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Uncle Sam's Financial Suicide

Written By Brian Hicks

Posted October 3, 2012

The Federal Reserve’s decision last month announcing “infinite” quantitative easing has now put the United States on the path of infinite money creation.

With up to $85 billion in monthly money creation — including $40 billion a month in purchases of mortgage-backed securities — the Fed is now wholly committed to the creation of money out of thin air to cover old debts.

Mathematically, this financial death spiral can only end in sheer catastrophe.

This massive money creation tactic is the Fed’s last-ditch plan to desperately try to save the economy.

“I think the country should have panicked over what the Fed is saying that we have lost control,” said Ron Paul, “and the only thing we have left is massively creating new money out of thin air, which has not worked before, and is not going to work this time.”

Peter Schiff added, “This is a disastrous monetary policy; it’s kamikaze monetary policy.” 

Schiff is right. This is financial suicide.

It’s also highly offensive to anyone who can actually do math (which, sadly, isn’t that many people these days).

Where is the well-placed outrage from the media or the people when it is actually justified and sorely needed?

Bernanke’s announcement that the Federal Reserve will embark on an open-ended scheme to purchase $40 billion in mortgage-backed securities each month has been touted by the establishment media as the beginning of “QE3.″

The fact, however, is QE3 is just another banker bailout in disguise.

While many have rightly attacked the Fed’s policy of printing money as a Band-Aid that does little to solve the economy in the long term, this new move is far removed from anything that resembles helping the people or the economy.

The policy announced in September will merely see the Fed use taxpayer money to purchase more bad debt in the form of junk mortgage-backed derivative based securities that have been sold over and over again.

This has nothing to do with getting the economy going again — and will only serve as yet another huge wealth transfer from the middle class to the elite.

They are stealing from us, not helping us!

QE1 and QE2 both did absolutely nothing to rescue the economy. Despite a massive injection of quantitative easing over the last four years, the unemployment rate in the United States is dismal and getting worse, not better.

In addition, the “wealth gap” between rich and poor has vastly increased. This again illustrates how actions such as the one announced last month have nothing to do with helping the little guy get back on his feet, and everything to do with the concentration of financial power into fewer hands.

As George Washington’s Blog points out:

This is just another bailout for the big banks. (If the government had instead given money directly to the consumer, we would be out of this economic slump by now.)

Bernanke claims that the main justification for QE3 is to boost employment. This is slightly ironic, since Bernanke’s policies are largely responsible for creating high unemployment in the first place. The real justification is to try to artificially prop up asset prices. But that approach has been proven to be an absolute failure.

Indeed, the Federal Reserve admits that its new program will do little to alleviate the suffering of jobless Americans…

“I want to be clear — while I think we can make a meaningful and significant contribution to reducing this problem, we can’t solve it. We don’t have tools that are strong enough to solve the unemployment problem,” Bernanke said at the time of the announcement.

The economy is being destroyed by design so that the banking cartel called the Federal Reserve can exploit the fear and chaos caused by the collapse in order to centralize power and control. (This can also be seen over in Europe, where Jose Manuel Barroso is exploiting the crisis in a bid to turn the EU into a “federation.”)

Bernanke’s latest move is merely a continuation of the engineered takeover of the U.S. economy by the elitist bankers for the elitist bankers.

From my perspective, this looks to me like the final chapter in America’s fiat currency debacle.

Some say that the government financial mandate on January 1, 2013 — also known as the Fiscal Cliff — will see Congress make drastic spending cuts to our budget while adding massive tax increases across the board.

One noted economist, John Maudlin, still believes Congress can get this done in the first six months of next year and that the country can be saved. But even Mr. Maudlin says that if Congress cannot do what needs to be done in the first six months of 2013, then he becomes a major pessimist and sees horrible consequences for the country.

As a pragmatic optimist, I find it difficult to believe that deeply divided politicians can get anything done at this point, let alone massive tax increases and spending cuts across the board. We are talking massive cuts to government spending that would piss off half the country and massive tax increases that would affect every American, not just the rich.

As some examples, the country would need to see income taxes rise substantially up to 50% of our incomes. In addition, there would have to be a 14% VAT tax on everything you purchase in addition to the taxes we already pay such as state and city taxes. And while that is going on we would have to see massive cuts to military, Medicare, Medicaid, and just about every government program that exists.

Could this realistically happen in our politically charged environment?

And would the elitist bankers who have a much different agenda than Americans even allow it to happen?

I totally understand that if we don’t, our country goes into a death spiral…

In my opinion, the time to deal with our structural deficits has long passed.

The death bed repentance scenario that Congress will finally take our medicine as we are about to die is admirable to some degree, but just a hollow and contrived event that will only add to the coming chaos.

As investors, you must take a position to defend yourself against the coming collapse of our fiat currency called the dollar.

The only way to do this is to own another form of safe currency other than dollars.

The best alternative currency is physical ownership of precious metals, coins and bars.

Most of the other paper currencies throughout the world are fiat currencies as well, and will not fare much better than the dollar — particularly the euro and the yen.

Some countries’ fiat currencies will be better than most, such as commodity-based currencies like the Canadian dollar or Australian dollar, but even these currencies will not perform better than physical ownership of precious metals.

Aside from that, you all know my position on being prepared as the world deals head-on with the staggering debts of fiscal irresponsibility, derivative investing stupidity, and the banking cartel power grab.

The time to act was yesterday.

Consider every week you still get to prepare from here on out as a huge bonus.

Greg McCoach
Analyst, Wealth Daily
Investment Director, Mining Speculator

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