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Deflation Rebuttal and Reich Hyper monetary inflation Economics

Economics / HyperInflation Nov 08, 2013 - 10:12 AM GMT

By: Jim_Willie_CB

Economics

As introduction to this article on the bizarre nature of all things economic and financial within the Untied States, consider once again the Deflation Knuckleheads. Be sure to know that the Jackass considers Rick Ackerman to be one of the premier technical chart analysts in the world. He has taught me in the past from his T/A work, even as his hidden pivots are unique and enlightening. In 2011, we were at odds over the incessant errant ramblings about deflation and its great threat. In August of that year, the Jackass penned a public article in an attempt to clarify the inflation and deflation factors being simultaneous, not at all mutually exclusive or in some debated sequence. While respect is still high for Rick, he has misquoted me, not demonstrating the depth of knowledge concerning the incredibly difficult topic of inflation. The distortions run so deep on the topic, that even smart folks fail to comprehend. The syndicate desires such confusion. After trying to set the record straight two years ago, one more attempt is necessary. The respect for each other is mutual.


The motive here is to further shed light on the nasty gnarly tangled topic of inflation and how deflation is interwoven as the financial and economic domains are locked in the weave. They are twisted together to produce a storm the likes of which have never been witnessed before in history. What follows is a critique of obtuse perceptions of all things relating to inflation and its opposite. Ackerman might have stepped down as King of the Deflation Knuckleheads, but he continues to preach its shallow school of thought. No hard feelings, Rick, but you do not misrepresent my work correctly. We might have a common goal, but we do not follow similar perceptual paths to arrive at the promised land, the Gold Standard. The critique in this article is not designed as a personal attack on Ackerman. At times, the competent among us have big differences in perceptions. The motive is to clarify in a continuing theme the shortcomings of the deflationist camp, which cannot see either the monetary inflation or its interwoven nature with policy. The result is a vicious cycle that escapes them. We will not witness one or the other, but rather both together. Acute inflation and persistent deflation co-exist and even feed off each other, due to policy action and response. My own belief is that the Knuckleheads will never comprehend the two factors woven together to produce the financial & economic hurricane of unprecedented type.

PARADIGM SHIFT OVERSHADOWS CHARTS

In a November 4th address to his subscribers, Ackerman discussed the Gold price and the risk for a decline to the $1125 level, another potential 15% fall from here in the COMEX posted price. He went on to show nice respect for the Jackass analysis and work. However, in his final attempt to distinguish our work on differences, he presented my position incorrectly, in an important misquote. The Jackass practice of not looking much at the official Gold chart in the last two years or more flies in the face of any chart expert. Their skill is recognized, but the relevance is not apropos. My belief is that the important non-linear factors have kicked into gear. The extraordinary events dominate within the COMEX and MF-Global, such as thefts of accounts, refusal to deliver on gold futures contracts, rapid depletion of official gold inventory in vaults, raids on the GLD Fund, even quick shifts in inventory from one major bank to another in order to cover demands. The revolt in the Eastern Hemisphere has not entered into the work of much of any prominent analysts, surely not chartists. Therefore, a grand blind spot persists. The chart experts believe all external information is wrapped inside the chart somewhere, a belief once embraced by the Jackass. No longer, not for a major structural shift in systemic revolt. The entire Eastern Alliance, with its visible front in the BRICS nations and the G-20 Forums, is working on a USDollar alternative. They include some ancient wealthy families in China, who have decided to produce change by draining the London banks of several thousand tons of gold. They influence the change factors in the most awesome manner, behind the curtains, with phone calls and surely threats. They have enlisted the aid of the trust Triads, in a counter-action to the security agencies resident among the three major nations in the Axis of Fascism. Refer to the United States, Great Britain, and their small ally.

The chart as a primary tool has been superseded by a Global Paradigm Shift in progress. It is like trying to follow a chess match, but the game is changing like to a more advanced game. The pieces soon will not move like they used to. The King Dollar piece will not command his subjects on the chessboard with the same authority as before. The bishops and knights are being neutralized. The Queen USTBond is caught in a derivative straitjacket. Be sure to know that in past history, a paradigm shift involved a world war, the ultimate in altered infrastructure. The last few years have marked a significant change, often minimized by the label of Global Financial Crisis. It is much more, since endless and without solution on the present course. The Jackass name given is of a Global Monetary War, since the corrupted Anglo bankers wage war in defense of the system and their USDollar regime. They insist on perpetuating the inflation to cover deficits, perpetuating the distortions to bend the markets to their will (see USTBonds, US Stocks, even FOREX currencies), and altering the rule changes to force participation (see SWIFT for banks). Any nation that attempts to bypass the current Anglo dominated system based upon the USDollar for trade and the USTBond for bank reserves is branded a rogue nation. The deviant nation is then smeared as a human rights violator, as well as a nuclear community renegade. The accuser is the most culpable.

The deviant behavior is with the Anglo enforcers though. They cannot dictate geopolitical criminality on a unilateral basis. They cannot oppose other methods between two independent nation parties for conducting trade. They cannot obstruct commerce like with natural gas pipelines and expect to remain unopposed, to escape without oil on their hands. The United States and Great Britain have become rogue leaders in defense of increasingly fascist regimes and financial systems. As a result of the hostile monetary war, the USDollar and its USTBond vehicle are facing not simply opposition, but broad-based earnest organized initiatives to avoid them. Not to wreck them, but rather the goal is to replace them in workarounds. Thus the Gold chart means very little in Jackass analysis. A reset is apparently near. The pressures to install a more fair, more just, and more enduring system is enormous, and will not cease. The demand is to bring back the Gold Standard, the equitable arbiter, the true enforcer. The ultimate installation will render the chartists an embarrassing day, week, and month, in a non-linear price rise that will take their breath away, and bring a rejoicing battle yawp from the gold community. Something big is near, as the tremors are being felt in every global corner, and every global market.

The pressure has turned international to agree upon a grand reform for the present system of sovereign bond issuance, of bank reserves management, of bilateral trade settlement, of settlement with distributed systems (PCs or Blackberrys), even of debt ratings. The current USD/USTB system is broken. The managers and operators have no interest in either reform toward efficient function, nor enforcement of law against banker criminality. So the world pursues an alternative. When it arrives, a grand shock wave will hit the world like a tsunami, a wave of justice in finance. The winner will be the world. The new king will be Gold. The loser will the host nations to financial crimes, the United States and Great Britain. Thus the chart is of less importance when a big boot cometh to kick over the table. It is the Cossack Boot on one leg, and the Genghis Boot on the other.

SYNCHRONOUS BIG PICTURE

Rick Ackerman and the Jackass agree on many factors and perceptions. We both see the big cracks in the US financial fortress, the precarious position of the Saudi regime as it faces pressures for regime change, and the gigantic flow of Gold bullion eastward, as untold supply of bars flow from Exchange Trade Funds in illicit manner. Where we differ is where we have always differed, on the perceptions of inflation and deflation. My contention is simple, that the Deflation Knuckleheads do not comprehend inflation concepts at all, and surely cannot define the concept of deflation. Ackerman misquotes the Jackass position, which must be set straight. It seems despite my past efforts to set the record straight, Rick cannot comprehend my position of simultaneous hyper monetary inflation amidst powerful asset decay, for a simple reason. He does not comprehend inflation or deflation. Inflation has always been a monetary phenomenon, when Rick believes it occurs only with very fast rising prices. The Jackass position is that prices are rising in disruptive manner, but mostly within the cost structures. The result is more asset deflation pressures realized in a cycle. We both observe the veritable armada of black swans threatening to undo the banking system. A hat tip to RickA for saying, "This conclusion might seem extreme, especially to readers who believe such things only when they read about them in The New York Times or The Wall Street Journal. But only those who are blind to the obvious would say that Jim Willie has exaggerated." Much thanks among professionals. My apology for calling him the King of the Deflation Knuckleheads. But honestly, he continues to strive toward the same lowly distinction with its broken script and scepter.

The main issue at odds is the Jackass perception of the current situation and its enduring degeneration. My August 2011 article attempted to set the record straight. Let me take this opportunity to haul out a section from an old article. Let the record be put in clear bullet items for the current Jackass analytic position. Deflation Knuckleheads, please read the following. Let it sink in.

JACKASS POSITION

Yet another attempt to set the Deflationist crowd straight. The Jackass viewpoint:

  • Hyper monetary inflation is exactly QE, the bond monetization
  • Hyper inflation exists now, on the monetary side (completed correct forecast)
  • Home values, mortgage bonds, bank equity all fell (seen as deflation)
  • The massive decline in asset prices has already occurred
  • The United States is totally dependent on inflation now (dispensed by USFed)
  • The bond monetization has supported the USGovt deficits
  • The monetary easing has supported mortgage rates
  • Except for redirected amplified inflation, asset prices would collapse
  • As asset prices weaken, the call for more inflation comes (vicious cycle)
  • The pressures rise constantly for more monetary inflation
  • INFLATION AND DEFLATION EXIST SIMULTANEOUSLY NOW
  • The two forces have interacted together since 2011, when QE began
  • They are not exclusive, but rather simultaneous, even interwoven
  • Tremendous inflation derivative devices are at work behind the scenes
  • Tremendous downdrafts on asset prices are prevented by official intervention.

CRITICAL MISQUOTE OF JACKASS POSITION

It is incredible how the great density in erroneous thought can be encapsulated in such a short wrong single sentence (in bold). It incorporates the wrongful awareness of my forecast and analytic position. It also incorporates the wrongful grasp by the Knuckleheads for the current complex situation (too complex for them). Here is the Ackerman misquote, "He and I have had our differences in the past. Jim Willie believes hyper-inflation is inevitable, and although I tend to agree, I think it will come like a thunderclap after deflation has laid waste to the financial system. In the past, we have both recommended holding physical gold against any and all possibilities. However, I also suggest keeping a shoebox full of intrinsically 'worthless' paper currency to hedge against the ultimate deflationary event – i.e., the forced closure of US banks for more than a day or two. Although no one can predict what might cause this, we should not be in doubt of its likelihood. If Jim Willie and I are in complete agreement about one thing, it is this: the dollar’s long reign is near an end." The tone is positive. The agreements are many. The end goal is in common. However, it would be greatly appreciated if the Jackass analysis and conclusions were not misquoted. The above is NOT the analytic position written by me, never has been, and never will be. Although briefly summarized, it is incorrect in reference at the opening statement. The hyper-inflation is already here. The wasteland of financial markets is obvious also in their depletion. The overlooked part is the key integral part, the interaction of the two with central bank monetary policy after financial market calls and its resulting vicious cycle. The entire Taper Talk episode should have demonstrated to Ackerman the interaction and existing hyper-inflation at work and in progress. It did not. He is not an economist or monetary expert. He is a technical analyst extraordinaire.

The United States has ushered in hyper monetary inflation with the series of Quantitative Easing programs, as in QE1, QE2, Operation Twist, and QE3. My belief is no longer than hyper inflation is evitable, since already part of current policy now. The Jackass forecasted it in 2010, and it arrived in 2011 in the force of QE. It is better named QE to Infinity after the wrong-footed blunder of the Taper Talk to draw down the monetized bond purchase plans. Ackerman seems unaware to comprehend that the hyper-inflation that my forecast called for has already arrived. It not only arrived, but its continuation into perpetuity (QE to Infinity) is being debated with formally stated rational in the three-part mandate. Refer to tame price inflation, full employment, and stable markets. My forecast has been for Zero Interest Rate Policy forever and Quantitative Easing to Infinity. Events of the last several months are proving the twin monetary forecasts to be correct.

Q.E. AS DEFLATION MACHINE

As for the financial system, it has been laid to waste already. Ackerman surely perceives the wasteland, although he is not specific. It seems he might anticipate the financial destruction as yet to come, when in fact it is already here. The Jackass expects, adequately made clear on frequent public articles, that the hyper monetary inflation goes hand in hand with the financial and economic destruction underway. My emphatic point has been that the QE debases the USDollar, forcing a hedge in defense in the investment of hard assets. The result is the rise in hard asset prices in terms of the rapidly debased USDollar units. The rising cost structure results in shrinking profit margins, and lost profitability for companies large and small alike. Then follows the retirement of capital (equipment, machinery, buildings), and their mothball storage, later followed by liquidation. Therefore, ironically, the Jackass joins the Deflation Knuckleheads in expecting deflation, but through capital destruction, something they also do not comprehend.

Thus the Jackass sees the monetary policy to hyper-inflate as tied directly to the wrecked capital, or as the Knuckleheads would say, the Deflation. They are not mutually exclusive as they perceive them in extremely shallow intellectual manner. They are instead integrally related, the deflation called upon in result to the inflation. Worse, the reaction to falling asset prices has been for yet more inflation to prop prices, as freshly printed money is devoted to support bond prices, home prices, and bank equity prices. For those who do not see the home prices propped, notice the growing legion of Private Equity firms who purchase 100-home blocks of properties from the big bank portfolios. They do so with easy money made available at the USFed for the preferred clients, the associates at such firms with names like Blackrock led by Larry Fink, the most active of its players. As footnote, the Knuckleheads fail to realize the greatest suppressive factor (deflationary in their flawed lexicon) is the ultra-low USTreasury Bill and Bond yields, something the Jackass has harped upon for three years. Not only do they slow the tangible economy by providing pitiful paltry low interest income for savers, but they fail to provide adequate income from bond spread engines for the entire pension and insurance industry, plus the investment banker sector.

ACTIVE STORM DIFFERENTIAL

The feedback loop from a vicious cycle is at work in feverish fashion. The inflation causes capital destruction. The assets fall in value. The response is for more inflation directed at the ailing assets, under the cover of financing the gargantuan yawning USGovt debts. More capital destruction results from the rising cost structure. More response to the deflation. The Deflation Knuckleheads do not perceive the inter-relationship because they are stuck in monoline types of thinking, with mutually exclusive errant shallow concepts. Sadly, the Jackass does not believe the Knuckleheads will benefit from this article as explanation, in attempt to right their wrong-headed perceptions on inflation and deflation. They lack the intellectual capability to discern and comprehend the complexity of the inter-relationship and feedback mechanisms. It is like teaching the German language to a French poodle. They naively believe one happens or the other happens, since they tend to miss the central banks response to the system. They think passively, when the real complex systems are dynamic and active. They think in shallow terms, when the financial system and economies are totally interwoven in delicate ways. They cannot define Inflation, and cannot define Deflation.

The Inflation and Deflation are manifested simultaneously to produce a horrific financial and economic storm which cannot be quelled except by a return to the Gold Standard. They are simultaneous with direct effects upon each other, from the monetary spigot to the dynamic asset valuations. They are not exclusive of each other. Rather, they occur at the same time to create an historically unprecedented storm vortex as center, seen over every continent active in trade and finance.

The above is sadly beyond the intellectual grasp of the Deflation Knuckleheads. Many are the steps in the reluctant re-installment of the Gold Standard, since it will be imposed by the Eastern Nations in the form of the Gold Trade Standard. It will not arrive as the Gold currency standard for the many defective major currencies, implicitly backed by sovereign bonds. It will  not arrive as the Gold banking standard for the many insolvent banks and national banking systems, those zombie standing columns of toxicity and corruption.

REMINDER: JACKASS ANALYSIS AUGUST 2011

This section shows a direct quoted passage from a public article entitled "Inflation & Deflation in a Storm" (CLICK HERE) which without doubt the Knuckleheads did not read or else, did not comprehend. Perhaps they read and did comprehend, but later forgot, much like a creature that reverts to old stubborn behavior, since it is more comfortable and certainly more familiar. After reading the brief passage, conclude that the Knuckleheads are incapable of comprehending the complex storm underway, as are most of the mainstream public. The storm picked up speed and intensity since mid-2011 by means of QE to Infinity. The central banks provide the high pressure zone (inflation), while the damaged economy and financial markets provide the low pressure zone (deflation). Inflation has been and always will be a monetary phenomenon. The August 2011 passage read as follows, written over two years ago but still very relevant...

The best description of the current situation is the collision of high pressure zones against low pressure zones. The high pressure is the result of thrust by central banks of monetary expansion that has actually wrecked the USFed balance sheet, and the EuroCB balance sheet. Each is the shameful owner of worthless mortgage bonds and sovereign bonds respectively, that nobody wants, that will never recover in price. The low pressure is the result of a powerful push by falling housing prices and big bank balance sheet insolvency. The banks are making a transition from insolvent Zombies to undercapitalized Dead Made Men. They are soon to be recognized as dead. They are agents of the Syndicate, and thus guaranteed for slush fund income from multiple sources.

The investor community incorrectly believes that actual money is flowing into USTBonds as safe haven. They are fooled by the powerful Interest Rate Swaps applied by the big US banks, the agents of the Syndicate. The only massive asset bubble in existence is the USTreasury Bond. It loudly proclaims USEconomic recession also, just like Chairman Bernanke's admission following the FOMC meeting this week. More still, the chart contradicts the myopic focused Deflation concentration that ignores the monetary inflation consistently and errantly. They earn their Knucklehead label every passing day, from being half blind. My contention is that none of them is very intelligent.

Aside from the grand deception, the markets, the pundits, the investors, and the analysts, all blessed by eyes and ears and clipboards are realizing the record price level for Gold. The Deflationist crowd and the Wall Street hive cite instability, uncertainty, and shaky confidence, all true, but off the mark. The actual motive and thrust behind the record Gold price are:

  • Endless chronic 0% official interest rates in the United States, England, and Europe. The nil rate is the traditional trigger and sustaining force for the Gold market.
  • The crumbling fortress of sovereign bonds, broken on the peripheral nations, the deep damage working its way to the core of USTreasurys and UKGilts through Italy and Spain, despite the sheep-like retreat into USGovt bonds. Watch out for France!!
  • The utter wreckage of the big US banks, kept afloat by the generous FASB accounting rules since April 2009, insolvent to their core, under siege from both toxic mortgage assets and bond investor lawsuits, under Basel II strain on reserve management, and suddenly finding themselves grossly under-capitalized after showing unwillingness to recapitalize when their stock shares were much higher last year.
  • The witness of the Euro Central Bank putting up another EUR 850 billion to bail out Italian and Spanish Govt debt, after several bailouts of Greek debt fixed nothing and only served to apply patches amidst continual bank redemptions.
  • The general sense that fiat money is losing its value, its meaning, and public confidence, as central banks are observed in the HariKari Keynesian Monetary exercise ritual, having lost their prestige and credibility, but seen still as the last hope. Every action they take debases the currencies further and lifts the Gold price.

(This marks the end of the August 2011 passage.)

REICH FACTORS & & EXCEPTIONALISM

The world is being subjected to the most bizarre and unwieldy banking and economic policy. Within the United States, delusions of capitalism persist, when almost none exists at the top tiers. What is seen instead is a queer mixture of business fascism and ordained socialism, as the welfare state expands. Something like 46% of the US population benefits from some sort of state assistance, the most egregious elements being the Worker Disability Income and Food Stamps. The delusion of capitalism is actually a tragic claim and the cause of great laughter. The Big US Banks are protected from failure and liquidation. No capitalism there, as liquidation is perhaps the cornerstone of capitalism itself. These rotten pillars infect the entire economic body and cast long shadows on capital formation. The price inflation, economic growth, job creation, and even home prices are all objects of great deceptions and lies. All data is managed, massaged, manipulated, with laced deceptions. Recession is outlawed, as all quarters must conform to average. Pure fascism there, as accurate monitors are the hallmark of systems with integrity. Without proper readings, the decisions by corporate heads is often prone to error.

The financial markets are the bastion of control and intervention where favored, and suppression where not favored. The flash trading and derivatives have become fixed features. Pure fascism there, as free markets are not even remotely the case. The entire set of asset prices is the domain of policy makers, who wish to enrich their henchmen, while at the same time avoid a nationwide rebellion from cratered pension funds and mutual fund savings. The USEconomy has become dependent upon consumption and handouts. It has evolved in a pathetic manner. The Jackass belief is that after the tangible industry was displaced and forfeited to Asia in the 1980 decade, the US leadership crew of heretics decided to change the philosophy. They declared financial engineering a step forward in evolution, higher on the economic food chain. They also declared consumption to be the tacit privilege of the supposedly superior financial driven American tribe. The nation did not need to work for money, since it came from asset inflation and the USGovt dole.

Monetary policy in today's terms is replete with heresy. Recall the off-loaded risk in derivatives that Quack Greenspan called sophisticated financial calibration. The next stage in the heretical assembly line is the installed (never to be removed) hyper monetary inflation delivered by the US Federal Reserve, given the euphemistic name of Quantitative Easing. It should be called financial engineering in climax, the last chapter of destruction that is, not development. This is pure Weimar national socialist failure to the extreme. When the Japanese ran QE for years, the Wall Street muppets called them a failure in a debt suffocation state. But when the Americans do it, just salute and call it sophisticated preservation of an advanced delicately balanced machinery. It is in reality failure to the extreme, destined to destroy sufficient capital to cause a systemic failure. The USFed inflation is in position to cover debts, public and private. The debt is not covered by legitimate income anymore. It is printed. At times, one can read or hear that the USFed is printing capital, or providing capital for the big New York banks, more extreme heresy. Inflation is not capital, when in fact inflation destroys capital. The US is exceptional. The great lie is that the USFed Quantitative Easing programs of printing money, using the phony money to cover the debt (called debt monetization), is actually called STIMULUS. It destroys capital the way inflation always has. Actually, keep in mind that under Greenspan, the entire concept of bond monetization was considered heresy and deeply destructive, by the USFed itself. Memories are short. The heresy is an integral part of what can be called Reich Economics, laced with propaganda from the controlled media. The forces of economics, finance, and money are pointed at the United States. It will bend to the forces, despite the ample nazi banker efforts.

The USEconomy is not the byproduct of exceptionalism. It is the result of three decades of inflation abuse and warmongering and bank sector fraud and a generation of heretical teaching. Half the USGovt debt is from war costs. The American nation has very little concept of inflation, as exemplified by the Deflation Knuckleheads. They cannot observe a high pressure and low pressure zone in the current financial and economic storm center vortex. The public could not identify a rheumatic fever, surely called a beneficial sweat. The sad fact of American University life is that the USFed pays for 35% of chaired Economics professor chairs. The teaching of false doctrine is complete, performed by economic high priests. Nowhere in the Finance and Economics curriculum is corruption taught as a key factor that influences the markets and economy itself. The formal study of derivatives is delicate, and surely does not include outlier events like the Morgan Stanley $8.5 trillion infusion in the second half of 2010 that caused the phony flight to safety in USTreasurys.

Russian President Putin took great exception with the amateurish US President in rationalizing the global reserve currency abused privilege. The US is exceptional in its criminality and heresy and war aggression, not in its innovation for industry. It is exceptional in its devious destructive financial engineering that helped heap wreckage upon the USEconomy and the entire Western financial structures. The foreign resentment is deep. As a nation, it is exceptional in the protection it offers the criminal elite for the gradual imposition of a police state. Forgive the Jackass, who is going off the deep end and is clearly delusional in criticism.

The United States does not deserve privilege in financial abuse, bond fraud, banker criminality, and war on credit card. The US as a nation is indeed exceptional. It is exceptional in the extreme degree of criminality and protection provided by the many official USGovt offices. This is precisely the bitter fruit of the Fascist Business Model that the Jackass has written about for nine years, yet almost no other financial analyst even mentions. The merger of state with big business led by the financial sector has produced a grand corrupt nation and illegitimate leadership, unless criminal syndicate leadership is given high value. Full spectrum dominance has been an exercise in theft, pilferage, fraud, market frontrunning, insider trading, murder, bribery of Congressional members, twisted agendas for the Intl Monetary Fund, the World Bank, and even the major regulatory bodies, including the Debt Rating Agencies. The USGovt leaders strut their puffed arrogant chests like mutants. The democratic process (like voting system) has been turned on its head, as corrupted as Third World nations except more sophisticated with Diebold software. The police state will have little opposition, since recruits will be easy. The brutality of police is a time-honored characteristic that appeals to the dark side of humanity. Just as the USMilitary at times has appealed to those who wish to kill in the national interest, the domestic police at times appeals to those who wish to beat heads and distribute pepper gas to unruly crowds. The dark side is prominent in humans, the debate being whether dominant.

INELASTIC GOLD MARKET

The Gold Market is truly unique. It represents money and savings. It represents defense against inflation and even against corruption. It represents a store of value free from debt counter-parties, and even corrupt banks that exploit and prey upon their clients. Apart from its innate defensive properties, the gold market is full of unique characteristics. To be sure, gold is the fungible, transportable, recognized store of value that is immune to effects of time decay. However, its micro-economic effects are fascinating. The demand for Gold is inelastic. As price rises, so does demand. It is called Gold Fever. Recall in year 2001, gold could not be given away at the rock bottom $280/oz price. The gold demand shoots up whenever the price makes significant upward strides. The opposite is true of demand for television sets. The supply of Gold is inelastic. As price rises, supply diminishes, the opposite of what one would expect. For years, the coverage of the insanely acidic hedge book maintained by mining firms resulted in a massive drainage of cash. Note the several Barrick Gold stock issuances to cover their hedge book, except they lied and never covered it. The toxic hedge books continue to leak. As they continue to drain cash, they inhibit devotion of capital to productive projects. Another recent bizarre phenomenon has occurred. It is a cousin effect to the inelastic supply factor. As the USDollar is debased by USFed monetary inflation to the extreme, and forces are applied to lift the Gold price, the many foreign governments marshall forces to confiscate gold mines and to impose heavier royalty taxes. Worse, as the USFed inflation raises the cost of living universally, the gold mine labor forces react. They go on strike for higher wages. The result is confiscation to reduce gold mine output, and strikes to reduce gold mine output. Gold is an exceptional industry indeed. The opposite is true of supply for milk and beef.

PARADIGM SHIFT ON GOLD

Paradigm Shift will be the climax crescendo to the entire currency market, its king gold included. The Gold price will someday before long enjoy a quantum leap upward in a global reset. The design and details are not for the common unwashed among us to be informed. We plebeians must plan and decide according to anticipated decisions which come. The great Global Currency Reset will come like a thief in the night. It is being demanded by a multitude of foreign nations, which are beyond fed up with US banker criminality and abused USDollar privilege. Foreign leaders are angry and motivated to produce change. The Voice has given several messages in the last couple months about enormous pressures by many nations. The Eastern nations hold a staggering amount of Gold reserves and USTreasury Bonds. They strive to bring about by force an overnight 50% USDollar devaluation. When the discussion turns to the impact on other fiat paper currencies, the conclusion is simple. All major currencies will likely retain their relative exchange rates. But they will all adjust to the 50% devaluation versus the benchmark currency: GOLD. What he is describing is a Global Currency Reset that features an overnight double in the Gold Price. The biggest loser will be the United States, the site of the greatest financial crimes and the location of the greatest abused privilege.

THE HAT TRICK LETTER PROFITS IN THE CURRENT CRISIS.

From subscribers and readers:

At least 30 recently on correct forecasts regarding the bailout parade, numerous nationalization deals such as for Fannie Mae and the grand Mortgage Rescue.

"I commend the Jackass for being the most accurate of all newsletter writers. Others called for the big move in Gold right away, but you understand that the enormous fraud in the system needs to play out before free market forces can begin to assert themselves. You seem to have the best sources and insights into the soap opera that is our global financial system. Most importantly, you have advised readers to be patient, stay safe, and avoid mining shares like the plague. Calling the top in the USTreasury Bond (10-yr yield at 1.4% yield) stands out as a recent fine accomplishment. The Jackass understands the markets, understands the fraud, and also has the sources to keep him the most up-to-date on the big geopolitical and financial events and scandals. Few or no other writers have all three of these resources."

   (Austin in California)

"After first reading the Hat Trick letter a few years ago, I was amazed at Jim Willie's prophetic calls concerning the economic forgery and corruption worldwide. His knowledge, coupled with his worldwide contacts and gutsy fortitude to call out and expose the evil criminal bankers, and to expose the lying US government, forced me to become a subscriber. I have no plans to cancel. Willie's work creates an anticipated excitement for new reports issued in the middle of the month."

   (JeffH in Virginia)

"A Paradigm change is occurring for sure. Your reports and analysis are historic documents, allowing future generations to have an accurate account of what and why things went wrong so badly. There is no other written account that strings things along on the timeline, as your writings do. I share them with a handful of incredibly influential people whose decisions are greatly impacted by having the information in the Jackass format. The system is coming apart on such a mega scale that it is difficult to wrap one's head around where all this will end. But then, the universe strives for equilibrium and all will eventually balance out."

   (The Voice, a European gold trader source)

by Jim Willie CB
Editor of the “HAT TRICK LETTER”
Home: Golden Jackass website
Subscribe: Hat Trick Letter

Use the above link to subscribe to the paid research reports, which include coverage of several smallcap companies positioned to rise during the ongoing panicky attempt to sustain an unsustainable system burdened by numerous imbalances aggravated by global village forces. An historically unprecedented mess has been created by compromised central bankers and inept economic advisors, whose interference has irreversibly altered and damaged the world financial system, urgently pushed after the removed anchor of money to gold. Analysis features Gold, Crude Oil, USDollar, Treasury bonds, and inter-market dynamics with the US Economy and US Federal Reserve monetary policy.

Jim Willie CB is a statistical analyst in marketing research and retail forecasting. He holds a PhD in Statistics. His career has stretched over 25 years. He aspires to thrive in the financial editor world, unencumbered by the limitations of economic credentials. Visit his free website to find articles from topflight authors at www.GoldenJackass.com . For personal questions about subscriptions, contact him at JimWillieCB@aol.com

Jim Willie CB Archive

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Comments

JamesGinn
09 Nov 13, 20:28
Deflation On The Way

There is nothing to support inflation certainly not in the US or Europe. And if all currencies debase then nothing changes.


Nadeem_Walayat
10 Nov 13, 03:50
Understanding Deflation

Hi

If all currencies debase nothing changes ?

I do not understand why so many people are blind to inflation and its consquences, it's as though they don't mind losing all of their wealth and purchasing power.

If all currencies are debasing what is lost is purchasing power of Sacvings, purchasing power of earnings.

I've often said that deflation is a delusion, and it really is a delusion.

If there were deflation then I would be actively capitalising on it by parking all of my wealth in Savings that increases in value, but there is no deflaiton, has not been since the 1930's, so my wealth is in Stocks and housing.

Best

NW


JamesGinn
10 Nov 13, 16:21
Inflation or Deflation

But if everything is bad there is no such thing as bad. The same with currencies if they all debase then nothing changes. Of course we have the American dollar as so called benchmark but will the powers that be ever allow that to fall to the extent of creating a hyper-inflationary environment. I think not for there can be no support for such a scenario certainly not from the 48 million on food stamps in the US or the bankrupt nations of Europe. We know what the result of the last hyper inflation was over 70 years ago and it was not too nice. Do you truly believe that the powers that be want that scenario once more. With over 300 million guns and assault rifles in the US the dog eat dog world of hyper-inflation would be hell on earth.

Just saying.


Nadeem_Walayat
10 Nov 13, 16:35
Hyperinflation vs Inflation

Hi James

Your confusing hyperinflation with inflation they are NOT the same thing.

Inflation is as a consquence of politicians buying votes with printed money and banksters printing money via fractional reserve banking.

Hyperinflation is a panic event when people lose faith in holding currency so dump savings and earnings in exchange for other currencies, hard assets and consumer goodes.

Best

NW


Parviz
11 Nov 13, 14:50
Elitist comments on inflation

Hi Nadeem,

As I have emphasized in the past, the rise in U.K. housing prices bears no relationship to the global deflationary trend. You suggest everyone buys stocks to protect against inflation. But how many people can afford either stocks or pay cash for houses? Do you know the percentage? In the U.S. it is 5 - 10 %.

"Inflation" is a tool of the rich who become richer through it, because they can afford to buy appreciating luxury assets. But the goods commonly bought by the 99 % have actually become cheaper in real terms.


Nadeem_Walayat
11 Nov 13, 19:23
Understanding Inflation

Hi

Your comments illustrate that you don't understand inflation.

The rich are not a big enough group to drive inflation.

If things bought by the 99% become cheaper than everyone would be happy!

But again, you DO NOT UNDERSTAND. Because there is no deflaiton the stuff people buy is NOT GETTING CHEAPER! Have you checked you energy bill ? Food bill ? Services bill ? Is it getting cheaper ?

NO!

Your confused, you look at tech, such as computers and smartphones and see they get cheaper and conclude that its deflation, if you understood then you would know that they get cheaper cos of technological innovation which is GOOD DEFLATION!

BUt they are not enough to overcome the EXPONENTIAL INFLATION MEGA-TREND

Stocks and housing offer protection from inflation.

I need to get on and do some work. My best advice is to educate yourself, gain skills, work hard and try to join the 1% :)

Best

NW


R.E.B
12 Nov 13, 14:33
Inflation facts

There seems to remain much deflation debate on various basis such as spare economic capacity, credit contraction (not happening!), municipal bankruptcies etc etc but the reality is there isn't a price in my life that is going down. Even where food prices appear static in fact pack sizes/weights have reduced so it is still less for your money. I do not think it necessary to overthink this. All my life governments have inflated debts away and colluded with the central and private banks to engineer massive expansions in credit money to boost aggregate demand. It is just what they believe in as a mantra and it will not change. The fact that all currencies may devalue together is cold comfort if your wages have lagged behind, so the next stage I suppose is a wage price spiral. Parse the language of the politicians re "cost of living crisis" to get a clue as to where we are heading, and it doesn't begin with a "D" !!!


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