Economic update

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Someone asked an economist how his wife was doing, and the economist answered "compared to what?"

http://mises.org/daily/5051/Inflatio...Gold-Explained

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Inflation is already here in a big way. Central bankers (Fed, ECB, BOE, BOJ, BOC, etc), got scared of delation & pumped so much money into the system creating excess money supply, & currency itself is loosing value. This has led to inflation in essential commodities. As inflation takes stronghold, its the savers who will get punished for saving (as currency becomes worth less & less). Here is an excellent piece....

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“The running 10 year annual returns in overall commodities. Through wars (both hot and cold), easy credit booms and even the U.S. industrial revolution, any time the commodity market has gone through a period like it just has, a nasty spill invariably followed".

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Major War is on the way, Charles Nenner predicts

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Probably it has started by so called bankrupt economies in search of a legitimate way to seize Libya's oil reserve. Attacking Libya (for whatever they are doing) is justified, & at the same time doing nothing for a similar action in Saudi/Bahrain indicates, its a war game-plan. http://www.cato-at-liberty.org/libya...ithout-policy/

THe future looks all set for a massive escalation heading towards something very scary.. So, Buy precious metals, as much as one can in a portfolio, as this is the only asset class which will rally the most.

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We just had a trend line break in the USD that looks uncannily similar to the 1970s break.
A must read: "Time for Gold to Shine? USD Breaks 3-year Trend Line"



Source: http://www.financialsense.com/contri...-gold-to-shine

And news just received: we see the escalation of war.. & expect to see more countries getting involved over time till this whole thing leads to a WW
"Israel Warplanes Fly Over Gaza, Bomb Hamas Military Site"

Under these circumstance, normally US Dollar would have rallied, but now its infact tanking, so, its really a very serious situation with the fall of USD.

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For weeks now I have been warning that the End Game for the US monetary system was fast approaching.

Now we have confirmation of this... from the Federal Reserve itself!

Earlier today Dallas Fed President Richard Fisher said that the US is at a "tipping point" and that if we continue down the path we are on we will become "insolvent."

Bad news Mr Fisher, we're already there:


As you can see, the US Dollar has not only taken out its multi-year trendline, it's also broken below its 2010 low. This leaves only the 2009 low and 2008 lows as final support before... well, let's just say before things get "interesting" in the US very fast.

If you have not already taken steps to prepare your portfolio for a US Dollar collapse, you need to do so now. Fed President Fisher's comments make it clear that the Fed KNOWS the US Dollar collapse is coming. And they're not going to do anything to stop it.

In fact, the Fed recently stated that it WANTS to create inflation in the US!!!

The best inflation hedge GOLD is already shining... as smart investors are loading up on Gold & Silver...


Source: Graham Summers, Economist.

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Today Portugal Govt. collapsed, its another domino falling in a house of cards.
This one is worth reading...
"YOU AIN'T SEEN NOTHING, YET"
UPDATE: GOLD VS ARMSTRONG'S MODEL
http://www.gold-eagle.com/editorials...ner032111.html

The Largest Bond fund in the world "PIMCO" is predicting a massive Global inflation..


Compare the rates in the Current inflation, & the expected inflation in 2nd Quarter 2011 & same time next year (2nd Quarter 2012) ARE YOU PREPARED..
I doubt, many of us are unprepared for a high (very high) inflation....... like $2/lit gas, $5 for a loaf of bread, etc.. & loosing job at the same time

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The Dollar Will Collapse Within 3-4 Months (a must read)
The US Dollar's inflationary death spiral continues. We've now taken out the 2010 low leaving only two more lines of support before we're in completely uncharted territory. At its current rate of collapse, the US Dollar will do this within the next 3-4 months. This means the greenback will break into a new all-time lows by 2H11, which will precipitate the coming inflationary collapse.

Small wonder then that both Gold and Silver recently hit new highs for their current bull markets. With the greenback dropping like a rock, and rumors of QE 3 (next roiund of money printing) swirling around the financial community, what sane investor would bet against inflation?
On that note, now is the time to be shifting capital into inflation hedges. Those who buy Gold and Silver will likely do very well in the coming months (my personal view is Gold will clear $1,500 and Silver $40 this year).
We’re also going to be seeing an increased wave of buyouts in the natural resources sector as larger firms look to increase their resources via mergers and acquisitions rather than spending the money to find and develop new mines.
The natural resources sector will also benefit as large institutions (pensions, mutual funds, etc) finally begin piling into inflation hedges across the board. Given how little exposure the Big Boys have to inflation hedges even a small percentage of assets under management, shifted into these sectors, could result in sharp price spikes.
In other words, buckle up, cause things are about to get REALLY interesting.
Good Investing!
Graham Summers
Source: GainsPainsCapital.

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Canadian current credit bubble (& the housing bubble) have its origins in the aftermath of the dot-com bubble and the associated tanking of interest rates. At that time it was nothing but a mild overvaluation. But gas was thrown on the fire between 2004 and 2009 as the loosening of mortgage lending standards and a new prevailing mentality towards housing took hold. The combination of shifting mass psychology and cheap, readily available credit has been the fuel for the made-in-Canada housing bubble.

At least this is not the time to add more unnecessary debt (like - buying a bigger home with a bigger mortgage, or taking a loan for a vacation, etc)


source: http://financialinsights.wordpress.com/

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Forgive me for such a lengthy posting, somehow I couldn't edit, as the whole article is so important & needs to be followed...

12 Warning Signs of U.S. Hyperinflation
One of the most frequently asked questions we receive at the National Inflation Association (NIA) is what warning signs will there be when hyperinflation is imminent. In our opinion, the majority of the warning signs that hyperinflation is imminent are already here today, but most Americans are failing to properly recognize them. NIA believes that there is a serious risk of hyperinflation breaking out as soon as the second half of this calendar year and that hyperinflation is almost guaranteed to occur by the end of this decade.

In our estimation, the most likely time frame for a full-fledged outbreak of hyperinflation is between the years 2013 and 2015. Americans who wait until 2013 to prepare, will most likely see the majority of their purchasing power wiped out. It is essential that all Americans begin preparing for hyperinflation immediately.

Top 12 warning signs that hyperinflation is about to occur:
1) The Federal Reserve is Buying 70% of U.S. Treasuries. The Federal Reserve has been buying 70% of all new U.S. treasury debt. Up until this year, the U.S. has been successful at exporting most of its inflation to the rest of the world, which is hoarding huge amounts of U.S. dollar reserves due to the U.S. dollar's status as the world's reserve currency. In recent months, foreign central bank purchases of U.S. treasuries have declined from 50% down to 30%, and Federal Reserve purchases have increased from 10% up to 70%. This means U.S. government deficit spending is now directly leading to U.S. inflation that will destroy the standard of living for all Americans.

2) The Private Sector Has Stopped Purchasing U.S. Treasuries. The U.S. private sector was previously a buyer of 30% of U.S. government bonds sold. Today, the U.S. private sector has stopped buying U.S. treasuries and is dumping government debt. The Pimco Total Return Fund was recently the single largest private sector owner of U.S. government bonds, but has just reduced its U.S. treasury holdings down to zero. Although during the financial panic of 2008, investors purchased government bonds as a safe haven, during all future panics we believe precious metals will be the new safe haven.

3) China Moving Away from U.S. Dollar as Reserve Currency. The U.S. dollar became the world's reserve currency because it was backed by gold and the U.S. had the world's largest manufacturing base. Today, the U.S. dollar is no longer backed by gold and China has the world's largest manufacturing base. There is no reason for the world to continue to transact products and commodities in U.S. dollars, when most of everything the world consumes is now produced in China. China has been taking steps to position the yuan to be the world's new reserve currency.

The People's Bank of China stated earlier this month, in a story that went largely unreported by the mainstream media, that it would respond to overseas demand for the yuan to be used as a reserve currency and allow the yuan to flow back into China more easily. China hopes to allow all exporters and importers to settle their cross border transactions in yuan by the end of 2011, as part of their plan to increase the yuan's international role. NIA believes if China really wants to become the world's next superpower and see to it that the U.S. simultaneously becomes the world's next Zimbabwe, all China needs to do is use their $1.15 trillion in U.S. dollar reserves to accumulate gold and use that gold to back the yuan.

4) Japan to Begin Dumping U.S. Treasuries. Japan is the second largest holder of U.S. treasury securities with $885.9 billion in U.S. dollar reserves. Although China has reduced their U.S. treasury holdings for three straight months, Japan has increased their U.S. treasury holdings seven months in a row. Japan is the country that has been the most consistent at buying our debt for the past year, but that is about the change. Japan is likely going to have to spend $300 billion over the next year to rebuild parts of their country that were destroyed by the recent earthquake, tsunami, and nuclear disaster, and NIA believes their U.S. dollar reserves will be the most likely source of this funding. This will come at the worst possible time for the U.S., which needs Japan to increase their purchases of U.S. treasuries in order to fund our record budget deficits.

5) The Fed Funds Rate Remains Near Zero. The Federal Reserve has held the Fed Funds Rate at 0.00-0.25% since December 16th, 2008, a period of over 27 months. This is unprecedented and NIA believes the world is now flooded with excess liquidity of U.S. dollars.

When the nuclear reactors in Japan began overheating two weeks ago after their cooling systems failed due to a lack of electricity, TEPCO was forced to open relief valves to release radioactive steam into the air in order to avoid an explosion. The U.S. stock market is currently acting as a relief valve for all of the excess liquidity of U.S. dollars. The U.S. economy for all intents and purposes should currently be in a massive and extremely steep recession, but because of the Fed's money printing, stock prices are rising because people don't know what else to do with their dollars.

NIA believes gold, and especially silver, are much better hedges against inflation than U.S. equities, which is why for the past couple of years we have been predicting large declines in both the Dow/Gold and Gold/Silver ratios. These two ratios have been in free fall exactly like NIA projected.

The Dow/Gold ratio is the single most important chart all investors need to closely follow, but way too few actually do. The Dow Jones Industrial Average (DJIA) itself is meaningless because it averages together the dollar based movements of 30 U.S. stocks. With just the DJIA, it is impossible to determine whether stocks are rising due to improving fundamentals and real growing investor demand, or if prices are rising simply because the money supply is expanding.

The Dow/Gold ratio illustrates the cyclical nature of the battle between paper assets like stocks and real hard assets like gold. The Dow/Gold ratio trends upward when an economy sees real economic growth and begins to trend downward when the growth phase ends and everybody becomes concerned about preserving wealth. With interest rates at 0%, the U.S. economy is on life support and wealth preservation is the focus of most investors. NIA believes the Dow/Gold ratio will decline to 1 before the hyperinflationary crisis is over and until the Dow/Gold ratio does decline to 1, investors should keep buying precious metals.

6) Year-Over-Year CPI Growth Has Increased 92% in Three Months. In November of 2010, the Bureau of Labor and Statistics (BLS)'s consumer price index (CPI) grew by 1.1% over November of 2009. In February of 2011, the BLS's CPI grew by 2.11% over February of 2010, above the Fed's informal inflation target of 1.5% to 2%. An increase in year-over-year CPI growth from 1.1% in November of last year to 2.11% in February of this year means that the CPI's growth rate increased by approximately 92% over a period of just three months. Imagine if the year-over-year CPI growth rate continues to increase by 92% every three months. In 9 to 12 months from now we could be looking at a price inflation rate of over 15%. Even if the BLS manages to artificially hold the CPI down around 5% or 6%, NIA believes the real rate of price inflation will still rise into the double-digits within the next year.

7) Mainstream Media Denying Fed's Target Passed. You would think that year-over-year CPI growth rising from 1.1% to 2.11% over a period of three months for an increase of 92% would generate a lot of media attention, especially considering that it has now surpassed the Fed's informal inflation target of 1.5% to 2%. Instead of acknowledging that inflation is beginning to spiral out of control and encouraging Americans to prepare for hyperinflation like NIA has been doing for years, the media decided to conveniently change the way it defines the Fed's informal target.

The media is now claiming that the Fed's informal inflation target of 1.5% to 2% is based off of year-over-year changes in the BLS's core-CPI figures. Core-CPI, as most of you already know, is a meaningless number that excludes food and energy prices. Its sole purpose is to be used to mislead the public in situations like this. We guarantee that if core-CPI had just surpassed 2% and the normal CPI was still below 2%, the media would be focusing on the normal CPI number, claiming that it remains below the Fed's target and therefore inflation is low and not a problem.

The fact of the matter is, food and energy are the two most important things Americans need to live and survive. If the BLS was going to exclude something from the CPI, you would think they would exclude goods that Americans don't consume on a daily basis. The BLS claims food and energy prices are excluded because they are most volatile. However, by excluding food and energy, core-CPI numbers are primarily driven by rents. Considering that we just came out of the largest Real Estate bubble in world history, there is a glut of homes available to rent on the market. NIA has been saying for years that being a landlord will be the worst business to be in during hyperinflation, because it will be impossible for landlords to increase rents at the same rate as overall price inflation. Food and energy prices will always increase at a much faster rate than rents.

8) Record U.S. Budget Deficit in February of $222.5 Billion. The U.S. government just reported a record budget deficit for the month of February of $222.5 billion. February's budget deficit was more than the entire fiscal year of 2007. In fact, February's deficit on an annualized basis was $2.67 trillion. NIA believes this is just a preview of future annual budget deficits, and we will see annual budget deficits surpass $2.67 trillion within the next several years.

9) High Budget Deficit as Percentage of Expenditures. The projected U.S. budget deficit for fiscal year 2011 of $1.645 trillion is 43% of total projected government expenditures in 2011 of $3.819 trillion. That is almost exactly the same level of Brazil's budget deficit as a percentage of expenditures right before they experienced hyperinflation in 1993 and it is higher than Bolivia's budget deficit as a percentage of expenditures right before they experienced hyperinflation in 1985. The only way a country can survive with such a large deficit as a percentage of expenditures and not have hyperinflation, is if foreigners are lending enough money to pay for the bulk of their deficit spending. Hyperinflation broke out in Brazil and Bolivia when foreigners stopped lending and central banks began monetizing the bulk of their deficit spending, and that is exactly what is taking place today in the U.S.

10) Obama Lies About Foreign Policy. President Obama campaigned as an anti-war President who would get our troops out of Iraq. NIA believes that many Libertarian voters actually voted for Obama in 2008 over John McCain because they felt Obama was more likely to end our wars that are adding greatly to our budget deficits and making the U.S. a lot less safe as a result. Obama may have reduced troop levels in Iraq, but he increased troops levels in Afghanistan, and is now sending troops into Libya for no reason.

The U.S. is now beginning to occupy Libya, when Libya didn't do anything to the U.S. and they are no threat to the U.S. Obama has increased our overall overseas troop levels since becoming President and the U.S. is now spending $1 trillion annually on military expenses, which includes the costs to maintain over 700 military bases in 135 countries around the world. There is no way that we can continue on with our overseas military presence without seeing hyperinflation.

11) Obama Changes Definition of Balanced Budget. In the White House's budget projections for the next 10 years, they don't project that the U.S. will ever come close to achieving a real balanced budget. In fact, after projecting declining budget deficits up until the year 2015 (NIA believes we are unlikely to see any major dip in our budget deficits due to rising interest payments on our national debt), the White House projects our budget deficits to begin increasing again up until the year 2021. Obama recently signed an executive order to create the "National Commission on Fiscal Responsibility and Reform", with a mission to "propose recommendations designed to balance the budget, excluding interest payments on the debt, by 2015". Obama is redefining a balanced budget to exclude interest payments on our national debt, because he knows interest payments are about to explode and it will be impossible to truly balance the budget.

12) U.S. Faces Largest Ever Interest Payment Increases. With U.S. inflation beginning to spiral out of control, NIA believes it is 100% guaranteed that we will soon see a large spike in long-term bond yields. Not only that, but within the next couple of years, NIA believes the Federal Reserve will be forced to raise the Fed Funds Rate in a last-ditch effort to prevent hyperinflation. When both short and long-term interest rates start to rise, so will the interest payments on our national debt. With the public portion of our national debt now exceeding $10 trillion, we could see interest payments on our debt reach $500 billion within the next year or two, and over $1 trillion somewhere around mid-decade. When interest payments reach $1 trillion, they will likely be around 30% to 40% of government tax receipts, up from interest payments being only 9% of tax receipts today. No country has ever seen interest payments on their debt reach 40% of tax receipts without hyperinflation occurring in the years to come.

Source: inflation.us

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Housing Double Dip fears wouldn't go away:-

Case Shiller US housing data is out, and it is as horrible as ever. Basically the double dip refuses to stop. The 10-City and 20- City Composites continue to decline month-over-month and have posted monthly declines for six consecutive months now. “These data confirm what we have seen with recent housing starts and sales reports. The housing market recession is not yet over, and none of the statistics are indicating any form of sustained recovery. At most, we have seen all statistics bounce along their troughs; at worst, the feared double-dip recession may be materializing."

Gary Shilling: Housing Prices to Drop another 20% (more mortgage default, more ... more ... of everything ????) http://www.businessinsider.com/gary-...es-2011-3?op=1

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The Biggest Financial Fraud in history & NO ONE Gets punished.. Infact, its back to business as usual...... its getting ready for the next even bigger crisis (this time its the currency markets/bond markets/CDS's).

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Wal-Mart US CEO To America: "Prepare For Serious Inflation"
(inflation details at 3.30min of video)

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