Why the U.S. Government Hates -and Fears- Gold

By Alan Walsh

The U.S. Government hates Gold because it serves as a clear, unambiguous, and constant sign of their fiscal irresponsibility.

U.S. currency used to be issued by the U.S. Government, and was backed by Gold. You could literally trade-in your dollars for Gold. Then, the Federal Reserve system was created, the dollar was disconnected from Gold, and the U.S. government stopped issuing currency. To really “seal the deal”, the government even outlawed individual ownership of Gold for awhile and forced citizens to sell it to them at a fixed price they set; then they raised the “official” price of Gold, devaluing every dollar citizens held by about 40%.

The Federal Reserve (also referred to as the U.S. central banking system, or central bank) is not a government agency; it’s a private bank, owned by other big banks, and run by people from those banks. When the U.S. Government wants additional money to spend, it buys it at face value ($100 for a $100 bill, for instance) from the Federal Reserve; which creates the currency. That’s why your dollars say “Federal Reserve Note” on them. In order to buy the currency, the U.S. government goes into debt  via Treasury Notes & Bills, etc. The government then spends that money.

Why did the U.S. government do this? So politicians could avoid accountability, buy votes, get reelected, increase their power, and transfer the effect of their spending to the future. This is how the federal government got to be the monster it is today. Under the old system, the government could only spend as much as it held in gold-backed dollars. If they wanted to spend more, they had to tax citizens. Citizens don’t like higher taxes, and get upset. Politicians lose jobs. Government was held accountable. The new Federal Reserve system removes this nasty inconvenience by letting the politicians just go buy currency from the Federal Reserve, creating new debt in the process; and government debt is a claim on the productivity of the nation – therefore it is your debt. Government doesn’t produce; it only consumes – your wealth. The income tax was created at the same time as the Federal Reserve system to pay for this debt.

As government buys more dollars from the Federal Reserve (and creates more debt in the process), it increases the number of dollars in circulation; thus creating inflation – plus damaging boom & bust cycles in the economy – plus interest expense on the debt. This is where Gold becomes very annoying to them. Gold, like any other commodity, adjusts in price with inflation and glaringly points it out. As the number of dollars in circulation goes up, the price of Gold rises.  People see their purchasing power in dollars go down, so they trade them for Gold; which holds its purchasing power in times of inflation and serves as alternative money. Government doesn’t want you to notice their little shell game, and they don’t want you to stop using and holding their inflationary dollars, so they hate Gold.

Our government, and other governments who play the same shell game, try to control the price of Gold and hold it artificially down through surreptitious trading activity in league with major financial firms. They try to send you false signals about their inflationary borrow & spend activity by artificially holding the cost of Gold down. If the price of Gold is low, everything must be okay, right? Wrong! Very, very wrong!

We’ve now reached a point where government borrowing and spending is so extreme that they can’t artificially hold Gold down to the price level they would like anymore.  Thus, Gold is trading near $1,700.00 per ounce. Many experts argue that if the government wasn’t surreptitiously intervening in the market to hold the price of Gold down, it would be trading for $3,000 or more.  Regardless, the rise in the price of Gold is a clear and unambiguous signal that government spending is out of control. The effect of this is to undermine peoples’ faith in the dollar and our government.  That makes it hard for government to keep up their shell game. Their borrowing & spending has also created a debt that the income tax can’t begin to cover – plus those nasty and growing interest obligations.

Sober people have also questioned how much of the Gold the government holds it actually owns anymore. They suspect that the government’s secret Gold sales to flood the market and hold the market price of Gold down have been so extensive that very little of the Gold they hold is actually owned by them anymore. Large Gold sales usually don’t involve physical transfer. An electronic record is created to note the new ownership. Therefore the government may be sitting on a large cache of Gold that “we the people” don’t own anymore. Perhaps this is partly why the price of Gold has risen despite government’s best efforts to hold it down. Maybe they’ve run out of Gold to sell. We can’t know for sure, because the government hides this activity behind a thick wall of secrecy. But bits and pieces of info leak out now and then, and they paint a dismal picture. Investigators have even uncovered documents created by central bankers for central bankers on how to execute market intervention between each other to hold the Gold price down.

As the government shell game grows, people start paying attention, and realizing how they’re being hosed by the government’s inflationary, destructive borrow and spend policy. If more Americans understood how our monetary policy works, and what government’s doing to them, they’d be screaming. Government does everything it can to keep us in ignorance.

Faith in the U.S. Dollar has been so severely undermined that other nations, who are not so naive in these matters, are seriously talking about abandoning the dollar as the “world currency”, a beneficial status which the U.S. has enjoyed since the end of World War II. If that happens, investment coming into the U.S. will decline and government will find it increasingly difficult to sell or roll-over their debt; China being our largest current creditor. Then the U.S. will hit a “fiscal cliff” that makes the current one look like a ride in the park.

The U.S. national debt is now over $16 Trillion dollars; over $52,000 per person, and approx. 125% of gross domestic product (gross domestic product being our productivity as a nation – your productivity – the productivity our government taxes you on) – a new record by far. The current government’s policies alone added $8 Trillion to that debt in the last four years. Then there’s the interest on all that debt. Budget projections indicate that the national debt could hit $20 Trillion in the next couple years if we keep going the way we are. Other nations are starting to look at the U.S. like Greece; a bankrupt financial disaster. We’re mortgaging our nation to entities like China, who are not exactly our friends. The current administration’s indebted the nation to a greater extent than any other, but they’re not the only perpetrators. This has been going for decades since the new system was created. It’s not a Democrat or Republican problem – it’s a national tragedy.

Gold at $1,700 an ounce sends this signal clearly – which government fears and hates.

The government wants you to hold their inflationary dollars. The Federal Reserve does too; and bad-mouths Gold. The finance houses who surreptitiously work with the government to control the price of Gold tell you that Gold is an unproductive asset, and you should hold dollars instead; while they quietly buy it for their own accounts. They’re all propagandizing you to keep their shell game going. I remember one time a couple of years ago when one of the major financial houses (JP Morgan I believe) was publicly telling it’s clients to sell Gold, while privately buying it for their own account.

The national tragedy goes even deeper. The Federal Reserve holds secret meetings where it shares inside information with the finance houses who help it; information that they use to make millions and billions on the markets from you unknowing investors. If you think the equity & debt markets are free and open, think again. It’s all manipulated.

Let’s talk about one of the many ways in which your government shafts you with this shell game – Social Security. You are required to make tax payments into Social Security. These payments are made with post-income tax dollars (you’re first income-taxed on the income you pay the social security tax with). The government spends the social security revenues (money) and replaces them in the social security trust fund with government debt instruments; thus, the government spends your social security contributions as it sees fit, and replaces them with new government debt. Of course, government debt is a claim on the productivity of the country – your productivity – and therefore represents a new debt you as citizens take on. This is important to note, because government spends your social security contributions, and creates a new debt owed by you as a citizen (another tax) for payment of benefits to you. Then, when you receive your benefits, up to 85% of them are subject to income tax depending on your filing status and how much income from other sources you have coming in.

To recap, the government first taxes the income you pay social security taxes with (income tax), then taxes you for social security (social security tax), then spends the money and replaces it with new debt (a new claim on your productivity, or tax), and then taxes you on your benefits (income tax). That’s three taxes on the money you put into social security, plus the social security tax itself. Of course, the government must pay interest on the new debt they created (another claim on your productivity, or tax), so really you pay five taxes; and your contributions are spent now for anything the government wants. Most citizens think the government is taking their money and putting it into a social security trust fund (savings account) to pay your benefits. Nope! That money’s gone. They spent it and replaced it with debt – debt that you owe as citizens.

The government says that your benefits money is safe because it’s invested in instruments guaranteed by the U.S. government. What they really mean is that your benefit claims are backed by their ability to tax you; or create new debt that you owe as a citizen; and that’s the only way those benefits are going to be paid. They just keep spending the tax money as it comes in, and pass the buck for social security obligations to future generations. Neat trick huh?

Additionally, “people retiring today are part of the first generation of workers who have paid more in Social Security taxes during their careers than they will receive in benefits after they retire. It’s a historic shift that will only get worse for future retirees, according to an analysis by The Associated Press.”  The government absorbed all the money you put in, plus the employer contributions, and you won’t even get back what you alone put in; let alone all the interest you could have earned on that money over the years. This is what your government has done for you. Isn’t it great? What a deal!

Your wealth, purchasing power, and financial stability are being undermined every day by the government’s borrow & spend shell game, the underhanded dealings of the Federal Reserve and it’s finance house cronies, and very likely the sale of our nation’s Gold reserves (your Gold reserves) to manipulate the markets and fool you. Even your most basic “protections” are being undermined by government subterfuge. Gold serves as a clear warning, and an alternative.

That’s why the U.S. government hates -and fears- Gold.

Be informed.

Learn More About the U.S. Government Monetary Policy:

http://walshal.wordpress.com/2009/04/11/monetary-policy-a-primer/

Other Suggested Reading:

America Has Become a Pinata

http://walshal.wordpress.com/2012/12/28/america-has-become-a-pinata/

U.S. trade deficit surges to $50.2 billion in May

updated 7/12/2011 8:51:24 AM ET 2011-07-12T12:51:24

Courtesy of msnbc.com

 

WASHINGTON — The U.S. trade gap widened much more than expected in May as a jump in oil prices helped push imports to the second highest level on record and exports fell slightly from April’s record high, a U.S. government report showed on Tuesday.

The trade deficit totaled $50.2 billion, the highest since October 2008, and well above the consensus estimate of $44.0 billion from Wall Street analysts surveyed before the report.

Imports rose 2.6 percent to $225.1 billion, the highest since the record of $231.6 billion set in July 2008 just before the global financial crisis took a huge toll on global trade.

The increase reflected record imports of capital goods and food, feeds and beverages in a sign of resurgent U.S. demand, but a jump in oil prices to $108.70 per barrel — the highest since August 2008 — also accounted for a large part of the gain.

The oil price jump helped push the U.S. petroleum trade deficit to the highest since October 2008. Imports from the Organization of the Petroleum Exporting Countries were also the highest since October 2008.

The wider-than-expected trade gap will likely prompt analysts to scale back their estimates of second-quarter economic growth, as imports captured more of stronger U.S. demand.

Link to Full Article

Why Job Growth Isn’t Happening

By Peter Morici

Published July 08, 2011 | FOXBusiness

Reuters

The economy added only 18,000 jobs in June, after posting a lackluster 25,000 gain in May.  Jobs creation remains moribund and inadequate to appreciably dent unemployment, because the economic recovery is simply not gaining steam.

These weak jobs data indicate the economic recovery remains in low gear, and policies other than big deficits and printing money are needed to get Americans back to work.

Health care, retail, and manufacturing posted modest gains.

Construction, especially hurt by the weak housing market and tight state and local budgets, lost 9,000 jobs.

Temporary employment is falling, indicating growing business pessimism.

Government employment fell by 39,000, and private sector jobs growth was 57,000.

Unemployment rose to 9.2 percent, as jobs creation continues to lag labor force growth. Moreover, unemployment would be higher but for the fact that many adults have become discouraged and quit looking for work altogether. 

Factoring in those discouraged workers, and others working part time but would prefer full time employment, the unemployment rate is 16 percent.  Adding college graduates in low skill positions, like counterwork at Starbucks, and the unemployment rate is closer to 20 percent.

Link to Full Article

Global growth: American exceptionalism

American exceptionalism

Jul 1st 2011, 17:41 by R.A. | WASHINGTON; Courtesy, The Economist

AMERICA’S economic prospects seem to be improving, but it’s very nearly alone in that respect. The latest data from purchasing managers’ indexes around the world provide a snapshot of a global slowdown. While American manufacturing activity grew at a faster pace in June relative to May, most countries saw slowdowns and a few dipped back into contractionary territory. (See this useful interactive at Real Time Economics for an easy comparison.)

Slowing growth in China has grabbed attention, given recent headlines about debt loads and unrest there. China’s PMI dipped from 52 to 50.9, barely in expansionary territory, in June. That’s not entirely a bad thing, however. Chinese inflation has been running uncomfortably high, and the government has been working to slow the economy’s growth. The story is the same in India, where activity also slowed, and in Brazil, where production actually fell in June.

As the chart at right indicates, the Indian and Brazilian economies have been running especially hot. (You can see an interactive chart of the factors that make-up the index here.) Depending on the pace of the slowdown over the next few months, there are sure to be worries about hard landings. Emerging market governments have little choice but to combat destabilising inflation.

The good news for the rich world is that slowing emerging market growth will keep commodity prices. That, in turn, will dampen inflationary pressures and free central banks to respond more appropriately to domestic economic conditions. In Europe, those conditions are weak and getting weaker. Manufacturing activity for the euro zone decelerated sharply in June. The big core economies, Germany and France, weren’t spared. But matters are worse around the periphery.

Link to Full Article

It’s China’s Turn to Wrestle with a Pile of Bad Debt

By John W. Schoen, Senior producer, msnbc.com

The U.S. banking system was the first to get hit by the financial Panic of 2008. For the past year, European bankers have been scrambling to head off exploding debt bombs in Greece and other countries with high debt loads.

Now, it looks like it’s China’s turn to face up to a giant pile of bad debt. This being China, though, the story isn’t playing out like an ordinary Western financial crisis.

The source of China’s current problem dates back to the collapse of the global economy in 2008 when, like its Western counterparts, the Chinese government unleashed a flood of cash to stimulate its economy. Much of that money was loans from state-owned banks to local governments, which were supposed to spend all those yuan on new roads, railways, power plants and other projects to help China maintain its torrid pace of economic growth.

Many of those yuan didn’t get where they were supposed to go. It’s still not clear exactly where they all went. But this week the Chinese government announced the results of a nationwide audit of 31 provinces and hundreds of municipalities which found that those local governments are now carrying some $1.6 trillion worth of loans. And a large portion — as much as 20 percent — may have to be written off as bad debt.

Link to full article

Household wealth down 23% in 2 years – Fed:

NEW YORK (CNNMoney) — The average American family’s household net worth declined 23% between 2007 and 2009, the Federal Reserve said Thursday.

A rare survey of U.S. households, first performed in 2007 but repeated in 2009 in order to gauge the effects of the recession, reveals the median net worth of households fell from $125,000 in 2007 to $96,000 in 2009.

Titled “Surveying the Aftermath of the Storm,” the report offers a broad look at how the financial crisis impacted individual households.

Link to Article

Turmoil in Middle East spells trouble for your budget

By John W. Schoen Senior producer

msnbc.com msnbc.com

updated 2/25/2011 10:53:50 AM ET 2011-02-25T15:53:50

Oil is nothing less than the life blood of the U.S. economy.

While it’s impossible to know the full impact of Arab uprisings on the long-term price of oil, one thing is clear. Every extra dollar consumers and businesses have to spend on oil takes another little bite out of economic growth.

“Higher oil prices take purchasing power away from the consumer,” said Mohamed El-Erian, co-chief investment officer at money manager PIMCO. “They transfer income to the rest of the world and they increase import prices. Put all that together and it means lower growth and higher inflation.”

The shockwaves reverberating through the global oil supply chain this week come just as the U.S. economy is finally getting back up to speed after the deepest recession in 70 years.

Link to Full Article

China and Colombia announce ‘alternative Panama Canal’

14 February 2011 Last updated at 11:47 ET

From BBC Mobile 

Trade between Colombia and China has increased

from $10m in 1980 to more than $5bn last year

Colombia has announced it is negotiating with China to build an alternative to the Panama Canal.

The proposed transport route is intended to promote the flow of goods between Asia and Latin America.

The plan is to create a “dry canal” where the Pacific port of Buenaventura would be linked by rail, across Colombia, to the Atlantic Coast.

Trade between Colombia and China has increased from $10m in 1980 to more than $5bn last year.

The announcement came from the Colombian president, Juan Manuel Santos, who told the Financial Times that the project was “a real proposal… and it is quite advanced”.

China has been increasing its involvement across Latin America to feed a growing need for raw materials and commodities.

According to BBC Bogota correspondent Jeremy McDermott, President Santos has departed from the emphasis on security of his predecessor Alvaro Uribe.

Mr Uribe’s Democratic Security Policy, backed by US military aid, is credited with halving the numbers of Marxist rebels and pushing them into the more remote jungles and mountains.

Mr Santos is concentrating on what he calls “democratic prosperity”, our correspondent says.

He hopes that economic development will address some of the root issues of the 46-year civil conflict, such as poverty and the lack of opportunities, which have pushed people into being rebels or into the lucrative drug trade, our correspondent says.

Why is China Building Eerie ‘Ghost Cities’?

Editor’s Note: The following report is excerpted from Jerome Corsi’s Red Alert, the premium online newsletter published by the current No. 1 best-selling author, WND staff writer and senior managing director of the Financial Services Group at Gilford Securities.

Why is China constructing large, well-designed “ghost cities” that are completely devoid of people?

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FROM JEROME CORSI’S RED ALERT

Google Earth photographs reveal towns completely devoid of people

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Posted: February 06, 2011
9:51 pm Eastern

© 2011 WorldNetDaily

Editor’s Note: The following report is excerpted from Jerome Corsi’s Red Alert, the premium online newsletter published by the current No. 1 best-selling author, WND staff writer and senior managing director of the Financial Services Group at Gilford Securities. 

Why is China constructing large, well-designed “ghost cities” that are completely devoid of people?

China’s empty roads (source: Business Insider)

Jerome Corsi’s Red Alert reports Google Earth photographs of China depict city after city of vast complexes consisting of office skyscrapers, government buildings, apartment buildings, residential towers and homes, all connected by networks of empty roads – with some of the cities located in China’s truly most inhospitable locations. Images of these “ghost cities” – after countless billions of dollars have been spent on the towns’ design and construction – reveal nobody lives in them.

“The photographs look like giant movie sets prepared to film apocalyptic motion pictures in which some sort of a neutron war or bizarre natural disaster has eliminated people from the face of the earth while leaving the skyscrapers, sports stadiums, parks and roads perfectly intact,” Corsi noted. “One of China’s ghost cities is actually built in the middle of a desert in Inner Mongolia.”

Business Insider ran a series of photos of these Chinese ghost cities. One showed no cars in the city except for approximately 100 parked in largely empty lots clustered around a government building, and another showed a beautiful wetland park with people added using Photoshop.

China now has an estimated inventory of 64 million vacant homes. It is building up to 20 new ghost cities a year on the country’s “vast swathes of free land.”

ScallyWagAndVagabond.com quoted Patrick Chovanec, a business teacher at Tsinghua University in Beijing, who explained, “Who wants to be the mayor who reports that he didn’t get 8 percent GDP growth this year? Nobody wants to come forward with that. So the incentives in the system are to build. And if that’s the easiest way to achieve growth, then you build.”

For more information on China’s ghost cities, read Jerome Corsi’s Red Alert, the premium, online intelligence news source by the WND staff writer, columnist and author of the New York Times No. 1 best-seller, “The Obama Nation.“

The Dollar and Global Standing

February 2, 2011, 5:49 pm
The Dollar and Global Standing
By DAVID LEONHARDT
From Barry Eichengreen (via Matt Yglesias):

Sterling lost its position as an international currency because Britain lost its great-power status, not the other way around. And Britain lost its great-power status as a result of homegrown economic problems.

There isn’t much point in complaining about the devaluation of the dollar right now, given the trade deficit the United States is running. But there really isn’t much point in complaining about devaluation and not also complaining about our big long-term economic problems: slowing educational gains, the uniquely high cost of health care and the country’s inability to align taxes with government benefits. Those problems, not the dollar’s value, threaten the United States’ global standing.