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Today The Destruction of Money

Bob Chapman
International Forecaster
Jan 13, 2011

The U6 number fell to 16-7/8% from 17% last month, thus, the real unemployment number is 22-1/4%, off 3/8 of 1 percent in two months. The average duration of unemployment heads back up to a new record 34.2-weeks and when the share of the unemployed ranks looking for a job without success rises 2% to 44.3% you have a problem. It is hardly a winner. The workweek was unchanged at 34.3-hours. The employment rate was 58.3%, the same level it was at late in 1983. In order to re-ascend to peak employment levels 11 million jobs would have to be created. That cannot happen as the transnational conglomerates execute free trade, globalization, offshoring and outsourcing. That would be 2.75 million jobs annually over the next four years. Still millions of illegal aliens are streaming across our borders to find work and push American citizens out of their jobs.

There has been a decline in the number of jobless claims, but layoffs of state, country and city employs has added to the jobless, some 20,000 a month. Even with all the funds being injected into the system, the economy is still stagnant. The municipal layoffs will become acute in the last quarter of the year and carry over into 2012, as more and more towns, cities and states seek protection from bankruptcy.

Personal income is stagnant, as are hours worked, as inflation increases robbing workers of purchasing power, thereby negatively affecting consumption. Adding to this discouraged workers hit a record high of 1.32 workers. If it were not for extended unemployment benefits we might just be approaching revolution. You can throw in food stamps as well for 44 million Americans; 16% of the elderly are below the poverty line and 15.7% of the public is in the same boat.

Last week the Dow rose 0.8%, S&P gained 11.1%, the Russell 2000 gained 0.5% and the Nasdaq 100 jumped 2.7%. Banks gained 1.3%; broker/dealers gained 2.0%; utilities 0.9% and the high-tech 2.5%; semis 3.4%; Internets 3.1% and biotechs 0.8%. Gold bullion fell $51.00, the HUI lost 7.2% and the USDX gained 2.6% to 81.08.

The two-year US-T bill was unchanged at 0.59%, the 10-year T-note rose 3 bps to 3.33%, and the 10-year German bund fell 9 bps to 2.87%.

This year foreign governments will finally realize that Europe and the US won’t be able to repay most of their debts. In Europe, during the first 6-months of the year, countries will be stressed to pay back debt. All of the funding necessary won’t be available and the six with debt problems will need more assistance from the more solvent EU countries, the ECB and the IMF. There will be negotiations concerning how to solve this problem throughout the remainder of the year. The damage to European countries will be staggering. Not only will the debtor countries be hanging on by a thread, but due to a massive funds outflow the solvent countries will be in trouble as well.

In the US the problems of municipalities will finally start to be addressed as federal funding and loans are ended. We warned of the possible bankruptcy of municipal insurers, AMBAC being the focus of our concerns. At that time, three years ago, we recommended the sale of municipals and have done so since.

These predictions came to fruition in December 2010 when AMBAC went bankrupt.



In the final quarter of this year both the European and American problems will be exposed full force. This will bring about a worldwide financial crisis as the true depths of the problems are fully revealed. The impact on western finance will be more devastating than the Bear Stearns and Lehman Bros. collapses. At this juncture the timing is difficult, but that time frame seems reasonable.

Our prediction of QE2 and perhaps QE3 last May proved to be correct. Others didn’t begin to catch on until August. We projected another form of government stimulus and it came in the subtle form of a pork tax package. The renewal of the Bush tax cuts. That ended up being $868 billion. That means the Fed or someone will have to come up with about $1.6 trillion to keep the economy from keeling over and going sideways. We projected a full expenditure of $2.5 trillion in exchange for a 2 to 2-1/4% growth in GDP.

As we write European and US debt is expanding at a fast clip. The service of this debt is being exacerbated by lack of a recovery, which began in the Treasury market in June. During the past six months banks have tried to increase lending to middle and small sized companies, but there have been few who wanted to borrow. This lack of growth has impeded tax revenues for both the federal government and state entities. The fall in the stream of funds has forced major new borrowing by both groups. This trap mitigates against drawing savings from foreign countries. This limitation has started to force real interest rates higher as we have recently seen with the US 10-year note whose yield jumped from 2.40% to 3.50%. This in turn has forced interest rates on 30-year fixed rate mortgages to more than 4.8%.

Beneath the surface both in the US and Europe all matter of things are being done to keep both entities afloat. What is being done is being done without the consent of the people. Politicians are terrified and are doing as they are being told. The financial community and central banks are making all the decisions. In order to cover-up what is going on they simply lie about everything. These Sherpa’s working behind the scenes fashioning a solution are preparing for debt settlement and some sort of a stabilization fund.

As we have predicted in the past we see a meeting of all countries, as opposed to unilateral action by Europe or the US. A meeting along the lines of the Smithsonian talks in the 1970s, the Plaza Accord of 1985 and the Louvre Accord of 1987, where all nations will revalue and devalue and default multilaterally 50% to 66%. Everything will be on the table. By doing it this way it becomes a simple business transaction and not a situation where everyone is ostracized. This will be detrimental to currencies, bonds and shares. Commodities and gold and silver and the shares will appreciate as they did in the 1930s and the late 1970s. It’s a hard road to take, but it is the only one open to the elites.

One of Ayn Rand’s disciples, one Alan Greenspan, spent his entire time as Chairman of the Federal Reserve destroying money. Ms. Rand warned of destroyers appearing among men who would destroy money. As she said, “This kills all objective standards and delivers men into the arbitrary power of an arbitrary setter of values. Paper is a check, drawn by legal looters upon which an account which is not theirs.”

Today we have the destruction of money – the mediums of exchange – free trade, globalization and the phony terrorism all linked together. A 3-pronged attack to create confusion and fear and as an extension to control and destroy the wealth of the masses. This is a marriage of monetary, fiscal, geopolitical, economic and financial terrorism. The terrorists are in the banks, on Wall Street, in the City of London and running transnational conglomerates that are destroying our society and that of Europe. This complex paradigm is relentlessly day by day creating chaos within society. Needless to say, we have war and occupation thrown in for good measure in Iraq and Afghanistan. This is a profitable distraction and at the same time a method of culling the population of useless eaters. As this all transpires, immune from prosecution, Wall Street and banking pull one outrageous fraud after another. As an example, as we predicted, the Attorney Generals have rolled for the bankers in Foreclosuregate. Five major banks are being allowed to settle with some 50 states. This decision was made in secret by your elected states’ Attorney Generals. This is one of the biggest frauds in American history and all that will happen is the major banks involved will get a slap on the hand and a chump change fine. The public will get nothing. Any fraud by the too big to fail banks is now permissible.

The fraud is now so pervasive and systemic that foreigners, particularly at the upper levels of the corporate world simply refuse to do business with American companies. American executives, particularly from Wall Street and banking, contend there are simply no rules or only their rules. This will elevate into trade war eventually, which has been coming for a long time and actually a trump card for US elitists. The ugliness is still under the surface, but it exists and is gaining momentum. Once that becomes reality the financial system will break down. As we have said many times once that happens all these criminals will become fugitives from justice. If other countries try to hide these people they will be sanctioned and isolated, and that shouldn’t take long. We should have courts to try these crooks. They should go to jail and their entire families be stripped of their wealth, which would go to the US Treasury. Those who committed treason should have all their assets confiscated and they should be hung.

The BIS, the Bank for International Settlements, says the six nations in trouble in Europe are indebted more than $350 billion to these sovereign nations. As we have said month’s ago it will take more than $3 trillion to bail these sovereigns out and if not bailed out many central banks and the ECB will be wiped out. As usual the bankers are trying to stall for time, hoping some miracle or some war will bail them out. Either way the taxpayers, they have decreed will pay the bill. We wonder what the rating agencies, that have been propping up the dollar and the pound will do, when they can no longer get away with lying about these ratings? We don’t believe Spain, Portugal and Belgium and perhaps Italy can survive without going bankrupt. That will take many other nations close to insolvency as well.

We have sited many examples of fraud in this publication.

We have finally come to the conclusion that our system could not function without the rampant fraud in our society.

You have seen this in the operations of “The President’s Working Group on Financial Markets,” in mortgage lending and the daisy chain it created. Then the foreclosures, which lenders didn’t own, because they had sold them many times over. The major lawsuits against Goldman Sachs in mortgage syndication and the suits against JPM and HSBC for rigging the silver market. It just goes on and on not to mention Madoff. Many corporations are carrying two sets of books like that was normal. The Fed creating money and credit to the tune of $13.8 trillion most of which went to Europe. It goes on and on.

As yet we do not know how much money the Fed has spent on QE2, which secretly began last June, as we predicted. As inflation is allowed to rise by design it mysteriously doesn’t show up in official figures. As you can see, within government you can have it both ways. The results have been a move in the 10-year T-note from 2.40 to a 3.5 percent yield to reflect the risk of inflation that already exists. This rise in yield and the fall in Treasuries on the long end for the past couple of months has been the result of professional selling. The 18 Wall Street banks and brokerage houses that are primary dealers that trade with the Fed, have been cutting their holdings in Treasuries at the fastest pace since 2004, because they see a stronger economy, a rising market and further strength and demand for shares than for bonds.

These dealers cut their long positions in long dated notes and bonds from $81.3 billion on 11/24/10 to $2.34 billion on 12/29/10. The Fed has not been able to control the long end of the market, only the short end. That has led to higher mortgage rates. This will reverse as the stock market corrects or it becomes obvious that the economy is not advancing or recovering.

Price inflation continues unabated and that will worsen substantially as the year wares on. Sellers will not absorb basic price increases; they will be passed on. One printer told me he had had seven price increases on paper in the past year. That is certainly not 1.2% inflation, but the real inflation we talk about at 6.8%.

Gold and silver just completed another mini-correction and again 95% of newsletter writers, analysts and economists were wrong. As we say, go long and stay long. These fools continue to try to justify their existence. As you can see the US government, JPMorgan Chase, Goldman Sachs, Citigroup and HSBC cannot hold prices down for more than several days. The physical demand is overwhelming.

The Max Keiser, “Crash Banksters, Buy Silver” program is working. Max and Bid Bullion will launch a limited edition of silver coins. 25,000 units of 1/10, ¼, ½, 1 oz and 5 oz silver coins with max on one side and on the other side “Global Insurrection Against Corporate Occupation” and or “Crash Banksters, Buy Silver.” They will be .999 silver. Max will not benefit in anyway from their sale.

Over the past nine years the silver commercial short position has grown from 16,000 odd contracts to 235,000 contracts, or 1.2 billion ounces. That is a 15-fold move, while silver has only risen by 6 fold. Demand has risen over those years in part due to unnaturally low prices. As the price of silver relentlessly moves higher the reality of default heightens not only on Comex, the LBMA, in SLV and in the undisclosed, unregulated derivative market. Default is coming and cannot be avoided. The total paper market is corrupt and all those illegal profits gleaned over the years will now be more than offset by losses. This could bring about the end of paper trading in gold and silver and massive losses not only to the criminal bankers, but also to participants as well.

We believe there is a distinct possibility that the US Treasury has little or no gold left. We know for sure that bars that look and feel like gold are in Fort Knox, but we do not know if they are gold covered tungsten bars or who they belong too. There could be hundreds of billions of dollars of bogus gold bars floating around the world.

John Williams, taking into account real inflation since 1980 when gold was $850.00 an ounce, says gold should be selling at $7,700.00 an ounce. We believe silver should already be selling over $100.00 an ounce. These figures will become reality over the next several years as the elitists’ suppression of gold and silver prices nears its end.

Last June we reported that subscribers had a very difficult time getting delivery of gold from their accounts in Switzerland. We do not know how widespread this is, but if you hold gold and silver in Swiss banks you should be concerned. We always advise that if you move your assets out of the country you had best be prepared to live with them. We lived in Geneva and Zurich for three years, worked and went to university there, and the Swiss are simply financial parasites, set up by world elitists, so that they could all keep their assets safe. That is why the Swiss have had no wars for over 150 years.

That in mind, there is no question that major Western banks control Europe and the US and are influential worldwide. It could be via such control that investors who have accounts in these banks could have their gold and silver frozen in the future. If that happens it will be because the gold and silver has already been sold or leased and you will be offered currency in place of your holdings. Having lived there for some time and watching the antics of the Swiss for more than 50 years we wouldn’t trust them any further than we could kick them. We have lots of experiences yet to relay.

All banks today lie about everything, thus anything goes. They own the regulators and the governments. They are all carrying two sets of books. The entire world banking system is bogus. In order to avoid criminal charges the banks will pay in currency. The Chinese current account balance is now $2.85 trillion in various currencies, thus it is no surprise that they are buying gold, silver, commodities and anything priced reasonably. That is why every time gold and silver and commodities are knocked down they rise right up again. This war as we have pointed out for the last two years is gold versus currencies, particularly versus the dollar. The battle for the paramount world reserve currency has already been won by gold. The world just doesn’t know it yet.

Great pressure could be bought to bear in behalf of gold and silver prices if the US and European public were to get involved. Their participation has been lackluster. The gold and silver markets have just been forced into another consolidation, which makes the possibility of a deeper correction less likely. Eventually a reserve currency, or a world index of currencies has to be backed by gold.

Today gold can rise or fall $20.00 and silver $0.01. In the future next we will see gold move $50.00 either way and silver $0.02 or $0.03.

In silver there is still a giant naked short position and over 30 class action lawsuits, one of which is RICO. In addition, the silver market is deeply short of silver for delivery. That means $30.00 should be easy. There is massive pressure to the upside, as there is in gold. In addition, almost every time we look both gold and silver are in backwardation. That is when the spot month trades higher than the active outside month, which is bullish. There is no doubt that now is an exceptional time to buy both gold and silver. The public in the US and Europe are not really in the market as yet. At some point they will arrive triggered perhaps by $2,000 or $3,000 gold, or perhaps $60 or $70 silver. We don’t know what the trigger will be, but it is coming. When they arrive it will be like thunder and lightening to the upside and there will be no stopping it.

Pensions and Investment Magazine says Newt Gingrich is pushing for legislation to allow bankrupt states to file bankruptcy, and in that process renege on pension and other benefit obligations to state workers. It also means that those holding municipal bonds would be wiped out. This is a neocon dream backed by the same trash that accompanied the last moron we had for President, whose name will not pass our lips. This is nothing more nor less then a frontal attack against the average American to put them in an economic and financial position from which they have no leverage and will be forced to accept world government. It just goes to show you that you get no assistance from either party, because the same elitists groups control both. The chance for elimination of incumbents is passed and we fear what the future reactions will be.
The latest data from the Federal Reserve indicates the Fed continues to increase the amount of money they are providing to AIG.

At November 3, 2010, the balance of credit extended by the Federal Reserve to AIG  stood at $19.235 billion by December 29, 2010, the credit extended increased to $20.452 billion. An increase of 6.3%.

Aggregate Reserves of Depository Institutions and the Monetary Base

http://federalreserve.gov/releases/h3/current/h3.htm

Wall Street banks are cutting their holdings of Treasuries at the fastest pace since 2004 as the world’s biggest bond firms bet that the economy will strengthen and demand for higher-yielding assets will increase.

The 18 primary dealers that trade with the Federal Reserve reported that holdings of U.S. government debt tumbled to a net $2.34 billion on Dec. 29 from $81.3 billion on Nov. 24, the most since June 2009, according to the most recent central bank data. While the stake is the lowest since February, corporate bond and mortgage securities have risen from the lows of the year.

Dealers had stocked up on U.S. debt anticipating demand from customers who wanted to sell the securities to the central bank as part of Fed Chairman Ben S. Bernanke’s plan to buy $600 billion of Treasuries. Government bonds lost their allure as stocks rose, corporate financing conditions eased, expectations for inflation increased and the dollar strengthened.

“Slowly but surely the economy’s getting on stronger footing,” said John Fath, who helps manage $2.5 billion as a principal at investment firm BTG Pactual in New York and was the former head government-bond trader at UBS Securities LLC, a primary dealer. “There are people moving or thinking of moving out of risk-free assets. This is what Bernanke wanted.”

Berkshire Hathaway Inc., the Omaha, Nebraska-based holding company controlled by billionaire Warren Buffett, and General Electric Co.’s finance unit led companies selling a record $48.5 billion of bonds in the U.S. last week as relative yields on investment-grade debt shrank to the narrowest since May.

Federal Reserve Vice Chairman Janet Yellen presented a possible timeline of about seven years before the Fed’s balance sheet is restored to normal levels, while saying the central bank’s asset purchases will end up creating 3 million jobs by 2012.

Yellen, speaking in Denver on Jan. 8, referred to a model created by Fed economists that assumes the central bank will complete its second round of large-scale Treasuries purchases within a year. The Fed’s balance sheet would stay “elevated” for two years before returning to a normal size over five years, she said, alluding to the economists’ research.

The timetable is “a reasonable proxy for what they might do,” said Allen Sinai, president and chief executive officer of Decision Economics Inc. in New York, who appeared on the same panel as Yellen.

“But I wouldn’t take that as a forecast of what Governor Yellen is thinking about in terms of her own view,” he said. “My guess would be, given what she presented and how long it will take to get unemployment down to a somewhat less than 6 percent level, that she would be wanting to do more” quantitative easing, he said.

Yellen, 64, gave the most detailed accounting yet of the benefits the Fed sees from its stimulus, adding her voice to a defense of the policy by Chairman Ben S. Bernanke and other officials. Republican lawmakers and officials in China, Germany and Brazil have criticized the purchases, saying they threaten to weaken the dollar and stoke asset-price bubbles.

Employers in the U.S. added fewer jobs than forecast in December, confirming Federal Reserve Chairman Ben S. Bernanke’s view that it could take “four to five more years” for the labor market to completely mend.

Payrolls increased 103,000, less than the median projection of 150,000 in a Bloomberg News survey, Labor Department figures showed yesterday in Washington. The jobless rate fell to 9.4 percent, partly reflecting a shrinking workforce as discouraged Americans stopped looking for work.

Faster job growth is needed to keep consumers spending and ensure a self-sustaining recovery in the world’s largest economy. Bernanke, in Senate testimony after the report, said it may take five years for the labor market to “normalize fully,” indicating the Fed won’t depart from its strategy of pumping $600 billion into the financial system.

“We are seeing a moderate labor market improvement; it’s not especially rapid,” said Andrew Tilton, an economist at Goldman Sachs Group Inc. in New York, which forecast a 100,000 increase in payrolls. “As GDP growth accelerates in 2011, we are likely to see the labor market pick up steam as well,” he said, although “it will be a very long time before the Fed changes course.”

A little known clause in the gigantic Dodd-Frank financial reform bill went into effect January 1st. All funds in a “noninterest-bearing transaction account” are insured in full by the Federal Deposit Insurance Corporation from December 31, 2010, through December 31, 2012.

This temporary unlimited coverage is in addition to, and separate from, the coverage of at least $250,000 available to depositors under the FDIC’s general deposit insurance rules.

It is unclear the purpose of this temporary status, but certainly we can speculate that it is to protect the elite’s deposits should another catastrophic financial collapse happen in the next two years.

The official purpose as stated by the financial bill itself is beyond convoluted:

The proposed rule serves as a vehicle for the FDIC Board of Directors to announce that it will not extend the TAGP beyond the scheduled expiration date of December 31, 2010. Because of the differences between the TAGP and the new statutory provision, changes to the rules are necessary.

Say what? It seems that the designers assume another financial crisis is looming and they want to make sure that the taxpayers will be on the hook for the potential billions in private bank losses.

The U6 number fell to 16-7/8% from 17% last month, thus, the real unemployment number is 22-1/4%, off 3/8 of 1 percent in two months. The average duration of unemployment heads back up to a new record 34.2-weeks and when the share of the unemployed ranks looking for a job without success rises 2% to 44.3% you have a problem. It is hardly a winner. The workweek was unchanged at 34.3-hours. The employment rate was 58.3%, the same level it was at late in 1983. In order to re-ascend to peak employment levels 11 million jobs would have to be created. That cannot happen as the transnational conglomerates execute free trade, globalization, offshoring and outsourcing. That would be 2.75 million jobs annually over the next four years. Still millions of illegal aliens are streaming across our borders to find work and push American citizens out of their jobs.

There has been a decline in the number of jobless claims, but layoffs of state, country and city employs has added to the jobless, some 20,000 a month. Even with all the funds being injected into the system, the economy is still stagnant. The municipal layoffs will become acute in the last quarter of the year and carry over into 2012, as more and more towns, cities and states seek protection from bankruptcy.

Personal income is stagnant, as are hours worked, as inflation increases robbing workers of purchasing power, thereby negatively affecting consumption. Adding to this discouraged workers hit a record high of 1.32 workers. If it were not for extended unemployment benefits we might just be approaching revolution. You can throw in food stamps as well for 44 million Americans; 16% of the elderly are below the poverty line and 15.7% of the public is in the same boat.

Last week the Dow rose 0.8%, S&P gained 11.1%, the Russell 2000 gained 0.5% and the Nasdaq 100 jumped 2.7%. Banks gained 1.3%; broker/dealers gained 2.0%; utilities 0.9% and the high-tech 2.5%; semis 3.4%; Internets 3.1% and biotechs 0.8%. Gold bullion fell $51.00, the HUI lost 7.2% and the USDX gained 2.6% to 81.08.

The two-year US-T bill was unchanged at 0.59%, the 10-year T-note rose 3 bps to 3.33%, and the 10-year German bund fell 9 bps to 2.87%.

This year foreign governments will finally realize that Europe and the US won’t be able to repay most of their debts. In Europe, during the first 6-months of the year, countries will be stressed to pay back debt. All of the funding necessary won’t be available and the six with debt problems will need more assistance from the more solvent EU countries, the ECB and the IMF. There will be negotiations concerning how to solve this problem throughout the remainder of the year. The damage to European countries will be staggering. Not only will the debtor countries be hanging on by a thread, but due to a massive funds outflow the solvent countries will be in trouble as well.

In the US the problems of municipalities will finally start to be addressed as federal funding and loans are ended. We warned of the possible bankruptcy of municipal insurers, AMBAC being the focus of our concerns. At that time, three years ago, we recommended the sale of municipals and have done so since.

These predictions came to fruition in December 2010 when AMBAC went bankrupt.

In the final quarter of this year both the European and American problems will be exposed full force. This will bring about a worldwide financial crisis as the true depths of the problems are fully revealed. The impact on western finance will be more devastating than the Bear Stearns and Lehman Bros. collapses. At this juncture the timing is difficult, but that time frame seems reasonable.

Our prediction of QE2 and perhaps QE3 last May proved to be correct. Others didn’t begin to catch on until August. We projected another form of government stimulus and it came in the subtle form of a pork tax package. The renewal of the Bush tax cuts. That ended up being $868 billion. That means the Fed or someone will have to come up with about $1.6 trillion to keep the economy from keeling over and going sideways. We projected a full expenditure of $2.5 trillion in exchange for a 2 to 2-1/4% growth in GDP.

As we write European and US debt is expanding at a fast clip. The service of this debt is being exacerbated by lack of a recovery, which began in the Treasury market in June. During the past six months banks have tried to increase lending to middle and small sized companies, but there have been few who wanted to borrow. This lack of growth has impeded tax revenues for both the federal government and state entities. The fall in the stream of funds has forced major new borrowing by both groups. This trap mitigates against drawing savings from foreign countries. This limitation has started to force real interest rates higher as we have recently seen with the US 10-year note whose yield jumped from 2.40% to 3.50%. This in turn has forced interest rates on 30-year fixed rate mortgages to more than 4.8%.

Beneath the surface both in the US and Europe all matter of things are being done to keep both entities afloat. What is being done is being done without the consent of the people. Politicians are terrified and are doing as they are being told. The financial community and central banks are making all the decisions. In order to cover-up what is going on they simply lie about everything. These Sherpa’s working behind the scenes fashioning a solution are preparing for debt settlement and some sort of a stabilization fund.

As we have predicted in the past we see a meeting of all countries, as opposed to unilateral action by Europe or the US. A meeting along the lines of the Smithsonian talks in the 1970s, the Plaza Accord of 1985 and the Louvre Accord of 1987, where all nations will revalue and devalue and default multilaterally 50% to 66%. Everything will be on the table. By doing it this way it becomes a simple business transaction and not a situation where everyone is ostracized. This will be detrimental to currencies, bonds and shares. Commodities and gold and silver and the shares will appreciate as they did in the 1930s and the late 1970s. It’s a hard road to take, but it is the only one open to the elites.

One of Ayn Rand’s disciples, one Alan Greenspan, spent his entire time as Chairman of the Federal Reserve destroying money. Ms. Rand warned of destroyers appearing among men who would destroy money. As she said, “This kills all objective standards and delivers men into the arbitrary power of an arbitrary setter of values. Paper is a check, drawn by legal looters upon which an account which is not theirs.”

Today we have the destruction of money – the mediums of exchange – free trade, globalization and the phony terrorism all linked together. A 3-pronged attack to create confusion and fear and as an extension to control and destroy the wealth of the masses. This is a marriage of monetary, fiscal, geopolitical, economic and financial terrorism. The terrorists are in the banks, on Wall Street, in the City of London and running transnational conglomerates that are destroying our society and that of Europe. This complex paradigm is relentlessly day by day creating chaos within society. Needless to say, we have war and occupation thrown in for good measure in Iraq and Afghanistan. This is a profitable distraction and at the same time a method of culling the population of useless eaters. As this all transpires, immune from prosecution, Wall Street and banking pull one outrageous fraud after another. As an example, as we predicted, the Attorney Generals have rolled for the bankers in Foreclosuregate. Five major banks are being allowed to settle with some 50 states. This decision was made in secret by your elected states’ Attorney Generals. This is one of the biggest frauds in American history and all that will happen is the major banks involved will get a slap on the hand and a chump change fine. The public will get nothing. Any fraud by the too big to fail banks is now permissible.

The fraud is now so pervasive and systemic that foreigners, particularly at the upper levels of the corporate world simply refuse to do business with American companies. American executives, particularly from Wall Street and banking, contend there are simply no rules or only their rules. This will elevate into trade war eventually, which has been coming for a long time and actually a trump card for US elitists. The ugliness is still under the surface, but it exists and is gaining momentum. Once that becomes reality the financial system will break down. As we have said many times once that happens all these criminals will become fugitives from justice. If other countries try to hide these people they will be sanctioned and isolated, and that shouldn’t take long. We should have courts to try these crooks. They should go to jail and their entire families be stripped of their wealth, which would go to the US Treasury. Those who committed treason should have all their assets confiscated and they should be hung.

The BIS, the Bank for International Settlements, says the six nations in trouble in Europe are indebted more than $350 billion to these sovereign nations. As we have said month’s ago it will take more than $3 trillion to bail these sovereigns out and if not bailed out many central banks and the ECB will be wiped out. As usual the bankers are trying to stall for time, hoping some miracle or some war will bail them out. Either way the taxpayers, they have decreed will pay the bill. We wonder what the rating agencies, that have been propping up the dollar and the pound will do, when they can no longer get away with lying about these ratings? We don’t believe Spain, Portugal and Belgium and perhaps Italy can survive without going bankrupt. That will take many other nations close to insolvency as well.

We have sited many examples of fraud in this publication.

We have finally come to the conclusion that our system could not function without the rampant fraud in our society.

You have seen this in the operations of “The President’s Working Group on Financial Markets,” in mortgage lending and the daisy chain it created. Then the foreclosures, which lenders didn’t own, because they had sold them many times over. The major lawsuits against Goldman Sachs in mortgage syndication and the suits against JPM and HSBC for rigging the silver market. It just goes on and on not to mention Madoff. Many corporations are carrying two sets of books like that was normal. The Fed creating money and credit to the tune of $13.8 trillion most of which went to Europe. It goes on and on.

As yet we do not know how much money the Fed has spent on QE2, which secretly began last June, as we predicted. As inflation is allowed to rise by design it mysteriously doesn’t show up in official figures. As you can see, within government you can have it both ways. The results have been a move in the 10-year T-note from 2.40 to a 3.5 percent yield to reflect the risk of inflation that already exists. This rise in yield and the fall in Treasuries on the long end for the past couple of months has been the result of professional selling. The 18 Wall Street banks and brokerage houses that are primary dealers that trade with the Fed, have been cutting their holdings in Treasuries at the fastest pace since 2004, because they see a stronger economy, a rising market and further strength and demand for shares than for bonds.

These dealers cut their long positions in long dated notes and bonds from $81.3 billion on 11/24/10 to $2.34 billion on 12/29/10. The Fed has not been able to control the long end of the market, only the short end. That has led to higher mortgage rates. This will reverse as the stock market corrects or it becomes obvious that the economy is not advancing or recovering.

Price inflation continues unabated and that will worsen substantially as the year wares on. Sellers will not absorb basic price increases; they will be passed on. One printer told me he had had seven price increases on paper in the past year. That is certainly not 1.2% inflation, but the real inflation we talk about at 6.8%.

Gold and silver just completed another mini-correction and again 95% of newsletter writers, analysts and economists were wrong. As we say, go long and stay long. These fools continue to try to justify their existence. As you can see the US government, JPMorgan Chase, Goldman Sachs, Citigroup and HSBC cannot hold prices down for more than several days. The physical demand is overwhelming.

The Max Keiser, “Crash Banksters, Buy Silver” program is working. Max and Bid Bullion will launch a limited edition of silver coins. 25,000 units of 1/10, ¼, ½, 1 oz and 5 oz silver coins with max on one side and on the other side “Global Insurrection Against Corporate Occupation” and or “Crash Banksters, Buy Silver.” They will be .999 silver. Max will not benefit in anyway from their sale.

Over the past nine years the silver commercial short position has grown from 16,000 odd contracts to 235,000 contracts, or 1.2 billion ounces. That is a 15-fold move, while silver has only risen by 6 fold. Demand has risen over those years in part due to unnaturally low prices. As the price of silver relentlessly moves higher the reality of default heightens not only on Comex, the LBMA, in SLV and in the undisclosed, unregulated derivative market. Default is coming and cannot be avoided. The total paper market is corrupt and all those illegal profits gleaned over the years will now be more than offset by losses. This could bring about the end of paper trading in gold and silver and massive losses not only to the criminal bankers, but also to participants as well.

We believe there is a distinct possibility that the US Treasury has little or no gold left. We know for sure that bars that look and feel like gold are in Fort Knox, but we do not know if they are gold covered tungsten bars or who they belong too. There could be hundreds of billions of dollars of bogus gold bars floating around the world.

John Williams, taking into account real inflation since 1980 when gold was $850.00 an ounce, says gold should be selling at $7,700.00 an ounce. We believe silver should already be selling over $100.00 an ounce. These figures will become reality over the next several years as the elitists’ suppression of gold and silver prices nears its end.

Last June we reported that subscribers had a very difficult time getting delivery of gold from their accounts in Switzerland. We do not know how widespread this is, but if you hold gold and silver in Swiss banks you should be concerned. We always advise that if you move your assets out of the country you had best be prepared to live with them. We lived in Geneva and Zurich for three years, worked and went to university there, and the Swiss are simply financial parasites, set up by world elitists, so that they could all keep their assets safe. That is why the Swiss have had no wars for over 150 years.

That in mind, there is no question that major Western banks control Europe and the US and are influential worldwide. It could be via such control that investors who have accounts in these banks could have their gold and silver frozen in the future. If that happens it will be because the gold and silver has already been sold or leased and you will be offered currency in place of your holdings. Having lived there for some time and watching the antics of the Swiss for more than 50 years we wouldn’t trust them any further than we could kick them. We have lots of experiences yet to relay.

All banks today lie about everything, thus anything goes. They own the regulators and the governments. They are all carrying two sets of books. The entire world banking system is bogus. In order to avoid criminal charges the banks will pay in currency. The Chinese current account balance is now $2.85 trillion in various currencies, thus it is no surprise that they are buying gold, silver, commodities and anything priced reasonably. That is why every time gold and silver and commodities are knocked down they rise right up again. This war as we have pointed out for the last two years is gold versus currencies, particularly versus the dollar. The battle for the paramount world reserve currency has already been won by gold. The world just doesn’t know it yet.

Great pressure could be bought to bear in behalf of gold and silver prices if the US and European public were to get involved. Their participation has been lackluster. The gold and silver markets have just been forced into another consolidation, which makes the possibility of a deeper correction less likely. Eventually a reserve currency, or a world index of currencies has to be backed by gold.

Today gold can rise or fall $20.00 and silver $0.01. In the future next we will see gold move $50.00 either way and silver $0.02 or $0.03.

In silver there is still a giant naked short position and over 30 class action lawsuits, one of which is RICO. In addition, the silver market is deeply short of silver for delivery. That means $30.00 should be easy. There is massive pressure to the upside, as there is in gold. In addition, almost every time we look both gold and silver are in backwardation. That is when the spot month trades higher than the active outside month, which is bullish. There is no doubt that now is an exceptional time to buy both gold and silver. The public in the US and Europe are not really in the market as yet. At some point they will arrive triggered perhaps by $2,000 or $3,000 gold, or perhaps $60 or $70 silver. We don’t know what the trigger will be, but it is coming. When they arrive it will be like thunder and lightening to the upside and there will be no stopping it.

Pensions and Investment Magazine says Newt Gingrich is pushing for legislation to allow bankrupt states to file bankruptcy, and in that process renege on pension and other benefit obligations to state workers. It also means that those holding municipal bonds would be wiped out. This is a neocon dream backed by the same trash that accompanied the last moron we had for President, whose name will not pass our lips. This is nothing more nor less then a frontal attack against the average American to put them in an economic and financial position from which they have no leverage and will be forced to accept world government. It just goes to show you that you get no assistance from either party, because the same elitists groups control both. The chance for elimination of incumbents is passed and we fear what the future reactions will be.
The latest data from the Federal Reserve indicates the Fed continues to increase the amount of money they are providing to AIG.

At November 3, 2010, the balance of credit extended by the Federal Reserve to AIG  stood at $19.235 billion by December 29, 2010, the credit extended increased to $20.452 billion. An increase of 6.3%.

Aggregate Reserves of Depository Institutions and the Monetary Base

http://federalreserve.gov/releases/h3/current/h3.htm

Wall Street banks are cutting their holdings of Treasuries at the fastest pace since 2004 as the world’s biggest bond firms bet that the economy will strengthen and demand for higher-yielding assets will increase.

The 18 primary dealers that trade with the Federal Reserve reported that holdings of U.S. government debt tumbled to a net $2.34 billion on Dec. 29 from $81.3 billion on Nov. 24, the most since June 2009, according to the most recent central bank data. While the stake is the lowest since February, corporate bond and mortgage securities have risen from the lows of the year.

Dealers had stocked up on U.S. debt anticipating demand from customers who wanted to sell the securities to the central bank as part of Fed Chairman Ben S. Bernanke’s plan to buy $600 billion of Treasuries. Government bonds lost their allure as stocks rose, corporate financing conditions eased, expectations for inflation increased and the dollar strengthened.

“Slowly but surely the economy’s getting on stronger footing,” said John Fath, who helps manage $2.5 billion as a principal at investment firm BTG Pactual in New York and was the former head government-bond trader at UBS Securities LLC, a primary dealer. “There are people moving or thinking of moving out of risk-free assets. This is what Bernanke wanted.”

Berkshire Hathaway Inc., the Omaha, Nebraska-based holding company controlled by billionaire Warren Buffett, and General Electric Co.’s finance unit led companies selling a record $48.5 billion of bonds in the U.S. last week as relative yields on investment-grade debt shrank to the narrowest since May.

Federal Reserve Vice Chairman Janet Yellen presented a possible timeline of about seven years before the Fed’s balance sheet is restored to normal levels, while saying the central bank’s asset purchases will end up creating 3 million jobs by 2012.

Yellen, speaking in Denver on Jan. 8, referred to a model created by Fed economists that assumes the central bank will complete its second round of large-scale Treasuries purchases within a year. The Fed’s balance sheet would stay “elevated” for two years before returning to a normal size over five years, she said, alluding to the economists’ research.

The timetable is “a reasonable proxy for what they might do,” said Allen Sinai, president and chief executive officer of Decision Economics Inc. in New York, who appeared on the same panel as Yellen.

“But I wouldn’t take that as a forecast of what Governor Yellen is thinking about in terms of her own view,” he said. “My guess would be, given what she presented and how long it will take to get unemployment down to a somewhat less than 6 percent level, that she would be wanting to do more” quantitative easing, he said.

Yellen, 64, gave the most detailed accounting yet of the benefits the Fed sees from its stimulus, adding her voice to a defense of the policy by Chairman Ben S. Bernanke and other officials. Republican lawmakers and officials in China, Germany and Brazil have criticized the purchases, saying they threaten to weaken the dollar and stoke asset-price bubbles.

Employers in the U.S. added fewer jobs than forecast in December, confirming Federal Reserve Chairman Ben S. Bernanke’s view that it could take “four to five more years” for the labor market to completely mend.

Payrolls increased 103,000, less than the median projection of 150,000 in a Bloomberg News survey, Labor Department figures showed yesterday in Washington. The jobless rate fell to 9.4 percent, partly reflecting a shrinking workforce as discouraged Americans stopped looking for work.

Faster job growth is needed to keep consumers spending and ensure a self-sustaining recovery in the world’s largest economy. Bernanke, in Senate testimony after the report, said it may take five years for the labor market to “normalize fully,” indicating the Fed won’t depart from its strategy of pumping $600 billion into the financial system.

“We are seeing a moderate labor market improvement; it’s not especially rapid,” said Andrew Tilton, an economist at Goldman Sachs Group Inc. in New York, which forecast a 100,000 increase in payrolls. “As GDP growth accelerates in 2011, we are likely to see the labor market pick up steam as well,” he said, although “it will be a very long time before the Fed changes course.”

A little known clause in the gigantic Dodd-Frank financial reform bill went into effect January 1st. All funds in a “noninterest-bearing transaction account” are insured in full by the Federal Deposit Insurance Corporation from December 31, 2010, through December 31, 2012.

This temporary unlimited coverage is in addition to, and separate from, the coverage of at least $250,000 available to depositors under the FDIC’s general deposit insurance rules.

It is unclear the purpose of this temporary status, but certainly we can speculate that it is to protect the elite’s deposits should another catastrophic financial collapse happen in the next two years.

The official purpose as stated by the financial bill itself is beyond convoluted:

The proposed rule serves as a vehicle for the FDIC Board of Directors to announce that it will not extend the TAGP beyond the scheduled expiration date of December 31, 2010. Because of the differences between the TAGP and the new statutory provision, changes to the rules are necessary.

Say what? It seems that the designers assume another financial crisis is looming and they want to make sure that the taxpayers will be on the hook for the potential billions in private bank losses.

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