Today
James Turk spoke with King World News about a historic event which has
just taken place in the United States. Turk states that this situation
is not being accurately reported in the mainstream media. He also
believes that because of this unfolding drama, “It is all but certain
now that the dollar is headed for hyperinflation.” Here is what Turk
had to say: “The huge bases in gold and
silver are getting bigger, which is very positive, Eric. The only thing
the drop in price over the last few days has done is set up a retest of
this significant and growing support.”
James Turk continues:
“We are seeing just another
example of how the central planners intervene in the precious metal
markets by selling paper to drive the price down during month-end option
expiry. This maneuver maximizes the profit for their agents - those
bullion banks facilitating the gold price suppression scheme – so that
the calls they've sold to investors and financial institutions expire
out of the money. It also ensures that as many call buyers as possible
lose money, which helps the central planners foster a negative sentiment
for the precious metals.
We have seen this time and
again, Eric. Contributing to the manipulation is the FOMC meeting this
week, during which the central planners like to put a lid on gold and
silver prices while they announce their new money printing schemes. And
then watch out for Friday when the unemployment report is released,
usually a time of wide price swings aimed to trigger stops. None of
this is new. But there is something new and important happening in
Washington DC....
“The politicians have finally done it,
Eric. The House passed a debt ceiling bill that throws away the last
semblance of any discipline on federal spending. It is now all but
certain now that the dollar is headed for hyperinflation, assuming the
Senate and then the President go along with the measure passed by the
House a few days ago, and the indications are that they will.
Because the federal
government is running an operating deficit, it needs to borrow dollars.
So the federal government needs the debt ceiling to be raised
periodically to enable it to keep borrowing. The federal government
reached the current $16.4 trillion debt ceiling a few weeks ago.
The mainstream media
reported that the House has now extended the debt ceiling to May 19th.
But that is not accurate. What the House actually did is suspend it.
Bloomberg accurately reported that the House acted to “temporarily
suspend” the debt ceiling.
In other words, the House
is proposing to eliminate the debt ceiling, meaning that there will be
no limit on what the federal government can spend until May 19th when
the debt ceiling must again be considered.
But here's the really
important point: These two words used by Bloomberg in reporting this
event - temporarily suspend - are chilling, Eric. These are the exact
same two words that Nixon used in his August 15, 1971 speech announcing
that he was breaking the dollar's link to gold.
His temporary suspension
has now lasted 42 years, which is the key point I am making here. This
suspension of the debt ceiling is not going to be temporary. Each time
it comes up for consideration, the politicians will just keep extending
the suspension again and again. They will always take the soft
political option.
When Nixon broke the
dollar's formal link to gold, he removed the constitutional check on the
power of the government to inflate the dollar, sending the US
government over the fiscal cliff. Nixon’s action in 1971 has directly
led to the financial mess the US is now in. However, the debt ceiling
still provided some constraint.
The debt ceiling wasn't
much of a limit though because it has been raised dozens of times over
the years, but at least it brought to everyone's attention the dire
financial condition of the federal government each time the ceiling was
hit. You will recall that the last time it was reached, the US lost its
triple-A credit rating.
The debt ceiling has been
the remaining roadblock to unlimited federal government spending, and
out of control spending by a government is always the cause of
hyperinflation. But now the House is saying that even this small
roadblock imposed by the debt ceiling should be removed.
In effect, if this measure
becomes law, Congress and the President have given themselves a blank
check. And to inflate asset prices, Bernanke is prepared to print
whatever amount of dollars is written on that blank check. So when May
19th comes, there is no doubt in my mind that the politicians will
simply find a convenient excuse to keep suspending the debt ceiling
limit so that they can keep writing checks. It is the soft political
option, and any suspension of the debt ceiling will prove no more
temporary than what Nixon did to the dollar's convertibility into gold.
We all know that every
check-and-balance is critically important to representative government.
But now the debt ceiling, which is last check to prevent unbridled
money creation, is about to be eliminated. When it is, there will be no
doubt that the dollar is heading for a hyperinflationary outcome because
federal government spending will spiral out of control. So,
hyperinflation here we come.
Maybe that is why at the
confab in Davos the head of China's sovereign wealth fund warned the US
on Friday that its money “printing machine will have to slow down” or
the world would lose confidence in the dollar. He is right, but he was
wrong when going on to say, “There will be no winners in currency
wars.” The winners of course will be everyone who owns physical gold
and silver. They will be the beneficiaries of the greatest wealth
transfer in history.”
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