Don’t Hold Your Breath

1912 Cartoon Against The Coming Federal Reserve

Financial sanity is returning to the world. The silver bubble has burst. The debt ceiling won’t be raised. The government is going to make trillion dollar cuts in spending. Osama bin Laden is dead, signaling the end to the war on terror. Greece is going to be bailed out. Everything is dollar positive and it is time to dance, right? Don’t hold your breath.

Most bear markets follow the same characteristics. They start with a major wave down, followed by a brief counter trend move to the upside, only to be finished off with an even stronger and final collapse. If you look at the 2008 crash as the first wave down, and the following 3 years after that as the counter trend move, then we are due for the final collapse very soon. The reason is quite simple, none of the problems that caused the crash in 2008, have been corrected. In fact, by all accounts they have gotten much, much worse. Not only are things worse, there is no room for error. A major collapse now would be exacerbated by the fact that all of the safety nets we had in 2008, are destroyed.

I am not a market timer and don’t trade, I spot trends and see their inevitable outcome. My job is to pick the right asset, and to stick with it, until the trend changes. The big trend at work here is a shift away from fiat, paper assets to REAL assets. This is a trend that has been in the making for over a decade. If you take any commodity and compare it to any paper asset, you will see that REAL assets are the place to be. This is not necessarily because the price of these REAL assets are going up, as much as it is the value of their measuring sticks (the dollar) are going down. The more dollars that are put into circulation, the less they are worth. This dilution of purchasing power is caused by Zero Interest Rate Policy (ZIRP) by the Fed and their Quantitative Easing (printing money out of thin air.) Now that the Fed has announced that it is no longer going to do QE, does that mean the end of this trend? Don’t hold your breath.

Our money system is one that is based on debt. For every dollar that comes into existence, there is a dollar of debt AND interest that is owed on that dollar. Quite simply, the only way for our debt based monetary system to work, is that every year debt must be increased in excess of the debt AND interest accrued the year before. This debt can NEVER be paid off, because if it did, there literally would be NO money in the economy and there would still not be enough money to pay the interest back.  Please read that paragraph over again, it is so important that you understand that simple principle.

If debt is not increased on this exponential climb, we get what we saw in 2008, a massive de-leveraging and massive defaults. This is why there are “too big to fails”, because if this collapse was left unchecked, it would lead to systemic collapse. (The end of the dollar paradigm.) The Elite cannot afford to let their quadrillion system of banking, media, military, corporate and political power to collapse. So what do they do? They bailed everyone (the big boys) out and allowed them to consolidate power. The Elite has to be careful, to keep us guessing and in the dark. If the average person or say China, saw this game of money printing, they would seek to protect themselves by buying REAL assets. That would destroy the ability of the Fed to create money that has any value.

The modern Elite always err towards inflation, because we live in a fiat world. Inflation allows for old debts to be devalued and overall debt to increase, because it is more affordable. Can you imagine taking a $750,000 mortgage in 1960? We live in a world unhinged by any monetary anchor, and like I said before, debt must be increased every year in excess of the debt AND  interest accrued the year before. There was a time when deflation strengthened the banks positions, but that was when we had hard money that they coveted. Now they get systemic risk of collapse as people walk away from their debts. It does the Elite no good to seize assets if they lose control of the banking system. The game is to create bubbles, pop bubbles and liquify the system again. They make money by knowing what comes next. Since we will never know the timing or extent of their moves, one has to focus on the end game.

So here we are in the eye of the hurricane. We know that the debt must be increased or else we will have a systemic deflationary collapse. Any debt increase will lead to further weakening of the dollar and much higher inflation. This is because smart money and foreign nations to dump their dollars for REAL assets. Given this Catch 22, here is what I think the Elite have in the works.

First attack the Elite attack commodities to scare investors back into the paper system. You can see that the coordinated attack of silver (the anti-dollar) and Osama bin Laden, was a tour de force by the Elite. They essentially said to the world, “look what we can do.” I look at it like a sucker punch from a stage IV cancer patient. The punch hurt, but it does not show that they have any long term strength. There could be one more attack in the works, but I just don’t see that they are going to be that aggressive again. They were smart to wring out all of the weak hands of the bull chasers, but now all that is left is strong hands. Now more than ever, those strong hands only want physical silver. Any further attacks will lead to further pressure on the physical market, which will eventually bring about a physical default of the CRIMEX.

The timing of the next step is tricky. The Elite need to increase the debt to keep their game going. Americans are broke and at their max with mortgage, auto, credit card and student debt. Corporations see the weakness of the American consumer and will not take on more debt and hire new jobs. State and local governments are at their max and desperately trying to keep things going. Which leaves the spender of last resort, the Federal Government. I wrote that the debt ceiling will be raised despite all of the soap opera like antics of Congress. (The Contrived Drama of the Debt Ceiling and Count On It!) In the end, they will either raise the debt ceiling or the Elite will cause a stock market collapse. Remember what they did when  Congress balked at the $700 billion dollar Bankster bailout? The next day they smacked the stock market down 777 points. I feel that there will be a coordinated collapse to make everyone BEG at the alter of the money gods. This will lead to QE3, government bailouts of corporations, states, and I believe personal bailouts.

The personal bailout I feel will come out of necessity to keep Americans from revolution. This collapse will cause already desperate Americans to say, “enough is enough.” We are seeing a rise in violence and people shooting over 99¢ burritos. Americans will see a system that no longer benefits them, and they will want blood. I believe that the government will attempt to quell the personal pain with extensions of benefits and actual checks. This will be short lived, as Americans finally wake up to the lie that they have been living.

Foreign holders of the dollar will see any inflationary action as a good reason to dump their dollars for the only logical asset class, REAL assets like gold and silver. This will lead to more dollars eventually finding its way back to American domestic economy, putting even more inflationary pressure on us here at home. Foreigners have already shown that they are not interested in buying anymore of our debt. They have already started dumping their dollars for trade settlment. They are already buy oil with other currencies and not the dollar. They are already buying gold outside of the Anglo American Empire. What are we going to do if we cannot export dollars for 25% of the worlds oil?

I still believe that before all of this is over, the Elite will steal American’s retirement savings. (Read: The Treasury is Coming and Don’t Say I Did Not Warn You.) This may happen as a means to pressure people to raise the debt ceiling or they might just steal that wealth by hyper inflation. At the end of all of this, there is either a systemic deflationary collapse of the dollar or a hyper inflation. My best guess is that there will be a small deflation or panic that will serve only as an excuse for more money printing. There is no scenario that I can even begin to conceive that will not end in the destruction of the dollar and priceless silver. If you try to trade this market, I believe you are crazy. Even if you are right in the short term, you risk having your wealth in a paper system that might collapse overnight, look at Belarus. You may think that we can extend and pretend forever, but I would not hold my breath.


28 comments to Don’t Hold Your Breath

  • TexasFalcon

    Solid bang on post. Got preps? It’s a-comin.

  • silverdoc

    The Fed is now like a 500-pound man who can eat 7,000 calories per day without gaining weight because his morbidly obese metabolism requires it to function. The discussion of QE2, QE3 and QE4 becomes irrelevant, because what they have established is a condition of perpetual or permanent QE.
    The size of the Fed’s balance sheet is now so vast that the reinvestment of principal payments from the existing assets will be enough to monetize a large portion of the Federal deficit without having to increase the total size of the balance sheet.
    Most of the Fed’s the purchases of notes and bonds are concentrated in the 2-to-10 year sector with a weighted average maturity of about 6 years. Combining the $500 billion annual principal payments on QE mortgage backed securities with $250 billion of maturing principal payments on the remainder of the Fed’s portfolio gives the Fed about $750 billion per year of buying power without expanding the balance sheet.
    With the projected U.S. deficit for fiscal 2011 at $1.645 trillion, the Fed’s buying power of $750 billion per year can monetize over 75% of the new 2-to10 year note issuance needed to fund ongoing U.S. budget deficits for the next two years without expanding the balance sheet. The Republican party is using this argument, amongst others, in their fight against raising the current federal debt ceiling.
    So with QE2 ending in June, I’m expecting the stock market to drop significantly, commodities prices to dip, and housing and employment numbers to continue to regress. Then QE3 will be announced to come to the willing rescue of the fledgling american economy, and the now 550 pound man needing 8000 calories will again be allowed to belly-up to the all-you-can-eat debt trough, compliments of you and me and every taxpayer yet to be born for generations to come.
    We know the how, the what, the where, just not quite the when. Be ahead of the curve, keep buying physical silver and gold, support the don’t-tread-on-me and SOLA cause of getting all the vital information out to the apathetic general public ….and stay aware and prepared.

  • ewkeane

    i see on ebay at 125cst this day (june 1) that dime lots are bid to 38-39 range.
    bargans? maybe.
    dollar index? off about a nickle anytime i see it, or up by fractions of a cent. on the skids following long trend.
    i think that in this consolidation of paper Ag markets, and in the micro silver markets (coin shops, ebay) it could be smart to give up a fast food meal, or a pack of smokes, and use that value to raise the weight of ones hoard. even a couple of grams added every day at this time makes sense.
    i wouldnt sell a gram right now if i could avoid it. in my point of veiw, since monthly average leads the yearly by a couple of bucks, its still a bull market.

  • CQ

    This is exactly what I see happening. Excellent post.

    I’ve tried to explain to my Dad that without debt there is no money, but he just doesn’t seem to grasp the concept.

    There are so many aspects of the multi-level scam being perpetrated upon us that are so simple, yet people cannot (or will not) allow the realities to sink into their brain. It’s as though they believe it couldn’t be so basic and be such a successful and widespread scam. There are still people who think the Federal Reserve is “our” bank…

    Perhaps this disconnect exists because economics is made out to be such a mysterious and complicated field that requires many “experts” and studied analysis with fancy charts and high-falutin’ middlemen deserving of transaction fees and deferential respect. Also because we have a media whose role is to grease the con.

    What I will say is that once people do grasp the mechanics and admit to themselves that they’ve been played, they seem to spot lies much easier (and they’re appropriately pissed off!)

    I hope one day we see a live broadcaster or interviewee lay out some truth because they cannot stand being a liar anymore. They’re participants in the looting, the killing, and the destruction of the economy. The cries of all the starving children we’ll be hearing should resonate with them because they’ll have played an active role in causing those children pain.

    The mask of respectability these people have enjoyed will be washed away and they will be seen as criminals and deviants along with the more obvious perpetrators.

  • I agree with the overall jist of your post.

    I suspect that the P-T-B will engineer a little deflation this summer to provide 1) political wiggle room for more QE and 2) a break from high oil and commodity prices.

    As you’ve rightly pointed out, however, nothing that caused the 2008 crisis has been fixed. The elite banks are still over-leveraged. A sizeable deflation will ruin them.

    Because of this, I expect more QE, probably this fall or winter.

    We might get a little dollar rally this summer as QE ends and the Euro-debacle continues (not that we don’t have our own government sponsored debacle on this side of the pond, too). But, like you said, don’t hold your breath. The deck is stacked against the dollar and the taxpayer.

  • Jon

    Great article! This has become one of my favorite sites. Unfortunately most people I talk to just don’t get the end game or the other quarters before the game ends. I try to explain, but most look puzzled or just blow me off. The advantage is to the elite, as they make
    It all so complicated, and most Americans just can’t think anymore. TV has mushed their brains, and they just get angry and fear the next shoe to drop. I pray that God will expose those who need to rule mankind. Man cannot rule man. History shows this all to well.

  • Tyson


    Getting ready to purchase another round of 90% coin and ounce bullion. Does anyone one else get a “shiver of freedom up their leg” when they trade the worthless FRN for physical silver. WHEEEEEE!!!

  • Scout

    Congrats, SS! “Don’t Hold Your Breath” is lead article of the day, June 2, at Steve Quayle’s site

  • For the last 3 years, those who control the stock market (and always have), that is, JP Morgan, Goldman Sachs, et al, have been manipulating it to mask the truly horrible shape that the economy is STILL in, no matter how high they push the DOW. Unemployment is higher than they say, and housing starts/prices are lower than they say. But if you don’t count unemployment, gas, food or foreclosures… everything’s just ducky! place of refuge 2012 dot com

  • chiller

    The Federal Reserve has nothing “Federal” to do with the US and its reserves are all from foreign banking conglomerates who have been bleeding our country and the world dry for a century. I like to direct people to this simple to use time line complete with consumer price index (the cost of goods for the general populous) and the value of the dollar based on the 1967 dollar and inflation. If there ever was a time for our dollar to rise up and be strong, it surely was immediately after WWII when the US was the ONLY economic engine left on the planet. But this was not to be as all this prosperity was siphoned off by, you guessed it, the greedy families behind the insidious, ruthless and evil, Federal Reserve. The greed infused into every grain of these peoples existence is so horrific, they will stop at nothing, kill anyone in their way and never stop in their sick and twisted attempt to own everything and everyone. There is no one who can be voted in or out to stop them. There is no talking their schizophrenic minds out of it. They are beyond all hope of recovery as are the people of the US unless we the people fight back.
    If you were on your death bed tomorrow, just think of the world you are about to leave your loved ones in without you yourself having lifted a finger to make it a better place for them. If that is ‘you’, you will no doubt NOT rest in peace and your family will definitely not live in peace.

    “There’s nothing to lose by doing a lot, but a lot to lose by doing nothing.”

  • kevinace

    Your article i believe is bang on the money.The banksters have to crash the markets to justify an increase in the debt ceiling and QE3 so a little deflation before more printing is on the cards.
    Here in the UK the austerity measures are begining to bite and the passive Brits are beginning to stir we usually row with the US,so to keep up the austerity measures a little deflation will scare the sheep in to more submission and when they hit the printing again it will be seen as a relief from the austerity with few concerned with the inevitable inflation that will follow.
    Stagflation or a depressionary hyperinflationary paradigm is coming,the prepared will be the ones who survive and prosper.
    Keep stacking the silver and hold, the paper markets are going down at some point it would be be very unwise to try and paper trade the market moves,with so little inventory on the crimex and the chinese market opening,this all comes down to supply and demand and silver soaring.
    Hold and stack is the only way to survive.

  • Jim Shores

    What if the US did default only on the phony interest charges manufactured by the FED’s scam artists? I think we could gain our reputation back and only destroy the Banksters. Our “debt” to them is in the trillions and we would clear most of it if not all. Let them struggle to keep a roof over their pointed heads and scramble for discount donuts for lunch like most of the world does. As everyone knows governments are supposedly working to provide the greatest good for the greatest number of folks. To starve billions of humans for the enrichment of 1,000 elite just seems wrong, right?

  • Perhaps I am not seeing the bigger picture. As I understand the global elites, they want the UN to be the power to be reckoned with. To do that they have to destroy the present dollar backed system. They have to put the US into receivership, indentured to the World Bank. Silver and gold will have little impact on anything when the dollar crashes. The dollar crash will take all the other currencies into the vortex with it. With close to seven billion people chasing food, and necessities, gold and silver won’t be worth a frog’s croak. Toilet paper will be worth more than precious metals. Basic antibiotics, food, fuel, toiletries, and pain killers will be worth more than gold, platinum, and silver.

    The United Nations will confiscate all precious metals from every source as a base to issue new money, along with a tax identification number for every person who wants to buy or sell anything. That way every person will pay a direct tax to the UN, and the UN will be the next, and last, world power of human history. That is the elites’ vision for everyone’s future.

    I think they will achieve their goal, in all of its horrid awfullness.

  • Highlander

    I think it is, that the way you express the thought regarding the mechanics of how the federal reserve scheme works, is confusing to many.
    What’s missing from your explanation is that the U.S. neither ‘owns’ its own money nor prints it anymore.
    You should explain that because all of our money is now owned (minted) by someone else, that we must ‘borrow’ it in order to spend it. That’s a point which isn’t well explained, if at all.
    Since we don’t own anything in the way of money, then there’s no way to pay back the interest, even if we did pay back what we borrowed, for the simple reason that we have nothing with which to pay off that interest.
    So therefore, we must borrow ~more~ of what doesn’t belong to us in order to pay off the interest of the first loan, which now gets us even deeper into debt as a result of the second loan.
    The way out of this mess is really simple: Bless the debt, get rid of the FED, and go back to printing our own money.
    And, for all private citizen not connected in any way to the bankers, honour their saving in whatever institution whilst converting those to the same face value with our new specie.
    If China, Japan, or anyone else wants their money, tell them to talk to thieves who owned the former FED.
    And quite frankly, all the other nations of this world should do exactly that same thing: DUMP the funny money.
    Finally, outlawing corporations and banks would go a long way towards permanently ameliorating this mess. Private companies and credit unions only. And of course, no government should be allowed to borrow that which it cannot payback in a single year of projected tax receipts minus obligations.

  • Fink

    Bill gross and Jim Rickards. Have the idea that all the fed might need to do is keep inflation at 4% and over time it could reduce he debt by inflating it away. Savers screwed as usual, yet no hyperinflation. Listen to his latest interview at king world news.

  • Aussie Mick

    Great post CHILLER…The FED is at the root of all evil…but the tree of evil has many roots..the Bilderbergers..Rothschilds..Rockerfellers..track their tentacles into the corporations and foundations that they control…The Trilateral Commission rules Congress and therefore…the USA. The CIA is a Rockerfeller leaving these people in power, the American people are doing to their own country, exactly what they are doing to so many other countries around the world. Remember this..anyone who has had a family member or friend ‘sizzled’ will never forget…the elite like the smell of a good long as it profits THEM. Aussie Mick.

  • johnny freedom

    if you know the bankers history you will know they are creating world war 3 now! they do not want to take the rap for there crimes they will use the arabs and oil to bring down the economy and blame it on the radicals they control that is the reason they do not allow us to be energy independent for there new world order dream they must pit the moslems and nilests{communists russia china} against the western christians and freedom lovers who would both [christians moslems]rise up against the bankers plan so they want us to destroy each other.

  • BabsNovak

    Collapse the Fed and dollar once they know what to do with the rowdy State & Fed & teachers & Retirees. When? before 12/21/12. Like walking in a mine field, carry gold and silver coins to bail you out!

  • Jim Shores

    Speaking of the eliet’s assets from above. Media, banking etc. As Ihave witnessed nobody wants a bamk to deal with. They don’t want a big house or the expenses associated with it such as taxes and insurance. They don’t want an electric car to see their charging expenses to cost more than gas does. They don’t want to use goverment education (even colllege) to provide knowlege to be a producing person. They don’t like the NWO music or movies. The politicians rate only 10% confidence. What do they have that has a future? Military might? Their poisoning by DU has convinced the troops they are on the wrong side. News sources are not worth what their monthly electric bill costs. They have destroyed their assets. They are over! over!

  • Lowell L Morse

    Mohawk Indian/Native Americans tell of a story about a gold and silver snake found by fisherman.

    If you can find it, the bottom line is, they fed the snakes until they took over their entire society.

    Tom Porter..Mohawk. You might find it on google search. I read it from his book.

    Good Luck, and Good Night.

    Lowell L Morse

  • Lowell L Morse

    OPps, I looked up Tom Porter on the internet. I have read his book. The story I spoke about is true, however, I DO NOT stand, with the “mother earth”. I will stand with the Creator, Yah. Sorry folks I should have done more research on this man.

    The story about the silver and gold snake still rings true to me. I hope you may find it in your journey.

    Again, my best regards

    Lowell L Morse

  • The market is doing what is known as the “dead cat bounce”. Drop a dead cat from a fifth floor window (the falling market) and the cat will hit the ground, bounce up a short way, then fall right to the bottom and stay there. A graph of the market is behaving in just this same way.

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