This essay explores how the likely consequences of a US dollar and economic crash could play right into the hands of US policy makers, what role the FTAA (Free Trade Area of the Americas) plays in all of this, and how a discerning few can use gold to "step out of line" and evade the fleecing shears and the slaughtering pen that are waiting at the other end.
The Fed Lies - but Markets Don't
Another way to put it is: "the masses are easily fooled, but the markets are not."
Al (Pinocchio) Greenspan has outdone himself - again.
It seems to be an occupational hazard of power-mongers. It's not "the higher they go, the harder they fall," but rather "the higher they go, the more they have to lie" - or at least they think they have to.
But there is a dead give-away.
Like Pinnochio's growing nose was a dead-giveaway whenever he lied, the Treasury bond yields are the dead-giveaway of the Fed's lies. The more Al "P." Greenspan and his underlings pile on their "inflation is no threat" wares, the higher long term interest rates go - far ahead of any official tightening by the Fed itself (unless they make good on their threat to buy long term treasuries, but that's another story).
Although terribly dangerous for the "normal" investor out there with his debt-financed lifestyle and "the-sky-is-the-limit" ARMs, this knee-jerk reaction of the bond markets to the lies we are being "fed" is kind of refreshing.
In a world where traditionally valid relationships between economic variables are turned on their head so completely that it is almost breathtaking to behold, seeing one of the rock-bottom variables respond with such unerring predictability to obvious public policy lies is indeed most reassuring.
What has been turned on its head, then?
Pretty much everything else. I touched on it in my last two essays.
Good economic news used to make the stock market scream higher and higher. Nowadays, every time we get such "good news", the Dow drops.
Falling dollar forex values used to help adjust runaway foreign trade deficits. Nowadays, we see a falling buck push it even higher.
Talk of rising inflation used to push the gold price higher. Nowadays, we witness gold abandoning that time-honored relationship and falling right along with the Dow and with bond prices.
Only a few years ago, in 1999 to be precise, Al used to call upward price trends a threat. Nowadays, we are forced to listen to him claiming that the only significance of rising prices is that businesses have finally gotten some of their "pricing power" back.
Back in the good old days, a recovering (especially a so-called "booming") economy meant that workers are having an easier time finding jobs, and that salaries were increasing over time. Nowadays, our skewed information machinery has to resort to reporting only gains in one sector without mentioning equal losses in another, and even Greenspan himself admits that "unit labor costs, as best as we can judge, are still going down."
It is ironic that in an age where the global power hierarchy impregnates every man, woman, and child with fuzzy ideas of socialistically controlled "sustainable development," the economic policies employed by the same power elites are about as "sustainable" as the explosion that results when dying embers of a campfire are revived by dousing them with gasoline - especially when you are pouring the gas straight from the tank. The only difference is: for the average investor, the time-line is so long that it all happens in an excruciating, matrix-like "slow-mo" tempo - and is for that reason invisible to most.
If it wasn't for the fear that overcomes gold investors every time they see the gold price dropping, it would not be necessary to repeat, over and over, the undeniable and unconcealable truth:
That, in a purely credit-fueled expansion, when businesses are only spending money because it is so cheap - almost free - to borrow, mal-investment by businesses and overspending by consumers becomes the rule of the day.
That in such an environment, all of the added capacity, all of the added inventory, all of the added fictitious "productivity" amounts to about as much real economic value as the hot air you blow into a paper bag - before you smash it between your hands and it goes "bang!"
That once it does go "bang," only gold and PMs will hold any kind of value at all - despite all of the shenanigans that are currently going on, and finally,
That the day when things go "bang" is very, very close.
The Destruction of the Middle Class
What we are witnessing here (as the social cynicists and ever authority-distrusting pariahs we gold investors are) is nothing less than the utter and deliberate destruction of the American middle class - the backbone of American society, economic power, and social/legal stability.
Yet, it is almost impossible to wake the slumbering giant. We have all experienced what it feels like to try:
We can jump up and down with all of our might, and scream at the top of our lungs while waiving our hands in front of even our closest friends, family members, and associates, and "warn" them of what is coming - and all we earn in return is that weird, glazed-over look that people get when they undergo a "mental slide" and automatically turn their attention elsewhere.
But in the end, what will be the almost certain result of the Fed's economic policies?
Can you say: "pension-fund blowout"?
Can you say "giant, society-wide shake-out"?
As the dollar rises in the face of a weakening euro that suffers from socialistic controls and over-regulation induced anemia, bond prices fall - the brief and expertly engineered uptick after Greenspan's speech on April 21st notwithstanding.
The only people who have thus far supported US bond prices and thereby kept long-term rates in check are the Chinese, the Japanese, and the other Asian exporters. While the dollar was falling they were forced to buy into it to keep their currencies and products competitive. Now that the dollar is rising - seemingly on its own - they no longer need to make those expenditures. In fact, as the dollar rises from initial verbal Fed-tightening blather and eventual actual rate hikes, they will feel a rather compulsory urge to unload their US treasuries.- adding fuel to that fire as well.
The resulting added upward pressure on long term rates will choke off first mortgage and then business borrowing This will stop economic activity dead in its tracks as the last-ditch efforts of hte herd of consumer-sheep at maintaining an impossible lifestyle are hitting the wall.
No money left for consumption by already debt-strapped consumers means no money left for blowing it on stocks. So the stock markets will bomb as well.
But since we are constantly told that we are currently in an economic "recovery" or even a "boom", and because we haven't nearly added enough paper-wealth over the past five years to guarantee us a better-than Jimmy the Cricket retirement, we will throw more money at the markets in a desperate effort to make up for it all. After all, even though long rates are going up, they are still too piddling to really make any hay when it comes to saving - but at the same time they are squeezing us to death when we are borrowing or trying to repay debt.
Stripped of our last savings, borrowed up to the hilt, we watch in amazement as our hoped-for stock market gains disappear in the swirly gutter of misaligned Fed policies.
Or, are they really "misaligned"?
Can all of this be happening by design?
A vibrant and powerful middle class is what has built this country and kept it free. As long as we had property, and property rights were considered sacrosanct, we could live and prosper, and this country had a voting base that wasn't all that dependent on federal handouts.
People would never give up their property rights voluntarily, directly. But if we can be sucked by Fed interest rate policy into no longer saving money (because stock market gains are so much higher than returns on CDs and savings bonds), and instead into throwing all of our retirement hopes and dreams at the stock market (that can be engineered into a catastrophic collapse in the blink of an eye), then we can all become "good little sheep." Then we can be made to march right up to be fleeced and then slaughtered and meat-packed for later consumption by our handlers.(Sorry for being so blunt).
That slaughtering pen has a name. It's called the FTAA (Free Trade Area of the Americas).
The FTAA: Graveyard for the Middle Class
The United States immigration laws have been virtually suspended for a decade now.
The reason: the FTAA. The FTAA is Clinton's brain bastard, dutifully picked up by Bush and continued as a top-priority policy - but under cover of a virtual media blackout. Media sources - if they report about it at all - portray the whole thing as a harmless economic forum where the US is trying to convince other western-hemispheric nations that it is a "good neighbor."
The truth is rather stark: the only thing that will be "free" anymore under the FTAA is international trade. The only things it will be "free" from are obstacles posed by the national sovereignty of any pact members and their protected national borders. On the other hand, this "freedom" of trade will be totally subjected to the regulatory power of a supra-national body created by the pact. That body will eventually completely supersede and sideline the limits placed upon government by the United States Constitution.
To get a more detailed idea of what the plot is about, read this free issue of the Euro vs Dollar Currency War Monitor. (Scroll down to about the middle of the document if you are in a hurry).
Bush wants to implement this monster by 2005. That's next year!
To do this, he must get re-elected in November of 2004.
As was readily apparent today, and as has been apparent over the last few weeks and months, the federal ministry of slanted truth and disinformation is firing on all cylinders to make sure the economic numbers look good enough so he will get re-elected.
Once he has his second term locked up, and is sworn in, he no longer needs to worry about anything.
He already received his "fast track" trade authority from our rubber-stamp Congress. All he needs to do is sign our lives and freedom away, and the deal is done.
Ergo: you can expect an economic crash after the election and before his signing of that pact.
With the mandate from a re-election and the added urgency of having to do "something" about Americans' economic plight (after the engineered crash) all he has to do is claim that "free(er)trade" will improve economic conditions and bring us back out of the morass.
Most Americans will in fact go for that line.
Only individuals here and there will be able to prepare for that coming crash, and gold and precious metals will be their means of doing so.