Archive for the ‘ben bernanke’ tag
Published on Nov 21, 2013
IN This Interview:
*Global Economic Reset (00:27)
*Russian Lawmaker Calls for the Outlaw of the U.S. Dollar (2:23) – Source: “Russian lawmaker wants to outlaw U.S. dollar, calls it a Ponzi scheme”: http://WashingtonTimes.com/news/2013/…
*Federal Reserve Printing More Than $85 Billion/mo (4:47)
*Dollar Collapse And How It Will Impact YOU (7:30)
*Is Real Estate A Good Investment? (9:49)
Guess Who Benefited!
And that, in a nutshell, is precisely how the money from QE has been distributed.
One can debate whether QE has benefitted Main Street or Wall Street until one is blue in the face, even though five years later, the answer is perfectly clear to all but the staunchest Keynesians and monetarists (and if it isn’t, just pay attention to the 3:30 pm S&P ramp every day). One thing, however, that is undisputed is what the market itself says about where the QE money ends up when it is being spent by its recipients. And that story is so simple even a Keynesian would get it.
Stated briefly, luxury retailers such as Tiffany, Coach and LVMH are now up 500% since the Lehman lows, and about 30% above the prior cycle highs. On the other hand, regular retailers such as Macy’s, Kohl’s and JC Penney are barely up 100% from the crisis lows, and still more than 30% below the last bubble highs.
by David Stockman, author of "The Great Deformation"
A decisive tipping point in the evolution of American capitalism and democracy—the triumph of crony capitalism—took place on October 3, 2008. That was the day of the forced march approval on Capitol Hill of the $700 billion TARP (Troubled Asset Relief Program) bill to bail out Wall Street. This spasm of financial market intervention, including multi-trillion-dollar support lines provided to the big banks and financial companies by the Federal Reserve, was but the latest brick in the foundation of a fundamentally anti-capitalist régime known as “Too Big to Fail” (TBTF). It had been under construction for many decades, but now there was no turning back. The Wall Street bailouts of 2008 shattered what little remained of the old-time fiscal rules.
There was no longer any pretense that the free market should determine winners and losers and that tapping the public treasury requires proof of compelling societal benefit. Not when AAA-rated General Electric had been given $30 billion in taxpayer loans and guarantees to avoid taking modest losses on toxic assets it had foolishly funded with overnight borrowings that suddenly couldn’t be rolled over.
Even more improbably, Goldman Sachs had been handed $10 billion to save itself from alleged extinction. Yet it then swiveled on a dime and generated a $29 billion financial surplus—$16 billion in salary and bonuses on top of $13 billion in net income—for the year that began just three months later.
Even if Goldman didn’t really need the money, as it later claimed, a round trip from purported rags to evident riches in fifteen months stretched the bounds of credulity. It was reminiscent of actor Gary Cooper’s immortal 1950s expression of suspicion about Communism. “From what I have heard about it,” he told a congressional committee, “it isn’t on the level.”
Nor was Washington’s panicked bailout of Wall Street on the level; it was both unnecessary and targeted at the wrong problem. The so-called financial meltdown was not the real crisis; it was only the tip of the iceberg, the leading edge of a more fundamental economic malady. In truth, the US economy was heading for the wringer because a multi-decade spree of unsustainable borrowing, speculation, and financialization of the national economy was coming to an abrupt end.
In the years after 1980, America had undergone the equivalent of a national leveraged buyout (LBO). It was now saddled with $30 trillion more in combined public and private debt than would have been the case under the time-tested canons of financial discipline and prudence which prevailed during the nation’s long economic ascent. This massive debt burden had fueled a three-decade prosperity party by mortgaging the nation’s future. Now the bill was coming due and our national simulacrum of prosperity was over.
This rendezvous with the limits of “peak debt,” however, did not mean that the Main Street economy was in danger of collapse into an instant depression. That was the specious claim of the bailsters. What did threaten was a deeper and more enduring adversity. The demise of this thirty-year debt super cycle actually meant that it was payback time. Instead of swiping growth from the future, the American economy would now face a long twilight of debt deflation and struggle to restore household, corporate, and public sector solvency.
This abrupt turn in the road should not have been surprising. America’s fantastic collective binging on debt, public and private, had no historical precedent. During the century prior to 1980, for example, total public and private debt on US balance sheets rarely exceeded 1.6 times GDP. When the national borrowing spree reached its apogee in 2007, however, the $4 trillion of new debt issued by households, business, banks, and governments amounted to 6 times that year’s $700 billion gain in GDP. Plain and simple, what was being recorded as GDP growth was little more than faux prosperity borrowed from the future.
In fact, by the time of the financial crisis total US debt outstanding was $52 trillion and represented 3.6 times national income of $14 trillion. Accordingly, there were now two full turns of extra debt weighing on the nation’s economy. And the embedded math was forbidding: at the historic leverage ratio of 1.6 times national income, which had prevailed for most of the hundred years prior to 1980, total US public and private debt would have been only $22 trillion at the end of 2008.
So the nation’s households, businesses, and taxpayers were now lugging around the aforementioned $30 trillion in excess debt. This staggering financial burden dwarfed levels which had historically been proven to be healthy, prudent, and sustainable. TARP and all its kindred bailouts and the Fed’s ceaseless money printing could not relieve it. And Washington’s reckless use of Uncle Sam’s credit card to fund the Obama stimulus actually made it far worse by attempting to revive the false prosperity of the bubble years. The obvious question remains: Why did this plague of debt arise? Did the American people suddenly become profligate and greedy through a mysterious process of moral and social decay?
There is no evidence for the greed disease theory but plenty of reason to suspect a more foreboding cause. The real reason for the current crisis of debt and financial disorder is that public policy had veered into the ditch, permitting an unprecedented aggrandizement of the state and its central banking branch. In the process, the vital nerve center of capitalism, its money and capital markets, had been perverted and deformed. Wall Street has become a vast casino where leveraged speculation and rent seeking have displaced its vital function of price discovery and capital allocation.
The September 2008 financial crisis, therefore, was about the need to drastically deflate the Wall Street behemoths—that is, dangerous and unstable gambling houses—fostered by decades of money printing and market rigging by the Fed. Yet policy veered in the opposite direction, propping them up and thereby perpetuating their baleful effects, owing to a predicate that was dead wrong.
A handful of panic-stricken top officials, led by treasury secretary Hank Paulson and Fed chairman Ben Bernanke, proclaimed that the financial system had been stricken by a deadly “contagion” that had come out of nowhere and threatened a chain reaction of financial failures that would end in cataclysm. That proposition was completely false, but it gave rise to a fateful injunction—namely, that all the normal rules of free market capitalism and fiscal prudence needed to be suspended so that unprecedented and unlimited public resources could be poured into the rescue of Wall Street’s floundering behemoths...
Under the Dodd-Frank Act “losses will be assigned to shareholders and unsecured creditors” . . . . . . . and, as a depositor in a bank, under the law:
YOU ARE an unsecured creditor.
The Leveraged Buyout of America” by Ellen Brown, Author, Web of Debt, Public Bank Solution; President, Public Banking Institute
Giant bank holding companies now own airports, toll roads, and ports; control power plants; and store and hoard vast quantities of commodities of all sorts.
They are systematically buying up or gaining control of the essential lifelines of the economy. How have they pulled this off, and where have they gotten the money?
In a letter to Federal Reserve Chairman Ben Bernanke dated June 27, 2013, U.S. Representative Alan Grayson and three co-signers expressed concern about the expansion of large banks into what have traditionally been non-financial commercial spheres. Specifically:
We are concerned about how large banks have recently expanded their businesses into such fields as electric power production, oil refining and distribution, owning and operating of public assets such as ports and airports, and even uranium mining.
After listing some disturbing examples, they observed:
According to legal scholar Saule Omarova, over the past five years, there has been a “quiet transformation of U.S. financial holding companies.” These financial services companies have become global merchants that seek to extract rent from any commercial or financial business activity within their reach. They have used legal authority in Graham-Leach-Bliley to subvert the “foundational principle of separation of banking from commerce”… It seems like there is a significant macro-economic risk in having a massive entity like, say JP Morgan, both issuing credit cards and mortgages, managing municipal bond offerings, selling gasoline and electric power, running large oil tankers, trading derivatives, and owning and operating airports, in multiple countries.
A “macro” risk indeed — not just to our economy but to our democracy and our individual and national sovereignty. Giant banks are buying up our country’s infrastructure — the power and supply chains that are vital to the economy. Aren’t there rules against that? And where are the banks getting the money?
by James Howard Kunstler
How then did Ben Bernanke finally summon the fortitude to entertain tapering Federal Reserve bond purchases from $85 billion a month to, say, $84.7 billion a month come September 18th, the world may never know, but now the deed appears to be done, in his absence, by remote paranormal transmission, while the other Fed board members, with their attendant economist factotums, servelings, and catamites all beamed the message out of horsey Jackson Hole that they expected — even pined for — the vaunted return to “a normal economy.” Which left many bystanders wondering if that meant a Dow Jones industrial average at, say 3,847 around Columbus Day, the 10-year bond at 5 percent, and every pension fund in world bleeding out from a sucking chest wound — not to mention a Hindenberg-like conflagration of the US Treasury as debt payments went beyond critical.
Pardon me for saying that I don’t think these mooks of finance know what they’ve been paying for with the QE series of monkeyshines. They’ve been creating “money” for five years to offset the collapse of a no-longer-cheap-oil economy. It’s really that simple. If any of these poobahs thinks they can run a “normal economy” at $106-a-barrel then they should run out and get a realtor’s license and buy as many Arizona REO’s as the foundering banks will admit to holding on their books, and then become landlord to renters working 29 hours a week on the WalMart loading dock.
Actually, I don’t think they will have to wait that long to see the consequences of their loose, silly talk. America’s major export is now working its hoodoo in many other parts of the world as currencies become unglued and economies look down at the flimsy bamboo scaffolding that holds them up so high. America’s major export these days is economic uncertainty, specifically the question of what, exactly, will maintain the pretense that the hopelessly intertwined financial affairs of China, India, Brazil, Japan, Euroland, Russia, and everybody else, really, including ourselves, are not unraveling like some kind of cosmic sweater knitted with one needle by a cross-eyed god with the jim-jams.
A lot of people begin to suspect that there is something called “an economy” quite apart from the shenanigans and dumb shows put on by the banks and their imitators, the hedge funds. That actual economy is a very earthy thing, in so far as it is pegged to the biophysical realities of the planet — such as, can you harvest a turnip and therefore make turnip soup for dinner? After all, you won’t be making a soup out of interest rate swaps. Of course, dining on turnip soup is not as sexy as driving to work in a Tesla to a hedge fund boiler room where you get to cream off millions every week by playing Where’s Waldo with the rehypothecated accounts of the muppets who foolishly entrusted you with their own ill-gotten savings.
The nervousness out there is palpable and epochal. Not only is everyone waiting for some other shoe to drop after Labor Day; they’re waiting for it to drop on their own heads. The most visible result, I think, will be a shocking flight into precious metals, of which there is precious little to meet the kind of demand soon to overwhelm that teeny-weeny market corner of the financial universe. What else is there now? The Fed taper talk is pretty much a case of holding a gun to a puppy’s head — the puppy being the equities markets. The bond sector is a hall of mirrors. Cash is a lot less than king in several countries now, with the contagion running hot. Everything is mispriced to the upside except Gold and Silver, which are mispriced the other way, especially after the chicaneries of April and June when, depending on which story you believe, the banks ran a naked short campaign to knock the stuffing out of the metals so they could then go back in and hoover some of it up cheap in an attempt to conceal the multiple out-leasings (that is sale, or perhaps theft) of metal left by fools in their custodial charge. Or, some other sages might say, the knock-down was done to defend the honor of the evaporating US dollar (a dollar with the vapors), making it appear sturdier than it actually is. Yes, well that worked, sort of, for a few months, while Wall Street repaired to the annual East Hampton endorphin splash. I was not invited to Diddy’s party, where the pineal glands of the gathered .01 percent were audibly ringing with celestial euphoria as they swapped the reassuring pulsations of their own specialness. Those people, you can be sure, were not pining for a “normal economy.”
Long story short: we’re in for some interesting weeks ahead. Keep your hat on.
My new little book will crack you up. Click to purchase
On Aug. 13, economist Jim Willie was a guest on the Trunews radio program. During the hour long interview, Dr. Willie stated that Fed Chairman Ben Bernanke, who made his bones writing a doctoral thesis on how the central bank could have staved off the Great Depression through the pumping of massive liquidity into the system, should have both his thesis and P.H.D. stripped since his own polices as the head of the Federal Reserve have disproved his own paper.
Jim Willie: Now if you listen to some of the old principles of Greenspan. He would say, “An artificially low interest rate environment is necessary for stimulating and kick starting the economy, but it cannot last for more than six to eight months. If it does it causes great distortions in the financial markets, and other distortions that are very difficult to fix.
Now Greenspan wasn’t the Fed Chairman at the time, it was Bernanke, who is a total hack. And his entire P.H.D. thesis has been disproved by Bernanke himself. He wrote that liquidity, flowing through the tubes, could fix any financial crisis like the Great Depression.
Well, why do we need QE2 then sir? Why do we need Operation Twist? Why do we need QE3 sir? You just disproved your P.H.D. thesis, and you should have your thesis and doctorate stripped. – Trunews
The ‘distortions’ that former Fed Chair Alan Greenspan alluded in his speech several years ago, have culminated in the asset bubbles the economy has experienced since low interest rate policies began in earnest back in 2004. From a housing bubble, to a treasury bubble, then with QE3, creating a stock market bubble, Willie’s assessment of Bernanke’s failed beliefs and policies have done nothing to stimulate the economy, and have solely resulted in a redistribution of wealth upward, from the Middle Class to the ultra rich.
Chart courtesy of Financial Sense
The truth of the matter is, the Great Depression could have been avoided, or at least lessened to a mere recession if the Federal Reserve had followed their simple mandate, which was to be a lender of last resort for the banks that were suddenly failing by the thousands due to bank runs, stock market margin calls, and loss of liquidity. If the 15 year old central bank had opened its discount window to the troubled banks in 1929-1933, then only a long term recession would have resulted, with bad debts and toxic assets being dissolved as they did in the normal economic cyclical.
Ben Bernanke, like most central bankers since the 1930′s, is a student of Keynes, who believes that the government, not the free markets, are the arbiter of economic growth and economic success. Government and central bank intervention has proven Greenspan right, and Bernanke wrong, that long term artificial liquidity in a economy doesn’t improve or kick start the system, but instead creates anomalies and distortions that make the problem much worse, and creates an economy that requires even more liquidity in a never ending cycle until inflation reaches hyper-inflation, or the system collapses under its own debt.
Kenneth Schortgen Jr is a writer for Secretsofthefed.com, Examiner.com, and hosts the popular web blog, The Daily Economist. Ken can also be heard Friday evenings giving an weekly economic report on the Angel Clark radio show.
The following fictional account of a day in the life of a drunk Fed Chairman is as relevant today as it was when it first came out around the time QE2 was ending and the Chairman was confident no more unsterilized monetization of US debt would be required ever again.
SEWARD, NE—Claiming he wasn’t afraid to let everyone in attendance know about “the real mess we’re in,” Federal Reserve chairman Ben Bernanke reportedly got drunk Tuesday and told everyone at Elwood’s Corner Tavern about how absolutely fucked the U.S. economy actually is.
Drunken Ben Bernanke Tells Everyone At Neighborhood Bar How Screwed U.S. Economy Really Is
Bernanke, who sources confirmed was “totally sloshed,” arrived at the drinking establishment at approximately 5:30 p.m., ensconced himself upon a bar stool, and consumed several bottles of Miller High Life and a half-dozen shots of whiskey while loudly proclaiming to any patron who would listen that the economic outlook was “pretty goddamned awful if you want the God’s honest truth.”
“Look, they don’t want anyone except for the Washington, D.C. bigwigs to know how bad shit really is,” said Bernanke, slurring his words as he spoke. “Mounting debt exacerbated—and not relieved—by unchecked consumption, spiraling interest rates, and the grim realities of an inevitable worldwide energy crisis are projected to leave our entire economy in the shitter for, like, a generation, man, I’m telling you.”
“And hell, as long as we’re being honest, I might as well tell you that a truer estimate of the U.S. unemployment rate is actually up around 16 percent, with a 0.7 percent annual rate of economic growth if we’re lucky—if we’re lucky,” continued Bernanke, nearly knocking a full beer over while gesturing with his hands. “Of course, if everybody knew that, it would likely cripple financial markets across the entire fucking globe, even in various emerging economies with self- sustaining growth.”
After launching into an extended 45-minute diatribe about shortsighted moves by “those bastards in Congress” that could potentially exacerbate the nation’s already deeply troublesome budget imbalance, the Federal Reserve chairman reportedly bought a round of tequila shots for two customers he had just met who were seated on either side of him, announcing, “I love these guys.”
Numerous bar patrons slowly nodded in agreement as Bernanke went on to suggest the United States could pass three or four more stimulus packages and “it wouldn’t even matter.”
“You think that’s going to create long-term economic growth, let alone promote job creation?” Bernanke said. “We’re way beyond that, my friend. There are no jobs, okay? There’s nothing. I think that calls for another drink, don’t you?”
While using beer bottles and pretzel sticks in an attempt to explain to the bartender the importance of infusing $650 billion into the bond market, the inebriated Fed chairman nearly fell off his stool and had to be held up by the patron sitting next to him.
Another bargoer confirmed Bernanke stood about 2 inches from her face and sprayed her with saliva, claiming inflation was going to “totally screw” consumer confidence and then asking if he could bum a smoke.
“Sure, we could hold down long-term interest rates and pursue a program of quantitative easing, but c’mon, we all know that’s not going to make the slightest bit of difference when it comes to output, demand, or employment,” Bernanke said before being told to “try to keep [his] voice down” by the bartender. “And trust me, with the value of the U.S. dollar in the toilet, import costs going through the roof, and numerous world governments unprepared for their own substantial debt burdens, shit’s not looking too good for us abroad, either.”
“God, I’m so wasted”, added Bernanke, resting his head on the bar.
Later in the evening, Richard Kampman, a truck driver who was laid off in 2010, said Bernanke approached him in the men’s restroom and attempted to strike up a conversation about various factors contributing to the current financial crisis.
“He stumbled up to the urinal and started mumbling on about the depressed housing sector or something,” said Kampman, who claimed Bernanke had to use both hands on the wall to steady himself. “Then after a while he just sort of stopped and I couldn’t tell if he was laughing or crying.”
“Then, he puked all over the sink and the mirror,” Kampman added.
Customers at the bar told reporters the “shitfaced” and disruptive Bernanke refused to pay for his drinks with U.S. currency, claiming it was “worthless.” Witnesses also confirmed that near the end of the evening, Bernanke put money into the jukebox and selected Dire Straits’ “Money For Nothing” to play five times in a row.
“This is what it’s all about,” said Bernanke, who reportedly danced alone in the middle of the dark tavern. “Fucking love this song.”
(Source: The Onion)
SaGuiNuS TaPeRoR SpoTTed…>
USTBond: Return to Sender
by Jim Willie, Golden Jackass website
The USTreasury Bond is the primary vehicle for the USDollar. Nations do not hold the USDollar in raw currency form, except for the crime syndicates. They hold them in USTBond form, in order to gather some interest income. In the last few years, not few months, but years, the interest has been next to nothing, and surely far less than what it should be, given the risk and the nasty undermine to value by the monetary action by the central bank itself. Paltry interest aside, with all its unfortunate deterrent toward investment in USGovt debt, the USFed has been kicking out the value pillars for a very long time, far longer than the limit imposed loosely by Sir Alan Greenspasm of six to eight months. With the cost of money near zero, all markets are distorted, all assets improperly priced, and Gold marked for illicit ambush on a regular basis by the fascists. Major broad deep channels are being constructed to redeem and discharge USTreasury Bonds. They will be returned to sender. The USFed will be put under tremendous strain to absorb and soak up the supply being dumped around the world in all these major channels. The USFed balance sheet will expand, not contract, or else they will face a catastrophe in a USTBond explosion and Interest Rate Swap derivative nuclear event. The USFed has no exit available, as all doors are shut, none an option. In the process, the Gold price will rise relentlessly, while its nemesis the USTBond is dumped as a discredited bride, a vixen of unimaginable betrayal. The USGovt never had any intention of redeeming the bonded debt. Gold will prevail, as the channels fill. The Rubin Doctrine has run out of time.
NO EXIT, STUCK IN THE MATRIX
The Bernanke Fed is realizing they are stuck in the monetary corner with NO EXIT. They began to mention the need for an exit in the spring months of 2009. That is when the 0% official rate should have been abandoned. Here we are four years later, and they are still stuck with no exit, precisely as the Jackass warned, forecasted, and screamed in print. The division within the USFed is becoming a regular story. Only the half-blind governors on the once august Board refuse to admit that USEconomic growth is a mirage. The brave governors have been more bold in recent months, taking a stance against the charlatan Bernanke, explaining the intractable position. The chairman has ably proved that liquidity cannot solve the current banking and financial problems mired in insolvency. In doing so, Bernanke has disproved his own PhD Economics dissertation, and has discredited his own lofty credentials with a Princeton seal. He is a sham, a Weimar agent, and a destroyer of capital. The hopelessly devoted paper mache craftsman is stuck in the Matrix.
A counter-culture comparison is due. The USFed and the Wall Street bankers have created an environment of alternative universe. The financial markets are rigged. The USDollar currency and USTBond are propped. The bankers are given free license for $trillion fraud. The big banks are dependent upon narcotics funds. The politicians are syndicate puppets, include the leader of the land. The last three presidents have been narcotics addicts, who refuse to hand over medical records to the Congress as required by law. The debts are covered by hyper monetary inflation. Jobs are being shed rapidly. The USEconomy is stuck in quicksand, as it deteriorates, while the blaring music sings about recovery.
The fascist United States is the embodiment of the MATRIX, the multi-sequel hit movie series from the 1990s. Notice the similarity between the cold controlling deceptive alternative world Matrix architect (left) and USFed Chairman Bernanke (right). The contrast is scary. No offense to Helmut Bakaitis, the Austrian actor who played the architect. In the movie he fought the hero Neo and rogue Oracle and pesky Keymaker. They symbolize the Gold community working toward freedom from the Matrix itself, doing battle against a corrupt controlled fiat currency Matrix centered upon the USDollar, defended by the USTBond software (bank derivatives) and the banker computer consoles. The rogue programs loose within the Matrix are the Gold investors, messing up their layouts and screens. The aspect Bernanke and his gang of Wall Street bankers cannot anticipate or successfully keep at bay is the attack from the East, the comprehensive entirely new operating system being fashioned by the East which will replace the programming source code (bank procedures). It is gold trade settlement, the New Gold Trade Standard which renders the Matrix with obsolete software. It opens the door to freedom from the Matrix. The scrambling by the G-7 finance minister clowns in early May served as concrete proof of their desperation, in response to the G-20 Meeting held in Turkey. They disrupted its implementation, but bought only a little time.
PRELIMINARY TO REJECTION
In the last several years, perhaps five or six years, the stage has been set for great change. A device has been put in place by numerous nations for trade settlement in barter framework, which has bypassed the USDollar. The Chinese Yuan Swap Facility has been a sneaky bypass workaround. The United States has largely dismissed the device, calling it irrelevant as a challenge to the Supreme Dollar. However, being based in barter, it is a fair system that involves a small group of banks in China and a small group of banks in the other nation like Brazil. Since the swap facility began in 2007, it has blossomed to settle trade on a net basis between participating nations. Since its inception, the swap facility has become adopted by a growing list of nations, hardly the emerging swarthy from the other side of the world. It includes Australia, New Zealand, Japan, South Korea, Brazil, Belarus, Russia, and lately England with a knock at the door by France. A veritable revolution is occurring from under the US-Anglo stage, which is listing badly eastward.
The grand weakness of the West over the course of the last three decades has been the outsourcing of labor to Asia, starting with the Pacific Rim and climaxing with China itself. The Jackass vividly recalls my quality control consulting days in the 1980 decade with internal corporate clients located in Taiwan, Hong Kong, and Singapore at Digital Equipment Corp in Maynard Massachusetts. The colleague bonds were lasting. The work was tremendously rewarding. The softball teams will always be part of the etched memories. The dopes at the top made devastating decisions that affected over 100 thousand employees, as we scattered. The end result was that the emerging nations built factories, shipped finished products, accumulated significant wealth, and now find themselves restless with increasingly toxic FOREX reserves centered upon USTBonds, UKGilts, EuroBonds, and JapGovtBonds, all of which are ripe and ready for major writedowns. The debt writedowns will render damage to stored wealth.
The point is that as the list of nations participating in the Chinese Yuan Swap Facility continues to grow and to include nations with strong Western alliances, it has formed the foundation of a non-USDollar foundation for trade settlement. Think of them as stones in a great pond. With enough stones, a platform can be erected atop the stones to create a firm arena upon which to conduct and settle trade. Barter is a fair system of trade, unlike the queer paper exchange whereby nations work with labor and sweat, hand over finished products, and walk away with bonded paper bearing ink, strange elaborate markings, a certain broken promise never to repay the debt. The ink-stained bond is called the USTreasury Bond. The Chinese Yuan Swap Facility has set the stage, proving that trade settlement does not have to be based upon the USDollar. The net basis swap settlement is as simple as it is clever. The ultimate in barter is Gold Trade Settlement, again on a net basis between nations. Since honest, it is despised by the bankers who rule over the financial charred ruins with politicians in their pocket.
FAIR TRADE IN BARTER
Two quotes drive home the point about barter and its legitimacy, if not hope. No solution has been produced by the bankers to reform the situation that the bankers have wrecked, a pathogenesis that began when the bankers directed the puppet Nixon to discard the Gold Standard, to play the first China card, which unleashed criminal enterprise, the blossom of fascism, the distortion of value, the perversion of trade, the toxicity of savings, and the advent of the police state.
The first quote is from an esteemed colleague and mentor to a trusted source for the Hat Trick Letter. Dr Dieter Spethmann is honorary Chairman of PEL-EX Trading Ltd and former Chief Executive Officer of Thyssen AG. The man is also a current Hat Trick Letter subscriber. He wrote, “Barter and Gold are identical. People who understand this also understand what barter is. Both Barter and Gold allow for free re-valuation of currencies that are blocked by central banks.” Brilliant, simple, succinct, deep. Unfortunately, the concept is way over the heads of 95% of dull Americans still swimming in their devoted toxic paper pools.
The second quote is from Antal Fekete, who has decided to put aside his vapid Gold Basis theme, and now backs up my barter theme. Remember that gold settlement is the manifestation of barter, if conducted with true valid pricing. Fekete wrote, “The price of Gold is headed for extinction. I for one do not believe that the price of Gold is headed for five digits. Long before that might happen, permanent backwardation would shut down the gold futures markets. Gold could no longer be purchased at any price. Gold would only be available through barter. World trade is facing an avalanche-like transformation, flattening out monetary economy into a barter economy. Practically all economists, financial writers, and market analysts have missed this possible scenario. That will pull the rug from underneath the international monetary system. Barter is the ultimate in deflation, and that is what the world economy is getting.” Welcome aboard the Jackass train, as barter and its relation to Gold are no strangers here. Notice he anticipates the Gold price to go dark, as the COMEX shuts down, in total synch with the Jackass viewpoint. Obviously, a market without product that serves up fraudulent contracts will go away. Time and exposure are its enemies. Gold ambushes conducted over time provide the requisite exposure.
The gold community should applaud and cheer the recent market ambushes. They represent banker suicide on stage, and assure the COMEX to become an empty room, with chains on its doors, yellow tape as cordon around the crime scene, and lawsuits aplenty. If another summer gold market ambush occurs, it will bury the bankers and expose their corrupted vacant market for all to see. Only then would the futures market dry up completely. They can have their Force Majeure, as the Jackass will settle for them to go away, even to the Paraguay jungle where their nazi forefathers hid.
PETRO-DOLLAR FOUNDATION SHAKEUP
Just a brief note. The Saudis are not in a position to stand as the primary pillar to enforce the Petro-Dollar anymore. The Saudis decided foolishly to join the USGovt security agencies in black ops games last year, with heavy consequences. They were involved in murder of the Assad inner core in Syria. The quick retaliation by HezBollah was to murder Saudi Prince Bandar in August 2012, the Bush cohort and longtime US ally. The complexity has turned an order of magnitude more intractable, as King Abdullah is clinically dead. A few months ago, the strong king did not emerge from back surgery and its anesthesia. He is dead, but with a heartbeat. His eyes have not seen the desert sun nor a document to sign in months. News is finally out on both deaths, but Hat Trick Letter subscribers were informed long ago when the events occurred. The Western press prefers to cover up the details, to disseminate old photographs with altered time stamps, the usual fare of deception often lapped up in full gullibility.
The Saudis are out of adept adroit leaders. The Saudis are in decline of crude oil output. The Saudis are seeing sharply reduced trade surpluses. The Saudis must contend with increasingly angry and stubborn citizens, who demand change and meaningful reform, if not an end to privilege. The surviving eager princes from which to choose the next leader are a pack of meager inbred insecure half-wit dullards who will preside over the Fall of the House of Saud. With it will go the Petro-Dollar into the sunset. The hidden events of significance include arrangements already struck between the Persian Gulf member nations and China & Russia. The Chinese have increased their presence in a significant manner in the gulf. They have established numerous trade pillboxes, like distribution networks and retail centers in almost every single gulf nation. The Chinese and the Russians have promised military support in the form of troops, armadas, and missile emplacements. The Petro-Dollar used to have a military component bearing a USMilitary flag. That is missing, along with the Saudi King. It has been replaced by a Chinese flag and Russian Onyx & Sunburn missiles (one generation ahead of the US Cruise missile). All the Eastern Alliance (BRICS, G-20, SCO) developments and progress toward a non-USDollar trade solution will soon receive a Saudi endorsement, even if implicit.
The Petro-Dollar is dead, with the funeral only remaining, and a loud thud. When the Saudis cut certain deals with Iran recently over the natural gas pipeline, they sealed the USDollar fate. The news is not reported in the sleepy lapdog intrepid subservient pathetic US press. The Natural Gas Coop will be the undoing of the Petro-Dollar and even overshadow OPEC. The maestro organizer is Russian Gazprom. Expedience has allied with natural gas to form new partnerships, all of which disrupt the current geopolitical balance. The Qataris have discovered with partner Iran a large gas field in the Persian Gulf. The Israelis are fast developing their natgas riches off the floating Tamar platform. The Israelis forged a deal with mighty Gazprom, which will guarantee natgas flow to Europe and lock in significant trade surplus. Perhaps Israel will receive Gold in net settlement someday. Surely they will not want toxic USTBonds. With the numerous natgas pipelines coming online, the Petro-Dollar is doomed, since Russia is in the control room flipping switches, pulling levers, and sending toxic paper back to the sender, the USGovt.
The Kremlin is very cleverly using their natural gas card to slice the Petro-Dollar into rotten caviar at a time when the Saudis are in total disarray. Once more, Putin is the adroit chess player, as the USGovt continues its clumsy games like the Libyan disposal for a surreptitious gold raid, like the SWIFT bank blockade of Iranian banks, like the interference with the Pakistan Gas Pipeline, like the obstruction of Turkish banks to provide gold in intermediary role. The USGovt maneuvers will all backfire, as they have in the past. Eventually, natural gas will be part of the Gold Trade Settlement system. The margin in the energy industry is being defined by natural gas, as the old crude oil buddy network is dissolving.
CHANNELS TO DISCARD USTBONDS
A new trend has begun to show itself. While the West, in particular the Untied States, is locked with focus on maintaining a stable USTreasury Bond yield, the East is preparing wide channels to send toxic USTBonds back to London and New York, back to the sender. While the West is busily operating its vast Interest Rate Swap derivative machinery, the East is gathering mountains of toxic USTBonds at the gateways to the new channels directed at the financial crime centers of London and New York. While the West is anxiously seeking an exit strategy from the QE & ZIRP monetary nameplates of Weimar policy, the East has already decided to take the important initial steps in an actual exit strategy from the USDollar altogether. The Western central banks are deeply immersed in an obscene circle jerk, but without realizing their dangled reeds are but rotten shriveled orchids sewn to corrupt impotent old men. Explore the new channels, an impressive series of waterways to return toxic paper to sender in endless waves. The many channels to discard the USTBond are being established by foreign entities, in an organized manner. At first the flow in return will seem manageable. Later it will become a torrent resulting in endless waves. The Bernanke Fed will demonstrate before the world that liquidity cannot overcome insolvency, nor can it compensate for toxicity. Revoke Bernanke’s PhD Doctorate! Benjamin Shalom Bernanke is not worthy of being a doctor, since a bonafide quack. He is a snake oil salesman, a toxic paper hanger, a banker errand boy bagholder, and a destroyer of economic worlds.
BRICS Development Fund, creating Gold Trade Center Bank:
By far the most dangerous and ominous channel is this fund. It has not been correctly reported in the Western press. It has intentionally been downplayed by the East. Surely it will initially serve as a source of funds for a series of projects, mostly infrastructure like railroads, super highways, mining mills, electric generating stations, and port facilities. My source has informed that the BRICS Development Fund will serve as a vast trading house to convert USTreasury Bonds into Gold bullion. It will eventually operate side by side with the newly formed Gold Trade Central Bank, with funds arriving from the emerging nation surpluses, mostly from reserves holdings, to be converted directly into Gold bullion. The Gold Standard is coming back, but in Gold Trade form, where the new fund will spin off Gold Trade Notes with legitimate and significant gold backing for conducting trade transactions. The new central bank will not be located in banking and currency. It will be centered in trade settlement, done brilliantly outside the current system that is dominated by the corrupted London and New York banking elite. The scales will soon fall off the Western analyst eyes, as they realize the BRICS are creating a Gold Trade Central Bank which will recycle toxic Western sovereign bonds, primarily USTBonds. They will convert their hard earned trade surpluses held in reserves into true tangible wealth. They will forge gold on the back of USGovt debt. Details are found in updates almost every month in the Hat Trick Letter. They will drain the West of its gold. Toxic impaired USTBond debt securities will be returned to sender, the USGovt, in very large volume, which will surely overwhelm the USFed and its Weimar press.
Rosneft Acquisition, Buyout of British Petroleum Stake:
The channel was revealed in the March buyout by Rosneft of the BP stake in a major oil deal. The $55 billion deal has Rosneft acquiring the official BP stake in BP-TBK, a large British-Russian company with significant energy deposits and production. BP will be left with a minor position. The terms of the complicated finance deal are unusual, innovative, and indicative of Anglo-American limp wrists. The Chinese provided $30 billion in loans, but in the form of USTBonds, which will be handed over to British Petroleum in the buyout. The Chinese will be guaranteed years of oil & gas pipeline supply from Russia. Regard the transaction as a CHECKMATE of the USDollar generally, of the Wall Street and London bankers specifically, and of the Anglo-American energy giants indirectly. The deal is the final chapter to the Yeltsin years being unwound. The Chinese will dump some USTBonds held in reserve in order to finance the new Eurasian Trade Zone foundation, a great irony. The US press is nowhere on this entire story, which will make Rosneft the biggest oil company on the planet, twice the size of Exxon-Mobil. The tagteam of Rosneft and Gazprom will become giant pillars to defend the new Gold Trade Standard, which will gradually attract more Western nations as partner members, the tipping region being Europe. The prize has always been Europe, which will turn attention and loyalty to Russia. Details are found in the March Hat Trick Letter. Toxic impaired USTBond debt securities will be returned to sender, the USGovt, in very large volume, which will surely overwhelm the USFed and its Weimar press.
Conversion of Russian & Chinese FX Reserves:
Very difficult to prove, but the Russians & Chinese are aggressively converting their foreign reserves into Gold bullion. The Russians possess over 20,000 tons of gold. The Chinese possess over 10,000 tons of gold. They maintain their secrets, but the reality is a major story. The US press is nowhere on the reserves story, still locked on the official IMF and WGC phony gold statistics which bear as much truth as the USGovt jobs, economy, and price inflation reports. Almost every single Western economic and financial report is a lie. Neither Russia nor China permits any export of gold mine output. However, both superpower nations have been avidly converting FOREX reserves to gold bullion. The major component of the converted reserves is USTreasury Bonds, the toxic paper undermined by the USFed itself. The destructive QE & ZIRP monetary policies are the primary motives for the conversions. Their political leverage is unclear, if they are indeed draining Switzerland or London or Rome. To be sure, deals are being cut to share the power scepter in the next chapter. My belief is that gold mine output from Mongolia to Kazakhstan is being gobbled up by Russia & China. These nations are from the Former Soviet Republics, and form the bond between the BRICS and SCO, the Shanghai Coop Organization. Toxic impaired USTBond debt securities will be returned to sender, the USGovt, in very large volume, which will surely overwhelm the USFed and its Weimar press.
Russian Supply of Oil & Gas through Pipelines:
Far more energy supply from Russian pipelines to Chinese gathering facilities will arrive than just from the Rosneft finance deal on the BP-TBK buyout acquisition. The graphic clearly displays that Russian gas pipelines already supply Europe, seen in red. Significant Russian oil pipelines also supply Europe, seen in blue. Most of the settlement transfers to Russia in payment come in the form of USTBonds and EuroBonds, soon to be eagerly converted. The pipeline structure includes important passage ways through Kazakhstan and Turkmenistan. Liquefied Natural Gas (LNG) pipelines are under construction in the northern reaches of Europe. The future work will focus on the Russian connection to China, as the two giant nations have redoubled their efforts, realizing they are on the same team in alliance against the USDollar syndicate. The Chinese have received most of the tilted press coverage, but Russia holds most of the cards at the table in both gold hoards and energy supplies. The Kremlin will dispose of grand vats of toxic USTBonds, some of which will come from Chinese hands. Toxic impaired USTBond debt securities will be returned to sender, the USGovt, in very large volume, which will surely overwhelm the USFed and its Weimar press.
African Resource Deals with China:
Too numerous to cite are the deals struck by China to secure minerals and energy resources in the dark continent of Africa. Details have been provided over the years in the Hat Trick Letter report. The structure of the deals is often identical. The nation, whether Nigeria or Angola, is given a block of USTBonds by China. In return, the African nation cooperates to construct mines or ports or railways that include roadways and depots, sometimes community centers and hospitals and schools. The future output of the commodity end product eventually finds its way to Chinese ports. Battles have been raging since 2011 in Southern Africa between China and the USMilitary, both directly and between proxies. The nexus of the conflict is Congo and Djibuti at the horn. The African nations surely do not collect the USTBonds as sale proceeds for to stuff the toxic paper in their banking systems. Maybe Nigeria does to some extent, but most African nations operate on a hand to mouth basis, cashing and redeeming the bonds immediately. Toxic impaired USTBond debt securities will be returned to sender, the USGovt, in very large volume, which will surely overwhelm the USFed and its Weimar press.
Saudi Bond Redeem Petro-Dollars:
The basis of the Petro-Dollar is the recycle of OPEC oil sales, held as trade surplus, converted and stored in USTreasury Bonds. The Saudis also hold a significant amount of big US bank stocks, but no mortgage bonds since they regard them as immoral. As the planks further corrode and rot that hold the Petro-Dollar defacto standard together, the Saudis will abandon their toxic USTBonds in favor of Gold, the longstanding favorite of Arabs. Their devotion to the USTBond is a recent aberration in their long history, purely done to placate the Untied States and to earn them free USMilitary patrol and sentry protection. The Fall of the House of Saud is well underway. The only true remaining element is the sound of the impact. During the rapid disintegration process, complete with the inbred prince attempts to sit on the throne, will be the rapid conversion of USTBonds into gold bullion. They will also convert into property, like in Spain. The Saudis might follow the USGovt security agency lead, and load up on warehouses full of Swiss Franc bills. Another factor that revolves around the Saudi sun is the big petro-chemical plant on the Red Sea port, a joint project with China. Conversely, the Saudi Basic Industries (SABIC) is busily working on a giant petro-chemical plant inside China. Total bilateral trade amounted to $42 billion in year 2012. A grand discharge flow of USTBonds will surely be directed into Saudi hands to fund the project, for materials, for engineering equipment, for labor, and more. Toxic impaired USTBond debt securities will be returned to sender, the USGovt, in very large volume, which will surely overwhelm the USFed and its Weimar press.
Big US Banks Reverse the Carry Trade:
The unintended consequence of any Exit Strategy executed by the crippled USFed will be the unleashing of the torrent of USTreasury Bond sales, in a grand reversal of the massive sponsored USTBond carry trade. For four full years, the big US banks have in earnest been borrowing money at nearly 0% and investing in 10-year USTBonds to earn 2%, or in 30-year USTBonds to earn 3%. The entire process has been conducted under the direction, wisdom, and corruption of the US Federal Reserve itself. The central bank actually promotes the program as a replenishment of the big bank reserves after their tremendous losses in the post-Lehman calamity. The big US banks are no longer credit engines to supply American businesses, nor are they investment banks to foster American fledglings in business. The banks are instead vast ugly cancer wards operating as casinos, heavily committed to USTBond carry trade. They borrow short and invest long, and have accumulated a gigantic account that sits at the USFed account, under the label of Excess Reserves. Oddly, the key component on the USFed balance sheet to give the appearance of solvency is the Excess Reserves account owned not by the USFed, but by the big US banks. The USFed is an insolvent bank also, in the worst condition of all.
The USFed is a gigantic busted broken flywheel. At the second confirmed hint of that the phony rally supported by vast Interest Rate Swap derivatives has ended, the big US banks will reverse their trade. They will sell not only the USTBonds, but also the USTBond futures contracts that apply leverage gains to the corrupt operation. In time, the marriage between the USFed and the big US banks will undergo great strain. They will find there are indeed 50 ways to leave your lover. The selling process by the banks will result in a nasty phenomenon called convexity. Any attempt by the USFed to enable a rise in the bond yields will go awry, will wander badly out of control, as a result of the convexity phenomenon. Fannie Mae exposed the phenomenon in past years, when the USFed tried to enable a rise in rates. The nasty twister involves the unwind of leverage and the assured overshoot. The main point is that the big US banks will be sellers as they unwind their USTBond carry trade, an immoral source of gain. The backlash comes. Toxic impaired USTBond debt securities will be returned to sender, the USGovt, in very large volume, which will surely overwhelm the USFed and its Weimar press.
GOLD SAFE HAVEN TO APPEAR
It seems the USFed has been doing an experiment, to see if the financial markets can endure a USTBond rise in yields. The reversal would qualify as a return to normalcy, but only the first of 20 to 30 needed steps up in the bond yield. To match fundamentals, the USTBond at 10-year yield would have to rise to 7% or 8% or 9% at a minimum. The first line of defense is the Interest Rate Swap on the experimental response. The second line will be the unwind of the carry trade run under USFed sponsorship. Only touching the surface, we can conclude that the USFed is conducting an experiment. They are managing a Live Stress Test. It will go badly if continued. In no way can a return to normalcy be achieved, not even part way.
The nemesis over the ages to Gold has been the USTreasury Bond. As the BRICS nations convert to build a Gold Central Bank, as the Russians pay off the London loans in the Rosneft acquisition, as the Russians & Chinese convert their FOREX reserves, as the Chinese make payment for oil & gas pipeline deliveries, as the Africans redeem from mineral and resource deals, as the big US banks reverse the carry trade, the sanctuary safe haven of the USTBond will be revealed as a fiery pit and acid spray arena. The true safe haven will be Gold. By the time the USTBond global dumping exercise is well along, expect to see the COMEX shut down, to have the Gold price go dark, for the lawsuits to line up. The COMEX has no alternative, since it will be completely and totally empty of gold. No market can continue without inventory, no matter how corrupt, no matter how powerful the bankers are, no matter what military intimidates its detractors, opponents, and enemies. Going dark is a necessary step for the release of the Gold price to truly high honest levels. It must pass through a climax storm.
As the cited channels start to flow USTBonds back to sender in London and New York, the Gold price will make great upward strides and eventually zoom out of control to the upside. The corrupt COMEX price is absolutely no indication of the Gold market right here and right now. USTreasury Bonds will be converted into Gold bullion. The process has already begun. The channels are being constructed. The flow will be tremendous, like Uncle Sam tied to a morgue table, with tubes connected to all major arteries and veins. He will be drained dry, converted into a desiccated corpse. On the floor where vats of blood will be collected, the conversion to Gold will be sudden and impressive. Opening one’s eyes to the greatest Paradigm Shift in the last two centuries will be the next big megatrend, the big act. Gold will find its way in discontinuous jumps to the $7000 per ounce price. The Gold Trade Settlement platforms assure the higher price, already agreed upon in the grand reset. All is aligned, including the secretive imprisonment of 6000 bankers. Justice might not come, but they will be removed.
Jim Willie CB, editor of the “HAT TRICK LETTER”
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