An Asset Bubble for the History Books

By Bob Chapman:

Big bank money bombs will blow up money supply, economic data distorted beyond recognition, Fed magically conjures money, dollar set to lose its status in world currencies, zombie banks suck in healthy banks, just like in the movie, mark to market rules still hiding trillions in losses

Many of you may recall that there was a tulip mania in Holland in the 1630’s that has become synonymous with asset bubbles. Just to give you an idea of how over-the-top this mania became, the price for a single tulip bulb at one point during this mania was in the tens of thousands of dollars in terms of today’s prices. And believe it or not they were writing futures contracts on tulip bulbs! Now, courtesy of our new Treasury Secretary, Kissinger protégé Little Timmy Geithner, who is on loan from the Federal Reserve Bank of New York, and Little Timmy’s sidekick, Buck-Busting-Ben, chairman of the privately owned Fed, we are about to experience a hyperinflationary money bubble as Little Timmy and Buck-Busting-Ben create and unleash a money supply mania. That money supply mania will cause many other manias, including gold and silver manias, as tangible asset prices skyrocket.

Considering all the foregoing talk of tulip mania and asset bubbles, we thought we felt it would be fitting to rename “Little Timmy” by giving him a name more appropriate to the overall circumstances. So, we decided to call him “Tiny Tim” instead. Yes, that’s right, we chose this name because, like it or not, we will all have to go tiptoeing through the tulips (read: asset bubbles) with Tiny Tim. Hey, in the spirit of our upcoming hyperinflationary bubble, let’s all sing together with Tiny Tim: “Tiptoe through the window, by the window, that is where I’ll be, come tiptoe through the tulips with meeeeeeee…”

Tiny Tim’s hyperinflationary bubble will result from trillions upon trillions of dollars being created out of thin air to fund big bank bailout money-bombs. The funding will be accomplished by direct monetization of treasury bonds, the proceeds from which will be pumped into the US and world economies. That ever-burgeoning supply of money will be chasing after fewer and fewer goods as the world economy collapses. As each trillion-dollar money-bomb fails to save the Illuminist banks and our already dead but temporarily re-animated zombie financial system, another trillion-dollar money bomb will follow in rapid succession, until we go through about five trillion and the public outcry becomes so great that no further theft from taxpayers will be tolerated. By then it will be too late.

The temporary re-animators of our financial system are the Fed and US Treasury, acting in cahoots, to create this profligate supply of money and credit, which is nothing but paper, electrons and photons, to set up zero interest rates, and thereby to provide maximum leveraged profits from spreads. But only banks of the Illuminist variety get to take full advantage of the money-bomb grants and the leverage and enhanced spreads made possible by a profligate flow of credit from the Fed and its zero interest rate policies, as they continue to milk the system so they can pay out handsome salaries and bonuses to their criminal operatives and co-conspirators a while longer. After all, the henchmen have to be paid.

If you are not an Illuminist bank, you get squat, because the much larger Illuminist banks get to hoard their cash with the Fed at interest instead of loaning it to you. This helps to sterilize (delay the inflationary effect of) the money and credit provided by the re-animators at the Fed and the Treasury Department. And to add insult to injury, not only do non-Illuminist financial institutions get squat, they also get a bill from the FDIC to pay for all the losses caused by the fraud perpetrated by the same Illuminist banks that refuse to lend to them. These credit-starved banks are the ones who should be taking over the businesses and customers of the bankster-gangster-fraudsters who should be forced into bankruptcy. Instead, they get reamed by the criminals who laugh all the way to the bank (literally). The zombie banks get to live on while they acquire the healthy banks or cause them to fail. It is all about elimination of competition, and consolidation of power. Eventually, all the zombie banks and the Fed itself will go under, to be replaced by a corporatist, fascist super-entity, like the IMF or some monstrosity like it, so that all the competition can be regulated into oblivion while the criminals continue to blood-suck the sheople’s wealth with impunity.

The other team of re-animators are the corrupt criminals that run our government and our so-called regulatory system. These criminal co-conspirators with the Illuminist financial institutions have decided to allow these institutions to continue to hide trillions in losses by letting them mark-to-market on their near worthless derivatives while distorting official economic data beyond recognition and failing to require accountability for bailout money. How can anyone in their right mind invest in re-animated zombie financial stocks when their financial statements are phantasmagoric fairytales that make Alice in Wonderland look like a work of non-fiction? All of these bogus, deceitful, underhanded moves are just more of the same smoke-and-mirrors, voodoo finance which has been ongoing for decades, as they continue to cover up the destruction of the US economy via free trade, globalization, off-shoring, outsourcing and both legal and illegal immigration.

The elitists may well skip forming a new world currency for now, and keep the old currencies for the time being, perhaps even adding an element of gold-backing for all currencies, or they may go to a regional currency system where different world financial zones each use a single, partially gold-backed currency. What they will do, in lieu of implementing what would be a very unpopular world currency, is form a super-entity that controls all the currency exchange rates and interest rates for borrowing and lending around the world, along with regulatory power over all financial institutions, including not only commercial banks, but also investment banks, brokerage houses, insurance companies, hedge funds and even sovereign wealth funds, as they also take control over the unregulated quadrillion dollar derivative market. Already they are acting to remove tax havens so they can get at not only the wealth of the middle class, but also the wealth of the non-Illuminist upper classes, including their hidden wealth, so that there is no escape from their blood-sucking tentacles. The Illuminati are leaving no stone unturned as they continue to consider themselves the only people worthy of accumulating any wealth so they can lord it over everyone else. We can assure you that the tax havens of the Illuminists will remain intact, or their off-shore, tax haven accounts will simply be ignored while the non-anointed tax dodgers get reamed.

This regulatory juggernaut will allow for some flexibility in adjusting exchange rates and interest rates in order to accommodate differences in the wealth and overall financial conditions of the various nations that will be part of the new worldwide regulatory system, since it has become apparent that a one-currency-fits-all strategy won’t work as evidenced by the European Union, which is on the verge of total meltdown and disintegration. This new super-regulator will crush all non-Illuminist financial and business corporations, as well as countries with non-Illuminist governments, by regulating them into oblivion or by punishing them with vicious exchange rate and interest rate adjustments just as the IMF and World Bank have done to their victim nations in the past. This power structure will allow them to have the same privileges as they would have with a single world currency so you can bend over and kiss your derriere goodbye if you allow them to implement such an Orwellian system of Big Brother central control. Sovereignty of nations will become little more than a sick joke as corporatist fascism takes over not only world finance, but production of goods and services as well. Anyone who does not cow-tow to their way of doing things will be cut off from all financial tools, or will be given unfavorable financial terms, until they either succumb or go under. The pages of the Nazi playbook continue to be turned as the march toward a one-world, feudal police state marches on.

The dollar will of course lose its reserve status somewhere in this process of world regulation of currencies and financial markets. When asked directly if they would support a move away from dollar hegemony to a basket of currencies, Tiny Tim and Buck-Busting Ben both said they would not support such a move to abolish the dollar’s status as the reserve currency of the world. When we heard this, all we could think of was Granny asking Sylvester if he had eaten Tweety Bird, but all Granny can get is a mumbled “no” from Sylvester who has Tweety Bird’s feathers still sticking out of his mouth. Then Tiny Tim let slip that he might consider this move away from dollar hegemony, as the G-20 meeting was getting under way, with that very issue up for discussion. This is the same double talk we get from our corrupt government officials, who pathologically lie through their teeth, telling you everything you want to hear, and then doing the opposite of what they have said. Never listen to what they say, but watch what they do!

Why is the Fed purchasing all these new treasury bonds with its magically conjured money, to the tune of over one trillion dollars? We’ll tell you why. First, and foremost, the Fed is trying to support the treasury market, and thereby to suppress gold (JOB ONE), which currently competes with treasury bonds for the safe-haven money of terrified investors. That is how we support markets now. We first create counterfeit monopoly money, and then use it to create a market for treasury bonds that otherwise would not exist. No wonder foreigners are so disillusioned!

The Fed will exchange the $750 billion in treasury bonds it has purchased to buy toxic waste GSE bonds from Fannie and Freddie, making the Fed into a toxic waste super-site so that it can later go under and ask for more hyperinflationary bailout money as the ultimate too-big-to-fail institution. Fannie and Freddie will then use some of the new treasury bonds they have received to exchange for toxic waste GSE bonds held by the foreign nations and financial institutions that got screwed by US Illuminists in their flimflam, toxic waste investment sales fraud. What this means is that the Term Securities Lending Facility has been extended to include not just the primary dealers, but the entire group of Illuminist financial institutions around the world! Then the Fed, in its ongoing failed attempt to revive our economy, which the Fed has no intention of reviving as they hyperinflate us into oblivion, will ask to buy more treasuries and use them to acquire the toxic waste that was just bought out by Fannie and Freddie with the previous round of treasury bond proceeds, until all the Illuminist financial institutions around the world have disgorged their toxic GSE bonds, while all the while supporting the market for treasury bonds with a never-ending supply of monopoly money so they can keep sucking the toxic waste poison out of the wounds suffered by Illuminist financial institutions. Non-Illuminist financial institutions can of course go suck an egg.

When the Fed finally goes under by virtue of holding all these worthless derivatives, it will stick the US sheople-sucker-dupe-taxpayers with the bill as all this toxic waste evaporates into thin air, which is where it came from. Even now, Tiny Tim is attempting to create a market for these bonds in a sweetheart, heads I win, tail you lose, deal for Illuminist insiders who will participate in the public-private partnerships being formed to overpay for toxic waste. This is a feeble, inane attempt to create a market for these otherwise unmarketable assets so the Fed can attempt to bail out of its toxic waste when the time comes to contract the money supply in order to put some brakes on inflation so that the mad-as-hell sheople do not go directly into revolution mode as they are Weimarized. This is the same parlor trick which private Illuminist banks tried and failed to implement shortly after the subprime meltdown got started, and is similar to the plan Hanky Panky Paulson rejected in favor of outright equity injections in his bate-and-switch fraud against Congress and taxpayers. The Tiny Tim plan will fail for the same reasons that these other plans failed, because unless they pay what amounts to par value for this toxic waste, everyone will have to acknowledge that these derivatives are worth far less than the financial statements of the zombie Illuminist financial institutions say they are. In fact, the plan will fail even if they pay par value. Our corrupt regulators’ failure to require mark-to-market accounting will not save the plan. When the Fed goes to sell its worthless assets, everyone will know their true value. Just because the Illuminists try to say these assets have value does not make it so, and they will find that out as they are walked to the gallows when their attempt to stop the US from repeating the Zimbabwe experience fails. Using more monopoly money to create what would otherwise be a non-existent market for toxic waste is a stupid plan just like the plan to create a market for treasury bonds with that same monopoly money.

The remaining Fannie and Freddie proceeds from the sale of its GSE toxic bonds to the Fed will be used to re-inflate the real estate market by offering new Wild West real estate mortgages to anyone who can fog a mirror, and all the major mortgage lenders are tooling up for one final round of liar loans to suck in anyone who did not get sucked into the real estate bubble the first time around. This will add to the toxic waste pile and compound our problems as the new round of real estate buyers watch the value of their new homes plummet while the stimulus package fizzles out, the economy continues its implosion, stagflation runs rampant, risk elevates to levels unseen in our economic history, and double digit interest rates administer the coup de grace to the real estate markets, the bond markets, the interest rate swap derivative market and the US and world economies in general. All economic activity will then cease, and there will be a crack-up boom the like of which has never before been seen in the history of the world as the Much, Much Greater Depression swings into full gear.

Posted: April 8 2009

Source: The International Forecaster

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