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Suicide 

Of 

The Western World 

ID: 11957098 Level: 2 

Years 2011-2012 

Why and How It Is Happening 

How To Save Yourself 

Dr. Stephen Newdell 

1


This book and several others I’ve written or “cobbled together” have the 

purpose of teaching you and intelligent readers like yourself how to 

survive, enjoy living, be healthy and prosper through the present and 

coming difficult years. I sell these books often for next to nothing. Why? 

I do this in the honest expectation that you’ll visit my website and 

respond to advertising there. I carefully review products we offer. I 

consider these to be the best at reasonable prices to help you be healthy, 

wealthy, safe and wiser. Kindly repay my efforts to help you with your 

purchases. Please see my website and respond to advertising there. S. 

Newdell www.BH2012.com 

A second reason to bring this together was as an historical piece. One 

day when some college professor wants to know how it all happened, 

he’ll find this compendium, should it survive, very helpful. 

It’s a bit difficult to organize all of this into neatly separate subjects. 

You’ll have to forgive me if subjects overlap. That’s real life for you! The 

wonder of the human mind is that it can store all of this stuff and cross 

reference it, which makes you capable of much more than you realize. 

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www.bh2012.com 

Opening Volley 

The Problems We Face Today boil down to moral issues. They 

summarize in doing the job right, being honest with our 

fellows, working to uplift all of society, because that in turn lifts 

our lives too, and using the mineral wealth and working with 

the environment in ways that will sustain us. We humans, it is 

argued, abuse the planet and destroy everything we conquer. In 

1850 no one imagined we could poison the atmosphere or the 

oceans, but now we know we can. 

Here’s a more personal example to explain my viewpoint. 

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For Nearly Twenty-Five Years I made my living as a small town Chiropractor, 

massage therapist, and nutritional advisor in Western Washington State. 

I don’t think I’m a genius. I think I did exceptionally well because I took the time to 

do the job right. I studied more, I used more techniques, I learned more about how 

to get the patient’s body to tell me what it needed even if we were alone in the dark, 

or in a forest. That was my stated goal and knowing old time doctors did that, I 

wanted those skills too. 

I didn’t need electronic gizmos. It was my pleasure to help sometimes in someone’s 

home, help a girl-friend on our bed in the dark, or even care for someone on an office 

or living room floor. Sometimes I helped a pet and the pets remembered me! 

This kind of caring service meant I got exhausted after seeing 18 or 20 patients a day 

while other doctors ran roughshod over 200. They disappointed a lot of patients. The 

guys who ran the licensing and disciplinary board in Washington State, particularly 

the despotic brothers John and Bill Day, and their disciple Butch Corbin, thought 

that sort of shoddy practice was acceptable, and they practiced that way too. They 

prevented the best kinds of care from reaching painful patients and indirectly caused 

tremendous suffering to thousands of patients. A pox on their houses! 

Some of their disappointed patients found me. Some patients came from a thousand 

miles distance when they flew in from Alaska. Occasionally I had visitors from 

Japan or Paris, France. I had a lot of friends who trusted me because I was doing the 

job right, not just moving them on and off the table in 3-minutes! Even other student 

chiropractors at seminars asked me to care for them and exclaimed it was the best 

care of their lives. 

I got people well. Pity that insurance companies don’t survey for success rates. They 

just look at numbers of visits, and costs, and then place visit and price limits. Getting 

people well is of no concern for them. 

I distinctly remember I was working on a weight-reduction book into the dark hours 

when a lovely teenager girl called me around 7:00 PM. “I drove by and saw your 

lights on. I have a terrible headache and I have to go to a Long Shoreman’s Union 

dinner with my Mom and Dad. Can you see me?” 

She came in, I adjusted her spine and paid particular attention to her neck, the 

headache cleared and she went home. That sort of trust warms my soul. Those were 

the people who caught up with me and gave me a hug in the middle of the local 

grocery or department stores. 

Why am I telling you this? Because I want you to understand there’s another way to 

approach life. There an approach that is methodical, thoughtful, analytical, careful, 

concerned, loving, and slower. It’s an approach that takes the time to do life right. 

It’s an approach that puts family love for ones neighbors FAR above personal 

financial gain and self aggrandizement. It is a love of generosity which repays with 

kindness. This attitude comes from the plane of existence you cannot see and may 

have hope or have faith exists, (or have come to be certain exists.) 

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Later, when the government Medicare regulations turned me into their wage slave I 

left the healthcare business. I did a lot of work and was never paid for about 40% of 

it. 

As Ringo Starr once quipped, “Anything the government touches turns to crap.” A 

lot of good caring doctors left the business for the same reasons I left. Every time the 

government starts regulating prices and overtaxing, they kill businesses. That’s why 

so many businesses have moved abroad. 

After more training I began to sell insurance and financial services. My experience 

mirrors that of others in the economics realm. It is that most people are unwilling to 

slow down, look and listen, and then protect themselves from the consequences of no 

financial plan. These are people who have all of their lives run headlong into the 

future like a herd of horses off a cliff screaming into the moonlight as they fall. 

It has been entirely too easy for Americans to borrow money, and assume there will 

be more. They were paid well, and bought beautiful items at low prices. Rather than 

maintain what they had, they often let these items go to ruin, and then bought a 

newer model. This idea even extended to marriages! Men might joke about their 

wives threatening to trade them in for a newer model. There’s a lot of truth behind 

some jokes. People seldom love, they have marriages of convenience. 

Their children don’t bother with marriage or with love. They have sex as a 

convenient exercise with near strangers, as if the partner was an exercise bicycle to be 

rented, and the activity were no more significant emotionally than helping a 

neighbor move some furniture. 

When the economy began to go badly (again) the government advised them to spend 

more to help keep us all working. Consume, enjoy life, and have all the credit you’d like! 

Some people bought two and three homes, thinking they could do a little clean up 

and “flip” the house (sell for a quick profit.) Eventually a lot of people ended up with 

two homes they didn’t live in, couldn’t sell or rent, and lost the homes to the banks. 

Now the bank has the asset and the “flippers” are broke! 

These people were as stupid as Michael Jackson hanging his baby over a second 

story fence while waving to a crowd of fans! (He wouldn’t have dropped the kid, but 

then, maybe something unexpected might have happened. It was simply imprudent.) 

The flippers, similarly imprudent, didn’t expect to lose the value of all of that real 

estate, but perhaps there might have been reason to show some caution and 

prudence. There were lots of financial planners saying “the price of real estate is 

going up too fast and it can’t continue this way forever” but people just shook their 

heads and said they were wrong! 

It was idiocy from start to finish. A chimpanzee with a loaded gun was piloting the 

airliner and everyone was dancing in the isles and drinking to excess. Somewhere in 

a dark corner a strange couple was joining the mile high club. It was all party and 

throw all prudence to the wing tips. It was the beginning of the end of an empire that has 

grown fat on excess and grown drunk with its arrogance to such an extent that its 

citizens believed their arrogant excessive behavior was the justifiably right way to 

4


live. (‘I’m right, the rest of the world is wrong. I must be right. I must be better than 

everyone else because I’m an American.’) 

Planners call or write, but too many people won’t look, read, think and prepare a 

financial foundation for a shelter through financial maelstroms. That’s a sure way to 

be caught naked in a hail storm. 

Too many potential customers are too quick to dismiss the caller with a quick hangup 

and a nasty comment, never thinking that the cost of insurance or planning is a 

LOT lower than the cost of paying the price to have done without it. This is one of 

the major reasons families are homeless now. They lost everything due to lack of life 

insurance or health, and disability insurance products. 

They never carefully invested a dime. They spent it all on plastic easily broken 

garbage, cars that were fashionable, excessively expensive clothing, cosmetic surgery, 

dinners out, vacations, dubious entertainments, Wall Street “investments” that were 

little more than gambles on what other gambles were going to do, college degrees 

leading to no marketable definable skills, and so many more excesses. They lost it all 

because they did not invest correctly for a retirement fund. Ultimately enough people 

did this to push the greatest empire the world had ever seen to the brink of 

bankruptcy and self destruction. 

They threw so much money away on junk they could have paid their mortgage off in 

15-years and owned their home. 

Like little children, they habitually ran across financial streets without looking 

cautiously. It is inevitable such behavior will get you run down. 

I called. Many agents and financial planners who studied diligently and honestly 

wanted to help. We were rebuffed with the words, “I ain’t interested!” and the 

crunch of the disconnected communication. 

To those ill mannered nitwits my answer remains, “One day soon you will be 

interested, but at that point it’ll be too damned late to help you.” 

Our society is polarizing. Like other countries in South America, Russia, Ukraine, 

Eastern Europe, The Philippines, and other places in South East Asia there are rich 

and poor and almost no middle class. I think the same will be said about the USA in 

the not very distant future. 

I’m assuming YOU, my reader, are not a nitwit, (or you’ve decided to repent and 

become a reformed nitwit.) You recognize it’s time to take protective actions. There 

is yet an opportunity for you to become part of the “comfortable” class and live a 

decent life while the impoverished beg to serve you at any price. 

I’ve been to The Philippines and seen beautiful youthful impoverished people 

degrade themselves to do anything to survive. Even dirty children beg on the streets 

and bring the money to Mr. Big who sits smoking cigars in his air conditioned 

passenger van. It’s the lamentable Oliver Twist story occurring today. This is the sum 

5


total of what people have when the governors put their self aggrandizement above 

the needs of those they’ve promised to serve. 

This piece of writing is not all my own. I’ve cobbled together articles from many 

economics writers. They will prove to you that the once most heroic empire the 

world has ever known is about to become a fond memory. They will also tell you 

what to do to protect yourself and create a safer future. 

As you continue I’ll give references and let you know who you can read on-line at no 

charge to learn more. At your own discretion you can subscribe to their investment 

news letters and other advisories and following their advice do more to have a better 

future. 

This is a good introduction for you. It crams years of looking around at who to read 

and who to avoid, and puts a sane viewpoint into a neat little electronic package for 

you. I’m selling this for a really low price in the hope you’ll read more of my 

materials and do some real business with me in the near future. I promise, business 

you do with me is meant to be a good exchange. You’ll get real benefit for your 

money when you do business with me. 

The fact that the price was low does not mean this “book” is less valuable. It simply 

indicates some nice guy wanted to help you get the information you need to get your 

act together and avoid screaming into the moonless night on the back of a plunging 

horse. 

I openly admit, this book is way too long, but the subject is just “gigunduss!” 

This IS the end of the greatest empire the modern recorded history of our world has 

ever seen, and this piece, cobbled together from various writers, serves as a history 

and a future prognostication. Flash read through it, slow down at articles that 

capture your interest, and I’m sure it will serve its purpose to help you. 

Most of the material here is not my own. As if in a long evening conversation, I’ve 

cobbled together articles, blogs and news to give you an overview of the world and 

its future and recent history. But for this first box, most of it is rather easy and light 

reading. 

No one has given me permission to reprint their material. I advertise them for free 

here, so I think they should be happy I’m helping to promote their name and their 

products. I’m also hardly wealthy enough to be worth suing, and I maintain that 

anything on the Internet is public property. 

BEFORE I roar into proofs of what has happened, is happening, and will happen to 

our economy, I want to also point out the environmental degradation. This list of 

link will help those interested (in year 2011) to see articles supporting my hypothesis. 

I have previously in other writings hypothesized that the BP Oil Spill in the Gulf of 

Mexico was being mishandled, and that the dispersants used would eventually 

poison the entire Caribbean, the Gulf Stream and at last poison all the sea life in the 

6


Atlantic Ocean. This would deprive Billions of people a source of protein which they 

presently subsist upon. No one is answering me directly about this, not even biology 

professors to whom I’ve written. They just acknowledge the letter. I think it’s too 

terrible for them to contemplate, or they don’t want their name connected to 

anything that would get them in trouble among their colleagues. In any case, look 

over this list, at least the titles, and see what it tells you. 

BP Oil Slams Florida 

Florida has been hit with huge amounts of oil from the BP oil spill: 

• Tears after heartbreaking discovery near FL border: “Massive amounts of 

submerged and sub-surface oil” pushed on to beaches — “Neverending” 

(VIDEO) 

• *CONFIRMED* Chemist: That’s BP oil on Southwest Florida beach — 

“Should put to rest any doubt” over origin of 173 ppm oil found in sand 

near Sarasota 

• Orange Beach: “Billions of tar balls” (VIDEO) 

• Oil under sand still just “as toxic as the fresh oil”: Sample “had to be 

diluted 20 TIMES to get a reading” — Florida agency says SAME sample 

NOT toxic 

• FL Fisherman: “Like having a chemical dump site and not telling anyone” 

— “Oh no, I’m cleaning flounders right now that I just caught within 

eyesight of there” 

• Miami wildlife officer: “Birds sporadically dispersed, floating southward, 

about a mile slick of them” — CBS reports 10 dead (VIDEOS & PHOTO) 

• Miami-area: Many large birds reported “floating in Biscayne Bay covered 

in oil” — “Biologists mind-boggled” (VIDEO) 

• “Could we all be at risk?” asks local Florida news station — Medical doctor 

has patients testing in 95th percentile for oil spill-associated chemicals 

(VIDEOS) 

• All 40 scientists agree at meeting: “Fish in the Gulf of Mexico will continue 

to get sick, die or fail to reproduce as a result” of oil — What about the 

people? 

• Multiple boats of fishermen sickened on November 1 — One still 

hospitalized after “bleeding in his esophagus” 

• Dallas surgeon “has treated many people from the Gulf that have been 

made sick by BP’s toxic chemicals” 

7


• “I don’t recommend eating Gulf seafood, not with the risk of liver and 

kidney damage” says toxicologist — “They’re sniffing for something they 

can’t detect” 

• Scientists worry about “a cascade of events that will lead to the collapse of 

entire Gulf species” — May have pushed a variety of sharks “to their 

tipping point” 

• Doctor: “Dead people don’t talk, dead people don’t sue, dead people don’t 

tell the truth, and dead people don’t bother BP” 

• Official: “We will NEVER get all of the oil off the beach, that’s just 

something we have to come to grips with” (VIDEO) 

• “Human race survives methane plume, for now” — May take 400 years to 

be clear on how methane affected Gulf says professor 

• “Data that’s been gathered about the spill’s impact has yet to be made 

public” — USF Dean: Feds will not share test results with researchers who 

collected samples 

• Dispersant use contaminates volume of water with up to 1,000 more PAHs 

— What’s worse? These toxic parts of oil remain longest 

• Toxicologist: “We tested a good number of seafood samples and in 100 percent we found 

petroleum” — Gov’t tests “little more than a farce” 

Headlines courtesy of Florida Oil Spill Law. 

With attribution to: http://georgewashington2.blogspot.com/2010/11/bp-oil-slams-florida.html 

Volley II: The people at BP have the US Energy department firmly anchored in 

their wallet. The whole operation is as corrupt as Hell. Dick Chaney, when he ran the 

government behind the scenes, allowed safety regulations to be eliminated because he 

and others planned for the BP Oil Disaster. They wanted this to happen so they 

could finally remove masses of poor folk out of Louisiana and Mississippi, and use 

the entire coast for their gigantic oil field and oil refining operations. To say there is 

no “conspiracy” is nonsense. It appears the “conspiracy theorists” are often right and 

the ones who say they’re crazy are the ones with their mind’s numbed and their eyes 

covered with blinders. If you’d like to see more go to YouTube and look for the 

video by Jessie Ventura “Conspiracy Theory” regarding the gulf oil spill. It may give 

you reason to reconsider. 

Dick Chaney, former CEO of Halliburton Corporation is very wealthy. He’s grown 

older and his health is failing. I see no reason for him to want to be wealthier. 

Perhaps he wants to make his mark on the oil business, or on the stability of the 

United States as an Empire. Or perhaps he has more sinister, secret reasons beyond 

the scope of this discussion. In any case, he is still well invested with Halliburton and 

what makes Halliburton richer will enrich Dick Chaney too. The fact that a few 

people unnecessarily died on the BP Oil platform and many more will die after their 

clean-up efforts, and many more will die from poisoned fish in the future, is of no 

8


concern to Dick Chaney, or George Bush, or several other guys who apparently have 

all been working together toward many disasters for this country and the world, with 

roots that grow back a very long time. 

Read on…. 

The Democratic Ideal 

The United States is not a “Democracy.” It is a democratic 

representative republic. Nevertheless, the democratic ideal should 

weave through it making of it a nation that works to help uplift its 

citizens. Here on this subject are the words of one of the greatest 

British scholars to grace the 20 th century. 

“The democratic ideal is expressed as: Government BY the people 

FOR the people. To facilitate the process, democracies are organized 

on an electoral basis whereby the few represent the many. The 

representatives are chosen BY the people to govern FOR the people - 

but the paradoxical result is generally their government OF the people. 

This is contrary to all the principles of democratic community and has 

nothing whatever to do with service. It is, therefore, in direct 

opposition to the Holy Grail Code. 

At a national and local level, elected representatives have long 

managed to reverse the harmonious ideal by setting themselves upon 

pedestals above their electorate. By virtue of this, individual rights, 

liberties and welfare are controlled by political dictate, and such 

dictates determine who is socially fit and who is socially unfit at any 

given time. In many cases this even corresponds to decisions on who 

shall survive and who shall not. To this end, there are many who seek 

positions of influence for the sheer sake of gaining power over others. 

Serving their own interests, they become manipulators of society, 

causing the disempowerment of the majority. The result is that instead 

of being rightly served, that same majority is reduced to a state of 

servitude. 

Whether nations are governed by military-style regimes or elected 

parliaments, whether by autocrats or democrats, and whether formally 

described as monarchist, socialist or republican, the net product is 

always the same: the few control the fate of the many. In situations of 

dictatorship this is a natural experience, but it should not be the case 

in a democratic institution based on the principle of majority 

representation. As stated, true democracy is Government BY the 

people FOR the people, in either direct or representative form, ignoring 

class distinctions and tolerating minority views. The American 

Constitution, for example, sets out an ideal for this form of democracy 

9


but, in line with other nations, there is always a large sector of the 

community that is not represented by the party in power. 

Because presidents and prime ministers are politically tied, and 

because political parties take their respective turns at individual helms, 

the inevitable result is a lack of continuity for the nations concerned. 

This is not necessarily a bad thing, but there is no reliable ongoing 

institution to champion the civil rights and liberties of people in such 

conditions of ever-changing leadership. Britain does, at least, retain a 

monarchy, but it is a politically constrained monarchy, operating only 

by the 'consent' of Parliament. It is therefore ineffectual in performing 

its role as Guardian of the Realm. 

The United States, unlike Britain, has a Written Constitution, but has 

no one with the power to uphold its principles against successive 

governments who determinedly pursue their own politically vested 

interests. The Supreme Court is not elected by the people; it is 

presidentially appointed. 

Is there an answer to the anomaly - an answer that could bring not 

just a ray of hope but a shining light for the future? There certainly is, 

but its energy relies on those in governmental service appreciating 

their roles as Representatives of society rather than presuming to 

stand at the Head of society. Class structure is always decided from 

above, never from below. It is therefore for those on self-made 

pedestals to be seen to kick them aside in the interests of harmony 

and unity….” 

Laurence Gardner 1943 - 2010 

If you’re not involved in the stock market, a market crash might give you 

reasons to say, “so what?” The answer is, the market is a reflection of 

national and world wide business and your job prospects. Some times it 

leads. Sometimes it follows. If the market crashes everything and 

everyone goes with it. It’s the sneeze that gives everyone a cold. 

I’m going to talk a lot about economics. This electronic book if printed 

would be two or three volumes. I want to draw a comparison. I own a 

wonder book entitled “The Hand-Sculpted House” by an English 

architect, Ianto Evans, his common law wife Linda Smiley and their 

friend Michael G. Smith. The three were major re-developers of the 

ancient art of building a home from the earth and grasses and trees 

around us. The product is called “Cob,” and far from being a “mud hut” 

it’s a free form shape and can be so substantial it’ll land for centuries. 

10


Many exists world wide. Mr. Evans points out how much money we 

spend going to work just so we can spend more to take a mortgage to 

have a home that is designed to fall apart after 50-years. 

We don’t have to live that way. We can be self sufficient and quite 

happy. We live our lives by convention and never think about 

alternatives. 

Here’s the conventional brought to the disgraceful extreme. 

How Does a Four-Year-Old Spend $46,000 a 

Month? 

by Robert Frank 

Wednesday, August 3, 2011 

Reuters 

Model Linda Evangelista at an 

amfAR event in Milan in 2009 

Supermodel Linda Evangelista is askingFrench 

billionaire Francois Henri-Pinault for $46,000 a 

month in child support. He's the father of Ms. 

Evangelista's four-year-old son, Augustin James. 

And Ms. Evangelista argues that $46,000 is the 

minimum required to provide for young Augustin in 

the manner to which he has grown accustomed. 

Readers outside New York are probably thinking: 

"What's this kid eating ?!" 

Readers in New York are thinking: "She should 

ask for more." 

To find out how a four-year-old could possibly burn through $46,000 a month in Manhattan, I 

called Natasha Pearl, president ofAston-Pearl, the New York-based lifestyle-management firm for 

wealthy families. 

Here's the breakdown: 

Childcare 

Forget the nanny. Kids like Augustin need a round-the-clock child-care team, what the wealthy 

call "full, 24/7 coverage." Ms. Pearl says that requires three nannies, with two rotating on full 

schedule and another as a backup. "And that third nanny preferably has some specialty skill, like 

teaching the kid Mandarin," Ms. Pearl said. "And if he's a boy, the third staffer might be a manny 

to run him around the park and throw him baseballs." 

Total cost: About $23,000 a month or more — half the total. 

School 

11


Augustin is still in preschool, which means that rather than paying the $36,000 to $40,000 a year 

for private school, Ms. Evangelista only has to pay about $20,000 to $30,000 for a top preschool. 

That means his school bill — at least for now — is a mere $2,500 a month. 

Clothing 

You can't be the son of Linda Evangelista and the world's luxury king and wear Osh-Kosh. To 

sheath Augustin in Chloe, Berlingot and Jacadi (does Gucci have a kids' line?) you're looking at 

$3,000 a month minimum. 

Extracurriculars 

Fencing, chess, French lessons, soccer and all the other add-ons that are required for any 

successful Manhattan four-year-old will easily run another $2,000 to $5,000 a month. 

Drivers 

"He probably needs his own driver since they can't split one," Ms. Pearl said. "If he needs to be at 

school at 8 a.m. and she needs to be out 'til 2 a.m., they have to have two." So add another 

another $6,000 to $8,000 a month. 

So we're already at more than $41,000 and we haven't even gotten to his daily sushi intake, the 

expense account at F.A.O. Schwartz and the kiddie birthday parties at Top of the Rock. 

"At first glance, $46,000 seems like an extraordinary amount and it is," Ms. Pearl said. "But for a 

fortunate child in New York, it is actually absolutely conceivable that his expenses could approach 

$50,000 a month." 

Message to Mr. Pinault: you're getting a bargain. 

What other expenses do you think a fortunate son in New York might incur? 

I feel sorry for the poor little rich kid. He’ll miss so much and lose so many opportunities 

for personality development. He’ll never mow a lawn, paint a house, build a cabinet, 

work so hard that he aches all over and keeps going because he knows this is the way to 

develop into a man, harvest fruit from trees, milk cows, feed animals, curry a horse, brush 

shedding hair from a fluffy doggie friend, sail a 12-foot boat alone across a tempest 

tossed bay and come home knowing he faced death and won the gamble. This is not the 

way to raise a man who can survive in the world tomorrow. He’ll grow up ready to be a 

girl who models clothes, a struggling artist, or a financial pencil pusher. The woman does 

the child a terrible disservice. (sn) 

Approximate Date: 11-30-2010 

Dear Steve, 

New phase of debt crisis! 

Striking NOW! Despite rescues! 

by Martin D. Weiss, Ph.D. 

12


A belated "Happy Thanksgiving!" — from our 

family to yours! 

Sadly, though, even while most Americans 

were enjoying the holiday or hitting the 

malls, much of Europe was sinking deeper 

into a new, more severe phase of its 

sovereign debt crisis. 

This crisis is unfolding despite Herculean 

rescues by the European Union, the 

International Monetary Fund and the U.S. 

Federal Reserve. 

It's striking right now. 

And it's threatening to spread to all of the 

world's big debtor nations, including the biggest of all — the United 

States. 

Hard Evidence from Global Markets 

This conclusion is not merely my analysis or forecast. 

It's the collective opinion of global investors who, at this very moment, 

are scrambling to buy insurance against bond defaults by major 

governments. 

Think of it like life insurance: 

• When the premiums are cheap, it's because the country has a clean 

bill of health. 

• When the premiums start rising, it means there's growing evidence 

of fiscal disease. 

• And when premiums skyrocket to obscenely high levels, you can be 

darn certain the country's Treasury is on its death bed, threatening 

to take down the government ... sabotage its economy ... and, 

inevitably, impoverish its people. 

That's precisely the situation the Irish find themselves in today. Their 

economy is sinking fast. Their two largest banks — the equivalent of our 

Bank of America and Citigroup — have just gone under. The Prime 

Minister is resigning. Millions of citizens are sinking into poverty. And 

yesterday's final agreement on a $113 billion European rescue package 

will not change that reality. 

13


Moreover, their crisis is a stark warning for all U.S. investors. So you'd 

better understand exactly what's happening and why ... 

The Real Trauma of 

The Irish Debt Crisis 

Default insurance is 

the telltale indicator. 

And right now, the 

cost of insuring €10 

million of 5-year Irish 

government bonds 

against default has 

skyrocketed — to an 

extremely high 

€600,000. 

That's 55 percent 

more than it cost for 

the same insurance in 

the aftermath of the 

Lehman Brothers 

failure — a time when 

it seemed the entire world was on the brink of collapse. 

It's 50 percent more than the cost of insuring equivalent Greek debt at 

the peak of Greece's first round of financial difficulties earlier this year. 

It's at least DOUBLE the cost of insuring the debts of deeply troubled 

lesser nations like Romania, Lebanon, Latvia, and even Iceland. 

Most shocking of all, today's €600,000 price tag for Irish default 

insurance is higher than it was BEFORE the European Union and IMF first 

announced their intent to engineer a $113 billion rescue for Ireland just 

eight days ago. 

Earlier this year, when Europe announced a similar bailout for Greece, 

traders in this kind of insurance — credit default swaps — gave Greece at 

least a 30-day reprieve. Now, they've given Ireland no more than three 

days. 

Investors obviously don't believe promises by politicians anymore. 

Clearly, the Debt Crisis Is Accelerating. 

Clearly, the Bailouts Are Not Working! 

14


The European authorities had hoped that, as soon as their massive, 

supposedly "definitive" Irish bailout package was announced, investors 

would jump for joy. Instead, investors have done precisely the opposite. 

The authorities had hoped that the premiums on government bond default 

insurance would come down dramatically. Instead, the premiums have 

gone higher, as I've just shown you. 

The authorities had hoped that Irish bond yields would come down 

sharply, helping to avert a disastrous, additional interest burden for the 

government. Instead, bond investors have dumped Irish bonds with both 

hands, driving their prices down and yields up. 

Exactly seven days ago, on the morning after the big bailout 

announcement, the yield on Ireland's benchmark 10-year government 

bond was near 8 percent. Now, it has surged by more than a full 

percentage point to 9.17 percent. That extra interest cost alone threatens 

to eat up a big chunk of the bailout money. 

The authorities had hoped — and prayed — that their earlier bailout of 

Greece would have been enough to contain the cancer. Instead, it has 

metastasized and spread — not only to Ireland, but also to Spain and 

Portugal. 

Right now, the cost of insuring against a default on Spanish and 

Portuguese bonds is at new, all-time highs, far surpassing the levels 

reached earlier this year when the Greek debt crisis was first exploding. 

15

Even Greece itself, 

which the authorities 

thought was largely 

cured, is back in the 

emergency room. 

But this time, all life 

support systems are 

in serious doubt. And 

this time, investors 

are in open rebellion 

against the spin 

doctors. 

The facts: At the 

height of the last 

Greek debt crisis — 

on February 8, 2010, 

to be exact — the 

cost of insuring a €10 

million 5-year Greek 

government bond 

reached a peak of €420,855. 


But last week, the cost on the exact same instrument had surged above 

€1,000,000! 

That's like shelling out an outrageous $50,000 for a term life insurance 

policy that pays no more than $500,000 in death benefits. 

Why so expensive? Because investors now realize that austerity, no 

matter how necessary, can never be a quick ticket to fiscal balance. 

In fact, the more the Greek government has cut spending, the more its 

economy has sunk. Ditto for Ireland and other countries. 

Urgent Lessons for 

All U.S. Investors 

Even if you've never invested a penny in Europe — and even if you've 

never set foot outside the United States — this new phase of the debt 

crisis has far-reaching implications and lessons for you and your family ... 

Lesson #1 

America Is Definitely NOT 

Immune to the Contagion 

16


For 2011, the Bank for International Settlements estimates that Portugal's 

and Spain's government debts will be 99 percent and 78 percent of GDP, 

respectively. 

But for the same year, U.S. government debts will be 91 percent of GDP. 

Thus, by this measure, America's debt burden is similar to 

Portugal's and bigger than Spain's — two countries that are ALREADY 

victims of the sovereign debt crisis. 

Yes, the U.S. dollar is the world's reserve currency. 

And, yes, that gives Washington the ability to print money with impunity 

... press other rich countries to accept its debts ... and borrow huge 

amounts abroad to finance its deficits. 

But that's more of a curse than a blessing! 

It means that, more so than any other major nation on the planet, the 

U.S. government is beholden to investors overseas — often the same 

investors who have repeatedly attacked Greece and Ireland this year. 

Ultimately, that could make the U.S. even more vulnerable than Europe. 

Lesson #2 

Governments CANNOT End a Debt 

Crisis by Piling on Still MORE Debt 

Europe tried by announcing a Greek bailout earlier this year ... and it 

failed miserably. 

Europe tried again by expanding the Greek bailout to a $1 trillion fund for 

all euro-zone countries. But that effort is also failing. In fact, just one 

more bailout — for Spain — could wipe out the fund. 

And now, even before Europe has figured out precisely how the bailout 

fund is to be used, there was new talk in high circles this weekend of 

expanding it even further — another desperate attempt to "reassure 

investors." 

But again, it is not working. 

In fact, the more money Europe throws at the crisis, the more investors 

seem to recoil in horror. 

Investors can now see, as plain as day, how past rescues have backfired. 

17


They can see how the debt disasters can't be papered over with bailouts 

or printed money. 

And they KNOW that money printing can only gut the currency they're 

investing in — be it the dollar or the euro! 

In either case — bailout or no bailout — bond investors want out. 

Lesson #3 

Before a Government Debt Crisis Can Be 

Ended, It Must FIRST Get a Lot WORSE! 

In order to slash deficits ... 

• Governments must impose austerity — deep cutbacks in spending, 

tax hikes, or both ... 

• The austerity inevitably drives the economy into a tailspin, and ... 

• The economic tailspin always causes even LARGER deficits! 

It's only after years of fiscal discipline and collective belt-tightening that 

this vicious cycle is ended and balance is restored. 

That's why the cutbacks in Greece, Ireland, Portugal, and Spain are, in 

the near term, making the crisis even worse. And it's also why a similar 

vicious cycle is now looming in the U.S., as the new Congress seeks to 

slash the deficit. 

Lesson #4 

The Great Debt Crisis 

Of 2008 Never Ended! 

Politicians talk about the U.S. debt crisis of 2008 ... the Detroit 

bankruptcy crisis of 2009 ... the European sovereign debt crisis of early 

2010 ... the Greek debt tragedy ... the Irish debt mess ... the California 

budget debacle ... the U.S. municipal bond collapse ... and more. 

Then, they talk about the urgent need to make a show of resolve to bail 

out the world — to stop the "contagion" from spreading from one sector or 

region to the next. 

But these are not separate, isolated disasters. Nor is the contagion of fear 

the true source of the problem. 

Instead, what we are experiencing is one, single, integral debt crisis that 

never ended. 

18


It is one crisis that has spread from the U.S. to Europe and beyond ... 

morphed from a private-sector banking crisis to a public-sector 

government debt crisis ... grown in scope and power ... and begun to 

drive the large debtor nations on a collision course beyond anyone's 

control. 

Lesson #5 

The New Phase of the Debt Crisis 

Can Bring Surging Interest Rates 

I showed you how the yields on Ireland's 10-year notes have surged from 

8 to 9.17 percent in just a few days. Yields in other European nations 

have shot up as well. 

Meanwhile, I assume you've seen how, despite the Fed's massive bond 

purchases, U.S. Treasury yields have also moved higher. 

And you've seen even bigger jumps in U.S. municipal bond yields. 

This is just the beginning. 

And for the near future at least, rising interest rates could be a gamechanger 

— for real estate, for the U.S. economy, and for many financial 

markets. 

Investors aren't dumb. When they see a new phase of the debt crisis, they 

rush from risk to safety. 

So don't be surprised if we get deeper corrections in those markets that 

rose in recent months — U.S. stocks, precious metals, key commodities, 

and several foreign currencies. 

There will always be exceptions. But my recommendation is the same as 

last week's: Take profits off the table. Build cash. Focus on safety. 

Good luck and God bless! 

Martin 

19


JUNE 2011 

The U.S. Economic Collapse 

Top 20 Countdown 

So just how bad is the U.S. economy? Well, the truth is that sometimes 

it is hard to put into words. We have squandered the great wealth left to 

us by our forefathers, we have almost totally dismantled the world's 

greatest manufacturing base, we have shipped millions of good jobs 

overseas and we have piled up the biggest mountain of debt in the 

history of mankind. We have taken the greatest free enterprise economy 

that was ever created and have turned it into a gigantic house of 

cards delicately balanced on a never-ending spiral of paper money and 

debt. For decades, all of this paper money and debt has enabled us to 

enjoy the greatest party in the history of the world, but now the bills are 

coming due and the party is nearly over. 

In fact, things are already so bad that you can pick almost every number 

and find a corresponding statistic that shows just how bad the economy 

is getting. 

You doubt it? 

Well, check this out.... 

20 - Gallup's measure of underemployment hit 20.0% on March 15th. 

That was up from 19.7% two weeks earlier and 19.5% at the start of the 

year. 

19 - According to RealtyTrac, foreclosure filings were reported on 

367,056 properties in the month of March. This was an 

increase of almost 19 percent from February, and it was the highest 

monthly total since RealtyTrac began issuing its report back in January 

2005. 

18 - According to the Bureau of Labor Statistics, in March the national 

rate of unemployment in the United States was 9.7%, but for Americans 

younger than 25 it was well above 18 percent. 

17 - The FDIC's list of problem banks recently hit a 17-year high. 

16 - During the first quarter of 2010, the total number of loans that are at 

least three months past due in the United States increased for the 16th 

consecutive quarter. 

20


15 - The Spanish government has just approved a 15 billion euro 

austerity plan. 

14 - The U.S. Congress recently approved an increase in the debt cap of 

the U.S. government to over 14 trillion dollars. 

13 - The FDIC is backing 8,000 banks that have a total of $13 trillion in 

assets with a deposit insurance fund that is basically flat broke. In fact, 

the FDIC's deposit insurance fund now has negative 20.7 billion 

dollars in it, which actually represents a slight improvement from the 

end of 2009. 

12 - The U.S. national debt soared from the $12 trillion mark to the $13 

trillion mark in a frighteningly short period of time. 

11- It is being reported that a massive network of big banks and financial 

institutions have been involved in blatant bid-rigging fraud that cost 

taxpayers across the U.S. billions of dollars. The U.S. Justice 

Department is charging that financial advisers to municipalities colluded 

with Bank of America, Citigroup, JPMorgan Chase, Lehman Brothers, 

Wachovia and 11 other banks in a conspiracy to rig bids on municipal 

financial instruments. 

10 - The Mortgage Bankers Association recently announced that more 

than 10 percent of all U.S. homeowners with a mortgage had missed at 

least one payment during the January-March time period. That was a 

record high and up from 9.1 percent a year ago. 

9 - The official U.S. unemployment number is 9.9%, although the truth 

is that many economists consider the true unemployment rate to be 

much, much higher than that. 

8 - The French government says that its deficit will increase to 8 percent 

of GDP in 2010, but by implementing substantial budget cuts they hope 

that they can get it to within the European Union's 3 percent limit by the 

year 2013. 

7 - The biggest banks in the U.S. cut their collective small business 

lending balance by another $1 billion in November. That drop was the 

seventh monthly decline in a row. 

6 - The six biggest banks in the United States now possess assets 

equivalent to 60 percent of America's gross national product. 

21


5 - That is the number of U.S. banks that federal regulators closed on 

Friday. That brings that total number of banks that have been shut 

down this year in the United States to a total of 78. 

4 - According to a study published by Texas A&M University Press, the 

four biggest industries in the Gulf of Mexico region are oil, tourism, 

fishing and shipping. Together, those four industries account 

for approximately $234 billion in economic activity each year. Now 

those four industries have been absolutely decimated by the Gulf of 

Mexico oil spill and will probably not fully recover for years, if not 

decades. 

3 - Decent three bedroom homes in the city of Detroit can be bought for 

$10,000, but no one wants to buy them. 

2 - A massive "second wave" of adjustable rate mortgages is scheduled 

to reset over the next two to three years. If this second wave is anything 

like the first wave, the U.S. housing market is about to be absolutely 

crushed. 

1 - The bottom 40 percent of all income earners in the United States now 

collectively own less than 1 percent of the nation’s wealth. But of 

course many on Wall Street and in the government would argue that 

there is nothing wrong with an economy where nearly half the people 

are dividing up 1 percent of the benefits. 

May 31st, 2010 | Tags: Banking Crisis, Foreclosure Filings, Housing 

Crisis, Problem Banks, U.S. Economy, U.S. National 

Debt, Underemployment | Category: Commentary Economic Collapse Blog 

« Europe’s Coming Summer Of Discontent 

One Out Of Every Ten U.S. Banks Is Now On The FDIC’s Problem List – Do You 

Know If Your Bank Is Safe? » 

………………………………………………. 

Here a Billion, There a Billion. It begins to add up. 

AIG sues BofA for $10 billion alleging "massive 

fraud" 

22


The American International Group (AIG) building in New York's financial district, March 16, 2009. REUTERS/Brendan McDermid 

On Monday August 8, 2011, 10:16 am 

By Jonathan Stempel 

NEW YORK (Reuters) - The insurer AIG is suing Bank of America Corp to recover more than $10 

billion of losses from a "massive fraud" on mortgage debt, deepening the morass of litigation 

faced by the largest U.S. bank. 

American International Group Inc, still largely owned by taxpayers after $182.3 billion of 

government bailouts, is the latest of a growing number of investors filing lawsuits to hold banks 

responsible for losses on soured mortgages that contributed to the financial crisis. 

The AIG complaint accuses Bank of America and its Countrywide and Merrill Lynch units of 

misrepresenting the quality of mortgages placed in securities and sold to investors. AIG said it 

suffered its losses on $28 billion of investments. 

"Defendants were engaged in a massive scheme to manipulate and deceive investors, like AIG, 

who had no alternative but to rely on the lies and omissions made," said the complaint, being filed 

in the New York State Supreme Court in Manhattan. 

Bank of America bought Countrywide for $2.5 billion in July 2008 and acquired Merrill six months 

later. The Countrywide acquisition is almost universally considered a disaster because of the 

costs of litigation and writing down bad loans. 

"There is going to be more finger-pointing and mortgage litigation," said Michael Mullaney, who 

helps oversee $9.5 billion at Fiduciary Trust Co in Boston, which has sold nearly all its Bank of 

America stock. "Much of it is well deserved, especially related to Countrywide, which turned out to 

be a sinking ship." 

In morning trading, Bank of America shares were down 7 percent at $7.60, while AIG shares 

were down 2.2 percent at $24.55. Most financial stocks were down following the Standard & 

Poor's downgrade of the United States' long-term debt rating. 

Bank of America rejected the AIG allegations. 

23


"AIG recklessly chased high yields and profits throughout the mortgage and structured finance 

markets," spokesman Lawrence Di Rita said. "It is the very definition of an informed, seasoned 

investor, with losses solely attributable to its own excesses and errors. We reject its assertions 

and allegations." 

In a statement, AIG said it expects to file more lawsuits against other banks that "sought to profit 

at our expense." 

Separately, AIG plans to intervene in Bank of America's $8.5 billion agreement in late June to end 

most litigation by investors, including BlackRock Inc and Allianz SE's Pimco, that bought 

securities backed by risky Countrywide home loans, according to a person familiar with the 

matter. The source was not authorized to speak on the plans. 

A growing number of investors has called the payout too low and say Bank of New York Mellon 

Corp as trustee did not negotiate fairly. New York Attorney General Eric Schneiderman is moving 

to block that accord. 

The case is American International Group Inc v. Bank of America Corp et al, New York State 

Supreme Court, New York County. 

(Reporting by Jonathan Stempel; Additional reporting by Ben Berkowitz, Sakthi Prasad and Joe 

Rauch; editing by John Wallace) 

Follow Yahoo! Finance on Twitter; become a fan on Facebook. 

SMALL BUSINESSES GOING OUT 

According to Dun & Bradstreet Reports, “Businesses with 

fewer than 20 employees have only a 37% chance of surviving 

four years and only a 9% chance of surviving 10 years.” 

I hold the opinion that small businesses with fewer than 10employees, 

run by overwhelmed bosses who aren’t educated 

and experienced in business management and marketing 

stand an even greater chance of going out of business in year 

2011 and 2012 as fewer customers buy. 

I’m seeing this everywhere I go, and I’m running into more 

prospects for products I’ve sold telling me they can’t spare a 

24


dime to buy anything. Tragically, I’m often selling disability 

health insurance protection. They don’t want to hear about it 

now, but the statistics are stacked against all of us. Within 3 

to 5 years everyone is likely to get hurt or sick, and possibly be 

unable to work for a few days, a week, or much longer. It’s 

that moment when those who said, “I’m not interested” and 

hung up on me will wish they had been a bit better mannered 

and a bit more open minded because the doctor’s bills and 

ancillary expenses will be much higher than the money 

“saved” by going without insurance protection. or To put it 

another way, when they hung up on me and said to 

themselves, “Screw you; goddam callers. I feel better now 

telling one of them off!” they really were saying “screw you” to 

themselves because in the end they hurt themselves. 

Those small businesses employ people, could help those 

employees get health insurance at lower group rates, denied 

their employees a chance to make their own decision, therefore 

“screwed” their employees, and threw away a chance to get a 

substantial payroll tax deduction because they weren’t open 

minded enough to listen and learn! They will go out of 

business in droves for lack of good marketing and good 

planning and leave many more employees seeking work, while 

also leaving themselves bankrupt. 

We have become a society of disgracefully rude people, living 

on sound bites, unwilling or unable to maintain attention span 

to anything new or what we might imagine could be 

objectionable. The result is we can’t function properly in a 

financially complex society and our tiny businesses go out of 

business. 

I’ve been selling advertising and or financial services to small 

business owners for years and my impression is less than 2% 

of them are smart enough to stop fighting everyone, shut up, 

listen, learn, and make themselves better able to win in this 

economic climate. 

Every time I walk into a place where some jerk says, “We don’t 

speak to solicitors” I wonder if he considered that he doesn’t 

know what he’s rejecting and he’ll never hear about it 

otherwise. He’ll never go shopping for what we offer. He’s just 

25


hurting himself. He also just threw a local potential customer 

out the front door – an that potential customer is a salesman 

and speaks to hundreds of people every week. Do you want a 

man like that wandering around angry with you or saying, 

“Don’t do business with him.” Of course not, but they never 

think of that. Bluntly, they simply don’t think. They don’t 

analyze the consequences of their actions. 

People say I’m “very analytical” and my answer is, “Why aren’t 

you?” 

Inevitably, every time some business owner treats me rudely I 

observe that same business is out of business within two 

years. 

If you mean to survive in this climate you must turn the 

television off. Avoid the evils of drinking, pornography, 

gambling and general time wasting, and spend more time 

slowing your mind down with prayer and meditations, so that 

you will be able to concentrate and focus on life, and thereby 

listen, learn, absorb and adapt to the changes ahead. I’m 

predicting right here – the socially stupid people are not going 

to survive this! We must work together to help ourselves and 

one another or we’ll die alone. SN 







……………………………………………………………………………… 

Two Teams Raising Hell 

(odd email and I don’t vouch for its accuracy) 

36 have been accused of spousal abuse 

7 have been arrested for fraud 

26


19 have been accused of writing bad checks 

117 have directly or indirectly bankrupted at least 2 

businesses 

3 have done time for assault 

71, I repeat 71 

cannot get a credit card due to bad credit 

14 have been arrested on drug-related charges 

8 have been arrested for shoplifting 

21 currently are defendants in lawsuits, 

and 

84 have been arrested for drunk driving 

in the last year ! 

Can you guess which organization this is? 

Is it the NBA Or NFL? 

Neither, 

it's the 535 members of the United States Congress 

The same group of Idiots that crank out hundreds of 

new laws each year designed to keep the rest of us in 

line. 

10 Tipping Points Which Could 

Potentially Plunge The World 

27


Into A Horrific Economic 

Nightmare 

The global economy has become so 

incredibly unstable at this point that it is not 

going to take much to plunge the world into 

a horrific economic nightmare. 

The foundations of the world economic 

system are so decayed and so corrupted 

that even a stiff breeze could potentially topple the entire structure 

over. Over the past couple of months a constant parade of bad 

economic news has come streaming in from Europe, Asia and the 

United States. Signs of an impending economic slowdown are 

everywhere. So what "tipping point" will trigger the next global 

economic downturn? Nobody knows for sure, but potential tipping 

points are all around us. 

Today, the global economic system is even more vulnerable than it 

was back in 2008. Virtually none of the systemic problems that 

contributed to the 2008 collapse have been fixed. 

Mark Mobius, the head of the emerging markets desk at Templeton 

Asset Management, .... 

"There is definitely going to be another financial crisis around the corner because we haven’t 

solved any of the things that caused the previous crisis." 

The "financial reform" law that Barack Obama and the Congress passed a while back 

was a complete and total joke. They might as well have written the law on toilet 

paper for all the good that it is doing. 

We did not learn from our mistakes and our future economic lessons are going to be 

even more painful. 

The world is drowning in a mountain of debt, the global financial system is packed to 

the gills with toxic derivatives, everyone is leveraged to the hilt and the dominoes 

could start falling at any time. 

I am not the only one that is warning that another financial collapse is coming. In 

fact, a whole lot of people have been warning about the next financial 

collapse lately. 

So what will the tipping point for the next collapse be? 

28


The following are some potential nominees.... 

Tipping Point #1: Syria 

Syria is a situation to watch very, very closely. The Syrian government is in a lot of 

trouble right now. Sadly, the instability inside Syria probably makes war with Israel 

even more likely. 

Make no mistake - a war between Israel and Syria has been brewing for a long, long 

time and at some point it will happen. When it happens, the entire Middle East may 

erupt in warfare. 

Just the other day, a very troubling incident happened in the area around the Golan 

Heights. The following is an excerpt from a report by The Daily Mail about the 

incident.... 

"About 20 pro-Palestinian demonstrators were killed and 325 injured yesterday when Israeli 

forces opened fire on them as they crossed the border from Syria into occupied territories, 

according to reports." 

At this point, the Syrian government is probably glad that the attention has been 

taken off of them at least for a while. The Syrian government has been getting a lot 

of bad press lately. The following is an excerpt from a recent report by Human 

Rights Watch about the treatment of protesters inside Syria.... 

"The methods of torture included prolonged beatings with sticks, twisted wires, and other 

devices; electric shocks administered with Tasers and electric batons; use of improvised metal 

and wooden 'racks'; and, in at least one case documented by Human Rights Watch, the rape of 

a male detainee with a baton. 

"Interrogators and guards also subjected detainees to various forms of humiliating treatment, 

such as urinating on the detainees, stepping on their faces, and making them kiss the officers' 

shoes. Several detainees said they were repeatedly threatened with imminent execution." 

So in light of the "precedent" that we recently set in Libya, does this mean that we 

will be "forced" to conduct a "humanitarian mission" inside Syria as well? 

Syria is one tipping point that we all need to keep a close eye on. 

Tipping Point #2: Iran 

The Iranian nuclear program is in the news again. A new report by RAND 

Corporation researcher Gregory S. Jones claims that Iran could have a nuclear 

weapon within 2 months. His report is based on recent findings by the International 

Atomic Energy Agency. According to Jones, airstrikes alone would be incapable of 

stopping Iran's nuclear weapons program at this point. Instead, Jones says that a 

"military occupation" would be required. 

It is a minor miracle that a war with Iran has not erupted yet. It seems almost 

inevitable that at some point either the United States or Israel will use military force 

to try to stop Iran's nuclear program. 

29


When that happens, it is going to cause a major shock to the global economy. 

Tipping Point #3: Libya 

NATO has made it abundantly clear that Moammar Gadhafi will no longer be 

tolerated. In fact, NATO apparently plans to reduce Tripoli to a heap of smoking 

ruins if that is what it takes to bring about the fall of Gadhafi. 

What a "humanitarian mission" we have going in Libya, eh? It turns out that NATO 

believes that the United Nations gave it permission to bomb television stations and 

to make attack runs with helicopters. 

Russian Deputy Prime Minister Sergei Ivanov recently said that by using attack 

helicopters, NATO has moved dangerously close to turning the Libya operation 

into a ground invasion.... 

"Using attack helicopters, in my view, is the last but one step before the land operation." 

So why is Libya a potential tipping point? 

It isn't because Gadhafi is a threat. He is toast. 

It is because the rest of the world is watching what is happening in Libya, and 

that is raising global tensions. 

Even if Gadhafi falls, the Libyan operation will still be a failure because it has 

brought us all significantly closer to World War III. 

Tipping Point #4: More Revolutions In The Middle East 

The revolutions throughout the Middle East earlier this year sent oil prices absolutely 

skyrocketing and they have remained at elevated levels. 

And in case you haven't noticed, revolutions continue to sweep the Middle East. 

Have you seen what has been happening in Yemen lately? 

Yemeni President Ali Abdullah Saleh has burns over 40% of his body and he has 

suffered a collapsed lung as a result of a recent attack. 

If violence and protests throughout the Middle East become even more intense as the 

weather warms up this summer that could have a very significant impact on world 

financial markets. 

Tipping Point #5: Fukushima 

The mainstream news has gotten a bit tired of covering it, but the situation at 

Fukushima is still a complete and total disaster. 

Japan's Nuclear Emergency Response Headquarters admitted on Monday that three 

reactors experienced "full meltdowns" in the aftermath of the earthquake and 

tsunami in March. 

30


Did it really take them nearly three months to figure this out, or were they lying to 

the rest of the world all of this time? 

The truth is that the nuclear disaster at Fukushima is far worse than the mainstream 

media has been telling us. If you doubt this, just check out this excellent article or 

this article by Natural News: "Land around Fukushima now radioactive dead zone; 

resembles target struck by atomic bomb". 

The economic impact of the Fukushima disaster is going to continue to unfold over 

an extended period of time. It turns out that Japan is now officially in a recession. 

Their economy contracted at a 3.7 percent annualized rate during the first quarter. 

Look for more bad economic numbers to come out of Japan for the rest of the year. 

Considering that the Japanese economy is the third largest economy in the world, the 

fact that they are struggling so badly right now is not a good sign for the rest of us. 

Tipping Point #6: Oil Prices 

The price of oil is going to continue to be one of the biggest economic stories for the 

rest of this year and for 2012 as well. 

The last time U.S. energy expenditures were over 9 percent of GDP was in 2008 and 

we quickly plunged into the deepest economic downturn since the Great Depression. 

Well, we have reached the significant 9 percent figure once again in 2011, and many 

fear that once again high oil prices will cause another major economic decline. 

Tipping Point #7: Government Austerity 

In the United States, it is not just the federal government that is drowning in debt. 

All over America, there are state and local governments that are financial basket 

cases. 

I don't always agree with the time frames that Meredith Whitney puts out there, but 

she is absolutely correct that we are going to see a massive municipal bond crisis. 

The following is an excerpt from a recent report about Whitney's predictions on 

CNN.... 

"Meredith Whitney is issuing a fresh warning to mutual funds, banks, and politicians: The 

state of state finances is far worse than what you think, or at least than what you've been 

willing to tell the investors and taxpayers who will eventually carry the burden." 

Many state and local governments are attempting to get their budgets balanced by 

making huge budget cuts. But most of the time these austerity programs also include 

the elimination of a lot of government jobs. 

UBS Investment Research is projecting that state and local governments will 

combine to slash a whopping 450,000 jobs by the end of next year. 

So where will the half a million good jobs come from to replace all of those lost jobs? 

31


Tipping Point #8: The European Sovereign Debt Crisis 

Greece is just the tip of the iceberg in Europe. 

Moody's downgraded Greek debt again last Wednesday. This time Moody's 

downgraded Greek debt by three levels all the way down to Caa1. At this point, the 

yield on 10-year Greek bonds is over 15 percent. 

The EU has been going crazy trying to deal with the Greek debt crisis. The truth is 

that a default by the Greek government would be absolutely catastrophic. If you do 

not understand the kind of chaos a Greek default would set off on world financial 

markets, just read this editorial. 

But Greece is not the only major European nation with a massive debt problem. 

The government of Ireland is already indicating that they may need another bailout. 

Portugal, Spain and Italy are also on the verge of collapse. 

So will the EU bail all of these nations out for years and years to come? 

At some point will the whole house of cards come crashing down? 

Everyone needs to keep watching what is going on in Europe. The status quo is not 

sustainable and it cannot go on forever. 

What happens when Greece defaults 

By Andrew Lilico Economics Last updated: May 20th, 2011 

It is when, not if. Financial markets merely aren’t sure whether it’ll be tomorrow, a month’s 

time, a year’s time, or two years’ time (it won’t be longer than that). Given that the ECB 

has played the “final card” it employed to force a bailout upon the Irish – threatening to 

bankrupt the country’s banking sector – presumably we will now see either another 

Greek bailout or default within days. 

What happens when Greece defaults. Here are a few things: 

- Every bank in Greece will instantly go insolvent. 

- The Greek government will nationalise every bank in Greece. 

- The Greek government will forbid withdrawals from Greek banks. 

- To prevent Greek depositors from rioting on the streets, Argentina-2002-style (when 

the Argentinian president had to flee by helicopter from the roof of the presidential 

palace to evade a mob of such depositors), the Greek government will declare a curfew, 

perhaps even general martial law. 

- Greece will redenominate all its debts into “New Drachmas” or whatever it calls the new 

currency (this is a classic ploy of countries defaulting) 

32


- The New Drachma will devalue by some 30-70 per cent (probably around 50 per cent, 

though perhaps more), effectively defaulting 0n 50 per cent or more of all Greek euro- 

denominated debts. 

- The Irish will, within a few days, walk away from the debts of its banking system. 

- The Portuguese government will wait to see whether there is chaos in Greece before 

deciding whether to default in turn. 

- A number of French and German banks will make sufficient losses that they no longer 

meet regulatory capital adequacy requirements. 

- The European Central Bank will become insolvent, given its very high exposure to 

Greek government debt, and to Greek banking sector and Irish banking sector debt. 

- The French and German governments will meet to decide whether (a) to recapitalise 

the ECB, or (b) to allow the ECB to print money to restore its solvency. (Because the 

ECB has relatively little foreign currency-denominated exposure, it could in principle print 

its way out, but this is forbidden by its founding charter. On the other hand, the EU 

Treaty explicitly, and in terms, forbids the form of bailouts used for Greece, Portugal and 

Ireland, but a little thing like their being blatantly illegal hasn’t prevented that from 

happening, so it’s not intrinsically obvious that its being illegal for the ECB to print its way 

out will prove much of a hurdle.) 

- They will recapitalise, and recapitalise their own banks, but declare an end to all 

bailouts. 

- There will be carnage in the market for Spanish banking sector bonds, as bondholders 

anticipate imposed debt-equity swaps. 

- This assumption will prove justified, as the Spaniards choose to over-ride the structure 

of current bond contracts in the Spanish banking sector, recapitalising a number of 

banks via debt-equity swaps. 

- Bondholders will take the Spanish Banking Sector to the European Court of Human 

Rights (and probably other courts, also), claiming violations of property rights. These 

cases won’t be heard for years. By the time they are finally heard, no-one will care. 

- Attention will turn to the British banks. Then we shall see… 

Tipping Point #9: The Dying U.S. Dollar 

The euro is not the only major currency that is in trouble. 

The U.S. dollar is also slowly dying. 

On April 18th, Standard & Poor’s altered its outlook on U.S. government debt from 

"stable" to "negative" and warned that the U.S. could soon lose its prized AAA 

rating. 

33


The sad truth is the U.S. dollar value in U.S. Treasuries is rapidly declining. The 

mainstream news is not reporting on it much, but right now the Chinese are rapidly 

dumping U.S. government debt. 

As the dollar declines, so will the purchasing power of average Americans. We 

are already seeing a tremendous amount of inflation in 2011. 

But this is just the beginning. 

A lot worse is going to be coming down the road. 

Tipping Point #10: Drought 

A lot of people that read my articles doubt that we will ever see a major global 

food crisis. 

But one is coming. 

It is just a matter of time. 

Even now, many areas of the world are experiencing very serious droughts. The 

following is from a recent Bloomberg article.... 

Parts of China, the biggest grower, had the least rain in a century, some 

European regions are the driest in 50 years and almost half the winter-wheat 

crop in the U.S., the largest exporter, is rated poor or worse. Inventory is 

dropping 8.8 percent, the most in five years, Rabobank International says. Prices 

will advance 20 percent to as high as $9.25 a bushel by Dec. 31, a Bloomberg 

survey of 14 analysts and traders shows. 

Are you concerned yet? 

You should be. 

But if you prefer some mindless pablum that will make you feel better, we have 

some of that for you too. 

Larry Summers, the former director of the National Economic Council under 

Barack Obama, recently told CNBC the following.... 

"We definitely hit a slower patch, but I think the basic fact that the terrible 

financial strains we had are abating, remains in place, and I expect this recovery 

to continue for a substantial period of time." 

Does that make you feel better? 

Larry Summers says that everything is going to be okay. 

It would be great if Summers was actually right, but sadly he is not. 

In fact, the worst economic times that America has ever seen are ahead. 

34


The following is a brief excerpt from a recent interview with Dmitry Orlov about 

the coming economic collapse that was posted on shtfplan.com.... 

First you have financial collapse, which is basically the volume of debt that has 

to be taken on in order for the economy to continue functioning, cannot 

continue. We’re seeing that right now in Greece, we’re probably going to see 

that in Japan, we’re definitely at a point now in the United States where 

even if you raised the income tax to 100 percent, there’s absolutely no 

way of covering the liabilities of the U.S. federal government. So, we’re 

at that point now but the workout of the financial collapse is not all 

quite there. We don’t quite have a worthless currency but that’s in the 

works. 

That, of course, is followed by commercial collapse especially in a country like 

the United States that imports two thirds of its oil. A lot of that is on credit 

and if a little bit of that oil goes missing then the economy starts to fall 

apart because nothing moves unless you burn oil in the United States 

and, of course, a lot of goods that are sold everywhere are imported 

again, on credit. 

When the U.S. dollar dies and our financial system collapses we are not going to 

be able to get all of the things that we need from the rest of the world so 

cheaply any longer. 

That is going to cause fundamental changes inside the United States. 

Right now, the economic news just seems to get worse and worse, but this is 

just the beginning. 

What is eventually going to happen in this country is going to be so nightmarish 

that most Americans could not even imagine it right now. 

So are our leaders doing anything to prepare for the coming economic crisis? 

No, they are too busy with other things. 

The big political news of the day was U.S. Representative Anthony Weiner finally 

admitting that he sent out lewd photos of himself over Twitter . 

We have become the laughingstock of the world and the economic collapse has 

not even happened yet. 

Help Make A Difference By Sharing These Articles On Facebook, Twitter And 

Elsewhere: 

From my Post Box, 

The Pinnacle Gold Group of Sherman Oaks, CA Phone 800-675-9088 sent among 

several pieces an article by Roger Lambie “The Demise of the Dollar and the Rise of 

Gold.” 

35

Mr. Lambie begins with this: 


“ ‘The US dollar has now tumbled to near all time lows while precious metals 

and commodities are reaching new nominal highs. All this is in spite of the fact Fed 

Chairman Ben Bernanke in a recent press conference said the US Treasury and 

Federal Reserve are aiming for a “strong dollar” and at an earlier congressional 

hearing noted that he does not “full understand movements in the gold price”. The 

unfortunate part of these statements is Bernanke is the main, admittedly ignorant, 

driver of the price of gold which, by definition, goes up to the extent the dollar goes 

down.’” 

Ben Bernanke is said to be one of the world’s great authorities on the crash of 

1929. He is apparently (A) lying to everyone and knows exactly why the price of gold 

is rising or (B) is looking for far more detail to explain the simple obvious moment of 

the price of gold and other commodities vs the US Dollar or (C) is so lost in some 

convoluted economic theory he’s no longer fit to run any banking system, let alone 

ours. He’s so lost in details he can’t see the broad picture which is, “I add fiat cash 

and the price of gold rises. I subtract cash and the value of gold falls. I add cash and 

the dollar gets weaker and unemployment gets worse. I subtract cash-dollars and 

small businesses offer more jobs to the unemployed. Hummm….” Well, Gee Ben! 

The calculation was they could reduce the value of the dollar and pay off all 

the debts to China and the Arabias and the South Americans with dollars that 

bought less. In other words they could legally rob everyone. But… when you rob 

everyone they finally decide they won’t do business with you any more! 

What will we do without Chinese electronics, Japanese car parts, South 

American food, and Arabian oil? And 

Bulwinkle J. Bernanke says, “Well, 

Fiddle Faddle Rockie,….I never 

thought about that.” 

Many of us who know the history of the Federal Reserve have come to 

believe it is a conspiracy designed and dedicated to the ruination of the United States 

of America and the subjugation and enslavement of at least a third of the world’s 

population under an evil oligarchy. 

If you think that’s ridiculous then, consider this as an alternative. Bernanke is 

senile, and has no explanation for why during his reign as Fed Chairman, all the 

money that had been created by the Fed’s history has more than tripled. 

All of this proves RIGHT NOW is a good time to call Pinnacle Gold Group 

and ask for some help! Every other investment that is not something you can drop on 

your foot is a breakable promise to pay. That’s why, if you have any money to save, 

you should own some precious metals, in hand, tradable for the life sustaining things 

you may need one day very soon. 

You hear this work “inflation” often. It is essentially the printing of more 

money without any additional valuable products or services to support it. I’ll explain. 

What is money? 

36


A great many people really have no basic definition. They really don’t know what 

they’re talking about at its most basic level. A man with a masters or Ph.D. in 

economics might laugh at me here, but I think the basic is where most of us should 

start, and where the Ph.D. should end! 

Let’s assume you sew evening gowns or build furniture. You exchange something on 

paper or in gold or silver coin for that item into which you put your time, energy, 

skills, and frustrations, meeting and beating the challenges to end up with a final 

product. 

Money is your solidified energy! It is a representation of your work. 

Can you make more of it by simply printing it? Of course not. If I offer $1 or $10 for 

the same evening gown is the gown worth more? Did it cost more energy, frustration, 

skill and work? No! 

Our country does not become wealthier buy printing more paper money. It simply is 

reducing the buying power of the money by so printing! 

This next is from a sales letter, but I enter it here to give you a tone for 

what’s happening, and because I respect the service this publisher is 

offering. 

Why a Devastating 

Market Collapse 

May be Unavoidable 

The Man Who Called the 2008 Market Crash Warns: 

“The Stock Market Will Hit a Brick Wall” 

Dear Investor, 

At this moment, your wealth is very much at risk. 

In fact, one of the world’s most successful – and most accurate – stock market 

observers recently issued an urgent bulletin that I’d like to share with you now: 

“As we head into May, the ending of QE2, rising energy and food costs 

and a down-in-the-dumps consumer will be more than this stock 

market can stand. The stock market will hit a brick wall.” 

37


38 

April 2011 

Over the next few weeks, there is a very real danger of a devastating stock 

market collapse…and it’s vitally important that you take a few simple steps to 

prepare yourself right now. 

This warning was issued by Dennis Slothower – the stock market guru who not 

only warned individual investors of the 2008 stock market collapse… 

He actually helped his readers make money that year – during one of the 

market’s worst-ever years. 

I’ll tell you more about Dennis Slothower’s amazingly accurate forecasts in just a 

moment. 

But for now, let me quickly show you why this market is especially volatile: 

1. The End of the Fed’s Artificial Market Inflation. 

We now have confirmation that the Federal Reserve’s Quantitative Easing 

program – known as QE2 – will end as scheduled on June 30. 

QE2 began in August 2010…and in just nine months’ time, the S&P 500 had 

soared 29%! 

Here’s what Dennis had to say about the ending of QE2 in his most recent 

bulletin: 

“As soon as the stimulus ends for QE2…the stock market will hit a brick 

wall. Without the Fed’s stimulus, I can’t see how stock prices will be 

able to head higher.” 

2. Soaring energy and food costs are crippling U.S. consumers. 

According to the U.S. Energy 

Information Administration, 

gasoline prices could soar higher by 

another $1.10 or more by this 

summer – putting us well over $4 

per gallon and heading toward $5. 

And the USDA warns that U.S. 

supermarket meat prices in 2011 

are expected to post the largest 

increase in seven years. 

Think about it. 

Gas prices – up 28% in one year… 

Beef and veal prices – up 12%... 

Pork – up 16%...

Coffee – up 11%... 

And fresh vegetables – up 10%. 


Yet according to the U.S. Department of Labor, our “official” inflation rate is just 

over 2%. 

But we know the truth. 

Anyone can see that these real-world price increases will have an enormous 

impact on U.S. consumers – and Wal-Mart CEO Mike Duke confirms this fear. 

Duke recently told the Wall Street Journal that rising gas prices are hurting its 

main customers, who are having an even harder time stretching their dollars to 

the next payday than they did a year ago. 

Duke explained that customers are now cutting back on discretionary items as 

their spending power erodes. 

And if this impact is being felt at Wal-Mart – a business where Americans spend 

$36 million dollars every hour – the impact on the U.S. economy will be 

devastating. 

3. Arab unrest continues to spread in the Middle East. 

Thanks to social networking – and the influence from outside interests – we’ve 

seen revolutions in… 

* Tunisia 

* Egypt 

* Libya 

* Bahrain 

* Yemen 

* Saudi Arabia 

* Syria 

But what we’ve seen so far 

is just the beginning. 

It’s important that you 

prepare yourself now for 

this volatility. 

And I’ll show you how can 

do that…beginning right now. 

As I said before, I’d like to introduce you to a stock market guru who has made a 

career out of helping individual investors avoid danger AND profit during 

turbulent times. 

His name is Dennis Slothower… 

39


Marketwatch.com has referred to Dennis’ amazingly accurate forecasts on 

several occasions. 

Most recently – in November 2010 – Marketwatch had this to say of Dennis: 

“(He’s the) advisor who dodged the Crash of 2008…a particularly 

striking performance.” Click here NOW to accept your 30-Day FREE 

PREVIEW of Dennis Slothower’s top-rated Stealth Stocks Daily Alert 

service! http://www.stealthstocksonline.com/ 

SN: To understand what is really happening, you must think outside the 

normal circles of financial statistics. You may believe this and you may 

think it’s impossible and I’m a little crazy, but I can tell you most of my 

predictions come true even so much as to frighten me! The world is 

affected, by Biblical Prophecy and other forces that also are prophetic 

but outside what is in The Bible’s prophecies. For example, the problems 

all over the Middle East now are thanks to the Muslim Brotherhood 

which is being supported by Iran. And the US is actually working with 

the Iranians and supporting the Muslim Brotherhood in secret while 

telling in their news broadcasts that Iran is an enemy. If the Iranian 

government was really an enemy, our spies could have killed them a 

long time ago. 

Really – how difficult can it be to slip some bacteria or virus into a food 

delivery to the back door of some dictator’s kitchen? But it never 

happens to any of these miserable dictators because evil forces protect 

them and want to bring on the final cataclysm. None of this is calculated 

into Wall Street statistical analysis. 

These are not normal times. Things are not going to settle back to the 

way they were after a few months. 

Persia, now called Iran, is rising in power as prophesied and is joining 

with Turkey and will open a route for Russia and finally China to enter 

the Middle East. Everyone has their reasons. 

The Russians want power. The Chinese want oil and in their deepest 

royal recesses believe they must be masters of the world. The Muslims 

want the world to be entirely Muslim so they believe their savior the 12 th 

Imam will arrive and bring world peace. (Can abusing your women and 

murdering anyone who disagrees with you be defined as “peace?”) 

40


The Israelis are striking oil as prophesied and they’ll finally strike more 

of it than even was under Saudi Arabia. The European Union wants the 

oil but they want a peaceful alliance. The Russians want the oil but they 

want a monopoly over it so they can be the ultimate Western World 

Power. (The French want to talk about it over coffee and cognac.) The 

Chinese will do nearly anything to have power over oil and strategic 

minerals. The United States wants nothing less 

than complete power over the entire Middle East – 

better ALL of Africa. But their best plans are being 

foiled. 

God has a written deed to one small sliver of 

property which is called Israel and He has said He 

will defend it. 

The true leader of Islam hates the true Creator of 

this universe and he is sworn to wage war against 

God to his death. 

The British Royals, (who also are pawns but don’t know this) are 

another warring faction. They are closely tied to an extremely powerful 

religious group that wants to completely dominate the world. They seek 

to reduce world population to 500,000 and hold it there. They will 

control banking, politics, religion, food production, air and water, 

weather, earthquakes. They’re actually doing a lot of this now but of 

course it’s all covered up to look benign. They actually dictate to our 

Federal Reserve what we will do and they are ultimately the reason for 

the demise of the USA. I believe ultimately they are “Mystery Babylon” 

because Mystery Babylon isn’t just a city or a religion, it’s an entire 

world and society controlling system – a web of entanglement 

encompassing all thought, all action, and all agreements. 

“Come out of her My People. Be in the world but not OF the world,” 

are Biblical commands that tell us to leave behind all of what Mystery 

Babylon stands for and put our focus upon the true Creator of the 

Universe and the only one who really wants to save you. 

Spiritually stupid and blind men know nothing of this truth. Like a joke 

full of words with double meanings, “it flies over their head.” They don’t 

want to believe it. If they have to acknowledge that what I’m saying is 

right, it means all they’ve worked for and dreamed of is worthless or will 

be soon enough. 

41


They gamble in the stock markets and half of their analysis is an attempt 

at predicting what the other gamblers will do. They seek to get rich by 

winning gambles rather than producing anything of honest long lasting 

value. 

If you want safety and peace, find God and become capable of your own 

self-sufficiency. That’s my advice, but the rest of this is much more 

“worldly” and will show you what most economists predict. 

Ultimately, I believe, all of these wealthy people will lose everything. 

Their retirement funds will vanish. They’ll weep as the world economic 

system collapses and they’ll struggle to survive. They will finally curse 

God and then ‘be no more.’ I think that will happen after the end of year 

2012, and I expect more very momentous occurrences in years 2013 – 

2015 because these events fit with Biblical calendar dates. 

Everything in prophecy is coming true including a world wide natural 

calamity for which no government has defense. 

The sheep and the goats will be separated. “Them what loves God is 

goin’ thisa way and them what don’t is goin’ thata way.” 

The real wealth will display itself in the next world and it will have 

nothing to do with money or physical possessions. 

The Coming Economic Hell For 

American Families 

Tens of millions of American families are about 

to go through economic hell and most of them 

don't even realize it. Most Americans don't 

spend a whole lot of time thinking about things 

like "monetary policy" or "economic cycles". 

The vast majority of people just want to be able 

to get up in the morning, go to work and 

provide for their families. Most Americans 

realize that things seem "harder" these days, 

but most of them also have faith that things will 

eventually get better. Unfortunately, things 

aren't going to get any better. The number of good jobs continues to decline, the 

number of Americans losing their homes continues to go up, people are having a much 

more difficult time paying their bills and our federal government is drowning in debt. 

Sadly, this is only just the beginning. 

42


Since the financial collapse of 2008, the Federal Reserve and the U.S. government have 

taken unprecedented steps to stimulate the economy. But even with all of those efforts, 

we are still living in an economic wasteland. 

So what is going to happen when the next wave of the economic crisis hits? 

During one recent interview, Peter Schiff made the following statement.... 

If you look at the economic relapse that’s going on right now, look at Friday’s 

abysmal job numbers, look at the housing numbers, understand that all of this is 

taking place with record monetary and fiscal stimulus. What happens if we 

remove those supports? 

Peter David Schiff born March 23, 1963) is an American investment 

broker, author, financial commentator, and was a candidate in the 2010 

Republican primary for the United States Senate seat from Connecticut. [12] 

Schiff is CEO and chief global strategist [1] of Euro Pacific Capital Inc., 

a broker-dealer based in Westport, Connecticut [13] and CEO of Euro Pacific 

Precious Metals, LLC, a gold and silver dealer based in New York City. [14] He 

frequently appears as a guest on CNBC, Fox News, and Bloomberg Television 

and is often quoted in major financial publications [15] and is a frequent guest 

on internet radio [16][17][18] as well as the host of the former podcast Wall Street 

Unspun, [19] which is now broadcast on terrestrial radio and known as The Peter 

Schiff Show. [16] 

Schiff is known for his bearish views on the dollar and dollar denominated 

assets, while bullish on investment in tangible assets as well as foreign stocks 

and currencies. 

At the end of June, the Federal Reserve's quantitative easing program is slated 

to end. The U.S. Congress and state legislatures from coast to coast are talking 

about budget cuts. The amount of borrowing and spending that has been going 

on is clearly unsustainable, but will the U.S. economy start shrinking again once 

the current "financial sugar high" has worn off? 

Already, all sorts of bad economic news has been coming out and all kinds of 

economic indicators are turning south. The American people are becoming 

increasingly restless. One new poll has found that 59 percent of the American 

people disapprove of Barack Obama's handling of the economy (which is a new 

high). According to another recent poll, 63% of Americans say that they feel 

"not good" or "bad" about how the U.S. economy is performing. 

If most Americans had good jobs, could afford their mortgages and could pay 

their bills, the economy would not be such a big issue. 

Unfortunately, times are really tough for American families right now and they 

are about to get a lot tougher. 

43

*Jobs* 


The official unemployment rate just went up to 9.1 percent, but that figure only 

tells part of the picture. 

There are some areas of the country where it seems nearly impossible to find a 

decent job. Millions of Americans have fallen into depression as they find 

themselves unable to provide for their families. 

According to CBS News, 45.1 percent of all unemployed Americans have been 

out of work for at least six months. That is a higher percentage than at any 

point during the Great Depression. 

Just two years ago, the number of "long-term unemployed" in the United States 

was only 2.6 million. Today, that number is up to 6.2 million. 

Can you imagine being out of work for 6 months or more? 

How would you survive? 

Just look at the chart below. What we are going through now is really 

unprecedented. The average duration of unemployment in this country is now 

close to 40 weeks.... 

So will things get any better soon? Well, there were only about 3 million job 

openings in the United States during the month of April. Normally there should 

be about 4.5 million job openings. The economy is slowing down once again. 

Good jobs are going to become even more rare. 

There are millions of other Americans that are "underemployed". All over the 

United States you will find hard working Americans that are flipping burgers or 

working in retail stores because that is all they can get right now. 

Most temp jobs and most part-time jobs don't pay enough to be able to provide 

for a family. But there are not nearly enough full-time jobs for everyone. 

44


Sadly, the number of "middle class jobs" is about 10 percent lower than a 

decade ago. There are simply less tickets to the "good life" than there used to 

be. 

*Homes* 

But without good jobs, the American people cannot afford to buy homes. 

Without good jobs, the American people cannot even afford the homes that they 

are in now. 

U.S. home prices have fallen 33 percent since the peak of the housing 

bubble. That is more than they fell during the Great Depression. 

This decline in housing prices has caused a lot of problems. 

28 percent of all homes with a mortgage in the United States are in negative 

equity at this point. There are millions of American families that are now paying 

on mortgages that are for far more than their homes are worth. 

Millions of American families literally feel trapped in their homes. They 

can't afford to sell their homes, and if they simply walk away nobody will 

approve them for new home loans for many years to come. 

Many Americans are sticking it out and are staying in their homes until they 

simply can't pay for them anymore. 

As the number of good jobs continues to decline, the number of Americans that 

are losing their homes continues to rise. 

For the first time ever, more than a million U.S. families lost their homes to 

foreclosure in a single year during 2010. 

If the economy slows down once again and millions more Americans lose their 

jobs this problem is going to get a lot worse. 

*Bills* 

Even if they aren't losing their homes yet, millions of other Americans families 

are finding it increasingly difficult to pay the bills. 

Wages have been very flat over the past few years and yet the cost of most of 

the basics just seems to keep going up and up. 

According to Brent Meyer, a senior economic analyst at the Federal Reserve 

Bank of Cleveland, the cost of food and the cost of energy have risen at an 

annualized rate of 17 percent over the past six months. 

Have your wages gone up by 17 percent over the past six months? 

45


As 2009 began, the average price of a gallon of gasoline in the United States was 

$1.83. Today it is $3.77. 

American families are finding that their paychecks are going a lot less farther 

than they used to, but Ben Bernanke keeps insisting that we have very little 

inflation in 2011. 

Most Americans don't care much about economic statistics - they just want to be 

able to do basic things like take their children to the doctor. 

According to one recent survey, 26 percent of Americans have put off doctor 

visits because of the economy. 

Sadly, soon a lot more American families will not be able to afford to go to the 

doctor. 

According to one recent survey, 30 percent of all U.S. employers will "definitely 

or probably" quit offering employer-sponsored health coverage once Obamacare 

is fully implemented in 2014. 

As the economic situation has unraveled, an increasing number of people are 

being forced to turn to the federal government for assistance. 

One out of every six Americans is now enrolled in at least one anti-poverty 

program run by the federal government. 

Some of the hardest hit members of our society have been our children. Today, 

one out of every four American children is on food stamps. 

Back in the old days, a large percentage of American families were self-sufficient, 

but that is no longer the case. 

Back in 1850, approximately 50 percent of all Americans worked on farms. 

Today, less than 2 percent of Americans do. 

So these days when American families can't feed themselves what do they do? 

They turn to the federal government of course. 

At the moment, approximately 44 million Americans are on food stamps. 

But our federal government cannot afford to spend money like this forever. 

According to a recent USA Today analysis, the U.S. federal government 

took on $5.3 trillion in new financial obligations during 2010. USA Today says 

that the U.S. government now has $61.6 trillion in financial obligations that have 

not been paid for yet. 

Wow! 

46


Who is going to end up paying that bill? 

So with so much bad news, are our leaders alarmed? 

Not really. 

According to Federal Reserve Chairman Ben Bernanke, "growth seems likely 

to pick up somewhat in the second half of the year." 

Yeah, we'll see how that prediction works out. 

Others are not so sure that everything is going to turn out okay. 

Recently, James Carville warned that we could literally see rioting in the streets if 

the economic situation does not turn around soon. (SN: Oh my land, James the 

evil one Carville suddenly sounds like a conservative thinker.) 

The truth is that America is in decline. Just like with all of the great empires of 

the past, our empire is starting to crumble too. 

A recent article in the Guardian touched on some of the reasons for America's 

decline.... 

The experience of both Rome and Britain suggests that it is hard to stop the rot 

once it has set in, so here are the a few of the warning signs of trouble ahead: 

military overstretch, a widening gulf between rich and poor, a hollowed-out 

economy, citizens using debt to live beyond their means, and once-effective 

policies no longer working. The high levels of violent crime, epidemic of obesity, 

addiction to pornography and excessive use of energy may be telling us 

something: the US is in an advanced state of cultural decadence. 

The economic news is only part of the puzzle. This country has rejected the 

ancient wisdom that was passed down to us and we have rejected the principles 

of our founding fathers. 

We have piled up the biggest mountain of debt in the history of the world and 

yet somehow we expected that everything would turn out okay. 

Well, everything is not going to turn out okay. 

All of this debt is going to come down on us like a ton of bricks and the U.S. 

economy is going to continue to fall apart. Millions of American families are 

going to lose their jobs and their homes. 

Economic hell is coming. 

Greece just a symptom of the REAL Problem! 

Bryan Rich | Saturday, June 18, 2011 at 7:30 am 

http://www.moneyandmarkets.com 

47


If you think the Greek debt crisis is the cause of Europe’s major ills, 

think again. It’s just a symptom of the far deeper problems I’ve been 

telling you about all along. 

As I’ll explain in this issue, the European Central Bank (ECB) is 

loaded with toxic assets; the entire concept of the euro is flawed; and 

now it’s finally coming unglued, just as I have been warning week 

after week, month after month. 

Consider the dramatic events of the past week … 

On Wednesday, a haymaker was thrown at European Union officials, the IMF and 

the ECB … all parties that have been trying desperately to keep the crisis in Europe 

from reaching an impact point. 

• S&P downgraded four Greek banks, 

• And Moody’s warned of downgrades on Portuguese banks and most 

importantly, FRENCH banks. 

These are all institutions that will take huge losses, if not fail, should Greece 

ultimately default or restructure its debt, and a contagion of sovereign defaults take 

hold. 

This outcome has a chance to be delayed, again, only if the Greek government is 

willing to accept even more intense austerity measures — and soon. But other events 

of the day made it clear that the likelihood of that happening was dwindling … 

• When Greek Prime Minister Papandreou couldn’t get parliament to agree 

on more, tougher austerity measures to satisfy the EU/IMF requirements for 

more financial aid, making a July default more threatening. Ultimately he “reshuffled” 

his cabinet in an attempt to ram it through. 

• Then rioters hit the streets in violent protests against austerity. And it was 

widely covered by global media. 

Once again, Greece is the word. 

It’s the word used to describe the plunge in the U.S. 

stock market. It’s Greece that’s attributed to a sharp 

slide in the price of crude oil this week. And it’s the 

uncertain outcome in Greece that is the subject of 

greatest concern for global policy makers. 

But most casual market followers still don’t 

understand why Greece doesn’t really matter. 

With all of the focus that has been given to the 

irresponsible spending and social welfare programs that have driven Greece to 

insolvency, the real problem isn’t Greece at all. 

You see … 

Greece Is Only a Symptom of the Real Problem 

48 

They’re rioting again in the 

streets of Greece.


The problem is European banks, the European Central Bank and a flawed single 

currency concept — the euro. 

In May 2010, we got a clear message from Europe on just how desperate the 

situation was there. That’s when the powers of Europe gathered to determine a 

game-plan for dealing with Greece. The European Union, the IMF and the ECB 

could have backed away and let the country pull-out of the monetary union and go 

on with its business of mending itself through currency and debt devaluation. 

But they didn’t do that! 

Instead, in perhaps the most shocking development in the entire global financial 

crisis, they vowed to rip up the rulebook that the European monetary union was built 

upon, by using taxpayer money of the stronger countries to support the fiscally 

irresponsible weaker countries … to the tune of 750 billion euros worth of promised 

aid. 

Moreover, the European Central Bank, built upon the idea of fierce independence, 

tossed its rulebook out and vowed to be the buyer of last resort of the toxic sovereign 

debt of the failing euro-zone peripheral countries. AND they continued accepting the 

toxic collateral from these countries in exchange for short-term liquidity. 

They didn’t go to such extreme measures because they really cared about saving the 

likes of Greece, Portugal and Ireland (and even Spain). They did so because they had 

to! 

When the global financial crisis was at peak severity, much of the world focus was 

on U.S. bailouts. Meanwhile Europe and the ECB were naively admired as the 

example of conservatism and rationale. 

(SN: The ECB or European Central Bank, was a few years ago selling gold out of its 

vaults, and proclaiming the death of gold. The Euro would save the world.) 

But throughout the financial crisis, the ECB was offering unlimited funds to its 

European banks for a paltry 1 percent interest. The stated purpose was to keep credit 

flowing in its economy. However, the banks weren’t lending to consumers and 

businesses; they were lending to the PIGS (Portugal, Ireland, Greece and Spain) to 

keep them alive. 

The struggling countries were happy. They were able to borrow at reasonable rates, 

even though they were maintaining massive budget deficits and burgeoning debt 

loads … 

The banks were happy. They were borrowing at 1 percent and lending at juicy yields 

… 

49

The ECB was happy 

to handout euros left 

and right, but now its 

strategy has 

backfired. 


And the ECB was happy, because it was aiding the 

struggling countries through the “back-door” … 

maintaining adherence to its guiding principles and keeping 

its appearance as staunchly independent. 

But finally, market participants took notice and went on 

attack, selling the government bonds of the weak euro 

members. Consequently sending borrowing rates for these 

countries soaring, exposing their spiraling deficits and the 

flaws of the greater European monetary union. 

So when the decision had to be made by European officials 

and the IMF, back in May 2010, to let Greece go or go “all- 

in” … the choice was obvious. They had to go all-in, because the European banks 

were loaded with Greek debt. If Greece had fallen, the other weak countries would 

have fallen, putting $2 trillion worth of European bank exposure to the PIGS 

countries on course for massive write downs — and triggering another financial 

crisis. 

But now, more than a year later, the PIGS remain on the path of default, European 

banks are still highly exposed, and all of these desperate actions to stave off the 

ultimate impact day has left the … 

SN: Brian isn’t mentioning: the Eastern European countries are also in financial 

trouble because of the ECB policies. From old East Germany and further East 

everyone is in financial trouble. Virtually the whole of Europe and Britain are in 

financial difficulty (with the possible exceptions being Switzerland, Austria, 

Andorra, Lichtenstein, Monaco and The Vatican). We’re all naked together in the 

same dirty cold bath water. I suspect Russia is going to rise out of this first and 

strongest but they’ll do it with their infamous iron fist and anyone opposing them 

will suffer. They didn’t create this problem. Their people have endured suffering 

for the past 100 years. They will not allow these troubles to cause them any more 

pain than they absolutely must. They have oil and gas, weaponry, and China as 

their ally. Biblical prophecy marks them for the future. No one should dare step 

into their path. 

ECB Loaded with Toxic Assets! 

As I warned in my Money and Markets May 14 column, the sovereign debt crisis 

in Europe could make the Lehman Brothers failure pale in comparison. 

It’s not just European banks, but the European Central Bank is at risk of failing. 

A European think-tank, Open Europe, says the ECB has taken on nearly 400 

billion euros of exposure to the four most troubled European countries — selling 

off its good assets to take on bad assets. And they estimate the ECB is 23 to 24 

times leveraged. When Lehman failed it was 30 times leveraged. 

They estimate that Greece would have to restructure half of its debt to bring it 

down to sustainable levels. With that scenario, it would “effectively leave the ECB 

insolvent.” 

50


If that happens expect another wave of global financial crisis, bigger than the 

first, where markets trade in two tiers: Risky and safe. 

All of this is good news for currency investors, because the BIGGER THE 

CRISIS, the GREATER the movement of capital within global currencies. And the 

BIGGER the profit opportunities! 

Regards, 

Bryan http://www.moneyandmarkets.com 

P.S. My World Currency Trader is specifically designed to protect and grow your 

wealth during the wild swings in currencies like we’re about to see. Check out my 

latest presentation. 

Bryan Rich began his currency trading career with a $600 million family office 

hedge fund in London. Later, he was a senior trader for a $750 million leading 

global hedge fund in South Florida. There, he helped manage and trade a multibillion 

dollar foreign exchange options portfolio. Today, Bryan is the editor 

of World Currency Trader, a service designed to give you everything you need 

to trade currencies that offer the greatest profit potential with the least amount of 

risk. http://www.moneyandmarkets.com 

Always interesting to me, people generally expect an emergency to begin suddenly. 

In fact there are always small beginning signs. Wars never start with a rocket 

suddenly fired onto a capital. They begin with a lot of broken negotiation and 

threats. Social chaos doesn’t start suddenly either. It begins with a few small crimes, 

than gangs of criminals banding together, then some sort of Hitlarian demigod will 

whip them into a cohesive monstrosity, and then the peaceful society will cringe in 

fear effectively supporting the monstrosity in an attempt to left in peace. 







18 Signs The Collapse Of Society 

Is Accelerating 

As the U.S. economy collapses, the thin veneer of 

civilization that we all take for granted is going to begin to 

disappear. In fact, there are already an increasing 

number of signs that the collapse of society is 

51


accelerating. In cities such as Chicago, roving packs of young people are "mob robbing" 

local businesses, randomly assaulting tourists and shoppers and are even pulling people 

out of vehicles. This isn't just happening in the "bad areas" anymore. Over the past 

couple of months this type of crime has been common in some of the wealthiest areas 

of Chicago. In fact, many Chicago residents are now referring to "the Magnificent Mile" 

as "the Mug Mile". But it isn't just in Chicago that this is happening. During this past 

Memorial Day weekend, cities all over the United States experienced a stunning wave of 

mass violence. We are supposed to be an "example" for the rest of the world, but as 

our economic wealth crumbles we are witnessing the collapse of society all around us. 

So what is going to happen when the economy gets even worse? 

The United States used to be a fairly civilized society. But now very few people seem to 

care how they treat others. That is even the case with our own government. As you 

will see below, the government is now sending SWAT teams in and dragging people out 

of their homes over unpaid student loans. 

So if the government is going to be so brutal, what kind of message does that send to 

our young people? 

Today our young people are facing a future that looks incredibly bleak. It is hard to 

have faith in the "system" when the "system" simply does not work any longer. 

What are you supposed to say to a young person when you know very well that there 

are no jobs and that there is very little hope? 

Most Americans don't understand what is causing the collapse of the economy, but 

most of them do have a sinking feeling that something has seriously gone wrong. 

For the last few years the American people have waited patiently for our politicians to 

"fix things", but they have not gotten the job done. 

Instead, our economic situation is still declining. 

So now frustration is starting to boil over, and it is only going to get worse. 

The following are 18 signs that the collapse of society is accelerating.... 

#1 In a brand new article, Janet Tavakoli has vividly described the wave of shocking 

violence that is currently sweeping the city of Chicago. What she says is happening to 

Chicago right now is beyond alarming.... 

This year, all hell has broken loose in downtown Chicago. Years of under-hiring 

have resulted in a police force that is unprepared for wildings and gang violence. 

Moreover, concealed carry in Chicago is illegal, unless one follows the 

Constitution. 

Tourists and residents have been attacked by mobs of youths on buses, on 

beaches, on bicycle paths, near the shops of the Magnificent Mile, and outside 

their homes. Mobs of shoplifters plagued "Mug Mile" stores. 

Terror has descended on many of the wealthiest areas of Chicago. Some are even 

calling on Chicago residents to completely avoid areas like the Magnificent Mile during 

the weekends until more police are brought in. 

52


Mobs of young people are "swarming" retail stores, assaulting shoppers and pedestrians 

and even pulling people out of their cars. 

The following is one eyewitness account of the "wildings" in Chicago that Tavakoli 

included in her recent article.... 

At about 11pm last Friday night, June 3rd, I heard shouting, screaming, horns 

blaring and tires screeching from my apartment...When I looked out my window 

to the street below I saw a crowd of about 20 young people...directly across the 

street from the entrance to my building. They were leaning on parked cars and 

clogging the street. They were screaming at people walking and driving by. I 

watched them stop vehicles, including taxi cabs, and pull people from the 

vehicles...It was a frightening scene and I was sure someone was going to be 

hurt. 

#2 If you don't pay your student loans you may find yourself getting dragged out of 

your home by a SWAT team. 

You doubt this? 

The following is how an article in The Daily Mail recently described one recent SWAT 

team raid in California that was apparently ordered by the Department of Education.... 

A father was dragged from his home and handcuffed in front of his children by a 

SWAT team looking for his estranged wife - to collect her unpaid student loans. 

A stunned Kenneth Wright had his front door kicked in by the raiding party at 6 

am yesterday before being dragged onto his front porch, handcuffed and led to a 

police car with his three children. 

He says he was then detained for six hours while officers looked for his wife - 

who no longer lives at the house. 

#3 One town in Connecticut was forced to shut down a beautiful new fountain because 

too many people were using it as a toilet. 

#4 This most recent Memorial Day (2011) weekend, cities all over America literally 

turned into war zones. There were reports of mass violence in Miami, New York, 

Chicago, Charlotte, Myrtle Beach, Nashville and Boston among other places. 

If you want to see video of some of the violence in Miami as it was happening, you can 

view it here. The video is quite disturbing so please don't let any small children view it. 

#5 One of the hottest books in America right now is a "children's book" entitled "Go 

The F*k To Sleep". 

#6 A teenage girl in Washington state recently shot her Dad with a hunting bow 

because he took away her cell phone. 

#7 In New York City, one 32-year-old man was recently charged with sexually 

assaulting an 85-year-old woman. 

53


#8 Democratic strategist James Carville recently made national headlines when he told 

talk show host Don Imus the following.... 

"You know, look — this is a humanitarian — you know, you’re smart enough to see this . 

. . People, you know, if it continues, we’re going to start to see civil unrest in this 

country. I hate to say that, but I think it’s imminently possible." 

#9 According to one new study, the percentage of U.S. households that contain a 

married couple with children has fallen from 44.3% in 1960 to 20.2% today. 

#10 In Atlanta, two dozen teens recently violently assaulted two Delta flight attendants 

on a train for no apparent reason. The following is how a local Atlanta 

newspaper described the attacks.... 

Their "Clockwork Orange" style blitz was over soon after it began. The teens boarded 

the train, headed to Hartsfield-Jackson International Airport, at the Garnett station a 

little after midnight seemingly intent on instilling fear. They succeeded. 

“There was blood everywhere, people were hollering and screaming,” a witness told 

Channel 2 Action News. “We were intimidated. People were terrified. People were trying 

to run. But there was nowhere to run.” 

#11 Federal prosecutors in Indianapolis have announced that they have broken up one 

of the largest child pornography rings ever discovered. It was based in Bloomington, 

Indiana. 

Are any small towns still safe? 

#12 Barack Obama's food safety chief is defending armed raids of raw milk producers 

(including a raid on an Amish farmer) and he says that the FDA will "keep doing our 

public health job". 

#13 In Florida, a 45-year-old Polk County sheriff's deputy has been charged with 

strapping children to a desk and spanking them with sex toys. 

#14 In Sioux City, Iowa a 41 year old man recently walked into the office where his 

boss worked and beat the living daylights out of him. The boss suffered four 

chipped teeth and needed surgery to repair his nose. Apparently the boss was planning 

to fire the man. 

#15 A 20-year-old woman in Oklahoma has been charged with killing the family 

cat and using the blood as part of a costume she planned to wear to a Lady Gaga 

concert. 

#16 McDonald's recently held a "National Hiring Day" and about a million Americans 

showed up to apply for jobs at McDonald's restaurants all around the nation. Well, in 

Cleveland a horrible fight broke out between some girls and it ended up with three 

people being run over by a car. You can view video of this incident right here. Please 

do not watch the video if you are sensitive to graphic violence. 

#17 All over the United States, vicious restaurant brawls have been erupting with 

alarming frequency and many of them are being posted up on YouTube for the world to 

see. You can see one example of this phenomenon right here. 

54


#18 From coast to coast, "mob robbing" has become a very disturbing trend. 

So what is a "mob robbing"? 

Well, basically dozens of young people storm into a store together, grab whatever they 

want, and storm back out again. 

Recent examples of this have been caught on video in Washington D.C. and in Las 

Vegas. 

So does anyone still doubt that we are starting to see the collapse of society? 

Sadly, things are going to get a whole lot worse. 

In response to a recent article entitled "The Coming Economic Hell For American 

Families", a frequent commenter on my site known as "El Pollo De Oro" left the 

following comment about the collapse of society that is beginning to unfold.... 

Yes, it’s going to be VERY violent in The Banana Republic of America. Carjacking, 

kidnapping, drug trafficking, armed robbery and murder for hire will be major growth 

industries in the BRA when millions of formerly middle class Americans, now the neopoor/neo-peasants, 

become increasingly desperate. The horrifying violence in Mexico 

will become a fact of life on this side of the border, the brutal kidnappings of the 

Philippines and Papua New Guinea will plague the BRA as well. Formerly middle class 

Americans who find themselves living in shantytown slums won’t like their new 

accommodations, and many of them will turn to violent crime in the hope of improving 

their miserable circumstances. 

The truth is that about the only thing keeping our society together has been the 

unprecedented affluence that we have been enjoying over the past few decades. 

Once that affluence is gone, the true character of the American people will come out, 

and we may not like what we see. 

That is one reason why I pound on the economic crisis this nation is facing day after 

day. Once our wealth is gone, there is going to be chaos in the streets of America. 

So what are you seeing in your area of the country? Do you see signs that the collapse 

of society is accelerating where you live? Please feel free to leave a comment with your 

opinion below.... 

SN: See this video too, it’s Sodom City in 

Miami. The social structure is collapsing. Just 

look. 

http://www.youtube.com/watch?v=lM4KZAEONaI&feature=related 

“Don Trip Memorial Day Weekend Miami 

2011.” This fellow Don Trip looks and 

sounds like half his brain was burned away 

with drugs. 

On the street the girls are wandering 

around virtually naked. The “thong” was 

55


called a “G-String” a few years ago and was only seen on strippers in bars. Now the 

girls wear them on the beach and the sidewalks. In another year they’ll wear paint 

over their nipples and nothing more. The police will ignore them. Toplessness is 

common in the South Pacific. I guess that will be the justification to tolerate it. The 

boys wander around without bounce in their step. They look fat and unhealthy like 

head shaven slobs covered with tattoos. These days it’s fashionable for a girl to say, 

“I’m a slut” and smile as if to say, ‘admire me, I’m so glamorous and beautiful 

everyone wants me in bed.’ They display beads in their tongue to indicate they offer 

oral sex to as many lovers as they can find, which in some cases are several each 

week. 

In addition to the very real potential for serious sexually transmitted disease spread 

….No one can trust such people for a stable marriage or the right raising of children. 

This is a lost generation! Any of them reading this will laugh at my old fashioned 

values. Good luck for them! They’ll need it. 

Is this the Change you wanted from Mr. Obama? Can you stand for 4-more-years of 

this? The author above thinks you MAY not like what’s coming? 

My guess is if 1% of society goes into revolution the police will be completely 

overwhelmed. I suspect at least 25% of people between age 15 and 24 are potential 

criminals like the ones we see in that YouTube video. If they all band together 

through social networks to start burning neighborhoods, this country will be 

considered at civil war with insufficient police and military to stop it. There will be 

martial law. Anyone suspected, anyone on the street after curfew will go to an army 

base outdoor prison camp and probably never get out! 

The Russians and Chinese don’t have to wage war against us. We’ll kill 

ourselves without their help. You really should see this because it illustrates the 

condition of a fraction of today’s young people and indicates who the trouble makers 

are. You want to know who will start the riots and who will be in army prison camps? 

Just see and hear this. http://www.youtube.com/watch?v=lM4KZAEONaI&feature=related 

12 More Signs That Society Is 

Collapsing 

What we are now witnessing is the slow motion unraveling of 

America. Our economy is dying, the American people have 

lost faith in the government and in almost all of our other 

major institutions, and our society is collapsing. 

Most Americans don't understand why all of this is happening, but most of them do 

realize that something has fundamentally changed. Earlier this year, McDonald's held a 

"National Hiring Day" and a million Americans showed up to apply for jobs. 

Only 62,000 of them were hired. That means only 6.2% of the applicants got jobs. So 

what are we supposed to tell the 93.8% that didn't get hired? Are they supposed to 

have any hope for the future when they can't even get a minimum wage job at 

McDonald's? When I was a teenager, I went over to McDonald's one day, filled out an 

application and was instantly hired. My, how things have changed. Now we have 

56


millions upon millions of young people that are staring directly into a very bleak future. 

The level of frustration in this country is rising to frightening levels and large numbers of 

people are already showing that they will stoop to anything in order to survive. 

In a recent article entitled "18 Signs The Collapse Of Society Is Accelerating" I 

focused primarily on the chaos that has been erupting in many of our urban areas. But 

the truth is that, as you will see below, there are signs that society is collapsing coming 

out of very rural areas as well. This phenomenon cannot just be pinned down to one 

area of the country or to one group of people. From coast to coast people are already 

starting to lose it and the economic collapse has only just begun. 

The cold, hard reality of the matter is that what we are experiencing right now is riproaring 

prosperity compared to what is coming down the road. 

So if people will behave this wildly now, what is our society going to look like someday 

when there are millions of Americans that have not had anything to eat for several 

days? 

That is something to think about. 

History has shown us that when people are really, really hungry they will do just about 

anything. 

But right now we are not even close to that point and yet people all across America are 

going crazy. 

The following are 12 more signs that society is collapsing.... 

#1 In my previous article, I detailed how the "mob robbery" phenomenon in Chicago 

is spinning wildly out of control. Well, just this morning, the brother of Billy Corgan (the 

front man for the Smashing Pumpkins) was mugged and had his iPod stolen by a 

mob of teens while he was riding a Red Line train in Chicago. 

Things have gotten so bad that now even The Wall Street Journal is taking notice of the 

rash of "mob robberies" that have been happening in Chicago. The following is how a 

new article in the Journal described one of the recent attacks.... 

In another incident last Saturday evening, Krzysztof Wilkowski, after shopping on 

Michigan Avenue, was sitting on his scooter a couple of blocks away checking his phone 

for a restaurant when he got whacked in the face with a baseball. 

At first, he said, he thought it was a prank, but then he looked up and saw 15 to 20 

young men approaching. "My first reaction was, 'I'm about to get robbed, what do I do?' 

" Mr. Wilkowski recalled in an interview. 

The 34-year-old insurance company employee from a Chicago suburb grabbed the keys 

from his ignition and held tight to his phone. A few of the attackers dragged him off his 

scooter and pulled him onto Chicago Avenue where they punched him, hit him with his 

helmet and tried to grab his phone. 

#2 Sadly, "mob robberies" are not just happening in Chicago. The following is a video 

of a mob robbery that took place in Stockton, California.... 

57


This next video is an Associated Press video report about how police have become 

extremely concerned about the "flash mobs" that have been plaguing Philadelphia 

lately..... 

This is a very, very disturbing trend. Once these videos go up on YouTube, other 

groups of young people "copycat" them all over the country. 

The next 10 signs are from some of my readers. In response to my previous article that 

discussed how society is collapsing, a number of people left comments that described 

what is happening in their particular areas. Sometimes so many dozens of comments 

get left that some real gems get overlooked. The following is a sampling of what my 

readers have been sharing about how society is collapsing where they live.... 

#3 Golden Child (Third Richest County In America): 

About a month ago I was robbed in broad daylight walking to the store on a picture 

perfect 75 degree sunny day at 1 PM by two high school dropout teenagers on the path 

in my nice suburban town which is located in third richest county in America! A few 

months before that I was beaten unconscious by random drunk young people on the 

path near my home that I woke up in the hospital getting stitches in my face. This will 

be one dangerous summer for places all across America. 

#4 Chris (Fargo, North Dakota): 

I live in Fargo, ND and we have been having a rash of crime lately. In the past 6 months 

we have had multiple gas station robberies, bank robberies, and the latest, a shooting at 

one of our three movie theaters. 

#5 Sue (Ogden, Utah): 

I am a teacher in Ogden, Utah and this last winter I had a second grade student tell me 

that if I didn’t tell him how old I was that he was going to “shoot me in the back of my 

head.” He was suspended from school because that is a threat of violence, but nothing 

changed. His parents are active gang members. 

#6 Heather (Columbus, Ohio): 

I live close enough to Columbus, OH to follow the news there. (Thankfully far enough 

away not to be regularly affected by it.) Every day there is a new report of a violent 

crime. I believe we are up to 70 or so murders on the year. 10 years ago this wasn’t the 

case. I could (and did) walk into the worst part of the city and be safe as long as I was 

vigilant. I wouldn’t try that for the world now. I used to be a bank teller there and 

there’d be maybe 1 robbery a month throughout the city. It’s at least one a week now, 

probably more than that. And it’s no longer the downtown banks that are getting 

robbed–it’s the suburban ones. 

#7 The Baroness (Atlanta): 

I live in Atlanta Georgia. Everyday there are signs. Today’s headlines are: Babysitter kills 

toddler, 2 shot outside teen party, Brick thrown from I-75 overpass and several more. 

#8 Gas Panic (Unknown): 

58


The first, a 21 year old pizza delivery girl who was held with a knife to her throat while 

making a delivery. They took all the money she had on her and even took the time to 

search her car! The second was a 30 year old woman who told me she was walking 

down the street and was solicited by a pimp telling her she could “make good money”. 

After she told him to get lost, he stabbed her in the back of the arm. She needed over 

twenty stitches and showed me the wound. 

#9 NS (Fairbanks, Alaska): 

Even in Fairbanks, Alaska, there has been similar “mob robbing” going on. Yes, it is 

spreading everywhere. 

#10 Katherine (Unknown): 

I’ve also seen a huge increase in theft, vandalism, sexual assault, and violence just in 

the past couple of years. This is in a city that used to make the list in top places to live 

in the U.S. year after year. 

#11 Doktryn (Richmond, California): 

I live in Richmond California aka the city with the 2nd highest murder rate next to New 

Orleans, aka the city where the probability of you being killed is 5x higher. It is getting 

very serious out here, and luckily I don’t live in the rough part, however I go to the 

rough part to try to witness and preach. People are walking zombies. At any point their 

lives can be taken but the fact is, this is all they know. It is completely hopeless and 

when you wrote about “American Hellholes” I live in one. Richmond, CA is a postindustrial 

warzone. I work in the manufacturing industry, and I got here not long ago, 

but if you just drive through the city, the boarded up homes and abandoned warehouses 

tell the tale of how a deindustrialized city quickly turns to a battlefield. 

#12 IWillSurvive (Rural America): 

In my area we have been able to sleep well enough and always known our neighbors – 

up until a few months ago I did not lock my cars or my home most of the time – there 

was no need. That has changed, neighbors are now siphoning gas out of cars from 

desperation, and stealing scrap lumber, metal, livestock, produce and anything else they 

can get their hands on to sell or eat. Over the last year or so the police departments of 

some areas have started taking these seriously and actually investigated and caught a 

few. They are sometimes groups of people working together to amass resources to sell. 

We now keep a vigilant eye on our little flock of chickens and we have a colony of 

rabbits as well. We no longer “free range” them on our property at all – the risk of theft 

is too high if others know we have them. We keep any resources away from the road on 

the back side of our property – we also keep two German Shepherd Dogs for guarding 

our property. Living in the country is NOT what it used to be. 

--------------------------------------------------------- 

Sadly, this is just the beginning. 

This is just the tip of the iceberg. 

As the economy collapses, the chaos is going to get a lot worse. 

59


I wish that wasn't true, but this is the world we live in now. 

The recent article I did about the "economic hell" that American families are 

going through right now got a huge response, but honestly what we are 

experiencing right now is not even worth comparing to how nightmarish things 

are going to be when our economic system fully collapses. 

We have been on the biggest debt binge that the world has ever seen. Our 

debt-fueled prosperity has enabled us to enjoy an unprecedented standard of 

living. But the largest debt bubble in the history of the world is going to pop, 

and when it does the party is going to be over. 

SN: None of this is unexpected. I’ve predicted it to friends who ridiculed me. 

Many economists have predicted this for DECADES. Those who have been too 

busy watching television to take notice are the ones who find all of this news 

surprising. 

The Sky Is Falling, It Is Time To 

Panic And The U.S. Economy Has 

Fallen And It Can’t Get Up 

So many economists and financial pundits seem absolutely 

shocked that the U.S. economy is slowing down again. It is as if 

this latest wave of bad economic data has caught them completely 

by surprise. Now, in the mainstream media we are seeing all kinds 

of headlines declaring that the U.S. economy is headed for 

disaster. But anyone with half a brain could have seen this 

coming. 

This year alone, we have seen the worst tsunami in Japanese history, the worst U.S. 

tornado season in recent memory and the worst Mississippi River flooding in decades. 

In addition, chaos in the Middle East has pushed the price of oil up to very high levels. 

Of course all of those things were going to have an effect on the economy. In addition, 

all of the long-term trends that have been destroying the U.S. economy for decades 

have not been taken a breather. In fact, the truth is that all of our long-term economic 

problems have been accelerating. So yes, the sky is falling, it is time to panic and the 

U.S. economy really has fallen and it really can't get up. It is just that everyone in the 

mainstream media seems to have believed that Ben Bernanke and Barack Obama would 

60


just sprinkle a bunch of fairy dust on the economy and everything would just magically 

get better. Well, in the real world things simply do not work that way. 

Despite an unprecedented debt binge by the federal government and nightmarish 

money printing by the Federal Reserve, the economic downturn continues to drag on. 

Andrew Barber, a strategist at Waverly Advisors in Corning, New York recently told 

CNN the following.... 

"People are starting to see that this sort of malaise is not just going to go away no 

matter what you do." 

And "malaise" is a really good word for what we have been experiencing. For those that 

remember the late 1970s, what we are going through today is similar in a lot of ways. 

But what is perhaps even more frightening is that 2011 is starting to look a lot like 

2008 all over again. 

In particular, we are starting to see some real signs of instability in the financial 

markets. 

When Moody's downgraded Greek debt again on Wednesday all the way down to Caa1, 

I was only moderately alarmed. The truth is that everyone knows Greece is a basket 

case so a debt downgrade wasn't really all that surprising. 

When Moody’s announced that it plans to review the U.S. government’s AAA debt 

rating "if there is no progress on increasing the statutory debt limit in coming weeks" 

that got the attention of a lot of people around the world, but it was not totally 

unexpected. Moody's is telling Congress that they better raise the debt ceiling or else. A 

lot more pressure will be applied to Congress before this is over. 

SN: Martin Weiss lately rated the US credit rating a notch better than India and lesser 

than Singapore. 

When Moody's warned that it may downgrade the debt ratings of Bank of America, 

Citigroup and Wells Fargo, that really set off alarm bells for me. 

Do you all remember what set off the financial panic in 2008? 

Do the names "Bear Stearns" and "Lehman Brothers" ring a bell? 

Well, right now there are some frightening indications that we may see more trouble at 

some "too big to fail" institutions. 

But will there be any willingness to do more bailouts this time? 

Right now the financial markets are closely mirroring their performance just prior to the 

financial collapse of 2008. One great example of this is these charts which were 

recently posted by the Financial Armageddon blog. It looks like bank stocks may once 

again be leading the way down. 

Hopefully the financial system can hold together and we won't have a repeat of 2008 

right now, because if it happens it is going to be really messy. 

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But even without a "financial collapse" we already have all of the economic problems 

that we can handle. 

Robert Brusca, the chief economist at FAO Economics, is being quoted by CNN as 

saying the following.... 

"We've had a poor economic recovery to begin with, and now it appears to be segueing 

into an end." 

At this point, U.S. consumer confidence is already lower than it was back in 

September 2008 when Lehman Brothers collapsed. U.S. consumers are holding onto 

their money more tightly these days and that is not a good sign for an economy that is 

so highly dependent on consumer spending. 

The latest manufacturing numbers have also been very distressing. Measures of 

manufacturing activity all over the world are indicating that we have now entered an 

economic slowdown. This is also similar to what we saw a few years ago. 

We should all feel really bad for anyone that is entering the workforce right now. We 

are in the midst of graduation season, and the only thing that our new graduates have 

to look forward to is an economic crisis that never seems to end. 

On a recent article entitled "Global Financial Markets Tremble As Bad Economic 

News Continues To Pour In" a reader named Esta left the following comment.... 

I feel sad for yet another year of graduates entering a horrible job market. I recently 

read, and I think it was in the mainstream media, that only half the 2010 college grads 

have found jobs of any kind, only half of those have found jobs requiring a college 

education, and that 85 percent of all grads moved right back in with their parents. The 

job growth rate is so low that we keep employing fewer and fewer people as a 

percentage of our adult population. Why isn’t that still a recession? 

SN: Dr. Martin Weiss (moneyandmarkets.com) defined this as a DEPRESSION long ago. 

We have widespread (nation-wide) job losses across all or most sectors of the economy. 

We’re producing less and expecting to live as a service provider economy. If we’re not 

selling products and durable goods we’ll inevitably be ruined. Silicon Valley electronic 

engineers are working in Target as floor clerks and sales people IF they can find any 

work. Most are unemployed for over a year. Young women bagging groceries in my 

community have BS degrees or more! Elderly ladies are running cash registers for hours 

(thankful to have any income) and saying nothing about their painful legs and varicose 

veins. Mr. Bernanke dresses in about $2,000 of clothing before he goes to work each 

morning. There’s something wrong here…. 

(A better quality suit costs $1,000 and more. A better quality winter topcoat costs 

$1,000. Better shoes cost $300. Better neckties $75. Silk white shirts $50 to 200. 

Underwear $12. It adds up! He’s going to protect his comfortable position and from his 

point of view, WE can go to hell.) 

What a future our college graduates have to look forward to, eh? Moving back in with 

your parents, a crappy job (if you can find one) and a pile of student loan debt that 

will crush you financially for decades. 

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We are always told that "more education" is the answer, but even many of our most 

highly educated young people can't find jobs. In fact, it turns out that a third of last 

year's law school graduates aren't even practicing law.... 

The law school class of 2010 is making news for all the wrong reasons. The budding 

legal minds who managed to find employment last year have set a new record--only 

68.4 percent of them are in jobs that require them to pass the bar exam, the lowest 

share since the Association for Legal Professionals began collecting data. 

SN: I’m a retired Chiropractor. These days that’s 8-years to get through school and 

licensed. It costs at least $50,000 to open any sort of practice these days and that 

doesn’t leave much time to survive and build a base of patients to support your effort. I 

wonder how many doctors dropped out of practice thanks to the insurance company 

and medicare laws forcing them to work for peanuts, and how many have graduated 

and can’t get a practice started or find any hospital in which to work. 

Now it looks like the economy is going to starting heading downhill once again. 

What is that going to do to the job market? 

Last year, only 45.4% of Americans had jobs. That was the lowest figure since 1983. 

In some states it was even worse than that. In states like California, Arizona and 

Mississippi only about 37 percent of people had a job last year. 

The economic news just seems to get worse and worse and worse. The American 

people have been relatively calm over the past several years as they have waited for the 

promised "economic recovery", but what do you think is going to happen if we have 

another major economic downturn and unemployment spikes back up by several more 

percentage points? 

And what in the world can our "leaders" really do to "help" the economy if we do have a 

repeat of 2008? 

We are already running trillion dollar deficits. 

The Federal Reserve is already printing money like it is going out of style. 

So what would their next moves be? 

Most Americans have no idea how fragile our financial system and our economy really 

are. 

Let us hope and pray that things can hold together for as long as possible, because 

when the next wave of the economic collapse happens it is going to be really, really 

messy. 

Europe's Coming 

Summer Of Discontent 

June 12, 2011 

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The summer of 2010 promises to be the most 

tumultuous summer in the short history of the 

European Union. The sovereign debt crisis sweeping 

the continent threatens to cause economic and 

political instability on a scale not seen in Europe for 

decades. The truth is that governments across the 

eurozone have accumulated gigantic piles of debt that 

simply are not sustainable. Prior to the implementation 

of the euro, these European governments often 

"printed" their way out of messes like this, but now 

they can't do that. Now they either have to dramatically cut government 

expenses or they have to default. But the austerity measures that the IMF and 

the ECB are pressuring these European governments to adopt are likely to have 

some very painful side effects. Not only will these austerity measures cause a 

significant slowdown in economic growth, they are also likely to cause the same 

kinds of protests, strikes and riots that we saw in Greece to erupt all over 

Europe. 

You see, most Europeans have become very accustomed to the social welfare 

state. Tens of millions of Europeans aren't about to let anyone cut their welfare 

payments or the wages on their cushy government jobs. In most of the 

European nations that are experiencing big financial problems there are very 

powerful unions and labor organizations that do not want anything to do with 

austerity measures and that are already mobilizing. (SN: Mobilizing to kill the 

business they work for and put all of the union out of work!) 

As the IMF and the ECB continue to push austerity measures all over Europe this 

summer, the chaos that we witnessed in Greece could end up being repeated 

over and over again across the continent. This could truly be Europe's summer of 

discontent. 

The following are just a few of the countries that we should be watching very 

carefully in the months ahead.... 

Spain 

In many ways, the economic situation in Spain is now even worse than the 

economic situation in Greece. Spain's unemployment was already above 20 

percent even before this recent crisis. There are now 4.6 million people without 

jobs in Spain. There are 1.6 million unsold properties in Spain, six times the level 

per capita in the United States. Total public/private debt in Spain has reached 

270 percent of GDP. 

But this past week things really started to spin out of control in Spain. Ambrose 

Evans-Pritchard of The Telegraph describes the current situation in Spain this 

way.... 

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For Spain it has been a horrible week. The central bank seized CajaSur and 

imposed draconian write-down rules on banks to restore confidence. The Spanish 

Socialist and Workers Party (PSOE) of Jose Luis Zapatero then rammed a 5pc cut 

in public wages through the Cortes by a single vote, shattering consensus. The 

government cannot hope to pass a budget. Its own trade union base is planning 

a general strike. 

The austerity measures that Spain has been pressured to implement have proven 

so unpopular in Spain that many are now projecting that Spain's socialist 

government will be forced to call early elections. 

Spain finds itself in a very difficult position. They have a debt that they cannot 

possibly handle, the IMF and the ECB are pressuring Spain to implement 

austerity measures which are wildly unpopular with the public, and if Spain does 

implement those austerity measures it may send the Spanish economy into a 

downward spiral. 

In addition, the fact that Fitch Ratings has stripped Spain of its AAA status has 

pushed Spain to the edge of financial oblivion. 

A recent editorial in El Pais spoke of the "perverse spiral" that Spain's economy is 

entering.... 

"The Fitch note drives home the apparently unsolvable contradiction in which the 

Spanish economy finds itself. To maintain debt solvency Spain must squeeze 

public spending: yet this policy undermines the chances of recovery which itself 

causes further loss of confidence." 

And Spain's very powerful labor organizations are not about to take these 

austerity measures sitting down. In fact, the two largest trade unions in Spain 

are already calling for a general strike. 

So could Spain end up being the next Greece? 

France 

France admitted on Sunday that keeping its top-notch credit rating would be "a 

stretch" without some tough budget decisions. 

But French citizens are not too keen on belt-tightening. We all remember the 

massive riots in France a few years ago when it was proposed the work week 

should be shortened. It certainly seems unlikely that the French will accept 

"tough budget decisions" without making some serious noise. 

Italy 

The Italian government recently approved austerity measures worth 24 billion 

euros for the years 2011-2012. But the Italian public is less than thrilled about it. 

65


In fact, Italy's largest union has announced that it will propose to its members a 

general strike at the end of June to protest these measures. 

Portugal 

Under pressure from the IMF and the ECB, Portugal has agreed to impose fresh 

austerity measures that include much higher taxes and very deep budget cuts. 

And the truth is that Portugal desperately needs to do something to get their 

finances under control. Recent EU data shows that Portugal’s total debt is 331 

percent of GDP, compared to only 224 percent for Greece. 

So will the Portuguese public accept these austerity measures? 

It doesn't seem likely. 

In fact, Fernando Texeira dos Santos, Portugal's finance minister, says that he 

expects "violent episodes" comparable to those in Greece but insists that there is 

no other option. 

So it promises to be a wild summer in Portugal. The CGTP trade union federation 

in Portugal has promised to mobilize their members.... 

"Either we come up with a very strong reaction or we will be reduced to bread 

and water." 

Romania 

They have already been rioting in the streets in Romania. 

Tens of thousands of workers and pensioners recently took to the streets in 

Romania to protest the harsh austerity measures that the Romanian government 

is imposing at the request of the International Monetary Fund. 

The Romanian people have been through incredibly hard times before, and they 

aren't about to let the IMF and the ECB impose strict austerity measures on them 

without a fight. 

Germany 

It is being reported that Germans are bracing themselves for a "bitter" round of 

government budget cuts. It seems that even Germany has some belt-tightening 

to do. 

In addition, resentment is rising fast in Germany as the population there realizes 

that it is Germany that is going to be the one funding a large portion of the 

bailouts for these other European nations. 

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How long will the German people be able to control their tempers? 

Ireland 

The Wall Street Journal is warning that Ireland could be Europe's next financial 

basket case. 

Why? 

Well, the Irish have gotten into a ton of debt, and they are now finding it very 

expensive to finance new debt. The Irish government is now paying 

approximately 2.2 percentage points more than Germany is to borrow money for 

10 years, while Spain (even with their economy in such a state of disaster) only 

has to pay 1.6 percentage points more than Germany. 

But if "austerity measures" come to Ireland, how do you think the public will 

react? 

It likely would not be pretty. 

The United Kingdom 

The exploding debt situation in the U.K. was a major issue in the most recent 

election. David Cameron promised the voters to get the U.K.'s exploding debt 

situation under control. But the coming budget cuts are likely to be incredibly 

painful. In fact, Bank of England governor Mervyn King has even gone so far as 

to warn that public anger over the coming austerity measures will be so painful 

that whichever party is seen as responsible will be out of power for a generation. 

But it isn't just national governments that are in trouble in Europe. The European 

Central Bank is warning that eurozone banks could face up to 195 billion euros in 

losses during a "second wave" of economic problems over the next 18 months. 

The truth is that almost everyone is expecting the next couple of years to be 

very tough economically all across Europe. 

But the vast majority of the European public is not going to understand the 

economics behind what is happening. Almost of them are going to know is that 

the budget reductions, tax increases and pay cuts really, really hurt and that is 

likely to result in a whole lot of anger. 

When Europeans get really angry it isn't pretty. If what happened in Greece is 

any indication, this upcoming summer and fall could be a really wild one 

throughout Europe. 

SN: Commentary: There are many forces seen and unseen, in this plane of 

existence and in spiritual planes of which you may or may not be aware, seeking 

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to unsettle society and cause many people to riot and wage wars. Most of those 

people who riot are not my readers. This puts YOU in a better position. 

The rioters will fill the jails and empty land and homes. If you are desperate 

later, there won’t be enough police to look into every abandoned building and 

home and chase squatters out. If you’re truly desperate moving into an 

abandoned place and treating it well will be a service to the owner and may go 

virtually unnoticed. The jails will be too full to add more people. The police and 

the courts will be too overwhelmed to trouble you. If someone does catch up to 

you, ask if you can pay a reasonable rent and get electricity and water turned 

on. This is a terrible situation to be in but yours could be that bad and I can 

hope by then the “land lords” will come to their senses and be willing to work 

with you if you’ll maintain the house and grounds and keep vandals away. 

In any case, DO NOT participate in riots. Riots accomplish nothing and destroy a 

lot of property. They also lead to many injuries and some deaths. These days it 

appears the national guard and army are prepared to put masses of people into 

prison camps and never take them to court. These people will simply die in such 

prisons due to exposure, disease and starvation. 

The worst of society will riot and be removed. Those with enough good sense to 

stay out of the way of trouble will be left to rebuild when the dust settles. Be 

sure you are one of them. 

Will The Banksters And The 

Corpocracy Eventually Own It 

All? 

29 Statistics About Extreme 

Income Inequality In America 

That Will Blow Your Mind 

Today, average Americans have less power 

relative to the monolithic corporate and 

governmental institutions that dominate our 

society than at any other point in U.S. 

history. Sadly, this is not what our founding 

fathers ever envisioned. Our founding 

fathers established a government "of the 

people, by the people, for the people", but 

68


what we have today is very far from that ideal. 

In America today, wealth and power are very highly concentrated, and if you 

have neither wealth nor power than most of our politicians really do not have 

any interest in you. Over the past several decades, those with huge amounts of 

money and power have been busy rigging the game so that the rest of the 

money and power slowly but surely funnels into their hands. If current trends 

continue, the banksters and the corpocracy will eventually own it all. Below you 

will find 29 statistics about extreme income inequality in America. Sadly, most of 

these statistics will be out of date in a year or two because wealth and power will 

be much more concentrated by that time. 

If you are a "Kool-Aid drinking Democrat" you are going to be really upset by this 

article. If you are a "Kool-Aid drinking Republican" you are going to be really 

upset by this article. 

Most Republicans have been brainwashed into believing that "capitalism" means 

cheerleading while the big corporations vacuum up money and power. 

Most Democrats have no trouble with big corporations either because most 

establishment Democrats have been brainwashed into believing that large 

concentrations of power (whether governmental or corporate) are generally 

good. Most Democrats just wish that big corporations were a little less greedy 

and were a little more "socially responsible". 

Today, the big banks, the big corporations and the federal government are all in 

bed with one another and it is average Americans that always lose out. 

Our founding fathers tried to warn us about large concentrations of power. They 

attempted to establish a very limited central government, they wanted to keep 

us free from the tyranny of the big banks and they were very suspicious of large 

corporations. 

In a 2010 article, Rick Ungar noted that corporations were very seriously 

restricted in the early days of America.... 

After the nation’s founding, corporations were, as they are today, the result of 

charters granted by the state. However, unlike today, they were limited in how 

long they were permitted to exist (typically 20 or 30 years), only permitted to 

deal in one commodity, they could not own shares in other corporations, and 

their property holdings were expressly limited to what they needed to accomplish 

their corporate business goals. 

My how things have changed. 

"Capitalism" is supposed to be about the empowerment of individuals and 

families and small businesses. 

69


Instead, today "capitalism" has come to mean something completely different. 

Today, the biggest, meanest concentrations of wealth devour everyone else with 

a big assist from the government. 

At this point, average Americans mean next to nothing in the political process. 

This point was eloquently made in a recent column by Robert Reich.... 

The unemployed are politically invisible. They don’t make major campaign 

donations. They don’t lobby Congress. There’s no National Association of 

Unemployed People. 

Their ranks are filled with women who had been public employees, single 

mothers, minorities, young people trying to enter the labor force, and middleaged 

men who have been out of work for longer than six months. You couldn’t 

find a collection of people with less political clout. 

I would not normally quote Robert Reich, but he made a good point. If you 

don't have an army of lobbyists or any money to give to them then most of our 

politicians don't really care what you think or how much you are hurting. 

Just think about the amount of power and money that Exxon Mobil or Wal-Mart 

has compared to the amount of power and money that an average American 

has. 

Our society has veered very far from the egalitarian ideal that our founding 

fathers once hoped for. 

The corporate giants are so powerful that it is next to impossible for small 

businesses to directly compete with them. 

Just try it some time. 

Many banks and corporations have become so big that the world literally cannot 

afford for them to fail. 

For example, three U.S. corporations control approximately 90% of the 

world’s grain trade. 

So what happens if those three corporations collapse? 

That is something to think about. 

But of course average Americans are never "too big to fail". The big banks 

begged and begged for bailouts, but if you are late on your debt payments they 

will chuck you into prison. 

Also, when wealth and power are so highly concentrated, economic rewards flow 

only to a few. Corporatism (as opposed to true capitalism) produces a handful of 

winners and a whole lot of losers. 

70


As I have written about previously, the middle class is being destroyed. If 

current trends are allowed to continue long enough we eventually won't have 

much of a middle class left at all. 

The following are 29 statistics about extreme income inequality in America that 

will blow your mind.... 

#1 In the United States today, the richest one percent of all Americans have a 

greater net worth than the bottom 90 percent combined. 

#2 The wealthiest 1% of all Americans now own more than a third of all the 

wealth in the United States. 

#3 The wealthiest 1% of all Americans own over 50% of all the stocks and 

bonds. 

#4 The poorest 50% of all Americans collectively own just 2.5% of all the 

wealth in the United States. 

#5 According to a joint House and Senate report entitled "Income Inequality 

and the Great Recession", the top one percent of income earners in the 

United States brought in a total of 10.0 percent of all earned income in 1980, but 

by the time 2008 had rolled around that figure had skyrocketed to 21.0 percent. 

#6 Between 1979 and and 2007, the average household income of the top 1% 

of all Americans soared from $346,600 to $1.3 million. During that same 

time period the average household income for middle class Americans increased 

only slightly. 

#7 According to Harvard Magazine, 66% of the income growth between 

2001 and 2007 went to the top 1% of all Americans. 

#8 More than 3 billion people, close to half the world's population, live on less 

than 2 dollar a day. 

#9 According to a new report from the AFL-CIO, the average CEO made 343 

times more money than the average American did last year. 

#10 The number of "low income jobs" in the U.S. has risen steadily over the 

past 30 years and they now account for 41 percent of all jobs in the United 

States. 

#11 Since 1979, real median weekly earnings for high school dropouts has 

declined by 22 percent. 

#12 During this economic downturn, employee compensation in the United 

States has been the lowest that it has been relative to gross domestic product in 

over 50 years. 

#13 Half of all American workers now earn $505 or less per week. 

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#14 Since the year 2000, we have lost 10% of our middle class jobs. In the 

year 2000 there were about 72 million middle class jobs in the United States but 

today there are only about 65 million middle class jobs. Meanwhile, our 

population has gotten significantly larger. 

#15 Ten years ago, the United States was ranked number one in average 

wealth per adult. In 2010, the United States fell to seventh. 

#16 According to one recent study, approximately 21 percent of all children in 

the United States were living below the poverty line in 2010. In the UK and in 

France that figure is well under 10 percent. 

#17 Today, one out of every four American children is on food stamps. 

#18 It is being projected that approximately 50 percent of all U.S. children 

will be on food stamps at some point in their lives before they reach the age of 

18. 

#19 According to Moody's Analytics, the wealthiest 5% of households in the 

United States now account for approximately 37% of all consumer spending. 

#20 The number of Americans that are going to food pantries and soup kitchens 

has increased by 46% since 2006. 

#21 The U.S. poverty rate is now the third worst among the developed 

nations tracked by the Organization for Economic Cooperation and Development. 

#22 Approximately half of all American workers make $25,000 a year or 

less. 

#23 The wealthiest 1% of the earth's population controls 39% of the 

wealth. 

#24 It is estimated that over 80 percent of the world's population lives in 

countries where the income gap between the rich and the poor is widening. 

#25 One year after the recent financial collapse the top 25 hedge fund 

managers earned a total of approximately $25 billion. That breaks down to an 

average of $1 billion each. 

#26 Bill Gates has a net worth of somewhere in the neighborhood of 50 billion 

dollars. That means that there are approximately 140 different nations that 

have a yearly GDP which is smaller than the amount of money Bill Gates has. 

#27 It is estimated that the entire continent of Africa owns approximately 1 

percent of the total wealth of the world. 

#28 The top 0.01% of Americans make an average of $27,342,212. The 

bottom 90% make an average of $31,244. 

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#29 58 percent of the members of Congress are millionaires while only about 

1 percent of the general population is made up of millionaires. 

So what is the solution? 

Well, our liberal friends insist that the solution to all of this inequality is to tax the 

rich and to distribute the wealth to the poor. 

Well, there are three major problems with that. 

Number one, when you raise taxes too high you eliminate the incentive to work 

hard. 

Number two, when you make it too easy to depend on government handouts 

you create an underclass of economic parasites. 

Number three, the big corporations and the ultra-wealthy have become masters 

at avoiding taxation no matter what the rates are. 

Before you tax the rich too much, you might want to consider the 

consequences of doing so. 

Why should someone work hard to run a business and make a lot of money if 

the government is just going to come along and take over half of all the money 

that is made? 

Personally, if I ever get into a tax bracket where over half the money I make 

goes to the government then I simply will not work nearly as hard at that point. 

But if that starts happening on a large scale, then you have a significant loss of 

economic activity which hurts the economy overall. 

Already, the top 20 percent of all income earners in the United States pay 

approximately 86 percent of all federal income taxes. 

When the government "steals from the rich" and "gives to the poor", that also 

tends to create a large group of people that decides that it is easier to take from 

the government than it is to work for a living. 

In 1980, government transfer payments accounted for just 11.7% of all 

income. Today, government transfer payments account for 18.4% of all income. 

That is not a good trend. 

At this point, U.S. households are now receiving more income from the U.S. 

government than they are paying to the government in taxes. 

That is not even close to sustainable, but nobody wants to give up their 

"government benefits". 

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Today, 59 percent of all Americans receive money from the federal government 

in one form or another. 

Yes, there will always be those that cannot help themselves and we should 

always have a "safety net". But when you look around it doesn't take a genius to 

figure out that things have gotten completely and totally out of control. Right 

now, an all-time record 44 million Americans are on food stamps. 

Back in 1965, only one out of every 50 Americans was on Medicaid. Today, one 

out of every 6 Americans is on Medicaid. 

The U.S. government is even handing out billions of dollars to homeowners 

that are delinquent on their mortgages. This is not a formula for long-term 

economic success. When people get addicted to government checks they never 

want to stop. 

But this is not what the poor need. 

What the poor need are good jobs that pay good wages. Unfortunately, we keep 

shipping millions of those jobs overseas. So now the Chinese economy is 

thriving and our formerly great manufacturing cities are turning into hellholes. 

Handouts do not give people hope, dignity and a future, but jobs can. 

Also, as I have written about before, the big corporations and the ultra-wealthy 

have become masters at avoiding taxes. There is a reason why approximately a 

third of all the wealth in the world is held in "offshore" tax havens. 

What U.S. corporations are able to get away with is absolutely amazing. 

The following figures come directly out of a report by Citizens for Tax 

Justice. These are combined figures for the tax years 2008, 2009 and 2010. 

During those three years, all of the corporations below made a lot of money. Yet 

all of them paid net taxes that were below zero for those three years combined. 

How is that possible? Well, it turns out that instead of paying in taxes to the 

federal government, they were actually getting money back. 

So for these corporations, their rate of taxation was actually below zero. 

If you have not seen these before, you are going to have a hard time believing 

some of these statistics..... 

*Honeywell* Profits: $4.9 billion Taxes: -$34 million 

*Fed Ex* Profits: $3 billion Taxes: -$23 million 

*Wells Fargo* Profits: $49.37 billion Taxes: -$681 million 

*Boeing* Profits: $9.7 billion Taxes: -$178 million 

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*Verizon* Profits: $32.5 billion Taxes: -$951 million 

*Dupont* Profits: $2.1 billion Taxes -$72 million 

*American Electric Power* Profits: $5.89 billion Taxes -$545 million 

*General Electric* Profits: $7.7 billion Taxes: -$4.7 billion 

Are you starting to get the picture? 

I wish I could make $7.7 billion, pay no taxes and have the government give me 

$4.7 billion on top of it. 

Our system has become corrupted beyond all recognition.We need to throw out 

the current system of taxation and come up with something entirely new. 

In fact, the truth is that for most of U.S. history there was not a federal income 

tax at all. But that is a story for another day. If you believe in the U.S. 

Constitution and in the republic that our founding fathers established, then the 

very high concentrations of wealth and power in our society today should greatly 

concern you. Income inequality is not a "Democrat" or a "Republican" issue. A 

vibrant, thriving middle class should be a goal all of us can embrace. 

But I have a feeling a whole lot of "Democrats" and a whole lot of "Republicans" 

were deeply offended by this article. Feel free to express your opinion by leaving 

a comment below.... 







119 comments to Will The Banksters And The 

Corpocracy Eventually Own It All? 29 Statistics 

About Extreme Income Inequality In America 

That Will Blow Your Mind 

« Older Comments 1 2 

• Nickelthrower 

June 6th, 2011 at 10:48 pm · Reply 

Greetings, 

I’ve got something to say that really pisses off the Libertarians and will probably piss off anyone 

that agrees with the author of this article and his views on taxes. 

75


I have no problem with letting the Rich keep more of their “hard earned” money. No problems. I 

have no problems with deregulation. No problems. 

I have no problems with this very Free Market as long as those same rules apply to those that 

labor within that market. Lets have a look at what a free market would look like when ALL 

restrictions with regards to how labor organizes itself (to include a “militant” wing)are removed. 

Let labor and corporate power compete in an open and free world wide market place and we can 

let the market decide who will come out on top. 

Of course, the Libertarians clam up and freak out over the question of Armed and Organized 

Labor as it removes the monopoly of power from the wealthy elite. 

Think I’m wrong? Go ask a Libertarian their thoughts on Labor Unions. Go ahead. 

Suddenly Everyone Is Warning 

About The Next Financial 

Collapse 

take notice. 

Are we about to see a repeat of 2008 (or 

something even worse)? Suddenly all kinds 

of people are coming out of the woodwork 

and warning that we could be on the verge 

of the next major financial collapse. Of 

course many economists and financial 

pundits just enjoy hearing themselves talk, 

and sometimes they will make outrageous 

claims just to get attention, but when so 

many ominous warnings come out all at 

once it does tend to make one sit up and 

The truth is that global financial markets are even more vulnerable today than 

they were in 2008, and all over the globe we are seeing trouble signs. Japan is 

trying to recover from the worst natural disaster that they have ever seen and 

they are dealing with a nuclear crisis that never seems to end. The Europeans 

are trying to put another bailout package for Greece together and about a half 

dozen more European nations that are drowning in debt will need bailouts after 

76


that. In the U.S., there are all kinds of signs pointing to the collapse of the 

economy and the politicians in Washington D.C. continue to "kick the can down 

the road" and hope that our economic problems will somehow fix themselves. 

Oil prices are incredibly high and turmoil is sweeping the globe. Conditions are 

certainly developing that could bring about a "perfect storm" and cause another 

global financial collapse. 

The following is just a sampling of the financial warnings that we have seen in 

recent days from some prominent voices.... 

*Economist Nouriel Roubini: "I think right now we’re on the tipping point of a 

market correction. Data from the U.S., from Europe, from Japan, from China are 

suggesting an economic slowdown." 

*Jim Rogers: "I would expect to see some serious problems in the foreseeable 

future….By 2011, 2012, 2013, I don’t know when, we’re going to have an 

economic slowdown again." 

*Mark Mobius, the executive chairman of Templeton Asset Management’s 

emerging markets group: "There is definitely going to be another financial crisis 

around the corner because we haven’t solved any of the things that caused the 

previous crisis." 

*David M. Blitzer, Chairman of the Index Committee at S&P Indices: "Home 

prices continue on their downward spiral with no relief in sight." 

*Jeffrey Gundlach, CEO of DoubleLine Capital: "I think we're looking at some 

type of echo in the credit crisis coming up here. That's what I'm afraid of." 

*Carl Icahn: "I do think that there could be another major problem. Now, will it 

happen next week, next year, i don't know and certainly nobody knows, but i 

don't think that the system is working properly. I really find it amazing that we're 

almost back to where it was, where there's so much leverage going on in the 

investment banks today. There's just way too much leverage and way too much 

risk-taking, with other people's money." 

Sadly, the world really did not seem to learn much of anything from 2008. 

Global financial markets are still pretty much operating the same way that they 

did before the last crisis. 

But back before the crisis in 2008 things were much more stable around the 

globe. 

When the horrible earthquake and tsunami struck Japan earlier this year, most 

economists brushed it off and believed that Japan would be "resilient" and would 

bounce back very quickly. 

At the time, I went directly against the mainstream consensus with this article: 

"14 Reasons Why The Economic Collapse Of Japan Has Begun". 

77


I followed that up with another article entitled "The Japanese Economy Is In 

Much Bigger Trouble Than Most People Think". 

So who was right? 

Well, it turns out that Japan is now officially in a recession. Their economy 

contracted at a 3.7 percent annualized rate during the first quarter. 

As bad as that number is, just remember that the tsunami did not even hit until 

March 11th. 

So what is the 2nd quarter number going to look like? 

There is often a lag between a disaster and the economic effects of the disaster. 

The economic impact of this nightmare is going to be felt in Japan for many 

years to come. In fact, it is going to be very interesting to see what kind of 

earnings reports we seeing coming out of Japan in the months ahead. 

The economic problems in Japan are also really starting to be felt around the 

rest of the globe. The other day, USA Today published an article with the 

following headline: "U.S. economy damaged more than thought by Japan 

quake". 

Amazingly, everyone seems to be really surprised that the worst tsunami in 

modern history is having a significant economic impact. 

Meanwhile, the crisis at Fukushima just continues to get worse. 

In case you haven't noticed, the Japanese are not even close to finding a 

solution to this crisis. 

If you want to get a good idea just how bad things are getting around 

Fukushima, just read this article by Natural News: "Land around Fukushima 

now radioactive dead zone; resembles target struck by atomic bomb". 

The mainstream media has been doing their best to downplay the crisis at 

Fukushima, but the truth is that it is now a worse disaster than Chernobyl and 

life in that region will never be the same again. 

Conditions are also ripe in Europe for another financial collapse. 

Have you been watching what has been going on in Greece? 

It's crazy. Without another bailout the Greek government will soon start 

defaulting on their debts. 

The EU and the IMF don't want to give Greece more bailout money unless there 

are some significant "strings" attached. But they also know that if Greece is not 

bailed out it will cause complete chaos in the financial markets. 

78


The Greek population does not want more bailouts and more austerity. There 

have been protests all over the country. Greek citizens have been pulling 

billions out of Greek banks as the country descends into chaos. 

In the end, another bailout deal will get pushed through and the can will be 

kicked down the road a little while longer. 

But what about all of the other European nations that need bailouts? 

The government of Ireland is already indicating that they may need another 

bailout. 

Portugal, Spain and Italy (along with several other European nations) are also 

teetering on the brink of financial disaster. 

Most Americans do not realize it, but the European sovereign debt crisis really 

could set off another global financial crash. Everyone really should be watching 

Europe. It is going to be a very interesting summer. 

Of course the United States continues to be an economic basket case. 

More depressing housing data came out today. U.S. home prices are now 5.1% 

lower than they were a year ago and they have fallen back to mid-2002 levels. 

CNN is declaring that a housing "double-dip" has been confirmed. 

Sadly, U.S. home prices have now fallen farther during this economic 

downturnthan they did during the Great Depression. 

Also, the consumer confidence index fell from 66 in April to 60.8 this month. 

Americans are becoming more pessimistic about the economy. 

According to Gallup, 41 percent of Americans believed that the economy was 

"getting better" at this time last year. Today, that number is at just 27 percent. 

We are seeing a tremendous about of inflation in 2011, but incomes are not 

rising. Unemployment is still rampant and very few jobs are being created. 

What is even sadder is that a very high percentage of the jobs that are being 

created are part-time or temporary jobs. 

But this was supposed to be the "recovery". Barack Obama and the Congress 

pushed through "stimulus package" after "stimulus package". We added trillions 

to our national debt. The Federal Reserve has been printing money like crazy. 

An all-out effort was made to pump up the U.S. economy in the short-term. 

So after all of that, is this what the "recovery" is going to look like? 

Meanwhile, all of those efforts have also made our long-term economic problems 

even worse. 

79


Because of our exploding national debt and the reckless money printing by the 

Federal Reserve, faith in the U.S. dollar is dying. Even the United Nations 

is warning of a potential dollar collapse. 

We are in big, big trouble. 

This is about as good as things are going to get for the U.S. economy. Despite 

unprecedented efforts, the U.S. economy is still struggling mightily and our longterm 

economic problems are scarier than ever. 

Sadly, most Americans still believe that wonderful economic times are on the 

way. Most believe that this downturn is just temporary and that things will soon 

be better than ever. 

How do you think they are going to feel when they find out the truth? 

(SN: I have Fukushima articles following. First this comment.) 

American think this is a temporary downturn, but have no idea why they think 

so. They believe what they hear on radio or TV, they believe what they hope 

might be true. I have a friend who doesn’t understand and doesn’t try to 

understand. My talking to him leads to him telling me “Its too much for me. I 

don’t want to hear it.” He wastes money on cases of beer, more electronic 

entertainment appliances for his home, pocket and car. He spends enough on 

this garbage to repair his home and pay the bills off quickly. Instead he wastes 

hours daily watching TV, reading the news, living thoughtlessly. I’m afraid he’ll 

lose him home and the new car he bought. But there’s no talking to him, just like 

there’s no talking to most of the people I meet. If I tell the truth “I’m a very 

negative person.” 

NO! I’m a very realistic person and YOU have your head in the sand Mr. Ostrich. 

People upset me, but I don’t need to require revenge. They’ll punish themselves 

more than they know, very soon. 

If you have discipline to store what you need and a bit of gold and silver you’ll 

buy the world’s luxury items, tools, tires, food, labor, nearly anything for pennies 

on the dollar. 

Land around Fukushima now radioactive 

dead zone; resembles target struck by 

atomic bomb 

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Tuesday, May 31, 2011 

by Mike Adams, the Health Ranger 

Editor of NaturalNews.com 

Learn more:http://www.naturalnews.com/032568_Fukushima_dead_zone.html#ixzz1PkjcKHxD 

(NaturalNews) It is nothing short of astonishing that the nuclear catastrophe 

we've all been told was "no big deal" has now escalated into the worst nuclear 

disaster in the history of human civilization. It's so bad now that soil samples 

taken from outside the 12-mile exclusion zone (the zone considered safe 

enough by the Japanese government for school children to attend school there) 

are higher than the 1.48 million becquerels a square meter limit that triggered 

evacuations outside Chernobylin 1986. 

In other words, the radiation level of the soil 12 miles from Fukushima is now 

higher than the levels considered too dangerous to live in near Chernobyl. This 

is all coming out in a new research report authored by Tomio Kawata, a fellow 

at the Nuclear Waste Management Organization of Japan. That same report 

also reveals that radiation from Fukushima has spread over 230 square miles. 

What we're facing here, folks, is a Fukushima dead zone where life will never 

return to its pre-Fukushima norms. 

Radiation levels similar to nuclear bomb test site 

Bloomberg is now reporting, "Tetsuya Terasawa said the radiation levels are in line 

with those found after a nuclear bomb test, which disperses plutonium. He declined 

to comment further." (http://www.bloomberg.com/news/2011-...) 

One soil sample taking 25 kilometers away from Fukushima showed Cesium-137 

exceeding 5 million becquerels per square meter. This level, of course, makes it 

uninhabitable by humans, yet both the Japanese and U.S. governments continue to 

downplay the whole event, assuring their sheeple that there's nothing to worry about. 

By their logic, since all the people are sheeple anyway, as long as the area is safe 

enough for sheep, it's also safe enough for the human population. 

Both Japan and the U.S. have made huge efforts to raise the limits of allowed 

radiation exposure in foods and beverages. This was, of course, a deceitful tactic to 

try to reclassify radiation contamination as somehow magically being "safe" by 

redefining it. 

The outright lying and tactics of deception that have been used to try to downplay 

the severity of the radioactive fallout from Fukushima are nothing less than 

despicable. In a time when radiation threatens the safety and food supply of 

hundreds of millions of people, we are getting nothing but a Fukushima whitewash. 

Fukushima is now far worse than Chernobyl ever was and yet we're all being told it's 

no problem and that the government has it all under control. I ask: How is 5 million 

becquerels per square meter not a problem? It's amazing that we even got this 

81


information, considering how frequently TEPCO claims its sensors and meters aren't 

working (basically any time they get a reading that's "too high"). 

The Japanese government can't wait to corral the sheeple back onto the radioactive 

soil, by the way. "Basically, the way in which the current zones have been drawn up 

aren't a concern in terms of the impact on health," said Chief Cabinet Secretary 

Yukio Edano. "Using Mr. Kawata's report as a guide, we want to do what we can to 

improve the soil, so people can return as soon as possible." 

(http://www.bloomberg.com/news/2011-...) 

Barely two weeks ago, TEPCO finally admitted Fukushima suffered multiple core 

melt downs in the hours following the tsunami strike 

(http://www.naturalnews.com/032378_n...) (http://www.naturalnews.com/032437_F...). 

This was the first time TEPCO openly admitted to something the alternative media 

had been reporting for months. 

What has become perfectly clear in the reporting on Fukushima is that: 

• Governments lie to the people 

• Mainstream media lies to the people 

• Only the alternative media was correct in reporting the severity of the core 

meltdowns and the release of radioactive material into the environment. 

Learn more:http://www.naturalnews.com/032568_Fukushima_dead_zone.html#ixzz1PkjTL6uC 

SN: I’m suddenly reminded of the movie Winds of War. I think it was that movie. 

Hitler is having coffee with diplomatic visitors, talking about how they’ll have 

enough crème for coffee and how things are going so well for him. Meantime of 

course the war rages and millions are dying. Am I mad or does anyone else see the 

parallel connection? Why care about all of those beautiful, educated, cultured, well 

mannered, decent Japanese people in misery? I’m comfortable and that’s what 

matters to me….. It’s a social and mental sickness! 

Radiation spreading across oceans and continents 

This is the data from the global network of radiation sensors that were originally 

installed to monitor the Comprehensive Nuclear-Test-Ban Treaty (CTBT). They 

were designed to detect illegal nuclear weapons testing events, but now they're 

proving to be quite effective at picking up the massive release of deadly radiation 

from the Fukushima nuclear power complex -- which is still burning, by the way. 

The monitoring stations are located in Alaska, Hawaii, Montreal and other cities, 

indicating that the radiation fallout from Fukushima now spans oceans and 

continents. 

Because Fukushima continues to leak radiation into the environment, its total 

radioactive output may yet exceed that of Chernobyl. There's certainly a lot more 

fuel at Fukushima than there ever was at Chernobyl: 1,760 tons of nuclear fuel versus 

just 180 tons at Chernobyl. 

82


So Fukushima has ten times the amount of fresh and spent fuel as Chernobyl. And 

it's still spewing radiation every second. The food and water in Japan is already 

contaminated, the oceans are radioactive, the air is radioactive, neutron beams are 

jetting out of the nuclear facility, it's raining yellow water, workers are being 

hospitalized with radiation burns, and still the nuclear industry says stop worrying... 

it's all safe! 

Fukushima quickly rising to the top of the list of the world's worst nuclear disasters 

It only leads me to wonder: How much worse is this going to get? We were told just 

this week that the reactors had their power restored, that the crisis was over, 

remember? The mainstream media has already blown past this story and doesn't 

express much concern at all over the situation. Yet this Fukushima catastrophe is 

quickly moving into the top position as the world's worst nuclear power plant 

disaster -- even as the media plays it down! 

(SN June 19, 2011 I see NO media coverage. It’s old news now. Out of sight, out of 

mind.) 

Fukushima may yet out-Chernobyl Chernobyl! 

So where does all this radiation end up? Well, according to the Japanese and 

American governments, it all just magically fades away and there's nothing at all to 

worry about. But Natural News readers know better: This radiation ends up in the 

food, in the water, and circulating throughout the environment. Where will this end? 

No one knows for sure. But if there's one thing we've all learned from watching 

Tokyo this past week, it's that the time to get prepared is right now! 

(SN: The Japanese current will carry lighter weight radioactive particles around the 

pacific past the North American West Coast. It could be the end of the food supply 

from the ocean in Washington and Oregon.) 

ACTION ITEMS: 

• Always have at least 10 - 20 gallons of extra fresh water stored in your house or 

apartment. No matter what! Tokyo residents just found out the hard way that 

depending on tap water is a risky gambit. 

• Always have extra food available, just in case. Next week on Natural News, by the 

way, we will be announcing the launch of a new line of long-term storable 

superfoods and organic foods packed in #10 steel cans (using BPA-free bags inside 

the cans). 

• If you don't yet have potassium iodide or a source of natural iodine, and you're in 

an area that could be hit by radiation fallout, it's a wise idea to have some just in 

case. The Natural News Store has potassium iodide back in stock today (as of this 

writing) and is shipping all orders containing *only* potassium iodide in 1-2 working 

days:http://store.naturalnews.com/index.... 

• Don't allow yourself to be caught unprepared by a natural or man-made disaster. 

83


Governments lie to you about disasters, almost as a rule. They always wait too long 

to tell people to do something, and by that time everybody's in a panic. So to avoid 

all that,get prepared in advanceso you're safe, confident and not contributing to the 

supply shortage problems. 

Remember, in any given emergency, the people who prepared in advance are those 

who help ease the supply lines and ultimately leave more supplies available for others 

who didn't prepare. So in any given city, the more people who have prepared in 

advance, the fewer people will panic and the lower the burden will be on emergency 

supplies. 

That's why preparedness makes such obvious sense. Only a fool would tell 

Americans to avoid being prepared for the unknown -- especially in a time when 

nuclear power plants are on the verge of catastrophic 'dirty bomb' meltdown events. 

Stay safe, folks. Even if it means just getting the basics squared away. If you drink 

anything out of the 2-liter bottles, just save those bottles and fill 'em with water. 

That's a start! 

Learn more:http://www.naturalnews.com/031836_radioactive_fallout_Fukushima.html#ixzz1Pkk6BrhW 

Stock Prices Have Fallen For Six 

Weeks In A Row June 16, 2011 

Well, it's official. U.S. stock prices have fallen for six weeks in a row. So 

will next week make it seven? The last time stocks declined for seven 

weeks in a row was back in May 2001 when the "dot-com" bubble was 

bursting. At this point, the Dow has declined by approximately 5 percent since 

the beginning of June. Things don't look good. So exactly what is going on 

here? 

Well, it is undeniable that the recent mini-bubble in stocks has been too good to 

be true. The S&P 500 had surged nearly 30 percent since last September. Much 

of this has been fueled by the Federal Reserve's latest round of quantitative 

easing, but now that is coming to an end in a few weeks and investors are a bit 

spooked. Meanwhile, wars and revolutions are sweeping the Middle East, Japan 

is dealing with the damage caused by the tsunami and by Fukushima, Europe is 

trying to figure out how to bail out Greece again and the U.S. debt crisis is 

continually getting worse. In addition, wave after wave of bad economic news is 

certainly not helping the mood on Wall Street. In many ways, a "perfect storm" 

is developing and many are now extremely concerned about what the rest of 

2011 is going to bring for Wall Street. 

QE2 is slated to conclude at the end of June, and many investors are deeply 

disappointed that it does not appear that we are not going to see QE3 right 

away. Many fear that the end of quantitative easing will pop the current mini- 

84


bubble in stocks and commodities. At the moment, financial markets are more 

jittery than they have been in a long time. 

Frank Davis, director of sales and trading with LEK Securities, says that there is a 

lot of pessimism on Wall Street right now.... 

"There's a lot of emotion in this market at the moment, and the conversations 

among traders are nearly all leaning toward the bear side" 

So what are some of the signs that this downturn on Wall Street may turn into a 

full-blown crash? 

Well, according to the Wall Street Journal, junk bonds are being sold off at an 

alarming rate right now. Does the following quote from the Journal remind 

anyone of 2008 at least a little bit?.... 

A steep decline in prices of bonds backed by subprime mortgages has spread 

through the riskiest segments of the credit markets, ending rallies in high-yield 

corporate bonds and commercial real-estate debt. 

Also, many of the big Wall Street banks are already laying off workers. In a 

previous article I wrote about the potential for Wall Street to go into "panic 

mode", I noted that Goldman Sachs, Bank of America, JPMorgan Chase and 

Morgan Stanley are all laying people off or are considering staff cuts. 

The truth is that the big banks on Wall Street are not nearly as stable as most 

people think that they are. Moody's recently warned that it may downgrade the 

debt ratings of Bank of America, Citigroup and Wells Fargo. 

Another major story on Wall Street right now is oil. OPEC recently announced 

that oil production levels will not be raised, even though the price of oil has 

been hovering around $100 a barrel. 

World oil supplies are very tight right now. In fact, the globe actually consumed 

5 million barrels per day more oil than it produced during 2010. This was 

possible because the difference was apparently made up by drawing down 

reserves. 

But if oil supplies are this tight already, what is going to happen if a major war 

(as opposed to all of the minor wars that are already happening) erupts in the 

Middle East? 

The world is sitting on the edge of a financial disaster. 

It is important to keep in mind that Europe is also in far worse financial condition 

than it was just prior to the financial collapse of 2008. 

It is being reported that German finance minister Wolfgang Schaeuble is 

convinced that a "full-blown" financial meltdown by Greece is a very real 

85


possibility. The cost of insuring Greek debt has soared to a brand new record 

high, and officials all over Europe are in panic mode. 

But financial problems are not just happening in Greece. The largest bank in 

France has just cut in half the amount of cash that customers can withdraw 

from ATMs each week. 

Most Americans don't spend much time thinking about the financial condition of 

Europe, but the truth is that what happens in Europe is going to play a major 

role in the months and years ahead. 

Of course most Americans already know that the U.S. government is a financial 

mess. 

As the "debt ceiling deadline" of August 2nd draws closer, the U.S. government 

has been raiding retirement funds in order to stay under the debt limit. 

Many investors are quite nervous about what may happen if the U.S. 

government actually does start defaulting on debt on August 2 nd . 

Others claim that the U.S. government is already in default. 

The only Chinese agency that gives credit ratings on sovereign debt says that the 

U.S. government “has already been defaulting” and the Chinese government 

has been repeatedly warning that the U.S. needs to get its finances in order. 

In any event, this debt ceiling drama will get resolved one way or another. 

The bigger question is this…. 

How is the U.S. government going to respond when the next financial crash 

happens? 

Back in 2008, the Federal Reserve and the U.S. government took unprecedented 

steps to prop up Wall Street. 

But can they really do that again if we see another major crash in 2011 or 2012? 

Many believe that things will be totally different this time around. Just check out 

what Jim Rogers recently told CNBC…. 

“The debts that are in this country are skyrocketing,” he said. “In the last three 

years the government has spent staggering amounts of money and the Federal 

Reserve is taking on staggering amounts of debt. 

“When the problems arise next time…what are they going to do? They can’t 

quadruple the debt again. They cannot print that much more money. It’s gonna 

be worse the next time around.” 

Jim Rogers is right about that. 

86


The next time we see a collapse on the scale of 2008 it is going to be a much 

bigger mess. 

Global financial markets are extremely vulnerable right now and there are a 

whole host of potential “tipping points” which could push them over the edge. 

The Federal Reserve and the U.S. government more or less used up all of their 

ammunition on the 2008 crisis. 

If we see another collapse in 2011 or 2012 there is not going to be much of a 

safety net available. 

The entire world financial system is simply swamped with way too much debt. 

The world has never seen anything even remotely close to the gigantic 

mountains of debt that have been accumulated around the world today. 

The current global financial system is not sustainable. More crashes are 

inevitable. A lot of people are going to get steamrolled. 

Hopefully you will not be one of them. 

Inflation Is Here – Just Open Up 

Your Eyes And Look At These 5 

Financial Charts! 

Despite what Federal Reserve Chairman Ben Bernanke says, rampant inflation is 

officially here. The federal government is constantly monkeying with the 

numbers to keep the "official" rate of inflation below 2 percent, but it is 

becoming very difficult to deny that the cost of almost everything is really going 

up these days. The American people are not stupid. They notice the difference 

when they go to the grocery store or stop at the gas station. The dollar is losing 

value (buying power) rapidly now. 

The price of gold set another new all-time record today and is currently hovering 

just above $1430 an ounce. The price of West Texas crude has moved above 

100 dollars several times recently and the price of Brent crude is currently above 

116 dollars. These higher oil prices are really starting to be felt in the United 

States. The average price for a gallon of gasoline in the United States has now 

reached $3.38. There are some gas stations in the U.S. where the price of a 

gallon of gas is already over 4 dollars. But it is not just the American people that 

are feeling the pain. The global price of food recently hit a new record high and 

almost every major agricultural commodity has absolutely skyrocketed in price 

over the past 12 months. Meanwhile, Ben Bernanke just told the Senate Banking 

Committee that he really isn't concerned about inflation at all. 

87


When it comes to inflation, the key is not to look at the official U.S. government 

numbers (they are highly manipulated) or how the U.S. dollar is performing 

against other major currencies (because they are all being devalued as well). 

Instead, you can get a truer sense of what is really happening to inflation by 

looking at what the U.S. dollar is doing against precious metals, commodities and 

other hard assets. 

So are we experiencing rampant inflation right now? Well, just open up your 

eyes and look at these 5 charts.... 

1 - The price of oil is racing back up to record levels. The chart below from the 

Federal Reserve is a couple weeks out of date. As noted above, the current price 

of West Texas crude is about $100 a barrel.... 

2 - The price of a gallon of gasoline in the United States seems destined to hit a 

brand new all-time record at some point this year. Was it really just a few short 

years ago when the average price of gas in this country was about a dollar a 

gallon?.... (In 1953 it was 5¢/gallon sn) 

88


3 - The value of most precious metals is very consistent over time. So when you 

see precious metals go up dramatically in price, it means that the dollar is being 

devalued. The price of gold just set another new all-time high and it seems 

destined to keep going even higher.... (next page) 

4 - The chart below from the Federal Reserve is a measure of the price of all 

commodities. These price increases are inevitably going to be passed along to 

consumers in the United States.... 

89


5 - After a couple of years of stable food price, the price of food is starting to 

take off yet again.... (NEXT PAGE) 

In fact, many analysts are warning that we could experience a major food crisis 

over the next couple of years. The global demand for food continues to grow at 

a very brisk pace, but all of the crazy weather we have been having around the 

world has caused some very bad harvests. 

Unfortunately, the global price of food has gone up substantially in recent 

months and it is likely to keep going up very rapidly. Just consider the following 

five facts.... 

#1 The United Nations says that the global price of food hit another new all-time 

high during the month of January. 

#2 The price of corn has doubled in the past six months. 

#3 The price of wheat has roughly doubled since the middle of 2010. 

#4 According to Forbes, the price of soybeans is up about 50% since last June. 

#5 The United Nations is projecting that the global price of food will increase by 

another 30 percent by the end of 2011. 

Ouch. 

But isn't there some good economic news? 

90


Yes, there is, but before we cover it, it is important to keep in mind that in an 

inflationary environment almost all economic numbers go up. 

For example, during the recent hyperinflation in Zimbabwe stocks went up like 

crazy and "economic growth" statistics were very impressive. 

Why? 

Because those numbers were measured in currency units that were being 

devalued at a blinding pace. 

So please keep that in mind when you hear "good economic statistics" on the 

evening news. 

The truth is that in an inflationary environment such as we have now entered 

into almost all economic numbers should be going up. 

So what is the good news? 

Well, last month all three major U.S. car companies reported strong sales gains. 

Sales of GM vehicles were up 49%, sales of Chrysler vehicles were up 13%, and 

sales of Ford vehicles were up 10%. 

But just because a few pieces of good economic news come floating our way 

does not mean that we should forget all of the horrific long-term economic 

trends that are tearing this country apart. 

The truth is that we are still a nation that is absolutely drowning in debt. 

For example, it was just announced that China now owns 1.16 trillion dollars of 

U.S. government debt. 

The borrower is the servant of the lender. We should never forget that. 

Also, the U.S. economy is slowly but surely becoming of less importance on the 

global stage. 

In 1985, America's share of global GDP was 33%. Today, it is just 24%. 

Our nation is rapidly being deindustrialized and we are becoming deeply 

dependent on industrial production from other nations. 

Did you know that the new World Trade Center that is being constructed on the 

site of the September 11, 2001 attacks is going to be made from German steel 

and Chinese glass? 

That says a lot about where we are at as a country. 

91


We have allowed so much of our industrial infrastructure to be exported to China 

where workers slave away in almost unbelievable conditions. 

A reader named Rish recently described what things are like over there.... 

As a product developer I went to china and saw the way the factory workers 

lived and worked in person. 50$ a month is about right, but if you are a skilled 

quality control expert you might make as much as 150$. at least this was true 

about 2 years ago the last time I went. The barracks were pretty meager, bunk 

beds with just plywood, no mattresses, if you wanted you could go to a store 

just outside the factory gate and buy a thick comforter that they sell as a 

“mattress” . 

It will be interesting to see how the next few years changes the face of the USA. 

Who knows? if the unemployment rate and lack of jobs keeps going and enough 

people become homeless, we might become the next Bangladesh, and people 

will be lining up of the 30 cents an hour corporate factory jobs, and living in 

barracks just like those… 

The only way the U.S. has been able to "thrive" during this deindustrialization is 

by borrowing gigantic amounts of money. But all of this borrowing is slowly but 

surely destroying the U.S. dollar, and we are getting closer to the point of 

absolute catastrophe. 

Peter Schiff recently shook folks up when he talked about these issues during a 

recent interview on CNBC.... 

But it is not just the United States that is printing tons and tons of money. All of 

the major industrialized nations have been firing out gobs of currency. That is a 

huge reason why so many investors have been racing to get into hard assets 

recently. 

Now Ben Bernanke and other top Federal Reserve officials have been dropping 

hints that more quantitative easing may be necessary. 

Unfortunately, just like with any other addiction, once you give in a few times it 

becomes easier and easier to engage in destructive behavior. Now that the Fed 

has gotten a taste for quantitative easing it is going to be really hard to stop. 

Nor can the Fed stop at this point. If they did it would be disastrous for the U.S. 

economy. But if the Fed continues on this reckless course it will make the 

eventual collapse of our economy even worse. 

Under our current debt-based system there is no way out. The Federal Reserve 

can attempt to put off the inevitable for a while by pumping up the debt bubble 

even more, but at some point it is going to burst. 

92


When that happens we are going to be facing a financial crisis which will blow 

what happened in 2008 completely out of the water. 

So enjoy these good economic times while you still can. This is about as good as 

things are going to get from here on out. 

SN: This is a comment post to a story on Yahoo about a homeless man in Salt 

Lake City who inherited money from a brother, it’s written by “Rodent-raiser” 

whom I suspect is a younger woman only because RodentRaiser spoke twice 

about the police making sure no one would molest him/her. 

This might be a good time to tell you that most people really have no 

idea about the true Gospels spoken by Jesus the Christ and no idea of what 

ancient Jewish Kabbalah says about becoming “saved.” The advice is, to 

become like God you have to act as loving and forgiving as God, and keep 

asking, “Am I like God yet?” The answer is “Give ‘til it hurts! Keep on giving.” 

Which explains in part why I’m far from wealthy, but also tells you to find 

someone in trouble and HELP OUT. Don’t ignore people who call you “friend” or 

family. If you do so you are so selfish you can expect the worst fate to fall upon 

you! 

Now I’ll really freak you out. You want the truth of life? Do you really 

want it? Go to http://www.essene.org/fpage.htm It’ll take you a couple of 

weeks to wrap your mind around the truth, but maybe you’re ready for it. 

• rodentraiser 4 hours ago Report Abuse 

I was homeless for 6 years and lived out of my truck although I was working the entire 

time. I was never on drugs and I don't drink, since alcohol gives me debilitating 

migraines. To give you an idea of why I was homeless, it was as simple as making a 

little more than the minimum wage of $5.50/hr, my rent was going up to over $500 a 

month and I couldn't pull together the first, last and security needed to get me in a 

different living situation. 

One of the things you learn really fast is to NEVER tell anyone you are homeless, 

especially prospective employers. When I went to a job fair given by the city college 

(did I mention I was a student as well?) I didn't have a phone and was told I needed to 

have one because "these people don't want to hire anyone who is homeless". I worked 

as a cashier where other homeless people would come in to buy coffee and then sit for a 

while outside. The rude remarks of the customers almost brought me to tears. While 

helping these customers, many of them told me the homeless should be rounded up and 

shot so "I" wouldn't have to deal with them. My family knew I was homeless and 

refused to acknowledge it. I was too proud to ask them for help, especially as I had my 

vehicle and a safe place to park at night, something many homeless people never have. 

The people that treated me the best in terms of giving me support and encouragement 

were other homeless people and surprisingly, the police were far more likely to be 

sympathetic towards my situation than my friends. Cops and firefighters know at a 

glance if someone is homeless and the local ones bent over backwards to make sure I 

was safe and unmolested at night in my truck - I can't ever thank them enough and I will 

93

e forever grateful to them. 


Eventually I got a room to rent, then a trailer and although I had to sell it several years 

ago, I was eventually able to buy a house. I guess the point I'm trying to make is you 

may never know who is or has been homeless and that we can all run into a patch of bad 

luck. That doesn't mean homeless people are inferior and that they can be treated like 

garbage. You don't have to like every person you meet, on the job or on the street, but 

trust me, a little courtesy goes a long, long way. 

China’s Secret Cyberwar 

Another huge Internet attack targets 72 organizations, including the U.N., 

and once again it apparently originated in China. Richard Clarke, former 

head of U.S. cybersecurity, says it’s time to fight back. 

Aug 4, 2011 12:56 AM EDT 

RELATED STORIES 

• Isaac Stone Fish: China's Role 

On Wednesday, the security firm McAfee revealed that a widespread cyberattack had 

targeted 72 organizations including the United Nations, governments, defense contractors, 

and other corporations in what a McAfee executive called “the biggest transfer of wealth in 

terms of intellectual property in history.” That attack comes on the heels of previous 

breaches at Google, the Pentagon, Citigroup, RSA, and defense contractors Lockheed- 

Martin and L-3 Communications. 

McAfee won’t say who was behind the newly revealed attack, but as before, this one has 

Chinese fingerprints all over it. For example, the targets included the International Olympic 

Committee and several national Olympic committees, which were breached in the months 

before the 2008 Beijing Olympics. 

“What’s going on is very large-scale Chinese industrial espionage,” says Richard Clarke, a 

former top U.S. government official who held roles in counterterrorism and cybersecurity and 

now is chairman of Good Harbor Consulting, a security and risk-management company in 

Arlington, Va. "They're stealing our intellectual property. They're getting our research and 

development for pennies on the dollar." 

Clarke says U.S. officials haven’t even dared to raise the subject with their counterparts in 

China, which sends the message to China that it's free to keep stealing from us. “We’re 

doing nothing to penalize them. So from their perspective, why not do it?” Clarke says. 

Clarke says it’s time for the U.S. to start fighting back. He says President Obama should 

“authorize action to go after the computers involved in the attack.” Clarke says we could zap 

malware across the Internet, “the same way they do it. You can destroy the computers 

involved in the attack. They can pay a price.” 

94

Michael A. Keller / Corbis 


Clarke admits that doing this would risk escalating tension and might invite retaliation from 

the Chinese. “But it’s better than lying there prostrate having all your research and 

development and intellectual property stolen and doing nothing about it,” he says. 

Worse yet, these attacks are probably only the beginning, says Joel Brenner, former director 

of national counterintelligence for the U.S. whose book America the Vulnerable: Inside the 

New Threat Matrix of Digital Espionage, Crime and Warfare will be published this fall. 

“It would be foolish to assume that there are not going to be more attacks—real bad attacks,” 

Brenner says. 

Huge parts of our infrastructure are susceptible, including our power grid, which now is 

connected to the Internet. Putting the grid online has made it easier to manage but “is 

profoundly unwise,” Brenner says. “Rational people buy down risk. We have increased it, 

and we are continuing to do so in the name of short-term efficiency.” 

"We are getting attacked. We are getting our 

pockets picked." 

Brenner says he’s not predicting that terrorists will launch a cyberattack on the U.S. power 

grid. However, he says, “if there is an attack on the grid, no one should be surprised.” 

Brenner says we’re not at war, but we have entered a new era in which “attacks are going to 

be part of the norm now, and they are going on in what is legally called 'peace.' We are being 

attacked. It isn’t war. War would be worse. But it’s really a serious problem. It’s operationally 

threatening, and we are getting our pockets picked.” 

95


The U.S. is a big target simply because most of the world’s cutting-edge tech innovation still 

takes place here. “There’s just more stuff here to steal,” Brenner says. 

Phyllis Schneck, chief technology officer at McAfee, says that in 2009 the company 

discovered a “command and control” server that was being used to launch the attacks. 

McAfee collected logs of all the attacks that the server was carrying out, and warned 

organizations that were targeted. McAfee calls the attack campaign “Operation Shady RAT.” 

(RAT is an industry acronym for Remote Access Tool, meaning the software that gets 

installed in a corporate network and is used to extract information.) 

Schneck says McAfee announced the attacks publicly because it wants people to realize that 

this kind of “quiet attack” has become so widespread that virtually every company of any size 

has been targeted already. “We like to say there are two kinds of companies—the ones who 

know they’ve been owned, and the ones who don’t know it yet,” Schneck says. 

And for now, it seems, there’s not much we can do about it. 

Like The Daily Beast on Facebook and follow us on Twitter for updates all day long. 

Dan Lyons is technology editor at Newsweek and the creator of Fake Steve Jobs, the 

persona behind the notorious tech blog, The Secret Diary of Steve Jobs. Before joining 

Newsweek, Lyons spent 10 years at Forbes. 

For inquiries, please contact The Daily Beast ateditorial@thedailybeast.com. 

SN: From a Chinese point of view, they might say, “We paid for this research and 

development. Now the dollar’s value is falling and we’re losing what we worked for, so 

we’ll just steal it and put it to work for ourselves here. 

What Will China Do? 

BY JR NYQUIST07/11/2011 

It is a critical time for the global economy, and many are watching China. It is not 

easy to understand China’s inner nature, especially since China is ruled by a secretive 

Communist Party that no longer openly insists on Communist ideas. Yet, the 

Communist Party remains in control – a point often missed by businessmen who 

travel to China. As Richard McGregor points out in his book on The Secret World of 

China’s Communist Rulers, there are hidden party structures that ultimately 

determine China’s economic life, China’s foreign policy, China’s military buildup 

and, by extension, China’s global impact. China is a major economic player with a 

96


vital role to play. The question is, what role will it play in the ongoing crisis of 

capitalism? 

Typically we think of Communism as incompatible with capitalism. Yet, 

Communism has always made use of capitalist methods. The official Communist 

retreat into “state capitalism” actual began in 1922 in the Soviet Union of Vladimir 

Lenin. It was called the New Economic Policy under which the Soviet economy was 

originally consolidated by virtue of capitalist experimentation. After the death of 

Mao, China’s Deng Xiaoping proved to be a student of Lenin. He brought the New 

Economic Policy to China, enlarging Lenin’s program into a more comprehensive 

system for building Communism through capitalism. And as Lenin’s New Economic 

Policy was part economic liberalism and part deception, so is Comrade Deng’s 

“socialist Market economy.” In Communist history the retreat into capitalism has 

always signified a deceptive compromise. Deng never downgraded the ideology of 

Marxism-Leninism. What he opposed was the stupid economic policies of arrogant 

functionaries who had no idea how to build a productive economy. As Deng 

famously said in 1961, “I don’t care if it’s a white cat or a black cat. It’s a good cat as 

long as it catches mice.” 

The fact that Communism doesn’t work was understood from the beginning. On 27 

March 1922, in his Political Report to the Eleventh Party Congress, Lenin explained 

that Communists were good revolutionaries and not good businessmen. Therefore, 

Communists needed to learn business from the capitalists by returning (for as long as 

needed) to a familiar capitalist type of economy. “Do not put on airs, do not be 

conceited,” he warned his comrades, “because you are a Communist while there is 

some nonparty salesman … who can do things economically … that you cannot. If 

you … realize this, you will attain your object, because this is something that can be 

learned.” 

Because China follows Lenin’s dictum, foreigners are easily confused as to China’s 

real “object.” China is both Communist and capitalist, and this is confusing. We 

would prefer to see one face or the other, but there are two faces. “China combines 

the worst of socialism with the worst of capitalism,” wrote Guy Sorman in The 

Empire of Lies. This statement may be truer than any other written by a foreign 

observer. China has seen 26 dynasties come and go, and if the Communist Party falls 

it won’t be bloodless. Millions of Chinese Communists have reason to fear for the 

future; and economic breakdown is the thing they fear the most. 

Despite decades of high economic growth, the Chinese economy might suffer a 

dislocation at any time. In Richard McGregor’s book we find the example of the 

Chinese banking crisis of the late 1990s. Because of the way in which the Chinese 

banking sector operates, by 1998 roughly 57 percent of all loans issued by China’s 

biggest lender (the Industrial & Commercial Bank of China) were “unrecoverable.” 

As McGregor explained in his book, “[Within] the whole [Chinese] banking system, 

45 per cent of loans made before 2000 had gone bad.” In response to the crisis, the 

Politburo of the Chinese Communist Party set up two party committees to take 

charge of the country’s financial system by assuming the power to hire and fire 

anyone who worked in a bank. Consequently, in China, the banks are totally 

subservient to the Chinese Communist Party. Any bank that refuses to accept the 

Party’s dictates would simply be closed down. Not too surprising, news of the 

97


Communist Party’s effective control of the banks has been suppressed by threats 

issued to newspapers and other domestic media outlets. If anyone wants to 

understand the meaning of the term “market socialism,” there it is. 

For those who credit the economic theories of Ludwig von Mises or Friedrich 

Hayek, it is worth asking if the Chinese economy was built on a sounding footing. 

After all, there are bound to be corrections dictated by the market; and an economy 

enjoys true health to the extent these corrections are allowed to play out. If the state 

intervenes to prevent the pain then the country’s growth is something of an illusion. 

Without any doubt, China has its share of troubles. On 28 June Fortune Magazine 

published a piece by Katie Benner titled China’s Debt bomb. Here we read about 

China’s real estate bubble. We also read about “an untold number of bad loans.” 

(Here we go again.) 

Yet the Chinese are being heralded as financially superior. On 25 June The Telegraph 

(UK) published a piece titled Enter the Dragon ‘to save the euro’ in which it is 

reported that the Chinese were looking down on the British as economic weaklings, 

and preparing to save Europe from its financial woes. At the same time, Chinese 

diplomats were demanding access “to every area of UK technological expertise” 

even as Chinese premier Wen Jiabao “gave a strong pledge of support for the 

embattled euro.” 

China’s economic clout comes from what some would call “unfair” trade practices, 

and an inexhaustible supply of cheap labor. Of course, cheap labor signifies 

widespread poverty. To understand China’s “wealth” in context, we must remember 

that in 2004 the average gross income in China was calculated as $4,397. Seven years 

ago the average firefighter in China made $131 per month. (See Worldsalaries.org.) 

The ongoing poverty of the Chinese people should not be confused, however, with 

the wealth and power of the Communist Party of China. While the Chinese people 

work for low wages, the Communist Party wields considerable financial power. 

To what end, however, do the Chinese Communists wield this power? And why do 

they cling to the Communist label? The Chinese leaders are determined to build a 

militarily strong country. As Chinese theorist Yan Xuetong explained, “You can still 

have a rich state with poor people.” He further explained that a strong state is best, 

because it brings “dignity to all.” Many powerful states have followed this model. So 

when it comes to the fate of the dollar, or the fate of the Euro, we must not imagine 

that the Chinese will act to maximize their people’s wealth; rather, they aim at 

maximizing state power; and as Moa Zedong once explained, “Power comes from 

the barrel of a gun.” 

China demands U.S. 'live within its 

means' 

98


The largest foreign holder of U.S. treasuries responds to 

the S&P downgrading by calling for decreases in U.S. 

military outlays and social spending. 

A Chinese investor reacts as world markets tumble at a brokerage house in Fuyang in central China's Anhui 

province. (Associated Press / August 5, 2011) 

By David Pierson Los Angeles Times Staff Writer 

August 6, 2011, 1:52 a.m. 

Reporting from Beijing— 

China called on the United States to "cure its addiction to debts" and "learn to live within its 

means" in a searing commentary published Saturday by the official New China News Agency 

in response to Standard & Poor's historic downgrading of the U.S. government's credit rating 

a day earlier. 

China, the largest foreign holder of U.S. federal debt, blamed "short-sighted political 

wrangling in Washington" for creating the current financial morass that now threatens to 

undermine the global economy. 

"China, the largest creditor of the world's sole superpower, has every right now to demand 

the United States to address its structural debt problems and ensure the safety of China's 

dollar assets," the commentary said. 

"If no substantial cuts were made to the U.S. gigantic military expenditure and bloated social 

welfare costs, the downgrade would prove to be only a prelude to more devastating credit 

rating cuts, which will further roil the global financial markets all along the way," it 

continued. 

China has regularly voiced concern about its dollar investments, most recently Wednesday 

when the governor of the country's central bank urged the U.S. to avoid a default and cut its 

deficit. 

In addition to holding about $1.2 trillion in treasuries, an estimated two-thirds of China's 

$3.2 trillion in foreign exchange reserves is estimated to be in dollars. 

Standard & Poor's downgrading was the first in U.S. history and echoed downgrades issued 

by a little-known Chinese credit rating agency that has been dismissed by some China 

99

watchers as politically motivated. 


The Dagong Global Credit Rating Co. twice lowered its rating for the U.S., most recently 

Wednesday when it said defects in the U.S. political structure stood in the way of solving the 

country's debt problems. 

"Dagong Global, a fledgling Chinese rating agency, degraded the U.S. treasury bonds late last 

year, yet its move was met then with a sense of arrogance and cynicism from some Western 

commentators" the New China News Agency's Saturday editorial said. "Now S&P has proved 

what its Chinese counterpart has done is nothing but telling the global investors the ugly 

truth." 

Jin Canrong, dean of international relations at China's Renmin University, said Beijing is 

especially fearful of another global recession because leaders have exhausted stimulus 

measures to blunt the effects of the 2008 financial crisis. 

"A second recession would be a nightmare for China," Jin said. 

Massive credit expansion since 2008 has led to the country's highest rate of inflation in three 

years -- fueling a national property bubble and potentially sowing the seeds of social 

instability. 

China's heavy reliance on U.S. debt and the dollar is largely self-induced because of its 

decision to shun market forces and control the value of its currency to keep Chinese exports 

competitively cheap. 

China's central bank must jettison trillions of incoming foreign exchange to ensure the yuan 

remains low. For the most part, U.S. treasuries represent the only destination large enough 

to accommodate China's holdings. Officials have periodically pledged to diversify China's 

reserves, but few alternatives exist. 







david.pierson@latimes.com 

US markets fall sharply, Dow down more than 450 

Stocks fall as US investors join global sell-off after S&P downgrade; Dow down 450 points 

Stan Choe, AP Business Writer, On Monday August 8, 2011, 2:05 pm 

NEW YORK (AP) -- The U.S. stock market joined a sell-off around the world Monday in the first 

trading since Standard & Poor's downgraded American debt. 

The Dow Jones industrial average fell more than 450 points in afternoon trading. Treasury prices 

rose -- despite S&P's assessment that they were a riskier investment than the debt of some other 

100


countries like Canada and France. Investors still view Treasurys as one of the world's few safe 

havens from turmoil in other financial markets like stocks or commodities. 

The yield on the 10-year Treasury note fell to 2.35 percent from 2.57 percent late Friday. A 

bond's yield drops when its price rises. The 10-year note's yield fell as low as 2.06 percent in 

2008. 

"Other AAA-rated sovereign debt issues are arguably in worse condition than the United States," 

said Bill Stone, chief investment strategist for PNC Financial. He pointed to the AAA-rated United 

Kingdom and France. Relative to the size of their economies, both have higher debt loads than 

the United States. The dollar's status as the reserve currency for the world also helps keep 

investors coming back to Treasurys. 

Monday was the first chance for global investors to respond to S&P's announcement late Friday 

that it was reducing its credit rating for long-term U.S. government debt by one notch, from AAA, 

the highest rating, to AA+. 

The move wasn't a total surprise but came when investors were already feeling nervous about a 

weak U.S. economy, European debt problems and Japan's recovery from its March earthquake. 

Fresh memories of the financial crisis three years ago are also driving investors away from risky 

investments and into what's considered safer. 

"Fear of a repeat of 2008 is what's really driving investments," said Gary Schlossberg, senior 

economist with Wells Capital Management. 

In other trading on Wall Street, the S&P 500 index fell 60 points, or 5 percent to 1,139. The 

Nasdaq composite index fell 126 points, or 5 percent, to 2,407. The Dow was at 11,009, down 3.8 

percent. 

Last week, the Dow Jones industrial average fell almost 700 points. That was its biggest point 

loss since October 2008, during the financial crisis. The Dow has dropped in nine of the last 11 

trading days. 

The S&P 500 is already down 11 percent so far in August. If it stays down just that much, it would 

be the worst month for the index since October 2008. 

Stock markets in Asia began the global rout. The main stock index fell almost 4 percent in South 

Korea and more than 2 percent in Japan. European markets opened later and fell, too, with 

Germany down 5 percent and France 4.7 percent. 

101


Gold, considered to be a safe investment, rose more than $70 per ounce, to $1,721. Monday was 

the first time gold was above $1,700 although after adjusting for inflation, its price remains below 

its 1980 record. At that time an ounce cost about $2,400 in today's dollars. 

Gold began the year at $1,421.40. It has climbed steadily as worries rose about high debt levels 

in both Europe and the United States. It went above $1,500 per ounce in late May. 

Moody's, another of the other key credit-rating agencies, on Monday stood by its top Aaa rating 

for the United States. It said it could downgrade the U.S. if it doesn't improve its long-term 

finances by cutting its deficit, "but it is early to conclude that such measures will not be 

forthcoming." 

Standard & Poor's also on Monday downgraded the credit ratings of mortgage lenders Fannie 

Mae, Freddie Mac and other agencies linked to long-term U.S. debt. Fannie and Freddie own or 

guarantee about half of all U.S. mortgages. Their downgrade could mean higher mortgage rates 

for consumers. 

Worries about weaker profits that could result from a slowing economy have slammed the 

financial industry since late July. As a group, financial stocks in the S&P 500 index fell 4.9 percent 

on Monday to their lowest level since July 2009. 

Bank of America Corp. has been the hardest hit. It fell 13.7 percent after AIG filed suit against the 

bank. The insurer alleged Bank of America sold it overvalued mortgage-backed securities. The 

bank denied the allegations. Its stock has dropped by nearly 50 percent this year. 

Stocks in other industries whose profits are closely tied to the strength of the economy also fell 

sharply. Energy stocks in the S&P 500 fell 4 percent, for example. 

The smallest losses came in safer industries whose profits tend to be steadier, regardless of the 

economy. Even in a bad economy people will still buy things like toothpaste and bread. 

Consumer staple stocks fell just 1.5 percent. Utilities, also a necessity for consumers, fell 2.8 

percent. 

The Vix index, a measure of fear among investors, shot up 26 percent to its highest level since 

May 2010. The index shows how worried investors are that the S&P 500 will drop over the next 

30 days. It does this by measuring prices for stock options that investors can buy to help protect 

their portfolios. 

Investors are worried that Spain or Italy could become the next European country to be unable to 

pay its debt. The European Central Bank said it will buy Italian and Spanish bonds in hopes of 

helping the countries avert a possible default. 

102


Seeking to avert panic spreading across financial markets, the finance ministers and central 

bankers of the Group of 20 industrial and developing nations issued a joint statement Monday 

saying they were committed to taking all necessary measures to support financial stability and 

growth. 

"We will remain in close contact throughout the coming weeks and cooperate as appropriate, 

ready to take action to ensure financial stability and liquidity in financial markets," they said. 

Crude oil, natural gas and other commodities fell on worries that a weaker global economy will 

mean less demand. Oil fell $3.47 to $83.41 per barrel. 

Worries about the U.S. economic recovery have been building since the government said that 

economic growth was far weaker in the first half of 2011 than economists expected. 

The economy grew at a 1.3 percent annual rate from April through June, below economists' 

expectations. It expanded at just a 0.4 percent rate in the first quarter. The first half of 2011 was 

the slowest since the end of the recession. 

Then reports showed that the manufacturing and services industries barely grew in July. Job 

growth was better than economists expected last month. But the 117,000 jobs created in July 

were still well below the 215,000 that employers added between February and April, on average. 

The Federal Reserve will meet on Tuesday, but economists don't expect much to come out of the 

meeting. The central bank's key interest rate is already at a record of nearly zero, where it has 

been since 2008. The Fed has also already said that it plans to keep rates low for "an extended 

period." 

The central bank finished a $600 billion program in June to buy Treasurys in hopes of supporting 

the economy. Chairman Ben Bernanke said last month that the Fed would step in to help the 

economy if it further weakened. But some Fed policymakers oppose more bond purchases, 

saying it could lead to higher inflation. 

Fears about a weaker U.S. economy have overshadowed profit growth that companies have 

reported for the second quarter. For the 441 companies in the S&P 500 that have already 

reported, earnings rose 12 percent in the second quarter from a year earlier. Revenue growth has 

also topped 10 percent for the first time in a year. 

Tyson Foods rose 0.8 percent after it reported stronger profit than analysts expected. The largest 

U.S. meat company said its net income fell 21 percent because of higher grain costs, but analysts 

expected a steeper drop. 

103


Tyson was one of just five stocks in the S&P 500 to rise on Monday. The biggest gain came from 

Newmont Mining Corp., which benefited from higher prices for the gold that it produces. 

Verizon Communications Inc. fell 3.9 percent after it was unable to come to terms with 45,000 

workers on health care costs, pensions and other issues. 

Trouble on Both Sides of the Pond 

Dirk Van Dijk, On Monday August 8, 2011, 1:00 am EDT 

Key Points: 

• Almost done with earnings season, with 433 or 86.6% of S&P 500 second quarter 

results in. Total earnings growth low at 11.2%, but mostly due to one stock (BAC). Ex- 

Financials, growth is 20.9% year over year. Total revenue growth 12.15%, 12.73% ex- 

Financials. Median earnings surprise 3.13% and median sales surprise 2.06%. Remaining 

firms (67) expected to grow 8.9%, 5.4% growth expected excluding Financials. 

• If remaining firms all report in line, then 87.9% of earnings are now in. Final growth to 

be 10.95%, 18.80% ex-Financials. At start of earnings season 9.65% growth expected, 

12.18% ex-Financials. 

• Earnings beats top misses by a 3.42 ratio, sales beats top misses by 2.81 ratio, 69.5% 

of all firms report positive earnings surprise, 72.1% beat on revenues. 

• Full-year total earnings for the S&P 500 jumps 45.6% in 2010, expected to rise 16.0% 

further in 2011. Growth to continue in 2012 with total net income expected to rise 11.5%. 

Financials major earnings driver in 2010. Excluding Financials, growth was 27.7% in 2010, 

and expected to be 18.8% in 2011 and 10.8% in 2012. 

• Total revenues for the S&P 500 rose 7.78% in 2010, expected to be up 6.72% in 2011, 

and 6.54% in 2012. Excluding Financials, revenues up 9.16% in 2010, expected to rise 

11.14% in 2011 and 5.96% in 2012. 

• Annual Net Margins marching higher, from 5.88% in 2008 to 6.40% in 2009 to 8.65% 

for 2010, 9.34% expected for 2011 and 9.83% in 2012. Margin Expansion major source of 

earnings growth. Net margins ex-Financials 7.79% in 2008, 7.07% in 2009, 8.27% for 2010, 

8.84% expected in 2011, and 9.25% in 2012. 

• Revisions ratio for full S&P 500 at 1.61 for 2011, at 1.41 for 2012, both bullish readings. 

Up from last week and driven by new increases, not old estimates falling out. Ratio of firms 

with rising-to-falling mean estimates at 1.44 for 2011, 1.30 for 2012 -- bullish readings. Total 

revisions activity still climbing, but should peak soon. 

• The S&P 500 earned $546.5 billion in 2009, rising to $795.4 billion in 2010, expected to 

climb to $922.2 billion in 2011. In 2012, the 500 are collectively expected to earn $1.028 

trillion. 

• S&P 500 earned $57.20 in 2009: $83.16 in 2010 and $96.47 in 2011 expected, bottom 

up. For 2012, $107.53 expected. Puts P/Es at 14.4x for 2010 and 12.4x for 2011 and 11.2x 

104


for 2012, very attractive relative to 10-year T-note rate of 2.56%. Top-down estimates: $96.26 

for 2011 and $105.44 for 2012. 

Problems Here and There 

Second quarter earnings season is almost over, with 433 of the S&P 500, or 86.6%, of the reports 

in. With the exception of a handful of financials, most notably Bank of America (NYSE: BAC - 

News), which had a $12 billion negative swing in net income from last year, this is another great 

earnings season. 

The year-over-year growth rate for the S&P 500 is 11.2%, way off the 20.9% pace those same 

433 firms posted in the first quarter. However, it you exclude the Financial sector, growth is 

20.9%, down only slightly from the 21.2% pace of the first quarter. 

The 86.6% reported figure slightly understates how far we are along in earnings season. If all the 

remaining firms were to report exactly in line with expectations, we now have 87.9% of the total 

earnings in. At the beginning of earnings season, growth of 9.7% was expected, 12.2% ex- 

Financials. 

Top line results are also very strong, with 12.15% year-over-year growth for the 433, actually up 

from the 9.72% growth they posted in the first quarter. The top-line results are even more 

impressive if the Financials are excluded, rising to 12.73% from the 10.67% pace of the first 

quarter. Top-line surprises have been almost as good as than the bottom line surprises, with a 

median surprise of 2.06% and a 2.81 surprise ratio. 

The revenue growth in the first half is remarkable, given only 0.4% GDP growth in the first quarter 

and just 1.3% in the second, with low overall inflation. High commodity prices helped revenues 

among the Energy and Materials sectors, and higher growth abroad and currency translation 

effects from a weak dollar have also helped. 

What to Expect from the Rest 

For those (67) still to report, the rate of growth is expected to be well below what we have seen 

already, with growth of 8.9%, in total and 5.4% ex Financials. I suspect that the actual growth will 

be somewhat higher than is now expected. With six sectors now done, and many more sectors 

with only one or two firms left to go, use caution in interpreting the “expected tables at the sector 

level. 

Revenue growth for the remaining firms is also expected to slow, falling 1.52% among those yet 

to report, down from +4.79% they reported in the first quarter. Excluding the Financials, growth is 

expected to be 4.63%, down from 4.75% of the first quarter. 

Net Margins Slimming 

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Net margins have been one of the keys to earnings growth, but cracks in the story are starting to 

appear. The 433 that have reported have net margins of 9.69%, down from 9.77% a year ago. 

That, however, is due to the Financials, especially BAC. Excluding Financials, next margins have 

come in at 9.08%, up from 8.47% a year ago. 

The higher margin firms have reported early, 31% of the remaining firms are retailers, and 

traditionally retail is the lowest margin sector. The remainder are expected to post net margins of 

6.66% up from last year’s 6.02%. Excluding Financials, the expected net margins are 6.05%, up 

from 6.01% last year. 

On an annual basis, net margins continue to march northward. In 2008, overall net margins were 

just 5.88%, rising to 6.40% in 2009. They hit 8.65% in 2010 and are expected to continue 

climbing to 9.34% in 2011 and 9.83% in 2012. The pattern is a bit different, particularly during the 

recession, if the Financials are excluded, as margins fell from 7.78% in 2008 to 7.07% in 2009, 

but have started a robust recovery and rose to 8.27% in 2010. They are expected to rise to 8.84% 

in 2011 and 9.25% in 2012. 

Full-Year Expectations & Beyond 

The expectations for the full year are very healthy, with total net income for 2010 rising to $795.2 

billion in 2010, up from $544.3 billion in 2009. In 2011, the total net income for the S&P 500 

should be $922.2 billion, or increases of 45.6% and 16.0%, respectively. 

The expectation is for 2012 to have total net income passing the $1 trillion mark to $1.028 Trillion, 

for growth of 11.5%. That will also put the “EPS for the S&P 500 over the $100 “per share level 

for the first time at $107.53. That is up from $57.15 for 2009, $83.16 for 2010 and $96.47 for 

2011. 

In an environment where the 10-year T-note is yielding 2.56%, a P/E of 14.4x based on 2010 and 

12.4x based on 2011 earnings looks attractive. The P/E based on 2012 earnings is 11.2x. 

Heavy Estimate Revisions 

Estimate revisions activity is soaring (as is seasonally normal). During the seasonal decline in 

revisions activity, the ratio of increases to cuts also declined sharply, from over 2.0 at the height 

of the last earnings season, to slightly below 1.0 for both this year and next. Now as activity is 

ticking up, so are the revisions ratios standing at 1.61 (up from 1.45 last week) for 2011 and 1.41 

(up from 1.36) for 2012. 

The fundamental backing for the market continues to be solid. It is important to keep your eyes on 

the prize. There is lots of news out there, and much of it is more dramatic than earnings results, 

but rarely does it have more significance for your portfolio. Earning are, and are going to remain, 

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the single most important thing for the stock market. Interest rates are an important, but distant 

second. 

At the micro level, earnings and valuations provide plenty of reason to be bullish. This is 

particularly true when one looks at the prevailing level of interest rates. Currently 160 S&P 500 

(32.0%) firms have dividend yields higher than the Friday yield on the 10-year T-note, and more 

than half (295, or 59.0%) yield more than the 5-year note. 

One thing is absolutely certain: the coupon payment on those notes will never go up, while 

companies have been raising their dividends at a rapid pace of late. Nearly one quarter of the 

firms in the S&P 500 have raised their dividend at more than a 10% per year rate over the last 

five years, and those five years include the worst economic downturn since the 1930’s. 

Encore Performance Scheduled 

While major corporations, as represented by the S&P 500 are in great shape, not only with nicely 

growing earnings, but also with great balance sheets, all is not well in the markets, mostly 

because of political problems and a bad macro economy. In particular, there are major problems 

on both sides of the Atlantic. On this side, we managed to avoid an economic end of the world 

scenario last Tuesday when Congress passed a last minute raising of the debt ceiling. It only 

happened because President Obama caved in. He should have just invoked the 14th Amendment 

and told the Tea Party to go jump in a lake. 

In effect, the Tea Party had held the economy hostage, and in the end Obama decided to pay a 

ransom. That ransom was about $1 trillion in spending cuts over the next decade, and the 

formation of a “Super Committee to identify an additional $1.5 trillion in deficit reduction over the 

next decade. If the Super Committee reaches an impasse by their deadline (Just before 

Thanksgiving) or Congress does not pass their plan (by Christmas), $1.2 trillion of spending cuts 

will automatically go into effect. 

While the first part of the spending cuts are back-end loaded, with almost no spending cuts for the 

rest of 2011 and minimal cuts for 2012, the same is not true of the $1.2 trillion, which is a meat- 

cleaver approach and is very front-end loaded. Those cuts will kill the economy, which in turn will 

depress tax revenues by throwing us back into recession, and in the end might well result in a 

higher, not lower deficit. In other words, there is another hostage ripe for the taking. 

If you enjoyed the debt-ceiling circus and are sad that the show is over, don’t worry -- there will be 

an encore performance just before Thanksgiving. It seems clear to me that the Super Committee 

is begin set up to fail and to reach an impasse. The GOP will appoint members who will not even 

discuss revenue increases. The Democrats will appoint strong defenders of Social Security, 

Medicare and programs like Food Stamps. 

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In the end, either the Democrats and Obama will once again fold like lawn chairs, or we will see 

the $1.2 trillion meat cleaver cuts go into effect. You think I’m being too political and over the top 

by calling the Tea Party Hostage takers? Don’t take my word for it, how about Senate Minority 

Leader Mitch McConnell’s? 

“I think some of our members may have thought the default issue was a hostage you might take a 

chance at shooting, he said. “Most of us didn’t think that. What we did learn is this — it’s a 

hostage that’s worth ransoming." 

S&P Downgrade Overblown, but... 

This is exactly the dynamic that caused S&P to downgrade Treasury bonds to AA+ from AAA. Let 

me make one thing perfectly clear: as long as the debt is denominated in dollars (all of it is now) 

and the government owns a printing press that can print those dollars, the only way the 

government can default is if we make an absurdly stupid political decision to do so. That 

statement is true if the national debt is $14.5 trillion, or it is $114.5 trillion. 

Could all that printing be inflationary? Of course it could. The debt covenants do not specify the 

purchasing power of the dollars paid back, just that they are paid back. However, right now 

inflation is not a problem. Right now the bond market, through the spread between regular T- 

notes and TIPS is forecasted to average about 2% per year over the next ten years, which is less 

than the 2.57% it has averaged over the last 20 years. 

No AAA Political System 

What S&P is saying is not that we don’t have a AAA economy or ability to pay, it is saying that we 

don’t have a AAA political system. After all, we just had a large number of members of the 

Congress that were saying “Let's just go ahead and default. That should be the realm of wing-nut 

bloggers, not people who actually have the job of governing this country. 

I should also make two points as well. The S&P rating is only an opinion about the probability of a 

default, and the S&P has been disastrously wrong in the past. They handed out AAA ratings like 

candy on Halloween to any pile of bad mortgages tall enough to ring the doorbell, and they 

assigned a AAA rating to Enron until just days before it wrote the eleventh and final chapter in the 

firm's history. 

Second, this does not have to mean that U.S. interest rates are going to have to rise (other than 

some potential short-term volatility). In time of stress, T-notes are still going to be the first place 

that institutions look to park money when they want to flee to a safe place, regardless of what 

S&P says about how safe they are. 

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There are simply no other markets that are big enough to do the job. Not the Swiss franc, not 

gold, not AAA corporates. All of them are simply too small to do the job. S&P downgraded Japan 

a long time ago, and their long-term bond rates are even lower than ours are and have been 

since they were downgraded. 

Are the Chinese going to dump their Treasuries? NO. What would they do with the money if they 

did? Buy bonds in euros or yen? If they did so they would have to sell dollars and buy either yen 

or euros. That would weaken the dollar and strengthen those currencies. That would make our 

exports cheaper and imports more expensive, and thus lower our trade deficit. That would be a 

good thing for the economy. 

Thus I don’t think that the S&P downgrade is, in and of itself, a big problem. There are some 

areas where there might be some difficulty. For example, it is exceedingly rare, if not unheard of 

for a sub unit of government to have a higher credit rating than the sovereign, so the states that 

still have AAA ratings will probably face downgrades, and that could hurt them. 

Also, the remaining AAA firms in the country may see downgrades as 

well. Microsoft (NasdaqGS: MSFT -News) and Johnson & Johnson (NYSE: JNJ - News) are 

fine firms with excellent balance sheets, but to suggest that they are less likely to default than the 

U.S. government is silly. They don’t won a printing press that can legally churn out dollars, the 

government does. 

Some Very Real Problems Here 

Growth is very weak. In the second quarter the economy grew at only 1.3%, far below the 

consensus estimates of 1.7% growth. The real shocker in the report was the downward revisions 

to past quarters. Most notably, the first quarter was revised down to just 0.4% from 1.9% and the 

fourth quarter was revised down to 2.3% from 3.1%. 

It also showed that the recession was FAR worse than previously reported, with a total decline in 

Real GDP of 5.1%, not the 4.2% we thought we had suffered. We need at least 2% growth to 

bring down unemployment. 

Obama now says he wants to fight for jobs. Unfortunately, he just bargained away all of the 

ammo he needs to fight with. It is not that the current round of spending cuts are that big in the 

short term -- they aren’t. The problem is it precludes taking any other fiscal action that could help 

on the growth and employment front. 

And Even Bigger Ones Over There 

The drama was not limited to this side of the Atlantic. The sovereign debt crisis there is now 

focused on Italy. It is the third largest economy in the Euro Zone, and Spain, number four, looks 

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to also be under attack. Both of which were supposed to be part of the lifeguard group that was 

going out to rescue Greece, Ireland and Portugal. Well, the first and most important requirement 

to be a lifeguard is the ability to swim, and Italy is proving itself to be no Michael Phelps. Its 

interest rates have spiked to over 6%, which is unsustainable. 

There was a serious question during the week if the European Central Bank (ECB) would 

continue to buy, or continue to accept as collateral, Italian debt. That was the spark that lit the 

513 point drop in the Dow on Thursday. On Friday, the ECB announced that it would, but only if 

Italy imposed a stiff austerity program right away, just like Greece, Portugal and Ireland are doing. 

This “economic rescue that the ECB agreed to on Friday (and thus causing the market to rally 

back to finished mixed on Friday, rather than down hard again) is bound to fail, just as the 

packages for Greece, Ireland and Portugal are failing. 

Ultimately, one of two things is going to have to happen. Either fiscal policy will have to be 

consolidated in Europe as a whole, which means that the individual countries will have to give up 

most of their sovereignty. Essentially Italy will have to become like Florida, and Germany like 

California. For that to happen, the overwhelming majority of people in Europe will have to think of 

themselves first and foremost as Europeans, not as French, German or Italian, just as most 

people here tend to think of themselves first and foremost as Americans, not as New Yorkers, 

Buckeyes or Hoosiers. Given historical, cultural and language differences in Europe, that seems 

unlikely to happen. 

It would also mean that people in Germany and the Netherlands would see a big part of their tax 

dollars flowing to Greece and Spain, just like people in Connecticut and New Jersey see a big 

part of their tax dollars flowing to Mississippi and Alaska. If that doesn’t happen, the common 

euro currency has to fall apart. 

Italy and Greece, unlike the U.S., do not have their own printing press. They have to rely on the 

printing press of the ECB, and that is largely controlled by the Germans. The process of 

unscrambling the euro-egg and going back to drachmas and lira is going to be a very messy one, 

and will result in huge dislocations, and thus potentially cause economic collapse. For example, if 

someone in Italy owes $1 million euros, how many lira will that be when there is no longer a euro 

to pay back? 

European banks are heavily invested in the bonds of the PIIGS, and there is a real threat to the 

stability of the European banking system. If it goes down, ours will follow as night follows day. 

This is not a problem caused here, and is not the fault of Obama, or Bush, or Congress for that 

matter. It is a mess of the Europeans own making, but its effects will be felt here, just as the 

effects of the mortgage mess of our making were felt there. 

This Too Shall Pass 

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All this said, I am still inherently optimistic. The U.S. has weathered many storms before -- world 

wars, depressions, terrorist strikes -- and has always proved resilient. Stock market valuations 

remain compelling, and it is good to buy when things are cheap. Usually the end of the world 

does not happen. 

There are plenty of companies that are in great shape and which will continue to grow and 

prosper. In the final analysis, the value of a company is based on what it will earn in the future, 

and what interest rate you have to discount those future earnings by. Corporate earnings are still 

very strong and interest rates are very low. Still, these are perilous times on a macro level. 

I first suggested taking out insurance against a debt ceiling fiasco in the June 30th edition of 

Earnings Trends. Then the 120 September SPY puts (my suggested vehicle, but just an example) 

were trading for $0.89. Now they are going for $4.65. If you followed my advice, sell off half of 

your position now. Close out the position if the S&P 500 falls below 1100, which would be just 

about a doubling from here. 

On balance, I remain bullish. I am, however, pulling back on my year-end target price for the S&P 

500. I had been looking for about 1400 by the end of the year (since December). With the slower 

economy, and the turmoil on both sides of the Atlantic, something more on the order of 1325 now 

looks more realistic. 

Strong earnings should trump a dicey international situation, and the drama in DC. Valuations on 

stocks look very compelling, with the S&P trading from just 12.44x 2011, and 11.16x 2012 

earnings. Put in terms of earnings yields, we are looking at 8.04% and 8.96%, while T-notes are 

only at 2.56%. 

The old “Fed Model suggested that the forward earnings yield (call it 8.50%) should be in line with 

the 10-year note. On that basis, stocks are wildly undervalued. Even based on the 10-year trailing 

P/E, which includes two periods of very depressed earnings, and does not take into consideration 

interest rates, stocks are just about fairly valued. Between here and there could be a very bumpy 

ride though. The direct implications of the S&P downgrade are overblown, but the other problems 

we face are not. 

Scorecard & Earnings Surprise 

• We have another great earnings season underway. So far, 319 (63.8%) reports in. 

Total growth looks low at 12.24% but that is entirely due to a handful of Financials). We have 

a 3.13 surprise ratio, and 3.13% median surprise. Positive Surprises for 69.5% of all firms 

reporting. 

• Positive year-over-year growth for 320, falling EPS for 104 firms, a 3.13 ratio, 75.3% of 

all firms reporting have higher EPS than last year. 

• Six sectors done, most others down to one or two left to go. 

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• Autos, Discretionary and Tech lead in surprise; Transports, Industrials lag. 

Historically, a “normal earnings season will have a surprise ratio of about 3:1 and a median 

surprise of about 3.0%. Thus we are doing much better than average on the median front, and 

about average on the ratio front. Pay attention to the percent reporting in evaluating the 

significance of the sector numbers. 

Dow plunges more than 634 points after 

downgrade 

Stocks plunge after S&P downgrade; Dow down 634; Europe, economy fears send 

Treasurys, gold up 

Traders work on the floor of the New York Stock Exchange on Monday, Aug. 8, 

2011 in New York. (AP Photo/Jin Lee) 

Related Quotes 

Symbol Price Change 

BAC 6.51 -1.66 

MCO 29.80 -3.08 

112

Follow these stocks 


Stan Choe, AP Business Writer, On Monday August 8, 2011, 6:07 pm 

NEW YORK (AP) -- Fear has taken over on Wall Street. 

The Dow Jones industrials fell 634.76 points, the first trading day since Standard & Poor's 

downgraded American debt. . It was the sixth-worst point decline for the Dow in the last 112 years 

and the worst drop since December 2008. Every stock in the Standard & Poor's 500 index 

declined Monday. 

But the S&P downgrade wasn't the only catalyst Monday. Investors worried about the slowing 

U.S. economy, escalating debt problems threatening Europe and the prospect that fear in the 

markets would reinforce itself, as it did during the financial crisis in the fall of 2008. 

"`What's rocking the market is a growth scare," said Kathleen Gaffney, co-manager of the $20 

billion Loomis Sayles bond fund. "The market is under a lot of stress that really has little to do 

with the downgrade." Instead, Gaffney said, investors are focused on worries about another 

recession and "how Europe and the U.S. are going to work their way out of a high debt burden" if 

economic growth remains slow. 

The Vix, a measure of market volatility and fear among investors, shot up 50 percent. That was 

its steepest rise since February 2007. 

Investors desperately looked for safe places to put their money and settled on U.S. government 

debt -- even though it was the target of the downgrade Friday, when S&P removed the United 

States from its list of the lowest-risk countries. 

The price of Treasurys rose sharply, and yields, which move in the opposite direction from price, 

plunged. The yield on the 10-year Treasury note fell to 2.34 percent from 2.57 percent Friday. 

That matches its low for the year, reached last week. Before last Friday, there was widespread 

concern that a downgrade would push yields up and increase borrowing costs for the 

government, businesses and consumers. 

"This is largely a flight to safety," said Thomas Simons, money market economist with Jefferies & 

Co. "The bond market is really trading off of what's going on in the stock market." Money flowed 

out of stocks and into Treasurys. 

Gold set a record. It rose $61.40 an ounce to settle at $1,713.20. 

Crude oil, natural gas and other commodities fell sharply on worries that a weaker global 

economy will mean less demand. Oil fell 6.4 percent to $81.31 per barrel, its lowest price of the 

year. 

113


Fear is spreading quickly through the market, said Dimitre Genov, senior portfolio manager with 

Artio Global Investors. "It's becoming a vicious cycle and could feed into consumers reducing 

their demand as well." 

The Dow was down 5.5 percent a 10,809.85. The sharp drop extended Wall Street's almost 

uninterrupted decline since late July, when the Dow was flirting with 13,000. It fell below 11,000 

for the first time since November. 

The S&P 500 fell 79.92, or 6.7 percent, to 1,119.46. The Nasdaq composite index fell 174.72, or 

6.9 percent, to 2,357.69. 

Trading volume was the highest since September 2008 and the fourth-highest on record. A total 

of 9.9 billion shares traded, and about 70 stocks fell for every one that rose on the New York 

Stock Exchange. 

Stock markets in Asia began Monday's global rout. The main stock index fell almost 4 percent in 

South Korea and more than 2 percent in Japan. European markets opened later and fell, too, with 

Germany down 5 percent and France 4.7 percent. 

In the U.S., stocks fell even as Moody's, another major credit rating agency, stood by its top 

rating of Aaa for the United States. It said it could downgrade the U.S. if it doesn't cut its deficit, 

"but it is early to conclude that such measures will not be forthcoming." 

Financial markets also did not appear comforted by an afternoon statement by President Barack 

Obama, who said Washington needs more "common sense and compromise" to tame its debt. 

"Markets will rise and fall," he said. "But this is the United States of America. No matter what 

some agency may say, we've always been and always will be a triple-A country." 

S&P, in its downgrade, criticized dysfunction in the American political system. The downgrade 

wasn't a total surprise but came when investors were already feeling nervous about the U.S. 

economy and European debt, among other problems. 

Last week, the Dow Jones industrial average fell almost 700 points. That was its biggest weekly 

point loss since 2008, during the financial crisis. Counting Monday, the Dow has dropped in 10 of 

the last 12 trading days. It is down more than 1,900 points, or 15 percent, since July 21. 

The Russell 2000 index of small stocks has now lost nearly 25 percent from its most recent high 

on April 29. A decline of 10 percent or more is considered to be a correction. And a drop of 20 

percent or more is said to be the start of a bear market. 

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The Nasdaq and S&P 500 are both down about 18 percent since the end of April. The Dow is 

down 16 percent. 

The last bear market for the S&P 500 ran from October 2007 until March 2009. The index lost 57 

percent of its value. 

Despite the slide the last two and a half weeks, the S&P 500 index, at 1,119, is 7 percent higher 

than its close of 1,047 late last August, just before the Federal Reserve announced a program to 

support the economy. And the Dow's percentage drop of 5.5 didn't make the list of its 20 worst 

days. 

S&P on Monday downgraded mortgage lenders Fannie Mae, Freddie Mac and other agencies 

linked to long-term U.S. debt. Fannie and Freddie own or guarantee about half of all U.S. 

mortgages. Their downgrade could eventually mean higher mortgage rates. 

Worries about weaker profits that could result from a slowing economy have slammed the 

financial industry since late July. As a group, financial stocks in the S&P 500 index fell 10 percent 

on Monday to their lowest level since July 2009. 

Bank of America plunged 20.3 percent, to $6.51, after AIG filed suit against the bank. The insurer 

alleged Bank of America sold it overvalued mortgage-backed securities. The bank denied the 

allegations. Its stock is down 51 percent this year, from $13.34. 

Stocks in other industries whose profits are closely tied to the strength of the economy also fell 

sharply. Energy stocks in the S&P 500 fell 8.3 percent, for example. 

The smallest losses came in safer industries such as consumer staples whose profits tend to be 

steady, regardless of the economy. Even in a bad economy people will still buy things like 

toothpaste and bread. 

The Vix, a measure of fear among investors, is up more than 90 percent this month. The index 

shows how worried investors are that the S&P 500 will drop over the next 30 days. It does that by 

measuring prices for stock options that investors can buy to help protect their portfolios. 

Investors are also worried that Italy and Spain could become the next European countries to have 

trouble repaying their debts. Greece, Ireland and Portugal have already received bailout loans 

because of Europe's 21-month-old debt crisis. 

The fears have pushed investors to shun Spanish and Italian bonds, which have led to higher 

yields and in even higher borrowing costs for the two countries. 

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The European Central Bank stepped in Monday and bought billions of euros worth of their bonds. 

The move helped to lower yields on Spanish and Italian bonds, at least temporarily. 

Seeking to avert panic spreading across financial markets, the finance ministers and central 

bankers of the Group of 20 industrial and developing nations issued a joint statement Monday 

saying they were committed to taking all necessary measures to support financial stability and 

growth. 

"We will remain in close contact throughout the coming weeks and cooperate as appropriate, 

ready to take action to ensure financial stability and liquidity in financial markets," they said. 

Worries about the U.S. economic recovery have been building since the government said that 

economic growth was far weaker in the first half of 2011 than economists expected. 

The economy grew at a 1.3 percent annual rate from April through June, below economists' 

expectations. It expanded at just an 0.4 percent rate in the first quarter. The first half of 2011 was 

the slowest since the end of the recession. 

Then reports showed that the manufacturing and services industries barely grew in July. Job 

growth was better than economists expected last month. But the 117,000 jobs created in July was 

still well below the 215,000 that employers added in February, March and April, on average. 

The Federal Reserve will meet on Tuesday, but economists don't expect much to come out of the 

meeting. The central bank's key interest rate is already at a record of nearly zero, where it has 

been since 2008. 

The Fed has also already said that it plans to keep rates low for "an extended period." Chairman 

Ben Bernanke said last month that the Fed could step in to help the economy if it further 

weakened. 

Fears about a weaker U.S. economy have overshadowed the profit growth that companies have 

reported for the second quarter. For the 441 companies in the S&P 500 that have already 

reported, earnings rose 12 percent in the second quarter from a year earlier. Revenue growth has 

also topped 10 percent for the first time in a year. 

AP Business Writers Matthew Craft, David K. Randall and Daniel Wagner contributed to this 

report. 

The stock market's "fear gauge" staged its biggest one-session rise in four years Monday as U.S. 

stocks careened lower in the first trading session since Standard & Poor's Ratings Services cut 

the credit rating for the United States. 

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The Chicago Board Options Exchange Volatility index, or VIX, climbed 39% to 44.55 recently as 

investor fled stocks and pushed Dow Jones Industrial Average down as much as 605 points. 

Monday's VIX jump marks the biggest percentage rise since Feb. 27, 2007, when the VIX soared 

64%. 

Monday's intraday highs touched levels not seen since the aftermath of the May 2010 "flash 

crash," when the measure pushed as high as 48 on an intraday basis. The VIX broke 40 in 

intraday trade for the first time since May 25, 2010. The VIX measures the price investors pay for 

protective options contracts on the Standard & Poor's 500 index and tends to rise when stocks 

fall. 

A VIX reading over 40 "says that right now there's uncertainty, there's panic," said Luke Ribahri, 

partner at Stutland Volatility Group in Chicago. "With the Dow down 500 points on Thursday, 

nearly 600 points now -- it's scary." 

Traders said Standard & Poor downgrade of the U.S. credit rating late Friday to double-A-plus 

from triple-A compounded fears that global economic growth is slowing. 

"It's outright panic," said Andrew Wilkinson, senior market analyst at Interactive Brokers in 

Greenwich, Conn. of Interactive Brokers. 

"Right now, investors are stretching in all directions trying to protect themselves," Mr. Wilkinson 

said. "Liquidation of portfolios and a general risk-off appetite is causing panic in traditional 

measures of risk." 

Trading volume was robust in the options market as investors heavily favored bearish put options 

contracts. Nearly 3 puts changed hands for every 2 calls across the options market, a ratio far 

above the average for the last month, Trade Alert data show. 

Options volume was on pace to hit record levels for the third-consecutive session, according to 

data from OCC, the industry's clearinghouse. 

Traders in the options market piled into puts of trading vehicles like the SPDR S&P 500 

exchange-traded fund. 

In one large options trade in the ETF, traders set up a bearish two-part trade that profits most 

from a decline in the SPY to $110 by the end of the week. The SPY shed 5.2% to $113.81 in 

recent trade. Another large options trade in the SPY saw traders close out of an existing 

September $121 put and extend the hedge into more pessimistic September $115 puts, 

according to derivatives strategists at Susquehanna Financial Group. 

Puts grant the right to sell an underlying security at a set price by a fixed expiration date. 

117


This is an interesting opening to an ad that promises help with Growth Stocks. What’s most 

interesting is that everyone knows the entire operation on Wall Street is as corrupt as Hell 

itself and it goes on and on anyway until they kill the country! SN 

The VIX volatility index soars, and we get wild 200-, 300-, 500- point swings in the market. 

Nervous consumers close their wallets and cut back spending. 

Manufacturing plunges. 

Economic growth grinds to a halt. 

And the stock market churns sickeningly lower day after day after day. 

Sound familiar? That’s because the latest round of market and economic news is eerily 

familiar to what we saw before the 2008 market meltdown. 

One key difference: This time around it could be Washington, not Wall Street that takes 

the economy down. 

Three years ago, it was the Lehman Brothers collapse that caused our financial system to 

teeter on the verge of collapse. 

Today, it could be the devastating fallout from the Standard and Poor’s downgrading the 

U.S.A.’s pristine AAA credit rating that takes us down. 

Yes, we have a debt-ceiling deal, but one that did not satisfy the credit agencies. Thanks 

to Washington’s very public display of dysfunction and ineptitude, the S&P has stripped 

the U.S. of the top credit rating—the first time that has happened since we achieved our 

AAA rating way back in 1917. 

And they have already declared more downgrades are possible! 

Moody’s has put a negative outlook on the U.S. credit rating, meaning a downgrade is still 

quite possible. And Fitch put the rating "under review." 

In addition to causing these downgrades, the circus we’ve just witnessed has deeply 

shaken the confidence of corporations, governments and investors around the globe. 

But Washington’s shenanigans aren’t the only reason investors are nervous. 

Who’s Worse—Washington or Wall Street? 

The truth is that you have a better shot at being treated fairly in a Vegas casino than you 

do in the stock market today, and most investors know it. 

Insider trading… flash crashes… computerized trading… naked shorting. 

All symptoms of a system run amok. All examples of a deck that is stacked against you. 

The Wall Street titans nearly destroyed our entire financial system thanks to years of 

shady accounting, newfangled investment products that no one (including them!) 

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understood, backroom deals and massive risk-taking. 

But amazingly (appallingly) no one has gone to jail for that scandalous behavior. 

Instead they got an obscene $20 billion in bonuses. JPMorgan Chase’s Jamie Dimon got 

a 1,500% raise—that’s not a typo. Those banks you bailed out a few years ago—their 

CEOs are getting 50% raises. 

The new Wall Street Robber Barons got big bonuses, fancy yachts and dream homes in 

the Caribbean... 

What About You? 

You got a housing collapse, stock market crash, sky-high unemployment and a 

devastated nest egg. 

And here’s the worst part… 

They are ready and perfectly willing to do it all again! 

Make no mistake about it. As a former Wall Street insider (I spent 25 years watching the 

game played), I can guarantee you that the game is rigged against you. 

Wall Street sneers at individual investors like you, they consider you easy prey... sheep to 

the slaughter as they say. 

Small investors are the people they eat for lunch on their way to the six-figure bonuses. 

But c’mon, you already know all of this. The question is, are you going to sit there and 

keep taking it? Or are you ready to DO something about it. 

Markets Melting, More to Come 

Bryan Rich | Saturday, August 6, 2011 at 7:30 am 

In late May, when the S&P 500 was trading just shy of its “post-crisis” highs, I made the case for 

why we should expect more pain … a lot of it. And I said, with QE2 ending in June, QE3 may 

follow. 

Today, I revisit some of that big-picture analysis. 

In the past several weeks, we’ve seen clear evidence that global economies are falling back 

toward recession territory, if they’re not already there. And the global sovereign debt crisis 

continues to grow in severity. 

With the United States in the crosshairs of a potential downgrade, the contagion in Europe has 

spread to Italy and Spain — two countries that are too big for EU and IMF officials to convince 

global markets that a magical backstop can be crafted. 

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Now, just at the time when most economists predicted leading central banks would be 

aggressively hiking interest rates to normalize policy, some are easing further. And other central 

banks that have been in hiking mode will likely reverse course, making big cuts. 

For the Fed, that puts QE3 back on the table. But that’s not going to happen before price 

pressures subside and begin threatening deflation again. 

And that is likely. Here’s why: 

The Delusional Recovery 

While the evidence of this type of unraveling has been right under our noses throughout this 

global economic crisis, most experts, market practitioners and politicians have done their best to 

ignore it. 

It takes a plunging U.S. stock market for most to recognize that the “recovery” was delusional. As 

I’ve outlined many times here in Money and Markets, the most thorough analysis of global 

financial crisis was done by Carmen Reinhart and Kenneth Rogoff. Though many ignored it, they 

revealed in 2008 the expected fallout from this crisis in 2008. 

Their study showed that global financial crises typically lead to sovereign debt crisis. Sovereign 

debt crises typically follow a progression of rising deficits, rising debt, an onslaught of 

downgrades and finally defaults. 

And their study showed that the 10-year global credit buildup would likely take as long to unwind 

(10 years). 

So the deleveraging process tends to take around a decade. And for the extent of the 

deleveraging period, the study suggests: 

Economic growth trends at lower levels than pre-crisis growth, 

Unemployment hovers around 5 percent higher than pre-crisis levels, 

And housing prices remain anywhere from 20 percent to 50 percent below peak levels. 

This has been nothing less than the script for the way economies have been behaving, 

particularly in the United States. If you mark the meltdown in subprime mortgages in early 2007 

as the beginning of the global economic crisis, then we stand at about four years in. 

Here’s how those three areas I’ve just mentioned are doing: 

Recent economic growth in the United States for the first half is running at less than three- 

quarters of one percent annualized. That’s after record fiscal and monetary stimulus. 

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Source: St. Louis Fed 

Unemployment remains above 9 percent. And the nine months of job gains are heading back 

toward job losses — again. 

Source: St. Louis Fed 

And home prices fell to a new low in March, and remain 32 percent off of the 2006 highs, 

despite all of the failed government rescue programs. 

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Source: Case-Shiller 

Given this backdrop, global financial markets have a long way to adjust — from pricing in 

recovery, to pricing in the reality of ongoing crisis and economic shocks. 

Economic Health Sirens 

Scream Downturn 

Two leading proxies of global economic health gave clear signals this week of another downturn 

in financial markets. 

Below is the chart of the S&P 500: 

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You can see the index broke the key trendline (in blue) this week that represented the bull trend 

in stocks that has taken place since early 2009. This opens up technical downside targets of 

1,100 … then 1,020 … and then the big retracement level in the 940 area. 

In crude oil, the chart looks very similar: 

Crude oil was said to be the proxy for global demand — especially attributed to the evolving 

emerging market economies. But when speculators got wind of an impending hike in margin rates 

in the second quarter, it was exposed as a market full of speculators. 

Now the break-down of this long-term trendline (the blue line) opens it up to another big decline 

— if the world continues to unravel at its recent pace. 

And the above two charts paint a gloomy story for one of the highest performing currencies in the 

world over the past three years, the Australian dollar. 

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In the above chart, you can see the dive that the Australian dollar took in the first round of 

financial crisis, falling 39 percent in just five months. Perhaps the most vulnerable to global risk 

aversion, the Aussie dollar is now breaking a long-term trendline of its own. 

Moreover, while rising interest rates were the key driver behind its strength in recent years, a 

major Australian bank is now expecting 1.25 percent rate cuts out of Australia through next year. 

That’s in sharp contrast to what was expected coming into 2011. 

The Bottom Line for Investors 

Many think the world is looking like a scary place again. The fact is, the world economy has been 

a scary place for four years. And all of the evidence points to a continuation. 

We should always seek out investment returns that compensate for risks taken. In this 

environment, which is highly vulnerable to economic shocks, not many exist. 

That’s why I continue to think we’ll see another aggressive flight of global capital back to 

the United States — home of the deepest capital markets and most liquid currency. In 

crises, capital preservation is king. 

Regards, 

Bryan 

P.S. To learn how I’m helping my World Currency Trader members position themselves during 

this global unrest, click here. 

Precious Metals: 10 

Things To Know Before 

Jumping Into Gold And 

Silver 

As the global economy became increasingly unstable during 

2010, investors all over the world flocked to precious metals such as gold, silver, 

copper and platinum. The price of gold set an all-time record high last year, and 

gold investors were euphoric. Many analysts are projecting that prices for gold, 

silver and other precious metals will continue to soar throughout 2011. But does 

that mean that everyone should just suddenly jump into gold and silver? No, it 

does not. Precious metals are not for everyone. 

Just like any other kind of investing, it is absolutely crucial that you get educated 

before you get involved. Investing in precious metals is very different from other 

kinds of investments. There are significant hazards and pitfalls to watch out for. 

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But if you take the time to do it right, investing in precious metals can be very 

rewarding, and it can potentially be a great way to protect your wealth against 

the tremendous inflation that is coming in the years ahead. 

The following are ten key things that you should know before jumping into gold 

and silver.... 

#1 Precious Metals Markets Are Highly Manipulated 

Big financial institutions, and even governments, openly manipulate the precious 

metals markets. This is an open secret that you should know if you plant to 

invest in precious metals. Those who think that they can jump in and out of gold 

or silver and make a killing usually end up learning a very painful lesson. 

Investing in precious metals should be done for the long-term unless you really, 

really know what you are doing. 

So why is long-term investing safer? Well, as we have seen over the past few 

years, the short-term manipulation of gold and silver prices usually gets trumped 

by the long-term trends in the end. 

But that doesn't mean that gold, silver and other precious metals won't take 

some very significant short-term tumbles. 

#2 The Long-Term Trends Are Very Favorable For Precious Metals 

As the U.S. dollar has declined, gold, silver and other precious metals have been 

going up, up, up over the past decade. Investors all over the globe have been 

flocking to the safety and stability that they provide. 

Just look at the following chart which shows how the price of gold has risen 

dramatically over the past decade. In fact, this chart is a little out of date. At one 

point during 2010, the price of gold exceeded $1400 an ounce. As you can see, 

those who have been investing in gold for the long-term have been doing very, 

very well.... 

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Many analysts are extremely bullish on gold right now. For example, Peter Schiff 

believes that the price of gold is going to eventually hit $5000. 

So does that mean that what Schiff is saying is actually going to happen? 

Nobody can tell you for sure what is going to happen. 

But one thing is for sure - we are entering uncharted territory in world financial 

markets. At this point, just about anything is possible. 

#3 Gold Holds Value Over Long Periods Of Time 

In ancient Rome, an ounce of gold would buy you a nice suit. A hundred years 

ago, an ounce of gold would buy you a nice suit. Today, an ounce of gold will 

buy you a nice suit. 

Meanwhile, the U.S. dollar has lost well over 95 percent of its value over the last 

100 years. 

So which is better to hold on to for the long-term - U.S. dollars or gold? 

#4 The Value Of The Dollar Is Going Down 

Usually (but not always) when the value of the dollar goes down, the value of 

gold goes up. As the U.S. government and the Federal Reserve have been 

flooding the system with new dollars, investors across the globe have been 

flocking to precious metals. 

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At some point in the years ahead (?) we are going to be facing some very, very 

serious inflation. When that time arrives, U.S. dollars are not going to be worth a 

whole lot. But all of that gold and silver you have stored up still will be. 

#5 Physical Gold Is Preferable To Paper Gold 

When investing in gold, it is much more preferable to actually take possession of 

the physical gold than it is to have a piece of paper that says that you have 

invested in gold. Someday when the financial system crashes, you may find that 

your "piece of paper" is not going to do you much good. (SN: That’s putting it 

too mildly. Paper is a breakable promise to pay! A gold piece in hand is better 

than 20 under a bushel of paper promises. Small gold coins can be hidden in 

many places, even in plain sight. You can travel with them. You can trade them 

virtually everywhere in the world. Everything else is suspected untrustworthy.) 

#6 Diversification Is Key 

When investing in precious metals, it is important to diversify. This spreads out 

your risk. Some investors accumulate as many different precious metals as they 

can. Others diversify by getting precious metals from a variety of dealers or by 

accumulating it in different forms - coins, bars, jewelry, etc. 

It is always wise not to put all of your "eggs" in one basket. 

#7 Accumulate Different Denominations If You Can 

In the future, if you actually need to spend your precious metals you don't want 

them all to be of the same denomination if possible. For example, if you need to 

buy a little bit of food, you don't want to only have high value coins. Variety is a 

good thing, and accumulating different coin denominations is another way that 

you can diversify. 

#8 You Cannot Eat Precious Metals 

Investing in precious metals should be done only after you have gathered 

together an adequate emergency food supply. If the global economy completely 

shatters, having gold and silver is not going to be good enough. You are going to 

need lots of food for you and your family. So be sure to take care of the 

necessities before you invest in precious metals. 

#9 Do Not Advertise That You Are Accumulating Precious Metals 

Don't go around telling everyone that you are storing up precious metals. That is 

just going to make you a target. Investing in precious metals is something to be 

done quietly. 

#10 Get Educated 

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I cannot stress this point enough. If you want to invest in precious metals, you 

need to get educated. People that do not know what they are doing are at much 

greater risk of getting burned. Be smart enough to realize what you do not 

know. Don't be too proud to ask for advice. Seek out reputable dealers. If you 

take the time to do things right, then you will have the best chance for success. 

The following video contains some more facts and figures about investing in 

gold. I do not know anything about the organization that put this video together, 

but this video is well produced and it presents a lot of important information 

about gold in an entertaining manner.... 

SN: No one knows what will happen to Gold. The Bible book of Revelation 

says eventually it’ll be worthless because the world will be forced upon a fiat 

money standard. Perish that day! Meantime, it’s worth the gamble to own a few 

gold coins, or at least some “junk silver.” Is it good to keep US Dollars. YES! If 

you can get a $20,000,000 some day, keep it neat and clean in a zip lock bag 

and one day it’ll be a great collector’s item for your son or daughter. 

Am I being ridiculous? My father had a drawer in which was a bunch of 

100,000 German Mark notes. Too bad they’re gone now. I like collecting stuff 

like that, to remind us all of the stupidity of politicians. By the time those notes 

were on the street you needed a wheelbarrow full of them to buy a loaf of 

bread! 

As for the idea that “at some point years from now we’ll face serious 

inflation” I’m afraid that time could be very quickly compressed. I wouldn’t be 

surprised if by the end of 2012 you’ll be burning dollars to start a nice warm fire. 

There are several trustworthy gold dealers. I like Pinnacle Gold Group, call 

1-800-675-9088 







Before I Move On … Take a Lesson About Whom You 

Can Trust! 

Family fights government over rare 

‘Double Eagle’ gold coins 

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By Zachary Roth 

AP Photo/U.S. Mint 


A jeweler's heirs are fighting the United States government for the right to keep a batch 

of rare and valuable "Double Eagle" $20 coins that date back to the Franklin Roosevelt 

administration. It's just the latest coin controversy to make headlines. 

Philadelphian Joan Langbord and her sons say they found the 10 coins in 2003 in a bank 

deposit box kept by Langbord's father, Israel Switt, a jeweler who died in 1990. But when 

they tried to have the haul authenticated by the U.S. Treasury, the feds, um, flipped. 

They said the coins were stolen from the U.S. Mint back in 1933, and are the 

government's property. The Treasury Department seized the coins, and locked them away 

at Fort Knox. The court battle is set to kick off this week. 

The rare coins (pictured), first struck in 1850, show a flying eagle on one side and a 

figure representing liberty on the other. One such coin recently sold at auction for $7.6 

million, meaning the Langbords' trove could be worth as much as $80 million. 

The coins are part of a batch that were struck but then melted down after President 

Roosevelt took the country off the gold standard in 1933, during the Great Depression. 

Two were given to the Smithsonian Institution*, but a few more mysteriously escaped. 

The government has long believed that Switt schemed with a corrupt cashier at the Mint 

to swipe the coins. They note that the deposit box in which the coins were found was 

rented six years after Switt's death, and that the family never paid inheritance tax on the 

coins. 

A lawyer for the Langbords counters that the coins could have left the Mint legally since 

it was permissible to swap gold coins for gold bullion. 

Authorities in the Roosevelt era twice looked into Switt's coin dealings, including his 

possession of Double Eagle coins. In 1944, Switt's license to deal scrap gold was 

revoked. 

The battle over the Double Eagles is hardly the only recent coin contretemps. Two British 

metal-detecting enthusiasts are said to be locked in a bitter dispute over how to divide the 

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profits from a horde of Iron Age gold coins that they unearthed together in eastern 

England in 2008. 

And an 80-year-old California man was jailed in 2009 after allegedly hitting another man 

in the head with a metal pipe and firing a gun at a third man during a dispute over 

missing gold coins. 

Some coin disputes involve more than wrangling over valuable collectors' items. In 2007, 

Secret Service and FBI agents raided an Indiana company called Liberty Dollar, in a bid 

to stamp out illegal currency. The firm was making "Ron Paul Silver Dollars," in honor 

of Rep. Ron Paul, whose presidential campaign advocates bringing back the gold 

standard. 

And since we're talking about coins, here's a list of the ten most valuable coins you might 

find in your pocket change. 

* This sentence previously referred incorrectly to the "Smithsonian Institute." 

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Listen, my dear reader/friend. The Nazi’s 

stole everything of value they could lay 

hands on during WWII. They took Jews out 

of their homes, illegally imprisoned them, 

raped their kids, stole their belongings, and 

finally worked them to death! Governments 

can be trusted to be untrustworthy. If you 

want what is YOURS figure out a way to 

take it with you. 

Do you sail? http://www.atkinboatplans.com/ 

Barack Obama And Ben Bernanke Continue To Defend 

Quantitative Easing, But For The Rest Of The World 

The Verdict Is In: They Hate It 

Even as Barack Obama and Ben Bernanke publicly defend the Federal Reserve's 

new $600 billion quantitative easing program, top finance officials around the 

globe are expressing alarm and outrage. But what did Obama and Bernanke 

expect? "Quantitative easing" is little more than legalized cheating. 

For a moment, imagine that the global economy is a giant game of Monopoly. 

Essentially what Bernanke has done is that he has just reached under the table 

and has slipped another $600 billion on to his pile of money, hoping that the rest 

of the players will not call him out on it. The rest of the world has heavily 

invested in the U.S. dollar and in U.S. Treasuries, and this new quantitative 

easing program is going to devalue all of those holdings. 

If the Federal Reserve continues to go down the road of monetizing U.S. 

government debt, other nations are rapidly going to get spooked and will soon


refuse to invest in U.S. dollars and U.S. Treasuries. When that day arrives, it is 

going to cause mass panic in the world financial system. 

Already, investors across the globe are flocking out of the U.S. dollar and into 

safe investments such as gold and silver. On Monday, gold closed at an all-time 

record high of $1,403.20 an ounce on the New York Mercantile Exchange, and 

silver closed at a 30-year high of $27.43 an ounce. 

Unfortunately, our leaders seem absolutely clueless about what is really going 

on. In fact, Barack Obama is very much in Bernanke's corner. During his trip to 

India, Barack Obama made it clear that he very much supports this new round of 

quantitative easing by the Federal Reserve.... 

"I will say that the Fed's mandate, my mandate, is to grow our economy. And 

that's not just good for the United States, that's good for the world as a whole." 

This is the exact opposite of what Barack Obama should be doing. He should be 

demanding accountability from Ben Bernanke and the Federal Reserve. He 

should be trying to get the U.S. financial system back on some kind of solid 

footing. 

(SN: He should be working for a Chicago law office (at best)! He was elected on 

emotion, and has NO qualifications to be President. I’m trying to be respectful of 

his office here, but I’m tempted to speak sharply.) 

But we all know that is not going to happen. Obama had no problem 

renominating Bernanke to another term, and Obama has publicly supported him 

at every opportunity. 

Well, if Obama isn't going to do it, shouldn't some of our other representatives in 

Washington D.C. be calling for the resignation of Bernanke? After all, how many 

chances does one guy get? Bernanke's record is littered with so much gross 

incompetence that it makes Wade Phillips of the Dallas Cowboys look like Coach 

of the Year. Bernanke reassured the public over and over and over between 

2005 and 2007 that the U.S. economy was in great shape and that we would 

continue to experience solid growth.... 

How long is it going to be until everyone wakes up and starts acknowledging that 

"the emperor has no clothes" and Bernanke is running the U.S. economy into the 

ground? (SN: Many economists of merit have already said so. The problem is we 

have no legal way to remove him from office and no one will kidnap him.) 

At this point, Bernanke has lost virtually all credibility. In 2009, he promised the 

U.S. Congress that the Federal Reserve would not monetize U.S. government 

debt, but now that is exactly what is happening. 

Most of the top finance officials in other countries realize what is going on, and 

they are really starting to make their displeasure known. The following are just a 

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few examples of the global outrage that has been expressed about the Fed's new 

quantitative easing program over the past few days.... 

*Xia Bin, an important member of the monetary policy committee of China's 

central bank has called the Fed's new quantitative easing plan "abusive" and is 

warning that it could set off a global economic meltdown. 

*On Monday, Chinese Finance Vice Minister Zhu Guangyao expressed his 

extreme dismay regarding the Fed's new quantitative easing scheme.... 

"As a major reserve currency issuer, for the United States to launch a second 

round of quantitative easing at this time, we feel that it did not recognize its 

responsibility to stabilize global markets and did not think about the impact of 

excessive liquidity on emerging markets." 

*German Finance Minister Wolfgang Schäuble, who has called current Fed 

policy "clueless", says that he is absolutely disgusted with the Federal Reserve at 

this point.... 

"They have already pumped an endless amount of money into the economy via 

taking on extremely high public debt and through a Fed policy that has already 

pumped a lot of money into the economy. The results are horrendous." 

*Luiz Inácio Lula da Silva, the President of Brazil, says that he is 

incredibly upset about QE2 and that he is going to arrive for the G20 meetings in 

Seoul ready "to fight". 

*Bloomberg is reporting that at the upcoming G20 meetings, Russian 

President Dmitry Medvedev is going to "insist" that any future quantitative 

easing measures be globally coordinated. 

*Even some top Fed officials are speaking out publicly against this new round of 

quantitative easing. For example, Kansas City Fed President Thomas Hoenig 

recently made the following statement about the new direction the Fed is 

taking.... 

"I worry that by pumping in significant amounts of dollars we then build the 

inflationary pressures for the future, and we do encourage then an easier credit 

environment that helped create this problem in the first place." 

The Federal Reserve had better hope that the rest of the world does not get 

scared off from buying U.S. government debt. According to the Wall Street 

Journal, in order to repay maturing bonds and finance the budget deficit, the 

U.S. government will have to come up with 4.2 trillion dollars over the next year. 

If the rest of the world cuts back on buying U.S. Treasuries, the Federal Reserve 

is going to find itself with a gigantic mountain of debt that it will be forced to 

monetize. (SN: That is already happening in June 2011.) 

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So what happens someday when China, Japan, Russia and the major oil 

producers in the Middle East decide that enough is enough and they are not 

going to buy any more U.S. debt? 

Don't think it can't happen - these nations are not stupid and if they realize that 

the U.S. dollar is going to continually keep falling in value there could be a 

dramatic move away from U.S. debt. 

If the rest of the world quits lending massive amounts of money to the U.S. 

government, our leaders will be faced with three options. The U.S. government 

could start trying to operate within a balanced budget (which would crash the 

economy), interest rates on U.S. government debt could be raised until people 

would be willing to invest in Treasuries again (which would probably crash U.S. 

government finances and the economy), or the Federal Reserve could just start 

monetizing most of the debt on a regular basis (which would likely eventually 

crash the entire world financial system). 

In order for the current world financial system to maintain stability, it is essential 

for there to be faith in the U.S. dollar and for there to be faith in U.S. Treasuries. 

Once faith in them is lost, it will only be a matter of time until the world financial 

system totally crumbles. 

This new round of quantitative easing could be the "tipping point" that opens the 

door to the eventual complete and total collapse of the U.S. dollar. Let us hope 

that the dollar does not completely fail any time soon, but with jokers like 

Bernanke and Obama running the show, there is not much reason for optimism. 

This is a good place to introduce Claus. (I’m a Claus fan. 

He’s may be the best modern economist in Europe.) 

Claus Vogt http://www.moneyandmarkets.com/ 

Claus Vogt is the editor of Sicheres Geld, the first and largest- 

circulation contrarian investment letter in Europe. Although the 

publication is based on Martin Weiss’ Safe Money, Mr. Vogt has 

provided new, independent insights and amazingly accurate forecasts 

that, in turn, have contributed great value to Safe Money itself. 

Mr. Vogt is the co-author of the German bestseller, Das Greenspan 

Dossier, where he predicted, well ahead of time, the sequence of 

events that have unfolded since, including the U.S. housing bust, the 

U.S. recession, the demise of Fannie Mae and Freddie Mac, as well as the financial system 

crisis. 

133


In December 2010 his second book The Global Debt Trap was published in the US. It’s a 

must read for anybody interested in how we came where we are, which escape hatches are 

theoretically available, which will probably be chosen, and what all of this might mean for 

your financial wellbeing. 

He is also the editor of the German edition of Weiss Research’s International ETF Trader, 

which has delivered overall gains (including losers) in the high double digits even while the 

U.S. stock market suffered its worst year since 1932. 

In addition to being the editor of Million-Dollar Contrarian Portfolio, his analysis and insights 

appear regularly in Money and Markets. 

The Hidden Consequence of Inflation 

Claus Vogt | Wednesday, May 4, 2011 at 7:30 am 

Last Wednesday Federal Reserve Chairman Ben Bernanke 

repeated what he stands for: A rampant inflationary monetary 

policy. He seems totally oblivious with the sad history of 

inflationary policies. And he obviously ignores the grave 

outcome that his and Alan Greenspan’s money printing policies 

had on the financial markets, the economy, and general 

welfare. 

Inflation Replaces Thrift with Theft 

So I’d like to discuss an often overlooked consequence of 

money printing: The relationship between inflation and poverty. 

Inflation leads to an impoverishment of great cross-sections of the population. During 

hyperinflationary phases, such as experienced by Germany in the early twentieth 

century or by Zimbabwe in the twenty-first century, this process happens quickly. With 

relatively moderate inflation rates, it occurs far more slowly. But in either scenario, thrift 

is replaced by theft — it reduces your wealth. 

Why? 

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The newly created money, which is not backed by tangible assets, always goes into 

circulation at some point within the economy. In other words, someone is always the first 

to possess the new money and the first to spend it. 

These first beneficiaries are the inflation winners — they enjoy an incalculable 

advantage, for they can make purchases on the market at old prices, before the new 

demand drives prices higher. 

However, those who are last in line to get the new money are the inflation losers, forced 

to pay higher prices. 

Bubbles Distribute Wealth Unfairly 

That is also the result when inflation manifests itself in the form of speculative bubbles. 

Examples include: The stock market bubble of the late 1990s, the recent housing bubble 

which was accompanied by an echo stock market bubble, and now, during the current 

echo stock bubble. 

The new money causes asset prices to rise sharply. Those who own them may see their 

wealth grow significantly, at least in nominal terms. And Fed members even brag about 

this so called wealth effect. 

But those who don’t own such assets and can’t afford to buy them are left behind, 

unable to compete or cope. 

The relatively small group of asset holders becomes richer, while those depending on 

fixed incomes or earning low wages become the losers. The longer this policy keeps 

going, the wider the gap becomes between rich and poor. 

And now all over the world, especially in the U.S. … 

The Gap between Rich and Poor Is Growing! 

Today the small number of super-rich holds a far greater share of total wealth than a few 

years ago. This is not always a bad thing, as long as the wealth is generated by 

entrepreneurial effort. 

After all, the men and women behind great interventions and products that make the 

world a better place should be rewarded. This is indeed a necessary mechanism 

propelling progress and wealth accumulation. 

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Yet it is precisely this connection — between effort and reward — that is increasingly 

weakened during speculative booms and inflationary periods based on easy money! 

Here’s what happens: The government bloats the money supply. And rich rewards are 

lavished on those who contribute little value to society. Then the connection between 

effort and reward becomes so arbitrary that it becomes meaningless. 

In that kind of environment, real interest rates are negative. Consequently, he who saves 

money is constantly losing buying power, as illustrated in the following chart. 

So it’s not a shock that during the late 1990s the savings rate in the U.S. fell to the 

lowest levels ever seen. 

And as you can see on the chart below, in spite of rising swiftly during the past 

recession, the U.S. savings rate is still historically low. 

136


Savings are important. They are the source of real investments and therefore the basis 

of wealth creation. But this important piece of economic knowledge seems to be lost with 

our politicians and central bankers … 

They are in the bubble blowing business — doing everything in their power to 

discourage saving and encourage risk taking and speculation. What’s more, they’re 

neglecting the devastating aftermaths of previous burst bubbles. 

Unstable Money Threatens the Foundation of Society 

Stable, reliable money is the foundation of healthy, balanced, and sustainable growth. In 

contrast, abusing the printing press to create money leads to the impoverishment of 

broad sections of the population. 

The policy of extreme easy money pursued across the globe, which Ben Bernanke is 

advocating so emphatically, is highly unjust. It’s in many respects a fundamental assault 

on society. Not only does it lead to growing income inequality, it also threatens to disrupt 

the very social harmony that Keynesian politicians pay lip service to. 

Ben Bernanke has again made clear that money printing will be with us as long as he is 

in the lead. This tells me that the secular bull market in gold is not in jeopardy. 

Therefore I continue to suggest gold bullion and gold ETFs, such as SPDR Gold Shares 

(GLD). Yes, there will be corrections from time to time, even severe ones. However, they 

should be greeted as buying opportunities. 

Best wishes, 

137

Claus 


Three Paths Out of the Government Debt Trap 

http://www.moneyandmarkets.com/three-paths-out-of-the-government-debt-trap-44840 


The governments of Portugal, Ireland, Italy, Greece, and Spain have a problem very 

similar to the U.S. and many other countries. It’s easy to describe: Too much debt as 

the result of living beyond their means for way too long. So looking at the PIIGS is like 

opening a window to the future of the United States. 

The PIIGS are at the forefront of a development that will soon reach global proportions. 

And there is no easy way out. But most of the voters and their leaders still don’t get it. 

And many who do get it simply look the other way because they don’t like what they see. 

I don’t like it either. But I always knew that something like this couldn’t go on forever. 

There are economic laws that can’t be aborted … not by political will, not by chicanery 

and not by central bank arrogance. Greenspan, Bernanke, Geithner surely knew this 

when they made their reckless decisions. 

Now it’s too late. There is no easy way out, just hardship and struggle. And the longer 

we wait to address the problem the harder it gets. 

The way I see it, there are three possible paths governments can take … 

Path #1 — Budget Cuts: 

Nobody likes the bitter medicine! 

the economic crisis to go away. 

138 

Demonstrations against budget cuts have 

spread throughout Europe. 

In Spain and Greece for instance, citizens are 

demonstrating, striking, revolting. Think about it: 

Anti-government protests, publicly shouting for 

While at the same time they’re not willing to accept the necessary steps to get the 

economy back on a healthy and sustainable growth path! Why? Because in the short run 

it would bring more hardship. 

There is also an important psychological force in play …


Political leaders of all stripes have consistently told voters that it was possible to get 

something for nothing, to bring about growth and wealth creation by printing money and 

going ever deeper into debt. 

Now it’s backfired! And voters are dead set against doing what it takes to make things 

right. 

The U.S. is still behind the PIIGS. But with actual and planned budget deficits of more 

than $1 trillion as far as the eye can see, it will quickly catch up. 

That brings me to … 

Path #2 — Government Defaults: 

Ignite global banking crisis! 

Default is an option, of course. And financial history is littered with examples of 

governments opting for this escape hatch. For the have-nots this solution sounds 

attractive. 

They seem to have nothing to lose. They may think that after defaulting on its debts the 

government will go on exactly as before, and the world can turn back to what seemed to 

be normal for too long. That the lenders, such as China, who were treated badly and 

robbed with the stroke of a pen would quickly be back lending fresh money to the 

robbers. 

And maybe they would. But I think it’s wishful thinking, a mirage. 

They’ll likely say, “Fool me once, shame on you. Fool me twice, shame on me.” 

There is another argument against the default escape hatch. Big banks and insurance 

companies are major holders of government debt. A default would throw us into another 

banking crisis, larger than the one of 2008, and possibly of biblical proportions. 

139 

Major financial institutions could face cataclysmic losses if 

governments default. 

The financial industry has an influential lobby. They will try 

everything to avoid a default and protect their interests. They 

stand a very good chance of succeeding, at least in the UK 

and the U.S.


Now, let’s look at the political favorite … 

Path #3 — Crank Up the Presses: Kick the can, once again! 

If the majority of voters oppose spending cuts and the financial industry exerts enough 

pressure to sideline defaults, there is just one option left: Money printing. 

That’s exactly what Ben Bernanke has always recommended. This advice was his ticket 

to the Fed chairmanship. And the case for him getting what he wants seems to grow 

stronger by the day. 

As an investor you should understand these interrelations. Inflation is not a necessity, 

but a political choice. To me it seems to be the most probable one. That’s why I keep 

recommending gold as an insurance policy against runaway inflation. 

Short term I expect a price correction in gold. If this turns out to be the case, you should 

consider it a buying opportunity. Either coins, bars or an ETF like GLD. 

Best wishes, 

Claus 

http://www.moneyandmarkets.com/it%e2%80%99s-200708-all-over-again-44559 

It’s 2007/08 All over Again! 


makes me increasingly bearish. 

Today looks eerily similar to what was going on in 2007 and 

early 2008. Then, as now, the vast majority of my macro- 

economic and stock market indicators issued massive warning 

signs. And then, as now, the stock market ignored them for a 

seemingly endless time. 

The big difference: Then it was the beginning of the housing 

slump that massively disturbed me. Now it’s the beginning of 

the international government debt and funding crisis that 

If you recall, the housing and mortgage credit crisis did not befall the world out of the 

blue. There had been many warning signs. And some of the best market analysts clearly 

pointed them out. Plus it was a relatively slow development that took many months until 

it finally culminated during the autumn of 2008. 

140


Then It Was the Fed’s Bernanke, Now It’s the ECB’s Stark 

I remember when Ben Bernanke spoke out in 2007, at the beginning of the housing 

crisis. “Containment” was his buzz word. And he assured us that neither the housing 

market nor the economy was in danger. He even gave an estimate of “up to $100 

million” in mortgage-related bad debts. 

In an interview at the time I strongly rebutted Bernanke’s soothing remarks and added 

that he was probably off by at least one zero. 

Now we have another central bank bureaucrat uttering soothing words: Jürgen Stark, 

Chief Economist of the European Central Bank (ECB). He said, 

“The discussion about restructurings in the Eurozone is based on the totally false 

assumption that one or another EU member state is insolvent.” 

Well, as we all know there are three EU member states — Greece, Ireland, and Portugal 

— that have already needed an illegal bailout by other EU members. If that’s not 

insolvent, what is? 

These countries don’t have a liquidity problem, they have solvency problem … a severe 

one at that! And solvency problems don’t get cured by injecting additional credit. 

141 

"In the worst case, the restructuring of a 

member state could overshadow the effects of 

the Lehman bankruptcy.” — Jürgen Stark 

According to Stark, a single euro member 

country default could trigger a banking crisis 

worse than the one that followed the September 

2008 Lehman Brothers collapse. And I certainly agree with him on this point. 

But he doesn’t expect any defaults! That’s where we disagree … 

I think that European government defaults are just a matter of time. And the market is 

massively supporting this view. 

In fact, yields on 2-year Greek bonds are well above 20 percent — a strong market 

signal that default is unavoidable. 

Now, let’s take a look at the …

Six Theoretical Escape Hatches 


In theory, there are six ways to resolve the global debt trap — six escape hatches: 

1. An economic growth miracle 

2. Major interest rate cuts 

3. Bailouts by other governments 

4. Money printing 

5. Austerity 

6. Outright default 

In case of Greece, Portugal, Ireland and other European countries sitting in a debt trap: 

Options one, two, three and four aren’t available. 

Growth miracles are the result of free market policies not in sight anywhere in Europe. 

Interest rates are already as low as they can get. 

Bailouts have already been tried. Now it’s getting clearer that they weren’t enough, and 

the willingness of donor countries to do more is fading. 

And due to the common currency, the ECB is the only one that can print money. That is 

as long as the troubled members want to keep their euro membership. 

This leaves them with escape hatches 5 and 6: Austerity and default. They are trying the 

former to a minor degree. But because of the huge debt load it’s not enough to solve the 

problem. 

What’s more, austerity is very unpopular … 

Resistance among citizens is snowballing. And sooner or later populists will ride on this 

wave and opt for outright default — the only other way out. 

The situation in the U.S. isn’t much better. The country is also trapped. But … 

The U.S. Has More Options Left 

First of all, the U.S. has a printing press as Mr. Bernanke so famously said ten years 

ago. Therefore inflation is feasible. 

Second, the U.S. has much more fat available to cut. Hence severe austerity policies 

could still lead the way out of this mess. 

142


Third, the U.S. is much more flexible, politically and as a society. A return to real market- 

oriented policies is still conceivable, accepting short-term hardship to foment a growth 

miracle later. 

Mr. Stark has a point when he says that an EU government default would trigger another 

major banking crisis. But he is either naïve or whistling in the dark with his statement that 

a default would not occur. 

It will, and probably soon. Therefore a bet against the banking sector might be a good 

idea since we’re talking about another global banking crisis due to the direct involvement 

of U.S. banks and the strong interconnection of the global financial system. 

Interestingly, as you can see in the chart below the banking sector continues to show 

conspicuous relative weakness — another reminder of the 2007/08 episode. 

To take advantage of that weakness, you might consider ProShares UltraShort 

Financials (SKF), an inverse ETF that tracks the financial sector. If you pick it up at 

current levels, $58-$59, set your stop loss at $54.50. 

Best wishes, 

Claus 

143


Oversold, but Unable to Bounce! 

Claus Vogt | Wednesday, June 15, 2011 at 7:30 am 

Four weeks ago I discussed the quickly deteriorating 

macroeconomic picture, both in the U.S. and internationally. 

Since then the outlook has corroded more. 

Especially noteworthy: Interest-rate spreads for the European 

PIIGS countries are widening and consequently credit-default 

swap spreads for major U.S. banks are on the rise. 

This can further hurt struggling U.S. financial institutions that 

have sold credit default swaps on roughly half of the PIIGS- 

threatened debt. So if the PIIGS default, these U.S. banks are on the hook for 50 

percent of the resulting losses. 

What’s more, during the past few weeks there has been a broad-based change for the 

worse in nearly all forward looking U.S. economic indicators. They haven’t reached 

levels clearly indicating another recession, but they aren’t far off. A relatively minor tick 

to the downside would generate a clear recession warning. 

And with the housing market slipping again, the job market getting weaker, and the U.S. 

consumer in a funk it’s certainly not farfetched to expect this follow through. 

Historically every recession has been accompanied by a severe bear market in stocks. 

But not every bear market was associated with a recession. There have been vicious 

bears without a shrinking economy. The 1987 stock market crash is certainly an 

impressive example. 

So even if the economy avoided another full blown recession, which I doubt, the stock 

market could still face some serious trouble — which I expect. 

Two weeks ago I discussed the technical deterioration of the stock market, which leads 

the economy both on the way up and down. I mentioned the failed breakout attempt of 

late April, the broken uptrend line, and the outstanding weakness of the banking sector. 

And now there are … 

More Signs of Weakness! 

144


Most remarkably, the current correction is very broad based. We have seen ominous 

breakdowns in risk-sensitive sectors like small cap stocks, emerging markets, and 

commodities. 

Despite oversold readings of short-term momentum indicators the market did not muster 

the strength for at least a short-term rally. This was especially noticeable when the S&P 

500 cut through the 1,300 support level. 

This behavior is a typical sign of weakness. When short-term support suddenly fails to 

act as a springboard to launch a rally, the market’s character has clearly changed. The 

bullish forces have weakened, and the bears have gathered strength. 

Plus … 

NYSE Margin Debt near Record Highs 

Historically, margin debt has been a clear contrarian indicator. It has been very helpful in 

spotting major tops, when speculation using credit was widespread. The most famous 

example being the 1929 stock market bubble top, when buying stock on 10 percent 

margin had become a national pastime. 

But modern stock market tops have also been accompanied by spikes in margin debt: 

145


• The 1987 market crash was heralded by margin debt reaching a very high 1.8 

percent of total market cap. 

• The 2000 bubble high also saw a spike in margin debt to 1.6 percent. 

• Then came the 2007 top with margin debt all the way up to 2.3 percent. During 

the ensuing bear market margin debt declined, but not by much. 

Here we are today with margin debt again at 2.3 percent of stock market cap, back to 

where it was at the 2007 high! 

This development is a strong indication for another major market top in the making. Its 

message fits perfectly with another historically very successful contrarian indicator — 

mutual fund cash levels. 

Yes, there are very successful mutual fund managers. But as a group they are as prone 

to herding as anyone. And their track record is clear: When they were mostly fully 

invested it was a bad time to be in stocks. 

146


Most recent readings show they’ve been holding record low cash levels of 3.4 percent 

for two consecutive months. That indeed tells me that this is not a good time to be 

invested in stocks. 

And if you’re looking to profit from falling stock prices, you might consider inverse ETFs, 

like ProShares Short S&P500 (symbol SH), that are designed rise as the market falls. 

For SH, stick to a price range of $41.50-$42.50. 

Best wishes, Claus SN: 

You would do well to read more at: http://www.moneyandmarkets.com/ 

Emphasis you’ve seen with color has been my doing. 

Believe me. Claus knows only too well what happened in German with the hyperinflation 

of 1923 and the psychological affect this had on most of the adult 

population. He is too much the conservative gentleman to describe it in his articles. 

The hyperinflation that occurred in German had a terrible psychological effect on the 

adult population. Many people became so disheartened about life in general they 

went into a sort of permanent depression, and built a psychological wall around 

themselves. They felt no concern for anyone. They were angry with the world and 

cold hearted. It was the perfect psychological set-up for Hitler, the NAZI regime and 

the horrors of the holocaust and World War II. 

God forbid! It could happen the same way in the United States and this country 

would never be the same thereafter! 

All of that money my father had in a drawer in 1957, those old German Mark notes 

in the 100,000’s were worth nothing. The government printed a new currency and 

started all over again. The wealth of a nation had vanished, their cities ended up in 

ruins, their young men had been lost to war. 

This is the beginning of sorrows and birth pangs. It’s the end of an empire and the 

End of the Age. If you think making America’s poor people poorer is just a passing 

phase just wait till they rise up burning neighborhoods and shooting firearms. 

Some time ago, perhaps two or three years ago, one of these writers to whom I often 

refer, interviewed Allen Greenspan, the former Fed Chairman. He finally took 

Greenspan to task with a short one-liner commenting that if Greenspan’s theory was 

wrong the inevitable result would be runaway inflation. Greenspan turned white as a 

ghost. He knew exactly that his theory was questionable and that perhaps he would 

witness within his lifespan the damage for which he was/is directly responsible. SN 

QE3? Several Top Federal 

Reserve Officials Seem To Think 

147


That More Quantitative Easing Is 

Necessary 

The end of QE2 is still several months away and yet quite a 

few top Federal Reserve officials are already hinting that 

more quantitative easing may be necessary. Apparently the 

U.S. economy is not moving forward as rapidly as they would 

like. So it looks like "QE3" could be on the way. But did 

anyone out there actually believe that quantitative easing would come to a 

complete stop in June? Whether they call it "QE3" or something else entirely, the 

reality of the matter is that we have now come to a time when the Federal 

Reserve is going to be continually purchasing a significant percentage of all new 

U.S. government debt. 

This is essentially a gigantic Ponzi scheme, but sadly there is just not enough 

money in the rest of the world to be able to continue to feed the U.S. 

government's voracious appetite for debt. Right now Ben Bernanke and his 

cohorts are trying to break the news to us gently, but anyone with half a brain 

can see what is happening. The only way for the game to keep going is for the 

Federal Reserve to print lots more money, and that is going to be incredibly bad 

for the U.S. economy in the long run. 

The other day James Bullard, President of the Federal Reserve Bank of St. Louis, 

made national headlines when he declared that Fed officials should "never say 

never" when it comes to QE3 and more quantitative easing. But the truth is that 

other Fed officials have been dropping public hints about the "need" for QE3 for 

several weeks now. Just consider the following quotes from top Federal Reserve 

officials.... 

Federal Reserve Chairman Ben Bernanke in response to a question about the 

potential for QE3 at the National Press Club.... 

"In the end, we'll just ask the same questions. Where's the economy going, and 

what do various inflation indicator look like? We'll ask those questions. If 

unemployment is still too low, then we may continue. If we're moving towards 

full employment, then we won't need to stimulate more." 

William Dudley, President of the Federal Reserve Bank of New York during a 

recent speech at New York University.... 

"The economy can be allowed to grow rapidly for quite some time before there is a real 

risk that shrinking slack will result in a rise in underlying inflation." 

James Bullard, President of the Federal Reserve Bank of St Louis during a recent speech 

at the Bowling Green Area Chamber of Commerce.... 

148


"The natural debate now is whether to complete the program, or to taper off to a 

somewhat lower level of asset purchases. Quantitative easing has been an effective tool, 

even while the policy rate is near zero. The economic outlook has improved since the 

program was announced." 

Charles Evans, President of the Federal Reserve Bank of Chicago during a recent 

interview with The Financial Times.... 

"The message that comes out of what I think of as high-quality research on this subject 

is that policy ought to remain accommodative for really quite a while, even a while after 

conditions start to improve." 

So how in the world did things get to the point where the Federal Reserve feels forced 

to recklessly print gigantic piles of money? 

Well, it didn't happen overnight. Back during the 1980s and 1990s there were many people that 

desperately tried to warn about what would happen if U.S. government debt was not brought under 

control. 

Unfortunately, our politicians did not heed those warnings. 

Today, the U.S. national debt has reached a grand total of $14,137,541,098,872.71. It is 

14 times larger than it was just 30 years ago. It is the largest single debt in the history 

of the world. 

So why don't our politicians just balance the budget now so that we don't keep having 

to borrow so much money? 

Well, there are some huge problems. First of all, when you combine entitlement 

programs such as Social Security and Medicare with interest on the national debt, it 

comes to approximately 64 percent of all federal government spending. 

But that is not the bad news. 

In the years ahead, entitlement spending and interest on the national debt are 

both projected to absolutely explode. 

We are rapidly approaching a time when spending on entitlement programs and 

interest on the national debt will be significantly greater than all of the revenue 

that the federal government brings in each year. All federal revenues will be 

spoken for even before a single penny is spent on defense, education, running 

the government or anything else. 

Either entitlement programs are going to have to be seriously reformed or the 

U.S. government is going to have to come up with a massive amount of extra 

money from somewhere or the U.S. government is going to have to borrow 

increasingly large piles of money from someone. 

Unfortunately, there are no easy solutions and most of our politicians are scared to 

death to touch entitlement programs because it will mean that they will lose votes. 

149


But our entitlement programs were never meant to be as massive as they are today. 

Back in 1965, only one out of every 50 Americans was on Medicaid. Today, one out of 

every 6 American is on Medicaid. 

Obviously something has to be done, because the debt that we are passing on to future 

generations is absolutely criminal. 

For example, every single child born in America today inherits $45,000 in U.S. 

government debt. 

Isn't that lovely? 

Of course our liberal friends believe that the answer is just to raise taxes. 

Oh really? 

The truth is that our taxation system is deeply broken. 

Small business owners and middle class Americans are being taxed into oblivion 

while those at the top of the food chain often pay no federal taxes whatsoever. 

For example, did you know that Citigroup did not pay a dime of federal taxes in the third 

quarter? Meanwhile, their executives continue to bring in bonus packages worth millions. 

Did you know that even though Boeing receives billions in federal subsidies every year 

and even though it has a bunch of juicy government contracts it did not pay a single 

penny in federal corporate income taxes from 2008 to 2010? 

Did you know that while Exxon-Mobil did pay $15 billion in taxes in 2009, not a single 

penny went to the U.S. government? Meanwhile, their CEO brought in over 29 million 

dollars in total compensation that year. 

You can find a lot more examples of this phenomenon right here. 

Those at the top of the food chain are experts at avoiding federal taxes. So liberals can 

raise rates all they want but it won't do much good. 

As I have written about previously, the truth is that approximately a third of all the 

wealth in the world is now held in "offshore" banks. The ultra-wealthy and the 

monolithic predator corporations that dominate the global economy don't mess around 

when it comes to paying taxes. They don't care if they aren't paying their "fair share". 

They simply know how to play the game and they laugh at all the rest of us. 

Our entire system is broken beyond repair and needs to be reconstructed 

from the ground up. (SN: many think a flat tax is the answer, like 15% of income or 

15% of sales and nothing else!) 

But of course that simply is not going to happen. 

So what can be done? 

150

Not a whole heck of a lot. 


The truth is that the U.S. economy is on the verge of a major collapse. 

Marc Faber, the author of the Gloom, Boom and Doom report recently gave a speech in 

which he declared that the U.S. financial system is in such disastrous shape that only a 

"reboot" will be able to save it.... 

I think we are all doomed. I think what will happen is that we are in the midst of a kind 

of a crack-up boom that is not sustainable, that eventually the economy will deteriorate, 

that there will be more money-printing, and then you have inflation, and a poor 

economy, an extreme form of stagflation, and, eventually, in that situation, countries go 

to war, and, as a whole, derivatives, the market, and everything will collapse, and like a 

computer when it crashes, you will have to reboot it. 

But can we just "reboot" the system and expect things to go back to normal? 

Of course not. 

The truth is that when the rest of the world completely loses faith in the U.S. dollar and 

in U.S. Treasuries the dominoes are going to start to fall. Eventually we are going to see 

a financial panic that is going to make 2008 look like a Sunday picnic. Our economic 

system will massively implode as all of the gigantic mountains of debt and paper money 

collapse like a house of cards. 

Right now the Federal Reserve is desperately trying to hold the system together by 

"papering over" all of the mistakes. But in the end it is not going to work. In fact, what 

we are witnessing now are the very early stages of hyperinflation. A lot of other nations 

in the past have thought that they could just print their way out of trouble, but many of 

those "experiments" ended in total disaster. 

Marc Faber is certainly right about one thing - all of this money printing is going 

to give us substantial inflation to go along with the high unemployment that we 

already have. This is called "stagflation" and anyone that remembers the 1970s 

knows that it is not a lot of fun. 

But the Federal Reserve seems absolutely determined to print more money. Fed officials 

are doing the same thing now that they did right before QE2. They are dropping hints 

about QE3 and they are trying to break it to us gently. 

Well, it is about time that someone told the American people the truth. All of this money 

printing is going to end in disaster and so you had better get prepared. 

SN: All of this was warned about since the 1960’s and 1970’s. We were spending 

something iike 200 Million dollars a second during the Viet Nam war while 

President Johnson was cavorting with prostitutes. (Most people don’t know about 

that but I have old journalism friends who saw it.) 

151


The 1970’s saw books by the late Harry Browne “How to Profit From A Monetary 

Crisis” and others. The fundamentals of economics were explained clearly then 

for the layman. And still people say they never heard about any of this. I say, 

“We’ve been warned for 50-years” and they answer, “What are you talking 

about?!” 

To GET READY means to find a way to live where you can grow your own food 

and be self sufficient because that’s all you’re going to be able to rely upon. 

……………………………………………………………. 







SN: There are two brilliant reasons to pay attention to Dr. Martin Weiss. (1) Do 

what he says if you’re an investor. (2) Foretell the future even if you’re not an 

investor. 

Jobs crumble! Debt talks failing! 

Martin D. Weiss Ph.D. | Monday, July 11, 2011 at 7:30 am 

Everything we’ve been warning you about is starting to happen 

— fast! 

152 

The U.S. job market is crumbling … the Washington debt talks 

are failing … and the unprecedented convergence of both these 

events is mandating urgent steps by all prudent investors. 

Here’s what I recommend: 

First, make sure your bank, credit union, or insurance company 

is safe. 

Second, if you haven’t done so already, dramatically reduce your risk in the stock market. 

And third, join me on my personal Facebook page for further discussion. 

But first, this all-important question: 

Did the Great Recession Ever End? 

Obama administration economists have repeatedly sworn that the answer is “yes.” Since 

early last year, they’ve told you the recession is “history” — and nearly every day since, 

they’ve had a chant to cheerlead the “recovery.”


For reasons I’ll explain in a moment, I have always found that quite remarkable. But what’s 

even more remarkable is that nearly everyone has believed it. 

Widespread belief in the existence of an economic recovery has been the underlying 

assumption behind virtually every new piece of economic legislation, every new policy 

initiative by the U.S. Treasury, and every decision by the Federal Open Market Committee 

(FOMC). 

It has been the basis for estimates of corporate earnings, government tax revenues, and 

global growth projections. 

It has guided corporate boardrooms, fund managers, and average investors. 

And in the debt debate between the White House and Congress, it has been the 

fundamental underpinning of every single understanding or misunderstanding, agreement or 

disagreement. But now … 

Suppose — just suppose — that, one day, with no prior warning, it suddenly begins to dawn 

on millions of financial decision-makers, big or small, that we never had a true economic 

recovery to begin with. 

Suppose it’s revealed that the U.S. economic growth since 2009 was nothing more than (a) 

bad data, (b) misinterpretation of numbers, plus (c) some knee-jerk reactions to massive 

stimulus. 

In other words … 

Suppose nearly everyone suddenly realizes that the economic recovery was mostly 

a hoax! 

All hell will break loose! 

And that’s essentially what began to happen this past Friday with the release of the official 

unemployment numbers — the nation’s broadest and most widely watched measures of the 

state of the economy. 

Hard to believe? Then consider the facts … 

Fact #1. We have the worst long-term 

unemployment in recorded history. 

On average, once someone loses a job, it takes 

more than 25 weeks to find a new one. 

That’s not just a wee bit worse than during prior 

bad recessions. 

It’s more than 2.5 times worse than during the 

mid-1970s, when the U.S. suffered its worst 

recession since World War II! 

It could even be worse than during the Great 

Depression, but we’ll never know; no similar 

records were taken during that period. 

153


Most important, since the recession officially began in 2008, this all-important measure has 

NEVER — not once — shown any improvement. Quite the contrary, it has continually 

telegraphed the message that the U.S. job market has been in a rapid, nonstop decline all 

along! 

If you find this unbelievable, just check out the chart above. Look how this official stealth 

measure of the recession’s severity has literally gone through the roof! Note how there was 

no intermediate improvements — not even the faintest hint of recovery! 

Fact #2. Just as we’ve been warning all along, this dire truth has now begun to finally seep 

into the more traditional measures as well. As master trader Kevin Kerr highlighted in his 

video update on Friday … 

• U.S. employers added 18,000 workers in June. That was 82% less than 

the 105,000 job gain that economists had forecast. They missed their 

target by a country mile! 

• A separate government survey, believed to be more accurate, showed 

that the economy actually lost 445,000 jobs in June. 

• Despite the rising cost of living, average hourly earnings didn’t go up by 

one iota. In fact, they actually fell by 1 cent to $22.99. 

Fact #3. The broadest, most reliable measure of unemployment in the United 

States has gotten progressively worse throughout most of the so-called recovery. 

This measure comes from John Williams, editor of Shadow Government 

Statistics(www.shadowstats.com), who has been persistent in his warnings that 

data distortions and manipulations have long been hiding the truth about the 

continually deteriorating job market. 

Let me explain … 

As you can see in the chart, Williams tracks three unemployment rates: 

1. The “official unemployment” number that the government and the press headline 

(called “U-3″). This is the most narrow and least accurate, because it includes only 

workers actively looking for full-time work. But even that number rose from 9.1% to 

9.2% last month. 

154


2. The all-inclusive unemployment according to the government (“U-6″). This 

measure does include workers who are not currently looking for jobs or have been 

forced to accept lower-paying, part-time jobs. And even the government admits this 

number is terrible, surging in June from 15.8% to 16.2%, the highest this year. 

3. But what I want you to focus your attention on is Williams’ Shadow Government 

Statistics estimate of the true, all-inclusive unemployment (the “SGS Alternate”). 

Why are the government’s numbers wrong? Because in 1994, the Clinton 

administration decided to stop counting workers who had been looking for a 

job for more than a year. If you include them, says Williams, the true 

unemployment rate in the U.S. is now about 22.7%! 

Here’s the key: While the government’s numbers improved somewhat during the recent 

“recovery,” this broadest measure of all continued to deteriorate — another confirmation that 

the recovery was largely bogus. 

Fact #4. The housing market! 

This is where the Great Recession began. And 

this is where it would have to end. But it has 

done nothing of the kind! 

In fact, except for a momentary pop in response 

to massive government infusions of capital and 

tax incentives, it’s been getting worse almost 

every quarter since the “recovery” supposedly 

began. 

Now, U.S. median home prices have fallen 

BELOW their lowest level of the debt crisis (see 

chart). And now, home foreclosures are at or 

near their worst level of all time. 

Does this look like a recovery to you? 

155 

How much longer do you think Washington and 

Wall Street can maintain the “recovery” charade? 

The Real Reason the Debt 

Ceiling Talks Are Failing 

As I said at the outset, the entire assumption of the debt talks in Washington was that we did 

have a recovery of sorts, albeit a weak one. 

Now, as the realization sinks in that the recovery was bogus to begin with, any chance of a 

grand compromise has been dashed. 

Instead of the $4 trillion in cuts discussed last week, both the White House and Republican 

leadership now admit that, at best, they’ll probably wind up with $2 trillion in cuts. 

What’s worse, it looks like our leaders are getting ready to pull the same trick they’ve pulled 

for decades — promise big savings in later years, but do little more than tinker with the 

deficits of current years. 

Bottom line: We can expect …


Too little, too late in savings — far from enough to save the country from fiscal 

Armageddon, but … 

Too much, too soon in cuts — a big blow to an economy with sinking job and housing 

markets. 

Too pessimistic for you? Sorry, but until and unless America faces the facts and collectively 

makes the needed sacrifices, that’s the dire reality of our era. 

You have only one choice: To ignore the Wall Street hype and prepare for the worst. 

Here’s What to Do … 

First, make sure your savings are with strong institutions, by following these steps: 

1. Go to our new website, www.weisswatchdog.com. 

2. Sign in or sign up. It’s quick and there’s no cost. But you DO have to go through this 

process even if you’re already signed up for Money and Markets. 

3. In the upper right-hand corner of the screen, click on “banks and thrifts.” 

4. Then, also in the upper right-hand corner, type in the name of institution and press 

“search.” 

Important hint: Don’t try to type in the full name of your institution. Just enter the FIRST 

word of the name and our search engine will do the rest. 

5. When you’ve identified your institution, click on the green “plus” sign to the right of your 

institution’s name, where it says “ADD TO WATCHLIST.” 

6. Above the list, click on the tab “WATCHLIST.” That’s where you should see our Weiss 

rating, ranging from the top rating of A+ to the lowest rating, E-. 

• If it’s B+ or better, we feel the risk of failure is comfortably low. 

• If it’s a D+ or lower, we consider it weak and NOT recommended. Seriously 

consider moving the bulk of your cash to a safer institution. 

7. Want to check your credit union? Then just go back to step #3 above and click on “credit 

unions.” 

8. For insurance companies, it’s the same process. The only major difference: The safety of 

the insurer is primarily a concern if you are using it as a savings or investment vehicle — 

such as with whole life policies and fixed annuities. 

If all you’re doing is paying premiums for insurance coverage, or if your money is held in 

separate accounts (as with variable annuities or variable life policies), you still should do 

business with the strongest companies. But there is less direct threat to your wealth. 

Second, while you’re at www.weisswatchdog.com, you can also check — and have us track 

for you — the latest rating on your U.S. stocks, ETFs, and mutual funds. 

(Just remember that these equity ratings are a different animal from Financial Strength 

Ratings. They’re an evaluation of the investments per se — not the institution that issues 

them.) 

156


Overall, it’s a rich resource and handy tool to help you make more prudent decisions about 

nearly all of your savings and investments. So do take full advantage of it. I feel it’s the least I 

can do for our loyal readers — especially in these treacherous times. 

Third, if you have questions or issues you want to discuss further, join me on my personal 

Facebook page, and I’ll do my best to respond. 


Martin 

Dr. Weiss founded Weiss Research in 1971 and has dedicated the past 40 years to helping 

millions of average investors find truly safe havens and investments. He is president of Weiss 

Ratings, the nation’s leading independent rating agency accepting no fees from rated companies. 

And he is the chairman of the Sound Dollar Committee, originally founded by his father in 1959 to 

help President Dwight D. Eisenhower balance the federal budget. His last three books have all 

been New York Times Bestsellers and his most recent title is The Ultimate Money Guide for 

Bubbles, Busts, Recesssion and Depression. 

http://www.moneyandmarkets.com/all-eyes-on-europe-while-china-quietly-weakens- 

45863 

All Eyes on Europe … While China Quietly Weakens 

Bryan Rich | Saturday, July 9, 2011 at 7:30 am 

In recent weeks the crisis in Europe has continued to dominate 

world markets. But behind the scenes China, the world’s highly 

touted global growth savior, has been proving more and more 

fragile. 

157 

China continues to try to rein in inflation, recently raising interest 

rates for the fifth time since last October, but they’ve been 

unable to get a grip on it. Worse, the aggressive monetary and 

credit tightening is damaging its economy. 

China’s all-important manufacturing sector has weakened 

sharply, recording its worst reading since February 2009 during 

the depths of the global financial crisis. Moreover, it’s looking 

increasingly like China is finally set to begin its own bubble burst. 

Especially when you consider this … 

Back in late 2008-early 2009, when the global economy was on the edge of the cliff looking 

down, global governments coordinated unprecedented monetary and fiscal stimulus, 

backstops and emergency aid to avoid disaster. And even though China was still growing at 

6 percent, its government did the same, rolling out the biggest fiscal stimulus package (as a 

percentage of GDP) in the world — about three times the size of the U.S. fiscal stimulus. 

Why did they do it? Jobs. 

Experts say China needs to hit a 9 percent growth rate to keep their people employed. 

Because when unemployment rises, so does social unrest. And that’s the biggest threat to 

Chinese leadership — a revolution in the most populated country in the world. 

Here’s the problem …

Too Much Easy Money! 


China’s economy has grown dramatically in the past decade, and it has the largest 

population in the world. But the economy simply couldn’t absorb all of this easy money! The 

result: Persistent inflation. And the money ultimately spilled over into speculative assets, both 

globally and domestically, driving an unprecedented appreciation in Chinese real estate. 

For now, the Chinese are trying to engineer a perfect landing, where they put a lid on 

inflation, without crushing their economic growth — a difficult feat, for sure. 

If they can’t, China is on the path of one of two outcomes: 

1) An inflationary spiral, or 

2) A significant economic slowdown (i.e. recession). 

In outcome one, the masses likely rise up against the government because they can no 

longer afford the basics of life, especially food. In outcome two, the masses likely rise up 

because of a massive wave of job losses. 

Either of these outcomes creates big problems for the global economy — which has relied on 

Chinese growth to drive global economic recovery. 

Unfortunately, for the Chinese government and the global economy … 

The Cracks in China 

Are Already Showing 

Real estate bubbles tend to pop when there are increases in interest rates, downturns in 

general economic activity, or exhausted demand. I think we can check all three of these. The 

latter is being self-induced by the government’s attempts to curb both general inflation 

through interest rates, and property speculation by raising lending standards. 

A National Bureau of Economic Research (NBER) study shows the price-to-rent ratio in 

Beijing so out of line that a stellar yearly price appreciation is required to financially justify 

buying a property versus renting. If annual home price appreciation slowed to only 4 percent, 

prospective buyers become financially motivated to turn to renting. And NBER estimated that 

the demand-hit would likely trigger price declines in Beijing of over 40 percent. 

And anytime you have a real estate bubble primed to pop, the next place to look for 

problems is the banks. In fact, historical financial crises typically find their origin in the 

property market. 

While the Chinese government flooded the country with money back in 2009, it also kept the 

easy money flowing through cheap loans from state-owned Chinese banks. 

Now, China has asked its banks to stress test for a scenario where property prices plunge 50 

percent! 

A report by Moody’s this week served as a warning on Chinese banks, exposing an extra 

$540 billion of local government debt, thus adding to the scale of problem loans in the 

banking system. 

158


Jim Chanos, a well-known China bear and hedge fund manager, has a chart that reveals this 

overinvestment, not only in Chinese real estate, but Chinese fixed asset investments in 

general. 

Take a look … 

From the chart above, as Chanos explains it, never in modern history is there a record of a 

country that has invested so heavily in fixed assets (greater than 40 percent of GDP) for 

such a sustained period of time. He estimates that the overbuilding in commercial real estate 

has been so extreme that there’s a 5×5 cubicle for every man, woman and child in China. 

Given this bursting bubble scenario, for a world that has been hitched to the idea that China 

can grow at a double-digit rate year in and year out, you now have to ask the ultimate 

question: 

What would the global economy look like if China slowed down to 5 percent? 

Who gets hurt if China slows? Likely, everyone since the global economy has been reliant on 

Chinese growth to fuel recovery. 

Fitch Ratings reckons that a Chinese slowdown to 5 percent growth would result in a 20 

percent plunge in global commodity prices. Indeed a grim outlook for the many emerging 

market and commodity rich economies that have been huge beneficiaries of China massive 

stimulus spending in recent years. 

On top of that, China as a buyer of the euro, troubled sovereign debt and Greek state-owned 

assets has been the stabilizing force in European markets throughout the ongoing European 

sovereign debt crisis. 

If this “China-rug” was pulled out from under the global economy, expect another violent, 

2008-like, flight from riskier assets. 

Bottom line: The world economy remains very interconnected. And the busts associated with 

the great global credit bubble are still unfolding. Expect crises to ripple. Be defensive! 

Regards, 

159

Bryan 


P.S. Currencies offer an excellent way to get defensive, because there is always a bull 

market in at least one currency. To learn how I’m helping my World Currency 

Trader members stay safe and profit during this global unrest, click here. 

Bryan Rich began his currency trading career with a $600 million family office hedge fund in 

London. Later, he was a senior trader for a $750 million leading global hedge fund in South 

Florida. There, he helped manage and trade a multi-billion dollar foreign exchange options 

portfolio. Today, Bryan is the editor of World Currency Trader, a service designed to give you 

everything you need to trade currencies that offer the greatest profit potential with the least 

amount of risk. 

Why this summer, it truly IS different! 

Mike Larson | Friday, July 8, 2011 at 7:30 am 

They’re lining up in the wake of last week’s rally. You know who 

I’m talking about. The “second half recovery” crowd. 

But this summer, it truly is different! 

Two years ago, in the summer of 2009, they said a short-term 

pullback in the market and the economy was just a correction. 

And thanks to the $800 billion-plus in economic stimulus 

spending, plus the Federal Reserve’s asset-inflating “QE1″ 

program, they were right. 

One year ago, in the summer of 2010, they said the Flash 

Crash and market pullback wouldn’t amount to anything. 

Because Helicopter Ben Bernanke launched QE2, they got that 

right too. 

The Fed can’t ride to the rescue with QE3, with multiple policymakers nixing that notion … 

Congress and the Obama administration can’t launch any significant new stimulus programs. 

They’re focused on tax increases and program cuts, not more over-the-top spending … 

Even the bailout brigades in places like Europe are running out of power to spike the markets 

with more monetary booze. Not even ONE WEEK after European policy makers managed to 

cram a Greek austerity package down that country’s throat, bonds in all the PIIGS countries 

have started melting down again! 

Bottom line: Nobody is riding to Wall Street’s rescue this summer. So unlike in 2009 and 

2010, more rallying just isn’t in the cards! 

Lack of Stimulus Spending, 

Rate Cuts, and Bailout Crutches 

Could Send Market Tumbling! 

160


Let’s start with Washington. We’re coming down 

to the wire there in the great debt debate. While 

Treasury Secretary Timothy Geithner has said 

Republican and Democratic lawmakers have 

until August 2 to reach a deal, it takes time to 

draft legislation that authorizes any debt ceiling 

hike. So the real deadline is more like late July. 

A last-minute deal could be reached to avoid a 

short-term default. But that’s not “good” news for 

the markets. I say that because any legislation 

will contain some combination of spending cuts 

and tax increases … an “anti-stimulus” package! 

I expect we’ll get $2 trillion or more in spending 

and tax measures, more than twice as much anti-stimulus as we got in stimulus two years 

ago! 

What about more QE? 

No way! Bernanke himself put the kibosh on that idea a few weeks ago. So did many of his 

deputies. The U.S. Fed obviously can’t cut interest rates anymore, either, with rates already 

pegged in a range of 0 percent to 0.25 percent. 

At the same time, foreign central banks continue to hike rates unremittingly. China surprised 

the markets yet again by raising rates 25 basis points on Wednesday, the third increase this 

year. The benchmark lending rate climbed to 6.56 percent from 6.31 percent. 

Then there’s Europe. Remember that “big” rally in the euro and European bonds spurred by 

the passage of the second Greek bailout? Well it’s already ancient history! 

Moody’s downgraded Portugal’s debt to “junk” status a few days ago, sending Portuguese 

bonds into the toilet. Yields soared to a record-high 956 basis points over comparable 

German government bunds, and 10-year borrowing costs hit 12.5 percent! 

In Italy, the 10-year bond yield jumped to 5.08 percent. That was the highest level since 

November 2008. And the cost of borrowing for only two years in Ireland surged above 15 

percent for the first time ever. 

Bottom line: Just as I predicted, the Greek bailout is failing to stem the tide of selling in 

European bond markets. You simply can’t paper over a SOLVENCY crisis by adding excess 

LIQUIDITY to the market. Nor can you solve a multi-nation sovereign debt crisis by putting 

more debt on the balance sheets of those governments! 

Don’t Be Blinded 

by the Perma-Bulls! 

Congress only has about three weeks to 

approve an increase in the federal debt 

limit. 

Look, it’s easy to fall victim to the siren song of Wall Street pundits. They pointed to last 

Friday’s ever-so-slightly-better-than-expected Institute for Supply Management report as 

evidence the economy is rebounding, and they promptly drove the Dow Industrials up by 

more than 160 points. 

161


Construction spending has fallen 

for six straight months. 

But did they note that the lion’s share of the 

strength came from inventory building? That’s 

not what you want to see. It suggests 

manufacturers are stuffing the wholesale and 

retail channels with inventory in anticipation of a 

rise in final sales. 

Construction spending has fallen for the past six 

months! 

162 

But the latest consumer confidence and 

spending figures suggest no such rise is coming. 

That means they’re going to be forced to rev 

down their factories again in the future, a bearish 

development for the economy. 

I bet they also didn’t highlight the fact that a sub-index which measures orders booked 

actually slipped below the 50 mark to 49. Nor did they note that the new orders index barely 

budged, ticking up just 0.6 to 51.6. Or that the export index slipped to 53.5 from 55. 

Meanwhile, the University of Michigan’s confidence index fell to 71.5 in June from 74.3 in 

May. That was worse than forecast. We also recently learned that construction spending 

tanked 0.6 percent in May. That was the sixth straight monthly decline, and far worse than 

the 0.1 percent increase economists were expecting. And the ISM services sector index sank 

to 53.3 in June from 54.6 in May. That’s the second-lowest reading this year. 

What about jobs? 

Outplacement firm Challenger, Gray & Christmas said job cut announcements rose more 

than 12 percent between May and June to 41,432. And while ADP Employer Services said 

job growth rebounded somewhat in June, unemployment remains stubbornly stuck around 9 

percent. 

Look, I’d love to tell you the economy was in good shape … that the sovereign debt crisis 

was “solved” … or that we’re in for a rip-roaring rally, just like what we saw in 2009 and 2010. 

But rather than a summer of market love, I believe we’re in for a summer of discontent. And 

that’s why I continue to urge you to take profits off the table, and hedge against a market 

decline with inverse ETFs. 

Until next time, 

Mike 

P.S. In my Safe Money’s Crisis Trader I use five major kinds of ETFs to help you grab 

substantial profit potential as America’s financial crisis unfolds. To learn more, read my latest 

report, 3 Investments with the Power to Protect Your Family and Your Wealth. 

Mike Larson graduated from Boston University with a B.S. degree in Journalism and a B.A. 

degree in English in 1998, and went to work for Bankrate.com. There, he learned the mortgage 

and interest rates markets inside and out. Mike then joined Weiss Research in 2001. He is the 

editor of Safe Money,Safe Money's Crisis Trader, and LEAPS Options Alert. He is often 

quoted by the New York Sun,Washington Post, Reuters, Dow Jones Newswires, Orlando 

Sentinel, Palm Beach Post and Sun-Sentinel, and he has appeared on CNN, Bloomberg 

Television and CNBC.


Why the Great Greek Tragedy Has Barely Begun 


This is a memorable day for the United States of America, both to warmly celebrate our past 

and coldly contemplate our future. 

But if you want the truth about what’s likely to happen next — in the wake of the Greek 

tragedy or any other debt disaster — you can’t trust the happy talk of our leaders who are 

merely seeking to tame the debt monster they themselves created. 

Nor can you believe Wall Street Pollyannas looking for any excuse to push the U.S. stock 

market higher. 

The only reliable measure of this debt crisis is the price thousands of institutional investors 

pay — and are willing to continue paying — for actual insurance contracts to protect 

themselves against future defaults. The more probable the default, the more they’ll pay. 

163


And for the country that’s at the epicenter of this crisis — Greece —here’s what this measure 

is telling you, loudly and unambiguously: 

Despite the biggest sovereign bailout in history and despite all the happy talk last 

week about a new infusion of emergency cash, the probability of a Greek debt default 

is now the highest ever! 

Have the bailouts made any difference? None whatsoever! 

In fact, based on how much they’re currently willing to pay for the insurance, institutional 

investors around the world have concluded that the probability of a Greek debt default is 

FOUR times greater today than it was when European officials announced their giant bailout 

package. 

That’s right. Nearly 14 months ago — on May 12, 2010 to be exact — when the European 

Union (EU) and International Monetary Fund (IMF) announced a 110 billion euro bailout for 

Greece, the cost of insuring $10 million in bonds against a Greek default was close to 

$540,000. Last week, it was $2.3 million, or 4.3 times more! 

Think that’s shocking? Then consider this: 

Even when Lehman Brothers failed and even when the likelihood of a global collapse was at 

an all-time peak, the most investors were willing to pay for $10 million in Greek debt default 

coverage was only $52,000. Today, they’re paying 45 times more! 

In other words, the world’s largest investors now believe that the probability of a Greek 

default is FORTY-FIVE times greater today than it was at the height of the 2008 financial 

crisis. 

Why are so many knowledgeable global investors who establish the price of these insurance 

policies so pessimistic, even while world leaders and markets are celebrating the “salvation” 

of the Greek economy? 

Because they know that the Draconian austerity package just passed last week by the Greek 

parliament — higher taxes on entrepreneurs and the poor, spending cuts for seniors and 

others, and the fire sale of government assets — won’t do a darn thing to help Greece avoid 

a default on its debts. 

They fully understand that these measures will actually hurt the country’s chances for 

survival in the near term. 

They know that each time you raise taxes and cut spending, the economy takes a hit, 

government revenues go down, and the country finds it even closer to impossible to pay its 

bills and debts coming due. 

Let’s say, for example, that you own a manufacturing company that has fallen on hard times. 

You can’t make your monthly payments. So you start downsizing — laying off workers and 

selling off equipment to raise the cash. Trouble is, your debts outstanding don’t shrink by one 

iota. So unless you can find some new way to generate more revenues, the more you 

downsize, the more likely a default will be. 

You are, in fact, signing your own death warrant. 

That’s exactly what Greece is doing now. Worse, it’s piling on still more debt that merely 

buys a few weeks more time: The much-ballyhooed loans Greece just qualified for will only 

164


help it survive for two to three months — through the summer, but not a single second 

longer. 

All This Leaves You with Two — 

And Only Two — Choices … 

You can believe the same politicians who have consistently and deliberately deceived 

you about this debt crisis from day one (see also “Government Lying about Debt Crisis“). 

Or you can believe the global investors who have no agenda but to protect their own 

investments from the true risks. 

It also leaves you only two courses of action: 

Believe the politicians, forget about the crisis and go back to the old days of buy-and-hold 

investing. 

Or, believe the reality of the marketplace and continue to err on the side of caution. 

The choice should be obvious: Despite what they may be saying in Athens, Berlin, 

Washington or on Wall Street … no matter what the media may try to sell you … the 

handwriting is on the wall: Greece is in the final stages of an historic collapse. Nothing 

can stop it now. 

Not concerned? Think it’s a far-away event that won’t affect you? Then consider this … 

The Unfolding Great Greek Tragedy Impacts 

YOUR Finances in Three Major Ways … 

If this were just an isolated financial crisis on the other side of the world, it probably wouldn’t 

amount to much as far as most Americans are concerned. 

But in today’s shrinking, hyper-connected world, the consequences of a Greek default could 

not be more important to you, me and every other U.S. investor. 

In fact, I count no fewer than three major impacts this crisis will have on your wealth and 

well-being: 

IMPACT #1: It will crush U.S. banks. It’s no secret the real estate crisis is back — falling 

home prices, a tsunami of home foreclosures and more. And despite short-term rallies, it’s 

virtually impossible to envision a scenario in which bank earnings are not adversely 

impacted. 

This is why bank stocks took such a big hit in May and June. Wells Fargo, for example, was 

flying high near $34 per share. Then, without warning, it suddenly plunged 24% — to $26. 

Bank of America hit $15 per share and then plunged more than 30% — all the way down to 

$11 per share. And nearly every major bank — JPMorgan Chase, Regions Financial, and 

others — show the same pattern. 

But here’s something that not everybody knows: Those same U.S. banks have loaned 

huge amounts of money to European banks. 

And because those European banks have, in turn, loaned billions to Greece, they will 

be among the first casualties of a Greek default. 

165


IMPACT #2: U.S. money market funds: Did you know that U.S. money funds have invested 

half of their $1.6 trillion in assets in European banks? 

It’s true: And 50 million Americans have money in those funds! 

That’s not good news. When Greece defaults on its loans, many European banks will find it 

impossible to repay what they borrowed from U.S. money market funds. 

That could force many to “break the buck” — allow their shares to fall in value below $1 

each. Even the worry that it could happen can cause the financial markets to freeze and 

send investors stampeding to withdrawal money. 

Impossible? Absolutely not! That’s exactly what happened after the collapse of Lehman 

Brothers in 2008. One fund that owned Lehman debt, the Reserve Primary Fund suffered 

mass withdrawals, which, in turn, caused a run on many other funds. 

Last week, even the eternally oblivious Fed chief Ben Bernanke fretted publicly about the 

stability of U.S. money funds: 

“They do have substantial exposure to European banks in the so-called core countries: 

Germany, France, etc.,” he said. “So to the extent that there is indirect impact on the core 

European banks, that does pose some concern to money market mutual funds.” 

Many investors aren’t waiting. In the last two weeks, they have withdrawn $45.6 billion from 

prime money market funds, according to data from the Investment Company Institute. 

But the risk goes beyond just money market funds. After the Lehman panic in 2008, virtually 

the entire global market for short-term debts — especially corporate IOUs called commercial 

paper — froze up. 

Without the Federal Reserve stepping in to make massive, blanket guarantees, thousands of 

companies could not have borrowed — even to roll over debts coming due — no matter how 

good their credit rating. We would have seen a chaotic chain reaction of defaults. 

This is the kind of SYSTEMIC risk that caused Washington to throw $700 billion in TARP 

funds at the problem last time around. But this time, with Congress vowing never to do such 

a thing again, there is no safety net. 

The consequences could be catastrophic. 

IMPACT #3: Washington is suffering from the same debt disease as Athens. Yes, in 

Greece, the illness is more advanced. But including government agencies like Fannie Mae 

and Freddie Mac, the U.S. government, like Greece, has passed the critical danger 

threshold of more money tied up in debts than the entire economy produces in 

each year! (A debt/GDP ratio of over 100%.) 

Indeed, nearly everything you’re seeing in Greece right now: 

The huge cutbacks in government spending on seniors … 

The substantial tax increases — not just on “the rich,” but on every portion of the population 

… 

The soaring interest rates and unemployment … 

166

Even the protests and riots … 


Are little more — and little LESS — than a sneak preview of what could be in store for us 

right here in the States, barring a major miracle in Washington. 

So How Do You Keep Your 

Money Safe at a Time Like This? 

First, the obvious: Do not believe the authorities. Distrust what you hear from Washington or 

Wall Street. Follow the facts and nothing but the facts. 

Second, do not count on government guarantees to always protect you from losses. 

Ultimately, as governments seek to protect their own finances, they will pull back from their 

role as lender, investor and guarantor of last resort. 

Ultimately, if a major bank like JPMorgan Chase or Bank of America cannot meet its 

obligations, it could be on its own, and investors or even depositors may have to pay a steep 

price. 

Third, make sure your bank or insurance company has the financial wherewithal to fulfill its 

promises independently — without government handouts or guarantees. That’s what our 

Weiss Financial Strength ratings do for you. For a free Weiss Rating on your institution, 

* Go to www.weisswatchdog.com. 

* Sign up. Or if you’re already registered, simply sign in. 

* Search for your institution. (Use strictly the FIRST word of its name.) 

* Add it to your watchlist and then check your watchlist for our rating. 

Fourth, continue to monitor the rating as this crisis unfolds. Hard to do? Not at all! Once 

you’ve added your institution to your Weiss Watchdog watchlist, we will automatically notify 

you whenever the Weiss Rating has changed, giving you the new rating along with specific 

instructions on what to do next. 

Fifth, reduce the risk in your investment portfolio. While you’re at www.weisswatchdog.com, 

check the investment ratings of your stocks. Especially if they are D+ or lower, they are likely 

to be among the most vulnerable. 

Above all, stay safe! 


Martin 






been New York TimesBestsellers and his most recent title is The Ultimate Money Guide for 


167


SN: see this: http://www.moneyandmarkets.com/files/documents/A- 

List_banks.htm 

this is a list of the strongest banks according to the Weiss Rating system. 

Also see this listing: 

http://www.moneyandmarkets.com/COE/reports/8680/Strongestand-Weakest-Banks-and-Thrifts.pdf 







12 Ominous Signs For World 

Financial Markets this was year 2010 but there’s good reason to take 

the same warnings and beware of October 2011. 

Can anyone explain the very strange behavior that we are seeing in world financial 

markets right now? Corporate insiders are bailing out of the U.S. stock market at a very 

alarming rate. Investors are moving mountains of money into gold and other 

commodities. In fact, there is such a rush towards gold that shortages are starting to be 

reported in some areas. Meanwhile, some very, very unusual option activity has started 

to show up. In particular, someone is making some incredibly large bets that the S&P 

500 is going to absolutely tank during the month of October. 

SN: Take note of October. It is a high ceremonial time for Satanists who are connected 

to and control many governments and banking systems. It is the month when market 

crashes always happen because they are actually contrived and designed to happen! 

“Somebody” is making option bets because that someone is probably behind the crashes 

and plans to become even more wealthy and powerful when the crash happens! If 

you’re going to be prepared for a terrible winter of 2011/2012 I’d say be ready before 

October 15 and expect horrific news October 30. Option trading is not for we with little 

money. It’s a dangerous game and in minutes you can lose everything you put into it. 

Shares of any stock to which you plan to take an option “position” must sell for at least 

$10 so you can’t take options on penny stock. It would be better to have food, canning 

lids, canning jars, extra tools, bullets, and other things you can trade, especially if you 

live in the country side and have a farm or do any hunting. Even if you don’t hunt, buy a 

box or two of most popular ammo and keep it. Someday you’ll meet a man with a gun 

or rifle who will trade a camel an old oil well, and his sister for a box of ammunition. 

168


Central banks around the world have caught a case of "loose money fever" and are 

apparently hoping that a new flood of paper money will shock the global economy back 

to life. Meanwhile, the furor over the foreclosure procedure abuses of the major U.S 

mortgage companies threatens to bring even more turmoil to the U.S. housing industry. 

There are some very ominous signs that something is just not right in world financial 

markets right now. Some of the signs listed below may be related. Others may not be. 

That is for you to decide. 

Often, just before something really bad happens, you can actually see the rats leaving a 

sinking ship if you know where to look. The truth is that if things are going to go 

south it is the insiders who know before anyone else. 

So are some of the signs below actually clues for what we should expect in the months 

ahead? 

Maybe. 

Maybe not. 

You make your own call. 

But it is becoming hard to deny that there are some serious danger signs out there at 

this point.... 

#1 Corporate insiders are getting out of the U.S. stock market at an absolutely blinding 

pace. It is being reported that the ratio of corporate insider selling to corporate insider 

buying last week was 1,411 to 1, and this week the ratio has soared even higher and is 

at 2,341 to 1. 

#2 Many of the world's wealthiest people are buying absolutely massive quantities of 

gold right now. 

#3 It is being reported that J.P. Morgan is gobbling up the rights to as much physical 

gold as it possibly can. 

#4 The United States Mint has announced that it has run out of 1-ounce, 24-karat 

American Buffalo gold bullion coins and that it will not be selling any more of them in 

2010. 

#5 It is becoming increasingly difficult to explain the unusually high option volume that 

we are witnessing right now. 

#6 Some very large investors are making massive bets that the S&P 500 is going to 

take a serious tumble during the month of October. 

#7 On Tuesday, the Bank of Japan shocked world financial markets by cutting interest 

rates even closer to zero and by setting up a 5 trillion yen quantitative easing fund. 

#8 The president of the Federal Reserve Bank of New York and the president of the 

Federal Reserve Bank of Chicago are both publicly urging the Fed to do much more to 

169


stimulate the U.S. economy, including beginning a new round of quantitative easing, 

even if it means a significant rise in the U.S. inflation rate. 

#9 Nobel Prize-winning economist Joseph Stiglitz told reporters on Tuesday that the 

loose monetary policies of the Federal Reserve and the European Central Bank are 

throwing the world into "chaos". 

#10 At the end of September, federal regulators announced a $30 billion bailout of the 

U.S. wholesale credit union system. 

#11 Bank of America, JPMorgan Chase and GMAC Mortgage have all suspended 

foreclosures in many U.S. states due to serious concerns about foreclosure procedures. 

Now, Texas Attorney General Greg Abbott is actually demanding that all mortgage 

servicing companies in the state of Texas immediately suspend all foreclosures, the 

selling of foreclosed properties and the eviction of people living in foreclosed properties 

until they have completed a review of their foreclosure procedures. 

#12 Not only that, but Nancy Pelosi and 30 other members of Congress are requesting 

a federal investigation of the foreclosure practices of U.S. mortgage lenders. Needless to 

say, this controversy has the potential to turn the entire U.S. mortgage industry into an 

absolute quagmire. 

So are dark days ahead for world financial markets? 

Well, yeah, but it is incredibly hard to predict exactly when things are going to fall apart. 

The truth is that there are going to be a whole lot more "crashes" and "collapses" in the 

years ahead. 

The important thing, as discussed yesterday, is to keep your eye on the long-term 

trends. 

The U.S. economy is undeniably in decline. The only thing keeping the economy going 

at this point is a rapidly growing sea of red ink. Debt is literally everywhere. It is what 

our entire financial system is based on in 2010. 

In the months and years to come, the major players are going to try very hard to keep 

all the balls in the air and to continue the massive shell game that is going on, but in the 

end the whole thing is going to collapse like a house of cards. 

Unfortunately, we have been destroying the U.S. economy for decades and there is 

simply not going to be a happy ending to this story. 

Jun 10, 2011 

• China says the U.S. is already 

defaulting on debt 

170

By David Jackson, USA TODAY 


CAPTION 

By Charles Dharapak, AP 

Forget the debt ceiling debate -- the U.S. is already in 

default, a Chinese ratings agency claims. 

"In our opinion, the United States has already 

171 

been defaulting," said Guan Jianzhong, president 

of Dagong Global Credit Rating Co. Ltd., reports 

AFP, describing that organization as "the only 

Chinese agency that gives sovereign ratings." 

U.S. Treasury officials have already said that the government exceeded its $14.3 

trillion debt ceiling in April, but that accounting procedures would finance 

obligations through Aug. 2. 

The Chinese claim to the contrary comes just two days after another Chinese 

official warned that congressional Republicans are "playing with fire" in opposing 

efforts to increase the debt ceiling. 

The debt ceiling is a primary topic of ongoing budget talks between President 

Obama's administration and members of Congress from both parties. 

Republicans, including those who control the U.S. House, say they won't vote to 

increase the debt ceiling until the administration commits to major spending 

cuts. 

"We believe that many of the problems surrounding the lack of job creation and 

growth in this country have to do with the fact that there isn't a credible plan to 

manage down the debt and deficit in this country," said House Majority Leader 

Eric Cantor, R-Va. "That's what we're trying to produce here." 

Obama officials say they too want to reduce the debt, but raising the debt ceiling 

as soon as possible is an imperative. 

"This is not a matter of spending," Obama said. "This is a matter of the United 

States meeting its obligations, not defaulting on its obligations." 

Sociological Effects

Pumping Brine 


172 

Having trouble viewing this issue? Click here. 

Refer a Friend to Energy and Capital. 

By Christian A. DeHaemer | Thursday, August 4th, 2011 

The last time I was in Thailand, several of the bars had signs with a cartoon of 

a traditional-looking Arab dressed in a Keffiyeh with a red line through it. 

The meaning was clear: No Arabs allowed. 

There is a dark and unseemly side to Saudi Arabia. 

It is a kingdom run by thirteenth century laws; women and foreign workers 

are treated like cattle, and suspected criminals are dealt with by a scimitar in 

the public square. 

The vast majority of 9/11 terrorists were from Saudi Arabia. Political descent 

is not tolerated, democracy is unheard of, and some 7,000 lazy, indulged 

princes wander about like a herd of hypocritical Charlie Sheens on spring 

break... 

All of this is bought and paid for by U.S. dollars chasing oil.


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But there is still one small, 300-million-dollar explorer that owns the best 

blocks. They haven't sold out yet... 

And drilling results are due August 11. 

Pride Before the Fall 

Hubris is an innate human quality. We are always trying to do things bigger 

and better. 

We often reach too far. 

Whether it be bridges in Holland during World War II, McMansions in 

Clearwater, or skyscrapers in New York City, the nature of the business cycle 

is to ramp up leverage and lay on the bets the farther you travel from the 

mean. 

In the case of constructing the world's tallest building, you must have 

confidence not only in the architect and the builder, but in the moneymen, the 

real estate people, and the political class. 

The simple, community-wide arrogance it takes to invest billions of dollars in 

a white elephant that adds millions of square feet of empty rental space is 

extraordinary... 

And it never pays. 

It is little wonder that, much like a flag on the moon, skyscrapers represent 

the high-tide mark of presumption. 

The Big Idea 

Twelve years ago, Andrew Lawrence — then a Hong Kong-based property 

analyst for a British investment bank — created the Skyscraper Index. This 

index correlated construction of the world’s tallest skyscrapers with economic 

crises going back to 1873. And it has proved incredibly accurate. 

Lawrence described his index as an “unhealthy 100-year correlation.” It works 

173

like a charm. 


The first example was the Equitable Life Building in New York, which was 

completed in 1873 at a then-skyscraping 43.3 meters. Completion was 

followed immediately by a recession in the United States and Europe that 

lasted for five years, historically known as the Long Depression. 

The Auditorium Building in Chicago and the New York World Building, 

completed in 1889 and 1890 respectively, coincided with the British banking 

crisis of 1890 and a world recession. 

Then there was Singer Building (1908), which presaged the Panic of 1907 and 

the Metropolitan Life Building, completed in 1909. 

The skyscraper index accurately predicted the Great Depression with the 

completion of 40 Wall Tower in 1929, the Chrysler Building in 1930, and the 

Empire State Building in 1931... 

The World Trade Center towers in New York were finished in 1972, and the 

Sears Tower in Chicago in 1974 “marked a period of U.S. currency 

speculation, the collapse of the Bretton Woods system, and the OPEC price 

rises that caused an economic crisis across the world.” 

The Global Phallic Symbol 

The Petronas Towers in Kuala Lumpur, Malaysia, was the first tallest-building 

constructed outside of the United States in 130 years. 

It marked the top of the “Asian Tiger” period and coincided with the Asian 

currency crisis of 1997. The Petronas Towers currently has an occupancy rate 

of just 55%. 

And of course, the Burj Khalifa in Dubai is now the tallest, standing 828 

meters tall and 162 stories, and coinciding with the biggest global real estate 

bust of all time. It is estimated that 825 of the tower's 900 luxury apartments 

are empty; Dubai property prices fell 60% since it opened in January 2010. 

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Mr. Lawrence updated his index in a report seven months ago: "Thankfully for 

the world’s economy, there is currently not a skyscraper under construction 

that is planned to overtake the height of the Burj Khalifa." 

He went on to describe the over-building of China and pointing to a possible 

collapse there. 

But yesterday, dear reader, it was announced that a new world's tallest 

skyscraper would be built in Saudi Arabia by the Bin Laden Group. According 

to Fox News: 

The Kingdom Tower will measure at least 3,280 feet high and will be located 

in Saudi Arabia, where it will outdo its Gulf neighbor Dubai, which inaugurated 

its own record-breaking skyscraper — the 2,717-foot Burj Khalifa — less than 

two years ago. The tower's final height remains a closely guarded secret, 

though it will be at least 568 feet taller than the $1.5 billion Burj Khalifa. 

Once complete, the Kingdom Tower will take the title of the world's tallest 

building. 

The building is expected to be completed in 2016–2017 — about the time the 

famed Ghawar oil field bubbles up with salt water. 

You see, the Saudis have developed Ghawar by using peripheral water 

injection; water is pumped into the reservoir, driving the remaining oil to the 

surface. 

In 1980 (when they last let Western scientists look at it), the depth of oil in 

Ghawar was at 500 feet and depleting at 18.4 feet per year... 

One day in the not-too-distant future, they will pump brine instead of black 

gold. 

Sincerely, 

Christian DeHaemer 

Editor, Energy and Capital 

The Safest Oil Profits in Today's Market 

How Fragile is U.S. Oil Production? 

175

By Keith Kohl 

Tuesday, August 2nd, 2011 

Text: 


The days of cheap oil are behind us. 

This isn't a new concept. In fact the last time I used the low-hanging fruit metaphor, it was to 

explain Peak Oil to my twelve-year-old niece. 

The idea, as you might expect, is that as you pick fruit from the tree, eventually the easy-toreach 

pieces will all be gone. The only fruit left on the tree will be too high and hard to reach, 

thus not worth the effort... 

How well are things going for U.S. oil production? 

At first, my line of thinking is right alongside yours. Sure, we'll never reach the same 

production rates that we did in 1970, but just how bad are things since our production 

peaked? 

After all, production increased slightly in 2009 and 2010, didn't it? 

The truth is things may be worse than we imagined... 

Nearly 80% of all the oil wells in the United States are producing less than 10 barrels per 

day. 

You read that correctly — less than ten barrels per day. 

So much for the images of huge gushers from back in the days of Spindletop... 

Known as "stripper wells," these wells are at the end of their lifespan; in order to be 

categorized as such, a well is typically producing less than ten barrels per day for a year. Not 

a very comforting thought. 

And a quick glance at the EIA numbers will paint for us a very different picture of domestic 

production: 

click image to enlarge 

Still think there's a lot of cheap, easy-to-access barrels underneath U.S. soil? 

As you can see, nearly 19% of our country's crude production in 2009 came from wells 

producing less than 15 barrels per day. In total, that amount comes out to about 900,000 

bbls/d — just shy of the amount we import from Saudi Arabia every single day! 

And this doesn't just apply to the smaller states. In Texas — our largest oil-producing state 

by far — almost 90% of wells produced less than fifteen barrels per day, making up more 

than 43% of the state's production. 

Low-hanging fruit, indeed. 

So where does that leave us? That all depends on how you look at the situation. 

176


Peak Oil offers an unprecedented opportunity for investors. Only through new advancements 

in drilling have we been able to hold off the decline recently. But not all oil investments were 

created equal... 

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and most profitable investments in the global energy markets. All you 

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Investing in 2011 by our resident energy expert, Keith Kohl. 

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When Big Oil Fails to Deliver 

Forget about Big Oil. 

Though companies like Exxon and Chevron are thrilled to post strong quarterly numbers 

(Exxon boosted its income by 41% and Chevron reported profits jumped by 43%), there's 

only one word to describe their performance to investors: lackluster. 

This isn't the first time we've put the supermajors up on the chopping blocks, and it certainly 

won't be the last. 

I'm not suggesting giant oil companies are completely worthless to investors (not yet, at 

least); I'm simply saying there are better opportunities available to us... 

(I'll let you make your own decision about which investment you would've rather made.) 

The veritable drilling boom happening in North Dakota has been covered by us since the 

beginning, long before the USGS was even sniffing around the Bakken. And there's another 

option open to oil and gas investors — one that not only carries little risk, but still has a 

tremendous upside. 

The Safest Oil Profits in Today's Market 

I say let the drillers fight over the last few barrels, because you don't have to rely on higherrisk 

drillers for a solid payday in today's market. 

There are much safer plays posting gains for investors. 

I recently told readers about Carbo Ceramics (CRR). This stock is the gift that keeps on 

giving. As you can see, I'm not exaggerating: 

177


The company manufactures ceramic proppants used during the hydraulic fracturing process, 

giving producers an advantage over using sand to keep the fractures open, improving 

productivity. And here's the best part: Carbo doesn't need to own a single acre of land to 

ensure its growth over the next couple of years... 

For that, we need only look at our country's drilling activity. 

It took a severe drop in crude prices (a 77% decline within six months during the latter half of 

2008) to drag down the record number of oil and gas rigs drilling within the United States. 

Today, we're back over 1,900 operating rigs, and we'll be seeing record drilling activity within 

the next two years. Furthermore, with more than 60% of those rigs are drilling horizontally, 

the backlog of fracturing jobs will continue to build. 

That alone will drive Carbo's growth going forward. 

Of course, the last time I brought up Carbo, several concerns arose regarding the fate of 

hydraulic fracturing. What people don't realize, however, is that investors will make a small 

fortune whether the practice is banned or not... 

It's a win-win situation. And I'll tell you all about it later this week. 

Until next time, 

Keith Kohl 


Peak Oil is Past Tense 

Exxon, Shell, and Aramco Admit the Peak is Real 

178 

Special Report


According to Exxon's (NYSE: XOM) official spokesman: 

All the easy oil and gas in the world has pretty much been found. Now comes the harder work in 

finding and producing oil from more challenging environments and work areas. 

That's the Exxon — the $383 billion market cap, world's most profitable company Exxon. 

I wonder what Shell (NYSE: RDS-A) thinks... 

It is pretty clear that there is not much chance of finding any significant quantity of new cheap oil. 

Any new or unconventional oil is going to be expensive. 

That was Ron Oxburgh, former Chairman of Shell, back in 2008. 

And in the past few weeks, former Shell CEO John Hofmeister has called for $5 gas and $150 oil 

in the near future. 

He thinks “the supply and demand fundamentals continue to point to upside price pressure... as 

long as the U.S. fails to contribute more production to global supply.” 

Don't hold your breath. The U.S. has failed to contribute more oil production to global supply 

since 1970, when production peaked around 9.5 million barrels. 

So I guess we're in for more upside price pressure. 

I know, I know, there's plenty of oil 

179


Whenever Peak Oil is mentioned, some message board troll always chimes in and says 

something like, “There's plenty of oil.” 

They'll cite shale, or tar, or offshore, or the Bakken. And yes, there's lots of oil in those places and 

types of formations. 

But Peak Oil isn't about depletion; it's about production. 

I'm sure Sadad Al-Husseini, former VP of Aramco (that's the Saudi national oil company) can 

explain it better than I: 

World reserves are confused and in fact inflated. Many of the so-called reserves are in fact 

resources. They're not delineated, they're not accessible, they’re not available for production. 

You see, a trillion barrels of “reserves” — or two or three or ten — doesn't do us a bit of good if 

we can't get to it fast enough. 

And according to the guy who was once in charge of oil operations for the country with the most 

reserves, reserves are inflated — and not accessible or available for production. 

Just consider the U.S., where 3.65 billion barrels are “technically recoverable” from the Bakken 

formation... 

That doesn't change the fact that production peaked in 1970, and will never again get to the 9.5 

million barrel per day level it once was. 

It's all about barrels in hand, not barrels in the bush. 

Good to the last drop 

And as production gets harder and harder (deeper and deeper, more energy intensive, more 

costly, under thicker rock, slower, etc.) what's left will be worth more and more. 

It's happening, folks, faster than anyone would like to admit. 

In 2007, the International Energy Agency said the world's existing oilfields would decline at a 

3.7% clip. By 2008, the same agency doubled the forecast decline rate to 6.7% 

Then in 2010 — for the first time — the IEA actually acknowledged peak oil. In its most 

recent World Energy Outlook, the IEA concludes: 

Crude oil output reaches an undulating plateau of around 68-69 mb/d by 2020, but never regains 

its all-time peak of 70 md/d reached in 2006. 

The IEA's Chief Economist Fatih Birol declared: 

The era of cheap oil is over. Each barrel of oil that will come to market in the future will be much 

more difficult to produce and therefore more expensive. We all... should be prepared for oil prices 

being much higher than several years ago. 

Those more difficult and more expensive barrels will be coming from unconventional sources, 

which the IEA thinks will play an “increasingly important” role in future world oil supply through 

2035. 

That means a quarter century of easy profits from companies with the technology to get those 

difficult barrels. 

180


Peak Oil is here, or rather, was here in 2006. And it really doesn't matter whose analysis you 

prefer: 

$97 oil is here. $150 oil is coming. 

$3.75 gas is here. $5.00 gas is coming. 

And if you don't want to be reeling in pain from increased costs at the pump and the store, you've 

got to invest in companies that will profit from exploiting unconventional sources of oil. 

Call it like you see it, 

Nick 


You can download the PDF version here: Peak Oil is Past Tense 

181


Oil Outlook: Investing in 2011 

182 

Special Report 

The return of $100 oil 

We know oil consumption is rising again. 

Thanks to stronger-than-expected economic growth in Europe and Asia, OPEC has upped 

its oil consumption forecast for 2011. OPEC believes global consumption will reach nearly 87 

million barrels per day next year. 

Even the IEA raised its global oil demand forecast again — this time by 0.2 million barrels 

per day, which puts their projected 2011 demand to 88.5 million barrels per day. That's 

compared with the 87.3 million barrels per day projected for 2010. 

Although those levels are nothing to boast about, remember that production is still around 86 

million barrels per day. Going forward, we can count on that gap widening. 

So in 2011, it's likely that we'll see the return of $100/bbl oil. 

But that certainly doesn't mean oil prices will average $100 per barrel for the year. Making 

that mistake could be costly. 

I expect to see prices staying between $75-$90/bbl, a little higher than the $60-$85/bbl range 

we saw in 2010. 

Four investment lookouts for 2011 

1. China's energy scramble reaches new heights 

I've talked about China's energy grab in the past. 

And in fact, calling it China's "energy scramble" is an understatement. 

According to the latest World Energy Outlook 2010, published earlier this month by the IEA, 

the world's energy demand grows 36% by 2035, "led by China, where demand surges by 

75% — accounting for almost all of the increase." 

Now, that shouldn't come as a surprise to us. The way China has been buying energy assets 

across the globe, you'd think the country is in the grips of a cataclysmic energy crisis. 

The country's largest company, PetroChina, reported approximately half of its overall 

production will come from overseas production within the next five years. And in order to 

achieve that goal, PetroChina expects to spend at least $60 billion on takeovers... 

And believe me, dear reader, nothing will be off limits. 

2. Montana's day in the Bakken spotlight 

We've been fortunate enough to watch the North Dakota oil boom unfold over the last few 

years. 

Even before that fateful USGS report was released in 2008, we saw opportunities that were 

too good to pass up — companies like Brigham Exploration (which now sets the bar in the 

Bakken) have been tremendously successful for readers. 

Throughout that time, Montana played the role of the quiet, envious neighbor. 

But that could easily change — especially now that Bakken drillers are looking to expand 

their horizons... 

The state has issued more than 300 oil and gas permits in 2010. And while it's a far cry from 

the 1,300 permits issued five years ago, it's a much different game today. 

North Dakota's success took a few years to cultivate, and the rewards are rolling in.


North Dakota is now the fourth-largest oil producing state in the United States. And with 

every Bakken well drilled, companies are becoming more efficient. 

When the drilling frenzy begins to grip Montana's portion of the Bakken, we'll see more than 

a few familiar names having success. 

3. Canada's oil sands heat up 

When oil prices bottomed at $33 per barrel at the end of 2008, it wasn't easy for producers 

operating in the Canadian oil sands. 

This year, however, turned out much better for them. With oil prices seemingly stuck in that 

$70-85/bbl price range, companies are finally moving ahead in developing the huge oil sands 

deposit. 

Yet the future of the oil sands isn't in the massive surface mining projects that plague both 

the news and environmentalists dreams. Rather, the future lies in the bitumen that's too deep 

to be surface mined. 

And the list of investors interested in the oil sands is far from short... 

183


The most recent deal was made by PTT Exploration and Production, Thailand's largest oil 

and gas company, to the tune of $2.3 million to purchase a 40% stake in Statoil ASAs oil 

sands project. 

China Petrochemical Corp. also dipped its hands in the dirty sands of Alberta, spending 

$4.65 billion for a stake in the Syncrude project. 

But as I mentioned, the real money's too deep to be surface mined. I'm sticking with those 

SAGD companies looking to ramp up in situ production. 

4. Offshore shakes the BP stigma: Brazil or bust 

Finally, we have the offshore industry — the one industry that has taken a massive PR hit 

this year. 

(Thanks again for that debacle in the Gulf of Mexico, BP.) 

The woes surrounding the Macondo well this past summer have sent the political wolves into 

the fight. 

From here on out, offshore companies looking to tap into deepwater oil fields will have a 

new, stringent set of rules to live by. 

Of course, more caution is a good thing, right? After all, drillers are breaking depth records 

over and over again, each company drilling further and deeper than ever before. 

Now that the world's giant oil fields are tossing back and forth on their deathbeds — the 

once-mighty Cantarell, now a shell of its former glory, comes to mind — the world's oil 

production is in the midst of a major shift to smaller fields... including offshore. 

Leading the charge is Petrobras, Brazil's oil gem that's developing the Tupi field. 

The company recently announced it will spend $224 billion over the next five years to reach 

target production of 5.4 million barrels of oil and gas per day. 

Reaching that target will take up to a decade. However, the company could very well 

become the largest publicly-traded oil producer in the world. 

Over the next few weeks, I'm going to dig much deeper into these trends individually... 

And I'll be putting the finishing touches on a report detailing several small companies still 

flying under everyone's radar. 

Enjoy your holiday, 

Keith Kohl 


You can download the PDF version here: Oil Outlook: Investing in 2011 







184


Wars, Rumors Of Wars, 

Skyrocketing Oil Prices And 

Global Economic Chaos – Why Is 

All Of This Happening? 

Did anyone out there anticipate that 2011 would be such a wild year? The year is 

barely over two months old and we have already seen multiple civil wars erupt, 

rumors of more wars all over the mainstream media (potentially even including 

the United States), riots and revolutions breaking out all over the globe, oil prices 

soaring into the stratosphere and chaos on global financial markets. So why is all 

of this happening? 

Is all of this one big coincidence or is there a reason why we are witnessing such 

global chaos right now? Is it just coincidence that revolutions have broken out in 

over a dozen countries in the Middle East all at the same time? Is it just a 

coincidence that global prices for oil, food and precious metals are all 

skyrocketing? Is it just a coincidence that world financial markets suddenly seem 

more vulnerable than at any time since 2008? Looking at what is going on in the 

world right now, it is very tempting to use the phrase "a perfect storm" to 

describe it. Unfortunately, this "perfect storm" is very likely to plunge the global 

economy into yet another financial collapse if it continues to get even worse. 

185


After decades of relative stability, the Middle East has erupted in chaos in 2011. 

In the post-World War 2 era, we have never seen a time when there have been 

so many major internal revolutions all at once. All of these simultaneous 

revolutions are driving the price of oil rapidly upwards. 

The price of West Texas crude is now over $102 a barrel and the price of Brent 

crude is now over $116 a barrel and if the chaos in the Middle East continues 

those numbers are likely to go a lot higher. 

Meanwhile, gold has set a new all-time record this week and the price of silver is 

absolutely exploding. 

In fact, just about every kind of "hard asset" that you can possibly name is going 

up in price. Investors don't like all of this instability and they are looking for safe 

places to put their money. 

Unfortunately, the global situation looks like it may become even more heated. 

The calls for military action against Libya are rapidly reaching a crescendo. 

The U.S. Senate has unanimously passed a resolution calling for the UN Security 

Council to impose a no-fly zone over Libya, and many members of Congress are 

openly declaring that the U.S. and NATO should take unilateral action no matter 

what the UN ultimately decides. 

But implementing a no-fly zone is not a simple thing. It is not just a matter of 

telling Libya not to fly their planes. Rather, imposing a no-fly zone over Libya 

would constitute a major military operation. 

U.S. Secretary of Defense Robert Gates is even admitting that enforcing a no-fly 

zone over Libya would begin with a huge military strike..... 

"Let's just call a spade a spade. A no-fly zone begins with an attack on Libya to 

destroy the air defenses ... and then you can fly planes around the country and 

not worry about our guys being shot down." 

U.S. commander General James Mattis made a similar comment on Tuesday.... 

You would have to remove the air defense capability in order to establish the nofly 

zone so it - no illusions here, it would be a military operation. 

Essentially, imposing a no-fly zone over Libya would be an act of war. 

Most of our representatives in Washington D.C. seem to be quite ready to go to 

war in Libya, but it is another story entirely when it comes to the American 

people. A recent Rasmussen poll found that a whopping 67 percent of Americans 

do not want the U.S. to get more involved in the unrest going on in Arab 

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countries and only 17 percent of Americans do want the U.S. to get more directly 

involved. 

But the American people don't get to decide whether we go to war or not. Our 

leaders in Washington D.C. do. The USS Enterprise and other major warships are 

on their way to Libya, and U.S. forces throughout the Mediterranean are on high 

alert. 

So could the U.S. really get involved in another war in the Middle East? 

Well, if the U.S. and NATO choose to get involved they will do it without the 

approval of the rest of the world. 

On Wednesday, the Arab League issued a statement which specifically rejected 

"any foreign interference within Libya on behalf of the opposition". 

Not only that, but any military action by the UN will most likely be blocked by 

both China and Russia. 

Russia's ambassador to NATO, Dmitry Rogozin, says that any military action 

against Libya without UN approval would be a violation of international law.... 

"If someone in Washington is seeking a blitzkrieg in Libya, it is a serious mistake 

because any use of military force outside the NATO responsibility zone will be 

considered a violation of international law." 

But Libya is far from the only crisis point in the Middle East. 

In fact, a much larger problem may be brewing in Saudi Arabia. 

On Facebook, a "Day of Rage" is being hyped for March 11th. Other dates being 

promoted for "revolution" in Saudi Arabia include March 20th and March 21st. 

But if Saudi Arabia sees the same kind of chaos that we have seen in other 

countries in the Middle East there is no telling how high the price of oil could go. 

Could we see $125 oil? 



Saudi Arabia exports more oil than anyone else in the world, so if their oil 

production gets interrupted it is going to have a dramatic impact on the global 

economy. 

For example, are you ready to pay 5 dollars for a gallon of gasoline in the United 

States? 

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For decades, the entire globe has been blessed with very cheap oil and this has 

resulted in a massive economic boom. 

But times are changing. 

The economic situation over in Europe is already deteriorating and any additional 

bad news could plunge that entire continent into a major crisis. A recently 

released report from Ernst & Young is warning that if oil goes up to 150 dollars a 

barrel and it stays there, "at least" one eurozone country will default and the 

entire eurozone will be plunged back into recession. 

A much higher price for oil would obviously not be good for the U.S. economy 

either. Do you remember what happened back in 2008? The price of oil hit a 

record high in June and then the entire financial system came unglued just a few 

months later. 

But if we see a repeat of 2008 it may be a lot worse this time because the global 

financial system is now more unstable than ever. 

The truth is that the entire world is still trying to recover from the last financial 

crisis. The Federal Reserve is pumping massive quantities of dollars into the U.S. 

economy in an attempt to stimulate it back to life, but so far it is not working too 

well. 

The rest of the world does not appreciate all of this "money printing" and the 

inflation that this is causing is beginning to create massive imbalances on global 

financial markets. 

The world is starting to lose faith in the U.S. dollar. Right now, approximately 

85% of all foreign-exchange transactions in the world involve the U.S. dollar. Not 

only that, 60% of all the currency reserves in the world are in U.S. dollars. With 

the U.S. dollar rapidly becoming less stable, many are now wondering if it should 

continue to be used as the reserve currency of the world. 

The truth is that if the U.S. dollar falls, it is going to create a tremendous amount 

of financial chaos in almost every nation on the globe. 

Unfortunately, as I have written about so many times previously, the U.S. 

economy is dying. The U.S. government is absolutely drowning in debt, and 

leaders all over the planet are calling for the establishment of a new global 

reserve currency. 

The days of the United States being the "economic engine of the planet" are 

rapidly coming to an end. 

The U.S. economy is not ever going to fully "recover". In fact, the U.S. economy 

is basically "running on empty" at this point as Gerald Celente recently noted 

during an interview on RT television.... 

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The entire U.S. economy was designed to operate on massive amounts of very 

cheap oil. Americans do more driving than anyone else in the world. Many of us 

are so lazy that we won't even walk to a store if it is on the other side of the 

parking lot. 

If oil hits record levels in 2011, it is going to be a massive shock to the U.S. 

economic system. Any hopes for an "economic recovery" will be completely 

dashed. 

In fact, if one wanted to "take down" the U.S. economy, driving up the price of 

oil would be a perfect way to do it. 

And if one wanted to drive up the price of oil, a perfect way to do that would be 

to create all kinds of chaos in the Middle East. 

So is all of this craziness that we are seeing in 2011 just a big coincidence or is 

there a reason why all of this is happening? 

Austerity In America: 22 Signs 

That It Is Already Here And That 

It Is Going To Be Very Painful 

Over the past couple of years, most Americans have shown little concern as austerity 

measures were imposed on financially troubled nations across Europe. Even as austerity 

riots erupted in nations such as Greece and Spain, most Americans were still convinced 

that nothing like that could ever happen here. Well, guess what? Austerity has arrived in 

America. At this point, it is not a formal, mandated austerity like we have seen in 

Europe, but the results are just the same. Taxes are going up, services are being 

slashed dramatically, thousands of state and city employees are being laid off, and 

politicians seem to be endlessly talking about ways to make even deeper budget cuts. 

Unfortunately, even with the incredibly severe budget cuts that we have seen already, 

many state and local governments across the United States are still facing a sea of red 

ink as far as the eye can see. 

Most Americans tend to think of "government debt" as only a problem of the federal 

government. But that is simply not accurate. The truth is that there are thousands of 

"government debt problems" from coast to coast. Today, state and local government 

debt has reached at an all-time high of 22 percent of U.S. GDP. It is a crisis of 

catastrophic proportions that is not going away any time soon. 

A recent article in the New York Times did a good job of summarizing the financial pain 

that many state governments are feeling right now. Unfortunately, as bad as the budget 

shortfalls are for this year, they are projected to be even worse in 2012.... 

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While state revenues — shrunken as a result of the recession — are finally starting to 

improve somewhat, federal stimulus money that had propped up state budgets is 

vanishing and costs are rising, all of which has left state leaders bracing for what is 

next. For now, states have budget gaps of $26 billion, by some estimates, and foresee 

shortfalls of at least $82 billion as they look to next year’s budgets. 

So what is the solution? Well, for state and local politicians from coast to coast, the 

answer to these financial problems is to impose austerity measures. Of course they 

never, ever use the term "austerity measures", but that is exactly what they are. 

The following are 22 signs that austerity has already arrived in America and that it is 

going to be very, very painful.... 

#1 The financial manager of the Detroit Public Schools, Robert Bobb, has submitted a 

proposal to close half of all the schools in the city. His plan envisions class sizes of up to 

62 students in the remaining schools. 

#2 Detroit Mayor Dave Bing wants to cut off 20 percent of the entire city from police 

and trash services in order to save money. 

#3 Things are so tight in California that Governor Jerry Brown is requiring 

approximately 48,000 state workers to turn in their government-paid cell phones by 

June 1st. 

#4 New York Governor Andrew Cuomo is proposing to completely eliminate 20 percent 

of state agencies. 

#5 New York City Mayor Michael Bloomberg has closed 20 fire departments at night and 

is proposing layoffs in every single city agency. 

#6 In the state of Illinois, lawmakers recently pushed through a 66 percent increase in 

the personal income tax rate. 

#7 The town of Prichard, Alabama came up with a unique way to battle their budget 

woes recently. They simply stopped sending out pension checks to retired workers. Of 

course this is a violation of state law, but town officials insist that they just do not have 

the money. 

#8 New Jersey Governor Chris Christie recently purposely skipped a scheduled 3.1 

billion dollar payment to that state's pension system. 

#9 The state of New Jersey is in such bad shape that they still are facing a $10 billion 

budget deficit for this year even after cutting a billion dollars from the education budget 

and laying off thousands of teachers. 

#10 Due to a very serious budget shortfall, the city of Newark, New Jersey recently 

made very significant cuts to the police force. Subsequently, there has been a very 

substantial spike in the crime rate. 

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#11 The city of Camden, New Jersey is "the second most dangerous city in America", 

but because of a huge budget shortfall they recently felt forced to lay off half of the city 

police force. 

#12 Philadelphia, Baltimore and Sacramento have all instituted "rolling brownouts" 

during which various city fire stations are shut down on a rotating basis. 

#13 In Georgia, the county of Clayton recently eliminated its entire public bus system in 

order to save 8 million dollars. 

#14 Oakland, California Police Chief Anthony Batts has announced that due to severe 

budget cuts there are a number of crimes that his department will simply not be able to 

respond to any longer. The crimes that the Oakland police will no longer be responding 

to include grand theft, burglary, car wrecks, identity theft and vandalism. 

#15 In Connecticut, the governor is asking state legislators to approve the biggest tax 

increase that the state has seen in two decades. 

#16 All across the United States, conditions at many state parks, recreation areas and 

historic sites are deplorable at best. Some states have backlogs of repair projects that 

are now over a billion dollars long. The following is a quote from a recent MSNBC article 

about these project backlogs.... 

More than a dozen states estimate that their backlogs are at least $100 million. 

Massachusetts and New York's are at least $1 billion. Hawaii officials called park 

conditions "deplorable" in a December report asking for $50 million per year for five 

years to tackle a $240 million backlog that covers parks, trails and harbors. 

#17 The state of Arizona recently announced that it has decided to stop paying for 

many types of organ transplants for people enrolled in its Medicaid program. 

#18 Not only that, but Arizona is so desperate for money that they have even sold off 

the state capitol building, the state supreme court building and the legislative chambers. 

#19 All over the nation, asphalt roads are actually being ground up and are being 

replaced with gravel because it is cheaper to maintain. The state of South Dakota has 

transformed over 100 miles of asphalt road into gravel over the past year, and 38 out of 

the 83 counties in the state of Michigan have transformed at least some of their asphalt 

roads into gravel roads. 

#20 The state of Illinois is such a financial disaster zone that it is hard to even describe. 

According to 60 Minutes, the state of Illinois is six months behind on their bill payments. 

60 Minutes correspondent Steve Croft asked Illinois state Comptroller Dan Hynes how 

many people and organizations are waiting to be paid by the state, and this is how 

Hynes responded.... 

"It's fair to say that there are tens of thousands if not hundreds of thousands of people 

waiting to be paid by the state." 

#21 The city of Chicago is in such dire straits financially that officials there are actually 

toying with the idea of setting up a city-owned casino as a way to raise cash. 

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#22 Michigan Governor Rick Snyder is desperately looking for ways to cut the budget 

and he says that "hundreds of jurisdictions" in his state could go bankrupt over the next 

few years. 

But everything that you have just read is only the beginning. Budget shortfalls for our 

state and local governments are projected to be much worse in the years ahead. 

So what is the answer? Well, our state and local governments are going to have to 

spend less money. That means that we are likely to see even more savage budget 

cutting. 

In addition, our state and local politicians are going to feel intense pressure to find ways 

to "raise revenue". In fact, we are already starting to see this happen. 

According to the National Association of State Budget Officers, over the past couple of 

years a total of 36 out of the 50 U.S. states have raised taxes or fees of some sort. 

So hold on to your wallets, because the politicians are going to be coming after them. 

We are entering a time of extreme financial stress in America. The federal government 

is broke. Most of our state and local governments are broke. Record numbers of 

Americans are going bankrupt. Record numbers of Americans are being kicked out of 

their homes. Record numbers of Americans are now living in poverty. 

The debt-fueled prosperity of the last several decades came at a cost. We literally 

mortgaged the future. Now nothing will ever be the same again. 

The More Americans That Go On 

Food Stamps The More Money JP 

Morgan Makes 

JP Morgan is the largest processor of food stamp benefits in the United States. JP 

Morgan has contracted to provide food stamp debit cards in 26 U.S. states and the 

District of Columbia. JP Morgan is paid for each case that it handles, so that means that 

the more Americans that go on food stamps, the more profits JP Morgan makes. Yes, 

you read that correctly. When the number of Americans on food stamps goes up, JP 

Morgan makes more money. In the video posted below, JP Morgan executive 

Christopher Paton admits that this is "a very important business to JP Morgan" and that 

it is doing very well. Considering the fact that the number of Americans on food stamps 

has exploded from 26 million in 2007 to 43 million today, one can only imagine how 

much JP Morgan's profits in this area have soared. But doesn't this give JP Morgan an 

incentive to keep the number of Americans enrolled in the food stamp program as high 

as possible? 

There are just some things that are a little too "creepy" to be "outsourced" to private 

corporations. The JP Morgan executive in the interview below does his best to put a 

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positive spin on all this, but it just seems really unsavory for a big Wall Street bank to be 

making so much money off of the suffering of tens of millions of Americans.... 

So if unemployment goes down will this ruin JP Morgan's food stamp business? 

Well, apparently not. In the interview Paton says that 40% of food stamp recipients are 

currently working, and he seems convinced that there could be further "growth" in that 

segment. 

So is this what America is turning into? 

A place where tens of millions of the unemployed and the working poor crawl over to 

Wal-Mart and the dollar store every month to use the food stamp debit cards provided 

to them by JP Morgan? 

It turns out that JP Morgan also provides child support debit cards in 15 U.S. states and 

they also provide unemployment insurance benefit debit cards in seven states. 

Apparently states have found that they can save millions of dollars by "outsourcing" the 

provision of these benefits to big financial firms like JP Morgan. 

So what happens if you have a problem with your food stamp debit card? 

Well, you call up a JP Morgan service center. When you do this, there is a very good 

chance that you are going to be helped by a JP Morgan call center employee in India. 

That's right - it turns out that JP Morgan is saving money by "outsourcing" food stamp 

customer service calls to India. 

When ABC News asked JP Morgan about this, the company would not tell ABC News 

which states have customer service calls sent to India and which states have them 

handled inside the United States.... 

JP Morgan is the only one today still operating public-assistance call centers overseas. 

The company refused to say which states had calls routed to India and which ones had 

calls stay domestically. That decision, the company said, was often left up to the 

individual states. 

JP Morgan has been moving some of these call center jobs back inside the United States 

due to political pressure, but this whole situation is a really good example of what the 

"global economy" is doing to middle class Americans. 

Just try to imagine the irony - a formerly middle class American that has lost a job to 

outsourcing calls up to get help with food stamp benefits only to be answered by a call 

center employee in India. 

Welcome to the global economy, eh? 

But wait, there is more. 

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It has just been announced that JP Morgan has admitted that they wrongly foreclosed 

on over a dozen military families and that they have been overcharging "thousands" of 

other military families on their mortgages. 

Ouch. 

It is a really bad public relations move to mess with military families. 

Is anyone over at JP Morgan even paying attention? 

JP Morgan has also been one of the primary financial institutions involved in the 

foreclosure "robo-signing" scandal. 

They just seem to be having all kinds of problems lately. But they are not alone. 

The truth is that we have gotten to the point where big Wall Street banks such as JP 

Morgan, Goldman Sachs, Citibank and Morgan Stanley just have way, way too much 

power. 

The biggest Wall Street financial institutions had no trouble begging for bailouts from 

the U.S. government during the financial crisis, but when the American people have 

needed a little grace and mercy from them they have been less than helpful. 

Lennie P answered the blog: January 20th, 2011 at 8:08 pm 

Fascism it is. But there are at least two forms of it – lite, and extra strength. With the 

former the authoritarianism is held to a workable minimum. In the later people who 

don’t agree with it are hauled off in box cars and either enslaved or killed – usually 

tortured first since it is in the nature of fascists to inflicting a little torture when they get 

the chance. 

How many millions of Americans are there still remaining that will disagree with this 

Fascism as to force the hand of the Fascists to implement the extra strength brand? 

It’s how it’s done in China, and things looked way too buddy-buddy to me in D.C. this 

week. What’s going on in our airports and elsewhere is probably the beginning of the 

conditioning process. Fear these “nothings.” 

SEE THESE VIDEOS: 

http://www.youtube.com/profile?user=SGTbull07&annotation_id=annotation_287513&f 

eature=iv 

http://www.youtube.com/profile?user=SGTbull07&annotation_id=annotation_287513&f 

eature=iv#p/u/0/WCxBDDk4Y-M 

Refer to: http://www.shadowstats.com/ 

http://theinternationalforecaster.com/ 

Blog from International Forecaster 

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June 11 2011: Examples of Sucking the 

lifeblood out of America; banks and hedge funds over 

leveraged, creating money out of thin air to buy debt, outrage in 

America over economic fiascos, we don’t need a world of fiat 

currencies, a total meltdown at the Arizona Legislature, US credit 

rating dropped to AA. Goldman Sachs and Gaddafi. 

The lifeblood is being sucked out of America by free trade, 

globalization, offshoring and outsourcing. Over the past 11 years 

manufacturing jobs have fallen by 11.7 million and 440,000 businesses 

have been lost. Those figures should make Americans very disturbed, 

when it is obvious that American business, and the House and Senate 

are aiding and abetting in this job destruction, which has not only 

ended the American dream, but created the destruction of the 

American economy. In essence quantitative easing, the creation of 

money and credit, are a cover for wealth and job destruction, as are 

food stamps, Medicaid and extended unemployment. These are shortterm 

solutions. 

The dismantling of the American economy came into focus in the 

late 1970s as major manufacturers began to move production out of 

the US. As of the past 11 years we have seen an effort first to create a 

bubble in real estate, which was accompanied by unusually low 

interest rates and a major increase in money and credit. Once the real 

estate bubble had broken the deflationary aspects appeared and the 

Fed had to create ever more money and credit taking the increase up 

some 18%. Then 3-1/2 years ago the credit crisis began and that 

prompted the Fed to directly pour trillions of dollars into the financial 

sector in both the US and Europe. A good part of which was done 

secretly. Thus, we have seen the creation of money and credit initially 

to create the real estate bubble and then to offset the credit crisis that 

it caused. During these periods banks, hedge funds, and other 

financial institutions engaged in aggressive speculation. Banks 

leveraged up to 70 to 1, when 9 to 1 was normal and hedge funds 

over 100 to 1. Banks are still leveraged at 40 to 1 and hedge funds up 

to 70 to 1. 

If you stop and think of it, the very idea that the Fed can create 

money out of thin air and buy Treasury debt is ludicrous. What kind of 

a system is that? And, in the process lend trillions of dollars to foreign 

banks and corporations. Then lie about it and force legal action into 

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the appeal process to cause a two-year delay in exposure of what they 

have done. We have never been told whether these actions are legally 

within their venue. We wonder what happens when the remainder of 

toxic debt has to be bought from the banks, or in addition will the Fed 

bail out the derivative markets as well? The Fed is already bailing out 

the commercial real estate market; will they bail out the residential 

sector as well? 

We ask you how can any sane person believe that the Fed will 

curtail quantitative easing? Over the past two years the Fed has 

created about $2.7 trillion that we know of. What is the real number 

and what is the new number going to be? Unfortunately, we may 

never find out. One thing we do know for sure is that the proverbial 

printing presses are running 24/7. We do not have to guess, because 

we already know what will happen when the music stops – collapse. 

Mr. Bernanke may have led many to believe that there would be 

no QE3, but do not be fooled. The Fed and Treasury cannot function 

indefinitely in a vacuum creating money and credit. It will be especially 

interesting to see if there will be a short-term debt extension on 

August 2nd. A defeat by the Republicans could bring debt default and 

legislation by Congress to go after privately owned 401Ks and IRAs in 

exchange for government guaranteed annuities. The presentation 

could be that currently government is being funded with funds from 

the federal pension plan and it is not fair that federal employees 

shoulder the whole burden, so let’s commandeer 401Ks and IRAs. It 

would be the perfect excuse. The legislation has already been prepared 

and has been ready to go for more than two years. In addition, 

legislation has been introduced in the Senate to limit accessibility to 

401Ks. This is certainly something to ponder. 

We do not believe the Fed and the Treasury are going to wait 

while the economy falters, interest rates are forced higher, or look in 

the distance to August 2nd. They are much more perceptive than that. 

We see no gap in assistance to either the Treasury/Agency market, or 

to the general economy. They are already losing momentum in the 

economy. That was borne out by dreadful first quarter GDP growth 

figures of 1.8%. QE3, or subsidy by another name, will cause lenders 

to contemplate whether they will ever get paid. Such a realization will 

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take a terrible toll on the value of the US dollar, and force gold, silver 

and commodity prices higher. 

One of the things we notice, while on radio is that many people 

still do not believe the economy is headed for perilous times. They still 

do not believe it can happen again in America, as it did in the 1930s. 

They are still detached from reality. We are making far more inroads in 

other countries then we are in the US. There has been ample evidence 

over the past four years that America has changed dramatically. We 

have seen a credit crisis that almost collapsed the financial system, 

not only of the US, but Europe as well. We have seen the liquidation of 

Bear Stearns, Lehman Bros., Fannie Mae and Freddie Mac, GM, AIG 

and many others. We have seen massive unemployment in great part 

caused by free trade, globalization, and offshoring and outsourcing 

that continues unabated. The residential and commercial real estate 

markets have all but collapsed, and there is no end in sight. The new 

set of circumstances goes on and on. It is human nature to reject 

reality. No one wants to come to grips with such difficult problems. 

Few want to believe that Wall Street and banking have destroyed the 

financial structure of the country and that it has been done 

deliberately in order to bring about world government. Some 

Americans are outraged, perhaps 30%, but they have been forced into 

a dead end, because their representatives and senators in Congress, 

refuse to act in their behalf. That is because Wall Street, banking and 

others have bought off 95% of them. This 30% know without the Fed 

creating money and credit the economy will collapse, the rest are 

ignorant and oblivious. It is now evident the economy cannot sustain 

without being subsidized. Thus far trillions have been spent saving the 

financial sector and the treasury. Little has been spent saving the real 

economy. It’s as if they wanted it to collapse. 

The world’s biggest bond fund is flat US securities and is short 

Treasuries. Commercial entities endowments, nations and individuals 

worldwide, are buying gold and silver to protect their assets. These 

moves are moves of no confidence and we believe they are correct. 

They are afraid they will not be able to access their assets. Will 

they be able to remove their funds from banks anytime they want? 

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Banks change the rules at will. They do what they want. Recently in 

France its biggest bank cut cash withdrawals by 50%. That can be 

done in America as well. There are laws that allow such restrictions. 

Do not forget the bank has loaned out your deposit and then some. 

The average bank today has lent 40 times its deposit base. That is 

called fractional banking and the historical lending rate is 9 to 1. As 

you can see banks are way over extended. They function by deceiving 

the public and there may soon some time when you can only get part 

of your funds or perhaps none at all. In the case of bankruptcy or 

major bank bankruptcies the FDIC would have to request funds from 

the Congress and Treasury; funds they do not have. Their only 

alternative would be to print money, which would cause more inflation 

and dilution. Purchasing power would fall as would the dollar and 

inflation would rise further. That means you should keep no more 

than three months operating expenses in the bank and do not 

own CDs. Banks today are very vulnerable, as are other thrift 

institutions. Many are already bankrupt and are being kept afloat by 

the Fed. Many are keeping two sets of books. If you were to do that 

you would go to jail. Remember, that when banks fail and the FDIC 

pays off it is you the taxpayer that is bailing out the depositor. 

We find it amazing that voters tell their congressmen not to vote 

for bailouts, and the legislators go right ahead and vote for them in 

defiance of their constituents, and then the idiots reelect them. 

American voters, as a majority, still do not get it. They still do not 

understand that representatives and senators are paid off via 

campaign contributions and lobbyists. Constituents do not count. The 

bankers know exactly what to do to continue to run the country. 

The banks have spent years via the Bank for International 

Settlements (BIS) interconnecting central banks in order to move 

forward in unison on every issue. A good example is creating a world 

of fiat currencies. The situation where all banks move in unison on all 

issues has created an unexpected problem. They are all 

simultaneously insolvent. That has created a call to increase unused 

reserves by 3%. The banks are howling as a result, because profits will 

fall along with bonuses. 

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The BIS sees serious trouble ahead for these systemically 

important financial institutions. 

They are going to have to lower their leverage exposure as well. These 

are the banks and other financial institutions that we have been told 

are too big to fail. As we saw this week the CEO of JPMorgan Chase 

clashed over this issue with the Chairman of the Fed, Mr. Bernanke, 

pointing out the loss of profits. JPM was correct, but the BIS realizes 

almost all UK, US and European banks are in serious trouble and they 

perceive that the entire European sector could fail if Greece goes into 

partial or full default. They know Ireland, Portugal, then Belgium, 

Spain and Italy will inevitably follow. 

The BIS knows the major economies are either in an inflationary 

depression such as in the US and UK and a recessionary recession as 

in Europe. The serious problems exist, because there is no banking 

control other than the BIS. 

The Fed, Bank of England and the ECB act as they please usually 

in unison with one another changing the rules arbitrarily as they go 

totally ignoring regulations and almost always in secrecy. The Fed has 

acquired more regulatory power, but it cannot really use it because the 

member banks that own the Fed control it. These are the people and 

institutions that instruct the Fed, as to what they should do. Talk about 

incest. 

The Fed has always been a failure, and will continue to be, as 

long as their functions are controlled by these Fed shareholders. If for 

no other reason this is why the Fed should cease to exist and their role 

be returned to the Treasury, where it rightfully belongs under our 

Constitution. 

There can never be regulation and control under the current 

system, which gives the owners a license to steal. The leverage we 

have witnessed in the markets has to come to an end, because the 

financial sector is totally irresponsible. Just look at recent history and 

their creation known as the credit crisis. What this is all leading up to 

today is another untoward event. An event the bankers did not think 

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could happen. That event could be the default of Greece, and the 

terrible financial fallout that would follow. 

That is why the BIS is calling for more reserves. They see what 

could happen. The punchbowl is being removed and the banker owners 

do not like it at all. The BIS saw the failure of Basel III, which 

contained capital controls and improvement and stronger minimum 

capital ratios. The outcome was it was ignored and in fact most 

financial institutions are carrying two sets of books. If you did that you 

would go to jail, yet, the banks are allowed to so. 

Incidentally, they intend to do that for the next 50 years as they 

write off bad debt and the US, UK and European governments, the BIS 

and the FASB have approved such insanity. We believe the Fed will 

back down on increased capital ratios just as the BIS did and when 

that unexpected event takes place the bottom will fall out of the 

financial system. 

The bottom line is these greedy bankers continue to stretch risk 

to unfathomable lengths and there is no way back. They do not know 

what they are doing, and they have completely compromised the 

system, kicking the can down the road isn’t going to be good enough. 

The answer is stronger regulatory control, but that can never 

happen because the bankers own the Fed. The situation is worse when 

you see how these central banks are all interconnected and the danger 

such interconnections present. 

This is what world government is all about and you can see why 

it cannot work. The US and world financial systems are at a dangerous 

crossroads and there is no real attempt to correct the problems. The 

attempt to strong-arm Greece thus far has not worked and we do not 

believe it will work. The tables have been reversed. It is now Greece in 

the driver’s seat. 

The opposition party now realizes, as do many Greeks that the 

banks really are between a rock and the hard place. Either Greece is 

offered extension with excellent terms and no collateralization, or they 

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will just default and in the process take down Europe’s financial 

structure. 

Those who understand these sophisticated problems have also 

considered that perhaps the bankers want to take the system down in 

order to insert a new one-world banking system. This economic and 

financial chaos would also force the citizens of Europe and the US to 

accept world government on terms they would never have imagined 

possible. We will see what happens. No matter what happens things 

are going to get very nasty. Failure is distinctly in the air and you are 

its victims. 

The Bad Homburg € Feri Rating & Research AG downgraded the 

first credit rating agency's credit rating for the United States 

from AAA to AA. Feri analysts justify the step by the continuing 

deterioration of the creditworthiness of the country due to high public 

debt, inadequate fiscal consolidation measures, and weaker growth 

prospects. 

"The U.S. government has fought the effects of the financial market 

crisis primarily by an increase in government debt. We do not see that 

here is sufficient alternative measures, "said Dr. Tobias Schmidt, CEO 

of Feri Rating & Research AG €. "Our rating system shows a 

deterioration, so the downgrading of the credit ratings of U.S. is 

warranted." 

For the third consecutive year the deficit of the United States is in 

double digit percentages relative to gross domestic product (GDP). 

"Deficits of such magnitude are not a sustainable fiscal policy. We 

would reconsider the rating when the U.S. government creates a long- 

term sustainable budget," said Schmidt. 

Feri Rating is listed on the Federal Financial Supervisory Authority 

(BaFin) as an EU credit rating agency approved and created with more 

than 20 years experience in sovereign ratings. Every month, the Feri 

analysts evaluate sovereign credit ratings from the perspective of a 

foreign investor based on the ability and willingness of countries to 

repay their debts. The credit ratings have eleven possible gradations 

between "AAA" (best credit) and "Default". 

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Next -- The Greatest Rant In The Book 

The International Forecaster 

The Owners Of The Fed Know What Is Going On 

June 8 2011 

International Forecaster Weekly | Link to this article | Return to Web 

View 

Summary: 

Wall Street believes in something that is not likely to happen, the 

threat of negative GDP, real inflation and quoted numbers to be 

something different as well, what the Fed knows can hurt you, weak 

consumer confidence, The Fed has created an inflationary bubble that 

will collapse one day, sucking the lifeblood out of the system. 

Wall Street seems to believe the waning recovery in the 

economy is only temporary and that further recovery is on the way. 

Such thinking can get you in serious trouble, unless QE3, or its 

equivalent, is on the way. It is on the way, as we pointed out 13 

months ago. The economy cannot live and survive without it otherwise 

we could be looking at a minus 5% GDP for openers. Incidentally, 

there are those that believe that unemployment already is as bad as it 

was during the “Great Depression” years of the 1930's. They may be 

correct, but we believe it was much higher than today’s 22.4% level. If 

government hadn’t created food stamps, Medicaid, extended 

unemployment benefits and other benefits, perhaps we could be close 

to 1930’s levels. 

The first quarter of 2011 saw GDP gain 1.8% as a result of at 

least $1.8 trillion in spending by the Fed and by government. If the 

economy grows 2% in the second quarter that would be substantial. 

The big question is what will the last half of the year be like? 

Government is cutting back, so we cannot expect stimulus 3. 

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That means the Fed has to create $1.6 trillion to purchase Treasury 

and Agency bonds, notes and bills, because presently only about 20% 

is being purchased by others. Assumably the Fed will again accomplish 

that, but what about the remainder of the economy? If the GDP 

growth rate is to maintain say at plus 1% to 2%, the Fed will have to 

create money and credit for the economy of an additional $850 billion. 

Without that the economy would slide to a minus 5% GDP. The flipside 

is that if the Fed were to perform these feats what would inflation be? 

John Williams tells us inflation, using previous standards, is 

10.2%. Last May 2010 we predicted real inflation by the end of 2011 

of 14%. That could turn out to be conservative. That projection was 

based on the results of QE1 and stimulus 1. Next year we will see 

inflation caused by QE2 and stimulus 2, which we believe could carry 

inflation to 25% or 30%, if official interest rates remain the same and 

we believe they will do just that at the Fed. If we get a version of QE3 

for about $2.5 trillion then we believe inflation could rise to 50% 

creating hyperinflation in 2013. 

Of course, no one knows for sure what the Fed will do, but this is 

a likely scenario. If these events do not unfold as presented the 

economy will spiral into the worst depression in modern history. It is 

as simple as that. If we get QE3 what can the Fed do for an encore? 

We won’t attempt an answer for that now, but the prospects are 

certainly frightening. 

All of the insiders who create the inside information, own the 

Fed, or are connected to those who own the Fed, know exactly what is 

going on. These are the people who make all the decisions. How do 

you think the market rallies upward when it should be going down? 

They know there will be a QE3, because these insiders are making 

those decisions, and say the market, bonds and the economy are 

dependent on massive amounts of money and credit is a vast 

understatement. 

These elitists tell us the slowdown in economic growth is just 

temporary. That is true, they know, they planned it that way, although 

growth will only be 1% to 2%, even with additional spending of $2.5 

trillion. If we are correct that means a Fed balance sheet of $5.5 

trillion plus. This time if QE3 did not develop the stock market could 

fall 20% to 30%. That means from the top of 11,800 we could see 

9,400 to 8,300. The market is the last visage of wealth along with 

bonds. If it falls it could send everything tumbling. It should also be 

noted that this recent so-called recovery has been weakest since 

WWII, or for 65 years. 

If there is to be QE3 it had best be implemented immediately. 

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Recent data shows a struggling job market with unemployment, again 

headed higher. As a result of this and climbing inflation, people are 

buying gold and silver related assets. Sales of American Silver Eagle 

coins reached almost 19 million ounces in the first five months of the 

year, the highest since 1986. This is not surprising considering initial 

unemployment claims just won’t fall below 400,000 and only 38,000 

new jobs were created in the private sector in May. Most all indexes 

are pointed downward as production and retail slow. In addition the 

housing index is at its lowest since 2003, as housing prices continue to 

plunge 3.6% in the 20 largest US cities in March year-on-year. 

Countrywide prices fell 5.1%. These are 2002 prices. This continual 

real estate wipeout has people who have been foreclosed on and some 

who sold to get what equity out of their homes that they had left. That 

means more renters and higher rents, which means the CPI inflation 

index should start heading upward. If you throw in higher food and gas 

prices it gets very expensive. As this transpires the dollar falls versus 

other currencies and gold and silver. Consumer confidence is dreadful. 

The payroll data from last week was nothing short of awful. On 

the U3 we are back up to 9.1%. The increase in non-farm payrolls was 

the worst in nine months. Manufacturing lost another 5,000 jobs in 

May, as free trade, globalization, offshoring and outsourcing did its 

nasty work. 

Congress does absolutely nothing to stop the carnage by 

imposing tariffs on goods and services. In 11 years we have lost 11 

million good paying jobs, and 445,000 companies, all of which can 

keep their profits offshore tax-free. Everyone in Congress is aware of 

what is going on, but not one member has proposed legislation to put 

a stop to this tragedy that is destroying America. That is what happens 

when you have campaign contributions and lobbying. It ends up with 

95% of both chamber members being bought and paid for. We are 

losing more than one million jobs a year and about 240,000 jobs have 

been created. The other million went to some foreign country. Over 11 

years manufacturing has lost some 7 million jobs. As you can see, 

service job losses are catching up. Can you imagine what these figures 

would look like without the $4.2 trillion spent on QE1 & QE2, and 

stimulus 1 & 2? Unfortunately, all this money has been spent to bailout 

the financial sector and government, and little has been added to 

wealth-producing infrastructure. All government and the Fed have 

done is create an inflationary bubble that in due time will collapse. It 

can end up no other way. 

Optimism is waning and rightly so. Has anyone stopped to think 

where we would be without all this artificial stimulus and that it can 

last indefinitely unless, of course, people desire hyperinflation? As the 

dollar remains weak in the USDX, exports rise, which is a Punic 

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victory. That same weak dollar reflects 10.2% inflation, hardly an 

equitable trade-off. 

No matter how much money is thrown at the problem it is 

protracted and any real possible recovery will be a difficult process. We 

do not believe there can be any kind of lasting recovery without a 

purging of the system, which would result in massive bankruptcies and 

a deflationary depression. We just completed a radio discussion on the 

air at Northeastern University. All present wanted solutions for jobs 

and recovery, but none understood that in order for that to happen 

and be lasting the system has to be purged first. No one simply wants 

to accept this. This is why we have these stimulus programs – to put 

off the inevitable. This could have been accomplished in 1990-1992, 

and again in 2001 to 2003, but adjustment never happened. Wall 

Street and banking befouled by greed and the quest for world 

government, bypassed these simple solutions. 

Yes, we are already into double dip and if the Fed doesn’t act 

quickly and continue into QE3 and add $850 billion into the economy 

we will be looking at big minuses in GDP and fast rising 

unemployment. In order to explain this result government and Wall 

Street euphemistically call this a soft patch. Obviously malinvestment 

and speculation continue unabated and will so as long as the creation 

of money and credit continues. 

We guess eventually everyone practically will work for the 

federal government or subsist on their handouts. How can the Fed and 

government spend at least $4.2 trillion and get such dreadful results? 

It is easy; just take care of the financial sector and government, and 

let the economy and job creation swing in the breeze. 

In respect to all this, the Fed and government are silent – 

no response, as Wall Street, banking and government, in their 

own particular ways, suck the lifeblood out of the system. 

Washington and Wall Street are bastions of systemic excesses. 

Americans are getting what they asked for. They allowed their 

Congressmen to become prostitutes for big business and they have 

allowed the Fed, banking and Wall Street to run amok and in that 

process to destroy the economy. 

(SN: Prostitute: To trade away honor and morals for personal gain. To 

dishonor oneself for money.) 

Profligacy is everywhere, but few seem to care. That has left us 

in supreme vulnerability and falling confidence as a people and as a 

nation. Ignoring the problems does not make them go away. There is 

bias all over the mainline media, which tells us everything is going to 

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be ok, when it isn’t going to be ok. Just ask the long-term 

unemployed, which stretch back to 1990. We are in trouble and it is 

time we recognized that. 

As we have said repeatedly, quantitative easing, the creation of 

money and credit, and the stimulus plans, as policies have been a 

failure, as have zero interest rates. We believe QE3 will be 

implemented, but as you have seen effectiveness is on the wane and 

QE3 could be the end of the road. 

We wonder if research departments at the big banks and 

brokerage houses understand that unemployment is 22.4%, that 

without the birth/death model, about 152,000 jobs were lost in May 

and that the government is lying, again? These analysts and 

economists cannot be that dumb. We have been writing about these 

bogus figures for 15 years. Whatever Washington needs to create, it 

does so. For those who were unaware, that struggling food purveyor 

McDonald’s received billions in TARP funds and we have no explanation 

as to why. This is one of the most successful corporations in the 

history of the world. It just so happens that McDonald’s added 62,000 

new jobs in May, which made up a good part of newly created jobs. 

This indicates to us cooking the numbers and leads us to believe there 

will be more severe unemployment problems in the near future. 

That means, coupled with the falling GDP growth figures, that 

QE3 has to become reality, or the economy will fall into deflationary 

depression and there will be a massive liquidation of bad debt and 

bankruptcies as far as the eye can see. That will include many major 

banks and brokerage houses worldwide. It will be a sight to behold. 

This is why you should have no more than three month’s operating 

expenses on deposit at the bank, and no CDs. 

The government doesn’t have money to cover the FDIC 

insurance and as a result they will have to print it exacerbating 

inflation. The general stock market will head downward with the 

exception of gold and silver shares, which will appreciate as they did in 

the 1930s and late 1970s. If the market falls to Dow 3,000 all the 

value in pension funds, cash value life insurance policies and 

annuities will fall as well. Get out of these investment vehicles 

now while you still can and switch to gold and silver shares, 

coins and bullion. For those of you who do not understand, this 

is what happens in a depression. The only place that is safe is 

in gold and silver related assets. 

Government tells us inflation is 2% when it is 10.2%. Food and 

gas prices have increased over the past almost two years by more 

than 50%. Inflation as we predicted in May 2010 will be 14% by the 

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end of the year, and the result of QE2 will put inflation close to 30% 

by the end of 2012. If more than $2 trillion is spent on QE3 inflation 

will probably be 50% in 2013, or hyperinflation. Prices for almost 

everything are higher and they’ll get higher yet. Inflation is 15% in 

China and wages are rising. That means export prices to the US and 

Europe are going to increase as well. 

2011: Doom is Always 6 Months 

Away. http://dont-tread-on.me/2011-doom-is-6-months-away/ 

By Silver Shield,on January 1st,2011 

Well it’s that time of year again for predictions. 

Since doom is always 6 months away,and I can write doom porn with the best of 

them, here we go… 

The world will learn of the great silver fraud in 2011. Max Keiser’s “Crash JP 

Morgan: Buy Silver”campaign will finally draw blood but not the intended victim. 

After 138 years of abuse of silver by the Elite (Crime of 1873) silver will finally 

break it’s all time nominal high of $50 in March. This will spark a huge delivery in 

physical metal and there will not be enough to go around. JP Morgan will offload all 

of their short positions to shell companies ala’Enron and the paper price of silver will 

moon shot. The SLV will reward (sucker) more investors for a little while more as the 

CRIMEX defaults. (Watch Wall St Laughs at Main St.) 

The physical market of silver will not be available at any price. 

Ebay will be empty. 

Apmex will be empty. 

Your local coin shop will be empty. 

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Once holders of silver realize the massive amount of fraud that has been committed 

and how suddenly wealthy they are, it will be like holding radioactive uranium. No 

one will bring it out to sell because who would sell real money for Monopoly money? 

Silver will be used much later on for food, land, and stocks but for now it is hidden. 

The only silver that will be available will most likely stay within families or close 

friends but never publicly. This will also be accentuated by the new IRS requirement 

to 1099 all sales over $600. Welcome to the black market. 

208 

The dollar dies. The dollar will be increasingly 

devalued as we reach it’s inevitable and 

mathematical certain end of the debt cycle. The 

dollar will be printed in rapid fashion as the 

government needs more and more to meet the 

unfunded liabilities. States and cities will be 

bailed out all summer long as the common man 

becomes increasingly uneasy with where things 

are going. (Think of that click clack sound as 

you are pulled up to the top of a roller 

coaster…) 

Life becomes too expensive to live. The world wide fiat currency debasement will 

have sickening effects on food and fuel prices. All of the things you need to live will 

rise with nauseating speed through out the spring and summer. There will be sparks 

of major food riots around the world and Americans will see $5 gas grind the rest of 

the economy to a halt. But this will be just the beginning, and there will be no relief 

this time around. 

Then everyone will be holding their breath and there will be an uneasy quite, like 

when a plane starts to crash. 

The uneasy summer will turn into panic in the fall as the music stops and everyone 

runs for the exit. 

The name is Bond…It won’t be the stock market 

to watch this time, it will be the bond market, as 

more and more issuance of debt are met with no 

bids. The Fed will monetize all of the federal debt 

and the emergency money needed to bailout 

everyone including most notably California and 

Illinois. By the fall, the Anglo American elite will see 

the writing on the wall. When it becomes glaringly 

evident to the Anglo American establishment that 

their financial situation has reached the end of the


road it will be time to pull out the punk card, war. 

Casus Belli. All of this money printing by the Fed will cause all holders of dollars to 

increasingly spend them while they still have purchasing power. This includes big 

institutions and even countries. The flood of money out of the bond market driving 

into the commodity market will be vicious. The Fed will stop buying our debt, not 

because it has no money, but because it wants to accentuate China selling it’s debt. 

Since the Fed is the only buyer of US government debt, the stop will cause the real 

market to kick in and that will demand huge haircuts in China’s holdings. China will 

be forced to dump their bonds to meet their own domestic needs and this will be the 

tipping point. Interest rates are going to rocket, but unlike the the Volker era, this 

will not stop the rush to commodities. 

Bring out the pitchforks. Now on 

top of soaring prices of commodities, 

which Americans will grumble very 

loudly about, this spike in interest 

rates will finally bring the anger to the 

surface that has been mysteriously 

missing. The debt loads cannot be 

rolled over another day because the 

long awaited day of reckoning has 

finally arrived. Riots will start in the 

inner cities and protest marches in the 

subburbs. People will look towards 

local authorities for help but they will 

soon realize that they are part of the problem and not the answer. Social contracts 

will be broken and promises not kept. Underneath all of this anger is the simple fact 

that people will realize that they have been fooled and somebody, anybody, must 

pay for that crime. 

So the Elite will throw the meat into the ring. 

Erectile Dysfunction…blame China. 

Osama bin Chang. The economic Pearl Harbor in 

the bond market will be placed squarely on China’s 

shoulders. In fact all of our problems will be blamed 

on China. 

High interest rates…blame China. 

$5 gas…blame China. 

Bridge collapse…blame China. 

American Idol sucks…blame China. 

Into the shadows laughing. It will be infinitely easier for America to kill millions of 

Chinese than to admit that we have been lied to for decades by the Elite. No where 

will you see the Elite’s faces for their decades of manipulation, abuse, and 

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destruction of this once great country. No this economic false flag will find a new 

enemy to blame all of our internal rot on. The real reason for all of this is for our 

Elite to gain more power and profit. It provides a distraction for the lower classes to 

keep them from over throwing the Elite. 

War is the most profitable human endeavor. It 

creates debt, profitable contracts for the insider, and most importantly it is rapid 

economic activity without raising the general standard of living of the common man. 

This is only understood by a small group. If the same amount of energy and capital 

that are invested into our war machine, were invested into things like free renewable 

energy for everyone, it would raise the standard of living for everyone. We would not 

need a globe spanning military empire protecting the energy routes necessary to 

keep things going. We would have not have to worry about the price of gas and 

would create new jobs back home. We could cut taxes and have more money to get 

out of debt. The Elite don’t want that, so they will upset the table and go to war 

instead of getting back to what made this country great. 

“Those Slant Eyed, Commie Bastards!” Another interesting side note to what is 

the increasingly racist tone that will be very noticeable in the entertainment 

programming on TV. You will see all of those typical racist images of buck 

toothed,vcoke bottle glasses China men taunting,vlaughing at America. All war has a 

strong tone of racism in it. In order for societies to be led into war,vthe elite use the 

age old formula of divide and conquer. This is used over and over again to keep the 

people looking down at other victims of our paradigm instead of the architects of our 

paradigm. Divide and conquer gives the emotional, primal, and tribal motivation for 

war. 

210 

WikiDoom. The Internet is another threat to the Elite 

as a free information medium that people are 

increasingly using to get away from the Elite’s 

propaganda machine of main stream media. So just like 

Michael Corleone ran the table at the end of the 

Godfather, the Elite will pull the plug on the web. 

This will be blamed on China and all of the Wikileaks 

hub bub is just a pretext for the web to end as we know 

it. This will be pulled off by guys like Jay Rockefeller 

who feel the Internet is a threat and be managed by 

the FCC. When it does come back up it will work fine for major corporations and 

government sites but mysteriously not for all of the blogs that would warn the


American people. Look at the recent hack of Zero Hedge. Osama bin Chang will 

always be messing with our sites, even though the real criminals will be in Virginia. 

Drive the point home. The final part of this opening act will be the traditional one 

and it will be a hit on an American aircraft carrier and blamed on the Chinese and 

their new anti carrier missile. Nothing gets the war drums beating louder than our 

boys being murdered. 

Americans have always fallen for this trick and this will be no different. 

A self inflicted wound, followed by hysterical media blitz, and the outing of any truth 

tellers as traitors, works every time. 

It worked with the USS Maine for the Spanish American War. See William 

Randolf Hearst “Please remain. You furnish the pictures,I’ll furnish the war.” 

It worked with the Lusitania and WWI. The Anglo American establishment set 

this one up to get America into the war by shipping arms on the lower deck of the 

Lusitania against the neutrality treaty and Winston Churchill taking away her escort 

and demanding she slow down to save coal. Germany even warned Americans not 

to sail on this ship because it was going to be sunk. 

It worked with Pearl Harbor and WWII. Again in order to get the isolationist 

American people into WWII, the Elite created the right environment through their 

age ole plan of create the problem, wait for the inevitable reaction, offer their 

planned solution. 

Japan has no oil or metal reserves to run its military that was running rampant all 

over Asia. The US at the time was the Saudi Arabia of oil and we stopped shipping oil 

and metal to Japan. Can you imagine what we would do now that we are importing 

upwards of 2/3 of our oil?! 

This forced Japan to make the desperate move of sneak attack. It is also debated 

that we had broken their secret code and that warnings were ignored. It was always 

curious to me that our vital aircraft carriers just so happen were no where around 

when the attack happened. 

It worked with the Gulf of Tonkin and Vietnam. The Gulf of Tonkin Incident 

Never Happened. 

It almost worked with the USS Liberty…Click here. 

And don’t get me started on 9/11 

The point of all or one of these acts would be to get the American people upset and 

do what we do best, go to war and not blame the real bad guys who control our 

reality. 

The rest of the winter of 2011 will be the economic crisis that will wipe away all 

debts through hyper inflation. The greatest wealth transfer the world has ever seen 

will happen and nothing will be the same again. This will be the single greatest event 

in human history and will affect everyone. And yet so few have thought about what 

will happen much less to start preparing for it. 

211

The middle class will be no more. 

The world will be up in arms. 


The board will be set for World War. 

And that will be the opening scene for 2012. 

Happy New Year Doomers! 

Silver Shield 

. 

This is just a work of fiction on a possible scenario of where we are going. 

The exact storyline is not certain. What is certain, is things that cannot go on 

forever, won’t. 

If you are aware of the coming reality, you can prepare for it. 

The best way to prepare is to educate yourself by joining the Sons of Liberty 

Academy athttp://SonsOfLibertyAcademy.com 

Stephen Newdell SteveNewdellxxxx@yahoo.com 

To: Mr. Silver Shield 

Dear Mr. Shield, June 26, 2011 

I’ve been cobbling together a booklet discussing the history and future of our impending 

national collapse and possible break up. Your material is very helpful, which leads to my 

query. 

I am assailed by investment newsletters claiming the future is very bright. We can invest 

in silver, gold, and rare earth mines. We can invest in oil and natural gas in North 

America. We can invest in fabulous medical advancements. We’re destined to get rich 

given a year or two. 

No one wants to talk about what would happen to our investments on paper, in stocks, if 

the dollar collapsed, if the banking system crashed and burned, if the dollar became 

worthless. 

I suspect the only things I’d have of worth then would be (might be) gold and silver 

coins, my personal belongings, and my skills as a retired Chiropractor and present time 

advertising copywriter and salesman. Do you think I’m right about this? 

If there’s no food and clean water, no electricity, no water or sewage flowing, no fuel or 

coal or gas moving on the highways, if there’s chaos in the streets and if the National 

Guard are locking up thousands of rioters in out-door prison camps like the one being 

built near my home, what can we expect of investments controlled by Wall Street Banks? 

212


I contend in such a time the only things you have of value are your personal belongings 

and a small self sufficient farm, or maybe a boat upon which to sail away. I’m basing this 

on the experiences of World War II refugees. 

My father in 1960 had a drawer full of 100,000 mark notes from the pre World War II 

German hyperinflation. So far as I know, those people lost everything and were so 

psychologically traumatized that they were the perfect set-up for a Satanic dictator. Many 

of them, so I read, had lost any sense of humanity, or of care for their friends or 

neighbors. They were emotional basket cases. And then came the pre-SS gangs beating 

people in broad daylight on the sidewalk. Seeing that, others would naturally close down, 

avoid protest, and avoid any sort of potential trouble for themselves. 

The dictator and his minions stole the homes, furniture, art, lives, even gold dental 

fillings. Why should I expect America to have a peaceful end to a crashed economy 

considering that about a third of society is made of brutal moral-less young people with 

no culture, no education, ill manners, and proclivity toward sex and drugs without 

faithfulness to anyone? 

Tell me in just a few words if you’ll be so kind. Have I gone off the deep end? Am I 

taking my vision much too far, or am I right? Is the only wise investment now a small 

farm far from people, tools, a water well, and a lot of heirloom seeds? Should I ignore the 

promises of riches in IPO’s and just go on being an incorrigible conservative/libratarian? 

Kind regards, 

Steve Newdell 

The Three Coming False Flags 

Friday, June 10th, 2011 

By Silver Shield 

Don’t Tread On Me http://dont-tread-on.me/ 

213


I have been tempted to write about False Flags for sometime, because I feel we are 

on the verge of seeing another one very soon. False flag operations are covert 

operations designed to deceive the public in such a way that the operations appear as 

though they are being carried out by other entities. (Wikipedia) False flags do not 

happen very often, but when they do happen, they change the paradigm we operate 

in. Now that we supposedly killed bin Laden last month, it seems like the deck is 

clear for another one. 

Historically, false flags are military in nature, but I feel going forward, they will 

morph into something worse. Every system built on debt needs constant debt to be 

created, or the system implodes. If the Elite can expand the system through asset 

bubbles, then all is well. What happens if they can’t get more debt created? They 

need to either steal other assets to provide capital to the system or they need a reason 

to create massive debts that the masses will sacrifice for. Wars do both. With war, 

the Elite can confiscate natural resources of other nations and provide the context to 

create massive amounts of new debt. 

Our system is failing and there is NO fixing it. There is so much inequity built into 

the system, at every level, the only answer is a complete collapse. This collapse will 

leave a generational scar, so that humanity never again considers fractional reserve 

banking and the war machine it enables. Until that collapse, the Elite will do what 

they have always done, create more debts and wars. 

In my opening blog post this year, Doom Is Always Six Months Away, I wrote 

that the Elite see their power paradigm collapsing on its own cancerous self. A 

silver default, debt doom, dollar collapse, peak oil or whatever leads to the end of the 

Anglo-American Petro Dollar financial paradigm. I hypothesized our Anglo- 

America Elite might need to pull off three false flags in order to fail forward. This 

might include the typical military false flag, an economic false flag and an internet 

false flag. These dramatic measures will seem necessary to the elite and the horrific 

toll on humanity will be justified in their minds. This upheaval will be the time for 

the elite to settle all of the threats to their power paradigm. 

The first of the three threats to their power is the death of the dollar. The dollar is 

the basis of all of the elites’ power, without it or an equivalent of it, they have no 

means to create the debt that enslaves nations, states, corporations, and citizens of 

the world. 

This debt provides the Elite with an unlimited checkbook to fund the most powerful 

military in the world. It controls the world’s natural resources so that their 

corporations can harvest them. It also protects the shipping lanes that transports the 

rest of the world’s trade. This debt also buys the political power for which the elite rig 

the game to their favor. Finally, the elite use the money to own all of the major 

media in order to distract the masses from the real problem in this world, the elite 

bankers. 

It is no secret that the dollar is going to die; it is a mathematical inevitability. 

Nothing can stop the ultimate collapse of the dollar. Our monetary system is based 

on debt and in order for it to work, more debt needs to be created every year in 

excess of the debt and interest accrued the year before. If it does not happen, there 

214


would be a massive wave of defaults that would suck the system dry in a few weeks. 

When you truly understand this debt-based money, you realize that debt cannot ever 

be repaid because there would not be 1 dollar in existence. In our sick system, money 

is created when debt is created. When debt is paid off money is destroyed. 

The elite don’t necessarily care if the dollar lives or dies, they just want to control 

the world’s reserve currency. They would ultimately like to have an global 

international currency that would be far away from the pesky national politicians. So 

if the dollar is doomed, how can the elite fail forward? The answer: create a financial 

crisis so incredible that desperate people will beg the elite to make the pain stop. 

They did it in 1907 to set the stage for the Federal Reserve. They did it in 2008 when 

they held up America for $700 billion. They will do it again and use the line of 

stability as the main reason why we should accept their new corrupt plan. 

I don’t think they can pull off something so large like that without a much larger 

distraction to silence the masses, which brings me to the second threat. The only 

thing I think big enough to scare the masses under the “protective” hug of the elite, is 

another World War. 

Nations outside the Anglo-American empire have been gaining power the further we 

slip into debt — and this is a huge threat. Countries like China, Russia, Iran, 

Venezuela, South Africa and to a lesser extent Japan, Germany, and France have 

been on the losing end of the Anglo-American Empire for over a century. These 

nations have a history of Anglo-American losses like the Cold War, Opium Wars, 

Operation Ajax, CIA attempted coup of Chavez, Apartheid, Hiroshima, Treaty of 

Versailles, and Waterloo. These are only some of the examples our elite have used in 

the past to ensure our supremacy. The elite feed us some lie about us making the 

world safe for democracy, while they pull the most evil and disgusting power grabs 

to eliminate threats to their paradigm. 

I believe that the collapse of the dollar will be blamed not on our corrupt and 

doomed monetary system that the elite are in sole control of. They will blame it on 

China. Let me first state that I am NO fan of China. Their elite have human rights 

violations against their own citizens that would make you sick to your stomach. 

Let’s be honest, China would not be a threat to us if our elite did not build them up. 

Our Military Industrial Complex needs an enemy to justify their war machine. The 

War on Terror was a good ride, but after almost a decade, it is getting a little old. 

Our banking system needed another country to buy into our paper Ponzi scheme. 

China became the most obvious target, after Japan gorged itself on our debt to death. 

Our elites made deals with their elites, to move our manufacturing overseas to use 

their slave labor and pollute their environment. The Chicoms got all of the 

technology, manufacturing and dollars to build up China as a threat. Our Elite did 

this to make tremendous profits and keep the dollar paradigm going. In the end, I 

believe the elite intend to use the Chinese as the next enemy in a paradigm-shifting 

war. 

When China said no more American debt, the Federal Reserve stepped in as a 

buyer of last resort. This has bought us some time, but it is becoming obvious that 

even when QE3 happens, this won’t end good. The American economic system is 

like the heroin guy from the movie Se7en, any flash of inflation or deflation will 

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create a massive heart attack. The Elite must some how solve Triffin’s Dilemma 

where a world reserve currency reaches its apex and must be allowed to default, but 

somehow not drag down the rest of the world with it. The elite have been trying to 

get regional and ultimately global currencies in place to solve this dilemma. Now no 

nation is going to give up their power to create money, especially now that we are 

looking at the Euro imploding. The only option is to do it the old-fashioned way: 

through war. 

The only thing the United States is good for is exporting debt and bombs. There is 

way too much at stake for our elite to just walk silently into the night without a fight. 

They are trying to keep things going by fighting now four wars in the oil rich MENA 

region, but the writing is on the wall. The debt ceiling will be raised, more 

money/debt will be created and the war machine will churn. This will not end 

because the elite will say, “we can’t do this anymore.” If anything, history has shown 

when the chips are on the table and they are up against the ropes, they double down 

and go off to war. 

The destruction of the dollar will either be the cause of war or the war will be the 

destruction of the dollar. If there is an economic False Flag, like a massive treasury 

sell off, that will be the cause for war with China. Or if there is a military False Flag, 

that will be the cause for the dollar’s destruction and forced introduction of a new 

money paradigm, possibly a global currency. The elite will use this upheaval to 

destroy any competitors. In the smoking aftermath of the war, they will impose a 

new paradigm based upon the same destructive seeds of the old paradigm. 

There is a third threat to the Eilte’s power paradigm: the Internet. There is no 

doubt that the Internet has gotten away from the elite and their lies have been 

exposed. As small sites like mine and hundreds of others show over and over again, 

the emperor has no clothes. I can see an internet False flag to coincide with this 

economic and military false flag. They will blame China for massive internet 

shutdowns of many sites. I believe that the big corporations will still have 

functioning internet, but small sites will be shut down. If this does not happen, they 

may do something more tyrannical, and shut down sites that speak out against this 

lie of war and debt. 

Most tyrannies go after the heads of the revolution like local leaders and/or 

opinion-makers like journalists and bloggers. They may ignore us at first, then call 

us crazy or unpatriotic, but ultimately they may detain or kill us. My hope is that 

people see the big picture and spread this truth so that it becomes impossible to put 

the genie of truth back in the bottle. 

My other hope is that those that are in charge of squelching dissent during these 

trying times will be Oath Keepers, who will not follow un-Constitutional orders 

against their fellow citizens. The most likely outcome is the government minion’s 

pay checks will bounce with their pensions stolen before we get to that kind of 

tyranny. At that point, those minions will most likely be the strongest allies to the 

truth movement, as they spill the beans and point the fingers. 

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I wrote an article Who Will Be the Most Dangerous Man in The World?, in it I 

describe a man that sees what he is doing is evil and has the power to destroy the 

system he once created. 

Daniel Ellsberg exposed the Vietnam scam and ended that war. We cannot fight 

evil, we only need to expose evil and it will cease to have power. The real challenge 

is to show people that the good that they think they are doing is really evil and they 

will no longer do it. We need to convince our fellow citizens that debt and war are 

evil and that we rid this scourge from humanity once and for all. 

The timing and order of all of this is unknown, but just know that it is going to 

get dramatically worse before this gets any better. Every 80 years or so a paradigm 

dies and a new one is born out of the ashes of the old. 80 years ago we had the Great 

Depression and World War II and this was the creation of the current paradigm. 80 

years before that we had the Civil War and 80 years before that we had the 

Revolutionary War. So far the United States has survived and gone on to become a 

Global Super Power. This time around we could have the possibility of a 

Revolutionary War, a Civil War, or a World War or even the combination of all 

three. There is nothing in writing saying that America will go on. In fact, given our 

horrible record of debt and war, this system deserves to die an awful death. 

What lies ahead? I don’t think the United States will be invaded, but we will retreat 

from our 777 military bases all over the world. We will no longer be able to consume 

25% of the world’s oil and create unlimited amounts of debt. Our lives will become 

much slower and local. If the Internet does continue to be free, there is a great 

chance of a new Renaissance for humanity as we move past debt and war. If the 

Elite somehow win, you will see the rise of American Oligarchs. 

The Elite will fund and create front men to buy up strategic assets while there is 

blood on the streets. This happened during the collapse of the Soviet Empire and I 

believe it will happen here. During the collapse of the Soviet Empire the Ruble was 

devalued, the economy collapsed and people starved. The Rothschilds came in with 

hard currencies like the Dollar and the Deutschmark and set up average men with 

banks and capital to buy state assets for a song. When our crisis comes, the Banksters 

will be screaming for state assets like land, roads, buildings, mining and drilling 

rights and other assets. They are doing this in Greece and they will do it here. 

While all of this may be too scary or too much for you to believe or even too big for 

you to deal with, I encourage you to not hide from this coming reality. Things are 

only scary if you do not understand them. 

SN: This author calling himself “Silver Shield” has mentioned hyper-inflation, as 

have others. Here is an explanation about Hyperinflation that is vitally important for 

your edification. 

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The German Hyperinflation of 1923 

Excerpt from Paper Money by "Adam Smith," (George J.W. Goodman), pp. 57-62. 

In the mid-1960s, money manager George J.W. Goodman began to write a series of 

irreverent and witty columns for New York magazine under the borrowed name of 

capitalism's founding theorist, Adam Smith. As "Adam Smith," Goodman went on 

to write several bestsellers about economics, the stock market, and global capitalism, 

among them The Money Game, Supermoney, and Paper Money, from which this 

account of the Weimar Republic's disastrous hyperinflation is excerpted. 

Before World War I Germany was a prosperous country, with a goldbacked 

currency, expanding industry, and world leadership in optics, 

chemicals, and machinery. The German Mark, the British shilling, the 

French franc, and the Italian lira all had about equal value, and all were 

exchanged four or five to the dollar. That was in 1914. In 1923, at the 

most fevered moment of the German hyperinflation, the exchange rate 

between the dollar and the Mark was one trillion Marks to one dollar, 

and a wheelbarrow full of money would not even buy a newspaper. 

Most Germans were taken by surprise by the financial tornado. 

"My father was a lawyer," says Walter Levy, an internationally known 

German-born oil consultant in New York, "and he had taken out an 

insurance policy in 1903, and every month he had made the payments 

faithfully. It was a 20-year policy, and when it came due, he cashed it in 

and bought a single loaf of bread." The Berlin publisher Leopold Ullstein 

wrote that an American visitor tipped their cook one dollar. The family 

convened, and it was decided that a trust fund should be set up in a 

Berlin bank with the cook as beneficiary, the bank to administer and 

invest the dollar. 

In retrospect, you can trace the steps to hyperinflation, but some of the 

reasons remain cloudy. Germany abandoned the gold backing of its 

currency in 1914. The war was expected to be short, so it was financed 

by government borrowing, not by savings and taxation. In Germany 

prices doubled between 1914 and 1919. 

After four disastrous years Germany had lost the war. Under the Treaty 

of Versailles it was forced to make a reparations payment in gold-backed 

Marks, and it was due to lose part of the production of the Ruhr and of 

the province of Upper Silesia. The Weimar Republic was politically 

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fragile. 


But the bourgeois habits were very strong. Ordinary citizens worked at 

their jobs, sent their children to school and worried about their grades, 

maneuvered for promotions and rejoiced when they got them, and 

generally expected things to get better. But the prices that had doubled 

from 1914 to 1919 doubled again during just five months in 1922. Milk 

went from 7 Marks per liter to 16; beer from 5.6 to 18. There were 

complaints about the high cost of living. Professors and civil servants 

complained of getting squeezed. Factory workers pressed for wage 

increases. An underground economy developed, aided by a desire to beat 

the tax collector. 

On June 24, 1922, right-wing fanatics assassinated Walter Rathenau, the 

moderate, able foreign minister. Rathenau was a charismatic figure, and 

the idea that a popular, wealthy, and glamorous government minister 

could be shot in a law-abiding society shattered the faith of the Germans, 

who wanted to believe that things were going to be all right. Rathenau's 

state funeral was a national trauma. The nervous citizens of the Ruhr 

were already getting their money out of the currency and into real goods 

-- diamonds, works of art, safe real estate. Now ordinary Germans began 

to get out of Marks and into real goods. 

Pianos, wrote the British historian Adam Fergusson, were bought even 

by unmusical families. Sellers held back because the Mark was worth 

less every day. As prices went up, the amounts of currency demanded 

were greater, and the German Central Bank responded to the demands. 

Yet the ruling authorities did not see anything wrong. A leading 

financial newspaper said that the amounts of money in circulation were 

not excessively high. Dr. Rudolf Havenstein, the president of the 

Reichsbank (equivalent to the Federal Reserve) told an economics 

professor that he needed a new suit but wasn't going to buy one until 

prices came down. 

Why did the German government not act to halt the inflation? It was a 

shaky, fragile government, especially after the assassination. The 

vengeful French sent their army into the Ruhr to enforce their demands 

for reparations, and the Germans were powerless to resist. More than 

inflation, the Germans feared unemployment. In 1919 Communists had 

tried to take over, and severe unemployment might give the Communists 

another chance. The great German industrial combines -- Krupp, 

Thyssen, Farben, Stinnes -- condoned the inflation and survived it well. 

A cheaper Mark, they reasoned, would make German goods cheap and 

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easy to export, and they needed the export earnings to buy raw materials 

abroad. Inflation kept everyone working. 

So the printing presses ran, and once they began to run, they were hard 

to stop. The price increases began to be dizzying. Menus in cafes could 

not be revised quickly enough. A student at Freiburg University ordered 

a cup of coffee at a cafe. The price on the menu was 5,000 Marks. He 

had two cups. When the bill came, it was for 14,000 Marks. "If you want 

to save money," he was told, "and you want two cups of coffee, you 

should order them both at the same time." 

The presses of the Reichsbank could not keep up though they ran 

through the night. Individual cities and states began to issue their own 

money. Dr. Havenstein, the president of the Reichsbank, did not get his 

new suit. A factory worker described payday, which was every day at 

11:00 a.m.: "At 11:00 in the morning a siren sounded, and everybody 

gathered in the factory forecourt, where a five-ton lorry was drawn up 

loaded brimful with paper money. The chief cashier and his assistants 

climbed up on top. They read out names and just threw out bundles of 

notes. As soon as you had caught one you made a dash for the nearest 

shop and bought just anything that was going." Teachers, paid at 10:00 

a.m., brought their money to the playground, where relatives took the 

bundles and hurried off with them. Banks closed at 11:00 a.m.; the 

harried clerks went on strike. 

The flight from currency that had begun with the buying of diamonds, 

gold, country houses, and antiques now extended to minor and almost 

useless items -- bric-a-brac, soap, hairpins. The law-abiding country 

crumbled into petty thievery. Copper pipes and brass armatures weren't 

safe. Gasoline was siphoned from cars. People bought things they didn't 

need and used them to barter -- a pair of shoes for a shirt, some crockery 

for coffee. Berlin had a "witches' Sabbath" atmosphere. Prostitutes of 

both sexes roamed the streets. Cocaine was the fashionable drug. In the 

cabarets the newly rich and their foreign friends could dance and spend 

money. Other reports noted that not all the young people had a bad 

time. Their parents had taught them to work and save, and that was 

clearly wrong, so they could spend money, enjoy themselves, and flout 

the old. 

The publisher Leopold Ullstein wrote: "People just didn't understand 

what was happening. All the economic theory they had been taught 

didn't provide for the phenomenon. There was a feeling of utter 

dependence on anonymous powers -- almost as a primitive people 

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believed in magic -- that somebody must be in the know, and that this 

small group of 'somebodies' must be a conspiracy." 

When the 1,000-billion Mark note came out, few bothered to collect the 

change when they spent it. By November 1923, with one dollar equal to 

one trillion Marks, the breakdown was complete. The currency had lost 

meaning. 

What happened immediately afterward is as fascinating as the Great 

Inflation itself. The tornado of the Mark inflation was succeeded by the 

"miracle of the Rentenmark." A new president took over the Reichsbank, 

Horace Greeley Hjalmar Schacht, who came by his first two names 

because of his father's admiration for an editor of the New York Tribune. 

The Rentenmark was not Schacht's idea, but he executed it, and as the 

Reichsbank president, he got the credit for it. For decades afterward he 

was able to maintain a reputation for financial wizardry. He became the 

architect of the financial prosperity brought by the Nazi party. 

Obviously, though the currency was worthless, Germany was still a rich 

country -- with mines, farms, factories, forests. The backing for the 

Rentenmark was mortgages on the land and bonds on the factories, but 

that backing was a fiction; the factories and land couldn't be turned into 

cash or used abroad. Nine zeros were struck from the currency; that is, 

one Rentenmark was equal to one billion old Marks. The Germans 

wanted desperately to believe in the Rentenmark, and so they did. "I 

remember," said one Frau Barten of East Prussia, "the feeling of having 

just one Rentenmark to spend. I bought a small tin bread bin. Just to buy 

something that had a price tag for one Mark was so exciting." 

All money is a matter of belief. Credit derives from Latin, credere, "to 

believe." Belief was there, the factories functioned, the farmers delivered 

their produce. The Central Bank kept the belief alive when it would not 

let even the government borrow further. 

But although the country functioned again, the savings were never 

restored, nor were the values of hard work and decency that had 

accompanied the savings. There was a different temper in the country, a 

temper that Hitler would later exploit with diabolical talent. Thomas 

Mann wrote: "The market woman who without batting an eyelash 

demanded 100 million for an egg lost the capacity for surprise. And 

nothing that has happened since has been insane or cruel enough to 

surprise her." 

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With the currency went many of the lifetime plans of average citizens. It 

was the custom for the bride to bring some money to a marriage; many 

marriages were called off. Widows dependent on insurance found 

themselves destitute. People who had worked a lifetime found that their 

pensions would not buy one cup of coffee. 

Pearl Buck, the American writer who became famous for her novels of 

China, was in Germany in 1923. She wrote later: "The cities were still 

there, the houses not yet bombed and in ruins, but the victims were 

millions of people. They had lost their fortunes, their savings; they were 

dazed and inflation-shocked and did not understand how it had 

happened to them and who the foe was who had defeated them. Yet 

they had lost their self-assurance, their feeling that they themselves could 

be the masters of their own lives if only they worked hard enough; and 

lost, too, were the old values of morals, of ethics, of decency." 

The fledgling Nazi party, whose attempted coup had failed in 1923, won 

32 seats legally in the next election. The right-wing Nationalist party 

won 106 seats, having promised 100 percent compensation to the victims 

of inflation and vengeance on the conspirators who had brought it. 

1981 George J. W. Goodman. 

SN: I do not entirely blame the German people for what happened in 

World War II. They were victimized as much as were the other victims 

of war by the monster bankers who created this travesty of decency and 

justice. Most Germans were cultured, educated, Lutheran, with a social 

moray of precision work, and help for their neighbors. What happened 

to their society cannot be entirely blamed on those who were 

impoverished and cringing in fear of the NAZI’s. I weep for them as 

much as I do for all the other victims of that terrible war. Germans I 

have met during my life have been admirable people and sometimes 

friends. They should not be forever reviled for the terror of those days. 

My fear now is that the same things that happened in Germany then will 

happen in America soon and I will weep bitter tears for a lot of good 

people lost again. 

This next piece is controversial in my view, however an educated man 

must tolerate literature with which he disagrees to prove his wisdom. In 

many of Silver Shield’s previous articles I’ve cleaned up some glaring 

grammatical mistakes and occasional sentence structure. I have made no 

attempt to edit this piece. It’s chips fall as they may. 

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Top 5 Places NOT To Be When 

The Dollar Collapses 

By Silver Shield,on June 23rd,2011 

The dollar collapse will be the single largest event in human 

history. This will be the first event that will touch every single living 

person in the world. All human activity is controlled by money. Our 

wealth, our work, our food, our government, even our relationships 

are affected by money. No money in human history has had as much 

reach in both breadth and depth as the dollar. It is the de facto world 

currency. All other currency collapses will pale in comparison to this 

big one. All other currency crises have been regional and there were 

other currencies for people to grasp. This collapse will be global and it 

will bring down not only the dollar but all other fiat currencies, as they 

are fundamentally no different. The collapse of currencies will lead to 

the collapse of ALL paper assets. The repercussions to this will have 

incredible results worldwide. (Read the Silver Bullet and the Silver 

Shield to protect yourself from this collapse.) 

Thanks to the globalization and the giant vampire squids of the 

Anglo-American Empire, the dollar is the world’s reserve 

currency. It supports the global economy in settling foreign trade, 

most importantly the Petro Dollar trade. This money is recycled 

through the City of London (not to be confused with London) and New 

York. This fuels our corporate vampires that acquires and harvests the 

wealth of the world. The corporate powers suppress REAL assets like 

natural resources and labor to provide themselves massive profits. 

This Fascist,Statist,Collectivist model provides the money into the 

economy to fund an ever increasing federal government. That 

government then grows larger and larger enriching its minions with 

jobs to control their fellow citizens. Finally, to come full circle, the 

government then controls other nations through the Military Industrial 

Complex. 

This cycle will be cut when the mathematically and inevitable 

collapse of the dollar occurs. In order for our debt based money to 

function we MUST increase the debt every year in excess of the debt 

AND interest accrued the year before or we will enter a deflationary 

death spiral. When debt is created, money is created. When debt is 

paid off, money is destroyed. There is never enough to pay off the 

debt, because there would be not one dollar in existence. 

We are at a point where we either default on the debt, willingly 

or unwillingly, or create more money/debt to keep the cycle 

moving. The problem is if you understand anything about 

223


compounding interest, we are reaching the hockey stick moment 

where the more debt that is incurred, the less effective it is and this 

leads us to hyper inflation. 

There are only two actors needed for this hyper inflation.theLender of 

Last Resort, the Fed, and the Spenderof Last Resort, the government. 

These two can, and will, blow up the system. I believe they will wait 

until the next crisis and the whiff of deflationary depression before 

they fire up the printing presses. That crisis is coming very soon at the 

end of this summer or fall. The money and emergency measures are 

worn out. The fact is NONE of the underlying problems that caused the 

2008 crisis have been resolved. The only thing that has happened is 

that instead of corporate problems, we now have nation problems. In 

this movie Greece will play the role of Lehman Brothers and the United 

States will play the role of AIG. The problem is there is nowhere to 

kick the can down the road and there is no world government to 

absorb the debt, yet…(Problem, Reaction, Solution.) 

So this leads me to the Top 5 Places Not To Be When the Dollar 

Collapses. 

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1. Israel- This Anglo-American beach head into the Middle East was 

first conceived by the most powerful family in the world, the 

Rothschilds,in 1917. The Balfour Declaration said that there will be a 

Zionist Israel years before World War two and the eventual 

establishment of Israel. Israel has not been a good neighbor to its 

Muslim nations and has always had the two biggest bullies on the 

block at it’s back. When the dollar collapses,the United States will have 

much to much on its plate both domestically and internationally to 

worry about such a non-strategic piece of land. This will leave Israel 

very weak at a time when tensions will be high. This very thin strip of 

desert land will not be able to with stand the economic reality of 

importing its food and fuel or the political reality of being surrounded 

by Muslims. 

2. Southern California- The land of Fruits and Nuts turns into 

Battlefield Los Angeles. 20 million people packed into an area that has 

no water and thus food is not good to say the least. Throw on top of 

225


the huge wealth disparities and the proximity to a narco state and this 

does not bode well. We have seen riots for Rodney King,what will 

happen when the dollar is destroyed and food an fuel stop coming into 

this area. People will get desperate and do crazy things,especially 

when a huge proportion of its citizens are on anti depressants. If food 

and fuel cannot get in,what about Zolfot? At a time when people’s 

world are falling apart they lack the ability to deal with this new 

paradigm. If people come off of these drugs too fast they suffer 

psychotic breaks and you will have thousands of shootings or suicides. 

3. England- The Land of the Big Brother and former Empire of world 

wide slave and drug trade will suffer heavily. The stiff upper lip that 

their the British Elite ingrained into their sheeple will not work 

anymore as the British population explodes. The human character will 

sacrifice and unite for a foreign enemy,but not if the enemy has 

always been the Elite. The Anglo-American Empire may pull off 

another false flag to distract it’s population on another Emmanuel 

Goldstein like in 1984,but I feel this collapse will happen before they 

pull it off. This will make all eyes point at the British Elite as solely 

responsible for this catastrophe. We have seen massive riots for soccer 

matches with hooligans. What will happen when this island with very 

little food and fuel gets cut off? 

4. New York City- Another large urban area living too high on the 

dollar hog. NYC is the area I moved out of in 2008. There is little doubt 

that all of the wealth in New York,New Jersey and Connecticut is 

derivative off of Wall Street wealth. The savings and investments of 

the whole nation and much of the world flows through this financial 

capital. As the world wakes up to the massive financial fraud,this will 

lead to the destruction of capital like we have never seen before. This 

will have tremendous effects on the regional economy as people 

driving in Mercedes suddenly wonder where their next meal is coming 

from. 

5. Washington D.C.- The political collapse of the Federal Government 

will wreck havoc on the hugely inflated local economy. As more and 

more states find it necessary to assert their natural control,the Federal 

Government will suddenly loose power and importance as the whole 

world suffers from a Global Hurricane Katrina. The money that they 

create and spend,will become worthless and the government minions 

pensions will evaporate. Millions that once relied on the ability to force 

others to send their money to them,will learn that the real power has 

always been at the most local level. Massive decentralization will be 

the answer to globalization gone mad. Local families and communities 

will forgo sending money and power out of their community,as they 

will care about their next meal and keeping warm. 

226


“You can ignore reality,but you can’t ignore the consequences 

of ignoring reality.” -Ayn Rand 

To sum up,those areas that have lived highest on the hog in the 

dollar paradigm will most likely be the worst places to live 

when the dollar collapses. Many of you will find this article with 

passing interest,but rest assured this dollar collapse is coming. It is a 

mathematical inevitability. We will not be as fortunate to muddle 

through this collapse like we did in 2008 when it was a corporate 

problem. This time around,it is a national and global problem. The 

global Ponzi scheme has run out of gas as the demographics decline,as 

cheap abundant oil declines,as hegemonic power declines. This comes 

at a time when we reach the exponential or collapse phase of our 

money. The Irresistible Force Paradox says,“”What happens when an 

unstoppable force meets an immovable object?”We are about to find 

out,when infinite money hits a very finite world. 

If you want to become aware and prepared for this collapse,please join 

the free Sons of Liberty Academy. 

Cartoon fills next page 







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Labor Pains 

Friday, June 10th, 2011 

By Barb Adams 

GCN Live.com 


President Obama expressed concern this past week about the sudden slowdown in 

the economy but said he is not worried about another recession and that the nation 

should “not panic.” With the recent downturn in the economy and the 

unemployment rate at 9.1%, many ideas are being discussed as to how to bolster the 

nation’s lackluster job market. One disturbing and seemingly nonsensical idea that is 

being considered is the possible rollback of child labor laws. 

Although Congress has the right to restrict child labor under the Fair Labor 

Standards Act , many states are being pressured to loosen restrictions by businesses 

which employ young people. Arguments range from giving employers and students 

229


more flexibility in work schedules to giving students valuable work experience at much 

earlier ages. But this would be at the expense of the minors, as proponents seek to pay 

them less than minimum wage; and research shows that students who work more have 

lower grades, more behavioral problems, and higher dropout rates. 

A recent decision by the state of Maine to roll back restrictions on the number of hours 

minors can work appears to be only the beginning. Although Maine’s child labor laws are 

still stricter than many other states, their legislature is considering allowing employers to 

pay employees under the age of 20 a “training wage” of $5.25, which is well less than 

Maine’s minimum wage of $7.50. 

In February, Missouri State Senator Jane Cunningham sponsored a bill (SB222) which 

would have removed restrictions on employing children under the age of 14 as well as 

removing the limits on the hours children could work per day. 

Additionally, the bill would have also removed inspections of companies hiring underage 

children. 

A particularly bizarre clause in the bill stated that “Children under 16 will also be 

allowed to work in any capacity in a motel, resort, or hotel where sleeping 

accommodations are furnished.” Do we dare think what is implied in that statement? 

And these are not isolated incidences. Senator Mike Lee of Utah, elected last year with 

Tea Party support, has publicly questioned the constitutionality of federal anti-child labor 

laws. So has Joe Miller of Alaska. 

Ironically, this week in Massachusetts, which was the first state to regulate child labor in 

1836, the owners of multiple Dunkin Donuts in the Fall-River area were fined for 

violating that state’s child labor laws. And in March, three of the nation’s biggest movie 

theater chains paid $277,000 in federal fines for violating child-labor laws. 

The Human Rights Watch organization documents child labor and trafficking 

globally, and is concerned about the “Hundreds of thousands of children (who) are 

employed as farm workers in the United States, often working 10 or more hours a day. 

They are often exposed to dangerous pesticides, experience high rates of injury, and 

suffer fatalities at five times the rate of other working youth. Their long hours contribute 

to alarming drop-out rates. Government statistics show that barely half ever finish high 

school.” 

June 12th has been designated World Day Against Child Labor. Perhaps Americans 

should reflect on where child labor laws may be headed. Jay Leno of The Tonight Show, 

in response to Missouri State Senator Jane Cunningham’s proposed bill, may have said it 

best, “Well, yeah, why should the 10-year-olds in China be getting all the good factory 

jobs?” Let’s protect America’s future by first protecting the children. 

Barb Adams is the talk radio host of Amerika Now, which airs on GCN 

every Saturday night from 9:00 p.m. – 1:00 a.m. CST. Or listen On 

Demand anytime. Join her every week for a dose of reality, solutions, 

some great tunes, and the search for truth. 

230


SN: In an attempt to be even handed I’d like to answer this paragraph – “A particularly 

bizarre clause in the bill stated that “Children under 16 will also be allowed to work 

in any capacity in a motel, resort, or hotel where sleeping accommodations are 

furnished.” Do we dare think what is implied in that statement? 

One’s first impression is that children at motels and resorts will be impressed into sexual 

servitude, which is a disgusting thought anywhere, but worse when supported by 

American law! 

The other intention may have been that families who own a motel can ask their kids to 

help vacuum floors, wash windows, dust furniture, run the laundry machines, carry out 

trash, answer the phone and do other housekeeping chores – without fear of the labor 

department coming down on them. 

I worked in my parents’ Dry Cleaning business occasionally from age 12. I learned to 

deal with customers and the telephone properly, and I learned to discipline myself to do 

labor even when I didn’t want to or when my muscles ached. I think it was a very 

valuable experience. The problem is simply that the proposed bill does not more clearly 

state the intention of that paragraph. 

An excerpt from Bob Chapman's weekly publication. 

May 25 2011: The price of gold a flight to quality, the need for a gold 

backed dollar, elitists wanting fiat currency, rampant inflation in US 

and Europe, Greece in default, living with the consequences of the 

greatest fraud in history, 

We believe that for the past 2-1/2 years the price of gold 

has been mainly driven by a flight to quality, as gold vied with the 

dollar for supremacy, as the world’s reserve currency. As we have 

witnessed gold has won that battle. The only way the dollar or any 

other world reserve currency can compete is by being backed 25% by 

gold. 

The elitist’s royalty of Wall Street and the City of London are 

quite upset with these developments, because they want all currencies 

to be fiat, so that they would not have to have a gold backed 

international monetary unit. 

Over the last six months another historic factor has come into 

play in evaluating gold versus currencies, and that is the 

interconnectivity of gold’s relationship with inflation. In the late 1970s 

this was the underlying factor for the rise in the prices of both gold 

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and silver. At that time they never had the luxury of strength also 

coming from recognition of being monetary units. 

We hear the manic claims that gold and silver are bubbles or are 

manias. That cannot be because gold is and always has been the only 

real money. Every time the major media makes these bogus claims 

they always fail to mention that both gold and silver have appreciated 

in value in excess of 20% annually versus nine major currencies. They 

refuse to point out gold and silvers’ 11 years track record having risen 

from $260.00 and $3.80 respectively to more than $1,500 and $50 per 

ounce. This shows you the massive deception by the major media, 

which is totally controlled by the elitists from behind the scenes. 

When QE3, or something akin to it, is implemented during the 

summer, it will give the stock and bond markets one last boost. Most 

of the gains from a future QE3 have already been reflected in the 

market place. On the other hand such recognition by investors, not as 

yet discounted, will give a very large boost upward to gold and silver. 

As this takes place downward pressure will begin to appear in the 

stocks, bonds and the dollar. Those events will make it even more 

difficult to sell US Treasury and Agency bonds. Efforts will have to be 

added by the Fed to cover up the again ongoing losses of banks and 

brokerage houses – the financial sector – under the concept of too big 

to fail. The greater the effort needed to save these bankrupt 

institutions and the government the greater heights gold and silver will 

rise too. 

Adding fuel to the fire most other nations will have their own 

versions of QE3 compounding world inflationary problems. Even if a 

nation is not causing inflation they are forced to absorb foreign nation 

inflation whether they like it or not. 

You have to look at the terrible fundamentals America is facing. 

The Fed has a balance sheet close to $3 trillion that could be $5 trillion 

in a year and one-half. If they purchase 80% of Treasuries and 

Agencies they would bolster the declining economy but only 

temporarily. There is no end in sight for zero interest rates. Both the 

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increases in money and credit and low interest rates will continue to 

send inflation into orbit. 

Monetization is the name of the game and the Fed and other 

central banks are playing it to the hilt. The ECB raises interest rates 

½% and expects miracles. That could happen after they raise them 

5% to 6%. Talk about misdirection as they continue to increase money 

and credit. They must think fellow Europeans and others are dumb and 

that is not the case. They knew as well as we do that what the Fed and 

ECB does causes monetization and inflation. Americans are used to 

inflation and heretofore they have been able to adjust for it. Other 

nations have not had that luxury in the past. Foreigners are far more 

sophisticated when it comes to propaganda and do not as easily fall for 

it as Americans do. 

You would have to be stone dumb not to recognize the rampant 

inflation in the US, England and Europe. Gasoline and petroleum 

derivative products and food costs have gone up substantially. Not 

only in the regions but also worldwide. As a result, inflation will be 

14% in the UK and US by year end and 8% on the Continent. 

It is not only the federal government that is broke, but so are 

the states and municipalities in the US. 

Europe and England have the same problems. More than 40 

states are struggling to balance their budgets. Most will, some will not 

and they’ll default on the interest payment on their bonds and 

probably have to pay vendors with IOU’s. There could be another 

federal bailout but we doubt it due to the battle over budget cuts in 

Washington. 

As these problems stand in the forefront the government’s debt 

dilemma is not going to go away anytime soon and over the next two 

years the US could experience a downgrade in its credit rating. 

Unfunded liabilities are $105 trillion and they are unfunded. Although 

stretched over years they still have to be paid unless benefits are 

adjusted. 

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We address the problems in Europe every week. Greece and its 

financial problems are still being negotiated. The discussion at hand 

only carries the shortfall in funding over the next year or two. The 

demand by banks for collateralization of debt by just about everything 

Greece owns has been rejected not only by the people, but by most of 

the politicians as well. Greece cannot pay its debt even over time and 

should default in part or in total. Again, the loans should have never 

been made and the bankers knew better. 

Similar conditions exist in Ireland, Portugal and Belgium, Spain 

and Italy could and probably will follow. One interest rate could never 

fit all. 

The euro zone is in deep trouble and the EU is starting to 

crumble at the edges. The sovereign lenders, German, France, the 

Netherlands, Austria and Finland, are very disturbed with the position 

they find themselves in. The Germans and the Finns have been quite 

vocal about the situation and recent elections in Germany made it 

quite clear that they do not want to fund any further loans. 

As we said a year ago $4 trillion will be needed to solve the 

problems and producing that kind of funding would certainly break the 

funding nations. As we said a year ago, the second half of 2011 will be 

full of dangerous problems. 

In the midst of all this we have the head of the IMF arrested and 

charged in what we see as an elitist power struggle with the US faction 

in the US entrapping a member of the European contingent to remove 

him from his position. It worked, but the fallout will be felt for many 

years to come. This intercene warfare is happening at a most 

unfortunate juncture in the midst of discussion involving Europe and 

the IMF and Greece and other debtor nations. These events have 

heightened the pressure on an already unstable situation. 

As these events and problems unfold many nations, corporations 

and investors are reaching for gold and silver investments for safety, 

as they have many times in the past. The availability of physical metal 

is acute, as backwardation occurs in paper investments. That is spot 

234


markets are trading higher than outside months in a desire by former 

sellers to take delivery of gold and silver they previously sold. Those 

who are biding at spot are also offering those who want to take 

delivery a 25% to 30% bonus not to take delivery. That highlights how 

difficult it is to get delivery of silver. The same is true with gold, but 

delivery of physical is not quite as difficult. 

Control of the paper markets via frauds and manipulation is 

always present. Regulators, as appendages of the government, are in 

place to protect certain Wall Street insiders, harass the rest, allow the 

naked shorts to do as they please and try to put as many small 

brokers and firms as possible out of business, no matter what the cost. 

Then there are the frauds of front-running and flash crashes. The 

big question today is how do you stop fraud when it is institutionalized 

and Wall Street and banking are run by a crime syndicate in league 

with Washington? 

Just look at the trillions the Fed and the Treasury spread all over 

the US and Europe, which they were forced to divulge after their court 

appeal failed. The TARP funds episode was another example - $700 

billion in free money for Wall Street’s Illuminist friends. That was one 

of the greatest frauds in history. A new movie is being released 

depicting Hank Paulson as having saved financial America, when in fact 

he and his friends were looting the American people. 

As these events worsen the situation deterioration continues 

unabated, wars rage as distraction and for geopolitical positing. The 

costs of which are totally outrageous with the cost to the American 

taxpayer in the trillions of dollars. 

The derivatives market is totally opaque and unregulated, Wall 

Street and the government want it that way so credit derivatives can 

be used to keep interest rates near zero and gold and silver and other 

items can be controlled by insiders. 

We won’t hit the bottom of the residential housing market until 

2013 or later. The end is still nowhere in sight, as Fannie Mae and 

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Freddie Mac, Ginnie Mae and FHA make subprime and ALT-A loans. 

Commercial real estate is being held up and in place by the Fed, 

otherwise there would have already been a crash. These two shocks 

keep the economy headed downward with still yet no bottom in sight. 

Inventory for sale builds exponentially. 

GEAB N°55 is available! Global systemic crisis - 

Confirmation of a Major Alert for the second half of 2011 

– Explosive fusion of world geopolitical dislocation and 

the global economic and financial crisis 

- Public announcement GEAB N°55 (May 16, 2011) - 

Almost a year ago LEAP/E2020 identified the second half of 2011 as a new critical 

point in time in the development of the global systemic crisis. Just like our February 

2008 anticipation highlighted a major shock affecting the US economy in September 

2008, our team confirms in this GEAB issue that all the conditions have now been 

met for the second half of 2011 to be the stage for the explosive fusion of two 

fundamental trends underlying the global systemic crisis, namely world geopolitical 

dislocation on the one hand and the global economic and financial crisis on the 

other. 

In fact, for several months the world has experienced an almost unbroken succession 

of geopolitical, economic and financial shocks which, according to LEAP/E2020, 

constitute the warning signs of a major traumatic event that we analyze in this issue. 

At the same time the international system has now passed the stage of structural 

weakening to enter a phase of complete decay where old alliances are breaking 

down, whilst new communities of interest are emerging very quickly. 

Finally, any hope for significant and lasting global economic recovery has now 

evaporated (1) whilst the Western pillar’s indebtedness, especially the US, has 

reached a critical level unparalleled in modern history 

(2). 

Comparative progression of the 

United States and China’s share of 

world GNP (2001-2016) (in 

purchasing power parity) - Source: 

IMF / MarketWatch, 04/2011 

The catalyst for this explosive fusion 

will obviously be the international 

monetary system, or rather 

international monetary chaos which 

has been further exacerbated since 

the disaster that struck Japan last 

March and in front of the inability of 

the United States to face the 

requirement for an immediate and 

significant reduction of its huge 

deficits. (SN: 2 year 14’s. Symbolic or 

a mistake?) 

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The end of QE2, the symbol of and factor in the explosive fusion now underway, represents the 

end of an era, that where the "US Dollar was the currency of the United States and the rest of the 

world’s problem": from July 2011, the US Dollar will openly become the main threat weighing on 

the rest of the world and the United States’ crucial problem (3). 

Summer 2011 will confirm that the US Federal Reserve has lost its bet: the U.S. economy has, in fact, never 

left the "Very Great Depression" (4) which it entered in 2008 despite the trillions of dollars injected (5), as the 

vast majority of Americans are perfectly aware of (6). Unable to launch a QE3 (even unofficially through its 

Primary Dealers as it used to do until the world became too closely interested in the US Treasury Bond 

market), the Fed will helplessly watch interest rates rise, US government deficit costs explode, the world 

dive into an intensified economic recession, stock exchange collapse and the US dollar show erratic 

behavior, making short-term saw-tooth movements, depending on the influence of these events, before 

suddenly losing 30% of its value as we anticipated in the last issue (7). 

At the same time Euroland, the BRICS and commodity producers will rapidly strengthen their cooperation 

while launching a final attempt to salvage the international institutions created by Bretton Woods and the 

world dominated by the US /UK duo. 

This will be the last since it is unrealistic to imagine Barack Obama, who has shown no major international 

stature so far, proving himself to be a statesman and thus take no major political risks in a presidential 

election year. 

Progression of the Shiller index of standard existing house prices in the USA (1890-2011) (in red: projection) - 

Source: R.J. Schiller / Steve Barry / Big Picture / New York Times, 01/2011 

Barriers, security, export embargos, diversification of reserves, 

frenzy over commodities, widespread rising inflation ... the world is 

preparing for a new economic, social and geopolitical shock 

China has just announced that it is halting all diesel exports to try and stop a rise in 

fuel prices that recently caused a series of strikes by road haulers (8). May the Asian 

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countries that depended on these Chinese exports manage, just like Japan has done 

in the aftermath of last March’s disaster! 

Russia has also stopped exporting certain oil products to limit domestic shortages 

and price increases (9), an export halt added to that on cereals imposed several 

months ago. 

Across the Arab world, instability continues to prevail against the backdrop of the 

rising cost of basic food commodities (10), whilst questions over the extent of Saudi 

Arabia’s oil reserves and production capacity have resurfaced (11). 

In the United States, any weather event out of the ordinary immediately causes the 

risk of shortages due to the lack of a security "buffer" in the US distribution system, 

except to call upon strategic stockpiles (12). Meanwhile, the population reduces its 

spending on food in order to fill the tanks of their cars at more than 4 dollars a gallon 

(13). 

In Europe, the decline in social security and extreme austerity measures 

implemented in the United Kingdom, Greece, Portugal, Spain and Ireland, ... will 

cause an explosion in the number of poor. 

Percentage of the male population employed within the seven major Western economies (1970-2009) - Source: 

The Economist / OECD, 04/2011 

The EU has more or less surreptitiously just reinforced its customs arsenal to 

withstand Asian imports in particular. First, it has reviewed its whole paraphernalia 

of preferential tariffs to eliminate all emerging nations, China, India and Brazil first 

of all. Second, at the end of 2010, it discreetly passed legislation to facilitate the 

implementation of anti-dumping and safeguard measures, because now a simple 

majority is sufficient to pass such a proposal with the Commission, whilst previously 

a qualified majority was needed, often difficult to marshal (14). 

Meanwhile, central banks continue to buy gold (15), announcing more or less clearly 

that they are diversifying their reserves (16) whilst they are taking increasingly 

238


inconsistent and dangerous steps, increasing interest rates to counter inflation in a 

context of weak economies or in recession to counter the influx of liquidity generated 

by the US Federal Reserve’s policies (17). To paraphrase the title of an article by 

Andy Xie, published in Caixin of 04/22/2011, "Rising inflation makes central 

bankers mad" (18). 

And the US side is completely in dreamland: whilst the country has reached 

unsustainable levels of debt, the leaders in Washington have made this topic an 

election issue, as illustrated by the question of the Federal debt ceiling which will be 

reached on May 16 (19). Comparisons abound in the US and international financial 

press with the Clinton years where a similar problem had arisen without major 

consequences. Obviously a sizeable part of the US elite and financiers haven’t yet 

taken on board the fact that, unlike the 90s, the United States today is seen as the 

“sick man of the world” (20), in which any sign of weakness or serious 

inconsistency can trigger uncontrolled panic. 

Crazy central bankers, world leaders without a roadmap, economies at risk, 

inflation rising, currencies in trouble, frenzied commodities, uncontrolled Western 

debt, unemployment at its highest, stressed societies ... there’s no doubt, the 

explosive fusion of all these events will really be the memorable event of the 

second half of 2011! 

-------- 

Notes: 

Chinese pay rises (2011/2010) - Source: Standard Chartered Bank / Getty, 05 

(1) The Telegraph has put together an interesting list of 10 reasons proving that the world economy is 

plunging again. 

(2) The chart below illustrates how, as we have recommended for over three years, the calculation of major 

economic indicators ex the dollar provides a view of the world which is very different from indicators 

calculated in dollars. Thus, whilst calculated in dollars, estimates of when the United States will be overtaken 

239


by China gives dates towards 2030, 2040 even 2050, the IMF culminates in 2016 (almost today) once they 

ignore this "standard" that changes size every day! 

(3) A sign of the times, the Financial Times, which has specialized in "headlines" on the demise of the Euro 

for more than 18 months, published an article in its inside pages (more discreet) on 05/11/2011 entitled "The 

Dollar faces a much greater danger than the Euro". Whilst The Age and the Wall Street Journal of 

04/23/2011 believe that the US economy is now in virtually the same situation as Greece’s. 

(4) The clearest example of the continuation of this "Very Great Recession" as we called it 4 years ago, is 

that the real estate crisis is bigger than ever. Prices are now once again falling through the "floors" reached 

in 2009, plunging tens of millions of Americans into a tragic economic and financial situation. Even the most 

optimistic don’t see the fall stopping before 2012. However, as already explained in previous GEAB issues, 

real estate is the plank on which the estimate of the US economy’s current value is built. The continuing 

collapse of real estate prices is the continuation of the economic depression. Source: MarketWatch, 

05/09/2011 

(5) The economic analysts Fathom have calculated that the four major global central banks (the Fed, ECB, 

Bank of Japan and Bank of England) directly injected 5 trillion USD into the global economy during 2008- 

2010 (this does not include the recent massive, post-Japanese disaster injections, nor the whole range of 

guarantees that accompanied them). This represents nearly 10% of world GDP with the result that we all 

know: gigantic public debt, private debt that has not really decreased and economies which are hardly 

growing or are once again in recession. Source: Telegraph, 04/26/2011 

(6) 80% of Americans believe that the economy is sick. Only 1% think that it’s going well (they must work on 

Wall Street). Source: CNNMoney, 05/09/2011 

(7) The end of QE2 means that the US Treasury bond market has, in fact, no more buyers (because the Fed 

has bought the bulk of Treasury bonds issued since late 2010 (at least)); which, incidentally, makes a 

complete fantasy of current articles and analyses on US Treasury Bond purchases. It's the evidence of the 

real "illiquidity" of the Treasury bond market (whilst even its importance is dependent on its status as the 

most liquid market in the world) which will play the transfer role between QE2 and fall of the dollar, because 

this situation will lead to a sudden acceleration in participants exiting the T-Bond market, the principal asset 

denominated in dollars. The event will result in first, an increased need for U.S. dollars then, very quickly, an 

excess supply of dollars for sale. It is the timing of these two events that will determine the evolution of the 

US currency against other major currencies and gold during the second half of 2011. 

(8) Source: BusinessInsider, 05/14/2011 

(9) Source: France24, 04/28/2011 

(10) Whilst on the subject, information that the founder of the former mercenary company, Blackwater, was 

hired by the UAE to build an army of mercenaries to protect the country from any external attack or internal 

upheaval, illustrates the increasing instability of the oil monarchies and the end of confidence in US 

protection. That said: to trust Western mercenaries is a great example of candour, or desperation. Source: 

New York Times, 05/14/2011 

(11) Source: Le Monde, 04/25/2011 

(12) Latest example, the present, historic Mississippi floodwaters. Source: Bloomberg, 05/13/2011 

(13) Source: New York Times, 05/12/2011 

(14) Source: Sidley, 02/28/2011 

(15) And we understand them. In fact, when we hear Timothy Geithner, US Treasury Secretary, banging on 

that the US will never try to devalue the dollar to gain a trade advantage, the mind boggles. Everyone listens 

politely, adds up all the other reasons (including debt) why the United States are de facto engaged in this 

devaluation, and therefore buys gold, or diversifies their reserves out of the dollar. Thus the Russian, 

Mexican and Thai central banks... continue to buy gold. And Hong Kong (i.e. China) is launching a direct 

attack on the Comex Gold Futures monopoly by launching its own kilo gold contracts. Sources: 

MarketWatch, 04/26/2011; Bloomberg, 05/04/2011; Zerohedge, 05/08/2011 

(16) China continues to quietly get rid of its US bonds and is even planning to diversify out of two-thirds of its 

dollar denominated assets, i.e. two trillion USD. Sources: CNS, 04/29/2011; Zerohedge, 04/24/2011 

(17) In fact, despite all the chicanery over US unemployment figures, Ben Bernanke is forced to admit that it 

is necessary to continue to artificially prop up the US economy. However, whatever he says, with the end of 

240


the QE2 and no credible prospect for QE3, the US economy will find itself without major stimulus for the first 

time in three years, as Jeffrey Lacker, head of the Richmond Fed, confirms. The second half of the year will, 

therefore, be a direct test of the performance of a "zombie economy", with no external power source. 

Sources: Bloomberg, 05/05/2011; MarketWatch, 05/10/2011 

(18) At least not all, because in Asia discussions are underway to expand and rapidly increase funding and 

joint support mechanisms to face a new shock comparable to that of September 2008. Like Euroland, Asia is 

increasingly decoupling from the pre-2008 US-centered financial system. And beyond financial 

arrangements, the entire region, led by China, is in the course of integration, including transport networks. 

Sources: Asahi Shimbun, 05/06/2011; ChinaDaily, 04/30/2011; Asahi Shimbun, 05/06/2011 

(19) The US Treasury is also preparing itself for a deadlock on this question whilst the Republicans seem to 

want to use the issue until the 2012 election. No doubt the global financial system will have come to a 

decision before that date! Sources: Christian Science Monitor, 05/10/2011; Washington Post, 04/27/2011 

(20) And it’s not media hype, like that of the assassination of bin Laden, that will change this situation much. 

In fact the incredible media kerfuffle that surrounded this episode shows that, even on its own privileged 

ground, communication, Washington know-how is a mere shadow of its former self. The only lasting result of 

the bin Laden operation is that the "conspiracy theories" are now debated live in mainstream media and the 

inconsistencies of the official versions of the story are blamed for feeding them. 

Lundi 16 Mai 2011 

USA’s entry into the austerity phase: The sequence of US social and political 

crises for the next ten years - 28/04/2011 

November 15, 2010: LEAP considers the victory of the Green Party in Baden-Württemberg an indicator of the 

double shock of the 2012 German and French elections - 29/03/2011 

LEAP launches MAP "to renew our stock of potential futures" - 24/03/2011 

MAP2-Winter 2011 - Content - 23/03/2011 

The first half of the decade marked primarily by world geopolitical dislocation - 05/02/2011 

GEAB wrote it in June 2008: "Arab world: Pro-Western regimes go adrift / 60 percent risk of socio-political 

explosion on Egypt-Morocco axis" - 31/01/2011 

Book - 'World crisis: The Path to the World Afterwards Europe and the World in the decade from 2010 to 2020', 

by Franck Biancheri - 27/12/2010 

Do GEAB yourself with the ‘Manual of political anticipation’! - 12/11/2010 

For 100 euros, have access to 4 years of GEAB archives! - 26/03/2010 

Traffic-Info LEAP/E2020 - Over two million single visitors from 150 different countries in 2009 - 14/01/2010 

241


USA’s entry into the austerity phase: The 

sequence of US social and political crises for the 

next ten years 

242 

- Excerpt GEAB N°47 (September 16, 2010) - 

As previously mentioned, entry of the United States 

into the austerity phase is caused by two sets of 

factors: some internal, specific to the United States, 

others linked to rapidly changing international 

conditions. Regarding internal factors, it is clear that 

the deficit issue becomes one of the central themes 

of US political debate after being studiously ignored 

for decades. The Keynesian Democrats may well 

expose Republican monetarist manipulation but that 

does not change the fact that this topic is emerging 

as one of central concern to voters. In economics as 

in politics, psychology plays a fundamental role and 

the current crisis has changed the attitude of a 

growing number of Americans in relation to the 

concept of debt: their own as well as that of their 

country’s. What was considered as evidence of 

modernity and “ real American” behavior is being 

transformed into the opposite: outdated and anti-American behavior (1). The link 

between public debate and individual behavior is made against the backdrop of the 

credit crisis and impoverishment of the middle classes. According to LEAP/E2020 it 

will shape US public debate for the next decade and generate a succession of social 

and political shocks because it is a matter of a genuine intellectual revolution 

compared to the norm of the last fifty years. And one can even consider this as an 

even more profound change because it marks the end of the myth of an America of 

unlimited riches (2) and a consequently bright future (3). 

From November 2010, the elections will enable a start to be made in measuring the 

magnitude of change underway. For our team it will result in two events directly 

interacting: the paralysis of federal power regarding the economy and social affairs 

and a growing fixation with the debate on the country's deficits. This is dangerous 

because it will exacerbate both the awareness of a huge problem which has been 

ignored for too long (the issue of deficits) while preventing any significant action to 

resolve it (institutional paralysis).


Progress of long-term US unemployment (1990-2010) (overall 

unemployment figures in blue) - Source: BLS, 08/2010 

Only from the November 2012 elections (so actually from 2013) will it 

be possible for Washington, according to LEAP/E2020, to start taking 

some difficult internal decisions. And yet this is the most optimistic 

option that assumes rational debate prevails, not questioning the 

foundations of the political, social and economic system of the country 

too much. But for our team at this stage, it is not the most likely option 

(4). Indeed, behind the issue of US deficits hides, in 

fact, the maintaining in place or replacement of the 

groups who control the US political system: the 

richest families and the military-industrial complex, 

combined with their financial intermediaries, the 

banks, are indeed at the heart of huge deficits 

accumulated by the United States. The first group pay 

hardly any tax, the second “ treat” themselves to 

wars at will and an oversized army, and the third 

manage it all and profit from the deficits that generate 

a manna of all kinds of financial activities. 

It is this deeply political nature of US deficits, which 

creates this strange “front of anger” where one can find 

very close in their analyses “tea-parties” ultra-liberals, 

anti-tax and anti -Washington activists, on the one hand, 

and anti-capitalist activists who want a tax increase and 

USA: Comparative 

annual development of nominal GDP (green), federal deficit (blue) and real GDP (red) (1995- 

2010) - Sources: US Treasury / Market Ticker, 08/2010 

the funding of a European style welfare state, on the other. For example, both groups 

can be found in their opposition to Obama’s healthcare reform (too much for some, 

too little for others), in their "hatred" of Wall Street (socializing losses for some, 

preventing socialization of profits for others), in their rejection of military adventures 

(waste of money for both)... From “lower-middle class whites” to minorities left to 

243


fend for themselves, these two groups can only continue to strengthen at the pace of 

the socio-economic carnage hitting the US middle classes (5). 

But imagining that the holders of US power (the favored classes, bankers, the large 

industrial and military complex) offer themselves meekly for an exercise in deficit 

reduction that would result in a sudden loss of their power and wealth would be 

totally naïve. For this reason the most likely development, according to our team, 

will be in the direction of a succession of social and political crises during the next 

decade. The crisis, its duration and its systemic nature prevents the current group of 

leaders to be able to continue exercising their power as they have done in the past, 

but the groups that want to change the US political system don’t have the means to 

force change. It is, then, a situation of imbalances that will prevail resulting in the 

inevitable rise of mass “structural” - as economists say - unemployment, requiring 

either the establishment of broader-based social insurance coverage, or a sharp 

increase in the country’s internal security forces (to protect the ruling groups). This 

population “left to fend for itself” will increasingly fuel the social, religious or 

political (and secessionist) “crusades” that are beginning to throw up the 

demagogues and aspiring political leaders of all kinds. Within the US elite, the 

debate will intensify from 2011 on how best to “hold the country” without the wealth 

or its substitute, i.e. the easy credit of recent decades. 

Unlike the opportunities of three or four years ago, it now appears unlikely to our 

team that external military adventures would be adopted as a means of ending the 

crisis. Entry into the austerity phase is indeed not conducive to new costly 

adventures that would only exacerbate internal tensions while generating fierce 

external opposition... in the knowledge that the United States had become extremely 

dependent on the economic and financial goodwill of the rest of the world. 

Willingly or not, the United States will now have to face immense contradictions and 

imbalances accumulated over five decades. And that will, of course, greatly increase 

their “country risk” profile and uncertainties about their growth, their taxation, their 

attractiveness, their ability to repay their debt... 

--------- 

Notes: 

(1) Credit card use is collapsing. Source: BusinessWeek, 09/08/2010 

(2) As the Guardian wrote in this article of 08/15/2010, knowing that the end of a 

dream can quickly turn into a nightmare. 

(3) In effect, changes in attitude are quick, numerous and fundamental: from cities 

that decide to remove the asphalt from the roads because they cannot pay for their 

repair and which once again become trails of the Far West, via the end of the passion 

for golf that leading to bankrupt courses, the withdrawal of toilet paper in some 

public services, the abandonment of pleasure boats the length of the U.S. coast, the 

end of public finance providing help for the disabled, for education, for the retired in 

many states and cities, the end of the car for 16 year old teenagers, universities on the 

brink of bankruptcy,... even the birth rate is falling. Sources: USAToday; 

08/03/2010; CNNMoney, 07/23/2010; USAToday, 08/26/2010; LJWorld, 

09/08/2010; USAToday, 06/08/2010; USAToday, 07/28/2010; New York Times, 

244


08/14/2010; Wall Street Journal, 07/17/2010; USAToday, 08/27/2010 

(4) Source: Washington Post, 08/12/2010 

(5) It is what LEAP/E2020 had anticipated from February 2009 in the GEAB N°32. 

In the same category: 

245 

Jeudi 28 Avril 2011 

GEAB N°55 is available! Global systemic crisis - Confirmation of a 

Major Alert for the second half of 2011 – Explosive fusion of world 

geopolitical dislocation and the global economic and financial 

crisis - 16/05/2011 

November 15, 2010: LEAP considers the victory of the Green Party in Baden-Württemberg an 

indicator of the double shock of the 2012 German and French elections - 29/03/2011 

LEAP launches MAP "to renew our stock of potential futures" - 24/03/2011 

MAP2-Winter 2011 - Content - 23/03/2011 

The first half of the decade marked primarily by world geopolitical dislocation - 05/02/2011 

GEAB wrote it in June 2008: "Arab world: Pro-Western regimes go adrift / 60 percent risk of 

socio-political explosion on Egypt-Morocco axis" - 31/01/2011 

Book - 'World crisis: The Path to the World Afterwards Europe and the World in the decade from 

2010 to 2020', by Franck Biancheri - 27/12/2010 

Do GEAB yourself with the ‘Manual of political anticipation’! - 12/11/2010 

For 100 euros, have access to 4 years of GEAB archives! - 26/03/2010 

Traffic-Info LEAP/E2020 - Over two million single visitors from 150 different countries in 2009 - 

14/01/2010 

-------------------------------------------------------------------------------------------- 

SN: The gentlemen you have just read and the next writer for Porter Stansberry are astute, 

and I believe well qualified to make these predictions. I have occasionally received very 

optimistic predictions, claiming the US is producing more than China and the Chinese will 

struggle a long time before they can close the production gap. The US is digging up more 

gold, oil, coal, uranium, rare earth minerals, silver, and natural gas. The US is producing 

more new technology. We will beat these problems and come out doing well. 

If I were the benevolent dictator I suppose we would. We could conserve fuel, use new 

technology to replace oil, drive smaller cars and junk the gigantic SUVs and pick-up 

trucks. We’d save a lot of fuel. We could curtail so much military adventure and reduce 

costs much more. 

We could in several ways revamp the education system and put much of it in cyberspace 

reducing costs considerably, and creating a safer environment for students.


I’d remove the three groups mentioned in the article above, kick the United Nations out of 

the USA, close the IRS and destroy all of it’s rules and laws, destroy the Federal Reserve, 

return the dollar to a gold standard, reduce taxes and regulations such that businesses 

would be encouraged to open businesses here again. Return God to His rightful place 

among us, and restore the original interpretations of our Constitution. I’d clean up the air 

waves, arrest the pornographers and close their studios, and I’d have a mass murder of 

drug dealers and narco-trafficers. There would be no mercy and my name would be reviled 

for decades, but we’d clean this place up and have a sane society again. 

Oh! I’d make a lot of people who don’t see the broad picture very angry indeed. It’s a pipe 

dream. 

I believe, as we continue on the course we have, and as more crises develop in our crops, 

our weather, and world politics, along with the economic mis-management, the United 

States is doomed to become three or more countries, and the politics will have to become 

more moderate and honest. The Ultra-conservatives sound like Fascists. The Ultra- 

Democrats sound like Communists. Neither can run the country well. 

I do not see how we can reverse these problems now. Our universities and local teachers 

have caused a disease, a rot amongst our young people. The kids appear only too happy 

to participate in crime and immoral behavior. The pornographers sprout more websites 

and produce more slime on a daily basis. I’m sure organized crime is controlling a lot of 

this and it will eventually be organized criminals running the very highest echelons of our 

government. When I see the world through this colored filter, even the iron fisted Chinese 

government appears to have plausible arguments. 

The wisdom of the Native Americans has been ignored. Their philosophy about care for 

one another, the animals, the environment and one another is right! 

This off the cuff synopsis sounds like a summary of the end years in ancient Rome. We’ve 

lost our moral direction and destroyed the economy. Barbarians are inside the gates and 

they plan to burn the community to the ground. 

I see our beautiful young people on a self-destructive course and when that group of 

immoral kids becomes a major percentage of all the young, I can’t imagine how the 

situation can be turned around. If the kids are our future, because of their corruptors, now 

we have no future. 

-------------------------------------------------------------------------------------------- 

The Bankruptcy of The United States 

Is Now Certain 

Tuesday, November 24, 2009 

From Porter Stansberry in the S&A Digest: 

It's one of those numbers that's so unbelievable you have to actually think about it for a 

while... Within the next 12 months, the U.S. Treasury will have to refinance $2 trillion in 

short-term debt. And that's not counting any additional deficit spending, which is 

estimated to be around $1.5 trillion. Put the two numbers together. Then ask yourself, 

how in the world can the Treasury borrow $3.5 trillion in only one year? That's an 

amount equal to nearly 30% of our entire GDP. And we're the world's biggest economy. 

Where will the money come from? 

How did we end up with so much short-term debt? Like most entities that have far too 

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much debt - whether subprime borrowers, GM, Fannie, or GE - the U.S. Treasury has 

tried to minimize its interest burden by borrowing for short durations and then "rolling 

over" the loans when they come due. As they say on Wall Street, "a rolling debt collects 

no moss." What they mean is, as long as you can extend the debt, you have no problem. 

Unfortunately, that leads folks to take on ever greater amounts of debt… at ever shorter 

durations… at ever lower interest rates. Sooner or later, the creditors wake up and ask 

themselves: What are the chances I will ever actually be repaid? And that's when the 

trouble starts. Interest rates go up dramatically. Funding costs soar. The party is over. 

Bankruptcy is next. 

When governments go bankrupt it's called "a default." Currency speculators figured out 

how to accurately predict when a country would default. Two well-known economists - 

Alan Greenspan and Pablo Guidotti - published the secret formula in a 1999 academic 

paper. That's why the formula is called the Greenspan-Guidotti rule. The rule states: To 

avoid a default, countries should maintain hard currency reserves equal to at least 100% 

of their short-term foreign debt maturities. The world's largest money management firm, 

PIMCO, explains the rule this way: "The minimum benchmark of reserves equal to at 

least 100% of short-term external debt is known as the Greenspan-Guidotti rule. 

Greenspan-Guidotti is perhaps the single concept of reserve adequacy that has the most 

adherents and empirical support." 

The principle behind the rule is simple. If you can't pay off all of your foreign debts in the 

next 12 months, you're a terrible credit risk. Speculators are going to target your bonds 

and your currency, making it impossible to refinance your debts. A default is assured. 

So how does America rank on the Greenspan-Guidotti scale? It's a guaranteed default. 

The U.S. holds gold, oil, and foreign currency in reserve. The U.S. has 8,133.5 metric 

tonnes of gold (it is the world's largest holder). That's 16,267,000 pounds. At current 

dollar values, it's worth around $300 billion. The U.S. strategic petroleum reserve shows 

a current total position of 725 million barrels. At current dollar prices, that's roughly $58 

billion worth of oil. And according to the IMF, the U.S. has $136 billion in foreign 

currency reserves. So altogether... that's around $500 billion of reserves. Our short-term 

foreign debts are far bigger. 

According to the U.S. Treasury, $2 trillion worth of debt will mature in the next 12 

months. So looking only at short-term debt, we know the Treasury will have to finance at 

least $2 trillion worth of maturing debt in the next 12 months. That might not cause a 

crisis if we were still funding our national debt internally. But since 1985, we've been a 

net debtor to the world. Today, foreigners own 44% of all our debts, which means we owe 

foreign creditors at least $880 billion in the next 12 months - an amount far larger than 

our reserves. 

SN: The Chinese are right. We’re defaulting! We must be! We produce and hand them 

nearly worthless money to repay and the effect is, we’re defaulting on our debts. 

Keep in mind, this only covers our existing debts. The Office of Management and Budget 

is predicting a $1.5 trillion budget deficit over the next year. That puts our total funding 

requirements on the order of $3.5 trillion over the next 12 months. 

So… where will the money come from? Total domestic savings in the U.S. are only 

around $600 billion annually. Even if we all put every penny of our savings into U.S. 

Treasury debt, we're still going to come up nearly $3 trillion short. That's an annual 

funding requirement equal to roughly 40% of GDP. Where is the money going to come 

from? From our foreign creditors? Not according to Greenspan-Guidotti. And not 

according to the Indian or the Russian central bank, which have stopped buying 

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Treasury bills and begun to buy enormous amounts of gold. The Indians bought 200 

metric tonnes this month. Sources in Russia say the central bank there will double its 

gold reserves. 

So where will the money come from? The printing press. The Federal Reserve has 

already monetized nearly $2 trillion worth of Treasury debt and mortgage debt. This 

weakens the value of the dollar and devalues our existing Treasury bonds. Sooner or 

later, our creditors will face a stark choice: Hold our bonds and continue to see the value 

diminish slowly, or try to escape to gold and see the value of their U.S. bonds plummet. 

SN: Same answer for your dollars. DON’T hold cash! Turn it into silver coins. 

Remember that stocks are paper promises to pay. They may be worth nothing soon. 

Thus they will “default.” They will “repudiate their debts.” I might gamble a little in 

Penny stocks for short term “play” but I’d be reluctant now to buy large sums of 

expensive stock for long term holdings. I realize I could be entirely wrong, but no 

one wants to answer my question, “What happens to the value of your stock if the 

economy and the banking system collapse?” The answer must be, the stock becomes 

worthless and your money is lost. The only question I can’t answer is about timing. 

When will the collapse occur? I can speculate around the end of an October some 

year, but I have no precise answer and no one else does outside of the great 

controllers of the world economic scene who remain like the Wizard of Oz, in hiding. 

These people are so powerful even their names are unknown, yet they move trillions 

of dollars. They have the answer. They could tell me, but then they’d have to kill me. 

One thing they're not going to do is buy more of our debt. Which central banks will 

abandon the dollar next? Brazil, Korea, and Chile. These are the three largest central 

banks that own the least amount of gold. None own even 1% of their total reserves in 

gold. 

I examined these issues in much greater detail in the most recent issue of my newsletter, 

Porter Stansberry's Investment Advisory, which we published last Friday. Coincidentally, 

the New York Times repeated our warnings - nearly word for word - in its paper today. 

(They didn't mention Greenspan-Guidotti, however... It's a real secret of international 

speculators.) 

(To see Porter's update on the bankruptcy of the United States, click here.) 

Crux Note: The S&A Digest comes free with a subscription to Porter Stansberry's 

Investment Advisory. Porter says his latest issue is the most important he's ever written. 

If you don't act right now to protect yourself from the dollar, he thinks the odds are very 

high you'll be wiped out over the next 12 months. To learn more, click here. 

http://www.thedailycrux.com/content/3455/Porter_Stansberry 

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Oh, gods! My brain feels like it is burning. Is the quart of Mia-Tia’s from last night? Is 

it the allergens blowing in the wind this morning? It is that new position that they 

wife wanted to try with the trapeze and the mayonnaise? I could only wish it were 

these things! No it is from giving up 77 minutes of my life watching Porter 

Stansberry’s on line fear mongering investment services pitch! 

You may have seen the commercial on TV recently (I spotted it on the prime time 

MSNBC line up) touting an online video about a prescient investor who is predicting 

the collapse of the Untied States government this year (italic and bold). You got to 

the website www.Endofamerica2011.com to see this hour long turd. For the love of 

all that is good and pure don’t waste your fracking time! I did it for you and I’ll give 

you a good summary of this piece of ca-ca. 

"Originally posted at Squarestate.net" 

First off a word on format; it is set up so it has to run continuously. You have no 

opportunity to jump ahead. The whole thing is Stansberry droning on in a voice that 

could put a meth addict who just snorted a whole gram of meth to sleep inside ten 

minutes! The only video part of this on line Sominex is text of what Stansberry is 

saying, with scary red lettered words here and there for emphasis. 

He starts by tooting his own horn on how he predicted the collapse of GM and the 

Wall St. reaction to the housing bubble. He conveniently forgets to mention his 1.5 

million dollar fraud fine from the SEC over investment “advice” he sold through a 

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news letter. The SEC claimed and the judge agreed that the report was “replete 

with lies”. 

So you can see why old Porter might feel the need to burnish his image a little. Then 

he goes on to lay out scary facts in the manner that is most common to the 

Republicans and Conservatives. He gives you actual facts but fails to give you the 

context that would allow you to understand them. 

For example he claims, accurately, that if all personal income were taxed at 100% it 

would not be enough to fund the spending of the United States government. The 

thing that he fails to point out is the amount of taxes on business is more than 50% 

of the total revenue collected. This is even though we have the pernicious pass 

thorough check box that allows businesses to skip paying taxes on revenue if they 

pass the money through to shareholders. 

He then starts to scare people by talking about the “when not if” the U.S. dollar 

stops being the worlds reserve currency. Again, it is true that there has been some 

talk about this, but the reality is no one talking about it has been able to put forward 

a way to do it that would not in and of itself perpetrate a massive world wide 

financial collapse. Sure other nations would like a piece of the pie that the US has in 

this regard, but getting them means killing their economies first so no one is 

seriously trying to do it, they just want to do it. 

From this premise of economic collapse Stanberry goes on and on and on about how 

things will get incredibly bad. He takes a long time talking about a European nation 

that had hyper inflation, that “stole” the assets of the people by keeping them form 

withdrawing the money from banks. How gas was unavailable at stations except 

ones that catered to foreign nationals. How the people all wanted Marks or Dollars 

and how their inflation rate hit 100% per day. 

What was this nation? Yugoslavia, in 1993-1995! You know after the collapse of the 

Soviet Union and the Soviet Block communist economies. This is the example he 

gives of “it can happen here!” the troubles of an Eastern Block nation as it struggled 

to form a market economy. 

He then asserts that it will happen here! He tries to defuse any skepticism the viewer 

might have (assuming they are still awake) with a droning explanation of the 

normalcy bias, which says that people can’t recognize paradigm change until it has 

happened and even then they will resist because they are more comfortable with the 

old norm. It is a real thing, but he is not using it to talk about sociology, he is trying 

to sell you something. 

Since he is not a fan of the Government (who is when they get their hand slapped 

for over a million dollar?) he gives the conservative trope about how regulation is 

killing business in the United States. As if the lack of regulation is not what got us in 

this mess in the first place. 

Then he gives a bunch of other dire examples like Britain in the 1960’s and how it 

devalued its currency 14% overnight. He talks about all the bad things that 

happened then and asserts they “will” happen here. 

Then he tells you that he is sure the government here is going to have such sever 

problems that there will be food and water shortages and that there are likely to be 

riots in the street. He predicts that you must have a 6 month supply of food and 

water and that you should be ready to flee to the countryside if you live in an urban 

area. 

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Now that he has done scaring the shit out of the view (not me I just got pissed off) 

he goes into his pitch, 59 minutes into this piece of shit!. 

He starts by saying you can not only protect your assets, you will be able to profit 

over the economic and social collapse of the United States! Do it now! 

He has five ways that you’ll be able to make a fortune off of this disaster. First get as 

much of your money out of the U.S. as you can before that evil ol’ gub’ment seizes it 

to pay for its programs. He has a booklet for the 4 off shore investments you don’t 

have to report. After all if the gub’ment man don’t know where you money is they 

can’t take it! He is careful (after all he doesn’t want to pay another big ass fine) to 

say you’d have to report the money if you sell these investments and pay the taxes 

but only when you get out of them. 

Then there is the pitch for gold. You knew there’d be a pitch for gold didn’t you? The 

Gold Investors Bible is just the thing for you! Then Stansberry predicts that gold will 

hit 5K an ounce sometime in the near future. Invest now! How can you lose? 

He goes on to hype silver and his report “The Secrets of Silver Investing” including 

such tidbits as where to hide your silver (no joke) and an assertion that silver will 

once again be a hard currency, in the United States. Get yours while it is cheap! 

Then he talks vaguely about something called the 100% Strategy. Without going into 

details he claims you can make tons of money and never have to own a stock. Then 

he makes the disclaimer that you might be forced to buy a stock at less than its 

current value if something goes wrong. By this point I assuming that Stansberry 

thinks viewers will be so afraid and nearly asleep that they won’t notice the cognitive 

dissonance between those two positions. 

He bolsters his claim with the names of some folks who made a lot of money with 

this “strategy”. The thing here is there are always atypical results in everything from 

weight loss to test scores. Picking out a few at the far right of a standard distribution 

says nothing about the over all effectiveness of a product or a strategy. 

So far all this is free, but wait there is more! Number four is the “One asset that will 

protect your family”. He never tells you what that asset is, just points out that it has 

done better than gold in the past 30 years and a bunch of really rich people own it. 

My guess is this is property but who knows? You have to get his report to find out. 

Then the final bit: 

The worlds most valuable asset in times of crisis” Again he won’t tell you what it is, 

but this bit of unobtainium is going to make you a butt load when the U.S. goes up in 

flames! 

So how do you get all these wonderful and important documents? You pay $50 bucks 

(half the usual cost, don’t cha’ know?) for his news letter. You even get to ask for a 

refund in four months if you don’t like it and you get to keep these “reports” for free! 

There is an hour and 17 minutes of my life I will never get back. You know I don’t 

mind people making a buck on investment advice, investments are tricky and if you 

know what is going on you should be able to sell that knowledge. What I do object to 

is fear mongering to pump up your subscription services. 

This asshole Stansberry runs a commercial with a scary website name that says 

“Warning This Video is Controversial and May Offend Some Viewers”, and that is 

about the only honest thing he says about it. I was offended. I was offended that 

251


someone would play on the fears of the Fox News crowd and older folks about the 

future of our nation just to sell his crappy advice. 

All the government bashing and no context warnings only serve to make people 

afraid and when people are afraid they are going to make bad choices. Which is what 

Stansberry wants, he wants them to make the bad choice of being propagandized by 

him on a regular basis while his pals in the gold and silver business suck up lots of 

profit by selling to scared people. 

Porter Stansberry is a con man. He is so full of shit that no real investor would let 

him within 1000 yards of their portfolio. How can we be sure? Because if he really 

was that good, if he had the real deal, he would never be spamming his products 

around like this and never ever selling them for only $100 bucks a year. 

Sadly there is one born every minute. There are people as we speak signing up to 

have this shit mailed to them and e-mailed to them. Do yourself a favor, if you hear 

any of your relatives talking about this con-man’s ideas, make them stop investing 

right away! 

Ugh, I think I need another quart of Mia-Tia’s 

The floor is yours 

Who Cares About Your Bet If 

The Casino Is Demolished?! 

Silver Shield, 

June 29th,2011 

For the past 6 months I have been 

building the case for you to sell every 

single paper asset you have and buy real 

assets. (Read the Silver Bullet and the 

Silver Shield.) I have had my run ins with 

famous traders/traitors who seek to make 

trades in and out of the market. These 

guys are making cute bets while the 

music/propaganda is still playing and the 

booze/money is still flowing. For the 

most part I am not arguing about their 

bets. I am telling them that the whole 20 story 

casino is going to collapse on top of them and to cash in their chips and get out. 

252


Recently I have been asked about this strategy of selling silver and gold now to buy it 

back at a lower price later. When I asked these two members where they got that idea from, 

it was from two different paid sites who seem to cover many of the same issues I cover. Both 

guys are letting their paid members know that they are selling now to buy back silver and 

gold later at a lower price. This is not two months ago, this is this week. 

Let’s think this through for a minute. I understand that many people love the bankster’s 

casino and feel a need to give them your money and that is why you trade. For many it is a 

disease, others feel they are really good at it and that it is not really gambling. (All gamblers 

feel that when they are winning.) You also understand that I am a physical silver purist 

whose reasons for buying silver go way beyond short term profits. Let’s play out the case that 

was put out yesterday by one of these paid services. 

253 

The first trade focused on gold breaking 

the 50 day moving average yesterday and 

the upcoming Greek vote. He is 

expecting a 3% to 8% drop in gold within 

a day or so. After that, he says buy the 

dip. My first problem is that this guru is 

not telling his paid audience what a risk 

they have by simply having money in the 

system/casino. When this deflationary 

crash does happen, the entire banking 

system is at risk, not just assets they are 

speculating on. What good is it to be right 

on the bet and not be able to really profit 

from it? 

We saw in 2008 that the buck was 

broken on money markets and many bank failures followed. This crisis will be magnitudes 

worse because nothing was fixed and the problem is much bigger than 2008. This is no 

longer an American problem, it is a Global problem. Compounding this problem is that we 

have burned through all of the political and financial capital we had last crisis. I mean, are 

we really going to listen to another Treasury Secretary about Too Big To Fails? 

No, after 3 years of declining unemployment, burning through their nest eggs, and the dark 

clouds on the horizon, people are desperate and they are going to blow up. Confidence will 

not be restored and people will FINALLY do the right thing and stop gambling in the rigged 

casino of the banksters. 

This will lead to runs on banks as people pull cash out. 

This will lead people emptying their brokerage accounts and further paper asset depreciation. 

The sickening thought of losing everything to a system so volatile, will cause people to do 

extreme things. So simply having a trade right is not enough reason to gamble, especially when the 

casino is set to be demolished. 

Even if this paid writer suggested that people do this with physical cash and physical 

gold, I would still have a problem. When this event that shakes the foundation of our entire 

banking system happens, who says there will be gold or silver available to buy? Or that 

REAL physical prices will not be dramatically higher? After all, the only logical place for all 

of this paper money is real tangible assets. There will be a mad rush for anything real: food,


energy, clothes, guns, and precious metals. Especially after the Fed and the Treasury print 

trillions more to save the system. 

The fake deflation, will bring about the inevitable hyperinflation. The paper price of gold and 

silver may be lower, but the REAL on the street price will either be much higher or not 

available at all. This is a very serious issue that these paid writers do not discuss. 

Then there is the very real risk of a CRIMEX default. I have made the case that there has 

been a war against silver since 1873 and that silver is the most manipulated asset in the 

history of the world. The reason for this manipulation is that it is the Silver Bullet to the 

quadrillion empire of lies the Elite have built on debt and war. Their massive paper 

manipulation can go on forever up until they can no longer deliver real silver that they are 

trading 100 times over. 

As you can see from the 45 degree angle of depletion in the registered inventory, this event is 

closer than you think. As we get closer to 0, the quicker it will become as people get nervous 

and pull their metal out much like a bank run. Instead of trading in electronic digits for 

FRN’s, they will trade in their paper receipts for the real metal. If there is a default all paper 

holders will get screwed as the CME settles for some fictitious paper price of silver instead of 

the real physical price. 

The next paid guy spent an hour describing all of the exact same issues I cover and then 

says to load up on Federal Reserve Notes! His reasoning was that a deflationary crash is 

going to make everything cheap for dollar holders. Does this guy not realize that if the 

banking system goes, the currency goes? Does this guy not know that we have $1.4 trillion 

budget deficit this year and $4 trillion in short term debt to be rolled over in the next year 

and a half? Does he not realize that the EU is facing a $6 trillion crisis that is just starting 

with Greece? 

The Fed is buying 80% of our debt right now and that is going to end this week. The entire 

system is getting close to implosion. So the choice is, let the system implode which would 

kill the dollar with massive banking defaults, the cessation of commerce, and massive social 

unrest both here and abroad. Or : They can create a hyper inflationary event where-in the 

Fed has to react to another trillion dollar crisis and print trillions more to cover the problem 

with another bandage. 

That would lead to a world wide rush out of the dollar as it becomes clear to all foreign and 

domestic investors that the Fed is determined to destroy the value of the dollar and that 

people better find a better place to keep their money. 

Either way, deflation or hyper inflation; the Federal Reserve Note is not going to make it out 

alive. In fact that is the plan. Things that cannot go on forever won’t. Our system is 

unsustainable and the plan is to crash it and create a new global paradigm. I believe that the 

Elite will fail and we will see massive decentralization, either way the dollar paradigm is 

toast. 

If you insist on playing this game of trading and want to take advantage of a price drop 

here is something you could consider. If there was another massive attack on silver like in 

2008, which I don’t think will happen, you can borrow against your stash and buy more 

physical silver. I am not a fan of leverage or debt, but if we go through what we went 

through in 2008, I would seek to leverage my metal at the bottom and load up on a very 

depressed price. 

254


If you think about it, the more metal you put in, the more you can borrow, the more you 

can put in…It would have to depend on the terms and your ability to handle the payments, 

but it is something to consider. 

I would prefer you sell every single paper asset you have before you try something funky like 

this. For guys like me that have NO paper assets, this is something to consider. I mean right 

now you can borrow 5 years on a car for 2.9%. Why wouldn’t they do the same thing on 

your metal, sitting in their bank? Hmm 2.9% versus the 25% silver has been 

returning…Especially if it gets whacked and there the CRIMEX looks to default… 

255 

There is an old saying in the marketing 

world, “if you can describe a problem 

better than your audience can, they will 

assume you know the answer and follow 

you anywhere.” 

This stands in direct opposition to what I 

have been trying to do here. I am about 

you questioning everything, including me. 

Please do not assume because someone is 

90% right, that it means he is right on the 

final 10%. The best lies always have a lot 

of truth in them. Question everything, 

educate yourself and be ready to stand on 

your own. 

When I was preparing for the Sons of 

Liberty Academy I followed this simple 

saying, listen to all, follow none and walk your path the best you can. 

Please don’t believe that just because information in 90% right or that it is secret or paid info, 

that it is right. Even in my paid Strategy Sessions, I let people know that I am not a financial 

adviser and they need to be the one to make the final decision. I will make the case the best I 

can and I am an expert at cutting to the heart of an issue. I want to empower you, because 

that is the only way that you are going to survive and thrive in this paradigm shift. 

Wake Some People Up! 

What you must know about bankruptcy of 

The United States of America 

Tuesday, February 02, 2010 


Nobody likes bad news. 

A few years ago, I got in hot water by insisting General Motors was bankrupt.


Supporters of the company (whether investors or unionized employees) got mad at 

me and said I was exaggerating. They rightly pointed out GM was still servicing its 

debts and was still owned by its equity holders. Thus, technically at least, GM wasn't 

bankrupt. 

In order to avoid any unnecessary litigiousness, I began to write in parody, 

pretending to be the chairman of General Motors and warning of the company's 

impending bankruptcy. One of the few ways you can still speak unpleasant truths in 

America is by using - or pretending to use - humor. That's why, for example, Chris 

Rock and Bill Cosby are our most poignant commentators on race relations and why 

John Stewart is perhaps our most insightful news commentator. 

Meanwhile, the bankruptcy of General Motors was far from a laughing matter. 

GM had no conceivable way to repay its debts. It was even borrowing money to pay 

for the interest expense on its existing debts. 

Monitoring the company closely between 2006 and 2009 taught me quite a bit about 

willful self-deception. Here are the three key traits I look for now in companies facing 

major financial stress... 

No. 1. There's never any real tally of the total amount owed. GM used byzantine 

accounting to hide the truth of its deteriorating fiscal condition for nearly 20 years. It 

was impossible for any outside analyst to get an accurate, consolidated account of 

GM's total debt. 

No. 2. None of the company's "turnaround" plans include any efforts to actually 

repay principal amounts owed. 

No. 3. The company's spending is out of control. In GM's case, it was also rife with 

fraud and absurdity - like, for example, its jobs bank where people were paid not to 

work. 

If you don't know how much you owe, if you make no attempt to ever repay your 

debts, and if your spending is out of control, there's no way to avoid bankruptcy. In 

retrospect, these facts seem so plain and obvious. But who else was warning about 

GM? No one. 

I bring this up to you today because the exact same things are now true about the 

United States of America. 

We don't know how much we owe. We don't have any plan to repay our debt. And 

our spending is still completely out of control... 

OBAMA! has sent a new budget to Congress. It contains several provisions that will 

make people unhappy. Taxes are going up on the rich. They're going up on privateequity 

firms and hedge funds. They're going up on oil and gas companies. And 

they're going up on multinational companies. 

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These new taxes are what you'll see people arguing about. They are what the 

politicians will complain and campaign about. Nobody wants to pay the costs of 

government, so that's the easy sell. But the taxes aren't the real problem with 

OBAMA!'s budget... 

The real problem is that government spending is literally out of control. 

The government is going to reduce its so-called "discretionary" spending by a grand 

total of $200 billion. Only about $1.4 trillion of the government's $3.8 trillion budget 

is discretionary. The rest is legally required, thanks to unfunded entitlement 

programs, like Medicare. So right now, far less than half of the government's annual 

budget can legally be restrained. 

Meanwhile, there's no accurate tally of the government's debt. Supposedly, we owe 

around $12 trillion. This number is so large that it is meaningless. What does it really 

mean? According to the IRS, almost 143 million people filed tax returns in 2007 (the 

most recently reported year). 

Of these people, roughly 96 million paid something in taxes - even one penny. Thus, 

technically, you could say there are basically 100 million taxpayers in the United 

States. Dividing the total debt ($12 trillion) by the number of taxpayers, you can see 

our total debt is actually $120,000 per taxpayer. How many people do you know can 

afford an additional $120,000 in debt? 

And the truth is, the $12 trillion figure is only a down payment on our actual debts. 

For example, nobody really knows how much more money Fannie and Freddie will 

require. (My bet is $500 billion each - or $1 trillion.) On Christmas Eve, when no one 

was looking, Congress approved unlimited funding for the two national mortgage 

banks. 

And that's far from the only "off-budget" item. We have committed to fighting two 

civil wars - in Iraq and Afghanistan. The costs are likely to be $50 billion or so next 

year alone. How much over the next 10 years? Maybe $1 trillion? Or maybe more. 

And there's a new "jobs package" that's estimated to cost $76 billion next year with 

another $25 billion to bail out cash-strapped state governments. 

Even if you only looked at the dollar amounts that have been budgeted today and 

you ignored all of the rest of the growth of future entitlement spending, you'll 

discover that we actually owe something around $20 trillion right now. 

And if $20 trillion is the real number, then the amount owed by taxpayers is actually 

$200,000 each. Of course, that's if you're counting all of the taxpayers. Most people, 

though, pay almost nothing in taxes. Unless you're earning more than $50,000 per 

year, you're not really contributing to the tax receipts. Roughly 50 million folks are in 

this category. These people pay less than 10% of all income tax receipts. So you 

shouldn't count on them to repay much, if any, of these debts - they can't. 

What's the real per-capita number? My best estimate - just on the money we actually 

owe today - is $400,000 per taxpayer. At a reasonable (6%) rate of interest that's 

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$24,000 each - just to pay the interest on these debts each year. How many people do 

you know that could afford $24,000 a year in higher taxes? How many people can 

afford additional debts of $400,000? 

My point? Our government is bankrupt - right now, today. Sure, it might still have 

access to the credit markets. And yes, since it owes dollars, it can always simply print 

more. I realize the government can't go bankrupt the way GM did. Our bondholders 

won't end up getting title to our national parks and the strategic petroleum reserve. 

No, that's not going to happen. 

What will happen? 

I can't say for certain. But here's what I know: It's not a good idea for the world's 

largest debtor and the world's strongest military power to go broke. Bad things 

happen in democracies when the government goes broke. At the very least, our 

creditors will demand much higher interest rates and abandon the use of our 

currency. That's going to devastate our standard of living. 

These facts and figures should cause you to wake up and think about what you're 

doing with your savings. Here's a hint: Don't save dollars. And don't count on 

whatever the government has promised to you, whether it is a retirement or medical 

care. The government is bankrupt. It won't be able to deliver. 

Crux Note: The S&A Digest comes FREE with a subscription to Porter Stansberry's 

Investment Advisory. In just the past few years, Porter has shown readers how to 

make huge gains in gold stocks... how to profit from the demise of Freddie Mac, 

Fannie Mae, and General Motors... and the best ways to protect themselves from 

inflation and the unavoidable collapse of the dollar. You can learn more about a 

subscription here. 

More from Porter Stansberry: 

The bankruptcy of the United States is now certain 

Stansberry: Detroit's socialist nightmare is America's future 

Porter Stansberry: The high-return/low-risk vehicle investors should place most of 

their money in 

Porter Stansberry | Government Stupidity | Boondoggle 

Must-read: Doug Casey predicts America's 

next 20 years 

June 7, 2011 7:52pm GMT 

By Doug Casey, Casey Research 

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There is a great deal of uncertainty among investors about what the future of the 

U.S. economy may look like – so I decided to take a stab at what’s likely to happen 

over the next 20 years. That's enough time for a child to grow up and mature, and it's 

long enough for major trends to develop and make themselves felt. 

I’ll confine myself to areas that are, as the benighted Rumsfeld might have observed, 

“known unknowns.” I don’t want to deal with possibilities of the deus ex 

machina sort. So we’ll rule out natural events like a super-volcano eruption, an 

asteroid strike, a new ice age, global warming, and the like. Although all these things 

absolutely will occur sometime in the future, the timing is very uncertain – at least 

from the perspective of one human lifespan. It’s pointless dealing with geological 

time and astronomical probability here. And, more important, there’s absolutely 

nothing we can do about such things. 

So let’s limit ourselves to the possibilities presented by human action. They're plenty 

weird and scary, and unpredictable enough. 

THE MARKET FOR PROGNOSTICATION 

People are all ears for predictions, whether from psychics or from “experts,” despite 

the repeated experience that they’re almost always worthless, often misleading and 

more than rarely the exact opposite of what happens. 

Most often, the predictors go afoul by underrating human ingenuity or extrapolating 

current trends too far. Let me give you a rundown of the state of things during the 

last century, at 20-year intervals. If you didn’t know it’s what actually happened, 

you'd find it hard to believe. 

1911— The entire world is at peace. Stability, freedom and prosperity prevail almost 

everywhere. Almost every country in Europe is ruled by a king or queen. Western 

civilization has spread to nearly every corner of the world and is received with 

appreciation. Stunning breakthroughs are being made in science and technology. 

There’s no sign of a gigantic world war about to come out of nowhere to rip apart the 

political and cultural map of Europe and bankrupt everybody. Who imagined that a 

dictatorial communist regime would arise in Russia? 

1931— It’s early in a disastrous worldwide depression. Attention is on economic 

troubles, not on the virtually unthought-of possibility that in less than 10 years a new 

world war would be under way against Nazism and a resurgent Germany. 

1951— Except for Vietnam, all that remains of the colonies the West had established 

in the 19th century are quiescent. Nobody guessed almost all would either be 

independent, or on their way, in 10 years. China has joined Russia – and many other 

countries – as totally collectivist. Who imagined that Germany and Japan, although 

literally leveled, would be perhaps the best investments of the century? Who guessed 

that the U.S. was already at its peak relative to the rest of the world? 

1971— Communist and overtly socialist countries all over the world seem to be in 

ascendance, soon to be buoyed further by a decade of rising commodity prices. The 

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U.S. and the West are entering a deep malaise. Little significance is attached to 

rumblings from the Islamic world. 

1991— Communism has collapsed as an ideology, the USSR has disappeared, and 

China has radically reformed. Islam is increasingly in the news. 

2011—The world financial/economic crisis is four years old, but things are still 

holding together. Islamic terrorism and collapse of old regimes in the Arab world 

dominate the news. China is viewed as the world’s new powerhouse. 

BAD AND WORSE 

Regrettably, I’m not much of a linguist. But I do pick up interesting semantic trivia. 

In Spanish they don’t say “in the future,” as we do in English, which implies a 

definite outcome. Instead they say “en un futuro” – in a future – which implies many 

possible outcomes. It’s a better way of assessing reality, I think. 

Here are three 20-year futures to consider. There are, obviously, many, many more – 

but I think these encompass the three most realistic broad possibilities. 

BEST CASE – FACTS GET FACED 

Realizing what a disaster the complete destruction of their currencies would be, most 

governments decide to endure the pain of allowing interest rates to rise and limiting 

increases in the money supply. Poorly run corporations and banks are left to fail. 

Talk of abolishing the Federal Reserve, and using a commodity for money, becomes 

serious and widespread. 

Shaken, the U.S. ends its profligate ways, in part because it lacks the means to 

continue, and in part because everyone but collectivist ideologues has actually 

learned something from the brutal ‘10s and ‘20s. 

Amidst massive protests, the government closes much of its counterproductive 

apparatus, eliminates many taxes, and lets 30% of its employees go. It also, albeit 

reluctantly, liberalizes its regulation of the economy because it has become 

impossible to deny that the U.S. has been falling behind in all areas. 

Although there is a resurgence of libertarian thought – reminiscent of the Reagan- 

Thatcher era – simple practicality is mainly responsible for forcing the government's 

hand. For one thing, it can’t afford the bureaucracy needed to enforce detailed 

interference. For another, entrepreneurs are increasingly just doing what they please, 

partly from necessity and partly from a growing sense of righteousness. Interest rates 

go to 25%, to compensate for high levels of inflation. That's high enough to make it 

worthwhile for people to save, and the capital base starts growing. The stock market 

has collapsed to its lowest level in living experience (in real terms), but the values 

available encourage people to become investors. Business is restructured on a sound, 

debt-free basis, with little speculation. 

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The U.S. radically cuts its military spending and pulls almost all troops out of their 

foreign bases and wars. The War on Drugs comes to an end, and the crime rate in 

both the U.S. and Mexico plummets. 

The government solves most of its overhanging financial problems with a seriously 

devalued – but not hyperinflated – dollar. The Social Security deficit is eliminated by 

abstaining from benefit increases and by inflating away much of what had been 

promised before. Most Americans suffer a severe drop in their standard of living, as 

they’re forced into new patterns of production and consumption. A generation of 

college students find that their degrees in sociology, political science, economics, 

English lit, Black studies, gender studies and underwater basket weaving are of no 

real value. 

When it's all over, the tough times that started in '07 prove to have been no more 

than a cyclical bump in the road, like all the other recessions since WW2, just much 

bigger. 

A rough and memorable ride, but it ends with a return to prosperity. 

MIDDLE CASE – FACTS ARE IGNORED 

The world’s governments continue under the delusion that printing massive 

quantities of paper money will solve problems when, in fact, printing lies at the base 

of the problems. Most currencies lose most of their value. Some lose it all. This 

destroys the most productive people in society, the middle class, who produce more 

than they consume and save the difference... in currency. 

And it injures successful corporations that have billions, or even tens of billions, in 

cash. Few of their managers know what to do with such sums other than to hold 

currency; at best they’ll buy their own and other companies' stock. The result is a 

stock market boom in the midst of a grim depression. But only one person in a 

hundred will be in a position to benefit from it, because most will be living too close 

to the edge, and the stock market will be the last thing on their minds. The 

destruction of capital sets technology back quite a bit in the U.S., Japan and Europe. 

Chindia increases its relative strength. ( SN: China + India = Chindia) 

The U.S. government, believing it has both the obligation and the ability to “do 

something,” redoubles its control of the economy. Price controls and capital controls 

are the order of the day. Petroleum products are rationed. Enforcement of new 

regulations is assigned to a new agency, the “Economic Recovery Administration,” 

which resembles the TSA in most regards – except it has many plain-clothes 

employees, to better ferret out violators. 

People think increasingly of politics as the way to get what they want. More and 

more Americans move abroad – although things are deteriorating in most places in 

the world. Poor, backwater countries offer the best opportunities because their 

governments are either weak, or corrupt, enough to allow new economic activity. 

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WORST CASE – WAR 


War is the worst thing that can happen to an economy, but it’s also the most likely 

thing at this point. When the going gets tough, the people in charge like to blame 

somebody else for the problem. That’s compounded by the foolish – but widely 

accepted – notion that war is good for the economy and that, for instance, it pulled 

the U.S. out of the last depression. 

Like all wars, this one results in a complete stifling of civil and economic freedoms. 

If my second scenario is unpleasant, this alternative is grim. 

The big conflict has already been teed up – the continuation of the Forever War 

between Islam and the West. I’ll hazard the major situs will be Europe – which has 

pretty much always been the case for wars in general for the last 2,000 years. Europe 

will be the worst place to be over the next two decades. And North America will be 

locked down like a police compound. 

China will have serious social turmoil as it is forced to reorient an export-driven 

economy catering to Europe and the U.S. As in the past, South America will be out 

of the conflict and in a position to benefit from it. India will also be a net beneficiary, 

largely uninvolved, and happy to watch their ex-colonial masters rope-a-dope 

themselves into poverty. 

People will always argue who really started it. Was it the Muslims when they poured 

out of Arabia in the 630s? Or was it the West when it invaded the Near East with the 

Crusades starting in 1099? Or was it the Muslims when the Turks took 

Constantinople in 1453 (although only 40 year later the Muslims would lose 

Grenada, in Spain, as the reconquista was completed) and then moved on to almost 

conquer Europe before being turned back at Vienna in 1683? Or is it more relevant 

just to look at recent history, starting at the beginning of the 19th century, when the 

West conquered and colonized every single Muslim country? Or the very recent past, 

when Muslims were counter-attacking, using a new military approach popularly 

called “terrorism”? 

My bottom line is that the next twenty years may be dominated by the Forever War 

that started in the 600s, being resumed in earnest. At least in Europe, it has the 

prospect of becoming a war of survival, much nastier than either WW1 or WW2. 

That resumption is being accelerated by what is going on in the Middle East now. 

The chances that the upheaval in the Arab world will just peter out and everyone will 

return to the status quo ante are about zero. It’s a culture-wide affair, much as the 

revolutions in Eastern Europe were. Or, for that matter, the revolutions against Spain 

in South America at the beginning of the 19th century. 

The Arab revolutions are a good thing, in that they’re getting rid of criminal regimes. 

Some will be replaced with equally repressive cliques, although manned with 

different criminals. I suspect a few might be more like the French Revolution of 

1789; good riddance to the old regime, but then came Robespierre. And after him 

Napoleon. 

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Regardless of how the tumult plays out in any particular country, the erstwhile docile 

collaborators with Europe and the U.S. are being elbowed aside, and the regimes 

that replace them are going to accommodate the vast public constituency for hostility 

toward the West, if only for the sake of internal political advantage. 

The war is not going to be fought with conventional armies. First of all because the 

Islamic world doesn’t have any that would last more than a day or two against a 

Western army. But also because a Western army is useless against an amorphous 

mass of millions of people. 

So what will the conflict be like? Amorphous and disjointed, chaotic and without 

fixed fronts. Millions of Muslims are in Europe – Pakistanis in the UK, Turks in 

Germany, North Africans in France, Indonesians in Holland. Europe’s destructive 

conquest of the world has come back to bite. These people will approach majority 

status over the next 20 years, both because they reproduce at several times the rate of 

the Europeans and because they’re not being absorbed. And because, now, millions 

and millions more are going to arrive as boat people. 

The natives aren’t going to like it, for lots of reasons. And the outcome will likely 

resemble what always happens when large numbers of unwelcome foreigners invade 

a territory: violence. 

One consequence of the war, and especially of the collapse of the regime in Arabia 

(in 2031 it’s no longer called Saudi Arabia, because the ruling Saud family – at least 

the ones who couldn’t get to their jets in time – has been massacred) is a cut-off of oil 

until the U.S. invades. 

I hate to overemphasize oil, but the world still runs on it. When something does 

happen in Arabia, you can count on a disruption in the shipment of oil. And 

absolutely count on active U.S. intervention. 

A prolonged guerrilla war, similar to those in Iraq, Afghanistan, Libya and other 

Arab countries will follow. But there won’t be any cover story about ousting a bad 

guy or bringing democracy to the oppressed. It will be pretty obvious to everybody 

that, from the West’s point of view, it will start out simply to answer the question: 

What’s our oil doing under their sand? But from the Muslim’s point of view, it will 

be a different question: How can we rid ourselves of these aggressive infidels once 

and for all? Then the West will rephrase their question to: These people want to kill 

us! How can we stop them once and for all? 

You may be thinking that the U.S. can’t lose a war because it has a large and 

extremely high-tech military. All those expensive toys can be useful from time to 

time; they can win lots of small battles. But they’re basically useless for winning the 

next generation of warfare, as useless as cavalry in WW1, battleships in WW2, tanks 

in Vietnam or nuclear missiles today. 

What? Nuclear missiles obsolete? Of course. They’re expensive, clunky, and the 

enemy can tell exactly where they came from. A plane, or a boat, or a truck – or a 

FedEx package – is a much neater delivery system. And there will be plenty of 

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nuclear devices to deliver. If they’re within the grasp of tiny countries like Israel and 

North Korea, they’re within the grasp of anyone. 

In fact, the centerpieces of today’s military are well on their way to the scrapheap or 

to museum displays. There may well be a few aircraft carriers, nuclear missiles, B-2 

bombers, F-22 fighters, and the like around in 20 years. But they’ll be oddities 

reserved for special purposes, like typewriters. Laser, electronic and robotic weapons 

will have replaced those using gunpowder, and they’ll be readily available to anyone 

(an accelerant in the collapse of the nation-state). The military's reliance on 

centralization and on computer power will prove an Achilles heel; a gang of teenage 

hackers (not only the best kind, but the most common kind) can devastate a military 

for pure sport. 

Conquest of wealth or territory will be pointless; that’s one thing even the Soviets 

suspected in the ‘80s, when they still had the power to invade Western Europe. It’s 

now nothing like in the old days, when a successful war yielded lots of gold, cattle 

and slaves. This lack of an economic return will obviate one reason for a military. 

The hollowing-out of nation-states will obviate another; governments will find they 

just don’t have either the financial means or the popular support for serious military 

establishments. 

The military, as the cutting edge of the nation-state, is in serious decline. Conflict 

between groups will still exist, of course, but it will be more informal, more the kind 

of thing that a Mafia or an Al-Qaeda might conduct. The growth of private military 

contractors, like Blackwater (now Xe), which only need be paid when in use, is 

indicative. 

A BASIC PLAN 

Sorry I can't do any better than a best-case scenario that just isn't very rosy – at least 

over the near term. And there’s a high likelihood of the worst-case scenario. There 

will probably be some overlapping elements from all three, if I’m on the right track. 

From an economic point of view, I see only two things as being predictable: One, 

that many people will always produce more than they consume and save the 

difference; this will create capital, which is critical for not only a higher standard of 

living, but for the advancement of technology. 

Two, that since there are currently more scientists and engineers alive than have 

lived in all previous history combined, technology will keep advancing; technology is 

the major force to advance the general standard of living. So that’s essentially why 

I’m an optimist. Let’s just hope the savers aren’t wiped out, and the scientists don’t 

do too much government work. 

The most sensible plan for the next 20 years is to plan to survive. The 

days of “He who dies with the most toys wins,” and of two whole 

generations living way above their means, are over. 

264


20 years isn't forever. Think of it like a bear market, when the best thing to do is take 

your chips off the table, grab some books and retire to the beach for a year – except 

that this is going to be a lot longer and more serious. Nonetheless, I expect my 

fundamental optimism to get through it undamaged, as should yours. 

For one thing, the long-term trend is favorable. Mankind has risen from subsistence 

and living in caves as little as 12,000 years ago, to reaching for the stars today – and 

the rate of progress has been accelerating. Why should that stop now? 

But, as I mentioned earlier, thinking too far in the future is perhaps pointless. So 

what should you do now? The essential advice remains the same: 

• Own gold and silver. At Casey Research, we’ve made a lot of money on them 

– and they’re no longer cheap – but they’re going higher, simply for lack of 

alternatives. Look at them as you would cash. 

• Produce more than you consume, and save the difference. This is no longer 

the time for promiscuous, conspicuous consumption. 

• Be alert for speculations. Some markets will collapse (for instance, I wouldn’t 

want to own a McMansion in the suburbs or a “collectible” car). Other 

markets will likely turn into manias, benefiting from trillions of new currency 

units (I suspect mining stocks will be one of them). 

• Diversify your assets (and yourself) politically and geographically. As big a 

risk as the markets will be, your government is an even bigger one. 

And, incidentally, we’re going to be looking carefully at the stock markets in the 

Arab world. It’s too early to buy. But there’s a time and a price for everything. 

How I Know Another Correction Is Coming 

Jeff Clark, Senior Precious Metals Analyst 

By Jeff Clark, BIG GOLD 

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June 9, 2011 7:21pm GMT 

The gold price has been rising steadily for almost a year now, with nary a correction. 

It fell only 4% last month, and the biggest decline since last July was January’s 6.2% 

drop. These barely register as “corrections” when one considers that we’ve had 18 of 

them greater than 5% since the bull market began in 2001.


We’re getting used to a persistently rising gold price. Any decline is met with more 

buying, pushing the price to new highs. But how long can we realistically expect this 

pattern to continue? 

The answer will ultimately be determined by the fundamental factors pushing on the 

price – more Greece, more money printing, and more economic bad news will all 

drive gold higher. But even then, have we really said goodbye to big corrections? 

History can provide a clue. If we could find a time period within a gold bull market 

where the price sidestepped major falls, then it might be reasonable to think we’ve 

entered a period where it will continue steadily climbing. On the other hand, if gold 

saw big corrections even during, say, a mania, we might need to be on the lookout 

for them no matter how bullish the factors are today. 

Here’s a chart of the corrections that occurred during the final two years of the 1970s 

mania – one of gold’s biggest parabolic runs in history. 

Chart next page…. 

During this historic run, there were seven significant corrections. On average, that’s 

one every 3½ months and a 10.1% decline. You’ll also see that they were very 

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sharp; four lasted less than ten trading days and all were less than a month. This all 

occurred in the middle of the mania. 

If history is any guide, our correction in January was small, and will be the first of 

many. 

In fact, historical precedent shows that volatility is the norm, even during the Mania 

Phase of a gold bull market. Big moves, both up and down, are common. I can’t 

point to a date on the calendar, but sooner or later we’re going to have another 

downturn, and it won’t be the only one. 

This means that great buying opportunities will present themselves regularly. And 

not just for gold but also for silver. To find out how and when to buy, and what forms 

of silver you should own, read our FREE 2011 Silver Investing Guide. 

Investor Jim Rogers Tells Fox Business 

Agriculture Is “Going to Be One of the 

Great Industries of Our Time” 

Chairman and CEO of Rogers Holdings Jim Rogers spoke with FOX Business 

Network (FBN) about the United States deficit and the path the nation and 

individuals need to take in order to prosper. Rogers said that the U.S. economy will 

not recover until we “accept reality, stop spending money we don’t have, go down to 

a lower level, and start over.” He went on to say that particularly in such an 

uncertain economy, “you should invest in only what you know, otherwise keep your 

money in cash.” Excerpts from the interview are below: 

On his investment strategies: 

“I am long commodities, long currencies, and short stocks. But we will see what 

happens. You should invest in only what you know, otherwise keep your money in 

cash. The reason people lose money is because they keep jumping around investing 

in things they don’t have a clue what they are doing. Normal people should just wait. 

Wait until there are good opportunities and take advantage of them. There are plenty 

of opportunities besides banks. Cotton is going through the roof, corn is making all 

time highs. Invest in farmers. Invest in agriculture. I think agriculture is going to be 

one of the great industries of our time.” 

On what one commodity he would invest for the next 10 years: 

“Agriculture. I am a terrible market timer but maybe rice. Maybe sugar.” 

267

On the United States deficit: 


“America is the largest debtor nation in the history of the world. These clowns in 

Washington are running up the debts. They are not solving the problem, they are 

making the problem worse. We have a serious crisis facing us and no one seems to 

understand it.” 

On what it will take for Congress to get serious about passing a deficit plan: 

“Throughout history, countries have never dealt with this kind of problem until there 

is a crisis or a semi crisis. The way things are going we are going to have a crisis. It is 

going to be in the currency markets. Perhaps as early as this fall you will see a lot of 

currency turmoil in the dollar or the euro. That’s how these things usually start.” 

On whether a crisis in Europe would impact world markets: 

“Of course it will. We are going to have problems. Nobody wants to take pain even 

when it’s staring you in the face. We have made a lot of mistakes. We have got to 

deal with those mistakes and saying we don’t have a problem is going to make the 

problem that much worse. There is going to be some pain. We have had pain before. 

People have been going bankrupt for a few thousand years. Hopefully if that happens 

you have got shorts. That’s why you are hedged.” 

On when our economy will recover: 

“When we accept reality, stop spending money we don’t have, go down to a lower 

level, and start over. We are no longer what we used to be. The largest creditors are 

in Asia. I don’t like this. I am an American citizen, but we have got to face the 

facts.” 

On who he would like to see running the Federal Reserve: 

“I would rather Trichet were running the Federal Reserve than Ben Bernanke are 

you kidding? I would rather anyone run the Federal Reserve than Ben Bernanke. Mr. 

Bernanke has been wrong about everything in the last seven or eight years. I would 

rather have Touché but if I could have anyone I would have Merkel. I would want 

Merkel to sit there and say you guys have got to take a haircut.” 

On whether bond holders should take a haircut: 

“Absolutely. They made the mistake, why should innocent German taxpayers wake 

up one morning and say oh I have got a bill here to pay off some Greeks sitting on 

the beach. It’s just not right. It’s not morally right and it’s not economically right.” 

Police State Amerika 

268


By David Galland, Casey Research June 10, 2011 4:20pm GMT 

I just had a conversation with constitutional lawyer and monetary expert Dr. Edwin 

Vieira. I first became acquainted with Dr. Vieira, who holds four degrees from 

Harvard and has extensive experience arguing cases before the Supreme Court. I met 

him again at our recent Casey Research Summit in Boca Raton, where he spoke on 

how far off the constitutional rails the nation has traveled. Here is a summary of 

what he told me… 

Dr. Vieira and I covered a lot of ground in our lengthy conversation, most of it 

related to the U.S. monetary system – its history, nature, and likely fate. But in 

between the details and analysis of how it is that the nation’s fiscal and monetary 

affairs have deteriorated to the current dismal state – and how the global sovereign 

debt crisis is likely to be resolved – a couple of deeply concerning truths emerged. 

Concerning because, taken together, these truths have set the stage for a full-blown 

police state. 

The first of these two truths has to do the nature of today’s money. To set the stage, I 

present the following excerpt from Dr. Vieira’s paper A Cross of Gold related to the 

original Federal Reserve Act. 

Section 16 of the Act provided that: 

Federal reserve notes, to be issued at the discretion of the Federal Reserve Board for the 

purpose of making advances to Federal reserve banks are hereby authorized. The said notes 

shall be obligations of the United States, and shall be receivable by all national and 

member banks and Federal reserve banks and for all taxes, customs, and other public dues. 

They shall be redeemed in gold on demand at the Treasury Department of the United 

States, or in gold or lawful money at any Federal reserve bank. 

Observe: From the very first, Federal Reserve Notes were denominated 

“advances” and “obligations”—that is, instruments and evidence of debt. True 

“money”, however, is the most liquid of all assets, not a debt that might be 

repudiated, and certainly not a debt that has been serially repudiated. 

And if Federal Reserve Notes were from the start to be “redeemed in gold or 

lawful money”, they obviously were never conceived to be either “gold” or 

“lawful money”. So, because by definition the only “money” the law recognizes 

is “lawful money”, by law Federal Reserve Notes were never (and are not now) 

actual “money” at all, but at best only some sort of substitute for “money”. 

269


The monetary conjurers’ trick has been, slowly, steadily, and stealthily, to reverse 

this understanding in the public’s mind. That is, to make the substitute pass for 

the real thing, and then remove the real thing from the operation. 

This subterfuge was not overly difficult to put over. After all, in the term 

“redeemable currency”, which is the noun and which the adjective? When 

people deal with a “paper currency redeemable in gold”, the natural uninstructed 

inclination is to treat the paper currency as “money” and the gold as something 

else. The paper currency, as the saying goes, is merely “backed” by gold—but of 

course is not itself gold. And because the currency is not itself gold, the moneymanipulators 

can remove the gold “backing” farther and farther into the 

background, without affecting the nature of the paper as “currency” (at least nominally). 

Thus, a “redeemable currency” can be converted into a “contingently 

redeemable” or “conditionally redeemable” currency, through temporary 

suspension of specie payments (as happened repeatedly during the Nineteenth 

Century); and then into a full-fledged “irredeemable currency”, through 

permanent suspension of specie payments, as with Federal Reserve Notes after 

1933 domestically and 1971 internationally. 

Yet, to the average citizen (whose most serious liability is mental inertia), even 

though a paper currency’s promise of redemption has been dishonored, it 

nonetheless remains “currency”. 

Thus one grasps that the so-called “right to redemption” attached to any paper 

currency is actually a liability, inasmuch as it exposes the holders of that currency 

to repudiation, because they possess only the paper, not the gold. 

Even in the best of times, the holders of redeemable paper currency are not 

economically and politically independent. Rather, they depend upon the honesty 

and the competence of the money-managers. 

This is why America’s Founding Fathers, realists all, denominated redeemable 

paper currency as “bills of credit”. They knew that such bills’ values in gold or 

silver always depended upon the issuers’ credit—that is, ultimately, the issuers’ 

honesty and ability to manage their financial affairs. 

The unavoidable trouble with “bills of credit”, though, is that they can (and 

usually do) turn out to be “bills of discredit”, when the holders discover that the 

money-managers are dishonest and incompetent—or worse, as is the situation 

today, highly competent at dishonesty. Then the holders of the paper currency (if 

they are sufficiently astute) realize how unwise it is to allow the gold to be held 

270


by the very people with the greatest incentive, and the uniquely favorable 

position and opportunity, to steal it. 

But when the money-managers refuse to redeem their currency, what can the 

holders of that currency do to protect themselves? Well, what were they able to 

do in 1933 and in 1971? Nothing. If the holders of Federal Reserve Notes had 

enjoyed an effective, enforceable “right” to the gold that the Federal Reserve 

System and the Treasury of the United States promised to pay in redemption of 

those notes—that is, if the currency had been “redeemable” in the only 

meaningful sense that redemption was absolutely assured as a matter of law and 

especially fact—the gold seizures of 1933 and 1971 would never have happened. 

Thus, the ostensibly “redeemable” character of paper currency of the pre-1933 

and pre-1971 type did not protect the holders of that currency. Instead, it turned 

out to be the very device used to deceive, defraud, divest, and dispossess them of gold— 

proving in the most palpable manner that a society’s acceptance of “redeemable 

currency” is the product of confusion and the invitation to inevitable economic 

and political disaster. 

In our conversation, Dr. Vieira ticked off eight specific ways in which the current 

monetary system is unconstitutional. While I won’t go into the specifics here, the 

important thing to understand is that, as currently operated, the federal government 

has managed to manipulate things to avoid any constitutional restrictions on its 

ability to spend. 

This, of course, gives the government free rein to reward favored voting blocs with 

expensive social programs, buy fleets of limousines, launch expensive overseas 

adventures, bail out well-connected donors, and otherwise spend the country into 

ruin. 

To understand why this is so important as a precedent to the evolution of fascism, 

view the matter in reverse by considering how different things would be if the 

constitutionally mandated requirement that the government’s currency be 

redeemable in good money – gold or silver – was still enforced. In that case, the 

government’s ability to spend would be effectively limited by what it collected in 

revenues. That, in turn, would have greatly curtailed its ability to grow into the 

bloated juggernaut it has. 

In other words, the American ideal of a limited government would have been hard 

wired. 

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As it stands, though, exactly the opposite has been allowed to evolve – unchallenged 

by anyone, including the Supreme Court. Why has the nation’s highest court chosen 

not to tackle this clear breach of the Constitution? 

According to Dr. Vieira, it is likely because if they were to void the current system as 

being unconstitutional, they would effectively blow apart the U.S. and global 

economy. But as they have no authority to even suggest an alternative system, they 

are faced with the reality that while they have the power to do great damage, they 

have no power to cushion the blow. And so, the Supreme Court does nothing. 

As a result, the ability of the federal government to continue its insane spending and 

rolling out new initiatives designed to win over voters continues with no legal 

restraints – the latest example being the health-care initiative. 

Put another way, in cahoots with the Fed, the federal government is able to wage 

war, bail out the banks, foster socialism, and otherwise bankrupt the nation – to do 

whatever it wants – largely thanks to its continued operation of an unconstitutional 

monetary system. 

It Gets Worse… 

The second fundamental truth is that the Supreme Court has been a co-conspirator 

and instrument of the government’s degradation of individual liberty. 

Dr. Vieira and I spent a fair amount of time on this topic – of how the nation’s 

highest court could let stand the egregious excesses of recent decades; the Patriot 

Act, Guantanamo, institutionalized torture and renditions, domestic spying, 

eminent-domain abuses, warrantless searches, etc., etc. In his view, there can be only 

one of two reasons that the Supreme Court has been so accommodating – one is that 

the justices are incredibly incompetent, and the other is that they are working within 

the context of an unseen agenda. 

Ruling out the first, his final conclusion is that they are operating with an unseen 

agenda in mind. In his view, that agenda revolves around the rising potential for 

widespread social unrest emanating from the nationwide monetary Ponzi scheme. 

Doing its part to prepare, the Supreme Court has been establishing the precedents 

necessary for the government to cope with that unrest. 

Too radical a thought? Returning to Dr. Vieira’s point – ask yourself how else to 

explain the Supreme Court’s actions. Are they collectively of low intelligence, or 

otherwise so stupid as to be unable to understand the Constitution? Or do they now 

view the Constitution and the Bill of Rights as dead letters, freeing them up to 

272


respond to the government’s overheated demands for new and previously 

unimaginable new “emergency” (read “fascist”) powers? 

Is there an alternative explanation? 

On this general theme, Dr. Vieira correctly points out that, in order for a fascist state 

to exist does not require the government to actually arrest anyone – but only that 

they can arrest anyone. Do you think you broke a law over the past week? I can 

assure you that every one of you dear readers broke a lot of laws. Sure, you may not 

have realized you were breaking a law – but, as the old saying goes, “Ignorance of 

the law is no excuse.” 

The Stage Is Set 

Unrestricted in its growth by any constitutionally mandated limits on its ability to 

create and manipulate money – the official currency now being nothing more than 

IOUs redeemable in nothing more tangible than coins made out of base metal alloys 

with inflated face values – and supported by a Supreme Court that has unequivocally 

demonstrated a willingness to ignore or sign off on egregious tramplings of the 

Constitution, the stage is set for the U.S. government to evolve into something far 

more dangerous on the domestic front. 

All it requires now is a triggering event, and it would be naïve to think that such an 

event won’t occur. Maybe not tomorrow, maybe not this decade – but when it 

inevitably does, the federal government already has all the precedents it needs to do 

“whatever it takes.” This absence of legal restrictions on its actions is the very 

foundation of fascism. 

When I asked Dr. Vieira how the nation has progressed on a scale from 1 to 10 

towards becoming a police state, with 10 being a full-blown version, he put us 

currently at about 7. 

There really is no investment angle to be derived from this situation – well, at least 

nothing new. Owning tangible investments that will hold up in the face of a 

continued currency debasement continues to make sense – but with the caveat that 

FDR’s unconstitutional gold confiscation of the 1930s was let stand and there is zero 

reason to think that the accommodating Supreme Court wouldn’t go along with it 

again. One would hope to see straws in the wind before any moves toward 

confiscation would begin. Until those straws start flying, the precious metals – as 

well as other tangibles – belong as part of your portfolio. 

273


And I’d be remiss if I didn’t mention the importance of politically diversifying your 

life and your money as one of the few steps you can take to avoid the serious risk 

that comes from being “all in” in a single jurisdiction. 

Some readers have berated me for often writing on what might be considered gloomy 

topics. To which I would respond: If you are sitting in a theater and see a fire 

breaking out, would you fail to make others aware of it, because you didn’t want to 

interrupt their entertainment? 

Well, we can see a fire blowing up – the kindling for which has been piled up deep by 

a series of out-of-control governments. Unless and until there is something akin to an 

“American Spring.” this fire is going to spread and consume even more of the 

accumulated wealth of the broader public – and maybe worse. 

Do what you can to protect yourself and your families – then get on with your life. 

You may not be able to do much about the bigger-picture trend, but you can 

certainly take steps on a personal level to mitigate the ill effects. 

Hope for the best, plan for the worst… but then live life to the fullest. 

Limited-time special offer: Hear Dr. Vieira’s complete speech at the Casey Summit 

(along with those of 34 other world-class experts) PLUS receive a fresh-off-thepresses, 

lengthy interview with David and Dr. Vieira in your inbox next week. It’s all 

in your discount Double-Dip Crisis Bundle – including the complete Summit CD 

set and a subscription to The Casey Report. Full details here. 







China Agency Says US Already Defaulting on Debt 

Friday, 10 Jun 2011 08:35 AM 

Share: 

A Chinese ratings house has accused the United States of defaulting on its massive 

debt, state media said Friday, a day after Beijing urged Washington to put its fiscal 

house in order. 

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"In our opinion, the United States has already been defaulting," Guan Jianzhong, 

president of Dagong Global Credit Rating Co. Ltd., the only Chinese agency that 

gives sovereign ratings, was quoted by the Global Times saying. 

Washington had already defaulted on its loans by allowing the dollar to weaken 

against other currencies -- eroding the wealth of creditors including China, Guan 

said. 

Guan did not immediately respond to AFP requests for comment. 

The US government will run out of room to spend more on August 2 unless 

Congress bumps up the borrowing limit beyond $14.29 trillion -- but Republicans are 

refusing to support such a move until a deficit cutting deal is reached. 

Ratings agency Fitch on Wednesday joined Moody's and Standard & Poor's to warn 

the United States could lose its first-class credit rating if it fails to raise its debt ceiling 

to avoid defaulting on loans. 

A downgrade could sharply raise US borrowing costs, worsening the country's 

already dire fiscal position, and send shock waves through the financial world, which 

has long considered US debt a benchmark among safe-haven investments. 

China is by far the top holder of US debt and has in the past raised worries that the 

massive US stimulus effort launched to revive the economy would lead to 

mushrooming debt that erodes the value of the dollar and its Treasury holdings. 

Beijing cut its holdings of US Treasury securities for the fifth month in a row to 

$1.145 trillion in March, down $9.2 billion from February and 2.6 percent less than 

October's peak of $1.175 trillion, US data showed last month. 

Foreign ministry spokesman Hong Lei on Thursday urged the United States to adopt 

"effective measures to improve its fiscal situation". 

Dagong has made a name for itself by hitting out at its three Western rivals, saying 

they caused the financial crisis by failing to properly disclose risk. 

The Chinese agency, which is trying to build an international profile, has given the 

United States and several other nations lower marks than they received from the the 

big three. 

Newsmax.com: China Agency Says US Already Defaulting on Debt 

Thursday, June 9, 2011 

How to Stay Sane In Insane Times 

http://www.washingtonsblog.com 

275


A reader asked - given all of the intense things I write about - how I stay sane. 

Well, even though I spend a lot of time reading and writing about intense subjects, I 

exercise, get out and play, have a rich family life, and "re-charge my batteries" when I 

can. 

Yes, Fukushima is spewing radiation, but if you stay inside to avoid it you'll become so 

depressed that that will shorten your lifespan. Indeed, sitting for too long can be as 

deadly as smoking. Get out and exercise (which floods your body with feel-good 

chemicals), but take off your shoes before you come inside, and shower off afterwards. 

You don't need a lot of expensive equipment. 

Yes, we're probably heading into a great depression, but - if so - you'll need your friends 

and family more than ever, so don't ignore them now. 

Yes, our country is drifting towards fascism, but if you don't take time out from 

obsessing on politics to enjoy the little things, you won't have the energy or creativity to 

keep on fighting for freedom and justice. Indeed, true courage comes from love ... and so 

we will only have the courage to fight fascism if we engage enough with family, friends, 

community, nature etc. to be willing to fight to protect them. 

And obviously, people of faith draw solace from their religious or spiritual communities, 

just as atheists can recharge their batteries from secular community activities. 

So, the bottom line is that facing the truth while staying sane is a paradox. You have to 

learn to turn it off for at least short periods every day if you want to stay sane ... and not 

burn out. 

Gerald Celente: “COLLAPSE: IT’S 

COMING! ARE YOU READY?” 

Mac Slavo June 13th, 2011 

Trend forecaster Gerald Celente of the Trends Journal advises 

subscribers of his quarterly newsletter that the collapse is on it’s way and will become 

apparent to the population of the entire world in short order. 

While pundits argue over whether or not a double dip recession is coming, many on the 

street have finally begun to realize that another recession is the least of our problems. 

Via Gerald Celente’s June 13, 2011 Trend Alert 

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Everything is not all right. And things are going to get worse … much worse. The 

economy is on the threshold of calamity. Wars are spreading like wildfires. The world is 

on a razor’s edge. 

Not so, say world leaders and mainstream media experts. Yes, there are problems, but the 

financiers and politicians are aware of them. Policies are already in place and measures 

are being taken to correct them. 

Whether it’s failing economies, intractable old wars or raging new wars, the word from 

the top always maintains that steady progress is being made and comforts the populace 

with assurances that the brightest minds and the sharpest generals are in charge and on 

the case. On all fronts, success is certain and victory is at hand. Only “patience” is 

required … along with more men, more time and more money. 

As far as these “leaders” and their media are concerned, the only opinions that count 

come from a stable of thoroughbred experts, official sources and political favorites. Only 

they have the credentials to speak with authority and provide trustworthy forecasts. That 

they are consistently, if not invariably, wrong apparently does nothing to diminish their 

credibility. 

How can any thinking adult possibly imagine that the same central bankers, financiers 

and politicians responsible for creating the economic crisis are capable of resolving it? 

… 

Yet even in the face of their proven failures and gross incompetence, anyone daring to 

challenge the party line or the conventional wisdom is dismissed as an “alarmist,” “fear 

monger,” or “gloom-and-doomer.” 

… 

…with the Dow on a down trend and the economic data increasingly pointing in the 

direction of Depression, Washington and Wall Street remain in denial. The only debate 

among the “experts” is whether or not a “double dip” recession is likely. 

However, for the man on the street – pummeled by falling wages, higher prices, 

intractable unemployment, rising taxes and punitive “austerity measures” – “Depression,” 

not “recession,” and certainly not “prosperity,” is just around the corner. 

… 

Trend Forecast: The wars will proliferate and civil unrest will intensify. As we forecast, 

the youth-inspired revolts that first erupted in North Africa and the Middle East are now 

breaking out in Europe (See “Off With Their Heads,” Trends Journal, Autumn 2010) 

Given the trends in play and the people in power, economic collapse at some level is 

inevitable. Governments and central banks will be unrelenting in their determination to 

wring every last dollar, pound or euro from the people through taxes while confiscating 

public assets (a.k.a. privatization) in order to cover bad bets made by banks and 

financiers. 

When the people have been bled dry financially and have nothing left to give, blood will 

flow on the streets. 

We’ve been saying it for over two years, and we maintain our position today – this is a 

depression. No amount of government machination is going to fix the fundamental 

problems within the financial, economic, monetary and political systems of our country. 

277


Nature will force balance one way or the other. And nature, as we have come to learn in 

recent months, can be very brutal. 

Make no mistake. We are in as serious a time today as any in the last century. While we 

may not be directly engaged in a World War, it is not that far off. Analysts often speak of 

the engagements in the middle east as four separate wars (Iraq, Afghanistan, Libya, and 

now Yemen). We may be engaged in conflict across four different borders, but there is 

only one war – and it will soon expand. It’s only a matter of time before China and 

Russia get involved. 

Look at the middle east and you’ll clearly see this is a battle for resources and regional 

dominance. Chinese state owned companies have had to withdraw 30,000 employees 

from the Libyan oil fields. Ownership, it seems, has now been granted to the “rebels.” 

Similar activities, though hidden from the view of the masses, are occurring all over the 

world. How long before the Chinese, the Russians and others take a real stand – a 

military stand? 

Even if we were to avoid global war, which is doubtful in the long-term, the fact that the 

super majority of the world’s population is broke and going hungry means that rioting, 

revolution and bloody civil wars cannot be avoided. If you still believe that the powers 

that be, those politicians who are in bed with the very financiers and military industrial 

complex that is robbing us blind and pushing us towards war, have your interests at heart, 

then you need to have your head examined. It’s time to be blunt. You either get it, or you 

don’t. 

The United States of America, as well as the world, will be unrecognizable as it exists 

today within the next decade. 

We offer the same advice that Mr. Celente has offered: 

…it has to be treated as if you are preparing for battle; expect the unexpected and prepare 

for the worst, which in these perilous times could be a declaration of economic martial 

law. Banks may close, currencies may be devalued and deposit withdrawals may be 

imposed. Remember Gerald Celente’s basic survival strategy, 

“GC’s Three G’s: Guns, Gold and a Getaway plan.” 

We’re in the middle of an unprecedented global crisis. Make preparations or suffer the 

consequences. 

Author: Mac Slavo 

Date: June 13th, 2011 

Website:www.SHTFplan.com 

Copyright Information: Copyright SHTFplan and Mac Slavo. This content may be freely 

reproduced in full or in part in digital form with full attribution to the author and a link 

to www.shtfplan.com. Please contact us for permission to reproduce this content in other 

media formats. (SN: My comments are, “This is an excellent website which you should 

visit, and I agree with Mac Slavo and Gerald Celente 100%.) 

Superinvestor Mark Mobius: Another 

financial crisis is around the corner 

278


Tuesday, May 31, 2011From Bloomberg: 

Mark Mobius, executive chairman of Templeton Asset Management's emerging 

markets group, said another financial crisis is inevitable because the causes of the 

previous one haven't been resolved. 

"There is definitely going to be another financial crisis around the corner because we 

haven't solved any of the things that caused the previous crisis," Mobius said at the 

Foreign Correspondents' Club of Japan in Tokyo today in response to a question 

about price swings. "Are the derivatives regulated? No. Are you still getting growth 

in derivatives? Yes." 

The total value of derivatives in the world exceeds total global gross domestic 

product by a factor of 10, said Mobius, who oversees more than $50 billion. With 

that volume of bets in different directions, volatility and equity market crises will 

occur, he said. 

The global financial crisis three years ago was caused in part by the proliferation of 

derivative products tied to U.S. home loans that ceased performing, triggering 

hundreds of billions of dollars in writedowns and leading to the collapse of Lehman 

Brothers Holdings Inc. in September 2008. The MSCI AC World Index of developed 

and emerging market stocks tumbled 46 percent between Lehman's downfall and the 

market bottom on March 9, 2009. 

"With every crisis comes great opportunity," said Mobius. When markets are 

crashing, "that's when we're going to be able to invest and do a good job," he said. 

The freezing of global credit markets caused governments from Washington to 

Beijing to London to pump more than $3 trillion into the financial system to shore 

up the global economy. The MSCI AC World gauge surged 99 percent from its 

March 2009 low through May 27. 

'Too Big to Fail' 

The largest U.S. banks have grown larger since the financial crisis, and the number of 

"too-big-to-fail" banks will increase by 40 percent over the next 15 years, according to 

data compiled by Bloomberg. 

Separately, higher capital requirements and greater supervision should be imposed 

on institutions deemed "too important to fail" to reduce the chances of large-scale 

failures, staff at the International Monetary Fund warned in a report on May 27. 

"Are the banks bigger than they were before? They're bigger," Mobius said. "Too big 

to fail." 

To contact the editor responsible for this story: Nick Gentle at 

ngentle2@bloomberg.net. 

279


How “Social Proof” Helps Smart Investors 

David Galland, Managing Director 

By David Galland, The Casey Report 

280 

May 27, 2011 7:44pm GMT 

As a young man in a foreign land, my curiosity was piqued by the crowd standing 

five or six deep in a circle. On pushing my way forward, the focus of the crowd’s 

attention quickly became apparent – a fight, although for reasons I’ll explain 

momentarily, “fight” is not the right word. 

The setting was the annual wine festival in Neuchâtel, Switzerland. I was just 18, a 

wet-behind-the-ears puppy from a small town in Hawaii. But even in the remote 

backwaters of my youth, the Swiss reputation for a certain decorum and 

circumspection had made its way into my consciousness. How then to explain the 

sight of several dozen Swiss citizens, a cross-cut of ages and gender, standing 

placidly by as one young man proceeded to batter another? 

Now I have seen a number of fights in my life – in pre-PC days it was how kids often 

concluded their strongest disagreements (today, very much not the case) – and this 

was no fight. It was a beating, and a brutal one at that. 

Adding to the surrealism of the scene – already surrealistic enough given the tableau 

of a polite crowd of plain Swiss folks watching the brutality, cow-like, against a 

setting of the placid beauty of the Swiss countryside – was that the girlfriend of the 

man being beaten was screaming in anguish as she appealed, futilely, to the crowd to 

intercede. 

While memory can dim with time, I can still recall the scene, and my emotions, quite 

vividly. My initial reaction was that this was wrong, and I was unable to 

comprehend why no one did anything – especially in that the champion of this 

country fight had so dominated the contest that his opponent was all but knocked 

out, lying bloody on the ground unable to defend himself. Not content at his 

domination and ignoring the man’s screaming girlfriend, the champion pulled his 

victim to his feet as I watched in shock and, holding him standing with one hand, 

brought his other fist back dramatically and bashed the poor guy in the jaw, sending 

him crashing back to earth. 

Clearly intending to do it all over again, he bent over and began to lift the target back 

to his feet. It was at that point that it dawned on me that no one else in the crowd 

was going to intercede in the carnage, not even to raise a voice in opposition. 

Instead, they were quite content to stare stupidly at what could have very well 

evolved into murder.


Recognizing the situation as some form of societal aberrance – though not 

understanding then how apparently normal people could fail to act against such 

wanton viciousness – I pushed my way through the crowd and into the circle and 

grabbed the brute, spun him around, and yelled “Enough!” in his face. 

Things then proceeded to get a little wiggly. Dropping his victim, whose girlfriend 

quickly helped him crawl off into the crowd, the brute stared at me, 

uncomprehendingly at first, probably because of my use of an English word. But 

with his blood still up, it quickly became clear I was to be his next target. At which 

point, and I kid you not at all, someone tugged at my sleeve and when I turned, 

forced the handle of a knife into my palm. While I was still trying to register what 

had just happened, the herd made a noise that brought my attention back to the 

Swiss brute, and I was shocked to discover that he, too, was now similarly armed. 

Now there were any number of reasons I had made the trip to Neuchâtel that day – 

to sample the local viniculture, tuck into a nice fondue for lunch, perhaps even to 

meet a cute Swiss girl – and I can assure you without double-checking that nowhere 

on the list was “get into a knife fight.” 

And so without the slightest shame at overtly exhibiting cowardice, I dropped the 

knife and turned tail, shoving my way through the tightly packed crowd and making 

good my escape by leaping up on a parked car and running its length, then diving 

back into the crowd on the other side. 

What Happened? 

In the years following the events just related, I often wondered what happened that 

day. How was it that a crowd of otherwise normal-looking people – and Swiss at 

that! – could have stood by so passively as one man brutalized another, ignoring 

even the dramatic pleadings of the victim’s girlfriend? 

Answers didn’t begin to come to me until some years later when I picked up 

Professor Robert Cialdini’s excellent book, Influence. In it, Professor Cialdini 

discusses a number of stimuli that trigger an automatic response in people, including 

the effect that “social proof” has on the human mind. 

The mechanics of social proof, while somewhat complex, are pretty easy to 

understand. Simplistically, we humans have a strong tendency to glance over at other 

members of the herd in an attempt to gauge the correct action or reaction to take in 

any given circumstance. While this tendency can be useful in identifying the right 

bread plate to use at a fancy dinner party, it can also have devastating consequences. 

281


In one of the most notorious examples of the downside of social proof, in 1964 Kitty 

Genovese was slowly murdered on a New York sidewalk over the course of about 30 

minutes, despite 40 or so witnesses, none of whom took action. They figured 

someone else would. 

Likewise, the very average Swiss citizens I encountered that day in Neuchâtel 

clumped together and, seeing that no one else was making a move to intercede, stood 

mute. 

In any event, understanding the concept of social proof – and its close cousin “social 

convention” – seems to me to be of fundamental importance to us as members of the 

human race, and as investors. 

As far as the former is concerned, if you ever find yourself doing the same thing as 

everyone else, it should concern you. Stop and ask whether you are doing the thing 

because you want to or because you think it is the right thing to do – or are you 

doing it just because it’s what everyone else does? 

As for the latter, if you rely on the cues coming from the mainstream financial media 

and officialdom, you would likely believe the country has exited the latest economic 

crisis and will now steadily make progress towards a return to normalcy. 

Even I find myself fretting that maybe we have it wrong about the nature, depth, and 

likely duration of this crisis. The hard data say the crisis will almost certainly again 

worsen and – given the tenuous nature of the world’s monetary and economic 

systems – perhaps even result in a wholesale breakdown. 

Yet, the indicators we look to for warning signals – the stock market and interest 

rates, to name two – are signaling that nothing particularly untoward is headed this 

way. This despite the data related to the “big two” of unemployment and housing 

being truly terrible, and zero progress being made in reducing the runaway deficit. 

It gets harder to reconcile when the data clearly point to the eurozone as being in the 

grips of a slow-motion break-up, but yet the euro continues to hold up remarkably 

well. 

Or that the Middle East is in flames and gasoline prices are over $4.00 a gallon in 

many U.S. localities. This week the International Energy Agency went on record 

with a statement that if additional supplies of petroleum don’t come online urgently, 

prices could spike higher and do serious further damage to the global economy. 

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Meanwhile, restaurants appear to be doing good business, and the parking lots in the 

local “box town” (Dick’s Sporting Goods, Best Buy, etc.) are full on the weekends: 

social proof that all is well, even though my own research tells me it very much isn’t. 

It Gets Worse 

The seeming disconnect between the true state of the world’s economy and the 

public reaction is actually not a particularly bad thing for those who have their eyes 

open. After all, anyone who can see what’s coming, while the masses do not, has the 

opportunity to get positioned in investments that will do well when the truth of the 

situation becomes evident to all. 

But there are matters much more important in this life than money-making. 

This week, the Supreme Court ruled by an 8-to-1 majority that search warrants are 

no longer required before police commence to kick in your doors. Instead, the new 

test of armed intrusion into your house revolves around whether a policeman hears 

what he or she interprets to be “suspicious” noises coming from within your abode. 

And this is just the latest in a long, long series of actions of a similar ilk that, 

together, add up to a vicious beating of the citizenry’s constitutional rights. 

Where’s the public clamor, the outrage? A casual glance around reveals the masses 

as dumbly going along with these and other such travesties. But only because they 

are. 

In the face of such apathy, it should come as a surprise to no one when the 

government continues to degrade individual liberties in favor of the all-powerful 

state. 

It’s always been something of a joke that you can tell if a politician is lying by 

whether or not his lips are moving. But the joke has now morphed into a hard fact. 

Thanks in no small part to the mechanics of social proof, lying, deceiving, selfdealing, 

and obfuscating by the leadership are now considered perfectly normal and 

acceptable. 

Now, I wish I could muster up some hopeful thought to interject at this point – even 

the smallest sign of a pushback against the state’s growing envelopment of all that 

comes under its gaze – but for the life of me, I can’t. 

Rather, I feel today as I might have all those years ago in Neuchâtel if, on 

discovering the brutal beating going on, I had been bound and gagged and forced to 

stand in the crowd and watch it continue to its bloody conclusion. 

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Hopeless. 

But Not Helpless 


The fact is that I am not bound and gagged. At least not yet. 

And thus, while I still have the ability to do so, I will continue to take measures to 

protect my family and myself – first and foremost, by diversifying globally. 

For many people, the idea of packing up and picking up in order to head elsewhere is 

a non-starter. They may feel an obligation to aging family members back home or 

have small children and worry that somehow a life abroad will not suit. Or they may 

not have the funds or income stream to assure they’ll be able to get by for a 

protracted period. 

While there are good responses to all of those concerns, the truth is that physically 

expatriating is not for everyone. Yet that shouldn’t stop you from prudently – legally 

– diversifying some of your wealth globally. 

Although I have mentioned it before, I’ll again mention what I took away as the 

biggest lesson of Adam Fergusson’s book When Money Dies. And that lesson is that if 

in the early days of the great German inflation, you had taken the simple step of 

investing money even one foot across the border with France or Switzerland, you 

would have saved yourself. Those who stayed put – who out of apathy, ignorance, or 

misguided nationalism left their money in the currency units of their native country, 

Germany – saw that money made worthless over the course of just a few years. 

Of course, it is not strictly required that you have your wealth parked in assets 

domiciled in another political jurisdiction – gold and silver close at hand can serve 

much the same purpose. That said, if all of your eggs are in one basket, and that 

basket is located in a single, corrupt political jurisdiction, then the potential for that 

basket being grabbed away from you remains a constant threat. 

For those of you with the means and a sense of adventure, creating a home away 

from home in a place you like is also a very worthwhile endeavor – though should 

you do so, I can assure you that your friends and family will think you 

unconventional; Maybe even unpatriotic or paranoid. 

But that’s only because that is what they have been taught to think, and because they 

look around and don’t see other people doing it – so it seems strange to them. 

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Now don’t get me wrong: the United States is certainly still largely an agreeable 

place to live and to do business in. And it’s likely to remain that way for years to 

come. If I had to place a bet on any one scenario, that is the bet I would make. 

That said, if the current trends continue, as they show every appearance of doing, 

then in our lifetime individual liberty could, de facto, be extinguished. While that may 

seem a radical statement, just ask yourself how secure your liberty will be if all three 

branches of the government purposely degrade the substance and intent of the U.S. 

Constitution and Bill of Rights? 

The records of the last decade or so make it clear that the Executive branch and 

Congress are all too willing to push constitutional rights aside for political purposes, 

or in an “emergency” – even institutionalized torture is no longer off the table. With 

the latest ruling on search warrants, the Supreme Court has thrown its hat into the 

same ring. 

And things could get much worse, much quicker than most think they could. All it 

would take is another 9/11 – perhaps like the Oklahoma bombing, with domestic 

origins. Regardless of where it comes from, should an attack of the scale of 9/11 

happen – as it almost certainly will – the final nails on Liberty’s coffin would be 

pounded in and the already-militarized domestic security apparatus will become 

openly antagonistic to those who take opposing views. 

When sitting down to write today, I hadn’t planned on writing on this particular 

topic. But the Supreme Court’s ruling has clearly gotten under my skin. Even more 

bothersome than that has been the lack of public outrage at the ruling. After a day or 

two in the news, the ruling has now vanished from the public discourse, injected into 

the code of law like a dose of slow-acting poison. 

Some readers may think that diversifying internationally is the wrong thing to do – 

that as a good American I should burn the proverbial boats and fight for what’s right. 

To which I would reply that I don’t intend on wasting what remains of my life in a 

knife fight with a far better armed opponent. 

You’ll make your own decisions about how to best look after yourself and your 

family. But if you look to your fellow citizens for clues as to what’s going on, and 

how to react to it, you will be setting yourself up for a very rude awakening. 

Trust your own instincts. 

[Every month, David and his co-editors of The Casey Report help savvy investors 

look behind the smokescreens government and mainstream media create to disguise 

the grim truth. And while the investing herd is losing money without even realizing it 

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– through monetary depreciation – they show the way to extraordinary profits in the 

face of crisis. Read more here.] 

Soldiering on: Why Our Military Adventures 

Matter to Investors 

David Galland, Managing Director 

By David Galland, The Casey Report 

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June 1, 2011 6:25pm GMT 

Recently, I read a book titled The Good Soldiers that also serves as an object lesson in 

the disconnect between what’s going on in Washington D.C. and reality. It was 

written by David Finkel, a Pulitzer-winning author, and it came to me via a friend 

who is going through a stage where she feels drawn to books about war, mostly 

about World War II. Showing flexibility, her interest has expanded to the ongoing 

conflict in Iraq – the theater of operations that serves as backdrop for The Good 

Soldiers. 

Despite it going solidly against my literary preferences, I dragged the book along 

during a quick trip to Florida – a spur-of-the-moment thing to attend a golf school (I 

figured it was either that or get thrown off the local course for energetic exclamations 

of elaborate expletives resulting from my golf shots constantly flying off in 

unexpected and unwelcomed directions). Out of courtesy if nothing else, I figured I’d 

read a few pages of the book before putting it down – and so was surprised when it 

sucked me in, and kept me in, pretty much until I was finished. 

The background story is that the author of the book traveled to Iraq with a battalion 

of U.S. soldiers sent as part of the “surge,” then lived with them for the 14 months of 

their deployment. As far as I can tell, he approached his topic with no overt political 

intentions – rather, he just wanted to document the war as experienced by a battalion 

operating from a small base in one of the worst corners of Baghdad. 

As one might expect, as they departed from the United States for Baghdad, the 

soldiers and their brigade commander, Col. Ralph Kauzlarich, were full of fight, 

patriotism, and the confidence that only a chosen people can possess. It was, in their 

view, a just war and they deeply believed that in no time at all they'd use their 

superior war-making capabilities – supported by the sure knowledge that they held 

the moral high ground – to clean the bad guys out of Dodge and get the whole mess 

straightened out pronto.


Reality, however, turned out to be significantly different, starting with the fact that 

rather than being welcoming, the population was overtly hostile – so much so that 

almost every time the soldiers drove off the base (which was part of the daily 

routine), the locals would try to maim and kill them. And they had considerable 

success at it. 

In addition to trying to kill them, the community’s leaders seemed uninterested in the 

outreach efforts the colonel was instructed to make, including an initiative to rebuild 

the sewers and fix the power and water delivery systems in the area around his 

command. Of course, it didn’t help that it was the blunt-force approach used by the 

U.S. military in capturing Baghdad that destroyed so much of the infrastructure in 

the first place. Regardless, all attempts at doing “good works” were stalled and 

disappointed at every turn, with billions of dollars wasted in the process. 

As the book progresses, the author juxtaposes President Bush's and General Petraeus' 

rosy comments about how well the surge is working with the on-the-ground realities. 

And those realities are presented as raw and graphic as they are – with the tops of 

soldiers’ heads being taken off by IEDs, or burning to death in Humvees while 

friends watch helplessly. 

So successful was the military and political leadership in convincing Congress and 

the media that the surge was a winning strategy that, to this day, its acceptance as a 

fact has become a meme throughout the body politic. Back on the ground in Iraq, 

however, the daily grinding down of the front-line forces continues apace. 

During the period of time covered in The Good Soldiers, the Iraqi insurgent attacks 

lightened up only slightly – but only because the ruling mullah in the battalion’s area 

of operation unilaterally called a cease-fire. The resulting dialing-back of attacks on 

U.S. forces was immediately pounced upon by the military leadership and the Bush 

administration as proof that the surge was working. 

That that wasn’t the case became clear the day the same mullah called off his ceasefire 

and hell opened up. One minute the area was relatively quiet – the next, the 

streets were filled with armed gunmen and snipers, and bombs were going off on 

what seemed like every corner. 

One of the more remarkable aspects of the war, an aspect that largely goes 

unreported, was just how sophisticated the Iraqi opposition became in their attacks 

against the occupying forces. Not only did their roadside bombs become 

murderously powerful – so powerful that they could almost evaporate a fully 

armored Humvee – but the Iraqis began attacking the U.S. bases using everything 

from mortars to rockets and even homemade missiles. 

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The lob bomb, for example, was created out of propane tanks, filled with ball 

bearings and shrapnel, with a triggering device welded to the nose, and a rocket on 

the rear. In one instance, two large dump trucks drove near the base; after tilting up 

their backs to drop their loads, they revealed rails which were then used to guide a 

barrage of lob bombs, resulting in millions of dollars of damage to the American 

base. 

By the end of the battalion’s stay, the soldiers were mentally and, in many cases, 

physically ruined. One chapter near the end of the book, which recounted Col. 

Kauzlarich’s visits to some of his wounded soldiers back in the States – soldiers who 

suffered truly catastrophic injuries – I had to skip after just a couple of pages. It was 

just too painful to read. 

Lessons from The Good Soldiers… 

There are a number of important lessons that can be derived from The Good Soldiers, 

including: 

• The on-the-ground commanders and soldiers being sent into places like Iraq 

and Afghanistan have only the best of intentions. Though their reasons for 

joining up may vary, as they head off for war, most believe their leaders 

wouldn’t deploy them unless there was good reason to do so. Thus when it 

becomes clear to them just how ill-used they have been – that they have lost 

friends and limbs for no discernable purpose – it creates a deep sense of 

disillusionment. The odds of another Timothy McVeigh emerging from the 

crowd of returning vets are very high. 

• Despite the U.S. government spending tens of millions of dollars a day in Iraq 

– with the total spent now approaching $1 trillion – the mission has 

accomplished nothing other than antagonizing the Iraqis whose doors the 

U.S. troops kick down regularly. When I say “accomplished nothing,” that is 

actually an overstatement. In fact, other than toppling Saddam, the outcome 

of the mission has been to create an everlasting antipathy between many 

Iraqis and the United States, blowing wind into the sails of the most radical 

elements of Iraqi society. What a mess. (sn emphasis) 

• The U.S. occupation has turned into a very effective laboratory for the 

insurgents. At the beginning of the conflict, the resistance fighters were 

relatively weak – but as time has gone by, the natural ability of humans to 

adapt and improvise has led to the development of an array of inexpensive 

but seriously lethal antipersonnel weaponry. That these technologies are now 

spreading throughout the region can be seen in the recent death of eight U.S. 

soldiers in Afghanistan, in a single blast. 

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• Short of staging a scorched-earth form of warfare – turning these cities into 

parking lots – the U.S. cannot possibly ever win one of these conflicts. 

There is no fixed enemy that the U.S. can target with its superior weapons. 

And it’s unrealistic that the military can hunt down all of the opposition by 

going door to door. (sn emphasis) 

• The U.S. political and military leadership is straight out lying to its troops and 

to the public at large. It is hard to comprehend why, but I dare you to read 

The Good Soldiers and come away with any other conclusion. Maybe they 

continue the tragic farce because to cut and run – as we ultimately did in 

Vietnam – is just too embarrassing. Maybe it’s because they are so effectively 

lobbied by the war profiteers – may they eventually rot in the hottest corner of 

hell. Maybe it’s because they are allowed to wage war from a safe distance 

(no politicians visited the forward operating base where Kauzlarich and his 

battalion were based during their stay there, and Petraeus only made a single, 

quick stopover.) 

Meanwhile, the U.S. continues to bleed billions in these misguided wars, while 

the soldiers just bleed. 

Someone, and probably a lot of people, should be held accountable for this travesty – 

as in being brought up on serious charges and, if found to have propagated lies 

resulting in the loss of lives and the wasting of hundreds of billions of dollars, sent to 

jail for a very, very long time. Or, better still, turned over to the Iraqis to punish. I’m 

sure they’d figure out something appropriately medieval. 

Why This Is Important to Us as Investors 

Given the urgency of addressing the U.S. debt and deficits, the bloated U.S. military 

budget is clearly the most obvious place to start making cuts that will actually matter. 

Yet Congress made no such cuts when passing the $690 billion budget requested by 

the Defense Department – doing so last week by an overwhelming margin. 

That budget includes another $119 billion to flush down the toilets of Iraq and 

Afghanistan. Showing that it has learned no lessons, the Obama administration – 

encouraged no doubt by new friends in the military-industrial complex – has already 

managed to spend $750 million in the undeclared war on Libya. 

There is a way to use this understanding that the bankrupt U.S. and its allies are 

doing little more than breaking furniture and making enemies in the Middle East to 

one’s advantage. Simply, unless and until the U.S. politicians muster enough spine to 

pull out of Iraq and Afghanistan and slash the military budget, the government’s 

massive budget deficits will continue. 

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And if the budget deficits continue, then the trend for the U.S. dollar is sharply 

downward (though I remain convinced we’ll see a rally in the near term, a topic we’ll 

be tackling in greater detail in the upcoming edition of The Casey Report). 

That is not conjecture, but the unavoidable conclusion uncovered by a number of 

objective analyses done on past sovereign debt crises by folks such as Kenneth 

Rogoff and Casey’s Chief Economist Bud Conrad. 

To those readers who think that cutting the military budget, or pulling out wholesale 

from the Middle East, will increase threats to the continental United States, we will 

have to agree to disagree. In my view, destroying our economy to wage war – in the 

process squandering the huge commercial advantage of providing the world its 

reserve currency – is far more destabilizing. As is making yet more enemies by 

continuing to lob bombs and kick in doors here, there, and everywhere. 

Unfortunately, the U.S. leadership and, I guess, some significant swath of the voting 

public who supports that leadership are suffering from some sort of mass psychosis 

(or maybe it’s paranoia), that actually has them thinking that it is somehow in the 

country’s interest to continue flinging billions of dollars and the lives of its good 

soldiers into lost causes overseas. 

But don’t take my word on the topic – do yourself a favor and pick up a copy of The 

Good Soldiers today. As I can’t know where you stand on these wars, I can’t say 

whether or not reading the book will change your mind. But I can guarantee you that 

its on-the-ground perspective will enlighten you as to the true and disturbing nature 

of what’s really going on, and the futility of it all. It is anything but entertaining, but 

is very well written and very illuminating. 

Meanwhile, use the military budget as a proxy for the seriousness (or lack thereof) of 

the government’s intent to reduce its spending by any significant amount. And, 

absent any serious cuts in that spending, continue to take measures to protect 

yourself against wholesale debasement of the currency. 

Every month, David Galland and his co-editors – among them Doug Casey – of The 

Casey Report research and analyze significant events in the U.S. and global 

economy, as well as in politics and the markets. Their goal is to recognize the trends 

in the making that will directly or indirectly affect investors… and to provide the best 

profit opportunities, even in a time of crisis. Learn how you can outpace rampant 

inflation by crisis-investing like the pros in this free report. 

Eliminate Bernie Madoff Style Accounting and the Real US Debt is 

$61 Trillion 

290


When the U.S. government reports its debt, it does not include payment that it is 

required to make to seniors, veterans and retired employees. If those were included, 

as they should be, the US debt would be a far greater number than the already 

outrageous number the government does publish. 

Accountant Sheila Weinberg, founder of the Institute for Truth in Accounting, has 

done the accounting correctly and has come up with these numbers: Total US debt 

$61 trillion, which comes out to $534,000 per household. 

These numbers provide a picture of why the debt is really such a big problem. No 

way, no how can it be paid off, given the simple fact that most households don't have 

$534,000 to turn over to the government. 

Default is really the only long-term option. It will be done either in straightforward 

fashion, where the government pays pennies on the dollar for what it owes. Or it will 

be done in stealth fashion by the Fed printing up dollars to pay for the government 

obligations, which will create huge price inflation that will screw the average worker 

and also those on fixed incomes such as retirees. 

Ron Paul: "A fiscal catastrophe is coming..." 

Tuesday June 7, 2011 

From Bloomberg: 

Republican presidential candidate Ron Paul dismissed House Speaker John Boehner's 

call for spending cuts to match any increase in the federal debt ceiling. A fiscal 

catastrophe is coming whether or not the country exhausts its borrowing power, he said. 

"I don't take it seriously," the Texas congressman said of Boehner's demand. Paul 

predicted Congress would "go up to the last minute" before the Aug. 2 deadline and then 

raise the nation's $14.3 trillion legal debt limit, yet fail to solve the problems underlying 

the nation's soaring deficits. 

"The catastrophe comes regardless, because as long as they encourage more spending, 

then we go over a cliff," Paul said in an interview for "Political Capital with Al Hunt," 

airing this weekend. "So I want to stop us," said Paul, who said he will vote against 

raising the limit. 

He dismissed discussion of a cap on future spending, saying it would be "too little, too 

late." 

"Do you think the American people are going to believe that we're going to cut in the 

future?" added Paul, 75. He said any reductions promised beyond this year's budget 

amount to "pie-in-the-sky talking." 

On presidential politics, Paul said that while other Republican candidates seeking to take 

on President Barack Obama in 2012 are echoing his themes on spending and debt, he is 

the only one who has a record that matches the rhetoric. 

'Credibility Gap' 

"I think there will be a credibility gap" for the other contenders, Paul said, responding to 

291


a question about potential primary opponents including former Massachusetts Governor 

Mitt Romney. 

Voters "know that I'm leveling with them, and I've done it all along, and I've expressed 

these concerns for 20, 30 years," he said. 

Paul, an advocate of abolishing the Federal Reserve, said while he doesn't expect other 

candidates to rally around the idea, they "won't laugh as much as they did last time" he 

ran for the Republican presidential nomination. 

"Just think of the difference on the attitude of the people now about the Federal 

Reserve," Paul said, noting that Fed Chairman Ben Bernanke took the unprecedented 

step April 27 of holding a news conference to defend his policies. "It's a failed system, 

and people are starting to realize this." 

A self-described libertarian whose anti-establishment views align with Tea Party 

activists' disdain for government, Paul developed a national following during his failed 

2008 bid for his party's presidential nomination. 

Afghanistan, Pakistan 

Paul said he favors withdrawing all U.S. troops from Afghanistan, Pakistan and Libya – 

countries where he never supported sending them. He said other Republican 

presidential candidates are "making a big mistake" by backing a continued U.S. military 

presence there. 

"The people now know that we can't pay it," Paul said, "and a lot of conservatives are 

coming in our direction because we can't pay it." 

"I'd bring them all home, sure, because we have no reason to be there," he said. 

Paul said Representative Michele Bachmann of Minnesota and former Alaska Governor 

Sarah Palin, two possible rivals for the Republican nomination who also style themselves 

as populist conservatives, are "closer to the people" than other candidates and are 

starting to move in his direction on foreign policy and civil liberties issues. 

Still, asked whether he understood Palin's economic agenda, Paul said, "No," adding, "I 

haven't studied them." 

Waking Up to Economic Realities 

by Ron Paul 

Recently by Ron Paul: Budget Cuts are Meaningless Without Fed Transparency 

Last week the financial markets were roiled by Standard & Poor’s announcement that 

they will change their outlook on the fiscal health of the United States over the next two 

years from “stable” to “negative.” The administration decried this decision as political. 

However, it seems the only political thing about this decision is the fact that it took so 

long. The Washington Post recently reported that the White House and the Treasury 

Department put tremendous pressure on S&P not to do this. However, if S&P made its 

292


ratings based on political pressures rather than economic reality, it would cease to have 

any relevance to the business community. Even if S&P delayed its announcement that 

U.S. government bond market would be downgraded, at some point it would become 

obvious that the finances of this country are out of control and our leadership is out of 

touch. All credibility would be lost if S&P simply continued to assign U.S. debt a AAA 

rating. 

S&P noted in its announcement that negotiations among leaders in Washington to address 

deficit concerns did not sound promising, and expressed skepticism that politicians could 

agree to any viable budget compromise. Of course this has been obvious for years but in 

the midst of the current debate over raising the debt limit it is perhaps the wake-up call 

that Washington needs. 

For decades politicians and government officials have been able to maintain their denial 

about our real financial situation, patching the system together by passing emergency and 

supplemental funding bills, issuing more debt, and allowing the Federal Reserve and 

foreign creditors to paper over deficits with more monetary expansion. I’ve said many 

times the real day of reckoning comes when fiscal and monetary tricks no longer work 

and there are no buyers for our debt. 

Even the most conservative budget that has been proposed by Republican leadership 

requires raising the debt ceiling by an additional $9 trillion by 2021. This demonstrates 

absolutely that no one in power right now has any real intention of addressing our 

spending problems or paying down the debt. They simply expect to continue to borrow 

and run up more debt forever, without limit. Yet they always imagine our dollar will have 

value no matter how many we print. This expectation is foolish and naïve. I guarantee 

that those buying our debt are not foolish and naïve enough to go along with this charade 

forever. 

The S&P announcement may just be the harbinger of economic realities acting as a 

restraint on government expansion. Government is not anxious to cap its own growth, in 

spite of misnomers like “debt limit” or “deficit reduction.” Government will continue to 

grow like a cancer, sapping our country of its wealth and freedom until the laws of 

economics no longer can be ignored. 

See the Ron Paul File The Best of Ron Paul 

Dr. Ron Paul is a Republican member of Congress from Texas. 

Ron Paul: Depression Is Coming 

Monday, 30 Aug 2010 02:36 PM 

293 

April 29, 2011 

By Dan WeilRep. Ron Paul, R-Texas, says depression looms for the economy and 

that failure to extend the Bush tax cuts for everyone would hasten the process.


“It will be devastating if the (tax) breaks aren’t renewed,” the 2008 presidential 

candidate told Newsmax.TV. 

“That represents a tax increase. It’s the unknown hanging over the market,” he said. 

The Obama administration and many Democrats in Congress want to renew the cuts 

only for those with income of less than $200,000. 

“I don’t understand how they can think that way. (But) when I see what they’ve done 

with the medical care bill and the financial reform bill, they’re capable of doing that,” 

Paul said. 

Story continues below video. 

Even without expiration of the tax cuts, the economy is headed for depression, he 

predicts. “That will just make it worse much faster.” 

Paul is introducing a bill next year for the nation’s gold reserves to be audited. 

“It’s common sense for the country to know what it owns,” he said. The last audit was 

in the 1970s, and a lot of central banks have sold or loaned gold since then. 

“Hopefully someday there will be a gold currency, or they will return gold to the 

people because it was taken from them in the 1930s at a very low rate,” Paul said. 

“We should know what we own. Why should anybody oppose us counting what’s in 

the bank, in case we make use of it, just because too many questions are raised about 

what central banks have done in the last 10 to 15 years?” 

Paul dismisses contentions that there’s no gold at Fort Knox or in the Federal 

Reserve. 

“The bigger question is what have been our commitments or loans,” Paul said. 

“That’s why I want an audit of the Fed and to check all the agreements they have with 

foreign central banks and governments.” 

And that’s the main reason the Fed successfully opposed his proposal this year for an 

audit of the central bank, Paul says. “They didn’t want us —as a people or Congress — 

to know what deals they made with other central banks.” 

Transparency is the main issue for the Fed, says Paul. 

© Moneynews. All rights reserved. 

Read more on Newsmax.com: Ron Paul: Depression Is Coming 

Important: Do You Support Pres. Obama's Re-Election? Vote Here Now! 

“Every law they write takes away more of our liberty.” 

George Rainer, Music Teacher, Bayport, NY 1959 

294


The Last Nail by Ron Paul — With Documented Hyperlinks 

WRITTEN BY THOMAS R. EDDLEM 

SUNDAY, 29 MAY 2011 21:00 

Congressman Ron Paul delivered a five-minute speech on the floor of the House of 

Representatives May 25, a short speech that may sound to the uninformed like one wild 

statement after another. In his speech, Dr. Paul (he's an obstetrician) made a number of 

charges that the executive branch of government has established a virtual dictatorship 

with the willing assistance of Congress and many Americans who fear for their 

"security." But Congressman Paul is complaining about the erosion of constitutional 

protections that have already happened. Following is his speech verbatim, along with 

links documenting his allegations. All words are by Congressman Paul; hyperlinks were 

added by The New American's Thomas R. Eddlem. 

The Last Nail 

by Congressman Ron Paul 

The last nail is being driven into the coffin of the American Republic. Yet, Congress 

remains in total denial as our liberties are rapidly fading before our eyes. The process is 

propelled by unwarranted fear and ignorance as to the true meaning of liberty. It is driven 

by economic myths, fallacies and irrational good intentions. The rule of law is constantly 

rejected and authoritarian answers are offered as panaceas for all our problems. Runaway 

welfarism is used to benefit the rich at the expense of the middle class. Who would have 

ever thought that the current generation and Congress would stand idly by and watch 

such a rapid disintegration of the American Republic? Characteristic of this epic event is 

the casual acceptance by the people and political leaders of the unitary presidency, which 

is equivalent to granting dictatorial powers to the President. Our Presidents can now, on 

their own: 

• Order assassinations, including American citizens; 

• Operate secret military tribunals; 

• Engage in torture; 

• Enforce indefinite imprisonment without due process; 

• Order searches and seizures without proper warrants, gutting the Fourth Amendment; 

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• Ignore the 60-day rule for reporting to the Congress the nature of any military 

operations as required by the War Power Resolution; 

• Continue the Patriot Act abuses without oversight; 

• Wage war at will; 

• Treat all Americans as suspected terrorists at airports with TSA groping and nude x- 

raying. 

And the Federal Reserve accommodates by counterfeiting the funds needed and not paid 

for by taxation and borrowing, permitting runaway spending, endless debt, and special 

interest bail-outs. 

And all of this is not enough. The abuses and usurpations of the war power are soon to be 

codified in the National Defense Authorization Act now rapidly moving its way through 

Congress. Instead of repealing the 2001 Authorization for the Use of Military Force 

[AUMF], as we should, now that bin Laden is dead and gone, Congress is planning to 

massively increase the war power of the President. Though an opportunity presents itself 

to end the wars in Iraq, Afghanistan, and Pakistan, Congress, with bipartisan support, 

obsesses on how to expand the unconstitutional war power the President already holds. 

The current proposal would allow a President to pursue war any time, any place, for any 

reason, without congressional approval. Many believe this would even permit military 

activity against American suspects here at home. The proposed authority does not 

reference the 9/11 attacks. It would be expanded to include the Taliban and "associated" 

forces — a dangerously vague and expansive definition of our potential enemies. There is 

no denial that the changes in Section 1034 totally eliminate the hard-fought-for restraint 

on Presidential authority to go to war without Congressional approval achieved at the 

Constitutional Convention. 

Congress' war authority has been severely undermined since World War II beginning 

with the advent of the Korean War which was fought solely under a UN Resolution. Even 

today, we're waging war in Libya without even consulting with the Congress, similar to 

how we went to war in Bosnia in the 1990s under President Clinton. The three major 

reasons for our Constitutional Convention were to: 

• Guarantee free trade and travel among the states; 

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• Make gold and silver legal tender and abolish paper money; and 

• Strictly limit the Executive Branch's authority to pursue war without Congressional 

approval. 

But today: 

• Federal Reserve notes are legal tender, gold and silver are illegal; 

• The Interstate Commerce Clause is used to regulate all commerce at the expense of free 

trade among the states; 

• And now the final nail is placed in the coffin of congressional responsibility for the war 

power, delivering this power completely to the President — a sharp and huge blow to the 

concept of our republic. 

In my view, it appears that the fate of the American republic is now sealed — unless 

these recent trends are quickly reversed. The saddest part of this tragedy is that all these 

horrible changes are being done in the name of patriotism and protecting freedom. They 

are justified by good intentions while believing the sacrifice of liberty is required for our 

safety. Nothing could be further from the truth. 

More sadly is the conviction that our enemies are driven to attack us for our freedoms and 

prosperity, and not because of our deeply flawed foreign policy that has generated 

justifiable grievances and has inspired the radical violence against us. Without this 

understanding, our endless, unnamed, and undeclared wars will continue and our 

wonderful experiment with liberty will end. 

Porter Stansberry: The terrible reason stocks 

are soaring now 

Wednesday, April 06, 2011 

Text Size: 

A very good economics lesson: SN 


Since the market bottom of March 2009, U.S. stocks (as defined by the S&P 500 

index) have nearly doubled – up 95%. Soaring stock prices translates into a $28 

trillion increase in U.S. equity market capitalization. This is the biggest two-year 

increase in stock prices since 1955. The march higher has been nearly straight up 

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– stocks have risen 18 of the last 24 months. Without a doubt, stocks have been 

the place to be for the last two years. If you'd put $1,000 into a global stock index 

fund (MSCI All-Country World Index) two years ago, you would have a little 

more than $2,000 today. Making the same investment in commodities would 

have left you with $1,593… Global corporate bonds would have left you with 

$1,277… and U.S. Treasurys would have only gotten you $1,044. And the rally 

probably isn't over yet, either… 

There are good reasons to expect stock prices will continue to move higher. 

Stocks really aren't that expensive, when compared to earnings. The S&P 500 is 

trading at 15.5 times reported earnings, compared to average bull market peak 

valuations of 19.7. Earnings will almost surely continue to grow rapidly. 

Bloomberg reports consensus estimates of Wall Street analysts showing average 

earnings growth of 17% in the next 12 months. Stocks are also cheap relative to 

interest rates. The earnings yield of the S&P 500 (6.4%) is still substantially 

above the yield of benchmark (10-year) U.S. Treasury bonds (3.5%). 

This all sounds like good news, doesn't it? But here's one fact you probably won't 

see reported anywhere else: The entire rise in U.S. corporate profits came 

from the financial sector. That is, the earnings growth driving our current 

bull market in stocks is coming exclusively from the financial sector. The 

nonfinancial sector of our economy actually saw profits fall in last year's fourth 

quarter. Today, financial sector profits make up more than 30% of total domestic 

corporate profits. That's the same level we saw in 2006 and 2007… just before 

the financial crisis. 

What's behind the surge in financial sector profits? You already know, dear 

subscriber… 

You already know the Federal Reserve has been shoveling out as much money as 

the banks want and charging nothing for it… You already know the Fed has 

lowered interest rates for member banks to almost nothing. But how does this 

impact the real world of finance? Let's look at Annaly Capital Management (NLY) 

to find out. 

We like to use Annaly as our window into the secret world of the big banks, 

because we're familiar with the company (having watched closely for the last 

decade) and its business model is Banking 101: Annaly borrows money at a 

privileged rate and lends it safely via the government-guaranteed mortgage 

market. At both ends of every deal, Annaly enjoys the warm, loving embrace of 

our sovereign nation. It takes advantage of the Fed's interest-rate manipulation at 

the short end of the curve (where it borrows) and the Treasury's backing of 

Fannie and Freddie at the long end of the curve (where it invests). Playing the 

government's game is unbelievably profitable… 

At the end of 2010 (the most recently reported quarter), Annaly paid only 1.8% to 

borrow money – and it could have as much as it wanted. It turned around and 

"lent" those same dollars out at an average rate of 3.65% via investment in 

Fannie- and Freddie-backed mortgage securities (which are guaranteed against 

any credit loss). In this way, Annaly earned a "risk-free" profit of 1.85% on each 

dollar it touched. Annaly's total portfolio grew to $75 billion – meaning its net 

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interest income was almost $400 million in the fourth quarter alone. 

Now, let me ask you a few simple questions about all this… Does it seem 

reasonable that a banking institution with only 114 employees and no branches 

should earn a risk-free $400 million in one quarter? That implies annual profits 

of much more than $1 billion. What did it do to earn these profits? Nothing more 

than pose as a buyer. I say "pose" because Annaly borrowed nearly all the money 

it used in these purchases and never assumed any risk whatsoever on the things it 

"owned." Does this make sense? Does it make sense that we, as a society, should 

trade $1 billion or more for this "service"? 

I admire the men who built Annaly and run it today. They found a simple – and 

wildly lucrative – way to take advantage of the absurdity of our banking system. 

Annaly's roughly $400 million in profits make up a tiny fraction of the $400 

billion-plus profit generated by the financial sector last quarter. But they 

represent perfectly how these dollars were "earned." In almost every case, the 

money wasn't earned at all – it was simply manufactured by a charade just 

complex enough to fool the press and the average debtor. 

But what about the parts of the economy where profits can't simply be 

manufactured with fiat money? How's that part of the economy growing? It's not. 

Whoops. 

Given these facts, I would suggest investors pay close attention to the 

government's ability to maintain its paper charade. The prices of gold, silver, oil, 

and most other major commodities would seem to indicate this process of 

printing money and paying bankers $400 billion a quarter to move it around isn't 

productive. Instead of producing wealth, we're only producing debt… which is 

getting much harder to afford, thanks to inflation… which is a terrible side effect 

of using monopoly money and allowing the government to play the game's 

"banker." 

Here's another interesting fact… Stephen Moore in the Wall Street Journal today 

writes: 

More Americans work for the government than work in construction, farming, 

fishing, forestry, manufacturing, mining and utilities combined. We have 

moved decisively from a nation of makers to a nation of takers. Nearly half of 

the $2.2 trillion cost of state and local governments is the $1 trillion-a-year tab 

for pay and benefits of state and local employees. 

Forgive me for being cynical… but it seems the only sector of our economy that's 

growing is the banking sector, which manufactures profits via a paper currency 

regime that's stoking a massive inflation and remains threatened by a growing 

banking crisis in every developed country. Meanwhile, the banking system is 

being held together by our government, an institution that's bankrupt on any 

conceivable scale – to the point that the world's largest bond investor (PIMCO's 

Bill Gross) has sold every single U.S. Treasury bond and is publicly calling 

Congress a house full of "skunks." The government has also become the largest 

employer, the largest source of union members, and the single largest customer 

of almost every company in the United States. 

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The question I pose to you, dear subscriber, is this: If this isn't 

socialism, what is? And when in the entire history of humanity has socialism 

ever created a sustainable bull market or any real prosperity? 

Please feel free to pass this around to your friends. I think it's important that 

more people understand what's behind the big move higher in stocks. And if 

you're reading this because someone flipped it to you, please look at our website 

(www.stansberryresearch.com) for information about how to subscribe to 

our newsletters. 

Click this link to subscribe to Stansberry Subscribe Now 







SN: It is often said, “Don’t invest money you can’t afford to lose.” I’m not sure any of us with 

small money belong in the markets, but if you’re taking chances Porter is one of the best you can 

follow. 

Porter Stansberry: This chart is predicting the 

End of America 

Monday, June 06, 2011 

Text Size: 


I've been writing for a few years now that the most important trend in finance is 

the relative performance of gold and U.S. "long" bonds. In this week's Friday 

Digest, I'd like to explain in plain language why I still believe it's "the only trend 

that matters" and what all the economic jargon really means. 

The chart below displays the trend I'm talking about. Over the last year, gold has 

gone up roughly 25% more than U.S. Treasury bonds… 

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As longtime readers know, I write the Friday Digests personally, and do my best 

to teach you core investment strategies that everyone should know about (but 

that most people have never even heard of). Believe me, I understand most 

subscribers aren't interested in learning and the rest probably view these 

"lessons" as condescending. Nevertheless, I carry on. It is what I would want 

from you, were our roles reversed. 

Let's start with the basics. On that chart above, the green line represents the price 

of one ounce of gold (GLD), measured in U.S. dollars. The blue line represents 

the price of long-dated U.S. Treasury bonds (TLT), which are also denominated 

in U.S. dollars. In terms of dollars, gold went up about 25% over the last year. 

Treasury bonds were flat. But what do these lines really mean? 

The spot price of gold is set every day in London in what's known as the "gold 

fix." This is the price at which members of the London Bullion Market 

Association will readily sell gold. The five firms who set the price twice each day 

are Scotia-Mocatta, Barclays, Deutsche Bank, HSBC, and Societe Generale. This 

isn't a conspiracy. It's simply a tradition that developed in the early 1900s to 

facilitate a fair price for gold among all the members of the bullion association. 

Today, the price is "fixed" in three currencies: dollars, euros, and pounds. When 

you ask what the price of gold is, more often than not, you'll get that day's "PM 

gold fix" price. The gold fix price is set at 3 p.m. London time to coincide with the 

market open in the U.S. 

The price of gold can also be measured by trading in the futures markets. Here, 

market participants can buy and sell 100 ounces of gold for delivery in the future. 

So today, for example, you could buy gold on the COMEX futures market for near 

delivery (June 2011) at $1,535.90. And there's an almost continual bid for gold at 

various spot markets around the world. 

You can follow the up-to-the minute price of gold at Kitco's website. 

SN: look into Perth Mint Certificates. If you intend to travel this may be a safe 

way for you to transfer your wealth. https://online.kitco.com/?pmcp=1 

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Given that the supply of gold is essentially fixed (gold isn't typically consumed by 

industry and relatively little is produced each year), the only real factor 

influencing its price is demand. That's one of the main reasons why gold is seen 

by most experienced investors as an alternative currency, not an industrial metal. 

People demand gold when their local currency becomes unreliable. People 

demand gold for savings during periods of global uncertainty. But most 

importantly of all, people demand gold when they no longer trust their 

government… which explains the antipathy between government-backed central 

banks and gold. 

The "long bond" is the common term for U.S. Treasury obligations that mature in 

20-30 years. The prices of these bonds are first set when the U.S. Treasury sells 

them at weekly auctions through primary dealers (20 large banks and brokers). 

But because long-duration bonds aren't sold in each auction, current prices for 

long bonds are determined via trading on the futures markets. 

The largest market for Treasury bonds is the CME Group, which resulted from 

the 2007 merger of the Chicago Mercantile Exchange and the Chicago Board of 

Trade. Most of the other interest rates in the world are set from the price of the 

10-year U.S. Treasury bond. 

The prices of U.S. Treasury certificates (especially the long-dated variety) are 

heavily influenced by inflation expectations. To understand why, you have to 

remember the coupon payment on bonds is fixed. So if the Treasury issued a new 

30-year, $1,000 bond today, at current interest rates, an investor would be paid a 

coupon of roughly $17.50 every six months. That represents a 3.5% annual 

interest rate. The bond would be said to trade at "par" at this yield. 

In 2041, the investor would be repaid his $1,000 in principal. Over the life of the 

bond he would have received a total of 60 coupons, totaling $1,050 in income. 

Thus, the offer from the U.S. Treasury is: Allow us to borrow $1,000 now, and we 

will pay you $1,050 over the next 30 years and then we'll repay your principal. 

But… if inflation were to go up over the next 30 years – pushing interest rates up 

in the process – then today's investor would have a problem. Higher interest 

rates will make his 30-year bond less attractive to investors than newly issued 

bonds, which would carry higher coupon payments. Say for example, interest 

rates go up to 6% annually. New Treasury bonds issued at this interest rate would 

pay an investor two coupons per year of $30 each. Over the life of a 30-year bond, 

that's $1,800 in coupon payments. 

Which bond would you rather own? The bond that will pay you $1,050 over 30 

years or the one that will pay you $1,800 over 30 years? Investors will prefer the 

bond that's paying more. As a result, the market price of the lower-paying bond 

will fall, until the yields are roughly equal. To reach a 6% yield, the price of the 

former bond would have declined from par ($1,000) all the way down to around 

$580. That's a huge loss for the bond investor. 

That's why we pay so much attention to long bond prices: They are the market's 

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early warning system for future problems with inflation. You can't buy a 30-year 

obligation with a fixed-coupon payment unless you have a lot of confidence in the 

government, currency, and the interest rate. Quite frankly, given our 

government's current policies, we can't imagine why anyone would own these 

securities at any price. And yet… interest rates remain low and bond prices 

remain firm. How do we explain that? 

Two factors are distorting the market for Treasury bonds and warping interest 

rates around the world. First, China has produced a huge economic boom by 

recycling most of its foreign exchange reserves into the U.S. Treasury bond 

market. This lowers its currency's value. This cheap-currency policy inflates 

demand for its products around the world by allowing China to under-price its 

competitors. This, in turn, causes its trade surplus to grow ever larger and its 

foreign reserves to expand continuously. 

This policy is unsustainable and dangerous. It will cause asset inflation in China's 

economy (which we've seen since 2004)… And if carried on long enough, it will 

lead to a big economic collapse. Almost the exact same cycle happened in Japan 

from the mid-1970s until 1989. We can't know exactly where we are in this cycle… 

But it is unsustainable. 

SN: This is like a “weapon of mass (economic) destruction. As China stops buying 

bonds our bond value drops and hyper inflation must follow. China in this way 

can defeat the US in a war for world supremacy without firing a shot. 

The second factor warping the Treasury market is the Federal Reserve. In a 

misguided effort to sustain the American economy with negative real interest 

rates (which steal from savers and reward borrowers), the Fed has been 

purchasing roughly 70% of the total issuance of Treasury obligations. This buying 

is scheduled to stop on June 30. 

I always believed that while the Fed (and the Chinese) could manipulate their 

currencies via unsustainable buying of Treasurys, it would always be evident in 

the market for gold. Think of it this way… the U.S. bond market is the ultimate 

barometer for the health of the global monetary system – a system based on the 

creditworthiness of the U.S. federal government. So while it's true world 

governments can manipulate the Treasury market, the efforts would eventually 

hurt the system's creditworthiness. And fears about the system would lead people 

to prefer gold to paper money. 

That's why I believe the above chart comparing the prices of U.S. Treasury bonds 

to the price of gold is so important. It's a measure of the "system wide" health of 

the world's economy. 

Here's the scary part. Look at the same chart over the last 10 years. The gap 

between gold and Treasurys has been widening since 2005… 

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This chart lays bare the false claims of our politicians, bankers, mainstream 

economists, and media that the economy is recovering, our debt levels are 

manageable, and the American way of life is safe and sound. As a newsletter 

publisher, it doesn't pay for me to be bearish. People won't pay for bad news. But 

this chart, unlike our leaders, doesn't lie. And the message is far too important to 

ignore. I hope you now have a better understanding of what it means. 

Crux Note: Porter recently updated his controversial "End of America" video 

with the very latest developments. If you haven't seen it yet, be sure to click here. 

Porter Stansberry: What every American 

needs to know about gold 

Wednesday, March 16, 2011 


We suspect today's Digest might set a new, all-time high for response vitriol in the 

mailbag. So why kick the hornet's nest? Given what's happening around the world right 

now (monetary chaos, debt crises, soaring commodity prices, etc.), we think it's critical 

to understand the advantages (and drawbacks) of a gold-backed monetary system. 

In our view, if you don't understand gold, you probably don't understand what's 

happening to our money… and the world economy, as a result. 

One more thing… you're almost surely going to hear a lot more about gold-backed money 

over the next several months. The Utah legislature passed a bill this week allowing gold 

and silver coins to be used as legal tender in the state – for the value of their precious 

metal, not just the face value of the coins. 

By itself, this doesn't really mean much. Private businesses have always been allowed to 

accept whatever form of money they want for goods, including barter. But we think it's 

symbolically significant: The measure draws attention to the fact that the U.S. dollar isn't 

stable… and the government of Utah is encouraging its citizens to use gold and silver. 

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The bill's sponsor, Brad Galvez, explained, "If the dollar continues to fall, what this will 

do will help stabilize the value of the dollar in Utah, so it helps stabilize the economy." 

That may be true in some limited way, but the real benefits of gold won't accrue until the 

U.S. Treasury and the entire banking system begin using it as a monetary reserve. If you 

want to learn why, please read on… 

So why do free-market types (like us), libertarians, lots of wealthy people… and some 

kooky conspiracy theorists… spend so much time talking about gold? Why do most 

government types and mainstream economists seem to hate gold so much? What's the 

real story? 

(SN: Evidence continues to appear indicating that the kooky conspiracy theorists aren’t 

so crazy after all.) 

In general, people who favor more personal freedom (and responsibility), less 

government power, and more free markets tend to favor gold over paper (fiat) 

currencies, for the simple reason that gold can't be printed and its supply can't be easily 

manipulated by the government. 

Former Federal Reserve Chairman Alan Greenspan himself explained these issues in the 

conclusion of his famous 1967 essay Gold and Economic Freedom: 

In the absence of the gold standard, there is no way to protect savings from 

confiscation through inflation. There is no safe store of value… The financial policy of 

the welfare state requires there be no way for the owners of wealth to protect 

themselves. 

The ability to protect your savings with gold from inflation is the first of several 

significant reasons to prefer gold as a currency. People will argue there are better ways to 

safeguard your savings – like investing for the long term in high-quality common stocks 

or owning real estate. 

I won't argue gold is the only way to protect yourself from inflation – or even the best 

way. (The best way to protect yourself from inflation is to own a capital-efficient business 

that's able to raise prices, but doesn't have to bear many of the additional costs. That's a 

lesson for another day…) But I would argue gold is the best way to protect yourself with 

money. 

Gold has retained its purchasing power for all recorded human history. It's a universally 

recognized and timeless store of value. Its natural properties have imbued the element 

with traits that humans find intrinsically valuable and well suited to use as money: It's 

portable, divisible, and doesn't corrode. If I were to hide 10 gold coins today and leave 

them for my grandchildren, I have no doubt that in 40-50 years, my grandkids would 

still be able to use them to purchase something around $14,000 in value. 

That certainty is gold's main appeal. It allows creditors to lend freely to debtors without 

having to worry about the real value of the money they'll be repaid. But in my opinion, as 

important as this factor is, it's not the real reason you should care about gold. 

Gold-backed monetary systems accomplish two other things that are even more 

important to an economy and to society. I'll explain these two secret benefits to gold 

below. But first… 

Most Americans don't realize a gold-backed currency is one of their birthrights as 

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American citizens… 


Traditionally, the United States backed its banking system with gold. It did so because 

during the colonial period several experiments with fiat currency collapsed. Starting 

around 1750, King George's government forbade the issuance of paper money and 

America's economy came to function almost exclusively using silver Spanish coins for 

small transactions and gold as bank reserves. This system remained in place, in one form 

or another, with only short interruptions between 1750 and 1971. 

That's why the U.S. Constitution doesn't mention the Federal Reserve or fiat currency. 

Article 1, section 8 of the Constitution only empowers Congress: "To coin Money, 

regulate the value thereof, and of foreign Coin, and fix the Standard of Weights and 

Measures." This authority was never intended to permit the use of fiat (paper) money. It 

was intended to ensure that sound money – gold and silver coins whose measures would 

be regulated by Congress – were used. 

The system worked remarkably well. Before the big devaluation of the dollar in 1933 

(when FDR seized all of the private gold in the country), prices during the gold standard 

period were remarkably stable. For almost 200 years (1750-1933), the purchasing power 

of the U.S. dollar (which was defined as 1/20th an ounce of gold) was nearly unchanged. 

Think about that in light of this fact: Since 2001, the value of the U.S. dollar has fallen 

50% against a basket of commodities (the CRB index). Which system do you think is 

better for the economy, a system that holds together for nearly 200 years… or a system 

that loses half of its value in one decade? 

The gold standard's powers shouldn't be exaggerated. A gold-backed monetary system 

doesn't prevent bankers from making bad loans. It won't stop investors from paying too 

much for lousy investments. And it doesn't work to prevent bubbles when debts outside 

the banking system are created, as occurred with the various trust companies prior to the 

Great Depression. The gold standard only works to the extent that it's enforced, just like 

any other standard. 

What about the secret advantages to gold-backed monetary systems? The first littleunderstood 

advantage is that gold-backed monetary systems are almost completely 

immune from any large-scale boom or bust. That's because the supply of credit is 

strictly regulated by the size of the economy. Bankers are limited by their gold reserves 

from making too many loans. 

Let me show you what this means… In the U.S., under the various forms of the gold 

standard we used from the 1750s until 1971, you'll notice a curious coincidence. The total 

debt-to-GDP ratio in our country was remarkably – almost perfectly – stable. Yes, there 

are some exceptions, like during World War II. But except for these temporary 

anomalies, the ratio of debt (both public and private) to GDP was remarkably stable at 

around 1.6 times GDP throughout most of U.S. history. Why? The size of our gold 

reserves limited our debt burdens. Reserves could only grow in correlation with the 

overall economy. Bankers couldn't build up onerous amounts of debt. 

That all changed in August 1971. Rather than cut the government's spending and raise 

interest rates to slow demands from our trading partners for bullion, President Nixon 

took us off the gold standard. From that point, our creditors had no legal claim to our 

gold reserves. And the banking system had nothing but the Federal Reserve to limit the 

creation of additional credit and money. 

Check out the charts below to see what happened next – debt began to explode. 

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David Stockman, the director of the White House Office of Management and Budget 

under Ronald Reagan, explained why credit exploded last month at Jim Grant's 

conference in London: 

American lawmakers have been freed of the classical monetary constraints. There is no 

monetary squeeze, and there is no reserve asset drain. The Fed always supplies enough 

reserves to the banking system to fund any and all private credit demand at rates 

which are invariably low. 

Freed from any requirement to acquire new reserves through industry or trade, the size 

of our banking system exploded. By 1990, the total debt-to-GDP ratio in the U.S. had 

grown substantially to 2.6 times GDP. It reached 3.6 times by 2007 – even before the 

financial crisis. Today, total debt in the United States stands at $56 trillion – 3.8 times 

GDP. 

That equals $180,000 in debt for every man, woman, and child in the United States. 

That's nearly $700,000 of debt per family in the United States. The interest on these 

debts is more than $3.5 trillion per year. To give you some idea how much money we're 

spending on interest alone, just consider… the total budget of the U.S. federal 

government is also $3.5 trillion. Again, $3.5 trillion just covers the interest. 

These debts are completely unaffordable. How many families in America do you know 

that can afford to finance and repay $700,000 in debt? Not many… certainly not the 

"average" family. And that means the value of our currency is now in peril because, to 

politicians, the only way out of this crisis is to print trillions of new dollars, something 

that's underway right now at the Federal Reserve. 

This will greatly devalue our currency… and, sooner or later, lead to an even bigger debt 

burden. (Ironically, this cycle of debt, devaluation, inflation, and then more debt is 

exactly why the King of England finally forbade fiat currencies in the American colonies 

in 1750.) 

A stable credit environment over the long-term isn't the only poorly understood benefit. 

There's one more big advantage to gold that's almost been completely forgotten. I don't 

recall these ideas being written about anywhere else. (That means most of you will 

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simply think I've lost my mind and made up this part…) 

Paper currency systems – with their inevitable booms, busts, inflations, and devaluations 

– discourage the public from saving. Instead, they inspire consumption and speculation. 

One of the main reasons the housing boom got so bad was people learned from the 

inflation of the 1970s and 1980s that buying a home (using a fixed-rate mortgage) was a 

"great investment." 

Most people didn't account for the fact that much of the rise in home prices during this 

period was attributable to inflation. People just knew if they'd kept the money in the 

bank they wouldn't have done as well. This kind of steady inflation leads people to prefer 

spending over saving. It also leads to more speculation. People realize they can't trust 

paper money, so they're willing to take more financial risks, consume, and borrow. 

Now imagine if our money was sound. Imagine if, instead of feeling like you better buy 

something or make an investment in something right away, you knew you could hold on 

to your money for decades and it would be worth at least as much as it is right now. Your 

perspective on risk and investing would change overnight. You'd be more willing to save 

and more cautious with your investment choices. You'd have the option of merely saving 

for retirement. You won't have to worry about trying to invest for retirement. 

As our current system collapses, there will be many discussions about what should 

replace the dollar. As part of my Project to Restore America (you can see our website 

here and visit us on Facebook here), I'm lobbying for a Constitutional amendment that 

will require banks and the U.S. Treasury to keep their reserves in gold. Believe me, you 

are going to hear all kinds of rhetoric about why this is a terrible idea, how it's not 

feasible, etc. 

It's certain the government and the bankers will oppose gold with all their might. Under 

a gold-backed system, they will lose tremendous power. They won't be able to create 

credit with a computer or a printing press. They won't be able to control the money 

supply. They won't be able to tax with unlimited power through inflation. (If you like 

these ideas, please join our Project to Restore America e-mail list… We'll keep you 

updated on our plans and progress to move these ideas forward.) 

The foes of sound money will argue – as they always do – there isn't enough gold to back 

the currency. That's complete nonsense. The U.S. government is the largest holder of 

gold in the world (or at least it claims to be). We have 263 million troy ounces. The Fed's 

monetary base is $1.7 trillion and will soon be $2 trillion. Divide $2 trillion by 263 

million ounces… and you get a gold price of $7,604 to have a currency that's 100% 

backed by gold. It's that easy. 

Now… there's one last part of all of this that might greatly interest you. Because the U.S. 

dollar has seen so much of its value wiped out over the last decade, it has become 

unreliable as an arbiter of prices. If you look at the price of stocks as measured in gold, 

instead of as measured in dollars, you will have an entirely different outlook on the real 

trend in stocks. See for yourself. 

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Does this look like a bull market to you? The above chart shows stocks have steadily lost 

ground to gold over the last 10 years. The reason why is obvious: Our currency is falling 

apart. But not one investor in 100 understands what this chart means... 

Crux Note: In the latest issue of Stansberry's Investment Advisory, Porter and co-editor 

Braden Copeland are sending an urgent warning to subscribers: "The stock market is setting 

up for a big correction. It's time to be incredibly cautious with your investments." In this 

must-read issue, they reveal their three proprietary indicators for accurately timing the 

markets... indicators that will let you know when it's safe to buy stocks again. Click here to 

learn more about SIA. 

SN: Seeing a chart like this leaves with one conclusion. Put all the extra money into gold 

and what we need to be self sufficient in the country-side, or leave the USA and invest 

using a foreign account in foreign stock markets and tell the IRS Nothing! It’s your 

money and they certainly don’t deserve to have it! 

http://georgewashington2.blogspot.com/2011/06/yastrow-we-are-on-verge-of-greatgreat.html 

Wednesday, June 1, 2011 

Yastrow: “We Are on the Verge of a Great, Great Depression” 

The news that frequent CNBC guest Peter Yastrow of Yastrow Origer (and formerly with 

DT Trading) told CNBC that "We’re on the verge of a great, great depression. The 

[Federal Reserve] knows it" is going viral today. 

But this is not news to anyone who has been paying attention. 

As I pointed out Tuesday, billion dollar fund managers agree: the government never 

fixed the underlying economic problems, so we'll have another crash. 

I provided details last month: 

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As I noted in January, the housing slump is worse than during the Great Depression. 

[Confirmed here] 

As CNN Money points out today: 

Wal-Mart's core shoppers are running out of money much faster than a year ago due to 

rising gasoline prices, and the retail giant is worried, CEO Mike Duke said Wednesday. 

"We're seeing core consumers under a lot of pressure," Duke said at an event in New 

York. "There's no doubt that rising fuel prices are having an impact." 

Wal-Mart shoppers, many of whom live paycheck to paycheck, typically shop in bulk at 

the beginning of the month when their paychecks come in. 

Lately, they're "running out of money" at a faster clip, he said. 

"Purchases are really dropping off by the end of the month even more than last year," 

Duke said. "This end-of-month [purchases] cycle is growing to be a concern. 

And - in case you still think that the 29% of Americans who think we're in a depression 

are unduly pessimistic - take a look at what I wrote last December: 

The following experts have - at some point during the last 2 years - said that the 

economic crisis could be worse than the Great Depression: 

• Fed Chairman Ben Bernanke 

• Former Fed Chairman Alan Greenspan (and see this and this) 

• Former Fed Chairman Paul Volcker 

• Economics scholar and former Federal Reserve Governor Frederic Mishkin 

• The head of the Bank of England Mervyn King 

• Nobel prize winning economist Joseph Stiglitz 

• Nobel prize winning economist Paul Krugman 

• Former Goldman Sachs chairman John Whitehead 

• Economics professors Barry Eichengreen and and Kevin H. O'Rourke (updated 

here) 

• Investment advisor, risk expert and "Black Swan" author Nassim Nicholas Taleb 

• Well-known PhD economist Marc Faber 

• Morgan Stanley’s UK equity strategist Graham Secker 

• Former chief credit officer at Fannie Mae Edward J. Pinto 

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• Billionaire investor George Soros 

• Senior British minister Ed Balls 

*** (SN: Could be worse than the depression. It’s already [July 2011] worse by any 

realistic measurement!) 

States and Cities In Worst Shape Since the Great Depression 

States and cities are in dire financial straits, and many may default in 2011. 

California is issuing IOUs for only the second time since the Great Depression. 

Things haven't been this bad for state and local governments since the 30s. 

Loan Loss Rate Higher than During the Great Depression 

In October 2009, I reported: 

In May, analyst Mike Mayo predicted that the bank loan loss rate would be higher than 

during the Great Depression. 

In a new report, Moody's has just confirmed (as summarized by Zero Hedge): 

The most recent rate of bank charge offs, which hit $45 billion in the past quarter, and 

have now reached a total of $116 billion, is at 3.4%, which is substantially higher than the 

2.25% hit in 1932, before peaking at at 3.4% rate by 1934. 

And see this. 

Here's a chart summarizing the findings: 

(click here for full chart). 

Indeed, top economists such as Anna Schwartz, James Galbraith, Nouriel Roubini and 

others have pointed out that while banks faced a liquidity crisis during the Great 

Depression, today they are wholly insolvent. See this, this, this and this. Insolvency is 

much more severe than a shortage of liquidity. 

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Unemployment at or Near Depression Levels 

USA Today reports today: 

So many Americans have been jobless for so long that the government is changing how it 

records long-term unemployment. 

Citing what it calls "an unprecedented rise" in long-term unemployment, the federal 

Bureau of Labor Statistics (BLS), beginning Saturday, will raise from two years to five 

years the upper limit on how long someone can be listed as having been jobless. 

*** 

The change is a sign that bureau officials "are afraid that a cap of two years may be 

'understating the true average duration' — but they won't know by how much until they 

raise the upper limit," says Linda Barrington, an economist who directs the Institute for 

Compensation Studies at Cornell University's School of Industrial and Labor Relations. 

*** 

"The BLS doesn't make such changes lightly," Barrington says. Stacey Standish, a bureau 

assistant press officer, says the two-year limit has been used for 33 years. 

*** 

Although "this feels like something we've not experienced" since the Great 

Depression, she says, economists need more information to be sure. 

The following chart from Calculated Risk shows that this is not a normal spike in 

unemployment: 

does this chart from Clusterstock: 

As 

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As I noted in October: 


It is difficult to compare current unemployment with that during the Great Depression. 

In the Depression, unemployment numbers weren't tracked very consistently, and the U- 

3 and U-6 statistics we use today weren't used back then. And statistical "adjustments" 

such as the "birth-death model" are being used today that weren't used in the 1930s. 

But let's discuss the facts we do know. 

The Wall Street Journal noted in July 2009: 

The average length of unemployment is higher than it's been since government began 

tracking the data in 1948. 

*** 

The job losses are also now equal to the net job gains over the previous nine years, 

making this the only recession since the Great Depression to wipe out all job growth 

from the previous expansion. 

The Christian Science Monitor wrote an article in June entitled, "Length of 

unemployment reaches Great Depression levels". 

60 Minutes - in a must-watch segment - notes that our current situation tops the Great 

Depression in one respect: never have we had a recession this deep with a recovery this 

flat. 60 Minutes points out that unemployment has been at 9.5% or above for 14 months: 

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Pulitzer Prize-winning historian David M. Kennedy notes in Freedom From Fear: The 

American People in Depression and War, 1929-1945 (Oxford, 1999) that - during 

Herbert Hoover's presidency, more than 13 million Americans lost their jobs. Of those, 

62% found themselves out of work for longer than a year; 44% longer than two years; 

24% longer than three years; and 11% longer than four years. 

(SN: We’re at the 40% out of work or under employed level now. The government won’t 

say so but independent analists do. The government stopped counting those 

unemployed when their unemployment insurance checks ran out back when Clinton the 

Traitor was president. Clinton sold our military and industrial secrets (and some 

hardware) to the Chinese, he and his wife ran a swinger’s open marriage, and they to this 

day pack away money they don’t rightfully earn. They’re criminals and our problems are 

in large part due to their ascendency to Capital Hill.) 

Blytic calculates that the current average duration of unemployment is some 32 weeks, 

the median duration is around 20 weeks, and there are approximately 6 million people 

unemployed for 27 weeks or longer. 

Moreover, employers are discriminating against job applicants who are currently 

unemployed, which will almost certainly prolong the duration of joblessness. 

As I noted in January 2009: 

In 1930, there were 123 million Americans. 

At the height of the Depression in 1933, 24.9% of the total work force or 11,385,000 

people, were unemployed. 

Will unemployment reach 25% during this current crisis? 

(SN: he’s using government figures.) 

I don't know. But the number of people unemployed will be higher than during the 

Depression. 

Specifically, there are currently some 300 million Americans, 154.4 million of whom are 

in the work force. 

Unemployment is expected to exceed 10% by many economists, and Obama "has warned 

that the unemployment rate will explode to at least 10% in 2009". 

10 percent of 154 million is 15 million people out of work - more than during the Great 

Depression. 

Given that the broader U-6 measure of unemployment is currently around 17% 

(ShadowStats.com puts the figure at 22%, and some put it even higher), the current 

numbers are that much worse. 

But it is important to look at some details. 

For example, official Bureau of Labor Statistics numbers put U-6 above 20% in several 

states: 

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• California: 21.9 

• Nevada: 21.5 

• Michigan 21.6 

• Oregon 20.1 


In the past year, unemployment has grown the fastest in the mountain West. 

And certain races and age groups have gotten hit hard. 

According to Congress' Joint Economic Committee: 

By February 2010, the U-6 rate for African Americans rose to 24.9 percent. 

34.5% of young African American men were unemployed in October 2009. 

As the Center for Immigration Studies noted last December: 

Unemployment rates for less-educated and younger workers: 

• As of the third quarter of 2009, the overall unemployment rate for native-born 

Americans is 9.5 percent; the U-6 measure shows it as 15.9 percent. 

• The unemployment rate for natives with a high school degree or less is 13.1 

percent. Their U-6 measure is 21.9 percent. 

• The unemployment rate for natives with less than a high school education is 20.5 

percent. Their U-6 measure is 32.4 percent. 

• The unemployment rate for young native-born Americans (18-29) who have only 

a high school education is 19 percent. Their U-6 measure is 31.2 percent. 

• The unemployment rate for native-born blacks with less than a high school 

education is 28.8 percent. Their U-6 measure is 42.2 percent. 

• The unemployment rate for young native-born blacks (18-29) with only a high 

school education is 27.1 percent. Their U-6 measure is 39.8 percent. 

• The unemployment rate for native-born Hispanics with less than a high school 

education is 23.2 percent. Their U-6 measure is 35.6 percent. 

• The unemployment rate for young native-born Hispanics (18-29) with only a high 

school degree is 20.9 percent. Their U-6 measure is 33.9 percent. 

No wonder Chris Tilly - director of the Institute for Research on Labor and Employment 

at UCLA - says that African-Americans and high school dropouts are experiencing 

depression-level unemployment. 

And as I have previously noted, unemployment for those who earn $150,000 or more is 

only 3%, while unemployment for the poor is 31%. 

315


The bottom line is that it is difficult to compare current unemployment with what 

occurred during the Great Depression. In some ways things seem better now. In other 

ways, they don't. 

Factors like where you live, race, income and age greatly affect one's experience of the 

severity of unemployment in America. 

In addition, wages have plummeted for those who are employed. As Pulitzer 

Prize-winning tax reporter David Cay Johnston notes: 

Every 34th wage earner in America in 2008 went all of 2009 without 

earning a single dollar, new data from the Social Security Administration 

show. Total wages, median wages, and average wages all declined .... 

And see this, this, and this. 

Food Stamps Replace Soup Kitchens 

1 out of every 7 Americans now rely on food stamps. 

While we don't see soup kitchens, it may only be because so many Americans are 

receiving food stamps. 

(SN: Some states give the poor free electricity, water and phone service, even bus 

services, too. This way they can still cook at home and make their way to the grocer. They 

can still keep their house in order while they continue looking for work. Additionally, 

many have two families under one roof. Mom lives with her son, the kids moved back 

with Mom and Dad, and girlfriends move in with any reasonably decent “boy friend” to 

have some shelter. Let’s be honest here, wouldn’t you trade sex and house keeping chores 

for a place to live? Most of the girls will say “yes” as women have world-wide for 

centuries. Add it all up and it’s obvious a lot more people are unemployed then ever in 

our past and desperately want their own home. Homes that should be maintained with 

heat, air-conditioning, and general operation and care are empty. The banks are too 

stupid to recognize these assets are wasting. Anyone in the mechanical world will tell you 

machines should be run to keep them operable. Appliances not running eventually 

deteriorate. Seals dry up, metals corrode and seize together. Homes with moisture in the 

roofing will rot away. 

From the point of view of security, about 50% of all Americans admit they are 

uninsured or under-insured. If there’s a death or disability or an illness, there is no 

insurance to help replace the money they’ll have to find to pay expenses incurred. Such 

expenses often push people over the edge into homelessness.) 

Indeed, despite the dramatic photographs we've all seen of the 1930s, the 43 million 

Americans relying on food stamps to get by may actually be much greater than the 

number who relied on soup kitchens during the Great Depression. 

In addition, according to Chaz Valenza (a small business owner in New Jersey who 

earned his MBA from New York University's Stern School of Business) millions of 

Americans are heading to foodbanks for the first time in their lives. 

*** 

The War Isn't Working 

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Given the above facts, it would seem that the government hasn't been doing much. But 

the scary thing is that the government has done more than during the Great Depression, 

but the economy is still stuck a pit. 

*** 

The amount spent in emergency bailouts, loans and subsidies during this financial crisis 

arguably dwarfs the amount which the government spent during the New Deal. 

For example, Casey Research wrote in 2008: 

“Paulson and Bernanke have embarked on the largest bailout program ever conceived .... 

a program which so far will cost taxpayers $8.5 trillion.” 

[The updated, exact number can be disputed. But as shown below, the exact number of 

trillions of dollars is not that important.] 

So how does $8.5 trillion dollars compare with the cost of some of the major conflicts 

and programs initiated by the US government since its inception? To try and grasp the 

enormity of this figure, let’s look at some other financial commitments undertaken by 

our government in the past: 

As illustrated above, one can see that in today’s dollar, we have already committed to 

spending levels that surpass the cumulative cost of all of the major wars and government 

initiatives since the American Revolution. 

Recently, the Congressional Research Service estimated the cost of all of the major wars 

our country has fought in 2008 dollars. The chart above shows that the entire cost of 

WWII over four to five years was less than half the current pledges made by Paulson and 

Bernanke in the last three months! (sn: I’m reading and breathing curses) 

In spite of years of conflict, the Vietnam and the Iraq wars have each cost less than the 

bailout package that was approved by Congress in two weeks. The Civil War that 

317


devastated our country had a total price tag (for both the Union and Confederacy) of 

$60.4 billion, while the Revolutionary War was fought for a mere $1.8 billion. 

In its fifty or so years of existence, NASA has only managed to spend $885 billion – a 

figure which got us to the moon and beyond. 

The New Deal had a price tag of only $500 billion. The Marshall Plan that 

enabled the reconstruction of Europe following WWII for $13 billion, comes out to 

approximately $125 billion in 2008 dollars. The cost of fixing the S&L crisis was $235 

billion. 

CNBC confirms that the New Deal cost about $500 billion (and the S&L crisis cost 

around $256 billion) in inflation adjusted dollars. 

So even though the government's spending on the "war" on the economic crisis dwarfs 

the amount spent on the New Deal, our economy is still stuck in the mud. 

Why Haven't Things Gotten Better for the Little Guy? 

Government leaders make happy talk about how things are improving, but happy talk 

cannot fix the economy. 

Two fundamental causes of the Great Depression, and of our current economic 

problems, are fraud and inequality: 

• Fraud was one of the main causes of the Depression, but nothing has been done 

to rein in fraud today 

• Inequality was another major cause of downturns - including the Depression - 

but inequality is currently worse than during the Depression 

There are, of course, other reasons the economy is still stuck in a ditch for most 

Americans, such as encouraging too much leverage, bailing out the big speculators, 

failing to break up the mammoth banks, and failing to spend wisely, where it will do 

some good. See this and this. But fraud and inequality were core causes of the 

Depression, and our failure to address them will only prolong our misery. 

Extreme Inequality Helped Cause Both the Great Depression and the 

Current Economic Crisis December 17, 2010 

It is clear that when banks become too big, it harms the economy. Economist Steve 

Keen says that "a sustainable level of bank profits appears to be about 1% of GDP", and 

higher bank profits lead to a Ponzi economy and a depression. 

But most mainstream economists dismiss the idea that wealth inequality among 

individuals causes economic crises. 

Of course, some ideologues will argue that even discussing inequality is waging class 

warfare, and smacks of an attack on capitalism. 

However, the father of modern economics - Adam Smith - disagreed. 

318


And as Warren Buffet, one of America's most successful capitalists and defenders of 

capitalism, points out: 

There's class warfare, all right, but it's my class, the rich class, that's making war .... 

And as I have previously noted, radical concentration of wealth actually destroys 

capitalism turning it instead into socialism for the rich. 

Is There a Causal Connection Between Extreme Inequality and Economic Crises? 

More to the point, most mainstream economists do not believe there is a causal 

connection between inequality and severe downturns. 

But recent studies by Emmanuel Saez and Thomas Piketty are waking up more and more 

economists to the possibility that there may be a connection. 

Specifically, economics professors Saez (UC Berkeley) and Piketty (Paris School of 

Economics) show that the percentage of wealth held by the richest 1% of Americans 

peaked in 1928 and 2007 - right before each crash: 

As the Washington Post's Ezra Klein wrote in June: 

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*** 


Krugman says that he used to dismiss talk that inequality contributed to crises, but then 

we reached Great Depression-era levels of inequality in 2007 and promptly had a crisis, 

so now he takes it a bit more seriously. 

The problem, he says, is finding a mechanism. Krugman brings up under consumption 

(wherein the working class borrows a lot of money because all the money is going to the 

rich) and overconsumption (in which the rich spend and that makes the next-most rich 

spend and so on, until everyone is spending too much to keep up with rich people whose 

incomes are growing much faster than everyone else's). 

Robert Reich has theorized for some time that there are 3 causal connections between 

inequality and crashes: 

First, the rich spend a smaller proportion of their wealth than the less-affluent, and so 

when more and more wealth becomes concentrated in the hands of the wealth, there is 

less overall spending and less overall manufacturing to meet consumer needs. 

Second, in both the Roaring 20s and 2000-2007 period, the middle class incurred a lot 

of debt to pay for the things they wanted, as their real wages were stagnating and they 

were getting a smaller and smaller piece of the pie. In other words, they had less and less 

wealth, and so they borrowed more and more to make up the difference. As Reich notes: 

Between 1913 and 1928, the ratio of private credit to the total national economy nearly 

doubled. Total mortgage debt was almost three times higher in 1929 than in 1920. 

Eventually, in 1929, as in 2008, there were “no more poker chips to be loaned on credit,” 

in [former Fed chairman Mariner] Eccles' words. And “when their credit ran out, the 

game stopped.” 

And third, since the wealthy accumulated more, they wanted to invest more, so a lot of 

money poured into speculative investments, leading to huge bubbles, which eventually 

burst. Reich points out: 

320


In the 1920s, richer Americans created stock and real estate bubbles that foreshadowed 

those of the late 1990s and 2000s. The Dow Jones Stock Index ballooned from 63.9 in 

mid-1921 to a peak of 381.2 eight years later, before it plunged. There was also frantic 

speculation in land. The Florida real estate boom lured thousands of investors into the 

Everglades, from where many never returned, at least financially. 

Wall Street cheered them on in the 1920s, almost exactly as it did in the 2000s. 

But I believe there may be a fourth causal connection between inequality and crashes. 

Specifically, when enough wealth gets concentrated in a few hands, it becomes easy for 

the wealthiest to buy off the politicians, to repeal regulations, and to directly or indirectly 

bribe regulators to look the other way when banks were speculating with depositors 

money, selling Ponzi schemes or doing other shady things which end up undermining 

the financial system and the economy. 

For example, as John Kenneth Galbraith noted in The Great Crash, 1929, Laissez-faire 

deregulation was the order of the day under the Coolidge and Hoover administrations, 

and the possibility of a financial meltdown had never been seriously contemplated. 

Professor Irving Fisher of Yale University - the Alan Greenspan, Robert Rubin or Larry 

Summers of his day - had stated authoritatively in 1928 that "nothing resembling a crash 

can occur". 

Indeed, when enough money is concentrated in a couple of hands, the affluent can lobby 

to appoint to government positions, pay to endow prominent university chairs, and 

create think tanks and other opportunities for economics professors who spout the 

dogmas "everything will always remain stable because we've got if figured out this time" 

and "don't worry about fraud" to gain prominence. For example, Bill Black 

has written about The Olin Foundation's promotion over the last couple of decades of 

these dogmas. 

I believe that the fourth factor exacerbates the first three. Specifically, when the wealthy 

have enough money to drown out other voices who might otherwise be heeded by 

legislators and regulators, they can: 

• Skew the tax code and other laws so that they can get even wealthier 

• Encourage a debt bubble (Bill Black has repeatedly explained that the fraudsters 

blow huge bubbles, knowing that the government will bail them out when the 

bust leads to defaults) 

• And create new Ponzi schemes for speculation 

(Admittedly, there might not always be a direct connection, but all of the factors are at 

least intertwined.) 

Reuters wrote an excellent piece on the issue of inequality and crashes (discussing the 

first three factors) last month: 

Economists are only beginning to study the parallels between the 1920s and the most 

recent decade to try to understand why both periods ended in financial disaster. Their 

early findings suggest inequality may not directly cause crises, but it can be a 

contributing factor. 

*** 

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America has one of the largest wealth gaps among advanced economies. Based on an 

inequality measure known as the Gini coefficient, the United States ranks on a par with 

developing countries such as Ivory Coast, Jamaica and Malaysia, according to the CIA 

World Factbook. 

*** 

There is little agreement among economists about what precisely links high inequality to 

crises, which helps explain why so few officials saw the financial upheaval coming. 

Rapid expansion of credit is one common thread. 

*** 

Raghuram Rajan, a professor at the University of Chicago's Booth School of Business and 

a former chief economist of the International Monetary Fund, believes governments tend 

to promote easy credit when inequality spikes to assuage middle-class anger about 

falling behind. 

"One way to paper over the rising inequality was to lend so that people could spend," 

Rajan said. 

In the 1920s, it was expansion of farm credit, installment loans and home mortgages. In 

the last decade, it was leveraged borrowing and lending, by home buyers who put no 

money down or investment banks that lent out $30 for each $1 held. 

"Housing credit gave you an instrument to assist those falling behind without them 

feeling they're beneficiaries of some sort of subsidy," Rajan said. "Even if their incomes 

are stagnant, they feel really good about becoming homeowners." 

Another theory is that concentration of wealth at the top sends investors searching for 

riskier interest-bearing savings. When so much cash is sloshing around, traditional safe 

investments such as Treasury debt yield very little, and wealthy investors may seek out 

fatter returns elsewhere. 

Mark Thoma, who teaches economics at the University of Oregon, wonders if the flood of 

investment cash from the ultra-rich -- both in the United States and abroad -- 

encouraged Wall Street to create seemingly safe mortgage-backed securities that later 

proved disastrously risky. 

"When we see income inequality rising, we ought to start looking for bubbles," he said. 

Kemal Dervis, global economy and development division director at Brookings and a 

former economy minister for Turkey, said reducing inequality isn't just a matter of 

fairness or morality. An economy based on consumption needs consumers, and if too 

much wealth is concentrated at the top there may be times when there is not enough 

demand to support growth. 

"There may be demand for private jets and yachts, but you need a healthy middleincome 

group (to drive consumption of basic goods)," he said. "In the golden age of 

capitalism, in the 1950s and 60s, everyone shared in income growth." 

The fact that economists are even examining the link between inequality and financial 

crises shows just how much the thinking has changed in the wake of the Great Recession. 

*** 

Ajay Kapur, a Deutsche Bank strategist, spotted the inequality parallels between the 

1920s and the most recent decade, but didn't see the meltdown coming. The former 

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Citigroup strategist created a stir five years ago when he built an investment strategy 

around his thesis that essentially divided the world into two camps: the rich and the rest. 

Kapur told clients in 2005 that the United States and a handful of other economies were 

developing into "plutonomies" where the wealthy few powered economic growth and 

consumed much of its bounty, while the "multitudinous many" shared the leftovers. 

Plutonomies come around only once or twice a century, he argued -- 16th century Spain, 

17th century Holland, the Gilded Age. The last time it happened in the United States was 

during the "Roaring 1920s". 

*** 

At least one new arrival to Washington's policy-making scene, Fed Vice Chairman Janet 

Yellen, has expressed concern that extreme inequality could ultimately undermine 

American democracy. 

"Inequality has risen to the point that it seems to me worthwhile for the U.S. to seriously 

consider taking the risk of making our economy more rewarding for more of the people," 

she wrote in a 2006 speech. 

For further background, see this, this and this. 

No Wonder the Economy Isn't Improving 

I've read countless news headlines recently about how economists are "surprised" over an 

"unexpectedly bad" economic indicator. 

But it's not surprising at all. It's no mystery. 

The government hasn't taken the necessary actions, and has instead been doing all of 

the wrong things. 

Let's recap. 

The leading monetary economist told the Wall Street Journal that this was not a liquidity crisis, 

but an insolvency crisis. She said that Bernanke is fighting the last war, and is taking the wrong 

approach. Nobel economist Paul Krugman and leading economist James Galbraith agree. They 

say that the government's attempt’s to prop up the price of toxic assets no one wants is not 

helpful. 

The Bank for International Settlements – often described as a central bank for central banks (BIS) 

– slammed the easy credit policy of the Fed and other central banks, the failure to regulate the 

shadow banking system, "the use of gimmicks and palliatives", and said that anything other than 

(1) letting asset prices fall to their true market value, (2) increasing savings rates, and (3) forcing 

companies to write off bad debts "will only make things worse". 

BIS also cautioned that bailouts could harm the economy (as did the former head of the Fed's 

open market operations). 

And BIS warned that the Fed and other central banks were simply transferring risk from private 

banks to governments, which could lead to a sovereign debt crisis. 

Virtually all leading independent economists have said that the too big to fails must be broken up, 

or the economy won't be able to recover (and see this). Instead, they have been allowed to 

get even bigger (and see this and this). 

323


While modern economic theory shows that debts do matter (and see this), the U.S. is spending 

on guns and butter like debts are a good thing. 

Nobel prize winning economist George Akerlof predicted in 1993 that credit default swaps would 

lead to a major crash, and that future crashes were guaranteed unless the government stopped 

letting big financial players loot by placing bets they could never pay off when things started to go 

wrong, and by continuing to bail out the gamblers. (Not only has the government rewarded the 

gamblers, bailed them out and let them engage in a new round of risky betting, but it hasn't even 

reined in credit default swaps.) 

And instead of trying to restore trust in our financial system - which is a prerequisite for any 

sustainable economic recovery - Summers, Geithner, Bernanke and the boys have tried to sweep 

the problems under the rug and con the public into believing that everything is okay and that no 

real reform is needed. 

As I wrote in October: 

William K. Black - professor of economics and law, and the senior regulator during the S & L 

crisis - says that that the government's entire strategy now - as during the S&L crisis - is to cover 

up how bad things are ("the entire strategy is to keep people from getting the facts"). 

Indeed, as I have previously documented, 7 out of the 8 giant, money center banks went bankrupt 

in the 1980's during the "Latin American Crisis", and the government's response was to cover 

up their insolvency. 

Black also says: 

There has been no honest examination of the crisis because it would embarrass C.E.O.s and 

politicians . . . 

Instead, the Treasury and the Fed are urging us not to examine the crisis and to believe that all 

will soon be well. 

PhD economist Dean Baker made a similar point, lambasting the Federal Reserve for blowing the 

bubble, and pointing out that those who caused the disaster are trying to shift the focus as fast as 

they can: 

The current craze in DC policy circles is to create a "systematic risk regulator" to make sure that 

the country never experiences another economic crisis like the current one. This push is part of 

a cover-up of what really went wrong and does absolutely nothing to address the 

underlying problem that led to this financial and economic collapse. 

Baker also says: 

"Instead of striving to uncover the truth, [Congress] may seek to conceal it" and tell banksters 

they're free to steal again. 

*** 

Time Magazine called Tim Geithner a "con man" and the stress tests a "confidence game" because 

those tests were so inaccurate. 

William Black said: 

How do you think we did the stress tests? Like doing a stress test on an airplane wing, but you 

don’t actually have airplane wing. And don’t know what airplane wing is made out of. It’s a farce. 

And - instead of rebuilding the real economy - the boys are simply simply rebuilding the house of 

cards. 

And while stopping the rising tide of unemployment is key to reversing the financial crisis, the 

government hasn't done much at all to staunch the loss of jobs. 

324

For example, as I wrote last August: 


The government has committed to give trillions to the financial industry. President Obama's 

stimulus bill was $787 billion, which is less than a tenth of the money pledged to the banks and 

the financial system. [106] 

Of the $787 billion, little more than perhaps 10% has been spent as of this writing. [107] 

The Government Accountability Office says that the $787 billion stimulus package is not being 

used for stimulus. [108] Instead, the states are in such dire financial straights that the stimulus 

money is instead being used to "cushion" state budgets, prevent teacher layoffs, make more 

Medicaid payments and head off other fiscal problems. So even the money which is actually 

earmarked to help the states stimulate their economies is not being used for that purpose. 

Indeed, much of the $787 billion was earmarked pork [109], not for anything which could actually 

stimulate the economy. [110] 

Mark Zandi - chief economist for Moody's - has calculated which stimulus programs give the most 

bang for the buck in terms of the economy: 

[111] 

But very little of the stimulus funds are actually going to high-value stimulus projects. 

Indeed, as the Los Angeles Times points out: 

Critics say the [stimulus money reaching California] is being used for projects that would have 

been built anyway, instead of on ways to change how Californians live. Case in point: Army 

latrines, not high-speed rail. 

*** 

Critics say those aren't the types of projects with lasting effects on the economy. 

"Whether it's talking about building a new [military] hospital or bachelor's quarters, there isn't 

that return on investment that you'd find on something that increases efficiency like a road or 

transit project," said Ellis of Taxpayers for Common Sense. 

325


Job creation is another question. A recent survey by the Associated General Contractors of 

America found that slightly more than one-third of the companies awarded stimulus projects 

planned to hire new employees. But about one-third of the companies that weren't awarded 

stimulus projects also planned to hire new employees. 

"While the construction portion of the stimulus is having an impact, it is far from delivering its 

full promise and potential," said Stephen E. Sandherr, chief executive of the contractors group. 

It's unclear how many jobs will be created through the Defense Department projects. Most of the 

construction jobs are awarded through multiple award contracts, in which the department 

guarantees a minimum amount of business to certain contractors, and lets only those contractors 

bid on projects. 

That means many of the contractors working on stimulus projects already have been busy at work 

on government projects.even the stimulus money which is being spent [112] 

David Rosenberg writes: 

Our advice to the Obama team would be to create and nurture a fiscal backdrop that tackles this 

jobs crisis with some permanent solutions rather than recurring populist short-term fiscal goodies 

that are only inducing households to add to their burdensome debt loads with no long-term 

multiplier impacts. The problem is not that we have an insufficient number of vehicles on the 

road or homes on the market; the problem is that we have insufficient labour demand.[113] 

Donald W. Riegle Jr. - former chair of the Senate Banking Committee from 1989 to 1994 - wrote 

(along with the former CEO of AT&T Broadband and the international president of the United 

Steelworkers union): 

It's almost as if the administration is opting for a rose-colored-glasses PR strategy rather than 

taking a hard-nose look at actual consumer and employment figures and their trends, and 

modifying its economic policies accordingly.[114] 

As yesterday's front-page story on ABC notes: 

Even as many Americans still struggle to recover from the country's worst economic downturn 

since the Great Depression, another crisis – one that will be even worse than the current one – is 

looming, according to a new report from a group of leading economists, financiers, and former 

federal regulators. 

In the report, the panel, that includes Rob Johnson of the United Nations Commission of Experts 

on Finance and bailout watchdog Elizabeth Warren, warns that financial regulatory reform 

measures proposed by the Obama administration and Congress must be beefed up to prevent 

banks from continuing to engage in high risk investing that precipitated the near collapse of the 

U.S. economy in 2008. 

The report warns that the country is now immersed in a "doomsday cycle" wherein banks use 

borrowed money to take massive risks in an attempt to pay big dividends to shareholders and big 

bonuses to management – and when the risks go wrong, the banks receive taxpayer bailouts from 

the government. 

"Risk-taking at banks," the report cautions, "will soon be larger than ever." 

Without more stringent reforms, "another crisis – a bigger crisis that weakens both our financial 

sector and our larger economy – is more than predictable, it is inevitable," Johnson says in the 

report, commissioned by the nonpartisan Roosevelt Institute. 

The institute's chief economist, Nobel Prize-winner Joseph Stiglitz, calls the report "an important 

point of departure for a debate on where we are on the road to regulatory reform." 

The report blasts some of Washington's key players. Johnson writes, "Our government leaders 

have shown little capacity to fix the flaws in our market system." Two other panelists, Simon 

Johnson, a professor at MIT, and Peter Boone of the Centre for Economic Performance, voiced 

similar criticisms. 

326


Federal Reserve Chairman Ben Bernanke and Treasury Secretary Tim Geithner "oversaw policy as 

the bubble was inflating," write Johnson and Boone, and "these same men are now designing our 

'rescue.'" 

The study says that "In 2008-09, we came remarkably close to another Great Depression. Next 

time we may not be so 'lucky.' The threat of the doomsday cycle remains strong and growing," 

they say. "What will happen when the next shock hits? We may be nearing the stage where the 

answer will be – just as it was in the Great Depression – a calamitous global collapse." 

*** 

Frank Partnoy, a panelist from the University of San Diego, claims that "the balance sheets of 

most Wall Street banks are fiction." Another panelist, Raj Date of the Cambridge Winter Center 

for Financial Institutions Policy, argues that government-backed mortgage giants Fannie Mae and 

Freddie Mac have become "needlessly complex and irretrievably flawed" and should be 

eliminated. The report also calls for greater competition among credit rating agencies and 

increased regulation of the derivatives market, including requiring that credit-default swaps be 

traded on regulated exchanges. 

With the Senate Banking Committee, led by Chris Dodd, D-Conn., poised to unveil its financial 

regulatory reform proposal sometime in the next week, the report calls on Congress to enact 

reforms strong enough to prevent another meltdown. 

"Sen. Dick Durbin once said the banks 'owned' the Senate," says Johnson. "The next few weeks 

will determine whether or not that statement is true." 

(Here is the Roosevelt Institute report.) Heck of a job, guys. 







W E D N E S D A Y , J U L Y 2 1 , 2 0 1 0 

No Wonder the Outlook for the Economy is "Unusually Uncertain" ... 

the Fed is Killing It 

Fed Chairman Ben Bernanke testified today that the outlook for the economy is "unusually 

uncertain". 

That's not surprising. 

Nothing has changed since I made the following points last December. 

High-Level Fed Officials Slam Bernanke 

Fed Vice Chairman Donald Kohn conceded that the government's actions "will reduce 

[companies'] incentive to be careful in the future." In other words, he's admitting that the 

government's actions will encourage financial companies to make even riskier gambles in the 

future. 

327


Kansas City Fed President and veteran Fed official Thomas Hoenig said: 

Too big has failed.... 

The sequence of [the government's] actions, unfortunately, has added to market uncertainty. 

Investors are understandably watching to see which institutions will receive public money and 

survive as wards of the state... 

Any financial crisis leaves a stream of losses among the various participants, and these losses 

must ultimately be borne by someone. To start the resolution process, management responsible 

for the problems must be replaced and the losses identified and taken. Until these actions are 

taken, there is little chance to restore market confidence and get credit markets 

flowing. It is not a question of avoiding these losses, but one of how soon we will 

take them and get on to the process of recovery.... 

Many of the [government's current policy revolves around the idea of] "too big to 

fail" .... History, however, may show us a different experience. When examining 

previous financial crises, both in other countries as well as the United States, large institutions 

have been allowed to fail. Banking authorities have been successful in placing new and more 

responsible managers and directions in charge and then reprivatizing them. There is also 

evidence suggesting that countries that have tried to avoid taking such steps have 

been much slower to recover, and the ultimate cost to taxpayers has been larger... 

The current head of the Philadelphia fed bank, Charles Plosser, disagrees with Bernanke's 

strategy of the endless printing-press and ever-increasing fed balance sheet: 

Plosser urged the Fed to "proceed with caution" with the new policy. Others outside the Fed are 

much more strident and want plans in place immediately to reverse it. They believe an inflation 

storm is already in train.*** 

Bernanke argued that focusing on the size of the balance sheet misses the point, arguing the Fed's 

various asset purchase programs are not easily summarized in a single number. 

But Plosser said that the growth of the Fed's balance sheet was a key metric. 

"It is not appropriate to ignore quantitative metrics in this new policy environment," Plosser 

said... 

Plosser is bringing the spotlight right back to the Fed's balance sheet. 

"The size of the balance sheet does offer a possible nominal anchor for monitoring the volume of 

our liquidity provisions," Plosser said. 

The former head of the Fed's Open Market Operations says the bailout might make things worse. 

Specifically, the former head of the Fed's open market operation - the key Fed agency which has 

been loaning hundreds of billions of dollars to Wall Street companies and banks - was quoted in 

Bloomberg as saying: 

"Every time you tinker with this delicate system even small changes can create big ripples,'' said 

Dino Kos, former head of the New York Fed's open-market operations . . . "This is the impossible 

situation they are in. The risks are that the government's $700 billion purchase of 

assets disturbs markets even more.'' 

And William Poole, who recently left his post as president of the St. Louis Fed, is 

essentially calling Bernanke a communist: 

Poole said he was very concerned that the Fed could simply lend money to anyone, without 

constraint. 

In the Soviet Union and Eastern Europe during the Cold War era, economies were 

inefficient because they had a soft-budget constraint. If a firm got into trouble, the 

banking system would give them more money, Poole said. 

The current situation at the Fed seems eerily similar, he said. 

328


"What is discipline - where are the hard choices - when does Fed say our resources are 

exhausted?" Poole asked. 

But the strongest criticism may be from the former Vice President of Dallas Federal Reserve, who 

said that the failure of the government to provide more information about the bailout could signal 

corruption. As ABC writes: 

Gerald O'Driscoll, a former vice president at the Federal Reserve Bank of Dallas and a senior 

fellow at the Cato Institute, a libertarian think tank, said he worried that the failure of the 

government to provide more information about its rescue spending could signal corruption. 

"Nontransparency in government programs is always associated with corruption in other 

countries, so I don't see why it wouldn't be here," he said. 

Of course, former Fed chairman Paul Volcker has also strongly criticized current Fed policies. 

Global Agencies Slam Bernanke 

The Bank of International Settlements (BIS) - called "the central banks' central bank" - has 

slammed the Fed for blowing bubbles and then "using gimmicks and palliatives" which "will only 

make things worse". 

As the Telegraph wrote in June 2007: 

The Bank for International Settlements, the world's most prestigious financial body, has warned 

that years of loose monetary policy has fuelled a dangerous credit bubble, leaving the global 

economy more vulnerable to another 1930s-style slump than generally understood... 

The BIS, the ultimate bank of central bankers, pointed to a confluence a worrying signs, citing 

mass issuance of new-fangled credit instruments, soaring levels of household debt, extreme 

appetite for risk shown by investors, and entrenched imbalances in the world currency system... 

The bank said it was far from clear whether the US would be able to shrug off the consequences of 

its latest imbalances ... 

"Sooner or later the credit cycle will turn and default rates will begin to rise," said the bank. 

A year later, in June 2008, the Telegraph wrote: 

A year ago, the Bank for International Settlements startled the financial world by warning that we 

might soon face challenges last seen during the onset of the Great Depression. This has proved 

frighteningly accurate... 

[BIS economist] Dr White says the US sub-prime crisis was the "trigger", not the cause of the 

disaster. 

Indeed, BIS slammed the Fed and other central banks for blowing the bubble, failing to regulate 

the shadow banking system, and then using gimmicks which will only make things worse. As the 

2008 Telegraph article notes: 

In a pointed attack on the US Federal Reserve, it said central banks would not find it easy to 

"clean up" once property bubbles have burst... 

Nor does it exonerate the watchdogs. "How could such a huge shadow banking system emerge 

without provoking clear statements of official concern?" 

"The fundamental cause of today's emerging problems was excessive and imprudent credit growth 

over a long period. Policy interest rates in the advanced industrial countries have been unusually 

low," he said. 

The Fed and fellow central banks instinctively cut rates lower with each cycle to avoid facing the 

pain. The effect has been to put off the day of reckoning... 

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"Should governments feel it necessary to take direct actions to alleviate debt burdens, it is crucial 

that they understand one thing beforehand. If asset prices are unrealistically high, they must fall. 

If savings rates are unrealistically low, they must rise. If debts cannot be serviced, they must be 

written off. 

"To deny this through the use of gimmicks and palliatives will only make things worse in the end," 

he said. 

In other words, BIS slammed the easy credit policy of the Fed and other central banks, and the 

failure to regulate the shadow banking system. 

More dramatically, BIS slammed "the use of gimmicks and palliatives", and said that anything 

other than (1) letting asset prices fall to their true market value, (2) increasing savings rates, and 

(3) forcing companies to write off bad debts "will only make things worse". 

But Bernanke and the other central bankers (as well as Treasury and the Council of Economic 

Advisors and Barney Frank and Chris Dodd and the others in control of American and British and 

French and Japanese and German and virtually every other country's economic policy) ignored 

BIS' advice in 2007 and 2008, and they are still ignoring it today. 

(SN: I suspect that is because these named people are secretly psychotic. They’re brilliant men 

who want to destroy the Western World and make it safe for socialism/fascism and a Satanically 

inspired one world government, one world religion and one world economic system in which 

everyone is a wage slave bending their knee to Satan just so He can make his point before God. 

But, that after all is another story to which I have digressed. I shouldn’t intend to reveal the real 

truth and the real background behind all of our troubles. That would be too much for most 

carefully deceived readers to accept.) 

Instead, they are doing everything they can to (2) prop up asset prices by trying to blow a new 

bubble by giving banks trillions, (2) re-write accounting and reporting rules to let the big banks 

and other giants keep bad debts on their books (or in sivs or other "second sets of books") and to 

hide the fact that they are bad debts, and (3) encourage consumers to spend spend spend! 

"The world's most prestigious financial body", "the ultimate bank of central bankers" has 

condemned Bernanke and all of the other G-8 central banks, and stripped bare their false claims 

that the crash wasn't their fault or that they are now doing the right thing to turn the economy 

around. 

As Spiegel wrote in July of this year: 

White and his team of experts observed the real estate bubble developing in the United States. 

They criticized the increasingly impenetrable securitization business, vehemently pointed out the 

perils of risky loans and provided evidence of the lack of credibility of the rating agencies. In their 

view, the reason for the lack of restraint in the financial markets was that there was simply too 

much cheap money available on the market... 

As far back as 2003, White implored central bankers to rethink their strategies, noting that 

instability in the financial markets had triggered inflation, the "villain" in the global economy... 

In the restrained world of central bankers, it would have been difficult for White to express 

himself more clearly... 

It was probably the biggest failure of the world's central bankers since the founding of the BIS in 

1930. They knew everything and did nothing. Their gigantic machinery of analysis kept spitting 

out new scenarios of doom, but they might as well have been transmitted directly into space... 

In their report, the BIS experts derisively described the techniques of rating agencies like Moody's 

and Standard & Poor's as "relatively crude" and noted that "some caution is in order in relation to 

the reliability of the results."... 

330


In January 2005, the BIS's Committee on the Global Financial System sounded the alarm once 

again, noting that the risks associated with structured financial products were not being "fully 

appreciated by market participants." Extreme market events, the experts argued, could "have 

unanticipated systemic consequences." 

They also cautioned against putting too much faith in the rating agencies, which suffered from a 

fatal flaw. Because the rating agencies were being paid by the companies they rated, the 

committee argued, there was a risk that they might rate some companies too highly and be 

reluctant to lower the ratings of others that should have been downgraded. 

These comments show that the central bankers knew exactly what was going on, a full 

two-and-a-half years before the big bang. All the ingredients of the looming disaster 

had been neatly laid out on the table in front of them: defective rating agencies, 

loans repackaged to the point of being unrecognizable, dubious practices of 

American mortgage lenders, the risks of low-interest policies. But no action was 

taken. Meanwhile, the Fed continued to raise interest rates in nothing more than 

tiny increments... 

The Fed chairman was not even impressed by a letter the Mortgage Insurance Companies of 

America (MICA), a trade association of US mortgage providers, sent to the Fed on Sept. 23, 2005. 

In the letter, MICA warned that it was "very concerned" about some of the risky lending practices 

being applied in the US real estate market. The experts even speculated that the Fed might be 

operating on the basis of incorrect data. Despite a sharp increase in mortgages being approved for 

low-income borrowers, most banks were reporting to the Fed that they had not lowered their 

lending standards. According to a study MICA cited entitled "This Powder Keg Is Going to Blow," 

there was no secondary market for these "nuclear mortgages."... 

William White and his Basel team were dumbstruck. The central bankers were simply 

ignoring their warnings. Didn't they understand what they were being told? Or was 

it that they simply didn't want to understand? 

The head of the World Bank also says: 

Central banks [including the Fed] failed to address risks building in the new economy. They 

seemingly mastered product price inflation in the 1980s, but most decided that asset price 

bubbles were difficult to identify and to restrain with monetary policy. They argued 

that damage to the 'real economy' of jobs, production, savings, and consumption could be 

contained once bubbles burst, through aggressive easing of interest rates. They 

turned out to be wrong. 

Economists Slam Bernanke 

Stephen Roach (former chief economist for Morgan Stanley, and now director of Morgan Stanley 

Asia) is one of the most influential and respected American economists. Roach told Charlie Rose 

recently that we have had terrible Federal Reserve policy for the past 12 years under Greenspan 

and Bernanke, that they concocted hair-brained theories (for example, that we should let the 

boom and bust cycle occur, but then "clean up the mess" once things fall apart), and that we really 

need to reform the Fed. 

Specifically, here's the must-read portion of the interview: 

STEPHEN ROACH: And what’s missing in the debate that drives me nuts is going back to the very 

function of central banking that’s at the core of our financial system. Do we have the right model 

for the Fed to go forward? And, you know, I think we’ve minimized the role that the custodians, 

the stewards of our financial system, the Federal Reserve, played in leading to this crisis and in 

making sure that we will never have this again. I think we’ve had horrible central banking in the 

United States for the past dozen of years. I mean, we elevate our central bankers, we probably . 

CHARLIE ROSE: From Greenspan to Bernanke. 

331

STEPHEN ROACH: Yeah. 

CHARLIE ROSE: Both. 


STEPHEN ROACH: We call them maestro, and, you know, we make them 

sound larger than life. And, you know, and the fact is, they condoned 

policies that took us from one bubble to another. They failed to live up 

to their regulatory responsibility granted them by law. They concocted new 

theories to explain why these things could go on forever, and they harbored 

the belief, mistakenly in my view, that monetary policy is too big and 

blunt an instrument, and so you just bring it in to clean up the mess 

afterwards rather than prevent a mess ahead of time. Well, look at the 

mess we’re in right now. We need a different approach here. We really do. 

Leading economist Anna Schwartz, co-author of the leading book on the Great Depression with 

Milton Friedman, told the Wall Street journal that the Fed's entire strategy in dealing with 

the financial crisis is wrong. Specifically, the Fed is treating it as a liquidity problem, when it 

is really an insolvency crisis. 

Moreover, prominent Wall Street economist Henry Kaufman says that the Federal Reserve is 

primarily to blame for the financial crisis: 

"I am convinced that the misbehavior of some would have been much rarer -- and far less 

damaging to our economy -- if the Federal Reserve and, to a lesser extent, other supervisory 

authorities, had measured up to their responsibilities ... 

Kaufman directly criticized former Federal Reserve Chairman Alan Greenspan for not using his 

position to dissuade big banks and others from taking big risks. 

"Alan Greenspan spoke about irrational exuberance only as a theoretical concept, not as a 

warning to the market to curb excessive behavior," Kaufman said. "It is difficult to believe that 

recourse to moral suasion by a Fed chairman would be ineffective." 

Partly because the Fed did not strongly oppose the repeal in 1999 of the Depression-era Glass- 

Steagall Act, more large financial conglomerates that were "too big to fail" have formed, Kaufman 

said, citing a factor that has made the global credit crisis especially acute. 

"Financial conglomerates have become more and more opaque, especially about their massive offbalance-sheet 

activities," he said. "The Fed failed to rein in the problem."... 

"Much of the recent extreme financial behavior is rooted in faulty monetary policies," he said. 

"Poor policies encourage excessive risk taking." 

Economist Marc Faber says that central bankers are money printers who create bubbles, and that 

the system would be much better now if the Fed hadn't intervened. Specifically, Faber says that - 

if the Fed hadn't intervened - the system would be cleaned out, the system would be healthier 

because debt load and burden on taxpayers would be reduced. 

(SN: Several economists to whom I make reference have said the same as Faber has. Dr. Martin 

Weiss in particular in early 2010 (I think it was) wrote a long report and passed it to Congress 

and The President, then to his readers saying their course of action would destroy the banking 

system and all confidence in our banks. Of course he was ignored, even I suspect unanswered.) 

Economist Jane D'Arista has shown that the Fed has failed miserably at its main task: providing a 

"counter-cyclical" influence (that is, taking the punch bowl away before the party gets too wild). 

The Fed has also failed miserably in its role as regulator of banks and their affiliates. As wellknown 

economist James Galbraith says: 

332


The Federal Reserve has never been an effective regulator for the straightforward reason that it is 

dominated by economists and bankers and not by dedicated skeptics who make bank regulation a 

full-time profession. 

As PhD economist Steve Keen has pointed out, the Fed (along with Treasury) has also given 

money to the wrong people to kick-start the economy. 

Unemployment 

The Federal Reserve is mandated by law to maximize employment. The relevant statute states: 

The Board of Governors of the Federal Reserve System and the Federal Open Market Committee 

shall maintain long run growth of the monetary and credit aggregates commensurate with the 

economy's long run potential to increase production, so as to promote effectively the goals 

of maximum employment, stable prices, and moderate long-term interest rates. 

However, PhD economist Dean Baker says: 

The country now has almost 25 million people who are unemployed or underemployed as a result 

of the Fed's disastrous policies. Millions of people are losing their homes and tens of millions are 

losing their life savings. The country is likely to lose more than $6 trillion in output ($20,000 per 

person) due to the Fed's inept job performance. 

The Fed could have stemmed the unemployment crisis by demanding that banks lend more as 

a condition to the various government assistance programs, but Mr. Bernanke failed to do so. 

Ryan Grim argues that the Fed might have broken the law by letting unemployment rise in order 

to keep inflation low: 

The Fed is mandated by law to maximize employment, but focuses on inflation -- and "expected 

inflation" -- at the expense of job creation. At its most recent meeting, board members bluntly 

stated that they feared banks might increase lending, which they worried could lead to inflation. 

Board members expressed concern "that banks might seek to reduce appreciably their excess 

reserves as the economy improves by purchasing securities or by easing credit standards and 

expanding their lending substantially. Such a development, if not offset by Federal Reserve 

actions, could give additional impetus to spending and, potentially, to actual and expected 

inflation." That summary was spotted by Naked Capitalism and is included in a summary of the 

minutes of the most recent meeting... 

Suffering high unemployment in order to keep inflation low cuts against the Fed's legal mandate. 

Or, to put it more bluntly, it may be illegal. 

In fact, the unemployment situation is getting worse, and many leading economists say that - 

under Mr. Bernanke's leadership - America is suffering a permanent destruction of jobs. 

For example, JPMorgan Chase’s Chief Economist Bruce Kasman told Bloomberg: 

[We've had a] permanent destruction of hundreds of thousands of jobs in industries from housing 

to finance. 

The chief economists for Wells Fargo Securities, John Silvia, says: 

Companies “really have diminished their willingness to hire labor for any production level,” Silvia 

said. “It’s really a strategic change,” where companies will be keeping fewer employees for any 

particular level of sales, in good times and bad, he said. 

And former Merrill Lynch chief economist David Rosenberg writes: 

The number of people not on temporary layoff surged 220,000 in August and the level continues 

to reach new highs, now at 8.1 million. This accounts for 53.9% of the unemployed — again a 

record high — and this is a proxy for permanent job loss, in other words, these jobs are not 

coming back. Against that backdrop, the number of people who have been looking for a job for at 

least six months with no success rose a further half-percent in August, to stand at 5 million — the 

long-term unemployed now represent a record 33% of the total pool of joblessness. 

333

And see this. 

Leverage 


The Fed says that we should reduce leverage, but is doing everything in its power to 

increase leverage. 

Specifically, the New York Federal published a report in July entitled "The Shadow Banking 

System: Implications for Financial Regulation". 

One of the main conclusions of the report is that leverage undermines financial stability: 

Securitization was intended as a way to transfer credit risk to those better able to absorb losses, 

but instead it increased the fragility of the entire financial system by allowing banks and other 

intermediaries to “leverage up” by buying one another’s securities. In the new, post-crisis 

financial system, the role of securitization will likely be held in check by more stringent financial 

regulation and by the recognition that it is important to prevent excessive leverage and maturity 

mismatch, both of which can undermine financial stability. 

And as a former economist at the New York Fed, Richard Alford, wrote recently: 

On Friday, William Dudley, President of FRBNY, gave an excellent presentation on the financial 

crisis. The speech was a logically-structured, tightly-reasoned, and succinct retrospective of the 

crisis. It took one step back from the details and proved a very useful financial sector-wide 

perspective. The speech should be read by everyone with an interest in the crisis. It highlights the 

often overlooked role of leverage and maturity mismatches even as its stated purpose was 

examining the role of liquidity. 

While most analysts attributed the crisis to either specific instruments, or elements of the deregulation, 

or policy action, Dudley correctly identified the causes of the crisis as the 

excessive use of leverage and maturity mismatches embedded in financial activities carried 

out off the balance sheets of the traditional banking system. The body of the speech opens with: 

“..this crisis was caused by the rapid growth of the so-called shadow banking 

system over the past few decades and its remarkable collapse over the past two years.” 

In fact, every independent economist has said that too much leverage was one of the main causes 

of the current economic crisis. 

Federal Reserve Bank of San Francisco President Janet Yellen said recently that it’s “far from 

clear” whether the Fed should use interest rates to stem a surge in financial leverage, and urged 

further research into the issue.“Higher rates than called for based on purely macroeconomic 

conditions may help forestall a potentially damaging buildup of leverage and an asset-price 

boom”. 

And on September 24th, Congressman Keith Ellison wrote a letter to Mr. Bernanke and Geithner 

stating: 

As you know, excessive leverage was a key component of the financial crisis. Investment banks 

leveraged their balance sheets to stratospheric levels by using short-term wholesale financing 

(like repurchase agreements and commercial paper). Meanwhile, some entities regulated as bank 

holding companies (BHCs) used off-balance-sheet entities to warehouse risky assets, thereby 

evading their regulatory capital requirements. These entities’ reliance on short-term debt to fund 

the purchase of oftentimes illiquid and risky assets made them susceptible to a classic bank panic. 

The key difference was that this panic wasn’t a run on deposits by scared individuals, but a run on 

collateral by sophisticated counterparties. 

The Treasury highlights this very problem in its policy statement before the recent summit of G- 

20 finance ministers in London. To address this problem, the Treasury advocates stronger capital 

and liquidity standards for banking firms, including “a simple, non-risk-based leverage 

334


constraint.” The U.S. is one of only a few countries that already has leverage requirements for 

banks. Leverage requirements supplement risk-based capital requirements that federal banking 

regulators have in place pursuant to the Basel II Accord, an international capital agreement. 

While important features of our system of financial regulation, leverage requirements only apply 

to banks and bank holding companies and therefore have not covered a wide array of financial 

institutions, including many that are systemically important. Moreover, leverage requirements 

have generally not captured the considerable risks associated with off-balance-sheet activities. 

Of course, the Administration looks to address the shortcomings in the existing regulatory system 

through a proposal to regulate large, systemically-significant financial institutions as Tier 1 

Financial Holding Companies (FHCs). Building upon its existing authority as the consolidated 

supervisor of all BHCs (which includes FHCs), the Federal Reserve would be responsible for 

overseeing and regulating the Tier 1 FHCs under the plan. In the legislative draft of the proposal, 

the Federal Reserve would have the authority to prescribe capital requirements and other 

prudential standards for these institutions that are stronger than those for all other BHCs. To that 

point, the text specifically says, “The prudential standards shall be more stringent than the 

standards applicable to bank holding companies to reflect the potential risk posed to financial 

stability by United States Tier 1 financial holding companies and shall include, but not be limited 

to—(A) risk-based capital requirements; (B) leverage limits; (C) liquidity requirements; and (D) 

overall risk management requirements.” 

The application of leverage limits – as advanced by the Treasury’s G-20 policy statement and by 

the Administration’s financial regulatory reform plan – is a simple and elegant way to limit risk at 

specific financial institutions (and within the overall financial system). The financial crisis has 

underscored the importance of leverage requirements and manifested the problems associated 

with relying upon risk-based capital requirements alone ... 

Nevertheless, there are some open questions regarding exactly how a leverage requirement should 

be applied. Some scholars and policy experts have advocated putting in place a leverage 

requirement for banks and other financial institutions that is set in statute. As Congress moves 

forward on comprehensive financial regulatory reform, it may consider such a requirement. I 

would therefore be interested to hear your views regarding the wisdom of such an approach. 

As you know, setting capital standards requires decisions regarding what institutions would be 

covered, how capital would be defined, and what levels the requirements would be set. In light of 

that, what specific difficulties would you anticipate Congress facing with respect to specifying 

such a requirement? In addition, would a statutory requirement be too inflexible and place too 

many constraints on regulators with respect to refining regulatory capital requirements and 

negotiating with bank regulators from other countries? 

On November 13th, Mr. Bernanke responded to Ellison (I received a copy of the letter from a 

Congressional source): 

The Board's authority and flexibility in establishing capital requirements, including leverage 

requirements, have been key to the Board's ability to require additional capital where needed 

based on a banking organization's risk profile. One of the lessons learned in the recent financial 

crisis is the need for financial supervisors to have the ability to react quickly to changing 

circumstances, as in the capital assessments conducted in the Supervisory Capital Assessment 

Program. The Board and other federal banking agencies initiated this program to conduct a 

comprehensive, forward-looking assessment of the capital positions of the nation's 19 largest 

bank holding companies (BHCs). The Board's authority to mandate specific levels of capital was 

critical to this exercise because each BHC had a unique set of risks and circumstances that 

demanded careful supervisory scrutiny and evaluation in order to identify the amount of capital 

appropriate for its safe and sound operation. The Board required corrective actions on a case-bycase 

basis and continues to assess the capital positions of these institutions as well as all others 

under its supervision. 

We note that in other contexts, statutorily prescribed minimum leverage ratios have not 

necessarily served prudential regulators of financial institutions well. Previously, the minimum 

capital requirements for the housing government-sponsored enterprises Fannie Mae and Freddie 

Mac (collectively, "GSEs") were fixed in statute; the risk-based capital requirement for the GSEs 

was based on a stress test that was also set forth in statute; and the GSE's regulator, the Director 

of the Office of Financial Housing Enterprise Oversight (the predecessor agency to the Federal 

335


Housing Finance Authority) did not have the authority to establish additional capital 

requirements for the GSEs. This limitation was different from the authority that the federal 

banking agencies have to set the leverage and risk-based capital requirements for banking 

organizations. In 2008, Congress enacted the Housing and Economic Recovery Act of 2008, 

which created FHFA and empowered it to establish additional minimum leverage and risk-based 

capital requirements for the GSEs. 

With regard to the Board and other U.S. banking agencies' efforts to join with international 

supervisors to strengthen capital requirements for internationally active banking organizations, 

the Basel Committee is working on proposals for an international supplement to minimum riskbased 

capital ratios. While this work is in process, it is likely that these efforts will take the form of 

a minimum leverage ratio. It will be important for the international regulatory community to 

carefully calibrate the aggregate effect ofthis initiative, along with other efforts underway that are 

intended to strengthen capital requirements, to ensure that they protect against future financial 

crises while not raising capital requirements to such a degree that the availability of credit to 

support economic growth is unduly constrained. The current authority and flexibility the Board 

has to establish and modify leverage ratios as a banking organization regulator is very important 

to the successful participation of the Board in the process of establishing and calibrating an 

international leverage ratio. 

The Supervisory Capital Assessment Program Mr. Bernanke refers to were the infamous "stress 

tests". There's just one little problem: the stress tests were a complete complete sham. 

In reality, the Fed has been one the biggest enablers for increased leverage. As anyone who has 

looked at Mr. Bernanke and Geithner's actions will tell you, many of the government's programs 

are aimed at trying to re-start securitization and the "shadow banking system", and to prop up 

asset prices for highly-leveraged financial products. 

Indeed, Mr. Bernanke said in February: 

In an effort to restart securitization markets to support the extension of credit to 

consumers and small businesses, we joined with the Treasury to announce the Term Asset- 

Backed Securities Loan Facility (TALF). 

And he said it again in September: 

The Term Asset-Backed Securities Loan Facility, or TALF ... has helped restart the securitization 

markets for various types of consumer and small business credit. Securitization markets are an 

important source of credit, and their virtual shutdown during the crisis has reduced credit 

availability for many borrowers. 

Has the Fed Manipulated any Markets? 

There are allegations that the Fed has manipulated the markets. 

Trillions in Unnecessary Interest to the American People 

Many people - including former analyst for the U.S. Treasury Richard Cook - argue that credit is 

too important a function to be left to the private banks. AFL-CIO president Richard 

Trumka told Congress recently: 

If the Federal Reserve were made a fully public body, it would be an acceptable alternative. 

Bloomberg News columnist Matthew Lynn writes: 

The U.K. government needs to start thinking about what it will do with all the banks it now owns. 

The answer is simple: Hand them to the people... 

Instead of selling the stakes it acquired in the financial system to other banks, or listing the shares 

on the stock market, it could create mutually owned societies. Royal Bank of Scotland Group Plc 

could be a people’s bank, owned by everyone.That would ensure more diversity, competition and 

stability, all goals just as worthy as getting back the money Prime Minister Gordon Brown’s 

government spent on bank rescues... 

Michael Moore recommends that the American people demand: 

Each of the 50 states must create a state-owned public bank like they have in North 

Dakota. Then congress MUST reinstate all the strict pre-Reagan regulations on all commercial 

banks, investment firms, insurance companies -- and all the other industries that have been 

336


savaged by deregulation: Airlines, the food industry, pharmaceutical companies -- you name it. If 

a company's primary motive to exist is to make a profit, then it needs a set of stringent rules to 

live by -- and the first rule is "Do no harm." The second rule: The question must always be asked - 

- "Is this for the common good?" (Click here for some info about the state-owned Bank of North 

Dakota.) 

As Moore notes, the state of North Dakota already has such a bank, and - because of that - North 

Dakota is just about the only state which is not running a huge deficit. 

PhD economist and candidate for Florida governor Farid Khavari wants to create a Bank of the 

State of Florida, to create credit without burdening the state and its citizens with high interest 

charges by private banks. See this for details. 

If the power to create credit were taken away from the Federal Reserve system and its private 

banks and given back to the government (as the Constitution envisioned), then American 

taxpayers would save hundreds of billions or trillions of dollars in unnecessary interest charges in 

paying off the national debt, as the government would not have to pay interest to finance its 

debt (sovereign nations such as the U.S. and England have the power to create credit and money; 

Failure to Disclose Who Received Bailout Money 

The Fed continues to fail to fully disclose who received trillions in bailout money. Because the 

economy will not recover until trust is restored, and trust cannot be restored unless there is 

transparency, this is a big deal. 

(SN: Two gamblers trying to figure out what all the other gamblers are going to do. The U.S. Economy is 

run by a casino called Wall Street!) 

Fear on the Street: 

Inside the Stock Sell-Off 

337

By Jeff Macke 


Stocks posted a severe drop today, with the Dow Jones Industrial Average falling 4.3% 

and the Nasdaq crumbling over 5%. 

By the end of the day there were few places left to hide. Gold, silver, crude and yields on 

Treasuries all fell sharply as traders looked for safety and were met by nothing but falling 

prices. Over the last 10 trading days stocks have lost more than 10%, the traditional 

definition of a market correction. 

Today's selling started in Europe and picked up steam as American investors, already 

twitchy in the wake of the debt ceiling debacle, suddenly preferred cash over all other 

assets. The selling began overseas, but we have more than our share of problems in the 

U.S. as well. 

There's a growing realization among even the most optimistic investors that the United 

States is entering a new recession -- a dreaded "double-dip." Adding to the pain is the 

sense that the government and Federal Reserve are out of both ideas and ways to 

stimulate the economy. Corporate America is sitting on record amounts of cash but is 

refusing to make new investments with so little end demand for its products. Consumers 

and corporations are hoarding cash, and the economy appears to be seizing. The debt 

ceiling debate was a fiasco, snuffing any remaining confidence traders had for help from 

Washington, D.C. 

The bottom line is traders are becoming convinced that we're facing a prolonged and 

severe recession, and there's nothing any government on Earth can do to stop it. In that 

context, selling stocks or "reducing exposure" as they say on Wall Street, is quite 

rational. 

So what should people at home do? Avoid panic, for starters. The swiftness of this 

correction is unusual, but a 10% drop is not. Just last summer stocks fell 17% on 

concerns not unlike those we face today. If you're an investor who can't sleep tonight, 

you're probably too exposed to stocks. Sell until you can sleep. Nobody ever made good 

financial decisions scared or tired. 

Today was the first sign of fear stocks have seen in a year. To paraphrase Churchill, that 

may not be the beginning of the end of the selling, but it's the end of the beginning. It's 

extremely unlikely we're going to see good economic news anytime soon. A terrible jobs 

number tomorrow is now assumed, and a good one will be considered either incorrect or 

flat-out fraudulent. 

Take hope for a quick economic recovery out of the equation and ask yourself this: If you 

woke up tomorrow and stocks were set to open down another 1,000 points on the Dow, 

would you buy or sell? Whatever your answer is, you'd be well served to consider doing 

it a little bit at a time now. 

Trying to "call the bottom" by going all in at once is a fool's game. Be patient, be calm 

and tune out the panic. In a market this volatile, prudence is the only rational strategy 

available. 

338


Banks Drag Wall. Street Lower 

As Fear Returns 

On Wednesday August 10, 2011, 6:01 pm EDT 

By Rodrigo Campos 

NEW YORK (Reuters) - Fear returned to Wall Street on Wednesday, sending the S&P 

500 to another 4 percent decline, triggered by worries that Europe's debt crisis could 

engulf French banks and spill onto the U.S. financial sector. 

Trading was once again marked by sharp moves on heavy volume. For a fifth straight 

day, the Dow industrials fluctuated in a range of more than 400 points. 

"What you're seeing is a very short-term, direction-oriented market," said Eric Kuby, 

chief investment officer of North Star Investment Management Corp in Chicago. 

Worries about the strength of French lenders, including Societe Generale, triggered a 

selloff in European and U.S. banks. Rumors about SocGen's financial health, which the 

bank denied, sent its shares tumbling 14.7 percent. 

An index of European banks dropped 6.7 percent and the KBW index of U.S. bank stocks 

slid 4.9 percent as fear grew of a possible contagion of any French crisis. Bank of 

America Corp lost 10.9 percent to $6.77 and Goldman Sachs slid more than 10 percent to 

$110.34. 

The Dow Jones industrial average lost 519.83 points, or 4.62 percent, to 10,719.94. The 

S&P 500 fell 51.77 points, or 4.42 percent, to 1,120.76. The Nasdaq Composite dropped 

101.47 points, or 4.09 percent, to 2,381.05. 

Wednesday's drop came a day after stocks rallied on the Federal Reserve's pledge to keep 

interest rates near zero for at least two more years. 

Even after Tuesday's snap-back rally, the S&P 500 is down almost 18 percent from its 

2011 closing high set April 29. 

The losses came against the backdrop of recent weak U.S. economic data, the United 

States losing its triple-A credit rating from Standard & Poor's and the inability of 

lawmakers to address worries that another recession may be on the way. 

About 15.1 billion shares traded on the New York Stock Exchange, NYSE Amex and 

Nasdaq, almost double the year's estimated daily average of 7.8 billion. 

Volume once again spiked in the last hour of trading, and the market closed near its 

session lows. Of late, overleveraged investors with losses on their books have been 

forced to sell shares near the end of the day. 

339


"Between 3 and 3:20 (p.m.) you have people getting margin calls, and on days like today 

there's some nervousness about what those calls will look like," said Andrew Frankel, copresident 

of Stuart Frankel & Co in New York, referring to the volatility of the final hour 

of trading. 

Slides in the value of stocks may increase the cash needed in margin accounts, which can 

spark further selling. 

Dow component Walt Disney Co dropped 9.1 percent to $31.54 a day after the 

entertainment company's quarterly results failed to reassure investors that it could do well 

in a weak U.S. economy. 

After the closing bell, Cisco Systems Inc's shares jumped nearly 12 percent after its 

quarterly results edged past Wall Street's scaled-back expectations. 

Declining stocks outnumbered advancing ones during the regular session on the NYSE 

by a ratio of more than 8 to 3, while on the Nasdaq, almost five stocks fell for every one 

that rose. 

(Reporting by Rodrigo Campos; Additional reporting by Ryan Vlastelica; Editing by 

Kenneth Barry) 

(SN: Some writers say what you’re seeing is banks in panic, manipulating the markets, trying to save 

themselves.) 

Dan Froomkin 

froomkin@huffingtonpost.com | HuffPost Reporting 

Social Immobility: Climbing The Economic Ladder Is Harder 

In The U.S. Than In Most European Countries 

Is America the "land of opportunity"? Not so much. 

A new report from the Organization for Economic Co-Operation and Development (OECD) finds 

that social mobility between generations is dramatically lower in the U.S. than in many other 

developed countries. 

So if you want your children to climb the socioeconomic ladder higher than you did, move to 

Canada. 

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The report finds the U.S. ranking well below Denmark, Australia, Norway, Finland, Canada, 

Sweden, Germany and Spain in terms of how freely citizens move up or down the social ladder. 

Only in Italy and Great Britain is the intensity of the relationship between individual and parental 

earnings even greater. 

For instance, according to the OECD, 47 percent of the economic advantage that high-earning 

fathers in the United States have over low-earning fathers is transmitted to their sons, compare 

to, say, 17 percent in Australia and 19 percent in Canada. 

Recent economic events may be increasing social mobility in the U.S. -- but only of the downward 

variety. Harvard Professor Elizabeth Warren, for example, argues that America's middle class 

had been eroding for 30 years even before the massive blows caused by the financial crisis. And 

with unemployment currently at astronomical levels, if there are no jobs for young people leaving 

school, the result could be long-term underemployment and, effectively, a lost generation. 

According to the OECD report, the main cause of social immobility is educational opportunity. It 

turns out that America's public school system, rather than lifting children up, is instead holding 

them down. 

One particularly effective way governments can help children from disadvantaged backgrounds 

improve their prospects, according to the report, is to increase the social mix within schools. 

Doing so "appears to boost performance of disadvantaged students without any apparent 

negative effects on overall performance." Early childhood education also helps a lot. 

Another big factor in social mobility is inequality, the report finds. The greater a nation's 

inequality, the harder it is for its children to improve their lot. 

That confirms findings by other researchers. "The way I usually put this is that when the rungs of 

the ladder are far apart, it becomes more difficult to climb the ladder," Brookings Institution 

economist Isabel Sawhill tells HuffPost. "Given that we have more inequality in the U.S. right now 

than at any time since the 1920s, we should be concerned that this may become a vicious cycle. 

Inequality in one generation may mean less opportunity for the next generation to get ahead and 

thus still more inequality in the future." 

There are things governments can do to reduce inequality, the OECD points out. Progressive tax 

systems and social programs help reduce income inequalities between parents "so that their 

descendants' income would converge more quickly." 

Perhaps more realistically for this country, given the current political climate, higher short-term 

unemployment benefits can reduce the effect of socioeconomic background on student 

achievement, the reports says. 

Gary Orfield, co-director of the Civil Rights Project/Proyecto Derechos Civiles at UCLA writes in 

an e-mail to HuffPost: "I think that researchers know about the poor mobility and millions of 

people are experiencing it -- but it is little discussed in a society in which both parties purport to 

represent the 'middle class' and no one is talking about the locked-in poor or the risk of downward 

mobility in public life." 

As for the report's conclusions about the value of social mixing in schools, Orfield, a long time foe 

of school segregation, notes: "There has been such a relentless conservative attack on 

desegregation strategies, even those focusing on class,... that I think there has been very little 

discussion of peer group effects (except in college) for a long time. During that void, however, the 

research evidence has become much more powerful. 

"People need to understand that schools are basically students and teachers interacting together 

and that if you have classmates who know very little, you won't learn from them, you may be 

distracted by them. And teachers teaching entire classes and schools with students who are not 

ready to learn at their grade level and require all kinds of individual tutoring will often leave as 

341


soon [as] they can so these schools get the least experienced and qualified teachers, which 

perpetuates the inequality." 

Just last month, Orfield's center issued a report urging President Obama, a supporter of charter 

schools, to take into account the extreme segregation of black students in those schools and to 

devise policies that encourage diversity. 

All in all, the OECD report is an ugly reality check for a country that has historically seen itself as 

uniquely rewarding of talent; as a place free of the sorts of rigid social structures that led so many 

generations of immigrants to leave Old Europe. 

And the goal of reducing barriers to social mobility isn't just a moral imperative, it's an economic 

necessity, the OECD notes. "First, less mobile societies are more likely to waste or misallocate 

human skills and talents. Second, lack of equal opportunity may affect the motivation, effort and, 

ultimately, the productivity of citizens, with adverse effects on the overall efficiency and the 

growth potential of the economy." 

March 12, 2010 

Life is Great ... But Only If You Are Already Mega-Wealthy 

As I pointed out in November: 

A report by University of California, Berkeley economics professor Emmanuel Saez 

concludes that income inequality in the United States is at an all-time high, surpassing 

even levels seen during the Great Depression. 

The report shows that: 

• Income inequality is worse than it has been since at least 1917 

• "The top 1 percent incomes captured half of the overall economic growth over the 

period 1993-2007" 

• "In the economic expansion of 2002-2007, the top 1 percent captured two 

thirds of income growth." 

As others have pointed out, the average wage of Americans, adjusting for inflation, 

is lower than it was in the 1970s. The minimum wage, adjusting for inflation, is 

lower than it was in the 1950s. See this. 

On the other hand, billionaires have never had it better (and see this). 

Now, state-run Russian news service RIA Novosti notes that the number of billionaires 

has soared during the economic crisis: 

The current global financial and economic crisis once again confirms the fact that during 

economic upheavals the rich get richer and the poor become even more destitute. 

On Thursday, Forbes Magazine carried an updated list of the world's wealthiest people. 

342


As of late 2009, the number of billionaires soared from 793 to 1,011 and their total 

fortunes from $2.4 trillion to $3.6 trillion. The number of Russian billionaires almost 

doubled, from 32 to 62. 

*** 

Despite the crisis, the list of billionaires has grown by 200 people and their aggregate 

capital has expanded by 50%. This may seem paradoxical but only at first glance. This 

result was predictable, if we recall how governments all over the world have dealt with 

the economic crisis. 

Anti-crisis measures essentially implied massive infusion of money into the economy. 

The United States alone spent over $10 trillion. Against the backdrop of a global 

recession, the funding could only be put to good use on stock and raw materials markets, 

leading to the creation of new financial bubbles. 

*** 

The volume of federal allocations injected by the Russian government into the economy 

was much higher than in Europe and the U.S. Forbes tactfully referred to this as the 

government's cooperation with big business, primarily raw materials companies. 

However, even high-ranking Russian officials have repeatedly complained that anti-crisis 

allocations were either used for stock market operations or deposited in foreign bank 

accounts. 

Life is good ... but only if you are already mega-wealthy. 

Even Alan Greenspan recently called the recovery "extremely unbalanced," driven largely by high 

earners benefiting from recovering stock markets and large corporations. 

As economics professor and former Secretary of Labor Robert Reich writes today 

in an outstanding piece: 

Are we finally in a recovery? Who's "we," Kemosabe? Big global companies, Wall 

Street, and high-income Americans who hold their savings in financial 

instruments are clearly doing better. As to the rest of us -- small businesses along 

Main Streets, and middle and lower-income Americans -- forget it. 

Business cheerleaders naturally want to emphasize the positive. They assume the 

economy runs on optimism and that if average consumers think the economy is 

getting better, they'll empty their wallets more readily and -- presto! -- the 

economy will get better. The cheerleaders fail to understand that regardless of 

how people feel, they won't spend if they don't have the money. 

The US economy grew at a 5.9 percent annual rate in the fourth quarter of 2009. 

That sounds good until you realize GDP figures are badly distorted by structural 

changes in the economy. For example, part of the increase is due to rising health 

care costs. When WellPoint ratchets up premiums, that enlarges the GDP. But 

you'd have to be out of your mind to consider this evidence of a recovery. 

343


Part of the perceived growth in GDP is due to rising government expenditures. 

But this is smoke and mirrors. The stimulus is reaching its peak and will be 

smaller in months to come. And a bigger federal debt eventually has to be repaid. 

So when you hear some economists say the current recovery is following the 

traditional path, don't believe a word. The path itself is being used to construct 

the GDP data. 

Look more closely and the only ones doing better are the people and privatesector 

institutions at the top ... Companies in the Standard&Poor 500 stock index 

had sales of $2.18 trillion in the fourth quarter, up from $2.02 trillion last year, 

and their earnings tripled. Why? Mainly because they're global, and selling into 

fast-growing markets in places like India, China, and Brazil. 

America's biggest companies are also showing fat profits and productivity gains 

because they continue to slash payrolls and cut expenditures... 

Firms in S&P 500 ... can borrow money cheaply. Corporate bond sales are brisk. 

So far in 2010, big U.S. corporations have issued $195.2 billion of debt, excluding 

government-guaranteed bonds. Does this spell a recovery? It all depends on what 

the big companies are doing with all this cash. In fact, they're doing two things 

that don't help at all. 

First, they're buying other companies... This buying doesn't create new jobs. One 

of the first things companies do when they buy other companies is fire lots of 

people who are considered "redundant." That's where the so-called merger 

efficiencies and synergies come from, after all. [My note: As I pointed out a year 

ago: "The Treasury Department encouraged banks to use the bailout money to 

buy their competitors, and pushed through an amendment to the tax laws which 

rewards mergers in the banking industry (this has caused a lot of companies to 

bite off more than they can chew, destabilizing the acquiring companies)"] 

The second thing big companies are doing with all their cash is buying back their 

own stock, in order to boost their share prices. There were 62 such share buybacks 

in February, valued at $40.1 billion. We're witnessing the biggest share 

buyback spree since Sept 2008. The major beneficiaries are current shareholders, 

including top executives, whose pay is linked to share prices. The buy-backs do 

absolutely nothing for most Americans. 

*** 

The picture on Main Street is quite the opposite. Small businesses aren't selling 

much because they have to rely on American -- rather than foreign -- consumers, 

and Americans still aren't buying much. 

Small businesses are also finding it difficult to get credit. In the credit survey 

conducted in February by the National Federation of Independent Businesses, 

only 34 percent of small businesses reported normal and adequate access to 

credit. Not incidentally, the NFIB's "Small Business Optimism Index" fell 1.3 

points last month, just about where it's been since April. 

That's a problem for most Americans. Small businesses are where the jobs are. In 

fact, small businesses are responsible for almost all job growth in a typical 

344


recovery. So if small businesses are hurting, we're not going to see much job 

growth any time soon. 

The Federal Reserve reported Thursday that American consumers are shedding 

their debts like mad. Total US household debt, including mortgages and credit 

card balances, fell 1.7 percent last year - the first drop since the government 

began recording consumer debt in 1945. Much of the debt-shedding has been 

through default -- consumers simply not repaying and walking away from homes 

and big-ticket purchases. 

This is hardly good news. But here's the Wall Street Journal's take on it: "the 

defaults are leaving many people with more cash to spend and save, jumpstarting 

the financial rehabilitation" of the economy. 

Baloney. As of end of 2009, debt averaged $43, 874 per American, or about 122 

percent of annual disposable income. Most economic analysts think a sustainable 

debt load is around 100 percent of disposable income -- assuming a normal level 

of employment and normal access to credit. But unemployment is still sky-high 

and it's becoming harder for most people to get new mortgages and credit cards. 

And with housing prices still in the doldrums, they can't refinance their homes or 

take out new loans on them... 

Some cheerleaders say rising stock prices make consumers feel wealthier and 

therefore readier to spend. But to the extent most Americans have any assets at 

all their net worth is mostly in their homes, and those homes are still worth less 

than they were in 2007. The "wealth effect" is relevant mainly to the richest 10 

percent of Americans, most of whose net worth is in stocks and bonds. The top 10 

percent accounted for about half of total national income in 2007. But they were 

only about 40 percent of total spending, and a sustainable recovery can't be based 

on the top ten percent. 

Add to all this the joblessness or fear of it that continues to haunt a large portion 

of the American population. Add in the trauma of what most of us have been 

through over the past year and a half. Consider also the extra need to save as tens 

of millions of boomers see retirement on the horizon. Bottom line: Thrifty 

consumers are doing the right and sensible thing by holding back from the malls. 

They saved a little over 4 percent of their disposable income in fourth quarter of 

2009. In the months or years ahead they may save more. 

Right and sensible for each household but a disaster for the economy as a whole. 

American consumers accounted for 70 percent of the total demand for goods and 

services in the American economy before the Great Recession, and a sizable 

chunk of world demand. 

So what happens when the stimulus is over and the Fed begins to tighten again? 

Where will demand come from to get Main Street back, create jobs, raise middle 

class wages? Not from big businesses. Certainly not from Wall Street. Not from 

exports. Not from government. 

So, where? That question is the big unknown hanging over the U.S. economy. 

Until there's an answer, an economic "recovery" for anyone other than big 

corporations, Wall Street, and the wealthy is a mirage. 

345


W E D N E S D A Y , S E P T E M B E R 1 7 , 2 0 0 8 

Why the Poker Game is Ending 

In his book "Secrets of the Temple: How the Federal Reserve Runs the Country", leading 

journalist William Greider said that the economy is like a poker game. He said that it is human 

nature to want to get all of the chips, but noted that - if one person does get all of the chips - the 

game ends. 

In other words, the game of capitalism only continues as long as everyone has some money to play 

with. If the government and corporations take everyone's money, the game ends. 

The fed and Treasury are not giving more chips to those who need them: the American consumer. 

Instead, they are giving chips to the 800-pound gorillas at the poker table, such as Wall Street 

investment banks. Indeed, a good chunk of the money used by surviving mammoth players to buy 

the failing behemoths actually comes from the Fed. 

No wonder billionaire George Soros says that the way US Treasury Secretary Henry Paulson was 

handling the situation was "very reminiscent of the way the central bankers talked in the 1930s", 

the time of the Great Depression. 

And no wonder Nobel-prize winning economist Joseph Stiglitz stresses putting poker chips back 

in the hands of the little guy (for example, by strengthening unemployment insurance). 

This is not a question of big government versus small government, or republican versus democrat. 

It is not even a question of Keynes versus Friedman (two influential, competing economic 

thinkers). 

It is a question of focusing any government funding which is made to the majority of poker 

players - instead of the titans of finance - so that the game can continue. If the hundreds of 

billions or trillions spent on bailouts had instead been given to ease the burden of 

consumers, we would have already recovered from the financial crisis. 

Porter Stansberry: This is why there are no 

jobs in America 

Monday, May 23, 2011 


I've decided to re-publish the most popular essay I've ever written. For some 

subscribers, this will only be a reminder about the serious problems we face in 

America. But for the many subscribers we've added in the last several months, 

this will be all new. 

If it resonates with you... if you see these same problems in your communities... I 

encourage you to pass this along to your friends. This is a message we must get 

across to our fellow citizens. Robbing Peter to pay Paul will not lead to national 

wealth or prosperity. It will only lead to bigger problems for our children and 

grandchildren. 

346


This Is Why There Are No Jobs in America 

I'd like to make you a business offer. Seriously. This is a real offer. In 

fact, you really can't turn me down, as you'll come to understand in a 

moment... 

Here's the deal. You're going to start a business or expand the one 

you've got now. It doesn't really matter what you do or what you're 

going to do. I'll partner with you no matter what business you're in – 

as long as it's legal. But I can't give you any capital – you have to come 

up with that on your own. I won't give you any labor – that's 

definitely up to you. What I will do, however, is demand you follow all 

sorts of rules about what products and services you can offer, how 

much (and how often) you pay your employees, and where and when 

you're allowed to operate your business. That's my role in the affair: 

to tell you what to do. 

Now in return for my rules, I'm going to take roughly half of whatever 

you make in the business, each year. Half seems fair, doesn't it? I 

think so. Of course, that's half of your profits. You're also going to 

have to pay me about 12% of whatever you decide to pay your 

employees because you've got to cover my expenses for promulgating 

all of the rules about who you can employ, when, where, and how. 

Come on, you're my partner. It's only "fair." 

Now... after you've put your hard-earned savings at risk to start this 

business and after you've worked hard at it for a few decades (paying 

me my 50% or a bit more along the way each year), you might decide 

you'd like to cash out – to finally live the good life. 

Whether or not this is "fair" – some people never can afford to retire 

– is a different argument. As your partner, I'm happy for you to sell 

whenever you'd like... because our agreement says, if you sell, you 

have to pay me an additional 20% of whatever the capitalized value of 

the business is at that time. 

I know... I know... you put up all the original capital. You took all the 

risks. You put in all of the labor. That's all true. But I've done my part, 

too. I've collected 50% of the profits each year. And I've always come 

up with more rules for you to follow each year. Therefore, I deserve 

another, final 20% slice of the business. Oh... and one more thing... 

Even after you've sold the business and paid all of my fees... I'd 

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recommend buying lots of life insurance. You see, even after you've 

been retired for years, when you die, you'll have to pay me 50% of 

whatever your estate is worth. After all, I've got lots of partners and 

not all of them are as successful as you and your family. We don't 

think it's "fair" for your kids to have such a big advantage. But if you 

buy enough life insurance, you can finance this expense for your 

children. All in all, if you're a very successful entrepreneur... if you're 

one of the rare, lucky, and hard-working people who can create a new 

company, employ lots of people, and satisfy the public... you'll end up 

paying me more than 75% of your income over your life. Thanks so 

much. 

I'm sure you'll think my offer is reasonable and happily partner with 

me... but it doesn't really matter how you feel about it because if you 

ever try to stiff me – or cheat me on any of my fees or rules – I'll 

break down your door in the middle of the night, threaten you and 

your family with heavy, automatic weapons, and throw you in jail. 

That's how civil society is supposed to work, right? This is Amerika, 

isn't it? 

That's the offer Amerika gives its entrepreneurs. And the idiots in 

Washington wonder why there are no new jobs... 

Crux Note: Porter recently updated his popular "End of America" 

video the transcript of which is next. 

SN: I know Mr. Stansberry has his critics. Any writer with no critics is either not a 

very good writer or is yet unknown. I think he’s right in his predictions. His 

arguments are supported by other economists and are well considered. I think so 

highly of Mr. Stansberry, I’m reprinting his entire video/letter here. Yes, it’s a 

sales letter but also a very telling piece about our economic condition and where 

we’re heading. 

Hello. My name is Porter Stansberry. 

A little over ten years ago I founded Stansberry & Associates Investment Research. It 

has become one of the largest and most recognized investment research companies 

in the world, serving hundreds of thousands of subscribers in more than 120 

countries. 

You may know of our firm because of the work we did over the last several years – 

helping investors avoid the big disasters associated with Wall Street's collapse. 

We warned investors to avoid Fannie and Freddie, Bear Stearns, Lehman Brothers 

and General Motors and dozens of other companies that have since collapsed. We 

even helped our subscribers find opportunities to profit from these moves by 

shorting stocks and buying put options. To my knowledge, no other research firm in 

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the world can match our record of correctly predicting the catastrophe that occurred 

in 2008. 

But that's not why I created this letter. 

I reference our success and experience with Wall Street's latest crisis 

because we believe there is an even bigger crisis lurking – something 

that will shake the very foundation of America. 

And that is why I've spent a significant amount of time and money in the past few 

months preparing this letter. 

In short, I want to talk about a specific event that will take place in America's very 

near future... which could actually bring our country and our way of life to a grinding 

halt. 

This looming crisis is related to the financial crisis of 2008... but it is infinitely more 

dangerous, as I'll explain in this letter. 

As this problem comes to a head, I expect there to be riots in the streets... arrests on 

an unprecedented scale... and martial law, enforced by the U.S. military. 

Believe me, I don't make this prediction lightly and I have no interest in trying to 

scare you. 

I'm simply following my research to its logical conclusion. 

I did the same when I tracked Fannie and Freddie's accounting. The same with 

General Motors. And Bear Stearns and the rest. And when I began giving this 

warning in 2006 no one took me very seriously... not at first. Back then, most 

mainstream commentators just ignored me. 

And when I presented my case and exposed the facts at economic conferences, they 

got angry. They couldn't refute my research... but they weren't ready to accept the 

enormity of its conclusions either. 

That's why, before I go any further, I have to warn you... 

What I am going to say is controversial. It will offend many 

people... Democrats, Republicans, and Tea Partiers, alike. In fact, I've already 

received dozens of pieces of hate mail. 

And... the ideas and solutions I'm going to present might seem somewhat radical to 

you at first... perhaps even "un-American." 

My guess is that, as you read this letter... you'll say: "There's no way this could really 

happen... not here." 

But just remember: 

No one believed me three years ago when I said the world's largest mortgage bankers 

Fannie Mae and Freddie Mac would soon go bankrupt. 

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And no one believed me when I said GM would soon be bankrupt as well... or that 

the same would happen to General Growth Properties (the biggest owner of mall 

property in America). 

But again, that's exactly what happened. 

And that brings us to today... 

The same financial problems I've been tracking from bank to bank, from company to 

company for the last five years have now found their way into the U.S. Treasury. I'll 

explain how this came to be. What it means is critically important to you and every 

American... 

The next phase in this crisis will threaten our very way of life. 

The savings of millions will be wiped out. This disaster will change your business and 

your work. It will dramatically affect your savings accounts, investments, and 

retirement. 

It will change everything about your normal way of life: where you vacation... where 

you send you kids or grandkids to school... how and where you shop... the way you 

protect your family and home. 

I'll explain how I know these events are about to happen. You can decide for yourself 

if I'm full of hot air. As for me, I'm more certain about this looming crisis 

than I've been about anything else in my life. 

I know that debts don't just disappear. I know that bailouts have big consequences. 

And, unlike most of the pundits on TV, I know a lot about finance and accounting. 

Of course, the most important part of this situation is not what is happening... but 

rather what you can do about it. 

In other words: Will you be prepared when the proverbial $@*% hits the fan? 

Don't worry, I'm not organizing a rally or demonstration. And I've turned down 

every request to run for political office. 

Instead, I want to show you exactly what I'm doing personally, to protect and even 

grow my own money, and how you can prepare as well. 

You see, I can tell you with near 100% certainty that most Americans will not know 

what to do when commodity prices – things like milk, bread and gasoline – soar. 

They won't know what to do when banks close... and their credit cards stop working. 

Or when they're not allowed to buy gold or foreign currencies. Or when food stamps 

fail... 

In short, our way of life in America is about to change – I promise you. In this letter 

I'll show you exactly what is happening. 

You can challenge every single one of my facts and you'll find that I'm right about 

350

each allegation I make. 

And then you can decide for yourself. 


Will you act now to protect yourself and your family from the catastrophe that's 

brewing right now in Washington? 

I hope so. And that's why I wrote this letter. 

I'm going to walk you through exactly what I am doing personally, and what you can 

do as well. I can't promise you'll emerge from this crisis completely unharmed – but 

I can just about guarantee you'll be a lot better off than people who don't follow these 

simple steps. 

But I'm getting ahead of myself just a bit. 

Let me back up and show you in the simplest terms possible what is going on, why I 

am so concerned, and what I believe will happen in the next 12 months... 

The Greatest Danger 

America Has Ever Faced? 

In short, I believe that we as Americans are about to see a major, major collapse in 

our national monetary system, and our normal way of life. 

Basically, for many years now, our government has been borrowing so much money 

(very often using short-term loans), that very soon, we will no longer be able to 

afford even the interest on these loans. 

Again... I say these things as an expert in accounting and financial research. 

You may not think things are THAT BAD in the U.S. economy, but consider this 

simple fact from the National Inflation Association: 

Even if all U.S. citizens were taxed 100% of their income... it would still not be 

enough to balance the Federal budget! We'd still have to borrow money, just to 

maintain the status quo. 

That's absolutely incredible, isn't it? 

Yet I've never seen this fact reported anywhere else. 

Normally I study these kinds of numbers when I'm looking at a business to invest in 

or to recommend to my readers. But lately I've spent most of my time looking into 

our national balance sheet, because as the banking system collapsed in 2008, all of 

the bad debts were absorbed by the world's governments. 

For example, when Fannie Mae and Freddie Mac collapsed in the summer of 2008, 

the U.S. government responded by simply guaranteeing all of their outstanding 

debt. 

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Since then these companies have recorded hundreds of billions of losses – all of 

which were passed along to the government. Yes, you can still get mortgages today. 

And yes, Freddie and Fannie are still in business. But costs associated with these 

programs are piling up at the U.S. Treasury – and they are enormously expensive. 

These losses and trillions in other private obligations are now the responsibility of 

the U.S. government. 

The problem is, even before this crisis, our government was deeply in debt. With 

each additional commitment we sink further and further into debt... closing in upon 

the moment that we can simply no longer afford even the interest payments on our 

obligations. 

According to even my most conservative calculations (using numbers provided by 

the Congressional Budget Office) a debt default by the U.S. government would be 

inevitable – were it not for one simple anomaly... the one thing that has saved the 

United States so far. 

I'm talking about our country's unique ability to simply print more money. 

You see, the U.S. government has one very important weapon to use in this crisis: It 

is the only debtor in the world who can legally print U.S. dollars. And the U.S. dollar 

is what's known as "the world's reserve currency." 

The dollar forms the basis of the world's financial system. It is what banks around 

the world hold in reserve against their loans. 

That's a secret that most politicians don't understand: 

As things stand now, the U.S. government can't go broke in any ordinary sense of the 

word because it can simply print dollars to pay for its bad debts. (It's been doing so 

since March of 2009). 

That might sound pretty good at first. Since we can always just print more money, 

what is there to worry about...? 

Well, let me show you... 

You see, as things stand today, America is the only country in the world that doesn't 

have to pay for its imports in a foreign currency. 

Let's say you're a German and you want to buy oil from Saudi Arabia. You can't just 

pay for your oil in German marks (or the new euro currency), because the oil is 

priced in dollars. 

So you have to buy dollars first, then buy your oil. 

And that means the value of the German currency is of great importance to the 

German government. To maintain the value of its currency Germans must produce 

at least as much as they consume from around the world, otherwise the value of its 

currency will begin to fall, causing prices to rise and its standard of living to decline. 

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But in America...? 


We can consume as much as we want without worrying about acquiring the money to 

pay for it, because our dollars are accepted everywhere around the word. In short, for 

decades now, we haven't had to produce anything or export anything to get all the 

dollars we needed to buy all the oil (and other goods) our country required. 

All we had to do was borrow the money. 

And boy did we. Take a look at this chart... 

Even as late as the 1970s, America was the world's largest creditor. But by the mid- 

1980s we'd become a debtor to the world. And since the late 1990s we've been the 

world's LARGEST debtor. 

Today, our government owes more money to more people than anyone else in the 

world. 

And that was before the financial crisis! 

In short, with all of these bad debts piling up, we've had to begin repaying our debts 

by printing trillions of new dollars. The impact of this is only just now beginning to 

be felt. 

And once our creditors figure out what's happening, they're going to be very angry. 

I believe they will either completely stop accepting dollars in repayment... or greatly 

discount the value of these new dollars. I'm sure you think that sounds crazy, but as 

I'll show you, it is already happening. 

And that will make our consumption-led way of life impossible to afford. 

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Just think about the price of oil... 


Access to cheap oil has been America's #1 gift of owning the world's reserve currency. 

This, along with several other government policies, has made gas cheaper in the U.S. 

than almost anywhere else in the developed world. I know you may think gas prices 

have skyrocketed in recent years... but look at how much less we pay than other 

developed nations... 

• United States: $2.72 a gallon on average 

• Oslo, Norway: $7.41........ (172% higher) 

• Berlin, Germany: $6.82.... ( 151% higher) 

• London: $6.60................(143% higher) 

• Rome, Italy: $6.40............(135% higher) 

• Paris, France: $6.04...........(122% higher) 

• Tokyo, Japan: $5.40..........(98% higher) 

• Toronto, Canada: $3.81......(40% higher) 

According to the most recent study (March 2011) by Kiplinger’s Personal Finance, we 

pay around $3.61 a gallon on average, here in the U.S. But in Canada, it’s $5.56, the 

French pay a whopping $8.21, the Japanese pay $6.62, Australians pay $5.41, and the 

Chinese pay $4.54. 

And here's the thing... 

If oil is no longer priced in dollars, the price of oil for Americans will skyrocket 

immediately. It will change our lives, overnight. 

Airline travel will get much more expensive. The cost to ship goods by truck to 

grocery stores around the country will get much more expensive. Farming itself will 

get a lot more costly... so will commuting to work... taking a taxi... just about 

everything we do will suddenly get much more expensive. 

And just remember: In order for prices to start skyrocketing, all that has to happen is 

that other countries start preferring payments in something besides U.S. dollars. 

The U.S. dollar has been the world's currency for decades now... so most Americans 

don't have a clue about what the repercussions are of losing this status. 

You might think this could never happen... but it happens all the time when 

countries get too far in debt or when they consume too much or produce too little. 

In fact, the same thing happened to Great Britain in the 1970s. 

Most people don't know this, but British Sterling was the reserve currency for most 

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of the world for nearly 200 years... for most of the 18th and 19th centuries. 

It continued to play this role until after World War II, when America was forced to 

prop up Britain's economy with foreign aid – remember the famous Marshall Plan, 

when we gave billions to help European countries rebuild? 

Unfortunately though, Britain pursued a socialist national agenda. The government 

took over all of the major industries. Like Barack Obama, Britain's leaders wanted to 

"spread the wealth around." Pretty soon the country was flat broke. 

The final straw for Britain came in 1967, when things got so bad the Labour Party 

(the socialists) decided to "devalue" the British currency by 14%, overnight. They 

believed this would make it easier for people to afford their debts. 

In reality, what it did was make anyone holding British sterling 14% poorer, 

overnight, and it made everything in Britain, much, much more expensive in the 

coming years. 

And for the country as a whole, it ushered in one of the worst decades in modern 

British history. 

Most Americans don't know about Britain's "Winter of Discontent" in the late 1970s, 

when the government put a freeze on wages. There were continuous strikes in nearly 

every sector... grave diggers, trash collectors... even hospital workers. Things got so 

bad at one point that many hospitals were reduced to accepting emergency patients 

only. 

In 1975, inflation in Britain skyrocketed 26.9%... in a single year! 

The government also imposed what was known as the "Three Day Week" in 1974. In 

short, businesses were limited to using electricity for only three specified consecutive 

days' each week and they were prohibited from working longer hours on those days. 

Television companies were required to cease broadcasting at 10.30pm... to save 

electricity. 

The extreme problems in the economy led to Britain being nicknamed, "the sick man 

of Europe." 

Just how bad were things, exactly? 

Well, listen to several Brits tell of their experiences. Their stories were collected 

recently by the BBC television channel... 

John Blackburn, from Wetherby said: 

"I was a control engineer at Huddersfield Power Station at the time and part of my 

duty was to switch off the supply to various substations around the town, according 

to an official rota. On many an evening shift I would have to switch off the power to 

my own home before going back for a candle-lit supper!" 

Richard Evans, from London, recalls: 

"My mother had to cross a picket line to get into the maternity hospital (they told her 

she couldn't come in....). My Grandmother had to bring in food for her to eat, and 

clean towels and bedding." 

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David Stoker, Guildford, said: 

"I lived in the North East near Newcastle and I vividly remember my grandmother 

and I walking from one shop to another in search of candles to buy. All were sold 

out. Innovatively, butchers placed string down cartons of drippings which we 

bought... These worked although the smell and risk of fire made them less practical 

than candles." 

Imagine... Britain was a global superpower for 150 years. But when they started 

intentionally devaluing their currency, things went straight down hill. 

Maybe you don't think something similar can happen here... but I'm telling you... it's 

already underway! 

In fact, the exchange value of the U.S. dollar has plummeted in the past year. Look at 

this chart… 

From June first of 2010 to June 1st of this year, the U.S. dollar has plunged 12%. 

That’s a huge move in the currency world. In short, people are quickly losing faith in 

the U.S. dollar. 

What happened to the British currency is now happening to the U.S. dollar. 

Not only will the price of gas, oil, and other commodities skyrocket in America, 

almost EVERYTHING we consume will immediately get more expensive. All the 

clothing, furniture, and household goods we import from China. 

All the food we get from Central and South America... all the electronics, televisions, 

computers, and cars we get from Asia and Europe. 

In fact, it's happening, right now before our eyes: The price of gold is up 85% since 

the financial crisis. Oil prices have doubled. Soy beans are way up. Copper prices are 

up more than 170% since 2009. Cotton prices are up 80%... in just the past 

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few months, since July of this year! 

The price of gold is up more than 100% since the financial crisis of 2009. 

See Kitco historical gold prices. IN the beginning of Nov. 2008, gold was trading for 

less than $740. Now it’s over $1,500, so it’s up more than 100%. 

As Wesley Card, the head of a clothing company that includes brands like Dockers 

and Anne Klein, recently said: "It's really a no-choice situation. Prices have to come 

up." 

The chart below shows how much a few key commodities have skyrocketed in price, 

just since the beginning of 2009... 

Of course, skyrocketing commodity prices are just the beginning. 

There are other disastrous consequences to the U.S. dollar losing status as the 

world's currency... 

For example, there would be much less demand for U.S. dollars around the globe, so 

interest rates will skyrocket. Instead of getting a mortgage at today's incredibly low 

rates of 4.5%, it might cost you 8% or even 10% or 15%. 

Imagine what that would do to housing prices! 

Stock prices will likely plummet by at least 40% in a matter of weeks as a result of 

this event in the currency markets. 

It will cost every American business A LOT more money for supplies and materials. 

No one will be able to get a loan... and no bank will want to make loans. 

In short, when the U.S. dollar loses its spot as the world's 'reserve currency,' it will 

cause a brutal downturn in the economy, which I expect will be about 10-times worse 

357

than the mortgage crisis of 2008. 


You see, what will also happen as a result of this currency crisis, and the end of the 

U.S. dollar as the world's reserve currency, will be massive inflation, the likes of 

which we have never seen before. 

When everyone is trying to get rid of their dollars, the government is printing more 

and more to pay debts, and no one wants to own them, the crisis will reach epic 

proportions. 

Just look for example, at what happened to one European country that faced this 

type of crisis in the 1990s... 

This is what happens during a major hyperinflation in the real world. 

By the early 1990s, the national government of one European nation had spent 

nearly all its savings. So what did they do next? Simple... they began to steal the 

savings of private citizens by limiting people's access to their money in governmentcontrolled 

banks. 

And of course, to finance the daily operations of maintaining their basic 

infrastructure, they started printing money, big time. Even so, the country's basic 

infrastructure began to fall apart. There were potholes in the street, broken water 

pipes... elevators that never got repaired... and entire construction projects that 

simply shut down, before being completed. 

At this point, the unemployment rate was more than 30%. 

Not too bad, right? 

But it got worse... much worse. 

You see, once you start down the dangerous road of printing money, things can get 

extremely bad, very quickly. 

As San Jose State University Economics Professor Dr. Thayer Watkins, an expert on 

countries that try to inflate their way out of big debts, wrote on this particular 

disaster: 

"The government tried to counter the inflation by imposing price controls. But when 

inflation continued, the government price controls made the price producers were 

getting so ridiculously low that they simply stopped producing. bakers stopped 

making bread... slaughterhouses refused to sell meat to the stores... other stores 

closed down" 

So what did the government do next to try to curb inflation? 

Well, one bright idea they had was to force stores to fill out government documents 

every time they increased prices. They thought that this would slow down price 

increases, because the paperwork would take so much time! 

358


But like many government plans, this one had terrible, unintended consequences. 

Since stores had to dedicate an employee to do nothing but register this paperwork, 

and since the process took so long, stores began to raise prices on basic goods at even 

higher rates, so that they didn't have to come back and file more paperwork! 

Incredible, isn't it? 

Then, of course the government did what all governments do during periods of 

hyperinflation: They created a new currency... which basically removed six zeroes 

from the old one. So 100,000,000 old units were soon worth 100 new units. Of 

course, this didn't work either... it never does. 

Between October of 1993 and January 1995, prices increase by, get this: 5 quadrillion 

percent. That's... 

5,000,000,000,000,000% 

In other words, a loaf of bread that cost $1 in 1993, suddenly cost 

Yes, that's $50 TRILLION. 

$50,000,000,000,001 

I know, it's laughable... but I can guarantee that the people of this once proud 

European country weren't laughing one bit, especially those living on a fixed 

income. 

Of course, at this point, the country completely fell apart. As Dr. Thayer Watkins 

wrote: 

"The social structure began to collapse. Thieves robbed hospitals and clinics of 

scarce pharmaceuticals and then sold them in front of the same places they robbed. 

The railway workers went on strike and closed down the country's rail system." 

At this point, businesses and citizens across the country basically refused to take the 

local currency. 

Instead, everyone started dealing in German Marks. Keep in mind, the daily rate of 

inflation was nearly 100%. 

Can you imagine the panic in a society when the price of just about everything 

doubles... every single day? It was absolute pandemonium, and the economy 

basically came to a grinding halt. It was like living in a war zone. Truckers stopped 

delivering goods. Stores, restaurants, and gas stations all shut down. 

In fact, the only way to get gas was to buy it on the side of the road, from someone 

selling it out of a plastic can. 

Steve Hanke, an Economics professor at Johns Hopkins, wrote that: 

"People couldn't afford to buy food in the free market – they kept from starving by 

either waiting in long lines at state stores for irregularly supplied rations of low- 

359


quality staples, or by relying on relatives who lived in the countryside. 

For long periods, all [the] gas stations were closed, with the exception of one station 

that catered to foreigners and embassy personnel. People also spent an inordinate 

amount of time at the foreign-exchange black markets, where they traded huge piles 

of near-worthless money for a single German mark or US dollar note." 

The number of operating busses dropped by 60%... and busses were so crowded 

that drivers couldn't even collect fares. Government ordered blackouts left people 

without heat and electricity for long periods of time. 

In another ridiculous government move, they actually made it illegal to NOT accept a 

personal check. 

Imagine... you could write a check... and in the several days that it typically takes for 

a check to clear, inflation would wipe out almost all of the cost of covering your 

check. 

Of course, as is typical, the government took none of the blame. As Dr. Thayer 

Watkins reported, the government's official position was that the hyperinflation 

occurred "because of the unjustly implemented sanctions against the people and 

state." 

Again... I know what you are thinking... "just because it happened in Europe doesn't 

it mean it can happen here, right"? 

Well guess what... 

The same thing that happened in this European country – Yugoslavia – also just 

happened in Iceland and Greece, but on a less dramatic scale. Of course, the only 

reason the situations in Greece and Iceland weren't worse is because of giant foreign 

bailouts. Yes... that's right... more debt to solve the problem of already existing, 

insurmountable debts. 

It's all going to come to a head soon. Much sooner than most people think. 

Remember too that in roughly the past 100 years this type of debt crisis has reared 

its ugly head in Germany, Russia, Austria, Poland, Argentina, Brazil, Chile, Poland, 

the Ukraine, Japan, and China. 

And I believe it will soon happen right here in the United States. 

Don't believe me? 

Well, the truth is that it's already happening at the local and state levels. Take a 

look... 

According to the Center on Budget and Policy Priorities, a Washington, D.C.-based 

think-tank, at least 46 states face huge budget shortfalls for 2011, on top of the 

deficits they still haven't completely figured out for 2010. 

360


The center reports that the total state budget shortfall could reach $160 billion. 

And although many states got federal help over the past year, that aid is now gone. 

So what are these desperate governments trying to do? 

You probably won't believe their proposals... 

* SELL EVERYTHING: The state of Arizona, for example, announced in early 2010 

that it is selling $735 million worth of government-owned buildings, but will still 

occupy them by paying a 20-year lease. The government is selling the legislative 

buildings, the House and Senate, the State Capitol Executive Tower, the state 

fairgrounds, even prisons. 

* RELEASE PRISONERS: In California, the state has taken the radical step of 

opening its prison doors and releasing thousands of inmates. About 11% of the state 

budget ($8 billion) goes to the penal system (more than they spend on higher 

education). 

So California is slashing the number of inmates by 6,500 next year. In other words, 

they are cutting loose about 4% of the prison population. 

Incredibly, other states, including New York, may soon do the same thing. 

* LIFE INSURANCE: In Georgia, the government is proposing taking out "dead 

peasant" policies on state employees. When these folks die, the money won't go to 

the dead person's family... but to the state coffers, to help pay for more programs, 

insurance, and pension liabilities! 

It's simply incredible, isn't it? 

State and municipal governments are so broke, and so desperate, that they are taking 

unprecedented steps to at least temporarily avoid bankruptcy. Nearly every state in 

the union is talking about legalizing some form of gambling, to boost tax revenue. 

California still wants to legalize marijuana, even though it was defeated in the recent 

election. 

Of course, none of these ridiculous steps will work on the long run. 

And the truly amazing thing is that the U.S. Federal government is in even worse 

shape than the local governments! The only reason we haven't seen the full brunt of 

this crisis yet on the federal level is because we've just continued to pile on more and 

more debt. 

The states can't print money... but the Federal government can (at least for now). 

And for the moment, this is all that is preventing a currency collapse of 

unprecedented proportions. 

And this is the important point: What most people don't realize is that 

the U.S. government can only continue printing dollars... as long as the 

U.S. dollar remains the world's reserve currency. 

In other words, this is all going to fall apart much sooner than people think. In fact, 

it's already happening... 

361


The first steps are already well underway. It is happening right now... before our very 

eyes. 

I can't stress this enough: You need to act now in order to protect your assets, 

and grow your savings in the next few years. In the next few minutes, I'm going to 

show you exactly how I'm protecting my own money, and what I recommend doing 

with your own. 

But first, let me show you what exactly is going on right now... 

"America... must be very worried" 

Like I said, most Americans don't believe the U.S. dollar could ever lose its spot as 

the world's reserve currency. 

But I am here to tell you... this process is already well underway. 

For example, although it went almost completely unreported in the U.S. press, last 

fall, a group of the world's most powerful countries, including China, Japan, Russia, 

and France, got together for a secret meeting – WITHOUT the United States being 

present or even knowing about the meeting. 

Veteran Middle East report Robert Fisk reported on this even in the Britain's 

Independent newspaper: 

"In the most profound financial change in recent Middle East 

history, Gulf Arabs are planning – along with China, Russia, 

Japan and France – to end dollar dealings for oil, moving 

instead to a basket of currencies including the Japanese Yen, 

Chinese yuan, the euro, gold and a new, unified currency 

planned for nations in the Gulf Co-operation Council, 

including Saudi Arabia, Abu Dhabi, Kuwait and Qatar." 

Fisk also interviewed a Chinese banker who said: 

"These plans will change the face of international financial 

transactions. America and Britain must be very worried. You 

will know how worried by the thunder of denials this news will 

generate." 

And sure enough, after Fisk published the details of this secret meeting, U.S. officials 

and central bankers from around the globe denied these plans. 

But as the old central banking adage goes... how do you know exactly when a 

currency will be devalued? 

The answer: Right AFTER the head of the central bank goes on television to 

adamantly deny that any such transaction will occur. (And guess who just went 

public in recent weeks with a statement about how the U.S. will "not devalue its 

currency"? Yes, you guessed it... U.S. Treasury Secretary Tim Geithner.) 

You see, the last thing a central banker wants to do in the midst of a devaluation is to 

give people a warning BEFORE he can devalue. So they have to deny, deny, deny. 

After the announcement is made, it's too late for citizens and investors to get out. 

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Like I said, what's incredible is that this story of a secret meeting among most of the 

major powers besides the U.S. was greatly under reported in the American press. 

But you know what... the way I see it, it's much more telling to look at actions rather 

than government press releases. 

For example, here is what is happening, right now in the real world. 

When you read these facts, I think you'll agree with me that the U.S. dollar's days are 

numbered, as far as remaining the world's reserve currency. 

China is getting out 

Cheng Siwei, a former vice-chairman of the Standing Committee, said that China is 

going to stop putting so much money into U.S. dollars, and will instead look to the 

Japanese Yen and the Euro. 

China holds more U.S. dollars than anyone else on the planet. But China is getting 

out of the U.S. dollar as fast as they can without crashing their own economy. 

Look at this chart... 

It shows that China's holdings of U.S. dollars peaked in 2009, but China is unloading 

as many dollars as they can, as quickly as possible. 

And this is just one sign of the end of the U.S. dollar standard. 

There are many more... 

The dollar is no longer good here 

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As I am sure you are aware, for years the U.S. dollar has been accepted almost 

universally around the globe. 

Heck, many times when I've traveled, I never even bothered to convert to the local 

currency, because I knew everyone would take my dollars. 

Well, that's simply not the case anymore... 

HSBC, one of the largest banks in Mexico, no longer allows you to deposit U.S. 

dollars into their banks. They've done this on the heels of money-laundering 

allegations, but we suspect they also simply don't want to be stuck with tons of U.S. 

dollars, as the currency continues to decline. 

This move would have been unfathomable 10 years ago... that a big bank in Mexico 

would no longer accept U.S. dollars for deposit. But today it is the harsh reality. 

And Mexico is not the only place this is occurring... 

Reuters reports that the same thing has happened in 2008 in one of Europe's most 

popular tourist spots... 

Currency exchange outlets in Amsterdam have been reportedly turning away 

customers who want to exchange their U.S. dollars for Euros. 

As one traveling American told the Reuters news agency: "Our dollar is worth maybe 

zero over here," said Mary Kelly, an American tourist from Indianapolis, Indiana, in 

front of the Anne Frank house. "It's hard to find a place to exchange. We have to go 

downtown, to the central station or post office." 

In India, the country's tourism minister said in 2008 that U.S. dollars will no longer 

be accepted at the country's heritage tourist sites, like the Taj Mahal. And the U.S. 

dollar is no longer good anywhere in Cuba. 

The New York Times reports that: "now, many shops in China no longer accept 

dollar-based credit cards issued by foreign banks... and foreigners cannot convert 

American dollars into renminbi beyond a given quota." 

Iran, of course, has already moved all of its reserves out of U.S. dollars, and Kuwait 

de-pegged it's currency from the dollar a few years ago: 

Bloomberg News recently reported that China and Russia plan to start trading in 

each other's currencies to diminish the dollar's role in global trade. "Given the risk to 

the dollar and U.S. assets from their fiscal position, they want to reduce their 

dependence on the dollar as an invoicing currency," said Bhanu Baweja, of UBS 

bank. 

It's even happening here in the USA 

Most Americans don't know that some states in the Mid-West are already using 

"alternative currencies"... 

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An NBC News affiliate in Michigan reports that 

"new types of money are popping up across Mid-Michigan and supporters say, it's 

not counterfeit, but rather a competing currency. Right now, for example, you can 

buy a meal or visit a chiropractor without using actual U.S. legal tender." 

What most Americans don't realize is that this is all totally legal. 

The U.S. Treasury Dept web site says that, according to Coinage Act of 1965: "There 

is... no Federal statute mandating that a private business, a person or an 

organization must accept currency or coins as for payment for goods and/or 

services." 

I saw one report that says there are now 150 of these alternative local U.S. currencies 

being accepted around the country! 

USA Today reports that the largest of these local currencies is a currency called 

"Berkshares," which are being used in the Berkshires region of western 

Massachusetts. 

According to the paper: 

"Since its start in 2006, the system, the largest of its kind in the country, has 

circulated $2.3 million worth of BerkShares." 

And even in places that do not yet have local currencies, store owners may now 

actually prefer foreign currencies rather than U.S. dollars... 

In Washington, DC, just 25 miles from my office, some stores have begun accepting 

euros. Of course, the euro isn't much more stable than the dollar right now. But my 

point is that most people don't understand there is NO FEDERAL REQUIREMENT 

in the United States for a private store to accept dollars for non-debt transactions. 

You see, no matter what the government decides, stores and businesses will accept 

whatever they believe is a strong currency. 

As Texas Representative Ron Paul wrote recently: 

"If you walk into a 7-11 to buy a soda, the clerk doesn't have 

to accept your dollars, he could demand euros, silver, or 

copper. But because legal tender laws backing the dollar have 

caused the dollar to drive other currencies out of 

circulation, [right now] it is easier for stores to accept 

dollars." 

Well, all that is quickly changing... 

Many places in Texas now accept Mexican pesos for payment. "Euros Accepted" 

signs are popping up in of all places: Manhattan. And not only Manhattan, but in 

New York's favorite summer playground... the Hamptons. 

There, an art gallery assistant was quoted by The Real Deal: "I wouldn't want to 

discourage a sale in any way because of a currency issue." 

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And it's not just small stores that are accepting other methods of payment besides 

U.S. dollars. 

The Chicago mercantile exchange the world's largest futures and commodities 

exchange board), now accepts gold to settle futures contracts. Until recently, the 

exchange typically accepted only U.S. treasuries and bonds as payment. 

These guys obviously see the writing on the wall. 

This would have all been completely unthinkable 10 years ago, but today it's a reality. 

And this trend is going to keep moving incredibly fast. 

That is why... 

The smartest investors are taking action... 

Bill Gross, who probably knows as much about currencies and debt as anyone in the 

world, runs the world's biggest bond fund. He was quoted by Bloomberg: 

"We've told all of our clients that if you only had one idea, 

one investment, it would be to buy an investment in a nondollar 

currency. That should be on top of the list." 

Jim Rogers, one of the world's most successful multi-millionaire investors writes: 

"The dollar is not just in decline; it's a mess. If something 

isn't done soon, I believe the dollar could lose its status as 

the world's reserve currency and medium of exchange, something 

that would lead to a huge decline in the standard of living 

for U.S. citizens like nothing we've seen in nearly a 

century." 

I know... you probably still don't believe it can happen here in the United States. But 

think about it... 

Are we as Americans really immune to the laws of economics and finance? 

I don't think so. 

And every circumstance I know of, in which a government has tried to inflate its 

debts away, has ended in disaster. It will happen here too. 

As Jim Rogers says: 

"History teaches us that such imprudent monetary and fiscal 

behavior has always led to economic disaster." 

This is why World Bank president, Robert B. Zoellick, in a speech at the School for 

Advanced International Studies at Johns Hopkins University, recently said: "The 

United States would be mistaken to take for granted the dollar's place as the world's 

predominant reserve currency. Looking forward, there will increasingly be other 

options to the dollar." 

And this is why the International Monetary Fund (IMF) recently published a paper 

calling for a new global world currency. 

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A paper entitled "Reserve Accumulation and International Monetary Stability," 

written by the Strategy, Policy and Review Department of the IMF, recommends that 

the world adopt a global currency called the "Bancor" with a global central bank to 

administer the currency. 

The report is dated April 13, 2010... and no, unfortunately this is not just a bad 

rumor. 

This is a deadly serious proposal in an official document from one of most powerful 

institutions in the world. 

Do you see where this is all heading? 

As Brazilian economist and strategist Ricardo C. Amaral wrote: 

"The US dollar served its purpose since the end of WW II and 

became the major foreign exchange reserve currency... [but] 

the days of the US dollar playing that special role... has 

reached the end of the line, since today that system is very 

sick and it is dying a slow death... 

Mr. Amaral added that we will soon see: "the major collapse of 

the US dollar creating the biggest international monetary 

crisis the world has ever seen..." 

This is why gold and silver prices are soaring: 

It's not a matter of "if" the U.S. dollar will lose its status as the world's reserve 

currency... it's simply a matter of "when." 

Investors know there are serious, serious problems with the U.S. dollar, so they are 

fleeing to precious metals, which have historically been very reliable when a country 

has major currency problems. 

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In short: It's not hard to see why people are no longer accepting U.S. dollars... and 

why many foreign countries are pushing for a new world reserve currency. 

The good news is, no matter what happens, I've found several ways for you to protect 

your savings – and you could even make 3- to 5-times your money over the next few 

years. 

I'll show you exactly what to do in a moment. But first let me explain why the 

collapse of the dollar as the world's reserve currency could happen much sooner than 

most people expect... 

The REAL State 

of the U.S. Economy 

I know many of my friends, colleagues, and family members are still in serious 

denial. 

In the world of psychology, they call this the "normalcy bias." 

You see, the normalcy bias actually refers to our natural reactions when facing a 

crisis. 

The normalcy bias causes smart people to underestimate the possibility of a disaster 

and its effects. In short: People believe that since something has never happened 

before... it never will. We are all guilty of it... it's just human nature. 

The normalcy bias also makes people unable to deal with a disaster, once it has 

occurred. Basically... people have a really hard time preparing for and dealing with 

something they have never experienced. 

The normalcy bias often results in unnecessary deaths in disaster situations. For 

example, think about the Jewish populations of World War II... 

As Barton Biggs reports in his book, Wealth, War, and Wisdom: 

"By the end of 1935, 100,000 Jews had left Germany, but 

450,000 still [remained]. Wealthy Jewish families... kept 

thinking and hoping that the worst was over... 

Many of the German Jews, brilliant, cultured, and cosmopolitan 

as they were, were too complacent. They had been in Germany so 

long and were so well established, they simply couldn't 

believe there was going to be a crisis that would endanger 

them. They were too comfortable. They believed the Nazi's 

anti-Semitism was an episodic event and that Hitler's bark was 

worse than his bite. [They] reacted sluggishly to the rise of 

Hitler for completely understandable but tragically erroneous 

reasons. Events moved much faster than they could imagine." 

This is one of the most tragic examples of the devastating effects of the "normalcy 

bias" the world has ever seen. 

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Just think about what was going on at the time. Jews were arrested, beaten, taxed, 

robbed, and jailed for no reason other than the fact that they practiced a particular 

religion. As a result, they were shipped off to concentration camps. Their houses and 

businesses were seized. 

Yet most Jews STILL didn't leave Nazi Germany, because they simply couldn't 

believe that things would get as bad as they did. That's the normalcy bias... with 

devastating results. 

We saw the same thing happen during Hurricane Katrina... 

Even as it became clear that the levee system was not going to work, tens of 

thousands of people stayed in their homes, directly in the line of the oncoming waves 

of water. 

People had never seen things get this bad before... so they simply didn't believe it 

could happen. As a result, nearly 2,000 residents died. 

Again... it's the "normalcy bias." 

We simply refuse to see the evidence that's right in front of our face, because it is 

unlike anything we have experienced before. 

The normalcy bias kicks in... and we continue to go about our lives as if nothing is 

unusual or out of the ordinary. 

Well, we're seeing the same thing happen in the United States right now. 

We have been the world's most powerful country for nearly 100 years. The U.S. 

dollar has reigned supreme as the world's reserve currency for more than 50 years. 

Most of us in America simply cannot fathom these things changing. But I promise 

you this: Things are changing... and faster than most people realize. 

For a moment, just look at a tiny fraction of the evidence around us.... 

** 13% OF POPULATION ON FOODSTAMPS 

And get this: The number of Americans on food stamps has now gone up every 

month for 37 months. That�s over three years! 

Can a country really be in good shape when 14% of the population can't even afford 

to buy food? 

Or how about this... 

** SHANTY TOWNS COMING TO YOUR NEIGHBORHOOD 

Although it's gone almost completely unreported in the mainstream press, in a dozen 

or so cities across the nation (like Fresno, Sacramento, and Nashville), there are 

hundreds of people living in modern-day, Depression-era shanty towns. 

The Fresno shanty town has received the most publicity, after a visit by Oprah 

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Winfrey. There, about 2,000 residents are homeless. They even have a security desk 

at the shelter, because the encampment has gotten so large. City officials say they 

have three major encampments near downtown, and smaller settlements along two 

local highways. 

Also... 

** 43% OF AMERICAN FAMILIES ARE ESSENTIALLY BROKE 

According to a recent article on MSN Money, about 43% of the American families 

spend more than they earn each year. 

Look at this chart... it's unbelievable.. 

The average household carries $8,000 in credit card debt... and personal 

bankruptcies have doubled in the past decade. 

How in the world can we possibly spend our way out of the current crisis? 

We certainly can't do it with savings... the only answer is to print more money, which 

will hasten the fall of the U.S. dollar as the world's reserve currency. 

** THE MYSTERY OF DISAPPEARING JOBS 

There's simply no one better at bending statistics than the U.S. government. Take the 

unemployment rate, for example. Back in the 1930s, anyone without a job but not 

retired was considered "unemployed." 

Today, however, the government calculates unemployment mainly by counting the 

number of people receiving unemployment benefits. So when people's benefits 

expire, they are no longer counted... and the unemployment rate actually falls! 

Ridiculous... I know. 

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But the reality is, the true unemployment rate is much, much higher than what the 

government is reporting. 

If you don't believe me, look at two job postings I read about recently... 

In Long Island City, an estimated 2,000 people waited in line at the local 

employment office – some for as long as four days! – to apply for 100 elevator 

mechanic apprenticeship positions. 

And in Massillon, Ohio, 700 people applied for a single janitorial job... paying $16 an 

hour, plus benefits! 

The point is, our country is not growing jobs, because the government makes it 

harder and harder for businesses. With current regulations in place, our country will 

never experience the type of growth necessary to dig our government out of the hole 

they've put themselves in. 

I'm sure you think I'm exaggerating, but just look at what the CEO of one of 

America's most important companies said.. 

Intel CEO Paul Otellini said in a recent speech: "I can tell you definitively that it costs 

$1 billion more per factory for me to build, equip, and operate a semiconductor 

manufacturing facility in the United States" 

He said that 90% of the additional costs are not from higher labor rates... but from 

higher taxes and regulatory charges, which other nations simply don't impose. 

Cypress Semiconductor CEO T.J. Rodgers agreed that the problem is not higher U.S. 

wages, but anti-business laws. He was quoted in an interview with CNET News: "The 

killer factor in California for a manufacturer to create, say, a thousand blue-collar 

jobs is a hostile government that doesn't want you there and demonstrates it in 

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thousands of ways." 


Few Americans today realize that we have the second highest corporate tax 

rate in the world. And since Japan's new prime minister just announced that he 

plans to reduce the country's corporate tax rate by 15%... the U.S. could soon 

have THE highest corporate tax rate in the world. 

Why would anyone want to start a business here, when they can do it for less 

money...and keep more of the money they make... by locating elsewhere? 

It's just another good reason to avoid the U.S. dollar... 

So is this: 

** DEBT-RIDDEN U.S. COMPANIES 

Did you know that in 1979, there were 61 American companies that earned a toplevel 

AAA credit rating from Moody's? 

Today, there are only four: Automatic Data Processing, Exxon, Johnson & Johnson, 

and Microsoft 

Does this sound like an economic recovery to you... when only four companies in the 

entire country are stable enough to earn a triple-A credit rating? 

Me neither. But it's nothing compared to what's going on in the housing sector... 

** A CRAZY LAS VEGAS ECONOMICS STORY 

You want to know how crazy things are in the U.S. right now... 

Consider the bizarre state of the Las Vegas housing market, where The New York 

Times reports that building is booming again in a city where nearly 10,000 new 

houses are empty, thousands are in foreclosure, thousands of regular people have 

simply stopped paying their mortgages and average prices are down more than 60% 

since 2006. 

What could possibly be driving this building mania? 

Well, it turns out that buyers don't want homes that were built during the boom, 

because they sit in neighborhoods that look like ghost towns, and because many of 

these never-occupied houses are filled with cockroaches and other critters. 

So local builders are doing the worst possible thing they could be doing in Las Vegas 

right now... building more homes! Similar scenarios are taking shape in Phoenix and 

other U.S. cities. 

Of course, this might look good for economic numbers, but all it does is make the 

situation much, much worse in the long run. 

Want to see another crazy trick some businesses are using to artificially boost their 

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earnings numbers? 

This is just incredible to me... 


** OUR HOPE FOR THE FUTURE: NEW JERSEY'S HOMELESS 

If you've been reading my work at all over the past few years, you know that I am 

extremely bearish on the "for profit" education sector, such as University of Phoenix. 

What could possibly be wrong with these institutions that offer inexpensive 

education to tens of thousands of students across the country? 

Well, to me it's just another symptom of how distorted and crazy our economy and 

country has become. Here's what I mean... 

One of the crazy practices institutions employ is to actually enroll homeless people 

into their programs. 

You probably think I'm making this up... but even Business Week recently ran a 

report on this practice. 

Why would they do this? 

Well, because these folks qualify for federal grants and loans used to pay for college 

tuition fees. According to reports I read, the University of Phoenix, for instance, 

relies on federal funds for more than 85% of its revenues. 

At another for-profit school, Drake College of Business, almost 5% of the student 

body at its Newark, N.J., campus is homeless, Business Week recently reported. 

Of course, the majority of these students will never be able to repay their loans. But 

the colleges certainly don't care... that's the government's problem... not theirs. 

Once again, it's the taxpayers like you and me who will be left holding the bag. 

And here's another good reason why investors are afraid of holding dollars right 

now... 

** IN THE STOCK MARKET, IT'S 1937 ALL OVER AGAIN 

One of the most worrisome problems in the stock market right now is that we could 

basically be repeating the exact same situation that occurred from 1937 to 1942. 

Most Americans think we've had this amazing stock market recovery since the 

financial crisis of 2008... and we have to a certain extent. 

But we are by no means out of the woods. 

In fact, during America's last real economic collapse, in the 1930s and 1940s, we saw 

a similar drop and recovery... before the markets crashed all over again. 

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In fact, the situation is eerily similar. 


Look at this chart... it's one of the scariest I've seen in a long time. It shows an 

overlay of what happened in the stock market in 1937 compared to 2008. 

In both situations, we saw big crashes, of about the exact same magnitude... then a 

big recovery, again of about the same size. 

But what will happen next? 

Well, if history is any guide, we could well have another big leg down in the stock 

market. That's exactly what happened 70 years ago. 

And with all of the problems left unresolved in our economy today, it could certainly 

happen again, especially if the U.S. dollar loses its reserve status. 

As The Wall Street Journal reported: 

"Over the last year the stock market has followed a path 

eerily similar to 1937. First, a strong, rapid run to a 

recovery high – same pace, same magnitude. Then a correction – 

again, the same. Will we continue on the path that led the 

correction of 1937 into a collapse in 1938? 

The point is, the cards are seriously stacked against us. 

This looming currency crisis is inevitable. 

Almost every state in the country is on the verge of bankruptcy. We have borrowed 

an impossible amount of money, which we'll never be able to pay back. 

Our economy is an absolute mess. Taxes are sky high already... and will certainly go 

much higher over the next few years. And nearly all of the world's major financial 

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players are preparing for an alternative to the U.S. dollar as the world's reserve 

currency. 

To me, it is so obvious that we are about to experience a serious currency crisis, that 

I can't believe people can deny this reality with a straight face. 

Again, if you don't believe a currency crisis is coming, just take another look at the 

price of gold and silver compared to the U.S. dollar over the past decade. 

It's obvious that smart investors want to hold gold and silver, not U.S. dollars. 

Anyone with any sense or basic understanding of economics can tell that the U.S. 

dollar is doomed. And it's going to have major repercussions, which the average 

American has not yet even considered. 

So, what can you do? 

Well, I've done a lot of research on this, and have found that there are a surprising 

number of simple things you can do to not only protect what you've currently got, 

but to also potentially make quite a bit of money as this currency crisis unfolds. 

Here's what I recommend... 

What You Can Do to Protect 

Yourself and Actually Make Money 

So what should you do... to protect and possibly even grow your wealth in the next 

few years? 

Well, there's a series of pretty simple financial moves I believe you should begin 

making, immediately. 

And here's something I want you to keep in mind: I'm really only going to talk about 

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your finances here. 


As far as protecting your family... well... it depends on your circumstances. If you live 

in an urban area, I recommend making sure you've got somewhere you can go in case 

there are riots or food and water shortages. I think there's a very good chance we'll 

see that in the next two years. 

Wherever you're going to wait out the chaos, I recommend you have basic food, 

water, and medical supplies to last you for at least six months. 

Remember, you won't be able to count on the government during this crisis. Think 

about it... if the government couldn't even save the city of New Orleans during 

hurricane Katrina, how in the world will it save an entire country when all hell 

breaks lose? 

And as I said earlier, the truth is, the government won't even try to save individual 

American citizens... the government will be much more concerned with saving itself. 

As far as taking care of your money – to make sure you don't lose money and even 

use this situation to come out quite a bit ahead – well, that's where I can help you. 

All of the moves I recommend are simple and fairly straightforward to implement – 

at least right now. If you wait to do these things, however, they will almost certainly 

get very expensive, difficult, and even impossible to do. 

If you do these things now, not only will you be better prepared to weather the 

coming storm, I believe you could also make quite a bit of money over the next few 

years. 

And if I'm wrong... well... that's the best part... I think you'll still make very good 

gains. 

Even if all we get out of this crisis is a mild inflation, you will still be set up to do 

very, very well. 

So here are the specific steps you should take... 

STEP #1. GET SOME OF YOUR MONEY BEYOND THE REACH OF THE 

U.S. GOVERNMENT (it's perfectly legal, and a lot easier than you think) 

I know you probably don't believe me when I tell you that the U.S. government is 

going to implement policies to save itself, which are unimaginable right now. 

But remember, desperate governments will do very desperate things. That's why they 

outlawed the ownership of gold 80 years ago. 

That's why they are already talking about "nationalizing" automatic 401(k) and 

retirement plans... and it's why it might soon be against the law to open a foreign 

bank account, or to move your money overseas without paying outrageous taxes. 

The good news is, I met recently with a man who is considered one of the top "asset 

protection" attorneys in America. 

In short, I learned that there are four simple investments you can make right now, 

which you DO NOT have to report to the U.S. government. 

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Don't get me wrong... 


When and if you ever sell these things, years down the road, you are still required to 

pay taxes on your gains. But the great thing is, while you are holding these 

investments, so long as you play by the rules, neither you nor anyone else is required 

to report them to the government. 

And this benefit should be obvious... 

The less the government knows about where you have your money, the better. They 

simply will have a very hard time taking what they don't know you have. 

I am personally putting a fairly significant portion of my portfolio into one of these 

assets. And I plan to hold it for a long time. No matter what happens, I know I'll have 

a significant amount of money that is beyond the government's grasp. 

I'm not going to tell you exactly what I'm doing here in this letter, but I will explain 

everything in full detail in my new report, called: The 4 Investment Assets You Do 

NOT Have to Report to the U.S. Government. And I will gladly give you access to a 

copy, free of charge. 

In addition to explaining how I'm protecting my own money, I'll show you three 

other places you can put your money, which you legally do not have to report to the 

U.S. government. 

Of course, normally it would cost you thousands of dollars to meet with my asset 

protection attorney, and to take advantage of his best strategies. But I'll reveal 

everything you need to know to get started in this report. 

Plus, I'd like to send you the information on... 

STEP #2: HOW TO ACQUIRE THE WORLD'S SAFEST ASSETS, WHICH 

ARE LIKELY TO PERFORM BEST DURING THIS PERIOD. 

What I'm talking about here is buying as much gold and silver as you can reasonably 

afford. I know... gold has had a huge run, jumping more than 400% in the past 

decade. 

But believe me, when the U.S. dollar loses its status as the world's reserve currency, 

this early run is going to be a mere afterthought. 

I will be surprised if gold does not reach $5,000 or $6,000 an ounce in the next few 

years. 

The smartest money managers in the world, people like George Soros, David 

Einhorn, and John Paulson, have all recently taken huge positions in gold. And I 

think you are crazy to not do the same. 

How should you do it? 

There are many options. And my research firm has recently published a great book, 

called The Gold Investors Bible, which details in full all of the best ways to own and 

hold gold bullion. 

377


In this volume, we reveal dozens of secrets about the gold industry... specifically the 

best ways to buy, sell, and store your gold. It explains whey some gold coins are 

better than others. How to buy gold with ZERO dealer markup. How to easily and 

safely store some of your gold overseas, very cheaply... where to hide it... and so 

much more. 

Not regularly available for sale, this book is valued at $24. I'd like to give you instant 

access to a copy, totally free of charge. 

And what about silver? 

Well, I believe silver will serve a unique role during this currency crisis. 

Let me explain... 

For most of recorded history, the price of gold has been around 16 times the price of 

silver. This ratio – the so-called "silver ratio" – has fluctuated from time to time 

based on silver discoveries and attempts by governments to regulate the silver-togold 

ratio. But... in a free market, where demand for silver as money exists, I'd expect 

the natural supply and demand balance to lead to a silver price around 1/16 times the 

price of gold. 

If gold = $1,400� 

Silver should = $87, but today it�s around $34. 

Based on the historical ratio, with the price of gold around $1,500, the price of silver 

should be around $90. It's not, of course. Today, silver is trading around $34. Today 

then, gold is selling for more than 44-times the price of silver. 

What explains the difference between hundreds of years of history and today? Why is 

silver still so cheap relative to gold? 

When silver is "demonetized," as it is now (meaning it's not being used for money, 

but just for industrial purposes), supplies soar as people sell silver for gold and other 

currencies. 

On the other hand, during periods of monetary crisis, demand for silver as money 

pushes the silver ratio heavily in silver's favor. 

For example, the ratio returned to its historic range (16) during World War I. It 

happened again in the early 1970s, when Nixon abandoned the gold standard. It also 

happened most famously in 1979-1980, when it seemed as if America was really 

entering a serious money crisis 

Most people don't know this, but silver is actually the best-performing asset of this 

century... not gold. 

As my multimillionaire friend and currency expert Chris Weber pointed out, Gold 

has risen from $256 to $1,500 since 2001. That is a rise of over 500%. Silver has 

risen from $4.02 to $34. That is a rise of 845%. 

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In short, silver is the best hedge against a money crisis. 

As the dollar fails, silver will once again be in demand as money. 

And my friend Chris Weber believes silver will likely hit $187 an ounce. 

If that happens, you could make gains of around 450% if you invest at today's prices. 

So what are the best ways to buy silver? 

Well, my firm has done a ton of research on this precious metal. We have found great 

ways to hold the metal personally... to have it stored in a secure location in the 

United States or overseas... and more. We've put everything we know into a valuable 

guide called: Secrets of the Silver Market. 

I'd like to give you this valuable resource, also free of charge. I'll show you how to get 

it in a second. 

But first let me get to the 3rd financial step I recommend you take right now: 

STEP #3: LEARN THE 100% SECRET 

If you want the opportunity to make a lot of money during the coming crisis, one 

sure way to do it is to learn the intricacies of an unusual investment strategy that is 

now making some investors an absolute fortune. 

At my research firm, we have been teaching readers this method for several years. 

And get this: You don't have to buy a single stock to begin using this strategy... and it 

has nothing to do with "shorting." 

In a nutshell, this is an approach that could enable you to safely extract gains of 

exactly 100% from the market... without ever owning or touching a stock. 

Keep in mind: this strategy can play out in two very different ways. Though you'll 

always be able to keep the initial cash you extract from the market, there is a chance 

you will be required to purchase the underlying stock, at a price less favorable that its 

current market value. So please understand, there is risk involved with this strategy, 

and it probably won't be right for everyone. 

But this can be such a sound market strategy, especially in times of financial 

uncertainty, that once you learn how it works, you might decide to never invest the 

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That's why I call this the 100% Secret. 

For example, look at how it has worked for a few of the folks I taught this secret to in 

recent years... 

Last year, for example, Peter Kos of Boise, ID began using this strategy. He says he 

now makes an average of $10,000 per month. And Randy Bowman of Annapolis, 

MD told me he's made over $87,500 with this technique. Bernard Henderson of 

379


Carmel, IN, now collects an average of $100 a day. Another, Harold Welchik of New 

Brunswick, NJ, has made over $20,000. 

Tim Hewitt from Sacramento probably put it best when he wrote me and said: "This 

has saved my portfolio." 

That's why financial author Lee Lowell writes: "I've been a professional trader for 17 

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Pulitzer Prize winning author James Stewart learned this technique recently and 

said: "[These payouts] are so rich I consulted a colleague to make sure they were 

real." 

This seldom-understood strategy is how we've helped dozens of people make 

incredible gains, even in a terrible stock market. And in all likelihood, when the stock 

market gets really bad, as I expect it soon will, this will be incredibly lucrative and 

safe strategy. 

Everything you need to know is in my new report called: The 100% Secret � The 

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advantage of it, starting immediately.. 

Believe me, this is something you want to learn about now. Because as the stock 

market begins to unravel, this incredible technique will likely get more and more 

lucrative. 

And that brings me to: 

STEP #4: MAKE SURE YOU OWN THE ONE ASSET THAT CAN HELP 

SAVE YOU AND YOUR FAMILY, NO MATTER HOW BAD THINGS GET 

There's no telling exactly how bad things are going to get as this crisis unfolds. 

I firmly believe there could be riots, marches in the streets, bank runs, massive 

arrests, and periods of uncontrollable mayhem... at least for several months as things 

begin to unravel. 

But the good news is that there is one asset you can own (now widely available in 

America), which should help protect you and your family from this chaos... and could 

also likely make you a fortune in the years to come. 

I'm not talking about guns or bonds or gold or other precious metals... or anything 

like that. And of course this has absolutely nothing to do with the stock market. 

What I'm talking about is a very powerful asset that wealthy families have used for 

centuries to protect themselves... and preserve and build their fortunes. 

An index tracking this asset has absolutely crushed the stock market between 1991 

and 2009, by returning about 430% more than stocks during that period. 

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Best of all, it provided these gains with almost no volatility. Just look at the chart 

below. 

See how that blue line goes straight up, without any hiccups? 

Multimillionaire investor Barton Biggs wrote that this type of asset, throughout 

history, "protected both your wealth and your life." 

During World War II, for example, when millions of families lost their entire life 

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What the average American doesn't realize is that many of the richest people in the 

United States have a significant ownership stake in this asset: The Walton family (of 

Wal-Mart fame), Bill Gates, Ted Turner, the Hilton family, Charles Schwab, 

Microsoft billionaire Paul Allen, the Hunt family (of Texas oil fame), the Hearst 

family, the Ford family, and more 

As I mentioned, you can easily make this investment today, here in America. 

Probably less than 1% of the population owns it today... but it is readily available, 

and fairly inexpensive. 

I've written up all of the details on everything you need to know. My full report is 

called: The World's Most Valuable Asset in a Time of Crises. 

There are several ways to make this investment. I'll show you what they are. 

Like I said, this has nothing to do with stocks, bonds, precious metals, guns, 

medicine, or anything like that. Yet it could save your family... and make you very 

wealthy in the coming years. 

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As my multi-millionaire friend Doug Casey says, it's the ONE THING you should 

own in the years to come. 

I don't want to say any more about it than that, here in this letter. The truth is, the 

fewer people who know about this investment secret, the better. 

So how can you begin taking these simple steps, right away? 

Well, my company, Stansberry & Associates Investment Research, is a financial 

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We have a staff of about 50 people, and our main objective is to find safe and 

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Since we started this business a decade ago, we have helped a lot of people make a lot 

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Harold Thiessen from Montana wrote recently to say: "My IRA has gone from a low 

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We even got an interesting note recently from a reader named Ulysses Reuter, who 

says he has been making a "small killing" – enough to buy a nice-sized boat and a 

house in Mexico. Here's the photo he sent (below). He writes: 

Mr. Reuter added: "We took delivery of her 3 weeks ago and are cruising the 

Bahamas. In October we will take her through the Panama Canal over to the Pacific 

side since I just bought a home in Mexico..." 

382


Then there was the nice note from Mitchell Donavan, from Ithaca, New York. He 

said: "I was working long hours with overtime to make a living when I joined you. 

The excellent results have allowed me to retire early." 

Believe me, nothing makes me feel better than receiving notes like these. 

But I have to tell you, right now, I am really worried that a lot of our subscribers and 

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when this inevitable crisis hits. 

That's why I created this letter, and that's why I'd like to send you the full details on 

exactly how I believe this is all going to unfold... and exactly how to protect yourself 

and even prosper during this crisis. 

Remember: The government is not going to save you: 

If the government couldn't save one small city from the disastrous news coming, 

then how is it going to save all of us when the [beep] really hits the fan? 

You can either let things happen to you... or you can take a few simple steps and take 

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Report to the U.S. Government 

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in a Risky Stock Market 

Research Report #5: The World's Most Valuable Asset in a Time of 

Crises 

Also, on the first Friday of each month, I'll send you my monthly 

newsletter,Stansberry's Investment Advisory. I'll keep you up to date on exactly 

what's going on regarding this financial crisis, and I'll show you some unusual and 

incredible ways to make money now and as it begins to unfold. 

We have found some great ways to make a fortune as the government continues to 

try to bail out one failing industry after another. 

I'll also keep you up to date on what I am doing to protect myself. I'll make sure you 

383


stay abreast of changes to the laws and government interventions. 

And... every day the markets are open, I'll send you my paid-subscribers-only e-mail 

called the Stansberry & Associates Digest. 

In short, I report on all the work my firm is doing... the most interesting investment 

ideas... what we're researching now... and what we expect to happen in the months to 

come. 

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to try. What I mean is, you'll have the next four months to take a look at the Research 

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100% Keep everything. 

If you decide for any reason my work is not right for you, just let us know and you 

can receive a full refund... and keep everything you've received so far. 

In other words, by taking me up on this offer, you are agreeing only to TRY my work 

to see if you like it. 

I know it will be one of the best financial moves you ever make: 

I hope you'll consider this offer seriously. I know in my heart it will be one of the best 

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To get started, simply click on the link below, which will take you to a secure order 

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Sincerely, 

Porter Stansberry 

384


Founder, Stansberry & Associates Investment Research 

July 2011 

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LEGAL DISCLAIMER: This work is based on SEC filings, current events, interviews, corporate press releases, and what 

we've learned as financial journalists. It may contain errors and you shouldn't make any investment decision based 

solely on what you read here. It's your money and your responsibility. Stansberry & Associates Investment Research 

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Privacy Policy 







Our Economic Future: From Best to Worst Case 

Doug Casey, Chairman 

• June 7, 2011 7:52pm GMT 

By Doug Casey, Casey Research 

There is a great deal of uncertainty among investors about what the future of the 

U.S. economy may look like – so I decided to take a stab at what’s likely to happen 

over the next 20 years. That's enough time for a child to grow up and mature, and it's 

long enough for major trends to develop and make themselves felt. 

I’ll confine myself to areas that are, as the benighted Rumsfeld might have observed, 

“known unknowns.” I don’t want to deal with possibilities of the deus ex 

machina sort. So we’ll rule out natural events like a super-volcano eruption, an 

asteroid strike, a new ice age, global warming, and the like. Although all these things 

absolutely will occur sometime in the future, the timing is very uncertain – at least 

from the perspective of one human lifespan. It’s pointless dealing with geological 

time and astronomical probability here. And, more important, there’s absolutely 

nothing we can do about such things. 

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So let’s limit ourselves to the possibilities presented by human action. They're plenty 

weird and scary, and unpredictable enough. 

THE MARKET FOR PROGNOSTICATION 

People are all ears for predictions, whether from psychics or from “experts,” despite 

the repeated experience that they’re almost always worthless, often misleading and 

more than rarely the exact opposite of what happens. 

Most often, the predictors go afoul by underrating human ingenuity or extrapolating 

current trends too far. Let me give you a rundown of the state of things during the 

last century, at 20-year intervals. If you didn’t know it’s what actually happened, 

you'd find it hard to believe. 

1911— The entire world is at peace. Stability, freedom and prosperity prevail almost 

everywhere. Almost every country in Europe is ruled by a king or queen. Western 

civilization has spread to nearly every corner of the world and is received with 

appreciation. Stunning breakthroughs are being made in science and technology. 

There’s no sign of a gigantic world war about to come out of nowhere to rip apart the 

political and cultural map of Europe and bankrupt everybody. Who imagined that a 

dictatorial communist regime would arise in Russia? 

1931— It’s early in a disastrous worldwide depression. Attention is on economic 

troubles, not on the virtually unthought-of possibility that in less than 10 years a new 

world war would be under way against Nazism and a resurgent Germany. 

1951— Except for Vietnam, all that remains of the colonies the West had established 

in the 19th century are quiescent. Nobody guessed almost all would either be 

independent, or on their way, in 10 years. China has joined Russia – and many other 

countries – as totally collectivist. Who imagined that Germany and Japan, although 

literally leveled, would be perhaps the best investments of the century? Who 

guessed that the U.S. was already at its peak relative to the rest of the world? 

1971— Communist and overtly socialist countries all over the world seem to be in 

ascendance, soon to be buoyed further by a decade of rising commodity prices. The 

U.S. and the West are entering a deep malaise. Little significance is attached to 

rumblings from the Islamic world. 

1991— Communism has collapsed as an ideology, the USSR has disappeared, and 

China has radically reformed. Islam is increasingly in the news. 

2011—The world financial/economic crisis is four years old, but things are still 

holding together. Islamic terrorism and collapse of old regimes in the Arab world 

dominate the news. China is viewed as the world’s new powerhouse. 

BAD AND WORSE 

Regrettably, I’m not much of a linguist. But I do pick up interesting semantic trivia. In 

Spanish they don’t say “in the future,” as we do in English, which implies a definite 

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outcome. Instead they say “en un futuro” – in a future – which implies many possible 

outcomes. It’s a better way of assessing reality, I think. 

Here are three 20-year futures to consider. There are, obviously, many, many more 

– but I think these encompass the three most realistic broad possibilities. 

BEST CASE – FACTS GET FACED 

Realizing what a disaster the complete destruction of their currencies would be, most 

governments decide to endure the pain of allowing interest rates to rise and limiting 

increases in the money supply. Poorly run corporations and banks are left to fail. 

Talk of abolishing the Federal Reserve, and using a commodity for money, becomes 

serious and widespread. 

Shaken, the U.S. ends its profligate ways, in part because it lacks the means to 

continue, and in part because everyone but collectivist ideologues has actually 

learned something from the brutal ‘10s and ‘20s. 

Amidst massive protests, the government closes much of its counterproductive 

apparatus, eliminates many taxes, and lets 30% of its employees go. It also, albeit 

reluctantly, liberalizes its regulation of the economy because it has become 

impossible to deny that the U.S. has been falling behind in all areas. 

Although there is a resurgence of libertarian thought – reminiscent of the Reagan- 

Thatcher era – simple practicality is mainly responsible for forcing the government's 

hand. For one thing, it can’t afford the bureaucracy needed to enforce detailed 

interference. For another, entrepreneurs are increasingly just doing what they 

please, partly from necessity and partly from a growing sense of righteousness. 

Interest rates go to 25%, to compensate for high levels of inflation. That's high 

enough to make it worthwhile for people to save, and the capital base starts growing. 

The stock market has collapsed to its lowest level in living experience (in real terms), 

but the values available encourage people to become investors. Business is 

restructured on a sound, debt-free basis, with little speculation. 

The U.S. radically cuts its military spending and pulls almost all troops out of their 

foreign bases and wars. The War on Drugs comes to an end, and the crime rate in 

both the U.S. and Mexico plummets. 

The government solves most of its overhanging financial problems with a seriously 

devalued – but not hyperinflated – dollar. The Social Security deficit is eliminated by 

abstaining from benefit increases and by inflating away much of what had been 

promised before. Most Americans suffer a severe drop in their standard of living, as 

they’re forced into new patterns of production and consumption. A generation of 

college students find that their degrees in sociology, political science, economics, 

English lit, Black studies, gender studies and underwater basket weaving are of no 

real value. 

When it's all over, the tough times that started in '07 prove to have been no more 

than a cyclical bump in the road, like all the other recessions since WW2, just much 

bigger. 

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A rough and memorable ride, but it ends with a return to prosperity. 

MIDDLE CASE – FACTS ARE IGNORED 

The world’s governments continue under the delusion that printing massive 

quantities of paper money will solve problems when, in fact, printing lies at the base 

of the problems. Most currencies lose most of their value. Some lose it all. This 

destroys the most productive people in society, the middle class, who produce more 

than they consume and save the difference... in currency. 

And it injures successful corporations that have billions, or even tens of billions, in 

cash. Few of their managers know what to do with such sums other than to hold 

currency; at best they’ll buy their own and other companies' stock. The result is a 

stock market boom in the midst of a grim depression. But only one person in a 

hundred will be in a position to benefit from it, because most will be living too close 

to the edge, and the stock market will be the last thing on their minds. The 

destruction of capital sets technology back quite a bit in the U.S., Japan and Europe. 

Chindia increases its relative strength. 

The U.S. government, believing it has both the obligation and the ability to “do 

something,” redoubles its control of the economy. Price controls and capital controls 

are the order of the day. Petroleum products are rationed. Enforcement of new 

regulations is assigned to a new agency, the “Economic Recovery Administration,” 

which resembles the TSA in most regards – except it has many plain-clothes 

employees, to better ferret out violators. 

People think increasingly of politics as the way to get what they want. More and 

more Americans move abroad – although things are deteriorating in most places in 

the world. Poor, backwater countries offer the best opportunities because their 

governments are either weak, or corrupt, enough to allow new economic activity. 

WORST CASE – WAR 

War is the worst thing that can happen to an economy, but it’s also the most likely 

thing at this point. When the going gets tough, the people in charge like to blame 

somebody else for the problem. That’s compounded by the foolish – but widely 

accepted – notion that war is good for the economy and that, for instance, it pulled 

the U.S. out of the last depression. 

Like all wars, this one results in a complete stifling of civil and economic freedoms. If 

my second scenario is unpleasant, this alternative is grim. 

The big conflict has already been teed up – the continuation of the Forever War 

between Islam and the West. I’ll hazard the major situs will be Europe – which has 

pretty much always been the case for wars in general for the last 2,000 years. 

Europe will be the worst place to be over the next two decades. And North America 

will be locked down like a police compound. 

China will have serious social turmoil as it is forced to reorient an export-driven 

economy catering to Europe and the U.S. As in the past, South America will be out 

388


of the conflict and in a position to benefit from it. India will also be a net beneficiary, 

largely uninvolved, and happy to watch their ex-colonial masters rope-a-dope 

themselves into poverty. 

People will always argue who really started it. Was it the Muslims when they poured 

out of Arabia in the 630s? Or was it the West when it invaded the Near East with the 

Crusades starting in 1099? Or was it the Muslims when the Turks took 

Constantinople in 1453 (although only 40 year later the Muslims would lose 

Grenada, in Spain, as the reconquista was completed) and then moved on to almost 

conquer Europe before being turned back at Vienna in 1683? Or is it more relevant 

just to look at recent history, starting at the beginning of the 19th century, when the 

West conquered and colonized every single Muslim country? Or the very recent 

past, when Muslims were counter-attacking, using a new military approach popularly 

called “terrorism”? 

My bottom line is that the next twenty years may be dominated by the Forever War 

that started in the 600s, being resumed in earnest. At least in Europe, it has the 

prospect of becoming a war of survival, much nastier than either WW1 or WW2. 

That resumption is being accelerated by what is going on in the Middle East now. 

The chances that the upheaval in the Arab world will just peter out and everyone will 

return to thefstatus quo ante are about zero. It’s a culture-wide affair, much as the 

revolutions in Eastern Europe were. Or, for that matter, the revolutions against Spain 

in South America at the beginning of the 19th century. 

The Arab revolutions are a good thing, in that they’re getting rid of criminal regimes. 

Some will be replaced with equally repressive cliques, although manned with 

different criminals. I suspect a few might be more like the French Revolution of 1789; 

good riddance to the old regime, but then came Robespierre. And after him 

Napoleon. 

Regardless of how the tumult plays out in any particular country, the erstwhile docile 

collaborators with Europe and the U.S. are being elbowed aside, and the regimes 

that replace them are going to accommodate the vast public constituency for hostility 

toward the West, if only for the sake of internal political advantage. 

The war is not going to be fought with conventional armies. First of all because the 

Islamic world doesn’t have any that would last more than a day or two against a 

Western army. But also because a Western army is useless against an amorphous 

mass of millions of people. 

So what will the conflict be like? Amorphous and disjointed, chaotic and without fixed 

fronts. Millions of Muslims are in Europe – Pakistanis in the UK, Turks in Germany, 

North Africans in France, Indonesians in Holland. Europe’s destructive conquest of 

the world has come back to bite. These people will approach majority status over the 

next 20 years, both because they reproduce at several times the rate of the 

Europeans and because they’re not being absorbed. And because, now, millions 

and millions more are going to arrive as boat people. 

389


The natives aren’t going to like it, for lots of reasons. And the outcome will likely 

resemble what always happens when large numbers of unwelcome foreigners 

invade a territory: violence. 

One consequence of the war, and especially of the collapse of the regime in Arabia 

(in 2031 it’s no longer called Saudi Arabia, because the ruling Saud family – at least 

the ones who couldn’t get to their jets in time – has been massacred) is a cut-off of 

oil until the U.S. invades. 

I hate to overemphasize oil, but the world still runs on it. When something does 

happen in Arabia, you can count on a disruption in the shipment of oil. And 

absolutely count on active U.S. intervention. 

A prolonged guerrilla war, similar to those in Iraq, Afghanistan, Libya and other Arab 

countries will follow. But there won’t be any cover story about ousting a bad guy or 

bringing democracy to the oppressed. It will be pretty obvious to everybody that, 

from the West’s point of view, it will start out simply to answer the question: What’s 

our oil doing under their sand? But from the Muslim’s point of view, it will be a 

different question: How can we rid ourselves of these aggressive infidels once and 

for all? Then the West will rephrase their question to: These people want to kill us! 

How can we stop them once and for all? 

You may be thinking that the U.S. can’t lose a war because it has a large and 

extremely high-tech military. All those expensive toys can be useful from time to 

time; they can win lots of small battles. But they’re basically useless for winning the 

next generation of warfare, as useless as cavalry in WW1, battleships in WW2, tanks 

in Vietnam or nuclear missiles today. 

What? Nuclear missiles obsolete? Of course. They’re expensive, clunky, and the 

enemy can tell exactly where they came from. A plane, or a boat, or a truck – or a 

FedEx package – is a much neater delivery system. And there will be plenty of 

nuclear devices to deliver. If they’re within the grasp of tiny countries like Israel and 

North Korea, they’re within the grasp of anyone. 

In fact, the centerpieces of today’s military are well on their way to the scrapheap or 

to museum displays. There may well be a few aircraft carriers, nuclear missiles, B-2 

bombers, F-22 fighters, and the like around in 20 years. But they’ll be oddities 

reserved for special purposes, like typewriters. Laser, electronic and robotic 

weapons will have replaced those using gunpowder, and they’ll be readily available 

to anyone (an accelerant in the collapse of the nation-state). The military's reliance 

on centralization and on computer power will prove an Achilles heel; a gang of 

teenage hackers (not only the best kind, but the most common kind) can devastate a 

military for pure sport. 

Conquest of wealth or territory will be pointless; that’s one thing even the Soviets 

suspected in the ‘80s, when they still had the power to invade Western Europe. It’s 

now nothing like in the old days, when a successful war yielded lots of gold, cattle 

and slaves. This lack of an economic return will obviate one reason for a military. 

The hollowing-out of nation-states will obviate another; governments will find they 

just don’t have either the financial means or the popular support for serious military 

establishments. 

390


The military, as the cutting edge of the nation-state, is in serious decline. Conflict 

between groups will still exist, of course, but it will be more informal, more the kind of 

thing that a Mafia or an Al-Qaeda might conduct. The growth of private military 

contractors, like Blackwater (now Xe), which only need be paid when in use, is 

indicative. 

A BASIC PLAN 

Sorry I can't do any better than a best-case scenario that just isn't very rosy – at 

least over the near term. And there’s a high likelihood of the worst-case scenario. 

There will probably be some overlapping elements from all three, if I’m on the right 

track. 

From an economic point of view, I see only two things as being predictable: One, 

that many people will always produce more than they consume and save the 

difference; this will create capital, which is critical for not only a higher standard of 

living, but for the advancement of technology. 

Two, that since there are currently more scientists and engineers alive than have 

lived in all previous history combined, technology will keep advancing; technology is 

the major force to advance the general standard of living. So that’s essentially why 

I’m an optimist. Let’s just hope the savers aren’t wiped out, and the scientists don’t 

do too much government work. 

The most sensible plan for the next 20 years is to plan to survive. The days of “He 

who dies with the most toys wins,” and of two whole generations living way above 

their means, are over. 

20 years isn't forever. Think of it like a bear market, when the best thing to do is take 

your chips off the table, grab some books and retire to the beach for a year – except 

that this is going to be a lot longer and more serious. Nonetheless, I expect my 

fundamental optimism to get through it undamaged, as should yours. 

For one thing, the long-term trend is favorable. Mankind has risen from subsistence 

and living in caves as little as 12,000 years ago, to reaching for the stars today – and 

the rate of progress has been accelerating. Why should that stop now? 

But, as I mentioned earlier, thinking too far in the future is perhaps pointless. So 

what should you do now? The essential advice remains the same: 

• Own gold and silver. At Casey Research, we’ve made a lot of money on them 

– and they’re no longer cheap – but they’re going higher, simply for lack of 

alternatives. Look at them as you would cash. 

• Produce more than you consume, and save the difference. This is no longer 

the time for promiscuous, conspicuous consumption. 

• Be alert for speculations. Some markets will collapse (for instance, I wouldn’t 

want to own a McMansion in the suburbs or a “collectible” car). Other 

markets will likely turn into manias, benefiting from trillions of new currency 

units (I suspect mining stocks will be one of them). 

391


• Diversify your assets (and yourself) politically and geographically. As big a 

risk as the markets will be, your government is an even bigger one. 

And, incidentally, we’re going to be looking carefully at the stock markets in the Arab 

world. It’s too early to buy. But there’s a time and a price for everything. 

[Only until June 14: Hear more investment advice from Doug and the Casey team, 

as well as 35 renowned experts who gathered at the recent Casey Summit in Boca 

Raton. Get yourDouble-Dip Crisis Bundle today – the full Summit CD set with more 

than 20 hours of audio recordings PLUS one year of The Casey Report at a huge 

discount. Details here.] 

It seems like I can never end this portion of the 

book. I’m reminded of a boy in high school who could look you right in the eyes 

and lie. Even when you backed him into an intellectual corner and proved that he 

was lying he would still stick to his story. To this day I wish I could have beaten him 

nearly senseless and then said, “Now you’ll admit to the truth, or die!” But as thing 

were I’ve always been the smallest fellow in the room and without years of martial 

arts experience I’m destined to never beat anyone senseless even though a few of 

them certainly deserve it. 

I actually have a thesis I’m developing around people who behave this way. I think 

they’re subconsciously afraid that everyone is out to kill them, so they’re going to 

hurt everyone first! This is the true definition of pyscosis with the addition of the fear 

factor. They don’t do it because they’re intrinsically evil. They lie and harm others 

because they fear everyone and everything. 

So, now we have a final article of “dis-information.” We know by now that if Greece 

falls Spain, Italy and Ireland will follow and the rest of the mess will likely collapse 

like a house of cards. 

A depression would be defined as wide spread loss of jobs and productivity across 

broad sectors of the economy in virtually every industry and every location. We are 

very definitely in a depression as of long before August 18, 2011 (the day I’m writing 

this.) But still there are liars looking you right in the face and sticking to their story. 

So, here’s a company with which you should have no business. Morgan Stanley! 

Morgan Stanley cuts global growth view, eyes 

ECB 

By Tenzin Pema in Bangalore and Marc Jones in London | Reuters – 9 mins ago 

The entrance to the Morgan Stanley headquarters is seen in New York, May 12, 2010. … 

LONDON/BANGALORE (Reuters)- The United States and euro zone are "dangerously close 

to recession," Morgan Stanley said on Thursday, criticizing policymakers and predicting the 

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European Central Bank will have to reverse its rates policy. (Recession indeed. We’re close to 

global economic collapse! sn) 

The Morgan Stanley research note, which cut global growth forecasts, was cited by stocks 

traders as adding to market nervousness over the U.S. and euro zone debt crises and the 

economic drag of austerity measures in debt-burdened countries. 

Deutsche Bank added to the gloomy market tone by cutting its gross domestic product 

forecast for China, a major growth engine for the world economy. 

Morgan Stanley cut its U.S. GDP forecast to 3.9 percent growth from 4.2 percent for 2011, 

and to 3.8 percent from 4.5 percent for 2012. 

It also predicted the European Central Bank's next interest rate move would be a cut, a sharp 

contrast to Reuters last ECB poll earlier this month when just one bank of around 50 

surveyed -- Australia's Westpac -- forecast a cut next. The ECB has raised its benchmark rate 

twice this year. 

"Our revised forecasts show the U.S. and the euro area hovering dangerously close to a 

recession -- defined as two consecutive quarters of contraction -- over the next 6-12 months," 

Joachim Fels, who co-heads Morgan Stanley's global economics team, said in a research note 

dated Wednesday. (It’s been contracting for much longer. The central banks continue to 

pump in more fake money to make things look better, but as business and jobs decline there 

is “contraction.”sn) 

That was not the bank's base case scenario, he said, noting the corporate sector still looked 

healthy and lower inflation will ease pressure on consumers' wallets, while central banks 

such as the Federal Reserve and ECB could try to loosen policy further. 

"A negative feedback loop between weak growth and soggy asset markets now appears to be 

in the making in Europe and the US," Fels said. 

"Against this dire growth backdrop, we no longer expect the ECB to hike rates. Instead, we 

now see the Bank cutting rates next year. We lower our refi rate forecast for the end of 2012 

to 1 percent from 2 percent before." 

Economists are beginning to latch on to a shift of view already evident among investors. 

Traders in financial markets have been moving to price in a cut since the ECB's last press 

conference on August 4. Standard Bank said this week it expects the ECB to make its first cut 

early next year. 

POLICY ERRORS 

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Weak growth data from the euro's main economies, Germany and France, has put further 

pressure on European politicians who have been haggling over ways to stop the bloc's 

sovereign debt crisis from engulfing Spain and Italy. 

The U.S. economy also stumbled badly in the first half and came dangerously close to 

contracting in the first quarter. High unemployment, a bruising political battle in 

Washington over the debt ceiling and spending cuts in July and a stock market slump all 

helped push U.S. consumer sentiment to its lowest level in more than 30 years. 

"Recent policy errors - especially Europe's slow and insufficient response to the sovereign 

crisis and the drama around lifting he U.S. debt ceiling -- have weighed down on financial 

markets and eroded business and consumer confidence," the Morgan Stanley note said. 

It now sees growth in developed market economies averaging only 1.5 percent this year and 

next, down from his previous view of 1.9 percent and 2.4 percent, respectively. 

Growth in emerging market economies will slow to 6.4 percent this year from 7.8 percent in 

2010, Fels estimated. 

This means that emerging market economies -- which now account for half of global GDP -- 

will generate 80 percent of the global GDP growth that Morgan Stanley is forecasting for 

2011 and 2012, Fels said. 

Most economists say they are not cutting their growth forecasts for emerging Asia for now, as 

the continent is less dependent on exports to Western markets than it was when the financial 

crisis hit in 2008. 

Morgan Stanley left its 2011 growth forecast for China unchanged at 9.0 percent, versus 10.3 

percent last year, but dialed back growth expectations slightly for Russia and Brazil. 

If the West does slump back into recession, or a prolonged period of meager growth, analysts 

say China may not be in a position to reprise its role in supporting the global economy as it 

did in 2008, when it announced a massive stimulus program. 

Inflation unexpectedly quickened in China in July, putting pressure on the central bank to 

keep prices in check with more interest rate rises even as growth showed signs of cooling. 

(Reporting by Tenzin Pema in Bangalore and Marc Jones in London; Editing by Mathew 

Veedon/Kim Coghill/Ruth Pitchford) 

394








I’ve given you plenty of information about who to 

look to for investment advice. But… what if you 

can’t invest? Or what if you believe, as I do, that 

all investments will be worth nothing when an 

economic collapse occurs? 

What next? 

Learn to live simply and be self sufficient as our 

great grandparents did. 

395


Surviving 

The Storm: Ageless wisdom to help prepare for adversity 

From Energy, Money, and Your Future by Vern Meyers, as quoted in MIA in August, 2006 

By now we must have arrived at the conclusion that there can be but one end to the present 

worldwide inflation. That is a collapse of the value of money followed by a collapse in the 

quantity of money (deflation). Such a collapse usually comes in the form of an exponential 

curve, rising rather swiftly to a crescendo near the end. We do not know exactly where we 

stand on this graph today, and there is no means by which we can predict the time of the final 

blowoff. 

But it is not always necessary to predict time. It is often enough for us merely to know that a 

thing will happen, without exactly knowing when. 

Among my earliest memories are memories of the storm. It was a small frame house of 

perhaps 500 square feet and it sat alone (so it seemed to me) on a vast and endless plain. Far 

beyond my known horizons lay a town. And in that town you could – if you had money – buy 

coal and lamp oil, sugar, even some preserves. The town was a reality only when the weather 

was right. It was a day’s journey. We were as far from the town, in time, as Los Angeles from 

London. 

When the deep winter set in, when the storms came, the town might as well have been 

London. Anything you needed from the town must have been laid in store long before the 

storm. You knew the storm would come. And you took it for granted. And you laid in the store 

of goods, with such resources of money as you had. 

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Long, long before any sign of snow we were getting ready for the storm. The early frosts 

brought us to our knees, plucking potatoes from the soil, pouring buckets of red spuds into 

sacks, and storing these in the dark cellar. There was canning of beans and beets; and even 

peaches – if we could afford them from the town. As the frosty mornings moved in, and long 

before the daylight, I could hear the rattle of the wagon as my father set out for the mine to 

lay in the winter’s store of coal. 

When it was all done, it was a pretty safe feeling. There was oil for the lamps, sacks of flour 

and sugar, dried prunes and raisins. The chicken house had been thatched; the hens were 

comfortable on the straw. The cows were in the nearby pasture. The barn was ready. When it 

was all done we read by the evening lamp. And we didn’t worry. We knew the storm would 

come. We didn’t have to know what day. And we didn’t worry. 

When, at length, the sky grew black in mid-afternoon and the wind began to whistle round the 

eaves and the temperature started to drop we were almost glad. The snow fell. The winds 

howled. The darkness settled, and the drifts piled high. So high, sometimes, that a boy could 

not see over them. Even when it went to twenty degrees below, forty degrees below, and the 

chill factor stood at minus ninety degrees so that three minutes would freeze your nose off, we 

made our quick trips, as necessary, to the well and the barn. The warm milk was in the pails. 

The pot-bellied stove glowed its heat. And as the storm increased in fury, my father would 

say: ‘Let her come. We were here first.’ He would say it on the third day, and if need be, say it 

on the tenth day: ‘Let her come. We were here first.’ 

The storm always blew out. And the sun shone again. And eventually there was spring. Had 

we not known the storm was coming, of course, we should have perished. I feel very strongly 

that we have had all the signals we could ask for in predicting the monetary and economic 

storm. Already the skies in the north are black, and the winds are rising. The temperature is 

dropping. This may be a preliminary storm, or it might be the big one. On the farm we didn’t 

worry if the storm came a little later than we expected. The important thing was to be ready 

for it. It came when it came. Why should we wish it before it came? Or why should we 

conclude that because it had not yet arrived, it would not happen at all? 

We are now entering the period of winter. If we are ready for it, we need not fret, nor hope 

that it will happen tomorrow, nor hope sooner or later; because we have no control. Our 

situation is simply this: To the best of our financial and economic ability we have stocked our 

cellar, boarded up our house, and we might as well relax. ‘Let her come. We were here first.’ 

And now we must touch on the most unpleasant possibility of all. That is virtual revolution in 

the United States. 

This book is concerned with the end of an era. That means the end of an era of 

permissiveness, the end of an era of the spoilage of people, the end of an era of credit and 

waste, the end of an era of something for nothing, the end of an era to buy now and pay later, 

the end of an era of dependence on someone else. 

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Americans aged forty years and younger have become so accustomed to the idea that the 

country owes them at least a living that the withdrawal of this presumed privilege could result 

in widespread rioting across the nation. Empty bellies produce inflamed minds. When it comes 

to considering the possibility of violent protest, it’s difficult to project either the upper or the 

lower limits. The lower limits could be rioting throughout the large cities. The upper limits 

could be organized revolution. 

In preparation for the time that will inevitably fall upon us – sooner or later – every man must 

rely upon his own imagination, his own projection, and his own initiative. You will be able to 

come up with your own solutions particularly applicable to your personal conditions in the 

storm. One thing is certain. You will see the collapse of this inflation and that will mean the 

end of the era you have known. But you and your country can still be saved. 

The storm can be weathered. 

Disaster Preparedness / Principles of Self Sufficiency 

1. Change the way you look at everything. Rethink your entire lifestyle. 

2. Develop discernment about people. 

3. When you invest, invest first in the right people. 

4. Look at your self honestly, and ascertain your strengths and your weaknesses. 

5. Seek the counsel of others you trust. 

6. Find like-minded people who can be part of a mutual support group with whom you 

can cooperate. 

7. Find alternate methods for doing everything. 

8. Develop an instinct for what doesn’t feel right. No matter how good something looks 

or sounds on the surface, go with your gut feeling, with your instinct, with your 

intuition. 

9. Eliminate non-essentials from your life. Eliminate all time wasters and money wasters, 

and things you don’t need – i.e. clothes, furniture, junk, etc. Eliminate television from 

your life. 

10. Simplify your lifestyle – learn to say ‘no’ to things or activities which do not make you 

self-sufficient. Learn to please God and yourself, and not other people. 

11. Develop physical, mental and spiritual disciplines. 

12. Learn to treat everything as if it were irreplaceable. 

13. Buy things that will last, even if they cost more. 

14. Acquire tools that do not depend upon electric power. 

15. Learn to spend time alone with yourself in total silence – think, reflect, reminisce, and 

plan [or strategize] in silence. 

16. Learn to spend time alone with yourself and your family, apart from superficial 

entertainment and distractions. 

398


17. Learn something from every situation you are in – everything you hear, see, touch, or 

feel has a lesson in it. Learn a principle from every mistake you make, from everyday 

life situations. 

18. Make sure your trust is in the Lord and not your own preparedness. Pattern your 

preparedness according to the guidance of the Lord. Listen to what the Lord puts in 

your heart – don’t use only your reasoning power. 

19. Learn to enjoy simple pleasures from the smallest things – have a measure of joy and 

happiness that doesn’t come from creature comforts or entertainment. 

20. Store up memories for times of isolation or separation from your loved ones. 

21. Establish priorities for all of life [i.e. relationship, needs, present needs, future needs.] 

Set goals for areas you’ll be proficient or self-sufficient in. Set a schedule or timeline 

based on money and time you can invest in self-sufficiency. 

22. Examine the concept of civil disobedience [from the Bible and history.] At what point 

should the people of Egypt have said ‘no’ to killing the male babies in Moses’ day? At 

what point should the people of colonial America have said ‘no’ to King George? At 

what point should the people of Germany have said ‘no’ to Hitler? At what point do we 

say ‘no’ to despots in our day – when they take over money, our property, our guns, 

our children, our freedom? Decide what is your action point – when do you move to 

civil disobedience? [For many throughout history – it was when evil leaders handed 

down edicts that were directly contrary to God’s Word or commands.] Don’t set your 

action point too early or too quickly – nor too late or never. Think through and 

calculate a strategy – then act on it. 

23. Learn to ask the right questions in every situation. [In ‘Operation Waco,’ nobody asked 

the right questions.] 

24. Bring orderliness into your life. If you live in disorder, it will pull you down; it will 

break your focus. Think focus versus distraction. Eliminate the distractions from your 

life. 

25. Self-sufficiency [or survival] principles are learned on a day-to-day basis and must be 

practical. 

26. Always have more than one way to escape, more than one way to do something. Have 

a plan B and a plan C. 

27. Everyday life [and especially crisis] requires ‘up-front systems’ and ‘back-up systems’ 

if the first line of defense or ‘up-front systems fails. 

28. Real education [or learning] takes place only when change occurs in our attitudes, 

actions, and way of life. 

29. Wisdom is making practical applications of what you know. It is not enough to know 

everything you need to know. It will only serve you and others if practical application 

is made of that knowledge. 

30. Fix in your own mind the truth about your capabilities. In a crisis situation, this 

principle will keep you from cockiness [or overconfidence] and will provide you with 

confidence. 

399


31. Decide ahead of time before a crisis arrives, how you will react in a given situation so 

that you are not swayed by the circumstances, the situation, or your emotions. 

32. Beware of being spread too thin in your life. Decide on the few things in life that you 

must do and do them well. Think focus versus distraction. Make sure that 

unimportant, non-essential distractions don’t keep you from achieving your important 

objectives. 

33. Learn to quit wasting things. Be a good steward of all that God provides. 

34. Buy an extra one of everything you use regularly and set the extra one aside for the 

time when such items may be difficult or impossible to obtain. 

35. In every situation, train yourself to look for what doesn’t fit, for what’s out of place, 

for what doesn’t look right. 

36. Teach your children [and yourself] that they are not obligated to give information to a 

stranger. You don’t have to answer questions [not even to a government official] that 

are none of their business. 

37. Sell or give away things you do not use or need. Consider giving away or selling 50% 

of your ‘stuff,’ [i.e. the non-essentials.] Simplify and streamline your life, lifestyle and 

possessions. 

38. Find someone who lived through the Great Depression and learn from them how they 

were self-sufficient, how they made do with little, and how they found joy and 

contentment in the midst of hard times. An excellent book on this subject is We Had 

Everything But Money: Priceless Memories of the Great Depression From Strong 

People Who Tell In Their Own Words What It Was Like When Banks Closed and Hearts 

Opened. 

See these and other excellent articles here: 

http://miatoday.com/articles/disasterpPrep.asp 

also see 

http://www.thefallofamerica.net/ If you think I’m alone in these opinions 

see this page and be sure to watch the video with it. 

SN: Again I say, under no circumstances should you participate in any mass protest or riot – because 

peaceful protests often do become riots. I’m writing August 12, 2011. We’ve just seen riots all over 

London and other cities in England. Our police will naturally assume that is the example they should expect 

here in the USA at some future time. The National Guard and the United Nations soldiers and our police, 

many of whom also carry a UN uniform and helmet will be ready at a moment’s notice to institute martial 

law. To survive you must cause no trouble and be out of sight. 

……………………………………………. 

If a “non-connectivity problem” can do this, what would 

happen to the whole country if the Internet stopped 

working? 

Posted on Yahoo News June 18, 2011 

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CHICAGO (AP) — United Airlines said Saturday that a computer glitch that grounded flights 

nationwide and left some passengers stranded overnight had been fixed. 

The airline blamed the problem on "a network connectivity issue" and said it was in the 

process of resuming normal operations. But the airline also indicated passengers may 

experience some delays for the rest of the weekend. 

"While we will be experiencing some residual effect on our flight operations throughout the 

weekend, United is committed to restoring normal operations as soon as possible," 

Alexandria Marren, senior vice president of system operations control for United, said in a 

written statement. "We encourage customers to print their boarding pass prior to arrival at 

the airport and give themselves extra time. 

The airline apologized to its customers and said it was rebooking passengers as needed. 

The outage started around 7:15 p.m. CDT Friday and lasted for about five hours. As a result, 

long lines of passengers formed at airports in San Francisco, Los Angeles, Denver and 

Chicago. Some passengers ended up spending the night at airports or found hotel rooms in 

the cities where they were stranded. 

United said its flight departures, airport processing and reservation system, including its 

website, were affected by the outage. 

United didn't say how many passengers or flights were affected. But Los Angeles 

International Airport spokeswoman Nancy Castles said the outage affected about 2,500 

people at that airport alone. 

Nina and Mark Whitford of Brockville, Ontario, ended up in Chicago while on a layover on 

their flight home from Minneapolis. They said they were headed to a hotel to spend the night 

and were dismayed when an airline worker told them they would have to mail in their hotel 

receipt to get reimbursed. 

"We've been waiting here for about two hours for our baggage, and nothing's come," said 

Nina Whitford, 35. 

She said several people were still at the airport around 1 a.m. CDT Saturday, and others on 

their flight had rented cars to complete their trip to Canada. 

"Some people were sleeping and some people were getting very angry because no one was 

giving us any answers," she said. 

Ron Schaffer, an Apple Inc. engineer, was trying to connect with a flight to Grand Junction, 

Colo., after flying into Denver from Orlando, Fla. 

"A hundred yards of kiosks, and every one of them closed," he said, adding there were no 

flights listed on monitors. "Workers were trying to answer questions. They have no ability 

401


to do anything manually. They can't check baggage. You can't get baggage. You 

are really stuck." 

At the San Francisco International Airport, hundreds of passengers stood shoulder-to- 

shoulder. ……. 

Just extend this idea. No communication, no transportation. No phones, the electricity 

stops, if you have a water well you can pump it by hand. If you live in the city the water 

stops flowing. You can’t flush toilets or get clean water from the tap. The grocery store is 

looted and empty. The gas stations are shuttered. Street lights and traffic signals don’t 

work. You have $5-million in gold stuffed in your mattress but it’s useless just now 

anyway! 

From Los Angeles, to Dallas in mid summer after 3-days the elderly, and the babies will 

be sick and dying. 

In Northern and North Eastern cities, after 10-days in mid winter most of the city will be 

dying. 

Are you getting my point? 

……………………………………………………..…………….. 

Top Post-Collapse Barter Items And 

Trade Skills 

Brandon Smith June 10th, 2011 

The concept of private barter and 

alternative economies has been so 

far removed from our daily 

existence here in America that the 

very idea of participating in 

commerce without the use of 

dollars or without the inclusion of 

corporate chains seems almost 

outlandish to many people. 

However, the fact remains that up 

until very recently (perhaps the last 

three to four decades) barter and 

independent trade was 

commonplace in this country. Without it, many families could not have survived. 

Whether we like it or not, such economic methods will be making a return very soon, 

especially in the face of a plunging dollar, inflating wholesale prices, erratic investment 

markets, and unsustainable national debts. It is inevitable; financial collapse of the 

402


mainstream system ALWAYS leads to secondary markets and individual barter. We can 

wait until we are already in the midst of collapse and weighted with desperation before 

we take action to better our circumstances, or, we can prepare now for what we already 

know is coming. 

In today’s “modern” globalist economy, we have relied upon centralized and highly 

manipulated trade, forced interdependency, senseless and undisciplined consumption, 

endless debt creation, welfare addiction, and the erosion of quality, as a means to sustain 

a system that ultimately is DESIGNED to erode our freedoms not to mention our ability 

to effectively take care of ourselves. We have been infantized by our financial 

environment. In the near future, those who wish to live beyond a meager staple of 

government handouts (if any are even given) will be required to make a 180 degree 

reversal from their current lifestyle of dependency and immediate gratification towards 

one of self sufficiency, personal entrepreneurship, quality trade, and a mindset of 

necessity, rather than unfounded excess. 

This means that each and every one of us will not only be driven to form barter networks 

outside the designated confines of the mainstream, we will have to become active 

producers within those networks. Each and every one of us will need to discover practical 

goods and skills that will be in high demand regardless of economic conditions. Being 

that our society has all but forgotten how this kind of trade works, let’s examine a short 

list of items as well as proficiencies that are sure to be highly sought after as the collapse 

progresses… 

Top Priority Goods 

To be sure, this list is a summary of items 

that will have high value during and after a 

breakdown scenario. I welcome readers to 

post their own ideas for trade goods below 

this article. The following is merely a 

framework which you can use to get started, 

and was compiled using actual accounts of 

post collapse trade from the Great 

Depression, to Bosnia, to Argentina, to Greece, etc. These are items and skills that people 

were literally begging for after financial catastrophe occurred in numerous separate 

events. 

Water Filtration: Stock up on water filters. Learn how water filtration works. Even make 

your own water filters using cloth, activated charcoal, and colloidal silver. Everyone will 

want to trade with you if you have extra filtration on hand. During economic breakdowns, 

especially in countries like Argentina, and Bosnia, which had more modern, city based 

populations, the first thing to disappear was clean water. Always. In some cases, the tap 

water still runs, but is filled with impurities, and needs to be boiled. Boiling does not 

remove bad tastes or smells, however, and clean filtered water will be in demand. 

Seeds: Non-GMO seeds are a currency unto themselves. They can last for years if stored 

properly, and everyone will want them, even if they don’t have land to plant them. Get 

enough for yourself, and then purchase twice as much for trade. 

403


Fresh Produce: Ever heard of scurvy? Probably. Ever had scurvy? Probably not. Believe 

me, you don’t want to have it. Your body essentially begins to fall apart slowly, and the 

result is an ugly boil and sore filled complexion, the loss of teeth and hair, and the 

eventual failure of internal organs. Don’t think you can live on beef jerky and canned 

beans for months on end. You need fresh vegetables and fruits, and the vitamins they 

supply. Anyone with a well managed garden and a few fruit trees is going to do very well 

in barter. Vitamin supplements would also be a practical investment. 

Long Shelf Life Foods: This one should be obvious, but you may be surprised how many 

preppers, even though aware of the danger in the economy, do not have ample stored 

foods.The rationalizations abound, but usually, you are dealing with a person who has a 

heavy hunting background, and believes he will be able to procure whatever food he 

wants whenever he wants with his trusty bolt action rifle and a few hours in the woods. 

Don’t fall into this foolish trap. Thousands if not millions of other hungry, destitute 

people will likely have the same idea, combing the forest for deer, only running into (and 

perhaps shooting at) each other. In every single account of modern economic collapse I 

have read, the people involved kick themselves brutally for not stocking more food that 

didn’t require refrigeration. Even those that were moderately prepared stated that they 

wished they had stored twice as much as they did. 

Sealed food kits would be highly valued trade items, as long as they contained necessities 

like grains (wheat or rice store well), salt (the human body will not function without salt), 

honey or maple syrup (the body needs sugars), and powdered milk, peanut butter, or any 

other foods with fat content (the body needs fats). Prepackaged freeze-dried foods are 

more expensive to stock, but they are, of course, easy to trade. 

Food Producing Animals: Chickens are great for eating, but they also produce eggs. 

Cows and Goats can be slaughtered, but they also produce milk. Sheep can be easily 

herded towards your dinner plate, but they also produce wool. Rabbits make a good stew, 

but they also produce lots of other rabbits. In terms of barter, these animals will be life 

savers, as well as a solid source of trade income. Dual purpose livestock are really where 

it’s at for those who have even an acre of land, and many of them (except cattle) tend to 

feed themselves easily if left to wander your property. You can trade eggs, milk, wool, 

etc, that they produce. Not to mention, fetch serious value for trading the animal itself. 

Solar Power: Solar power is so overlooked by most barter organizations and survivalists 

in general that it’s astonishing. If every home in America had at least two large solar 

panels on the roof, I would not be half as worried about collapse as I am today. My 

suspicion is that many preppers believe that after a breakdown, we will all return to some 

kind of Agrarian pre-electric age where everything is lit with oil lamps. This is silly. If I 

have my LED lamp with rechargeable batteries, I’m certainly not going to rely on less 

effective burning lamps that depend on a finite fuel supply. And, I’m certainly not going 

to give up the advantages of nightvision, radio communications, or refrigeration if I can 

help it. The key is to ensure that you have a continuous means of diverting electricity to 

these goods. This already exists in the form of solar power. 

Depending on your budget, you can purchase solar panels that can be folded and carried 

with you for charging batteries, or, you can purchase entire arrays and battery banks that 

run your whole house. Those without electricity WILL want electricity, and solar is an 

excellent barter item. Wind generators, as well as water driven generators (as used often 

404


in Bosnia) are also a consideration. People that have the knowledge to set up these 

systems for others will not have trouble finding trading partners. 

Firewood: Even with solar power, home heating will become a major concern for every 

household during and after a breakdown. If you can avoid running your battery bank out 

on inefficient space heaters, you will. The best way to do this is with a wood stove, or a 

fireplace.Those without any electricity will scour their immediate areas for loose wood, 

then move on to chopping down random trees for fuel. This is one of the few instances, 

ironically, that those in urban environments would have an advantage, being that dry 

wood for burning is literally everywhere in the city. During the Great Depression, 

families would often sneak into abandoned homes and apartment buildings to dismantle 

sticks of furniture, or even the walls, to use as firewood. 

A small, well insulated home can be heated with as little as two cords of wood every 

winter.Larger drafty homes require as much as twenty cords per winter. A “cord’ of wood 

is a stack of split timber around four feet wide, four feet high, and eight feet long. This 

wood is “aged”, or dried for at least a year after being cut, so that it burns cleaner, and 

creates much more heat than freshly felled timber. When the general public begins to 

rediscover the need for aged cord wood, those with timberland will have a prized 

commodity on their hands for barter. 

A disciplined cutting routine would be essential. Only cutting enough timber (of the right 

maturity) to create a decent supply while not erasing the whole forest for a single year of 

profit.Those traders with the correct knowledge will do very well in a barter economy. 

Gasoline And Oil: This is a tough one, because its hard to predict how much petroleum 

the U.S. will be able to import or produce on its own during a collapse, and its very 

difficult to store for long periods of time. If you hear news that the wars in the Middle 

East have expanded even further, or that OPEC is decoupling from the dollar, you might 

want to run to the nearest station and fill as many storage cans as possible, along with a 

little bit of added ‘gas saver’ which helps keep it stable longer. Initially, people will be 

dueling to the death for gas and oil. I have little doubt. After the price hits $15, $30, $60 a 

gallon due to hyperinflation, and a little time passes, I think people will begin finding 

ways to live without it, or they will reduce its use to emergency tasks. 

Desire for gas will always be there, especially in agricultural areas where one tractor 

could help sow the seeds that feed an entire town. But beyond storage, I would suggest 

learning ways to distill your own corn ethanol and alcohol based fuels. This is where the 

real barter potential is. 

Silver And Gold: I placed precious metals in the middle of this list for a reason. Concerns 

in a collapse situation will be varied, and the manner in which a derailment progresses 

will also determine the order of needs in a barter community. In a Mad Max scenario 

where there is little to no community, or the construction of any semblance of economy is 

impossible; sure, gold and silver will not be very high on most people’s lists. Has this 

ever happened in recorded history? No. Gold and silver have remained common 

currencies for thousands of years despite any catastrophe. This is why I have to laugh at 

those people who undercut precious metals or claim that because you “can’t eat them” 

they will not be important. In Argentina, in the midst of complete meltdown and 

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monetary chaos, when people were shooting each other in the streets for food on a daily 

basis, gold and silver became king, and still are. 

Barter networks that have formed in Argentina love to trade for anything made out of 

gold or silver, because precious metals are the only tangible form of currency in existence 

there. Being able to trade goods is fantastic, but sometimes, you may not have what 

another person wants. Do you go out to find someone who does, trade with them, then, 

try to find the guy who turned you down? No. If you have any meaningful localized 

commerce in place, then you should also have a common medium of exchange, and 

precious metals are the only thing that safely fits the mold, because they cannot be 

artificially reproduced or fabricated. Their rarity and their longevity make them the 

perfect method of common trade. Even if the worst of the worst occurs, rebuilding will 

result in the immediate resurgence of trade, and the immediate need of a new currency. 

Gold and silver will come back, as it always has, and always will. Every potential barter 

network should be including gold, silver, and maybe copper, on its list of accepted 

alternative currencies, and the values of said metals should be weighed by the inherent 

supply and demand of the community. The “official” market value (which is very 

manipulated) should only be used as a loose guide. 

Firearms And Ammo: Another obvious one. The problem is, the selection of calibers is 

so varied within the U.S. that stocking anything that will be needed by everyone is very 

difficult. The only recourse is to stick with common military calibers, such as 9mm, 40 

S&W, 45 ACP, .223, 7.62 by 39, 7.62 by 51 (.308), 12 gauge, .410, and 20 gauge 

shotgun shells, and the ever pervasive .22. Stocking these calibers will result in a much 

greater chance of trade. 

I can think of no instance of societal disintegration that did not lead to horrible violence. 

In places where firearms are outlawed, the carnage is always much worse. Criminals 

easily get their hands on weapons, while law abiding citizens are left defenseless. 

Governments take liberties with the people, while the populace cowers. Accounts of 

torture, rape, murder, and genocide, are abundant in the face of hard economic times. 

EVERYONE should be armed, and as reality sets in, even those who clamored to outlaw 

guns will be clamoring to get one. 

Of course, laws today very strictly regulate our ability to barter firearms, but post 

collapse, no one will care much. 

Ammo reloading will be a useful skill in light of the fact that homemade manufacture of 

ammo is very difficult. The nationwide ammo supply will dwindle very quickly, except 

for those pockets of people who smartly stockpile for trade. 

Body Armor: That’s right. Any kind of body armor is as good as gold in a collapse 

environment.People in countries across the world wish they had it, and would trade 

almost anything for it.When you live in a place where a random gun shot (a minute by 

minute occurrence in many countries), from a criminal’s weapon, or more likely a police 

or military weapon, could bounce off the curb or through your car windshield, and into 

your chest, you begin to respect the necessity of Kevlar. The fact that body armor is 

relatively cheap and is easily obtained in the U.S. should be taken advantage of by barter 

networks. This advantage may not exist in a couple of years. 

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Tazers And Pepper Spray: Easy to purchase and stockpile here in America. Better than 

nothing when facing armed attackers. Disables without death (in most cases), and easier 

on the conscience. Trades well. 

Various Tools: A garden hoe may be a novelty item to most suburbanites and city 

dwellers now, but soon, it will be a mainstay tool. If you have extra, they will come to 

you for barter. I’m not going to list every tool in existence here, but I suggest using 

common sense. What tools do you see being required for daily use? What would YOU 

need post collapse? 

Pesticides: I’m big on organic food and healthy eating, but if my life is on the line, I’m 

spraying my crops down with whatever poison I can find. Unless you have years of 

experience with natural pest deterrence methods, then I suggest you do the same, 

especially in that first year of calamity. A hoard of locusts could annihilate your crop 

within a day given the chance, and should be dealt with using the most powerful means 

available. 

Cockroach and rat poisons will also be huge sellers, guaranteed. Vermin thrive in 

unkempt human environments, whether in the country or the city, and with them comes 

disease. Diseases you thought had disappeared off the face of the Earth, like bubonic 

plague or small pox, will make a comeback in cities, where streets of death and sewage 

act like enormous Petri dishes (remember New Orleans after Katrina? Imagine if that had 

never been cleaned up). 

Stock pesticides, even if they offend your environmental sensibilities. You’ll use them, 

trust me. And, people will trade whatever they can for them. 

Warm Clothing: The world is awash in textiles and clothing. Using clothes as your 

primary means of trade is not necessarily the best plan. However, most of the clothes 

made around the world are very poor quality, and are not designed for harsh 

environments. Clothes made specifically for harsh cold or rough wear are harder to some 

by, and are often very expensive.This is where you would want to focus your 

investments. 

Gortex, for instance, could give you incredible bartering potential. Wool socks are a 

rarity (how many people do you know with more than two pairs of wool socks?). Water 

resistant and water proof jackets and overcoats, boots, well made hiking shoes, and 

waterproofing chemicals and sprays will be needed within trade networks. The ability to 

make these items, or repair them, will also be valued. 

Medicines: This is another difficult item to procure, mainly because doing so often gets 

you flagged as a possible drug dealer. Certain items aren’t too hard to come by and store, 

though, and could be life saving barter material in the future. Antibiotics are handed out 

like candy by doctors today, so storing any extra you have away for trade may be a good 

strategy. Painkillers are another medical miracle that doctors seem to sprinkle out of 

helicopters without a second thought. With the risk of injury increasing one hundred fold 

after a financial tsunami, I suspect even mere aspirin would put a smile on the face of any 

barter networker. 

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Eventually, natural medicines and herbs are going to have to move to the forefront, as 

industry medicines begin to disappear, or become so expensive they are unobtainable. 

Stocking such herbs and vitamins would be smart, for protecting oneself, not to mention, 

its savvy business sense. 

Toiletries: Yes, yes, we all hear about how great toilet paper will be as a barter item, and 

how preppers plan to demand cows, trucks, and beach-front property, in return for 

packages of the silken quilty-soft huggable rolls of goodness. I don’t disagree that it will 

be highly desired at first. People don’t change their habits that quickly. But let’s face it; 

toilet paper is a luxury item in a post collapse environment, not a necessity. People are 

going to eventually go back to older methods of hygiene, like using strips of washable 

cloth. It might sound gross to us now, but hey, did you think we were going to start using 

poison ivy and pinecones? 

Stock toilet paper, but don’t treat it as a priority. Focus more on cleaning items like soap, 

toothpaste, and bleach, as well as chemicals that cause human waste to quickly 

biodegrade. Staying clean is VERY important, because the alternative is catching a nasty 

bacterial infection that may kill you, when in more peaceful and comfortable times, it 

may have just given you slightly irritating intestinal distress. The rest of the country will 

come around to this way of thinking in short order, and many people will come to you for 

the cleaning goods you stockpiled. 

Specialty Items: There are many circumstances that are hard to predict, circumstances 

that could severely affect barter markets and what items come into demand. For example; 

a nuclear event, as is in progress in Japan, could just as easily strike the U.S. There are 

104 nuclear power plants in the U.S., not to mention the threat of a small nuclear attack 

(or false flag). The market for goods such as potassium iodide pills and Geiger counters 

would explode (potassium iodide suppliers were inundated with orders from around the 

world after Fukushima). How many people do you know with a Geiger counter? I’m one 

of the few I know with one, and I know preppers across the country! In the wake of a 

fallout situation, knowing what is contaminated with radiation and what isn’t, knowing if 

it’s even safe to go outside, is imperative. Having an extra Geiger counter could help you 

barter your way into any number of goods. 

A biological event might bring medical grade particulate masks to the top of people’s 

lists, as well as disinfectants and even hazmat suits. It’s an ugly thing to imagine, but for 

those who plan to engage in independent trade, it’s a likelihood that must be considered. 

Top Priority Skills 

Provided below is a brief list of skills which 

have served people well in various economic 

downturns, and will do the same for you in 

this country. Keep in mind that almost any 

skill that other people cannot do well has 

potential for trade, but some skills are more 

sought after than others. In my research, it is 

those people who are able to produce their 

own goods as well as effectively repair 

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existing goods that have the greatest potential for survival in a barter market.Next, are 

those people who have specific abilities that are difficult to learn and who have the knack 

for teaching those abilities to others. If you do not have any of these skills, or perhaps 

only one, then it would be wise to begin learning at least one more now. Keep in mind 

that competition will very much exist in a barter economy, so knowing as many skills as 

possible increases your chances of success. 

Mechanic, Engine Repair 

Welding 

Blacksmithing 

Firearms Repair, Ammo Reloading 

Construction 

Architect, Home Reinforcement 

Agriculture, Farming Expertise, Seed Saving, Animal Care 

Bee Keeping 

Doctor, Medical Assistant 

Veterinarian 

Well Construction, Water Table Expertise 

Engineer, Community Planning, Manufacturing, Electrical 

Firearms Proficiency, Security, Self Defense Planning 

Martial Arts Training 

Wild Foods Expert 

Hunting 

Chemist 

Sewing, Textiles 

Soap Making, Candle Making, Hygiene Products 

Small Appliance Repair 

Electronics Repair 

HAM Radio Expert 

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Homeschooling, Tutoring 


(More Suggestions from SN) Plumbing, water well construction and maintenance, fire 

place, chimney and heater stove building and maintenance, bicycle repair, even making 

of wagons and horse drawn plows will come in useful. 

Everything to do with sea-faring. Fishing, net making and repair, rope work, boat 

building, rigging, sail and awning making, making of blocks. You should keep this URL 

and buy a boat design. Preserve the design for generations and if you’re alive after 2014, 

build a boat! http://www.atkinboatplans.com/ If you’re afraid of the ocean make copies 

of the plans and sell them to people who will buy them. There are great plans here that 

can be adapted to move cargo, people, and fish. 

Do YOU know anything about how to make a block and tackle? Can you tell me what a 

“Handy Billy” is and how to use it? What’s an eye splice? Can you splice galvanized 

wire? What’s a “gin pole” and how can you lift something very heavy with it? I don’t 

care your age or gender. Everyone can learn this and everyone reading should look these 

up on line and learn about them THIS WEEK! 

Get a book or two about doing Swedish Massage and learn all you can. Don’t be afraid to 

work around the spine a bit or check my book website for a course about “back pain 

massage” in which I’ll teach you to combine most of the basics of Chiropractic with 

massage. This is not difficult to learn and you really don’t need an 8-year degree to help 

your friends and family. 

Can you make soap, candles, ceramic items? Can you produce a mold for ceramics or 

concrete or even molten metals? Do you know the formula to make peuter, bronze or 

brass? Can you make a solar oven? Can you explain how to make a water cistern? Make 

adobe bricks? Make a septic tank? Can you make a dry toilet and know how to turn what 

comes from it into compost? Can you make an outdoor solar heated ceramic water tank? 

An indoor ceramic heater stove? Do you own a book about Aquaponics? No? go to 

Amazon.com and look for a few. There’s a good one there for Kindle for just $4.00 Do 

you own any “heirloom seeds?” If you don’t start looking for some and buy what you 

can. 

Speaking of “can” can you Can any fruits and vegetables? Did you ever watch anyone do 

it? Get a book on canning and meet with the elderly ladies Christian cooking club and 

learn to store food. 

What do you know of first aid, sewing and bandaging wounds, setting a broken bone? 

Can you do a Heimlich maneuver on a baby? Can you care for horses, cows, chickens? 

Could you make a thatch roof? 

You see everyone of any “substance” thinks he’s wealthy if he trades a financial 

instrument and makes a few dollars. What happens when the dollars become useless? 

They’re only promises to pay upheld by the “full faith and credit of the United States 

Government” which is growing less trustworthy every hour. So if you have $10,000 and 

tomorrow that’s the price of a loaf of bread how far can your money take you? 

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All of this stuff is vital for living. Turn the flaming Television off and start learning a 

LOT more! I’m not a nice guy about this. I’ve said nothing and quietly observed dozens 

of thoughtless, non-analytical people all of my life. I’ve wondered how most of them 

survive! They do because someone is there to help them so long as they have money. But 

when the government fails and the electricity is gone for the next 5-years you’re going to 

depend upon your wits and what you’ve learned, or you’re going to starve and freeze. So, 

start using the brains God gave you and give the TV to the garbage man. 

Why am I upset? I’m upset because nearly everyone is busy watching handsome Brian 

Williams on MSNB-TV earn 15-million dollars per year and teach you nothing about 

what’s coming or how to save your life! Everyone is busy being entertained 4 or more 

hours every night instead of using those 4 hours to be self-educated. 

Meantime the simple rural farmers that everyone thinks are backward will survive and 

thrive, after they weep and pray for all those who died “for lack of wisdom.” 

But you see … their churches have been telling them to expect this for years! They look 

at young women covered with tattoos and living promiscuous sex lives and just say, “It 

was all predicted and here it is. I’m so glad my family isn’t part of that behavior!” 

And all of this is just a small portion of the story. There are parts of Japan that sway and 

rise and fall like floating docks. The west coast of Japan is sinking! Eventually huge 

swaths of North America will too. As I said, “IF” you’re alive after 2014 can you help 

create a new civilization? I’m afraid most of us cannot. I’m afraid most people are 

completely clueless about the final days being as the days of Noah were. 

Have you asked the Creator of the Universe for His protection, or do you believe He is a 

myth and all life was accidental? 

I was in college in the late 1960’s. The Hippy movement days. And of course so many 

people were busy with their sex, drugs and rock-n-roll. Now they know if they tell their 

kids not to behave that way they’ll be living their own Hipocracy. So their kids are going 

to college and trying to fit some study time in between all the orgies and high-times. 

They’re carrying around several sexually transmitted diseases. They think life is an 

accident and therefore there’s no reason for morality or any attempt to raise a better 

society. They don’t love anyone. They are completely self-centered, and the idea of 

honestly helping your neighbors or strangers across town seems “abnormal.” 

Ambassador, “How is all of this going to end?” 

“With Fire.” 

Who is going to survive this? I’m afraid little old ladies in Russian, Ukraine and 

Rumania, because they’ve lived the simple peasant ways for generations and they know 

how. More … it’s their way and they’re comfortable with it. They don’t have to adapt to 

simple living. It’s the way they live now. Learn from any of them in your background, 

because their voices from the past are trying to save your life! 

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Again, there are definitely many more trades of value that could be learned. This list is 

only to help you on your way to self sufficiency and entrepreneurship in an Alternative 

Market. Unfortunately, too many Americans have absolutely no skills worth bartering in 

a post collapse world. 

Bringing Back The American Tradesman 

Barter networking is a powerful tool for countering the affects of depression, 

hyperinflation, stagflation, globalization, and beyond. But, networks require that 

participants actually have necessary goods and services to trade. In only half a century or 

less, American culture has been sterilized of nearly all its private trade skills. We have 

lost our desire to produce, and have been relegated to the dregs of a retail nightmare 

society dependent entirely on consumption and debt. This is going to change, one way, or 

another. 

We can change on our own, or we can wait until fear and desperation force us to make 

hard choices. I would rather forgo the desperation and the painful fall into the gutter. It 

makes little sense. 

The bottom line is, if you wish to survive after the destruction of the mainstream system 

that has babied us for so long, you must be able to either make a necessary product, repair 

a necessary product, or teach a necessary skill. A limited few have the capital required to 

stockpile enough barter goods or gold and silver to live indefinitely. The American 

Tradesman must return in full force, not only for the sake of self preservation, but also for 

the sake of our heritage at large. Without strong, independent, and self sufficient people, 

this country will cease to be. 

This article has been generously contributed for your reading pleasure by Brandon Smith 

of Alt-Market.com. 

You can contact Brandon Smith at: brandon@alt-market.com 

Join Alt-Market today, find a barter network in your area, or start your own. Insulate 

yourself and your family from economic collapse before it is too late. 

Author: Brandon Smith 

Date: June 10th, 2011 

Website:http://www.alt-market.com/ 

Copyright Information: This content has been contributed to SHTFplan by a third-party 

or has been republished with permission from the author. Please contact the author 

directly for republishing information. 

SN: More stuff to store 

Soap, shampoo, tooth paste, and other cleanliness items 

Sex Lube 

Birth control products 

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First aid items 

Canning jars and lids (lids can be traded) 

BBQ starter fluid, lamp oil, kerosene, 

coal, other burnables, 

flashlights and similar lamps, buy a couple of good heavy cast iron fry pans and covers 

for them. Learn to care for them. They spread heat evenly and last forever if you wash 

and dry them immediately after use and then let them warm over the fire to be sure all the 

moisture is evaporated off. No kitchen should go without them. Also get… knives, can 

openers, tooth brushes, shaving razors, lighters/matches, needles, (sewing and medical 

instruments including scalpels, calipers, etc.) First aid supplies including bandages, spray 

on disinfectant/pain killers, topical antibiotic salve, thread for sewing wounds. Heirloom 

seeds! Aquaponic books at Amazon.com and a signal whistle in case you’re lost some 

place. Raid the Salvation Army stores and buy a lot of warm used clothing for yourself 

and others who will be in need. 







If you’re still dreaming of making big money read 

this. 

Legendary investor Mark Mobius: 

Buy commodities... and buy 'em big 

Friday, November 05, 2010 

From Bloomberg: 

The U.S. Federal Reserve's bond purchase plan will further drive the rally for global stocks 

and push commodity prices "higher and higher," said Templeton Asset Management Ltd.'s 

Mark Mobius. 

"We could have an optimistic scenario for quite some time," Mobius, who oversees about $34 

billion, said in a telephone interview from Beijing yesterday. "Commodities are the big area 

for us. We are great believers in higher commodity prices and therefore are investing in 

commodity companies." 

The MSCI World Index yesterday surged to a two-year high, gold surged to a record, and 

crude oil advanced to a seven-month high after the Fed announced Nov. 3 plans for $600 

billion in bond purchases through next June. Asian stocks rose today, pushing a benchmark 

gauge to its best weekly advance this year, on speculation the Fed will succeed in stoking 

growth in the world's biggest economy. 

The liquidity flooding the global economy from the Fed's quantitative easing will extend 

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record gains for commodities and dollar depreciation cannot be avoided, said Mobius, 74, 

who is also the chairman of Templeton's emerging markets group. 

The U.S. economy is growing and that will have a positive effect on Europe and spread to 

other countries, Mobius said. The "bright spot" is the emerging markets where demand 

continues to grow, he said. Rising incomes in developing nations are especially good for 

consumer stocks, he said. 

Mobius joins Goldman Sachs Asset Management's Jim O'Neill in saying the Fed's measures 

to boost the U.S. economy will spur further gains for global equities. O'Neill, creator of the 

BRICs acronym to describe the large emerging markets of Brazil, Russia, India and China, 

said this week that while a new "bull market" in global equities probably started in the past 15 

months, current valuations are far from a "bubble." 

China Bull 

The MSCI Emerging Markets Index has jumped 17 percent this year, compared with an 8.4 

percent advance for a measure of developed markets. 

Mobius said he's "very bullish" on China as the country has "no big problems." Even though 

stock valuations are not as attractive as last year they are "not out of sight" and Templeton 

funds are buying companies that are expanding in the nation's less developed regions, 

particularly consumer companies. 

"It's not as easy as it was but we're still buying and finding opportunities," he said. 

The Shanghai Composite Index has rebounded 31 percent since reaching this year's low on 

July 5 on expectations central banks around the world will inject more cash into their 

economies to boost growth. It remains down 5.8 percent this year after the government 

raised bank reserve requirements and curbed lending growth to cool the economy. 

'Wouldn't Touch' 

Demand is so strong in China that Mobius is now looking at airline stocks, an industry that 

he said he normally "wouldn't touch" because of low profit margins. 

Emerging markets may face inflationary pressure from the capital inflows spurred by the 

Fed's measures, he said. 

Inflows into emerging-market stock funds have surpassed $60 billion and exceeded $46 

billion in bond funds, both poised for their best year since Cambridge, Massachusetts-based 

EPFR Global started tracking them in 1995. 

Central banks in emerging markets will buy dollars to prevent their currencies from rising 

too fast and as their foreign exchange reserves increase in size so they will appear 

increasingly safe to investors looking for markets with higher economic growth and yields, 

Mobius said. 

"It's a vicious cycle," he said. "The consequences could be not too good going forward. It's 

something we have to watch carefully." 

Stock Sales 

For now, capital inflows in emerging markets are being counterbalanced by "hundreds of 

billions" of funds being raised by new stock sales and secondary fund raisings, Mobius said. 

If funds keep pouring in and companies that have raised cash begin using the cash to buy 

assets, prices will be pushed up in a "snowball effect," Mobius said. 

414


The worst-case outcome is a bubble that bursts after prices rise too fast, with "people getting 

hurt" because they were too optimistic, Mobius said. 

None of these outcomes is likely in the short term and Mobius said his funds are fully 

invested. "I'm pretty optimistic," he said. "I don't see any risks any time soon. These things 

can last for years and years." 

To contact the Bloomberg News staff on this story: Kevin Hamlin in Beijing on 

khamlin@bloomberg.net. 

To contact the editor responsible for this story: Chris Anstey at canstey@bloomberg.net. 

This would never happen where you live 

by Simon Black 

Email This 

June 2, 2011 

Here’s a great story. 

I left Santiago yesterday, quite happy that I had managed to lock up a major property deal 

at the 11th hour right before my international departure. I cut it so close, I literally had to 

run from my attorneys’ office back to my flat in El Golf within 90-seconds of signing the 

contract. 

I was in such a hurry to make my flight that, when going through security, I forgot to 

empty my pockets. I know, the cardinal sin, right? 

I had a Blackberry, my wallet, a belt, and several Chilean coins jingling around in my 

pants, and the X-ray machine dinged like a winning slot machine. Instinctively, I 

prepared myself for a verbal battle with some neanderthal who would try and put his 

hand down my pants. Except… it didn’t happen. 

In my haste, I had almost forgotten that this was Chile, a civilized place that doesn’t go 

out of its way to demean citizens and residents at every available opportunity. No 

fondling, no fear and intimidation tactics, no surprise searches, no cash-sniffing dogs, no 

‘secondary screening’, no stasi on the jet bridge. 

415


Instead, the solo security attendant simply asked if I had anything in my pockets. I pulled 

out my Blackberry and showed it to him, and he waved me through. I was on my plane 2minutes 

later. 

A few days ago, I was having a conversation with our Chief Investment Strategist Tim 

Staermose; he was telling me about a similar experience traveling recently to Macau via 

hydrofoil from Hong Kong. 

During his trip, he checked his luggage, got his boarding pass, went through immigration 

control… all the typical sort of international travel stuff, except for one thing: there were 

no X-ray machines or radiating body scanners at all, and there certainly weren’t any surly 

border guards to fondle passengers. 

As I travel frequently and spend time in so many different countries, it’s becoming clear 

to me that there are essentially two categories in the world – police states that are running 

towards George Orwell’s view of the world in 1984, and countries where you can still 

feel like a free human being. 

Unfortunately, the police states are doing their best to corrupt the rest of the world. 

Homeland Security chief Janet Napolitano recently toured India and met with senior 

security officials there, undoubtedly trying to influence them to toughen security 

measures and join the Orwellian order. 

Back in the US, DHS recently announced its ever-expanding “If you see something, say 

something…” program, this time at the 2011 Indianapolis 500 race. 

If you’re not familiar, this is the program that encourages people across the country to 

become unpaid spies for the federal government and rat out friends and neighbors for 

anything ‘suspicious’. In eerie Big Brother fashion, Napolitano delivers this message 

from monitors perched throughout WalMart stores nationwide. 

The stated DHS purpose for the Indy 500 message this past weekend was to “help ensure 

the safety and security of fans, employees, and race crews by identifying and reporting 

suspicious activity” at the venue. 

Realistically, though, it’s just a precursor to having Homeland Security involved in public 

sporting events… in addition to airports, train stations, subway stations, bus stations, and 

eventually shopping malls. 

(This video, though a bit long, should give you an idea of the ridiculously police state 

conditions that exist in public places.) (SN: This is the perfect lesson teaching you how to 

run afoul of police and similar “law enforcers.” Just understand, they are not judges or 

juries. They just have a job to do and they take people to jail. That’s their job! This guy 

“Christopher” from Oregon is destined to be in a concentration camp and he’ll die 

waiting for a fair trial. I knew an elderly lady with a thick German accent. She was 

protesting Hitler during those terrible years. She was taken to a concentration camp and 

finally released when the Americans released those prisoners and captured the German 

army. Her parents never knew anything until the war ended. They thought she was going 

to college in Paris! She came home so starved when her mother caught first sight of her 

she fainted away. This guy Christopher thinks he’s a jail house lawyer about to win an 

416


argument in court. His “understanding” is bull-poop. He might well be committing a 

crime. If he wants to be “dead right” he’s going to be if he continues in this way. He may 

be right, but he’ll also end up dead, and that’s no way to live to fight another day.) 

This has nothing to do with security, but the gradual brainwashing of a population to 

accept a heavier and heavier hand of government in daily life. They convince people that 

government is necessary to create jobs, to provide security. Within a few years, though, 

this influence can change the entire face of the country. 

Developed countries used to be the light of the world, the pinnacle of civilization. You 

could turn on the TV in North America or Europe, see terrible oppression in third world 

countries and think, “that would never happen here.” 

Ironically, as I was sensibly waived through security in Chile’s principal airport 

yesterday, I thought to myself, “wow, that would never happen in the United States.” 

Similarly, as many of my foreign friends see TV clips of police battling citizens across 

Europe, and even in North America, they say “wow, that would never happen here.” 

The tables have truly turned. 

Look, economic opportunity exists all over the world, and modern technology makes the 

opportunities accessible to just about everyone. Moreover, nice, clean, developed places 

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* Simon interviews Joel Salatin, famous for his role in the Food, Inc. documentary, about 

417


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SN Comments 

The question is when will you realize it is happening? 

How many banks must fail, how high must prices go, how many jobs must be lost 

before you realize it’s happening NOW. We can’t repay these debts and there are 

serious consequences for that. 

You cannot believe anything the government tells you about the state of our 

financial affairs. The main point I make is that the fractional banking system has 

to end and the constant printing of fiat money will turn the rest of the world 

against us. At the end of QE II Interest Rates will spike, stock market will fall, 

unemployment will rise, silver and gold prices will continue to rise and the fed 

will have to announce QE 3. 

There’s no other way to finance our debts. Silver will go up much more when QE3 

is announced. Silver will double from today’s current price. The real credit rating 

of the US see the gap between our bonds and precious metals. The real credit 

rating is there. 

Chinese will cut buying US Bonds. This is the end of the Greenback. The key for 

the US is whether we can retain the world’s reserve currency? We cannot. The 

Chinese will eventually back their currency with gold and silver and overnight the 

rimimbi will become the new reserve currency. 

418

Own Rimimbi! 


There’s no telling how high the price of gas will be. $10 by end of next year is not 

impossible. 

All the value of all the world’s dollars will collapse. We’re very close to that 

point. 

The government wants to damage and rid themselves of the dollar! Soros and 

others want to force us to use a new world global basket and a new currency. As 

the dollar loses value it will benefit some people. This also provides political 

power. Politicians can make promises and deliver more worthless dollars without 

demanding taxes to finance the entitlements. Every paper currency devolves to this 

state. 

The collapse of the paper dollar is inevitable and when it does collapse and we 

return to a metals backed standard it will be impossible for politicians to have an 

unlimited checkbook. 

How Shall We Protect Ourselves? 

To solve our problems you need (1) gold and silver backed currency. (2) must 

have a balanced budget amendment and a borrowing limit. We can’t continue to 

pass on our debt to our children. (3) We must have a flat tax of some kind – a 

provision that prevents the continuous increase of taxes destroying the incentive 

for business to operate here. A progressive income tax allows politicians to 

promise more benefits to the poor and say, “You won’t have to pay for this. We’ll 

make the rich and the corporations pay!” 

That will simply give more incentive for wealthy capable business people to take 

their businesses and their jobs out of America. Americans have to grow up and 

realize that taxing the rich is raping the rich and the rich are only going to stand 

for this abuse to some limit, at which point they’ll move out of Silicon Valley, out 

of Boston, out of Virginia to China and Singapore and open their factories there. 

We must cut social security and medicare benfits. If we don’t the entire country 

will be bankrupt in less than 10-years. As it is now, many doctors dropped out of 

practice because medicare drove them out. Most often, the doctors who want to do 

excellent work, and spend more time with patients are the ones who lose the most 

and leave the soonest. Conversely, the doctors who are willing to abuse their 

patient and give them cursory care for 3-minutes and bill for everything they can 

get are the ones making money and staying in the system. They’ll stay so long as 

they can rob the system and their patients. 

1. Put your savings into gold and silver 

419


2. Invest in overseas real estate. Farms in the Phis would be good. IF you have 

money this is a good investment for you to move money out of the US. 

3. Use this crisis to make more money for yourself. Speculate, short stocks, and 

do that more if you have money to do so. 

Porter’s firm was the only one in the US that predicted everything exactly as it did 

happen. Many people still want to deny these predictions even as they continue to 

come true! They’re playing denial games with themselves but in the end they’ll 

starve for their “rightness.” 

Many of those people who subscribed to Stansbury did not want to take his advice, 

they lost money, and then wanted to blame him for their inaction and their losses. 

He was telling them how to avoid loss and make profit. They didn’t do it, and then 

they wanted to blame him and kill their subscription. (Talk about psychological 

problems! No wonder as an insurance salesman some days I nearly go crazy with 

the responses I get over the phone searching for appointments.) 

They wanted to say that because Porter warned about the impending bankruptcy of 

General Motors that he was responsible for it. Those who explain and warn are 

blamed for causing pessimism and destroying the markets. 

Do you know the first barometer was made with water and about 30 feet tall? 

When it fell and stayed low and the rains came and continued the local people 

blamed the barometer and someone broke it. Evil spirits in the barometer were 

causing bad weather, I guess. So now I suppose it will be my fault that I produced 

several books of warning and “history” in present time. I’m to blame for 

destroying the greatest empire the world ever knew. I’m worth nearly nothing and 

I’m hardly a genius. I’ve never given a political speech. But…blame me. 

The debt per family is over 681,000. I didn’t do this. Neither did Porter. Our 

politicians and the Federal Reserved did it. 

Own silver and gold if you have enough money to put some away. 

Own a tiny farm and a water well. Learn about and apply Aquaponics. There are 

several books about this plant growing method available at Amazon.com 

That’s how you’re going to survive and for all of those who long ago said I was 

crazy to sound an alarm, I wonder what they’re thinking now, or if they’re still 

alive to think at all. 

www.endofamericavideo.com http://www.stansberryresearch.com/ 

According to the Alex Jones broadcasting network. 

420


The numbers are so big now, even the media that did not want to admit to the real 

cause is saying it’s true. For a long time they played along with the government 

and supported them but now they can’t anymore. 

The entire monetary American system is spinning out of control. 

There are 45-million people on food stamps. If the food stops riots are next. 

Printing money forces the price of the food to rise. Eventually the food stamps 

won’t buy the food you need. 

We must cut the budget by a huge percentage. We have to put all entitlements on 

the table and cut them. 

There’s a Biblical prophecy in The Book “Revelation” that says eventually gold 

and silver will be worthless. When that happens, and I promise you, it will happen, 

dollars will mean nothing. Your ability to feed yourself and the skills you have to 

do things for yourself and others will be your means to earning a living. It’s a 

terrifying prophecy, IF you understand it. See it here: 

http://www.biblegateway.com/passage/?search=Revelation+18&version=NIV 

The dollar is following a well-worn path of destruction 

http://www.moneyandmarkets.com/the-dollar-is-following-a-well-worn-path-of-destruction-46159 

The mighty U.S. dollar’s fall from 

economic grace didn’t happen overnight. 

Kevin Kerr | Wednesday, July 27, 2011 

It’s been a long and painful process driven by bad judgment, 

irresponsible fiscal policies, and arrogance. 

Like many fiat currencies before it, the greenback’s paper and the ink 

printed on it is only worth what individuals are willing to assign to it. 

Otherwise it becomes as worthless as green wallpaper with numbers 

on it, just as happened in Rome. 

Devaluing the Currency— 

A Proven Recipe for Collapse 

Nero and other Roman emperors debased the currency in order to supply a demand for more 

coins. Sound familiar? By debasing the currency, instead of a coin having its own intrinsic value, 

it was only representative of the silver or gold it had once contained. That’s all well and good as 

long as the silver content is what they say it is. 

421

Tax and Spend — 

Didn’t Work Either! 


Soldier’s wages went up. But silver content went down, 

making the currency worth less — considerably less. 

Source: mappinghistory.uoregon.edu 

422 

But by the time 

Claudius II Gothicus 

(268-270 A.D.) took 

power, the amount of 

silver in a “100 percent” 

silver denarius coin was 

only 0.02 percent. This 

led to widespread severe 

inflation and instability. 

The chart below shows 

just how that inflation 

occurred, eerily much 

like it is today in the 

U.S. 

In addition to recklessly devaluing the currency, the Roman Empire tried to ratchet up revenue 

through extreme taxation and finding new sources of wealth. We’re now seeing this in the U.S. 

as municipalities boost taxes while home values plummet. Plus they’re slapping citizens with 

fines and tickets for even the most minor violations, all in a desperate effort to stop the flood of 

red ink. 

In Rome, the poor and wealthy alike were taxed extensively. Eventually the wealthy and 

powerful were no longer rich or powerful. 

To escape the burden of tax, some small landowners actually chose to sell themselves into 

slavery, since slaves didn’t have to pay tax and freedom from taxes was more desirable than 

personal liberty. Eventually that didn’t even work, and Rome essentially imploded. The once 

mightiest empire on earth simply disappeared. 

The same thing could happen to the United States. Let’s face it: The middle class and business 

owners are struggling, and disappearing fast! Unfortunately they’re also vital to the U.S. 

economy, and any hope of recovery. 

Printing and Borrowing 

Failed, Too! 

One modern day example of inflation run amuck is the African nation of Zimbabwe. The 

country is famous for having issued 100 trillion dollar notes during a period of inflation, which 

reportedly reached 231 million percent at the height of the disaster. 

Much like Rome, and the United States today, the inflation was largely self-imposed.


And the main cause of hyperinflation, 

whether in Rome, in Zimbabwe or in the 

U.S. today: The massive and rapid 

increase in the amount of money in a 

system that is not supported by growth in 

the output of goods and services. 

Can you imagine walking into Wal-Mart 

and a gallon of milk going for more than 

U.S. $150? This is what it was like when 

Zimbabwe’s currency was destroyed by 

inflation. 

When hyperinflation occurs it results in 

an imbalance between the supply and demand for money, including currency and bank deposits. 

Eventually a complete loss of confidence in the money is almost inevitable. The public panics, 

and global market participants dump the currency. 

Just like in the U.S. today, Zimbabwe’s hyperinflation was a result of the monetary authority 

irresponsibly borrowing money to pay its expenses and obligations. 

History Repeats Itself 

One of the biggest factors that has gotten the U.S. into the disaster we’re in, is the arrogance of 

the nation’s leaders. The belief that what happened in Rome and Zimbabwe could not happen in 

the U.S. 

Fed Chairman Bernanke has said over and over that the United States can always just print more 

money as needed. I’m pretty certain that the people of Rome had a hard time believing that their 

empire would collapse too. After all it ruled the majority of the known world. But 

that’sexactly what happened. 

So as the powers that be grapple over how to raise the debt ceiling, the money pit is sinking 

deeper and deeper. Prices for most everything we buy, especially food and energy, are soaring! 

And it seems the dollar loses more and more ground each day. 

Indeed, the dollar is skating on very thin ice. Already many nations are shifting out of dollars and 

into gold and other forms of hard assets; I expect that trend to continue. Another way countries 

are avoiding trading in dollars is to barter instead. 

Abandoning the Dollar 

Most recently China and Iran have forged a deal to barter oil for goods from China. 

According to The Financial Times … 

“Tehran and Beijing are in talks about using a barter system to exchange Iranian oil for Chinese 

goods and services, as U.S. financial sanctions have blocked China from paying at least $20bn for 

oil imports. 

“The U.S. sanctions against Iran, which make it extremely difficult to conduct dollardenominated 

business, mean that China could owe the oil-rich nation as much as $30bn, 

according to people familiar with the problem.” 

423 

The Zimbabwe government resorted to 

slashing 12 zeros from its currency as 

hyperinflation eroded its value.


OPEC has also repeatedly discussed trading oil in another currency, instead of dollars. A move 

such as this would shake the very foundation of the dollar and certainly have an adverse impact. 

In fact, OPEC members have called for a fully convertible, gold-backed dinar for oil sales, instead 

of U.S. dollars. So the possibility of this happening remains a real risk. 

As investors what can we do to protect ourselves from this hyperinflation and collapse in buying 

power of the dollar? 

There are a few key ways to … 

Be Smart While Rome Burns 

I’m pretty sure those Romans who saw the true writing on the wall, converted their wealth into 

tangible assets such as gold, silver and hard commodities. They knew the Roman coinage was 

basically becoming worthless and that rule of law and order was evaporating. 

A similar situation is occurring in the U.S. right now. Individual liberties are being taken away, 

higher taxes are crushing small businesses and consumers, and the value of the currency is 

collapsing. 

So we must look at ways to move some of our paper dollars into precious metals and other 

tangible assets that have real physical value. I also suggest ETFs that are actually backed by 

physical assets. 

Here is my 3-step action plan to help hedge against the inflation disaster: 

Step #1— Reduce your U.S. dollar holdings. Move into precious metals … gold, silver or both. 

Step #2— Once you’ve made the decision to add precious metals to your portfolio, do it in a 

diverse way. Some physical gold and silver bars are good; coins are good too if you know how to 

buy them. 

Step #3— In addition to physical gold and silver, you may want to add key ETFs. I prefer ETFs 

that are backed by physical gold and silver. 

Remember though, when you buy gold and silver physically backed ETFs, you do not own the 

physical metal, you own a paper representation. Depending on the ETF, the amount per share 

can range from one ounce to one tenth ounce. 

Five physically backed ETFs traded in the U.S. are the SPDR Gold Shares (GLD); the iShares 

Comex Gold Trust (IAU); the ETFS Physical Swiss Gold Shares (SGOL); the iShares Silver 

Trust (SLV); and the ETFS Physical Silver Shares (SIVR). 

ETF options are what I like best … 

They offer you leverage, and a bonus: Limited risk. And they’re the tool I use to help my Master 

Trader members seek gains in any major asset class in the world — stocks, precious metals, 

commodities, bonds and even foreign currencies — no matter what event or trend is happening 

in the world! 

The bottom line is that the dollar’s risk is real. And investors must take control of their own 

destiny, or face seeing their wealth disappear along with the once mighty greenback. 

Yours for resource profits, 

424

Kevin 


Kevin Kerr has successfully traded commodities professionally for the last 22+ years. His unparalleled 

expertise in commodity and resource futures, options, and equity trading, has made him a regular 

contributor to news outlets like CNBC, CNN, FOX News, CBS Evening News, Nightly 

Business Report and many others. 

Find Kevin’s Master Trader’s Letter Here 

http://finance.uncommonwisdomdaily.com/reports/event/kerr/vsp4.php?s=p446&e=4523155 

&p=2 







S&P downgrades US credit rating from AAA 

S&P issues unprecedented downgrade of US credit rating, saying debt package falls short 

Martin Crutsinger, AP Economics Writer, On Friday August 5, 2011, 10:09 pm 

The United States has lost its coveted top AAA credit rating. 

Credit rating agency Standard & Poor's on Friday downgraded the nation's rating for the first time 

since the U.S. won the top ranking in 1917. The move came after Congress haggled over budget 

cuts and the nation's borrowing limit -- and failed to cut enough government spending to satisfy 

S&P. The issue has contributed to convulsions in financial markets. 

The drop in the rating by one notch to AA-plus was expected. The three main credit agencies, 

which also include Moody's Investor Service and Fitch, had warned during the budget fight that if 

Congress did not cut spending far enough, the country faced a downgrade. S&P said that it is 

making the move because the deficit reduction plan passed by Congress on Tuesday did not go 

far enough to stabilize the country's debt situation. Moody's said Friday it was keeping its AAA 

rating on the nation's debt, but that it might still lower it. 

One of the biggest questions after the downgrade was what impact it would have on already 

nervous investors. Many financial analysts said investors were expecting a downgrade. But some 

selling was expected when stock trading resumed Monday morning. The Dow Jones industrial 

average fell 699 points this week, the biggest weekly point drop since October 2008. 

425


"I think we will have a knee-jerk reaction on Monday," said Jack Ablin, chief investment officer at 

Harris Private Bank. 

One fear in the market has been that a downgrade would scare buyers away from U.S. debt. If 

that were to happen, the interest raid paid on U.S. bonds, notes and bills would have to rise to 

attract buyers. However, even without its AAA rating, U.S. debt is seen as one of the safest 

investments in the world. And investors clearly weren't being scared away this week. While 

stocks were plunging, investors were buying Treasurys. The yield on the 10-year note, which 

moves opposite its price, fell to a low of 2.39 percent on Thursday. 

The government fought the downgrade. Administration sources familiar with the discussions 

contended that the S&P analysis was fundamentally flawed. They spoke on condition of 

anonymity because they weren't authorized to discuss the matter publicly. S&P had sent the 

administration a draft document in the early afternoon Friday and the administration, after 

examining the numbers, challenged the analysis. 

In a statement, Treasury said, "A judgment flawed by a $2 trillion error speaks for itself." 

S&P said that in addition to the downgrade, it is issuing a negative outlook, meaning that there 

was a chance it will lower the rating further within the next two years. It said such a downgrade to 

AA would occur if the agency sees smaller reductions in spending than Congress and the 

administration have agreed to make, higher interest rates or new fiscal pressures during this 

period. 

In its statement, S&P said that it had changed its view "of the difficulties of bridging the gulf 

between the political parties" over a credible deficit reduction plan. 

S&P said it was now "pessimistic about the capacity of Congress and the administration to be 

able to leverage their agreement this week into a broader fiscal consolidation plan that stabilizes 

the government's debt dynamics anytime soon." 

Is the U.S. Credit Rating a Victim of GOP 

Sabotage? 

By Daniel Gross | Contrary Indicator – 7 hours ago 

The fiscal clown show continues. A few days after Congress and the White House agreed to 

raise the debt ceiling and cut spending, Standard & Poor's has downgraded the United States 

of America'scredit rating from AAA to AA+. 

S&P, which covered itself in a substance other than glory during the mortgage crisis, may 

have a poor record and strange methodology when it comes to sovereign ratings. France, 

which has a far higher debt per capita ratio than the U.S., still enjoys a AAA rating. And a 

426


downgrade, alone, doesn't mean U.S. interest rates will spike -- on Monday or at any time in 

the future. Japan's credit rating was downgraded several years ago, when the interest rates 

its government paid on bonds was already extremely low, and they've generally trended 

lower in the years since. 

Market conditions, the trajectory of economic growth and relative value can play as big -- if 

not a bigger -- of a role in determining interest rates than a rating. 

But that doesn't mean we should ignore S&P's Friday evening shot across the bow. In 

downgrading the U.S.'s credit rating, S&P points out what has long been obvious: 

Washington's inability to come to an agreement on how to close the large fiscal gaps that 

have emerged since the recession began is troubling. Recent events have sapped the agency's 

confidence that the government can and will do what is necessary to align revenues with 

spending commitments. And it's difficult to escape the conclusion that America's credit 

rating was intentionally sabotaged by Congressional Republicans. 

It has long been obvious to all observers -- to economists, to politicians, to anti-deficit 

groups, to the ratings agencies -- that closing fiscal gaps will require tax increases, or the 

closure of big tax loopholes, or significant tax reform that will raise significantly larger sums 

of tax revenue than the system does now. Today, taxes as a percentage of GDP are at historic 

lows. Marginal rates on income and investments are at historic lows. Corporate tax receipts 

as a percentage of GDP are at historic lows. Perhaps taxes don't need to rise this year or next, 

but they do need to go up in the future. 

Otherwise, the math of deficit reduction simply doesn't work. And that's how the deficit 

reduction deals signed off on by Republican presidents like Ronald Reagan and George H.W. 

Bush came about. 

Yet the action in Washington in the past year has all gone in the opposite direction. President 

Obama deserves some of the blame. Several months ago, he struck a deal with Congress to 

make the fiscal situation worse -- extending the Bush tax cuts for two more years and 

enacting a temporary cut in the payroll tax. 

But Congressional Republicans deserve much more of the blame. For this calamity was 

entirely man-made -- even intentional. The contemporary Republican Party is fixated on 

taxes. It possesses an iron-clad belief that the existing tax rates should never go up, that 

loopholes shouldn't be closed unless they're offset by other tax reductions, that the fact that 

hedge fund managers pay lower tax rates than school teachers makes complete 

427


sense, that a reversion to the tax rates of the prosperous 1990's or 1980's would be 

unacceptable. 

In the past two years, this attitude has combined with a general hostility to playing ball with 

Democrats on large legislative issues, a near-blanket refusal to conduct business with 

President Obama, and, since the arrival of the raucous Tea Party freshman, a cavalier 

attitude toward the nation's obligations. It was common to hear duly elected legislators argue 

that it wouldn't be a big deal if the government were to pierce the debt ceiling and default on 

its debts. 

This downgrade is the logical outcome, to a degree, of the long-running "Deal or No Deal" 

dynamic in Washington. For much of the last two years, President Obama and various fiscal 

reform groups have urged a grand bipartisan deal that would make a dent in the short- and 

long-term deficits. Every group -- from the bipartisan Bowles-Simpson Commission on down 

-- argued that a large package of spending cuts and tax increases or reforms would be the way 

to go. Polls showed that American voters generally endorsed a mix of spending cuts and tax 

increases. And plenty of neutral observers thought that the approach of the debt ceiling 

expiration would help forge a grand bargain. 

Many observers (including this one) argued that such efforts were doomed to failure. For 

President Obama, all the incentives weighed toward making a big deal, even one that would 

upset his base. It would show an ability to work on a bipartisan basis and make concrete 

progress and take the issue off the table for 2012. But for Republicans, all the incentives 

weighed against a big deal. By definition, anything that is acceptable to President Obama 

and Democrats is unacceptable to today's Congressional Republicans. It almost doesn't 

matter what the substance is. Why would they sign off on any measure that would include 

revenue increases that the president wanted? Congressional Republicans don't believe in 

higher revenues as a matter of ideology, as a matter of economics or, most importantly, as a 

matter of political tactics. Top Congressional Republicans have expressed a desire to deny 

victories to the president. 

And so, in a completely predictable pattern, every time the discussions got around to revenue 

increases, Republicans pulled back. House Speaker John Boehner was willing to entertain 

the possibility of several hundred billion dollars of increased revenues, until he realized he 

couldn't sell it to his own caucus. The anti-tax radicalism of the Congressional GOP took 

revenues off the table and made a large deal impossible. The result was a lengthy 

manufactured crisis and a small deal that relied solely on spending cuts, and even that was 

opposed by a big chunk of the House GOP caucus. 

428


Judging by S&P's release, this needless brinksmanship and effort to take the debt ceiling 

hostage seriously influenced the agency's thinking. It didn't like the theatrics, and it didn't 

like the outcome. While the deal took default off the table, the agreement "falls short of the 

amount that we believe is necessary to stabilize the general government debt burden by the 

middle of the decade." In other words, S&P downgraded in the U.S. in large measure because 

the recent debt deal didn't do enough to stabilize finances. 

The irony, of course, is that the very attribute that pushed S&P to downgrade -- the inability 

of the U.S. political system to agree on large topics -- may help improve the fiscal situation. 

At the end of 2012, the Bush tax cuts are slated to expire. If the two parties fail to agree on 

some very controversial issues in the midst of an election year, taxes will rise across the 

board, on income and on investments, producing trillions of dollars in revenues over the 

coming decade. 

Daniel Gross is economics editor at Yahoo! Finance. 

Email him at grossdaniel11@yahoo.com; follow him on Twitter @grossdm. 

The Next Stop for Revolution: Europe. Is the U.S. Far Away? 

http://www.moneyandmarkets.com/the-next-stop-for-revolution-europe-is-the-u-s-far-away-46112 

Bryan Rich | Saturday, July 23, 2011 at 7:30 am 

This past week we’ve seen yet another bailout scheme from 

euro-zone officials. This one is perceived to be the magic bullet 

to solve all of the failing monetary union’s problems. But I think 

we’ve seen this movie before … 

Last June, the EU and IMF responded to a free-falling euro and 

a government bond market attack in Greece by promising to 

pour up to €750 billion into Europe’s weak countries to ensure 

their solvency. 

It worked, for a while. The euro turned on a dime and went on to 

rally 26 percent over just 11 months and highly stressed 

government bond markets eased significantly, for a while. 

But it did nothing to make the heavily indebted, low-growth countries in Europe solvent! As 

such, the stress in the bond markets quickly returned. 

Again, government bond yields in Greece soared to record highs. And over time, the risk 

premium spread to Ireland, Portugal, and now to Italy, Spain, and Belgium. That’s close to 40 

percent of the euro-zone economy at risk of insolvency. 

Another Shock-and-Awe Type of 

Promise to Solve the Euro-Zone Crisis 

After many failed attempts, euro-zone officials went back to the table again this week. 

429


This time, they’ve promised to soften the terms of their earlier bailout schemes for Greece, 

Ireland, and Portugal. It also appears they’ll increase the size of their bailout fund. And 

despite the European Central Bank’s warnings, they’ve indicated that private financial 

institutions in Europe would agree to alter the terms on their loans to the fragile euro-zone 

governments — that means a technical default. 

But as expected, the ECB is already massaging its rule book so that it can continue 

accepting the bad debt (even defaulted debt) as collateral, thus allowing them to continue 

supplying liquidity to Greek banks. The intent: A technical default might not inflame the debt 

crisis or the European financial system. 

The markets immediately took that as good news. 

But we shouldn’t be surprised that politicians can sit 

in a room and devise a plan that suits themselves … 

Left to their own devices, it’s increasingly clear that 

government officials and politicians will continue with 

this strategy of moving the goal posts down the field. 

As problems arise, don’t address them, just change 

the rules! 

What started in 2007-2008 as emergency measures 

to avoid a global banking collapse has evolved into 

doing anything and everything in this global 

economic crisis to avoid the day of pain — in an attempt to manufacture a desired outcome. 

And now, one thing is clear … 

Only Public Uprising Will Stop 

The Shenanigans in Europe 

They’ve done it in North Africa; they’ve done it in the Middle East: Ousting bad leaders 

and, in some cases, provoking full-blown revolutions. 

And all signs point to Europe as the next place for social unrest to erupt. 

Back in June of last year, when Europe was at the edge of the cliff, officials tossed out the 

laws that the European Union was built upon and began transferring taxpayer money from 

the rich countries in Europe to the poor countries. 

This was the first step by the leadership in Europe, namely Germany and France, in 

executing their favored solution: Federalization. 

430 

The ECB came up with a new financing 

package for Greece and measures to 

prevent the contagion from spreading.

Amazingly, Friedman’s 

insights are becoming 

more relevant with each 

passing day. 

inception: 


In other words: “The United States of Europe.” It’s a step that 

EMU leadership was unable to muster support for at the advent 

of the euro. But now within this crisis, they’re seeing an 

opportunity to ram it through, i.e., marrying the monetary union 

with fiscal unity. 

This means the people of Greece, Ireland, and Portugal, as well 

as possible Spain, Ireland, and other euro-zone members, could 

lose their sovereignty. 

Eurogroup chief Jean-Claude Juncker has already said Greek 

sovereignty is to be “massively limited.” 

I don’t expect that to go over well with the people of countries 

with such deep history and culture. 

The entire saga in Europe is playing out according to script, as 

renowned economist Milton Friedman warned before its 

“Europe’s common market exemplifies a situation that is unfavorable to a common currency. 

It is composed of separate nations, whose residents speak different languages, have 

different customs, and have far greater loyalty and attachment to their own country than to 

the common market or to the idea of ‘Europe.’ 

“The drive for the euro has been motivated by politics, not economics. The aim has been to 

link Germany and France so closely as to make a future European war impossible, and to 

set the stage for a federal United States of Europe. I believe that adoption of the euro would 

have the opposite effect. 

“It would exacerbate political tensions by converting divergent shocks that could have been 

readily accommodated by exchange rate changes into divisive political issues. 

“Political unity can pave the way for monetary unity. Monetary unity imposed under 

unfavorable conditions will prove a barrier to the achievement of political unity.” 

So while all of the media’s attention has squarely focused on the many solutions euro 

officials have come up with behind closed doors, perhaps we should be looking to the people 

of the euro zone for the catalyst that will end the game of kick the can down the road. 

The question then becomes: Will the U.S. be next? 

Regards, 

Bryan 

P.S. There’s not much you or I can do about the crises going on around the world today. But 

that doesn’t mean you have to sit by passively while your investments flounder! You see, 

there is always a bull market in at least one currency. And to learn how I’m helping my World 

Currency Trader members position themselves during this global unrest, 




portfolio. 

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Visit Brian’s New Website! 

http://www.globalinvestorweekly.com/ 

Market Activity is Proving There are Few Places to Hide 

Bryan Rich | Saturday, August 13, 2011 at 7:30 am 

When Standard & Poor’s downgraded U.S. government debt last 

week, everyone was stirring about the prospects of a big sell-off in 

the dollar and U.S. Treasuries — but it didn’t happen. 

Instead, we witnessed a mass sell-off in nearly all other markets 

around the world. 

Why? Because this is a global economic crisis … not a U.S.specific 

economic crisis. 

And as we found in 2008, there simply aren’t many safe places to hide in this depression-like 

environment. In the end, the world’s deepest, most liquid capital markets and currency — U.S. 

Treasuries and the U.S. dollar — are favored, despite the downgrade. 

That indeed makes a clear statement: A downgrade to U.S. government debt is the equivalent of 

a downgrade to the global economy. 

As I wrote in my July 30 column … 

“The loss of risk-free status in U.S. government debt would likely spread to other sovereign 

ratings. After all, ratings are relative — not absolute.” 

Already the risk adjustment is underway and so is contagion. Everything is being priced down 

relative to the downgraded credit worthiness of the U.S. These risk profile adjustments may not 

be reflected yet by an actual ratings downgrade, but they are being reflected in price. 

That has been clearly seen in bank stocks. In fact, on Monday U.S. banks fell the most since 

2009. 

I also said back in July … 

“Perhaps the more troubling part is the systemic damage it would cause.” 

In Europe, the story has been all about the dreaded PIG — Portugal, Ireland and Greece. And 

then in recent months Italy and Spain came under fire, which required the buyer of last resort — 

the European Central Bank — to quell the downward spiral in those government bond markets. 

But this week, one of the two core engines of Europe, which is also one of the key orchestrators 

of managing the euro-zone crisis, is in the crosshairs: France. 

The chart below shows the credit default swaps of France (orange), the U.S. (red) and a major 

French bank (black). 

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You can see in this chart the markets are pricing in nearly twice as much risk of a French 

government default than they were in early July. The difference between the orange line 

(France) and the red line (the U.S.) indicates that market participants think that France is 

three times more likely to default than the U.S. 

With that, it’s no surprise that French banks also came under attack this week … 

In advanced economies, banks often have sizeable exposures to their own domestic government 

debt. Therefore, when sovereign debt gets downgraded, bank creditworthiness tends to be 

downgraded, too. 

And the vicious cycle is set into motion — where bad banks drag down sovereigns and bad 

sovereigns drag down banks. 

Defaults Ahead 

As we’re seeing, there is no painless way to avoid the economic shocks associated with a badly 

overleveraged world. 

The general consensus has been that inflation would be the favored solution. That’s precisely 

why gold traded north of $1,800 this week. 

But despite central bankers’ best efforts, inflation isn’t in the cards any time soon. Record low 

yields in U.S. Treasuries confirm that. 

And austerity doesn’t seem to be working either. Take Greece for example. Greece has been 

operating under the austere requirements of the EU and IMF for more than a year. Yet things 

haven’t gotten better for Greece; they’ve gotten worse — across the board as shown below. 

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To sum up the above table: Since adopting tough austerity measures, the Greek economic 

activity is contracting more aggressively. Its debt burden is growing, led by continued worsening 

deficits — precisely what the austerity plans are crafted to reduce. 

The risk premium in Greek government bonds is higher, government revenue is lower, spending 

is higher and Greece needs even more money to stay afloat. 

Put simply: Austerity is not working! 

One thing austerity is doing, though, is its killing global growth. 

And that’s not good for the outlook of commodities. And historically, a common trigger for global 

sovereign debt defaults happens to be … falling commodity prices. 

As I’ve said many times here in Money and Markets, in a world still working through a historic 

global financial crisis, we should expect downgrades and we should expect defaults. For your 

investments, it’s about preservation of capital. 

Regards, 

Bryan 




portfolio. Today, Bryan runs Logic Fund Management, a currency research, advisory, consulting 

and money management firm. 

SN: in the above, bold or blue are my doing for emphasis. These men have been telling 

us for YEARS that you can’t spend yourself rich, and neither can any government. Dr. 

Weiss has written several strong letters and papers sent to Washington’s Congress 

attempting to educate our legislatures and bring some sanity to our government. From a 

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worldly point of view, he has been ignored. From the point of view of a man (me) who 

sees this world as subservient to the spirit-world, he has received the welcome from the 

blind and deaf because all of what is happening was planned long before our modern era. 

That is why I hold the opinion that the only true survival is in giving yourself and your 

faith to the Creator of the Universe, and putting your money into the THINGS you need 

to stay comfortable as long as you can. That means moving to a new location, at least 

having a hand pump for your water well, growing your own food and “canning” your 

own, and owning hand powered tools to take care of daily chores. Have a way to hide and 

even lock yourself away from marauders. They will panic and attack at first and then 

become to hungry, sick and weak to do anything and that won’t take longer than 2-weeks. 

You don’t need guns. You mostly need a basement with a good lock on a steel door, or 

you need to be in hiding so no one knows you’re in the community. An underground 

dwelling or cave dwelling for a short while wouldn’t be bad. Living aboard a small boat 

away from people is a good idea. Don’t put a lot of your future plans into big retirement 

funds, because eventually all of that money will be worth nothing and only your faith in 

God, and your abilities will protect you. That’ll be when you realize, your cat is your best 

teacher. 

I think what bothers me most here is, so many people ignore the warnings in the Biblical 

prophecies, even though they have proven correct for centuries. Martin Weiss and men 

like him are simply recounting the historical details of the world wide economic and 

social collapse. To understand the future, one must understand the meaning of prophecy. 

A year or 18-months before August 27, 2011 Dr. Weiss ended a video program with the 

words “America is still a great country.” Now, he doesn’t say that. Now, I suspect, he’s 

well aware of what happened in Europe before World War II and he might one day 

suddenly be found living near his wife’s family in Brazil. 

Martin, Good Luck and God Bless. We’ll all need all the blessings we can get! I think by 

the end of October, 2012 the game will be ending. By the end of year 2012, there will be 

no more economic reality as we know it today. 

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Countdown to D-Day 

http://www.moneyandmarkets.com/countdown-to-d-day-46118 


Irreparable Damage 

The United States government is now just eight days from D-Day — 

the day of debt default. 

If it actually happens, the ensuing chaos could bring the end of the 

United States as we know it today. 

And if it’s averted, any substantive agreement by our leaders in 

Washington is bound to cause an historic sea change in America’s 

economy, politics, and society. 

Already, regardless of what our leaders may do in the next eight days, their inability to come 

to an agreement this close to D-Day has damaged both the credit and credibility of the 

United States government. 

S&P and Moody’s — historically biased strongly in favor of the U.S. — have put the 

government’s debt on credit watch for the first time in history. 

Our own rating agency, Weiss Ratings, acting sooner than all of the above, recently 

downgraded U.S. government debt to a C- (approximately equivalent to a BBB- at S&P). 

And global investors, remarkably complacent until this past Friday, are now scrambling to 

prepare for the possibility of default. 

These actions are historical fact — a signal that damage has already been done and could 

be permanent. 

What Would Happen If Washington Defaulted? 

The precise outcome is inherently unpredictable. 

In the inevitable market panic that would ensue, no one can anticipate exactly what investors 

might do. 

In a moment of madness at the Fed, no one can know ahead of time how Chairman 

Bernanke would respond. 

And in their rush for self-defense, certainly no one can say how China, loaded with U.S. 

Treasuries, or Europe, reeling from its own debt crisis, would react. 

But we do have one recent precedent that can provide some insight: Just three years ago, 

global financial markets came dangerously close to a fatal meltdown even in the absence of 

sovereign debt defaults. 

Hundreds of billions in mortgages went bad. 

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Bear Stearns, Lehman Brothers, Washington Mutual, Wachovia, Merrill Lynch, Citibank, and 

Bank of America filed for Chapter 11, and were bought or bailed out. 

The all-important short-term credit markets, where thousands of corporations go to raise 

quick cash, froze up. 

Money was unavailable at virtually any price, threatening a cash squeeze that would drive 

thousands of large companies into Chapter 11. 

Derivatives — high-risk bets on all kinds of markets or events — blew up. 

U.S. financial markets were on the brink of Armageddon. 

Therefore, almost by definition, the consequences of a default by the United States 

government itself would be more severe than anything witnessed during the great debt crisis 

of 2008. 

Here’s why: 

* Then, the catalyst of the crisis was a small niche sector of one type of debt — subprime 

mortgages 

This time, the catalyst would be the federal debt of the largest economy in the world — the 

issuer of the world’s dominant reserve currency … the world’s sole military superpower … 

the center of global financial markets … and ironically, the country with the single largest 

pile-up of debts in history. 

* Then, the epicenter of the crisis was a small niche in the derivatives market called credit 

default swaps — a type of insurance against the failure of major borrowers. And according to 

the third quarter 2008 report by the Comptroller of the Currency (OCC), at around the time of 

the Lehman Brothers failure, U.S. banks held $16.1 trillion in these credit default swaps. 

This time, the epicenter of the crisis would be the sector most directly impacted by a 

Treasury default — interest-rate derivatives. And this time, the amounts involved would be 

far larger: According to the OCC’s first quarter 2011 report, U.S. banks now hold $199.5 

trillion in interest-rate derivatives, making this sector 12.3 times larger than the one most 

directly impacted by the last debt crisis. 

* Most important, in the 2008 debt crisis, a total collapse was averted thanks only to the 

direct and massive intervention by the U.S. government — $700 billion in rescue capital from 

the U.S. Treasury plus an estimated $14 trillion in government guarantees for virtually every 

kind of credit imaginable. 

This time, it is the U.S. government itself that’s facing its own Day of Reckoning— and there 

is no power on earth rich enough to bail it out. 

How Bad Could It Get? 

The Secretary of the Treasury and the Federal Reserve Chairman warn of Medicare and 

Social Security checks canceled … salaries to soldiers unpaid … critical government 

functions shut down. 

That’s true. But it’s not the entire truth. 

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The pundits say that a consequence of a U.S. government default would be sharply higher 

interest rates. 

That’s also true, but also not the whole truth. 

In reality, it would be a lot worse than that: If the United States truly fails to make 

payments on the interest and principal of U.S. government securities, here’s a likely 

scenario that would ensue … 

The largest and most important kind of market in the world — the market for all forms of 

credit — promptly shuts down. Virtually all buyers recoil in horror. Any vestige of liquidity 

disappears. 

Forget about interest rates! Money is virtually unavailable at any cost. For overnight money, 

desperate borrowers in the U.S., like their counterparts in European crises of recent years, 

offer annual rates of 20%, 30%, even 100%, but most still can’t find willing lenders. 

Government officials scramble to minimize the danger. But no matter what they say or do, 

there is no answer to this fundamental question: 

If U.S. Treasury securities — THE benchmark of quality and liquidity for all other debts 

everywhere — are themselves in default, how can any other debt or loan be safe? How can 

we trust any bond of any corporation, local government, state government, or foreign 

government? How can we trust commercial paper (short-term corporate IOUs), bank CDs, 

insurance policies, or any other contractual obligation? 

With this collapse in confidence and with money so scarce, anyone with debts coming due — 

which is almost every borrower in America — risks a cash squeeze and default. Only 

companies that are rich in cash and virtually debt free survive. 

Financial markets cease to function normally. Banks close nationally. Business transactions 

of all kind become extremely difficult, if not impossible. The entire economy sinks into 

paralysis. 

The individual consumer is blown away by the fallout — no cash flow for employers, no 

paychecks for employees. 

The U.S. stock market, the U.S. dollar, and virtually every U.S. asset collapse in value, with 

many markets shutting down entirely. The price of gold skyrockets. 

Is This Really Possible? 

If Congress and the White House fail to raise the debt ceiling and allow a permanent, outright 

default by the U.S. government to occur, yes. 

What’s more likely, however, is this scenario: 

In the days ahead, global financial markets give Washington a sneak preview of the scenario 

I’ve just described. And then, finally, our leaders are so spooked by what they see, they rush 

to make a final deal in the 11th hour. 

But remember: A deal to make big cuts in U.S. government spending — on top of an already 

sinking economy — will NOT end this crisis. 

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It may trigger some temporary relief buying on Wall Street. But it will also drive the U.S. 

economy into the same four-step vicious cycle we now see in Greece and other European 

countries: 

1. A shrinking economy and sinking government revenues, which cause … 

2. Out-of-control budget deficits, which require … 

3. Big cuts in government spending, triggering … 

4. More declines in the economy and further shrinkage in government revenues. 

In Any Scenario, Your Course 

Of Action Should Be the Same … 

First, unload and avoid all medium- or long-term government securities — including those 

issued by the U.S. Treasury, Ginnie Mae, Fannie Mae, Freddie Mac, or any government 

agency. 

Right now, their notes and bonds are still fetching premium prices in liquid markets. But that 

could change very quickly. So don’t wait. Sell at the market. 

Second, if you haven’t done so already based on our guidance in Safe Money Report and 

other publications, increase your allocation to gold bullion or equivalent. 

The world’s largest gold bullion ETF — GLD — is still viable. Plus, you can purchase gold 

bullion coins from American Century, Dillon Gage, FideliTrade, Manfra, Tordella & 

Brookes,Rare Coins of New Hampshire, or another reputable dealer. 

Third, substantially reduce your exposure to U.S. stocks, starting with the most vulnerable. 

For a reliable opinion on which those are, 

• Sign up or sign in at www.weisswatchdog.com, 

• Search for your stocks (using the first word of the name only), 

• Add them to your Watchlist, and then 

• Check your Watchlist to see the latest rating. 

Fourth, for vulnerable investments you do continue to hold, be sure to hedge. A handy 

vehicle: Inverse ETFs that are designed to rise in value when your investments fall. 

Specifically, 

• To hedge against a decline in U.S. Treasuries, you can use the ProShares 

UltraShort Lehman 20+ Year Treasury ETF (symbol TBT), and … 

• To hedge against a decline in U.S. stocks, consider the ProShares Short S&P 

500 ETF (SH). 

Above all, stay safe! 


Martin 






been New York TimesBestsellers and his most recent title is The Ultimate Money Guide for 


Six Steps to Financial Doomsday: The Ultimate Financial 

Catastrophe 

Mike Larson | Saturday, August 20, 2011 at 7:30 am 

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In the last five editions of Money and Markets, I’ve detailed how 

the United States has taken the same steps toward economic 

doomsday that have triggered Europe’s current financial 

nightmare: 

First, Washington spent everything it could collect in taxes … 

Second, it borrowed all it could from citizens and spent that as 

well … 

Third, it borrowed even more from foreign governments, banks 

and investors and blew that, too … 

Fourth, with the economy now slowing and tax revenues plunging, it has just called its own 

ability to pay into question … 

And fifth, by burying the world in an avalanche of unbacked paper dollars, the U.S. Federal 

Reserve has declared war on the greenback’s value — and is stiffing the very investors we 

count on to continue loaning us money. 

Now, a far more dangerous phase of this great crisis is beginning. 

Barring a miracle in Washington, an historic, world-changing event is about to end the 

American way of life as we know it. 

This monumental event will plunge vast numbers of families into the nightmare of poverty, 

homelessness and hunger. 

In the worst case scenario, you will see soaring crime, the confiscation of property, the 

suspension of civil rights, and even martial law enforced by the U.S. military. 

But while the vast majority of Americans will suffer, a select handful will use this crisis to 

build substantial wealth. 

Our mission here at Money and Markets is to do everything in our power to see you through 

this crisis with your wealth intact. So be sure to stay tuned! 

Best wishes, 

Mike Larson 

Mike Larson graduated from Boston University with a B.S. degree in Journalism and a B.A. 

degree in English in 1998, and went to work for Bankrate.com. There, he learned the mortgage 

and interest rates markets inside and out. Mike then joined Weiss Research in 2001. He is the 

editor of Safe Money,Safe Money's Crisis Trader, and LEAPS Options Alert. He is often 

quoted by the New York Sun,Washington Post, Reuters, Dow Jones Newswires, Orlando 

Sentinel, Palm Beach Post and Sun-Sentinel, and he has appeared on CNN, Bloomberg 

Television and CNBC. 

SN: Again, in the above the emphasis is mine. There’s an obvious reason I quote 

these people so often. You may or may not invest as they say, but I can tell you 

they’re always right about the broad picture of the oncoming future. Dr. Weiss 

admits he cannot time the market perfectly and says no one can. There are too many 

variables to predict what everyone will do, what every gambler will do, and what’s 

next in the insane world of geo-politics and natural calamities. I know people who 

440


have attempted to time the markets and lost a fortune. “The trend is your friend” is 

the better answer. If you know the crops are ruined it’s a safe bet the price of food 

will rise. Exactly how much or when is a more difficult prognostication. We do 

know from experience, over all there is at 98% likelihood that what these men say 

will come to pass, is truth. That’s why I reprint their advertising and commentaries 

so much, and will likely continue to do so in the next volume of this ongoing series 

explaining the experiences of “the last days” of the civilized world as we’ve known 

it, the end of the 20 th and 21 st centuries as we’ve known and expected it and the 

beginning of what some of us amateur theologians expect will be the beginning of a 

new world guided by its Creator. 

I make no apologies. If you are offended by “religion” brought into this discussion 

you have simply indicated you wish to be blind to necessary information. The 

prophecies clearly state that Europe will become an economic union, the United 

States will lose its “super power” status, and great (terrible) forces will attempt to 

create a one world dictatorship – a false religion, controlled economy, and single 

dictatorial government. Human rights will be a memory. 

Do men like Martin Weiss and Ron Rowland know any of this? I have no idea. 

We’ve never met. They appear to be doing their job. Their job is to promote 

economic guidance. They don’t want to offend their audience by bringing in Bible 

prophecy. 

I have a different agenda. I doubt I’ll make any serious money with this book. I do it 

as a labor of love and interest, and as a way to tell a history to some scholars in the 

future. I only hope the book survives into the future. 

Years ago I looked at the world and thought it wasn’t evil enough yet. It had to 

become much worse before The Creator came to change things. Now, I think it’s 

almost as bad as it can get. We’re headed for a terrible war, and a disastrous world 

wide economic collapse leading to poverty, diseases and the deaths of Billions of 

innocent people! Even as I write there is again another terrible famine in Western 

Africa and millions are starving to death. The news media gives it a column inch of 

attention. The rest of the “news” is about young women entertainers, which 

entertainers are getting married, which of them are rubbing bodies together (in an 

attempt to start a fire I’d guess) and other sorts of meaningless stories. As each day 

passes the Amish, Mennonite, and Quaker people who have been suspicious of the 

modern world look more right and righteous than ever. The Hasidic Jews 

maintaining the ancient laws seem wiser by the hour. 

There’s the very real probability that our sun and planet will be disturbed by a 

celestial body coming past us near the middle and through the end of year 2012. The 

media is saying nothing to avoid world wide panic. They are laying a terrible trap, 

preparing at least four-fifths of the world’s population for slaughter. I wonder if I will 

want to survive after this. I only hope The Lord transfigures those who love Him 

before it happens, and there are many who are and are not Bible students, saying this 

will happen. I hope so. I’m weary of this world. Hold up your hands and call out, 

“Lord, Take Me Too!” 

For those “left behind” the banking and investment world must eventually become 

irrelevant. Communications will collapse. Power plants will shut down. Dozens of 

441


communications satellites and millions of miles of fiber optic cable will go silent and 

be rendered worthless. The electronic and economic world will be as silent as the 

grave for a while, or if it survives through the worst of the projected tragedy, it will 

preach only what the slave masters want us to hear. That is why, as a survivor, you 

must be prepared to live as a farmer or fisherman of the 1800’s before the intrusion of 

electricity and internal combustion engines. 

People with the skills of the 1800’s will be in great demand. The Chiropractor and 

massage therapist, large animal veterinarian, the herbalist, the wood worker, stone 

mason, farmer, fisherman, sail maker, blacksmith, farrier (horse shoe installer), 

architectural and kitchen ceramics workers, (you can make cooking and heating 

stoves of ceramic too!) the women who patiently make fishing nets, weave rope, 

blankets, tents, hammocks, knit sweaters, makers of soap and candles, builders of 

earthen houses -- will be those everyone admires and seeks out. That is how you may 

survive after you come out of a protective cave with at least 10 feet of earth and rock 

above you. (You’ll know to go in when your electronic items like an electric watch or 

a cheap radio begin working improperly. Come out after sunset, return before 

sunrise, continue to do so for several weeks. Keep electronic items of great value 

sealed in a clean paint can under ground, or in other cans with lids sealed further 

with aluminum foil. This will prevent damage from electro magnetic pulses. You can 

buy clean paint cans at most paint dealers. ) 

There articles serve as history. They show you the opinions of economists if you 

wish to follow their advice, they help us understand the past, divine the future, and 

predict when the next changes will occur. Mike Larson was bold. He stated what 

most people never wanted to hear and may have lost subscribers for saying so. He 

separated those endless optimists and rose colored glasses wearers from we 

“realists.” 

Accuse me of being “a negative person” as one matured idiot salesman did, and I’ll 

accuse you of being an ostrich, hiding your eyes from the truth. To much of our 

modern world, which has been brainwashed for 50-years to believe God is a myth 

and theologians are crazy, I’m an unpredictable, lunatic. I’m a moralist in a world 

that distains morals preferring money, power and physical pleasures. I’m a realist in 

a world that prefers to believe what propaganda they are taught. I’m a dangerous 

revolutionary preaching decency and human rights where governments secretly want 

ultimate dictatorial power to kill, destroy, and remake a world after the image of the 

first thief who promised to steal it! I am the one who reveres the Rabbi and the 

honest Christian teacher, collects books and does not own a television. I am negative 

and dangerous…. Beware of me, because I Love the Lord and The Truth! 

Euro Unity Was Always an Illusion 

Ron Rowland | Thursday, August 25, 2011 at 7:30 am 

Last week Mike Larson told you how Europe is an economic basket case. 

And today I want to talk about that a little more. 

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Why? Because Europe is the epicenter of an earthquake that rocked world markets this 

month — and the shock is far from over! 

Yet amazingly, some investors seem convinced the European Central Bank (ECB) will ride to 

the rescue, just like the Federal Reserve did here back in 2008-2009. We can see this in 

ETF and ETN trading activity. If you believe financial markets are always rational and 

efficient … prepare to think again. 

PIIGS at the Trough 

Europe’s problems first became evident in the so-called “PIIGS” nations: Portugal, Italy, 

Ireland, Greece, and Spain. Now the whole 

continent is in trouble. 

The “economic unity” that made politicians so 

proud was always an illusion. The euro common 

currency let PIIGS feed off the prosperity of 

Europe’s dominant nations. Bankers in France, 

Germany, and elsewhere went along because 

they saw a chance for easy money … and they 

were right until just recently. 

The problem with pigs is they don’t know when Pigs are fed well — until slaughter time. 

to stop eating. They gorge until the food runs 

out. Greece was the first crisis only because the bankers had to start somewhere. 

Italy isn’t far behind. Thanks to out-of-control spending, government debt there stands at 120 

percent of gross domestic product. Italy ran out of rope when even sky-high interest rates 

could not convince investors to buy any more of its bonds. 

To see what this has meant for investors, all you have to do is … 

Follow the Action 

The results are pretty clear in the chart below of PowerShares DB 3x Italian Treasury 

Bond Futures ETN (ITLT), which follows the market for Italy’s ten-year government bonds. 

Launched just this April, ITLT reached an intraday peak of $21.78 on June 3, 2011. In the 

August 4 panic (barely two months later) ITLT traded as low as $14.93. That’s a loss of 

almost 32 percent! 

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So much for “safe” European government bonds. 

Yes, the volatility was amplified by ITLT’s built-in 3x leverage. But even the unleveraged 

version (ITLY) dropped more than 11 percent in the same period. 

Now, look what happened after August 4: ITLT shot up as high as $20.76 on August 22 — 

for a gain of better than 39 percent in less than three weeks! 

That reversal came when it was clear the ECB would step in. The prime beneficiaries weren’t 

Italian, though: It was the banks elsewhere in Europe. The bailout saved their huge bond 

holdings (which are leveraged way more than 3x, incidentally). 

Now let’s contrast this with PowerShares DB 3x German Bund Futures ETN (BUNT). This 

one tracks a bond index in the same maturity range as ITLT — but these bonds are issued 

by Germany instead of Italy. Same continent, same base currency, different governments. 

Look at the BUNT chart below. 

Investors like Germany better. 

While ITLT was racking up a 32 percent loss between June 3 and August 4, BUNT gained 

about 21 percent! 

In one sense this isn’t surprising. We already knew Germany dominated European finance. 

The comparison is still a bit startling, though. 

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I’m not bold enough to say the markets are wrong about either country — but short-term 

moves can still be exaggerated. I suspect the situation in Italy isn’t as bad as ITLT makes it 

look. Nor is Germany as safe as BUNT may suggest. 

In the bigger picture, neither nation has very good prospects. Growth in Germany is stalling 

out. And the public is in no mood to keep subsidizing its neighbors — in Italy, Greece, or 

anywhere else. 

What the euro zone probably should do is refinance their debt with “euro-bonds” backed by 

the entire union. As of now they can’t, because the member nations integrate currencies but 

not government spending policies. They can’t have it both ways. 

Europe will recover, eventually, but meanwhile expect the volatility to continue. Here are a 

few Europe-related ETFs and ETNs you should watch closely … 

• Vanguard European ETF (VGK) is the largest of the Europe ETFs. 

• iShares MSCI EMU (EZU) includes only countries in the monetary union. 

• iShares MSCI Germany (EWG) covers the dominant country in Europe. 

• ProShares Ultra MSCI Europe (UPV) has 200 percent daily exposure. 

• ProShares UltraShort MSCI Europe (EPV) has 200 percent 

daily inverse exposure. 

Best wishes, 

Ron 

P.S. With volatility comes opportunity. At various times, I’ve recommended both traditional 

and inverse ETFs in my International ETF Trader service. Click here to learn more. 

Ron Rowland is widely regarded as a leading ETF and mutual fund advisor. You may have read 

about Mr. Rowland and his strategies in publications such as The Wall Street Journal, The New 

York Times, Investor's Business Daily, Forbes.com, Barron's, Hulbert Financial Digest and 

many more. As a former mutual fund manager from 2000 to 2002, Ron was a pioneer in using 

ETFs inside of mutual funds. Today, he is the editor of International ETF Trader, dedicated to 

helping investors use ETFs to profit from ever-changing global market conditions. 

SN: I am generally a fiscal conservative and see all Democrats as suspect, however 

any proper gentleman should open his ear to the opposing argument, and Benzinga 

presents his view for the Democratic Party side. 

Benzinga Insights 

Jun. 21 2011 — 4:30 pm | 1,574 views | 0 recommendations | 4 comments 

Man Robs Bank … For Health Care? 

posted by JASON RAZNICK 

Having already set his affairs in order, James Verone calmly walked into 

an RBC bank in North Carolina and committed his first crime in his 59 

years on this planet. 

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Verone handed the teller a note that read “This is a bank robbery. Please 

only give me one dollar,” took the dollar from the terrified clerk, and sat 

down on a couch in the bank’s lobby. 

(To see how to profit with winning stocks under $5, click here.) 

“‘I’ll be sitting right over there in the chair waiting for the police,” 

Verone told the bank teller. And wait he did. Police arrived moments 

later and apprehended him, hauling him off to the jail cell he so 

desperately wanted to enter. 

No, James Verone isn’t crazy. He isn’t a career criminal. He didn’t rob 

the bank to get drugs or booze. He didn’t do it to get attention or on a 

lark. James Verone walked into that bank and committed a felony 

because going to jail was the only way he could receive the health care 

he needed to survive. 

Verone is one man, but he could really be any one of us. He’s 59 and well 

past the point of finding a new career. He was laid off from his 17-year 

job and, with unemployment hardly a survivable wage, took the first job 

that came his way. He developed a growth on his chest — the sort of 

medical condition that could be life-threatening — and earned two 

ruptured disks in his back, along with problems with his left foot. 

After depleting his life savings and realizing he had, literally, nowhere 

else to turn, Verone committed the crime, hoping he could get the 

medical care that he so desperately needs. 

This is what America has come to? Otherwise honest folks, with no 

where to turn in life, have to resort to fake-robbing a bank with the 

hopes they’ll be arrested so they can receive medical care? 

(To see about Russian unemployment and whether the situation in 

Greece will spill over, click here.) 

There is absolutely no reason for an allegedly civilized country, 

particularly one as wealthy as America, to pass the buck on providing 

health care for everyone. Yes, everyone: the employed and the 

unemployed; the sick and the healthy; old and young. 

Before you scream “oh no, socialism!!!” stop and consider what you 

mean by that. How do socialist systems pay for health care? Taxes are 

446


collected from businesses and citizens, and a portion of those taxes go to 

cover the health care costs of everyone in the plan — in other words, 

everyone in the country. 

How do health insurance systems pay for health care? Premiums are 

collected from businesses and employees, and a portion of those 

premiums go to cover the health care costs of everyone in the plan. 

The difference between the two? Socialized care costs less (because it 

has a much larger pool of people to draw from), covers everyone at all 

times, and prevents people from purposefully committing crimes to get 

treated. Insurance systems ARE socialized systems, except they don’t 

cover everyone and allow a corporation — an entity that neither receives 

nor provides the medical treatment — to skim a profit off the top. 

In what sort of twisted mind is that the rational way to provide medical 

care? It’s not like the marketplace can rationally set prices for health 

care. A dying man has no ability to check prices and compare services 

before deciding which hospital he’ll take his heart attack to. 

Chemotherapy cannot wait for patients to decide if they want to upgrade 

to the premium service that ABC Cancer, Inc is offering, or if they’ll 

settle for the basic package. Health care is not cable TV and cannot be 

solved with these over-simplified market solutions. Anyone who tells 

you otherwise is a liar, a fraud, or a charlatan — and perhaps a moron. (I 

would bet on “moron”.) 

At some point, Americans need to grow up and accept that providing 

single-payer, government-paid health care for the entire country is not 

only mandatory — it is the only morally acceptable choice. 

447


Russian Unemployment Down Nearly 30% Since 

Financial Crisis, Down 0.80% Month-to-Month 

By Paul Quintaro 

Benzinga Staff Writer 

June 21, 2011 1:05 PM 

Symbols: RSX, UUP, XRU, DNO 

Tags: Unemployment, European Union, Greece, Canada, financial crisis, Russia 

Posted in: Long Ideas, Commodities, Short Ideas, Emerging Market ETFs, Currency ETFs, Global, Econ 

#s, Economics, Trading Ideas, Forex, ETFs, Best of Benzinga 

inShare 

Share 

On Tuesday, Russia's unemployment rate came in very favorably at 6.4%, crushing analysts 

expectations of 7.0%, according to Bloomberg. 

Russia's unemployment rate has not been this low since September 2008. At the end of 

2009, Russia's unemployment was well over 10%. 

Domestic demand has been steadily increasing in Russia's domestic markets, which may 

have led to increased capital investment in the BRIC country. Fixed capital investment is up 

7.4% year-over-year. 

Russia is a major exporter of crude oil. The strength of Russia's economy may correspond 

strongly to the price of oil. 

Crude oil was down significantly in 2009, as fears of a global depression dampened demand 

for the industrial commodity. Since then, oil has been rallying in price, and though the price 

of oil is near 50% off its highs, the gradual run-up in the price of oil may be heavily 

contributing to Russia's economic growth. 

Perhaps validating this line of reasoning is a similar phenomenon in the oil-exporting country 

of Canada. Granted, Canada's recovery has not been as pronounced as Russia's, but the 

countries have followed a nearly identical pattern in their unemployment rates. Canada's 

unemployment rate spiked in 2009, before gradually falling near 7.0% in recent months. 

Canada's recovery may be dampened by its ties to the United States. The United States is 

Canada's largest trading parter, and the vast majority of Canada's exports go to the United 

States. 

Russia has a similar relationship, but not to the United States. Rather, Russia's energy 

exports largely flow to Europe. 

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This is interesting because the continuing debt debacle in Greece may spillover to Russia. 

Commentators have cited a financial contagion affecting other European Union member 

states. However, the impact Greece would have on Russia has been largely ignored. Should 

Greece default and bring down the economies of the European Union, Russia may suffer 

severely as demand for its oil plunges on European weakness. (see later note: sn) 

Still, for the time being, Russia's economy appears to be a great growth story. 

Action Items 

Bullish: Traders who believe that the Russia economy grows from here might want to 

consider the following trades: 

• Buy Market Vector Russia ETF (NYSE: RSX) in a long play on the broader Russian 

economy. RSX attempts to return a value corresponding to the general strength of 

Russian companies, and may do well if the Russian economy continues to rebound. 

• Buy Currency Shares Russian Ruble Trust (NYSE: XRU [FREE Stock Trend 

Analysis]) in a long play on Russia's currency. If the Russian economy is growing, 

demand for its currency may grow. 

Bearish: Traders who believe that problems in Europe may dampen Russian recovery may 

consider taking positions in the following: 

• United States Short Oil Fund (NYSE: DNO) is a short play on oil. If Russia is 

struggling, the price of oil may be down. In that case, DNO may be a smart 

investment. 

• Power Shares DB US Dollar Bullish Index (NYSE: UUP) is a long play on the dollar. 

If the Russian economy is down on European weakness, traders may be buying the 

dollar in a safe-haven play. 

Neither Benzinga nor its staff recommend that you buy, sell, or hold any security. We do not 

offer investment advice, personalized or otherwise. Benzinga recommends that you conduct 

your own due diligence and consult a certified financial professional for personalized advice 

about your financial situation. 

When it comes to investing, you cannot settle for anything less than the fastest and 

most efficient news feed. That is why we created Benzinga Pro. Sign up for a free trial 

today! 

(c) 2011 Benzinga.com. All rights reserved. This material may not be published in its entirety or redistributed 

without the approval of Benzinga. 

Read more: http://www.benzinga.com/etfs/commodities/11/06/1188682/russian-unemployment-down-nearly- 

30-since-financial-crisis-down-0-80-#ixzz1WMFM3cV5 

SN: This has an interesting side note commentary. The European PIIGS will eventually collapse, pushing 

the Russian government to do something extraordinary, perhaps leading to ties to Persia to attack Israel for 

her oil. 

Jun. 20 2011 — 12:12 pm | 487 views | 0 recommendations | 0 comments 

449


Forget President Obama: Why Isn’t 

Robert Reich President? 


I know it’s not a popular view on Wall Street, but what if Robert Reich is 

right and the wealthy are severely under-taxed, to the detriment of the 

entire society. 

In a video on youtube, the former Labor Secretary lays out a brief case 

for what has caused the decline of the middle class, and with it, the 

decline of the American economy. It is the middle class, after all, that 

drives the national economy; if it suffers, the entire nation declines. 

(To see why the media continues to ignore Ron Paul’s candidacy, click 

here.) 

Reich notes a simple, sad truth about the American economy since 

Reagan. Since 1980, the American economy has doubled in size. Yet 

wages have remained flat. Where did all that generated wealth go? To 

the top, of course, where it didn’t exactly trickle down to anyone else. 

“The top one percent used to take home ten percent of total income. 

Now it takes home more than twenty percent,” Reich said. “The super 

rich have 40 percent of the nation’s wealth,” he added. 

What has been the effect of all this extra money flowing upward in the 

economy? Increased political power for the wealthy, for one, which 

explains why they’ve been able to chop their top tax rates more than in 

half, from over 70% in 1980 down to 35% today. The capital gains rate, 

which taxes the majority of the income the super wealthy earn, is 15%. 

You pay more than that on your Visa (NYSE: V) card. 

The result of these tax decreases? Tax receipts are at the lowest 

percentage of the economy in sixty years, a mere 15% of the total 

economy. At the very time when the government needs to step in and 

smooth over the rough economy, it lacks the financial means to do so. 

Having undercharged the wealthy for a generation, governments at all 

levels are cutting education, police, fire, health care, and environmental 

programs, while tax cuts for the wealthy mysteriously remain 

untouchable. 

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As Reich points out in his video, the decline in the American middle 

class has led to a strange phenomenon, whereby the victims of the policy 

identify politically with the folks who caused the problem. Rather than 

band together to force higher taxes on the extremely wealthy (and save 

public programs like Medicare and Social Security, as well as schools, 

roads, and other necessary government expenditures), the middle class 

is divided and politically weak. 

The Democratic party used to fight for the middle class, including 

quality of life issues such as health care, the environment, fair wages, 

and education in their platform. Now, at a time when Democrats most 

need to support the middle class, they’ve abandoned the platform to 

support extending tax cuts for the wealthy and other terrible ideas that 

put us into this fiscal mess. 

Reich’s plan, as laid out on his website, would increase the tax rate on 

incomes over $15 million to 70%. He would also boost the tax rate to 

60% on incomes between $5 and $15 million, and 50% between 

$500,000 and $5 million. He would also significantly cut taxes for 

incomes under $100,000. 

This relates to the relationship between higher taxes on the wealthy and 

economic growth. 

“Rather than depress economic growth, higher taxes on the rich 

correlate with higher growth. During almost three decades spanning 

1951 to 1980, when the top rate was between 70 percent and 91 percent, 

average annual growth in the American economy was 3.7 percent. 

Between 1983 and the start of the Great Recession, when the top rate 

dropped to between 35 percent and 39 percent, average growth was 3 

percent,” Reich said. 

(To see how to profit from Benzinga’s Cash Generator, click here.) 

Maybe it’s time for Barack Obama, who is a lot closer politically to a 

1950′s Eisenhower Republican than he is to a Socialist, to announce he’s 

stepping down to allow an actual Democrat (like Reich) to run. The 

middle class deserves a voice in this election, and as Reich shows, they 

are not going to receive one from either major political party this year. 

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Jun. 17 2011 — 11:46 am | 1,648 views | 0 recommendations | 3 comments 

Ron Paul Should Be The Next President Of 

The United States 

http://blogs.forbes.com/benzingainsights/ 


Image via Wikipedia 

The United States of America may potentially be on 

the precipice of a Greek-style debt crisis within a 

few years, and our economy is increasingly looking 

like it may be at risk of entering another recession – 

and the Financial Crisis 2.0 could make the Great 

Recession look tame. Simply put, the Fed and 

Treasury have bloated their balance sheets to such grotesque levels to 

fight the deflationary forces sparked in the economy as a result of the 

housing collapse that there will be no more temporary “smoke-andmirrors” 

fiscal and monetary options to circumvent another downturn. 

Certainly, the Fed will likely give QE3…QE4…QE5, a shot if the economy 

becomes completely unglued, but similar to what has occurred in Japan 

for the last 20 years, it will not work. We have already seen what Mr. 

Bernanke’s money printing in the form of QE2 has wrought – it has 

robbed the middle class blind, while benefitting the entrenched 

corporate, banking, and political elite, along with wealthy Americans. 

The vast majority of Americans do not have sufficient financial assets 

such as bond, stock, commodity and hedge fund portfolios to offset the 

rise in food and energy prices that Bernanke has unleashed on the 

country due to his policy of Dollar devaluation through money printing. 

The entire burden of a falling Dollar as a result of QE2 and the United 

States’ exploding debt has been placed on the middle and working 

classes, while the elite have benefitted from rising prices for financial 

452


assets. It is a scam. Furthermore, it hasn’t provided one iota of benefit 

for the vast majority of American citizens. The unemployment rate 

continues to hover at 9.1% and very likely could hit double digits by next 

year. 

Furthermore, home prices hit a new low in May. This is the one asset 

that matters most to the majority of Americans, and things are getting 

worse. The creator of the Case-Shiller Home Price Index, Robert Shiller, 

recently said that he was optimistic that home prices could fall for the 

next 20 years. In all likelihood, there will be no economic recovery 

whatsoever when the dust settles. The bailouts, federal deficit spending, 

and quantitative easing programs that were enacted to attempt to reflate 

asset prices and spark the job market will be viewed by historians as 

failures. The entire Keynesian orgy’s real result is likely to be an even 

more devastating financial collapse. 

The toxic debt that was held by the private sector before the crisis has 

now been transferred to sovereign balance sheets as well as those of 

global central banks. Furthermore, many private corporations have 

taken advantage of the Fed’s historically low interest rate policy to leverup 

their balance sheets once again. These facts when combined with the 

moral hazard that we have introduced into our economic system as a 

result of the bailouts (corporate socialism), similar problems in most of 

the developed world, and an unprecedentedly interconnected global 

economy have set the stage for a potential systemic meltdown. 

All of this could have been averted if we had taken heed of Dr. Ron 

Paul’s warnings years ago. This man has been fighting with absolute 

integrity and honesty for the values that this country was founded on for 

the last 30 years – sound money, balanced budgets, free markets, noninterventionist 

foreign policy and civil liberties. Most every other GOP 

Presidential candidate is an Establishment panderer who is beholden to 

entrenched special interests. Why should we trust another 

establishment politician after being subjected to the lies of George W. 

Bush and Barack Obama, not to mention nearly every other politician in 

Washington D.C.? 

Obama’s lies have been egregious and on par with those of President 

Bush. He lied about closing Guantanamo Bay. He lied about bringing 

the troops home. He resigned the Patriot Act after saying that he would 

453


would not. Furthermore, Obama is targeting American citizens for 

assassination without due process. This is in addition to the socialist, big 

government, programs he has passed such as ObamaCare, which was 

opposed by the majority of the American populace. Domestically, our 

spending has gotten completely out of control. President Bush got the 

ball rolling, and President Obama has sped up the process of destroying 

the country through debt. 

According to a a recent Treasury report, the national debt will exceed 

the size of the economy this year. Just one year ago, the Treasury had 

said that the debt to GDP ratio would not break 100% until 2014. Can 

we really afford to elect Obama for 4 more years given that our 

debt/GDP level is estimated to hit 102% in 2012? Can you imagine what 

a U.S. default would look like? How about civil unrest, a collapsing 

Dollar, and unemployment rivaling the Great Depression. 

Make no mistake, this country is on the precipice of crisis and we need 

to make radical changes. The 2012 Presidential elections may present 

one of the last opportunities for the American people to rise up against 

the oligarchy that has run this country into the ground for their own 

personal benefit at the expense of the majority of the citizens of this 

deteriorating Republic. 

Amid the terrible domestic economy where another recession 

(depression?) seems likely, our politicians are still overseeing a 

disastrous foreign policy that is bankrupting us. We have been lied to 

repeatedly. We have been propagandized mercilessly by the mainstream 

media. We have been made to live in fear under the “War on Terror,” yet 

we have not been given a clear message about how this war can be won. 

How do you win the “War on Terror” by invading and occupying a 

sovereign country that had nothing to do with Al-Qaeda, and killing 

hundreds of thousands of innocent civilians. 

We are engaged in wars in Afghanistan, Iraq, and Libya, and we are 

bombing Yemen and Pakistan all the while threatening Iran. How is this 

going to stop terrorism? Please tell me! We are creating more terrorists, 

while at the same time giving the extremists opportunities to kill 

Americans day in and day out. Why? If anything, we are galvanizing 

their cause in the eyes of other Muslims. Furthermore, we simply cannot 

afford more war mongering and militarism. Period. 

454

• 


Into this void has stepped a man whose reputation for integrity, 

honesty, and principles is unimpeachable. He has ideas which address 

nearly every single problem that this country faces. He wants to follow 

the Constitution, restore civil liberties, end the foreign occupations, 

downsize government, restore sound money and reform the Entitlement 

State. If we elected Dr. Ron Paul would all of these things happen 

overnight? Of course not. Many of his solutions would take years to 

successfully implement, but the ideas are powerful and very important. 

Ron Paul represents the idea of a radical reformation of our country – 

based on the principles enunciated by the founding fathers. 

These ideas were profoundly powerful when they were written down in 

the Declaration of Independence and the Constitution. If Ron Paul can 

sufficiently stir the American populace, his ideas will take root even if he 

does not subsequently win the GOP nomination. If this happens, U.S. 

policy and the entire course of our country could shift much faster than 

most people realize. Nothing is more powerful than an idea, and few 

ideas are as powerful as the concept of liberty. It is time that we finally 

tried something different. Ron Paul represents real change. 

Confirmed: Obama authorizes assassination 

of U.S. citizen 

BY GLENN GREENWALD 

http://www.salon.com/news/opinion/glenn_greenwald/2010/04/07/assassinations 

Anwar al-Awlaki 

(updated below - Update II - Update III - Update IV) 

455 

Wikipedia


In late January, I wrote about the Obama administration's "presidential assassination program," 

whereby American citizens are targeted for killings far away from any battlefield, based 

exclusively on unchecked accusations by the Executive Branch that they're involved in Terrorism. 

At the time,The Washington Post's Dana Priest had noted deep in a long article that Obama had 

continued Bush's policy (which Bush never actually implemented) of having the Joint Chiefs of 

Staff compile "hit lists" of Americans, and Priest suggested that the American-born Islamic cleric 

Anwar al-Awlaki was on that list. The following week, Obama's Director of National Intelligence, 

Adm. Dennis Blair, acknowledged in Congressional testimony that the administration reserves the 

"right" to carry out such assassinations. 

Today, both The New York Times and The Washington Post confirm that the Obama White House has 

now expressly authorized the CIA to kill al-Alwaki no matter where he is found, no matter his 

distance from a battlefield. I wrote at length about the extreme dangers and lawlessness of 

allowing the Executive Branch the power to murder U.S. citizens far away from a 

battlefield (i.e., while they're sleeping, at home, with their children, etc.) and with no due 

process of any kind. I won't repeat those arguments -- they're here and here -- but I do want to 

highlight how unbelievably Orwellian and tyrannical this is in light of these new articles today. 

Just consider how the NYT reports on Obama's assassination order and how it is justified: 

The Obama administration has taken the extraordinary step of authorizing the targeted killing 

of an American citizen, the radical Muslim cleric Anwar al-Awlaki, who is believed to have 

shifted from encouraging attacks on the United States to directly participating in 

them, intelligence and counterterrorism officials said Tuesday. . . . 

American counterterrorism officials say Mr. Awlaki is an operative of Al Qaeda in the 

Arabian Peninsula, the affiliate of the terror network in Yemen and Saudi Arabia. They 

say theybelieve that he has become a recruiter for the terrorist network, feeding prospects 

into plots aimed at the United States and at Americans abroad, the officials said. 

It is extremely rare, if not unprecedented, for an American to be approved for targeted killing, 

officials said. A former senior legal official in the administration of George W. Bush said he did 

not know of any American who was approved for targeted killing under the former president. . . 

. 

"The danger Awlaki poses to this country is no longer confined to words," said an American 

official, who like other current and former officials interviewed for this article spoke of the 

classified counterterrorism measures on the condition of anonymity. "He’s gotten involved 

in plots." 

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No due process is accorded. No charges or trials are necessary. No evidence is offered, nor any 

opportunity for him to deny these accusations (which he has done vehemently through his family). 

None of that. 

Instead, in Barack Obama's America, the way guilt is determined for American citizens -- and 

a death penalty imposed -- is that the President, like the King he thinks he is, secretly decrees 

someone's guilt as a Terrorist. He then dispatches his aides to run to America's newspapers -- 

cowardly hiding behind the shield of anonymity which they're granted -- to proclaim that the 

Guilty One shall be killed on sight because the Leader has decreed him to be a Terrorist. It is 

simply asserted that Awlaki has converted from a cleric who expresses anti-American views 

and advocates attacks on American military targets(advocacy which happens to be Constitutionally 

protected) to Actual Terrorist "involved in plots." These newspapers then print this 

Executive Verdict with no questioning, no opposition, no investigation, no refutation as to its 

truth. And the punishment is thus decreed: this American citizen will now be murdered by the 

CIA because Barack Obama has ordered that it be done. What kind of person could possibly 

justify this or think that this is a legitimate government power? 

Just to get a sense for how extreme this behavior is, consider -- as theNYT reported -- that not 

even George Bush targeted American citizens for this type of extra-judicial killing (though a 2002 

drone attack in Yemen did result in the death of an American citizen). Even more strikingly, Antonin 

Scalia, in the 2004 case of Hamdi v. Rumsfeld, wrote an Opinion (joined by Justice Stevens) arguing 

that it was unconstitutional for the U.S. Government merely to imprison (let alone 

kill) American citizens as "enemy combatants"; instead, they argued, the Constitution required 

that Americans be charged with crimes (such as treason) and be given a trial before being 

punished. The full HamdiCourt held that at least some due process was required before Americans 

could be imprisoned as "enemy combatants." Yet now, Barack Obama is claiming the right not 

merely to imprison, but to assassinate far from any battlefield, American citizens with no due 

process of any kind. Even GOP Congressman Pete Hoekstra, when questioning Adm. Blair, 

recognized the severe dangers raised by this asserted power. 

And what about all the progressives who screamed for years about the Bush administration's 

tyrannical treatment of Jose Padilla? Bush merelyimprisoned Padilla for years without a trial. 

If that's a vicious, tyrannical assault on the Constitution -- and it was -- what should they be saying 

about the Nobel Peace Prize winner's assassination of American citizens without any due 

process? 

All of this underscores the principal point made in this excellent new article by Eli Lake, who 

compellingly and comprehensively documents what readers here well know: that while Obama's 

"speeches and some of his administration’s policy rollouts have emphasized a break from the 

Bush era," the reality is that the administration has retained and, in some cases, built upon the 

core Bush/Cheney approach to civil liberties and Terrorism. As Al Gore asked in his superb 2006 

speech protesting Bush's "War on the Constitution": 

457


Can it be true that any president really has such powers under our Constitution? 

If the answer is yes, then under the theory by which these acts are committed, are 

there any acts that can on their face be prohibited? 

If the president has the inherent authority to eavesdrop on American citizens without a 

warrant, imprison American citizens on his own declaration, kidnap and torture, then what 

can't he do? 

Notice the power that was missing from Gore's indictment of Bush radicalism: the power 

to kill American citizens. Add that to the litany -- as Obama has now done -- and consider how 

much more compelling Gore's accusatory questions become. 

UPDATE: When Obama was seeking the Democratic nomination, the Constitutional Law 

Scholar answered a questionnaire about executive power distributed by The Boston Globe's Charlie 

Savage, and this was one of his answers: 

5. Does the Constitution permit a president to detain US citizens without charges 

as unlawful enemy combatants? 

[Obama]: No. I reject the Bush Administration's claim that the President has plenary authority 

under the Constitution to detain U.S. citizens without charges as unlawful enemy combatants. 

So back then, Obama said the President lacks the power merely todetain U.S. citizens without 

charges. Now, as President, he claims the power to assassinate them without charges. Could 

even his hardest-core loyalists try to reconcile that with a straight face? As Spencer Ackerman 

documents today, not even John Yoo claimed that the President possessed the power Obama is 

claiming here. 

UPDATE II: If you're going to go into the comment section -- or anywhere else -- and argue that 

this is all justified because Awlaki is an Evil, Violent, Murdering Terrorist Trying to Kill 

Americans, you should say how you know that. Generally, guilt is determined by having a trial 

where the evidence is presented and the accused has an opportunity to defend himself -- not by 

putting blind authoritarian faith in the unchecked accusations of government leaders, even if it 

happens to be Barack Obama. That's especially true given how many times accusations of 

Terrorism by the U.S. Government have proven to be false. 

458


UPDATE III: Congratulations, Barack Obama: you're now to the Right of National Review on 

issues of executive power and due process, asKevin Williamson objects: "Surely there has to be 

some operational constraint on the executive when it comes to the killing of U.S. citizens. . . . 

Odious as Awlaki is, this seems to me to be setting an awful and reckless precedent. " But Andy 

McCarthy -- who is about the most crazed Far Right extremist on such matters as it gets, literally - 

- is as pleased as can be with what Obama is doing (or, as Gawker puts it, "Obama Does Something 

Bloodthirsty Enough to Please the Psychos"). 

Should You Really Leave America? 

Fascist America; the Place to Be FROM! 

SN: 

SN: 

These final articles serve to prove that the economic problems are just 

one factor in a larger picture. See the broad canvas! The military-industrial 

complex run by elitists is literally experimenting with weapons which can 

cause earthquakes (some say similar weapons thousands of years ago caused 

the sinking of Atlantis) and alter the jet stream. These are weapons of mass 

destruction. 

Now, I happen to think the Russians are far better educated than we. Their 

schools are more rigorous by 100 times! They are philosophical and patient. 

They do not intend to wage war with us, but if our militaristic government 

alters their weather, ruins their crops, destroys the fishing in the Atlantic 

ocean, screws with the price of oil and the Euro, even causes earth quakes – 

eventually their military people are going to have to defend themselves and 

the world, even if it means raining nuclear and neutron bombs down upon 

Washington D.C. and much of North America. 

One religious zealot I’ve watched says that he thinks Moscow (rather than 

Rome or the USA or London or Brussels) is “the seat of the Beast” in the Book 

of Revelation. Moscow will be drawn into a war that brings China and them 

into the Middle East. Ancient Persia is involved. The U.S. doesn’t seem to be, 

and perhaps that’s because the U.S. is incapacitated by a previous war. 

The conspiracy that most “sane” people think is “unthinkable” is much more 

alive and dangerous than most of us have been allowed to imagine, and 

apparently it’s roots run back all the way to the dawn of civilized mankind. 

459


The National Biometric ID Card: 

The Mark of the Beast? 

April 20, 2010 

by John Whitehead 

"This calls for wisdom. If anyone has insight, let him calculate the number of 

the beast, for it is man's number. His number is 666." ~ Revelation 13:18 

As technology grows more sophisticated and the government and its 

corporate allies further refine their methods of keeping tabs on the American 

people, those of us who treasure privacy increasingly find ourselves engaged 

in a struggle to maintain our freedoms in the midst of the modern 

surveillance state. 

Just consider the many ways we’re already being monitored and tracked: 

through our Social Security numbers, bank accounts, purchases and 

electronic transactions; by way of our correspondence and communications 

devices – email, phone calls and mobile phones; through chips implanted in 

our vehicles, identification documents, even our clothing. Data corporations 

are capturing vast caches of personal information on you so that airports, 

retailers, police and other government authorities can instantly identify and 

track you. Add to this the fact that businesses, schools and other facilities are 

relying more and more on fingerprints and facial recognition to identify us. 

All the while, banks and other financial institutions must verify the identities 

of new customers and make such records of customer transactions available 

to the police and government officials upon request. 

In recent years, this information glut has converged into a mandate for a 

national ID card, which came to a head with Congress’ passage of the REAL 

ID Act in 2005. REAL ID requires states to issue machine-readable drivers’ 

licenses containing a wealth of personal data. However, because the REAL ID 

Act has been opposed by many states due to its cost and implementation, we 

have yet to be subjected to a nationwide implementation of a national ID 

card. That may all change depending on what happens with the immigration 

reform bill now before Congress. 

A centerpiece of the immigration bill as proposed by Senators Charles 

Schumer (D-NY) and Lindsey Graham (R-SC) is a requirement that all U.S. 

workers, citizen and resident alike, be required to obtain and 

carry biometric Social Security cards (national ID cards under a different 

name) in order to work within the United States. Attempting to appease 

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critics of a national ID card, Schumer and Graham insist that "no 

government database would house everyone’s information" and that the 

"cards would not contain any private information, medical information, or 

tracking devices." However, those claims are blatantly false. Indeed, this 

proposed biometric card is nothing more than an end-run around opposition 

to a national ID card. 

Civil and privacy rights advocates, as well as liberal-, conservative-, and 

libertarian-leaning organizations, have long raised concerns that a national 

ID card would enable the government to track citizens and, thus, jeopardize 

the privacy rights of Americans. President Reagan likened a 1981 proposal to 

the biblical "mark of the beast," and President Clinton dismissed a similar 

plan because it smacked of Big Brother. 

Most recently, The Rutherford Institute and the American Civil Liberties 

Union, along with a host of other organizations, voiced their opposition to the 

biometric ID card. In a letter to both the U.S. House of Representatives and 

Senate Judiciary Committees, Senate Finance Committee, House Ways and 

Means Committee and the White House, this coalition of groups declared that 

such a national ID card would "not only violate privacy by helping to 

consolidate data and facilitate tracking of individuals, it would bring 

government into the very center of our lives by serving as a government 

permission slip needed by everyone in order to work. As happened with Social 

Security cards decades ago, use of such ID cards would quickly spread and be 

used for other purposes – from travel to voting to gun ownership." And the 

national biometric ID card would "require the creation of a bureaucracy that 

combines the worst elements of the Transportation Security Administration 

and state Motor Vehicle Departments." 

At a minimum, these proposed cards will contain a memory device that stores 

distinct – and highly personal – physical or biological information unique to 

the cardholder such as fingerprints, retina scan information, a mapping of 

the veins on the top of your hand, and so on. Eventually, other information, 

such as personal business and financial data, will probably also be stored on 

these cards. For the cards to be effective, an information storage system and 

central database, which will be managed by the government and its corporate 

handlers, will be required. That means a lot of taxpayer dollars will be used 

to create the ultimate tracking device to be used against American citizens. 

As journalist Megan Carpentier reports, "The federal government wants to 

spend hundreds of millions of dollars, and force employees and employers still 

suffering from a recession to do the same, to create and make accessible to 

every employer a national database of the fingerprints of all Americans from 

the time they are 14 years old. And they want to do it in order to keep an 

estimated 11.9 million unauthorized immigrants – less than 4 percent of the 

total population of the United States – from accessing the job market." Under 

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threat of substantial fines by the government and in what promises to be a 

cumbersome, bureaucratic process, employers will have to purchase ID card 

scanning devices (or visit their local DMV) in order to scan the cards of every 

individual they wish to hire before that individual can be employed. What 

this amounts to, essentially, is a troubling system in which all Americans 

would have to get clearance from the federal government in order to get a job. 

Furthermore, the law’s requirement that machine-readable technology be 

incorporated into the card opens the door for radio frequency identification 

(RFID) tags to be placed on the cards. RFID is a tiny, automatic identification 

system that enables data – in this case the private information of American 

citizens – to be transmitted by a portable device. This will provide the 

government with unprecedented access to American citizens’ personal 

information. In addition, RFID tags emit radio frequency signals that allow 

the government to track the movement of the cards, as well as the 

cardholders. In other words, wherever your card goes, so do the government 

monitors. 

When all is said and done, the adoption of a national biometric ID card serves 

one purpose only: to provide the government with the ultimate control over 

the American people. As one commentator has remarked, this is a "naked 

government power grab." 

The time to resist is now. If we don’t, eventually, we will all have to possess 

one of these cards in order to be a functioning citizen in American society. 

Failing to have a biometric card will render you a non-person for all intents 

and purposes. Your whole life will depend on this card – your ability to work, 

travel, buy, sell, access health care, and so on. 

What we used to call science fiction is now reality. And whether a national ID 

card is the mark of the Beast or the long arm of Big Brother, the outcome 

remains the same. 







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BP Oil Spill Conspiracy Theories 

I wasn't surprised when Rush Limbaugh noted the suspicious timing of the explosion 

at the Deepwater Horizon oil rig, occurring as it did on the eve of Earth Day and the 

impending Cap and Trade Bill announcement and just after Obama's reluctant OK of 

new drilling leases. Limbaugh suspects "environmental whackos" (click here) and 

who can blame him? I mean, it's clearly a small step from spiking trees to blowing up 

oil rigs. And to radical environmentalists, the destruction of the Gulf is a small price 

to pay to save the Gulf from destruction. Talk show host Mark Levin (click here), 

opines that Hugo Chavez-like, Obama dispatched SWAT teams to the Gulf as a 

"precursor" to the nationalization of the oil industry. 

Though I'd heard her tell many official lies when she was G.W. Bush's spokesperson, 

I confess I was a little taken aback when Dana Perino (click here) joined the 

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conspiratorial chorus ("I'm not trying to introduce a conspiracy theory....but was this 

deliberate?") -though this is a woman who's also said, for all the world to hear, that 

America experienced no terrorist attacks during the Bush administration. 

Michael Brown, late of FEMA, ascribes the Obama administration's allegedly slow 

response to the catastrophe to naked political calculation. "We're seeing the Rahm 

Emanuel rule #1 taking effect, and that is to let no crisis go unused. So this is an 

opportunity for a President who wants to bankrupt the coal industry, and basically 

get rid of the oil and gas industry, to shut down offshore drilling." (Click here for 

more). Obviously, Brown is a man with a chip on his shoulder; I can't really blame 

him for going off half-cocked. 

I would file all of the above under the category of "opportunistic political 

demagoguery" rather than Conspiracy Theory as such. But then this week, David 

Emery, About.com's Urban Legends editor, forwarded me a viral e mail that's the 

real thing. The headline reads "US Orders Blackout Over North Korean Torpedoing 

Of Gulf Of Mexico Oil Rig"; the article is dated April 30th, and it appears to have 

originated at the What Does it Mean? website, written by a woman with the 

Pynchonesque name of Sorcha Faal. Click here to read it for yourself. 

The gist of the story is that the oil rig disaster is the work of a North Korean suicide 

sub, deployed from a "cargo ship" out of Cuba: 

The North Korean "cargo vessel" Dai Hong Dan believed to be staffed by 17th 

Sniper Corps "suicide" troops left Cuba's Empresa Terminales Mambisas de La 

Habana (Port of Havana) on April 18th whereupon it "severely deviated" from its 

intended course for Venezuela's Puerto Cabello bringing it to within 209 kilometers 

(130 miles) of the Deepwater Horizon oil platform which was located 80 kilometers 

(50 miles) off the coast of the US State of Louisiana where it launched an SSC Sang- 

o Class Mini Submarine (Yugo class) estimated to have an operational range of 321 

kilometers (200 miles). 

On the night of April 20th the North Korean Mini Submarine manned by these 

"suicidal" 17th Sniper Corps soldiers attacked the Deepwater Horizon with what are 

believed to be 2 incendiary torpedoes causing a massive explosion and resulting in 11 

workers on this giant oil rig being killed outright. Barely 48 hours later, on April 

22nd , this North Korean Mini Submarine committed its final atrocity by exploding 

itself directly beneath the Deepwater Horizon causing this $1 Billion oil rig to sink 

beneath the seas and marking 2010's celebration of Earth Day with one of the largest 

environmental catastrophes our World has ever seen. 

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The source of this sensitive intelligence is Russia's Northern Fleet (which I seem to 

recall was also much cited for the HAARP theory for the Haiti Earthquake). The real 

motive for the attack, the article concludes, is to put Obama in an "impossible 

dilemma"-either he allows the leak to continue indefinitely, wreaking untold 

economic and ecological havoc, or he authorizes the "nuclear option." A drone mini- 

sub is standing by, which could easily deploy "a B83 (Mk-83) strategic thermonuclear 

bomb having a variable yield (Low Kiloton Range to 1,200 Kilotons) which with its 

12 foot length and 18 inch diameter, and weighing just over 2,400 pounds" could 

instantly seal the leak, "the only known and proven means" to do so. But that "would 

leave the UN's nuclear conference in shambles with every Nation in the World 

having oil rigs off their coasts demanding an equal right to atomic weapons to protect 

their environment from catastrophes too, including Iran." 

This is too silly to respond to in depth; I'll leave that to Randall Amster at the 

Huffington Post (click here). But more interestingly, who is Sorcha Faal? The What 

Does it Mean.com site provides answers here, but they're awfully defensive and hard 

to follow. 

But if you follow a different set of links, you'll learn that Faal is "Sister Maria 

Theresa, the 73rd Sorcha Faal of the Sorcha Faal Order, Elected as Mother Superior 

3 February 2007." She is currently based in Israel. 

Born in Dublin, Ireland, the 73rd Sorcha Faal joined the Order in March, 1973 and 

holds various degrees with both European and United States Universities. 

Sorcha Faal has traveled and lectured extensively throughout the World, with her 

primary focus being the systematic structure of languages serving as a link between 

thought and sound, and as developed by Ferdinand de Saussure. Sorcha Faal has 

further expanded her own research on 'Linguistic Ordering' with knowledge gained 

while a visiting researcher with Russian biophysicist and molecular biologist Pjotr 

Garjajev on the esoteric structure of DNA and its uses in explaining physic 

phenomena. 

'In accepting this Conclave's nomination as the 73rd Sorcha Faal of our Order, I 

express the gratitude of all the Sisters in thanking Sister Lyuha for her guidance as 

our Sorcha Faal these past 7 years, especially her efforts these past 5 years in reorienting 

all of us towards the Western World. 

Our Order has always striven to provide to this World that Light needed to dispel the 

myths inherent in Darkness, but which without we could never see the truest balance 

between the two.' 

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There's more: The nuns of Sorcha Faal pre-date Christianity; their order was 

established in 588 BCE in Tara, County Meath, Ireland. They claim as their Founder 

the oldest daughter of King Zedekiah, Tamar Tephi (Tamar Tephi, the "Maid of 

Destiny" is a great heroine in British Israelitism; it is in her person that the line of the 

House of David comes to Great Britain). The name Sorcha Faal, the website says, 

comes from "the ancient Gaeilge branch of the Goidelic languages of Ireland" and 

has the meaning of: Sorcha: She Who Brings Light; Faal: the Dark and Barren Place. 

"The Order of Sorcha Faal comprises 18 Monasteries in Ireland, Russia, Egypt, 

Lebanon, and the United States." 

That's what it says, anyway. If you're interested and have $25.95 to spend, you can 

order Sorcha Faal's book The True Knowledge of Three Minds, which "From the 

most ancient of texts, to the latest discoveries in quantum physics, and everything inbetween....contains 

the truest knowledge of human beings available to the Western 

World today and provides the foundation upon which to live your life more 

powerfully than you could have ever imagined before." 

Literally dozens of equally probable alarmist stories, often of an apocalyptic bent, 

have been dispatched under Sorcha Faal's name since 2004; they are archived here. 

For just a few examples, "All Private Guns Will Be Confiscated By September 2009, 

US Tells Russia" was issued in March of 2009; "Catastrophic Atmospheric Blast in 

Southern Hemisphere Continues Global Weather Chaos as North American Plate 

Instability Increases and US President Orders Massive Troop Withdrawal from New 

Madrid Fault Zone Region" in September 2005. 

There has been frantic speculation in the world of conspiratorial websites over the 

years as to Sorcha Faal's real identity. Most suspect she is the creation of David 

Booth, a computer programmer, self-proclaimed psychic, and apocalyptic conspiracy 

theorist who is the author of Code Red: The Coming Destruction of America 2004. 

You can read the book here here if you like. But be advised that Jeff Rense's far right, 

anti-Semitic website exposed it as a cut-and-pasted tissue of plagiarisms (click here). 

By the way, an update to the original oil spill article is now available: "US Goes To 

"COCKED PISTOL" Alert Status Over Korean War Fears." We may be on the 

brink of World War III! You can read it for yourself here. 

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The euro crisis will give Germany the 

empire it’s always dreamed of 

By Peter ObornePoliticsLast updated: July 21st, 2011 

1556 CommentsComment on this article 

467 

Angela Merkel 

greets Nicolas 

Sarkozy in 

Berlin, July 20 

(Photo: AFP) 

Many of the biggest losers from the Wall Street Crash were not those greedy speculators 

who bought at the very top of the market. There was also a category of investor who 

recognised that stocks had become badly overvalued, sold their shares in the summer or 

autumn of 1928, then waited patiently as the market surged onwards to ever more 

improbable highs. 

When the crash came in October 1929, they felt thoroughly vindicated, and waited for the 

dust to settle. The following spring, when share prices had consolidated at around a third 

lower than the all-time high reached the previous year, they reinvested the family 

savings, probably feeling a bit smug. Then, on April 17, 1930, the market embarked on a 

second and even more shattering period of decline, by the end of which shares were 

worth barely 10 per cent of their value at their peak. Those prudent investors who had 

seen the Wall Street Crash coming were wiped out. 

There was one crucial message from yesterday’s shambolic and panicky eurozone 

summit: today’s predicament contains terrifying parallels with the situation that prevailed 

80 years ago, although the problem lies (at this stage, at least) with the debt rather than 

the equity markets. 

After the catastrophe of 2008, many believed and argued – as others did in 1929 – that it 

was a one-off event, which could readily be put right by the ingenuity of experts. The 

truth is sadly different. The aftermath of that financial debacle, like the economic 

downturn after 1929, falls into a special category. Most recessions are part of the normal, 

healthy functioning of any market economy – a good example is the downturn of the late


1980s. But in rare cases, they are far more sinister, because their underlying cause is a 

structural imbalance which cannot be solved by conventional means. 

Such recessions, which tend to associated with catastrophic financial events, are 

dangerous because they herald a long period of economic dislocation and collapse. Their 

consequences stretch deep into the realm of politics and social life. Indeed, the 1929 

crash sparked a decade of economic failure around much of the world, helping bring the 

Weimar Republic to its knees and easing the way for the rise of German fascism. 

So we live in a very troubling period. The situation is very bad in the United States, 

where ratings agencies are threatening the once unimaginable step of downgrading 

Treasury bonds, and Congress is consumed by partisan wrangling over raising the 

nation’s debt limit. But it is desperate in Europe, because the situation has been 

exacerbated by a piece of economic dogma. 

The faith of leading European politicians and bankers in monetary union, a system of 

financial government whose origins can be traced back to the set of temporary political 

circumstances in the immediate aftermath of the Second World War, and which was 

brought to bear without serious economic analysis, is essentially irrational. Indeed, in 

many ways, the euro bears comparison to the gold standard. Back in 1929, politicians and 

central bankers assumed that the convertibility of national currencies into gold (defined 

by the economist John Maynard Keynes as a “barbaric relic”) was a law of nature, like 

gravity. European politicians have developed the same superstitious attachment to the 

single currency. They are determined to persist with it, no matter what suffering it causes, 

or however brutal its economic and social consequences. 

There is only one way of sustaining this policy, as the International Monetary Fund 

argued ahead of yesterday’s summit in Brussels. Admittedly, the IMF should not be 

regarded as an impartial arbiter. Theoretically, its responsibilities stretch around the 

globe, but it has become the plaything of a reactionary European elite, of whom its latest 

managing director, Christine Lagarde (a dreadful and backward-looking choice), is the 

latest manifestation. However, the IMF was entirely correct when it pointed out that the 

only conceivable salvation for the eurozone is to impose greater fiscal integration among 

member states. 

This advice was finally being taken yesterday – and it is almost impossible to 

overestimate the importance of the decision which European leaders seemed last night to 

be reaching. By authorising a huge expansion in the bail-out fund that is propping up the 

EU’s peripheral members (largely in order to stop the contagion spreading to Italy and 

Spain), the eurozone has taken the decisive step to becoming a fiscal union. So long as 

the settlement is accepted by national parliaments, yesterday will come to be seen as the 

witching hour after which Europe will cease to be, except vestigially, a collection of 

nation states. It will have one economic government, one currency, one foreign policy. 

This integration will be so complete that taxpayers in the more prosperous countries will 

be expected to pay for the welfare systems and pension plans of failing EU states. 

This is the final realisation of the dream that animated the founders of the Common 

Market more than half a century ago – which is one reason why so many prominent 

Europeans have privately welcomed the eurozone catastrophe, labelling it a “beneficial 

crisis”. David Cameron and George Osborne have both indicated that they, too, welcome 

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this fundamental change in the nature and purpose of the European project. The markets 

have rallied strongly, hailing what is being seen as the best chance of a resolution to the 

gruelling and drawn-out crisis. 

It is conceivable that yesterday’s negotiations may indeed save the eurozone – but it is 

worth pausing to consider the consequences of European fiscal union. First, it will mean 

the economic destruction of most of the southern European countries. Indeed, this process 

is already far advanced. Thanks to their membership of the eurozone, peripheral countries 

such as Greece and Portugal – and to an increasing extent Spain and Italy – are 

undergoing a process of forcible deindustrialisation. Their economic sovereignty has 

been obliterated; they face a future as vassal states, their role reduced to the one enjoyed 

by the European colonies of the 19th and early 20th centuries. They will provide cheap 

labour, raw materials, agricultural produce and a ready market for the manufactured 

goods and services provided by the far more productive and efficient northern Europeans. 

Their political leaders will, like the hapless George Papandreou of Greece, lose all 

political legitimacy, becoming local representatives of distant powers who are forced to 

implement economic programmes from elsewhere in return for massive financial 

subventions. 

While these nations relapse into pre-modern economic systems, Germany is busy turning 

into one of the most dynamic and productive economies in the world. Despite the 

grumbling, for the Germans, the bail-outs are worth every penny, because they guarantee 

a cheap outlet for their manufactured goods. Yesterday’s witching hour of the European 

Union means that Germany has come very close to realising Bismarck’s dream of an 

economic empire stretching from central Europe to the Eastern Mediterranean. 

History has seen many attempts to unify Europe, from the Habsburgs to the Bourbons 

and Napoleon. This attempt is likely to fail, too. Indeed, a paradox is at work here. The 

founders of the European Union were driven by a vision of a peaceful new world after a 

century of war. Yet nothing could have been more calculated to create civil disorder and 

national resistance than yesterday’s demented move to salvage the single currency. 

Repeating from page 7 

Volley III 

• “Could we all be at risk?” asks local Florida news station — Medical doctor has patients 

testing in 95th percentile for oil spill-associated chemicals (VIDEOS) 

• All 40 scientists agree at meeting: “Fish in the Gulf of Mexico will continue to get sick, die 

or fail to reproduce as a result” of oil — What about the people? 

• Multiple boats of fishermen sickened on November 1 — One still hospitalized after 

“bleeding in his esophagus” 

• Dallas surgeon “has treated many people from the Gulf that have been made sick by BP’s 

toxic chemicals” 

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• “I don’t recommend eating Gulf seafood, not with the risk of liver and kidney damage” 

says toxicologist — “They’re sniffing for something they can’t detect” 

• Scientists worry about “a cascade of events that will lead to the collapse of entire Gulf 

species” — May have pushed a variety of sharks “to their tipping point” 

My Hypothesis About The BP Spill 

And Its Longer Term Results 

Dr. Stephen Newdell, AS, BS, MT, DC. NhTh (natural health care therapist) 

C.O.M. (cantankerous old man) and uRL (unRegistered lunatic) 

If you understand anything about physics of water you know that as one passes deeper 

below the surface the pressure (density) becomes greater. Oil tar balls poisoned by BP 

will not sink to the bottom because they’re too light. At some point they float and some 

divers have seen them at a depth of 20 feet. They stay there and finally currents and 

winds lift them up and wash them ashore where they ruin the beaches and poison the 

environment for the next 1,000 years. They’re washing up on Florida beaches presently. 

Bacteria break crude oil down, but probably not if it’s laced with deadly toxins! Reports 

I’ve read are that oil is covering the shallower gulf floor, it’s floating 20 feet beneath the 

surface, and it’s washing ashore all over the gulf. I think this is just the beginning of the 

observations. 

(Let’s remember, all the people who did the clean-up of the Exxon Valdese Alaska oil 

spill are dead, and many of the people cleaning up in Louisiana are sick as dogs and have 

been ever since they started cleaning up. Meantime the BP public relations advertising 

has a fisherman aboard his boat saying, “We’re catchin’ shrimp, they big shrimp, they 

pretty shrimp, they good t’eat. Ya all come on down.”) 

The BP dispersants are the most poisonous available. The EPA asked them to find 

something else, and BP answers they cannot. But the truth is there are other products 

which they refuse to use. The present dispersant contains lead, mercury, and several other 

carcinogenic chemicals. 

The smaller tar bits also pregnant with these dangerous chemicals must eventually move 

into the currents that join with the Gulf Stream. They will eventually poison the beautiful 

Caribbean, destroy the reefs, collapse the fish stocks and the entire 

aquatic environment, sweep into the Atlantic around Europe to the far 

northern ocean, back down along the coast of fabulous Newfoundland 

and Labrador, Nova Scotia, beautiful New England and on south 

eventually poisoning all that once was beautiful, innocent, and makes 

up the memories and fantasies that occasionally glisten and flicker in 

older men’s boyhood dreams. 

Several billion people depend upon the Atlantic for a source of fish 

and protein. And people, according to my religious inclination (if you’ll forgive me for 

saying so) are only a small part of a larger equation that calls animals our family too! 

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These poisons will hasten the sickness and untimely demise of millions, perhaps over a 

billion, innocent people who have eaten these poisoned fish. 

I would like in my last years to remember crisp cool days on Long Island with the tang of 

salt air, the smell of oak and maple trees, fresh cut grass and a small white dog with too 

much energy. I would like to think your kids and their kids can sail and swim amongst 

the seaweed and fishes in the waters surrounding the island and eat the sea food and savor 

the taste of beach plums, and hold the hand of a lover, and make promises about faithful 

love forever, as they walk on the beach and watch the sun set. 

I would like many things, and many things there are that I’ve never had and will not in 

this lifetime. But some things belong to me as much as they belong to you and your kids 

and their kids and are not by right the property of Dick Chaney, George Bush Sr. and 

Junior, and all the other “Masters of the Universe” who have subverted the basic natural 

economic forces of this country and the Western World until the wealth you worked for 

to comfort you in your last years is worth nothing, and until the earth The Heavenly 

Father and His Family gave to you to respectfully tend, has been destroyed. All of this is 

not theirs to steal from you and destroy before your eyes. It is not their divinely appointed 

place to torture your children and cause billions to die at their whim. 

I’ll be the first to admit there is no way for this world to support 7-billion people. There is 

not enough land or water or mineral wealth to make all these people as comfortable as 

many of us have been between the years 1950 and 2007. I would go so far as to admit the 

ideal population is between 200 and 500 million (which it was at the time of Jesus.) Such 

a number could be reached over some long time gently and without terrible pains. Many 

would be disappointed to have no children, but even that is better than death by disease, 

poverty, freezing in winter, starvation and horrific wars. Birth control – even mass 

sterilization chemistry in the air or water (as controversial as such an idea is) – must be a 

better alternative than the mass murder these snakes have planned for most of us! 

Make your choice, no kids and all the sex you want with your spouse, or death by a super 

bubonic plague or an airborne AIDS, or an influenza that is an obvious laboratory created 

genetic manipulation. Which do you prefer? I’ll choose a long life of study, and happy 

experiences with my wife over death by starvation and disease. Yes, never raising 

children is a sad thought, but it’s certainly an idea to which I can adapt my emotional life. 

Indeed I have never raised children and feel only slight remorse about it in rare moments. 

There was a little blonde girl in one of the “Alien” movies. She said, “You told me on 

earth there were no monsters.” 

They told you wrong, little girl. They lied. Earth is being taken over by fascist monsters 

who worship Satan, and only a people who have decided to stand up and launch a full 

scale “recrudescence” can send them into retreat back to the black hole from which they 

came and into which they will fall again one day, back to their prison where they belong. 

I am not wise. This is not the ideal solution. The Creator of Eternity has the solution and I 

trust Him to arrive with it shortly. Upon His omnipotence I depend. 

Revelation 11:18 

And the nations were angry, and thy wrath is come, and the time of the dead, that they 

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should be judged, and that thou shouldest give reward unto thy servants the prophets, and 

to the saints, and them that fear thy name, small and great; and shouldest destroy them 

which destroy the earth. 

Revelation 11:17-19 (in Context) Revelation 11 (Whole Chapter) 

Thoughtless George Nixon 

In early 2011, I was a guest in a friend’s home. Behind the house is an 

empty lot. My car was parked on the lot because in Cape Coral, Florida 

you’re not allowed to park on the street – but it’s okay for you to park ten 

cars on your lawn! 

One day while I’m mowing the lawn this fat little man with a 

mustache shows up with his little white pick-up truck looking at my car’s 

license plate. His name is George. He claims that some unnamed good 

citizen is complaining about my car parked on their empty lot. It’s a quarter 

acre lot and the car is 12’ long and 4’ wide tucked into a corner, half on my 

friend’s back yard and half on their empty lot. This is a crime, unthinkable! 

I’m a couple of feet over their line. 

I think there’s no one complaining. I think George Nixon is plankton. 

Let me explain about “plankton.” 

Plankton are people who played games through junior high school and 

did nothing with high school and dragged their way through a two year 

degree at a community college with no interest in life. 

These are people who have no desire to better the world or improve 

anything. Their fondest hope is to eat, sleep, use the toilet, have 

unremarkable sex once a month, and die in their sleep. They have no plans 

to leave a better world or help anyone have a better life. They don’t ask 

questions and they never analyze anything about what they do or their own 

thoughts. They don’t analyze what others think, or why people do what they 

do, or the far reaching consequences of their actions. In truth, they don’t like 

questions and occasionally show anger toward anyone asking questions. 

So George Plankton Nixon in Cape Coral is raising hell because my 

car is 2 feet over the border of my friend’s back yard onto a quarter acre 

empty grassy lot in the middle of 8 other empty quarter acre lots all located 

at the far north end of a no-where, “Monopoly boardesque” town with 500 

empty houses in a community of over 2,000 empty houses, that feels a little 

more pain every time someone else packs a U-Haul truck and moves away. 

(and it appears at least 100 families will do that this year.) 

You see, everyone who moves away, no matter how rich or poor, 

takes with them whatever money they spend per year for gas and groceries, 

soap and occasional car repairs, hardware, a couple of shirts, a pair of shoes 

and a pair of blue jeans. Every one of those residents; people that George 

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Nixon encourages to leave, takes with them another few dollars that would 

be thankfully received and circulated around by the local residents. But 

George Nixon doesn’t think about that. He doesn’t ask questions, and he 

doesn’t consider motives or consequences of actions. 

D’ya’see, George Plankton Nixon doesn’t think about much of 

anything. He just fills in forms wherever he can justify his job. If he files 

enough violation forms because someone hung their clothing to dry on a 

clothes line, or parked their car on an empty lot, or let their grass grow a 

little too long, he justifies his job and keeps collecting a pay cheque. He gets 

a pay cheque for producing nothing of value. He provides nothing useful to 

the world. Georg Nixon in Cape Coral, Florida is “humanoid plankton.” 

He’s also the right hand of the Fascist-Socialist system that is taking 

over the once free and wonderful United States of America. This once great 

union, under God, indivisible, with liberty, and justice for most, is now not 

great, owes money to the entire world, is hated world wide, is likely to split 

into three countries, has pushed God out of society and the schools and is 

closing its churches. It has violated the historical intent of the Second 

Constitutional Amendment, (indeed of all the Constitution) and because of 

this, there is no liberty. Rumors have it that some old USSR citizens 

working in Russian Federation government call the USA a more terrible 

police state than the USSR was! 

The bright golden flame of Liberty is being snuffed out by thousands 

of worthless plankton people filing forms, and forcing struggling people to 

pack and leave because there’s no peace and no place to park a car or dry the 

laundry or let a few chickens roam. 

Actually, hundreds of thousands of wealthy families have packed and 

left the USA to live elsewhere. And a few of us poor folk are following! 

They didn’t want to live in a fascist state. They remember what happened to 

their families during World War II and they’re frightened. 

The Jews in Poland and Germany thought nothing would happen. 

They thought those young hot heads would finally be rejected by a civil 

society and that would be the end of them. So they did nothing. Six Million 

of them; educated, capable, working people, lost their belongings, objects of 

art, money in banks, memorial clothing and photos, their homes, privacy, 

culture and decency, their hopes and dreams, and finally their very lives. 

And the monsters who stole their wealth kept it and picked the silver 

and gold from their teeth after they murdered these people, and then laughed 

all their way to dreaded Outer Darkness. I suspect they’re not laughing any 

more. 

Take some advice from 6-Million Dead People calling to you from 

their graves. Don’t stay in a country turning Fascist and Socialist. The 

German army was vanquished but the Nazi’s won. The Nazi’s were not 

eliminated. They simply moved to North and South America with plans to 

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continue their evil dealings after a bit more preparation. Now they’re busy 

working their evil deeds again. They lost a battle called World War II 

Europe, but they won because they survived and took over your government 

and your banking system. 

They have prepared carefully. The ACLU has turned our nation’s 

morality inside out. The taxes against business are the most egregious in the 

world. The public compulsory education system is busy teaching kids to be 

socially compatible believers in a socialist/fascist dictatorship. The products 

of this educational system are teenagers who stay busy sucking upon one 

another’s genitals – but most of them can’t read and couldn’t make a living 

if their lives depended upon it. 

Taxes are rising. Sane finance is decomposing in the septic tank, and 

plankton like George Nixon in Cape Coral, Florida are busy ruining what’s 

left of a once civil and caring society. 

Do you know two or three people can live comfortably in the 

countryside in The Philippines for $500/month? It’s not fancy living but it’s 

enough and it has more liberty than you have now! 

No one tells you where to park or how you shall build your house or 

how you will educate your kids, how many kids you shall have, or how you 

shall worship or what clothing you must wear. They don’t even tell you what 

gender to marry. They leave you alone! You’re free to live your life as you 

will. There are places of freedom all over South America and The Caribbean 

islands. There are places like that in the wilds of Russia and Ukraine and 

there’s even more freedom in Eastern Slavic Europe! 

For that matter, you could get along well enough in Kansas or The 

Dakotas or some forested mountains of Pennsylvania or Colorado or Utah. 

The observation apparent is, when you move to a place that looks like a 

gigantic Monopoly board it will cost you more money and more freedom 

than it’s worth. 

Cape Coral, Florida isn’t a real town so much as it’s a gigantic model 

of a Disneyland -- an engineered residential retirement community. It’s all 

planned and apparently civilized but there’s no room for humanity. Even the 

sewer and water pipes are colored bright green, blue and purple. It’s all ever 

so cute. But you can’t live in it because every move you make is watched by 

The Plankton who are governed and directed by equally thoughtless people 

who can’t capably plan for the future in any meaningful way. 

Should you really move out of the United States, “land of the 

free, home of the brave?” I think, “Yes you should.” Personal freedom alone 

is enough to make me advise you to take your skills, your business acumen, 

your hard-won education, and your money and move, as many of America’s 

wealthiest and smartest have already done. 

You should move to a place where you can be brave and sufficiently 

free to be self-sufficient, where you can speak and write what you want and 

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put it on the Internet without fear that someone from the CIA won’t hammer 

your door down one day and call you a subversive radical potential terrorist, 

then drag you away to an army base prison camp. 

I think you should take your money and move to some place where 

the merchants will be happy to see you, and you should stay away from 

North America until all the Planktons like George Nixon in Cape Coral and 

the Magistrates who work with him, do some reformation of their laws and 

make a neighborhood in which thinking people are truly HAPPY to live. 

You and I, my reading friend, are surrounded by people who don’t 

believe or don’t know that this nation is on the edge of the abyss. They 

imagine their lives will be peaceful and prosperous forever. Anything they 

hear from MS-NBC TV is “the truth” because handsome Brian Williams 

said it. 

Your best revenge against people who look disdainfully at the poor 

and miserable is to leave while you can and let those onlookers find their 

own poverty and come to the realization that they had a hand in ruining the 

nation in which they live, and crushing the life out of the most hopeful 

empire this world has ever seen. 

Our government is spending Billions to wage war against 

impoverished societies in the Middle East but has nothing for college tuition 

for kids who can’t pay. I knew a girl who told me, “They say my father 

earns too much money so I can’t have a college loan. But my father says the 

money he earns is just enough to keep us surviving.” She wanted to be a 

medical student. Now she’ll be replaced by someone who comes from India, 

I suppose. 

I’ve seen pre-med student women writing articles explaining how they 

are earning their college tuition working as prostitutes and “acting” in 

pornographic movies. 

They smile and say, “I’m a sex worker. It’s a job and it’s traditional 

work, after all. I’ve fucked nearly everybody,” and their proud of it! In mid 

June of 2011 a 50+ year-old New York congressman (with a physique 

typical of a person who never lifted anything heavier than a teaspoon full of 

Rice Krispies covered with sugar and milk) got booted out of his chair 

because he was married and emailing photos of himself wearing little more 

than a smile to women between the ages of 17 and 22. He also admits he’s 

never had a real job in his life. He has made his entire post college career in 

politics. (Modeling himself after Bill Clinton and Barack Obama! I 

suppose.) 

How can such a man govern a people or understand the plight of the 

business owner struggling to pay the taxes and keep a few employees 

working too? He can’t. He doesn’t, and he doesn’t care if he destroys the 

businesses and the economy they support. 

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It’s people just like him who have made California so ravenously 

business unfriendly that businesses are moving next-door – to China and 

Viet Nam. 

Lots of people have their interpretation of the meaning of the 

Revelation’s “Mystery Whore Babylon.” 

I think Babylon is a system of economics, immoral people, crooked 

banking, broken courts, false religion, purposely erroneous and twisted 

education, and careless greedy government all designed to enslave YOU. 

When God said, “Come out of her, My People” He may have meant 

leave this place and this system to George. Let George do it and do it until 

it’s destroyed. Thoughtless small minded plankton like George Nixon on the 

north end of Cape Coral, Florida will pick a fight over a small old car with 

its wheels straddling a border of a grassy lot in an obscure town in the 

middle of nowhere. He’ll do it to file another report and justify his job. He’ll 

do it until that person is chased out of town and takes his meager 

expenditures with him, giving a little less justification to keep one more 

person working at the local grocery store. 

Plankton like George and his “magistrate” and people who write 

financing rules that deny decent college opportunities to ambitious young 

people, and decent jobs to young graduates in debt up to their eyebrows, are 

the ones who will quietly cause our society to disintegrate, and will 

ultimately destroy the jobs they cherish and are so busy trying to keep. 

In Dedication: 

And to better heap disrespect upon those who desperately deserve it. 

This vitriolic diatribe is lovingly dedicated to all of the world’s 

torturers, planktonus humanoids, neo-Nazis, fascists, communists, banksters, 

corrupted lawyers, greedy congressmen, disingenuous moralists, 

psychologists who believe gentle discipline is bad and open marriage is 

good, poisoners of the land, the air and the seas, genetic manipulators, and 

all the other horned creatures who hate happiness, despise hope, distrust 

liberty, and believe the only way to end a good life is to pour the best of it 

into a black hole and see if it really leads into an alternative universe. 

To all those filled with hate, and giving worship to Satan, while 

destroying the earth and all that is Godly, loving, holy, decent, kindly, 

nurturing of life, and good for spiritual advancement -- this writing is 

dedicated to YOU. 

May God Almighty grant every reward they richly deserve. 

2¢ 

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The great betrayers blessing their viewers with the sign of Satan. 

http://www.whale.to/b/hand.html (much more at this site, including photos of 

“celebrities” too ugly to place at the end of my book!) 

SATANIC/LUCIFARIAN HAND SIGN 

[back] Symbolism [back] Satanism 

[The hand sign for the followers of Evil, possibly the main sign 

for Reptoids. The Horned Hand or "Cornuto" represents the Devil, Satan. It is 

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similar to the sign for I Love you, but Helen Keller, who developed sign 

language, was into Theosophy (founded by Satanist Blavatsky), the satanic 

group that Krishnamurti rejected. Likewise the The "V" Sign has a good 

cover. The President does the same hand sign as serial killer Ramirez.] 

Hand sign: Music See: 666 hand sign Polygon iris Reptile eyes (slits) Reptoids 

"That is an old, well known greeting of one Satanist to another. Usually, the 

Illuminists are a lot more subtle and don't do that publicly."----Svali 

478 

Ladies and Gentlemen, The 

President(s) of the United 

States! 

Obama, Bush, Reagan, 

Clinton, There are also 

photos of Carter doing this. 

The Illuminists are coming out of hiding for the great final battle. 

I respectfully recommend: 

Planet of Slums [Paperback] at Amazon.com 

Mike Davis 

(Author) 

From Publishers Weekly 

Urban theorist Davis takes a global approach to documenting the astonishing depth 

of squalid poverty that dominates the lives of the planet's increasingly urban 

population, detailing poor urban communities from Cape Town and Caracas to 

Casablanca and Khartoum. Davis argues health, justice and social issues associated 

with gargantuan slums (the largest, in Mexico City, has an estimated population of 4 

million) get overlooked in world politics: "The demonizing rhetorics of the various 

international 'wars' on terrorism, drugs, and crime are so much semantic apartheid: 

they construct epistemological walls around gecekondus, favelas, and chawls that 

disable any honest debate about the daily violence of economic exclusion." Though 

Davis focuses on individual communities, he presents statistics showing the 

skyrocketing population and number of "megaslums" (informally, "stinking


mountains of shit" or, formally, "when shanty-towns and squatter communities 

merge in continuous belts of informal housing and poverty, usually on the urban 

periphery") since the 1960s. Layered over the hard numbers are a fascinating grid of 

specific area studies and sub-topics ranging from how the Olympics has spurred the 

forceful relocation of thousands (and, sometimes, hundreds of thousands) of the 

urban poor, to the conversion of formerly second world countries to third world 

status. Davis paints a bleak picture of the upward trend in urbanization and 

maintains a stark outlook for slum-dwellers' futures. 

Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights 

reserved. --This text refers to the Hardcover edition. 

Review 

The astonishing facts hit like anvil blows ... A heartbreaking book. (Financial Times ) 

Davis's prose exudes a crusading fervour – if not exactly messianic, close enough. 

(Village Voice ) 

If it's apocalypse you want – and frankly who doesn't, because how else to explain 

the mess we're in – nobody does it better. (Guadrian ) 

The Raymond Chandler of urban geography ... a coruscating tragedy. (Independent ) 

A profound enquiry into an urgent subject ... a brilliant book. (Arundhati Roy ) 







Because I STILL Can’t Shut Up! 

A bonus section including Biblical Prophecy Considerations 

My friend “Hal” is past age 80. As the saying goes, “When the student is ready 

the teacher will come.” Hal is one of those teachers. His friendship is a great 

blessing and one of the singular greatest privileges of my life. He was a famous 

journalist with the Washington Post. He sat sometimes side by side with Harry 

Truman and several other Presidents in their office sometimes on a daily basis. 

He’s seen what most of us have never seen and tells little about all the details. 

He was of course aware of Presidents Hoover and Roosevelt. Truman called 

him “Son.” He parked his new car beside Truman’s on one side of the White 

House. They sat together daily, discussing everything, including his new car 

when he rolled it in. “What is that, Son?” 

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“Well, Mr. President, it’s my new Studebaker. I can finally afford a new car.” 

They went out and looked it over together. The President of the United States 

leaned on his own car and they talked about cars for a little while. Hal knew all 

the Presidents there after right up to Ronald Reagan. He had little kind to say 

about Johnson. 

So we’re corresponding, and he’s asking me about Prophecy. Here’s the 

Email. 

Hi Hal, 

You asked my thoughts about Tim McHyde. I think he’s interesting but I 

doubt he’s 100% right in all cases. You know there are so many counter 

arguments about prophecy. Is he right in his conclusion that we’ll see an 

economic rectification? 

I’d guess that as The Italian Lira has somehow managed to continue so will 

the dollar for a while. For all the talk about China, the US economy is still 5 

times bigger than theirs. They’re on the edge of civil war, actually, and their 

government is trying to keep everyone working because the tacit deal is, 

“You give us jobs and we won’t revolt.” So they get jobs, they get thrown off 

their land, they get told how many children they can have, a few get 

comfortably rich and a great many get left behind. The pollution in some 

places has poisoned the land and water making areas uninhabitable. The 

drought alone could stall the country for decades. So, the Chinese might not 

be all the threat we imagine. In that case, America could rise again, but not 

likely to the same Super Power status it had from 1960 to the end of the 

1990’s. 

Hal Lindsey couldn’t find America in Prophecy but it has come to me one day 

that America is Mystery Babylon, but that moreover, The Vatican, the USA, 

The European Union are all extensions of Mystery Babylon all political players 

on the act. 

Mystery Babylon extends into every facet of life; religious, economic, 

educational, moral, legal. It is all pervasive. Just as the true God is in all 

things animate and inanimate, the devil and his system are designed also to 

pervade all things. 

There’s another preacher on line who has the presumption to call himself a 

final prophet and some other Biblical title, and he says Russia is “The Seat of 

the Beast.” He may be right. In that case the Vatican and Washington are 

minor players. 

In broad terms I’ll tell you what I might expect. Israel is finally finding the oil 

prophesied. It’s in shale rock and now we have the technology to release the 

480


oil and gas economically. Signs are strong that there’s more oil under Israel 

than was under Saudi Arabia. 

Everyone wants that oil! The Persians want it to solidify their power over the 

Middle East. The Russians want it to solidify their power over Europe. The 

Chinese want it to solidify their intended dominion of the entire world. God 

wants it because he said Israel is His land and woe unto anyone who tries to 

take it. 

There’s going to be a war for that oil. 

The USA is the worst managed economy in the world now. The best 

economists I respect say Greece will crash – there’s no way to prevent it. 

The US banks are all tied up loaning dollars to the European banks. When 

Greece goes the entire world goes with it. A Greek plague. 

Who’s going to fix the problem. Prince Charles, the Anti-Christ? Maybe. So 

then the US and England will enjoy an economic ascension again, but I hope 

before that time you and I have left this place. 

WHEN??? In my Codex for the End of the World which you have, I show that 

the end of 2012 is going to witness something – though I don’t say exactly 

what. 

I have also said this story is vast beyond anything most people imagine. 

Lately there was a story about an observed circle of light that came from a 

point in space above Hawaii. Some reports from Russia are that it’s a star 

gate opening. Not long after there was a quake and Tsunami in Japan. 

This is just the beginning. These cycles of change are compressing and going 

faster and faster, as if we’re falling down a black hole with time and events 

rushing past us beyond our understanding and control I suspect we’ll have 

more terrible geologic and weather events between now and then, and 

perhaps a stock market crash in October of 2012. That would open an 

opportunity for Obama! to declare emergency powers and make himself our 

first dictator. Imagine, a Black Muslim Dictator sitting where your friend 

Harry once sat. Don’t sully yourself by saying it out loud! 

The temple in Jerusalem must be built before this is over. If there’s going to 

be a “rapture” (which is a debatable point) I think it will be a moment when 

those who love God will suddenly be moved into another plane of existence, 

a higher energetic frequency, if you like. Those left behind will know they’re 

in trouble, but still won’t understand or acknowledge what they’ve done or 

what the trouble is. 

I’d say another 7 to 10 years after that The USA will be impotent and we’ll 

really have the war to end all wars. The farm land and minerals here are too 

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valuable. I don’t see a nuclear exchange likely. I do see a possibly 

impoverished America due to Electro Magnetic Pulse weapons, or EMP from 

solar storms, or from other sources. (“Other sources” opens another 

speculative discussion that sounds like sci-fi.) 

I think, and I hope, American forces will not be in the Middle East for the final 

terrible battle. We are releasing a lot of oil from our own shale rock in the 

Great Planes. We could keep the oil for military use and continue to invade 

the Middle East. 

I don’t believe George W. Bush ran the country. I think Dick Chaney did and 

he eventually made it clear his intention was to foment so much revolution 

and war in the Middle East that the US would own the place and the oil. Now 

we’re handing it to The Muslim Brotherhood which is really like making love 

to Satan! 

The next few years are going to be about oil, minerals, water, food 

commodities, and power consolidated in the hands of a very small Elite 

population (less than 5% of the world’s people.) They will continue to 

consolidate and survive (“don’t touch the oil and the wine”) and the rest of 

us will suffer and watch. 

At this point there are too many books about prophecy and the more we 

read the more confused we become. McHyde is more sensible than most 

(and I hope I am too) and if you wanted to read another writer I’d say he’s a 

good one to consider. 

Talk soon, 

SteveN 

(I am not necessarily advertising for Mr. McHyde, and I have not 

corrected any typos or grammar. If you judge an author based upon these 

details it will help you determine whether or not to buy his works. SN) 

So, I just left you with a question. What will happen at the end of year 2012. It’s up for 

speculation. Perhaps many things. Perhaps something so hidden you won’t even know. 

Maybe a decision amongst British Royalty. Maybe God gives an order to Angels. Maybe an 

economic collapse, or a monumental world changing natural disaster. Maybe a “rapture.” 

There’s enough evidence for all of these possibilities and more. First this and then the 

McHyde piece. SN 

Published 14:40 22.07.11 Latest update 14:40 22.07.11 

New layer of gas discovered at Tamar field off 

coast of Haifa 

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Amount of natural gas and economic implications of 

discovery at Mediterranean Sea site yet to be determined. 

By TheMarkerTags: Israel gasA deeper layer of natural gas has been discovered at the 

Tamar field, off the coast of Haifa, according to a report published on Thursday by Delek 

Drilling and Avner Oil Exploration. 

The impact of the newly discovered reserve has not yet been analyzed nor released 

in full. The significance of the newly discovered structure will depend on the amount 

of natural gas at Tamar and on the estimations of additional layers in other areas of 

the Mediterranean Sea that have not yet been discovered. 

The new reserve, 'Layer D', was discovered beneath 'Tamar 3', and is said to be up 

to 25 meters wide. 

According to the report, Noble Energy – the American partner leading the consortium 

– is gathering data on Layer D and analyzing the implications of the extent of the 

reserves at Tamar. It is currently not possible to determine the size and economic 

implications of the newly discovered reserve. 

Noble owns 36% of Tamar, while Isramco Negev owns 28.75% and Delek Group, 

controlled by Yitzhak Tshuva, has a 31% percent stake through two units with equal 

shares of 15.6% each, Avner Oil Exploration and Delek Drilling. 

The Tamar site is the largest natural gas discovery in Israel and plans on selling 

natural gas to Israel in 2013. 

The Lebanese proposal of its maritime border with Israel that is currently under 

dispute does not include the Tamar and Leviathan gas prospects. 

Will America Crash Economically or Recover? -- 

Bible’s Bittersweet Answer 

Is the U.S. economy going into another Great Depression, or 

something worse like a total collapse? Is it under judgment 

by God? Some say that the collapse of the dollar is inevitable 

due to the enormous national debt. But what does Bible 

prophecy say? A surprising and helpful amount. Find out how 

America actually will fall and what her financial status among 

the nations will be at that time. 

Don't Be Confused About Bible Prophecy Another Minute 

Here's the Bible Prophecy breakthrough you've been waiting for—from two overlooked 

keys in the hard sayings of Jesus now made plain in the most accurate prophecy research 

available, because it departs from traditional "anything goes" allegorical interpretations which 

disregard Jesus' only statement on how to interpret Scripture correctly. (Learn these keys of 

Jesus in this free article...) 

A Reader Comments: 

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“I've been searching all of my adult life for this kind of wisdom! I have listened to 

Irvin Baxter for 13 years and the Prophecy Club off and on for the same amount of 

time. I felt like I only had bits and pieces of the big picture. Then I hit the "wisdom 

and understanding jackpot" the next night when I typed "Prophecy" into a google 

search and out of all the sights that were available, I clicked on Tim's site first! It 

was like God pulled a needle out of a haystack for me in answer to my prayer from 

the day before!” 

Eve Brast, California (Read more testimonials...) 

Is America doomed? Ever since the turn of the millennium, major new troubles have been 

multiplying for the U.S.A. We've seen the Dot-com Bubble Crash, the 9/11 WTC attack, the 

U.S. Housing Bubble Crash and now the Great Recession of 2007 and still going. Given all of 

this, many of my friends, Facebook contacts, and even readers of my book have expressed to 

me their concern that a total economic collapse is coming. Perhaps you are having the same 

thoughts. 

If so, you are definitely not alone. According to a recent NYT/CBS poll, 39 percent of 

Americans believe that the U.S. economy has now entered a "permanent decline."Another 

recent survey by CNN found that 48 percent of Americans believe that it is likely that another 

Great Depression will begin within the next year. News in the USA is full of stories of how 

people desperate for money are stealing just about anything that is not bolted down (manhole 

covers, copper wiring, air conditioners, etc.). Many Christians seeing these reports wonder if 

the nation is not under judgment from God. 

Doomsday Profits... 

This kind of negative thinking and behavior is not without instigators. Doomsday appeals to 

fear show up periodically, especially in times of recession or uncertainty. Back in 1998 when I 

started studying prophecy, the Year 2000 problem (Y2K) was in focus. Many people were 

convinced by Gary North and the sellers of survival supplies that they needed to stockpile 

food, weapons, gold and silver to face Y2K. It turned out to be a poor investment when Y2K 

did not create the disaster it was expected to. 

Now a little over a decade later, stockpiling is being touted again, this time from new sources. 

For example, even the bestselling author of Rich Dad Poor Dad, Robert Kiyosaki, is predicting 

an economic crash (“depression or hyperinflation”). He's so concerned about it that he has 

made the typical survivalist preparations for his household including guns (Seevideo). 

You may have seen another popular economic doomsday video that was even advertised on 

TV and radio. Porter Stansberry's “End of America” newsletter sales spiel 

(EndofAmerica2011.com) predicts a coming dollar collapse. In it, Stansberry introduces 

himself as someone who predicted the Great Recession and who has a strategy (yours for 

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$49.99) to tell you how to survive and profit from the coming financial crisis. The hour long 

video is so persuasive that it can be frightening for the fainthearted or uninitiated who don't 

recognize, for example, that one of the case studies he gives of what to expect 

isYugoslavia after the collapse of the Soviet Union. (If you watch the video, be sure to read 

this debunking of it afterward and Peter Schiff's review of every one of Stansberry's newsletter 

in the years prior to 2008 to debunk his claim of predicting the Great Recession. (P.S. In case 

you're wondering what that "number one investment in a time of financial crisis that most 

super rich own" touted in the video is: farmland, due to the soaring food prices.) 

...and Doomsday Prophets 

It is not only secular businessmen who warn of a soon end to America. The idea is also 

common among Christians, many of whom believe it is predicted in the Bible. Christians also 

have reported independent visions, alleged from God, of America's end. You may have read 

such visions like those of A.A. Allen and Dimitru Duduman. They portray America being taken 

down by her enemies because God's blessing and protection have left her. 

If those ideas are mistaken, there is still the Biblical pattern of God's judgment on wicked 

nations. This pattern is worrisome in the face of America's other trend of decline: morality. 

The depravity and increasing wickedness of American society mirrors that of nations in the 

Bible who were judged by God. For example, God eventually raised up enemies who came and 

conquered Ancient Israel and Judah for their sinfulness. This is also what the Bible prophesies 

for the mysterious end time nation “Daughter/Babylon the Great” of Jeremiah 50-51 and 

Revelation 17-18. 

Is America and Her Fate in the Bible? 

To sum up, we have a lot of people expecting the end of America and they envision it in two 

main ways. The secular perspective is offers a mountain of reasons why an complete 

economic collapse is inevitable soon. The Christian perspective argues that a complete 

military defeat is coming at God's hand, also soon and inevitable. 

Which one is right? Of course, if you are an American like me, you hope “neither.” Neither of 

these pessimistic perspectives are what you were wanting to hear about your home country. 

You don't have to be an American to dislike the concept of such a large nation and its citizens 

going through such tribulation. Even selfishly speaking, the fall of America or the reserve 

currency of the world it produces would send the world into depression and chaos.Could 

something this devastating really happen to not just America, but the whole world— 

and soon at that? 

We do not have to be in the dark on this question if we consult the Bible and understand it 

properly. As many rightly argue, it would make no sense that a book that has predicted the 

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fates of many empires in history does not have something to say about the greatest nation of 

the end times, and arguably the greatest world-ruling hegemony of all time. This is not to say 

it will be easy to identify or that everyone will agree with your identification. 

But since 1998 when I first heard the idea, I have become convinced America is actually 

spoken of in the Book of Revelation. The prophecy of Mystery Babylon from Revelation 17-18 

was mentioned earlier. Many think this refers to the Roman Catholic Church, the Vatican, or 

even Iraq (home of Ancient Babylon, rebuilt by Saddam Hussein beginning in 1983). However, 

when you look at all the detailed clues and take them at face value, the best fit by far is none 

other than the United States of America. 

Revelation 17-18 (along with the parallel in Jeremiah 50-51) describe a nation that is a: 

1. Reigning military power (Jer 50:23 - “hammer of all the earth” - the last 

“superpower”). 

2. Most importer importer and consumer of goods (Rev 18:11) 

3. Huge corrupter of the rest of the world (Rev 18:3-4 - America's movies, TV, music, 

websites, and drugs are distributed globally) 

There is much more proof than this for the skeptical. Check out this list of dozens of proofs 

that point to America being Mystery Babylon the Great here (or find further unique proofs in 

my book). 

This positive identification lets us learn several things about America's future from the 

prophecy of Babylon. It leads to some good news and some very bad news. 

The Bad News - America's Fiery Destruction 

The bad news is that both Jeremiah and Revelation leave no doubt as to the fate of America 

the Babylon. They give us specifics about exactly how it will happen. Jeremiah tells us a great 

nation even an assembly of nations, will arrive from north (Jer 50:3, 9; 50:41;51:48) and 

defeat her. Revelation tells us that the method of defeat will be fire and burning (Rev 18:8-9) 

and it will be in a single day (Rev 18:8), and completed within an hour (Rev 18:10). 

When you put these specifics together, it points to America's archenemy of the Cold War, 

Russia. The shortest distance between Russia and America is over the north pole. Russia still 

has the largest arsenal of nuclear missiles in the world to send in that very direction. Russia is 

allied with China who is also preparing for war with America over Taiwan. Together under the 

right conditions, such as after the star Wormwood passes that Revelation predicts, they could 

accomplish it. 

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But I know what you're thinking, Communism lost and collapsed and Russia became a 

democracy and would not want war now. The Cold War is over, etc. However, you have to look 

at what they are doing to prepare, not what they are saying. If you listen the many high level 

Russian military defectors, they will tell you that Soviet war policy is that a nuclear war is 

winnable and they still have a plan for defeating the USA with a nuclear first strike one day. 

However, if you don't find the theory of Russia plausible keep in mind that it is does not 

matter exactly who the culprit is; America has plenty of enemies. What matters is that the 

Bible says the greatest nation of the end times will be defeated swiftly one day just on time for 

the Beast to take over in the Great Tribulation. (For full details, see Know the Future). 

That's very sad news to an American like myself; news that I am loath to share with other 

Americans. I'm sure most of you reading this are not pleased to hear it and are tempted to 

deny it or even to be angry at me for suggesting it. Yes, I know it's a huge downer; please 

don't shoot the messenger. The sad truth is that in God's eyes, no matter how good America 

is to the rest of the world, it does not erase her extreme wickedness (see this article on 

America as Babylon for a complete explanation). 

The Good News: More Time + No Economic Collapse 

Despite the bad news about a coming military destruction of America, there is good news. The 

good news is twofold. 

First, from Bible prophecy we can determine that, contrary to what the groups mentioned 

above predict, America's end is anything but soon or imminent. Revelation 14 shows that 

America's military defeat does not come until right before the Mark of the Beast is released, in 

other words when the Great Tribulation starts in the middle of the 70 th Week of Daniel. The 

70 th Week of Daniel has not even begun yet and nothing needed before it can begin has 

happened (Nuclear Middle East War, Third Temple, sacrifices for the Antichrist to stop, etc.). 

The defeat actually comes at the hands of the Antichrist and his “Ten Rulers” (Rev 17:16-17) 

himself, right before he sets up his own global military and financial empire to fill the void 

America leaves. Revelation 17-18 depicts Babylon as a Whore riding or controlling the Beast 

which is why the Beast needs to remove her to be free. prerequisite events that the Bible 

describes It can't happen this decade (the 2010s) for sure 

The second piece of good news is that what Revelation tells us about the financial status of 

America on the day she is destroyed also precludes the “coming total economic collapse” 

theory. Like today, Revelation describes a nation that makes rich (Rev 18:15) the world's 

merchants and traders who ship to her every imaginable good under the sun (Rev 18:12-13). 

Like today, America will still be the biggest market for goods in the world. So much so that the 

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merchants are pictured on that day as weeping offshore in their ships looking at the smoke of 

her burning and wondering who will buy their goods now that she is gone (Rev 18:18-19, 11). 

Conclusion 

When we hear the latest theories for how America will soon end, it helps to realize that rumors 

of America's economic or military end are nothing new. No doubt people have been predicting 

this every year since the nation was founded. Meanwhile, America has survived a 

Revolutionary War, Civil War, two World Wars, Cold War, a Great Depression, and countless 

recessions. 

Although it may be the worst recession ever, the current Great Recession will end one day just 

like all other recessions did, with a recovery—not a complete economic collapse. Although 

Revelation sadly depicts the military defeat of America one day, it tells us plainly that it will be 

an America that is still the economic center and wealth creator of the world economy. A 

complete economic collapse of the dollar would ruin America forever and the world economy at 

the same time. It's contradicts Bible prophecy. 

We can believe and fear the theory of economic collapse or we can believe what the Bible says 

about America's rosy economic future. If we believe the Bible on this and even God's will for 

our own personal financial abundance (John 10:10) then there is much hope for our future 

despite the current financial trial many of us are in. 

SN: This is the article Tim referred to. If you read through it you can agree that Mr. 

Coombes applies many of the articles to America, and concludes the USA is Mystery 

Babylon. Mystery Babylon, as I’ve mentioned is a system of one world government, 

economics (banking and trade) and religious beliefs. The SEAT of the system is difficult 

to define because with today’s telecommunications what is done in Brussels or 

Washington DC or Moscow or The Vatican can all be as one in the same moment! The 

“city” called Babylon represents the country with the most influence. My instant guess is 

the Deep Water Port in point #2 is not Long Beach, California, it’s the world center of 

communication, business and banking. It is New York City. This article is additionally 

remarkable because in our time so many people have been convinced through carefully 

written arguments that the city called “Mystery Babylon” must be Rome and The Vatican 

in Italy; A city on 7-hills, bending the political will of the world with it’s false doctrine, 

parading as true Christianity. Yet, there’s more. As I’ve said, The Vatican will influence 

world politics and religion, and morality. There are small villages where one may find 

old-fashioned proper morality, but I think now there are no large cities where people 

behave as they did in the 1700s. The City that is destroyed eventually appears from this 

argument to be New York. The City represents the Country. The United States of 

America may not be totally destroyed but may soon become a broken nation, several 

nation/regions, several governments, and probably impoverished and no longer a world 

power. How soon? My general calculation is by year 2020. 

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60 Reasons Why Iraq Can Not Be Mystery Babylon 

by R.A. Coombes 

[Much of this article's material has been adapted from chapter 4 of Volume 2 of "America, 

The Babylon" but since publication of the book in 2002 which featured 57 reasons, this 

article provides an added 3 new reasons and was composed in May of 2006. For more 

information on the 2-Volume work - "America, The Babylon" see this link below: 

http://www.americathebabylon.com 

There are some prophecy "experts" who have proposed the theory that Iraq and the ancient 

archaeological site of Babylon is the location for the "Mystery Babylon" of Prophecy. That theory 

considers the ancient prophecies of Revelation chapters 17 and 18 primarily. Some of those 

experts also refer to other prophecies of Isaiah 13, 14, 18, 47, and Jeremiah 50 and 51. The 

theoretical lines of reasoning revolve around the central notion that the prophecies must be literal 

and applicable only to the ancient location site of Babylon with its current nationality being Iraq. 

That is the main line of proof for such a view. 

The site of ancient Babylon can be the only literal rendering of this prophecy according to those 

theorists. They proudly claim that they are the only, holy LITERAL interpreters of the text. To 

take the text LITERALLY one must assume then, that ancient Babylon is the LITERAL Babylon 

of the prophecies written by the Old and New Testament authors. Such a view assumes way too 

much, particularly in the translation work. Is it possible that there could be a different and more 

literal view based on a sharper rendering of the original Hebrew and Greek texts? Yes. Why? 

This researcher has done 16 years of extensive research into such theories. The results of my 

research indicate that the "Iraq is Mystery Babylon" theory is incorrect and invalid. Why? It is 

really very simple. Follow the exact rendering of the original Hebrew and Greek texts for 

themselves and you will find numerous character traits for the future nation of Mystery Babylon. 

Yes, I did use the term "nation" because again, what seems to be merely a city being described is 

not just a city. Most literally, the prophecies not only refer to a city but to cities, PLURAL. Also 

the prophecies refer to farming and the farmers of Babylon. There are no farms in a city. 

There are numerous character traits listed for this city/state/nation that is referred to as either 

"Babylon" or "Mystery Babylon". These character traits serve as identifying markers that give us 

the clues as to the identity of such a city/nation. Those traits must all match perfectly to one 

identity. We cannot ignore some and select others. These traits are numerous and 60 of those 

traits clearly can not be identified with Iraq. The following list shows what traits do NOT match 

up with Iraq. 

#1. The Jewish Population Issue: Jeremiah 50:8, 25; Jeremiah 51: 6, 45; Isaiah 48:20 and also 

Revelation 18:4. These are all references to Jewish people living in this future "Mystery Babylon" 

in the ancient Babylon, from the 6th Century BC till well into the early Church Age, the majority 

of the Jewish population lived in ancient Babylon. It was the home to most of the world’s Jews 

even in the time of Christ. Today, the largest population of Jewish people is found in the United 

States. The next two nations combined, Israel (home to the 2nd largest Jewish population) and 

Russia (home to the 3rd largest Jewish population) do not equal the population of Jewish people 

living in America. Iraq on the other hand has only a relative handful of Jews living within its 

borders. Some estimate the Jewish population in Iraq at perhaps 10,000. That is not very many 

people, particularly in regards to the population of most other nations hosting the Jewish 

remnant. This character trait of being the lead host for Jewry is not indicative that Iraq today 

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fulfills the prophecies of "mystery Babylon." Therefore, this trait alone disqualifies the theory of 

"Iraq = Mystery" Babylon. 

But, for those who are hard-headed, let us press on with the other 56 reasons why Iraq can NOT 

be Mystery Babylon based upon a literal rendering of the texts. 

#2. The chief city of Mystery Babylon is a "DEEP WATER PORT CITY"!!! Revelation 18: 17- 

19. This passage tells us that merchant ships are standing off the shoreline of Babylon. These 

ships have either just unloaded in the port city of Mystery Babylon, or are waiting to dock when 

the fiery judgment hits. These ship captains, crew and passengers are witnesses to the destruction. 

Question: Why would these folks be standing on deck of merchant ships unless there were port 

facilities in this city? Answer: The city is a port city. In this day and age, especially by virtue of 

the list of commodities that are traded in "Mystery Babylon," (see Revelation 18:11-13) there 

must be at least one deepwater port in the nation of Mystery Babylon. One thing can be noted 

regard to modern day port facilities. In order for Babylon to have the kind of merchandise 

(described in Revelation 18:11-13) coming by ships then those ships must be going to and from a 

DEEP WATER SEA- PORT CITY. Why? For today's ships to bring such merchandise requires 

them to be large commercial freighters with DEEP drawing drafts. These ships require deepwater 

port facilities to dock and load/unload because their hulls are so deep. They are BIG ships. 

[Note Reason #2 seems to be like our #57 reason, but there are significant differences between 

them.] 

Now here is the problem for the Iraq=Babylon theorists: Iraq has no deepwater seaport!!! That's 

right, there is no DEEP Water port facility in all of Iraq. During GulfWar2, there were and still 

are small freighters coming into the little town harbor of Basra. In a recent United States CIA 

publication on Iraq, the CIA noted that a significant problem with sea transport was the lack of 

deepwater shipping facilities. Harbor draft measurements up the mouth of the Euphrates river to 

Basra are around the eight foot (that's 8 feet) level. That makes it hard to even get big fishing 

boats into the harbor. At best, draft levels further out only range to less than 20 feet. 

There is no way that the typical international commercial freighters could dock in Basra or 

anywhere else in Iraq's very short shoreline because they would easily run aground and become 

stuck in the shallow, muddy waters. Only small ships carrying small quantities of goods can dock 

in Basra. Those large ore-carrying freighters, or big cargo container ships carrying cars or trucks 

are simply too big to be able to dock at the shallow harbor of Basra or any other little harbor on 

Iraq's shoreline. Those super-large oil tankers can not get near to the small snippet of coastline 

that Iraq has because it is so shallow. The oil from Iraq is therefore either piped to Jordan, or is 

piped out for miles into the Persian Gulf into the deeper waters where these oil tankers won’t run 

aground. 

But that is not all that shoots the Literalists balloon out from underneath them on this issue of 

deepwater port facilities. 

According to the "Literalists," Ancient Babylon, we are told must be the only literal 

interpretation. However, ancient Babylon is 400+ miles from the Persian Gulf and over 350 miles 

from Basra. The LITERAL description found in Revelation 18: 17-19 shows these huge ships 

will be within visual distance of the city skyline and will witness her destruction up close and 

personal. Being 400 miles away is just a bit too far to be able to see any kind of destruction of a 

city, even if it were from nuclear bombs. The curvature of the earth is just a bit too much at 400 

miles even with flat terrain to be able to see what has transpired that far away. Now although this 

is in itself a fatal flaw exposed in the "Iraq = Mystery Babylon" theory it is just one of many 

theoretical flaws. One thing it really points to though is how NOT Literal is the concept that Iraq 

is Mystery Babylon. 

#3. It is the KEY Commercial Nation and Engine of Wealth for the World’s Economy: Isaiah 

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47:15. Revelation 17:2; Revelation 18: 3, 9, 11-13, 15, 16, 17-19, 22, 23, & 19:2. In these 

passages we see just what relationship Babylon enjoys with the rest of the world. Here she is 

clearly the critical factor in the world economy. When she goes down in flames…what is the 

lament? "What was like unto this mega city? Who will buy our goods now that she is gone"? The 

answer is that no one will be able to buy the products of the world’s merchants. What does this 

tell us??? It should be a clear warning indicator that whoever this nation is… the rest of the world 

depends on her for buying their merchandise. With her destruction, there is no one left to buy 

these goods. That tells us just how vital this nation is and it means this nation is the engine of 

wealth for the world. Now, Iraq does NOT now nor can it fit that role…at least in the next 30 

years, unless the rest of the world is wiped out first. Once again, we see a character trait that Iraq 

does not exemplify in anyway, shape or form. 

#4-#21. It is the principal Commodities Trading Center: These are all commodities in a list that 

are the chief trading products as cited in Rev 18:11-13, for which the merchants and sailors later 

lament that no one will buy these products anymore. This includes Gold, Silver and Copper. Now 

on these items alone… there is more Gold traded in New York City on the COMEX in one day 

than in all the rest of the world combined !!! The same is true for Silver and Copper and Crude 

Oil. In fact, the volume of trade is so heavy that in one day alone there is more gold traded than 

had been traded in all of human history up until 1974 when gold trading was allowed on a futures 

contractual basis. That is how massive and dominant the USA and NYC are in the commodities 

trading markets. Revelation 18: 12 & 13, lists many other commodities as well, including grains 

and livestock. Now, Chicago is the Host City for such record trading in that arena. It too is a port 

city on as it sits on Lake Michigan. The fact of the matter: Iraq has no economic power… it has 

no ability to be the economic engine of wealth for the whole world. If Iraq vanished from the face 

of the earth today it would not even cause a ripple in the world’s economy. 

However, if the USA vanished today it would decimate the world’s economy and bankrupt every 

nation on earth, instantly. In essence, there would be no one left to buy the foreigner’s goods. 

That’s because no one else wants to import goods. They only want to export not import. The USA 

is the big promoter of international trade and promotes imports plus free trade. Iraq plays no such 

role in the world economy. As a nation, Iraq is simply too poor. 

#22. A Leading center of imports and consumption: Revelation 18: 11, 17-19. These passages tell 

us the economic picture of this nation. Note that this nation is not only involved in the trade of 

these products, but that she is also the leading importer… because when she is destroyed…"no 

one buys"… their merchandise anymore. The folks doing the lamenting are the international 

merchants who export goods to this mystery Babylon. Therefore, she is the leading import nation. 

She is therefore, by virtue of her importer status, the chief consuming nation. This also is not a 

description of Iraq. Iraq has no such status in the world today, tomorrow or the foreseeable future! 

It is this aspect which negates the Iraq theory…because the contention is that we are living in the 

"last days" and the fulfillment of the end-times prophecies are at hand. IF this is true, and I assert 

that it indeed is true, then how can Iraq match these character traits in so short a span of time??? 

Answer: she can’t. Iraq is not the nation being described. There is only one nation that fits these 

traits, and more. That nation is the United States of America. 

#23. She is also a manufacturing nation: Revelation 18: 22. This passage tells us manufacturing is 

no longer found in her after the judgment. This tells us that she was a manufacturing nation prior 

to her destruction. Iraq is not a nation noted for manufacturing. 

#24. Center for Merchandising and Marketing. Revelation 18: 3, 23; 19:2. Her merchants were 

the mega-merchants of the earth. This again does not fit the character traits of Iraq. It does, 

however, fit the picture of America. 

#25. Known as the World’s "policeman": Jeremiah 50:23 gives us a Hebrew idiom, "hammer of 

the whole earth." It had been used at one time to describe the way the empires of Persia, Greece 

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and Rome had applied their power to keep the world at peace. Today, after the decline and fall of 

the Iron Curtain, major news media refer to America as the world’s policeman, in the same kind 

of role that the Hebrew idiom references. Iraq does not fit this role. 

#26. Known for "showing the flag" or "gunboat diplomacy". Isaiah 18:1-2 Here we have two 

Hebrew idioms for the idea of a nation’s navy showing its power. The phrase in verse 1 relates to 

the idea of "air travel." The first phrase of verse 2…"that sends ambassadors by the sea," another 

Hebrew idiom for when ancient naval powers would send warships to "show the flag" of 

friendship or threaten war to unfriendly nations or cities. Today, one nation engages in such 

actions: The USA sends out naval units usually as aircraft carrier battle groups. The notion of 

verse 1 with air travel, combined with verse 2 and the naval aspect, thus combines to send a 

notion of naval and air power… or suggesting aircraft carriers!!! 

#27. Noted for its elegant, luxurious, refined and rich lifestyles: Isaiah 47: 1-8; Revelation 17: 4- 

5; 18: 2 –24. This does not match up with Iraq, as it is not capable of reaching such levels of 

wealthy living standards in our lifetime. 

#28. Extremely Wealthy: Jeremiah 51:13… Revelation 18: 2-19 

#29. Sensual, Materialistic lifestyle: Isaiah 47: 8; Revelation 18:14 

#30. The Highest Living Standards: Isaiah 47:1 Revelation 18: 14 

#31. Intoxicating high-society lifestyle as a world example to emulate: Revelation 17:2; 

Revelation 18: 3, 14, 23. 

#32. Elegant, Sumptuous lifestyle. Revelation 18: 14, 23. 

#33. Noted for its bright gaudy-colored lights and nightlife with round the-clock partying. 

Revelation 18:14. Note the words "dainty" and "goodly." Dainty is a word in Greek that connotes 

to 24-hour parties, and is connoted with orgies and debauchery. The word for "goodly" is the 

Greek word "lampra" from which we get the English word for lamp. In this case it carries the idea 

of bright, gaudy-colored lights, with idea of "glitzy" lights. Could it be the bright lights of 

Broadway, Times Square or perhaps even Las Vegas??? 

#34. Noted for its Drugs and Drug use: Isaiah 47: 9, 12. Revelation 18:23 Do we even need to 

comment on this one??? I think not…the text clearly speaks for itself on this one. 

#35. Noted for exporting its culture abroad: Revelation 18:14, 22 

#36. Noted for being Wasteful and Extravagant: Rev 18: 3, 7, 9, 14, 15; implied in Rev 17: 2. 

#37. Massive Population: Rev. 18:15. And Revelation 17: 1, 15. 

#38. A land of immigrants: Jeremiah 50:16; 51:13; Rev. 17:1, 15. 

#39. Unique and awe-inspiring from its birth right up to its demise: Isa. 18: 2 

#40. A remarkably different heritage. Isaiah 18:2 

#41. Respected-envied and yet HATED by the whole world also. Isa. 18:2 

#43. Powerful and Oppressive. Isaiah 18:2 

#44. Land of Rebels in its birth. Jeremiah 51: 1; Isaiah 47: 9. 

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#45. Cosmopolitan and Urban. Jeremiah 50:32 

#46. A Land of Agriculture. Jeremiah 50: 16 

#47. An International City. Revelation 17: 18; 18:15 

#48. Architecture, Buildings and Skyline. Isaiah 13:22 

#49. Land of Many Waters (fresh waters)> Jeremiah 51:13, 36, 42; Isa 18:1,2 

#50. Where the world’s leaders "stream" to meet. Jer. 51:44; Rev. 17:18 

#51. Last of the Super Powers. Jeremiah 50:12; Rev 17:18, 19; and in the Revelation 18:18 

passage "what city is like the ‘mega’ city"… 

#52. No Fear of Invasion. Isaiah 47:5, 8; Revelation 18: 7 

#53. Defenses reach up to Outer Space Jeremiah 51:53 

#54. Occult aspects, especially within the governmental leadership. Isaiah 47: 9, 12,13. 

#55. Alliances/Treaties allowing physical military bases of operation for the Satanic forces. 

Revelation 18: 2. 

#56. Its national symbol: Rev 17. Robed woman with a cup-like container in one hand that smells 

like natural gas odors inside the container…and the woman is connected to water and 

immigration…and is considered to be a mother-figure of spiritual prostitution…a.k.a. Ishtar, the 

mother of ‘literal’ and ‘physical’ prostitutes within religious worship centers. [That is what the 

Babylonian goddess Ishtar was--the promoter of physical prostitution… salvation by sex… have 

sex with a temple priest or priestess and you are purified from sin. And of course you pay a ‘gift 

offering’ for this salvation activity. Ishtar was never a physical ‘mother’… but rather a ‘madam’ 

over the priestesses. Ishtar was never married and never had a child but she was called "mother" 

of the temple priestesses. Now having said all of this… I am referring to the Statue of Liberty. 

SN: I’ll show you here Revelation 17 and note this is the English Standard Version. Even if 

you’ve read this several times read again carefully the translation of line 5 – I’ve underlined the 

phrase pointing out to you “mother of …. Earth’s abonimations.” 

I’ve written this before. This is not a matter of “sexual” immorality so much as it is the idiom “in 

bed with” or “bedfellows with.” In the lust for commerce and wealth our traders and industry 

have been making love with The Devil, and if my expression is correct there is sufficient 

justification for God’s righteous indignation to be kindled against America and particularly it’s 

banking system (which you know I love so well and respect so highly….) The “prostitutes” are 

the bankers and traders who willingly trade away their honor in exchange for money – which is 

the more accurate definition of the term “to Prostitute” or “prostitution.” 

English Standard Version (ESV) (from www.BibleGateway.com 

Revelation 17 

The Great Prostitute and the Beast 

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1 Then (A) one of the seven angels who had (B) the seven bowls came and said to me, 

"Come, I will show you the judgment of (C) the great prostitute (D) who is seated on many 

waters, 2(E) with whom the kings of the earth have committed sexual immorality, and (F) 

with the wine of whose sexual immorality (G) the dwellers on earth have become drunk." 

3 And (H) he carried me away in the Spirit (I) into a wilderness, and I saw a woman sitting 

on (J) a scarlet beast that was full of (K) blasphemous names, and (L) it had seven heads and 

ten horns. 4 The woman (M) was arrayed in purple and scarlet, and adorned (N) with gold and 

jewels and pearls, holding in her hand (O) a golden cup full of abominations and the 

impurities of her sexual immorality. 5 And on her forehead was written a name of (P) 

mystery: (Q) "Babylon the great, mother of prostitutes and of earth’s abominations." 6 And I 

saw the woman, drunk (R) with the blood of the saints, the blood of (S) the martyrs of 

Jesus. [a] 

When I saw her, I marveled greatly. 7 But the angel said to me, "Why do you marvel? I 

will tell you (T) the mystery of the woman, and of the beast with seven heads and ten horns 

that carries her. 8 The beast that you saw (U) was, and is not, and (V) is about to rise from (W) 

the bottomless pit [b] and (X) go to destruction. And (Y) the dwellers on earth whose names 

have not been written in (Z) the book of life from the foundation of the world will marvel 

to see the beast, because it was and is not and is to come. 9(AA) This calls for a mind with 

wisdom: the seven heads are seven mountains on which the woman is seated; 10 they are 

also seven kings, five of whom have fallen, one is, the other has not yet come, and when 

he does come he must remain only a little while. 11 As for the beast (AB) that was and is not, 

it is an eighth but it belongs to the seven, and it goes to destruction. 12 And (AC) the ten 

horns that you saw are ten kings who have not yet received royal power, but they are to 

receive authority as kings (AD) for one hour, together with the beast. 13 These are of one 

mind, and they hand over their power and authority to the beast. 14 They (AE) will make war 

on the Lamb, and (AF) the Lamb will conquer them, for he is (AG) Lord of lords and (AH) King 

of kings, and those with him are called and chosen and faithful." 

15 And the angel [c] said to me, (AI) "The waters that you saw, where the prostitute is seated, 

are peoples and multitudes and nations and languages. 16 And (AJ) the ten horns that you 

saw, they and the beast (AK) will hate the prostitute. They will make her (AL) desolate 

and (AM) naked, and (AN) devour her flesh and (AO) burn her up with fire, 17 for (AP) God has 

put it into their hearts to carry out his purpose by being of one mind and (AQ) handing over 

their royal power to the beast, until the words of God are fulfilled. 18 And the woman that 

you saw is (AR) the great city that has dominion over the kings of the earth." 

In my book, "America, The Babylon" Vol. 1, I explain the meticulous research involved that 

shows that the Statue of Liberty is in fact the brainchild of the sculptor Bartholdi. Later in 

Volume 2, you will find even more data on this subject. I would like to note at this point that it 

was Bartholdi's idea to create the image of the goddess Liberty of Rome. You will see later on in 

Volume 2 just how the Romans had in fact borrowed the Babylonian goddess. 

Babylonians first worshipped Ishtar the goddess of Babylon and the Romans also adopted her but 

they changed the name to Libertas in Latin, (Liberty, in English). So that, the Statue of Liberty is 

actually a pagan idol image of Ishtar--the woman pictured in Revelation 17. If you don’t believe 

it…look at Revelation 17: 4 & 5. Note the word for abomination. The word used here is 

"bdelugma" and its root word is "bdeoh." Strong’s Code # 946 … " A foul thing, detestable, 

usually of idols … the root word means to "break wind", or to "pass gas"… indicating the odor 

smells like natural gas. 

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Speaking of natural gas …did you know that the torch-cup of the Statue of Liberty burns an 

eternal flame…fueled by smelly natural gas? Also of course, the Statue is referred to as the 

Mother of Exiles … an immigrant connection…just as the woman of Rev. 17: 1, 15 is also 

connected to immigrants. So too was Ishtar. She was the goddess of personal freedom … and an 

encouragement to immigrants. 

#57 Iraq is radioactive 

Iraq is now extremely "radioactive" because of America's use of ammunition that uses depleted 

uranium, the same basic component used for nuclear weapons, only in lesser strength in and of 

itself. Rifle bullets and artillery shells were packed with small amounts of radioactive, depleted 

uranium. Once fired, the shells and bullets spread small doses of radio-activity throughout much 

of Iraq and especially in hot spots like ancient Babylon. Each bullet or shell, was thought to be 

seemingly harmless in terms of radioactivity. What was not anticipated was the voluminous use 

of such radioactive materials scattered across the battlefields of Iraq. Such voluminous use has 

created large quantities of low-level radioactivity that in volume has created a dangerous 

atmosphere and environment for virtually all of Iraq. (SN: This also implies our military 

permanently poisoned the hoe of the ancient Garden of Eden!) 

The radioactive dust has found its way into the soil and water supplies, contaminating every-thing 

it comes into contact with. The radioactivity levels are high enough that Iraq is experiencing 

contamination levels much like that of a "nuclear dirty-bomb" in terms of the after-effects. Not 

only are Iraqi's dying from exposure but so are US and allied soldiers. 

Uranium is a very reactive metal, easily oxidising to U3O8 and UO2. 

A single 120mm Abrams tank DU shell contains 3kg (6.6 pounds) of U-238 (111MBq of activity) 

and there is 275g (10.1MBq) in a 30mm GAU-8A A-10 Thunderbolt cannon shell. These 

‘penetrators’ explode on impact, with up to 80% conversion to tiny long-lived glassy beads of 

Uranium Oxide from


uranium particles in air filters in Bosnia some years after its use. The question of the dispersion of 

uranium aerosols from the battlefield is of significant legal interest, since if a radioactive weapon 

resulted in the general contamination of the public in the country of deployment or elsewhere, the 

weapon would be classifiable as one of indiscriminate effect. There is now conceded to be no safe 

level of exposure to radiation. Further, there are major scientific questions over the risk models 

used to assess the health effects of uranium particle exposure from weapons use. In addition there 

is evidence of ill health in many of those exposed to uranium particles from Gulf veterans to the 

population of Iraq." 

"Terry Jemison at the U.S. Department of Veterans Affairs stated in August 2004 that over 

518,000 Gulf-era veterans (14-year period) are now on medical disability, and that 7,039 were 

wounded on the battlefield in that same period. Over 500,000 U.S. veterans are homeless." 

* In some studies of soldiers who had normal babies before the war, 67 percent of the post-war 

babies are born with severe birth defects - missing brains, eyes, organs, legs and arms, and blood 

diseases. 

* In southern Iraq, scientists are reporting five times higher levels of gamma radiation in the air, 

which increases the radioactive body burden daily of inhabitants. In fact, Iraq, Yugoslavia and 

Afghanistan are uninhabitable. 

* Cancer starts with one alpha particle under the right conditions. One gram of DU (depleted 

uranium) is the size of a period in this sentence and releases 12,000 alpha particles per second. 

The above depleted uranium information can be found at the links below. 

http://www.llrc.org/du/duframes.htm 

http://pages.zdnet.com/trimb/id321.html 

From Gulf War 1 usage of depleted uranium, the Babylon region had one of the highest ratings of 

radioactivity levels as late as 1997. 

Here's a link to a film on DU in Iraq. 

http://www.ericblumrich.com/pl_lo.html 

http://rense.com/general70/deathmde.htm 

#58 The Messianic Covenant To Abraham Included Babylonia and Babylon 

The promises made to Abraham regarding a Promised Land were for Abraham and his 

descendants and the lands were far more extensive than ever used by Israel up until this point in 

time. 

Often overlooked by many Bible Prophecy “experts” are the prophecies concerning the future 

borders of Israel when Jesus Christ returns and establishes new borders for Israel’s Millennial 

Kingdom that will finally fulfill the promises made to Abraham and his descendants. 

Israel’s future borders will be extended eastward to encompass much of what today is called Iraq. 

The area will include all of the old Hittite and Chaldean Empire. Joshua 1:4 notes that it will 

include “ALL” of the land, which means the ancient site of Babylon and all of Babylonia are to 

be part of the new Messianic Israel. Scholars now believe that the Chaldeans originally were the 

Hittites. Not only is the promise made to Abraham in Genesis 15:18-20 [and the Hittite empire is 

496


mentioned (which included Babylon) ] but again in Deuteronomy 1:7 to Moses and again to 

Joshua in Deuteronomy 11:24. 

Above: Map showing Hittite Empire. Dark Blue is the main empire - Pink shading along 

Euphrates shows conquest of Babylonian and Babylon itself by the Hittite (a.k.a Khaldee or 

Chaldean) Empire. 

497 

SN: I have found a 

better map than was 

originally offered, 

shown in part above. 

Below I’ve cropped 

the same map and 

enlarged again so you 

can see the Hittite 

Empire and the 

Euphrates clearly. 

You’ll note for 

references Italy, 

Greece, The Red Sea, 

and the Black Sea just 

north of the Empire. 

This modern map 

helps orient you. We 

can see the Hittite 

Empire took up much 

of modern day Turkey 

and Saudi Arabia.


These Messianic prophecies come into direct conflict with the identity 

theory, which proposes that Iraq or ancient Babylon is the Mystery Babylon 

of Bible Prophecy. The conflict arises because the Babylon prophecies 

indicate that the land of Babylon and all of her cities and the land will 

remain uninhabited forever. 

It should also be noted that there are some anthropologists who have strong linguistic and 

archaeological evidence to support their claims that the Hittites were in fact the Chaldeans. The 

name “Hittites” is a different name for the same people. Such information again, only underscores 

the assertion that Babylon and Babylonia of Mesopotamia are to be a part of Jesus Christ's 

Messianic Kingdom and not buried underwater forever as the Mystery Babylon prophecies of 

Jeremiah and Revelation 18 indicate because those prophecies refer to a different, end-time superpower 

that exists outside of the Middle East. 

We simply can't have the Millenial Kingdom of Christ and the Israeli boundaries including the 

lands of Mystery Babylon which are to remain uninhabited forever and under water. Keep in 

mind that all of the millennial kingdom will be inhabited and prosperous. Clearly, we cannot have 

a destroyed Mystery Babylon being part of Christ's Millennial Kingdom. 

498


If Mystery Babylon is Iraq and ancient Babylon then it cannot be part of the Messianic Kingdom 

of Jesus Christ because it cannot be both occupied and unoccupied at the same time. The 

prophecies dealing with Babylon's judgment tell us that this future Babylon will never be 

inhabited again and will be under water. If, Babylon of Iraq is the "Mystery Babylon" then we 

have a clear-cut contradiction for which the Bible never contradicts itself. The contradiction is a 

result of misunderstandings, misapplications, and misinterpretations of the scriptural passages to 

Iraq as Mystery Babylon when clearly, there are 60 reasons - why Iraq can NOT be Mystery 

Babylon. Thus, we have no contradiction once we rule out Iraq and ancient Babylon as the future 

Babylon of prophecy. 

#59 America Conquered Iraq and Babylon in 2003 and retains strategic control of that land and 

will retain that control most likely until America, the Babylon is destroyed in Divine Judgment as 

the Mystery Babylon. 

In March of 2003, The United States of America launched an invasion and military conquest of 

Iraq. America captured the ancient archaeological site of Babylon. America retains strategic 

control of that region as well as the actual nation of Iraq which was originally Babylonia of 

Nebuchadnezzar's day. Iraq and the ancient ruins of Babylon are under the strategic control of 

American military forces with a puppet government that appears to be splitting Iraq into three 

separate regions. There is talk of it being forced to realize three separate regional entities that will 

no doubt become "protectorates" of the United States, much like Guam became a protectorate 

after World War 2 or Puerto Rico after the Spanish American War. During the war, America 

trashed the ancient archaeological site when it established "Camp Babylon." There have been 

reports that the United States military spirited away from Babylon and Iraq's Museum of 

Antiquities, key occult artifacts that may well be the fulfillment of the Isaiah 47: 12-13: 

12. - Stand now with thine enchantments, and with the multitude of thy sorceries, wherein 

thou hast laboured from thy youth; if so be thou shalt be able to profit, if so be thou 

mayest prevail. 

13. - Thou art wearied in the multitude of thy counsels. Let now the astrologers, the 

stargazers, the monthly prognosticators, stand up, and save thee from these things that 

shall come upon thee. 

Let's not forget also Zechariah 5: 5-11, as we hear of stories in which the US Military and 

Black Operations Intelligence Groups such as the CIA, DIA and other covert intelligence 

units may have spirited away certain occult artifacts and put them aboard giant cargo 

planes and air-shipped them to the United States to join other occult symbols such as The 

Statue of Liberty and the Goddess of Freedom atop the US Capitol Dome. Do you recall 

that just after the US took Baghdad, the Iraqi Museum of ancient artifacts was vandalized 

by thieves shortly after US soldiers on guard were pulled out? Reports indicated that 

before the general public began looting the museum, special ops forces dressed in black 

with ski masks entered the building and raided the locked vaults containing secret occult 

artifacts of ancient Babylon. These have never been returned but most of the remaining 

looted items have been located and either returned or are in the process of return. 

We also understand that on Easter Sunday of 2006, an occult ceremony was conducted in 

secret by US intelligence agents in conjunction with a US military guard and waiting 

nearby giant air cargo transport planes. This secret operation reportedly involved occult 

ceremonialism and the removal of key on-site artifacts. (SN: There is much evidence that 

the top powers of the British and US governments are Free Masons and Satanists.) Let's 

see if the Zechariah passage might just fit with such stories. 

499

Zechariah 5: 5-11: 


5 - Then the angel that talked with me went forth, and said unto me, Lift up now thine eyes, 

and see what is this that goeth forth. 

6 - And I said, What is it? And he said, This is an ephah that goeth forth. He said 

moreover, This is their resemblance through all the earth. 

7 - And, behold, there was lifted up a talent of lead: and this is a woman that sitteth in the 

midst of the ephah. 

8 - And he said, This is wickedness. And he cast it into the midst of the ephah; and he 

cast the weight of lead upon the mouth thereof. 

9 - Then lifted I up mine eyes, and looked, and, behold, there came out two women, and 

the wind was in their wings; for they had wings like the wings of a stork: and they lifted up 

the ephah between the earth and the heaven. 

10 - Then said I to the angel that talked with me, Whither do these bear the ephah? 

11 - And he said unto me, To build it an house in the land of Shinar: and it shall be 

established, and set there upon her own base. 

(SN: Uranium eventually degrades to become lead! The symbol of a nuclear warhead or reactor 

within this passage must not be dismissed. The land of Shinar is modern day Iraq. The lead 

which the Angel defined as “wickedness” could refer to these fine particles of refined uranium 

now spread all over most of Iraq as discussed above on pg 494.) 

Regardless of such stories, the fact that America retains strategic control of the land means that 

from a prophetic standpoint, America IS Babylon. But if you don't wish to believe even this, 

consider ... 

500

… THE MOST LITERAL OF ALL 


#60. A Populated city named Babylon on a Deepwater Port entryway to New York City 

Revelation 17:18; & 18: 11-19… Did you know that when ships coming in to the harbor facilities 

of New York City make their final approach to the Harbor channel shipping lanes…they have to 

come in from the south… heading due North straight for a spot on Long Island called … 

BABYLON !!! That is right. The city of Babylon, New York features a tall water tower that ship 

captains use to navigate directly into the harbor channel. They come within view of Babylon 

before turning west to head into the ports of New York City. It is from this vantage point that I 

believe Revelation 18: 17-19 takes place. 

(SN: This is my old home community. I’ve shown a map above. I’m a sailor. From 10 miles out 

to sea standing on a 40 foot tall ship deck, using large binoculars inside the pilot house, you 

would be able to spot range finders and other land marks. Today’s huge freighters and oil tankers 

going to refiners in New Jersey need at least a half mile to change course. Pilots will be looking 

for the water towers and other land marks even from 10-miles away so that they’ll have sufficient 

time and distance to correct their course. This would be more appropriate before the advent of 

modern GPS charting equipment which these days will guide you to within 6 feet of a designated 

location. Nevertheless, proper piloting procedures require that a man also use paper charts and be 

on deck using his eyes and mechanical optical instruments, rather than to rely solely upon 

electronic equipment.) 

From this vantage point…on the deck of a ship…one could quite easily read the letters of the 

name Babylon on the city water tower!!! Talk about literal?? Now that is indeed literal. This is 

something that theorists who promote the Iraq = Babylon idea can’t match, because ancient 

Babylon is not a deepwater seaport. It's so far away from the ocean that it can not possibly fit the 

description of Revelation 18: 17-19… in no way. But the USA can… and especially its chief 

city… a seaport named NYC/Babylon. Also, Babylon on Long Island derived its name because 

immigrant Jews founded it in 1872. The group’s Rabbis chose the name almost prophetically, 

because they believed it would be home to a new diaspora. 

Why would they think this? Because rabbinical opinions had held that ancient Babylon’s power 

would be moved… Zechariah 5: 5-11… and Isaiah 18:1 tells us what direction it would be 

moving. Isaiah 18:1 says that the spirit of Babylon would move west of the most outermost 

boundaries of ancient Babylon’s western-most border, beyond the rivers of Ethiopia and Egypt. 

[That is what is meant by the KJV term "Ethiopia"] By virtue of Isaiah’s point of observation 

being from Jerusalem…then the direction of movement was westward from Jerusalem…beyond 

the most outer of Babylon’s oldest boundaries… meaning… the occultic power that fueled 

Babylon would move and take up residence elsewhere in the end times. 

Thus, scripture itself negates the "Iraq = Babylon" theory. Why will our "expert" scholars not 

accept the scriptural passages on this? Is it due to Pride? Is it due to ignorance? However, it 

seems to me that their hypocrisy shows. Clearly, the only logical interpretation from scripture is 

that it literally cannot be Iraq because the text tells us it moved. Isaiah 18:1-7 and Zechariah 5:5- 

11. 

Early rabbinical writers commented on this well before the time of Christ. 

They made note that the "mystical woman of Babylon" had moved out of the 

501


Babylonian Empire and had been taken westward beyond the ancient 

boundaries of Babylonia. Those most westward boundaries were considered to be Egypt 

and Ethiopia. The woman was taken west of those two countries. They noted that the woman 

would not be found in its old location of Mesopotamia for the fulfillment of the final prophecies, 

which would be fulfilled at the coming of Messiah. 

These rabbinical commentators believed that a future Babylon that was prophesied by Isaiah and 

Jeremiah would be located west of Egypt and Ethiopia. They believed the woman of Zechariah 5 

was headed west of those boundaries and hence out of uttermost regions of 

Babylonia/Shinar/Chaldea. Yes, they believed she was being taken west of Egypt and Ethiopia in 

that basket. Why? Note that the observer's vantage point was already in the land of Shinar. 

Shinar is yet another term for the ancient nation of Babylonia or Chaldea. Therefore we must pay 

attention to that scriptural direction and realize that it must be a new nation that carries the old 

Babylonian character traits. You'll note that the verse is indicating it is a different Shinar than the 

Chaldean or Babylonian land called Shinar. How do we know that? Isaiah 18:1-2 tells us from the 

observer's vantage point of Jerusalem that the phrase beyond the rivers of Ethiopia is an ancient 

idiomatic reference to the farthest borders of Babylon at the time of Cush, father of Nimrod. 

Nimrod inherited that land from his father and so that Egypt and Ethiopia were the extreme 

western border of Babylonia or Shinar or Chaldea. 

Now, Isaiah is telling us that a future Babylon would exist at the time of the coming of Messiah 

and it would be located beyond the old Babylonian Empirical boundaries of Egypt and Ethiopia, 

which was the Cush empire that Nimrod inherited. It too was Shinar. Zechariah is then 

referencing that the woman is being flown out of Babylonia/Chaldea/Shinar to a new land of 

Shinar. This confirms what the prophet Isaiah had written earlier concerning a future Babylon 

being located west of the old Babylon. 

There is reportedly a team of archaeological experts preparing to publish the results of many 

years of work in which they claim to have documentation that the Babylonians occupied North 

America and Mexico as colonies as early as around 3,000 BC. If this were true then it may further 

highlight and underscore the reason for these statements made by the prophets and the rabbinical 

commentaries. 

We do know this…that the nation being referred to is none other than … … 

America, The Babylon 

http://www.americathebabylon.com 

We’ve come a long way together. I’ve done my best to rattle nearly everyone’s 

cage, and nearly all of them had it coming. And….I sincerely believe The 

Creator of Eternity is going to give it to them! 

I’ve never known a society so arrogantly ignorant and selfish as is much of 

America. Of course there are wonderful people here, giving, kindly, and 

concerned for others. It was my misfortune to grow up amongst a great many 

502


extremely self centered people who could not control their ego weakness such 

that they could be open minded to new ideas self-analysis. It’s entirely too easy 

to go along with what you’re told than to delve deep into what is said to find its 

origin and query whether it is honest and right or untrue and evil. 

This wicked generation will be tolerated no longer. They have kindled God’s 

righteous indignation and the conflagration that follows will be more than 

sufficient to humble them. 

I hope this long anthology will serve the reader helping those in my time and 

the future to survive and prosper, maintain peace and freedom, and use the 

minds God gave such readers to have a better life and create a better life for 

future generations in a world that respects the ways of God and by which there 

will forever be human rights, peace, dignity, economic prosperity for everyone, 

no war, and no more bitter tears. 

Ω 

� 

503


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