Monday, July 26, 2010

Reading is fundamental

Reading is fundamental...and I did some reading this weekend. The number one topic of "confusion" being discussed is without question "Deflation or Hyperinflation". Flip a coin. In my humble opinion, the stories about Deflation are "after the fact". The global ecomomy has been dealing with Deflation for almost three years now. It has become so obvious, that it has become the number one topic of discussion of the financial news media, AND taken the top spot on the "Things To Fear Most" list.

Being a contrarian, the stories about Deflation need to be taken with a grain of salt these days. The threat of Hyperinflation should be on everybody's lips and fingertips instead. Historically, in EVERY instance of a Hyperinflation there has been a period of Deflation that proceeded it.

A crisis in confidence is all that remains to signal the end of Deflation and the beginning of Hyperinflation. Hyperinflation is not a monetary event, it is a "loss of confidence in the currency" event.

Despite all the efforts by the US Federal Reserve to prop up prices and give the economy an illusion of growth over the past two years, it is beginning appear that confidence in their success is an illusion as well. The Fed controls the current global reserve currency. If the public loses confidence in the Feds ability to stabilize prices and maximize employment [their mandate by law], a loss of confidence in the US Dollar will not be too far behind. The road to Hyperinflaion will be open.

You've got plenty of reading to do...

Unusually Uncertain Outlook Shows The Fed is Killing the Economy
The Federal Reserve is mandated by law to maximize employment. The relevant statute states:

The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long run growth of the monetary and credit aggregates commensurate with the economy's long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.

However, PhD economist Dean Baker

The country now has almost 25 million people who are unemployed or underemployed as a result of the Fed's disastrous policies. Millions of people are losing their homes and tens of millions are losing their life savings. The country is likely to lose more than $6 trillion in output ($20,000 per person) due to the Fed's inept job performance.

The Fed could have stemmed the unemployment crisis by demanding that banks lend more as a condition to the various government assistance programs, but Mr. Bernanke failed to do so.

Ryan Grim argues that the Fed might have broken the law by letting unemployment rise in order to keep inflation low:

The Fed is mandated by law to maximize employment, but focuses on inflation -- and "expected inflation" -- at the expense of job creation. At itsmost recent meeting, board members bluntly stated that they feared banks might increase lending, which they worried could lead to inflation.

Board members expressed concern "that banks might seek to reduce appreciably their excess reserves as the economy improves by purchasing securities or by easing credit standards and expanding their lending substantially. Such a development, if not offset by Federal Reserve actions, could give additional impetus to spending and, potentially, to actual and expected inflation." That summary was spotted by Naked Capitalism and is included in a summary of the minutes of the most recent meeting...

Suffering high unemployment in order to keep inflation low cuts against the Fed's legal mandate. Or, to put it more bluntly, it may be illegal.

Smoking Guns of USTreasury Monetization[MUST READ]
By: Jim Willie CB
A significant feature of fiat money systems is the privilege for the custodian to commit fraud, big fraud, gargantuan fraud, even counterfeit. Fannie Mae might function as the clearinghouse for numerous massive role programs with $trillion fraud behind each, hidden from view, especially since it was conveniently nationalized. Follow some other fraud schemes, right out in the open. Surely such recount only touches the surface, but these shenanigans are advanced forms of fraud. They are smoking guns of USTreasury fraud and counterfeit, with strong whiffs of monetization. Full Story

International Forecaster July 2010
By: Bob Chapman, The International Forecaster
Now mind you, the Federal Reserve, which Congress has now put in charge of our entire financial system, is the privately owned, and largely foreign owned, central bank of the US which has always operated, and which continues to operate, in total secrecy, and with zero accountability. So, after the Fed destroyed our economy with malice aforethought, it certainly must have made perfect sense to the apparent morons and village idiots in Congress to put the Fed completely in charge. Full Story

The Coming Rise In Prices
Howard S. Katz
Keynesianism is not a theory of economics. It is a confidence game, and the question is not whether they can correctly predict the future. The question is, can they gain your confidence and get you to act in such a manner that they can steal your wealth.? This is why they continually talk about confidence. “It is important that everyone have confidence in the economy.” They are confidence men, and the only question that matters to them is can they get you to have confidence in them? They are liars, frauds and thieves, and they are trying to reduce the American people to the status of serfs so that a collection of rich riff-raff can live off the product of their labor. That, by the way, is the explanation for the “taxpayer” bailout of Wall Street in 2008. The normal method of robbing you by having the Fed counterfeit money was too slow for the establishment crisis of that year. So they just went in and took it. Now the political polls tell us that the Republicans who opposed that bailout are going to win an enormous victory thus proving that a paper money system is inimical to democracy. They want you to become like the medieval serf so that they can steal the product of your labor any time they like. The serf, of course, did not have democracy. His only recourse was to grab his pitchfork and confront his feudal lord by sheer numbers. (Neither was the 2008 Wall Street bailout ever paid back, as you are being told. What happened was that the slower process of having the Fed steal from you via the counterfeiting of money went to work in ’08 and ’09, and the Wall St. firms were able to pay back their “loans” from the Government with the money made for them by the Fed. That is, they stole from you in ’08, disguised as a loan, and then “repaid” the loans in ’09 and ’10 with more money stolen from you. If you buy these lies, you are on your way to becoming a modern serf. Not only will your life be wretched, not only will the paper aristocracy be able to steal from you any time it feels the need but you will have the added disgrace of having given up your liberty when you had received it as a gift (from the Founding Fathers).

Stocks, Commodities and Financial Markets, The Shape of Things to Come
By: Steve_Betts
Central banks are gold’s best friend, and the more they print the better gold will perform over the long run. Make no mistake about it; the Federal Reserve will print obscene amounts of fiat paper until it produces the only possible result, a complete collapse of the dollar. The question I have is whether or not the rest of the world’s central banks will follow them over the cliff like the good sheep that they are. If they do there is no end to the amount that gold’s price can rise. We know that for more than a year it has consistently risen against every major currency in the world and in spite of the fact that the dollar has rallied for almost seven months. Gold has also rallied in spite of deflationary pressure and falling commodities prices, so those of you who think gold will fold up its tent and go home now that the dollar has topped, would be wise to think again.

I don’t know how low gold can go right now. With the dollar topping and heading lower gold will now complete the transformation into money. When that happens the bull market in gold will enter the third phase characterized by the general public piling into the gold market. To date gold is the play toy of commercial traders and institutions that can, at least over the short run, move the price around almost at will. As with any transformation process it takes time, and there will be a few hiccups along the way, and that’s what we are experiencing now. Manipulation exists and it will increase as the Fed desperately tries to maintain its grip on things. Unfortunately they’ve chosen to print their way out of trouble and that is the one solution guaranteed to fail. That failure will become evident to more and more people and that will drive the price of gold higher. That’s why I maintain that gold will not suffer any serious reactions until it reaches a minimum of 1,372.80, and to date I have yet to see anything that changes my mind.

Plan For America To Control Federal Deficit Spending [BRILLIANT]
By: James_Quinn
The ONLY way to save the country from financial collapse is to take on the largest expenditures. They are:

$895 billion for Military spending
$730 billion for Social Security
$491 billion for Medicare
$297 billion for Medicaid

These 4 areas total $2.4 trillion per year out of $3.8 trillion. This is 63% of all Federal spending. A real leader would tackle these areas. A 3rd party candidate with a strong backbone would propose the following ideas:

The Banksters: Lloyd Blankfein, John Mack, Vikram Pandit, Jamie Dimon, Brian Moynihan, Et Al. Have we forgotten what lying is? [Laughter is the best medicine]
Mandleman Matters
Those names should ring some bells by now, but in case you can’t place them all, they are the names of the CEOs of Goldman, Morgan, Citi, JPM Chase, and the new guy at BofA who replaced Kenny Lewis at the beginning of this year.

Now, there are all sorts of reasons that I could go after these guys for being beyond offensive. I mean, just the fact that any of these CEOs still has her job is nothing short of astonishing. Traditionally, as far as I can remember, CEOs that captain their corporate ships only to go fatally crashing into the cliffs of insanity get canned, right? Not only did these guys keep their jobs after, at the very least, spectacularly failing, but they also picked up very nice bonuses to boot. So, I’d have to say, very well done there.

But I’m not even going to worry about any of that today. No, today I’m only concentrating on what this group of overbearing oligarchs has done lately, like as in over the last five quarters, according to the Federal Reserve Bank of New York. That’s right, new stuff. They didn’t do enough to destroy the global financial system over the last decade, so I guess it’s a matter of why-quit-on-a-winner sort of thinking?

Apparently, data released by the Federal Reserve Bank of New York shows that 18 banks, including those listed above of course, have been lying about their levels of debt that are used to fund their trading of securities at the end of the last five consecutive quarters, lowering them by an average of 42%, and then increasing those debt levels back to the real numbers in the middle of the following quarters.

Oh, I know… it’s not really “lying,” in this, our horribly-distorted-by-bank-lobbyists-world, I’m sure it’s actually perfectly legal, and equally sure there’s some banking lawyer out there who can set me straight on this. If such a lawyer ever contacts me I think I’ll introduce myself by saying: “Hi, I’m a human being. What are you?”

1 comment:

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