The financial pains began last August but the underlying causes could be seen in the decades leading up to the summer of 2007. The Federal Research banks from around the world have pumped record amounts of paper money into the markets which created speculation and in turn created bubble after bubble. The result now is deleveraging and the acceleration of credit contraction which can be deflationary. I know most of you are saying how can there be deflation when gas is over $ 4, one tomato cost 2 bucks at the grocery store, and can’t afford to send your kids to college.
http://butlerdemblog.blogspot.com/...
That my friend is the result of credit inflation or in other words the printing of fiat money. Imagine yourself sitting around the kitchen table playing monopoly with your family. Credit inflation is like someone having an extra monopoly game and decides to throw both banks into one game. Everyone who plays get double the amount to start. Imagine the effect it would have on buying property. Nothing has changed in reality other than having extra printed money and that is what the fed has been doing for decades. The problem is most Americans wages have not budged while the price of everything else goes up. The pain you are feeling is the adjustment of your standard of living and I am sure you know which way that direction is!
This whole scheme began in the early 1900’s when the US Dollar actually had value because it was backed by gold. Meaning for each amount of US Dollars one was guaranteed that they could redeem it for X amount of gold. Gold is true wealth and is the only form of currency that has lasted over time and all others have failed. What is the United States dollar backed by now? The good faith and backing of the United States government and with Bush at the helm most of the world has lost faith.
In terms of real value, I mean the amounty of gold it takes to buy shares in the DOW. Be have been experiencing a silent crash because the DOW has declined over %70 since 2000 in term of gold. Moreover, if one would compare the number of shares of the DOW gold can buy at today’s prices to that of the 1929 peak we would find that the value was higher in 1929 than it is today. Thank you Mr. Federal Reserve.
Now let’s speed things back up to the summer of 2008 because the shit is hitting the fan.
The financial system is cyclical and it has it up and downs. However, it is a less stable market when it is not supported by a gold standard. The current credit crisis is only in the second inning of a 9 inning game. What will come will be life altering for all individuals globally. As the credit crisis spreads more and more people will be affected. Protect yourself with gold, cash, and Short term US treasuries. Get out of stocks and your local bank while you still can!!
The next financial institutions to fail!
http://ml-implode.com/
- Freddie Mac
- Fannie Mae
- American Sterling Bank - Wholesale
- Downey Savings and Loan
- Franklin Bank, SSB
- Bayview Lending Group, LLC
- Thornburg Mortgage
- American Equity Mortgage, Inc.
- CTX Mortgage Company (Retail)
- First Horizon Home Loans
- BankUnited (Wholesale)
- Chevy Chase Bank - Wholesale
- MortgageIT
- Sallie Mae
- Meridias Capital
- Doral Financial Corp.
- Residential Capital, LLC*