“You now are experiencing the legacy of Keynesian corporatist fascism and the destructive forces unleashed by Sir Alan Greenspan”
International Forecaster January 2011 (#3) – Gold, Silver, Economy + More
By: Bob Chapman
Sunday, 9 January 2011
If you look back into the mid-1960s you will see the beginnings of today’s financial and economic problems. Inflation was beginning to raise its ugly head as clad coins came into being. We were collecting all the pre-1964 90% dimes, quarters and halves we could find. As we moved into 1968 few were to be found in circulation. War in Vietnam was draining the country and the buffoon Lyndon Johnson, another socialist, was leading America into the Great Society. What he was really doing was taking the US into socialism and debt. It got so bad that countries were demanding gold for dollars, particularly, aggressive was President Charles DeGaulle of France. Then the beginning of the end came. On August 15, 1971 the dollar was moved off the gold standard and the dollar became just another fiat currency. Here we are almost 40 years later and the dollar has lost 95% of its purchasing power and two breadwinners are needed in every family, as apposed to one in 1971. That is when social engineering began, as we know it today. We’ve seen many losers walk across the stage over the years – all with either their hands in the till or exuding incompetence. Most of the bright still excelled but 55% of Americans slipped into stupidity. What is sadder is they think they know it all, but they do not. From 1976 to 1981 gold and silver warned us of what was coming. We have had cycles of inflation, buildup of debt and a general degeneration of society.
We had a purging of the system in the early 1980s but it certainly did not last long. Real estate collapsed starting in 1988 and the affects carried over into the early 1990s. During that period those in control had a great opportunity to again purge the system, but they refused to use that option and went right back to doing what they had done in the past. Gold and silver fell out of favor and we were subjected to the dotcom boom, which ended in tears for so many. Inflation was about but worse a great deal of wealth had been lost. We were fortunate enough to call the top of the market in the first week of April 2000, just two weeks after the actual top. Only 2% of economists, analysts and newsletter writers called the top. Being mostly outnumbered by the losers has its benefits. Presently 95% believe gold and silver are headed lower. Considering their track records we’ll stay long as we have been since the second quarter of 2000 when gold was $262.00 and silver was $3.50.
Many professionals are looking for answers as to why the US economy and finances are in the state they are in. We have been pointing out for ten years that the Fed is the problem, but those who realize this are afraid to speak the truth. They won’t have their jobs long if they do speak out. Low or zero interest rates may have helped government and big business, but it has not helped small business and the unemployed. Are we to believe that the Fed had nothing to do with the real estate collapse? Of course they did – they planned and executed it. The zero interest rate policy still in place has created more grievous damage than any other aspect of economic causes.
Framing failed policy in the context of the system and calling it mistakes and incompetence doesn’t cut it. The problems we have seen since 2000 were planned that way. Investors and professionals do not want to hear that. They do not want to look behind the facts because it’s not popular and they may have to tell the truth and that is very inconvenient for an employee’s financial health. Why do you suppose the Fed didn’t want anyone to know to whom the $13.8 trillion was lent to and why and what collateral was presented? A great part of the loan packages went to banks and others, which had been buyers of MBS from US syndicators. We would say the next logical step in this charade would be to clean up the rest of the toxic waste in the US and Europe and then come up with the $8 trillion to bail out Fannie, Freddie, Ginnie and FHA. We believe that either legislation or fiat order has to be set in motion at 5-1/4% to bring home the $1.9 trillion America’s transnational corporations have stashed in the Cayman Islands and in other tax havens. You notice you cannot do that, but these anointed corporations can. They can use the funds to again prop up the stock market, perhaps make the market go higher, make their company’s stocks go higher, so they can again cash out their options making billions and to help fund the Treasury, Agency and perhaps buy MBS-CDOs at $0.15 on the dollar. Don’t forget elitists control all these corporations or those who manage these firms are under elitist thumbs. We see this move as inevitable with the Fed already offside some $1.2 trillion. Eventual assistance to the housing agencies would fit perfectly with our prediction seven years ago that these agencies were broke, they would be nationalized, which they were, and funding by the Fed would lead to eventual 55% control of the US housing market. Over the next two generations almost all real estate half will belong to the Fed and government. This way they will be able to tell people where they will live and work and a myriad of other controls will be in place.
Transnational conglomerates contend they need the ability to avoid taxation of the US, which runs from 35% to 40%. In Europe the range is 24% to 30%. Individual US taxes, after state and local taxes, run about 35%, but in Europe if you add in VAT the average is 70%. Therein lies the difference. The only way to deal with the problem is to set up tariffs to protect US jobs and industry from predators such as transnational conglomerates. The tariffs would fund government and debt and there would no longer be any reason to move jobs and industries offshore. That means the majority of jobs and industry would return to the US. Under current law there is no reason for US corporations to invest in the US because it is uncompetitive. We wrote about this in 1967, but no one was listening.
If all this wasn’t damaging enough, most American municipalities are facing bankruptcy. Police, fire and social workers are already being eliminated, some with 15 to 25 years on the job. This dislocation is going to be devastating in communities. This is the result of pure incompetence and we predicted this result three years ago and recommended the sale of municipals. We must say that salaries and benefits at these government levels got totally out of hand. After 30 years on the job some retirements are $150,000 to $200,000 a year, which is totally absurd. This new wave of ongoing layoffs will add to core unemployment. Those lucky enough to find jobs will do so at a rate of 1/3 to 1/2 of previous salaries. This is why America desperately needs tariffs on goods and services. Unfortunately tariffs are a long shot as the elitists behind the scenes have purchased 95% of the members of our House and Senate and no such legislation could be passed. Then there still is the revolving door between Wall Street and the Fed and the Treasury. The latest in your face appointment to fill the shoes of Rahm Emanuel, as White House Chief of Staff, is Mr. Daley from JPMorgan Chase’s Midwest branch. Doesn’t the public see what is going on? Or do they care at all? We see 55% of know it all Americans not caring or being too dumb to understand.
As the destruction continues in an insolvent banking system banks continue to speculate in world markets again increasing leverage at the cost to the economy of not lending to most small and medium sized businesses. The Treasury carry trade is far more profitable. All this in an environment of flash trading, which is front running and is illegal, as is naked shorting, which the SEC refuses to do anything about. In addition, of course, is a rigged manipulated stock market whose license to steal was granted under Executive Order. These mechanisms are used to take markets in whatever direction government and the people who control government want them to go. Is it any wonder the public investor is leaving the markets in droves?
The US economy is still reaping the world wind of malinvestment that is yet to be unwound, which continues to destroy capital. The intercession by the Fed and the agencies delayed the residential housing collapse, but didn’t stop it, and it has not been a solution. Very low interest rates have been in place, but most buyers cannot even afford 3-1/2% cash down. In addition, the available housing inventory for sale monthly grows. Slow growth and lower rates have not been a solution. In fact, without the Fed and its loan programs and returning to the subprime-ALT-A loans, all the major lenders would have gone under and their financial situation is no better now than it was four years ago. The pyramid scheme that was housing was a giant financing device, as homeowners pulled out equity once a year and used that cash to buy second and third homes. The lenders knew they shouldn’t have been doing what they were doing, but they did it anyway. The result is today some 25% of homes have negative equity, which we believe will become 25% worse over the next two years. That means more walk-a-ways and more over-hanging inventory. This is nothing less than systemic failure. In the housing collapse most Americans had a major loss of wealth occur. Half of Americans were using their homes as a hedge for retirement. In most cases their only real saving’s vehicle, only to have that vehicle smashed by the Fed, government and imprudent banks. This was the destruction of the dreams of millions of Americans.
Capital was drained into the real estate cauldron and today we have millions of empty homes, malls and stores. This capital should have been used to build plant and equipment and in research and development. That was difficult under the circumstances, because of the lack of need of such job creating facilities. This was caused by free trade, globalization and outsourcing. Over the last 11 years America lost 8.5 million jobs and 42,400 businesses to foreign countries. Without tariffs to level the playing field there was no need for investment, so the outlet to keep the economy from collapsing was real estate construction. That was and still is consumption, that is keeping the economy afloat, along with endless amounts of funds for the financial sector and little or nothing for the average American. This consumption, which is 70% of GDP, is still in force in the US debt borne economy. Still no solutions, but can there be a solution as we lose millions of jobs a year to transnational conglomerates, which ship these good paying jobs overseas in a relentless effort to totally destroy the American economy? This is the same group of elitists who want to bring $1.9 trillion in profits again back into the US at 5-1/4% taxation, which will cost the taxpayer $650 billion in lost taxation – money that instead flows to corporate shareholders and into the pockets of the managements of these corporations, as the funds are used to jack up the market and buy Treasury and Agency bonds. This is all at your expense. All these elements have been employed to take down the US economy and pauperize the American people in an attempt to make them accept world government. You now are experiencing the legacy of Keynesian corporatist fascism and the destructive forces unleashed by Sir Alan Greenspan. All we see from the trillions of dollars pumped into the economy by the Fed is the bailout of the financial sector and over the top speculation and unbelievable fraud from the criminal cabal running NYC, Washington and the nation. Only in America can a Defense Department announce it cannot find trillions of dollars or where in the administration of Iraq $50 billion disappears, as American citizens starve on the streets. Everywhere you look there is fraud and criminal acts, yet mysteriously no one ever goes to jail.
The residential home mortgage market has been destroyed and probably won’t recover for many years to come. The Fed will probably have to create money and credit for years to come to stave off the failure of the financial system and the persistent undertow of deflation. As you have been taught the giant banks, brokerage houses and insurance companies are too big-to-fail. That means they will continue to have a license to steal. Front running and naked shorting will rise to even greater heights with the complicity of the criminal SEC and CFTC. The corruption that is overwhelming will worsen each and every day. Then again for the past 15 years Goldman Sachs has controlled the revolving door at the Treasury Department and JPMorgan has controlled the Fed since its inception. These are the gang leaders who control America. These are the same people who control the American media, so that you won’t know what is really going on. The brainwashing and psychological warfare, against the American people, is relentless.
The supposed current recovery is being underpinned by zero interest rates with real inflation hovering around 6-3/4%. We are told by Bloomberg that current high gold and silver prices, a result in part of these zero rates, is a craze and CNBC calls it a bubble. They don’t call the bond market a bubble, which it is. Evidentially they attach no significance to the fact that the 10-year Treasury note just catapulted from a yield of 2.40% to 3.50%. In the world of CNBC, CNN and Bloomberg up is down and down is up. It is also evident that governmental deficits will never be liquidated, unless, of course, Washington steals Americans’ $6 trillion in 401Ks and IRAs, which they have every intention of doing. The bill has been prepared and our politicians and Wall Street are waiting for the right moment to jam it through. Just think of it, a lifetime of work wiped out in the blink of an eye. If you have these plans you had better think about liquidating them before it is too late.
Gold has become again the world reserve currency. It is just that few realize the transition has already taken place. For the past 11 years every major currency has fallen in value versus gold from 13 to 20 percent annually. Versus silver, the figures range from 17 to 25 percent. This is a clear-cut ominous trend of a flight away from all currencies to gold and silver and quite a flight to safety. This movement by worldwide investors cannot be ignored. There obviously are many people that see what we see and in that process are dumping currencies for gold and silver related assets. Unfortunately, Americans are far behind in these changes with only 2% of the population participating. Ladies and gentlemen the second stage of the gold and silver bull market has just begun. Prices have fallen from their highs, what a great time to buy.