GLOBAL MONEY WAR REPORT
DEBASED CURRENCY COMPETITION
SOVEREIGN BOND BREAKDOWN
CENTRAL BANK DISCREDIT

* Last USDollar Defense in Syria
* Intro Monetary Fragments
* USFed Failed Policy
* USTreasury Bond Exposure
* USDollar Death Throes
* Emerging Market Capital Flight
* Anti-USDollar Alternative
* Banks Due for Derivative Losses


HAT TRICK LETTER
Issue #114
Jim Willie CB, 
“the Golden Jackass”
18 September 2013

QUOTES ON MONEY

"The total complex of the rules according to which those at the helm employ compulsion and coercion is called law. Yet the characteristic feature of the State is not these rules, as such, but the application or threat of violence." ~ Von Mises (indirect reference to the Syndicate maintaining control of money)

"No one can possibly know anymore what the law is, not even experts. As a result, anyone the State and/or its minions do not like can be harassed at will." ~ Acting Man (of Syndicate power and control)

"It is their insistence on defending Syria which has brought the world from the brink and forced the US President to postpone the congressional vote that he so badly wanted. Vladimir Putin is trying to stop a wider war but the Nobel Peace Prize winning Barack Obama is trying to start one." ~ Margaret Kimberley (editor, Black Agenda Report)

"It is fascinating to be alive and part of the Paradigm Change era. Barack Obama is just a small totally irrelevant figure on the chessboard of history. He is totally unimportant in a larger context. The most powerful result from the Syrian incident is the fact that the Anglo-American military power machine has been completely paralyzed. The trap was set for them. They did not understand it and walked right into the snare. The battle has now been taken inside the political structures in Washington DC and the system will be taken down from the inside. The Russian GRU/FSB [Main Intelligence Directorate/new KGB] has vacuumed the entire NSA database, just like the Russians vacuumed the expansive NATO data base when they captured the Western mobile communication center in Georgia [SouthWest Asia]. The United States is defacto paralyzed in its methods of forcing their will onto other nations. Russia has asked Germany to take charge of the on-ground handling and destruction of the chemical weapons in Syria. Assad had insisted that Germany be put in charge. The UN inspection team that went to Syria was already led by German professionals. China also made it crystal clear that Germany be put in charge of the operational aspects of the neutralization of those weapons. Germany has accepted. Very interesting shift in the global power structures." ~ The Voice (with excellent connections to Russia)

"The real curse is the drunkenness with idolization that comes when a nation is awarded the special privilege of holding the world's reserve currency. Joe Paterno at Penn State University was awarded the same kind of privilege. This special privilege made him feel that he was special and could overlook his right hand man Sandusky, who abused the position by humping young boys. America and its criminally drunk leadership have been humping the much of the rest of the world for far too long now. Ultimately, their fate will not be much different than Sandusky's." ~ Rob Kirby

"Putin just took the high road in Syria with a clever delayed check move on the chessboard, and in the process Obama had his war teeth removed, while Kerry has been exposed as bellicose. The USA will have a lame duck for President for the next 3+ years, longer than any other previous White House chief. The Cyprus incident was 90% about cutting off the Kremlin at the Gazprom knees. It failed, and Syria is where Gazprom will find its ascendance in bringing down the USDollar through its critical oil sale payment system called the Petro-Dollar. The entire Middle East is unstable. Syria is Obama's Waterloo. With the Syrian theater in full view, never has it become more obvious that the USDollar is backed by the USMilitary and brute force." ~ Jackass

"The only thing necessary for the triumph of evil is for good men to do nothing. All tyranny needs to gain a foothold is for people of good conscience to remain silent. The people never give up their liberties but under some delusion. When bad men combine, the good must associate; else they will fall one by one, an unpitied sacrifice in a contemptible struggle. Bad laws are the worst sort of tyranny." ~ Edmunde Burke (18th century Irish statesman in British Parliament)

## LAST USDOLLAR DEFENSE IN SYRIA

◄$$$ SYRIA IS ABOUT THE LAST GASP FOR THE USDOLLAR REGIME AND ITS DEFACTO OPERATING PETRO-DOLLAR STANDARD. THE CONFLICT IS ABOUT THE RISE OF THE NATGAS COOP, THE ECLIPSE OF OPEC, AND THE CHANGE IN EUROPEAN LOYALTY. HIDDEN WAS THE CYPRUS MISDIRECTED ATTACK AGAINST GAZPROM. THE USGOVT WILL EXTEND THE ENERGY WARS TO BANK WARS, CERTAIN TO RESULT IN FURTHER ISOLATION. $$$

The Jackass perceptions were collected compiled and written in a public article entitled "Syria, Pipeline Politics, OPEC, and the USDollar" (CLICK HERE). The entire story about chemical weapons is a lie, a fabrication. The chemical weapons were bought by the Saudis from English companies, and used in Damascus, all blamed on the Assad loyalist forces. Just one more false flag attack, for which the USGovt is being exposed. The Syrian pipelines must be stopped, or else the United States loses Western Europe to the Gazprom fold. It is that simple. The rest is distraction misdirection and deception. Notice England withdrew support for USMilitary action. They must have received a phone call from the Kremlin on continued winter supply. Last year, England signed a big natural gas supply contract with Gazprom. The entire Syria and Cyprus incidents are about stopping the encroachment of Gazprom on all of Europe, a captive customer on the increasingly energy tilted geopolitical stage. In fact, it is more a chessboard upon which the chess master Vladimir Putin is thriving. Confirmation that the conflict is about the Gazprom strangehold of the West has come quickly. The USCongress is targeting GazpromBank in a weak gambit that will also backfire, like all other energy related geopolitical ploys. See the Russia Times News article (CLICK HERE).

Syria is about the last gasp for the Petro-Dollar. It has been the critical trade platform for the USDollar standing four decades, which has locked global bank reserves in USTreasury Bonds. The US news networks cannot tell the real story. They surely tell the USCongress teams the unvarnished truth about Gazprom pipeline politics overwhelming US interests and winning the Europeans as trade partners. The real focus is Pipeline Politics and the eclipse of OPEC. Coming into world view is the NatGas Coop led by Gazprom. Expect some not so gentle blackmail to Europe and Great Britain. Heading out is OPEC, and the fracture of its leader Saudi Arabia, eventually the fall of the House of Saud. Their regime is due to fall or else to undergo great change, while the princes abscond with hundreds of $billions in national resource wealth and prurient lifestyle.

Coming online is the NatGas Coop, to date not recognized for its potential power. It has some powerful strange bedfellows. The Jackass view has changed. Cyprus was a challenge to Gazprom, more than a Bail-in Model. The model serves as a suicide pact for the West, a poison pill. They cannot pull that switch unless major banks are all dead gone, with millions of private accounts vaporized. The Western bankers needed to disguise their attack of Gazprom, but the Russian banks were left untouched in Cyprus, led by GazpromBank. The USGovt lost on Iran sanctions, causing a tremendous backfire. The USGovt lost on Iran-Pakistan Pipeline struggles, pushing the project into Chinese hands. The key to the future (the margin of new power) is the natural gas assured supply, which will be dominated by the NatGas Coop. The strangest bedfellow is Israel, whose Tamar floating platform has committed surplus natgas to Gazprom, to be directed toward the Western European market. Another strange bedfellow is Qatar, supporter to the anti-Assad rebel front, but owner of huge natgas reserves and production. They want a different gas pipeline completed, but they will end up being a Gazprom partner in the end.

It is game over for OPEC and soon the USDollar global currency reserve, as the Petro-Dollar stake will be put in its heart. Not 5% of Americans comprehend the defacto Petro-Dollar standard and its importance. The fall of the Saudi regime is guaranteed eventually. The Saudis cannot play both sides (US & Russia) successfully. They have angered the USGovt by forging numerous projects with China like the Western Saudi petro-chemical plant on the Red Sea. They have angered Russia by direct threats posed at belligerent olive branches delivered at the Kremlin door. The NatGas Pipelines are critical and together, the NatGas Coop will successfully phase out OPEC in function and importance. What Saudi Arabia is to OPEC, Russia is to the NatGas Coop. The demise of OPEC will deliver a death blow to the USDollar and force a catastrophic diversification out of USTreasury Bonds in banks across the world, enabling the birth of the Gold Trade Standard amidst the ruins and vaccum to follow. In time, the USTBonds will be converted by the BRICS Bank, one of its primary functions to be. Syria is the last line of defense for the USDollar.

Notice the G-20 Meetings in Russia were not sabotaged. The US-UK syndicate was exposed during the strongarm activity to seek Syrian War support. The meetings were great for revealing the duplicity of the cabal in Middle East affairs. The BRICS must do their heavy lifting work without an organized assembly and the spotlight of publicity from now on. Expect the BRICS nations to continue as they did in early September, working in summit meetings, forging deals, organizing teams, making progress. Next on their agenda is funds commitments, platform creation, internal mechanisms, wiring from trade participants to peers in payments, and connections from Gold & Silver to commodity markets. They are planning for a post-USD world.

The end result is a more isolated United States. The Russians & Chinese banded together to block a United Nations resolution. The USGovt is losing its United Nations influence. The team of Russia & China has emerged from deeper broader collaboration. The United States is no longer seen as a defender of freedom, but rather as a continued aggressor to sustain and to perpetuate the USDollar regime. Putin was the winner as Obama looked like a rank amateur. Obama should hand Putin his Nobel Peace Prize, a bought and paid for award with coercion on Oslo.

The online news journals are picking up on the Gas Pipeline theme and stories. The bylines tell of the awakening on the real motive for war. The proposed pipeline through Iran, Iraq, Syria is competing with Saudis and Qatar for $trillions, in simple terms. It is the basis of an infrastructure war on the energy front. Syria intervention plans are fuelled by oil interests, not chemical weapon concerns. Russia has a weapon in the Gazprom fortress, has learned how to use, and it is winning the pipeline battles. They will lassoo Europe. See the WND Money article (CLICK HERE). See the Zero Hedge articles (CLICK HERE and HERE and HERE). See the UK Guardian article (CLICK HERE). See the Jesse Cafe Americain article (CLICK HERE). See the Quartz article (CLICK HERE). See the CounterPunch article (CLICK HERE).

A different but parallel perspective is offered by a Hat Trick Letter subscriber. He wrote, "Always agreed with you in principle that Syria was to protect the USDollar. Dig a little deeper and our Chemical Weapons dealer has Carlyle group ties. The Project for the New American Century (PNAC) is still clearly in charge even after their boot from the White House. The House of Saud needs to bankrupt Iran with fracking to eliminate competition, which is why they are trying to pull backroom deals with Russia concerning oil. Maybe fracking tech is being transfered to Putin as well. I smell a different map behind the scenes. It adds a few years before the world economy implodes. If hyper-inflation worldwide hits after this excess oil saturates the market, all that cash from the USFed bond purchase programs will drive up low commodity prices." Very interesting, always deeper than even the informed perceive.

## INTRO MONETARY FRAGMENTS

◄$$$ PROFOUND PARADIGM SHIFT IS EVIDENT IN JUST THE LAST FEW MONTHS, AS HISTORY IS BEING MADE, STRUCTURES SHAKEN, NATIONS WAYLAID, NEW PATHS FORGED, OLD GUARD SHUNNED. PERCEPTIONS AND IMPRESSIONS ARE CHANGING RAPIDLY. $$$

Is it possible that we have witnessed the visible isolation of the banker cabal over the last few months, a climax in the last month. It is possible that numerous developments indicate vast changes underway. It is possible that structural transformations are in progress, old systems shaken. It is possible that global impressions are being cast aside, new ones displacing them, complete with different perceptions. It is possible that great weakness is perceived in former powerful players. It is possible that exposure of the Gold/Bank system and its syndicate has arrived. A grand Paradigm Shift is evident in just the last couple months. It is very difficult to fully comprehend if part of the movie instead someone seated in the audience watching the movie. The same analogy is true of living in a dome versus outside it. Note the following.

  • Total isolation of the United States on Syria (a Jackass forecast)
  • USMilitary Brass no longer aligned with the White House and banker cabal
  • The Summers pick at USFed shunned, Goldman Sachs kicked to the curb
  • Obama ignored at G-20, his policies out of favor with domestic audience
  • Egypt fiasco, as the Morsi puppet sock from US discarded
  • USTreasury Bond selloff, as 3.0% yield seems assured in global rejection
  • USGovt debt ceiling back in focus on main burner
  • The REPO and Muni Bond markets show signs of liquidity distress
  • GLD Fund refuses gold redemption by qualified shareholders
  • COMEX refuses gold contract delivery on repeated months
  • Russia courts Greece, using pipelines and infrastructure as bait
  • Putin seen as peace champion, while Russia & China emerge as leaders
  • India, Turkey, and Brazil face domestic disintegration, seek solutions
  • Poland and Finland request gold repatriation, like Germany.

◄$$$ THE UNIVERSAL COMMERCIAL CODE (UCC) IS ALSO KNOWN AS ADMIRALTY LAW. THE WESTERN WORLD MIGHT BE IN THE PROCESS OF A GRAND TITLE SWAP FOR NATIONAL ASSETS AND INCOME STREAM. NO FIRM RELIABLE SOURCE EXISTS. WORTH BEING ON THE ALERT. $$$

Regard the following as exposure of a very high level property ownership sequence, with no way of verification reliably. A first hint was the DPCC claim of final ownership on all stock investments, as no certificates were handed out, the ownership murky. The second hint of a devious sequence was the revelation by Karen Hudes (formerly of World Bank) about the Vatican claims to all US-based income tax stream through the IRS. The banker cabal originally set up the US Federal Reserve in 1913, to run the banking system under the appearance of an organization dedicated to the United States interests. Little known was that after the collapse of the US system in 1929, the United States filed for bankruptcy in 1933 in Basel Switzerland with the Bank For Intl Settlements. Against the wall of bankruptcy, the US switched from civil to admiralty law. The nation pledged all assets including lands, parks, ports, buildings, in return for continuation. It was essentially the highest level of financial fraud, done through the legal system, with hardly anyone on the street noticing. Then in 1971, after the Bretton Woods Accord was broken, the Gold Standard was gone. The floating currency system was launched into the volatile seas of liquidity laced with sponsored corruption. The Federal Reserve Note is the fake money item, the standard of paper currency to fill the pockets of the people, to satisfy as legal tender by fiat decree. It appears the BIS is the uber-lord.

The people have been turned into debt slaves, having lost their home equity, otherwise known as the inflation hedge. Their stock accounts including those locked in pension systems have dubious ownership. Their main investments have a false money foundation in the USDollar itself, all at risk. They are discouraged from ownership of Gold & Silver. It might someday be clear whether the American natives, who work to maintain themselves (with food, housing, education , retirement) in life, have their assets actually owned legally by another entity without their knowledge. Think the highest echelon in bankers and Vatican. The title swap is truly beautiful in its perversity, if real and valid. The courts at the ground level have been applying the civil code of law. Quietly, at the highest levels, the system has been converted to the commercial (government contract) law, without people noticing it. It this case, if effective, if actually applied, it is a very subtle, very profound, and very ugly, a veritable application of The Matrix. The final owners would be the bankers, the Jesuit bankers, the castle dweller uber-lords. Nothing is perfectly clear.

◄$$$ THE 911 CONTROVERSY WILL NOT GO AWAY. ON THE TWELFTH ANNIVERSARY OF THE COUP D'ETAT AND MASS MURDER INCIDENT, COMPLETE WITH OFFICIAL COVERUP, THE PATH TO JUSTICE HAS BEEN VERY SLOW. THE 911 INSIDER TRADING INCIDENT HAS BEEN REVISITED. FOLLOW THE MONEY. THE DESTINATION OF THE LOOT FROM THE WORLD TRADE CENTER BANK IS UNKNOWN. THE AFTERMATH OF THE 911 EVENT NULLIFIED THE CONSTITUTION AND BILL OF RIGHTS, AND PAVED THE ROAD TO A FASCIST STATE WITHOUT CHALLENGE. $$$

The first questions that arise on the financial path to justice should be centered upon the destination of the World Trade Center bank vault contents. Few people realize it was the biggest bank in New York City at the time, a bank used by countless participants in world trade. Thus the target to steal $100 billion in bearer bonds, $100 billion in gold bars, and $100 billion in diamonds. The bonds and gold were known long ago, but the diamonds were made known to the Jackass only four years ago. The source was a man with USMilitary and USGovt security agency background, who knew people involved in moving the diamonds. The families of the victims have seen no satisfaction in numerous attempts to publicize the cut cord in the line of justice and investigation of a long list of anomalies. A couple of unresolved issues remain on the table, related to the attacks of September 11th of year 2001. The Commission Report is as bland and absurd as the Warren Commission in 1964. Both were hastily assembled, both with barred evidence, both with ridiculous untenable conclusions made before the evidence was presented and examined. In fact, both have another lethal aspect in common. Most all witnesses on the Grassy Knoll of Dallas in November 1963 met with violent or mysterious deaths. In the last 12 years, a great many witnesses at the base of the World Trade Center have met with violent or mysterious deaths.

The firm Jackass belief is that the same organization is responsible for the JFKennedy assassination and for the WTC attack with related bank heist, even the abrogation of the Bretton Gold Standard, all three pillars of systemic change. It is the banker cabal, the syndicate that controls the banks, the military defense contractors, the security agencies, the pharmaceutical giants, and the press networks. The Wall Street bankers always wanted a 70-story building complex on the site, a complaint stated openly. They will see it built, under construction. A victim of the WTC destruction was an enemy of Wall Street, a Swiss re-insurance firm. Leave it there.

The two unresolved incidents pertain to stock trading and money supply growth. The informed trading on advance knowledge was directed at the airline stocks. They had a 5-sigma rise in shorted options trading volume. They were obscenely profitable for certain Wall Street and London banks. Also, the USFed under Greenspan saw fit in advance to order the astounding increase of currency in circulation a few weeks prior to 911. No investigation of the former has come. No explanation of the latter by the knighted former chairman has come. One should always be seeking for a rationale of why Canton Fitzgerald moved their data storage location to New Jersey six months before the 911 attack. Two Hat Trick Letter clients have good friends warned on September 10th not to show up at work the next day, calls received anonymously. See the Lars Schall article (CLICK HERE) and the YouTube video (CLICK HERE).

High praise and respect should go to the AE1000 organization of one thousand architects and engineers. They have pressed onward about a long list of anomalies and inconsistencies such as the presence of thermite in the rubble, which is a sophisticated explosive. They have pointed out that jet fuel burns at 1000 degrees Fahrenheit below the required temperature to alter structural steel. Inquiring minds are till looking for aircraft debris on the Pentagon lawn. At least one hundred other items could be cited. The oddest anomaly is that car and truck engine blocks were melted within a three or four block radius of the WTC buildings. Expert analyses have concluded that thousands of micro nuclear devices were part of the demolition, the radiation fanning out. Most early responders at the scene have developed cancer. The most obvious smoking gun is the collapse of WTC Building #7 without any airplane impact or fire. The building was the site of JPMorgan's data storage records on the Enron failure and USTreasury Bond counterfeit trail. Leave it there.

In the Jackass opinion, the position on 911 separates the morons (who do not comprehend much) from the masses in denial (who refuse to examine evidence) from the mindless patriots (who salute the captured flag) from the inquisitive patriots (who reject the official story) from the angry betrayed citizens (who observe a coup d'etat). Those who seek the truth (aka Truthers) have been denigrated. After all, truth is the enemy of the fascist state. Hope is an expensive and elusive commodity. Action and preparation are better pathways. Justice is too much to expect. Rather, expect the criminals in power to be displaced or to vanish.

◄$$$ OPEN INTERIOR CONFLICT AT THE WHITE HOUSE. A DEEP DIVISION HAS COME BETWEEN SYNDICATE LOYALISTS AND THOSE WHO PLEDGE SERVICE TO THE PEOPLE AND CONSTITUTION. THE DIVISION IS OUT IN THE OPEN. THE OBAMA ADMIN IS TRAVELING ON A PATH OF NATIONAL ISOLATION IN A GLOBAL SENSE. $$$

The conflict is all through the USGovt and the USMilitary and the US Security Agencies. The Snowden files have brought much division into the open like a hot knife. The topic is beyond the scope of the newsletter, but some comment is required. The numerous security and intelligence agencies suffer from a gross gulf in priorities from the two camps. To put it simply, the bad side is led by the National Security Agency. The good side is led by the Defense Intelligence. The Black Hats are driven by the huge narcotics profits and pervasive bank fraud with monetary control. The White Hats are driven by devotion to the Constitution and commitment to protect and serve the populace. Lately, a division has been given more attention by the Pentagon Brass and the elite soldiers whose lives have been trampled. Much more could be told about the dismissal of General Patraeus. Much more could be told about the several generals and admirals and the fateful flight one week before the Oklahoma City 1995 incident. They wanted to restore the Republic. On the anniversary of 911, the Russia Times released a story about the CIA involvement of the 911 attacks, an inside job, a false flag. The RTNews called it another Operation Gladio Project, which is well known for its subterfuge in Europe, for which not 1% of Americans have any knowledge. Let it be known that President Obama does not have Pentagon support. He is gradually giving the Joint Chiefs of Staff at the Pentagon reason to distrust his priorities, service, and leadership. NATO Secretary General, Anders Fogh Rasmussen, has stressed that NATO forces are not in support of the Obama Admin either. See the Zero Hedge articles (CLICK HERE and HERE).

◄$$$ USMILITARY COMPLEX AND HOMELAND SECURITY FORM A GIANT PORTION OF RECENT USGOVT SPENDING. IT IS A BUBBLE THAT MUST POP. ALTHOUGH THE DEFENSE BUDGET IS ALREADY COMING DOWN, IT IS STILL ALMOST DOUBLE WHAT IT WAS IN 2002. THE HOMELAND BUDGET IS THE LITTLE MONSTER, THE GESTAPO CREDIT LINE, THE CHERTOFF SLUSH FUND. $$$

 

It is highly doubtful that either budget will be reduced substantially as the police state continues, as the USDollar is rejected globally. The disorder rises both within the crumbling financial framework as well as the deteriorating economic structure. How few remember the Eisenhower warning in the 1950 decade about the sprawling encroachment of the military industrial complex, whose wishes, plans, and ambitions seem never to be refused. He foresaw a growing tyrant. Nowhere is it more evident with the powerful defense contractors and the Chertoff Group. See the Zero Hedge article (CLICK HERE).

◄$$$ THE WORLD BANK WHISTLEBLOWER BELIEVES THE WORLD WILL REJECT CENTRAL BANKERS AND THEIR CRIMINAL DASTARDLY SCHEMES. MANY INSIDERS ARE WORKING TO EXPOSE THE CRIMINAL BANKER ELITE, THEIR HIDDEN WAYS, AND THEIR DETRIMENTAL PROJECTS. $$$

Karen Hudes is on a tear, offering interviews, at personal risk. She is a former economist at the World Bank, who left the devious organization a couple months ago amidst great fanfare for her negative views on the bank and central banks and bankers themselves. She mentioned that other World Bank insiders are extremely disenchanted with the course of events, and are helping to bring facts to light that expose the nefarious banker deeds and harmful effects to the global financial system. Hudes offered a stern warning. She concluded, "Fiat currencies are now under siege. We have a limited amount of time to set up alternative monies. If we have permanent Gold backwardation, international trade will simply stop and we will have a world depression that will make what happened in the 1930s and 2008 look like nothing." She offered numerous important points in an interview with Smart KnowledgeU (CLICK HERE).

  • The important banker figures migrate from one bank to another, sometimes to regulatory agencies and commissions.
  • The big banks slowly acquired the news networks, constantly alter the stories, keep the masses ignorant, and make sure that internal critics are fired.
  • Many bankers understand that a day of reckoning is coming. The populace in many nations is awakening to their criminal deeds, more aware of the broken central bank franchise system.
  • The BRICS nations of the East are moving fast away from the current banking and financial system, in broad attempts to settle trade on a net basis in gold bullion.
  • If the power transition is not resolved in the current transition by bringing the major parties together, then war is inevitable. Great wealth lies in the balance.

For continued background reading on the currency wars and struggles to maintain the bank reserve system, Hugo Salinas Price has provided some solid analysis. No equilibrium can be achieved without major systemic reforms. The centralized banking and financial rules inhibit progress, and even inhibit capital formation. The foced valuation of currencies, bonds, and gold is very destructive. Only Gold can serve as money (surely not debt), and only Gold can serve as the ultimate enforcer of value. See the Cafe Americain essay (CLICK HERE).

◄$$$ THE FOCUS IS TO SHIFT TO USGOVT DEBT CEILING AND USFED CHAIRMAN WITHIN THE UNITED STATES. IN THE BIGGER PICTURE, THE CENTRAL BANK CULT IS UNRAVELING AS THE FRANCHISE SYSTEM IS UNDERGOING BROAD FAILURE. THE USFED AND USMILITARY FIND THEMSELVES IN THE SAME POLICY ROOM, NEITHER WITH AN EXIT. IT COULD BE THAT NOBODY WANTS THE JOB OF FINANCIAL CAPTAIN OF THE USS TITANIC. A CLOSER LOOK SHOWS SUMMERS AND YELLEN TO BE NEARLY IDENTICAL, EXCEPT FOR PERSONALITY. $$$

With the news that Lawrence Summers has taken his hat out of the USFed Chairman ring, the focus has shifted. (His hat was kicked off.) Veteran Fed Governor Janet Yellen is the front runner for the post. However, the key question is whether she is stupid enough to pursue or accept the job. An embarrassing situation might develop where nobody wants the post, regarded possibly as the captain of a gigantic sinking vessel abandoned by most global players with disdain. The USFed is beset by a crippled balance sheet loaded with toxic bonds, the buyer of last resort throughout the financial crisis over five years. The USFed is under fire for raising the cost structure worldwide, including food prices across the vast array of poorer nations. The USFed is being dragged into global conflicts, as the Monetary Policy is intertwined with Military Policy on the geopolitical stage, both offering aggression, both perceived as global problems, neither having an exit strategy. The USFed is stuck, and is likely to preside over the systemic failure that accelerates into a climax. Expect some additional shift of attention to the USGovt debt ceiling.

The Jackass view is that the offer for the Chairman post must come with sweeteners and additional lures. There must be promises that the Greenspan and Bernanke policies killed the structures and caused the systemic failure. The next Chairman will preside over ruin, a gigantic toxic balance sheet, a forced QE to Infinity and ZIRP Forever twin-cam Weimar engine block. The guarantee to hold ZIRP & QE in place until an economic recovery is a death sentence, since the policies assure continued capital destruction of the engine room with the ObamaCare marginal business tax imposition as a ruinous engine additive. The dubious Quantitative Easing, also known as hyper monetary inflation, and as QE to Infinity by the Jackass, will be firmly in place. The leading analysts expect the QE tapering process to happen more slowly if at all. The USFed Chairman post will preside over systemic failure and Weimar printing practices made very apparent, possibly with grand lies tied to the office. See the Financial Sense article by James Gruber (CLICK HERE).

Yellen might be regarded improperly as the big monetary dove in the room. Although Summers is painted as an architect of dismantling the Glass-Steagall Act that used to separated the banks, brokerage, and insurance businesses, the shredding of this important firewall took place under the Democratic guise of the Clinton-Rubin Admin. On the other hand, Yellen has made it somewhat clear (as clear as monetary policy makers ever do) that she wants no harsh budget austerity, and wishes to maintain so-called stimulus even at the risk of fast growing money supply. The only reality might be more that Summers is hawkish and Yellen dovish in public demeanor and comportment, since their monetary policies might be very much on the same wavelength. The former is a disliked boisterous arrogant loudmouth, the latter a reserved articulate toilet trained professional. Both bankers believe the market requires intervention. Both have no preference for full deregulation. Both are ultimate insiders, as Yellen was a firm fixture on the Council of Economic Advisors. So out with the controversial ass, and in with the clueless dove. See the Fortune Magazine article (CLICK HERE).

## USFED FAILED POLICY

◄$$$ MONEY SUPPLY IS FALLING ACROSS THE BOARD. STARK EVIDENCE OF NO ECONOMIC RECOVERY AND CAPITAL DESTRUCTION IS THE DECLINE. FOCUS WILL GROW ON USFED POLICY AS PART OF THE PROBLEM. $$$

The side effect from hoarding the monetary growth within the privileged financial sector, and thus restricting monetary growth into the Main Street business centers, has become very evident. The M3 Money Supply measure cannot reach the 2004-2006 levels. The M2 and M3 actually show very slow growth, but M1 is in fast deceleration. The current monetary policy with 0% and bond purchases (ZIRP & QE) is not producing a recovery, a revival, or any resuscitation whatsoever. If new money is devoted only for the banking sector, then the rest of the business sectors suffer. Witness some nasty consequences of capital destruction due to ZIRP & QE, which have lifted the cost structure, reduced profit margins, and forced widespread job cuts and business shutdown. Next comes the deep damage from ObamaCare and the slam effect with job cuts.

◄$$$ MONEY VELOCITY REMAINS CRIPPLING LOW, AT HISTORIC LOWS. THE AMPLIFIED MONETARY EXPANSION HAS AIDED BANKS AND REDEEMED BONDS, BUT WITH NO TANGIBLE BENEFIT TO THE USECONOMY. MANY ARE THE CHANNELS FOR MONEY FLOW, BUT MOST ARE BLOCKED. AS CAPITAL IS KILLED OR RETIRED FROM THE USFED MONETARY POLICY, THE MONEY VELOCITY DECLINES. IT IS PROOF OF CAPITAL DESTRUCTION. $$$

The Money Velocity is at historic lows, a point of extreme embarrassment to USFed Chairman Bernanke, who is on the way out with failure on his resume. Worse, the outcome of four years with extraordinary money growth has been a crippled USEconomy. The good chairman quack argued in his doctoral thesis that amplified liquidity was the basis of the emergence from the Great Depression. Yet amplified liquidity cannot lift the United States from its chronic recession, deeply mired in insolvency. Perhaps because first, it is a depression, and second, the absent Gold Standard provides no traction for new money. Next on the global stage will be the USFed serving as the processing plant for the USTBonds returned to sender from a vast stream of foreign entities. Still the funds will not hit the US Main Street, but rather foreign business investment and development. Just like with toxic bonds, the redeemed Fannie Mae Mortgage Bonds or AIG-held derivatives never aided the USEconomy. They served as accounting entries and payoffs to preserve the current power structure. The foreign dumping of boatloads of USTBonds will have to be redeemed just like the toxic bonds.

The money flow has numerous textbook channels, of which at least five are important channels. They are 1) redeemed toxic bonds without price inflation effect, 2) business capital expansion for a massive typical effect which is not happening, 3) USGovt deficits and its moderate effect when infrastructure which is not happening, 4) Wall Street and financial account expansion for a tiny effect that offers psychological lift to consumers, and 5) Military spending for a profound deficit effect that harms twice with capital destruction. Be sure to know that fast reducing money velocity is the most reliable signal of deep recession and economic danger.

The nation seems to completely accept the notion of the USFed monetary policy being a radical stimulus that runs the risk of promoting extreme price inflation. The truth is the exact opposite. No stimulus, when in fact the QE bond monetization will continue to kill capital and destroy business. The price inflation effects are all over the board, with material costs rising, service costs rising, but liquidation sales throughout the field of view in a suppressive cross current effect. The same incorrect stimulus propaganda has been spouted for months on end, actually over three years steadily like a propaganda loudspeaker. However, almost no economists comprehend the capital destruction and severely harmful effect from the USFed policy. The sequence is simple, from rising cost structure, poor pricing power, shrinking profits, ruined business segments and even entire businesses, then shut down of equipment and liquidated capital. The ongoing QE will ensure the USEconomy continues to deteriorate, with more acceleration coming. Those who expect a rise in business activity are way off, bordering on delusional. Those who expect the money velocity to rise are way off, bordering on clueless.

The essentials and life necessities for households are a flat constant. One must integrate the USDollar devaluation into the formula for prices. It is the new factor coming into relevance within a year or more. Many people remain stuck with hyper monetary inflation as a dreaded fear from the USFed in focus. The current environment is in no way similar to past cycles. China is the new player, which prevents both rising product prices and capital investment. The price inflation monster is corralled with redemption of toxic bonds. The nation might indeed see some fast rising prices where shortages abound. The psychological factor might surprise the Jackass, as it enters into the equation, it will be regarded as price gouging. My 15% for price inflation sudden shock is a baseline stab for price hikes in a quantum jump after the 30% USDollar devaluation is forced. The Jackass does not wish to enter into silly math syntax game discussions on devaluation and price inflation calculus, which diverts from the main point. Clearly a big USD devaluation would result in an amplified large price jump. For example, a 25% devaluation brings a 33% price jump. A 33% devaluation brings a 50% price jump. A 40% devaluation brings a 67% price jump. A 50% devaluation brings a 100% price jump.

Soon the obvious step will come of a USDollar forced into a split of a foreign version and a domestic version. It will be a major news item and source of deep confusion and controversy. The foreign reserves holders will demand a preserved foreign held USDollar, as protection from the USFed itself and its powerful hyper monetary inflation. The foreign USDollar version will emerge as distinctly different. The domestic version will be devalued repeated to the point of being recognized finally as a Third World currency. The new USDollar for domestic usage must trade on the FOREX currency market, where it will be brutalized. After the baseline 15% price inflation is embedded, next comes the follow-up effects like extreme shortages. The rest of the world will eventually reject the USDollar for trade. Shortages will result from the transition where foreign suppliers will be uncertain of the new USDollar value. The shortages will be most acute at supermarkets for food, at service stations for gasoline, and at ATMachines for cash. These three locations is where to expect the most violence.

◄$$$ LAGARDE ADMITTED UNCHARTED TERRITORY IN ACKNOWLEDGING THE CURRENT MONETARY EXPERIMENT. RECOGNITION OF THE HIGH RISK AND DESTRUCTIVE EFFECTS HAS BEGUN. THE CHOICE IS FOR CONTINUED GRADUAL HIDDEN DESTRUCTION VERSUS RAPID DESTRUCTION IN FULL VIEW. THE CENTRAL BANKERS HAVE NO CREDIBILITY ANYMORE. $$$

Chrisinte Lagarde is no fool, but she might be a tool. She certainly is a system harlot. She has for the last two years held the dubious managing director post at the International Monetary Fund. It is a job for a half-blind bureaucrat in service to the bank syndicate, since the IMF itself has lost its clout. It has moved slowly under the Chinese aegis, by virtue of the bigger fund input donations from Beijing. With cash input comes power. She recently stated, "The day will come when this period of exceptionally loose monetary policy must end. We need to plan for that day, especially since we do not know exactly when it comes. Just as with entry, exit will take us into uncharted territory. Let me say it up front: I do not suggest a rush to exit. Unconventional monetary policy is still needed in all places it is being used, albeit longer for some than for others." The apologists for the current policy have no legs to stand on, their integrity shredded long ago, as a result of ongoing massive banker welfare and favors.

Lagarde advised the continuation of highly destructive monetary policy, for the simple reason that its removal would cause a fast decline, massive lost wealth, and engrained chaos. So she chooses slow destruction over rapid destruction during which no solution is pursued. Her words sound as stupid as delusional. She spoke to the global gathering of central bankers hosted by the US Federal Reserve in Jackson Hole Wyoming. They are criminals by most definitions, deeply involved in concealing bond fraud, working avidly in redeeming and retiring toxic and fraudulent bonds with other people's money, shuffling around bank derivatives while managing them in secrecy, and chronically getting hands dirty from high volumes of money laundering in narco funds. See the UK Telegraph article (CLICK HERE).

◄$$$ CHICAGO FED'S EVANS SEES A REDUCTION IN USFED BOND PURCHASES BY YEAR END 2013, AND A FIRST RATE HIKE IN LATE 2015. THE REALITY (JACKASS FORECAST) IS FOR A DOUBLE IN USFED BOND PURCHASE VOLUME BY NEXT YEAR. ALWAYS BEST TO DISREGARD SUCH OFFICIAL VIEWPOINTS. $$$

Chicago Fed President Charles Evans has added to the lunatic propaganda. He expects the USFed to bring an end to its bond purchase plan by the middle of 2014, and to order its first rate hike in late 2015. He actually anticipates a tapering of QE later this year. Evans estimates the USFed balance sheet will reach $4 trillion by the time QE3 ends. Being a hack economist, he stated that low interest rates provide a necessary support for economic activity at this stage of the cycle. He fails to see rising cost structure, shrinking profitability, and business shutdown, all part of capital destruction. He is a blind man serving as policy apologist wonk. See the Market Watch article (CLICK HERE).

Recall the regular spouted misdirected propaganda in the last decade, centered upon nonsense like the Second Half Recovery, later followed by Green Shoots nonsense, then by Exit Strategy distractions. It is all mindless chatter. So the QE tapering will be next year. The Jackass forecast is for the USFed volume of bond purchase to double in the next several months. The embattled central bank must absorb the heavy volume of USTBonds returned to sender from foreign entities, whether in diversification of reserves or in Indirect Exchange stemming from large asset acquisitions. Expect the USFed to talk about reductions while increasing volume in huge amounts, the public stated policy all lies. The heightened volume will be done in secrecy, fully denied. Intrepid analysts will catch their lies in the data.

◄$$$ GOLD REPATRIATION CAMPAIGN IS ABOUT TO BE LAUNCHED IN POLAND AGAINST THE BANK OF ENGLAND. A PETITION IS GATHERING FOR OFFICIAL INQUIRY OF STATUS AND VOLUME CONCERNING THE POLISH GOLD HELD IN LONDON. DITTO JUST TWO WEEKS LATER FOR A SIMILAR POPULAR MOVEMENT IN FINLAND. THE LILLIPUTIANS ARE BEGINNING TO TIE DOWN THE WICKED LONDON GIANT. $$$

Taking inspiration from Germany, a movement to repatriate national gold reserves has arisen in Poland, the gold bullion supposedly held vaults at the Bank of England in London. The movement is called Oddajcie Nasze Zloto (Give Our Gold Back) and was brought to the attention of GATA by its vice chairman Piotr Wojda. Their intelligentsia is worried about the safety of more than 100 tons of Polish gold held in the vaults of Bank of England for the last 70 years. The Polish people want their gold returned from London. Wojda informed that the movement has been widely supported by organizations such as the Ludwig von Mises Institute, the Business Center Club, the Mint of Wrocaw. The requisite publicity was given by several newspaper publications and television shows. The national Polish politicians finally took action. Wojda wrote, "Representatives of the movement met with members of the Polish Parliament on August 29th to discuss doubts regarding the safety of Polish gold held abroad. During our presentation, we used several examples of similar movements in Germany, Switzerland, and the United States. We also briefly presented achievements of the Gold Anti-Trust Action Committee and they impressed our members of Parliament. The members of Parliament agreed that Polish gold reserves deserve an independent audit."

The petition will be put before the president of the Polish Central Bank, Professor Marek Belka. The petition will stipulate that official inquiries be made as to the volume of Polish gold reserves held at the Bank of England, their quality, including serial numbers, purity, and status as good delivery bars. They wish to know if any independent audits have taken place within the last 70 years, with their results. They wish to know details of any official leasing of such gold to any financial institutions, and if so, under what terms and conditions. The Polish central bank has gold reserves that amount to only 4% of the bank's total currency reserves. See the GATA article (CLICK HERE) and the the Polish "Give Our Gold Back" campaign's Internet site (CLICK HERE).

The Polish Govt decided to confiscate half of the national pension funds, in order to reduce the sovereign debt burden. It was an extraordinary maneuver, surely not a decision favored by the populace. One must wonder if they will seize another 10% of the pension funds to cover next year's deficit. They could instead cut the budget and encourage private business formation, maybe even attract some foreign investment. See the Zero Hedge article (CLICK HERE).

A gold repatriation movement has sprung up in Finland just two weeks after such a movement arose in Poland. The objective is simple: To execute a referendum, the purpose to determine the will of the people of Finland concerning the return of gold reserves back to Finnish soil. The time for the vote is at the latest May 2014. Gold is a strategically important asset, useful as insurance for the country to support its currency system. Gold is the tool with with to emerge from currency crises, as history has shown. Finland owns 49.1 tons of gold, stored mostly at the Bank of England. It is actually located in several sites across the world. The majority of the official Finland gold account is kept outside of Finland. Let the conclusion be made that governments are preparing for a climax to the currency crisis. Native Ilkka Hikipaa, CEO of gold dealer KultaEeva Oy, is on top of the story.

At issue is the gold market leverage and leasing by bullion banks, as well as by central banks like in London and New York. No permission has been granted to lease. The owners want the gold repatriated. After numerous similar demands, like those of Venezuela, Germany, the Netherlands, Austria, Ecuador, Ghana, the last nations to do so could end up empty handed. For verifiable ownership, as with individuals, gold must be in actual possession. The people of Finland have never been asked whether Finland should keep and hold the gold on its own. The issue is more relevant than ever nowadays, since the global financial crisis is without solution, as the bank and bond and currency systems are all hurtling toward the abyss. See the GATA article (CLICK HERE) and the Finnish campaign's Internet site (CLICK HERE).

## USTREASURY BOND EXPOSURE

◄$$$ USTREASURY BOND AND USDOLLAR BREAKDOWN IN PROGRESS. THE BOND MARKET HAS CONVERTED INTO A FLASH TRADING ARENA WITHIN THE BANK SYNDICATE TO MAINTAIN BOND PRICES. THIS IS AN EXPLOSIVE DEVELOPMENT, INDICATIVE OF UNSUSTAINABLE SOVEREIGN BOND PRICES KEPT UP BY ROUND ROBIN DRIVEN BY INTERNAL SALES WITHIN THE FEDERAL RESERVE BANKS THEMSELVES. SPECULATION IS ABOUT TO RISE THAT THE USFED AS A FINANCIAL FIRM IS SUDDENLY SUBJECT TO CAPITAL RULES, WITH INHERENT RISK OF FAILURE. IT HAS STACKED UP OVER $3 TRILLION IN IMPAIRED ASSETS, MUCH OF WHICH ARE TRULY TOXIC. $$$

Last week, an extraordinary memo was received from a trusted colleague. It could be important in yet unknown ways. It read as follows. "I spoke with an old banking friend of mine on Saturday who now works as an Executive Officer in the Regulatory Division of the Dallas Federal Reserve. The gist of the conversation was this. There was a panic teleconference among all of the Regional Federal Reserve banks on Thursday afternoon [Sept 5th]. The subject of this emergency teleconference was USTreasury Yields. The perilously low capital of the Federal Reserve was at issue in this meeting, and the fact that they could no longer afford to defend the USDollar at this point. All of the regional Federal Reserve Banks were ordered to unload as many USTreasurys and Mortgage Backed Securities as they could, even though they are selling at a loss, to provide immediate liquidity even at the expense of capital! Eventually, late Friday night a tranche of Treasurys was sold above market price to several Federal Reserve Member banks in order to drive down the yield! You can plainly see this sale on the 10-year USTreasury chart." Big news! Panic setting in! Unsustainable bond arena! Flash Trading has hit bonds!

Make several conclusions right away. Panic has finally hit the USFed. They cannot defend either the USDollar or its obverse USTBonds, the trading vehicle. They are both at improper high valuations. Rising interest rates will next cause more sales, the dreaded convexity to come into play. The big US banks must unwind their leveraged USTBond carry trade, based upon the bond futures contracts. Watch big US banks sell their leveraged positions that in the past three years provided them supposedly easy profits. The breakdown of the USDollar and USTBonds has begun, a long process having come full circle after the highly destructive ZIRP & QE, both engrained in monetary policy. The breakdown in the currency and sovereign bond will be aggravated by Interest Rate Derivative dismemberment and colossal losses. More important, WE HAVE NOW SEEN THE BEGINNING OF FLASH TRADING ON USTREASURY BONDS !! A grand round robin closed circle selling program will be relied upon in desperation to maintain price, just like with NYSE stocks in Algorithm Trading. The internal trading volume will grow and dominate the system, just like with the stock market where 80% of NYSE volume is from the perverse Algo Trading. No computer based trading like with Algo Trading is regulated. The dangerous times and instability in bond market will become major spectacles and news items. The risk will be transferred to stocks, which rise in value from more QE volume flowing into asset purchases, but which fall in value from creeping bond yields. Great instability will be a regular fixture in the US Stock market, and possibly many other national bourses around the world.

The excellent insightful source EuroRaj pitched in. He wrote, "The USTreasury & USDollar duo is just the visual impact and reaction seen of the gradual geopolitical isolation of the United States. The world is reacting to the misguided policy maintained by the USFed to aid Wall Street, while Main Street is permitted to go to the dogs. The isolation is now internal and external. The bond trading within the Fed system is nothing but right hand selling to left hand at a price which is meaningless to the rest of the world. The USFed is owned by the banks!" He described Algorithm Trading done by the Wall Street computer systems.

Normally the USFed has avoided the need for capital, in justification of its own solvency. It has not been subject to financial requirements, since not an operating financial firm. It is instead a financial fortress and headquarters to coordinate bank activity within a vast crime syndicate. Back in 2009, the USFed broke from tradition, by offering a small interest yield for big US bank excess reserves. Doing so raised many questions. The Jackass concluded soon afterwards that the USFed was insolvent, and desired the assets from big nearby banks to disguise and obscure its insolvency. Capital is of concern only when a liquidity crunch is anticipated. Therefore, the USFed appears very worried about a liquidity threat, perhaps from vast demands of USTreasury Bond redemption, perhaps from a breakdown of its own Primary Bond Dealers. The game must have changed recently and suddenly. One must speculate that perhaps the USFed balance sheet might eventually be wound down, causing some devastation. The USFed might suddenly be scrutinized as a financial firm, where it is suddenly subjected to capital rules with risk of failure. Conclude that the USFed received a phone call from a higher power. As footnote, bear in mind that the public has long maintained an incorrect perception that that the USFed can defend itself from insolvency by padding its balance sheets with assets. This is not correct. This belief of infinite creation of electronic wealth to ward off deep insolvency is a baseless myth. They can add assets with equally offsetting debts, net zero. The USFed is going down the tubes into the sewer, next door to Fannie Mae.

◄$$$ GLOBAL MARKET REJECTION WILL BE FELT IN USTBOND LONG MATURITY YIELDS. NEXT TARGET 3.0%, THEN COMES THE SURGE UPWARD. THE BIG US-BANKS ARE EXTREMELY VULNERABLE TO MASSIVE DERIVATIVE LOSSES FROM THE RISING BOND YIELDS. THEIR LEVERAGED DEVICES ARE FRACTURING FROM THE FAST RISE IN YIELDS. THE BIG US-BANKS ARE FORCED TO UNWIND THEIR GRAND CARRY TRADE SPONSORED BY THE USFED SINCE 2011. WITNESS QE WHIPLASH, AS THE EASY PROFITS URGED BY THE USFED HAVE TURNED INTO CATASTROPHIC LOSSES ON THE HIDDEN UNDER-CARRIAGE OF THE BIG WESTERN BANKS. THE UNITED STATES IS ON THE VERGE OF BECOMING A VICTIM OF GLOBAL HOT MONEY FOR THE FIRST TIME IN ITS HISTORY. THE ULTIMATE DESTINATION IS THE THIRD WORLD, THE DOORWAY BEING THE USTBOND MARKET IN REVERSAL. $$$

The big US banks sit on a massive mountain of derivatives, precisely when the TNX has gone from 1.7% in May to almost 3.0% in September. Derivatives break down when much smaller moves occur in the 10-year bond yield, like last year with the London Whale incident. The current TNX moves are twice the whale's ripples. The risk for leveraged damage is hidden, and not visible on the falsified balance sheet. JPMorgan, Goldman Sachs, and Morgan Stanley stand out along with Bank of America as being in line for annihilation. The bigger banks stand to suffer at least several $100 billion in derivatives losses, maybe multiples higher. (Whenever an analyst forecasts a $trillion loss, he/she is labeled as a kook, but the risk is real bare and gigantic.)

The behemoth JPMorgan Chase could lose a few $trillion in interest rate derivatives alone, a small portion of their roughly $70 trillion notional position. The big Western banks, primarily those in New York, all stand to lose their entire gains in the USTBond carry trade over the last three years, perhaps to lose double their gains. They are the hidden sellers of USTGovt securities, responsible for the sudden deadly rise in the TNX. The irony is thick. The big US banks are in line for big losses in interest rate derivatives, aggravated by the grand unwind of the leveraged carry trade in USTBonds by the same big US banks!! These corrupt bunkers directed cannon fire at their own edifices, their own fortress, from the easy bond trade sponsored by the USFed. Recall Chairman Bernanke boasting how these banks had been quickly rebuilding their balance sheets from USTBond investments. Witness profound convexity at work, from leveraged sales, in energized rising bond yields. Analysts will be taken by surprise when the derivative losses stack up, and when the TNX zips past 3.0% soon.

◄$$$ THE REAL THREAT TO THE USTREASURY BOND MARKET COULD COME FROM ITS MARGIN OF TRADING, THE REPO MARKET. IF THE DERIVATIVES ARE NOT THE TRUE WEAPONS OF MASS DESTRUCTION, THEN THE REPO ACTIVITY IS THE SITE OF SUCH HARMFUL WEAPONS. IT IS AN ARENA WITH A SMALL NECK, WHERE AGAIN JPMORGAN IS ROOTED. $$$

The REPO market related to the USTBonds might be the trigger for the next financial crisis. It is where the crucial vulnerability lies in the financial system. In fact, former FDIC chief Sheila Blair, New York Fed Chief William Dudley, and USFed Chairman Ben Bernanke have all expressed concerns about the REPO market. At $4.6 trillion in size, it is where almost every financial crisis since the 1980s has begun. Little has been done to reduce its risks since the collapse in 2008, a point raised by New York Times columnist Gretchen Morgenson. It serves as the refunding market for the repurchase obligations (on maturing bonds) and for wholesale operations. She describes the REPO market as the plumbing of the financial system, where various securities are financed, where money market funds are lent to banks and other financial players. Constant rollovers are executed for next day handling. In practice, both sides constantly agree to roll over the deals rather than unwinding them the next day. If one party decides not to renew the transaction, there could be trouble. That is precisely what happened to Bear Stearns and Lehman Brothers. Based upon trust, the system is vulnerable at this bottleneck.

Only two banks, Bank of New York Mellon and JPMorgan Chase dominate the business, operating as intermediaries for REPO deals, much like clearinghouses. Some experts recommend creating a central clearing platform where all participants could trade directly, similar to platforms the Dodd-Frank Act mandated for derivatives. Such a platform could be arranged as a bank utility facility under full monitor, with margin payments required to finance bailouts in the event of a participant default. New regulations in the works would require banks to hold capital against assets they finance in the REPO market. It will shrink in size as a result, reducing liquidity for the USTreasury debt itself. Thus the systemic risk. These regulations have already shrunk the REPO market from $7.02 trillion in 1Q2008 to $4.6 trillion today in the outstanding volume. Higher borrowing costs are assured from the declining liquidity. Bruce Tuckman from the Center for Financial Stability warned, "Recent regulatory changes will cause dealers to reduce risk and to make markets less aggressively. End users will lose some liquidity as dealers adjust to higher risk capital mandates, lower leverage limits, and increased margin requirements." See the Money News article (CLICK HERE).

◄$$$ THE TIC REPORT SHOWS AN INCREASE IN GLOBAL NET PURCHASES OF LONG-TERM BONDS FROM THE THE UNITED STATES IN JULY. THE BULK OF PURCHASES WERE FOREIGN PRIVATE ENTITIES, AS FOREIGN CENTRAL BANKS REMAIN NET SELLERS. $$$

Reversing a recent trend, the US Treasury Internatl Capital (TIC) Report showed a rise in foreign demand for US$-based assets. The negative trend had run for six straight months. The USDept Treasury reported that net foreign purchases of long-term securities totaled $31.1 billion in July, compared to net sales of $67 billion in June. The aggregate in July of all net foreign acquisitions of long-term securities, short-term securities, and banking flows was a monthly net inflow of $56.7 billion. The finer detail had a breakdown of net foreign private inflows at $59.3 billion, contrasted by net foreign official inflows at negative $2.6 billion. So central banks are still sellers. Net purchases by private foreign investors were at $41.7 billion, contrasted by net purchases by foreign official institutions at $5.0 billion. At the same time, US residents increased their holdings of long-term foreign securities with net purchases at $15.6 billion. Apologies for occasionally calling it the Treasury Investment Capital Report.

◄$$$ THE USFED WILL NOT TAPER DOWN ITS HUGE BOND PURCHASES. AS THE STEADILY CITED TAPER IS USED REPEATED IN A LAST DITCH USTBOND DEFENSES (PROPAGANDA), THE RISK RISES FOR LOST INTEGRITY. EXPECT THE USFED TO ACTUALLY DOUBLE ITS QE BOND MONETIZATION VOLUME OF USTREASURY PURCHASES IN THE NEXT SEVERAL MONTHS. THE BIG LIE WILL BE EASILY EXPOSED, AND HELP PUSH THE UNITED STATES INTO THE THIRD WORLD. A GRAND GLOBAL REJECTION AND EXPOSURE IS UNDERWAY. $$$

The new Jackass forecast: USFed bond purchase volume will double in a new phase of the QE to Infinity, an ongoing saga, a true American Tragedy. This is Theodore Dreiser meets Robert Rubin and Hank Paulson. The Taper Talk will be smashed as lies. The USFed and USDept Treasury must cover the enormous volume of foreign bond dumpings. Many are the contributing factors to the destruction and burst of the USTreasury Bond bubble, the biggest grandest asset bubble in modern history. The entire world is involved, not just the Wall Street power brokers (soon to fall on their own financial swords). A great many factors are at work:

  • big US banks reversal their colossal carry trade
  • fracture of Interest Rate Swap derivatives behind the curtains
  • ongoing near $trillion USGovt deficits
  • bloated USMilitary machine in perennial search of a war
  • global trade partners diversification in FOREX reserves
  • Indirect Exchange (return to sender) from foreign asset acquisitions
  • arbitrage that suppresses the Gold price against the paper currency regime.

The high stakes will change the world. The USFed, even the US President, are making promises about reducing the official QE bond purchase program. It is like an endless nightmare. The US banking and political leaders are caught in a trap. They pass on false rumors, floated to help the USDollar. Foreign players will depart from the USTBond if they are certain the QE hyper monetary inflation will continue ad infinitum. What is happening right here, right now, is the world is recognizing the lies by the USFed and USGovt regarding the USTBonds. The world is coming to realize it is a grand asset bubble on the verge of bursting. The United States is to become the Western industrialized world's first hot money victim. Just as Switzerland was the 2011 beneficiary of hot money inflows, the United States will be the 2013 victim of hot money outflows. The hot money exodus will gather momentum, cause financial earthquakes, cause a recognized economic depression, make clear the eventual USGovt debt default, shatter the derivative market, and usher the United States into the Third World. Back in 2008 when the Jackass forecasted a USGovt debt default and a fall into the Third World, the details were very unclear, but the ultimate outcome was crystal clear. THE EARLY STAGES HAVE BEGUN TOWARD THE HOT MONEY DEPARTURES FROM THE USDOLLAR !!! The United States has never been the victim of hot money exodus in its entire history. Neither has it been on the edge of falling into the Third World. Witness the bitter fruit of the Fascist Business Model in its full corrupt destructive glory.

The Voice commented on the above opinion constructs. He brought in some geopolitical consequences. He said, "Spot on regarding the hot money abandoning the USTreasury Bond. It is the biggest asset bubble in history, supported by bank derivatives and fictional safe haven dynamics. The United States never thought to see the day where the rug is pulled from under their feet in a situation like what they created in Syria. The next blow will be how the US will be forced to deal with Iran." Due to his direct bold style, often delivered in private emails among a few trusted colleagues, edits are used, but the themes are very much his own. The big losers are the Middle East partners for the United States. One nation lost their US threat potential component, whose political power leverage center has been the Council on Foreign Relations. Another nation lost their Persian Gulf protector. In fact, the gulf will see the new protectors emerge more openly in Russia and China, who no longer tolerate the typical American power ploys. The Chinese have made significant investments across the entire Persian Gulf within the local economies. Pressures are at work where the tiny US ally on the Southeast Mediterranean is moving toward more cooperative relations with its Arab neighbors. As the United States and United Kingdom endure their fateful plunge, the tiny ally must make pragmatic decisions to survive. Such a shift has been in the making for well over 25 years, but now gains momentum.

The world is making a Paradigm Shift in trade and finance. The Voice brought the geopolitical chess game back to the Gold and Currency front. He concluded, "We will see commodity based money being introduced with precious metal at its core. However, the Anglo-Americans will stage one more battle, trying to revive their previous dominance. The proximal victim could be the USGovt debt market, the nation's most vulnerable point. If they do not step into line and conform to the global plans [led by the Eastern giants], they will be annihilated politically, economically, and socially. If it comes to that, be sure the potential exists for wider war, as in nuclear war. We shall soon find out." THE TIME FOR GAMES IS OVER!!

◄$$$ THE DAMAGE TO RISK SPREADS AND TO THE MORTGAGE MARKET IS REAL. THE RISING USTBOND YIELDS HAVE FINANCIAL AND ECONOMIC CONSEQUENCES. $$$

The risk for disorderly rotation has never been greater. The accelerated outflows from bond funds will eventually lead to wider high grade credit spreads, causing great disruptions. Many pension funds depend upon credit spreads for income. The generated income will vanish more than it already has in the last two years. Witness the fastest rise in mortgage rates in five years. The depressed housing market is being kicked in the face and groin simultaneously. The bubbly US Stock Market is at risk of sudden decline, from rising rates. The risks are everywhere, both financial and economic. Before long the USGovt will announce its forced migration for pension funds into the USTreasury Bond complex. See the Zero Hedge article (CLICK HERE).

◄$$$ EVEN THE WAR DRUMS DO NOT BRING IN USTBOND INVESTORS. UNLIKE IN PAST CYCLES, THIS TIME THE USDOLLAR AND USTBOND VEHICLE WILL SUFFER FROM THE DRUMS OF WAR. THE UNITED STATES IS NOT SEEN AS THE SAFE HAVEN ANYMORE, BUT RATHER AS THE CAUSE OF FINANCIAL RUIN AND THE CAUSE OF WAR. THE LEADERS OF US-BANK POLICY ARE SEEN AS THE CAUSE FOR GLOBAL ECONOMIC HARDSHIP (LIKE RISING FOOD PRICES). THE NEW REALITY BRINGS FORWARD THE POTENTIAL FOR RETALIATION IN THE FORM OF FINANCIAL WARFARE SCENARIO DIRECTED AGAINST USTBONDS. FULL SPECTRUM DOMINANCE HAS GIVEN WAY TO GLOBAL RETALIATION. $$$

Never before has it been so clear that the USDollar is supported by military might and bond fraud, and not industry or hard work. The Full Spectrum Dominance promoted by former VP Cheney has turned the world into a predator paradise. The backlash has begun against the United States, whose prestige has never been lower in a century. As reported last month, the TIC Report indicates foreign sales of US$-based bonds, primarily USTBonds, in volumes that are setting historical records. The United States is no longer seen as the rescue party, but rather than pirate landing party and the cause of most financial and economic problems. The export of mortgage bonds in the last decade sent the signal. The die was cast on sentiment against the once great nation, the former cradle of capitalism and beacon of freedom. The US has become a financial predator, regardless of the identity of the perpetrators on Wall Street. They are in Jackass view descendants of the Nazis and from the core of the Banker Syndicate whose identity is linked to the last letter Z of the alphabet (with a US National Park bearing the same name). Their activity is never a topic for report discussion.

The USFed monetary policy has aided the big Western banks, but at the expense of most every nation of the world, lifting food and energy prices. The capital destruction tied to the USFed actions knows no borders. Worse, for the first time in human history, a major military predator has ravaged the world, with the war costs paid for by the same targeted nations of the world, including the victims themselves. The world has begun to call a halt to funding the USMilitary that operates on the USDollar credit card. The world has begun to shut down the financial espionage offices scattered across numerous countries, disguised as fostering commercial and economic development. The recent USTreasury auctions have been wimpy and lackluster. Foreign sales have grown to historical levels. The threat of a buyout boycott for USTreasury Bonds is a real and present danger. See the Zero Hedge articles (CLICK HERE and HERE).

The vengeance has already begun. The movement is gathering great momentum, enough to cause trepidation and obstruction attempts by the West, led by the United States and United Kingdom. Usage of bank SWIFT codes in standard financial warfare has met with resistance. Usage of bank bans in certain nations has met with resistance. The Eastern response has been to work toward an alternative to USDollar usage in trade settlement in more distributed systems. The bank SWIFT and currency FOREX systems will be circumvented. The game is on! The opposition forces are rallied around the G-20 Nations, the BRICS nations, and the Shanghai Coop nations. They are led by China & Russia. The groups are a formidable adversary, which are gradually acquiring more financial savvy necessary to reach the finish line, defined by Gold Trade Settlement using gold intermediaries. Notice how Russia is the white face confronting the West in the foreground, while China is the Asian face opposing the West in the background.

◄$$$ RUSSIA AND CHINA OWN OVER $1.4 TRILLION IN USTREASURY BONDS. THEY ARE AT RISK DURING A RETALIATION USED AS A FINANCIAL COUNTER ATTACK. FOREIGN OWNERSHIP OF USGOVT DEBT LEAVES THE NATION INCREDIBLY VULNERABLE. THINK HOT MONEY RISK, LIKE WITH SMALL WEAK NATIONS. A SPECTACULAR ROLE REVERSAL IS IN PROGRESS. $$$

When the Jackass was a young adult, the queries were answered. The United States was not so vulnerable from its debt since the investors were largely US-based financial firms and pension funds and individual savers. That changed around year 2006, when foreign entities raised their stakes to over 50% of available USTreasury debt securities. The US has been vulnerable for years to outside driven priorities. In 2008, many stories swirled that China forced the nationalization of Fannie Mae. Their mass sales were on the verge of causing a national housing market disaster, and worse, revealing the multi-$trillion fraud within the House of Fannnie & Freddy. The Clinton and Papa Bush theft of $1.6 trillion from the Fannie Mae coffer was effectively managed via threats and a certain Oklahoma City building being destroyed in 1995. Another vapid lone gunman story covered it up. More stories were heard in 2011 with Hillary bestowing eminent domain to China. Here today, the USGovt and USEconomy can easily be held hostage to the USTBond attacks. The defense has been the Quantitative Easing, a euphemism for hyper monetary inflation in the form of USTBond purchase with printing press money. Such defense has wrought destructive effects the world over for more than three years. It is called stimulus, when it is actually a defense against economic and financial death throes at home, accompanied by disdain and contempt abroad.

Between the two of them, China and Rusia own $1.414 trillion in USTreasury Bonds, equal to 25% of all foreign held USTreasury debt securities. They hold a weapon. China owns almost ten times more than Russia, with $1.276 trillion versus $138 billion. In the event of any military escalation, these two nations and the other BRICS nations, along with many nations among the G-20 Group might begin a fierce selling campaign. They could force a rapid decline in the USTBonds, unconcerned about price. The motive would be to weaken the USMilitary and call it home for financial reasons. The most vulnerable part of the US underbelly is clearly the USGovt debt. It might soon become the target of the increasingly powerful voting bloc. The emergency plan would be to ramp up the USFed bond monetization program, exactly when the once respected central bank offices promises of reduced bond purchases (the Taper). However, the ugly secret is that the USFed is already buyer for between 80% and 90% of the entire volume of USTBond securities under auction for new issuance and refunded sale (rollover debt). Witness a transition where the United States is subject to incredible risk from foreign money departing from support. This is precisely the emerging market risk from hot money seen in previous crises, a spectacular role reversal in progress. The US is vulnerable to lost foreign faith and high volumes of departing funds, in a grand turn of the tables.

## USDOLLAR DEATH THROES

◄$$$ USDOLLAR AND GOLD FUTURE POTENTIAL PATH IS DIFFICULT TO ENVISION, BUT IT IS SLOWLY COMING INTO VIEW. THE WORLD IS PURSUING A NON-USDOLLAR PATH FOR TRADE, WHICH WILL LEAD TO CHANGE IN GLOBAL BANKING PRACTICES. EVENTUALLY THE COMEX WILL NOT OFFER A GOLD PRICE, SINCE IT WILL BE ABANDONED DUE TO EMPTY VAULTS AND A SPEW OF LAWSUITS. AFTER A DARK PERIOD, THE GOLD PRICE COULD BE REPORTED MUCH LIKE LIBOR, AS AN AVERAGE OF POSTED PRICES AT MAJOR TRADING CENTERS.

THE KEY FACTOR WILL BE GOLD TRADE SETTLEMENT AND THE RETURN OF THE GOLD STANDARD. HIGHLY DISRUPTIVE STAGES WILL ARRIVE. AT LONG LAST, BANKING WILL FOLLOW TRADE AND FORCE THE USTBOND OUT OF THE BANKING SYSTEM RESERVES FOUNDATION. CRIMINAL ARENAS WILL BE SWEPT ASIDE. SURVIVAL OF NATIONS WILL MOTIVATE GLOBAL TRADE PLAYERS TO JOIN THE ALTERNATIVE MOVEMENT AWAY FROM THE USDOLLAR AND TOWARD THE GOLD STANDARD. $$$

In the last decade, the fraud behind the US$-based bonds has been reported on a widespread basis. When near full exposure, the USAgency Mortgage Bonds were put under the USGovt wing for protection and concealment. The next stage has seen endorsed heresy in hyper monetary inflation as the norm, the accepted policy, the extraordinary measures fixed in place without option of removal. A return to normal via an exit strategy has been rendered impossible. In the meantime, as quantum steps are attempted by foreign nations in opposition to financial warfare, the war card has been trotted out while the terrorist hand has been played too far. The world is starting to see how the USDollar is backed by debt, bond fraud, and USMilitary. The debt pathway has run out of road. The last ditch is the advocated war drumbeat, and the declaration of enemies to the USDollar as terrorists. The sleepy dullard masses for the most part buy into the propaganda. The credibility of the USGovt leadership and message has never been as low as today. What follows is a speculation, a vision of the future path, replete with tremendous change, probably mass violence, and unspeakable hardship.

Opposition builds against USD/USTBond. A confusing future path comes for USDollar and Gold in its evolution, as an exit from the intractable global financial crisis is more actively pursued in urgency. Since liquidation of the big Western banks will be permitted to occur, and certainly not be ordered willingly, the crisis will reach a crescendo. The alternative pathway will be pursued, but it requires powerful protection from the Russian and Chinese military forces. An usual combination of economic forces and financial forces is converging against the USDollar and its USTreasury Bond vehicle. The foreign economies of the Eastern Hemisphere are pursuing trade (economies) but strive to settle in Gold (finances). At the same time, entire trade zones are organizing, built around a defiant infrastructure not of highways but of energy pipelines. The presence of Iran is like a cathartic agent not for its pursuit of rights and respect of culture. Instead, Iran steadfastly refuses to follow the USDollar direction (right of way) declared on the financial trade routes. If the Western financial platforms do not collapse from insolvency, they will soon falter from isolation and avoidance. The crisis will probably be pocked by a cross of inadequate capital within the system, and toxic currencies spreading a cancer as the system cannot escape the USDollar, nor other major fiat currencies in tow on the floating dirigible known as FOREX.

Broken financial markets. As the crisis approaches climax, the financial markets will spin out of control but growing recognition laced by deep confusion. Expect the USDollar to rise and rise and rise, then split in two, then be devalued without mercy. In time, if left to seek equilibrium, the USDollar will be killed from devaluation and global rejection. The split will be forced as the USGovt attempts to control its movement and exchange rate. Foreign entities wish to be freed from USGovt/USFed control over the USDollar. It cannot be separated from the USTBond, which has begun the deadly phase of rejection. Foreign nations will respond to their currency decline by departing from USDollar usage, in small ways at first, then in important ways later. The USD will gain ground from rising interest rates, paradoxically through rejection. The USD will suffer decline from the broadbased sale of USTBonds, from a reality fast lane, the new deadly HotMoney departure. The USEconomy is on the verge of importing three decades worth of exported inflation. The result will be unstable sovereign bonds, unstable FOREX currency exchange rates, and unstable economies. The managing offices in foreign lands will seek a desperate quarantinne from the USDollar, embracing the stable ballast of Gold, even in the face of USMilitary threats and accusations of terrorist campaigns.

The Asian Gold foundation. The Gold arena will enjoy an ascendance within commerce with powerful motivation to seek a survival route to an island which will grow into a Global Golden Pangea. The process will be greatly enhanced by means of the general trade by China and the energy trade by Iran. The infrastructure of energy pipelines will provide a skeletal foundation much like a human circulatory system that transports oxygenated blood. The energy commerce will provide the new system a strong basis in stability, the commercial skeletal support. Secretly and in tremendous volume, both Russia & China will continue to accumulate Gold bullion reserves. My source indicates that China has over 15,000 tons and Russia over 20,000 tons. He has served as broker for the former and has witnessed the latter. Pay close attention to the triangle of Turkey, India, Iran for development of the gold trade settlement model. It has already hatched, enjoying a certain degree of evolution. Turkey has played a unique role for over one thousand years in intermediary gold trade provision. Turkey is the primary gold provider for the entire Arab and Moslem world, the core Middle East provider, except for direct shipments from Swiss refineries.

The real Iran transgression (crime). The crime committed by Iran has almost nothing to do with nuclear arsenals or military threats to key nations. Without question, Iran's offense has been to conduct its energy trade (crude oil & natural gas) outside the USDollar sphere. The irony is that development of non-USD trade acts like a financial weapon of mass destruction that assures economic failure and financial crippling in the West, as long as the major nations continue to build their entire commercial and financial platforms around the USDollar and USTBonds respectively. Given the absent basis for the USDollar and the toxic nature of the USTBond, the resulting force has been to destroy and to kill capital. The outcome has been deeply insolvent financial structures (banks) and dysfunctional economies (businesses). The USD/USTB embrace results in economic death. The systems devoted to the US bank leadership are shedding jobs, while the the cost of living (mainly food prices) is rising to critical levels.

The coming Dark Period. The avenues leading away from the concentrated chokehold from the USDollar are fraught with danger from indirect attack of financial and covert violent nature. The Eastern nations, which form the critical mass of non-USD trade development, are working fiercely to avoid the SWIFT bank code weapons and the FOREX currency trading arenas. Since under US & UK control, they will be averted if Gold is ever to achieve ascendancy from the return of the Gold Standard. As the system is derailed, as the platforms collapse, as the economies cannot provide income to sustain the population, a dark period is coming that will not provide for a clear Gold price. The declining COMEX and JPMorguen gold inventory foretell of big consequences, of grand disruptions. The refusal to honor Gold futures contracts, the obstruction of contract delivery as has been the case since June, the whacky financial market prices for assets, and the overplay of the military card will result in broad systemic failure and profound US isolation. The disorder and chaos will demand an alternative system be put in place, or at least attempted in trials. The interrupted supply chain will demand new bold solutions of different types, as all past solutions will be discarded and denigrated. A dark period will be entered.

A reported Gold much like LIBOR. The COMEX eventually will have no gold futures contract, since its absent inventory will become common knowledge. Given obstructed metal delivery, the contract will simply go away. It will soon have no credibility, and certainly no perceived integrity. In will convert into a Cash & Carry gold mart. As a result, it will follow the Gold price, not determine it. Its price discovery role will go away as well, like an exhaust factor from lost inventory. The artificially low kept gold price has resulted in a natural consequence, as in vanished cleared non-existent inventory. Gold trade will continue, as it always does, but not in the usual way. Negotiation will be more flexible to arrive at a price where supplier is willing and buyer is satisfied. Expect 5 or 6 or 7 gold trading global centers to post different Gold prices. During this dark period, the reported Gold price will be the average from these brisk centers. The averaged Gold price will resemble and be modeled after the LIBOR price set by average methods. Perhaps the lowest and highest prices will be trimmed before a final average is calculated. The pressure from the emerging Gold Trade Standard will force the Gold price to multiples higher, like over $5000 per ounce easily, probably closer to $7000 per ounce as national gold reserves ramp up in competition.

The rush to acquire Gold reserves. Governments will be forced to scramble to acquire gold for the new currency system. The present currency system is gradually being discredited, due to their unstable and faulty sovereign bond foundation. Economies will be forced to scramble to acquire gold in big banks in order to enable and facilitate trade. The big mining firms are highly likely to be confiscated for gold supply, an assured supply chain. The smaller mining firms are highly vulnerable to be acquired by force, bought with pennies per share. The Jackass belief is that no confiscation of personal investment gold will be attempted. Many are the pressures for the USD to rise hand in hand with rising bond yields, broad debt settlement, and hidden derivative settlement. Much European debt is written in USD terms. All bank derivative contracts are written in USD terms. In contrast, many pressures for USD decline will come from lost faith by foreign entities, as the USTBonds are rejected, dumped, and exchanged for real money. A grand conversion process is in the works, to convert USTBonds into Gold bullion. The BRICS Bank will lead in the conversion of toxic paper to Gold bullion. The process will be slow at first, then grow into a torrent, finally a tragic flood. The USGovt will resist the transition, tooth and nail, even to foment war. The United States will attempt to convince nations to sink with them under the weight of the USDollar.


Grand changes to bank reserves management. As the world rejects the USDollar and discards the USTBond vehicle, the banking systems will convert from a foundation of fiat paper sovereign debt and work toward a solid ballast in Gold bullion. For five decades, the banking system has dutifully followed the Petro-Dollar defacto standard. The banking reserves foundation have been USD-based for these many decades as a result. That is about to change, and cause severe disruptions. The foundation will revert to Gold, the stable basis with no debt counter-party. The USGovt will resist the transition, tooth and nail, even to foment war. The United States will attempt to convince nations to sink with them under the weight of the USDollar. Instead, they will rebel and force a split. The split USDollar will result in tremendous pressure for USD devaluation in order to finance debt. The USGovt must attract some foreign money to cover the deficits and securitized debt supply. The attraction will not be very successful. The dependence upon the Weimar printing press will continue unfortunately. The USD will be inflated into nothingness, just like the ReichMark of the 1930 decade. Such irony is fitting, since the current USGovt management team owes their descendence and style to the same National Socialists (nazis).

The coming rise of Gold into ascendance. Any gold confiscation plan would lift the Gold price quickly, as value would be perceived in an item pursued so vigorously. The gun confiscation plan might be a trial run so as to monitor the acquiescence of the US public. They might yield rights in the face of violent events of uncertain origin. But the US public is not likely to give up their gold or their guns in the face of rising disorder, increased supply shortages, including threats to their homes and families. After the dark period is exited, the Gold price will reach $3000 per oz easily. The Gold price will reach $5000 in the following several months as the Gold Trade Standard returns, installed in the East. Nations will replenish their banking systems with the recognized Gold bullion, acknowledged with unquestioned value and no counter-party debt obligations. The West will be required to gather Gold bullion, even to bid its price higher, if the Western nations wish to be supplied by Eastern factory output. The deck must be cleared from the derivative cancer nodes, whose chaotic consequences will motivate more Gold purchases. The Gold price will reach $7000 in the following year or so, as USTBonds are converted to Gold in the grandest tragic display in modern history of false wealth to bonafide wealth. The Paradigm Shift dictates vaporous paper wealth to chase true Gold & Silver wealth.

The ignominious fall into the Third World. In the process, the United States will be transformed into a de-industrialized Third World natio under police state rule, Gestapo tactics, and openly recognized Nazi leadership, unless a USMilitary move is made to restore the republic. The hour is late. Wall Street bankers know full well the consequence of global rejection of the USDollar as the reserve currency. The USGovt will resist the transition, tooth and nail, even to foment war. The United States will attempt to convince nations to sink with them under the weight of the USDollar. The Jackass does not advocate any USMilitary move against the White House. My preference is for reform that restores the Republic and renews the Constitution. But a drastic maneuver seems the most possible route since liquidating the big banks is not a permitted or considered option. It is difficult to conceive of an American nation which succumbs to narco power and extended bribery to capture and control the hearts and minds of the thousands of people in leadership positions. A great tragedy is unfolding, during the systemic failure. It will be ugly, violent, and full of loss in most conceivable ways.

◄$$$ CHAOS WILL ARRIVE WHEN THE USDOLLAR IS REJECTED, THE RESULT IMMEDIATE TO SUPPLY CHAIN. THE MOST DIRE EFFECT WILL BE TO CITIES. THE DISRUPTION WILL BE WORSE THAN WAR. NO DESTRUCTIVE WAR HAS HIT THE NORTHERN UNITED STATES IN ITS HISTORY, SINCE THE REVOLUTIONARY WAR WITH ENGLAND. THE CIVIL WAR WAS FOUGHT IN THE SOUTHERN STATES. THE TWO WORLD WARS WERE FOUGHT IN EUROPE, NORTH AFRICA, RUSSIA, AND THE PACIFIC. THE GLOBAL REJECTION OF THE USDOLLAR WILL CAUSE GREAT DAMAGE TO THE AMERICAN HOMELAND LIKE AN ECONOMIC BATTERING RAM AND A CAPITALIST HAMMER. THE SUPPLY CHAIN WILL BE TURNED UPSIDE DOWN AND BROKEN. VIOLENCE WILL ENSUE FROM THE SHORTAGES AND FRUSTRATION, CENTERED AT FOOD MARKETS, FUEL STATIONS, AND CASH MACHINES. $$$

Devastation to hit the US homeland. The orderly development of the USDollar alternative to trade described in the previous story will have a domestic effect to the USEconomy. It will be extremely disruptive, interrupting the supply chain, and causing violence among the increasingly restless natives. The US homeland has never suffered damage from war since the 18th century, when independence was won from England (with critical reinforcement from France). None of the Spanish-American War, the Civil War, World War I, World War II, none touched the northern states, the core. The Global Money War as the Jackass has called it, will cause damage, destruction, and maybe devastation to the core United States. The entire supply chain will be interrupted from the global rejection of the USDollar. The USEconomy does not pay its bills, but rather forces a credit card upon the rest of the world in the form of USTreasury Bond purchase and ownership. That model is changing, and the USGovt is resisting the transition tooth and nail, even to foment war. The United States will attempt to convince nations to sink with them under the weight of the USDollar. The Global Fascist Enclaves wish to destroy the United States, since it has served as the cradle of capitalism and the beacon of freedom. The enclave leaders are the likes of Henry Kissinger, Zbigniew Brezinski, David Rockefeller, and Papa Bush.

Big US bank and COMEX immunity from law. The supply chain first came into extreme focus at the COMEX. The COMEX has been in default numerous times already. The MF-Global thefts in December 2011 were the first egregious criminal act, complete with contract breach. Instead of declaring a default in the Silver market, MFG decided to call upon JPMorguen to steal all the accounts awaiting silver contract delivery. The silver bars all ended up in the JPM account. Later the accounts were settled, most of the funds returned, but without silver delivery. The MF-Global incident was a default event, given cover by Wall Street, the USGovt regulators, and the US Appellate Court. In April, June, and July of 2013, JPMorguen delayed and delayed on gold delivery, refused to honor contracts, and through coercion forced the contract holders to roll over into future months. But JPM took the gold delivery themselves, replenishing their JPM account again. The market has been a default event in continuation. The big basic question is: WHEN WILL THE LAW BE ENFORCED?? The answer is simple: NEVER. Not until the COMEX is shut down, not until JPMorguen Chase Bank is liquidated, and probably not until the USGovt debt default occurs.

Crime Syndicate in control. Criminal activity is the norm. Bank fraud, contract fraud, and basic thefts are protected under the bold cover of USGovt official policy and law enforcement by the crime syndicate itself. The USDept Treasury, USDept Justice, and the USFed work together to maintain the criminal fortress as primary priority. If pressured, the reason has been and will continue to be stated for national security. Nixon began the usage of national security in criminal defense. Nixon in my opinion was the first fascist US President, part of a deal struck that included the Kennedy assassination, then abrogating the Gold Standard. The underlying explanations tend to be grand crime syndicate activity. Since the Clinton Admin, the USGovt has been a vast criminal organization operating in the open. His Treasury Secretary Robert Rubin led the initiative to drain Fort Knox of its gold in a vast scheme called the Gold Carry Trade. They pushed the gold lease rate to zero, and enabled the Wall Street banks and USGovt executive accounts to benefit from the virtual theft of the national gold treasure held in Fort Knox. The Clinton-Rubin gang left the US nation vulnerable to systemic failure from no currency collateral foundation. Since 911, the bank syndicate went into the open in bold manner with raised flag and shredded Constitution. Even Bush Jr declared the once revered document a mere piece of paper. These are fascists, otherwise called nazis. Remember Papa Bush's father Prescott Bush led a failed attempt to oust FDRoosevelt. Prescott should have been executed. Instead he was given a remote assignment in the Central Intelligence Agency, where he arranged for his son to lead special projects, and later head the CIA itself. The law will return when the USGovt debt default occurs. The pathway has been built, lit, and directed in an inevitable procession. The upcoming systemic failure will be broad, wide, deep.

Widespread supply chain disruptions. The disruption from shortage and disorder will render tremendous damage to the entire supply chain, even the infrastructure to the USEconomy. To some degree, the USA will feature charred ruins with violence almost everywhere. The Jackass is beginning to make a public forecast of the US experiencing thousands of deaths in the cities from cutoff of supply. It could be worse, with millions perishing. Imagine a crowded movie theater amidst a fire, but on a metropolitan scale. The roads will be clogged. The supermarket shelves will be empty, as trucks will not enter. The gasoline stations might have spotty supply. The big banks will be a wreck, leading to empty ATMachines for cash dispensed. People will act in desperate ways to survive. The chaos will be horrendous. It is inevitable.

Redrawn geopolitical map. An increasing risk of some false flag attack on US soil is likely to garner support for a new war over Syria. In fact, an increasing risk of some false flag attack on US soil is likely to distract from the global USDollar rejection. Worse, an increasing risk of some false flag attack on US soil is likely to offer a grand smokescreen for the bankers to escape. The geopolitical chess board is on the verge of being drawn again, not for Saudi Arabia and Iraq and Northern African states, but for commercial boundaries and passageways in Western Europe. For five years, the bankers in London, New York, and European Commission have fiddled and diddled with their phony baseless solutions that have applied flimsy bandages with no effective cure, no effective surgery, no effective removal of dead tissue, only more toxic ointment. Therefore, Western Europe will turn East for commercial solutions after failed bank solutions. The USGovt will resist the transition, tooth and nail, even to foment war. The United States will attempt to convince nations to sink with them under the weight of the USDollar.

Rise of Gazprom, the principal chessboard piece. The newest geopolitical chess piece is Gazprom and its vast network of energy pipelines, even LNG port facilities. The disorder and disruption that comes to the US shores will be accompanied by Western European nations forging new deals with Russia & China. In the process, a new protectorate role will be made clear for both Western Europe and the Persian Gulf. NATO and the USNaval Fleet are to fade away from their prominent role. The hammer and sickle has been replaced by Gazprom and the energy pipelines, with reinforcements in the form of an array of industrial and strategic metals in supply. The big Paradigm Shift will feature the nations of Western Europe seeking protection not from NATO, but instead from Russia. They will be influenced by Gazprom energy supply chains and Chinese retail supply chains. The chess board will be redrawn. An increasing risk also will be seen for some retaliatory foreign attacks against US cities for its flagrant USMilitary attacks on civilian centers via drone strikes. The biggest threat might be from supply interruption that reeks violence at primary supply centers.

Isolation accompanied by British signals. A major significant quantum jump in violence is soon to hit the United States. The United States nation will be indescribably isolated, as it loses its biggest and most loyal trade partners that share genetic heritage, the nations of Western Europe. Watch England for the tipping point signals. One such signal has already been given, denied military support for the USMilitary strike in Syria. England also signaled a new Chinese financial alliance by accepting the Yuan Swap Facility, and paving the way for Chinese Govt debt trading in London City. The examples of Libya and Egypt are very clear for aggression and puppet regime. Russia & China will not permit an expansion of such criminal chaos.

◄$$$ THE GLOBAL POLICE AND SENTRY FORCE HAS TURNED PREDATOR IN RECENT YEARS. HOWEVER, THE SECURITY ROLE HAS BEEN EVIDENT, DESPITE THE PREDATOR ROLE AS WELL. SOON CHAOS WILL BREAK OUT, WHEN THE USMILITARY STANDS DOWN OR IS BROUGHT TO HEEL. $$$

The Voice offered a different kind of perspective, concerning the removal of a longstanding global stabilizing force. The United States is going to falter further, with some important global consequences. He wrote, "Event driven scenarios will accelerate as the system nears total collapse. It is almost impossible to keep up even with some of the major issues. With all the terribly stupid things the US is doing, it also does good things, namely preserving our way of life. Once the US collapses, we shall see terrible things happen all over the world. In the good old days, during the British Empire, it was enough to fly a Union Jack [flag] on the camel caravan in the desert and no one would touch you. Today they piss on the British and American flags and nothing happens. In the Middle East we now have a situation where whatever you do, it is wrong. In Latin America and Asia it is not much different. We are heading for a tremendous system reset event in a financial sense, with grand changes to the world tectonics. The economic and financial stability will be lost. This Fukushima situation is a gigantic problem, affecting the food chain and air quality for the entire Pacific Ocean region and North American continent."

## EMERGING MARKET CAPITAL FLIGHT

◄$$$ CAPITAL FLIGHT FROM EMERGING MARKETS DOUBLED TO $6 BILLION IN A SINGLE WEEK IN LATE AUGUST. CAPITAL FLIGHT IS RAMPING UPWARD AS CURRENCIES PLUNGE RAPIDLY IN ASIAN ECONOMIES. THE HOT MONEY IS LEAVING THE HIGHER RISK EMERGING MARKETS. FALLING CURRENCIES ENCOURAGE FASTER WITHDRAWALS FROM THEIR FINANCIAL MARKETS BY FOREIGN HOT MONEY HOLDERS. $$$

The exodus of money from emerging markets accelerated in the last week of August. Collectively, bond & equity funds endured net outflows of almost $6 billion, nearly double the previous weekly outflow. To put perspective on volume, the emerging bond & stock funds took in a cumulative $90 billion in all of 2012. Data is monitored by Boston-based fund tracker EPFR Global. Investment bonds denominated in emerging market currencies were particularly hard hit, as currencies for Turkey, Indonesia, and India have recently fallen sharply against the USDollar. Emerging markets have witnessed heavy losses since May as investor conviction made a shift, in response to the USFed talk of reduced bond purchase volumes, pulling back from the Quantitative Easing. One must wonder how much investment capital from cheap US$-based borrowed funds found its way to the energized emerging markets. See the UK Telegraph article (CLICK HERE), which covers more details on the macro picture of the Indian Economy.

The threat of an end to the credit glut spew from the United States is reeking havoc in the developing countries like India, Thailand, and Indonesia, whose currencies are plummeting. Fears are fresh that a redux of the 1997 market crash is on the horizon. Not only is hot money departing these nations, but gold is entering. As the gold enters, the local currency falls further in a vicious cycle. Official defensive measures have accomplished little, except to annoy the masses. Since May, the Indian Rupee has lost 17% of its value against the USDollar. The two commonly regarded reasons for the decline pertain to dwindling faith in the Indian Economy and Indian leaders, as well as the anticipated tapering down of the USFed monetary easing. Much of the easy money from the USFed released onto the market as a way of stimulating the economy eventually made its way to India or other emerging markets, where it drove up property values and stock prices in broad strokes.

Rising USTBond yields mean that the money is called home, the carry trade gone into reverse, the debt paid off with some loss taken on the US borrowed side. To be sure, investors from foreign locations are increasingly pulling their money out of emerging markets. Currency value is now dropping in many countries that previously profited from foreign capital, like Brazil, Russia, and South Africa. Hardly anywhere is the phenomenon as extreme as in India. Curiously, the leading BRICS country China is not directly affected by the current currency crisis, since the Yuan is not freely convertible currency. It cannot be immediately converted into major reserve currencies. But the Chinese Govt rulers have their own challenges with a banking crisis and an urgently needed realignment of industrial sector toward more domestic consumption. An integration effect is also damaging. As the Chinese Economy falters, its import of raw materials from other newly industrialized countries has declined in kind. It Southeast Asian neighbors are suffering on two fronts. Indonesia, Malaysia, and Thailand are not only exporting less to China, they are also forced to deal with investors exiting from the Indonesian Rupiah, the Malaysian Ringgit, and the Thai Baht due to investment hot money flight.

Dreadful memories are fresh from the 1997 Asian Meltdown Crisis. The debacle began in Thailand, which suffered a calamity that wiped out almost its entire national wealth. This time around, newly industrialized countries are better prepared against capital flight. In reponse to past experience, they have increased their foreign currency reserves and reformed to some degree their banking sectors. More importantly, their currencies are no longer pegged to the USDollar. Watch as they gradually start considering a peg to Gold, to gain stability. The current emerging market unease, disturbance, volatility, and hot money exits bring emphasis to how the BRICS countries and the Asian Tigers still have a long way to to in achieving industrial strength and stability in a traditional Western sense. Some data is alarming. Morgan Stanley analysts estimate the central banks of developing countries, excluding China, lost a total of $81 billion between May and July through the selling of dollars to protect their currencies. These are intervention initiatives gone bad so far. The developing countries are in a tight spot, much like the United States. To curtail rapid capital flight, they would need to raise interest rates considerably, but doing so would cause each national economy to stall. See the Spiegel article (CLICK HERE).

◄$$$ NEXT THE UNITED STATES IS LINED UP WITH GRAND RISK OF BECOMING VICTIM TO HOT MONEY DEPARTURES. THE USTREASURY BOND MARKET REVERSAL SIGNALS A SPECTACULAR PARADIGM SHIFT. THE USTBOND MARKET IS NO LONGER THE GLOBAL SAFE HAVEN. THE BIG US-BANKS ARE IN THE MIDST OF A REVERSAL IN THE LEVERAGED USTBOND CARRY TRADE. IT IS INSTEAD THE OBJECT OF REJECTION BY GLOBAL PLAYERS, AND THE EXPOSED CENTER OF FINANCIAL CORRUPTION. HOT MONEY WILL DEPART THE UNITED STATES, A GRAND BILLBOARD SIGN FLASHES. THE NATION IS TAKING ON A THIRD WORLD LOOK, COMPLETE WITH STENCH. $$$

The USFed risks smothering the domestic economy also, but must curtail the gradual rise in the cost structure, including the commercial staple in energy and the household staple in food. The speculative losses in the United States are enormous, but are not given publicity, since the press is controlled by the power brokers. The big US banks engaged in bond carry trade using free money and the plentiful USTBond futures contracts to replenish their balance sheets. The USFed Chairman Bernanke boasted of the fast profits filling the big bank balance sheets in 2010 and 2011 and 2012. But he has turned strangely and conspiciously silent. The rise in the 10-year TNX yield from under 1.7% in May to nearly 3.0% in September has caused absolutely gigantic and possibly near catastrophic losses to the big US banks. Their profitable carry trade has gone bad in a big way. With the spectacular unwind, a powerful transition will take place, as the US passes into the Third World. It will be pushed by the global rejection and exposure of the corrupted USTreasury Bond market.

The news will be released in due time about the new big US bank distress, along with catastrophic derivative losses from the interest rate leverage devices. The entire financial maelstrom should serve as powerful motive to adopt the Gold Standard. It will be adopted, but only when much more economic destruction has come, and much more wealth has been evaporated. The punctuated message is that the United States stands at tremendous risk of being a victim of hot money movement out of the supposed safe haven, the corrupted USTreasury Bond complex. It has become a grand pit of leverage abuse, sponsored hyper inflation, final fortress defensive battle, role program antics, and propaganda.

◄$$$ BRAZILIAN CURRENCY SURGED AFTER CENTRAL BANK LAUNCHED A MAJOR INTERVENTION PROGRAM TO STOP THE BLEEDING. THE NASTY EFFECTS FROM THE USFED MONETARY INFLATION IS KILLING FOREIGN ECONOMIES. THE PEOPLE AND INSTITUTIONS PROTECT THEMSELVES BY HUNKERING DOWN IN USDOLLARS, WHICH MAKES THE INFLATION EFFECT WORSE. THE HEDGE PROTECTION IS MORE PREVALENT THAN ANY CHASING OF USTBOND YIELD. WHAT IS HAPPENING IN BRAZIL IS TYPICAL OF MANY EMERGING MARKET NATIONS (LIKE INDIA). IT IS UNCLEAR WHETHER WALL STREET IS AGGRAVATING THE PROBLEM IN BRAZIL WITH TARGETED ATTACKS ON THE REAL CURRENCY, AS IS THEIR CUSTOM. $$$

Little known but with very harmful effects, the Brazilian Real currency has fallen 20% versus the USDollar since March, in just six months. The emerging market nations are suffering from the extremely harmful effects of the USFed QE bond purchase program, better called hyper monetary inflation. The immediate effect is to lift the cost structure in the global economy. The emerging market nations must contend with rising business costs and rising food prices. The defense is quick, learned long ago. They leave their currency and hunker down in USDollars. The response exacerbates the falling Real currency exchange rate. A similar drama is playing out in India.

The Central Bank of Brazil responded in late August with the announcement of a new official FX intervention program. They have been officially taking a big short position in the USDollar. They are propping their Real currency in the process in a high risk gamble. Money is moving into USDollars as safe haven, kind of like going home to mommy, a learned response over decades. One must wonder to what extent the money is chasing higher USTreasury yields. The Brazilian Real has been one of the hardest hit currencies in the selloff that has slammed emerging markets this summer, while bond yields in the United States have risen. The first slam was rising prices, in particular food prices. The second slam has been the bond principal losses from USTBond holders. The story told is again falsified by the press. The institutions of Brazil and their natives are not chasing the USTBonds for higher yields. The TIC Report posted for June activity indicated that Brazil sold a net $12.2 billion in US$-based bonds, which are always dominated by the sovereign USTBond. The press claims they are chasing yield in US$-based bonds. The data contradicts the claim. They are holding USDollars (as cash hoards) and selling their own Real currency as a hedge against the inflation wrought by a falling Real exchange rate. They are avoiding and side-stepping a Real decline with a local inflation kicker. This is a very domestic phenomenon, not a global bond arbitrage tactic at work.

Since May 2nd, the day before the big selloff in the USTreasury market started and sent yields soaring, the Real has declined 15% against the USDollar. Following the Central Bank of Brazil (BCB) launch of the intervention into foreign exchange markets to stem the depreciation of the Brazilian Real, the effect has so far been as intended. The Real surged on August 23rd, up around 2.6% versus the USD on a single day. The weak trend is still in place, and must be addressed. Given the rising yield environment for USTreasurys, some analysts expect the money within Brazil to chase the rising yield in the US bond market. However, another more accurate view could be that big losses are being suffered by Brazilian financial firms on their bond portfolios. Their sale and redemption is flooding their local arenas with USDollars. Analysts like Marcelo Salmon of Barclays, co-head of Latin America economics and strategy, points the finger at rising USTBond yields. He believes the key driver of Real depreciation recently has been rising Treasury yields due to the changing outlook for US monetary policy. Most expect the trend to continue, which would lead the Real currency to weaken further. The Jackass disagrees with this assessment. The international bond flows contradict Salmon, whose paycheck comes from a big Western bank conglomerate.

Another key driver for Real currency depreciation must be identified. At risk and in movement is the relatively large investment by foreign companies in Brazil's economy. It is estimated at $785 billion. It is precisely this financial sector within Brazil that is trying to hedge currency risk by selling Reals and buying USDollars. Consider Bank of America Merrill Lynch strategists David Beker and Claudio Irigoyen. They wrote to clients in early August, "Current [Brazilian Real] pressure is mainly due to corporate hedging and speculative flows in the derivatives market." Even they contradict bank analyst Salmon. They point to such hedging as motive for the new intervention program announced by the BCB. The central bank will offer US$500 million of swaps in the currency derivatives market on a daily basis (4 days/week) for the rest of 2013, in addition to $1 billion of FX spot lines on Fridays. The BCB is accumulating a giant short position in the USDollar. Later, they will struggle to unwind, amidst massive losses. They must switch to the Gold Standard if they wish to survive the possibly financial storms. The BCB decided to conduct the majority of the intervention for Real support in the derivatives market as opposed to the spot market. The reason for this strategy is also worrisome. In the spot market defense, the central bank would burn through the USDollar shelf of its foreign reserves. In the derivative defense, foreign reserves do not come into play. Think huge uncollateralized casino bet. The volume of Brazil's FX reserves is US$374 billion currently.

What is happening with Brazil will be repeated across the emerging market nations. A broader policy shift has begun in these high growth nations which are being slammed by the USFed monetary policy and Taper Talk, as bond yields go into reverse. Sebastian Brown of Barclays summarized. He said, "Beyond the immediate effects on Brazil, we believe that the BCB's actions could have broader implications on the price action of high carry emerging market currencies, such as the Turkish Lira, South African Rand, Indonesian Rupiah, Indian Rupee, and particularly the Mexican Peso. The BCB's decision to intervene could be interpreted as a signal that the tolerance for weaker exchange rates across emerging markets is close to running out, given some evidence of increasing inflationary pressures." By High Carry is meant borrowed cheap USDollars used for investment purposes, the potential hot money. See the Business Insider article (CLICK HERE). The uglier side of the story is that Wall Street trading desks are using numerous small currency trading marts to slam the emerging market national currencies, pure vengeance, basic hidden pernicious USDollar defense. Their actions in India are being publicized in this respect. The USGovt wants a stronger USDollar, even if it wrecks the foreign nations.

◄$$$ PERU HAS EMERGED AS A GLOBAL USDOLLAR COUNTERFEITING EXPERT. USING ADVANCED PRINT TECHNOLOGY AND YOUNG WORKERS, THE LABS PUT OUT A GOOD PRODUCT. IF THEY COULD ACQUIRE THE HIGH QUALITY COTTON FIBER PAPER, THEIR WORK WOULD BE ALMOST UNDETECTABLE. THE BUSINESS HAS HIGHER PROFITS AND LOWER RISK THAN COCAINE. THE COUNTERFEIT PAPER BILLS ARE SPREAD TO THE UNITED STATES AND SOUTH AMERICA. $$$

Lima Peru is the home for numerous highly profitable counterfeit labs that put out some excellent product, fake US$ bills. They employ young kids who recycle from police precincts to other labs, due to underage status. The Peru labs use standard paper and high quality lithographic printers, with hand finishing, light varnish, and wear machines to give them the non-new look. They even insert security strips with precision needles, and apply glue with precision syringes. The US$100 bill is their specialty, since cost is the same per bill, but value varies by designated denomination. But they produce Euro bills as well. With its meticulous criminal craftsmen, cheap labor and, by some accounts, less effective law enforcement, Peru has in the past two years overtaken Colombia as the #1 source of counterfeit USDollars, according to the US Secret Service. They operate as protector of the US currency, and to ensure that the CIA owns plenty of counterfeit tools. Since opening a permanent office in Lima last year, only its fourth office in Latin America, they have assisted in helping Peru's police arrest 50 people on counterfeiting charges.

Over the past decade, $103 million in fake USDollar bills have been seized, made in Peru, the majority since 2010. A USGovt officer was impressed and commented, "It is a very good note. They use offset, huge machines that are used for regular printing of newspapers, or flyers. Once a note is printed, they will throw five people on it and do little things, little touches that add to the quality." Most of the counterfeit cash from Peru heads to the United States. Some is smuggled to nearby countries including Argentina, Venezuela, and Ecuador. Demand is particularly great in Argentina and Venezuela, because currency controls make the USDollar so coveted. In those countries, they mostly circulate in the black market. As pressure on prosecution in Colombia increased, the labs migrated to Peru. In fact, the US$ bill counterfeit business is much more profitable than cocaine, which has higher overhead, with more complex distribution, and stiffer criminal penalties. The profit margin is 20% generally for producing the fake bills.

The Peruvian labs use software such as Corel Draw or Microsoft Powerpoint. Then comes photo-lithography, the etching of metal plates, offset printing, and finishing. Devices are used with coarse fabric and light sanding to give the bills a rough texture and slightly used look. It takes four or five days to make $300,000 in counterfeit notes, claims the investigator. The typical destination is US retail stores, where clerks are less vigilant. Only $100 bills are shipped to the United States, while $10 and $20 bills are sent to Peru's neighboring countries. Latin America has broadbased obstacles in the general economy (apart from banks) for passing any US bills over $20, something seen routinely by the Jackass on signs at register counters.

The counterfeit labs in Peru have one stark flaw in their output. Most banks use infrared scanner to authenticate currency. The labs continue to rely upon standard bond paper, found in office supply stores. They are detected by the scanners, and will disintegrate when wet. The standard USDept Treasury US$ bills are made from a combination cotton parchment called rag paper, which contains unique ingredients that can be identified during analysis. Lima Inspector said, "The day the [Lima labs] get rag paper and perfect the finish a bit more, their bills will go undetected." See the Huffington Post article (CLICK HERE).

One must be reminded of the dunce dolt dopey John Snow, first Treasury Secretary in the Bush Jr Admin. He once said, "The sign of a strong currency is the difficulty in being counterfeited." Funny, a reputable economist might believe strong industry and a healthy Current Account would be more important, certainly a Gold backing. By the way, in my view, John Snow with his CSX Railway experience was a curious choice at Treasury in the Bush Jr Cabinet. Without a doubt, Snow was selected to improve the logistics for shipping narcotics from Afghanistan to European NATO bases and then into the United States and Great Britain. Once the Dubai Ports World controversy broke into the open, Snow was replaced by Hank Paulson of Goldman Sachs. The USDept Treasury priorities shifted from narcotics distribution exploit to Wall Street bond fraud exploit. The narcotics production and trafficking role by the USGovt, with attendant money laundering by Wall Street banks, is as big a story as the 911 Coup d'Etat behind the World Trade Center bank heist.

## ANTI-USDOLLAR ALTERNATIVE

◄$$$ CHINA AND HUNGARY SIGNED A CURRENCY SWAP DEAL, ONE MORE STEPPING STONE AWAY FROM THE USDOLLAR. GRADUALLY EUROPE IS COMMITTED TO A NON-USDOLLAR TRADE SOLUTION, A MEANS TO WEAN OFF THE GREENBACK. FEW ANALYSTS GIVE MUCH EMPHASIS TO THE YUAN SWAP DEVICE WHICH UNDERMINES THE USDOLLAR AND PREPARES FOR ITS LOSS OF GLOBAL RESERVE STATUS. THE SWAP IS A FORM OF BARTER, AN INTERMEDIATE STEP TOWARD FULL FLEDGED GOLD TRADE SETTLEMENT. $$$

The Peoples Bank of China (PBOC) announced in early September a currency swap agreement worth 10 billion yuan (=US$1.62 bn) with the Hungarian central bank. The agreement will stand in place for three years, subject to extension. It is designed to strengthen bilateral financial cooperation, to promote trade and investment, even to jointly maintain regional financial stability. On its own, the pact is insignificant, since Hungary is a small nation with only 10.0 million people in command of a $196 billion economy. However, one by one the European nations are locking entry into the China corrall. A critical mass is coming for Europe alone, after France, England, and Germany have signed Yuan Swap agreements. Spain already has strong cooperation. The corrall has recent entries with Japan, Australia, New Zealand, Russia, Belarus, and other nations. One by one, a global critical mass is forming which will isolate the toxic USDollar. See the China Org article (CLICK HERE).

The Yuan Swap Facility is not fully appreciated by Western analysts. It is important for three reasons. First, it enables nations that engage in trade with China to conduct the settlements among their major banks on a net basis, outside the USDollar shadow. Second, it represents barter, without a third party participant. In its own right it serves as a significant avoidance mechanism for the USDollar and its bank choke channels. Third, as more nations sign on with the Yuan Swap device, the transition from a wide array of bilateral trade settlement arrangements will be easy toward full fledged gold trade settlement. None of the three factors is appreciated by US and London analysts, fully enthralled with their own importance, with mirrors to admire themselves and honors to bestow to themselves as their financial world craters.

◄$$$ INTRODUCTION OF ASSET-BACKED CURRENCIES MUST BE DONE BY A GROUP HAVING CRITICAL MASS. IF NOT, THEN ANY NEW SUCH CURRENCY WOULD DIE QUICKLY FROM ITS SUCCESS. A CRITICAL MASS IS ESSENTIAL FOR A NEW VALID ASSET BACKED CURRENCY TO TAKE ROOT. WATCH FOR TWO OR THREE NEW GOLD BACKED CURRENCIES TO BE LAUNCHED. THE EFFECT WILL BE SEVERE ON THE PRESENT DAY LEADING PAPER CURRENCIES AND THEIR CAPTIVE NATIONS. THEY WILL BE CUT OFF. $$$

A powerful movement has been in progress for at least two years, intended to build a majority consensus for a USDollar alternative in trade and banking. The movement has been slow to occur, since it requires a majority participation. It must form a critical mass of participating nations, or else wait until such a majority forms. The process is extremely delicate to install a new currency, in particular a valid one with tangible backing like with commodities. Better yet to back the new valid currency with Gold & Silver, the monetary metals. If just one or two or three nations install a gold-backed currency, it would fail. The failure would be assured from fast rising valuation, which would force great loss in export trade from higher priced exported products. The positive rub of lower import costs is in no way sufficient, since no nation is an island in the modern age. Over half the world must adopt the usage of the new valid asset-backed currency. It must be adopted by a critical mass in order to avoid the deadly high valuation effects, which would ravage the economies. A tremendous challenge to organize and gather in participating member nations for the rebellious movement. They must withstand attacks like in India, which has been cooperating with Iran in gold trade for energy sale settlement. As more pain is felt from economic damage and financial structure decay, the participation level will rise, and has risen.

The entire Iran sanctions are about movement away from the USDollar in trade payment systems, transformed by the fascist bankers and their poodle governments into a phony terrorist threat. The threat is real, but to the USDollar. The challenge is heightened to enlist participating nations, since the economies and banks are in rapid ruin. The motive to join the new currency becomes obvious easy natural, eventually seen as a matter of survival. Once critical mass has been assembled, the follow-on challenge is to build platforms and linkage systems. As a consequence of not belonging to the critical mass, the tables are turned on the former bank masters with loyalty to the Old Guard bound to the USDollar, Euro, BPound, and Yen. Outsiders will see a fast falling currency valuation, with tremendous price inflation inside their domestic economies. The non-participants will be thrust into a veritable Third World. They will suddenly find themselves outside looking in. The transition is extraordinarily difficult for political, technical, and sabotage reasons. The new adopters are labeled as terrorists in false accusations and misdirected propaganda. To vilify those nations that wish to avert the toxic unsound USDollar seems destined to fail. The current regime that presides over the USDollar and major fiat paper currencies is powerful, with military and news network support. However, they preside and rule on a sinking ship.

The Jackass belief is that a stronger asset backed currency will come, which will lead to other similar asset backed currencies to follow quickly afterwards. The initial such currency might be the Chinese Yuan, by most indications. The G-20 nations with the BRICS nations and Shanghai Coop in support appear to be working toward the Yuan as a gold-backed solution, a viable vehicle with no debt underpin. Actually, it could arrive in the form of a Gold Trade Note that serves as Letter of Credit within the Gold Trade Settlement scheme and format. My belief is that in order to succeed, a group of asset backed currencies must be launched. They might be the Chinese Yuan joined by the Russian Ruble and new Nordic Euro. Do not expect any new USDollar to be launched with a gold backing. The entire USGovt and USEconomy is so deeply saddled with debt, that it cannot conceivably make a transition to a viable secure currency. Besides, the Clinton-Rubin Gang pilfered all the gold bullion in Fort Knox, which now contains nerve gas in storage. The dynamic is very clear. If not a critical mass core as a group that adopt such stronger currencies, then they will fail from success, seen in a fast rise in valuation, followed by loss of export trade. They would not be launched unless in a large group. Then the risk is lost export trade to the new dwellers of the Third World, who could not afford to purchase costly imports. However, if a critical mass core is launched, then the other non-participating currencies will die a sudden death from nasty devaluation and rampant price inflation. They can start anew within the Gold Standard, and give a proper hanging to their stubborn criminal leader class.

◄$$$ A QUICK NORDIC EURO UPDATE. THE NEW CURRENCY IS DESIGNED FOR GERMAN USAGE ALONG WITH ITS CLOSEST TRADE PARTNER NATIONS. IT HAS BEEN DELAYED, NOT SCUTTLED. MANY ARE THE EVENTS TO DELAY AND OVERWHELM THE PRIORITIES. THE NEW EURO HAS BEEN AGREED UPON IN A CONCRETE DEAL, NO CHANGE, NOTHING ALTERED. $$$

The introduction of a Nordic Euro for usage by Germany, Austria, the Netherlands, and Finland was cited by the Jackass back in 2009 originally. Much work behind the curtains has been done, extensive connecting platforms in the making. While people could regard it to be a wrong forecast, it only appears to be incorrect. Getting the timing right on certain issues is an extreme challenge during the unfolding chronic global financial crisis, since a new crisis crops up every few months. The priorities shift, so as to manage the next fire, while the project is put off. The Voice has assured in recent weeks that the decision for introducing the Nordic Euro has been made and nothing has been altered. However, major events have taken over certain plans. He wrote, "If Germany, Holland, Finland, and Austria do not move to the Northern Euro, then Germany will leave the Euro Monetary Union. Not because they want to, but because they have to save the Euro itself." The statement is profound and perplexing, not to be explained further. Germany is likely to take the Euro, trim off the peripheral fat, and improve its core, then turn East for partnership.

◄$$$ THE REBELLION IN TRADE SETTLEMENT IS HEATING UP IN ACTUAL TRANSACTIONS BEING COMPLETED. THE PATTERN HAS BEEN ESTABLISHED WITH IRANIAN TRADE. A STRANGE IMPETUS COULD COME VERY SOON BY THE BRICS NATIONS AND OTHER NATIONS THAT FOLLOW THEIR LEAD. IT COULD CENTER ON CRUDE OIL AND ENERGY TRADE. DEFIANCE AGAINST THE USDOLLAR AND ITS CURRENCY REGIME IS COMING TO A HEAD VERY SOON. IRAN IS THE KEY, SINCE SUCH A HUGE ENERGY PROVIDER WITH GIGANTIC RESERVES. $$$

My reliable colleague EuroRaj is exceptional in his analysis. He shared some thoughts about the fracture of the Petro-Dollar, which he anticipates will occur within the BRICS nations of Brazil, Russia, India, China, and South Africa. In his view, the fracture might occur in response to a rising crude oil price. If and when the price of oil goes toward $150 per barrel, he expects the emerging market (EM) nations of the world will stop buying it in the G-7 currencies, namely USDollars, Euros, BPounds, and Yen. The emerging market nations are becoming collectively so powerful that they have earned a new acronym of EM, a term that appears widely in the financial press. The EM nations have won respect and legitimacy by virtue of their industrial base and growing FOREX reserves. The EM world is ready for barter trade with final net settlement in Gold. The pact has been decided, but the details are being forged in new systems. The distractions are many to the G-20 Meeting working groups, and for good reason. The G-7 Nations realize that the Eastern Hemisphere has made commitments, and has made progress in the rebellion against the floating currency regime. EuroRaj believes the EM nations will permit the United States to be the catalyst that forces the great change on them. They can later blame the disruption on the USGovt and move to a new system as they step over the rubble.

EuroRaj expects the Saudis to be steadfast but play the fence carefully. They can collect their $150 oil price from the US partners in the fragile Petro-Dollar convention under grave threat. The United States, England, and Western Europe will continue to pay the Saudis in US$ terms. The key change agent has been Iran. The important duo of China & India will ramp up exports from Iran and make payment in reciprocal trade and gold on a net basis. One by one, Western Europe will break away and work toward the Yuan Swap device, then outright gold trade settlement on a net basis with Iran. He expects France will get cold feet at the last minute. The USGovt cannot brand all of Western Europe as terrorist nations, a consequence of the critical mass grown from consensus.

Some Iran factoids are important to be listed and absorbed. Iran is sitting on the #2 natural gas reserve and the #3 oil reserve in the world. Iran controls 35% of the oil provided to the entire world and more than half of the amount provided to China through the Hormuz Strait, which is a strategic pathway of energy. Iran is the origin of an important Gas Pipeline to Pakistan and India. Iran is the origin of an important Gas Pipeline to Western Europe, through the Syrian port. Thus its importance in capturing the European market for the Eastern Alliance that includes not only Iran but Russia and its Gazprom giant, the owner of a vast network of gas pipelines extending to SouthEast Asia and Western Europe. The critical importance of Syria is seen through a pipeline lens.

◄$$$ THE RENEGADE BRICS BANK IS MAKING PROGRESS. THE BRICS NATIONS HAVE AGREED TO CAPITALIZE THE DEVELOPMENT BANK INITIALLY AT $100 BILLION, THE DEAL FORGED ON THE EVE OF THE DISRUPTED G-20 MEETING IN MOSCOW. THE CRISIS MANAGEMENT FUND HAD BEEN AGREED UPON A FEW MONTHS AGO, EARLY IN 2013. THE DEVELOPMENT FUND (AKA THE BRICS BANK) IS SEPARATE, DESIGNED FOR IMPORTANT PROJECTS. IT WILL MORPH INTO A GOLD PURCHASE FUND FOR THE CONVERSION OF USTBONDS. $$$

The BRICS nations have forged an important agreement, to fund their development bank with $100 billion. The plan is to fund planned joint development ventures, like railways, highways, and communication systems. The fund is a direct affront to the current Western bank appendages. It is to rival the dominance of the World Bank and the IMF, basic harlot tools. The introduction of the fund was timed with the opening of the Moscow G-20 Summit. In St Petersburg Russia, President Vladimir Putin blessed the initiative to create a BRICS FOREX reserve pool. The size of its capital has been agreed at $100 billion. The details were thorny, but done finally. Russia, Brazil, and India will contribute $18 billion to the BRICS currency reserve pool, while China will put up $41 billion, and South Africa $5 billion, according to an official press release issued by the BRICS nations. More work must be done. The Russian Finance Minister Sergei Storchak stressed that many difficult details must be sorted out. He said, "These are complicated systematic themes, wherein negotiations are difficult. We must assume the bank will not start functioning as fast as one could imagine. It will take months, maybe a year." In June Storchak estimated the project would be functional by 2015. The scheme was approved in Durban South Africa at the BRICS summit in 2013.

The two BRICS funds are actually confused in their makeup. Several months ago, the Crisis Management Fund was announced, with pledges of committed funds. The recent press release mentioned that the bank is designed to finance infrastructure and development projects in the BRICS countries, AND to pool foreign currencies to defense against any future financial crisis. Russian Foreign Minister Sergei Lavrov emphasized that the bank will work to avoid the negative impacts from fluctuations in currency markets, related to the powerful global financial crisis. Furthermore, the creation of the reserves pool will improve the position of BRICS nations in their drive to reform votes and quotas in the International Monetary Fund. The IMF currently is tilted in inequitable manner toward the United States, its 17% share vote sufficient to veto any decision, since passage must receive 85% of the vote.

The BRICS nations represent a viable critical force in terms of the world finances. The $6.1 billion trade just within its own five nation group amounted to 16.8% of global commerce. The BRICS nations account for 43% of world population, around 18% of its GDP, and 40% of its currency reserves. China owns well over half their combined reserves. Their increased economic muscle has been matched by a stronger voice across all areas of global affairs. The Russian & Chinese duo has put its full weight behind the BRICS agenda, giving it power. See the Reuters article (CLICK HERE) and the RTNews article (CLICK HERE). As footnote, consider the entry of South Africa, although small, since it is a major gold producer!!

Notice that China contributes more than twice other nations. Russia contributes surprisingly little, considering its commodity wealth. Wait until the critical mass of Eastern trade occurs. The first $100 billion will be significant in the BRICS Development Fund. The second $100B will be quick, and the third and fourth $100B will be a snap. First the Russians, Chinese, Indians, and Brazilians need to establish the path and set the course. Expect the Obama Admin to promise to end QE to Infinity, the monetary inflation dread that is causing tremendous financial and economic problems across the entire BRICS nations. The USGovt will then be caught in lies, and thus remove its justification for additional obstruction of the BRICS agenda. Big lies and big bombs are all the United States has anymore in foreign policy, its most outstanding characteristic besides the monopolized money printing machinery (with Weimar nameplate) and profound bond fraud that is no longer undiscovered.

◄$$$ THE FINANCIAL MEDIA IN FRANCE GAVE DISRESPECT TO THE BRICS FUND AND ITS ENTIRE MOVEMENT, INDICATING NO PERCEIVED POWER OR STRENGTH AMONG EMERGING MARKET NATIONS. THE WESTERN NATIONS WILL BE CAUGHT FLATFOOTED IN WHAT COMES. THE COMMENTARY TEEMS OF ARROGANCE IN THE WEST, AND SHOWS IGNORANCE OF THE FULL IMPACT OF THE UNENDING FINANCIAL CRISIS HEAPED ON OTHER NATIONS BY THE WESTERN BANKERS. $$$

The following is from PatrickH in France, a longstanding Hat Trick Letter subscriber. He wrote the message in late August. "I was listening today a French radio economic broadcast whose people (including Jacques de la Rosiere, an old IMF whore) who were all laughing about the new BRICS Development Fund which was approved today with only a $100 billion initial input. It was a very small amount regarding the reserves held by the BRICS at their own central banks. Another person added that there was no common global policy coordinated by the BRICS to make important changes. Furthermore, the global economical matters such as developing countries flows of funds can be destabilized by the USFed actions (or speech). Globally it seems in their viewpoint that nothing important will really change in the next few years on the economic planet, and the G-20 is a completely worthless organization. I am really fed up with these people. I hope you will be right about what the BRICS may intend to do." Patrick refers to the eventual morph of the BRICS Development Fund into the BRICS Bank, whose function later will take on the critical disruptive role of converting USTBonds and EuroBonds into Gold bullion, as the bank removes its facade and emerges as the BRICS Gold Trade Central Bank. Their actions could very possibly usher in the return of the Gold Standard, but through trade, not through banks and currency markets.

◄$$$ INDIA IS PUSHING THE BRICS NATIONS TOWARD A SHOCK & AWE CURRENCY PLAN TO SAVE THEIR ECONOMIES AND FINANCIAL STRUCTURES. THEIR AGENDA POINTS OUT THE JACKASS THEME THAT A NEW VIABLE BACKED CURRENCY MUST HAVE LARGE CRITICAL MASS, OR ELSE IT DIES FROM SUCCESS IN TOO LIMITED AN APPLICATION (THE BACKFIRE RISK). A COORDINATED DUMPING OF USTBONDS AND EUROBONDS WOULD CAPTURE ATTENTION, BUT INFLICT DAMAGE ON THE NATIONS THAT ORDER THE MASS SELLING OF SOVEREIGN BONDS. A CATCH-22 IS UNDERSTOOD. IT WILL THEREFORE GATHER MOMENTUM FROM NEW PARTICIPANTS. $$$

India has turned on the Urgent Button in emergency. It is officially advocating for joint Shock & Awe intervention by key developing nations. The BRICS nations must halt capital flight and shore up currencies. They must take action, but the reaction risks a severe backfire that could trigger a vicious spiral. Both Brazil and India have reached their limit in standing by to observe staggering damage to their economies and financial structures. A top Indian official named Dipak Dasgupta told Reuters that a powerful coordinated intervention move would occur soon. He indicated that China, Brazil, India, Turkey, Russia, and South Africa have all been squeezed in the last two or three months, ever since the USFed threatened to reduce the QE bond purchase monetization program. Without joint action, no intervention would be meaningful or have required impact. The BRICS nations and others in concert must deploy their substantial reserves and provide opposition to what they perceive to be speculators, who rush to remove their hot money. Without joint action, the nations in the BRICS yard will be wrecked one by one. They will sell USTreasury Bonds held in ample reserves, and buy their own currencies. They would do well to diversify reserves and buy Gold also.

While a simple BRICS currency support initiative might not accomplish much, the more crucial development is the motivation for collective action. They might spend some reserves to counter the exit of hot money and to counter the desire to hedge against falling domestic currencies. However, later on, like within months, the coordinated action will be to convert reserves to Gold and to fortify the BRICS currencies with more gold reserves! The seemingly intractable problem is that any broadbased sale of USGovt and European Bonds would push up yields, whereas rising yields started the frenzied process in the first place. Yet such a viewpoint might not be totally correct. The problem is not an actual end of USFed easy money in staggering bond purchase endless programs. It is the threat of such end, a tapering of its volume. So the USFed might intend to talk of tapering much more than it plans to cut back on bond purchases, just to screw up BRICS nations that hold substantial USTBonds, and to keep them off-balanced.

When it becomes clear that the USFed is stuck in QE to Infinity, and has lost its credibility, taking an opposing stance to the United States banker fortress will be more successful. Also, the USDollar might endure declines from lost global prestige, more than it finds support from rising bond yields. The Jackass belief is that foreign BRICS national currencies are not falling from the rising USTBond yields, a story told by the biased Western financial press. The BRICS currencies are falling from movement of hot money and from intense hedging by their domestic corporate firms. Like the Brazil Real, the Indian Rupee is in a veritable freefall. It has declined by 25% in the last several months to a record low of 68.84 against the USD in recent trading. Its Current Account deficit stacks up to 4.8% of GDP last year. India needs large inflows of capital to cover its short-term external debt, yet hot money is leaving. The Indian Govt officials have made a complete mess of policy, throwing money around like candy before the elections to win votes. They should begin the reforms before embarking on a risky intervention. See the UKTelegraph article by Ambose Evans-Pritchard (CLICK HERE).

◄$$$ INDIA COULD PLAY A VITAL ROLE IN INTRODUCTION OF THE GOLD STANDARD. IT ALREADY USES GOLD IN BANK COLLATERAL. ITS OFFICIAL POLICY IS A WALL FOR GOLD ENTRY ERECTED AT THE BORDER, OBSTRUCTIONS FOR GOLD BUYING AT INTERIOR BANKS, WHILE GOLD COLLATERAL IS USED FOR CREDIT AT BANKS, LARGE AND SMALL. THE NATION HAS THOUSANDS OF YEARS IN EXPERIENCE WITH GOLD TRADE AND GOLD AS SAVINGS. THE JUMP TO GOLD TRADE SETTLEMENT WILL BE QUICK. THEIR ALLIANCE WITH IRAN IS FIRM. $$$

The following is a conclusion from EuroRaj, who has extensive bank and economic analysis experience as it pertains to India, Turkey, and Iran. His thoughts, my edits. The gold backed loans via jewelry shops has been in place for centuries. The jewelry shop in a village acts like a useful combination of a jewelery store, a bank, and a pawn shop in an effective system arrangement. But jewelry is very difficult to rate on quality and authenticity. For instance, a determination must be made on whether a hallmark item in hand is 90%, 95% or 99% gold in content. Hence it is very difficult to transact, and has essentially very little liquidity. However, when dealing with hallmarked gold jewelry products, a firm degree of authenticity is introduced that enables brisk liquidity. That is the beauty of the move for Indian banks to work with hallmarked gold as collateral.

Similar standards are the case among commercial banks and central banks, with the LBMA being the central clearing market in London. The important current development is the recent practice where hallmarked gold items are introduced at the micro level. The local businesses can deal directly with banks. Essentially India is signaling to the BRICS and the emerging market (EM) world that the gold based trading system is ready and can be integrated with bank functions at the credit level. Securitized lending, whether gold, farms, parmesan cheese, whisky barrels, foundries, mines, homes, it has been there since centuries. The USDollar and its fiat currency regime that features a small gaggle of floating unstable major currencies is but a small aberration in the history of time. People tend to forget, the fast collapsing floating currency system was only introduced in 1971. It has outlived its usefulness. Worse, the floating currencies backed by sovereign debt are a cancer acting to destroy capital. Nations are beginning to react. They will find the Gold Standard as the solution. They are desperating seeking solutions. They are desperating planning counter measures. It is not an island, but a continent that will isolate the United States and its USD skull & crossbones banner emerges as an island.

## BANKS DUE FOR DERIVATIVE LOSSES

◄$$$ BANKS ARE STILL SEEN AT RISK FIVE YEARS AFTER LEHMAN COLLAPSE. WHILE THEY APPEAR TO HAVE TWICE AS MUCH CAPITAL VERSUS 2008, THEY HAVE MUCH ASTOUNDING GREATER DERIVATIVE RISK. THE PROPPING OF THE USTREASURY BOND BUBBLE PUTS THEM AT TREMENDOUS IMMINENT RISK. $$$

The big US banks are on the edge of total annihilation with few realizing their current risk. The consensus is that the big banks remain at risk, five years after the Lehman collapse. At the same time Fannie Mae and AIG fester under the USGovt roof, for protection of their bond fraud and presidential thefts, never having been fully examined. Doing so is banned. The analysts and internal officers share a robust rosy view on the strength of the big US banks, a view that is not warranted. They focus too much on the working capital, the cash reserves, the loss reserves, the asset base, but overlook the derivative exposure and the big item, leveraged USTreasury Bonds in a highly leveraged sponsored carry trade. Some like Morgan Stanley believe their initiative to boost capital and cut risk is a big success. The analysts call the Wall Street giants safe enough to survive a shock that devastated the big banks like in the late 2008 barrage. Do not believe the favorable outlook. The big US banks are still insolvent hollowed structures with phony accounting and huge derivative risk off the balance sheets. They sit on a massive mountain of derivatives, precisely when the TNX has gone from 1.6% in May to almost 3.0% in September. Derivatives break down when much smaller moves occur in the 10-year bond yield, like last year with the London Whale. The current TNX moves are twice the whale's ripples.

While the six largest US lenders have almost doubled their capital since 2008, even some Wall Street veterans say it is not sufficient. They see a system still too leveraged, complicated and interconnected to withstand a panic, and regulators unprepared and unwilling to head off another deluge of losses and suddenly insolvency events. The analysts do not anticipate any losses from the frail interest rate derivative structures that are stressed to the limit, far more than for the London Whale episode. They do not learn from basics like a much bigger move up in TNX bond yields. They do not learn from even the recent past, like last year. Clearly the analysts are paid not to see what is before their noses. They are part of the Wall Street promotion machinery.

The official explanation for the crisis that exploded in 2007 and 2008 reads like a Polyanna edited fable. The villains are identified as homeowners borrowing beyond their means, banks selling subprime mortgages, government supported agencies backing too many loans, Wall Street packaging them for overzealous investors, ratings firms giving seals of approval, regulators offering little objection, and politicians encouraging the procession over the cliff. They leave out the mortgage bond fraud, the counterfeit of Fannie Mae bonds, the MERS title database that permitted duplicate income streams (and thus far more bonds to sell), and the encouragement to banks by Wall Street to falsify securitization documents. They overlook the biggest villain of all. The blessings by former USFed Chairman Greenspasm for both the acceptable dependence of the USEconomy on home equity removal for sustenance of the USEconomy, and the sophisticated risk off-load via derivatives, both contributed mightily to the bond market collapse and prolonged financial crisis. The lunatic dependence was deadly and the faulty sophistication was lethal. The knighted chairman sabotaged the USEconomy, and received accolades from the Queen. Thus the Jackass conclusion of deliberate crush of the United States.

Three fundamental flaws stand out, present in 2007 and 2008, still present today. 1) Regulators still permit banks to embrace too much risk, simply in different instruments now. 2) Insufficient bank capital still with inadequate margin for error, simply different risk now. 3) A system still too large, opaque, and interconnected, with everpresent catastrophic risk prevalent. A final flaw is new. Banks and financial firms are permitted to mark their assets to model or myth, something the FASB accounting practices did not permit five years ago. The other grandiose change to the landscape, not present five years ago, is the two full years of ultra-low long-term USTreasury Bond yields, held in place, fortified with obscene leverage, by the interest rate swap derivatives. They will break down. This derivative swap will unwind like a bottled nuclear bomb with metal fragments across the entire banking sector. See the Bloomberg article (CLICK HERE).

◄$$$ BANKS EXPECT TO SNATCH THIRD QUARTER PROFIT BOOST FROM DIPPING INTO LOAN LOSS RESERVES. THE QUALITY OF EARNINGS WILL BE LOW, BUT THE FOCUS HAS ALWAYS BEEN ON THE REPORTED EARNINGS PER SHARE. $$$

Top US banks will book $billions in profit in the third quarter from funds they set aside in Loan Loss Reserves. The big US banks like JPMorgan Chase, Wells Fargo, and Bank of America justify the raid on better home loan payment performance. The practice of releasing reserves is entirely legal, just bad judgment. Amidst a slowdown in mortgage underwriting, the rise of litigation (lawsuit) costs, near nil investment bank operations, and scant commercial loans, they will need to raid reserves in order to show profits. They will lose their Credit Value Adjustment fictional profits, since prevailing bond yields have risen. These firms have used free cash to buy their own shares also, thus reducing the outstanding shares, which tends to amplify earnings per share. Research firm Portales Partners estimates that the 16 major banks it covers have $14.7 billion of reserves that could be tapped, converted into earnings. The Street knows the earnings are not quality and not repeatable. They actually are repeatable until the Reserves are drained. See the Yahoo Finance article (CLICK HERE).

◄$$$ THE BIG US-BANKS ARE CUTTING JOBS WITH A GIANT MEAT CLEVER IN THEIR MORTGAGE UNITS. THE WRITING ON THE WALL FROM THE DEPRESSED USECONOMY IS PLAIN TO SEE. THEIR DECISIONS CONTRADICT THE SUPPOSED HOUSING MARKET RECOVERY. $$$

Citigroup announced plans to cut over 2000 jobs in their mortgage unit. In like kind, Bank of America revealed plans to cut over 2100 jobs in their mortgage unit. Wells Fargo has other job cuts in suit, from their mortgage unit. Bear in mind that their economists and the clownish USGovt economists steadily talk of a recovery in progress, albeit stubborn. They have pointed to a housing market recovery for months, which the Jackass has disputed. The recession is stubborn in reality, bordering on a defined depression. When over 20% of the able bodied workforce is unemployed, month after month, it qualifies as a depression. See the Fox Business article (CLICK HERE) and the Bloomberg article (CLICK HERE).

◄$$$ JUNK DEBT EXCEEDS $2 TRILLION IN RESPONSE TO ULTRA-LOW CENTRAL BANK BOND YIELDS OFFERED. JUNK BONDS HAVE BECOME THE SECONDARY BOND BUBBLE. OUTCOME IS ASSURED, IN VAST WRECKAGE DURING THE NEXT PHASE OF THE ONGOING CRISIS. $$$

Only three decades were required for the volume of high yield debt securities to reach $1 trillion. It took about seven years for the dicey speculative grade debt to reach $2 trillion. Always in line for a slaughter, investors have sought relief from the paltry bond yields by hunkering into the high yield bond market. When the damage for the supposedly safe pristine USTreasury Bonds comes in the form of losses, compounded by carry trade reversals, magnified by the linked interest rate derivative losses, the junk bond losses will register, and grab headlines. It is like a harvest in the early autumn from the bounty of summer, only in reverse. See the Bloomberg article (CLICK HERE).

◄$$$ JPMORGAN WILL ACCEPT A $700 MILLION FINE OVER THE LONDON WHALE FIASCO. MORE FALLOUT IS TO COME. THE HIDDEN LOSSES ARE AN ORDER OF MAGNITUDE GREATER THAN WHAT THE PRESS CITES OR THE CASES INDICATE. THE BRIBERY CASE AGAINST JPM IN ASIA WILL EXPAND. $$$

A group of regulators is expected to hit JPMorgan Chase, the perfect son, with fines of at least $700 million over its handling of the London whale trading loss case in early 2012. The fines could be closer to $800 million. Like with mortgage bond investment fraud, home mortgage contract fraud, and money laundering, the big US banks merely chalk it up to business costs. The Securities & Exchange Commision, the Office of the Comptroller of the Currency, the Federal Reserve, and other USGovt official agencies found that the bank lacked adequate internal controls and monitoring of its derivatives traders. Their exposure was easily ten times what the regulators observed during their supposedly exhaustive investigation. This type of derivatives trading brought down Bruno Iksil. The big beneficent bank attempted to cover up the massive bad bets. They did a very good job, because the official recognized loss was declared at $6 billion. The insider reports indicate the losses to be closer to $100 billion.

The USFed has been printing new worthless money to cover much of the JPMorguen losses, keeping it all shoved under oversized rugs. After all, JPMorguen is the operating arm of the USFed itself, in a tight collusive affiliation. The current settlement is related to charges brought against two other employees, namely Javier Martin-Artajo, supervisor to Iksil, and Julien Grout, a subordinate to Iksil. So far, Bruno Iksil has received a pass and lives in comfort, protected in his native France. The two men were charged by US prosecutors in August on criminal violations, with four counts of conspiracy, wire fraud, falsifying accounting records, and causing JPMorgan to make false statements in two securities filings in 2012. The two men hid hundreds of $millions of dollars in losses, prosecutors alleged. Pretty funny, since tens of $billions in losses were actually hidden. See the Daily Finance article (CLICK HERE). At the same time, a minor additional criminal detail, JPMorguen is reported to be the object of an expanded bribery investigation in Asia. Consider it full spectrum dominance in criminal banking enterprise. See the Bloomberg article (CLICK HERE). In time, JPMorguen could face a global obstacle to do business at all in foreign countries after the next phase of the financial collapse.

◄$$$ SAN BERNARDINO CALIFORNIA WILL RECEIVE BANKRUPTCY PROTECTION. THE FAILURE OF CITIES AND STATES WILL BECOME A FLOOD IN THE NEXT PHASE OF THE ONGOING CRISIS. NOTHING CAN STOP IT, SURELY NOT THIS MYTHICAL RECOVERY. $$$

In the last week of August, a court granted bankruptcy protection to the California city of San Bernardino. The way is paved for a creating a precedent in the battle between bondholders and California's giant public pension system. The case is being closely watched by other US cities, including Stockton, Detroit, and Chicago, along with perhaps a dozen other cities. The US Bankruptcy Court in California ruled that San Bernardino was eligible for Chapter 9 bankruptcy protection despite opposition by the California Public Employees Retirement System known as CALPERS. The $260 billion pension fund is the city's biggest creditor and the nation's largest pension fund. The city had to prove it negotiated in good faith with creditors to be eligible for bankruptcy. The city of San Bernardino has a population of 210,000 and a current deficit of $46 million. It is out of cash to meet its obligations. The complexity is apparent due to the battle upcoming between pension obligations and debt payments. California state law says the fund must always be fully paid, even in a bankruptcy. The CALPERS crew extended $50 million in pension obligation bonds. The ultimate decision might be made at the US Supreme Court, setting precedent for other cities to follow. The case: San Bernardino, 12-bk-28006, US Bankruptcy Court, Central District of California (Riverside).

◄$$$ FINALLY, MOODYS WILL CONDUCT A DEBT REVIEW OF THE SIX BIGGEST BANKS IN THE NATION. THE IMPACT COULD BE CRIPPLING, AND FORCE THE BIG US-BANKS TO PURCHASE MORE USTREASURY BONDS. OR IT COULD KILL THEM, AS INVESTORS MUST SELL THEIR BANK CORPORATE BONDS SUDDENLY CAST BELOW INVESTMENT GRADE. $$$

Bank of America, Goldman Sachs, JPMorgan Chase, Morgan Stanley, Wells Fargo, and Citigroup are under renewed scrutiny by Moodys. The big banks are in the ratings agency crosshairs. The justification offered by the agency is as unusual as it is disturbing. They reason the agency states is that in the next financial crisis, the USGovt is not likely to bail out the big banks again, not after the public outcry and broadbased criticism for banker welfare, padded executive bonuses, and stricter obtrusive lending practices. Implicit is a forecast of the next phase of the ongoing crisis. See the CNBC article (CLICK HERE).

## THANKS

Thanks to the following for charts StockCharts, Financial Times, UK Independent, Wall Street Journal, Zero Hedge, Business Insider, Calculated Risk, Shadow Govt Statistics, Market Watch, and more.