Bob Chapman/ gold silver discount 03 June 2011
Bob Chapman w/Joyce Riley (Hour 2)
http://archives2011.gcnlive.com/Archives2011/apr11/PowerHour/0426112.mp3 June 06, 2011 (hour 2) http://archives2011.gcnlive.com/Archives2011/jun11/PowerHour/0606112.mp3
BobChapmanRADIO - PATRIOT FRIDAY SHOW - Jun 4, 2011
Bob with Kerry H. Lutz
BobChapmanRADIO - Kerry Lutz - June 6, 2011
Wall Street seems to believe the waning recovery in the economy is only temporary and that further recovery is on the way. Such thinking can get you in serious trouble, unless QE3, or its equivalent, is on the way. It is on the way, as we pointed out 13 months ago. The economy cannot live and survive without it otherwise we could be looking at a minus 5% GDP for openers. Incidentally, there are those that believe that unemployment already is as bad as it was during the “Great Depression” years of thep930s. They may be correct, but we believe it was much higher than today’s 22.4% level. If government hadn’t created food stamps, Medicaid, extended unemployment benefits and other benefits, perhaps we could be close to 1930’s levels.
The first quarter of 2011 saw GDP gain 1.8% as a result of at least $1.8 trillion in spending by the Fed and by government. If the economy grows 2% in the second quarter that would be substantial. The big question is what will the last half of the year be like? Government is cutting back, so we cannot expect stimulus 3. That means the Fed has to create $1.6 trillion to purchase Treasury and Agency bonds, notes and bills, because presently only about 20% is being purchased by others. Assumably the Fed will again accomplish that, but what about the remainder of the economy? If the GDP growth rate is to maintain say at plus 1% to 2%, the Fed will have to create money and credit for the economy of an additional $850 billion. Without that the economy would slide to a minus 5% GDP. The flipside is that if the Fed were to perform these feats what would inflation be? John Williams tells us inflation, using previous standards, is 10.2%. Last May 2010 we predicted real inflation by the end of 2011 of 14%. That could turn out to be conservative. That projection was based on the results of QE1 and stimulus 1. Next year we will see inflation caused by QE2 and stimulus 2, which we believe could carry inflation to 25% to 30%, if official interest rates remain the same and we believe they will do just that at the Fed. If we get a version of QE3 for about $2.5 trillion then we believe inflation could rise to 50% creating hyperinflation in 2013. Of course, no one knows for sure what the Fed will do, but this is a likely scenario. If these events do not unfold as presented the economy will spiral into the worst depression in modern history. It is as simple as that. If we get QE3 what can the Fed do for an encore? We won’t attempt an answer for that now, but the prospects are certainly frightening.
All of the insiders who create the inside information, own the Fed, or are connected to those who own the Fed, know exactly what is going on. These are the people who make all the decisions. How do you think the market rallies upward when it should be going down? They know there will be a QE3, because these insiders are making those decisions, and say the market, bonds and the economy are dependent on massive amounts of money and credit is a vast understatement. These elitists tell us the slowdown in economic growth is just temporary. That is true, they know, they planned it that way, although growth will only be 1% to 2%, even with additional spending of $2.5 trillion. If we are correct that means a Fed balance sheet of $5.5 trillion plus. This time if QE3 did not develop the stock market could fall 20% to 30%. That means from the top of 11,800 we could see 9,400 to 8,300. The market is the last visage of wealth along with bonds. If it falls it could send everything tumbling. It should also be noted that this recent so-called recovery has been weakest since WWII, or for 65 years.
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