When government is wounded, trapped and desperate, it lashes out like a wild animal. Survival in the political class is just as strong a drive as it is in the wilderness. I don’t know how government will lash out, but you are likely to see laws, restrictions and behavior you never imagined…. Washington has demonstrated it will “print money” in whatever quantities necessary to stave off a sovereign bankruptcy and a Great Depression but this strategy cannot work forever because existing debt is already too high to be serviced. It is only a matter of time before the U.S. economy succumbs – unless it engineers a ‘soft default’ [which will save it's ass and get you shafted! Let me explain.]

So says ”Monty Pelerin” (a pseudonym derived from The Monty Pelerin Society) in edited excerpts from his original article* as posted at www.economicnoise.com.

Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), has edited the article below for length and clarity – see Editor’s Note at the bottom of the page. This paragraph must be included in any article re-posting to avoid copyright infringement.

Pelerin goes on to say, in part:

• It controls the world’s currency, the dollar. So long as this lasts (and it lasts only until an alternative is found), it has more wiggle room in terms of its ‘extend and pretend’ options. The dollar will likely be a short-term beneficiary of the disruptions in the Euro as capital flees out of Europe into whatever is considered a safer haven. Ultimately, the dollar will weaken when it becomes apparent that the political class in Washington is jeopardizing the dollar and U.S. solvency. The U.S. political class has no way of solving the country’s problems. They have chosen to sacrifice the dollar in order to extend their time in power.
• Its fiscal condition is not quite as bad (yet!). At current government spending rates, that differential is disappearing rapidly.

Washington has demonstrated it will “print money” in whatever quantities necessary to stave off a sovereign bankruptcy and a Great Depression. This strategy cannot work forever because existing debt is already too high to be serviced. It is only a matter of time before the U.S. economy succumbs. Easy money will not produce an economic recovery, nor will it avoid another Great Depression. It is a last gasp strategy to defer the inevitable rather than to face up to the problem(s).

If this strategy is continued, the dollar will eventually decline toward Voltaire’s definition of fiat currency’s intrinsic value — zero. Before that, I suspect, the government will engineer a “soft default.” A soft default is one where obligations are honored in nominal terms, but not in real terms. It is easily done via high inflation.

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I speculated elsewhere about the issuance of a new dollar as a means to achieve such an outcome. It is simple, quick and devastating. In such a scenario, the U.S. changes currency much like Greece. Here is how such a scenario could play out.

• The U.S. declares the old dollar null and void, requiring all old dollars to be converted into “new dollars.” This conversion is more dangerous to US citizens than it would be for Greek citizens for two reasons:
• All contracts and obligations in the U.S. are denominated in dollars. The government could easily mandate that all existing claims can be honored by payment in full with “new dollars?”
• There is no competing currency in circulation in the US. Citizens would not be able to arbitrage against a competing currency.

Let’s look at an example of one way this could happen. Government issues new dollars at the rate of 3 new for 1 old dollar. That is an immediate and massive devaluation of the dollar. In effect,

• all creditors would be harmed by being paid off with dollars now worth 33% of what was originally lent,
• borrowers would benefit to the degree that creditors lost. Real debt would effectively be reduced by 67%. Who would be the biggest beneficiary of such a ruling? Why the US government!
• all government promises like social security, welfare payments, medicare, etc. might also be deprecated. Who wins again? The US government! Is there a pattern here?
• Those harmed most would be lenders. In this case, it would be anyone holding US Treasuries like US citizens, China, Japan, etc. It would also be the U.S. banking system which could not survive without massive additional government bailouts but government has already shown its propensity to do whatever is necessary to keep the financial system alive.
• Apparent beneficiaries would be consumers and the housing markets. Real consumer debt and mortgages would be effectively reduced by 67% (as incomes would presumably triple). Of course they would be harmed by the bailouts necessary to make the banks whole, but many would not even see the connection.

If such a devaluation played out as described, the government would effectively “default” on two-thirds of its debt obligations while, almost assuredly, maintaining that it was honoring them. Government would lose credibility, and be accused of bad faith by credit markets, but time would eventually heal those concerns.

Voila! Debt problem solved, but not the economic problem.

• Inflation would at least triple, presumably raising many incomes and prices accordingly but price inflation is never uniform, so additional distortions and inequities would be infused into the economy.
• The strategy would not avoid a Great Depression. It might in fact bring one on sooner as the loss of purchasing power to the elderly (anyone dependent on fixed incomes), the poor and those on government assistance ripples through the economy.
• Further, such a strategy could trigger hyperinflation which would reduce markets to barter, essentially guaranteeing another Great Depression.

A massive wealth transfer would have been effected away from the productive sector toward the unproductive (government) sector.

The scenario just described might be considered unlikely, but it is exactly the strategy government has pursued since the economic crisis. Actually it is a strategy followed even before the current crisis:

• Since the formation of the Federal Reserve in 1913, 96% has disappeared.
• Since 1980 inflation has stolen 80% of the dollar’s purchasing power. 
• Since 1980, the Fed has effectively given you new dollars for old dollars (at least in purchasing power value) at a ratio of 4 new for 1 old

so how far-fetched would it be for them to declare an emergency and repeat this action only in a shorter timeframe?

It is difficult to be specific regarding a currency default/issuance of new money in the U.S.. The possibilities are there, easily accomplished and done before, just in slower motion.

Two areas may provide signals that something is about to occur:

1. Markets: Markets often force action before it is politically desirable. Erratic movements, especially in exchange rates, might signal the imminence of such action. A rapidly rising price of gold would also likely precede such a currency event as the ruling class and their crony friends dump the dollar in advance and buy gold and other hard assets.
2. Politics: The political class will do what is in their interests and what they believe they can get away with. As sovereign bankruptcy nears, the courage to default via a currency event increases. What was considered politically impossible then becomes merely unpalatable. Further, as the country devolves further towards totalitarianism and away from the Rule of Law, those in charge will be more emboldened to act….

Conclusion

The world is headed for a debacle in financial markets and living standards. Both will be preceded by currency collapses. The declines in Europe and here will trigger conditions unlike anything before experienced on a worldwide basis. Greece is merely a small canary in a small coal mine. Pay attention to how this canary dies, because it may help you survive what is coming to your personal coal mine.

For me holding dollars and dollar-denominated assets is dangerous. Good luck and hunker down for some unbelievable times ahead.

*http://www.economicnoise.com/2012/02/23/new-currency-the-next-great-plunder/  (To access the articles please copy the URL and paste it into your browser.)

Editor’s Note: The above article may have been edited ([ ]), abridged (…), and reformatted (including the title, some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.

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1. Is a Plan Afoot to Introduce a New Dollar to Repudiate America’s Piles of Debt and Derivatives?

Any thinking person with a calculator knows that the current global monetary system is going to fail given enough time. Rather than going through the charade of more quantitative easing, what if the central banks, the collaborating Western governments, and the financial elites decide to let the system fail now? [What if]…people in control…have a plan…to accelerate the emergence of a new dollar.

2. Michael Pento Doubts U.S. Can Inflate Its Way Out of Debt – Here’s Why

Michael Pento, president of Pento Portfolio Strategies, and Peter Tchir, founder of TF Market Advisors, talk about Nobel Prize winner Paul Krugman’s recommendation that policy makers should consider allowing slightly higher inflation as a way to spur the U.S. economy.

3. U.S Likely to Hit the Financial Wall by 2017! Here’s Why

The deficits aren’t going to stop anytime soon. The debt mountain will keep growing…Obviously, the debt can’t keep growing faster than the economy forever, but the people in charge do seem determined to find out just how far they can push things….The only way for the politicians to buy time will be through price inflation, to reduce the real burden of the debt, and whether they admit it or not, inflation is what they will be praying for….[and] the Federal Reserve will hear their prayer. When will the economy reach the wall toward which it is headed? Not soon, I believe, but in the meantime there will be plenty of excitement. [Let me explain what I expect to unfold.] Words: 1833

4. The Fed MUST Inflate Away Debt or Default So MAJOR Inflation IS Coming!

If our assessment is correct, over the coming years, stocks, precious metals, commodities and real-estate will appreciate in value versus paper currencies. Furthermore, on a relative basis, we expect precious metals and commodities to outperform all other asset-classes. Conversely, we anticipate that cash and fixed income instruments will probably turn out to be the worst assets to own over the next decade. Words: 869

5. 2012: More Money-printing Leading to Accelerating Inflation, Rising Interest Rates & Then U.S. Debt Crisis! Got Gold?

Evidence shows that the U.S. money supply trend is in the early stages of hyperbolic growth coupled with a similar move in the price of gold. All sign point to a further escalation of money-printing in 2012…followed by unexpected and accelerating price inflation, followed by a rise in nominal interest rates that will bring a sovereign debt crisis for the U. S. dollar with it as the cost of borrowing for the government escalates…[Let me show you the evidence.] Words: 660

Any thinking person with a calculator knows that the current global monetary system is going to fail given enough time. Rather than going through the charade of more quantitative easing, what if the central banks, the collaborating Western governments, and the financial elites decide to let the system fail now? [What if]…people in control…have a plan…to accelerate the emergence of a new dollar.

So says Robert Fitzwilson in edited excerpts from an interview with King World News as provided by Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!). This paragraph must be included in its entirety in any re-posting to avoid copyright infringement.

Fitzwilson goes on to say, [you can read the full article here] in part:

It would not be the end of the dollar as the king of currencies, just the end of the current dollar as we know it. The new dollar could be realigned not only against other currencies, but would allow for the effective repudiation of the massive piles of debt and derivatives. Interest rates would be allowed to return to more normal levels and all assets would be re-priced in terms of the new dollar. It might seem crazy to sane people, but to insane people running global government and finance, it might seem rational to them….Debts go away as does the dreaded austerity. Wealth will be destroyed, but the vast majority of people have no wealth to preserve.

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The disaster in Europe should be pushing the U.S. dollar up more than it is but it’s not, and that has me deeply worried [I'm] worried that the next leg of the dollar’s decline may be right around the corner; worried that the loss of the dollar’s reserve-currency status could occur more quickly than even I had expected and worried that the “X&@!” may soon hit the fan, across the entire globe. [Let me explain.] Words: 600

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Merk Investments has ranked the attractiveness of the currencies of each G10 country based on the monetary and fiscal policies of each country and the strength of each country’s economy to come up with what they call the Merk Currency Score™. This Score should prove invaluable in supporting investment decision-making across countries and regions. Go here to see where your country ranks.

Axel Merk, Kieran Osborne and Yuan Fang (http://www.merkfunds.com/) have recently published the Merk White Paper – Monetary Policy  and it can be found here in its entirety compliments of Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!). This paragraph must be included in any article re-postings to avoid copyright infringement.

By way of introduction to the linked White Paper, the authors state, in marginally edited excerpts, that:

We have developed a score for each currency within each category, that is, a Merk Monetary Score™, a Merk Fiscal Score™, and a Merk Economic Score™ with the aggregate of those metrics being an overall Merk Currency Score™….

Merk Monetary Score™

The focus of the Merk White Paper – Monetary Policy is to rank currencies based upon a monetary policy framework. Within this category we focus on specific metrics that we consider to be bellwethers for long- and short-term economic health, price stability and ultimately, to have a significant implication on relative currency strength or weakness. Those specific metrics are:

• the consumer price index (CPI),
• the producer price index (PPI),
• market-based expected inflation measures of each central bank and
• the change in the size of a central bank’s balance sheet, as a proxy for the absolute change in money supply.

A breakdown of the above overall monetary policy assessed components for the G10 currencies to arrive at our Merk Monetary Score™ can be seen here.

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[In summary,] based on monetary fundamentals within the G10 universe, we find that, as of March 31, 2011, the Australian dollar and the Canadian dollar appear the most compelling two currencies based upon our Merk Monetary Score. Conversely, our methodology ranks the Swiss franc and British pound as the two least attractive currencies within the G10 universe based upon monetary fundamentals.

[The rankings of the currencies of said G10 country currencies are as follows:

1. Australia
2. Canada
3. New Zealand
4. USA
5. Sweden
6. Euro area
7. Norway
8. Japan
9. United Kingdom
10. Switzerland]

Editor’s Note: The above article may have been edited ([ ]), abridged (…), and reformatted (including the title, some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.

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The notion of government raiding personal retirement accounts (IRAs, 401K, etc.) for funds may seem extreme…but other governments have done it. Argentina did in 2008, Ireland has indicated it might [and the U.S. might well do so as it's] financial crisis worsens. This article puts forth reasons why it is possible they would undertake such a grab or ‘confiscation’ of your retirement accounts and how they likely would go about implementing such an event.

So says ”Monty Pelerin” (a pseudonym derived from The Monty Pelerin Society) in edited excerpts from his original article* as posted at www.economicnoise.com.

Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), has edited the article below for length and clarity – see Editor’s Note at the bottom of the page. This paragraph must be included in any article re-posting to avoid copyright infringement.

Pelerin goes on to say, in part:

Surely the U.S. would never do so. Actually, there is little basis for assuming they would not – and factual evidence they would.

Here are three good reasons to believe they would:

1. Financial Ratios: The U.S. financial ratios are arguably as bad as the weakest countries in Europe. Unlike Europe the U.S. government has shown no willingness to meaningfully cut government spending and/or balance the budget. Europe has signaled austerity programs, although time will determine whether they adhere to such programs.
2. Rule of Law: All modern governments believe they are above the law. They justify violation of the law on the grounds it is necessary for the “good of the nation.” The U.S. government has frequently demonstrated that property rights should not stand in the way of public policy. Abuses of eminent domain are numerous. The automotive bailout was a flagrant example. Not only was the bailout without legal precedent, U.S. bankruptcy law was violated in order to reward unions at the expense of bondholders.
3. Behavior Pattern: The U.S. government has a despicable record with regard to honoring retirement obligations. The government raided the Social Security trust fund so that politicians could spend at higher levels. That continuing raid put Social Security in a liquidity crisis that should not have occurred for another couple of decades. President Clinton and Congress reneged on the promise that Social Security benefits would never be taxed. Now Treasury Secretary Geithner routinely raids public pension plans in order to allow government to continue spending.

Most politicians in the U.S. believe (or behave as if they believe) they can continue to kick the spending can further down the road. Apparently many believe the spending/debt problem will somehow magically go away or at least metastasize after they have left government. Unfortunately, the problem is not going away and will get much worse unless political courage and will is found to enact substantial spending cuts.

Why Raid IRAs?

The simple answer was provided by famed bank robber Willie Sutton: “that is where the money is.”

Total market capitalization of the U.S. stock market is about $16 trillion and 40% of that is estimated to reside in IRAs and 401Ks. They are big, visible, vulnerable and mostly immobile targets. This $6 trillion, if it were grabbed in some fashion, would satisfy the next 4 – 6 years of government deficits. Whatever can be used from IRAs lessens the amounts needed from sources 1 and 2 above.

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Before proceeding, it should be noted that the term “IRA” as generally used in this article generally refers to Individual Retirement Accounts and self-directed retirement accounts such as 401Ks. Many of the comments pertain to both even though the IRA abbreviation is used.

How Might Government Go After This Money?

There are innumerable ways. Here is some speculation regarding what might happen.

• It is unlikely that government confiscates IRA funds, at least directly. That is likely too big a step, at least as a first move.
• More likely government mandates that a percentage of IRA funds be invested in Treasury securities. The percentage would start out small and then likely increase as government insolvency worsened.

Let’s imagine a scenario. After proper citizen conditioning, the government would require that all IRAs must be at least 20% invested in Treasuries. The rationale would be that we must all do our share in assisting the country out of its economic hardship. Those with IRAs certainly are better off than those without. Therefore it is only fair that they invest in the future of their country.

The reason to enact such legislation is that markets are driving up the costs of borrowing for the government. By forcing investments from existing IRA funds, the government achieves two objectives:

1. It reduces the amounts necessary to raise in capital markets and/or
2. It reduces the amount of new quantitative easing necessary.

Although unnecessary, a special series of Treasury bonds called “Patriot Bonds” could be created.

• These bonds would be the only ones that counted for IRAs and could have lower interest rates than traditional Treasuries. If so, you would be coerced into funding the government by purchasing bonds for more than the market values them because, after all, you are a patriot and one of the” winners in life’s lottery” so it is the least you can do.
• Over time the required percentage would be raised to, say 40 or 60 or even 100% as financial conditions worsen. Finally the government defaults, making whatever portion of your IRA represented by government securities worthless.

In effect, that part of your IRA has been confiscated by government.

Is This Possible?

Those who believe our government is too honorable to raid private retirement accounts better wake up! The seriously dangerous and wounded animal we know as government is fighting for its survival. It will do anything short of dying, reducing spending or revealing itself as the Ponzi scheme it truly is.

Your notions of integrity, law and morality do not apply to this animal. The biggest, meanest man in town is trying to escape death and will use whatever means possible. Rightly or wrongly, he believes you are his antidote and he is going after whatever he can get.

One hurdle to preventing government from taking such action might be the stock market. The shift in asset allocations required in retirement accounts would presumably be detrimental to the stock market. Whether it would crash or not is moot. Any such action would certainly reduce its value, which might be the best protection retirees have.

Conclusion

Unless government spending is reduced to the point that new debt grows slower than GDP, most retirement accounts will diminish dramatically. This conclusion is independent of whether government raids your IRA account. Hyperinflation will eventually result from continued quantitative easing (printing of money). That will destroy most savings and all fixed income obligations like bonds and pensions whether these funds are in or out of IRA accounts.

Things are going to get ugly. Prepare for the worst and hope for the best.

* http://www.economicnoise.com/2011/07/25/is-your-ira-going-to-be-raided/ (To access the articles please copy the URL and paste it into your browser.)

Editor’s Note: The above article may have been edited ([ ]), abridged (…), and reformatted (including the title, some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.

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If you own, or are contemplating owning…gold, you should read this article, and think carefully about the content of the 58 slides included with it – a presentation on the history of physical gold, its price drivers, what selected individuals think about it going forward, and what U.S. Federal Reserve Chairman Bernanke thinks of it.

“After an amazing run that lasted over a decade, gold has been a major laggard this year. Lately it has been particularly weak but it remains the subject of an intense amount of fascination, both in terms of the investment prospects, and as a subject of political and historical debate so we’ve compiled the ultimate guide to gold: its history, its performance, what moves it, and what it might do next.”

So says Eric Platt (www.BusinessInsider.com) in his presentation which is introduced to you by www.munKNEE.com (Your Key to Making Money!). This paragraph must be included in any article re-posting to avoid copyright infringement.

Click here to see the truth about gold >

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Gold-producing countries are found on nearly all continents, and represent the gamut of economies from developed super-powers to small, emerging market countries. With gold’s spectacular rise in price and related demand, it’s worth your time to know a little bit about where all the gold comes from.

6. What Do Gold Measurements “Troy” Ounce and “Karat” Really Mean?

You have no doubt read countless articles on the price of gold costing x dollars per “troy ounce” or perhaps just x dollars per “ounce” but the difference between the two measurements is significant. For that matter, what’s the difference between a 24 karat gold ring and an 18 karat gold ring? Let me explain. Words: 863

7. A Direct Comparison Between Gold, Silver, Platinum and Copper

In this article I would like to take a fresh look at physical gold, silver, platinum and copper regarding their respective versatility of use, durability, fungibility, store of value, liquidity and aesthetics with the hope that, for both old and new investors, my analysis will yield a new perspective on precious metals (including copper). Words: 878

My weekly analyses of the developing trends in gold; silver; S&P 500, Wilshire 5000, HUI and XAU indices; West Texas crude oil; the US Dollar Index and 30-year U.S. Treasury bonds are not a pretty sight. Take a look and you will see just how low these various asset classes and sectors are expected to go over the next week or two.

So says Dr. Nu Yu (http://fx5186.wordpress.com) in edited excerpts from his original article*.

Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), has further edited the analysis below for length and clarity – see Editor’s Note at the bottom of the page. This paragraph must be included in any article re-posting to avoid copyright infringement.

Yu goes on to report the following trends:

The U.S. broad stock market had a bearish breakdown from a 3-month head-and-shoulders top pattern and the U.S. Dollar Index had a bullish breakout from a 4-month descending triangle. [To see how the trends are developing you might want to read Dr. Yu's article from last week entitled Dr. Nu Yu: Developing Trends in Gold, Silver and Mining Companies to Remain VERY Bearish! Here’s Why.]

The Broad Stock Market (Wilshire 5000 Index)

The Dow Jones Wilshire 5000 index is a benchmark of the total equity market.

 

Based on the forecast from the LWX, the broad stock market should be in the bearish time-window until 5/21/2012 (see table above).

The daily chart of the Wilshire 5000 index below, color coded with the LWX indicator, shows that it has breached the 89-day moving average while the Broad Market Instability Index (BIX), measured from over 8000 U.S. stocks, is at 148 (up from 105 the previous week) which is well above the panic threshold level of 44. Both are indicative of a bearish market.

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S&P 500 Index

The S&P 500 index completed the 3-month Ascending Broadening Wedge pattern (more on this pattern here) with a breakdown from the lower boundary of the wedge last week.

Ascending broadening wedges typically appear at the late stages of an uptrend or at market tops. Because the index has broken through and closed below the lower boundary, as can be seen in the chart below, the S&P 500 index could have a further decline with a downside target around 1325 which is projected by using the lowest valley in the broadening wedge.

 In addition, as the chart below shows, the SPX also broke down the neckline of a 3-month Head-and-Shoulders top pattern. According to Bulkowski’s measure rule (see here), from the head price (1420), the neckline price (1350), the target meeting rate (55%) and the breakout price (1369), the downside target price could be derived as 1369 – ( 1420 – 1350 ) x 0.55 = 1330.

[Below are 4 other articles on the subject:

• Marc Faber: We Could Have a Crash Like in 1987 This Fall! Here’s Why
• NOW Is the Time to Get Out of the Stock Market! Here’s Why
• Pento: Markets Will Fall Significantly This Summer – Here’s Why
• Charles Nenner: Dow to Peak in 2012 and Then Decline to 5,000!]

The Shanghai Composite Index has not confirmed its inverse Head-and-Shoulders pattern yet. It closed right at the neckline a week ago Friday but has retreated from the neckline since then. Because it has not confirmed the situation is deemed neutral until a breakout occurs from the neckline.

Precious metals (physical gold and silver and their associated mining companies) and crude oil are looking particularly negative at this point in time with major downside trends in place as the following analyses indicate.

Gold

As can be seen in the chart below, gold is in an intermediate-term “Bump-and-Run Reversal Top” pattern (see here) and is now below the “Lead-in Trendline” of the “Run” phase. The typical characteristics of the “Run” phase is a downhill run in price movement which, in this instance, could be to a downside price target of around $1525 which would act as support from the first target line.

[Below are 5 other articles on the subject:

• Gold and Gold Stocks Going Even Lower! Here’s Why 
• The Bottom Is Not In Yet For Gold Or Gold Stocks – Here’s Why 
• Gold Will Drop to $1,450 This Month Before a Parabolic Move to $3,950! 
• The Time to Buy Gold Is When There Is Blood In the Streets and That Time Is NOW!
• Richard Russell: NOW is the Time to Begin Amassing Your Future Fortune – Here’s Why and How]

Silver

Silver has been in a Descending Triangle pattern (see here) since last April with a falling resistance line and a horizontal support line. The descending triangle generally appears in downtrends. Price movement is choppy between the two boundary lines before a breakout or a breakdown from the triangle. The current downswing may reach  around $26.50 which is the lower boundary of the triangle.

As I mentioned in a previous analysis (Gold and Gold Stocks Going Even Lower! Here’s Why), both XAU and HUI have broken to the downside from their 7-month descending triangle patterns (see here). The descending triangle is a bearish formation confined by an upper descending trend line and a lower horizontal line. Once a downside breakout occurs, a price target is projected by measuring the widest distance of the pattern, multiplying it by 54% price target meeting rate, and subtracting it from the breakout.

Therefore, as shown in the 2 charts below, XAU could fall to 144 and HUI could fall to 400, both of which represent a decline of about 17% measured from the breakout. The gold/silver mining sector currently has the lowest performance rank in comparison with all other sectors (see the table of sector performance ranking in bottom).

[Below are 5 other articles on the subject:

• Now’s the Time to Take Advantage of Current Discount on Mining Shares – Here’s Why 
• John Embry: ‘Plunge Protection Team’ Hard at Work While Investors Puke Up Mining Stocks!
• Precious Metals: Don’t Want To Play Anymore?
• Sprott: Current HUI Level Spells O-P-P-O-R-T-U-N-I-T-Y
• John Embry: PM Stocks One of the Greatest Buying Opportunities of ALL Time!]

West Texas Intermediate Crude Oil

The crude oil broke out to the downside sharply from a symmetrical triangle pattern last week. The downside price target is projected at 92.50 as shown in the chart below.

US Dollar Index

The US Dollar Index broke out from its 4-month Descending Triangle pattern last week. The upside price target is around 81.50 which is projected by using the highest peak in the descending triangle. [Also read: Larry Edelson: “I’m Deeply Worried About the U.S. Dollar” – Here’s Why]

The 30 – Year U.S. Treasury Bond

Since last August, the 30-Year US Treasury Bond index has been range bound in a horizontal channel or rectangular pattern between the upper boundary at 146 and the lower boundary at 135. Currently prices are in the upper half of the trading range. The upside price target is near 146 at the upper boundary of the horozontal channel. [Also read: Tom Fitzpatrick: Stocks to Go Down 27%, Bonds to Go Up to Extreme Levels, Gold to Remain Firm] 

Asset Class Performance Ranking

The following table is the percentage change of each asset class (in ETFs) against the 89-day exponential moving average (EMA89). Currently the U.S. Treasury Bond is outperforming. Crude oil is underperforming.

Sector Performance Ranking

The following table is the percentage change of sectors and major market indexes against the 89-day exponential moving average (EMA89).

The Dow Jones Wilshire 5000 index, as an average or a benchmark of the total market, is 0.15% below the EMA89 (last week it was 0.90% above the EMA89). Outperforming sectors are Biotech (7.61%), Telecommunication (4.96%) and Real Estate (4.66%). Underperforming sectors are Precious Metals (-13.87%), Energy (-5.00%), and Basic Materials (-4.14%). The NASDAQ 100 (0.36%) is outperforming the market, and the Russell 2000 Small-cap (-1.06%) is underperforming.

BRIC Stock Market Performance Ranking

The table below is the percentage change of the BRIC stock market indexes against the 89-day exponential moving average (EMA89), also in comparison to the U.S. market. The Chinese market is outperforming and all other BRIC markets are underperforming.

*http://fx5186.wordpress.com/2012/05/13/5132012/

Related Articles:

1. Gold and Gold Stocks Going Even Lower! Here’s Why

The Fed’s recent inference that QE3 was not imminent has caused physical gold and silver and the HUI and the XAU to breach their downside support lines. These transitions set up the distinct possibility that we could well see $1,500 gold and the HUI and XAU at 400 and 144, respectively! Let me outline my analyses of the current situation and how it might unfold. Words: 386

2. The Bottom Is Not In Yet For Gold Or Gold Stocks – Here’s Why

Are gold and gold stocks set to bottom? Not yet, according to my long-term measures of greed and fear. [I think a look at each of them below will substantiate my conclusion.] Words: 390

3. The Time to Buy Gold Is When There Is Blood In the Streets and That Time Is NOW!

As contrarian investor Baron Rothschild said, “the time to buy is when there’s blood in the streets.” Here are five reasons we believe this sell-off sets up a buying opportunity for gold. Words: 388

4. Gold Will Drop to $1,450 This Month Before a Parabolic Move to $3,950!

Based on my technical analysis gold will drop to $1,450/oz. before the end of May and then go parabolic in the next C-wave to $3,950/oz. Below is a chart of how I see the price of gold unfolding over the next while.

5. Marc Faber: We Could Have a Crash Like in 1987 This Fall! Here’s Why

Marc Faber has stated in an interview* on Bloomberg Television that “I think the market will have difficulties to move up strongly unless we have a massive QE3 (something Faber thinks would “definitely occur” if the S&P 500 dropped another 100 to 150 points. If it bounces back to 1,400, he said, the Fed will probably wait to see how the economy develops)….. If the market makes a new high, it will be with very few stocks pushing up and the majority of stocks having already rolled over….If it moves and makes a high above 1,422, the second half of the year could witness a crash, like in 1987.” Words: 708

6. Tom Fitzpatrick: Stocks to Go Down 27%, Bonds to Go Up to Extreme Levels, Gold to Remain Firm

A top analyst at Citibank has told King World News that global stock markets are set to plunge 27%…the panic will move global bond markets to extreme levels, but gold will remain firm.

7. Now’s the Time to Take Advantage of Current Discount on Mining Shares – Here’s Why

Gold stocks are now trading as though peace, prosperity, balanced budgets, and the repudiation of fiat currencies were about to break out across the globe, sending the metal back to $1,000 per ounce in the very near future. Given the stagflation conditions in the developed world, however, and governments’ proclivity to use money printing in order to jump-start an economy, it may be wise to take advantage of the current discount being offered on mining shares.

8. John Embry: ‘Plunge Protection Team’ Hard at Work While Investors Puke Up Mining Stocks!

Most novice investors don’t understand the fundamentals and so they are puking up the mining stocks because they just want out but…this is when you want to buy, when sentiment is negative and fundamentals are astoundingly positive.

9. Precious Metals: Don’t Want To Play Anymore?

We suspect that many precious metals investors are saying, “We don’t want to play anymore!” and our reply is, “You mean you want to quit right now? Right at the bottom of this cycle? You must be crazy – and that is crazy with a capital C!” True, this is a very challenging market environment for resource shares, but we know what the ultimate outcome will be: higher share prices. The only question is “when” and our opinion is that we are very close in time (within days or a week or two at most) of being able to say that the lows are behind us. Let me explain. Words: 785

10. Sprott: Current HUI Level Spells O-P-P-O-R-T-U-N-I-T-Y

Before we end the year we will hit new highs in both [gold and silver]. Then the mining stocks [will] react. The big problem has been [to date has been that] there is not this momentum in the prices of bullion, which is keeping people away from the gold stocks. If we can get the price of gold and silver going back up, I’m sure people will come back into the mining stocks.

11. Jeff Clark: Are Gold Stocks Still Going to Bring the Anticipated Magic? Yes, Here’s Why

We’re invested in gold stocks not just to make money, but for the chance to change our lifestyles and with their lackadaisical [dare I say dismal] year-to-date performance, one may begin to wonder if they’re still going to bring the magic. [Here are my views on the subject.] Words: 740

12. John Embry: PM Stocks One of the Greatest Buying Opportunities of ALL Time!

If we’re not at a bottom [in gold and silver and precious metals stocks], we’re very close to it. The sentiment is dismal and you can see that particularly in the stocks which are almost tragic. I’m shocked quite frankly at the valuations and how low they are. In the fullness of time, this will be seen as one of the great buying opportunities of all-time.

13. Richard Russell: NOW is the Time to Begin Amassing Your Future Fortune – Here’s Why and How

Great fortunes are made at super-bear market lows but you must have the money at the lows. [That is precisely] why gold is so singular and valuable. If you have gold at the bottom of the next bear market, you can exchange it for a collection of great common stocks or funds, and then sit back and relax.

14. Gold’s Current Bull Market Will Be Even Bigger Than The One In The 1970s – Here’s Why

The fundamentals supporting a mania in gold and gold stocks are such that I think a strong case can be made [to support my contention] that the current bull market in gold is far stronger than the one from the 1970s. [I present below] the major observations I feel…support such a thesis. Words: 700

15. Deja Vu? Is Gold Just in a Correcting Phase on Its Way to Parabolic Peak of $4,294?

The current volatility in the precious metals market doesn’t necessarily indicate a change in secular direction. [In fact,] if today’s gold price was to rise by the same degree over the next 14 months [as it did from the beginning of 1979 into 1980, it would hit $4294/ozt. by Jan 2013! Let me explain.] Words: 420

16. GOLDRUNNER FRACTAL ANALYSIS: 2012 SILVER TO $70++

Around this point in the fractal cycle in the late 70’s, Gold busted out of its channel to rise sharply higher, along with Silver. Silver’s channel top will lie up around $68 to $70 over the coming months which we believe will be reached in 2012. The next higher angled resistance bands for Silver run from $112 to $115, and then up at the $123 area. By the end of the Silver Bull, we expect to see Silver reach $500+. Words: 1765

17. James Turk: Silver Will Climb to $68-$70 in 2 to 3 Months

Silver will climb to $68-$70 in 2 to 3 months once resistance at $35 is taken out… In many ways silver is positioned today like it was back in the summer of 2010… Regarding gold, as goes oil, so goes gold…and the bottom line is that the wind is at the back of the bulls in both the gold and oil markets.

18. Silver Will Go to $50 and Then Explode Dramatically Higher! Here’s Why

There is a massive amount of energy underlying the silver market, and when it is ready to unleash, we will see price/value increases that will stun even the most ardent silverbugs…The real power of this expected move is likely to be released only some time after the price of silver has surpassed the $50/ozt. level. [Let me explain.] Words: 685

19. History Says Silver Could Become the Next 10-Bagger Investment! Here’s Why

If you concur with the 159 analysts (see below) that maintain that physical gold is going to go parabolic in price in the next few years to $3,000, $5,000 or even $10,000 or more then you should seriously consider buying physical silver. Why? Because the historical gold:silver ratio is so way out of wack that silver should appreciate much more than gold as it goes parabolic in the years to come. Indeed, silver could easily reach $100 – $200 per troy ounce, maybe even $300 and conceivably in excess of $400 depending on how high gold goes. The aforementioned may be hard to believe but an analysis below of the historical price relationship between silver and gold suggests that such will most likely occur if gold does, indeed, go parabolic. Take a look. Words: 1423

20. Stephen Leeb: Silver’s Going to $60, $70, by the End of 2012 – Easy!

I think scarcity in oil is a dramatic tailwind for gold. Politicians will inflate. They don’t want oil to bring down the economy like it did in 2008. Remember, this inflation will take place with commodity prices already high. So this will create significant inflation. This means higher gold and silver. Gold at $3,000 by the end of the year, easy. Silver $60, $70, easy.

21. Goldrunner: Fractal Gold Analysis Says Gold On Way to $3,500 Mid-year!

Our Fractal Model suggests the wave for Gold in US Dollars will sweep up into the $3500 to $3600 area into the mid-year time-frame. The leading edge of that time-frame begins in May and extends out for a few months. A potential for Gold to spike to a $3900 extended fib level exists. Like all parabolic moves in Gold, the late stages create the biggest price movements. Personally, I would be happy with a huge Gold run up to the $3200 level. Words: 1400

22. NOW Is the Time to Get Out of the Stock Market! Here’s Why

With the S&P 500 at its highest level since the summer of 2008, investors previously sidelined by reoccurring fears of a double dip recession and nagging worries about a disorderly Greek default may now be tempted to hold their noses and dive into the market where, presumably, they will be swept along to the land of outsized profits by the Dow 13,000 wave. Having said this, it is worth noting that often the best time to sell is when everyone else is buying. Now may be that time. [Let me explain.] Words: 885

23. Pento: Markets Will Fall Significantly This Summer – Here’s Why

Investors are being told that the worsening sovereign debt crisis in Europe will leave the U.S. economy unscathed….[because,] since we don’t make many things to export to Europe, our GDP won’t suffer a significant decline at all…. What [has been] conveniently overlooked, [however'] is the fact that 40% of S&P 500 earnings are derived from foreign economies and the seventeen countries that make up the Eurozone have collapsed into recession. [Let me explain what effect that will have on the performance of the S&P 500 this summer.] Words: 325

24. Charles Nenner: Dow to Peak in 2012 and Then Decline to 5,000!

Charles Nenner has been accurately predicting movements in the liquid markets for more than 25 years, and his most recent cycle analysis predicts that the current stock market rally is going to last through Q2 and then begin a major descent in 2013 – with the Dow eventually reaching 5,000! Read on to learn how Nenner’s unique system works and what he forecasts for commodities, currencies, bonds, interest rates and more. Words: 400

25. Larry Edelson: “I’m Deeply Worried About the U.S. Dollar” – Here’s Why

The disaster in Europe should be pushing the U.S. dollar up more than it is but it’s not, and that has me deeply worried [I'm] worried that the next leg of the dollar’s decline may be right around the corner; worried that the loss of the dollar’s reserve-currency status could occur more quickly than even I had expected and worried that the “X&@!” may soon hit the fan, across the entire globe. [Let me explain.] Words: 600

It seems that Americans (and particularly those who vote Republican) are always complaining about how much they pay in personal income taxes.  Frankly, however, they have absolutely nothing to complain about when compared to what the citizens of Canada, Australia, the U.K., New Zealand, Germany, Belgium and almost all other countries pay. Here’s a list of 20 countries of note showing what their effective tax rates are at the equivalent of USD100,000 and USD300,000 for comparative purposes.

This synopsis has been put together by Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!) from KPMG’s 84-page International Individual Income Tax and Social Security Rate Report to ensure you a fast and easy read.  This paragraph must be included in any article re-posting to avoid copyright infringement.

Rather than report on all 96 countries covered in the report I have limited coverage to those countries from which most of the visitors to this site come from plus some other countries that have been very much in the news lately.

What you see below is a ranking of the tax rates of the 20 countries selected, in ascending order (that is, from lesser to greater), based on the combined effective income tax and social security rate on the equivalent of USD100,000 and on the equivalent of USD300,000 followed by the ranking at that income level:

These 11 Countries Have Low Tax Rates at Both USD100,000 & USD300,000 Income Levels

1. Switzerland: 17.7% and 31.5% (4th)
2. Singapore: 20.0% and 18.5% (1st)
3. U.S.A.: 24.3% and 29.8% (2nd)
4. Australia: 25.3% and 37.2% (7th)
5. China: 26.0% and 36.5% (6th)
6. New Zealand: 27.4% and 31.1% (3rd)
7. Japan: 28.3% and 37.8% (8th)
8. Canada: 30.3% and 40.8% (10th)
9. U.K.: 31.0% and 41.6% (11th)
10. Spain: 31.7% and 39.2% (9th)
11. Malaysia: 31.8% and 35.3% (5th)

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Other Countries of Note

1. Ireland: 36.05 and 47.0% (16th)
2. Portugal: 38.5% and 46.3% (15th)
3. India: 39.4% and 41.8% (12th)
4. France: 42.0% and 53.0% (19th)
5. Italy: 42.6% and 50.0% (18th)
6. Germany: 43.0% and 43.9% (13th)
7. Greece: 43.5% and 44.5% (14th)
8. Netherlands: 47.6% and 47.6% (17th)
9. Belgium: 47.9% and 55.5% (20th)

(Note: Effective rates are derived by taking total taxes over gross income prior to any deductions (which may include social security) to allow for a better comparison, as deductions can vary greatly across countries. In addition to federal taxes, the US calculation factors in the income taxes of the state of New York as a national number (state income taxes vary by state), the Canadian calculation factors in the income taxes of the province of Ontario (which vary by province) and the Swiss calculation factors in Zurich canton and community income taxes which may vary by canton throughout the country.) For a complete list of all 96 countries in the report go here.

Related Articles:

1. How Much Do Americans Earn?

How much does the typical American family make? This question is probably one of the most central in figuring out how we can go about fixing our current economic malaise. In this article we break down the U.S. household income numbers. Words: 464

The U.S. government has put us between the proverbial ’rock and a hard place’. Cutting spending to improve our country’s financial situation would surely trigger rioting in the streets by those Americans most adversely affected yet

So says ”Monty Pelerin” (a pseudonym derived from The Monty Pelerin Society) in edited excerpts from his original article* as posted at www.economicnoise.com.

Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), has edited the article below for length and clarity – see Editor’s Note at the bottom of the page. This paragraph must be included in any article re-posting to avoid copyright infringement.

Pelerin goes on to say, in part:

We have reached the point where [the U.S.] government can no longer meet its obligations with traditional financing….[It] became a real Blanche du Bois, “living off the kindness of strangers” but now the strangers are no longer interested in supporting Blanche’s profligate spending. Furthermore, they have incredible needs themselves and are busy with their own printing presses.

The Fed purchased 61% of the total net Treasury obligations that were issued in 2011 (prior to 2008 the amounts were negligible) and it is likely to have to purchase even more in 2012 [given that] deficits are not being reduced in the U.S.. The world recognizes that America’s fiscal situation is out of control. Their confidence in our bonds is decreasing rather than increasing….Markets understand that the U.S. is becoming a dangerous credit risk…

The U.S. government has reached the point where it cannot pay for its level of spending via tax revenues or market-based Treasury sales. [Read: U.S. Can NOT Avoid Coming Economic Collapse – No Matter What! Here’s Why] There are only three courses of action available to the Federal Government:

1. Raise Taxes – This option cannot raise enough money to close the gap. Attempting to raise taxes could exacerbate the deficit by dampening economic activity. U.S. corporate income tax rates are now the highest in the world [although personal income taxes are among the lowest - see Stop Complaining! U.S. Taxes Are MUCH LESS Than Almost All Other Countries! Take a Look]. If anything, taxes should be lowered.
2. Cut Spending – This is the proper solution. Government has grown past the point where the productive sector will or can support it. Spending should be cut back to the point where deficits are eliminated.
3. Print Money – This is the political solution and exactly why the Federal Reserve bought 61% of Treasury Bonds last year. It is not a real solution and it is highly dangerous. Each purchase of Treasury Bonds by the Federal Reserve increases the base money supply. Any time the Fed expands its balance sheet it adds an asset and creates money/credit. Since 2008 the Federal Reserve has almost quadrupled its balance sheet. That puts into the system the potential for 300% price inflation. [Read: Any Way You Look At It Very High Inflation Is Inevitable – Here’s Why]

Politicians never want to cut spending and almost never want to increase taxes (unless it can be done as class warfare aimed at punishing the few to get the votes of the many). It is exactly this type of behavior, with special emphasis on the spending part, that has put the country into the impossible situation it is in. [Read: U.S. “Deficit Disorder” Means Broken Promises + Even More QE! Here’s Why]

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My guess is that printing money will continue until high inflation, possibly hyperinflation, engulfs the nation. [Read: High Inflation is Coming but Hyperinflation is Highly Unlikely – Why is That?] We are in uncharted territory for this great printing exercise. Creating more money or liquidity always leads to higher prices. The potential for damage based on money already in the system is staggering. Furthermore, additions in excess of last year’s money creation will likely be added this year….

Past Fed actions have already released the inflation genie into the system. When he decides to explode no one can predict, but an explosion is inevitable unless government spending is cut by almost 1/3 and the Fed begins to reverse the excess money in the system. Neither one will happen until it is too late….

What I discussed above is a rather generic way the country dies. [Read:  U.S Likely to Hit the Financial Wall by 2017! Here’s Why] To understand why matters will not and cannot get better, take a look at this list from The Economic Collapse. Most of these exacerbate the effects I discussed above:

1. According to one new survey, approximately one-third of all Americans are not paying their bills on time at this point. [Read: 75% of Americans are in Deep _ _ _t!]
2. The U.S. housing industry is bracing for another huge wave of foreclosures in 2012. [Read: U.S. House Prices Have MUCH Further To Fall! Here’s Why] The following is from a recent Reuters article: “We are right back where we were two years ago. I would put money on 2012 being a bigger year for foreclosures than 2010,” said Mark Seifert, executive director of Empowering & Strengthening Ohio’s People (ESOP), a counseling group with 10 offices in Ohio.
3. The Citigroup Economic Surprise Index, a key indicator watched by many economists, is on the verge of heading into negative territory.
4. We are supposed to be in the middle of an economic recovery in the United States, but bad news just keeps pouring in from major companies. For example, Yahoo is firing thousands of workers and Best Buy is closing dozens of stores.
5. Richard Russell says that the “big money” is starting to quietly exit from the financial markets….“My guess is that this is the big money that has been holding off as long as it decently can — and then dumping their goods just before the close. I don’t think the big money likes this market, and I think they have been slowly exiting this market, as quietly as they can.” [Read: We’re at the “Beginning of the End” for the Markets – Here’s Why]
6. Goldman Sachs is projecting that the S&P 500 will fall by about 11% by the end of 2012. Read: Marc Faber: We Could Have a Crash Like in 1987 This Fall! Here’s Why and Pento: Markets Will Fall Significantly This Summer – Here’s Why and Charles Nenner: Dow to Peak in 2012 and Then Decline to 5,000!]
7. All over the country, local governments are going into default [Read: Municipal Bankruptcy Crisis in U.S. to Have Dire National Consequences! Here’s Why – and How and American Cities Feeling the Financial Pinch] and we have not even entered the next recession yet….

Rioting in the streets is an almost certain outcome. [Read: Monumental Change is Coming for Most Americans – Here’s Why] Cutting spending would trigger it but not cutting spending will trigger high inflation which will also result in rioting.

* http://www.economicnoise.com/2012/04/06/how-the-country-dies/ (To access the articles please copy the URL and paste it into your browser.)

Editor’s Note: The above article may have been edited ([ ]), abridged (…), and reformatted (including the title, some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.

Related Articles:

1. Economic Alert: If You’re Not Worried Yet…You Should Be

For the past four years I have been covering the progression of the global economic crisis with an emphasis on the debilitating effects it has had on the American financial system. Only once before have I ever issued an economic alert, and this was at the onset of the very first credit downgrade in U.S. history by S&P. I do not take the word “alert” lightly. [Read on to to understand why I have issued an economic alert once again.] Words: 1904

2. Kunstler: Wake up, Sleepyheads! Things are Heating Up

Europe may soon be choking on that plat du jour of government a la Hollandaise with the side of chopped Greek salad. The whole world, in fact, has got something like a giant hairball stuck in its craw. The hairball is composed of filaments of lies wound over a core of supernatural indebtedness. The lies are promises that the debt will be paid back. Words: 710

3. European Election Results Harbinger of Future U.S. Elections – Here’s Why

The implications for the elections in Europe likely portend what will happen in the U.S.. A similar revolt against incumbents [will] …sweep Obama…out of office but… the newcomers will be placed in the position of Sarkozy and other European incumbents. They will have to address the insolvency and eventual liquidity issues in similar fashion which will be viewed here as “austerity” or worse, “cruel and unusual” punishment. [So, how likely is that? Not very, because] politicians, by nature, are not courageous animals. Instead we will see more of the same: half-assed attempts to fool the people into believing that something is being done to solve the problems. [So what does the future hold for America?] Words: 631

4. U.S. Gov’t Making Preperations for Expected Major Social Unrest Next Year

The Federal government is gearing up for unprecedented social unrest (worse than Greece or Spain) when Washington is forced to impose “austerity” plans next year… [which will be deemed absolutely necessary to avoid] runaway inflation [that would otherwise occur] to pay for the country’s costly welfare programs like Social Security, Medicare, Medicaid, Food Stamps and massive unfunded liabilities. [Below are the preparations presently underway.] Words: 500

5. Stop Complaining! U.S. Taxes Are MUCH LESS Than Almost All Other Countries! Take a Look

It seems that Americans (and particularly those who vote Republican) are always complaining about how much they pay in personal income taxes. Frankly, however, they have absolutely nothing to complain about when compared to what the citizens of most other countries pay. Take a look. Words: 471

6. U.S Likely to Hit the Financial Wall by 2017! Here’s Why

The deficits aren’t going to stop anytime soon. The debt mountain will keep growing…Obviously, the debt can’t keep growing faster than the economy forever, but the people in charge do seem determined to find out just how far they can push things….The only way for the politicians to buy time will be through price inflation, to reduce the real burden of the debt, and whether they admit it or not, inflation is what they will be praying for….[and] the Federal Reserve will hear their prayer. When will the economy reach the wall toward which it is headed? Not soon, I believe, but in the meantime there will be plenty of excitement. [Let me explain what I expect to unfold.] Words: 1833

7. Municipal Bankruptcy Crisis in U.S. to Have Dire National Consequences! Here’s Why – and How

The plight of municipalities in the U.S., and their struggles under the weight of enormous pension budget deficits, are reaching the critical phase [with] many municipalities [now]contemplating bankruptcy. [That, in turn, is causing]… municipalities [to eliminate jobs (150,000 - 175,000 in 2012) providing significant headwinds to jobs growth nationally [which, in turn, will adversely affect] economic growth…[causing even] more municipalities to declare bankruptcy and [their] states, in turn, run to the Federal government for help. Words: 567

8. U.S. “Deficit Disorder” Means Broken Promises + Even More QE! Here’s Why

One of the problems with the debate over the “national debt” is that there’s no generally agreed upon definition of that term. Is it what the federal government owes, or what it owes foreigners, or what the whole country, private and public sector together, owes? Does it include off-balance-sheet items and contingent liabilities? There’s a hundred-trillion dollar gap between lowest and highest on this spectrum, which allows each commentator to confuse the rest of us by picking the measure that best suits their point of view. [Let's try to decipher the true state of the nation.] Words: 1468

9. Monumental Change is Coming for Most Americans – Here’s Why

A monumental change is coming, and for most Americans, it will be painful—especially for the unprepared. [Let me explain just what is happening, why it can not go on as is and what we can likely expect in the future.] Words: 1144

10. U.S. Can NOT Avoid Coming Economic Collapse – No Matter What! Here’s Why

The U.S. government is spending more than a trillion dollars more than it takes in every year…[which] all gets into the pockets of ordinary Americans [who,] in turn,…use that money to pay the mortgage, buy food, shop at the mall, etc. – creating a “false prosperity” bubble that is not real. It may feel real to you right now, but it is unsustainable…We are living in the greatest debt bubble the world has ever seen and, as such, a devastating economic collapse is on the horizon no matter what we do [so] don’t let this false prosperity and this “calm before the storm” fool you…There is going to be a massive amount of pain so you might want to get yourself and your family prepared for that. [Let me explain.] Words: 1211

11. American Cities Feeling the Financial Pinch

The Age of Austerity has arrived with a vengeance in U.S. cities. City budgets shrank 1.9% in 2011 after 4.4% declines in 2010 and city revenues declined 2.3% this year for the fifth straight year of declines, according to the annual report from the National League of Cities. While tax revenue and state and federal aid decline, costs are increasing including pensions and health care. Cities have responded with layoffs, hiring freezes, pay cuts and service cuts. [A picture is worth a 1000 words so here are 11 charts that show just how bad the situation really is.] Words: 333

12. 75% of Americans are in Deep _ _ _t!

Rising education and medical costs, on-going credit card interest payments, well used personal lines of credit and large mortgage debt and home equity loans – most a penchant for living beyond their means – is keeping 75% of American households in some degree of debt. Take a look and then pass it on to your friends, neighbors and co-workers.

13. John Williams: U.S. Edging Closer to Collapse

At present, the underlying fundamentals could not be much worse for the U.S. dollar. Beyond trade, the key factors, relative to other major currencies, could not be much worse. Despite any political and financial hype in the markets, the U.S. economy is relatively weaker, interest rates are lower, inflation is higher and fiscal policy and political stability all are relatively much worse than are seen relative to the other major currencies.

14. Any Way You Look At It Very High Inflation Is Inevitable – Here’s Why

How this economic disaster ends is something about which many of us speculate. Two extreme endings are likely — a sudden deflationary collapse or a period of very high inflation/hyperinflation which ultimately cripples commerce and resolves itself in a deflationary collapse. In either case, the deflationary collapse is another Great Depression. It is important to know which route will occur because of what will happen to asset values along the way. Words: 1057

15. High Inflation is Coming but Hyperinflation is Highly Unlikely – Why is That?

People get confused about the nature of mass inflation, hyperinflation, and what causes both. [Let me clarify the nature and causes of each.] Words: 930

16. Major Price Inflation Is Coming – It’s Just a Matter of Time! Here’s Why

The developed economies of the world have opened the money spigots…[and this] massive money and credit creation is sitting in the banking system like dry tinder just waiting for a spark to set it ablaze. How quickly it happens is anyone’s guess, but once it does we are likely to be enveloped in a worldwide inflation unlike anything before ever witnessed. [Let me explain further.] Words: 625

17. U.S. House Prices Have MUCH Further To Fall! Here’s Why

There has been a deluge of articles recently about the upticks in the housing data…[yet, while] I do not dispute the improvement in the data regarding home starts, permits, pending sales, etc.,… [see graph below] these data points are still mired at very depressed levels so the assumption is that if home building is stabilizing then it is only a function of time until home prices began to rise as well. Right? Not so fast.. [Let me explain.] Words: 1100

18. Marc Faber: We Could Have a Crash Like in 1987 This Fall! Here’s Why

Marc Faber has stated in an interview* on Bloomberg Television that “I think the market will have difficulties to move up strongly unless we have a massive QE3 (something Faber thinks would “definitely occur” if the S&P 500 dropped another 100 to 150 points. If it bounces back to 1,400, he said, the Fed will probably wait to see how the economy develops)….. If the market makes a new high, it will be with very few stocks pushing up and the majority of stocks having already rolled over….If it moves and makes a high above 1,422, the second half of the year could witness a crash, like in 1987.” Words: 708

19. Pento: Markets Will Fall Significantly This Summer – Here’s Why

Investors are being told that the worsening sovereign debt crisis in Europe will leave the U.S. economy unscathed….[because,] since we don’t make many things to export to Europe, our GDP won’t suffer a significant decline at all…. What [has been] conveniently overlooked, [however'] is the fact that 40% of S&P 500 earnings are derived from foreign economies and the seventeen countries that make up the Eurozone have collapsed into recession. [Let me explain what effect that will have on the performance of the S&P 500 this summer.] Words: 325

20. Charles Nenner: Dow to Peak in 2012 and Then Decline to 5,000!

Charles Nenner has been accurately predicting movements in the liquid markets for more than 25 years, and his most recent cycle analysis predicts that the current stock market rally is going to last through Q2 and then begin a major descent in 2013 – with the Dow eventually reaching 5,000! Read on to learn how Nenner’s unique system works and what he forecasts for commodities, currencies, bonds, interest rates and more. Words: 400

21. We’re at the “Beginning of the End” for the Markets – Here’s Why

We are now at the mercy of oil and the commodity markets. Bernanke’s plan to print our way to prosperity is destined to fail. Ultimately, he is just going to spike inflation and collapse the global economy, resulting in a worse downturn than what we saw in 2008/09. Let me explain. Words: 510

22. Why It’s Exit Time – For Your Gold, Your Wealth and Your Family

The United States and most of Europe…risk an eruption and collapse of the mountain of unsustainable sovereign debt built up over the last two decades. Frankly, the U.S. dollar and national debt situation is so dire – and our means to contain a sovereign debt crisis so limited by multiple wars and Washington’s debt and political incompetence at home – that anything could happen, almost overnight. [The best] America and most European governments and the central banking elites, which created the criminal sovereign debt fiasco, [appear able to do is] try to buy more time and delay the inevitable. This inaction means the threat of an immediate US debt and dollar collapse cannot be ruled out. Therefore, readers who have not protected themselves certainly have cause to worry because now could be too late. [Let me explain further.] Words: 1689

23. The Demise of OUR Country is on Borrowed Time – Unless YOU Help Save It! Here’s How

The demise of America is on borrowed time – and the end game could be dire – unless YOU do something about it. Congress is a tool of special interests – not OURS! As such, WE, as citizens, must become proactive if we are to protect OUR financial future by solving the Washington debt and tyranny problems and preventing foreign nations and/or creditors from forcing OUR country into bankruptcy and collapse! [What can YOU do to help? Read on!] Words: 2971

24. U.S. “Deficit Disorder” Means Broken Promises + Even More QE! Here’s Why

 

One of the problems with the debate over the “national debt” is that there’s no generally agreed upon definition of that term. Is it what the federal government owes, or what it owes foreigners, or what the whole country, private and public sector together, owes? Does it include off-balance-sheet items and contingent liabilities? There’s a hundred-trillion dollar gap between lowest and highest on this spectrum, which allows each commentator to confuse the rest of us by picking the measure that best suits their point of view. [Let's try to decipher the true state of the nation.] Words: 1468

25. We Are Heading Deeper and Deeper Into Fiscal Insanity! Here’s Why

The definition of insanity is to continue doing something that goes wrong, without contemplating that there could be a different course of action…[and we] are heading deeper and deeper into insanity…we are just getting deeper and deeper into problems leaving our children and grandchildren with loans that could well take decades to finish (paying) off. I fear we are now stoking up the conditions, at some point in the future, for serious inflation.

26. Events Accelerating Towards an Ultimate Dollar Catastrophe! Here’s Why

With the U.S. election just nine months off, political pressures will mount to favor fiscal stimulus measures instead of restraint. Such action can only accelerate higher domestic inflation and intensified dollar debasement culminating in a Great Collapse – a hyperinflationary great depression – by 2014. [Let me explain why that is the inevitable outcome.] Words: 2766

27. Fed’s Actions Are a Path to Ruin NOT Prosperity! Here’s Why

Currency wars arise when a country steals growth from trading partners by cheapening its currency to promote exports. The new currency war began in 2010 when President Obama declared in his State of the Union address that it was the policy of the United States to double exports in five years. Since the U.S. would not become twice as productive in five years, the implication was the U.S. would severely cheapen its currency to achieve this goal. [Let me expand upon this.] Words: 666

28. Major Changes in Inflation, Interest Rates, ‘Taxes’ and U.S. Dollar Coming

The economy is now so manipulated by politicians, big bankers, and special-interest groups that making sense of the markets has become an almost impossible feat. Which is to say, it must push even harder on the levers of its printing presses, further setting the stage for the massive period of inflation we continue to see as inevitable… and for a stunning rise in interest rates. Words: 968

29. The U.S. is Headed Toward a Complete and Utter Collapse of its Financial System

 

The U.S. is headed inexorably toward a systemic failure, a complete and utter collapse of the financial system. TARP and all the other machinations have not improved the underlying insolvency of the banking system. They have, however, deferred a collapse and ensured that it will ultimately be worse. [Let me explain.] Words: 1385

 

30. Get Ready for Financial Crisis 2.0 in 2012 – It’s Inevitable! Here’s Why

 

 

This analyst sees the perfect storm of converging criteria almost perfectly timed and aligned with the 2012 election cycle. When the moment arrives, the financial earthquake will rapidly demolish the existing highly precarious financial system. Government will stand by helpless, unable to shield itself, much less its vulnerable citizens or private financial institutions from the tsunami of debt and currency destruction. 2012 is shaping up to be the blockbuster main event of the ongoing financial crisis. Massive amounts of new debt, vast quantities of additional digital dollars and the spark of higher interest rates will set off version 2.0 of the credit-driven financial implosion. Let me explain. Words: 1443

For the past four years I have been covering the progression of the global economic crisis with an emphasis on the debilitating effects it has had on the American financial system. Only once before have I ever issued an economic alert, and this was at the onset of the very first credit downgrade in U.S. history by S&P. I do not take the word “alert” lightly. [Read on to to understand why I have issued an economic alert once again.]

So says Brandon Smith (www.ALT-Market.com) in edited excerpts from his original article*.

Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), has edited the article below for length and clarity – see Editor’s Note at the bottom of the page. This paragraph must be included in any article re-posting to avoid copyright infringement.

Smith goes on to say, in part:

Since 2008 we have seen a cycle of events that have severely weakened our country’s foundation, but each event has then been followed by a lull, sometimes 4 to 6 months at a stretch, which seems to disarm the public, drawing them back into apathy and complacency. The calm moments before each passing storm give Americans a false sense of hope that our capsized fiscal vessel will somehow right itself if we just hold on a little longer…but this is not going to happen….

Debt implosions and currency devaluation NEVER simply “fade away”; they are always followed by extreme social and political strife that tends to sully the doorsteps of almost every individual and family. The notion that we can coast through such a tempest unscathed is an insane idea, filled with a dangerous potential for sour regrets.

There are some people who also believe that the private Federal Reserve with the Treasury in tow has the ability to prolong the worst symptoms of the collapse indefinitely, or at least, until they have long since kicked the bucket and don’t have to worry about it anymore (the ‘pay-it forward to our grandkids’ crowd).

I can say with 100% certainty that most of us will live to see the climax of the breakdown, and that this breakdown is about to enter a more precarious state before the end of this year. You can only stretch a sun-boiled rubber band so far before it snaps completely, and America’s financial elasticity has long been melted away.

A pummeling hailstorm of news items and international developments have made the first half of 2012 almost impossible to track and analyze. The frequency at which negative information has surfaced is almost dizzying. However, a pattern and a recognizable motion are beginning to take shape, and, I believe, a loose timeline is beginning to form.

Here are some of the most important reasons why every American should be prepared for much harder days, especially before the end of 2012:

1. The European Union Is Officially Dead In The Water

Stick a fork in er’, the EU is done! We are talking about full scale dismantlement, likely followed by a reformation of core nations and multiple collapse scenarios of peripheral countries. The writing is all over the wall in the wake of the latest election results in Greece and France, where, as alternative researchers have been predicting for some time, the battle between the government spending crowd and proponents of austerity has reached a fever pitch.

The Greeks and the French are royally pissed over draconian cuts in public programs and the destruction of pensions which have been a mainstay of their economies for quite some time. They are also furious over being sold off like collateral to the IMF and World Bank. Rightly so.

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Like the American taxpayer, the taxpayers of floundering EU nations are wrongly being held responsible for the financial mismanagement and fraud of their governments and global banks which have remained untouched and unpunished for their trespasses. The problem is, the voters of both countries are signing on to the socialist/quasi-communist bandwagon in response. In Greece, the Left Coalition Party, a splinter group of the traditional communist party, has now taken a primary position of power while, in France, voters have elected socialist Francois Hollande…, whose latest promise is to spend France into recovery through his “pro-growth agenda”.

I have no doubt that the elections of the EU are as manipulated by elitists as they are here in the U.S., and I’m sure false paradigms abound. Have Europeans forgotten that it was overt government spending that set them on the path to calamity in the first place or are they like [many/most] Americans who are just desperate for any change in the ranks of leadership? One would think that they would take note of the problems here in our country and realize that electing a socialist to replace another socialist is no way out of economic hardship….

The French and the Greeks have essentially replaced closet collectivists with outspoken collectivists, and will see NO relief from the crisis in the Euro-zone as a result of the political reordering.

In fact, the stage has now been set for a volatile chain of dominos.

How does this affect America? Being that international banks and corporations have forced our countries into interdependency through the engineered chicanery of globalization, any collapse in Europe is going to strike hard around the world, but the worst will hit the U.S. and China – which is probably why China is disengaging trade away from the U.S. and the EU and focusing on other developing nations.

If you thought the Greek rollercoaster was a pain in the neck for investment markets, just wait until the whole of the EU is in a shambles!

Spain is next in line, with a 25% official unemployment rate and a massive black market economy forming….When governments disrupt the financial survival of the people, they WILL form their own alternatives, including black markets and barter markets. It is about survival. The Spanish government does not care much for these alternatives, though, and has now banned cash transaction over 2500 euros in a futile attempt to squeeze taxes out of the populace through digitally tracked payment methods.

Another major concern for Americans is the fact that Europeans are inching towards an abandonment of the dollar. Francois Hollande has openly called for an end to the dollar’s world reserve status, and with a majority backing of the French people, he could easily make this happen, at least where France is concerned. All it takes is for a few key countries to publically and completely drop the Greenback and the dollar’s reputation as a safe haven investment will be quashed. This could very well happen before 2012 is over.

2. QE3 Is The End

Here is the bottom line; U.S. growth is a theater of shadows. There has been no progress, no recovery….:

• Millions of Americans have fallen off unemployment rolls because they have been jobless for too long, which lowers the unemployment rate, but does not change the fact that they are still without work.
• Durable goods orders are dropping like an avalanche.
• U.S. credit has been lowered yet again by rating agency Egan-Jones.
• The currency’s safety is nonexistent with China making bilateral trade deals in numerous countries on the condition that the dollar be dropped as the primary purchasing mechanism, and with the EU turning to economic mulch. Traditional investors who cling to the idea that a falling Euro spells dollar strength will be sorely disappointed when the currency is suddenly being rejected in international currency markets.

The Federal Reserve has already stated that any signs of “relapse” into recession (the recession that we never left) will be met with all options on the table, including QE3.

I believe that QE3 will probably be announced this year (due in large part to trauma from Europe), and, that this will trigger a mass movement by foreign nations to drop the dollar as the world reserve.

QE3 will be the straw that broke the camel’s back. How exactly this will play out socially and politically, I do not know…but the technical results are predictable:

• The Fed will respond to the lack of treasury purchases by ramping up fiat printing in order to cover the ever increasing costs of the government machine.
• The Greenback will immediately lose a large portion of its value, at least in terms of imported goods, causing inflation in prices.
• Oil and energy prices will skyrocket if OPEC follows suit (which they will, though the Saudis may still honor dollars for a time).
• Doing any traditional business will become nearly impossible, and price inflation will dominate the lives and the minds of average unprepared citizens..

The amount of time that it will take for these difficulties to unfold is also not clear. We are operating in uncharted territory, and dealing with a collapse scenario on a truly planetary scale. My best advice is to assume that the avalanche will move fast.

While markets in our country have seen only mild disruptions so far this year, their solidity is predicated on a host of props and costume pieces, any one of which could pull the rug out from under America’s suspension of disbelief if it strays but a little from the illusion.

As long as the dollar holds, stocks can be infused with bailout juice through major banks as can major companies and even desperate state governments on the verge of bankruptcy. The Dow will remain relatively friendly, and day traders and the public will remain happy. As soon as the dollar comes into question, [though,] all bets are off….

The question now is, how much longer can the U.S. wobble along on one wheel? In my view, and from the evidence I see in markets at the moment, not much longer….

All indicators suggest that this year will be unlike any other before:

• In 2008, we saw the first trigger events for the collapse.
• In 2008/2009, we saw the creation of the bailout culture, setting the stage for inflation and dollar disintegration.
• In 2010, we saw the first bilateral trade deal cutting out the dollar between China and Russia, which is now the template for trade deals all over the globe.
• In 2011, we saw the first downgrade of the U.S. credit rating and the crisis in the EU become epidemic.
• In 2012, I see not just another difficulty to add to the mountain, but a culmination of all these detriments to produce something entirely new; a vast and subversive realignment forcing many of us to take a more aggressive stance in the fight for an economically and socially free America.

Financial disasters have always been a convenient catalyst for a host of even more frightening obstacles, including civil unrest, and blatant totalitarianism. This is the cusp. It is one of those moments that people of later generations read about in awe, and sometimes horror. The “doom” is not in the event, [however,] but in the response.

Conclusion

What we make of the days approaching determines the darkness that they cast upon the future. It is a test. It is not something to be dreaded. It is something to be seized upon, and dealt with, as great men and women before us have done….

*http://www.alt-market.com/articles/765-economic-alert-if-youre-not-worried-yetyou-should-be (Alt-Market is an organization designed to help you find like-minded activists and preppers in your local area so that you can network and construct communities for mutual aid and defense. Join Alt-Market.com today and learn what it means to step away from the system and build something better. You can contact Brandon Smith at: brandon@alt-market.com . To access the articles please copy the URL and paste it into your browser.)

Editor’s Note: The above article may have been edited ([ ]), abridged (…), and reformatted (including the title, some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.

Related Articles:

1. Kunstler: Wake up, Sleepyheads! Things are Heating Up

Europe may soon be choking on that plat du jour of government a la Hollandaise with the side of chopped Greek salad. The whole world, in fact, has got something like a giant hairball stuck in its craw. The hairball is composed of filaments of lies wound over a core of supernatural indebtedness. The lies are promises that the debt will be paid back. Words: 710

2. European Election Results Harbinger of Future U.S. Elections – Here’s Why

The implications for the elections in Europe likely portend what will happen in the U.S.. A similar revolt against incumbents [will] …sweep Obama…out of office but… the newcomers will be placed in the position of Sarkozy and other European incumbents. They will have to address the insolvency and eventual liquidity issues in similar fashion which will be viewed here as “austerity” or worse, “cruel and unusual” punishment. [So, how likely is that? Not very, because] politicians, by nature, are not courageous animals. Instead we will see more of the same: half-assed attempts to fool the people into believing that something is being done to solve the problems. [So what does the future hold for America?] Words: 631

3. U.S. Gov’t Making Preperations for Expected Major Social Unrest Next Year

The Federal government is gearing up for unprecedented social unrest (worse than Greece or Spain) when Washington is forced to impose “austerity” plans next year… [which will be deemed absolutely necessary to avoid] runaway inflation [that would otherwise occur] to pay for the country’s costly welfare programs like Social Security, Medicare, Medicaid, Food Stamps and massive unfunded liabilities. [Below are the preparations presently underway.] Words: 500

4. Why It’s Exit Time – For Your Gold, Your Wealth and Your Family

The United States and most of Europe…risk an eruption and collapse of the mountain of unsustainable sovereign debt built up over the last two decades. Frankly, the U.S. dollar and national debt situation is so dire – and our means to contain a sovereign debt crisis so limited by multiple wars and Washington’s debt and political incompetence at home – that anything could happen, almost overnight. [The best] America and most European governments and the central banking elites, which created the criminal sovereign debt fiasco, [appear able to do is] try to buy more time and delay the inevitable. This inaction means the threat of an immediate US debt and dollar collapse cannot be ruled out. Therefore, readers who have not protected themselves certainly have cause to worry because now could be too late. [Let me explain further.] Words: 1689

5. The Demise of OUR Country is on Borrowed Time – Unless YOU Help Save It! Here’s How

The demise of America is on borrowed time – and the end game could be dire – unless YOU do something about it. Congress is a tool of special interests – not OURS! As such, WE, as citizens, must become proactive if we are to protect OUR financial future by solving the Washington debt and tyranny problems and preventing foreign nations and/or creditors from forcing OUR country into bankruptcy and collapse! [What can YOU do to help? Read on!] Words: 2971

6. U.S. “Deficit Disorder” Means Broken Promises + Even More QE! Here’s Why

One of the problems with the debate over the “national debt” is that there’s no generally agreed upon definition of that term. Is it what the federal government owes, or what it owes foreigners, or what the whole country, private and public sector together, owes? Does it include off-balance-sheet items and contingent liabilities? There’s a hundred-trillion dollar gap between lowest and highest on this spectrum, which allows each commentator to confuse the rest of us by picking the measure that best suits their point of view. [Let's try to decipher the true state of the nation.] Words: 1468

7. We Are Heading Deeper and Deeper Into Fiscal Insanity! Here’s Why

The definition of insanity is to continue doing something that goes wrong, without contemplating that there could be a different course of action…[and we] are heading deeper and deeper into insanity…we are just getting deeper and deeper into problems leaving our children and grandchildren with loans that could well take decades to finish (paying) off. I fear we are now stoking up the conditions, at some point in the future, for serious inflation.

8. Events Accelerating Towards an Ultimate Dollar Catastrophe! Here’s Why

With the U.S. election just nine months off, political pressures will mount to favor fiscal stimulus measures instead of restraint. Such action can only accelerate higher domestic inflation and intensified dollar debasement culminating in a Great Collapse – a hyperinflationary great depression – by 2014. [Let me explain why that is the inevitable outcome.] Words: 2766

9. Fed’s Actions Are a Path to Ruin NOT Prosperity! Here’s Why

Currency wars arise when a country steals growth from trading partners by cheapening its currency to promote exports. The new currency war began in 2010 when President Obama declared in his State of the Union address that it was the policy of the United States to double exports in five years. Since the U.S. would not become twice as productive in five years, the implication was the U.S. would severely cheapen its currency to achieve this goal. [Let me expand upon this.] Words: 666

10. Major Changes in Inflation, Interest Rates, ‘Taxes’ and U.S. Dollar Coming

The economy is now so manipulated by politicians, big bankers, and special-interest groups that making sense of the markets has become an almost impossible feat. Which is to say, it must push even harder on the levers of its printing presses, further setting the stage for the massive period of inflation we continue to see as inevitable… and for a stunning rise in interest rates. Words: 968

11. The U.S. is Headed Toward a Complete and Utter Collapse of its Financial System