By Giordano Bruno

10/18/2009 - Neithercorp Press

The Liberty Movement has been warning of the eventual disaster inherent in the private Federal Reserve’s inflationary policies for years.  Men like Ron Paul and Peter Schiff were pleading with media talking-heads about the coming collapse back when the Dow was at its peak, the housing market seemed invincible, and the dollar could do no wrong.  They received nothing but ridicule and laughter for their tireless efforts.  Of course, things change…..

Now that we have been proven correct in our warnings on the housing bubble, and the derivatives bubble, mass media shills have changed gears and are now denying the threat of the treasuries and dollar bubble.  The most important information that we can share with friends and family today is on the progressive collapse of the dollar.

The MSM in the past few months has instituted an organized campaign to reign in public doubts on the safety of the dollar.  Here are just two of their main tactics:

Deny The Dollar Is Collapsing

There are many economists and bloggers across the country desperately clinging to the mirage of the dollar.  The MSM trumpets their unfounded opinions while real economists with warnings on our currency, based on fundamental financial principles, are often ignored or attacked, though day by day, we continue to gain ground.  One of the most interesting and untenable positions against the reality of inflation I have heard so far has been from blogger and owner of SitkaPacific Capital Management, Mike Shedlock:

http://finance.yahoo.com/tech-ticker/article/354921/Exploding-Gold-Prices-Have-Nothing-To-Do-With-Inflation?tickers=gld,gdx,idn,uup,tlt,tbt

Strangely, Shedlock is pro-gold, yet his company invests very heavily in U.S. Treasuries and the Greenback?  This appears to be a self-negating paradox of an investment strategy, which is probably why he is now trying to promote the theory that gold’s recent rise to prominence is not because of inflation and a weakening dollar, but simply a by-product of the credit crunch.  It is true that banks have not unfrozen, and the lending process is virtually nonexistent despite trillions of dollars in bailout funds created by the private Federal Reserve.  Shedlock’s completely unsupported assumption is that all this bailout money is being somehow driven into gold and this is why gold’s value has skyrocketed to new highs.  But if this were true, then why is gold only just now reacting to this supposed “bailout bonanza”?  Why didn’t gold jump to new highs after the first bailout?  Why did it in fact drop in value for a time? 

Shedlock’s theory is ridiculous and dangerous.  Gold began to jump in value almost exactly when the dollar began to dramatically drop, and when international interest in physical gold increased (especially in China).  We at Neithercorp warned Shedlock of his misconceptions almost a year ago when he wrote a vapid hit piece on Peter Schiff and his company, Euro Pacific Capital.  Even though Shedlock’s company is in direct competition with Peter Schiff’s, presenting a conflict of interest, his hit piece was snapped up by numerous mainstream web news sources like candy and spread across the blogosphere.  We were forced to correct him:

http://neithercorp.us/npress/?p=75

Almost every claim that Shedlock made a year ago is now being proven false, including the idea that China would never decouple from the U.S. or the Greenback:

http://www.telegraph.co.uk/finance/currency/5761033/Chinese-officials-call-for-end-to-dollars-global-dominance.html

http://www.chinadaily.com.cn/china/2009-09/03/content_8648691.htm

http://english.people.com.cn/90001/90780/91421/6734461.html

http://en.rian.ru/russia/20091014/156468599.html

http://neithercorp.us/npress/?p=105

His company has been awash in dollar investments while the Greenback continues to crumble.  Why would any intelligent investor who understands monetary policy listen to him now? 

In the Yahoo interview above, Shedlock poses the question; if banks are still not lending, where did all the TARP bailout funds go?  He claims gold, but the fact is, it was not gold that began a meteoric rise after the bailouts, but the Stock Market!  Now up nearly 45% from its lows early this year, the Dow has led a market charge that is completely unsupported in reality, especially given that companies like GE and Bank of America are continuing to post incredible revenue losses:

http://finance.yahoo.com/news/Bank-of-America-GE-results-apf-1024461756.html?x=0&sec=topStories&pos=4&asset=&ccode=

Some banks who received bailout funds have even admitted that they misused them to invest in the market:

http://www.washingtonpost.com/wp-dyn/content/article/2009/07/19/AR2009071901770.html

Shedlock knows that bailout funds have been propping up the Dow, not gold.  His claim that the money went into gold is simply a maneuver to cover his own ass after putting his foot squarely in his own mouth a year ago.  The theories of Shedlock and those like him are a threat to real economic awareness, because they are used as cannon fodder by the MSM to distract and confuse people away from the threat of a dollar collapse.  The dollar is not “dying”, it is already dead!  The inflationary activities of the Fed saw to this.  We at Neithercorp are not predicting a future event, we are only pointing out what has already happened.  The event’s after-affects have merely been delayed:

http://neithercorp.us/npress/?p=167

Claim The Dollar Collapse Is “Good For Us”

Another tactic used by the MSM has been to play a slick psychological game of half-truths coupled with a little smoke and mirrors.  Much like a parent trying to get a reluctant child to eat his soggy overcooked spinach, they pretend its “yummy” while suppressing their own gag reflex.

Media talking heads have been testing this strategy in recent weeks, now that the failings in our currency have become widely visible to the average American.  The new spin admits that the dollar is faltering, but contends that this is an “opportunity”:

http://www.reuters.com/article/ousivMolt/idUSTRE5985R820091012

http://www.latimes.com/business/la-fi-dollar10-2009oct10,0,4065414.story

http://network.nationalpost.com/np/blogs/francis/archive/2009/10/16/u-s-dollar-drop-managed-devaluation.aspx

A year ago, the same people were foaming at the mouth over the “impervious” U.S. dollar, now they welcome its destruction as a “needed foreign exchange correction”.  The argument for a “good dollar collapse” can be divided into two points:

1)  A Weaker Dollar Strengthens U.S. Exports

First off, only a MSM pundit could claim with a straight face that the U.S. has any semblance of an export economy.  Our financial system is 70% service based, meaning retail and consumption, not industry and production.  Our entire manufacturing infrastructure was shipped overseas decades ago.  All that’s left is a skeleton of struggling American companies still producing goods on home soil, along with various software businesses and agricultural products.  A weak dollar and more narrow trade deficit are not going to save us because we have almost nothing to export.  Increased foreign purchases of video games and cheap poultry are a drop in the ocean of our economic troubles.

It would take a dozen years or more for the U.S. to retrieve anywhere near the level of production capacity we had during the 50’s and 60’s, and that is a generous estimate.  So what do we do in the meantime?  Wallow in financial misery for a couple of decades while our currency tanks, waiting until we can manufacture enough Nikes and paper umbrellas to bring in sufficient revenue?

The export argument is a distraction away from the real issue.  It suggests that we “adapt” to the root problem (manipulative monetary policies) and even accept it as “necessary”, instead of trying to actually fix it.  It also assumes that if we increase exports other countries will be in a position to consume them.      

America does need to bring back its industry, and we do need to become self sufficient again, but that includes a stable currency backed by something more than “hope”.  Otherwise, we become the next China, or even worse, and I don’t know anyone outside the MSM or the Globalists that thinks that is a good idea.

2)  The End Of The Dollar Is Necessary To “Balance” The World Economy

This is a globalist scripted debate point if I’ve ever heard one.  To begin with, why is it necessary to artificially balance the world economy at all?  So called Economic Harmonization in the EU has not worked out so well for the regular citizens there, why would it work for the entire world?  Essentially, what harmonization does is make every country equal……..equally poor.  The idea that a country should not be allowed to surpass any other country in relative wealth is not only an affront to the idea of free markets, but the idea of freedom in general.  The harmonization argument is a hook designed to draw unsuspecting people towards socialism and the lie that “free market capitalism failed”. 

It was not free market capitalism that led us to this disaster, because we have not had a free market system for decades!  Corporate control of markets with their monopolies and limited liability, central banker manipulation of interest rates along with unchecked inflation, were not part of Adam Smith’s original plan when wrote his treatise on capitalism.  In fact, Adam Smith frequently spoke out against corporations or “Joint Stock Companies” as they were called in his day.

When governments (or small groups of elites) dominate the ebb and flow of commerce, they then determine the progression of society itself.  Some of the most powerful new ideas, for good or ill, are given birth through the processes of commerce.  Its systems are like a living breathing entity that adapts and grows according to the needs and dreams of humanity itself, at least, when it is left to grow naturally.  But this has not been the case.  Commerce has been co-opted by a minority of power brokers and financiers, and turned into a terrible weapon.  Indeed, very few people alive today have ever actually seen true free markets in action because of this minority of men.               

Another fact that proponents of harmonization rarely mention out loud is the end to American sovereignty that would be required in order for such balance to take place.  The economic activities of all countries would have to be synchronized by a central authority, otherwise, balance could never be accomplished.  By harmonizing the world economy, the push for global government becomes a common sense and even “rational” proposition.  What seemed a spectacular and ridiculous concept to Americans before would then become almost predictable.

Never in history has the inflationary collapse of a currency “helped” any country or people.  From ancient Rome, to the Weimar Republic, Russia, Argentina, and Zimbabwe, the results of a currency collapse have always been unimaginable disaster.

In the end, the collapse of the dollar was not fated until the inception of the private Federal Reserve in 1913, and the complete termination of the U.S. gold standard by the Nixon Administration in 1971.  Those two events ultimately led us to the catastrophe we face today. 

Three years ago the MSM told us that the U.S. economy was unstoppable; they were wrong.  Two years ago they claimed the recession would be short lived at best; they were wrong.  One year ago they told us the dollar was the safest investment possible and that buying gold was a fool’s gamble; yet again, they were wrong.  On almost every conceivable point, the media has been incorrect.  Even following statistical probability, they should have guessed correctly on something by now, yet for every claim they make, the opposite appears to happen.  Even if I knew nothing of monetary policy or finance, I could easily deduce what will occur in our country next.  If the MSM insists the dollar will thrive, along with our economy, by their track record you can be certain that the reverse will be immanently true.                      

Posted on Sunday, October 18th, 2009 at 7:29 pm in the category:All Posts. Comment RSS 2.0 feed. Comment it , or trackback this post.