May 13th, 2012 by Dissolving Dollars

February 19th, 2012 by Dissolving Dollars

I especially liked the imagery of the last frame.

March 7th, 2011 by Dissolving Dollars

As a so-called political strategist, I guess Dick Morris knows when he’s about to get ripped apart over his fascist drivel, because he only lasted a few minutes before he hung up on Peter Schiff. It is worth a listen.

January 19th, 2011 by Dissolving Dollars

Here is Ellen Brown author of Web of Debt on the Peter Schiff show. Schiff and Brown are two people critical of the Federal Reserve system but with much different solutions. To Schiff government is the enemy and to Brown government is the savior. Brown doesn’t articulate her point all that well in this interview, but who could with a great talker like big mouth Peter? I’d personally put my money on Schiff’s solutions rather than Brown’s, but I’m a fan of science and the only way we’ll ever really know what works is through actual experimentation. But that never happens because for some reason ideology is all that matters in politics and economics, not science. Anyway, it’d be nice if Schiff studied people with opposing views to his more. I know Ellen Brown is quite familiar with Schiff’s whole take on things but he isn’t of hers, since he never read her book. I mean he was in the movie The Secret of Oz, which is more of an Ellen Brown take on the Federal Reserve system, and he claims he doesn’t know who Bill Still, the guy who made The Secret of Oz, is. Anyway, I like both these people but we’ll never know who is right without full scale experimentation.

November 29th, 2010 by Dissolving Dollars

Statistically, on days when the Federal Reserve performs open market operations, which basically means they create money and give it to primary dealers (banks), the stock market either closes up or has a nice, rigged reversal to the upside that offsets selling pressure. That’s how banks can have profits every trading day, like JP Morgan and Bank of America did last quarter. The banks are the market. Below are some links for further information related to how open market operations help rig the stock market.

Perfect Quarter for JP Morgan and Bank of America

Flagpole Rally November 29, 2010 after Fed Creates $9 Billion

Fed Open Market Operations Schedule

Case Study of POMO in Relation to Stocks

Video on the Mechanics of POMO

November 23rd, 2010 by Dissolving Dollars

As if the surface banking system (shown at the very top of this chart) isn’t insane enough, this chart reveals the absolute insanity of the deeper parts of the banking system: the shadow banking system. This just goes to show that absolutely no one can really comprehend the complexity of the current monetary system.

Excerpt from the Financial Times article that exposed this chart:

“These flows are so extraordinarily complex that hundreds of boxes create a diagram comparable to the circuit board of a high-tech gadget. Even as poster size, it is difficult to decode…

…The Fed now estimates that in early 2008 shadow banking was $20 trillion in size, dwarfing the $11 trillion traditional banking system. And though this shadow system has now shrunk to a ‘mere’ $16 trillion, this remains bigger than traditional banking, at some $13 trillion. Little wonder, then, that so few people immediately appreciated the significance of the seizing up of shadow banking in 2007.”

November 8th, 2010 by Dissolving Dollars

The Federal Reserve finally announced the next official round of dollar devaluation (quantitative easing/money printing). Any brief hopes that the Federal Reserve was going to protect the purchasing power of the dollar started eroding in August. The question now is, what does this new round of money printing really mean? Well, I’ve broken it down into three main possible categories: conspiracy, incompetence, or desperation.

Conspiracy: if what the Fed is doing is an authentic conspiracy, then there are many different scenarios that could unfold. Although conspiracy could entail a fake-out, overall, conspiracy mostly means inflation. By inflating away the value of the dollar, that will act as a tax on all people holding dollars; it will pay for government debt and act as a subsidy for banks teetering on insolvency. Also, inflating away the value of the dollar will mean higher foreign profits for those companies and people doing business overseas.

Incompetence: if what the Fed is doing is authentic incompetence, then that means that the Federal Reserve is operating off a completely unreal model of how the economy works and fighting phantom deflation. As a result of such incompetence, inflationary expectations could get out of control and cause a major retreat out of the dollar and into hard assets and stocks. So, incompetence is mostly an inflationary scenario. If the Federal Reserve keeps turning to quantitative easing as the solution to the economic situation, we could see Dow 20,000 and a 50% devaluation of the dollar.

Desperation: if what the Fed is doing is authentic desperation, then that means the deflationists are right and that the dollar can handle a lot more quantitative easing before it becomes truly inflationary. As a result, that would mean the asset inflation we are seeing now ($1400 Gold, $27 Silver, $11500 Dow) is based on false inflationary expectations, and that, due to debt destruction, deflation is still roaring behind the scenes. Desperation doesn’t mean Dow 2000, but it also doesn’t mean Dow 20,000. Desperation could mean a more steady state of flip-flopping between deflationary expectations (like we saw during the summer) and inflationary expectations (like we’ve seen since September). And in the big picture, desperation could all just be about propping up the government, which has taken over the burden of keeping the debt pyramid scheme going. The last thing the government needs is rising interest rates on its debt. And after the November election, it became clear that no spending cuts or tax increases were likely any time soon. Technically, monetizing government debt is better than paying interest on debt. Seeing as the government debt is the base supply of money to begin with, it is the only debt that only grows without ever being repaid.

All I know is that regardless of what the reality of the situation is, people are making bets on their perceived realities. Some people continue to get out of dollars while some people are actually easing back into dollars. Unfortunately, all our economic data is suspect. And the economy is at the whim of a few people in power at the Federal Reserve. If there are enough people who believe opposite things, many markets may head in non-correlating directions. Those who have no more money than what they spend are actually lucky in a way these days. Because trying to figure out what to do with saved money right now is a conundrum. Do you put it in gold even though it is at a record high? Do you put it in the stock market even though the fundamentals of the economy aren’t very bullish? Do you send your money into foreign markets and assure that the American economy will be short the money it needs to recover and pay off debt. If I had to sum up what the Fed is doing with its current policies, it would be this: The Fed is forcing people to chase rainbows.