Deepcaster: Preparing for The Big One

dollarGlobal markets are already revolting against the $US. The End Game for the $US is THE BIG ONE for which we aim to help Investors prepare.
The really BIG ONE announced October 10, 2013 was not the Republican Proposal to lift The Debt Ceiling for six weeks, though that was an important constructive step to attempt to resolve the Administration’s partial Government Shutdown.
THE BIG ONE was the European Central Bank’s agreement with the People’s Bank of China to establish bilateral Euro-Yuan Currency Swap arrangements, thus freezing the U.S. Dollar out of yet another Bilateral Sovereign Currency Swap Deal.
This will, sooner rather than later, have catastrophic impact on the International Financial System.

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Submitted by Deepcaster:

”Federal Reserve Chairman Ben S. Bernanke has been tap dancing on a land mine since 2008.  He has avoided detonating an intensified banking-system crisis, so far, but the cost has been that of locking the Fed into near-perpetual quantitative easing and monetization of U.S. Treasury debt, with horrendous implications for future domestic inflation and U.S. dollar debasement…. the Fed has locked itself into quantitative easing for some time to come, irrespective of any jawboning to the contrary….

“The longer-term U.S. sovereign solvency issues are the bane of the U.S. dollar and the global financial markets.  Unless these problems can be brought under credible control, those same global markets—soon and massively—will revolt against the U.S. dollar.”

 

“NO MORE TAP DANCING ON A LAND MINE; THE ADMINISTRATION PULLS OUT A COUPLE OF HAMMERS,” John Williams, Shadowstats.com, 10/10/2013

 

Indeed, global markets are already revolting against the $US. The End Game re. the $US is THE BIG ONE for which we aim to help Investors prepare.

 

The really BIG ONE announced October 10, 2013 was not the Republican Proposal to lift The Debt Ceiling for six weeks, though that was an important constructive step to attempt to resolve the Administration’s partial Government Shutdown.

 

THE BIG ONE was the European Central Bank’s agreement with the People’s Bank of China to establish bilateral Euro-Yuan Currency Swap arrangements, thus freezing the U.S. Dollar out of yet another Bilateral Sovereign Currency Swap Deal.

 

This will, sooner rather than later, have catastrophic impact on the International Financial System as John Williams points out.

 

“Beginning to play with hammers around a land mine, the President recently suggested that the financial markets should be concerned about the shutdown/debt-ceiling crisis.  Related comments from the Treasury Secretary suggest looming economic and financial Armageddon, in the event of a default on U.S. Treasury securities.  The push appears to be to frighten the markets enough, so as to pressure a resolution on the government shutdown and debt-ceiling issues, without those controlling the government having to address federal fiscal-policy issues, meaningfully. …

 

Instead, the increasingly clear message to the global markets is that the Administration will not take any meaningful action to address the long-term solvency issues of the United States. (emphasis added)

“Sovereign states that issue debt in the same currency they print rarely default, ….  Instead, they simply print the money needed to cover financial obligations that could not be covered otherwise with tax revenues, asset confiscations, etc.  The effect usually is full debasement of the currency, or hyperinflation.  Creditors get paid off, but with what has become a worthless currency.

“Indeed, ahead is currency debasement, eventually complete debasement of the U.S. dollar.  As the global markets increasingly absorb that reality, selling of the dollar against the currencies of major U.S. trading partners should become intense, with pressure for removal of the dollar as the global reserve currency becoming unstoppable.  Oil and other dollar-denominated commodity prices would rise sharply in dollar terms, fueling domestic U.S. inflation, despite a moribund economy.  In like manner, the dollar prices of precious metals—particularly gold and silver—would move on to ever-increasing historic highs, despite any efforts by central banks and related plunge-protection teams to contain those prices with jawboning and covert or overt physical intervention, in the markets.”

(Ibid.)

Before considering how Investors can Profit and Protect from this Impending Crisis, it is essential to consider why Fed QE/Stimulus policy (likely to continue under Chairman Yellen) not only will not cure the Economy’s ills but will only worsen Economic Prospects for the Middle Class and Working Poor around the World. It is this Majority to whom Fed Policy should (ethically and for the sake of a Healthy Economy) be directed, but it is not. It is their capacity to Work and Spend which is a Necessary Condition for Economic Health.

 

Consider the Wise Analysis of former Morgan Stanley Chairman, Stephen Roach

 

“…The Federal Reserve continues to cling to a destabilizing and ineffective strategy. By maintaining its policy of quantitative easing (QE) – which entails monthly purchases of long-term assets worth $85 billion – the Fed is courting an increasingly treacherous endgame at home and abroad….

 

“But there is an even more insidious problem brewing on the home front. With its benchmark lending rate at the zero-bound, the Fed has embraced a fundamentally different approach in attempting to guide the US economy. It has shifted its focus from the price of credit to influencing the credit cycle’s quantity dimension through the liquidity injections that quantitative easing requires. In doing so, the Fed is relying on the “wealth effect” – brought about largely by increasing equity and home prices – as its principal transmission mechanism for stabilization policy.

 

“There are serious problems with this approach. First, wealth effects are statistically small; most studies show that only about 3-5 cents of every dollar of asset appreciation eventually feeds through to higher personal consumption. As a result, outsize gains in asset markets – and the related risks of new bubbles – are needed to make a meaningful difference ….

 

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“Second, wealth effects are maximized when debt service is minimized – that is, when interest expenses do not swallow the capital gains of asset appreciation. That provides the rationale for the Fed’s zero-interest-rate policy – but at the obvious cost of discriminating against savers, who lose any semblance of interest income.

 

“Third, and most important, wealth effects are for the wealthy. …

 

Fully 90.6% of US families in the highest decile of the income distribution owned stocks – double the 45% ownership share of the other 90%….

 

“The wealthiest 10% of the US income distribution benefit the most from the Fed’s liquidity injections into risky asset markets. And yet, despite the significant increases in asset values traceable to QE over the past several years – residential property as well as financial assets – there has been little to show for it in terms of a wealth-generated recovery in the US economy. …

 

“This underscores yet another of QE’s inherent contradictions: its transmission effects are narrow, while the problems it is supposed to address are broad. Wealth effects that benefit a small but extremely affluent slice of the US population have done little to provide meaningful relief for most American families, who remain squeezed by lingering balance-sheet problems, weak labor markets, and anemic income growth. …

 

“Lost in the angst over inequality is the critical role that central banks have played in exacerbating the problem. Yes, asset markets were initially ecstatic over the Fed’s decision this month not to scale back QE. The thrill, however, was lost on Main Street.

 

“As I wrote:

“Such stealth transfer of wealth enabled and facilitated by central bank policies are not only economically unsustainable, they are reprehensively immoral.

 

“Occupy QE,” Stephen Roach,

Project-Syndicate.org, 09/25/2013

Chairman Roach’s Analysis underscores the point John Williams, Deepcaster and other independent commentators have been making for months. Fed Policy is aimed at helping a select cohort of the Wealthy, the Mega Banks and Wealthy Individuals, and all The Fed “communications policy” Claptrap that their QE is designed to help the Economy is just Political Cover for their aforementioned Real Aim.

The Key Point for Investors is that the Flight from the $US is already occurring (latest evidence, The ECB – PBOC currency swap Agreement).

This flight has not been widely factored in to the Markets YET but a Harbinger has appeared in the form of the $US’s recently flirting with moving under 80 basis USDX.

Since a Conclusive Close under 78 would definitely Signal the $US rout had begun in earnest, Deepcaster keenly observes and regularly reports to Subscribers on prospective Triggers for such a Move thus providing Various Opportunities to Profit and Protect.

Generally, U.S. Dollar denominated assets are most vulnerable (and non-US$ denominated Assets which we identify are Not).

And Real (as opposed to Financial) Assets in Relatively Inelastic Demand are the least vulnerable in the mid and long term.

Of several such Real Assets which we periodically identify, Gold and Silver have the Most Upside Potential for Profit and Protection.

But these Precious Metals are also subject to Price Suppression by The Cartel (Note 1) which fears them because they are Real Money as opposed to their Fiat Paper Currencies and Treasury Securities.

But – a Word to the Wise Investor – Consider that the World’s largest Gold Producer, China, is also the largest Gold Importer.

And another larger Gold Producer, Russia, imported 12.7 tonnes of Gold in its most recently Reported Month.

And China and Russia are importing Physical Metal and not mainly relying on future delivery on some paper promise from a Gold ETF.

Indeed

…(The) Gold Price Could Double Overnight in U.S. Dollar Crisis

(Rickards) “envisages a series of ‘black swan’ events that trigger a loss of confidence in the US dollar precipitating a rush to get out of the greenback.”

“Gold Price Could Double Overnight in U.S. Dollar Crisis,” Jim Rickards,

etfdailynews.com, 10/10/2013

 

Deepcaster shall continue to watch and report on Harbingers and signals.

 

Best regards,

 

Deepcaster

October 11, 2013

 

Note 1: We encourage those who doubt the scope and power of Overt and Covert Interventions by a Fed-led Cartel of Key Central Bankers and Favored Financial Institutions to read Deepcaster’s December, 2009, Special Alert containing a summary overview of Intervention entitled “Forecasts and December, 2009 Special Alert: Profiting From The Cartel’s Dark Interventions – III” and Deepcaster’s July, 2010 Letter entitled “Profit from a Weakening Cartel; Buy Reco; Forecasts: Gold, Silver, Equities, Crude Oil, U.S. Dollar & U.S. T-Notes & T-Bonds” in the ‘Alerts Cache’ and ‘Latest Letter’ Cache at www.deepcaster.com. Also consider the substantial evidence collected by the Gold AntiTrust Action Committee at www.gata.org, including testimony before the CFTC, for information on precious metals price manipulation. Virtually all of the evidence for Intervention has been gleaned from publicly available records. Deepcaster’s profitable recommendations displayed at www.deepcaster.com have been facilitated by attention to these “Interventionals.” Attention to The Interventionals facilitated Deepcaster’s recommending five short positions prior to the Fall, 2008 Market Crash all of which were subsequently liquidated profitably.

 

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Comments

  1. …the Big One!…

  2. Yes! A big story! As I pointed out this is the kind of thing to watch. I assume this is going to end up as another move back to the Gold Standard. I (humbly) disagree that this will crumble “all markets.” I believe that it will sucker punch the good old dinosaur U.S.&A Corp. and all us little people but hey, change is good. I changed my socks today. But I digress…My interest is how it will affect Precious Metals due to the fact a Gold Standard only works if Stability results. I could see a World where gold and silver remain at one “price” for the rest of our lives and take all the fun away. And in which fiat denominated? http://money.cnn.com/2013/10/10/news/economy/ecb-china-currency/

  3. Good post.  Saw this earlier this morning on some site I go to.
    If the Bond Holders of the world HAVEN’T seen the writing on the wall by now,
    I guess it sux to be them…

    • Reminds me of my Grandma.  Back when AT&T lost their monopoly on forced rental of
      your telephone, I tried in vain to get my Grandma to return the phone and buy her own.
      This was way back when you had no choice.  If you wanted a Telephone in your house,
      you RENTED a Western Electric telephone provided by AT&T.  There were no telephones for
      sale at any stores.
       
      So when that all changed, and consumers where able to buy a phone saving 100 dollars
      a year or so, my Grandma would not do it.  So she rented her phone up til the day she passed.
       
      Some people will just not listen, no matter what the consequences.

    • There was a time when the US had the finest phone system in the world.  The quality of the calls and equipment were high and if anything ever did go wrong with a phone, the line, or anything else in the system, AT&T would replace it quickly and without charge.  Costs were quite reasonable too.  Seeing as to how that system was not broken, a Fed judge had to get involved and fix it anyway.  The result is the collage of crap that we have today.  Ever read a phone bill closely?  It’s damn-near indecipherable… and 5-6 pages long!  My guess is that your Gram was like a lot of folks back then:  a satisfied AT&T customer who stood by a company that had stood by her for years and years.  There isn’t much loyalty like that these days and that’s a pity. 
       

  4. I have a photo of a BIG ONE, but can’t show it!

  5. IMO there will be No Default. The DXY and TNX  will drop the entire banking system to their socks. Standby to Standby.
     
    Coming soon to a Banking Center near you.

    • That is a possibility, but not good for the HOME TEAM IMO. 
      That would put us in the same boat as Japan, most likely. 
      This is what TPTB have as their “End Game” is my guess. 
      Also why “the Good Guys” want to crash the system? 

  6. Limited exchange trade agreement, the big one? In Fiat currency? The big one? Huh? Limited 10′s of billions of Euros, the big one? Hey look in that barrel again, I don’t think you quite scraped enough!
     
    Its only a currency conversion, makes life simpler and more cost effective, who needs the dollar for this, its just dumb. Wake me up when I can exchange euros for oil, that’s a real story, until then, peddle this to the stupid people, maybe the Daily mail (uk) might buy this.
     
    Man your king of the stupids. And deepcaster sounds like a porn name.

  7. This doesn`t fit in well with the ONE WORLD ORDER or ONE WORLD GOVERNMENT theory.
     
    Unless, of course, it`s ONE WORLD, with the US on the outside looking in.
     
    But, how bad could that be?
     
     
     
     

  8. @SilverHawk Here’s your video. hell I had to upload it three bloody times since 9 this morning before it would work. Anyway Keep Stacking Folks It’s Getting Close.


     

    • Yeaaaaa!
      Well ya put me in a good mood, bloke, and I’m sure you making the vid put you in a good mood.
      Can’t argue with what your doing.   Everyone should do it.  OK, a little fiat, I guess won’t hurt…
      Thanks!

    • A Little Fiat is not actually a bad idea, and here’s why:
       
      Nearly ALL of the QE Money (fiat) is not and never will be “PRINTED”
      as it is intended to be all electronic, “E”-Currency. If indeed the U$D 
      does “crash”, then the actual printed, circulating currency will increase 
      in value by a factor of at least TEN TIMES, as the amount of real “hold in your hand” (lol) 
      Paper Dollars are in relatively short supply. Around 2010 and 2011 I read of the destruction 
      of larger and larger amounts of paper dollars, and now these new Benjamins come out. 
      Something is going on… my Spidey Sense tells me CHARLIE is Correct!

    • Nice video, Charlie.  Thanks for keeping on with The Silver Recliner Report!  :-)
       
      If you’re feeling a wee bit down, I ha’ th’ cure fur ya.  Just stoke up the fire a bit, pour yourself a wee dram in the Scottish tradition, sit back in your recliner, and relax.  Maybe put on a nice piece of Celtic music too.  Now, that would be nice, would it not?  Sure it would!
       
      The thing is, friend Charlie, you are better prepared for a SHTF situation than about 99% of everyone out there.  Take some well arned comfort in tha’, ’cause it’s true, ya know?   ;-)

  9. Who’s got the bloody time to read, digest & analyze war & peace according to deepcaster? I’ve tried numerous times, and can only ever get about 1/3 the way into his articles(on a good day), before bailing with ADD fueled loss of focus and interest.

  10. Chinese official news agency call for the de-Americanization of the world and end the $USD as world’s reserve currency. You think somebody oughtta pay attention?
    http://www.theblaze.com/stories/2013/10/13/chinese-op-ed-world-should-be-de-americanized/
     
     

  11. Oh-oh I better run home and sell all my silver–look right here at this chart—oh! I am home. Honey? does this stack look any smaller to you? Who puts them charts up anyway? dum de dum dum dedum I love my Silver!!!

  12. This is Bizarre the closer the US gets to default the more and more gold and silver lose value in USD lol but it’s not rigged ahy ;-) And when are these ratings agencies going to stand up and downgrade the Junk US bonds that are going to collapse ? Surely they are not in on it too? No couldn’t possibly be…

  13. Here’s what I got back from Bing images, searching for ‘The Big One’ – seems to fit the story pretty well…
     
     

  14. A  well funded Grass Root  TRUTH organization on foot truth Army passing out fliers and speaking in crowds on the streets ,Malls ,Shopping centers,the Christian Church Schools,College ,Universities ,business ,medical ,Police ect…..There are lots of unemployed people ,vets,students ,professional that need work..then a  TRUTH  News channel ,power to the people

    • @silverdagger
      What is the point with the chart? Is it supposed to show silver’s price derived directly from demand? Aren’t you forgetting a factor? :) And if you’re not… how do you explain the rise in price from 2002 to 2008 when demand was almost flat?

  15. John 8:32 And ye shall know the truth, and the truth shall make you free.

  16. The TRUTH Grass Roots Organization ,the people are ready NOW…fight the controlled News Media with TRUTH that is valuable for the survival of every American..

  17.  

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