Thursday, March 11, 2010

Bob Chapman: Pondering Our Collapse

Pondering Our Collapse While We Watch Others Fall
Structural Weakness of the US Dollar. The Dollar Rally will not last
by Bob Chapman article link article link
Global Research, March 10, 2010

... The collapse of currencies and nations won’t happen overnight, because their demise has been planned, and a subtle collapse is in process. Our guess is that next year is when the collapse will finally take place followed by one of the greatest deflationary depressions of all time. During the last 2-1/2 years all the toxic investments have been and will continue to be transferred from the Illuminist banks, brokerage houses, insurance companies and transnational conglomerates to the public. The Federal Reserve is the repository for this junk, which includes Treasuries and Agencies. That means the public foots the bill. Every government and bank in the world will be affected. This magical game of 3-card-Monte will never work and the Illuminists know it won’t work. That is why they have war on demand to distract the public and to escape punishment for the devastating thing they have brought upon mankind. What we are facing is as bad if not worse than the collapse of the Lombard system in Venice in 1348, the year of the plague and the collapse of the Hanseanic League in the 1600s, the creation of the Medici’s. For starters we already have 19 bankrupt or near bankrupt major countries and many others that will be pulled into the vortex of financial and economic calamity. In each country we see the Illuminists doing their evil work, legends in their own minds, in a system that they know cannot survive. They are waiting for orders to pull the plug in each and every country. These masters of the universe all know that prosperity cannot be created by printing money and issuing credit indefinitely. They know full well that such a system cannot survive. ...

... We conclude that the Fed will continue to provide low interest rates and vast liquidity to the US and world financial systems. The Volcker Rule” will be used to deflect criticism, but little will change unless we can get rid of the Fed. The excesses and bubbles will go on unless the Fed is disarmed. What is really distressing is that none of the financial media, nor alternative media, points out that the Fed is at the root of this credit crisis. They caused it and it was done deliberately.

The idea of too big to fail will persist even after any deflationary collapse. Nothing will change unless the elitists want it to change - the concept is at the base of power in the financial world. This finance bubble can only be disrupted by the failure of national economies. There are 19 in that position presently, and what it boils down to is whether and when these elitists want to pull the plug on liquidity and seriously want to enter a deflationary era. For the time being, over the next 18 months, inflation and perhaps hyperinflation will prevail. Politicians are 90% in the pockets of these people, so unless we can unseat more than half of the incumbents in Congress, the elitist grip on our society will prevail. In the meantime it is inflation and or hyperinflation followed by deflation this year and next year.

As a result investors are in a tear again buying stocks and bonds with obviously little fear of any consequences. They have forgotten what we just went through and the chance of that reoccurring is excellent. They are of course in league with those who are doing “God’s work.” This is representative of those on Wall Street, who said they could not have seen what was coming. They made billions of dollars and walked away from destroying our economy scott-free. These people are not stupid, thus, they are liars, gloating over their riches and how the public cannot touch them because they own the politicians, regulatory agencies and the courts.

Greece and 18 other countries have financial problems, but just as much in trouble are the states – some 40 of them. The states cannot print money, so they’ll have to face the music. They’ll all have to face austerity, which is the anti-thesis of growth, which creates a death spiral and perpetual recession or depression. The only alternative, short of a deflationary depression, is to expand money and credit.

The dollar rally we have seen over the past couple of months could soon be coming to an end, as world deflation reasserts itself. The surge and undertow of deflation has to be met with ever more inflation to offset it. The bubbles that fueled inflation, the stock market of the late 1990s and the real estate bubbles are long past gone. All that is left is massive credit.

Just as in the 1930s the Federal Reserve will eventually take us into a deflationary depression. That is what Greece was all about. The table is being set for the end of inflation probably within the next two years.

We see a general contraction of credit worldwide and unless reversed the inevitable will unfold. What is even more dangerous than in the 1930s is the enormous leverage that exists today. When this come down it will be with a thundering roar. That is because few have the ability to pay. It is totally inconceivable that the US government can pay back its liabilities. That means that other nations that hold 60-1/2% of their foreign exchange in US dollars will take tremendous losses from which they won’t easily recover. China and Japan, along with Middle East oil producers, will take unbelievable losses. All creditors will be big losers.

In this wringer no nation seems to want to reduce spending or is prepared for any kind of austerity. Greece is a good example. Each day sees more and more demonstrations. No one wants to take the economic and financial pain. The good days are supposed to go on endlessly. Not only does the public not want reduced employment, but they also do not want increased taxation. What is extremely interesting is that those in charge of monetary theory at the Fed know that monetary inflation does not work. They also know that the minute they can no longer control deflation with inflationary monetary policy the game is over. The Fed and other central banks are currently playing a very dangerous game. That is keeping inflation up, but only enough to stop hyperinflation. This is like sitting on the edge of a knife. One false move the game is over. Global credit is evaporating and the Fed and others are attempting at the same time to remove some of the excess in the system. We do not think it will work. If it does not work it is depression for many years to come.

As this transpires lending to individuals and small and medium size businesses have fallen some 16% to 20% dependent on whose figures you use. On a national basis credit, some $700 billion to $1 trillion has been lost.

If you put this all together you will find that the only logical outcome can be devaluations, multilateral debt default and a deflationary depression. That is ultimately where we are headed and where we have always been headed. ...

... A few months ago when we wrote of deflation over the next couple of years and when we spoke of it as well on radio, we were attacked for such utterances. We have known what the end game has been for 50 years. Few others have. Almost all never saw and still do not see the Illuminists final solution to bring about world government. If you do not understand that you can never grasp the true situation and its logical conclusion. Most who eventually understand will be too late. The remainder will never know what hit them. All currencies are linked to the US dollar and there lies the word’s weakness. As the dollar goes, so does all other currencies, especially in view of the fact that nations have far less gold today than previously, if any at all. We really do not have any idea what gold reserves are, because they all lie about everything. This is why we expect multilateral devaluation and debt settlement as well as tariffs on goods and services. We expect that charge to be led by England as they break away from the European Union.

China is taking its own course, and will continue to dump dollars as best they can. They see trade tariffs on the horizon. China is now challenging Japan in trade, as the US acts in its own interests against both countries. Due to their large dollar denominated holdings the US dollar has to head lower as US debt continues to pile up, only to be monetized. US, Wall Street, banking and government just do not care. They just keep running up debt, running the economy and finances into the ground. Due to this course of action over the past 25 to 30 years they have now made China, Japan and others into adversaries. Next comes the big fall in the dollar and sometime over the next two years the multilateral devaluations and defaults. Foreigners hold $3.3 trillion in US debt and the US is going to get a good part of it back, which will push the country into bankruptcy.

The US is in a box and they cannot get out. There is no viable exit other than bankruptcy. This is why you have to have gold and silver related assets. It is impossible to pay off debt. This time it is really different. Based on history America is financial toast. The path for destruction was set on August 15, 1971, when America fled the gold standard. It took 38 years but it is time to pay the piper. ... [excellent detailed article continues]

The International Forecaster home page
Global Research home page

Banking for the People
by JOHN NICHOLS article link
March 11, 2010 The Nation

Even if financial services reforms are finally enacted at the federal level, it is unlikely they will create a banking system that serves the interests of Main Street America or the great mass of citizens who do the work and pay the taxes yet reap few of the benefits of this nation's immense wealth. But what if that great mass of citizens owned the banks?

That's a question that a growing number of candidates and legislators across the country are answering with proposals to create state-owned banks. Though these initiatives borrow from an old model--North Dakota has run a successful state bank since 1919--they are a response to a new reality: the hundreds of billions of public dollars plowed into big banks by the federal bailout have done little to free credit for job creation or economic development in recession-ravaged communities. So, taking a cue from Nobel Prize-winning economist Joseph Stiglitz and other critics of private-bank bailouts, latter-day populists are proposing to put public money to work for the public good. ... (article continues)

... The prospect of what might be done with all the money that has flowed from the federal Treasury to private banks has some players talking of taking the North Dakota model national. At a Nation magazine "Meltdown" event a year ago, Stiglitz suggested, "If we had used the $700 billion to create a new financial institution, allowed it to lever 10 to 1, which is very modest compared to the 30 to 1 that we were doing--10 to 1 would have generated $7 trillion of new lending capacity, far in excess of what our country needs. So the issue here is not about lending. It's really about saving the bankers. And what we confused was saving the banks versus saving the bankers and their shareholders." Yet as Washington struggles with the task of imposing basic regulation on big banks, the action will be in the states. How likely is that? Hardmeyer used to doubt that the North Dakota model would ever be adopted elsewhere. Now, he says, "when I look around the country, it's not quite as far a leap as I once thought it was."

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