Category: Proverbs 22:3
Bob Basso to talk to Obama
This was sent to me by a friend. It is disturbing on many levels.
YouTube star summoned to White House
Bob Basso is the man who made the wildly popular YouTube videos calling Americans to stand up and take our country back. For him to be “summoned” to the white house to talk about the “disturbing nature” of his videos says a great deal about two things. 1) This “take back America” movement has the full attention of the White House and 2) They are going to make every effort to stop it.
It will be interesting to see how this “meeting” goes. Will Mr. Basso suddenly become silent because he “misunderstood” the intentions of our government? Will he put out another video after the meeting, effectively putting the message back in their face? Or will something else happen?
Either way, while very troubling, it is a positive sign. I wonder who else is on the list of those soon to be summoned to the White House? This bears close watching.
View PostWeimar USA Update I
Where do I start?
First of all, after reading and listening to the sources that have been so reliable for so many years, the consensus of them is that we are indeed at the end of an era. The US dollar will cease to be the world’s reserve currency soon – maybe with in a matter of months. Most give it a year at best.
A few weeks ago I reminded you all that during the great depression our Fed and government took 4 steps to halt the deflation. They were done in this order.
1) Lower interest rates.
2) Flood the banking system with money.
3) Guarantee bank loans.
4) Devalue the US dollar (at that time against gold).
It took them four years, between 1929 and 1933, to take these four steps. Mr. Bernanke and our Fed took steps 1-3 (on a large scale) in four months between October 2008 and January 2009. Step #4 was all that was left – to devalue the currency. I stated that they would do it. It just was a matter of time and methodology. Well, here we are. Step #4 is underway.
Dollar devaluation is a way to “force†the prices of goods and services to halt a decline and begin rising. It is simply flooding the system with so much money that it has to find its way into the pricing structure of goods. Why do this? Why not let deflation run its course?
Because simply stated, the entire US banking system (actually the global banking system if one were to be honest) is insolvent. It is insolvent because of two reasons. 1) the deflation has caused the collateral that backs the loans on the books of the banks to fall so much that the sum total of the loans is greater than the assets backing them. This is insolvency. The second, and more dire reason, is that derivative positions have also done the same thing. However, because they were leveraged up to 40 to 1, the degree of insolvency was absolutely absurd.
They have to fix both of these problems in order to bail out the banks. So what they are attempting to do now, with their policy moves last week, is an attempt to solve problem number 1. They are trying to solve problem number 2 by simply changing an accounting rule that removes the requirement of the banks to “mark to market†these toxic assets. If they can make a few computer entries and wipe out the losses on paper, then they think they are good to go. Again, how absurd this all is! One cannot make 10’s of trillions in loses go away with a rule change. However they believe if they can change the rule, it will buy them time while they re-inflate the underlying assets nominal value, which in theory will make the losses on derivatives go away.
What they do not understand is that confidence has been lost in the system. It is a ponzi scheme that has been exposed and nobody is going to go back and throw more money at this scheme. The banks long ago quit lending to other banks for this very reason. A simple accounting change will not fix that. This game is long over and there is nothing to set the clock back and change the score so their team wins.
Quantitative Easing and Why It Will Fail
I thought I would give you a definition of a term you are going to hear a great deal of over the coming weeks/months. Quantitative Easing is the process by which central banks (in this case our Fed) attempts to force interest rates down in a market when they no longer have any policy options left.
During a normal recession, the Fed lowers its discount rate and/or Fed funds rate, which makes borrowing cheaper. This causes the money supply to increase as new loans are made to businesses and individuals taking advantage of the lower rates. This has a stimulative effect, and the economy recovers.
However, when interest rates reach 0%, as is the case now with the Fed Funds rate, the Fed has no policy options left. If demand for credit is low due to defaults, increasing standards, and a host of other reasons, the economy cannot benefit from the stimulus of Fed induced rate cuts because interest rates remain higher than people and business are willing or able to pay.
Thus, with Quantitative Easing, the Fed simply creates demand for credit by creating money and buying credit (if that sounds circular, it’s because it is). This “new demand†serves to lower market rates (artificially) and the hope is that if they can lower rates enough, they will entice others into the market, restarting the credit/consumption cycle.
In our present case, the Fed is targeting mortgage rates by buying US long dated Treasuries, which are used to set mortgage rates. They also are buying Freddie and Fannie debt in order to relieve their balance sheets so they can supply the anticipated “new demand†as the housing market catches a bid.
The model being used as an example of QE “success†is the Japanese. They have been practicing QE for years, since their real estate bust nearly two decades ago. While their economy has suffered low/no growth during that time, their currency hasn’t failed, along with all of the ill effects that accompany such a failure. So the thought in Washington is that the US can get away with this too.
Why will this fail for the US? Because there is too large of a supply of US Treasuries to be purchased without destroying the currency. The Japanese yen is not the world’s reserve currency. When they went to 0% interest and QE, it effected only their economy. Every nation in the world didn’t have a stash of yen on hand that they were counting on to act as their reserve currency and national savings. The opposite is true for the US dollar. There are so many US Treasuries tucked in central banks around the world that there is no practical way for the Fed to buy enough to create enough demand to make the difference they need to in the market.
In fact, what is more likely is that when the Fed begins purchasing Treasuries, nations around the world will see it as their last opportunity to unload them while they have any purchasing power left, and the market could see a flood of them. This would cause interests rates to rise instead of fall, which would be an unmitigated disaster, triggering a hyperinflation within weeks. It is a real possibility and one that must be considered!
Here are some numbers…
Japan, China and the other major buyers of US treasuries purchased approximately $600 billion worth of our notes last year. Yet here we are, ready to finance a budget deficit this year that the Congressional Budget Office has estimated at $1.8 trillion. We all know that these estimates are grossly understated (the real deficit is pegged by private economists to be between $2.5 and $3 trillion). But let’s for the sake of argument say they are right. That would mean that if these nations continued their purchases at the same rate as last year, we still would need to come up with $1.2 trillion in new demand for treasuries. The Fed said it would buy $300 billion, so now we are down to $900 billion. Where is that coming from? I’ll tell you where – the Federal Reserve’s printing presses as they soon announce the need to “buy more” US Treasuries.
And to add insult to injury, the central banks of the nations mentioned above have already cut back on their purchases of US Treasuries. The January TIC report showed a net outflow of funds of $143 billion dollars. So not only will be have a deficit of $2 to $3 trillion, but we will not see even $600 billion of the debt purchased by foreigners. All that is left is the Fed. And when they go to monetize these trillions, that is when the dollar collapse will begin in earnest if it does not before then.
People – it is over. Deal with this reality, because if you don’t, it is going to deal with you very soon.
The absolute best case scenario would be that the US can buy enough treasuries in the short term to push rates down for a short period of time, a few weeks – maybe a couple of months at best. But at some point, someone will blink. The self preservation instinct will kick in (could be China, could be the Middle East) and they will begin to sell. When that happens it will likely happen very quickly, leaving people little or no time to react.
Peter Schiff had a great program last Wednesday where he explained the bond situation. If you don’t know about Peter, he is one of the few people who were allowed onto CNBC who called this depression. He is very good at his analysis on the global economy. The clip at the end of the post is from his show on 3/18. Please listen to it. It’s only a few minutes long.
G20 Meeting Is Likely DOA
The G20 meeting to be held April 2nd is a critical meeting. The outcome was hoped to be the last, best chance at salvaging the global fiat monetary system, and in the process, minimize the pain that the world would feel due to this enormous credit debacle. The best case scenario would have seen an orderly transition from the US dollar as a world reserve currency, to something else. A basket of currencies, possibly backed by some hard asset (gold) or group of commodities. In that scenario, the world would still suffer tremendous economic hardship for the next two years or so, but would emerge without major conflict and on a healthy footing.
Because England, and now the US, have chosen to “go it alone†in their monetary policies rather than wait for a G20 plan, they have forced the world to move in another direction. I’m sure in our leader’s hubris, they think they are leading by example, and still believe that they can go into this meeting and convince the rest of the world to follow them. If they persist in their present course of action, they will fail in that endeavor.
If indeed this meeting does fail in its objective of a coordinated global plan (you will not be able to tell by the spin that comes out after it), it will leave a vacuum of leadership in the world in the area of monetary policy. This in turn will trigger an “everyone for himself†mind set which will eventually lead to chaos in the global markets.
Tensions were already high, as China’s Premier said last Friday that he was concerned about their huge holdings of US based assets, mainly US treasuries. Well, he got his answer on Thursday. That being – spend them while you can, because we are going into full devaluation mode. I don’t think this is a message you want to send to your debt master just before a critical meeting. It is not likely to end well and the ramifications of this are enormous.
Because quantitative easing will fail, market forces will soon force the rest of the world to replace the US dollar as its reserve currency. If the market is left to do the job, rather then nations adopting and implementing a plan, then the transition will be uncoordinated and on ad hoc basis. This will be extremely disruptive to nearly all world currency markets, particularly for the United States. Thus it is in the Obama administration’s best interest to cooperate with any G20 plan to replace the US dollar with something new to act as the world’s reserve currency. Every indication is that they will not.
Increasing Governmental Intrusion Sets Stage for Social Unrest
This is probably the most significant development I have come across as I have expanded my view into world events. The rate at which the government is taking over (or proposing to take over) the free markets in this nation, while at the same time clamping down on freedoms of its citizens, is in many respects breathtaking.
I received an email from a friend of mine who is a real estate appraiser. His business has been booming because he happens to be connected to the foreclosure process. Recently, he went to a class on a new government program called the HVCC. Here is what he learned in that class:
“The government has killed capitalism in my industry. Mortgage brokers can no longer order appraisals (with the exception of FHA for now, this will change soon) from independent appraisers. They must first lock the loan with an Investor (GMAC, Flagstar, Wells…), then the Investor orders the appraisal from an Appraisal Management Company (AMC), the AMC will pick an appraiser from their panel, that charges the lowest fee to them ($165 to the appraiser on a $400 appraisal fee, yes the AMC gets $235), so the Broker can no longer shop the loan to get the best deal for the homeowner. They must pick an Investor. Also, the Broker can not know who the appraiser is that is selected and the Broker can no longer call an appraiser to get a “comp check”, to see if the value is there before taking their time and the homeowners time and money (they must pay the appraisal fee to the AMC upfront) for a loan application. The appraisal instructor said that reading between the lines the Government is trying to get rid of the Mortgage Broker industry, let it be run by big banks.â€
The government in effect is stealing 50% more of this man’s income (they already get more than 50% in taxes of all sorts). This program is done under the guise of “protecting the public†from appraisals that are above market. And that is the rub. While the last administration took advantage of the fear of terrorism to encroach on our freedoms, this one is using our fear of the economic melt down to enact programs that “protect the public†while in reality, they transfer wealth and power to the bankers and the government.
If you think the above story was bad (and it is). Check out this nice little proposed bill from the wife of a Monsanto executive.
If this legislation were to pass, it would severely restrict the free production, marketing and distribution of food. Once again, it is being proposed in the name of “public safety†at a time when the public does not feel safe about much of anything. This is nothing short of fear mongering in order to “take advantage of a good crisis.†Are you starting to see what they meant by that? Does it make you a tad upset? It does me, and is making a growing number of people upset as well.
I wrote Saturday, that there is a growing anger related to the freedoms that this administration is taking from the people of this nation. The awareness of what this ultimately could lead to is not lost on those in the military. There is a new web site/blog that just went online a few weeks ago. It is called “Oath Keepers” (http://oath-keepers.blogspot.com). These people know that economic turmoil combined with a tyrannical government usually leads the government to turn its military on its own people to restore “order” in times of civil unrest. And there is a growing contingent in our military that simply will not obey those orders because they would necessitate breaking their oath to “defend against enemies foreign and domestic“. That includes up to, and including the Commander In Chief.
This is serious stuff people. This type of discussion does not get initiated if “all is well” and we are headed back to prosperity and liberty. It occurs when people recognize that the trend is toward hardship and tyranny. We either recognize this real possibility and prepare for it, or we find ourselves in trouble when it breaks loose and we have done nothing.
What This Means
If you have not taken steps to prepare to live through the aftermath of a currency collapse and the resulting civil unrest, then you have scant time left. I care not what the stock markets are doing today. The cheer leading from the Fed, the “all is well” mantra, the “stocks have bottomed” calls from the talking heads on CNBC. It matters not. The consequences that will be unleashed due to the monetary policies of the Fed as they move to outright money printing will not be denied.
The fact we are getting a rally now that will keep some of you reading this blog from making your final preparations is no surprise. It is precisely the type of rally that draws in the final rush from the general public, then turns on them with a destructive vengeance. It’s sad, but that is usually how these bear markets work. None the less, I will put this out and ask you to take steps to prepare for a nearly “worst case scenario.”
Why? Because when this thing turns, it will turn quickly. Right now you have central banks around the globe wringing their hands, trying to figure out how to get out from underneath their pile of worthless US dollars. But that was already discussed above.
Recently I read a book called “When All Plans Fail.” I highly recommend that you get a hold of this book and use it to get your house in order. It was written by Dr. Paul Williams, who made over 100 missionary trips into poor countries and saw first hand what was needed during times of crisis. The book puts into perspective what you need to do to prepare in checklist format. It is slanted toward crisis that are more natural disaster related, however it matters not what the crisis is. What matters is that you are ready with supplies and a plan.
As I said Saturday. We no longer have the luxury of wondering if things may get really challenging. We must prepare now as if they are going to. In future posts, I will be including more analysis that includes the potential for violence to erupt, as well as additional ways to prepare. I am fully aware that this new direction may cause me to lose some readers because I will be perceived to have become too extreme. What business do Christians have preparing like this? Won’t God take care of us?
There is an old story about that. A man was stranded on a roof after a flood ravaged his home. A man in a boat came by and asked him if he needed help. “No. God is going to save me.” The waters continued to rise and a helicopter came and they shouted “Do you need help?” The man said “No. God is going to save me.” Finally the waters swept him away and he died. In heaven he asked God. “Why did you not save me?” God answered “I sent you a boat and a helicopter. The choice was yours not to take my help.”
Don’t be the man on the roof. If not for you, for the sake of your family.
Weimar USA
I come to this week’s post with a bit of a conflicted heart. Not a fearful heart, but one that contains a degree of sadness combined with hopefulness. And not the kind of hopefulness most reading this are likely to be thinking of.
So you are going to have to put up with a bit of a monologue here as I reflect back on my journey of discovery regarding our monetary system that began in late 2002. What I find interesting, challenging, reassuring and concerning is that since I started looking into this over 6 years ago, there were people who were predicting the very series of events that we are now experiencing – events they said would unfold to bring an end to our nation’s and possibly the world’s experiment with fiat money.
For the longest time, absorbing and understanding it all was an academic exercise – trying to learn the basic, and then not so basic, interrelationships between all of the markets and how they interfaced with each other, and ultimately man’s nature – more specifically, his sin nature. Rarely did I stop to think about what the cost would be of the actual failure of our monetary system. At least not the cost in dollar terms, as money is easily quantifiable. But rather the cost to our nation and its people in terms of fear, grief, heartache, suffering, and loss of freedom as the world’s reserve currency met its end.
Over the years, I studied these interrelationships – between man and his money – and grew increasingly aware of the toll that would be exacted on society. God, in His grace, has given us a clear picture of what to expect when we travel this path. Thus, it was easy to begin to take preparations for the events to come. And in it, I still found myself struggling with my own temptations, and failures, to distance myself from man’s monetary traditions and live according to God’s word in the area of finance. To this day I still to not have complete victory in this area in my life. That is why I can relate to those who are just learning about this national sin, and why it is so hard for them to accept it for what it is, and what it will do to our nation.
I remember clearly the day last September, when the banking system was under great strain and the Federal Reserve and government did what I thought they would never do – let a big one (Lehman Brothers) fail. I was stunned because, after studying this mess for years I knew that a derivatives nuclear bomb would be set off if a large financial intuition were to fail. That evening I was standing outside of our local YMCA getting ready to watch a co-ed volley ball game some in our church would be playing in. And on that warm September evening, it hit me – the laughter of the kids running around the parking lot, the carefree conversations going on around me, the innocence – and ignorance – of the people regarding what was happening to their nation and their world. All of that was going to end. Soon, every person around me would have their life changed dramatically as we moved through the events of a global monetary crisis. I felt like I did when I first heard the news the Challenger space shuttle exploded, or when I watched the twin towers come down. The reality and gravity of the situation suddenly crystallized. Only I knew that this would not be a single event, but a series of events that would unfold over months, then years. Events that would change lives.
Yet through the last six months, I always had this seed of hope that somehow the worst could be avoided. Somehow our nation would come to its senses and deal with the sins of the past and that our national leaders would seize the day and right the ship. Not that we would avoid pain, but that the path chosen wouldn’t be as destructive as the potential it held. I no longer hold this hope.
There is an undercurrent of anger that is building in this nation that is on two major fronts. The first is obvious. The economy. This anger is building across all political, social and income strata. Our economy is failing at an increasing rate despite trillions of dollars of debt that was being placed on the backs of “future generations†by the bankers and our government. I say “future generations†in quotes because, as of Thursday, the Federal Reserve announced the seminal event that would signal to the world that the fiat money system that has been in place for 38 years was indeed going to fail. This failure will insure that the brunt of the pain that has been rolled forward and stored up for decades will be unleashed upon this generation. More on that later.
The second reason for the building anger is what is occurring in our present administration. Those feeling this anger aren’t nearly as large in number, yet they have the potential to be the catalyst for extreme good – or incredible violence. The Obama administration is “taking advantage†of this “good crisis†to consolidate power on a level not seen in this nation’s history. And while it was many presidencies ago that the wheels were set in motion to completely marginalize our Constitution, it dramatically accelerated under the last administration and is going into hyper drive in this one.
People ask me in amazement how Obama can be getting away with the things he is – nationalization of huge segments of our economy, putting in place social programs that expand the destruction of life in the womb and gross expansion of the powers of the Executive Branch of our government. For the answer to that question, we need only look at ourselves. The conservative Christians in this nation.
It was we who turned a blind eye to the gross abuses of the Bush administration when they undermined our freedoms and the Constitution with such hideous legislation as the Patriot Act and Patriot Act II. It was Bush who dramatically expanded the practice of governing by executive order, which we began to accept as normative during the Clinton years. Why did we allow this? Because George W. Bush was a Republican. Because George W. Bush was a “Christian.†I quote that intentionally because of his acts, his fruit and his statement last fall that the Bible should not be taken literally.
There are plenty of “Christians†in this nation like him. Claim the cross and bear no fruit. And the church’s blind eye toward his sin and the direction he was taking this country is a great deal of the reason we find ourselves where we are today. That is, on the brink of changes in our nation and world that even I would have not thought probable just a year or two ago.
For those of you who have been following this blog for any length of time, you will see a marked change to the information presented. For the past year I have wanted to make it a friendly place for people who are new to what is happening in the world around them, specifically the monetary world. It was a blog where you could get a lot of milk and a little meat now and then, specifically targeted toward the monetary system. That needs to change. While money is at the root of this, something much larger than our monetary system’s reform is at stake. It is the very existence of this nation as we know it.
Those new to the blog should visit my web site www.traditionsofmen.org. There you will find the basics of how our monetary system got to where it is today and why it is responsible for the evil you see around you. Buy the book and watch the videos. Get up to speed using those tools. Then come to the blog for the meat.
We no longer have the luxury of a few years to prepare for what is coming. With the Federal Reserve’s admission that it had no other choice but to begin using “quantitative easing†to monetize Federal and agency debt, we have entered into what could be a time of rapid decline. I believe this policy move will be looked back upon in history as the “economic shot heard round the world.†I will continue to present the case as to why our economic system will likely fail soon, yet that will be combined with more commentary on the geopolitical situation (Mexico is on the verge of collapse) and the tyranny being imposed on our nation via our current administration.
All of this is coming together in a perfect storm to create challenges that we cannot face alone. And finally – that is where my hope lies. Man has spent decades building his towers to the heavens, demonstrating how his ways seemed to bring riches, peace, safety and comfort.
Now it’s God’s turn.
For many, their trust in the sovereign God of this universe is going to be tested. And I believe that is exactly what He wants. God wants us to have every support pillar that man has built kicked out from underneath us so that we must stand alone, naked and vulnerable with only the trinity left for us. The word of God inspired by the Father, the Holy Spirit to guide us in wisely applying it, and our undeniable, unshakable faith that, but for the shed blood of Jesus Christ, we would have no access to the full armor of God which will deliver us from this present darkness.
It is through this time of testing that the church can, and I pray will, regain its relevancy in our nation as she is able to once again stand in contrast to the darkness of our culture rather than be assimilated into it. As she is able to be salt worthy of seasoning, instead of that which is thrown out and trampled underfoot by men. Can you imagine what our world would look like with a repentant, revitalized and relevant church? I can, and that thought drives me forward every day, despite the very difficult path required to get there. I pray you can see it to.
During this time, please pray that the enemy will not deceive but that the Spirit will reveal. Pray for courage and boldness of heart. Pray for discernment to trust Him as He leads you. Now is the time for godly leaders to heed the call – leaders of homes, churches, states and our nation. Either we cower in fear of man and what he has built as it comes crumbling down around him, or we stand is awe of God and His mercy, love, holiness and righteousness as we see Him garnering victory after victory – all for His glory.
My prayer is that this post and the update that will be coming Monday will build a foundation based on the reality of the task ahead. We have time for nothing else.
In His Service,
Doug
This appears to be the better way.
Just the way things are shaping up this week, and the information I am gathering, I am certain that the changes I said I was going to make are for the better of us all. By stepping out of the day-to-day detailed reading, I am better able to focus on the big picture. People are sending me articles and links that are helping reveal the real trends.
I was too deep in the forest to see much. The world events are becoming clearer and I look forward to the update on Friday (probably late evening).
For those who say “It can’t happen here”
A few months ago I said that the currency crisis would “move up the food chain” until it infected nearly every currency of the world. It started in countries like Iceland. Small and seemingly insignificant to the global economy. It is now infecting Eastern Europe and soon to spread to the Euro zone. Great Brittan is already in its grip.
Does anyone believe that it won’t reach our shores? Economies and currencies honor no boundaries drawn upon maps by men. Electronic currencies mean that a panic run can be global and literally happen within hours. Yes, governments have firewalls set up. They were tested and nearly brought down when bankers panicked last fall. What happens when millions upon millions of people around the world hit the panic button and begin withdrawing money by clicking their mouse?
I would anticipate that daily withdraw limits and/or a complete blocking of electronic withdraws would be instituted. What happens when people have lost 20, 30, 40, 50% of their money and the government blocks them from getting the rest?
Civil unrest. And the most “stable” countries in the world are preparing for it.
At least over in GB they are calling it what it is. The United States is in such denial that they are calling our troop deployments preparation for “immigration unrest” or some other such nonsense. Please do not be in denial of this. Prepare for it. The summer of discontent is approaching and the United States is not likely to be spared. If not by summer, then by fall and next winter, we will likely see similar problems here.
On a related topic, I read some of the comments posted to the Utube video’s of Glen Beck’s “War Room” series where he talked about preparing for the worst case scenario. Rather than say “gee, maybe we’d better look at the possibilities”, the denial and outright demagoguery of the comments was sad. Anyone with a knowledge of history and the humility to understand that we are just as exposed to the potential bad outcomes as in all other nations experienced during financial collapses in the past is labeled as unpatriotic and a doom and gloomer. The arrogance, denial, and/or ignorance locked into the mindset of the people of this nation only serves to confirm that we are indeed headed for a bad outcome.
I am no longer in a position to “soft sell” this message. It is what it is. For those who deny the possibility of what has been written about here for well over a year now, and is now even being mentioned in the MSM (main stream media), they will likely carry that denial until something very unfortunate happens to them to finally slap them out of their slumber.
God gave us our 5 senses to use to perceive and understand the world around us. The mind is a powerful thing however, and can shut off information when it does not filter well through the “black box” of our past experiences and preconceived notions. It takes courage to open up that black box and allow a new grid to be formed. I hope and pray that the information here and elsewhere will be able to be used in some people’s reworking of their grid. It all gets back to the fundamental notion of my book – that this problem has biblical precedent and solutions. Reworking our grid with His tools will be the way through this thing.
Three years ago, my website was not www.traditionsofmen.org. It was www.proverbs22-3.net. That verse is still very applicable to today.
Proverbs 22:3
Agenda – Grinding America Down (5 star!)
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