Coping With the Ongoing Investor
Threatening Cartel 'End Game' - A Solution for Protection & Profit
by DeepCaster LLC, deepcaster.com | April 3, 2009
Print“From the beginning of the bailouts, we’ve been appalled by the willingness of Messrs. Paulson and Geithner to protect most financial-firm bondholders to the tune of 100 cents on the dollar while socking it to taxpayers….
…But in any event, Geithner has now requested access to this “nuclear option”: The ability to seize and restructure any financial institution that the government deems insolvent.”
Henry Blodget, www.businessinsider.com, March 31, 2009
“Geithner’s ‘Nuclear Option’ Should Scare Bejesus Out of Bondholders”
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“US Treasury Secretary Tim Geithner confessed on Wednesday that he had not read the plans by China’s central bank governor for a ‘super-sovereign reserve currency’ run by the International Monetary Fund, but nevertheless let slip that Washington was ‘open’ to the idea. Whoops.
This is how matters quickly escalate in geo-finance. China’s suggestion - - (is) backed by Russia, Brazil, and India, and clearly aimed at breaking US dollar hegemony…
…It comes days after Premier Wen Jiabow demanded US action to safeguard the value of China’s holdings of US bonds - - $740 billion of US Treasuries and a further $600 billion or so of other debt. ‘We have lent huge amounts of money to the US. Of course we are concerned about the safety of our assets,’ he said.
China’s Communist Party seems to fear that the Federal Reserve is orchestrating a beggar-thy-neighbour devaluation - - and a disguised default on America’s foreign debt - - by resorting to the nuclear option of printing money to buy US Treasury bonds.” (Emphasis added)
Ambrose Evans-Pritchard, The Telegraph, London, March 25, 2009
“A New World Currency Draws Nearer After Geithner’s Slip”
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“The administration’s proposal,… would represent a major expansion of federal authority over the financial system…
…It also would extend federal regulations for the first time to all trading in financial derivatives, exotic financial instruments such as credit default swaps that were blamed for must of the damage in the meltdown…
…In addition, the administration proposed the creation of a systemic risk regulator to monitor the biggest institutions… the administration is expect to support awarding this power to the Federal Reserve.
The plan also includes a measure that Geithner and Fed Chairman Ben Bernanke discussed before the committee on Tuesday to give the administration expanded powers to take over major nonblank financial institutions…and…sent Congress a 61-page bill dealing with the expanded powers to seize control of nonbank institutions late Wednesday.” (Emphasis added)
Martin Crutsinger, Associated Press Economics, March 26, 2009
“Administration Unveils Financial System Overhaul”
Thus, the U.S. Fed-led Cartel*, which is The Primary Cause of our Ongoing Financial and Economic Crises, (as we explain below) is pushing for even more Power. Indeed nearly three years ago, Deepcaster and others exposed their Plan for a “Super-Sovereign Reserve Currency” of sorts to replace the U.S. Dollar!
Thus, the Obama Administration’s latest Proposal to increase the Power of the Cartel-leader private for-profit “U.S.” Federal Reserve, comes as no surprise.
But the Obama Bailout is Breeding a Bigger Crisis, one which Deepcaster earlier Forecast, and which represents yet one more step in implementation of The Cartel’s ‘End Game’ as we also show below.
Consider the following from Paul Craig Robert’s “Is the Bailout Breeding a Bigger Crisis?”
“Obama’s advisers are focused on rescuing banks and the insurance company, AIG. They perceive the problems as solvency and paralyzing uncertainly or fear. Financial institutions, unsure of their own and other institutions solvency, hoard cash and refuse to lend. Credit is needed to get the economy moving, and the Federal Reserve and Treasury are doing their best to inject liquidity and to remove troubled assets from the banks’ books.
This perception of the problem and the “remedies” being applied, might be causing a greater problem for which there is no solution. Obama’s approach, and that of the previous administration, requires massive monetization of debt by the Federal Reserve and massive new debt issues by the Treasury.
The unaddressed question remains: Is the US dollar’s status as world reserve currency threatened by the debt monetization and multi-year, multi-trillion dollar issuance of new Treasuries?
The United States has become an import-dependent country. The US is dependent on imports for energy, manufactured goods including clothes and shoes, and advanced technology products. If the US dollar loses its reserve currency status, the US will not be able to pay for its imports. The ensuing crisis would dwarf the current one.
Obama’s advisers believe that the US can monetize debt and issue new debt endlessly, because America’s capital markets are the deepest and most liquid. The dollar is strong, Obama said at his press conference.
But already cracks and strains are appearing. …an auction of UK bonds, known as gilts, failed…
…interest rates on US Treasuries have risen in anticipation of unprecedented new Treasury issues…
…America’s largest creditor, China, expressed concern that the value of its massive holdings of US dollar investments is in danger of being inflated away…
…The Fed cannot monetize new Treasury issues without the word getting out. If and when this happens, the US dollar’s exchange value is likely to drop while interest rates and inflation rise…
…To avoid a crisis of this magnitude, the US needs to focus on saving the dollar as reserve currency. …this requires reducing US budget and trade deficits…
…terminating these pointless military adventures…
…The probability is that the bailouts are not over. The commercial real estate defaults are yet to present themselves…
…A (state) socialized financial sector run by civil servants is preferable to the gambling casino of greed-driven, innovative, unregulated capitalism operated by banksters who have caused crisis throughout the world…
…Perhaps the Federal Reserve should be socialized as well. The notion of an independent, privately-owned Federal Reserve system was never more than a ruse to get a national bank into place. Once the central bank is part of the state-owned banking system, the government can create money without having to accumulate a public debt that saddles taxpayers and future budgets with hundreds of billions of dollars in annual interest payments…
…If the Obama administration can think about socializing health care as a single-payer system, it should be able to think about socializing the banking system…
…The Bush/Obama approach to the crisis in the financial sector is to monetize existing debt and to accumulate enormous new debt that will likely also require monetization. The monetization threatens inflation, high interest rates, and depreciation of the US dollar and loss of its reserve currency role. The accumulation of new public debt implies larger annual interest payments that could make future deficit reduction problematic. Clearly, the Obama administration needs to broaden its perception of the predicament to which financial deregulation and offshoring have brought the US economy.” (Emphasis added)
Paul Craig Roberts, March 29, 2009
“Is the Bail Out Breeding a Bigger Crisis?”
Indeed, the private for-profit U.S. Federal Reserve should be abolished (as Deepcaster, Representative Ron Paul and Jim Rogers inter alia have advocated) and replaced by a National Bank under auspices of the U.S. Treasury.
If it is not abolished in its present form, implementation of the Fed-led Banking Cartel’s ‘End Game’ will likely continue with disastrous consequences for many Nations and their Citizen-Investors.
Yet, The U.S. Fed-led Cartel* of Central Bankers is becoming ever more Powerful - - so Powerful indeed that their Power already rivals the Power of major Sovereign Nation-States.
“Legislation envisioned by the House Financial Services Committee’s chairman, Democrat Barney Frank of Massachusetts, would put the Fed, or less likely another agency, in charge of protecting the stability of the entire system, Frank and other congressional sources said.”
The Washington Post/January 26, 2009
The hapless, or ‘bought’, depending on one’s perspective, U.S. Congress is about to give another gift (courtesy of U.S. Citizen-Taxpayers) to The Fed-led Cartel: virtually total control of the “entire” U.S. Financial System and Markets. As if The Cartel did not have enough power already (see Deepcaster’s “The Fox Wants More of our Chickens” 4/4/08 in the “Articles by Deepcaster” Cache at www.deepcaster.com).
And now (cf. quote above) the Obama Administration has joined the Chorus that The Fed be given ever more power.
Consider that The Fed has already refused to disclose the identity of the recipient businesses reflecting another arrogant assertion of Cartel-Sovereign-Nation Status. As Gold Anti-Trust Action Committee Secretary Chris Powell points out:
“Refusing to disclose to Bloomberg News the identities of (the recipients of - Ed.) $2 trillion in government loans…the Federal Reserve Board is making the same argument it made this year in denying GATA access to the Fed’s records involving the U.S. gold reserve - - that “trade secrets” are exempt from disclosure…any government that can disburse $2 trillion secretly, without any accountability, is not a democratic government. It is government, of, by, and, for the bankers. And maybe now GATA isn’t the only one to think so…” (emphasis added)
Chris Powell, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
December 12, 2008, The Gata Dispatch
The Fundamental problem with giving The Private For-Profit Fed the power to “regulate the entire System” is that it is primarily their Policies, which have put investor-citizens and Nations around the world in the worsening Economic and Financial Pickle to begin with.
Consider:
The recent refusal of the private-for-profit U.S. Federal Reserve to identify the recipients of over $2 trillion in bailouts or loans funded and/or authorized by the U.S. Congress, “courtesy” of U.S. Taxpayers, serves to re-emphasize the Grave Threat, which The Fed-led Cartel poses to democracy.
Of course, the U.S. Taxpayer has had to and will continue to have to borrow the money to fund the Bailouts (and pay interest on it) from The Fed, which prints it for free out of thin air.
Congress simply rolled over and given The Fed authorization for trillions in Bailout Monies, Loan Authorizations and Guarantees, without any significant requirements of oversight, or accountability, or disclosure, mandated. And, as our discussion of The Cartel’s End Game below demonstrates, the threat goes beyond the policy of using U.S. Taxpayer-provided funds without disclosure or accountability. That threat to Investor Profits and Systemic Stability is systemic and ongoing and increasing.
Concerning the threat to Profits, the ongoing Fed-inspired Massive Monetary Inflation entails a continuing and Massive Decrease in Purchasing Power for both U.S. Taxpayers and Investors around the world.
As well, the massive Monetary Inflation will likely result in a massive Stealth Wealth Transfer to the owners of the private-for-profit Federal Reserve and their Favored Financial Institutions.
This loss in Purchasing Power may be appropriately called The Fed’s New “Inflation Tax.”
The “Inflation Tax” works like this: every dollar the Fed prints in excess of GDP growth makes every dollar each of us holds worth less than before in Purchasing Power terms. But, today, there is no real U.S. GDP growth (see below) and there has not been for many months.
This process has already begun. By the end of December, 2008, the Bailouts, guarantees and other authorizations had increased the price tag to Taxpayers to $8 trillion and counting. And U.S. Taxpayers’ descendents saddled with this debt did not get to vote on it either.
Surely no one believes any longer the Propaganda that the Bailout Bills are necessary to save the financial system from collapse. Recent events (and events-to-come) have, and will, prove that contention wrong. If The Fed had really wanted to unfreeze the Credit Markets it could have imposed loan quotas as conditions for Financial Institutions’ receiving Bailout Money and/or Guarantees. (“Cramthroughs” as we call them) Nah, too easy! (Such a policy might have unfrozen the credit markets. And why would The Cartel want to do that? It appears they are making too much money and gaining ever-increasing power by continuing to play the “Crisis Card.”) So…The System is not nearly “saved” yet, is it? Nor are the Credit Markets unfrozen.
Clearly, Bernanke and crew are not flooding markets with liquidity - - just flooding Favored Financial Institutions with liquidity. (Most of the $180 billion used to bailout AIG was funneled through to mega-U.S. and European Banks). Main Street is still “dry.”
Of course, the Fed-led Cartel* of Key Central Bankers is trying to manage all of this through their Overt and Covert Market Interventional Regime. That Overt and Covert Interventional Regime is designed not only to manipulate the Major Markets (in particular the Precious Metals, Equities, and Strategic Commodities Markets) but also to hide key Economic and Financial Realities from the American people and Investors worldwide.
*We encourage those who doubt the scope and power of Intervention by a Fed-led Cartel of Key Central Bankers and favored financial institutions to read Deepcaster’s December, 2008 Letter containing a summary overview of Overt and Covert Intervention entitled “A Strategy for Profiting from the Cartel’s Dark Interventions & Evolving Techniques” and Deepcaster’s July, 2008 Letter entitled “Market Intervention, Data Manipulation - - Increasing Risks, The Cartel End Game, and Latest Forecast” at www.deepcaster.com. Also consider the substantial evidence collected by the Gold AntiTrust Action Committee at www.gata.org for information on precious metals price manipulation. Virtually all of the evidence for Intervention has been gleaned from publicly available records. Deepcaster’s profitable recommendations displayed at www.deepcaster.com have been facilitated by attention to these “Interventionals.”
One aspect of this Regime is a Data Manipulation component. Real U.S. Consumer Price Inflation was over 10% annualized from 2006 through 2008 and is still is a little under 8% in early 2009. Real U.S. Unemployment was 19.8% as of March, 2009! And Real U.S. GDP is at a negative 4%, while real M3 (monetary creation) is running at 10% annually, all according to the quite credible calculations of shadowstats.com. Shadowstats.com calculates the numbers as they were calculated prior to the “gimmicking” of Official Statistics that became widely employed beginning in the 1980s and early 1990s.
In any event, the foregoing brief sketch gives one a flavor of what is coming: more crises, more disasters, more demands for Bailouts to “save” the system.
The Root Cause of our Current Crisis and The Systemic Threat to Democracy and Profits
The major focus here is the ongoing ascendancy of The Cartel to Superpower Sovereign Nation Status, coupled with the destruction of the Purchasing Power of the U.S. Dollar and certain other Fiat Currencies, via the attempted ongoing implementation of the quite anti-democratic Cartel “End Game.” Consider:
“…in every major US financial panic since at least the Panic of 1835, the titans of Wall Street – most especially until 1929, the House of JP Morgan – have deliberately triggered bank panics behind the scenes in order to consolidate their grip on US banking. The private banks used the panics to control Washington policy including the exact definition of the private ownership of the new Federal Reserve in 1913, and to consolidate their control over industry such as US Steel, Caterpillar, Westinghouse and the like. They are, in short, old hands at such financial warfare to increase their power.
Now they must do something similar on a global scale to be able to continue to dominate global finance, the heart of the power of the American Century.
That process of using panics to centralize their private power created an extremely powerful concentration of financial and economic power in a few private hands, the same hands which created the influential US foreign policy think-tank, the New York Council on Foreign Relations in 1919…”
“Behind the panic: financial warfare over future of global bank power” F. William Engdahl, October 10, 2008
Consider the implications of the F. William Engdahl quote regarding “global bank power.” As Engdahl points out, the evidence is increasing that the recent financial panic and economic distress is and has been planned as a part of Cartel Strategy to increase power and, in our view, to implement its “End Game.”
To understand the Cartel’s likely “End Game” we must understand the Root Cause.
The root cause of The Threat lies in the structure, functioning and policies of the private-for-profit “U.S.” Federal Reserve.
Various international private banks, several of which are headquartered in Europe, own the “United States” Federal Reserve Bank.
These International Bankers, acting through their “U.S.” Fed, make money by creating money out of “thin air” as eloquently described by the Dean of the Newsletter Writers, Richard Russell:
“I still can’t get over the whole Federal Reserve racket.”
Consider the following - - let’s take a situation where the U.S. government needs money. The U.S. doesn’t just issue United States Notes, which, of course it could. These notes would be dollars backed by the full faith and credit of the United States. No, the U.S. doesn’t issue dollars straight out of the U.S. Treasury.
This is what the U.S. does - - it issues Treasury Bonds. The U.S. then sells these bonds to the Fed. The Fed buys the bonds. Wait, how does the Fed pay for the bonds? The Fed simply creates money “out of thin air” (book-keeping entry) with which it buys the bonds. The money that the Fed creates from nowhere then goes to the U.S. The Fed holds the U.S. bonds, and the unbelievable irony is that the U.S. then pays interest on the very bonds that the U.S. itself issued. (With great profit to the Private Owners of The Fed - - Ed. Note) The mind boggles.
The damnable result is that the Fed effectively controls the U.S. money supply. The Fed is …not even a branch of the U.S. government. The Fed is not mentioned in the Constitution of the United States. No Constitutional amendment was ever created or voted on to accept the Fed. The Constitutionality of the Federal Reserve has never come before the Supreme Court. The Fed is a private bank that keeps the U.S. forever in debt - - or I should say in increasing debt along with ever rising interest payments.
How did the Fed get away with this outrage? A tiny secretive group of bankers sneaked through a bill in 1913 at a time when many in Congress were absent. Those who were there and voted for the bill didn’t realize (as so often happens) what they were voting for (shades of the shameful 2002 vote to hand over to President Bush the power to decide on war with Iraq).”
Richard Russell, “Richards Remarks,” dowtheoryletters.com, March 27 2007
After President Wilson signed the Federal Reserve Act into law in 1913, he reportedly said, “I am a most unhappy man, I have unwittingly ruined my country…a great industrial nation is now controlled by its system of credit…the growth of the nation, therefore, and all of our activities are in the hands of a few men…” Thus we have an early statement about the threat to “democracy” occasioned by The Fed.
Insightful economic forecaster Ian Gordon notes several negative consequences of the nearly 100-year reign of The Fed, consequences with which we cope today.
“Since its inception in 1913, the Federal Reserve Board has been responsible for almost 95% devaluation of the U.S. Dollar. All this has been achieved through its ability to continually inflate the money supply.
And, between 1985 and 2005, the Federal Reserve Board has increased the money supply by five times. This extraordinary money creation is merely the catalyst for debt creation. In a fiat money system, money is debt…there is absolutely no way this money can ever be repaid except by continued inflation. But, now that the credit bubble is blown up, inflation is no longer an option; bankruptcy looms.”
“The Federal Reserve…What Has It Done For You Lately? ”
Ian Gordon, December 29, 2007 (www.axisoflogic.com)
To put it bluntly, the “devaluation” of which Gordon speaks is loss of Purchasing Power.
When the United States has, in recent years, been threatened with recession (e.g. 1987 and 2001), the Greenspan-led Fed responded to each threat by ever more massive fiat money (debt) creation. The problem is that each time the fiat money supply is inflated by an ever-greater amount, more money must be printed (and more “interest” paid by U.S. Taxpayers to the Private For-Profit Federal Reserve) in order to stave off recession or depression. One recent calculation has indicated that approximately $6 must now be created (i.e. printed) in order to drive each additional $1 of GDP.
That policy is being amplified by Fed Chairman Bernanke and Fed Progeny, now Treasury Secretary, Geithner.
Such profligate printing merely delays financial disaster, and indeed even increases the chances for disaster in the long run, because Taxpayers are further burdened by the loss of purchasing power that the additional printed money (i.e. additional debt) entails. Such a disaster could, and should, be avoided by linking currency to the Monetary Metals – Gold & Silver – but The Cartel strenuously resists that.
The Cartel works to protect their lucrative “paper” money regime of fiat currencies and Treasury Securities at all costs. Failure to do so would dilute their power and profits. (In order to protect this Paper Fiat Currencies and Treasury Securities Regime they periodically take down the price of Gold, Silver, and other Strategic Commodities - - see below.)
Systemic Threat Increases
Monetary inflation reflected in (the now hidden by The Fed) M3 is still increasing at over 10% annualized per year (www.shadowstats.com) as of March 14, 2009- - for many months prior to that it was increasing in the mid to high double-digit terms. Of course, this reckless Fed-generated Monetary Inflation is gradually translating into Price Inflation, though importing cheap goods and ostensibly cheap labor into the United States via the de facto Open Borders policy has temporarily dampened that price inflationary effect.
This inflation has been disguised by Data Manipulation (see Data Manipulation section of July, 2008 Deepcaster Letter Market Intervention, Data Manipulation Still Accelerating - - Increasing Risks, The Cartel “End Game,” and Latest Forecast for Gold, Silver, Equities, Crude, U.S. Dollar and Treasuries” in the “Latest Letter/Archives” at www.deepcaster.com).
Of course, among the negative consequences resulting from rampant monetary inflation, de facto open borders, outsourcing, and easy credit has been serious wage depression and job loss for American workers, as well as the destruction of much of the United States’ domestic manufacturing capacity. These consequences have negative ripple effects throughout the world.
Deepcaster and Richard Russell are of the same mind regarding the consequences of the Fed-created monetary inflation and easy credit. Regarding the continued inflation of the money supply:
- The U.S. Dollar will eventually (pushed by Fed policies) self-destruct and
- “…The system must eventually destroy itself. It is not a matter of whether, it is simply a matter of when and how…” Richards Remarks, March 27, 2007
So if “the system must eventually destroy itself” and The Cartel likely knows this, what has been, and is likely in the future to be, their response?
Market Intervention, Data Manipulation & The Cartel “End Game”
First, in order to stave off the day or month or year of Reckoning (which, we reiterate, is coming mainly as a consequence of their dramatic monetary inflation and “easy credit” policies in recent years), the Fed-led Cartel* of Key Central Bankers and Favored Financial Institutions has created, and for the past several years has operated, an extraordinary “financial regime” built on dramatically increasing trillions of dollars (nearly $683 trillion as of June, 2008 - - see www.bis.org (path: statistics>derivatives>Table 19 and ff.) of Dark OTC Derivatives available for the manipulation of major markets ranging from Precious Metals to Crude Oil and Energy, to Equities and Strategic Commodities (see Deepcaster’s July, 2008 Letter at www.deepcaster.com).
To be sure The Cartel’s massive and increasing use of derivatives to intervene (Overtly and Covertly via Primary Dealers) in a wide variety of markets is fraught with danger (e.g. through actual and prospective counterparty failure as we are now seeing). Deepcaster, Warren Buffett and Jim Sinclair have pointed out the dangers of OTC derivatives. Indeed, Buffett calls them “toxic” and Sinclair has aptly described the financial system as “sitting on a… trembling mountain of derivatives…think Weimar Republic.” Unfortunately, Deepcaster, Jim Sinclair, and Warren Buffett are correct.
Second, the evidence indicates that The Cartel has developed a nefarious “End Game” plan, which we describe below.
Real-World Consequences Reflect Increasing Systemic Risks
But even so, the pressures of the Real Economy (e.g. increases in food and energy costs) coupled with this relentless and irresponsible fiat money (debt) creation by The Fed have begun to seriously stress and threaten the entire financial system, as the Credit Freeze-Up beginning in August, 2007 and subsequent Financial Sector disasters show. As we pointed out in our June 2008 Letter, the Credit Freeze-Up, CDO Crisis, Toxic Derivatives and other Threats have not gone away. These Threats are latent and growing, and beginning to erupt again. They are erupting in many forms, including continuing Bank Failures.
We reiterate, these failures have, ironically, been catalyzed by the policies of the most powerful Bank of them all - - The private-for-profit U.S. Fed.
Yet, some individual banks are “favorite sons” of The Cartel and others are…victims. Consider a recent example eloquently described by Ellen Brown in “The Secret Bailout of JPMorgan,” May 13, 2008, www.webofdebt.com/articles; and “what’s the Difference Between Lehman Brothers and Bear Stearns?” June 14, 2008, ibid. and “Putting the Federal Bank in the Federal Reserve,” July 24, 2008, webofdebt.com.
But, as the worsening Housing Crisis, Credit Freeze-up, Banking Failures, among increasing numbers of negatives show, The Cartel’s policies generate increasing Systemic Risk which results in their “Paper Regime” becoming ever harder to manage.
Indeed, perhaps the most salient item of evidence that The Fed-led Central Bankers Market Intervention Regime is becoming harder to manage is that The Cartel requires, and thus is creating, ever-increasing Trillions of dollars of derivatives to “manage” all the various markets in which The Cartel intervenes. The $683 Trillion figure noted above (from The Bank for International Settlements - - The Central Bankers Bank) is a record high for OTC Derivatives. Indeed, the amounts of derivatives are increasing exponentially. A favorite Fed Interventional Vehicle, the Repurchase Agreement Pool, is several times larger today than it was just a few years ago. And the Fed is now apparently using the new TSLF Pool and other recently authorized vehicles as a manipulation vehicle, as well.
So what are the Central Bankers to do as their Market Intervention Regime becomes harder to manage? What are they doing?
They surely must want to avoid allowing the financial system to collapse around them (in a manner in which its failure would be linked to them) lest they be subject to the wrath of the populace of the major nations. They must thus develop a Solution - - an “End Game” as it were - - to cope with what Deepcaster, Richard Russell, and others view as the inevitable collapse.
The Crisis Intensifies - – The “End Game” Implementation Begins
Deepcaster has described The Cartel’s apparent ‘End Game’ in detail in its June, 2007 Letter “Profiting From the Push to Denationalize Currencies and Deconstruct Nations “ and its August 13, 2006 Alert “Massive Financial-Geopolitical Scheme Not Reported by Big Media” posted in the “Archives” at www.deepcaster.com. Fortunately, a Bill was introduced in the last Session U.S. Congress (H.Con.Res.40), which opposes this nefarious scheme. But consider the following key aspects.
The U.S. Dollar’s purchasing power has declined over 30% in the past half-decade and it appears that The Cartel expects (and likely are even pushing) the U.S. Dollar to go into further and further decline, over the medium term, and to continue their other policies, until there is a “No-Salvation, No-Return Systemic Crisis.”
That the U.S. economy (about 25% of the international economy) is headed in the direction of Serious Stagflation (a Kondratieff Winter) is pretty clear from the very credible shadowstats.com statistics cited above.
It would appear that The Cartel-charted-course toward a Stagflationary Depression, and thus toward the attempted implementation of their “End Game,” is on course.
The clue to the character of The Cartel “End Game” is the Strategic and Prosperity Partnership Agreement signed by Presidents Bush, Fox of Mexico and Martin of Canada in Waco, Texas in March, 2006.
This multi-faceted Agreement was signed without the approval of Congress, or the knowledge of most of the American people.
It is clear from the multifaceted “End Game” Plan reflected in this Agreement why the Bush Administration was so resistant to defending U.S. borders.
It is also clear that One Key Component of the End Game Plan is the dissolution of the United States Dollar and other currencies into a new currency, the “Amero.” Indeed, two bits of anecdotal evidence that this plan is being taken seriously are:
- That the “Swiss Portfolio” Investment Advisory Company has already touted the “Amero Alternative” on its website; and
- The London investment firm Jeffries International Ltd.’s Vice President, Steven Pervis, said that the coming “Amero” will have “a big impact on everybody’s life.”
Another Fiat Currency Alternative which would be functionally equivalent (and thus serve The Cartel’s needs) would be a “Super-sovereign Reserve Currency” (“SSRC”) to which Fed Progeny/Treasury Secretary Geithner recently said he was “open’ - - a surprising but frightening display of candor, and disloyalty to the U.S. Dollar and to the United States.
One clear inference is that if The Cartel is pushing the Amero or the SSRC as the eventual, and their favored, alternative to the U.S. Dollar, The Cartel certainly intends to continue its interventional efforts at suppressing the prices of Gold and Silver in order to prevent their attaining increasing legitimacy as money, and thus as competitors to their Fiat Currencies and Treasury Securities.
In the event of the success (from The Cartel’s perspective) of the implementation of the End Game Plan, doubtless The Fed intends to transmogrify itself into The (still private and still very profitable) Central Bank responsible for issuing the Amero or the SSRC. Additional details regarding The Cartel’s “End Game” are provided in Deepcaster’s August 3, 2008 Alert and June 2007 Letter available at www.deepcaster.com.
Of course, the key question for the long-term is whether The Cartel will be able to pull it off. Certainly they have been instrumental in creating a financial climate, which has crisis potential.
If The Fed is not able to lead its Cartel to success in implementing its “End Game,” the No-Salvation, No-Return Systemic Crisis that its policies will likely create, the ensuing crisis would clearly and publicly be its responsibility.
In that event, is it not highly likely that The Fed would be unable to continue as a privately owned for-profit entity? One can hope.
A Solution Which Addresses Current Realities
Rather, and as an alternative to The Cartel’s planned “End Game,” the U.S. Treasury could begin to function as it is constitutionally authorized to do, as The United States National Bank issuing United States Notes (as President J.F. Kennedy briefly authorized the U.S. Treasury to do before he was killed) solidly backed by the monetary metals, Gold and Silver.
But, in the short-term, the U.S. Fed-led Cartel continues to expand its power. For example, it is important to reiterate that: the Powers-That-Be, ensconced at The Fed and U.S. Treasury, have recently sought and obtained even more power without accountability. Any downstream liabilities, of course, continue to be laid off on the U.S. Taxpayers. We are grateful to Rep. Ron Paul for disclosing shocking and anti-democratic details of the Bailout Bill rammed through Congress last Fall, and grateful to GATA and others for reporting them:
“- The two troubled federal mortgage agencies, Freddie Mac and Fannie Mae, will be given unlimited access to the U.S. Treasury without requiring any further approval from Congress.
- The U.S. national debt ceiling will be raised by $800 billion, which suggests that the bailout is expected to cost a lot more than the country is being told.
- All credit card transactions will have to be reported to the Internal Revenue Service, as if the country isn’t under enough government surveillance already.” (emphasis added)
“Ron Paul discloses housing bailout bill’s money and power grab”
The Gata Dispatch, July 24, 2008
Clearly, the Private For-Profit Federal Reserve should be abolished and replaced by a truly National Bank operated by the U.S. Treasury which could then issue currency linked to Gold and Silver.
Joining Deepcaster and Rep. Ron Paul in its call for abolition of the “U.S.” Federal Reserve is legendary Investor Jim Rogers. Were The Fed to be abolished, a major threat to our Democracy would be removed.
The Cartel’s Constraints Generate Profit Opportunities
Though The Cartel’s Interventional Machinery is still quite powerful, it is unable to manipulate all markets at will all the time because it is constrained by several Realities. These include: politics, the necessity to run “under the radar” (i.e. to maintain plausible deniability) regarding its Market Interventions, and the very real constraints of a marketplace in which tangibles-in-limited-supply (e.g. energy and food) are of major importance.
So how does an Investor cope with all this?
A Strategy for Profit and Protection
Normally, (that is to say in a Genuine Free Market situation) the go-to “Safe Haven” Assets in times of Financial Crisis would be the Precious Monetary Metals Gold and Silver, as well as other assets such as Strategic Commodities.
We say “normally” because nearly every time another Financial Market Crisis has come prominently into the public eye in recent years The Cartel* of Central Bankers has successfully taken down the price of what would normally be the Safe Haven Assets - - the Precious Monetary Metals. A prime example occurred during the much-publicized demise of Bear Stearns in March, 2008, which was accompanied by a vicious Takedown of Gold and Silver. In a non-manipulated Market, given the fact that Bear Stearns reflected great and increasing weaknesses in the Financial System, Gold and Silver should have skyrocketed. But instead they were dramatically taken down.
So the question now, at the beginning of April, 2009, is it different this time around? Have Gold and Silver finally thrust off the shackles of Cartel Intervention? Or will The Cartel be able once again to cap and take down the prices of these Precious Monetary Metals and Strategic Commodities? Deepcaster has addressed this question in a Forecast he recently issued for the likely fate of Gold, Silver, Crude Oil & the U.S. Dollar in the Alerts Cache at www.deepcaster.com.
One thing is certain: The Cartel will certainly attempt again to take down Gold, Silver and Crude Oil at the earliest opportunity because the Strategic Commodities and Precious Monetary Metals are Competitors as Stores and Measures of Value with the Central Bankers’ Treasury Securities and Fiat Currencies.
Yet there is a Strategy which accommodates Cartel Interventional attempts and at the same time provides excellent Profit Opportunities, whether the Interventional attempts are successful or not.
A major premise of The Strategy is that one can certainly remain a Hard Assets Partisan (as Deepcaster is) while at the same time insulating oneself from future Takedowns. The following points provide an outline of The Strategy (particularly as applied to the Gold and Silver Markets) and are designed to help avoid Portfolio unpleasantness, or even possible financial ruin, in the future, as well as to profit along the way:
- Recognize that The Cartel is still Potent, as difficult as that may be psychologically for Deepcaster and other Hard Asset Partisans to acknowledge. The Cartel is still the Biggest Player in many markets and, if the timing and market context are propitious, the Biggest Player makes Market Price. In addition, The Cartel has the advantage of de facto controlling the structure and regulation of various marketplaces and that is a tremendous advantage; just as the Hunt Brothers years ago discovered much to their dismay and misfortune, when they tried to corner the Silver Market.
- Accumulate Hard Assets near the Interim Bottoms of Cartel- induced Takedowns.
- In order to know when one is near the bottom of a Cartel-generated takedown, it is essential to take account of the Interventionals as well as the Technicals and Fundamentals. Paying attention to the Interventionals facilitated Deepcaster recommending five short equities positions as of early September, 2009 (just before the Fall Crash) all of which we subsequentially recommended be liquidated profitably.
- For example, regarding Gold & Silver, near such Interim Bottoms, accumulate a combination of the Physical Commodity (Deepcaster prefers “low premium to melt” bullion coins) and well-managed Juniors with large reserves. (Deepcaster provides a list of such Junior Candidates in our December 20, 2007 Alert “A Strategy for Profiting from Cartel Intervention” available in the Alerts Cache at www.deepcaster.com.) The “Physical” and “Juniors” are for holding for the long-term as a Core Position.
- Then, to the extent one wishes to speculate on the next “long” move, one should buy the major producers or long-term call options on them. These latter positions are for ultimate liquidation at the next Interim Top and are not for holding for the long-term.
- However, there will be a time when The Cartel price capping is ineffective and Gold & Silver make record moves upward. The benefit of this Strategy is that one will likely be long in one’s speculative positions when this happens.
- Near the next Interim Top, liquidate the long options and majors. Again, in order to know when we are close to the next Interim Top, it is essential to monitor the Interventionals, as well as Fundamentals and Technicals.
- Near that Top, sell short or buy puts on Majors. We re-emphasize the Majors as preferred vehicles for trading positions because such positions are more liquid and tend to be quite responsive to Cartel moves.
- At the next Interim Bottom, cover your shorts and liquidate your puts and go long again to begin the process all over again. We emphasize that it is essential to consider the Interventionals as well as the Fundamentals and Technicals in order to determine the approximate Interim Tops and Bottoms.
- Finally, Hard Assets Partisans have the opportunity to become involved in Political Action to diminish the power of The Cartel. It is truly outrageous that the average unsuspecting citizen, and prospective retiree, can and does put his hard won assets in Tangible Assets only to have those assets effectively de-valued by Cartel Takedowns. This is extremely injurious to many average citizens in many countries who are saving for the rainy day or retirement and have their retirement and/or reserves effectively taken from them. In order to help prevent this and similar outrages, we recommend taking three steps:
- Become involved in the movement to abolish the private-for-profit U.S. Federal Reserve as Deepcaster, ex-Presidential candidate Rep. Ron Paul, and legendary investor Jim Rogers, all have advocated. Rep. Paul introduced Federal Reserve Abolition Act, H.R.2755 in the last Congress.
- Join the Gold AntiTrust Action Committee, which works to eliminate the manipulation of the Gold and Silver markets (www.gata.org). GATA is a non-profit organization, which makes a great contribution by gathering evidence regarding the suppression of prices of Gold, Silver and other commodities.
- Work to defeat The Cartel ‘End Game.’ Deepcaster has laid out the evidence regarding the Ominous Cartel “End Game.” Clearly The Cartel is sacrificing the U.S. Dollar to prop up Favored International Financial Institutions and to maintain its power. But this sacrifice cannot continue forever.
If this aforementioned Strategy is employed effectively, it can result both in an increasing Core Position in Gold and Silver, and in considerable profit along the way.
Additional insights and details regarding this Major Strategy, which are essential to profiting from the Fed’s Policies, are laid out in Deepcaster’s article of 9/26/08 entitled “Protection and Profit from Bailouts Failed to Doom.”
Protection and profit required Proactivity and attention to the Interventionals, Fundamentals and Technicals, not “Buy and Hold.” “Buy and Hold” rarely succeeds anymore as current market conditions attest.
Indeed, the Key Point of the Strategy for Protection and Profit outlined above is careful attention not only to the Fundamentals and Technicals but also to the Interventionals. These Overt and Covert Cartel-generated Interventions have the power to move markets as those who study the matter can attest.
Thus, the Key to Profit and Protection is a Strategy: Successful Investors must become Long-Term Position Traders, with their trading choices informed by the Interventionals, as well as the Fundamentals and Technicals. Moreover, engaging in the Actions suggested above can help prevent The Cartel’s obtaining Superpower status.
Copyright © 2009 DeepCaster LLC
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