U.S.A. Caught In Enormous Policy Vise
Today
is May Day, the international day of workers celebrated by most
communist and deeply socialist nations. To be sure, Obama should come
out of the closet with admission of not only his Muslim roots but his
Marxist roots. By now, he could have easily promoted the holiday and had
it moved from its longstanding September location to the May month. In
honor of the holiday, the Jackass will outline the profound damage to
the USEconomy, its recent destructive pressures, and the newest dynamics
which assure a systemic breakdown. The outcome is being seen in
widespread job loss, business shutdowns, a new war waged each year, and
civil disorder prompted by a strange phenomenon hardly ever discussed.
The US police forces have been given carte blanche to conduct an
extremely wide raft of criminal activity ranging from simple roadside
mugging robberies, to commercial hijacks, to orchestrated public
explosion events, to home invasions without warrants, to killing
criminal suspects during raids, to abuse of suspects in custody, and
recently in the open killing suspects in custody. A detail came to the
fore recently, that the US Police Forces killed more of its own
civilians in the year 2014 than the United Kingdom did in the entire 20th Century.
What would George Washington, Thomas Jefferson, and Benjamin Franklin
have to say? My belief is that they would decry the advance of the
police state, as consequence of the banker class domination, which has
trampled the Constitution and ripped the Bill of Rights to shreds. The
next phase will be led by Gold, and force the US nation to comply, even
if a wrecked field.
As
much as the practice is horrendous and unconscionable, the national
wreckage has helped promote the Obama agenda. He is fast advancing the
police state, with a race war chaser as distraction to the more suitable
class war. Witness the rise of the US Police State. The Occupy Wall
Street movement was largely gutted, subverted, and waylaid. The race war
will be easy to promote and execute, with the end of the road being
martial law. The clue is riots and curfews. The police have almost zero
accountability for violence committed against the public. The agenda
contracted by Obama in mid-2008 was to kill the USDollar, to wreck the
USEconomy, and to install martial law with a lit race war. Mission
Accomplished, but the Jackass digresses. One week after inauguration,
Barry was the beneficiary of a $1 billion Vatican bank account, as
promised when he was selected, not elected. If the Kenyan squatter is
not a victim of a renege or bail-in, he will be fortunate. He is by far
the most expendable president in US history.
Before
diving into the newest economic wrecking balls, let us share a reminder
on the destructive wrong-footed monetary policy which serves the
financial elite and prevents national debt default, however with huge
consequences. It really has not prevented any debt default, since behind
closed doors some important events have occurred. The citizen vassals
are not worthy of being informed about the US corporate structure, its
finances, its fealty, its contracts, its dealings, its failures, its
pilferage, its homage to distant elite families, and its defaults. The
Jackass has been extremely vocal on the destructive influence of US
monetary policy. The effect has been utterly devastating, as the
American nation has been reduced to a retail parlor, a half empty
shopping mall, a socialist dole queue, and vast crime scene. The
promoted consumer economy ate its capital beyond the critical mass point
of no return, without adequate capital formation.
Many
are the new powerful pressures to tear the nation asunder. The systemic
failure discussed for seven years in Jackass analysis has finally come
to the fore in ugly glory. The upcoming Currency Reset will knock the
nation on its keister. After the tumult, a fair and equitable system
will be installed, forced upon a nation which abhors fair and equitable
systems since doing so removes the gross opportunity for fraud and
thefts at the national level, in addition to debt securities fraud, and
debt control levers exerted upon citizens. The monetary policy damage
has a flanking factor which is equally devastating. The destructive
factors are extending into fallout from dismantled Petro-Dollar and
rising USDollar.
As
footnote, the pernicious nature of the controls and demolition can be
seen in personal savings accounts held in banks. They are last in line
during liquidation failures, treated as unsecure debt. Ordinary people
do not own their savings held in banks, either in passbook accounts or
certificates of deposit. Personal savings, according to the Bush 2007
Bankruptcy Reform Act, are treated like donations to banks, then
structured as unsecured debt. The bank derivatives are treated as secure
debt. In the event of bank failure, the derivatives will be honored
first. In so doing, the entire national savings held in banks will be
wiped out, since the derivative debt is in the hundreds of $trillions,
far outweighing the volume of national savings in the low $trillions. A
vassal state will be created. The clock is running to put the rascals
out of office, to install the Gold Standard, and to restore justice.
However, in the process of removing the scabs on the helm control
center, the nation will lose wealth and fall into the Third World. As a
sassy colleague quick with a quip commented a couple months ago, every
Third World nation should have an African president. America does, true
to form, following a string of narco presidents, much like Mexico.
ZIRP & QE DESTRUCTIVE INFLUENCE
The
monetary policy has been adequately covered in Jackass scribbles since
2009 for its highly destructive effect, the annals found in public
writings and public interviews. Official policy has solved nothing, and
only put a patch on the gaping wound of insolvency. The Zero Interest
Rate Policy became necessary in order to give the big broken dead banks
an opportunity to make money the lazy gauche way, in carry trades. The
bond issuance business has vanished, as has their stock issuance
business. The concept of capital formation is not in the Wall Street
lexicon or boardrooms anymore, only carry trade. They must have free
money from which to invest in rigged arbitrage gaming. So they borrow at
0% and invest in long maturity USTreasury Bonds, also with added
leverage in futures contracts. Despite the absence of foreign investors,
demand for bonds has been found to be strong, due to the arbitrage on
rates better labeled as carry trade. In addition, the zero bound money
fountain source was urgently needed to provide the feeder mechanism for
the Interest Rate Swap derivative contracts. It makes the multi-$billion
purchases as the prevailing current in bond rivers. The bond demand is
all phony baloney, fabricated from financial machinery, as all astute
observers know. Sir Alan Greenspan beams with pride on its
sophistication, even if destructive.
The
effect of ZIRP has been powerful in its wrecking balls and jack
hammers. The misallocation of assets is a hidden effect, much like
transposing the dinner table elements. Nobody knows what to eat or where
to find it, as wrong food finds spots on the table out of disorder. It
is GMO crappola anyway. Capital formation is all messed up. But such
damage is hard to pinpoint on specifics, and besides, the public does
not care. To explain asset misallocation to the public, or even to
educated people (outside economics fields) is much akin to teaching
monkeys calculus and orangutans higher order mathematics. The practical
damage from ZIRP has been low interest yield to savers and savings
institutions., thus the reward to debtors and penalty to savers.
Citizens do not earn any income of substance, and professional funds do
not earn income either. The effect has been powerfully felt by pension
funds and insurance firms. They each sit on vast manure hills and
termite mounds of paper assets, not earning a yield. Both sector niches
are eating their nut, much like the homeowners in the 2000 decade at
their home equity capital. Destruction is rampant, as capitalism has
been turned on its ear in a lost colony. Gold will soon enter the room
and rule the roost, served by Silver as squire.
The
pension funds just won a victory in the USCongress, which passed a law
to permit pension funds to pay out 35% less on contract benefits. So
pension payouts will be reduced legally. Insurance firms are caught in
the squeeze also. They will resort to the other methods, by hiking
policy premium costs. They cannot pay reduced awards on covered policy
payouts. Hence, expect lower pension income and higher insurance costs,
in a basic economic squeeze. The pathetic result to the USEconomy has
been seen in a 50% reduction in Money Velocity, the big wet blanket. In
no way is ZIRP a policy success, this ZIRP Forever. It can never be
removed, since Wall Street needs the free money to gamble on carry
trades, the USDept Treasury needs the free money in its feeder system
for Interest Rate Swap contracts to fabricate the artificial bond
demand, and the USGovt will not permit higher borrowing costs to lift
the deficit. When the ZIRP goes away with the Great Reset, Gold &
Silver will be released like wild yellow and white horses rampaging
through the wheat fields and corn fields.
The
Quantitative Easing became necessary in order to enable the USGovt to
cover its monthly deficits, to cover the foreign creditor dumping, and
to bring order to the adjustments made from long-term to short-term
portfolio shifts. Almost no creditor nations (except Japan and England)
wished to continue the travesty of investing in USTreasurys when the
USFed was busy acting in true Zimbabwe form with hyper monetary
inflation. To monetize annual deficits is pure Third World, now with a
fascist twist. To call QE stimulus is like calling suicide a liberating
experience, or calling sexual rape an act of social discourse, or
calling disembowelment of a child a rite of passage. The direct damage
from QE has been outlined by the Jackass for three full years, and with
surprising little economist company on the stump. No more than two other
analysts have identified the profound damage to capital from a rising
cost structure, thus producing a wiped out profit margin. Hence the
retirement of equipment, the warehouse of productive machinery, the
removal of capital from businesses operation, followed by its
liquidation and sale, or recycling of parts. It is called capital
destruction by any other name. QE actually kills capital, which the
Reich Finance experts (of fascist origin) prefer to call stimulus. That
QE aids the Wall Street firms is obvious, as they dump their toxic bond
assets on the USFed, which itself is wrecked. QE is nothing more than an
emergency Third World monetary measure installed in emergency
conditions, to avoid default, and to enable a backdoor bailout of the
big banks desperate to unload their toxic assets. It would be hilarious
to learn in a few years that principle creditor China ordered the USFed
to conduct endless QE so that Beijing could busily convert its toxic 3W
debt paper from Washington into tangible assets around the world.
Beijing is rumored to own controlling interest in the US Federal
Reserve.
The
pathetic result of QE has been a USEconomy (and Western Global
Economy) which cannot find traction to recover and an Eastern Global
Economy severely hampered. The US GDP is stuck in a minus 2% to minus 4%
annual recession, painted over by cooked books and basic lies on the
inflation rate and jobless rate. The business shutdowns, the retail
outlet closures, the new job cut pink slips, the poor forward guidance
by corporations, the lousy Fed Beige Book outlooks, the horrible USGovt
economic reports (once the veneer of wax is removed), these all makes
lies out of the official USGovt stat rat drum beat of a sluggish
recovery. It is Fascist Business Model bitter fruit, a failed crop, this
year, last year, every year. The fascist clowns managing the Reich
Economics buggy have run the show over the cliff. Few have noticed. In
no way is QE a policy success this QE to Infinity. It can never be
removed, since the USGovt cannot finance its deficits and war costs. The
creditor nations are no longer in the room. The maverick Fed Governors
admit it must continue forever. The rise of the BRICS financial
platforms (like New Development Fund and Asian Infrastructure Investment
Bank) ensure vast dumping of USTreasurys in favor of Gold bullion,
which the USGovt and USFed masters must soak up. When the QE goes away
with the Great Reset, Gold & Silver will be released like wild
yellow and white horses rampaging through the wheat fields and corn
fields.
As
nasty and ugly and full of wreckage that ZIRP & QE have been and
continue to be, another new pair of powerful factors has entered the
economic equation. It acts like a vise, while monetary policy acts like a
fire hose to erode capital within the two contracting walls.
HIGH USDOLLAR VALUATION SLAM
The
high USDollar exchange rate is not a sign of strength, but rather of
wreckage of the Global Economy. It cannot survive the ZIRP & QE
delivered as left and right hand policy punches to capital structures.
Four and five years of such monetary policy assures a global systemic
breakdown. Despite pronouncements by the midget Jacob Lew as Secy
Treasury, the high USDollar has caused enormous problems. Foreign
investors did not want the USTBond asset before, but now with a price
premium added on the USD side, they want it even less of these toxic
bonds. The foreign investors are no longer interested in over-priced
bubbly US Stocks either, especially with the USD premium. They are much
less interested in US property due to high cost, except for the Chinese.
The Middle Kingdom masters are still motivated to dump boatloads of
USTBonds before they go worthless, so a purchase at exaggerated price is
no big deal. It works out for Beijing to be equivalent to a discount
rendered to the USTBond asset generally. Use it or lose it, and factor
in a writedown on value applied within the hard asset conversion
process. Think of the high USD factor much like a wall around the
nation, kind of like an international quarantine for trade.
In
addition to the financial sector impact, an economic impact is felt. US
industry has been beset with burdensome problems. Now they have the
high USD exchange rate to contend with. They must find export
destinations, while the foreign customers seek equal quality at lower
price from an ample list of competitors in the Emerging Market arena.
Furthermore, the foreign customers have grown increasingly weary with
the endless red tape from USGovt dealings. The forms and procedures are
onerous, in compliance with anti-money laundering objectives and
anti-terrorism objectives. The banking transactions are a pain in the
ribs as well. Hence the legion of foreign customers are abandoning the
US industries, which have fewer technological advantages as the years
pass. The outcome is an economic vise squeeze which removes foreign
clients from the USEconomic equation. America is pricing itself out of
the game. The US GDP growth will slow (recession will gain more
momentum), just like its Money Velocity. The trade deficit will rise.
The national insolvency will erode further, far past the systemic
breakdown point. The United States has become of victim of its own
derivative devices, as the USDollar rise has put a clamp on the national
economy. It is no longer competitive.
The
Jackass is impertinent always. Consider a metaphor that illuminates and
elucidates. The King Dollar is dead, the Petro-Dollar harness is
dismantled. As the once powerful reigning king lies prone on the global
stage, industry having been gutted for three full decades from
outsourcing, his body has entered the putrefaction stage following the
2000 decade of magnificent fraud. The immune system is long gone, except
for exported foreign wars, which have a much bigger predator role for
syndicate profit than defense of the dollar any longer. As the body
fills with gas from the unchecked bacterial growth at work during the
rotting process, the chest cavity expands. As time passes, we see the
King Dollar lifting, not from strength, but instead from the death
process and the massive buildup of gas. The pathogenesis is not seen by
more than 5% of the population, of which the Hat Trick Letter followers
dominate.
LOW OIL PRICE SLAM EFFECT
The
deeply depressed oil price is no advantage at all. To be sure, the
lower price at the gasoline pump is appreciated. But consumers cannot
unleash their disposable income stream, since job security is nowhere,
since company cutbacks are universal, since threats to savings are being
integrated into bank account policies, since wages have fallen by 20%
on a real basis in the last 10-15 years, and because citizens are
scared. There is no extra disposable income. The harsh fact of business
model life is that the lower oil price has whacked the corporate profit
model in the crucial energy sector, much like in parallel to the QE
capital wreckage. The profit margins are nowhere. The parade of bond
defaults and commercial loan covenant failures has begun in earnest. The
list of defaults and failures is already of critical mass, most assured
to worsen badly. Negative momentum grows on a weekly basis, as
investors and bankers pull the plug. The victims initially are workers
on projects, each abandoned since no longer viable. The next victims
will be the many investment firms and even banks. They have already
begun the process of asset seizure, part of the shutdown aftermath. The
moron at the White Horse marbled office Jacob Lew must explain to the
ravaged energy industry what the actual advantage really is, where it is
seen, how it is manifested. To the workers in the field, those rugged
roughnecks, they are angry and feel betrayed. Lew is a moron and stooge.
The
entire US-based shale sector will be shut down. The active rig count
was cited in the April Hat Trick Letter. The drill rig count has fallen
off a cliff in a vertical dive never seen in US history. The low oil
price might be a benefit for those businesses which must pay for the
feeder cost, but the overall aggregate macro effect overwhelms the
collective local micro effect. The national ISM reports show the
pervasive decline. The recent Dallas Fed business summary report was
devastating. The region is major league oil country. The damage is
massive. Jacob Lew should review the idle fields and failed financial
investments, like Obama does the hurricane zones, shirt sleeves rolled
up. The dismantled Petro-Dollar is to blame. The vast apparatus of FOREX
contacts linked to the oil price are being undone, piece by piece, much
like the dismantling of the oil field derricks and platforms, piece by
piece.
The
Saudis are behind the falling oil price. The Jackass suspects vengeance
by the sandy crusty angry royals. They clearly collude with China to
bring more output to market, to depress price, to kill off the US
marginal shale output (their competition), and to reek havoc in the
USEconomy. The American landscape has become a veritable killing field.
The outcome is an economic vise squeeze which tears apart the USEconomy.
The wreckage is once again seen in the USEconomic equation. America is
seeing itself priced out of the great global game, in a role reversal.
Economic fascism has resulted in ruin and isolation. The US GDP growth
will slow (recession will gain more momentum), just like its Money
Velocity. The trade deficit will rise. The national solvency will erode
further, far past the systemic breakdown point. The metaphors come
quickly to mind, almost a fun exercise. The demise of the Petro-Dollar
has effectively resulted in the fracking of the entire energy sector,
one of its most vital sectors. The holes perforating into the economic
table are vast. Its capital pools are on fire. The injection of
contaminants has been ordered by means of insolvency rendered via QE
itself. The idle drill rigs testify to the misallocated capital.
CONCLUSION
Time
is running out on both the USEconomy and the US nation. Its very social
fabric is finally being stretched and torn, as the Jackass forecast for
the last three years. The triple threat will be price inflation, supply
shortage, and social disorder. It is happening before your very eyes,
no surprise here from Ferguson to Baltimore. The USDollar is soon to
fade into oblivion. Its rise signals its demise. The hidden dismantle of
the Petro-Dollar mechanism has been full of intrigue. The Gold Standard
will return, but through the trade window. The many crucial new Gold
platforms are being assembled, one by one. The most recent platform in
view is the Asian Infrastructure Investment Bank, which will render
obsolete both the Intl Monetary Fund and the World Bank. Actually, the
IMF will be useful for China to seed the global banking system with a
few types of RMB-based bonds. These Chinese Yuan denominated bonds will
have a few flavors, like in addition to the Chinese Govt Bonds, there
might be some other sovereign bonds (like UKGovt bonds) held in RMB
denomination. The Chinese took control of the IMF, not just to shut it
down, but to exploit it. They have an agenda. As the global banks place
more RMB bonds in their reserves shelves, they will find the USTreasurys
of no use. They will be converted conveniently to Gold bullion during
the restoration phase. The Chinese hand moving the IMF part is a
brilliant stroke, like an answer to the Monsanto GMO seeds. China will
seed the global financial system with RMB seeds with the only genetic
modification being of a golden strain and hue.
The
solution to the untreated Global Financial Crisis is the gold device.
The Eurasian Trade Zone will be built upon the gold route. Next soon
comes the heralded Gold Trade Note used as Letter of Credit in
facilitated trade. The movement cannot be stopped, not by war, not by
sanctions, not by toxic monetary spew. The global rejection of the
USDollar continues, far above the din of Washington and Wall Street
propaganda. The nascent Eurasian Trade Zone will soon include Germany
and whatever nation follows its prudent lead. The Teutonic shift is more
clear with each passing month, in a sequence replete with intrigue and
betrayal. Events of early 2015 proceed in the nasty sequence to isolate
the US and its monopolist money mavens. The King Dollar is dying a
horrible death, as Gold will return to its rightful throne. The toxic
USD will be chucked into the dustbin of history. Bond fraud, asset
bubble devotion, and QE will be the captions read in the annals of this
chapter of ruin. The rise of the USDollar precedes its vanishing act.
The
New Scheiss Dollar will be launched in order to guarantee import supply
to the beleaguered nation. However, the New Dollar will not pass
muster. It will quickly fail, due to final phase fraud. The palette full
of new Gold & Silver backed currencies will include the Chinese
Yuan, the Russian Ruble, the Gulf Dinar, the New Nordic Euro, possibly
the New Mexican Peso (silver backed), possibly the Central American
Dollar (if Panama can elude Langley murder obstacles). The requirement
for sustained usage will be independent audit, which the New Scheiss
Dollar will not pass. Its deep storage gold fraud will be exposed for
all the world to see. Next stop is the New American Third World. It is a
lock, followed by colonization by China. Expect the Chinese industrial
park concept to flourish, executed by force, paved by USGovt policy. In
five years, the biggest new marginal employer and lender inside the
USEconomy will be Chinese firms. They will tap the idle US talent, but
with lower wages than expected, and absent the hefty fringe benefit
packages the workers have grown accustomed to.
Gold
& Silver will be at the core of the new monetary system. Following
the Global Currency Reset, better named the Return of the Gold Trade
Standard, precious metals will prevail once again. For over 40 years,
the FOREX tail has wagged the trade dog. The Petro-Dollar system enabled
the paper currency regime to dictate terms on trade norms and banking
reserves management. A reversal is soon to take place. The trade
corridors will take control, since the Petro-Dollar is dead, in fact
dying a horrible death. With Emerging Market strength, and with vast
warehouses of Eastern family Gold, the trade dog will wag its own golden
currency tail properly at long last. Justice will be meted out, as the
most magnificent vanishing of wealth in human history is undertaken. The
majority put their trust in paper, and lost. They trusted the system
after a generation of indoctrination, and were betrayed. The people were
deceived on matters of money and capital, and lost both life savings
and family fortunes. The American public knows very little about
concepts of money and capital, and therefore will be treated to
devastation. Let history judge whether it was a meretricious swing of
justice. Only precious metals and certain physical assets will survive
the storm.
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