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International Forecaster March 2008 (#1) - Gold, Silver, Economy + More

By: Bob Chapman, The International Forecaster



-- Posted Thursday, 13 March 2008 | Digg This ArticleDigg It! | Source: GoldSeek.com

The following are some snippets from the most recent issue of the International Forecaster.  For the full 35 page issue, please see subscription information below.

 

US MARKETS

 

          Boston gave us the "Big Dig," Socorro, New Mexico hosts the "Very Large Array," but from Wall Street and Washington, D.C. we get the "Big Lie," soon to be followed by the "Very Large Depression."  We think that most of you understand about the potential for a "Very Large Depression" which we have spoken of in several of our recent issues, but you may have been wondering about what we meant by the term: "Big Lie."  The "Big Lie" is that the recession which has been ongoing for two years and which many economists are still downplaying and are still having trouble admitting to, is just another normal, mundane downturn in what economists call the "business cycle" and that we will soon "turn the corner" and be back "in the money" after a few, or perhaps several, tough quarters.  This is the unmitigated tripe we get from our "fane-stream" media.  What planet are these morons reporting from, we ask? Certainly not from earth, because there is nothing normal or mundane about this recession.  This is a super recession on steroids.  There has been nothing like it in the past, and there is not likely to be anything like it in the future, a future that may in all likelihood include the complete and utter destruction of the worldwide financial system as engineered by the bungling Illuminati, many of whom will be destroyed by the monster which they themselves have created.  We are all about to attend an encore performance on the financial stage based on the theme from a novel by Mary Shelley entitled:  "Frankenstein."

 

          Indeed, the current financial debacle is quite unique, very ugly and totally unprecedented.  Truly, this is a Frankenstein monster.  All of our past recessions have been caused by contractions in the money supply accompanied and partly caused by higher interest rates, which were implemented to stop unacceptable levels of inflation.    This is the root cause behind the so-called "business cycle," a term which is really just a euphemism for central bank ineptness, and in the current case, central bank malevolence which is aimed at the destruction of the old system so that a new world system can be implemented in stages, starting with the regionalization of national economies, and ending with a one world government, economy, religion and sociopolitical structure which used to be called "feudalism."  You know, the system you learned in your history classes where you have "lords" and "serfs," the latter category being where virtually all of us will find ourselves if the Illuminati get their way.  The current debacle, by contrast, has arrived on the heels of an unprecedented acceleration of the money supply as evidenced by the now unpublished M3 level of over 16%, and not on the heels of a contraction in the money supply as has been the case in the past.  And while it may be true that interest rates were gradually raised over several years, which may have contributed to the current recession, the raising of rates started from the ludicrous 1% level.  The Fed thus lowered the bar on interest rates just as the Bank of Japan did when their economy tanked almost two decades ago.  Here we are eighteen years later, and a hapless Japan still has not recovered from its financial implosion.  Will we fare any better than they did?  No, it will be much worse for us.  Why?  Because unlike Japan, we have no manufacturing industry left to speak of, just for starters, not to mention that Japan now has the world's largest forex reserves, while we have the world's largest trade deficit.  This dichotomy in foreign exchange between Japan and the US has happened because Japan produces tangible goods while we shuffle paper.

 

          So how do we end up in a rampaging recession on the heels of a 16% expansion of M3?  We'll tell you how.

 

          Normally, economic growth in its healthiest form is created through mining, exploration, manufacturing and technical innovation, not by the financial and services industries which produce very little of anything that has any real, lasting and tangible value.  Ideally, the money supply should be expanded to help fuel this growth in resource production, manufacturing and research, but the expansion of the money supply must occur so as to maintain the same ratio of total money supply to the overall amount of goods being produced and which are available for both business and personal consumption.  If the money supply grows at a faster rate than the rate of growth for the production of new goods due to central bank ineptness, or more likely, due to speculation fueled by the greed of the Illuminati and enabled by lax policies of co-conspirator central banks (which are owned by the Illuminati), you end up with more money chasing proportionately fewer goods.  This is where inflation comes from, and the imbalance is allowed to grow, along with Illuminist profits, until the general populace cries out.  Then comes the contraction in the money supply, once again exaggerated to produce a recession so the Illuminati can make a profit shorting everything in site as the contraction occurs.  The recession occurs because the contraction in the money supply is greater than what is needed to balance the growth in production.  And because the Illuminati know when the expansions and contractions will occur and where they will occur, they are able to make profits in any type of market, being the ultimate inside traders who never get prosecuted because they own the system.  This is how they screw the public ad infinitum.  But we digress.


          So ideally, if the money supply increases at the same rate as production, prices remain stable and so does the economy.  At least this is how it works when you have a healthy economy based on the production of resources, manufacturing and technical innovation, and a Fed with its head screwed on straight, together with financial and services industries which are proportionately smaller in terms of the percentage of the labor force employed and which are geared to support the resource, manufacturing and research industries instead of fueling speculation and creating inflationary paper profits.  Unfortunately, our manufacturing industry has been gutted by the formation of the World Trade Organization in 1995 as an enhancement to the globalist agenda for so-called free trade that was started in 1947 under the General Agreement on Tariffs and Trade, and then by NAFTA and CAFTA (giving you the "SHAFTA"), increased illegal immigration (slave labor), the sellout of union members by corrupt trade union officials and a general screwing by our various and even more corrupt Congresses and Presidential Administrations over the past 60 years.  The percentage of our work force that is engaged in manufacturing is now one third of what it was in 1950 and one half of what it was in 1970.  Admittedly, some of the percentage losses of our manufacturing labor force as a proportion of our total work force are due to increases in technology, which have reduced the number of workers necessary per unit of production.  But that being the case, where did all those profits from increased productivity go?  Certainly not into the pockets of the US work force.  No, instead the profits went to the very wealthy who own and run the big transnational corporations and to capital investments overseas in order to take advantage of slave labor rates by outsourcing jobs.  That way, our workers here in the US get to grind away at their pitiful minimum wage service jobs instead of receiving $20 to $30 per hour working at jobs in resource exploration, mining and extraction, manufacturing and research and development.  This has morphed our economy into a parody of what it once was, and is why we get a recession despite M3 growth of 16%.  

 

          You see, the only way our economy, and more importantly our disposable income, can really grow is through our financial and services industries, which is all that we really have left as a labor force.  Yes, we still have some manufacturing, but it is only about 12% of GDP and provides good-paying jobs for far fewer workers than in the past due to increases in productivity.  Total production outside of services, including manufacturing and mining, is only about 20% of GDP, with government spending contributing another 12%.  That leaves a whopping 68% of GDP for the service sector.  But the real issue of crucial importance here is not only about how much GDP is produced, but about how much of that GDP makes its way into the pockets of the US laborer/consumer as opposed to going overseas to become part of another nation's forex reserves, to finance foreign capital improvements or to line the pockets of the elitist rich.  And we can assure you that, due to rampant inflation and overstated production, the amount of GDP, which is landing in the average Joe's pockets is getting smaller with each passing minute.  Because so much of the growth burden is in the financial and services industries, and because these industries produce services which vanish after they are rendered or produce paper profits which are largely imaginary and highly inflationary, the only way we can continue to show profits and growth is by inflating the money supply and then lying about the resulting inflation.  It is all about smoke and mirrors, and is nothing short of a dog and pony show for the ignorant sheople.

 

          In order for the financial and services industries to grow, you must expand credit at a much more rapid pace than would be necessary if you had the benefit of real growth from an economy which has a more robust manufacturing and resource sector that produces tangible commodities and goods and includes a much greater percentage of the work force so that a much larger portion of the money produced by these industries in the form of wages from higher-paying jobs makes its way back into the local economy instead of being invested overseas through off-shoring and outsourcing.  Without this abundant credit, a services based economy will stagnate.  Credit is what greases the wheels of our commerce now more so than ever.  And in order to expand credit at the institutional level, the credit extended must generally be backed by prime (AAA) collateral.  When the dot.com bust occurred, there was a massive loss of capital in the form of equities, equities that could be used as collateral for the extension of credit.  Also the huge fees that were earned selling dot.com stocks disappeared, which destroyed earnings and growth in the financial industry.  The huge losses also put a damper on services since fewer assets means less discretionary money and less spending, especially on nonessential services, and this led to greatly reduced earnings and growth in the financial and services sector and eventually to a recession as the false-flag 911 attacks added to the damages.

 

          The Illuminati had to figure out where they could come up with more collateral that could be used to secure credit, generate fees to replace those lost in the dot.com bubble and increase consumption of both goods and services.  The only straw that was left for the grasping was the real estate industry.  The problem was that everyone who could afford a home already owned one and the baby boomers were aging while the population was stagnating or even contracting.  So how could they drive real estate prices up to provide the increase in value necessary to provide new collateral to support the extension of more credit to keep the financial and service industries bubbles growing?  Answer:  Subprime loans.  These newfangled loans would make houses more affordable (albeit short term until the rate resets, lies and frauds came home to roost) and draw in a whole new subset of first-time homebuyers.  These first-time homebuyers are what get the whole market moving, because current homeowners cannot move up without them.  Once the market is set in motion, the increase in mortgage sales creates a fresh source of collateral, which is then packaged into bonds and sold, with the proceeds being rolled over to provide more funding for mortgage loans.  Real estate values rise due to the increase in demand, which in turn increases the value of the collateral and gives the impression of greater security, thus increasing the desire to invest in mortgage bonds.  Also, as prices move up, potential profits draw in speculators, thus driving prices up even further.  Unfortunately, however, this new industry had many problems.  For instance, how do you cover up the fact that these new buyers are not creditworthy and really can't afford any kind of mortgage at current prices?  How do you push prices up when they are already higher than most people can afford?  And how do you package the toxic waste into AAA bonds which can then be used as institutional collateral or bank reserves in order to grease the big credit wheels which keep the services and financial sectors moving?  But not to worry, the Illuminists would just cover them over and sweep them under the carpet with lies, lies and more lies, from soup to nuts.  No down payment, no income or asset verification, lies on the loan applications, false appraisals, adjustable rate teaser loans, negative amortization pick-a-pay loans, securitization of mortgages into bonds that were given false AAA ratings, etc., etc., etc., were some of the solutions to the problems posed.  The Fed, being a private bank at the hub of the Illuminist conspiracy to destroy our economy and rob us of our sovereignty, conspired with all these Wall Street reprobates and did nothing to regulate or to oversee these flimflam operations.  As part of that conspiracy, the Fed drove interest rates down to ludicrous levels, with the funds rate being lowered to an unbelievable 1%.  This rate drop also raised bond values, thus increasing the value of existing collateral and reserves of various financial institutions, further greasing the extension of credit.  Toxic waste was falsely rated and dumped on dupe clients and off-shored to SIV's thanks to the repeal of Glass-Steagall by sociopath "Slick Willie" Clinton.  Naked credit default swaps and interest rate swaps, now with notional values in the many hundreds of trillions and tens of trillions, respectively, were used to insure investors against bond losses due to payment defaults and interest rate fluctuations, driving rate spreads to all-time lows and driving the use of leverage to levels normally reserved for psychopaths.  Everyone had a big party.  That party is now over.


          The reason we are in recession now despite a 16% M3 level is obviously not because of a contraction in the money supply, which was implemented by the Fed to stop inflation as has been the case with past recessions.  The real reason we are now in recession is that the value of the asset base, mainly real estate, that was used as collateral to support the massive, moronic and insane issuance of credit for the past six years has been completely and utterly destroyed, and because our productivity and growth have been crushed by rampant inflation that has been caused by the unprecedented growth in the money supply.  Therefore, the current recession cannot be ended by lowering interest rates and increasing the money supply because a contraction of the money supply was not the root cause of the recession.  In fact, the lowering of interest rates while the money supply is being increased will only exacerbate the recession by destroying the value of the dollar and by igniting hyperinflation that will totally annihilate what little productivity and growth remain in our economy.  And may we add that thanks to the Bush-Clinton-Bush Administrations, since 1990, our real per capita GDP has been CUT IN HALF by rampaging and falsely reported inflation that has by far outpaced our rate of growth and productivity

 

 

THE INTERNATIONAL FORECASTER

WEDNESDAY 3/12/08 (0312-08(1)_IF

P. O. Box 510518, Punta Gorda, FL 33951-0518

An international financial, economic, political and social commentary.

 

Published and Edited by: Bob Chapman

E-Mail Addresses:

international_forecaster@yahoo.com

if_distctr@yahoo.com

CHECK OUT OUR WEBSITE

www.theinternationalforecaster.com

 

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Note:  We publish twice a month by surface mail or twice a week by E-mail. international_forecaster@yahoo.com or if_distctr@yahoo.com


-- Posted Thursday, 13 March 2008 | Digg This Article | Source: GoldSeek.com



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