Insolvent Financial System Signals Much Higher Gold Price

Dec 26, 2008 - 03:29 AM
by Jim Willie CB
Editor of the “HAT TRICK LETTER”
Home: Golden Jackass website
"..To begin with, the US so-called ‘Deflation Experience' is not deflation at all. Sure, many investments are losing value fast. Sure, much credit is being burned, with heavy write-downs. But new money is coming into the system from the corrupt bond swaps, historically unprecedented rescues, bailouts, and nationalizations. The $8500 billion in new commitments highlight the inflation side. Also, never confuse the ample supply of crippled assets brought from off balance sheets to actively accounted big bank balance sheets, distorting money supply figures, but just exposing the shell game. The deflation that many analysts describe is actually a systemic liquidation that will be difficult to reverse, a necessary step by producing the critically important inflation. It will come, but with difficulty. The US is not Japan in the 1990s, but something much much worse. The USFed and Dept Treasury, with lackey help from the USCongress, are not pushing on a string. They are rather trying to hold up a man whose skeletal structure is dissolving, while its circulatory system is also dissolving. THIS IS DISINTEGRATION. To argue otherwise seems pure folly and wishful thinking.

DEFINITION OF INSOLVENCY
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The big banks to date have cornered over 80% to 90% of the official rescues and bailouts. They have also been invited to engage in a Treasury Yield Curve carry trade, wherein they borrow money cheaply at the rate of short-term maturities, then invest for yields at the long-term maturities. Wall Street has managed to hog the rescue bailout trough, while disseminating false messages about how the US Federal Reserve has enabled broad liquidity programs to assist the people. They are doing precisely the opposite. Over $800 billion has been DRAINED from the private banking system via Cash Mgmt Bills by the USFed in order to feed the Wall Street banks responsible for most of the fraudulent bond packages, for coercion of debt ratings agencies, and for commandeered crony regulatory inaction..."