Category Archives: HyperInflation
April 24, 2013
By Paul Craig Roberts
For Americans, financial and economic Armageddon might be close at hand. The evidence for this conclusion is the concerted effort by the Federal Reserve and its dependent financial institutions to scare people away from gold and silver by driving down their prices.
When gold prices hit $1,917.50 an ounce on August 23, 2011, a gain of more than $500 an ounce in less than eight months, capping a rise over a decade from $272 at the end of December 2000, the Federal Reserve panicked. With the United States dollar losing value so rapidly compared to the world standard for money, the Federal Reserve’s policy of printing $1T annually in order to support the impaired balance sheets of banks and to finance the federal deficit was placed in danger. Who could believe the dollar’s exchange rate in relation to other currencies when the dollar was collapsing in value in relation to gold and silver?
The Federal Reserve realized that its massive purchase of bonds in order to keep their prices high (and thus interest rates low) was threatened by the dollar’s rapid loss of value in terms of gold and silver. The Fed was concerned that large holders of U.S. dollars, such as the central banks of China and Japan and the OPEC sovereign investment funds, might join the flight of individual investors away from the dollar, thus ending in the fall of the dollar’s foreign exchange value and thus decline in U.S. bond and stock prices.
Intelligent people could see that the U.S. government could not afford the long and numerous wars that the neoconservatives were engineering or the loss of tax base and consumer income from off-shoring millions of U.S. middle-class jobs for the sake of executive bonuses and shareholder capital gains. They could see what was in the cards, and began exiting the dollar for gold and silver.
Central banks are slower to act. Saudi Arabia and the oil emirates are dependent on U.S. protection and do not want to anger their protector. Japan is a puppet state that is careful in its relationship with its master. China wanted to hold on to the American consumer market for as long as that market existed. It was individuals who began the exit from the U.S. dollar.
When gold topped $1,900, Washington put out the story that gold was a bubble. The presstitute media fell in line with Washington’s propaganda. “Gold looking a bit bubbly” declared CNN Money on August 23, 2011.
The Federal Reserve used its dependent “banks too big to fail” to short the precious metals markets. By selling naked shorts in the paper bullion market against the rising demand for physical possession, the Fed was able to drive the price of gold down to $1,750 and keep it more or less capped there until recently, when a concerted effort on April 2-3 drove gold down to $1,557 and silver, which had approached $50 per ounce in 2011, down to $27.
The Federal Reserve began its April Fool’s assault on gold by sending the word to brokerage houses, which quickly went out to clients, that hedge funds and other large investors were going to unload their gold positions and that clients should get out of the precious metal market prior to these sales. As this inside information was the government’s own strategy, individuals cannot be prosecuted for acting on it. By this operation, the Federal Reserve, a totally corrupt entity, was able to combine individual flight with institutional flight. Bullion prices took a big hit, and bullishness departed from the gold and silver markets. The flow of dollars into bullion, which threatened to become a torrent, was stopped.
For now it seems that the Fed has succeeded in creating wariness among Americans about the virtues of gold and silver, and thus it has extended the time that it can print money to keep the house of cards standing. This time could be short or it could last a couple of years.
For the Russians and Chinese, whose central banks have more dollars than they want, and for the 1.3B Indians in India, the low dollar price for gold that the Federal Reserve has engineered is an opportunity. They see the opportunity that the Fed has given them to purchase gold at $350-$400 an ounce less than two years ago as a gift.
The Fed’s attack on bullion is an act of desperation that, when widely recognized, will doom its policy.
The Fed is creating 1T new dollars per year, but the world is moving away from the use of the dollar for international payments and, thus, as reserve currency. The result is an increase in supply and a decrease in demand. This means a falling exchange value of the dollar, domestic inflation from rising import prices and a rising interest rate and collapsing bond, stock and real estate markets.
The Federal Reserve’s orchestration against bullion cannot ultimately succeed. It is designed to gain time for it to be able to continue financing the federal budget deficit by printing money and also to keep interest rates low and debt prices high in order to support the banks’ balance sheets.
When the Fed can no longer print due to dollar decline which printing would make worse, U.S. bank deposits and pensions could be grabbed in order to finance the federal budget deficit for a couple of more years. Anything to stave off the final catastrophe.
By its obvious and concerted attack on gold and silver, the U.S. government could not give any clearer warning that trouble is approaching. The values of the dollar and of financial assets denominated in dollars are in doubt.
How the Fed Tanked Gold & Silver
By Paul Craig Roberts
I was the first to point out that the Federal Reserve was rigging all markets, not merely bond prices and interest rates, and that the Fed is rigging the bullion market in order to protect the U.S. dollar’s exchange value, which is threatened by the Fed’s quantitative easing. With the Fed adding to the supply of dollars faster than the demand for dollars is increasing, the price or exchange value of the dollar is set up to fall.
A fall in the dollar’s exchange rate would push up import prices and, thereby, domestic inflation, and the Fed would lose control over interest rates. The bond market would collapse and with it the values of debt-related derivatives on the “banks too big to fail” balance sheets. The financial system would be in turmoil and panic would reign.
Rapidly rising bullion prices were an indication of loss of confidence in the dollar and were signaling a drop in the dollar’s exchange rate. The Fed used naked shorts in the paper gold market to offset the price effect of a rising demand for bullion possession. Short sales that drive down the price, trigger stop-loss orders that automatically lead to individual sales of bullion holdings once their loss limits are reached.
According to bullion trader and whistle-blower Andrew Maguire, on Friday, April 12, the Fed’s agents hit the market with 500 tons of naked shorts. Normally, a short is when an investor thinks the price of a stock or commodity is going to fall. He wants to sell the item in advance of the fall, pocket the money, and then buy the item back after it falls in price, thus making money on the short sale. If he doesn’t have the item, he borrows it from someone who does, putting up cash collateral equal to the current market price. Then he sells the item, waits for it to fall in price, buys it back at the lower price and returns it to the owner who returns his collateral. If enough shorts are sold, the result can significantly drive down the market price.
A naked short is when the short seller does not have or borrow the item that he shorts, but sells shorts regardless. In the paper gold market, the participants are betting on gold prices and are content with the monetary payment. Therefore, generally, as participants are not interested in taking delivery of the gold, naked shorts do not need to be covered with the physical metal. In other words, with naked shorts, no physical metal is actually sold.
Consider the 500 tons of paper gold sold on April 12. At the beginning gold price that day of about $1,550, that 500 tons comes to $24.8B. Who has that kind of money?
What happens when 500 tons of gold sales are dumped on the market at one time or on one day? It drives the price down. Investors who want to get out of large positions would spread sales out over time so as not to lower their sales proceeds. The sale took gold down by about $73 per ounce. That means the seller or sellers lost up to $73 dollars 16 million times, or $1.2B. [Over the next two days it dropped $200 per ounce. That equals a $3.2B fall.—Ed.]
Who can afford to lose that kind of money? Only a central bank that can print it.
Paul Craig Roberts is a former assistant undersecretary of the U.S. Treasury and former associate editor of The Wall Street Journal. He is the author of many books including The Tyranny of Good Intentions, Alienation and the Soviet Economy, How the Economy Was Lost and others.
- The Assault On Gold – Paul Craig Roberts (paulcraigroberts.org)
19.11.2012 By Xavier Lerma
Putin in 2009 outlined his strategy for economic success. Alas, poor Obama did the opposite but nevertheless was re-elected. Bye, bye Miss American Pie. The Communists have won in America with Obama but failed miserably in Russia with Zyuganov who only received 17% of the vote. Vladimir Putin was re-elected as President keeping the NWO order out of Russia while America continues to repeat the Soviet mistake.
After Obama was elected in his first term as president the then Prime Minister of Russia, Vladimir Putin gave a speech at the World Economic Forum in Davos, Switzerland in January of 2009. Ignored by the West as usual, Putin gave insightful and helpful advice to help the world economy and saying the world should avoid the Soviet mistake.
Recently, Obama has been re-elected for a 2nd term by an illiterate society and he is ready to continue his lies of less taxes while he raises them. He gives speeches of peace and love in the world while he promotes wars as he did in Egypt, Libya and Syria. He plans his next war is with Iran as he fires or demotes his generals who get in the way.
Putin said regarding the military,
“…instead of solving the problem, militarization pushes it to a deeper level. It draws away from the economy immense financial and material resources, which could have been used much more efficiently elsewhere.”
Well, any normal individual understands that as true but liberalism is a psychosis . O’bomber even keeps the war going along the Mexican border with projects like “fast and furious” and there is still no sign of ending it. He is a Communist without question promoting the Communist Manifesto without calling it so. How shrewd he is in America. His cult of personality mesmerizes those who cannot go beyond their ignorance. They will continue to follow him like those fools who still praise Lenin and Stalin in Russia. Obama’s fools and Stalin’s fools share the same drink of illusion.
Reading Putin’s speech without knowing the author, one would think it was written by Reagan or another conservative in America. The speech promotes smaller government and less taxes. It comes as no surprise to those who know Putin as a conservative. Vladimir Putin went on to say:
“…we are reducing taxes on production, investing money in the economy. We are optimizing state expenses.
The second possible mistake would be excessive interference into the economic life of the country and the absolute faith into the all-mightiness of the state.
There are no grounds to suggest that by putting the responsibility over to the state, one can achieve better results.
Unreasonable expansion of the budget deficit, accumulation of the national debt – are as destructive as an adventurous stock market game.
During the time of the Soviet Union the role of the state in economy was made absolute, which eventually lead to the total non-competitiveness of the economy. That lesson cost us very dearly. I am sure no one would want history to repeat itself.”
President Vladimir Putin could never have imagined anyone so ignorant or so willing to destroy their people like Obama much less seeing millions vote for someone like Obama. They read history in America don’t they? Alas, the schools in the U.S. were conquered by the Communists long ago and history was revised thus paving the way for their Communist presidents. Obama has bailed out those businesses that voted for him and increased the debt to over 16 trillion with an ever increasing unemployment rate especially among blacks and other minorities. All the while promoting his agenda.
“We must seek support in the moral values that have ensured the progress of our civilization. Honesty and hard work, responsibility and faith in our strength are bound to bring us success.”- Vladimir Putin
The red, white and blue still flies happily but only in Russia. Russia still has St George defeating the Dragon with the symbol of the cross on its’ flag. The ACLU and other atheist groups in America would never allow the US flag with such religious symbols. Lawsuits a plenty against religious freedom and expression in the land of the free. Christianity in the U.S. is under attack as it was during the early period of the Soviet Union when religious symbols were against the law.
Let’s give American voters the benefit of the doubt and say it was all voter fraud and not ignorance or stupidity in electing a man who does not even know what to do and refuses help from Russia when there was an oil spill in the Gulf of Mexico. Instead we’ll say it’s true that the Communists usage of electronic voting was just a plan to manipulate the vote. Soros and his ownership of the company that counts the US votes in Spain helped put their puppet in power in the White House. According to the Huffington Post, residents in all 50 states have filed petitions to secede from the Unites States. We’ll say that these Americans are hostages to the Communists in power. How long will their government reign tyranny upon them?
Russia lost its’ civil war with the Reds and millions suffered torture and death for almost 75 years under the tyranny of the United Soviet Socialist Republic. Russians survived with a new and stronger faith in God and ever growing Christian Church. The question is how long will the once “Land of the Free” remain the United Socialist States of America? Their suffering has only begun. Bye bye Miss American Pie! You know the song you hippies. Sing it! Don’t you remember? The 1971 hit song by American song writer Don McLean:
“And, as I watched him on the stage my hands were clenched in fists of rage.
No angel born in Hell could break that Satan’s spell
And, as the flames climbed high into the night to light the sacrificial rite, I saw…
Satan laughing with delight the day the music died
He was singing, bye bye Miss American Pie
Drove my Chevy to the levee, but the levee was dry
Them good ol’ boys were drinking whiskey and rye, singing…
This’ll be the day that I die
This’ll be the day that I die
So, the question remains:
How long will America suffer and to what depths?
- Pravda: Bye, Bye, Miss American Pie… The Communists Won in America With Obama (thegatewaypundit.com)
- Pravda: Obama re-elected by ‘illiterate society’ (wnd.com)
- Soviet Media “Pravda” Lectures US on Its Choice of Obama (usdailyreview.com)
- Pravda: ‘Communist’ Obama Reelected By ‘Illiterate Society’ (mikesright.wordpress.com)
- Obama’s Soviet Mistake (english.pravda.ru)
- Irony: Russian News Claims ‘Communists Won In America With Obama’ (freedomoutpost.com)