Of all the things we can do to prepare for the coming difficulties, prayer is of utmost importance.  Most of us underestimate the power of the prayer of the righteous.  Not that we are perfect - our righteousness is due to the blood of Christ.

I ask you to consider praying for our leadership, and for our bankers.  Yes, for the bankers who have brought this world to the brink of a major financial collapse.  And while our prayers ultimately end with a call for them to know Jesus, we must also remember that our God is a just God.  Justice and righteousness are spoken of together many times in the Bible.  In Psalm 10, David asked God to judge those who were oppressing the poor…

Psalm 10 - v1 Why do You stand afar off, O LORD? Why do You hide in times of trouble? 2 The wicked in his pride persecutes the poor; Let them be caught in the plots which they have devised. 3 For the wicked boasts of his heart’s desire; He blesses the greedy and renounces the LORD. 4 The wicked in his proud countenance does not seek God; God is in none of his thoughts. 5 His ways are always prospering; Your judgments are far above, out of his sight; As for all his enemies, he sneers at them. 6 He has said in his heart, “I shall not be moved; I shall never be in adversity.”

This describes our money changers of today. Greed and pride.

7 His mouth is full of cursing and deceit and oppression; Under his tongue is trouble and iniquity. 8 He sits in the lurking places of the villages; In the secret places he murders the innocent; His eyes are secretly fixed on the helpless. 9 He lies in wait secretly, as a lion in his den; He lies in wait to catch the poor; He catches the poor when he draws him into his net. 10 So he crouches, he lies low, That the helpless may fall by his strength.

The money changer’s system if full of deceit and oppression.  What steals from the poor more subtly and completely than fiat money? Not just one poor person, but every single poor person in the nation! And their theft and oppression is complete when the system fails.

11 He has said in his heart, “God has forgotten; He hides His face; He will never see.”

This is the manifestation of Ecclesiastes 8:11, “Because the sentence against an evil work is not executed speedily, therefore the heart of the sons of men is fully set in them to do evil.”

12 Arise, O LORD! O God, lift up Your hand! Do not forget the humble. 13 Why do the wicked renounce God? He has said in his heart, “You will not require an account.” 14 But You have seen, for You observe trouble and grief, To repay it by Your hand. The helpless commits himself to You; You are the helper of the fatherless. 15 Break the arm of the wicked and the evil man; Seek out his wickedness until You find none. 16 The LORD is King forever and ever; The nations have perished out of His land. 17 LORD, You have heard the desire of the humble; You will prepare their heart; You will cause Your ear to hear, 18 To do justice to the fatherless and the oppressed, That the man of the earth may oppress no more.”

Just as David prayed, we too should call for God to “break the arm of the wicked and evil man.”  Then, in his brokeness, the wicked too may find God and know Christ.

What is happening in the US Treasury/bond market is amazing, confusing, and likely to end as the next giant bubble pops. Yields on short term US Treasuries are literally almost 0%. Long term yields, which were remaining stubbornly high until about a week ago, have plummeted to lows not seen since the heyday of the housing boom of 2003-2005.

Hmmm. Because the housing bust was the catalyst for our current economic woes, the Harvard and Yale graduates must believe if they can only get long rates back down there, people will start buying houses again. Really - this is the simplistic thinking of our Ivy educated leaders. So they blow the next bubble in the treasury market in order to bring rates down in a last, desperate attempt to turn back the clock and make this bad old bogey man of a credit crisis go away. Sad.

What they have really done is to lure in a great deal of money into US Treasuries. The amount of money flowing into this giant market must be enormous to move it as aggressively has it has moved in the last two weeks. This can mean only one thing. There are way too many people on that side of the boat. And when they decide to head for the exits, it will rock the boat in ways we cannot comprehend. And head for the exits they will.

In the past few weeks, our government has said it will backstop (read bail out) over $8 trillion dollars in bad loans, risky financial entities, commercial paper, and who knows what else. As they begin to have to pay for these bad assets, they can do it one of two ways. 1) tax the people. Good luck in taxing them to cover $2 or $3 trillion dollars within 12 months. 2) sell US Treasuries. Sell. Did you catch that? Sell $2 to $3 trillion in US Treasuries within a 12 to 18 month window (maybe shorter). This during a time when the two largest buyers of treasuries are no longer eager buyers.

China has said it is going to take nearly $600 billion of its reserves and concentrate on developing its internal economy. Also, they will be purchasing 4000 tons of gold. In fact, to convert $600 billion of its reserves into their local currency, they must sell some of the US Treasuries they hold. No buyer in China, in fact they will join the selling campaign at about the same time the US begins to sell their newly printed Treasuries to fund their trillions in bailout and stimulus packages.

The other major buyer over the last few years has been the Middle East, Saudi Arabia in particular. When oil was $100 to $150/bbl, they had all kinds of cash to stash in US Treasuries. Now, with oil sinking toward $40 per barrel, they are cash poor. Sorry, no buyer there either.  So in summary:

• We have an unprecedented supply of US Treasuries coming to market.
• Two of the largest buyers will not be at the table, and one will likely be a net seller.
• The US dollar must fall to help put a floor under the deflationary trends that are in our economy.

This adds up to a perfect storm for US Treasuries and the makings of a typical blow off top of a very large and dangerous bubble. The formation of this bubble is evidence of the growing world wide currency crisis that I have been writing about. As each nation devalues its currency in order to stay liquid and jumpstart its economy, people holding that currency flee to the next “safest” currency. There is a 30 year conditioning of the world markets that says this safe haven is the US Treasury market.

When holders of our debt realize that our Fed is committed to backstopping $10’s of trillions of dollars in insolvent companies, (do you really think they will stop at $8 trillion?) and that the US long ago joined (in fact has led) the devaluation bandwagon, the stampede to the ultimate currency will be breathtaking. The ultimate currency? God’s money - gold and silver.

When will this happen? The time lines I am seeing range from January 2009 through sometime in 2010. As is usually the case, the truth lies somewhere in between. The most sound analysis I see pegs the US dollar crisis somewhere in mid-2009. You will know it has begun when the long term bond yields begin to rise sharply. Interest rates will soar. And with most other currencies discredited by then, there will literally be no place for them to run - except into “stuff”, beginning with the only currency to survive 5000 years of history. That is where we are headed people. 18 months or less.

The entire fiat monetary system is broken beyond repair.  This is evident by the massive amounts of new fiat dollars that must be generated globally just to keep the debt pyramid from collapsing. Good grief people, do not become numb to the numbers you are hearing.  $8 TRILLION dollars in guaranteed debt/losses!  We are traveling the same path that all fiat currencies have travled prior to their demise, only on a much larger scale because in 1971 the entire world kicked the final tie to God’s money out of the global monetary system.

Beginning later this week, I will be posting more on practical suggestions on how to prepare for and navigate through the next few years.  Some will see it as alarmist.  I’m sorry, but it isn’t.  You may not agree with all of my suggestions, and that is OK.  I will propose and you choose what to implement and to what degree.  I cannot be specific because each situation is unique.  However, I can give you ideas and sources to research further to prepare.  So that is what I will do.

I had the privilege of hosting Kevin Swanson’s “Generations” radio program on Wednesday. I consider Kevin to be a friend of mine and a visionary leader the likes of which this country could use a few more of. A permanent link to this program will be posted on the blog in a few days. For now, if you think this would help open someone’s eyes, please pass the link on to them.

Also, I had the privilege of being interviewed on a segment of the Korelin Economics Report with Al Korelin this weekend. Al has asked me to be a regular on his show, so there will be more of these segments coming.

The Lord is opening doors. I’ll continue to walk through them. Your support is appreciated so that I may dedicate more time to efforts like these and the recent seminar in Lawrence, KS.

 

 God's Money or Else [24:58m]: Play Now | Play in Popup | Download

 

 Korelin Economics Report [40:27m]: Play Now | Play in Popup | Download

We all have to be able to laugh, even though this is a very serious time.

Here is something for your post Thanksgiving shopping.

Coupons

“Inasmuch as the great Father has given us this year an abundant harvest of Indian corn, wheat, peas, beans, squashes, and garden vegetables, and has made the forests to abound with game and the sea with fish and clams, and inasmuch as he has protected us from the ravages of the savages, has spared us from pestilence and disease, has granted us freedom to worship God according to the dictates of our own conscience.

Now I, your magistrate, do proclaim that all ye Pilgrims, with your wives and ye little ones, do gather at ye meeting house, on ye hill, between the hours of 9 and 12 in the day time, on Thursday, November 29th, of the year of our Lord one thousand six hundred and twenty-three and the third year since ye Pilgrims landed on ye Pilgrim Rock, there to listen to ye pastor and render thanksgiving to ye Almighty God for all His blessings.”

–William Bradford
Ye Governor of Ye Colony

They finally admitted that a considerable sum of the money they are throwing at the credit crisis is “new money.”

$800 Billion Bet on Consumers

This is the most ridiculous plan I think I have seen.  These guys think they can throw money into the system and people will run to the bank to borrow it.  They are supposed to be smart people.  How can I know the following and they don’t?

1. We are in a recession, heading toward a depression. The consumer is tapped out.  They can’t afford to borrow more.  Those that can, are afraid to take on more debt, and in fact are looking to liquidate debt ahead of the hard times that are coming.
2. With all the borrowing the US Government is going to need to do in order to fund these programs, interest rates will rise, not fall.  The bond market is the next bubble to pop.  This will drive borrowing costs higher, making it more difficult for people to service their debts.  It will be counter productive and will in fact bring results opposite of what their plan hopes to accomplish.  The law of unintended consequences will rear its ugly head again.

This brings the total tab for the bail out of the banks to $5.2 trillion dollars.  Just last week it was $4.3.  Anyone see a parabolic rise beginning in the total cost of these programs?  This is what leads to hyperinflation!

If this is not more evidence that the Fed and US Treasury is all about saving the banking system and throwing the middle class overboard, I do not know what evidence you need.  The lie of “we must save the banks to save the economy” has taken on new absurd twists.

Furthermore, I hope you now understand that our monetary system is not simply a fiat system - money created by man.  But it is a debt based fiat monetary system.  In order for it to survive, credit must continue to be created.  If our country repents from its use of debt, becomes more prudent and begins to save and pay off debt, the monetary system will collapse.  There is no other way around it.  The bankers, Fed and Treasury know this.  That is why they are so desparate to restart the flow of credit and consumption instead of putting money toward programs that would foster economic growth through production and savings.  Switching to a model of production and savings will kill our monetary system!! 

Lord help us!  We have created a monster that will consume us through slavery via debt or through poverty as our system implodes and savings is wiped out.  We must be ready to effect a change in the aftermath of what is coming.  Until then, please go out and purchase any physical gold and silver you can get our hands on.  God’s money may be the only way to protect yourself from what is coming.

The next bubble forming is now in the US Treasury markets.  Yields on 1 and 3 month treasuries is about .02%. That is 2/100ths of a percent.  This is insanity.  Yields on the long end were holding strong for awhile, however they too are falling now.  Why?

The Treasury is trying to herd the world’s money into US Treasuries in order to finance over $2 Trillion in borrowing they will be doing next year.  I expect that anyone holding US Treasuries will, this time next year, be licking some very large and open wounds.

The US dollar has fallen 2.5 points in two trading days.  This is a loud and clear warning signal.  It’s breaking down will begin a descent of epic proportions. Very soon (weeks or a couple of months) the move toward the exits of US Treasuries will begin in earnest.  After all, what person in their right mind would hold bonds of a nation that has printed $4.3 trillion in the last year and will need to do at least that much in the next 12 to 24 months?  The answer is nobody.  They are still clinging to the lie that the US is the world’s economic leader with the most liquid assets.  They are about to find out how even the US bond market liquidity can dry up when treasuries go “no bid” at auction due to the massive inflation that is going to be unleashed in the US.

Dysfunction.  It is now chronic.

Gold and silver may pause to catch their breath at +/- $800/$10 for a few days before heading higher.  I simply cannot see a sustained rally in the US dollar to even take it to its recent highs - unless we see a global stock market crash and another “flight to safety” run as another round of deleveraging begins.

People, get ready.  If you have not done it, please Google “Wiemar Germany.”  Read up on it.  That is what is coming to the US.  It may not be as bad, however we will experience it to some degree.  Inflation has been, and always will be a monetary event.  And the money being created today is without precedent in all of history. Our God will not be mocked, and we have mocked Him for nearly a century now. The consequences will be unavoidable.  And they are the just consequences of the abomination to God that our money is.  Sorry, but that is the simple truth.

This will be a long post, as there is a lot to discuss since last Friday.  A few more banks failed, Citi gets a big bailout, gold rises $80 (so far), Obama announces a $500 to $700 stimulus package, and more.

But first, I need to update you on the emerging battle for a return to honest money.  As you know, I had a seminar in Lawrence, KS on Saturday that was hosted by a local church.  What I discovered there is what I suspected all along - that there are a growing number of Christians that are willing to step into the battle to return to honest money.  The group of people at Lawrence was a tremendous encouragement to me and my ministry.  They are caring people who love the Lord and see the evil of man’s money - and more importantly, are willing to get involved to bring an end to its reign.

The seminar was three hours long and was video recorded.  The good people there have volunteered to make it into a DVD.  It may be available in a few weeks (in time for a Christmas gift?)  What a gift huh?  A reality check on our monetary system.  OK, maybe you won’t want to tie it to Christmas.  Either way, I pray it will help move the ball forward.  I am seeing God move the chess pieces into place, however, as always, I do not know how He will execute His strategy.  I can’t get too specific now, however there is an opportunity, through some contacts the Lord has brought to me, to get the ear of a well known national politician when the time is right.  Please keep this in prayer!

Developments in the Financial Markets

It is now becoming more evident by foreigners that the US has extreme problems with its financial system. Yes, this is a global problem, and it seems national leaders are trying to make the other countries out as being the ones with the biggest problems.  The fact is, the US is the center of this storm, and it is we who have the largest mess on our hands.  Meetings are being planned by France and others to discuss the global financial situation, and that meeting does not include the US.  In fact, it is 4 days prior to the inauguration of Obama, a time when our political influence will be at its low. You should be able to see what that means.

President Bush has been pounding the table for the world to avoid protectionism and to leave free markets open.  Why?  Because he sees other nations circling the wagons.  Self preservation instincts will kick in during the next wave of the crisis (when it becomes a currency crisis) and I believe you will see regional alliances quickly form to protect as best they can their own best interests.  It could be that the rest of the world is getting ready to pitch the US overboard and President Bush is pleading with them not to.

Jim Sinclair seems to think something major is up.  I have a great deal of respect for Jim.  While he has been a bit of a perma bull on gold, missing some major corrections, he has been very prescient in his calls as to how this crisis is developing.  This summer he said “this is it.” People scoffed. This fall he said “this is it and it is now.”  Again, they laughed. Saturday he said “this is it, it is now, and now it is out of control.”  Please read this post.  He gives some very specific advice on what steps one should take to “avoid financial destruction.”  Act as you feel led.  It is my responsibility to get it in front of you.

What MUST be Done to Avoid Financial Destruction

With gold shooting up $80 in two days, it is evidence something is afoot.  Last week I said a major move in gold was coming, either up or down and I suspected up.  The action was just too calm for too long based on what was going on.  Well, we have our answer.  The move is up and it should be a doozy.  Gold (and silver) is telling us the next phase of the crisis is breaking over the horizon.  Thus, all prior warnings to keep cash, food, fuel, etc. are all still in effect.  If you re-deposited your cash, go get it.  Be ready for more bumps coming, and soon.

Banks are going to begin failing at an increasing rate - at least the small ones will.  Large ones, like Citi, will be bailed out.  The Fed and govt. learned their lesson with Lehman Brothers.  Nothing big will fail.  The plan to back Citi is just another in a growing line of bailouts that will happen.  Within the next 12 to 18 months, you will see Goldman Sacs, JP Morgan and others join that list.  And it is this fact that is driving other nations to get ready to protect themselves from the US dollar’s unavoidable devaluation.

$4.3 trillion in bailouts as of last week and growing.  The Fed not disclosing $2 trillion worth of assets it has taken on (and is now being sued for disclosure).  Obama coming out with a $500 to $700 billion stimulus plan.  Citi’s $2 trillion in “assets” being backed by the government.  The Big 3 auto makers need for 10’s of billions.  And the beat goes on.  The world is waking up to the fact that US dollars have already been created in staggering amounts, and it is not enough.  There will have to be many more created before this is over.

China has announced that it plans to buy 4000 tons of gold. Gold is flowing into the Middle East as well.  It seems everyone is buying gold except our leaders.  When asked by Ron Paul if gold was discussed as a solution to the problems we face, Ben Bernanke responded that the discussion of gold was “only related to planned sales.”  We have either grossly unqualified people running this country’s finances - or they are deceiving us by outright lying.  It is sad.  It is why we must work to install new leadership in this country.

This is the situation we face as we move into the battle phase to return to honest money.  It is too late to halt the economic damage already done.  We will go through an extremely challenging time as a nation.  However, history shows that these times are when opportunity exists.  Either evil will advance, or good will triumph.

There is a power vacuum being created as we speak.  If those who stand for truth and righteousness are silent during this time, then we will get what we deserve - a global dictatorship.  Yet if we join this battle, we can be confident that we have the ultimate warrior on our side - God Himself.  It will be He who decides the outcome.  He simply asks us to join Him.  I found a group in Lawrence, KS that will.  Will you?  If you have any prompting to join this battle, I am asking you to contact me - now.

• Abram left the land of his fathers.
• Noah cut down his first tree.
• Moses cast his staff down before Pharaoh.
• Gideon set out with only 300 men.
• David picked up 5 smooth stones.
• Daniel walked into the lion’s den.
• Peter, Andrew, and James and John dropped their nets and followed a stranger.

None of them knew the outcome of their actions, but they had faith in God to respond to His leading.  I can now say “we” are moving.  Join us if you will.

This is it.  It is now.  And it is in HIS control.

Just a brief posting tonight.  Today’s depressed markets were due to the spector of the Big 3 auto makers being alllowed to fail.  I personally do not think the government will allow this to happen.  This bailout talk has all the same patterns of political posturing that the $700 billion bailout of the financial companies did.  Refuse it at first, scoring policital points, then come back with a “compromise” that will pass.

Expect a bailout of the big 3 in the next couple of weeks that could trigger a market rally.  Longer term I do not think we have seen the ultimate lows for the market.  If you are a trader, sell the reverse ETF’s I said to buy on Monday.  They should have a 10 to 20% gain.  I’ll take that in 4 days.  Then leave that cash to buy in again on a rally.  If you are not a trader, than leave the investment on for now.  I think we’ll see lower later in the year.

I do not wish to become a trading blog.  However I made the comment on Monday, and thus I wanted to let you know that I am taking my hedges off tomorrow if the market stabilizes.  If it continues down, I may wait another day or two but will be taking them off Friday or Monday either way.

You may have heard that the Balitc Dry Index has collapsed by 90% over the last two months.  This is the index that tracks the cost to ship goods around the globe.  Most pundits are saying it is due to a collapse in demand for commodities and retail goods.  Others say that it is simply due to the inability of companies to obtain letters of credit to guarantee payment of goods when they reach their destination.

Certainly it is a combination of the two, however one has to be the dominant force.  While retail sales were down 2.8% this month, this does not support a “collapse in demand” theory.  Furthermore, China has decreased imports of commodities by double digits percentage wise.  And while this is indeed significant, it id not Armageddon.   I believe that the 90% collapse is primarily due to lack of credit.  The ships are empty, not because of demand destruction, but because of supply constraints.

Goods are piling up in warehouses all over the place because they cannot be exported.  Inventories of raw materials are growing, not at the end user’s site, but at the producer’s site.  This situation will produce a whipsaw effect in the market place, once credit starts flowing again.

Eventually the supply constraint could begin to produce shortages of goods at the production and retail level.  This may actually drive prices higher for some goods despite a bad economy.  Oil and gasoline being some of them.  But when credit flows again and the ships load up, the flood of goods moving into the pipeline could cause a dramatic drop in prices as a glut of production hits the market.  More volatility in an already unstable environment.  I know this is contrary thinking, however if the BDI collapsed due to credit and not demand, this would make sense.

Quantitative Easing is another term you are likely to begin hearing about.  This is a policy that the Fed has undertaken without fanfare, and for a good reason.  The result of QE is an explosion of “assets” (if you want to call the junk they are buying assets) on the Federal Reserve’s balance sheet.

“At the beginning of this year, the assets on the books of the Fed totaled $960 billion,” said Dallas Fed chief Richard Fischer on Nov 4th. “Today, our assets exceed $1.9 trillion. I would not be surprised to see them reach $3-trillion, roughly 20% of GDP, by the time we ring in the New Year. The composition of our holdings has shifted considerably. Previously, almost 100% of our holdings were in the form of US Treasuries, today, it’s less than a third. The remainder consists of claims deriving from our new facilities,” Fischer revealed.

Japan’s balance sheet swelled to 30% of GDP during the 90’s as their economy hit 0% interest.  We are headed in the same direction. This leads many to believe that we will enter a Japan style deflation.  However, the most overlooked variable in this analysis is the most obvious one.  The Yen was not the world’s reserve currency.  The world did not hold trillions and trillions of yen in reserve.  They do hold dollars, and as we inflate the Fed balance sheet with bad assets, this is making many countries mighty nervous about their dollar holdings.

Every country knows that we are debasing our currency in a major way, yet, until now, none have wanted to be the first to stampede to the exits.  Asia and the middle east are not so quietly buying gold in large amounts.  Iran, Saudi Arabia and Russia have let it be known they have shifted significant percentages of their reserves to gold. China has signaled it is doing the same.  The first steps are being taken toward the exit of the US dollar.  Nobody has yelled “fire” yet and began running toward the door, however, how long can that hold out?

Gold and silver have traded very quietly over the last two weeks.  When $10 and $750 are approached they are stuffed back down again.  But rather than collapse after they did at such rebuffs at $850, $800 and $15, $12, they simply drop back a bit and resume quiet trading.

My gut says that something is up.  Gold and silver are set to make another stunning move.  I just don’t know which direction.  Could gold collapse to $600 and silver to $7?  Or will they make their runs to $850 and $15?  I really can’t say now.  With the above purchasing by foreign nations, swelling of the Fed’s balance sheet, and falling supply, my hunch is that they will rise.  However, over the last 60 days I have learned a painful lesson in just how much control the PTB still have over the PM markets.  If they want prices to collapse in a flush out, they will make it happen.  I don’t think we will have to wait long to see.

Just a quick note on the auto debate.  Bailout or bankruptcy?  My take is that if they allow bankruptcy, it will be another Lehman Brothers.  They will wish they hadn’t.  Their finance arms are much to entangled in the global credit mess and derivatives.  They don’t want to open another of those pandora’s boxes.  My guess is that is exactly what they will do.