPAN COMES NEXT
The US banking system has poisoned the well from which the US Treasury borrows by selling international lenders American subprime waste paper. These lenders are facing losses which are climbing ever higher. The Bank of China, hardest hit among the country's big banks by subprime exposure, has reported that it held $US 5 Billion in US asset-backed securities at the end of 2007 and booked $US 1.58 Billion in losses and markdowns on the holdings. China's Industrial & Commercial Bank reported holdings of $US 1.23 Billion in US subprime paper at the end of 2007 and booked $US 400 million in losses. Suffice it to say that Chinese banks are not keen to keep loading up on US debt paper.
China's Climbing Mountain Of Foreign Exchange Reserves:
Chinese foreign exchange reserves hit $US 1.6471 TRILLION at the end of February, rising $US 57.3 Billion over the month. The increase compares with January's record $61.6 Billion addition to reserves.
China's Stock Market Reflects Its Future Export Prospects:
In Shanghai, China's benchmark CSI 300 Index recently plunged 5.1 percent to its lowest point in eight months. The index has slumped 30 percent this year on Chinese concern that a housing crisis would push the US economy, China's biggest export market, into recession. This is the way that the US economic recession is spreading like waves right across the world's stock markets, causing losses which are already in the $US TRILLIONS for investors globally. That, of course, will have its own effects inside all these economies. Falling stock markets are always economically contractionary.
The Economic Wave Effects:
A recession in the US will cause rising waves of unemployment in export industries. With the Asian nations most exposed to the internal US consumer markets, the US contraction will occur in Asia to a near matching degree. For several of these nations, this will be enough to knock them into real economic recession. Of course, with these Asian nations having rolled into their own recessions, they will buy less as their imports diminish. This too will be a form of economic backwash from the US recession wave. No nation will be immune, the entire world economy faces an economic downswing. The real global economic tragedy is that, having worked and saved and turned the savings into new capital plant on a grand scale in recent years, all these now concrete investments in capital plant dedicated to the internal US consumer markets are now becoming malinvestments which will have to be scaled down or written off with the attendant enormous losses.
Japan's Fiscal Year Ends On March 31:
Next Monday, March 31 marks the end of Japan's fiscal year. It is also the date Japanese banks report their doings over this past year. In the absence of a grandiose exercise in oriental book cooking, what the US subprime fiasco has cost Japan will be out in the open. Worsening Japan's problem is the recent climb of the Yen against the US Dollar. That will also reveal a huge wave of losses across Japan.
In The Approaching Global Recession - Asia Will Be A US Dollar Seller:
As the economic wave sweeps across the globe, it is certain that those with the reserves in hand will be using parts of these reserves to sustain their own economies during the downswing. This simple fact makes it certain that Asian economies will periodically engage in selling waves of US Dollars. They will try to time these sales during periods of temporary US Dollar strength. But that, in turn, means that any upturn in the US Dollar will be capped by this Asian selling. The US Dollar simply cannot win.
INSIDE THE EUROPEAN UNION
THE COMING GLOBAL PIVOT MOMENT
International Background Briefing:
On Monday, March 24, Iran's Foreign Minister announced that his country has officially applied to join the Shanghai Cooperation Organization (SCO), a security grouping of nations dominated by China and Russia which has morphed into a form of anti-NATO alliance. Iran would never have made this official announcement had in not known in advance that it had the approval of both Russia and China.
Geo-Strategic Overview:
Geo-Strategically, this simply means that if and when Iran joins the SCO, then it has acquired two enormous and powerful allies in full military terms. The first is Russia, with a nuclear armament sufficient to be equal to that of the US. The second is a greatly modernised China with its own vast armed forces. In this alliance, it will be China and Russia calling the shots diplomatically and/or militarily. Iran will be the very junior partner. But the important point here is that with Iran as a member of the SCO, any US future attack upon Iran has become void.
Politically and grand-strategically, any US attack upon Iran would directly draw Russia and China into the conflict once Iran becomes an official member of the SCO. In these circumstances, an attack upon Iran would be risking a world war. Official Washington has been stung to the quick. On Wednesday, March 26, President Bush announced that he had accepted an invitation from President Vladimir Putin to visit Russia next week. That official invitation from Moscow follows urgent meetings in Washington with a top level Russian delegation which arrived at the request of the United States. The Russian invitation to President Bush followed, the Russian delegation left the US, and President Bush made the official announcement that he had accepted President Putin's invitation. ALL of that happened on March 26. What is in fact happening here is that Russia and China have realised that the US is at the end its strategic rope and that therefore, it was time to open the doors for Iran to become an official member of the SCO anti-NATO alliance. In essence, this is Russia and China against the USA. In practical terms, the futile US military enterprise is all over, unless the Bush Administration is prepared for a global war.
The PIVOT Meeting:
The meeting between the American and Russian Presidents will take place on April 5 and 6 in Sochi, a resort city on the Black Sea. Apart from the normal diplomatic folderol as to who invited whom, the facts are plainly in view. President Bush is travelling to Moscow as a "supplicant", having insufficient military and strategic means in hand to retrieve the drastic situation inside Iraq. The US military occupation of Iraq is right on the verge of full military failure. The US Force on the ground there has utterly exhausted itself and it cannot for much longer be maintained logistically.
President Putin knows this. So do the Chinese who stand right behind him. Arriving in Russia, President Bush will discover the real cost of a policy which has left the US in an impossible worldwide position.
Geo-Strategic Failure In Front - Economic Failure At Home:
In history, there have been many examples of geo-strategic overstretch leading to an impossible military position. A nation in this position has always had only two exits. One is a negotiated agreement which will allow the self-defeated party to militarily retreat with its own dignity nearly intact, at least in the view of the public back in the home country. This is what Vietnam achieved at the Paris Peace Talks. President Bush will find in Russia that the only position acceptable to Russia is that he leaves Iraq. Mr Bush can take that exit - or choose the other one, which is war and disastrous defeat.
AUSTRALIAN REPORT
SUPER WOES
The Australian stock market has fallen almost 25 per cent since its all-time high last November 1. $A 86 Billion has been wiped off the value of Australian shares in superannuation funds since January 1.
If anything shows the economic folly of forcing millions of Aussies into a government scheme of compulsory savings, the above facts ought to be it. Government coercion of private individuals in civil society is a pestilence even if done under clouds of good intentions. Having forced people into compulsory super funds with these massive funds in fact acting as a subsidy for the entire financial system generating salaries, bonuses, etc., the creators of all this are now looking at the people they forced to invest and saying: "Sorry, we've lost $A 86 Billion for you". Think of what $A 86 Billion (that's $A 4,000 per capita) if left in peoples' pockets, could have done in respect to their actual living standards.
It is one thing to make investments on one's own and at times take some losses. It is an entirely different thing to be forced into investing only to take huge losses caused by others.
Sorry - The Bus Has Already Left:
Australia's foreign debt, now over $A 600 Billion, is still rolling out an annual current account deficit of well over $A 60 Billion. Australians are adding to the height of their external debt to the tune of 10 percent a year. When looking between the flags towards the far economic horizon, it is clear that a global recession is rolling towards Australia. Are Aussies prepared for this? Nope. Have Aussies made any national efforts to prepare? Again, the answer is no. In the second half of this year, Australia's international terms of trade are going to turn down and foreign export earnings will go down with them.
Australia has now recorded 69 straight months of trade deficits with the current account deficit in the December quarter running equivalent to 7 percent of gross domestic product. Australia cannot earn its own way in the world when it is enjoying the best international terms of trade since WW II.
But Can You Bank On It?:
With commercial banks worldwide so suspicious of each other that they fear sending money to each other - causing central banks to throw tidal waves of cash into the payments system simply to keep trade and normal payments going - it is time to take a closer look at the Aussie Banks. Here is where they stand.
The Loan Arrangers:
The "risk weighted" assets of Australian banks, the total amount they have lent adjusted for the kind of loans they make, totalled $A 1.465 TRILLION in December. Against all that, the banks held $A 150 Billion in capital. Their capital-to-asset ratio is 10.2 - the lowest since 2004. While Aussie banks have borrowed massively from offshore, it is not clear how much money they owe internationally. What is clear is that this offshore borrowing has been re-lent inside Australia at the local higher rate of interest.
The banks, of course, have profited from the difference between the lower rate at which they borrowed the money and the higher rate at which they lent it to Aussies. But debts are debts and all of these debts are on the balance sheets of the Aussie banks. This is where the danger lies.
The Australian credit expansion is still going strong though the recent raises to official interest rates have had the effect of causing climbing housing stress. Credit expansions are wonderful. First, get a lot of people to borrow a lot of money and get them to buy houses at the now elevated prices that any credit expansion always causes. Then raise interest and mortgage rates and bring distress to millions.
THE GLOBAL MARKET REPORT
US DOLLAR DEBT PAPER - LOVE IT OR LEAVE IT
In the second week of March, the US Treasury held an auction of ten-year paper, as they do every week. Over the eight weekly auctions leading up to this one, foreign buyers, mostly from Asia, the Middle East and Europe, had taken up an average of 25 percent of the Treasury paper on offer. But in the mid-March weekly auction, the share of the debt paper going to these foreign buyers plummeted to 5.8 percent.
On March 21, the Guardian newspaper in the UK reported that Southeast Asian central bank governors - "plus South Korea and Taiwan" - were to meet in Jakarta (Indonesia) for two days to discuss - "financial market uncertainty and market weakness". Nothing much more was said in the English-speaking media. Any focus on this meeting was lost in the aftermath of the Fed's rate cuts and the attendant upturns in the US Dollar and on US stock markets. The "Lull" - see the Global Report in this issue - was on.
The duration of that "lull" might be very short indeed. On March 27, a London correspondent for marketwatch.com reported that the National Pension Service of South Korea plans to no longer purchase US Treasuries. The head of global investments for the Pension Service, Mr Kwag Dae- hwan, was quoted as follows: "It is difficult to buy more US Treasuries because the portion of our Treasury investment is already too big and Treasury yields have fallen a lot."
Indeed they have, in fact, in the two days following the Fed's announcement of its 0.75 percent rate cuts on March 18, short- term three-month Treasury bill yields plummeted all the way down to 0.60 percent. That is their lowest yield since the early 1950s. It is lower than the yields on this paper were in the year between June 2003 and June 2004 - when the Fed Funds rate was 1.00 percent. From here, there is nowhere for (short-term) Treasury yields to go but UP. And when yields go up, the capital value of the existing debt paper goes DOWN!
South Korea's National Pension Service is the fifth largest pension fund in the world. While many investors have been quietly shunning Treasuries, this is the first time that a fund has announced that fact.
Actions Have Consequences - Even For The USA:
In 2006, the net acquisition of US stocks and bonds (government and corporate) by foreign investors and central banks was $US 722 Billion - enough to "fund" the US current account deficit. In 2007, that figure had dropped to $US 596 Billion - not enough to fund this deficit. But break down the year of 2007 and the picture gets MUCH worse. Over the first half of the year - from January to June, the net purchases of foreigners was $US 475 Billion. Over the second half of the year - the half when the US credit crunch hit - it plummeted to $US 121 Billion. That's a fall of almost 75 percent, pitifully inadequate to fund the US current account deficit. And as already reported in this issue, net SALES of US stocks and bonds by private foreign investors totalled $US 38.2 Billion in January 2008. The well has already run dry.
Please note here that the huge fall in foreign net purchases of Treasuries came in the second half of 2007, when the Fed chose to ignore a US Dollar that was already at multi-year lows and embarked on another round of official interest rate cuts. Note further that, for private foreign investors, this drying up of net purchases turned into expanding net SALES in January this year, when the Fed began lopping 0.75 percent chunks off its official interest rates, cutting them at a rate not seen for more than two decades.
Combine this with the avalanche of unprecedented moves taken by the Fed (and the Treasury) since the beginning of this year, some of them based on arcane regulations undisturbed since the 1930s, and the message to the rest of the world is loud and clear: "Our banking and financial system is in deadly danger. We will stop at nothing to preserve it. If we have to sacrifice the currency in the process, to echo the words of a Treasurer of the early 1970s - It's our currency, but it's your problem!"
Battening Down The Hatches On A Financial Titanic:
A week ago, the Fed was loudly denying rumours that it was in talks with the Bank of England and the European Central Bank on the subject of using taxpayer money to literally buy up the mortgage backed securities which led to the demise of Bear Stearns and which threaten the entire US banking system. On March 26, US Treasury Secretary Paulson said in a speech to the US Chamber of Commerce that US financial regulations must be overhauled to reflect the "interconnectedness amongst all financial institutions". Two days later, President Bush endorsed an executive summary proposing an overhaul of US financial regulations and regulatory agencies. Mr Paulson will give a speech unveiling this proposal on Monday, March 31. In essence, this regulatory "overhaul" promises to do for the financial system what the "Department of Homeland Security" did for US foreign and domestic spying agencies.
Under this proposal, as reported by the Associated Press, the Fed would become what is called the government's "market stability regulator" and given "sweeping powers" to better detect threats to the financial system. The proposal is redolent of a new "Patriot Act", this one pertaining to the financial system. The one certainty is that, if implemented, it will sweep away any remaining vestiges of free and open markets inside the US. Such is the magnitude of the perceived threat facing the US financial system. And such is the knee-jerk reaction from government.
More Than Halfway There:
On September 27, 2007, President Bush signed into law a measure which increased the "debt limit" of the US Treasury by $US 850 Billion to $US 9.815 TRILLION. On March 27, 2008, exactly six months later, official US Treasury debt stood at $US 9.412 TRILLION. That's an increase of $US 447 Billion ($US 894 Billion "annualised). It has also used up 52.6 percent of the debt limit increase put into place a mere six months ago. The problem here is that the presidential elections don't take place until early November, and that's MORE THAN six months from now.
There is no doubt that the Treasury will strive to cook its books in order to remain under the current debt limit until the elections are out of the way. But there is an equal lack of doubt that when the Congress does have to raise the debt limit again, whether it is late this year or early next year, the new limit will be in excess of TEN TRILLION US DOLLARS. If foreign investors are still clinging on to their already immense holdings of US Dollar debt paper by then - and that is VERY unlikely - the breaching of the TEN TRILLION Treasury debt barrier along with a US market logjam caused by the new regulatory environment now being proposed is going to be impossible to overcome.
Iceland - An Advance Warning:
On March 25, the central bank of the tiny nation of Iceland raised its controlling interest rates by 1.25 percent to 15 percent after an emergency meeting called to try to deal with a plunging currency and a huge surge in price inflation. The central bank said it was "crucial to reverse the Krona's decline as soon as possible." Perversely, at least in the eyes of Wall Street, the Icelandic stock exchange leaped 5.1 percent on the news, its biggest one day gain in nearly seven years.
Iceland has a huge current account deficit. Even with double digit interest rates, foreign investors have shunned the nation and more recently, Icelanders have been moving their capital offshore. And because Iceland cannot buy up the rest of the world's goods and services with its own money but must first obtain the foreign exchange necessary to do so, it cannot afford a plunging currency. Hence the huge rate rise. Without it, Iceland would not have been able to acquire the foreign capital essential to prevent its entire financial structure, including its government debt structure and its currency, from falling off a cliff.
The US is Iceland writ large but is going in the exact opposite direction in an attempt to "solve" its insoluble problem of SOLVENCY. Their days of "paying" debt by rolling it over are numbered.
The Coming End Of The Flight To "Quality":
In the immediate aftermath of the Fed's rate cut, there was an abrupt reversal on US stock markets while commodities and precious metals were dumped and short-term Treasury yields imploded to intraday lows below 0.40 percent. It had dawned on many that the end of the Fed's ability to influence the situation via rate cuts was, if not here, at least in plain sight. As investors always do in quasi panic situations, the winning positions were sold off to shore up other positions, to meet margin calls, and to raise cash. The "cash" was in turn parked where it is always parked when there seems nowhere else to go. It was parked in Treasury debt paper, notably short-term paper.
The attitude was summed up by one Wall Street trader quite succinctly: "It's a capital preservation trade, the rationale is - 'I'll buy a bill, I know that when the thing matures I'll get 100 cents on the dollar.'"
Thirty years ago, when US and foreign investors alike were abandoning US paper assets of all descriptions, including the US Dollar itself, the great currency analyst Franz Pick referred to US Treasury debt paper (and all other forms of unfunded government debt) as: "Certificates of guaranteed future confiscation." That is precisely what they are. Ultimately, they can only be serviced and repaid with the earnings (confiscated via taxation) of the productive sector of the nation which issues them.
US investors still love US Treasury debt paper. The rest of the world is preparing to, or is already in the process of, leaving it. Some, like the South Korean Pension fund, are starting to actively sell it. The problem of getting 100 cents on a Dollar of Treasury debt is simple. WHAT WILL IT BUY?
Recent Events:
On March 18, the day of the Fed's rate cut, US stock markets soared. The Dow was up 420 points on the day. Then, things got REALLY "volatile". On March 19, the Dow slumped 293 points. Then, on March 20 and 24, it turned and stormed upward by 448 points. The "net" gain on the index induced by the Fed's rate cut at that point was 575 points. With the US Dollar rising too on the USDX, Wall Street started tentatively hoping that the "fix" was actually working.
That didn't last long. By March 28, the Dow was back below the level it reached on March 18. The US Dollar had given back two thirds of the gains it had made over the previous week, and worst of all, Treasury yields had begun to rise from the ridiculous multi-decade lows they had set over the previous week. The problem now is that there isn't another FOMC meeting until the end of April.
Gold:
Please see Gold This Week (GTW):
http://www.the-privateer.com/subs/goldcomm/gold.html
What's Next?:
Monday, March 31 is the end of the financial year in Japan and the day when the Japanese banks have to come clean. On that same day, US Treasury Secretary Paulson will outline the Bush Administration's new plans for financial regulatory oversight. This is a potentially toxic combination.
Next weekend, on April 5-6, President Bush meets President Putin in Sochi in Russia. After that comes the European Central Bank (ECB) meeting on April 10. Two ECB council members have signalled that they are ready to RAISE European rates "if necessary". Finally, the G-7 meets in Washington on April 12-13. Imagine the uproar in the unlikely event that the ECB decides to RAISE rates on April 10!
"The Fed had held about $US 800 Billion in Treasury paper, paper that it acquired by "monetising" the US Treasury's debts. This paper is at the core of the Fed's financial holdings. It is the Fed's major "asset". Now, by having sent $US 400 Billion out the door, the Fed has in fact sold down its capital by half. Please note here that the Fed's liabilities - the US Federal Reserve Notes (US Dollars) - have not fallen in quantity.
ReplyDeleteIf any private financial company had done what the Fed has done, most people in finance would instantly recognise that its liability to asset ratio had doubled. That alone would make holding its liabilities, US Dollars, much more dangerous. What is certain is that the Fed cannot repeat what it has just done. To do so would strip it entirely of capital on its own balance sheet. If the Fed is not now "done" - then it is done for!"
Not necessarily - as long as the top can come up with a reason to issue bonds for the privately owned Federal Reserve to 'monetise.'
"The FED actually intervened by selling bonds or reserves into the bond market to keep rates from plunging to zero...Fortunately the top is good at planning since the FED has a finite amount of reserves and needed more...Good thing Congress had the Iraq war as justification to request the Treasury to increase the bond supply so that the FED could keep rates from plunging to nothing..."
http://hypertiger.blogspot.com/2008/03/whatever-hope-you-have-now-will-be.html