Jew Hyperinflation Watch – April 20, 2010

[CrackSmokeRepublican]

The Jewish criminal "ball" is rolling... watch it!
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Hyperinflation Watch – April 20, 2010

Hyperinflation Looms – The Dollar Arrives at Its 'Havenstein Moment'

April 20, 2010 – There is an interesting article in Canada's Globe & Mail about the lack of growth in the US money supply.  Ignoring for the moment that the quantity of dollars in circulation is significantly underreported, it observes:

"The money supply in the United States is doing something that almost never happens: it's shrinking, after taking into account inflation.  Similar episodes in the past have usually been scary times for investors. Declines in the amount of money in circulation have coincided with recessions, and some analysts looking at the current trend say it is a harbinger of trouble. Despite signs that the U.S. is in recovery, they worry that the money supply numbers indicate the economy remains vulnerable to the feared double-dip downturn, or is close to experiencing deflation."

I agree with the first half of this proposition about a renewed economic downturn, but not the second.  In fact, rather than deflation, the dollar is moving ever closer to hyperinflation.

How is deflation possible when crude oil prices have more than doubled since their post-Lehman crash low?  Or more broadly, how can there be deflation when the price index of 19 commodities compiled by the Commodity Research Bureau rose 47% during this same period?  It cannot of course, which means there is no deflation.

The ongoing decline in the purchasing power of the dollar has been masked by wealth destruction as over-priced assets like houses fall back to realistic levels.  There is also the problem that the mainstream media broadcasts only the government calculated CPI, which is an inaccurate measure of the dollar's eroding purchasing power.

As John Williams of www.shadowstats.com notes: "Over the decades, the BLS [Bureau of Labor Statistics] has altered the meaning of the CPI from being a measure of the cost of living needed to maintain a constant standard of living, to something that no longer reflects the constant-standard-of-living concept."  John reports that his "SGS-Alternate Consumer Inflation Measure, which reverses gimmicked changes to official CPI reporting methodologies back to 1980, rose to about 9.5%" in March from a year ago.

So the Globe & Mail article is wrong about deflation, but I am not drawing attention to it just because I agree that "the economy remains vulnerable to the feared double-dip downturn".  Instead, this article unintentionally offers compelling evidence that the dollar is approaching hyperinflation.

The so-called "shrinking" money supply that arises when adjusting for the loss of purchasing power from inflation is a characteristic portending imminent hyperinflation.  Let's call it a 'Havenstein moment', named after the ill-fated president of the Reichsbank who presided over the destructive hyperinflation that devastated Weimar Germany.

I first explained this phenomenon in September 2007 and questioned then whether the dollar would eventually hyperinflate because Ben Bernanke would follow the footsteps of Herr Havenstein.  I quoted an insightful section from Murray Rothbard's excellent book, The Mystery of Banking, that explicitly explains the consequences of the inflation-adjusted money supply.  Here is the relevant part of that quote:

"When prices are going up faster than the money supply, the people begin to experience a severe shortage of money, for they now face a shortage of cash balances relative to the much higher price levels. Total cash balances are no longer sufficient to carry transactions at the higher price."

As the Globe & Mail observes, these circumstances prevail today.  Prices of goods and services are rising, but as it warns, the quantity of dollars in circulation is "shrinking, after taking into account inflation."  This "shortage of money" is being widely misinterpreted as deflation, which is exactly what happened in Weimar Germany shortly before the Reichsmark was swooped up in its hyperinflationary whirlwind.

Rothbard provides his usual brilliant insight to explain what happens once the "Havenstein moment' is reached.  There are two alternatives.

"If the government tightens its own belt and stops printing (or otherwise creating) new money, then inflationary expectations will eventually be reversed, and prices will fall once more – thus relieving the money shortage by lowering prices. But if government follows its own inherent inclination to counterfeit and appeases the clamor by printing more money so as to allow the public's cash balances to 'catch up' to prices, then the country is off to the races.  Money and prices will follow each other upward in an ever-accelerating spiral, until finally prices 'run away'...[i.e., hyperinflate]"

Weimar Germany took the second alternative.

The dollar has now reached its 'Havenstein moment'.  Will policymakers follow the prudent advice of Murray Rothbard and 'tighten its belt'?  Or like Herr Havenstein, will Mr. Bernanke continue to 'print'?

No need to ponder these two alternatives.  The Federal Reserve must 'print', for one reason.  Despite the noble goals assigned to it in textbooks and offered in Congressional hearings, the Federal Reserve exists for only one reason – to make sure the federal government gets all the dollars it wants to spend, which consequently has put the dollar on a hyperinflationary course.

Spending by the federal government is out of control, causing it to borrow record amounts.  The money to fund this growing mountain of debt must come from savings or 'printing', and the sad fact is that there is not enough accumulated savings in the known universe to satisfy the spending aspirations of Washington's politicians.  So beyond what it can collect from taxpayers and extract from the world's savings pool, the dollars the federal government is spending can only come from one place – the 'printing press', which in the prevailing monetary system means bookkeeping entries of the Federal Reserve.

This process of creating new dollars 'out of thin air' creates the hyperinflation, which the 'Havenstein moment' indicates is near.  Sadly, like Weimar Germany, few people are prepared for this impending destruction of the dollar, but the remedy is simple – as much as practical, avoid the dollar.  Own physical gold and physical silver instead.

http://www.fgmr.com/hyperinflation-loom ... oment.html

[CrackSmokeRepublican]

Jews in Germany 04: WW I and inflation times

Jewish victims in WW I - Communist revolution with leading Jews - Weimar constitution of Hugo Preuss - Jewish welfare organizations - inflations - influx from eastern Europe - integration question

presented by Michael Palomino (2008)


from: Encyclopaedia Judaica (1971): Germany, vol. 7
from: Encyclopaedia Judaica (1971): History, vol. 8


<1914-1933.

The history of German Jewry in the interwar period is sharply divided into two chapters: the period up to 1933, which was a time of great prosperity; and the period which began in 1933, a year which was to mark the beginning of the tragic end of German Jewry. (Germany, col. 482)

[First World War - Communist revolutionary movement with Jewish cliques - Weimar constitution by Hugo Preuss - Jews in high positions]

Over 100,000 Jews had served in the German army during World War I, and 12,000 Jews fell in battle [[and thousands of German Jews were awarded on all sides of the war]]. At the end of the war, when the monarchy had fallen and a democratic republic was established, it seemed that the Jews had achieved full emancipation. Any restrictions that were still in force were abolished by the Weimar Republic, and Jews could not participate in every sphere of public life. Their share and influence in the political life of the country reached unprecedented proportions. Many of the leaders of the democratic and socialist parties were Jews, as were two of the six "people's commissars" which made up the first post-revolutionary German government (O. *Landsberg and H. *Haase).

In Bavaria, Jews played an even more significant role; the head of the revolutionary government was a Jew, Kurt *Eisner, and the majority of the Soviet-type government set up after Eisner's murder consisted of Jewish intellectuals (Eugen *Leviné, Gustav *Landauer, Ernst *Toller, etc.). The inquiry commission which was to determine the responsibility of the military leadership for Germany's defeat had among its members Oscar *Cohn, a Social Democrat and [[racist]] Zionist. The Weimar Constitution was drafted by a Jew, Hugo *Preuss; another Jew, Walter *Rathenau, first became minister of reconstruction and later foreign minister; his murder by young extremists was motivated largely by anti-Semitism.

[[The extreme presence of Jews in the Communist movement and above all the Weimar Constitution which was named a "Jewish" product lead to easy general agitation against the Jews in the Weimar republic]].

Several Jews were appointed to high positions in the civil service, especially in Prussia. The rise of Jews to positions of political power, added to their economic and social advance, increased hostility among the population, and facilitated the growth of the Nazi movement. Anti-Semitic propaganda exploited a series of financial scandals and bankruptcies in which Jews were involved. The background (Germany, col. 483)

to these events was the great social and economic crisis which gripped Germany as a result of the terrible inflation after the war. (Germany, col. 484)

[Jewish welfare and Jewish organizations since 1917]

In 1917 a central welfare bureau for German Jewry was set up, the *Zentralwohlfahrtsstelle [[central welfare office]], whose membership consisted of the communities as well as of many private institutions, trusts, and societies. The bureau cooperated with the main non-Jewish welfare agencies in the country, as well as with the *American Jewish Joint Distribution Committee, and published its own monthly. It supervised hospitals, clinics, counseling centers, bureaus, and a variety of other public institutions, and had some 2,000 welfare agencies affiliated with it. (Germany, col. 485)

In addition to the organizations based on the communities, there were also a large number of other societies, as well as cultural and scientific institutions. Jewish life in general was marked by the struggle between Jewish nationalism and various degrees of assimilation. [[Racist]] Zionism succeeded in revolutionizing the life of the communities, and the councils, in addition to "notables", now also contained democratically elected members who represented national-Jewish interests.

The following were the main organizations of German Jewry in the period:
-- Centralverein (C.-V.) deutscher Staatsbuerger juedischen Glaubens ("Central Organization of German Citizens of the Jewish Faith")
-- Zionistische Vereinigung fuer Deutschland (Z.V.f.D.; "Zionist Organization of Germany")
-- Hilfsverein der deutschen Juden ("Aid Society of German Jews")
-- the religious organizations - Agudat Israel, Ahdut (Aḥdut), *Vereinigung fuer das liberale Judentum [[Liberal Jewry Association]]
-- *B'nai B'rith
-- *Verband national-deutscher Juden ("Union of Jews of German Nationality")
-- *Reichsbund juedischer Frontsoldaten ("Reich Association of Jewish War Veterans")
-- the various rabbinical associations, and associations of teachers and cantors; etc.

An important role in the cultural life of German Jewry was played by the academic organizations:
-- *Kartell-Convent (K.-C.) deutscher Studenten juedischen Glaubens ("National Fraternity of German Students of the Jewish Faith"), affiliated to the Centralverein
-- Bund juedischer Akademiker (B.J.A. [[Jewish Academic Association]], an association of Orthodox academics)
-- Kartell juedischer Verbindungen [[Jewish Connection Cartell]], the [[racist]] Zionist student organization.

A substantial number of Jewish youth in Germany were members of Jewish youth movements. Some of the youth organizations were sponsored by the Centralverein, and others by the Orthodox; a third type were the [[racist]] Zionist youth organizations. The latter encouraged pioneer settlement in Erez Israel (Ereẓ Israel), maintained training centers, and supplied a (Germany, col. 486)

small but steady flow of immigrants. The Centralverein was the largest and most important organization, which published its own newspaper. It advocated a synthesis of Judaism and "Germanism", emphasized defense of Jewish civil rights, and regarded German Jewry as an integral part of the German people. Other periodicals were
-- Der *Israelit [[The Israeli]] (published by Agudat Israel)
-- Juedisch-liberale Zeitung [[Jewish Liberal News]]
-- Der Schild [[The Shield]] (published by the veterans' organization)
-- Der *Jude, [[The Jew]] a [[racist]] Zionist monthly, edited by Martin *Buber; and
-- Der Morgen [[The Morning]], a monthly published by the Centralverein.

The official organ of the [[[racist]] Zionist movement, *Juedische Rundschau, a weekly (which in its last years appeared twice a week), eventually became the leading Jewish paper published in Germany. (Germany, col. 487)


[Jewish influx from eastern Europe]

Even in the best years of the Weimar Republic the Jewish problem had not really been solved. Socially and spiritually the German people had not absorbed the Jews. Even the assimilationists among the Jews had to acknowledge this fact, and some reacted by over-emphasizing their German nationalism, thereby hoping to set themselves apart from the rest of the Jews. As a result of the large increase of Jewish immigration from eastern Europe, the old difference between "Eastern" and "Western" Jews became much more pronounced and had many practical implications.

Jewish organizations did their best to facilitate the absorption of the newcomers and created special institutions (Germany, col. 484)

for this purpose, such as the Welfare Bureau for Jewish Workers. (Germany, col. 485)

After World War I, when many Hebrew writers and publishers fled from Russia and took refuge in Germany, the country became a center of Hebrew publishing and Hebrew literature. Some of the greatest Hebrew poets and writers became residents of Germany, and Hebrew publishing houses were established. This was in addition to the many books published in German, on Judaism, [[racist Herzl]] Zionism, and Jewish studies. In Berlin and (Germany, col. 487)

Breslau, the [[racist]] Zionist Organization founded schools for the study of modern Hebrew by adults and the youth. In 1920 Franz *Rosenzweig established the Freies Juedisches Lehrhaus ("Free Institute of Jewish Learning") in Frankfort, and it gained great prestige. Other cultural institutions were
-- the Juedische Volkshochschule ("Jewish College of Adult Education")
-- the Toynbee-Halls, which also served as centers of social work;
-- and the Juedisches Volksheim (Jewish Social Center) established in Berlin in 1916.

There were Jewish elementary schools in several communities and Jewish teachers' seminaries in Wuerzburg and Cologne. There were also Jewish secondary schools, originally maintained by Orthodox Jews only, but in later years also supported by the [[racist]] Zionists. (Germany, col. 488)

[Rise of anti-Semitism]

<At the end of World War I there was a rise in anti-Semitism. The defeat of Germany in war was explained by the myth, propagated by extreme right-wing elements, that circulated after 1918 of the "stab in the back" that the victorious [[racist kaiser]] German army had received from revolutionaries, pacifists, and intellectuals under the influence of the cowardly "Jewish spirit", as opposed to the heroic and creative "German spirit";

[[Pacific and Communist Jewish circles had organized an ammunition strike - and by this the German army had been without ammunition at the front and had to give up the war in France. Racist kaiser did not want a civil war and could not do anything. The "Germanizers" of racist kaiser Germany got a defeat and mostly Jewish Communist leaders in the world played their extreme destructive role also in Germany until 1933...]]

such accusations [[the generalization is wrong, but that the Communists were Jewish circles is right]], combined with resentment at Jewish commercial and financial activity in Germany during the great inflation of the early 1920s there, reinforced the old stereotype evil image of the Jews. Fuel was added to the old hatred by the preeminence of Jews in many scientific fields, and, even more, their activity on the (History, col. 736)

lebaral and left-wing side of German politics (Walther *Rathenau, minister for foreign affairs of the German republic, was assassinated in 1922; Kurt *Eisner, head of the socialist republic of Bavaria in 1918, and Rosa *Luxemburg, as the symbol of left-wing socialism, were murdered).> (History, col. 737)

[[In the Weimar Republic criminals had more rights than the honest people. This was one of the big reasons that many Germans could not accept any "democratic" structure, and not at all the stupid Communists with their unrealistic Jewish circles. There were more reasons to hate the Weimar Republic like the robbery of all colonies by the racist "democratic" Empire states (France and England), like the debts question for the World War which was never solved, like the robbery of industries and coal mines in the Saarland etc. Add to this there was hyper inflation organized by striking industrialists and stupid German and French government fighting about the Ruhr Basin. By all this the rightist press found the eastern Jews as a compensation for propaganda against Jewry. After all, there was no reason for the German population to trust into a "democracy"]].


[1923]

[[Racist German industrialists were supporting the hyper inflation of 1923. They got rid of their depth and at the same time the Jewish constitution of Weimar was put into question. The inflation was a big German racist manipulation. Germans and Jews were hit by the economic crisis, but the Jews had the welfare organizations which caused envy on the German side]].

Right-wing circles in Germany, anxious to divert public attention from the real beneficiaries of inflation - the "pure Aryan" industrial and financial barons and their giant enterprises - were more than ready to use the anti-Jewish propaganda for their purposes. The middle class, heavily hit by the economic upheaval, the nobility and the officer class who felt their honour besmirched by the defeat [[of 1918]] and whose privileges were abolished in the revolution [[of 1919, and by the Treaty of Versailles of 1919]], were all easily swayed by the idea that it was the Jews who were to blame for all of Germany's misfortunes - that "the Jews had stabbed the undefeated German army in the back", and thus forced it to surrender;

[[there had been an ammunition production strike by the Communists which hindered ammunition transports to the front so the German front was without ammunition at the end. Because of the Jewish leaders in the Communist party the Jews were generally blamed having caused the German defeit of 1918. This indication is missing in the article of course. The general blame of the Jews is also wrong because many Jews came also into poverty after 1923 and after 1929]].

that Capitalism and "Marxism" (i.e., Bolshevism and Socialism)were the result of the machinations of "World Jewry". In the 1920s, however, the full implications of this anti-Semitic mood had not yet become apparent, and the situation of the Jews seemed satisfactory. (Germany, col. 484)

[1925 census and professions]

According to the 1925 census, there were 564,379 Jews in Germany, representing 0.9% of the total population. One-third lived in Berlin, another third in the other large cities, while the remaining third lived in 1,800 different places with organized Jewish communities and another 1,200 places where there were no organized communities. Most of the Jews made their living in commerce and transportation and in the liberal professions; in the large cities, one-third or even more of the lawyers and doctors were Jews; they also played a prominent role in the press, in literature, in the theater, and in other forms of entertainment. In general, the Jews belonged do the middle class and were well off. Although many had lost their savings in the inflation, they recovered from the effects of this crisis. (Germany, col. 485)

The absorption of Jews into all spheres of German life was accompanied by record numbers of mixed marriages and conversions; in the period 1921-27, 44.8% of all Jewish marriages were mixed, conversions took place at the rate of 500 annually, and a similar number of Jews formally "dissociated" themselves from the community. (Germany, col. 485)

COMMUNAL ORGANIZATION.

[Jews from eastern Europe - the "foreigners" - national union of Jewish communities - collaborating agencies and organizations]

Between the two World Wars, the Jewish communities presented a model of organization. The Weimar Constitution retained official recognition of the Jewish communities as entities recognized by public law and their right to collect dues. In general, a Jewish community had a representative body, elected by the community members, and an executive committee, elected in turn by the representative body and consisting of three to seven members. A point under dispute was the voting rights of Jews of foreign nationality (the Ostjuden [[Jews from eastern Europe]), who in some communities amounted to a substantial proportion of the total membership. Although the "foreigners" had equal rights to the religious and social services provided by the community, in many places they had no right to vote, or were given that right only after long years of local residence. In the various states of which the Reich was made up, there existed "state unions" of Jewish communities.

For a long time the need was felt for a national union of Jewish communities, but there were differences of opinion as to the form this should take; some thought that it should be a union of individual communities, others preferred a national union of the state unions, while a third proposal called for a kind of Jewish parliament, elected by direct democratic vote (the last plan was supported by the [[racist]] Zionists) [[with the aim of a "Greater Israel" from the Nile to the Euphrates, see 1st Mose, chapter 15, phrase 18]].

By the time a national union was finally established, shortly before Hitler came to power, the organizational form of the communities, and the tasks they faced, were about to undergo a radical change. Apart from the religious and cultural tasks they performed, the community organizations were most active in social welfare; this was true of the period preceding 1933, and became even more important after that turning point. (Germany, col. 485)

In the large communities expenditure on welfare amounted to as much as 30% of the total budget. Agencies concerned with youth, and with immigrants passing through Germany on their way overseas, also played an (Germany, col. 485)

important role. (Germany, co. 486)

Despite differences of outlook, there was close cooperation between the various organizations. An outstanding example was the establishment of the *Keren Hayesod in Germany in 1922 which was based on cooperation between [[racist]] Zionists and non-Zionists, and served as a preliminary stage to the enlarged *Jewish Agency (1929). The [[racist]] Zionist Organization included  Zionist party organizations (Mizrachi, *Poalei-Zion, *Hapo'el ha-Zair-Hitahdut, etc.). (Germany, col. 487)

[1929: stock exchange collapse and rise of the NSDAP]

[[Then came the stock exchange collapse of 1929 and only since then the NSDAP had a significant part of votes. The industrialists did not do anything, and the German government was elected almost every year because it was not possible to govern any more under the conditions with a big Communist fraction on one side and with a big Nazi fraction on the other side. The racist industrialists wanted to have the Nazi government which gave them more rights and less democracy for the workers. Germans and Jews were hit by the economic crisis, but the Jews had the welfare organizations which caused again envy on the German side]].

<[Intellectual achievement of German Jews - eastern Jews - inner tensions]
Up to 1932 German Jewry was in the forefront of intellectual achievement and the acquirement of free professions, though it never achieved the type of social acceptance found in otther western societies. In Germany too the development was away from the crafts and petty trade to academic professions, medium and largescale business enterprises, and public service. German Jewish society experienced during this period a certain undercurrent of tension between its acculoturated strata and the "Ostjuden" ["eastern Jews"], who, whether as immigrants or as transients, caused some offense by their culture and way of life, in particular through fear of the "bad impression" they could make on cultured good Germans.> (History, col. 736)

It was not until 1933, when the Nazis came to power and based their program upon the "doctrine of race" - i.e., hatred of Jews - that the role of the Jewish problem for the internal historical development of Germany stood fully revealed. (Germany, col. 484)

[[The NSDAP never had a majority. Hitlers manipulations which mostly were financed from abroad were leading his party to an absolute power, above all after the liquidation of the Socialists (SPD). The Jews and other races should be exterminated slowly by separation of all men and women and forced labour]].

When the Nazis came to power, there was again a great deal of capital in the hands of individual Jews and the Jewish communities. (Germany, col. 485)

[[About the crash of the stock exchange in 1929 is nothing reported in this article. The most important elements for the rise of the Nazi party in Germany - the collapse of the worldwide stock exchange and the wide unemployment - are not mentioned in the Encyclopaedia Judaica article of "Germany". Add to this it was the coward German police which let Hitler's gangs do their "work". Principally Hitler was an Austrian, a criminal foreigner which could have been removed to Austria easily. But the coward German police of Weimar did not do so..]]




Sources
   
Encyclopaedia Judaica (1971): Germany, Vol. 7, col. 481-482
Encyclopaedia Judaica (1971): Germany, Vol. 7, col. 481-482    Encyclopaedia Judaica (1971): Germany, Vol. 7, col. 483-484
Encyclopaedia Judaica (1971): Germany, Vol. 7, col. 483-484
   Encyclopaedia Judaica (1971): Germany, Vol. 7, col. 485-486
Encyclopaedia Judaica (1971): Germany, Vol. 7, col. 485-486
   Encyclopaedia Judaica (1971): Germany, Vol. 7, col. 487-488
Encyclopaedia Judaica (1971): Germany, Vol. 7, col. 487-488
Encyclopaedia Judaica (1971): History, vol. 8, col. 735-736
Encyclopaedia Judaica (1971): History, vol. 8, col. 735-736
   Encyclopaedia Judaica (1971): History, vol. 8, col. 737-738
Encyclopaedia Judaica (1971): History, vol. 8, col. 737-738
   

http://www.geschichteinchronologie.ch/e ... -ENGL.html

[CrackSmokeRepublican]

This was right at the bottom last year...
......

The Reality of Stock Market Manipulation Explained
Thursday, March 12th, 2009 at 2:25 am  

 

The Jewish television personality, and former hedge fund manager, Jim Cramer explains one of the many ways to manipulate the value of the stock market.  In this video, Cramer explains a method of dishonest emotional manipulation used by major market players.  He refers in this video to the hedge funds having a "short" position right now, and therefore they cannot afford the stock market to go back up.  For those of you unfamiliar with the term "short" in reference to the market, it means these investors have borrowed and sold stock that wasn't theirs in hopes that the market would go down.  Then, they can buy the stock back at a lower price and keep the difference.  
 
Short selling creates downward pressure on a stock price, and when done en masse can completely destroy the value of a stock.  For example, massive short selling took place on many of the bank stocks over the past year, as the market players were betting on their demise.  Furthermore, exuberant amounts of short selling were reported on the days leading up to 9/11, suggesting that there were major market players that knew a disastrous event was going to happen.  
 
You have to understand why short selling is so deleterious - most Americans have the majority of their retirement and life savings invested in the stock market.  These working Americans do not plan on adjusting their positions on a day to day basis because they have been told that the best strategy is to buy and hold for the long term.  However, when the value of a person's retirement account is wiped out, this average Joe is left footing the bill for the extravagant lifestyle of the hedge fund manager.
 
We often hear in the Media lately that "4 trillion dollars in wealth has evaporated" out of our economy due to the stock market going down.  This couldn't be any more false.  This money has not evaporated, but has merely been taken out of the market; effectively being transferred from one person to another.  The market moves proportionately to how much money is being put in or being taken out of the market at any given time, i.e. more people buying (money influx) drives prices up, and more people selling (money efflux) drives prices down.  So, if the stock market has dropped in value by half over the last year this means that much more selling has been going on compared to buying.  
 
Now this is the most important part to understand: In our economy, once money is created it is never taken out of circulation.  Right now, you may be asking yourself what this means.  This means that if $4 trillion dollars exited the stock market, it did not evaporate.  This money still exists and was only taken out of the market and transferred to someone else.  The stock market is merely a secondary market where stocks are bartered back and forth between people, more or less.  You see, if someone makes money in the market it is because someone else lost money, or basically for every realized dollar lost is gained by another investor.  Money cannot be created or destroyed in the stock market; it can only be put in, pulled out, or it can change hands.
 
Why is this important?  Because the American people have been told that in order to overcome inflation they need to invest in the stock market for their retirement.  First off, inflation doesn't even have to exist, and could be held at virtually zero without the presence of the fraudulent Federal Reserve system.  Secondly, normal working folks just want to put their money in the market, let it "grow," and then be able to retire when they are 65.  But, since a decent portion of the money invested in the stock market comes from those practicing the "buy and hold" strategy, when a stock is manipulated into failure the 401(k) of Joe Sixpack takes a hit, and he is left holding the bill.
 
You can basically think of it like this: Inflation in the money supply drives up the total market cap over time, because there is more money in existence (so naturally some of that money would end up in the stock market).  But in periods of economic instability (which can largely be contrived) a massive amount of money is swept out of the market into the pockets of those who sold at the top.  Then, eventually over time the market will come back, due to some investors putting their money back in, and due partly to new money being put into the market that has recently been created by our inflationary monetary system.  The original money that was taken out during the stock market downturn is never fully reinvested, because people use this money for other things.
 
Thus, the stock market serves as a medium of wealth transfer, and I believe that was it's original intention.  It is as fraudulent as the Federal Reserve system, and they are designed to work hand in hand.  In this video, Jim Cramer frankly says that the best thing about the stock market is that everyone thinks it's based on company fundamentals, but in reality it's all based on nothing but emotion and perception.  This creates the perfect opportunity for the stock market barons to work in concert with the media, to achieve a desired outcome.  And as it just so happens, many of these people have a common ethnic relationship that goes unmentioned.  
 
In Mein Kampf, Adolf Hitler wrote that he thought one of the main goals of the Communists was to enslave Germany in an international stock exchange.  Many "Capitalists" these days would have no idea what this means because they relate the stock exchange with the "free market."  But in fact, Hitler was exactly right.  The Federal Reserve system and the stock market are not free market entities, and they engage in money manipulation every day.  It is through these two systems that the wealth of working Americans has been stolen, transferred, and destroyed.  This should be of no surprise, as history shows us that many prominent American Jewish Capitalists have funded Communism around the globe, including the Jewish Bolshevik Revolution.
 
This shows you why modern Capitalism and Communism both lead to economic enslavement.  When Germany tried to break away from this system the world's bankers and media all worked together to launch the most vicious onslaught in history, effectively destroying the one chance we had to break free from this slavery.  A fact that most Americans never realize is that during World War II we fought on the same side as the Communists.  By helping to defeat Germany we allowed Communism to sweep much of Eastern Europe, resulting in the deaths of millions upon millions of people.  We then spent billions of taxpayer money over the next four decades combating the Soviet Union, a country who we had helped achieve power.  
 
But now, after reading this article, you should realize that we were not merely Capitalists helping Communists win the war, but in fact we were of the same persuasion, only perceived in a different form.  In fact, most of the Jewish Communists that fled Germany before the War migrated to the United States.  These people set up shop in our universities, media, legal professions, finance, and government; and now we have become the epitome of what Germany was fighting against - International Communists who happen to call ourselves Capitalists.  One of the main ideals of Communism was the "international worker."  Communists were the first Internationalists and the first Globalists.  It comes as no surprise now that modern Capitalists are the first ones to promote both of these concepts.

For more background information on this read this article: Thinking Outside the Box: How a Bankrupt Germany Solved Its Infrastructure Problems,  and watch these two videos:  Money As Debt, The History of the Federal Reserve

Filed under: Nation • World

http://www.midwestfreepress.com/2009/03 ... explained/

[CrackSmokeRepublican]

John Williams: A Hyper-Inflationary Great Depression Is Coming

Bookmark and Share Source: Tim McLaughlin and Karen Roche of The Gold Report  04/30/2010

ShadowStats' John Williams has done his math and believes his numbers tell the truth. He explains why the U.S. is in a depression and why a "Hyper-Inflationary Great Depression" is now unavoidable. John also shares why he selects gold as a metal for asset conversion in this exclusive interview with The Gold Report.

The Gold Report: John, last December you stated, "The U.S. economic and systemic crisis of the past of the past two years are just precursors to a great collapse," or what you call a "hyper-inflationary great depression." Is this prediction unique to the U.S., or do you feel that other economies face the same fate?

John Williams: The hyper-inflationary portion largely will be unique to the U.S. If the U.S. falls into a great depression, there's no way the rest of the world cannot have some negative economic impact.

TGR: How will the United States' decreased economic power impact global economies? Will the rest of the world survive?

JW: People will find to their happy surprise that they'll be able to survive. Most businesses are pretty creative. The thing is, the U.S. economic activity accounts for roughly half that of the globe. There's no way that the U.S. economy can turn down severely without there being an equivalent, at least a parallel downturn outside the U.S. with its major trading partners.

When I talk about a great depression in the United States, it is coincident with a hyper-inflation. We're already in the deepest and longest economic contraction seen since the Great Depression. If you look at the timing as set by the National Bureau of Economic Research, which is the arbiter of U.S. recessions, as to whether or not we have one, they've refused to call an end to this one, so far. But assuming you called an end to it back in the middle of 2009, it would still be the longest recession seen since the first down-leg of the Great Depression.

In terms of depth, year-to-year decline in the gross domestic product, or GDP, as reported in the third quarter of 2009, was the steepest annual decline ever reported in that series, which goes back to the late '40s on a quarterly basis. Other than for the shutdown of war production at the end of World War II, which usually is not counted as a normal business cycle, the full annual decline in 2009 GDP was the deepest since the Great Depression. There's strong evidence that we're going to see an intensified downturn ahead, but it won't become a great depression until a hyper-inflation kicks in. That is because hyper-inflation will be very disruptive to the normal flow of commerce and will take you to really low levels of activity that we haven't seen probably in the history of the Republic.

Let me define what I mean by depression and great depression, because there's no formal definition out there that matches the common expectation. Before World War II, economic downturns commonly were referred to as depressions. If you drew a graph of the level of activity in a depression over time, it would show a dip in the economy, and you'd go down and then up. The down part was referred to as recession and the up part as recovery. The Great Depression was one that was so severe that in the post-World War II era, those looking at economic cycles tried to come up with a euphemism for "depression." They didn't want to create the image of or remind people of the 1930s. Basically, they called economic downturns recessions, and most people think of a depression now as a severe recession.

I've talked with people in the Bureau of Economic Analysis and the National Bureau of Economic Research in terms of developing a formal depression definition. The traditional definition of recession—that of two consecutive quarters of inflation-adjusted contraction in GDP—still is a solid one, despite recent refinements. Although there's no official consensus on this, generally, a depression would be considered a recession where peak-to-trough contraction in the economy was more than 10%; a great depression would be a recession where the peak-to-trough contraction was more than 25%.

We're borderline depression in terms of where we're going to be here before I think the hyper-inflation kicks in. You've certainly seen depression-like numbers in things such as retail sales, industrial production and new orders for durable goods, where you're down more than 10% from peak-to-trough. In terms of housing, you're down more than 75%, and that certainly would be in the great depression category. With hyper-inflation, you have disruption to the normal flow of commerce and that will slow things down very remarkably from where we are now.

TGR: After a period of recession, isn't inflation considered a good sign?

JW: There are a couple of things that drive inflation. The one that you're describing is the relatively happy event where strong economic demand is exceeding production, and that's pushing prices higher, as well as interest rates. That's a relatively healthy circumstance. You can also have inflation, which is driven by factors other than strong economic activity. That's what we've been seeing in the last couple of years. It's been largely dominated by swings in oil prices. That hasn't been due really to oil demand, as much as it has been due to the value of the U.S. dollar. Oil is denominated in U.S. dollars. Big swings in the U.S. dollar get reflected in oil pricing. If the dollar weakens, oil rises. That's what you saw if you go back to the 1973-1975 recession, for example. That was an inflationary recession.

Indeed, the counterpart to what you were suggesting earlier about the strong demand and higher inflation is that usually in a recession you see low inflation. The '73 to '75 experience, however, was an inflationary recession because of the problem with oil prices. That's what we were seeing early in this cycle, where a weakening dollar rallied oil prices, and then the dollar reversed sharply and oil prices collapsed. We have passed through a brief period of shallow year-to-year deflation in the consumer price index, but, as oil prices bottomed out and headed higher since the end of 2009, we're now seeing higher inflation, again.

I'm looking at hyper-inflation, which is a rather drastic forecast. This has been in place as an ultimate fate for the system for a number of years. Back in the '70s, the then Big 10 accounting firms got together and approached the government and said, "Hey guys, you know you need to keep your books the way a big corporation does. You're the largest financial operator on earth." The government then, as well as today, operates on a cash basis with no accrual accounting and such. Yet, over a period of 30 years, the accountants and government put together generally accepted accounting principles, or GAAP, accounting for the federal government and introduced formal financial statements on that basis in 2002, which supplement the annual cash-based accounting.

If you look at those GAAP-based statements and include in the deficit the year-to-year change in the net present value of the unfunded liabilities for Social Security and Medicare, what you'll find is that the annual operating shortfall is running between $4 and $5 trillion; not $500 billion as we saw before the crisis or the $1.4 trillion that they announced for fiscal 2009. Now to put that into perspective, if the government wanted to balance its deficit on a GAAP basis for a year, and it seized all personal income and corporate profits, taxing everything 100%, it would still be in deficit. It can't raise taxes enough to contain this. On the other side, if it cut all government spending except for Social Security and Medicare, it still would be in deficit. With no political will to contain the spending, eventually the government meets its obligations by revving up the currency printing press.

TGR: With all this new paper money coming into the system, wouldn't we see a bigger bubble than we've ever seen prior to a hyper-inflationary great depression?

JW: No, in fact, it's a very unusual circumstance that we have now. Put yourself in Mr. Bernanke's situation—he had to prevent a collapse of the banking system. He was afraid of a severe deflation as was seen in the Great Depression, when a lot of banks went out of business. The depositors lost funds and the money supply just collapsed. He wanted to prevent a collapse of the money supply and keep the depository institutions afloat. Generally, that has happened. The FDIC expanded its coverage and everything that had to be done to keep the system from imploding was done. The effects eventually will be inflationary.

In the process, what Mr. Bernanke did was to expand the monetary base extraordinarily, more than doubling it over a period of a year. The monetary base is money currently in circulation plus bank reserves. If you go back to before September 2008, the bank reserves were in the $50 to $60 billion range. Where the currency was maybe $800 billion, we've gone over $2 trillion in total reserves. Most of that is in excess reserves and not required reserves that banks have to keep to support their deposits. Normally banks would take their excess reserves and lend them out into the regular stream of commerce, and in doing so, that would create money supply. Instead they're leaving the excess reserves on deposit with the Fed. Money supply and credit are now generally contracting. We're going to see an intensified downturn in the near future. I specialize in looking at leading indicators that have very successful track records in terms of predicting economic or financial turns. One such indicator is the broad money supply.

Whenever the broad money supply–adjusted for inflation–has turned negative year over year, the economy has gone into recession, or if it already was in a recession, the downturn intensified. It's happened four times before now, in modern reporting. You saw it in the terrible downturn of '73 to '75, the early '80s and again in the early '90s. In December of 2009, annual growth in real M3 turned negative. It's now at a record low in terms of decline, down more than 6% year over year. What that suggests is that in the immediate future you're going to see renewed downturn in economic activity.

In all the prior instances that I mentioned, this event led recessions, except for '73 to '75. That's when you had the oil spike and a recession that came from that. When the money supply turned down in that recession, the economy accelerated in its decline. We're going to see something along those lines, now, with about a six-month lead time. You're going to have negative economic growth this year. The implications for that are extraordinary, because the projections on the federal budget deficit, a number of the state deficits, and the solvency and stress tests for the banking system all were structured assuming positive economic growth in the 2% to 3% range for 2010. Instead it's going to be negative. Many states are going to be in greater difficulty than they thought. Most likely, you're going to have federal bailouts there. The banks are going to have more troubles. All this means more government support, more government spending, greater deficits and greater funding needs for the U.S. Treasury. We have a global market that already is increasingly reluctant to hold the dollars and U.S. Treasuries.

TGR: The U.S. dollar is still the reserve currency, and it's holding its value while the euro struggles. Wouldn't decoupling precede hyper-inflation?

JW: I don't know if it will decouple from being the reserve currency formally, but it will de facto. The reserve status is the reason the dollar didn't collapse per se a year and a half ago during the September '08 panic. The movement is already afoot, however, to try to relegate the dollar to some status other than a reserve currency. For example, OPEC purportedly is looking to price oil in something other than U.S. dollars. The pressure is there to change the status.

Again, if you start to see a great depreciation of the U.S. currency or a tremendous increase in lack of confidence in the soundness of the government's fiscal condition, there is a problem. You mentioned Greece, for example. The sovereign solvency issues there are minuscule compared to what we have with the United States, which is the elephant in the bathtub. The markets know it's there. The central bankers know it's there. Again, with the downturn in the economy, all the issues are going to be brought to a head. As they come to a head, there will be that effort to dump the dollar. I would expect that, indeed, it will be decoupled from its reserve status, although it could follow after the fact as opposed to before the fact.

TGR: Major economic indicators suggest significant improvement; even the IMF has stated that we've averted a global depression. What are you seeing that these governing bodies are not?

JW: What I'm using is a leading indicator of economic activity: year-to-year change in inflation-adjusted broad money supply. We're now seeing a very sharp year-over-year decline, which has not been seen since the 1990 recession. This indicator does not work always in the upside; it doesn't necessarily give you a signal for a rising economy. It is, however, basic. If you strangle liquidity you can always contract an economy. Deliberately or not, liquidity's being strangled. You're seeing very sharp declines in consumer credit, commercial and industrial loans and commercial paper outstanding.

You are getting happy news from governments, central banks, financial markets, Wall Street analysts and the popular media, which does tend to cater to Wall Street. Such is standard practice. Happy news is what sells and you don't want to discourage people. The Obama administration, interestingly, started talking-down the economy when it wanted to get its stimulus package in place. As soon as that was done, it started talking-up the economy. Everything was just fine and dandy again. This is the most extraordinary downturn most people living today have ever seen. In terms of modern economic reporting, which basically started after World War II, we've never had a downturn as long or as severe. Perversely, the extreme nature of the downturn actually has warped recent reporting of seasonally-adjusted data to the upside.

TGR: Earlier you mentioned that business around the world will survive in the event of a depression. Aren't there sustainable businesses in the U.S. as well? Won't an influx of printed currency and green-tech job creation offer some value? At some point, doesn't stimulus money become real cash producing real goods? Surely the economy would be viable at some level?

JW: Not without income growth. There's nothing there that you've described to me that is growing, aside from inflation. To have sustainable growth in the economy, you have to income growth, net of inflation. That is not happening, and there is nothing in existing government stimulus that will cause real income growth.

Beyond income issues, the problem with the hyper-inflation is that very quickly the use of cash will cease. Let me contrast our circumstance here with a very popularly followed hyper-inflation case that's now run its course in Zimbabwe. There you had probably the worst hyper-inflation that anyone's ever seen. After devaluation upon devaluation, they successively lopped the zeros off the bills. If you took a $2 bill that they first issued back in the '80s and then tried to come up with the equivalent of a $2 bill in the last form of the currency, it would be very difficult to do because it was so worthless. If you put a pile of those together to equal the original $2 bill, it would actually stretch from the earth to the Andromeda Galaxy. We're talking light years. There are not enough trees on earth to print them. Yet the Zimbabwe economy survived and functioned. They had a lot of problems, but they operated. The reason they functioned was because they had a back-up system, which was a black market in U.S. dollars. People switched out of the Zimbabwe dollar to U.S. dollars. They could live with that. In the U.S., we don't have a back-up system.

TGR: You mentioned in a recent interview with CNN that you're recommending individuals move into both cash and gold. With the euro and the dollar in jeopardy, where does that leave us?

JW: I don't like the euro. I don't think that's going to hold together, and I've thought so for some time. If it should break up and you have a new German currency, a new mark or something like that might be a strong one option. At the moment I like the Canadian dollar, the Australian dollar and the Swiss franc. For anyone living in the United States, rather than looking at the short-term volatility in the markets and trying to make money off of that, this is the time to batten down the hatches and to look to preserve your wealth and assets.

In terms of preserving the purchasing power of your assets, the best thing I can think of is physical gold. That's worked over the millennia. I'm not per se a gold bug. It just happens to be a circumstance in which it's the cleanest asset around for that. You don't need to put all your assets into gold, but hold some. Hold some silver. I'd look to get some assets out of the U.S. dollar and look to get some assets out of the U.S. When I say outside of the U.S. dollar, again, I look at the Canadian dollar, Australian dollar, Swiss franc in particular. I think they will tend to do particularly well, whereas the U.S. dollar is going to become effectively worthless.

As the dollar breaks down, you'll also likely see disruptions in supply chains, including shipments of food to grocery stores. People should consider maintaining stockpiles of basic goods needed for living, much as they would for a natural disaster. I sit on the Hayward fault in California. I have a supply of goods and basic necessities in case something terrible happens—natural or man-made—that will carry me for a couple of months. It may take that long for a barter system to evolve, which I think is what you're going to end up with; at least until a new currency system is reorganized and you get a government that's able to bring its fiscal house into order. No currency system in the U.S. is going to work unless the fiscal conditions that drove it into oblivion are also addressed.

On a global basis, where the dollar is the world's reserve currency, 80% of currency transactions involve the U.S. dollar. There's going to have to be an overhaul of the global currency system. To gain credibility with the public, the powers that be likely will design a system that has some kind of a tie to gold, but that's purely speculative.

TGR: From a personal investment point of view, you emphasized that this is a time to conserve assets, including gold and other currencies. How else can investors protect themselves?

JW: I like physical gold and silver. I look to gold as a primary hedge. If you can come out of this holding gold, you'll be in a position where you'll be able to take advantage of some extraordinary investment opportunities that will follow. With inflation, real estate is usually a pretty good bet. It tends to hold its value over time. There may be periods of illiquidity, though, and it's not portable. Neither of those limitations is an issue with gold. Maybe gold will become the black market to support U.S. economic activity. It certainly would be the area that people will try to transfer their assets to as time goes along.

You see people now as gold gets to a new high saying, "Oh my goodness, I bought at $200, and I can sell out at $1,100 making a good profit." What people don't realize is that they haven't made a real profit. What they've done is retained the purchasing power of the dollars that they invested in gold, and they've lost proportionately the purchasing power of the amounts left in dollar-denominated paper assets over the same time. Gold is a long-term wealth preserver. Again, where many people are used to an investment environment where they can buy a stock, make a quick profit and then sell, with gold you need to hold on for the long haul as an insurance policy, not as a quick investment.

TGR: Thank you very much for your time.

Walter J. "John" Williams was born in 1949. He received an A.B. in Economics, cum laude, from Dartmouth College in 1971, and was awarded a M.B.A. from Dartmouth's Amos Tuck School of Business Administration in 1972, where he was named an Edward Tuck Scholar. During his career as a consulting economist, John has worked with individuals as well as Fortune 500 companies. For more than 25 years he has been a private consulting economist and a specialist in government economic reporting. His analysis and commentary have been featured widely in the popular media both in the U.S. and globally. Mr. Williams provides insight and analysis on his website, www.shadowstats.com.

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