What is a Dollar Worth?

The dollar is a "note". In other words, it is a "debt" owed by the Fed. It pays 0.00% interest.
Accounting 101: From the perspective of the Federal Reserve (which issues these "Reserve Notes") the dollar is a liability (debts owed are liabilities). In order for the Fed's balance sheet ot balance, Assets less Equity Must = Liabilities.

The Fed's "Assets" are: US Treasuries (notes to be paid by the Treasury), bank reserves, some foreign currency, some commerical paper, and a small amount of gold.
Treasuries are debts owed by the government.

SO IN OTHER WORDS, THE DOLLAR IS A DEBT WHICH IS BACKED BY A DEBT.

When the Fed "prints money" they keystroke "Federal Reserve Notes" (dollars) which become liabilities on the Fed's balance sheet. They then use these "notes" to buy "assets" which are just the debts of the government (or GM and the banksters).

There is no "money" in any classical sense beyond the the hard assets the Fed holds. All that exists is the debt of the left hand backed by the debt of the right.

The purchasing power of Federal Reserve 'Notes' hinges on the value of the ASSETS that back them. That value is determined by the PERCEPTION of the government's ability to convert labor into dollars (via taxes) that can then be used to pay the interest on the debt they owe (Treasuries).

It is a system only CPAs, Ken Lay and Bernard Madhoff could be proud of.

Did Bernanke save us from another Great Depression?

Athens, Ga. - The recession is probably over. So said Ben Bernanke this week. His timing is exquisite. President Obama has reappointed him to be Fed chairman, and he can now head into his Senate confirmation hearings this fall with the reputation that he nipped another Great Depression in the bud.
But did he?

Read More...
http://www.csmonitor.com/2009/0917/p09s01-coop.html

The Fed Does NOT Stabilize The Economy

You may well wonder where he got that idea, since there are no official estimates of gross domestic product (GDP) for years before 1929. In the early 1960s, however, John Kendrick and Simon Kuznets bravely attempted to construct such estimates for gross national product (GNP). That would be close enough to modern GDP data were it not for the primitive statistics and technology they had to work with.
Read More...
http://www.cato-at-liberty.org/2009/09/09/no-the-fed-did-not-stabilize-the-economy/

Global Warming- A Conspiracy of Lies

If you own any shares in alternative energy companies I should start dumping them NOW. The conspiracy behind the Anthropogenic Global Warming myth (aka AGW; aka ManBearPig) has been suddenly, brutally and quite deliciously exposed after a hacker broke into the computers at the University of East Anglia’s Climate Research Unit (aka Hadley CRU) and released 61 megabites of confidential files onto the internet. (Hat tip: Watts Up With That)
When you read some of those files – including 1079 emails and 72 documents – you realise just why the boffins at Hadley CRU might have preferred to keep them confidential. As Andrew Bolt puts it, this scandal could well be “the greatest in modern science”.
Read More...
http://blogs.telegraph.co.uk/news/jamesdelingpole/100017393/climategate-the-final-nail-in-the-coffin-of-anthropogenic-global-warming/

The Truth Behind China's Currency Peg

During President Obama's high-profile visit to China this week, the most frequently discussed, yet least understood, topic was how currency valuations are affecting the economic relationship between the United States and China. The focal problem is the Chinese government's policy of fixing the value of the renminbi against the U.S. dollar. While many correctly perceive that this 'peg' has contributed greatly to the current global imbalances, few fully comprehend the ramifications should that peg be discarded.
The common understanding is both incomplete and naïve.

Read more...
http://www.lewrockwell.com/schiff/schiff59.1.html

Société Générale tells clients how to prepare for potential 'global collapse'

In a report entitled "Worst-case debt scenario", the bank's asset team said state rescue packages over the last year have merely transferred private liabilities onto sagging sovereign shoulders, creating a fresh set of problems.
Overall debt is still far too high in almost all rich economies as a share of GDP (350pc in the US), whether public or private. It must be reduced by the hard slog of "deleveraging", for years.

Related Articles
'Debt levels risk another crisis'
"As yet, nobody can say with any certainty whether we have in fact escaped the prospect of a global economic collapse," said the 68-page report, headed by asset chief Daniel Fermon. It is an exploration of the dangers, not a forecast.

Read the rest...http://www.telegraph.co.uk/finance/economics/6599281/Societe-Generale-tells-clients-how-to-prepare-for-global-collapse.html

Deflation or Inflation

"Deflation" this time around will not result in falling consumer prices.

When the big deflation comes in US Treaasuries, which will be triggered by Japan selling off to fund their looming fiscal crunch, the Fed will monetize (inflate FRNs) to keep interest rates down. If they don't, the US government will go bankrupt as most of the US debt rolls over every 5 years and rapidly rising rates will devour the budget. If the Fed does not inflate FRNs to soak up crashing Treasuries, then Congress will take over the Fed and 2010 republicans will hyperinflate by decree.

There will be no deflation in consumer prices. Sorry. The mass-inflation is already here. The stock market/real estate market is being reflated by TARP/GSE cash infusions and Fed outright purchases. 2 of 3 automakers are utterly insolvent yet still have $Bs in market cap. Oil, gold, silver are on a rocket.

Mass inflation is here. We are in it. Next stop, $4.00 gas.

More Predictions

10/20...

This latest market runup is nothing more than a reflation fueled by 0.00% money, levered up twenty times by banksters like Government Sachs.

90% of the bankster earnings are from the "carry trade" so to speak. They swap their bad assets (MBS) for Federal Reserve Notes which are used to shore up their margin accounts.

The Fed has "bought" close to $300 Billion in MBS since July 1 (check their H3 and H4 reports).

The speculative bubble is only possible with 0%, short term loans. The dollar crumbles daily and the Fed will be soon forced to act. But hiking rates will reveal the scheme as unsustainable and collapse the equity markets.

Public Option = Babies Left to Die (in UK)

'Doctors told me it was against the rules to save my premature baby'
By Vanessa Allen and Andrew LevyLast updated at 8:53 AM on 10th September 2009


Doctors left a premature baby to die because he was born two days too early, his devastated mother claimed yesterday.

Sarah Capewell begged them to save her tiny son, who was born just 21 weeks and five days into her pregnancy - almost four months early.
They ignored her pleas and allegedly told her they were following national guidelines that babies born before 22 weeks should not be given medical treatment. Read more: http://www.dailymail.co.uk/news/article-1211950/Premature-baby-left-die-doctors-mother-gives-birth-just-days-22-week-care-limit.html#ixzz0R0VRCvMh

A Track Record of Lies

A MINORITY VIEW
BY WALTER WILLIAMS
RELEASE: WEDNESDAY, SEPTEMBER 2, 2009

Washington's Lies

President Obama and congressional supporters estimate that his health care plan will cost between $50 and $65 billion a year. Such cost estimates are lies whether they come from a Democratic president and Congress, or a Republican president and Congress. You say, "Williams, you don't show much trust in the White House and Congress." Let's check out their past dishonesty.

Read the rest...http://economics.gmu.edu/wew/articles/09/Washington%27sLies.htm

The Health Care Plan Really IS Government Run

The devil is definitely in the details! This plan is the typical statist scheme. The summary goals seem reasonable but the means of accomplishing those ends opens a pathway to total government control. See below:

Page 17

(3) RESTRICTIONS ON PREMIUM INCREASES.—
The issuer cannot vary the percentage increase in the premium for a risk group of enrollees in specific grandfathered health insurance coverage without changing the premium for all enrollees in the same risk group at the same rate, as specified by the Commissioner.

(Who defines the "risk group"?)

Page 17:

(A) IN GENERAL.—The Commissioner shall establish a grace period whereby, for plan years beginning after the end of the 5-year period beginning with Y1, an employment-based health plan in operation as of the day before the first day of Y1 must meet the same requirements as apply to a qualified health benefits plan under section 101, including the essential benefit package requirement under section 121.

And on Page 18:

(iii) Such other limited benefits as the Commissioner may specify.
In no case shall an employment-based health plan in which the coverage consists only of one or more of the coverage or benefits described in clauses (i) through (iii) be treated as acceptable coverage under this division

(More government mandates that create a political means of destroying private coverage)

Page 24:

SEC. 116. ENSURING VALUE AND LOWER PREMIUMS.
(a) IN GENERAL.—A qualified health benefits plan shall meet a medical loss ratio as defined by the Commissioner. For any plan year in which the qualified health benefits plan does not meet such medical loss ratio, QHBP offering entity shall provide in a manner specified by the Commissioner for rebates to enrollees of payment sufficient to meet such loss ratio.

(So if a private insurance company makes too much money, the government force them to give it up)

Page 41:

SEC. 141. HEALTH CHOICES ADMINISTRATION; HEALTH CHOICES COMMISSIONER.
(a) IN GENERAL.—There is hereby established, as an independent agency in the executive branch of the Government, a Health Choices Administration (in this division referred to as the ‘‘Administration’’).

(A "Health Choices" Czar accountable only to the President)

And on Page 42:

(a) DUTIES.—The Commissioner is responsible forcarrying out the following functions under this division:
(1) QUALIFIED PLAN STANDARDS.—The establishment of qualified health benefits plan standards under this title, including the enforcement of such standards...

Page 59:

‘‘(B) require paper versions of standardized transactions to comply with the same standards as to data content such that a fully compliant, equivalent electronic transaction can be populated from the data from a paper version;

(Every medical service you receive will be put into an electronic database)

Page 432:

(A) IN GENERAL.—For purposes of reporting data on quality measures for covered professional services furnished during 2011 and any subsequent year, to the extent that measures are available, the Secretary shall include quality measures on end of life care and advanced care planning that have been adopted or endorsed by a consensus-based organization, if appropriate. Such measures shall measure both the creation of and adherence to orders for life sustaining treatment.

(Death Czar?)

It goes on and on....

Audit the Fed Bill Will Not Pass

Will we ever get to see how much many trillions of dollars Bernanke printed and handed over to Goldman Sachs, JP Morgan, the Bank of England, and the US Treasury? Wouldn't it be nice to learn how the FOMC twisted the arms of banker executives and what the committee members had to say and how far they are willing to go to prevent the collpase of the Financial Cartel?

Well, it ain't gonna happen because all the forces of the three branches of government have WAY too much to lose. And no, the three branches of American government are not the Executive, Legislative, and Judicial like your Public School propoganda agent taught you. They are the Bureaucratic, Financial, and Corporate and they have ONE GOAL: Keep their system alive by ANY means possible.

A Fed audit would generate so much outrage that the system would collapse almost instantly out of sheer outrage.

So this is what will happen:

1. The Bill will never get out of Braney Frank's Committee
2. If it does and the House votes for it, the Senate will kill it
3. If the Senate votes for it (without neutering it) due to pressure from constituants, then Obama will veto it.
4. If Obama signs it then the GAO will half-ass the audit
5. If the GAO actually does their job then the Fed will simply shred the offending documents and cook the books.

Welcome to Amerika!

The Monetary Base

Gold Price as a Function of the Monetary Base

Fed Method

The monetary base has been expanded by roughly $1Trillion (more than doubled) since last Spetember. When the inflation comes (and you are seeing it already) how will the Fed pull liquidity out of the system?

Well, in 2008 the Fed devised a scheme whereby they can pay interest on bank deposits held on deposit with them. So when the inflated monetary base starts working it's way into the economy, the Fed can suck it back out by merely increasing the interest rate they pay to bankers for keeping their cash on deposit with the Fed.

What are the implications of this?

1. Does it not still create money in the form of monetized interest payments (albeit at a slower pace)?

2. Will the Fed get in a viscous spiral whereby they chase the market interest rates up?

3. Will the Fed's lucrative rates be made available to slobs like you and me?

Inflation is here!

Gas climbing daily. Gold and silver on a rocket. Dollar tanking. Stock market taking off with no good news. GM still trading above $0.00. Ten year yield steadily climbing as investors balk at US debt. Looks like the fed will have to bail out the Treasury and buy another trillion. Look for more "quantitative easing". Get ready for Weimar.

My gold coins went from $900 to $980.

Looking to buy an inverse bond mutual fund like Proshare's or Rydex.

Response to Senator's Email

Dear Senator Bennett,

The notion that government can put the economy back on track by pumping liquidity in begs the question: where will the money come from?
If it is borrowed then it must a) be paid back with interest extracted from taxes and b)that borrowing will crowd out private sector borrowers.

If it is borrowed from the Fed it is "printed" and the result will eventually be higher consumer prices which act much like a tax.

The only responsible and sustainable method for you clowns in government to put the economy back on track is to dramatically reduce taxes AND spending, deregulate, and drastically cut the number of parasites you employ in government jobs that are a drain on the economy.

Remember, it was regulation, fiscal deficits, and credit expansion by the Fed that caused this mess. Stop trying to cure the illness with the smae things that caused it.

But that would mean relinquishing your power and you will certainly not do that voluntarily.

Read Frederic Bastiat's "What is Seen and What is Not Seen" when you get a chance.

Regards,
Troy Grice

Sucker's Rally

Don't get in yet! Manufacturing is still plummeting. Earnings are shriveling up. Alt A and commercial real estate crash is coming. All paper currencies are inflating. It is a race to the bottom. DOW ain't bottoming until 2010. (Unless a cup of coffee costs $20, that is). Hahaha!

It's coming

I called for hyperinflation last summer. It didn't pan out. Just as commodity prices were rocketing through the stratosphere, the great deleveraging began. Holders of real estate and stocks sold off and held cash. This is deflationary. I am certain it is temporary.

When the deleveraging ends (DOW at 4500, median home price at 2.5 xs median income) and we are on our 5th or 6th round of bailouts and stimulus, things will begin to creep up.

I'm watching the 10 year Treasury yield. The Treasury is having some trouble selling it's $2.5 trillion shit sandwhich in $33 Billion dollar bites. This means they have to offer it at a discount. When the price of bonds fall, the difference between their purchase and par value increases. This translates into higher yield. When the yield gets above 3%, I am treating it as a signal to buy gold coins (on the downtick).

So what's so bad about high inflation?

Here's how it goes down:

1) Prices, probably commodity and agricultural goods end their see-saw and start reflecting a permanent upward trend.

2) Within6-12 months, commodities double.

3) In the mean time, the economy worsens due to the interventions of the Keynesians.

4) With staggering unemployment 12-15%, there will be HUGE political pressure to end the "price gouging".

5) Government will insitute price controls on gasoline and certain foods.

6) Price controls will eradicate the profits in these industries.

7) There will be shortages. Shortages will lead to civil unrest. Government will blame "hoarding".

8) Businesses will lobby congress to enact wage controls to keep their costs down. Some businesses will get what they want, others (who have no political clout) will be nationalized.

9) A black market will evolve, rendering the price control mechanism meaningless.

10) With its prestige at stake, government will launch an assault on the illegal underground market.

11) We will devolve into a surveillance state. Prison populations will swell. There will be more unrest. More arrests. More unrest. More arrests. etc, etc.

Get ready. It could be a WILD RIDE ahead.