You Get What You Pay For

Should any of you doubt the level of danger the money system faces, you only have to listen to the Chairman of the Federal Reserve Mr. Ben Bernanke, describing just why the Fed had to step in and protect the entire U.S. financial system, which could easily have collapsed.
-Julian D. W. Phillips



“The Great Depression,” says the headline. “Food stamps are the symbol of poverty in the U.S. In the era of the credit crunch, a record 28 million Americans are now relying on them to survive – a sure sign the world’s richest country faces economic crisis.”

Again, we see the sad evolution of the U.S. of A. since the end of the ’60s. Then, fewer than five million people received food stamps. Now, nearly six times that number are living on them...after, what was supposed to be the biggest boom the world has ever seen. Of course, dear reader, we know that the boom was a phony. It made Indians and Chinese much, much richer. But Americans were left out. They got to spend their wealth, not make more of it. And now, nearly 26 years after the boom began, Americans find that they owe more money to more people in more places than any people ever did. What’s worse...while wages shot up among our old adversaries – Russia and China, in the 50 states, the average person earns about the same thing, in real terms, as he earned during the Carter administration.
-Bill Bonner,The Daily Reckoning



80,000 Jobs Lost
Employers buffeted by talk of recession slashed 80,000 jobs in March, the most in five years and the third straight month of losses. At the same time, the national unemployment rate rose from 4.8 percent to 5.1 percent, the clearest signal yet that the economy might already be shrinking.


The March decline was the largest job loss since March 2003 when the economy was still shaking off the lingering effects of the 2001 recession. Since the start of the year, 232,000 jobs have disappeared, the bureau said yesterday.


...the speaker of the House, Nancy Pelosi, said she would propose a second economic stimulus package. Hers would supplement the $150 billion measure that includes the mailing of tax rebates to millions of Americans beginning next month.


Payrolls Drop - And You Ain't Seen Nothin' Yet
Over the past 3 decades, the US economy has gone through 3 recessions. During these contractions, there were a string of job losses that lasted for a minimum of 10 months. We are already beginning to see this trend unfold and it will be months before we will actually see job growth. The largest single month job loss in each of the recessions was more than 300k. We wouldn’t be surprise to see the same degree of job losses in this business cycle.
http://seekingalpha.com/article/71219-payrolls-drop-and-you-ain-t-seen-nothin-yet


LOL Nancy, you little troll. Typical government response to any and all problems these days. "throw some money at it" and the problem will miraculously disappear. Nancy, you can't propose a Socialist agenda without raising taxes to support it. C'mon Nancy, are you just going to print more money to supplement the money the Treasury is already printing? Government spending on countless "social programs" dreamed up by our increasingly Socialist government are a HUGE part of this country's debt problem...and thus the US Dollar's generational slide into oblivion.


It is disturbingly amusing how this country has been brainwashed into believing that it's "government" can fix everything by throwing money at it, but demanding that "we the people" not have to pay for it. Well folks, you have gotten more than you wished for. Big government CAN give you everything AND fix everything without asking you to pay for it. They do it with inflation, the silent tax. By devaluing your money, the government steals your wealth to spend it as you'd have them spend it. Kinda gives new meaning to "you get what you pay for" doesn't it? And please, please, please Nancy, understand that inflation is NOT the result of rising commodity prices as the good Captain of the sinking ship, Ben Bernanke, would have you and all your crony friends on Capitol Hill believe. Inflation is ALL about increasing the money supply and thus debasing the currency. Rising commodity prices are a "symptom" of inflation, not the cause of it.


In Senate hearings this week, all parties involved completely ignored the Fed’s own culpability in igniting the speculative fever. It’s as if a senior prom had turned into a wild bacchanalia, and angry parents now question why the chaperones failed to notice the disrobing or why the DJ played provocative music, all the while ignoring the bearded gentleman pouring grain alcohol into the punch bowl.

A perfect illustration of the Fed’s failure to take responsibility can be found in Bernanke’s explanations regarding inflation, which he solely attributes to the effects of the rapid increase in global commodity prices. He failed to mention that commodity prices are rising as a direct consequence of his monetary policy, which is debasing not just the U.S. dollar, but currencies around the world. Rather than accepting the blame for creating inflation, Bernanke is shifting the blame to the free market. The Senators are happy to let him get away with it as it provides more evidence to support the “need “ for more government to save the economy from the disastrous effects of unbridled capitalism.

Of course, for all the talk about taxpayer bailouts, none of the senators bothered to mention that, for the moment, no tax increases are actually on the table. Instead, the bailouts are being financed by savers, pensioners, wage earners, investors and the elderly on fixed incomes, who all suffer staggering increases in their costs of living, as the Fed uses inflation to rob Main Street to pay off Wall Street.
-Peter Schiff
http://news.goldseek.com/EuroCapital/1207325044.php


...the CPI is a number concocted by the government primarily for the purpose of managing inflation expectations and these days bears little resemblance to the loss of purchasing power that is actually occurring within the economy.
-Steve Saville
http://news.goldseek.com/SpeculativeInvestor/1207321200.php


...last week’s rally on Wall Street might be viewed as a flight from reality. The celebratory mood will surely pass, and probably soon, but until that happens, we should expect the mainstream press to continue force-feeding the theme that the Fed’s heroic and unprecedented measures have saved the day. The catalyst for this latest outbreak of good feelings was of course the Bear Stearns deal. From a public relations standpoint, it has succeeded thus far only because so few investors understand what actually went down.
-Rick Ackerman

By now I hope you all have taken the time to read:

Text of Bernanke's Remarks on Hill
http://ap.google.com/article/ALeqM5i6_PUYTtL0JkeBYqTIM8y-YpGuXAD8VPPILO1

N.Y. Fed's Geithner explains Bear Stearns deal
http://www.marketwatch.com/news/story/new-york-fed-chief-geithners/story.aspx?guid=%7B9165450A-F288-45E9-B6BC-47CD1A57CB0E%7D&dist=hplatest

If you have not read them, you owe yourself to do so soon, so that you may begin to understand what actually went down on St. Patrick's Day. After reading both statements by these villains it should be quite apparent that "all is not well on Wall Street" as the blathering financial media would have you believe. The both of them come right and tell us how perilously close the World's financial system is to destruction. Had Bear Stearns been allowed to fail, a mushroom cloud would have replaced the world financial system. Bernanke and Geithner both made it clear that the World financial system is one big bank failure away from destruction. That our economy and our way of life as we know it would go up in smoke with it. These guys are playing with fire, more like juggling lit sticks of dynamite, and they know the consequences of a big investment bank failure. They also clearly know they dodged a bullet this time and have been reduced to "hoping" that they don't have to face a crisis of similar magnitude again.

However, the issues raised here extended well beyond the fate of one company. Our financial system is extremely complex and interconnected, and Bear Stearns participated extensively in a range of critical markets. With financial conditions fragile, the sudden failure of Bear Stearns likely would have led to a chaotic unwinding of positions in those markets and could have severely shaken confidence. The companys failure could also have cast doubt on the financial positions of some of Bear Stearns thousands of counterparties and perhaps of companies with similar businesses. Given the current exceptional pressures on the global economy and financial system, the damage caused by a default by Bear Stearns could have been severe and extremely difficult to contain. Moreover, the adverse effects would not have been confined to the financial system but would have been felt broadly in the real economy through its effects on asset values and credit availability.
-Ben Bernanke, Federal Reserve Chairman

Clearly the American and World financial systems are hanging by a thread. To believe that the Fed's actions regarding the bail out (and it was a bail out) of Bear Stearns was the last chapter in this global banking crisis is ridiculous. If anything the Bear Stearns "event" was the opening chapter of a horror story that is still being written...perhaps the "end of the beginning" but definitely not the end to this banking crisis.

"Is Bear Sterns the mine disaster or the canary in the coal mine?"

In an NPR Radio interview former CFTC Commissioner Michael Greenberger explains the challenges to the US Economy. With the insight of a man who was once on the inside of the derivatives markets, Mr Greenberger takes you on a tour of the corpses that will pop up throughout out this horror story as the chapters yet to be written are uncovered and exposed to an unsuspecting public. It is unlikely ANY government could print enough money to keep all these monsters in the closet. I highly recommend taking the time to listen to this 39 minute interview in it's entirety. You can listen to it here:
http://www.npr.org/templates/player/mediaPlayer.html?action=1&t=4&islist=true&id=13&d=04-03-2008

It is now 10PM est. The Dollar, as it often does on Sunday evenings, has caught a bid. Why anybody would buy this fecal wipe is beyond me. Rest assured that inflation is coming to these shores in a big big way. A tsunami of worthless Dollars is going to ravage this country from coast to coast. The ensuing inflation will be felt globally. Commodity prices and Precious Metals will continue to rise far into the future. Never forget that is was the US Federal Reserve that caused the pending collapse of the World financial system, and not the rising cost of commodities...oil in particular. Rising commodity prices are a symptom of monetary inflation. Monetary inflation that has been devaluing the US Dollar and stealing the wealth of this nation since the Federal Reserves "unconstitutional" inception in 1913. The Federal Reserve is NOT a government entity...it IS a "private bank". Banks are in business to make money. The Federal Reserve has got to now hold the record on that. Today, one US Dollar is worth 98% less than a Dollar in 1913.

...and that's my 2 cents worth for today.