All Major Governments Die by their Own Hand
QUESTION:
“So Deutsche Bank is bankrupt and US investment and commercial banks are at big risk from rising yields, but all the stock prices are still going up because people will trust owning Goldman or Barclays stocks over owning government bonds???”
ANSWER: I seriously doubt that bank stocks will do well. During the Sovereign Debt Crisis of 1931, over 3,000 US banks failed. Roosevelt declared a Bank Holiday. Cash was king. Commodities, including silver, collapsed into its 13 year low in 1932.
It was the devaluation of the dollar that forced inflation just as Japan finally tried but still fails to grasp the real issues suppressing Japan. Roosevelt confiscated gold to make sure he funded his programs with the devaluation of the dollar and to end hoarding. When people do not have confidence, they simply hoard cash and do not invest.
This is why there was such a shortage of money that cities were forced to start printing their own. People accepted this scrip because there was NO OTHER CHOICE! Over 400 cities issued their own money and that too was omitted from the history books.
You can go on Ebay and buy bonds that were defaulted upon as you can with Depression scrip. Government hid the 1931 Sovereign Debt Crisis and it was omitted from the history books as well as Gailbraith’s Great Crash. This was all to support socialism. They lied! Surprised?
The problem is, politicians and economists had to sell the New Deal. Read the newspapers before 1929 and after the New Deal. Previously, stocks rose when interest rates rallied because that was bullish showing there was still a demand for money. Just look at the facts. Rates decline sharply with every depression and recession. They rise with booms. With the New Deal, the thinking flipped and became higher interest rates are bearish BECAUSE government wants to see stocks decline because they now dictate the economy. Analysts did not pick-up the rug and investigate anything. Everyone adopted the New Deal thinking and Keynesianism. They fashioned their theories on facts that were flat out right bogus propaganda, intervention, and manipulations. Sorry, but the confusion people experience today is because they fail to see the world as it is and prefer to see government as the demigod of Wall Street. The analysis is NOT free market, it is what will they do to us next!
The popular myth that gold will rise to $30,000 because of hyperinflation is just nonsense.Germany ended the hyperinflation not with gold, but with real estate backing to the banknotes. Unfortunately, people WANT to believe this stuff about hyperinflation and constantly send me emails only trying to argue points like brainwashed terrorists expecting to get their 72 virgins. Who would want that many anyhow I do not know for they would come with 72 mother-in-laws. There is not a single incident of any established major government going into hyperinflation. They all die by their own hand committing financial suicide because they attack the people in search of wealth precisely as they are doing now. Liquidity is off by 50% from 2007. They are destroying the world economy and are brain-dead. They areTOO STUPID to see that they are collapsing civilization by destroying all the very reasons that brought people together in the first place. Someone from a foreign land cannot open an account with Merrill Lynch and deal with a broker of choice. He must only go through their international desk because they have to report to everyone what he is doing in the USA. There are custodians who will not accept REITS because they do not want the problem of trying to value them for regulators. With every step we take, we are destroying more and more of our economy not to mention losing all our human rights.
Most now target Gold in the 1050 range – You Are Your Biggest Adversary
Most of the forecasts now target gold in the 1050 range. This generally means that we could overshoot and crack $1,000 shifting the sentiment decisively negative. This will be POSITIVE long term for just as the talking heads disbelieved the rise in the Dow even as it made new highs laughing how this time they will not get suckered into buying the top, the same is necessary for gold. If we crack $1,000, the majority will trow in the towel and fight every rally thereafter as a selling opportunity. Bull market unfold when the MAJORITY are bearish, not bullish. This is HOW markets move. The majority become the fuel that ignites the engine causing it to move in the opposite direction. We reach the Phase Transition when the majority suddenly see a bull market, flip, and then expect it will never end. That produces the doubling effect and sets the stage for the crash and burn.
Gold has a daily Bullish Reversal at 1302 on the minor level. That means a rally has to exceed that level on a closing basis to stabilize short-term.
Never punish a people for the sins of their political leaders
COMMENT:
Marty – You are correct I believe in regards to Germany during the 1919-1923 period and even beyond…It was taken over by the Bolsheviks. You’ve alluded to the revolutionary Marxist takeover and government in Germany at this time…a fact many people probably aren’t aware of. Also, what many don’t realize is that CHAOS reigned in Germany after WW1. It was NOT business as usual for the German people after the Armistice and Treaty. It was actually worse! It was acontinuation of the war for them. Consider: No navy, no air force, limited arms, limited troops, occupation of the Allied forces, an embargo which killed thousands upon thousands immediately after the war… I mean, one could go and on and make a strong case that hyper-inflation of the currency was an inevitable result of war-like conditions and suffering within Germany for several years after the Great war. It was just about survival, and we have no idea how they suffered.
REPLY: Everything is connected – just follow the money. There was a tremendous punishment imposed upon the German people for the actions of their government. People do not often appreciate that there is never a 100% agreement within any group. Hitler was not elected with a majority. Nevertheless, the punishment inflicted upon the German people by the Allies was inhuman following World War I and not merely led to starvation of citizens, but that laid the seeds for the rise of Hitler. The backlash against the Jews began with the bankers and it was all seen as a conspiracy to many not that strikingly different from today.
Germany is plagued by the nightmare of the hyperinflation and imposes austerity upon Europe that only creates a deepening depression. The misconception of the hyperinflation and the unreasonable reparation payments killed many German citizens, often the weak elderly and children. But again, history does not wish to remember the hardship imposed by the Allies any more than the Annihilation of the American Indians. John Maynard Keynes first was noted for his writing warning about the abuse of the Reparation Payments.
Keynes actually became famous, not for his 1936 General Theory, but for his Economic Consequences of the Peace (1920) and A Revision of the Treaty (1922). These were the real works he argued against at the 1919 peace conference, exposing the absurdity of imposing reparation debt on Germany.
The Germans saw the reparations as unjust extortion imposed upon the people. You can imagine if the USA lost a war and the victor the imposed a tax on everyone for the damaged cause by Washington. The efforts to accommodate the Allies’ demands undermined the government’s legitimacy setting the stage for the communist revolution in Germany. This later led to the rise of Nazism and the coming of a second world war. Keynes seemed to foresee the entire disaster that would unfold. In his 1922 book, he posed the crucial question: “Who believes that the Allies will, over a period of one or two generations, exert adequate force over the German government to extract continuing fruits on a vast scale from forced labor?”
We must always remember that people disagree with their government and as such punishing an entire nation is unjust and will only create future enemies. This is why often when a political leader killed a rival, he also killed his offspring for fear that they will seek vengeance when then become of age. The reparations set the stage for the hyperinflation as any wealth was plundered, and that opened the door for Hitler as resentment of other nations built up among the German people. Never punish a people for the sins of their political leaders.
Using a Multitude of Agencies to Defeat Rights
Thomas Jefferson included among the injuries inflicted by the King in the Declaration of Independence the trick of creating a multitude of agencies. He wrote:
He has erected a multitude of New Offices, and sent hither swarms of Officers to harrass our people, and eat out their substance.
One reason the SEC and CFTC hate my guts is because I warned going back to 1985 that UNLESS they were merged, this competition among agencies would send capital offshore. The biggest hedge fund then was $100 million. They did not listen because each has their own lobbyists to perpetuate their existence. The cost to the taxpayer is huge and the competition decreases control. They have been incapable of every stopping anything right down to MF Global.
Creating a multitude of agencies defeats all democratic principles. As the AP has reported, they can shift responsibility from one agencies to another to hide evidence and to defeat even the Freedom of Information Act. The entire process is a joke. We nee smaller government with one agency not many. There were 7 agencies regulating the CDOs. They all approved them so what is achieved besides higher taxes.