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Historically about 1/3rd of Americans do not file income tax and only 15% of illegal aliens file. That has cost government about $500 billion a year. Americans are fed up and more are becoming non-filers and more are underestimating or hiding income. It is essentially a tax revolt. Why do you think federal revenues fell so precipitously? People are sick and tired of taxation without representation. They are also outraged at the bailout of banks, Wall Street and insurance companies and a few crumbs for the average American.

They also realize that America’s debt will never be repaid, that they will have hyperinflation and that the dollar is collapsing versus other currencies. In time the public will discover gold, but that will happen as the depression goes further forward.

We have already entered the inflationary spiral again. Its force will depend on the strength of the deflationary undertow and the monetization of monetary aggregates. Make no mistake higher inflation is on the way and probably hyperinflation. It will also be affected by a break down in the tax system as well. The trio leads to economic, financial, social and political dysfunction.

What else should the elitists expect? All the revolving door bureaucrats from the Council on Foreign Relations, The Trilateral Commission and the Bilderberg Group are going to do is give us more of the same, as we had for the previous eight years.

           Team A replaced Team B. They are furthering the same financial conditions that brought us the current disaster. We are seven months into the new administration and it has already destroyed any credibility it could have had. Writing blank checks to the financial community, which financed your campaign, does not endear you to the voters, as they are thrown a bone.

After the announcement, that the president had re-nominated Ben Bernanke as Chairman of the Federal Reserve, we were led to believe he saved us from a fate worse than death. Bernanke created enough money and credit to temporarily overcome the deflationary undertow in the economy. Ben created the problem along with Sir Alan Greenspan and now he wants us to believe he is going to save us by solving the problem. This is the same Ben that gave Greenspan academic cover. He had the temerity to blame the credit crisis on foreigners who created a savings glut, particularly Asians. He said this suppressed bond yields. That was probably true, but he conveniently forgets to mention that the Fed created all those dollars in the first place and were responsible for lower interest rates. Ben believes any slowdown or shock to the system can be easily handled by injecting more money and credit into the system.

Ben is the man who is going to lead us to a federal deficit of 100% of GDP over the next decade, as deficits swell to more than $1 trillion a year.

What must be remembered here is that it is not going to be easy or even possible to pull the punchbowl away. In 1936 they tried to slick up liquidity to prevent speculation. It turned out to be premature as money and credit fell into negative territory. By 1937 fiscal stimulus programs ended. The federal deficit fell, creating a counterforce.

This is the kind of risk Ben faces when and if he decides to withdraw the punchbowl. When Ben believed he saw in November 2002, the danger of deflation, he acted by increasing aggregates. There is no doubt he will see the same thing again if he cuts money and credit and raises interest rates. That means the system is entrapped in an endless cycle of money and credit creation, inflation and a lower dollar. Ben fears deflation far more than inflation and so the course will not be altered.

If we are experiencing a bottom it is accompanied by unprecedented budget deficits, which presents a huge financial problem during a recovery.  That will be accompanied by inflation. That is what commodities, such as oil and copper are telling us. This presents us with stagflation. The bottom line is more of the same is not going to work and that is what Ben will give us. He simply doesn’t know any other way out of the maze. This also shows us that the president is totally ignorant of what is going on around him. None of the players believe in sound money and we will pay the price for that.

In September we see a renewal of monetization where officially the Fed will buy more and more Treasuries, Agencies and CD’s from banks, besides what they are doing in secret. A large part of the budget deficit, real estate expansion and banks’ bad debt will be monetized by the Fed, which is very inflationary. This is what went on in Argentina and the Weimer Republic and this is where Ben is headed. This is why you have to have gold and silver related investments; they will be your only protection.

          The dollar may weaken through “established lows” as signs of a global economic recovery drive gains in equities and oil, Goldman Sachs Group Inc. said.

          “That kind of shift could easily be prompted by continued good news from the macro front and the persistently negative dollar-equity and dollar-oil correlations,” Thomas Stolper, an economist at Goldman Sachs in London, wrote in a report yesterday. “Dollar bulls could well end up disappointed. Even a short-term move beyond our three- and six-month forecasts of $1.45 per euro is getting increasingly likely.”

          The Dollar Index, which Intercontinental Exchange Inc. uses to track the U.S. currency against the euro, yen, pound, Canadian dollar, Swiss franc and the Swedish krona, has weakened as the Standard & Poor’s 500 Index of U.S. shares gained more than 85 percent of the time since June and more than 50 percent of the time since September as investors sought higher-yielding assets on signs on an economic recovery.

          The index fell 11 percent from its high this year on March 4, during which time the S&P 500 gained 44 percent. The index was little changed at 78.592 as of 7:29 a.m. in New York. S&P 500 Index futures were unchanged.

          “More and more foreign-exchange players have positioned themselves for a dollar bounce without much impact on the spot market,” Stolper said. Since early June, traders have moved toward favoring contracts that give them the option to buy the dollar against the pound, while “spot remains stuck in the mid- $1.60s,” Stolper said.

          The cost of betting that the dollar will rise against the pound in one month’s time are at the highest since July 14, and near the most since March, according to 25 Delta risk reversals.

          “All this suggests that the underlying dollar trend is still downward sloping and the risk is that normalization in positioning pushes the dollar through the established lows,” Stolper said.

          Sales of newly constructed homes leaped unexpectedly in July to hit their highest level since last September.

          New homes sold at an annualized rate of 433,000 during the month, according to a joint report issued by the Census Bureau and Department of Housing and Urban Development.

          That far exceeded analysts' forecasts and was up 9.6% from the revised 395,000 rate recorded in June. A consensus of industry experts surveyed by Briefing.com had predicted July sales of 390,000.

          U.S. building permits for July were revised to down 1.1% from June to a seasonally adjusted rate of 564,000, the Commerce Department reported Wednesday.

          July building permits were originally reported as being down 1.8% at a seasonally adjusted rate of 560,000.

          Mortgage applications filed last week increased a seasonally adjusted 7.5% compared with the week before, boosted mainly by filings to refinance existing home loans, the Mortgage Bankers Association said Wednesday.

          Refinancing applications rose 12.7% for the week ended Aug. 21 from the prior week -- the third increase for such applications over the last four weeks.

          Overall filings had increased a seasonally adjusted 5.6% in the week ended Aug. 14, data compiled by the Washington-based MBA showed. The MBA survey covers about half of all U.S. retail residential mortgage applications.

          Applications for mortgages to purchase homes were up a seasonally adjusted 1.0% last week compared with the week before, due to increased demand for government mortgages, including those backed by the Federal Housing Administration.

          This latest increase marks the fourth consecutive weekly gain for home-purchase applications -- a streak last seen in March, when interest rates on fixed-rate mortgages dropped and stayed below 5%. See related story.

          Overall applications for the latest week were up an unadjusted 34.1% from the same week in 2008. The four-week moving average for all mortgages was a seasonally adjusted 3.5%.

          Refinancings made up 56.5% of all applications last week, up from 53.3% the week before. Adjustable-rate mortgage accounted for 6.5% of filings, unchanged from the week before.

          According to the MBA survey, rates on 30-year fixed-rate mortgages averaged 5.24% last week, up from 5.15% the week before.

          The average rate on 15-year fixed-rate mortgages stood at 4.58% last week, up from 4.52% in the week ended Aug. 14. And one-year ARMs averaged 6.74%, up from 6.66%.

          To obtain the rates, the 30-year fixed-rate mortgage required payment of an average 1.07 points, the 15-year fixed-rate mortgage required an average 1.18 points and the 1-year ARM required an average 0.17 point. A point is 1% of the mortgage amount, charged as prepaid interest.

          Only one crime was solved by each 1,000 CCTV cameras in London last year, a report into the city’s surveillance network has claimed. The internal police report found the million-plus cameras in London rarely help catch criminals.

          In one month CCTV helped capture just eight out of 269 suspected robbers.

David Davis MP, the former shadow home secretary, said: “It should provoke a long overdue rethink on where the crime prevention budget is being spent.”

          He added: “CCTV leads to massive expense and minimum effectiveness.

          “It creates a huge intrusion on privacy, yet provides little or no improvement in security.

          “The Metropolitan Police has been extraordinarily slow to act to deal with the ineffectiveness of CCTV.”

          Toll Brothers Inc., the largest U.S. builder of luxury homes, reported a wider loss for the third quarter as the recession weighed on sales. The company said it has begun raising prices as the market starts to recover.

          The net loss for the three months ended July 31 swelled to $472.3 million, or $2.93 a share, from $29.3 million, or 18 cents, a year earlier, Horsham, Pennsylvania-based Toll said in a statement today. The loss, which included tax charges and writedowns of $554 million, was bigger than analysts’ estimates.

          Massachusetts Mutual Life Insurance, was stripped of its AAA rating by Standard & Poor's on the drop in the value of asset management units.

          The credit and financial-strength ratings were cut to AA+ "because of its lower quality of capital and reduced financial flexibility," the ratings firm said yesterday.

          Nevada's unemployment rate hit a record in July, climbing to 12.5 percent statewide and 13.1 percent in Las Vegas, according to a state report issued Friday.

That puts the Silver State 3.1 percentage points above the national unemployment rate of 9.4 percent, according to figures from the Nevada Department of Employment, Training and Rehabilitation.  The state's unemployment rate was the third highest in the nation, behind Michigan at 15 percent and Rhode Island at 12.7 percent, the agency said.

          The number of U.S. workers filing new claims for jobless benefits declined last week, falling in line with economists' observations that labor market conditions appear to be slowly stabilizing.

          Meanwhile, total claims lasting more than one week also fell back down after ticking up the previous week.

          Initial claims for jobless benefits fell 10,000 to 570,000 in the week ended Aug. 22, the lowest level since Aug. 8, the Labor Department said in its weekly report Thursday.

          Economists surveyed by Dow Jones Newswires had expected a decline of 11,000. The previous week's level was revised from 576,000 to 580,000.

          The four-week average of new claims, which aims to smooth volatility in the data, fell 4,750 to 566,250. That was the lowest average since the week ended Aug. 8.

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