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A defining move by the Fed last week to buy billions in treasuries and Freddie and Fannie mortgage backed securities will change the world as we know it.
In my November 25, 2008 article entitled 'Deflation Dragon Disaster', I asked:
Will the unprecedented inflow of cash that is being injected into the system be enough to still the Deflation Dragon? At what point will the unyielding upward trend in the dollar be stopped in its tracks by the avalanche of FIAT sisters and brothers joining daily?
With the Fed buying 300 billion in treasuries, I believe that day of reckoning has come. Martin Weiss of Money and Markets adds up the tally of government funds committed so far as close to 13 trillion. He also reports a total of 57.3 trillion in credit default swaps. This inevitably will push the dollar down.
I explained the perils of this stealth tax in my December 30, 2007 article:
I hear many smart financial people say ‘but Americans buy everything in dollars so it won’t really affect us much’. ‘It is great for increasing our exports’ they add.
Yes, it does at first, but products aren’t sold on price alone but design, promotion, etc. To them I say “Foreign countries and Americans sell commodities at the international price on the Chicago Market. Cocoa beans, chocolate, oil, plastics and soy beans are all paid in US dollars at the international prices.”
I continued on to say:
The thought that you will not even hear whispered is that an unhinging of the reserve currency could happen and that would cause financial panic, plummeting stock markets, oil priced in the us dollar would rise way over $100 a barrel and the gold price, which has been shouting inflation, would quickly jump over $1000 an ounce as investors seek protection in safe havens.
The government’s reserves would be gone in a few days if it had to support a dollar dive. Conversely, if we keep our dollar strong, foreign capital from the developing world will buy the US dollar and help finance the huge liabilities of social security, Medicare and interest on the national debt.
I also explained in my August 12, 2007 article:
If fear of US instability creates more selling of the dollar, interest rates will have to eventually rise considerably to lure the world back to buying the greenback.
Foreign government saber rattling by Russia and China has finally brought attention to the viability of the US dollar as the world’s reserve currency.
Is a planned New World Order complete with a New World Currency backed by gold and silver all a part of the puppet show unfolding before our eyes?
What would the consequences be if the world Mainstream news media has finally tackled this concept with questions this week to Bernanke, Geithner and President Obama asking if they were for a new world currency. Obviously they all said no. We know this issue will be well represented at the G20 meeting in London on April 2, 2009.
If currency devaluation does come due to:
- A massive spending and bailout.
- A fear based rush out of the dollar.
- A planned devaluation of all G20 currencies.
Let’s look ahead at what will ensue.
Is the US FIAT currency in trouble? If the last 10 days is any indication of what is to come then yes, I think it is. In order to bolster the dollar we have to quickly reverse course to squeeze out inflation and excessive liquidity by raising interest rates. The fed policy is set and this is NOT part of the present plan. One day soon, inflation’s invisible tax will soar.
How much Keynesian spending does it take to purge deflation? When Japan opened the tap, their currency did not quickly fall off a cliff. Does this offer hope to the Greenback? As the FIAT Benjamins get caught like birds in the engine, will Obama be able to make a safe crash landing?
As the dollar falls, you can bet on swift restrictions to moving money out of the country to safer currencies and banks.
Commodities, mainly gold and oil, are caught in the vice grip. On the one side, nervous Nellie’s who know as the dollar falls gold, silver and oil will rise and those who believe the market bottom is not yet in. Demand destruction and deflationary forces could still pull oil under $50 a barrel. Gold mining companies seasonally sell off in May. Will we see the plunge protection elephant use a spring market bounce to jump on gold in May knowing this will put fear into even avid gold investor’s hearts? Probably.
If you took my recommendation in August or September to load up on gold mining companies, although you should have good profits I would hold tight. If the price of gold does fall we will use the opportunity to buy more. Don’t expect prices to fall to 08 lows. This latest debasement of the dollar will just reaffirm China, Russia and the Middle East’s commitment to moving big capital into the yellow metal.
Other then gold, my three favorite ways to safeguard cash from a falling dollar are the commodity rich currencies of Canada, Australia and Norway. (The Swiss Franc was borrowed en masse to make loans for Baltic country mortgages, many now under water.) If the Deflation Dragon still has more fire in him, we may yet get another chance this summer to pick up gold, silver and oil at lower prices.
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On Mar 29 01:09 PM ChindiaRules wrote:
> Plus what if gold is confiscated like FDR did on April 5, 1933 thru
> Presidential Executive Order 6102...making possession a 10 year felony
> and requiring you to turn it in for an "equivalent amount of any
> other form of coin or currency coined or issued under the laws of
> the United States."
A bit confused over your statement "Is a planned New World Order complete with a New World Currency backed by gold and silver all a part of the puppet show unfolding before our eyes?". No worries, we're on the same page w/ the NWO and puppet regime in Washington. I just assumed that the elite wanted a new world currency that was still fiat in nature, that's all.
I note that a weak dollar in general tends to help multi-national companies (on a relative basis) due to favorable exchange rates upon coversion of foreign sales back to the dollar.
A weak dollar should also give us one last good chance to lighten our personal debt loads over the next 5-10 years, as inflation indeed helps debtors.
I too believe we'll see another pullback in Gold before it starts to skyrocket, giving us one more good chance to get in. Declining credit on a massive scale is what's currently keeping inflation in check, but the tables will soon tip the other way.
The New World Order is dependent upon debasing fiat currencies and forcing governments to buy into a world currency.
They have tried this since Jimmy Carter and came close a couple of times but now that they have Obama and the CFR guys running the Administration they have a good chance of pulling it off. The UN, which the CFR and Tri-Lateral Commission control with be the vehicle of their choice.
I predict that they will fail as politicians worldwide want to control their turf and they will, with grass roots efforts hopefully, wake up the public to the danger of One World Government!
If you know anything about the quantum theory, particles can "tunnel" out of closed systems which would be impossible in classical physics.
Likewise, the value of your dollar "tunnels" out of you pocket and into the Fed and is redistributed among it's toadies.
As long as enough Americans remain ignorant of this process, it continues, and any effort to remedy it will make things only worse, just like a patient, when he does not understand the nature of his disease selects the wrong remedy.
And Americans will remain ignorant as long as the "big media" continue to serve the same interests which are tunneling the money out of your pocket.
On Mar 29 03:03 PM Richard K wrote:
> He had to do that prior to devaluing the dollar vs gold, otherwise
> private gold owners would have reaped a windfall profit. Today, with
> no link to gold, the federal government is free to devalue dollars
> as it pleases, with no need to confiscate anything.
>
> On Mar 29 01:09 PM ChindiaRules wrote:
put there money? What other currency is there? US officials
believe there is no way people will abandon the dollar.
Didn't take much to tip our glass-jawed everything-must-go-right leveraged-to-the-max consumption economy to 40%+ car sales declines and countless trillions of derivatives losses.
The geniuses that brought us here will fight to keep their privilege and system going to our last dollar. That's why it's foolish to trust them as even many who should know better do on these commentaries. These fools are probably losing control of our privileged national position of reserve currency as we speak and consequences will really throw us into Eastern European mode.
Constitution, anyone?
On Mar 29 01:38 PM WACG wrote:
> HA! I should take advice from a former fashion model and clothing
> designer when considering macro economic trends!? The internet as
> an information distribution engine has become a "race to the bottom".
> Amazing! (and good grief!)
If Volcker and his Group of 30 have their way, Obama will inject their agenda into the G20 without questioning for a moment that perhaps, just perhaps, the information that he has been fed is incorrect. Unless of course Obama already knows he's playing the game, in which case he'll happily adopt any agenda provided to him by the axis of evil (Volcker, Geithner, Summers).
Logical minds say no NWO lackey in his or her right mind would have intentionally created this crisis - since they obviously can't control the unraveling - but they'll certainly attempt to jump on the opportunity.
On Mar 29 05:29 PM Prudent Man CFA wrote:
> Yes!!
>
> The New World Order is dependent upon debasing fiat currencies and
> forcing governments to buy into a world currency.
>
> They have tried this since Jimmy Carter and came close a couple of
> times but now that they have Obama and the CFR guys running the Administration
> they have a good chance of pulling it off. The UN, which the CFR
> and Tri-Lateral Commission control with be the vehicle of their choice.
>
>
> I predict that they will fail as politicians worldwide want to control
> their turf and they will, with grass roots efforts hopefully, wake
> up the public to the danger of One World Government!
With the announcement by Bernanke to buy Govt bonds, I'd be inclined to sell US govt bonds to protect capital. The fix is in, temporarily. And the sellers may just look to a currency like the Yen.
There are those that would say the interest on Japanese Bonds is low and why would anyone take that path.
I'd argue that the best idea is to be concerned not with return on capital but RETURN OF CAPITAL.
The real risk is inflation and/or a devalued dollar.
On Mar 30 01:32 PM secmaven wrote:
> The New World Order currency will be created and managed by an expanded
> IMF with its headquarters moved from Washington DC to Bejing. There
> is no necessity that this currency be tied to redemption in gold
> and silver. Rather a market basket of national currencies will be
> exchanged for the new money. Big problem is what to do about
> the debt holders of trillions in US obligations.
We know he saw them as a clear and present danger.The road to hell is paved with good intentions.
On Mar 30 06:46 PM Adrienne Gonzalez wrote:
> It is amazing to see such an open discussion of NWO agendas on a
> legitimate investing website. Sadly, you are correct.
>
> If Volcker and his Group of 30 have their way, Obama will inject
> their agenda into the G20 without questioning for a moment that perhaps,
> just perhaps, the information that he has been fed is incorrect.
> Unless of course Obama already knows he's playing the game, in which
> case he'll happily adopt any agenda provided to him by the axis of
> evil (Volcker, Geithner, Summers).
>
> Logical minds say no NWO lackey in his or her right mind would have
> intentionally created this crisis - since they obviously can't control
> the unraveling - but they'll certainly attempt to jump on the opportunity.
>
On Mar 29 01:38 PM WACG wrote:
> HA! I should take advice from a former fashion model and clothing
> designer when considering macro economic trends!? The internet as
> an information distribution engine has become a "race to the bottom".
> Amazing! (and good grief!)
On Mar 29 09:39 AM mrbill wrote:
> So where are all those deflationists now?
On Mar 29 09:25 AM bagman432 wrote:
> Basically a good article that makes sense and your advice is sound.
>
>
> My main argument is with your comment regarding the likely price
> of oil, gold, and other commodities should the dollar be replaced
> as the reserve currency. If this happens expect oil & gold to
> soar 3 to 5 times your prediction. Most other commodities, as they
> are priced in dollars, will double, triple very quickly.
On Mar 29 04:58 PM hpcooperjon wrote:
> Enjoyed the article, my first read from the author. Try "vise",
> not vice unless that's what you are talking about.. "On the one side,
> nervous nellie's, (nellies) who know (that) as the dollar falls (,)
> gold, silver and oil will rise and (on the other side, are) those
> who believe the market bottom is not in yet". Just being picky since
> I don't have anything useful to say. I'll proofread your articles
> if you like.