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Alan
Greenspan had full knowledge of his betrayal to the principles of sound
money. He wrote early in his career about the only legitimate basis for a
monetary system, namely Gold. His published works from four decades ago read
like an indictment against his career for monetary crimes against the nation.
His accommodation, giving the financial sector what they wanted, betrayed his
mindset. He knew the nation courted disaster with a long delayed fuse. His
quote is being circulated frequently and broadly lately, "Gold is the
canary in the financial coal mine." Exactly, precisely, perfectly.
Greenspan proved to be a great handler of the politicians, offering them
obfuscation of the most erudite variety. They were so confused by his drivel
to be immensely impressed. The Jackass was not impressed, not after the 2000
events unfolded to reveal the US as a naked asset bubble blower. Not after
the same events revealed Greenspan to be an inflation engineer specializing
in serial asset bubbles blown to wreck the nation. My attitude years ago was
to listen to his topics of debate, to ignore the words, and to anticipate a
crisis event in the sector he mentioned. It worked every time. What
Greenspan brought to the nation was a nearly complete interruption to the
process of capital formation by virtue of the asset bubbles he engineered.
His policies undermined and destroyed capital itself. He puffed up the
finance sector at the expense of the tangible economy. Industry was forfeited
in the pathogenesis of managed inflation.
THE
WAR FACTOR
To be
sure, the war machine, immature during the Vietnam War, more mature for the
advanced Iraq and Afghan Wars, accelerated and completed the process of
saturating the nation with debt. The combination of domestic asset bubble
development and war machine maturity conspired to gut the nation of industry
and force it to depend upon a sequence of asset bubbles. They all busted. Few
analysts dare to point a finger at the war costs, deemed sacred, rarely
debated, always funded. Half the national debt of $12 trillion is attributed
to war spending, hardly defensive anymore. The USMilitary expansion has become
servant to its own gargantuan appetite, no longer driven by security motives.
Expansion of war to secure supplies for the nation might be better explained
as the global stretch of the military complex in order to secure supplies for
itself. The complex is a vibrant independent enterprise. It might require
new wars to secure its own supply chain in order to sustain its own
operations, which increasingly depart from the objective of the people, and
increasingly conform to the Syndicate objectives.
Deception
of war motives and war purposes is replete with the same sort of deception
inherent to USEconomic statistics. In Iraq, supposedly masses of troops are
heading home. Those not heading home reveal a convenient reclassification.
The soldier title of HBCT (Heavy Brigade Combat Team) was changed to AAB
(Advise & Assist Brigade). Presto! Far fewer combat troops, but same
duties, same operations. It reminds a person of economic statistic deception,
relabeling what makes for an unemployed worker. The soldiers are mere
accounting ledger items. The soldier death count is another statistical
deception. The actual death count is at least triple the official number
posted by the USMilitary. The official count is of soldiers who died on Iraqi
soil, not those who were moved to hospitals outside of Iraq, like other
Persian Gulf nations, a ship on the Gulf itself or the Mediterranean Sea, or
even Germany. The best statistical accounting deception in the gold world is
the USTreasury reporting. Gold on the USGovt balance sheets is accounted for
as Deep Storage Gold, as per ore mined but not processed in a mountain. More
tricks. For those Americans who engage in reading novels, the book "1984"
is relevant.
The
Jackass has a controversial forecast, initially made in autumn 2008. Expect
the pressures to build eventually until the USMilitary complex, including
the defense contractors and the military service contractors, are led to
splinter off into a private corporation. Its business will be arms dealer
and mercenary provider, with a core narcotics business segment. Those who
deny this inevitable path must be blind, must be dumb, or prefer to wear
underwear bearing the stars and stripes. In their wake will be a nation they
once served sliding into the Third World. In their foreground will be vast
wealth accumulated by the Syndicate.
THE
FINAL BUBBLE
In
the aftermath of the tech telecom bubble bust ten years ago, Greenspan
actively pursued the next bubble. Historical precedence dictated that a
housing decline would come in 2001 and 2002. But such an event would have
spawned a powerful recession that would have killed the banks, whose main
diet had become credit derivatives. The lack of regulatory oversight enabled
this queer racket to expand into a mammoth hidden business, a giant casino
where the Wall Street banks actually placed billion$ bets against their own
clients, against the major corporations of America. To say that constituted a
conflict of interest is the understatement of the decade. Its scummy effects
are slowly coming to fore in the United States and Europe, in the mortgage
market and sovereign debt market. The awakening has led to great anger,
harming the banker image irreparably, when combined with home foreclosure
disgust.
Greenspan
encouraged a housing revived bubble ten years ago. He actively lobbied the
financial markets to believe that full support for a USTreasury rally and
mortgage bond rally would ensue, given the full beneficial power of monetary
policy. He spoke at conferences. He gave press conferences. He
interviewed with the press. He leaned on Wall Street. He preached to the
USCongress. He finally swayed the financial markets. The result was that a
typical housing market correction was averted. Instead, a powerful housing
market rally took place, a climax rally. It sucked in every conceivable
vagrant buyer, including a homeless bum in St Petersburg Florida who bought
two homes without income or assets, full exploit of the NINJA loans (no
income, no job or assets). What a travesty and blotch in American financial
history. Even Fannie Mae entered the act, advertising on television with
minority actors to encourage the last buyers to fall into the bubble trap.
They succeeded, and minorities became the first victims of the wrecked,
dispossessed, and bankrupted citizens.
The
subprime mortgage chapter was a planned event, not by Greenspan, but by Wall
Street firms. They went far beyond what Mr Magoo
planned. They needed fresh meat to feed upon. Unqualified buyers served as
cannon fodder to Wall Street bond merchants, offering hefty fees in bond
securitization. Foreign investors were lined up like toy soldiers on a table
for execution. The backfires are a plenty. The MERS database for title
registration, intended and designed to handle the rapid trading of mortgage
bonds, has been declared in several states to have no legal standing. Thus
MERS has turned into a crowbar that intelligent enlightened emboldened
homeowners can use to apply pressure on the banks and mortgage firms to avoid
foreclosure, and live rent free in a home while still holding title. The
strategic mortgage default practice, simply not paying, has spread like a
mild virus.
Greenspan
built the next asset bubble with full motive. It was a doubled chambered
asset bubble, which enabled him to retire before a deep intractable crisis
struck. The housing bubble grew leaps and bounds, doubling prices in some
regions, called the Sand Bubbles. Arizona, California, Nevada, Florida, they
all expanded, and now have contracted. The city of Miami has hosted a
national jamboree for the foreclosure victims, another blight much like the
tent cities. New home prices in the Phoenix area have been cut in half. Talk
about the wings being burned off the rising bird, which fell hard to the
ground! Millions each year have been tossed onto the national dump of
foreclosures, left with no savings, no homestead, often with no job, and too
often with no pension, and clearly no hope. The other bubble was mortgage
finance. A great majority of the Wall Street business model transformed into
leveraging profits off mortgages, either from fees off bond securitization or
nasty gains from insuring against bond failures as clients lost arms and
legs. The parade of client lawsuits has replaced the parade of clients
seeking bond issuance. Talk about wings being burned off the financially
engineered bird!
Even
though gone from the scene of the crime, Greenspan ensured the final asset
bubble. Perhaps unwittingly, perhaps expectantly, no matter. When home prices
inevitably and inexorably fell, the great housing bubble would transform into
a charred ruin. Note the contrast in Time Magazine covers. What a difference
five years can make. The Jackass forewarned back in 2005 that a great train
wreck would happen, severe enough to render the entire US banking system a
ruined victim, from a guaranteed insolvent condition. It happened as
prescribed. So behold the final bubble implicitly and passively designed
by Greenspan, the USTreasury Bond. It has gained attention as a bubble,
but again no asset bubbles are bad until they are broken. Wall Street
encourages asset bubbles, as that is their reason for being. They then
exploit the bubbles as professional vultures. As the housing wreckage and
the mortgage wreckage unfolded, the safe haven was grabbed and sought in
USTreasurys. The current situation actually finds the bond rally to be
proof positive that symptoms scream of systemic failure. The USTreasury
complex is the only game in town that seems to offer investment gains inside
the paper realm. Gold is the rising star on the tangible realm. Gold has
begun to distinguish itself from the commodities, since the realization has
come that GOLD IS MONEY.
The
arrival of systemic failure was guaranteed by the Clinton Admin decision to
grant Most Favored Nation status to China, our next trade rival and current
bitter trade enemy. That the US nation could send industry to China, enjoy
the benefits of Low Cost Solutions in sustained profit margins, remove
legitimate income, replace it with debt off asset bubbles, and expect as
economists promised a continued decade of prosperity testifies to the lunacy,
stupidity, and heretical guidance of US economists. The US corporate sector
seemed to grasp at a decade extension of economic good times. The result was
the rise of China, the grand accumulation of $2.5 trillion in reserve assets,
and the encirclement (aka strangulation) of the American body by Chinese
investment and partnerships the world over. The decision to partner with
China has not been questioned much, even now.
Witness
on this side of the Pacific Ocean an embraced USTreasury Bond bubble, blessed
as good, regarded as the ultimate in safe haven. In the next several
months, watch a radical change unfold in the perception of the USTreasury
asset, from safe haven to next broken bubble, even a tragic path toward debt
default. My sources tell of a 2006 Christmas effort to devalue the
USDollar by 50%, but the plan blocked by China. Watch for the 50% devaluation
to be pushed and pushed until it sticks. Boycott of USTreasurys will go
global. The USTreasury auction process will turn into a fraternity
celebration of onanism. In fact, with the proliferation of high frequency
flash trading on the stock side, the isolated monetization of USTreasurys and
good ole boy nether relief practices will mark a complementary bond style
perversion. Such lone hand satisfaction requires isolation and often
darkness. Talk of Greek Govt bond default will turn into a fever. Next will
be Spanish Govt bond default. We will see a parade of them, including Great
Britain. The year 2011 will be tumultuous, as a new currency is introduced.
Germany will lead the way, and the once formidable USTreasurys will be
treated to an American sunset.
THE
GREAT ANTI-BUBBLE
Behold
the powerful Gold ascendancy. What great amusement comes from watching the
squirming of financial anchors and their guests, the confused banter, the
ideological pretzel contortions, the shallow discourse, the nitwit criticism,
the self-serving errant banter, the fiat paper ideological warfare
propaganda, the abject vacancy dressed in monetary mental monotone. The
struggle to comprehend the rising Star of Gold by the financial media is much
more amusing than frustrating. Five years ago with the advent of the Hat
Trick Letter, a frequent stream of curses was directed at the television
screen during interview of supposed experts. These past weeks and months, a
smile comes during interviews of the same compromised deacons committed to
the ideological priesthood, striving for a piece of the paper pie. It will
not come. Instead, a pink slip of paper will arrive on desks, to the tune of
80 thousand jobs to Wall Street firms, according to Meredith Whitney, the
former Oppenheimer analyst. Such reductions would comprise 10% of current
workforce levels. The structural decline in Wall Street profits over the last
three years began with busted bubbles, but continues with a perverse
replacement of stock and bond issuance by client lawsuits. The damage extends
to Europe and England. See Barclays, Credit Suisse, and Royal Bank of
Scotland Group. Bear in mind that the USTreasury Bond bubble has sucked most
capital from the world, as even bond offerings struggle and spreads widen.
Behold
the powerful Gold ascendancy. What great amusement comes from watching the
minimization of the gold price advances by financial anchors and their guests,
the envious avoidance, the denigration from the loser corner, bizarre bubble
accusations. The anchors seem not to show much respect for a 300% return on
investment for gold in the 2000 decade, the clear victor among asset groups.
It is only gold, the pesky yellow metal. It does not really count as an
investment, since it is not an approved vehicle within the paper fleet. The
1973 movie "Paper Chase" with John Houseman and the
subsequent television hit series in the following decade was cool. It
featured a group of Harvard Law students struggling to succeed in a rigorous
program made more difficult by a surly but competent professor not prone to
smiles or displays of human tenderness. It was a favorite weekly show of the
Jackass, young at the time and developing unorthodox iconoclastic tendencies.
The gold community has turned away from the Paper Chase, the Wall Street
game, the fiat charade, the heresy on paper wheels.
One
key family member of mine shunned the advice given in 2001 to invest 25% of
life savings, my future inheritance, in a gold investment. In 2010 after the
quadruple was complete, the same person expressed satisfaction in NOT having
invested in gold over those same ten years, since it seemed risky and went
against the grain of the system. He comes from a different age, with
engrained trust for the system, a veteran of a war long ago, one who prefers
not to contemplate the threats made against his son by USGovt agencies.
Little satisfaction comes to the Jackass except from personal colleagues and
trusted friends in the gold community who get it. One might expect similar
lack of satisfaction when preaching the gold theme to family members and
close friends for other people, other gold warriors. My view is that
acceptance of the Gold theme is much like politics or religion, should not be
forced, but other opinions need not necessarily be given too much respect. A
progression has been well noted of family and friends in response to the sequence
of crisis events, full shock, and personal impact to them. They go through
their defining moments, their watershed decision points, but usually continue
committed to the paper trail. They tend to express hope that the nation can
pull out of the current morass of problems. My stern replies of worsening
forecasts go unheeded, each dismissed like the last, despite the string of
correct systemic breakdown forecasts. Conclusion: make new friends, stick
with the gold friends, as we will rule the earth, all in time. Family and
friends might be given some help later, from a different pecking order.
Gold
reacts to many things not seen by the mainstream. It
reacts to the extreme distress of the creaking dying financial system. It
reacts to the failure of debt denominated monetary system. It reacts to the
insolvent US Federal Reserve. It reacts to the moribund environment for
capital formation. It reacts to the debt saturation. It reacts to the
burgeoning federal deficits. It reacts to the 20 months of 0% that cannot
kickstart the USEconomy. It reacts to the still declining housing market. It
reacts to the tragic march of home foreclosures. It reacts to the tragic
march of the unemployed. It reacts to the 20% of the homes mired in negative
equity. It reacts to the reluctance to serve remedy, reform, or restructure
by the big banks who have the USGovt finance ministry in a choke hold. It
reacts to the wars that exhibit a cancer upon the presidency. It reacts to
the absence of industrial base, dispatched to Asia. It reacts to the hidden
lack of comprehension for the consequences of unsound money. It reacts to the
ugly aftermath following two decades of falsely priced cost of money. It
reacts to the failed central bank franchise system. It reacts to the end of
the road for additional bubbles to blow on the American landscape. It reacts
to the growing despair extended from the dark clouds hanging over the current
environment. It reacts to the lack of comprehension of money itself by the
brain trust posing as bank leaders. It reacts to the lack of comprehension of
economics itself by the brain trust posing as economists.
GOLD
& SILVER BREAK OUT
The
mainstream financial press networks cannot grasp the meaning and potential of
gold. They hate it. The broader comprehension of gold is superficial.
They recognize the excess of government deficits and debt issuance, but
not their permanence. They recognize the fast vast creation of new money, but
not the need for repeated episodes of more creation, to the point of total
debasement. They recognize the need for safe harbor, but still cling to the
notion of USTreasury Bonds offering that safety. They recognize the need for
inflation to return, but not how a chronic dependence upon inflation brought
the current wreckage. They recognize the inevitability of further debt
burdens, but not the certainty of debt default. They recognize the need to
reduce the US debt to manageable levels, but not the wicked foreign response
in global revolt. They recognize the foreign angst over the USDollar and its
teetering condition, but not the global revolt against it. They recognize the
missing collateral reserves in the banking system, but not how gold used to
serve that purpose. They recognize the sickness of the debt based monetary
system, but not the ultimate requirement for a complete overhaul of the
monetary system. They recognize the rise in the gold price, but not its
identification as money in a moneyless world. They recognize the broken
system, but believe it can be righted, if only naively by the passage of
time. They confuse legal tender with money. They do not understand gold,
but they will, probably when it is too late. GOLD IS BOTH THE STORE OF
VALUE AND THE BALLAST IN THE BANKING SYSTEM. It offers stability, but seems
like dead weight to the ignorant.
The
gold price has broken out to new highs. This is just the beginning. The
silver price has broken out to new highs. This is just the beginning. The
mainstream has no idea how high the gold & silver prices can reach. My
response is simple. No effort has come to reform the financial foundation.
No effort has come to bring remedy the broken platforms. No effort has come
to restructure its workings. The first steps involve liquidation of the
vast swaths of badly impaired, often worthless bonds that clutter the banking
system like discarded rags in a sewer pipe. No effort will come either, since
orders to repair the financial platforms would bring about sudden death to
the big banks that control the USGovt and its finance ministries. Gold understands
all this very well. Gold realizes that no Big Fix can come without trashing
the entire power structure, turning the system upside down, and giving
invitations to criminal prosecution. The Gold price is constantly and
steadily fed strong nourishment.
The
gold & silver prices have broken out to new highs. Tremendous heights
will be achieved. We will see $2000 gold, then later $3000 gold. We will see
$40 silver, then later $70 silver. It is pre-ordained. It is written. It will
be done. Nothing is fixed nor will be fixed. Much money has been wasted, and
more will be wasted. Each round of economic stimulus pushes the gold &
silver price higher. Each round of big bank bond redemption pushes the gold
& silver price higher. Each round of sanctioned official debt
monetization pushes the gold & silver price higher. Each round of
inaction from political delay or stalemate pushes the gold & silver price
higher. The only lack of satisfaction from the leaps higher in precious metal
prices comes from knowing that the world as we know it will change, as the
landscape shows evidence of economic scars. Supply chain disruption, price
inflation, lost financial security, social unrest, and growing chaos will make
it difficult to enjoy the strong purchasing power from a high gold &
silver price from personal holdings in investment. But the alternative is so
much worse than not holding them in investment. Gold & silver are a vote
of no confidence in the paper system. Gold & silver are vast life boats
during a tsunami. Gold & silver are a stake in the future.
Gold
fights the big political battles, but silver takes the greater spoils. Behold
gold on the verge of a powerful breakout. Gold is not an inflation hedge, but
rather a monetary system failure hedge. Gold is not a dead asset, but rather
the ultimate form of money. Gold is not an investment without yield, but rather
the a store of value serving as ballast for the global banking system. Each
round of stimulus, bond redemption, bank aid, and annual government deficit
lifts the gold price potential another $1000, and the silver price another
$20. Silver is favored on the supply side of the price dynamics, and
silver is favored on the demand side of the price dynamics. Massive supply
shortages are being reported and realized. Just this week a private off
market silver sale took place in the multi-million$ at a $24.50 price,
according to an information source. The disparity between the physical market
and paper market will remain wide, even as both price structures move higher.
JPMorgan
is on the extreme defensive. While the new Financial Regulation Bill might
have caused some disarray of the price suppression gamers, the bill surely
has emboldened precious metals investors. By the way, a deep contact informs
that Bank of America suffered a death experience on the weekend of July 24th,
the same weekend that the London Bullion Market Assn went dark on reported
data. Around the same time the Bank For Intl Settlements was fumbling around
with phony stories regarding their 340 ton Gold Swap contract. The
truth is... the BIS bailed out the London metal exchange, on the edge of
default, which has suffered repeated gold raids. They have been
forced to defend against a sequence of coordinated raids, all legal,
demanding vast gold bullion and obtaining it. The BIS bailed out not
commercial banks, not the Portuguese central bank, but the London metal
exchange. The LBMA is struggling to avoid completely empty inventory. More
BIS backdoor supply handoffs will come. Expect the gold raids against London
to continue until the corrupt Anglo bankers are plowed under like a weeded
lawn laced with rubbish. Soon a big bank will fall, from the incremental
drain from losses defending the gold price without success. My guess is Bank
of America. It will be absorbed by the titans on Wall Street, the corrupt
monoliths. Eventually only two will stand, by the time the USTreasury default
approaches.
Jim Willie CB
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