U.S. Government Debt Is THE Biggest Ponzi Scheme In History

The Ponzi scheme generates returns for older investors by acquiring new investors. This scam actually yields the promised returns to earlier investors, as long as there are more new investors. These schemes usually collapse on themselves when the new investments stop.  -Investopedia

First, let me just say up front that anyone who is worried that the U.S. will default on its Treasury obligations because of this grand Vegas stage-show going in DC is a complete idiot.  To begin with, I fully expect Boehner to cave in and come to an agreement that at least temporarily lifts the debt ceiling so that Jack Lew and Obama can continue spending our money at a far greater rate than the incoming revenues.  Second, for all you folks with your head in the sand about what has happened to our Constitution over the last 13 years, the Patriot Act/Homeland Security Acts give Obama the authority to unilaterally print the money needed to service the Government's Treasury Ponzi scheme in case the stage actors don't blink by October 17th - Jack "Yes I'm A Thief" Lew's drop-dead date for cash in the Treasuries drawer.  Ultimately the debt ceiling will be raised by at least $1 trillion and Government spending will not be reduced.  But rest assured that the massive graft and kick-back payments that flow freely all around Capitol Hill will continue unabated.

The Treasury bond market is a Ponzi scheme because the amount of debt outstanding keeps growing pretty much at an accelerating rate:

(Treasury Debt Outstanding)

The reason this is a true Ponzi is because at every Treasury auction, held twice a month, the Government issues enough debt to repay the existing debt that is maturing and issues even more debt in order to fund Government overspending.  That is a Ponzi scheme in its essence.  In fact, Putin was wrong, this is an exceptional country because nature of the U.S. Government  Treasury Debt Ponzi scheme is truly exceptional.

Now that I think about it, The United States' Treasury bond Ponzi scheme is not only the biggest in history but it's the greatest in terms its ability to keep it going.  A typical Ponzi scheme, like Bernie Madoff's, requires new investors putting more money in to the scheme in order to payout the existing investors.  In contrast, if the Chinese and Japanese decide they'd rather not keep putting an increasing amount of money into financing our Governmental spending juggernaut, the Fed can just print money under the orders of the President to keep the gerbil going on the wheel, as it were.  Madoff's biggest problem is that he didn't have his own U.S. dollar printing press.

Worried about the price of gold?  This chart below shows you why you don't have to worry long term:

This chart shows the "exceptional" correlation between the price of gold and the level of the debt limit ceiling going back to 2000, the genesis of the current bull market in gold.  The drop in price since September 2011 shows the "exceptional" degree of Government/Federal Reserve intervention in the gold market - conducted by the Exchange Stabilization Fund as authorized by law and executed by JP Morgan - in order to deflect concern/fear about the increasing levels of Government spending and debt and the exceptionally increasing level of international distrust of the U.S. dollar.

The problem with Government interference in markets is that over time there are natural laws of economics and mathematics that come into play and that can not be avoided, by anyone.  The particular law of nature here is the "regression to the mean."  At some point, sooner rather than later, the price of gold will "regress" back up to its mean level of correlation  with the imminently-to-be-raised Treasury debt limit ceiling.

Will The Real Goldman Sachs View On Gold Please Stand Up

The head of Goldman Sachs' commodities research area yesterday announced in headline-grabbing fashion that gold was a "slam dunk" sell.  What's truly stunning about this is that during the 2nd quarter this year, Goldman Sachs revealed in an SEC 13-F filing that it had accumulated over 4 million shares of GLD (that's half a billion dollars worth) of GLD to become the 6th largest holder.

True to its historical track record, Goldman often says one thing through its research reports but does the exact opposite with its capital.  I've written an article published by Seeking Alpha which compares the Goldman's "sell" report, which has no basis in factual analysis, with a list of fundamental factors that point to the reasons that Goldman is saying one thing but doing the exact opposite with its capital.  You can read my article here:  Follow The Money

But before you read that, consider this accounting from www.goldcore.com of the last time Goldman issued a highly publicized "sell" on gold back in 2007:

It is worth remembering that Goldman, to much fanfare and media attention, “told clients” in November 2007, to sell gold. On November 29, 2007, Goldman recommended that investors sell gold in 2008 and it named the strategy as one of its ‘Top 10 Tips’ for the year.

Gold subsequently rose nearly 6.4% in December 2007 alone - from $783.75/oz to $833.92/oz.

Gold then rose another 5.8% in 2008 - from $833.92/oz at the close on December 31, 2007, to close at $882.05/oz on December 31, 2008.

Gold rose 12.2% in the 13 months after Goldman's sell gold call. Gold then rose 23.4% in 2009, 27.1% in 2010, 10.1% in 2011 and 7% in 2012.

Thus, proving Goldman’s ‘Top Tip’ prediction absolutely wrong and costing their clients and many of the unsuspecting public a lot of money in the process.

At the time, Goldman cut its gold forecast to $740/oz from $810/oz on a 12 month basis. One year later, gold closed at $882.05/oz - more than 19% above Goldman’s ‘forecast’.

The crystal ball gazing of Wall Street banks and hedge funds and others who have suggested gold is a bubble in recent years has cost many of the investment public dearly.

As ever, it remains wise to ignore the considerable noise that emanates from Wall Street and maintain a healthy, long term allocation to physical gold.

The Saga Of How JP Morgan/Jamie Dimon Ripped Off America With Barack Obama's Full Endorsement

JP Morgan is one of the best managed banks there is.  Jamie Dimon, the head of it, is one of the smartest bankers we got.   - Barack Obama on "The View," May 14, 2012

Read that quote a few times to let the full force of the absurdity of it sink in.  It actually took me a few minutes get over the glaring and pathetic grammatical error.  I'm guessing there wasn't a teleprompter set up in front of the El Hefe when he was snuggled up on that couch with the group of cackling moronic ladies of "The View."  There's a lot of questions that still persist about exactly who Barack is and where that rock is from under which he crawled into politics, but for now don't let your kids see that statement from the President unless you intend to give them a grammar lesson.

As far as being a "best" managed bank, I guess that could be the case if you overlook the hundreds of billions of taxpayer money that has been used to keep JP Morgan from collapsing.  And I guess that could be the case if JP Morgan was not currently embroiled in several Government investigations that will ultimately result in tens of billions of settlement payments.

Currently the Justice Department has six ongoing investigations of JP Morgan.  You can read about them here:  LINK.   And I'm sure there would be several SEC investigations into JP Morgan's accounting fraud if Obama's newly appointed head of the SEC - Mary Jo White - wasn't one of JP Morgan's chief defense litigators before she was plucked from Debevoise Plimpton in order to make sure that JP Morgan has a solid line of defense inside the Government.

And I guess you could say that  JP Morgan did a great job avoiding a much bigger settlement payment related to its extremely fraudulent mortgage activities when it appeared as if the bank would skate away with an $11 billion settlement - a mere fraction of the money it made during the housing boom and bust.  But now there's complications surrounding that potential settlement and the number could grow even bigger.

Taking all of this in to account - and again, overlooking Obama's inability to use proper English - I'm not really sure how he can possibly conclude that JP Morgan is "best" managed - or even well-managed.  And is Jamie Dimon smart?  I dunno.  You give me a couple hundred billion in taxpayer money and freedom from any fear of criminal prosecution and I'll do things with that money to create profitability would make make me look like a financial Einstein.

I know one thing we can conclude with 100% certainty is that JP Morgan pays Barack Obama very well to speak highly of the firm.  If you watch this video - which was sent to me by a reader who produced it - you'll see that JP Morgan has been Obama's 4th largest money donor and the #1 bank donor:




The beast named Jamie Dimon, of whom President Obama speaks so glowingly, is a liar, perjurer, criminal and, worst of all, a taxpayer thief.

Is Gold Money? Well, Do You Trust Ben Shalom Bernanke? (Yes and NO)

             
The metals have not gone nuts because of the extreme intervention by the Fed and the BOE and probably the BOJ.  The intervention now is the most extreme that it's been in 13 years.  But the end is near.  90-95% of the American public - by design - will never have the chance to buy gold or silver - it will move higher in price too quickly and retail investing patterns suggest they will refuse to chase the price.  And given that 76% of the public lives from paycheck to paycheck they don't have money to buy gold/silver anyway - that's my prediction.

My comment above was in response to a discussion I was having with a colleague about the fact that most people in this country are completely clueless about what is really happening in this country in terms of the indisputable fact the U.S. is in a state of political and economic collapse.  The extreme corruption and massive ongoing theft of wealth by corporate America - in collusion with the Federal Government - is symptomatic of this collapse.  Unfortunately, Karl Marx predicted this about America back in the mid-1870's - a fact that I hate yo acknowledge because I despise socialism/communism.

So I thought it would be interesting to present the differing view on what gold is and what it represents between non-U.S. Central bank officials and our wonderful B.S. Bernanke.  The following is an excerpt from the keynote speech given by the Director General of Italy's Central Bank to the audience at a London Bullion Marketing Association conference recently held in Italy (the Bank of Italy has the 4th largest gold reserve in the world - that is, if you assume the U.S. really has possession and legal claim to the gold it reports as owning):

During Banca d’Italia’s keynote address Salvatore Rossi the director general told delegates how gold plays a key role in the central bank reserves:

"Not only does it have the vital characteristic of allowing diversification, in particular when financial markets are highly integrated, in addition it is unique among assets in that it is not issued by any government or central bank, so its value cannot be influenced by political decisions or by the solvency of any institution," he said.

"These features, coupled with historic ... and psychological reasons, stand in favour of gold's importance as a component of central bank reserves," he said. "Gold underpins the independence of central banks in their ability to (act) as the ultimate bearer of domestic financial stability."

Now compare that statement to the remarks by BS Bernanke a couple years ago when he was being questioned by then Congressman Ron Paul while under oath - I've transcribed the salient section:

Ron Paul:  Do you think gold is money?
Bernanke:  No
RP:  Even if it has been money for 6 thousand years, somebody reversed that and
       eliminated that economic law?
Bernanke:  (pause) Well, it's an asset
RP: Why do Central Banks hold it?
Bernanke:  Well, it's tradition

I don't know about anyone else, but I think it's quite fitting that the first two initials of Bernanke's full name are "B" and "S."  I can't believe nobody has flagged that in 7 years of his Fed Chairmanship - because, if anything, Bernanke is certainly full of BullShit.

September Auto Sales And ADP Payroll Report Confirm The Economy Is Tanking

I have to say, Barack Obama is probably the biggest political sell-out in the history of the United States.  Anyone who voted for him and still supports what he is doing is either tragically brain damaged or pathetically naive.  That's not to say the Republicans are a better alternative but Obama sold out his supporters like  plantation slaves in the 1800's.

Yesterday's auto sales report for September - led by GM's 11% plunge in sales and incredible bloating up of dealer inventory levels - confirms my view that the economy is tanking.  Today's ADP (Automatic Data Processing, Inc) Payroll report for September further confirms, as today's payroll report was nothing short of disaster, with a big miss of the consensus estimate AND the two previous month's reports revised downward sharply.  The dollar has lost the 80 level.  The world isn't buying into the story being reported in the media by Wall Street and the President that the economy is improving.

I review this data plus three other observations in this article:  September Auto Sales/Tanking Economy.

I further expect that housing sales will follow auto sales lower.  September home sales data will start coming in three weeks.

Is Bart Chilton Serious?

Zerohedge published this amusing email interchange between a plebian serf citizen and Bart Chilton, one of the empty suits occupying desk space at the CFTC (Commidities and Futures regulatory department).

He responded to an email by saying that "no regulators looking at markets due to Government shut down."  LINK

That's hilarious, because by making that statement he's implying that the regulators make difference when the Government is working. 

I don't know if Bart is either tragically stupid or is just trying to provide justification to his pathetic existence as a useless Government employee.  But we know the CFTC couldn't spot market manipulation even if it was in the form of a no-anesthetic colostomy being performed on them.

Keep punching the clock Bart - in a few more years you'll have your 20 yrs behind you and can retire to some fishing hole and collect a taxpayer-provided pension monthly pension payment.

Obama = A Joke; Obamacare = A Disaster

I'm not sure how anyone can possibly support Obama at this point.  But here's an interesting fact:

I'd love to hear what he has to say about that.  Of course, unless it gets programmed onto his teleprompter, we'll never hear an explanation.

As for Obamacare, the facts stand for themselves:   It's already costing the Government more to implement Obamacare than Obama represented when he was pushing to have it passed;  premiums for everyone who have to reach into their own pocket are going to go up 50-100%, depending your State;  speaking of people who have to reach into their pocket to pay for healthcare, businesses are already shifting a higher portion of their workforce into part-time status, as evidenced by the latest non-farm payroll reports - in other words full-time employment is down significantly and it's been replaced with part-time workers in order for businesses to avoid paying for employee healthcare.  You can read more the details of what a horror show Obamacare is turning out to be here:  Thanks Barack

Here's a couple other factoids:  1)  The U.S. has the most expensive healthcare in the world and Obamacare is guaranteed to exacerbate this.  2)  According to the World Health Organization, the U.S. is ranked 37th in healthcare, behind such economic powerhouses as Costa Rica, Domenica and Chile:  LINK.  3)  The U.S. is the most obese country in the world.  4) Americans pop more prescription pills per capita than any other country in the world.

For this you can all thank your President.  I don't understand why anyone can get upset by the fact that the House Republicans refuse to pass a budget Bill that doesn't defer and/or de-fund Obamacare.  But then again, I'm sure Congress will ultimately pass some kind of "stop-gap" that will enable the Government to continue operating and funding Congressional paychecks.  After all, the Obama Government has not operated with an official, Congressionally passed budget Bill in 3 years.

Anyone who voted for Obama and still supports that failure of a human being is a complete idiot.