Central Bankers Lie About Nearly Everything

May 18, 2008

Elaine Meinel Supkis

As usual, the central bankers who brought down on our heads this entire banking collapse, refuse to face the truth. They want this mess they created to end as swiftly as possible. They also want no inflation. They want things to 'grow'. They want to control prices while flooding the world with new money via low interest rates. They are totally insane. Right now, they are hoping that the loss of buying power in the world due to inflation will cause such a big slowdown, prices will fall. This is silly if they are also flooding the world with more and more easy money loans. The central banks are doing exactly that: flooding the world with new money even as old money vanishes as people are increasingly unable to pay off loans due to inflation.

Fed's Lockhart Says Slowdown to Reduce U.S. Inflation

Federal Reserve Bank of Atlanta President Dennis Lockhart said the U.S. economic slowdown may moderate inflation that has been spurred by rising prices of energy and commodities.

``We expect inflation to abate somewhat in the second half and going into 2009 based upon our forecast of weak economic growth,'' Lockhart said in response to a question following a speech today in Atlanta. ``There is some early indication that the strength of inflation has softened.''

Lockhart's comments contrast with remarks this week by Kansas City Fed President Thomas Hoenig and Richard Fisher of the Dallas Fed, who warned about rising prices. Hoenig said inflation was at an ``unacceptable level,'' while Fisher said the economy may recover from its slowdown ``at much higher base rates of inflation than we would want.''

The entire reason for having the Fed is to control inflation and the economy so there are no recessions/depressions or bubbles. Of course, the reality is, the Fed creates these things itself all the time which is why it has been a total failure. These days, they pretend they exist to control PRICES. Yet time and again, they fail there, too! If the price of one thing drops, another rises rapidly. We have been seeing rampant inflation during much of my life thanks to this inability to 'control prices.' Things got so out of hand in the early seventies, Nixon imposed unilateral wage/price controls that also failed.

The monetarists who took over our university educational systems have a doctrine of 'total control of pricing via interest rates'. This is the mythical 'gas pedal/brake' they talk about all the time. Recently, the head bankers have also said, they can't foretell what will happen next because this car of theirs which supposedly controls prices via the gas pedal/brake system of raising or lowering interest rates, is opaque. They believe that NO ONE can see through this dark windshield. Perhaps this is their salute to the reality of the Gates of Death from which wealth springs. But in reality, this is a lie. They know perfectly well, where we are driving. They refuse to say where this road goes because it is going off a cliff.

The tragedy of a banking system striving to 'control prices' is obvious: they cannot do this. They CAN control the monetary base and the rate of growth of lending. But ONLY if they control the currency and to control the currency, one must control TRADE. Which they do not. This is the role of a government, not a bank. Central banks can be an extension of a government's powers. They can't regulate trade at all. The monetarists collectively decided this was false. Banks could regulate trade via manipulating the value of the currency via interest rates. The problem here is obvious: if the bankers wish to control PRICES they have to go for the cheapest prices in goods and punish anyone who raises prices of goods! And they do this by forcing everyone to seek as low a price as possible. This means, if other nations have weak currencies, the need to import grows for this drops the price of goods and thus allows the banking system to lend more money, cheaply. This cheap money is then borrowed by the masses who have to buy cheap foreign goods in so there is no inflation.

This is why the US is going rapidly bankrupt as our trade deficit began to climb right after we got off the gold standard. The US wishes to crank out endless loans and balance this by bringing in cheaper and cheaper imports. The ONLY way to stop inflation now is to destroy the economy and this, in turn, stops consumers from buying foreign goods---not to mention, domestic goods! Why is this happening? We still have open borders to 'free trade'. Why can't the price of all goods continue dropping forever?

And this is where Marxist economics comes in: the exploitation of labor has its limits. If everyone is driven into slavery, the economy doesn't flourish, it collapses. This is simple: people who get rewarded for work, work harder. People who get nothing will go to great ends to avoid work. There are a shocking number of foolish people who think the pre-Civil War South was a wonderful economic paradise! But commentators of that time period remarked on the lassitude and lack of initiative in the South. The minute one crossed the Mason-Dixon Line, the industriousness levels dropped dramatically.

The US got away with pretending the Fed controlled prices only due to the industriousness of the great mass of Chinese labor as well as Japanese robots working alongside desperate workers who were experiencing dropping wages. The things the US wanted to consume were made cheaper and cheaper due to exploitation of foreign labor, not the Fed raising or lowering interest rates. On top of this, the only thing the Fed really controls is the housing market. If they drop rates, the market goes up in a very inflationary way, if they raise rates, the housing market crashes.

U.S. weakness, initially concentrated in housing, has undermined consumer spending, which generates about two-thirds of U.S. gross domestic product, Lockhart said.

``Personal consumption has softened,'' Lockhart told the Southern Center for International Studies at an event at Emory University. ``To the extent the world relies on strong U.S. consumer activity, this weakness could pose a threat to continued global expansion.''
*snip*
Increasing prices have become a global problem, Lockhart said, citing ``unrest'' over food prices in several countries.

``Recently inflation in many parts of the world has begun to pick up,'' he said. That ``is a growing issue for emerging economies.''

Inflation is a growing issue with ALL economies! Forget just 'emerging' ones. Lockhart's lies are at the heart of this problem. The US regulators are in denial. They pretend the problem lies with the cheap labor nations, not the globe's most important banking systems. Besides, the second lie here is 'inflation is picking up'. It is RAGING OUT OF CONTROL at this point. So the Fed's final proposition in all this is to passively watch consumer spending collapse due to inflation of all necessities eating up all discretionary incomes.

Fed, BOE Foreshadow End of Rate Cuts as Prices Rise

The world's most powerful central banks are telegraphing the end of interest-rate cuts, and traders already anticipate the first steps in the opposite direction.

Federal Reserve officials this week flagged inflation risks after slashing borrowing costs seven times since September and Bank of England Governor Mervyn King unveiled Britain's worst price outlook in a decade. Faster growth is vindicating European Central Bank President Jean-Claude Trichet's refusal to cut rates in response to the credit crisis.

``The central banks are taking a pause, but that could turn into a permanent end to rate cuts,'' said Thomas Mayer, co-chief economist at Deutsche Bank AG in London. ``The risk we won't see more cuts from the Fed and Bank of England has grown, and markets have pushed out expectations of ECB easing.''

The danger is that food and oil prices are rising so fast that inflation will replace costlier credit as the chief threat to the global economy. That may force the Fed to turn a deaf ear to what King labels the ``siren'' calls for rate cuts and perhaps consider raising them instead.

The Bank of Japan still listens to the sirens sing about 0% interest. This is because they cynically want a weak currency so they can pretend to be a low-wage third world state. And as far as the Japanese workers are concerned, they are a third world nation and their condition approaches that of the Chinese workers. So long as Japan clings to this false system, the rest of the G7 economic union's banks will see inflation no matter what their interest rates are. The EU's inflation has been muted by a stronger euro but this is destroying their export markets and they are anxious to not be the world's strongest currency. They want desperately for the US to be the strongest currency. The US, of course, even with a weak dollar, still imports far too much. But none of this is talked about when the central bankers conspire to 'fix prices'. Also, this obvious rigging of the game has been anticipated by speculators and traders. At this point, the responses to inflation, etc, are so ritualistic and easily foreseen by traders, they are all a jump ahead of the bankers and thus, evade the banker's attempts at controlling prices.

This is the 'psychology of inflation' the bankers like to talk about. The speculators WANT inflation! Whatever they buy, they pray hard that it will rise in price as fast as possible. Since the central bankers seem bent on enabling speculators to do this by giving them endless loans at cheap, sub-inflationary percentages, the amount of money being used by speculators to bet on price hikes of nearly everything on earth, continues. If one market for speculation reaches a peak, they all abandon it instantly and jump into another market. So, over the last 10 years, we have seen many balloons in prices from housing, energy, food, corporate take overs, etc. All of these burst and instantly, a new balloon replaces the burst balloon. This is thanks to the central bankers of the G7 nations feeding endless money into the system no matter what. The claims that they are fighting inflation is pure insanity if they all use the Bank of Japan for carry trade loans! Lending stopped briefly only because the Japanese carry trade collapsed last summer.

Kohlberg, Madison Find Blank-Check Buyers as IPO Prospects Dim

May 16 (Bloomberg) -- Kohlberg & Co., Madison Dearborn Partners LLC and Kirtland Capital Partners have resorted to selling holdings to so-called blank-check companies, a path more private-equity firms may follow as other buyers remain scarce.

Leveraged buyout firms stepped up the pace of takeovers in the past five years, aiming to cut costs at businesses ranging from newsprint makers to crane purveyors and then sell them to the public. Now they're turning to special-purpose acquisition companies as demand for IPOs sinks to a three-year low and tight credit markets make it harder to borrow money to finance LBOs.

``We're definitely seeing private-equity firms talk to SPACs as possible exits for their portfolio companies,'' said Thomas Ivey, a partner in the Palo Alto, California, office of Skadden, Arps, Slate, Meagher & Flom LLP. ``The M&A market for traditional private-equity purchasers is closed. The other piece is that the IPO market is closed.''

SPACs, also known as blank-check companies, are publicly traded corporate shells created solely to buy other businesses. Chicago-based Madison Dearborn, whose $60 billion of announced buyouts last year included Canadian phone company BCE Inc., was one of the first LBO firms to turn to a SPAC. Last September, Madison sold paper, packaging and newsprint businesses to Aladabra 2 Acquisition Corp. for $1.63 billion. Madison didn't say whether it earned a profit.

This is so very much like the pre-Great Depression financial markets. For 50 years, these sorts of shell games were outlawed. Note that the useless debts piled on top of corporations are now being shuffled off onto something that doesn't exist as an entity. A shell corporation is a black hole. And they are madly shoveling all the bad stuff into this black hole because it is now worthless. Namely, it profits nobody. And so it is a drag on the ability of the real corporations who can't borrow more money if they have this big overhang of previous debts. Of course, the money created by these previous debts still is circulating. This is why we have inflation. None of the debts created in the past 5 years has been paid down, of course. We have seen this before: when all of Europe went bankrupt in unison in 1929-1933.

SPAC shell games:

All told, SPACs had $13.5 billion on hand to fund purchases as of April 18, according to Morgan Joseph & Co., the New York investment bank. Global IPOs dropped 35 percent in dollar volume from last year through May 15, according to Bloomberg data. Excluding a $19.7 billion offering by Visa Inc., the world's largest credit-card network, the gap widens to 59 percent.

At the same time, the volume of deals in which private-equity firms sold companies to other buyout shops, or secondary buyouts, has plunged about 80 percent so far this year, to $11 billion from $55 billion, according to data provider Dealogic, blocking another outlet for private-equity investments.

The drop was even more severe for secondary LBOs within the U.S., which are down over 90 percent to $2 billion from $26 billion so far this year.

I am betting these SPACs are very closely related to the Derivatives Beast. Where did they get this $13.5 billion, anyway? Who is fronting this money? If we assume they are offshore hedge funds, the questionable nature of all this is obvious. They never build anything, they are people who get rich exploiting weaknesses and raiding economic systems. And the $19.5 billion deal for VISA: I suspect these funds are using debt from Japan to buy higher interest rate debt entities in the bankrupt West. The flood of red ink here is very troubling, of course. And is at the heart of why we have a depression in banking while in the real world, all real things like gold, oil or food are seeing ferocious inflation.

FDIC sees another wave of U.S. credit stress coming

The head of the Federal Deposit Insurance Corp. said on Friday another wave of U.S. credit stress was coming involving non-mortgage loans.

Bair, in prepared remarks for a Brookings Institution event, said delinquency rates were rising for construction and development lending as well as for commercial and consumer debt. However, U.S. banks are still healthy and in a much stronger position to weather the storm than they were during the savings and loan crisis of the 1980s.

In what way are our banks stronger? As far as I can see, they are much, much weaker! In the 1980's, banks offered high interest on CDs sold to the public thanks to Volcker raising interest rates of the money lent to the other banks from the Fed. So savings rose. Then Volcker was eliminated and we all rejoiced and easy lending returned. Savers had to seek high interest banks on the fringe since the main banks haughtily refused to pay reasonable rates on savings. I remember that time, I was very unhappy about these sub-inflation level CDs.

Many elderly with savings moved them to the Savings & Loan banks because these banks offered high rates on savings. This way, they could lend on the 10% base of savings and they lent recklessly. When the creditors defaulted, the whole thing collapsed. Because these S & Ls were not protected by the Fed, the savers lost everything. But then, this is why the CDs were so high: increased risk. The S & L debacle was due to the government and the Fed seeking a way around the inflation riddle. They let this alternative, unprotected banking system grow and lure in victims rather than regulating it just like the main banks. But then, they wanted to cheat on the real rate of inflation. After the S & L collapse, they fixed this mess yet again by lying and cheating. Namely, they ceased tracking real inflation and concocted a new system that was totally fraudulent. So they can merrily inflate while evading responsibility for this inflation.

Here are the shocking graphs from FRED, The Federal Reserve St. Louis research arm:

Anyone looking at these two graphs can plainly see, we are in a full-scale banking collapse far, far worse than in 1930. These graphs show that the reserves of our entire banking system have vanished. And are being replaced with Treasuries cranked out in DC: total inflation of the money supply to fix a collapse in lending repayments! The effects from all this are not over, they are barely beginning. The bloated incomes of our Senators and Congress people, our financial manipulators, our banking elites: all this is a byproduct of massive inflationary money creation. That is NOT paying interest on the lending from the past! These loans are collapsing and with them, the banking system.

The Fed officials can see these charts plain as day! This means either they are terminally stupid or more likely, they are simply lying to everyone. And lying is their job. They lie constantly to the point, they are unable to utter the truth. I suppose it would cause them to shriek and tear their hair out like Rumplestiltskin.

D.R. Schoon at Survival Blog;

Global financial markets are in extreme triage following the credit contraction of August 2007. It is believed central bankers are trying to restore markets to help the economy. In truth, they are like life insurance companies fighting to keep a wealthy patient alive so the high premiums will continue to be paid and the large death payout will be postponed. It has been only nine months since credit markets unexpectedly froze in August 2007. The central bankers who were surprised by the summer 2007 credit contraction now hope the danger has passed. But they are about to be surprised again and soon.

We are witness to the unraveling of historic levels of debt caused by central bank issuance of debt-based money. That such issuance over three hundred years has led to trillions of dollars in constantly increasing compounding debt is not unexpected. What is also not unexpected is that someday the debt could not be repaid. That realization is what happened in August 2007. Suddenly, buyers of debt, those in need of guaranteed downstream revenues realized $1.5 trillion of AAA rated subprime CDOs would not be repaid as expected. The consequences of that realization are now in motion.

He is correct. Alas, his solution---buy gold!----is faulty. History shows very ruthlessly and clearly that when gold becomes valuable due to a banking collapse, governments either seize it or invade countries that hoard it. There is no simplistic solution to the problems we face. Just as there is no 'go it alone' survivalist solution. We are a collective. Local, national and international. Struggling to understand and find solutions to each of these levels of social involvement is the only way we can sanely deal with all this. Telling the truth about things and analyzing them correctly is the first step. Right now, the cries to hoard things is rising. And this is logical in an inflationary system. Buy now or tomorrow it will eat up more of one's income!

But this is not a solution, it is desperation.

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Comments

[Raphael]

If hoarding Gold is not the answer. What can one do to protect whatever wealth they have? Banks pay 0% interest,the dollar is being debased, and inflated away, foreign currency is debt based fiat as well, hoarding oil in ones yard is too messy and big, hoarding food is good I suppose, but it can go bad. Political change is impossible at this point. Government debt is rampaging higher every second. What are sovereign wealth funds going to buy with their forex? They hold less than 3% of their assets in Gold. If they move to even a 5% allocation Gold will soar. Please suggest an answer. Americans for the most part cannot live off the land and create mountain hideouts such as yourself. What are us mortals to do? Help please. your guidance and prowess is much appreciated. May God bless you.

[Phil the thrill]

you can buy gold not domiciled in the US.

[Crimson Ghost]

If you like gold you should love silver.

Silver usually moves about twice as fast as gold in both directions.

[Elaine Meinel Supkis]

Thanks to the lack of a gold standard EVERYTHING is fluctuating in value all over the place, often with little or no warning.

So buying gold today can 'protect' money but if they drive down the price of gold, all that money vanishes just like it can vanish vis a vis property, food, fuel or whatever. We are in a state of deliberate flux.

What is missing is stability. We need some stable center point so things go smoothly, not this violent rocking of the boat. I know many web sites promote buying and holding gold, etc.. But we must realize, this is NOT a nostrum without any hazards.

For example, if you bought gold the day it hit $1,000 an ounce, it lost almost $200 of its purchase price and still is far from that high. You may have to sit on it for a month, a year, a century, YOU CAN'T TELL. This is not like putting money in a good bank backed by say, gold reserves. Then it grows slightly faster than inflation which is just fine.. If one is looking for huge profits, one has to turn to capitalist manufacturing profits, not hoarding or saving something.

[Mario]

We now have steel pennies, and soon steel nickels. How long will it take until our coinage is gone and the smallest demoninated note has Grants face on it? Kindly respond. Thanks

[Paul S]

You need only to review the posting on TJIS wwebsite to get good info on this topic. This is the link: http://elainemeinelsupkis.typepad.com/money_matters/2008/02/washington--you.html
The title is "You're Fired!" Very valuable to listen to Mr. Griffin's lecture on the Fed. I liked the part where Mr. Griffin gives the Fed their "report card" on what their alleged and ACTUAL objectives are.

[ad mike]

our new chinese overlords will save us.submit to them. death to imperialist scum!
the man enslaved to wealth can never be honest.
there is no limit to human greed and folly.(tm)
well.! it just doesnt seem that anything or anyone will save us, even including obama.
expect food shortages. fuel shortages, rolling national brown outs. race riots.
soon very soon. because we all sat on our asses and sed,"what can you do?"
answer...nothing. and look what happened.
enjoy nascar and uhmerikan idle while you can.
stuff your face with cheeze doodles and and tater-tots.these are the good old days.
what are going to do when your meds wear off?
EAT THE RICH!

[rockpaperscizzors]

The problem is that the Federal Reserve does not want to admit that "labor" is the wealth of a nation. In a swift keystroke the Fed adds electronic 000,000,000.000's to insolvent banks, investment houses, pick a scam etc.... They pretend that people who are the labor of every nation, need not exist to create wealth. Greenspan & Clinton's NAFTA and WTO policies, Greedspan & Bush's & Clinton's deregulation of the financial sector and sending US industries overseas to our past "enemies" now our shark loan godfathers, gave USA enemies wealth in labor production. The USA labor/wealth has been eroded and we became the world consumers of resources. US incomes are expotentially dwindling per year due to rampant devaluation of the dollar and outsourced labor to China, Japan, India, Vietnam, etc... Which Elaine eloquently rages upon;The Trade Deficit.

These Sovereign countries are generously supporting and abetting our addictions to cheap material goods, cars, and electronics... Due to the loss of incomes Greenspan and GWB colluded with the real estate market and artificially increased house values. People foolishly believed that their homes were a ATM machine. HA HA! The funny money has disappeared as house/land values mysteriously readjusts to correct levels. So what's left for these thieves to steal....Social Security and Medicare. Both are set in stone in payroll deductions until unemployment rises to astronomical levels.

UNEMPLOYMENT:
What Is The Real Story?
by Ronald R. Cooke
http://financialsense.com/editorials/cooke/2008/0516.html

[B.A.]

What's with all the despair, Raphael? We are always at the tipping point. We live in a system operating at the edge, as Elaine so clearly shows time and again. Just like the mighty Soviet Union collapsed with a relatively small push from American aided Afghans, it is not only wars that start with a little push. So can system changes, regime changes.
I suspect we lack the patience of the Chinese, of the Muslims. Probably because we're secular individualis and want to enjoy the fruit of our efforts in our own lifetime. But this is only possible if we are not hasty. Impatience leads to despair. Look at Bin Laden. he played a role in, and witnessed the collapse of the USSR and (if he's still alive) he may still contribute to the collapse of the other mightiest empire on Earth's history. Must be feeling mighty smug in his cave! And all that with a few determined men and the willingness to wait. Then, paradoxically, things happen quicker that seemingly possible. There is a presumptuousness in pessimism. We don't really know all the mechanisms operating in history, all the elements at play, their interaction, relative strength, the very last relevant flap of the unknown butterfly. Since we don't know, and since most factors seem to be already partial to change, often sudden and in any conceivable and inconceivable direction, we might as well be optimistic and push forward regardless.
A single human lifespan has witnessed the improbable revolt of the oppressed black and, within a generation, the audacity of a black man as favorite to the highest office of the land. What wise man in the 50's predicted either? And yet we predict, confident and gloomy, more of the same; or chaos; or fascism. But fascism, and communism, were new once. Other realities are possible. Otherwise there would be no need for this insistence that we live in the only possible world. We need to be convinced, because only then will it be so.
Ironically, those running the show know this. They, as someone has mentioned here, make things up as they go, audaciously. The know that uncertainty is the norm, but are confident they can use it to their benefit. Their only concern is to keep the "sheeple" in a state of stupor, feeling safe in the illusion of predictability.
Those fighting against them need the same confidence and the patience to allow the sleeping to wake up from the American Dream (great term for both an idealist and a cynic!).Milton Friedman said (I read it in Naomi Klein's The Shock Doctrine) "Only a crisis produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around". Time to spread new ideas around.

[blues]

GET WITH PRIMITIVE ECONOMICS. You have a comprehensive economic system, then you have real wealth. That can PRODUCE! You have only a military-industrial base? DING! You Lose. So Sorry.

[Michael]

Raphael,

What can be done to protect yourself under current unstable economic conditions? Obviously, no one can predict the future (though many claim to, and some are luckier at guessing than others). However, there are some actions YOU could take that are guaranteed to improve YOUR personal financial security, regardless of the changes in inflation, recession/depression, employment, war, world trade, the value of the dollar, gold, oil, or food. All the power you need to control your own destiny is already in your own hands:
1. If you have debts, pay them off. If you don't have debts, don't acquire any. The main function of debts is to get something today that you can't afford today but think you will be able to afford (as obligated payments) tomorrow. This makes you completely vulnerable to changing external economic conditions and takes money out of your pocket for the privilege of renting money. Debt is the American way, and the "American Dream" is debt-funded (starting with the Revolutionary War). The single biggest problem right now of the U.S. government, U.S. business, the U.S. financial system, and U.S. households is debt. DEBT IS THE CAUSE AND NATURE OF THE CURRENT UNSTABLE WORLD SITUATION!! But it doesn't have to be YOUR problem! Every dollar used to pay down the principle on your debts earns money for YOU at the rate of interest you owe on the debt - this is the only guaranteed earning in the entire universe. Throw away your credit card if you don't have the willpower (or means) to pay off your balance every month. Don't think of credit as a tool to get what you need or want, think of it as A DEADLY DISEASE THAT IS VERY HARD TO GET RID OF AND MAY KILL YOU. It may take years to pay of your existing debt, but that's no excuse; if you don't take control the years will pass anyway and you will continue at the mercy of inflation/recession, etc, forever.
2. Change your lifestyle (and perhaps your aspirations) to match your income. You don't have to live off the land to be financially self-sufficient. You just have to limit your expenditures to match your income (minus saving). Most Americans have it backward (because the American Belief is that Debt is Good): they start by wanting a certain level of consumption (in school it's IPods, clothes, cellphones, etc; later it's bigger cars, bigger houses, fancy appliances, nicer vacations, etc; along the way there's cigarettes, drugs, booze, make up, junk or restaurant food, CDs, DVDs, etc) and then seek the income/debt necessary to achieve it. You take control of your life by choosing your means of livelihood (income) for self-fulfillment or to make a contribution to others (or both), then develop a lifestyle that your income can support without debt. People like Elaine are doing exactly that - the country life is only one possible chosen lifestyle - and it requires a conscious choice and self-discipline. But the chosen, self-sustaining lifestyle is powerful no matter what the financial-trade-political system does, while the pursuit-of-affluence lifstyle is weak and vulnerable to every twist and turn of the system.
3. SAVE, SAVE SAVE. Make a monthly budget (or cash your check and put the bills into envelopes marked "rent/housepayment", "food", "gas', etc). Use a budget line (or an envelope) for SAVINGS. Every time you get non-monthly income (a tax refund, Mom's birthday check, the proceeds of your garage sale) don't think "Now I can buy that..."), add it into your savings. NO MATTER HOW LITTLE YOU MAKE, YOU CAN ALWAYS SAVE!! I started out making $1.50/hr, and I have always saved a portion of my income. Think of it as a Tithe to your own security (and a good avenue to upgrade your lifestyle). 10% of your income for saving is a great figure, but even 2% is better than nothing (it's like sleep and exercise - more is better, but any is better than none). If you want, you can buy stuff with your savings - Ipods, cars, houses, whatever - or you can let it grow (Einstein said that compound interest is the most powerful expansive force in the universe) for emergencies, retirement, etc. It's your money, your power, your life.
4. O.K. I know, this seems too prosaic. You wanted to know how to prepare for drastic inflations, dramatic shortages and crises, the destruction of the American economy. What if you actually succeed at becoming debt-free and accumulate savings? How do you prevent runaway inflation from making it worthless, or economic/political disaster from eliminating your income? First of all, what a wonderful dilemna to have: "I have no debts and I'm accumulating savings, how do I invest?" Only 10% of Americans can ask that question, so you are in the top 10% already!! There are many techniques for hedging against inflation, and I'm not going to play investment advisor; if inflation's your concern, study the alternatives and make a choice (all choices involve trade-offs); if deflation/depression/unemployment is your concern there are very safe low-return investments available (and in this scenario you will be praising God you became debt-free and have some savings). Buy gold of you want, buy crude if you want, buy reposessed real estate, antique stamps, junk bonds, certificates of deposits, whatever. In any scenario, THERE IS ALWAYS OPPORTUNITY FOR SOMEONE WITH NON-BORROWED CAPITAL (SAVINGS) TO INCREASE THOSE SAVINGS. THERE IS NO HOPE FOR THOSE WHO HAVE DEBTS WHERE THEY SHOULD HAVE SAVINGS.
Hope this helps.

[Elaine Meinel Supkis]

Everyone here is correct.

No nation that has a people who never save, no such nation can thrive in the future. If we look at history, we can see clearly the need to balance military power with finances. Nations that do this via endless debt, lose power in proportion to the accumulating debt. But having no military leads to being looted by other military powers.

Figuring out this balance is very difficult. But it is OBVIOUS to see that running deep in the red like the US is doing, is utterly fatal.

ALL great changes in history had antecedents but ALL changes also happened in a flash. Very often, one small, little event explodes in everyone's faces as all the systems suddenly collapse around this event. For example, despite wild overspending on war by Germany, France and England during WWI, all managed to limp along just fine until October, 1929 when an overheated US stock market crashed.

No one imagined this would usher in a total collapse of world banking and world trade! Or the assassination of a middle aged prince of Austria. No one sane thought this would lead to both WWI and then WWII, the greatest global wars in human history! Impossible!

But it did. No one imagined letting Lenin into Russia secretly would lead to 75 years of international communist struggle for global domination! The Germans thought he would simply rouse a little trouble and thus, keep Russia occupied hammering their own serfs and workers rather than fighting Germany.

Then, this force nearly took over Germany after WWI. The efforts to prevent this led directly to Hitler for he was hired to spy on the communists and other socialist radicals and this is how he discovered and took over the Nazi party! Which was very small.

History is full of such tales. We don't know what small group, what force will be the next great power change. I am guessing, between rising Russian and Chinese nationalism, the foolish destruction of Western liberalism in the name of Zionist colonization of the Middle East, and the collapse of true capitalism in the West, I am guessing the forces of history which came mostly from Europe for 500 years is going to switch to coming from Asia.

This period we are in is a very powerful change in massive forces. Changing from Europe spreading out across the planet and taking over power everywhere to the reverse: this is a HUGE historic change. Almost mind-boggling. How we cope with this is very important.

Perhaps this is why I sound like I am supporting the Chinese view so much: aside from having Chinese as well as Jewish members in my family, I can 'project' my thoughts to be like someone else. So I strive to 'see' the world from the point of view of say, the Chinese.

In the case of the Jews, I fear the Apocalypse tremendously. My fury that AIPAC and the top Jewish leaders are embracing Christians who plan for this to happen: MY GOD. Help! NO! But when I walk into that fight and explain that ethnic cleansing is unholy hell for the Jews, I get attacked as if I am an anti-semite. Any Jewish person who does what I do, is also attacked.

This is another historical force we seem helpless to stop: Zionism will destroy the Jewish people. The 'safe haven' concept of the Zionists is really the opposite: a death trap.

And all of this intertwines with money. Which is why I talk about that strange place, the Cave of Death so much. For locating the point of power, the true point of power, we must look straight at the heart of the matter: the intersection of human desires, religion and the dynamics of the Outer Darkness where wealth is created. That place where all things can suddenly merge into One or flip and become the Other in a flash. The place where infinity meets instantaneous destruction.

So, in the end, this is all really about the next religious force. For the Age of Pisces is fading. Always, when humanity sees the stars 'shift' as the earth wobbles on its axis, the stars we see at night rise and fall at the 'wrong' times in the calendar, there is great fear. And this always resolves itself, once the stars are obviously 'not right' in the form of religious revolutions that suddenly overthrow the older religions!

This happens every 2,000 years or so. We are on the cusp of such a change. And isn't that crazy? It is certainly crazy.

[Peter]

Thank you Elaine,

you hint and allude to so much in this comment ("this happens every 2,000 years or so. We are on the cusp of such a change. And isn't that crazy?"). My inclination is to read philosophy and non-duality blogs, but you broaden and deepen my understanding if so many other critical ways. I agree, a broad, multi-dimensional view of sufficient perspective (as is yours) does inspire hope, if one is detached and aware. It would appear the fundamental problem is one of identity, for which we look to the lies of the other elites-the priest-caste of past religions. Which is why the one religion that is new and attempts to address this crisis facing humanity-the Baha'i Faith- prohibits a priest or minister class.
Hopefully, this is all the growth-pains of a maturing humanity. But for now, some ancient Chinese wisdom applies: "To understand the mystery of this One-essence is to be released from all entanglements." (Seng T'san, "Hsin Hsin Ming")

[john]

Buy gold and ignore what Elaine says

[Karmaisking]

Karma is getting angry. If Elaine is wrong, then go away. I'd buy gold and still read what Elaine has to say. How about you try that?

Buying gold is a selfish desperate act that will destroy the system. But I'm buying gold too. Why? Because if "the system" betrays you, what else are you to do?

The people at the top have become human rats without the ability to see the system as a whole. They just keep feeding on the capital built by others. Those who see the system as a whole are marginalized by the human rats. This begets barbarism. Barbarism is our future. Hoarding gold is a sign of barbarism. John, in small way, symbolizes this.

[B.A.]

I learn more about finance and history here than in college. A one blog liberal arts degree! Funny how, in my "International Economics" class, all we do is study how wonderful free trade is, always and everywhere. Most of the lessons are prepared answers to the doubters. Reminds me of Catholic Sunday school. "Is there a true Market? Yes!". "Why is it superior to protectionism? It is superior to protectionism because all sides are better off, always and everywhere". And so on. Religion and trade! Trade as religion.. One cannot underestimate how much those preaching unrestricted flow of capital, goods and people actually believe in it. This deception is self deception. I guess it's just the way the human mind works: we cannot live in a contradiction for long. The emotional attachment to a system that makes you rich and gives you all that pleasure and power must be very strong. That's probably why prophets come from deserts or mountains!

[OC]

Silk and tea trade worked for at least 2 thousand years and is proof that global trade exists and works. The Romans, Persians and the Chinese work damn hard to keep the trading routes open and free.

The current Western model of free trade is suspect. It is based on the Roman model which had failed and so it will fail again because the foundations were flawed to begin with. Perhaps the ME and Oriental models might prevail as they are based on a more sustainable footing..time will tell.

Meantime, it looks like a reversion to the norm...ME & China gets all their wealth back and the rest of the world is stuck.

[Elaine Meinel Supkis]

Yes, B.A. HAHAHA...I went to a Lutheran school as a child and we were taught 'yes, the Pope really is the devil'! And married...a Catholic who was an altar boy.

About buying gold: yes, it makes sense in a world where we must hoard to survive! It is just, while doing this, one must recognize the lurking dangers and the difficulties. #1 of which, the government always ends up stealing all this gold from private citizens. Be forewarned!

And this was done when we had no gun control laws. The NRA's pretense they are giving us power is silly. Power grows out of the barrel of a only organized militias! Which was clearly recognized by our Founding Fathers who gave MILITIAS the right to bear arms.

Then came the Civil War....

[Paul S]

I grew up Lutheran. I never heard any anti-Pope comments. I know Luther called the Pope the Anti-Christ, but that was a long time ago. Re the Free marketers: IMHO most of them KNOW they are shoveling BS. They are just members of the propaganda ministry getting paid really well to spout the big business, corporate, party line. Topping the list: corporate fascists like Limbaugh and Hannity. How guys like this get away with their propaganda is a mystery to me. Of course, you can always tell when these guys like L. and H. are getting nailed by a caller. They break off the call because they are out of time, caller veering off subject, etc. It just astounds me to hear folks call in and say 'Sean you're a great American', 'Dittos Rush',etc. These guys positively are NOT friends of the little guys. The Limbaughs abd Hannitys will NOT rest until the average wage in the USA is 80 cents an hour. We're getting there.

[Elaine Meinel Supkis]

Hey, were you Norwegian Lutheran? Heh. The high holy days are celebrated with jello and marshmallows.

You are right, Paul, about Rush and company. I used to be on the radio and they would turn off the sound and rattle away while I was locked out, of course. They can't win real arguments.

[Paul S]

Jello...haha! No kitchen worthy of the name has less than 6 jello molds. But don't forget about the tater tot casseroles!! And ya won't see any of that Demon alcohol at a REAL Lutheran get-together. Yeeha! But seriously, I can NOT believe the lies that come out of the talk fascists like Limbaugh abd Hannity. I should stop listening to them. They just make me angry, but it's like a bad habit. You know it's wrong but you do it anyway. Maybe there's a patch I can wear to ease away from the habit.

[Elaine Meinel Supkis]

Yeah, wear earplugs. Heh.

[Paul S]

Hi Elaine: Have to disagree with you about the talk radio morons. Sure they are whores for the groups that pay them AND they do nothing but lie. All that is true, BUT I believe it's important to know what the bad guys are up to. It's sort of like a war; you want to get good intel on the bad guys. That said, I don't recommend others waste their time listening to Limbaugh, Hannity, Levin and their ilk. Getting a root canal is more pleasant.

[Gary W]

Talking about labour always reminds me of an old Soviet joke: "we pretend to work, they pretend to pay us." This must be the ultimate crisis of capitalism: when the wage slaves spend all of their income, and possibly more, on the basics: food, shelter, and energy.

Thanks again to Elaine for her inexhaustible elucidations!