He Predicted Japan’s Two Lost Decades…
He Forecast the 1990-92 Recession…
He Warned of the 2008 Credit Crisis…
So let me start by telling you about the Three Driving Truths that will shape the coming decade…
Truth #1: The Largest Generation in History Has Peaked in Its Spending Cycle… That's Why This Will Be No Ordinary Recession.
Economists, financial pundits, even government policy makers, rarely talk about the most important cycle driving modern economies like that of the United States and other developed nations.
That is…
New generations come along about every 40 years.
And members of these generations move along a predictable life cycle of earning, spending and productivity.
Although we’re all different as individuals, as a group we do predictable things:
We tend to enter the work force at around age 20…
We get married at around age 26 and have kids around the ages of 28 or 29.
At roughly age 31 we buy starter homes… then trade up to larger homes between 37 and 42, as our families grow.
We enter our peak spending ages – the period in our lives when we tend to have the most disposable income and treat ourselves to cars, gadgets and so on – between 46 and 50.
It’s also during that time that our spending habits tend to change dramatically. We see retirement not far off and make a concerted effort to save, while our spending needs decline as our kids leave the nest.
We retire at 63 (on average) and tend to have our greatest net worth at 64 – cash, investments and assets we’ve set aside to live on.
Knowing this, we’re able to see, decades in advance, what impact up-and-coming generations will have on the economy, different consumer sectors and the markets. And when you have a generation the size of a pig in a python, you know that the inevitable booms and busts ahead will be monumental.
the Baby Boomer generation was no ordinary generation. It peaked at nearly five million births per year between 1957 and 1961.
To forecast the greatest boom years, as this generation moves through its predictable spending patterns, you merely “skip ahead” 46 years. That’s when the average Boomer is in his peak spending years.
And you discover that the greatest economic boom in U.S. history was pretty much “preordained” to have begun around 1983 as the first of the Boomers entered their peak spending years (1937 plus 46 years)…
It was also pretty much “preordained” to start tailing off after 2007 with the last of them moving into a different phase of their lives (1961 plus 46 years takes you to 2007).
Here’s how the Dow performed over that time:
It rocketed from 775 in late 1982 to 14,280 in late 2007. That’s a 17.4 times gain.
Again, it’s important to understand that we knew – as early as the late 1980s when we developed the Spending Wave – that Boomers would experience their peak spending years during this time.
All we had to do was trust the research and invest accordingly.
Was this an isolated event?
No. Look at the generation 40 years behind the Boomers, where the birthrate spiked from as far back as we can measure it in 1909 through 1921/1924 (they’re known as the Bob Hope generation).
Skip ahead 44 years (when spending peaked back then) and look how the Dow performed. It soared from 280 in 1953 to 932 in 1968 – a 233% gain.
Of course the years following 1968 would be a different story for the Dow and the U.S. economy in general…
The Dow pretty much traded sideways over the next 14 years… actually losing 100 or so points between 1968 and 1982…
And this exact same scenario is what we see ahead for the next decade or so.
To make matters worse, many European countries experienced post war Baby Booms of their own. They too are experiencing the same generational shift in spending as we are.
That reality will, in all likelihood, make this recession global in scope. It’s already evident with the continued crises raging across the euro zone – in places like Greece, Portugal and Spain – and the worst of the credit crunch has yet to take place.
Then there’s the next great bubble to burst…
China is ripe for a bubble bust, where they have been building cities designed for a million people, yet have no inhabitants… where they’ve been building infrastructure they won’t need for a decade to come… where they’ve been building excess industrial capacity.
They’re doing it all to keep their unemployment from soaring as exports collapse.
Truth #2: The Greatest Credit Bubble In Modern History Will Continue to Deleverage… Deflation, Not Inflation, Is Ahead.
So many market forecasters these days are talking about the coming inflation.
“We’re trying to spend our way out of this mess by printing money,” they tell you. “That can only lead to inflation down the road.”
On the surface, of course, they’re right.
Typically when you flood the economy with newly minted dollars, prices tend to go up – you get inflationary pressures – and the value of the dollar tends to go down.
In fact, that’s precisely what the government will try to do: inflate its way out of this crisis by flooding the market with new dollars.
But it will only work temporarily
After that, we’ll see a very different scenario unfold, thanks to an economic reality most market watchers aren’t considering.
The fact of the matter is, it’s not inflation you should worry about. It’s DEFLATION.
I believe it’s crucial you understand this.
Because if you base your investments on the likelihood of coming inflation (like buying gold or other inflation-friendly investments), I’m afraid you could be wiped out along with everyone else… even though you were right about the coming debt crisis.
But if you know the real story, not only can you make a lot of money in the short term… you could have a rare opportunity to generate a family fortune by the time 2020 rolls around.
Here’s why deflation – not inflation – will be the order of the day, likely from around 2013/2014 through 2023, and especially from 2014 into 2015...
History tells us that most severe downturns and depressions have three phases.
1.A severe crash, like we saw in late 2007 to early 2009, when the Dow fell 55%, from 14,280 down to 6,440.
2.That’s followed by a bear market rally, spurred by renewed economic activity from government stimulus. That’s where we are now.
3.The third phase is a final crash, deeper depression, and a deflationary phase that lasts a few years.
Most of us have never experienced deflation. The last period of any substantial deflation happened during the Great Depression, from around 1930 into 1933 and things didn’t really recover until World War II.
So what is deflation and how does it impact the economy?
Deflation, as the name suggests, is the exact opposite of inflation.
Inflation happens when there’s lots of available credit, free flowing money and strong demand for goods and services. When everyone has access to money through easy loans and fast credit, the demand for “stuff” goes up. And when demand goes up, so do prices.
With deflation, the opposite occurs. There’s less money flowing because credit tightens up, causing money to become scarce. And because people have less money to spend, demand for goods and services go down. And when demand goes down, so do prices.
Of course, prior to 2008 there was plenty of money to be had by all, thanks to all the cheap credit that was available. In the credit boom we extended large amounts of money to homebuyers and homeowners in the form of HELOCs, subprime loans, NINJA loans, Option ARMS, Alt-As, etc.
We lent money to anyone with a pulse, as long as the asset behind the loan was real estate. Why? Because the real estate moneylenders were lending against what was escalating in value… an asset that had seemed to go up for many decades without a major crash. (The Japanese did the same thing in their 1980s real estate bubble.)
And boy, did we borrow:
Thanks to fast rising housing prices, cheap home equity loans and banks willing to loan to anyone, Americans went on a spending spree like no other time in history:
$18.2 trillion in government debt…
$13.5 trillion in leveraged banking and financial services debt…
$11.6 trillion in corporate debt…
And a whopping $14 trillion, at the peak in 2008, in consumer debt – mortgages, car loans, credit cards…
In total $57.8 trillion in total debt. And that doesn’t include the estimated official $46 trillion in unfunded liabilities for Medicaid, Medicare and Social Security. The best experts outside of the government estimate those unfunded liabilities to be more like $66 trillion.
Add it all up and that’s $103 trillion to $123 trillion in debt…
Or about $330,000 to $400,000 for every man, woman and child in America!
The thing is, we examined all of the great bubble and credit booms throughout history and there are no exceptions…
Once credit bubbles go to extremes, they always burst and deflate… resulting in a sudden tightening of money supply (credit)… followed by deflation as massive amounts of debt are written off.
It happened in the 1930s and again in Japan.
And because no government can counteract that kind of overwhelming debt with any amount of stimulus without making its currency next to worthless, it’s likely to happen as this new economic cycle settles in.
Everything else will fall in line…
Bankruptcy rates will escalate followed by a long line of bank failures.
Those banks left will be very careful about who they lend to and under what terms. Many will not lend at all. Instead they’ll choose to hoard cash while it gains value (i.e., buying power) through deflation.
Most will be very hard pressed to find qualified lenders to loan to, since a) so many borrowers’ credit ratings will be destroyed as they walk away from homes and other loans, and b) further declining house prices means there will be very little equity to lend against.
Less credit means less money in the economy.
Less money means less demand for goods and services.
Less demand means lower prices and less production.
Less production means more plant closings and more job losses.
More job losses means…
Well, I think you’re getting the picture here. It’s all a domino effect.
Again I’ll say it…
For those who don’t prepare now, the impact will be devastating.
It’s also a very positive thing for the economy as a whole in the longer term.
That’s because deflation helps to shake out the excesses much quicker. It encourages a massive restructuring of debt, writing off of losses, trimming back of the supply chain, shifting of market share to the strongest and most efficient companies that can keep prices down in the future, and more.
There’s a third truth contributing to the fast approaching “perfect economic storm” I’ve been warning you about…
Truth #3: The Greatest Real Estate Bubble in Modern History Happened between 2000 and 2005... Why Further Declines and a Massive Banking Fallout Are Inevitable.
Most people don’t know this, but the stock market crash of ’29 wasn’t solely responsible for the Great Depression of the 1930s and ’40s.
It was the failure of real estate….
The failure of farms in particular, where most bank loans of the day were extended. That was back when farms were the place where many Americans lived and worked. As demand for farmland and easy credit grew, more and more money was available and loaned out against the escalating value of property and equipment.
But when the bubble burst – as they always do – and farmers couldn’t repay their loans, the banks failed right alongside them. That’s what caused the kind of “run on banks” the era was famous for.
We’ve seen plenty of real estate bubbles in the past. In fact, research tells us real estate tends to run in 17-18 year cycles… virtually without exception.
We saw minor peaks in 1954, 1972 and 1989.
But nothing like we saw in 2006!
Housing prices were already on the rise in the mid-1990s, thanks to an aggressive government-led “home ownership” policy that made it easier for people of all economic backgrounds to buy homes.
It was no accident that housing prices rose even faster following the 2000 stock market crash. Not only were Baby Boomers well into their peak house-buying years, but huge flows of investment funds suddenly shifted out of the technology stock bubble that was crashing and into housing.
Meanwhile with Fed easing and a slowing post 9-11 economy, interest rates plummeted to near-historic lows, making home affordability and speculation even more attractive.
On top of everything, mortgage companies took full advantage of further deregulation by offering liberal financing with little money down and low teaser interest rates that would ratchet up three, five and seven years later.
At the height of it all, it was entirely possible to walk into a mortgage broker with no job, lie about your income, sign a no-doc mortgage and be in a house you had no hope of ever affording!
Then it got even crazier…
As this artificial demand kept driving housing prices higher – an average of 15% per year compared to the historical 3% per year average – millions more people borrowed billions of dollars at the cheapest rates in history against the newfound equity in their homes.
And things were great until around 2006, when it all started to unravel.
Triggered by low interest subprime mortgages resetting to much higher rates, homeowners who could barely afford their teaser rate mortgages had no chance of covering payments that doubled and tripled.
Thousands of subprime borrowers simply stopped paying.
But that wave of foreclosures was just the beginning… the low hanging fruit as it were.
Just this past April, the National Association of Realtors reported that all-cash sales slipped to 32% of transactions in March from 33% in February. They were 35% in March 2011. Investors account for the bulk of cash transactions.
Our research suggests they’ll have to wait to see any return.
Let’s stop and look at the reality of the situation…
Forget, for a moment, the over 8% unemployment rate that exists right now. Forget the estimated 10 million Americans who might have been in a position to buy a home five years ago but now can’t…
The real problem rests with two predictable realities:
1.Baby Boomers, the very ones who drove much of the housing market over the past decade and a half, are now past their peak home-buying years. If anything, they’re sellers looking to downsize…
2.Most people looking to buy a home must sell their own home first. With so many homes underwater thanks to declining real estate prices and the money owed through first, second and sometimes third mortgages, very few are in any position to buy.
And what about new homebuyers – those 20-somethings entering the market?
They’re too bogged down with unbearable student loan debts and extreme levels of job insecurity to have any significant effect on the market anytime soon.
It’ll take years to absorb the millions of units in excess inventory – foreclosures, empty new construction and existing homes for sale.
Plus the new, younger generation is much more cautious about buying homes, and spending in general, after seeing phase one of this great bubble crash.
You see, one of the classic rules of bubbles, history tells us, is that they typically deflate at least back to where they started… and often a bit lower.
That means housing prices will have to fall 55% to 65% from their early 2006 highs. So far, they’ve only fallen 33%.
Home values could fall back to the prices they were in 2000, or possibly as low as 1996 levels. That would put as many as half of U.S. homes in “negative equity”… escalating the default and foreclosure rate even further.
That in turn will, in all likelihood, serve as the final nail in the banking system’s coffin, along with rapidly collapsing commercial real estate values, which will continue to fall even faster as more and more businesses go under.
What does this mean to you?
We see the next, larger banking crisis unfolding soon, just when most economists see the recovery gaining longer-term sustainability.
In short, we haven’t even felt the effects of most of the foreclosures that have already occurred because so many people are waiting for the market to improve, and they’re simply running out of time. Also, many foreclosures are still being processed or they’re in negotiations.
Plus, some banks are holding back their present foreclosures hoping for better prices. They don’t want to unload their inventory onto the market because that will hurt prices even more.
As real estate defaults continue to rise – and with no government money left to bail them out – banks will fail at a much greater rate than they did in 2008 and 2009. Back then, that failure was already as scary as anything we’ve seen since the early 1930s…
Which means less money in the system… which means less spending… less demand…falling prices… and ultimately:
Deflation.
in deflationary times, cash is king.
Because unlike what happens during inflation, money actually gains value when there’s deflation. It’s simple supply and demand. Money supply shrinks when there’s less lending and as debts are paid down and written off through foreclosure.
As this happens, the demand for dollars will actually go up. That’s why, as strange as it might sound right now, and contrary to everything you might be hearing, the U.S. dollar (and dollar-based assets) will be the very best currency to own in the years ahead.
You see, we actually devalued and debased the dollar during the great boom and credit bubble from 1985 through early 2008. The dollar fell 60%!
Reversing this unprecedented credit bubble will destroy many loans and credit… it will destroy dollars, making them more scarce and valuable!
Also, be ready to sell your gold, silver and other precious metal investments in the not too distant future.
Gold and silver perform in inflationary times because they act as a hedge against currency devaluation. But when there’s deflation – and a strengthening currency – gold and silver prices will fall along with most other assets.
If you happen to be holding any foreign currencies, convert them to dollars. Dollars are “cheap” right now compared to many currencies. But that won’t be the case a year or two from now. By converting back to dollars now, it’ll be like buying a sure-fire investment at 10-year lows.
Next thing is something I have already alluded to…
If you have any real estate, if the interest rate on your mortgage is higher than 6% and you have more than 20% equity remaining in your home, refinance now and lock in a low 3- or 5-year ARM rate (depending on the time left on your current mortgage).
Rates naturally convert back to very low short term rates in a deflationary period, so you’ll save refinancing costs.
I recommend you do this now for two reasons…
Number one, with housing prices destined to fall further, you may not have the equity to qualify in the future. Two, there’ll be a time where any home loan will be very difficult to get.
Also, take this opportunity to downsize your life.
If you’ve accumulated a lot of “stuff” you don’t really need or use – cars, furniture, boats and other toys – sell it now while there’s still something of a market for it.
Not only will it give you more cash, you’ll be amazed at how liberated you’ll feel. (Plus, if you really want it – you’ll be able to buy it back cheaper two, three years from now).
And look at the money you’re paying out every month. See if there’s a way to reduce any of it. Maybe there’s a storage unit holding a lot of furniture and it’s costing you a few hundred dollars a month. Sell the stuff and cancel the unit.
Maybe there are subscriptions you’re paying for that you don’t need – newspapers, magazines. Do you really need a home phone if you have a cell phone? Do you really need all the cable or satellite channels? Do you really need to belong to that country club?
Cut unnecessary expenses. You’ll be surprised how the money adds up.
Keep in mind this is all about dollar accumulation and keeping more of the money you make.
This isn’t just about penny-pinching or budgeting or necessarily preparing for some sort of global Armageddon. It’s about being more self-sufficient and safe, which will likely pay off in a time of greater unemployment and social unrest.
Right now it’s about two things:
Shedding inflated assets and high-cost debt… and moving stealthily into safer investments and cash – cash you’ll later be able to parlay into outstanding profits as the events of the next economic cycle happen.
So how can you take advantage of the myriad of opportunities as this situation begins to unfold?
CHINA ~~~\/\/\/\/\/\/\/\/\/\/\/\/\/
Now mainstream economists are hailing China’s growth model as the new model of state-driven capitalism. After all, China’s economy has urbanized faster than any emerging country in history and has grown faster than any major economy since the 1980s.
But come on!
For those economists to be right, that would mean that governments are better at driving the economy than the invisible hand of free-market capitalism.
And let me assure you. They. Are. NOT!
I’ll concede two points to China…
One, it has realized how powerful it is to move people from rural to urban areas where their incomes and spending rise nearly three times.
And two, it does have the largest population, driven by national pride and the desire to be number one in the world.
But despite its meteoric growth since 1980, China has not taken on higher-end industrial and hi-tech industries like Japan, South Korea, Singapore and Taiwan did, or like many western nations in Europe and North America did.
These Tiger countries, as the East Asia examples are known, were able to move from emerging to developed country status in three or four short decades on an s-curve acceleration of urbanization versus GDP per capita because they went straight for the industries that create higher wages in developed nations.
China didn’t follow that road and as a result its growth has been relatively linear, like almost all other emerging nations barring the list above. The only thing driving China’s growth is its aggressive, government-driven expansion of infrastructure and export-driven industries.
The Southeast Asian countries did the same thing in the 1980s and 1990s until they over-expanded and had a financial and currency crisis between late 1997 and late 2002. Their government-driven policies overshot what the free markets would have done.
Now China has expanded twice as fast and twice as long in the global bubble from 2003 to 2013.
How could it not face a bigger crisis ahead? Especially given that it is the one emerging country that now has plateauing demographic trends and faces quickly declining trends from 2025 onward. While other emerging countries enjoy a demographic peak between 2040 and 2070, China will be trending in the other direction.
I have shown in past books and newsletters how China will grow old before it becomes rich thanks to its unfortunate demographic trends ahead.
I have also shown how China has moved rapidly from 30% to 53% urbanization in the last decade.
And I have spoken of the Chinese government’s double-down plan to move hoards of its rural people into the cities so it can achieve 72% urbanization by 2025. That’s just 12 years from now. And that’s 250 million more low-skilled people dragged off their rural farms and dumped unceremoniously into high-rises in cities.
China is an economy on steroids beyond compare!
How are those rural migrants going to compete?
How are they going to afford an apartment in the city that has the highest price-to-income levels in the world? I’m talking higher than London or Tokyo?
The answer is quite simple: they won’t be able to compete when the government-driven gravy train of endless building and construction jobs slows as the global economy continues to contract ahead.
They won’t be able to afford those apartments, or any services, or even food.
This is the Achilles Heel of the “China Miracle.”
712 million people – 53% of its population – live in cities. Of those people, only 69% are registered urban residents with rights to education, health care and any other social benefits. That’s just 491 million people.
The other 221 million, or31%, are basically “illegal migrants from the countryside!”
They are not citizens. They are simply tolerated when things are good, just like the U.S. tolerated illegal immigrants from Mexico to fill our unwanted jobs during the boom years of the 2000s.
But what happens when the boom turns to bust?
These “illegal im/migrants” are shunned.
Illegal immigrants in the U.S. are now migrating back to Mexico as fast, if not faster than new immigrants are entering. That trend will only accelerate as our economy plunges once again between 2014 and 2019, as we expect. During this slowdown, Chinese city migrants will suffer the same fate.
China is careening headlong into a disaster of epic proportions… and the world seems to be cheering it on.
The country has created an insane infrastructure bubble.
It has the most overvalued real estate in the world, driven by the highest savings rates in the world and the people’s love of property investing.
It has the highest vacancy rates in cities, at 25%. What happens when tens of millions or hundreds of millions flee back to rural areas where they are registered and can survive on the land?
When China’s real estate bubble bursts, and it will burst, wealth will evaporate faster than rain on the sun.
Don’t look to China as the model for capitalism. Instead, look to it as the prime example of why top-down government planning and endless stimulus only kills the Golden Goose of free market capitalism.
Steer clear. The dragon is about to implode.
CANADA
Most Americans aren’t aware that Canadian home prices continued to increase after our 2006 real estate crash. There are reasons for that.
First, Canada didn’t have the subprime crisis in lending like we did. Households there had to put up substantial deposits and show real proof of income. Imagine that!
Second, Canada has had higher immigration rates than us since the early 1970s, and more so since 2006. This has caused households to grow at 1.4% since 2006, double the rate in the U.S., which is 0.7%.
But here’s the rub!
Canada’s prime housing segment – age 20 to 44, which includes apartment demand from ages 20 to 26 – is now forecast to decline from 1.2% in 2012 to 0.3% in 2021. Ouch!
And worse, Canada’s household debt-to-disposable-income ratio has risen to 156% while in the U.S. that ratio has fallen to 99%. Back in 2007, the ratio for both countries was around 120%, more than double the ratios at the peak of the last great bubble in 1929.
The reality is Canada’s household debt has doubled from 78% in 1990. It is now 57% higher than in the U.S., despite our continued over-indebtedness.
That means that even if the growth of the prime-buying segment were not to slow dramatically in the years ahead, such debt ratios would wreck the party sooner rather than later.
Since the real-estate bubble began in early 2000, Canada’s home prices are up 133%. The U.S. property market had only gained 107% by its peak in early 2006.
Canada’s bubble has lasted longer and stretched 24% higher than ours, with home prices now 47% higher than the U.S.
And as I say – and as history proves – the bigger the bubble, the bigger the burst. Put another way, Canada’s in for some serious pain.
The most overvalued city is Vancouver and it gets that dubious distinction thanks to the wealthy Chinese immigrating there and buying condos with bags of cash, like drug dealers from Brazil are doing in Miami. Property there has gone up 152% since 2000.
Locals can’t afford the 10- or 11-times income valuations that are now slightly higher than San Francisco’s, which were at the top of the U.S. bubble before it burst. When most locals can’t afford property, that’s a bad sign.
Recall that it wasn’t the failing economy that caused home prices to start falling from 2006 forward in the U.S. It was simply prices that were so high that young, new households could no longer afford them.
Young people (age 27 to 41) buy houses. Older people sit in them! That’s why the dramatic slowdown in Canada’s 20 to 44 year-old population is tolling Canada’s property market’s death knell.
If the next global financial crisis starts in early 2014, as I forecast, then Canada’s real estate is cruising for a bruising very soon.
So Canadians, beware!
Since your real estate is at new highs, in the coming years it will fall much further than the crash we experienced in the U.S., even if it never quite falls as low as we do.
The seven Canadian cities that have appreciated the most since 1999 – and which face the most pain ahead – are in order:
#7: Montreal #6: Toronto #5: Vancouver #4: Calgary #3: Edmonton #2: Quebec City
And at #1 – the city that has appreciated the most in Canada since 1999 – we have: Winnipeg.
The higher the real estate prices in these cities, the harder they’re likely to fall.
Vancouver’s pending property collapse could trump them all in the end thanks to its extreme valuations.
Don’t be like most consumers and economists that just extrapolate past trends into the future. Listen to people like us that understand bubbles and cycles from tirelessly and obsessively studying them throughout history.
So to answer my question – did Canadians learn anything from our real estate bubble: absolutely not.
I’ll say it again: Canadians, beware!
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What the Fed does.is punishing savers and helps to make bankers rich. And it also fails to predict major economic developments.
The national bank was established when the U.S. was in its infancy. It took on the role of national creditor, putting it at odds with the banks established in all of the states. It could establish regulations for money and credit, and did so for its own purposes. This meant everyone who dealt in money and credit had to accommodate this national animal.
Sound familiar?
President Andrew Jackson hated the idea of a national bank. He saw such entities as nothing more than an easy path for governments and large institutions to manipulate currency for their own gain. He vowed to close the bank… and succeeded.
The demise of the bank set off a credit contraction that deflated a speculative bubble, resulting in a sharp economic downturn in the mid-1830s.
Many people point out that if Jackson had not closed the bank then the contraction would not have happened, but this misses the point that the expansion was based on the extension – and some would say reckless extension – of credit.
Sound familiar?
Should there be a Bank of the United States? Should the Federal Reserve exist? Should there be ONE body that can determine, free of voter approval or oversight, whether the national currency we are required to use can be devalued? Should there be an entity that can exert worldwide influence by simply deciding what short-term interest rates should be and by pursuing programs to change long-term interest rates?
These questions are hotly debated today, just as they were in the 1800s, but not by as many people as they should.
People who are knowledgeable about such things constantly question the wisdom of consolidating power, while recognizing that it can allow for swift action in times of need. Given the recent actions of central banks around the world and how they affect all of us through our pocketbooks, it would seem reasonable that such topics arise at cocktail parties, little league games, and really anywhere that people gather. But they don’t. Instead, such conversations are relegated to financial papers and gatherings of like-minded people.
Maybe that’s the way the winners of the bureaucracy – those who decide what gets displayed and what doesn’t – want it to be.
Maybe that’s why the building that housed the Second Bank of the United States holds no record of what went on there… of how a fight over money and credit was waged.
Laying out the reasons for and against a national bank might actually help to spark a conversation about where we are and how we function.
“America’s Final Unwind”
Get ready for the coming collapse of a 99-Year Old PONZI scheme (now 318-times the size of Madoff's) that’s set to wipe out the once Great American Middle Class!
But in order for you to understand the magnitude of the crisis ahead, let me first take you back to what may be remembered as:
"The Darkest Night in Financial History"
It was the strangest and most secretive expedition to ever occur in American history.
In 1910, a party of the nation’s biggest bankers and power brokers (who some say represented a sixth of the world’s wealth at the time) met at a station in Hoboken, New Jersey.
A senator directed each one of the guests to go to a rarely frequented platform, where a private railcar awaited them.
And under the cover of darkness, these financiers scurried out of New Jersey.
Attendees included Nelson Rockefeller's grandfather; the Assistant Secretary of the Treasury; the Presidents of two of the largest banks in the country; Paul Moritz Warburg, a German partner in a large New York bank; and an aid to J. P. Morgan.
After clanking along a railroad track for hundreds of miles, these six men hit the coast of Georgia. There, they embarked on a secret launch headed toward a mysterious island.
The island was deserted, except for a few servants.
There they stayed for a week in rigid secrecy. The guests were forbidden to call each other by their last names, lest the servants learn of their true identities, and lest the truth get out of the top-secret plan they would hatch.
Their master plan was to create and operate an institution that maximizes profits, eliminates competition and that would be able to freely utilize the power of the police state.
The plan worked flawlessly for 99 years.
The Secretive “Committee of 7” that Now
Controls the World
The bankers and power-brokers created an institution that today is more powerful than Apple, Wal-Mart, IBM and every S&P 500 company combined.
As Senator Barry Goldwater went on record to say,
"The accounts of the Federal Reserve System have never been audited. It operates outside the control of Congress and manipulates the credit of the United States."
It pays no income taxes and it enables un-elected individuals to control America's currency system...
I’m talking about the Federal Reserve.
And while most Americans believe the deceptively named Federal Reserve is a government agency acting on behalf of its citizens, it’s not.
The Federal Reserve is the most powerful private corporation in the world. And frankly, it’s about as "federal" as Federal Express.
As far back as the 1930s, the Honorable Louis McFadden, Chairman of the House Banking and Currency Committee, tried to warn Americans of its true power…
“When the Federal Reserve Act was passed, the people of these United States did not perceive that a world banking system was being set up here. A super-state controlled by international bankers and industrialists acting together to enslave the world. Every effort has been made by the Fed to conceal its powers but the truth is the Fed has usurped the government.”
And according to the popular book, The Creature from Jekyll Island, the Fed was founded - by a small group of the world’s richest bankers, including the Rothchilds of Paris and London; Lazard Brother of Paris; Israel Moses Seif of Italy; Kuhn, Loeb, and Warburg of Germany; Goldman, Sachs and the Rockefeller families of New York…
The Federal Reserve is More Like
“The Feudal Reserve.”
In order to keep resources, money supplies and the media in the hands of one power, they rarely married outside their circle… eventually coming to control everything from diamonds to dollars…
That’s how modern empires were built.
And the Federal Reserve is at the end of the day: “The Ultimate Empire”
But this Empire and its "fractional reserve banking" system - a system which let its members create money out of thin air - is now $16 trillion in debt… and it has no easy escape without destroying the money in your wallet.
It has successfully created the "Greatest Ponzi Scheme of All Time."
Unfortunately for our country, this Ponzi scheme is about to collapse…
The role of the Fed, besides lining the pockets of rich bankers, is to protect the value of the dollar.
For the 100 years before the Fed was born, the dollar was resilient – even amid the turbulence of America’s social and economic growing pains. Between 1813 and 1913 – when the Fed was born – the value of a U.S. dollar actually increased by 95%.
But ever since the Jekyll Island cabal centralized America’s monetary policy on December 23, 1913, the day the Fed was officially established, we've witnessed the greatest financial panics in history…
The Great Depression in the 1930s… the draining of gold reserves in the 1960s… stagflation in the 1970s… the dotcom bubble in the early 2000s… the housing bust and the current recession all stem from Fed policies as well.
As for a once-mighty dollar – 99 years ago, when the Fed took control of our monetary system the dollar was still worth a dollar.
Today, it's worth about 4 cents.
That final four cents might not seem like there's much to lose. But what most people don't understand is that from a modern-day perspective, our remaining four cents is equivalent of that 1913 $1 bill.
We can still lose another 97% of our currency… and then another 97% from there. The potential is exponential.
Every crisis in America over the last century began with the Federal Reserve’s monetary policy. The Fed was sold to America as a way to smooth the economic ebbs and flows – to lessen the severity or even avoid the recessions that routinely struck the U.S. economy before 1913. On that front the Fed has succeeded – but at the cost of creating far-larger boom/bust cycles that rob our wealth…
The Fed's solution for fixing all these busts has almost always been a re-flation of the bubble.
But my research tells me this "Game of Thrones" is over. The Fed can’t print its way out this time…
The mainstream media, economists and Wall Street have all overlooked one critical detail – and it’s the ultimate game-changer…
It’s the one thing NO ONE is talking about…
The ONE THING they wished would never come about…
It's NOT the $16 trillion in national debt…
It's NOT the $1 trillion in outstanding student loans…
Nor is it the $97 trillion in entitlement debt…
It's something the FED and all of their men do NOT want you to know about.
By December 23rd, 2013, the Dollar's End
Will Be in Sight!
As you may know by now, major nations like China, Russia, Japan, Brazil, Iran and South Africa, to name a few, are already actively trading directly with one another in local currency.
They've begun to sidestep the dollar.
That's a monumental shift in global trade. Ever since a meeting in Bretton Woods, New Hampshire, in the summer of 1944, the world has used the U.S. dollar as its medium of exchange. As that system breaks down, the demand for dollars declines.
That demand is what helps keep our interest rates low and the prices for various commodities from oil to corn less expensive for American families than for most other families in the world.
But consider what's happening:
•Asia's Mightiest Are Ditching the Dollar! On June 1st, China and Japan began trading using their own currencies. When the yen-to-yuan trade began, it was a huge blow to the dollar that most people didn’t even know occurred.
•The BRICS Just Kissed the Dollar Goodbye. A new agreement among Brazil, Russia, India, China, and South Africa now promotes the use of their national currencies when trading, instead of the greenback.
•Buying Oil Without a Single Petrodollar! China is ditching the dollar to buy oil directly from United Arab Emirates. The Chinese National Bank says this agreement is worth the equivalent of $5.5 billion annually. Plus, China and Iran are working on a barter system to exchange Iranian oil for Chinese imported products.
•Trade is Heating Up Down in Africa. China is its largest trading partner, and is doing everything it can to replace the dollar with Chinese currency. Standard Bank, Africa's largest financial institution, predicts that the equivalent of $100 billion worth of trade between China and Africa will be settled in renminbi in 2015.
•Oil for Rice – It's Happening! Iran has begun to buy shipments of rice, sugar and soybeans from India, to circumvent U.S. financial sanctions on its oil shipments. Even though India has been unable to pay in full for Iranian oil imports because U.S. sanctions have made it difficult to access U.S. dollars for transactions with Iran… it's now paying Iran in Indian rupee and gold.
If the U.S. dollar is no longer the world's reserve currency… then life as you know it in America will radically change.
The Ripple Effect Has Begun
But there’s something even more devastating to the dollar and the Fed's reign of financial terror than China, Russia, Japan and other major nations circumventing it…
I’m talking about the day when NOT just big nations start dropping the dollar, but the day when even small nations start dropping it also…
That day is already here…
Countries like Turkey, Vietnam, Thailand, Laos, Cambodia, Brunei, Argentina, Belarus, Malaysia and the Philippines are already abandoning the dollar.
•Argentina now trades directly with China. Value: Over $23 billion.
•Indonesia and China swap local currencies. Value: Over $15 billion.
•South Korea, Malaysia, and Hong Kong trade for yuan. Value: $147 billion.
•Belarus has traded outside the U.S. dollar. Value: $3.15 billion.
The Great American Alternative Currency Movement
A recent CNN report announced that homegrown local currencies are springing up across America.
Citizens disgusted with the fiscally reckless federal government are taking steps to stimulate local economies and protect themselves.
Loren Gatch, a professor of political science at the University of Central Oklahoma who researches local currencies, estimates that in the last few years at least a dozen communities have developed their own currencies.
In Southern Berkshire, MA more than 3 million BerkShares have been issued since the currency launched in 2006. Already, five community banks (about two-thirds of the local banks) have partnered with BerkShares and 3 local branches now accept the currency. This is significant for a region with only 19,000 residents.
In Philadelphia, PA, a homegrown currency known as Equal Dollars can be used at over 100 local businesses… Bay Bucks trade in Traverse City, MI… Life Dollars are used by over 700 businesses in Bellingham and Seattle, WA… Downtown Dollars in Armore, PA… and since 2009 Potomacs have traded in Washington, D.C., suburbs of Northern Virginia and Maryland.
Now, state governments are exploring state issued currencies. Lawmakers in more than 10 states, including Virginia, Georgia, South Carolina, Idaho and Tennessee, have circulated proposals to introduce alternative currencies in the form of gold or silver.
It's clear that foreign countries – and even its own citizens – don't want anything to do with the greenback.
As fewer and fewer buyers need dollars … the Fed's Ponzi scheme will unwind faster, and more furiously, than any financial disaster we've ever seen
This is the ultimate warning sign that countries are rapidly losing confidence in the dollar… and they're getting out of it so they don't go down with the ship.
The Dollar's Day of Reckoning is coming fast.
The International Monetary Fund declared the dollar should cede its role as global reserve currency to an international currency.
The United Nations Conference on Trade and Development denounced the dollar saying "the current system of currencies and capital rules that binds the world economy is not working properly… the dollar should be replaced with a global currency."
And in June, the former head of the Hong Kong Monetary Authority, Joseph Lam, father of Hong Kong's peg to the U.S. dollar, said "that it’s time to review the U.S. dollar peg."
Even U.S. Treasury Secretary Timothy Geithner has said Washington's "quite open" to ideas that the International Monetary Fund build a global reserve currency for the world to use.
Fact is, the Fed’s fiscal ploys over the past 100 years to rob our wealth – paired with political incompetence in America – has given the world no choice but to abandon the dollar.
The Fed’s 100-year experiment in a currency managed by a faux federal entity has failed miserably… and its $16 trillion Ponzi scheme will implode much sooner than people think.
<><><><><><><><><><><><><><><><><><><><><><><><><><><><><><><><><><><>
Socialism: You have 2 cows and you give one to your neighbor.
Communism: You have 2 cows; the Government takes both and gives you some milk.
Fascism: You have 2 cows; the Government takes both and sells you some milk.
Nazism: You have 2 cows; the Government takes both and shoots you.
Bureaucratism: You have 2 cows; the Government takes both, shoots one, milks the other and throws the milk away..
... Traditional Capitalism: You have 2 cows. You sell one and buy a bull. You herd multiplies, and the economy grows. You sell them and retire on the income.
To go back to the HOME PAGE click on link
http://www.consciousazine.com/living-on-water.html
The national bank was established when the U.S. was in its infancy. It took on the role of national creditor, putting it at odds with the banks established in all of the states. It could establish regulations for money and credit, and did so for its own purposes. This meant everyone who dealt in money and credit had to accommodate this national animal.
Sound familiar?
President Andrew Jackson hated the idea of a national bank. He saw such entities as nothing more than an easy path for governments and large institutions to manipulate currency for their own gain. He vowed to close the bank… and succeeded.
The demise of the bank set off a credit contraction that deflated a speculative bubble, resulting in a sharp economic downturn in the mid-1830s.
Many people point out that if Jackson had not closed the bank then the contraction would not have happened, but this misses the point that the expansion was based on the extension – and some would say reckless extension – of credit.
Sound familiar?
Should there be a Bank of the United States? Should the Federal Reserve exist? Should there be ONE body that can determine, free of voter approval or oversight, whether the national currency we are required to use can be devalued? Should there be an entity that can exert worldwide influence by simply deciding what short-term interest rates should be and by pursuing programs to change long-term interest rates?
These questions are hotly debated today, just as they were in the 1800s, but not by as many people as they should.
People who are knowledgeable about such things constantly question the wisdom of consolidating power, while recognizing that it can allow for swift action in times of need. Given the recent actions of central banks around the world and how they affect all of us through our pocketbooks, it would seem reasonable that such topics arise at cocktail parties, little league games, and really anywhere that people gather. But they don’t. Instead, such conversations are relegated to financial papers and gatherings of like-minded people.
Maybe that’s the way the winners of the bureaucracy – those who decide what gets displayed and what doesn’t – want it to be.
Maybe that’s why the building that housed the Second Bank of the United States holds no record of what went on there… of how a fight over money and credit was waged.
Laying out the reasons for and against a national bank might actually help to spark a conversation about where we are and how we function.
“America’s Final Unwind”
Get ready for the coming collapse of a 99-Year Old PONZI scheme (now 318-times the size of Madoff's) that’s set to wipe out the once Great American Middle Class!
But in order for you to understand the magnitude of the crisis ahead, let me first take you back to what may be remembered as:
"The Darkest Night in Financial History"
It was the strangest and most secretive expedition to ever occur in American history.
In 1910, a party of the nation’s biggest bankers and power brokers (who some say represented a sixth of the world’s wealth at the time) met at a station in Hoboken, New Jersey.
A senator directed each one of the guests to go to a rarely frequented platform, where a private railcar awaited them.
And under the cover of darkness, these financiers scurried out of New Jersey.
Attendees included Nelson Rockefeller's grandfather; the Assistant Secretary of the Treasury; the Presidents of two of the largest banks in the country; Paul Moritz Warburg, a German partner in a large New York bank; and an aid to J. P. Morgan.
After clanking along a railroad track for hundreds of miles, these six men hit the coast of Georgia. There, they embarked on a secret launch headed toward a mysterious island.
The island was deserted, except for a few servants.
There they stayed for a week in rigid secrecy. The guests were forbidden to call each other by their last names, lest the servants learn of their true identities, and lest the truth get out of the top-secret plan they would hatch.
Their master plan was to create and operate an institution that maximizes profits, eliminates competition and that would be able to freely utilize the power of the police state.
The plan worked flawlessly for 99 years.
The Secretive “Committee of 7” that Now
Controls the World
The bankers and power-brokers created an institution that today is more powerful than Apple, Wal-Mart, IBM and every S&P 500 company combined.
As Senator Barry Goldwater went on record to say,
"The accounts of the Federal Reserve System have never been audited. It operates outside the control of Congress and manipulates the credit of the United States."
It pays no income taxes and it enables un-elected individuals to control America's currency system...
I’m talking about the Federal Reserve.
And while most Americans believe the deceptively named Federal Reserve is a government agency acting on behalf of its citizens, it’s not.
The Federal Reserve is the most powerful private corporation in the world. And frankly, it’s about as "federal" as Federal Express.
As far back as the 1930s, the Honorable Louis McFadden, Chairman of the House Banking and Currency Committee, tried to warn Americans of its true power…
“When the Federal Reserve Act was passed, the people of these United States did not perceive that a world banking system was being set up here. A super-state controlled by international bankers and industrialists acting together to enslave the world. Every effort has been made by the Fed to conceal its powers but the truth is the Fed has usurped the government.”
And according to the popular book, The Creature from Jekyll Island, the Fed was founded - by a small group of the world’s richest bankers, including the Rothchilds of Paris and London; Lazard Brother of Paris; Israel Moses Seif of Italy; Kuhn, Loeb, and Warburg of Germany; Goldman, Sachs and the Rockefeller families of New York…
The Federal Reserve is More Like
“The Feudal Reserve.”
In order to keep resources, money supplies and the media in the hands of one power, they rarely married outside their circle… eventually coming to control everything from diamonds to dollars…
That’s how modern empires were built.
And the Federal Reserve is at the end of the day: “The Ultimate Empire”
But this Empire and its "fractional reserve banking" system - a system which let its members create money out of thin air - is now $16 trillion in debt… and it has no easy escape without destroying the money in your wallet.
It has successfully created the "Greatest Ponzi Scheme of All Time."
Unfortunately for our country, this Ponzi scheme is about to collapse…
The role of the Fed, besides lining the pockets of rich bankers, is to protect the value of the dollar.
For the 100 years before the Fed was born, the dollar was resilient – even amid the turbulence of America’s social and economic growing pains. Between 1813 and 1913 – when the Fed was born – the value of a U.S. dollar actually increased by 95%.
But ever since the Jekyll Island cabal centralized America’s monetary policy on December 23, 1913, the day the Fed was officially established, we've witnessed the greatest financial panics in history…
The Great Depression in the 1930s… the draining of gold reserves in the 1960s… stagflation in the 1970s… the dotcom bubble in the early 2000s… the housing bust and the current recession all stem from Fed policies as well.
As for a once-mighty dollar – 99 years ago, when the Fed took control of our monetary system the dollar was still worth a dollar.
Today, it's worth about 4 cents.
That final four cents might not seem like there's much to lose. But what most people don't understand is that from a modern-day perspective, our remaining four cents is equivalent of that 1913 $1 bill.
We can still lose another 97% of our currency… and then another 97% from there. The potential is exponential.
Every crisis in America over the last century began with the Federal Reserve’s monetary policy. The Fed was sold to America as a way to smooth the economic ebbs and flows – to lessen the severity or even avoid the recessions that routinely struck the U.S. economy before 1913. On that front the Fed has succeeded – but at the cost of creating far-larger boom/bust cycles that rob our wealth…
The Fed's solution for fixing all these busts has almost always been a re-flation of the bubble.
But my research tells me this "Game of Thrones" is over. The Fed can’t print its way out this time…
The mainstream media, economists and Wall Street have all overlooked one critical detail – and it’s the ultimate game-changer…
It’s the one thing NO ONE is talking about…
The ONE THING they wished would never come about…
It's NOT the $16 trillion in national debt…
It's NOT the $1 trillion in outstanding student loans…
Nor is it the $97 trillion in entitlement debt…
It's something the FED and all of their men do NOT want you to know about.
By December 23rd, 2013, the Dollar's End
Will Be in Sight!
As you may know by now, major nations like China, Russia, Japan, Brazil, Iran and South Africa, to name a few, are already actively trading directly with one another in local currency.
They've begun to sidestep the dollar.
That's a monumental shift in global trade. Ever since a meeting in Bretton Woods, New Hampshire, in the summer of 1944, the world has used the U.S. dollar as its medium of exchange. As that system breaks down, the demand for dollars declines.
That demand is what helps keep our interest rates low and the prices for various commodities from oil to corn less expensive for American families than for most other families in the world.
But consider what's happening:
•Asia's Mightiest Are Ditching the Dollar! On June 1st, China and Japan began trading using their own currencies. When the yen-to-yuan trade began, it was a huge blow to the dollar that most people didn’t even know occurred.
•The BRICS Just Kissed the Dollar Goodbye. A new agreement among Brazil, Russia, India, China, and South Africa now promotes the use of their national currencies when trading, instead of the greenback.
•Buying Oil Without a Single Petrodollar! China is ditching the dollar to buy oil directly from United Arab Emirates. The Chinese National Bank says this agreement is worth the equivalent of $5.5 billion annually. Plus, China and Iran are working on a barter system to exchange Iranian oil for Chinese imported products.
•Trade is Heating Up Down in Africa. China is its largest trading partner, and is doing everything it can to replace the dollar with Chinese currency. Standard Bank, Africa's largest financial institution, predicts that the equivalent of $100 billion worth of trade between China and Africa will be settled in renminbi in 2015.
•Oil for Rice – It's Happening! Iran has begun to buy shipments of rice, sugar and soybeans from India, to circumvent U.S. financial sanctions on its oil shipments. Even though India has been unable to pay in full for Iranian oil imports because U.S. sanctions have made it difficult to access U.S. dollars for transactions with Iran… it's now paying Iran in Indian rupee and gold.
If the U.S. dollar is no longer the world's reserve currency… then life as you know it in America will radically change.
The Ripple Effect Has Begun
But there’s something even more devastating to the dollar and the Fed's reign of financial terror than China, Russia, Japan and other major nations circumventing it…
I’m talking about the day when NOT just big nations start dropping the dollar, but the day when even small nations start dropping it also…
That day is already here…
Countries like Turkey, Vietnam, Thailand, Laos, Cambodia, Brunei, Argentina, Belarus, Malaysia and the Philippines are already abandoning the dollar.
•Argentina now trades directly with China. Value: Over $23 billion.
•Indonesia and China swap local currencies. Value: Over $15 billion.
•South Korea, Malaysia, and Hong Kong trade for yuan. Value: $147 billion.
•Belarus has traded outside the U.S. dollar. Value: $3.15 billion.
The Great American Alternative Currency Movement
A recent CNN report announced that homegrown local currencies are springing up across America.
Citizens disgusted with the fiscally reckless federal government are taking steps to stimulate local economies and protect themselves.
Loren Gatch, a professor of political science at the University of Central Oklahoma who researches local currencies, estimates that in the last few years at least a dozen communities have developed their own currencies.
In Southern Berkshire, MA more than 3 million BerkShares have been issued since the currency launched in 2006. Already, five community banks (about two-thirds of the local banks) have partnered with BerkShares and 3 local branches now accept the currency. This is significant for a region with only 19,000 residents.
In Philadelphia, PA, a homegrown currency known as Equal Dollars can be used at over 100 local businesses… Bay Bucks trade in Traverse City, MI… Life Dollars are used by over 700 businesses in Bellingham and Seattle, WA… Downtown Dollars in Armore, PA… and since 2009 Potomacs have traded in Washington, D.C., suburbs of Northern Virginia and Maryland.
Now, state governments are exploring state issued currencies. Lawmakers in more than 10 states, including Virginia, Georgia, South Carolina, Idaho and Tennessee, have circulated proposals to introduce alternative currencies in the form of gold or silver.
It's clear that foreign countries – and even its own citizens – don't want anything to do with the greenback.
As fewer and fewer buyers need dollars … the Fed's Ponzi scheme will unwind faster, and more furiously, than any financial disaster we've ever seen
This is the ultimate warning sign that countries are rapidly losing confidence in the dollar… and they're getting out of it so they don't go down with the ship.
The Dollar's Day of Reckoning is coming fast.
The International Monetary Fund declared the dollar should cede its role as global reserve currency to an international currency.
The United Nations Conference on Trade and Development denounced the dollar saying "the current system of currencies and capital rules that binds the world economy is not working properly… the dollar should be replaced with a global currency."
And in June, the former head of the Hong Kong Monetary Authority, Joseph Lam, father of Hong Kong's peg to the U.S. dollar, said "that it’s time to review the U.S. dollar peg."
Even U.S. Treasury Secretary Timothy Geithner has said Washington's "quite open" to ideas that the International Monetary Fund build a global reserve currency for the world to use.
Fact is, the Fed’s fiscal ploys over the past 100 years to rob our wealth – paired with political incompetence in America – has given the world no choice but to abandon the dollar.
The Fed’s 100-year experiment in a currency managed by a faux federal entity has failed miserably… and its $16 trillion Ponzi scheme will implode much sooner than people think.
<><><><><><><><><><><><><><><><><><><><><><><><><><><><><><><><><><><>
Socialism: You have 2 cows and you give one to your neighbor.
Communism: You have 2 cows; the Government takes both and gives you some milk.
Fascism: You have 2 cows; the Government takes both and sells you some milk.
Nazism: You have 2 cows; the Government takes both and shoots you.
Bureaucratism: You have 2 cows; the Government takes both, shoots one, milks the other and throws the milk away..
... Traditional Capitalism: You have 2 cows. You sell one and buy a bull. You herd multiplies, and the economy grows. You sell them and retire on the income.
To go back to the HOME PAGE click on link
http://www.consciousazine.com/living-on-water.html