Google received more requests from the U.S. government to hand over user data during the first half of this year than from any other country, according to the search company's biannual "Transparency Report" released on Tuesday.
From January to June, Google received nearly 8,000 requests for user data from the U.S. government. The search company said it "fully or partially" compiled with roughly 90 percent of them. That's up from the 5,950 requests for user data that Google received from the U.S. government during the same period a year ago.
More than 16,000 Google accounts were specified in the U.S. government's user data requests, according to the report.
However, the search company cautioned that the total number of U.S. government requests for user data also tallied requests "issued by U.S. authorities on behalf of other governments pursuant to mutual legal assistance treaties and other diplomatic mechanisms."
Still, that number dwarfs the requests from other countries: India and Brazil came after the U.S. with 2,319 and 1,566 requests for user data, respectively, during the first half of 2012. Read more >>
Lawmakers are pushing legislation through Congress that will
criminalize reporting on illegal activities and corruption in the US
government.
Just when you thought the United States government couldn’t sink any
lower our beloved politicians in Washington have introduced legislation
that will criminalize reporting on US government secrets.
What makes this new legislation shocking is that we have seen the US
government repeatedly use the “State Secrets” and the “National InSecurity
card to suspend the Constitution at will to commit a wide variety of
heinous activities from torture and indefinite detention without trial
to outright forced drugging of prisoners and even repeated assassination
by the government, of people including US citizens, which is now being
done on the direction of the United States’ first even assassination czar.
Keeping in mind the fact that lawmakers are now trying to
go after reporters that “publish government secrets” can easily be taken
as an outright ban on reporting on government corruption PERIOD since
at the end of the day any corrupt or illegal activities conducted by
government officials are done in secret by the government in the first
place.
This week, House Republicans sought legal advice on whether reporters
can be prosecuted for leaking secret information public and the excuse
being used in a series of leaks by officials in the Obama administration
that have pissed of the republicans.
Now Congress is trying to justify the outlawing of such reporting
using the excuse of “comprising National Security” when the truth is the
information was given to reporters in repeated interviews by government
officials speaking on the condition of anonymity with the approval of
the White House in the first place. Read more >>
Russian spies in the United States whose arrest was announced Monday (see http://news.yahoo.com/s/ap/20100629/ap_on_go_ca_st_pe/us_doj_russia_arre...) last year conveyed information about the gold market that the Russian security service considered "very valuable" and forwarded to the Russian finance ministry and ministry of economic development, according to the criminal complaint filed by the FBI with U.S. District Court in New York.
The gold angle in the story was highlighted in reporting Monday night by the Economic Policy Journal, based in Washington, D.C.
Perhaps most interesting for GATA's purposes, the FBI's criminal complaint suggests that the spies obtained the gold market information through "a prominent New York-based financier" who is a political fund raiser and a friend of a U.S. Cabinet member. Would a New York-based financier have valuable information about the gold market if the U.S. government wasn't using New York financial houses for gold market intervention purposes?
The criminal complaint says the Russian spies were under U.S. counterintelligence surveillance for years and suggests that they didn't do much besides pass money around to each other surreptitiously while trying to figure out how to meet important people. That the charges against them are not espionage but only failure to register as foreign agents suggests that they weren't very effective.
But failure to register as a foreign agent is still a federal felony, so maybe the defendants will want to call CPM Group executive Jeffrey M. Christian as an expert witness, as he may be willing to repeat his insistence that, the criminal complaint's reference to the Russian finance ministry notwithstanding, central banks care very little about gold. After all, as an expert witness at the March 25 hearing of the U.S. Commodity Futures Trading Commission, Christian tried very hard to alleviate suspicions about the gold market. How could anything about that market be of international importance?
Economic Policy Journal's report of the charges against the supposed Russian spies can be found here:
The reference to the gold market and the New York-based financier can be found on Pages 34 and 35 of the second criminal complaint appended to Economic Policy Journal's report.
CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc.
Gordon T. Long via ZeroHedge There is something seriously wrong in America. We all sense it, but few in the mainstream media are willing to touch it or can effectively articulate it within the public’s sound-bite oriented attention span.
It isn’t just about the remnants of the financial crisis; it isn’t the protracted jobs recession and slow recovery; it isn’t the trillions of dollars in deficit spending; it isn’t the degree of rampant financial malfeasance. It is something deeper which reaches into the soul of who we are as a people and society. It will soon be the central theme to your investment strategy and financial security.
On the surface it might appear we have lost our optimism about the future and our confidence that America is still the ‘beacon on the hill’ that countries around the world admire and look to for leadership. Though our children mouth the platitudes taught by older generations, they ring hollow in the hallways with video surveillance, motion sensors and metal detectors when recited by them. The high minded ideals seem misplaced in unemployment lines where they stand with freshly minted advanced degrees in hand, huge education debts and little hope other than the faint possibility of a non-paying internship position.
Our leaders have become propaganda machines promising change but delivering the lobbyists’ agenda which appears to make matters only worse. Every election, waves of our well intentioned fellow citizens go to Washington with high hopes of making a difference, but are quickly ground into submission by an unscrupulous culture of power, influence and compromise. The few who maintain their convictions are quickly neutralized and removed like an ugly infection by the party apparatus. So what is to be done?
First we need to recognize the real problem, not what the media spin machine purports the problems to be. We need to realize that we are in an era of trading personal freedom for what is economic freedom or touted as national security. Like slavery we are succumbing to a sacrifice of our liberty for the basic primeval needs of safety and survival. Few recognize the insidious cancer other than possible slave masters behind the curtain.
Many of you will no doubt think this harsh. Consider the personal freedoms we have surrendered in the last decade, for what we are sold with high pressure tactics, as increased personal security and labeled a matter of national security on our war on terror:
1. Personal surveillance has become ubiquitous due to the fear of terrorism as represented by: surveillance cameras, metal detectors, security guards in every public and even private gathering place.
2. Borders are tighter, money movement is tighter and government reporting requirements on movement has increased.
3. Regulations, fees and taxes have exploded at all levels of government while basic public services are reduced.
4.Personal Information under the Patriot Act has made available unlimited amounts of personal information to the government’s watchful eye. There is no longer any privacy from the government.
5. A more than one $T annual military budget (including an off-budget sheet war) is spent to enforce police activities in over 130 countries yet we can’t implement a ‘half baked’ response to an oil spill on our own shores or assist our own citizens in the wake of a devastating hurricane. These are complete government failures to actually deliver the national security we have entrusted to them.
WHAT IT MEANS TO YOUR FINANCIAL STRATEGY & PLANNING
It is almost indisputable that as future events unfold, the US government will become larger, more controlling and more interventionist. It will exert more power over ever increasing levels of our personal decision making. This will include our investment choices, which will be increasingly represented and framed as what is in the best interest of the state and national security. They will increasingly be policed by taxation, regulatory reporting and predatory restrictions on available options that were previously available.
In EXTEND & PRETEND: A Guide to the Road Ahead I stated:
“Hard assets such as physical gold and silver have traditionally been the ideal vehicle for an environment of high inflation coupled with a currency crisis. I fully expect governments will strip these assets from holders either directly or through predatory taxation, fees or other trading limitations. They will be classified somewhere in the four categories discussed above. Alternatively, if it is not done in this fashion it will be controlled through intervention similar to national currencies in the forex arena. I personally suspect it is already being controlled in some fashion based on the March 25th whistleblower testimony by Andrew Maguire. It is a matter of national security in a beggar-thy-neighbor environment since gold and silver are the only real money in a fiat based system. Protect yourself accordingly.”
John Shiffman On a grainy undercover videotape recorded in a hotel room in Tbilisi, Georgia, an Iranian arms merchant chats with two Philadelphia salesmen who have brought samples of their military wares.
The merchant, Amir Hossein Ardebili, who has flown from Tehran to make a deal, patiently answers the Americans' questions. The radar microchips? Needed for antimissile protection. The sophisticated computers? Essential to "launch the F-4" fighter.
All of it, he says flatly, is destined for the Iranian military "because they think the war is coming." Against the United States.
The videotape, recorded in October 2007 by undercover federal agents from Philadelphia, was released yesterday as the case against Ardebili was unsealed in federal court in Wilmington - nearly two years after the Iranian was secretly brought to the United States.
U.S. officials said the case, first reported by The Inquirer on Wednesday, offers a window into Iran's covert effort to obtain U.S. military technology to bolster its armed forces.
"There is no question that there is an orchestrated effort by the government of Iran to acquire weapons in violation of our laws," said John Morton, assistant secretary in the Department of Homeland Security for Immigration Customs Enforcement (ICE). "This is serious business, not a flash in the pan. Unfortunately, there's a whole network of these guys out there trying to get weapons and sophisticated technology, and not just for Iran."
ICE undercover agents in Philadelphia and Europe ran the three-year sting, which was kept secret as federal agents used data retrieved from Ardebili's laptop to launch dozens of Iranian arms-sales investigations against U.S. and overseas companies.
The court filings unsealed yesterday, including the videotape, show that Ardebili, a former Iranian government procurement officer, was arrested in Georgia in early October 2007. After legal proceedings in Georgia, Ardebili was secretly extradited to the United States in January 2008 and quietly jailed in Philadelphia. A prominent Wilmington defense lawyer, Edmund D. Lyons, was appointed to represent him.
During a closed hearing in Wilmington in May 2008, Ardebili pleaded guilty to violating the arms embargo, the arms export control laws, conspiracy, and money laundering.
He is scheduled to be sentenced Dec. 14 before U.S. District Judge Gregory M. Sleet in Wilmington. According to federal sentencing guidelines, Ardebili could face more than 10 years in prison.
Lyons, his lawyer, has argued in a court filing that Ardebili should be sentenced to time served. He said Ardebili had admitted he broke U.S. law but did so while in Iran, where his actions are not considered a crime.
Lyons also said the Iranian had suffered in U.S. custody because he is housed in a special unit of the Philadelphia Federal Detention Center, where he is confined 23 hours a day. He has lost teeth and suffers from depression, the lawyer said.
Federal officials characterized the case as serious enough to warrant more prison time.
"Ardebili's job was to illegally" acquire military gear "in preparation for war with the United States," said Ed Bradley, the Philadelphia agent in charge of the Defense Criminal Investigative Service.
Ardebili negotiated the purchases of 1,000 state-of-the-art radar shifters, 10 gyro-chip sensors used in advanced aircraft applications, and two digital air computers for an F-4 aircraft, prosecutors said.
In addition, according to a court filing by U.S. Attorney David Weiss and Assistant U.S. Attorney David Hall, Ardebili made "tens of thousands" of requests via e-mail for American-made military hardware, from "aviation to sonar to radar."
The prosecutors said the Iranian arms merchant had acquired roughly $1 million worth of American hardware annually, most of it from U.S. companies.
Ardebili was lured by two ICE undercover operations, one based in the United States and one in Europe, U.S. officials said.
Much of the negotiation was done via e-mail or instant message.
In May 2006, for example, an ICE agent e-mailed Ardebili, writing in broken English to disguise himself: "What you can say can perhaps be good business, but I stress to you what we are do is ILLEGAL in US."
Ardebili replied the next month. To avoid the U.S. embargo law, he suggested that the military parts be shipped to Europe, then forwarded to Iran. "This is long time we are in the business and working in full security system. . . . [No one will] know end user located in Iran."
By 2007, Ardebili was negotiating by e-mail to buy the radar components and night-vision equipment, the U.S. government said. The undercover agents offered to sell more than 1,000 radar microchips for use in Iran through a shipping company in Azerbaijan. After protracted negotiations, Ardebili agreed to make a deposit on the radar components and wired $3,000 to the ICE undercover company's bank in Delaware, which is why the case was prosecuted in Wilmington.
Although Ardebili wanted to meet the salesmen in Dubai, the undercover ICE agent lured him to Georgia.
In one of their last instant-message chats, the ICE agent wrote to the Iranian arms merchant: "Our future is going to be big. I sometimes believe you do not know how big will our deals be."
More Evidence Gold is Being Hoarded as Comex Fulfills Gold Contracts With Paper
Duncan Davidson My bet that by 2020 we will return to some form of gold standard is looking better. Something is up when gold is being hoarded to such an extent that the futures exchanges cannot fulfill with metal but have to try to stiff the contract holder with paper. Now, they have done this in the past, and gotten away with it, but according to this story, never so aggressively.
Another aspect of this story is the collapse of Barrick’s hedging strategy. Barrick Gold (ABX) is the largest gold mining company and had been following a really dumb hedging strategy which had been to take naked short positions (shorting gold they did not possess). In a world of gold hoarding, they may not be able to cover, even at a loss. The strategy was so risky that a conspiracy theory had evolved that Barrick was front-running the US government to keep the gold price down. Lending support to this is the question: why would a gold production firm try to cap the gold price? An answer which does not require the conspiracy is that Barrick had less gold in the ground than it wanted to reveal, and so was engaged in a confidence game of the first order. The weak Dollar (driving gold up) and the hoarding has called their bluff.
Gold-backed currencies, unlike fiat currencies, have the irreducible endpoint of debts being paid in gold, which has retained value throughout history. Fiat currencies have no such endpoint. You can make the argument that fiat currencies are backed by the productive capacity of the issuer, and that they have some irreducible value based on taxing that production. History has tested that case, and found it wanting. You see, fiat currencies tempt countries to over-extend.
What happens when the debts of the issuer are vastly beyond their productive capacity? Well, the country defaults, and the fiat currency is forcibly exchanged for scratch. A 2008 paper by Harvard Professor Rogoff and Prof. Reinhart, both members of the NBER (which calls recessions and recoveries) entitled This Time Is Different demonstrates that instead of fiat regimes making good, they have defaulted over and over throughout eight centuries of financial crises:
We find that serial default [repeated sovereign default] is nearly a universal phenomenon as countries struggle to transform themselves from emerging markets to advanced economies.
Before we take comfort in the US being already an advanced economy, the imperial power of its day has typically defaulted after over-extending. Rich European countries have defaulted, including Austria, France, Portugal Spain and Germany. The reunified German defaulted in 1873, bringing the whole world into a long depression, including the United States. In the last century, Germany defaulted twice: 1932 and 1939. Russia three times, beginning in 1918. England in effect defaulted in 1931.
So now the gold hoarding makes sense: other sovereign powers are preparing for - or at least hedging against - the inevitable sovereign default of the US. The more Obama buries the US in ever more present deficits and future commitments, the closer this becomes.
Niall Ferguson’s piece in Newsweek, which I discussed yesterday, fits into this context. He was talking about Imperial powers getting over-extended, and the first thing that falls is to pullback on excessive defense spending and foolish Imperial wars. Even as Obama pitches tonight a three-year vague commitment in Afghanistan, the hand writing is on the wall. Sadly, the US is so over-extended the wars are but a small pullback in the vast future deficits from social commitments. This won’t end well.
telegraph Liam Halligan The trade deficit of the world's biggest economy also remains huge. How much longer can the dollar defy gravity?
Last week, America's currency fell to a 15-month low against the euro, cutting through $1.5050. Against a trade-weighted currency basket, the dollar was also at its weakest since July 2008. The greenback plunged to parity with the rock-solid Swiss franc, then hit a 14-year low against the yen.
The dollar's weakness is based on fundamentals – not least America's jaw-dropping debt. It's a long-term trend. From the start of 2002 until the middle of last year, the dollar lost 30pc on a trade-weighted basis.
It was during the summer and autumn of 2008, though, that the sub-prime debacle entered its most vicious phase (so far). The rescue of Fannie Mae and Freddie Mac, America's quasi-state mortgage-lenders, followed by the Lehman collapse, sent shock waves around the world. For six months or so, Western investors piled into what they knew, liquidating complex positions and buying plain dollars. The greenback became stronger, spiralling upward during the so-called "safe haven rally".
All that has now changed. The trade-weighted dollar has lost 22pc since March. One reason is that, since the spring, the Federal Reserve has been printing money like crazy – both to bail out Wall Street and service America's rapidly growing debt.
Sophisticated investors have also been exploiting America's ultra-low 0.25pc interest rate to borrow cheaply in dollars, switch these borrowings in currencies where returns are higher, then pocket the difference. This so-called "carry trade" has flooded foreign exchange markets with US currency.
The dollar fell particularly sharply last week, though, as traders were reminded of the patently obvious – that the White House actually wants the dollar to fall. US Treasury officials have lately taken to staring into the TV cameras, puffing out their chests, then stating: "We are committed to a strong dollar." That's nonsense, of course, because a weaker currency boosts US exports and lowers the value of America's external debt.
When the minutes of the Fed's latest policy meeting were published on Tuesday, describing the dollar's decline as "orderly", the markets rightly took that as confirmation of America's "benign neglect" approach – with intervention to support the dollar unlikely. The minutes also showed the Fed's key committee members voted "unanimously" to keep interest rates at rock-bottom for "an extended period" – another reason to sell.
In addition, the Federal Deposit Insurance Corporation, the fund that safeguards US bank deposits, warned that the number of "problem" banks grew in the third quarter, leading to speculation it could seek a credit line from the US Treasury. That would mean more borrowing and money-printing, concerns which sent the dollar even lower.
Yet "benign neglect" is fraught with danger. A weak US currency makes commodities more expensive (seeing as they're priced in dollars). It was when the dollar hit an all-time low of $1.60 against the euro during the summer of 2008 that oil soared to $147 a barrel. Expensive crude damages the economy of the world's biggest oil user. And as the dollar falls, America's huge commodity imports cost more, making the trade deficit even worse.
On top of all that, a falling dollar makes it even more difficult for the US government to meet its massive borrowing needs. Just to service existing debt, America must sell $205bn of Treasuries this year, a total set to hit more than $700bn a year by 2019 – even if annual budget deficits shrink. Selling long-term sovereign debt, in a currency expected to fall, is not easy.
Almost every American economist I know dismisses these concerns. Several have contacted me over the last 48 hours, gloating that the dollar has just put on a renewed "safe haven" spurt in the midst of fears about Dubai.
Yet the state of the dollar poses enormous dangers. For one thing, America's currency depreciation trick could backfire if "the rope slips" and a steadily dollar decline turns into free fall. The cost of US imports would soar, with the Fed being forced to sharply push up rates. The world's largest economy would then be caught in a stagflation trap – a slump, but with high inflation.
A more immediate concern is that a blind rush into the US currency could cause the carry-trade to go badly wrong – with those who've borrowed in dollars suddenly owing more, while their dollar-funded investments elsewhere are worth less.
A rapid "unwinding" could cause major losses at financial institutions, posing renewed systemic dangers. Far from being a safe haven, the dollar is the likely source of the next financial crisis.
The US public will be “outraged” by Citibank’s $8 billion loan to Dubai just six weeks after the bank was bailed out, US House of Representatives domestic policy subcommittee chair-man has said. Dennis Kucinich commented on the Dubai loan and other US banking investments as a congressional panel released a report that strongly questioned Citibank’s actions. The report, shown to 7DAYS, cites the Dubai loan as the largest of the “questionable transactions” by banks after the US government bailed them out. It notes that the loan to Dubai’s public sector came on December 14, just six weeks after the US government gave Citibank a $25 billion bail-out.
The report quotes Win Bischoof, then chairman of Citi, as saying the bank agreed to the Dubai loan because “we continue to place the Gulf region among our globally most significant markets”. The report also questions JP Morgan’s $1 billion investment in India and Bank of America’s $7 billion investment in China. “When the American people find that their tax dollars, which were supposed to be used to get us out of this financial crisis, are instead being used to ship jobs and investments overseas, there will be outrage,” Kucinich said. The report notes the loans were not illegal and that it is not known if they were directly funded by bail-out funds. A Citibank official was quoted at the time as saying the $8 billion came from the bank’s own funds and third party sources. The report was released as the committee prepares to question banking chiefs about their use of bail-out funds.
It’s too late for anyone to pretend that the U.S. government, whether under President Barack Obama or anyone else, can divert our nation from long-term economic decline. The U.S. is increasingly in a state of political, economic, and moral paralysis, caught as it were between the “rock” of protracted recession and the “hard place” of terminal government debt.
Even if the stock market can be shored up by more government borrowing for “stimulus” spending, it’s a temporary reprieve, because nothing can bring back the consumer purchasing power that was lost when the banks stopped pumping money into the economy through out-of-control mortgage lending. We simply no longer have the job base for people to earn the income they need to live.
The underlying cause of the crisis is in fact the debt-based monetary system, whereby the U.S. ruling class long ago sold out our nation and its people to the international banking cartel of which the Rockefeller and Morgan interests have been the chief representatives for over a century. It was lending on a previously unheard of scale for overpriced assets to people and businesses unable to repay that created the bubbles that burst in 2008, not only in the housing market but also in such areas as commercial real estate, equities, commodities, and derivatives. It was an explosion that reverberated throughout the world.
The Obama administration’s response to the crisis has been to print Treasury bonds both for the financial system bailouts and the sputtering Keynesian stimulus that so far has gone substantially into military infrastructure. This bond bubble is what I have referred to as “Obama’s Last Picture Show.” http://www.globalresearch.ca/index.php?context=va&aid=12512
Government debt is fundamentally inflationary. For a generation, the U.S. dollar has been inflating at an increasing rate, with the economy being kept in a growth posture by selling our debt instruments abroad or allowing foreigners holding dollars to purchase property and other assets on our own soil. The website EconomyinCrisis.org reports that in 2007, the most recent year for which data are available, “foreign entities spent $267.8 billion to acquire or establish U.S. businesses.” http://www.economyincrisis.org/articles/show/2801
Foreigners are spending their dollars as fast as possible, because they are now plummeting in value. It’s increasingly clear that sooner rather than later, the dollar will be dumped by foreign purchasers of bonds, particularly China, and possibly even the oil-producing nations.
These nations know full well that bonds denominated in dollars can never be completely repaid, even if the bonds can be rolled over into fresh debt. It’s this dynamic that is dragging the U.S. economy to the cliff, because real economic growth stopped long ago when our manufacturing jobs were exported. This is because most of the growth since Ronald Reagan was elected president in 1980 has been only on paper through financial bubbles. This included the dot.com bubble of the Clinton years that blew up in 2000-2001.
Now, after the Treasury bond bubble of 2009, there is nothing left in America to inflate. With so many jobs gone, the American family home was the last thing of value we owned.
So the air is going out of the tires. Americans who are struggling to work for a living are passive spectators as their jobs, savings, health insurance, pensions, and homes continue to erode in value or even disappear. Last Sunday the Washington Post reported a massive crisis in state and local government pensions. Reporter David Cho wrote, “The financial crisis has blown a hole in the rosy forecasts of pension funds that cover teachers, police officers and other government employees, casting into doubt as never before whether these public systems will be able to keep their promises to future generations of retirees.”
So what, if anything, can be done about it?
Well, the first thing an intelligent physician does is diagnose the disease. Thomas Greco, in his new book The End of Money and the Future of Civilization (Chelsea Green: 2009) , outlines the increasingly familiar story of how things got so bad, and he tells it as well as anyone has ever done. His style is precise and sometimes academic. Behind it, though, is a passion for truth and the type of rock-solid integrity that refuses to sugar-coat a very bitter pill.
More than that, Greco writes about how to change what has gone wrong. His credentials as an engineer, college professor, author, and consultant are impeccable. His book is among the most important written in this decade. It is truly a book that can alter the world and, if taken seriously, give large numbers of people a practical way to survive the gathering catastrophe.
But unlike most commentators, what Greco offers is not another phony prescription for what the financiers and government should do for us, whether through “restarting” lending or another round of stimulus spending. Rather it’s what we should do for ourselves, and could do much better, if we understood what to do and if big banking and big government just got out of the way.
As I said, at the root is the monetary system, whose failure cannot be understood without a history lesson. So Greco writes about the struggle between banking and democracy that took place in the 1790s when the ink on our new national constitution was barely dry.
It was Alexander Hamilton, the first secretary of the treasury, who compromised the new nation, through what he admitted was “corruption,” by giving the wealthy speculators in Revolutionary War bonds the benefit of federally-sponsored redemption and then by establishing the First Bank of the United States. This early drift toward elitist rule was opposed by Thomas Jefferson, James Madison, and others who figured in the creation of what later became the Democratic Party.
Greco writes: “While Jefferson favored a stronger union than that which emerged under the Articles of Confederation, he was vehemently opposed to the reconstruction of monarchic government on the American continent.” Hamilton had said frankly that the British monarchy was the best system of government known to man. Part of the monarchic system was the Bank of England, which Hamilton copied when setting up the First Bank.
But Jefferson, who repudiated Hamilton’s elitist platform, was elected president in what was then called “The Revolution of 1800.” Congress refused to renew the Bank’s charter by a single vote when it was up for renewal in 1811.
But the Second Bank of the United States was chartered in 1816 due to the government debt left behind from the War of 1812 against Great Britain. Thus was set up what became known as the “Bank War.”
It was President Andrew Jackson who dethroned the bankers from power by pulling government funds out of the Second Bank in 1833. Greco writes that in Jackson’s view: “The ‘Bank War’ was a contest for rulership—would the United States be governed by the people through their elected president and representatives, or by an unelected financial elite through their central bank instrument?”
The modern takeover began in earnest during the Civil War when Congress passed the National Banking Acts in 1863-64 which mandated use of government bonds as bank lending reserves, thereby creating a direct linkage between bank profits and the debt the government was starting to load on the shoulders of taxpayers.
The nation’s fate was sealed with the passage of the Federal Reserve Act in 1913. The deal was that the bankers would control the currency, and thereby the nation’s economy, while the government would be provided with an unlimited amount of inflated dollars to fight its wars.
The bookkeeper’s trick of creating money out of thin air, charging interest for its use, then forcing it down the throats of weaker nations by threat of violence, is what has allowed the Anglo-American empire, since the founding of the Bank of England in 1696, gradually to conquer the world. Though President Woodrow Wilson signed the Federal Reserve Act into law, he saw what that action meant. Greco cites Wilson as writing: “There has come about an extraordinary and very sinister concentration in the control of business in the country….The great monopoly in this country is the monopoly of big credits.”
Among other ill effects, the system has ruined the value of the currency. The inflation caused by large issues of bank-created loans is seized upon by the government which goes along because inflation reduces the cost of its deficits. Investors buy Treasury bonds denominated in Federal Reserve Notes then watch their value evaporate over time. In fact Federal Reserve Notes have lost over 95 percent of their value since they were first introduced.
Moreover, it’s additional inflation caused by bank-generated interest that drives up the costs of goods and services, forcing everyone in the economy to try to defend themselves by raising their prices to the max. Greco spells this out too, which almost every economist in the world, with the exception perhaps of Australia’s James Cumes, overlooks.
Bank interest has other tragic effects. It was high interest rates, for instance, that destroyed the Idaho potato industry. A farmer from that region told me at a conference a few years ago that when interest rates skyrocketed in the early 1980s, he asked the president of one of the Federal Reserve Banks why they did it. The answer was they were “ordered” to raise interest rates by the international banking system.
Make no mistake, it’s the banking system, facilitated by the Fed, not unwary borrowers, who brought on the collapse of 2008.
Now, in 2009, the bankers, mainly those in the U.S., have so shattered the world economy by debt mounted on debt that there may be no reprieve except the creation of a slave society based on rule by the rich over the masses of whatever peons should happen to survive the downturn and its tragic effects on employment, health, the food and water supply, and even our ability to cope with climate change.
The political establishment, expressing itself in pronouncements by organizations like the Council on Foreign Relations, see a future, not of economic democracy or increased financial pluralism, but consolidation of world currencies into a small number overseen at the top by the world’s financial oligarchy. Citing the writings of Benn Steil, the CFR’s Director of International Economics, Greco writes: “The ostensible plan is to reduce global exchange media to three—one each for Europe, the Americas, and Asia. One might reasonably suppose that at a later stage, those three would be combined into one currency also under the control of the global banking elite.”
Greco concludes: “The New World Order is upon us.”
But is it really the end, or is there a new world waiting to be born? Greco thinks so. He speaks of the end of an era when unlimited economic growth fed by massive influxes of debt-based money is no longer sustainable. He writes: “That our global civilization cannot continue on its current path seems evident….But I think our collective consciousness is beginning to change. We are becoming aware of limits and are reaching that part of our evolutionary program that says, ‘Stop!’” More...
Andrew Moran Digital Journal Outspoken investor Jim Rogers has warned for many years, like Peter Schiff and Marc Faber, that the United States economy is in total decline and that Asia is the land to put your money.
Co-founder of the Quantum Fund and creator of Rogers International Commodities Index, Jim Rogers, told attendees at the China International Financial Services Conference (CIFSC) held in Guangzhou last week that he will sell all United States dollars, according to People’s Daily Online.
For years now, Rogers has been telling media outlets and investors that he wants to get completely out of the US dollar and put his money in other sound currencies. Rogers went on to say that the last 50 years the US government has taken a dive into astronomical debt and the each administrations continues to make the same mistakes.
Rogers, who is a student of the Austrian School of Economics, has been a bull on China and commodities around the world. In a message he has said for a long time regarding America’s economy and its currency, “[The] US dollar economy has encountered major problems, the dollar index fell to a new low, and it will continue to fall. If the dollar rebounds in the future, I will sell all the U.S. dollars. My whole family has moved to live in Asia.
The story of the United States is over. A new story belongs to China.” For several years, Rogers has urged people to learn to speak Mandarin, “It was smart to invest in Britain in 1807. It was smart to invest in the United States of America in 1907. It is now smart to invest in Asia in 2007.” Right now, Rogers’s youngest daughter is learning mandarin and her caregiver only speaks mandarin to her. At the conference, Rogers did not only talk about the United States but also Europe by stating they go into a vicious cycle of issue bonds – inflation, issue bonds – inflation and so on. “I will not by United States treasury bonds,” Rogers proclaimed, “because the government is constantly printing more banknotes.”
In a jest manner, Rogers believes the US will never lack US dollars. Nevertheless, he will buy oil and minerals and, of course, the stocks of those companies that “engage in a real economy.” Author of “Hot Commodities” and economic commentator thinks the economic downturn in the US is still growing and continuing. At the present time, according to Rogers, there are more people to buy treasury bonds, interest rates will remain low but, eventually, in the long run, will dramatically rise.
These days I can't seem to look at numbers anymore without asking myself what's behind them. Hey, who can? 90% of them are embellished crappahola, and we're still stuck trying to figure out what they mean if we want to know what lies ahead. Wouldn't a be nice to have a government that's transparent, and doesn't try to pull a fast one on you every chance it gets? Yeah, dream on; here goes another round of number rumbling:
The headline may claim that "initial unemployment claims dip", but in reality they have hardly moved at all through summer. As for continuing claims numbers, they are not only up, they're increasingly devoid of meaning, as increasing numbers of people fall off the far end, beyond the duration of unemployment benefits. The worst hit states, where unemployment is highest, and hence tax revenues drop most, will have to pony up the most in additional benefits, as an estimated 1.5 million people will have exhausted all resources by Christmas. For some states, this must cause nightmares already. Especially since it won't stop in 2009; not even the most rose colored forecasters see a significant improvement in jobless numbers any time soon.
If you look at the speed at which benefits are running out right now, going from almost zero to 1.5 million "clients" in just a few months, we could see millions of long-time, structurally unemployed soon. A true underclass.
Also, the discrepancy between initial claims and official job loss numbers begins to look ridiculous. A slight difference is fine, but 300% is crazy. Then again, that label applies to most US government data. Read More...
Written by J.S. Kim, the founder of SmartKnowledgeU™ and the evolutionary MoneyPing™ investment strategies. Kim charges USD $7,775.00 for a private consultation.
The Coming Blowback of Banking Fraud
The Double Dip Recession, or the “W” shaped recovery that a minority of economists, such as Joseph Stiglitz, is now stating as a strong possible outcome of this current rally, should not be discussed in the realm of economics but rather in the more apropos realm of financial fraud. The fact that the upleg of the “W” shaped recovery that is occurring now will inevitably crumble in spectacular fashion will not be a result of any free market principle, but rather the direct consequence of a fraudulent scheme executed by an elite global financial oligarchy, otherwise known as Central Banks. If the mission of this current manufactured leg-up in Western stock markets was to fool the world into believing that global economies are recovering, then clearly, up until this point, the mission has been a resounding success. For those unfamiliar with the term “blowback”, it's a CIA term that was first used in March 1954 to describe the unintended consequences of US government international activities kept secret from the American people.
Though this term has primarily been used to describe the consequences of covert military operations, “blowback” is an appropriate term to use to describe the coming consequences of banking fraud because the US government, US Federal Reserve, Wall Street, the US Treasury, and the Exchange Stabilization Fund have all engaged in domestic and international financial and monetary transactions that have been kept secret from the world, and that will have severe and negative consequences in the not so distant future. In fact, I predict that the blowback of these activities will not only exceed, but far exceed, the fallout the world experienced in 2008 at the prior apex of this current crisis. Most people today can not even fathom how bad the situation will become primarily because of all the secrecy that the banksters have engaged in – in US Treasury markets, the gold markets, the US dollar markets, agriculture commodities, stock markets, and financial markets – in hiding reality from the people.
In an article I wrote three months ago, on June 10, 2009, titled, “Can Rising Stock Markets Serve as a Confirmation of a Crashing Economy?”, I stated, “Whether I am right or wrong about US markets tanking by summer’s end/fall’s beginning, if [we] position [our] investment assets based upon an understanding of the fraudulent monetary system, [we] can still continue to create wealth.” While true, I was a bit early in raising the proposition of a stock market correction the month before; I amended my prediction in June upon realizing the breadth of the manipulation schemes occurring in Western stock markets. In today’s markets, only a complete investment novice would try to predict market behavior without accounting for the massive government intervention schemes and forays into stock markets as well as the computerized manipulation of daily trading volume. One of the main reasons, but not the only one, that I amended my target for the end of this rally this past June to the fall season is the fact that fall normally marks the return of much higher daily trading volume from the traditional summer lulls. Thus, it is a much more difficult proposition for Central Banks and computerized trading programs to manipulate a continued rise in stock markets in the face of higher daily trading volumes.
However, should daily trading volume remain surprisingly low or muted this fall, as is also a possibility, I have no doubt that this market rise can persist for an extended period longer before these false gains are eventually flushed away (but, of course, not before all US financial executives have had ample time to exit their positions quietly). In fact, the development of this false rally was the main topic of my article. The other scenario, one that includes a significant rise in daily trading volumes that trigger the start of a second massive decline in Western stock markets, would not surprise me either. It’s just a matter of observing the signs that forecast the waning efficacy of the fraudulent stimulus of Western markets (or for this matter, the fraudulent stimulus of Chinese stock markets too).
Remember that it is only the timing of this decline that I am uncertain of, but I am very certain that a significant decline of a shocking nature is coming. The last time I issued an adamant warning of a similar nature was on April 23, 2008, when again, the only issue about a market crash was timing, though the US S&P 500 index peaked just 18 business days after I wrote that article and proceeded to fall by more than 50%.
To truly gain more clarity regarding this recent Western stock market rally, consider a hypothetical scenario in which a person was kept ignorant of any action in the US stock markets for the entire previous six months. Instead, imagine that he or she was given the task of predicting US market behavior over the past six month period solely based upon cold, hard US financial and economic data stripped bare of any of the media-slanted headlines that perpetually spin bad economic data as positive or “less bad” than it truly is. Based upon the economic data produced from the last six months, what do you think this person would conclude? That stock markets have soared during this time or that they had crashed?
Of course, factor in the plethora of evidence about numerous PPT interventions to “save” markets during this time, and the strong US stock market rally no longer seems so illogical. But strip away any evidence of free-market manipulation and interference and in the face of true, undistorted economic data, our current market rally would be enormously puzzling. And this point alone should be sufficient to tell you how this rally will end. The inevitable conclusion of this rally isn’t just about the unsustainability of the massive bailout programs implemented by global Central Banks that have engineered this current market rally out of thin air, but its manifestation should trigger an investigation into the outright fraud committed by Wall Street, banking institutions, and Central Banks that has been aided and abetted by financial journalists.
For example, consider the following stories:
Demographers recently reported that Florida, the state known as the “mecca” for wealthy retirees in America, suffered its first population decline last year in more than 60 years, an event that delineates the collapse in wealth of American retirees and an event that is likely to repeat this year.
At the end of this past July, one of the largest ports in America, Long Beach, reported that the 20% year-over-year cargo business decline is among the sharpest since the Great Depression. This is not a trend specific to Long Beach. “It’s phenomenal how much things fell away even since December,” said Paul Bingham, managing director of global trade and transportation for IHS Global Insight, the business research firm that monitors North America’s biggest ports for the National Retail Federation.
As of September 4, 2009, shadowstats.com reported that unemployment in the US is now near 21% and is showing no signs of improving any time soon (when factoring in discouraged workers, part-time workers that can’t find full-time work, unemployed workers that have fallen off the unemployment roll, etc.). In fact, yesterday, Manpower’s Employment Outlook Survey reported that US employers’ hiring plans for the upcoming fourth quarter dropped to the lowest level in the history of its survey which dates back to 1962.
On August 15th, when BB&T (BBT) purchased failed US bank Colonial Bank, it wrote down Colonial Bank’s loans and real estate collateral by 37% and Colonial Bank’s construction loans by 67%. Yes, 67%! The severe markdowns of Colonial Bank’s assets should have set off warnings akin to a five-alarm fire among the financial media, but it did not, for the media increasingly caters to the interests of the elite bankers of this world at the cost of truth and freedom. If there are several things we can deduce from Colonial Bank’s failure, it is the following.
Though the Federal Deposit Insurance Corporation (FDIC) refuses to disclose the names of the banks on its “watch list”, it can be safe to assume that a bank just does not go bankrupt overnight and that the process of going bankrupt can be predicted many months in advance by personnel with access to a bank's financial statements and knowledge of its true financial condition. In fact, various newspaper articles reported that Colonial Bank was in negotiations with the FDIC as early as March, 2009, yet not one time, did the FDIC force Colonial Bank to come clean regarding its true financial health before it finally shuttered the bank five months later.
The fact that the FDIC is spotting massive trouble in the American banking system and covering it up should be massively worrisome to Americans. Because revelations regarding the truth about a US bank’s health only seem to occur after it fails, the favored handling of American banks with kid gloves by the FDIC should immediately beg the question, “How many more US banks are legitimately bankrupt today and just operating on fumes?”
Personally, I would not be surprised if sometime within the next six months, a considerably larger US bank failure causes a massive ripple effect of much greater consequence. Banks that are currently struggling with unreported and covered-up deepening problems of loan delinquencies such as Wells Fargo (WFC), may be among the large banks that are candidates for future bankruptcy despite the public categorization of such institutions in the “too-big-to-fail” category. Unfortunately, Wells Fargo, from a political standpoint, does not have the “most favored bank” status of a Citigroup (C) or JP Morgan (JPM), two institutions deserving of bankruptcy but clearly favored by the US Federal Reserve and the US government.
When one considers the fact that all government or state produced economic statistics have been massively distorted towards the side of optimism and away from reality throughout this global financial crisis, one should be even more worried when the occasional sparse negative statistic is reported, for it is likely that these statistics too are misrepresenting the truth. Thus, in the face of all negative news that points to zero foundation and zero economic structural improvements, how has a multi-month stock market rally been able to spread across Asia, Europe and the US? Again, the answer is fraud, and thus should be analyzed through the prism of fraud and not the false prism of “economics”. There is no “economics” behind this latest global stock market rally, only fraud.
For many weeks in August, just four stocks accounted for as much as 40% of composite volume on the NYSE: Citigroup, Bank of America (BAC), Freddie Mac (FRE) and Fannie Mae (FNM). In early 2007, Citigroup, Fannie Mae and Freddie Mac accounted for roughly 1% -3% of NYSE volume, a far cry from its recent 35%+ collective weight of the composite NYSE volume. Remember that this huge volume anomaly persisted not just for one day but for weeks on end during August. If Citigroup, Bank of America, Fannie Mae and Freddie Mac were a pharmaceutical collective that just discovered a cure for cancer and AIDS, then such volume anomalies would make sense. However, such massive trading volumes, as a percent of composite volume for the entire NYSE index, makes zero sense for companies, that for all intents and purposes, are on government bailout lifelines. It makes no sense, that is, unless massive free-market intervention is occurring in an attempt to save these firms.
Again, when viewed through the “fraud prism”, such activity makes complete sense. It is obvious that the “Rise of the Machines” has created markets that are now dominated by computerized high frequency trading programs that can execute trades as quickly as 0.5 milliseconds and have as their sole purpose the creation of short-term market distortions driven by statistical arbitrage that can be used to game the system and cheat their clients. Though this link describes how this scheme works in commodity markets for those that have been following the New York Stock Exchange, the use of high frequency trading programs to game the system at the expense of the retail investor has been glaringly obvious especially in the trading behavior exhibited this past summer.
The ironic part of this huge scam that has merely just re-inflated another massive stock market bubble is that the segment of the public that is so easily angered by government bailouts, billion dollar bonus plans for Wall Street executives and the chicanery of JP Morgan and Goldman Sachs (GS) (and justifiably so), are the very same people that so passively accept the mountain of lies that passes for financial reporting today (inexplicably so). It is ironic that this same collective of people, instead of rejecting this mountain of lies, continues to listen to their financial advisers at global commercial investment firms, even though these advisers are the same group of people that miserably failed to see the crash that started in the spring of 2008, when the factors behind the pullback back then was just as clear as the factors behind the future pullback that will occur in the near future. It is ironic that this same group of people continues to support, participate and fund a system that cares only about using their clients' money to lie, cheat and steal from them when a simple withdrawal of funds from the system is the antidote to ignorance-induced paralysis that will once again create massive crisis-induced losses in the future. Pulling one’s money from one’s current firm and switching to another firm that participates in this web of lies and deceit is not a solution either.
It is ironic that it is the same group of people that so readily accepts the Western media’s correct analysis of China’s stock market as a huge bubble through the lens of Austrian economic principles that simultaneously rejects any similar notion as applicable to US or UK stock markets, and instead, readily embraces heavily flawed and unsound Keynesian economic principles when evaluating Western stock markets. It is ironic that the same group of people that foolishly equates being “American” with blind support of the US stock market (i.e. “being bearish on the US market is un-American!”) is also completely ignorant of both the massive fraud that is perpetrated in US stock markets as well as the tenets of the US Constitution that sound great objections and warnings to the ruinous and foolish monetary policies that are implemented by bankers as their “solution” to our current economic crisis. And finally, the greatest irony of all is that the anger that brews inside those that have been tragically hurt by this crisis can coexist with the failure to recognize that it matters not in America if the President has the last name Clinton, Bush or Obama – that monetary and fiscal agenda inside the US for the last 17 years has not wavered nor changed one iota during this period of time because it was not these men that have been in charge of the economy but the men that manufactured these men’s rise to power and that control the US Federal Reserve and the world’s Central Banks, and thus the global monetary policy.
If one can not see the connection between Presidents, Prime Ministers and the banking families that rule Central Banks, one merely needs to open up a newspaper and follow their lives after they leave government office. It is not just a coincidence that ex-British Prime Minister Tony Blair, after leaving office, took a part-time consulting job with JP Morgan’s Jamie Dimon that reportedly pays him $5 million per year as well as another well-paid consulting position with Zurich Financial Services. In office, Mr. Blair was a consultant to the banking oligarchs in secret; out of office, he is free to be a consultant publicly. And one can be certain that current UK Prime Minister Gordon Brown and US President Barack Obama will be offered very considerable salaries and fees by the world’s top financial oligarchs as thanks for their current and past service to them once they leave office as well (especially Gordon Brown, for selling out his countrymen and selling more than half of England’s bank reserves to ensure that the financial oligarchs could maintain the US dollar as the de-facto international currency for 10 additional more years than it deserved to hold this status).
In the end, what is the most frustrating facet of these huge con games executed by the financial oligarchs is that the group of people that this article is most intended to help is often the group of people that will take most offense to this article and most steadfastly refuse to see the truth. Instead, they will only realize the truth when the economic future unfolds to the blueprint of those of us the media labels as “gloom and doomers” because we base our predictions on reality instead of fantasy and lies. Instead of labeling us as “gloom and doomers”, if the media at large ever conducted an unbiased analysis of the predictions of the “gloom and doomers” for the past 3 years, they would discover that the “gloom and doomers” have been spectacularly accurate in the majority of their calls while the financial demagogues they continually fawn over (that only serve the interests of the bankers) have been spectacularly wrong in the vast majority of their predictions. Yet, those that serve the international banking cartel with glowing and rosy predictions of economic recovery never suffer the negative consequences of being wrong all the time as the mass media all too happily continues to provide the largest public platform and the loudest voices to these people. Perhaps, if it is accurate to label “gloom and doomers” as realists, then one should label the optimists that make their calls based upon perpetrated fraud as banking shills and cogs in the investing machine, for their societal contribution of greatest significance is an opiate cocktail for the masses that is a mixture of deceit and lies mixed with unbridled optimism.
As they often say that life imitates art, I close my article today with a speech from the film “V for Vendetta” that is frighteningly relevant if you listen to this speech with a critical ear and replace the references to the war on terror in this speech with the current war the bankster fraudsters are committing against the people. A sound money backed by precious metals, can be the people’s liberation from this war. Anything that falls short of such a solution will be just another scam in an already long line of scams, of a solution sold to the masses, that in reality, is no solution at all.
Never a disappointing read – Russell has never lost site of the big picture despite the rapid short-term gyrations in the market. If you’re not a subscriber of the Dow Theory Newsletters I highly recommend it:
Niall Ferguson, MA, D.Phil., is Laurence A. Tisch Professor of History at Harvard University and William Ziegler Professor of Business Administration at Harvard Business School. He is also a Senior Research Fellow at Jesus College, Oxford University, and a Senior Fellow at the Hoover Institution, Stanford University.
I want to include a few paragraphs from a most important article by the brilliant Niall Ferguson, author of “The Ascent of Money, A Financial History of the world.” Ferguson’s article is about the coming “divorce” between the US and China. I believe the future of the world will revolve around the relationship of US and China. The Ferguson article appeared in Newsweek magazine (Aug. 21) and is entitled, “Chimerica Is Headed For Divorce.”
And I quote –
“Let’s look at the numbers. China’s holding of US Treasuries rose to $801.5 billion in May, an increase of 5% from the $763.5 billion in April. Call it $40 billion a month. And let’s imagine the Chinese do that every month through this fiscal year. That would be a credit line to the US government of $480 billion. Given that the total US deficit is forecast to be about $2 trillion, that means the Chinese may finance less than a quarter of total Federal-government borrowing — whereas a few years ago they were financing virtually the whole deficit.
“The trouble is that the Chinese clearly feel they have enough US government bonds. Their great anxiety is that the Obama administration’s very lax fiscal policy, plus the Federal Reserve’s policy of quantitative easing (in laymen’s terms, printing money) are going to cause one of two things to happen: the price of US bonds could fall and/or the purchasing power of the dollar could fall. Either way, the Chinese lose. Their current strategy is to shift their purchases to the short end of the yield curve, buying Treasury bills instead of 10-year bonds. But that doesn’t address the currency risk. In a best-selling book titled Currency Wars, Chinese economist Song Hongbing warned that the US has a bad habit of stiffing its creditors by letting the dollar slide. This, he points out, is what happened to the Japanese in the 1980s. First their currency strengthened against the dollar. Then their economy tanked.
“What is China’s alternative if it seeks a divorce from America? Call it the empire option. Instead of continuing in this unhappy marriage, the Chinese can go it alone, counting on their growing economic might (according to Goldman Sachs, China’s GDP could equal that of the US by 2027) to buy them global power in their own right. In some ways, they’ve already begun doing this. Their naval strategy clearly implies a challenge to US hegemony in the Asia-Pacific region. Their investments in African minerals and infrastructure look distinctly imperial too. And now the official line from Prime Minister Wen Jiaobao is to hasten the implementation of our ‘going out’ strategy and combine the utilization of foreign-exchange reserves with the ‘going out’ of our enterprises. That sounds like a Chinese campaign to buy foreign assets — exchanging dodgy dollars for copper mines.”
Russell Comment — I believe the above is a brilliant look at our international future. No nation (the US) can be both the world’s leader and world’s biggest debtor. In his fight to thwart the bear market, Bernanke is sowing the seeds for the future demise of the United States. The law of unintended consequences is about to become operative.
A huge problem ahead is this — will the dollar decline slowly, as it has been doing, or will the dollar crash, setting off a world crisis?
Prediction – Where ever you are now will be your best situation for years to come. The trick ahead will be to hold on to what you have. I’ve been warning that a “hard rain is a’coming.” So far, we’ve only experienced a drizzle.
What about you? Sold your gold lately? Sold your gold due to an inevitable correction coming due? Sold your gold because of a tremendous short position build up with the bullion banks? Sold your gold because the bullion banks are so smart and always right? Sold your gold because of an imminent deflationary collapse which would bring down gold prices to absurd lows of $300 or less?
Well, the list of bearish arguments goes on and on but the reality is that nothing fundamentally has ever changed. In other words, those very same fundamentals which took gold up from $250 in 2001 to almost $1000 today are still in place.
With the end of the US dollar as world’s sole reserve currency in sight gold is poised for a monster rally towards $5000 or more. Yes, ultra bearish reports for gold are surfacing almost on daily basis now and yes, 12 reasons to short gold seems to be the tune of the day these days and yes, conspiracy theories to suppress the gold price are being ridiculed by western media as never before so yes, for newcomers to the gold market it’s difficult what and who to believe. Should they believe GATA which maintains the view that gold has been suppressed for more than a decade in order to maintain the illusion of a strong dollar? Or should they believe the mainstream gold organizations like GFMS who refer to the GATA crowd as a bunch nuts or even worse terrorists?
The simple truth is that GATA has done such tremendous research and has come up with so much evidence that even some major banks like Credit Agricole and CITI Group have published bullish reports on gold projecting $2000+ gold based on GATA’s findings. As John Embry of Sprott Asset Management once said, everyone with a IQ higher than a grapefruit should admit GATA has a point. Obviously GFMS Chairman Philip Klapwijk fails to meet Embry’s IQ criteria since he refuses to debate GATA on grounds you shouldn’t deal with terrorists.
To the newcomers in the gold market I would say please read the fictitious conversation between a staunch gold bull and GATA supporter (GB) and a mainstream investor (MI) who isn’t so sure what to believe these days. The conversation features discussions on traditional bearish arguments for gold, gold’s monetary role, the gold suppression scheme, GATA’s birth, the blatant lies from US government regarding its gold policies, Brown/Blair’s blatant lies after announcing the sale of half of Brittain’s gold in 1999, future for the US dollar, new world reserve currency, Chinese gold hoarding, etc.
I hope you agree with John Embry after reading this piece that GATA has a point indeed. It’s important to know what GATA knows since once you understand what western central banks have done to gold last decade you’ll understand why gold is heading to $5000 or more. Read More...
The Fed’s Wall Street bubble, as we forecast in January, will need at least $2 trillion more in 2010, if the economy is to just stay on an even keel. The massive debt liquidation particularly in banking, Wall Street and in insurance demands many more trillions of dollars. $23.4 trillion is not going to be enough. Presently the Fed is in the process of monetizing $2 trillion in Treasuries, Agency paper, such as Fannie Mae and Freddie Mac and collateralized debt obligations held by lenders. It is a secret what the Fed is paying for this almost worthless paper. Is it any wonder the public has lost trust and confidence in these players and our government?
In order to escape from this global expansion of debt from government, corporations, banking, Wall Street and even state indebtedness, the bubble has to be maintained. The longer it lasts the worse will be the collapse when it bursts. Does anyone really believe that this can continue indefinitely?
People talk about robust inflationary environments in China, Asia and emerging markets In America the Fed’s game of lowering interest rates and increasing money and credit and monetizing paper will end over the next two years, maybe three. What is already in the system guarantees inflation.
Many believe American re-flation boosts real estate values. Not a chance. The recovery is not going anywhere. Americans are starting to save and pay down debt, and that means eventually consumption, as a percentage of GDP will fall to the long-term mean of 64.5%.
The stock market and major market players are again highly leveraged even after 50% gains. They do not seem to understand that the sustained injection of trillions of dollars in money and credit is not going to work. It is not creating anything. Wild speculation is fine; it’s the leverage that kills. As a broker I never had a margin account. The market is not discounting a rosy future, but the players do not understand that. Prices are simply disconnected from reality. Short covering and the reversal of derivative positions cannot go on indefinitely. Market performance is led by second and third tier companies that are in serious positions, some on the edge of bankruptcy. This is a very frustrating but temporary phenomenon. You are short failing companies, and good companies languish. This is one of the unpredictable parts of the market. All we can say is that current stock market action is a reflection of the current dysfunctional financial chaos that we are trapped in. Mis-pricing is legion. All we can say is it is not going to work. Your only alternative is to back in the safety of gold and silver related assets.
The same elements that were responsible for the collapse of the market in 2000 are at work today. Incidentally we recommended selling in the second week of April, two weeks after the top. Only 2% of analysts accompanied us. Then again, we called the top at 14,100. That element was interest rate carry trades. The players are taking advantage of the ability to borrow cheap dollars, yen and euros to buy other higher yielding currencies, which in turn strengthens their currencies, making their exports uncompetitive. South Africa and Turkey are such examples. Thus, currency appreciation caused by differing interest rates is reigniting third world countries. Free trade and globalization are having some unintended consequences. The dollar is headed down and at the G-20 meeting in London on September 4-5; the US will ask China and others to cut it more slack, because they cannot now reverse the reversal of fortune.
When we called the top on the dollar at 89.5 on the USDX a few months ago we never expected its decent to be as sharp as it has been. As we write it is 79, up from 77.60 in a normal bear market rally assisted by a temporary manipulation by the US government that will be of no lasting consequences. You might call this a normalization process, as a result of the unwinding of dollar gains in the de-leveraging process. The speculators got out and the banks are still upside down. The unwinding process is only half complete and that means the dollar will test 71.18 on the USDX by yearend and probably by the end of October. The banks have to reduce leverage and that makes it a lock. They are still leveraged 40 to 50 times deposits. You talk about stupid. Even Mr. Bernanke tells us tightening by raising interest rates is a long way off. In addition, world central banks are dollar sellers, even if only in a minor way. As long as the US Congress refuses to enact tariffs on goods and services the dollar will remain chronically and perpetually weak. As an aside, the further the dollar weakens the more expensive it will be for the US to purchase foreign goods, which will lead to higher inflation. That will force further dollar selling. Thus, you can more clearly see how this combination of events, accompanied by others, will continue to suppress the dollars value.
The result has been that second and third world currencies are strengthening against G-20 currencies, a result of unintended consequences in the elitists grab for profits and power. What they have done via free trade and globalization, offshoring and outsourcing is to allow China, Brazil, India and Russia to take their places at the head of the table. The developed economies have dug their own graves as they experience staggering unemployment and dollar depreciation simultaneously. It may not be evident now but it is every man for himself sooner than you think. Already officially manipulating their currencies are Sweden, New Zealand, Australia and the Swiss. This does not create a fair playing field and it pulls the underpinnings out from under the WTO, the World Trade Organization, which is the major element in the destruction of the industrial power of Japan, Canada, the US and Europe. All it really was created for was a redistribution of wealth from the first to the second and third worlds in the early 1960s. We wrote about this in the American Mercury in 1967, but, of course, no one was listening. A massive socialization process, a leveling if you may, so that the inhabitants of the world, and particularly the citizens of the more powerful nations, would accept world government. This did not just happen. It was done deliberately by design. As a result of this plan currently these second and third tier nations are growing 50% faster than the G-20, or more specifically Canada, the US and Europe.
We are going to see strong resistance to currency appreciation in the future and increases in subsidies in many nations – first, second and third tier currencies. Perhaps even currency wars. The damage done via free trade and globalization is vastly underestimated when related to the first world, which brings us back to the dollar and other carry trades that are a result of this. It is not only the dollar that will be destroyed, but also all major currencies. That accomplished, the elitists will then attempt to implant world government. That is what this is all about and few have the foresight to listen. Most do not even recognize the enemy at the Council on Foreign relations or at the Bilderberger meetings, because he or she wears a $3,000 suit and they look like nice people. When are people going to wake up and stop allowing themselves to be propagandized? Is the fog so thick that they cannot see what is being done to them? Do they not understand why they are unemployed; have to take mandatory swine flu shots; why socialized medicine will destroy our medical system; why Cap and Trade is a scam by Goldman Sachs to increase their taxes 20% or that our privately owned Federal Reserve is totally corrupt? This is part of a major plan to destroy the major nations, as we now know them. The carry trade, derivatives and massive injections of money created out of thin air are but nails in our coffins and if we do not stop these evil people it will mean destruction.
Last March net wealth declined from a peak of $22 trillion to $12 trillion and due to a bear market rally it has moved back to about $15 trillion. During the past two years consumer debt is about the same, but the market has gotten hit hard. Household equity is off about 90%, and had it not been for the personal stimulus package it would have fallen much more.
What is surprising to most but not to us was that the money in money market funds increased as the market fell. That means that leverage via borrowed money was what has driven the market rally, along with short covering and government manipulation. The Fed was the biggest factor in rigging this bear rally. We have probably seen all the public investor buying we are going to see. The US and European banks were probably given the funds by the Fed with strict instructions to push the equity market higher and use as much leverage as possible. This rally has not enticed the public to spend more and in fact, retail sales are off 6% and still falling, thus, no recovery except in the minds of Wall Street and Washington.
Further to the unemployment figures, the birth/death ratio should have been 113,000 job losses higher or about 350,000. This year the B/D model has added 879,000 jobs and that figure should be 992,000, during the worst employment environment since the ‘Great Depression”, which is simply beyond belief. Then to have short-term unemployment fall from 9.5% to 9.4% is incredulous. You ask how did they do that? It was due to the fact 637,000 people were dropped from the labor force, not from an increase in employment, but they did end up on the U6, which officially is 16.8% unemployment, but if you extract the B/D ratio you end up with unemployment of 20.8%. What we have witnessed is more lies and propaganda, as the administration tries to use smoke and mirrors to regain public confidence to get them to increase spending. Barry and advisors, it isn’t going to work. They are not that dumb.
Home prices continue to fall nationwide. Portland, OR is a good example. It reported a record decline in home values for the 17th straight month in May and month-on-month saw a 16.3% fall, the biggest decline in the index’s 22-year history. Since the July 2007 peak prices have fallen 21% and that is the lowest level since May 2005.
We see the summer pause as natural and as unemployment rises, now by U6 at 20.8%, they’ll be more foreclosures and lower prices. The depression is only pausing to catch its breath.
The U.S. currently boasts some 500 barter exchanges, up from about 40 in 1980, and that's the official count; many businesses barter informally to avoid the IRS.
The depth and length of Depression 2.0 will be the most severe depression in history. When the unemployment benefits run out for great swaths across America, who will they turn to when bankrupt states slash welfare and food stamp programs? As our global economy comes to a full stop, trade will begin to flourish in local communities out of necessity.
But there's another even more important reason to barter -- to destroy the Federal Reserve. Congress will never reform the banking system. Congress, bankers, Wall Street, The Federal Reserve, are all fleecing the system of taxpayer wealth. Government officials, economists, and financial pundits would like all of us to believe the nature of our current financial crises results from a complex series of events, but it's really very simple: the elite (Wall Street bankers and their whore political system) have robbed taxpayers blind in the largest transfer of wealth in history.
Historically, every financial and economic crisis has been used to further centralize power and concentrate wealth. This one is no different, and in fact the moves being promoted by the Obama administration and the central banks of the Western powers will take the whole world to the pinnacle of financial despotism -- unless enough people wake up and claim their own "money power.”
In recent months, the Fed has expanded its "assets" from about $800 billion to more than $2,000 billion. Those so-called assets are securities it bought from financial institutions and loans made to central banks in other countries. But the Fed refuses to name the specific recipients of those funds, while admitting that by doing so they are manipulating the value of the US dollar on foreign exchange markets. (Congressman Alan Grayson Grills Fed Vice Chair Donald Kohn.)
Where does the Fed get the money to buy those "assets" or to make those loans? Quite simply, it creates the money. Unlike you or me or any other economic entity, the Fed has the power to create Federal Reserve dollars by effectively writing a check against no funds. This is the function known as "Open Market Operations."
What is the economy experiencing now, and what is in prospect for the future? Despite unprecedented inflation of the money supply, we are now (mid-July, 2009) in a period of depression. How can we have simultaneous inflation of the currency and still have economic depression?
It is a matter of where the money is going. While the public sector (federal government) is being lavishly funded to maintain a global empire, and the banks are being bailed out to try to keep a dysfunctional and destructive financial system from collapsing, the private productive sector is being starved for credit. As a result, businesses are bankrupting, people are losing their jobs and their incomes, and lower levels of government are being squeezed because their tax revenues are shrinking.
There is also the matter of the real estate bubble that was created by the financial institutions as they loaded up the private sector with a debt burden that was way beyond its ability to bear. Now that burden is being shifted to the public sector as the government assumes those "toxic" loans. Unfortunately, it is not the poor suckers who were lured into the debt trap that are being relieved, but the predatory lenders who laid the traps. So mortgages are being foreclosed at an unprecedented scale, people are losing their equity as housing values plunge, and more Americans are being made homeless.
These are the factors that have so far kept the effects of monetary inflation from becoming extreme. Ultimately, however, such abusive issuance of political money shows up as rising prices.
When will the price effects of hyper-inflation begin to kick in? How will the government respond to it? What will be the social and political fallout? What can ordinary people do to protect themselves from monetary and legislative abuses? These are the questions that beg for answers.
Already there are rumblings and signs that the U.S. dollar is about to lose its status as the global reserve currency. When that happens, imports of energy and other necessities will become more expensive. The U.S.’s massive trade deficits will not be sustained into the future. China, the OPEC countries, and others that have been buying massive amounts of U.S. government bonds with their dollar earnings, are indicating that their appetite has been sated. Bilateral and multilateral trade agreements are being made that bypass the use of the dollar for international trade.
One thing is clear -- we cannot rely upon the government to act in the best interests of the people. Already, President Obama has moved to give the Federal Reserve even more power to control the people's credit and financial resources. According to a June 18 article in the Wall Street Journal, "The central bank would win power to monitor risks across the financial system, and sweeping authority to examine any firm that could threaten financial stability, even if the Fed wouldn't normally supervise the institution." This is not a new plan; it was floated as a trial balloon during the Bush administration. As early as March 2008, then Treasury Secretary Paulson was proposing to "give the Federal Reserve broad new authority to oversee financial market stability, in effect allowing it to send SWAT teams into any corner of the industry or any institution that might pose a risk to the overall system."
Ostensibly that would be done to prevent the errant financial institutions from repeating their sins of the recent past, but more likely it will have the effect of suppressing any private initiative that might compete with the financial cartel. The Fed is, after all, a private company run by the bankers for the bankers. A recent Reuters article is critical of Obama's move because of the Fed's lack of accountability. It is a plan that seeks to preserve at all costs the credit monopoly that exists under the central banking regime and to perpetuate the looting of the economy by monetization of federal government debts and other ultimately worthless "assets."
During the Great Depression, President Franking Roosevelt, upon taking office in 1933, declared a "bank holiday." He ordered all banks to close. Many of those banks never reopened and many people lost their savings. He also demanded that all Americans turn in their gold holdings in return for paper currency, which was one of the biggest robberies in history up to that time. Some pundits are predicting that another such bank holiday is being planned to put the brakes on price increases, once they begin in earnest, by depriving people of access to their savings, as was done in Argentina in 2002.
Governments that mismanage money invariably use the force of law to prevent the sheep from escaping from the shearing pen (or the slaughter house). So long as people are completely dependent upon political money and banks, they will docilely (or grudgingly) accept whatever "solutions” the political leadership puts forth, and do whatever the government demands of them.
Fortunately there is a way out. The primary purpose of money is to facilitate the exchange of goods and services in the markets. But it is possible to mediate the exchange process without using political money as the payment medium, and without borrowing from banks.
There is plenty of precedent for this sort of cashless trading. It involves a process of direct credit clearing among associated buyers and sellers. During the Great Depression the entrepreneurial middle class in Switzerland organized themselves into the WIR Economic Circle Cooperative. After 75 years, the WIR clearing circle continues to thrive with more than 60,000 member businesses trading the equivalent of about US$1.3 billion per year.
The past four decades have seen the emergence of a new industry comprised of commercial trade exchanges, sometimes called "barter" exchanges, that act as "third part record keepers" enabling the same sort of direct credit clearing for thousands of businesses in cities around the world. Efforts at the grassroots by social entrepreneurs to localize exchange and finance have been similarly widespread in many communities over the past twenty-five years.
Measures to properly reform the money and banking system by political means have about as much chance as the proverbial snowball in hell. However, what is possible, and what seems to be gaining traction to transcend the dominant system, is the materialization of voluntary, private initiatives that enable the cashless exchange of goods and services. As these systems continue to improve, proliferate, and scale up, they will provide a pathway toward a sustainable economy, greater local control, and a better quality of life for all.
Thomas H. Greco, Jr. is the director of the Community Information Resource Center, which he founded in 1992. CIRC is a nonprofit consulting organization and networking hub dedicated to economic equity, social justice, and community improvement, specializing in community currency and mutual credit design, development, and implementation. His newest book is The End of Money and the Future of Civilization.
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