Sound what? Ron Paul is the only politician telling the real story...

Audit the Fed - dead...till the next time

Corruption is alive and well in Washington.

Audit the fed - dead...or will the dead cat bounce bring it back

When the DOW falls 2,000 points the pressure on the Fed will start to heat up again...for now Bernake and cohorts have used the process of printing money to buy votes, power and legislation. It is not compliant with the foundations of this republic. The reality is that in any most legal jurisdictions it would be called criminal and be a punishable offense. However, finance is government and most of the officials in government work for finance driven causes since the payoff they get is apparently free money that makes them look good to their constituents. This money is provided at the behest of the Fed and large financial institutions regardless of the liabilities and imbalances it creates.

Structural blackmail is alive and well.

Hyper inflation will be the result after hyper deflation...

First, DEFLATION...then monetize with currency devaluation = HYPER INFLATION in 2014 to 2016. This movie is too optimistic about a linear path to inflation...I think characteristic to the market's pattern, we will get deflation first and then currency devaluations that attempt to compensate for fiscal deficits and other obligations.

Bear markets like EVERYONE to lose money...if we get deflation people who make money on that decline will most likely lose it on inflationary activity when currencies become worthless.

Works for me!

Wall Street...up to old/new tricks

This week was an abortion. Currency collapses, volatility, margin calls, liquidations and manipulations. It was not without serious implications. The manipulators won. But what did they win?

Well, that is an interesting question. First, take note that Morgan Stanley, JPM and Goldman Sachs and the Fed are at risk of a lot of dangerous litigation and regulation - both of which they do not want. I am quite sure that Goldman, for one, is tired of being painted as the villain - though they and the others are, but it could finally have been time for them to show Washington who really runs Washington. Ironically, if these financial institutions spending $100 million per week on lobbying is not enough why not use a bat.

On the very day that the senate was supposed to vote on the breakup of these very banks, including a few others, their computers and market making shenanigans, unlimited naked short selling capability, systematic front-running mechanisms, rebates and liquidity miraculously paused and the market crashed by 10% intraday.  Ironically, creating one even larger shenanigan, in my opinion - if you want to call playing with millions of peoples lives a shenanigan.

Note 5/9/2010: Mike Shedlock indicated today in his post Human Judgment Needed or Computers Bid $.01 that this was not a coordinated event but a symptom of inefficiencies in the system. I do not agree. I would like to point out is that the markets have been down 300+ points many times before with NYSE curbs starting to take effect without causing a cascading crash. Liquidity was pulled from the market in a different manner than any previous trigger and most definitely not without some coordinated responses or trigger events in the liquidity systems. For the record, liquidity trading systems are quite aware of the electronic exchanges and use them quite well in fact. Please refer to this post for more information: PG and the market...more lies from the press

Think about the result of breaking up these banks. The Fed's deceit would be readily visible - as the balance sheet issues of the large banks would prove their insolvency once their assets could no longer be commingled and their balance sheet could no longer be marked to fantasy. If that happend, there would be more scrutiny of the Fed's balancesheet aswell. Politicians paniced when Paulson and Bernake went to capital hill claiming the the end of the world was near...seems to me a good panic would be just the ticket again to trigger them to forget sound reasoning and instead worry about they're election contributions, near-term perceptions of their constituents or special interests. Score is Fed 9, us tax payers 1 and special interest politicians 8. So far, I would say the Fed has done a very effective job of fighting Ron Paul and his attempts to hold them or their buddies accountable.

As if to let the senate know that their vote could be a disaster - the entire financial computerized market liquidity system was shutdown and then rebooted to demonstrate just how powerful these powerful forces really are. 1987 was probably more easy to understand actually and though it was also contrived it was not the same kind of contrived and coordinated effort that was required to create Thursday's action. This event was just ridiculous, highly orchestrated and well coordinated. Just take a look at the program trading chart below. If ever there was a clear blackmail of the senate and the policy makers in Washington -this was it. And guess what? ...the vote failed. These arrogant manipulators got what they wanted. 

Market making is a ludicrous business, with access to hugely leveraged capital at nearly no cost, nearly free trading costs and settlements, rebates, exchanges, offsets and finally dueling and often coordinated computer programs. If you can hitch a ride on those coat tails fine, otherwise, quite frankly you are screwed. Even with this market as it stands, I would not be surprised to see these dueling and coordinated market liqudity trading algorithms used to engineer a move to new highs.

Ironically, the frailties of the system were laid bare for all to see if only they were willing to look. However, many people may have seen the  end of day closing prices as a minor drop in their portfolio values and heard the press flaunting their ever popular fat finger type theories (I wonder how many favors they curried for that effort) and thus trivialized the implications of the greatest Wall Street blackmail of since Paulson and Bernake assaulted capitol hill.

So, where do we go from here...certainly, the markets can not be trusted, the government can not be trusted the regulators can not be trusted, the banks can not be trusted....that's a lot of trust that is lost. Maybe greed can over power it, but in my opinion if the markets can rally, it will be because big PPT member banks like JP Morgan's computers trading with Goldman Sach's (or other PPT member's) computers and not because there is any real buying, confidence or trust.

We need to support real change not Obama type change. We need a stable currency and a free market. To get there we will need to audit the fed, dismantle this confidence game and its ponzi scheme banking system. And finally we need to remove people who would prefer the totally manipulated and non-free market markets that have been the hallmark of the current system. Ron Paul, Rand Paul, Peter Schiff and even Alan Grayson are a few people who are going the right direction. 

We need to get involved.

Ron Paul got it...we need government officials who do

Ron Paul gets it...Obama, Bush, Paulson, Summers, Geithner, Bernake, Rubin, Goldman Tax, JP Morgan do not. The sad fact is that this will end badly for them as well as us...though they may still be looking out of corner offices as people are protesting. However, if I could wish that it ended badly for just them...they would be getting what they deserve.

Capitalism should not be condemned, since we haven’t had capitalism. A system of capitalism presumes sound money, not fiat money manipulated by a central bank. Capitalism cherishes voluntary contracts and interest rates that are determined by savings, not credit creation by a central bank. It’s not capitalism when the system is plagued with incomprehensible rules regarding mergers, acquisitions, and stock sales, along with wage controls, price controls, protectionism, corporate subsidies, international management of trade, complex and punishing corporate taxes, privileged government contracts to the military-industrial complex, and a foreign policy controlled by corporate interests and overseas investments. Add to this centralized federal mismanagement of farming, education, medicine, insurance, banking and welfare. This is not capitalism! [...]

Speculative bubbles and all that we’ve been witnessing are a consequence of huge amounts of easy credit, created out of thin air by the Federal Reserve. We’ve had essentially no savings, which is one of the most significant driving forces in capitalism. The illusion created by low interest rates perpetuates the bubble and all the bad stuff that goes along with it. And that’s not a fault of capitalism. We are dealing with a system of inflationism and interventionism that always produces a bubble economy that must end badly.

Capitalism didn’t give us this crisis of confidence now existing in the corporate world. The lack of free markets and sound money did. Congress does have a role to play, but it’s not proactive. Congress’s job is to get out of the way. - Ron Paul - 2002

Thanks to jose for sending me this quote.

Bernake does not get it...thank god Ron Paul does

Video worth watching...

Ron Paul on the Jon Stewart Show in NYC

The Jon Stewart interview of Ron Paul was pulled from You Tube...I would suggest searching around for it...was a great interview...below is a transcript

Jon Stewart: … welcome Republican Congressman from the State of Texas who also ran for President in 2008. His new book is called End The Fed. Please welcome back to the program, Congressman Ron Paul.

Audience: (Applauds)

Jon Stewart: Nice to see you again, sir.

Ron Paul: It’s good to see you. Thank you.

Jon Stewart: I have read many… this call end the Fed. I have read many politician’s books. They typically are a couple of apocryphal [ph] campaign, anecdotes, cut and paste from one of Churchill’s books. A little end with the American exceptionalism, God and faith. You seemed to have put a lot of thought and effort into this book and you call yourself a congressman. It’s usually you’ve been calling, you’ve been rallying against this type of government intervention, the Federal Reserve, for 30-35 years. Suddenly, the tea parties arise calling for a very similar type of thing. Do you feel like you were like a cool Indie band and somebody came in and like kind of stole your sound and then, by golly, he’s super big. Like how do you feel when you’re watching that development for the last eight or nine months?

Ron Paul: It’s scares the daylights out of me.

Jon Stewart: (Laughter). There goes the daylight.

Ron Paul: Well now, what has happened is that the concerns of how it come about, it’s not because I knew about this. I think good economic policy will tell us that these problems are here and everybody knows we’re in the middle of a big problem. We’ve have…

Jon Stewart: But isn’t we this way with Republican administrations, with Democratic administrations. It is a consistency not often seen.

Ron Paul: Right, my biggest concern is personal liberty and I’ve noticed over the years that both Republicans and Democrats have very little respect for personal liberty and therefore I’ve been fighting this and I want the government to be small. If the government is big, you have less personal liberty and you have to find out how they finance big government and they tax us a lot, but it’s not enough to pay the bills. They borrow a lot and that’s not enough and then there’s another method and it has to do with the Fed.

They have this little thing called the counterfeit machine and they just print the money when they need it. You know, you and I we’d go to jail if we did that, but the Fed does it in secrecy and they get away with it and the government keeps growing and you have runaway welfare spending and then on top of that, they use this to finance these wars that I think are so ridiculous. You know, undeclared wars, endless wars, good wars, long wars, and all kinds of wars with no end in sight. So I’ve put a lot of blame on the Fed because they monetize these debts.

Jon Stewart: We would be taken to jail if we print the money. And do they ever, you know, first of all, I was struck by what you said me going to jail for printing money.

Audience: (Laughter)

Jon Stewart: We have to make a quick call after the show.

Audience: (Laughter)

Jon Stewart: But it is interesting. You know, reading about the history of the Fed that you layout. Their policy is always talking about controlling inflation or preventing deflation, but it is always inflationary. It always seems that over years, they just print more money and you believe that it then creates an illusion of an economy rather than an economy.

Ron Paul: Temporarily, it helps. You know, if you borrow a lot of money. If an individual borrows a million dollars a month, they can live beyond their means until they have to pay the bills. What the government does, if they pay their bills through financial crisis, inflation, unemployment and all these kinds of problem, but one of their job was to have a sound dollar and steady prices.

Well, in 1913, when they started, they have a dollar stock, but it’s worth 4 cents right now. Most of us have four employment. True statistics now in the free market, where we calculate our unemployment per five person, 20 percent, so they haven’t given us sound money. They don’t give us steady prices. They say, “Well, we want to steady the interest rates.” Well, the interest rates are, in my lifetime, they’ve been 21 percent and they’ve been less than 1 percent, so they have failed in everything they’ve done. They have given us big government and they have helped in a significant way to undermine our liberty.

Jon Stewart: What do you say if somebody says, “But what is the answer in the absence of any regulation or in the absence of any controlling entity? Isn’t it anarchy? Isn’t there chaos? Before the Fed, the 1800s, would anyone choose that century as a model for stability, you know, economically?

Ron Paul: It would help guide us because we had significant growth for 30 or 40 years at the end of 19th century and we have a gradually decreasing prices. Actually, your purchasing power went up, but it was not perfect because we have they call benevolism. They fixed the price ratio between gold and silver and there were shortcomings and frequently State’s abuse, so it was imperfect, but the Founders knew about inflation. The destruction …

Jon Stewart: Well, you’re more Jeffersonian on this. You would say he fought against the Central Bank and you would say that he would make the right call. But who would fill that gap? You know, is government the only infringement on personal liberty? You know, because it seems like government also can provide a bore against tyranny, the civil rights movement in such.

Ron Paul: No.

Jon Stewart: Are there other things that infringe personal liberty in government?

Ron Paul: Oh, yes, all the time. Well, with money, the government should protect the value of the money and not destroy it. But yes, the government has an important role in financial issues. They should protect against fraud. For instance, Enron went bankrupt. The market said their stock was worthless and under State Anti-Fraud laws, these individuals were prosecuted and put in jail. You didn’t need more regulations. You have to have anti-fraud laws. But it’s hard to enforce fraud laws when the government participates.

Jon Stewart: (Laughter)

Audience: (Laughter)

Jon Stewart: I’d really like this cast already. Extraordinary.

Ron Paul: Yeah, it’s hard to prosecute…

Jon Stewart: It’s hard to support fraud when the government is committing fraud.

Ron Paul: Well, what about Madoff. He deserves to go to jail, but you know, well, there’s a Ponzi scheme done in DC it’s a same situation down there.

Jon Stewart: Is that a failure though of a lack of oversight? I guess what I’m trying to wrap my head around is even a libertarian viewpoint would say that we need government to provide for the common defense.

Ron Paul: Yes, sure.

Jon Stewart: Who protects us from corporatism? Who protects us from… is it the corporate attack, maybe not as bloody as another country coming in, but isn’t it as necessary for the little guy to be protected from that by some kind of collective?

Ron Paul: Yes.

Jon Stewart: And some others.

Ron Paul: Yes. But to do this, it’s more about prevention than by regulating it. You caused all these harm and trouble and inflation.

Jon Stewart: Right.

Ron Paul: What you want to do is prevent it. The corporations have no right to come to government and get special benefits. The Halliburns [ph] wouldn’t exist in a libertarian society.

Jon Stewart: Right.

Ron Paul: And they get special benefits. It started early on, even with the railroads. I mean, they’ve got certain benefits. So corporations that makes money because you and I and everybody else buy their product. Business, good and bad and corporate profit reflects that they have given the consumer a good product at a good price, but if they’re big because they’re wheeling and dealing with the government. The bigger the government is, the more it encourages the lobbyists because then the incentive to go down there and control the government to get the benefits.

Jon Stewart: Has anyone try to, you know, in what you would call your ideal, has that been tried? Is there a country, is there a government that you believe approximated your ideal of a more sort of a liberty-oriented and economically and socially government?

Ron Paul: Well, we haven’t reached the ideal and we’re not likely to, but I think our country started off pretty well. You know, fairly well. They had the intention. They recognized property rights, sound money, and contracts and you didn’t have the right to destroy your neighbor’s property and so I think…

Jon Stewart: Oh, all right. I’ve got to make another call then. All right.

Audience: (Laughter)

Ron Paul: I don’t want to get you in any trouble.

Jon Stewart: Exactly. Thank you for writing this book. It is really thought-provoking and just really well written and clearly from the heart and it clearly comes from a foundation of belief that you know and awfully a lot about and how you’ve survived in government for eleven terms, I do not know, but thanks for being here. End the Fed is on the bookshelves now. You really should check it out. Thank you, sir.

Ron Paul: Thanks a lot.

Jon Stewart: Thank you, sir.

Why the Fed Loves Secrecy
by: Ron Paul

Last week I was very pleased that the Financial Services Committee held a hearing on the Federal Reserve Transparency Act, HR 1207. The bill has 295 cosponsors and there is also strong support for the companion bill in the Senate. This hearing was a major step forward in getting the bill passed.

I was pleased that the hearing was well-attended, especially considering that it was held on a Friday at nine o’clock in the morning! I have been talking about the immense, unchecked power of the Federal Reserve for many years, while the attention of Congress was always on other things. It was gratifying to see my colleagues asking probing questions and demonstrating genuine concern about this important issue as well.

The witness testifying in favor of HR 1207 made some very strong points, which was no surprise considering the bill is simply common sense. It was also no surprise that the witness testifying against the bill had no good arguments as to why a full audit should not be conducted promptly. He attempted to make the case that the fed is already sufficiently accountable to Congress and that the current auditing policy is adequate. The fact is that the Fed comes to Congress and talks about only what it wants to talk about, and the GAO audits only what the current laws allow to be audited. The really important things however, are off limits. There are no convincing arguments that it is in the best interests of the American people for anything the Fed does to be off limits.

It has been argued that full disclosure of details of funding facilities like TALF and PDCF that enabled massive bailouts of Wall Street would damage the financial position of those firms and destabilize the economy. In other words, if the American people knew how rotten the books were at those banks and how terribly they messed up, they would never willingly invest in them, and they would fail. Failure is not an option for friends of the Fed. Therefore, the funds must be stolen from the people in the dark of night. This is not how a free country works. This is not how free markets work. That is crony corporatism and instead of being a force for economic stabilization, it totally undermines it.

If the Fed gave its actual arguments against a full audit, they would not have mentioned anything about political independence or economic stability. Instead they would admit they don’t want to be audited because they enjoy their current situation too much. Under the guise of currency control, they are able to help out powerful allies on Wall Street, in exchange for lucrative jobs or who-knows-what favors later on. An audit would expose the Fed as a massive fraud perpetrated on this country, enriching a privileged few bankers at the top of our economic food chain, and leaving the rest of us with massively devalued dollars which we are forced to use by law. An audit would make people realize that, while Bernie Madoff defrauded a lot of investors for a lot of money, the Fed has defrauded every one of us by destroying the value of our money. An honest and full accounting of how the money system really works in this country would mean there is not much of a chance the American people would stand for it anymore.

Ron Paul - Audit will expose Fed as a massive fraud

Paul The Real Reasons Behind Fed Secrecy (9/28/09)

Does the Federal Reserve Engage In Market Manipulation?

Watch this...Paul and Grayson are heros.

Great Interview with Dr. Ron Paul

Please see this video also...goes very well with Ron Paul's discussion.

Obama - just does not get it - trade war with china?

Lets analyze this. He hires the most wall street executives into his cabinet in the history of any president. Comes up with a plan that is about as good as turning under crops in order to fix prices - calls it Cash for Clunkers. Gloats about it being green - which it is most definitely not. Comes up with stimulus plans that are not stimulus - but wealth transfers. Designs a health care plan that "...will not add one dime to the deficit". Now, mind you this plan costs roughly 2 trillion dollars. That is 14% of GDP. If you believe this can be implemented without increasing the deficit then there are only two options...fuzzy math or delusion.

Clearly, though Obama may attempt to back up his rhetoric with some numbers...I am quite sure those numbers are selective and that not increasing the deficit does not mean what any normal person thinks it would mean. Whatever the excuse, I do not care. The answer is simple - this health care proposal will increase inefficiency of the system and further bankrupt the country. And now just to make things more interesting...Obama apparently has decided to add tariffs on tires from China. Clearly, Obama's cabinet is misguided, has failed economics 101 and has no understanding of what is going on within the confidence game of the special interest fiat system that many including Obama  (just as bush) have abused to the detriment of our country.

The last thing we need is a trade war with China for several reasons. First and foremost, is the defaults that they are proposing on derivatives agreements with our largest banks. We definitely do not want to give china any additional ammunition to use to keep capital in their borders or renege on commitments that could collapse our theoretical money supply. This would result in driving the remaining money up in value dramatically. Quite frankly, there is no reasonable way to enforce those agreements. It simply has to be based on mutually beneficial relationships that promote fair business dealings and an honor system. War with china is not an option. So, what are we thinking? Please Mr. Obama give me the legal platform you are going to use to enforce financial agreements, that if defaulted, send our economy into oblivion? There is none. China is a separate country with the ability to print its own money and force their bankers who may not want to lend to do so anyway under threat of capital punishment. Their system can inflict quite a bit of damage on us right now. (see: All we need now is a big hit to theoretical money - derivatives anyone?)


I recommend that everyone read all the dollar related articles I have posted under the featured articles list at the right in order to understand what the shortage of cash dollars will do to our financial system.

Overall, I am very disappointed with Obama. (that is an understatement) I am even more disappointed that we were not able to get Ron Paul into Whitehouse now that we see how much we really needed him there. I think Ron Paul or his son will be elected to that office if the US does not descend into governmental destabilization. But Obama is making a big mess and bill that we or our children will not be able to afford to pay.

To me, republican or democrat is not the question...both represent the interests of the financial elite that fund their campaigns, get them media exposure and embody the system that creates the fiat money that furthers their ability to execute unreasonable plans that are perceived will impress their constituents but clearly can not be afforded.

Think about it...if you are a politician is credited with building a transportation system, governmental aid plan, park, school, bridge or casino that creates the perception of wealth creation, standard of living increase or general benefit for his constituents...the voters will most likely vote for him next time he runs. Since there is not enough tax revenue money to fund most of this kind of spending...one needs to float government debt using the fiat currency/fractional reserve system to enable the perception to be that the budget is reasonable and manageable. The idea is that the taxes for the benefits will not perceived by constituents at that time - but rather simply delayed - this is a deliberate misdirection and slight of hand. The logic is: they won't notice if the taxes are come later - so the politicians will get the vote they need and their jobs back if the constituents think they have been benefited in some way. This symbiotic relationship is enforced by the fed and the shareholders of the fed who are able to grant or deny almost tacit capability to elected officials to retain or gain their positions.

Do you realize that the Fed for instance has hired a staff of lobbyists to fight the HR1207 Audit the Fed legislation. They have already manipulated, Pelosi and Frank in an attempt to disembowel the legislation by incorporating it with other packages and that enable typical tit-for-tat vote buys that would neutralize the bill. Please explain to me why the Fed should be employing lobbyists at all Mr. Bernake?

THE LAST THING WE NEED NOW IS A TRADE WAR WITH CHINA.


The fiat money system is a political manipulation system guided by the Fed...it needs to be ended.

Ok...now we start to hear it. "UN Says New Currency Is Needed to Fix Broken ‘Confidence Game’"

 The dollar’s role in international trade should be reduced by establishing a new currency to protect emerging markets from the “confidence game” of financial speculation, the United Nations said.

UN countries should agree on the creation of a global reserve bank to issue the currency and to monitor the national exchange rates of its members, the Geneva-based UN Conference on Trade and Development said today in a report.

China, India, Brazil and Russia this year called for a replacement to the dollar as the main reserve currency after the financial crisis sparked by the collapse of the U.S. mortgage market led to the worst global recession since World War II. China, the world’s largest holder of dollar reserves, said a supranational currency such as the International Monetary Fund’s special drawing rights, or SDRs, may add stability.

“There’s a much better chance of achieving a stable pattern of exchange rates in a multilaterally-agreed framework for exchange-rate management,” Heiner Flassbeck, co-author of the report and a UNCTAD director, said in an interview from Geneva. “An initiative equivalent to Bretton Woods or the European Monetary System is needed.”

The 1944 Bretton Woods agreement created the modern global economic system and institutions including the IMF and World Bank.

Enhanced SDRs

While it would be desirable to strengthen SDRs, a unit of account based on a basket of currencies, it wouldn’t be enough to aid emerging markets most in need of liquidity, said Flassbeck, a former German deputy finance minister who worked in 1997-1998 with then U.S. Deputy Treasury Secretary Lawrence Summers to contain the Asian financial crisis.

Emerging-market countries are underrepresented at the IMF, hindering the effectiveness of enhanced SDR allocations, the UN said. An organization should be created to manage real exchange rates between countries measured by purchasing power and adjusted to inflation differentials and development levels, it said.

“The most important lesson of the global crisis is that financial markets don’t get prices right,” Flassbeck said. “Governments are being tempted by the resulting confidence game catering to financial-market participants who have shown they’re inept at assessing risk.”

The 45-year-old UN group, run by former World Trade Organization chief Supachai Panitchpakdi, “promotes integration of developing countries in the world economy,” according to its Web site. Emerging-market nations should consider restricting capital mobility until a new system is in place, the group said.

The world body began issuing warnings in 2006 about financial imbalances leading to a global recession.

The UN Trade and Development report is being held for release via print media until 6 p.m. London time.

see full article at: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aSp9VoPeHquI


If there ever was a sign for a coming bottom in the dollar this is it. If there was ever a sign that Bernake is a liar this is it. Ron Paul called it...


If derivatives could not solve the problem for these manipulators, the best choice is to create a global currency...but you need a really good excuse for that. Derivatives were a good first try. Please see my posts on the dollar. (Derivatives...what the heck were they for?, More dollar what-if discussion, crash warning and recommendations, The Future of the Dollar - the biggest short squeeze ever and The EURO - starting a trip to oblivion) 


This is much further along than I expected. 

These guys will stop at nothing.

More dollar "what-if" discussion, crash warning and recommendations

(this is a companion post to: The Future of the Dollar - the biggest short squeeze)

One of the other points I would like to make in regard to some of my earlier posts, is something that has grave impacts economically and for investors. People need to be very active in managing and understanding what is going on in order to protect themselves and understand the real impacts of a potential dollar rally on their purchasing power, assets and employment.

First and foremost, I would like you to take a close look at this dollar chart? Do you notice anything? Okay, look very carefully at the only significant dollar rally since the Fed has been responsible for the dollar?

Clearly debt pushing policies inflated asset values from 1913 to 1929. During this time dollar purchasing power declined markedly if you want to call 50% markedly. This was Fed engineered. There was a reason so many banks popped up during the 20's...and its the same reason that this century has been the era of the banking - so far - THE FED and its conflicts of interest...and fractional reserve lending. Fractional reserve lending is the manner in which 95% of the money in the world is created and the primary dilution factor for the dollar.

Now lets go back to my previous post, in which I refer to the dollar as a certificate representing the corporation of the United States of America. Well, the dollar IS the stock certificate of the United States...and that certificate is currently not an asset or value but an IOU.

The selling/issuing of dollars through credit (IOU's) - is a short sale that by implication will need to be covered. Its just the same as a short on Pets.com or AIG common shares or ES SP500 futures...the sale of these securities needs to be covered with the purchase of same to close the transaction.

Ron Paul has said it many times, the dollar reserve system has ended and the question is what is next. But the question is also how are all those short sales going to be closed...what kind of mess will that create?

We have appointed people to be responsible for our national value and stock certificates who are the equivalent of appointing a bunch of AIG shorts to run AIG. Additionally, you can tell that the Fed and it's governmental co-conspirators have done a terrible job...the chart says they did.

Why are they still employed? Normally you would try to cover your tracks or at least do a bad job not a catastrophic one if you were trying to steal from someone while smiling at them at the same time. This dollar chart is catastrophic.

Subsequent to the debt pushing of the 1913 to 1920's, when that debt became oversupplied and dollars to service the debt became scarce - as has happened now - we had the only rally in the dollar purchasing power of consequence in nearly 100 years. That rally for the dollar was the great credit contraction called the "Great Depression" - curiously, this was roughly a 27.2% rally (see: The Future of the Dollar - the biggest short squeeze EVER).

The the Fed used the depression to ensure that their goals would be achieved. The panic of those times led anyone who was scared to the conclusion that its beyond imagination the Fed could engineer such a condition. Worse yet, to be able to conceive that they, instead of attempting to fix the problem, would implement an agenda to make a much bigger one. So, fear led to more and more power which the Fed used to continue to expand its policies - ironically under the guise of preventing a depression which they engineered in the first place.

In achieving these objectives they did an excellent job. Is it any wonder that the SP500 bottomed at 666? I wonder?

Is it any wonder that your Dow Jones Industrials certificates are now worth less in purchasing power in real terms than at the peak of 1929?

So, where to from here? Well, that is a very good question. Look again closely at the dollar chart. Theoretically, the dollar is worth .04 cents. Under a reasonable scenario (but still a bad one), a short squeeze capitulation rally could take the dollar's purchasing power to between 15 to 30 cents...that could be a 750% increase in the purchasing power of the dollar. I am not going to go into details as to what that would do to the values of stocks, real-estate and other assets such as silver/other commodities.

Though I really hope to god that none of this happens...recognizing that it can happen - because it has happened before - is an important thing to do given where we stand currently.

There may be some further efforts to fuel a hyper-inflation story. If gold rallies for instance people will think that inflation is about to explode...but that rally will likely be short lived.

What to do:

Learn as much as you can.

• Watch the dollar. If the dollar breaks out strongly...then we know a bad case or worst case scenario is playing out. For the scenario discussed here to not take place - the dollar MUST sell-off and remain weak. If that does not happen (I know i am repeating) things are going to get very bad.

• I recommend that you read the book Conquer the Crash - You Can Survive and Prosper in a Deflationary Depression by Robert Prechter.

• Subscribe to Elliotwave International: http://www.elliottwave.com/

• I also recommend that you evaluate and subscribe to a very good investment newsletter called BreakpointTrades.com. They have made amazing calls on the big and the short-term picture and really help you to put things in perspective. In a practical and easy to understand way. In addition, they have done a lot of work on mechanical/automated trading systems and have a lot of resources and guidance for this on the site.

• Also, Jim Shepherd is terrific and has a great advisory service and newsletter: The Shepherd Investment Strategist.

• Make a plan...do not trust the FDIC...they are the primary enabler of the debt pushers...I heard these two guys on CNBC discussing how "you should not even worry about the FDIC - its backed by the full faith of the US Government." That's called complacency...complacency and investing do not go together. If politicians were rational, we might not have to worry. But if politicians realize that they will be voted out of office for putting the US taxpaying on the hook for another trillion here and another trillion there...we can not be sure that the faith of the government will be there when its required. I know it seems improbable...but if you told me that we would put the supposedly smartest minds in fiance on the job of protecting our purchasing power, managing prices and protecting the dollar and they would run it into the ground by 96% - I would say that is improbable too.

• Watch this movie: The Money Masters and show it to people you care about. This movie was made in 1995 and given that is an even more astounding achievement. Absolutely everything that is discussed in this documentary is relevant to what is happening now. Also, go to the website http://www.secretofoz.com/ and buy the movie "The Secret of OZ" and please contribute to Bill's work.

• Watch this movie: Money as Debt. Show it to people you care about.

• Watch this movie by Arron Russo: America: Freedom to Fascism.

• Read blogs like Mike Shedlock's http://globaleconomicanalysis.blogspot.com/ 

• Help Ron Paul and Rand Paul defend the constitution and reign in the Fed

To help put this stuff in perspective please see my previous posts:
     Bernake - Hurray for the guy who has been wrong 90% of the time 
     Warren Buffett - the ultimate bull-market manifestation 

And I thought Barny Frank was hopeless - apparently not

note: from 8/27/09: Frank is apparently NOT talking HR1207, but an overall regulation. I think Frank still did not make it to my approved list. As one of the strongest backers of FannieMae and Freddie Mac...its clear that he has some conflicts to overcome before I can relate to him.