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ECONOMICS AND ESOTERICA FOR A NEW PARADIGM

Posts Tagged ‘India

Dear Ben, please print us more money

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by testosteronepit
Posted August 30, 2011 

DEAR BEN,
Please print us more money. We want you to prop up the stock market. Everybody knows it’s a Ponzi scheme that will collapse without your support. You don’t want us to end up like Bernie Madoff’s clients. No, Ben, we love Ponzi schemes. We get in early and get out before they collapse. That’s why we’re rich. The bad thing is that they sometimes collapse before we can get out. But you already bailed us out twice in the last couple of years through printing trillions of dollars. Why not a third time?

That will also keep the bond-market bubble inflated. We have to admit that you’ve done an excellent job there, hands down. Negative real yields all the way up the yield curve! Awesome. Now if you could just print a few trillions and buy up the sovereigns from the PIIGS. Euro crisis over. End of story. And we’d get richer because we’d sell them to you at face value though we bought them at fifty cents on the dollar.

And why not forever? Just keep printing. Because as soon as you stop, stock markets will crash again, and credit markets will seize, and then we’re back on this awful ride to hell.

Of course, it’ll cause inflation, which is good. You yourself said that. You stated many times that you want inflation. In fact, you said that one of the goals of the Fed, after propping up the markets, is to create inflation. So stick to it, Ben. Don’t slack off suddenly just because some cowboy threatened you.

Inflation, in conjunction with your near-zero yields, has all sorts of benefits. For example, it will eat up the Social Security trust fund, whose $2 trillion balance is invested in treasuries. Fixed-income investors, retirees, and everybody who has any savings will also be demolished. And homeowners. But don’t worry. They won’t figure it out. They don’t get a statement every month that shows how much inflation cost them. It’s a quiet way of stealing from them, and it’ll impoverish them over time, but it’ll make us, the recipients of the money you print, richer.

You see, Ben, we can charge higher prices for our goods and services. And even if we have to pay more for raw materials, we look good. Our inventories increase in value, and we can claim sales jumped 10% because we raised prices by 10%. Analysts dig that.

Recently, Ben, you’ve done a decent job on inflation. In July, we were running at an annual rate of 6%. Not bad. But you need to preempt any cooling off. So keep printing.

Now, we’re not talking about wage inflation. Oh no. We have to keep wages down. We need cheap labor, or else we’d have to send these jobs to China—which we’re doing anyway. And not just to assemble iPhones. Heck, our lawyers in India are doing the same work as our local lawyers for one-tenth the pay. So, if our local lawyers want to be competitive…. Just think how much more profit we could make if wages collapsed!

Real wages have been declining for ten years and fell another 1.7% since July 2010. But that’s not enough. So get with it, Ben. Print more. And don’t worry about the wusses out there who say that choking the middle class like that will put us into a permanent recession. Just get the banks to loan them lots of money so they can buy our stuff, and when the loans blow up, you buy them from the banks at face value. Full circle, Ben.

The trillions you’ve printed and handed to us, well, we put them to work, and we created jobs in China and Mexico and Germany, and we bought assets, and it inflated prices, and now we’re even richer. We’re proud of you, Ben. Think of the influence you have. And not just here. Around the world, Ben! Look at the Middle East and North Africa. See the food riots, rebellions, and civil wars it caused? Thousands of people died and entire governments were toppled…. Oh, wait. That’s a bad example.

And then there is Congress. We invested in them through campaign contributions and other mechanisms to get them to spend trillions of dollars every year on our products and services, and they even started a few wars, and it made us richer—without taxing our companies or us. It’s a wonderful system.

But the deficits have become so huge that they exceed what the Treasury can borrow. So we’re glad, Ben, that you stepped up to the plate and printed enough money to monetize the deficit. But Ben, you can’t just stop now! You’ve got to keep at it. Or else, the whole system will blow up. Well, it’ll blow up anyway, but we don’t want it to blow up now. So, Ben, you don’t have a choice. Otherwise, we’d lose a lot of money in our schemes, and nobody wants that.

Our economic future – From best to worst case

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by Doug Casey of Casey Research
Posted originally June 7, 2011

THERE IS A GREAT DEAL OF UNCERTAINTY ABOUT WHAT THE FUTURE OF THE U.S. ECONOMY MAY LOOK LIKE – so I decided to take a stab at what’s likely to happen over the next 20 years. That’s enough time for a child to grow up and mature, and it’s long enough for major trends to develop and make themselves felt.

I’ll confine myself to areas that are, as the benighted Rumsfeld might have observed, “known unknowns.” I don’t want to deal with possibilities of the deus ex machina sort. So we’ll rule out natural events like a super-volcano eruption, an asteroid strike, a new ice age, global warming, and the like. Although all these things absolutely will occur sometime in the future, the timing is very uncertain – at least from the perspective of one human lifespan. It’s pointless dealing with geological time and astronomical probability here. And, more important, there’s absolutely nothing we can do about such things.

So let’s limit ourselves to the possibilities presented by human action. They’re plenty weird and scary, and unpredictable enough.

THE MARKET FOR PROGNOSTICATION

People are all ears for predictions, whether from psychics or from “experts,” despite the repeated experience that they’re almost always worthless, often misleading and more than rarely the exact opposite of what happens.

Most often, the predictors go afoul by underrating human ingenuity or extrapolating current trends too far. Let me give you a rundown of the state of things during the last century, at 20-year intervals. If you didn’t know it’s what actually happened, you’d find it hard to believe.

1911— The entire world is at peace. Stability, freedom and prosperity prevail almost everywhere. Almost every country in Europe is ruled by a king or queen. Western civilization has spread to nearly every corner of the world and is received with appreciation. Stunning breakthroughs are being made in science and technology. There’s no sign of a gigantic world war about to come out of nowhere to rip apart the political and cultural map of Europe and bankrupt everybody. Who imagined that a dictatorial communist regime would arise in Russia?

1931— It’s early in a disastrous worldwide depression. Attention is on economic troubles, not on the virtually unthought-of possibility that in less than 10 years a new world war would be under way against Nazism and a resurgent Germany.

1951— Except for Vietnam, all that remains of the colonies the West had established in the 19th century are quiescent. Nobody guessed almost all would either be independent, or on their way, in 10 years. China has joined Russia – and many other countries – as totally collectivist. Who imagined that Germany and Japan, although literally leveled, would be perhaps the best investments of the century? Who guessed that the U.S. was already at its peak relative to the rest of the world?

1971— Communist and overtly socialist countries all over the world seem to be in ascendance, soon to be buoyed further by a decade of rising commodity prices. The U.S. and the West are entering a deep malaise. Little significance is attached to rumblings from the Islamic world.

1991— Communism has collapsed as an ideology, the USSR has disappeared, and China has radically reformed. Islam is increasingly in the news.

2011—The world financial/economic crisis is four years old, but things are still holding together. Islamic terrorism and collapse of old regimes in the Arab world dominate the news. China is viewed as the world’s new powerhouse.

BAD AND WORSE

Regrettably, I’m not much of a linguist. But I do pick up interesting semantic trivia. In Spanish they don’t say “in the future,” as we do in English, which implies a definite outcome. Instead they say “en un futuro” – in a future – which implies many possible outcomes. It’s a better way of assessing reality, I think.
Here are three 20-year futures to consider. There are, obviously, many, many more – but I think these encompass the three most realistic broad possibilities.

• BEST CASE – FACTS GET FACED

Realizing what a disaster the complete destruction of their currencies would be, most governments decide to endure the pain of allowing interest rates to rise and limiting increases in the money supply. Poorly run corporations and banks are left to fail. Talk of abolishing the Federal Reserve, and using a commodity for money, becomes serious and widespread.

Shaken, the U.S. ends its profligate ways, in part because it lacks the means to continue, and in part because everyone but collectivist ideologues has actually learned something from the brutal ‘10s and ‘20s.

Amidst massive protests, the government closes much of its counterproductive apparatus, eliminates many taxes, and lets 30% of its employees go. It also, albeit reluctantly, liberalizes its regulation of the economy because it has become impossible to deny that the U.S. has been falling behind in all areas.

Although there is a resurgence of libertarian thought – reminiscent of the Reagan-Thatcher era – simple practicality is mainly responsible for forcing the government’s hand. For one thing, it can’t afford the bureaucracy needed to enforce detailed interference. For another, entrepreneurs are increasingly just doing what they please, partly from necessity and partly from a growing sense of righteousness. Interest rates go to 25%, to compensate for high levels of inflation. That’s high enough to make it worthwhile for people to save, and the capital base starts growing. The stock market has collapsed to its lowest level in living experience (in real terms), but the values available encourage people to become investors. Business is restructured on a sound, debt-free basis, with little speculation.

The U.S. radically cuts its military spending and pulls almost all troops out of their foreign bases and wars. The War on Drugs comes to an end, and the crime rate in both the U.S. and Mexico plummets.

The government solves most of its overhanging financial problems with a seriously devalued – but not hyperinflated – dollar. The Social Security deficit is eliminated by abstaining from benefit increases and by inflating away much of what had been promised before. Most Americans suffer a severe drop in their standard of living, as they’re forced into new patterns of production and consumption. A generation of college students find that their degrees in sociology, political science, economics, English lit, Black studies, gender studies and underwater basket weaving are of no real value.

When it’s all over, the tough times that started in ’07 prove to have been no more than a cyclical bump in the road, like all the other recessions since WW2, just much bigger.

A rough and memorable ride, but it ends with a return to prosperity.

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This would never happen where you live

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by Simon Black of Sovereign Man
Posted originally June 2, 2011

HERE’S A GREAT STORY. I left Santiago yesterday, quite happy that I had managed to lock up a major property deal at the 11th hour right before my international departure. I cut it so close, I literally had to run from my attorneys’ office back to my flat in El Golf within 90-seconds of signing the contract. I was in such a hurry to make my flight that, when going through security, I forgot to empty my pockets. I know, the cardinal sin, right?

I had a Blackberry, my wallet, a belt, and several Chilean coins jingling around in my pants, and the X-ray machine dinged like a winning slot machine.  Instinctively, I prepared myself for a verbal battle with some neanderthal who would try and put his hand down my pants. Except… it didn’t happen.

In my haste, I had almost forgotten that this was Chile, a civilized place that doesn’t go out of its way to demean citizens and residents at every available opportunity. No fondling, no fear and intimidation tactics, no surprise searches, no cash-sniffing dogs, no ‘secondary screening’, no stasi on the jet bridge. Instead, the solo security attendant simply asked if I had anything in my pockets. I pulled out my Blackberry and showed it to him, and he waved me through. I was on my plane 2-minutes later.

A few days ago, I was having a conversation with our Chief Investment Strategist Tim Staermose; he was telling me about a similar experience traveling recently to Macau via hydrofoil from Hong Kong. During his trip, he checked his luggage, got his boarding pass, went through immigration control… all the typical sort of international travel stuff, except for one thing: there were no X-ray machines or radiating body scanners at all, and there certainly weren’t any surly border guards to fondle passengers.

As I travel frequently and spend time in so many different countries, it’s becoming clear to me that there are essentially two categories in the world– police states that are running towards George Orwell’s view of the world in 1984, and countries where you can still feel like a free human being. Unfortunately, the police states are doing their best to corrupt the rest of the world. Homeland Security chief Janet Napolitano recently toured India and met with senior security officials there, undoubtedly trying to influence them to toughen security measures and join the Orwellian order.

Back in the US, the Department of Homeland Security recently announced its ever-expanding “If you see something, say something…” program, this time at the 2011 Indianapolis 500 race. If you’re not familiar, this is the program that encourages people across the country to become unpaid spies for the federal government and rat out friends and neighbors for anything ‘suspicious’. In eerie Big Brother fashion, Napolitano delivers this message from monitors perched throughout WalMart stores nationwide.

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U.S. Economy — The Big Picture

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by Monty Guild
Posted originally April 29 2011

A MESS BY ALL ACCOUNTS – AND SEEMINGLY GETTING MESSIER. As we have been saying for some time, U.S. economic growth is stuck in the slow lane. Very slow lane. There are few signs of any significant lane changing ahead. We have seen a serious slide in the American standard of living over the past three years, since the beginning of the recession. The slide can be measured in many ways. Food stamps recipients have increased by 48 percent and the cost of the program ballooned by 80 percent  Medicaid recipients are up 17 percent and program  costs are up 36 percent. Welfare recipients are up 18 percent, and program costs up 24 percent. That isn’t the kind of growth that’s good for any economy!

Looking ahead, we expect the standard of living decline to continue for up to another seventeen years. Our economy and society are substantially changed, but the change to date is moderate compared to the magnitude of change ahead. In 2018, the U.S. will be a much poorer country than it was in 2008.

We envision the average family spending a higher percentage of income on food and shelter. People will retire at 75 years of age… not 65. Many may not be able to retire. Many retirees will have to re-enter the work force as their savings and pensions are diminished in buying power. The streets will be filled with more poor and homeless. The dollar will continue its decline. Gold and other commodities will continue to rise in price. All of these are symptoms of a decline in the public’s standard of living. Unfortunately, we expect it to last for quite a while.

If it is any solace, the U.S. does not stand alone in the economic muck.  Japan has been going through the doldrums for almost twenty years now and that sorry state of affairs will likely continue for another decade.  Europe’s standard of living is moving in lockstep with the U.S.  We give the Europeans, like the U.S., a poor seventeen year prognosis.  To us, it looks like the developed world is ‘un-developing.”  By 2020, expect to see a more humble developed world, viewing itself differently, playing a lesser leadership role, and having a vastly different view of the use of debt to create prosperity in society.

Labor in the Big Picture

The U.S. has big problems on this front. The country needs to employ more than 2 million new workforce entrants every year. Plus, there are millions who lost jobs in the last three years who still need to be rehired. How does the U.S. deal with challenges like this in a situation of slowing economic growth?  The reality is a very difficult employment outlook for current and future U.S.-born workers, especially those with minimal education and skills, and for immigrants with inadequate English fluency.

Conversely, the jobscape looks brighter for the educated and skilled, especially individuals in the fields of computer science, electronic engineering, mathematics, geology, energy science, and oil field engineering.  The job market also appears better for individuals in some low-paying retail jobs and other service industries who demonstrate good attitudes and a willingness to work.

The U.S. employment picture is changing and it has become necessary for the labor force to have higher skill and education levels in order to compete. The U.S. still has a comparative advantage over other countries in areas involving technology and skilled labor. The construction jobs that kept so many laborers working for the past two decades are gone. We don’t see them returning for many years. Moreover, there is little unfilled demand for factory workers at high salaries and government employees who receive secure pay and rising benefits.

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India halts all food imports from Japan after Fukushima fish found with excess radioactivity

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by Tyler Durden
Posted Zero Hedge, April 5, 2011

After dumping thousands of tons of radioactive water in the sea, Japan appears to have been stunned to find that the radioactive content of various fish has surged and is now above just imposed radiation safety thresholds.

From Kyodo: “Japan hastily set a legal limit Tuesday for the permitted level of radioactive iodine in seafood as safety concerns spread overseas in the wake of continuing leaks contaminated water into the Pacific Ocean from the crippled Fukushima Daiichi nuclear power plant. The limit of 2,000 bequerels per kilogram set by the Ministry of Health, Labor and Welfare for radioactive iodine in marine products such as fish and shellfish is the same as that already adopted for vegetables, Chief Cabinet Secretary Yukio Edano told a press conference.

The imposition of the limit followed the detection by Japanese authorities 4,080 bequerels per kilogram of radioactive iodine in young sand lance caught Friday off Kitaibaraki in Ibaraki Prefecture, which prompted the health ministry to consider setting a limit for fish and clams.

Different young sand lance, also caught near Kitaibaraki, were found to be contaminated with 526 bequerels per kilogram of radioactive cesium, exceeding the legal limit of 500 bequerels already set by Japan.” And now that Japan has another crisis scenario fall out to deal with, other countries no longer have faith that Japan has any control over the situation and are imposing complete bans on Japanese food imports: first India, and soon everyone else. Expect sushi prices to surge momentarily.

From Kyodo:

India said Tuesday it will suspend food imports from Japan for about three months to prevent food contaminated with radioactive substances leaked from the crisis-hit Fukushima nuclear power plant from entering the country, Press Trust of India news agency reported.

Specific food items subject to the suspension were not immediately disclosed, but marine products and fresh fruits are expected to be among them. India’s health ministry said the import suspension will last until it can obtain reliable data proving that the levels of leaked radioactive substances are safe, according to PTI.

Not to be outdone, Japan once again has proven it is completely clueless, and is dealing with the catastrophe in the only way it knows – denial:

Chief Cabinet Secretary Yukio Edano dismissed the need for an immediate ban on shipments of marine products from the affected areas, but he pledged to toughen inspections to ensure that contaminated products do not reach markets.

The government will make further efforts to provide sufficient information to other countries through diplomatic channels regarding its efforts to contain the leak of radioactive substances from the plant, the top government spokesman added.

Given that radioactive substances exceeding safety limits have only been found in a small number of samples so far, Edano said, ”We want to proceed by monitoring (contamination) closely and grasping the broader situation rather than immediately regulating” shipments.

And while the diplomatic wrangling over who is right and who is wrong is about to spike in earnest, Japan can kiss its fishing industry goodbye, as well as scrap food exports for the indefinite future.

Panic evacuations strike Tokyo where radiation levels are ten times normal, food hoarding empties stores in capital, fallout projected to blow to Pacific

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From Reuters
Posted March 15, 2011

RADIATION WAFTED FROM AN EARTHQUAKE-STRICKEN NUCLEAR power plant towards Tokyo on Tuesday, sparking panic in one of the world’s biggest and most densely populated cities. Women and children packed into the departure lounge at an airport, supermarkets ran low on rice and other supplies and frightened residents, tourists and expatriates either stayed indoors or simply left the city.

“I’m not too worried about another earthquake. It’s radiation that scares me,” said Masashi Yoshida, cradling his 5-month-old daughter Hana. The nail-biting eased in the afternoon after Chief Cabinet Secretary Yukio Edano appeared on national television saying radiation levels at the troubled Fukushima Daiichi nuclear-power complex had fallen dramatically since morning.

But confidence in the government is shaken and many decided not to take chances, especially after radiation levels in Saitama, near Tokyo, were 40 times normal – not enough to cause human damage but enough to stoke fears in the ultra-modern and hyper-efficient metropolis of 12 million people.

Many hoarded food and other supplies and stayed indoors. Don Quixote, a multistorey, 24-hour general store in Tokyo’s Roppongi district, was sold out of radios, flashlights, candles, fuel cans and sleeping bags on Tuesday.

At another market near Tokyo’s Yotsuya station, an entire aisle was nearly empty on both sides, its instant noodles, bread and pastry gone since Friday’s earthquake and tsunami killed at least 10,000 people nationwide and plunged Japan into a twin nuclear and humanitarian crisis.

At Haneda Airport, hundreds of young mothers lined up with children, boarding flights out of Tokyo.

“We are getting our of Tokyo and going to our home town because of the situation. For the time being we have bought a one way ticket and will wait and see what happens,” said a Japanese woman with an eight-month-old baby and four-year-old son, who declined to be identified by name.

Tourists such as Christy Niver, of Egan, Minnesota, said they had enough. Her 10-year-old daughter, Lucy, was more emphatic. “I’m scared. I’m so scared I would rather be in the eye of a tornado,” she said. “I want to leave.”

Winds over the troubled Fukushima Daiichi nuclear-power complex, about 240 km (150 miles) north of Tokyo, blew slowly southwesterly towards Tokyo for much of the day before shifting westerly later, a weather official said.

Some scientists, however, urged Tokyo to stay calm. “Radioactive material will reach Tokyo but it is not harmful to human bodies because it will be dissipated by the time it gets to Tokyo,” said Koji Yamazaki, professor at Hokkaido University graduate school of environmental science. “If the wind gets stronger, it means the material flies faster but it will be even more dispersed in the air.”

University of Tokyo professor of bioengineering Hiroyuki Takahashi added: “If the nuclear fuel remains contained, there will be very little health risk.”

The Czech Symphony Orchestra left Tokyo by bus for Ishikawa prefecture on the west coast. “Some of them wanted to go home after the earthquake but it’s pretty much impossible to get tickets for a hundred people now,” said Hitomi Sakuma, a friend of the orchestra who was seeing them off at a Tokyo hotel. About 350 Japan-based expatriates at Infosys Technologies Ltd , India’s second-largest software services exporter, are returning to India, its chief executive said.

“Some of them have returned, some are in the process of coming back,” S. Gopalakrishnan told Reuters. “The revenue from Japan is very small and overall it will have a minimal impact on business.”    U.S. banking giant Citigroup said it was keeping workers in Tokyo informed but there were no evacuation orders, said a spokesman, adding the bank was closely following guidance by the U.S. Embassy, which has not urged nationals to leave.

Some international journalists covering the disaster from the worst-hit region around the northeastern city of Sendai, devastated by Friday’s mammoth earthquake and tsunami that killed at least 10,000, were pulling out.

The Tokyo office of Michael Page International, a British recruitment agency, was closing for the week. “I am leaving for Singapore tomorrow,” said one employee. Levels of radiation had risen in Tokyo but for now were “not a problem”, the city government said.

And while Korea and Russia are reported to be safe for now, with radiation fallout simulated to head toward the Pacific, we expect America to be quite vocal about the threat of radioactivity coming from Japan via the Jet Stream as soon as it wakes up. From Kyodo.

South Korea’s Meteorological Administration on Tuesday released the results of a weather simulation which it said shows most of the radioactive particles from Japan’s damaged nuclear power plant will drift toward the Pacific.

The weather agency insisted that the results are entirely hypothetical, noting that it does not have concrete data with respect to the amount of radioactive vapor that escaped into the air, the timeframe and other details concerning the extent of damage to Tokyo Electric Power Co.’s No. 1 Fukushima nuclear power plant.

The agency said it conducted the simulation using the latest weather data to find how the radioactive particles will spread in the next 24 hours, assuming that the leak occurred at 9 a.m. Tuesday Tokyo time. The simulation shows similar results whether the leak occurred at 3 p.m. or 9 a.m. Tuesday, the agency said.

 

Commodity Inflation: “You Ain’t Seen Nothing Yet”

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by Michael Krieger
Posted originally January 13th, 2011

Gold is the money of kings, silver is the money of gentlemen, barter is the money of peasants – but debt is the money of slaves.
Norm Franz, Money and Wealth in the New Millennium

As soon as you’re born they make you feel small,
By giving you no time instead of it all,
Till the pain is so big you feel nothing at all,
A working class hero is something to be,
A working class hero is something to be…
When they’ve tortured and scared you for twenty odd years,
Then they expect you to pick a career,
When you can’t really function you’re so full of fear,
Keep you doped with religion and sex and TV,
And you think you’re so clever and classless and free,
But you’re still fucking peasants as far as I can see,
There’s room at the top they are telling you still,
But first you must learn how to smile as you kill,
If you want to be like the folks on the hill
–John Lennon, Working Class Hero

Thanks, Ben… You have destroyed the social fabric of the World

HISTORY IS LITTERED WITH THE CARCASSES OF MEN THAT IN THEIR EXAGGERATED HUBRIS attempted to stop the forces of nature and the markets only to fall flat on their faces. We tell the stories of these men in history books and myths from prehistory, but it never stops those of successive generations from trying it all over again.

What the current political class the world over (at the behest of Wall Street financial terrorists and other big corporate interests) are doing falls into the same exact formula of prior historical failures. Some of the historical figures that attempted to beat back nature were great warriors or kings that just reached too far. Some of them were evil megalomaniacs whose desire was nothing short of absolute power in their hands over any of the unfortunate human beings that happened to be in the way.

Ben Bernanke is neither of these. He is a just a little dweeb with an electronic printing press. Tragically, because of modern technology and the way the monetary system works today he has the ability to cause more damage than any other one person in the history of mankind and he is doing it. I shudder to contemplate the ultimate effects of the inflationary holocaust he has unleashed on the six billion mesmerized and helpless souls present on earth at this time. The signs are starting to show up again just like in early 2008. Food is becoming scare at a “reasonable” price in many parts of the globe and the symptoms of this are starting to bubble up to the surface.  For example in recent days we have witnessed food riots in Algeria and Tunisia where at least 14 people are reported to have died in each country.

These types of events were easily predictable and have been predicted by people like me and many other whose views will never be seen in the mainstream media.  Fortunately, the alternative media is taking over (which is why the Obama administration is certain to increase its crackdown on the internet) and people are becoming very informed and linked all over the world.  The divide and conquer strategy that has worked so well for millennia will be much harder to pull off this time around.

Inflation:  There is no putting this cat back in the bag

Probably the most misleading thing Bernanke said in his Sixty Minutes interview a few weeks ago was that he could snuff out inflation in 15 seconds (this was the most misleading thing, not the biggest lie, which goes to his “I’m not printing money” statement). This comment (“snuffing out inflation“) is so misleading because it is true he can do what he says but he never will because at this point the effect of raising rates or tightening credit would immediately bankrupt every single part of the gigantic TBTF banker run ponzi scheme also known as the global economy.

The world’s Western governments are loaded with more debt than before the crisis and many of these, including the U.S. and Japan, could not handle even a moderate increase in interest rates let alone what Volcker had to do in order to end the inflation of the 1970’s. Think about it. Other nations own our debt and currency in the form of their FX reserves. China just came out with its latest FX figures and guess what?  You got it, a new record! $2.85 trillion to be exact, which is up 19% year-over-year.

I want to reiterate a point I made earlier in the year on this. With their FX reserves up 19% year-over-year they needed to boost gold reserves 19% just to keep their puny 1.6% of gold at a steady percentage. If they actually want to increase the share, which they do, they need to buy far more. This goes for every other nation as well since FX reserves have been exploding across the emerging world.

You see, this is the great game: The West and Japan and major debtors that know they can never pay it off and have no intentions of trying.

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