US MARKETS

          The dollar has once again collapsed.  Get ready for the next dollar debacle and the coming rally in gold and silver which have just broken out.  The elitists have lost all credibility.  The would-be lords of the universe have told so many pathological lies that no one "in the know" believes anything emanating from the forked tongues of Buck-Busting, Bear-Bashing, Big-Ben Bernanke and Hanky Panky Paulson.  If our Fed Head and Treasury Secretary had been characters in the Walt Disney movie entitled "Pinocchio," their noses would have quickly grown to lengths that could have been wrapped around the earth's equator several times.  God would have had to reverse the earth's rotation to extricate them.

          Wall Street tells us the odds favor two quarter percent rate hikes to the Fed funds rate by the end of the year.  We ask whether that would be before or after the economy collapses?  If before, the Fed's rate hikes will destroy what is left of our economy, and the dollar will collapse, thereby erasing any benefits from the rate hikes. If after, you will see rate cuts instead of rate hikes as the Fed attempts to save the fraudsters on Wall Street who are not even remotely close to recovering from the credit-crunch despite what the elitists might tell you to the contrary.  We ask who the morons are that make up these odds, and what planet they come from.  They give aliens a bad name.  These index predictions are just another form of jaw-boning and disinformation.

          As soon as the economy starts its final descent into Davy Jones' Locker, which is likely to occur in the very near future, the Fed and the US Treasury will unceremoniously toss the so-called "strong dollar" policy into the nearest financial dumpster in order to save the economy and the fraudsters.  Accompanying the "strong dollar" policy on its way to the dumpster will be the next round of derivative toxic waste that is on its way courtesy of the upcoming surge in fallout from tanking real estate markets in a process that will see the Fed blow what remains of its general collateral in exchange for such waste.  Once the Fed's general collateral is exhausted, we will be ushered into a new hyperinflationary era characterized by direct monetization of US treasuries to fund our deficits and to absorb more toxic waste as it continues to pour down on elitist financial institutions like Niagara Falls.

          A few measly quarter percent cuts will do absolutely nothing to slow the acceleration of inflation, especially if the Fed keeps the M3 at current levels.  Only a double-digit Fed funds rate and greatly reduced M3 could have any eventual and meaningful impact on the inflation that is built into the system for at minimum the next year and one half at levels in the area of 15% to 18%, and even then the impact will not be felt until the current baked-in inflation has run its course.  Direct monetization of treasuries to replenish Fed collateral and to absorb our growing deficits will put inflation beyond the point of no return, as will the breaking of OPEC dollar pegs.

As you can see, there is no way that any of the proposed diminutive rate hikes will have a positive impact on the economy, on the dollar or on the balance sheets of the fraudsters.  Therefore, there will not be any rate hikes.  Any increase in the Fed funds rate would be accompanied by an economic catastrophe of epic proportions that would occur as a direct result of the raising of that rate.  Any rate hike would take a year to a year and a half to have an impact on inflation.  By the time the anticipated Fed rate hikes could have any kind of impact whatsoever, the economy will already be in a state of rampant hyperinflation, and would be well on its way to depression, far too late to save the dollar or the economy.  Ergo, the new elitist motto will soon become: "Damn the inflation, full greed ahead!"

          The Fed's and the government's lies about inflation and other economic statistics have trapped them in an impossible situation.  For instance, because they have tremendously understated official inflation for so long, they cannot impose a plausible solution to fight actual inflation.  Any meaningful action they might take to give people relief by lowering the level of actual inflation must be scaled down to match what they are saying about official inflation and would therefore be totally ineffective and pointless.  The same scenario holds true for other economic issues as well.

          As if to accentuate the collapse of the dollar, open interest on the USDX plummeted on Wednesday by a gargantuan 20,461 contracts, from 46,665 to 26,204.  This also means that since last week Tuesday, when open interest was boosted by the PPT by a huge 14,393 contracts to a total of 52,520 contracts to boost the dollar and to make it look as though Big Ben really meant business about the buck, the open interest has been cut by half, with a total of 26,316 contracts having been liquidated over the course of the past week.

          The last time this kind of a breakdown in USDX open interest occurred was on December 19, 2007, when open interest dropped a whopping 22,966 contracts, from 57,389 to 34,423, when the spot USDX stood at 77.587.  The spot USDX then plummeted to a double bottom of 71.459 on March 17 and 71.329 on April 22, before rebounding to a recent closing high of 74.146 on June 13.  This week Friday, June 20, the spot USDX has already dropped to 73.030 from its recent closing high of only a week ago as the collapse of the dollar got underway once again.  Between December 19 and June 13, the closing high for the spot USDX was 77.794 set on December 20, while the all-time low was set at 70.698 on March 17.  If that pattern is followed again, we could be looking at a dollar breakdown to the low to mid-67 area.  Then again, we could be looking at a total collapse as hyperinflation and severe recession continue to eat away at what is left of our hapless economy.  Gold and silver are headed for outer space.

          We further note that as of Friday, there were 25,382 USDX futures contracts for September, 2,362 for December and only a handful for later months.  There certainly does not appear to be much interest in the "strong dollar" after September, which is when the supposed rate hikes are "expected" to occur.  

          Gee, we wonder if it could be that traders don't believe Ben-the-Bear-Killer and Hanky Panky about the  "strong dollar" policy and have a sneaking suspicion that post-election America will mark the start of the final bloodbath that will destroy the real estate, stock, bond and derivatives markets along with the US and world economies?  Royal Bank of Scotland has warned of the potential for a full-fledged crash in global stock and credit markets over the next three months as inflation voraciously consumes and destroys everything in its path worldwide.  Morgan Stanley has predicted a "catastrophic event" in world currency markets during the coming months as occurred in 1992 due to opposing views between the Fed and the ECB about what to do about monetary policy and inflation and due to imbalances in the ECB itself.  Both RBS and MS are elitist insiders high in the food chain of Illuminist companies.  They know what is coming.

          The ECB is history no matter what Trichet does.  If he hikes to fight inflation, the weaker members will be destroyed.  If he cuts to save the weaker members, Germany, the strongest member that is carrying  virtually the whole Euro Zone economy, will bolt, and the EU will be shattered by hyperinflation.  Germany is the holder of most of the Euro Zone's surplus dollar forex reserves which are being destroyed by inflation. Then on top of losing purchasing power with respect to its dollar forex, Germany's citizens are fed up with inflation from a euro they view as being too weak and the vast majority of them want the Deutsche Mark back.  Germans are savers and they resent having their savings destroyed by a weak euro as their wages stagnate.  Germany may soon join Ireland in their political rejection of the EU and its Lisbon Treaty.  Adding to Trichet's woes is the fact that if he hikes rates, and the Fed does not follow through with its jaw-boning about rate increases, which they won't, the damage to the weaker EU members will be accelerated as their exports become more expensive in the US on account of the resulting much stronger euro versus the dollar. That would make them less competitive in the US and in nations with currencies pegged to the dollar, forcing them into tighter competition with domestic companies and with other foreign exporters of goods to the US and to other dollar-pegged economies, thereby increasing their growing trade deficits to intolerable levels.  Nothing could be more positive for the US than the break-up of the EU, which will delay the evil Illuminati's plans for a one-world government for over half a century.

          In reviewing the movement of the yen versus the Dow, we are astounded that every human being drawing breath on the face of our planet and that every business entity with offices located anywhere on the globe are not fleeing in terror from the general stock and bond markets along with their related derivatives.  The last time the Dow closed below 12,000 (11,972.85), on March 17, the yen stood at 96.88 yen per dollar and 152.731 yen per euro.  On Friday, the Dow closed below 12,000 (11,842.69) with the yen at 107.42 yen per dollar and 167.855 yen per euro.  So despite yen weakness in the range of 10 yen per dollar and 15 yen per euro, the stock markets have gone nowhere.  If that doesn't freaking scare you, nothing will.  The carry trade can no longer carry the markets.  The de-leveraging from the credit-crunch, the destruction of corporate profits, stagnant consumer spending despite the stimulus, outrageous energy and food prices, the ongoing real estate debacle, the monetary profligacy of the Fed, wars for profit and eternal deficits in our budget, our trade balance and our current account are simply too much for the markets to absorb, even with the help of the PPT.  We are headed much lower.  We are 100 to 200 Dow points from a total catastrophe.  If gold and silver start to rally and the PPT crashes the markets with yen-hits to drain liquidity, it will be all over but the crying for stock markets worldwide.

          The real catastrophe comes when elevated levels of risk push rates up despite what the Fed does with its funds rate.  LIBOR is up 1% despite the Fed's lower rates and this affects mortgages, credit cards, student loans and a host of other variable rate loans that are tied to LIBOR.  Higher real rates of interest will destroy principal values for corporate bonds and treasuries that are already way underwater on account of rampant inflation, and that inflation will administer the coup de grace to bonds and treasuries as everyone flees to the only real money - gold and silver.  When the towel is finally thrown in on the bond and treasury markets and all that money migrates into commodities, and especially into gold and silver, you will see gold and silver move in ways you never thought possible that will delight you with shock and awe as all the money in the world pours into the tiny precious metals markets and their related shares.  Already, some mainstream analysts are calling for gold prices to rise to $5,000 an ounce and beyond as investors decimated by miniscule returns in the face of hyperinflation seek to protect themselves.  This latest prediction came from Schroder Investment Management Ltd., which oversees $277 billion of assets globally.

          This week, the PPT tried to blow out the specs' protective derivatives by driving stocks up at the beginning of expiration week for stock index and other options.  The specs struck back once again like clockwork and pounded stocks into the ground, racking up huge gains to fund the coming precious metals rally.  The PPT continues to press specs who are short oil to protect metals positions, and this is partly why oil keeps dropping and popping on short squeezes that are explained away with all kinds of jaw-boning pretexts in the fane-stream media.  The elitists have driven oil up while metals were suppressed to use it as a suppressive counterbalance against precious metals.  This will backfire as everyone exits oil and takes their proceeds into the gold and silver pits.  Stark, raving fear and the need for a safe haven from tanking markets and rampaging inflation will take over where oil left off.  Resource stocks will greatly benefit from lower energy costs as oil gets tanked to hit the next metals rally, so its time to LOAD UP!!!  The bottoms are in and its up, up and away!

...

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SATURDAY June 21, 2008  -   062108(6)_IF

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-- Posted Sunday, 22 June 2008 | Digg This Article | Source: GoldSeek.com

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