On the Bright side it is not looking good for the US War Machine either.
Jim Rickards is a financial consultant to the CIA and Pentagon. He participates in War Games. Of the 2009 War Games he recently said that the object was not to defeat the enemy or win the war but rather to inflict relatively more damage on them than you. In case you were wondering about the Pentagon that statement should remove all doubts. They are are not looking for another General Patton.
He also mentioned Pentagon plans to strike North Korea in the next 6 months or so. Of course Russia and China have said not to consider a first strike option. More about WW III later.
But first I want to explain why we can conclude the Federal Reserve under Janet Yellen will kill the stock and bond markets and cause foreign investors to flee the US. When foreigners dump dollars by the trillions to flee the crashing US stock and bond markets, we will have sharply higher prices. This will dramatically cut wages and pensions overnight. It will also cut Pension fund holdings so people retiring in 15 to 20 years will also be severely hurt.
Quantitative Tightening has begun. The average person understood Quantitative Easing. It was just another world for Money Printing. It lowered interest rates. It forced bond holders to either buy risky junk bonds or to buy over priced stocks. Central Banks also used QE to keep Wall Street billionaires out of prison. The US government bought trillions of dollars in fraudulent (MBS) Mortgage Backed Securities.
This is how Rickards explained QT. Various Central Banks including the Federal Reserve have been buying a trillion and a half dollars a year of stocks and bonds under the Quantitative Easing program which allowed them to create trillions of dollars, pounds, euros and yen to buy stocks and bonds. But the Federal Reserve has entered Quantitative Tightening (QT). They were buying $10 billion a month less in MBS but upped that to $20 billion a month less starting October 1st. They had been buying Treasury bonds under QE. Now they are letting $20 billion of those bonds mature every month. This forces the US Treasury to sell new bonds elsewhere or more likely to run an even bigger deficit.
QT will, by design, force interest rates higher. The FED under Yellen hopes to reduce their Balance Sheet and to raise interest rates so they can fight the next Depression by lowering interest rates and expanding their Balance Sheet (i.e. Print Money.) This cannot work. The US stock market is at dangerously high levels. It is due for a severe correction. When, not if, foreigners sell their US stocks and bonds, they will take their money elsewhere.
Instead of increasing their Depression fighting tools (i.e. printing money and lowering interest rates), they will be starting one of the greatest Financial Panics of all times. Where would the stock and bond markets be if Central Banks had not bought a trillion and a half dollars a year of stocks and bonds? My regular readers know that the CIA has a secret slush fund from their Afghanistan heroin profits that was used to buy an additional trillion dollars in US bonds to prevent the dollar from sliding into oblivion.
This Financial Panic could have severe consequences.
If foreigners including foreign subsidiaries of US corporations sell a few trillion dollars in stocks and bonds, they might take their money out of the country. They could dump the dollar by buying commodities or foreign currencies, real estate and other assets. This will spike prices to consumers. High prices could force consumers and investors to spend their dollars as soon as they receive them. That is what happened in Germany in 1923 and Zimbabwe in 2008. On July 4, 2008 the price of a bottle of beer rose from $100 billion Z to $150 billion Z between the hours of 5 and 6:30 PM. It won’t have to be that bad here for the US to have Nationwide Food Riots. A 20% cut to wages and pensions will make it impossible for the bottom 120 million Americans to feed their children.
Rising prices cut current wages and pension payments. But think what a Financial Panic will do to pension funds scrambling to fund retirements for tens of millions of people expecting to collect their funds in 10 to 20 years. There are lots of cities, states, unions and corporations with underfunded pension plans. Cutting the value of their stock holdings in half will do them no good. States and cities could ask taxpayers to pay more taxes but good luck with that when 120 million working and middle class people can’t afford to pay for rent, utilities, gas and food.
The US survived the 2007-2008 crisis because the Federal Reserve could print massive amounts of dollars and lower interest rates. No more.
China, Russia and their allies from Brazil and Venezuela, to South Africa to Iran and Pakistan have been challenging both the international reserve status of the dollar and the Petrodollar. The US dollar replaced gold and the British pound as a reserve currency by the Bretton Woods agreement at the end of WW II. The US was represented by Harry Dexter White. John Maynard Keynes represented England. He had wanted to use an instrument similar to the SDR but was over ruled by the Americans.
China is attacking the Petrodollar with their yuan convertibility to spot gold. China’s goal is to replace the US Dollar with the UN’s SDR. Over half of all US Dollars are overseas. When, not if, the Dollar is even partially replaced by gold, the yuan and the SDR, we will hit Hyperinflation. Germany went into Hyperinflation in 1923 because the public lost confidence in the Mark. Velocity increased. People refused to hold Marks. They spent them as soon as they were received. That will happen to us soon. People overseas are only willing to take dollars because they can buy US stocks and bonds and liquidate them in seconds.
I define Hyperinflation as starting at 25% for a reserve currency. At that point everyone would dump the dollar. In 1980 Paul Volcker increased rates to 18%. We barely survived. We would not survive that today, And forget about 25% inflation for a reserve currency.
Janet Yellen and the Federal Reserve have entered Quantitative Tightening (QT). She will cause a Financial Panic which will force foreigners out of the US bond and stock markets. China is inviting them to enter their oil, gold, SDR and yuan markets. China has to finance the New Silk Road initiative. They have promised trillions of dollars in new investments in Africa, Latin America and the Silk Road initiative. These opportunities were not available ten years ago.
I would expect much stronger responses from China after their President Xi Jinping solidifies power and the Chinese people are given a new Five Year Plan at the 19th People’s Congress which begins October 18th.
The other looming disaster apart from a Financial Panic is a major Depression. In the Great Depression at least 3 million Americans starved to death. Dr Steve Keen has said the West is headed to the worst Financial Crisis in five centuries because we have more Unpayable Debts to cancel at any time than in the last 500 years. Let that sink in. 3 million out of 123 million Americans alive in 1929 starved to death. But Wall Street decided to add 200 million people mostly through legal and illegal immigration while passing NAFTA which closed 57,000 manufacturing plants.
The US and Great Britain will fare the worst in Keen’s analysis because we have more Unpayable Debts to cancel. I am aware that China has hidden $32 trillion in debts off its books. 21,000 Chinese people have $4 trillion hidden in British banks in the Caribbean. They also have a lot of fraudulent loans and missing money. Asia Times magazine said more than a decade ago that the Big International Banks launder $500 billion a year in political bribes and that at least 40% or $200 billion went to Chinese officials.
This adds to China’s instability and to the likelihood that they will target the Dollar for destruction.
One last point about a Financial Panic cutting stock prices in half. I believe there is a deliberate plan to run the stock market up so the Uber Rich can unload their over valued shares to the Central Banks, pension funds and small investors and then let you eat the inflation as the world plunges into a Global Depression worse than the 1930s.
I define a Depression as a period in time when Unpayable Debts are cancelled en masse. The US, the UK, Canada, Europe and nearly everyone else has a banking system designed to generate Unpayable Debts. Our system was intentionally set up to give Bankers the right to charge us interest on money they created out of nothing. The draft legislation was written by Paul Moritz Warburg and agents of the Rothshcilds. The Rockelleller family and J P Morgan worked for the Rothschilds. The first meeting was held on November 22, 1910 in a private rail car across the river from Manhattan. Please note that President Kennedy was assassinated exactly 53 years later to the day.
Killing a man on a certain anniversary is one way of subtly telling us that we are forbidden to reform the banking system no matter how many Gentiles starve to death. Martin Luther King Jr was killed on the first anniversary of his anti-war speech at Riverside Church in New York City. The message was clear. No man and – especially no black man – would be allowed to have enough power to stop a war. Dr King had intended to settle the garbage strike in Memphis and then go to Washington in the summer of 1968 and shut the place down until the Vietnam war was ended. All that remained was for someone to shoot Robert Francis Kennedy in the back while Sirhan was spaced out and firing a gun in front of the man who could have been President. You will waste away for years in unwinnable wars in Vietnam and Afghanistan and you will not tell the real reason why our soldiers are dying while we are spending trillions of dollars over there. You will willingly let tens of millions of Americans to either starve to death or to die at the hands of hungry neighbors. You will not think thoughts of resisting Evil.
We run the risk of societal collapse. It would benefit the Elite if that happened while Trump was in office and they could blame him for the Federal Reserve Act which was passed in 1913.
The media has been pushing a partisan political warfare agenda for the past several decades. Trump has been severed from the crooks in the Republican and Democrat parties. I do not support Trump’s Zionism but there is a larger issue involved here. In my last article I pointed out that $21 trillion in federal spending from two government agencies -HUD and Defense- had gone missing. Secretary Donald Rumsfeld announced on 9-10-2001 that he could not find $2.3 trillion in Pentagon appropriations. He did promise the taxpayers that the DOD would do a better job of looking after their money in the distant future. That has not happened. And the media has not campaigned to make that happen. On the morning of 9-11-2001 the men and women at the Pentagon who were looking for the missing trillions were killed so nothing came of their investigations.
The immediate economic outlook is bleak. By all measure the stock market is way over sold. We are in far worse shape than in 2007 because we have even more Unpayable Debts to cancel. And as Michael Hudson said, “Unpayable Debts are never paid.”
I did promise to talk of James Rickards and his conversations with the Pentagon about attacking North Korea. The time frame he is talking about is six months. That is a good sign because I doubt the US government will even be able to launch a war by April of 2018. We might not even be capable of holding national elections in 2018 and certainly not in 2020. I see even darker forces on the horizon.
He said the US has some some super secret weapons to unleash. One of which is non-nuclear weapons that destroy everything just like nukes do. Supposedly, we have other weapons. They also want to launch a decapitation strike by US Special Forces. North Korea has 100,000 Special Forces. And I hope those Super Duper secret weapons were not built by the idiots who gave us the F-35 fiasco.
China and Russia have said No to war. The US will be begging for handouts by April of 2018. And Russia has shored up their allies. Iran is building their own version of the S-400 from Russian designs. And, as I have said before, the Iranians have started mass producing Mach 13 and Mach 14 missiles. The US has no defense against any missile faster than Mach 10. The US is no position to wage a war. They will not have the finances. The machinery that made the weapons of WW II were shipped overseas. What do they plan to do? Call up Putin and Xi Jinping to order more weapons or better yet ask them for things that work like the S-500, the SU-50, Mach 14 missiles and the Khibiny system that can shut down all US electronics, computers and radar.
I grew up on military bases. I am anti-war. I seriously doubt that professional soldiers who have been betrayed ever since I can remember will commit suicide for Wall Street. And World War III would be suicide for America and its allies.
Sometimes it is good to know what is likely to happen. It’s past time to start a garden or at least learn to sprout seeds or grow potatoes in a container. American cities will be uninhabitable waste lands within two years if not sooner.