"Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens….while the process impoverishes many, it actually enriches some …Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose."
John Maynard Keynes, The Economic Consequences of the Peace, 1919
Ironic it is to focus on Keynes’ most Profound Insight when much of the Responsibility for the ongoing Currency Debauching which facilitates Today’s Economic and Financial Crises is properly his. Indeed, the Inflation which Implementation of his Economic Policies is causing is increasingly confiscating the Wealth of businesses and citizens. The U.S. Dollar has lost over 95% of its Purchasing Power since The Fed’s founding in 1913 and its purchasing Power continues to be degraded. That Increasing Monetary (and thus ultimately, Price) Inflation is one Primary Megatrend with which all of us, worldwide must increasingly cope. We address that challenge here.
Consider first the Magnitude of the Monetary Inflation. Deutsche Bank reports that as of the end of March, 2012 the combined Balance Sheets of the four largest Central Banks will top $9 Trillion, whereas five years ago those balance sheets totaled “only” $3.5 Trillion.
That means $4.5 Trillion of “Hot” Money pumped into the Economy by those four banks alone in just five years. No wonder Food and Energy Price Inflation is increasing. And no wonder the Fed-led Cartel* is redoubling its efforts to suppress the prices of Gold and Silver, the Ultimate Indicators of Inflation. The Cartel also suppresses Prices of Gold and Silver because the increasingly widespread recognition that they are Money, delegitimizes the Cartel’s Treasury Securities and Fiat Currencies.
Cartel Precious Metals Price Suppression Attacks are becoming more frequent, because the Price Takedowns are becoming ever more difficult to sustain. Beginning with the Price Takedown attack of November 9, 2010 it was 173 days until the next attack (5/1/11), and only 128 days until the next attack (9/6/11), and only 93 days until the next attack (12/8/11) and only 57 days until the next attack (2/3/12), and only 26 days until the Famous February 29, 2012 “Leap Year” attack. Notice that it is becoming harder and harder for the Cartel to sustain its Takedowns.
*We encourage those who doubt the scope and power of Overt and Covert Interventions by a Fed-led Cartel of Key Central Bankers and Favored Financial Institutions to read Deepcaster’s December, 2009, Special Alert containing a summary overview of Intervention entitled “Forecasts and December, 2009 Special Alert: Profiting From The Cartel’s Dark Interventions - III” and Deepcaster’s July, 2010 Letter entitled "Profit from a Weakening Cartel; Buy Reco; Forecasts: Gold, Silver, Equities, Crude Oil, U.S. Dollar & U.S. T-Notes & T-Bonds" in the ‘Alerts Cache’ and ‘Latest Letter’ Cache at www.deepcaster.com. Also consider the substantial evidence collected by the Gold AntiTrust Action Committee at www.gata.org, including testimony before the CFTC, for information on precious metals price manipulation. Virtually all of the evidence for Intervention has been gleaned from publicly available records. Deepcaster’s profitable recommendations displayed at www.deepcaster.com have been facilitated by attention to these “Interventionals.” Attention to The Interventionals facilitated Deepcaster’s recommending five short positions prior to the Fall, 2008 Market Crash all of which were subsequently liquidated profitably.
No wonder Massive Head and Shoulders Patterns for both Gold and Silver are nearly complete (Deepcaster forecasts Timing and Targets for these impending Moves, and makes Recos aimed at profiting from them in his latest Alerts, and April Letter).
But the CB’s Massive Monetary Inflation helps only the Mega Banks (and them only temporarily) and not most Businesses, Workers, or the Economy, because the resulting price Inflation (Cf. Gasoline and Food) dampens Wages and slows the Economy.
In the U.S, for example, Official Figures indicate 23 Million Unemployed or Underemployed. The Real Number is somewhere North of 30 Million unemployed (about 22%) and the Real Inflation rate is 10.5% per shadowstats.com.
QE hurts citizens around the World. And we are already seeing it in the Real Numbers.
Consider the U.S. for example:
Shadowstats.com calculates Key Statistics the way they were calculated in the 1980s and 1990s before Official Data Manipulation began in earnest. Consider
Bogus Official Numbers
vs. Real Numbers
Annual U.S. Consumer Price Inflation
reported March 16, 2012
2.87% / 10.45%
reported March 9, 2012
8.3% / 22.4%
U.S. GDP Annual Growth/Decline
reported February 29, 2012
1.62% / -2.70%
reported March 17, 2012 (Month of February, Y.O.Y.)
No Official Report / 3.92% (e)
And Official Source Disinformation continues; consider Shadowstats comments on the January 6, 2012 release of U.S. Employment data:
“The reported seasonally-adjusted 200,000 jobs surge in December 2011 payrolls included a false, seasonally-adjusted gain of roughly 42,000 in the “Couriers and Messengers” category. That gain was an artifact of the seasonal-adjustment process and will remove itself in the January 2012 numbers.
“The problem is that this 42,000 gain is part of a seasonal pattern that fully reverses itself each January…”
Indeed, Q.E. helps almost no one but the Mega-Banks.
And, an important related consequence of Q.E. creates another Megatrend. As the CB’s pump ever more hot money into the system, Price Inflation takes off. (The U.S. e.g. is already at 10.45%.) Price Inflation Pressures Company Sales and Earnings and lowers or annihilates Workers Discretionary Income.
Businesses lay off workers and/or do not hire and they are pressured to hire lower wage workers. Dean of the Financial Newsletter Writers, Richard Russell, outlines the consequences (which are ultimately the result of QE).
“Among people who have not been able to find a job in over a year (in some cases three years), the situation is distressing and actually very scary. About 34,000 people enter this situation every month. They are willing to do almost any kind of work, but there are no jobs. The fact is that foreign workers are taking their jobs. They are highly educated and willing to work for a fraction of workers in the United States. My view: living standards will have to come down in the US if we are ever to get anywhere near full employment.”
Richard Russell, 2/24/12
Indeed, Canada, the United States and most of the Eurozone have become Mass Immigration Magnets. Of course, Mass Immigration is a net (after subtracting taxes immigrants pay) cost to Taxpayers, many businesses and most Workers, since they pick up the Education, Health Care and other Expenses of the New Arrivals (Contra Russell: the majority of Immigrants to the U.S. are low-skilled with an average 4th Grade Education and thus impose a net multi-billion dollar cost on businesses and other Taxpayers.)
As many Investors-citizens of the Eurozone, U.S. and Canada are increasingly realizing neither the Massive Q.E. nor Mass Immigration Mega Trends are in their Interest, but rather in the interests of a few Mega-Bankers, and a few businesses which Privatize Profits from cheap low-skilled labor, but Commonize Costs for their education, health care, etc.
Are these two Mega Trends reversible? Surely. (The non-profit www.carryingcapacity.org advocates Solution for both of them.) The Eurozone and other Sovereign Debtor countries could adopt and impose an “Icelandic” Solution to the problem of Excessive Sovereign Debt, and would likely already be on the road to recovery, as is Iceland.
And the Citizens of the Eurozone, U.S. and other Debtor Nations could dramatically reduce Immigration (allowing in only a few highly skilled workers) thus reducing the social while Economic Costs and increasing employment opportunities.
However, since both Mega Trends, Mass Q.E. and Mass Immigration are ongoing, until or if they are reversed, they must be addressed. Indeed, Deepcaster provides opportunities to Profit from Mass Q.E. (See Notes below.)
In sum, in order to Profit and Protect, one must stay abreast of these two Key Mega Trends.
March 29, 2012
Note 1: Bernanke’s comments this past Monday to the effect that The Fed was still open to Monetary Easing propelled the Equities Markets into Paroxysms of Bullishness. Similarly, Gold (and Silver) jumped on Massive Buying (early on Gold was up $23 in 50 minutes!)
But there is Evidence that much of the Gold Buying was by Central Banks, many of which are in an Accumulation Mode. But these Central Bank purchases can also be used for a Massive Surprise Sales Action to take down the Price once again. Which Action will it be?
Deepcaster forecasts which Action it is likely to be and offers Recommendations on how to Profit in his latest Alert – “Warning! Action Impending; Forecasts: Gold, Silver, Equities, Crude Oil, U.S. Dollar/Euro, U.S. T-Notes, T- Bonds, & Interest Rates” just posted in ‘Alerts Cache’ on deepcaster.com.
And regarding these Forecasts see Deepcaster’s Specific Buy Recommendations referred to in Notes 2 and 3 below.
Note 2: We have just issued a Forecast for Imminent Turning Points in two Key Sectors.
And we make a Buy Recommendation aimed at profiting from one of them.
We expect these two Major Turning Points will have Substantial Ripple Effects in Other Key Sectors as well and we forecast these in our recent Alert – “The Set-Up Before the Storm; Forecasts: Gold, Silver, Equities, Crude Oil, U.S. Dollar/Euro, U.S. T-Notes, T- Bonds, & Interest Rates” in the ‘Alerts Cache’ at deepcaster.com.
Note 3: Recent developments in the Economy and Markets are creating an Extraordinary Opportunity in one sector NOW. We expect this Opportunity to last only a few days, at most.
The Foundation of this Opportunity is the Massive QE which has been and is being injected into the Economy via The Fed (with QE1, 2 and 3, Operation Twist, and recently the $1 Trillion provided to Eurozone Banks via a Swaps deal with the ECB) and the $1 Trillion ECB LTRO Injections into some 800 banks.
We see this as once-in-a-Decade Investment Opportunity which we describe in our recent Alert, “Extraordinary Opportunity NOW & Buy Reco!; Forecasts; Gold, Silver, Equities, Crude Oil, U.S. Dollar/Euro, U.S. T-Notes, T-Bonds, & Interest Rates” just posted in “Alerts Cache” on deepcaster.com.
In this Alert, we also identify a launching Takedown in another Sector and reiterate that one way to achieve profit and protection from the Vagaries of The Equities Markets is to Buy Stocks whose total Return (Gain plus Yield) is higher than Real Inflation (10.5% in the U.S., e.g., per shadowstats.com) Deepcaster High Yield Portfolio has that Goal.