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It is difficult to know where to begin when analyzing the unraveling
global financial system as so much has happened over the past couple of weeks
and months. The one thing that is for sure is that neither the Federal
Reserve nor the U.S. government can bailout everyone. We are seeing a mass
consolidation of wealth on a wide scale and this is all being done by design.
What is happening now is the result of fiscal policies put into place by the
Federal Reserve that encouraged reckless lending and borrowing on all levels.
This month we have seen a major reshuffling on Wall Street with the U.S.
government nationalizing the two largest home mortgage owners Freddie Mac and
Fannie Mae, the bankruptcy of Lehman Brothers, the Bank of America purchase
of Merrill Lynch and now the $85 Billion bailout of insurance giant AIG. The
end result of this is undoubtedly going to be a disaster, but it is going to
be even worse because the Federal Reserve and the U.S. government has gotten
involved in the practice of bailing out failed institutions. By propping up
failed institutions using the excuse that these companies are too large to
fail is nothing short of welfare for the rich and is entirely against the
premise of a free market. It is nothing short of economic socialism. If you
are a small business owner and you have trouble paying your bills the U.S.
government is not going to come and help you out, but yet the establishment
can step in and spend billions on these corporate bailouts. This is not a
good situation and we can expect to see these bailouts contribute to a
continued devaluation of the U.S. Dollar and a rise in gold and silver
prices. This will occur irregardless of how much these powerful financial
interests decide to manipulate the markets.
Essentially what is happening is that these bailouts will serve as a
temporary short term fix, but will create more problems in the long term.
While we see all sorts of money being used to rescue these institutions, the
FDIC is running out of capital to be able to insure the bank accounts of
individuals who might have their money in one of these insolvent banks.
There’s been speculation that Washington Mutual is in trouble and if
their stock price is any indication, it very well could be. If Washington
Mutual were to fail it would be a failure ten times larger than what we saw
with IndyMac earlier this year. The IndyMac bank failure sapped approximately
10% of the FDIC’s capital that is allocated towards insuring bank
accounts. With that in mind, a failure of Washington Mutual would mean that
the FDIC would not have enough capital to be able to properly insure account
holders.
It is likely that Washington Mutual will get bought out by JP Morgan
Chase but that’s just one bank out of many. Analysts have predicted
that we could see around 100 to 150 bank failures in the next 12 to 18 months
and the FDIC will not be able to insure these bank accounts if this number of
banks were to fail. As a result, the FDIC would need to get money from the
U.S. Treasury which is ridiculous in of itself considering that there is no
money to give. The U.S. government is close to $10 Trillion in debt, the debt
ceiling has even been raised to accommodate the Freddie Mac and Fannie Mae
bailouts. This means that more money will have to be created out of thin air
in order to help out the FDIC or to bailout additional institutions. The
insanity of this is unparalleled and is just part and parcel of the
elite’s agenda to consolidate wealth and create an inflationary climate
where it will be easier to have the political will to replace the U.S. Dollar
with a larger regional currency or even a merger between the U.S. Dollar and
the Euro.
The financial powers that be spent the past couple of months
suppressing the price of gold and silver almost as part of an effort to
preemptively push the price down prior to this current debacle that we are
seeing unfold before us today. One need only look at the daily price charts
of gold throughout the past few months and see that there are significant
price drops consistently during New York trading hours with no real reason as
to why these price drops would take place. Not only that but some of the most
significant price drops in gold occurred on days in which the news would
normally result in a price rise and not a price drop.
Despite all of that, they could no longer keep the price of gold or
silver down today with everything that’s taken place over the past
couple of weeks. Both precious metals saw substantial gains reflecting the
true nature of this financial crisis. Gold at one point in the day was up
over $85 an ounce marking the single biggest gain in the metal since 1999. If
the Federal Reserve and the U.S. government continue to step in and bailout
these private institutions, we will see a continued devaluation of the U.S.
Dollar and a continued rise in gold and silver as I’ve discussed in
previous articles. In fact, there is a significant danger of the whole system
collapsing as the elite financial powers attempt to consolidate wealth in the
hands of fewer and fewer controllers. The Federal Reserve itself could even
fail in the next several years if we see these problems continue. They simply
cannot create more and more money out of thin air to bailout more and more of
these insolvent institutions which are heading towards bankruptcy.
Remember, all of this has happened by design. It is ridiculous that
Alan Greenspan whose policies as Federal Reserve chairman earlier this decade
caused the reckless lending which lead to the housing crisis is able to go on
national television and critique the problems that are happening now as a
result of the policies he approved. The Great Depression served as a mechanism
for the elite to consolidate wealth, and now they are seeking to do it on a
larger scale with everything that’s happening now. It is very possible
that even the elite cannot control this financial crash that is coming but
even if they can, they cannot endlessly bailout company after company by
creating more and more money out of thin air. If they decide to go that
route, the U.S. Dollar may experience an Argentina like currency collapse
which would be a disaster not only for the American people, but the elites as
well. Gold and silver are the places to be, because regardless of what these
people do, precious metals will never go to zero value.
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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