-- Posted Monday, 5 December 2011 | | Disqus
The following are some snippets from the most recent issue of the International Forecaster. For the full 39 page issue, please see subscription information below.
US MARKETS
Do we need central banks at all? It’s a good question. We have had the Federal Reserve since 1913 and their management has been a disaster for Americans and a wealth builder for its owners, the Wall Street banks. It has also allowed the financial sector to control our country. It is the seat of elitist power. The Fed has debauched the US dollar via their monopoly and enriched their owners beyond belief. Any entity that has to resort to the subterfuge of using a cloaking term, such as quantitative easing has to be a scam.
The Federal Reserve and other central banks were created to inflate currencies thereby depreciating them and in that process the owners of the Fed and their colleagues’ reaped enormous profits. Entities like the Fed have been doing this for centuries. You might say such a monopoly leads to currency debauchery. Reflecting on such a track record there is no reason to have central banks. A federal Treasury is all that is needed. Not that it is perfect, it is no worse then having a privately owned central bank. We have suffered under the Fed since 1913 and it is time to terminate the Fed and return our monetary authority to the US Treasury.
In the latest turn of events the Fed has mastermind another rescue in conjunction with the ECB. Europe hurting for cash, particularly US dollars, brought England, Japan, Switzerland and Canada and ECB into their latest money creation scheme. They will lower prices on dollar liquidity swaps on 12/2/11 and extend these swap subsidies until 12/01/13. What has happened as we pointed out previously is that US money market and pension funds dropped participation in short-term bond markets in Europe from 55% of assets to about 20% of assets. That meant European banks couldn’t function. The eventual outcome would be no dollar investments in Europe until their financial house is put in order.
In addition there are on again off again stories that the IMF has been talking with Italy and Spain. Both sides deny it and behind the scenes we are told talks have in fact been going on for weeks.
We can assure you that the dollar swap is really all coming from the Fed. England and Japan are probably window dressing and Switzerland and Canada may participate. This is a Fed operation. What confuses the public is misdirection engendered in utterances by policy makers. There is absolutely no coordination, which belies confusion, which leads to lack of belief in any statements. Again, the problem is not liquidity, but solvency. They are all broke and reorganization would take years to accomplish. They cannot do what they should do, and that is purge the system, because they’ll lose control and that is the key and seat of elitist power. If they do the right thing the public will then discover what they have been up too and they’ll end up where they belong, in jail.
These dollar loans will be run through the ECB, the European Central Bank, giving euro zone banks direct access to dollars. It is all subterfuge in order to continue the force short term. Additional liquidity is a stopgap measure, which not only deceives, but also is injurious in the long run. The result is the Fed will continue to prop up European financial markets with no solution in sight moving from one calamity to another until the systemically insolvent conditions take the system down. These players have many things they can pull yet, so don’t think the system can fail soon. It could take several more years and the result will be inflation, hyperinflation and higher gold and silver prices.
If we may interject here along those lines this advance toward hyperinflation, probably in 2014 or 2015, will entail the destruction of not only the US dollar and the euro, but to some degree all currencies versus gold and silver. For the average person worldwide they should have their wealth in gold and silver related assets and as little as possible in any currency. For businesses that is less practical because they need a flow of funds to function. If that is the case stick to the Swiss franc, which is no longer what it once was, but the best of the lot. The alternatives are the Norwegian corona, and the Australian and Canadian dollars.
As far as US debt is concerned the recent super Congress, enabling committee, was set up to fail from its very inception. They wanted the automatic cuts, so no ones head was on the chopping block. We observe everything was done or discussed in secret. That resulted in dollar selling and weakness, which was offset by euro problems. Debt in the US, UK and Europe, as well as in many other countries is unpayable. In finality the value of currencies will fall perpetually versus gold and silver. The outcome of higher gold and silver prices is inevitable. Remember, the federal government and the Fed are in a box and there is no way out. The longer they extend the deterioration time line the worse the end result will be. There is no political will to change this in Washington, because 95% of Congress is bought and paid for. That means we have to elect Ron Paul as President and people like him to Congress. If we do not it is game over.
Government calls core inflation 2.1% and overall inflation at 3.8%, when in reality inflation is 11.6%. This reality is having a terrible effect on the US economy, which negatively affects all economies. Every time the Fed creates more money and credit for the US and other economies it takes the dollar a little lower, not only versus other major currencies, but against gold and silver as well. The Fed is forced to rescue Europe because if they do not those problems will implode the US banking system.
If you chart official inflation since 1980, gold should be selling at $2,500 an ounce. If you use real inflation numbers since then gold should be selling at $8,700 an ounce. This is just part of the inflation-dollar syndrome since 1933 and again since 1971. That is why your wealth has to be stored in the safety of gold and silver. You have no other alternative.
In 1992 Japan opted for creating money and credit to extricate itself from recession. They sold their debt to Japanese citizens and the exercise proved futile. We mention this because this is the same morass the US, UK and Europe is headed into.
The coordinated disbursement of dollars and perhaps other currencies is not the cure all for what ails the banking community in Europe. Major European banks are broke just as major UK and US banks are. They gambled big and lost and somehow they expect the Fed, the American taxpayer, to bail them out. What happened was when money market and pension funds pulled their short-term dollar deposits out of these European banks it was almost like having a bank run. The US lenders simply feared insolvency. That certainly is understandable. That entrapped European banks, particularly French banks, even though they were and had been selling bonds of unsound nations, they still do not have enough liquid capital particularly US dollars. That meant that if the Fed did not create money for them they would have to sell and call in loans to businesses in Europe and the US.
As a result of this quagmire the Fed made it easier and less costly to obtain US dollars. Agreements in place since 2007 for $500 billion, which few probably remember. We still think these Fed rescues are the result of a secret deal between the Fed and European banks to take on toxic mortgages, so NYC legacy banks could hand out giant bonuses, the flip side being the Fed protecting European banks at all costs. This is what we see. Those bond buyers knew they were buying garbage, but did it anyway. It shows you how interdependent these criminals are.
If we are correct it shows you the liquidity part of this equation was caused by the CDO’s and MBS’s of yesteryear. Their problem was never solved and that toxic waste is still lying on European and US bank balance sheets. That is why the Fed within QE 3 will relieve US banks of $800 billion to $1 trillion of this waste off of US banks in 2012. We then ask the logical question, will the Fed then buy this waste from European banks so the US taxpayer can be allowed to pay for it? This to us is borne out by the fact that there never has been an attempt at civil or criminal prosecution of the US banks for selling European banks AAA bonds that in fact were BBB bonds. The buyers had to have known.
Newly created capital is another temporarily positive. It does nothing to fix the balance sheets of banks. They are systemically insolvent and the only solution is to allow them to be liquidated, which corrects the system and puts the bankers that deliberately caused these problems out of business permanently.
This Fed money machine will never stop until the result of hyperinflation brings it to collapse and that is where we are headed. Not this year, but in 2014 and 2015. Currencies, particularly the dollar, will be ravaged and the only safe place to be will be in gold and silver shares, coins and bullion. The bankers are trapped. They cannot stop the money machine. If they do the whole edifice collapses. The antidote for European and US banks as well as the Treasury is that, is that, as we have stated over and over again that the Fed has never stopped providing swap funds to the ECB, funds to US banks and continuing to purchase US Treasuries.
Those foreign bids you see are really Fed bids. Reflect back for a dozen years. The Fed has been buying Treasuries via the Bank of England and the Cayman Islands. Even “Operation Twist” was an additional attempt to allow foreign governments to dump long dated Treasury notes, which gave them additional funds to purchase their own paper. Yes, the Fed wanted lower long-term rates, so mortgage rates would fall but the real reason was to liquefy foreign central bank sellers. This program of Fed purchases will probably last 4 or 5 years and cost $1 trillion a year.
If you read today’s tea leaves you will find the leadership, all Illuminist, in Germany and France continuing to push for stricter budget information, which is a code phrase for overhauling the euro zone’s governance and implanting the end of fiscal sovereignty.
Chancellor Merkel has rejected joint euro-area bonds because she knows the Fed is going to create the funds to keep the system from imploding. This is the big move to lock up the euro zone as the basis for world government. The other ten nations would be expected to follow. They again also talk about GDP deficits of 3%, which they know won’t work. It is all a charade and a cover for world government.
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THE INTERNATIONAL FORECASTER
SATURDAY, DECEMBER 03, 2011
12/03/11 (1) IF
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