Tag Archives: Federal Reserve System

The Japanese Financial System Is Beginning To Spin Wildly Out Of Control

By Michael, on May 27th, 2013

 

The financial system of the third largest economy on the planet is starting to come apart at the seams, and the ripple effects are going to be felt all over the globe.  Nobody knew exactly when the Japanese financial system was going to begin to implode, but pretty much everyone knew that a day of reckoning for Japan was coming eventually.  After all, the Japanese economy has been in a slump for over a decade, Japan has a debt to GDP ratio of well over 200 percent and they are spending about 50 percent of all tax revenue on debt service.  In a desperate attempt to revitalize the economy and reduce the debt burden, the Bank of Japan decided a few months ago to start pumping massive amounts of money into the economy.  At first, it seemed to be working.  Economic activity perked up and the Japanese stock market went on a tremendous run.  Unfortunately, there is also a very significant downside to pumping your economy full of money.  Investors start demanding higher returns on their money and interest rates go up.  But the Japanese government cannot afford higher interest rates.  Without super low interest rates, Japanese government finances would totally collapse.  In addition, higher interest rates in the private sector would make it much more difficult for the Japanese economy to expand.  In essence, pretty much the last thing that Japan needs right now is significantly higher interest rates, but that is exactly what the policies of the Bank of Japan are going to produce.

There is a lot of fear in Japan right now.  On Thursday, the Nikkei plunged 7.3 percent.  That was the largest single day decline in more than two years.  Then on Monday the index fell by another 3.2 percent.

And according to Business Insider, things are not looking good for Tuesday at this point…

In post-close futures trading, the Nikkei has dropped by another couple hundred points, and has dropped below 14,000.

Are we witnessing the beginning of a colossal financial meltdown by the third largest economy on the planet?  The Bank of Japan is starting to lose control, and if Japan goes down hard the crisis could spread to Europe and North America very rapidly.  The following is from a recent article by Graham Summers

As Japan has indicated, when bonds start to plunge, it’s not good for stocks. Today the Japanese Bond market fell and the Nikkei plunged 7%. The entire market down 7%… despite the Bank of Japan funneling $19 billion into it to hold things together.

This is what it looks like when a Central Bank begins to lose control. And what’s happening in Japan today will be coming to the US in the not so distant future.

If you think the Fed is not terrified of this, think again. The Fed has pumped over $1 trillion into foreign banks, hoping to stop the mess from getting to the US. As Japan is showing us, the Fed will fail.

Investors, take note… the financial system is sending us major warnings…

If you are not already preparing for a potential market collapse, now is the time to be doing so.

And all of this money printing is absolutely crushing the Japanese yen.  Since the start of 2013, the yen has declined 16 percent against the U.S. dollar, even though the U.S. dollar is also being rapidly debased.   Just check out this chart of the yen vs. the U.S. dollar.  It is absolutely stunning…

Japanese Yen

The term “currency war” is something that you are going to hear a lot more over the next few years, and what you can see in the chart above is only the beginning.

What the Bank of Japan is doing right now is absolutely unprecedented.  It has announced that it plans to inject the equivalent of approximately $1.4 trillion into the Japanese economy in less than two years.

As Kyle Bass recently discussed, that dwarfs the quantitative easing that the Federal Reserve has been doing…

“What they’re doing represents 70% of what the Fed is doing here with an economy 1/3 the size of ours”

The big problem for Japan will come when government bond yields really start to rise.  The yield on 10 year government bonds has been creeping up over the past few months, and if they hit the 1.0% mark that will set off some major red flags.

Because Japan has a debt to GDP ratio of more than 200 percent, the only way that it can avoid a total meltdown of government finances is to have super low interest rates.  The video posted below does a great job of elaborating on this point…

It really is very simple.  If interest rates rise substantially, Japan will be done.

Investor Kyle Bass is one of those that have been warning about this for a long time…

There’s a fatalism, he says, in everyone he talks to in Japan. Their thinking is changing, and the way they talk to him about debt is changing. They already spend 50% of tax revenue on debt service.

“If rates go up, it’s game over.”

The financial problems in Cyprus and Greece are just tiny blips compared to what a major financial crisis in Japan would potentially be like.  The Japanese economy is larger than the economies of Germany and Italy combined.  If the house of cards in Japan comes tumbling down, trillions of dollars of investments all over the globe are going to be affected.

And what is happening right now in Japan should serve as a sober warning to the United States.  Like Japan, the money printing that the Federal Reserve has been doing has caused economic activity to perk up a bit and it has sent the stock market on an unprecedented run.

Unfortunately, no bubble that the Federal Reserve has ever created has been able to last forever.  At some point, we will pay a very great price for all of the debt that the U.S. government has been accumulating and all of the reckless money printing that the Fed has been engaged in.

So enjoy the calm before the storm while you still can.

It won’t last for long.

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Gold Sees Surge as Fed Announces ‘Unlimited QE’

Infowars.com
September 13, 2012

After holding steady at above $1,700 this past week, gold’s price per ounce has surged close to $40 in response to the announcement of QE3, which allows the Federal Reserve to buy up “$85 billion in new assets, including $40 billion mortgage-backed securities every month until the end of the year.”

Swiss 20 Franc Helvetia “Vreneli” Gold Coin

As the Committee announced an “open-ended,” or “unlimited QE,” the fed will decide when enough is enough after the Federal Open Market Committee decides the economy is back on track: “To support continued progress toward maximum employment and price stability, the Committee expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the economic recovery strengthens.”

As Reuters notes, gold has already made a 2 per cent gain this month in addition to the 5 per cent leap it saw in August.

As predicted, the Fed’s decision to buy up large-scale bonds has led to further deflation of the already sinking US dollar, urging both silver and gold prices to rise, with the latter rallying near $1,800.

Ed Meir, formerly of MF Global and now of INTL FCStone, told Reuters the Fed’s decision should be seen as unsettling: “Although previous rounds of QE have helped kick-start some growth in the U.S., the fact that we are once again at the ‘money trough’ is not very reassuring.”

Congressman Ron Paul released a statement earlier today addressing the Fed’s decision:

“No one is surprised by the Fed’s action today to inject even more money into the economy through additional asset purchases. The Fed’s only solution for every problem is to print more money and provide more liquidity. Mr. Bernanke and Fed governors appear not to understand that our current economic malaise resulted directly because of the excessive credit the Fed already pumped into the system.

“For all of its vaunted policy tools, the Fed now finds itself repeating the same basic action over and over in an attempt to prime the economy with more debt and credit. But this latest decision to provide more quantitative easing will only prolong our economic stagnation, corrupt market signals, and encourage even more misallocation and malinvestment of resources. Rather than stimulating a real recovery by focusing on a strong dollar and market interest rates, the Fed’s announcement today shows a disastrous detachment from reality on the part of our central bank. Any further quantitative easing from the Fed, in whatever form, will only make our next economic crash that much more serious.”

US Fed hints strongly at fresh round of stimulus

The Federal Reserve has delivered its strongest hint yet that it will unleash a fresh round of “stimulus” to help the flagging US economy

by Richard Blackden, The Telegraph:

 

In a surprisingly strong signal, many of the rate setters at the Fed have decided that further stimulus is needed “fairly soon”, according to the minutes of their meeting this month.

Many of those on the Federal Open Market Committee (FOMC) – the equivalent of the Bank of England’s Monetary Policy Committee – also judged that more quantitative easing could offer “additional support” for the economy.

Economists said the minutes showed that after a summer watching the recovery lose momentum, top officials at the central bank have decided that the potential benefits of further action outweigh the risk of fueling inflation.

After an encouraging first quarter of the year, the world’s biggest economy expanded at an annual pace of just 1.5pc in the second as employment growth weakened and consumers retrenched. With Europe’s debt crisis far from over, and the US presidential election a matter of weeks away, few private forecasters expect growth to pick up in the second half of the year.

The Congressional Budget Office warned today that the US could plunge back into recession if a series of tax increases and spending cuts are allowed to take effect at the start of the year.

Read More @ Telegraph.co.uk

MintChip: ‘The Evolution of Currency’ – Doorway to the Mark of the Beast

by SGT,

The Royal Canadian Mint recently introduced the MintChip and they say “it’s better than cash.”

MintChip stores your money in digital bites. A the promotional video touts, “Today’s digital economy is changing faster than ever. And currency has to change too… Money as we know it, is fine, for today. But tomorrow is a different story. MintChip is currency in a digital form. Using a chip you securely load value onto a smart phone, USB device, tablet or cloud, MintChip is better than cash.”

 

[youtubehttp://www.youtube.com/watch?v=9wx14x5HLgw]

The claim is that a MintChip transaction is completely private. But the truth is that only cash, HARD cash (or better yet, physical silver and gold) can maintain your personal financial sovereignty. A cashless society is a Luciferian Bankster’s wet dream end game. And it must not be allowed.

The Bankster’s have raped and pillaged every aspect of our society since the inception of the privately owned Federal Reserve System in 1913. According to the limited GAO audit of the Federal Reserve that was mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act, the grand total of all the secret bailouts conducted by the Federal Reserve during the last financial crisis was $16.1 trillion.

So let’s recap: The international banking elite has given the world $700+ Trillion in derivatives fraud, the HSBC drug laundering fraud, the MF Global fraud, the high frequency trading pilfering and stock market fraud, the manipulation of the precious metals and bond market fraud, the MERS mortgage fraud, nearly countless individual frauds from both Goldman Sachs and JP Morgan, and the international LIBOR interest rate fixing banking fraud, just to name but a few recent FRAUDS and breaches of Bankster credibility and trustworthiness.

Why on earth you would trust these criminals with your money on a chip? Read More…

Nigel Farage – They Will Collapse The System & Enslave People

from KingWorldNews:

Today MEP (Member European Parliament) Nigel Farage spoke with King World News about what he described as the possibility of, “a really dramatic banking collapse.” Farage also warned that central planners want to enslave and imprison people inside of a ‘New Order’” and he described the situation as “horrifying.”

 

 

Farage also discussed gold, but first, here is what he had to say about the ongoing financial crisis: “Governments don’t have the courage to tell the people that we cannot afford to go on living the way that we are. We’ve really failed very badly in having honest politics, so we have this gross and very grave debt problem.

Now everyone has decided, the Bank of England, the Fed and the European Central Bank, who are utterly brilliant people that have led us to the mess we are in, they’ve all decided that the solution is quantitative easing. The solution is to go on printing and creating false money in an attempt to buy our way out of the (ongoing) crisis.

My take on that, my historical perspective is that all we are really doing is actually compounding the problem….”

LISTEN NOW @ KingWorldNews.com

On US Banks Being Told to Make Plans to Prevent Collapse

by Economic Policy Journal:

 

I am getting quite a few emails from readers asking about the news that:

U.S. regulators directed five of the country’s biggest banks, including Bank of America and Goldman Sachs, to develop plans for staving off collapse if they faced serious problems, emphasizing that the banks could not count on government help.

This is all nutty propaganda that has nothing to do with a view by government that a crash is imminent (This is about a 2010 document).  The report goes on to say:

According to documents obtained by Reuters, the Federal Reserve  and the U.S. Office of the Comptroller of the Currency first directed five banks — which also include Citigroup, Morgan Stanley and JPMorgan Chase — to come up with these “recovery plans” in May 2010.

Read More @ economicpolicyjournal.com.au

We Are Now Just Weeks Away From A European Bombshell

from KingWorldNews:

Today Michael Pento told King World News we are now just weeks away from a European ‘bombshell.’ Pento predicted, “In my estimation, the ECB is about three or four weeks away from giving a banking license to the EFSF and the ESM. This will lead to unlimited purchases of European debt, and an unlimited dilution to their currency.”

Pento also warned, “I am telling my clients, I am gearing them towards the inevitable inflation,” because “you will see the most salient moves in precious metals, base metals, energy and agricultural stocks and commodities.”

Pento also discussed what will happen in other key markets, but first, here is what Pento had to say about the Fed and ECB decisions: “My first impression was that the reports we had from the Wall Street Journal that the Fed was imminently going to interfere with the markets (with more QE), once again proved to be untrue. Bernanke is waiting for Jackson Hole. He’ll make some kind of announcement, like he did back in 2010, and then he will start to put his plan to destroy the currency in effect, probably in September.”

Pento continues @ KingWorldNews.com

Turk – Gold To Explode Higher As US Debt To Be Downgraded

from KingWorldNews:

On the heels of the Fed decision and continued volatility in gold and silver, today King World News interviewed James Turk out of Europe. Turk stunned KWN by saying that US debt is about to be downgraded once again. Turk also warned, “The reality is the Fed is losing control,” and the Fed is now being “overwhelmed.” He went on to say that all of this means right now we are going to see an “upside explosion” in both gold and silver.

Here is what Turk had to say: “The Federal Reserve has made another announcement, Eric, and each one of their proclamations makes it more obvious that the Fed is no longer in the driver’s seat. It is just rehashing the same stuff. The reality is the Fed is losing control. It is slowly but surely being overwhelmed by events, and particularly, the reality that US government finances are out of control.”

“The 800-pound gorilla in the room is the US government’s horrendous deficits and addiction to debt. The Fed is keeping interest rates low to sustain the illusion that the US government is solvent, while hoping that low rates will also jump-start the US economy and thereby increase federal tax revenue to service the mountain of debt.

James Turk continues @ KingWorldNews.com

Ron Paul’s ‘Audit the Fed’ bill passes the House

By Chris Moody
July 25, 2012

 

 

At long last, Ron Paul has his day.

The House of Representatives on Wednesday overwhelmingly approved the Texas Republican’s bill to increase the transparency of the Federal Reserve. With bipartisan support, the measure passed 327-98.

For Paul, the path to getting his bill approved in the House has been a long, and often lonely one. He first introduced the bill to a skeptical House a decade ago. While his efforts were ignored at the time, the call to audit the Fed” has gained support from mainstream Republicans and Democrats.

On the presidential campaign trail in 2008, Paul spoke often about the need to make more of the Federal Reserve’s activities public, a cause that became a rallying cry of his supporters. Paul’s book, End the Fed, was published in September 2009, and he continued his crusade against the federal bank into his second run for the Republican presidential nomination in 2012. (Paul first ran for president as the Libertarian Party candidate in 1988.)

Paul’s bill came to the floor Wednesday with 270 co-sponsors. The measure also received support from his fellow Republican presidential candidates during the primaries. Former Massachusetts Gov. Mitt Romney, the presumptive Republican presidential nominee, most recently voiced his approval for Paul’s efforts last week.

“Ron Paul’s ‘Audit The Fed’ bill is a reminder of his tireless efforts to promote sound money and a more transparent Federal Reserve,” Romney posted on Twitter.

The bill, of course, is not without critics. Democrats say the Act could “politicize” the Federal Reserve’s decisions–what Federal Reserve Chairman Ben Bernanke has called a “nightmare scenario.”

“This bill would … jeopardize the Fed’s independence by subjecting its decisions on interest rates and monetary policy to GAO audit,” said House Minority Whip Steny Hoyer, a Democrat from Maryland. “I agree with Chairman Bernanke that congressional review of the Fed’s monetary policy decisions would be a ‘nightmare scenario,’ especially judging by the track record of this Congress when it comes to governing effectively.”

While Wednesday’s passage in the lower chamber is a victory for Paul and his supporters,  the bill is considered dead on arrival in the Senate. Harry Reid, the Senate Majority Leader and Nevada Democrat, has vowed not to put it to a vote.

Get Ready for a Massive Stock Market Selloff

By M.N. Gordon

On Tuesday, Federal Reserve Chairman Ben Bernanke’s made his semiannual monetary policy testimony before the Senate Banking Committee. Washington and Wall Street wanted QE3. Bernanke demurred.

Following the testimony, Senator Chuck Schumer told Federal Reserve Chairman Ben Bernanke to “get to work.” Schumer, like most Senators, is under the illusion that Bernanke can actually do something to improve the economy. Those days are gone.

“The question in my mind is, is he [Bernanke] not stepping up with another program in any quick fashion because they’re [The Fed] starting to wonder if it’s going to have any impact? Alternatively, are they not stepping up because when they look at the data they think, ‘It’s not that bad,’?” said Jim Paulsen, chief market strategist at Wells Capital Management in Minneapolis, following Bernanke’s testimony. “Maybe it’s some of both. But does anyone need any more excess bank reserves?”

Obviously, Paulson’s last question was intended to make the point that there’s already too much credit available to banks. The problem is, there’s nowhere for the banks to put the credit to use. When banks gaze out upon the economic landscape they don’t see anything worthy of extending the credit to…especially when they can borrow money from the Fed at practically zero percent and lend it back to the government with purchases of 10-Year Treasury notes yielding 1.5 percent.

What this means is the financial system currently has no use for the Fed’s one and only product – bank credit.

Price Distortions

Banks don’t believe loaning money to businesses will turn a consistent profit. This means the Fed can no longer juice the economy with cheap money. Like repeated applications of fertilizer, or a second helping of chocolate cake, QE has reached a state of diminishing marginal returns.

Nonetheless, Schumer, like Wall Street and Washington, want Bernanke to do something more. Here at the Economic Prism we believe Bernanke has already done far too much. The federal funds rate is at effectively zero, banks are flooded with credit, and the Fed’s balance sheet is at nearly $3 trillion. Still the economy lumbers along like an old Plymouth down a dusty dirt road.

At this point, the Fed’s monetary efforts won’t do a lick for the economy. Adding another $1 trillion to the Fed’s balance sheet won’t do anything for business. Instead, all it will do is inflate asset prices.

But the S&P500’s making its way to 1,400 and oil’s back above 90 per barrel. Gold’s even scratching for 1,600 per ounce. At the moment, assets have already been over inflated with Fed gas. Their prices are totally distorted from the realities of the actual economy.

The Fed knows they must let some air out of these assets before opening the monetary valve again. If they take action now, prices – including consumer prices – could skyrocket just as the economy cools off. That would make for the worst of both negatives…a stagnating economy with rising prices.

Back in the 1970’s that was called stagflation. While Schumer may have forgotten stagflation and the misery index, Bernanke certainly hasn’t. He spent his entire career studying these things. Plus, while the economy may already be slowing down, it is also rapidly approaching the fiscal cliff with no one at the wheel…

Get Ready for a Massive Stock Market Selloff

Beginning in January, 2013, massive tax increases and haphazard government spending cuts will be triggered. From our vantage point, it appears Congress is unwilling and incapable of redirecting the economy away from the imminent fiscal cliff. They are stuck in a Congressional standoff and no one’s willing to budge.

Thus, if nothing happens before the end of the year, taxes will increase nearly $3,800 per taxpayer. That’s over $300 per month…which equals a little less than a monthly car payment or preschool tuition. The vast array of taxes to increase include the income tax, alternative minimum tax, the estate tax, payroll taxes and a new healthcare tax for Medicare. Government spending cuts include defense spending, unemployment benefits, and physician payments to Medicare.

According to estimates from Goldman Sachs, Citigroup, Merrill Lynch, and Morgan Stanley, the fiscal cliff will result in a 4 to 5 percent GDP contraction. No doubt, with GDP currently increasing at just 1.9 percent, this will push the economy into a recession. In fact, the Congressional Budget Office has crunched the numbers and believes driving off the fiscal cliff will result in recession. Yet Congress is taking a one month vacation.

Down here with the rest of us the evidence that things just ain’t right continues to pile up like cow pies on a dairy farm. Just yesterday we learned from the National Association of Realtors that sales of previously occupied homes fell 5.4 percent in June. So, too, we learned from the Labor Department that the number of Americans applying for unemployment benefits rose by 34,000 to a seasonally adjusted 386,000. On top of that the Conference Board said its index of leading economic indicators declined 0.3 percent in June.

The stock market may be a little slow…but we’re confident it will figure things out soon enough. No Fed gas. Economy rapidly approaching recession, if not already in one. Congressional stalemate.

Get ready for a massive stock market selloff. It’s coming. You can just feel it in your gut.

How Gold Will be Made Acceptable by the Powers that Be

Julian D.W. Phillips

1. It must easily dovetail into the current monetary system.

2.   It must provide a workable application, right down to consumer level.

Without meeting these requirements any attempt to mobilize gold in the system will fail eventually. So many writers have focused on ways to re-introduce gold in, for instance, a repeat of the old gold standard. We are of the opinion that this will not work, not simply because there is nowhere near enough gold at current prices to do the job, but it does not meet the first requirement above.

One appreciates the results of the study sponsored by the World Gold Council that the demand for gold since the twin global crises has increased substantially – globally. But for it to return to the ‘official domain, it must be implemented in a way that central banks can control and dominate its use in a way that supports the current global monetary system.

Right now these officials are caught in a cleft stick as they watch their currency systems stumble, first in the U.S. then in the Eurozone and then again, we expect in the U.S. in the months to come. It is clear to all in the banking world that the system as it stands now cannot take five more years of what has happened in the last five years. Something must be done and quickly, to prevent such a future.

With every nation’s monetary system based on the model forged by the U.S. and reliant on it as the world’s sole reserve currency [at the moment] what happens in the discussions on gold at Basel III and in the U.S. will dictate the way forward for gold and consequently silver.

Change in the Developed World to a Tier I Asset

The developed world, as a whole, has not been convinced that gold can add any real value to the paper currency system in the last forty years. But the stresses and strains seen in that system over the last five years and possibly for the foreseeable future has seen instances where officials of that paper system have found a need to use the gold in their reserves to enhance liquidity and to facilitate the offer of loans to those nations in need.

The entire subject of gold being mobilized in the developed world’s monetary system is now firmly center stage as commentary on re-defining gold from a Tier II asset to a Tier I asset has been called for by the Fed in the U.S. and at the same time is being proposed to the Basel III Committee on monetary reform. If it is so re-defined this will mean that 100% of its value can be attributed to a bank’s balance sheet as required assets from the current 50%. Why is this so important to gold investors? If commercial banks can now hold gold in this way then it will act [to quote Herr Weber ex-Bundesbank President] “as a counter to the swings of the dollar”.

Irrespective of the virtues and failings of these discussions, what has happened to gold at retail and official levels is that the need for it to support a stumbling paper system has grown increasingly urgent over the last five years. It path to a central place in the monetary system is now inexorable!

The practical application of this is that instead of gold being sold off when bank ratios come under pressure as sovereign bonds lose value [these are Tier I assets], gold will be retained by those banks as a confidence inspiring assets when those rainy days come. By way of example, when the mid-2007 credit crunch impacted, the most easily liquidatable assets such as gold were sold off to get 100% of their value into the bank’s [instead of only 50%] balance sheets to fill the value hole left by the declining value of sovereign bonds and property linked assets. If gold had been defined as a Tier I asset then, gold would not have been sold off and the price would not have fallen from $1,200 to $1,000.

Thereafter, it did recover when such selling abated, to reach a new peak of $1,920. If it had been defined as a Tier I asset then, where would the price have gone to? If gold had been defined as such, how much gold would commercial, as well as central banks, be holding now? And where would the gold price be sitting at now? We believe it would be far higher than it is at present.

With the Basel Committee proposing that January 1st be the date of its re-definition [this can of course be changed] we would define this moment as the most significant step in the re-monetization of gold seen since it was written out of the global monetary system back in 1971.

Such fundamental changes to the banking system will have to be combined with a practical day-to-day use of gold in the system. It should not be mobilized only in an emergency but used so as to avoid those emergencies in the first place. One of the biggest hurdles in this regard is accessing the above ground stocks of gold not already in the hands of central banks. The tonnages held in central banks can, with the innovative thinking that we have seen in the last five years [currency/gold swaps as a facilitator of international loans] opens up a way for gold to be far move than just one of the reserve asset holdings of central banks. We will have to wait until the New Year for this discussion to reach a crescendo, but it is on the way.

The events of the last five years and the direction that the monetary system is headed in shows us that gold as an asset in the monetary system is gaining in importance. If the fiat money system suffers any more body blows from debt crises and the like, gold will be deemed a very necessary strategic asset for banks. As we discussed above the re-defining of gold as a Tier I asset will advance gold’s desirability enormously, next year.

Where gold is held privately or by institutions outside the banking system we expect to see concerted efforts from the banking system to be made to harness this private gold. It will be easiest in the case of gold Exchange Traded Funds as this gold is in the hands of banking Custodians such as Barclays and HSBC right now. It is the moving of this gold under the roof of banks that we believe will gather momentum in the days to come. We are hearing of success in these endeavours in Turkey.

Turkey Leads the Way       

The experiments using gold in the monetary system in Turkey are being watch with fascination by all monetary authorities. Granted, Turkey is a special case, a nation that trusts gold above all other money and just will not change from using it. The Turkish monetary authorities, by necessity, have had to be pragmatic and find ways of harnessing the gold in their citizen’s hands so as to complement their existing paper monetary system.

Encourage Gold Deposit Schemes

In September 2011 the central bank of Turkey increased the ratio of lira reserves that could be held in the form of gold from zero to 10%, raising it further to 20% in March 2012 and 25% last month. This had the effect of drastically increasing banks’ appetite for gold. As a result such deposits have increased four-fold in the past year. The country’s commercial banks are targeting customers to open gold deposit accounts. Customers give their gold to a bank and can make withdrawals from their accounts in gold bars or the lira currency. Understandably, the accounts offer interest rates that are substantially lower than those on normal time deposits.

Turkish gold investors who take up these offers are happy to hold their gold in a secure environment and earn even low interest rates on their holdings. But just how far will they succeed in the emerging world? In the developed world, the trust in the banking system and its people is considerably higher than in India, for instance, as we can see in the size of the holdings of gold Exchange Traded Funds now close to 2,000 tonnes. No interest is offered on these holding, normally held by Custodians such as the bank HSBC.

So what? Can the practical steps is Turkey taking to harness gold in a workable pragmatic way in its system be applied in the developed world and other parts of the emerging world in the same way?

Applicable in India

While the Indian government have attempted to discourage the imports of gold since 1948 [for a while banning them completely] they have failed for gold continued to enter the country illegally, during this time.

While distrust of government there and a natural propensity to hide private financial affairs from government, adds to the reasons why gold is such a favored investment in the sub-continent, it is hoped that the Turkish experiment may well blaze a trail for Indian Authorities. For the Turkish model to succeed in India it will have to offer sufficient benefits to overcome the jaundiced view of government by gold investors. With Indian, private gold investments standing over 20,000 tonnes, currently  the proportion of those investors who would hand their gold to banks is miniscule and likely to remain so as the country, by nature, likes to keep their financial affairs close to their chest.

But the scheme is moving ahead where commercial banks, in particular, the State Bank of India, offer gold deposit schemes at low rates of interest. Gold savings deposits and term deposits are being encouraged. Let’s see how much these schemes will grow in tonnage terms.

Are You A Slave Of The System?

Michael Snyder
The Economic Collapse
July 4, 2012

If you went out and took a poll of the American people on July 4th (Independence Day) and asked them if they are free, what would the results look like?  Of course the results would be overwhelmingly lopsided.  Most Americans believe that they live in “the land of the free” and that they are not enslaved to anyone.  But is that really the case? Slavery does not always have to involve whips and shackles.  There are many other forms of slavery.  One dictionary definition of a slave is “one that is completely subservient to a dominating influence”.  I really like that definition.  Today, millions of Americans are slaves of the system and they don’t even realize it.  Debt is a form of slavery, and millions of Americans having become deeply enslaved to our debt-based financial system.  When someone enslaves someone else, the goal of the master is to reap a benefit out of the slave.  You don’t want the slave to just sit there and collect dust.  Today, most Americans have willingly shackled themselves to a system that systematically drains their wealth and transfers it to the very wealthy.  Most of them don’t even realize that they have been enslaved even as the system sucks them dry.

Just think about it.  Where is the “big money” in the United States today?

When asked that question, most Americans think of Wall Street.

Well, who controls Wall Street?

The bankers do.

The borrower is the servant of the lender, and they generate massive amounts of wealth by lending us money.

Perhaps an example will be helpful.

Have you ever run up $5000 of credit card debt?  Many people have run up much, much more than that, but let us use $5000 for our example.

According to the Federal Reserve, if you only make the minimum payment every month, at a 20% interest rate it will take you 49 years to pay that credit card off and you will pay back a total of $26,169.

So you would have gotten the original benefit of spending the $5000 and you would have had to work extremely hard to pay back an additional $21,169 to the bankers.

In essence, you would be working as a servant of the bankers until you had paid back that entire debt plus interest.

Unfortunately, our entire system is now designed to get you to go into debt.

It starts before we even get into the “real world”.  We are constantly told that we cannot get a “good job” without a college degree, but a college education is so ridiculously expensive these days that most of us cannot afford one without going into lots of debt.

Many of you out there know exactly what I am talking about.

Do you have a pile of student loan debt?

I do.

In fact, the total pile of student loan debt in the United States is now over a trillion dollars.

Unfortunately, when a lot of us graduated we found out that the “good jobs” that we were promised simply were not there.  Last year, 53 percent of all Americans with a bachelor’s degree under the age of 25 were either unemployed or underemployed.

So many young adults are starting out life already enslaved to a gigantic pile of debt but without a good job that will enable them to comfortably service that debt.

The really “lucky” graduates from the top schools flock to Wall Street so that they can make lots of money running the debt-based financial system that is enslaving all the rest of us.

Once young people leave school, there are lots of other “debt traps” to fall into.

Once you get out into the “real world”, just about every major purchase is going to involve another pile of debt.

Do you want a house?

That is going to mean more debt.  As I have written about previously, mortgage debt as a percentage of U.S. GDP has more than tripled since 1955.

Do you want a car?

About 70 percent of all vehicle purchases in the U.S. now involve at least some borrowed  money.

Consumer debt is particularly insidious.  Our stores are filled with very beautiful things, and it is really easy to buy a bunch of stuff and “put it on plastic”.

Since 1971, the total amount of consumer debt in the United States has increased by 1700%, and approximately 46% of all Americans now carry a credit card balance from month to month.

We just keep plunging ourselves deeper and deeper into debt slavery.  Most Americans never seem to learn.  Over the past 30 years those of us in the “bottom 95 percent” have seen our financial shackles just get heavier and heavier.  The following is from a recent CNN article….

In 1983, the bottom 95% had 62 cents of debt for every dollar they earned, according to research by two International Monetary Fund economists. But by 2007, the ratio had soared to $1.48 of debt for every $1 in earnings.

When you pile up lots of debt, you aren’t just working for yourself anymore.  You are also working for those that you owe the debts to.  Your hard work and sweat end up making them a lot wealthier.

Our state and local governments have enslaved themselves to debt as well.  Total state and local government debt is now about 8 times higher than it was 30 years ago.

At this point, many U.S. cities are in very serious trouble with debt.  In fact, another California municipality has just declared bankruptcy.  On Monday, the town of Mammoth Lakes announced that it has formally filed for bankruptcy.

But this is just the beginning.

The truth is that we are a nation that is absolutely drowning in debt and we need a lot more money in order to keep up with all of this debt.

But there is a problem.

In our debt-based financial system, the creation of more money actually creates more debt.

So how are we ever going to get out of the hole that we are in?

Today, the U.S. national debt is more than 5000 times larger than it was when the Federal Reserve was first created back in 1913.  This is why it is so important for the American people to realize that the Federal Reserve is a perpetual debt machine.

The Federal Reserve system itself does not make much money.  The vast majority of the profits that the Federal Reserve makes are transferred back to the U.S. government.

But that is not what the Federal Reserve was created to do.

What the Federal Reserve was created to do was to set up a system where the U.S. government would borrow money and pay interest on it instead of just creating the money itself.

Last year the U.S. government spent more than 454 billion dollars just on interest on the national debt.  That is a form of national slavery.  454 billion dollars that we worked very hard to make was taken from us and transferred into the pockets of some very wealthy people.

The truth is that the U.S. government does not actually need to ever borrow a single penny from anyone.  As a sovereign government it could directly issue money into circulation.

But lending money to governments is very, very profitable and it is the kind of thing that wars are fought over.

For example, the First Bank of the United States (the very first central bank in our country) was established in 1791 and the charter for that bank expired in 1811 and was not renewed.

So what happened the very next year?

The War of 1812.  During that war Washington D.C. was actually captured and burned.  The final major battle of that war was the battle of New Orleans which took place on January 8, 1815.

So what happened the very next year?

President James Madison signed the charter for the Second Bank of the United States on April 10, 1816.

The goal has always been to enslave the American people.  Debt is used to enslave us individually, it is used to enslave our businesses, it is used to enslave our state and local governments and it is used to enslave our federal government.

So are you a slave of the system?

If you are in debt, then you are a slave at least to some degree.

Unfortunately, the global financial system has become so saturated with debt that it is now on the verge of collapse.  It appears that things could be getting significantly worse during the second half of this year, and the years ahead do not look very promising at all.

Sadly, most Americans do not see any of this coming.  In fact, a new CNN/ORC International poll has found that about 60 percent of all Americans think that the U.S. economy will be in good shape next year.

Can you believe that?

The mainstream media has done a fantastic job of brainwashing the general public.

The “blue team” is convinced that if Barack Obama wins the election and the Democrats take control of both houses of Congress that prosperous times are on the way.

The “red team” is convinced that if Mitt Romney wins the election and the Republicans take control of both houses of Congress that the U.S. economy will be put back on the right track.

Well, the truth is that there is not going to be a solution to our economic problems on the national level.  We have accumulated the greatest mountain of debt in the history of the world, and it is going to collapse and crush us no matter which brand of corrupt politicians we sent to Washington.

On July 4th, millions upon millions of Americans will celebrate “Independence Day” with cookouts, parades and fireworks without ever realizing the true nature of what is really going on.

Hopefully we can get more of them educated while there is still time

Alert! Long Term Dollar Trend Down, Commodities Way Up.

Published on Jul 1, 2012 by

In this video I discuss the long term trends for the dollar and commodities.

LaRouche: We Are Now Living on the Brink of Hell

from laroucheyouth:

Today, Lyndon LaRouche delivered extremely sobering remarks to his associates in light of the complete breakdown of the trans-Atlantic community, stating that we are now living at the brink of hell.

IMPORTANT UPDATE: Market Down 275, Gold Up $61, Will this Continue?

Friday, 01 June 2012 00:00
Futuremoneytrends.com

The Trend we have been predicting all year long is happening right now!

All year long we have been predicting that the FED wanted the markets to fall, specifically gold, silver, and oil. The precious metals because they are an inflation warning, and oil because it spreads price inflation to all areas of the economy. However, we said that any dips in the precious metals or mining shares should be treated as gifts as we knew the money printing was just around the corner.
We know for certain (100%) that the Federal Reserve (FED) has to print to keep the illusion of a recovery going and the Federal Government (The Beast) has to borrow in order to keep the government handouts going to pretend that we are on the road to recovery in an election year.
So for us, this entire market downturn and all these FED statements about no more QE is just one big FED head fake. We have been calling their bluff throughout the entire year and we believe we are weeks or even possibly days from being vindicated.
In our opinion, QE is IMMINENT!!!
The market is down 275 points today on ugly unemployment data; however, gold is surging right now as the smart money knows what we do, the big print is coming! One of the key indicators for us is that silver is also up with gold, if this was just a fear trade, gold would be up and silver would be down due to its industrial uses. Yet the smart money knows that a major devaluation of the U.S. dollar is about to happen this year!
Our Thoughts on the Unemployment Numbers Released This Morning
Despite shrinking the workforce to 1980 levels and having the birth death model create 204,000 jobs, yes that’s right, today’s BLS report stated that their guessing model of how many jobs could have been created was over 200,000 for the month of May. This is the same model that created jobs throughout 2008 and 2009 only to finally be revised down by millions years later. In the end, today’s numbers still came out ugly as there is NO driver for jobs and the baby boomer demographics are beginning to effect the consumer driven economy.
Gallup, who polls Presidential races and is usually off by about 1%, has the real unemployment rate around 19%. Who are we to believe, the BLS or a private company that gets paid and makes a profit for being accurate?
Gold Stocks SURGE as Market Collapses
Right now even though there is a huge sell off in the stock market, Gold stocks are up BIG! NEM, for example, is up 8% as we speak.
This weekend we will be researching to bring you a gold company that has been beaten up lately (along with ALL gold stocks) that we think may have significant upside potential.
Don’t feel like you are the only one, NOT one person in the mining sector is a winner, even the big guys have been trading like shit!
It is important to know the trends and the end game, otherwise you will get shaken out by the FED’s deception and market manipulation.
Please read this quote below from our good friend Mike Krieger, if you get this you will understand why the opportunity in 2012 is greater than it has ever been for gold investors, especially those in mining shares as the mining shares have been beaten down hard all year. Even the biggest producers in the world are down nearly 50% in the past year.
“If I am correct, and the U.S. economy itself is now in the early stages of what will probably turn into a serious economic slowdown, then it will not be easily stopped with incremental Central Bank policies.  The fact that they have waited this long and the fact that the global economy is in the midst of a serious slowdown tells me one thing.  They are way behind the curve and by the time they realize this it will be too late to stem the momentum.  That said, I do expect them to respond and the fact that things will have gotten much worse than they expected will mean a major response.  I’m not talking operation twist part deux.  I mean a serious print.  Potentially the BIG ONE.

In this sort of scenario, the inflation hedges will sniff it out first.  So I would expect the precious metals to bottom well before everything else does.  In fact, we could be looking at a situation where the metals and their shares rebound sharply while the U.S. equity markets continue to decline.  This could last many months.  I want to point out that the GDX bottomed in October 2008 and was up 100% before the S&P 500 bottomed in March 2009.  So over a five month period the GDX doubled while the SPX declined 25%.  Don’t think that can happen again?”

 -Economist Mike Krieger of LibertyBlitzKrieg.com

 

Myths and Realities of Returning to a Gold Standard

by Terry Coxon, Casey Research:

 

What It Would Fix

Here’s what a gold standard would do: threaten the individuals who run monetary institutions (such as the Federal Reserve) with embarrassment for bad behavior. It narrows their opportunities for dodging responsibility.

Every issuer of money promises to protect its value. The promise is the same whether it is made on behalf of a fiat currency or for a currency backed by gold, silver, copper, other currencies or seashells or pelts. A gold standard doesn’t prevent an issuer from breaking the promise. It merely makes it difficult for the issuer to pretend that it is keeping the promise when year after year it isn’t.

With a fiat money system, you don’t need any special talent in order to deceive the public with insincere talk about avoiding inflation and protecting the money’s purchasing power. The years-long lag between printing and the effect on prices makes deception easy.

Read More @ CaseyResearch.com

Bilderberg 2012: Photos

Infowars.com
June 1, 2012

We will post photos as they arrive. Send your photos to kurt@infowars.com


Heather Reisman – Founder and chief executive of the Canadian retail chain Indigo Books and Music. Photo by Shepard Ambellas


Jutta Urpilainen – Current Minister of Finance of Finland. Photo by Shepard Ambellas


Alison Redford – Premier of Alberta, Canada. Photo by Shepard Ambellas


Kevin Warsh – Visiting fellow at Stanford University’s Hoover Institution and former Federal Reserve Board of Governors Member. Photo by Marcus Gabrel


Jacob Wallenberg (and his wife) – Swedish Banker and Industrialist. Shepard Ambellas


Henri de Castries – Chairman and CEO of AXA (France). Photo by Shepard Ambellas


Cheng Li – Director of Research and Senior Fellow, John L Thornton China Center, Brookings Institution. Photo by Hannah Borno.

Ying Fu – Vice Minister of Foreign Affairs. (China) Photo by Hannah Borno.


The Destructionist.

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25 Signs That The Smart Money Has Completely Written Off Southern Europe

Michael Snyder
The Economic Collapse
Tuesday, May 29, 2012

When it comes to the financial world, it is important to listen to what the “smart money” is saying, but it is much more important to watch what the “smart money” is actually doing.


The ultra-wealthy and those that run the biggest financial institutions on the planet are far more “connected” to what is really going on in financial circles behind the scenes than you and I could ever hope to be.  But if we watch their behavior we can get clues as to what they think is about to happen.  As is the case with so many other things, if you want to figure out what is really going on in Europe, just follow the money.  And right now, money is rapidly flowing out of southern Europe and into northern Europe.  In fact, some large corporations are now pulling the money that they make in Greece during the day out of the country every single night.  It is becoming increasingly clear that the upper crust of the financial world considers a Greek exit from the euro to be “inevitable” and that it also considers much of the rest of southern Europe to be a lost cause.  Unfortunately, a financial collapse across southern Europe is also likely to trigger another devastating global recession.

Even though all the warning signs were there, very few people actually expected to see the kind of financial crisis that we saw back in 2008.

But it happened.

Now very few people actually expect another “Lehman Brothers moment” to happen in Europe although the warning signs are all around us.

Sadly, most people never want to believe the truth until it is too late.

The following are 25 signs that the smart money has completely written off southern Europe….

#1 Lloyd’s of London is publicly admitting that it is rapidly making preparations for a collapse of the eurozone.

#2 According to the New York Times, top global law firms are advising their clients to withdraw all cash and all other liquid assets from Greece….

So their advice is blunt: Remove cash and other liquid assets from Greece and prepare to take a short-term hit on any other investments.

“My personal view is that it is irrational for anyone, whether a corporation or an individual, to be leaving money in Greek financial institutions, so long as there is a credible prospect of a euro zone exit,” said Ian M. Clark, a partner in London for White & Case, a global law firm that has a team of 10 lawyers focusing on the issue.

#3 According to CNBC, large numbers of wealthy Europeans have been moving their money from banks in southern Europe to banks in northern Europe….

Financial advisers and private bankers whose clients have accounts too large to be covered by a Europe-wide guarantee on deposits up to 100,000 euros ($125,000), are reporting a “bank run by wire transfer” that has picked up during May.

Much of this money has headed north to banks in London, Frankfurt and Geneva, financial advisers say.

“It’s been an ongoing process but it certainly picked up pace a couple of weeks ago We believe there is a continuous 2-3 year bank run by wire transfer,” said Lorne Baring, managing director at B Capital, a Geneva-based pan European wealth management firm.

#4 The President of the Federal Reserve Bank of Philadelphia, Charles Plosser, says that the Federal Reserve is advising money market funds to reduce their exposure to Europe….

The Fed and regulators have tried to stress to money market funds, for example, to reduce their exposure to European financial institutions.

#5 The yield on 10-year Spanish bonds is rapidly moving toward the very important 7 percent level.

#6 Many multinational corporations that operate in Greece are now pulling their funds out of the country on a nightly basis.

#7 Juergen Fitschen, the co-CEO of Deutsche Bank, has publicly proclaimed that Greece is a “failed state“.

#8 The head of the Swiss central bank has admitted that Switzerland is developing an “action plan” for how it will handle the collapse of the eurozone.

#9 The European Commission has urged all member states to develop contingency plans for a Greek exit from the euro….

Last week, the European Commission said that it has asked member states to make plans to deal with a potential Greek exit, ahead of a second round of Greek elections on 17 June.

#10 PIMCO CEO Mohamed El-Erian says that a Greek exit from the euro “is probably inevitable“.

#11 Spanish stocks continue to drop like a rock.

#12 The percentage of bad loans on the books of Spanish banks has reached an 18 year high.

#13 Late on Friday, the Spanish government announced that banking giant Bankia is going to need a 19 billion euro bailout.

#14 Standard & Poor’s downgraded the credit ratings of five more Spanish banks to junk status on Friday.

#15 Moody’s downgraded the credit ratings of 16 Spanish banks back on May 17th.

#16 According to the Telegraph, “struggling European banks could be seized and controlled by Brussels as part of secret plans being drawn up”.

#17 The head of equity strategy at Societe Generale, Claudia Panseri, is warning that European stocks could fall by as much as 50 percent if Greece leaves the euro.

#18 Economist Marc Faber is warning that there is now a “100% chance” that there will be another global recession.

#19 There seems to be an increasing attempt to pin the problems that Greece is now experiencing on the behavior of Greek citizens.  The following are some of the shocking things that the head of the IMF, Christine Lagarde, said in a recent interview….

“Do you know what? As far as Athens is concerned, I also think about all those people who are trying to escape tax all the time. All these people in Greece who are trying to escape tax.”

Even more than she thinks about all those now struggling to survive without jobs or public services? “I think of them equally. And I think they should also help themselves collectively.” How? “By all paying their tax. Yeah.”

It sounds as if she’s essentially saying to the Greeks and others in Europe, you’ve had a nice time and now it’s payback time.

“That’s right.” She nods calmly. “Yeah.”

And what about their children, who can’t conceivably be held responsible? “Well, hey, parents are responsible, right? So parents have to pay their tax.”

#20 According to the Telegraph, an unidentified member of Angela Merkel’s cabinet has stated that Germany simply will not “pour money into a bottomless pit”.

#21 This week the Bank of England is holding a “secret summit” of global central bankers to address the European financial crisis….

The summit will be dominated by central bankers including the host, Sir Mervyn King, Governor of the Bank of England. Mario Draghi, president of the European Central Bank, and Zhou Xiaochuan, governor of the People’s Bank of China, have been invited.

#22 According to Zero Hedge, a major German newspaper is reporting that a Greek exit from the eurozone is a “done deal”….

The Greece-exit is a done deal: According to the German economic news from financial circles EU and the ECB have abandoned the motherland of democracy as a euro member. The reason is, interestingly, not in the upcoming elections – these are basically become irrelevant. The EU has finally realized that the Greeks have not met any agreements and will not continue not to meet them. A banker: “We helped with the Toika. The help of the troika was tied to conditions. Greece has fulfilled none of the conditions, and has been for months now.”

#23 According to CNBC, preparations are quietly being made to print up and distribute new drachmas should the need arise….

British banknote printer De La Rue is drawing up plans to print new drachma notes in the event of a Greek euro exit, according to an industry source with knowledge of the matter.

The world’s biggest security firm G4S expects to be involved in distributing notes around the country.

#24 Citibank’s chief economist Willem Buiter is warning that any new currency issued by the Greek government could “immediately fall by 60 percent“.

#25 Reuters is reporting that a planning memo exists that suggests that Greece could receive as much as 50 billion euros to “ease its path” out of the eurozone.

If Greece does leave the eurozone, the cost to the rest of Europe is going to be astronomical.  The following is from a recent article by John Mauldin….

The debate among very knowledgeable individuals and institutions as to the future of Europe is intense. There are those who argue that the cost of breaking up the eurozone, even allowing Greece to leave, is so high that it will not be permitted to happen. Estimates abound of a cost of €1 trillion to European banks, governments, and businesses, just for the exit of Greece. And that does not include the cost of contagion as the markets wonder who is next. Keeping Spanish and Italian interest-rate costs at levels that can be sustained will cost even more trillions, as not just government debt but the entire banking system is at stake. Not to mention the pension and insurance funds. If the cost of Greece leaving is €1 trillion, then who can guess the cost of Spain or Italy?

As I have written about previously, a Greek exit from the euro would cause the “bank jogs” that are already happening in Spain and Italy to accelerate.

The problem in Europe is not just government debt.  The truth is that the entire European financial system is in danger of melting down.

Unfortunately, there are no more grand solutions on the horizon and so things are going to continue to get worse for Europe.

As I have talked about so many times, the next wave of the economic collapse is going to start in Europe, but it is going to deeply affect the entire globe.

During the next major economic downturn, the official unemployment rate in the United States will rise well up into the double digits.

Once that happens, perhaps many more Americans will finally figure out that they should have been paying much more attention to what was taking place in Europe.

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