Bill Holter ~ President Obama spent last week on a European tour where he spoke at the Hague, met with Pope Francis, spoke on the phone with Mr. Putin and finished his trip with a visit to Saudi Arabia. We also found out that the Germans have made a deal with China where "renminbi" will be cleared to settle trades rather than dollars.
You really have to wonder "what was REALLY said?" in all of these various deals and conversations. To start off the week, President Obama gave a speech where it ended in nearly total silence. No clapping, no standing ovation, nothing. To see the clip was almost eerie as to what it means. Do the Europeans not believe what was said? Were they purposely "rude" to a sitting U.S. President? I suppose that the silence was better than the response Tim Geithner received from Chinese students where they outright laughed at him.
The President then met with the Pope on Thursday and the accounts of "what was said" differ greatly the Vatican's and White House' accounts don't seem to match. I will let the reader follow the link and make up their own minds as religion and politics do not mix well, I will leave this one with "no comment."
There was also a conversation between Mr. Obama and Mr. Putin. This one must have been hilarious. If I had to guess, Mr. Putin could have used only one word to suffice which differed in tone of voice and may have been surrounded by his own laughter. The one and universal word I believe is "nyet" as in "no." I cannot imagine what possible sanction or set of sanctions Mr. Obama could threaten with that would have any traction at all. None that I know of will hurt the Russians nearly as much as us. As I wrote last week, we need them (and everyone else) to use the dollar more than "they" need to use the dollar and be a part of the SWIFT system.
Russia has in fact announced that they are in the process of setting up their own clearance system where dollars will not be used. They announced energy deals with both China and India last week while hiking gas prices by 40-50% to the Ukraine. All the while, they now have over 100,000 troops assembled at the Ukrainian borders, was any of this a part of the Putin/Obama conversation?
All of the above is very important but in my opinion pales in comparison to the meeting with Saudi Arabia. Even the New York Times speaks of a "split" in U.S./Saudi relations. I cannot say strongly enough how important this meeting and "relationship" is. Not for the Saudis mind you, for the U.S. Were the Saudis to switch horses in this race and switch allegiance to China (which includes Russian ties), Saudi Arabia will still "get paid" for their oil...from someone, somewhere. As for the U.S., the bottom line is that the dollar will be absolute toast and a FOREX crash will follow.
It has already been reported that the Saudi royal family are skeptical at the least and do not trust at the worst...President Obama and the U.S. It was even publicly said after the Syrian "non conflict" that Saudi Arabia felt "stabbed in the back." Saudi Arabia is the last straw holding dollar hegemony together. If you recall, Prince Salman (next in line after King Abdullah) was in China 2 weeks ago and met with top Chinese officials including President Xi. Again, I really wonder what was said in this meeting. Could there be a deal brewing where Saudi Arabia accepts currencies other than dollars for their oil? Could they be planning to redirect oil sales "east" in place of supply going "west?" Has Saudi Arabia been given assurances by China (and Russia) that if they do decide to switch allegiances...they will be "protected?"
Any movement at all from the status quo since the early 1970's will be a disaster for the dollar. Never mind the $300 billion plus that Saudi Arabia takes in which the world must bid for to begin with which has supported the dollar/treasury merry go 'round for so long, "others" will play monkey see, monkey do. "Other" oil producers will immediately follow suit and the "utility" of the dollar will be lost. All you need to do is look at the recent stance of the G-20 to know that the U.S. and thus the dollar are not currently favored. Unfortunately, the dollar is the very last "privilege" of the U.S., if reserve status is eroded or outright withdrawn then the playing field changes dramatically.
Why is this important to you? Because if you are reading this then it is more than likely that you "save" or count your net worth in dollars...which will be devalued. To finish, I'd like to point out that the Japanese who have never in recent times been big buyers of gold seem to be beginning a stampede into the metal. Zero Hedge did a piece yesterday that spoke of a 5 fold increase in sales at a well-known Japanese metals dealer and that "lines" were forming for purchases. This is in response to "Abenomics" by the Japanese people. Abenomics is the same central banking process as our "QE." People are slowly "figuring it out" and acting in their own best interests. This movement is nothing more than what I've spoken of so often, "Mother Nature." Investors are beginning to understand that currencies are being debased and that their banks holding these currencies may not be the safest place to hold savings. These are not people speculating to "make a profit," these are people moving into gold to "save." "Save" as in save purchasing power; get out of the system and save their own bacon so to speak. The West can sell all the gold and silver futures they'd like to depress prices. This will only give better (lower) pricing, entice more buyers to collect the physical metal and bring the paper defaults on that much faster. Human nature has a way of moving individuals towards self-preservation, in this case it means exiting the game where physical possession of metal will beat rock, paper and scissors.
Michael Lombardi ~ For a moment, consider yourself a loan officer at a major bank. Would you approve a loan for a customer who says they earn $1,000 a month, spend $1,300 a month, and don’t have a job? They also tell you they have unpaid debts of $17,000.
I don’t think anyone would authorize that kind of loan because the chances of getting the money back are next to zero. The individual spending more than he earns is a prime example of a financial disaster waiting to happen. It is unsustainable living; when someone does this, they break the most basic principles of Personal Finance 101.
So why does the U.S. government get away with it?
The United States Department of the Treasury, Bureau of the Fiscal Service reported the budget deficit for the month of February was $194 billion. The U.S. government received $144 billion in revenues and spent $338 billion; the government spent 134% more than what it earned. (Source: Bureau of the Fiscal Service, March 14, 2014.)
So far for fiscal year 2014 (which began in October of 2013), the U.S. government has incurred a budget deficit of $380 billion on revenues of $1.10 trillion and expenses of $1.48 trillion. Since the beginning of its current fiscal year, the government has been spending 34% more than what it takes in.
The U.S. national debt, which has now surpassed $17.0 trillion, has skyrocketed since the Credit Crisis of 2008.
There are two important facts about our rising national debt that don’t get a lot of mainstream attention (and I certainly don’t hear the politicians talking about them):
Point #1: With higher national debt comes higher interest payments.
Point #2: Interest rates are rising.
So far this fiscal year, the U.S. government has paid $166 billion in interest payments alone on its national debt. For the entire year, it expects to pay about $420 billion in interest. The more debt we pile on as the years go by, the more interest we will be paying on that debt.
As for interest rates themselves, they have been rising. Since mid-2012, the yield on the 10-year U.S. Treasury has gone up from 1.4% to 2.7% today, a whopping increase of 92%.
When a family is in trouble, it tries to make at least the minimum payments on its debt. Right now, the U.S. government isn’t even making a minimum payment. It is covering its interest payments on its debt by borrowing more; something the individual in our example above cannot do.
In fiscal 2013, the U.S. government registered a budget deficit of $680 billion. The politicians were very quick to say, “Look, it’s not the $1.0-trillion budget deficit we’ve been running for each of the past five years…we’ve come in lower!” They pat themselves on the back. But they don’t talk about the massive national debt we have created, how we are borrowing more money simply to pay our interest costs on our debt, how rising interest rates in 2015 and 2016 will just propel the national debt higher.
Maybe the amount of national debt no longer matters because we’ve all concluded it simply can’t be paid back. Or maybe it doesn’t matter because Japan’s national debt is equal to 205% of its gross domestic product (GDP), and Japan’s not broke yet. (Our national debt-to-GDP stands at 105%.) I guess that, according to the Japanese example, the size of a country’s national debt, or its relationship to GDP, really doesn’t matter anymore.
I am skeptical. What happens when one day the Japanese and China, which have already cut back on buying U.S. Treasuries, say “We want our money back”? Oh, that’s right. That won’t be a big deal because the Federal Reserve will just get the printing presses going again and buy all the new U.S. bonds coming on the market with newly printed money. Yeah, that will work.
Antal Fekete: The illegal open market operation of the Federal Reserve is a check-kiting scheme, pure and simple. It is based on the conspiracy of the Fed and the Treasury. The Fed issues checks without backing (namely the F.R. notes) which the Treasury accepts in payment for its bonds. Then it is the turn of the Treasury to issues checks without backing (namely, bonds), which the Fed uses as collateral to create more F.R. notes. Of course, this scheme to create something out of nothing is at the expense of the general public. When the check-kiting conspirators create hundreds of billions, it is not out of nothing. They tap into the bank account of every depositor in the country and pilfer a small amount hoping that the depositor won't notice.
We have included an audio version of the recording to help those in Turkey bypass any Youtube blocks:
Full transcript (translated by @castizbey):
"Prime Minister said that in current conjuncture, this attack (on Suleiman Shah Tomb) must be seen as an opportunity for us."
"I'll send 4 men from Syria, if that's what it takes. I'll make up a cause of war by ordering a missile attack on Turkey; we can also prepare an attack on Suleiman Shah Tomb if necessary."
"Our national security has become a common, cheap domestic policy outfit."
"It's a direct cause of war. I mean, what're going to do is a direct cause of war."
FIRST SCREEN:Ahmet Davutoğlu: I couldn't entirely understand the other thing; what exactly does our foreign ministry supposed to do? No, I'm not talking about the thing. There are other things we're supposed to do. If we decide on this, we are to notify the United Nations, the Istanbul Consulate of the Syrian regime, right?
Feridun Sinirlioğlu: But if we decide on an operation in there, it should create a shocking effect. I mean, if we are going to do so. I don't know what we're going to do, but regardless of what we decide, I don't think it'd be appropriate to notify anyone beforehand.
Ahmet Davutoğlu: OK, but we're gonna have to prepare somehow. To avoid any shorts on regarding international law. I just realised when I was talking to the president (Abdullah Gül), if the Turkish tanks go in there, it means we're in there in any case, right?
Yaşar Güler: It means we're in, yes.
Ahmet Davutoğlu: Yeah, but there's a difference between going in with aircraft and going in with tanks...
SECOND SCREEN:Yaşar Güler: Maybe we can tell the Syrian consulate general that, ISIL is currently working alongside the regime, and that place is Turkish land. We should definitely...
Ahmet Davutoğlu: But we have already said that, sent them several diplomatic notes.
Yaşar Güler: To Syria...
Feridun Sinirlioğlu: That's right.
Ahmet Davutoğlu: Yes, we've sent them countless times. Therefore, I'd like to know what our Chief of Staff's expects from our ministry.
Yaşar Güler: Maybe his intent was to say that, I don't really know, he met with Mr. Fidan.
Hakan Fidan: Well, he did mention that part but we didn't go into any further details.
Yaşar Güler: Maybe that was what he meant... A diplomatic note to Syria?
Hakan Fidan: Maybe the Foreign Ministry is assigned with coordination...
THIRD SCREEN:Ahmet Davutoğlu: I mean, I could coordinate the diplomacy but civil war, the military...
Feridun Sinirlioğlu: That's what I told back there. For one thing, the situation is different. An operation on ISIL has solid ground on international law. We're going to portray this is Al-Qaeda, there's no distress there if it's a matter regarding Al-Qaeda. And if it comes to defending Suleiman Shah Tomb, that's a matter of protecting our land.
Yaşar Güler: We don't have any problems with that.
Hakan Fidan: Second after it happens, it'll cause a great internal commotion (several bombing events is bound to happen within). The border is not under control...
Feridun Sinirlioğlu:I mean, yes, the bombings are of course going to happen. But I remember our talk from 3 years ago...
Yaşar Güler: Mr. Fidan should urgently receive back-up and we need to help him supply guns and ammo to rebels. We need to speak with the minister. Our Interior Minister, our Defense Minister. We need to talk about this and reach a resolution sir.
Ahmet Davutoğlu: How did we get special forces into action when there was a threat in Northern Iraq? We should have done so in there, too. We should have trained those men. We should have sent men. Anyway, we can't do that, we can only do what diplomacy...
Feridun Sinirlioğlu: I told you back then, for God's sake, General, you know how we managed to get those tanks in, you were there.
Yaşar Güler: What, you mean our stuff?
Feridun Sinirlioğlu: Yes, how do you think we've managed to rally our tanks into Iraq? How? How did we manage to get special forces, the battalions in? I was involved in that. Let me be clear, there was no government decision on that, we have managed that just with a single order.
FOURTH SCREEN:Yaşar Güler: Well, I agree with you. For one thing, we're not even discussing that. But there are different things that Syria can do right now.
Ahmet Davutoğlu: General, the reason we're saying no to this operation is because we know about the capacity of those men.
Yaşar Güler: Look, sir, isn't MKE (Mechanical and Chemical Industry Corporation) at minister's bidding? Sir, I mean, Qatar is looking for ammo to buy in cash. Ready cash. So, why don't they just get it done? It's at Mr. Minister's command.
Ahmet Davutoğlu: But there's the spot we can't act integratedly, we can't coordinate.
Yaşar Güler: Then, our Prime Minister can summon both Mr. Defence Minister and Mr. Minister at the same time. Then he can directly talk to them.
Ahmet Davutoğlu: We, Mr. Siniroğlu and I, have literally begged Mr. Prime Minster for a private meeting, we said that things were not looking so bright.
FIFTH SCREEN:Yaşar Güler: Also, it doesn't have to be a crowded meeting. Yourself, Mr. Defence Minister, Mr. Interior Minister and our Chief of Staff, the four of you are enough. There's no need for a crowd. Because, sir, the main need there is guns and ammo. Not even guns, mainly ammo. We've just talked about this, sir. Let's say we're building an army down there, 1000 strong. If we get them into that war without previously storing a minimum of 6-months' worth of ammo, these men will return to us after two months.
Ahmet Davutoğlu: They're back already.
Yaşar Güler: They'll return to us, sir.
Ahmet Davutoğlu: They've came back from... What was it? Çobanbey.
Yaşar Güler: Yes, indeed, sir. This matter can't be just a burden on Mr. Fidan's shoulders as it is now. It's unacceptable. I mean, we can't understand this. Why?
SIXTH SCREEN:Ahmet Davutoğlu: That evening we'd reached a resolution. And I thought that things were taking a turn for the good. Our...
Feridun Sinirlioğlu: We issued the MGK (National Security Council) resolution the day after. Then we talked with the general...
Ahmet Davutoğlu: And the other forces really do a good follow up on this weakness of ours. You say that you're going to capture this place, and that men being there constitutes a risk factor. You pull them back. You capture the place. You reinforce it and send in your troops again.
Yaşar Güler: Exactly, sir. You're absolutely right.
Ahmet Davutoğlu: Right? That's how I interpret it. But after the evacuation, this is not a military necessity. It's a whole other thing.
SEVENTH SCREEN:Feridun Siniroğlu: There are some serious shifts in global and regional geopolitics. It now can spread to other places. You said it yourself today, and others agreed... We're headed to a different game now. We should be able to see those. That ISIL and all that jazz, all those organisations are extremely open to manipulation. Having a region made up of organisations of similar nature will constitute a vital security risk for us. And when we first went into Northern Iraq, there was always the risk of PKK blowing up the place. If we thoroughly consider the risks and substantiate... As the general just said...
Yaşar Güler: Sir, when you were inside a moment ago, we were discussing just that. Openly. I mean, armed forces are a "tool" necessary for you in every turn.
Ahmet Davutoğlu: Of course. I always tell the Prime Minister, in your absence, the same thing in academic jargon, you can't stay in those lands without hard power. Without hard power, there can be no soft power.
EIGHTH SCREEN:Yaşar Güler: Sir.
Feridun Sinirlioğlu: The national security has been politicised. I don't remember anything like this in Turkish political history. It has become a matter of domestic policy. All talks we've done on defending our lands, our border security, our sovereign lands in there, they've all become a common, cheap domestic policy outfit.
Yaşar Güler: Exactly.
Feridun Siniroğlu: That has never happened before. Unfortunately but...
Yaşar Güler: I mean, do even one of the opposition parties support you in such a high point of national security? Sir, is this a justifiable sense of national security?
Feridun Sinirlioğlu: I don't even remember such a period.
NINTH SCREEN:Yaşar Güler: In what matter can we be unified, if not a matter of national security of such importance? None.
Ahmet Davutoğlu: The year 2012, we didn't do it 2011. If only we'd took serious action back then, even in the summer of 2012.
Feridun Sinirlioğlu: They were at their lowest back in 2012.
Ahmet Davutoğlu: Internally, they were just like Libya. Who comes in and goes from power is not of any importance to us. But some things...
Yaşar Güler: Sir, to avoid any confusion, our need in 2011 was guns and ammo. In 2012, 2013 and today also. We're in the exact same point. We absolutely need to find this and secure that place.
Ahmet Davutoğlu: Guns and ammo are not a big need for that place. Because we couldn't get the human factor in order...
The video below should help put this into perspective:
The International Monetary Fund has agreed a $14-18 billion two-year bailout for Ukraine, a deal to help it recover from months of turmoil that will also unlock further credits making a total of $27 billion. The agreement, announced on Thursday, is intended to help the heavily-indebted ex-Soviet republic stabilize its economy after anti-government protests which resulted in the overthrow of President Viktor Yanukovich and a standoff with Moscow in which Russia annexed the Crimea region. – Reuters
Dominant Social Theme: The IMF rides to the rescue. What a relief.
Free-Market Analysis: The Ukraine debacle has exposed certain truths to the world about the way the West operates and how the power elite destabilizes countries politically in order to gain further control over them. IMF officials are doing themselves no favors by participating, but doubtless have little choice.
This IMF tranche is not a helpful gesture toward Ukraine so much as part of a calculated and continued campaign of destabilization and occupation. It is the Internet Era itself that is exposing these manipulations and making them considerably less effective in the 21st century than in the 20th.
The release of a taped conversation featuring senior US State Department official Victoria Nuland plotting the political future of Ukraine was circulated via the Internet. As were other provocations and deliberate "false-flag" operations launched by the West to ensure that Russia would not dominate the whole of the Ukraine, nor wield influence over it financially.
Now the IMF has played its part, rushing into Ukraine with a program of funds worth US$27 billion. Here's more from the article:
The program of reforms that accompanies the support and which the IMF says is necessary to get economy back on track and avoid a debt default may be painful for the population and the new government at a time of crisis and uncertainty.
... The agreement is also subject to approval by IMF Management and the Executive Board, which will consider it in April. Conditions sought by the Fund include allowing the national currency, the hryvnia, to float more freely against the dollar, increasing the price of gas for the domestic consumer, overhauling finances in the energy sector and following a more stringent fiscal policy.
IMF mission chief Nikolay Gueorguiev outlining the proposed package said another important step was to pass a law on public procurement aimed at restraining corruption in the state sector and reducing state budget expenditure. Prime Minister Arseny Yatseniuk, who has dubbed his government a 'suicide' government because of the unpopular measures it will have to take to right the corruption-ridden economy after years of mismanagement, urged parliament to approve the measures outlined in the package.
"Ukraine is on the edge of economic and financial bankruptcy," he said, warning that the price Ukraine will pay for Russian gas supplies was expected to rise by nearly 80 percent from April to $480 per 1,000 cubic meters. He said inflation in 2014 would be between 12 and 14 percent and unless laws were passed to support the austerity measures proposed by the IMF to stabilize the economy, GDP could fall 10 percent during the year and Ukraine could default.
The previous, ousted government said the country of 46 million needed around $35 billion over two years to stave off bankruptcy. It faces about $10 billion in repayments on its foreign currency debt this year, excluding the several billion dollars it will require for gas imports from Russia.
In June, it will have to pay out on a $1 billion eurobond that matures. In a move on Wednesday, seen as a gesture by Kiev to secure the IMF package, the government said it had agreed to raise the price of gas to the domestic consumer - a long-standing demand by the Fund - by more than 50 per cent from May 1.
This was an unpopular condition for IMF aid that Yanukovich had refused before he was ousted last month. "Following the intense economic and political turbulence of recent months, Ukraine has achieved some stability, but faces difficult challenges," the IMF statement said.
Announcing the agreement in the Ukrainian capital, Kiev, Gueorguiev declined to say how big the initial tranche of aid would be. Kiev has said it desperately needs cash to cover expenses and avert a possible debt default. The country's finance minister has predicted the economy will contract 3 percent this year. The bailout from the IMF will clear the way for several billion dollars in aid from the United States, European Union, Japan and other nations.
Two points here. The first is that the West will seemingly throw as much cash as necessary at Ukraine to extend its influence and consolidate sociopolitical and economic gains. Second is that "austerity" is going to be an ongoing factor.
Austerity in this case – as elsewhere – is a way for the government itself to expand authority in a region where government control is not strong. Greece is a prime example. Despite the failures of austerity, the process itself legitimized the government's strengthened role in Greek society.
Nuland's comments show how intimately the West – the US, really – has been in forming the new sociopolitical, economic and military nexus that will run the part of Ukraine that Russia decides to leave alone.
The IMF's involvement in Ukraine is simply one more event in a series of deliberate measures designed to cement Ukraine's fate as a Western proxy on Russia's border.
The real significance of Ukraine may turn out to be not the political reconfiguration so much as the additional exposure of Western influence peddling and deliberate strategies of manipulation. These have already been exposed in Northern Africa and the Middle East, but the Ukraine saga continued the process and made it even more obvious.
The power elite depends on a willing suspension of disbelief to promote facilities such as the UN, IMF, World Bank, etc. The more these facilities are seen as compromised and manipulated, the more they lose their luster – and certainly their credibility.
Conclusion As the famous Macedonian General Pyrrhus once observed after winning the day against a superior Roman force but losing much of his army in the process: "A few more victories like this and we are undone.
Andy Hoffman ~ Today's supposed "financial markets" will one day be viewed by historians with awe and wonderment. The bubbles created by money printing and market manipulation - not just in the U.S., but the entire world - have no precedent in centuries of economic experience, as never has currency been universally unbacked, nor government intervention so widespread.
The odds, for example, of gold suddenly plunging at the 2:15 AM EST open of the global paper market 90% of the time - even over multi-month periods of rising prices or U.S. stock futures surging in the wee hours nearly every day, are infinitesimal in the best of times. But in theworst of times, as we are far closer to today, it's not out of line to toss terms like "sixth sigma" around, or six standard deviations from the mean; which statistically, should occur no more than once in two million years - were markets to be freely traded.
In other words, Western markets are now 100% rigged - from stocks and government bonds, which are relentlessly supported to PAPER gold and silver, which are suppressed and currencies, which are "managed." In today's particular case, Precious Metals were attacked in perfect concert with yesterday's COMEX options expiration - just ahead of Friday's "first delivery day" - as TPTB do everything in their power to prevent investors from taking delivery of the COMEX's scant available physical metal. The fact that COMEX registered gold inventories have not changed in a
month - at a measly 637,000 ounces - with perhaps 500,000 of it claimed via December, January, and February delivery demands, should tell you all you need to know; particularly given that, since June of last year, the COMEX conveniently slipped the following "disclaimer" into its daily inventory reports.
The information in this report is taken from sources believed to be reliable; however, the Commodity Exchange, Inc. disclaims all liability whatsoever with regard to its accuracy or completeness. This report is produced for information purposes only.
-CME Group (And boy can we trust this entity
Not to mention, the fundamental backdrop of a dramatic plunge in the NASDAQ, potentially signaling the beginning of a crash in the market's most speculative, highly-leveraged investments; as well as a new low in the Yuan/dollar exchange rate, surging oil prices, another week of blistering U.S. Mint demand for silver Eagles (as yet again, weekly quotas were sold out by Tuesday), Citigroup failing the Fed's latest "stress test," the largest U.S. home sales plunge in three years, a $27 billion Ukrainian bailout, and the head of the Bundesbank flat out stating that negative interest rates and QE are potential near-term options for the ECB!
Most comically of all, the propagandautilized to "explain" the most recent PM attacks circulates around last week's Fed "tapering" announcement; i.e., that rising interest rates, amidst an environment of "deflation and recovery," will "strengthen the dollar." As you can see below, the dollar index has barely budged since the FOMC meeting; or, for that matter, the Dow. Oil prices have surged, toward their highs for the year, while the market's most speculative investments, technology stocks, have been slammed. And yet, gold and silver prices, already trading well below their respective costs of production have been hit hard. And as for the so-called "recovery," I'll defer to Peter Schiff's prescient comments, here.
As for the aforementioned, historic bubble in Western financial assets, I cannot agree with Schiff more - in that it actually appears to be worse than 1999. I didn't think it was possible, given the utter mania that era represented; but as I wrote yesterday, regarding the "Candy Crush" IPO, late 1990s "investment metrics," with few exceptions, were far more conservative than today. Here at the Miles Franklin Blog, we have consistently stated our belief that the next phase could just as easily be a hyperinflation as a crash - although in real terms, the result would be equally catastrophic. Frankly, we could care less, as our goal is to protect ourselves from real losses in
either scenario - which to our knowledge, only gold and silver have the ability to do.
Per today's title, we plan to demonstrate that the "anatomy" of this gross overvaluation of U.S. financial assets - and by extension, those of many other nations - is Federal Reserve money printing, care of the gargantuan debt creation it engendered. Once you realize this - in viewing just how exponential such activity has recently become - it becomes easy to understand why TPTB have so viciously attacked Paper PM prices in the past two-plus years. Frankly, very little commentary is required; as in this case, pictures tell "a thousand words."
Let's start with what we view as one of the most shocking charts imaginable - that of NYSE margin debt. To wit, given what we wrote above, of the historically speculative mindset in 1999 - not to mention, the utter shambles today's global economic environment has become - it is nearly inconceivable that margin debt could be any higher. And yet, not only is it higher than in 1999, but nearly two times higher.
Of course, the national debt is three times higher - and four times higher when including the "off balance sheet" debt incurred via the 2008 nationalizations of Fannie Mae and Freddie Mac. So as to not make your heads spin, we won't even bring up the parabolic increase in "unfunded liabilities" - but suffice to say, they are tens of trillions of dollars larger.
Next up, we have the Fed's balance sheet - that is, the portion they tell us about - up more than
eight times over this period. Those $3.5 trillion extra dollars were injected directly into the TBTF banks; and since loan growth has been utterly dead over this period, said money has been injected
directly into financial markets.
...and similarly, government spending...
...and, what do you know, inflation! But don't tell Janet Yellen - or Mario Draghi, Shinzo Abe, and the rest of the world destroying Central bankers - whom insist that "deflation" is the world's biggest threat, so they can continue running the printing presses full tilt.
And thus, on yet another day when stocks "miraculously" reversed at exactly 10:00 AM EST - when the Fed's daily "open market operations" occur; whilst PM prices equally "miraculously" turned down - just as the global physical markets closed, ask yourself these questions. Do you believe the aforementioned trends are sustainable - regarding debt, Treasury yields, margin, and Precious Metals prices?
If so, go right on believing "deflation" and "recovery" are on the way. But if not, the time is
now - with Precious Metals at historically undervalued levels relative to production costs, money supply, and essentially all relevant metrics - to protect your assets against the more likely scenario of inflation and depression.
Bill Holter ~ Tit for tat "sanctions" so far. We bar a dozen or so high level Russians from entering the U.S., Russia retaliates with the same. Canada puts their 2 cents (Canadian) in and bars another dozen or so Russians and Russia does the same to Canada. Like I said, so far it's been tit for tat.
But wait, have you heard that Russia is setting up their own "payments" system? They are obviously doing this so their businesses are not disrupted, money and goods will still flow. It might be a pretty good bet that "dollars" will not even enter this equation once they get it up and running. Will this be a disaster to the dollar? No, probably not but as I've mentioned before it does serve as an example for others who might get this "bright idea."
Russian companies are also making plans to redirect their sales of metals eastward and away from the U.S. if sanctions begin to bite. The most important being metals of platinum and palladium for their catalytic properties. Looking into this just a little deeper you will find that Russia is the largest producer of palladium...which they may not be accepting dollars or "American Express" for shortly.
But here is where the tit for tat starts to get really foolish. The G-8 (G-7 +Russia) meeting scheduled for June seems to be in the process of being cancelled. Cancelled because the meeting was scheduled ...yes you guessed it...in Sochi, Russia. To top this off, President Obama is lobbying not only for a cancellation of this meeting but "kicking" Russia out altogether. Really? All because a small portion of a traditionally Russian nation "democratically voted" to be re annexed with its motherland? This seems to me like "schoolyard stuff." No, better yet, this is like our president sneering and saying, "We're not going to let Ivanoff play in any of our reindeer games!"
I'm sorry to say but if we are taking this position, the Chinese may have a little bit to say about it. Clearly Mr. Putin has made the Chinese aware of his planned moves ahead of time...and received the OK. This did not take the Chinese by surprise (though our responses may have). We are "beholden" to China as they were gracious enough to lend us as much as we needed to borrow...until the end of 2011. They lent us enough rope to hang ourselves and then just stopped which is why the Federal Reserve now buys (monetizes) 70% of our own debt. But, they didn't "stop" until they had acquired enough of our debt to become our largest creditor!
For anyone who has not thought this all the way through, when you become someone's largest creditor there is "power" involved. The old saying that if you owe $100,000 then the bank owns you but if you owe $10 million you own the bank does not hold true when discussing international "sovereign" debt. Especially when the debtor is also privileged with the issuance of the reserve currency...and this is the rub.
By pushing Mr. Putin we are accelerating the game's outcome, it is like we on our own are accelerating the clock. We are daring our foes to go off of the dollar standard. In fact, we will with sanctions that make it very difficult for Russia to use dollars even if they wanted to. Which of course leads to "what is China's position?"
Do you see the question that follows this? "Who" exactly gets hurt the worst? No, actually let me re phrase this, "who" has the most need for dollars to be used? Russia or the U.S.? Can Russia survive and do business without the use of dollars? If the dollar all of a sudden just vanished, would Russia economically implode? Then ask the same questions of the U.S. How will we trade...for anything? We have a $500 billion trade deficit to start with; will those goods still continue to "flow" into our ports? What exactly will we pay in exchange for goods coming in? IOU's?
And this is the problem; we have been paying with IOU's for years now. In fact, I have termed it the "never pay model." Can we be foolish enough to not understand that our trading partners are already not happy with our IOU's...yet we want to tell another nation "you can't use them?" It is clear that this is not a "U.S. vs. Russia" problem. The G-20 has stepped up to the plate and is making them known. They don't like the "veto power" of the U.S. or China and want all 20 nations to have more equal power and voting rights. A very good take on this waspenned by Paul Mylchreest.
This is a dangerous situation for the U.S. as the 20 nations will meet April 10 to discuss. The U.S. has still not amended legislation pertaining to the IMF which has this date, April 10th as a deadline. The danger is that enough of these countries will come to similar views and decide to begin sidestepping the dollar. Were Russia's new "SWIFT" system to get up and running, the use of SWIFT and dollars may become unnecessary.
When I say "unnecessary" you should understand that the world is not happy with our antics. They are not happy with the way we bullied other nations. They don't really know where we stand anymore on various issues as in one nation we will back one side yet they are our foes in another and different nation or conflict. They surely do not enjoy the NSA spying on them (Mrs. Merkel has said as much and she now seems more sympathetic to Mr. Putin rather than Mr. Obama).
A response to the U.S. "isolating itself" was seen yesterday when Mr. Obama gave a speech in Hague, Netherlands. Zero Hedge provided a clip which is less than 2 minutes in length. Has this ever happened anywhere to any sitting U.S. president? Ever? You must ask yourself why or how something like this could have happened. Even if your politics are extreme far left, this is a very scary response and illustrates global opinion of our actions.
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