Wednesday, June 24, 2009

No Doubt

“The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity. Both bring a permanent ruin. But both are the refuge of political and economic opportunists.”
- Ernest Hemingway.

I am sitting here this morning on pins and needles just waiting to hear what brilliant ideas the Fed has come up with this month to push our nation further into the Greater Depression. No doubt the Fed will say little that will be interpreted to say a lot by the ever over analyzing financial news media. No doubt the financial news media will find a way to peel back the shroud of bullshit that covers every statement by the Fed, and uncover yet another bed of "green shoots of recovery". Oh look! More weeds!

IMF says dollar adjustment might be needed
PARIS, June 22 (Reuters) - An increase in exports is needed for a sustained recovery in the United States and this may require an adjustment in the value of the U.S. dollar, IMF chief economist Olivier Blanchard said on Monday.

'For the US, it is absolutely no question that a sustained recovery has to come from a large increase in exports, that may not be very easy to do. This may require fairly substantial adjustments in the dollar,' he told a conference.

The Obama knows this. Bumbling Ben Bernake knows this. The little rat like fellow that runs the US Treasury knows this. The Gold market knows this. The Chinese know this all to well. Damn it, the whole world knows this, and refuses to admit it. Refuse to admit the truth, and you're living a lie. America is living a lie, a VERY BIG LIE.

America is broke. Busted. Bankrupt. In case you lost track:

The U.S. will sell $3.25 trillion of debt in the fiscal year ending Sept. 30, according to primary dealer Goldman Sachs Group Inc. Obama has pushed the nation’s marketable debt to an unprecedented $6.45 trillion. The budget deficit is projected to increase to $1.85 trillion in the year ending Sept. 30, equivalent to 13 percent of the nation’s economy, according to the nonpartisan Congressional Budget Office.

The Treasury Department will conduct a record $104 billion worth of bond auctions this week, part of its Orwellian efforts to finance a rescue of the world's largest economy and destroy its future.

The sales will exceed the previous record of $101 billion set in auctions that took place in the last week of April and consist of two-year, five-year and seven-year securities. That record was matched by another $101 billion week in May.

The Treasury's include $40 billion in 2-year notes on Tuesday, $37 billion 5-year notes on Wednesday and $27 billion in 7-year notes on June 25.

The shocking truth is that in 2002, following the 9/11 disaster, the entire US budget deficit was ONLY $165 BILLION.

Where is the outrage? When will America wake up to the truth and REACT!?

The real lie we are forced to endure is the price of Gold. If there is a single market in the world that could stand a huge dose of truth, it is the Precious Metals Markets. The bullshit that is allowed to take place at the CRIMEX by "the regulators" is abhorrent. Oh sure Mr. President, more regulation will solve everything! Why not begin with ENFORCING the laws that are ALREADY on the books!?

Monday's Gold and Silver performance is yet one more example of "government regulators" sleeping on the job, with permission of their government bosses, of course. The desperation by the US Government to suppress the price of Gold is not only now visible to the entire world investment community, it is becoming increasingly intolerable. Those that deny the NY COMEX metals markets are rigged are complicit in the crime.

Ed Steer at Contrarian Profits expounds on my assertion yesterday that Gold was NOT down because of a rising Dollar on Monday:

Monday’s [and this year's] gold price action [and the media comments about it] were nicely summed up by Bill Murphy over at yesterday. Here’s what he had to say…”Today, [the press] are all reporting again that ‘gold is down on strong dollar’, even though from the time gold hit $990 two weeks ago the dollar has done nothing more than rise from 79.5 to 80.5, a whopping 1% change compared to the $70 decline in gold and $2.50 drop in silver thanks to massive COMEX shorting. Apparently, the deflation scapegoat is back in fashion for describing gold’s decline.

“Even more comical is realizing that when gold hit $1,007 in February, just four months ago, the dollar was 87.5, or seven points HIGHER than today, and the Dow was 7,200, or 1,500 points LOWER than today. Back then, 10-year Treasury yields were below 3%, compared to closer to 3.75% today, and ‘Dr. Copper’ was $1.50 compared to $2.20 today! Thus, that gold SURGE clearly coincided with real ‘deflation fears’, as opposed to today when the press reports that gold is now plunging due to ‘deflation fears.’

“Not only that, when gold hit $1,030 in March 2008, the dollar was 77, or three points LOWER than today, while the Dow was 12,500, or 4,000 points higher today.”

If you’re confused…you shouldn’t be. The gold price is not joined at the hip with the US$ or the Dow…it goes up or down depending on who is long or short on the Comex…nothing else. Did the gold or silver price go down because of the US$ on Monday? No it didn’t. It [and silver] only declined because the price was engineered lower. Does the gold chart above look like normal market action…moving with the US$ tick for tick…or does it look like someone’s dicking with it? You have to be deaf, dumb, blind and/or stupid not to recognize price management staring you in the face yesterday.”

This afternoon the wizards that ensconce themselves behind the curtain will hand forth the much over anticipated "statement" regarding interest rates. The financial news media will fawn all over it and then "tell us what it means". I'll tell you what it means right now, hours before it is released and dissected by these media buffoons. It means "America, you're f***ed!"

The Fed in reality no longer controls interest rates. The country's debt holders do. The Fed's ONLY hope of slowing the rise in interest rates is to continue purchasing the nations debt themselves. And it is only hope. To date Fed purchases have failed to stop interest rates from rising. If the Fed comes out and says they will slow purchases of Treasuries because they fear inflation, bond prices will fall on the "fear of inflation". If the Fed comes out and says they will increase purchases of Treasuries, bond prices may rise, temporarily. But by purchasing even more Treasuries, the Fed only raises higher expectations of inflation, and bond prices will plummet. The Fed does not have enough money to prevent rising interest rates no matter how fast they print the money. For the Fed, there is NO WAY OUT. Well, I suppose they could kill themselves...

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