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Hurricane Force Winds May Cause Ben’s Helicopter to Crash! PART II BY JAY TAYLOR

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Hurricane Force Winds May Cause Ben’s Helicopter to Crash! PART II  BY JAY TAYLOR

hurricane and money

But getting back to the U.S. Treasuries and why Bernanke may be losing control of that market and as an extension of the global financial system, here are the points that need to be made:

  • Up until now, the Fed had been able to pick up the slack as foreigners sold U.S. Treasuries. The $85 billion per month of purchases in U.S. Treasuries and mortgage-backed securities was sufficient to keep the prices of those Treasuries up and to keep interest rates at very low levels.
  • The U.S. is continuing to run huge deficits to finance all manner of unaffordable military excursions overseas and socialism here at home. The political will to cut back on expenditures to levels that can be funded from global savings simply does not exist nor do our brilliant Ivy League educated politicians and economists believe that is what we should do. So Mr. Bernanke must continue to print money to buy U.S. debt since no one in their right mind wants to buy it at current interest rates. And obviously, if Bernanke left rates rise to their true market levels as Volcker did in 1980, we would enter a depression much more severe than that of the 1930s.
  • The Fed is now like a mouse on a treadmill! While Mr. Bernanke recently said that the Fed would, depending on economic data, begin tapering down the purchases of U.S. Treasuries and mortgage-backed securities by the end of 2014, we can expect that he as well as his successor will buy even more than the current $85 billion at a faster and faster rate, in an effort to continue their failed policy. James Turk compared the Fed now to being like “mice on a treadmill.”
  • The fraudulent U.S. Dollar CON GAME will become more and more difficult for Mr. Bernanke or his successor to sell, as the Fed chairman will be increasingly seen as the “Naked Emperor.” At the moment, with the markets in decline, the dollar has gotten stronger. But if the misguided Keynesian money printing and deficit spending policies continue, at some point there will be a huge run on the dollar, although we will need to see other currencies go first. The dollar will likely be the last fiat currency standing, at least in the Western world. And in fact, the Russians and Chinese, who already see the handwriting on the wall for the dollar, have been building huge gold reserves in anticipation of the dollar’s date with death.

Of course what we are seeing now in the markets is just the tip of a gigantic iceberg of way too much debt that cannot be paid by any stretch of the imagination. James Turk pointed out in an interview with King World News the following problems that are bubbling up under the surface that should make us all very fearful of what is to come:

  • Thomas Hoenig, the vice chairman of the FDIC, described Deutsche Bank as “horribly undercapitalized.” But he also named a slew of other major companies, like UBS, Morgan Stanley, Crédit Agricole, and Société Générale, as banks skating on thin ice.
  • Mario Draghi, head of the ECB, is now saying they will do whatever is necessary, even though whatever the ECB does “may have unintended consequences.”

Meanwhile, recent economics news—even using the government’s sugarcoated stats—was abysmal. Real average hourly earnings for all employees fell 0.2% in May. Now we know that those are phony numbers because, based on the work of economist John Williams, the actual cost of staying alive is far above the 1.7% CPI numbers the government conveniently manufactures. The real cost of living increase for average Americans is more like 7% to 9%. If you factor those numbers into the equation, you can see why a chart of the real median household income using John Williams’s inflation numbers looks a lot more like the consumer confidence chart than the inflated take-home numbers the government gives us.

The mainstream media, which is bought and paid for by the same people who own the Federal Reserve Bank and our government, will try to put a happy face on rising rates by saying it is a result of a stronger economy. Nothing could be further from the truth, but in order to continue the con game, the establishment has to act like they know what is going on.

It is interesting to note that a host of people believe the bull market in long-dated Treasury bull market that was set up by the last Federal Reserve chairman to respect the markets, namely, Paul Volcker, is coming to an end. Not only is it interesting but it also represents what could be the biggest turning point in American economic history since the Civil War. What is impressive is that both those on the hyperinflationary side as well on as the deflationary side believe we are at a turning point. 

 

Jay Taylor

www.jaytaylormedia.com

www.miningstocks.com

Jay Taylor Host of Turning Hard Times Into Good Times   Jay Taylor is the host of Turning Hard Times Into Good Times on the VoiceAmerica Business Channel.  The insights provided to Jay came from a history professor in 1967 who advised Jay that when countries go off a gold or silver standard, hard economic times are sure to follow because nations begin to think they do not need to work hard and save to enjoy a better life. Indeed there is no free lunch and a gold standard reminds people of that every day.  Jay watched his professor’s prophetic words come true when in 1971, President Nixon completely detached the dollar from gold. Not surprising to Jay, the price of gold skyrocketed in the late 1970s as inflation wiped out vast amounts of wealth from average Americans. To protect his own wealth Jay began to invest in gold and gold mining shares and in 1981 he began sharing his success and insights in his newsletter. In 1981 Jay began writing a subscription newsletter that has earned his subscribers countless thousands of dollars over the years.  Jay’s insights as to the real cause of our problems has enabled him to find investment strategies that work. Diagnose a problem correctly and you have a chance for success.

 

Hurricane Force Winds May Cause Ben’s Helicopter to Crash! PART I BY JAY TAYLOR

Posted by Editor on
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Hurricane Force Winds May Cause Ben’s Helicopter to Crash! PART I BY JAY TAYLOR

hurricane and money 

 

“If creating wealth by printing money is so easy, then why should any of us work?” Ron Paul and other Austrian economic thinkers have been asking that question but never getting an answer from the proponents of absurd Keynesian theory.

jay taylor graph

 While those of us who believe that wealth is created through free market capitalism and not the activities of the state, market forces, which are the ultimate purveyor of truth in this four dimensional world  may be about to hammer some sense into the dense heads of Keynesian communists like Paul Krugman and Ben Bernanke. I say that because there is growing evidence now that Bernanke may be losing control of the bond markets. And from there, he could ultimately lose control of the dollar.

 Paul Volcker was a much more honest Fed chairman than the two that followed him. When asked how he knew what to do as Fed chairman, he said, “I simply followed the market.” Indeed that is a point that Bob Hoye has constantly been making. The Fed is never in charge, at least to the degree it seems to be or to the degree it wants you to believe it is. Our current policymakers want you to think they are the gods of the universe and that you should relinquish your freedom and autonomy to them.

 But in fact, the long-term interest rates are not now cooperating with the Fed. And even the housing recovery, phony as it has been (artificial low rates, U.S. purchases of mortgages, and 80% of failed mortgages kept off the market by the banksters) may now be poised for another plunge into the earth if rates continue to rise.

 Why are interest rates heading higher in light of a slowing economy not only in the U.S. but even more so around the world? A recent Treasury TIC report may be the “canary in the coal mine” that is providing a lethal answer. Here are some details that came out in the latest report dated June 14, 2013, which you can read at http://ow.ly/me0x5:

  • Foreign residents decreased their holdings of long-term U.S. securities in April – net sales were $24.8 billion. Net sales by private foreign investors were $17.8 billion, and net sales by foreign official institutions were $6.9 billion.
  • At the same time, U.S. residents increased their holdings of long-term foreign securities, with net purchases of $12.6 billion.
  • Taking into account transactions in both foreign and U.S. securities, the net foreign purchases of long-term securities were negative $37.3 billion. After including adjustments, such as estimates of unrecorded principal payments to foreigners on U.S. asset-backed securities, the overall net foreign acquisition of long-term securities is estimated to have been negative $57.1 billion in April.
  • Foreign residents decreased their holdings of U.S. Treasury bills by $15.1 billion. Foreign resident holdings of all dollar-denominated short-term U.S. securities and other custody liabilities decreased by $30.1 billion.

 Jamie Dimon, JPMorgan’s chairman, says the bank can make boatloads of money when interest rates go up. But as Rick Santelli recently asked on CNBC, “Who is funding Mr. Dimon’s book when Treasury rates rise?” because as they rise there will be huge losses at banks. Rick rightfully suggested that there will be huge losses at banks that are holding massive amounts of Treasuries that Mr. Bernanke printed money for them to buy that debt with. And this final statement in the last Treasury TIC report sums it up:

“Banks’ own net dollar-denominated liabilities to foreign residents increased by $99.9 billion.”

So while most of the world is running from the highly-rigged U.S. Treasury market because it is one of the dumbest investments any person could make, U.S. banks are still buying them up. Of course, when the banks lose money, they know they can always depend on the Fed to rob the American people either through “bail outs” or “bail ins.” I will talk more about the upcoming “bail ins,” which threaten all of us, big time!

 

Jay Taylor

www.jaytaylormedia.com

 

www.miningstocks.com

Jay Taylor Host of Turning Hard Times Into Good Times   Jay Taylor is the host of Turning Hard Times Into Good Times on the VoiceAmerica Business Channel.  The insights provided to Jay came from a history professor in 1967 who advised Jay that when countries go off a gold or silver standard, hard economic times are sure to follow because nations begin to think they do not need to work hard and save to enjoy a better life. Indeed there is no free lunch and a gold standard reminds people of that every day.  Jay watched his professor’s prophetic words come true when in 1971, President Nixon completely detached the dollar from gold. Not surprising to Jay, the price of gold skyrocketed in the late 1970s as inflation wiped out vast amounts of wealth from average Americans. To protect his own wealth Jay began to invest in gold and gold mining shares and in 1981 he began sharing his success and insights in his newsletter. In 1981 Jay began writing a subscription newsletter that has earned his subscribers countless thousands of dollars over the years.  Jay’s insights as to the real cause of our problems has enabled him to find investment strategies that work. Diagnose a problem correctly and you have a chance for success.

 

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