June 3, 2009 – 12:52 am


No truer testament to the power of creating money out of thin air exists than the way that sanction, single and singular, has taken the classes of the inept and clueless and transformed them into rulers of us all. Presently, on the cusp of economic collapse, the parasitic elite reach yet again to that book and pull from it the latest tool of their choosing. That tool being a 56-year-old Nobel prize-winning economist who single handedly runs the oldest scam in the book.

Despite an army of Ph.D.’s, the only product the Federal Reserve can produce is a low quality counterfeit reproduction of the United States dollar. Coming as it does out of thin air, this product is manufactured and marketed for free, yet the shafters of this universe fail to maintain market value for the only product on the market, so they pull Paul Krugman out of a hat to do a pump and dump for the counterfeit liability known as the dollar. The Fed-Krugman team is so incredible that it makes even Jim “Bear Stearns is not insolvent” Cramer seem sensible.
Unlike Cramer’s ear splitting raucous rant, Krugman runs this con with guile, misleading with the implication drawn from a well honed and highly precise rhetoric. But if you listen to Krugman and hold onto your dollars, then you’ll soon be holding paper worth less than the Bear Stearns stock that Cramer pumped.
Arguing for any one of inflation’s numerous definitions over any other is akin to arguing politics and religion at the same time. Indeed, Krugman avoids the fight by not defining inflation at all, but he stealthily uses, mixes and mismatches three different definitions of it.      

  1. Inflation is rising prices in general
  2. Inflation is best described as a net expansion of money supply and credit.
  3. Deflation is logically the opposite of 1, or falling prices in general

Number one can also be described as a general decrease in the purchasing power of money.

You can bet the farm Krugman knows those definitions a lot better than you or I, but he is an establishment stooge and know the general public only cares about prices. To them, inflation means number one. Krugman’s ruse rests on interchanging 1 and 2 in such a way to support the notion that expansion of the money supply does not increase the risk of higher prices, a notion which suits insiders on the various Fed boards while grossly screwing humanity. The notion is immediately disposed of once you stop laughing. In fact the Feds hyper-printing is actually hyper-inflationary, the kind leading to hyper-high prices by anyone’s definition. Just like water building up behind a damn, it is energy with a terrible potential.

Still, waters run deep covering the cesspool of diseased liabilities (not assets like the stooges would like you to believe), while providing silky cover for the Nobel laureate’s ruse. Krugman knows it, but he never breathed a word. The Fed either stops printing, or the damn breaks. A slow trickle overflow is possible, but history shows that most most currencies collapse overnight, washing away their economies in a flash flood of inflation. Anything is conceivable, but a technical analysis of the most recent US Dollar index chart shows what is credible, between them insolvency lingers. Krugman knows it! He knows history and charts too. What else does Krugman know and why is he so wrong? You can only guess at it, but you can be sure that he is desperate to divorce, in your mind, the increasing supply of money from the resultant higher prices it produces, making you ripe for Krugman to twist terms and torture logic so that up is down and true is false and hyperflation is deflation.
Did Cramer know that Bear Stearns was solvent when he tried to keep you in? Did he know that it did not matter, and what was to happen? Again no way to know for sure, but you do know what happened. Bear Stearns was gutted, sacrificed for the greed of insiders, at the expense of shareholders.      

As the shares hovered at 74 the trigger was pulled and the ensuing brutal fall wouldn’t end until 2.84. On March, 14 it opened at 54.24 the following day it closed at 4.81, most of the crushing 50 point decline on a single stick and gap leaving no way to run. Share holders, some of them life long employees with shares loaded into retirement funds were wiped out. With all eyes on the Street for bears no one suspected the sharks in Stearns own board room.

Wiped out overnight! What it must have felt like! Yet whatever damage was done to Bear Stearn’s investors, Krugman’s “printing is not inflationary” decoy will be much worse.
First, as the world’s reserve currency, the dollar, is ubiquitous, so then is the risk. Moreover where the fiscal health of Bear Stearns was debatable at the worst, the status of the dollar is not. Technically, the Fed’s Reserve notes are already in purgatory on their way to hell, as the chart above shows. Desperate to save the banks and seeing no other way, the Fed has inflated the dollar to near death, making the dollar fundamentally virulent as well. The printing press is the machine that sooner or later will, break the damn and, as the stubbornly steepening yield curve shows, the damn is nearly full. Finally what the Fed relies on most to save it will betray it at the very second when it’s needed most. Whether or not China makes good on its threat to use a new currency, just as it was with Bear Stearns, the rumor is out. If a run on the dollar starts, all those “reserve” dollars out of the country will come crashing back on itself, causing hyper-flation, overnight with no warning.
The tiger, as they say, is held by the tail. To avoid defaulting on Treasury bonds, the Fed must keep printing, but to avoid hyperinflation, it must stop printing, leaving who knows who to buy the bonds. It’s an impossible choice, but one the Fed has made. Obviously, they will print. So, last week, with the risks palpable and pervasive, just as Cramer had done before, in service of his masters, Paul Krugman went to work.

Suddenly it seems as if everyone is talking about inflation. Stern opinion pieces warn that hyperinflation is just around the corner. And markets may be heeding these warnings: Interest rates on long-term government bonds are up, with fear of future inflation one possible reason for the interest-rate spike.

But does the big inflation scare make any sense? Basically, no — with one caveat I’ll get to later.

And I suspect that the scare is at least partly about politics rather than economics.

And I suspect that the inflation you are talking about is higher prices, inflation number 1, while ignoring that the Fed is force feeding its notes to the economy, i.e. inflation number 2, printing mountains of money at a time.

First things first. It’s important to realize that there’s no hint of inflationary pressures in the economy right now. Consumer prices are lower now than they were a year ago, and wage increases have stalled in the face of high unemployment. Deflation, not inflation, is the clear and present danger.

Suspicion confirmed! We don’t need a hint of inflationary pressures in the economy right now. There is indisputable proof of it and Krugman gives that proof to you.

Now, it’s true that the Fed has taken unprecedented actions lately. More specifically, it has been buying lots of debt both from the government and from the private sector, and paying for these purchases by crediting banks with extra reserves.

More specifically, THAT IS INFLATION, like water rising.
And in ordinary times, this would be highly inflationary: banks, flush with reserves, would increase loans, which would drive up demand, which would push up prices.
And in anytime this IS highly inflationary by definition. Moreover, mortgage rates are skyrocketing as the FED prints, making the dam more deadly.

But these aren’t ordinary times. Banks aren’t lending out their extra reserves. They’re just sitting on them — in effect, they’re sending the money right back to the Fed. So the Fed isn’t really printing money after all.

Really? He’s talking inflation number 2, saying the money is just clogging the pipes. For how long? Krugman wants you to think it will be forever, but you know it won’t be. The only profits the big banks had in the first quarter came on trading gains, big ones, with capital printed by the Fed. The banks WILL spend or invest the cash, but even if they hoard every cent, it’s still on the books, available to bid for assets, employees, ect. If they buy gold and silver it’s double disastrous for us, they get more of the true wealth, thus removing it from circulation, and we get more of the shaft. More money chasing the same number of things means rising prices. Paul wont tell you, so I did.

All in all, much of the current inflation discussion calls to mind what happened during the early years of the Great Depression when many influential people were warning about inflation even as prices plunged. As the British economist Ralph Hawtrey wrote, “Fantastic fears of inflation were expressed. That was to cry, Fire, Fire in Noah’s Flood.” And he went on, “It is after depression and unemployment have subsided that inflation becomes dangerous.”

Is there a risk that we’ll have inflation after the economy recovers? That’s the claim of those who look at projections that federal debt may rise to more than 100 percent of G.D.P. and say that America will eventually have to inflate away that debt — that is, drive up prices so that the real value of the debt is reduced.

All in all what happened during the early years of the Great Depression happened under a sound money policy. The paper we use for money today was already inflated from the time of that depression until the credit bubble burst in July 2007, since then the printing press has gone hyper-active. We have already seen food riots in industrialized countries with economies similar to ours, i.e. without sound money.

Such things have happened in the past. For example, France ultimately inflated away much of the debt it incurred while fighting World War I.

But more modern examples are lacking. Over the past two decades, Belgium, Canada and, of course, Japan have all gone through episodes when debt exceeded 100 percent of G.D.P. And the United States itself emerged from World War II with debt exceeding 120 percent of G.D.P. In none of these cases did governments resort to inflation to resolve their problems.

So is there any reason to think that inflation is coming? Some economists have argued for moderate inflation as a deliberate policy, as a way to encourage lending and reduce private debt burdens. I’m sympathetic to these arguments and made a similar case for Japan in the 1990s. But the case for inflation never made headway with Japanese policy makers then, and there’s no sign it’s getting traction with U.S. policy makers now.

Japan’s currency and economy were devalued so Wall Street could apply its carry trade for two decades of arbitrage rip-off of the Japanese economy. Japan didn’t print mounds of Yen to bail out its failed financiers; Zimbabwe did that, and their inflation is in the millions of percent per day.  There is the valid comparison.   

 

Although Japan was rapidly printing money, a destruction of credit was happening at a far greater pace. There was an overall contraction of credit in Japan for close to 5 consecutive years. Property values plunged for 18 consecutive years. The stock market plunged from 40,000 to 7,000. Cash was hoarded and the velocity of money collapsed. Those are classic symptoms of deflation that a proper definition incorporating both money supply and credit would readily catch. Those looking at consumer prices or monetary injections by the bank of Japan were far off the mark. 

But Krugman isn’t listing to facts, and he doesn’t want you to either.

All of this raises the question: If inflation isn’t a real risk, why all the claims that it is?
Because inflation is not a risk it’s a reality you dope! Skyrocketing prices is the real risk that inflation brings. Krugman says the Fed can print all day, don’t worry keep your dollars, Bear Stearns is fine!

Well, as you may have noticed, economists sometimes disagree. And big disagreements are especially likely in weird times like the present, when many of the normal rules no longer apply.

That’s from another page in the playbook under heading “I’m preaching idiocy here, but it’s my job, and it’s the only way I can sell it.”

But it’s hard to escape the sense that the current inflation fear-mongering is partly political, coming largely from economists who had no problem with deficits caused by tax cuts but suddenly became fiscal scolds when the government started spending money to rescue the economy. And their goal seems to be to bully the Obama administration into abandoning those rescue efforts. 

Exactly diametrically wrong on every count! The obvious and inescapable fact is that asymptotic spending increases to rescue the billionaire bankers created the astronomical deficits referred to. They must be abandoned, because not abandoning them will draw the entire economy into the inflationary black hole Stooge Krugman so blatantly denies, obviously for the sake of his billionaire handlers. The only path to ruin is the only path you can suggest, that’s a page from the book too.

Needless to say, the president should not let himself be bullied. The economy is still in deep trouble and needs continuing help.Yes, we have a long-run budget problem, and we need to start laying the groundwork for a long-run solution. But when it comes to inflation, the only thing we have to fear is inflation fear itself.

The one thing you can be most sure of is that Krugman doesn’t give a damn about the economy. He only cares about the billionaires’ economy. Otherwise he would do his Nobel mightiest to cajole, entice, bully or bludgeon the president into abandoning the only policy that can financially ruin the country. Instead, he tries to con you into going along with the bailout that will send you with your family to the food lines. If we don’t kill the inflation right now, there will be no need of a long-run solution. Ask Zimbabwe. When it comes to the only thing we have to fear, it IS inflation itself, but we need only fear it if we follow Paul’s advice.

Printing money from nothing comes straight from the Keynesian’s, who believe you can get something for nothing and now Krugman is using it as a fig leaf of academic cover. The problem is that the fig tree is in the economic woods, where most people with a life live it better elsewhere. So, the fig leaf is just big enough to cover what is not there. 

The point is there’s no way to financially engineer our way out of this crisis.

Economists love the idea that the Fed is all powerful, that it has some magic wand to wave which can rescue Americans from debt deflation. I suspect this is because, deep down, they harbor ambitions to be Fed Chairman themselves. For most economists, the Fed’s printing press is the ultimate toy….one they’ve always wanted to play with.

And it is a powerful one. Most recessions are easily “solved” because the Fed can always use that printing press to inflate a credit bubble, to inflate demand artificially.

This works great until it doesn’t. Eventually the credit bubble becomes so big it’s simply impossible to sustain with more printing.

It only works until it’s too late, and it’s getting late. Remember, Krugman is deliberately misusing the terms “inflation” and “deflation,” to confuse lower prices with a lack of inflationary pressure. Don’t you be confused, especially for food and commodities.   

Where there clearly is evidence of falling food prices is in international commodity markets. That does to some extent feed into consumer prices, but there are plenty of other factors too.

These prices are still pretty high by some standards
In that area, there is a very clear decline, which shows up in an index produced by the United Nations’ Food and Agriculture Organisation (the FAO). It’s based on international prices for meat, dairy, cereals, sugar and oils and fats.
The most recent figure, for April, is slightly up from the previous two months, but is lower by a third from the high it reached in June last year. The decline is particularly striking for dairy foods, which are down by more than half.
In the World Service survey, those declines were reflected to some degree in the shops in Brussels and Washington.

How much you pay depends on where you live
It is likely that in the other countries, consumer prices would have increased even more, had there not been these declines in commodity markets.

Did you catch what Aaron Krowne (in email) caught in that?

 

 

Not only are food prices up, but they only seem to be down significantly in advanced countries that are highly influenced by futures exchanges (which we know are corrupt and excessively influenced by credit). This divergence will eventually be resolved one way or another — and I think it will be with higher prices in developed countries.

Oil prices, back over 60… metals and other commodities have recovered a lot, etc.

Besides which, the naive investing world is now getting to the point where they realize the Dollar/US Treasuries are a roach motel, and from there the only place to flee to is precious metals and hard assets.
That’s the place the elites don’t want you, but you better get there while you can. Krugman is playing for time, but time is running out on us all, faster than any of us knows. Krugman knows it, but won’t breath a word. Why not? With that most precious commodity bleeding into the nothingness from which money springs, Krugman wants you in a box, playing by the rules that his insiders made for themselves to break. One man’s insider is another man’s scoundrel, and as those outside, insiders take aim at resolving Krowne’s divergence.  “One way or another” better not be where Krugman wants you to be – in the firing line. It will be much worse than buying Bear Stearns from Jim Cramer. 
   

1

The HITMEN have been hired, with highly lucrative contracts and wide berth in methods to be put to use. Their assigned task is to castrate the levered family jewels from some of the major players who illegally keep the gold price and silver price artificially low. The targeted victims know their awaited fate, and are presently defecating in their skivvies. A short list of banks facing the firing squad is already known, details for Hat Trick Letter members. Some detailed speculation will be devoted to the June HTL reports, since too controversial. This will be an evolving story, with new chapters soon written. The executions will be sudden. The missing US-UK levers will be immediate. Since last autumn, the global powers have aligned against Wall Street, even if the central bankers have supported it. If one wants to destroy a building, then weaken its pillars, cut a few support beams, then rush in a crowd of people, and wait for a turbulent storm. In the case of the COMEX, the wicked players will crowd the corrupted building. They will sink into ruin and then oblivion. They might become objects of mockery when they make noises from prison. If lucky, they will join Ken Lay from Enron fame in a remote Caribbean island where other favored operators live a secluded life, but a life nonetheless, complete with plenty of sunshine, fresh air, beaches, bikinis, and sailboats, but no intrusive cameras. Please, do not disturb the quasi-dead!

 

 

 

Unbelievable? Was Bear Stearns?

Unbelievable? The elites used Krugman and Cramer to make you believe it’s unbelievable.

Believe this, right now as you are reading this, the elites, along with Krugman and Cramer, got their’s and hit men are on the way.

<>

Comments

    Comment on this post! (Requires free membership in the Implode-Explode forums!)