The Smell of Collapse is in the Air – Part 1

Read The Smell of Collapse is in the Air – Part 2.
The U.S. stock market is near all-time highs, while politicians and economists are blathering about recovery, low inflation, and good times, but instability and danger are clearly visible in our debt based monetary system. To the extent we rely upon the fantasies of ever-increasing debt, money printing, and credit bubbles, we are vulnerable to financial collapses. Perhaps a collapse is not imminent, but it would be foolish to ignore the possibility. Consider what these insightful writers have to say:

The Fantasy of Printing “Money” To Solve Problems

Bill Fleckenstein:

“Money-printing cannot solve problems. It doesn’t really give us much gross domestic product growth, as we have seen. It hasn’t really helped on the employment front either, as job growth is meager (of course, it is also hampered by other government policies). What money-printing has accomplished is to push the stock market high enough to cause people to once again become delusional in their expectations.”

Egon von Greyerz:

“Debt worldwide is now expanding exponentially. With absolutely no possibility of stopping this debt explosion, we will soon enter a period of unlimited money printing leading to a total destruction of paper currencies. The consequence will be a hyperinflationary depression in most major economies.”

Andy Hoffman:

“No, Larry Summers won’t be able to save the day… The damage is already done; and thus, NOTHING can turn the tide of 42 years of unfettered, global MONEY PRINTING – which as I write, has entered its final, terminal phase.”

Bullion Bulls Canada:

“So the ending is already clear. The U.S.S. Titanic is about to be intentionally sunk (again), and B.S. Bernanke’s ‘fingerprints’ will be planted all over the crime scene.”

Credit Bubble in the Global Economy Will Eventually Collapse

John Rubino:

“…nothing was fixed after 2008, just as nothing was fixed after the housing, tech stock, and junk bond bubbles burst. The response has been the same each time, only progressively more aggressive and experimental. That the financial, economic and political mainstream think that the system has been reset to ‘normal’ because asset prices are back where they were just before the 2008 crash is, well, crazy. With financial imbalances bigger than ever before – and continuing to expand – the only possible outcome is an even bigger crash.”

Bill Holter:

“THIS is where THE REAL BUBBLE is! The biggest bubble in all of history, (larger than the Tulip mania, South Sea, the Mississippi Bubble, 1929, current global real estate and global stock bubble combined then cubed) is the current and total global financial system. EVERYTHING EVERYWHERE is based on credit. In fact, over 60% of this credit is dollar based and ‘guaranteed’ by the U.S. government. The minor little problem now is that we have reached ‘debt saturation’ levels everywhere. There are no more asset classes left able to take on more credit (air) to inflate the balloon. The other minor detail is that the ‘asset’ that underlies the value of everything (the dollar and thus Treasury securities) is issued by a bankrupt entity. What could possibly go wrong?”

Discussion

Growing and healthy economies mean more people are productively employed. It appears that much of the “growth” in the U.S. economy over the last five years has been in disability income, food stamps (SNAP), unemployment, student loans, welfare, debt, and government jobs – none of which are productive. Examine the following graph of Labor Force Participation Rate – the actual percentage of the populace that is employed. Does this look like a healthy economy experiencing a recovery or a collapse in productive employment?

Click on image to enlarge.
The damaging effects of 100 years of Fed meddling in the U.S. economy, many expensive wars, 42 years of unbacked debt based currency, and unsustainable growth in credit and debt have left the Western monetary system in a precarious position.
Using common sense, ask yourself:

1. Can total debt grow much more rapidly than the underlying economy which must support and service that debt? FOREVER?
   
2. Can government expenditures grow much more rapidly than government revenues? FOREVER?
   
3. Will interest rates remain at multi-generational lows? FOREVER?
   
4. Will a fiscally irresponsible congress rein-in an out of control spending system that our fiscally irresponsible congress created?
   
5. Is another and larger (than 2008) financial collapse likely and inevitable?
   
6. Do you still believe in the fantasies of ever-increasing debt, printing “money” and credit bubbles? Are you personally and financially prepared for a potential financial collapse?
   
7. Have you converted some of your digital currencies into real money – physical gold and silver? Is it safely stored outside the banking system and perhaps in a country different from where you live?
   

Read: The Reality of Gold and the Nightmare of Paper
Read: What You Think is True Might Be False and Costly
Read: The Smell of Collapse is in the Air – Part 2
GE Christenson
aka Deviant Investor

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Debunking Anthony Migchels concerning NSDAP monetary policy and usury

On Tuesday, September 24th, 2013 Deanna Spingola interviewed Rodney Martin who debunked a Veterans Today article by Anthony Migchels entitled “Hitler’s Finances and the Myth of Nazi Anti-Usury Activism” which has been widely circulated on various alternative media sites within the “half-truth movement” to keep the kool-aid drinkers  sedated, dumbed down and dis-informed, and unable to see, much less accept the fact the Hitler and the NSDAP opposed the Bankster Gangsters and their system of usury, and that National Socialism was the solution to the New World Order agenda.
Who would not want the world to know that? Moreover, who would have a vested interest in keeping the so-called “truth movement” from accepting that fact, and keeping them perpetually demonizing Hitler and “evil Nazis”?  Who has a vested interest in keeping “truth seekers” going down rabbit holes that go nowhere?  It merely keeps certain “truther gurus” in a position to keep repeating their hysterical mantras, and to keep their reputations and fear mongering strategies afloat, which enables them to rake in cash from their books and DVDs etc, and no doubt, even more cash from their handlers. Who ultimately benefits? What agenda is served?
By the way, Anthony Migchels’ article is virtually un-sourced.  He merely adds some related links at the bottom and pretends that his diatribe is authoritative. About the only thing he sources is from the Jewish Virtual Library where they quote Schacht, as if they are not a biased source? Mr. Migchels apparently also believes in “Nazis”. There was never any such thing.  They exist only in the imagination and rantings of ignorant people who love to hate National Socialism and to bash people around who are no longer here to defend themselves. His use of that term speaks to his bias.



Download mp3

Points made by Rodney along with some of my own notes:

1. The author Anthony Migchels admits that he has NO DATA regarding interest rates (Usury) during the Hitler era. Thus, he debunks himself and admits he has no proof. Rodney states that
2. Hjalmar Schacht was a “Rothschild Baking agent”  who served two terms as head of the Reichsbank. One term during Weimar years and then again, because of his experience and connections was brought back by Hitler for an interim, transitional period until Hitler was able to put his own plan in place.  However, however, he was first appointed by Hitler as the Minister of Economics. Schacht was not an NSDAP party member.  He spoke perfect English, had spent a lot time in America,  had connections, was very egotistical and enjoyed having power and prestige, and to be in the limelight.  Thus, Hitler was able to use and manipulate him to make him useful and to act as a kind of firewall against the international bankers while Germany was being reorganized under the NSDAP.  Schacht was later removed when he was no longer useful to the NSDAP government and his services and connections were no longer needed.
3. Professor Gottfried Feder who wrote the book on National Socialist monetary and economic policy served as State Secretary in the Finance Ministry and in the number 2 position where exerted great influence.  Hermann Goering implemented the first 4 year plan in which the NSDAP govt moved towards self-sufficiency.
4. Migchels states  that Schacht oversaw the creation of IG Farben which is patently false, and furthermore, IG Farben was nothing sinister, but the name has been deliberately tainted in the post war years and used as a trigger to conjure mental images of the “holocaust” and an emotional state of repulsion. Migchels uses it like a pro to gain sympathy for his position.  IG Farben was an innovative company that developed, amongst other things, synthetic oil which assisted Germany to become self-sufficient and independent.  It was a spin-off from the old and well established BASF company. During Schacht’s first term as a President of the Reich’s Bank in the Weimar years, he approved the loan as “start up capital” for IG Farben which they needed, but he had no other involvement.  So again, this is just an emotional ploy in Migchels’ script.
5.  Schacht was replaced by Walther Funk, a protoge of Feder, who implemented the NSDAP plan.
6. Migchels states “there was no usury free economy”.  Rodney cites “Behemoth: The Structure and Practice of National Socialism, 1933-1944” by Franz Leopold Neumann (Oxford Uni. Press, 1944) which details the barter system.
7. Migchels claims the classic lie that Germany’s recovery was based upon re-armament, how ever, that did not begin in earnest until 1936.  Rodney states that Hitler’s unprecedented mammoth Autobahn project was NOT financed with loans from the International Bankers, but by selling bonds and paying workers with Reichs Labour Treasury Certificates.  Rodney cites “The Wages of Destruction: The Making and Breaking of the Nazi Economy“, by Adam Tooze

Bottom Line Facts:

Under the National Socialists, Germany’s money wasn’t backed by gold (which was owned by the international bankers). It was essentially a receipt for labor and materials delivered to the government.

Hitler said, “For every mark issued, we required the equivalent of a mark’s worth of work done, or goods produced.”

The government paid workers in Certificates. Workers spent those Certificates on other goods and services, thus creating more jobs for more people. In this way the German people climbed out of the crushing debt imposed on them by the international bankers.
Within two years, the unemployment problem had been solved, and Germany was back on its feet. It had a solid, stable currency, with no debt, and no inflation, at a time when millions of people in the United States and other Western countries (controlled by international bankers) were still out of work. Within five years, Germany went from the poorest nation in Europe to the richest.
Germany even managed to restore foreign trade, despite the international bankers’ denial of foreign credit to Germany, and despite the global boycott by Jewish-owned industries. Germany succeeded in this by exchanging equipment and commodities directly with other countries, using a barter system that cut the bankers out of the picture. Germany flourished, since barter eliminates national debt and trade deficits.
Economist Henry C K Liu writes of Germany’s remarkable transformation:

“The Nazis came to power in 1933 when the German economy was in total collapse, with ruinous war-reparation obligations and zero prospects for foreign investment or credit. Through an independent monetary policy of sovereign credit and a full-employment public-works program, the Third Reich was able to turn a bankrupt Germany, stripped of overseas colonies, into the strongest economy in Europe within four years, even before armament spending began.” (Henry C. K. Liu, “Nazism and the German Economic Miracle,” Asia Times (May 24, 2005).

In Billions for the Bankers, Debts for the People (1984), Sheldon Emry commented:

“Germany issued debt-free and interest-free money from 1935 on, which accounts for Germany’s startling rise from the depression to a world power in five years. The German government financed its entire operations from 1935 to 1945 without gold, and without debt. It took the entire Capitalist and Communist world to destroy the German revolution, and bring Europe back under the heel of the Bankers.”

These facts do not appear in any textbooks today, since Jews own most publishing companies. What does appear is the disastrous runaway inflation suffered in 1923 by the Weimar Republic, which governed Germany from 1919 to 1933. Today’s textbooks use this inflation to twist truth into its opposite. They cite the radical devaluation of the German mark as an example of what goes wrong when governments print their own money, rather than borrow it from private cartels.  Source:  How Hitler Defied the Bankers   (based on Web of Debt by Ellen Brown)

Quotes from Hjalmar Schacht:

“The German future lies in the hands of our Fuehrer”
“Instead of a weak and vacillating Government, a single, purposeful, energetic personality is ruling today.”
“The aim and the idea of the Four Year Plan were and remain entirely correct and necessary!”
“Only the closest collaborators of the Fuehrer know how difficult is the burden of this responsibility; how sorrowful are the hours during which decisions must be made which bear upon the well being and the fate of all of Germany.”
An American banker had once commented to him, “Dr. Schacht, you should come to America. We’ve lots of money and that’s real banking.” Schacht replied, “You should come to Berlin. We don’t have money. That’s real banking.” (John Weitz, Hitler’s Banker, Warner Books, Great Britain: 1999)
“Germany can generally only pay if the Corridor and Upper Silesia will be handed back to Germany from Polish possession, and if besides somewhere on the earth colonial territory will be made available to Germany.”
“Allied supplies of arms to Russia, and the manpower reserves of Russia have been sufficient to bring continuous counter-attacks against our Eastern Front.”

http://www.famousquotes.com/category/economist/

Recommended Reading on this Topic:

Warwolves of the Iron Cross: The Hyenas of High Finance: The International Relationships of French and American High Finance (Book)
THINKING OUTSIDE THE BOX: HOW A BANKRUPT GERMANY SOLVED ITS INFRASTRUCTURE PROBLEMS (Web of Debt by Ellen Brown)
Founding and Funding of the NSDAP
Hitler and the Banksters: The Abolition of Interest-Servitude
Hitler’s Unforgivable Sin?
How Hitler Tackled Unemployment and Revived Germany’s Economy
The Myth of Fritz Thyssen and Big Business Funding Hitler and the NSDAP Exposed
Hitler was a Jew? A Rothschild?? Really ???

This article was first published on Justice4Germans.

'We chose democracy & human rights over banks' - Iceland president to RT

Report: US quickly running out of cash

The United States government is running out of money to pay its bills faster than previously thought, the Treasury Department warned on Wednesday.

Treasury Secretary Jacob Lew said the government would fail to meet its financial obligations and will be left with just $30 billion cash on hand “no later” than Oct. 17.
œWe estimate that, at that point, Treasury would have only approximately $30 billion to meet our country™s commitments,” Lew said in a letter Wednesday to US House Speaker John Boehner.
Last month, Lew told Congress he expected the Treasury Department would have about $50 billion left to fund the government in mid-October.
A study by the Congressional Budget Office earlier this month predicted the US government would default by the end of October if lawmakers fail to increase the $16.7 trillion borrowing limit.

That small amount of money could make it difficult, or even impossible for the government to pay the roughly $55 billion in Social Security, Medicare and military payments due Nov. 1.
Democrats and Republicans remain far apart on how to fund the government and raise the debt ceiling. The federal government will shut down if no agreement is reached.
The White House has said Congress should raise the debt ceiling without conditions and has refused to negotiate with lawmakers about how to do it.
The US government has about $16.7 trillion in debt which continues to rise because the government spends more money than it brings in through revenue.
The government spends more than $3.5 trillion a year and funds the deficit by issuing debt.
In 2011, Standard & Poor™s downgraded the US credit rating for the first time after President Obama and Congress failed to resolve the long-term debt crisis.
AHT/HJ

Copyright: Press TV

Rejoice America: You Are Now $3 Trillion Wealthier... Due To A Definition Change

Two months ago the US suddenly found itself "wealthier" by over $500 billion in Gross Domestic Product as a result of a simple definition revision that retroactively added trillions in cumulative gains from, wait for it, intangibles. More importantly, as Paul Singer explained, "As part of the revisions, the Bureau of Economic Analysis will change the way pension payments are counting in GDP. Previous to the change, when a company paid money into a pension plan, the money was counted as wages in the GDP calculation. After the change, what companies have promised to pay in the future, not what they are actually paying, will be added to GDP. This is fantastic. The bigger the unpayable promise made to unsuspecting retirees (promises that are not fully funded), the more GDP supposedly goes up!" As it turns out, it was not just economic "output" that benefited from this definition change. As today's release of the Fed's very much revised Flow of Funds report confirmed, US households as of this moment are wealthier by over $3 trillion, just because the re-definition of the Pension Fund line item, which is no longer counted as "Reserves" but the broader "Entitlements."

End result: whereas Americans last quarter had net worth of $70.3 trillion, as a result of this revision, they now have $73.5 trillion. Revisionist Definition wealth for everyone!
Unfortunately, "wealth" attained as a result of definition changes can't be spent at places like Wal Mart,
more @http://www.zerohedge.com/news/2013-09-25/rejoice-america-you-are-now-3-trillion-wealthier-due-definition-change
Check out the member blogs, videos, and discussions http://12160.info/

Flash Trading Hits USTreasury Bonds

The USTreasury Bond market breakdown is in progress, all part of the general USDollar global rejection that is taking the world by storm. Of course, residents inside the US Dome do not notice, since they only perceive it as the native currency. From conversations with common folk, discussions with investor types, and general observations for over 20 years, the Jackass belief is that only 5% to 10% of Americans are aware that the USDollar serves as a global financial instrument in contracts, the basis for trade settlement (mostly crude oil), with some extremely important consequences. A major development has begun, much like a metabolic life support system in concert with the Interest Rate Swap derivative contract. For two years or more, the USTreasury Bond market has been deeply dependent upon artificial demand derived from the derivatives. Entire bond rallies have been fabricated with 50:1 leverage, fully supported by the financial network propaganda. Without derivative flying buttress support, the giant USTBond Tower would have collapsed a couple of years ago. Now a new support system has been begun, a dangerous musical chairs long entrenched in the stock market. It has entered the bond market finally. Flash Trading!!

The USFed, the USGovt, and the Big US Banks urgently needed to stop the move in the 10-year bond yield (aka TNX). They needed to prevent a move above 3.0% on the USTreasury yield. They needed to avoid a calamity with both Interest Rate Swaps and USTBond carry trade reversals. They needed to avoid a trigger of sell stops. They needed to prevent the rest of the world selling off USTBonds within their reserves management systems, the foundation of their national banking systems. So the USFed and Big US Banks called upon themselves to place artificial high bids on USTBonds sold among themselves in a circle jerk of Flash Trading. They pushed the TNX below 2.9% quickly in the corrupt process. USFed Chairman Bernanke then backed off the Taper Talk threat, and the USTBonds rushed in a pathetic rally. The Jackass forecasted his retreat exactly, a bluff after a failed trial balloon. The bankers then resorted to the hidden work of computer algorithms. They altered the constructive dynamics of the bond market. They corrupted it one deeper level. The Flash Trade defense is pathetic, and will be revealed in coming weeks. The United States is in the process of being isolated on numerous fronts, as its monetary policy has merged with its military policy, both having merged long ago with its banking policy.

SICKNESS SEEN IN ONE POWERFUL GRAPH

As preface, consider a highly telling graph. No graph better demonstrates the failure of the last five years in monetary policy, and absent USEconomic recovery. The falling Money Velocity means the system is collapsing gradually. The infusion of phony new money is not addressing the key fundamental problem, insolvency of banks, businesses, households, and the USGovt. Putting a $20 bill in the hand of a manager of a broken business does not remove the insolvent condition. It only enables the manager to pay a part-time worker another few hours. The clueless cast of corrupt economists cannot notice, nor admit, that the QE & ZIRP monetary policy (hammer & sickle) is destroying capital by raising the cost structure. The capital destruction comes from businesses losing their profit margin, shutting down a business or business segment, cutting jobs, and putting equipment in mothballs or liquidating it. This is the biggest blind spot to economic policy. Obviously, the economists serve the syndicate, which benefits from toxic bond redemption with free money. The USFed is not engaged in a stuck stimulus, but rather a stuck destruction. The hammer & sickle are symbols of communist Politburo, no difference in contrast to the planned financial structure in the Untied States.

HIDDEN PANIC AT THE USFED

A recent event has occurred, which was brought to the table by an unexpected corner, but a reliable source, who has a banker friend. The bond market has converted into a Flash Trading arena within the bank syndicate to maintain bond prices. This is an explosive development, indicative of unsustainable sovereign bond prices kept up by round robin marked by internal sales within the Federal Reserve banks themselves. Worse, speculation is about to rise that the USFed as a financial firm is suddenly subject to capital rules, with inherent risk of failure. It has stacked up over $3 trillion in impaired assets, much of which are truly toxic. The Taper Talk at the USFed was a ghastly disaster, with financial feces flung in the central bank's faces. The big new engine that will work to fracture the USFed itself is the reversal of the Big US Bank carry trade in USTBonds. Recall all their boasting about replenishing balance sheets with easy leveraged profits, spouted like junkie morons in 2011 and 2012. It has now backfired to force flatulence into the banker faces in addition to the flung feces. Of course, the financial networks report none of this. The unwind of bond carry trade is a basic phenomenon that any worthwhile bond analyst can observe and anticipate. It is the flip side to easy money gains, namely massive losses.

Two weeks ago, an extraordinary memo was received from a trusted colleague. It could be important in yet unknown ways. The USTBond market is broken, and the USDollar cannot be defended. The memo read as follows. "I spoke with an old banking friend of mine on Saturday who now works as an Executive Officer in the Regulatory Division of the Dallas Federal Reserve. The gist of the conversation was this. There was a panic teleconference among all of the Regional Federal Reserve banks on Thursday afternoon [Sept 5th]. The subject of this emergency teleconference was USTreasury Yields. The perilously low capital of the Federal Reserve was at issue in this meeting, and the fact that they could no longer afford to defend the USDollar at this point. All of the regional Federal Reserve Banks were ordered to unload as many USTreasurys and Mortgage Backed Securities as they could, even though they are selling at a loss, to provide immediate liquidity even at the expense of capital! Eventually, late Friday night a tranche of Treasurys was sold above market price to several Federal Reserve Member banks in order to drive down the yield! You can plainly see this sale on the 10-year USTreasury chart." Big news! Panic setting in! Unsustainable bond arena! Flash Trading has hit bonds!

More important, WE HAVE NOW SEEN THE BEGINNING OF FLASH TRADING ON USTREASURY BONDS!! A grand round robin closed circle selling program will be relied upon in desperation to maintain price, just like with NYSE stocks in Algorithm Trading. The internal trading volume will grow and dominate the system, just like with the stock market where 80% of NYSE volume is from the perverse Algo Trading. No computer based trading like with Algo Trading is regulated, as the computers run wild. The dangerous times and the instability of bond markets will become major spectacles and news items. The risk will be transferred to stocks, which rise in value from more QE volume flowing into asset purchases, but which fall in value from creeping bond yields. Great instability will be a regular fixture in the US Stock market, and possibly many other national bourses around the world. The next several months will see some important bond market events and likely outsized derivative losses, complete with revelation of USTBond market rigging devices.

REVERSE OF USTBOND CARRY TRADE

Make several conclusions right away. Panic has finally hit the USFed. They cannot defend either the USDollar or its obverse USTBonds, the trading vehicle. They are both at improper high valuations. Rising interest rates will next cause more sales, the dreaded convexity to come into play. The big US banks must unwind their leveraged USTBond carry trade, based upon the bond futures contracts. Watch big US banks sell their leveraged positions that in the past three years provided them supposedly easy profits. The positions are locked in high leveraged structures. The breakdown of the USTBonds and USDollar has begun, a long process having come full circle after the highly destructive ZIRP & QE, both engrained in monetary policy.

The breakdown in the currency and sovereign bond will be aggravated by Interest Rate Derivative dismemberment and colossal losses. The USTB & USD duo breakdown is the visual impact and reaction to the gradual geopolitical isolation of the United States. It was seen in a glaring glimpse with Syria, a call to war, a refusal, and the US looking like a deceptive player with blood lust. The world is reacting to misguided monetary policy maintained by the USFed that supports the Western banks (in toxic bond redemption) but causes nasty problems across the world (in higher food prices). As the USFed and its devoted big US banks conduct bond trading among themselves, the left hand selling to the right hand, it becomes more evident that the USTBond asset bubble is being revealed. The irony is that the aggravating factor is the big US banks unwinding their bond carry trade. Their leveraged sales will result in over-shoots in the bond yield, called Convexity in the trade. Beware of Convexity, and its destructive impact!

USFED INSOLVENCY SCRUTINIZED

Normally the USFed has avoided the need for capital, in justification of its own solvency. It has not been subject to financial requirements, since not an operating financial firm. It is instead a financial fortress standing as headquarters to coordinate bank activity within a vast crime syndicate. Back in 2009, the USFed broke from tradition, by offering a small interest yield for big US bank excess reserves. Doing so raised many questions. The Jackass concluded soon afterwards that the USFed was insolvent, and desired the assets from big nearby banks to disguise and obscure its insolvency. Capital is of concern only when a liquidity crunch is anticipated. Therefore, the USFed appears very worried about a liquidity threat, perhaps from vast demands of USTreasury Bond redemption, perhaps from a breakdown of its own Primary Bond Dealer team.

The game must have changed recently and suddenly. One must speculate that perhaps the USFed balance sheet might eventually be wound down, causing some deep damage. The USFed might suddenly be scrutinized as a financial firm, where it is suddenly subjected to capital rules with risk of failure. Conclude that the USFed received a phone call from a higher power like Basel. As footnote, bear in mind that the public has long maintained an incorrect perception that that the USFed can defend itself from insolvency by padding its balance sheets with assets. This is not correct. This belief of infinite creation of electronic wealth to ward off deep insolvency is a baseless myth. They can add assets with equally offsetting debts, net zero. The USFed is going down the tubes into the sewer, next door to Fannie Mae.

USA CONFRONTS HOT MONEY RISK

The USFed is trapped. It has two lousy alternatives, to continue bond purchases within Quantitative Easing or to taper the QE bond monetization volume. Both result in total wreckage and systemic failure. Continuation is a slow death. Tapering is a quick death. They will choose the slow death, and deny the capital destruction effects all the way to an economic depression. Back in 2009, the Jackass was loud and vocal about the USFed being stuck with no Exit Strategy. At that time, they were trying to extricate themselves from the ZIRP corner, the zero bound interest rate. My forecast was for its continuation almost forever, since damage to the USEconomy would otherwise be quick, and rising borrowing costs to the USGovt debt burden would be intolerable.

The point was also made that the longer ZIRP is in place, the more likely it would remain as permanent, since a huge amount of bond purchases were being made, all to suffer big losses in a backup of rates. Worse, continued ZIRP would affect asset prices, which they could not afford to undergo a correction. In 2011, the USFed began the QE initiatives marked by bond monetization. The QE program itself was a correct Jackass forecast, denied openly by the USFed for months. The point was made that buyers of USTBond issuance would vanish, and the teetering USEconomy would not generate indigenous wealth to save in USTBonds. In 2012, the Jackass was loud and vocal about the USFed being stuck with no Exit Strategy from that destructive disastrous monetary policy again, as in ZIRP Forever and QE to Infinity. Both forecasts are being seen to come true. The FOMC meetings and recent Bernanke speech highlight their plight, no options, no exit, no relief, stuck with destructive monetary policy which cannot be halted or even reduced. In fact, QE to Infinity will be ramped up, with double the volume of USTBond purchases in the next several months. The foreign nations will diversify out of their USTBonds held in reserve, and foreign corporations will dump outright USTBonds, in what will become the grandest vote of no confidence toward US-UK bankers in modern history. The USFed must sop up the supply. The alternatives are truly horrendous.

TWO HORRIBLE CHOICES FOR USFED

PLAN A: BEING IMPLEMENTED: The USFed can continue QE and its heavy volume bond monetization. Doing so will sustain the rise in the cost structures, including food prices. As a result, the national economies suffer capital destruction, a direct (but unrecognized) consequence of shrinking profit margins and shrinking disposable household income. The mainstream news and bank leadership insists on calling it stimulus, when it is the exact opposite. It is the most powerful force to destroy capital in modern world history. The fierce recessions are assured to continue, the incomes fall, store liquidations to persist, systemic failure assured. The United States eventually will be faced with hot money exits in a very unique new development. The United States will be eventually shunned and the USDollar rejected, as global alternative to the US$-based trade will develop until a formal launch next year in 2014. However, the US will continue its usual path of creating (boogeymen) enemies, creating new wars, blasting the propaganda networks, but deny being the cause of the broad wreckage. The destruction of the US system will not come from fast rising rates, but instead from accelerating capital destruction, job cuts, recession identified as depression. In this Plan A scenario being adopted and embraced, the USFed will be compelled to amplify its QE bond buying volume, to lie about it, but it will be caught in the lies. The United States and the USFed will be blamed for the climax of collapses, which will occur gradually. The United States will rapidly be shunned, the USDollar rejected, and the US declared a global pariah.

PLAN B: TESTED WITH TAPER TALK TESTED, NOT TO BE DONE: The USFed could taper QE and reduce sharply the bond monetization. The results would be felt very quickly and suddenly, like what was seen in July and August. It was painful and shocking, but revealed the deep dependence upon the USFed easy money spigot, from the financial market perspective (quickly) and the economic perspective (more slowly). The financial markets would suffer incredible declines bordering on historical events like a sequence of Black Mondays (1987) and post-Lehman crashes (2008). The surprising direct effect from a strong tapering of QE would be something never seen before in the United States history. It would cause very well publicized hot money moves out of the US financial market in addition to the emerging markets. The global tightening would make for a global catastrophe. The investors in USTreasury Bonds would rapidly vacate the arena, since bond yields would rise quickly, putting strain on the interest rate derivative control levers to the point that the rate swaps could not prevent the rates from going up out of control. The big US banks would unwind their leveraged USTBond carry trade, and suffer outsized losses. The rapid rise in rates would deliver a well recognized death blow to corporate paper flow, the US housing market, the US car market, and put an end to student loans. The national USEconomy would suffer from higher interest rates, the fierce recession continue. A systemic failure would result within 12 to 18 months. The United States and the USFed would be blamed for the climax of collapses, which would occur rapidly. The United States would rapidly be shunned, the USDollar rejected, and the US declared a global pariah. Same outcome, faster pace.

The USFed is desperately trying to balance two horrible destructive options. The look of frustration and defeat is apparent on outgoing Chairman Bernanke's face in press conferences. He realizes finally that his Doctoral Thesis is disproved by experiment, by his own hand at the USFed control panel. Yet the bankers must appear to be in control. They must defend the USDollar and USTBond, along with major paper currencies. They must defend the franchise central bank system. They must buy time to escape with their lives before they are forced to vanish, either willingly or by order.

GOLDEN PILLARS

Many are the pillars that support the current USTBond & USDollar phony fractured folly. In the Jackass view, The USTreasury Bond aint a market, but rather an empty room filled with market rigging machinery. It is an asset bubble. Tragically and inexorably, once an asset bubble is pricked, it cannot be held together. The prick event occurred with the Taper Talk, a highly misguided action taken. Perhaps the Basel masters wish to see the system collapse and banker fascist states honored openly. However, as the pillars fall, the Gold Price will rise like a phoenix and offer a breath-taking event to behold. The pillars are all breaking down, which will release the Gold Price. New pillars are being erected in support of the Gold Price. They mark tremendous changes, as in Paradigm Shift in the global structure of commerce and finance

1) USTreasury Bond Tower of Babel is breaking. The interest rate derivatives have offered the USTBond asset bubble hidden illicit deceptive support for over two years. Morgan Stanley is the chief agent for its application. The London Whale event (complete with greatly falsified losses) emerged in May 2012 as a result on such derivative losses, not the sovereign bond losses as JPMorguen liars reported. The losses are not $8 billion, but rather $100 billion. If the London Whale losses occurred after a mere 60 basis point rise leading to the May event, then imagine the derivative losses suffered from a 130 basis point rise from 1.65% in May 2013 to 2.9% in early September 2013. The Flash Trading practice is a last ditch to defend the USTBond & USD twin towers in South Manhattan. History repeats, transformed from physical towers to financial towers, but without the false flags waving atop the crumbling towers.

2) The Petro-Dollar defacto standard is breaking. Since the late 1970 decade, this standard has been at work. The Arab oil producing nations, led by the Saudis, have sold crude oil in US$ transactions, then cooperated in recycling the vast surpluses in USTreasury Bonds, with a fair amount in big US bank stocks as well. The OPEC cartel is showing signs of fracture, slowly disbanding amidst regularly spouted lies from the flairs of member nation mouths. The new dynamic is powerful and disruptive, the natural gas pipelines. The Syrian conflict is all about the natgas pipelines, with smokescreens created in the usual way. Watch Gazprom lead a consortium of NatGas Coop members, flex its muscles, and eclipse OPEC to the point of obsolescence. The irrelevance of OPEC will usher in the rejection of the Petro-Dollar, and threaten the House of Saud (where regime change is nigh). The other victim will be the USTreasury Bond, with accelerated sales from Persian Gulf abandonment.

3) USTreasury Bond diversification & rejection. Many are the channels of USTBonds returned to sender from emerging market nations and elsewhere. The USFed monetary policy has motivated many nations to diversify out of the very USTBonds being purchased with printed money in phoney baloney manner, due to perceived debasement, deeply resented. The Westerners call it euphemistically Quantitative Easing, but the Jackass prefers to call it hyper monetary inflation off the printing press with a Weimar nameplate. Entire national banking reserves management systems are in the process of undergoing change. Much USTBond sale volume will be returned from Indirect Exchange, in the payment for large asset acquisitions (like Chinese buying an African energy deposit, or Chinese payments for Russian oil). Much USTBond sale volume will come from conversion to Gold bullion. These players will be building the BRICS Bank, or replenishing sickly Western banks, maybe even central banks.

4) Central Bank Franchise System is failing in recognized full view. After four and a half years of utter nonsense from the major central banks, dispensation of more toxic bond patch solutions, redemption of toxic bonds with freshly printed money, payoffs to big banks revealed (often gone to executive bonuses), support of USGovt deficits, refusals to inspect official Allocated Gold accounts, assists in derivative coverups, gigantic interest free loans to Fed partners in the multiple $trillions, the game is over, the jig is up, the public aware. Too many events have resulted in a pulling back of the curtain to reveal the criminality of the central bank franchise system. Hidden from view is the narcotics money laundering and their participation. Hidden from view is the phony project in the late 1990 decade to accumulate gold for a new USDollar, which made a U-turn at the last minute. Finally the Flash Trading practice reveals the sustained USTBond by a new more dangerous artificial prop, which had been a tool devoted mainly for the US Stock market, as in the New York Stock Exchange.

5) The death of the COMEX gold market is within view. With thefts of private accounts (see MF-Global), with refusals to deliver in gold COMEX futures contracts (see June and July and August), with drained COMEX inventories (see the massive decline since January), with drained JPMorguen inventories (see the massive decline since January), with the regular price ambushes led by naked shorting (see mid-April ambush, and subsequent ambushes), the death of the COMEX is within view. They will someday in the near future halt the gold futures contracts, since they will have no gold inventory, and since they have refused to deliver on gold futures contracts routinely. In fact, the refusal to redeem gold accounts at the GLD Exchange Traded Fund, even to qualified investors, might be the smoking gun, or (to mix metaphors) be the thread which when pulled, unravels the entire sweater.

6) Gold Trade Settlement is the coming, a return of the Gold Standard. It has been inevitable, its return, since it is the only solution with any merit or legitimacy. No phony paper debt bond solution has stuck since 2008, since all are illicit and meaningless circle jerks in a debt patchwork. The old sound money adage is so true (from Von Mises school), that no paper money solution can fix a failing paper money problem. However, the new trade settlement system will usher in a new Gold Trade Standard in a different route. It will enter on trade settlement from peer to peer, using Gold Trade Notes as letters of credit, using a vast distributed system. It will bypass the big bank SWIFT system which has been abused by the United States Govt and UKGovt. They have used the SWIFT codes as weapons. The East resents it, not just Iran. It will bypass the FOREX system of currency exchange, a regularly corrupted pit mangled by the Western bankers (see the Exchange Stabilization Fund managed by the USDept Treasury). The Europeans are in the middle, not such hardened adversaries to Iran, since Iran is willing to sell oil & gas in Euro transactions.

The major currencies will be forced to scurry like cockroaches in the dark to find and source gold bars for renovation of the currencies themselves. The crumbling sovereign debt serves as flawed foundation for the major currencies. The climax blow will be the conversion of USTBonds and EuroBonds and UKGilts and JapGovtBonds into Gold bullion that kills the current system and opens the door to the new system. With great disruption, the new Paradigm Shift is in progress, unstoppable, but offering hope for a better day, a better system, a more fair system, with participants and savers given a just system. For three decades, Gold has had a nemesis in the USTreasury Bond. The USTBond is dying, a wreck in progress. As the old pillars fall and the new pillars rise, The Price of Gold will be set free. It will reach $3000/oz when the COMEX defaults from empty inventory and Shanghai arbitrage, then reach $5000/oz when the great conversion begins in earnest from USTBonds to Gold bullion, then reach $7000/oz when the Gold Trade Settlement is installed in its full glory. It is written. It shall be done.

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America’s Re-shoring of Jobs Is Accelerating

More than half of 200 U.S. companies with sales greater than $1 billion are moving jobs back to the United States, or are planning to, within the next two years. The announcement by Boston Consulting Group (BCG) on Tuesday confirms a subterranean paradigm shift that’s been underway for at least two years. Because of rising labor costs in China and elsewhere, the mathematics supporting offshoring of former American jobs has drastically changed for the worse, according to Harold Sirkin, senior partner at BCG:
Over the past couple of years, we’ve projected an improvement in U.S. manufacturing competitiveness by 2015 that would help drive an American manufacturing revival. The results of our latest survey make clear that a profound shift in attitude is beginning.
When you look at the total cost of production for many goods, the U.S. appears increasingly attractive.
The impact is likely to be enormous. A report released by BCG in August predicted that between 2 � million and 5 million new jobs would be created in U.S. manufacturing before the end of the decade, less than seven years from now. This is estimated to bring down the unemployment rate by between two and three full percentage points.
In that August report, it was noted that the shift has already begun but without media fanfare. Since 2005, U.S. exports have been growing more than seven times faster than the country’s economy as a whole. In fact, exports from the United States are now at their highest point in 50 years, according to BCG. And this is just the beginning.

The math that makes such a move not only predictable but inexorable involves more than just labor costs. When adjusted for productivity and taking into account energy costs, quality, proximity, supply chain management, and other factors, the United States is surprisingly competitive:
We estimate that by 2015, average manufacturing costs in the five major advanced export economies that we studied — Germany, Japan, France, Italy and the UK — will be 8 to 18 percent higher than in the U.S….
As a result, we estimate that the U.S. could capture up to 5 percent of total exports from these countries by the end of the decade.
Five percent doesn’t sound like much but when multiplied by the world’s total exports, estimated to be almost $18 trillion in 2012, that’s almost one trillion dollars. To put that in perspective, as of June 30, the Federal Reserve estimates America’s output at $16.67 trillion. If that comes to pass the economic impact in the United States would, to put it mildly, be impressive.
Sirkin is unabashedly optimistic:
Over the past 40 years, factory jobs of all kinds have migrated from high-cost to low-cost countries.
Now, as the economics of global manufacturing changes, the pendulum is finally starting to swing back. In the years ahead, it could be America’s turn to be on the receiving end of production shifts, as more companies use the U.S. as a low-cost export platform.
As noted elsewhere, lower energy costs, thanks to fracking and its success in unlocking oil and gas reserves heretofore unavailable, are an increasingly important part of the equation. In less than two years, the price for natural gas is projected to be between 60 and 70 percent lower here than in Europe or Japan, and consequently the cost of electricity will be 40 to 70 percent lower here than there. That’s an advantage that the United States will likely enjoy for years if not decades to come. China has enormous untapped oil shale reserves, perhaps even larger than those in the United States, but so far their efforts to extract significant quantities of it to quench its own internal thirst for energy have faltered.
Environmentalists have all but shut down fracking efforts in the eurozone, and the high labor costs in Norway, Finland, Denmark, and Sweden will keep them out of the picture for years. Although China still enjoys a labor cost advantage over the United States at the moment, when all other factors are taken into account, China is also losing its attractiveness. BCG estimates that the production of between 10 and 30 percent of goods that the United States now imports from China could return to the United States in the next few years.
In those industries using enormous quantities of energy, America’s advantage will continue to improve. In the petrochemical industry, the United States is expected to capture between $7 billion and $12 billion of the market from Western Europe and Japan. In Germany, for example, natural gas (which is an important feedstock in making chemicals) costs nearly three-and-a-half times more than in the United States, making manufacturing costs nearly 30 percent higher there than in the United States. In China total manufacturing costs are projected to be 16 percent higher, and 28 percent higher in France.
In heavy machinery, the U.S. advantage over Japan is 7 percent, 14 percent over Germany and France, and 15 percent over Italy. Similar advantages are projected in the making of transportation equipment.
Taken altogether then, the U.S. advantage is impressive. With a large labor pool of skilled labor with productivity three times that of Chinese labor, fewer transportation and other supply chain issues, higher quality of final output, and energy prices that keep dropping as the fracking boom continues, there is little to stand in the way of the resurgent manufacturing boom in the United States.
As Sirkin noted back in March:
Companies … are realizing that when labor content, productivity, logistics and the many indirect costs, risks and headaches of managing supply chains extending halfway around the world are fully accounted for, it … makes better economic sense to manufacture in the U.S.
A graduate of Cornell University and a former investment advisor, Bob is a regular contributor to The New American magazine and blogs frequently at www.LightFromTheRight.com, primarily on economics and politics. He can be reached at
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