18 Jun 2011

Anonymous OpESR Status Update: Empire State Rebellion Day 1

Media Operation Success, Phase 1 Cyber Operation Success, Ground Operation Fail, Moving Forward
OpESR Status Update: Empire State Rebellion Day 1While we have launched this movement beyond expectations throughout Media and Online Operations, and have achieved success in Phase 1 of Cyber Operations, our first step in Ground Operations has been insufficient.
Here is our first Status Report: 6.15.11
Media Operation Success (MO1)
Our message has spread throughout the media faster than expected. The new Anonymous OpESR video already has over 275,000 views on one YouTube account. Our demands are being broadcast throughout all forms of media. An initial primary objective was to get people talking about the following goals:
* End the campaign finance and lobbying racket
* Break up the Fed & Too Big to Fail banks
* Enforce RICO laws against organized criminal class
* Order Ben Bernanke to step down
Here is a small sampling of media coverage:

Wall Street Journal: Anonymous Targets Bernanke
CNBC Morning Call: Anonymous: Bernanke Is Next
Ground Operation Fail (GO1)
Given that this was the first day of Ground Operations, we were not expecting large turnouts. However, the public protests throughout 23 cities attracted less people than expected. According to reports from participants, the average turnout was only 12–25 people per protest site. This is an unacceptable number. Given all the media coverage, online chatter and 275k views on our video, it seems most people are content with taking a passive role. This is not how operations succeed. If we are to achieve success, you must take your own action and be a leader. We are confident in our numbers and strength online, but we must urgently evolve into a much stronger offline force as well.
Despite small turnouts, participants have reported back stating that many people were given information and were very supportive of our goals. For example, Russell Cohn reported from the San Francisco protest site: “We handed out 300 flyers and got interviewed for the local ABC evening news. We definitely continued the process of turning the tide of awareness!” These type of activities must continue with frequency and grow in size. Please take it upon yourself to plan public protests and distribute information widely. Anything you can do to rebel against the system of economic tyranny in a non-violent manner is welcome.
Move Your Money Operation (MYMO)
It is hard to measure the total success of the first day of the Move Your Money Operation. We have had over 150 people report that they moved their money out of the big banks on the 14th. In the overall scheme of things, this is a small number. However, we take great pride in every dollar that is moved out of the global banking cartel’s grasp. Thank you to everyone who followed through on this effort. If you are one of the people who still has not removed your support from the big banks, please let us know when you do by posting toTwitter #OpESR, OpESR Facebook page or the A99 social network group.
We Applaud The Liberty Park 4 (LP4)
The most ambitious ground operation launched on Day 1 was in New York City’s Financial District, just a few blocks from Wall Street, at Liberty Park. The protest only attracted 16 people in total, with only 4 people ready to occupy the park indefinitely. While this operation was a fail due to lack of participants, we want to thank the event organizer Gary Roland and the three other people who were prepared to occupy the park: David DeGraw, Oren Clark and Kevin Dann.
Getting people to stand up in this way requires a very strong commitment that most people have not yet realized will be necessary and in their best interests. As we continue Awareness Operations and build momentum, we will reactivate this part of our Ground Operation at a future date. We have set up a social network group dedicated to planning this operation. If you are ready to peacefully occupy a public place, please join the planning group here.
Phase 1 Cyber Operation Success (P1CO)
Statement from Anonymous A99:
OpESR Cyber Operations have been successfully launched and are progressing as planned. Once Ground Operations prove more successful, and the people have demonstrated their support for the operation’s goals, we will execute the final phase of OpESR, our largest operation to date.
Given the decentralized and amorphous nature of Anonymous, there is no way to know what smaller-scale operations are in progress.
OpESR is designed to expose corruption and scandalous actions on the part of central bankers and their servants within government. We will avoid the further destruction of personal wealth for 99.9% of the population at all costs.
Anonymous A99 OpESR seeks to empower people and return wealth to the population.
Anonymous A99 is an enemy of the organized criminal class.
Anonymous A99 is an enemy of the global banking cartel that has impoverished a record-breaking number of people and created the most severe inequality of wealth in American history.
Anonymous A99 fights for the good of the general population.
We The People.
We Are Legion.
Expect Us.

You’re Not Imagining It — The Gold Miners Are Tanking

Conventional wisdom — backed up by years of observation — states that gold mining shares tend to outperform the underlying metal in good times because they’re “leveraged to the price of gold.” That is, their extraction costs are more-or-less fixed, so when gold rises, most of the increase flows directly a miner’s bottom line, increasing its earnings at a rate that exceeds the metal’s move.
With gold near a record, most miners should put up ridiculous earnings in the year ahead, which should make their shares act like tech circa 1998, right?
Nope. The biggest miners, whose shares populate the GDX gold miner ETF, did outperform gold (represented here by the GLD ETF) during most of its recent epic run, just as you’d expect. But in April the two trends diverged, and lately the divergence has become a chasm. Gold is up 22% in the past 12 months and the big miners are, as a group, virtually unchanged.
This is painful and humbling for investors who bet on gold by loading up on mining shares, only to discover that they were right on the macro but wrong on the implementation. But one person’s pain is another’s opportunity, and the market appears to be offering a whopper here.
Assuming that the long-term relationship between gold and the miners holds — and there’s no reason to think it won’t — then the trend lines will converge at some point in the coming year. This can happen in several ways: They can both fall, but gold more than mining shares. They can both rise, but mining shares can rise more. Or gold can tread water while the miners go up.
Which means there are two ways to play it: Buy the miners and ride them, which will work if gold goes up. Or short gold and buy the miners, in which case you don’t care where gold goes as long as the miner/metal relationship reverts to normal. The first is simpler but only works in a rising gold price scenario. The second is an arbitrage that should work no matter what gold does in the year ahead, though it carries an emotional price, since shorting gold is disturbing on a lot of levels.
On the other hand the idea of making money while being short gold — in the middle of a global currency meltdown — has a certain contrarian appeal.
One final thought: If the big miners are underperforming because of fears that they can’t replace the reserves they’re consuming, then we’re in for a buyout binge as they use their rising cash flow to gobble up the juniors with the most accessible reserves. So the small-cap miners will end up being the best part of this market.

Forget "Blood Diamonds", Here Comes "Conflict Gold"

Update: The WGC has provided us with the following clarification to our rhetorical query on deciding who the blacklisted country is: "The reason the DRC is the focus is due to section 1502 of the Dodd-Frank Act which specifically identifies that country as the reason for the legislation. You can read our submission to the SEC on S. 1502 on our website for further details on our POV."
Original post
In what could be the oddest development in the precious metals market in a long time, the World Gold Council has just unveiled an initiative whose sole purpose if to combat "conflict gold." From the just released notice: "The World Gold Council today announces that, working together with its member companies and the leading gold refiners, it has produced a draft framework of standards designed to combat gold that enables, fuels or finances armed conflict. The draft standards represent a significant, industry-led response to this challenge and are designed to enable miners to produce a stream of newly-mined gold which is certified as ‘conflict free’ on a global basis." While we are confused what exactly is being pursued with this action, aside from the creation of a black market for gold of course, it does seem that the logical end result will be a decline in the total supply of "certified" gold. On the other hand, it will also afford the WGC or any prevailing authority the ability to brand any country it so chooses (Indonesia?) a sourcer of "conflict gold" and effectively clamp down on the production of the yellow metal. Additionally, what better way to deprive a gold sourcing country of massive export revenues than to effectively make their product unsellable in the "legitimate" market. Which then would lead to a surge in fair market value due to supply considerations. Which begs the question: is this the preparation for the "golden" endgame?
More from the WGC:
After almost a year of work, the draft standards are currently being ‘stress-tested’ by leading gold mining companies and refineries, as part of the development process. The World Gold Council recognises the multi-faceted nature of this initiative and is seeking input that will foster a collaborative and comprehensive solution and is, therefore, undertaking consultations with stakeholders. Interested parties including governments, NGOs, the investment community, artisanal miners, end-users and other participants in the gold supply chain are being invited to review the draft standards and to provide their feedback by 1 September 2011. There will also be continuing work and dialogue on related issues such as recycled gold, audit and assurance.

Aram Shishmanian, Chief Executive of the World Gold Council, commented that: “Responsible gold mining contributes positively to economic and social development in producing countries both at a national and community level. The misuse of gold to fund conflict is wholly contrary to this mission and is a threat to the reputation of gold.”

The current focus of concern about gold as a factor in fuelling armed conflict is on the Democratic Republic of Congo (DRC) and adjoining countries. The World Gold Council standards address this situation for large-scale producers. In addition, the World Gold Council is working with the Organisation for Economic Co-operation and Development (OECD) and others on global guidelines for the responsible sourcing of gold.  The World Gold Council is committed to working with sector specific groups in the electronics and jewellery sector to seek an integrated solution for market participants.

Aram Shishmanian continued: “The gold market is uniquely complex. It is difficult to track specific consignments from the mine to the end user because it is easily melted down and co-mingled with other sources of gold.  So the success of any certification system will depend upon the co-operation and commitment of many parties in the gold supply chain. The work on the standards is well advanced, but we want all those committed to addressing conflict issues to contribute their ideas. We are aiming for a comprehensive framework which commands confidence, credibility and broad support. We look forward to working with organisations that use gold to in developing an integrated certification process that avoids duplication and meets the needs of all stakeholders.”  
As the release notes, the "current focus" is the Congo. What will be the focus tomorrow? And the day after?
The draft standards may be viewed on the World Gold Council website at the following link.

And another update from the WGC:
It is important for the gold industry to show that newly-mined gold is produced responsibly; to be responsive to market expectations; to engage pro-actively with governments and regulators; and to play its part in preventing gold from being misused to fund armed conflict or severe human rights abuses.

For further clarification, the framework represents a significant contribution to addressing the challenges posed by regulatory initiatives (including the US’s Dodd-Frank Act). The Framework reflects the global approach of the OECD guidelines on responsible minerals supply chain management. The World Gold Council is working closely with the OECD to ensure that the World Gold Council framework and the OECD guidelines on the responsible sourcing of minerals supplement on gold are mutually supportive. The World Gold Council framework is geographically broader than the DRC-focused requirements of the Dodd Frank Act in that it provides a framework for analysing gold’s impact on armed conflict situations wherever they may arise. In principle, the World Gold Council chain of custody scheme could be a significant element in helping manufacturers to meet Dodd-Frank’s requirements.

Regarding identifying conflict, the World Gold Council will not seek to make these sorts of judgements. Those countries which are defined by national legislation (e.g. the US Dodd-Frank Act) or by supra-national bodies (e.g. the UN) as being in such a level of crisis will automatically trigger an assessment by companies operating in those areas. 


Fort Knox Reserves to Get Independent Audit?

Gold is trading at $1,527.39/oz, €1,070.50/oz and £944.70/oz.

Gold has given up much of yesterday’s modest gains and is marginally lower in all currencies except the Swiss franc. The euro has stabilized despite continuing contagion concerns and an existential threat to the euro currency itself. 
Gold remains close to record nominal highs in all major currencies but media coverage in the UK, Ireland and Europe remains minimal and skeptical. Focus continues to be almost exclusively on bond, equity and currency markets – with little or no coverage of gold. 
The ramifications of contagion and a euro currency crisis which would lead to the price of gold in euros surging has not been covered in the media. This is of course bullish as it shows a continuing lack of understanding and appreciation of gold’s importance as a diversification and a safe haven asset.

Cross Currency Rates

The rout in peripheral eurozone bond markets, and the Greek market in particular, seen yesterday has abated somewhat with prices stabilizing in most markets.  Portugal is the exception and its 10 year bond has risen to a new euro era record high of 11.124%.

 World Gold Reserves, December 2010. Source: Wikipedia via World Gold Council

Congressman Ron Paul, the Republican presidential candidate who is chairman of the US House Financial Services subcommittee and chairs the House's Subcommittee on Domestic Monetary Policy plans to question US Treasury officials next Thursday (June 23) about the US gold reserves and get them to testify regarding the authenticity of the nation’s gold reserves. 
This is an important question given the increasingly precarious state of the US’ finances and is important to the gold market as the unaudited US gold reserves are the largest holdings of gold bullion in the world (see table above).
Paul, who has said he thinks it's possible there is no gold at Fort Knox, recently said that the government is asking the American people to trust that all the gold is there, while not allowing site visits or an audit.

Foreign currency reserves and gold minus external debt based on 2010 data. Source: CIA factbook 
Paul has introduced legislation that would require an independent audit of the 5,000-plus tons of gold bullion that is believed to stored in the Fort Knox, Ky., vault. The audit would include other US gold reserves held in government facilities in Denver, West Point and the New York Federal Reserve Bank in lower Manhattan. 
Paul is also calling for some of the bars to be assayed and tested by a laboratory in order to prove that it is investment grade gold bullion as the US Treasury Department says. There have been unconfirmed reports that the Chinese received a shipment of large gold bullion bars from the US that contained tungsten.
Last August Paul said that "if there was no question about the gold being there, you think they would be anxious to prove gold is there." He has been pressing the point since the early 1980s, when he was a member of the US Gold Commission.

Gold Reserves Per Capita. Source: World Gold Council

Paul’s recommendation back then was that Congress audit the gold reserves. It was rejected by 15 of the Gold Commission's 17 members. 
Lack of transparency leads to corruption which is one of the reasons for our current crisis.
Given the growing risks posed to the US dollar as global reserve currency, an audit is important as it may allay the concerns of GATA (Gold Anti-Trust Action Committee) and their followers about whether US gold reserves have been sold or lent into the gold market thereby artificially suppressing the gold price.
An audit might help restore faith in the dollar which is being debased with the dollar now trading at less than a 1,500th of an ounce of gold.
The US dollar has lost 97% of its value in the last 97 years – since the foundation of the Federal Reserve (see most watched video in the world on gold bullion so far in 2011 - here). The debasement has accelerated since the US came off the Gold Standard in 1971.
If Ron Paul’s reasonable requests lead to an audit that establishes that the US gold reserves are substantially less than the over 8,100 tons that they are meant to be, the dollar will be at risk of falling the last 3% in a shorter time frame.  

Silver is trading at $35.38/oz,€24.79/oz and £21.88/oz.
Platinum Group Metals
Platinum is trading at $1,747.25/oz, palladium at $752/oz and rhodium at $1,925/oz.
(Reuters) – Global Markets-Euro, stocks fall on Greek contagion worries
(Wall Street Journal) – Precious Metals: Gold, Silver Lower In Asia; Eyes On Euro-Zone Meet
(San Francisco Chronicle) – Gold Gains- Central Bank Buying May Support Demand 
(Daniels Trading) – Purchase of gold by central banks thru April exceeds 2010 totals
(Bloomberg) – Gold Climbs for Third Day on Demand for Haven From Beleaguered Currencies
(MoneyWeek) – What the '70s bull run can teach us about today's gold market
(Business Week) – Ron Paul's Fort Knox Fever
(Stockhouse) – Many a gold and silver stock moved by GATA supporters
(MarketWatch) – Stock collapse and $12,000 gold?
Mark O'Byrne is executive director of Ireland-based GoldCore.


17 Jun 2011

Russia, China warn West against Arab interference

Russia and China oppose outside interference in the unrest in the Arab world, the two presidents said on Thursday in a declaration, as the West seeks their support for increasing pressure on Syria.
"The sides believe that the search for settling the situation in the countries of the Middle East and North Africa should take place in the legal field and through political means," said the declaration signed by Presidents Dmitry Medvedev and Hu Jintao.

"Outside forces should not interfere in internal processes in the countries of the region."

Rather, the conflicts should be solved by "launching broad national dialogue about rebuilding stability and social order and the promotion of democratic and economic reforms," the statement said.

The two presidents also expressed concern over the situation in Libya, calling for an end to hostilities between the forces of Libyan leader Moamer Kadhafi and the rebels.

Russia has said it opposes the UN Security Council adopting any resolution on Syria, risking a major dispute with the West over the response to the crackdown on Syrian protestors.

China has backed Russia's cautious stance although, as is customary, it has allowed its fellow permanent UN Security Council member to do most of the public talking on the issue.

Russian foreign ministry spokesman Alexander Lukashevich confirmed in Moscow that Russia "as before" was opposed to a UN Security Council resolution on Syria.

"This position, as you know has been set by the president and it remains unchanged," the Interfax news agency quoted him as saying.


Documentary: Disastrous Fiat Money Inflation In France In The 18th Century

Max Keiser, of maxkeiser.com, James Turk, Director of The GoldMoney Foundation and Pierre Jovanovic, jovanovic.com, tell the story of the introduction of Fiat Money to France.

In this episode we look at the use of Fiat Money during the French Revolution and how monetary mismanagement made an already delicate situation even worse, destroying the nation's economy and encouraging political radicalism.

We start with the debates over the issuence of paper money, explaining that the previous experience of John Law made French statesmen like Necker very cautios about fiat currency. The debates over the first issue of assignats were hard fought and lasted a long time, with the first issue of assignats approved by just a handful of votes and with all manner of guarantees to insure that it was "backed" by land and other forms of collateral.

The first issue of assignats had some very positive short term effects, stimulating commerce as paper wealth spread. However, the government took only a few months to spend the money raised and very soon cries were raised for more. This time a new issue was approved by a large majority. We look at how this paper money inflation started to drive prices higher, encouraging the creation of more paper in increasing amounts as the government and its clients became addicted to newly-created money. Rising prices were blamed on all manner of scapegoats in order to divert attention from the real cause: money printing.

As the situation worsened, the worst rose to the top, with Clavière becoming Minister of Finance with the promise to increase printing. Gresham's law started to act in full force, driving good money out of circulation with such force that silver, gold and even copper disappeared from the market. Attempts to put ceilings on prices through the "Law of the Maximum" and to prop up the value of assignats failed, and only succeeded in criminalising most commerce with increasingly harsh penalties -- eventually including death -- for those that sold above established prices or refused to accept payment in worthless government paper. Even the guillotine was not enough backing to ensure the assignat's survival.

Eventually food riots brought down the revolutionary government, and after several interim reactionary governments culminated with Napoleon's military rule. Napoleon brought back the gold standard, which survived until the first World War.

Further reading:

Fiat Money Inflation in France, Andrew Dickson White

Early Speculative Bubbles and Increases in the Supply of Money, Douglas E. French

Reflections on the Revolution in France, Edmund Burke

Assignats And Mandats; A True History, Stephen Devalson Dillaye

What Has Government Done to Our Money?, Murray N. Rothbard

Warnings Of A Great Depression or Hyperinflation

A run is starting on your retirement, hardship compounding the problems of retirees, we may be going into hyperinflation or deflationary depression, currencies down significantly over gold, problems similar to the 1930s, Ponzi finance must end.

Unemployment at 22.4% is causing a run on assets of retirement funds. That is probably why legislation is being introduced to limit how much money can be removed from these investment vehicles. About 11% of participants have taken out loans over the past year, up from 9% y-o-y. In overall total 22% have loans out and the numbers are accelerating. Almost all the loans will never be paid back. Hardship is forcing people to withdraw, as well as those who believe that government will try to commander 401K’s and IRA’s to fund a bankrupt government, that wants to replace those vehicles with bogus government guaranteed annuities.
If the extension of the short-term debt is not legislated by August 2nd, we may see legislation regarding a takeover of some retirement plans.
As this possible misuse of Americans hangs in the balance, inflation plods, relentlessly onward and at the current rate of acceleration we could see hyperinflation two to three years down the road. We projected 14% inflation before the end of 2011 just over a year ago, and we have six months to go to make it to that level. There is no way to avoid what is coming whether it is hyperinflation or straight into deflationary depression. Eventually it will be deflationary depression. The very fact that sovereign states are creating money and credit willy nilly trying to avoid financial failure is surely proof that they are unable or incapable of generating sufficient revenue to satisfy their debt obligations. Currencies are inflated and depreciated in order to pay back debt with less valuable currency. This is the mode that the US dollar and many other currencies are in today. All currencies for the past eleven years have fallen more than 20% annually versus silver and gold and there is good reason for that, they are all being deliberately devalued not only against one another, but versus gold and silver as well. That means that if this policy continues the US dollar and other currencies will eventually go into default. The unavoidable conclusion has to be an eventual dollar and dollar related collapse of things denominated in US dollars. What lies ahead has some uncertain aspects, as to which route will be taken. Presently it is inflation that probably would lead to hyperinflation and then collapse into deflationary depression. At first buyers will perceive less purchasing power, then they will be frightened as the dollars buys less and less, then like a thunderbolt hyperinflation strikes. The public will be ill prepared not having listened to those few who predicted such an event. They will generally speaking not be prepared. Once hyperinflation hits there will be chaos just as there was between 1921 and 1923 in Weimar Germany and most recently in Zimbabwe. Markets will be empty of food, clothing and everything else. It all will have been sold or perhaps even looted. This will happen overnight as the dollar becomes worthless and the country’s social fabric disintegrates. At this stage no one will want to accept dollars in exchange for anything. Barter will begin and gold and silver coins and bullion will become the medium of exchange.
The most important aspect of the inflation, hyperinflation, followed by deflationary depression is its effect on prices of things such as goods and services. Financial assets will degenerate in value usually between 70 and 90 percent, as witnessed during the last US “Great Depression.” The only assets that retained value and purchasing power were gold and silver related assets, which rose in value and buying power. By the end of 2011 we should see 14% real inflation as we predicted over a year ago. If QE3 type of polices are followed next year we’ll see 25 to 30 percent and in 2013 50 percent or more. That is the beginning of hyperinflation. This happens due to the excessive creation of money and credit by the Federal Reserve, an entity that represents private banking interests. All currencies in today’s world, except a 5% to 7% backing in gold of the euro, are fiat. They have no backing whatsoever other than the good will of the issuer. What you are about to see is nothing new. It has been practiced by governments and bankers for more than 1,000 years. Mankind seems to learn little from their mistakes, making the same stupid mistakes over and over again. There are always those few who have read history and understand the mistakes of the past and plan for the future. They are the survivors and they are the ones who take the time to read articles such as this and prepare for the difficulties ahead.
Economic and financial recession is a euphemism for a mild depression. To use the word depression is depressing. Leaders do not want their people depressed, so they call the circumstances recession, a receding of conditions. Don’t be misled; a recession is a mild depression from which there is escape. Since WWII that escape has been engineered by central banks inflation. It has worked a number of times, but all things have a finite life of usefulness. This time it is going to be different. There will be no recovery borne by the issuance of more money and credit. The system has and will be damaged beyond repair.
By our standards, and those of John Williams, inflation is currently running at 10.2%, at about the same juncture in 2008, as we approached the beginning of the credit crisis, inflation was about 11.6%. It eventually reached 14.65%. That is why we projected in May 2010, that inflation would reach 14% by the end of 2011. We now suspect it may be higher. These are real rates of inflation, not some bogus numbers out of Washington. The downside plunge in the economy and in the stock market in 2008 and 2009 should be similar to the oncoming correction underway for the second half of 2011 and well into 2012. This inflationary depression began in February of 2009. We are in the process now of experiencing the fallout of QE1 and stimulus 1. Next year we will see further deterioration and 25% to 30% inflation caused by QE2 and stimulus 2. If the Fed increases money and credit from $1.7 to $2.5 trillion inflation will move up close to 50% or what we recognize as hyperinflation. After 2013 it’s anyone’s guess what the next step will be. It could be further hyperinflation or a deflationary depressionary collapse, which in any case is inevitable. There is no question that the Fed and other central banks, particularly in the UK and Europe face the same dilemma. Just because M3, which is not published anymore, is not 17.3% does not mean monetization is not proceeding at a rapid pace. As of late the stock market has begun to tell us all is not the way it should be, as the Dow has fallen from 12,800 to below 12,000. The dollar trades on the USDX between 74 and 76, and we believe that the only reason the dollar doesn’t trade lower is due to the financial problems in Europe.
Financial problems are very similar to the 1930s masked by extended unemployment, Medicare, food stamps and many social programs. If government continues such programs and others, and continues to incur massive debt, it will take more and more deficit spending and monetization to keep the system from collapsing. That means more inflation, a lower US dollar and higher gold and silver prices, a continuation of what you have seen over the past several years.
FDR never was able to pluck the US out of depression. In 1940 unemployment was still 16.2% and only the intersession of WWII saved America from a continuing depression. You ask when are we going to have our war? We cannot answer that, but we can assure you it is being planned and will soon get underway. That is the diversion, the misdirection the bankers, and Wall Street again have planned for you. Just look at history over the past 1,000 years and all the answers are laid out for you in detail. What you are seeing and experiencing is nothing new. Mr. Bernanke is supposedly a student of the “Great Depression.” You wouldn’t know that by his track record. He’s dong something similar to what the FDR administration did and it didn’t work. The elitists that give Mr. Bernanke his marching orders obviously have something else in mind. Thus far true to his word he has monetized everything in sight. He believes that under a fiat paper money system government can always generate higher spending and hence positive inflation. Since when was inflation ever positive? We believe Mr. Bernanke is a charlatan. He and Michael Boskin wrote a paper in 1988 that stated that what Mr. Bernanke is now doing doesn’t work. The question then is why is he doing it? The answer is there is nothing else to do until another war can be arranged.
Leaving the gold standard on August 15, 1971 was the fatal day for the dollar. We have seen the devastating degenerative results. That was also accompanied by the beginning of free trade and globalization, which we wrote about in the American Mercury in 1967. During the 1970s major US manufacturing corporations were setting these plans in motion to move American industry out of the country. In the early 1980s that plan was set in motion. We believe, and did at that time, that the only way that the American economy could be taken down was to ship manufacturing and services out of the country. As it turned out we were correct. These moves along with the falling dollar sealed the fate of the American economy. Today we are witnessing the results of those plans and policies.
These structural changes have contributed to a higher trade deficit and a further falling dollar. Wages and salaries have nosedived, as unemployment has exceeded 22%. Current earnings are lower than they were in 1972 and purchasing power has been decimated. In the meantime debt has accelerated digging the hole even deeper and savings vary from minus 5 to plus 5 percent. Who would be interested as interest rates fell eventually to near zero? The result is what you see today - a country in decline.
The Federal Reserve rescues Wall Street and government temporarily by creating money and credit with the resultant inflation. Zero interest rates over the past three years have not stimulated the economy, they have only increased the profits of Wall Street and banking and allowed government to borrow cheaply and keep the charade going. There has been little or no attempt for three years to address the underlying problems. Generally speaking revenue is falling and if you factor in inflation there are no gains. Taxes have been cut, zero interest rates and two stimulus programs totally $1.7 trillion. What GDP gains we have seen have been fleeting. Even though they talk of a strong dollar most of what they have done has weakened the dollar. How can the dollar be strong with $1.6 trillion annual deficits? There in addition are millions of Americans unemployed, many of them permanently. How can GDP recover when every day unemployment increases and more jobs leave America forever? The middle class is being decimated. Eventually consumption has to fall.
The Weimarization of the German economy in the years 1920 thru 1923 was similar to today’s circumstances, although the basic reasons in the pursuit of hyperinflation were somewhat different. Germany was a planned takedown to put someone like Adolph Hitler into power, whereas today we are experiencing stage two of the Planned destruction in order to bring about world government. The US cannot recover as it is plagued by structural destruction and the theft of its manufacturing base by transnational conglomerates. The propping up of the US dollar ended about two years ago and during that period many nations, central banks and others have withdrawn their support of the dollar. That has forced the Fed to purchase 80% of Treasury and Agency issuance with money created out of thin air. Such actions doom the US dollar just as it doomed the Reich Mark. The only reason the dollar is not declining against other currencies more rapidly is that they collectively have as many problems as the US and its dollar has. The only true guideline of any currency is its performance versus gold and silver.
We hear about the dreaded bank run. It truly is a devastating experience, especially when the Fed and the Treasury today do not have the standby cash to satisfy depositors who want to get their funds out. Two years down the line currency could start to disappear as inflation climbs toward 50%. That is why people should be accumulating gold and silver coins in small as well as large denominations to use as currency when the dollar collapses. Even today, if you go to a bank to withdraw $10,000 or $20,000 in cash they tell you to come back in a couple of weeks, because they have to order it up. They also ask many questions about your desire to want cash. The current currency system is based on electronic transfers and we do not see any changes in the future. That means if there are bank runs you will have little or no access to your funds. The digital system of today is more vulnerable than that of the 1930s. There you have it; this is where we are headed and the outcome is inevitable.
Here we are again at the crossroads overlooking one of the biggest credit bubbles in history. It isn’t only in the US, but American problems will affect the entire world negatively. Eventually the US, UK and Europe will render the global system inoperative, because bankers and politicians do as they please. They have almost put the dysfunctional financial system into bankruptcy. First was the dotcom bubble of the late 1990s, then the real estate bubble, which saw the syndication of debt in the form of mortgage backed securities (MBS) and (ABS) asset backed securities, accompanied by the massive mortgage purchases of Fannie Mae, Freddie Mac, Ginnie Mae and FHA bonds, derivatives and various credit instruments. The final triumph was the Fed’s QE1 and 2, which bailed out Wall Street and banking and then the US Treasury. Then, of course, is the Fed’s interference in the bond market to provide market liquidity and drive interest rates down to accommodate expansion and the mortgage market.
In the background is the Bank for International Settlements (BIS), Basil III, which changes the funds big banks have to keep on hand for emergencies. We wonder when they will disallow, if ever, these same banks to keep two sets of books?
During QE1 we saw major bank bailouts in major US banks and corporations, which discount window documents, released under court order, show the biggest recipients of Fed largess were foreign banks, particularly Dexia Bank of Belgium. Where was the ECB while these loans were being made? We have speculated since the beginning that a behind the scenes deal was made by the Fed. We envision it as the Fed telling European banks, if you buy our AAA rated toxic MBS and ABS we will cover your losses down the road and make sure you remain solvent. The silent kicker in all of this is that no civil action was initiated by any European bank versus the US banks that created this garbage, nor were there criminal charges ever filed. That caper stinks to high heaven, and that tells us why the Fed, controlled by the banks that sold the waste, was lending more in Europe than in the US. What we now know and had to find out through appellate court action is shocking to investors, but we exposed this three years ago. The Fed supplied solvency to insolvent European banks that were in trouble, because the owners of the Fed had sold them toxic waste rated AAA, which in reality was at best BBB. The difference between a 10 and a 4 in ratings. Another travesty is that S&P, Moody’s and Fitch were never prosecuted criminally. They were an integral part of this conspiracy. It is no wonder many want to get rid of the Fed and turn its duties back to the Treasury. US Fed owners made massive profits and nobody has gone to jail.
These distortions created on the currency, interest rate, and debt creation markets knows no historical equal. A private corporation, such as the Fed, should not have the power to inflate credit at will and in the process distort the current account in trade and flood the world with ever depreciating dollars.
Ponzi finance has to end along with quantitative easing. The system has to be purged in a classical manner. The leveraged speculation and the existence of unregulated hedge funds have to end. The dynamic is still in operation as the speculators on Wall Street and in banking continue to loot the system of everything they can before the system collapses. What is coming will make 2008 look like a mild interlude. There is the collapse of Greece that could be the trigger that will unravel the entire mess over the next few years. As we aid from the beginning on Greek radio, TV and in the press, Greece must default, leave the euro and implement its own austerity program. That will soon become reality. The road ahead will be strewn with financial victims and those who do not have their assets in gold and silver related assets will pay a heavy price.

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16 Jun 2011

China Treasuries Holdings Rise

Chinese Holdings of Treasuries Climbed in April as Fed Purch
China, the largest foreign owner of U.S. government debt, added to its holdings for the first time in six months in April as economic data weakened and the Federal Reserve signaled no extension of its $600 billion purchase plan. Photographer: Nelson Ching/Bloomberg
June 9 (Bloomberg) -- Dennis Stattman, a fund manager at BlackRock Inc., discusses investment strategy and the outlook for Treasuries. Stattman speaks with Erik Schatzker from the 2011 Morningstar Investment Conference in Chicago on Bloomberg Television's "InsideTrack." (Source: Bloomberg)
June 15 (Bloomberg) -- Jeff Applegate, chief investment officer at Morgan Stanley Smith Barney, talks about his investment strategy, U.S. and European financial stocks, the sovereign debt crisis in Greece and U.S. fiscal policy. He talks with Tom Keene on Bloomberg Television's "Surveillance Midday." (Source: Bloomberg)
China, the largest foreign owner of U.S. government debt, added to its holdings for the first time in six months in April as economic data weakened and the Federal Reserve signaled no extension of its $600 billion purchase plan.
The Communist nation’s holdings of longer-term notes and bonds rose 0.8 percent to a record $1.149 trillion in April, surpassing the $1.145 trillion held in December, U.S. Treasury data released yesterday show. Holdings of short-term bills maturing in one year or less declined by 32 percent to $3.9 billion, the least since April 2004, the data show.
Chinese officials, as well as those in Germany and Brazil had been critical of the Fed’s asset purchase plan when it was first announced in November, said the proposal would be inflationary and could hurt the value of dollar-denominated assets. The Fed became the largest owner of Treasuries through what has become known as its policy of quantitative easing, in which bonds were bought to add cash into the economy and reduce the risk of deflation. The purchases end this month.
“One might draw a loose conclusion that they stepped aside at the onset of QE and during the period of time when the economy seemed to be gaining better footing and there were some inflationary concerns,” said Chris Ahrens, head interest-rate strategist at UBS AG in Stamford,Connecticut, one of the 20 primary dealers that trade with the Fed.
Global demand for U.S. stocks, bonds and other financial assets rose in April from a month earlier, led by longer- maturity securities, the Treasury Department reported. Net buying of long-term equities, notes and bonds totaled $30.6 billion compared with net buying of $24 billion in March.

‘Foreign Intermediaries’

Foreign holdings of Treasuries rose for a 24th month to $4.49 trillion.Japan, the second largest foreign owner, reduced its holdings by 0.9 percent to $906.9 billion in the month after suffering its largest earthquake on record and a tsunami, leading to meltdowns at a nuclear power plant.
Even with the increase, the data “underestimates what China’s buying,” said Scott Sherman, an interest-rate strategist at Credit Suisse Group AG in New York, a primary dealer. “China deals through foreign intermediaries” leading to initial tallies counting their purchases as belonging to other holders, such as the U.K.
Holdings of Treasuries in the U.K. rose 2.4 percent to $333 billion in April, and have increased 23 percent for the year, the data show.
The Treasury’s initial reports on international purchases are based on the location where the transaction occurs, while subsequent revisions are based on location of the beneficial owner.