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Advanced
life forms on other planets are reportedly rolling on the ground laughing at
the willfully delusional condition of humanity today. In a state of complete
denial as to the meaning and root causes of the rapid decline in civilization
now underway, both are ignored and perpetuated.
Foremost among the
symptoms of the collective insanity is the inverse relationship between
T-Bonds/ US dollars and gold/silver.
T-Bonds, or more broadly,
all securities issued by the United States Treasury,(treasuries) are the
units of value that enable the issuance of dollars from the U.S. Federal
Reserve. If nobody bought treasuries, the fed could not issue any money. Inflation
would be theoretically over.
More importantly,
the “stimulus” plan organized by Barack Obama would not be
possible, because the money just wouldn’t be there. The declining
interest in treasuries is apparent in the diminishing prices and increasing
yields.
Well so he pulled it
off. $819 billion greenbacks are about to come whimpering into
existence….somehow. I’ve been looking at the charts of monetary
supply, U.S. debt, T-Bond yield, and planned T-bill auctions. Of particularly
suspicious character is the announcement anticipating the expectation that
bond prices will drop further, and yields will increase more, to attract
investors. Alongside that little fragrant tidbit is the absolutely rancid one
that says the U.S. Federal Reserve is going to be a big buyer of long term
bonds.
So let me see if I
have this straight. The Fed prints money based on the sales of United States
Treasury bills, which the U.S. Treasury sells to investors so it can write
checks to the Fed so the Fed can print money. If the Fed is the buyer of
T-bills, then isn’t that like kiting a check to yourself from your own
account at a different bank? Is this how the debt/money supply thingy works?
If I did that, at
some point I would get a visit from a gentleman wearing a uniform who would
be determined to stop such behavior by depriving me of my liberty. I think
it’s called “fraud”. The trigger for that would be when the
bank cashing the check realized that the signature on the back of the check
was the same as the one on the front. Bernie Madoff was recently deprived of
his liberty for just such an offence, with minor variations.
Now I imagine if I
was as highly organized a criminal organization as the United States
government/banking cartel that I would employ a vast empire of minions, all of
whom would be tasked with generating scads of complicated and contradictory
data, so that the sharper tacks in the crowd wouldn’t be able to call
“Bulls**t” on my little ponzi enterprise. And obviously, since
this criminal organization also happens to be the government, this ruse would
have the veil of respectability afforded by official sanction. I would call
these data avalanches “statistics”. I would feed them to a
perception management apparatus, and call that “media”. The
statistics could then be rendered meaningful in “headlines”
The headlines are
disconcerting today, even if the bullish markets are to be expected on the
day when another $819 billion are going to join the impressive-sounding yet
increasingly worthless $12 trillion out there. If yields are increased and
prices dropped to entice buying, isn’t that sort of like a kick back to
a broker for pushing a worthless stock on his clientele? His clientele
wouldn’t buy it unless he did, and the stock issuer bribes him so he
gets it for cheaper than his clientele.
I’m assuming
the justification for the “stimulus” package is to create
employment so people can become eligible for more credit so they can buy more
stuff that they already have but would buy more new of if it was doable with
free money. Since the banks default and get rewarded with free government
money, and the government is the bank, so its ponzi scheme never gets raided
by the SEC, the lesson here for the public is, the bigger the debt you
default on, the more money you’ll be given to keep you afloat, so that
everybody thinks everything is just fine.
Our government not
only conducts itself in a criminal manner, we now export a criminal education
to future generations by virtue of our actions.
Meanwhile, the
prices of gold and silver are ruthlessly manipulated (or
“managed” as the perpetuators of the ongoing crime consider it),
because the biggest signal to purchasers of U.S. debt that the dollar was no
longer viable would be runaway monetary metals prices. That relationship
should now be crystal clear to even the most uneducated and disconnected
observer of currency and precious metals markets.
If (when) gold bolts
to $1500, all holders of U.S. treasuries will be looking to exit those and
head for gold and silver, as that event would either coincide with, preclude,
or closely follow, a complete abandonment of global U.S. dollar support.
This is what has the
aliens laughing so uproariously.
They see the
dominant economic force has trapped its neighbors into supporting its
currency, for it they don’t, their own reserve holdings of such
currency, which they have used to foolishly replace their historic reserves
of gold and silver, will collapse in value, dragging their own net worth
downward along with it.
A Catch-22 of the
first order. The embodiment of SNAFU. A global tragic-comedy starring
everyone. A gigantic galactic farce.
The increasing gold
price, and the corresponding increasing silver price are evidence that that
inverse relationship will soon be reversed. The magnitude of the upward
pressure on gold and silver is directly proportional to the negative
sentiment towards U.S. debt instruments. U.S. interest rates are at zero
because nobody wants U.S. money. Its purchasing power is universally
discounted.
Being right about
this is bittersweet. For it portends the next leg of the financial meltdown
will swallow national economies and impoverish the world. An apocalypse of
sorts, it will force the world back into the realistic conduct of its
financial affairs, and survivors of the era will shudder to think about the
nation who financed its ascendance with the wealth of its neighbors. It will
be the advent of truly intelligent life on earth.
Until then, the
aliens just keep laughing.
James West
www.midasletter.com
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