October 28, 2012 ~ We have recently been told by people, who are new to the idea of precious metals as a part of their ‘survival’ or ‘prepper’ kits, that this site is too difficult to find any information on it. We have been told that they don’t understand this web-site, and what its purpose is. “Why should I buy gold?” is among the questions most often asked. “How will it help me in troubled times?” “Why are of these news articles and headlines on the front page?“
Well dear readers, it’s fairly simple my friends – if you are not aware of what is going around you in the world, and the TRUE economic picture in this country with massive job losses and larger numbers of people living below the poverty line, and the fact that YOUR taxes are being picked from YOUR pocket to feed, cloths, educate and house people who are just too damned lazy to do something about it – then you will NEVER understand why you should own gold and silver.
Wake-up – look around you and stop trying to look at the world through your hi-tech “smart phones” and become aware of the BIG picture. If you are unable or unwilling to scroll down the front page of this web-site and see the category headings, “Why Gold?”, The Gold Bullion Vault, The Silver Bullion Vault, etc., – then maybe you just aren’t as smart as some people seem to think that you are.
Finally, to those of you who can’t figure out why there are no prices posted at this site; there are many gold, silver and platinum products available throughout the world – but this isn’t a one-shop fits all. Each client deserves to know the truth, receive fair and honest treatment, and assistance in the development of their holding-portfolio. There are plenty of places that you can go to on line and do your shopping. We believe that you should understand the reasons for the problem first, then we will gladly assist you with the solution – the RIGHT solution for your family’s needs and goals.
Kettle Moraine Ltd. has proven to be highly competitive in the marketplace throughout the years and will continue to be so.
If what you are about to read doesn’t answer the questions for you – then you will never get it. (Ed.)
November 21, 2002: Bernanke gave his “helicopter” speech in which he made reference to a “helicopter drop of money”. But the critical point in his speech was:
“U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in term of goods and services, which is equivalent to raising the prices in dollars of those goods and services.”
Currently the “helicopter drops: are primarily fed into the reserves of the banks and to cover the increasing deficits between government expenses and revenues. There is no end to how many dollars the Federal Reserve can create. At the time of Bernankes speech, an ounce of gold was worth approximately $320. As of September 2012, that same ounce of gold is worth over $1,700. The gold has not changed, but the value of the dollar has declined. As more dollars are created or dropped from helicopters, all existing dollars become less valuable.
We have been warned!
September 11, 2001: The official story is that two jets crashed into two World Trade Center buildings and caused three buildings to collapse. The violence and destruction were blamed on Al Qaeda and provided the impetus for The Patriot Act and two massively expensive wars in Iraq and Afghanistan. For 6,000 years the Middle East has been filled with anger, hatred, and war between the people and countries of the Middle East and toward outsiders such as England and the United States. The 911 attack was one of many in an ongoing series of Middle East related violent attacks that seem destined to continue.
Regardless of who was responsible for the loss of life and the horrific destruction of 911, war tensions are increasing in the Middle East and another devastating war is increasingly probable. Nuclear war has been threatened. The adverse consequences for the economies of many nations, destruction of life and property, and other collateral damage will be dreadful. When will the violence and destruction end?
We have been warned!
2007/ 2008: A financial crash caused the S&P 500 index to drop over 55%. People lost their homes, unemployment climbed much higher and has not come down, many businesses closed, and the standard of living for most Americans declined. The crash was at least partially caused by excessive leverage in the financial community including derivatives rated AAA when they were better described as “toxic waste” and possibly fraudulent. An over-leveraged financial system is prone to crashes. Nothing of substance in our financial system has been fixed. Many believe another financial crash is inevitable and perhaps imminent. We have seen it once. As noted by many astute individuals, it can and probably will happen again.
We have been warned!
September 2012: Five renowned economists published an editorial in the Wall Street Journal. They said:
The problems are close to being unmanageable now. If we stay on the current path, they will wind up being completely unmanageable, culminating in an unwelcome explosion and crisis.
The fixes are blindingly obvious. Economic theory, empirical studies and historical experience teach that the solutions are the lowest possible tax rates on the broadest base, sufficient to fund the necessary functions of government on balance over the business cycle; sound monetary policy; trade liberalization; spending control and entitlement reform; and regulatory, litigation and education reform. The need is clear. Why wait for disaster? The future is now.
They understand the problems and the solutions to our current economic problems. Must we wait for another financial and economic crash and more violence and bloodshed before we can intelligently act in our own best interest?
We have been warned!
September 2012: The national debt exceeds $16,000,000,000,000. This does not include other off-budget liabilities such as the present value of future costs of Medicare, Social Security, and federal pensions. Prof. Lawrence Kotlikoff of Boston University relies on the statistics from the Congressional Budget Office. He estimated the present value of the off-budget liability at approximately $220,000,000,000,000. Does anyone really believe that quantity of dollars will be created by growth in the economy? It appears that continual “helicopter drops” of “printed” dollars, such as QE3, are the only likely answer from the Federal Reserve and our Congress to address our out of control deficits, out of control debt, and out of control entitlements! David Stockman, former head of the Office of Management and Budget, and many others have fervently proclaimed that these deficits, liabilities, and debts are unsustainable.
We have been warned!
2007 – 2012: J. P. Morgan told Congress in 1912, “Gold is money. Everything else is credit.” Russia and China have been purchasing gold (real money) in huge quantities from around the world. Gold is rapidly leaving western economies and flowing into Russia, China, and other Asian countries. What do they understand that we, in the west, are ignoring?
We have been warned!
There have been numerous other warnings regarding our on-going economic, financial, and political self destruction. Observe the reality of continual war, an unsustainable financial system, and the insanity of self-destructive political decisions.
We have been warned!
~ Conclusion ~
Expect more trauma dead ahead. As they say, rig for stormy weather. The forecast, as I see it, is for:
- Increased money printing. Quantitative Easing to Infinity, QE4-Ever, and Inflate or Die seem accurate.
- Substantial consumer price inflation. I dont think well spend $100 to pay for a cup of coffee, but I do think very uncomfortable prices for food, energy, and other essentials are inevitable.
- Regardless of who wins the 2012 Presidential election, his term will be filled with tremendous economic, financial, and political challenges.
- A severe economic recession in 2013 seems inevitable.
- Another financial crash within a few years seems likely.
- A financial crash could lead to an economic crash, in which the economy cannot provide for basic needs or services to a substantial number of people for an uncomfortable period of time. Think Greece in 2012, Spain in 2013, and the United States in 20XX.
- The government will do something, and it will not help.
- There is still time to buy gold and silver.
We have been warned!
QE inflation Iceberg Dead Ahead
Voltaire said in 1729: All paper money eventually returns to its intrinsic value ZERO. WE were warned almost 3 centuries ago. Bernanke announced QE3 on September 13, 2012 – the next step in the process of pushing the dollar down toward its intrinsic value. Not only is the Fed making a commitment to purchase $40 Billion per month of MBS (mortgage backed securities) from large banks with newly printed money, it is also making an open ended commitment there is no end date. Ultimately this is highly inflationary for the American public and very beneficial for the banks holding what is often referred to as toxic waste (MBS) that can be dumped onto the Fed at full face value. Hopefully the bailouts to the banks will allow them to loan that newly created money into the economy so it benefits real people and “Main Street.” Regardless, we have been warned about the consequences of printing money and the resulting consumer price inflation.
QE3 looks like a desperate act to feed money to large banks, offload MBS toxic waste from their balance sheets, and devalue the dollar against houses, commodities, and other currencies. There will be significant collateral damage but apparently funneling money to the banks is more important.
It was inevitable that such action created an abundance of commentary. I have quoted a number of respected economists and critical thinkers on the subject of QE3. All links are listed at the end of this article.
Peter Schiff is a best-selling author and famous for calling the housing bubble when almost everyone thought he was an extremist and utterly wrong. History has proven he was correct then, and I believe he is correct now. He stated:
“In the meantime, the implications for American investors should be clear. The Fed will try to conjure a recovery on the backs of currency debasement. It will not stop or alter from this course. If the economy fails to respond to the drugs, Bernanke will simply up the dosage. In fact, he is so convinced we will remain dependent on quantitative easing that he explicitly said he wont turn off the spigots even if things noticeably improve. In other words, the dollar is screwed.” (Operation Screw)
Daniel Amerman wrote regarding Bernanke, QE3, and the effort to devalue the dollar:
“This building crisis of a strengthening dollar and rising unemployment called for emergency action, and that is exactly what Bernanke is doing. He is effectively calling in a B-52 strike on the US dollar, monetizing for the world to see, and pledging to monetize for as long as it takes until the US dollar is driven down to a level where American workers can once again be globally competitive.” (Unraveling Why A Fed President Just Suggested Doubling QE3)
Peter Schiff also wrote on Bernanke, QE3, and the necessity for a poor memory in the economics profession:
“Instead he explained how the new stimulus would be focused directly at the housing market through purchases of mortgage backed securities. He made clear that this strategy is intended to spark a surge in home prices that will in turn pull up the broader economy. Such a belief requires a dangerous amnesia to the events of the last decade. Despite the calamity that followed the bursting of our last housing bubble, economists feel this to be a wise strategy, proving that a poor memory is a prerequisite for the profession.” (The Fed Plays All Its Cards)
Steve Saville wrote regarding The Fed, QE3, and the potential for more QE in addition to the QE3 already promised:
“So, the Fed has done what we thought it would have enough sense not to do at this time. The US now has QE3?. The Fed has said it will purchase $40B per month of mortgage-backed securities, indefinitely. This is being done to put downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative.” Interest rates are at generational lows, but the Fed believes that what the US economy really needs right now are lower interest rates. The bottom line is that when this latest program doesn’t achieve the intended results, it wont be perceived by the Fed as a failure of “monetary accommodation“. It will, instead, be perceived as a failure due to insufficient monetary accommodation and therefore as a reason for an even higher dose of the same bogus remedy. This process is likely to continue until price inflation is widely perceived as a major problem. (Fed Up)
Charles Hugh Smith described The Fed as The Worlds Largest Money Laundering Machine. – He questioned the morality of QE3 and explored the real reason for QE3. He wrote:
Once again we can start by asking why a nations Central Bank should buy mortgages from private financial institutions. Once again the first answer is a variation on the same theme: the Central Bank prints money and buys the mortgages as a way of socializing private losses and passing through billions of dollars in free money to private hands Since the Fed can create unlimited money, why not pay off every mortgage in the land? Thats only $9.7 trillion, and if the Fed wanted to unleash an orgy of spending, that would certainly do it. Trillions in losses would be filled with free money, since the Fed would pay the full value of all mortgages.
This thought experiment reveals the real agenda of the Feds asset purchases: its not about aiding the nation or borrowers, its all about funneling free money to the banks to restore their balance sheets and profits. (The Worlds Largest Money-Laundering Machine: The Federal Reserve)
Peter Schiff further discussed QE3 and likened it to a runaway train rushing toward a brick wall. He concluded:
Bernanke and his Wall Street supporters see cheap money until the horizon but that horizon is really a painted brick wall. So its not QE-Infinity, its QE until the Fed either recognizes the brick wall and slams on the brakes, or doesnt and crashes into it. Either way, the only way to get off this locomotive is to invest in hard assets. (Riding Into The Sunset or a Brick Wall?)
William (Bill) H. Gross founded PIMCO, a huge bond investment fund that manages over $1 Trillion in assets and is highly respected in the financial community. Mr. Gross wrote in his October 2012 commentary (Damages) that he is afraid (my words) for the structure and integrity of the economy and the financial markets of the United States. He further stated that the United States is an addict who frequently pleasures itself with budgetary crystal meth. He is not optimistic about current monetary and fiscal policies and even advised purchasing gold as an alternative to bonds, the investment business that made him wealthy.
Steve Saville wrote further about bad economic theory in the form of QE3 and discussed the basic nature of The Fed. He said:
Weve speculated in TSI commentaries that unwavering devotion to bad economic theory (a type of stupidity) is the most likely reason for the Feds introduction of a new inflation program at this time. There are other plausible explanations, but in general terms it boils down to this: the Fed is either stupid, or evil, or stupid and evil. There is no fourth possibility that makes any sense. It is either evil enough to inflate the currency in an effort to help banks (or the re-election chances of Obama) even though it knows that doing so will harm the overall economy; or it is stupid enough to believe that the economy can be helped by creating money out of nothing and distorting the price signals upon which an efficient market relies; or it is evil enough and stupid enough to believe that it can transfer wealth to the banks and simultaneously create a net benefit for the overall economy. Well go with evil and stupid. (The Fed is the great enabler)
Months before QE3 was announced, Congressman Ron Paul discussed the consequences of Fed actions and stated that expanding the money supply is the root cause of inflation: He stated:
The American public now senses that the Feds actions, especially since 2008, are enormously inflationary and will cause great harm to the American economy in the long run. They are beginning to understand what so many economists still dont understand, which is that inflation is a monetary phenomenon, and rising prices are merely a symptom of that phenomenon. Prices eventually rise when the supply of US dollars (paper or electronic) grows faster than the available goods and services being chased by those dollars. The true evil of inflation is that newly created money benefits politically favored financial interests, especially banks, on the front end. Over time, however, the net result of monetary inflation is always the devaluation of savings and purchasing power. This devaluation discourages saving, which is the key to capital accumulation and investment in a healthy economy. Inflation also tends to hurt seniors and those living on fixed incomes the most. (Inflation is a Monetary Phenomenon)
Deepcaster wrote regarding QE3 and how it would weaken the purchasing power of the dollar and hurt the middle class and their standard of living. He stated:
This debauchery of the $US weakens its purchasing power and thus increases burdens on the agonized disappearing middle class.
The Bernanke claim that buying $40 billion per month in mortgage backed securities would stimulate the economy and help the housing market is just a fictitious cover story. In fact, it is just another gift to the Mega-Banks who hold underwater paper, and to Wall Street which proceeded to rally on a Fed-sugared high. And, of course, it is a pre-election gift to President Obama.
Important Consequences will ensue. (Golden Numbers, Ersatz Numbers & Profit Nuggets)
We have been warned! QE3 is now pumping newly created dollars into the large banks. Expect the US money supply to dramatically increase as a consequence of QE3 and yet-to-be announced additional stimulus (printing money injecting liquidity into the financial system). Expect increased consumer price inflation and a declining standard of living for the middle class of the United States. The banks will benefit, but many others will suffer. An economic recession seems inevitable, another financial crash seems likely, and the social unrest we see in Greece, Spain, and Italy may visit the United States as soon as the next congressional election.
The government will do something, and it will not help the middle class! Perhaps QE4 on steroids will be next.
There is still time to buy gold and silver to protect your assets before the dollar declines further. If you are skeptical of the trend, examine the exponential rise in gold, and the exponential rise in silver. With QE3 officially announced and huge US government budget deficits projected for the foreseeable future, the long-term uptrend in gold and silver, for at least several more years, is now assured.
There is still time to buy gold and silver.
We have been warned!
Published on Deviant Investor as a 2 part series, October 8th and 23rd, 2012.
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