James Rickards of Tangent Capital gives his critique of Ben Bernanke’s performance during his tenure as Chairman of the Federal Reserve. While some in the main-stream want to give Bernanke credit for ‘saving’ the global economy during the crisis of 2008, Rickards points out that Bernanke’s Fed helped create the crisis in the first place!
The following video from peakresources.org explains how the gold price suppression schemes executed by the Gold Cartel (central banks) have succeeded in destroying the profitability of the miners, which means they will soon be closing down their projects and future gold supplies are at risk. This is a catch-22 situation that can only mean much higher gold prices as remaining supplies are diminished.
Mike Maloney reviews chart data from the St. Louis Fed and shows the great currency expansion that has ensued since Richard Nixon took the dollar off the international gold standard in 1971. The data also shows how the velocity of money has not increased, which is why we are not getting much inflation yet (as Jim Rickards has pointed out numerous times on this site already). Instead, this money expansion has only benefited the banks and the elite, who are buying up real assets with all this printed money, leaving the rest of us with pure debt.
Grant Williams, author of the newsletter, Things That Make You Go Hmmm, reviews the results of the last decade of Central Bank activity – namely: Bubbles. Bubbles are everywhere…. stocks, bonds, commodities, real estate. But Williams goes on to explain how the central bankers are stuck. There is no way out of this mess without severe pain. They (the central bankers) have found themselves in a position where they can only talk about halting the easy money policies, but cannot actually do it without completely crashing the system. He notes that Janet Yellen may indeed try to taper from $85 to $65 billion per month, but soon would have to re-engage more QE because the US economy is not strong enough on its own.
So what to do? Williams recommends holding a lot of cash right now in order to take advantage of the situation coming after the crash.
This documentary by the Renegade Economist reveals the cycles that all the empires of the world have followed and how they all eventually fail. The current disparity between the very rich and the very poor is but one indication that today’s western empire, led by the U.S. is approaching its end.
James Rickards, author of Currency Wars, gave the following presentation at The Future of Money 2.0 in Bratislava, Slovakia on September 26, 2013. A week later, Rickards gave the same presentation, though significantly abbreviated, at the Casey Research Summit in Tucson, Arizona. In the presentation, he covers:
- US Defense Department’s exercises in financial warfare.
- Historical currency devaluations by countries to gain trade advantages.
- Historical examples of re-establishing a gold standard after a currency collapse.
- The current situation of Inflationary and Deflationary forces working against each other – an unstable situation.
- Irving Fisher’s (and later Milton Friedman) theory of economics (Quantity Theory of Money … M x V = P x Q).
- QE, Operation Twist, etc. have had no affect because money velocity is not responding. 2014 may bring efforts to put money directly into the hands of the people (e.i. Tax Cuts).
- Complexity Theory may provide a better model for the Fed, as it shows that the economic system has become increasingly more interconnected across sectors. It actually predicted the 2008 collapse and, unfortunately the model is even more densely integrated today, indicating a worse crash ahead.
- The potential remedies the Fed or the IMF might enforce in response to the next collapse.
Here’s some level-headed thinking from Jim Rickards, who was proven to be correct on his call that the Fed would not taper. While the Fed would certainly like to taper, they’ve always stated that they would do so on the condition that the economic data continues to be strong. But the economic reporting has been terrible, so the Fed didn’t taper and won’t until those reports show viable strength. Jim also discusses what differences, if any, the upcoming Fed-chair change may make (none), gold’s future price expectations (higher) and his new book, The Death of Money (due out in April, 2014).
The following video from OneTruth4Life explains how America’s founding fathers created a sound money system, framed within Article I, section 8 of the Constitution. It goes on to describe, in full detail, what’s happened since then – anti-Constitutional acts by certain government leaders and bankers, which debased the currency at various moments in history. These acts seem to become more blatant as history proceeds, and have led to, or have been the primary motive for most, if not all, the military conflicts. Furthermore, it will be the primary factor that will have brought the nation to its own doom at some point in the near future.
Grant Williams is a strategy adviser for the hedge fund, Vulpes Investment Management in Singapore, as well as the blogger behind the popular Things That Make You Go Hmmm…. In the following video, Williams reviews the disconnects between the economic realities that exist in today’s world and the rosy pictures painted by governments, central banks and the main stream media.
- Williams’ problem #1: The disconnect between fundamentals and equity prices.
- Williams’ problem #2: The paradox behind China’s mysterious GDP growth during a time of reduced manufacturing, shrinking demand for raw materials and declining imports/exports
- Williams’ problem #3: How is France able to sell its sovereign bonds at such low interest rates when all indications of its own economy are performing like those of the European periphery?
- Williams’ final problem: The difference between the “Gold Price” and “The Price of Gold”
In the end, the laws of mathematics cannot be subverted by governments or central banks. Central banks’ zero percent interest rate policies are damaging:
- In the short term through the confiscation of savings and the forcing into riskier investments in the search for yield
- In the long term by suppressing market volatility, which must be reconciled at some point
Mathematics, rightly viewed, possesses not only truth, but supreme beauty – a beauty cold and austere.
– Bertrand Russell
Update: February 9, 2013
The Whitehouse.gov site has removed the petition because it failed to gain enough support in the time allotted. It lacked approximately 18,000 signatures of the 25,000 necessary. It seems not many people care about this issue.
January 11, 2013
For many years, the Gold Anti-Trust Action Committee (GATA) has been gathering official government documents that indicate the US gold reserves are insufficient and cannot cover the paper obligations assigned to them. Through leasing and swap agreements with other nations, the details of which are hidden from the public, the nation’s gold could be in jeopardy and at the very least, over-reported. Some people have even openly speculated that the Fort Knox facility contains mostly empty space.
There is now a movement to have the gold reserves audited. As the description in the petition notes, the reserves have not been audited since 1953! Prior to that, there were semi-regular audits. In the last 60 years, there has been too much turmoil to simply assume normality in this matter. A prudent and measured action is necessary.
It’s amazingly easy to create a White House account and sign the petition – all you need is a valid email address and zip code. If the petition gets at least 25,000 signatures, the White House must take action to take the issue to the next step for further study. Read and sign the petition today.
Jim Grant on CNBC today discussing:
- The ‘bad idea’ to attempt to resolve the national debt problem by minting a trillion-dollar platinum coin. Supporters say the US Treasury would be able to deposit said coin with the Federal Reserve to act as an asset, backing part of the outstanding debt.
- As Jim notes, this is not an honest approach to discussing the root problem – which is based in the monetary system, itself.
- Besides that, the idea is preposterous and just shows how crazy this system has become. Things don’t hold value because someone says they have value. A thing has value based on the public/market demand for that thing.
- Prior to 1971, government spending was constrained by both interest rates and the fact that there was some semblance of a gold-backed currency via Bretton Woods. But today, we have neither constraint – the Fed’s zero percent interest rate policy combined with the current, purely fiat monetary system has created the unstoppable spending spree that has led us to these extreme levels of debt. If there is anything left at all as a bar against further spending, it is the debt ceiling. But even that is now being threatened with a proposal to remove it entirely.
- The just announced appointment of Jacob Lew as Treasury Secretary. Jim is holding judgement in order to see if there will be any honest discussion regarding the real problems of the monetary system.
Lauren Lyster puts the tough questions to Eric Sprott regarding gold and silver and whether or not investment in such is warranted, given the lackluster performance over the past year. Sprott responds by pointing out that given the increases in quantities of the metal that have been purchased recently, it’s highly likely that central banks have been leasing their physical gold into the marketplace in order to suppress the price.
- In the last 12 years, the annual physical gold demand has increased by 2500 tonnes/year. But the supply of gold has remained flat. Where does the new metal come from to meet this new demand?
- Some rather prominent central banks have recently been subjected to questions asking about the validity of their gold claims held in foreign vaults (i.e. Germany and Austria).
The discussion continues to include:
- The Fed is buying 90% of US Treasuries. Japan and other central banks are practicing similar policies. Central banks of the world are trying to keep interest rates low for extended time frames, “which is ludicrous.”
- Sprott expects silver to outperform gold in the next decade and points out the investment ratios he’s seeing from the entities making purchases of these two precious metals.
- Lauren Lyster defines Hard Money and it’s relation to old and new central banking policies.
- A record 47.7 million Americans are now on food stamps, according to the latest report from the Supplemental Nutrition Assistance Program (SNAP).
Author of Currency Wars, Jim Rickards explains that the Fed’s easing programs have thus far failed to create their desired inflation, which, in their view, is required to boost US exports. Although Japan will be allowed to weaken their currency, all the other currencies of the world will be strengthened as the US strives to further weaken the US dollar. Of course, gold is still the currency of choice to preserve wealth.
- The economy has failed to recover despite the Fed’s actions so far because the consumer has not been willing to spend or invest. Hence money velocity has remained nil.
- The Fed is trying to induce more spending by: (1) Forcing a negative interest rate as an incentive for more borrowing, and (2) Scaring the public into buying stuff through the threat of future inflation.
- The inflation, they hope, will be the result of all the currency wars with other nations, especially China – cheapening the dollar will make imports more expensive.
“It’s a race between the Fed trying to achieve their goals and the whole system imploading because of a loss of confidence in the dollar.”
The illusion of choice continues to be exposed, although one wonders if the public is either too hypnotized or too apathetic to recognize what’s really happening. Jimmy Rogers had earlier inferred on CNBC that neither Obama nor Romney understood enough about economics to make appropriate comments on policy.
Ron Paul then notes that the established banking powers, i.e. the Fed, will be equally served by either the Republican or the Democrat… “they both know how to play the game and they represent a one-party system.” This system depends on the Fed to keep printing money for bail-outs and government spending. [Under such a system, isn’t it obvious that the real power does not reside in the White House?] Furthermore, Paul states, “I’ve been in this business for a long time and believe me, there is essentially no difference from one administration to another, no matter what the platform.”
G. Edward Griffin, author of The Creature from Jekyll Island, explains how the Federal Reserve’s main goal is to support the banks – that’s it. The Fed creates money from nothing and gives it to the banks to keep their operations going. All their actions benefit the banks, and screw the rest of us.
It was fun getting screwed for a while – while we didn’t even know what was happening. Up until now, the US and most of the western world has benefited greatly from this system. We’ve been living the dream. It was the best kind of dream – a wet dream. It’s time to wake up and see the mess we’ve made.
Update: January 11, 2013
Congress lived up to their reputation and kicked the can once more. Essentially, tax rates were raised (such as on those making $450,000 or more and estate taxes went up from 45% to 40%) but spending cuts were deferred for a couple months, entailing yet another round of political saga to come. So, as the following chart from Casey Research shows, the deficit situation has not gotten any better. In fact, according to the CBO, it’s worse – earlier estimates had not even considered the interest payments, so the annual deficit will be $60 billion more than originally anticipated.
September 22, 2012
On January 1, 2013 the US will face the real possibility of falling off a fiscal cliff and may take down much of the global economy with it. Specifically, the cliff is represented by three factors, which policy makers must overcome in order to avoid another severe recession – or worse, depression.
- The Bush Tax Cuts are set to expire at the end of 2012. At a time such as this, when the economy is stagnant, any tax increases will only serve to further sour any potential business activity. On the other hand, the government annual deficit spending is already at $1.2 trillion and if revenues aren’t increased, budget deficits will only get worse.
- Mandatory budget cuts are set to take affect. Last year, when congress was unable to agree on a long-term plan to tackle the never-ending growth of the national debt – now over $16 trillion – the temporary measures they initiated allowed for a small ceiling increase, while putting in place a special super-committee to study the situation and recommend policy. The super-committee came and went without any agreement, which automatically instituted a $1.2 trillion cut in government spending – half from domestic spending and half from defense spending. These cuts are set to go into affect starting in January, 2013 at about $100 billion per month and last for nine years.
- The debt ceiling is again being breached. Last year, when the ceiling debate was the centerpiece of discussion, lawmakers were unable to reach agreement on a debt reduction policy. They were only able to conclude a temporary measure, allowing for a small increase in the ceiling while the super-committee furthered the discussion. The current debt ceiling limit of $16.394 trillion is coming up fast.
It should be obvious that the real problem is that there is simply too much debt! But then again, what should one expect when the whole monetary system has become based on debt? In today’s world, money only comes into existence when someone is willing to borrow it from the banking system. This is why the Fed and all the other central banks try so hard to keep interest rates low – as more money is borrowed, the banks are able to use fractional reserve banking methods to increase money availability even more. The economy keeps chugging along as long as people and companies are willing to borrow more.
But this debt-based system obviously has its limits, as the current economy has been showing. People and companies are unwilling to burden themselves with more debt. The Fed’s policies have been trying to overcome that by keeping interest rates low so that the government can keep spending borrowed money in order to sustain the perception that the economy is okay.
It is impossible for the governments to ever repay these debts, which is why the central banks will continue to employ “QE” measures, just as they did in early September, when the ECB in Europe, followed by the US Fed, and finally the Bank of Japan all embarked on major money-printing policies to keep the debt-game going a bit longer.
In relative terms, it wasn’t that long ago when money was based on real, tangible assets, such as gold and silver – assets that couldn’t simply be conjured up out of thin air. These are the real assets that people should be seeking now, especially since saving cash in a savings account yields next to nothing in interest. Plus, as the governments of the world continue to print money to cover unpayable debts, the value of all fiat paper money will only continue to decline.
However, investors in precious metals will want to get their priorities straight. Many gold bugs, for example wish to keep their precious metals close – where they can actually touch them. Possession is nine-tenths of the law, after all. Having physical possession of one’s precious metals has benefits, especially in the case of a complete financial collapse, which some say is inevitable, given the shape of the current over saturated debt system. Having real money to barter with under those circumstances may be priceless.
On the other hand, not everyone is comfortable holding physical precious metals in substantial quantities. Private storage can be a risk, which should be weighed carefully. For those concerned about the safety of private storage, or even those seeking diversification can look into alternative ways to hold precious metals. One convenient method is to use Exchange Traded Funds (ETF) traded on stock exchanges. Whether open-ended funds like GLD and SLV or closed-ended funds like PHYS and PSLV, the investor should be aware that there are still risks to overcome, such as the stock market itself.
Yet there are other ways people can invest in precious metals. Companies such as BullionVault allow their clients to buy and sell precious metals online, via an internet browser. Once purchased, the metal is physically stored in various geographically separated regions of the world. This immediately accomplishes two things – diversifies assets across national boundaries, which reduces some sovereign risks and also relieves the investor of personal storage responsibilities.
Perhaps some combination of all of the above methods, or others not covered can be sought after for the potential precious metals investor. When the debt-system finally collapses, people will wake up and remember what real money really is and wonder why they never thought about it before. It’s funny, isn’t it? Something so vital to every day activities, yet so little thought is given to what money really is. It’s good that some people are waking up early.
There’s been much discussion on the Fed’s newest monetary easing policy. The markets received their much anticipated stimulus and are reacting positively (for now). But as previous posts have indicated, the Fed’s stated objectives and motives are questionable at best. For a few steps further down the rabbit hole, here’s a must-see video from CrisisHQ.
“If you want to understand what’s happening in the Mideast, particularly in Libya, Syria and Iran, you must first understand the main driving force behind U.S. foreign policy. Contrary to mainstream media propaganda, it is not our desire to spread democracy or to prevent tyrannical despots from murdering their own citizens. The real agenda is to protect the Petrodollar system, because it is the only thing that is currently preventing the total collapse of our fiat currency.”
For more information on the Petro-Dollar, please see our research article: Root Cause: The Petro Dollar.