Showing posts with label new world order. Show all posts
Showing posts with label new world order. Show all posts

Sunday, February 06, 2011

Global Stock Market Crash Imminent

If you’re reading this because stock markets have crashed and the world’s economy is collapsing – it’s time for you to learn the truth.

What is happening to our economy – and to us – is not random chance and it’s not because of the many reasons you are being told on your television and radio.

Mainstream media and world (political & financial) leaders are telling you many reasons why the global economy is crashing – and none of them are true.

Hopefully, you are now asking yourself a very important question.  

What is the truth?

The truth is that the global economy has been built on a foundation of sand – and there are motives at work here – motives that do not benefit you or me. 

Yes – there are many people who can describe the many pieces of the global economy – but there are very few people who truly understand how it works, why it was created and understand that it has always been unsustainable.

You and I live in a system that has kept the world in financial bondage and is destined to fail – and fail it will.  This isn’t opinion – it’s math.  Some very simple math will tell you that the global debt based monetary system will fail. 

This is leading you to some obvious questions.

If some relatively simple math will show that the world’s economy has always been destined to fail – why wasn’t this prevented?  Why haven’t we been warned?  Who has let this happen?  Who is behind this? Why are government and financial leaders leading us astray?  More importantly - why are they lying to us?

Great questions – and you will not like the answers.

In fact, you will find many answers on this blog that explain what is happening in our world. The answers will challenge your way of thinking.

Many of the things that you have been told your entire life about religion (including Christianity), about the Lord’s prophecies, about the global financial system and about who governs the world – are simply not true. 

There is only one path to truth in this world – and I will explain it all here.

The collapse of the global economy is just one piece of the puzzle. 

This mystery cannot be solved by only searching for things or solutions in this world.

I’m sure there will be many who agree with my analysis of the global economy – but they will not want to bring God into the equation. They will see my references to Him and His prophecies – and will not want to believe what I’m telling you.

Let me be clear from the beginning.

He is the reason I understand many of His prophecies.

He is the reason I have created this blog – to give to you. 

He is the reason I do not fear the people behind this economic collapse.

He is the Alpha and the Omega – the beginning and the end – and He has told us what is coming.  We haven’t been listening.

Much of what is happening can be summed up by two important facts:

1.      We – as a nation – have walked away from God and His ways

2.      We have vastly underestimated our spiritual enemy

Most Christian churches do not understand what is happening because they believe incorrect interpretations of Bible prophecy.

Our enemy has created a wondrous fantasy out of the Lord’s prophecies – and most of the Christian world has taken the bait – hook, line and sinker.

A classic case of bait and switch – on a global scale.

Don’t believe it?  You will.

They will try to take everything from us – until we have nothing left.

Who are ‘they’ you ask?

While we fumble around trying to understand what is happening – the beasts of Revelation chapter 13 are gaining control of the world.  They have controlled the world’s financial system for hundreds of years and have slowly infiltrated the world’s governments and the world’s religions.

This coming stock market/economic collapse will be the ‘event’ they created to push the world to accept a new global financial system and world government.  This world government is often referred to as the ‘New World Order’.  Call it what you will – it’s all about control of the world’s population by an ‘elite’ few.

The final push for world government began with the events of September 11, 2001 – and there have been many people working in the shadows over the past 10 years to bring about what we are experiencing today.

The devil’s hands have indeed been busy.  Over the past 5 years I have watched him work to move his plans forward - and deceive the world. In case you are wondering – he doesn’t fight fair.  Never has – never will. 

For those of you involved with the New World Order – those of you who call yourselves the ‘elite’ - those of you who think you are ‘enlightened’, but swear allegiance to God’s adversary – those of you who walk in darkness and think that you have hidden your plans from God and His people - you are mere puppets on the grand stage.  You are the blind leading the blind. I would advise you to get free of this abomination and make your peace with God before it’s too late.  

Pay attention to what I’m telling you. Though you don’t believe me – I have been given a message for you.  The day draws near when you will be cast into the place prepared for those who follow God’s enemy. You stand against the Almighty – do you expect to win this battle?  I have seen your end. You’ve already lost.  You will gain authority in this fallen world for a short time – and then it will end – forever. Search for the truth now – or face the consequences for all eternity.

As for everyone else – I will say again – it’s time for you to learn the truth about the world in which you live.  A world of lies and deception - deception on a level that is almost unbelievable.

If you feel that you’ve got God and this world all figured out and you don’t want your beliefs challenged – then there is no need for you to proceed.

If you are squarely focused on yourself and what you can get in this world – and you don’t feel the need to change – then there is no need for you to proceed.

If, however, you feel lost and want to believe that there must be something more for us – then you should continue.

If you feel that there is something seriously wrong with the world and you feel that if there really is a God that loves us – He would certainly show us the way of truth – then you should continue.

If you consider yourself a Christian and you need some guidance on what is happening and why from a Biblical perspective – you should continue.

If you are simply tired of the lies and are ready for some hard truth – then you should continue.

One of the many truths you will learn is that you have been asleep – and it’s time for all of us to wake up.

You will learn – as I have learned – that the Lord will show you the door – it’s up to you to walk through it.

In the near future, when the world (Mainstream media, Obama, Bernanke, Geithner, Greenspan, Bush, etc) tells you a million lies why global stock markets are crashing and the global economy is collapsing – ask yourself how I and some other informed people knew it was coming.

If you’ve seen ‘The Matrix’ – then this is your opportunity to take the red pill and see just how far down the rabbit hole this thing goes – or take the blue pill – walk away – and believe whatever you want to believe.

Remember – all I’m offering is the truth. Nothing more.

If you want to begin to learn the truth about the world’s economic system and the motives behind it – the journey begins here: 

http://endtimediscussions.blogspot.com/2006/09/our-monetary-system.html

http://endtimediscussions.blogspot.com/2006/09/our-monetary-system-part-ii-market.html

jg – February 6, 2011

 

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How long can the party in stocks last?

Wednesday, February 2, 2011, 11:23 am, by cmartenson


by Chris Martenson

The headlines are screaming at the top of every financial media outlet tonight:  The Dow Closes Above 12,000 For the First Time in Two Years!

What's going on here?  Is the recovery well and truly underway?   And, if it is, why is the Fed dropping hints again that "QE3 may get discussed" at future Fed meetings, as Kansas City Fed President Thomas Hoenig said on Feb 1st?

Given the raft of good economic news lately, one might be forgiven for wondering what the Fed has in mind here.  If everything is so economically rosy, why are they already dropping trial balloons about more Quantitative Easing?  What are they seeing that we are not seeing, that justifies more than $100 billion in thin air money each month, and why won't they just tell us what it is? 

Here's how ChrisMartenson.com member dbworld put it earlier today:
I thought I heard CNBC state the other day that there was seen an inflow into the US Equities market which hasn't been seen in a while. I didn't catch the details, but I'm hoping that Chris has a read on this and an explanation on why the US stock market is so strong.
While it's true that retail investors have only very recently begun moving more money into stock funds than they have been removing, reversing a 33-week-long outflow, this is focusing on the wrong element in the equation.  Retail investors provide only a minor amount of the rocket fuel used to elevate the stock market over the past several months.
Look at the amounts here, and also pay attention to the timeframe:

Over a 36 week period spanning from May 2010 to the end of January 2011, there was only one instance of 'investors' putting more money into stock mutual funds than they withdrew, and that one ,outlier was well under a billion dollars.  Over that 36 week period, over $100 billion was removed from the markets by investors.  Even when money started moving back in over the past two weeks, I want you to note the scale; the combined total is $6.7 billion.  Keep that figure in mind.
Instead, we should first focus on the massive injections of raw, potent, thin-air money (a.k.a. "credit easing") by the Fed into the financial system.  Sometimes this is referred to as "liquidity," which it is.  But that's too narrow a definition, because it is much more; it also happens to be high-powered base money (a.k.a. 'Wall Street rocket fuel').
Here's the stock market story over the past eight months:

Note that QE II began in early November of 2010 and that the stock market is up 20% since the end of August.
As an aside, I used to track the Fed's thin-air money programs very closely, and if you had told me as recently as three years ago that the Fed would have been running 11-figure POMO operations each and every month, I would have told you it was unthinkably impossible.  But here we are, that is exactly what is happening, and I am largely numb to the process, which worries me somewhat, as it means that my baseline has shifted.
At any rate, the point here is that from those August lows to now, retail investors have taken out far more money from the stock market than they've placed back in; a total of around minus $38 billion.
But over that same period, the Fed has placed nearly an entire order-of-magnitude more thin-air money, some $350 billion dollars, into the hands of financial institutions, some of whom consider the stock market their personal playground.

Here's a chart of the cumulative POMOs by the Fed from the end of August 2010 to now:

Should we consider the injection of more than a third of a trillion dollars and a stock market that is up by 20% to be a coincidence?  No, not in the least.  The stock market has become, if anything, a liquidity gauge first and a discounting machine second.  The fundamental that matters most is how much money is flowing into the machine.
So it is my view that the trillions of dollars of thin-air money and deficit spending are finally finding their mark (asset prices) and doing their work, just as I predicted they would.  Where some called for deflation to be the irresistible force that would drag us all down, I've consistently leaned towards the side of inflation.  Although, to be fair, I have always hedged that view somewhat, with a 70/30 split held for nearly 5 years that was recently amended to 80/20 (in 2010 shortly after QE II was announced).

On a Tear

Unfortunately for the rest of the world it's not simply the stock market that is the lucky beneficiary of all this Fed largess.  Thin-air money, once released into the wild, tends to have a mind of its own.
Commodities are now setting new records almost daily.  Where the stock markets still have some catching up to do, commodities are exploring virgin territory.

This is serious business, folks.  The future is not going to arrive 'someday.'  For the billions of people who spend a huge portion of their income on food and fuel, it has already arrived.
Looking at the above chart of the past 12 months, what we see is that everything, from metals to stocks to bonds to grains to energy, has experienced profound price increases. That pretty much covers everything you need to live on and the bulk of the paper universe.  Such a chart is a historical rarity for any one country, yet it currently happens to apply to the entire world.  You are living in historic times, which certainly belabors the obvious.

Your Lying Eyes

On the flip side, the story we are being told almost daily is that inflation is very low -- too low, even -- in a worrisome sort of way.  I am reminded here of an old Richard Prior skit where his wife walks in on him in bed with another woman.  To her increasing agitation, he denies that he has been cheating on her, finally shouting, "Who are you going to believe, woman?  Me, or your lying eyes!?"

Well, my lying eyes see something very different in that chart above from what I am being told; instead of worryingly low inflation, I see rapidly rising inflation that is very close to slipping out of control.   
I spend as much time on this subject as I do because the decisions you make based on whether you are protecting yourself from inflation vs. deflation are as different as to whether you grab an anvil or a life raft on your way out the door when facing an emergency. 
I do my best to let the data do the talking, and right now it is saying inflation.

How long will it last?

The old saying is, Don't fight the Fed.  That's good advice.  I have dutifully been following the developing story by watching what the Fed does, not what it says, and by letting prices tell me which way the wind is blowing.  It's a regrettable position to be in, because it's nearly impossible to make any long-range plans when you have no idea what the Fed is going to do next.  But here we are.

How long the stock market rally will last is therefore unknowable, but stocks and bonds and commodities will remain elevated in price for as long as the Fed continues to dump hundreds of billions of thin-air money into the markets.  The only problem is that there's no clear exit strategy for the Fed.
Putting money into the markets is a very easy thing for the Fed to do.  Letting rope let out under full sail is easy; tugging it back in is difficult.

The Fed faces a similar asymmetry.  Market participants are always eager to take fresh money hot off the press.  An infinite number of things can be done with that money almost instantly.  But coming up with money to give backto the Fed for Treasury of MBS paper?  All sorts of difficulties arise.

"Wait, we'd have to sell a lot of things to free up that kind money and what, exactly, are you proposing to hand us in return? Treasuries? Um, no thanks, not right now. Agency debt? Uh, no, that doesn't fit our portfolio needs right now either.  Perhaps next week?"

Further, when the Fed goes to get its money back from the marketplace, that action will drain liquidity, creating ripples throughout all sorts of markets, especially and including knocking the stock market down.  Very few people complain about adding thin-air money; a crowd roars its disapproval for the reverse.

Too Late

The bottom line is that by the time the Fed becomes institutionally aware that inflation is raging across the globe - and I often wonder when they'll finally awake to the threat - it will be too late.  Inflation will have the momentum, and it will take a vast overreaction on the part of the Fed to restrain it.  They'll have to drain enormous amounts of liquidity and tolerate vastly higher interest rates to be able to do that, and I doubt they have the courage for such bold action.  I think they will hesitate, equivocate, and ultimately be late.
History suggests that inflation is best tamed early, but the Fed is already late and demonstrating a remarkable callousness by doing the exact opposite of fighting inflation.  While we cannot know what it is that the Fed sees, or which demons it is fighting that provide the internal rationalization for risking a hyperinflationary outcome, we can only conclude that these threats are more spectacular than the alternatives.  
Unfortunately, these events conform to the main themes that I have been writing and advising about for the past several years.  Sadly, they are not a surprise at all; the only mystery to me so far is how they have managed to carry on as long as they have.
Events of the past few weeks - unrest in Tunisa/Egypt/Jordan, skyrocketing food prices, Dow cracking a 2-year high, dropping dollar with rising bond yields - make me even more confident in the conclusions of my recent report on How This Will All End (published January 12) in which I derive a calculated estimate of when a final fiscal deterioration will overwhelm even the best of intentions. While the money-printing-induced high we're currently on may feel fun today, the unavoidable inflationary smackdown we'll experience tomorrow most certainly will not. 

Click here to read the report on How This Will All End (free executive summary, enrollment required for full access)

Monday, October 25, 2010

How to Fake an Economic Recovery - February 16, 2011

This is one of the best articles I’ve seen that describes the deception surrounding our current ‘recovery’.

No comments needed.

jg – February 16, 2011
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Guest Post: How To Fake An Economic Recovery

Submitted by Tyler Durden on 02/16/2011 07:44 -0500
Submitted by Giordano Bruno of Neithercorp Press
How To Fake An Economic Recovery

This may be a highly distasteful proposition, but just for a moment, I want you to sit back, and imagine that you are a member of the corporate banking elite. You are a walking talking disease ridden power mad pustule who naively believes himself intellectually superior to the vast majority of humanity and above the inherent laws of conscience, honor, and general good taste. You are a villain in the purest sense, in that you not only do great harm to the world, you actually SEEK to do great harm to the world, if only to benefit yourself and your exclusive circle of “friends”; a clan of degenerate blood thirsty sociopaths with delusions of omnipotence that stalk the night like Armani wearing Chupacabra exsanguinating the joy from poor unsuspecting cultures. You are capable of anything, and sadly, you take “pride” in this fact…
You aren’t “rich” in the traditional sense. You aren’t a “Bill Gates” or a “Donald Trump” (I’m beginning to wonder if Donald Trump is even solvent, or if his entire fortune is a special-effect courtesy of NBC). No, you don’t “make” money, you MAKE the money. You are a global financier. You are a central banker. You create the fiat that the rest of the country uses to sustain its fantasy economy. You dominate trade through monopoly and corporate fraud. You control the flow of currency through an economic system using fractional reserve banking, artificially pegged interest rates, and your ever trusty printing press. You put your substantial monetary clout behind BOTH major political parties, and groom presidential candidates to your globalist standards. Any politician who desires to climb the ladder of power turns to you for assistance, not the voting public. You have a tremendous financial stake in every corporate news provider in the country, if not own them outright. You invite their top reporters to posh banquets, give them unlimited access to prominent social figures and high rollers, and fly them to private alcohol addled orgies in the middle of the California Redwoods (I wish this was all made up). Forget responsible journalism, they love hanging out with you, and would probably write whatever you tell them to.
Now that you have placed yourself in the tight fitting shoes of the “enlightened few”, I want you to imagine that you have engineered an implosion in national credit sectors using ultra-low interest rates to fuel mortgage and derivatives bubbles that would contract at an unprecedented pace once it is revealed to the wider investment world that those equities which they prized only days before are now “toxic”, essentially worthless, due to mass debt defaults on loans which never should have been made in the first place. Yeah, you’re a real dirtbag.
Of course, you aren’t finished yet! Your ultimate goal is centralization, and the key to centralization is to remove all options available to the masses but one; the option which garners you the greatest amount of dominance. A global economic system based on a single world currency and a single unaccountable governing body would be ideal. What would you call this world currency? I don’t know, how about something innocuous sounding like….Special Drawing Rights (SDR’s), which you can then label as a mere “basket of currencies” when it is really a parasitic financial instrument meant to absorb currencies until it replaces them completely:
In order to begin instituting this world currency, you would first need to remove the standing world reserve currency from its exalted position, that currency being the U.S. dollar. This seems rather impossible to many mainstream analysts who cannot fathom the possibility of a breakdown in the mighty Greenback, but you have already set the stage. You have created a progressive debt singularity so immense that no amount of fiat, no amount of taxation, no amount of austerity could ever satiate its hunger. You now have the perfect excuse to print the dollar with wild abandon until its withered, corpsified remains are six feet underground, leaving the door wide open for the tap dancing fast-talking SDR to take its place.
The issue is, how do you convince the general public that all is well until you are ready to unleash hyperinflation and fiscal Armageddon? How do you make them believe with all their hearts that they are not in the midst of a debt meltdown and the end of their financial sovereignty, but basking in a full-on economic recovery?!
You can’t stop wealth destruction now that the avalanche has been set in motion. You can’t stop inflation and dollar devaluation (nor would you want to. Hey, you’re evil incarnate, remember?). The effects on mainstreet are beyond your ability to hide, but, what you CAN manipulate, are the statistics and indices that Americans rely on for psychological comfort. You give everyone a blindfold and a cigarette and you do what you do best; lie!
Here is a step by step guide to fabricating an economic recovery out of thin air….
Don’t Count The Unemployed, Discount Them: Jobless people are a real downer and a pesky nuisance because they represent living breathing proof that a recovery is not taking place. By most standards, a recovery in jobs markets can be claimed if meaningful evidence shows a return to unemployment standards (normal unemployment) set before the recession / depression was triggered. If you are a global banker today, however, this will not due. Instead, you simply change the definition of “normal unemployment”. Thus, the debilitating jobless rate which was originally thought of as “bad”, is now thought of as “natural”. You must then publish long-winded white papers using more subjective statistics devoid of common sense while feigning a logical pretense:
This only satisfies a small portion of the populace, though. Next, you must rig the manner in which unemployment is calculated to always overlook certain subsections of jobless. Never count those people who have been unemployed so long that they no longer receive benefits. Always count people who are underemployed as fully employed, even if they are only able to scrape together ten hours a week through part time McSlavery. After this, change the manner in which raw data on unemployment is actually collected.
First, the Labor Department derives most of its raw data on unemployment not through any traditional mathematical means, but through two separate surveys which are open to wide interpretation; an establishment survey, and a household survey. The establishment survey is what we hear about at the beginning of every month, while the household survey tends to float under the mainstream radar. In 2009 and 2010, the Labor Department deemed the household survey data (a phone driven survey of 60,000 households) “more reliable” for indicating job growth, because it was accurate in counting small business hiring and self-employment. So, you have two separate surveys (unscientific indicators of employment) combined together to produce a job growth rate number, and an unemployment percentage, both of which represent, at the most, a GUESS on the current state of jobs in this country.
While the establishment survey showed only 36,000 jobs created, the household survey somehow showed around 600,000 new jobs created!?:
Basically, the BLS is asking you to believe that over 600,000 people either started their own businesses, or were hired by home based businesses in the month of January alone. I’m curious as to where all the capital inflows are coming from to launch such a revolution in home entrepreneurship in the middle of the greatest credit crisis in history. Oh well, if the Labor Department says it’s true, it must be…
The juxtaposition of odd data collection methods is the reason why the government was able to claim a drop from 9.4% to 9% in the jobless rate while announcing only 36,000 jobs created! The household survey has become an incredibly useful tool for generating arbitrary employment data which can be molded to say whatever government officials and central bankers want it to say. Anyone who controls the source data for a calculation controls the outcome of that calculation. It’s that simple.
What I wouldn’t want, if I was the Labor Department, is for some outside independent citizens group to monitor my survey methods while in progress. That would make life for a statistical huckster very difficult indeed.
As Long As Stocks Are Green, The World Is Golden: Near zero interest rates can be very useful if a central bank wishes to throw a tidal wave of fiat into a particular index in order to make it appear healthy. Certainly, the Fed has avoided admitting to any manipulation of the stock market. QE measures are all “above the board”, and all is well in Bernanke’s Mayberry. A question arises here though that desperately begs to be answered; if the stock market’s meteoric rise from near destruction to the 12,000 point mark is “real”, and completely in tune with a legitimate recovery, then why is the Fed still keeping interest rates at near zero after almost three years, and why are they continuing quantitative easing measures? Could it be that without constant liquidity injections from the Fed, the stock market would once again collapse like a wet paper sack? We know that in 2009, it was revealed that bailout funds which were supposed to go towards muting the effects of toxic bank assets were actually being pumped into the equities of healthy banks instead, meaning,the money has not been allocated to the areas promised:
We also know that top hedge fund managers have openly stated that stocks will remain bullish because QE funds are propping up the market:
And, frankly, if you are a global banking cartel intent on keeping the American people in the dark, it makes perfect sense to prop up stocks. A Dow in the green is like a mass dose of fiscal lithium; it calms investors into a stupor. Even people who are otherwise unconcerned about economics will keep track of the Dow as if it is a solid indicator of their personal financial safety. A great test would be to observe market reactions to a Federal Reserve interest rate hike and a freezing of QE in order to counter inflation. Will the Dow stand on its own two feet then? I seriously doubt it, but then again, I don’t know that the Fed will ever raise interest rates again…
Inflation? What Inflation?: Unmitigated inflation spells doom for any society. It’s like some monetary based animal instinct deep down in our collective unconscious. The moment we hear the word “inflation” or see prices rise dramatically, we revert to survival mode and begin honing our mammoth bone battle mallets. Governments and central banks throughout history have made it their top priority to hide the effects of inflation from the citizenry at all costs.
To mask inflation is nearly impossible, especially where commodities and base goods are concerned. That’s why our government and private central bank calculate the Consumer Price Index (CPI) without counting food or energy. Most grains and crude oil have doubled in price over the past year alone, and this does not reflect well on the safety of the dollar, or the effectiveness of liquidity measures by the Fed. China, whose inflation is but a prequel to our own, is also distancing food and energy price surges from its CPI numbers, giving the false impression of leveling markets:
Corporate retail chains have a tendency to absorb rising prices of base goods to avoid alienating their customer foundation, hoping that the increases are temporary. When retailers realize that prices are not going to drop back down, they eventually relent, and shelf costs skyrocket. The bottom line is clear; overall worldwide food averages were up over 28% in 2010:
Crude oil prices continue to hover near the $90 mark even though inventories are at a 20 year high:
The World Bank is now warning of possible disasters (which they helped create) in the wake of “dangerous price levels”:
Our government’s response? Complete denial that there is any significant threat of inflation. Denial that overprinting of the dollar and its subsequent devaluation has anything to do with rising prices. Scapegoating everything from weather, to speculators, to the fake “recovery” itself for price spikes. The longer they keep the terminology of inflation out of the mainstream, the less Americans are likely to prepare for an onslaught of the dollar.
Create Debt To Pay Off Debt: This is pretty self explanatory. If foreign investors want nothing to do with you, your explosive national debt, or your depreciating currency, where is your government going to get the money to continue spending like a drunken trophy wife at Macy’s? If you default, the jig is up, and no one will buy your recovery yarns. Instead, print even more fiat and use it to purchase your own Treasury bonds! This serves two purposes; first, it props up the federal bureaucracy which gives the impression of stability (at least for a time), and, it furthers your goal of squeezing the dollar like a grape.
Remove All Checks And Balances: If you plan on decimating an economy, you can’t very well have people pointing fingers at you while you do it. That would be inconvenient. It’s funny, but for years, ratings agencies like Moodys helped global banks facilitate the mortgage and derivatives crisis by categorizing worthless assets as AAA securities. Without them, no one would have invested in such garbage in the first place, and the banking fraud would have been immediately exposed. Now that ratings agencies are finally doing their job and downgrading the creditworthiness of banks and countries that possess extreme liabilities, the SEC is moving to marginalize them:
Interesting that as the U.S. nears a possible credit downgrade, we suddenly no longer care what ratings agencies have to say.
The SEC in itself is one enormous joke, and in no way a practical overseer of banking activity. The organization has shown itself to be either fantastically incompetent, or deliberately indifferent to ongoing financial fraud. I never thought I would find myself agreeing with a cretin like Bernie Madoff, but according to the middle-weight Ponzi artist, global banks he dealt with, like JP Morgan and HSBC, had to be perfectly aware of the scam he was undertaking, otherwise, it could not have been possible:
Likewise, the SEC’s complete lack of proper investigation into such activities turned Wall Street into a globalist playground where much bigger conmen than Madoff have nested and bred like fleas. It’s not that the system needs more regulation, or more legal wrangling; this would accomplish nothing, because the system is regulated by the criminals! Therefore, new laws can be enacted in concert, and the government can deem the system reformed and recovered, all while the underlying corruption remains untouched. If the poison that instigated the fall of the markets is not uprooted, treachery will continue to reign supreme, and healthy markets a childish illusion.
The Creeping Terror
Two years ago I was in my local Borders bookstore and noticed that they had downsized their stock selection by what looked to be nearly a third. I made a point to ask if this was a chain wide phenomenon. Most employees I talked with said yes. I then asked if they had begun cutting employee hours by significant margins and specifically laying off longtime workers that had built up substantial pay increases. Again, the consensus was yes. Finally, and most importantly, did Borders discuss these changes with their staff in a manner that was informative and open, or, was there a lot of confusion amongst employees as to what exactly was going on? The response was that they were overwhelmingly bewildered by Borders’ lack of clear communication as to the direction of the corporation.
My suggestion to them was to start looking for another job, because their company was about to declare bankruptcy. They, of course, denied this was remotely likely:
It may sound like a stretch, but the reason I bring up Borders’ impending chapter 11 is because, to me, it represents a microcosm of the creeping nature of economic collapse, especially when that collapse is being wielded and delegated. [TD: Borders filed for Chapter 11 this morning]
Borders has been on the verge of default for quite a while. Did they refuse to relay this information openly to their employees because they selfishly wanted to maintain profit margins just a little longer until they were ready to pull the plug? Of course! Do global bankers with aspirations of a centralized currency keep the true destabilization of the market spectrum and the coming international dollar dump to themselves because in the end they will benefit from our shock and awe? Of course!
Whether a person loses everything all at once, or a piece at a time, the end result is the same, however, there is something especially cruel in the idea of fiscal theater; the act of inspiring false hope that a financial environment is sound when it has, in truth, already suffocated. Why would our modern day robber barons put so much energy into constructing a fake recovery? There are many reasons, but first and foremost, to create apathy. To lure us towards inaction. To swindle us into assuming the storm will blow over, and all will return as it was. Unfortunately, recovery without intense restructuring of our economic system is impossible. The fundamentals do not support the suggestion in the slightest. The question is, who will be at the helm when the dust settles and this restructuring does eventually occur? Will the American people take the lead, as they should, and commit to a concrete free market rejuvenation of our financial environment? Or, will we sit back yet again, and let the banksters set us up for the next grand disaster?

World Bank President Robert Zoellick Calls For 'New International System of Commerce' and Return to Gold Standard

And here we see another world leader proposing a ‘new international system of commerce’ and a return to a gold standard.

Do you think they know something is coming? No doubt about it. They know that the current system is inherently unstable and will collapse.

Time for a new system that is stable for the long term.  This new system will eventually utilize one currency – most likely backed by gold.

Watch as the central banks pull the rug out from under everyone.

Get ready – the game is about to begin.

jg – November 8, 2010
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World Bank President Robert Zoellick Calls For Return To "Old Money" Gold Standard

  
One of the most serious condemnations of the race to the currency bottom to date comes not come from some peripheral media, but from the head of the World Bank itself, who in a just released Op-Ed in the Financial Times says that since the system of floating currencies established by the 1971 Bretton Woods II system, has broken down, it is time to look to a new international system of commerce, one which "should also consider employing gold as an international reference point of market expectations about inflation, deflation and future currency values." In other words, welcome back gold standard 2. Of course, this proposal will never attain more than a casual academic reference, as even a partial gold standard will immediately establish a lower bound on how much any given monetary authority can debase its (and, by retaliation, others') currencies. What, however, if very curious, is why this proposal is being floated precisely 3 short days after the Fed has launched its most ambitious attempt to reflate global asset prices and devalue fiat paper. And as is well-known, the IMF has also been quietly proposing a return to an ven more powerful version of the SDR.... Just what will take for the scales to tip, and for the dollar to remain a reserve currency just in retrospect.
From the FT:
Writing in the Financial Times, Robert Zoellick, the bank's president since 2007, says a successor is needed to what he calls the "Bretton Woods II" system of floating currencies that has held since the Bretton Woods fixed exchange rate regime broke down in 1971.

Mr Zoellick, a former US Treasury official, calls for a system that "is likely to need to involve the dollar, the euro, the yen, the pound and a renminbi that moves towards internationalisation and then an open capital account". He adds: "The system should also consider employing gold as an international reference point of market expectations about inflation, deflation and future currency values."

His views reflect disquiet with the international system, where persistent Chinese intervention to hold down the renminbi is blamed by the US and others for contributing to global current account imbalances and creating capital markets distortions.
Of course, with a market primed to discount every inflationary possibility, it would not be surprising to see precious metals to continue their near parabolic move higher over the past few days. Silver is already flirting with the $27 in the spot market tonight.
With talk of currency wars and disagreements over the US Federal Reserve’s policy of quantitative easing, the summit of the Group of 20 leading economies in Seoul this week is shaping up as the latest test of international co-operation. So we should ask: co-operation to what end?

When the G7 experimented with economic co-ordination in the 1980s, the Plaza and Louvre Accords focused attention on exchange rates. Yet the policy underpinnings ran deeper. The Reagan administration, guided by James Baker, the then Treasury secretary, wanted to resist a protectionist upsurge from Congress, like the one we see today. It therefore combined currency co-ordination with the launch of the Uruguay Round that created the World Trade Organisation and a push for free trade that led to agreements with Canada and Mexico. International leadership worked with domestic policies to boost competitiveness.

As part of this “package approach”, G7 countries were supposed to address the fundamentals of growth – today’s structural reform agenda. For example, the 1986 Tax Reform Act broadened the revenue base while slashing marginal income tax rates. Mr Baker worked with his G7 colleagues and central bankers to orchestrate international co-operation to build private-sector confidence.

History moved on after the huge changes of 1989 and the experience of the 1980s is still being debated, but this package approach was significant for its combination of pro-growth reforms, open trade and exchange rate co-ordination.

What might such an approach look like today? First, to focus on fundamentals, a key group of G20 countries should agree on parallel agendas of structural reforms, not just to rebalance demand but to spur growth. For example, China’s next five-year plan is supposed to transfer attention from export industries to new domestic businesses, and the service sector, provide more social services and shift financing from oligopolistic state-owned enterprises to ventures that will boost productivity and domestic demand.

With a new Congress, the US will need to address structural spending and ballooning debt that will tax future growth. President Barack Obama has also spoken of plans to boost competitiveness and revive free-trade agreements.

The US and China could agree on specific, mutually reinforcing steps to boost growth. Based on this, the two might also agree on a course for renminbi appreciation, or a move to wide bands for exchange rates. The US, in turn, could commit to resist tit-for-tat trade actions; or better, to advance agreements to open markets.

Second, other major economies, starting with the G7, should agree to forego currency intervention, except in rare circumstances agreed to by others. Other G7 countries may wish to boost confidence by committing to structural growth plans as well.

Third, these steps would assist emerging economies to adjust to asymmetries in recoveries by relying on flexible exchange rates and independent monetary policies. Some may need tools to cope with short-term hot money flows. The G20 could develop norms to guide these measures.

Fourth, the G20 should support growth by focusing on supply-side bottlenecks in developing countries. These economies are already contributing to half of global growth, and their import demand is rising twice as fast as that of advanced economies. The G20 should give special support to infrastructure, agriculture and developing healthy, skilled labour forces. The World Bank Group and the regional development banks could be the instruments of building multiple poles of future growth based on private sector development.

Fifth, the G20 should complement this growth recovery programme with a plan to build a co-operative monetary system that reflects emerging economic conditions. This new system is likely to need to involve the dollar, the euro, the yen, the pound and a renminbi that moves towards internationalisation and then an open capital account.

The system should also consider employing gold as an international reference point of market expectations about inflation, deflation and future currency values. Although textbooks may view gold as the old money, markets are using gold as an alternative monetary asset today.

The development of a monetary system to succeed “Bretton Woods II”, launched in 1971, will take time. But we need to begin. The scope of the changes since 1971 certainly matches those between 1945 and 1971 that prompted the shift from Bretton Woods I to II. Serious work should include possible changes in International Monetary Fund rules to review capital as well as current account policies, and connect IMF monetary assessments with WTO obligations not to use currency policies to remove trade concessions.

This package approach to economic co-operation reaches beyond the recent G20 dialogue, but the ideas are practical and feasible, not radical. And it has clear advantages. It supplies a growth and monetary agenda that parallels the G20 financial sector reforms. It could be built upon prompt incremental actions, combined with credible steps to be pursued over time, allowing for political dialogue at home. And it could help rebuild public and market confidence, which will remain under stress in 2011. Perhaps most importantly, this package could get governments ahead of problems instead of reacting to economic, political and social storms.

Drive or drift? How the G20 decides could determine whether multilateral co-operation can achieve a strong economic recovery.
Little can be added here except for one recent popular quote, which explains why we eagerly welcome more and more high level individuals condemning the fiat system, and petitioning to a reversion the system that actually worked without creating quadrillions in imaginary debt-money (and the inevitable fiat devaluation that always follows): "What is the most resilient parasite? Bacteria? A virus? An intestinal worm? An idea. Resilient... highly contagious. Once an idea has taken hold of the brain it's almost impossible to eradicate. An idea that is fully formed - fully understood - that sticks; right in there somewhere."
5


Bank of England Head Mervyn King Proposes Eliminating Fractional Reserve Banking - November 1, 2010

I’ve been waiting for someone in power to say this – and here we are. 

As things continue to get worse economically – we’ll see more and more world leaders propose a new global monetary system to replace the current one that is collapsing. This rhetoric regarding a new monetary system started in 2007/2008 during the financial crisis (see previous blog posts) – but the rhetoric has waned over the past two years as government and Federal Reserve ‘stimulus’ has propped up the system. Now that we’re nearing the inevitable collapse of the system – expect the rhetoric for a new system to increase.

As you’ve seen me say before – this is not random – it is planned. Our current system requires debt and money to grow exponentially forever – which is mathematically impossible in a finite world. 

I feel certain that the governor of the Bank of England knows this.  You and I are being conditioned for the next phase of the plan. A phase that I believe will start with a significant global stock market crash.

jg – November 1, 2010

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Bank of England Head Mervyn King Proposes Eliminating Fractional Reserve Banking


Submitted by George Washington on 10/31/2010 21:02 -0500
Mervyn King - the governor of the Bank of England - has proposed abolishing fractional reserve banking.
As the BBC noted last week:
Mervyn King, the governor of the Bank of England, has tonight made a big intervention into the debate on banking reform. In a speech at Buttonwood, New York, he [listed] much more radical proposals.
 1. Forcing the riskiest banks to hold capital "several times the magnitude" of requirements at present.
2. The Volcker rule-style enforced breakup of banks into speculative and non-speculative arms.
3. The "Kotlikoff proposal", which forces banks to match each pool of risks with a requisite amount of capital, preventing losses in one spilling over into another.
4. Stunningly, Mervyn King imagines the "abolition of fractional reserve banking":

 "Eliminating fractional reserve banking explicitly recognises that the pretence that risk-free deposits can be supported by risky assets is alchemy. If there is a need for genuinely safe deposits the only way they can be provided, while ensuring costs and benefits are fully aligned, is to insist such deposits do not co-exist with risky assets."

 King does not advocate any of these radical plans - but the fact that he goes out of his way to list them, and to place them on the agenda of the UK's Independent Commission on Banking, means that we are not yet at the end of the debate about long-term reform of the banks.

 ***

 Beyond the technicalities, the fact that a central banker in a G7 country is prepared to imagine such outcomes is itself significant.
Moreover, King wrote to Ben Dyson and stated:

You suggest that banks should be forced to conform to the underlying purpose of the 1844 Bank Reform Act. You might be aware that I have said publicly that I think ideas in this spirit - such as those advocated by John Kay - certainly merit serious consideration in the debate as to how we reform our financial system. I remain sympathetic to these views. But as I said in my previous letter, I do not want to prejudice the outcome of the Banking commission's deliberations. Now the Commission has been set up, I think we all should wait to see its conclusions."
As Dyson explains:
The 1844 Bank Charter Act ('Reform' is a typo) was a piece of legislation that prohibited commercial banks from printing paper notes (£1, £5, £10 and so on). Before this law was passed, banks were permitted to print as many paper notes as they wanted, up to the point where they printed too many and went bankrupt (as everyone cashed in their paper notes at once).
That situation should sound very similar to the situation that we have today - we currently allow commercial banks to 'print' money in the form of digital bank deposits (the numbers in your bank account). In the years up to 2007, the banks 'printed' far too much of this digital money, to the extent that they - and the economy - started to collapse.

The 'underlying purpose' of the 1844 Bank Charter Act was to prevent the commercial banks creating money and to restore that privilege to the state. It had become obvious to the government of the day that if banks were allowed to create money, they would keep creating money up until the point where it destabilized the economy, so they could not be trusted with this responsibility.

So, in plain English, Mervyn King appears to be saying:

"I agree that banks should probably be stopped from creating money, and recommend John Kay (or Laurence Kotlikoff's) proposals. But it's not for me to say - let's leave it to the Banking Commission."

It's very reassuring to know that the top guy at the Bank of England understands the root of the issue and is promoting solutions that would go a long way to addressing it. Both John Kay and Laurence Kotlikoff's proposals would prevent commercial banks from creating money (or 'issuing credit') for their own benefit at the expense of the wider economy and the public.

Ironically, while King is proposing the potential elimination of fractional reserve banking (i.e. a return to 100% reserves), Ben Bernanke has proposed the elimination of all reserve requirements (i.e. requiring no reserves):
The Federal Reserve believes it is possible that, ultimately, its operating framework will allow the elimination of minimum reserve requirements, which impose costs and distortions on the banking system.