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Doctor Doom on the Fiat Money Empire Coming Financial Crisis

Stock-Markets / Credit Crisis 2014 Apr 12, 2014 - 10:05 AM GMT

By: Andrew_McKillop


Save The Threatened Empire

Almost openly now, the long-running attempt to kick the price of gold down, and keep it down to Save the Money and stoke further frenzied and unreal price growth of equities has overreached. The fiat money empire is more threatened, today, than for decades and the train has hit the buffers. Speaking on CNBC this week, the veteran market expert Marc Faber – often ridiculed by business media as a Doctor Doom who always exaggerates – was given more respect than he normally gets. There were no you-said-it-before jibes when he said a 1987-style “pure financial” market crash is coming. Leading the way, he said, the insanely-overpriced Internet and Biotech stocks will be the first to go. Apart from what he called “cloud cuckoo” stock and asset prices, the basic upstream trigger are the antics of the US Fed, which like other central banks has upped the ante to the point where, Faber said, anybody can see the Fed is a “clueless organization”. Global monetary overreach went viral years ago.

Faber is sometimes called the expert who forecast 12 of the last 2 market crashes, or a broken clock that only tells the right time twice a day, but the US Fed, the ECB, BOJ and BOE have engaged a deadly stampede to print money, and to cap that have launched a terminal – as well as criminal - struggle to rig gold markets. Their childlike belief is that if gold is weak, fiat money will be strong. Gold market specialists repeat they have serial proof of market rigging, day after day and month by month, notably morning market raids to dump naked “paper gold” shorts and kick the price of gold down as much as $20 per ounce in a few minutes. The world's largest bullion buy-sell market association's members, the LBMA, has for months been scrabbling to find physical gold to fill the emptying gold vaults of it members dependent on and predatorily dominated by the so-called bullion banks, starting with JP Morgan. Chinese and Indian demand for physical gold remains at extreme highs, China's monthly imports of the metal running at close to world total mine output.

Real gold is hard to find, but paper gold is cheap! Paper money has drowned the world.

The Four Horsemen of the Apocalypse, the US Fed and its three partner central banks are running a terminal quest to Save the Money, and they operate with impunity. Governments in each country, in the ECB's case meaning the 18 EU states of the Eurozone, are in thrall to their central banks and supinely nod through the whims of the banksters. The politicians' refusal to act proves they are more than only complicit – they are the glove puppets of the banksters. Unable or refusing to understand what they are doing, political deciders have allowed the banksters to rip apart the foundations of world finance and the economy, while the same political deciders are now stampeding into a US-led Cold War-vintage showdown with Russia, featuring sanctions in the monetary and finance domains.

Gold and Oil

As in every previous market crash since the 1970s, we can expect, and will get extreme moves in the price of gold and oil. To be sure, the crisis parameters and launch process set a different trajectory each time, but in the case of 2014 we firstly have stark evidence that the US Fed and other banksters are running a massive campaign to rig the price of gold as Western gold supplies and bullion bank holdings of the physical metal shrivel to nothing. This means a gold and dollar crisis, for starters, before and during the process of stock markets being slayed. As we know, the US dollar is a “safe haven money” at times of war tension – meaning that the US could or might welcome a military standoff with Russia, as well as the economic and financial standoff, if only to slow the dollar's demise.

This will only be short-term respite. The US Fed “primus inter pares” has most intensely – it would say “diligently” - sapped the bases of the USA's national currency. The Cold War-vintage political antics of the Obama administration and its European allies completes the death cross for the dollar. Goading Russia, treating China like a Third World country of the 1970s, and totally ignoring India as a small and powerless nation on the edge of the world, Obama and his allies can in no way be surprised when – not if – these three powers move to radically shrink the role of the dollar in their bilateral trade, of course including oil and gas trade. The already rampant and obedient action by major Western banks, brokers and currency traders to trash the value of the Ruble can be outfaced, by Russia, through demanding payment exclusively in Rubles for oil and gas supply to Europe. The role of the Chinese yuan will certainly grow despite China's reluctance – to date – to let it happen.

This means a big drop in the demand and need for US dollars in world trade and a corresponding drop in the dollar’s exchange value. Starting with the US, this means inflation as the price in dollars of its imports sharply rises.

All is far from well in the monetary, financial and economic domains of Washington's few allies and partners – which are several but not all EU28 states, and not willingly, Japan. Their political overreach, their atavistic belief they still have massive global power, is underlined by the shrunken size of “the Western alliance”. For this fragile, small alliance haunted by 1950s-era images of its previous power, the increasingly certain take-off of the gold price, followed by a mega-spike and then by a slump for oil prices, as the world value of the US dollar plummets after its own short-lived spike, will be devastating. What will likely start as Faber's “pure financial” market crash will soon rout the economy.
Unfortunately but inevitably, the political class in all three cases – the US, Europe and Japan – has lost contact with reality and pursued the fantasy of “monetary easing” for at least 5 years. Also very unfortunate, and that is an understatement, the potential for all kinds of conflict with Russia – from economic to military – is almost welcomed with open arms by them as a test of virility, the red line in the sand, a moment of greatness, a show of force, and similar tragic airhead slogans.

Economic and Political Implosion
The 2014 crisis, for starters, will be different from 1987 due simply to the global economy and especially the advanced nations' economies still being in slow recovery mode from the 2008 crisis. In all three cases – the US, Europe, Japan – import and trade dependence is basic to the economy. Walking straight into a Cold War-vintage political crisis, able to become military conflict, the political elite in the US, Europe and Japan must understand they are playing with fire when they unknowingly, perhaps, but inevitably  “pull the plug on the dollar”. We can hope they understand, but if not, they will find out.

The political implosion running with the dollar implosion  will be awesome, and nothing like anything since the 1970s era, marked by the oil shocks and the Vietnam War. The “western alliance'” guard dog of Nato, today, is threatened by a host of internal policy conflicts and leadership issues, stemming from its loss of focus and uncertain future. Nato has nowhere to go but down, adding more danger to the standoff with Russia due to this standoff seeming to offer Nato a return to the high ground as the Savior of the West. At least as possible however, Nato action and inaction on Ukraine can further reveal its outdated role and dysfunctionality in the real New World Order of the G20. Following the Ukraine crisis Nato could disappear, either physically or as a serious and credible military organization.

Another international entity that has severely overreached and become dysfunctional – the European Union -  may also emerge from the Ukraine crisis and market crash with heavy, even irreparable damage. Both Nato and the EU are engaged to the hilt in Washington’s reckless Cold War-era standoff with Russia, shown by the near-instant recognition by the EU of Kiev's Flash Mob government, and enthusiastic support to Kiev's use of its internal security forces to put down the uprising in eastern Russian-speaking Ukraine.

Called a shatterbelt in modern geopolitical parlance, and a pivot in older geopolitical terms, Ukraine and its surrounding regions and states are inherently unstable. Marching on these shatterbelts is like treading on broken glass for external powers, again explaining Russia's quick action in Crimea, heading off what could have been the site of Ukraine's first civil war of 2014. The focus for that civil war has now been moved a short distance north and east, by Washington and Brussels, extending the potential conflict zone and enabling more and larger overflow, or “ripple effects” in a widening area.

To be sure and totally certain, the EU does not want conflict with Russia. Europe will deal itself a sure and certain lose-lose with Russia, if it applies more and wider economic sanctions, but EU political deciders are still mesmerized by 1950s-era images of Washington and the US, and remain fearful of Russia due to 1950s-era “race memory” of the Cold War. They are literally sleepwalking to the gallows, putting their heads in the noose that Washington sets for them.

Another, deeper European economic crisis will be sure and certain, unless a very rapid and total halt occurs in a process that is unfortunately building, with its own momentum, each day. Since 2008, the EU has drifted into two camps we can call the Losers and the Still Struggling. Income and employment gaps, in Europe, have widened on a continual basis. Austerity is the buzzword in the EU only masked, at monetary level, by the insanely overvalued euro, and at market level by Europe's insanely overvalued stock markets. On the ground, among ordinary persons and their public opinion - although that is totally unimportant to Europe's political leaders of the current type or ilk – hostility to sanctions and potential military standoff with Russia is large and growing, but the fear component is not war. Average Europeans fear another major economic crisis and its certain negative impacts.

Massive Blowback is Certain

We have a self-willed and decided crisis set by the political elites. Whatever their “we didn't know” claims may be, after the crisis, they are to blame. As an almost sure-fire method to trigger and deepen a classic and major market crash, shred the value of the dollar, and intensify the economic slump that looms in the US, Europe and Japan it is hard to imagine anything more deadly. Other impacts, as already noted, can possibly set in motion the final collapse both of Nato and the EU.

Washington is ensuring itself the worst of all possible worlds. Its reputation of duplicity and arrogance will be hardened – and harder to deny. The already growing disinterest in the US, in Europe, will certainly accelerate as Washington is identified as the main culprit in bringing down a new and worse continent-wide economic crisis. American banks, brokers and financial institutions will lose whatever respect and admiration they still had, outside the US as inside the US, due to their kneejerk execution of Washington's grand strategy in calling a standoff with Russia, using the golden opportunity of Ukirane – to meddle and do harm.  Washington has already badly damaged other countries’ confidence in the US government and shredded remaining belief in American leadership. It is now poised to complete the somber process of self-denigration.

Outside of the US, and especially among G20 leaders including the Chinese, Indian and Brazilian leaderships, previous attitudes to Washington's post-2000 rampage in small countries – from Afghanistan and Iraq, to Venezuela, Cuba and Libya – included tolerance based on this only concerning small and unlucky countries with too sharply anti-US leaderships. This tolerance has now gone. Iran and Syria were two red lines for the G20. Ukraine is another. Starting with the US, but certainly including political leaders in most EU states and Japan, the current process and sequence of financial, economic and geopolitical crisis is very clearly self-willed and decided. This is lose-lose and “the West” will also lose. Its political elites will carry the blame, and will have immense difficulties playing innocent, after the crash.

By Andrew McKillop


Former chief policy analyst, Division A Policy, DG XVII Energy, European Commission. Andrew McKillop Biographic Highlights

Co-author 'The Doomsday Machine', Palgrave Macmillan USA, 2012

Andrew McKillop has more than 30 years experience in the energy, economic and finance domains. Trained at London UK’s University College, he has had specially long experience of energy policy, project administration and the development and financing of alternate energy. This included his role of in-house Expert on Policy and Programming at the DG XVII-Energy of the European Commission, Director of Information of the OAPEC technology transfer subsidiary, AREC and researcher for UN agencies including the ILO.

© 2014 Copyright Andrew McKillop - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisor.

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