• Archives

  • Enter your email address to subscribe to this blog and receive notifications of new posts by email.

    Join 22 other followers

  • Categories

  • Top Rated

  • Enter your email address to subscribe to this blog and receive notifications of new posts by email.

    Join 22 other followers

  • Categories

  • Advertisements

NIA’s New Video Goes Viral

On Wednesday, November 24th, the National Inflation Association released a shocking and stunning video entitled, ‘The Day the Dollar Died’, which shows the world exactly what could happen to the U.S. economy in the very near future during the first 12 hours of a U.S. dollar collapse. Although the video itself is fictional, NIA believes a U.S. dollar collapse is inevitable and there is a strong likelihood that the U.S. will experience an outbreak of hyperinflation this decade. ‘The Day the Dollar Died’ is a wake up call for Americans who aren’t yet stocking up on gold, silver and food supplies. The U.S. dollar’s day of reckoning is coming and only Americans who prepare now will survive.
In just 42 hours since its release, ‘The Day the Dollar Died’ has already been viewed over 145,000 times on YouTube. It is currently YouTube’s #1 top favorited news and politics video. Approximately 1,200 people have commented about the video on YouTube alone, with thousands of more comments having been made about the video on hundreds of Internet blogs that have featured it. An amazing 93.5% of those who have watched ‘The Day the Dollar Died’ have given it a thumbs up.
All of the discussion about ‘The Day the Dollar Died’ comes hot on the heels of NIA’s October 31st release of its latest critically acclaimed full length documentary ‘End of Liberty’, which shows how Americans are rapidly losing their liberties and freedoms, and how our country is headed for a complete societal collapse. ‘End of Liberty’ has already received about 1/2 million views in less than one month.
On November 5th, NIA released a report with its projections for future U.S. food prices based on the recently announced $600 billion in quantitative easing by the Federal Reserve. Several days later, NIA’s food inflation report was featured live on Fox News by Glenn Beck, who was recently ranked by Newsweek as the #2 most influential political figure in the country. On November 12th, NIA’s President Gerard Adams was a guest on the Fox Business Network, where he spoke about the potential for food inflation to take over as America’s biggest crisis in 2011.
NIA is not a political organization and does not support Republicans or Democrats. NIA exists solely for the purpose of educating Americans to the truth about the U.S. economy and inflation. Americans live in a country where 99% of those who studied economics in college were taught voodoo Keynesian economics.
Keynesian economists have the mistaken belief that all recessions are bad and must be suppressed by government interference in the free market. They believe that by the Federal Reserve manipulating interest rates to artificially low levels and printing trillions of dollars of fiat money out of thin air, they can create jobs, economic growth, and wealth. They believe that a little bit of inflation is good for an economy.
Keynesian economists fail to realize that when price inflation breaks out, it becomes impossible to contain unless interest rates are immediately raised to a level that is higher than the real rate of price inflation. Unfortunately, due to the current size and scope of our national debt and unfunded liabilities, NIA believes it will be impossible for the Federal Reserve to raise interest rates higher than the real rate of inflation. Real interest rates are likely to stay negative until the U.S. dollar collapses and is officially declared dead and worthless.
Gas and grocery bills for all Americans have been rising substantially in recent months. The average American has been seeing health insurance costs spiral out of control on an annual basis. Students have been suffering from college tuitions rising like there is no tomorrow. Massive price inflation is all around us, yet the mainstream media continues to ignore the truth and reports the government’s phony CPI numbers as gospel.
Politicians in Washington from both sides of the aisle have been colluding with the media in order to brainwash Americans into believing inflation is not a problem and that their real fear should be deflation. Deflation is a good thing for middle class Americans because it means their money is worth more and their incomes and savings have more purchasing power. Inflation is only good for the politicians because it allows them to steal the wealth of middle class Americans and redistribute it to their banker friends on Wall Street who don’t produce anything of real value.

There is no reason for a lawyer or banker to make more money than a farmer or factory worker. This is only made possible by the system we have today, where Americans get suckered into electing representatives who promise entitlements that the government can’t afford without printing the money to pay for them. When the dollar bubble bursts and the system collapses, the free market will allow farmers and goods producers to become wealthy while lawyers and bankers go broke.

Most Americans are naive enough to believe that because the U.S. has survived for so long with such a huge national debt and continuous budget deficits, the country will be able to continue down this path forever without any consequences because after all, this is America we are talking about. The truth is, our national debt has grown by 70.7% over the past five years, compared to 41.8% during the previous five years, and 14.3% during the five years before that. Meanwhile, our GDP has grown by 17.9% over the past five years, compared to 27.5% during the previous five years, and 32.9% during the five years before that. We have gone from our GDP growing more than twice as fast as our debt, to our debt growing at nearly quadruple the speed of our GDP. A train wreck is getting ready to happen and this train wreck is literally unstoppable.
To watch ‘The Day the Dollar Died’ for free please visit the NIA video page at: http://inflation.us/videos.html
It is important to spread the word about NIA to as many people as possible, as quickly as possible, if you want America to survive hyperinflation. Please tell everybody you know to become members of NIA for free immediately at: http://inflation.us

Sean Corrigan Explains The Rules Of The “Multi-Trillion Shell Game” And What To Expect Next

Diapason’s Sean Corrigan does a succinct review of how the “multi-trillion” ponzi has progressed, where we are now (a point where even intellectually challenged anchors on CNBC gasp in wonder that entire countries are failing merely to save a few not so good bankers), and where we are headed: “under the rules of this multi-trillion shell game, the sovereigns guarantee the ECB which funds the banks which buy the government debt which provides for everyone else’s guarantees.” All in all, nothing that should surprise our readers (as should none of the things that are “suddenly” headline news), but still one of the better summaries of how and why we are now at a point where even the second biggest economy in the world (the EU) is unable to stop the unraveling. It is only fitting that America is today demonstrating to the world the apogee of its consumerist orgy, even as the austerity belt is tightening for yet more hundreds of millions of people all across the world, and where resentment toward America is once again reaching unprecedented levels. At this point it is just a matter of time before said unraveling crosses the Atlantic. One year from today the media will be running amused retrospectives how a deranged bubble chasing hedge fund world was buying NFLX and AMZN at triple and quadruple digit forward multiples. But until then the insanity has just a little longer left to run.

From Material Evidence

Though he later recanted his belief in its message, Lionel Robbins’ near-contemporaneous treatment of events in his ‘Great Depression‘, remains one of the most cogent and lucid expositions of what went wrong in that dark decade and also of what kept it in a state of ‘wrongness’ for such an unconscionable length of time after the initial crisis.

Among its many, telling comments, the following stands out by way of its relevance to the turmoil taking place in Europe today and so is worthy of an extended reproduction here:

“…The boom was remarkable, not only for the proliferation of fashionable fraud; it was remarkable, too, for a change in the methods of straightforward financing.., by a conspicuous increase in the proportion of public investment which takes the form of fixed debt rather than participating ownership. This tendency was bound to accentuate the difficulties of any period of depression. In part, the change was due to… increased participation by banks in the financing of all kinds of enterprise created a market for bonds where equities would have been unacceptable…The big insurance companies, moreover, through whose agency so large a proportion of the savings of the poorer and middle classes are invested, had a preference for this kind of investment…”

“But in part it was due to the increased economic activity of States and governmental bodies. The most intractable and disastrous masses of fixed debt which have obstructed recovery in the slump have been debts of this sort… Of the total amount invested in Germany in the years 1924-1928, it has been estimated that at least 40 per cent was on account of governmental bodies. Much of this was spent on the carrying out of works such as the construction of swimming-baths, the financing of housing schemes and so on, which had little prospect of being financially remunerative… Much of this money is irretrievably lost. But, because it was borrowed by government bodies, recognition of this fact is slow to come and liquidation has thus been delayed. Paradoxically enough, economists who have urged that this sort of thing has not proved its worth in practice, are often called by their opponents, ‘deflationists’…”

Is it so hard to see that, when the crisis broke, the Irish authorities should have restricted themselves to guaranteeing banking deposits up to some fairly modest ceiling amount and then left bank shareholders, bondholders, and wholesale depositors to negotiate over the division of whatever small residuum their ill-advised investments had left them?

By extension, if and when those creditors themselves were sufficiently embarrassed as a result of their folly, the authorities in their own jurisdictions — whether German, Dutch, French, British, or whatever — should have applied exactly the same salutary treatment to them in their turn. Losses would undoubtedly have been substantial, but the foredoomed attempt to disguise them has not only not made these any lesser, but has prevented anyone from embarking upon the process of working to put right the shocking loss of wealth they have entailed in the interim.

Yes, there would have been considerable disruption and a highly regrettable hardship would have been imposed not just on the few, highly-visible ‘Rich’ but also on the many, nameless, less well-off — but can anyone say that today’s consequently pressing need to throw the engine of government debt accumulation violently into reverse will not occasion at least equal amounts of suffering in a far more protracted manner and without even the merit of fairness and equity in making the malefactors’ willing business partners bear the first (and probably the largest) portion of the losses?

As it is, the Irish ‘rescue’ looks like it has only served to underline how perilously entwined the fortunes of sovereigns and their banks have become. As we have noted before, under the rules of this multi-trillion shell game, the sovereigns guarantee the ECB which funds the banks which buy the government debt which provides for everyone else’s guarantees. No wonder scrutiny is switching back to Spain and Eurobank stocks are sagging, once more.

And to think that the former UK Prime Minister used to boast that he had ‘saved the world’ when he set the standard by being the first to rush to conclude a similar pact of mutually-assured destruction into which the hosts of cherubim and seraphim, surely, would have feared to tread.

As if this were not enough for markets to try to rationalise, there is just the risk that it travels back to the US – whether via the ‘putback’ of dodgy mortgage loans to FNM/FRE and/or the banks, or via a possible Muni implosion when the Build America Bond programme expires at year end.

Bigger yet is the threat posed by China’s inflationary outbreak. Although we derided its crude attempts to suppress prices and boost welfare payments – and while the market was briefly relieved that the PBoC did no more than hike reserve ratios for the umpteenth time – it does appear as if something a little more draconian may be coming down the track, possibly after the Central Economic Work Conference has discussed any such measures in three weeks’ time.

Certainly, if we are to take the China Daily at its word, we should be reducing risk exposures where we can: –

“…The latest move to contain excess liquidity and the forceful measures that the central government has taken to stabilize prices show the determination of Chinese policymakers to fight inflation. Though these moves may not be enough to tame inflation once and for all, they are a good start before more aggressive actions become necessary to battle inflation that is unlikely to end anytime soon, as debt-laden rich countries keep flooding the world economy with their newly printed money.”

Well, if Ben can blame it all on Zhou, he is surely entitled to give a little of it back, but the main point is that the former’s indulgence in QE might just be about to run into the latter’s switch to QT. We know which we think will carry more weight in setting commodity prices.

Happy Holidays? 28 Hard Questions It Would Be Great If We Could Get Some Real Answers To

The Economic Collapse
Nov 27, 2010

Over the coming weeks, Americans will be wishing each other “happy holidays” millions upon millions of times.  But are these really happy times?  Record numbers of Americans are going to be going hungry and cold this winter.  Millions upon millions of our fellow citizens would gladly give up all holiday celebrations in exchange for a decent job.  The vast majority of us have plenty of examples of horrible personal tragedy all around us this holiday season, and much of that tragedy has been brought on by the deteriorating economic conditions.  Meanwhile, we have a “control freak” government that wants to establish an even tighter grip over our lives and that now insists on either viewing our exposed bodies or groping our private areas before we can get on an airplane.  Once upon a time in America the holiday season was a time to rejoice because we lived in a prosperous land where liberty and freedom were respected, but today we live in a nation with a highly centralized economy dominated by a federal government that is becoming more “totalitarian” by the day.

But we are told that centralized control by an overwhelmingly powerful national government is good in our case because “they” know what is best for us.

Oh really?  They sure have done a great job “managing” our economic system, haven’t they?  Unfortunately, it seems as though anything that the federal government takes control over just gets more messed up.

The following are 28 hard questions that you should ask anyone who believes that having a highly centralized economy and a highly centralized government is good for us….

#1 Why is the U.S. government trying to put a choke hold on our food production system? S. 510, The Food Safety Modernization Act, is being called one of the most dangerous bills in American history.  This very vague and incredibly broad bill (which you can read here) will give the U.S. government unprecedented control over the growing, storing and sale of food in the United States.

#2 Approximately 14.8 million Americans are unemployed this holiday season.  So why in the world is the “greatest economy on earth” not able to provide jobs for all of them?

#3 Why are the U.S. and South Korea insisting on conducting 4 days of naval exercises in the Yellow Sea when tensions in the reason are at an all-time high and when a single mistake could spark an all-out war?  Wouldn’t it be better to postpone these naval exercises until things have calmed down a bit?

#4 What prompted Russia and China to suddenly decide to quit using the U.S. dollar and instead start using their own national currencies when trading with each other?

#5 Why does it cost $181,757 per hour for Barack Obama to travel on Air Force One?

#6 Are we still a “great nation” when so many of our citizens are going hungry?  According to a recent BBC report, 15% of all U.S. households experienced a shortage of food at some point during 2009.  One of our readers named Gary recently left a comment that indicated that he encountered a very big crowd during his recent visit to a local food pantry….

The line at the food pantry was very long. There are a lot of folks who have little food and no money.

#7 If the U.S. economy is recovering, why were new home sales for October down 28.9 percent from a year ago and why were existing home sales for October down 25.9 percent over the previous year?

#8 Why are there so many reports of unprofessional behavior by TSA agents?  For example, it is being reported that some TSA agents have specifically targeted attractive young women for “additional screening”.

#9 Why are U.S. home builders only selling one-fifth of the homes that they were selling during the “boom times” five years ago?

#10 How did a man who had been convicted of misdemeanor harassment and stalking get hired to be a TSA agent?  Now it turns out he is being accused of abducting and sexually assaulting a woman.  These are the people who are supposed to be protecting us?

#11 In the “wealthiest nation on earth”, why are a record number of Americans going to be without heat this winter? According to the National Energy Assistance Directors’ Association, more than 10 million U.S. households will not be able to afford to heat their homes this winter without assistance, which would be a new all-time record.  One of our readers named Elaine recently shared that she is one of those Americans that is going to be cold this winter….

It’s starting to get cold here in the mountains. I’m unemployed, no heat, at risk for foreclosure, etc. Everyone is at risk for this, it’s just that many of the muddleclass can’t face it yet. For a lot of us, it’s not cutting back on that bi-weekly latte that’s going to help, it’s cutting back on having electricity. Don’t judge the poor until you’ve been here.

#12 Why are Americans becoming so pessimistic about the future?  According to one recent poll, now only 51 percent of Americans believe that today’s young people will have a better life than their parents did.

#13 How did we ever get to the point as a nation where only 39 percent of likely voters believe that the U.S. government is operating within the limits established by the U.S. Constitution?

#14 Why does the mainstream media largely ignore the fact that thousands of people are being slaughtered near the U.S. border with Mexico each year and a city just across the Mexican border is now being dubbed “the most dangerous place on earth”?

#15 What does it say about American politics that the companies that produce the new naked body scanners have more than doubled their spending on political lobbying over the last five years?

#16 Why is the Washington Post working so hard to defend the policies of the Federal Reserve?

#17 Have we now gotten to the point where the financial condition of the U.S. government is so bad that it will be virtually impossible to ever have a balanced federal budget ever again?

#18 Why aren’t more Americans deeply concerned about the dozens of nasty diseases that they could catch from TSA agents if they don’t change gloves between each groping?

#19 Why are there 18 times as many banks on the FDIC “problem list” as there were just four years ago?

#20 What does it say about the United States that now 39 percent of Americans believe that marriage is becoming obsolete?

#21 How can anyone claim that the U.S. economy is turning around as long as the number of Americans on food stamps continues to set a new all-time record month after month?

#22 As thousands of factories and millions of jobs continue to be shipped overseas, why does Barack Obama keep publicly proclaiming that globalism is so good for us?

#23 Why aren’t Homeland Security officials willing to consider changes to the new airport security procedures when many women are actually using the term “sexual assault” to describe their experiences with the new “enhanced pat downs”?

#24 The median wealth of a U.S. Senator in 2009 was 2.38 million dollars.  So exactly what does that say about the health of our Republic?

#25 Why have our leaders allowed U.S. strategic grain reserves to shrivel away to almost nothing?

#26 In 2009, 54.9 million international tourists visited the United States, and those tourists spent approximately 93 billion dollars.  How far will those numbers drop once stories of TSA abuse circulate all over the globe?

#27 If Congress does not authorize another emergency extension of long-term unemployment benefits, then what in the world are the 2 million Americans who are going to suddenly lose their checks going to do?

#28 Are there still any areas left in the United States where liberty and freedom are respected, where taxes are low, where regulations are not suffocating, where the people are friendly and where Americans can be free to live an independent lifestyle?

Here’s Why the Fed Plan Is Failing: We’re All Austrians Now

John Carney

It’s no accident that Austrian economics is newly popular. It provides the best explanation for the business cycle we just lived through.

But the resurgent popularity of Austrian economics may actually be hampering the ability of the Federal Reserve to reflate the economy with low interest rate policies. Businesses, now aware of the dangers of a low inflation- sparked economic bubble, may simply be refusing to fall for the age-old boom-bust trap.

The Austrian theory of business cycles is rather straightforward:

1) In a market economy, lower interest rates are a sign that more wealth is available in society for new business projects. Either society is more wealthy – and therefore saving more without lowering spending – or its members are saving more – delaying current consumption in favor of future consumption, and incidentally providing loanable funds for projects that will be sold for future consumption.

2) In either case, the low interest rates are a sign of additional savings – and therefore a sign that more money will be available for future consumption. Businessmen respond to this by starting or expanding business lines aimed at future consumption – that is, projects that take time and larger amounts of money to complete.

3) Many of the projects seem profitable only because low interest rates make them cheap to fund and the assumption of future consumer spending out of increased savings promises demand for their products. For businesses, this is a kind of paradise: they get to borrow cheaply and sell to wealthier people in the future.

4) Low interest rate-fueled business expansion spreads through the economy. The cost of labor and materials goes up, which provides people with more money to spend or save. Retail businesses expand as well as the higher-order long-term manufacturing, investment and research & design projects. This creates what looks like a benign cycle: expansion fueling expansion.

5) When the low interest rates are caused by central bank intervention, however, this paradise turns out to be an illusion. The wealth that would have led to future spending does not actually exist – because the low interest rates aren’t caused by an increase in the amount of savings. Because we already know the interest rates weren’t caused an increase in the savings rates, it’s fair to assume that the additional wealth created during the boom mostly went to spending rather than increased savings. (Indeed, savings might actually have decreased as people anticipating future wealth rationally spend more now because they perceive less need for savings to finance future spending.)

6) As it is revealed that savings-fueled demand is lower than expected, many of the projects go bust. Investments in them need to be liquidated, some at a total loss. The investments in those long term projects now look like irresponsible speculation on an assumption of future growth. The Austrians call them “malinvestments.”

7) The liquidation of those malinvestments means the loss of value in the resources those investments would have used, including the loss of jobs in those businesses. This spreads the “bust” from the original speculative areas to cover the economy – in a reverse of the boom cycle.

8) A side note here: It’s sometimes asked why a consumer boom doesn’t follow a long-term project bust. After all, if the problem was an assumption by businesses of increased savings, shouldn’t learning the reality that people weren’t saving cause the retail sector to boom? Unfortunately, this doesn’t happen. In fact, the reverse is usually the case. The reason is straight-forward: the mistake wasn’t underestimating spending, it was overestimating savings. What’s more, the liquidation of malinvestments causes unemployment, often triggering consumers to start saving more and spending less.

9) The economy develops what looks like an output gap. It is producing far less than it once did and employment is at a far lower level. This is mainly because part of the old output was geared toward future consumption that is now understood to be impossible. The output gap is just a shadow of the old, unsustainable boom.

Okay. Let me say that this is a slightly modified version of the Austrian theory of business cycles. It’s been modified mostly to take out the shibboleths of Austrian economics – the kind of private language that people who have read a lot of Ludwig Von Mises use to talk to each other. No doubt they’ll strenuously object to one part of another of my description of what they like to call the ABC – Austrian Business Cycle.

Students of ABC will notice that I left out one crucial aspect of the Austrian theory of business cycles here: I didn’t mention the role of the central bank in sparking the bust by raising interest rates. Typically, Austrians say that the central bank inevitably raises interest rates to ward off inflation. But I don’t think any raising of interest rates is necessary to begin the bust cycle – all that is necessary is for the future spending to be lower than it was expected to be. (I think this explains the housing bust, for instance.)

The strongest critique of the Austrian theory of business cycles has always been that it makes businessmen out to be a bit foolish. Why are they always getting tricked by the low interest rates of central banks into making unsustainable investments? Wouldn’t a smart businessman take advantage of low rates to make investments that could withstand inevitable rate raises?

There are lots of possible responses to this. The Austrian economists have offered plenty, including the fact that low interest rates create a kind of calculational chaos that makes if very hard to figure out which projects are sustainable and which are too risky.

One of the favored responses, however, has just been that businessmen did not understand the business cycle very well. After all, Austrian economics has long been regarded as outside the realm of mainstream economics. Many MBA’s probably have nothing but a vague sense of the Austrian business cycle theory. So the reason businesses didn’t anticipate and respond to the boom-bust cycle is that they didn’t know much about it. Their errors were based in ignorance.

A conspiracy theorist might point out that this ignorance served the purposes of central bankers very well. It made it possible for central bankers to use interest rates to manipulate the economy. They could lower interest rates and count on businessmen to respond as they expected – by starting and expanding business lines.

This brings me around to my point today. I think that we may have entered a new era.

We may all be Austrians now.

Not since the New Deal has Austrian economics enjoyed the political popularity it does now. Austrian economists are awfully popular with the Republican Party, especially its Tea Party wing. Peter Schiff, the Austrian economics-inflected investment advisor, is a very popular guest on business television. Tom Woods’ book “Meltdown” – which provided an Austrian economics explanation for the financial crisis – was a best seller. Congressman Ron Paul and Senator-elect Rand Paul are both devotees.

Perhaps more importantly, there has been widespread blame assigned to Alan Greenspan’s Federal Reserve for initiating the housing bubble with its low interest rate policies. I cannot remember when the last time was that there was widespread public appreciation of the role of central banks in causing the boom-bust cycle.

Top that off with the very public criticism of Ben Bernanke’s zero-interest rate plus quantitative easing policy. While much of this is centered on the dangers of inflation, it has also given rise to fears of “bubbles” in various assets.

All of which points to me to the possibility that Austrian business cycle theory has gone mainstream. I think it is very likely that businessmen are finally waking up to the dangers of malinvestment – and avoiding some of the errors that the critics of ABC theory always thought they should.

If I’m right about this, it could mean that Ben Bernanke’s plans to push along the recovery through further easing could be stymied – or at least delayed. I’m not sure how long business will be able to hold out against the lure of low interest rates – especially as investors push banks and businesses to put the money on their balance sheets to work. But the downturn could last much longer than history would suggest.

Don’t get me wrong. I don’t think the Fed has totally lost its power to create mischief for the economy. If the power of central bankers to manipulate businesses through lower interest rates was diminished, the economy would be far healthier. But interest rate manipulation still will be a source of calculational chaos that will make business planning more difficult and likely lead to clustered economic errors.

But as long as our Austrian moment lasts, we might be headed to a healthier – if slower – recovery than we would have had if Bernanke could get his way.

America’s Standard of Living is About to Fall Off a Cliff

Bob Chapman

The social net has become a bit more frayed. Soon extended unemployment benefits will cease and 2 million Americans will have to dip into their savings, if they have any. This is an outgrowth of the effects of free trade, globalization, offshoring and outsourcing. We have lost 8.5 million jobs over the last ten years to this destructive process. We have seen more than 42,000 manufacturing plants leave the country as well. There are now more than 17 million Americans unemployed and the U6 official government unemployment figures 17%. If you remove the bogus birth/death ration, the real figure is 22-5/8%. Over that ten-year period we have lost about 5.5 million manufacturing jobs or about 1/3rd of that labor force. As recent as 1985, 25% of output was in manufacturing, now it is close to 11%. America’s physical infrastructure is in a shambles, so that transnational conglomerates can bring us cheap goods to suppress inflation and bring these companies mega-profits, which they keep stored offshore to bypass taxation. They presently have $1.7 trillion in such profits.

This in part has been caused by deficit spending and the creation of money and credit since August 15,1971, when the US left the gold standard.  It is not surprising as a result that 81% of the US economy is considered in poor shape and that the IMF fears a social explosion. You could call this a financial death spiral. There is no question the economy is moribund and the next stage could be dead in the water and that is after QE1 which saw $2.5 trillion enter the economy. The first installment of QE2 is in process and that $600 billion will grow to another $2.5 trillion, to be followed by Q3 and a further injection of another $2.5 trillion. There are those who say QE2 should be eliminated. We wonder if they realize that if it is, that the American economy, and most of the world’s economy will collapse. If we had allowed a severe recession to play itself out in the early 1990s all this would have never happened, but that is not what Wall Street and banking wanted. We should have bitten the bullet three years ago, but the elitists wanted to take the problem at least one step further to be sure the final result would bring about one-world government. Readers, that is what this is really all about.

Video: Nixon on August 15. 1971 discussing amongst other things the decoupling of the US dollar from gold.

We have a foreclosure crisis in real estate of epic proportions caused by the criminal behavior of banks. The use of food stamps reaches an all-time high each and every day. Soon unemployment will be more than 23%. If you want to see where we are headed look at the unemployed figures projected from the 1930s. U3 was 25.2% and U6 was 37.6%. In addition if you use the 1990 methodology the CPI inflation figure is about 4.5%. If you use the 1980 basis real inflation is 8.5%. We have ceased looking at official government figures because very simply, they are bogus and have no connection to reality. The unemployment situation is so bad that millions are filing for disability. That comes after extended unemployment benefits end.

It is not that people do not want to work but that there are simply few jobs available. 8.5 million of our jobs have gone to foreign nations with cheap abundant labor and they won’t return until we erect tariffs on goods and services. As a result 14.3% of adult Americans live in poverty. That is cash income before taxation of $22,000, or less, for a family of five. This does not include existing assets or food stamps or unemployment benefits. This situation is similar to the early 1960s, which was solved by the Keynesian “War on Poverty” and another no-win war. As we recall, the last time fewer Americans were employed in manufacturing was in 1941, when unemployment was 16.2% and we had another war. Incidentally, we do not believe in coincidence. It should be noted that we not only face labor differentials of 90%, but America’s regulatory environment is purely anti-business and anti-growth, as our competitors face no such handicaps. These factors began the exodus and that will continue until there are no jobs and the American economy collapses. The World Trade Organization, WTO, NAFTA, CAFTA and all the other sweetheart deals with other countries have to be eliminated, and they will be purely because soon the US will be strictly in a survival mode. America is left with a service economy and that does not produce wealth. Then there is the declining dollar that has put the US on sale. It has gotten so bad that states, cities and counties are selling off ports, parking meters, bridges and highways. Foreigners are happy to comply in their effort to dump depreciating dollars. In addition unfunded US liabilities are about $90 trillion, plus the current short-term liability of $14 trillion. This is debt that cannot possibly be repaid.

Consumers in great part are living off credit cards, as they try to pay them down. Recently consumer debt fell 1.4%. That means in the intermediate and longer term consumers cannot consume enough to maintain consumption at 70% of GDP. The flip side of that is that 13% of the economy is deficit spending. If government spending was eliminated GDP would fall at a 10% rate.

As a result governments, corporations and individuals are dumping the depreciating dollar. That is what QE2 is all about and that is monetizing US debt, because fewer and fewer people will buy it. The Fed will end buying all the US debt and the dollar will collapse. In February, almost two years ago, we declared an inflationary depression. It’s still going on. There is no growth in America. What is spent is debt by the US Treasury augmented by the Fed. Purchasing power is dropping off a cliff and that means America’s standard of living is falling and will continue to fall. What will America do when the music stops? When no one will no longer buy US bonds? The Fed will buy them all eventually and that process is already under way. What happens if the Congress cuts back spending and austerity begins? That means cuts in many areas and higher unemployment and less consumption. That means a deepening depression. This shows you what few options the government and the Fed really have. They rescued Wall Street and banking and left the economy to shift for itself. If the Fed does not inject over $2 trillion into the economy GDP could shrink by some 18%. This is a consequence the Fed doesn’t dare tell you and the Congress about. That also means the dollar could fall 20% to 50% from current levels. Living standards would then fall a like amount, as government cuts extended unemployment, food stamps, Medicaid, Medicare and Social Security. At the same time persistent inflation will be a drain on purchasing power. This is where this is all headed and Wall Street, banking, the Fed and government are well aware of where this is headed. Where will the welfare come from? As a result there will be social unrest and dislocation. We are already seeing families moving together from one state to another and an exodus of inhabitants from high tax states to states with low or no state taxes and warmer climate. Major changes are already taking place. All kinds of big changes are coming. What can government do when they are committed to $105 trillion in debt and foreigners refuse to any longer fund its debt? Those who own gold and silver related investments will protect their wealth and those who have put food; a water filter and weapons away will have a good chance of survival.

Americans are not alone in this dilemma; many other nations are as well. Even Canada has a debt to GDP ratio of 150% and 60% would be in trouble with just the loss of one paycheck. Like in the US savings are miniscule. There is no incentive to save with 1% interest rates. The funds are either spent or invested in more speculative vehicles as they are in the US and in other countries. Do not forget savings are the lifeblood of the economy.

Open currency warfare

Currency warfare is out in the open after having been under cover for many years. It isn’t just the Chinese; it is everyone including the US, and this will eventually lead to trade wars, which is a battle exporters cannot win. Exporters with large US dollar positions are getting rid of them by buying bonds in other currencies, commodities, gold and silver. Many other nations are following their lead, as we explained earlier in reference to SOC, the Shanghai group. You also have Japan making its biggest currency intervention in years. Needless to say, the US blames everyone else when they have been manipulating the dollar for years. Just stop for a minute and think of what the Treasury’s, Exchange Stabilization Fund is all about. It is about currency manipulation. No one is blameless, and if the US had not eliminated tariffs on goods and services we wouldn’t have the problems we are having today. Lack of tariff protection has definitely driven America to the end – not to speak of the loss of 42,000 businesses and 8.5 million good paying jobs, which has resulted in 22-5/8% unemployment. Americans are still not paying attention. They still think the good things in life grow on trees and all they have to do is pluck them off free of charge. They still do not get it. We made gains in the last election from the socialists, but a paltry 100 seats in the Senate and House changed hands. They still are too dumb to understand that the crooks have to be thrown out, not re-elected.

If all of this wasn’t bad enough we have a European debt crisis to make things even more difficult. The euro hit about $1.19 in June and has since traded up to $1.40 and back to about $1.35 as the odyssey of debts hangs over Europe. The low euro made euro exports inexpensive over the months when it was down. That break has ended. We see the euro reversing from $1.40 to $1.30, but that fall won’t be enough to push exports up again. That means no exit strategy, no higher interest rates and back to stimulus again. Greece, Ireland, Portugal and Spain will leave the euro zone and if Germany, France, Holland and Austria want to bail them out, they now know the price tag will be $5 trillion.

Even the IMF is releasing warnings of falling world GDP, no recoveries and dire warnings of social crisis worldwide and massive world unemployment. What the elitist leadership behind the scenes in the US and Europe do not understand is when you have austerity economies slow down. They do not grow, they stagnate ad have recessions and depressions. Why do you think you are seeing massive demonstrations all over Europe, soon to come to the US as extended unemployment ends? Britain can appropriately be called a dog’s breakfast. In both France and Germany financial institutions are warning their clients that a global collapse could occur over the next two years. Serving high debt is no longer possible and that governments have reached the point of no return. The debt picture has so deteriorated that defense spending has to be cut in a major way.

This is probably your last opportunity to sell stocks and bonds. The only exception is gold and silver shares. Interest rates cannot go any lower and legislatures are unwilling to pass legislation for more stimulus. That job has been laid at the feet of the Fed. There is no one left to save the US or the world economy. The Fed cannot, because it is too busy buying US Treasury and Agency debt. People are getting savvy fast on the secrets of the Federal Reserve. Before long everyone will be aware that the Fed makes money out of thin air. It won’t be long and the Fed will be out of business and rightly so, because it is a criminal enterprise and the public is discovering that via the Internet and talk radio. The free ride for the insiders is coming to an end.

The conclusion of the failure of the Fed is about to be sound money, currency backed by gold. The struggle to suppress gold and silver are about to come to an end and they are about to again find their true place in the monetary establishments of the world. Gold will again become the ultimate world currency and it is proving that now and has proved that over the past 18 months.

Load up now when you can because there may come a time when you cannot easily find gold and silver and their prices will be substantially higher. We have been correct 98% of the time for twenty years and we see no reason for that success to change.

Last week the Dow rose 0.1%, S&P was unchanged, Nasdaq fell 0.1% and the Russell 2000 rose 0.7%. Banks fell 2.3%; broker/dealers were unchanged; cyclicals rose 0.4% and transports rose 1.4%. Consumers were unchanged; utilities fell 0.7%; high tech gained 1.9%; semis rose 1.2%; Internets fell 0.5% and biotechs gained 1.4%. Gold bullion fell $16.00, the HUI gold index fell 1.1% and the USDX rose 0.5% to 78.50.

America’s strapped states and cities took another hit Wednesday, with California seeing tepid demand for its latest bond sale and other governments pulling about $700 million worth of borrowing deals this week as investors continued stepping away from the municipal bond market.  The normally staid market has grown volatile the past week, posting its sharpest selloff in nearly two years, as investors demand higher interest rates to buy paper issued by states, cities and counties to finance their operations.

Mayor of London Warns George W Bush-War Criminal: Bring Book Tour to Britain and Never See Texas Again – George W. Bush can’t fight for freedom and authorize torture By Boris Johnson 15 Nov 2010 It is not yet clear whether George W Bush is planning to cross the Atlantic to flog us his memoirs, but if I were his PR people I would urge caution. As book tours go, this one would be an absolute corker. It is not just that every European capital would be brought to a standstill, as book-signings turned into anti-war riots. The real trouble from the Bush point of view is that he might never see Texas again. One moment he might be holding forth to a great perspiring tent at Hay-on-Wye. The next moment, click, some embarrassed member of the Welsh constabulary could walk on stage, place some handcuffs on the former leader of the Free World, and take him away to be charged. Of course, we are told this scenario is unlikely… But that is what torture-authorizing Augusto Pinochet thought. And unlike Pinochet, Mr. Bush is making no bones about what he has done.

Countrywide Documentation Disaster to Explode at Bank of America?

Ash Bennington

The mortgage documentation mess keeps getting stickier.

The latest is this: Countrywide Financial, now owned by Bank of America [BAC Loading] , appears not to have properly transferred necessary mortgage documents when it sold loans to other banks, which then in turn created residential mortgage backed securities (RMBS) from the loans.

The documents Countrywide failed to provide are critical to the owners of the RMBS because without them homeowners can question the legal right of banks to foreclose on their homes.

What’s new here? Based upon testimony delivered in a New Jersey bankruptcy court, this may have been a matter of policy at Countrywide – not just a case of a one-off error.

Based on Bank of America’s current ownership of Countrywide Financial, it is possible that the largest bank in America, when ranked by deposits, may potentially be held liable for the problem.

Perhaps the biggest challenge in grasping the nature of the problem is that the details can overwhelm our ability to see the forest for the trees, so let’s walk through it one step at a time.

To begin at the beginning: Mortgage documentation typically requires two critical documents : The deed of trust and the promissory note. The deed of trust describes facts about the lender, the borrower, the terms of the loan and payment, and assigns a legal title to the property – which is traditionally described as the ‘bundle of rights’ the owner of the property holds. The second document, the promissory note, obligates the owner to make payments on the loan, for which the deed of trust serves as collateral. In the event of a foreclosure, certain jurisdictions require a bank to ‘produce the note’ if the homeowner demands that the bank do so.

My description, of course, is a high-level summary of a very complex legal construct with roots dating back to the Magna Carta. But what it lacks in nuance it compensates for in simplicity: And it sometimes seems this story hasn’t received the focus it deserves – because writer and reader are both washed over by tidal wave of legal terminology.

Over the weekend, Gretchen Morgenson at the New York Times incisively reported on the current state of the mortgage documentation mess. Among other points, she picks up on a bankruptcy case in New Jersey, from which the documentation was released just last week.

The legal issues in the case appear to be fairly straightforward: The homeowner went to bankruptcy court in an attempt to settle up back payments on a mortgage – to “cure arrearages” in the language of the filing – under Chapter 13 of the Bankruptcy Code, which allows individuals to pay their debts over time without losing their property.

What is perhaps most interesting is testimony from a Bank of America executive named Linda DeMartini, “a supervisor and operational team leader for the Litigation Management Department,” with responsibilities for home loans. She testified, in reference to the creation of the mortgage backed securities, “…that to her knowledge, the original note never left the possession of Countrywide, and that the original note appears to have been transferred to Countrywide’s foreclosure unit, as evidenced by internal FedEx tracking numbers.”

But here’s what is perhaps most extraordinary: “She testified further that it was customary for Countrywide to maintain possession of the original note and related loan documents.”

Morgenson points out: “Countrywide did this even though the pooling and servicing agreement governing the mortgage pool that supposedly held the note required that it be delivered to the trustee, the court document shows.”

Morgenson continues, in rather measured tones, considering the apparent ramifications of the statement:

“If Countrywide’s practice was to hold onto the note, then investors in this pool and others may question whether the security was constructed properly and legally and may be able to require Bank of America to buy back their securities.”

It may be a fair bet to expect this story to appear throughout the news cycle with increased frequency – and magnitude – as the week continues and the implications sink in.