Now even the United Nations is worried about the dollar.

Onward and upward,
airforce

The Coming Economic Hell For American Families


The Economic Collapse
June 8, 2011

Tens of millions of American families are about to go through economic hell and most of them don’t even realize it. Most Americans don’t spend a whole lot of time thinking about things like “monetary policy” or “economic cycles”. The vast majority of people just want to be able to get up in the morning, go to work and provide for their families. Most Americans realize that things seem “harder” these days, but most of them also have faith that things will eventually get better. Unfortunately, things aren’t going to get any better. The number of good jobs continues to decline, the number of Americans losing their homes continues to go up, people are having a much more difficult time paying their bills and our federal government is drowning in debt. Sadly, this is only just the beginning.

Since the financial collapse of 2008, the Federal Reserve and the U.S. government have taken unprecedented steps to stimulate the economy. But even with all of those efforts, we are still living in an economic wasteland.

So what is going to happen when the next wave of the economic crisis hits?

During one recent interview, Peter Schiff made the following statement….

If you look at the economic relapse that’s going on right now, look at Friday’s abysmal job numbers, look at the housing numbers, understand that all of this is taking place with record monetary and fiscal stimulus. What happens if we remove those supports?

At the end of June, the Federal Reserve’s quantitative easing program is slated to end. The U.S. Congress and state legislatures from coast to coast are talking about budget cuts. The amount of borrowing and spending that has been going on is clearly unsustainable, but will the U.S. economy start shrinking again once the current “financial sugar high” has worn off?

Already, all sorts of bad economic news has been coming out and all kinds of economic indicators are turning south. The American people are becoming increasingly restless. One new poll has found that 59 percent of the American people disapprove of Barack Obama’s handling of the economy (which is a new high). According to another recent poll, 63% of Americans say that they feel “not good” or “bad” about how the U.S. economy is performing.

If most Americans had good jobs, could afford their mortgages and could pay their bills, the economy would not be such a big issue.

Unfortunately, times are really tough for American families right now and they are about to get a lot tougher.

*Jobs*

The official unemployment rate just went up to 9.1 percent, but that figure only tells part of the picture.

There are some areas of the country where it seems nearly impossible to find a decent job. Millions of Americans have fallen into depression as they find themselves unable to provide for their families.

According to CBS News, 45.1 percent of all unemployed Americans have been out of work for at least six months. That is a higher percentage than at any point during the Great Depression.

Just two years ago, the number of “long-term unemployed” in the United States was only 2.6 million. Today, that number is up to 6.2 million.

Can you imagine being out of work for 6 months or more?

How would you survive?

Just look at the chart below. What we are going through now is really unprecedented. The average duration of unemployment in this country is now close to 40 weeks….


So will things get any better soon? Well, there were only about 3 million job openings in the United States during the month of April. Normally there should be about 4.5 million job openings. The economy is slowing down once again. Good jobs are going to become even more rare.

There are millions of other Americans that are “underemployed”. All over the United States you will find hard working Americans that are flipping burgers or working in retail stores because that is all they can get right now.

Most temp jobs and most part-time jobs don’t pay enough to be able to provide for a family. But there are not nearly enough full-time jobs for everyone.

Sadly, the number of “middle class jobs” is about 10 percent lower than a decade ago. There are simply less tickets to the “good life” than there used to be.

*Homes*

But without good jobs, the American people cannot afford to buy homes.

Without good jobs, the American people cannot even afford the homes that they are in now.

U.S. home prices have fallen 33 percent since the peak of the housing bubble. That is more than they fell during the Great Depression.

This decline in housing prices has caused a lot of problems.

28 percent of all homes with a mortgage in the United States are in negative equity at this point. There are millions of American families that are now paying on mortgages that are for far more than their homes are worth.

Millions of American families literally feel trapped in their homes. They can’t afford to sell their homes, and if they simply walk away nobody will approve them for new home loans for many years to come.

Many Americans are sticking it out and are staying in their homes until they simply can’t pay for them anymore.

As the number of good jobs continues to decline, the number of Americans that are losing their homes continues to rise.

For the first time ever, more than a million U.S. families lost their homes to foreclosure in a single year during 2010.

If the economy slows down once again and millions more Americans lose their jobs this problem is going to get a lot worse.

*Bills*

Even if they aren’t losing their homes yet, millions of other Americans families are finding it increasingly difficult to pay the bills.

Wages have been very flat over the past few years and yet the cost of most of the basics just seems to keep going up and up.

According to Brent Meyer, a senior economic analyst at the Federal Reserve Bank of Cleveland, the cost of food and the cost of energy have risen at an annualized rate of 17 percent over the past six months.

Have your wages gone up by 17 percent over the past six months?

As 2009 began, the average price of a gallon of gasoline in the United States was $1.83. Today it is $3.77.

American families are finding that their paychecks are going a lot less farther than they used to, but Ben Bernanke keeps insisting that we have very little inflation in 2011.

Most Americans don’t care much about economic statistics – they just want to be able to do basic things like take their children to the doctor.

According to one recent survey, 26 percent of Americans have put off doctor visits because of the economy.

Sadly, soon a lot more American families will not be able to afford to go to the doctor.

According to one recent survey, 30 percent of all U.S. employers will “definitely or probably” quit offering employer-sponsored health coverage once Obamacare is fully implemented in 2014.

As the economic situation has unraveled, an increasing number of people are being forced to turn to the federal government for assistance.

One out of every six Americans is now enrolled in at least one anti-poverty program run by the federal government.

Some of the hardest hit members of our society have been our children. Today, one out of every four American children is on food stamps.

Back in the old days, a large percentage of American families were self-sufficient, but that is no longer the case.

Back in 1850, approximately 50 percent of all Americans worked on farms.

Today, less than 2 percent of Americans do.

So these days when American families can’t feed themselves what do they do?

They turn to the federal government of course.

At the moment, approximately 44 million Americans are on food stamps.

But our federal government cannot afford to spend money like this forever.

According to a recent USA Today analysis, the U.S. federal government took on $5.3 trillion in new financial obligations during 2010. USA Today says that the U.S. government now has $61.6 trillion in financial obligations that have not been paid for yet.

Wow!

Who is going to end up paying that bill?

So with so much bad news, are our leaders alarmed?

Not really.

According to Federal Reserve Chairman Ben Bernanke, “growth seems likely to pick up somewhat in the second half of the year.”

Yeah, we’ll see how that prediction works out.

Others are not so sure that everything is going to turn out okay.

Recently, James Carville warned that we could literally see rioting in the streets if the economic situation does not turn around soon. Just check out the last part of the video below….

The truth is that America is in decline. Just like with all of the great empires of the past, our empire is starting to crumble too.

A recent article in the Guardian touched on some of the reasons for America’s decline….

The experience of both Rome and Britain suggests that it is hard to stop the rot once it has set in, so here are the a few of the warning signs of trouble ahead: military overstretch, a widening gulf between rich and poor, a hollowed-out economy, citizens using debt to live beyond their means, and once-effective policies no longer working. The high levels of violent crime, epidemic of obesity, addiction to pornography and excessive use of energy may be telling us something: the US is in an advanced state of cultural decadence.

The economic news is only part of the puzzle. This country has rejected the ancient wisdom that was passed down to us and we have rejected the principles of our founding fathers.

We have piled up the biggest mountain of debt in the history of the world and yet somehow we expected that everything would turn out okay.

Well, everything is not going to turn out okay.

All of this debt is going to come down on us like a ton of bricks and the U.S. economy is going to continue to fall apart. Millions of American families are going to lose their jobs and their homes.

Economic hell is coming.

You better get ready.

Remember when those of us who were predicting an economic collapse were dismissed as kooks?

Onward and upward,
airforce

China says U.S. is already defaulting on debt.

And if Moody's and/or Standard and Poor's downgrades U.S. debt instruments, the dollar is going to tank even more. Things are not looking good.

Onward and upward,
airforce

This will be a hard winter for a lot of people. Stock up on food and essential supplies to weather a very long storm. Do everything humanly possible to get out of their matrix and become self sufficient.

DO IT NOW.

Seriously, folks. This is no joke.

Onward and upward,
airforce

ConSigCor
People will never stock up.
Those with gardens and farms assume they will eat off the land.
False! The others will start harvesting their crops before they are ripe. If they stop them the State Governors will declare an emergency and send troops to harvest them.
The Eaters will go to the ATM to get money with their Welfare cards.
There they will find ISF because the Feds didn't put money in or the Banks wont accept them. Then they will come to your house to shop with a couple dozen friends.
The LEOs will take the day off since they got no pay. The Fire service will join them and you will be on guard 24/7 till the eaters discover another town with more resources.
Many think; I have weapons and I will protect my own property.
False! The Leo's before they leave will back the eaters in your yard because it keeps them out of theirs.
I see a Mad Max syndrome among the youth as they have no schools, no jobs, and no future. Some enterprising people will though have drugs and alcohol for the kids. That should start about as soon as the quick food places close from lack of money and products.
In my town of 80,000 we already have Black Gangs, White Gangs, and two flavors of Mexican Gangs. That will fight each other till they have divided this burg. Then they will sit down and join up to take the rest from the people.
My question will be "Where will the local Militia be? In their secure wood line, or on the street with the people cleaning out this trash?

What are you going to do?

For me at least, "stocking up" is a continual process. I already have a year's supply of food and other essentials, so it's simply a matter of rotating stocks, using the oldest on a daily basis. If you aren't already at this point, getting there is relatively easy. Whenever you go to the grocery store, if you're going to buy one of an item, buy two instead. Decide what canned goods you can make a meal out of, and buy a couple of them too. Be sure you write the date on each item you buy.

Do this, and you'll be surprised how quickly your stocks will grow. And if you don't do this, after we've warned you, well...

Onward and upward,
airforce

I don't know about your city of 80,000. What you say may very well be true in your area; but not here.

Common, ordinary people in my area are stocking up. They're growing huge gardens, raising pigs, chickens and cows...some for the first time.

Back in April we had 5 tornadoes in one night. Much of my area was wiped out. Everyone crawled out and helped their neighbors. We didn't have a problem with looters. We had a problem with the sheriff who used the "threat of looting" as an excuse to implement martial law. The locals made it clear that the cops weren't needed or wanted. In my area everyone is well armed and we look out for each other. In a worst case scenario we would shoot those looters you describe and wouldn't think twice about it.

Yeah, people here who are not constantly on the move are using the ground they have available to make gardens. It is often not "needed" but has become a fashionable expression of survival mindedness in the current economy.

A lot of people here in Portland are catching on to being more independent and "off the grid", or at least "less dependent on the grid" and are looking to learn. Not exactly joining militias and talking conspiracy theories, but privately looking at the government/corporate situation and trying to position themselves into being less dependent on it.

A lot of people have been dealing with the food survival situation in various ways to the point that I don't think anyone would be starving. If there are riots here, it will NOT really be over food. It may be something else, but not food.

Toward the end of summer, the food banks start to get stocked with local fresh garden food that people grew as a hobby but then don't know what to do with it. My current garden will likely go that route as I am doing it as an experiment for "SHTF" but have no intention of keeping it going long term full time. The experiment side of it being hanging plants grown basically up on a ten foot concrete wall. Thus, no "stooping" to deal with trimming or harvesting and I can make use of a very small square footage area of ground.

I am not screwing around with storing glass jars of vegtables I'll never eat that much of. I keep MREs for use in the second couple months of any "SHTF situation" along with "convenience meals" for work that I have to do away from easy access to fast food joints.

The idea is this:
Anyone should easily have a one to two month supply of regular food around their basic home, whether it is a room rental of six bed three and a half bath house. That's the kind of food you eat all of the time, in regular supply. In the first week or two of a power grid faliure, you will live on the refrigerated and frozen stuff in luxury, pig out or it will just go bad on you anyway. Share it with friends, neighbors and passers-by. Make big pots of stew and share it for free. Let folks know you are into sharing and organizing.

That, and as people who have less but can come up with things, let them know you are in the same situation they are (just a little better prepared) and they are welcome to come back provided they don't come back empty handed. Chances are what they bring will be those perishable staples as they move about and you stay put.

Of those who want to "stay put" with or around you, they get put to work building and expanding the gardens post hasted.

Thus goes month one. Month two, you are still living on your groceries, the gardens are starting to get in, maybe someone starts figuring out how to hunt or get out and trade with some farms because your meat will have run out at this point. Maybe someone gets fish.

Months three and four, you break into the MREs for two reasons, you are running low on regular groceries, and you are likely to need to do some travelling and need fast compact meals for what you are doing. That might mean hunting, it might mean heading out to the farmlands to get live chickens and rabbits for local food production back home. The cities at that point still have things the farms need, and the bigger factory farms would likely be wanting to reduce volume anyway, since without grid infrastructure to sustain their fuel and electricity needs, they will scale back to closer to a subsistence level. The big chicken farms for instance, would no longer be selling frozen chickens processed on site, but would likely still be selling feeder chicks, same with pigs. I think dairy operations would do something similar. You would no longer be able to go buy processed homogenized milk, but you could still buy cows.

Months five and six, you have hopefully adjusted to your economic situation of raising food and doing local trade to eat. Depending on the season, you are toughing out some hard weather or your first garden foods will be coming in. Your basic Broiler chickens exist on a life cycle that can run as short as two months, at three months fully grown and consumable. If you got your baby chicks during month two or three of the collapse, then it is only a short time between the runout (or self enforced rationing) of your two months supply of MREs before you are into a sustainable diet which includes regular supplies of chicken.

Pork cycles run a little differently depending on processing times (think smokehouse time). Personally, I think the decentralization of farming could in fact happen quickly if and people become motivated to do it. There is actually no less food production per capita in the US right now compared to 1920, just the centralization of production and processing has changed, and the fashionable tastes in food have been shifting toward a lot of imports which of course would be reduced if "SHTF".

This past weekend I spent sometime talking with a gentleman I met on a service call last year. He lives in a community that in order to keep the resale value of the homes up forbade any garden except for flowers.
His answer was to build what he called stealth gardens. He raised the base of a wooden (Pressure treated wood) frame about 8" above the ground. The base was 4' X 8' and 8" deep. The 6 legs were reinforced by angle iron which he said "will last longer than I will at 58". The bottom had angle iron slats every foot and was covered by 1/4" fence material. The last layer of the box was 1/2" pebbles for 2", over that was crush and run for 2". Then he put in his moist soil up to the rim.
He made 4' sides made of the 1/4 fence grate and covered on the inside with window screen to keep insects out of his garden. Then the outer most was two sheets of Plexiglas with holes drilled for air which could be slide where the holes were blocked for the winter months.
The top was of solid Plexiglas over the wire mesh and screen. This layer could be raised to allow harvesting, watering and maintenance. He said every year he picked the bees off his porch and moved a nest into each of his 12 gardens.
To keep the nosy neighbors at arms reach he leaves a hornets nest in one tree and grows flowers in the area by the sides and radishes, tomatoes, beans, sprouts, herbs, and corn in the middle. He said he had used to use these for 20 years in New York City on his building's roof.
If the Dept of Agriculture begins stalking free growers as I suppose the E-Coli outbreak is designed to allow these will keep the peace fairly well.
The ones he showed me he had built catch basins in the trees under the limbs that funneled the water to the raised sides to allow water to enter when there was a drought injunction for watering as we should soon start getting from our Governors.

Gardens can definitely save several hundred dollars a year, but you need protein too. And that's hard to grow in a small backyard garden.

Wal-Mart sells 20-pound bags of long grain rice for about $12. And for about $15, you can buy enough powdered milk to make 20 quarts. Throw in some dried beans and some economy-size Dinty Moore Beef Stew, and you have enough food to feed a family for weeks for about the same as you would pay for a single case of MRE's.

Onward and upward,
airforce

John Gage, the head of the American federation of Government Employees, has responded to an editorial in the Wall Street Journal that called for pension reform in the federal government.

Included in the letter was this howler. See if you can spot the fallacy in this argument:

Um, someone remind me why Bernie Madoff went to jail.

I'm thinking of starting a new thread, collecting all of the completely stupid, ridiculous, and absurd ideas people have about economics. Anyone interested?

Onward and upward,
airforce

Think beans, rabbits, and chickens for protein, 2 beehives and a goat for milk. All of this will fit in a small space.

It might be a good idea to mention this thread again.

Onward and upward,
airforce

Collapse: It\'s Coming! Are you ready?

Gerald Celente has a pretty enviable track record at forecasting economic trends. I hate to keep harping on the same subject, but get ready. The worst that could happen is you will have too much food on your hands and you will be eating pretty cheaply for a while. And how would that be a bad thing?

Onward and upward,
airforce

Credit-rating agencies are threaten... thanks to the Dodd-Frank "reform" bill. So what does the government do? Why, naturally, it threatens to investigate the credit-reporting agencies .

This doesn't exactly boost my confidence in U.S. solvency.

Onward and upward,
airforce

They\'re thinking about changing the Consumer Price Index again. And this should surprise no one here at AWRM:

Onward and upward,
airforce

Even [b]Lindsay Lohan[/b] has taken notice. If this doesn't get everyone's attention, nothing will.

Onward and upward,
airforce

James Wesley Rawles just posted this...

i remember my grandmother who lived in germany till 1952 ...talk about what happened in germany in the 1920's now the usa is getting the slow boil treatment with the 100 years of the fed coming...we have a picture of uncle sam is in coffin with almost all the nails are in place .next move will be the north american union to level out the ''debt troubles'' ....damn what a mess is in the works...

For America's economy, the end is nigh

Exclusive: Lord Monckton sounds alarm on 'one of the largest financial frauds in history'


“Full speed ahead and damn the torpedoes” was an approach fortunately justified by events during the Battle of Mobile Bay, but as a strategy for managing a nation’s economy it is folly. Mr. Obama’s mission to destroy America’s economy is complete. The damage he has done is irreversible. The dollar is history. The American economy is going down, and soon.

The posh commentators say the collapse will be gradual rather than sudden. But few are now predicting there will not be collapse at all.

Here are just some of the pointers. First and foremost, U.S. public debt is $18.3 trillion. By the time Mr. Obama leaves the White House late next year, he will have doubled it in a single “presidency.” On top of that, Uncle Sam has unfunded liabilities of at least $100 trillion – Medicare, Medicaid, Freddie Mac, Fannie Mae, Social Security and so forth.

Partly as a result of all that debt, and partly through scandalous mismanagement, the U.S. Federal Reserve Bank is insolvent – insolvent even though it has robbed the citizen blind by reducing the value of the dollar to just 4 cents compared with what it would buy when the Fed was founded a century ago.

At book value, the Fed pretends to be solvent, but that is because it accounts for its assets at cost and not at today’s market price. The Fed has $60 billion in capital, about twice that in total assets, and $4.5 trillion in liabilities. Its average leveraging was around 40:1 over the past half-century. Now it is leveraged at more like 80:1. That kind of leveraging among the private banks was what brought about the crash of 2008.

On a mark-to-market basis, the Fed is trading while insolvent. That is illegal for any bank, including the Fed, but the GOP is weak, the individual citizen is too poor to fight city hall in the courts and increasingly the governing class is above the law anyway. So nothing will be done about what is, in essence, one of the largest financial frauds in history.

To try to stave off the now-inevitable crash and the long depression that will follow, the Fed has resorted to the desperate measure of printing more than $3 trillion unsupported by any assets in less than a decade. That works out at $25,000 for every taxpayer in America. It isn’t working. The velocity of money has tanked.

Interest rates have been pushed down to zero, robbing pensioners of a reasonable return on their savings.

Not only that, but new GDP growth per dollar of debt has plummeted from around 50 cents on the dollar to zero under Mr. Obama, whose borrowing produces not merely a loss but a total loss. There is nothing to show for it.

That is not all. There are indications that the Fed may have laundered some $300 billion by paying Belgium to buy some of the U.S. Treasury bonds being dumped by Russia and China. If it isn’t the Fed, then who is it? Belgium can’t afford it. Memo to the CIA’s economic threats division: You’d better find out.

Russia and China are now dumping U.S. Treasuries on the market by the sackful. They know America is going down, and they are getting out in good time. China is going into gold in a very big way, doing so while the price is low. China will make billions when the crash comes and the price of precious metals spikes. Even after dumping Treasuries, she remains far and away America’s largest creditor, holding something like 20 percent of all U.S. government debt.

As Margaret Thatcher used to say, if you are in debt to another country, you are no longer sovereign. The first step she took was to pay back every penny the previous Socialist administration had borrowed overseas. Not so Mr. Obama. His fellow Communists in China now rule the America roost by holding more than a fifth of your nation’s debt.

The CEO of one of Russia’s biggest banks said not long ago: “It is time to change the entire international financial system that considers the dollar the key reserve currency.”

Russia is increasingly denominating international energy export contracts not in dollars but in roubles. China is increasingly doing bilateral trade deals in renminbi, the international version of its own currency, the yuan. America, then, is going to lose the vast cash value of the dollar’s status as the international reserve currency. Indeed, much of that value has already been lost.

Then there’s the private sector. U.S. banks are carrying $60 trillion in debt, which is not far short of a year’s global total economic output. And that debt is growing around 25 times faster than the U.S. economy as a whole. Hardly a stable situation.

Yet, as the Titanic sinks, the band plays on. Stock-market capitalization is currently more than double the annual output of the entire U.S. economy. The normal ratio is about half that. Shares are seriously overvalued. Hardly a stable situation.

The plight to which Mr. Obama has reduced America’s finances has global implications. One of these is that the total value of open futures and options contracts – derivatives based on the underlying value of stocks and shares – is now equal to 10 years’ total global economic output. Hardly a stable situation.

America is already not merely in recession but in depression. One citizen in six gets food stamps. Hardly a stable situation.

In the U.K., we have similar problems. The Children’s Coalition that governed us till earlier this year doubled our national debt in its five-year term of office, and the present administration has now deferred, yet again, the date on which we shall begin to pay back our national debt. More than half of all British households receive more in benefits than they pay in taxes. Hardly a stable situation.

Yet the current British government won the recent general election because the people feared, rightly, that the even more socialist alternative would be still worse for the economy.

In Europe, many Eurozone countries are bankrupt. Greece is just the first domino to fall. Even China, whose stock market has crashed, continues to be weak and may itself be the nation that triggers the worldwide collapse that will bring low the economies of all nations which, like America and Britain, have foolishly adopted socialism.

To quote Margaret Thatcher again, socialism is all very well until other people’s money runs out. Other people’s money has now run out. Expect trouble ahead.

World Trade Drops Most Since Financial Crisis

Commodities Collapsed Just Before T... – So Guess What Is Happening Right Now?

Social Security Disability Fund Could Run Dry in 2016

An Economic Earthquake Is Rumbling

by Tyler Durden 08/11/2015


While the people sleep, an economic earthquake rumbles underneath. The day that they begin to feel the quake draws near.

History will record that in this decade more people will lose more money (forget about the trillions of dollars already lost) than at any time in our history, including during the Great Depression.

At the same time, a very small group has made and will make huge sums of money.

During the Y2K scare (a real hoax) many people stored food. Then, after Y2K, many people wanted to dump their cache; and some did.

We advised readers at the time to store food simply because of the crisis world we live in, but to store those foods that you could rotate and consume. Stored food is a hedge against inflation. It’s a hedge against natural disaster. It’s a hedge against economic collapse. It was our advice before, and it has been our advice since.

This advice is still valid. People who don’t have some stored food don’t realize how dependent they are on the system and government. Of course, the system was designed and created to make the people dependent on government. That makes them easier to control.

Many people have been in hard times since 2008, thanks to bursting housing and derivatives bubbles — both fueled by the Federal Reserve’s money printing and both predicted by meand by many other writers. For those of us who are not well-connected (those of us who are not in the 1 percent), there has been no relief. While the banksters got bailouts and Wall Street and the banksters benefited from the money printers, the middle class was impoverished. Savings were wiped out.

More working-age people than ever before are not working. More young workers than ever before are still living with their parents because they are either out of work or working at low-paying jobs. More people than ever before are on the government dole. Welfare pays more than most jobs. Retirement funds have been cashed out and spent on living expenses.

Wages have not kept up with inflation — not the phony inflation numbers peddled by the Fed and the propaganda media, but real inflation.

Printing-press money is fertile ground for expanding world crisis. Crisis is excellent cover for national and international chicanery. Boy, we have it!

How can anyone who is paying attention not recognize these tremors for what they are?

The default rate of companies with the lowest credit rating is at its highest level since 2013.

The auto loan debt bubble is at $900 billion, fueled by easy credit and long-term loans (more than 60 months on even used cars) that put the car buyer upside down as he drives off the lot and keeps him there. U.S. mortgage holders are carrying the most non-mortgage debt they’ve had in more than 10 years; 81 percent of that is automobile debt. Student-loan debt held by mortgage holders is the highest it’s ever been, with the average balance owed at nearly $35,000. Almost 5.7 million homeowners remain underwater on their mortgages.

We see bad inflation in the immediate future. Inflation in housing and consumer goods exceeds the Fed’s stated inflation goal of 2 percent, but Fed Chair Janet Yellen is talking about raising interest rates to kick-start more inflation. But a deflationary collapse has started in commodities, oil and gold. The dollar is rising. Today’s dollar index chart mirrors the dollar index chart pre-2008 collapse.

U.S. dollar assets are in a slow-motion crash. A financial asset is any paper asset, such as CDs, bank accounts, U.S. government bonds, etc. While we sleep, we are losing our savings. The U.S. stock market is in a QE-driven bubble that will soon burst.

Inflation and deflation are both forms of wealth destruction and impoverishment. Now think about this: The U.S. government has an official and stated policy of currency destruction through inflation. This is voluntary destruction of the currency. If instead we have deflation because of the collapse of debt, we still have currency destruction.

Besides, the U.S. dollar and U.S. financial assets pay almost no interest. Plus, it’s now official U.S. and World Bank policy to take your money in the event of another collapse as we saw in 2008. They call it a “bail in.” That is a code word for “what’s yours is really theirs.”

Wisdom dictates getting out of dollar assets ASAP! I long ago, way before the 2008 crash, cashed out my IRA and took the penalty. Many of the readers of my Letter did, too. It was well worth it. The government is also eyeballing your IRA, 401(k) and pension even now. Stealing it from you and replacing it with government paper would knock a big hole in the so-called “government debt” and prop up the system for a while longer.

The Greeks ignored the warning signs of their failing economy to their detriment. They were left standing in long lines, waiting to withdraw meager amounts of their own rationed cash, and diving in dumpsters for food because the shelves were bare.

Sooner or later, inflation skyrockets. Paper money economies always crash in the end, and their currencies end up worthless.

At some point, there will be a panic. Many people will realize that the debt pyramid is collapsing. Most who see what’s happening will not act. The herd instinct suggests that only a few will bail out in time; but the majority will act in panic, too late. We saw it in Greece. We saw it in Cyprus.

“Oh, yes,” you say. “It cannot happen here in the U.S.; or if it does, it won’t be for some time.” But it has awesome potential at any time. Why in the world take the chance? Prudent and wise people always plan for eventualities that the crowd can’t see.

In hyperinflation, there is actually a shortage of paper money. The paper money production cannot keep up with prices. Now that we have electronic money, prices and inflation can go higher than the mind can imagine. The Fed is manipulating the consumer price index to cover inflation. This allows them to maintain zero interest rates on U.S. debt, but it also means zero interest on savings.

Things are in place for huge inflation now. They think the people won’t know if they just kill the indicators. This is really a fantasy world. Since the money creators own the mass media, it seems that they can make the people believe anything, more fiction than fact.

When we tell you to buy gold and silver coins and gold stocks; to store some food, water and ammo; and to buy Swiss annuities in Swiss francs, we are talking preservation of your assets, as well as survival financially and physically.

Don’t trust the banks. Most are bankrupt. Don’t put your gold and silver coins in the safe deposit box. Keep them at home and keep them secret. Don’t keep more cash in the bank than is necessary to cover about a month’s worth of bills. This is a flashing red alert.

Many tens of thousands of people who have their trust in the government system (U.S. currency) are headed dead ahead into impoverishment.

What in the World is Going on with Banks this Week? Emergency meetings, banker summits, crashing European banks, and the worst bank reports since the Great Recession

By Federalreserve

Just about every major banker and finance minister in the world is meeting in Washington, DC, this week, following two rushed, secretive meetings of the Federal Reserve and another instantaneous and rare meeting between the Fed Chair and the president of the United States. These and other emergency bank meetings around the world cause one to wonder what is going down. Let’s start with a bullet list of the week’s big-bank events:



The Federal Reserve Board of Governors just held an “expedited special meeting” on Monday in closed-door session.
The White House made an immediate announcement that the president was going to meet with Fed Chair Janet Yellen right after Monday’s special meeting and that Vice President Biden would be joining them.
The Federal Reserve very shortly posted an announcement of another expedited closed-door meeting for Tuesday for the specific purpose of “bank supervision.”
A G-20 meeting of finance ministers and central-bank heads starts in Washington, DC, on Tuesday, too, and continues through Wednesday.
Then on Thursday the World Bank and the International Monetary Fund meet in Washington.
The Federal Reserve Bank of Atlanta just revised US GDP growth for the first quarter to the precipice of recession at 0.1%.
US banks are widely expected this week to report their worst quarter financially since the start of the Great Recession.
The European Union’s new “bail-in” procedures for failing banks were employed for the first time with Austrian bank Heta Asset Resolution AG.
Italy’s minister of finance called an emergency meeting of Italian bankers to engage “last resort” measures for dealing with 360-billion euros of bad loans in banks that have only 50 billion in capital.


President Obama’s meeting with Fed Chair Yellen



It is rare for presidents to meet with the chair of the Federal Reserve. The last time President Obama met with Janet Yellen was in November of 2014, a year and a half ago. It is even more rare for the vice president of the United States to join them. In fact, I’ve heard but haven’t verified that it has never happened in a suddenly called meeting with the Fed before.

For security reasons, the president and vice president don’t regularly attend the same events. There are, of course, many planning sessions or emergency meetings where they do get together, but not with the head of the Federal Reserve. Emergency meetings where the VP is included in the planning session would include situations related to dire national security in case the VP winds up having to take over.

(George Bush and Dick Cheney were exceptional to the point that everyone commented on how often the VP was included in meetings with the president, but I always figured that was because George Bush couldn’t think and speak without Cheney acting as the ventriloquist.)

In fact the meeting with the prez and vice prez is so rare that the White House is bending over backwards to assure the entire nation that the president is not meeting with Yellen to try to influence the Fed, which is required to act independently of politics (so they claim).

According to the White House, President Obama is meeting with the Fed chair and Biden to discuss the nation’s “longer-term economic outlook,” even though Yellen just told the entire nation that the economy was strong and had arrived nearly back at “full health.” The president says they will be “comparing notes.” Do their notes about the nation’s outlook disagree? “Compare notes” sounds sufficiently vague to cover everything imaginable.



White House spokesman Josh Earnest said both Obama and Yellen are focused on ways to expand economic opportunities for the U.S. middle class. He called the meeting an opportunity for the two to “trade notes” while emphasizing that Yellen makes decisions about monetary policy independently. (SFGate)



Either such meetings are, indeed, extremely rare, or the White House doth protest to much because they spent more time this week emphasizing what the president was not going to do than what he was going to do in assuring us all that the president will not try to influence Yellen.



“The president has been pleased with the way that she has fulfilled what is a critically important job,” Earnest said. He added that Obama has “the utmost respect for the independent nature of her role.”



Earnest also said that, “even in a confidential setting” Obama would not “have a conversation that would undermine” the Fed’s ability to make “critical financial decisions independently.” I’m waiting to here the next words — “trust us!”

If such meetings with the Fed are so rare they require careful defensive explanation, why the sudden call of the meeting, oddly timed between two specially called, emergency meetings of the Fed — or, at least, “expedited” meetings of the Fed. It can’t just be that the president wants to plan what he will be saying at this week’s G-20 conference, if he’s to speak there. That kind of planning would happen in advance because one knows the conference is coming. One striking peculiarity of the president’s meeting with the Fed is that it appeared to have been called immediately after the Fed announced Monday’s “expedited” meeting of the Board of Governors.

We are in an election cycle, and I already speculated in my last article that, with the anti-establishment, Fed-hating candidates Sanders and Trump doing so well in their bids for the presidency, we could be sure the Administration would be doing all it can with the Fed to put some accelerant on this economy and forestall the recession that I believe we have already begun.

A recession would prove Trump and Sanders right in their statements about a coming recession or about the failed recovery actions of the Fed and Wall Street. So, the Fed and the President have every reason to work together to make sure an announcement of recession never happens. That could be what “comparing notes” on the economy’s future means — how do we assure the economy doesn’t fall apart in the next few months before the election since we have that common interest?

(In that case, the president is right that he will not be influencing the Fed — not in the sense of telling it what to do. He will be brainstorming with the Fed what they can both do in their own self-interest. No need for presidential persuasion or coercion because the Fed’s head is in the noose with the presidents if this economy fails.)

That would explanation why the White House is saying, in advance of any accusations, that the president isn’t trying to influence the Fed. They want to get ahead of the story. (Of course, it could just be that they recognize such rare meetings will lead to the kind of speculation I’m now brattishly doing.)


Tuesday’s specially called meeting of the Board of Governors under “expedited procedures”



Here is the announcement the Fed posted at the end of last week for Monday’s meeting (italics mine):



Advanced Notice of a Meeting under Expedited Procedures

It is anticipated that the closed meeting of the Board of Governors of the Federal Reserve System at 11:30 AM on Monday, April 11, 2016, will be held under expedited procedures, as set forth in section 26lb.7 of the Board’s Rules Regarding Public Observation of Meetings, at the Board’s offices at 20th Street and C Streets, N.W., Washington, D.C. The following items of official Board business are tentatively scheduled to be considered at that meeting.

Meeting Date: Monday, April 11, 2016
Matter(s) Considered
1. Review and determination by the Board of Governors of the advance and discount rates to be charged by the Federal Reserve Banks.

A final announcement of matters considered under expedited procedures will be available in the Board’s Freedom of Information and Public Affairs Offices and on the Board’s Web site following the closed meeting.



…Dated: April 7, 2016



The promised update after the meeting merely added,



Effective April 11, 2016, the meeting was closed to public observation by Order of the Board of Governors 1 because the matters fall under exemption(s) 9(A)(i) of the Government in the Sunshine Act (5 U.S.C. Section 552b(c)), and it was determined that the public interest did not require opening the meeting.



I’ve worked with boards for enough years to know they can always find a reason something is not in the public interest … and to know how generically they word things whenever they have a closed-door session. One day later, the Fed put out an announcement of another special meeting to be held on Tuesday, after the suddenly scheduled meeting with the president:



Advanced Notice of a Meeting under Expedited Procedures

It is anticipated that the closed meeting of the Board of Governors of the Federal Reserve System at 2:00 PM on Tuesday, April 12, 2016, will be held under expedited procedures, as set forth in section 26lb.7 of the Board’s Rules Regarding Public Observation of Meetings, at the Board’s offices at 20th Street and C Streets, N.W., Washington, D.C. The following items of official Board business are tentatively scheduled to be considered at that meeting.

Meeting Date: Tuesday, April 12, 2016
Matter(s) Considered
1. Bank Supervisory Matter

A final announcement of matters considered under expedited procedures will be available in the Board’s Freedom of Information and Public Affairs Offices and on the Board’s Web site following the closed meeting.



…Dated: April 8, 2016



O.K. Two expedited, closed meetings in a row accompanied by a meeting with the president and vice president in between, which the White House, itself, associated with these closed-door meetings, that is so rare it required special White House defense as to what would not be happening in the president’s meeting between these two sessions.

The first meeting was nominally to talk about setting interest rates, which the FOMC will be meeting to consider again later this month, having just postponed their scheduled increase in March. The second meeting is more interesting. If you have served on board or worked with boards that go into closed session, you know they always use the most generic terminology that is still truthful when announcing the meeting and when reporting in minutes what happened in the meeting.

The fact that it is a bank supervisory matter makes it sound like a particular concern, not a general discussion about supervisory policy. Something is the matter somewhere that requires an immediate meeting right after another immediate meeting … behind closed doors. That particular matter immediately requires central-bank supervision.

Boards hold closed meetings when they have to talk about specific institutions or individuals with details that they don’t want to go public. This all comes very close to sounding like some bank somewhere is in trouble, and the trouble is big enough to call a special meeting of the very august board of governors right after they just had a special meeting, and if you know these kinds of guys, they don’t like wasting their time in excessive meetings.

Naturally, I am as curious as you probably are about why so many last-minute meetings behind closed doors and with the president and vice president at a time when all major central bank heads in the world will be meeting with finance ministers in Washington, DC. So, I cast about for some possible related stories in order to what could be the matter, and I found several very hot issues going on this same week.


The recession that has already begun — Atlanta Fed revises US GDP down AGAIN!



The president’s meeting with the Fed and the Fed’s two meetings with the Fed were all called right after the Atlanta Federal Reserve Bank revised the revisions of its previous revisements to say the US economy now looks like it will report in for the first quarter at 0.1% growth.

It seems I cannot write fast enough to keep up with the Federal Reserve’s downward revisions of anticipated US GDP growth for the first quarter of 2016. No sooner did I click “publish” on my last article where I noted they had just revised their estimates of GDP down to a 0.4% growth rate than I read an article stating they have revised it again down to 0.1%!

Isn’t this where I said this quarter was going? That last number is within a rounding error of going negative and is less then the margin of error for their data. It was only back in February that the Fed anticipated a cruising speed of 2% growth for GDP in the first quarter. They have revised that number down almost every week.

Of course, the fact that the Fed and the President called an unscheduled, closed-door meeting to include the VP does not mean there is any connection between the events, and I certainly am not concluding even for myself that there is something dire happening here … but stay with me. There is more to perk the ears.


Great_Depression_Bank_FailureUS banks expected to report worst quarter financially since start of the Great Recession



That’s no minor announcement for a coincidence in timing. What if the numbers to be reported are even worse than has been anticipated, and the Fed is seeing bank trouble in some of those numbers, and the President has received advanced information about some of those numbers? What if they foresee turmoil as the numbers come out? All speculation on my part, of course. What isn’t speculation on my part is that Wall Street is already predicting that this week’s quarterly bank reports are going to look like the start of the Great Recession, and some pretty big players are using some pretty severe language.



Analysts say it has been the worst start to the year since the financial crisis in 2007-2008 and expect poor first-quarter results when reporting begins this week…. Analysts forecast a 20 percent decline on average in earnings from the six biggest U.S. banks, according to Thomson Reuters I/B/E/S data. Some banks, including Goldman Sachs Group Inc (GS.N), are expected to report the worst results in over ten years. (Reuters)



Whoa! That means a report for Goldman Sachs that is worse than any time just prior to or during the Great Recession! When you consider how bad the last decade has been, being worse than that is pretty bad. Moreover, the timing is considered unusually nasty:



This spells trouble for the financial sector more broadly, since banks typically generate at least a third of their annual revenue during the first three months of the year…. Bank executives have already warned investors to expect major declines…. Citigroup Inc (C.N) CFO John Gerspach said to expect trading revenue more broadly to drop 15 percent versus the first quarter of last year. JPMorgan Chase & Co’s (JPM.N) Daniel Pinto said to expect a 25 percent decline in investment banking. Several bank executives have warned about declining quality of energy sector loans.

“The first quarter is going to be ugly and we don’t think that necessarily gets recovered in the back half of the year,” said Jerry Braakman, chief investment officer of First American Trust, which owns shares of Citigroup, JPMorgan, Wells Fargo and Goldman. “There are a lot of challenges ahead.”



Yes, one of the biggest areas of bank troubles is emerging now from defaults in the energy sector that I have been saying will play a major role in birthing this banking crisis. (Translate that primarily oil and gas.)



BofA’s Michael Contopoulos warned last week, it may be the worst default cycle in history with “cumulative losses over the length of the entire cycle could be worse than we’ve ever seen before.”

Over the weekend, the FT got the memo with a report that … said that “the global bond default rate by companies is running at its highest since 2009 with the US accounting for the vast majority, according to rating agency Standard & Poor’s. A further four defaults this week, with three coming from the troubled oil and gas sector, pushed the overall tally to 40 with a little over a quarter of 2016 done.” (Zero Hedge)



According to the Wall Street Journal, these defaults are from “massive energy loans that most investors didn’t even know about until recently.” The recovery rate of these bad debts is falling extremely fast.



The growth of the high-yield bond market allowed drillers to take on far more debt than in past booms, leaving them more vulnerable to default. The emergence of shale technology allowed companies to expand reserves and the loans backed by those properties. Some of those loans may now be underwater. (Bloomberg)



You can thank the Fed’s zero-interest-rate policy for that easy, crazy credit bubble!

Is anyone starting to feel a little financial crisis deja vù? Last time it was declining housing-sector loans. This time, as I’ve been saying for the last few months we would soon see, it’s declining energy-sector loans. Same song, different verse. Looks like all of that is now materializing.

In code words, Wells Fargo tells us that their trench-worthy report has not even begun to fully write down the bad debts or move into foreclosures that would cause write-downs: (That is, at least, what I read in public bankerspeak.)



John Shrewsberry, Wells Fargo’s chief financial officer, said on a January call with analysts. “We were working with each customer to help them work through this. It doesn’t do us any good to accelerate an issue, or to end up as the holder of a number of oil leases as a bank.”



Since we start the big-bank reporting season on Wednesday, we should know right away if this is the next leg down in the Epocalypse, but you will probably have some coded language to look through. Something as big as this would certainly merit a flash meeting with the president and vice president, multiple meetings of the board of governors, and a G-20 financial summit in Washington along with meetings with the IMF and World Bank.

Not saying that’s what it is. Just sniffing out the kinds of stories that could be related to all these meetings, some planned earlier, others suddenly and all held somewhat secretively.



Conspiracies of the Ruling Class: How to Break Their Grip Forever. You’ll probably never find another book by a former Federal Reserve Governor, telling you how to break the Federal Reserve’s out-of-control control over the economy. “A Ruling Class have emerged in America against the hopes and designs of our Founding Fathers. Over the last hundred years, they have rejected the Constitution and expanded their own power, slowly at first and now rapidly.”




Austrian bank failure echoes Great Depression



Five and a half years ago, I wrote an article here that mentioned how the Great Depression took its second and deepest plunge in 1931 because of the failure of a private Austrian bank named Credit Anstalt.



In May 1931, a Viennese bank named Credit-Anstalt failed. Founded by the famous Rothschild banking family in 1855, Credit-Anstalt was one of the most important financial institutions of the Austro-Hungarian Empire, and its failure came as a shock because it was considered impregnable…. The fall of Credit-Anstalt—and the dominoes it helped topple across Continental Europe and the confidence it shredded as far away as the U.S.—wasn’t just the failure of a bank: It was a failure of civilization. (Bloomberg)



Now, as I’ve been writing about the start of what I believe will be the the second and worst dip of the Great Recession, another Austrian bank is crumbling.

Austria created Heta Asset Resolution AG when it nationalized all the bad loans of Hypo Alpe-Adria-Bank International five years ago to rescue that bank and its depositors by creating a “bad bank” to contain the problems. It went down something like this:



Hypo Alpe-Adria bank, when it was still owned by the small Austrian state of Carinthia, was a cesspool of corruption. It involved bankers, politicians, and powerbrokers in Austria and the Balkans. It was the perfect union of money and power. Investigators found 160 instances of suspected fraud….

Six of the bank’s former executives have been convicted of crimes.

“I’m not aware of a criminal case bigger than this one,” explained Christian Böhler, whose forensics team started investigating the bank in 2011. “It was a mix of greed, criminal energy, and utter chaos.” (Wolf Street)



Hypo’s troubles began, much as Credit Anstalt’s had before it, when it was required to adjust its books to reflect the true value of its collateral assets after the value of real estate in southeastern Europe collapsed. Everything fell apart upon the realization of how little it was actually worth.



Austria’s central bank governor Ewald Nowotny and his task force recommended that Hypo’s toxic assets of €17.8 billion should be put into a “bad bank.” But to stop the drag on public finances, the federal government should not guarantee Hypo’s bonds. At the time, Austrian taxpayers had already plowed €4.8 billion into Hypo to bail out these bondholders.

He then explained on TV to incredulous Austrians that this deal would nudge the budget deficit over the 3% limit set by the Maastricht Treaty and push the government’s debt from 74.4% of GDP to 80% of GDP. This one rotten, state-owned bank in Carinthia was causing this much damage to the country’s finances!



The government, at that point, set a one-year moratorium on all payments to the “bad bank’s” bondholders.

After burning through 5.5 billion euros of taxpayer money to no avail and discovering a 7.6-billion-euro hole in its balance sheet still remained to be filled, Finance Minister Hans Joerg Schelling ended support in March 2015. Surprise, surprise, the bad bank created by the government to put a fence around all the bad debts of the original bad bank became nothing but a black hole of debt, swallowing all money poured into it with nothing to show for the effort. That didn’t stop Schelling from claiming the nationalized bank was in good health in order to put a good face on things, as leaders are inclined to do when dealing with really bad stuff in order to protect the public from a scare.

Yesterday, under the first application of Europe’s new forced “bail in” procedures, Austria ordered a haircut to the banks bondholders. Sighs. This is apparently what happens if your money is invested in a bank with “good health.”

It does, indeed, sound a tad bit like Credit Anstalt. Now the moratorium is up, and it’s time to start dishing out the bad news to the bondholders under Europe’s new rules:



Austria officially became the first European country to use a new law under the framework imposed by Bank the European Recovery and Resolution Directive to share losses of a failed bank with senior creditors as it slashed the value of debt owed by Heta Asset Resolution AG.

The highlights from the announcement…

a 100% bail-in for all subordinated liabilities,

a 53.98% bail-in, resulting in a 46.02% quota, for all eligible preferential liabilities,

the cancellation of all interest payments from 01.03.2015, when HETA was placed into resolution pursuant to BaSAG,

as well as a harmonisation of the maturities of all eligible liabilities to 31.12.2023. ((SuperStation95)



This is actually some much-needed relief from how things used to work:



Throughout the Financial Crisis, and since, there has been one rule: bank bondholders will always be bailed out at the expense of everyone else. The sanctity of bank bonds reigned supreme, no matter what government and central banks had to do to keep it that way. Bank bonds weren’t allowed to be judged by the capital markets. They were simply untouchable. Underpaid and overtaxed workers would have to bail out bank bondholders when these recklessly managed banks collapsed.

That was the rule in the US when the Fed, and to a lesser extent the federal government, bailed out the banks. And that was the rule during the debt crisis in Europe. (Wolf Street cont.)



Europe’s new rules were intended to make sure that depositors did not take all the loss and that tax payers don’t absorb all the loss. Heta, because it was a government created “bad bank,” apparently does not have depositors, as it was the creditors and stock holders who were pooled into the “bad bank” who take the hit. The preferred creditors at the Austrian bank have been told they will have to take a 54% haircut, meaning the bonds they have purchased will recover forty-six cents on the euro.

The big-money (preferred) creditors of the bank, however, don’t like the new rules. They complained and are still holding out for ninety-two cents on the euro. That doesn’t bode well for anything being left for the smaller creditors, whose money will, in the very least, be kept in a lockbox for seven years because payouts to the non-Majors don’t wind up until 2023.

Major bond-holders demanding a smaller hit include Pimco, Commerzbank and the already deeply troubled Deutsche Bank. (Anybody see how things can quickly move down the line like dominoes when you consider the size of some of the worried creditors who are complaining that the hit will be too hard for them?)

The “subordinated liabilities,” as I understand the complex breakdown (for which I have been unable to find any clear definitions), appears to include bondholders who took a second position to the “preferred liabilities” in getting their money back and third-party investors in the bank. It also appears to include the partners in the bank. If so, then this is exactly how bank failures should happen. The investors are slated to lose 100% of their money first, allowing for the smaller loss by the bondholders.

It is the investors who elect the board that governs the bank and who fill the board positions and who make the decisions of who will be CEO; so, of course, they should lose all of their money before anyone else does. Creditors (bond holders) should be next, as they are often large institutions like PIMCO that have more than enough capacity to investigate risk before investing. Depositors should always be last, as most of them have no capacity whatsoever to investigate the real risk of banks and nowhere near enough money to put into a bank to make it worth a serious and useful investigation of risk. They are acting in trust … and particularly in trust that government regulators are doing their job.

Too bad the United States doesn’t operate this way!

What kind of spinoff can the settlement of Heta have to other institutions? Well, last month, the Association of German Banks had to bail out a small bank called Duesseldorfer Hypothekenbank AG because its hit as a creditor of Heta would have killed it. Though Duesseldorfer is a small bank, it was apparently deemed too big to fail because, once again, government bailouts went to the rescue.

Given that such an agreement happened on Sunday afternoon, and that central banks and regulatory bodies usually talk with other national bodies that may be affected, I have to wonder if the thought of how Europe might react on Monday had anything to do with Monday’s sudden meetings of the Fed.


Italian banks on final crash-landing approach



As if all that were not bad enough for the start of a week in banking news, Italy’s minister of finance called an emergency meeting over the past weekend of Italian bankers to engage “last resort” measures for dealing with 360-billion euros of bad loans in banks that have only 50 billion in capital.



Finance minister Pier Carlo Padoan has called a meeting in Rome on Monday with executives from Italy’s largest financial institutions to agree final details of a “last resort” bailout plan.

Yet on the eve of that gathering, concerns remain as to whether the plan will be sufficient to ringfence the weakest of Italy’s large banks….

Italian bank shares have lost almost half their value so far this year amid investor worries over a €360bn pile of non-performing loans — equivalent to about a fifth of GDP. (Contra Corner)



Could that have had anything to do with the flurry of bank meetings in the US. I have no idea, but I do have to wonder, with so much smoke everywhere in the banking industry, is there a fire we need to know about? You can be sure, we’ll be the last to know, and any announcement of what’s really going down will hit like Bear Sterns or Lehman Brothers. One day, all the central bankers are talking like things are fine. The next day a major vertebrae is knocked out of the nation’s financial spine.

Or maybe presidents and central bankers are just making sure things generally hold together through the election cycle. Such a bad-news week for banks around the world certainly doesn’t sound like all is well as our smiling central bankers, president and VP, say it is. I don’t know any top secrets to reveal, but the smoke is killing me.

Economic Collapse Is Erupting All Over The Planet As Global Leaders Begin To Panic

Posted on: April 11, 2016

Mainstream news outlets are already starting to use the phrase “economic collapse” to describe what is going on in some areas of our world right now. For many Americans this may seem a bit strange, but the truth is that the worldwide economic slowdown that began during the second half of last year is starting to get a lot worse. In this article, we are going to examine evidence of this from South America, Europe, Asia and North America. Once we are done, it should be obvious that there is absolutely no reason to be optimistic about the direction of the global economy right now. The warnings of so many prominent experts are now becoming a reality, and what we have witnessed so far are just the early chapters of a crushing economic crisis that will affect every man, woman and child in the entire world.

Let’s start with Brazil. It has the 7th largest economy on the entire planet, and it is already enduring its worst recession in 25 years. In fact, at the end of last year Goldman Sachs said that what was going on down there was actually a “depression“.

But now the crisis in Brazil has escalated significantly.

I want to share with you an excerpt from a recent article entitled “Brazil: Economic collapse worse than feared“. I know, that title sounds like it comes directly from The Economic Collapse Blog, but I didn’t write it.

It actually comes from CNN…

Amid political chaos, Brazil’s economic collapse is worse than its government once believed.

In the midst of rising calls to impeach President Dilma Rousseff, Brazil’s central bank announced Thursday that it now expects the country’s economy to shrink 3.5% this year.

That’s worse than the central bank’s previous estimate for a 1.9% contraction. The darker forecast matches what the International Monetary Fund projected for Brazil — Latin America’s largest country — and what many independent economists have suspected.

It is one thing for Michael Snyder to tell you that Brazil is in the midst of “economic collapse”, but it is another thing entirely for CNN to say it.

And of course I have been warning about the crisis down in Brazil for quite some time now. For much more on this, please see my previous article entitled “The Economic Collapse Of South America Is Well Underway“.

Meanwhile, things are actually much worse in Venezuela than they are in Brazil. Food and basic supplies are in short supply, the inflation rate has hit 720 percent, and crime is completely out of control.

The following is from an article in the Independent entitled “Venezuela is on the brink of complete economic collapse“…

The only question now is whether Venezuela’s government or economy will completely collapse first.

The key word there is “completely.” Both are well into their death throes. Indeed, Venezuela’s ruling party just lost congressional elections that gave the opposition a veto-proof majority, and it’s hard to see that getting any better for them any time soon — or ever.

Incumbents, after all, don’t tend to do too well when, according to the International Monetary Fund, their economy shrinks 10 percent one year, an additional 6 percent the next, and inflation explodes to 720 percent. It’s no wonder, then, that markets expect Venezuela to default on its debt in the very near future. The country is basically bankrupt.

Once again we see a very respected mainstream publication using the phrase “economic collapse” to describe what is happening in South America.

You can find some stunning video of the “economic Armageddon” that is taking place in Venezuela right here. I would encourage you to watch that video, because what is happening down there will eventually be happening here.

Meanwhile, over in Europe the collapse of the Italian banking system has entered a disturbing new chapter. Italy’s finance minister has called a meeting in Rome for Monday that will be focusing on a “last resort” bailout plan for the troubled banks…

Finance minister Pier Carlo Padoan has called a meeting in Rome on Monday with executives from Italy’s largest financial institutions to agree final details of a “last resort” bailout plan.

Yet on the eve of that gathering, concerns remain as to whether the plan will be sufficient to ringfence the weakest of Italy’s large banks, Monte dei Paschi di Siena, from contagion, according to people involved in the talks.

Italian bank shares have lost almost half their value so far this year amid investor worries over a €360bn pile of non-performing loans — equivalent to about a fifth of GDP. Lenders’ profitability has been hit by a crippling three-year recession.

As Italy descends into financial chaos, the rest of the continent better be paying attention.

Do you remember how hard it was for the rest of Europe to rescue Greece?

Well, Greece has the 44th largest economy on the planet.

Italy has the 8th.

It would be hard to overstate the seriousness of what is going on over in Europe, and it is not just Italy we are talking about. All over the continent major banks are in deep trouble, and the chairman of France’s second largest retail bank recently told reporters that “I am much more worried than I was in 2009“.

And there is very good reason for concern. On Sunday, we learned that a major “bail-in” had just been announced for one of Austria’s most prominent banks. The following comes from Zero Hedge…

And then today, following a decision by the Austrian Banking Regulator, the Finanzmarktaufsicht or Financial Market Authority, Austria officially became the first European country to use a new law under the framework imposed by Bank the European Recovery and Resolution Directive to share losses of a failed bank with senior creditors as it slashed the value of debt owed by Heta Asset Resolution AG.

The highlights from the announcement:

Today, the Austrian Financial Market Authority (FMA) in its function as the resolution authority pursuant to the Bank Recovery and Resolution Act (BaSAG – Bundesgesetz über die Sanierung und Abwicklung von Banken) has issued the key features for the further steps for the resolution of HETA ASSET RESOLUTION AG. The most significant measures are:

a 100% bail-in for all subordinated liabilities,
a 53.98% bail-in, resulting in a 46.02% quota, for all eligible preferential liabilities,
the cancellation of all interest payments from 01.03.2015, when HETA was placed into resolution pursuant to BaSAG,
as well as a harmonisation of the maturities of all eligible liabilities to 31.12.2023.

According to the current resolution plan for HETA, the wind-down process should be concluded by 2020, although the repayment of all claims as well as the legally binding conclusion of all currently outstanding legal disputes will realistically only be concluded by the end of 2023. Only at that point will it be possible to finally distribute the assets and to liquidate the company.

The dominoes are starting to fall in Europe, and I would expect even bigger announcements in the weeks and months to come.

Over in Asia, economic chaos is beginning to prevail as well.

In China, the stock market is already down more than 40 percent from the peak, Chinese exports were down 25.4 percent on a year over year basis in February, and Chinese economic numbers overall have not been this poor since the depths of the last global recession.

At the same time, the Japanese economy is really struggling right now. As I wrote about the other day, Japanese GDP has shrunk for two out of the last three quarters, we just saw Japanese industrial production experience the biggest one month decline that we have witnessed since the tsunami of 2011, and business sentiment has fallen to a three year low. The Nikkei has dropped by about 5,000 points from where it was last summer, and some analysts believe that Japanese markets “are being destroyed” due to massive intervention by the Bank of Japan.

Here in the United States, we haven’t been hit quite as hard as the rest of the world just yet, but there are lots of very disturbing warning signs all around us.

At the end of last week, we learned that it is being projected that U.S. GDP will have grown by just 0.1 or 0.2 percent during the first quarter of 2016. And on Monday corporate earnings reporting season begins, and it is expected to be a very, very bad one. The following comes from Business Insider…

We are about to get confirmation that earnings growth for America’s biggest companies was negative in the first quarter, compared to the same period a year ago.

When aluminum giant Alcoa releases its results on Monday, it will mark the unofficial start of the heaviest reporting season for S&P 500 companies.

The final scoreboard is expected to show a 9.1% earnings drop for the quarter, according to FactSet senior earnings analyst John Butters.

If these projections turn out to be accurate, it will be the fourth quarter in a row of earnings declines. This is something that we never see outside of a recession.

And for a whole bunch more numbers which indicate that the U.S. economy is in very serious trouble, please see my previous article entitled “19 Facts That Prove Things In America Are Worse Than They Were Six Months Ago“.

Of course I am just another voice in the crowd when it comes to predicting that the U.S. economy is headed for rough times. For example, just check out what Societe Generale economist Albert Edwards is saying…

A tidal wave is coming to the US economy, according to Albert Edwards, and when it crashes it’s going to throw the economy into recession.

…the profit recession facing American corporations is going to lead to a collapse in corporate credit.

“Despite risk assets enjoying a few weeks in the sun our fail-safe recession indicator has stopped flashing amber and turned to red”

…

He continued:

Whole economy profits never normally fall this deeply without a recession unfolding. And with the US corporate sector up to its eyes in debt, the one asset class to be avoided — even more so than the ridiculously overvalued equity market — is US corporate debt. The economy will surely be swept away by a tidal wave of corporate default.

As you can see, it isn’t just one nation or one region of the world that we need to be concerned about.

Economic chaos is erupting literally all over the planet, and global leaders are starting to panic.

Unfortunately, they have had seven years to try to fix things since the last global recession, and they didn’t get the job done. Anyone that believes that by some miracle they will be able to pull us out of the fire this time and that everything will somehow be okay is simply engaged in wishful thinking.

*About the author: Michael Snyder is the founder and publisher of The Economic Collapse Blog. Michael’s controversial new book about Bible prophecy entitled “The Rapture Verdict” is available in paperback and for the Kindle on Amazon.com.*

Source: Economics Collapse Blog

When people fear the government and banks teaming up to loot them, they buy gold and silver. Gold for those who are thinking of relocating over long distances, silver for those who want to be able to run a locally resilient economy.

The Chinese and people in India traditionally hoard gold so that they can take a lot of wealth overseas in a briefcase and set up life anywhere they go with it. Wealthier Europeans have traditionally done that with gems, but then so have a number of Africans, South Americans and Middle Eastern people.

Silver is the bastard child of that, since local silver based economic systems vary a lot. Thing is right now, in the last month, it made almost a $3 per ounce move upward. It is easier to buy in much of the domestic USA and one of the fallback options when lower to middling bank and stock investments get scary.

Silver also has an industrial base value which is more commonly utilitarian than Gold. Basically, there always will be a silver coin of some sort worth roughly $10 to $25 in today's money, whether or not it is a quarter, half or full ounce coin depends on its popularity as a trade medium, but I think a future of a quarter ounce coin being worth a healthy sized meal at a middling level diner will be about right. That's $40-$50 oz silver.

The Humungous Depression

We are not in a recession. We are in a depression, and have been since the turn of the century.

Guest Post by Robert Gore at Straight Line Logic

Economic depressions unfold slowly, which obscures their analysis, although they are simple to understand. Governments and central banks turn recessions into depressions, which are preceded by unsustainable expansions of debt untethered from the real economy. The reduction and resolution of excess debt takes time, and governments and central banks usually act counterproductively, retarding necessary adjustments and lengthening the adjustment, and consequently, the depression.

If one dates the beginning of a depression from the beginning of the unsustainable expansion of debt that preceded it, then the current depression began in 1987. Newly installed chairman of the Federal Reserve Alan Greenspan quelled a stock market crash, flooding the financial system with fiat liquidity. It was a well from which he and his successors would draw repeatedly. Throughout the 1990s he would pump whenever it appeared the market and the US economy were about to dump. In 1999, he pumped because the Y2K computer transition might adversely affect the economy and financial system (it didn’t).

If one dates the beginning of a depression from the time when the benefits of debt are, in the aggregate, outweighed by its burdens, the depression began in 2000, with the implosion of the fiat-credit fueled, high-tech and Internet stock market bubble. Unsustainable debt and artificially low interest rates lower the rate of return on productive investment and saving, increasing the relative attractiveness of speculation. Central bankers and their minions refer to this as “forcing investors out on the risk curve,” crawling way out on a limb for fruitful returns. They have no term for when markets saw off the branch, as they did in 2000 and again in 2008.

Most people don’t see 2000 as the beginning of a depression, but Washington and Wall Street cloud their vision. Stock markets were once essential avenues for raising capital and valuing corporations. Since central bankers’ remit was broadened to their care and feeding, stock markets have become engines of obfuscation. The “wealth effect” supposedly justified solicitude for markets: a rising stock market would increase wealth, spending, and economic growth. For seven years a rising market has coexisted with an anemic rebound and one hears little about the wealth effect anymore. The stock market is the preeminent symbol of economic health, so keeping it afloat has become a political exercise. Sure, central bankers and governments know what they’re doing, just look at those stock indices.

Let’s look at those stock indices. They are measured in fiat debt units, the entirely elastic quantity of which is in the hands of governments and central banks. What if stock indices are valued in a less ephemeral currency, say gold, aka “real money”? By that measure, the DJIA divided by the price of an ounce of gold reached its all-time high of about 41 ounces in May 1999, or just before the depression began. That ratio collapsed to under 7 ounces in September 2011, and currently stands at about 14. If you paid for the Dow in 1999 with gold, you’ve lost 65 percent on your original investment.

There is a general awareness that real family incomes have gone nowhere since the turn of the century; it’s often offered as a reason for the Trump and Sanders ascendancies. Other, less well-known indicators have also deteriorated or declined. What David Stockman defines as “breadwinner” jobs in construction, manufacturing, white-collar professions, governments, and full-time private services, which on average pay more than $50,000 per year, peaked in January 2001 and are still about 3 percent below that peak. The growth in employment since 2001 has been in lower paying part-time jobs, restaurants, retail, medical services, and education, which explains the stagnation in incomes. Two other important measures—labor hour inputs and real net investment—have gone nowhere since 2001. An economy in which hours worked and real investment are not growing is an economy that is not growing.

The US economy has been losing altitude for sixteen years. While debt monetization and interest rate suppression have fueled housing and equity booms, they can’t mask the underlying deterioration. President Obama will be the first president to have presided over an economy that never achieves 3 percent annual growth. That’s by government figures, which must be taken with a shaker of salt. Employment statistics are especially dubious. To the public, they are right behind the stock market as an economic indicator. They are subject to a variety of pertinent criticisms, including their seasonal adjustments and the birth-death model of new business formation, which continues to add to employment although, sadly, more businesses are currently dying than are being born. The government also has a vested interest in understating inflation. Many of the benefits it pays are indexed to inflation, and interest rates on government debt incorporate an inflation premium. Understating inflation overstates the growth of real GDP, probably third on the list of statistics to which the public pays attention.

The Great Depression was not a straight downhill run. There were multiple, widely hailed “recoveries” and stock market rallies, but in 1938 the economy was in worse shape than when Franklin Roosevelt was elected in 1932, and the government was bigger, more intrusive, and more in debt (the same can be said about the government since 2000). Depressing it is to contemplate how government turning a recession into the Great Depression, but consideration of what Japan has done since its stock market topped out in 1989 can leave one pondering the choice of pills, noose, or handgun.

The Japanese have copied every page of the Keynesian and monetarist playbooks: government debt, public works spending, and regulatory expansion, and central bank monetization of assets and interest rate suppression. Multiple recoveries have been punctuated by multiple contractions. Capitalism has remarkable recuperative powers, but screw with an economy long enough and you not only prevent recuperation, you do lasting damage. Japan and Europe—also beset by persistent economic idiocy—have shown little growth or innovation for decades, leaving the economic idiots responsible muttering about supposed, self-exculpatory, secular stagnation. As the US economy glide paths into zero-and-below-land, Washington, Wall Street, and the Ivy League’s best are muttering the same thing.

Nothing is more telling than birthrates, and in Europe, Japan, and the US, birthrates are below the replacement rate of 2.1 births per couple. When planned, having babies expresses confidence in the future. The Japanese buy more adult than baby diapers, illustrating the demographic crunch and falling dependency ratios (the ratio of able-bodied and employed workers to the population requiring outside support), which understandably increases pessimism and further decreases birth rates among the young.

They see a bleak future and they’re not wrong. The global economy hit stall speed with the commodities crash in 2014 and another rendezvous with terra firma looms. Never has the world been more in debt. True recovery won’t happen until most of it has been repudiated and written off. The current depression is already longer than the Great Depression. By the time it’s over, economic historians will be calling it the Humongous Depression.

This is Crisis Progress Report 18. For the first 17, see the Debtonomics Archive.

Next Up For Our Chaotic World

May 23, 2016 by Gary Christenson



What will happen in our increasingly chaotic financial world? For sensible analysis, seek the most intelligent, least biased, and experienced people … central bankers, most economists, and all politicians are, of course, not eligible.
From Mish regarding the opinions of Stanley Druckenmiller:



“Gold is the superior asset in present part of cycle
Fed is lost – totally lost and nothing they say match their action
Negative interest is worst policy mistake ever
Debt is and remains the elephant in the room”

“Stanley Druckenmiller warned on Wednesday that the Federal Reserve’s low-rate policy is creating vast long-run risks for the US economy.”

“… most of the debt today has been used for financial engineering in the form of stock buybacks and other methods that provide a boon to corporate profits…”

“I have argued that the myopic policy makers have no endgame, billionaire Stanley Druckenmiller said towards the end of a scathing twenty minute romp through all the world’s economic problems.”
From The Telegraph regarding global economies:



“The patient is in a critical condition. The International Monetary Fund is concerned that the global economic recovery has taken too long. Kaushik Basu, chief economist of the World Bank, says the financial crisis has left a ‘festering wound’ that is ‘refusing to heal.’ Growth is too weak, resulting in the equivalent of a compromised immune system that has left the economy vulnerable to fresh diseases.

“The question now facing the global economy’s physicians: is the ailment chronic or acute?”

“Answer: [Darryl Robert Schoon] It’s fatal, a prognosis no one wants to hear or accept.”
IT IS ALL ABOUT DEBT …
From Michael Lewitt at SureMoney:



“Debt drains away vital resources from economic growth. Fighting a debt crisis with more debt is doomed to failure, yet that is not only what global central banks did during the crisis, but long after markets stabilized (though the crisis never truly ended, just slowed). This was an epic policy failure that continues today.”

L-Unsustainable

Economic growth chugs along at a percent or two while debt races ahead at 9% or so each and every year. Debt rising far more rapidly than the underlying economy which must support the debt is unsustainable. If something can’t continue, it will end ….
From David Stockman:



“That’s because the Bubble Finance status quo as we know it is on its last legs. … That means a big market dive is coming soon.”

“In fact, a recession, a market crash, an explosion of deficit projections and, for good measure, double digit increases in next year’s health insurance premiums and copays will be hitting the headlines before the final Hillary/Donald debate duals of the fall campaign.”
Repeat – What Comes Next? Thank you David Stockman!



A recession, happening now, or soon
A stock market crash or severe correction
Higher deficits – practically guaranteed in the coming recession
Health Insurance increases – the data and history suggest this is likely

What Comes Next? More Possibilities:



“Helicopter Money” or per Bill Gross the “Universal Basic Income” or UBI
Negative interest rates, like a viral infection, could spread to the U.S.
Emergency stimulus or more QE under a different name
A war to serve as a scapegoat and distraction
More “bread and circuses”

From Albert Edwards: Summary from “Let me tell you how this ends”



Investors can pretend no longer – profits slide into a recession.

Deep bear market in equities

Corporate bond spreads explode with widespread corporate bankruptcies.

Social unrest and huge budget deficits.

Investors lose faith in the Fed.

Negative interest rates, currency and trade wars, helicopter money, and inflation.

It ends BADLY!


From John Rubino:


“Where do we go from here? Probably into a crisis in which the world stops trusting markets, and financial assets are devalued accordingly.”



Our debt based economic future looks grim for the next several years, unless, as Druckenmiller suggests, we move out of financial assets and move into gold (and silver) – real physical gold (and silver) – not the paper versions.


Gold and silver are not the answer to all of our economic problems, but they are better answers than more debt, QE, war, and lies.



Gary Christenson

The Deviant Investor

15 Facts About The Imploding U.S. Economy That The Mainstream Media Doesn’t Want You To See

Michael Snyder | Economic Collapse - June 16, 2016


You are about to see undeniable evidence that the U.S. economy has been slowing down for quite some time.

And it is vital that we focus on the facts, because all over the Internet you are going to find lots and lots of people that have opinions about what is going on with the economy. And of course the mainstream media is always trying to spin things to make Barack Obama and Hillary Clinton look good, because those that work in the mainstream media are far more liberal than the American population as a whole. It is true that I also have my own opinions, but as an attorney I learned that opinions are not any good unless you have facts to back them up. So please allow me a few moments to share with you evidence that clearly demonstrates that we have already entered a major economic slowdown. The following are 15 facts about the imploding U.S. economy that the mainstream media doesn’t want you to see…

1. Industrial production has now declined for nine months in a row. We have never seen this happen outside of a recession in all of U.S. history.

2. U.S. commercial bankruptcies have risen on a year over year basis for seven months in a row and are now up 51 percent since September.

3. The delinquency rate on commercial and industrial loans has been rising since January 2015.

4. Total business sales in the United States have been steadily dropping since the middle of 2014. No, I did not say 2015. Total business sales have been in decline for nearly two years now, and we just found out that they dropped again…

Total business sales in the US did in April what they’ve been doing since July 2014: they dropped: -2.9% from a year ago, to $1.28 trillion (not adjusted for seasonal differences and price changes), the Censuses Bureau reported on Tuesday. That’s where sales had been in April 2013!

5. U.S. factory orders have been dropping for 18 months in a row.

6. The Cass Shipping Index has been falling on a year over year basis for 14 consecutive months.

7. U.S. coal production has dropped to the lowest level in 35 years.

8. Goldman Sachs has its own internal tracker of the U.S. economy, and it has fallen to the lowest level since the last recession.

9. JPMorgan’s “recession indicators” have risen to the highest level that we have seen since the last recession.

10. Federal tax receipts and state tax receipts usually both start to fall as we enter a new recession, and that is precisely what is taking place right now.

11. The Federal Reserve’s Labor Market Conditions Index has been falling for five months in a row.

12. The employment numbers that the government released for last month were the worst that we have seen in six years.

13. According to Challenger, Gray & Christmas, layoff announcements at major firms are running 24 percent higher this year than they were at this time last year.

14. Online job postings on the business networking site LinkedIn have been declining steadily since February after 73 months in a row of growth.

15. The number of temporary workers in the United States peaked and started falling precipitously before the recession of 2001 even started. The exact same thing happened just prior to the beginning of the 2008 recession. So would it surprise you to learn that the number of temporary workers in the United States peaked in December and has fallen dramatically since then?

Earlier today, we learned that two of our biggest corporations will be laying off even more workers. Bank of America, which is holding more of our money than any other bank in the country, has announced that it is going to be cutting about 8,000 more workers…

Bank of America is expected to reduce staffing in its consumer banking division by as many as 8,000 more jobs.

The nation’s largest retail bank by deposits has already reduced the staffing in its consumer division from more than 100,000 in 2009 to about 68,400 as of the end of the first quarter of 2016, said Thong Nguyen, Bank of America’s president of retail banking and co-head of consumer banking at the Morgan Stanley Financials Conference Tuesday.

And Wal-Mart has announced that it is going to be eliminating “back-office accounting jobs” at approximately 500 locations…

Walmart is going to cut some back-office accounting jobs at about 500 stores in a bid to become more efficient.

The job cuts will occur mostly at stores mostly in the West and involve accounting and invoicing workers, says spokesman Kory Lundberg. Instead, bookkeeping functions will be switched to Walmart’s home office in Bentonville, Ark. Cash at the stores will be counted by machine.

Day after day we are hearing about more layoffs like this. So why would this be happening if the U.S. economy truly was in “recovery mode”?

Even with how manipulated the GDP numbers are these days, Barack Obama is on course to be the only president in all of U.S. history to never have a single year when the economy grew by at least 3 percent. The truth is that our economy has been stuck in the mud ever since the end of the last recession, and now a major new downturn has clearly already begun.

And you want to know who else realizes this?

Foreign investors do.

Last month, foreign investors dumped U.S. debt at the fastest pace ever recorded…

Foreign investors sold a record amount of U.S. Treasury bonds and notes for the month of April, according to U.S. Treasury Department data on Wednesday, as investors priced in a few more rate increases by the Federal Reserve this year.

Foreigners sold $74.6 billion in U.S. Treasury debt in the month, after purchases of $23.6 billion in March. April’s outflow was the largest since the U.S. Treasury Department started recording Treasury debt transactions in January 1978.

There is no debate any longer – the next economic crisis is already here. This is so abundantly obvious at this point that even George Soros has been feverishly dumping stocks and buying gold.

We can argue about whether the U.S. economy started turning down in late 2015, early 2015 or late 2014, and it is good to have those debates.

But at the end of the day, what is far more important is what is ahead. Fortunately, our downturn has been fairly gradual so far, and let us hope that it stays that way for as long as possible.

In much of the rest of the world, things are already in full-blown panic mode. For instance, Venezuela was once the wealthiest nation in South America, but now people are literally hunting cats and dogs for food.

Absent a major “black swan event” of some sort, we won’t see that happening in the United States for at least a while yet, but without a doubt we are steamrolling toward a major economic depression.

Unfortunately for all of us, there isn’t anything that any of our politicians are going to be able to do to stop it.

Is Economic Collapse Inevitable?

http://www.profitconfidential.com/economy/is-economic-collapse-inevitable/

By Robert Appel, B.A., B.C.L., L.L.B July 12, 2016

This Will Be the Cause of the Next Economic Collapse

We are living in historic times. Never has the gap between the rich and poor, the elites and the common people been so great. Never has the very notion of democracy and self-determination been so fragile. Never have the core tenets of so-called capitalism been under such attack. And never has there been such unprecedented brute-force interference in markets that used to pride themselves on being “free.”

How did we get here? Is there a way back? Is economic collapse and reset the inevitable result of nationhood?

I want to focus on these four areas: people, government, capitalism, and nation-states.

1. People Invariably Imitate Their Betters, Not Their Peers

In my ongoing essays on the continuing trainwreck that the Western business sector has evolved into, I have time and again underscored that human beings, by their very nature, are copiers and mimics. This is in our DNA. (Source: “Born copycats! Why we just can’t fight the subconscious impulse to imitate others,” Daily Mail, July 20, 2011.)

This trait can be a blessing…or a curse.

If those we perceive to be our betters—our leaders—set the right example, humankind and society, in general, can soar.

On the other hand, if our leaders choose to demonstrate the traits of arrogance, greed, selfishness and a general lack of respect for those not of their social class, the ending will not be pretty.

I have just as frequently drawn attention to the horrific and disturbing fact that in 2007, completely unashamed and in full view of the world stage, the leaders of America “came out of the closet” and revealed where their real loyalties lay.

The banks and miscreants that deliberately created the mess we are in were—according to our elected leaders—“too big to fail.”

Now, since economics (and for that matter, life itself) is a “zero sum game,” the unspoken implication was that if they could not fail, then we, being society as a whole, would have to in their stead.

Against this backdrop, I was pleased to catch a recent interview with Rana Foroohar, TIME Magazine’s assistant managing editor and economic columnist. Her recent book, Makers and Takers: The Rise of Finance and the Fall of American Business, repeats several of the themes I have been putting forward for years, albeit more eloquently.

The following is from a podcast interviewing Rana Foroohar on the ideas put forth in her book—ideas I’ve also shared before in these pages and elsewhere:

“[…] if you are well off, you’re doing better than you ever have before in history. But the majority of Americans, the majority of workers in this country, haven’t gotten a raise in real terms since the early 1990’s. Many people in the working class, the minorities, haven’t gotten one since the late 1960’s.

“[…] only 15% of all the money sloshing around in American financial institutions ends up invested in Main Street business. So where is the rest of it going? Well, it’s being used to trade against existing assets, stocks, bonds, houses—it’s doing something entirely different than what the banking system was set up to do, which is to take our savings and funnel them through financial institutions into business investments. Those businesses then grow and create jobs. When you only have 15% of the money in the markets doing that, you’ve got a problem…the top 10% of the country which owns 80% of the asset base stocks, bonds, houses, that’s a bubble that is enriching just the wealthy while not actually creating real underlying growth.

“[…] what I think will be the biggest political tension point of the next 20, 30, 50 years…is this square off between the boomers and the Millennials for a shrinking economic pie. And the pie is shrinking because we have had a completely perverse system that has enriched the few, the financial markets, at the expense of the many.

“[…] Just look at the sort of movies of our day…they definitely glorify the financier to the exclusion of others. That is a real problem…our MBA education…is so financially oriented and kids come out and finance is still the number one area they want to go into. They don’t want to go into industry. And increasingly you have got even the smartest scientific minds, the mathematicians…a quarter of the class of MIT graduates will end up on Wall Street figuring out sort of complex, 14-dimensional algorithmic models for trading instead of inventing the next ‘green’ airplane engine over at Boeing. That is a real issue. So we have to look at education. We have to look at the way we even speak to each other. We use words from the financial lexicon. We talk about ‘human capital.’ We think of workers as being as expendable as assets themselves.

“[…] I think the deregulation of the derivatives market was big. I think [about] the way in which monetary policy was unleashed…and we started to rely on really low interest rates to create any growth at all was big. But it is this big process—this sort of slow process where as finance got bigger and bigger and everyone was pulled into its orbit, almost like planets orbiting the sun—[where] we just began to think of the markets differently and we all are oriented towards the markets. The point of my book really is to start a conversation about how, guess what, this is totally the wrong way to look at things. The markets need to be oriented towards us. The markets need to be focused on helping Main Street.” (Source: “Rana Foroohar: How Wall Street Is Strangling The Economy,” Peak Prosperity, June 12, 2016.)

2. Is Government the Solution…or the Problem?

I recall an Economics professor from my salad days who chose to present the final exam for his course by presenting us with one single essay question: “Is government an enabler or a parasite?”

I and my fellow students dutifully selected one side of the argument and then proceeded to spend two hours arguing the case.

I passed the course, but did not get the high grade I expected.

Months later, by coincidence, I met my professor at a local farmers’ market. After apologizing for “talking shop,” I begged him to tell me the answer he had been looking for.

“Simple,” he said, “governments are not enablers or parasites. They are both at the same time. Invariably each starts mainly as an enabler and over time becomes mainly an unstoppable parasite.”

Looking back, I understand what he was getting it. When the hit TV show Deadwood first debuted, the critics could not say enough nice things about the acting and the writing. Among those critics, there were a scant few who understood what the show was really about—government, how it forms, the purpose it serves, and how, invariably, it goes awry. (Source: “The Real Men of Deadwood,” HistoryNet.com, July 25, 2006.)

My professor was correct: governments start off serving a vital purpose, bringing order out of chaos. Over time, however, the power to tax, the power to impose the government’s will on the governed, and the government’s power to enforce that will ultimately supercedes everything else.

Democracy is equally flawed. Something about human nature makes the temptation to get “something for nothing” just too great to resist. Deep down, each one of has deep within ourselves something of both the “ant” and the “grasshopper” from the timeless children’s story. Part of us wants to work to make things better and part of us wants to benefit from someone else’s work, without having to do the work ourselves.

History tells us that all governments ultimately fail, drowning in their own incompetence and lust for control.

Recent studies, for example, have shown that the current recession (which some are calling a full-fledged depression) has completely circumnavigated government itself. In other words, good times or bad, for better or for worse, government just keeps taxing and growing and making new laws to help it tax and grow.

You might expect that because many experts blame government incompetence for the mess we are in, government itself would show some remorse and attempt to reign in its worst impulses…? You would be wrong. Rain or shine, boom or bust, government only knows one thing: consolidation of power and increase in size. (Source: “The Swelling Parasite: How The Federal Government Rewards Itself For The Recession,” Political Outcast, February 5, 2014.)

3. Are We Still in a “Capitalistic” System…or Merely Delusional?

In 2011, Forbes did a now-infamous piece explaining how we in the West like to pretend we have a capitalistic system but, in fact, over time, our system has lost touch with the core notions of “capital” and “enterprise,” and instead become a bizarre amalgam of cronyism and corporatism (sometimes the F-word—“fascism”—is also used).

The article was not welcome but it struck a chord nonetheless. It turns out what governments and corporations have in common is a core belief that the rest of humankind exists merely to assist them to grow and needs constant stewardship and control. This is why the relationship between these two worlds gets tighter and tighter each year—while Main Street, small business, and entrepreneurship all go the way of the dodo bird. (Sources: “It’s Not Capitalism, It’s Corporatism,” The Caleb Jones Blog, February 22, 2016; “Capitalism Isn’t Corporatism or Cronyism,” Forbes, December 7, 2011.)
4. Do Nation-States Sow the Seeds of Their Own Destruction?

Yet another way of looking at the very same problem is to conclude that the very process of nation-building, once successful, starts an invisible “clock” that ultimately, in the fullness of time, will cause all experiments in self-determination to implode. This notion was recently explored in ZeroHedge:

“[…] In every case, when a nanny state increases the weight of its boot on the neck of the economy, the economy becomes less vibrant, to the detriment of all citizens except those connected directly to the government. Keynesian theory has it that major changes can be made to the economy in isolation, with little or no effect on the economy as a whole. This flawed assumption is a major contributor to the failure of Keynesianism. In truth, any variable affects the whole in some way.

“[…] each nation has a shelf life. It begins its rise as a result of determination and a strong work ethic. It then rises to a level of productivity, which in turn creates prosperity. This abundance leads the population to become easy prey to empty political claims that largesse from the state can enrich all. Largesse results in complacency, which then turns into apathy.

“After a nation has peaked and a majority of the people have traded in their work ethic for the undeliverable promise of ever-increasing governmental largesse, the decline is set in stone. When this has taken place, it’s not only the work ethic that’s in a terminal decline. The nation heads inexorably downward in other ways.

“[… ] Historically, when a nation goes into a terminal decline, it is not just one aspect of its existence that declines. Moral values, sound economic principles, productivity, an independent media, and basic freedoms all tend to decline with it.” (Source: “Burning Down The House,” ZeroHedge, June 21, 2016.)

OK…So How Will This All End?

It is not an attractive picture. It is, in fact, a vicious cycle.

In prior essays, I have made the point that in 2007, forced to choose between supporting a banking system that had knowingly and deliberately taken us to the brink of collapse and possibly bringing justice to the people even at the expense of a temporary period of chaos and realignment, our governments did not hesitate to choose.

They chose to favor the banks instead! They declared the banks “too big to fail” and threw the rest of us under the bus. Our governments did not do this because they believed it was the right decision. They did this because it was the only option that protected the existing system of executive privilege and the accompanying power structures.

Nine out of 10 times, this is what governments do. They protect themselves!

(The 10th time? Iceland is an example. This wonderful and strange little country allowed its economy to work through the excesses and actually jailed 29 bankers, all of whom were mysteriously released just recently when the political leader behind the initiative was conveniently found to have been mentioned in the “leaked” Panama Papers, a leak now generally acknowledged to have been both managed and edited. [Source: “This Is Where Bad Bankers Go To Prison,” Bloomberg, March 31, 2016.])

The solution? There really is none. As the TV show Deadwood illustrated, we initially create government to bring order out of chaos. Over time, government itself becomes the chaos and ultimately destroys the fabric of the very society to which it gave birth.

On a roadmap of possibilities, that is where we are now. Governments in the West are imploding under the weight of protecting themselves and the elites from the very problems they themselves wrought. The results will not be pretty.

Lets look at this another way.

Trump is a friend of the Clintons. Hillary runs for office as one last big hurrah to fund all of her friends with generosity during an election year. If she wins, so be it, if she loses, they have the election period plus Obama's outgoing transition period to have their major looting festivities and then leave the country with all that money and the ability to use that money to manipulate trouble during the next administration without ever having to take blame for it.

They come up with a major narrative to say everything they left Trump to inherit is the greedy billionaire's fault. They would not orchestrate the full collapse during one of their own administrations, but during the administration of their opposition just in time for their own people to come to the rescue with "solutions".

So it's like this. I see them making a huge ruckus, but Trump wins. Our eye off the ball of their looting, they guide their own people into survival preparations for a collapse engineered to happen around 2018. Right in the middle of the Trump presidency.

If it happens too soon, it gets blamed on Obama, if they have to delay it a bit, they can, but in either event, I sense Trump as a 4 year president. He is also a smart guy and might be able to prevent some of the damage.

I have long thought that Obummer will be selected as the next secretary general of the un. Shortly afterwards the globalist's will allow the world economy to collapse. Then, they will implement a cashless digital system that will give them complete and total control of ALL resources and people.

In the meantime, the elite will do everything in their power to destablize and destroy America because we are the only thing standing in the way of their plan of global domination.

Barack Obama may have finally destroyed America’s #1 advantage

Simon Black
August 23, 2016
Santiago, Chile

In July 1944, just weeks after the successful Allied invasion of Normandy, hundreds of delegates from around the world gathered in Bretton Woods, New Hampshire to determine the future of the global financial system.

The vision was simple: America would be the center of the universe, and every other nation would revolve around the US.

This arrangement ultimately led to the US dollar being the world’s dominant reserve currency which still remains today.

Whenever a Brazilian merchant pays a Korean supplier, that deal is negotiated and settled in US dollars.

Oil. Coffee. Steel. Aircraft. Countless commodities and products across the planet change hands in US dollars, so nearly every major commercial bank, central bank, multi-national corporation, and sovereign government must hold and be able to transact in US dollars.

This system provides a huge incentive for the rest of the world to hold trillions of dollars worth of US assets– typically deposits in the US banking system, or US government bonds.

It’s what makes US government debt the most popular “investment” in the world, why US government bonds are considered extremely liquid “cash equivalents”.

As long as this system continues, the US government can continue to go deeper into debt without suffering serious consequences.

Just imagine being totally broke… yet every time you want to borrow money there’s a crowd of delighted lenders eager to replenish your wallet with fresh funds.

This may be the US government’s #1 advantage right now.

You’d think that they would be eternally grateful and take care to never abuse this incredible privilege.

But no… not these guys.

In fact, they’ve done the exact opposite. Over the last eight years the US government has gone out of its way to eliminate as much of this benefit and alienate as many allies as possible.

They’ve abused the trust and confidence that the rest of the world placed in them by racking up record amounts of debt, waging indiscriminate wars in foreign lands, and dropping bombs on children’s hospitals by remote control.

They’ve created absurd amounts of regulations and had the audacity to expect foreign banks to comply.

Plus they’ve levied billions of dollars worth of fines against foreign banks who haven’t complied with their ridiculous regulations.

(Last week, for example, New York state financial regulators fined a Taiwanese bank $180 million for not complying with NY state law.)

And they’ve threatened to banish any foreign banks from the US financial system who don’t pay their steep fines.

Abuse. Deceit. Extortion. Not exactly great ways to win friends and influence people.

It’s as if Barack Obama pulled together the smartest guys he could find to make a list of all the ways the US government would have to screw up in order to lose its enormous financial privilege… and then he went out and did ALL of them.

The US government is practically begging the rest of the world to find an alternative to the US dollar and US banking system.

Even the government of France, a key US ally, called into question continued US dominance of the global financial system after the US government slammed French bank BNP Paribas with a $9 billion fine.

There have already been some attempts to displace the United States in the financial system.

China has been aggressively setting up its own competing financial infrastructure, something called the China International Payment System.

It’s been a slow start for the Chinese, but they’re building momentum. Though I’m not sure China is the answer in the long run.

While banks around the world may not care for the long and strong arm of the US government, the Chinese government doesn’t exactly inspire trust either.

But now there really is an alternative. Technology.

Ripple, a blockchain-style protocol that’s funded by Google Ventures (among others), is now being utilized by international banks to send and receive transactions directly.

The way international bank transfers work now relies exclusively on the US financial system.

Large foreign banks have what’s called a “correspondent account”, typically at a major US bank like JP Morgan, Citibank, etc.

A correspondent account is essentially a bank account for other banks. Our company holds funds at a bank in Singapore, for example, whose US dollar correspondent account is at Bank of New York Mellon.

Foreign banks’ US dollar correspondent accounts are typically at major Wall Street banks because that’s the epicenter of US dollar transactions.

So when a bank in Australia sends US dollars to a bank in South Africa, that payment actually flows from the Australian bank’s correspondent account in the US to the South African bank’s correspondent account in the US.

The entire transaction effectively takes place using the US banking system.

Again, this gives the US government enormous power over foreign banks. Any foreign bank that doesn’t do what Uncle Sam commands can be excommunicated from the US banking system.

And without access to the US banking system, a foreign bank will be unable to transact in US dollars, and hence unable to conduct any global business.

This is a death sentence for a bank. The US government knows this and has been blackmailing global banks for years.

But now technology is providing another option.

Banks don’t have to use the US banking system anymore; they can send real-time payments internationally using the Ripple protocol.

Two months ago a Canadian financial services company sent the first-ever institutional cross-border payment to a German bank.

This isn’t some wild theory or conjecture. It’s actually happening.

Just this morning a group of 15 banks in Japan signed up to start using Ripple, and dozens of banks plan to use the protocol within the next six months.

The technology is cheaper. Faster. Superior. And it doesn’t come with any US government strings attached.

So it seems Uncle Sam may have finally shot himself in the foot for the last time.

Four more mega-banks join the anti-dollar alliance

Simon Black
August 24, 2016
Santiago, Chile

That was fast.

Yesterday I told you how a consortium of 15 Japanese banks had just signed up to implement new financial technology to clear and settle international financial transactions.

This is a huge step.

Right now, most international financial transactions must pass through the US banking system’s network of correspondent accounts.

This gives the US government an incredible amount of power… power they haven’t been shy about using over the last several years.

2014 was one of the first major watershed moments when the Obama administration fined French bank BNP Paribas $9 billion for doing business with countries that the US doesn’t like– namely Cuba and Iran.

It didn’t matter that this French bank wasn’t violating any French laws.

Nor did it matter that only months later the President of the United States inked a sweetheart nuclear deal with Iran and flew down to Cuba to attend a baseball game with his new BFFs.

BNP had to pay up. A French bank paid $9 billion because they violated US law.

And if they didn’t pay, the US government threatened to kick them out of the US banking system.

$9 billion hurt. But being kicked out of the US banking system would have been totally crippling.

Big international banks in particular cannot function if they don’t have access to the US banking system.

As long as the US dollar remains the world’s dominant reserve currency, major banks must able to clear and settle US dollar transactions if they expect to remain in business.

This means having access to the US banking system… the gatekeeper of the US dollar.

But having watched BNP Paribas get blackmailed into paying an absurd $9 billion fine to the US government, the rest of the world’s mega-banks knew instantly that their heads could be next ones on the chopping block.

So they started working on contingency plans.

Blockchain technology provided an elegant solution.

Instead of passing funds through the US banking system’s costly and inefficient network of correspondent accounts, blockchain technology provides an easy way for banks to send payments directly to one another.

I cannot understate how important this technology is.

Blockchain may very well be what neutralizes the US government’s domination of the global financial system.

And while there’s been a lot of momentum in this direction (hence yesterday’s letter to you), even I’m surprised at how fast it’s moving.

Today, four of the world’s largest banks announced a brand new joint venture to create a new financial settlement protocol built on blockchain technology.

Deutsche Bank from Germany, UBS from Switzerland, Santander from Spain, and Bank of New York Mellon have joined together to launch what they’re naming the very un-sexy “utility settlement coin”.

Like Ripple, Setl, Monetas, and several other competing technologies, Utility Settlement Coin has the potential to end the reliance on the US banking system for cross-border payments and financial transactions.

Banks will be able to send payments to one another directly without having to transit through the Wall Street financial toll plaza.

(Global consulting firm Oliver Wyman estimates that the cost of clearing and settling international financial transactions at up to $80 billion annually.)

This has enormous implications, especially for US banks.

The Federal Reserve, for example, has already warned that financial technology could pose stability risks to the US financial system.

And they’re right.

If foreign banks are able to transact directly with one another without having to go through the US banking system, then why would they need to park trillions of dollars in the United States?

They wouldn’t.

Adoption of this technology could cause a gigantic vacuum of deposits out of the US banking system.

US banks would take a big hit. And the US government would have far fewer foreign buyers to sell its ever-expanding piles of debt.

Make no mistake, the adoption of this technology is a game-changing development with far-reaching implications. And it’s happening very quickly.

If these mega-banks can hit their milestones, they’ll launch commercially in eighteen months.

Mark it on your calendar– that may be the end of peak US financial dominance.

So, U.S. banks are losing business in the international marketplace because of government interference. Who woulda thunk it?

Competing currencies are a good thing. Either the U.S. will get its act together, or it will continue to lose market share to other countries who, paradoxically, value a free market in banking. There's a lesson in there.

Onward and upward,
airforce

It's harsh, but the big boys play that way. I once met a "retired" US attorney who was very wealthy due to handling those sorts of cases which run some sort of commission basis. It's the gravy train reward for slick lawyers the government really likes.

It's a few levels above the affirmative action IRS court jobs they give to ex welfare mothers who finish their degrees and then make life miserable for successful people who did not pay enough taxes from the viewpoint of the entitled.

On that banking thing though, they have the point of saying they won't provide service to certain countries, and anybody else in the business of exchanging privelaged access for profit knows how that works. When you are talking about the transfer fees for billion dollar deals, you are also talking about someone gaining access to control segments of the US economy due to measurable wealth here. For example, eventually controlling housing costs through loan financing. Or cars, or jobs for that matter, functionally implementing Sharia economic law.

I have seen that in the car business too. These Iranians show up on dealership row with a few million of up front money to open a car dealership, then another few million in backing from some finance company nobody heard of before. That gets them embedded into the local economy on a traditionally profitable business where their people end up in co troll of a lot of stuff and it is defacto sharia economic law. Not saying they are all Khomeni loyalists, but from the outside, you really have no way of knowing. Before you know it, the local finance companies vie to compete with them by either dropping rates, opening up car loan eligibility or shunning high risk loans, depending on the plays being made since they would happily let the Iranians and foreign lenders take the hit on high risk loans, or they play them to get treated right in order to facilitate a bigger take later on.

That's goes quick and rough in the house flipping trades, especially during the buildup years prior to the establishment of ISIS and those executive orders you heard about Bush signing to prevent people from leaving the US with large amounts of cash. What these Jihadis were doing was flipping houses, but hustled it so they could pull cash out of the properties and head to Syria with the money. It was allowed until the Feds figured out that was funding forces hostile to Americans. In fact when that was going on is when you saw those meetings like with McCain glad handing he jihadis over there.

More to it that I can go into later, but there are reasons for excluding hostile nations from trading in the US dollar, and a lot of it has the very same reasons why there is economic warfare within a police state against any population deemed as an enemy, but then you get into the complexities of national politics vs internal social economic policy.

Here's a timetable for the dollar's demise

James Rickards, The Daily Reckoning

Sep. 7, 2016


The next five weeks will mark one of the most significant transformations in the international monetary system in over 30 years.

Since the dollar is still the lynchpin of this system, the dollar itself will be affected. Whatever affects the dollar affects you, your portfolio and your personal financial security. It is vital to understand the changes underway in order to protect your net worth, and even prosper in the coming transition.

Such radical transformations of the international monetary system have happened many times before, including the dual “accords” of the 1980s. These were the Plaza Accord in 1985, and the Louvre Accord in 1987 — named respectively after the Plaza Hotel in New York, and the Louvre Museum in Paris where the key meetings took place.

At the Plaza Accord, the top financial officials from the U.S., U.K., West Germany, France and Japan agreed on Sept. 22, 1985, to devalue the dollar. The dollar plunged 30% in the next two years.

The damage was so bad that a second meeting was called at the Louvre on Feb. 22, 1987. That meeting was attended by the top financial officials from the U.S., U.K., West Germany, France, Canada and Japan. Participants at that meeting agreed to halt the dollar’s devaluation. The dollar was relatively stable in the years following.

It’s a mistake to believe the dollar’s value is set by market forces.

That may be true in the short run, but in the longer run, the dollar is worth whatever governments want it to be worth. The more powerful the government, the more they can call the shots.

There’s no doubt that the U.S. was the most powerful country in the world in the 1980–2000 period shown in the chart above. The Soviet Union was in terminal decline by 1987, and collapsed in 1991. China was still emerging and had a major setback with the Tiananmen Square uprising in 1989. Europe did not implement the euro until 1999. The U.S. was king of the hill.

When the U.S. wanted a weaker dollar in 1985, we just dictated that result to the world in the Plaza Accord. When the U.S. wanted to lock in the cheap dollar in 1987, we dictated that result also in the Louvre Accord. Market forces had nothing to do with it. Whatever the U.S. wanted, the U.S. got. Investors were just along for the ride.

Before the Plaza and Louvre Accords, there was the Smithsonian Agreement of December 1971. That was an agreement among the “Group of 10” (actually 11: U.S., U.K., Japan, Canada, France, West Germany, Belgium, Netherlands, Italy, Sweden and Switzerland) to devalue the dollar between 7% and 17% (depending on the currency pair in question).

This happened shortly after President Nixon suspended the conversion of dollars for gold on Aug. 15, 1971. Nixon thought this would be a temporary suspension and that the gold standard could be resumed once the devaluation was agreed.

The devaluation happened but the gold standard never returned. By January 1980, the dollar had devalued 95% when measured in the weight of gold.

Even before the Smithsonian Agreement, there was Harold Wilson’s 14% sterling devaluation (1967), the Bretton Woods Conference (1944), FDR’s gold confiscation and 60% dollar devaluation (1933), U.K. abandoning the gold standard (1931), and the Genoa Conference and the Gold Exchange Standard (1922).

The point is that monetary earthquakes happen from time to time. We just noted nine big ones in the past hundred years, but there were many others, including the sterling crisis of 1992 when George Soros broke the Bank of England, and the Tequila Crisis of 1994 when the Mexican peso devalued 50% in a matter of months.

These monetary earthquakes move in both directions. Sometimes the dollar is a huge winner (1980–85), and sometimes it loses a large part of its value (1971–80 and 1985–87). The key for investors is to be alert to behind-the-scenes plans of the global monetary elite and anticipate the direction of the next big move.

What will happen in the next five weeks is just as significant as any of the monetary earthquakes mentioned above. There are three major events happening in rapid sequence. Here’s the list:

On Sept. 4, the G20 leaders meet in Hangzhou, China

On Sept. 30, the yuan officially joins the SDR basket of currencies

On Oct. 7, the IMF holds its annual meeting in Washington, D.C.

You might be tempted to dismiss this calendar as “business as usual.” G20 leaders’ meetings happen every year. The SDR basket has been changed many times in the past. The IMF has global meetings twice a year (spring and fall). But it’s not business as usual. This time is different.

International Monetary Fund (IMF) Managing Director Christine Lagarde attends the 60th anniversary of the Paris Club at the French Ministry of Finance in Paris, France, July 1, 2016. REUTERS/Jacky Naegelen International Monetary Fund Managing Director Christine Lagarde attends the 60th anniversary of the Paris Club at the French Ministry of Finance in Paris Thomson Reuters

The hidden agenda involves the formal transition from a dollar standard to an SDR standard in world monetary affairs. It won’t happen overnight, but the elite decisions and seal of approval will take place at these meetings.

The SDR is a source of potentially unlimited global liquidity. That’s why SDRs were invented in 1969 (when the world was seeking alternatives to the dollar), and that’s why they will be used in the imminent future.

SDRs were issued in several tranches during the monetary turmoil between 1971 and 1981 before they were put back on the shelf. In 2009 (also in a time of financial crisis). A new issue of SDRs was distributed to IMF members to provide liquidity after the panic of 2008.

The 2009 issuance was a case of the IMF “testing the plumbing” of the system to make sure it worked properly. With no issuance of SDRs for 28 years, from 1981–2009, the IMF wanted to rehearse the governance, computational and legal processes for issuing SDRs.

The purpose was partly to alleviate liquidity concerns at the time, but also partly to make sure the system works in case a large new issuance was needed on short notice. The 2009 experience showed the system worked fine.

Since 2009, the IMF has proceeded in slow steps to create a platform for massive new issuances of SDRs and the creation of a deep liquid pool of SDR-denominated assets.

On Jan. 7, 2011, the IMF issued a master plan for replacing the dollar with SDRs. This included the creation of an SDR bond market, SDR dealers, and ancillary facilities such as repos, derivatives, settlement and clearance channels, and the entire apparatus of a liquid bond market.

In November 2015, the Executive Committee of the IMF formally voted to admit the Chinese yuan into the basket of currencies into which an SDR is convertible.

In July 2016, the IMF issued a paper calling for the creation of a private SDR bond market. These bonds are called “M-SDRs” (for market SDRs) in contrast to “O-SDRs” (for official SDRs).

In August 2016, the World Bank announced that it would issue SDR-denominated bonds to private purchasers. Industrial and Commercial Bank of China (ICBC), the largest bank in China, will be the lead underwriter on the deal. Other private SDR bond issues are expected soon.

On Sept. 4, 2016, the G20 leaders will meet in Hangzhou, China, under the leadership of G20 President Xi Jinping, who is also the general secretary of the Communist Party of China. In this meeting, other world leaders will metaphorically kowtow to the new Chinese emperor and recognize China as the co-head of the global monetary system alongside the U.S.

On Sept. 30, 2016, at the close of business, the inclusion of the Chinese yuan in the SDR basket goes live.

On Oct. 7, 2016, the IMF will hold its annual meeting in Washington, D.C., to consider additional steps to expand the role of SDRs and make China an integral part of the new world money order.

Over the next several years, we will see the issuance of SDRs to transnational organizations, such as the U.N. and World Bank, to be spent on climate change infrastructure and other elite pet projects outside the supervision of any democratically elected bodies. (I call this the New Blueprint for Worldwide Inflation.)

Thereafter, the international monetary elite will await the next global liquidity crisis. When that crisis arrives, there will be massive issuances of SDRs to return liquidity to the world and cause global inflation. The result will be the end of the dollar as the leading global reserve currency.

Based on past practice, we can expect that the dollar will be devalued by 50–80% in the coming years.

A devaluation of this magnitude will wipe out the value of your life’s savings. You’ll still have just as many dollars, but they won’t be worth nearly as much.

The time to start preparing is now.