Thursday, October 14, 2010


It seems as though America has walked into a trap from which there is no escape. As the articles below suggest, it may be sprung soon.

Here's the situation. America has an unsustainable debt load and an economy in either recession or depression, depending on who you believe. The politicians and bankers that control our economy believe that
Keynesian economic policy is the best way to manage our slowing economy and turn it around. They believe that government injection of capital into the economy will create jobs which will in turn generate paychecks that will be spent on other products and services, creating more jobs which will eventually cause the economy to rebound. Sort of trickle down economics in reverse. Actually it seems closer to Marxism and government control of the economy to me but that's neither here nor there.

The problem that we face with the Keynesian model is that to spend money into the economy the government has to have money to spend. Since we no longer are in charge of our money but have instead handed that power off to the federal reserve we now have to borrow money to inject it into the system. We are so deeply in debt now that every dollar we borrow to create economic growth actually reduces our GDP.

Over the last couple years the Fed has tried to stimulate the economy by keeping interest rates low, really low. This has caused the interest rates paid on U.S. Treasury Bonds to stay low, too. Bonds are essentially loans made to our government with the promise of a return to the investor at maturity. U.S. bonds have always been considered the safe investment in times of trouble because of our economic stability. Even when the rates are low people and countries buy them to protect their money. Of course, countries that buy them may have other reasons for their purchases. China for instance. We now owe so much money to China through bond sales that they can in many ways call the shots.

In other words, to make the Keynesian model work we have to borrow money from other countries, mainly China. The problem is that China and a bunch of other countries have started to cut back on bond purchases, thus making our ability to generate the funds needed to prop up the economy unavailable.

So what can the government do to avoid economic collapse?

The normal way out would be through inflation. The Fed could begin to raise interest rates which would do two things. It would make our money less valuable, driving down the cost of our debt and it would raise the interest rate paid on bonds which would attract more investors thus injecting, through debt, more capital into the economy. The problem with this approach is the enormous debt the country is already carrying. If the interest rate climbs we won't be able to service our debt and will be forced to default. America will collapse.

The other choice is for the
Fed to begin buying our bonds, in other words, monetizing the debt. This means turning on the presses and printing money to finance our own debt creating a death spiral from which there is no return. The dollar will become worthless and the cost of the most basic commodities will go through the roof. This seems to be the path we have chosen.

Because we've placed ourselves in this position we've opened the door to manipulation of our currency by others. If our enemies want to destroy us they only need to make sure that no one will buy our debt through bond purchases. They need to create something else that is more attractive as a safe harbor in these times of economic turmoil. What better place than gold.

If the price of gold is on the rise and is perceived as only getting ready to go higher investors will put their money in gold, not Treasuries. And if this happens America will either have to raise interest rates to bring them back, begin to monetize the debt or default.


Maybe there is a way out of this mess that people far smarter than me can clearly see. And maybe that way would preserve our freedoms in America and not make us slaves. Maybe. I doubt it, though.

Something bad is coming our way, whether today, tomorrow or a month from now. The timing is open to conjecture but not the certainty that massive calamity lies just over the horizon. The perfect storm has been building for a long time now and it seems poised to strike.


"At the risk of being dismissed as outlandish conspiracy theorists, we must point out to our readers that things may not be as they seem.

We know, for a fact, that organizations like the Bilderberg Group, Trilateral Commission and Council on Foreign Relations work in concert to manipulate everything from monetary policy and financial markets to politics and social perceptions. This has been made crystal clear over the last decade through projects such as the global warming carbon tax, Agenda 21, the passage of liberty restricting laws domestically and internationally, and most recently, the coordinated multi-trillion dollar bailouts of interrelated financial institutions.

One thing that is not known by the majority of the public, and is rarely ever discussed, is that the aforementioned international cooperatives don’t always include representation from around the globe. In general, these organizations are focused more on what they can do in “the west,” in regions such as Europe and the United States, rather than intricately involving themselves with all global governments. Not everyone shares the same goals as the financial and political tycoons of the United States, England and Europe.

Make no mistake - there are other interests that are operating against these organizations’ intended goals. We rarely, if ever, hear about the Chinese, for example. But they most certainly have their own Illuminati, for lack of a better word, which most likely do not share the same interests as those of the West. The Chinese have a long history of dynasties, and though we can’t see them overtly, they do exist and pull strings within China and the greater Asian region to promote their own agendas. The Russians, led by Mr. Vladimir Putin, do not share the same goals of “New World Order” global domination as America and Europe. In fact, it was the Russians that came under attack by Western financial institutions who at one time attacked the Ruble much like the British Pound. Russian leaders have not forgotten; they’ve also not forgotten the attack on their way of life, which eventually led to the complete collapse of the Soviet Union.

Regardless of what is reported about international cooperation, these countries and their affiliates would love to see a total and complete collapse of Western states.

The ultimate goal, of course, is for the U.S. dollar and the “American oligarchy” to be destroyed and they are likely actively pursuing policies and strategies to do just that. Unfortunately, any such collapse of this so-called oligarchy would lead to much pain and suffering for average people.

Everyone - at least those who follow even basic monetary, economic and financial news - knows that the U.S. dollar is in trouble. How long it can be held up is anyone’s guess, but there is certainly a movement to destabilize the dollar completely.

Up until this point, America has been the dominant force in the world of economics, but if players like the Chinese, Russians and others are strategically working together to crush the U.S. dollar, then we could have serious trouble in the near future. These “other interests” have, literally, trillions upon trillions of dollar equivalents in buying power and could execute an attack on the dollar and U.S. financial institutions at anytime - perhaps it’s happening already.

Remember, they are the creditors, not the debtors. And while we may have the ability to default on our debt, or devalue our currency to pay the debt in inflated dollars, they are the ones who can cut off our credit flow. When an individual person defaults on a loan, a bank may foreclose on your home, or come after other assets. If the same were to happen with the United States, it may lead to something much worse."

"...If this keeps up [the devaluation of the dollar] by the time Bernanke gets to his meeting the dollar will be lucky if it's not in the 60s, below all historical support levels. Somewhere in here it will come under severe speculative attack.

Bernanke thinks he can control this if it happens. He's wrong.

I wrote about this in 2007 and said that if it happened - the last time we were down there - it would be a catastrophe. Such an event would cause commodities to shoot the moon on a literal basis and result in massive capital flight of foreign funds out of the United States.

This is exactly the sort of trap that can lead a central banker to make the critical mistake of trying to "ease" even more - that is, print his way out. If he makes that error the currency is destroyed and when it implodes the government will go with it, as every citizen's liquid net worth will be rendered value-less overnight, exactly as occurred in Weimar."
Market Ticker

No comments:

Post a Comment