Increasing Systemic Risk
Portends Cartel 'End Game' Attempt
by DeepCaster LLC, deepcaster.com | March 7, 2008Print
�In conjunction with the banking system�s solvency crisis, the market and economic circumstances have the broad financial system facing its greatest risks of instability or outright collapse in modern times�the Federal Reserve will spend every dollar it needs to create in order to prevent the financial system from collapsing. A systemic failure is not an option for the Fed, and any needed bailouts will not be limited to large banks�much of the salvage operation may be covert. Not to do so would promise a deflationary great depression�Unfortunately, however, the eventual result of the great bailout will be a hyperinflationary great depression�� (emphasis added) shadowstats.com, Alert, March 5, 2008
�We face a hyperinflationary great depression OR an attempt to implement The Cartel�s Ominous End Game.� Deepcaster, March 6, 2008
Evidence continues to mount that The Cartel* of Central Bankers is moving ever closer to implementing their Ominous �End Game� strategy which Deepcaster first described in its Alert �Massive Financial-Geopolitical Scheme Not Reported by Big Media� on August 13, 2006. This End Game would radically change the financial and geopolitical landscape, much to the detriment of the middle class and working poor in the United States and elsewhere. (Note: this scheme is now being opposed, somewhat belatedly, by a Resolution pending in Congress.)
*We encourage those who doubt the scope and power of Intervention by a Fed-led Cartel of Central Bankers to read Deepcaster�s January, 2008 Letter containing a summary overview of Intervention entitled �Market Intervention, Data Manipulation - - Increasing Risks, The Cartel End Game, and Latest Forecast� at www.deepcaster.com> at Latest Letter. Also consider the substantial evidence collected by the Gold AntiTrust Action Committee at www.gata.org for information on precious metals price manipulation. irtually 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.�
Investors and traders who are not attentive to the impending implementation of this End Game strategy risk taking massive losses.
�Also, before Congress yesterday, Chairman Bernanke suggested that banks reduce the principal due on defaulted or troubled mortgages so that homeowners would have positive equity in their properties. Bernanke has to know that such is a near-impossibility for mortgages bundled into structured securities, and that suggests he may have something else in mind for the system�non-traditional approaches could be under consideration. A couple of years back, Mr. Bernanke noted that the Fed was free to buy up any securities it wanted to in order to provide liquidity to the system. Such could range from equities to troubled mortgage0backed securities. In other places and other times (sometimes in the United States) actions ranging from nationalization of a banking system; to wage and price controls; to capital controls that restrict non-commercial transference of currency from a country, inhibiting flight from the domestic currency; to other options involving more-direct government control of the financial system�� (emphasis added) shadowstats.com, Alert, March 5, 2008
Several items of evidence lead us to the conclusion systemic risks are increasing and, therefore, that the attempted implementation of the �End Game: is drawing ever nearer:
1) The monthly-average annual growth in M3, the money supply, hit an all-time high of 16.7% in February, 2008, according to shadowstats.com. If this rate were sustained, it would result in a doubling of the Money Supply in just over 4 years - - a rampant monetary inflation which inevitably brings a rampant price inflation. Money supply growth cannot forever continue at an accelerating rate without a �Weimar Republic� type crisis. Therefore a financial system �day of reckoning� is inevitable.
2) Another item of evidence came in a recent exchange between Presidential candidate and Hard-Assets Constitutionalist Hero, Representative Ron Paul (R-TX) and Fed Chairman Ben Bernanke. The text of this exchange published on goldseek.com and reported by GATA (Gold AntiTrust Action Committee at www.gata.org) was appropriately titled �Paul Takes Bernanke to School About Inflation.�
The heart of the exchange, well reported by GATA, is as follows:
�Paul observed that inflation is an increase in the money supply, and he quoted estimates that the U.S. money supply has been exploding lately - - estimates Bernanke did not attempt to contradict. This explosion in the money supply, Paul said, is currency debasement that expropriates savers. He asked Bernanke how it could be justified.
Bernanke replied that the Fed's statutory mandate is price stability rather than money supply.
Whereupon Paul cited the sharply rising Producer Price Index.
Bernanke answered that he prefers to go by the Consumer Price Index. (Maybe because it is more aggressively manipulated by the government.?)
Paul countered that even the CPI has turned up sharply lately.
The best Bernanke could do was to acknowledge that the Fed is concerned about that - - concern that seems likely to manifest itself shortly in a strange way, with more reductions by the Fed in official interest rates, pushing them even further below official inflation and expropriating savers even more to rescue the banks and financial houses that lately defrauded the world with the Fed's connivance.�
Two key points are noteworthy. First, GATA hit the nail right on the head when it said that The Fed's actions were �expropriating savers even more to rescue the banks and financial houses that lately defrauded the world with The Fed's connivance.�
The foregoing exchange is yet another indication that the so-called �U.S.� Federal Reserve Bank does not act in the interest of the American people, which is not surprising as it is a for-profit private entity owned by large international financial institutions whose actions reflect a commitment to the interests of those big international financial institutions and not the United States, or to savers, or to reducing inflation, or even to their ostensible goal of �price stability.�
In fact, the �price stability� which Bernanke said was the Fed's goal, is not being achieved - - actual Consumer Price Inflation is increasing at a nearly 12% annual rate (www.shadowstats.com).
Left unstated was the inevitable effect of the Fed's continuing to cut short-term interest rates (i.e. the Fed funds rate and the discount rate). One certain result of these rate cuts is to continue to sacrifice the U.S. Dollar, making a mockery of the so-called �Strong Dollar� policy claimed by the U.S. Federal Reserve and Treasury Department. (Note: Deepcaster believes the Dollar will soon begin to bounce but the bounce will be short-lived - - a few months at the very most - - and the Dollar will then resume its Plunge.)
Not only does the sacrifice of the U.S. Dollar penalize savers, as pointed out in the interview, it also hurts the purchasing power of all Americans and, particularly the middle-class and working poor. Indeed the purchasing power of the Dollar has declined over one-third in the past five years, vis-�-vis other major currencies. That is one reason why everything costs so much more.
Most ominous, however, is what is obvious from the interview. The sacrifice of the U.S. Dollar and the consequences thereof are either being done knowingly or as a result of rank incompetence. Bernanke was caught in a huge contradiction - - he did not deny that the money supply was increasing very rapidly (though he did not admit is was growing as rapidly as we know it is), yet he claimed the Fed's goal is �price stability,� a goal utterly inconsistent with its explosive money supply growth which The Fed causes.
What was all but explicit was the fact that the dramatic increases in money supply debase the currency. The logical conclusion is that the Fed is knowingly destroying the U.S. Dollar. This conscious destruction of the U.S. Dollar and its systemic implications are key components of the Cartel End Game (which Deepcaster first described in its 8/13/06 Alert, and then elaborated on in its June, 2007 Letter �Profiting From the Push to Denationalize Currencies and Deconstruct Nations� and most recently in its January, 2008 Letter).
This conscious destruction of the U.S. Dollar has been a primary driver of recent Gold, Silver and Crude Oil record highs.
But essential to the Fed-led Cartel�s legitimacy and power is that the Precious Monetary Metals and Strategic Tangible Assets like Crude Oil not be or become competitors with their Fiat Currencies and Treasury Securities. Thus The Cartel seeks to take down Precious Metals and Strategic Commodities prices at opportune times.
3) The U.S. Dollar does not have an infinite downside. Yet it is under increasing pressure from all quarters, including, especially from continuing Fed actions. On March 7, 2008, The Fed announced it would conduct a series of (28 day) term repurchase transactions amounting eventually to $100 billion. This additional liquidity portends more price inflation and an even weaker Dollar in the long-term. This action would not have been taken were there not increasing systemic risk.
Thus it is understandable that one (of several) key components of The Cartel�s End Game (clear even to some members of Congress) is to eventually replace the U.S. Dollar with the Amero (see Deepcaster�s June, 2007 Letter for details). Needless to say, the Amero would be another Fiat Currency whose issuance is planned to be controlled by the same Central Bank Cartel which now controls the fate of the U.S. Dollar.
But in order to drive the U.S. Dollar down in order to make the transition to the Amero and the other components of the Massive Financial/Geopolitical Scheme (see Deepcaster�s June, 2007 Letter at www.deepcaster.com) the Fed must again attempt soon to de-legitimize Gold and Silver as alternatives to their Fiat Currencies and Treasury Securities by attempting to take down their prices again, and Crude Oil along with them. Deepcaster�s Forecast regarding the outcome of this attempt is contained in its latest Alert �Intervention Risk Acceleration Provides Profit Opportunity, and a Buy Recommendation� post in the �Alerts Cache� at www.deepcaster.com.
4) A final ominous note was struck when the Federal Reserve Bank of Atlanta just this January released a video on Crisis Preparedness. Excerpts from their Press Release are:
�In the aftermath of a disaster, banks play a vital role distributing cash to their customers and ensuring that their customers are able to meet the financial needs of their families and their businesses. Drawing on the experience of bankers who have weathered crisis situations, the Federal Reserve Bank of Atlanta developed Crisis Preparedness: Reconnecting the Financial Lifeline, a DVD designed to assist bankers with the institutions emergency preparedness efforts. Each section of the DVD profiles a facet of crisis preparedness, from preparing and testing a plan to caring for employees to providing cash to customers to working with banks and first responders. The DVD features interviews with bankers and Atlanta Fed staff. The examples featured in the DVD emphasize the need for crisis preparedness and practical steps institutions can take to be prepared. The DVD includes supplemental in-depth interviews with these featured bankers. The DVD can be downloaded or ordered at the Atlanta Fed's website, http://www.frbatlanta.org/bank_info/crisis_preparedness.cfm.�
Need we have any more evidence than all of the foregoing for the increasing probability of an attempted implementation of The Cartel�s Ominous End Game?
Copyright © 2008 DeepCaster LLC
DEEPCASTER FORTRESS ASSETS LETTER Wealth Preservation, Wealth Enhancement, & Financial and Geopolitical Intelligence. Gravitas, Pietas, Virtus