Economic Collapse

Modern paper or digital money is created through a mechanism know as “fractional reserve banking”. In short, this means that new paper money is created when a private bank issues a loan. This means that virtually all money that circulates in the world has been created through debt. All paper money is debt and all debt has interest payments attached to it. To keep the Ponzi scheme afloat bankers need to constantly increase the amount of money in circulation. This is why they fear deflation (a decrease in the amount of money in circulation) and love inflation (the opposite). However, they need to control inflation at a level that they see fit. If inflation is cut loose the dragon is free to destroy the debt the bankers created.

In deflation, saving money in the mattress is no problem since deflation makes the purchasing power of money greater tomorrow compared to today, rendering your need for bankers none. The opposite is true in inflation. So, in deflation, people don’t need bankers. In inflation, saving money is penalized and speculation and consumption is rewarded since the purchasing power is lower tomorrow compared to today. Bankers make their money on speculation with deposited money (your money) and lending out newly created money as credit earning interest. Speculation leads to higher risk taking and money flows to all kinds of areas both productive and non-productive. Eventually this leads to asset bubbles.

In Sweden, where I live, a normal deposit account at a bank will give you about 1,75% interest today. At the same time, official statistics on consumer prices says prices rose by about 2,5% last year (2010). This means that the bankers steal the difference from your deposit account. This is an example on why savers are penalized in an inflationary environment. However, real inflation, that is to say the expansion of the amount of money in circulation in Sweden, rose by about 10% in 2010. And I can tell you going out for lunch today is about 10% more expensive than it was one year ago. This means that having my savings deposited at a bank makes me lose about 8,25% in purchasing power per year. This is just 1,75 percentage points better than the mattress!

So, bankers create money out of nothing by issuing credit. Credit is spent in the economy as money. Attached to the money are interest payments that flow from the borrowers to the bankers. To keep the ever expanding credit bubble from popping, the bankers need to constantly increase the amount of money in circulation, otherwise interest payments on outstanding debt cannot be paid, credit defaults and the balance sheet and the stock price of the banks go down.

I believe in Love. If you can learn to love thy enemy, you will be greatly rewarded. I love bankers! Why? Because I keep all my savings in physical gold and silver. The more fake credit-based-fiat-paper-so-called-money the bankers create out of thin air, the more they expand the money supply and the higher the price of my gold and silver will be. Gold and silver in physical possession makes me totally immune to the theft of bankers. Yesterday, the banker of bankers Ben Bernanke, kept interest rates at all time lows. A few minutes after his announcement gold and silver prices headed higher. Gold at all time highs and silver approaching its (in nominal terms).

So go on, Ben! Print! Print! Print! Sure, you’ll totally destroy this Ponzi scheme we call “the financial system” while you’re at it only making the inevitable happen sooner rather than later: the world will return to fair sound money based on gold and silver.

I love you Ben!
Yours truly /Johnny

- Jim Sinclair, March 7th 2010:

What is the difference between the State of California and the State of Greece? The State of California is a bigger bankruptcy… The financial industry is at war with Greece. The CDS-attack (Credit Default Swaps, an off-the-counter derivative) is a nuclear financial attack on Greece.

Very interesting two-part interview with the legendary Jim Sinclair of JSMineSet.com by King World News. Listen to this amazing interview: part 1 and part 2.

In part 2, Jim Sinclair talks about Quantitative Easing, hyperinflation and the coming One World Currency of the IMF and a de facto financial One World Government.

The interview ends with Jim Sinclair concluding:

“Be prepared! This is a great civilization change. The most positive thing you can do is to recognize what is out there. The greatest contribution you can make to your family is to be prepared. So when all of this happens, you already have things in place: plans as of what you can do.
…We are not trying to scare anybody or trying to sell anything. We are simply saying, this is the hand writing on the wall. This is what’s most likely going to happen. In order to prepare you have to look at your financial and physical situation. You have to se weather or not this is a really great and significant shift in world history.
…The entire purpose of all this is preparation, because the truth will set us free.”

That last statement is at the core of why I have this blog. The world is changing. If you want to protect the purchasing power of your savings from the devaluation of the printing press - buy gold. If you want to stimulate your mind and stay a head of the game, keep reading, listening and watching. Stay tuned…

- “You should be in wealth-protection mode, not in trading mode”
John Williams

Very good audio interview with John Williams of Shadowstats.com released today. Listen carefully:
http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2010/2/6_John_Williams.html

Rocky Vega of The Daily Reckoning took the effort to transcribe some quotes from a little video clip of Marc Faber, publisher of The Gloom, Boom, and Doom Report:

“There’s this huge debate between the inflationists and the deflationists… I belong more to the camp that looks at inflation and deflation from a different perspective. In the sense that in every system you can have some prices going down up and some prices going up. Say if you have a glut in consumer goods, then consumer goods prices can go up. But if you print money and have a zero interest rate, then home prices theoretically could go up, or stocks, or commodities. In any event your cash purchasing power goes down, that’s a symptom of deflation.”

“The worst investments in an inflationary period, when you print money and have large fiscal deficits are, of course, long term bonds and then cash. The best is to have foreign currency and commodities… also equities can protect you to some extent because they adjust upward as the currency goes down.”

“Regarding the dollar he says, “well, it will go to a value of exactly zero eventually.” When pressed for a timeline he explains, “Looking at Mr. Obama and his administration it should already be there, but I think it will take roughly ten years until people really realize that the fiscal position of the US is a complete disaster.”

My personal favorite from this clip:
On Bernanke: “He’s a money printer. He does that well.”

Here is a great interview with legendary Jim Sinclair of JSMineset.com on the inflation vs deflation debate:

• Download Mp3-file
• Listen in your browser.

From the kingworldnews.com website:

“Legendary Jim Sinclair known as Mr. Gold for his remarkably accurate timing regarding the gold bull market of the 70’s is the Founder of jsmineset.com and Chairman of Tanzanian Royalty Exploration. In this interview James discusses inflation, deflation, hyperinflation, the U.S. Dollar, gold, silver, social unrest, the Federal Reserve, commercial banks incorrectly positioned on the COT, fraudulent bank balance sheets, the equity market, future opportunity, gold and silver shares and much more. King World News thanks Jim for being so gracious with his time.”