The useful idiots in congress are talking, more than ever, about preemptive warfare with the nation of Iran. This is the same sort of chatter that happened in the time leading up to the war with Iraq. The stupidity of the American public never ceases to amaze me.

There is no evidence that Iran is producing nuclear weaponry. They have been subject to surprise inspections and the inspectors have found nothing; yet Israel and United States wish to bomb them anyways.

The individuals who advocate this sort of behavior, pre-emptively destroying the lives of other people without even investigating why it is being done, are even worse than rapists and serial killers.

I don’t give a damn if you’re just ignorant, turning a blind eye, or whatever your excuse is.

Another war will impoverish the people even further. The price of energy will double or triple and the whole world will be brought into a massive depression.

Remember what happened when the economy of Germany was in shambles after WWI. They witnessed the Nazification of their nation, and we too shall witness the Nazification of the United States of America, if we just sit back and allow this slaughter to occur.

The American people have to get up off the couch, put the soda down, drop the TV controller, turn off the game console. Get up and do something about this before it is too late. We need fundamental changes in the lives of each and every one of us, if we are to hold off the forces of darkness.

If we fail here, then our children and grandchildren will live in a world that you wouldn’t wish on anyone.

What kind of a people are Americans? Are they the kind who would allow horrible things to happen to others for no good reason? Or do they have a spine and the will to stand up for something bigger than themselves.

Will they stop listening to McCain, Gore, Obama, Clinton and instead listen to their hearts? Are we going to fail the next generation or are we going to turn this situation around?

Our success or failure here will be looked at for generations…

Food inflation as we have mentioned is here to stay. Corn prices may be peaking as the Mississippi river crests, but we see higher prices for other substitutable grains. A decline in food prices could happen temporarily in the autumn if the U.S. Government and others end set their aside programs and other countries start to develop underdeveloped farmland. This will not lead to a large increase in food production worldwide initially but in the long term production will rise.

The problem is that consumption is also rising at a rapid rate. While worldwide production will not go up by a huge amount, the main effect will be psychological. As people come to the conclusion that supplies may increase, speculators will exit positions. Over the longer term, global food stocks will be rebuilt as they are way too low. This rebuilding of inventories will keep prices firm.

As we have mentioned in the past, global food inventories have fallen in 7 of the last 8 years. These inventories must be rebuilt for many years before prices can really start to fall. The fact is, global food prices are lower in inflation adjusted dollars than they were decades ago. Even in the most optimistic case, inflation adjusted corn, wheat, soybeans, and other foods must rise for years to come just to get back to their inflation adjusted prices of 50 years ago.

An aside…developed country consumers spend less of their budget on food compared to consumers in other countries. We believe that this will change. Consumers in developed countries will be spending more of their total income on food as well.

INFLATION WILL COME MORE AND MORE INTO PUBLIC AWARENESS OVER THE NEXT SEVERAL YEARS

There are many indicators of inflation in the world that we watch to forecast oncoming inflation. Currently, the great majority of these tell us that the inflation we have seen so far…is just getting started.

IT IS NOT THE CASE THAT FOOD AND ENERGY ARE THE SOLE OR MOST IMPORTANT DRIVERS OF INFLATION TODAY

The public media has picked up on the theme of inflation in the last few months, and they have been haranguing the public about higher food and energy prices. As a result, many people believe that once the rate of the rise in food and energy prices slows, the rate of increase in inflation will recede.

In our commentaries, we have been talking about inflation and its expected arrival for almost two years. We have pointed out the reasons for inflation, and discussed some of the many variables in a general way. We would like to take this opportunity to discuss them in more detail.

IN TODAY’S MEMO, WE WILL COVER FOUR OF THE TEN REASONS WHY WE BELIEVE INFLATION WILL CONTINUE:

REASON #1: PERIODS OF LONG GLOBAL ECONOMIC EXPANSION CREATE INFLATIONARY TENDENCIES

The economic expansion that began in 2003 was still going strong as the end of 2007 approached. The current banking crisis in the developed world has caused it to slow. However, the economic growth rate did not slow in the developing world, and the tendencies leading to inflation remain strong globally.

Some governments are still trying to tell their constituents that the U.S. and European economies are growing, but at a much slower rate. On the other hand, important economists in both regions agree that the U.S. and Europe are at least in a growth recession…if not an outright recession.

In either case, a slight recession or slow growth, the current economic climate has been strong in the developed world for five years, and in the developing world (which is more important) it has been going on for closer to ten years. China, India, Brazil, Russia the mid eastern oil producers and many other countries continue to grow at a very rapid rate as we write this memo.

IN SUMMARY, APART FROM THE DEVELOPED WORLD, EVERYONE IS STILL GROWING…AND SOME BIG COUNTRIES ARE GROWING VERY FAST. PROLONGED AND INCREASING ECONOMIC GROWTH STIMULATES INFLATIONARY EVENTS IN THE ECONOMY.

Perhaps it is shortages of raw material, skilled labor…or, maybe it is the need for speedy delivery to a customer. Maybe new customers and new markets are all putting pressure on suppliers to achieve rapid execution in getting the deliveries out on time and with good quality…at the expense of price.

IN BOOM TIMES, PRICE INCREASES ARE EASY TO PASS THROUGH. THIS LEADS TO PROFIT MARGIN EXPANSION.

Of course, price increases lead to inflation. In this way, a long economic expansion (such as the one that the world is currently experiencing) will lead to higher prices. When customers’ profit margins are strong, eventually the customers allow their suppliers to raise prices and enjoy higher margins as well. Higher margins come as result of higher prices.

A long economic expansion breeds higher prices, and is the first of 10 influences on inflation. Stay tuned for more about what drives inflation.

REASON #2: GOVERNMENTS ARE QUICK TO ADDRESS THE DOWNSIDE RISKS TO THE BANKS AND THE FINANCIAL SYSTEM. THIS IS DUE TO A NUMBER OF FACTORS, BUT PRIMARILY IT IS DUE TO A CHANGE IN THE PSYCHOLOGY OF GOVERNMENTS REGARDING BANK SOLVENCY AND ECONOMIC GROWTH.

SIMULTANEOUSLY, THEY HAVE BECOME SLOWER TO MOVE TO STOP INFLATION FROM BECOMING EMBEDDED IN THE SYSTEM.

Now that they recognize inflation is becoming a problem, they have begun to address it…but in words only. Thus far, U.S. Federal Reserve has spoken about the possibility of higher interest rates, but they have done nothing. U.S. interest rates are lower now than when the inflation rate was almost 2% per annum lower. Higher inflation should mean higher interest rates, but thus far it hasn’t. The ECB has also recognized inflation is higher than their targets, but thus far has only spoken of instituting higher rates.

Government officials have become afraid to not limit the downside risks to their economy due to social and political pressure. The days of the hard nosed, tough central bankers in the U.S. and many countries has ended. Inflation, which was a specter that stalked the world in the 1970’s, has been pushed to the back of the institutional memory of politicians and bureaucrats who run the day to day activities of government. The days when inflation, and wages adjusted to inflation, caused havoc in the 1970’s are remembered by some of the older financial types, but not by government as a whole. As a result, people in the developed and developing world are slow to act to restrain inflation. This slowness to restrain it causes inflationary psychology to become embedded in the public mind. As we will discuss in future memos this can be a serious problem.

MORAL HAZARD

Another major issue is that the U.S. and Europe have become more social democratic or socialist in the governmental policies in the last thirty years. Thus, an institutional bias by government toward protection of the public at all costs has risen. In other words, the institutional bias that existed in the U.S. in the 1970’s that said that the individual was at least partly responsible for their personal financial future has eroded. In the 1970’s, I do not recall anyone thinking that it would ever be OK for the government to take over a bank like Britain did when it bailed out Northern Rock; publicly stating that it was making good on all deposits…even those well in excess of the insured maximum. In fact, many crises of the seventies were correlated to a major bank failure. At those times, people who had deposits in excess of insured amounts were just out of luck.

REASON #3: GOVERNMENT SUBSIDIES

Today, food, energy and other consumables are subsidized by the governments of countries where about 4 billion of the world’s people live. China and India are rife with subsidies for food, energy and other goods…as are many dozens of other countries globally. These subsidies are a mistake and will create inflation when they are lifted.

Governments subsidize the price of food, energy and other consumables for political purposes…it is a good way to curry favor with voters. These have been a favorite with centrally planned economies for decades. Their history goes back much further to some of the world’s ancient civilizations. There has in my opinion, never been a track record of long term success for these types of programs. Politicians are attracted to them because they are popular with consumers. The programs cut costs for consumers, but someone has to absorb the loss on the subsidy. Usually, it is the taxpayers or the owners of companies who are asked to lose money on the goods that they sell to consumers at below cost.

For example, if world prices of gasoline are $4.50 per gallon and you can buy gasoline for $2.00 per gallon in Vietnam, why would you not purchase gasoline for $2.00 and resell it in another locale (a neighboring country) at something closer to the world market price of $4.50? The answer is that many people will, and this leads to over-consumption, black markets, shortages, smuggling and many other socially unattractive side effects. Higher prices ration demand and lead to lower consumption artificially low prices incentivize consumption. Eventually, shortages and rationing follow…and the government is then forced to move the subsidized price closer to world prices. By now world prices will be much higher than the subsidized price thus setting off a wave of price inflation.

Subsidies are a shortsighted strategy to “improve” the standard of living for their constituents, but they encourage waste and inefficiency…and eventually painful adjustment when they are lifted. Subsidies often lead to inflation and redistribute wealth from the government or the rich to the poor. Once the cost becomes too expensive for the government to bear, or when the private companies who have been forced to sell at below market prices go broke, prices are forced to rise rapidly. The price rise hurts those who have not learned to conserve…often more than they would have been hurt if subsidies had never been introduced.

REASON #4: PRICE CONTROLS

Along with subsidies (which we discussed yesterday) and tariffs (which will be covered in our next memo), price controls are a common but destructive economic tool. They are politically motivated and substitute the intelligence of bureaucrats for the intelligence of the marketplace by telling companies and individuals the prices they can charge for goods and services. Often, the prices are slow to reflect cost increases, and companies and individuals can experience losses and dislocations in profits if the price controllers are not proactive, effective, and accurate.

The way they hurt an economy depends upon many variables, like whether they are all-inclusive, whether they are instituted in concert with wage controls, how much free trade the world and the country enjoys and so forth.

Like subsidies and tariffs price controls cause a misallocation of resources, non-economic behaviors on the part of the government, and antisocial behavior on the part of the public.

Price controls often go hand in hand with: shortages, conniving behavior by businesses and consumers, declines in production, declines in quality, and many other problems. A common problem in price controlled economies is that capital will not be invested to grow businesses because a fair return on capital can not be obtained. So, the manufacturing and employment capacity of the economy will usually fall. This may have the unintended consequence of slowing economic activity and increasing unemployment.

Price controls cause the creation and growth of bureaucracies to administer the controls. These bureaucracies often develop lives of their own and become difficult to remove, causing the controls to last years longer than they should…which further diminishes economic growth.

The biggest problem is that price controls cause a build-up of unfilled price increases and diminished production (people don’t produce for a loss if they can help it). When shortages and economic dislocations caused by the controls finally become politically unpalatable, and politicians remove the controls…INFLATION ACCELERATES.

These make up reason #4 why inflation will be here for a while, and why it is not being driven solely by food and energy price rises.

We will discuss more of the reasons we believe inflation will be with us for a while in next week’s letter. In the meantime, we hope you are enjoying the summer season.

If you would like to read more on inflation please check our website periodically for this series on inflation.

The people fear not having adequate food due to inflation, excessive taxation, poor use of capital and interest payments. With each passing day the people are becoming increasingly enslaved to the costs associated with the dependency on civilization and the money system.

It is therefore incumbent upon us to reduce our dependency on this civilization for survival. It is time to exercise our freedom to plant a garden, grow our own foods on this bountiful land that we inhabit.

We have to move away from this hijacked “money” system, and into a “human” system. The “money” system has no integrity anymore.

The architects of today’s system have created 1.1 QUADRILLION dollars worth of derivative instruments to float the massive debt and keep Frankenstein alive. At any moment, the money system could come unhinged and bring the prices of everything sky-high, as happened in Weimar Germany after the reparations of WWI.

It is far more profitable to live independently, when it is feasible, because the government cannot tax your tomato bush, fruit tree, etc. The system can, however, tax 40-50% of the cost of getting food through the money system. By the time a loaf of bread reaches you, it has been taxed, all told, hundreds of times directly and indirectly.

The trip to the ballot box is rigged, we have to uproot it at the source. Reduce, and seek to eliminate your dependency on civilization, become more independent with each passing day if you can.

The willingness to stop this dependency, when it becomes so much of a burden as is now the case, is an essential element of freedom.

This means that the controllers of HAARP have the ability to modify, what had been exclusively a natural phenomena, as well as weather patterns.

Over the skies of the Sichuan, China epicenter, where the major earthquakes have been happening recently, a rainbow colored cloud was seen, just minutes before the first big quake.

Benjamin Fulford did an interesting investigation into the evidence surrounding these claims. He also noted that a mysterious plasma weapon was seen prior to the Niigata earthquake in July 2007.

Taiwanese satellites measured a 50% drop in ionospheric energy above the Sichuan epicenter on the day before the quake. Both earthquakes seem to have happened near nuclear military facilities.

This is a situation that has no reasonable solution except, imo, to scale down these derivative positions. They are going to have to be made illegal, but the people that have them already have to be grandfathered in so that the system doesn’t collapse.

Total Notional Value Of Derivatives Outstanding Surpasses One Quadrillion

Jim Sinclair | JSMineSet.com

Dear CIGAs,

The notional value of all outstanding derivatives now totals approximately $1.144 QUADRILLION.

This appears to be Bank of International Settlement Spin to announce the largest gain in derivatives outstanding since they started to report. As of the last report it appeared that both listed and OTC derivatives was under $600 trillion. Now listed credit derivatives alone stood at $548 Trillion. The OTC derivatives are shown as $596 billion notional value, as of December 2007. One can only imagine what number they are at now.

Well we hit a QUADRILLION. We have more than $1000 trillion dollars in all derivatives outstanding. That is simply NUTS because notional value becomes real value when either counterparty to the OTC derivative goes bankrupt. $548 trillion plus $596 trillion means $1.144 quadrillion.

It would be an interesting piece of research to see what the breakdown is of listed derivatives according to exchange to see if it adds up to the reported number. Spin is now everywhere.

This means that no OTC derivative house can be allowed to go broke. This means that whatever funds are required to rescue failing international investment banks, banks and financial entities will be provided.

Keep this economic law in mind. Monetary inflation proceeds price inflation and is its primary cause in economic history from Rome to present.

Nothing can stop the juggernaut of price inflation heading towards every nation like a runaway freight train down a mountain.

Gold is going to at least $1650. I am probably way too low with that estimate.

The US dollar will trade down to at least .5200 as measured by the USDX.

Gold is the easiest market to trade for the aggressive investor. Sell 1/3 when the market looks like a Rhino Horn which you will see with your French Curves at the point of the rollover.

Buy 1/3 back when the price of gold looks like a fishing line hanging off a fishing rod. Your maximum power down trend line will give you this.

Exchange Traded Derivatives Increased 30%, BIS Says (Update1)

By Liz Capo McCormick

June 9 (Bloomberg) — Trading in derivatives, led by short- term interest-rate futures, climbed 30 percent to a record $692 trillion in the first quarter, signaling a possible easing of tensions in the money markets, the Bank for International Settlements said.

The value of short-term interest-rate futures traded on exchanges rose to $548 trillion during the three months ended March 31, a gain of 32 percent over the same period last year, the Basel, Switzerland-based BIS said today. The contracts are designed to speculate on, or hedge against, moves in borrowing rates. The figures are based on the notional amounts underlying the agreements.

The increased trading “suggests that liquidity conditions in the term money markets might have recovered to some extent after the stressful 2007 year-end,” analysts Naohiko Baba, Patrick McGuire and Goetz von Peter wrote in the BIS’s quarterly review.

The gains were concentrated in derivatives denominated in U.S. dollars and euros, which had undergone a “significant retreat” in the prior quarter, they wrote. Banks were still pressed for cash, according to another part of the report.

A derivative is a financial obligation whose value is derived from interest rates, the outcome of specific events or the price of underlying assets such as debt, equities and commodities. Derivatives include futures, which are agreements to buy or sell assets at a set date and price, and options, which are the right but not the obligation to do so.

Eurodollar Deposits

Turnover in futures and options on three-month Eurodollar deposit rates “picked up sharply” in the period, extending a rise from the previous quarter, said the BIS, a global organization formed in 1930 that monitors financial markets and serves as a bank for central banks.

Eurodollar futures are priced at expiration to the three- month London interbank offered rate, or Libor, for U.S. dollars. Turnover in futures and options on the federal-funds rate fell in the quarter.

The increase in exchange-traded derivative trading in the first quarter erased a 21 percent slide in the previous period, the biggest drop in at least 14 years. Trading had declined as banks hesitated to lend to each other amid mounting losses on securities linked to U.S. subprime mortgages.

Even as conditions in the money market improved in the first quarter, early signs in the current quarter show that banks were still pressed for cash, BIS analysts Ingo Fender and Peter Hordahl wrote in a separate section of the report.

`Extreme Stress’

“Interbank money markets continued to show clear signs of extreme stress from March to May,” they wrote. “Spreads between Libor rates and corresponding overnight indexed swap (OIS) rates, due to counterparty credit risk as well as liquidity concerns, were generally at least as high at the end of May as three months earlier.”

This appears to imply there were expectations that interbank strains “were likely to remain severe well into the future,” Fender and Hordahl wrote.

The difference, or spread, between the three-month dollar London interbank offered rate and the overnight index swap rate, known as Libor-OIS, is 67 basis points today. The spread was 73 basis points on March 31 and peaked last year at 106 basis points in December. The spread averaged 11 basis points for the 10 years prior to August, when the global credit crunch began.

Dollar Swaps

Overnight indexed swaps are over-the-counter traded derivatives in which one party agrees to pay a fixed rate in exchange for the average of a floating central-bank rate over the life of the swap. For U.S. dollar swaps, the floating rate is the daily effective federal funds rate.

Trading in stock index futures and options fell 2.7 percent to $73 trillion in the fourth quarter, compared with $75 trillion in the prior quarter, according to BIS analysts Baba, McGuire and von Peter. Trading rose 22 percent versus the same period a year earlier. The Standard & Poor’s 500 index declined 9.9 percent in the three months to March 31. The Dow Jones Stoxx 600 Index in Europe dropped 16 percent during the same period.

Foreign exchange futures and options volumes advanced in the first quarter, led by trading in the euro, yen and Swiss franc derivatives, the BIS said. These increases offset retreats in currencies that included the Canadian dollar and the U.K. pound.

Trading in currency futures and options rose to $6.7 trillion, a jump of 11.7 percent from fourth-quarter 2007 and a gain of 32 percent from the same period last year, the BIS said.

Currency Volatility

Volatility implied by options among the seven most-traded currencies increased 25 percent in the first quarter, matching the rise in the previous quarter, a JPMorgan Chase & Co. index shows.

Global trading in commodity derivatives grew by 52 percent to 489 million contracts in the first quarter from the year-ago period. The BIS said notional figures weren’t available. Agricultural and energy products led the climb, it said. Commodity trading data is not included in the BIS’s aggregate derivative figures.

Trading in derivatives not listed on exchanges increased during the second half of 2007, led by growth in the credit segment “due possibly to heightened demand for hedging credit exposure,” the BIS said.

The notional value of all outstanding over-the-counter derivatives rose 15 percent in the second half to $596 trillion, following a 24 percent gain in the first half of the year, the BIS said.
The gross market value of credit default swaps, which measures the cost of replacing all existing contracts, almost tripled to $2 trillion in the second half of 2007, compared with a rise of 53 percent in the first half, the BIS said.

Credit-default swaps, which make up the majority of credit derivatives, are financial instruments investors use to speculate on the ability of companies to repay debt or hedge against the risk they won’t.

More…

If nations can keep their own economies strong, not completely dependent on pillaging and slave labor, then there is not much that the globalists can do to enslave the people and subjugate the nation-states.

The globalists profit most by flooding a nation’s economy with cheap goods; causing the local infrastructure to deteriorate. If this process can be stopped then the globalists are going to lose their power.

“British Imperial Free Trade Doctrine” At a Dead End

The bad news from Rome, is that the FAO conference did not decide on any truly effective remedy for the worldwide hunger catastrophe. The good news, is that the “free traders” were likewise unable to put through their plans, and that the WTO’s Doha Round will, in all likelihood, end in failure. A commentary by Helga Zepp-LaRouche.

“British Imperial Free Trade Doctrine” At a Dead End And Now, for a New, Just World Economic Order!

by Helga Zepp-LaRouche | LaRouchePAC.com

Certainly the bad news from the FAO conference in Rome, is that the measures agreed upon fall far short of what will be necessary to solve the world hunger crisis. The final communique promised a mere $8 billion, without even specifying how it is to be spent. But despite this, the conference’s outcome can be termed a partial victory for the cause of humanity, because the champions of the “British Imperial free trade doctrine,” as Friedrich List once described them, have suffered a decisive defeat.

The so-called developed countries should nevertheless be ashamed that the dividing line between those states whose leaders spoke in favor of food security and protectionist trade measures, and the the partisans of unfettered free trade, ran more or less precisely between the G7 nations on the one side, and the underdeveloped nations on the other. And so, it’s hardly surprising that among the developing countries, the view was widespread, that the G7 is pursuing a neo-colonial policy, and is unwilling to help the world’s poor countries–a view which was already anticipated back in April by FAO Director Diouf. (At least the German delegation, as the conference was winding up, evinced “respect” for the positions of Argentina, Venezuela, and a few other countries.)

But since it’s become increasingly evident that the neo-liberal system of globalization is light-years distant from humanity’s real needs, and is only benefiting a tiny caste of speculators, it should also not be surprising that the institutions and organizations associated with globalization are all becoming obsolete. For example, in Paris, the G6–the European Union, the United States, Brazil, Japan, China, and India–failed in their last desperate crisis talks aimed at bringing the seven-years-long negotiations of the so-called Doha Round to a conclusion, which they had hoped would finally secure the complete liberalization of world trade.

In Geneva, WTO Director-General Pascal Lamy then proceeded to suspend all further meetings, arguing that negotiations have only resulted in further setbacks, and that some participants are no longer even trying to get results. EU Trade Commissioner Peter Mandelson complained that a failure of the WTO agreement would mean there would be no guarantee against protectionist reactions. All options, he said, have been exhausted, and with the U.S. Presidential elections under way, the window of opportunity has now been closed. (They had hoped to get the agreement signed, sealed, and delivered well before the end of Bush’s Administration.)

Former WTO Director-General and current BP chairman Peter Sutherland bemoaned the fact that the hundred-years-long march of free trade has now come to a standstill, and is about to go into reverse. He predicted that it’s only a matter of months before the Doha Round completely breaks down.

That is all excellent news, because it has never been more clear than right now–at a time when the global systemic collapse and rampant worldwide inflation have unleashed an unparalleled hunger catastrophe–that the doctrine of free trade is in fundamental opposition to the existential interests not only of the developing countries, but also of Europe’s farmers, and thus of all consumers everywhere.

Nations Take the Law Into Their Own Hands

A rapidly growing number of countries are therefore taking their own independent measures to increase domestic food production, move toward food security, restrict exports, and invest in sectors which are run contrary to the WTO’s trade conditions and the IMF’s conditionalities. These countries are driven by a courage born out of desperation. In Haiti, for example, during the hunger revolt which led to the collapse of the government, the rioters were shouting that they had no reason to fear the policemen’s bullets, since they were on the verge of starving to death anyway.

These countries are simply doing what Friedrich List, the father of the German Tariff Union, had called for in his book on National Economy, namely, that the lesser-developed nations must erect protective tariff barriers for their domestic economies, so that they might have a chance to build up a strong internal market and increase their citizens’ purchasing power. List, who traveled to America in 1825 and studied what he termed the American System, along with the diametrically opposed English System, advocated the same theory as Henry Carey did later on: that the source of all social wealth is not the principle of Manchester free trade–”buy cheap, sell dear, and demolish all trade barriers”–but rather, wealth comes from increases in productivity, as the fruit of scientific and technological progress. For it is only by increasing the productivity of a nation’s entire workforce, that a nation can achieve actual growth of its national physical assets.

List’s accusation against Adam Smith’s British System holds just as true now for the proponents of free trade, as it did back then: namely, that it is for export only, in order to prevent underdeveloped economies from building up their own productive forces, while British manufacturing remained shielded from foreign competition. In the same way, Great Britain today has forced the monster of Maastricht and the euro onto continental Europe, and, in the words of Ambrose Evans-Pritchard, has induced Brussels to pursue a 100% British-made policy, while Britain itself remains free of the Maastricht corset.

On Nov. 3, 1827, while in Philadelphia, List wrote that the Americans (and today, the world as a whole–HZL) must finally understand “that with his books, Adam Smith did not intend to enlighten nations, but rather aimed at confusing them, for the benefit of his own land [England].” The same is true of the free-trade faction’s ideas today. So, free trade isn’t all that free after all, since, for example, 90% of agricultural production worldwide is now controlled by five mega-cartels. The purpose of “appropriate technology” is not to help people in the developing countries, but rather it is for deliberately perpetuating those countries’ underdevelopment. And under the rubric “sustained development,” the continuation of that injustice is supposed to be made permanent.

Free Trade Is Obsolete

But just as Russia’s new President Medvedev was correct when he announced on his first visit to Berlin, that NATO and its eastward expansion have become obsolete, so also this is true for the WTO and the entire British Imperial free-trade doctrine. Russia, China, and India, along with a growing number of developing countries, are drawing their own conclusions from the failure of globalization. What is most necessary now, is a worldwide public debate on what a real industrial policy is, one which is capable of conquering world hunger and poverty in the long term. That must include Japan’s promised assistance for a new Green Revolution in Africa, as well as Senegal President Wade’s plan to build a “great green wall” from Dakar to Djibouti, i.e., from the Atlantic coast to the Gulf of Aden, cutting across an area consisting mainly of desert–a forested corridor, and thus a new “green lung” for the African continent.

Over the coming months, the world financial crisis will worsen dramatically, with all the predictable side-effects. The agenda item which the FAO conference in Rome failed to address, must now be discussed elsewhere, in other forums. By the time when the UN General Assembly meets in September, at the very latest, the issue of a New Just World Economic Order, a New Bretton Woods System, and a New “New Deal” for the world economy, must be on the agenda. It is high time that our planet’s political and economic order be brought into harmony with the Creator’s order, the laws of the physical universe, and the dignity of Man as the crown of that Creation.

Management professor Reuven Brenner bristles at superficial thinking and the ill-founded myths it tends to perpetuate. He rails against the type of academics who propagate them with meaningless jargon under the guise of science. How, he wonders, can some social scientists possibly believe what they do is scientific?

“It’s a function of them having nothing to say,” he shrugs during a conversation in his Bronfman Building office. Obscure, pompous language uttered by those with a claim to expertise is quickly mistaken for science by those without the understanding to issue an authoritative challenge. The true challenge for the academic is to make an argument clearly, without resort to obscurity.

The holder of the Repap Chair of Business for the past decade at McGill, Brenner has just published The Financial Century: From Turmoils to Triumphs (Stoddart), a jargon-free volume with much to say about how societies can achieve prosperity and some barbed observations about how governments often get in the way.

Prosperity, he writes, is a consequence of “matching talent with capital, and holding both sides accountable.” Open, democratized financial markets and access to capital promise the most benefits to the most people. Private, as opposed to public, institutions have the most incentive to distribute capital wisely and prudently. Government, he writes, “can make many more and greater mistakes, and they can also fail to correct them.”

Why? Because they have a monopoly on the power to tax. Given that, they are unlikely to face bankruptcy and, hence, the urgency to change. An exception would be the case of the Soviet Union, which survived on repression and monopoly control of the economy until the state was finally bled beyond financial recovery.

“The best system is one of stable institutions that move as fast as possible to correct mistakes,” he explains. And private institutions have incentive to act quickly; neglecting to do so means financial ruin. Governments, on the other hand, merely compound their mistakes and then raise taxes to cover them.

This discretion to raise funds takes away the incentive to change. “Only when they go bankrupt or are leapfrogged by other states will governments be forced into action. Until then they can simply carry on.”

He continues, “We are living with years’ worth of mistaken regulations that impact today. It is difficult to erase old regulations, so instead we pile new ones upon them. This is what creates the habit in people of going to government for solutions instead of responding with private initiatives,” he says.

Unafraid to raise contentious arguments, Brenner questions the root of the anti-smoking position that the current Canadian government expresses with high taxes, bans on tobacco advertising and its own publicity campaign on the hazards of the practice.

He argues that smoking would be far less prevalent were health care not socialized. Imagine, he proposes, the incentive to quit if smokers faced the prospect of excessive insurance premiums, as compared with non-smokers. The result would be removing government from the health business, which it has been mismanaging anyway, in his view, eliminating reams of bureaucracy, and leaving people free to choose how to behave, knowing they will have to bear the costs for those choices rather than having them diffused for society at large to absorb.

Another area where he sees government imposing itself because of wrong-headed decisions is culture. Two hundred years ago, the great opera houses of Europe were privately owned and sustained by adjoining casinos. Thanks to the profits earned from gambling, the impresarios were able to stage the operas.

When government stepped in and seized monopoly control over gambling, or imposed outright bans on the pursuit, they denied this integral source of revenue and had to compensate with subsidies.

For a relevant comparison he looks at today’s movie theatres, which depend on the margin from popcorn and soft drink sales for profit. What if health ministries decided to ban such junk food in the public’s interest? It would mean the death of the film industry or dependence on government funding, which they would raise through taxation. Thus does every government intervention reverberate through multiple public policies.

Brenner’s faith lies in the creativity of the individual. Give them access to capital and they will employ it to raise prosperity. Limit taxation so that the entrepreneurial spirit may thrive. And, furthermore, give people the opportunity to express their wishes through direct democracy.

“People are more intelligent than politicians would have us believe. A referendum on a specific issue would be a catalyst for focused debates,” he insists. This would require even an interventionist government to correct mistakes because the voter would insist.

He says that an open financial market is the true measure of freedom; political elections are frequently more symbolic than anything else. He refers to Mexico, which for 70 years held votes that repeatedly put the same elites in power and kept the electorate in crushing poverty. On the other hand, there’s Hong Kong before its transfer to China’s rule. It did not have free elections. However, it did enjoy freely accessible financial markets and a 15% flat tax and, consequently, one of the most dynamic and prosperous economies in the world. If you’re wondering which society most appealed to its citizenry, all you need do is look at the outflow of people. Mexicans have fled in huge numbers to the United States, while pre-China Hong Kong held on to its most ambitious and talented people.

Who would be hurt if politics is removed from finance? According to Brenner, the political class and those who have relied on its protection. As an example, he draws on Newfoundland’s fishermen, who have more incentive to take money from an Ottawa bureaucracy set up to administer a dying sector than to adopt new skills.

Obviously, not everybody will agree with Brenner’s thesis. He is blissfully unconcerned.

“The world works as it does,” he smiles. “It’s your choice whether to buy into it.”

Lyndon LaRouche believes that there is no more future for this monetary system. He says that we are at a cross-roads, where we can choose between two paths.

On the one hand, we could choose to use warfare and welfare to prolong the life-span of the current system. Such an approach would drag our world into another dark-age.

On the other hand, we could choose a new system, in which we have a stable monetary system, which rewards productivity and stability; a system which increases food production instead of fighting over the few scraps that are available.

Like Weimar Germany, the productive capacity of our real economy has been destroyed. However, we have done this to ourselves, through our adherence to the belief in globalization.

For those of you who haven’t figured it out already, what we are witnessing here is a Malthusian effort to reduce the human population of earth and steal wealth from the lower castes. Higher oil prices are an easy way of starving people and killing off “undesirables.”

Lindsey Williams is one of the researchers who really enhanced my understanding. His book, “The Energy Non-Crisis” is an excellent expose of our situation. Here are some excerpts:

Peak Oil Hoax - The Energy Non-Crisis

By Lindsey Williams
Reformation.org
2-14-6

The following are small excerpts from chapters in Mr. Willims book ‘The Energy Non-Crisis’

CHAPTER 1 - The Great Oil Deception … There is no true energy crisis. There never has been an energy crisis . . . except as it has been produced by the Federal government for the purpose of controlling the American people. …

CHAPTER 3 - Shut Down That Pipeline … My friend answered, “Well, Brother Lindsey, that’s one of the major cross-country pipelines carrying crude oil from the West to the East.” “Ah,” I answered, “That’s rather interesting. I’ve heard there’s a possibility of an energy crisis. I’m sure glad those pumps are running full speed ahead.” … That was in 1972. You will remember that 1973 was the first time we were told there was really an energy crisis. The East Coast was used as a test for that energy crisis, and there were long lines of people waiting, burning fuel while they waited in line for gas they couldn’t get. … Well, the man finally recognized that I was getting a little bit indignant and he said, “well, mister, if you really want to know the truth, the truth is the Federal government has ordered us to close this pipeline down.” The old Westerner went on and told how he stood up to the boss man, “Why man, I can hardly believe that. After all, we’ve got an energy crisis.” The boss man answered him, “Sir, we’re closing it down because we’ve been ordered to.” …

CHAPTER 4 - An Important Visit by Senator Hugh Chance … What followed included some of the most astonishing answers I have ever heard in my life. This is not opinion, but is actually what I heard from a man who was one of the original developers of the Prudhoe Bay oil field. He said, “Senator Chance, there is no energy crisis! There is an artificially produced energy crisis, and it is for the purpose of controlling the American people. You see, if the government can control energy, they can control industry, they can control an individual, and they can control business. It is well known that everything relates back to crude oil.” …

CHAPTER 11 - The Barges Froze and Cracked and Popped … I watched as they stalled, and stalled, and stalled for time … until they had finally stalled long enough! The barges froze, and cracked, and popped. The big steel plates were literally destroyed, and millions of dollars worth of equipment was crushed by ice-Why? Could it be that the government did not want that flow of oil? Could it really be that there is no energy crisis, except the one they want to produce? …

CHAPTER 13 - Why Are These Arabs Here? … What follows is an approximate recall of the questions and answers betweenSenator Chance and Mr. X, one and a half years earlier. If you like, this is the good old “flashback” method. The questions and answers went like this. Senator Hugh Chance had asked, “Mr. X, how much oil is there on the North Slope of Alaska?” “Senator Chance, I’m persuaded there is as much oil as there is in all of Saudi Arabia.” “Then, Mr. X, if there is that much oil there, there is not an energy crisis.” (Mr. X’s only answer was a smile, implying that Senator Chance had hit the nail on the head.) “Mr. X, what do you think the Federal government is really out to do?” “Senator, I personally feel that the American government wants to nationalize the oil companies of America.” “Then, Mr. X, if you are so convinced of that fact, have you calculated how long you can remain solvent with present Federal control?” Mr. X was reluctant to answer at first, but then he looked at Senator Chance and said, “Yes, we are so convinced that in fact we, as oil company executives, have made that calculation.” “Then how much longer do you think you can remain solvent?” “Until the year 1982.” “Then, if what you say is true, why don’t you oil companies warn the American people of what is going on? After all, it is your neck that is at stake.” “Senator, we can’t afford to tell the truth.” “Why not?” “Because, Senator, the Federal government already has so many laws passed, and regulations imposed on us as oil companies, that if they decided to enforce these rules they could put us into bankruptcy within six months. Sir, we don’t dare tell the truth.” …

CHAPTER 15 - Waiting for a Huge New Oil Field … A “burn”-in layman’s terms-is a method of proof used when an oil field or an oil well is brought in. I was to watch that day what is probably one of the most phenomenal bits of intelligence information that has ever been discovered since the original oil discovery at Prudhoe Bay. However, this was also to be one of the most devastating things that the government of the United States has ever done to the American people in relation to the energy crisis. …

CHAPTER 16 - Gull Island Will Blow Your Mind! … I went to his office and sat down, and wondered why it was that on this day the trumpets were not sounding. This was a phenomenal thing, and yet there seemed to be no fuss at all about it. Sure enough, without delay, the oil company official soon walked into his office and closed the door behind him. He looked at me with a frown on his face and said, “Chaplain, what you saw yesterday, don’t you ever as long as you live, let anything out that would tell anyone the data that you saw on those technical sheets.” I said, “But sir, that’s going to end the energy crisis in America!” He said, “No, Chaplain, it’s not. Quite to the contrary.” As he sat down behind his desk, I noticed that he was very worried, and then he continued, “Chaplain, you weren’t supposed to see what I showed you yesterday. I’m sorry I let you go with me out there to watch that burn. I’m even more perturbed that I let you look at the technical data, because, Chaplain, you and I might both be in trouble if you ever tell the story of Gull Island.” … This company official said to me,”Chaplain, that great pool of oil is probably as big as the Prudhoe oil field, it has been proven, drilled into, and tested-we know what is there and we know the amount that is there, but the government has ordered us not to produce that well, or reveal any information as to what is at Gull Island.”

I could hardly believe what I heard that day. I walked out of the oil company official’s office very perturbed, because again we could be lied to, the American people would be deceived again-the truth would not be told. As I walked out of that office I realized that I was only one of about six men alive who would even know the truth about Gull Island, or would ever even see the technical data. I was astonished that day because of this restriction on releasing data about the production from beneath a small island out in the Arctic Ocean. This could end the oil crisis, but I had come to the conclusion in my mind, with no doubt whatsoever, that the Federal government would never want that oil produced.

It was not the oil companies that ordered the rig removed and the well capped. It was not the oil companies that said, “We cannot go beyond our 100-mile boundary.” It was not the oil companies that said, “We will not tell the American people the truth.” Rather, it was your Federal and State government … and my Federal and State government-the officials elected by us to represent us for our welfare.

Gull Island was capped and the rig was removed, and the truth has never been’ told … until now! …

CHAPTER 17 - If Gull Island Didn’t Blow Your Mind-This Will! Gull Island just proved what the oil companies have believed for some time. It authenticated the seismographic findings. Seismographic testing has indicated that there is as much crude oil on the North Slope of Alaska as in Saudi Arabia. Since the Gull Island find proved to be seismographically correct, then the other testings are correct also. There are many hundreds of square miles of oil under the North Slope of Alaska. … The Gull Island burn produced 30,000 barrels of oil per day through a 3 1/2 inch pipe at 900 feet.

Three wells have been drilled, proven, and capped at Gull Island. The East Dock well also hit the Gull Island oil pool (you can tell by the chemical structure). For forty miles to the east of Gull Island, there has not been a single dry hole drilled, although many wells have been drilled. This shows the immensity of the size of the field. …

The following is a comparison between the three oil fields on the North Slope of Alaska which have been drilled into with numerous wells, tested, and proven. Prudhoe Bay can produce two (2) million barrels of oil every 24 hours for 20 to 40 years at artesian pressure. Imagine what the production of the Kuparuk and Gull Island fields could be.

Field Pay Zone Oil Area of Field

(Average depth of oil pool)

Prudhoe 600 Ft. of pay zone 100 square miles

Kuparuk 300 Ft. of pay zone Twice the size of Prudhoe

Gull Island 1,200 Ft. of pay zone At least four times the size of Prudhoe . . .

Estimates are that it is the richest oil field on the face of the earth. …

CHAPTER 19 - The Energy Non-Crisis of Natural Gas: A StartlingPrediction Comes True … “Yes,” Mr. X answered, “There’s enough natural gas on the North Slope of Alaska to provide the entire United States with natural gas for the next two hundred years. If every other natural gas well in America were shut off, there would still be enough natural gas on the North Slope to provide for the total projected natural gas needs for all of the United States for 200 years.

That is based on the present calculated rate of consumption and the expected increased consumption year by year -there’s still enough there to provide all the projected needs of the United States for 200 years.” …

And what about Alaska? You guessed it! Morris Udahl’s bill came along, so now we will take most of the land in Alaska, and lock it up in wilderness areas for all time and eternity. This was just one more part of the great plan to lock up all the energy that is so abundant in the North Slope of Alaska. The D-2 land bill has passed, the natural resources can never be produced. It can never be drilled, and it can never be used. We will never be allowed in to find out more, to make the tests to see what is there. They say it is being preserved for our future generations. Future generations? With the technology of today, you mean we cannot develop some alternative means of supplying energy? . . . even when we have at least enough (with crude oil and natural gas) to supply our nation’s energy needs for generations ahead from just a few pools of oil on the North Slope of Alaska? What is the real answer? If a satisfactory alternate energy source cannot be discovered and developed in that length of time, it’s because nobody is trying .. . or somebody doesn’t want one found! …

CHAPTER 20 - A Scandal Greater Than Watergate? … In the year 1973, we experienced the first real so-called energy crisis per se. By the way, have you ever noticed that each of these energy crises have affected only one portion of the country at a time? In 1973 it was only the East Coast (the northern part, in particular). There was no crisis in the West. There was no crisis in the Midwest. There was no crisis in the South. Why the Northeast? Because, you see, that was the first testing ground to find out how far the government could take gullible Americans. Then about the time folks were ready to revolt, suddenly there was no longer a crisis in the Northeast. All of a sudden, out of a clear blue sky, for no known reason, it ceased to exist … all the gas you wanted!

Next, if you remember, it was California. The lines had disappeared in the Northeast. Then they thought, “We’ll try the farming section of the country.” However, that one did not get too much publicity, so that “crisis” didn’t last too long.

It seemed strange to me that I was told by oil company officials a number of months in advance where the next “crisis” would occur.

One section after another of America has been tried, to see just how far they could be pushed before they rebel. Then, at the point of rebellion, the government backs off. All of a sudden there is no energy crisis in that area anymore. …

I am convinced that there is a definite reason, and at this point I move from observations to personal opinion. There is only one thing on earth by which every human being can be controlled, if that product itself is controlled. That product is energy. The world today has become dependent on energy-for its homes, its lights, its fuel, its automobiles, its airplanes, its trucking industry, its railroads, its delivery of goods, etc.

Electricity is produced by the energy of today. Every facet and aspect of our lives can be controlled when energy is controlled. There is no other product on the face of the earth that can so control the American people-and all the people of the world. Whoever controls the energy … controls us! The fact is, if energy can be controlled, you can be controlled. It could not be done by money, for methods of bartering could be developed by the people. If your energy is controlled, however, then “Big Brother” can control how you live in your home; when you go and where you go; the products you buy; the style of life that you will live; even the level of life at which you will live. They can control your state of life and your every movement.

In the days of the horse and buggy, this would not have been so, but today we are dependent entirely on energy. Therefore, because of our complete dependence, we have become ready targets. Now, if they can brainwash the people into believing that there is a true energy crisis, when there actually is not, then they can slow down our society, they can destroy our free enterprise way of life, and they can control every area of our being. It certainly points ultimately to one-world control … and to an evil dictatorship. Absolute power corrupts absolutely.

http://www.reformation.org/energy-non-crisis.html

Read more about the ‘Peak Oil’ hoax - http://www.peakoil.com/article717.html

Indeed, at the extreme end of possibilities, most of today’s prognosticators believe in one of two potential outcomes:

1. The dollar collapses into complete oblivion, the United States dis-integrates, anarchy takes hold and society as we know it ceases, bringing about a dark age of chaos and upheaval.
2. Everything stays about the same, the markets recover in the near future, the economy begins recovery by 2009, and people continue to go further and further into debt; all remains well in the Goldilocks economy, where consequences never befall those who are irresponsible.

My research into these matters indicates that neither of these scenarios are likely, though it wouldn’t hurt to be prepared, at all times, for the first scenario, in case the system does end up coming apart.

During the course of my studies I have come across a brilliant solution, which, after another 30% slide in the dollar, the U.S. Dollar resumes its role as the reserve currency for the planet Earth, but with a modernized and revitalized Gold Certificate Ratio to regulate it, instead of edict-driven interest rate fluctuations.

This Gold Certificate Ratio is not the same as the direct Gold Convertability that we hear about our great grandfathers using in the early 20th century.

Instead of fixing the price of gold to a set rate, or price range, the modernized Gold Certificate Ratio merely employs Gold to balance the balance sheet of the United States.

In the early 1980’s, Gold shot up to $887.50 then fell for over a decade to $248. The $887.50 level is precisely the point at which the Gold held in reserves of United States Treasury balanced out the U.S. Current Account.

At this point of balance, the common stock of United States (U.S. Dollar) was again seen as a viable investment, so the world’s central banks and wealthy elite re-vested into the dollar.

The same thing is on its way to happening in the current generation. Given the level of the U.S. Current Account Deficit, Jim Sinclair believes that we will see gold move to a minimum price objective of $1,650 and the U.S. Dollar Index (USDX) would move to .52.

At this point, it would become imperative for the monetary powers of the Federal Reserve to hold the balance sheet at a state of equilibrium, ensuring prosperity and stability for, at the very least, several generations into the future.

Aside from a 3% M3 growth allowance, to keep up with population growth, any amount of new monetary liquidity created (as measured by the M3 money supply figure) will have to be balanced by the value of gold in the reserves of the U.S. Treasury.

So if the Fed creates 5% more money in a year, the value of Gold will have to rise by 2% (5% minus 3%) or they will have to buy an equivalent amount of gold to hold in reserve.

This being the case, all monetary creation will quickly be balanced out, by either gold purchases or a rise in the price of Gold. This new policy will facilitate international trade and restore confidence in the financial status of the United States.

Sinclair estimates that, due to a peak in a crop cycle, which is likely to effect the price of food crops; we will see the peak in the gold price by February of the year 2011.

The following is a compilation of Jim Sinclair’s from writings going back from 2003 to present.

Connecting the Golden Dots

source: Jim Sinclair’s Mine Set

It makes the following points:

1. The answer is looking you right in the face if you have the eyes to see it.

2. One needs only to connect the dots to understand what is happening behind the scenes regarding gold price drama.

3. We take for granted that there must be a buyer on the other side of the gold hedges but never ask ourselves who that buyer or buyers are. For every short in any arrangement there has to be a long.

4. By reading the last article written below you will begin to see a pattern forming.

5. This pattern is nothing short of brilliant.

6. A pattern is the connection of the various dots.

7. All these dots point to a single corporate source.

8. That corporate source is an immensely wealthy entity which is not a gold producer nor in any way in the gold business.

9. When major producers deliver against their short of gold hedges it will represent sales by the producers at the largest possible discount; that sale price being between $300 and $400.

10. Gold is now and has been in many ways accumulated by just those that you point your finger at as anti-gold entities and people.

11. By studying the Ashanti case study you will see how the long side of a derivative can be settled in common shares with the losing entity ending up in control of the company and therefore the production.

12 This influence as a product of derivatives will control world production and hold the largest gold position

Therefore when gold reaches whatever its high side potential is the size of the position precludes any liquidation. By the following method gold will trade closely (within $50 to $200) around the figure it was trading at when the installation of a new Revitalized and Modernized Federal Reserve Gold Certificate ratio occurs.

13. This will not represent gold convertibility.

14. This will not be as the previous entity of the same name connects to automatic increases or decreases of interest rates.

15. This will be attached to a measure total liquidity.

16. Should liquidity rise the price must also rise to meet the liquidity level so as to balance to some degree the balance sheet of the USA.

17. In all likelihood the Fed and the Treasury will never have to do anything as the market will speculate via some listed vehicle on the rise and fall of liquidity and therefore the gold price. The US dollar will end its bear market the day this mechanism is put in place, most likely at USDX .5200

18. The bottom line answer to the question, “WHAT COMES NEXT” is there will be nothing to do but enjoy your profits as gold will not crash after reaching its maximum but trade closely around it according to liquidity increases or decreases.

Those that know this have been the major buyers on every reaction as the community panics. The gold shares, most certainly juniors that are not the target for control that TODAY are being thrown out the window, will enjoy a level of prosperity that they never even dreamed of.

Please keep in mind as you read this that it was written as early as 2003 and as recently as last week.

What Comes Next:

Here is where the circumstances change. I doubt you will have a repeat of 1980 wherein gold began its return to commodity valuation and declined in stages from $887.50 to $248.

You have to realize that in the age of Authoritarian Free Enterprise, a PPT and a more active Exchange Stabilization Fund, circumstances will change.

If you, as I do, assume all major markets are creations of the unseen dirty hand, it follows that when gold reaches the characteristic mentioned above that the unseen hand would have most all the capital there is to have. That capital due to the nature of the beasts will be paper assets. The time will have come to protect that value.

Gold has always functioned primarily as a CONTROL item and convertibility is simply impossible. It is too inefficient to settle world trade without causing serious difficulties regardless of the price.

Gold would again function as a control item in the US dollar in the form of a revitalized, modernized Federal Reserve Gold Certificate Ratio tied to a measure of international liquidity as measured by the ounces of gold held by the USA times the price of gold equaling the market value of the international central bank’s holding of US Treasuries. In the 1930 this item was tied to an automatic adjustment of interest rates practical then and totally impractical now.

It stands to reason that those with most of the US dollars would wish to start a dollar bull market to profit even more. Control over desires is not a virtue at the Bilderberger Hotel.

Further explanation of the construction and function of the Federal Reserve Gold Certificate Ratio can be found in the following missives:

More on the Federal Reserve Gold Certificate Total Value Ratio

(Originally posted Wednesday, May 28, 2003, 6:05:00 PM EST)
Author: Jim Sinclair

Q: Regarding the “Federal Reserve Gold Certificate Total Value Ratio” discussed recently on your web site.

If I understand you right, the US government is to rescue the dollar by promising to limit their issuance of dollars based on the amount of Treasury gold.

This is supposed to be some form of limited, modified gold standard. They never allow an audit of the physical gold said to be on hand. Even if the number of bars were counted, how would we know whom it really belonged to? Doesn’t this make any such revived “gold standard” rescue attempt meaningless?

A: No it does not because there never will be an audit and 98% of the world will take whatever the Treasury says as gospel. Look at yesterday’s rally in equities because each of those buyers believed what the government is saying.

Q: Whatever the ratio of dollars to gold which they promise to adhere to, what is to prevent them from later incrementally changing that ratio as has been done in the past? Doesn’t this make any such revived “gold standard” rescue attempt meaningless?

A: Yes, that is possible. But a rescue for the dollar most likely in these terms will come if the two tax cuts, a war, the rebuilding of Iraq by US companies, and the spending of all allocated funds fails to deliver the economic conditions required for reelection of the present administration.

Q: If I understand you correctly, there would be no actual re-deemability of US dollars for gold. This is like a mortgage, which cannot be foreclosed. Doesn’t this make any such revived “gold standard” rescue attempt meaningless?

A: That is correct. It is a balance sheet fix for a balance sheet problem and will work for some time if adopted.

Q: In short, how is this smoke and mirrors gold standard going to add any credibility to the dollar since it will depend entirely on confidence in the US government, which is exactly what has caused the problem?

A: Smoke and mirrors are what cause markets to occur. I comment on what I see coming. Nobody wants to hear me pontificate on what I think is correct. I am here to tell you what I see coming, not what I think should be coming.

If a modernized Federal Reserve Gold Certificate Ratio is adopted, gold will trade $100 above and below the gold price of that day, be it $1000, $1650 or some other price. The US Treasury will not have to do anything, as derivatives will first be listed to wager on this change thereby changing the gold price itself.

Like a company coming out of bankruptcy with a balance sheet balanced and some mechanism to permanently control that situation, the US dollar as the common share of USA Inc. will enter a long-term bull market.

Here is where Gold and Silver disconnect in direction. Silver goes up like a rocket and down like a rocket. Gold goes up like a rocket and stays there.

Gold and Dollar Market Summary

(Originally posted Thursday, June 09, 2005, 7:54:00 PM EST)
Author: Jim Sinclair

Dear CIGA:

In five to ten years Henny Penny can fall from the sky! But let me give you an alternative scenario to the recent statements made at the Reuter’s Mining Summit about the dollar and its relationship to gold.

The Advent of and Application of a Modernized, Revitalized, Federal Reserve Gold Certificate Ratio.

How Gold Re-enters the US Dollar Equation.

1. The dollar again enters a full-blown bear market as a product of its deteriorating internal fundamentals.

2. The march into the new system of Authoritarian Free Enterprise continues as a result of all the measures being adopted and reinforced to combat terrorism – perceived or otherwise.

3. There comes a point in the dollar decline that the public will support draconian measures as they are reassured by eminent authority and political consensus that this is the correct system fix.

4. At this point, major wealth reassumes a long dollar position.

5. There are two key items in the draconian plans, the first of which is the significant reduction of Federal entitlement spending for the common benefit of all. This is intended to stabilize the US Federal Budget deficits and save the dollar, thereby creating jobs and improving the US and global economic system. That is the spin. Authoritarian Free Enterprise favors the authority of commerce and not the common good. This is when policy changes will occur, the deficits will come into balance and the US dollar will enter a bullish period.

6. In the second move, gold enters the picture. Gold convertibility is not what will occur and the Gold Community will not be pleased by the role gold will play. Gold is coming back into the system not at the pleasure of present gold advocates but at the pleasure of the masters of the global economy.

Gold will function as a control item for the US dollar. Convertibility is simply too automatic and too cumbersome for the barons of commerce. Gold’s role, however, as a barometer and control item will be seized in the form of a modernized, revitalized Federal Reserve Gold Certificate Ratio.

Gold will be tied to levels of international dollar liquidity measured by the outstanding US debt in the hands of non-US entities. This is another view of the cumulative affect of the US Current Account.

Assuming the unfortunate event that the price of gold closes any day at the end of the open outcry session of the COMEX (simply as a point of measure) 3% above the $518 - $529 price level it can be considered having moved out of a normal bull market into a run away market. That run away situation would be the signal that gold has assumed its traditional role in attempting to balance the international balance sheet of the USA.

That is another way to say that the value of the gold held by the US Treasury would be at a market price that would when computed be equal to the amount of US Treasuries held by non-US entities calculated at par or 100 cents to the dollar issue price. That situation would be the balanced position of assets versus liabilities for the US dollar internationally.

That price then is recognized internationally by central banks and all gold is revalued on their respective balance sheets to this market price. By this means, the US Current Account now becomes the means by which the US Treasury must increase their gold position if the price of gold times the gold held by the US Treasury (Gold Certificates) is below the level of value at par times all the US Federal paper held by non US entities.

This is modernized because it is not like the old Federal Reserve Gold Certificate Ratio that was tied directly to the cost of money. It is revitalized because it moves to maintain the balance of the international balance sheet of the USA Inc.

Such a condition for a corporation is conducive to acceptance of its common shares. Such a condition by a country is conducive to the value of its common share namely its own currency. Thus, the old outdated and impractical US Federal Gold Certificate Ratio becomes modernized and revitalized.

If the holdings of US Federal paper dropped internationally, the US Treasury could stand pat or sell gold.

There is no question that instruments of speculation would immediately appear, allowing the market to place bets on the state of the US current Account, marking the price of gold to the assumed level thereby relieving the US Treasury of having to do anything at all but watch as the market keeps the US international balance sheet in balance for them.

The gold people would be quite pleased with the price of gold and quite displeased when they recognize whom it protects. However, the system of Authoritarian Free enterprise with a sound US dollar controlled by gold - not convertible but as a control item of US creation of international liquidity – would guarantee the dollar’s viability for generations to come.

It would reinstate a one-alarm system and that alarm would be turned off immediately in the marketplace or by the US Treasury at will.

The action of the marketplace or by the US Treasury would - if liquidity were created - assure that the balance sheet of the USA was always in balance.

The fix as predicted as the Reuters Mining Summit. That can only happen for short to the problem is a balance sheet fix and not a fix that gold convertibility will have any place in.

Dear CIGAS (Comrades In Golden Arms),

(Originally posted April 2006)

In answer to many inquiries, this time after gold has maximized its potential on the upside, it will not fall as it did in 1980. Actually it will stay within a range at the high level as now a fulcrum point wherein gold rises slightly above and slightly below due to the increase and decrease of “International Liquidity.” This is the Federal Reserve Gold Certificate Ratio, modernized and revitalized. That will be the point of the low in the US dollar decline, which I see at .5200

What you need to understand is the gold market is not the bastion of you and I, but of the establishment in the disguise of the buy side of the short of gold over the counter derivatives. This is what Chung Phat and Dr. No knew when I used to tell you about their activities in 2002 and beyond.

The buy side of the OTC short of gold derivative, which becomes the lender to the producer at the end of the day, takes stock in one manner or the other as the producer simply cannot pay the cash owed. Just have your accountants look at what I outlined to you yesterday. You will see I am absolutely CORRECT. Therefore, the OTC short of gold derivative grantor has always known that their play was not for the profit on the transaction, but to be the majority stockholders of the major gold producers. How can you really believe that they will wish the price of gold significantly lower when there is a tool out there to both hold gold up and stop a dollar debacle, all in one.

It will not cost the Fed or US Treasury anything at all because the market will trade gold as if there was to be a costly move, thereby removing the need to act. It is like the method the PPT uses to control the general equities via the equity indices.

Just review the case studies of any of the companies that have run into derivative problems and you will see exactly what I am telling you is already occurring where control of the producers by dilution as a result of losses on OTC short of gold derivatives are concerned. Simply look at the few reports on who was on the other side of the Ashanti situation, since as it was a clear giveaway. Now there is silence on which the creditors are as a product of the loss developed by the close of the OTC derivative short of gold.

As such you can forget the talk of any action that would, like in the 30s, make holding gold or gold profits illegal or taxed to death.[emphasis by me]

Let’s go back to late 2002 to review the Modernized and Revitalized Federal Reserve Gold Certificate Ratio and how it will hold gold at prices at and near $1650 while establishing the low in the US dollar, probably by late 2011.

http://goldismoney.info/forums/showthread.php?t=193312

Follow the dots

Dear CIGAs,
(Originally posted February 2008)

There is an axiomatic truth in defining society, “The Structure of Power is Pyramidal.” What that means is that as your position of power rises in human society there are less people with more power above you until you reach the top where there is but one person in control of all below.

That person and the first two levels below are unknown. Conspiracy theory comes from a less than perfect observation of what is simply natural. All food chains have a top dog, not top dogs.

Many inquired why I said 30 dollars lower that ABX would consolidate the gold field and not suffer from its short of gold position until much later on. The reason is simple. The highest level of the “Pyramid of Power” is the long side of those short sales, which are extremely close via agents to ABX.

In the final analysis ABX will have obtained all the production that can be achieved then it will be watered down as per the Ashanti case. I doubt any present stockholders will care because with gold trading at or above $1650 the price of ABX will be in the stratosphere. The then stockholders of ABX’s hit will be light compared to Ashanti.

The point I am trying to bring home to you clearly, directly and not between the lines is that those you blame for today’s most uncomfortable Western world economic conditions and the derivative disaster that is only starting are those that run these people and have long positions in most gold hedges. As unnamed international stockholders owning the majority of ABX shares, they will control ABX who in turn will control all the available gold production by acquisition.

That fact is by itself all you need to know in order to have the courage to step up to bat in every decline in the gold price is scale buying after having sold some on every Rhino horn. That is all you need to know in order to sit tight with your gold and gold share investments, knowing that just those in the highest position in the pyramid of power are those who have the largest position in physical gold and have a strategy in place and operations to control gold production going forward from 2011.

This is all you need to know in order to understand that gold will not collapse as was evident from 1980 to 2001.

I will review well ahead of time the mechanism that will assure gold remains trading in price around its final high, not significantly lower. It is not convertibility, nor the gold cover clause as previously structured. It is this that makes the business of precious metals and the companies therein excellent investments, even though today you are screaming bloody murder.

Remember when gold was just going through $300 and $400, you heard from me about Chung Phat and Dr. No? Well they are real people.

Check the honorary directorship of ABX then hunt all the boards they are presently serving on after which you will need oxygen.

This is just one of the many reasons that the present action in gold, today off about $30 from the top, is nothing but noise on the way to $1650 and probably above.

Of course those that believe TA is the sole determinant of the direction of anything will be screaming against gold this weekend. They forget that major interest can paint the charts of a market as tiny as gold with the greatest of ease.

I keep trying, and try I must,
But something always seems to come along,
To take away what little I am able to produce,
After taxes and thieves have had their way with me.

I know it hasn’t always been this way,
And it can’t be this way forever,
But I wonder when it will end,
So I can do even one thing,
That isn’t tainted before its complete.

Tainted by the rot of the wretched and soulless,
Weakened and devoured by the fruitless among us,
Made to lay waste in its youth,
Defloured at the pinnacle of its existence.

There are those who will tell me to ignore my concerns,
Paint a smile in my face and enjoy the smell,
But I would be untrue to my self and to you,
If I didn’t say what a dirty rotten hell this place can be.

Its only a perspective, its only my experience,
If I could live it differently, then I surely would,
But this place is what it is,
And I am what I am,
And I’ll be god damned if I’ll just sit back and smile.

The US Treasury Department today released its monthly International Capital Flows data for the month of March 2008. Among the main highlights was a significant NET OUTFLOW of foreign capital of some $48.2 billion compared to a revised INFLOW of $48.9 billion in February. That is nearly a $100 billion swing in one month’s time and illustrates how severe the distress in the US financial system was which forced the hand of the Fed to bail out Bear Stearns at the expense of polluting their balance sheet. Wouldn’t you have loved to have been a fly on the wall in those hidden offices where the various machinations took place as the monetary authorities and their pals in the investment banks plotted and schemed to come up with a way to avert the consequences of their reckless greed and idiocy when it comes to the derivative daisy chain mess they concocted?

That net outflow occurred when short term securities were included in the numbers. When those were stripped out, the data showed a large NET INFLOW of $80.42 billion.

Using the short term measurement, the flows were insufficient to fund the trade deficit for that same month which was at $58.2 billion. That is a shortfall of $106.4 billion. Employing only the long term dated securities, flows were more than sufficient to fund the gap.

Another interesting thing to note for March’s data is the effect of the Bear Stearns news, along with the rest of the investment house troubles, which resulted in a mass exodus of foreigners from US corporate bonds. They sold those things off like they had the plague. In February they had ponied up to the bar to buy $19.2 billion worth of US corporate debt. In March, they sold $4.5 billion for a one month swing of $23.7 billion. Again, you can see why panic alarms were sounding in the halls of the Fed and the Treasury department.

Those nervous foreign investors went charging into US Treasuries for safety more than doubling their previous purchases to $55 billion from the previous month of $20.6 billion. As a matter of fact, foreign purchases of US Treasuries was the highest number that I have on record!

Those same foreign investors increased their purchases of US equities however from $1.1 billion in February to $11.5 billion in March. They also purchased $18.3 billion in US Agency down from $36.9 billion the previous month.

Let’s just say that were it not for US Treasury purchases, one wonders just how lousy these numbers could have been.

The key to watch will be the next month’s release for April, which will reveal whether or not foreigners felt sufficiently convinced that the US monetary authorities’ actions have been appropriate to restore their confidence.

Download the latest TIC data with commentary from Trader Dan Norcini

I don’t know whether to lie awake at night worrying about over-the-counter (OTC) derivatives or not, so I lie awake at night worrying about whether to lie awake and worry.

I should just buy a worry default swap and go back to sleep. But what happens if the counter party can’t pay? Who IS the counter party? And how many trillions of worry default swaps are out there, ready to collapse like an Egyptian block of flats and turn my dreams to nightmares?

The Bank of International Settlements says there are $US681 trillion worth of over-the-counter derivatives in the world, which sounds like rather a lot. Is that more than there are stars in the sky and grains of sand on the beach?

In any case, what does it mean? Should I worry about that number, or is it like saying there were 59.6 billion cappuccinos produced in the world last year. Is that concerning or not?

Last month the Financial Stability Forum (FSF), which was set up in 1999 as an inter-government body to promote international financial stability, solemnly presented a paper to the G7 in which it recommended, among other things, reform of the OTC markets.

It can’t actually do anything, you understand, it’s just a forum. There is nobody who can actually do anything. We can invade Iraq and tortuously negotiate rules to stop global warming, but each country is on its own when it comes to derivatives.

The FSF recommended: “the financial industry should develop a longer-term plan for a reliable operational infrastructure supporting OTC derivatives”. It went on to explain that the infrastructure should capture all trades, deliver reliability and scalability, maximise efficiencies from automation, enhance the management of counter-party risk, address all asset classes and encompass both dealers and investors.

You know what that sounds like? A securities exchange. That’s right folks, the Financial Stability Forum says the way to improve OTC derivatives is to make it work like a public securities exchange.

OTC trades are carried out between two parties in private. I say to a bloke in a pub: “Would you like to buy this Rolex watch?” He says: “Sure, how much?” I say: “Ten bucks”. He says: “That’s way too much for a Rolex.” We deal at $7.50. That’s an OTC transaction.

If I say: “Would you like to buy a Rolex watch next week?”, that’s an OTC derivatives contract, in this case futures.

Credit default swaps (CDS) are where someone agrees to pay me if someone else I’ve lent money to can’t, because they’ve gone broke.

A contract for difference (CFD) is where I bet that an exchange-traded item, namely an ordinary company share, will go up or down, and you bet that it will go down or up. And we both sit there watching the stock exchange screen tensely and then when the stock moves, one of us goes “HAHAHA, I WIN” and collects money from the other one.

That’s why OTC derivatives are worth US$681 trillion – because they’re so much fun.

The most fun of all is had by investment banks because they get to collect lots of fees and don’t have to tell anyone about what’s going on. There’s no regulatory pests meddling in the free market and trying to get them to report the trades or charge less in fees and interest.

For example there are two ways to trade CFDs in Australia: OTC and on the ASX. On the ASX it’s transparent – you can look up the prices on public screens, the interest rate is 1.5 per cent over cash (versus 3 per cent over in most OTC deals) and there’s no other fees. OTC CFD dealers charge a variety of hefty commissions for their trouble, on top of the interest rate and sometimes on top of a widened spread.

What’s needed is a Kyoto protocol for putting all of the world’s OTC derivatives trading onto public exchanges.

No more private deals with investment banks doing what they like with CDSs and CFDs on the QT.

In this Project Camelot interview, David Wilcock discusses the changes that we are likely to see, leading up to the pivotal year 2012, as well as the events which shaped his spiritual path.

Originally, Wilcock’s information lead me to the channeled Law of One information.

The information described in these channeled readings illustrates, on a very deep level, how the cosmos is organized into the different energy levels, or densities, which we incarnate into based upon our level of awareness.

Planets can be terraformed, when the beings inhabiting them are ready to transform into other densities. Earth may soon be moved out of the 3rd density and into the 4th density, depending on how the people of this planet react to the coming changes. Many researchers believe that 2012 will bring the pivotal changes.

The Road to Ascension : David Wilcock

Watch the Project Camelot Interview: Part 1 | Part 2 | Part 3 | Part 4

Our interview with David Wilcock is part of the redirection of Camelot’s energies toward the future of our planet in the years leading up to 2012. As the self-professed reincarnation of Edgar Cayce, he is a good person to start with. In some ways, we have approached David less in the traditional interview mode and more with the stance that all we at Camelot had to do was to place the camera at the opportune time and place and the rest would take care of itself. And so it happened. David is extremely well-read, eloquent and dynamic and in our conversation was able to hit the ground running. He tells us about his own spiritual journey, how he came to terms with his very probable prior life as Edgar Cayce, his meetings with members of the Black Ops community and encounters with the world of the Illuminati, his understanding of the Law of One and the ‘Ra material’, and his in-depth scientific investigations.

Wrapping his own considerable channeling abilities into a vast and lucid review of the scientific basis for the coming changes approaching 2012, this interview will raise many questions and provoke a great deal of thought. To his credit, in this lifetime David has duly recognized the areas where his prior self needed to grow and has set to work rectifying these things with a frank self-appraisal in the spirit of truth. He’s not lost his former channeling ability, but in this lifetime has complimented that skill with a solid grounding in science to augment both his knowledge and intuition and gain greater leverage into the social and mental thought framework of today’s world. David is currently working with Richard Hoagland on an investigation into the planetary changes surrounding 2012, and is the co-author of the extremely important and well-researched article to be found on Hoagland’s website entitled The Interplanetary Day After Tomorrow. This is recommended reading for all.

In presenting this material, we at Project Camelot recognize that some of what David states is contentious, and we encourage everyone to consider David’s conclusions in the spirit of open inquiry and as part of an ongoing investigation into the mystery surrounding 2012. This interview is in four parts.

“There’s an unceasing wind that blows through this night
And there’s dust in my eyes, that blinds my sight
And silence that speaks so much louder than words,
Of promises broken”

~Pink Floyd

I hear a number of theories, regarding the future of our economy. On one side, we have the people who wear the rose colored glasses and live in a one season world. On the other side, we have the people who believe that society, as we know it, will break down completely; that it will be absolute chaos and anarchy.

I can’t say for sure that we won’t have a complete breakdown, but I do know that anyone who says the worst is over, or near over, has got their head way up their ass.

My research into the actual cause of the problems, indicates that the banks are holding about 20 trillion dollars worth of worthless debt-related derivative instruments. This was done, basically, in order for borrowers to get loans without having the collateral to back it up.

Once this practice took hold, huge amounts of debt were created, which lead to the housing bubble of the early 21st century. This debt is not likely to ever be repaid, as there is no practical way to come up with the 20 trillion dollars that would be necessary to unwind these positions.

As we all know, there is no such thing as a free lunch. Everything will be repaid, either in this life or the next. It looks as if this problem will be repaid in this life, as the only solution is to inflate the money supply, to devalue the debt to a palpable level.

This is much the same as the Weimar Republic did, in order to get out of paying back the war reparations. The effect on society was devastating, since everything that people had spent their time toiling for vanished in a short period of time.

Let us hope that the Weimar-like event doesn’t happen to the same extent that it happened prior to WWII.

The Great Depression of the 2010s

Economics is not rocket science. Neither is power.

Depressions are monetary phenomena caused by central bank issuance of excessive credit. In 1913, the newly created US central bank, the Federal Reserve, began issuing credit-based money in the US. Within ten years, the central bank flow of credit ignited the 1920s US stock market bubble; and shortly thereafter, following the collapse of the bubble in 1929, the world entered its first Great Depression in 1933.

Investment banks are the undoing of central banking. While all banks, central, commercial and investment, view credit as the opportunity to exploit society’s growth and productivity, investment bank exploitation of growth and productivity exposes society to extreme risks - for investment banks use society’s savings to make their volatile and speculative bets.

The speculative risks undertaken by investment banks is done by leveraging the savings of society; and, when investment bank bets are sufficiently large enough and the bets go bad - as they inevitably do as the luck of investment bankers is due more to their proximity to credit than to their ability to foresee the future - it is society that will bear the brunt of the pain in the loss of its savings.

Inevitably, investment bankers cannot resist the temptations of excessive credit and, like the buyers of teaser-rate home mortgages, they will always overreach themselves - an overreaching that will have disastrous consequences for the society whose savings they bet.

The leveraged overreaching by investment banks in the 1920s caused the Great Depression of the 1930s and their more recent overreaching in this decade, the 2000s, is about to cause another Great Depression in the next, the 2010s.

It is the proximity of investment banks to the pools of savings that allows investment banks to profit. By their access to society’s savings, investment banks use society’s wealth as the foundation of their highly leveraged bets in financial markets; and in so doing, they have now placed all of us in harms way.

GOVERNMENT THE DEVICE BY WHICH THE FEW CONTROL THE MANY

The collapse of financial markets in the first Great Depression led to the US Congress to enact laws that would hopefully insure that such a collapse would never again happen. To that end, in 1933 the Glass-Steagall Act was passed by Congress and signed into law.

Acknowledging the role that investment banks had played in the Great Depression, the passage of the Glass-Steagall Act in 1933 separated investment banking and commercial banking to insure that investment bank speculation would not again destabilize commercial banks as it did during the Great Depression leading to the loss of America’s savings.

What bankers hath joined together let no man put asunder

However, in 1999, the US Congress repealed the Glass-Steagall Act and America was once again vulnerable to the highly leveraged shenanigans of Wall Street. This time, however, it was not only the US but the entire world whose futures were to be bet and lost by Wall Street gamblers.

The globalization of financial markets had spread the dangers of US investment banking to banks, insurance companies, and pension funds around the world. Now, the savings of Europe and Asia as well as the US were to be impacted by the wagers of Wall Street who in the 2000s literally bet the house on the possibility that subprime CDOs were actually worth their AAA ratings.

Glass-Steagall, the law enacted in 1933 to prevent another Great Depression was repealed at the behest of bankers. While it is true that at certain times the US government will act in the best interest of society, usually (and usually in the guise of so doing) the US government is the pawn of the special interests that benefit from the trough of government largesse and regulation. The repealing of the Glass-Steagall Act in 1999 was therefore a reversion to the mean.

We are today in the initial stages of another collapse that will lead to another Great Depression. The safeguards put in place to prevent such from happening were not only disassembled in 1999; but, now in 2008, the US government has moved even closer to exposing its citizenry and indeed the world to the speculative carnage and folly of investment banking excess.

THE RULE OF LAW IS A WONDROUS THING - ESPECIALLY IF YOU WRITE THEM.

Bloomberg.com April 8, 2008

As credit markets seized up, the Fed gave the 20 primary dealers in U.S. government bonds the same access to discount- window loans that had previously been reserved for banks. The central bank now auctions as much as $100 billion to lenders a month, and has cut the cost on direct loans to just a quarter- point above the overnight rate on loans between banks.

The US Federal Reserve is now underwriting, i.e. subsidizing, the commercial activities of global private investment banks. The 20 primary dealers in US government bonds include the world’s largest investment banks - BNP Paribas Securities Corp. (French), Barclays Capital Inc (British), Banc of America Securities LLC (USA), UBS Securities LLC (Swiss), Dresdner Kleinwort Wasserstein Securities LLC (German), Daiwa Securities US Inc. (Japan) etc.

In truth, these investment banks are global entities and have no actual nationality no matter what jurisdiction in which they are legally domiciled. As such, they also have no allegiance except to their own self-interests.

QUESTION:

Why is the US government allocating public resources for the benefit of private international investment banks?

ANSWER:

US resources are subsidizing international investment banks through the Federal Reserve Bank, a quasi private entity which was given governmental powers in 1913 (some allege in violation of the US Constitution). That a quasi private bank is bailing out private banks with public monies does make sense. What doesn’t make sense is why the public allows it.

There is much discussion as to the justification and reasons for US, UK, European, and Japanese central banks bailing out private banks with public money. Issues such as moral hazard are now being raised in questioning the right and consequence of so doing.

In truth, such issues are irrelevant. Not that they are in themselves not important, but issues such as moral hazard will have no effect whatsoever on what is going to happen.

Intent is the underlying motive that explains what is about to occur. The intent of private bankers is not public stability, nor growth, nor productivity - it is the pursuit of private profit via the use of public credit and debt.

Today, most governments, especially the US and UK, are controlled by private bankers - which is why government policy continues and will continue to favor the interests of private bankers over the public good.

THE MELTDOWN OF MAMMON

I am sure that in some quarters of the Catholic Church objections were raised (perhaps even on theological grounds) about the torture used by the Church during the Spanish Inquisition; just as today, there have been objections raised by some in the US in regards to the use of torture in its “war on terror”.

Objections are always tolerated by those in power as long as the objections do not rise to the level of action. The objection to central bank credit and influence in our monetary affairs is therefore rhetorical. The influence of private bankers and central banking in our monetary affairs will not change until their influence has run its course - which is now about to happen.

The present epoch of central banking will perhaps be known as the period when bankers roamed the earth. Just as during the Jurassic Age, when dinosaurs roamed freely eating whatever and whomever they encountered, bankers did much the same in the present epoch that is now about to end - profiting by the productivity of society and the public and private debts incurred as a result of bankers’ induced credit-based spending.

Bankers achieved their immense power during this era by exploiting flaws in human nature and systemic flaws in the economic system they constructed for their own benefit. But as with all flaws, human or economic, the consequences of so doing are exposed over time. That time has now arrived.

Money is not credit, nor is money created de jure by circulating paper coupons imprinted with a government stamp stating the coupons are now legal tender to be used in the settlement of debts.

The idea that central bank coupons/paper money, sic debt, can be used to settle another debt is astounding. That we have been led to accept it is so is even more astounding. Throughout history, every experiment with paper “money” as a settlement of debt has failed. Our experiment with paper money towards that end will be no different.

The recent correction in the price of gold and silver is just that, a correction in an otherwise direct repudiation of the on-going attempt by governments and bankers to substitute paper coupons for real money.

A paper yen, a paper euro, a paper dollar, when no longer backed and convertible to gold or silver is but a paper coupon masquerading as money - a coupon with an expiration date in invisible ink.

In truth, the bankers’ real gambit is not their bet that paper money can be substituted for gold and silver or that subprime mortgages can be passed off as AAA securities. Their real gambit is that central bank issuance of debt as money and their control of governments will never be discovered by the public.

HUBRIS FOLLY AND DISASTER

The world of credit and debt and all it has