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The corporate controlled media is finally starting
to talk about the economic problems that the alternative media and assorted
precious metals advocates have been talking about for years now. We are
facing a potential inflationary  depression. Independent
estimates of the M3 money supply show that we are seeing an annual increase in the M3 money
supply by around 16 to 17 percent. The Federal Reserve chose
to stop producing this report right around the time when these figures began
going parabolic on their chart showing a massive increase in the money
supply. An increase in the money supply results in a devalued currency and
that’s one of the primary reasons why we are seeing the price of gold
flirt with the $1,000 an ounce mark and silver explode past the $20 an ounce
mark. The U.S. Dollar Index is now treading water around the 72 to 73 mark
and it is becoming increasingly clear that the role of the world’s
reserve currency is shifting from the U.S. Dollar to the Euro. Some ask how
low the U.S. Dollar could go and that answer is simple. The U.S. Dollar could
go to zero because it is a fiat
currency with no real tangible backing. Every fiat currency in the history of
man has been replaced or collapsed and there is nothing fundamentally different
between the U.S. Dollar and these other fiat monetary systems of the past.
The people who are in control of the private central
banks that fix the value of the U.S. Dollar through their policies are
monopoly men. The Federal Reserve consolidated much wealth during the Great
Depression by intentionally making money scarce following the excesses of the
roaring 1920s. Prior to the Great Depression there were many local community
banks. Following the Great Depression the vast majority of banks were under the
Federal Reserve’s umbrella. The Federal Reserve was assisted by FDR who
had the nerve to blame gold hoarders for the economic problems even though
the gold hoarders were only attempting to protect their hard earned wealth. As
FDR used the gold hoarders as a scapegoat for the economic problems that were
created by the Federal Reserve’s policies, he issued Executive Order 6102 which made any
significant amount of gold ownership illegal. The government confiscated a
large portion of the American people’s gold and in return issued them
paper notes. Following the confiscation, the price of gold was revalued from $20 an ounce to $35 an ounce. The
confiscated gold was melted down and hauled
off to Fort Knox, KY. Bluntly, what took place during the
Great Depression was a giant scam by FDR and the assorted controllers of the
Federal Reserve to consolidate more wealth and power under this criminal
banking system.
History is repeating itself. Instead of destroying
the economy and consolidating wealth through monetary deflation, it looks as
if the bankers have decided that they will use monetary inflation as their
weapon of choice. Alan Greenspan encouraged member banks to loan out large
quantities of money and encouraged individuals to get these loans by setting
interest rates at absurdly low levels in the early part of this decade. By
making money cheaper, more people went out and got loans and the bankers
accommodated the increased demand for loans by providing all sorts of
creative financing packages. These packages included adjustable rate
mortgages, interest only loans and other risky financial instruments. The
bankers knew that this would eventually create a major financial calamity
later when interest rates moved higher. The Federal Reserve’s policies
is what primarily created the crash in the U.S. housing market and it is
disgusting that people are looking to this same institution for a solution to
the mess they created in the first place.
There is no doubt that the Federal Reserve is the
culprit behind the current housing market collapse. Instead of questioning
Alan Greenspan for his mishandling of interest rates in the early part of the
decade, Congress decided to hold hearings
with mortgage company CEOs. These hearings
were nothing more than a dog and pony show designed to place the blame of the
housing crisis on these mortgage companies. Although these CEOs do have some responsibility in this mess, the
primary responsibility rests with Greenspan because
his policies encouraged this market behavior. Greenspan
should have been at these hearings especially after he encouraged Arab
nations to drop their pegs to the U.S. Dollar. Greenspan actually had the
nerve to tell these Arab states that they are having inflation because they are pegged to the U.S. Dollar. This is a
criminal act on the part of Greenspan and has undoubtedly played a role in
the sharp decline of the U.S. Dollar.
It is entirely insane that we continue to put up
with a private central bank that manipulates the value of our money. It is
absurd to believe that we have a free market if there is a monolithic private
bank fixing the price of our money. The free market should dictate what money
is and what money isn’t and if the government issues legal tender it
should be gold or silver as the Constitution demands.
As a result of the housing market crash created by
the Federal Reserve, smaller banks are failing and being bought out by larger
financial institutions. Ben Bernanke has even
stated that there will be bank failures as this crisis continues to unfold. This
engineered crisis will be used to consolidate more wealth and power amongst
fewer corporations. The crisis is also destroying the American middle class
financially as an increase in the supply of homes coming on to the market has
resulted in a deflationary environment. This has made it more difficult for
home owners to use their homes as piggy banks.
The collapse of the U.S. Dollar in the past couple
of weeks has been spectacular. In fact, each day this week we saw the U.S.
Dollar reach new consecutive new lows. At this point, global confidence in
the U.S. Dollar is eroding and it cannot be considered a tangible investment
vehicle. Many highly respected economists are predicting further problems for
the U.S. Dollar with some predicting that an inflationary depression is right
around the corner.
Weakness in the U.S. Dollar has further accelerated
due to poor economic data. Generally
statistics from the Federal Reserve and the U.S. government understate
economic problems so some of this new data that is coming out is fairly
disturbing. According to data released by these two institutions, home owner equity is at its lowest
levels since 1945, consumer debt has grown to $2.52
trillion and employers slashed more jobs in
February than in any other since 2003. These are not good signs
at all and the figures are likely understating how bad it really is.
The Federal Reserve and the U.S.
government will never be honest about what’s really happening in an
economic downturn because these
are the two institutions that people look to first when there are economic
problems. The U.S.
economy has conservatively been in a recession since 2006 and it has taken
George W. Bush and Ben Bernanke until now to
finally admit that we are having difficulties. These guys are a little late
to the party. Of course, if these two men actually told the truth about the
monetary system, the U.S. Dollar would likely collapse and millions of folks
would descend on Washington
DC demanding their heads on a
platter. Either way, you aren’t going to get the truth from the Federal
Reserve or the U.S.
government on the economy. It isn’t in their interest to provide the
truth.
In terms of gold and silver, we are likely going to
see an increasing amount of price volatility with these two metals on a day
to day basis. Short term, central banks are likely going to dump more gold
into the marketplace in order to prevent gold from hitting the $1,000 an
ounce mark. This is exactly what happened on Friday when a slew of bad
economic data came out that would normally be bullish for gold. Instead, gold
dropped sharply. The $1,000 an ounce mark represents a key psychological
barrier that will likely be broken in the very near future. The central banks
want to keep it under this mark as long as they can, because once it goes over this mark it is likely to
move much higher. Long term, these two metals will see substantial gains in
U.S. Dollar denominated terms. It is not out of the question to see a $5,000
an ounce gold price or a $100 an ounce silver price in the next several
years.
The Federal Reserve is stuck between a rock and a
hard place. If they raise interest rates to the point where holding U.S.
Dollars can outpace inflation they would need to raise them to around 20%. This
would hurt not only the American people but the elite financial interests as
well. As a result, the Federal Reserve is attempting to manage a slow
inflationary decline of the U.S. Dollar which will allow the financial elite
to more easily reposition themselves. Inflation hurts the poor and the middle
class far more than the financial elite where as a deflation like what we saw
during the Great Depression would hurt everybody across the board.
As this financial calamity continues, the corporate
controlled media will likely say we are in a recession even though it will
resemble more of a depression. Gold and silver remain good hedges against
inflation and their price will rise in U.S. Dollar denominated terms. There
continues to be more upside to silver but there will also be more short term
volatility in silver. There is no doubt that an inflationary depression is a
very likely scenario and there is always the chance that the U.S. Dollar
could go to zero. This is why having physical gold and silver is always a
smart move.
By :
Lee Rogers
Editor, Funny Money Report
Lee
Rogers edits the Funny Money Report, whose object is to educate people as to the frauds of our dishonest paper money system and to
provide information on stocks in the precious metal, base metal and assorted
hard asset sectors. You can subscribe to his newsletter by clicking here.
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