Jim’s Mailbox

Posted at 2:36 PM (CST) by & filed under Jim's Mailbox.

Dear Mr. Sinclair,

The question about mortgage revaluation keeps coming so I did some research:

1. On page 226 in the book “When Money Dies – The Nightmare of Deficit Spending, Devaluation, and Hyperinflation in Weimar Germany” by Adam Fergusson, the author indicates that the “Third Taxation Ordinance” of 2/14/1924 revalued mortgages higher to 15% of their original gold price. Also “extinct mortgages” (I assume he means mortgages that were previously paid off) going back 5 years were likewise revalued to 25% percent (I assume to their original gold price also). So there is no escaping debt even in hyperinflation.

2. From Wikipedia:http://en.wikipedia.org/wiki/Hyperinflation_in_the_Weimar_Republic

“Revaluation

Eventually, some debts were reinstated to compensate in part those who had been creditors. A decree of 1925 reinstated some mortgages at 25% of face value in the new Reichsmark (effectively 25,000,000,000 times their value in old marks) if they had been held 5 years or more. Similarly some government bonds were reinstated at 2-1/2% of face – to be paid after reparations were paid.[20] Mortgage debt was reinstated at much higher percentages than government bonds. Reinstatement of some debts, combined with a resumption of effective taxation in a still-devastated economy, triggered a wave of corporate bankruptcies.”

So you are correct in stating that holding gold will not allow one to completely escape mortgage liability in real terms during hyperinflation. You are also correct in advising us to pay off all debts ASAP. It is evident that our current system was designed to protect the bankers and will do so going forward.

Also your advice to purchase a farm is also prudent as Mr. Fergusson also stated in his book on page 108:

“Only the country people were surviving in Germany in any comfort: anyone who lived off the land had the readiest access to real values.”

This book is a must read for all CIGA’s. Anything we need to know to survive the coming dollar annihilation is contained therein.

Thanks for all that you and your team do.

Regards,
CIGA Tom

Dan,

Gold is access to real value that at the least, and in the worst conditions, maintains the buying power of your wealth, and the ability to maintain and manage your debt position.

Jim

 

Jim,

Here is a great wake up article for the American public!

CIGA Wolfgang Rech

Don’t Worry – The Government Says That The Inflation You See Is Just Your Imagination
By Michael Snyder, on October 30th, 2013

If you believe that there is high inflation in the United States, you are just imagining things. That is the message that the U.S. government and the Federal Reserve would have us to believe. You might have noticed that the government announced on Wednesday that the cost of living increase for Social Security beneficiaries will only be 1.5 percent next year. This is one of the smallest cost of living increases that we have ever seen. The federal government is able to get away with this because the official numbers say that there is hardly any inflation in theU.S. right now. Of course anyone that shops for groceries or that pays bills regularly knows what a load of nonsense the official inflation rate is. The U.S. government has changed the way that inflation is calculated numerous times since 1978, and each time it has been changed the goal has been to make inflation appear to be even lower. According to John Williams of shadowstats.com, if the inflation rate was still calculated the same way that it was back when Jimmy Carter was president, the official rate of inflation would be somewhere between 8 and 10 percent today. But if the mainstream news actually reported such a number, everyone would be screaming and yelling about getting inflation under control. Instead, the super low number that gets put out to the public makes it look like the Federal Reserve has plenty of room to do even more reckless money printing. It is a giant scam, but most Americans are falling for it.

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Jim Sinclair’s Commentary

Courtesy of CIGA V. Patane.

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Jim,

A RED FLAG in my book.

Great expectations in MSM versus a dose of reality from the Fed.

Brace yourself.

CIGA Wolfgang Rech

Dear Wolfgang,

This is the mechanism which will give rise to Bail-In. You are right in seeing this as a red flag but for the reasons given you here.

Respectfully,
Jim

Fed to Test Banks Against Interest Rate Rise, Housing Collapse
By Craig Torres and Joshua Zumbrun
November 01, 2013 2:00 PM

The Marriner S. Eccles Federal Reserve

The Federal Reserve said it will examine how the biggest banks might react to a jump in long-term interest rates and another housing crash as it released the next round of stress-test scenarios designed to monitor the ability of the U.S. financial system to withstand economic shocks.

The central bank in two adverse scenarios will measure the impact from rising prices in some U.S. property markets and tightening spreads on high-yield, high-risk loans and bonds, according to a release by the Fed today in Washington.

The Fed is using the tests — based on hypothetical adverse conditions instead of forecasts — to encourage the 30 biggest banks to build capital cushions against economic turmoil. The Fed said 12 additional banks will be subject to the capital review.

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