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Congressionial Control = Hyperinflation, FED Control = Deflationary Depression

Recs

19

November 22, 2009 – Comments (12) | RELATED TICKERS: GS , JPM , GE

EXCUTIVE SUMMARY

I am watching the political issues, as always.  I could care less about fundamentals and market technical's at this juncture. 

If Congress is successful in auditing and bringing down the corrupt banking cartel the FED, IMO we will get Zimbabwe style hyperinflation and similar Zimbabwe style rising stock market.

If the FED stops Congress in its audit the FED will eventually raise rates to prevent hyper-inflation (my WAG in 24-48 months. Best guess is one to two years into the next President's office) and save the dollar.  The US will go into a severe deflationary depression worse then the 1930s.

DETAILS

A lot of Fools keep babbling about Fundamentals and technical analysis etc... in general, I think it is mostly worthless in the "Big Picture" of current events. I do recognize many talented Top Fools have done well regardless of the implosion.  (Top Fools are NOT to be confused with the re-treads - Top Fool Accounts created in the last 12 months).

The corrupt private banking cartel the FED is at war with the Congress to keep itself outside and above the law.  The FED, which caused the first Depression with credit expansion and cheap money, has created another massive credit expansion and implosion and is in full damage control mode trying to stop the carnage. 

Congress is in self-preservation mode, by attacking the FED, they re-direct the blame for the current economy and also can shake down the FED for money for the district.

If the curtain is pulled back from the FED and the mostly corrupt and inept US Congress is put in charge of monetary issues, hyper-inflation will and a new currency must emerge.  IMO, Congress will spend, spend, spend to try and save their districts with out restraint.  Most / many in DC politics are useful idiots, whose job depends on signing the lobbyist written laws in order to get the funding for re-election.

If the FED survives, they will try for Japanese's style deflation (Ref comments by SF Fed Chairmen) at some in order to save the dollar, a Volkner type response will be needed and we will get higher interest rates and a severe Depression.  The FED will not want hyperinflation it will destroy their ill gotten wealth and private cartel / monopoly.

If you have not seen the battles, here are some highlights:

Feb 2009. Grayson takes on the Cartel

Alan Grayson on the Worst Deal Since Manhattan Was Sold for $24 in Trinkets

May 2009 (3 million views on youtube.com)

- Rep. Alan Grayson asks the Federal Reserve Inspector General about the trillions of dollars lent or spent by the Federal Reserve and where it went, and the trillions of off balance sheet obligation...  

21 July 2009 - (172,000 views on yourtube)

Alan Grayson: "Which Foreigners Got the Fed's $500,000,000,000?" Bernanke: "I Don't Know."

19 Nov 2009- Ron Paul's amendment to audit the Fed brought to voice vote

Additional References -

Bernanke: Why are we still listening to this guy?

"Bernanke Threatens The Congress" We will cause an Economic Collapse if you audit the Fed!

12 Comments – Post Your Own

#1) On November 22, 2009 at 4:06 PM, abitare (35.12) wrote:

Why will get hyper-inflation under COngressional control of a fiat monetary supply?

Some examples of the inept and corrupt members of DC politics:

One of the MOST SENIOR Democrat Budget Committee Member Marcy Kaptur Doesn't Know the Difference between Treasury Secretary and Federal Reserve Chairman  and her district is in a DEPRESSION

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#2) On November 22, 2009 at 4:50 PM, ikkyu2 (99.24) wrote:

I like that last one in the main post, Abita.  He's pretty clear about it: "Come on and audit us and put the Fed balance sheet on the internet; you'll destroy the dollar.  Go for it."

Definite fightin' words. 

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#3) On November 22, 2009 at 4:57 PM, SuperPicks (29.01) wrote:

HUH?!?

Both of those a very far-reaching claims.

Your scenarios & claims:

1) Fed is not audited

claim1a) Fed's control would lead to deflationary depression

2) Fed is audited

claim2a) That once fed is audited, somehow the Fed system will falter

claim2b) After the fed system/control loses, Congress will dictate issuance of currency

claim3b) If Congress dictates issuance of currency, they will hyperinflate

 

My questions for you Abitare:

A) Couldn't one make an equally sounding arguement that is exactly the opposite of the claims above?

Fed causing hyperinflation instead of deflation

Fed audit not faltering fed system

Fed audit giving congress no more power to dictate currency issuance

Or if Congress were to dictate issuance, they allow for deflation

B) Before 1913, in the periods without a central bank & major war, was Congress in control of monetary issuance, and how much hyperinflation did we have?

C) Are you not in support of HR1207 & its most recent amendment by Paul?  Your arguements are fueling the arguements of either shooting this down or using Watt's bill instead.  The main arguement floating around is that congress will get power over monetary decisions due to the audit - THIS IS NOT TRUE

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#4) On November 22, 2009 at 4:59 PM, dwot (40.33) wrote:

Long time ago I figured there would end up being a combination.  If you look at the asset price inflation, and the cost of living, the devaluation of the currency happened a while ago. 

I think without some monetary expansion to recapitalize the banks the financial system collapses.  The banks are insolvent and I think monetary expansion will be required to recapitalize them.  They loaned people's money out to other people who are not paying it back, and they did this well beyond ability to absorb losses. 

But, with a population bubble, there is so much "wealth" stored, when people go to cash it in... well, I think savings is actually helping to keep the price of goods down and hiding the degree of currency devaluation.

I don't think it looks good...

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#5) On November 22, 2009 at 5:22 PM, Tastylunch (29.33) wrote:

I agree abitare. I think you've got it nailed. It's not a yes/no kinda question. The outcome is unknown at this point.

So far it's inflation on Wall Street (commodities, stocks, bonuses) and deflation on main street (homes, wages, consumer goods, consumer credit)

We'll see if Oil and gasoline acts like a gateway drug to bring inflation to Main street 

dunno if Bernanke has the stones to let America deflate though. My guess is probably not.

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#6) On November 22, 2009 at 8:11 PM, abitare (35.12) wrote:

ALCON,

Thank you for the responses and RECs etc.... I kept this post short and simple, but I recognize there are are a variety of posibilities and I couldwrite 10+ pages.

I can see severe deflation, stagflation or hyper-inflationary as possibile.  A currency crisis is almost guaranted. A "wage the dog" war or something similar can happen to. If you have not listened to Celente's interview on KIng World News, his views are worth knowing. 

If you look at the absurity of our fiat currency, bank leverage, personnel leverage, lack of savings, debt load and "consumption based economy", you can easily guess change you can believe in is coming.

ikkyu2  "Definite fightin' words. " Yep

SuperPicks: "Both of those a very far-reaching claims." Yes, they align with the far-reaching circumstances...

A) Couldn't one make an equally sounding arguement that is exactly the opposite of the claims above?

Yes, but the FED is a banking cartel. There assets and monopoly would be destroyed in hyperinflation and loss of confidence in the currency. We will have 20% interest rates before they let that happen. Exactly, what they did before under Chairmen Volkner in the 1980s. 

Fed audit not faltering fed system

Unlikely, seeing behind the FED curtain will not help confidence.  Watch the videos, then tell me you have confidence. If the FED thought it would help them they would have already come forward with information instead of hiding.

Fed audit giving congress no more power to dictate currency issuance

The FED audit, will be the end of it and criminal charges should follow. Where is all the gold stolen in 1933?  $500 billion to foreigners? etc....

Or if Congress were to dictate issuance, they allow for deflation

Maybe, but Congress is short term thinker, they want the heroin aka stimulous / money printing to get re-elected. The long term is someone elses problems.  Ref the 2000 page health care bill, the war etc....

B) Before 1913, in the periods without a central bank & major war, was Congress in control of monetary issuance, and how much hyperinflation did we have?

Congress was constrained by the gold standard. They could not print money out of thin air.

C) Are you not in support of HR1207 & its most recent amendment by Paul?  

Yes, the criminals at the FED need to be taken down.  Legitimacy and a new system must be created. My point is both are going to bring pain, severe pain is coming reguardless and you should start preparing for it. 


 dwot
 Great response.  I think without some monetary expansion to recapitalize the banks the financial system collapses.  The banks are insolvent and I think monetary expansion will be required to recapitalize them.  They loaned people's money out to other people who are not paying it back, and they did this well beyond ability to absorb losses.  You are right here. But the problem Congress and I are having is...they bailed out the banks, but not the debt slaves and insolvent state and local governments. 

But, with a population bubble, there is so much "wealth" stored, when people go to cash it in... well, I think savings is actually helping to keep the price of goods down and hiding the degree of currency devaluation.

Good point, I think you are right here, too. I will write about this at some point. THe baby boomers, should be looking at their kids and realizing the kids will not likely be able to buy the BB assets at there current valuations based on the kids current incomes.

Tastylunch and like minded thinkers take a listen to Celente on King World News from 21 Nov 09 here.   http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2009/11/20_Gerald_Celente.html I will post it tomorrow. Bottom line, change you can believe in is coming and you had better prepare for some contractions and economic pain.  Report this comment
#7) On November 23, 2009 at 2:23 AM, jahbu (85.21) wrote:

Seems they are walking right into the real solution that was determined years ago.  All this mumbo jumbo just legitamizes what comes next.  An outside Audit...  

http://www.gata.org/node/6399

For seven years, US President George W. Bush refused to allow the IMF to conduct its assessment. Even now, he has only given the IMF board his consent under one important condition. The review can begin in Bush's last year in office, but it may not be completed until he has left the White House. This is bad news for the Fed chairman.

When the final report on the risks of the US financial system is released in 2010 -- and it is likely to cause a stir internationally -- only one of the people in positions of responsiblity today will still be in office: Ben Bernanke.

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#8) On November 23, 2009 at 10:56 AM, whereaminow (< 20) wrote:

Point 1

Hyperinflation under a paper currency is always possible, whether it is under the Fed's control or Congress'.

Point 2

If hyperinflation occurs under Congress' watch, Americans (presumably) would have a method of retribution and justice (well, so our high school teachers tell us.)

Point 3 

If hyperinflation occurs under the Fed's watch, Americans have no recourse for justice.

Point 4 

The gold standard is preferable to either as it limits (but does not prevent) the politicians ability to wreak havoc.

Point 5

Technocrats are cute, but they can't calculate

Point 6

Choice in Currency trumps all ideas.  See here.

Point 7

Americas deserve to know the truth

David in Qatar

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#9) On November 23, 2009 at 11:11 AM, whereaminow (< 20) wrote:

abitare,

I forgot to add two things!

1. Great vids thanks.

2. I agree that the Fed will pull the strings for a deflationary depression before going hyperinflation.  I linked to a GNorth article a while back that discussed these scenarios.  It's here.

David in Qatar

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#10) On November 23, 2009 at 11:32 AM, russiangambit (29.32) wrote:

One of FED govrenors just called for more QE today. It seems to me FED is in the same camp as the COngress when it comes to spending.

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#11) On November 23, 2009 at 2:13 PM, AbstractMotion (52.07) wrote:

Something else to think about here.  Check out the chart on the left.

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#12) On November 23, 2009 at 5:33 PM, RookieQB (28.96) wrote:

Arbitare said: "My point is both are going to bring pain, severe pain is coming reguardless and you should start preparing for it."

 

And how do we prepare for either scenario?

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