In his latest update to CIGA’s, the legendary Jim Sinclair states that we haven’t seen anything yet, and that the financial collapse in progress due to over $1 trillion in notional OTC derivatives is going to be an event of Mayan calendar proportions.
To the amazement of the young turks and talking heads of Wall Street, economic law has not been repealed. When misuse of finance to the extreme (OTC derivative fraud) and exotic tactics are used to pretend solvency of financial entity balance sheets, the result will be not in terms of phony figures MSM doses daily to the sheeple, but rather in direct relationship to the degree of the true number in the insolvent categories of finance. The true number of OTC derivatives is above one quadrillion dollars as measured by the BIS before they cut the number in half by changing their computer program to value to maturity (which assumes all pay off, yet few will).
The conclusion based on economic law is that we have not seen anything yet. The balance sheets must balance and to accomplish that assets must equal liabilities. That is the foundational fact of what I have just told you. In time they will but the process is going to be Mayan calendar event of sorts.
This is why QE must continue to infinity which inherently also means debt must continue to infinity, or else.
“In short, if the government confiscated the entire adjusted gross income of these American taxpayers, plus all of the corporate taxable income in the year before the recession, it wouldn’t be nearly enough to fund the over $8 trillion per year in the growth of U.S. liabilities. Some public officials and pundits claim we can dig our way out through tax increases on upper-income earners, or even all taxpayers. In reality, that would amount to bailing out the Pacific Ocean with a teaspoon. Only by addressing these unsustainable spending commitments can the nation’s debt and deficit problems be solved.” Read more
‘China is preparing for a world beyond the inconvertible paper dollar, a world in which the renminbi, buttressed by gold, becomes the dominant reserve currency.’
CNN’s Kevin Voigt writes, in The China Post, “Currencies: Re-evaluating the ghost of gold:”
“One platform of the recent U.S. Republican National Convention that, ultimately, could reverberate around the world is a plan to study a possible return of the U.S. to the gold standard. While it was perceived as a move to appease the party’s extreme right wing, economists like Mundell think the world needs a limited return to the gold standard.”
This is by no means an isolated blip on the economic radar screen of China watchers. As Christopher Potter, president of Northern Border Capital Management, so astutely observed in a column entitled China’s Preparing for the End Game — Are We Paying Attention, published in The Lehrman Institute’s TheGoldStandardNow.org — which Potter advises (and this columnist professionally edits):
- China is … increasing its monetary gold reserves at an alarming rate. Five years ago China surpassed the US in gold production and five years from now it will own more gold than the US Federal government.
- China is preparing for a world beyond the inconvertible paper dollar, a world in which the renminbi, buttressed by gold, becomes the dominant reserve currency.
- The Chinese government has recently removed all restrictions on personal ownership of gold; legalized domestic gold exchange traded funds; is currently purchasing 100% of domestic gold mine production; has imported over 750 tons of gold (27% of global output) in the last 12 months; stated publicly its intention to add 1,000 tons per year to its central bank gold reserves; and is buying major stakes in foreign gold mining companies. The scale of this initiative is extraordinary.
- Commenting on the recently announced acquisition of African Barrick Gold Ltd. by state-owned China National, CEO Sun Zhaoxue stated, “As gold is a currency in nature, no matter if it’s for state economic security or for the acceleration of renminbi internationalization, increasing the gold reserve should be one of the key strategies of China.”
8. The demand for gold for fabrication purposes, in particular from the jewelry and electronics industries, has consistently out-paced the supply from current production over the past 20 years. The so-called market deficit–i.e., physical demand lessmine production-has been widening over the years and filled by direct salesfrom official and private sector stocks, and from gold lending by many central banks, which have resulted in salesin the spot market by the bullion banks, who borrowed the gold.’
14. The current demand for gold for fabrication and industrial use has outstripped current production by 40 percent per annum over the last decade, and this gap between demand and current production-the so-called “market deficit”-has widened over the years (Table 1). This deficit has been filled by sales of gold stocks by the private sector (i.e., scrap gold) and central banks and,increasingly, by central bank gold lending.
The increased mobilization of central bank reserves through gold lending operations has had a depressing influence on the spot price for gold since on-lent gold is usually associated with sales of gold in the spot market (Section IV).
At the same time, gold lending has led to accelerated supply of gold to the spot market, which has tended to put downward pressure on the spot price of gold.
On Wednesday, the Federal Reserve will announce its latest decision on monetary policy, followed by a press conference featuring Fed Chairman Ben Bernanke.
The FOMC has a big decision to make. Last fall, it announced Operation Twist, an asset purchase program wherein the central bank buys $45 billion of long-term Treasury bonds each month and sells short-term notes to “sterilize” the purchases by keeping the overall size of the central bank’s balance sheet the same.
In September, the FOMC announced open-ended QE3, which added $40 billion per month of purchases of mortgage-backed securities to the Fed’s balance sheet expansion efforts.
from Gold Money News: