Please click the following link to hear Jim Sinclair speak this evening on GoldSeek Radio:
Please click the following link to hear Jim Sinclair speak this evening on GoldSeek Radio:
1. Gold is a currency.
2. Hyperinflation is a currency event
3. Hyperinflation builds slowly then explodes. See the chart of any of the currencies of all the many historical periods of hyperinflation given you in previous missives on www.JSMineset.com.
4. All periods of currency events that birthed the explosion of hyperinflation occurred during extremely depressive to depressionary economic conditions.
5. The key element of the event preceding the loss of confidence was the failure of the liquidity or coin clipping programs capped by forms of Quantitative Easing. Secretary Paulson this morning and the Federal Reserve three weeks ago said that they were embarking on this program.
6. The loss of confidence during the depression to come will be the failure of all programs to reverse a meltdown of OTC derivatives.
7. The world is looking towards the US dollar for the rescue, bailout and airdrops to include them.
8. The dollar is the prime monetary inflator and therefore the confidence to be lost is in the US dollar.
Add this to the Begging Bowl Fed loan window and TARP:
Be prepared to watch the Federal Reserve over the next 18 months as this is the last of two arrows left in the quiver. Quantitative Easing is going to look more and more attractive.
Quantitative Easing is the process of dumping money directly into business enterprises. The other tool is simple – announce a target of 2% for 10 year bonds to further drop mortgage rates as you Helicopter Drop funds directly into non-financial business enterprises for the public to pick up and spend. This is a tactic added to the Begging Bowl Fed loan window and TARP.
Guardian.co.uk, Tuesday October 14 2008 12.10 BST
Quantitative easing is what non-economists call ‘turning on the printing press’.
In extreme circumstances, governments flood the financial system with money, easing pressure on banks and business entities by giving them extra capital.
Ben Bernanke, the chairman of the Fed, won the nickname ‘helicopter Ben’ when he floated just such an idea earlier this decade. US economist Milton Friedman had originally said it would be theoretically possible for governments to drop large amounts of cash out of helicopters for the public to pick up and spend.
Many respected commentators, even in our camp, warn not of hyper-inflation but rather a bone chilling depression.
Help me please.
Dear CIGA Arlen,
History declares that all major hyper-inflation started in depressive to depression type business conditions as a currency loss of confidence event.
The key is the word HYPER which means a total currency unwind.
Large inflationary periods are products of the mechanics that creates bubbles, but are not HYPER in nature.
Bubble-Inflation and Hyper-Inflation are two distinctly different events
All "Hyper-Inflation" events have occurred as a product of "Quantitative Easing." Google that term and study it.
The Fed has announced their move towards "Quantitative Easing" because of all that occurred so far in bailing out the good ole boys that caused the problems with their damn OTC derivatives, now known as "Toxic Paper."
All the best,
Click images to enlarge
I am repeating this small missive because with the trillion dollars worth of more funds promised to financial institutions this morning by the Fed (which means the Obama Administration) plus the upcoming huge Fiscal Stimulation to create jobs, hyperinflation cannot and will not be avoided.
The spin is that in order to transmute hyper liquidity into hyperinflation you must have an improvement in business conditions. This is totally FALSE. History declares that hyper inflation comes from a loss of confidence followed by a sequence of events as outlined at the close of the missive.
1. Hyperinflation takes birth and is currency-visible during major economic upheavals. There is NO historical truth that business recovery is a necessary criterion to transmute massive increases in money supply into hyperinflation.
2. What has been the major cause of the transmutation of massive liquidity into hyperinflation has been one form or another of Quantitative Easing combined with a loss of confidence in the inflator.
Quantitative Easing does not sterilize its offspring – violent inflation. We will see this offspring not in the far future but in 2009, 2010, 2011 and maybe much further.
It is akin to the Japanese Sci-Fi out of the 70s titled “The Green Blob That Ate the Earth.” It just grew and grew until it consumed everything.
For the moron financial TV hosts claiming that major inflation is well down the road because inflation requires a business recovery to occur, tell them to review:
Argentina 1981 – 1992
Belarus 1993 – 2008
Bolivia 1984 – 1986
Bosnia – Herzegovina 1992 – 1993
Brazil 1986 -1994
Chile 1971 – 1981
China 1948 – 1955
Georgia 1993 -1995
Germany 1919 -1923
Greece 1943 – 1953 At the high point prices doubled every 28 hours. Greek inflation reached a rate of 8.5 billion percent per month.
Hungry 1944 – 1946
Israel 1971 – 1985 (price controls instituted)
Japan 1934 – 1951
Nicaragua 1987 – 1990
Peru 1987 – 1991
Poland 1990 – 1994
Romania 1998 – 2006
Turkey 1990 – 2001
Ukraine 1992 – 1995
USA 1773 – not worth a Continental
Yugoslavia 1989 – 1994
Zaire 1989 – present (now the Congo)
Zimbabwe – 2000 to present. November of 2008 – inflation rate of 516 quintillion percent
The steps to hyperinflation are and have throughout history always been quite simple:
1. This is it.
2. It is now.
3. It is out of control in terms of the size and constancy of fiscal and monetary injection in world liquidity.
4. Loss of general confidence in paper assets.
Please understand how important it is for your knowledge of economic history, and therefore why this missive is repeated and emailed to those who have expressed their interest in closer contact.
Have you really considered the following:
I have no doubt that $1650 will come. My concern is not that it will not happen, but that I am much too conservative in my long-term price objective held since 2000.
If major banks can be torn apart how can we have faith in the small local institutions that hold most of your ready cash?
When I said "It is Out of Control," it is not something that I take lightly. Never in 49 years in finance have I seen a set of circumstances so challenging to the man in the street.
What I am getting at is a simple question. Are you prepared? You have heard us talk repeatedly on removing financial intermediaries between you and your assets, but the time has come for us to recommend going one step further:
Do you have a true-custodial-ship account?
Even if you think you do has your counsel read the agreement and blessed it?
Hold enough cash at your household to last you a month or two. It may be largely unnecessary for the majority, but what do you have to lose?
If your bank should fail this will save you a lot of grief in the short term. If they do not, you still have all your cash that can easily be deposited back into your account.
My Dear Extended Family,
Things are now "Out of Control."
This international financial crisis is now out of control as the world asks if the USA has two presidents, one president or no president at all.
It would appear that Paulson is in financial control with Bernanke as his second.
I warned you by personal email long before the statement was proven totally correct that “This is it.” That was followed by “This is it, and it is now.” Many people laughed it off.
This is it, and it is now.
Now it is out of control.
Now we enter the Collapse of Confidence period.
Then we begin the Weimar Experience.
It has all hit the fan, and still the absolute majority have no clue. The OTC derivative dealers broke the system into millions of pieces of glass. This broken glass cannot be put back together.
It is heart rending to see a picture of GM autoworkers holding a prayer meeting for their retirement funds. The retirement money was never funded. It is a lost hope. This is another responsibility the government has undertaken that is going to go wild.
Those of you still in freeze frame are headed for lines around your bank. Your bank will likely be acquired by another bank that also is in deep trouble.
The US dollar, like a leaderless company, will lose its respect and therefore value.
In order of importance the following MUST be done unless you want to be one of the suffering masses that will be all too visible this winter:
1. You must have your assets held anywhere they are in true custodial-ship accounts. That type of account at a bank or broker states clearly that the assets held there are not on the balance sheet of the host financial entity. Those assets are clearly segregated in your name. This must be reviewed by counsel to be sure you have what you think you have. Don’t cheap out. All you have is depending on the validity of true custodial-ship accounts.
You cannot know all the banks are broke, however I feel ALL banks are broke because finance is an intertwined system that if visible would look like a spider’s web. Problems on the top will materialize all along the web. Therefore the singular most important step you must take is the establishment of a true custodial-ship account.
Do not assume you have this type of account unless a competent attorney reviews the account papers.
2. I am extremely concerned about those of you who persist in holding certificates for gold rather than holding the actual metal either delivered to you or held for you in a true custodial-ship type account. The scams out there in gold are plentiful. The only way to avoid these scams absolutely is to have your gold in your own possession.
Every other means of holding gold is steps away from perfection. Some will be ok, but many will not.
3. Why would anyone fail to either take paper certificates or order their financial agent to make direct registration book entry at the transfer agent? In most cases you only have until year-end to accomplish this strategy.
4. Withdraw from ETFs.
5. If you carelessly keep large assets with your broker you are as mad as a hatter. The FDIC DOES NOT have the money to guarantee all they are undertaking. Withdraw excess money constantly from any net broker. If you are so stubborn that you think you can trade to insure yourself when your funds are not making money while still getting your money that counts you are nuts. Admit to yourself you are nothing more than a gambling addict in a downward spiral.
6. Leave no gold or coins with any coin dealer.
7. If you can withdraw from your corporate retirement plan do it.
8. Withdraw from credit unions.
9. Withdraw from all money market instruments.
10. This is it.
11. It is now.
12. It is out of control NOW.
The next two months are going to be shocking, but nothing compared to what you will have to experience in 2009.
What bank is broke, and what bank is solvent is an impossible question to answer. All we hear are lies, distortions and bailouts. There still has not been a definitive statement about all of this being a product of OTC derivatives.
The key to survival as we have already told you is that you keep your assets in a true custodial-ship anywhere.
Soon you will not be able to direct register or get paper shares for most public companies.
What are most you waiting for? You are at risk to your financial agents. For your sake, get off your butt and do the necessary.
INFALLIBLE INSURANCE ON SALE:
Gold is cheap at $800 per ounce.
Gold is the only viable insurance. The US dollar is not viable insurance because there is simply too much of it and that amount is growing every day. That makes the US dollar untrustworthy.
Gold is the only viable insurance. Clearly equities (with the exception of precious metals shares) are not.
Gold is the only viable insurance. US Treasury bills are not because the yelling at all the rating agencies in Washington today just might get US credit downgraded.
General commodities have been viable, but by nature they are too wild and from now on will be selective until Pakistan implodes and Weimar appears.
Banks cannot offer insurance as they are, in the main, bankrupt.
Insurance companies cannot offer you sound insurance.
Money market funds are not insurance, making gold the only viable insurance.
Retirement programs are no longer insurance.
Jobs are no longer insurance as companies are run by lawyers and accountants.
Equity in your home is not insurance because it simply does not exist.
Your family is no longer insurance because they have the same problems you do.
The assumption your kids will take care of you in your old age is not viable insurance no matter what you think.
Gold has no liability attached to it and is therefore the only viable insurance.
Gold is universally exchangeable, making it the only viable insurance.
Gold has historically performed perfectly in maintaining buying power, making it the only viable insurance.
Gold is the only viable insurance because it is Honest Money.
Since gold is the only viable insurance and because everyone needs it, gold will trade at levels of at least $1200 and $1650.
I could go on but gold is all there is that will protect you from the White Wash being applied by the Fed and Treasury on a structure that is in fact in a free fall.
I am not the least concerned about gold and believe you should not be either as long as you have no margin and understand what gold really is: a currency and an insurance policy. There is no other viable insurance in this most unusual situation.
Gold is a currency that you will see perform as the currency of choice. There is no doubt we are headed into a planetary Weimar experience to some degree.
Dollars are being created faster now than in any other period in history. The Fed and treasury are guaranteeing everything from money market funds to large corporate entities in one way or another.
The first valuation of worthless OTC derivatives via a public sale of these at .0875 to .02 cents shocked anyone with a brain. Now the downturn in business is hitting financial entities and shortly litigation will smoke whatever is left.
The FDIC is already yelling for additional and significant funding from congress as their capital contracts on every Friday’s bailout.
People expect things to return to normal in 2010. That is a fairy tale.
The Fed has only started creating money for bailouts. You saw what happened when they stepped away from Lehman. If you say you didn’t look out the window.
Quantitative Easing by the Fed is the massive creation of funds with no sterilization.
All these bailouts and Federal guarantees on credit items constitute a white wash on a falling economic structure going out of control, and soon.
The out of control point for major planetary dislocation is NOW for the next two months.
On or before January 14th, 2011 Gold will trade at or above $1650. This is simply reporting on the symptoms created by my Formula originally posted in 2006 (Click here to review).
30 reasons for Great Depression 2 by 2011
New-New Deal, bailouts, trillions in debt, antitax mindset spell disaster
By Paul B. Farrell, MarketWatch
Last update: 11:53 a.m. EST Nov. 19, 2008
(Excerpted from larger article)
30 ‘leading edge’ indicators of the coming Great Depression 2
Every day there is more breaking news, proof Wall Street’s greed is already back to "business as usual" and in denial, grabbing more and more from the new "Bailouts-R-Us" bonanza of free taxpayer cash and credits, like two-year-olds in a toy store at Christmas — anything to boost earnings, profits and stock prices, and keep those bonuses and salaries flowing, anything to blow a new bubble.
Scan these 30 "leading indicators." Each problem has one or more possible solutions, but lacks unified political support. Time’s running out. We’re already at the edge. Add up the trillions in debt: Any collective solution will only compound our problems, because the cumulative debt will overwhelm us, make matters worse:
1. America’s credit rating may soon be downgraded below AAA
2. Fed refusal to disclose $2 trillion loans, now the new "shadow banking system"
3. Congress has no oversight of $700 billion, and Paulson’s Wall Street Trojan Horse
4. King Henry Paulson flip-flops on plan to buy toxic bank assets, confusing markets
5. Goldman, Morgan lost tens of billions, but planning over $13 billion in bonuses this yea
6. AIG bails big banks out of $150 billion in credit swaps, protects shareholders before taxpayers
7. American Express joins Goldman, Morgan as bank holding firms, looking for Fed money
8. Treasury sneaks corporate tax credits into bailout giveaway, shifts costs to states
9. State revenues down, taxes and debt up; hiring, spending, borrowing add even more debt
10. State, municipal, corporate pensions lost hundreds of billions on derivative swaps
11. Hedge funds: 610 in 1990, almost 10,000 now. Returns down 15%, liquidations up
12. Consumer debt way up, now at $2.5 trillion; next area for credit meltdowns
13. Fed also plans to provide billions to $3.6 trillion money-market fund industry
14. Freddie Mac and Fannie Mae are bleeding cash, want to tap taxpayer dollars
15. Washington manipulating data: War not $600 billion but estimates actually $3 trillion
16. Hidden costs of $700 billion bailout are likely $5 trillion; plus $1 trillion Street write-offs
17. Commodities down, resource exporters and currencies dropping, triggering a global meltdown
18. Big three automakers near bankruptcy; unions, workers, retirees will suffer
19. Corporate bond market, both junk and top-rated, slumps more than 25%
20. Retailers bankrupt: Circuit City, Sharper Image, Mervyns; mall sales in free fall
21. Unemployment heading toward 8% plus; more 1930’s photos of soup lines
22. Government policy is dictated by 42,000 myopic, highly paid, greedy lobbyists
23. China’s sees GDP growth drop, crates $586 billion stimulus; deflation is now global, hitting even Dubai
24. Despite global recession, U.S. trade deficit continues, now at $650 billion
25. The 800-pound gorillas: Social Security, Medicare with $60 trillion in unfunded liabilities
26. Now 46 million uninsured as medical, drug costs explode
27. New-New Deal: U.S. planning billions for infrastructure, adding to unsustainable debt
28. Outgoing leaders handicapping new administration with huge liabilities
29. The "antitaxes" message is a new bubble, a new version of the American dream offering a free lunch, no sacrifices, exposing us to more false promises
At a recent Reuters Global Finance Summit former Goldman Sachs chairman John Whitehead was interviewed. He was also Ronald Reagan’s Deputy Secretary of State and a former chairman of the N.Y. Fed. He says America’s problems will take years and will burn trillions.
He sees "nothing but large increases in the deficit … I think it would be worse than the depression. … Before I go to sleep at night, I wonder if tomorrow is the day Moody’s and S&P will announce a downgrade of U.S. government bonds." It’ll get worse because "the public is not prepared to increase taxes. Both parties were for reducing taxes, reducing income to government, and both parties favored a number of new programs, all very costly and all done by the government."
Reuters concludes: "Whitehead said he is speaking out on this topic because he is concerned no lawmakers are against these new spending programs and none will stand up and call for higher taxes. ‘I just want to get people thinking about this, and to realize this is a road to disaster,’ said Whitehead. ‘I’ve always been a positive person and optimistic, but I don’t see a solution here.’"
We see the Great Depression 2. Why? Wall Street’s self-interested greed. They are their own worst enemy … and America’s too.
Note to junior exploration, development and producers:
Unless the person or company is well known to you, already a large "registered" stockholder or a proven long, do not take private placements. The shorts are looking to cover.
Things may well be turning. Deal with well known friends only, not strangers and most certainly none of the bad guys.
When the HUI turns, the cover is on.