A Yen And A Gold

March 6, 2008

Elaine Meinel Supkis

The US banking system is pretty much on the verge of bankruptcy. Only because the G7 nations and other trade entities want us more alive than dead, are our banks even functioning. Indians working in Arab lands are told to convert their dollars to gold immediately upon being paid. Japan's FOREX reserves shoot over a trillion dollars. Japan even admits this fund is for 'currency stability'. Meaning, to stabilize the dollar. Time to look at what dollar bills said about themselves over the last 150 years using dollars I own, many of them interesting antiques. Also, the US real estate market looks more and more like a cemetery estate market. Six feet under or mausoleums.

NRIs urged to invest in gold or UK sterling

Non-resident Indians in Bahrain were last night urged to invest in gold, UK sterling or Euro to offset the losses they have suffered due to the weakening dollar. The call came from Reserve Bank of India director and finance/tax expert Homi Ranina, who said Indians in Bahrain, where the dinar is pegged to dollar, should consider various options to protect their income.

"It is ideal to put their money in a basket of currencies, preferably UK sterling and euro, against which the Indian rupee is weakening," he told the GDN.

"It is also ideal to invest in gold, which will continue appreciating in value in the coming years.

This advice is from a Persian Gulf news paper. A month ago, I thought the gold market would begin to top off due to the collapse in sales in India. But the US took care of that! By dropping interest rates to 'teaser rate' levels, the Fed has created a bull market in gold straight from hell: gold MUST be used due to the dollar plunging ever faster. Just a year ago, I wrote about how Bernanke and his buddies were swearing on a stack of Bibles and Korans, they supported the strong dollar. All our trade partners who run surpluses with us...which is virtually all of t hem...wanted to be assured that we would support the dollar no matter what. This meant killing inflation and the traditional way free trade kills inflation is to outsource and offshore all our jobs, industries and finances! Which we continued to do.

Like with debts, there is this invisible upper limit. This can be done all the way up to bankruptcy. And here we are: pretty much bankrupt. Since the dollar is still the world's premier fiat currency, this has forced everyone into alternate strategies. When governments tell their workers to demand gold, we are very close to a revelatory moment in history. Never do governments really want workers paid in gold. This is a transfer of power! They always desire people to hold papers issued by the corporations or the state! When workers hold gold, they begin to drive bargains with this gold! A monopoly in financial verification and value is lost!

As we see, the value of gold versus all currencies is now shooting upwards. As more and more workers and savers are forced to demand gold, it will continue to rise. Seeing this, workers will try very hard to NOT spend it! This makes the depressionary cycle which runs alongside the ballooning gold values. This is 'money under the mattress.' By holding gold and not even putting it in a bank, a worker can get richer. This is why I suspect this business will be terminated somehow by frightened bankers who see no more customers. Certainly, by driving everyone to gold, this will destroy the banks even faster. It has me very amazed. Very amazed.

Geithner Says Rates May Need to Stay Low `Some Time'

Federal Reserve Bank of New York President Timothy Geithner said the central bank may need to keep interest rates low for ``some time'' if financial markets remain under stress and threaten economic growth.

``If turbulent financial conditions and the associated downside risks to growth persist, monetary policy may have to remain accommodative for some time,'' Geithner said in a speech to the Council on Foreign Relations in New York.

AAARGH. Well, shivver me timbers, we will all be pirates by the time this year is out. If the Fed imagines they can keep interest rates super-low while this merely feeds the climb in gold values, that this will save our economy, is pure madness. I am spending money on my computer and its systems and my set up at home in order to expand my business. But I am one of the few, it seems. By the way, I will be on the radio in NYC this Saturday on WMCA talking about all these things. Also, after the web service I was using shot over its limit due to too many people wanting to listen to my podcast, I am in negotiation with another service to see if they can handle the load.

Back to the story above: The Fed imagines it can drop rates to 1% for three years again. They cannot. I believe their thoughts are, 'If we drop rates below the teaser rates of those Alt-A mortgages, no one will have to refinance and all will be well.' But of course, the destruction of wealth continues. The ONLY reason anyone bought those tranches and the only reason they were given AAA ratings was because everyone anticipated really high interest rates in return! But now, no one putting ANY MONEY in ANY BANK OFFERINGS is going to get squat diddley. Nothing. Sub-inflationary rates are not attractive even to the blind. Everyone is aware of inflation, it is biting the entire planet on the rear now. No one can avoid it anymore.

So long as inflation rages, no one dares to have low interest rates...except for the US and Japan. And if the world's #1 and #3 economies do this at the same time, this is a catastrophe. Especially if Germany and China join in doing the exact opposite. This is the only reason why gold and oil haven't doubled in price this last 2 months. If they copied Japan and the US, we would be seeing $2,000 gold and $200 a barrel oil. And we might see this, anyway, at this rate.

Foreclosures hit all-time high

Over 900,000 borrowers are losing their homes, up 71% from a year ago, and a record number of home owners are behind on payments.

It is all over. I pointed out several years ago, housing downdrafts, housing collapses all take 5 years, minimum. And big ones take a lot more, up to 25 years to recover. All attempts at shortening this present one will make this one last longer. It is impossible to stop the forces at work here. Abandoned projects will stay orphans. People will be kicked out of their homes. As someone who has lived in a vast variety of domiciles, this isn't as hideous as people fear. If I could live in a tent with no services, using buckets and oil lamps, anyone can survive with nearly nothing. Most of the people defaulting held their mortgages for less than a year. This is pure madness and they should suffer the consequences. People took on too much debt and wanted goofy lending schemes. All, the investors, the home buyers, the bankers, should first pay the piper who is the guy with the scythe, then start over. This is the only way out, alas. All other exits were locked long ago.

Fed's rate cuts may do long-term dollar damage

But whether the central bank succeeds in forestalling recession is of little consequence to dollar investors these days. The most optimistic forecasts call for little more than anemic growth even if the Fed succeeds.

More troubling is the fear that whatever success the central bank achieves will have been bought at the expense of future inflation, shattering confidence in the dollar.
*snip*
Englander said the Fed hopes pro-growth measures will help the dollar later. "The goal is not a strong dollar a month from now but a stronger dollar two years from now."

HAHAHA. 'In a few more years, THEN we will support the dollar.' Wimpy in the old Popeye cartoons was always saying he would pay for today's hamburger next Tuesday. So we will strengthen the dollar next Tuesday. So we are going to destroy the dollar so our GNP can grow by 0.5%? I would say this is a fool's errand and a bad bargain. Again: by not biting the bullet, we end up taking a bullet to the heart. We can't evade the pain of a contraction at this point. If only the Fed listened to me when Greenspan dropped rates to 1% for over a year! I knew what would come of that and was rather loud about it. And I wasn't alone, not at all! The gold sellers, on the other hand, celebrated that move. They know what side their gold brick is buttered! Low interest rates during inflation is pure gold to them.

Now to return attention to Japan. From my own news service over a year ago: Germany's Love Of Strong Currency

So, from 2000, the USA had a $32 billion trade deficit with the European Union but in just seven years, in 2007, this shot UP to $91 billion! And the euro grew stronger as Europe exported to the USA? $59 billion divided by 7=nearly $8 1/2 billion rise each year! People who pretend making the dollar weak will increase our sales are off base, badly. Worse, the USA export rate to Europe is declining...in dollar value as the dollar drops! So we sell more items but this is less valuable when set against our importation of European goods!

The Japanese can get away with this stupid devaluation game because they don't ever allow the USA to have a trade SURPLUS with them! The shoe is always on their foot and on our face. So anyone claiming a weak currency=strong export markets FOR THE USA is lying or stupid. Obviously, this game is rigged.

Japan began to 'grow' its huge FOREX reserves last summer when they realized China had shot past them. China's reserves are over $1.5 trillion and today, Japan's also has passed the trillion dollar mark.

Japan's Foreign Reserves Reach Record $1 Trillion

apan's foreign reserves surpassed $1 trillion at a time when lawmakers debate whether the country should create a fund to manage state assets.

Official reserves climbed to a record $1.01 trillion as of Feb. 29, the Ministry of Finance said today in Tokyo. Japan's reserves, the world's largest after China's, have swelled five times in the past decade, as the ministry bought U.S. Treasuries and other securities to contain gains in the yen.

Ruling-party lawmakers have stepped up calls for a sovereign wealth fund to boost returns on state assets, arguing that government money can be managed more effectively. Japan may have a harder time establishing a fund than its neighbors in Asia because the reserves were built up by selling trillions of yen of government bills, rather than from cash inflows.

Japan is dropping any pretense at being with the other G7. They are now launching a sovereign wealth fund. They are imitating China now. I have contended for years now, Japan's FOREX reserves are hostile and set up to keep the dollar strong vis a vis the yen. I drew many cartoons about this. In this case, the Japanese are so out of sorts, they are dropping their mask. Last year, the World Bank pretended that the FOREX reserves were useless and asked China to stop building up their funds. The US Treasury issued a report claiming that huge FOREX reserves were a waste of time and money. But while this propaganda push was going on, both China and Japan pointedly ignored this. Now, Japan admits, this fund was boosted for the coming battle to drop the value of the yen so they can export more goods to the US.

Finance Minister Fukushiro Nukaga said the ministry focuses on liquidity and safety in managing the country's foreign reserves. His ministry has said the money should be used in case Japan needs to intervene in the currency market.

``We keep foreign reserves to maintain the stability of the currency market,'' Nukaga said in Tokyo today. ``As long as we stick to this policy, we'd like to earn profits through appropriate investments.''

The US should be sort of concerned about all this. We should be discussing this in Congress, the President, the candidates for President, Bernanke, all should be examining this along with other matters. We can't use monetarism as a tool if our money is mush.

Six Ways to Compute the Relative Value of a U.S. Dollar Amount, 1790 - 2007

In 2007, $100.00 from 2000 is worth:

$120.41 using the Consumer Price Index

$119.69 using the GDP deflator

$131.84 using the nominal GDP per capita

$141.02 using the relative share of GDP
*****************************************

In 2007, $100.00 from 1974 is worth:

$420.32 using the Consumer Price Index

$344.71 using the GDP deflator

$653.46 using the nominal GDP per capita

$922.92 using the relative share of GDP
****************************************
In 2007, $100.00 from 1907 is worth:

$2,275.98 using the Consumer Price Index

$1,729.11 using the GDP deflator

$11,779.02 using the nominal GDP per capita

$40,896.27 using the relative share of GDP

***************************************

Here is an older chart I did showing Germany's inflation after WWI.

We have a pile of old currencies here at home. Look at the words on the front and back of paper currency starting in 1874 and onwards! These words remind us that the paper being issued is NOT money but CONTRACTS! And the wording of the older dollars shows clearly the worries about inflation. The designers of these bills went to great lengths to assure holders, the dollar would not be diluted.
****************************************
1874 25¢ bill

UNITED STATES

TWENTY FIVE

25

Picture Treasury Secretary, Robert Walker, 1845

CENTS

Department of Treasury Washington DC

FRACTIONAL CURRENCY

Back side of 25¢ bill:

SERIES 1874

ACT OF MARCH 13, 1864

ACT OF JUNE 30, 1864

PATENT: JULY 24, 1864

COLUMBIA BANK NOTE, WASHINGTON DC

This note is payable for:

(long list of various purposes this could be used as money for as a substitute for $5 gold coins)

*********************************

Note how this very early paper bill lists all the laws that pertained to its issue! People wanted to know if this was 'legal tender' and the inclusion of these laws meant it was covered by the government and could be used in court to recover value. And people sued all the way to the Supreme Court for exactly these reasons! Money was suspect and rightfully so. This was in the era of the gold coin, by the way.

*********************************

1899 $1 SILVER CERTIFICATE

THIS CERTIFIES THAT THERE HAS BEEN DEPOSITED IN THE TREASURY OF THE
SILVER CERTIFICATE.....SILVER CERTIFICATE

THE UNITED STATES OF AMERICA

US Treasury Washington DC series of 1899

ONE SILVER DOLLAR

PAYABLE TO THE....SILVER CERTIFICATE....BEARER ON DEMAND

Back side of 1899 dollar bill:

SILVER CERTIFICATE ONE DOLLAR

This certificate is receivable for customs, taxes and all public dues and when so received, may be reissued.

UNITED STATES OF AMERICA SILVER CERTIFICATE

*******************************************

Note how the dollar bill is careful to say that only if silver is deposited, can this paper be 'reissued.' They can't print two dollars based on one silver coin. The battle over this was very ferocious. The gold currency people hated this! Silver flooded into the mint and it debased the gold coinage, eventually driving out the gold currency from hand to hand use! Meanwhile, England stuck to the gold based currency and had what was called 'the Long Depression' while the US grew.

Note also how the mint didn't dare say this paper silver certificate was money. They wrote, it was for customs, TAXES and other PUBLIC spending. It was a government IOU. Few Americans realize all our dollars are government IOUs but not issued by our government, issued and sold by the private banks who are the Federal Reserve.

*****************************************

1923 $1 SILVER CERTIFICATE:

THIS CERTIFIES THAT THERE HAS BEEN A DEPOSIT IN THE FEDERAL TREASURY OF

THE UNITED STATES OF AMERICA

This certificate is receivable for payments when so received can be reissued.

Department of Treasury Washington DC

ONE SILVER DOLLAR PAYABLE TO BEARER ON DEMAND

***********************************************

Now the Federal Reserve takes over. Note how the contractual parts of the paper dollar collapses. The earliest one had the most words. Every issue slowly dropped these words until it became rather curt and limited. Note how they still had to pretend to recirculate only old dollars and not print up new ones non-stop.

**********************************************
1928 $10 GOLD CERTIFICATE :

FEDERAL RESERVE NOTE

THE UNITED STATES OF AMERICA

Series 1928 B

Redeemable in gold on demand at the United States Treasury, or in gold or lawful money at any Federal Reserve Bank.

Federal Reserve Bank of New York....US Treasury Washington DC

WILL PAY TO THE BEARER ON DEMAND TEN DOLLARS

******************************************

A $10 gold coin is worth a lot of money today. This was one of the last issues for the gold certificates. After this, the US ceased to promise gold in payment.

*****************************************
1969 $1

FEDERAL RESERVE NOTE

UNITED STATES OF AMERICA

This note is legal tender for all DEBTS, Public and Private

Federal Reserve of New York.......US Treasury Washington DC

ONE DOLLAR

Back side of modern $1:

THE UNITED STATES OF AMERICA

In God We Trust

ONE

ONE DOLLAR
***************************************

Along with that goofy one eyed Masons/Illuminati Pyramid of Power. Note that all talk about laws and contracts and balance and reissuing are gone with the wind. Instead, we are supposed to trust some 'god' creature. I suppose, looking at the pyramid, it isn't very trustworthy. Indeed, it gives me the creeps. So we went from clear contracts about the value of a dollar to 'trust this goofy god' dollars! Talk about moving BACKWARDS. From intelligent, suspicious adults to savages who fear divine retribution from eyeballs on top of pyramids. Recall the movie, 'The Lord of the Rings'. Sauron builds a huge tower and then parks this big eyeball on top. Who trusts him?

Not I.

Email this post

Culture of Life News Main Page

Comments

[GK]

In GOD we (the Illuminati) trust:

Gold
Oil
Drugs

[aa2]

There has been a huge move over the last year from 117 or so Yen per dollar, all the way down to 102/1 which it is at this morning as I type this.

There is more to currencies then just the ratios though, it should be noted both currencies are changing in value within their own economies. 1 dollar today isn't the same as 1 dollar 5 years ago, and neither is 102 Yen the same as 102 Yen 5 years ago. So that has to be taken into consideration when comparing two currencies.

[Elaine Meinel Supkis]

Both have great oil inflation. The dollar more than any currency.

[CK]

Ah election years.
Greenspan in 2000 decided that the republicans must win the election, he popped the then current dotcom bubble, raised interest rates, and the end of the Clinton "good times" followed quickly enough to help defeat Gore. ( It was a close run thing even with Greenspan's aid)
Now after 8 years the USA has another election. Bernanke is doing his damdest to keep the repuclicans in office. Interest rates will be lowered several more times this year, right up to election week. If this allows the republicans to retain office, the interest rates will stay low; if the dems win or Ron Paul wins, a strong dollar will suddenly be the FED mandate. Interest rates will sky, and all the crap that awaits will be unleashed at once.
The Supreme Court may follow the elections and modify its findings somewhat; but the FED determines elections. ( None of the above is intended to give the Clinton's a pass, they mandated the busting of Microsoft because MSFT was at that point not paying any attention to the power of DC.
In 1999, MSFT had a total of one part time lobbyist in DC. Today MSFT has one of the smoother and larger lobbying staffs in DC.
Notice how much you have not heard about AOL, netscape, Oracle, Sun and the other complainants about MSFT since 2000.) The only people trying to give MSFT a hard time are the EU bureaucrats, MSFT pays the pocket change fines and goes on about its business. MSFT even arranged that the FEDGOV surveillance of their activities remain in place for several more years. Tough to go after MSFT at home when it is protected by the US government.

[James in Wisconsin]

Elaine,

What time, on Sat, March 8th., will you be "on-the-air"???

I checked the web site of WMAC, NYC, and they support pod-casts.

If you don't know the exact time, which program will you be on ??

[AF]

CK-

I wouldn't worry too much about MSFT these days. Their insane pursuit of Yahoo! is tantamount to painting a giant red "OUT OF IDEAS" sign on their HQ in Redmond.

[CK]

@AF
Not worried about MSFT. It is following the classic path from first gen entrepreneurial firm to second generation managed dullard firm. Best picture of which is IBM pre and post Thom Watson. Actually an even better picture is XP was the last of the MSFT operating systems where Gates had significant input. Vista is a classic corporate craptastic product, Gates had much less input and cared much less for Vista after the managerial types pulled most of the "innovative" ideas and instead spent time and money on making distinctions without economically intelligent differences among the dozen or so variants of Vista. MSFT has the size and the inertia to keep going in much the same way ATT and IBM have kept going long long after they were supposedly reined in by government anti-trust suits. Entrepreneurs need ideas, large corporate structures just need to keep on being adequate.

[Elaine Meinel Supkis]

I have no idea when I will be on the air in NYC because something very weird is going on between the guys who interviewed me and our joint email service.

We are now getting rather paranoid about this. I warned them that the CIA and others want to keep me off the air and have worked hard for the last 15 years at this.

[Cato]

THE PARTY'S OVER

The Party's Over, it's time to call it a day.
They've burst your pretty balloon and taken the credit away.

It's time to wind up the masquerade.
Just make your mind up the piper must be paid.

The Party's Over.The candles ficker and dim.
You danced and dreamed through the night,
it seemed to be right just sticking with Ben.

Now you must wake up, all dreams must end.
Take off your make up, The Party's Over.
It's all over, my friend.

[Cato]

Some comments surfacing about the illiquidity in the market for off the run Treasury securities. This is normally a no-brainer market. That problem has deepened overnight. One trader at a very large shop described the "off the run" market as being in lockdown. The same trader suggested that the historical relationships between cash markets and futures markets had broken down.

I spoke with another trader who has made relative value trading of off the run Treasury debt his life’s work and he noted that there has been practically no trading today. The market has dried up.

[Elaine Meinel Supkis]

WOW. Thanks, Cato. You give a lot of good information. I have to pick my son up and take him to Amtrak today. Will look this up later.

WOW.

[GK]

Dear God Elaine, I can honestly say you are one of the bravest, most ruthlessly honest, knowledgeable and prolific writers on the alternative news internet world today.

I dare anyone to find anyone better.

I thought the person trying to get you onto the air was just trying to use human ego to trick you into wasting your time getting wrapped into a editorial controlled format that will tame your ruthlessly accurate forecasting.

Now I realize they are clueless that they are risking your life. If it matters my opinion, I would vote for you to keep in a safe place for writing. Or podcasting. Let distributed computing works its magic.

My mom experienced this as a doctor near the construction site of a large nuclear power plant when she reported extreme drinking accidents that she had to treat. The threats are very real and scary.

Keep safe and keep writing!

[Elaine Meinel Supkis]

They have no reason to bother me. Note that the mainstream media works smoothly to prevent any open talk. This, again, is why Jimmy Carter, a former president, is now NEVER in the news, for example.

Silence, for them, is golden. And the nuttier stuff like 'there is no bin Laden' believers don't listen to me, either. It is amazing, watching how people fall for all sorts of obvious tricks.

Bin Laden is real. The bin Laden family is really close to the Bush clan. This matters a lot. Note how few people ever mention this, just to give an example.

And your mom: ANYTHING to do with nuclear power or research is top secret and they get mad if anything leaks out. This has been true from day one.

[Gary W]

Microsoft is doomed, it's such a dinosaur that its brain hasn't noticed its body rotting and falling away. The only things keeping it in business are coercive pre-installs (that have been illegal for a long time now) and customer inertia.

The company is partly a victim of Moore's Law: the price of hardware has fallen so far that the software, Microsoft software, is now more expensive than the computers it runs on (notwithstanding recent price cuts for Vista, the biggest yawn ever in commodity computing).

The most successful marketing company in history is being done in by a mob of part-time garage hackers; the freshest and most interesting hardware of 2007, the Asus Eee ultraportable, runs Linux and other open-source software.

And Elaine, despite using Macs, you are right to be paranoid. You really should look into encryption, especially emails, using GPG. It is no big deal to set up and relieves a lot of paranoia. We should ALL be using encrypted emails! But inertia and lack of forward thinking will leave the spooks with plenty of rich pickings to misuse.