Inflation vs. Deflation debate

[Jason]

Yeah that's a good read....

For example, we addressed the Cash for Clunkers in our last commentary—a perfect microcosm of government market intervention. One month after its expiration, the program is now available for a post-mortem. Vehicle sales, after popping to an annualized rate of 11.25 million and 14.09 million in July and August, respectively, fell back to 9.20 million in September.

Nearly 45% drop in vehicle sales if the 9.2 estimate holds (which is very probable). That's expense #2 on people's monthly list.

With the Federal Reserve purchasing close to $1 trillion in MBS under their purchase program....Barclays Capital estimates that the Fed currently owns 90% of the outstanding 4% coupon and 80% of the 4.5% coupon.

The Col's much talked about inflation in Fed assets....LOL....ain't cash that's for sure!

As Bank of America research summarized, the recent Fed statement is unquestionably a positive for MBS for three reasons:

1. The Fed will buy all of the $1.25 trillion authorized under the program, easing concerns that they will buy less than the committed amount.

2. If the Fed wishes to achieve their target of completing the program by the end of the first quarter of 2010 they will have to purchase $70 billion a month, or roughly 70% of total origination.

3. By extending their buying program to the end of March 2010 and pledging a gradual wind down, the Fed has avoided a potentially dramatic sell off in both the MBS and Treasury market via duration coming into the market.

Say what they want but I think the real goal is for the Fed to end up owning everything in exchange for recapitalizing the banks who were the ones actually printing money in exchange for our debt. So they get all the assets for ZERO!

They know the debt boa constrictor is going to squeeze the life out of the economy by sucking up all available cash. They stand by patiently waiting for us to beg them to take ownership of our assets in exchange for promises of relief. All while spewing crap about hyperinflation and how we would be absolutely stupid not to take on more debt. Meanwhile the whole world economy collapses as evidenced here - http://www.ldsfreedomforum.com/viewtopi ... =20&t=9039

Nice gig! Biggest wealth transfer in the history of the world....thought the great depression was good to them....you haven't seen anything yet!

Our oil price calls have been good for three years. In the 4th quarter, we should have low oil prices, but up substantially from the first of this year. On gold, our call is a winner in 2009.
Next, it should be very clear that the Fed is focused on making households more indebted rather than less indebted. In December, the Fed should report lower household debt through September, 2009. However, they will not report how much new debt has replaced defaulted debt. The Fed has no intention of letting households reduce their debt loads.

In July, we wrote: “We will not be surprised by 30-yr. mortgage rates under 4.5% in 2009.” Current 10-year Treasuries are near 3.1%. As we wrote: “it boils down to ‘ABC…123…Baby you and me!’” A + B = C: 3% + 1.5% = 4.5%. Bill Gross may not agree with us, but we are likely right.

We have noted for years that the Federal Reserve has recreated the Great Depression process. In 2009, we have found many comparisons to 1931! In fact, we found three more this week!
It is also amazing to see the Fed blowing asset bubbles, again. Obviously, they are not fast learners! Our model suggests the Fed departs from the Depression pattern in 2010. Our model also suggests the departure will deepen the pattern.

In July, we also wrote: “Has Obama prevented a depression? No! He is in the ‘early stages’ of making this depression worse.” One might ask: “What choices other than a big stimulus program did the Administration have?” We ask: “Once government debt flow has been ramped, how do they reduce it?” Keynes was wrong.

- http://www.piscataquaresearch.com/track ... ts_148.pdf

By changing the last number you can review previous documents released to the public. 148 is latest so you have to work backwards....actually....here's the directory - http://www.piscataquaresearch.com/tracker/documents/

[Jason]

CHICAGO (Reuters) - The seven-bedroom, three-bath house in this city's West Garfield Park neighborhood had once been someone's American Dream.

But at a recent auction of about 100 foreclosed houses and condos, it was just Property No. 20 -- and drawing no bids from a roomful of buyers despite its bargain-basement price.

"Any interest in this home at $7,000?" fast-talking auctioneer Renee Jones asked the crowd. "If not, we'll move on."

Saddled with swollen portfolios of foreclosed and unsold properties in the housing crisis, U.S. lenders and builders are turning to professional auctioneers to help them unload the unwanted real estate in a hurry.

Hard data on the number of foreclosed properties being sold at auction are hard to come by. "The foreclosure market is a moving target right now," said Dave Webb of Hudson & Marshall, one of the biggest auctioneers in the market.

But Hudson & Marshall and its rivals say they are gearing up for more in the coming months, convinced that a moratorium on foreclosures earlier this year only postponed what they believe is an inevitable avalanche of new repossessions.

"The foreclosures are going to explode again," said Webb.

Antonette Taylor, an agent at a brokerage that plans to start holding auctions this fall, said the low prices -- most sold for 30 to 50 percent below their last deeply-discounted list price -- made her "a little nervous for my sellers."

Other troubling signs: buyers passed on almost half the properties offered in Chicago and fewer than 100 bidders showed up for the event, which also attracted some online buyers.

"We're having a difficult day," said Tom Atkins of Zetabid, the company holding the auction. "There was a $1,000 property that no one bid on. You'd think a slum lord at the very least would buy it and put a (federal housing assistance voucher) renter in there for $600 a month."

Later, when the nine-bedroom, four-bath property that David Kosak's boss had been trying to sell for a year went under the hammer, it fetched just $15,000 -- less than one-third its last list price but a figure the 23-year-old broker's assistant called "better than anything we've gotten."

Asked if he thought the auction activity might be a sign the property market was improving, Kosak was less upbeat.

"If it's getting better, we're not seeing it," he said. "We only do foreclosures, and we're only getting busier."

After Barack Obama's election as U.S. president last year, Fannie Mae and Freddie Mac, the two government-sponsored mortgage giants, imposed a foreclosure moratorium that lasted about four months. Many private banks followed suit.

As a result, there was a gap in the pipeline of foreclosed homes that pushed into late spring. That helped auction prices stabilize for a few months and permitted some analysts to claim the market had found its bottom.

But the moratoriums have now expired. With the mortgage modification and foreclosure prevention efforts championed by the Obama administration unable to keep pace with defaults, as many as 7 million homes and condos may eventually enter foreclosure before the dust finally settles, according to a report by Amherst Securities Group issued in September.

"There are a lot of things that have temporarily stabilized the market," Tilson said. "But those things are going away ... Delinquencies are spiking. This is going to be a mess."

http://finance.yahoo.com/news/At-forecl ... l?x=0&.v=1

[cayenne]

nice posts all.

My deal is this. Whether deflation or inflation, it seems obvious that the dollar is a dying currency. When it dies, and the world dumps it, would this not cause hyper-inflation? Would this be a good time to get into Gold and Silver over the dollar. I am just talking dollars to Medals, not land, food, etc

[cayenne]

I want to add something. I was doing some reading. It seems we are in deflation somewhat. It seems the Fed pulled a 1933 ish stunt to pump money into the system to stop deflation. It then seems because of this mass fiat printing that inflation is inevitable regardless of whether other nations dump the dollar. To much debt with nothing to back it. So this must be why men like calente and shiff are predicting over 5000$ an ounce Gold?

[Illuminati Exposed!]

The fact is, the Federal Reserve sold off its gold reserves in 2001 to pump up the market back then! That is why the 9/11 gold in the 2 Towers was missing! The collapse just covered the deed.

There is no more gold to sell, so now they just keep printing more and more money.

The dollar against the Euro is down to .65. It was $1.20 against the Euro in 2001. It has nowhere to go but down, as the Fed keeps just printing away...

The stock market is being pumped again in a final "suckers" rally.

"He Who Must not be named" thinks the market collapse is just weeks away. Probably preceeded by another MAJOR "False Flag" Terrorist event to distract us and to imprison those of us who still have the will to resist.

[shadow]

"He Who Must not be named"

While I believe you are "He who must not be named" and tire of the self aggrandizement, why must you not name him err you? I have no problem with it. Just change your name to Paul Drockton MA Perfect IQ. I'll even let you have my avatar

[Jason]

The fact is, the Federal Reserve sold off its gold reserves in 2001 to pump up the market back then! That is why the 9/11 gold in the 2 Towers was missing! The collapse just covered the deed.

There is no more gold to sell, so now they just keep printing more and more money.

The dollar against the Euro is down to .65. It was $1.20 against the Euro in 2001. It has nowhere to go but down, as the Fed keeps just printing away...

The stock market is being pumped again in a final "suckers" rally.

"He Who Must not be named" thinks the market collapse is just weeks away. Probably preceeded by another MAJOR "False Flag" Terrorist event to distract us and to imprison those of us who still have the will to resist.

The dollar vs this or that currency is a joke. Currency valuation is manipulated just like everything else. If currency value was an accurate measure of the financial production of a nation you would not have rapid variations in value as it would be decade trends. Instead we have a situation where a currency can lose half its value in a week....there are plenty of examples - start with Australian dollar vs US dollar....

So just as the price of oil is a result of big bank speculation.....not supply and demand.....so is the price of currency.

[caddis]

The fact is, the Federal Reserve sold off its gold reserves in 2001 to pump up the market back then! That is why the 9/11 gold in the 2 Towers was missing! The collapse just covered the deed.

There is no more gold to sell, so now they just keep printing more and more money.

The dollar against the Euro is down to .65. It was $1.20 against the Euro in 2001. It has nowhere to go but down, as the Fed keeps just printing away...

The stock market is being pumped again in a final "suckers" rally.

"He Who Must not be named" thinks the market collapse is just weeks away. Probably preceeded by another MAJOR "False Flag" Terrorist event to distract us and to imprison those of us who still have the will to resist.

The dollar vs this or that currency is a joke. Currency valuation is manipulated just like everything else. If currency value was an accurate measure of the financial production of a nation you would not have rapid variations in value as it would be decade trends. Instead we have a situation where a currency can lose half its value in a week....there are plenty of examples - start with Australian dollar vs US dollar....

So just as the price of oil is a result of big bank speculation.....not supply and demand.....so is the price of currency.

+1

[cayenne]

A few questions. Please help me, I am confused me think



It is my understanding that if you pump money in the system, it causes eventual inflation, and if money is in short supply we have deflation.

So what happens since we have pumped all this money in the system with all the included interest owed? Does the lack of being able to pay back the debt cause inflation or deflation?

It is just confusing to me, If we keep creating credit and debt that is inflation right? at what point do the creditors come calling? If we print more and more the dollar is devalued right? Doesn't this eventually cause hyperinflation?

If the world drops the dollar, will that cause inflation or deflation since we have so much of it printed? Wouldn't that make us have so much extra dollars floating around that we would have hyperinflation?

Then in 1933 roosevelt pumped money in didn't he, and it worked? Why did massive inflation not happen then? Why won't this fiat creation not work now? Help me please understand this. Why are shiff and celente and others talking about 5000$ an ounce gold? They usually accurate.

[Jason]

A few questions. Please help me, I am confused me think



It is my understanding that if you pump money in the system, it causes eventual inflation, and if money is in short supply we have deflation.

So what happens since we have pumped all this money in the system with all the included interest owed? Does the lack of being able to pay back the debt cause inflation or deflation?

It is just confusing to me, If we keep creating credit and debt that is inflation right? at what point do the creditors come calling? If we print more and more the dollar is devalued right? Doesn't this eventually cause hyperinflation?

If the world drops the dollar, will that cause inflation or deflation since we have so much of it printed? Wouldn't that make us have so much extra dollars floating around that we would have hyperinflation?

Then in 1933 roosevelt pumped money in didn't he, and it worked? Why did massive inflation not happen then? Why won't this fiat creation not work now? Help me please understand this. Why are shiff and celente and others talking about 5000$ an ounce gold? They usually accurate.

Money is created by debt. Debt is inherently deflationary - you must pay back the original amount plus interest. The money for interest is never created. The only way the system can survive is to pump more and more debt (money) into the system. The additional debt (money) creates inflation as more money chases relatively same amount of goods. It is mathematically impossible for this method to continue indefinitely.

When the tipping point is reached (i.e. top of the business cycle) and the growth in debt slows or retracts....then debt becomes this big sucking vacuum that sucks all the available money out of the economy to pay back debt. Default is also a result as there is not enough money to go around.

We were at the tipping point in 1994/1995 but Greenspan's Sweeps program, initiated in 1994, kept the ball rolling. The Y2K problem helped as well as the resulting pump in the stock market.

We hit the tipping point again in 2000/2001 but Greenspan lowered interest rates to 45-50 year low (below the rate of inflation) which then caused a massive increase in debt consumption with the resulting high inflation that tripled asset prices in just a couple of years.

We hit the tipping point again in 2007/2008 and the basic premise is the government will spend our way out of it and prolong the game another 4 to 6 years. I don't think that's possible but everyone has an opinion on it.

One fact is clear - not a dollar is printed that isn't created by debt (either government or individual). That debt at some point in time must be paid back and is inherently deflationary.

The dollar vs other currencies is a whole different ballgame. As the world's leader in consumption (25%) if the dollar loses value the prices of goods from the rest of the world increase in price. Without enough money to go around US consumers consume even less. Overcapacity then occurs across the globe and prices fall as a result.

Remember that the US is not alone in the debt game. This is a world wide problem and the last boom was world wide. The resulting economic collapse will also be world wide. Historically these collapses in demand have been utilized to consolidate power and ownership of assets. Those who create the money know the game better than anyone else. Its simply a tool for a far bigger agenda! Bella lays that agenda out nicely in her blog....although its been months since the last bit! Hopefully Saturday she will enlighten!

[Jason]

Furthermore....

What is the purpose of the debt system we have in place today?

IMO it is a tool designed to transfer wealth. Look at the genius design of the system -

You want buy a .25 acre lot for $100k. You go to the bank to borrow the money. They create the money out of nothing (within the rules of course - 10:1 ratio....so with $10k of another person's savings they now create your $100k). You take the newly created money and buy the property.

The bank will either get the money back WITH INTEREST or they will foreclose and get the property. Either way they get extra money that they didn't create or a property.....what was their cost to obtain the money or the property?

Now keep in mind that the money for the interest was never created so someone, somewhere, will default and the bank will end up with their property.

With the Sweeps program - sweeping average checking account (demand deposit) balances into a savings account to loan out - we effectively have a zero reserve requirement. Not to be alarmed as other countries like Canada, Japan, UK, etc all have zero requirement...so there's absolutely zero guaranteeing the actual money....but because it is created by debt.....it will all be paid back with interest or the forfeiture of assets....or in other words, the transfer of all wealth to the bankers who created the money out of nothing!

Debt is the pit. In the end chaos will result when people realize how they've been played....gonna be some pitchforks thrown about!

[pjbrownie]

Thanks for your research, Jason. I didn't know this about the Greenspan years.

[cayenne]

Thx Jason

So what do you and others think of these gold predictions? and what do you and everyone think will happen when the dollar is dumped by the other nations?

Are these scenarios true at all?

Normally printing to much money will cause inflation, then deflation, but since the dollar will be dumped by the other nations, it will cause massive inflation since the buying power of the dollar will be destroyed.



The nations realize they cannot get the money owed them, so they come to "break us up" and take our nation by war, causing a new world currency spiking gold and silver in hyperinflation.



I WANT TO ADD SOMETHING. ARE WE NOT IN BOTH INFLATION AND DEFLATION. THE DOLLAR HAS LOST VALUE EVERY YEAR FOR AWHILE NOW, AND WHEN THE NATIONS DUMP IT WE ARE IN TROUBLE. I realize we are seeing deflation, we can buy a lot right now with the dollar, then why does our money worth on the world market show inflation....hense gold and silver soar!

[Jason]

Thanks for your research, Jason. I didn't know this about the Greenspan years.

Your welcome!

[Jason]

Thx Jason

So what do you and others think of these gold predictions? and what do you and everyone think will happen when the dollar is dumped by the other nations?

Are these scenarios true at all?

Normally printing to much money will cause inflation, then deflation, but since the dollar will be dumped by the other nations, it will cause massive inflation since the buying power of the dollar will be destroyed.



The nations realize they cannot get the money owed them, so they come to "break us up" and take our nation by war, causing a new world currency spiking gold and silver in hyperinflation.



I WANT TO ADD SOMETHING. ARE WE NOT IN BOTH INFLATION AND DEFLATION. THE DOLLAR HAS LOST VALUE EVERY YEAR FOR AWHILE NOW, AND WHEN THE NATIONS DUMP IT WE ARE IN TROUBLE. I realize we are seeing deflation, we can buy a lot right now with the dollar, then why does our money worth on the world market show inflation....hense gold and silver soar!

Gold is troublesome for me....a lot of manipulation there (just like about everywhere else). Do the central banks have tons of gold reserves? Or is it all lent out like GATA claims?

Personally I like cash, food storage, guns & ammo, property, etc. A little gold and silver probably wouldn't hurt and I would lean towards the silver. The issue with metals is how does a person on the street, in the case of a major collapse, value them? Is it yellow gold, white gold, pink gold, green, blue, gray? Is it 8,10,16 or 24 carat (K)? Is the bar pre '94 or post '94? Is the bar over 5 kilo which would then be pre/post '97?

Silver has the same issues....if not more of them.

Will the dollar get dumped? Possibly - possibly not. On one hand in order to create a one world government you need everyone on a pretty equal playing field to keep the disputes to a minimum. Demise of the US makes sense. Also where Zion will be built so makes sense for the devil to try and take it out. On the other hand the US is numero uno. There are military implications as well as economic for dumping the dollar...I can't see the dollar getting dumped just because of the debt load and that the Fed is recapitalizing the banks in exchange for their assets (or more appropriately at the end of the day - our assets). Also we are the big bad consumer....and there is already a ton of excess capacity in the system....who are they going to sell to in order to keep the factories churning out widgets and gadgets? who's going to keep buying in order to keep the whole system churning?

World Wide War looks like the best bet to me......good stimulus for power change plus keep all the factories going! Remember the name of the game is power & control not chaos!

[pjbrownie]

I don't think you INVEST in gold or silver, you have a basket of different commodities including cash, silver, and gold as a hedge against uncertainty in the future. You never know what's going to happen, so it's nice to have a little of each on hand.

[Jason]

I don't think you INVEST in gold or silver, you have a basket of different commodities including cash, silver, and gold as a hedge against uncertainty in the future. You never know what's going to happen, so it's nice to have a little of each on hand.

One should never INVEST in any commodity....doesn't pay a return. Gold doesn't work...doesn't add value....nor silver...nor wheat....nor anything else that sits in a pile and collects dust. You INVEST in something that takes those items and creates something more valuable - i.e. adds value.

The Lord tossed the servant that buried what he had. The goal is to work & add value! One should INVEST accordingly.

Anything else is just plain ol' gambling!!!

[haddomr]

One should never INVEST in any commodity....doesn't pay a return. Gold doesn't work...doesn't add value....nor silver...nor wheat....nor anything else that sits in a pile and collects dust. You INVEST in something that takes those items and creates something more valuable - i.e. adds value.

If a commodity is manipulated, in this case suppressed, it would be a good investment. Additionally, some commodities are bid up as they become popular. Having said that, I wish things weren't that way....it would mean we had an honest system, and would be based on principles like you mentioned.

[Jason]

One should never INVEST in any commodity....doesn't pay a return. Gold doesn't work...doesn't add value....nor silver...nor wheat....nor anything else that sits in a pile and collects dust. You INVEST in something that takes those items and creates something more valuable - i.e. adds value.

If a commodity is manipulated, in this case suppressed, it would be a good investment. Additionally, some commodities are bid up as they become popular. Having said that, I wish things weren't that way....it would mean we had an honest system, and would be based on principles like you mentioned.

Whether the system is honest or not has no impact on the principles involved. Commodities are or can be a great safe deposit box, a hedge, or a flat out gamble.....but they are not investments. One makes an educated or not so educated guess about where prices are going to go but at the end of the day, you don't know so its gambling. The gold doesn't multiply....nor the wheat (unless you plant it which takes work or adding value)....so its a plain and simple bet on prices.

[Jason]

What is the purpose of the debt system we have in place today?

IMO it is a tool designed to transfer wealth.

Wall Street has turned the economy into a giant asset-stripping scheme, one whose purpose is to suck the last bits of meat from the carcass of the middle class.

What really happened to Bear and Lehman is that an economic drought temporarily left the hyenas without any more middle-class victims — and so they started eating each other, using the exact same schemes they had been using for years to fleece the rest of the country. And in the forensic footprint left by those kills, we can see for the first time exactly how the scam worked — and how completely even the government regulators who are supposed to protect us have given up trying to stop it.

- http://www.rollingstone.com/politics/st ... ed_swindle

Great article. FYI - some cussing.

More...

It's important to point out that not only is normal short-selling completely legal, it can also be socially beneficial. By incentivizing Wall Street players to sniff out inefficient or corrupt companies and bet against them, short-selling acts as a sort of policing system; legal short-sellers have been instrumental in helping expose firms like Enron and WorldCom. The problem is, the new paperless system instituted by the DTC opened up a giant loophole for those eager to game the market. Under the old system, would-be short-sellers had to physically borrow actual paper shares before they could execute a short sale. In other words, you had to actually have stock before you could sell it. But under the new system, a short-seller only had to make a good-faith effort to "locate" the stock he wanted to borrow, which usually amounts to little more than a conversation with a broker:

Evil Hedge Fund: I want to short IBM. Do you have a million shares I can borrow?

Corrupt Broker [not checking, playing Tetris]: Uh, yeah, whatever. Go ahead and sell.

There was nothing to prevent that broker — let's say he has only a million shares of IBM total — from making the same promise to five different hedge funds. And not only could brokers lend stocks they never had, another loophole in the system allowed hedge funds to sell those stocks and deliver a kind of IOU instead of the actual share to the buyer. When a share of stock is sold but never delivered, it's called a "fail" or a "fail to deliver" — and there was no law or regulation in place that prevented it. It's exactly what it sounds like: a loophole legalizing the counterfeiting of stock. In place of real stock, the system could become infected with "fails" — phantom IOU shares — instead of real assets.

If you own stock that pays a dividend, you can even look at your dividend check to see if your shares are real. If you see a line that says "PIL" — meaning "Payment in Lieu" of dividends — your shares were never actually delivered to you when you bought the stock. The mere fact that you're even getting this money is evidence of the crime: This counterfeiting scheme is so profitable for the hedge funds, banks and brokers involved that they are willing to pay "dividends" for shares that do not exist. "They're making the payments without complaint," says Susanne Trimbath, an economist who worked at the Depository Trust Company. "So they're making the money somewhere else."

Trimbath was one of the first people to notice the problem. In 1993, she was approached by a group of corporate transfer agents who had a complaint. Transfer agents are the people who keep track of who owns shares in corporations, for the purposes of voting in corporate elections. "What the transfer agents saw, when corporate votes came up, was that they were getting more votes than there were shares," says Trimbath. In other words, transfer agents representing a corporation that had, say, 1 million shares outstanding would report a vote on new board members in which 1.3 million votes were cast — a seeming impossibility.

Analyzing the problem, Trimbath came to an ugly conclusion: The fact that short-sellers do not have to deliver their shares made it possible for two people at once to think they own a stock. Evil Hedge Fund X borrows 100 shares from Unwitting Schmuck A, and sells them to Unwitting Schmuck B, who never actually receives that stock: In this scenario, both Schmucks will appear to have full voting rights. "There's no accounting for share ownership around short sales," Trimbath says. "And because of that, there are multiple owners assigned to one share."

Trimbath's observation would prove prophetic. In 2005, a trade group called the Securities Transfer Association analyzed 341 shareholder votes taken that year — and found evidence of over-voting in every single one. Experts in the field complain that the system makes corporate-election fraud a comically simple thing to achieve: In a process known as "empty voting," anyone can influence any corporate election simply by borrowing great masses of shares shortly before an important merger or board election, exercising their voting rights, then returning the shares right after the vote is over. Hilariously, because you're only borrowing the shares and not buying them, you can effectively "buy" a corporate election for free.

Back in 1993, over-voting might have seemed a mere curiosity, the result not of fraud but of innocent bookkeeping errors. But Trimbath realized the broader implication: Just as the lack of hard rules forcing short-sellers to deliver shares makes it possible for unscrupulous traders to manipulate a corporate vote, it could also enable them to manipulate the price of a stock by selling large quantities of shares they didn't possess. She warned her bosses that this crack in the system made the specter of organized counterfeiting a real possibility.

"I personally went to senior management at DTC in 1993 and presented them with this issue," she recalls. "And their attitude was, 'We spill more than that.'" In other words, the problem represented such a small percentage of the assets handled annually by the DTC — as much as $1.8 quadrillion in any given year, roughly 30 times the GDP of the entire planet — that it wasn't worth worrying about.

It wasn't until 10 years later, when Trimbath had a chance meeting with a lawyer representing a company that had been battered by short-sellers, that she realized someone outside the DTC had seized control of a financial weapon of mass destruction. "It was like someone figured out how to aim and fire the Death Star in Star Wars," she says. What they "figured out," Trimbath realized, was an early version of the naked-shorting scam that would help take down Bear and Lehman.

Take the commodities markets, where most of those betting on the prices of things like oil, wheat and soybeans have no product to actually deliver. "All speculative selling of commodity futures is 'naked' short selling," says Adam White, director of research at White Knight Research and Trading. While buying things that don't actually exist isn't always harmful, it can help fuel speculative manias, like the oil bubble of last summer. "The world consumes 85 million barrels of oil per day, but it's not uncommon to trade 1 billion barrels per day on the various commodities exchanges," says White. "So you've got 12 paper barrels trading for every physical barrel."

The same is true for mortgages. When lenders couldn't find enough dope addicts to lend mansions to, some simply went ahead and started selling the same mortgages over and over to different investors. There are now a growing number of cases of such double-selling of mortgages: "It makes Bernie Madoff seem like chump change," says April Charney, a legal-aid attorney based in Florida. Just like in the stock market, where short-sellers delivered IOUs instead of real shares, traders of mortgage-backed securities sometimes conclude deals by transferring "lost-note affidavits" — basically a "my dog ate the mortgage" note — instead of the actual mortgage. A paper presented at the American Bankruptcy Institute earlier this year reports that up to a third of all notes for mortgage-backed securities may have been "misplaced or lost" — meaning they're backed by IOUs instead of actual mortgages.

How about bonds? "Naked short-selling of stocks is nothing compared to what goes on in the bond market," says Trimbath, the former DTC staffer. Indeed, the practice of selling bonds without delivering them is so rampant it has even infected the market for U.S. Treasury notes. That's right — Wall Street has actually been brazen enough to counterfeit the debt of the United States government right under the eyes of regulators, in the middle of a historic series of government bailouts! In fact, the amount of failed trades in Treasury bonds — the equivalent of "phantom" stocks — has doubled since 2007. In a single week last July, some $250 billion worth of U.S. Treasury bonds were sold and not delivered.

The counterfeit nature of our economy is troubling enough, given that financial power is concentrated in the hands of a few key players — "300 white guys in Manhattan," as a former high-placed executive puts it. But over the course of the past year, that group of insiders has also proved itself brilliantly capable of enlisting the power of the state to help along the process of concentrating economic might — making it less and less likely that the financial markets will ever be policed, since the state is increasingly the captive of these interests.

The nation's largest financial players are able to write the rules for own their businesses and brazenly steal billions under the noses of regulators, and nothing is done about it. A thing so fundamental to civilized society as the integrity of a stock, or a mortgage note, or even a U.S. Treasury bond, can no longer be protected, not even in a crisis, and a crime as vulgar and conspicuous as counterfeiting can take place on a systematic level for years without being stopped, even after it begins to affect the modern-day equivalents of the Rockefellers and the Carnegies. What 10 years ago was a cheap stock-fraud scheme for second-rate grifters in Brooklyn has become a major profit center for Wall Street. Our burglar class now rules the national economy.

[firend]

Hey Jason, I always love your posts

So question. Lets say you had all property owned debt free, you had all the food, water, alternative power, toys that go bang along with there fuel, and hek, you even have many years worth of dental floss lol....u even have hidden fallout room

Assuming at this point you have extra money left

What would you do with it?

[Jason]

Hey Jason, I always love your posts

So question. Lets say you had all property owned debt free, you had all the food, water, alternative power, toys that go bang along with there fuel, and hek, you even have many years worth of dental floss lol....u even have hidden fallout room

Assuming at this point you have extra money left

What would you do with it?

Thank you!

Great question - I would look for ways to add value.

Application is much more difficult than verbalization...of course. Also constrained by the amount of extra money you have left. At the end of the day the money is a tool.....so what can you do with it.

This could be anything from a direct investment in a value added start-up (assuming you are a qualified investor though there is always FFF at the beginning - Friends, Family, and Fools) to purchasing stock in a solid company that adds real value (doesn't require you to be a qualified investor - but be wary of stocks in general - tons of manipulation). Are there people around you with good ideas that could use some help going forward? Your own ideas that add value and could use a little investment?

IMO Zion will be about adding value.

The goal of capitalism is to build a business to extract wealth from it and live higher on the hill. The more successful you are at extracting wealth and keeping the business alive....the more successful businessman you are perceived to be.

The Law of Consecration is a paradigm shift. You extract only what you need and everything else goes back into the business to add more value or gets turned over to the High Council to invest in another business or individual who adds value. In that system success will be determined by how much value you add and not on how much value you extract.

[Jason]

Now comes blunt commentary from the watchdog charged with oversight of the Gumnut bailout programs.

* Despite the aspects of TARP that could reasonably be viewed as a substantial success,” he wrote, “Treasury’s actions in this regard have contributed to damage the credibility of the program and of the government itself, and the anger, cynicism and distrust created must be chalked up as one of the substantial, albeit unnecessary, costs of TARP.”Barofsky said public suspicion was fed by Treasury’s decision not to require banks to report how they used their rescue money and its “less-than-accurate” statements describing the financial condition of nine large banks that benefited from large infusions of aid.

To me, the outcome is as plain as a Train Wreck. These financial institutions have formed large pools and have geared the market in a non-transparent way, knowing full well that zero interest rates would bring back, like Lazarus, other speculators and take these dice from cold dead hand types. The degree to which this has happened, at least at this stage, has frankly surprised and shocked me. I have used “the silly season,” but Mervyn King’s term “unworldly” is perhaps more apt.

And the way the market has been re-geared is via a massive new burst of debt and leverage and attack against the USD (the “funding” currency). Also unworldly is the concept that destroying the global purchasing power of the US Dollar holders will somehow create a sound economy. The truth is that the only real beneficiaries of this are speculators and dice throwers. It is a zero-sum game of transferring wealth from one group to another, and the Public knows this instinctively. They also know full well that they are on the outside of this “game,” watching a Train Wreck.

The next stage will be the actual Train Wreck, when these trades are once again unwound. The too-big-to-fail banksters will once again go back to Washington with dynamite strapped to their bodies, and explain that they thought they were carrying out the wishes of Gumnut and Congress by attacking the Dollar and restoring fictitious capital to its full glory. The intellectual discussion around that one should be unworldly indeed. Even more silly will be the attempt to bail out their follies once again with an emptied out and looted Treasury.

- http://www.wallstreetexaminer.com/blogs/winter/?p=2689

For more detail see the Rolling Stone article I linked to earlier.....game of shorting Treasuries!

[Jason]

Karl expounds on Matt's article -

http://market-ticker.denninger.net/arch ... Issue.html

some dry GS humor....

http://www.goldmansachs666.com/2009/10/ ... -good.html

[Jason]

Earlier this month, a report by the Federal Reserve showed that consumer credit fell by $21.6 Billion in June to $2.5 Trillion—a 10% annualized rate of decline This number includes revolving credit like credit cards, as well as non-revolving debt such as auto loans. It was the sixth straight month of decline, which suggests that the contraction in consumer credit is not just a short-term phenomenon.

In fact, there is every reason to suspect that the recent decline in consumer credit may be the start of a significant trend. That’s because not only are US consumers dealing with nearly seven million jobs lost and a record decline in wealth from declines in stock and home prices, they came into this recession saddled with a large amount of debt. When we look deeper into the numbers, it’s clear that this time around we may see a decline in consumer credit that both follows the normal path of past recessions and corrects the excess of debt that was accumulated over the past decade.

The recession that followed the tech bust in 2001 was very unusual, and we can see one of the ways it was unusual in the chart below. In recessions past, consumers generally reduced spending and debt—a straightforward response to job losses and wages that stagnated. But in the recession in 2001, consumers did just the opposite, taking on more and more debt even as fewer people worked and incomes stagnated.

When the 2001 recession ended and employment began to modestly grow again, consumers took on even more debt until debt payments were taking up over 14% of disposable income in 2007, a much higher level than seen prior to past recessions.

As employment began dropping again in 2007, consumers carried a higher debt burden relative to their income than they had for decades. As you can see by the blue line on the chart, employment has dropped precipitously since then, and that has made that debt all the more difficult to service. This is one reason why outstanding consumer credit is now falling, because people have realized that the debt they took on over the past 10 years is much more than they can handle.

Of course, consumers have a long way to go. Debt levels are still far above past historic norms, and with employment and incomes falling it means debt repayment will continue to take a large chunk out of consumption. This process will likely take a long time, and it’s one reason why there is little hope for any significant rebound in consumer spending in the years ahead.

The take-home message is that this recession is not just correcting imbalances of the last business cycle—it is correcting imbalances built up over the past several business cycles. It retrospect, it appears the year 2000 was not only the end of the 1990’s stock market bubble, it was the end of a 40-year expansion in the percent of the US population that is employed.

During the last nine years, people spent and took on debt as if the previous trends of increasing employment and increasing wages were going to come right back. However, employment and wage growth never did come back, and instead took a dramatic turn for the worse. The US now are back to early 1980’s level of employment, but consumers have 30% more debt to carry.

From a strictly technical perspective, the odds of such a bullish outcome are probably less than 1 in 5. If we take into account what other markets are suggesting, the odds are probably lower than that. Which means that being highly exposed to the stock market carries far lower odds from this point than betting at the craps tables in Las Vegas.

We have to remember that times like this are periods of “wealth destruction,” not “wealth creation.” This is why our underlying stance remains cautious, even though stocks have managed to drift higher over the past few months. Even in a casino it is possible to win the long-odds bet sometimes, but over time these gamblers will lose it back to the house because the odds are generally against them. The same holds true of bear markets, especially this one. Until a long-term bull market begins again, and the odds shift back to favor wealth creation, the winners will be those who continue to tread lightly in stocks.

A little misleading....its not "wealth destruction"....its "wealth transfer"!!!!

Now that stocks have rallied over 50% from their March low, they are again valued at near 20 times earnings. Viewed another way, the market is expensive and the only way it represents any value is if you believe earnings will increase significantly over the next year.

Although many stock analysts seem to think that is just what’s going to happen, corporate insiders are now selling their own shares at a rate not seen since 2007, just before the bear market began. Given that these insiders were also net buyers in March, they have fairly good track record of knowing when their stocks are under or overvalued. They also know more than most about their future business prospects.

- http://www.sitkapacific.com/files/Sitka ... Letter.pdf

Could it be that they are also major players in the game and know how the game is played - http://www.rollingstone.com/politics/st ... ed_swindle