Bernanke’s Ring of Fire

We shall have world government, whether or not we like it.  The question is only whether world government will be achieved by consent or by conquest.
– James Paul Warburg appearing before the Senate on 7th February 1950

For more than a century ideological extremists at either end of the political spectrum have seized upon well-publicized incidents … to attack the Rockefeller family for the inordinate influence they claim we wield over American political and economic institutions. Some even believe we are part of a secret cabal working against the best interests of the United States, characterizing my family and me as ‘internationalists’ and of conspiring with others around the world to build a more integrated global political and economic structure—one world, if you will. If that’s the charge, I stand guilty, and I am proud of it.
– David Rockefeller in his autobiography, Memoirs

Before I get into it I want to pose a question for all of you to ponder this weekend:

What is more dangerous, building nuclear power plants on major fault lines or allowing Central Bankers to play God?

 

Bernanke’s Ring of Fire
The horrific human and societal tragedy that has befallen the people of Japan over the past week has brought up many questions with few answers.  One of the most frequent questions I have heard is why would anyone every build nuclear power plants on a major fault line that everyone knew would one day experience a nightmarish earthquake like the one that occurred last Friday?  I am not going to try to answer that question although I think there are many reasons ranging from the fact that Japan is a nation short on natural resources like oil and coal to the fact that there is a strange aspect of human nature that causes us to repeatedly think we can overcome the forces of nature with our superior intelligence manifested in technological advancements.

I am also not going to try to pass judgment on how bad the radiation fallout from the disaster is because quite frankly I have no idea.  That said, whenever “experts” tell me everything is fine and not to worry that the situation cannot possibly be a disaster on the scale of Chernobyl I do get a bit freaked out.  It reminds me of when I was standing outside the World Trade Center staring straight into a massive blown out hole and stating to a Lehman colleague that we better move since the building could crumble at which point he began to lecture me about how and why that could not possibly happen.  It was impossible he said.  Just like the Titanic was unsinkable.  Just like the treasuries are a safe haven…

Rather than comment on how bad Japan is or will be I am going to focus on the massive monetary fault line we are all sitting on at the moment.  While the epicenter of this earthquake is at 33 Liberty Street in Manhattan, this quake will wreck havoc on all of the planet’s six billion people and unlike the Japan earthquake this one will be entirely a manmade affair.  For those unaware, 33 Liberty is the building that houses the Federal Reserve Bank of New York and for those that have never seen the building or a photo of it take a look at this link http://gonyc.about.com/od/photogalleries/ig/Federal-Reserve-Bank-Pictures/Federal-Reserve-Bank-Building.htm.  Look at the top right corner.  Looks like a Medieval castle doesn’t it?  Makes sense if you think about it.  These guys are the so called “elite” and they view us as their serfs.  They already have much of the world in a sort of passive neo-feudalism but their real endgame has remained elusive.  Total feudal control over the entire world including the United States via a world currency controlled by the IMF.  This has always been the plan and still is.  PLEASE read the following by Ambrose Evans Pritchard in the UK’s Telegraph from a couple of years ago.  The headline says it all:  “US Treasury Secretary Tim Geithner shocked global markets by revealing that Washington is ‘quite open’ to Chinese proposals for the gradual development of a global reserve currency run by the International Monetary Fund.”  See…they deny and deny this but it IS the agenda.  It is very clear if you are paying close attention.  Article here:  http://www.telegraph.co.uk/finance/economics/5050407/US-backing-for-world-currency-stuns-markets.html

There is a contentious debate out there amongst those of us that see the genocidal policies of the Federal Reserve for what they are.  There are those that think the Fed is doing all of this deliberately to destroy the U.S. dollar as the reserve currency so as to use the monetary earthquake that ensues to jam a world currency (SDR) down our throats at our most weak moment.  There are also those that think it is just all a tragic accident and folly of human nature and its hubris.  I don’t concern myself too much about which theory is correct because it doesn’t really matter.  What matters is that the end of this monetary system is close and hand and there is a strong push for a world currency in Central Bank circles.  This currency would be controlled by the IMF probably out of Europe and it would be the final nail in the coffin of fee humanity.  Avoiding this outcome is the single biggest driver of my writing these emails.  The dollar collapse is coming.  This is as certain as the seasons themselves.  What is uncertain is how we respond to it.  We need to put as much silver and gold into the hands of American communities as fast as possible so that when the end comes we can figure out for ourselves how to proceed.  So that the “elites” can’t tell us what to do next.  We need to become more self-sufficient and as quickly as possible.  We need to prepare for the monetary earthquake and get started fast so that we have our heads on straight and can fight back against the elite agenda when they try to force it upon us which they will with 100% certainty.

Will we be like Greece or Ireland and be treated like subhuman slaves by the IMF and ECB to be ordered around and dictated as to what their economies and cultures must be molded into by those that control the creation of fiat money?  Or will we still tall and proud like those in Iceland and say we may be poor but we are FREE and we will make our own decisions on how we will live our lives today and until the day we die.

What’s Next in the Markets?
Ben Bernanke has surrounded all of earth’s inhabitants within a Ring of Fire that will create a monetary earthquake that will very soon ravage the livelihoods of billions (the tremors have already started in MENA).  While the headlines are now focused on Japan, the dominos continue to fall in the Middle East and Saudi Arabia and Iran seem to be fighting a proxy war in Bahrain.  All of the themes I have discussed in earlier emails are only exacerbated by the Japanese quake as the response has been and will be to print infinite amounts of confetti money and try to secure resources to rebuild with it.  The problem is that EVERY nation is doing the same thing.  So worthless fiat is being expanded exponentially and will compete for real things and why should the holders of the necessities of life, gold and silver (real money and true financial security) as well as food and energy sell their goods for colored confetti or even worse digital entries in a bank account.  If you don’t think the governments of all countries that posses massive resources will not export less and in order to keep more internally to quiet their restless populations you aren’t paying attention.  This liquidation selloff in commodities since the Japanese earthquake is probably already over and I expect a HARD reversal to the upside to new highs in food and especially oil.  The Asia Tapis benchmark is closed at just under $117/b last night and it a whopping 3% off of the high.  Wholesale gasoline prices traded here in the U.S. are down about 4% from the high but are a terrifying 15% higher than a month ago.  I expect another major surge in the price of oil imminently.  Remember last week I wrote that I thought the Dow and gold would ultimately meet at around 5,000.  Can’t imagine how this can happen?  Watch the next few months.

Gold is Going to Do What the Nikkei Did in Reverse
Everyone in the financial markets were in shock watching the Nikkei plunge over 14% at one point on Tuesday and this was after a 6% plunge the day before.  Many macro strategists and commentators had been very bullish on Japanese equities, partly on the belief that the yen would plunge as the BOJ would have to start to monetize JGBs in size and this was certainly a somewhat plausible thesis (although I never agreed with it).  This positioning probably made the sell-off that much worse.  Below is the five year chart of the Nikkei.

Scary right?  Looks like 2008 right?  Ok, well what I expect to happen at some point this year is the gold chart and their shares will look like this but in reverse.  While financial parrots on television call gold a “bubble” without having any idea what they are talking about, precious metals expert Eric Sprott recently put out a great piece where it puts that whole ridiculous idea to rest.  Here it is http://www.sprott.com/Docs/MarketsataGlance/2011/02%20_11_Debunking%20the%20Gold%20Bubble%20Myth.pdf.  Furthermore, there is nothing I enjoy more in the markets than identifying a bubble and betting against, as emotionally traumatizing as that can be in the near-term.  In fact, my whole career has consisted on being able to identify big bubbles.  I have found the biggest one of them all.  It is fiat money and the U.S. dollar in particular.  The other side of that is gold.

As Sprott demonstrates, financial assets are barely invested in gold.  Personally I don’t think the current financial world will ever get properly positioned in time and the massive expansion of the % of financial assets in gold related investments that I expect in the years ahead will result primarily from a sudden and shockingly large surge in the price itself rather than investors ever figuring it out.  Instead they will lose all of your hard earned money in bank stocks that are worthless.  By rewarding failure and short-termism through its policies the Federal Reserve has created an investment industry with very little original thought, a very poor understanding of finance and economics and an inability to think outside the box.  It is up to you to protect yourself.  If you listen to Washington D.C. and Wall Street’s advice you will drown in the financial tsunami coming this way fast.

Happy St. Patrick’s Day and come on Ireland stand up to these bastards already!

Mike

Follow me on Twitter.