Americans may just be beginning to understand the US strategy regarding the credit crisis, but foreigners understand what they are up too. The US is creating a stealth default on its debt by continuing to issue massive amounts of money and credit and in the process devaluing the dollar. This, of course, is fraud, but other nations have defrauded the US for years by cheapening their currencies and subsidizing goods and services. China may be upset as others are, but they have totally subsidized their economy and they have been the worst offenders in cheapening their currency. What do they call their current $1.25 trillion effort to keep their growth above 8%? They have 30 million unemployed and frankly fear a revolution. Chinese policy was to sell goods to America, which was unable to pay for those goods. Their $2 trillion in US denominated assets will probably end up being worth $1 trillion and they knew that going in. They wanted the market and they’ll have to pay the price. US Treasury and Fed issuance is going to get worse not better – it’s going to be that way for sometime to come. No aggregates are going to be pulled from the system. If the US does that the financial system will collapse. There is going to be massive inflation and what China should be doing is dumping dollars by buying gold. They have not anticipated the fall in US stock and bond markets and the derivative bomb. American assets, including bonds, will get badly trashed. We wrote of all this in June of 2002, but no one was listening. We could not even envision the affects of mark-to-model and the worthless balance sheets of corporate America, particularly in the financial sector. Within four years and more likely in two to three years the US will default on treasury and Agency debt. That should take the dollar in USDX terms to 40. It is now just below 80. China obviously feels the yields offered on US paper on the long end are not worth the play. They have been buying bills instead in the short-term market that the Fed has to support. Today investors cannot conceive how bad this depression is going to get. Even the Bilderbergs see they cannot handle what is coming and want to reverse the process. Unfortunately it is too late for that. There has been no return since June of 2002. The Chinese knew 5 years ago they were screwed, but they kept on playing the game. They had to supply jobs or they might have had a revolution. The illuminist plan to bring China into WTO was a very bad choice. All the money the transnational conglomerates made will eventually be lost.

America is burdened in expensive wars in Afghanistan and Pakistan and is still occupying Iraq. This has cost Americans almost $1 trillion and it won’t end for years, an expensive distraction. We know war was created to enrich the elitists among other things, but the result has been disastrous not only for America but for the elitists as well. The Chinese have played a very dangerous game and if they try to get nasty as a creditor holding debt the US will just default. The Chinese will have to take their losses and perhaps start a war. America is in receivership and they should simply go into bankruptcy. We can bring our troops home, get rid of the Fed, pass trade tariffs, clear Wall Street out of Washington and let the treason and criminal trials begin.

Our guess is that all kinds of deals have been made illegally that we know nothing about with China. We must find out what these deals were. The only way we can do that is by removing those from power, who made those deals.

Keynesian inflationism is so engrained in economic orthodoxy that it is very hard to get a dissenting view. 90% of economists and analysts work for large corporations, which more often than not are run by Illuminists. IF you speak out of line you are out of a job. That is why few disagree. We just did about 30 interviews on Fox News and we were told we would no longer be allowed on the network to speak on the Federal Reserve. This is today’s version of freedom of the press-or media. If you do not like it ban it. Economists and analysts face the same problem. Policymakers have charted a course that risks bankrupting the economy and the Fed are at the core of the problem. They are doing everything possible to destroy the US economy.

When we see Dr. Kenneth Rogoff, IMF economist, advocating 6% inflation we have to laugh. It is still running at 9-1/2%. Food prices continue to rise and gasoline is moving higher as are oil prices. To insinuate that inflation would ameliorate the debt bomb and help in the de-leveraging process is pure folly. Then we have professor Mankiw who advocates negative interest rates. You borrow $100 and pay back $97. That is idiotic and this man is teaching our children, someone has to tell me how incurring more debt will allow us to escape debt? We are nearing 50 years in finance and economics and we cannot believe the unmitigated crap we are hearing from so-called experts. If these are experts please dear Lord send us the uneducated. They at least have common sense. These are the same people, along with government, banking and Wall Street who are creating another debt bomb. Federal debt is expanding at an unheard of 13%. As a result yields are rising as are gold and silver and the dollar is falling. It is only a matter of time until a crisis of confidence occurs in the Treasury market. This year the yield has moved from 2.35% to 3.45% on the 10-year notes and they and the 30’ have broken their 200-day moving averages. At the same time the Fed has induced these low rates for mortgages, as risk is transferred to the taxpayer via loans being guaranteed by the GSE’s, Fannie Mae and Freddie Mac. In just two years we will again face this debt bomb to go along with ALT-A loans, Option-ARM-pick and pay loans and prime loan failures due to rising, encompassing unemployment. That will occur in 2011 and 2012. The failure of the housing market is only 40% to 50% over. All this is happening as policymakers, Goldman Sachs, JP Morgan Chase, Citicorp, etc., and the rest of the elitists are shifting all the debt from the financial sector to the American people. Virtually no one talks about what is really going on. The same people at the Fed, in banking, on Wall Street and in government are supposedly solving the problems they created. We have news for you; they are not solving anything. They are just pushing judgment day a little further out. That is costing us $2 trillion in additional debt a year, which we can ill afford. The bomb gets bigger every day and you won’t want to be around when it explodes.

We hope you are all aware that as the dollar falls inflation rises. That is because we don’t produce much anymore and as the dollar declines the cost of imported goods rises, including oil. By the end of the year oil could be $80 a barrel and gasoline over $3.00 a gallon. It started to feed on itself two months ago.

As long as the privately owned Fed and the rest of the Illuminists are calling the shots speculative market dynamics and casino chaos will reign. These arrogant criminals are taking gambling to even greater heights. They profit because the Fed briefs them of what is going on so they can reap riches. Manipulation is the order of the day. All Keynesian thieves love massive stimulus as the bubbles burst. This time there is no way back. This repeat will rival the collapse of the Lombard System in Venice in 1348. The more important question is will we have another plague to accompany the Illuminist plague?

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GOLD, SILVER, PLATINUM AND PALLADIUM

We believe you are now looking at the last opportunity to buy cheap gold and silver. All those dimwits looking for $700 and $500 gold have been wrong again.

This time on a long-term basis we have both the fundaments and the technicals working for us. Once the options expire this week both metals should be ready to test the old highs. Accelerating inflation is again on the way, as investor demand continues to accelerate. As we mentioned in a previous recent issue, the GDP price deflator, is rising at a 2.9% rate. Foreigners have eased up on buying US Treasuries, but we as yet see no concerted move to stop buying Treasuries. As long as buyers accommodate the US Treasury we see no move to another reserve currency unit. It will come and there will be a dollar crisis this year, but it is still in the future. Other nations still have 64.5% of their foreign reserves in US dollars. They will take 50% losses from here rather then break ranks with the US. This will lead to financial and economic dislocation that in many nations of the world will end up in revolution. When that transpires gold and silver will be king.

The only way to return to sound money is to get rid of the Fed. Then we can again issue US notes backed by gold. We are probably looking at $6,000 to $7,000 an ounce, which is what real inflation has been since 1980. One of the problems here is that secretly controlled banks have sold off most of their gold in efforts to suppress the price since 1988, although most of the selling has occurred over the past ten years. There hasn’t been an audit of US gold since 1954, so we don’t know if they have any at all. We think central banks sold off most of their gold. They may have somewhere between 5,000 and 15,000 tons available. Be as it may we’ll find out in good time.

It has been a long hard road with plenty of fights along the way over the past 50 years. We won before and we will win again. That in spite of criminal conspiracy among the Fed, Treasury, bankers, Wall Street, The World Gold Council and GFMS, Gold Fields Mineral Services. They are all liars and criminals. For those who are new to this, central banks lease gold to a bullion bank like JP Morgan Chase, which sells it into the market, but the bank still carries it on the books as an asset even though it has been sold. What kind of criminal madness is that? Who in their right mind would believe that central banks continually take losses in leasing gold? That is the price they pay to suppress the gold price, so that they can print more fiat currency and keep the world in financial bondage. As we saw some central banks are sick of what is going on. Germany requested delivery of their gold from West Point and Dubai has transferred its gold out of London. It will be interesting to see if they are capable of making delivery.

That reminds us that Rep. Ron Paul has 183 co-sponsors for a House bill to conduct an independent audit of the Fed, including its claims to For Knox gold.

As we have been telling you for years that China had been accumulating gold, well China has finally admitted they bought 1,054 tons over the last six years. This holding is sure to increase. China is the world’s largest gold producer, mining 282 tons of gold in 2008. Chinese investment demand was 69 tons. India bought 660 tons last year, so you can see what China is capable of. China purchased all domestic consumption and bought through willing governments, such as Russia, South Africa and South American countries. If China is going to be playing the political game at the top level they could add another 4,000 tons easily. They certainly have the dollars to do it. What would you do with a falling dollar, horrible deficits, and climbing gold and silver prices and with a trade war in the works? If China and other nations expand money and credit in order to suppress their rising currencies they will face domestic inflation just to maintain their export trade.

Now that things are getting real serious how long do you think the Chinese and the Gulf States are going to hold up the dollar? How long do you think savers are going to bail out debtors? All creditors will continue to put pressure on the US, demand secret concessions and will enter into our political process if they haven’t done so already. China has already taken defensive action by accumulating gold and commodities. We believe within two to three years China will float a gold backed currency and that will end the dollar as a gold backed currency.

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-- Posted Wednesday, 27 May 2009 | Digg This Article