China this morning reported 4.9% price inflation for the month of February, exceeding analyst expectations of 4.8%. With China now mimicking the U.S. Bureau of Labor Statistics and taking steps to artificially manipulate their consumer price index (CPI) numbers as low as possible, it is likely that real price inflation in China is now closer to 10%. China was at least smart enough to raise interest rates last month by 25 basis points to 6.06%, while the Federal Reserve continues to leave interest rates near zero with there being absolutely no talk of the Federal Reserve ever raising interest rates again. China will be successful at containing inflation, as U.S. inflation spirals out of control and becomes the greatest economic crisis in American history.
China this week reported a $7.3 billion trade deficit for the month of February, its largest trade deficit in seven years, which surprised many global economists. NIA believes China's trade deficit is temporary and that China will quickly return to having a trade surplus. The Federal Reserve's QE2 along with China's destructive monetary policies, which artificially devalue the yuan, have led to a massive rise in China's raw material costs this year. NIA believes that in the upcoming months, Chinese manufacturers will raise the prices of their products that get exported to the U.S., to counteract rising commodity prices. With most products used by Americans today having been manufactured in China, this will mean Americans will soon see massive price inflation in just about all consumer goods they use. NIA projects that by the end of 2011, we will begin to see the U.S. CPI increase by 4.9% or higher on a year-over-year basis, with real U.S. price inflation rising north of 10%.
The mainstream media is proclaiming that China's trade deficit will silence calls for the Chinese to allow their currency to strengthen against the U.S. dollar. The fact is, China's government has for long been making the major mistake of printing too many yuan in order to artificially prop up the U.S. dollar. Their fear was, if the U.S. dollar was allowed to decline too rapidly, prices of Chinese goods would rise in terms of U.S. dollars and Americans would no longer afford to import them.
The truth is, if China allowed the yuan to strengthen, the Chinese would have enjoyed a much higher standard of living. Sure, prices would rise in dollars and Americans would import less, but the Chinese would have the ability to consume more of their own products. Now, as a result of China expanding its own money supply in order to keep the yuan pegged to the U.S. dollar, Americans will be forced to pay a much higher price for Chinese goods anyway. The same higher prices Americans were going to pay as a result of exchange rate appreciation, Americans will now pay as a result of inflation. For the Chinese, the exchange rate appreciation route would have been a much better route to take than the inflation route, because now the Chinese will also be forced to pay higher prices. In the very short-term, China might actually suffer more than the U.S. because they lack the social safety nets that have been implemented here in America.
The U.S. government has been successful at temporarily paying off Americans into not rioting in the streets like in Arab nations. It was just announced a few days ago that the number of Americans on food stamps in the month of December of 2010 was a record 44,082,324, up 13.1% from one year earlier and 1.1% from one month earlier. That is more than 14% of the total U.S. population! Combined with President Obama extending unemployment benefits up to 99 weeks, American citizens are too busy and distracted playing with their iPad 2s and gossiping on Twitter about Charlie Sheen, to have any time to protest in Washington, DC.
NIA believes the U.S. government's entitlement spending is currently having the unintended consequence of making Americans dependent on government. It is like when you take wild animals into captivity and you feed them, teach them to do tricks and take care of them for a period of many years; if you just dump them one day back into the wild, it will be very difficult for them to survive. Americans who have become dependent on unemployment checks and food stamps will likely soon abruptly find out that they must begin to fend for themselves without any help from the government. The result will be many Americans turning into wild animals and becoming so desperate that they will have to rob and burglarize their fellow neighbors who were smart enough to prepare, or else they will risk starving to death.
As a result of QE2, the Federal Reserve is now buying 70% of U.S. treasuries, up from previously only buying 10% of treasury bonds. Foreign central banks are now buying just 30% of U.S. treasuries, compared to previously buying 50% of treasury bonds. The U.S. budget deficit in the month of February reached a record $222.5 billion or $2.67 trillion on an annualized basis. With the Federal Reserve now monetizing our debt in full swing, a complete and total loss of confidence in the U.S. dollar could be imminent.
Just like how nobody in the mainstream media was calling for the collapse of Egypt's government a few months ago, almost nobody in the media believes a collapse of the U.S. dollar could possibly take place anytime soon. NIA members are educated enough to see that the writing is on the wall. The Federal Reserve can deny all it wants that the U.S. is experiencing inflation, but with the cost to print a single U.S. dollar paper note rising by 50% since 2008, massive inflation is here right under Federal Reserve Chairman Ben Bernanke's nose. Every day that goes by, China is quietly implementing more and more steps that expand the yuan's use in cross border trade, in order to position the yuan as the world's next reserve currency.
So few Americans are presently preparing for hyperinflation that if hyperinflation broke out today, approximately 90% of Americans won't have the means to put food on the table or put fuel in their automobiles. During the upcoming hyperinflationary crisis, food stamps will no longer have any value at all and all U.S. entitlement programs will come to a complete halt. Americans will take to the streets like the world has never seen before.
The biggest question NIA has today is, will the U.S. government resort to firing at its own citizens, if major riots take place in Washington, DC. On Thursday, police in Saudi Arabia shot and wounded three protesters. The price of oil rose by a few dollars per barrel as soon as this news hit the wire, which shows just how nervous the world's financial markets have become in recent weeks. The fact that the Dow Jones has declined significantly in recent days, in our opinion means that the odds of QE3 being launched as soon as QE2 is over, are now much higher than they were several weeks ago.
The other big question NIA has today is, if in the unlikely event there is no QE3, who will fill in for the artificial buying demand currently coming from the Federal Reserve. After all, with no QE3, the Federal Reserve will go from buying 70% of treasury bonds to being a seller of U.S. treasuries. NIA is 100% sure that foreign central banks aren't itching to jump back in to fill the hole. While in the past, the private sector may have picked up the slack, we believe individual investors will now be more reluctant to jump into government bonds, especially with bond king Bill Gross reducing the government bond holdings in his Pimco Total Return Fund down to zero. The bottom line is, no QE3 means interest rates will fly sky high and destroy the phony so-called "economic recovery".
From April to August of 2010, the last time the Federal Reserve allowed its balance sheet to shrink, the Dow Jones fell by over 1,000 points. If Bernanke doesn't soon begin to leak out the strong likelihood of QE3, we could see the stock market decline by 1,000 points or more, which will force Bernanke into launching QE3. If we see a major sell off in stocks, NIA doesn't necessarily think that precious metals prices will follow. In fact, we could see gold and silver rise along with the Dow Jones falling. NIA projects the Dow Jones to gold ratio to decline to 6.5 in 2011. This means even if the Dow Jones fell to below 11,000, we still believe gold is likely to rise to around $1,600 to $1,700 per ounce this year, with silver soaring to around $42 to $44 per ounce. NIA believes the worst decision any American can make is to sell their gold and silver and go long U.S. dollars, hoping to buy their precious metals back at a lower price in the future.
It is important to spread the word about NIA to as many people as possible, as quickly as possible, if you want America to survive hyperinflation. Please tell everybody you know to become members of NIA for free immediately at: http://inflation.us
Showing posts with label News. Show all posts
Showing posts with label News. Show all posts
Friday, March 11, 2011
Friday, February 4, 2011
Egypt: Preview of America in 2015
The rioting and looting currently taking place in Egypt is primarily a result of massive food inflation and shows what all major cities in the United States will likely look like come year 2015 due to the Federal Reserve's zero percent interest rates and quantitative easing to infinity. On December 16th, 2009, NIA named Time Magazine's 2009 'Person of the Year' Ben Bernanke our 'Villain of the Year', saying he created "unprecedented amounts of inflation in unprecedented ways" and "When it costs $20 for a gallon of milk in a few years, Americans will have nobody to thank more than Bernanke."
What started out a few weeks ago as protests in Algeria with citizens chanting "Bring Us Sugar!" and five citizens being killed, quickly spread to civil unrest in Tunisia which saw 14 more civilian deaths, and has now spread to riots in Egypt where 300 Egyptian citizens have been killed. Food inflation in Egypt has reached 20% and citizens in the nation already spend about 40% of their monthly expenditures on food. Americans for decades have been blessed with cheap food, spending only 13% of their expenditures on food, but this is about to change.
NIA was the first to predict the recent explosion in agricultural commodity prices in our October 30th, 2009, article entitled, "U.S. Inflation to Appear Next in Food and Agriculture", which said we have a "perfect storm for an explosion in agriculture prices". A couple of months later in 'NIA's Top 10 Predictions for 2010' we predicted "Major Food Shortages" and said, "Inventories of agricultural products are the lowest they have been in decades yet the prices of many agricultural commodities are down 70% to 80% from their all time highs adjusted for real inflation". Over the past year, agricultural commodities as a whole have outperformed almost every other type of asset, with silver being one of only a few other assets keeping pace with agriculture. (On December 11th, 2009, NIA declared silver the best investment for the next decade at $17.40 per ounce and it has so far risen 64% to its current price of $28.39 per ounce).
The world is at the beginning stages of an all out inflationary panic. Wheat, which NIA previously called on 'NIAnswers' its favorite investment besides gold and silver, is now up to a new 30-month high of $8.63 per bushel and has doubled in price since June of last year. Algeria bought 800,000 tonnes of wheat this past week, bringing their total purchases for the month of January up to 1.8 million tonnes, which was quadruple expectations. Saudi Arabia is also beginning to stockpile their inventories of wheat. Rice futures have gained 8% during the past few days with Bangladesh and Indonesia placing extraordinary large orders. Indonesia's latest rice order was quadruple its normal allotment and Bangladesh plans to double rice purchases this year. Meanwhile, the U.S., which is the world's third largest exporter of rice, is expected to cut production by 25% in 2011.
NIA considers rice to be one of the world's most undervalued agricultural commodities at its current price of $15.96 per 100 pounds and forecasts a move back to its 2008 high of $24 per 100 pounds as soon as the end of 2011. NIA believes cotton, at its current price of $1.80 per pound, may have gotten a bit ahead of itself in the short-term. In NIA's first ever article about agriculture on February 17th, 2009, we said that cotton's "upside potential is astronomical" at its then price of $0.44 per pound. NIA pointed to increasing sales to textile companies in China and the fact that cotton was down 70% from its all time high as reasons to be very bullish on cotton at $0.44 per pound. Early NIA members could have made 309% on cotton, but today we see much bigger potential in rice. The recent spike in cotton reminds us of the 2008 spike in oil. Although we believe cotton will ultimately rise above $3 per pound later this decade, we could possibly see a dip to below $1.40 per pound first.
Many people in the mainstream media have been criticizing NIA's recent food inflation report, claiming that agricultural commodity prices have very little to do with prices of food in the supermarket. CNBC's Steve Liesman, in particular, claims that "rising commodity prices won't cause inflation". Liesman has it backwards. NIA has never claimed that rising commodity prices cause inflation. Soaring budget deficits that the U.S. government can't possibly pay for through taxation causes inflation when the Fed is forced to monetize the debt by printing money.
Rising commodity prices are only a symptom of inflation. The reason NIA was so bullish on agricultural commodities going back two years ago when we produced our first documentary 'Hyperinflation Nation', is because while gold is the best gauge of inflation and is often the best tool for predicting future money printing, agriculture is where the majority of the monetary inflation ends up going after the Fed's newly printed money trickles down to the middle-class and poor. With gold prices already surging two years ago when we produced 'Hyperinflation Nation', NIA said in the documentary "food prices have the potential to surge most during hyperinflation".
One thing NIA is almost 100% sure of is that come year 2015, middle-class Americans will be spending at least 30% to 40% of their income on food, similar to Egyptians today. As NIA warned in its latest documentary 'End of Liberty', if you don't have enough money to accumulate physical gold and silver, it is important to begin establishing your own food storage, and store enough food to feed you and your family for at least six months during hyperinflation. Many store shelves in Egypt are now empty after recent panic buying, with shortages of nearly all major staple items throughout the country.
The U.S. Treasury is getting ready to sell $72 billion in new long-term bonds next week, as the U.S. rapidly approaches its $14.29 trillion debt limit. The debt limit is now expected to be reached by April 5th and Treasury Secretary Geithner warned the U.S. will see "catastrophic damage" if it isn't raised. With the Federal Reserve now surpassing China and Japan as the largest holder of U.S. treasuries, the real "catastrophic damage" ahead will be hyperinflation as a result of the U.S. government doing absolutely nothing to dramatically reduce spending. It is an absolute joke that Obama during his State of the Union address announced $400 billion in spending cuts over the next 10 years, but then the very next day, the Congressional Budget Office increased its 2011 budget deficit projection by $400 billion to $1.48 trillion.
Not raising the debt limit would be a good thing, as it would force Washington to live within its means. Sure, the stock market would collapse and the U.S. economy would enter into its next Great Depression, but at least it would save the U.S. dollar from losing all of its purchasing power. In fact, the standard of living for middle class Americans might actually improve if the government allowed the free market to put our economy into a depression, because goods and services would get cheaper.
The U.S. economy has become a drug addict that is dependent on cheap and easy money from the Federal Reserve. While Wall Street bankers took home a record $135 billion in total compensation in 2010, up 5.7% from $128 billion in 2009, this money was stolen from middle-class and poor Americans through inflation. The more monetary inflation (heroin) the Federal Reserve creates in order to satisfy the (in the words of Gerald Celente) "money junkies" on Wall Street, the more middle-class and poor Americans become dependent on unemployment checks and food stamps just to survive. Millions of American students are graduating college with hundreds of thousands of dollars in debt but no jobs. Luckily for them (but not holders of U.S. dollars), NIA is hearing reports from both unemployed and underemployed college graduates with student loans that the government is reducing their required monthly payments by sometimes 90% or more based on their current incomes.
China and Japan recently saw their credit ratings downgraded, while the U.S. credit rating remains at "AAA". NIA believes it would make far more sense for the world's largest debtor nation to be downgraded instead of the world's two largest creditor nations. The Federal Reserve's second round of quantitative easing has yet to even reach the halfway point and the Fed already holds about $1.11 trillion in U.S. treasuries. By the time QE2 is over at the end of June, the Fed will own $1.6 trillion in U.S. treasuries, about what China and Japan own combined. Shockingly, Kansas City Fed President Thomas Hoenig is already dropping hints about QE3. According to Hoenig, the Fed may consider extending treasury purchases beyond June 30th, 2010, (the scheduled completion date for QE2) if U.S. economic data looks disappointing.
With the Fed taking over as the largest holder of U.S. treasuries, China is beginning to rapidly move away from the U.S. dollar and into gold. In just the first 10 months of 2010, China imported 209 metric tons of gold compared to 45 metric tons in all of 2009, a stunning five-fold increase. While the western world is downplaying the threat of inflation as much as possible, Asian countries understand that hyperinflation is the most devastating thing that can possibly happen to any economy. The demand for gold in Asia right now is the most intense it has ever been, as they look to tackle rising inflation before it becomes hyperinflation.
The Chinese are so smart that families are now giving each other gold bullion as gifts instead of traditional red envelopes filled with cash. China is now on track to soon surpass India as the world's largest consumer of gold. The China Securities Regulatory Commission recently gave Beijing-based Lion Fund Management Co. approval to create a fund that will invest into foreign gold ETFs.
U.S. stock mutual funds saw $6.7 billion in net inflows during the past two weeks, the most in any two week period since May of 2009. The rioting, looting, and civil unrest in Egypt is now making the U.S. look like the safe haven of the world, even though it should be considered the riskiest place to invest. From the Dow's low in August until now, about $38 billion was actually removed from U.S. stock mutual funds, despite the stock market rising 20%. The Dow Jones has been rising from September until now solely due to the Federal Reserve printing around $350 billion out of thin air. When central banks print money, stock markets often act as a relief valve due to there being too much inflation going into the hands of financial institutions.
The U.S. M2 money supply surged by $46.6 billion during the week ending January 17th to a record $8.8623 trillion, following a rise during the previous week of $7.6 billion. The rise in the M2 money supply over the past two weeks of $54.2 billion equals an annualized increase of 16%. The M2 multiplier now stands at 4.218 compared to a long-term average of 10. When QE2 is complete, the Fed's monetary base will likely stand at $2.59 trillion. A return to the long-term average M2 multiplier of 10 means we are due to see a 192% increase in the M2 money supply and that is not even including a possible QE3 and QE4.
The U.S. economic ponzi scheme could unravel very quickly in the years ahead, with the velocity of money increasing much faster than anybody expects. As more Americans learn about NIA and become educated to the truth about the U.S. economy and inflation, a complete loss of confidence in the U.S. dollar could occur very suddenly. It is important for all Americans to prepare as if hyperinflation will be here tomorrow. At least in Egypt, their currency still has purchasing power and their citizens are trying to implement a regime change before it is too late. By 2015 in America, it will already be too late and the civil unrest here has the potential to be many times worse.
It is important to spread the word about NIA to as many people as possible, as quickly as possible, if you want America to survive hyperinflation. Please tell everybody you know to become members of NIA for free immediately at: http://inflation.us
What started out a few weeks ago as protests in Algeria with citizens chanting "Bring Us Sugar!" and five citizens being killed, quickly spread to civil unrest in Tunisia which saw 14 more civilian deaths, and has now spread to riots in Egypt where 300 Egyptian citizens have been killed. Food inflation in Egypt has reached 20% and citizens in the nation already spend about 40% of their monthly expenditures on food. Americans for decades have been blessed with cheap food, spending only 13% of their expenditures on food, but this is about to change.
NIA was the first to predict the recent explosion in agricultural commodity prices in our October 30th, 2009, article entitled, "U.S. Inflation to Appear Next in Food and Agriculture", which said we have a "perfect storm for an explosion in agriculture prices". A couple of months later in 'NIA's Top 10 Predictions for 2010' we predicted "Major Food Shortages" and said, "Inventories of agricultural products are the lowest they have been in decades yet the prices of many agricultural commodities are down 70% to 80% from their all time highs adjusted for real inflation". Over the past year, agricultural commodities as a whole have outperformed almost every other type of asset, with silver being one of only a few other assets keeping pace with agriculture. (On December 11th, 2009, NIA declared silver the best investment for the next decade at $17.40 per ounce and it has so far risen 64% to its current price of $28.39 per ounce).
The world is at the beginning stages of an all out inflationary panic. Wheat, which NIA previously called on 'NIAnswers' its favorite investment besides gold and silver, is now up to a new 30-month high of $8.63 per bushel and has doubled in price since June of last year. Algeria bought 800,000 tonnes of wheat this past week, bringing their total purchases for the month of January up to 1.8 million tonnes, which was quadruple expectations. Saudi Arabia is also beginning to stockpile their inventories of wheat. Rice futures have gained 8% during the past few days with Bangladesh and Indonesia placing extraordinary large orders. Indonesia's latest rice order was quadruple its normal allotment and Bangladesh plans to double rice purchases this year. Meanwhile, the U.S., which is the world's third largest exporter of rice, is expected to cut production by 25% in 2011.
NIA considers rice to be one of the world's most undervalued agricultural commodities at its current price of $15.96 per 100 pounds and forecasts a move back to its 2008 high of $24 per 100 pounds as soon as the end of 2011. NIA believes cotton, at its current price of $1.80 per pound, may have gotten a bit ahead of itself in the short-term. In NIA's first ever article about agriculture on February 17th, 2009, we said that cotton's "upside potential is astronomical" at its then price of $0.44 per pound. NIA pointed to increasing sales to textile companies in China and the fact that cotton was down 70% from its all time high as reasons to be very bullish on cotton at $0.44 per pound. Early NIA members could have made 309% on cotton, but today we see much bigger potential in rice. The recent spike in cotton reminds us of the 2008 spike in oil. Although we believe cotton will ultimately rise above $3 per pound later this decade, we could possibly see a dip to below $1.40 per pound first.
Many people in the mainstream media have been criticizing NIA's recent food inflation report, claiming that agricultural commodity prices have very little to do with prices of food in the supermarket. CNBC's Steve Liesman, in particular, claims that "rising commodity prices won't cause inflation". Liesman has it backwards. NIA has never claimed that rising commodity prices cause inflation. Soaring budget deficits that the U.S. government can't possibly pay for through taxation causes inflation when the Fed is forced to monetize the debt by printing money.
Rising commodity prices are only a symptom of inflation. The reason NIA was so bullish on agricultural commodities going back two years ago when we produced our first documentary 'Hyperinflation Nation', is because while gold is the best gauge of inflation and is often the best tool for predicting future money printing, agriculture is where the majority of the monetary inflation ends up going after the Fed's newly printed money trickles down to the middle-class and poor. With gold prices already surging two years ago when we produced 'Hyperinflation Nation', NIA said in the documentary "food prices have the potential to surge most during hyperinflation".
One thing NIA is almost 100% sure of is that come year 2015, middle-class Americans will be spending at least 30% to 40% of their income on food, similar to Egyptians today. As NIA warned in its latest documentary 'End of Liberty', if you don't have enough money to accumulate physical gold and silver, it is important to begin establishing your own food storage, and store enough food to feed you and your family for at least six months during hyperinflation. Many store shelves in Egypt are now empty after recent panic buying, with shortages of nearly all major staple items throughout the country.
The U.S. Treasury is getting ready to sell $72 billion in new long-term bonds next week, as the U.S. rapidly approaches its $14.29 trillion debt limit. The debt limit is now expected to be reached by April 5th and Treasury Secretary Geithner warned the U.S. will see "catastrophic damage" if it isn't raised. With the Federal Reserve now surpassing China and Japan as the largest holder of U.S. treasuries, the real "catastrophic damage" ahead will be hyperinflation as a result of the U.S. government doing absolutely nothing to dramatically reduce spending. It is an absolute joke that Obama during his State of the Union address announced $400 billion in spending cuts over the next 10 years, but then the very next day, the Congressional Budget Office increased its 2011 budget deficit projection by $400 billion to $1.48 trillion.
Not raising the debt limit would be a good thing, as it would force Washington to live within its means. Sure, the stock market would collapse and the U.S. economy would enter into its next Great Depression, but at least it would save the U.S. dollar from losing all of its purchasing power. In fact, the standard of living for middle class Americans might actually improve if the government allowed the free market to put our economy into a depression, because goods and services would get cheaper.
The U.S. economy has become a drug addict that is dependent on cheap and easy money from the Federal Reserve. While Wall Street bankers took home a record $135 billion in total compensation in 2010, up 5.7% from $128 billion in 2009, this money was stolen from middle-class and poor Americans through inflation. The more monetary inflation (heroin) the Federal Reserve creates in order to satisfy the (in the words of Gerald Celente) "money junkies" on Wall Street, the more middle-class and poor Americans become dependent on unemployment checks and food stamps just to survive. Millions of American students are graduating college with hundreds of thousands of dollars in debt but no jobs. Luckily for them (but not holders of U.S. dollars), NIA is hearing reports from both unemployed and underemployed college graduates with student loans that the government is reducing their required monthly payments by sometimes 90% or more based on their current incomes.
China and Japan recently saw their credit ratings downgraded, while the U.S. credit rating remains at "AAA". NIA believes it would make far more sense for the world's largest debtor nation to be downgraded instead of the world's two largest creditor nations. The Federal Reserve's second round of quantitative easing has yet to even reach the halfway point and the Fed already holds about $1.11 trillion in U.S. treasuries. By the time QE2 is over at the end of June, the Fed will own $1.6 trillion in U.S. treasuries, about what China and Japan own combined. Shockingly, Kansas City Fed President Thomas Hoenig is already dropping hints about QE3. According to Hoenig, the Fed may consider extending treasury purchases beyond June 30th, 2010, (the scheduled completion date for QE2) if U.S. economic data looks disappointing.
With the Fed taking over as the largest holder of U.S. treasuries, China is beginning to rapidly move away from the U.S. dollar and into gold. In just the first 10 months of 2010, China imported 209 metric tons of gold compared to 45 metric tons in all of 2009, a stunning five-fold increase. While the western world is downplaying the threat of inflation as much as possible, Asian countries understand that hyperinflation is the most devastating thing that can possibly happen to any economy. The demand for gold in Asia right now is the most intense it has ever been, as they look to tackle rising inflation before it becomes hyperinflation.
The Chinese are so smart that families are now giving each other gold bullion as gifts instead of traditional red envelopes filled with cash. China is now on track to soon surpass India as the world's largest consumer of gold. The China Securities Regulatory Commission recently gave Beijing-based Lion Fund Management Co. approval to create a fund that will invest into foreign gold ETFs.
U.S. stock mutual funds saw $6.7 billion in net inflows during the past two weeks, the most in any two week period since May of 2009. The rioting, looting, and civil unrest in Egypt is now making the U.S. look like the safe haven of the world, even though it should be considered the riskiest place to invest. From the Dow's low in August until now, about $38 billion was actually removed from U.S. stock mutual funds, despite the stock market rising 20%. The Dow Jones has been rising from September until now solely due to the Federal Reserve printing around $350 billion out of thin air. When central banks print money, stock markets often act as a relief valve due to there being too much inflation going into the hands of financial institutions.
The U.S. M2 money supply surged by $46.6 billion during the week ending January 17th to a record $8.8623 trillion, following a rise during the previous week of $7.6 billion. The rise in the M2 money supply over the past two weeks of $54.2 billion equals an annualized increase of 16%. The M2 multiplier now stands at 4.218 compared to a long-term average of 10. When QE2 is complete, the Fed's monetary base will likely stand at $2.59 trillion. A return to the long-term average M2 multiplier of 10 means we are due to see a 192% increase in the M2 money supply and that is not even including a possible QE3 and QE4.
The U.S. economic ponzi scheme could unravel very quickly in the years ahead, with the velocity of money increasing much faster than anybody expects. As more Americans learn about NIA and become educated to the truth about the U.S. economy and inflation, a complete loss of confidence in the U.S. dollar could occur very suddenly. It is important for all Americans to prepare as if hyperinflation will be here tomorrow. At least in Egypt, their currency still has purchasing power and their citizens are trying to implement a regime change before it is too late. By 2015 in America, it will already be too late and the civil unrest here has the potential to be many times worse.
It is important to spread the word about NIA to as many people as possible, as quickly as possible, if you want America to survive hyperinflation. Please tell everybody you know to become members of NIA for free immediately at: http://inflation.us
Wednesday, January 19, 2011
Austerity In America: 22 Signs That It Is Already Here And That It Is Going To Be Very Painful
Posted: 18 Jan 2011 04:50 AM PST
Over the past couple of years, most Americans have shown little concern as austerity measures were imposed on financially troubled nations across Europe. Even as austerity riots erupted in nations such as Greece and Spain, most Americans were still convinced that nothing like that could ever happen here. Well, guess what? Austerity has arrived in America. At this point, it is not a formal, mandated austerity like we have seen in Europe, but the results are just the same. Taxes are going up, services are being slashed dramatically, thousands of state and city employees are being laid off, and politicians seem to be endlessly talking about ways to make even deeper budget cuts. Unfortunately, even with the incredibly severe budget cuts that we have seen already, many state and local governments across the United States are still facing a sea of red ink as far as the eye can see.
Must read=>>Source
Must read=>>Source
Wednesday, December 30, 2009
U.S. Government: The New Growth Industry
(Editor's Note: This article originally appeared in Jason Farkas' November 6 "Weekly Insight" column of EWI's intensive Currency and Interest Rates Specialty Services.) The United States is facing a lot of problems, but one U.S. industry remains strong. It has access to capital and has increased in size every single year since 2000. Should you invest in this industry? Don't bother -- you already have. This mystery industry is the U.S. government, and its unbridled growth remains a reason to be bearish on the U.S. economy. Don’t be fooled into thinking the Great Recession is over because of the 3.5% gain in third-quarter GDP. The only reason for the uptick was the government’s contribution, as seen in the chart (courtesy of the Cato Institute):
A chance reading of a book on technical analysis and the Austrian school of economics led Jason Farkas, CMT, to EWI. Prior to joining the firm, Jason worked for 14 years as a futures, options and equity trader. He has been tutored by some of the best investment minds, including legendary trader Dick Diamond. You can read Jason's Weekly Insights every Friday in EWI's intensive Currency and Interest Rates Specialty Services.
Read the entire article =>>here
Monday, December 7, 2009
The Dubai Financial Nuke
The Dubai Financial Nuke
Clive Maund
What was really odd about yesterday was that we saw a big dollar breakout, but Treasuries fell heavily. We are now believed to be on the verge of another massive deflationary downwave, similar to last year, but worse. However, this time it is very possible that while we will see a flight to cash, we will not witness a stampede into Treasuries, or at least not on anywhere near the same scale. So what is going on here? - what are the principal underlying dynamics? Anyone who has had the misfortune to watch a nuke exploding, misfortune because you get irradiated, knows that first you see a very bright flash, then there is a period of tranquillity as the flash dies down and the mushroom cloud starts to rise, before the shockwave hits, when things get pretty rough to say the least.
You've seen the flash - now get ready for the shockwave...
What happened in Dubai just over a week ago was the bright flash, and the media have used the intervening period before the shockwave hits to reassure everyone that everything is going to be just fine - "You just relax, nothing will come of it, it's only $60 billion down the drain or whatever - have a cup of tea". The trouble is that it's not $60 billion at all - the reality is that this is a default on a massively larger scale. Dubai was a vast sinkhole into which western banks and governments unquestioningly poured not just billions but trillions of dollars which was then leveraged enormously by means of derivatives enabling Dubai to build itself up into a latter day Rome, with a level of opulence and extravagence that would have made Caesar green with envy.
When people think of Dubai the things that come to mind are the massively extravagent 7-star hotels, the towering record breaking skyscraper, palm-shaped island resort complexes etc and forests of new office buildings and apartments etc. What the vast majority don't realize is that the stupendous leverage afforded by derivatives has in addition enabled Dubai to create an immense global empire of businesses, most of the elements of which are broke, having racked up staggering levels of debt. Dubai is the nexus of the derivatives pyramid and it is flat, stony broke. Where did all the money come from to pay for all these things? - why from taxpayers and pension fund contributors the world over of course, but especially in the US, with Wall St acting as a giant conduit sluicing a torrent of cash into Dubai. The interesting thing is that there was never any accountability - countries and companies vied with each other for the privelege of pumping money into the exalted kingdom, seduced by its supposedly limitless oil wealth, and requesting or requiring guarantees was regarded as impolite. Now that Dubai is broke, the Dubai government has suddenly distanced itself from Dubai World, and the attitude towards the Western banks and governments who have poured trillions into Dubai is "Tough luck - you lose, suckers". What this means is that trillions of dollars which are now counted as assets on the balance sheets of banks worldwide and especially in the US are actually liabilities. So what do you think is going to happen to the stock prices of these banks - and stockmarkets generally, when the world wakes up and acknowledges this reality - when the shockwave hits?? Small wonder that the charts for Goldman Sachs and J P Morgan look very like the market charts before the '87 crash, but that was "small potatoes" compared to what is coming down the pipe this time.
Go ahead, take a good look at it - after all, You helped pay for it!.
If money panics out of commodities and stocks it has to go somewhere. Last year, as we know, it took refuge in US Treasuries, especially short-term Treasuries and it drove the dollar up as massive across the board liquidation went first into cash which was then used to buy Treasuries. While we can expect a similar dynamic to be in play this time round, largely because most investors simply don't have the imagination to think of an alternative to US Treasuries, there is a complicating factor, as highlighted repeatedly by Karl Denninger in his recent highly pertinent articles, which is that the US has been making a mockery of foreign Treasury buyers on an ever increasing scale with its endless monetization and ramping of the money supply - in effect treating them as morons by paying them zilch interest rates and undermining the dollar at the same time. They are right - they are morons, who are one way or another are going to get what's coming to them - after all, who but an imbecile buys the debt of a bankrupt country? However, there is a saying that "you can't fool all of the people all of the time" and foreign Treasury buyers and holders are getting increasingly fed up with their cavalier treatment at the hands of the US, and, in the absence of another deflationary implosion causing a renewed flight into the dollar and Treasuries, they look set to start dumping them, which as Denninger points out would set in train a "death spiral" of rising interest rates one consequence of which would obviously be a crashing stockmarket. So whether we see a rising dollar or a falling dollar it`s "Zugzwang" for the US stockmarket and economy - any move made loses, as does no move.
The rate of advance of the broad stockmarket has been slowing for months. On the 6-month chart for the S&P500 index we can see that it appears to have arrived at the top point of a large "Distribution Dome". If this Dome is valid - and it appears to be so - then we can expect the market to turn seriously lower soon, and we should remain aware that markets generally drop twice as fast as they go up, so it will not have to contact the Dome boundary on the way down - on the contrary, given the parlous fundamentals outlined above it will probably drop like a rock.
Bank stocks look set to be particularly hard hit in the event of a second downwave. This is apparent from their deteriorating relative strength in recent months - they are already very close to crashing key support as is clear on the charts for Goldman Sachs and J P Morgan. These 2 elite companies have had the richest of pickings during the financial crisis - being at the front of the line for everything, which is why their stock prices recovered so well - and because of this they are widely assumed to be invulnerable. They are not expected to be spared during the second downwave however, and their current lofty valuations make them a good candidate for shorting or Put options.
Goldman Sachs and J P Morgan chart analysis and Put option information follows for subscribers.
Clive Maund, Diploma Technical Analysissupport@clivemaund.com
www.clivemaund.com
Copiapo, Chile, 6 December 2009
No responsibility can be accepted for losses that may result as a consequence of trading on the basis of this analysis.
Saturday, January 10, 2009
Silver News and Views
The Silver Institute just put out a press release which stated, "The silver price, per ounce, in 2008 averaged a strong US$14.98, a nearly 12-percent increase over the 2007 average price of US$13.38; the best average annual price since 1980. A key development in silver's fortune has been renewed investor interest in the white metal, which began in earnest in 2004 and continues today.
Source=>>
Source=>>
Thursday, January 1, 2009
Warning Danger Ahead
UNCOMMON COMMON SENSE For People Who Think, WARNING: DANGER AHEAD
by Aubie Baltin CFA, CTA, CFP, PhD.
Now that the $50 billion Madoff Ponzi debacle is all over the front pages of every newspaper and more importantly, affecting most major charities all over the world, the cry for regulation and Increased oversight has reached crescendo proportions. If there is one lesson that should be obvious, but throughout history has never been learned, is that Making Laws Does Not Prevent Crime. Only by changing the system so that it makes human nature the centerpiece of regulation can we possibly achieve our goals. Have you not noticed that these same types of crimes always come to light only after extensive new regulations lead to a major Economic and Financial breakdowns? Yet after each one, we put a couple of people in jail and pass a few more new laws, yet each new breakdown produces bigger and bigger swindles: Which upon careful examination are due almost for exactly the same reasons as the one before.
Look at this guy Madoff. He allegedly robs $50 billion and yet he is out on bail. If a kid robs a liquor store for $500, chances are he doesn't get bail. How does a guy who could potentially have stolen more money than anybody in history get granted bail? With our entire financial system on its knees, how is it that not one single individual has even be charged? The inequality within our justice system has never appeared more glaring. Nobody seems to be able to figure out what happened or why he confessed so quickly. To me the answer is obvious: He is a 70 year old man and by confessing he is trying to take the spotlight and heat off his 2 sons and wife. Also, where is all the money that he stole? He could not possibly have spent it all. If there is a possibility of "grabbing back" monies paid to innocent investors, can they not seize all assets (money, valuables and properties, etc.) owned by his wife and children since they were all accumulated by the use of ill gotten gains? Or is there something we are not seeing. Is he being paid to keep quiet and that is the real reason for his favorable treatment by the courts?
The coming year, 2009, is going to be much worse for the average American than 2008. Dissatisfaction with our current system could lead to widespread protests, riots and violence which, in turn, could lead to a tremendous loss of our personal freedoms as we fall into a Dictatorship Style Socialism. Every American should be outraged by this atrocious stewardship of our nation's wealth. Our future has been looted by a select moneyed few who are completely free of the consequences that so many millions of others will have to go through. Did any of you ever ask where the $900 million that was spent on the presidential campaign came from and what do they expect to get in return? To these politicians from either party, we are like sheep to be sheared and when necessary, led to the slaughter. And make no mistake, it is the working people of this country who will be paying the tab for these so-called Masters of the Universe. The stark reality of the current power grab and the degree of naked greed on such a grand scale with complete disregard for others is a prelude to the financial genocide of our nation's health. Unfortunately it is creeping Socialism that breeds cronyism and anarchy, which always leads to outrageous theft that a truly Capitalist system would not tolerate. However it will be Capitalism that will get the blame, which is why I am calling for a 20 year Depression as our country turns more and more to French style Socialism lead by our new FDR. Keynesian Messiah.
THE STOCK MARKET: I don't have much to say that is new except that the market is behaving almost exactly as expected and explained in my last two issues. We are in major Wave B of the BEAR MARKET with as long as 2 or 3 more months to go before Wave B is over and the devastating Wave C crash resumes. Continue to build up your cash positions. If you insist on action: Buy stocks only into sell offs - DO NOT chase rallies. REMEMBER to always use STOPS. DO NOT LOSE MORE THAN 10% on any position. You must not get caught sitting on losses when this market turns down and the best shorting opportunities present themselves.
Please Note: This article is for education purposes only and is designed to help you make up your own mind, not for me to make it up for you. Only you know your own personal circumstances so only you can decide the best places to invest your money and the degree of risk that you are prepared to take. The Information on data included here has been gleaned from sources deemed to be reliable, but is not guaranteed by me. Nothing stated in here should be taken as a recommendation for you to buy or sell securities.
Abridged for E.A. read the entire article here=>>
by Aubie Baltin CFA, CTA, CFP, PhD.
Now that the $50 billion Madoff Ponzi debacle is all over the front pages of every newspaper and more importantly, affecting most major charities all over the world, the cry for regulation and Increased oversight has reached crescendo proportions. If there is one lesson that should be obvious, but throughout history has never been learned, is that Making Laws Does Not Prevent Crime. Only by changing the system so that it makes human nature the centerpiece of regulation can we possibly achieve our goals. Have you not noticed that these same types of crimes always come to light only after extensive new regulations lead to a major Economic and Financial breakdowns? Yet after each one, we put a couple of people in jail and pass a few more new laws, yet each new breakdown produces bigger and bigger swindles: Which upon careful examination are due almost for exactly the same reasons as the one before.
Look at this guy Madoff. He allegedly robs $50 billion and yet he is out on bail. If a kid robs a liquor store for $500, chances are he doesn't get bail. How does a guy who could potentially have stolen more money than anybody in history get granted bail? With our entire financial system on its knees, how is it that not one single individual has even be charged? The inequality within our justice system has never appeared more glaring. Nobody seems to be able to figure out what happened or why he confessed so quickly. To me the answer is obvious: He is a 70 year old man and by confessing he is trying to take the spotlight and heat off his 2 sons and wife. Also, where is all the money that he stole? He could not possibly have spent it all. If there is a possibility of "grabbing back" monies paid to innocent investors, can they not seize all assets (money, valuables and properties, etc.) owned by his wife and children since they were all accumulated by the use of ill gotten gains? Or is there something we are not seeing. Is he being paid to keep quiet and that is the real reason for his favorable treatment by the courts?
The coming year, 2009, is going to be much worse for the average American than 2008. Dissatisfaction with our current system could lead to widespread protests, riots and violence which, in turn, could lead to a tremendous loss of our personal freedoms as we fall into a Dictatorship Style Socialism. Every American should be outraged by this atrocious stewardship of our nation's wealth. Our future has been looted by a select moneyed few who are completely free of the consequences that so many millions of others will have to go through. Did any of you ever ask where the $900 million that was spent on the presidential campaign came from and what do they expect to get in return? To these politicians from either party, we are like sheep to be sheared and when necessary, led to the slaughter. And make no mistake, it is the working people of this country who will be paying the tab for these so-called Masters of the Universe. The stark reality of the current power grab and the degree of naked greed on such a grand scale with complete disregard for others is a prelude to the financial genocide of our nation's health. Unfortunately it is creeping Socialism that breeds cronyism and anarchy, which always leads to outrageous theft that a truly Capitalist system would not tolerate. However it will be Capitalism that will get the blame, which is why I am calling for a 20 year Depression as our country turns more and more to French style Socialism lead by our new FDR. Keynesian Messiah.
THE STOCK MARKET: I don't have much to say that is new except that the market is behaving almost exactly as expected and explained in my last two issues. We are in major Wave B of the BEAR MARKET with as long as 2 or 3 more months to go before Wave B is over and the devastating Wave C crash resumes. Continue to build up your cash positions. If you insist on action: Buy stocks only into sell offs - DO NOT chase rallies. REMEMBER to always use STOPS. DO NOT LOSE MORE THAN 10% on any position. You must not get caught sitting on losses when this market turns down and the best shorting opportunities present themselves.
Please Note: This article is for education purposes only and is designed to help you make up your own mind, not for me to make it up for you. Only you know your own personal circumstances so only you can decide the best places to invest your money and the degree of risk that you are prepared to take. The Information on data included here has been gleaned from sources deemed to be reliable, but is not guaranteed by me. Nothing stated in here should be taken as a recommendation for you to buy or sell securities.
Abridged for E.A. read the entire article here=>>
Wednesday, December 31, 2008
No end in sight for US property slump as prices fall at record rate
Larry Elliott, economics editor The Guardian, Wednesday 31 December 2008
House prices in 20 big US cities fell at their fastest rate on record in the year to October as rising unemployment, rationed credit and a glut of foreclosed properties led to fresh weakness in the market, according to a report released yesterday.
After falling every month since January 2007, the closely watched S&P/Case Shiller index of property prices declined 2.2% in October, leaving them 18% down on a year earlier. Six cities - Charlotte, Washington, Minneapolis, Tampa, Detroit and Atlanta - saw record monthly falls, while the biggest annual declines were in Phoenix and Las Vegas, where prices fell by a third.
David Blitzer, chairman of the index committee at Standard & Poor's, said: "The bear market continues; home prices are back to their March 2004 levels."
Source=>>
House prices in 20 big US cities fell at their fastest rate on record in the year to October as rising unemployment, rationed credit and a glut of foreclosed properties led to fresh weakness in the market, according to a report released yesterday.
After falling every month since January 2007, the closely watched S&P/Case Shiller index of property prices declined 2.2% in October, leaving them 18% down on a year earlier. Six cities - Charlotte, Washington, Minneapolis, Tampa, Detroit and Atlanta - saw record monthly falls, while the biggest annual declines were in Phoenix and Las Vegas, where prices fell by a third.
David Blitzer, chairman of the index committee at Standard & Poor's, said: "The bear market continues; home prices are back to their March 2004 levels."
Source=>>
Sunday, December 28, 2008
Almost one in 10 Floridians on food stamps
BY JOSE PAGLIERY jpagliery@MiamiHerald.com
Unemployed and strapped for cash, Floridians are asking for state assistance to feed their families in record numbers.
In the last two years, the number of Floridians on food stamps has increased more than 40 percent to 1.7 million. That increase is the highest in the nation, according to the U.S. Department of Agriculture. And it's the second-largest jump in the state's history, surpassed only during the aftermath of Hurricane Andrew, said an analyst at the Center of Budget and Policy Priorities, a Washington-based think tank.
Almost one in 10 Floridians is now on food stamps, and state managers say many more qualify.
Unemployed and strapped for cash, Floridians are asking for state assistance to feed their families in record numbers.
In the last two years, the number of Floridians on food stamps has increased more than 40 percent to 1.7 million. That increase is the highest in the nation, according to the U.S. Department of Agriculture. And it's the second-largest jump in the state's history, surpassed only during the aftermath of Hurricane Andrew, said an analyst at the Center of Budget and Policy Priorities, a Washington-based think tank.
Almost one in 10 Floridians is now on food stamps, and state managers say many more qualify.
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