I consider myself a fairly suspicious person, so when I’m shown that I haven’t been suspicious enough, I get aggravated!

I’ve written several blogs in the last few months lamenting the U.S. Government’s apparent lack of concern regarding flooding the economy with billions of additional debt while not having the resources to meet already astronomical entitlement obligations.  (Please check out this excellent Website.)  I initially thought maybe the Fed and Treasury were trying to fight a very real deflationary problem and going overboard.  I think I may have been wrong about that and incredibly naive.

After watching the CNBC clip below, I think the real motivation for massive debt that can only be covered by firing up printing presses and selling Treasuries is a deliberate crash of the dollar. Why would the U.S. Government want such a thing?  Massive inflation.  How does this help the U.S. Government?  Please check out the video below for what I consider to be a brilliant analysis by Mr. Jim Rickards of Omnis. My only disagreement with him would be using the example of 4% inflation over the next 17 years.  I think that’s way too conservative.  After all, Jimmy Carter would’ve felt blessed to have that number.

I suspect that there are certain very powerful elements within our government and the Fed who would like to see the dollar replaced as the reserve currency of the world with a global currency of some sort.

Rickards discusses Special Drawing Rights, or SDR’s and how some country or entity must carry massive debt to fuel global growth, but no one country can carry that burden for too long or they’ll go broke.  The U.S. is now at the point where we must bow out of that role and inflate our currency to keep from losing our shirt.

I like Rickard’s analysis and I’ll expand upon it.

Many people believe that the first obligation of any government is to protect it’s people.  However, this deliberate crash of the dollar will be paid for by the citizens of this country and foreign creditors.  If the government says to Medicare, Medicaid and Social Security recipients, “There will be a cost-of-living freeze on your benefits,” that doesn’t sound nearly as bad as, “You will be receiving massive cuts in your benefits.”  But that’s exactly what they’ll be receiving through inflation.  I believe that certain elements within the U.S. government have no problem with a massive white collar criminal heist of their creditors and the American people.

To expand upon the example used in the video, if your Social Security benefits are frozen and inflation is at 4%, within 17 years your benefits have been cut in half without the ostensible amount of your check changing one bit.  This is a crooked politicians dream come true and I’m afraid they’re in the majority.  Our system is more corrupt than ever and it’s much easier for politicians to go along for the ride than to try and fight it.

This “free society” we live in, along with a few other western cultures has been a grand experiment in controlling people without force.  Over generations, the elite ask themselves, “How can we have power over the people when we can’t beat them over the head with a stick to get them to do what we want?”  The answer is to control how people think and one way to do that is to crash the dollar instead of cutting benefits!

What’s the takeaway for investors?  Get into gold and silver while being vigilant for the U.S. Government to confiscate it. I’m not kidding.  It’s happened before; in this country! Don’t be naive!  (Ha Ha!)

OK.  I’ll see you all next time.  Hopefully fall will be back by then.  October in the Hills is usually so nice!  I feel like I’m getting gypped, although summer was nice.

Quote of the week: “I don’t like it, but I will vote for it because we need something right now. But this constitution in time will fail, as all such efforts do. And it will fail because of the corruption of the people, in a general sense.”

~Benjamin Franklin on being shown the new constitution of the United States of America.

One of my favorite economists, Peter Schiff, discuses the Demise of the Dollar.  Here’s a link to the article he mentions from the UK paper, The Independent.

My favorite quote is at 6:11: “If they stop pricing oil in dollars, people going to Wal-Marts are going to feel like they’re going into Saks Fifth Avenue or Bergdorf Goodmans.  Prices are going to be through the roof, because the dollar is going to collapse and we won’t be able to afford to import all these cheap products.”

Buried News of the Week

World Central Banks Dumping the Dollar, Feeding Worst Two Quarter Rout in Almost Two Decades

When secured lenders chose Chrysler bonds, they accepted a lower rate of return in exchange for the assurance that in the event of trouble, they would be paid everything they were owed before any money went to the junior or unsecured lenders. (The unsecured lenders in this case would be the United Autoworkers Union, a.k.a., the UAW.)

In short, the bondholders were assured that they would be paid first because the United States is supposed to be governed by the rule of law.  (As many Lakota and others are aware, this country doesn’t always measure up to that standard.)

More specifically, legal precedents in the areas of contract and bankruptcy law provided the bondholders a “guarantee” of being paid first.

That concept went out the window with the Obama plan.  The secured lenders were paid 29 cents on the dollar while the unsecured lenders were paid 50 cents.

Yes, some of these secured lenders were hedge funds but according to economist Dr. Mark W. Hendrickson, they were also “retired blue-collar workers, investment firms managing the retirement accounts of state and municipal employees,” and “school endowments…”

Obama unfairly lumped these folks in with the hedge funds and referred to all of the ripped-off bondholders as “speculators.”

The uncomfortable conclusion I’ve come to is that Obama violated the rule of law so he could reward his UAW supporters.  This behavior smacks of Soviet style cronyism, in my opinion.  This is theft at the highest branches of the government and at this point, no one is safe with the rule of law thrown out the window.

There are also constitutional problems with the Chrysler bankruptcy and government semi-nationalization.

Dr. Hendrickson claimed that :  “The Constitution allows Uncle Sam to ‘regulate commerce’ not to own and manage it.”

According to the attorney for the Chrysler bondholders, Tom Lauria, an argument could also be made that the Constitution was violated in the area of right to contract and right to property.

The executive office, which is charged with enforcing the law is breaking the law, he claims.

With this plan, the executive office is intruding into the judicial branch and upsetting the checks and balances that are supposed to prevent this sort of abuse.

So it’s with some disgust that I share the following clip of Obama proclaiming that the secured lenders to Chrysler wanted an “unjustified tax payer funded bailout.” “Unjustified?” What’s unjustified about expecting contract and bankruptcy laws to be respected?  What about the U.S. Constitution?

In addition, Obama says that the bondholders “were hoping that everybody else would make sacrifices and they would have to make none,” when in fact, the bondholders’ attorney offered to take 50 cents on the dollar when they had no legal obligation to take less than 100%!  No joke!

If what attorney Tom Lauria said is accurate, this is one of the most disgusting cases of spin that I’ve ever seen come out of the White House; prepare yourself.

What is differentiating us from a Banana Republic on this issue?

Where is the collective outrage?

Maybe it’s  in hiding until people in this country really start to hurt.

Watch your pensions and your 401Ks.  They may very well be stolen to bail-out the bankrupt social security system.

Quote of the Week: “God seems to have left the receiver off the hook.”

~Arthur Koestler as quoted in the May 11, 2009 issue of Forbes.

Buried News of the Week

Attorney for Bondholders Accuses the White House of Threats

Please check out this clip of attorney Tom Lauria being interviewed by WJR talk radio host  Frank Beckmann.

Mr. Lauria is representing the secured Chrysler bondholders.  He makes some shocking allegations about the Obama administration.

And here’s a later Fox Business News clip where Mr. Lauria seems to back off somewhat from his earlier allegations.

Readers, if you have any theories about why Lauria moved into “no comment” mode regarding his earlier allegations, please let me know.

Lauria seems to be saying that his client wanted him to be quiet about it.

My best guess is that the White House was unappreciative of Lauria speaking publicly about the threats and so they issued further threats to his client and/or Lauria, if he didn’t shut his mouth.

See you next time.

Was that a long winter or what?