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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.
Lee Rogers
Funny Money Report
www.funnymoneyreport.com
Please sign up for my free investment newsletter by visiting my web site
at www.funnymoneyreport.com
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