Hyperinflation and then The Second Great Depression

Posted: December 10 2008

A future out of control, bankrupt financial institutions trying to hold on, limitation on credit severely limits ability of the economy to start up again, debt totally embraces our lives, handouts a state secret, soon cash infusions wont work for banks anymore, banks hold too much toxic garbage to even know if they are solvent We are now 17 months into a credit crisis that continues to expose the corruption and incompetence of government, banking, Wall Street and transnational corporations. The situation has not stabilized and it won’t anytime soon. All we see are sweetheart deals for elitist corporations for which American taxpayers will pay for years to come. The future of our nation is totally out of control. For the last eight years our economy has been running on something for nothing, lies and deceit. The result will be hyperinflation and then the Second Great Depression.

As we predicted long ago the only avenue open to the elitists that control our country is to hyper-inflate to avoid collapse as long as possible. In this process financial institutions, most of whom are bankrupt, are trying with the help of the American taxpayer, to hold on. In that process they are severely limiting credit, which restricts business and growth and has caused crippling de-leveraging in our economy, particularly among hedge funds. Debt totally embraces our lives and finally we see de-leveraging among individuals as all debtors and borrowers come under pressured from the lenders. While this transpires relentlessly, unemployment grows stamping out the buying power of the masses many of whom already are on the edge of bankruptcy. We have this great mass of disintegration on the bottom and massive amounts of money and credit on the top. The money and credit is not reaching consumers who have been forced to stop buying. It is staying on the balance sheets of banks, brokerage houses, insurance companies and transnational conglomerates, such as G.E.

As you can tell from our publication and its growing size there is so much negative news we cannot publish it all. The response of government has been a massive distribution of taxpayer funds and if you can believe this they refuse to tell us who are the recipients of this public largess. In spite of repeated requests they refuse to name the borrowers, so that corruption and fraud can thrive. In such an environment of aggregate creation and corruption the only investments that shine are gold and silver. The cracks are appearing in this edifice of greed and the only place to flee to is those historical stand buys.

The first $125 billion lent by TARP went to banks in the Fed system of which 90% was used to award bonuses. This is to make sure that the Illuminists continue to receive the riches of the system. Funds are being lent, but the system is being strangled. Funds lie on bank balance sheets to keep them solvent and to be available for dividends and the purchase of other non-elitist banks. This is why more and more funds are needed for the system. This is what we realized very early on, some three months ago and that is how we were able to predict that more than $10 trillion would be needed to keep the system afloat. In time these infusions won’t work any more.

This is why the Fed and the Treasury won’t tell you who is receiving the handouts. It is a state secret. Such arrogance is unprecedented in the history of America.

Banks do not really know if they are solvent because they are holding so much toxic garbage. On top of that they have to contend with losses on credit cards, commercial mortgages, vehicle loans and derivatives.
As this game goes on unemployment is 6.7%, U6 13.5% and long-term joblessness is 15.4%. That means a further hit on bank earnings, balance sheets and solvency.

What has also gone almost totally unnoticed is the $700 billion drain from the economy via cash management bill. This holds down inflation and those funds end up in Treasuries that end up in elitist banks in exchange for toxic CODs, SIVs, and allows banks to handle their naked derivative problems. These tactics by the Fed and Treasury puts more downward pressure on the economy causing more unemployment and less consumer spending. This deepens the recession. Saving AIG, as we predicted, will cost $500 billion and Citigroup $1 trillion. JP Morgan Chase has unlimited funds to cover its derivative losses, control the bond market and to depress gold prices. That is why what Morgan does is classified as a national security issue.

It has been just three weeks since the Fed flooded the books of the 16 major banks that run Libor, the London Interbank Offered Rate, which is used worldwide to calculate interest rates. That rate was 4.8% for 3-month paper. A couple of days ago it was 2.16%. This forced the lenders to loosen up on lending and bring interest rates down. This needless to say is highly inflationary. Among other reasons for the manipulation is that this rate is used to set mortgage rates worldwide. The funds used to accomplish this were lent by the Treasury to US banks, which in turn lent to London banks. That step was followed by the Treasury and the Fed, via Morgan, Goldman and Citi, to drive down rates on US Treasuries. The long term rate on the US Ten-year Treasury note was then driven down from 4% to 2.55%. 30-year fixed rate mortgages usually sell for 1% to 1-1/4% higher than the 10s, so rates should be 3.80%. The lenders, banks, held rates at 6% to 6.5%. After such an onslaught they have dropped rates to 5.5%. That isn’t good enough for the Fed and the Treasury, they want rates at 4.5% for FHA loans, so that is where that mortgage rate is headed. If you were waiting to reset your mortgage wait until rates go below 5%. That should happen soon. This shows you how extensive government and Fed manipulation is.

Vast amounts of funds are being funneled in the finance sector where half the corporations are bankrupt, without any questions or announcements as to who’s getting the funds. We are talking about over $10 trillion yet the UAW and the officials of GM, Ford and Chrysler have to beg on their knees for $15 billion to tide them over for 3 to 6 months. This shows you how unfair the entire process is and how the Illuminists are trying to bury the American and Canadian vehicle manufacturers as soon as possible. The Democrats see political advantage here and will get a bailout done. They should be carried for 6 months and that is it. We believer they will not make it. We see absolutely no recovery for years to come. In June they’ll all file for bankruptcy. What you are seeing is a sideshow. Our vehicle business will not survive unless Congress implements trade tariffs on goods and services. Remember whether companies live or die is decided by the Illuminists not by a free marketplace. Most of the money lent out is going to bankrupt loser banks and brokerage houses, which caused all these problems in the first place; Labor elitists have exacerbated the problem over the years as well. It is still not too late to drop labor rates from $31 to $15 an hour and make other major concessions as well, in the absence of trade tariffs in order to survive.

How would you like to have several billion dollars without any restrictions on how it’s spent? That is the kind of deal Citigroup, AIG, JP Morgan Chase and many other institutions have regarding money from the Treasury and the Fed. These are the Illuminist corporations that are deemed too big to fail. When they are to be bailed out Congress has very little to say, but when the big 3 automakers need help congress puts them through the hoops. This capitalism is survival of the fittest and the richest. There is no fairness or even handedness. It is the worst looting of the American people in history. Automakers must have a plan, but Citigroup doesn’t need one. As it was said in Animal Farm, “some are more equal than others.â€