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The current monetary policy is stuck in place. It is highly destructive to
banking systems, working capital, and financial markets. Yet it continues ad
infinitum, actually until the great collapse. A systemic Lehman event is in
progress, as the global financial structure is collapsing. The only remedy is
the Gold Standard installation, which is happening, but its architects are
from the East. They are labeled as enemies, when the root problem is in the
Western banking hive.
The quickening has begun in earnest. The end game began in November with
events picking up speed, remedy engaged in progressive steps, and
geopolitical balance of power shifting in serious manner. The origin of the
systemic failure can be found rather easily. Refer to just the last several
years. Of course the seminal point was the creation of the Federal Reserve in
1913. Of course another critical event was the murder of President Kennedy, a
champion of sound money. He joined Garfield and McKinley in that respect, as
assassinated US Presidents, the common link being their favor of the Gold
Standard or sound money. Of course another key point was the abrogation of
the Bretton Woods Accord in regards to the Gold Standard Agreement. Following
the Tequila Crisis in Mexico in 1994, the expansion of margin credit and debt
was insane. The climax in recognition was Greenspan's famous admission of
Irrational Exuberance, which bears his blame. Following the tech-telecom bust
in 2000, the expansion of every conceivable type of credit and debt was insane.
A natural recession was actively avoided, assuring a doubled effect several
years later. Following the Lehman failure, every possible wrong decision was
made, in vigorous pursuit of continued fraudulent money and sustained
criminal banking enterprise. To be sure, no solution or remedy or reform
has been sought. What comes is a new systemic Lehman event, in a crash of the
global bond, banking, and currency systems together.
The systemic failure was guaranteed in my mind, when the big banks were
given license to continue operations even while both insolvent and guilty of
multi-$billion fraud. Such is the essence of the Fascist Business Model, a
term most mainline economists and financial analysts rigorously avoid. No big
US or London bank has been convicted of a felony, nor any executive from
their bank firms gone to prison. This license was joined with the
extraordinary corruption of money in the last gasp of monetary excess. The
result was a required liberalization of monetary policy, which put the systemic
failure on a guaranteed time line. The Quantitative Easing (QE) monetary
policy is highly destructive. It combines with another equally destructive
measure in the Zero Interest Rate Policy (ZIRP). Together they are a double
barreled shotgun killing the USEconomy and its financial structure. Worse,
they are killing the Global Economy and its financial structure based upon
the USDollar. Put aside motive or intention to scuttle the nation. Focus
instead on the wreckage from official policies in place, both of which the
Jackass forecasted to occur, and both of which were also forecasted to remain
in place permanently by this analyst.
It is indeed curious that almost no mainstream economists or analysts
mention the permanence of the current destructive monetary policy. They might
mention its permanence, but they do not attribute blame for the systemic
breakdown on the monetary policy, which is highly destructive. They might
mention distortions or some accurate observation of aberration, but they do
not indict the monetary policy itself as the root problem in the unstoppable
decline. The recognized brain trust surely do not recommend a return to
the Gold Standard as a viable honorable effective remedy. They do not
ever mention license for criminality in the banking centers linked all too
closely to the USGovt.
MONEY VELOCITY DECLINE
Stimulus implies greater activity, more encouraged movement. A spur in a
horse's flank or a crack of the whip will induce a sudden acceleration in the
harnessed animal. That is stimulus. A burst of nitro or naphtha to a racing
car engine will induce a sudden acceleration in the souped-up machine. That
is stimulus. A couple of whiskey chasers at a bar can give a guy some
newfound courage to approach an attractive woman for a dance or a romp. That
is stimulus. To be sure, QE & ZIRP help the big bank sector with redeemed
toxic bonds, with bond carry trade potential, with rising values of doomed
items like junk bonds. They even help the big banks directly with stock
buyouts as the USFed illicitly buys bank stocks.
However, QE and ZIRP are not stimulus agents to the USEconomy. They are a
death sentence. They are not viable support for the USD-based financial
structure. They are destructive elements. The business investment, often
called capital expenditures (CAPEX) has largely taken place in foreign lands.
Most multi-national corporations did not expand inside the United States for
a number of reasons. The US corporate tax rate is the highest in the
industrial world. The US environmental regulations are the most strict in the
industrial world. The federal regulatory oversight and interference is the
most burdensome in the industrial world. So large companies have conducted
expansion in the Emerging Market Nations. Where those nations grossly expanded
their official debt at the sovereign level, they have been bankrupted on the
currency impact. Such is not stimulus. The proof of ineffective policy is
found in the fast decline in money velocity. It is defined in loose terms as
the number of economic round trips for money within the economy during a
given cycle. It is akin to how often your car's oil circulates within the
engine, finding the same molecules at the starting point of the pistons
shafts and cylinders in a given period of time, like a month.
If monetary policy had any shred of stimulus, the chart below would not
appear as such a horrendous decline. The Jackass concludes that QE &
ZIRP are the most destructive monetary policy in modern history, rendering
the King Dollar not only on a reign of terror, but an instrument like a
headache ball at a demolition site. The result has been capital
destruction and dampened economic activity for several years. The policy
guarantees systemic failure on a time line. A systemic Lehman failure event
is in progress, not so much approaching, but already here, in progress.
The systemic failure has a point of origin, the United States and the
Federal Reserve. The incredible USDollar shortage from the global margin call
has lifted the global reserve currency to troublesome levels, only to cause
severe damage across the many nations. The Emerging Market Nations took
the bait, and added to their debt, told by Western bankers of no inherent
risk. Obviously no interest rate risk was at work, but plenty of currency
risk in effect. The USDollar has turned toxic. This margin call pressure
comes at the same time as the vast Petro-Dollar machinery is being
dismantled. The entire financial structures are crumbling and falling apart,
while the official monetary policy only makes the conditions worse.
PERMANENT QE & ZIRP IN REALITY
The QE policy is not stimulus, no way, not by any basic definition. The
ZIRP policy is not stimulus, not by any sensible reasonable or logical
manner. QE represents multi-$trillion slush money to aid the Wall Street
criminal banking center. QE has been expanded abroad, beyond the USFed
offices (see BLICS), even to involve confiscations (see Japanese pensions).
The QE has been joined since December by the gigantic clandestine arm known
as the Exchange Stabilization Fund, operated by the USDept Treasury. With
recent additions, one can truly call the monetary policy QE to Infinity.
Maybe the term QE to Infinity Squared makes sense, a take-off of their CDO
Squared lunatic bond instruments. Refer to Collateralized Debt Obligations,
where leverage was applied twice.
The ZIRP enables the more efficient feedstock and lubrication for Interest
Rate Swap machinery. The ZIRP enables a bond carry trade for easy Wall Street
bank profits. The ZIRP actually slows the USEconomy in an utterly obvious
way, with reduced income flows from pension funds, insurance treasuries, and
individual retirees. The wet blanket is obvious and universal in its
dampening effect. With its integral parts impossible to remove, one can truly
call the monetary policy ZIRP Forever. The central bankers are truly stuck,
not just in mud, but in quicksand. They are sinking, and their central bank
franchise system is facing total ruin.
Together they guarantee a systemic failure. The Zimbabwe hyper monetary
inflation undermines the entire global banking system in its reserves
management structure. An African style inflation to global reserves cannot
continue, and has forced an alternative system to be constructed, by the
East. The ultra-low interest undermines the risk reward for savings, inhibits
the economic flows, and distorts asset values universally. The USFed has
truly destroyed the global economy and financial structure. The unfolding events
are toward systemic failure and forcing the installation of the Gold
Standard. It is the long avoided solution.
NEW SCHEISS DOLLAR & GOLD TRADE STANDARD
In time, expect an eventual refusal by Eastern producing nations to accept
USTreasury Bills in payment for trade. The IMF reversal decision assures this
USTBill blockade in time, and might accelerate the timetable. The United
States Govt cannot continue on five glaring fronts of gross negligence and
major violations. These violations have prompted the BRICS & Alliance
nations to hasten their development of diverse non-USD platforms toward the
goal of displacing the USDollar while at the same time take steps toward the
return of the Gold Standard. The violations are:
1) to import finished goods and crude commodities, paying with IOU coupons
2) to commit multi-$trillion bond fraud in its big banks, done without
legal prosecution
3) to do QE bond purchases in applied hyper monetary inflation, monetizing
debt
4) to rig all major financial markets in favor of the primal USDollar
5) to engage in numerous regional wars to support the USDollar.
The New Scheiss Dollar will arrive in order to assure continued import
supply to the USEconomy. It will be given a 30% devaluation out of the gate,
then many more devaluations of similar variety. The New Dollar will fail all
foreign and Eastern scrutiny. The USGovt will be forced to react to USTBill
rejection at the ports. The US must accommodate with the New Scheiss
Dollar in order to assure import supply, and to alleviate the many stalemates
to come. The United States finds itself on the slippery slope that leads to
the Third World, a Jackass forecast that has been presented since Lehman fell
(better described as killed by JPM and GSax). The only apparent alternative is
for the United States Govt to lease a large amount of gold bullion (like
10,000 tons) from China in order to properly launch a gold-backed currency.
Doing so would open the gates for a generation of commercial colonization,
but actual progress in returning capitalism to the United States. The
colonization has already begun, with secret deals galore. As Ron Paul has
stated, one cannot blame capitalism for the current failure, since we have
had almost none!
The Gold price will find its true value and price over $10,000 per ounce.
The Silver price will find its true value and price over $300 per ounce. In
reaching these levels, the ratio will return to the 30-1 range. Several steps
have been laid out by the Hat Trick Letter toward the return of proper price to
precious metals. The major upcoming events will be exciting to watch unfold,
one after the other, in an inevitable sequence away from fascism and
concentrated uni-polar power, with a strong movement toward freedom and
equitable systems with distributed power. The steps will each involve a
quantum jump in the Gold & Silver prices. The process will take a few
years, but might be breath-taking in speed once the process is begun. The
steps involve:
- the critical mass of rejected USTBills in trade
settlement, citing its corrupt roots and illicit monetary policy as
foundation
- the return to the Gold Trade Standard and introduction
of Gold Trade Notes as letters of credit, in replacement for a fair
tangible payment system (no more IOU coupons)
- the recapitalization of the global banking system with
Gold as primary reserve asset, so as to relieve the grotesque
stagnation, insolvency, and dysfunction
- the seeking of equilibrium in Supply vs Demand in the
new fair uninhibited market, with exclusive control removed from London
and New York, and placed elsewhere like in Shanghai, Hong Kong, Dubai,
and Singapore
- the seeding of BRICS gold & silver backed currencies
from participating nations within the Alliance (likely several with
slight variation in features)
- the re-opening of the gold mine industry with some blue
sky, and relief from the Evergreen element at Barrick
- the remedy toward owners of over 40,000 tons of
rehypothecated and stolen gold in bullion banks across the world
(primarily in Switzerland)
THE HAT TRICK LETTER PROFITS IN THE CURRENT CRISIS.
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