IF Issue: Saturday June 11, 2011

Excerpts from the latest issue:

Bob Chapmanw/ Kerry Lutz

http://tinyurl.com/Bob-Chapman-6-9-11

http://youtu.be/GViif6N8k4w
Freedom Files w/James Burns
Weekdays! 3-5 pm (Central)http://freedomfiles.us/

US MARKETS

The lifeblood is being sucked out of America by free trade, globalization, offshoring and outsourcing. Over the past 11 years manufacturing jobs have fallen by 11.7 million and 440,000 businesses have been lost. Those figures should make Americans very disturbed, when it is obvious that American business, and the House and Senate are aiding and abetting in this job destruction, which has not only ended the American dream, but the destruction of the American economy. In essence quantitative easing, the creation of money and credit, are a cover for wealth and job destruction, as are food stamps, Medicaid and extended unemployment. These are short-term solutions.

The dismantling of the American economy came into focus in the late 1970s as major manufacturers began to move production out of the US. As of the past 11 years we have seen an effort first to create a bubble in real estate, which was accompanied by unusually low interest rates and a major increase in money and credit. Once the real estate bubble had broken the deflationary aspects appeared and the Fed had to create ever more money and credit taking the increase up some 18%. Then 3-1/2 years ago the credit crisis began and that prompted the Fed to directly pour trillions of dollars into the financial sector in both the US and Europe. A good part of which was done secretly. Thus, we have seen the creation of money and credit initially to create the real estate bubble and then to offset the credit crisis that it caused. During these periods banks, hedge funds, and other financial institutions engaged in aggressive speculation. Banks leveraged up to 70 to 1, when 9 to 1 was normal and hedge funds over 100 to 1. Banks are still leveraged at 40 to 1 and hedge funds up to 70 to 1.

If you stop and think of it, the very idea that the Fed can create money out of thin air and buy Treasury debt is ludicrous. What kind of a system is that? And, in the process lend trillions of dollars to foreign banks and corporations. Then lie about it and force legal action into the appeal process to cause a two-year delay in exposure of what they have done. We have never been told whether these actions are legally within their venue. We wonder what happens when the remainder of toxic debt has to be bought from the banks, or in addition will the Fed bail out the derivative markets as well? The Fed is already bailing out the commercial real estate market; will they bail out the residential sector as well?

We ask you how can any sane person believe that the Fed will curtail quantitative easing? Over the past two years the Fed has created about $2.7 trillion that we know of. What is the real number and what is the new number going to be? Unfortunately, we may never find out. One thing we do know for sure is that the proverbial printing presses are running 24/7. We do not have to guess, because we already know what will happen when the music stops – collapse.

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