Posted at 3:40 PM (CST) by & filed under Jim's Mailbox.

Dear Jim,

Regarding part of this post on hyperinflation it seems quite familiar:

Was Weimar’s Hyperinflation Triggered By An Increased Velocity Of Money Or A General Loss Of Confidence?
Posted: Nov 18 2008 By: Jim Sinclair

***snip***
2 “Governments will often try to disguise the true rate of inflation through a variety of techniques. These can include the following:

– Outright lying in official statistics such as money supply, inflation or reserves.
– Suppression of publication of money supply statistics, or inflation indices.
– Price and wage controls.
– Forced savings schemes, designed to suck up excess liquidity. These savings schemes may be described as pensions schemes, emergency funds, war funds, or something similar. 
– Adjusting the components of the Consumer price index, to remove those items whose prices are rising the fastest.

None of these actions address the root causes of inflation, and in fact, if discovered, tend to further undermine trust in the currency”
***end snip***

My Observations:

Bullet point one – Over the past years it is a given that the government massages the inflation numbers to suit their interests and pay less than they should on COLAS, etc. This fact is laughed about openly on CNBC. I have also seen numerous changes in how money supply is counted, calculated and presented on the Fed’s books, possibly Monty Guild or some other Fed watcher could document these changes and how they affect the market’s perception of the US dollar. There has been no audit of US gold as has been discussed by many gold people over the years and there have been distinctions made on the Fed’s books about "deep storage gold" and other strange classifications of the "reserve." Ben Bernanke also opined once that the Fed could buy gold mines if they so desired. So in my mind, bullet point one has been going on for some time now – massaging and fibbing over time, and hiding info.

Bullet point two – Well Dr. Greenspan took away the widely followed Money Supply report a few years ago, citing them as not needed anymore and to save the Fed money and time by not calculating the report. Well thanks to the private groups who continue to create these reports (as best as they can as mirrors to the originals) it seems like the money supply numbers are accelerating rapidly higher. Soon Inflation will be a dinner table topic again as it was in the late 70’s, so hiding it by eliminating reports or doctoring the reports will not make much of a difference in the near future.

Bullet point three – Price and Wage controls were tried by Carter and they failed. In an Obama administration I would tend to believe that they may be tried again. We can only wait and see if the same mistakes are made. We know that price controls lead to shortages on the goods that are capped, and artificial wage controls – usually making the employer pay more to his workers than what the market indicates, leading to less profits and in some cases business closures.

Bullet point four – Forced savings schemes–The trial balloon for that has already been released into the internet ether! Taking over 401k plans and IRA’s by the government, a Democrat sponsored idea, where you would receive a rate of return of 3% over the inflation rate (we know this number will be quite modest already) with other stipulations, restrictions, tax gimmicks and the like. Most average people, after they wake up from the market beatings they are now taking will probably go for it! Why not let the government manage the retirement money there is not much left anyway? And now we see that there is a cry for Obama Bonds!

We are well on our way towards dollar collapse and full blown runaway inflation. Looking at Trader Dan’s charts today regarding the fed balance sheet practically blows my mind – an ocean of dollars swamping the ship of State.

I noticed today that the 3 month bill is paying 0% interest! I also remember watching an exchange of viewpoints a long time back on a financial program about gold. One man said that gold is not a good investment since it pays no interest. The other man quickly replied that gold didn’t have to because it’s real money. Well paper money isn’t paying much these days and is going down in value since its supply is growing, the last thing you want is a drink of water when you are drowning. The lifeboats left are few, as some have already been lowered away.

CIGA Ken

Hello Jim,

Very good analysis in your article"30 Reasons For The 2nd Great Depression."

I might add this is the fourth long-term down cycle since 1860, and it’s not over yet.

CIGA Eric

Click chart to enlarge in PDF format

November2108-Eric

Posted at 9:35 PM (CST) by & filed under General Editorial.

Dear CIGAs,

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

No. 30:
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.

More…

 

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.

Regards,
Jim

Posted at 7:25 PM (CST) by & filed under General Editorial.

Dear CIGAs,

Did you enjoy today and yesterday in the paper gold market? You know the bullion banks are not even good traders in gold. They are only bullies. They could not compete with Trader Dan without their bully advantage.

To create an even playing field the transmutation of the COMEX to cash gold only means margins at 100%. This did occur late in the 1970s but was an entirely different situation.

When does a bully stop bullying? When the victim finally beats the crap out of the bully, that’s when. Nothing stops unless the victim takes action to stop it.

There is only one action that will bring this daily raping of the Gold and Silver market to an end.

If you are tired of being had by paper gold and silver bullies the following is the only course of action as a positive step to end the games being played at your expense.

Ending the bully’s free ride levels the playing field between you and the gold banks.

Do the necessary to stop the daily raping.

Take delivery of your COMEX gold and silver which can be shipped to any bank anywhere in the world.

Do not leave any intermediary between you and any kind of gold or silver you own.

Definitely:

  • DO NOT HOLD GOLD IN CERTIFICATE FORM.
  • DO NOT HOLD GOLD COMMINGLED WITH THE GOLD OF OTHERS.
  • DO NOT TRUST YOUR HARD EARNED GOLD TO ANYONE OFFERING YOU A SHADY DEAL.
  • LEAVE NO COINS WITH ANY COIN DEALER.
  • GOLD OR SILVER BOUGHT AND TAKEN DELIVERY OF ON THE COMEX CARRIES ZERO PREMIUM.
  • THE MARK UP YOU ARE PAYING COIN DEALERS FOR GOLD IS MADNESS WHEN THERE IS NO SUCH NEED IF YOU CAN AFFORD A 100 OZ BAR.
  • NEVER BUY GOLD ROUNDS WHICH ARE NOT COINS OF THE REALM.
  • PRETTY ARTWORK ON A ROUND DOES NOT MAKE IT A COIN OF THE REALM EVEN IF PERMITTED IN WRITING BY A GOVERNMENT AGENCY. ALL THAT DOES IS REGISTER THE PRETTY ROUND.

Here is a question for you to think about. I do not require the answer.

What is the difference between the Franklin Mint, the National Mint, the US Treasury Mint and Down Under?

Posted at 1:11 PM (CST) by & filed under General Editorial.

Dear Friends,

This is the exact point in the market at which the Bush Administration initiated the same actions as Roosevelt, but at a magnitude ten and all at once.

What do you think the Obama Administration will do?

We know the Fed has moved to Quantitative Easing.

Quantitative Easing
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 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."

More…

 

Lie-bor lies. If that were not so you would see the trickle down into general corporate paper which is nonexistent.

The dollar rally is from technical currency flows that will end and therein end the dollar rally.

Obama wishes to reduce military spending and increase fiscal stimulus. The latter will prove much easier than the former. Getting out of conflict is much harder than getting into one. Other problems of a military nature sit on the horizon. It is reasonable to assume FISCAL STIMULATION is the Obama plan regardless of other desired routes.

Gold’s decline is not part of the plan.

A strong US dollar is not part of the plan.

Significantly reducing military spending is more rhetoric than part of the plan in a practical sense.

When the boxes take shape we will add Obama to the schematic.

BushRoosevelt

Posted at 11:52 PM (CST) by & filed under General Editorial.

Dear Friends,

There are only two things you need to know:

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 it’s 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:

Angola 1991-1999
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

From http://en.wikipedia.org/wiki/Weimar Republic