Fair or not, like it or not, the US Fed is currently the most powerful financial organization on this planet. Today, during a press conference after a two-day meeting of the Fed (FOMC), the chairman of the Fed took almost all markets down. Precious metals, equities and bonds went sharply lower. There was something going up though: the dollar and the 10 year interest rate.
Author Archive: Darryl Schoon
The international monetary system based on credit and debt is, in truth, a confidence game in which gold was once a critical component. But when ties between paper money and gold were severed in 1971, confidence in the bankers’ paper money began to falter; and, today we are witness to what happens when confidence in a global confidence game begins to evaporate.
Today, the West and its bankers are desperately hoping to prevent a hyperinflationary collapse of paper money should confidence in fiat paper money evaporate. Russia and China, however, are preparing for that very day; they are stockpiling gold as fast as they can in anticipation of a coming currency crisis triggered by the West’s increasingly suspect paper money.
Erroneously believing themselves the cause of their good fortune, Americans continue to deny a changing world In 2006, when I began writing my book on the coming economic collapse, I didn’t know what the Fed would do regarding liquidity. At the time, whether the Fed would raise or lower interest rates was a soon-to-be multi-trillion dollar question. In the past, central banks walked a tightrope between higher and lower interest rates. Raise rates too high and economies would slow and/or contract. Keep rates are too low and inflation would result. Today, the central bankers’ monetary tightrope has become a gangplank. On December 12th, Fed Chairmen Ben Bernanke announced the Fed [...]
No matter what confidence game is being run, confidence is the necessary pre-requisite. This is why confidence indicators are so closely monitored by central bankers. If consumers and businesses lack confidence, they will not partake of the central banker’s credit; a necessary step in the indebting of otherwise willing victims. The credit trap is at the core of the bankers’ ponzi-scheme of credit and debt; and although today’s markets are awash with liquidity, bankers are increasingly loath to lend and customers are increasingly reluctant to borrow. Central bankers are well aware of the precarious health of their illicit franchise. Credit and debt-based economies must constantly expand to pay constantly compounding [...]
It is highly unlikely the Mayan predictions of the end of the world referred to the bankers’ world of credit and debt. Nonetheless, with only one month remaining until December 21, 2012—the end date of the Mayan 5,125 year Mesoamerican calendar—the concomitant end of the bankers’ 300 year ponzi-scheme of credit and debt should not be dismissed as mere coincidence. The world has entered a paradigm shift of immense proportions; and the collapse of the bankers’ economic world is a part of that shift. The bankers’ credit fueled a 300-year global expansion which transformed the world. The bankers’ credit, however, has now become debt which increasingly cannot be repaid. Economics [...]
De Toqueville’s amazing prediction in 1835 about the destinies of Russia and the Anglo-Americans was every bit the equal to those made by his illustrious French predecessor, Michel de Nostradame. “There are now two great nations in the world, which starting from different points, seem to be advancing toward the same goal: the Russians and the Anglo-Americans… Each seems called by some secret design of Providence one day to hold in its hands the destinies of half the world.” in “Democracy in America”, Alexis de Toqueville, 1835 In the 1830s, Russiawas a czarist empire and the UShad fought its war of independence from Englandonly 60 years before. The idea of [...]
The question of when gold’s long awaited ascent will happen is not without precedence. A similar question is still being asked by the Jews concerning the appearance of the Messiah. Prediction has always been an inexact science. TIMING MARKETS AND TIMING GOLD In my book, Time of the Vulture, How to Survive the Crisis and Prosper in the Process, I quote market timer and industry insider, Rick Ackerman: …the stock market is a rigged game… It really is just a giant carny game, one in which there are only predator and prey, and precious few big winners. Wall Street’s best and brightest may have more teeth and fewer tattoos than [...]
STAGE 3: The price of gold is subject to increasing highs and lows and large investment funds move in and out of gold as global uncertainties wax and wane, a sign that gold is increasingly a haven in uncertain times. pp. 151-152, Time of the Vulture: How to Survive the Crisis and Prosper in the Process, DRS, 3rd ed., 2012 In How to Survive the Crisis and Prosper in the Process (3rd ed., 2012) I describe the five stages of gold. When I began writing the book in 2006, gold was in Stage 2. In 2007, gold entered Stage 3 where speculators and investment funds become a factor the increasingly [...]
Traditionally, when economies expanded stocks outperformed bonds; but these aren’t traditional times and although economies have expanded, over the past 30 years bonds have outperformed stocks. Since 1981 the return on long-term government bonds averaged 11.5 %. The S&P stock index averaged 10.8 %; and, since 2000, the returns of stocks over bonds have widened. A major reason why bonds have done better is that since 1982 government bond yields have been declining; and when bond yields decline, bond profits rise. Yahoo Finance: From Dec. 31, 1999, through May 29, 2012, the Barclays Capital U.S. Aggregate bond index – which covers the investment-grade bond market, including government and corporate bonds [...]
The bankers have drawn a line in the sand at $1900 for gold. The sand, however, is far more important than the line. In 1949, in his classic treatise, Human Action, Ludwig von Mises, the noted Austrian economist wrote: All present-day governments are fanatically committed to an easy money policy. As has been mentioned already, the British Government has asserted that credit expansion has performed “the miracle…of turning a stone into bread.” The British government’s belief that credit expansion can produce the economic equivalent of turning stone into bread is similar to heroin’s amazing ability to turn pain into pleasure; and, while both may do so, the use of such [...]
On September 13th, the Fed announced QE3, a policy of open-ended bond purchases which would add $1 trillion annually to the Fed’s balance sheet. The Fed’s decision to provide liquidity ad infinitum, i.e. QE etc, was framed in reasonable and carefully chosen language: …These actions, which together will increase the Committee’s holdings of longer-term securities by about $85 billion each month through the end of the year, should put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative… http://www.federalreserve.gov/newsevents/press/monetary/20120913a.htm The measured wording gave the Fed sufficient cover to mask its increasingly desperate condition, i.e. how to keep its fatally-wounded credit and [...]
Stagflation’s appearance in the 1970s was like an outbreak of three-headed children. It wasn’t supposed to happen. Prevailing wisdom—an oxymoron among economists—held that high employment and rising prices were economic handmaidens; and that, conversely, slowing economies and inflation were mutually exclusive In the 1970s, for the first time in capitalism’s history stagflation appeared, i.e. prices rose and economic growth stagnated; and, while economists would search for reasons to explain the apparently inexplicable, it was only because they avoided the obvious that they did not find the answer. In August 1971, President Nixon upon the advice of Milton Friedman—the same Milton Friedman who erroneously taught Ben Bernanke economic contractions can be [...]