- The treasury bond market is collapsing. The USD is also being sold off. This is the beginning of the crisis and not the end. When the US treasury bond prices fall precipitously, it will affect almost all countries worldwide. Almost all countries have USD and almost every major country hold US bonds.
- The Guild Investment Management advises :
Last week, the U.S. bond market fell substantially and yields rose as investors finally began to see the obvious: Quantitative Easing (the purchase of U.S. Treasury bonds by the Federal Reserve) and its potential inflationary pressures are weakening the U.S. dollar.
As most economists will tell you, the U.S. economy is in a depression. Statistically speaking, most depressions are deflationary and therefore accompanied by a fall in interest rates. However, the bond market’s recent behavior provides evidence that the current depression is not deflationary. On the contrary, inflationary pressures are building and interest rates are rising. Bond investors, looking ahead and seeing a light, are realizing that it is the headlight of an oncoming train…and this oncoming train is the trillions of dollars of U.S. bonds which must be floated by the Federal Reserve in the next few years. The consequences of this flotation will include a weakening of the dollar and an increase in interest rates. Investors are finally awakening to this trend which we believe will continue for some time.
Certainly, the last two weeks have rewarded our long held global investment strategies. In our view, this is not the end, but rather the beginning of the decline in the U.S. dollar…and the rise in many other investment areas. Accordingly, we continue to believe that the wise investor will not hold U.S. dollars, but rather invest their portfolio in oil shares, gold shares, better-managed non U.S. currencies, and stocks in countries where corporate profits will grow rapidly, such as China, India, and Brazil and selected other countries.
For several years, our commentary has brought attention to the looming deficits and the questionable methods of financing them that have become so prevalent. The current situation of the U.S. economy thus comes as no surprise to our readers. [Please see our archived commentaries at www.guildinvestment.com for more details]. What may be a surprise to our readers is how long the U.S. dollar will decline, and how high many alternative areas of investment, including the areas mentioned above, will rise.
U.S. NATIONAL DEBT
The U.S. national debt is currently about $11 trillion, which is about $100,000 for every household and about $36,000 for every American resident. We are paying about 4% interest on this debt, but rates will be rising and we will be paying much more as Quantitative Easing and an ugly U.S. balance sheet cause our creditors to demand much more interest on the money that they lend to us. When interest rates get to 8%, as they soon will, the cost of servicing this debt will escalate even more rapidly. Disconcertingly, none of this realism is found in the Congressional Budget Office’s estimates, where they expect the U.S. to enjoy continued low interest rates.
The Congressional Budget Office, which always estimates much too low (we assume due to political pressure), states that the budget deficit for this fiscal year is $1.8 trillion. Looking ahead they estimate next year’s deficit to be about $1 trillion, and state that it will stay in the high ranges (above $0.5 trillion) for at least the next few years. In our view, these numbers underestimate the severe deficits we will be facing.
UNFORTUNATELY, THE U.S. HAS NO CHOICE. IT MUST CONTINUE TO PRINT MONEY AND DEBASE THE DOLLAR
China is positioning itself using a panoply of agreements that include allowing Chinese Yuan bond financing by Hong Kong banks, arranging trade related currency swap agreements with Brazil and six other countries, and working with countries and companies all over to world to lock up assets that it will need to run its production machine. China’s purchases include oil, coal, iron ore, nickel, and zinc to name a few. In short, China is buying assets worldwide –including an ever increasing share of the world’s gold supply — to stoke its economic machine in coming years.
China’s lust for gold is significant and deserves note. The fact is that China has been buying much more gold than it is producing. China is buying gold in the open market, willing to take gold off of the hands of the poorly managed IMF and central banks like Britain, who sold most of their gold at about $250 per ounce. Britain, the IMF, and others who have been, or will be, gold sellers appear to us to be operating with an excess of pompous verbiage and a shortage of common sense.
Gold will be an instrumental part of any new monetary system that is created in the world to succeed the current Breton Woods system. When the U.S. turns over power as the world’s reserve currency to China, it will be China’s large holdings of gold and large cash hoard which will make them a new monetary superpower. When that transition takes place, the old cliché about the golden rule, “Whoever holds the gold makes the rules” will be remembered for its wisdom.
- Jim Rogers is a very very smart man. According to him there is a possibility that the DJIA can rocket upwards because of the amount of Quantitative Easing (printing money out of thin air). This is the reason he is not shorting the US stock market even though he does not see the economy improving. All the ‘phoney’ money printed will have to go some where. It can lead to excess money chasing up stock prices in another major bubble.
- Rogers see a currency crisis brewing (a global monetary collapse?) and does not have confidence in the USD. Rogers prefers buying commodities and precious metals.
- It is no big secret that America has always undermined countries that do not submit to their hegemony. Why was the Iranian government overthrown in 1953? Because they refused to bow to America’s corporate oil interest. What is the current propaganda about a nuclear Iran about? It is all about oil. All about the oil lobby, corporate interest. Why was Iraq invaded? Oil ! The Raw Story reports :
US President Barack Obamamade a major gesture of conciliation to Iran on Thursday when he admitted US involvement in the 1953 coup which overthrew the government of Prime Minister Mohammad Mossadegh.
“In the middle of the Cold War, the United States played a role in the overthrow of a democratically elected Iranian government,” Obama said during his keynote speech to the Muslim world in Cairo. It is the first time a serving US president has publicly admitted American involvement in the coup.
The CIA, with British backing, masterminded the coup after Mossadegh nationalised the oil industry, run until then in by the British-owned Anglo-Iranian Oil Company.
For many Iranians, the coup demonstrated duplicity by the United States, which presented itself as a defender of freedom but did not hesitate to use underhand methods to get rid of a democratically elected government to suit its own economic and strategic interests.
Obama also said: “For many years, Iran has defined itself in part by its opposition to my country, and there is in fact a tumultuous history between us. “Since the Islamic Revolution, Iran has played a role in acts of hostage-taking and violence against U.S. troops and civilians. This history is well known.
“Rather than remain trapped in the past, I’ve made it clear to Iran’s leaders and people that my country is prepared to move forward. The question now is not what Iran is against, but rather what future it wants to build.”
Shortly after Obama’s inauguration on January 20, Iranian President Mahmoud Ahmadinejad demanded apologies for “crimes” he said the United States had committed against Iran, starting with the 1953 coup.
- Will the US government also admit to false flag terror attacks to drive their populous to support war? George Washington comments :
And when will America admit that – as confirmed by a former Italian Prime Minister, an Italian judge, and the former head of Italian counterintelligence – that NATO, with the help of the Pentagon and CIA, carried out terror bombings in Italy and blamed the communists, in order to rally people’s support for their governments in Europe in their fight against communism. As one participant in this formerly-secret program stated: “You had to attack civilians, people, women, children, innocent people, unknown people far removed from any political game. The reason was quite simple. They were supposed to force these people, the Italian public, to turn to the state to ask for greater security.”
And when will we admit that – as confirmed by recently declassified documents – in the 1960′s, the American Joint Chiefs of Staff signed off on a plan to blow up AMERICAN airplanes (using an elaborate plan involving the switching of airplanes), and also to commit terrorist acts on American soil, and then to blame it on the Cubans in order to justify an invasion of Cuba. If you view no other links in this article, please read the following ABC news report; the official documents; and watch this interview with the former Washington Investigative Producer for ABC’s World News Tonight with Peter Jennings?
Because the important admission is not that the U.S. helped with a coup, but that America and virtually all other powerful nations throughout history have used “false flag terror” as means to political ends.
- See also :
Confessions of an Economic Hit Man – John Perkins
History of The New American Century
Major General Smedley Butler – War is a Racket !
America: From Freedom to Fascism
America – Why do We Fight ?
The Plot to Overthrow Franklin D. Roosevelt
Do Banksters and the Military Industrial Complex Rule the World ?
What is the Unites States preparing in Pakistan?
Exposing the Truth on NATO-US Agression against Yugoslavia
Washington Plans Global NATO To Replace UN