Hidden Factor To Systematic Failure

July 4, 2014

The most amusing question asked of the Jackass by clients and other people is when the system is going to break down. My usual answer is 2008, which causes a strange reaction, since a past date. Then they are given a tactful tongue lashing that they have failed to notice, detect, or discern properly the failed system in front of their noses. Further quizzical looks and pleas for explanation bring a torrent of headline facts. Seeing events through a different lens of statistical reality with almost no gullible or naive tendencies, the intrepid analyst relates the tipping point was the Lehman kill in Sept 2008, following the subprime mortgage collapse. (Forecasted in advance by the Hat Trick Letter). It was a death event for the US banking structure, which should have forced liquidation of all Wall Street firms. Then came the Financial Accounting Standards Board relaxation of rules in April 2009, which still permits the big US banks to declare their assets at any value they wish. They hide grotesque insolvency. Their liquidation would not happen, instead zombies walked. The next tipping point was the Federal Reserve announcing a move toward the Zero Percent Interest Rate (ZIRP) in early 2009. (Forecasted in advance by the Hat Trick Letter). The next tipping point was the Federal Reserve announcing the bond monetization initiative (QE) in early 2012. (Forecasted in advance by the HTLetter). The next tipping point was Taper Talk removed in September 2013, an obvious declaration of QE to Infinity. (Forecasted in advance by the HTLetter). The most recent tipping points are the Syria War and the Ukraine War to obstruct the Russian Energy Monopoly in the European energy market. Further signals abound, but are more effectively hidden. Cyprus, Syria, and Ukraine all have Gazprom obstruction in common. The defense of the USDollar has taken historically unprecedented turns.


These cited extreme events are all serious tipping points. Since 2009, the vastly depleted, exhausted, and wrecked body economic of Uncle Sam has been kept going with life support, electric shock treatment, and the formaldehyde elixir. The absent recovery has ensued without detection of its causal elements. The monetary policy with ZIPR & QE is not stimulus. In the real world where Keynes does not inhabit, where actual people live and work, the cause for the rapid deterioration and extreme degradation is ZIRP & QE themselves. The former is a wet blanket on the entire USEconomy, providing no return to savers, while at the same time slowing down all money velocity. Misallocation of assets is another side effect from market mispricing. The endless ongoing QE bond purchase program actually destroys capital, by raising the cost structure and forcing a vanish act on profit margins. Hence, business segments shut down and capital is taken offline or liquidated. Killed capital is the indirect result of policy, a death sentence. The press anchors, the bank leaders, the political leaders, they all spout the party line of stimulus. Notice that no corporate heads seem to chime in, since they see rising costs at home and in foreign markets. The monetary policy is urgently needed to cover the USGovt debts, but it is a death sentence for the economy.

It is tragically funny that the US economist harlots preached for decades that hyper monetary inflation is a curse that uniformly destroys economies, until the US requires it. Then the harlots forget their own teachings, and preach from the toilet bowl, defending policy that is a wrecking ball. The Jackass has a newly hatched analogy that makes a great deal of sense. People comprehend free fall and the acceleration of speed of the falling unhindered object. The QE unsterilized bond purchases act like a free fall destructive force. The USEconomy is the object of accelerated damage. The unsterilized bond purchase programs lift the cost structure as a systemic reaction within the feedback loop. As profit margins shrink and disappear, entire businesses are shut down. Capital is removed from service. Job cuts are ordered. Income is reduced. Consumer purchases fall. Business investment goes into reverse. The cycle continues to shut down more businesses with each passing season and each passing year, while the feedback loop is a vicious cycle. QE is like a toilet bowl flush for the entire USEconomy, which is put in free fall. No recovery comes. Systemic failure and total breakdown are assured. The only protection is Gold & Silver coins and bars. The hyper monetary inflation has met the asset destruction, which some dim bulbs call deflation. In their twisted parlance, one can conclude that the USFed’s monetary inflation causes economic deflation. And economists turn their heads! Unfortunately they are paid to deceive people and to defend the system from which they derive a paycheck.


Nowhere has the betrayal of the US nation been more stark and ugly as with the granting of Most Favored Nation status to China in 1999. The story told is shallow and insipid, if not deceptive and loaded with treason. Reducing the cost of import items is a very shallow empty argument, with no long-term benefit, since legitimate income from industry was exported out of the United States. Reliance upon asset bubbles was the result, and eating home equity. It took time to come to light, but the MFN grant was done with a hidden backend lease of a sizeable portion of the Mao Era gold horde. Follow the collateral trails. My guess is it involved about 2000 metric tons. The Chinese demanded collateral, like any prudent organization would. They received it in two forms, in the Jackass best estimation, as a result of the sequence of events which have followed. First, the Wall Street and Federal Reserve hive pledged the JPMorgan Chase headquarter complex as collateral, maybe other buildings as well. But the big enchilada was how the Chinese were given by Wall Street a securitized sovereign bond (like a mortgage bond) on the IRS income tax stream. Such derivatives are regular menu items for the Exchange Stabilization Fund managed by the USDept Treasury, with big arm assists by JPMorgan’s Chief Investment Office.

Such derivatives hold together the USTreasury Bond complex, which China has been actively involved with. They were the primary beneficiary to Operation Twist in 2012, and probably designed it, then force fed it down the USFed throats. When the USEconomy suffered consecutive 3% and 4% recessions every year in 2008, 2009, 2010, 2011, 2012, 2013, the brutal impact was a default on the income tax bond derivative. Chronic recessions do that. The officially stated 1% or 2% GDP growth must be reduced by the inflation lie. For several years, the true CPI has been 7% to 9%. Inflation is called growth, according to Reich Finance. Subtract a chunk off every officially stated GDP, as the USEconomy is mired in a deep recession if not depression.

The visible part of the default is seen in the distressed sale (more like asset seizure) of the JPMorgan HQ for the paltry price of $725 million to a state-owned Chinese property conglomerate. The stated value at the time was $1.9 billion, but informed sources indicate the entire multi-purpose property complex to be worth easily $3 or $4 billion. They grabbed the gold vault too, and the conference center. The vault is connected to the USFed gold vaults underground via tunnels. The Chinese could have just as easily demanded the HQ of other Wall Street banks. Instead, they were given the JPMorgan HQ as collateral, since it is the operating arm of the USFed itself. With very high likelihood, conclude that China has taken control of the Federal Reserve, taken control of One Chase Plaza. Either the Federal Reserve has been shut down or purchased. Its lease expired in 2013, amidst much speculation. No story ensued on the contract continuation or other disposition. The Jackass believes China took the Fed by default force. Further evidence was seen at the Dallas Fed, where the US and Chinese flags were jointly flown until public complaints recently. The Chinese always prefer a low profile, especially when colonizing the United States. Next come industrial parks and vast commercial property purchase. Later comes the re-industrialization of the nation.

The biggest betrayal in modern history of any sovereign nation and its populace might have taken place last year. The USGovt defaulted apparently on the IRS tax stream bond held by China as collateral for the massive gold lease. The JPM HQ seizure is simply the visible portion on the asset seizure. The renege on returning leased Gold caused a trade war to commence back in 2007. Then the default on the IRS mortgage came last year, due to the powerful USEconomic recession. The Wall Street controllers to the USGovt sold out the nation, effectively handing over sovereign control to China in a lost gold poker bet. That is precisely what appears to be the case. In the meantime, the Obama Admin seems particularly pre-occupied with amending the laws for treason as much and for gay marriage. He has vested interest in both, along with Clinton and Bush the Lesser. The clowns who decry terrorism the most are the architects and purveyors of treason. But hey! The Jackass is delusional and crackpot. No American leaders would steal Fort Knox for the national treasury (see Rubin, Bush, Clinton), and then hand over foreign direct investment to China with a gold lease (see same clan) secured by a pledge of income tax revenue on collateral. To do so would be a coordinated betrayal using the US corporate sector in an abandonment of the American workers. Methinks the Paradigm Shift eastward has had some significant lubrication in the moving hind parts.


Many are the events with huge significance, but hidden from view from the madding crowd, working stiffs, clueless sheep, and hopeless dolts that populate the nation. Many are the hidden events not noticed by good bright alert hard working people also. The financial world has gone way beyond complex, and certainly way beyond manageable. Rather than fully describing the key telling events, let the Hat Trick Letter monthly reports lay out the details, angles, tied linkage, and full analysis. The following are all extremely important systemic breakdown events in the Jackass opinion. None seems to be taken seriously even by the financial analyst village or by the gold community. What follows are merely a few important items, many more regularly covered in the newsletter reports.

US corporate stock share repurchase programs bypass capital investment, and instead supports executive packages. Banks continue not to invest in the decrepit USEconomy, just like the corporate sector. Thus an alliance has taken shape with the USFed and the coordinated hidden support by the USDept Treasury plunge protection team. Add in the Wall Street banks with their algorithm trading platforms. The stock market has remarkably little private investor or mutual fund participation anymore. The public has little if any savings. The hedge funds and pension funds probably look to the stock market as the only game in town, since bond yields pay nothing from all the rabid stimulus.

Massive USTreasury Bond dumping in progress, so far kept out of news. But it is evident with bulges and distortions in other arenas. A gigantic funding of BRICS central bank is in progress, in addition to vast gold sourcing for the same BRICS central bank. Every USGovt action has a powerful opposite reaction. It seems every prominent financial legal action has a huge hidden motive. With the BRICS nations led by China & Russia, the Belgium Bulge Billboard might be a Call to Arms, to enlist other nations to dump USTBonds toward the accumulation of gold bullion. Even the legal cases brought by the USDept Justice against BNP Paribas and Credit Suisse have some hidden agendas. BNP appears to have assisted in significant dumping of USTBonds by third parties. Their large bond short position could be quickly delivered upon, as in USTBonds dumped on the market from sovereign nation FOREX reserve accounts. The USGovt would act to obstruct such action. By forcing an admission of guilt upon BNP, the USGovt might wish to fashion a merger of the French bank with the largest in the Paris stable of banks, Societe Generale. Let it be known that BNP is more independent and is run by older European families, whereas SocGen is firmly entrenched within the London and New York banker cabal. The heavy SocGen gold shorts and other derivative positions in support of the London and New York banks serve as testimony. The Credit Suisse case, with another forced admission of guilt, is simpler to dissect. A fashioned merger with UBS would enable quicker pilferage of Saudi and other Arab gold bullion held in the large Credit Suisse bank. The UBS channel for thefts has been set up already, the ramps in usage. Therefore conclude that USTreasury Bond dumping by Eastern nations and Gold thefts by the USGovt are prevalent, but hidden. The breakdown is well along, but hard to detect.

London Whale derivative losses are staggering, well over $100 billion. If the losses came to light, then the JPMorgan insolvency would be an obvious conclusion. So hide the losses by eliminating any testimony or cut deals with prosecutors. Thus note the motive to murder some mid-level bankers who might sing or leak. Other JPMorgan involvement in London stems from Vatican deals they wish to remain hidden, EMU related Maastricht qualification deceptions on FOREX derivatives they wish to remain hidden, and Russian Mafiya investments that went bad they wish to remain hidden. Murder has become an occupational hazard for JPMorgan bankers. By the way, a Hat Trick Letter client has a good friend who has been working inside the JPM hive for almost 20 years. Word passed to me this morning is that CEO Jamie Dimon does not have any cancer at all. He just wants a graceful way out. Lying is a way of life to these scummy people.

The USD has turned cancerous, a grand contamination to the global economy. For almost five years, the Jackass has claimed that the initial nations to abandon the USDollar and proceed with an alternative, especially a gold standard solution, will emerge healthy and become the leaders in the next chapter, while the nations that stick with the USD to the end will fall into the Third World with violence and no mercy shown. The critical moment is arriving for precisely that reality. The joke passed had been that the USDollar rises then rises and rises some more, before it dies suddenly. Other nations are rendered weaker by the QE initiatives, but do not have the ability to print money in heavy volumes. The USD might instead split into the International Dollar and the New Republic Dollar. The latter has earned as concept the Scheiss Dollar name, which word has it will have a gold backing. However, it is the very same Deep Storage fraudulent underpinning that appears on the USGovt accounting ledger for gold management. Think Barrick Gold output from raw mine ore, not yet mined. Think Evergreen Gold contracts, and other totally corrupted gold instruments. The challenge will be immediate and deadly for devaluation. Further proof of the validity of the split Dollar to come is the denial by Karen Hudes, who never stopped collecting a paycheck from the World Bank after all. The past report of her departure from the venerable hegemony outpost at WB was false. The constant is that bankers lie, and so do their hired guns under employ.

Pressure is building for the United States to lose its own currency. For three decades the US has exported inflation, but next it will rapidly import inflation. This is the key which when turned will open the door to the Third World. The US nation has already been de-industrialized. The process began in the 1980 decade with the outsourcing to the Pacific Rim. It culminated in the Chinese Renaissance after bargaining for the Most Favored Nation status. When the New Scheiss Dollar is launched, expect sudden price inflation to surge, expect sudden supply shortages to appear, and expect sudden violence to break out. The result will be acute shortages in food at supermarkets, acute shortages in fuel at service stations, and acute shortage in cash at ATM machines. The US population will not finally suffer a rude awakening until the vast broad painful shortages arrive and meet them face to face. If a 30% devaluation comes as part of the initial currency launch, then the (10/7) factor dictates a ripe 43% price inflation hit from the import channels. For reference to an actual model, see Venezuela for a peek into the US future of disorder, chaos, violence, and severe disruption. They struggle with 100% annual price inflation and deep shortage of staples, amidst almost daily demonstrations.

Rapid accelerated wreckage take place in the gold industry, from continued operations in the face of a corrupt market. The mining firms must honor contracts, must service debt, and must earn profit for shareholders. In the process, they deplete their best properties while the marginal properties are put on hold (mothballed). They should go on strike, not sell at the suppressed COMEX price, and should consider the Chinese buyer outlet at a better price. One must wonder if the contracts to supply refined ore output by mining firms contain some fine print about corrupted market price, either in direct clause or fine print within the contract. The miners need an escape hatch. The consequence is that when the Gold & Silver markets are liberated from banker choke holds and government strangles, the supply potential will be different. The Supply & Demand dynamics will be different. The best properties having been drained will offer less output. What will remain is the marginal and higher cost properties. The Gold & Silver prices will receive an added push from the mining cost altered structure, apart from the other much larger factors. Refer to the short futures contract positions of huge size, and refer to the requirement to replace stolen Allocated Gold Accounts in London and Switzerland, which by expert accounts are in excess of 40,000 metric tons.


Back in 2005, in the formative months of the Hat Trick Letter, a claim was made that the USDollar was implicitly backed by USGovt debt. But worse, it is defended by the USMilitary. The claim was supported by reports of the South Koreans being subjected by USM exercises immediately after they announced in 2005 the plan to diversify away from USTreasurys in their FOREX reserves. They did not change plans after all. Other nations hesitated to reveal any similar diversification plans, since hazardous. When the Norway Govt refused to invest some of their vast $800 billion pension fund in London banks, suddenly Oslo suffered a terrorist event in broad daylight with numerous casualties. The finger was pointed at the British MI-6. When Saddam Hussein went to Euro cash settlement on Iraqi oil sales, suddenly his nation was attacked by the USMilitary, annexed, and subjugated into a nation building project. The outcome is hardly a success. When Iran followed suit with more non-USD energy sales, suddenly it was branded a terrorist state, a rogue nation, in development of nuclear weapons. The USGovt security agencies are actively flooded the nation with heroin from the northern border with Afghanistan. The day is coming for more full revelations of USGovt sponsoring of heroin and global distribution from Afghan sites. Refer to the Snowden files.

The usage of the USMilitary has been pervasive in both Syria and Ukraine. The defense of the USDollar is the hidden element, to prevent Russia from establishing firm trade ties through energy provision with Europe. The bigger motive is to prevent the formation of the Eurasian Trade Zone, which will join the Eastern giants of Russia & China with the European continent and market. The Ukraine war is the USDollar Waterloo event. The Jackass bets not 10% of Americans know what the Waterloo metaphor means. The last defense of the USDollar takes place on Ukraine soil, with failure as outcome. Almost all Europe will splinter off from US & NATO support, all in time. Commerce will prevail. Ironic that Napoleon failed to conquer Russia, as did the Mongol Horde and Nazi Germany. Yet the Late Stage American Empire leadership crew believes the United States can bring Russia to heel or to lay waste to it. And further, the British Empire and the Soviet Empire failed to conquer stubborn little Afghanistan. Yet the Late Stage American Empire leadership crew believes the US can bring the Afghans to heel. We are still waiting for the Chevron pipelines through the hilly rugged nation, as part of the original deception. What incredible arrogance and insufferable pride. What ignorant students of history. The losers are the US citizens. The new normal is constant war, just like the sage prescient novel “1984” had warned by George Orwell.

The chief US exports are war, bond fraud, rising costs (led by food & fuel), GMO seeds, viruses, and diabetes. All war and hostile actions are designed to protect the USDollar. The United States consistently chooses war over the Gold Standard, the legitimate solution. War and Bank theft are the two main traits of dedicated professional fascist organizations, along with virus and genetic weapons, even obsessive control of captured peoples. The USGovt gradually will alienate every ally while soliciting support for attacks on enemies. All enemies have a common trait, defiance against the USDollar and desire to put in place an alternative to the most corrupt global currency in the history of mankind. They will put in place the new Gold Trade Standard.


"Not only have I seen many of the things you talk about in the public arena come to pass, but I have seen many of the things you say repeated three months later by the other analysts. Congratulations!"

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   (Nick from Australia)

"Jim Willie is a gift to our age who is the only clear voice sounding the alarm of the extreme financial crisis facing the Western nations. He has unique skills of unbiased analysis with synthesis of information from his valuable sources. Since 2007, he has made over 17 correct forecast calls, each at least a year ahead of time. If you read his work or listen to his interviews, you will see what has been happening, know what to expect, and know what to do."

   (Charles in New Mexico)

"A Paradigm change is occurring for sure. Your reports and analysis are historic documents, allowing future generations to have an accurate account of what and why things went wrong so badly. There is no other written account that strings things along on the timeline, as your writings do. I share them with a handful of incredibly influential people whose decisions are greatly impacted by having the information in the Jackass format. The system is coming apart on such a mega scale that it is difficult to wrap one's head around where all this will end. But then, the universe strives for equilibrium and all will eventually balance out."

   (The Voice, a European gold trader source)

Jim Willie

Jim Willie

Jim Willie CB, also known as the “Golden Jackass”, is an insightful and forward-thinking writer and analyst of today's events, the economy and markets. In 2004 he launched the popular website http://www.goldenjackass.com that offers his articles of original “out of the box” thinking as well as content from top analysts and authors. He also has a popular and affordable subscription-based newsletter service, The Hat Trick Letter, which you can learn more about here.  

Jim Willie Background

Jim Willie has experience in three fields of statistical practice during 23 industry years after earning a Statistics PhD at Carnegie Mellon University. The career began at Digital Equipment Corp in Metro Boston, where two positions involved quality control procedures used worldwide and marketing research for the computer industry. An engineering spec was authored, and my group worked through a transition with UNIX. The next post was at Staples HQ in Metro Boston, where work focused on forecasting and sales analysis for their retail business amidst tremendous growth.

Jim's career continues to make waves in the financial editorial world, free from the limitations of economic credentials.

Jim is gifted with an extremely oversized brain as is evidenced by his bio picture. The output of that brain can be found in his articles below, and on the Silver-Phoenix500 website, on his own website, and other well-known financial websites worldwide.

For personal questions about subscriptions, contact Jim Willie at [email protected]


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