Things aren’t so hot on the US economic front these days.  Word is that mortgage giants, Freddie Mack and Fannie Mae - the largest backers of US mortgages - are facing serious finanical troubles.  Just as with Bear Stearns, a major investment banker, the Federal Reserve is being asked to make up the shortfall.  Don’t misunderstand, such an act will have a devastating impact to our economy and will send us into a downward spiral that will last for years to come.

Where the Bear Stearns bailout alarmed me with billions of US taxpayer’s dollars going towards preventing assured destruction of the US economy (from systemic collapse), this latest bailout has me in an absolute state of panic.  These two mortgage firms financially back nearly half of all US mortgages - trillions upon trillions of dollars of investment dollars.  We’re talking a multi-TRILLION dollar bailout here with the capacity to nearly double the US national debt overnight.  Yes, folks, that means our money will be worth nearly HALF as much once the trickle effect of that money being spent into the world’s economy is felt.

Oddly, after the news of the Federal Reserve backing the failed mortgage firms came out, the US dollar rallied back up.  This is completely counter-intuitive and clearly shows how well the market is manipulated and misinformed.  With multiple trillions being induced into the economy, the only *logical* result is for the value of the dollar to go DOWN.  More money in the economy, unbacked by anything of value EQUALS inflation.  Yet, mark my words, it will fall…and it’s gonna fall harder than I ever expected.

News reports are also saying that this bailout marks the last and final we will see from the Federal Reserve.  On one hand, that’s good news because US taxpayers are footing the bill - but on the other hand, it means that systemic collapse is a very real risk.  Once the collapse begins to occur, there is no stopping it - and we WILL feel an economic recession that makes the 1920’s look like child’s play.

As was expected, gold and silver rallied back up to levels seen several months ago - a surefire indication that things are in trouble.  I only expect these to continue their upward trend, despite being heavily manipulated.  Those who control the market can only do so much.  These two investments will be one of the few that can survive the up and coming disaster that is looming on our doorstep.

Have a great week. 

Well, perhaps it’s not the beginning - but some news came out today that should cause each and every one of you to sit up and pay attention.

The US dollar slumped to an all-time low today - never before has the US dollar been worth less since it’s been independently tracked against foreign currencies in 1973. This could be the tipping point for our inevitable economic downward slide…with potential for a much larger magnitude than the economic crisis of the 1930’s.

Read about it on Bloomberg

If you’re not aware, the United States currently spends more than it makes and has to borrow money from foreign nations just to keep the lights on. Our government does this so they can print more money and spend that money into existence. Problem is, each time we create money, we devalue the currency that is all ready in circulation - it’s called inflation. This inflation has been occurring at an unprecedented rate over the last five years due to untempered spending in Washington.

Why the crisis? Well, two reasons. First, this devaluation impacts the desirabilty for investors to back the US dollar as better performing currencies will be a more likely choice for better returns. This means less people will invest in the US dollar, thereby decreasing the money we can create without out-of-control inflation, furthering our inability to pay our bills. Second, with the foreign investment dependence we currently suffer, foreign nations will favor stronger currencies than our faltering dollar. Countries like China have significant reserves of US currency - dumping these in favor of stronger currencies means our debt comes back to bite us like a rabid dog. These two things combined mean that people will start to transition their wealth into other currencies or precious metals, if they’re aware enough to do so. If this sustains and goes supernova, the US economy could come crashing down like a house of cards because of our reliance on these investors.

All I’m waiting for now is the first major bank to crash - at that point, we will have entered an irreversible trend that will catapult the economy towards the floor.  If you don’t think that can happen - you should be learning about the growing number of mortgage defaults, the worldwide housing market crash, imploding hedge funds and systemic risk.

I’ve written about the investing into precious metals and I still advise it as the most sure bet of sustaining the hard times that could be ahead. Gold has rocketed past $800 per ounce, up hundreds of dollars from where it was even months ago. Silver, albeit a more volatile market than gold, has seen recent spikes upwards of 30% from where it was just few short months ago. These precious metals are also inclining at a faster pace against the US dollar than other currencies that are performing better, such as the Canadian dollar.

Speaking of the Canadian dollar, I wrote awhile ago about the Canadian dollar overtaking the US dollar in value. In just a few weeks, we’re now seeing that it’s nearly 8 cents over the dollar, or 8% higher. (Read another, US currency is worth 8% less) Further evidence of our rapid downward spiral. I did a comparison of the Canadian dollar and the US dollar against the Swiss Franc recently in order to prove the anomaly wasn’t just the Canadian dollar performing better than average. The Swiss Franc is widely regarded as one of the most stable, unwavering currencies in the world and is therefore a good choice for comparison of inflationary effects. The graphs showed that, yes, the Canadian dollar was doing better…but by far, the US dollar was declining at a much more rapid pace.

Anyhow…that’s what I have to say for now. Pretty serious stuff, I know…but you need to pay attention to it because it WILL ultimately affect you. If you want to know what you can do, look at who I support - Ron Paul.

As I often do, I was checking out gold and silver prices and the general strength of the US dollar when I discovered something that shocked me. The Canadian dollar has surpassed the value of the US dollar for the first time, that I am aware of, in over 30 years. (Update: Since November 25th, 1976) Right now, a single US dollar is worth about 98 cents Canadian. Every Canadian can start doing the happy dance - they can actually come to the US and have better purchasing power than they do at home.

This is a perfect example that shows the declining US economy and reveals the direct result of inflation. You absolutely need to know about this because this means that anything holding value in US dollars, such as your stocks, bonds and savings accounts, are actually LOSING value a lot more rapidly than you might think. This also means that your savings will be able to purchase less as time goes on…stay tuned and I’ll show you how you can stop this.

Historical currency charts for at least the last ten years show this is indeed a rare moment and that the value of US currency, when compared to the Canadian dollar, has fallen by over 50 percent in the last 10 years. Take note of the slight dip shortly after 9/11, a short burst upward and then a rapid decline thereafter.

If we look at just the last five years, roughly the time frame that we’ve been creating tons of new money to fight the Iraq war, we see a steady decline of the US dollar’s value. Think they’re intertwined? You betcha. This is the direct result of inflation, which is what happens when we create new money with nothing of value to back it. Take note of the downward trend, since October of 2002, from $1.60 per US dollar all the way to actually being less valuable than the Canadian dollar. That’s a 60% loss of value!!!

Just to bring this rapid decline into the “how quickly it’s happening” perspective, I’ll show you just the last year. We see about a 15 percent drop in value just since October of last year. If this trend continues, we’ll be in some dire straits in no-time.

And just in case that’s not enough for you, you can see that over the last 30 days, we’ve declined another six percent. Six percent in 30 days???? Ouch…that kind of hurts. Well, maybe not me…but I feel the pain of all you believers out there that have their life savings dumped into the US dollar. Boy, am I glad that I never reconverted my Canadian money back to US dollars from my last trip. I’ve made almost a buck because of this!

Pretty depressing, huh? I think so. I remember the days when I could go to Canada and get some fantastic deals because the US dollar was so much stronger than the Canadian dollar. Those days have been dwindling to an end…and the end is now here.

If this isn’t your wakeup call to get out of the US dollar, I don’t know what will be. If you think all your stocks, bonds and savings accounts are making you money - you better think again. You’re losing to the inflation tax. Trends for the stock & housing markets look just as dismal as of late - yes, the US economy is crashing. If things keep going this way, there’s going to be a lot of sad people out there.

I’m not too worried myself, and for all I care, the trend can continue. You see, over the past several years, I have been transitioning over 90% of my savings into real money. What is real money, you ask? It’s the lore of yesteryear…gold and silver. Ayyyyyyyyeeee mateeee! And I’m not talking about paper silver & gold, as in the stuff traded on the commodities market…I’m talking actual gold & silver. I’ve been doing very well too…when investing in precious metals, a failing US economy, inflation and declining dollar values actually benefit me. Shown graphically, here’s what gold has been doing over the last seven years:

I have particularly enjoyed being in the silver market as I believe it’s greatly undervalued and has an opportunity to explode to levels we haven’t seen since the 80’s. With reports of paper-based silver commodity trading outweighing actual supply by more than two thirds, Wall-Streeters are trading something that doesn’t actually exist! From cursory knowledge of “supply and demand” (you remember that don’t you?), physical silver a prime place to be if those paper silver owners ever actually want to take possession of said silver. The last seven years of silver’s value show a steadily rising trend, just as we saw with the gold trends.

So, if that’s not enough to convince you to bail on the US dollar, I don’t know what will. Admittedly, by doing so, we would nearly insure the collapse of the US dollar. The way I see it, it’s the inevitable result of failed monetary system consisting of a privatized central banking system called the Federal Reserve and decades of financial policy that give no regard to wise fiscal management. We need to do away with the Federal Reserve anyhow…so I really see it as a means to an end. Sure, it’s gonna suck…but if you start planning now, you *might* just escape while there’s time.

And to think I failed economics in high school.

What do you need to know about American economics? Two words: Federal Reserve.

Whether or not you believe there is a potential for an impending collapse of the American economy, it’s important to understand certain things about economics. With information just beginning to leak about the “housing bubble” crisis, we’re on the brink of a severe economic downturn. A lot of people are going to be wondering how things got so bad…well, there’s a reason…but I’ll be damn if the media doesn’t want you to know about it.

It’s kind of funny…when I hear media puppets talk about the strength of the US economy, I immediately take offense at the mere notion of it. What we have is a falsely created economy…with it’s only strength coming from our tolerance of extreme debt and willingness to enslave future generations to an ever-increasing national debt and subsequent economic slavery. America’s national debt is approaching nine trillion dollars, thanks to fiscally irresponsible politicians, which amounts to roughly the equivalent value of every person’s economic output, vehicle, building, natural resource, and everything else in a single US timezone. Did you know that your portion of that pie is around $30,000?

We hear talk from politicians about “balancing the budget”…or more succinctly put into layman’s terms, to stop going into debt. This is what is commonly known as the federal defecit…it says nothing about paying off the federal debt. A lot of American’s believe we’ve paid off the national debt at one time or another, but I assure you, we’ve been steadily increasing debt since this country started. What you’ve likely heard is the balancing of the defecit…and that’s seen only rare, fleeting moments in our history. The problem with the debt began to get out of control with our third economic system in the US, the central banking system called the Federal Reserve. The problem has been exacerbated by financially corrupt politicians that fully believe money grows on trees. This is what our debt trend actually looks like for the last sixty-five years, corrected for inflation using year 2000 dollar values (ummmm, yeah, those numbers on the y-axis are TRILLIONS of dollars):

Now, you need to know that the Federal Reserve is no more federal than Federal Express. (Doublespeak, anyone?) It’s a corporation, a bank to be precise, and it’s not run by elected officials…but rather, very wealthy elite. The relationship of how our government interacts with the Federal Reserve in the process of creating money is a bit outside of the scope of this post, but suffice it to say, the creation of almost every dollar incurs another dollar towards the national debt. In the end, where our previous economic systems were plagued by inflation…with the Federal Reserve, we now incur both inflation AND a rising debt that must be paid back. Some say that’s the price of having a stable economy…but eventually, if not properly managed, the latter will become increasingly instable.

I’ll ask you some simple questions…what happens, if you personally, incur much more debt that you are able to reasonably pay off? The people that lent you the money will eventually want to be paid back, right? If you’ve exceeded your ability to pay, what risks are you taking? If you’re unable to pay off your debt, what is your financial future? Where does all your money go and how will you manage to live? Debt is not a freedom…it is the acceptance of financial dependence.

Now, put that into the context of a country. What’s our economic future if we continue to overspend well over $1 billion dollars PER DAY? Will lowering the interest rates help? No, that just reduces our ability to pay back the national debt as we’re inclined to borrow more money. Will raising tax rates help? Well, if we all accept a 75%+ tax rate, sure…but then, what does that do to the economic viability of each one of us?

Another interesting question is: Who do we owe this money called the “national debt” to? Well, without going into bonds and other technical aspects of monetary expansion, it’s graphically explained here. Note the two largest slices of the pie - the Federal Reserve and “Foreign and International.” The latter worries me…this means that we are financially dependent on foreign interests. You’ve probably heard that “China owns everything” or some simple concept like that on the news…well, now you can put two and two together. Oh, and remember what I said earlier about the Federal Reserve being a corporation? Yep, all that interest and profit goes to the benefit of wealthy, private individuals.

So, what to do about it? Is there anything you can do about it? Frankly, likely not…except for kicking a vote in 2008 for Ron Paul. Instead, what I’ve done, is to implement the gold and silver standard into my financial life. It seems to be a much more stable investment than other potentially disastrous stocks, bonds and other artificial money schemes. The paper commodities for silver and gold are increasingly volatile, with excessive trading that far outweighs actual supply. And it’s hella fun and gratifying to be involved in physical precious metals. No longer is the value of my savings compromised by inflationary rates and irresponsible financial management. I’d encourage you to do the same…some day, you’ll thank me for it.

Watch this video from Ron Paul, one of the few Congressmen to “tell it how it is” in the entire body of Congress:

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For a goldmine resource (bad pun intended) you should check out the Gold Is Money forums. You can find varying degrees of opinion about our economy and solid financial advice, all for free. If you’re interested in finding out just how deep the rabbit hole goes when it comes to the Federal Reserve, you should read the following books: The Secret World of Money by Andrew Gauze and The Creature from Jekyll Island by G. Edward Griffin. Both are excellent books.

For the lazy those that don’t have patience for dry books, you really need to watch America: From Freedom to Fascism. You can also rent it from NetFlix or other online video place. In my opinion, it’s worth every penny of the purchase price, too.

April 21st, 2006

The Honorable Cathy McMorris
United States House of Representatives
1708 Longworth House Office Building
Washington, D.C. 20515-4705
(202) 225-2006

Jeff Whiteside
[Contact Information Redacted]

Dear Honorable Cathy McMorris,

I would like to express concern over the Federal Reserve’s recent decision, on March 23rd, to cease publication of their M3 monetary aggregate report. Though this reporting change has been touted as a “minor policy change,” there is growing concern that this bold move may have been done to cover up explosive monetary expansion. As the Federal Reserve is not run by elected officials, I feel it is critical to have a full release of all monetary details to allow oversight groups and individuals the ability to review all available data relating to our currency system.

The M3 monetary aggregate represents nearly three and a half trillion dollars of our total economy and is the only report that gives the “bird’s eye view” of our country’s economic health. Though many in these circles may consider three and a half trillion dollars as inconsequential and “not worth the effort” to track, I must disagree as it represents nearly one third of our total economic system.

As you are probably aware, we have seen a marked increase of silver and gold prices, energy prices, as well as continually rising interest rates. All of these items are indicating runaway inflation and a rapid devaluation of the American dollar. This should be a source of concern considering our monetary system’s declining value in comparison to currencies such as the Euro. In times such as these, the M3 data is critical to insure that the Federal Reserve is keeping our economy’s best interest in mind.

I would urge you to support the effort to force the Federal Reserve to continue publishing the M3 monetary aggregate report. Congressman Ron Paul of Texas has introduced H.R. 4892 in an effort to bring about this change, and I feel it is important enough to receive your attention and support.

Thank you for taking the time to read this and for any correspondence.

Sincerely,

Jeff Whiteside