US MARKETS

          Caligula remains in denial as the barbarians storm the gates of Rome.  Perhaps he actually even believes some of the tripe emanating from the fane-stream media and pundits as well as from the Bureau of Lying (Labor) Statistics.  While even the Fed Chairman has at least had the chutzpah to use the dreaded "R" word, Caligula can only characterize our current financial catastrophe as an "economic slowdown."  We'd say that's a pretty good candidate for the understatement of the century!  Our economy is in a total shambles, hanging on by a thread, while our peerless leader claims we are undergoing an "economic slowdown."  He is joined by the rest of his fellow reprobates in our government, in the fane-stream media and on Wall Street who collectively and continually lie and cajole at the behest of their Illuminist masters.

          They claim that a strong dollar is in our best interest while they destroy the dollar.  They claim inflation is 4%, when it is over 12%.  They claim unemployment is 5% when it is 14%.  They claim we lost 80,000 jobs last month when most likely we lost over 300,000.  They claim our economy is turning around as consumer confidence drops to the lows of the early 1980's and in light of the fact that 70% of our tanking economy is driven by consumer spending.  They make it look like the big banks and financial institutions are being bailed out by the Fed when it is really the taxpayers doing the bailing through HUD, FHLB, Fannie, Freddie and hyperinflation.  They say banks are starting to show signs of recovery even as their insolvency deepens due to the ongoing destruction of a mountain of quivering derivatives as foreclosures accelerate, as real estate prices plummet, as maniacal bets are unwound and as the bear market in bonds gets underway because rate cuts appear to be subsiding for a short while, at least until the next debacle hits.  The old "we're in it for the long term" is being bandied about again by the media morons (aka commentators) to keep the dupes in so the Illuminati can bail out at the top through their dark pools of liquidity while everyone else is left holding the bag.

          Our government officials as well as banking and corporate leaders have created a culture permeated with pathological liars and sociopaths.  They subscribe to the same situational ethics, which they are teaching to our children so they can grow up to be miscreants like them.  Some of them may even believe their own lies, being unable to separate truth from fiction anymore because the lying has been so rampant and pervasive.  Some have probably even forgotten what the real truth is, having not entertained it or even thought about it for decades.  And who can blame the ones who have, for the real truth is nothing less than terrifying.  Their plans call for the depopulation of five billion people by starvation, disease and who knows what else, the destruction of western economies and the beggaring and serfdom of the citizens of the US, Canada and Western Europe, all with the whimsical hope that we can all dance around the One World maypole together some day before they haul us all off to internment camps.

          The disconnect that has occurred between what we are told and what we actually experience must be leaving uninformed non-subscribers in a surreal state, where they can no longer reconcile what their eyes see with what their ears hear.  You have two choices.  You can become a subscriber to the IF, or you can enter "The Twilight Zone."

          We thought we would have a little calculation fun in this issue to show you the devastating effects of inflation along with the deflation of real estate.  If these calculations do not get you motivated to institute some change, nothing will.

          Let's say your a millionaire in the year 2000 when you decide to retire.  You have exactly 1 million dollars set aside for your retirement.  Assume that on average you invest it conservatively outside of precious metals and commodities at a very generous 5% return after taxes from the beginning of 2000 to the end of 2011.  According to Shadowstats, inflation has averaged around 9% from 2000 to 2007, and we expect it to average about 15% for the period 2008 to 2011, which is extremely conservative considering that actual GDP, as opposed to official GDP, is a negative 2% to 3% or so, while M3 is running between 17% and 18%, giving us an inflation spread of about 20% that will soon manifest itself in 2009 and beyond.  Even current inflation is already over 12%.  So let's see how much money you have left in dollars based on the dollar's buying power in the year 2000 when you get to the year 2011.  Some simple math shows that in the year 2011 you would have $1,795,856 in 2011 dollars, but the buying power equivalent in year 2000 dollars would only be a very disappointing $515,309.  You're no longer a millionaire by year 2000 standards.  In fact, your buying power has been cut in half!  And if inflation is not stopped at some point, it will only get worse!  Had you only managed a 2% after tax return instead of 5%, you would have $1,268,242 dollars in 2011 dollars, but your buying power in year 2000 dollars is reduced to a stinking $363,913, or about a third of what you started with!  Now let's throw in the withdrawals you had to make and the taxes you had to pay along the way, and any thoughts you might have concerning your upcoming retirement get downright depressing.  Then try to imagine how you would feel if your original kitty was only $200,000, or $100,000 or, like most people, a measly $50,000 or less.  Then you get pauperized!  Do you still think consumer spending is going to recover when seniors are beggared?  Will unemployment improve when seniors are forced to keep their jobs or face starvation?  How will we make room for the next generation when few can afford to retire?  What will happen when the tens of trillions in Social Security and Medicare entitlements come due for the baby boomers and cannot be paid by our profligate government?

          Now let's take an example of what happens to the most valuable asset of most Americans --- their home.  Assume that you bought a house for cash in the beginning of the year 2000 for $500,000 and that its value peaked at the end of 2006 at exactly $1,000,000, a very generous doubling in value for one of the hotter areas.  The assumptions about inflation are the same as in our first example.  At the end of 2006, you have made a nice 10.4% annual return, keeping you just ahead of inflation.  There is only one problem.  The value of $1,000,000 is based on a real estate bubble propagated by rampant fraud and speculation.  Now watch what happens to your position as the real estate speculation that has been driving the markets unwinds and the Fed's policies send us into hyperinflation.  Note that up until the time the value of your home had peaked all you have managed to do is maintain the buying power of your home's dollar value, so you have made little progress.  Now, because you were in one of the hotter areas, you get a 40% haircut by the time the market bottoms at the end of 2011. Where will you be then?  Well, in nominal dollars, your house is worth $600,000, so it looks like you are still ahead, right?  WRONG!  In order for you to have the $500,000 in buying power that you had in the year 2000, you would have to have $1,742,502 at the end of 2011!  Your $600,000 in 2011 dollars is worth only $172,166 in year 2000 dollars!  Now let's throw in 12 years worth of maintenance to keep up the value of your home and pile on 12 years of interest on a jumbo mortgage as well as real estate taxes, and you've lost your freaking shirt!  So much for the big ATM trimmed with shrubs and shutters that we used to call "the place where we live!"

          THIS IS HOW INFLATION WILL DESTROY EVERYTHING YOU HAVE WORKED FOR AND HOW IT WILL DESTROY THE US ECONOMY!!!  THE FEDERAL RESERVE MUST BE TERMINATED AND, WITH THE EXCEPTION OF RON PAUL, ALL INCUMBENTS MUST BE VOTED OUT OF OFFICE.  OTHERWISE, THESE TWO EXAMPLES TELL YOU EXACTLY WHERE YOU ARE HEADED --- POVERTY!!!  THIS IS WHY WE HARP ABOUT PRECIOUS METALS AND THEIR RELATED SHARES.  NO OTHER ASSETS WILL COUNTERACT THE EFFECTS OF INFLATION LIKE GOLD, SILVER AND RESOURCE STOCKS. THE ABOVE EXAMPLES SHOW YOU IN SPADES WHY YOU MUST GET OUT OF GENERAL STOCKS AND BONDS AND INTO PRECIOUS METALS, COMMODITIES AND RESOURCE STOCKS!!!

...

THE INTERNATIONAL FORECASTER

SATURDAY 4/26/08 (042608(8)_IF

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

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-- Posted Monday, 28 April 2008 | Digg This Article