Higher Inflation And A Deeper Depression
Jay Taylor
In his latest missive in Shadow Government Statistics, John Williams states the following:
“General Outlook Unchanged: All factors considered, the broad outlook remains the same: further intensification of the inflationary recession and a deepening systemic and banking solvency crisis. Near-term market recognition of same and risks for unstable market conditions are intensifying, albeit erratically.
“Over the shorter term, major market displacements likely will follow or be accompanied by intense, broad selling of the U.S. dollar. An increasing flight-to-safety outside of the U.S. dollar also should include flight-to safety into gold. Despite volatility ongoing in oil prices, current levels remain highly inflationary. The gold and currency markets also remain subject to extreme near-term volatility, jawboning and both covert and overt central bank intervention. Over the longer term, U.S. equities, bonds and the greenback should suffer terribly, while gold and silver prices should boom.”
The System Is Still Inflating
Despite the horrendous implosion of wealth taking place in the global banking system, our IDW continues to indicate that the system overall continues to inflate. Our IDW closed the week at 139.79. Most important from my point of view is the Global U.S. Dollar Liquidity measure, which is growing at about 13% year over year. Once the entire system begins to deflate, there is no way any measure of money, be it M-3 or global U.S. Dollar Liquidity, could continue to grow.
We have said it many times before and we will say it again. If Americans understood what they stand to lose by the communist economic policies now being carried out by our government, they would be fighting like hell to stop Bernanke and Paulson and Bush from the tyranny they are preparing. Carrying out wars and bailouts in what is quickly adding up to trillions of dollars and then paying for it with debt and printing press money is absolutely destroying our capitalist system. And when capitalism is lost, so too will our freedoms be lost. And if you do not fear the loss of freedom, consider that you and I are just one small breath away from being endangered of imprisonment if the President of the United States and his henchmen wish to put us there. Why would he do that? He would do that and indeed he is doing that whenever he deems you or me or anyone else to be a political adversary.
As reported by The Privateer newsletter, in a recent article in the New York Times by journalist Adam Liptak, the Virginia Federal Appeals Court ruled 5-4 in favor of a dictatorial move by President Bush that paves the way for the President to haul you or me off to jail forever without a chance for any defense. The case involved a legal alien who was accused by Bush of terrorism.
The person in question was arrested by civilian authorities and then handed over to the U.S. military, where he was accused of terrorism. The appeals court had to do with the ability of a civilian court to turn over a citizen or legal alien to a military court, without a trial. According to Liptak, the language of ruling paves the way for American citizens to be turned over by the U.S. courts without a trial to the military where we all can be put away without any due process.
We can only hope and pray that the U.S. Supreme Court will agree to hear an appeal of this case or else we will all be endangered of a most basic liberty, the right of due process. While I would like to think this kind of thing couldn’t happen in America—as most Americans seem to assume—based on this account and many others having to do with the diminished rights of American citizens, the handwriting appears to be on the wall. Unless something changes rather dramatically, we could all be in danger of losing our freedoms very soon. In other words, we may have more in common with Nazi Germany than hyperinflation. In fact, as economic conditions continue to worsen, we can count on all manner of tyranny to grow exponentially along with prices. From thepoint of view of your own wealth, think in terms of capital controls and ways to get money out of the U.S. into a safe haven as soon as possible. We are not in the business of providing that kind of advice, but there are those who can guide you along those lines. Check out the Sovereign Society at www.sovereignsociety.com for starters. This is an organization that is headed by a former Congressman.
From what I know about this organization, they are not going to advise doing anything that is illegal. On the other hand, what is legal these days may no longer be a matter of law but rather what is based on the whims of the President of the United States. That wasn’t supposed to happen in America. But when you have a court system that thinks the Constitution is no longer valid because “times have changed” then who is to say what the law is?
Gold & Silver Look Stronger After August
Roger Wiegand called my attention to the following excellent charts for gold and silver.
This is a 34-year and 15-year weekly seasonal gold chart. In other words, the 34-year gold chart displays the average seasonality for gold over the past 34 years. The brown line represents the average seasonal pattern for gold during the past 15 years for gold. Note the strong seasonal strength for gold from the end of August through the early days of October. There is no guarantee this pattern will continue this year. Certainly the plunge protection team will do their best to try to steer Americans and others away from gold so that they will continue to hold worthless paper, as our fascist economic policies seek to bail out crony friends at the expense of people outside of their inner circles. (Does that statement make me a “terrorist”?)
The next chart shows a 40-year and 15-year seasonal pattern for silver. Note that the most recent 15 years for silver show strength from the end of August through the first of October and then a surge of strength during December.
These seasonal patterns are just one of several reasons why Roger Wiegand expects gold and silver to rise dramatically from the end of August toward the end of this year.
Certainly as we look at the dismal financial picture for U.S. financial institutions, it isn’t difficult to see the justification for a dramatically higher gold price. The housing crisis continues to get worse, as does the overall debt picture in the U.S. And the recent news regarding Fannie and Freddie is absolutely mind boggling in size. As reported by The Privateer, “Inside the US financial system, there were US$7.07 TRILLION in deposits at the end of the first quarter according to an analysis of data reported by FDIC. The two GSEs’ mortgage guarantees of US$5.2 TRILLION can be measured against the US deposit base, as can their off-balance sheet mortgage securities of, respectively, US$2.27 TRILLION and US$1.42 TRILLION. “Central banks around the world, innumerable pension funds and other investors hold US$5.2 TRILLION in debt sold by these companies. This is what makes Fannie and Freddie a global financial problem.
“US private debt owned by Americans is now US$145 TRILLION, about the size of the US Gross Domestic Product (GDP). US corporate debt exceeds US$6 TRILLION. The early estimates out of the counting houses in New York swing between US$1 TRILLION and up to US$5 TRILLION!”
Even if Obama is elected President, you can bet your bottom dollar that the +US$1 trillion of losses for Freddie and Fannie will have to be paid for with printing press money, not taxes. Therefore, the amount of dollars that will need to be printed, just for this problem—never mind social security and Medicare disasters awaiting America’s aging population—is absolutely mind boggling. Now as you start to view John Williams’s concern about hyperinflation in America, it doesn’t seem like such a stretch—at least it doesn’t seem so to me. or later the great CON games engaged in now by Bernanke and Paulson will give way to reality. And confidence is lost in paper money—more precisely in the U.S. dollar—that is when you can expect the collapse into a state of absolute worthlessness and when Americans will have to use wheelbarrows to enough cash off to the grocery store to buy a loaf of bread.
We hope the Dennis Gartmans of this world are correct. It will be good news if in fact it is WE and not THEY who are smoking something funny and are out of touch with reality. Perhaps someone with a clear mind can tell all of us gold bugs that we are “whacked out.” I pray that is the case because if it is not, then all of us are going to have some very, very difficult if not catastrophic days to deal with over the next two to ten years.
July 27, 2008
Jay Taylor, Editor of J Taylor's Gold & Technology Stocks
www.miningstocks.com
Email this Article to a Friend 
Printer Friendly Version
