It Begins: Bundesbank To Commence Repatriating Gold From New York Fed

Bundesbank Official Statement On Gold Repatriation

This is a VERY big deal.

Some context for foreign Gold storage: Nixon cut the dollars last ties to gold in 1971 when the French wanted gold for the money they lent us during the Vietnam war. He basically said, screw you, you’re only getting paper. This is a little appreciated source of Franco-American animosity. The situation with Germany is different. Because of the Soviet military threat, many European countries kept much of their gold reserves in the US.

The Concern: Many people believe the Fed doesn’t actually have Germany’s gold. People say this from varying depths of the rabbit hole of conspiracy. What’s clear is that the Fed has steadfastly resisted any audit of its gold.

Possible Outcomes: If the Fed continues to refused, as they’ve done with previous requests of the Bundesbank, it will cause a huge loss of confidence in the US Fed. (For some stupid reason, people still have confidence in the US gov’t.)

If those Germans continue to insist on their gold, as they should, then a gigantic house of cards might come tumbling down. The likely effects are a huge loss of confidence and a soaring gold price.

I think the more likely outcome at this point is that the media will being calling the Budesbank Nazis and they’ll retreat with their tail between their legs — but that will only work for so long.

From Dan Amoss of the Daily Reckoning, originally published in September 2012:

“For years, I’ve expected that at the end of all this central bank printing, we’ll see the end — not a reversal — of quantitative easing programs and a re-pegging of the US dollar to gold at much higher gold prices. A new gold standard would allow the Fed and other central banks to save face after the following sequence of events:

1. Central banks inflate their balance sheets and buy up many of the bonds governments issue to fund soaring budget deficits
2. Once the largest suppliers of scarce products realize they’re exchanging products for infinitely diluted paper money, they start demanding more and more money in exchange for sending their scarce products to the marketplace
3. Consumer prices start rising
4. Calls for monetary tightening (reduction of central bank balance sheets and interest rate hikes) grow louder
5. These central banks won’t be able to slash money supplies without crashing government bond markets and stock markets. They talk about tightening, but don’t tighten
6. As central banks lose credibility, gold launches on a final, near-vertical stage of its bull market
7. In response to inflation expectations running wild, governments and central banks draw up plans to re-peg currencies to gold in order to avoid having to drain trillions worth of cash from the banking system.”

In the face of imminent hyperinflation, Dan Amoss postulates that the Fed will back the dollar with gold at some significantly higher price in order to avoid a complete collapse of the dollar. It is reassuring that the Fed can do this, but will it? Another scenario is that some large and important country, such as Germany or China, will back its currency with gold and cause demand for the dollar as the preferred means of international settlement to fall. This will cause prices to rise in the US as overseas dollars start to flow back into the only economy where they must be accepted for all debts public and private. (Read more)

Ben Bernanke began his press conference with a touching tribute to the unemployed. Oh, how he cares! And so deeply! His description of the problem was accurate enough. But then out came the smoke and mirrors.

Bernanke said that to remedy the unemployment problem, he will continue the Fed’s program of asset purchases. Specifically, the Fed will continue to buy and hold mortgage-backed securities . . . .

But here’s the disconnect. What the devil does buying bad debt from zombie banks have to do with getting people jobs? The relationship between assets purchases and policy goals is murky at best.

“I need a job, so I hope the Fed buys more bad mortgage debt” — said no unemployed person ever.

Yes, I know about ancient Keynesian theories. There is tradeoff between unemployment and inflation. But those theories have not really explained much at all for the last 40 years. In fact, they blew up in the 1970s with the emergence of “stagflation.” An affliction where unemployment remains high even as inflation roars ahead. (Read more)

A 21-year-old Bangladeshi man tried and failed to blow up the Federal Reserve Building in downtown Manhattan on Wednesday, largely thanks to the efforts of the Federal Bureau of Investigation. That “thanks” ought to be attached both to the “tried” and the “failed” parts of that sentence, since it was the FBI that not only coaxed the suspect, Quazi Mohammad Rezwanul Ahsan Nafis, into moving forward with the bombing but also supplied him with the means to do so. Don’t worry. The Feds know what they’re doing. They do this all the time. (Read more)

Lew Rockwell: “The FBI and NYPD recruited and trained some schnook to fake-bomb the Federal Reserve Bank of New York. It’s more of the phony, government-generated “terrorist under the bed” stuff that’s supposed to make us shiver. It may also be an attempt to smear those who intellectually oppose the bankster temple.”

This is such an outstanding piece of bullshit, that I just had to post it. Who are these people?

U.S. home prices rose for a sixth straight month in July in the latest sign of a sustainable housing market recovery, while a jump in consumer confidence this month offered a harbinger that Americans are ready to loosen their spending.

Six years after its collapse, economists believe the housing market has turned a corner.

Two separate reports on Tuesday showed that home prices rose in July, though the gains were not as strong as the previous month. That follows recent data that home resales and groundbreaking on new properties rose in August, while business sentiment among homebuilders hit a more than six-year high this month. (Read more)

The last QE3 is aimed explicitly at the housing sector. The government is printing huge amounts of money and throwing it at the housing sector, then these idiots have the temerity to suggest that rising home prices are a sign of recovery!

Great breakdown of QE3.

I think this and similar videos are important because they document the sheer idiocy of rhetoric supporting economic suicide. I want historians to some day look back on this and marvel.

The story of American Empire in one photo:

#1 During fiscal year 2011, the U.S. government spent 3.7 trillion dollars but it only brought in 2.4 trillion dollars.

#2 When Ronald Reagan took office, the U.S. national debt was less than 1 trillion dollars. Today, the U.S. national debt is over 15.2 trillion dollars.

#3 During 2011, U.S. debt surpassed 100 percent of GDP for the first time ever.

#4 According to Wikipedia, the monetary base “consists of coins, paper money (both as bank vault cash and as currency circulating in the public), and commercial banks’ reserves with the central bank.” Currently the U.S. monetary base is sitting somewhere around 2.7 trillion dollars. So if you went out and gathered all of that money up it would only make a small dent in our national debt. But afterwards there would be no currency for anyone to use.

#5 The U.S. government spent over 454 billion dollars just on interest on the national debt during fiscal 2011.

#6 The U.S. government has total assets of 2.7 trillion dollars and has total liabilities of 17.5 trillion dollars. The liabilities do not even count 4.7 trillion dollars of intragovernmental debt that is currently outstanding.

#7 During the Obama administration, the U.S. government has accumulated more debt than it did from the time that George Washington took office to the time that Bill Clinton took office.

#8 It is being projected that the U.S. national debt will surpass 23 trillion dollars in 2015.

#9 According to the GAO, the U.S. government is facing 34 trillion dollars in unfunded liabilities for social insurance programs such as Social Security and Medicare. These are obligations that we have already committed ourselves to but that we do not have any money for.

#10 Others estimate that the unfunded liabilities of the U.S. government now total over 117 trillion dollars.

#11 According to the GAO, the ratio of debt held by the public to GDP is projected to reach 287 percent of GDP by 2086.

#12 Others are much less optimistic. A recently revised IMF policy paper entitled “An Analysis of U.S. Fiscal and Generational Imbalances: Who Will Pay and How?” projects that U.S. government debt will rise to about 400 percent of GDP by the year 2050.

#13 The United States government is responsible for more than a third of all the government debt in the entire world.

#14 If you divide up the national debt equally among all U.S. taxpayers, each taxpayer would owe approximately $134,685.

#15 Mandatory federal spending surpassed total federal revenue for the first time ever in fiscal 2011. That was not supposed to happen until 50 years from now.

#16 Between 2007 and 2010, U.S. GDP grew by only 4.26%, but the U.S. national debt soared by 61% during that same time period.

#17 During Barack Obama’s first two years in office, the U.S. government added more to the U.S. national debt than the first 100 U.S. Congresses combined.

#18 When you add up all spending by the federal government, state governments and local governments, it comes to 46.6% of GDP.

#19 Our nation is more addicted to government checks than ever before. In 1980, government transfer payments accounted for just 11.7% of all income. Today, government transfer payments account for 18.4% of all income.

#20 U.S. households are now actually receiving more money directly from the U.S. government than they are paying to the government in taxes.

#21 A staggering 48.5% of all Americans live in a household that receives some form of government benefits. Back in 1983, that number was below 30 percent.

#22 Back in 1965, only one out of every 50 Americans was on Medicaid. Today, one out of every 6 Americans is on Medicaid.

#23 In 1950, each retiree’s Social Security benefit was paid for by 16 U.S. workers. According to new data from the U.S. Bureau of Labor Statistics, there are now only 1.75 full-time private sector workers for each person that is receiving Social Security benefits in the United States.

#24 The U.S. government now says that the Medicare trust fund will run out five years faster than they were projecting just last year.

#25 Right now, spending by the federal government accounts for about 24 percent of GDP. Back in 2001, it accounted for just 18 percent.

#26 If the U.S. government was forced to use GAAP accounting principles (like all publicly-traded corporations must), the U.S. government budget deficit would be somewhere in the neighborhood of $4 trillion to $5 trillion each and every year.

#27 If you were alive when Christ was born and you spent one million dollars every single day since that point, you still would not have spent one trillion dollars by now. But this year alone the U.S. government is going to add more than a trillion dollars to the national debt.

#28 If right this moment you went out and started spending one dollar every single second, it would take you more than 31,000 years to spend one trillion dollars.

#29 A trillion $10 bills, if they were taped end to end, would wrap around the globe more than 380 times. That amount of money would still not be enough to pay off the U.S. national debt.

#30 If the federal government began right at this moment to repay the U.S. national debt at a rate of one dollar per second, it would take over 470,000 years to pay off the national debt.

#31 If Bill Gates gave every penny of his fortune to the U.S. government, it would only cover the U.S. budget deficit for 15 days.

#32 According to Professor Laurence J. Kotlikoff, the U.S. is facing a “fiscal gap” of over 200 trillion dollars in the future. The following is a brief excerpt from a recent article that he did for CNN….

The government’s total indebtedness – its fiscal gap – now stands at $211 trillion, by my arithmetic. The fiscal gap is the difference, measured in present value, between all projected future spending obligations – including our huge defense expenditures and massive entitlement programs, as well as making interest and principal payments on the official debt – and all projected future taxes.

#33 If you add up all forms of debt in the United States (government, business and consumer), it comes to more than 56 trillion dollars. That is more than $683,000 per family. Unfortunately, the average amount of savings per family in the U.S. is only about $4,735.

#34 The U.S. national debt is now more than 5000 times larger than it was when the Federal Reserve was created back in 1913. (Read more)