The truth hurts. Initially, truth can be shocking, hurtful, surreal, and utterly amazing – but its longer term nature is always liberating as it provides a solid foundation to make forward progress. With truth comes change, whether desired or not, and eventually a new sense of hope.

The Financial Panner sees 2010 being a year where many economic and market truths, a number of which are not mainstream, ascend the dam of deceit and rapidly immerse us all dispassionately. Though many still will not wish to recognize and accept them, these truths will begin to be accepted by a majority as commonplace.

The US Federal Government is bankrupt and printing money (AKA Quantitative Easing, Monetizing Debt, etc.)

The following Glenn Beck, clip from the 5th of January, is an early example of what is coming. Ironically, Beck leverages and discusses in detail the same report covered by The Financial Panner in the last post of 2009, “There Really is a Santa Claus!”.

The December 2009 report from Sprott Asset Management as well as the excellent coverage by Beck provides sound fundamental evidence of money printing that is difficult to refute.

However, this concept will be blown wide open when federal tax receipts struggle come tax time this year. Unemployment and the downward spiral which results on business and consumer spending in combination with a large portion of the population being utterly disgusted at trillions of dollars handed over to entities labeled “to big to fail” will undoubtedly put significant stress on federal tax receipts. It is likely that the US Federal Government will not be able to hide debt monetization much longer which could initiate significant duress in financial markets. This has the potential to catapult the 1 troy oz. spot price of gold to $1420 USD by April 2010.

The US Federal Government manipulates ALL markets directly or indirectly

Unfortunately, the monetization of debt is not the only trick up the government’s sleeve. Covered by The Financial Panner in September 2009, “Government Market Manipulation Going Mainstream?” detailed the possibility of government intervention in the stock markets. Another recent article, “Time for Fed to disprove PPT conspiracy theory”, discusses yet another credible financial expert who believes the US Federal Government is responsible for the meteoric rise of the stock market since March 2009.

Charles Biderman, chief executive of TrimTabs Investment Research, is the latest and most credible person to charge that the Federal Reserve and the Treasury (in league with top Wall Street firms) is rigging the stock market on a daily basis.

In a special report released Tuesday, Biderman said the $6 trillion increase in U.S. stock-market capitalization since March can’t be explained by the usual sources of funds flowing into the market — such as mutual funds, direct retail investment, pension funds, hedge funds or foreign purchases.

The only logical explanation for the extent of the rally, he suggested, is secret buying by a government committee known colloquially as the Plunge Protection Team. It’s like the dark matter that astrophysicists conjecture must be there, even if we can’t detect it.

The PPT was established by President Ronald Reagan in 1988 after the 1987 stock crash to coordinate the government’s response to market meltdowns. It consists of the Fed chairman, the Treasury secretary, the head of the Securities and Exchange Commission and the head of the Commodity Futures Trading Commission.

Here are a few historical videos, which were previously highlighted on The Financial Panner, of financial analysts on CNBC, FOX Business News, and Bloomberg making similar manipulation claims:

Joe Saluzzi of Themis Trading on Bloomberg TV Discussing Market Manipulation (6/30/09)
http://www.youtube.com/watch?v=g0U1vMUa2sc#t=3m40s

Larry Levin, of Secretsoftraders.com talks about market manipulation by the government (6/29/09)
http://www.youtube.com/watch?v=tFWIe7qqaZU#t=2m00s

5/14/2009: Dan Shaffer on Fox News: Someone is manipulating the stock markets to benefit the banks
http://www.youtube.com/watch?v=hxBqAw75Bpo

The realization of the previous two points will result in a loss of confidence in the overall system – it is this loss of confidence that will drive the gold price higher

From this vantage point, inflation or deflation, while it may have short term market impacts, for the time being is an after thought. Check out this image from http://www.goldmoney.com that shows gold’s performance vs. seven major world currencies since 2001:

Early on in this cycle, inflation was no doubt the driver of gold’s performance. The government’s response to the fall 2008 financial catastrophe as well as the overall systemic risk generated by the situation wholistically, is replacing that driver. Until these systemic concerns are brought to the forefront and addressed, inflation or deflation will simply be of secondary impact to gold’s overall price performance.

Of course the odds are greatly in favor of severe inflation or hyperinflation winning against strong deflationary forces. Inflation is *the preferred choice* by governments in similar situations historically – a choice that can have some devastating effects.

One very recent example of this is Venezuela. This past Saturday, January 9, 2010, President Hugo Chavez of Venezuela, devalued the Venezuelan currency (the bolivar) by up to 50%. As a result:

Venezuelans rushed to the shops on Saturday, fearful of price rises after a currency devaluation that will let President Hugo Chavez boost government spending ahead of an election but feeds opposition charges of economic mismanagement.

The opposition seized on fears that prices for imported goods will double as shoppers formed lines of more than a hundred people outside some stores in the capital Caracas.

By establishing the exchange rate at 4.3 bolivars per dollar, the quality of life for Venezuelans is automatically devalued since we now have half the money we had before,” said Caracas Mayor Antonio Ledezma, a Chavez opponent.

Understand that financially speaking, the only difference between the US and Venezuela is one of perception, largely based on America’s unique and special place in history. Our credit card will run out however, and one of the main elements The Financial Panner attempts to bring to the forefront, is credible evidence that this perception is changing. Once it does, there is no reason why the US would not experience an outcome similar to the one Venezuela has just realized.

UPDATE: Audit the Federal Reserve

http://www.auditthefed.com

• H.R. 1207: Federal Reserve Transparency Act of 2009 now has 317 co-sponsors, flat from 317 last week.
• S. 604: Federal Reserve Sunshine Act of 2009 now has 31 co-sponsors, up from 30 last week.

Ron Paul “The Federal Government Is Not Able To Deliver The Goods Anymore! (1/8/10)

http://www.youtube.com/watch?v=ofc25qMufzU

1/4/2010 Peter Schiff On Fast Money: Dollar Collapse By 70% In 2010?

http://www.youtube.com/watch?v=JTu8eK8nYFg

Devaluation ups stakes in Venezuela election year (1/9/10))

http://www.reuters.com/article/idUSN096521320100109

• Venezuelans rushed to the shops on Saturday, fearful of price rises after a currency devaluation that will let President Hugo Chavez boost government spending ahead of an election but feeds opposition charges of economic mismanagement.
• In a bid to jump-start the recession-hit economy of South America’s top oil exporter, Chavez on Friday announced a dual system for the fixed rate bolivar.
• It devalues the currency to 4.3 and 2.6 against the dollar, from a rate of 2.15 per dollar in place since 2005, giving the better rate for basic goods in an attempt to limit the impact of the measure on consumer prices.
• The opposition seized on fears that prices for imported goods will double as shoppers formed lines of more than a hundred people outside some stores in the capital Caracas.
• “By establishing the exchange rate at 4.3 bolivars per dollar, the quality of life for Venezuelans is automatically devalued since we now have half the money we had before,” said Caracas Mayor Antonio Ledezma, a Chavez opponent.

Ron Paul’s Golden Rule (1/8/10)

The Federal Reserve should answer to the government and dollars should be good as gold.

http://www.forbes.com/2010/01/07/gold-standard-fed-audit-intelligent-investing-ron-paul.html

• Congressman Ron Paul of Texas will be Steve Forbes’ guest Monday on Intelligent Investing discussing his new book End The Fed and his attempt, with Congressman Alan Grayson, to secure the right of the Government Accountability Office to audit the Federal Reserve.
• Watch a Highlight of Dr. Ron Paul’s Interview with Steve Forbes

Retiree Annuities May Be Promoted by Obama Aides (1/8/10)

http://www.bloomberg.com/apps/news?pid=20603037&sid=aHFCE999fWR0

• The Obama administration is weighing how the government can encourage workers to turn their savings into guaranteed income streams following a collapse in retiree accounts when the stock market plunged.
• The U.S. Treasury and Labor Departments will ask for public comment as soon as next week on ways to promote the conversion of 401(k) savings and Individual Retirement Accounts into annuities or other steady payment streams, according to Assistant Labor Secretary Phyllis C. Borzi and Deputy Assistant Treasury Secretary Mark Iwry, who are spearheading the effort.
• There is “a tremendous amount of interest in the White House” in retirement-security initiatives, Borzi, who heads the Labor Department’s Employee Benefits Security Administration, said in an interview.

Geithner dragged into AIG quagmire (1/8/10)

Commentary: Treasury Secretary breaks the golden rule

http://www.marketwatch.com/story/geithner-ankle-deep-in-aig-quicksand-2010-01-08

• Treasury Secretary Timothy Geithner should heed the lessons of Martha Stewart and Richard Nixon: It’s not the crime, it’s the cover-up.
• Now, emails gathered by Rep. Darrell Issa, the ranking Republican on the House Oversight and Government Reform Committee, suggest that Geithner played an even more sinister role: pressuring AIG not to disclose how and to whom CDS payments would flow.
• Geithner looks bad enough by being in the same room with AIG. He looks downright filthy in trying to keep the nosy public from following the money — its own money.
• He may survive the outcry and the congressional hearings being threatened, but as an effective proponent of Wall Street reform, he’s lost credibility.

Sarkozy says world currency disorder unacceptable (1/7/10)

http://www.reuters.com/article/idUSLDE6060P220100107

• Disorder among world currencies has become unacceptable and France intends to make it a major subject of its presidency of the G8 and G20 in 2011, President Nicolas Sarkozy said on Thursday.
• “Currency disorder is a major issue that France will bring up when it presides at the G8 and the G20 in 2011. There cannot be financial, economic and social order until we put an end to currency disorder.”
• “European companies will not gain competitiveness when the dollar is losing 50 percent of its value,” Sarkozy said.

Time for Fed to disprove PPT conspiracy theory (1/5/10)

Commentary: Analyst charges that government is manipulating markets

http://www.marketwatch.com/story/time-for-fed-to-disprove-ppt-conspiracy-theory-2010-01-05

• The massive stock-market rally in the past nine months is mostly due to secret government buying of stock-index futures, a respected stock-market analyst said Tuesday.
• Charles Biderman, chief executive of TrimTabs Investment Research, is the latest and most credible person to charge that the Federal Reserve and the Treasury (in league with top Wall Street firms) is rigging the stock market on a daily basis.
• In a special report released Tuesday, Biderman said the $6 trillion increase in U.S. stock-market capitalization since March can’t be explained by the usual sources of funds flowing into the market — such as mutual funds, direct retail investment, pension funds, hedge funds or foreign purchases.
• The only logical explanation for the extent of the rally, he suggested, is secret buying by a government committee known colloquially as the Plunge Protection Team. It’s like the dark matter that astrophysicists conjecture must be there, even if we can’t detect it.
• The PPT was established by President Ronald Reagan in 1988 after the 1987 stock crash to coordinate the government’s response to market meltdowns. It consists of the Fed chairman, the Treasury secretary, the head of the Securities and Exchange Commission and the head of the Commodity Futures Trading Commission.

Ron Paul’s ideas no longer fringe (1/2/10)

With the economy still struggling, the lawmaker’s libertarian views are getting serious attention.

http://www.latimes.com/business/la-fi-ron-paul2-2010jan02,0,7842580,full.story

• Reporting from Washington – For three decades, Texas congressman and former presidential candidate Ron Paul’s extreme brand of libertarian economics consigned him to the far fringes even among conservatives. Not a few times, his views put him on the losing end of 434-1 votes on Capitol Hill.
• No longer. With the economy still struggling and political divisions deepening, Paul’s ideas not only are gaining a wider audience but also are helping to shape a potentially historic battle over economic policy — a struggle that will affect everything including jobs, growth and the nation’s place in the global economy.

Bank of England considering extension of quantitative easing programme (1/2/10)

http://financialadvice.co.uk/news/12/ukeconomy/13276/Bank-of-England-considering-extension-of-quantitative-easing-programme.html

• The Bank of England is rumoured to be considering an extension of the quantitative easing programme with various meetings to be held this weekend. Despite the fact that £200 billion has been put to one side for the quantitative easing programme, which effectively allows financial institutions to swap assets for liquidity, it seems as though more money may be required in the short term. This would be a bitter blow for many investors and researchers in the UK who had assumed that the quantitative easing programme was being wound down.
• While there are a number of short-term considerations to take into account, in the medium term there is the problem of how and when to withdraw the quantitative easing programme without creating an unstable economy.
• While 2009 may have been a very difficult year for the economy and the authorities, 2010 will bring its own very difficult and very serious challenges.

Fed Discusses Limited Bond Sales to Withdraw Stimulus (12/31/09)

http://www.bloomberg.com/apps/news?pid=20601087&sid=aKkJ6A78P1P0

• Federal Reserve officials are considering a proposal to schedule limited sales of bonds from the central bank’s $2.2 trillion balance sheet as part of a range of tools for withdrawing record monetary stimulus.
• The Federal Open Market Committee discussed asset sales at its November meeting, with some members in favor and others warning that it would cause “sharp increases” in longer-term interest rates, according to minutes of the meeting released Nov. 24. A middle route now being studied would allow small amounts of bonds to be unloaded at announced times.
• “If they get this wrong, volatility is going to be through the roof,” said Dan Greenhaus, chief economic strategist at Miller Tabak & Co. LLC in New York. “Investors are over- discounting the difficulty that is coming our way when the Fed begins the process of raising interest rates.”

Merkel Says Economic Downturn Will Continue (12/31/09)

http://www.rttnews.com/Content/AllEconomicNews.aspx?Node=B2&Id=1168681

• German Chancellor Angela Merkel has warned that the economic situation in Europe’s largest economy could deteriorate before improving again.

Japan rating hinges on deficit reduction plan -Moody’s (12/30/09)

http://www.guardian.co.uk/business/feedarticle/8877429

• The direction of Japan’s credit rating would largely depend on the government’s efforts to consolidate its finances in the medium term and cut its deficit, an analyst at Moody’s Investors Service said on Wednesday.
• Tom Byrne, Japan sovereign analyst at the credit ratings agency, said capital markets will continue to finance deficits at relatively low nominal rates in 2010 but warned that “at some point” investors will demand a risk premium to fund such large gaps.
• “This turning point will be more likely if the government cannot articulate a credible medium-term deficit reduction plan,” he said in an emailed response to questions from Reuters.

Chinese firm says won’t pay Goldman on options losses (12/29/09)

http://www.reuters.com/article/idUSSGE5BS09T20091229

• A small Chinese power generator on Tuesday rejected demands from a Goldman Sachs unit to pay for nearly $80 million lost on two oil hedging contracts, part of a long-running dispute over how China deals with derivatives losses.
• Goldman Sachs (GS.N) was one of the foreign banks, along with Citigroup (C.N), Merrill Lynch and Morgan Stanley (MS.N), blamed by the state assets watchdog for providing “extremely complicated” and difficult to understand derivatives products.

Do we need a new reserve currency? (12/27/09)

http://www.business24-7.ae/Articles/2009/12/Pages/26122009/12272009_b60d075ae8834ca981282abc0ee85802.aspx

• A new global currency should replace the US dollar as the international reserve currency, as the long-term deterioration of America’s economy and the greenback is fuelling a “currency-regime crisis”, says Martin Wolf, associate editor and chief economics commentator of the Financial Times.
• “On the dollar, there is nothing to support this currency except the Chinese government and a few other governments that are prepared to buy it,” said Wolf. “Anybody can look at the arithmetic of the fiscal deficit, the monetary policy, the external balance, which has improved but largely because of the recession, the dollar is not adequately supported.” The US currently has a national debt in excess of $12 trillion (Dh44trn) or almost $40,000 per citizen, with a debt to GDP ratio of more than 85 per cent. In the July-September quarter, the US current account deficit rose sharply by 10.3 per cent from the previous quarter to $108bn. In the past year, the US dollar index, which measures the performance of the greenback against a basket of currencies, has also fallen significantly.

Central banks keen to stock up on gold (12/25/09)

http://www.thehindubusinessline.com/2009/12/26/stories/2009122652460100.htm

• The European Central Bank (ECB) decision to downsize its annual gold sale in 2009 to 155 tonnes is expected to further boost yellow metal prices in 2010. The ECB has sold 400- 500 tonnes annually the last 10 years.
• Of late, there is a tendency among central banks of many countries to hold a major portion of their reserves in gold. The emergence of new net buyers is expected to add strength to the bullish trend in the metal. China had acquired 450 tonnes, India 200 tonnes and Russia 120 tonnes from the International Monetary Fund this year.

U.S. Removes Caps on Fannie, Freddie Lifelines for Three Years (12/24/09)

http://www.bloomberg.com/apps/news?pid=20601087&sid=amgoNkv_GkYs

• The U.S. Treasury Department said today it will remove the caps on assistance to Fannie Mae and Freddie Mac for the next three years to alleviate market concern about the effect of limited government assistance.
• The two companies, the largest sources of mortgage financing in the U.S., are currently under government conservatorship and have caps of $200 billion each in backstop capital from the Treasury. Under the new agreement, these caps can rise as needed to cover net losses over the next three years.
• The Treasury said today that it is ending its mortgage- backed security purchase program as of Dec. 31, after $220 billion in purchases. The government also is eliminating a short-term credit facility for the two companies and the Federal Home Loan Banks that was never used.

Homeownership in U.S. May Decrease, New York Fed Study Finds (12/24/09)

http://www.bloomberg.com/apps/news?pid=20601068&sid=aLjHdmnKUlPo

• The rate of homeownership in the U.S. may fall in coming years as households rebuild equity wiped out by the worst slump since the Great Depression, according to a study by economists at the Federal Reserve Bank of New York.
• U.S. homes have lost about $5.9 trillion in value since the market’s peak in March 2006 as mounting foreclosures and the recession weighed on prices, according to Zillow.com. The homeownership rate peaked at 69 percent in 2006 and has since dropped to 67.3 percent, a level not seen since 2000, the authors wrote.
• Foreclosure filings in the U.S. are set to climb to a record for the second consecutive year with 3.9 million notices sent to homeowners in default, RealtyTrac Inc. said this month. This year’s filings will surpass 2008’s total of 3.2 million as record unemployment and price erosion batter the housing market, the Irvine, California-based company said.

Schwarzenegger to seek federal help for California budget (12/23/09)

http://www.latimes.com/news/local/la-me-budget23-2009dec23,0,7164018.story

• Facing a budget deficit of more than $20 billion, Gov. Arnold Schwarzenegger is expected to call for deep reductions in already suffering local mass transit programs, renew his push to expand oil drilling off the Santa Barbara coast and appeal to Washington for billions of dollars in federal help, according to state officials and lobbyists familiar with the plan.
• If Washington does not provide roughly $8 billion in new aid for the state, the governor threatens to severely cut back – if not eliminate – CalWORKS, the state’s main welfare program; the In-Home Health Care Services program for the disabled and elderly poor, and two tax breaks for large corporations recently approved by the Legislature, the officials said.

How China Might Buy More Gold Than America Owns (12/23/09)

http://www.businessinsider.com/china-gold-23-12-2009

• China has a long way to go before coming anywhere near America’s gold reserves. Yet apparently it’s on their to-do list and a must, at least according to the country’s China Gold Association.
• “In view of the declining US dollar value, it is paramount that China steps up gold reserves. How to do this is the only question that China is debating these days. The possible steps include opening up new gold mines, aggressively going for gold mining, buying gold from the open market etc. All said and done, it is imperative that China needs to buy more gold,” Zhang points out.
• “We recommend that China’s gold reserve should reach 6000 tons in 3~5 years, and probably reach as high as 10,000 tons in 8~10 years,” according to Ji Xiaonan on November 28 at the third Chinese Industry Stability Forum. He is the head of the supervisory committee at the state-owned Assets Supervision and Administration Commission.

Chase and Citibank to Drop Out of FDIC Coverage Program (12/23/09)

http://www.creditinfocenter.com/wordpress/2009/12/23/chase-and-citibank-to-drop-out-of-fdic-coverage-program/

• Chase and Citibank announced via their websites that they are no longer participating in (Federal Deposit Insurance Company) FDIC Transaction Account Guarantee Program. Both banks are still insured under the general FDIC program, however.
• What does dropping the Transaction Account Guarantee protection mean to you? Actually, you should be pretty scared. Taking a protection away from your hard earned funds is not a good thing. Nor is it a good sign of the health of these banks. Dropping out of the program means that the banks don’t have to be quite as strict with their banking procedures.
• What are all these rules that a bank doesn’t have to follow if they drop out of the program? If a bank decides not participate in the Transaction Account Guarantee Program, they no longer have to certify that they compliant in section 4(k) of the Bank Holding Company Act (4(k). What are 4(k) compliant activities?
• Any bank not participating in 4(k) compliant activities means a bank can invest in any company, risky or not, or financial in nature or not. Which means they are taking your money and perhaps gambling with it.

• It may have taken 38 years but the world is starting to realize that the US dollar, the world’s reserve currency, can no longer function in that role without gold backing. Abandoning the gold standard on August 15, 1971 began the death of the dollar. All control and discipline has been cast aside for years; that is certainly been demonstrated by the privately owned Federal Reserve. Taking the lead of the Fed central banks worldwide have to a greater or lesser degree followed in their footsteps with aggressive stimulus in creating and issuing money and credit and lowering interest rates. The result has been rampant speculation, financial excesses, outright criminality and all the other problems excesses bring. That leaves us with a financial system awash in liquidity, which is in the process of forming another bubble. Worse yet, if the Fed and other central banks withdraw the liquidity the system will collapse. We are told of higher Fed interest rates in July. We will believe it when we see it. Withdrawal of liquidity and higher rates will allow the deflationary undertow to take hold and the worst part of the depression will begin. That said, America is in a money and credit bubble and sooner or later it will burst. Incidentally, we refer you to the section on China; they are in a bubble as well.
• Recently the Chairman of the Fed, Mr. Bernanke, said Fed rate policy was right between 2002 and 2006, and that a low Fed funds rate was not the cause of the housing bubble, Ben is either dumb or a liar. It was all the fault of the Fed. The banks tell the Fed what to do and the Fed rubberstamps it. By banks we mean the 12 banks that own the Fed. Currently they see inflation perhaps hyperinflation, but they fear deflation even more. They see what we see, declining use of credit and saving by individuals, a decline in bank lending, an ongoing credit crisis masked by their issuance of money and credit, and still very little securitization. The end of quantitative easing is something the economy cannot cope with.
• The dangerous excesses are in the treasury, Agency and MBS markets. They are not responsible for the Treasury and Agency mess, that was the creation of fiscal policies by this and the last two administrations. The mortgage disaster is where we believe they deliberately blew it. What the Fed did was destroy the credit of our country in tandem with government’s reckless spending. As a result the Fed is forced to hold interest rates close to zero percent as they monetized Treasuries, GSE and MBS paper. This and government intervention has distorted prices and even supplied us with a dollar carry trade.
• A demand from government for money has been vicarious and it could be that the Treasury could be facing a debt spiral. In January and February the Treasury will need about $150 billion to service old debt and grapple at the same time with up to $300 billion in new debt. In recent months foreign government have been sellers of debt not buyers, leaving them buyers on a net basis of only some $8 billion. It should be noted that about $2 trillion in debt was sold in 2009. For the year foreigners’ holdings of all US liabilities fell about $44 billion and if you separate the Treasury holdings they fell about $38 billion. Those figures are borne out by a fall in reserve holdings of foreign central banks of dollars from 64.5% to 61.8% in just the last six months of the year.
• The only other buyer of size has been the privately owned, “Federal Reserve,” which creates money out of thin air. They call it “quantitative easing,”another euphuism for creating money with wild abandon.
• If the monetization is ended the whole house of cards will collapse. Year on year, in order to strangle inflation, the Fed has an M3 outstanding of $14.193 trillion versus $14.317 trillion. They had been increasing M3 by as much as almost 18% and now it is negative. Incidentally, all major countries central banks have been doing the same thing, yet official US inflation is 2.7% and real inflation is 8-1/4%. Can you imagine what it would have been otherwise? That means the inflation is being caused by the stock of euro dollars and cash outside the US, which are obviously being cashed in or sold. Banks internationally starting in 1948 created euro dollars, and the banks have been creating them ever since, some trillions of dollars.
• This in a world in which savers get little interest for their savings and in fact are losing some 5 to 7 percent by being in CDs, and Treasuries. This means cash holders are going to demand higher interest rates, which will put downward pressure on bonds, real estate and stock prices. There can be no economic recovery in that kind of an environment.
• What could be underway now is a sustained increase in interest rates, as a result of the Fed’s actions and those of the Treasury as well. A ¾% increase in rates would cause Treasury interest rate costs to rise by $120 billion, an increase to 5% would add $650 billion a year in debt for interest alone. That is if they have lenders at that level of interest. It is obvious those lenders are not available at current levels and haven’t been available for some time. This is why 80% is being monetized by the Fed. Higher interest rates would squeeze the economy, which would make assets fall further in value, as unemployment rose even higher. This is why so much pure gambling is going on in the markets. The public doesn’t understand what is going on, so they stand still while they get shafted. If they hold Treasuries they are losing 25 to 30 percent of the buying power annually. If the Fed wasn’t suppressing interest rates they would be somewhere between 6 percent and almost 10 percent. As you can see, bonds are certificates of guaranteed confiscation. The Fed and the Treasury are stealing people’s money.
• The path to destruction was chosen in 1990 when the system could have been more easily purged. That option is no longer voluntarily available.
• The path chosen was for inflation and it is inflation we have, which will become massive inflation and in that process the dollar will be the big victim. The only thing the Fed can do is hold interest rates down and create more and more inflation. As each wave of Treasury funding washes over the economy the dollar gets weaker and inflation rises higher and more dollars get sold by foreigners and instability increases.
• The only alternative to the carnage we face is gold and silver bullion, coins and shares. That is the only place ultimately where your wealth can be protected. As interest rates and monetization rise and the dollar falls with stock and bonds, you have little alternative but to be in gold and silver related assets. The only thing that won’t fall as the market drops is gold and silver related assets. If you do not have them, you had best get them because the window of opportunity could close quickly.