The Most Predictable Financial Calamity in History

By Greg Hunter’s USAWatchdog.com

In November 2010, the Federal Reserve announced a second round of economic stimulus commonly referred to as Quantitative Easing (QE2).  The reason, according to the Fed, was “progress toward its objectives has been disappointingly slow.”   So, to try and turn the economy around, the Fed said, “. . . the Committee intends to purchase a further $600 billion of longer-term Treasury securities by the end of the second quarter (June) of 2011, a pace of about $75 billion per month.” (Click here to read the complete announcement from the Fed.)  QE means the Fed basically creates money out of thin air to buy debt.  The current money printing orgy is financing more than half of U.S. government right now.  The first round of QE bought toxic mortgage debt and bailed out the bankers.

What was not said in the press release was much more important and may go down as one of the biggest turning points in the history of America.  Bringing on QE2 meant QE1 ($1.75 trillion) failed to provide a sustained recovery.  It also exposed the $12.3 trillion total spent or loaned by the Fed since the meltdown of 2008 failed to give the economy a lasting boost.  The Fed did save some businesses and all the big Wall Street Banks from bankruptcy, but we now know nothing has really been fixed.

This brings me to one really important question.   I put this question to a group of well-known market experts, economists, investment bankers and big thinkers.  The five guys you are about to hear from have at least one major thing in common.  They all predicted tough times for America when most didn’t see it coming.  So, I asked them all last week to peer into the not-so-distant future for their take on “What happens when QE2 ends?”

World renowned gold expert Jim Sinclair said, States and Municipalities can and will go broke.  The economic impact will act to foil QE.  That will result in QE to Infinity regardless of MOPE. (Management of Perception Economics)  Therefore, Washington and the Fed will backdoor rescues by buying State & Municipal debt, a form of QE.”

Next is prolific writer and author James Howard Kunstler.  He specializes in novels about fictional depictions of the post-oil American future.  Here’s what Kunstler says about the end of QE2, My guess is the Fed will find some other way to buy distressed securities or “investment-like” things. The models for that are the Maiden Lane portfolios (there’s more than one) which are stuffed with crap like bankrupt hotels. Yes, the Fed owns bankrupt hotels! If they don’t buy up what are essentially loans gone bad, the system sucks itself into a black hole of compressive deflation.  That outcome is likely anyway, because the Fed won’t be able to keep up with loans gone bad.”

Rick Ackerman, professional trader and founder of the website and newsletter called “Ricks Picks,” says, “I don’t think there’s a snowball’s chance in hell that promiscuous easing will end, regardless of what the fraudulent successor to QE2 is called. The commentary running right now at Rick’s Picks says that easing in the form of a U.S. bailout of cities and states could become politically necessary as early as this year, although a decision to do so would trigger the worst run on the dollar in history.  Look for the bailout to happen anyway, but in a way that tries to obscure the fact that it is being done with funny money. The subterfuge won’t work for long, since public workers will figure out quickly that unless their retirement benefits are indexed to inflation, they’re going to get paid in confetti.”

James Rickards is a heavyweight in the world of finance.  He is an expert in Threat Finance & Market Intelligence.  “What happens when QE2 ends?” Rickards says, “The Fed never said that QE2 would end; that’s a popular misconception but they never said it.  What they said was that they would buy $600 billion of intermediate term Treasury securities by June 2011.  They never said that was all they would buy. They never said they would stop. The comments were carefully worded so that $600 billion by June was a targeted minimum but they never said anything about a maximum; technically there is no maximum. The first QE program ended in 2010 and the economy immediately began to fall into a double dip.  QE2 was hastily put together to truncate the double dip. If they end QE2 the double dip scenario is back on the table.  Therefore they will not end it. They will keep monetizing debt, whatever it takes, as long as it takes until there is a self-sustaining recovery. However, none of the predicates of a self-sustaining recovery are in place, therefore they will just keep printing money as far as the eye can see until the process becomes dynamically unstable and the dollar begins to collapse. So, bottom line, it is a mistake to talk about the “end” of QE2 because there is no end in sight.

Finally, economist John Williams of Shadowstats.com predicts a financial meltdown even if QE2 is extended.   Williams told me, “I think you will see much greater economic and systemic-solvency troubles ahead than commonly are expected. Accordingly, I would expect a QE3, or an expansion of QE2 before it is scheduled to have been run through.”

I can’t imagine how the U.S. could stop printing money in June and then turn around and ask the world to start buying our debt again at a rate of $75 billion a month.  Of course, we would want to pay discount rates in order to keep mortgages affordable and real estate prices from crashing.     There would be no legitimate buyers unless we were paying much higher interest rates.  Higher rates are the last thing the Fed wants to see because it would kill what little is left of this so-called “recovery.”

In summary, all the experts I polled think QE Will Not End.  That will surely mean an imploding U.S. dollar and exploding inflation.  This is scheduled to happen by the end of June, making this the most predictable financial calamity in history.

Comments
  1. Hoppe

    Greg,
    It would have been very telling if these gentlemen had been asked where they have their money invested right now.

    While I don’t discount their predictions, I think seeing their money in the same place as their mouth would be be the nut cutter (as they say on the ranch)

    • Greg

      Hoppe,
      I think everyone of these experts has been a supporter of precious metals. Thank you for your comment.
      Greg

  2. Charlie

    they are going to federalize the states and no more sovereignty

    • Greg

      Thank you Charlie.
      Greg

    • William O'Day

      That’s right, federalize the states and force Obama Health Care on them as part of the bail out.

    • markm

      Hey Charlie,

      The fed gubmint has been incremently siezing state sovereignty allready. Federal cops roam freely in the states and arrest citizens notwithstanding a lack of de facto police power.

      Examples from the Forest Service Manual:

      “5360.11 – State and Local Law Enforcement on National Forest
      System Lands. State and local law enforcement agencies generally
      have the same authorities and responsibilities on National Forest
      System lands as they do elsewhere in their respective
      jurisdictions (16 U.S.C. 480).”

      “5360.33 – State Deputization of Forest Service Law Enforcement
      Personnel. When practical, Special Agents in Charge may
      authorize, under 16 U.S.C. 553, 559d(5), or 559g(c), law
      enforcement personnel to be deputized by State law enforcement
      agencies to aid in the enforcement of State laws (FSM 5303).”

      My point: The Forest Service now employs its own police force to enforce federal criminal law while in state territory. My nephew is a forest service cop. He is not deputized and all crimes he arrests for go before a federal judge even though the forest service is just a glorified property owner.

      Yosemite Nataional Park is the precedent. Yosemite was “regranted” by the California legistlature and the “recession” was accepted by Congress. Yosemite is a federal reservation; the state has no criminal and civil jurisdiction in the park. Very few federally owned properties have been “recessed” back to the federal gubmint. The precedent for this process does, in fact, exist.

      If you are arrested by a federal cop, make sure you require the federal prosecution to prove standing. The states are sovereign and the tenth amendment does exist; when a federal police officer arrests a person in a state’s sovereign territory, that federal LEO may have been impersonating a state law enforcement official, which is a criminal act.

      The only federal law that can be enforced in states is law that relates directly to constitutional law. Civil rights is a federal issue. Interstate commerce is a federal issue. Lake Tahoe is a federal waterway because it is an interstate waterway (California and Nevada). Clear Lake California is a state waterway.

      Smoking a cigarette on a National Forest during extreme fire conditions is not a federal constitutional issue. It is a state law enforcement issue.

      markm

  3. Norm Ezzie

    Look at it this way- whoever thought our financial henchmen at the Fed are “too big to fail”- indeed there lies the question,are they? I for one shudder to think if their “digit-dollars” goes on the fritz- after all,in this digitalized global monetary system its: He who controls the modem,and that keyboard,controls it all~

    • Greg

      Thank Norm for your short but very good point.
      Greg

  4. Mountainaires

    Would love an explanation as to the impact of report below on the quiet move at the Fed. Thanks for your excellent site!

    “An accounting methodology change at the central bank will allow the Fed to incur losses, even substantial losses, without eroding its capital.”

    The change essentially allows the Fed to denote losses by the various regional reserve banks that make up the Fed system as a liability to the Treasury rather than a hit to its capital. It would then simply direct future profits from Fed operations toward that liability.

    http://www.cnbc.com/id/41198789

    • Greg

      Mountainaires,
      Simple, taxpayers got more liability and ripped-off again!! This is outrageous, and why is mainstream media not protesting. (that includes Fox!!!)
      Greg

      • Mountainaires

        Thanks Greg. It certainly is outrageous, but worse, it’s blatantly criminal. How does Treasury [that's us] take on Fed liabilities when the Fed is a privately run organization? We’re not talking about nationalizing the Fed; it’s just like “mark to fantasy” accounting; it’s blatantly criminal. Just read Steven Malanga’s latest book shakedown; it’s depressing.

    • Denarius

      -
      Mountainaires,
      My Jefferson silver round now has smoke swirling from his ears.
      My Jackson silver round is scowling. Me? I only wonder why so
      many are surprised when bank robbers continue robbing banks.

      This new wrinkle seems to be but one more example of privatizing profit
      (to the Fed) and loading debt onto the public (Treasury). Well done, Ben.
      This will be added to the already long list of transgressions forming the
      basis for impeaching your treasonous a$$.

      ————————————————–

      Greg, perhaps you need to revise your definition of “mainstream”.
      Try swapping examples of them with ones found in the “fringe”.
      That may be more difficult than swapping paper for metal but try it.

      You may also wish to embark on a 12-step program to get that TV
      monkey off your back. There are many excellent videos on the WWW
      to help you. Just set your search engine looking for “Quantitative
      Easing Explained” to see what I mean. Then give your TV away.
      -

  5. Art Barnes

    Good piece of work.

    Let’s coin a new term – “perpetual easing” comes to mind.

    What happens next? Nothing but more of the same, lower standard of living becomes the norm for the average American. The rich increase in wealth and power and the middle class moves down to a working poor status. Just more and more of the same.

    But as long as Main Street Media says all is well the vast majority believe it. When history is written about this era it will be noted by underline that the MSM played a significant role in the destruction of a great society.

    • Greg

      Art,
      “perpetual easing” I want the t-shirt!!!
      Greg

  6. Diane Carol Mark

    Hi Greg,
    So, who’s received QE1, who’s receiving QE2 and what are they doing with it? Where is the money? Since the recipients aren’t keeping their end of the bargain (i.e. stimulating the economy), they can return the money with interest. Why not?

    It would sensible to invest this money to create a Strategic Petroleum Reserve as Michael C. Ruppert describes in his excellent book, “Confronting Collapse: The Crisis of Energy and Money in a Post Peak Oil World” where he defines an Emergency 25-Point Plan for Action which is intelligent and well-considered.

    If we neglect this type of infrastructure investment now, we’re setting ourselves up for a rather bleak set of colliding issues in the not so distant future. It will make the Perfect Storm seem like a cake walk.

    We can always change directions mid-stream…opportunities for change are always more plentiful than we imagine, and we never have to worry about the “how”. I think it just takes a strong vision of what we want, rather than what we don’t want.

    :) Diane

    • Greg

      Diane,
      Great points, but we have no “strong vision” just people and government trying to keep cashing in and holding on to power as long as they can. Thank you for you participation in this site!
      Greg

  7. Mark

    Given that my 14-year old daughter’s history book devotes an entire three and one half pages to the Great Depression, she asked me to explain exactly what happened. One can’t help but draw upon those times in looking at where we are today.

    Speculation drove the stock market in the 1920′s. The stock market collapsed because the economic underpinnings to support stock prices were not there. The House of Morgan could not stabilize the stock market through cash infusions because investor confidence failed and everyone bailed. Instead of small investors driving up stock prices using borrowed money, today we have a similar effect using a limitless QE money supply.

    The economic house of cards we live in today is based on little more than speculation and confidence that someone will come up with a successful plan to grow jobs, housing and the economy. Maybe we will muddle our way through this; but I prefer to take some control of my family’s destiny with prudent action like being debt free and storing away a year’s supply of food.

    • Greg

      Mark,
      Good plan, others should follow your lead!
      Greg

    • Mark_BC

      Mark,I think a good thing to have right now is a mortgage, with a backing of precious metals. It provides you with good tax shelter and capital gains benefits. And you can let inflation pay it off for you. I recommend looking up Daniel Amerman and his investment strategies.

  8. PatriotRider

    Greg:

    As usual, excellent post. Please review the attached link. We desperately need someone of Nigel Farage’s character and prose to stand on the floor of Congress and the Senate and say the same thing about our situation. All you have to do is change the country he is talking about and the result is the same…

    http://www.shtfplan.com/headline-news/maybe-we-should-make-this-man-a-us-citizen-and-elect-him-to-congress_01222011

    • Greg

      Thank you PatriotRider for the comment and link.
      Greg

      • Oldcoot

        Very good Mark. No wonder Thomas Jefferson hated banks. Unfortunately, speculation was not alone….the purchases of many stocks were made on the cuff, or what we now call on margin. Back then, there was no time limit to pay; the cash was to be paid when asked for. When this occurred, there was no cash. My poor father’s business was wiped out on Black Thursday. Some highly leveraged millionaire landed on his apple cart. This goes to prove that the little man is hurt the most.

  9. BenFlorida

    Very good article which brings me to this question. If inflation is on the horizon will equities experience price inflation or will equities fall because inflation brings on higher interest rates which will sqeeze corporate earnings. Excluding all other investments, such as gold and silver, should a person keep their money in equities or in cash? I think bonds at this time is an obvious no.

    • Greg

      BenFlorida,
      Not cash but if you are in a brokerage all are not equal. Having a great investment in a brokerage with low cash pad and high counter party risk to derivatives is NOT a good investment. The 2 brokers I like are Scottrade and Edward Jones. (I get no compensation from either of these firms.) Both have high capital ratios and fractional (meaning small) counter-party risk to OTC Derivatives. You should also own physical gold and silver coins. Please see my post “How do I buy Gold and Silver?” This is not a commercial but a real how to from me. Here’s the link: http://usawatchdog.com/how-to-buy-gold-and-silver/ I hope this helps you.
      Greg

      • BenFlorida

        Greg, I have the majority of my retirement in a 401k via my employer which does not have a large precious metals component. Basically you have the choice of blended funds, very conservative funds like money markets and t-bills, or aggressive funds. I think there are a lot of people in my position. If you think that equities will rise but not keep up with inflation then that would be better than being in the conservative fund. If you think that equities will decline because earnings will get crushed by inflation and a global depression then at least the conservative fund is better than losing 60-80% of your principal. I would love to take a large portion of these funds and buy gold and silver but that option is not available to me.

        • Greg

          Thank you Ben for sharing you thoughts. Many folks are in the same situation. If you can save outside of that plan, then more power to Ya.
          Greg

          • Lance

            I am in this position. If the company plan allows you to borrow against the 401k and if your income can tolerate the payments every pay period I would borrow against the fund. The interest is typically low and will accumulate in your fund. Use that cash to dollar average into the bullion markets. I do this every 3 years or so.

          • Greg

            Lance,
            Good idea and you have probably made a nice return while keeping your money away from Wall Street! Thank you for sharing your strategy here.
            Greg

          • Thart

            For some of us, it’s worse than that. My company plan used to be administered by Fidelity, and I was able to invest in FSAGX. But they plan managers switched us to Vanguard and there is NO precious metals or even commodities option. After much emailing, complaining, pleading, they simply told me that they know best and gold does not belong in a retirement portfolio. They took all my savings out of FSAGX and put it into a Vanguard index fund.

            I can’t get my money out of my retirement fund without severe penalties…

            You can imagine how much sleep I have lost over this.

            On the other hand, it’s proof positive that the bull run in Gold has a long way to go, because at the top these same “wise men” will be telling everyone to buy gold.

            Even just writing about this has made me sick to my stomach.

          • Greg

            Thart,
            Pay the tax and penalty and get your money. Then run the account the way you wish. That is my simple advise. Thank you for sharing your story here.
            Greg

      • cptpete

        Greg, years ago in a place called eagle alaskaI was in a small hotel, when a placer miner walked in ordered drinks and supplies and then proceeded to pay by shaving gold dust from a hunk of gold that he had somehow managed to melt down. So bullion bars do work and a lot cheapera then coins

        regards

        • Greg

          Cptpete,
          I didn’t say it would work or be valuable. Gold in any form is valuable. I said coins would be moire liquid and work better than bars. Shaving a bar as opposed to using a silver or gold coin, you made my point. If you are going to challenge my work please quote the context correctly. I welcome all criticism and ideas and I thank you for yours. Please come back.
          Greg

          • Oldcoot

            When FDR called in the gold and forbade ownership of it, the only exemptions were gold in art,as coins (especially foreign), and as jewelery. If the dictators in government decide to call gold in, I would worry if I had bullion.

  10. Sam

    Dear Greg,

    Very good, thank you.

    I think I know how to turn this bus around. Get rid of all the anti-business laws, including the onerous environmental laws. Reward innovation and production with tax breaks, from the tiniest cottage industry to the largest corporation.

    Abolish race-based hiring and quotas, let businesses hire the best people, no matter whom they are.

    Finally, repudiate the debt. Go back to the Constitution, and declare all script null and void. Keep the comical coinage in circulation, but a buck has to be silver, above has to be gold. Back all bonds with gold.

    Oh, that’s right, DUMB idea. It’s too simple, getting the economy out of the mire requires something more complex. Silly me with my MBA, only someone with a Ph.D. or a J.D. is qualified.

    • Greg

      Sam,
      You plan sound good to me!!!
      Greg

    • kumanari

      This is exactly what is coming Sam. Goggle Sinclair’s piece on gold revaluation -gold certificate ratio. See Jim Rickard’s interview’s on King world news,read his bio(Greg had no room to give it justice), this man knows what is going on.As the bond markets collapse we are entering the GOLD REVALUATION phase. Gold will anchor the currency and or debt AFTER it has been allowed to rise high enough to balance 80 years of chicanery. There is much to learn about where we are headed, The Invisible Crash by Jim Dines foretold this in’75. Study Martin Armstrong and Alf Fields as Sinclair says,” Alf’s numbers on Martin’s timing.” The trick will be to know when to exit SOME pms and get into GOLD backed BONDS at high 30yr interest rates. This is the banksters endgame!

      • Sam

        kumanari,

        Thanks, will do! Never heard of Dines’ work, I got my start reading Harry Browne’s “How to Profit from the Coming Monetary Crisis.” Too bad the crisis happened in 2008, not in the ’70′s as he predicted!

    • Mark_BC

      “Get rid of all…. the onerous environmental laws.”

      No, the environmental laws are what is protecting what little economy America still has. The best thing for America would be for gas to go to $10 a gallon.

      • Sam

        So true. We need something besides gas to start a fire if we want smores and want to sing “Kumbaya.”

  11. Mitch Bupp

    I am no expert but the words of Ben Bernanke on the Japanese monetary crisis reveals his current strategy for dealing with an under performing US economy. I am starting to believe that the entire housing crisis is the result of Bernanke’s economic plan which appears to have been instituted when he was Chairman of the President’s Council of Economic Advisers, from June 2005 to January 2006. I see all of the components of the plan that Bernanke believed the Japanese follow to end stagflation in his current financial policies. The components are there but they are not in the same order in the two following papers.

    http://www.princeton.edu/~pkrugman/bernanke_paralysis.pdf at the Princeton.edu website.

    http://www.iie.com/publications/chapters_preview/319/7iie289X.pdf

    In my opinion, low or near zero interest rates, were used to increase US consumer wealth so other countries would continue buying US debt but this created a housing bubble. Then the bubble burst and the bailout train left the station going full steam. Because Bernanke’s belief that even with interest rates pegged near zero that the way to stimulate an underperforming economy is to use money bombs to devalue the currency creating inflation which in turn results in increased economic activity. And this does what? It is nothing more than to keep the housing bubble inflated and asset prices inflated beyond normal market conditions. Bernanke’s fear that zero or near zero interest rates is well founded. It will expose the FED for what it is, a ponzi scheme which needs new money to keep going to pay off the old debt/investment.

    And Bernanke added, “The general argument that the monetary authorities can increase aggregate demand and prices, even if the nominal interest rate is zero, is as follows: Money, unlike other forms of government debt, pays zero interest and has infinite maturity. The monetary authorities can issue as much money as they like. Hence, if the price levels were truly independent of money issuance, then the monetary authorities could use the money they create to acquire indefinite quantities of goods and assets. This is manifestly impossible in equilibrium. Therefore money issuance must ultimately raise the price level, even if nominal interest rates are bounded at zero. This is an elementary argument, but, as we will see, it is quite corrosive of claims of monetary impotence.”

    Bernanke, also said, “Well-designed and transparent legal and accounting systems, a sound regulatory structure that helps limit the risk exposure to banks and corporations and prudent fiscal policies that help instill public confidence in economic fundamentals, are all vital components of an overall strategy.” Bernanke made the comment regarding fighting the Japanese illiquidity crisis.

    The problem is that we do not have transparent and legal accounting systems or a good regulatory structure. Bernanke is surly trying to limit the risk exposure to banks and corporations but this poor out of touch fiscal policy has not instilled public confidence. Bernanke’s policy can not work because his theories do account for fractional banking. The illiquidity that the banks are experiencing was created in the form of mortgage backed securities and collateralized securitized investment vehicles created using fractional banking outside the Federal Reserve currency system.

    • Greg

      Mitch Bupp,
      Thank you for posting your excellent comment here. This was a lot of work and I and our readers appreciate it.
      Greg

  12. lostinmissouri

    I think the real surprise, will be how long these banksters keep this going. Right now, the 100 dollar bill is our largest currency. What this great country needs is a cheap 10,000 dollar bill! That will fix everything!

    got gold?

    • Greg

      LostinMissouri,
      Thank you for the humor. I laughed, loved it.
      Greg

  13. Martin

    Dear Greg,

    Whether or not the actions of the FED pulled us back from the brink will probably never be known or maybe even revealed. I do believe that the gut feeling of most Americans is one of total distrust and revulsion of the people’s money being spent with so little oversight. In most people’s eyes the FED is a runaway train with a novice conductor. I am hopeful that Ron Paul will be able to ask important questions and receive verifiable answers without the usual brush off by the FED taking the 5th.
    Thanks Martin

    • Greg

      Martin,
      Mr. Paul will pull a whole lot of ugly out from behind the Fed curtain, and I can’t wait! Thank you for your comment.
      Greg

  14. billhopen

    “QE-ternity” in support of the new economic theory “permaboometrics” more money is better, and endless money forever leads to limitless wealth (like in Zimbabwei)

    • Greg

      Billhopen,
      Great slogan! I would get the dot com. Thanks
      Greg

  15. Fred Starkey

    Excellent. I have been following these experts also. In the world of the Ph.D. there seems to be only a few that have the knowledge to explain something that used to be commonsense.
    Thanks for explaining and exposing this shell game.

    • Sam

      Fred,

      ;-D

      Funny, Ph.D. does not spell “GOD,” it spells “PHUD” (as in Elmer Fudd). Also strange is that I have yet to run into any Ph.D.s and J.D.s with even a mustard seed of common sense. Hmmm.

  16. Mike T

    When they extend QE2 and have to find buyers of 75 bil/mo, I believe they will come after our 401(k) plans and force us to by Treasuries, what do you think?

    • Sam

      Mike,

      They’re already planning to. As well as the IRA’s. This administration plans on forcing us to buy Treasuries, whether we want to or not.

  17. NCdirtdigger

    And the Gideon Gono Award for Monetary Policy goes to……………….Ben Bernanke of the Federal Reserve. Ben, please step forward and claim your trophy, this beautiful bronzed wheelbarrow, suitable for hauling millions of worthless dollars.

  18. Samantha in Tucson

    Hi Greg,

    Great article; you explain things very well.

    This may be a little “off topic”, but, one of the things I’ve been chewing on for a long time now is WHY did we let go of our manufacturing base? I know it’s cheaper to manufacture in sweat-shop countries where there are little, if any, regulations, but can’t the American public (at large) see what we’ve ALLOWED the Big Corps to do to us?

    We don’t issue enough tariffs for imports from slave-labor countries into this country and we don’t promote “Made in the USA” any longer; that’s just a cheap mantra the politicians use to get us to believe they are our on side.

    I grew up in New England – the birthplace (essentially) of the Industrial Revolution in this country. Now, granted things were not perfect in the textile mills of long ago, but I knew people who worked with their hands in the shoe shops, apparel factories, etc. who could feed a family on one single wage earner’s salary a year.

    These bailouts and the QE2 nonsense is going to finish us off.

    Just found out today that the community college where I teach is getting hit with a $35 mil cut; you know what that means.

    Is is possible for us to save ourselves or is it too late? [In my heart I know it's probably way too late.]

    If we would stop fighting these obscene wars with “no end in sight”, we might have a little change to keep education going and to help the infrastructure in this great land. We rank VERY low in comparison to the rest of the world with education and transportation. China is going to eat our lunch and order dessert after.

    Greg, are we doomed? Do you see a glimmer of hope anywhere? Very sad for our country and for our people.

    Thanks for all you do; I read you every day.

    God Bless

    • Greg

      Samantha,
      We are not doomed but we are going to go through some very tough times! It is so important to do whatever you can to get ready. Plan for inflation is my simple advice.
      Greg

    • Sam

      Samantha,

      Please read my post above. Onerous environmental laws, unions, government telling companies whom they can hire and whom they can’t, add to that a slew of other stuff.

      • Samantha in Tucson

        I agree in most part with your points; however, I still think we need to slap tariffs on imports and get RID of NAFTA and CAFTA! Okay…we may have to pay another $1 for a pair of socks at Wally-World to have them manufactured in the U.S.A.

        It is time to take care of our own. Remember the famous words of one presidential candidate (Ross Perot) years ago about the “giant sucking sound.” Turns out, he was RIGHT!

        • Greg

          Samantha,
          You are correct. The economy will not completely crumble in June, but you will start seeing some really big cracks. Thank you for weighing in.
          Greg

    • Jim in GA

      Samantha,
      A small correction….the big corporations didn’t do anything to us, the government did. The US now has the highest corporate tax rate in the world.

  19. Ecuador Rules

    Why is everybody so concerned about getting out of debt?. When the Zimbabwe dollar died, there was no debt in the entire country. There were also no banks, so a good credit rating means nothing.

    I recently maxed a credit card at zero interest rate and put it into silver rounds. I pay $204 a month. Will BofA be there in one year to ask for the principle? BTW that silver is up 12% at the moment. if the economy really tanks, that silver will feed my family for more than two years.

    If times are really that tough, it will not be a difficult choice.

    It is almost treason to advocate this, but I did this credit card thing with almost six figures with gold while it went from $805-950. Never paid more than 3% interest.

    • Greg

      Thank you Ecuador,Bruce, Dan, Rosey and Bill.
      Greg

    • Mark_BC

      I’m doing the same thing.

  20. Bruce Minnick

    What surprises me most is how much stomping the citizens of America are willing to take and still lay down for more. Thomas Jefferson and George Washington would have been gathering their armies, saddling the horses, and loading the gun ready to ride on Washington to take back the Republic. Many in Washington would have been tried for treason and hung from the highest flag poles on the White House lawn having been found guilty.
    Thankfully we do have a few public servants like Ron Paul among all the political gangsters.

  21. Dan

    Democracy is the theory that the common people know what they want, and deserve to get it good and hard.
    H. L. Mencken

  22. Rosey

    Read “Lament For America”. This story is then complete.

  23. Bill

    Got Rope, I mean Milk?

  24. JoSa

    We are witnessing the end of fiat currencies, it’s a great time to be alive! Oh wait…on second thought, governments have been debasing and inflating currencies into oblivion for centuries and humanity always seems to de-evolve back to debt based fiat systems…i mean what have we learned in 2,066 years?

    “The budget should be balanced, the Treasury should be refilled,
    public debt should be reduced, the arrogance of officialdom should be
    tempered and controlled, and the assistance to foreign lands should
    be curtailed lest Rome become bankrupt. People must again learn to
    work, instead of living on public assistance.”

    – Cicero 55 BC –

    Evidently nothing…..

    • Greg

      Thank You JoSa.

  25. Adil

    Hi,

    I have entirely different perspective…

    here it is:

    fed will print more $.. world will look at their reserves..

    they will wish fed stops.. but fed won’t.. its war.!

    so at some point of time… they will have to sell their $s.

    that might be hyperinflation? not really…

    US has assets. and more importantly food. now the interesting facts..

    others won’t be able to export to usa.. so more jobs in usa.

    what about oil? well.. lets see.. $ may be valueless, but food can buy oil… ie gulf countries have NO option but to accept $.!

    china cannot do anything.. they don’t have any food for themselves.. what are they going to buy oil with? gulf countries wudn’t bother with them.!

    now countries will have NO option but to trash wto.. and countries would have to make independent trade decisions that makes SENSE.

    ie usa will export food and resources to gulf and gulf will export oil to USA…

    once this is stable and sound.. fed can increase interest rate to make $ fall in the place where it should be..

    ofcourse.. as in war.. lots of innocent people would have to suffer or die.. that would be price of the war.

    • Greg

      Adil,
      Interesting, thank you for the comment.
      Greg

    • RT

      How could this scenario take place if the U.S. cannot supply enough food for it’s own people? With floods and crops failing more and more, as the years go by, the supply for “trade” just won’t be there!! Hell when there is 7-10 inches on the ground or about to come the supply isn’t there!!

  26. European American

    A few items to consider for us Americans.

    Tangible, sustainable assets. When the Euro dies you’ve got 2 to 3 weeks to kiss your “paper” good bye.

    Gas cresting $5 by the end of the year in some hot spots. Oil $150 to $200 also by the end of the year. So dump that gas guzzler and get a motor scooter…you get the sustainable picture.

    Nice big vegetable garden that’s secure and has access to a deep well.

    Get to know your neighbors. Bring ‘em some freshly baked cookies with chocolate chips and nuts, now.

    Don’t consider myself a gun guy, but I’ve got some big ones.

    Solar, wind, off the grid, and plenty of provisions to tide one over as the long storm passes over.

    Not one word here about Zionists. Seems rather odd to me.

    Thanks for the article and comments and, your comments to the comments.

    Good Luck, Everybody!

  27. Gary

    Gold and silver rather escapes me in all this mess.

    First of all, they’re still pegged to dollars! And we know what the real value of those are these days.

    Secondly, someone must be willing to purchase it with some form of currency, and who knows if any of that particular medium will remain stable?

    Third, in and of itself, it’s not readily accepted for any normal payment transactions. I cannot just show up and purchase anything at any of my local markets using gold (in any form) as payment.

    I believe,in short order, we’re going to see the wheels are coming off all the wagons.

    • Greg

      Gary,
      Thank you.
      Greg

  28. Glenn

    Greg, with all due respect, I think your estimated figure of 12.3 tillion is conservative. I understand that it is closer to 20, but hey, what’s a few more trillion when the printing presses are smoking and Larry Kudlow (CNBC) is giddy that the Dow is only 20pts away from 12,000!!!

    • Greg

      Glenn,
      I just went with the “official” Fed disclosure, but you are probably correct it is closer to $20 trillion. Thank you for you support and comment.
      Greg

  29. Dan McCartney

    Greg, Really appreciate your mind, insights, and wonderful writing style. Don’t ever go away. Your essays also prompt some excellent responses from your readers, indicating that you get the intelligent following that you deserve. I cashed in a healthy 401K, paid the taxes (gulp!), and bought physical gold and silver. That was nearly two years ago and the value of my holdings has nearly doubled. That may seem pretty radical for some, but I have never lost a minute of sleep. Being at the very end of the Boomers I am painfully alone in this strategy, but the fundamentals that you and other like-minded people demonstrate can not be ignored. Thank you for all you do. Dan.

    • Greg

      Dan,
      Thank you for you for sharing your winning strategy and kind words. You made me smile!!!

    • boopstir

      me too!

  30. Anonymous Coward

    It’s so obviously planned it’s not even laughable. The Fed CANNOT raise interest rates for the simple fact of how much paper they have…ergo, the only option they have is to inflate.

    Planned theft, plain and simple.

    • Greg

      Anonymous,
      Short, sharp comment!! Love it!!! Thanks.
      Greg

  31. Rob S

    What really amazes me is that the US has avoided the “Reckoning” for so long. In fact, in 1980 the problem looked just as bad, on a relative basis, and the manipulators came in and took over. Things normalized, well sort of.

    The US had Pres. Ronald Reagan and the so called balance budget but it did not last or it was abandoned.

    You simply cannot spend more than you earn and not have a “Reckoning”. But why not a “Reckoning” in 1980, 1981, 1982,—- 1986? Gold got pasted after that as the market had its best run in all-time history…..800 on Oct 1983 through to 10800 in 1999 and it has traded sideways ever since. Debts rose as our friends said to unsustainable rates.

    My point is that it was unsustainable rates then, in the 1980′s, yet no collapse. Why now…I agree it should happen (I buy PM’s I have coins); it is inevitable, it must happen….could it be a moral problem and we are faced with the judgment of God? And God’s patience with the US has worn thin?

    What has always confused me about debt is the question: who are we debt to? No one seems to be able or perhaps even want to give a straight answer….I am not sure why? Find out that answer and I am sure that you will find out when!

    • Greg

      Rob S.
      We are in debt to everyone because our money is really debt. Thank you for your comment and asking all the right questions.
      Greg

  32. Mike

    I, like many folks, am stuck with a 401K that offers very little or nothing in the way of precious metals investing. The basic cafeteria style offerings are stocks, bonds and T bills. Sounds like a recipe for disaster to me. I pulled out all the money I could afford to barrow from mine and bought silver American Eagles and gold American Buffalos. The earlier poster that maxed out a credit card and bought precious metals with the proceeds is interesting. Some on here claim that credit ratings will be worth nothing in the future so why not implode your credit cards and buy metals?
    Perhaps this is true….at some point. But we are not there yet and no one knows exactly when “yet” will arrive. My excellent credit rating and FICO score save me money by lowering my credit card costs and insurance costs, since they base your insurance bill partly on your FICO score. I would love to pull out my c.c and max it out to buy metals but we ares still living within the confines of what is referred to as a “sound and normal” financial system. “Sound and normal” to the masses, at least.
    Lets just hope that things somehow work out for the best. Paul for Pres in 14!

    • Greg

      Mike,
      You make some excellent points here. I am not a fan of going deeper into debt for anything!!!
      Greg

    • Randolph

      I have a couple things you may want to take a look at. I specialize in roll over IRA, 401K, physical possession of bars & bullion and finally a financed trading account which allows 3x’s buying power for your falling dollar. This seems to be a wise investment for most people while the government in this time of financial uncertainty is driving this country through through the ground. Let’s watch these metals run like the bulls!!

  33. Jbender

    Hi Greg

    Print and more printing…seems we all agree on that…..So where does gold and gold and silver shares go once physical gold and silver is not found at your local coins shops

    Jim bender
    Milwaukee, Wisconsin

    • Greg

      Thank you Jim for weighing in.
      Greg

  34. slingshot

    We are DOOMED! We are all Doomed!
    No, we are not doomed but we are headed for some tough times. As Jim Morrison of the DOORS once sang, “Break on through to the other side”, is what I plan to do. You can educate ignorance but you can not fix stupid. That it what we have in our leaders today. If you think the politics on either side is going to change, well forty years plus of my life it has not and we are in a bigger mess than ever.
    I really do not care if there is peaceful or violent change. As long as a change comes about. I have had it with the lies, misrepresentations the greed, the arrogance and all the other traits that contribute to the downfall of this nation.
    I thurst for truth and justice.

    ” When the musics over, turn out the lights”. J.M.

    • Greg

      Slingshot,
      Here’s to the “breaking throiugh to the other side.” I can’t happen fast enough.
      Greg

  35. Jorrit

    I just found this quote, seems relevant.
    Alan Greenspan 40 years ago:
    “In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. …
    This is the shabby secret of the welfare statists’ tirades against gold.
    Deficit spending is simply a scheme for the confiscation of wealth.
    Gold stands in the way of this insidious process.
    It stands as a protector of property rights.
    If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.”

    • Greg

      Jorrit,
      Great quote. Thank you.
      Greg

  36. nm

    Greg:

    So, it’s June? This is when all hell will break lose? We shall see.

    I was listening to a radio show on the way to work and one of the reporters (who is a pretty sophisticated woman) had the following to say about the economy.

    1) We are in a recovery, but people don’t realize it yet because President Obama hasn’t done a good job of communicating this. This woman is right of center & is not an Obama supporter by the way.

    2) The stock market is surging, which is yet another sign that the economy is improving.

    3) The TARP, which was supposed to cost $700 billion will actually only end up costing $28 billion because the banks have “re-paid” back all the money they borrowed. TARP worked & Bush, Obama & Paulson were right.

    4)GM’s profits are surging. Another sign that the economy is improving.

    5) Paul Krugman was right all along. They should have been more “stimulus” not less. This is why the job number hasn’t improved.

    6) This NYT magazine article was right on target (http://www.nytimes.com/2011/01/23/magazine/23Economy-t.html?_r=1&ref=magazine) – (apparently, it seems to be where she got most of her information on the present state of the economy).

    Greg – People don’t understand the issue of debt and the implications it has for America. I think that’s the problem. They don’t get that the debt will never be repaid and America will default via printing.

    • Greg

      NM,
      Thank you for the bullet point precision of your comment. It made it easy to follow. The banks got $trillions that will never be paid back. The TARP fund is pocket change. And yes, America will default via printing as it is doing now.
      Greg

  37. Bob

    inflation is scary for people who are investors and when the investors hold to much debt over the workers you end up with inflation. The old lie is labor cost is the cause of inflation, the only way labor can cause inflation is make someone buy something by force. This country is top heavy with worthless paper pushers who have driven the whole world in to a hell hole. It’s a hard world better grow some food a potato could cost a days wage. I would give a potato to a kid but turn a banker away no matter how much gold he my offer. Gold can be inflated if to few people hold it. Scary times so many needed people, no land no trade no no how.

    • Greg

      Thank you JasonS and Bob.
      Greg

      • dwarvesden

        From my perspective, the policies pursued by the Fed are an attempt to avoid collapse, deflation, (with a very big D) and it’s companion, Depression. Ergo: pump the system full of “money”,liquidity, to keep the
        Wolves at a distance, or as some put it: kick the can down the road.

        We know that the result of QE-Infinity is hyperinflation. And,inflation is just a mask, or curtain hiding the deflationary bogey-man. When the
        Deflation monster peeks his head out between the curtain folds, the Fed grabs more cloth made out of debt to cover.

        The problem for the little people (like my diminuitive self
        hunkering down in my den) is that in a Depression, the value of all assets deflate. Even gold and silver. During the 30′s the price of gold was fixed, giving it a floor. So looking at it’s price stability during that time is skewed.

        So, is anyone, aside from the insulated filthy rich, safe?

        Is there a bullet-proof asset that protects from a deflation depression?

        It seems to me we would have a better chance of survival if we did what our forefathers did in 1776.

        • Greg

          Dwarvesden,
          The bullet proof asset is gold. It has a 5,000 year track record as being money and it still is. Thank you for your comment.
          Greg

  38. JasonS

    It would be well if we went the route of Iceland…

  39. mark

    Hi Greg,
    I would like to offer this comment in response to your article and the comments of the many readers who took time to raise both thought provoking questions and offer useful insights into the consequences of the actions taken by those who hold the reigns of power in both large corporate banking interests and the offices of government who have become unlawfully beholden to serving those same interests while at the same time betraying the trust of the citicenzs of the sovereign states of which they have sworn with an oath to the Constitution to defend against all enemies both foreign and domestic and at whose mercy our destinies (at least financially) seem to be in the hands of (since we are all forced to trade our goods and labor in what is becoming increasingly evident as a wealth transference scheme through the use of ever-decreasing-in-value, counterfeit paper notes of debt.
    In light of the present circumstances, I would offer the notion that the most useful information seems to be that which helps one to form a proper perspective of the situation in which one finds oneself and therefore enables one to put into context all the related considerations which may arise as a result. Having the wisdom and ability to understand why gold and silver “have value” is at least, if not more, important than just going out and getting a few coins (although the coins still have value whether you understand exactly why or not). What I am getting to is the notion that people can and must be able to figure out the solutions for their own particular set of circumstances, but increasingly as we become more enlightened to the truth of the circumstances in which we find ourselves and the forces at work to bring about predetermined outcomes (perspective), we will then be able to properly evaluate all events and relationships in light of what we believe and determine our destiny to be(context). Many are the voices which can be heard speaking of the threat to our existence as humans as being reduced to the misery of bondage in perpetual servitude to an oligarchy of global elites in a global tyranny of debt slavery.
    Along this line, I wish to quote from Peter’s first letter in the New Testament to the christian believers who at that time in history were facing no less of a threat and were in fact suffering extreme persecution for their refusal to deny their faith in the “God and Father of our Lord Jesus Christ, Who according to His great mercy has regenerated us unto a living hope through the resurrection of Jesus Christ from among the dead unto an inheritance,incorruptible and undefiled and unfading kept in the heavens for you who are being guarded by the power of God unto a salvation ready to be revealed at the last time;in which time you exult, though for a little while at present, if it must be, you have been made sorrowful by various trials,so that the proving of your faith, much more precious than of gold which perishes though it is proved by fire, may be found unto praise and glory and honor at the revelation of Jesus Christ; Whom having not seen, you love; into Whom though not seeing Him at present, yet believing, you exult with joy unspeakable and full of glory, receiving the end of your faith, the salvation of your souls.” (1Peter ch 1) Notice here the existence of a dynamically vital relationship between that which occurred in the Person of the Lord Jesus in being raised from among the dead and the dynamic effect the implication of such an event had on the lives and destinies of those who Peter was addressing. Their realization or comprehension of that resurrection event caused them to find value in something that far exceeded that which was commonly known to have value in that day, which was coins of gold and silver. Starting at verse 18 of ch 1 we read ” knowing that it was not with corruptible things, with little coins of silver or gold, that you were redeemed from your vain manner of life handed down from your fathers, but with precious blood,as of a Lamb without blemish and without spot, the blood of Christ; Who through Him believe into God, Who raised Him from the dead and gave Him glory, so that your faith and hope are in God.”
    Here we could see a juxtaposition of two categories of precious things. One is coins of silver and gold whose value was widely known and appreciated as they were the means by which day to day commerce was conducted and by which any of a number of items including grains, animals and even persons, i.e. slaves and prisoners could be purchased and traded as property and the “Precious Blood of Christ” by which a price has been paid to “redeem” us out from a “vain manner of life handed down to us from our fathers”. I wish to offer here for the sake of perspective to all those who fear we are consigned only to endure the misery of existence in a world wide web of unending tyranny as debt slaves in servitude to an elite class of globalist oligarchs, that the big picture (perspective) by which we can properly measure, or put into context all of these present dynamic historical occurrences,is to realize and understand that there is One Who sits upon a throne of glory and possesses authority that is higher than that of the globalist elite oligarchy and Who is beyond the reach of corruption, One in fact Who was tempted and tested as a flesh and blood man while He lived on this earth (under Roman tyranny no less) and One Who with His own precious, spotless, sinless blood did pay the price for the sin debt of the world so that whosoever would choose to believe on Him for the hope of their deliverance out from the tyranny of sin in a world of corruption, they could become participants in that incorruptible inheritance of eternal life in eternal glory, an opportunity which is just as available today as it was in that day, because ultimately, the value found in the precious blood of the Lord Jesus is that it is the only thing, the only commodity, if you will, by which souls of men can be redeemed out from sin’s tyrannical rule with its impending judgement and an eternal destiny in glory secured. Indeed, He Who created us in His own image and likeness and paid the highest price to redeem us out from the penalty of our sin debt with His own precious blood has nothing but our best interest in view and intends for us a destiny of nothing less than equipping us to share with Him His most dignified position of honor in glory as His bretheren of Whom He is not ashamed.
    So as we consider the value of gold and silver coins as a means of wealth preservation in a world of fiat counterfeit currency schemes by which the material wealth of the many is confiscated and concentrated into the hands of the few, let us remember that ultimately real value rests with the price our Savior paid to secure for us an eternal destiny in the glory of eternal life and that the means He paid such a price, His precious blood is beyond the reach of corruption and can never lose its power or effectiveness. God bless you all. The grace of our Lord Jesus be with your spirit.

  40. Daniel

    Regarding “too big to fail,” I was saying exactly the same thing yesterday. We would get all of this over much quicker if the federal government would get out of the way and would quit trying to prop up businesses. The longer they prop up businesses, the worse the crash will be once it finally does happen. I get the impression we are repeating the worst mistakes of the 1930s.

    Mr. Hunter, I heard you on 101.1 this morning, and my question to you is this: what should be our response? I vote in November, but what else can I do? Our huge federal government is not going to listen to a small guy like me, so I am not sure what I can do besides vote.

    I mean, I’m not an economist, but the basic concepts are easy to understand.

    Thanks.

    • Greg

      Daniel,
      You must protect yourself at this point. Thank you for the questoion and comment.
      Greg

  41. Bob

    The coast to coast was the red an blue pill show. America is still the best place to be. Even the big money want’s to get back in country, they just want a good tax break first. I like Adil post because we can transfer are inflation off shore as America goes so dose the world. The world is nothing like it use to be. The idea everyone must have a job is crazy, it’s more like we must share and so inflation is what you get. One thing I been watching is house’s prices and a hard working guy might be able to buy a couple up. This has happen before in my life time when they said the last person to leave Seattle turn the light off. Health care is are big problem but that’s because of greed and the pill pushers, brain washing people with TV advertising. Maybe the bottom is near an if you needed a house they are just about given them away. The only thing holding me back on investing in a couple of rentals is the yearly tax thing. Also Obama is just one man congress holds the blame for the useless wars and the bank robbers.

  42. dwarvesden

    Greg: I cannot argue with gold as money, I’ve held that minority view since my first purchase soon after it was legal, in the 70′s. But,it is also affected by a deflation-depression. It can fall with the dollar, if the dollar is comparatively weak in relation to another major currency. And do not forget, a depression is the opposite of inflation. The dollar acts differently then. (That is if it is still around)

    The previous poster alluded to the falling prices of houses, and we know the dollar they are priced in is also falling. Silver can fall as the dollar falls. And in a depression, the demand and “value” of many commodities, especially those related to economic health or industrial demand can become unwanted and unbought and low valued. For example: oil

    My point is that we all are going to get hurt bad if and when hyper-inflation gives in to deflation and depression. But I do understand that
    gold may allow one to survive it.

    A better solution is the one we took in the 18th century when the crown flooded the colonies with paper money in order to extract every last bit of wealth out of the colonists. We need a 1776 before our nation is destroyed IMHO.

    Postscript: if the school system taught the real reasons for the first American revolution, citizens would have changed things decades ago.

    • Greg

      Dwarvesden,
      Good idea. Thank you for your comments.
      Greg

  43. dwarvesden

    _TO ALL:_ simple survival message….. GET THE FOUR G’S

    1) Gold

    2) Guns

    3) Gasoline

    4) Grits

  44. Ed Moore

    OK so what happens to us “little people” if all this happens? Are we going to end up like Egypt? Will everything come crashing down & the dollar will be worthless? Then what? Riots in the streets?

  45. RENE HORACIO OREGGIONE

    Con todo respeto, el Pueblo USA, es propietario del oro de FORT KNOX, -usadlo. El pueblo no es una corporación. Han trabajado con gran esfuerzo desde hace muchísimo tiempo. No sufran. No permitan que se rían de vuestra inocencia. Han jugado con vuestros ahorros, con vuestros aportes y con su confianza al sistema. Deben recuperar su dignidad. La Libertad, emblema de su política no debe ser traicionada. DIOS NOS BENDIGA.

    • Greg

      RENE HORACIO OREGGIONE,
      (Translation: With all due respect, the People USA, owns the gold in Fort Knox, ‘Use it. The town is not a corporation. They have worked with great effort from long ago. Not suffer. Do not let them to laugh at your innocence. They played with your savings, your contributions and your confidence in the system. Must regain their dignity. Liberty, the emblem of his policy must not be betrayed. GOD BLESS.)

      Muchas Gracias para de comment
      Greg

  46. Perla Grife

    Craig you are really GREAT!!You are one of my favourite actors and one of the best…so SEXY and BEAUTIFUL!I loved you as Vince Tayler!I wish you the best…cause you are THE BEST!!

    • Greg

      Perla,
      If you could get my wife to think the same way, I would really appreciate it.
      Greg

  47. kyle newman

    the equity in your house was spent by the guess who

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