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Found 10 results

  1. I've created a new thread in another forum about the new Hidden secrets of money video: Here's the video: Here's the thread: http://www.abovetopsecret.com/forum/thread987587/pg1
  2. Joint Press Release Board of Governors of the Federal Reserve System Commodity Futures Trading Commission Federal Deposit Insurance Corporation Office of the Comptroller of the Currency Securities and Exchange Commission For immediate release December 10, 2013 Agencies Issue Final Rules Implementing the Volcker RuleFive federal agencies on Tuesday issued final rules developed jointly to implement section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Volcker Rule"). The final rules prohibit insured depository institutions and companies affiliated with insured depository institutions ("banking entities") from engaging in short-term proprietary trading of certain securities, derivatives, commodity futures and options on these instruments, for their own account. The final rules also impose limits on banking entities' investments in, and other relationships with, hedge funds or private equity funds. Like the Dodd-Frank Act, the final rules provide exemptions for certain activities, including market making, underwriting, hedging, trading in government obligations, insurance company activities, and organizing and offering hedge funds or private equity funds. The final rules also clarify that certain activities are not prohibited, including acting as agent, broker, or custodian. The compliance requirements under the final rules vary based on the size of the banking entity and the scope of activities conducted. Banking entities with significant trading operations will be required to establish a detailed compliance program and their CEOs will be required to attest that the program is reasonably designed to achieve compliance with the final rule. Independent testing and analysis of an institution's compliance program will also be required. The final rules reduce the burden on smaller, less-complex institutions by limiting their compliance and reporting requirements. Additionally, a banking entity that does not engage in covered trading activities will not need to establish a compliance program. The Federal Reserve Board announced on Tuesday that banking organizations covered by section 619 will be required to fully conform their activities and investments by July 21, 2015. Statement by Chairman Ben S. Bernanke Statement by Governor Daniel K. Tarullo Final Rule (PDF) Final Rule - Preamble (7.2 MB PDF) Fact Sheet (PDF) Community Bank Guide (PDF) Media Contacts: Federal Reserve Board Barbara Hagenbaugh 202-452-2955 CFTC Steve Adamske 202-418-5080 FDIC Andrew Gray 202-898-7192 OCC Robert M. Garsson 202-649-6870 SEC Judy Burns 202-551-6050 Board Votes 2013 Banking and Consumer Regulatory Policy Last update: December 10, 2013 http://www.federalreserve.gov/newsevents/press/bcreg/20131210a.htm
  3. This is all shown in graphics, I don't know how to bring that kinda stuff over, so just follow the link folks: http://www.zerohedge.com/news/2013-07-11/visualizing-uncle-sams-missing-money
  4. http://www.zerohedge.com/news/2013-06-10/guest-post-smoke-and-mirrors-running-out Guest Post: The Smoke And Mirrors Are Running Out Submitted by Tyler Durden on 06/10/2013 13:17 -0400 Originally posted at Monty Pelerin's World blog, Those who believe the economy is recovering are ignorant of the facts. Other than the Great Depression no US recovery (and I don’t believe we are in a recovery) taken longer. Eventually it may take more than a decade like the 1930s. Or perhaps it will be like Japan which is in its third decade of “recovery.” Politics and Economics The truth is that our economy is spent, exhausted and filled with misallocations and distortions made much worse by government interventions. There is no recovery, nor will there be one until a massive purge (usually referred to as a depression) occurs. This event will result in bankruptcies that release scarce, misallocated physical capital from unproductive and unwanted areas to places where it is needed and can be utilized efficiently. Rather than allow this pre-condition to an economic recovery and a growing, efficient economy, politicians want to prevent it. They use smoke, mirrors and propaganda (lies) to hide the reality of our sick economy. Their obfuscations continue, but the effective life is limited. What politicians do to the country beyond their term in office means nothing to them. Their concern is only for themselves and the short-term that exists between elections. As a result they rob from the future to hide the true conditions of the present. Those still unborn will be paying for their criminal economic charade. Economic Conditions So how bad is the economy? Michael Shedlock, “Mish” is among the more prolific as well as more incisive financial analysts on the web. His site is always worth reading, but a recent post is essential. To impress upon you the seriousness of the situation and to encourage you to read his post, I quote some of his points (anything in red is my emphasis): … we’re doing the same thing that led to the 2008 blowup — we’ve learned exactly nothing. In real terms our GDP is in fact contracting by about $500 billion a quarter, after adjusting for debt expansion — that’s $2 trillion a year, more or less. In terms of debt and inflation, Mish determined that: … we’re contracting in purchasing power adjusted for new debt at more than 10% over the last four quarters. The debt to GDP ratio reached the highest in history just before the 2008 collapse. It remains in this record territory and is just as unsustainable now as it was in 2008: … the absolute level of debt to GDP, however, refuses to go under 350%; it has now started rising again but is entirely coming from two sectors — business credit and the Federal Government. Consumers reduced their debt levels, although probably not enough. They are still strapped with more debt than many can properly service. Consumption, as a result, has dampened as more income goes to debt service and less debt is added. That appears to be a condition that should prevail for several more years. Remember, the announced reason for the loose Fed policy was to drive consumption. As Mish observed: … this so-called “expansion” driven by ZIRP and deficits has a use-by date that has expired and we are now trying to evade the fact that the fish is well into the “stinks up the joint” stage. Obviously, it has not worked. Read Mish’s article to view most of his observations in chart format. Desperate Government Although Mish does not make this point, I believe it is a relevant one. Government continues to borrow and spend in an effort to hide the truly rotten condition of the economy. This action was begun under the guise of stimulating a recovery. It is obvious that it has not worked. It was obvious to some that it could never work. Despite its obvious failure, theft from future generations continues. There are two main reasons for this, in my opinion: To hide from the people how desperate the economic situation truly is. To enable government to continue its current level of spending which cannot be funded via tax revenues or real market Treasury sales (certainly not at current interest rates; perhaps at no reasonable interest rate). Government has exhausted its faux solutions. Nothing they do, except reduce spending, can help the economy. Reducing spending means another Great Depression and the exposure of the economic scam they have been running. Thus, spending will likely continue as will the Federal Reserve enabling, euphemistically called quantitative easing. A Fly In The Ointment There is a limit on how long the fraud continues. The government is in what is known as a debt death spiral. They must borrow money to repay prior debts. It is as if they are using their Visa Card to make an American Express payment. The rate of new debt additions dwarf any rate of growth the economy can possibly achieve. The end is certain, only its timing is unknown. Once interest rates begin to rise, and they will, it is game over. Short-term Treasury interest rates are normally 3% with no inflation. In an inflationary environment, a premium for expected inflation is tacked on to that 3%. Under today’s conditions, ST Treasuries could easily rise to 6 – 9%. The low end of the range represents a rise in rates of more than 5.5%. If the debt outstanding, most of which is short-term, is $17 Trillion, that would been a rise in interest expense of close to a Trillion dollars annually. That would be added to deficits which are expected to be around a Trillion dollars per year. The high end of the range would produce a deficit in excess of $2.5 Trillion per year. At the low end of the interest rate range, deficits would exceed more than 10% of GDP, putting us right up there with the sick European countries. At the high end, we would be like Greece without its glorious history and climate. It gets worse than the above numbers convey. When interest rates rise, the economy will contract and probably severely. Then cries for more stimulus would be heard. An additional Trillion dollars or so would likely be added to the deficit, although many would want multiples of that. In either case, we become Greece on steroids. Another Fly In The Ointment There are those who say the US government cannot go broke because it has a printing press. They argue that the level of deficits don’t matter because the US can just print more money. Monetary fraud, which this is, also has a limit. Only paper and ink limit the amount of currency the government can print. However, government does not control the value of the money which is determined by the public. Printing money depreciates the value of money (otherwise known as inflation). Market forces (economic actors) determine what this value is via supply and demand interaction. When money is expected to buy less tomorrow than it does today, people will spend it sooner. This drives inflation even higher. Ludwig von Mises described this end phase as a crack-up boom: Credit expansion can bring about a temporary boom. But such a fictitious prosperity must end in a general depression of trade, a slump. The boom produces impoverishment. But still more disastrous are its moral ravages. It makes people despondent and dispirited. The more optimistic they were under the illusory prosperity of the boom, the greater is their despair and their feeling of frustration. Mises spent much of his life studying money, the business cycle and inflation. He correctly identified the choice that now stands before our political class (my emboldening added): There is no means of avoiding the final collapse of a boom brought about by credit (debt) expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit (debt) expansion, or later as a final and total catastrophe of the currency system involved. In the event of the total catastrophe, savings and fixed income become worthless. The middle class of a country is wiped out in terms of wealth. Poverty abounds except at the top where those with large wealth and insider information are able to protect themselves and enhance their real wealth. Inflation does not destroy wealth; it merely redistributes it. How Does It End? Neither ending is attractive, but opportunities for one or the other have been squandered. Sadly, the decision as to which route is taken is in the hands of our criminal political class. Their behavior suggests that they will do whatever it takes to continue the charade. They want to maintain their scam for as long as they can.. If they are successful, a crack-up boom is coming. History shows this ending in most all countries in our condition.
  5. http://www.zerohedge.com/news/2013-05-23/america%E2%80%99s-economy-being-sovietized Is America’s Economy Being Sovietized? 05/23/2013 19:29 -0400 Submitted by Brandon Smith of Alt-Market blog, The foundation of the Soviet model of trade and investment was centralization under the guise of "universal public ownership". The entire goal of communism in general was not to give more social and political power to the people, but to extinguish alternative options and focus power into the hands of a select few. The process used to reach this end result can vary, but the goal always remains the same. In most cases, such centralization begins with economic hegemony, and it is in our fiscal structure that we have the means to see the future. Sovietization in our financial life will inevitably lead to sovietization in our political life. Does the U.S. economy’s path resemble the Soviet template exactly? No. And I’m sure the very suggestion will make the average unaware free market evangelical froth at the mouth. However, as I plan to show, the parallels in our fundamentals are disturbing; the reality is that true free markets in America died a long time ago. The Tyranny Of Planned Economy The characteristics of a free market society defy the use of centralized planning. Adam Smith’s original concept of free market trade stood as an antithesis to what was then referred to as “mercantilism,” a select few “joint stock companies” (corporations) monopolizing production while using government ties to destroy any new competition. Unfortunately, there are to this day economists and politicians who believe that corporate centralization is a “natural” function of a free market. In reality, corporate monopolies are an unnatural creation of collusion between governments and big-money interests designed to suffocate any entrepreneurship outside of their sphere of influence. Over time, as we now see in the United States today, government power and corporate power begin to hybridize, until one can barely be distinguished from the other. The bottom line is that you cannot have planned structures, monopolized production or controlled capital flow within an economy and still claim it to be a “free market. There are no exceptions to this rule. The Soviet system was the ultimate in centralization. Every aspect of financial life was dictated by the communist government, from industrial input and output to investment to food production and rationing to wages and retail prices. Some people might argue that this structure is a far cry from what we now have in the United States, but let’s look at the fundamentals. Controlled Money Creation One of the primary tenets of The Communist Manifesto was the creation of a central bank meant to keep tight controls over currency issuance. The existence of a central bank immediately disrupts any chance of a true free market. Central banking without competition allows an oligarchy, whether corporate or political or a meshing of the two, to manipulate interest rates as well as adjust prices through inflation. Lending standards (which the central bank determines arbitrarily) built on fractional reserve banking opens the door to murky debt instruments and toxic financial products that are further used to either fabricate a “high” standard of living (as we saw in the U.S. in the 90s and early 2000s) or execute a bubble implosion causing a lower standard of living (as the U.S. is experiencing today). Since the establishment of the Federal Reserve through subversive collusion between banking interests and corrupt politicians in 1913, America has not had a free market system. From that point forward, every boom and bust, every interest rate disaster, every inflationary increase in prices has been scientifically engineered. Dominance Of Industry Soviet controls on industrial output are legendary. Every part of the resource allocation process became subject to bureaucracy, and this led to stunted manufacturing growth as well as a culture of misrepresented economic data. In the United States, the establishment has taken a slightly different approach but with the same end result. Heavy taxation on business ventures within the U.S. against entrepreneurs not lucky enough to run in elitists circles has erased incentives for manufacturing experiments within our borders. In the meantime, members of the corporate glee club receive government subsidization while they simultaneously outsource industrial projects to Third World nations. Controlled industry within communist Russia was meant to force the population to depend upon the government for every means of survival. In the United States, dependency on government has been replaced by interdependency on the globalized model in general. Necessities are now compartmentalized, and only select international businesses with cooperation from government have the ability to bring all the pieces together to keep our domestic economy running smoothly. Our society has been so distanced from self-sufficiency that many people now consider the globalist dynamic indispensable. The next step in this degradation of free market industry is the introduction of "public works projects" by the federal government, which gives the illusion that job creation through centralization is possible. This is the same strategy used in the Soviet Union and to this day, socialists still argue that the communist design for industrial expansion was "effective". In truth, the soviet public works plan with all its trains and transits and bridges and buildings was an absolute failure, as the collapse of the country made clear. Tax funded infrastructure is no replacement for free market invention, and at bottom, no public works enterprise can be undertaken without the government first stealing capital from one area in order to fund another. Governments can never and will never create wealth or jobs. They can only present the semblance of economic progress while siphoning wealth away from private citizens. Bureaucracy And Food Production U.S. Environmental Protection Agency and U.S. Food and Drug Administration regulations, based on dubious junk science and often instituted on high without congressional oversight, further erode business possibilities, especially for young companies as well as private agriculture, while giving free reign to elitist entities like Monsanto, an organization the government actually PROTECTS through specialized legislation making it nearly immune to civil litigation. While farms in the United States are not exactly “controlled” by the Federal government in the Soviet sense, many of them are subsidized through welfare on the condition that they grow only particular kinds of crops, raise particular animals or grow nothing at all. This subsidization is an indirect form of price control, creating engineered scarcity or abundance. At the same time, agricultural empires like Monsanto make private farm ownership increasingly difficult by using their government protection to harass and squeeze out independent food producers. This destabilization of private resource management by common citizens has culminated in the passage of President Barack Obama’s executive order National Defense Resource Preparedness, which allows under a “national emergency” (which the President can declare for any reason) the confiscation of any and all private resources, including farms and businesses, to be redistributed by the government to ensure security conditions. This is the Stalinist model, pure and simple. Centralized Control Of Investment We now know that since at least 2008, the U.S. stock market, often presented by the mainstream as a paragon of free market prowess, has actually been propped up and inflated by Federal Reserve fiat. Both former Fed Chairman Alan Greenspan and current branch head Richard Fisher have openly admitted in separate news interviews that the central bank spends considerable energy in “artificially sustaining” equity markets. This has been done, I suspect, with full knowledge of the U.S. Treasury and the Obama Administration. The Soviet model for investment was to remove all uncertainties from their domestic markets, often in the name of preventing manipulation by “speculators.” The speculator rationale was generally a distraction away from the attempt to dictate the natural forces of supply and demand. The idea was that if the government could dismiss legitimate demand or lack of demand or hide excess supply or lack of supply, the perception of a balanced economy could be conjured for the population. This led to strict redirection of capital to areas where manipulation was needed to artificially pump up (or deflate) a particular part of the economy. The government became the sole investor of the Soviet system and, thus, the sole determinant of the success or failure of any particular market. This is EXACTLY what is going on in America today, in what mainstream economists now call "the new normal". Federal Reserve fiat is being printed and dumped into every financial mechanism that supposedly maintains our country’s fiscal health, including stocks, Treasuries and municipals, while trade volume remains low and private investment disappears. The Federal government now owes its very existence to the continued support of central bank dollars, and the Dow Jones does as well. If this is not the Soviet ideal, then I don’t know what is. Labor Oppression, Dismal Living Standards And Government Dependency Poverty levels within the United States are at record highs. Nearly 50 million Americans are now dependent on government-subsidized food stamps for their survival. Nearly 100 million Americans receive welfare (or Social Security) in one form or another from the establishment. That is almost one-third of our entire population that relies on the system for at least a part of their sustainment. If Obamacare is fully realized, millions more Americans will also be conditioned to become dependent on government-designated healthcare providers. The point is not to pass judgment on those people who get money or services from the government, only to make clear our progression away from freedom and into centralized servitude. For a Soviet structure to thrive, poverty among common citizens has to be institutionalized. Dependency requires a constant state of desperation. In America, this has been accomplished through a combination of inflated prices and reduced wages in conjunction with the destruction of labor options. At the height of the communist machine in Russia, employment was ample; but the kind of employment one could apply for was dependent on bureaucratic red tape and availability based on a worker’s record. Only the academic “elite” within the government-run cesspools of Soviet universities and military schools had their choice of employment; even then, they were often pressured into particular specialized fields, depending on the kind of labor the state needed done at that particular time. In the United States anyone can certainly aspire to do whatever job he hopes to do. But again, options have been removed economically; and the same academic elitism pervasive in Soviet Union labor markets exists in America today. In a recent installment of his weekly radio show, New York Mayor Michael Bloomberg said it was better for “so-so” high school students to pursue a career in plumbing rather than go to college. Though I rarely agree with Bloomberg on anything, my initial reaction was surprise at his willingness to steer American youth away from university indoctrination centers. However, upon further examination, it became clear that Bloomberg was not trying to save the next generation time and money. Instead, he is promoting a shift in the labor dynamic of the U.S. economy toward a Soviet-style foundation. Bloomberg knows well that the U.S. labor market will never return to its former glory, partly because he is a supporter of the globalist policies that ruined our economy in the first place. Instead of suggesting ways to reverse the trend of progressive poverty and the lack of high-end jobs that engender ingenuity and invention, elitists like Bloomberg are saying “forget your dreams and get used to being a drone.” In a 70% service and retail economy, where job availability is increasingly degraded and independent business is discouraged, Americans will have two choices: Excel in the world of federally funded and propagandized education and sell your soul just for a chance at obtaining a professional career in a field of influence, or, settle for the leftovers. Modern socialists often sing the praises of the soviet educational model for raising the literacy rates of once agricultural and isolated people to 98%, but what they fail to mention is that this literacy was only encouraged in order to create a more efficient servant class that was easier to propagandize. The U.S. is moving into a similar paradigm. For some people, being a plumber is a fine thing; but it should not be the only thing. In a true free market, a smart man can make his own way, even if he does not conform to the ideologies of the educational racket. In a Sovietized market, a smart man is prohibited from accomplishing anything unless he conforms to the ideologies of the educational racket. Some people may respond that the centralization conspiracy within the American economy is an obvious thing today, and that there is little need to expose it any further. I would point out that centralization is not the only issue here; the guidebook by which that centralization is being implemented is also important. This has all been done before on the other side of the world only decades ago, and the end result was a horrifying cascade of social enslavement and mechanically inclined death. In the end, the Soviet economy was so utterly fraudulent that the final breakdown of the system came as a complete surprise to many in political and economic fields of the era. This is what happens when governments control all source data for financial statistics; transparency dies and collapse creeps in. Centralization is an absolute affront to the natural laws of supply and demand and an oppressive hindrance to the innovation that humanity thrives on. Such systems require constant theft from the populace in the form of reduced employment, reduced wages, reduced resources, increased taxes, increased price controls and a highly ignorant citizenry in order to function even for a short time. Sadly, the United States is well on its way in all of these areas, emulating a poisonous fiscal system and lending itself to a global economic tyranny in which all of us work much harder, for much less, and all for a government that seeks to use our very labor against us.
  6. World Bank Insider Blows Whistle on Corruption, Federal Reserve Wednesday, 22 May 2013 A former insider at the World Bank, ex-Senior Counsel Karen Hudes, says the global financial system is dominated by a small group of corrupt, power-hungry figures centered around the privately owned U.S. Federal Reserve. The network has seized control of the media to cover up its crimes, too, she explained. In an interview with The New American, Hudes said that when she tried to blow the whistle on multiple problems at the World Bank, she was fired for her efforts. Now, along with a network of fellow whistleblowers, Hudes is determined to expose and end the corruption. And she is confident of success. Citing an explosive 2011 Swiss study published in the PLOS ONE journal on the “network of global corporate control,” Hudes pointed out that a small group of entities — mostly financial institutions and especially central banks — exert a massive amount of influence over the international economy from behind the scenes. “What is really going on is that the world’s resources are being dominated by this group,” she explained, adding that the “corrupt power grabbers” have managed to dominate the media as well. “They’re being allowed to do it.” According to the peer-reviewed paper, which presented the first global investigation of ownership architecture in the international economy, transnational corporations form a “giant bow-tie structure.” A large portion of control, meanwhile, “flows to a small tightly-knit core of financial institutions.” The researchers described the core as an “economic ‘super-entity’” that raises important issues for policymakers and researchers. Of course, the implications are enormous for citizens as well. Hudes, an attorney who spent some two decades working in the World Bank’s legal department, has observed the machinations of the network up close. “I realized we were now dealing with something known as state capture, which is where the institutions of government are co-opted by the group that’s corrupt,” she told The New American in a phone interview. “The pillars of the U.S. government — some of them — are dysfunctional because of state capture; this is a big story, this is a big cover up.” At the heart of the network, Hudes said, are 147 financial institutions and central banks — especially the Federal Reserve, which was created by Congress but is owned by essentially a cartel of private banks. “This is a story about how the international financial system was secretly gamed, mostly by central banks — they’re the ones we are talking about,” she explained. “The central bankers have been gaming the system. I would say that this is a power grab.” The Fed in particular is at the very center of the network and the coverup, Hudes continued, citing a policy and oversight body that includes top government and Fed officials. Central bankers have also been manipulating gold prices, she added, echoing widespread concerns that The New American has documented extensively. Indeed, even the inaccurate World Bank financial statements that Hudes has been trying to expose are linked to the U.S. central bank, she said. “The group that we’re talking about from the Zurich study — that’s the Federal Reserve; it has some other pieces to it, but that’s the Federal Reserve,” Hudes explained. “So the Federal Reserve secretly dominated the world economy using secret, interlocking corporate directorates, and terrorizing anybody who managed to figure out that they were having any kind of role, and putting people in very important positions so that they could get a free pass.” The shadowy but immensely powerful Bank for International Settlements serves as “the club of these private central bankers,” Hudes continued. “Now, are people going to want interest on their country’s debts to continue to be paid to that group when they find out the secret tricks that that group has been doing? Don’t forget how they’ve enriched themselves extraordinarily and how they’ve taken taxpayer money for the bailout.” As far as intervening in the gold price, Hudes said it was an effort by the powerful network and its central banks to “hold onto its paper currency” — a suspicion shared by many analysts and even senior government officials. The World Bank whistleblower also said that contrary to official claims, she did not believe there was any gold being held in Fort Knox. Even congressmen and foreign governments have tried to find out if the precious metals were still there, but they met with little success. Hudes, however, believes the scam will eventually come undone. “This is like crooks trying to figure out where they can go hide. It’s a mafia,” she said. “These culprits that have grabbed all this economic power have succeeded in infiltrating both sides of the issue, so you will find people who are supposedly trying to fight corruption who are just there to spread disinformation and as a placeholder to trip up anybody who manages to get their act together.… Those thugs think that if they can keep the world ignorant, they can bleed it longer.” Of course, the major corruption at the highest levels of government and business is not a new phenomenon. Georgetown University historian and Professor Carroll Quigley, who served as President Bill Clinton’s mentor, for example, wrote about the scheme in his 1966 book Tragedy And Hope: A History Of The World In Our Time. The heavyweight academic, who was allowed to review documents belonging to the top echelons of the global establishment, even explained how the corrupt system would work — remarkably similar to what Hudes describes. "The powers of financial capitalism had a far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole,” wrote Prof. Quigley, who agreed with the goals but not the secrecy. “This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert by secret agreements arrived at in frequent private meetings and conferences. The apex of the system was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations." But it is not going to happen, Hudes said — at least not if she has something do to with it. While the media are dominated by the “power grabber” network, Hudes has been working with foreign governments, reporters, U.S. officials, state governments, and a broad coalition of fellow whistleblowers to blow the entire scam wide open. There has been quite a bit of interest, too, particularly among foreign governments and state officials in the United States. Citing the wisdom of America’s Founding Fathers in creating a federal system of government with multiple layers of checks and balances, Hudes said she was confident that the network would eventually be exposed and subjected to the rule of law, stopping the secret corruption. If and when that happens — even if it may be disorderly — Hudes says precious metals will once again play a role in imposing discipline on the monetary system. The rule of law would also be restored, she said, and the public will demand a proper press to stay informed. “We’re going to have a cleaned-up financial system, that’s where it is going, but in the meantime, people who didn’t know how the system was gamed are going to find out,” she said. “We’re going to have a different kind of international financial system.... It’ll be a new kind of world where people know what’s going on — no more backroom deals; that’s not going to keep happening. We’re going to have a different kind of media if people don’t want to be dominated and controlled, which I don’t think they do.” While Hudes sounded upbeat, she recognizes that the world is facing serious danger right now — there are even plans in place to impose martial law in the United States, she said. The next steps will be critical for humanity. As such, Hudes argues, it is crucial that the people of the world find out about the lawlessness, corruption, and thievery that are going on at the highest levels — and put a stop to it once and for all. The consequences of inaction would be disastrous. http://www.thenewamerican.com/economy/economics/item/15473-world-bank-insider-blows-whistle-on-corruption-federal-reserve?utm_source=feedly
  7. I thought this was a great article to send to folks who aren't up to speed on how our bankers have been systematically stealing from us for a century...this is put in very simple terms, and may hopefully wake up some who haven't realized this yet. Pass it on!! thx all http://www.rickackerman.com/2012/04/why-the-global-banking-system-is-a-scam/ Why the Global Banking System Is a Scam BY RICK ACKERMAN ON APRIL 18, 2012 1:48 AM GMT · 60 COMMENTS [We have argued here before that it is lies, systematic fraud and blatant duplicity by the central banks that have kept the global economy afloat in recent years. In the essay below, a regular in the Rick’s Picks forum who goes by the handle ‘Buster’ provides as succinct and elegant an explanation of this as we have seen. His thoughts were originally published in the forum, but we are reprinting them below because they deserves a wider audience. RA] America is a great country. As with any business, its success is based on the balance of its assets against its liabilities. Its assets are a plentiful supply of natural resources; land & minerals, plus 300 million specimens of the most creative creature on planet Earth. These assets are hindered by one main liability, a ruling class who imported a monetary system of theirs from Europe a while ago. It is a non-free market system which is enough of a hindrance to negate all the positives of any country in time. A simple enough system to understand, yet very seldom understood, even by the most intelligent among us, it would seem. It operates on the simple rule that currency is borrowed into existence with interest bearing on it at a given rate. The critical point to recognise is that the interest owing is not issued by the lender, only the principal, thereby meaning that the interest either has to be paid out of the sum of principal borrowed, or by confiscation of real physical assets, i.e. “real wealth”. The only thing keeping this eventuality from occurring is if a new borrower adds more money, borrowed as yet more debt, into the economy. This is why such a monetary system requires ever more investing manias to perpetuate itself. After exhausting the supply of manias of things of no real consequence such as tulips, the wizards of this system centered mostly around a company known as Goldman Sachs, moved on to turning very critical wealth into the biggest mania in history, i.e. the buildings we all live in. Once this mania had run its course to the extreme by changing the rules or committing outright financial fraud as we now know, and no new borrowers could be dragged in off the street, the “flaw” in the system became manifest, as the interest payments were not being covered by new money borrowed into the economies of the world. Boiling of the Frog Now things got interesting. Since not enough currency is in existence to cover all the debt owed to the lender, then the assets, real things or “real wealth,” are now owed to the lenders. The problem with this is that if the lenders acted upon this fact the populations of the developed world would quickly realise that they are all in fact broke, as all property would get consumed by the Banksters as repayment, leading no doubt to a world-wide revolt against the secret overlords of this system. So, instead of this, things have been manoeuvred to allow a more gradual slow “boiling of the frog,” or austerity programs coupled with placing ex-Goldman Sachs employees into key government positions across the western world. On an accounting level, huge bail-outs will continue to be necessary to keep the system’s head above water, or rather to keep those within “the club” in the lifestyles they have become accustomed to, perpetually unless or until a new bigger mania is devised that could add enough borrowed debt currency into the system to cover the current interest payments, but bringing more burden in so doing. The carbon credit system is possibly such a new mania? Greenspan Detected a ‘Flaw’ Alan Greenspan famously said that they found a flaw in their financial model. Yeah, right! The flaw was the very foundation of the model deliberately designed so centuries ago. Understanding of this “flaw” is the last thing the powers that be wish for the masses to acquire. Simply put, due to the fact that only the principal is borrowed into existence, not the interest, the result is never-ending debt allowing that the real wealth of miners, farmers, builders, engineers, fisherman and any other positive endeavour to be taken for free by those in “the club” via theft or fraud. Some, educated to think just as the Wizards have designed, will argue that this is a simplistic way of seeing things, citing their training in financial models and graphs, yet all deliberately designed to confuse and hide the simplicity of it all. As Ricks Hidden Pivot Method [of technical analysis] no doubt demonstrates, the intelligent see just the complexity, but the wise find the simplicity. America, as every country exists in a world of unimaginable abundance and we humans are blessed with the minds to realise it. We’re just presently snookered by a self-seeking “liability” that thwarts it. May we all one day realise that abundance.
  8. www.zerohedge.com/news/2013-05-07/11-reasons-why-federal-reserve-should-be-abolished 11 Reasons Why The Federal Reserve Should Be Abolished Submitted by Michael Snyder of The Economic Collapse blog, If the American people truly understood how the Federal Reserve system works and what it has done to us, they would be screaming for it to be abolished immediately. It is a system that was designed by international bankers for the benefit of international bankers, and it is systematically impoverishing the American people. The Federal Reserve system is the primary reason why our currency has declined in value by well over 95 percent and our national debt has gotten more than 5000 times larger over the past 100 years. The Fed creates our "booms" and our "busts", and they have done an absolutely miserable job of managing our economy. But why do we need a bunch of unelected private bankers to manage our economy and print our money for us in the first place? Wouldn't our economy function much more efficiently if we allowed the free market to set interest rates? And according to Article I, Section 8 of the U.S. Constitution, the U.S. Congress is the one that is supposed to have the authority to "coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures". So why is the Federal Reserve doing it? Sadly, this is the way it works all over the globe today. In fact, all 187 nations that belong to the IMF have a central bank. But the truth is that there are much better alternatives. We just need to get people educated. The following are 11 reasons why the Federal Reserve should be abolished... #1 The Greatest Period Of Economic Growth In The History Of The United States Happened When There Was No Central Bank Did you know that the greatest period of economic growth in U.S. history was between the Civil War and 1913? And guess what? That was a period when there was no central bank in the United States at all. The following is from Wikipedia... The Gilded Age saw the greatest period of economic growth in American history. After the short-lived panic of 1873, the economy recovered with the advent of hard money policies and industrialization. From 1869 to 1879, the US economy grew at a rate of 6.8% for real GDP and 4.5% for real GDP per capita, despite the panic of 1873. The economy repeated this period of growth in the 1880s, in which the wealth of the nation grew at an annual rate of 3.8%, while the GDP was also doubled. So if our greatest period of economic prosperity was during a time when there was no Federal Reserve, then why shouldn't we try such a system again? #2 The Federal Reserve Is Systematically Destroying The Value Of The U.S. Dollar The United States never had a persistent, ongoing problem with inflation until the Federal Reserve was created in 1913. If you do not believe this, just check out the inflation chart in this article. The Federal Reserve systematically penalizes those that try to save their money. Inflation is a tax, and the value of each one of our dollars goes down a little bit more every single day. But over time, it really adds up. In fact, the value of the U.S. dollar has fallen by 83 percent since 1970. Anyone that goes to the grocery store on a regular basis knows how painful inflation can be. The following is a list that shows how prices for many of the things that we buy on a regular basis absolutely skyrocketed between 2002 and 2012... Eggs: 73% Coffee: 90% Peanut Butter: 40% Milk: 26% A Loaf Of White Bread: 39% Spaghetti And Macaroni: 44% Orange Juice: 46% Red Delicious Apples: 43% Beer: 25% Wine: 60% Electricity: 42% Margarine: 143% Tomatoes: 22% Turkey: 56% Ground Beef: 61% Chocolate Chip Cookies: 39% Gasoline: 158% Even the price of water has absolutely soared in recent years. According to USA Today, water bills have actually tripled over the past 12 years in some areas of the country. So how can the Federal Reserve get away with claiming that we are in a "low inflation" environment? Well, what Ben Bernanke never tells you is that the way that the government calculates inflation has changed more than 20 times since 1978. The truth is that the real rate of inflation is somewhere between five and ten percent right now, but you will never hear about this on the mainstream news. #3 The Federal Reserve Is A Perpetual Debt Mach The Federal Reserve system was designed to be a trap. The intent of the bankers was to trap the U.S. government in an endless debt spiral from which it could never possibly escape. But most Americans don't understand this. In fact, most Americans don't even understand where money comes from. If you don't believe this, just go out on the street and ask regular people where money comes from. The responses will be something like this... "Duh - I don't know. I've got to get home to watch American Idol." This is why it is so important to get people educated. I think that most Americans would be horrified to learn that the creation of more money in our system also involves the creation of more debt. The following is a summary of money creation that comes from one of my previous articles... When the U.S. government decides that it wants to spend another billion dollars that it does not have, it does not print up a billion dollars. Rather, the U.S. government creates a bunch of U.S. Treasury bonds (debt) and takes them over to the Federal Reserve. The Federal Reserve creates a billion dollars out of thin air and exchanges them for the U.S. Treasury bonds. So what does the Federal Reserve do with those Treasury bonds? I went on to explain what happens... The U.S. Treasury bonds that the Federal Reserve receives in exchange for the money it has created out of nothing are auctioned off through the Federal Reserve system. But wait. There is a problem. Because the U.S. government must pay interest on the Treasury bonds, the amount of debt that has been created by this transaction is greater than the amount of money that has been created. So where will the U.S. government get the money to pay that debt? Well, the theory is that we can get money to circulate through the economy really, really fast and tax it at a high enough rate that the government will be able to collect enough taxes to pay the debt. But that never actually happens, does it? And the creators of the Federal Reserve understood this as well. They understood that the U.S. government would not have enough money to both run the government and service the national debt. They knew that the U.S. government would have to keep borrowing even more money in an attempt to keep up with the game. Men like Thomas Edison and Henry Ford could not understand why we would adopt such a foolish system. For example, Thomas Edison was once quoted in the New York Times as saying the following... That is to say, under the old way any time we wish to add to the national wealth we are compelled to add to the national debt. Now, that is what Henry Ford wants to prevent. He thinks it is stupid, and so do I, that for the loan of $30,000,000 of their own money the people of the United States should be compelled to pay $66,000,000 — that is what it amounts to, with interest. People who will not turn a shovelful of dirt nor contribute a pound of material will collect more money from the United States than will the people who supply the material and do the work. That is the terrible thing about interest. In all our great bond issues the interest is always greater than the principal. All of the great public works cost more than twice the actual cost, on that account. Under the present system of doing business we simply add 120 to 150 per cent, to the stated cost. But here is the point: If our nation can issue a dollar bond, it can issue a dollar bill. The element that makes the bond good makes the bill good. Unfortunately, today most Americans don't even understand how the system works. They just assume that we have the best system in the entire world. Sadly, the reality is that the system is working just as the international bankers that designed it had hoped. The United States has the largest national debt in the history of the world, and we are stealing more than 100 million dollars from our children and our grandchildren every single hour of every single day in a desperate attempt to keep the debt spiral going. #4 The Federal Reserve Is A Centrally-Planned Financial System That Is The Antithesis Of What A Free Market System Should Be Why do we need someone to centrally-plan our financial system? Isn't that the kind of thing they do in communist China? Why do we need someone to tell us what interest rates are going to be? Why do we need someone to determine what "the target rate of inflation" should be? If we actually had a free market system, the free market would be the one "managing" our economy. But instead, we have become so accustomed to central planning that any alternatives seem to be absolutely unthinkable. For example, CNBC cannot possibly imagine a world where the Fed (or some similar institution) was not running things... But suppose the law were taken off the books? The Fed's job—in simple terms—is to manage the nation's money supply and achieve the sometimes-conflicting tasks of full employment, stable prices while fighting inflation or deflation. How would the U.S. economy then function? Something has to take its place, right? Global markets would also need some sort of economic direction from the U.S. The Fed manages the dollar — and as the world's leading currency, a void left by a Fed-less America could throw those markets into chaos with uncertainty about who's managing U.S. interest rates and the American economy. I've got an idea - let's let the free market "manage" U.S. interest rates and the American economy. I know, it's a crazy idea, but I have a sneaking suspicion that it just might work beautifully. #5 The Federal Reserve Creates Bubbles And Busts Do you remember the Dotcom bubble? Or what about the housing bubble? By dramatically distorting interest rates and financial behavior, the Federal Reserve creates economic bubbles and the corresponding economic busts. And guess what? Now it is happening again. When will the American people decide that they have had enough? If you can believe it, there have been 10 different economic recessions since 1950. And of course the Federal Reserve even admits that it helped create the Great Depression of the 1930s. Perhaps it is time to try something different. #6 The Federal Reserve Is Privately Owned It has been said that the Federal Reserve is about as "federal" as Federal Express is. Most Americans still believe that the Federal Reserve is a "federal agency", but that is simply not true. The following comes from factcheck.org... The stockholders in the 12 regional Federal Reserve Banks are the privately owned banks that fall under the Federal Reserve System. These include all national banks (chartered by the federal government) and those state-chartered banks that wish to join and meet certain requirements. About 38 percent of the nation’s more than 8,000 banks are members of the system, and thus own the Fed banks. And even the Federal Reserve itself has argued that it is "not an agency" of the federal government in court. So why is there still so much confusion about this? We should not be allowing a private entity that is owned and dominated by the banks to make decisions that dramatically affect the daily lives of all the rest of us. #7 The Federal Reserve Greatly Favors The "Too Big To Fail" Banks Since the Federal Reserve is owned by the banks, should we be surprised that it serves the interests of the banks? In particular, the Fed has been extremely good to the "too big to fail" banks. Over the past several decades, those banks have grown tremendously in both size and power. Back in 1970, the five largest U.S. banks held 17 percent of all U.S. banking industry assets. Today, the five largest U.S. banks hold 52 percent of all U.S. banking industry assets. #8 The Federal Reserve Gives Secret Bailouts To Their Friends The Federal Reserve is the only institution in America that can print money out of thin air and loan it to their friends any time they want to. For example, did you know that the Federal Reserve made 16 trillion dollars in secret loans to their friends during the last financial crisis? The following list is taken directly from page 131 of a GAO audit report, and it shows which banks received secret loans from the Fed... Citigroup - $2.513 trillion Morgan Stanley - $2.041 trillion Merrill Lynch - $1.949 trillion Bank of America - $1.344 trillion Barclays PLC - $868 billion Bear Sterns - $853 billion Goldman Sachs - $814 billion Royal Bank of Scotland - $541 billion JP Morgan Chase - $391 billion Deutsche Bank - $354 billion UBS - $287 billion Credit Suisse - $262 billion Lehman Brothers - $183 billion Bank of Scotland - $181 billion BNP Paribas - $175 billion Wells Fargo - $159 billion Dexia - $159 billion Wachovia - $142 billion Dresdner Bank - $135 billion Societe Generale - $124 billion "All Other Borrowers" - $2.639 trillion If you will notice, a number of the banks listed above are foreign banks. Why is the Fed allowed to print money out of thin air and lend it to foreign banks? #9 The Federal Reserve Is Paying Banks Not To Lend Money Did you know that the Federal Reserve is actually paying U.S. banks not to lend money? That doesn't make sense. Our economy is based on credit, and small businesses desperately need loans in order to operate. But the Fed has decided to pay banks not to risk their money. Section 128 of the Emergency Economic Stabilization Act of 2008 allows the Federal Reserve to pay interest on "excess reserves" that U.S. banks park at the Fed. So the big banks can just send their cash to the Fed and watch the money come rolling in risk-free. As the chart below demonstrates, the banks have taken great advantage of this tremendous deal... #10 The Federal Reserve Has An Astounding Track Record Of Failure Over the past ten years, the Federal Reserve has been an abysmal failure when it comes to running the economy. But despite a track record of failure that would make the Chicago Cubs look like a roaring success, Barack Obama actually decided to nominate Ben Bernanke for a second term as the Chairman of the Federal Reserve. What a mistake. Just check out some of the things that Bernanke said prior to the last financial crisis. The following is an extended excerpt from an article that I published previously... ***** In 2005, Bernanke said that we shouldn't worry because housing prices had never declined on a nationwide basis before and he said that he believed that the U.S. would continue to experience close to "full employment".... "We’ve never had a decline in house prices on a nationwide basis. So, what I think what is more likely is that house prices will slow, maybe stabilize, might slow consumption spending a bit. I don’t think it’s gonna drive the economy too far from its full employment path, though." In 2005, Bernanke also said that he believed that derivatives were perfectly safe and posed no danger to financial markets.... "With respect to their safety, derivatives, for the most part, are traded among very sophisticated financial institutions and individuals who have considerable incentive to understand them and to use them properly." In 2006, Bernanke said that housing prices would probably keep rising.... "Housing markets are cooling a bit. Our expectation is that the decline in activity or the slowing in activity will be moderate, that house prices will probably continue to rise." In 2007, Bernanke insisted that there was not a problem with subprime mortgages.... "At this juncture, however, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained. In particular, mortgages to prime borrowers and fixed-rate mortgages to all classes of borrowers continue to perform well, with low rates of delinquency." In 2008, Bernanke said that a recession was not coming.... "The Federal Reserve is not currently forecasting a recession." A few months before Fannie Mae and Freddie Mac collapsed, Bernanke insisted that they were totally secure.... "The GSEs are adequately capitalized. They are in no danger of failing." ***** There are many, many more examples that could be listed, but hopefully you get the point. And now it is happening again. Bernanke is telling the American people that everything is going to be just fine and that no major problems are ahead. Do you believe him this time? #11 The Federal Reserve Is Unaccountable To The American People What is the most important political issue to most Americans? Survey after survey has shown that the American people care about the economy more than anything else. So why do we allow an unelected, unaccountable entity that is privately-owned to make our economic decisions for us? The Federal Reserve has become so powerful that it has been called "the fourth branch of government". Every four years, presidential candidates argue about who will be best at managing the economy, but the truth is that it is the Fed that manages our economy. We are told that the "independence" of the Federal Reserve is absolutely critical, but don't the American people deserve to have a say in the running of the economy? Our system is broken. It is a system that will continue to create more bubbles and more debt until the entire thing finally collapses for good. Thomas Jefferson once stated that if he could add just one more amendment to the U.S. Constitution it would be a ban on all government borrowing.... I wish it were possible to obtain a single amendment to our Constitution. I would be willing to depend on that alone for the reduction of the administration of our government to the genuine principles of its Constitution; I mean an additional article, taking from the federal government the power of borrowing. But instead of banning government borrowing, we have allowed ourselves to become enslaved to a system where government borrowing actually creates our money. We do not need to have a central bank. There are much better alternatives. We just need to get people educated.
  9. http://www.zerohedge.com/news/2013-04-29/qbamco-precious-metals-and-coming-great-resetQBAMCO On Precious Metals And The Coming 'Great Reset' Authored by Lee Quaintance and Paul Brodsky of QBAMCO, Volume Triage Last Sunday we closed the macroeconomic portion of “Imperial Constraint” with the following: “So we ask again, are there really unpredictable market shocks or are investors paid not to care? To us, all signs point towards the next currency reset. We think monetary authorities are compulsively destroying the current global monetary system; they simply have no choice if they are to keep it afloat in the short term. We further think they will have no choice but to replace it with a gold exchange standard they oversee (i.e., a gold-standard-light, “Bretton Woods” type reset). Perhaps this explains the current redistribution away from unreserved paper gold to physical gold? We would not be surprised if, in 2014, someone like Larry Summers or Tim Geithner takes control of the Fed and oversees such an operation.” Two days later the Fed announced Ben Bernanke would not attend the Jackson Hole summit, for the first time in twenty five years. A couple days after that the New York Times (on the first page, no less) ran an in depth profile of Janet Yellen, the heir apparent to run the Fed. Beneath her profile there were three other candidates “being discussed:” Roger Ferguson, Tim Geithner and Larry Summers. We normally do not spend time handicapping presidential appointments. In this case; however, we think the choice for next Fed Chair may have profound economic implications, and that it would not require expertise in econometric modeling, credit policy management, and maintaining the public perception of economic stability. As we wrote last week, we think the next Fed Chairman will oversee a conversion of the global monetary regime. A thick skin, diplomatic skills, and strong relationships with global banks and monetary policy makers will be the skill set most needed. We think Tim Geithner (with Bill Dudley as an alternative) will take over the Fed when Ben Bernanke steps down next January, and it seems by all indications that the table is already being set. We attended a small dinner party a few years ago at which an iconic financier (and major Obama supporter) let it slip that he questioned one of Obama’s most senior aides just prior to the 2008 Democratic convention about taking over the economy when it was imploding. The aide waived it off and exclaimed; “oh don’t worry, Bobby has it covered!” Most of the table was relieved that Bob Rubin still had their backs and that banks would keep priority. Such was, and remains, US economic policy. Neither growth nor austerity nor gloom of night will stay these currencies from their appointed devaluations. Bank balance sheets must be preserved; ergo sufficient inflation must be manufactured. We think the dull but persistent economic malaise amid increasingly aggressive monetary intervention policies will soon engender fear among the not-so-great washed – net savers. This happier band of brothers cannot maintain an edge when the real economy contracts and interest rates are already at zero. Base money is already being manufactured in the form of bank reserves and the total money stock is not growing because there is very little natural economic incentive among the rest of us to consume (much) or take risk. Something and someone new is needed. Ben Bernanke seems like a brilliant political economist and a decent guy, the top of his field in terms of comportment, academic credentials and specific competence in understanding historical monetary policies during a counter-cyclical (i.e., de-leveraging) period. Perhaps Janet Yellen is too? But such qualities are not what we think will be preferred by the powers that be now that global resource producers are openly questioning US, British, Euro and Japanese monetary policies and reserve holders are realizing their stash is being methodically turned to trash. Meanwhile, aggregate leverage is growing and real economies are withering. Does anyone believe that Ben or any other monetary authority has been proactive, or that any fiscal authority has enacted legislation that promises to help achieve “escape velocity?” Can’t we all agree that the rationale for economic policy may be boiled down to the counterfactual: “yes, but imagine if they withdrew liquidity or enforced true austerity – it would be worse!”? Is there a serious analyst who still believes economies can grow their ways out of being over-levered without leveraging further? Whether or not contraction has to come-a-knocking prior to a monetary reset is anyone’s guess, but it would be difficult to imagine monetary system change without a generally-recognized economic tragedy that precedes it. This implies disappointing GDP prints, declining corporate revenues and maybe even a swoon in stock and real estate markets. We have already begun to experience the first two. Now that we read global central banks have begun buying equities, perhaps equity prices may be controlled too (as are the level of interest rates via large scale asset purchases like QE and relative currency exchange rates via timed interventions)? Negative output growth and asset price busts would certainly open the door for our hero to enter. The role of a central banker in the late stages of de-leveraging seems to be volume triage, as they say in intelligence circles – reacting to an increasing barrage of events as they occur, wherever they may occur. In economics as in policing, the bad guys always get to take the first shot. From the central banker’s perspective, the bad guy in the current regime is the real economy. If it continues to shrink, as we think it must, then TPTB must change the way they do business. We think the box we drew in Imperial Constraint is the key metric in understanding the forces behind economic growth and market pricing. An inflationary leveraging perpetuates imbalances while deflationary deleveraging threatens the survival of the banking system at large. Hopes for organic credit growth, which would promote the former, are now fleeting. This, in turn, engenders the threat of the latter. Continued ZIRP, increasing asset purchases and a steep decline in the universal efficacy of it all suggests the time to press the reset button is quickly approaching. May to December 2013 may turn out to be the darkness before the dawn; a time we look back upon and choose to forget. All in all we think the most efficient Fed Chair in advance of a reset would be Paul Krugman. He seems willing to destroy the current global monetary system with swift dispatch, without consultation, declaration (or second drafts). Alas, capitalist economies in liberal democracies require level-headed responses to market forces. There is no place for rogue pro-actionists. Institutions like the Fed are meant to appear as first responders working on behalf of the societies their banks serve. And so we think that circa 2070, our children will write and read (140-word) biographies about how Timothy Geithner saved the world from economic darkness. Geithner will save the day and bring glory to the Obama presidency by reducing the burden of debt repayment while maintaining the nominal integrity of debt covenants and bank balance sheets. The only way to accomplish this would be by destroying the currencies in which those debts are owed. Net debtors will rejoice and net savers (all 1% of them?) will suffer, finally realizing their unreserved currencies and levered financial assets were never sustainable wealth in the first place. Our little narrative could certainly turn out to be wrong, but we discuss it here (against all political wisdom) because we cannot find another one that better fits current macro and market pricing trends. If we are wrong about Mr. Geithner, we think it would imply that TPTB (raise your hand if you think the Fed’s shareholders do not choose/approve the Fed Chairman) believe a clear-headed and decent academic political economist can figure out what all past ones could not: how to support asset prices beyond ZIRP and central bank asset purchases. (Ben is gone, long reign Janet!) That is not our projection. When and if it becomes clear that Tim Geithner will ascend the steps at Eccles, we think it would already be too late to buy physical gold and resources. The only play remaining for financial asset investors looking to get full value after the reset would be shares in precious metal miners and natural resource producers holding reserves in nature’s vault. Properly held bullion and shares in precious metal miners would act as the most efficient store of purchasing power over the course of the devaluation and conversion. (Worst to first? Get ‘em while they’re cold!) Futures, ETFs, unallocated bullion holdings and other fractionally reserved claims on physical reserves easily replaced with cash would not participate. If our scenario comes to pass, then bank, government and consumer balance sheets would be quite healthy following the reset and would be ready to expand. We would think consumable commodities and shares in their producers would lead equity markets higher and that interest rates would remain low, as further inflation would be mitigated by the discipline of a full or partial peg to precious metals. We think all should question whether we are 100% wrong. If not, then prudence dictates some allocation to properly held precious metals. (Presently, it is less than 1% of all global pensions.)
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