The Fall of the Dollar Will Lead to World Government

The Flood of Money Drowns Out the Value

February 26, 2011

The International Forecaster - The world is awash in dollars and that is being reflected in the USDX, which are six major currencies versus the dollar. The loss of value is being loudly trumpeted as the IMF says a replacement must be found. This is the same IMF that has been foisting non-gold backed SDRs on us since 1969. Every time they have tried this it has been a failure.

We can give the Illuminists an ‘A’ for effort, but what they do not get is that the professionals and investors see right through it. Another batch of fiat currency is not going to solve the world’s currency crisis, which can only be saved by gold backing. Needless to say, the mainstream media will never talk about this in realistic terms, because the elitists control them. The denigration of currencies versus gold and silver are advancing apace, as the elitists day after day try to suppress gold and silver prices.

The major media is as complacent as ever because they are totally controlled. It is not ignorance or incompetence. It is control. The media tells us the stock market is headed higher, but fails to tell us why. The reason is manipulation by the US government, and those who control it, and funds swamping the market via QE2. This is an economy where few jobs are being created, unemployment remains steady and we are told that a rising stock market means recovery, which is far from the truth. Propaganda flourishes as well as physiological warfare.

There is no truth for the American people and the people of the world, it is all controlled and capsulated for consumption and control. There is no real recovery; it is all smoke and mirrors to mislead the public. Government and the media declare there is no inflation, but yet it abounds. This is the same media that has ignored the climb in gold and silver prices for 11 years. They have few explanations as to why gold and silver prices are rising. It is because the value of fiat currencies are falling versus gold and silver, but that is not the explanation we hear. We are told a number of absurd falsities ...

The debt and inflation will become more terse as we struggle forward. Government knows it has to cut Social Security, Medicaid and Medicare, screwing the participants and better enabling government to control and reduce these benefits. Allowing government to renege over and over again does not instill confidence in its citizens. There are mammoth cuts coming, but the military industrial complex will experience few. This is how the elitists keep their empire by threat of force. Just look around you and look at the Patriot Act and Homeland Security or the new Gestapo the FBI. Yes readers, you already live in a police state.

As Americans overlook these developments and the fact that anyone who criticizes government is a terrorist, price inflation is destroying their purchasing power and it’s being done deliberately, as a result of saving a broken banking system that only catered to the wealthy and connected.

Loans are available, but generally only to AAA corporations and fellow elitists, as interest rates begin their devastating rise into the future. That needless to say will be accompanied by a falling dollar and higher gold and silver prices.

Many other countries have duplicated these events, so not only will the US dollar fall in value, but also so will the currencies of most every other country versus one another and particularly versus gold and silver. In case you missed it, or forgot, versus nine major currencies over the past 10 years on average gold has appreciated 15-1/4% annually and silver 20-3/8% annually, thus, these facts are nothing new. They have just been hidden from you.

As a result of the loss in purchasing power and ever building debt we have seen demonstrations and riots throughout Europe for the past two years. That has been followed for the same reasons, plus price inflation, in the Middle East with the overthrow of the governments of Tunisia and Egypt. Several more monarchies and dictatorships are on the verge of falling as well.

In the US the attempt to radically change retirement benefits and unions has led to demonstrations in Wisconsin, Indiana and Ohio. We believe in time as unemployment rises with prices and there is no economic recovery that demonstrations will increase and they could, as they have elsewhere, turn violent. If police in the US fire on civilians or beat them into submission there will be retaliation and law enforcement will get decimated.

There is absolutely no way the dollar and other currencies can be saved. That is why the prices of gold and silver move relentlessly upward. There already is waning confidence in the dollar and many other currencies, and that is why the USDX, the dollar index, as a yardstick, is inferior to measuring all currencies versus gold and silver.

You may not realize it now, but you are living through the collapse of fiat money systems. The future of monetary and fiscal matters will take many twists and turns, some good, some bad. It is far too early to make solid predictions on what routes will be taken. At this juncture it is easy to see where we are headed, but the future is more difficult. It could be inflation, hyperinflation, deflationary depression and another contrived war to distract people from the more important issues of the economy, finance and economic survival. In the meantime in reaction to such events gold could go to $5,000 or $10,000 and silver $100 to $500, as the flight to quality becomes a stampede.

Our studies and intelligence tells us that the elitists running the show deliberately planned a collapse so they can form a world government. For them everything is on the line. If they lose they’ll lose everything. If we lose the same could be true. We are not going to lose, because to many people worldwide already know what they are up too and that what we are experiencing was planned that way.

Why do you think QE1 financial sectors were saved in the US and Europe and in QE2 the US government was bailed out. It is very obvious to thinking people as to what is taking place. The edifice that underlies elitist power has been bolstered as the US and European economics are being allowed to fail. Tough decisions will have to be made to save the dollar and the economy and that is not going to happen because those running the show behind the scenes do not want that to happen.

The route being presently taken is that of the Fed funding all Treasury and Agency needs including deficit spending. In such a scenario gold and silver prices have no limits to the upside. It could also be that the majority of your gold and silver holdings may never be sold due to the ongoing turmoil the world may be buried in.

The stock market in Dow terms is about 12,400 due to trillions of dollars being poured into the economy via the Fed and QE1 and QE2 and via the manipulation of “The President’s Working Group on Financial Markets.” The insiders know what is going on but investors and the public do not have a clue. How is it that denizens of Wall Street get richer and the poor get poorer? It is because Wall Street and banking control the government.

The question arises is the market overpriced? Of course it is, but hundreds of billions of dollars are available to Wall Street and banks to speculate in their rigged game. Can you imagine that it is possible for several banks and brokerage houses every day for months to have no losing trading days? Of course that is not normally possible. That can only happen when they create the inside information. They are slaughtering the average investor.

Will the market collapse again? Of course it will, but the timing is very difficult. Perhaps if there is an announcement that QE2 is over and there will be no QE3, maybe major unrest in the Middle East will cause a correction, or perhaps a realization that there will be no further recovery, or perhaps we’ll see demonstrations in the US similar to those in the Middle East?

After adding tax-pork legislation of $862 billion last year, the administration is asking for $200 billion more. What the Fed has done with zero interest rates and quantitative easing at least temporarily is put a floor under the market. Eventually that floor will crumble as real interest rates climb further and perhaps QE comes to an end. Needless to say, were that to happen there would be total collapse.

The US and for that matter, European economies cannot survive without major stimulus. In Europe the financially healthy nations are supplying $1 trillion to six poorer nations knowing full well $3 to $5 trillion is needed. German Chancellor Ms. Merkel says Germany will hold the euro together. Last week in elections in the Hamburg region the voters sent her a warning by crushing CDU candidates. If the CDU wants to be thrown out of office they will continue to advocate more support for sick members of the euro zone. We think the support by Germany is at an end and that means it is only a matter of time before the euro is history. In this regard the G-20 meeting went nowhere, as sick nations demanded that the solvent nations stop exporting so much. One asks where does it end.

Eventually the Dow will fall. When that will begin we do not know, but if it follows history it should fall to 6,650 and then to? Dow 3,200. It could fall lower, but 3,200 is the goal. The damage wreaked on the economy by deficit spending and QE will take years to correct. The longer the upside continues on the Dow the higher gold is going to go because in terms of gold the US dollar and other currencies will continue to fall. That is why the US Treasury and the Fed and other central bans want so desperately to stop gold and silver from going higher, which gets more difficult with each and every day...

We have talked about an eventual market correction. We have just seen over the past six months the breaking of the bond market bubble and real estate continues its downward slide. That leaves gold, silver and commodities as the select investments.

In recent years real estate has proven to be a poor hedge versus inflation, as it still resumes its downward journey. It has become illiquid at market prices and can only be liquidated at severely reduced prices. Over the next few years massive inventory overhang will take prices lower and then there will be years of stagnation. That doesn’t sound like a very good investment to us.

We just saw the 10-year note fall from a yield of 2.20% to its current yield of 2.60%. We believe rates over the next two years could reach 5% to 5-1/2%. If we are correct, that means 30-year fixed rate mortgagees could move to 6-1/2% to 7%. It also translates into large bond losses.

The biggest question is will there be a QE3 and hyperinflation? We do not know for sure, but all the signs point in that direction. That means as inflation rises so do gold and silver related assets. Will we then see a flight to quality to gold and silver? Yes, we will. They will be the only game in town. We have been in an inflationary depression for two years. Next is higher inflation, probably hyperinflation and then deflationary depression. In all these environments gold and silver related assets will be the only place to be. These are the truthful facts of life today and a clear snapshot of where we are headed.

Get your house in order, because if you do not you won’t like the consequences.

Wal-Mart sales tanked, again. Sales at stores open at least one year declined 2.8% y/y; total sales declined 0.5% to $71.0B. The company is experiencing its worst ever stretch of sales seven consecutive quarters of decline. If not for inflation in the necessities of life, sales would be worse.

Wal-Mart saw weakness across much of its U.S. business, including electronics, consumables and clothing. The company did manage to post gain in its food business and health and wellness products.

The use of government assistance programs to pay for goods continues to rise, said Bill Simon, president and CEO of the Walmart U.S. business.

Simon said Wal-Mart would only pass along price increases when they cannot be avoided. It is working with suppliers to reduce inflationary pressure, where possible, on everything from food to clothing.

Housing prices tanked to new lows. The FHA’s December report shows its inventory of REO increased to over 60k, +9.5% m/m and + 47.5% y/y. Soon, Fannie and Freddie will report its REO inventory, which added to FHA’s haul should be well in excess of 300,000. And people think housing stocks are buys?!?!

In 1936 the Fed was able to monetize debt, as they are currently doing, until the bond market had a mini- collapse in September. Inflation soared into 1937.

At first stocks loved the inflation but eventually inflation squeezes margins and consumers, so solons must react. Stocks tanked 49% from March 1937 to April 1938. The DJIA declined 40% in only ten weeks into November 1937. Commodities tanked with stocks.

Bloody Ben and US solons are replaying New Deal strategies; and businesses are doing exactly what they did back in the middle thirties hoard cash, modernize with new equipment, which reduces employment, because they don’t see the need to greatly expand their businesses.

Liberals and Keynesians blame the push to tame out-of-control government spending and higher bank reserve requirements for the 1937-1938 collapse. But they never mention the underlying forces -- soaring CPI coupled with stagnant job growth and Hitler’s annexation of Austria (international turmoil).

Yesterday, KC Fed President Thomas Hoenig asserted that an “extended period” of low interest rates “invites speculation” and the US has “deeply” undermined free-market capitalism. This is a direct condemnation of Bloody Ben, B-Dud and other QE advocates.

Hoenig also stated that the biggest banks should be broken up and the ‘too-big-to-fail’ problem must be fixed “now” because:

“I am convinced that the existence of too-big-to-fail financial institutions poses the greatest risk to the U.S. economy. In my view, it is even worse than before the crisis”.

Hoenig favors privatizing FNM and FRE. Hoenig asserted that big financial firms must not hold the economy “hostage”.

We stated a long time ago that large banks and funds have been financial terrorists, declaring that they would blow up the financial system and economy if not granted unprecedented government support on the backs of taxpayers…We opined months ago that Hoenig is maneuvering to replace Bloody Ben.

In accounts of the political unrest sweeping through the Middle East, one factor, inflation, deserves more attention. Nothing can be more demoralizing to people at the low end of the income scale where great masses in that region reside than increases in the cost of basic necessities like food and fuel. It brings them out into the streets to protest government policies, especially in places where mass protests are the only means available to shake the existing power structure. China and India blame the U.S. Federal Reserve for their difficulties in maintaining stable prices.

About the only one failing to acknowledge a problem seems to be the man most responsible, Federal Reserve Chairman Ben Bernanke.

Mr. Bernanke has made it clear that his policy is to inflate the money supply. The Fed is financing a vast and rising federal deficit, following a practice that has been a surefire prescription for domestic inflation from time immemorial. Meanwhile, its policies are stoking a rise in prices that is contributing to political unrest that in some cases might be beneficial but in others might turn out as badly as the overthrow of the shah in 1979. Does any of this suggest that there might be some urgency to bringing the Fed under closer scrutiny?

Lloyd Blankfein, Goldman Sachs Group Inc.’s chairman and chief executive officer, warned against raising base salaries on Wall Street less than eight months before his own more than tripled to $2 million.

Goldman Sachs prefers paying compensation in bonuses that are contingent on the firm’s performance, rather than offering guarantees or high salaries, Blankfein said in a June 16 interview with staff of the Financial Crisis Inquiry Commission, a recording of which was made public this month. On Jan. 28, the New York-based firm disclosed it had raised salaries for Blankfein and four other top executives that had been $600,000.

“Salary is another form of guarantee, so we would like low salaries and high contingent comp,” Blankfein said in the interview. “We think the world is going in a poor direction. We think having high fixed salaries for people, or guarantees for people and lower contingent comp actually is worse behavior.”

Goldman Sachs raised salaries after competitors including Morgan Stanley, UBS AG and Citigroup Inc. lifted base pay for employees and executives. New U.S. rules on bank pay, approved for public comment by the Federal Deposit Insurance Corp. on Feb. 7, aim only at bonuses and leave salaries untouched...

The housing market is struggling to gain traction after a homebuyers’ tax credit expired last year and as more properties fall into the foreclosure pipeline. Combined sales of existing and new homes in December were at a 5.61 million annual unit pace, down from a July 2005 record of 8.53 million.

A report from the National Association of Realtors today may show existing home sales fell 1.1 percent to a 5.22 million annualized rate in January, according to economists’ estimates. Sales of previously owned homes last year totaled 4.91 million, the lowest level since 1997...

For many people who purchased a home for the first time in 2008, it's payback time. It sounded like a great deal: become a first-time homebuyer and pocket up to $7,500 in a tax credit. But if you bought that house in 2008 and received the credit, you're required to start paying it back now. That's because the credit was actually an interest-free loan provided by the government to stimulate a near-dead housing market.

Unlike the homebuyer credits of 2009 and 2010, this one must be paid back over 15 years beginning with this year's tax return. For someone who got $7,500, that's $500 a year.

"This is not a freebie," said Jackie Perlman, a tax analyst at H&R Block's Tax Institute.

The 2008 credit was available to qualified homebuyers who purchased after April 8, 2008, through the end of that year. The IRS has sent letters reminding folks who fall into this category, including 45,865 taxpayers in New York State.

Many have been caught off-guard. They either forgot that the credit was a loan, or believed the loan had been forgiven as Congress subsequently passed different versions of the homebuyer credit that did not require a payback.

"I had one client who called me in a slight panic," said Jonathan Horn, a certified public accountant. "People are confused."

If you got the credit and have sold your house or it is no longer your primary residence, the total amount you owe is due on the return for the year those events took place, with some exceptions. You can choose to accelerate your payments. While the loan is interest-free, some might want to pay it back sooner rather than later.

"A loan is still something hanging over your head," Perlman said. "Some people will say, 'Let me get this over with.'"

Purchases of new houses in the U.S. fell more than forecast in January, reflecting declines in the West and South that indicate a California tax credit and bad weather may have played a role.

Sales declined 13 percent to a 284,000 annual pace, figures from the Commerce Department showed today in Washington. The median estimate of economists surveyed by Bloomberg News projected a decrease to a 305,000 rate. Demand dropped 37 percent in the West and 13 percent in the South.

Homes in the foreclosure process sold at an average 28 percent discount last year and may continue to drive down U.S. housing prices as the supply of distressed properties grows, according to RealtyTrac Inc.

A total of 831,574 homes that sold in 2010 had received notices of default, auction or repossession, the Irvine, California-based data seller said today in a statement. Properties in distress accounted for almost 26 percent of all home sales last year, down from 29 percent in 2009.

Sales of previously owned U.S. homes rose unexpectedly in January, but prices fell to their lowest level in nearly nine years, an industry group said on Wednesday. The National Association of Realtors said sales climbed 2.7 percent month over month to an annual rate of 5.36 million units from a downwardly revised 5.22 million pace.

Economists polled by Reuters had expected January sales to fall 2.1 percent to a 5.24 million-unit pace from the previously reported 5.28 million units in December. Compared with January last year, sales were up 5.3 percent. The median home price fell 3.7 percent from a year-ago to $158,800, the lowest since April 2002.