We are entering panic mood month, known as Octoberphobia. Credit Suisse’s Global Risk Appetite index reached “panic” levels for the first time since January 2012. Stocks are going down. Why? Why are the markets not performing? On the one hand, the U.S. Federal Reserve desperately wants to raise interest rates to show that there’s been progress made since 2008. It would be a signal that things are getting better, that the economy can sustain new interest rates because we are reaching full employment right now at 5.1%. That’s basically full employment for the economy. So based on that figure alone, Janet Yellen, the President of the U.S. Federal Reserve, wants to raise rates because she suspects that inflation is developing due to people being fully employed.
But that’s only one side of the coin, albeit non-farm payrolls rose a weaker than expected 142,000 in September, below the expected 200,000 gain (meaning no rate hike in October and 2016 looks impossible as well). The other side, with this full employment, people are not spending money because there has not been a real raise in the wage sector. Since 2008 salaries have not been raised, because there has not been any inflation. There’s no reason to raise salary if there’s no inflation. So companies evidentially have not been raising inflation. Now the economy cycle got sunk and the economy prices dropped 25% this year alone. The world economy is slowing down so there’s no consumption. So all commodities, which total 70, are going down. Everything we see and touch and eat and consume every single day, every single thing is going down. From soy beans to meat markets to financial markets including precious metals, everything is going down. Worldwide. This is not a local phenomenon.
So why did the Chinese market drop 50%? Because there is no consumption. Why are we in this currency war where countries that have a drop in the value of their currencies of 30% so far this year, even 35%, are having an inflation? And to counteract inflation of course they are raising interest rates, like in Brazil and Turkey, but the rest of the world, there’s more of a Japanese style stagnation. There’s no inflation whatsoever in Japan, in Europe, in the United States.
And China has its own problem, which is a collapsing economy. Because of lack of consumption, their exports are significantly lower. So today, our management, our industrial capacity came out way below expectations for September. Of course, we are not exporting, we are not making things. Caterpillar is the largest maker of large machines in the United States. People think they just make tractors. Besides the tractors, they make all kinds of equipment and machinery for construction, such as heavy duty equipment for mining, and for anything that is heavy and huge. Caterpillar was one of our largest exports here in the United States. That’s something we’re very good at here, is big machines. Also packaging machines and bolting machines. Well, why do you think they laid off 10,000 people? These are our best exports. Because the strong dollar is no good. Having the dollar so strong, it makes Caterpillar products more expensive overseas to our clients. Since they are seeing a diminishing economy, exporters of commodities like Brazil and Australia, which are big exporters of commodities, the commodity prices are dropping. The world is not consuming, so there is no use to buy new machines for mining or agriculture, or for cutting trees in the Amazon. Whatever it is the project is dead because to whom are you going to sell those trees? To whom will you sell those minerals? To whom will you sell those commodities when the world is not buying? It’s a stagnation. The world is not consuming.
The President of the International Monetary Fund (IMF), Christine Lagarde, told Janet Yellen twice already: it’s a bad idea to raise interest rates in September. Now that Yellen hasn’t done it, Lagarde is saying that she is happy to see that the US Federal Reserve will be raising rates only if it’s data dependent. This means that one piece of data has to be good, such as unemployment at 5.1%. But Yellen says that there has to be at least 2% inflation. Well we are at 0% inflation right now. To get that 2% we have a long way to go. To get 2%, Europe has a long way to go. To get 2%, Japan has the longest way to go.
People in the Shanghai exchange, these last 90 days, have gathered the largest collection of gold ever seen since the Shanghai exchange was created. People are taking their gold back. They don’t want to leave it in the exchange. They are taking delivery of their gold. There was an all-time record of gold deliveries out of the exchange, as though people don’t even trust the exchange. Why are they doing this? Because they are starting to lose confidence in the system and in their government by association.
Then when will be the day, we, America, lose confidence in the stock market? Perhaps when we see the market is just a big balloon made out of smoke and mirrors to pretend the economy is doing okay by forcing a raise hike we cannot sustain. If they raise rates this year it’s only to lower rates next year because we cannot grow. There is no inflation. We are going to kill the economy. And most important, when you raise rates, immediately the dollar goes up. That’s the first consequence of the raise hike, it makes the currency stronger. And the last thing we need now is to get a stronger currency, because it will defeat our exports.
Our trade deficit is already around $40 billion a month, which means we consume $40 billion more than we export, and that’s why this hole we have with the national debt only gets bigger and bigger… and we’re losing our capacity to pay it.
So we are entering, slowly but surely, what Christine Lagarde calls disinflation, when rather than inflation, we are having the big D… the capital D that they don’t want to talk about, deflation. To the point where they came out with this new word, disinflation.
What is disinflation? Disinflation is the gray zone between inflation and deflation. So basically, we mean deflation, but they don’t want to call it deflation yet. We are getting there but we’re not there yet, so we are in disinflation. They don’t want to tell the people the truth, that we are already in a deflationary process, in which there is always a deflation before a bare market. And there is also always a commodities drop before a recession. We have two powerful phenomena here: the drop in commodity prices and the drop of the stock market internationally. Right? And as Lagarde says, it’s going to be extremely bad for many years to come. We are going to see a period of stagnation, which will last until 2020. No growth, no inflation, Japanese style, shows that we will enter a new recession. The economy is not going to get better, it’s going to get worse, and this is coming from the other most powerful lady in the world.
Now, we don’t want to listen to her, that’s the other side of the coin. We want to listen to our lady here, Janet Yellen. We want to be fed by lies because it feels better. We don’t want to know the truth. It’s like taking an anesthetic. We don’t want to know the pain. Without pain, we will not change. Without pain, this monetary system, which is obsolete, will continue towards total collapse and that’s what we will see after 2020: a collapse of the monetary system because this current system isn’t working anymore. It was created by us and is being destroyed by us.
Suddenly something comes out of this malaise of politicians, banking, Wall Street, something fresh, something new, and it has to happen. The United Nations already said we need a new currency system; they already said we need a new currency besides the dollar and the euro and the SDR, which is about to come into play as many countries now in Europe don’t accept cash anymore. If you want to put gasoline in your car in Denmark, you better have a plastic card because you can’t pay with cash. Same thing in Switzerland. This starts expanding everywhere where cash will not be accepted anymore. That’s the war on money. The government wants to control us with chips so they know what we spend the money on so they can tax every single thing. Money will just be a plastic card, like a credit card. That will be the only money there is. Controlled by the bank. Your salary is going to be deposited directly into that bank account and you will spend units of that bank account with that card. That’s the new money, and it’s already here.
It’s all about control. So there’s less laundering of money by drug dealers and terrorists. That’s very good. That’s the reason. But is it the real reason? Or is there another deeper reason? The reason is total control, one government, one World Bank. That’s the real reason… you can have a pick here at what the future will look like.
There are some red flags of this happening, like with retirement accounts, for instance. Here in the US, there was a proposal during the Bush administration to confiscate retirement accounts in order to buy stocks in the stock market. Didn’t fly. There’s also a similar project proposed in the Obama administration. While this is being discussed, starting January 1, 2015, a new law was applied, where you can only do one transfer a year. So whether you have two or more retirement accounts, as many people do because in a lifetime you can work in more than one company, so some people might have two 401k’s, two IRAs, etc., well you can do only one transfer a year, that’s it. Before that, you can choose to buy gold and you can buy real estate and put the money back in stocks, and switch between all of them as you pleased. Now you can only make one transfer, even if you have several accounts. They don’t want people to move from Wall Street so they’re making it more and more difficult to get out, as they demotivate you to do a transfer because if you don’t like it, you’ll be stuck there. There’s no back and forth. If something goes wrong it’s at your own risk. You’re going to lose money for a whole year. This is one form of money control.
This is how it starts. This is how it started in Argentina, and 5 years later the government took the whole lot. They’re making it more difficult here in America for people to do what they want with their own money. Private storage is borderline against the law. Why is it borderline? It’s their money. Why should it be borderline to get hold of their money and to buy physical gold… and why can’t they have their own gold if it’s theirs? Who is anyone to tell you that you do or do not have the right to own your own private property? This goes against the US constitutional Bill of Rights, another thing we are losing, one by one.
A lot of people are getting self-educated because they don’t teach you this in school. They don’t talk about how gold was forbidden for two generations. Economists out there don’t know much about gold because it was never part of their education. You can’t teach what you don’t know. So how would you teach your children and grandchildren if it was forbidden while you were growing up?
Only 3% of people in the western hemisphere own physical gold. 25-30% in Europe. 60-70% in China. 80% in India. 40% in Japan. What do all these civilizations know that we are missing? What do the Europeans and Asians know? They’ve been around for thousands of years. We’ve been around for 200 years. They know that paper money cannot be trusted. The dollar created in 1913 with the creation of the Federal Reserve, already lost 97% of its purchasing power. We don’t have a long history to look at. The value keeps devaluating. This is stolen wealth. The invisible tax everyone pays, called inflation or money manipulation. It is the untold story.
This ill health of the global economy sets the tone as to why investors are turning back to the safety of the gold market once again. Gold prices are surging higher since news of a weak US employment. Especially during crises like this: the No. 3 and No. 4 richest men in the world are tumbling down in investments. Carlos Slim lost $14.2 billion, or 20 percent of his net worth. Warren Buffet is down $12.5 billion, or 17 percent of his net worth. This happened in a time period of about 90 days. According to the Bloomberg Billionaires index of the 400 richest billionaires, they have collectively lost 4.2 percent of their combined net worth this year. How do investors go on to believe that they are better off than Warren Buffet or Carlos Slim? If they are losing money, the best investors in the world, then the smallest investors will most likely be following suit. Most people are in an entrapment of the first stage of a huge problem, which is denial. Through this stage, nothing can be done because they don’t recognize they have a problem. Such is the state of U.S. society. Furthermore, talking media tells us and makes us believe everyday everything will be okay and will pass by. It’s like saying your cancer tumor will shrink and go away. Not only is this completely unrealistic, but it’s going to hurt tremendously. One day, people will wake up and see all their savings disappear and their retirement dead or in coma. Denial never, ever works. Not ever has a society progressed through denial. Without taking responsibilities for your own personal problems, no one else will solve them for you. This approach of “la dolce far niente” (the sweet thing of doing nothing) will provoke the biggest and deepest pain ever felt in a crisis. Perhaps much worse than the 1933 Great Depression. The cancer of the mutual funds industry and Wall Street guarantees that your days are counted. The end is approaching rather fast and it will blow in your face any morning before you can make your first cup of coffee for the day.