This is what Paul Craig Roberts said to King World News about a recent Federal Reserve policy change and the Big Banks. He said the Too Big To Jail Banks can no longer contribute to the growth in our real economy. The Banks are part of an asset stripping mechanism. The Banks follow the IMF into destitute countries stealing islands from Greece or demanding local utilities be sold to foreign buyers.
Now the Federal Reserve is setting its sights on American cities and counties and their pension funds. The Federal Reserve has ruled that banks can no longer use municipal bands as tier 1 assets. There are $3.7 trillion dollars in these US municipal bonds out there. If the banks have to sell their bonds and are not allowed to buy new ones from the cities, then pressure will be put on new municipal bond sales. Roberts thinks that this policy is designed to deliberately hurt the financing of American cities.
If the cities are forced into bankruptcy, the Banks can step in and loot them of their assets including the pension funds of their employees. That is what they are doing in Detroit. Some of their bonds used Detroit’s water revenues as collateral. This has forced Detroit residents to pay a lot more for water. One woman told the LA Times that her unpaid water bill is $2,500. Where are people on Food Stamps going to get that much money? 38% of Detroiters live below the poverty line. Charities have raised some money. The city has decided to resume water shut offs. One woman said she would move if she had money.
However, the unpaid water bills for Detroit sports complexes are in the million of dollars and are not deemed serious enough to warrant surcharges on sports ticket sales.
Foreign buyers worried about the dollar’s decline in value might want to dump municipal bonds altogether because they might figure out what Janet Yellen is planning to do next.
If we assume that Paul Craig Roberts is right, then she is prepositioning the city and county governments of America to be looted during the next economic downturn. She can see very weak retail sales. And she can see layoffs by high tech companies. The tech companies are being undone by the revelations of NSA spying. If you were in China or Brazil or South Africa or Europe, would you buy from a company that is guaranteed to have backdoors built in that allow the NSA to steal your research and trade secrets to sell them to your competitors?
Janet Yellen can see another problem on the horizon that will hit American consumers very hard before Christmas. Open Enrollment for Obamacare begins on November 15th. Insurance companies also have to notify current customers of rate and policy changes including plan cancellations for the coming year. If only 2 to 5% of adults get panicked by higher healthcare costs and deductibles, then retail sales will be hurt. Some retailers like Sears are already considering closing their doors permanently. Several market observers have predicted market declines of 20 to 60%. And a few like George Soros have taken billion plus dollar bets against the New York Stock Market. He loses his billion dollars if he is wrong. But he makes billions if he is right. This is the man who made a fortune organizing a run on the Bank of England. Some say that Soros is given inside information from the IMF on the next country on their target list.
So is America on the IMF’s list?
Does the IMF matter anymore? The Chinese and the Russians have taken aim at the US Federal Reserve, the IMF and the World Bank. They have given the US a deadline to reform itself. At the Brazil summit of the BRICS nations ( Brazil, Russia, India, China and South Africa), they said the American leopard had until the end of 2014 to change its spots. That seems unlikely since the Federal Reserve has evidently decided to engage in asset stripping of American civil service pension funds.
The Chinese decided to open their Shanghai Gold Exchange early. The price of gold had been set in London by the London Bullion Marketing association (LBMA.) The COMEX in New York is supposed to be an actual gold market but few contract settlements involve gold or silver. The Chinese set their new Shanghai Gold Exchange up in a Free Trade Zone with extensive international participation. All contracts are to be settled in gold and silver with severe penalties for failure to deliver. This is in a nation that has executed Bankers for fraud. The COMEX plays by New York rules. They sell contracts equal to the world’s total gold and silver output every day with no intention of delivering. As Paul Craig Roberts said, the COMEX directors are bullion bankers. They allow lots of shorts. Hedge Funds are the players and are afraid to sue. Roberts said, ‘In America the law is not allowed to stop the Banks from acting as a Looting Mechanism.’
China does have a plan to stop American Banks from looting people overseas. Unfortunately, Americans will have to deal with the Federal Reserve and the Too Big To Jail Banks on their own.
Harvey Organ is a Canadian who has been a very astute observe of the gold and silver markets. He testified in front of the CFTC as an expert witness on gold and silver price manipulation. China loves it when the Federal Reserve allows its primary dealers to short precious metals in New York’s paper market at the COMEX. This allows them to buy physical gold and silver all over the world at depressed prices. And the Chinese are not just buying bullion. They are buying mines. They are buying real estate. They are also buying farm land and shipping the produce back to China. They are doing this to dump dollars.
The People’s Bank of China (PBOC) buys gold but not at the Shanghai Gold Exchange. Why? Because China by law sells their domestic production of just under 500 tons a year for yuan. China wants to get rid of dollars so it buys gold from overseas very surreptitiously so as not to spook the gold price. The Shanghai Gold Exchange sells 40 or more tons of gold every week for delivery. That is 100% of their domestic production in just 3 months. So where does the Shanghai Gold Exchange get the other 75% of their gold? And where does the Chinese government buy their gold?
These questions might have been answered by Dr Jim Willie. London and Washington have been exporting gold to Asia. The Federal Reserve has a gold leasing program which allowed bullion banks to lease gold from the US. Under New York Looting rules, these banks were allowed to sell each bar of gold they leased from the government 5 times as paper promises to deliver. Dr Willie has estimated that there could between 20,000 and 40,000 tons of paper gold out there with no bullion available for delivery. Needless to say, when investors are panicked and find their gold is missing, the markets will be in turmoil and Bankers will go into hiding.
Back to Harvey Organ. In a recent interview he noted that the Shanghai Gold Exchange is running dangerously low on silver. They consume 2 million ounces of silver a month for industrial purposes. Silver has a history in China of being used as money. In 2 months the Shanghai Gold Exchange will have no silver. The Chinese will have to abruptly change their tactics and bid silver away from foreign industrialists and investors. That will, as time goes b,y force the price of silver drastically higher. Gold will follow. The Shanghai Gold Exchange has had withdrawals of more than 1,300 tons of gold to date in 2014 . India is preparing for their gold buying season which begins in October with their holiday Diwali and continues strong through November and December when many young couples marry.
Any sign of weakness in the dollar like a continued run up in the price of silver could reveal the impotence of the Federal Reserve. In the past they could paper the world with $7 trillion in loans at 0.01% to their nearest and dearest friends. They could run their balance sheet up 500% as they did since 2007 but no more. The dollar has declined against the euro. A lot more trade is being settled in the yuan. American businesses importing from China have taken to settling in yuan. The BRICS nations have been setting up swap facilities to avoid using dollars. When Argentina collapsed and defaulted on its debt, there were no consequences because the Chinese were able to rescue Argentina. There are lots of bankrupt nations in the world who would prefer to take the Argentinian path to Beijing over New York and the IMF putting the screws to them. What does China care? They offered to invest $100 billion in Africa. Brilliant move. Dump those dollars while you can.
The skyrocketing price of silver might not collapse the dollar as quickly as Harvey Organ said. He thinks the Dollar Dies in December. I think it will live until the first quarter of 2015. I think the dollar and the New York Stock Exchange will both drop like rocks after our disappointing retail sales are made public. At that point Hedge Funds which had been hesitant to enter the silver market due to fear of the Federal Reserve will do so. That will drive silver and gold straight up. Of course it is not so much that the prices of gold and silver will be going up but that the value of the dollar will be crashing.
Harvey thinks that the Big Push will come when the Chinese release the data on their gold holdings. When they do, it will be obvious that America has no gold. All they have to do is to hint at a gold backed yuan and the end of the Petrodollar to crash the dollar.
My regular readers are aware that the Chinese and the Saudis might start pricing oil in yuan and even the euro but not the dollar. Saudi and other Gulf Sate billionaires have been recasting their gold into one kilogram bars to prepare for a yuan settlement system based on a gold backed yuan. The end of the Petrodollar will double and then double again prices in the US. Hyperinflation is coming to America. Russia will offer Germany and possibly Austria, the Netherlands and even Finland safe exits from the euro to a gold and oil backed ruble trade association.
The dollar should begin to unravel in the first quarter of 2015. It is way too early to run out and buy either gold or silver on a credit card hoping to avoid an imminent disaster.
I must conclude by saying: This Need Not Be.
Catherine Austin Fitts said, the Bankers have stolen $40 trillion from us. We could arrest the Bankers and seize their assets. We could use that money to cancel Unpayable Debts. And we could give $20,000 in debt relief to every adult citizen in the US. We could issue a debt free , non-interest bearing currency like president Lincoln’s Greenbacks. And ban fractional Reserve banking. These recommendation were made in the Chicago plan of 1933. If FDR had followed it, he might have saved the lives of most of the 3 million Americans who starved to death during the Great Depression. This plan has been endorsed by two IMF economists as what we are doing will otherwise lead to disaster.