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The UNFOLDING destruction of the developed
world’s economies and financial/currency systems continues apace.
Public servants are trying to defy Mother Nature with the stroke of a pen;
she will not yield to this. Radical Marxist POLITICAL solutions to practical
problems are at the end of their collective ropes (double entendre intended).
You CANNOT store wealth in paper, PERIOD. Those who do will get what they
deserve: NOTHING. It has been and will be printed endlessly from this point
forward as Socialist government policies have destroyed wealth creation and
substituted Ponzi asset-backed economies in their place. Now those economic
models have reached their COLLECTIVE endpoints.
Economies based on models of consuming wealth rather
than producing wealth are DOOMED, and this is the
definition of the developed world. Switching back to the wealth-production
model used prior to 1971 in the developed world will be painful as our
leaders have FORGOTTEN what wealth-creating policies to implement and how to
do so.
The financial systems of the world sit on TOXIC
paper (government bonds and currencies) and they call them assets and
reserves – they are NOT, THEY ARE LIABILITIES! To see the enormity of
government debt in the biggest economies in the world look at this graphic
from www.demonocracy.info :
These are worthless checks which can never be
REDEEMED in the biggest check kiting scheme in history, BAR NONE. They are backed
by nothing, redeemable in nothing and PAY nothing and called RISK FREE
investments. This is a testament to George Orwell and the financial
illiteracy SPAWNED by PUBLIC SCHOOLS.
These financial and currency systems are run by the
Central Banks and public servants and prey upon their citizen’s wealth
for redistribution to government dependents, elites, crony capitalists and
government employees. The whole fabric of developed-world governments is
PREYING on the private sector in one manner or another: currency debasement;
crony capitalism through oppressive regulation; and taxation of virtually any
activity in which a human engages, and they say they are serving and
protecting the public. THE END IS NEAR. They have preyed on the private
sector to the point that the goose is DEAD and can no longer lay eggs.
Something-for-nothing societies are like LOCUSTS
searching for something for nothing; they will EAT everything in the
developed world right down to the roots including the seed corn for next
year’s harvest and their children’s future earnings (these are
morally and fiscally-bankrupt leaders and citizens). They are spending
tomorrow’s income today and waiting for the bankruptcy to arrive.
They did this years ago in Greece and in mainland
Europe for that matter, they are doing it now in the United States. Greece is
a Socialist country; it produces next to nothing and has driven wealth
creation OUT OF THE COUNTRY. For generations, the people have been taught
that they are entitled to a greater standard of living than they produce.
Thirty percent of the WORKING population is made up of GOVERNMENT EMPLOYEES
(same as in the US). No bankruptcy will restart wealth and income production.
The people who are the real income producers left decades ago at the point of
a government confiscatory gun and they are NEVER coming back.
Why in the world would anyone start a business in
the United States when the Federal Government is DEDICATED to confiscating
any wealth they may produce, and with a President that is running for office
on the platform of demonizing success and telling people that by supporting
him they will be rewarded with all they need? Guaranteed by government, just
like the other $100 trillion worth of promises the government has made but
not paid for. The people who believe this are his FOOLS; his promises can
never be PAID except with increasingly WORTHLESS coupons called US Dollars.
"Socialism is a philosophy of failure, the creed of ignorance, and
the gospel of envy, Its inherent virtue is the equal sharing of
misery…" ~ Winston Churchill
GROWTH WILL NEVER RESUME as to do so is to invite
punishment and slavery to the WELFARE State. The psychological destruction by
the president’s CLASS WARFARE rhetoric on entrepreneurs and small
businessmen cannot be underestimated; it will take years to undo it.
TAXES are set to SKYROCKET in the United States at
the end of 2012 (further punishment for the prudent and hard
working) but no public servant dares bring up the subject because both
parties WANT the money to FUND their PREVIOUS policies of insolvency. Human
behavior is quite predictable with this recipe; IT IS A RECIPE for FAILURE
and to substitute for lack of growth and income they will PRINT the MONEY.
"The best way to destroy the
capitalist system is to debauch the currency. There is no subtler, no surer
means of overturning the existing basis of society than to debauch the
currency. By a continuing process of inflation, governments
can confiscate, secretly and unobserved, an important part of the wealth of
their citizens... There is no subtler, no surer means of overturning the
existing basis of society than to debauch the currency. The process engages
all the hidden forces of economic law on the side of destruction, and does it
in a manner which not one man in a million is able to diagnose.“ ~ John Maynard Keynes
Bonds and currencies are the epicenter of the crisis
and this OUTCOME was set in stone at Bretton Woods II on August 15th,
1971: Money and credit creation out of thin air which is a mechanism for
redistributing wealth, in addition to runaway,
LEVIATHAN government that has resulted in the Socialist-Marxist command
economies we now inhabit. Now the commanders in Washington DC, Brussels and
Berlin know only one policy: Bury them some more under thousands of new laws,
taxes and regulations.
Now the bills are coming due and they are un-payable
and inextinguishable as REAL wealth and income generation have gone the way
of the DODO bird. So it’s Hi Ho, Hi Ho off to the printing press the
Socialists will go, pretending to pay money back using worthless coupons they
call money printed out of thin air. They are fools as are the people that
support them.
When the people find that they can vote themselves money that will
herald the end of the Republic. This constitution in time will fail, as all
such efforts do. And it will fail because of the corruption of the
people, in a general sense.” ~ Benjamin Franklin
With a printing press they are stealing purchasing
power right out of the bank accounts of the private sector: companies,
retirees, pension funds, institutions. These innocents that have full faith
in the dollar will soon understand the US Government is not GOD, but rather
has now become the devil in disguise and is sending present and future
generations to DEBTOR’S hell just like the people in GREECE.
Economic activity, employment, inflation and GDP
reports are nothing but a cruel hoax to fool the masses (this will be covered
in a future edition, new information indicates the US economy is smaller by
10% or more than OFFICIALLY reported). The mainstream media is misdirecting
the anger of the middle class from those who destroy wealth towards those who
produce it. They are driving what’s left of private-sector growth into
hibernation because to create wealth is to invite attacks on oneself for
having the temerity to work hard and succeed. This is cannibalism of the
worst sort at the hands of government and their something-for-nothing
constituents.
Capitalism is dead in the lands of its birth, with
socialist dictatorships doing what they always do as their economies DIE from
their deadly embrace. Misery-spread-widely is and WILL BE the order of the
day as will a shrinking economic pie, taken from the most productive and
redistributed to their supporters. As wealth and income creation cease
Marxist Socialists turn to printing presses.
"The democracy will cease to exist when
you take away from those who are willing to work and give to those who would
not." ~ Thomas Jefferson
OB@M@care is
nothing more than taking healthcare from those that have and pay for it and
transferring it to those that don’t. Rationing and mandates are just
the beginning as Washington writes rulebooks for your physician to follow.
Here’s a peek: Billing codes
under the new healthcare law are going from 18,000 to 140,000. This is
going into effect in January 2013, just after the election. Why is no one
talking about this? Telling the public about this OBSCENITY… It will
never be repealed.
Can you say ABSURD and unworkable? It is only the
beginning. Dodd Frank is nothing more than 2,400 pages of political
corruption, the nationalization and politicization of the BANKING industry
and the allocation of credit. It transfers liability from the nineteen
TOO-BIG-TO-FAIL banks to the public who are their DUPES.
Wealth generation in the developed world is a
statistical illusion courtesy of the LAWMAKERS and their bureaucrats who rule
over us. Public servants are bought and paid for by the Crony Capitalists and
Banksters who are their masters to the chagrin of a
public who has placed their faith and futures in their hands.
Since my last missive several weeks ago money
printing has been the order of the day as Japan and the UK have thrown
approximately $200+ billion and the US Congress added over 10% to the $1.3
trillion deficit and sent the bill to future generations when it recently
wrote an NSF check of $150+ billion to extend the social security tax cut and
extend unemployment benefits as more and more people are impoverished by the
policies of leviathan government. $350+ billion all told -- small change by
today’s measures. Several Bank of England directors voted for 50% MORE
money printing. The next tranche is BAKED in the CAKE.
The chosen one
is padding his constituency of government dependents prior to his reelection
efforts and executing the Cloward Piven Strategy for collapsing the US economy with a deft
touch that befuddles and frustrates those with the last vestiges of common
sense. Lawmakers vote for something-for-nothing or be demonized as cruel
hearted for not spending money THEY DON’T HAVE.
We await the next big CENTRAL BANK cannon firing
next week when Mario “BOOM BOOM” Draghli fires the next installment of the European
Central Banks’ long term repo operation (LTRO). Some project it as high
as 1 trillion euros. No matter, it is only the next installment in a
never-ending story of the moral and fiscal bankruptcy of the developed world.
Trillions and trillions are left to be printed as the bonds going bad were
used for CONSUMPTION rather than self-liquidating investment.
The LTRO is VERY toxic, as is the SMP program while the ECB INSERTS itself above all other
creditors thereby SUBORDINATING them. Over seven trillion dollars’
worth of sovereign debt must roll in 2012; how many institutional investors,
pension funds or insurance companies will choose not to ROLL? Many are
prohibited from buying or holding subordinated debt, but the question is do they recognize this?
The Bond and Currency Markets are the epicenter of
the global-financial crisis and it will not end until they
BLOW UP. Currencies in today’s world are nothing more than BONDS in
DISGUISE, as semi-REAL money CEASED to EXIST in general circulation at
Bretton Woods II in August 1971. Bonds are nothing more than IOU’s
denominated in IOU’s. If one creditor doesn’t get you the other
one will!
A price revolution is unfolding like a tsunami ready
to strike shore. When it hits you don’t want to be in its path or you
may perish as those poor people in Japan did. The Tsunami is growing in size
and magnitude as I shall illustrate. When it hits is another story, but the
timeframes are accelerating as public servants, banksters
and crony capitalists try to print and borrow their way to solvency. They will
fail as all others have done in the past, throughout history, but not being
students of history THEY WILL TRY…
Austrian economics are extremely predictive, to
which my long time readers will attest. The longer this takes to unfold, the
more prepared you can become. Thank God for a poorly-informed public, as the
day they understand what is transpiring is the day the NUCLEAR financial
bombs GO OFF. The CONFIDENCE game will end on that
day! The day when the public’s eyes cease to glaze over is the day you
must have your final preparations in place. When the Baby boomers pull into
the retirement station they will be greeted by the greatest bankruptcy in
history and their retirement plans will VANISH as their wealth stored in
paper VAPORIZES at the hands of the people holding the financial system
monopolies. This is history repeating on an inconceivable scale. Will it be
crisis or an opportunity for YOU?
This
is the greatest OPPORTUNITY in HISTORY or your demise. In order to thrive you must be able to restore the functions of money
to your portfolio. Short circuit the printing press.
Make the printing press your friend. Learn to make money in falling and
rising markets. Preserve and build your wealth for the greatest buying
opportunity in history for stocks and real estate. Volatility is opportunity
to the prepared investor. Diversification into Absolute-Return alternative
investments with the potential to thrive in up, down and sideways markets are
part of the answer. This is what I do, for more information and private
consultation CLICK HERE (www.TraderView.com/portfolio/)
When properly measured and adjusted for
inflation, the economies of the developed world are no longer growing and
haven’t done so since 1998. Subtract government spending which is
errantly counted as growth and we see the private sector hasn’t grown
for an equally long period. Take a look at this chart from John Mauldin and
Rob Arnott (research affliates):
When adjusted for real inflation, private-sector
growth has been in FREEFALL since 1998; the public has been impoverished by
unsound money and runaway inflation. This chart uses official inflation
numbers so the reality is MUCH worse. Think about it, debt in the developed
world is up 300%+ but private-sector income is ZERO. Government doesn’t
create wealth which can service debt. All debt, public and private, is
serviced by private-sector growth and tax receipts.
Over $15 trillion have been printed and borrowed
since 2008 and there is ZERO growth to show for it throughout the developed
world. The money has been consumed in transfer payments to government
dependents and has funded the further expansion of government. The
consumption economies -- where growth is measured in how much more you can
consume than you produce and pay for it with borrowing -- is failing. Ponzi
finance is at the end of the road. Consumption is not wealth production, not
in the public or private sector.
US Federal debt is up over 50% since 2008 and its
angle of ascent is going VERTICAL:
This picture is echoed throughout the developed
world. These illustrations are extremely predictive when applied to the gold
price (perfectly correlated) in context with deficit spending as this chart
illustrates:
The exponential rise in gold is dead ahead as debt
creation and printing presses accelerate. Notice that the last 2.3 trillion
dollar debt increase has NOT been
PRICED IN. Gold has been in a ten-year BULL market (no market has
outperformed in that timeframe). Bull markets DO NOT end with a whimper; they
end with a BANG.
Now let’s look at what’s in the PIPELINE
as illustrated by the combined Central Bank balance sheets of the 8 biggest
Central Banks, below:
 
This is up over $2 trillion since this graph was
created at the end of November. The average money creation is now almost $500
billion a quarter, that ½ of the TARP in 2008. The money to prop the
financial system and fund the welfare states is spiraling out of control.
Since 2006 this measure is up MORE than 200% and NOTHING has been solved.
NOTHING. If that Central Bank balance sheet chart didn’t scare the
pants off you, the next one will. This is a picture of global money supply in
the last two years; it has increased 20%, hitting new highs:
This is MONEY PRINTING. The insolvencies are multiple
times greater than in 2006; Billions of new, unfunded promises have been
made. How many Trillions are left to be created (I believe at least $30
Trillion). Do you really think you can store wealth in paper currencies and
bonds after seeing these two charts?
The Question is: When will consumer prices adjust to
REFLECT the debasement and loss of purchasing power? How much will your cash
and bonds be worth in purchasing power when they
reflect this graph? The next question is: How much more balance sheet
EXPANSION will occur to SAVE the BANKSTERS and feed the WELFARE states? We
will have the answer to all these questions. Now let’s look at the
future UNFUNDED welfare state promises:
Japan is not shown, but its debt-to-GDP is already
over 200%; ½ is due this year and unfunded liabilities are more than
likely right in line with these other countries. Keep in mind these economies
DO NOT GROW (correctly adjusted for inflation and minus government growth,
called production), they have HUGE and growing structural BARRIERS to growth
erected to protect Crony Capitalists from competition and reward the latest
crops of campaign donors, they have tax systems that PUNISH wealth creation,
entitlements which are on auto pilot, and populations and their
representatives which REFUSE to act prudently.
The Federal Reserve under Project Twist is still
monetizing most of the new treasury issuance, as this table outlines:
The Chinese and Russians are dumping treasuries at a
rapid rate seeing the upcoming train wreck and trying to get off the train,
as this chart illustrates (courtesy of www.zerohedge.com):
Notice how the Federal Reserve, the Bank of Japan
and the Bank of England are monetizing US debt and increasing their reserves?
They call them assets, but how can that be when both the bonds they bought
and the money they printed to buy them were PRINTED OUT OF THIN AIR? It is an
illusion. For the most part, all three economies are barely growing and
running MASSIVE deficits for government spending, which they report as GDP.
In order to put in perspective what has been done by
the Federal Government in Washington, in addition to the present and FUTURE
destination of money printing and the debt requires that we look at a recent
debt clock (www.usdebtclock.org, as
of Feb 23, 2012):
This is ugly, but at the current rate of DEFICIT
spending, at the next presidential election in November 2016 the bills will
have LEAPT to:
Image courtesy of www.ZEROHEDGE.com
A breathtaking leap of almost 60%, after 60% growth
in the president’s first four years. Of course, don’t forget that
the paper in which you store your wealth will have LOST an equivalent
amount of purchasing power; yet the federal government REFUSES to cut
spending. These numbers DO NOT INCLUDE future BAILOUTS of the financial
system, Fannie Mae, Freddie Mac, FHA, unfunded government pensions, and state
and municipal insolvencies which will be TRILLIONS & TRILLIONS more.
Alan Greenspan, before he breathed the contaminated
air of Washington DC, wrote this about gold in 1966:
The abandonment of the gold standard made it possible for the welfare
statists to use the banking system as a means to an unlimited expansion of
credit. They have created paper reserves in the form of government bonds
which – through a complex series of steps – the banks accept in
place of tangible assets and treat as if they were an actual deposit, i.e.,
the equivalent of what was formerly a deposit of gold.
The holder of a government bond or of a bank deposit created by paper
reserves believes that he has a valid claim on a real asset. But the fact is
that there are now more claims outstanding than real assets.
The law of supply and demand is not to be conned. As the supply of
money (of claims) increases relative to the supply of tangible assets in the
economy, prices must eventually rise. Thus the earnings saved by the
productive members of the society lose value in terms of goods. When the
economy’s books are finally balanced, one finds that this loss in value
represents the goods purchased by the government for welfare or other
purposes with the money proceeds of the government bonds financed by bank
credit expansion.
In the absence of the gold standard, there is no way to protect
savings from confiscation through inflation. There is no safe store of value.
If there were, the government would have to make its holding illegal, as was
done in the case gold. If everyone decided, for example, to convert all his
bank deposits to silver or copper or any other good, and thereafter declined
to accept checks as payment for goods, bank deposits would lose their
purchasing power and government – created bank credit would be
worthless as a claim as goods. The financial policy of the welfare state
requires that there be no way for the owners of wealth to protect themselves.
This is the shabby secret of the welfare statists’ tirades
against gold. Deficit spending is simply a scheme for the
“hidden” confiscation of wealth. Gold stands in the way of this
insidious process. It stands as a protector of property rights. ~Alan
Greenspan, Gold and Economic Freedom, 1966
Thank you Bert Dohmen and
his outstanding Wellington Letter (I highly recommend it) for this wonderful
quote which sums up quite nicely how wealth cannot be stored in paper.
Greenspan recognized it 50+ years ago when he was a close associate of Ayn Rand. As Federal Reserve chairman he was the
perpetrator of it.
In closing: This is not Doom and Gloom; it is the
reality of the situation. In Fact it is the greatest opportunity in history.
Furthermore, you know about it and can arrange your affairs to profit from
it. Huge opportunities are presented to YOU. If you store your wealth in
paper and government bonds you may want to consider changing your plans as
there is no escape from the final denouement.
Bonds and currencies are classic Austrian
Mal-investments just waiting to fall to their real value, their value before
regulatory favoritism – in other words, before the leverage used to
purchase them and that has driven them to these levels, combined with a GLUT
of paper money that has been printed to BUY THEM. They must decline to provide
a real
return in excess of 10.5% after real, as measured by www.shadowstats.com
Would you like to turn this into an opportunity? If
you are an investor who wants to diversify your portfolio into
Absolute-Return Alternative Investments and have me help you repair your
paper money so it resists debasement by the printing press, CLICK HERE and
I will give you a call (http://www.TraderView.com/portfolio/).
A number of questions come to mind: The first
question is when will the BOMB…. er, Bond
Market crash as investors WAKE UP to the reality of the paper assets in which
they attempt to store their wealth? What prices will Gold, commodities and
natural resources rise to reflect past and future monetization? How much of
your gains are nothing more than your assets
RE-PRICING to reflect the lower purchasing power of what they are denominated
in? Answer: most of them. How much of their value is the result of the
leverage used to purchase them? How much will you lose if your paper assets
LOSE 90% of their value?
In the Eurozone, United kingdom, Japan, Switzerland
and all countries which hold dollars as reserves get a double dose of
debasement, 1st from the Federal Reserve debasement of their
reserve holdings (approximately 60% of Central Bank reserves are US DOLLARS),
then again from their respective Central Banks as they debase and carry out
quantitative easing. The dollar will be the last to fall as everything is a
derivative of the dollar. Also keep in mind that the dollar, as the
world’s reserve currency, is the only currency in the world which both
the shorts and the longs do not want it to fall. The shorts are printing it
endlessly and the longs are trying to store wealth in it. Bond auctions will
NEVER fail as success lays just a phone call away to another Central Bank
writing worthless checks to buy worthless bonds.
The confiscation of purchasing power Greenspan spoke
of is now almost COMPLETE, the final stretch run to worthlessness will be
MAYHEM run wild. People DO NOT KNOW what money is, how it must function to be
a store of value, and move purchasing power through time and space.
Currencies DON’T FLOAT they just SINK at DIFFERENT rates.
Repeat after me: PAPER is POISON, PAPER is poison.
It is the final BUBBLE. Don’t miss the next issue of TedBits 2012 Outlook, subscriptions are free at www.traderview.com/subscribe/ .
If you missed part one I urge you to read it. Thank you.
Thank you for reading TedBits. If you enjoyed it…
Theodore “Ty” Andros
www.traderview.com
Managed Futures & Alternative Investment
Specialists
233 West Jackson Blvd. Ste. 725, Chicago, IL 60606,
PH:. 800.253.7689 //
+1.312.338.7800
info@TraderView.com www.TraderView.com
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what’s unfolding globally and what you can expect from Tedbits as a regular reader.
Tedbits is authored by Theodore "Ty" Andros, and
is registered with TraderView, a registered CTA (Commodity
Trading Advisor) and Global Asset Advisors (Introducing Broker). TraderView is a managed futures and alternative
investment boutique. Mr. Andros began his commodity
career in the early 1980's and became a managed futures and forex specialist beginning in 1985. Mr.
Andros duties include marketing, sales, and portfolio selection and
monitoring, customer relations and all aspects required in building a
successful managed futures and alternative investment brokerage service. Mr. Andros attended the University of San Diego, and the
University of Miami, majoring in Marketing, Economics and Business
Administration. He began his career as a broker in 1983, and has worked his
way to the creation of TraderView. Mr. Andros is active in Economic analysis and brings this
information and analysis to his clients on a regular basis, creating
investment portfolios designed to capture these unfolding opportunities as
the emerge. Ty prides himself on his personal preparation for the markets as
they unfold and his ability to take this information and build innovative
professionally managed portfolios. Developing a loyal clientele.
This report may
include information obtained from sources believed to be reliable and
accurate as of the date of this publication, but no independent verification
has been made to ensure its accuracy or completeness. Opinions expressed are
subject to change without notice. This report is not a request to engage in
any transaction involving the purchase or sale of futures contracts or
options on futures. There is a substantial risk of loss associated with
trading futures and options on futures.
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