Category: US Dollar
Black Swans are in Flight
It’s been quite a month. Heads down for 70+ hrs a week to launch a web site aimed at helping people understand and engage in the effort to return to honest money. The Honest Money Center is formed with the prayer that over time, it will have the same impact as the 10th Amendment Center is having.
With Utah passing their sound money bill into law, the first shot across the Federal Reserve’s bow has been fired. It very well could be looked at as a historical event in the decades to come.
Outside of that, the 2014 Outlook continues to unfold as scripted. I must say that some events are progressing faster than I had thought, mainly due to the flock of black swans that have been let loose. Japan’s nuclear problems, post earthquake/tsunami, the unrest/war in the Middle East…. Right now its too early to declare the Outlook has accelerated. Economic statistics are improving, which will counter some of the other issues for a short time.
Over the next few years, there will be an ebb and flow that will at times make it seem as though we are heading for a collapse in weeks/months. Then we may enter a period that makes it appear as though it may be many years. Keep your eye on the overall trend. It is still in motion. In my opinion there is nothing short of an act of God that will stop us from experiencing a form of what was written in the paper.
The precious metals markets are near all time highs again. Silver is on fire. It seems to want $40/oz before correcting. I still fully hold to my prediction that we will see a very sharp pullback in all markets, including commodities and precious metals sometime this year. The 2011 deflationary scare will likely begin when QE2 comes to an end or shortly before. That assumes it will end.
The unknown factor now in that equation is the shock that Japan’s woes will bring to the world economy. If it manifests itself prior to QE2 ending, we could see an extension or a roll right into QE3. This could possibly a) place the beginning of the correction in the May time frame and b) make it a very brief one, as it becomes evident that the Fed (and most of the world’s central banks) will print, print, print.
Should the Fed end QE2 in the face of a new global economic downturn, we will see a very ugly sell off again. Maybe not as bad as 2008, but breathtaking none-the-less. The result would be, there would only be a few weeks/months between the end of QE2 and a QE3, and QE3 would be a doozy.
Oh, and just a quickey on the Police State front. This from Republican Senator Lindsay Graham:
Sen. Lindsey Graham (R-S.C.), a military lawyer, is the first member of Congress to say the legislature needs to explore the possibility, however unlikely, of limiting some kinds of free speech – like Terry Jones’ Quran burning – that help America’s enemies. “I wish we could find a way to hold people accountable. Free speech is a great idea, but we’re in a war,” he told CBS’s Bob Schieffer on “Face the Nation.”
A great idea? But….. we are at war! Really? When was war declared? When does war predicate suspension of 1st Amendment rights? It is happening people. Help your friends remove their rose colored glasses before it is too late.
And I haven’t even spoken of the dire finances of the states and large municipalities….
As I said in the Outlook paper. Lots of variables. None can be perfectly predicted. Stay alert.
Now that the big push for the web site release is over, I plan to give weekly or bi-weekly updates. That’s the plan. We’ll see how it goes.
View PostWhat in the world is going on?
Current events have not changed my outlook for the next four years at all. In fact, they continue to validate at least the overall premise that we are headed for extraordinary times in this nation.
Civil unrest is now taking a more partisan form. Rather than general protests over taxes, spending, lack of leadership, etc., some states have upped the ante by striking at the heart of the Democratic party – the Unions. By focusing on budget cuts that include unions (not exclusively, but simply including them in the austerity) these states have fired a shot across the bow of one of the Democratic Party’s sacred cows.
In return, Obama (he is the first person to occupy the White Hose whom I refuse to refer to “President” even out of respect for the office) has upped the ante on social conservatives by refusing to defend the Defense of Marriage Act, or DOMA. In response, Presidential candidate (he will run) Newt Gingrich is pandering to social conservatives with a veiled threat of impeachment. Gingrich: If Palin Took Obama Actions, There Would Be Calls for Impeachment.
Make no mistake. The geopolitical chaos is a breeding ground for domestic chaos, and both parties are increasing their hard line stances – defining their “lines in the sand.” As these lines become deeper and more visible, it will serve to frame the battle when it erupts. And at the current pace, erupt it will.
The police state continues to expand and is now increasingly targeting our children. See Arvada Police arrest 11 year old over inappropriate stick figures and Deputies seek protection after threatening family. Public school or home school. The police are set to intimidate families and children. They almost seem to be probing to find out just how people will fight back, assuming that people’s children are something they will fight for. What they learn will tell them a lot about how far they can expand their police state before they have to deal with real opposition. Sadly, it appears as though it will be very far down the line.
Now, enter the pro-life debate. Defunding of Planned Abortionhood should have happened eons ago. However now it is a real threat. These traditionally “compromised” areas of social conservatives are being addressed with steps that actually have teeth – baby teeth yes, teeth none-the-less. And it has the left going nuts.
Oh yes, if homosexuals, abortionists and unions are not enough of a minefield, lets talk about food. The good ole’ police state is claiming now that walnuts are drugs and need to be regulated. Big Pharma can’t have natural cures now can it.
Add to all of this the fact that inflation is raging. Calls for shortages of vegetables due to the late frost in Mexico has people expecting a doubling of prices of some foods in the next few weeks. Gas is well over $3 per gallon nation wide. Monetary policies are one thing, but when the geopolitical world gets lit on fire, there is no telling what oil can do.
My sense is that a growing number of “average” Americans are getting quite uneasy about the future. They are beginning to sense that their ‘normalcy bias’ is about to be exposed in a very powerful and unpleasant manner. The rhetoric used in nearly every political arena is growing more intense. This is exactly what was predicted just two months ago. If you haven’t done it, read the Outlook 2014 paper. It is early, however it is playing out as scripted.
The Great Global Debt Prison
Forwarded to me by a friend. Food for thought.
The Great Global Debt Prison
By Giordano Bruno
Neithercorp Press – 2/4/2011
Tense and terrible times inevitably summon an odd coupling of two very different and difficult human conditions; honesty, and brutality. Certain painful truths are revealed, and often, a palpable fury erupts. Being that times today are particularly tense, and on the verge of being spectacularly terrible, perhaps we should embrace both conditions in a constructive manner, and become brutally honest with ourselves. This begins by admitting to that which most ails us. It begins by admitting how far we have fallen…
Our economy, our culture, our entire world, is built upon debt. No one ever asked us if that’s how we wanted it, it is simply how the system was designed when we came into it. Many of us have lived our entire lives under the assumption that debt is a necessary function of daily commerce and a valuable driver of successful society. Most households in America operate at a steep loss, trapped in constantly building cycles of liability and interest. There are even widely held schools of economic thought that are centered completely on the production and utilization of nothing but debt. Only recently have many people begun to ask themselves what the tangible benefits are (if any) in being dependent on debt based finance.
Still confused about the future of the dollar?
The Chinese leaders have a 5, 10, 50 and 100 year plan. The U.S. leaders have a plan to get re-elected in two years.
Chinese President Hu Disses the Dollar; Says U.S. System is a ‘Product of the Past’
AP2010
Dec. 31, 2010: Chinese President Hu Jintao delivers a New Year’s address in Beijing.
BEIJING—Chinese President Hu Jintao emphasized the need for cooperation with the U.S. in areas from new energy to space ahead of his visit to Washington this week, but he called the present U.S. dollar-dominated currency system a “product of the past” and highlighted moves to turn the yuan into a global currency.
“We both stand to gain from a sound China-U.S. relationship, and lose from confrontation,” Hu said in written answers to questions from The Wall Street Journal and the Washington Post.
China distancing itself from the US dollar.
This is one reason why Virginia is doing what it is.
Hu: Dollar-Based System ‘Product of the Past’
Published January 17, 2011
AP2010
Dec. 31, 2010: Chinese President Hu Jintao delivers a New Year’s address in Beijing.
BEIJING—Chinese President Hu Jintao emphasized the need for cooperation with the U.S. in areas from new energy to space ahead of his visit to Washington this week, but he called the present U.S. dollar-dominated currency system a “product of the past” and highlighted moves to turn the yuan into a global currency.
“We both stand to gain from a sound China-U.S. relationship, and lose from confrontation,” Hu said in written answers to questions from The Wall Street Journal and the Washington Post.
Russia could join Euro zone?
The dollar’s days are numbered. I don’t think the Euro will replace it, but this kind of talk get’s people ready to accept another currency when the time comes.
From The Daily Reckoning:
11/29/10 Arlington, Virginia — At a recent conference on economic cooperation in Germany, Russian prime minister Vladimir Putin explained it was “quite possible” that in the future Russia would join the eurozone. He also expressed that the move would probably bring about the replacement of the US dollar with the euro as the world’s reserve currency.
Putin is quoted as saying that, “Can it be supposed that one day Russia will be in some joint currency zone with Europe? Yes, quite possible.” And, echoing a common worldwide sentiment these days, Putin added, “We should move away from the excessive monopoly of the dollar as the only global reserve currency.”
Read more: Putin Suggests Russia Could Join Euro Zone, Make Euro World’s Reserve Currency http://dailyreckoning.com/putin-suggests-russia-could-join-euro-zone-make-euro-worlds-reserve-currency/#ixzz19zxRuKyt
This is called “fleeing the dollar”
Read this article and think about it. If the Chinese are willing to pay double what the previous market value is for a company (which is becoming a trend, not an anomaly), then you have a combination of a) undervalued natural resource companies relative to the US dollar and/or b) a willingness by the Chinese to dump their dollars at what is effectively an immediate 50% loss.
I say again. Think about that and what it means. Wonder why gold is over $1,300 and silver over $22?
The Great Haul of China:
Agenda – Grinding America Down (5 star!)
Words from Jim Sinclair
I have been following Jim Sinclair’s writings for years. He has focused on the gold market as a means to protect your wealth. He often talks in somewhat coded language. This is by far his strongest, direct warning to prepare. Please take heed.
My suggestion for those who have not yet done so is to 1) secure a source for clean water. That may be as simple as several good water filters. Remember, wells will not work without electricity. City water? Don’t count on it. 2) get a food supply set aside. This is a long discussion, however I suggest some food grade buckets, mylar bags, wheat, rice and beans (don’t forget baking supplies such as baking soda and baking powder)- dried fruits, canned goods, etc. etc.
Now it the time. At best I believe we have a couple of years before some kind of dislocation happens. I’ll say it again – now is the time. Are you ready?
The System Has Failed
Posted: Apr 07 2011 By: Jim Sinclair Post Edited: April 7, 2011 at 11:22 pm
Filed under: General Editorial
Dear CIGAs,
The system has failed. It failed the day that Lehman Brothers was flushed.
There is a financial condition of an ocean of liquidity making the broken remains of a failed financial system in the Western world opaque.
There is no future failure coming. What is coming is a mass realization that exposes the fact there is no functioning system under all this liquidity. It is a sharp contraction in confidence that lies down the road. Realize this and know that there is one more step you need to make.
Having the largest pile of gold and silver without considering one more step might make you a modern Midas.
There is more to insurance than simply financial. Shortages of goods and services will occur because of currency induced cost push inflation resulting in dislocations of the organization and compensation in the distribution functions. That means there could be ample food in the system but little available on the shelf of your local market.
Because of the ill-understood world shaping changes in the Middle East, the impact of “Peak Oil” on price has been sharply accelerated. Public utilities considered now as a human right will prove themselves to be privileges. Expectation of power on a constant basis will become a hollow expectation.
If you do not have the experience of living in India and Africa in the 80s, you have no idea of how to live in a Western World experiencing long term currency induced cost push inflation. Self reliance will become as important as your holdings in gold. To have a huge pile of gold but remain totally dependent on the infrastructure of the Western World system is a serious mistake. You would have substantial capital but lack goods and services to buy. You will be able to afford much, but much will be either in short supply or illegal.
You know more about what is occurring than 99% of investors.
You are the 1% that knows the SYSTEM HAS FAILED.
You are the 1% that knows the system failed the minute Lehman Brothers was flushed.
You are the 1% not looking for some failure in the future but know there is no system below the flood of liquidity.
You are the 1% that has been exposed to the concept of currency induced cost push.
You are the 1% that can understand the future.
Please be that 1% that is not seduced by your profits and fails to take the last step to the best degree they can.
The picture above is another aspect of Sunnyfield’s Farm. It is one of two 20KW generators powered by a marine diesel engine. There is a special fuel filter system custom designed that allows this engine to run on low grade heating oil. There is at all times 14,000 gallons of fuel buried. This fuel is diesel, heating oil and gasoline. This is at best a short-term answer to the predictable failure of fossil fuel electric generation. The longer term solution is wind power banking batteries and a converter.
I will walk you through everything that I have done in hopes that you might use it as a model to improve on.
Regards,
View PostJim