http://news.cnet.com/8301-13578_3-10057618-38.html?tag=nl.e433 I am beyond words. Blissings, Ani

Financial Services Firms Facing Lawsuits

WASHINGTON — A group of state and municipal governments, including Mississippi, Chicago and Fairfax County, Va., said Friday they sued multiple financial-services firms, alleging price-fixing and bid-rigging in the municipal derivatives industry.

The suits were filed against 37 financial-services firms, including Merrill Lynch & Co., JPMorgan Chase & Co. and Morgan Stanley.

JPMorgan Chase and Merrill Lynch declined to comment. Morgan Stanley was not immediately available to comment.

In a statement, attorneys representing the government said the defendants conspired to deprive the group of extra money they would have received from their municipal bond investments. The suits, filed in federal court in Washington, allege the price-fixing and bid-rigging dates back to 1992.

Municipal derivatives are used to invest proceeds of municipal bonds.

UK tycoon Joe Lewis loses $800m on Wall Street

Bear Stearns on brink of break-up

JOE LEWIS, the secretive British billionaire, has lost an estimated $800m in the collapse of the American investment bank Bear Stearns.

The 71-year-old currency trading tycoon, who runs his empire from the Bahamas, holds almost 10% of the bank's shares. Bear’s shares fell 40% on Friday to $27, after it secured a 28-day credit lifeline to stave off collapse.

Lewis began building a stake in Bear last September, when the shares were changing hands for more than $100.

The huge paper losses could force Lewis to sell out of some of his other positions, according to traders, in order to meet margin calls from his lending banks.

Bear Stearns stands on the brink of collapse or break-up this weekend. The bank’s woes come as Wall Street braces itself for another week of pain.

Some of America’s biggest financial institutions are set to announce first-quarter figures showing fresh losses and write-downs of billions of dollars.

The disclosures come amid desperate attempts to bail out Bear Stearns, which secured a 28-day lifeline on Friday to stave off collapse. That would have caused a sale of Bear’s $42 billion (£21 billion) of loans and $176 billion of securities that could have triggered a meltdown in the financial markets.

On a Friday conference call, Bear’s chief executive Alan Schwartz said the bank was considering a full range of options - a statement many took to mean the bank is on the block. Lazards is advising Bear on its options.

JP Morgan Chase has stepped in alongside the Federal Reserve Bank of New York to provide emergency funding.

Jamie Dimon, JP Morgan chief executive, is interested in Bear’s prime brokerage business and parts of its mortgage operations, according to sources.

“Bear Stearns is over,” said one banker. “By the end of the month - if not this weekend - someone is going to come up with a plan to take it out or break it up.”

Wachovia, the giant American retail bank, is also said to be interested in parts of the business and so is JC Flowers, the private-equity group that attempted to buy Northern Rock.

A takeover is not expected to place a high value on Bear Stearns shares, which lost almost half their value on Friday.

Richard Bove, a banking analyst at the Punk Ziegel investment bank, said he thought a buyout was likely to fail, as it did with Britain’s Northern Rock. “I don’t think the Fed will approve a purchase,” he said. “Customers are leaving in droves, so what would they be buying?”

Bove said Bear was “a new Northern Rock” that would be propped up by the government as it dwindled away. He predicted the bank will limp on, losing clients, until it ends up being a regional broker.

Bear’s woes come as its blue-chip rivals prepare to announce first-quarter results. Analysts have cut their 2008 earnings outlook for Bear Stearns, Goldman Sachs, Lehman Brothers and Morgan Stanley. Bove said the results were less important than the strategy the banks were now following. “We have a totally mismanaged economy in America and that has been allowed to happen because the rest of the world accepted our debt.

“Well that’s over and now, like a banana republic, we are going to have to prove we are sorting out our act.”

The Bear Stearns crisis has reinforced the view that the Federal Reserve will cut interest rates this week by 0.75 percentage points, rather than 0.5, which would take the Fed Funds rate down to 2.25% – three points below last year’s peak.

Some analysts even think that the Federal Reserve may try to calm the markets by cutting rates by a full percentage point at its Tuesday meeting.

“We now expect the Fed to cut by 75 basis points on March 18, 50 in April, 50 in June and by a final 25 in early 2009, bringing the Funds rate back down to 1%,” said Ethan Harris, an economist with Lehman Brothers. “Who says history does not repeat itself?”

In Britain, nerves could be set on edge if the February inflation figures – also due out on Tuesday – show a decisive rise above 2.5%, from 2.2% in January.

While Mervyn King, the Bank of England governor, has primed the markets to expect a significant rise in inflation in the coming months, any sign that it was moving higher at an unacceptable pace would be seen as limiting the Bank’s room for manoeuvre on interest rates.

BANK LOSSES KEEP RISING

GOLDMAN SACHS is this week expected to reveal write-downs of more than $3 billion, as Wall Street begins another turbulent quarterly reporting season.

Huge loans for private-equity deals, coupled with a loss on its holding in the Chinese bank ICBC, are behind the write-downs. Goldman is also expected to unveil a 60% drop in earnings.

Lehman Brothers, which secured a new $2 billion credit line on Friday, is expected to reveal write-downs of more than $1 billion.

Morgan Stanley, meanwhile, is poised to reveal a further $500m in write-downs.

Bear Stearns will now publish its results tomorrow.


The Government Economy Con-Game = "Derivatives" 
by Walter Burien - 03/15/08 - http://CAFR1.com

Truly yours,

Walter J. Burien, Jr.
P. O. Box 2112
Saint Johns, AZ 85936

Tel: 928-445-3532

Website: http://CAFR1.com


Blissed be, Ani 

THE WORLDWIDE INTERNET PROTEST
TO STOP RESTRICTING HEMP'S USE IN MEDICINE.

We at Phoenix Tears are asking you to join with us in this worldwide internet protest.

Our aim is to bring hemp, man's oldest known and safest medication, back into widespread medicinal use.

Our research, backed by hundreds of other studies done worldwide, has proven properly made hemp medicine provides relief or cures many diseases, even cancer. Throughout thousands of years of medicinal use hemp has been known as a panacea, which means cure-all and not without good reason. We have provided hemp medicine to hundreds of people with various medical conditions and the results speak for themselves.

Governments and corporations have used the word "marijuana" to demonize hemp to the public. Marijuana is one of over 400 slang terms used worldwide to describe the cannabis hemp plant. The public has been told that hemp is a dangerous and addictive drug while scientific studies have proven that this is not true. The essential oil made from the bud of the female hemp plant is the most therapeutically active substance known to man. Millions of people enjoy smoking hemp, but this is the least effective way to use the plant medicinally. The real medical miracles occur when the oil is ingested or used topically on skin infections or diseases - then watch what happens! Hemp is real medicine straight from Mother Nature, not some concoction of chemicals and poisons produced in a pill factory somewhere.

Our aim is to produce hemp medicine on a large scale and make it available to the public on a donation basis. Whether you have the money or not, as long as you have the medical condition you get the medicine, no one has the right to put a price tag on your health.

Our history is littered with corruption, ignorance, wars, diseases and death. How many wars must be fought before the human race realizes that war is senseless and is humanity at its worst. Restricting the use of the most medicinal plant on earth is also mankind at our self-destructive worst. Why are so many people willing to believe a pack of lies about hemp without even looking into the truth of the matter for themselves? One would think everyone should be concerned when in the end for most of us; our very lives will depend on this medicine being available.

Big money and the governments they control, for many decades have told us that hemp is dangerous, we say prove it, and forget the double talk. We are more than willing to produce our evidence to the public. The people who have been restricting hemp's use should do the same.

In Canada, people with serious medical conditions are put through a bureaucratic hell called the Marijuana Access Program. Approximately 2000 people in Canada have been given a license to possess hemp. Imagine, 2000 out of a population of over thirty million. People with this license can then purchase hemp from the government at a 1500% markup. The government pays $328.00 for a kilogram of hemp and then they sell it to licensees for about $6000.00 kg. Isn't it gratifying to know the government has such compassion for poor and suffering medicinal users.

The Marijuana Access Program was put in place so the government could pretend to be helping people, while they make huge profits from medicinal users. Any one can buy a kilogram of much higher quality hemp from growers for less than the government charges, which leaves the question, who are the drug dealers? Even people who have been granted a license to possess hemp are not allowed to collect the resin or produce the essential oils. The resin and the oils produced from it are the real medicine. You can smoke hemp joints until the cows come home but it will not cure your cancer and the government knows it.

Opinion polls tell us that over ninety percent (90%) of people in Canada want hemp legalized for medicinal use. Why is our government not doing what their citizens want? Government and all they control must see the error of their ways. Practically all of our Canadian institutions are being controlled by government. Our medical system, legal and policing systems, the Royal Canadian Legion, even the "free press" and other news media are all controlled by government corruption and there are many others. We are not advocating retribution or violence against anyone, what we are demanding is change. The real truth about hemp and its medicinal value must be told to end this insanity of hemp's medicinal restriction.

If the human race and this planet ever needed hemp, it is now. The earth has been poisoned by rampant capitalism and the immune systems of humans and other species have been compromised. People today are dying of diseases that were practically unknown forty years ago. Even the food we eat in many cases is not fit for human consumption.

We are in the middle of a cancer epidemic while the "powers that be" restrict the use of a natural drug that can put an end to much of this needless suffering and death. When hemp's restriction is lifted, it will provide tens of thousands of jobs and it will put many farmers back on the land where they belong. Hemp can also solve all our energy requirements while it detoxifies the land it is planted in.

In reality, there is no downside for the human race or this planet if hemp is grown everywhere. Just harvesting seed from the hemp plant and providing it to the people in need will help put an end to starvation on this earth. No more of those horrible images of children starving to death. Growing hemp on a grand scale would also take the criminal element out of this wonder plant. When hemp is grown like corn what does it cost to produce it? What is a pound of corn worth? That should answer the question.

The corruption that is the law put in place against hemp is also what fuels the criminal element. If this law is changed hemp becomes of very little value, hence it is no longer of any criminal interest. When last I checked, somewhere to the tune of 80% of drug related deaths from the use of street drugs are attributed to pharmaceutical medications. How many people do you know of that have died from using hemp?

Within our medical system there are doctors that will prescribe hemp, but they are few and far between and I have yet to find one. If your doctor is like the ones I have come in contact with they will say things like; hemp is still under study, when indeed they know a lot more than they are telling you. Doctors who refuse to prescribe hemp are not healers; they are nothing but drug dealers for the pharmaceutical firms.

Take a look at all these organizations like the Cancer Society etc. Now ask yourself where all the money they have collected has gone? Do you really believe any of these organizations want to cure any thing? The bottom line is, if they did, they would be out of work! If indeed the public would like to donate money to a real cause, your support will be appreciated by everyone. Please send donations to Phoenix Tears, c/o Rick Simpson, 344 Little Forks Rd., G.D. Springhill, NS B0M 1X0. We already have the cure, all we need is the right to produce it.

I wish I could say otherwise but our legal system is no better than our medical system. Do you think that lawyers don't know that the law against hemp is based on corruption? Of course they do, they just don't want to give up the income they are making supposedly defending people facing hemp charges. It seems that most professionals are willing to sell their souls to go along with the system and thicken their wallets.

This is our watch. It is time to bring this dark chapter in man's history to an end. Is the human race to stand by and let big corporations kill our loved ones and ruin the planet we live on? As I have said many times, the people are the real power in any country, all we have to do is stand as one and this nightmare is brought to an end. The power that created the human race did not intend for us to destroy ourselves through ignorance and corruption. If something is not done right now there is no future for mankind, I urge everyone out there to educate themselves about hemp. Help bring hemp's restriction to an end. Stand up and be counted.

On February 8, 2008, I am to be sentenced for providing hemp medicine to the public. Since I did not profit from this I guess my crime is easing human suffering and saving lives. Does this not want to make you jump up and sing Oh Canada? Anyone who has ever been punished by our system over a hemp charge is not a criminal, people who have been jailed or restricted over hemp are political prisoners not criminals. The law against hemp is not real or just.

According to the news, Marc Emery will be doing five years in a Canadian prison to please the American government. Mr. Emery committed the horrible crime of selling seeds from the most medicinal plant on earth to Americans. Even though it is legal in Canada to sell hemp seeds the Canadian governments in their never-ending quest to please Uncle Sam have agreed to lock Mr. Emery up. If anyone should be locked up over hemp we think it is safe to say that it should be Mr. Bush and Mr. Harper. The policies of these two men toward hemp medicine continue the government sanctioned euthanasia that has been going on against the people of North America for decades. As for Mr. Emery, we say keep your head held high, we all know that you have done nothing wrong. Hopefully, in the next federal election the Canadian people will show Mr. Harper what we truly think of his policies.

Recently we received an email from the Maui Cannabis club in Hawaii. You can find them at www.mauicannabis.com - email: info@mauicannabis.com. These good people have been supporting Phoenix Tears and have been spreading the word about the medicinal use of the hemp pant. Of course, the US DEA did not much care for this and raided this compassion club on December 18, 2007. This has cost the club about $10,000.00. Like most folks trying to bring the medicine to the people they have little or no money to operate on since the raid. So if you can lend them any support I am sure it would be appreciated.

Now let us band together to ensure a future for ourselves and coming generations, let us all work together to create a better world. Time is running out for the human race and this planet if we do not act now.

Rick Simpson,

Phoenix Tears - www.phoenixtears.ca

BB, Ani 

Imported from external blog

About two-thirds of 211 officials surveyed by the National League of Cities reported an increase in foreclosures in their cities in the past year, according to the online and e-mail questionnaire. A third of them reported a drop in revenues and an increase in abandoned and vacant properties and urban blight.

"There's a reduction in revenues at the same time that more services are needed," says Cynthia McCollum, president of the National League of Cities and councilwoman in Madison, Ala., a suburb of Huntsville.

"Because of foreclosures, people are stealing, crime is on the rise and we don't have more money for cops on the street."

More than a fifth of city officials responding said homelessness and the need for temporary and emergency housing increased in the past year.

The ills of foreclosures are dominating the agenda of the league's meeting with congressional lawmakers in Washington, D.C., this week to secure federal funding for local initiatives.

"The American dream for individuals has now become the nightmare for cities," says James Mitchell, a Charlotte councilman and head of the group's National Black Caucus of Local Elected Officials.

Foreclosed homes are the target of vandalism, he says, and there's been an increase in police calls.

In Peachtree Hills, one of the many neighborhoods of starter homes that sprouted around Charlotte this decade, 115 of the 123 homes are in foreclosure, Mitchell says.

"The 12 residents left there can't sell their homes and now their property values have decreased," Mitchell says. "It's starting to be a symbol of what we don't want to happen to Charlotte."

Many of the buyers were African-Americans who were enticed by zero-down mortgages on moderately priced homes. The survey shows that lower-income families, single parents, seniors and people of color are disproportionately affected by the housing crisis.

Foreclosures create ramifications even in cities that have been spared the worst of the crisis.

Riverside, Calif., is at the heart of the state's Inland Empire, an area that has attracted people in droves from costlier coastal areas but now ranks fourth nationally in foreclosures. Most of the housing boom, however, did not occur in the city but in communities to the east where foreclosures are mounting.

"It's having a ripple effect on our budget and city finances," says Riverside Mayor Ronald Loveridge. "Housing industry is not simply building homes. There's less money being spent for new cars. … That's had a powerful effect on the economy of our region."

California cities rely heavily on sales tax revenues since the 1978 passage of Proposition 13, which caps real estate taxes. Riverside faces a $12 million deficit this fiscal year.

"We handle that by essentially not filling positions," Loveridge says.

Riverside is adjusting the payment schedule of development fees to encourage construction and passed an ordinance requiring the upkeep of homes — even when in foreclosures.

Charlotte is working with the Department of Housing and Urban Development on a program that allows firefighters, police officers and teachers to purchase foreclosed homes at 50% of their listed price.

Check www.rense.com for more details about the collapsing world economy.

Blissed be, Ani 

Imported from external blog

World Financial Crisis

Russia To Switch Some Oil Trading To Rubles

Foreclosures Fail Because No Loan Ownership Proved!

FDIC To Add Staff As Bank Failures Loom

Bernanke Almost Says 'Devaluation' - Vid

US Foreclosures Jump 90% As ARMS Reset

Major US Banks - Fundamentals Rapidly Deteriorating

Once-Safe DC Taking It On The Real Estate Chin

$739B In Mortgages At 'Moderate To High Risk'

US Housing Prices Plummet To 9 Year Low

September 2008 Collapse Of US Real Economy

US Self-Employment Plummeting - Massive Downturn

US Faces Mother Of All Economic Meltdowns

Protocols For Economic Collapse In America

Usually I am fairly conservative about economic matters, but my intuition and the above-linked articles, along with others, convinced me, we indeed, have a very serious potential worldwide economic issue on our hands.

Please note all pertinant articles can be found on www.rense.com

Blissed be, Ani 

Imported from external blog

Now that the sound of cork-popping and other signs of celebrating the New Year, and the new record highs in the price of gold, are dying down, some questions arise the answering of which brooks no delay. How high is high? Is it the nominal price or the so-called 'real' price of gold that gives us a valid reading of whence we came, where we are, and whither we go?

Chrysophobes have already started their dissonant chorus reminding gold bugs that the last time gold was trading at these levels, in January, 1980, it was a sign marking the onset of a bear market taking the price down by more than 75 percent, lasting over twenty years. Goldbugs take comfort in the thought that the previous peak in the price of gold was much higher in "real terms", so that the current price is not so high after all. However, this begs the question. The previous peak was the result of a blow-off, and further rise from here may make a new blow-off loom large on the horizon, with all the unpleasant consequences.

The chorus of chrysophobes will obviously get much louder as we may see fresh record prices in four digits. Just how serious is the danger that a blow-off could trigger another bear market lasting for decades?

Gold Standard University offers a unique perspective on the gold price issue, a perspective which is deliberately ignored, even denigrated, by virtually all investment advisory services. Ours is the perspective of monetary science as it existed prior to 1936, before Keynes and other charlatans gained academic recognition and prominence for peddling their pet monetary nostrums. Let's review some of the principles that are indispensable in separating grain from chaff.

Gold is the senior monetary metal (silver being the junior). This has nothing to do with the denials, declarations, and desires of devaluation-happy governments. It has to do with the fact that the value of gold, unlike the value of other earthly wares, depends far less on scarcity, and is threatened far less by increasing supply. One may even say that the value of gold is exempt from the effect of the law of supply and demand. Often the rising price of gold causes a contraction of supply. A blow-off may indeed cause a withdrawal of all offers to sell. After that happens, gold is not for sale at any price. But again, a blow-off may bring out an avalanche of supply. The essence of the gold price is volatility. The essence of the value of gold, however, is stability. We conclude that the price of gold has nothing to do with the value of gold.

Monetary economics is the science of monetary commodities, which are necessarily quite different from the non-monetary variety. The latter are produced in order to satisfy consumption demand. The former are produced to satisfy demand for the ultimate asset that has no counterpart in the liability column of the balance sheet of someone else. The only default-proof asset is a holding of monetary metals.

The value of gold is more stable than the value of any non-monetary commodity, although this fact is deliberately obscured by the managers of global irredeemable currency, anxious to confuse the issue. They have the power to engineer temporary surges in the value of their product, irredeemable promises to pay, in order to put gold into the worst light. What makes a monetary commodity? It is the fact that existing supplies are very large relative to the flows of new metal from the mines. A discovery of new gold fields makes little impact as its effect on supply is small. On this basis gold has been far and away the leading monetary metal for most of the Modern Age. It still is.

The managers of the global fiat currency system are helpless in facing the challenge of gold. They can have their high-profile auctions, trying to demonstrate that gold is scrap and is being sold as such. But what these gentlemen accomplish is only to undermine the value of their fiat currency through the dilution of the assets backing it. Those who can read balance sheets understand that selling a monetary asset that is nobody's liability such as gold, and replacing it with the irredeemable promises of coin-clipping governments, makes the balance sheet of the central bank weaker, not stronger. After all is said and done, gold is gold and paper is paper.

A paper promise cannot be better than the good faith behind it. This good faith is not a consequence of a quantity-rule advocated by the monetarists. It is a consequence of the promise being redeemable in something other than another promise. Gold is not a promise: it is the fulfillment of promise. You need not trust gold if you don't trust the issuer who stamped it. The weight and purity of gold can be readily tested with scales and acids.

The history of good faith behind monetary promises could hardly be more dismal, as the monetary annals of the twentieth century reveal. There is not a single currency without at least one instance of breach of faith during the twentieth century. The Swiss defaulted on the Swiss franc once, in 1936. The U.S. defaulted on the dollar twice: in 1933 and in 1971. The British defaulted on the pound sterling at least three times: in 1931, 1948, and in 1968.

By 1971 it looked so bad that the world's governments agreed to make the deciphering of their monetary record difficult through the stratagem of "floating". The word is a misnomer designed to camouflage "sinking". Floating obscures the underlying fact of competitive currency devaluations. The dam burst and the world's stock of money started on an exponential track. Prices of consumer goods took flight. Interest rates were destabilized. Derivatives markets proliferated.

But it was in the twenty-first century that monetary debauchery started in earnest. The scope of monetary destruction that goes on right now makes earlier episodes pale in comparison. Worse still, monetary debauchery has its own momentum and is not responsive to monetary brakes. Everybody talks about the unprecedented rate of new money creation. Nobody is talking about the equally unprecedented rate at which money is being destroyed. No sooner had new money been printed than its value depreciated. The point has been reached that the more new money is created, the more its value declines; and the more it declines, the more new money has to be created. What you have is an irresistible spiral into the abyss.

As I was saying, the price of gold has nothing to do with the value of gold. It has to do with the disappearing value of fiat currencies in which the gold price is quoted. A falling price of gold ought to be interpreted correctly, like the fall of a piece of rock. Is that rock pulling the earth, or is it the earth that is pulling the rock until the latter crashes into the former, through the mutual attraction of masses?

A falling gold price is the market's reaction in anticipating large-scale dumping of gold on official account. The dumping is politically motivated: it is designed to misinform and mislead. Naturally, the market obliges: it brings down the price to facilitate central bank unloading. But once dumping stops, as it obviously has to at one point, the market immediately adjusts the gold price back to its pre-dumping level or higher. Only ignoramuses swallow the propaganda line that gold is passé, and the millennium of global irredeemable currency is here.

Selling gold after a surge in the gold price is akin to canceling fire insurance after surviving unscathed a devastating fire destroying homes and property in the neighborhood. It can be confidently predicted that higher gold prices will bring out a lot of selling by woolly-thinking people, as if insurance against the danger of collapse of the international monetary system were no longer necessary after an initial tumble in the gold value of paper currencies.

The reason for this illogical behavior is greed that is often greater than the desire for security. A large part of the gold bug population is motivated by "get-rich-quick" mentality more than by the mentality of insurance policy holders. This type of behavior should not detain us here. We do know that there were passengers aboard the sinking Titanic willing to sell their life-savers for cash. "Profit-taking", so-called, will ultimately dry up as the collateral risk (what I euphemistically call the dead-cat bounce of the dollar) will become clear even to people ignorant of the difference between monetary and non-monetary commodities.

One of the most controversial propositions that we here at Gold Standard University have to face, and the idea that appears to die hardest, is the supply-demand equilibrium price of gold. The price of monetary metals is not governed by supply-demand considerations. Such a supposed equilibrium is just the figment of the imagination, lacking any scientific merit. The fact is that supply and demand in the case of monetary metals is indefinable. By their very nature the monetary metals are subject to the most intense and most concentrated speculative attacks, both from the long and short side of the market. Speculators in gold are not poring over production and exploration results. Rather, they are trying to divine how the largest holders of gold are going to react to a surge in the gold price. Accordingly, from sellers they become buyers and vice versa on a moment's notice, moving the price as they do.

There are no scientific principles to support predictions about human behavior. There are only statistical laws, and we might as well admit up front that they are very imperfect. A statistical law is the more valid the larger is the number of cases it can catch within the net of sampling. It follows at once that when it comes to predicting the consequences of a single isolated, non-repeatable event, such as gold scoring a certain new record, statistical analysis is useless. As any upright scientist will admit statistical analysis has a congenital weakness: its validity and usefulness diminish in proportion with a decrease in the number of samples. There is simply nothing science can do to eliminate or to assuage this weakness. Of course, quacks are ready to exploit our incurable ignorance and will try to impress the gullible public with mathematical hocus-pocus. They will pretend to make "scientific" predictions about the consequences of isolated, non-repeatable single events in the realm of human behavior.

I am a professional mathematician. Here I stand as a new Luther and bear witness that mathematics has not been in the past, is not at present, nor will it ever in the future be able to make predictions about human behavior based on minimal samples. I am fully aware of the significance of my statement and I am willing to stake my professional reputation on it. It is not possible to predict whether a surge in the gold price will bring out more sellers than buyers, or whether it will bring out more buyers than sellers.

Proliferation of mathematical symbols and studied gestures by pseudo-mathematicians do not science make.

However, monetary economics is able to predict that the ranks of so-called 'rofit-takers' in the gold market will be drastically thinned out by persistent losses they stand to suffer (as have the ranks of naked short sellers in the gold mining industry). Ultimately, when a certain threshold in the price of gold is passed, profit-taking will dry up altogether (as short selling by gold mines has A.D. 2007).

I say 'so-called profit-taking' because we are dealing with an oxymoron. Can one really take profits in the gold market by taking paper currency, destined to lose whatever value they may still have?

The call to take profit is a siren song. To neutralize it, you had better follow the example of Odysseus who had himself chained to the mast, and had the ears of his oarsmen plugged with wax.

When the profit-taking mentality is thoroughly defeated and discredited by the market, gold will go to permanent backwardation making the gulf between cash gold and paper gold unbridgeable. The gold basis will go negative, burning the bridge leading back to contango. From then on gold is not for sale at any price. Just when this will happen is impossible to predict. There are a few clues nevertheless. One is the silver basis that acts as a precursor of the gold basis. Whatever little information we may glean from the markets, it all has to do with the basis. It is therefore all the more surprising that investment advisers cavalierly ignore the basis as an analytic tool, just as they ignore the coming backwardation.

Likewise it is impossible to pinpoint where the threshold price, past which the supply of gold will dry up completely, is located. History and theory confirm that there is such a threshold, but we are left to guessing how high it may be.

Governments have forcibly removed gold not only from the banks, but from academia as well. As a result, the level of ignorance in the world about gold is appalling. Gold has been relegated from economics to superstition, witchcraft, and soothsaying. It is treated like a narcotic agent. "Gold is addictive. Gold ought to be taken away from man's greedy little palms by a paternalistic government", as advocated by Lord Keynes' New Economics. The advice is disingenuous. It is not given in the interest of people. It is given in the interest of the pilferers and plunderers of people. Here is how one author, Howard Katz, describes economics as it has transformed, nay, corrupted, American institutes of higher learning.

"Something is rotten in the state of economics. In the middle of the 20th century a group of bankers bribed some of the nation's top colleges to peddle a reactionary economic theory (which was to make bankers a lot of money). This theory swept American higher education with the result that pretty well everybody who has graduated with a degree in economics no longer has the slightest idea of what he is talking about… There is nothing wrong with the science of economics, but there is something terribly wrong with the kind of trash handed out by our nation's colleges today. It is people dumb enough to imbibe such trash who are the reporters and columnists in most of the media, and these are the people giving most Americans economic advice."

Gold Standard University is fighting back. It is not motivated by the lure of making a fortune in gold speculation. Not as if it condemned efforts to salvage capital from the crumbling old monetary regime to transfer it to a new one. But salvaging won't be a bed of roses as the idea of making a fortune in gold speculation seems to suggest. Gold Standard University is motivated by values held in the highest esteem. It is motivated by truth, the cause of which has been so pitifully betrayed by economists in taking bribe money from banks; and the dissemination of which has been so miserably compromised by economics departments in reacting to blackmail (namely the threat to discontinue grants and to purge truculent economists).

Making statements about the future course of the gold price is a most treacherous undertaking. Gold Standard University is committed to tell you all that can be supported scientifically. Making predictions about the timing of price moves up or down is beyond the pale. However, I am willing and happy to share with you my insight, for whatever it is worth, on the gold price issue as well as on the burning question how long the agony of watching the death throes of global fiat currency will take. I promise that I will always carefully delineate facts from opinion.

We can dismiss the suggestion out of hand that the next blow-off, if and when it comes, will ring in a new bear market in gold. At any rate, it will be very different from that witnessed in 1980. The credit of the United States was immensely stronger then. There was room for drastic increases in the rate of interest that helped restoring the dollar to strength. Higher interest rate is a very strong and very effective medicine ? that is, if the patient has a constitution that it can be administered. If the patient is too weak, strong medicine would be lethal.

The dominant fact to understand is that yield varies inversely with the value of the underlying asset. Therefore increasing the rate of interest would further erode the capital structure of the American banking system, already badly shattered by the subprime crisis. It is out of the question that the Fed could follow the Volcker-recipe, 1980 vintage, of letting interest rates go double-digit. Contrariwise, if the Fed were able to lower interest rates by hook or crook, that would be a reprieve for the banks with melting capital. It is my considered opinion that the Fed is doing what it does because the effect of a falling interest rate on bank capital is instantaneous. By contrast, pumping money into the banking system works by way of trickle-down. Talk about "stimulating the economy" is for the birds. The real reason why the Fed has to lower interest rates in a hurry when logic would call for increasing them is the emergency to stave off an implosion of bank capital.

How can the Fed engineer a falling trend in interest rates? This is the point where my own analysis diverges from that of others. Interest rates will fall because bond speculation in which the banks engage is risk-free, on the strength of the open market operations of the Federal Reserve. The banks preempt the Fed in buying the bonds. The consensus is that the ailing dollar can be bailed out only through a regimen of rising interest rates. But the banks bet at the roulette table that interest rates will fall, against everybody else betting that they will rise. Why, the $500 trillion strong derivatives monster serves one purpose and one only, that the bull market in bonds may continue indefinitely. In other words, the infinitely elastic supply of interest rate derivatives is there to make sure that the shorts in the bond market will burn their fingers right to the armpit. Interest-rate derivatives did not come about by accident. Like the original Tower of Babel, the Tower of Derivatives is being built deliberately. It was conceived and nurtured by megalomaniacs, in this instance the managers of the global fiat money system. They understand that bank capital hangs precariously on the cliff of vanishing confidence. They are confident that they can patch up even the largest holes in the balance sheet of banks on capital account, provided that the derivatives monster will not unravel in the meantime. The big unknown is whether the escalation of counterparty risk will trigger the self-destruction of derivatives before the managers are through.

Here is the strategy. The Fed will keep halving the rate interest as many times as necessary. Each halving nearly doubles bank capital. It worked in Japan where the authorities have kept the brain-dead banks in business through thick and thin. The Japanese merry-go-round has been supported by the yen-carry trade; the American merry-go-round will be supported by the derivatives farce.

Both represent a game of musical chairs. It is a matter of opinion how long the music can go on. I am reminded of the sinking Titanic aboard which the orchestra continued playing even after all lights went out. I don't see that the music would stop this year even if the lights go out and industrial production starts to sputter. The conundrum of a weak dollar cum strong bonds will continue to baffle all the experts, and lead a lot of gold bugs astray.

The 1980-2000 bear market in gold was made possible by the Volcker-coup in pushing interest rates past 20 percent. It was designed to trick people out of their gold position. The Volcker-coup was an expensive gamble that succeeded, because the economy was fairly strong in 1980, a condition completely lacking today. If Bernanke tried to mount the Volcker-coup now, the economy would go into a tailspin. We may conclude that another bear market in gold is well-nigh impossible.

To summarize, in my opinion a blow-off in the gold market is not imminent. The dollar, however weak, is not yet a pushover. It will fight back, supported by a strong bond market. The bag of tricks of the managers of global fiat currency is not empty. They haven't yet played the Amero card, for example.

I advocate a new approach to investing in gold. This approach rules out profit-taking, but involves arbitrage between the two monetary metals. Cues must be taken from the silver and gold basis, not from the gold/silver ratio which is rigged.

Come to Session Three of Gold Standard University Live to be held in Dallas, Texas, from February 11 through 17. I will conduct the course and the seminars in person. Bring your questions with you. Details about the session can be found on the website www.professorfekete.com/GSUL.asp

Be part of the uplifting undertaking to resurrect monetary science. Discover the truth about money as the giants of monetary science, Adam Smith, Carl Menger and others have handed it down to us, before bribe and blackmail have overtaken the search for and dissemination of knowledge in economics.

The world's finance capital is on its way to total annihilation. The essence of the subprime crisis was not the slack in lending standards. The essence is that the worm of doubt is eating confidence away. Banks no longer trust the promises of other banks. Under a gold standard trust could quickly be restored by paying out gold. That's what gold is for, to restore trust whenever doubt arises. But gold has been removed from the banking system. Now irredeemable promises can only be redeemed by issuing more irredeemable promises. In such a system the erosion of confidence cannot be checked. Lack of confidence becomes cumulative. It is like kicking garbage upstairs. When the attic can take no more, the day of reckoning has dawned, and the garbage comes crashing down.

What can the individual do under these circumstances? He can salvage the pieces of his capital from the moribund international monetary system through the Yellow Brick Road. When you invest in gold, you transfer your capital, bit by bit, from Sodom and Gomorrah where it is doomed by the coming rain of fire and brimstone, to Emerald City of the New Gold Age.

Truth, whether you are prepared to accept it, or not. 

Blissed be, Ani