Jay Taylor: Super Deflationary Depression May Be Looming
By Anthony Wile - February 01, 2015

Introduction: Jay Taylor is the editor of J Taylor's Gold, Energy & Technology Stocks newsletter. Throughout his career, Mr. Taylor worked as first a commercial and then as an investment banker. Most recently, he worked in the mining and metals group of ING Barings in New York. Prior to that he was involved in the first gold loan made in modern times in the U.S. to Amax Minerals, a 250,000 oz. loan facility led by Citicorp. In 1997 he resigned from ING Barings to devote himself full time to researching mining and technology stocks, writing about them in his newsletter, and assisting companies in raising venture capital.

Jay Taylor's web-based radio show, "Turning Hard Times into Good Times," can be heard live on the Voice America Business channel Tuesdays between 3:00 and 4:00 PM and can be downloaded the following day at JayTaylorMedia.com. Jay's guests have included, for instance, Jimmy Rogers, David Stockman, Ron Paul, Marc Faber, Doug Casey, Eric Sprott, John Hathaway, Edward Griffin, Howard Davidowitz, Ian McAvity, James Turk, Mish Shedlock, Richard Maybury, Rick Rule, Robert Prechter and Lewis Lehrman, to name a few. He is joined weekly on podcast discussion with Daniel McAdams of the Ron Paul Institute for Peace and Prosperity in "A Foreign Policy Week in Review with Daniel McAdams" and also weekly with David Jensen on "A Fundamental Look at the Gold Markets with David Jensen."

Anthony Wile: Hello, Jay. Let's jump right in. We asked some of the following questions when we interviewed you six months ago, so please emphasize how you think things have changed or evolved, and where you've been correct, or surprised. First, what's the biggest issue facing the West today economically?

Jay Taylor: The biggest issue facing the Western world today is "counterfeit money." Central bankers are doing exactly what mafia dons are thrown in jail for doing, namely creating counterfeit money. They create money out of nothing, which then is multiplied many times over by a dishonest fractional reserve banking system. But this banking system that is used to multiply the first counterfeit dollar into 10 to 100 times more fraudulent dollars does actually have a "raw material" from which it is manufactured. That raw material is DEBT. So whenever our current insane central bankers engage in QE, they also create an equal amount of debt into the monetary system. And because of malinvestment, income to service, that debt has not kept up with the growth of debt, as the chart shown here illustrates (click for original, slighty larger). Even if you believe the government's inflation numbers (I do not), income (GDP) is growing in a linear manner while debt is growing exponentially.

Somehow, the Keynesian PhDs from Ivy League and other elitist universities – those guys who receive all the Nobel prizes in economics – think there is nothing wrong with this picture. And seeing nothing wrong with the fact that debt is growing exponentially while income grows in a linear manner (at best), they continue to engage in the same failed monetary policies as in the 1930s only more so since the Lehman Brothers failure almost destroyed the Western world's economies. Doing the same thing over and over again and expecting different results is the definition of insanity. One wonders if our leaders are neurologically impaired or downright satanic.

Anthony Wile: Is the U.S. in a recovery, as Yellen has stated?

Jay Taylor: If you put blinders on and accept the government's inflation numbers, you can make a case that we have had a recovery of sorts, though even using the official "Pravda" numbers, even mainstream pundits admit this is the most tepid recovery by far than any we have had since the 1930s.

If you are a middle-class person like I am and if you take the blinders off and do not rely on mainstream news sources as your sole source of "intelligence" you have to believe the economy continues to shrink. Not only is the total number of employed workers continuing to shrink but average take home pay continues to decline for most employed people. Now, if you believe the CPI should measure the cost of keeping a family of four alive (as it did in the 1960s and 1970s) and if you used the same yardstick to measure the rise in the cost of staying alive as back then, economist John Williams makes the case that we have an inflation rate in the 8% to 9% range. If you factor that inflation rate into the GDP number, then indeed the U.S. economy has been in a contraction ever since the 2008-09 financial crisis. I believe that is the case.

Anthony Wile: Will QE help bring Europe out of its slump?

Jay Taylor: Europeans may get a short-term economic shot in the arm and it may buy a short period of time before debt deflation plunges it over into the abyss. And politicians may use a lot of good old Bernaysian propaganda combined with government transfer payments, entertainment diversions and lots of booze to keep the populace tranquil. But QE will never be successful if by success you mean a restoration to a truly vibrant, productive economy.

Lord Keynes no doubt scored high on any IQ test he may have taken, but they say Einstein had trouble tying his shoes. All of these very bright elite economists have trouble "tying their shoes." They simply don't live in the real world and don't observe how human beings actually behave. Or perhaps they simply want to manipulate the individual into a collectivist web that they control. These elitist economists are remarkably ignorant about how true free markets allocate scarce resources far more efficiently than a group of central planners. And if these elites intended to destroy capitalism, they could not have done a better job than they are doing now by hiding price discovery of capital by zero (even negative in some cases) interest rate policies.

Anthony Wile: How has it worked in Japan?

Jay Taylor: Worse than bad. The statistics speak for themselves. The BOJ has now had decades of QE with bigger and bigger doses coming faster and faster. Japan is a basket case. Why would anyone invest in a country that is destroying its currency and economy with zero interest rates and an impending hyper inflation as its currency is now accelerating toward a total state of worthlessness – as all Western currencies are doing? Clearly, the G7 is coordinating efforts among the various central banks of the G7 to take turns debasing their currencies so that as long as people accept these debt-based fiat currencies, they continue to appear viable. But, of course, collectively all of them are in a race to the bottom. The only currency that is stable and has existed over centuries, and that since mid-December is now gaining against all other currencies – even the "strong" U.S. dollar – is gold.

Anthony Wile: What is the point of debasing the currency?

Jay Taylor: To fool the people into thinking they can get something for nothing and to reallocate wealth from those who create it – the miners, manufacturers, farmers and inventor – to those who control it – those being the bankers and government.

Anthony Wile: Why hasn't gold reacted more to all this liquidation?

Jay Taylor: Gold is highly manipulated by a handful of very large financial "too-big-to-fail" institutions. I would strongly suggest your readers listen to my weekly podcasts at jaytaylormedia.com/audio. The podcast called "A Weekly Look at the Gold Market Fundamentals with David Jensen" is gaining rapidly in popularity because David not only provides concrete evidence of gold market manipulation by these too-big-to-fail institutions but he explains how they destroy gold (and silver) price discovery through massive paper contracts that they can create out of nothing. This is happening just as certainly as price discovery of capital is being destroyed with massive money printing. As David has pointed out, there is more paper gold and silver traded in a day than is mined in an entire year! He provides evidence that there are a handful of really huge players that can hit the markets with hundreds of millions of dollars of "sell" orders in a matter of minutes to turn markets downward at exactly the time they would otherwise rise.

There may be a few of us "crazy" gold bugs buying into that weakness but by keeping price discovery from happening in the gold markets, these few too-big-to-fail bankers keep the masses disinterested in selling what they create out of nothing – paper assets – to buy gold. To put it simply, what we have here is a legal license held by governments and bankers to rob people of the wealth they create. It's a case of the fox guarding the chicken coup pretending to befriend us chickens. But not one in a thousand Americans are aware that the Federal Reserve is a "hungry, dangerous fox."

Anthony Wile: Are the Chinese and Indians buying gold?

Jay Taylor: From all the reports I read outside of the mainstream the answer to that is "yes," and an enormous amount of it, too. Unlike citizens in the Western world, people living there have a very healthy distrust of their governments just as the founders of the U.S. had, which is why they kicked an evil, brutal King of England out of here in 1776.

Applying the propaganda tactics of Edward Bernays, those "foxes" have learned very well how to convince us they have our best interest at heart as they print money to give things away to both rich and poor in what is rightly described as "Operation Parasite." Both the rich and poor constituency has been growing. The Rich get massive installments of QE pumped into the economy whenever the stock market throws a "hissy-fit." That drives stocks higher. Bingo! You have a transfer of wealth just like that! As for the growing number of poor, with fewer people working, a record number of people on food stamps and the aging population we now have more people voting for a living than working for a living. Yet propaganda continues to suggest things are well in America so why is there any need not to trust Uncle Sam and the Fed?

The Chinese, Indians and Russians, on the other hand, have not been so effectively "kept down on the mushroom farm" as Americans have. They know from recent history that gold is pure, unadulterated wealth that will not be destroyed as they have witnessed with their government money.

But at least with China (Russia, too) the massive buildup of gold is not only driven by individuals. It seems that a buildup of gold reserves is a policy on the part of the BRICS governments as they seek to establish their own monetary system to avoid the abuse of the Anglo-American Empire that continues to live off of the remaining spoils of the past two world wars. But as the wealth of the developing countries has grown over the past number of years, the BRICS are flexing their muscle and as the U.S. pushed sanctions on Russia, it is causing the pace of a competing monetary system to accelerate. While I applaud that on the part of the BRICS, I worry that is why the U.S. is becoming so aggressive in the Ukraine and elsewhere.

The U.S. and NATO do not want to allow the Chinese to protect their own sea lanes and they don't want to allow an elected government in the Ukraine to get too close commercially to Russia. So we have had NGOs foment an overthrow of the Ukrainian government just as the U.S. has in many other countries since it first did it in Iran in 1953. I do worry that the winds of WWIII are beginning to blow.

Anthony Wile: So why did gold move down so markedly a few years ago?

Jay Taylor: You could argue that after 10 years of successive increases it was time for a natural breather. I think there is some truth to that. But I find it very curious as to why gold was so perfectly correlated with QE money growth until the exact time when U.S. Treasuries were downgraded in August of 2011 by S&P. Up until that time both stocks and gold were almost perfectly correlated with the growth in the Fed's balance sheet.

What investors need to realize is that there are two gold markets. First, there is the real gold market, which now exists in Shanghai where before someone can sell gold they need to deposit a bar of gold with the exchange. That is an honest gold market unlike the LBMA and the Comex, both of which are fractional reserve gold markets in which futures contracts are at least 100 times larger than the physical portion of those markets. When a major player comes in with its fiat money, which it has just created out of nothing, and enters a large contract to sell gold and colludes with one in that same institution's club to pass that contract back and forth and to close it out before delivery day, it looks to most observers as if it is a real gold market. It most decidedly is not. It is a virtual market in which you may have been exchanging widgets or any other name you want to call it. But this is considered to be THE GOLD MARKET.

So what I'm saying is there is a vested interest in keeping the gold market highly controlled, especially at key moments so as to keep the masses in the dark about the value of gold and thus keep them focused on what Wall Street can produce out of nothing, namely stocks and bonds.

I'm suggesting there has been a buy and sell manipulation by an oligopoly of too-big-to-fail financial institutions who pass massive futures gold contracts back and forth like a big locomotive moving back and forth on a train track to destroy a real price discovery for gold. And what more important time to do that than exactly when confidence might have been lost in the dollar thanks to a downgrade of U.S. debt by the S&P back in 2011? Was it just a coincidence that the correlation between money creation and gold broke down at that exact time while stocks continued on an upward tear along with massive money creation? It's all part of keeping the masses down on the mushroom farm (keep them in the dark and feed them fecal matter).

Anthony Wile: Do you see it moving back up? When?

Jay Taylor: The Western world's financial system is in a death spiral and that should have led to a trashing of the dollar a long time ago, which would have resulted in a massive bull market for gold. But policy makers have and will continue to exercise all manner of sociopathic con artistry to keep the public's attention from the real cause of our financial problems, that being the destruction of money and markets, which in turn is destroying the productivity of capitalism. Continued wars and rumors of wars are being employed to help to keep people united behind their governments. Isn't it strange how "rogue" nations are those that don't cooperate economically with the U.S. by choosing not to use U.S. dollars for trade? But now there is a rising number of countries including best friends of the U.S. like Canada, Australia and New Zealand that have arranged trade with China that excludes the U.S. dollar as the medium of exchange.

So, while Putin is accused of aggression against the Ukraine I believe it's the U.S. and NATO that are engaging in clandestine efforts with possible false flags being used to justify an ultimate military incursion with the ultimate goal a takeover of Russia. Likewise, we continue to go after militant Islamic groups forgetting the CIA itself has said, "The reason they came over here on 9-11 is because we are 'over there.' "

But all this foreign policy involvement is horribly costly and a diversion that will not fix our economy. I suspect as the economy continues to worsen and when it's become difficult to put food on the table in America, trust in government and its money will, unfortunately, be lost. Then we will see not only a bull market in gold like the one we had up until August 2011, but a bull market that scales unbelievable heights. Gold will rise exponentially, not that it will have become more valuable but because the dollar will be spiraling toward its death along with all the other fiat currencies through history. Only gold has survived the test of time over thousands of years as a trustworthy currency. I suspect that will continue to be the case.

I actually think we may now be very close to a gold breakout, given the fact that gold has, since about mid-December 2014, outperformed the U.S. dollar, which has outperformed all the other currencies. It tells me that at the margin, there is growing distrust among very smart investors that the days of fiat money are numbered. And when confidence is lost in the dollar by the masses, I think silver will outperform gold because it has become far more suppressed than gold in this 3½ year correction.

Anthony Wile: Do you see deflation taking hold around the world?

Jay Taylor: Yes, I do because as noted earlier, debt is growing much more rapidly than income around the world, especially in the West. Looking back at the work of John Exter whose inverted pyramid chart is shown here, the actions of the market are following his outline to a "t."

First, the senior currency (still the U.S. dollar) gets stronger because it has the most debts so that when the system contracts more wealth flows back into that currency when debts are repaid. Secondly, the senior currency is large and liquid enough to accommodate a massive move of wealth into it.

The last stage of Exter's deflation scenario, however, sees wealth finally flowing out of the senior currency into gold, which is outside of the system. It is at that time then when not only gold but virtually all tangible assets rise exponentially relative to the fraudulent debt-based currency that we have all been forced to use for commerce at gunpoint and through the courts by governments. By the way, this is contrary to the U.S. Constitution, which mandated the U.S. dollar be defined as gold and silver. So the courts themselves have bastardized the U.S. Constitution.

Anthony Wile: Is it going to get worse? Is the world going to end up in a deflationary depression? Is it in one already?

Jay Taylor: I hope and pray that is not the case. But based on all the evidence I see and hear when I stop listening to the mainstream propaganda, it tells me that that is exactly where we are headed.

Anthony Wile: Are things worse than the mainstream media claims they are?

Jay Taylor: Absolutely! The mainstream is owned by the same foxes that own the Fed and control our government. They are "guarding the chicken coop" and we are the chickens. Alan Greenspan understood and spoke about that in his 1966 article in the Objectivist newsletter, in his article titled, "Gold and Economic Freedom." Greenspan understood that the fox must convince all of us not to "fly out of our fraudulent U.S. dollar coop" into gold or the statist socialist and fascist military agenda would die a quick death. Those are my words, not exactly the way Greenspan put it, but that is what he meant.

That is exactly why Nixon "temporarily" closed the international gold window on August 15, 1971. Had we remained on the gold standard, Vietnam and Lyndon Johnson's Great Society could not have been funded. There was a great rebellion in the 1960s and 1970s in the U.S. by young people drafted to fight in Vietnam. But now, thanks to the discontinuation of the draft and an economic depression here at home that frees up plenty of men and women to fight as "volunteer" soldiers, and given endless QE, there would seem to be no end to the wars the U.S. will get into, at least as long as the rest of the world and Americans accept the U.S. dollar. The number of employed Americans continues to fall, but were it not for 2.3 million Americans officially in the military not to mention countless thousands more engaged overseas in NGOs the employment picture in the U.S. would be even worse.

Anthony Wile: What about the derivatives market? Will that collapse at some point?

Jay Taylor: Yes. Derivatives may be the trigger for the next sudden implosion. Derivatives give a false sense of security on a micro economic scale by having individuals thinking they have eliminated risk in their own deals. But the system as a whole has become much more risky, not only because of the trillions of dollars of derivatives but because of that false sense of security. Because of the enormous leverage in the system, a relatively small failure by a counter party in a derivative transaction can start a chain reaction of defaults, which like falling dominoes accelerate into a system-wide default. Because of the massive amount of leverage, the next decline may well be much bigger than that of the post-Lehman Brothers economic decline. And with central banks now having used up their firepower with rates still at zero, the next chain reaction set off by derivatives may very well bring down the entire system, as nearly happened after the Lehman Brothers failure.

Anthony Wile: Can geopolitics bring on a black swan and market collapse?

Jay Taylor: Certainly but as I suggested previously, wars may be brought on by growing economic strains and impoverishment at home, as politicians always seem to look for someone other than themselves to blame. If politicians can convince the public that we are under threat by a foreign leader then people tend to put partisan issues aside and sacrifice for what they perceive to be the common good. I expect that is why we are seeing growing numbers of wars, which can then, of course, contribute to even more impoverishment and bring about more "black swans" that sets a derivative default chain in motion.

Anthony Wile: Is the war in Syria going well for the West?

Jay Taylor: I speak with Daniel McAdams of the Ron Paul Institute for Peace and Prosperity in a podcast every week at jaytaylormedia.com/audio. Daniel was Ron's foreign affairs advisor when Dr. Paul was in Congress and he has helped me understand that so much of what our government tells us about its foreign policy is false. If by going well you mean a return to stability, good government and thriving economics for the people of those countries, the war in Syria has been an unmitigated disaster. Same is true in Afghanistan and Iraq and all of the Arab Spring countries where U.S. NGO's fomented revolution. But I'm sure for the military-industrial complex that Eisenhower warned us about as he left the presidency I guess it's going well.

One area that I think you can make money in over the next several years, besides gold stocks, if you don't mind owning shares in companies that specialize in killing people, is defense stocks. I have recommended in my newsletter that we buy some key defense stocks and if we make money in them, take some or all of the profit and contribute it to the Ron Paul Institute for Peace and Prosperity, which spends its efforts in spreading the truth about America's military activities overseas. I would strongly suggest your readers visit Dr. Paul's website and also listen to my weekly podcast with Daniel McAdams of the Ron Paul Institute for Peace and Prosperity.

Anthony Wile: What's going on in Ukraine?

Jay Taylor: The U.S. used NGOs to foment a revolution against an elected government that tried to serve its constituents wisely, which meant walking away from an inferior economic arrangement from NATO and strengthen its relationship with Russia. It made complete sense for the Ukraine to do that, as Daniel McAdams has pointed out on my show. But the American neocons did not like that. Remember, they want to rule the world under a one-world government with them in charge. So it is my very strong view that the U.S., not Putin, is the aggressor in the Ukraine.

Anthony Wile: Will the Ukraine crisis end quietly?

Jay Taylor: I fear not. I fear it could lead to WWIII because there is no way Russia can lay down and let the U.S. and NATO take over Ukraine, which really has been part of Russia for hundreds of years. Not only that but much of Russia's industry including its military hardware is produced in the Ukraine, not to mention the country provides a considerable amount of Russia's food. In defending the Ukraine, Putin is defending the right of Russia to maintain its sovereignty, which I personally applaud.

Anthony Wile: Will Putin be ousted?

Jay Taylor: I'm sure the CIA and various neocons will try just as they have every place else where we don't have a military presence. The CIA tried but couldn't take out Saddam Hussein because he had too many lookalike imposters so the neocons ended up sending in our military under false pretense. Putin may be even harder for the CIA to kill but with a Republican-controlled Congress, I'm guessing there will be more wars and aggression than ever before, including covert efforts to kill any foreign leaders that don't cooperate with the military-industrial complex, which of course includes our banking establishment.

Anthony Wile: Will Europe freeze?

Jay Taylor: Parts of it may freeze. I have seen reports that Russia has cut off gas to four different European countries. I'm not sure of the impact so far but cutting off the export of energy is certainly a trump card that Putin can play as the NATO forces put pressure on him to allow a takeover of Russia.

Anthony Wile: With so many geopolitical and economic difficulties, it's hard to see a light at the end of the tunnel. Where are the West and the world headed?

Jay Taylor: I'm afraid it's to Hell.

Anthony Wile: What should people do – buy gold? Secure second homes? Second passports? Make stock investments so long as the markets go up?

Jay Taylor: To the extent those options are available, all are worthy of doing. A second home and a second passport are not possible for everyone. And for the 50 million Americans on food stamps, buying stocks and buying gold are not a likely option, either. I think you need to build a network starting with your own family and then people in your neighborhood. Ron Paul told me once that everyone should get a trade or some skill set they can use to provide value and stay alive.

But finally, we have to be reminded that as the Psalmist said, "We live about 70 years or 80 if we are strong. Then we go to the home of our ancestors."

I'm nearly 68 years old now, so I have been thinking a lot lately about eternal life and my Creator. I have prayed a lot not only for myself and my family but for a world that seems to me to be spinning out of control. But despite horrible things that have happened to humans throughout history (including the 500,000 children the U.S. military has killed in Iraq alone), I believe the Creator who set this unfathomably huge, intricately balanced ever expanding universe in motion some 14 billion+ years ago, is in control of all that goes on inside the four dimensions of time and space as well as outside of our universe. So I think people need to examine the spiritual reality of life as well as material realities.

For my own personal satisfaction, I have examined the work of a couple of highly regarded mainstream scientists/theologians who provide substantial evidence for the God of the Bible. Of course, Bernays has worked his magic in propagandizing us not to believe in such "fairy tales" and he has been very successful.

Next to a belief in gold, a belief in God is the most dangerous threat to dictators. That is why Bernaysian propaganda is being used in the West by our statist educational system and mainstream media to convince us there is no God. Remember the days when Reagan and other leaders talked about the "godless" Soviet Union? Today Putin is building up his gold reserves and he is allowing "God" into his classrooms while we in America and the West have been convinced that any respectable, sane and well educated person "knows" there was no Creator and anyone who advocates a gold-backed monetary system is also cast as a "religious nut." John Nadler of Kitco was especially keen to pull that stunt. But it all makes sense to me. Why would any blood-thirsty, power-hungry global cabal like NATO wish to have its subjects trust in God and not need "Caesar."

Anthony Wile: Thanks for sharing your perspective on what's important for people to be doing in these times. Has the stock market surprised you?

Jay Taylor: Not really. The stock market is now the god of our legislators and bankers. They will do whatever they can to keep it rising higher because that enables them to engage in a process of legally stealing from the general public with that crime being recognized. Even so, I think this bull market is nearly exhausted, no matter how much money they throw at it. I think the Fed knows it must tighten money to retain credibility but it can't do it without sending the stock market into a tailspin. So I'm guessing soon we will get QE5 to QE infinite at which time, the game may be over. In fact, before the end of this year, I'm expecting a major market decline with the S&P declining to at least 1600 and possibly much lower as confidence is lost in fiat money and a major move toward "stuff" gets underway. Of course, the most portable stuff is gold and to a lesser degree silver.

Anthony Wile: What do you think about the evidently exploding cannabis sector … Good investment opportunity?

Jay Taylor: It's a market I have not studied. I am sympathetic to a free-market approach to cannabis for a host of reasons. I think the government has used drug laws as an excuse for military expansionism in many countries, most notably those south of our border. But I don't have an opinion on investment possibilities, though I'm sure there are some. It should result in less crime and I'm guessing more tax dollars. I suppose if things get bad enough in the economy, the government might actually want all of us passively stoned just as alcohol can keep people less politically active.

Anthony Wile: Should people invest in water and farmland? Any particular geographic areas you would look at?

Jay Taylor: Both a good idea but again, neither are areas I have focused on.

Anthony Wile: Other thoughts, in closing?

Jay Taylor: I believe we are facing a tumultuous year in 2015. I think the sudden decline in oil, copper and the euro may set the derivative dominoes in motion. One candidate for the beginning of a decline is the highly leveraged shale oil debt plays. The detachment of the Swiss franc from the euro is likely to turn thousands if not millions of Europeans into paupers, unable to pay their debts. God only knows how this thing will end, but it's hard to see how it won't end badly. I wish I could be more optimistic but I have to call them as I see them.

Anthony Wile: Finally, please update us on your newsletter, "Jay Taylor's Gold, Energy & Tech Stocks" and your radio show, "Turning Hard Times Into Good Times" and other podcasts that you mentioned. How are those going?

Jay Taylor: I have been doing my radio show since March of 2005 and it is going very well, although with the 3½ year bear market in gold and gold shares sponsors have been harder to come by. More recently, I have begun two weekly podcasts that have really started to catch on. They're on YouTube and many different sites are picking them up. Those podcasts are: "Foreign Policy Week in Review with Daniel McAdams of the Ron Paul Institute for Peace and Prosperity" and "A Weekly Look at Gold Fundamentals with David Jensen." The best way to listen to any of these is to go to the podcasts section of my website, at jaytaylormedia.com/audio where you can listen to or download my weekly radio show as well as both of these newer podcasts.

Anthony Wile: Thanks for your time.

Jay Taylor: My pleasure. Thanks for passing my views along to your readers.

After Thoughts

Jay Taylor has accurately predicted much of what has happened economically in the past half-decade. Like others in the alternative media, he perceives that monopoly money printing is ultimately inimical to prosperity because it causes great booms and busts. He is aware the system is unstable and is not afraid to point it out.

Obviously, we are living through one such bust today and monetary officials are doing their best to re-inflate various bubbles in order to create the perception that the global economy is "recovering."

As Jay understands, economic stimulation via monetary easing does not create an economic "recovery" – only an unstable economic situation that will expand into overproduction on numerous fronts and then collapse, as it always does.

Jay's perspective is that the collapse is looming and that it will eventually devolve into what might be termed a deflationary depression.

We tend to believe that central banks have the wherewithal to print so much money that outright monetary deflation for an extended period of time may not be a certainty. Even in the past half-decade so much money has been printed that disinflation has been the norm it seems, more than outright deflation.

Jay also seems to believe a stock meltdown is imminent – and perhaps it is. But calling the tops of these massive equity melt-ups is quite difficult.

Central bankers, as we have reported, may now be contemplating a "Neo-Plaza Accord" that might devalue the dollar significantly, thus supercharging already highly charged equity marts. You can see that article here: Central Bankers, Please Do Not Unite on a Neo-Plaza Accord

We want to thank Jay for sharing such an extensive interview with our readers.

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Posted in EXCLUSIVE INTERVIEW, Gold & Silver
  • Regarding the following questions posed …..

    Daily Bell: With so many geopolitical and economic difficulties, it’s hard to see a light at the end of the tunnel. Where are the West and the world headed?

    Jay Taylor: I’m afraid it’s to Hell.

    Daily Bell: What should people do – buy gold? Secure second homes? Second passports? Make stock investments so long as the markets go up?

    …… run for the hills and bury your heads in the sand appears to be one guaranteed to fail and backfire program, DB …….http://www.zerohedge.com/news/2015-01-31/what-do-they-know-why-are-so-many-super-wealthy-preparing-bug-out-locations ….. for that is what is effectively being reported in that article.

    However, it is wise to realise there’s really no place to hide whenever the virtual space rules and reigns over everything nowadays. Deny it and one be delusional.

  • Bill Ross

    Well, if the currency is “full faith and trust” (AKA: misplaced patience), like any “necessary” resource that can be produced / dissipated, the SHTF when it runs out.

    “Mathematics of Rule”, or, in general reality, RULES:


    The slippery slope, cliff or whatever you care to call it, does have a bottom where resources are dissipated and productivity is impossible, then, it is “war of all, against all”. The last predator standing will have a farewell epiphany: “Oops, no prey”.

  • nailheadtom

    “Apres nous, le deluge”.

    The thieves that have designed a fascist system in which an all-powerful regulatory government guarantees their predations can’t insure that it will last forever. But they can enjoy it for as long as possible. If it blows up tomorrow they can say that it was fun while it lasted.

  • Danny B

    Socrates is the name of the completely awesome program run by Martin
    Armstrong. Socrates proclaimed in 1985, that the world would see a
    collapse of sovereign bonds in 2015.75. I fail to see how a country
    can have a collapse of it’s bond market and still have a functioning
    fiat currency.

    Jim Willie has pointed out something that we are all aware of if we
    look. Events are speeding up. The crises come faster and faster,,,
    closer and closer together.

    “The forecast about fast acceleration of events into the January month
    has occurred on schedule. Normally a very big event occurs every several
    weeks, or every few months. In just the last three weeks ten have taken
    place of significance. The pace has quickened in an alarming fashion.
    The Great Quickening has commenced.”

    “Events are flowing extremely rapidly, even at a dizzying pace. It is
    not remotely possibly to anticipate the next critical event, but one can
    surely expect something every two to three days recently, something of
    urgent important with extreme consequence.”

    The USDollar will not survive the year. It might not vanish this
    year, but will surely show its eventual destination in the dustbin of

    You can bet that banks and GOV will NOT institute the changes that
    were / are necessary to preserve the productive economy. These changes
    will come from commercial powers.

    “The USFed with its corrosive QE has hastened the major nations of the
    world to rush toward implementation of the Gold Standard. They must
    install it from the trade ramps, not the financial ramps. They are in
    race with time, since their economies are faltering.”

    Mahatma Gandhi was a sage. He has a famous quote best presented in
    summary form. “Seven Deadly Sins: Wealth without work, Pleasure without
    conscience, Science without humanity, Knowledge without character,
    Politics without principle, Commerce without morality, Worship without
    sacrifice.” Without any hesitation, equivocation, or doubt, all these
    important sins are growing trends and priorities in modern United


    • Bill Ross

      “The crises come faster and faster,,, closer and closer together.”

      Crisis have two components: they are the consequences of REAL actions / inaction’s and are misrepresented to introduce confusion, chaos, uncertainty, create opportunities for those proffering false solutions (to problems THEY have created).

      Once you adapt to the “shock and awe” and are no longer amused…

      disengage, keep your eye on the ball of “you and yours”.

      walk softly and, carry a big stick.

      • Tom kauser

        Tout est calme

        • Bill Ross

          Of course. All is according to plan. Our enemies are destroying themselves, creating a power vacuum into which the sane and civilized will step.

          What, me worry?

        • Marten

          Tout est calme….on the western front

    • Diocletian

      Not much of a sage. Politics is inherently unprincipled; it’s all based on pragmatism. Worship and sacrifice have no rightful place in a free and civilized society. Gandhi thought capitalism is immoral but socialism is moral. His dhoti was apparently wrapped a little too tightly to allow more careful thinking than he displayed in that quote.

  • Those who follow the advice offered by the Bell and by Jay Taylor will be among the few with any options at ALL when the inevitable takes place. For all others the only option will be to trust in bigov and do what you are told. That is no option at all in my view.

    • Danny B

      Gregg, something that I tell people that they have a hard time accepting; The FEMA camps will be by invitation only. There are 6 military bases modified to take criminals. The camps will accept good worker bees and their families.

    • Tom kauser

      Two sides of every trade see you tomorrow

  • Praetor

    Ok, the world is going to hell in a hand basket, and on earth that means war. The question, how do you stop the warlords from going to war. Rational people know going to war in the 21st century (world war) is insane, because of nuclear weapons. To push a state with nuclear weapons into a corner is most definitely an insane idea. How to stop the warlords from going to war. If it be world war you will not find Safe Harbor, maybe a short time, but these will be world wide. There is to much animosity and hatred built up at these time, for one to think they are safe from these hatreds, is false. I lived in Australia for three years, during the Vietnam war, the Australians had no love for Americans, because their young were being killed in that war also, and they where are alias, so it is said, in war there are no alias, and in this war the American will be the enemy, you will be identified as such (American), you will be blamed for all that has gone wrong, just because you were born on the dirt called the United States of America, it will be your fault. Just look at some of the comments on this website of people from other countries, you can see the hatred, the animosity these people feel towards Americans. PLEASE, and you think you should go and but your physical body, your family in the presents of people, whom hate you, because you are AMERICAN. No way. The only way is to secede yourself from the evil warlords of this world and this country called the US of the Americas. Don’t participate in their wars, don’t participate in their economies, don’t participate in their Fiat empire, it is possible to live outside of their system of things, if you PREPARE that is, we have a short window, USE IT!! My personal history in this place called U.S. of the Americas is, my ancestor’s came here to get away from the warlords of dome over 300 years ago, where do you go now. no where. How do you stop the warlords from going to war, YOU CAN’T. Prepare yourselves.

    • Bill Ross

      Don’t think wearing a Canadian flag will help you either. Unbeknownst to most Canadians, our hands are filthy by government covert involvement in the “war by/of terror”. “Honest brokers” no more.

      Ditto for the “rule of law”. Adios civilization, because it IS civilization:


      • Praetor

        Absolutely. I will say, there are some Canadians, that, be welcome in my neck of the woods, as there will be some Americans whom are not. Barak!!! Diversification has definitely diversified us from the rule of law and civilization. No collectivist commies aloud.

        • Bill Ross

          “No collectivist commies aloud”

          typo, or pun? Either works for me. Not “allowed” to associate with me, or, “dangerous idiots, not to be heard from”.

          • Praetor

            Typo and pun, sometimes my fingers are faster than my brain, easer to let it go, than go in reverse. We all know there is no such thing as commies, just a bunch of feudal Monarch’s of the predator kind. Thanks Bill, next time I’ll read what I type.

    • Tom kauser

      Heard this same arguement under my desk in the 60s and my how handbaskets have made a comeback!

      • Praetor

        Please explain?

    • James Clander

      @Praetor – -Very true what you say about World Wide feelings towards Americans. As a country you are much disliked by anyone watching the destruction & killings. Must admit that’s how I feel although I know its your Government & there are a lot of switched on Yanks who feel the same as I do about your Government. You guys /girls must stand up & speak out cause your Government is criminal in every sense.
      I’m Australian & not proud of our Governments which have ALL meekly followed orders from the USA. Criminal actions that could never be condoned. Our Press too has been totally taken over & nothing true is seen in print or on TV. Russia is being made out to be a problem – all BS of course but a huge % of Australians could care less. The ONLY expression of rage is the Net & the bastards ALL want to silence that. We must continue to fight as best we can as in sufficient numbers we can make a difference.

  • Danny B

    I found a good quote; “The Greeks are not even trying to reassure the markets,” seeming to
    have entirely forgotten (and who can blame him in this new normal the
    world has been force-fed for 6 years) that political leaders are elected
    for the good of the people (by the people) not for the markets.”

    “,,,the most uncomfortable moment ever caught on tape – the moment when
    Eurogroup chief Jeroen Dijsselbloem (he of the “template” foot in mouth
    disease) stood up at the end of the EU-Greece press conference,
    awkwardly shook hands with Greece’s new finance minister, and
    whispered…”you have just killed the Troika,” to which Varoufakis
    responded… “wow!”

    Another good quote; ”
    “We Can’t Do This Forever,” Fed Admits “Market Will Overwhelm Us”

    The FED is trying to whisper in the ear of the bond market; http://www.zerohedge.com/news/2015-01-30/bond-market-has-reached-tulip-bubble-proportions

  • Danny B

    Everyone is pretty much aware of the $250? trillion of derivatives written against the energy markets. Low oil prices portend a BIG shock to the system. There is another shock on the horizon because the low prices may be around for a long time.
    “Prices are falling so fast that solar will soon undercut even the
    cheapest fossil fuels, coal and natural gas. In the few places oil and
    solar compete directly, oil doesn’t stand a chance. ”
    Sadly, nothing will save Venezuela. The same is probably true for other high-cost oil producing states.
    The markets are starting to catch on that there are NO safe havens. Consumption has crashed and taken everything else down with it.

    Eventually, confidence will crash. That is when we will transition from deflation to inflation. http://armstrongeconomics.com/2015/01/31/its-always-about-confidence/
    WAY TOO MANY people and States spent money that they HOPED to earn. It isn’t going to work out that way.

    • Tom kauser

      If derivatives were the problem they are portrayed to be than why are they still OTC?
      Everybody talks like “out there in the ether” there is this boogyman everyone knows about but everyone is in fear of trying to control?
      Derivatives as a “weapon of mass destruction” is bullocks?
      GOLD has been free falling from 1900 to 1200 and how are those derivatives fairing?

      • Danny B

        The FED, PPT and ESF are all rescuing derivatives that are failing. That was what the AIG bailout money was for. That was only the start.

  • Merlin

    Insightful interview with excellent analysis by Mr. Taylor. Thank you, Daily Bell.

    • Diocletian

      Yes, an analysis the factual validity of which in no way depends upon Taylor’s theistic beliefs. 1+1=2, the earth is a sphere, evolution is a fact, even though one likes to believe in god(s), The Easter Bunny, fairies, and leprechauns. I take what Marcus Tullius Cicero asserted about Epicureanism and apply it more accurately to the belief in supernatural dimensions and entities: “Res ficta tota pueriliter est”.

  • Bill Ross

    surprised DB has not weighed in regarding the linear increase in productivity versus exponential increase in fiat debt (anti-productivity) point.

    What cannot go on, won’t. People will adapt (human action), the same force that refuted the equally fallacious Malthusian “population bomb” of linear food production / exponential population increase, which was refuted by productivity innovation.

    so, do we adapt by allowing productivity (and civilization, us) to die, or, do we adapt by defending from the barbarians intent on controlling us with the inevitable consequence of destroying us?

    …stay tuned

  • Goldcoaster

    I see only one problem with this gold situation.
    The trump card is confiscation. That, and/or a world currency.
    No doubt it is all planned out, much like the UK and Italy adding drugs and prostitution to GDP. That had been planned for years, as they already knew the effect, a .7% goose to GDP per annum.
    You can bet TPTB have a plan, their resources being virtually unlimited.

    • WinChll

      It has been done before; no reason it will not be announced again. The real question is the value the parasites will give in exchange.

      • Praetor


        • Diocletian

          They will offer the same exchange as that given by any common goon, “Your gold, or your life”. Then they will try to take both. The real question is: will you be a coward and let them get away with it ?

    • Diocletian

      FDR tried confiscation. Few people stupidly complied. Most defied his order and hid their gold, and indubitably many of them were armed and ready to fight FDR’s goon squads who would barge onto their property intent on enforcing that statist order. Confiscation will meet with the same resolute resistance. I have taken Ron Paul’s advice about learning a skill. It is one that involves the deployment of dum-dum bullets.

  • Tom kauser

    Blinders? The counterfeiting money printing is nothing new? Been that way over at the Fed for 102+years. QE is just the new name for the old process. Before you can blame the public you need a moniker that will stick and QE has stuck?
    I cant blame myself because my blinders protect me!

  • Tom kauser

    Jay? Could it be possible that recent action from central bankers in Europe and Japan has been putting pressure on American stocks?
    Are traders looking overseas for value because of stimulus and favorable exchange rates and not because of any hell breaking loose in America? Its just a trade to bet on a better world economy and a weaker dollar after Japanese new year?

  • Bolt Upright

    With all this gloom and doom, I think I’ll head out to the golf course and play 9 before the Superbowl.

  • proudpeasant

    Why can’t the lower classes print free money as well?

    • There is no such thing as free money.

    • Bill Ross

      Depends on the definition of “print”. Anyone, from any decreed class can take the raw materials of food, energy, intellect, labor and “value add”, creating some good or service of value (defined as somebody is willing to freely exchange / trade for it) which, by un-subverted definition is a form of “money” (store of value).

      As to “why can’t”, in general: Because they decree / say.

      YOU are completely FREE to dissent, should yo accept the consequences:


      and, the money “printed”, by them, is only FREE, for them. It is debt / servitude for all others.

  • Mortimer Sled

    Message? The gold market is hopelessly manipulated by huge TBTF banks. Recommendation? Buy gold. There’s a leak in that bucket. It’s a beautiful bucket. I’ll have that bucket please.

  • windsor1

    Politicans will always err on the side of inflation. A super delationary depression will be the result of a complete failure of the economic system. Where currency has no value and consumers are broke; hence no demand for goods and low prices for the few that can afford them. Until that day you will see more QE as everybody debases currencies.
    The rulers are making their move to pull the rug out from under us, and leave the majority of the world’s population totally dependent on the state. They can and pull it off since they control the police, military, politicians,educational system and most importantly the media. Boobus Americanus’s attention is on the Superbowl and the economy is far removed from his cognitive processes.
    Russia, China, the US, UK France, Germany and Israel are all on the same page despoite what the media says. The public does not understand that the emperor has no clothes. The bankers are using Russia and China to undermine the reserve currency status enjoyed by the dollar and they are trying to undermine the petrodollar, as they jockey towards the ultimate objective of a globalized electronic currency. Globalists are hoisting huge deficits (military and social programs) on the US, and in the process are using huge banking and military and illicit drug profits to buy up hard assets prior to the collapse and leave Americans with the tab.
    Just so the rulers don’t get saddled with the blame for all this, they are manoeuvering the west into a global choreographed war starting in: Ukraine, N. Korea, Syria or Iran. How it will play out I cannot say as I am not an insider and don’t watch CNN. George H. W. Bush, for example was once asked if he read the newspaper. His reply “I don’t need to, I already know what is going to happen”. Kissinger, Buffet, Soros, London bankers as well as a few very select others are looking into the same crystal ball.

  • Danny B

    You want deflation,, I’ll send you a dose of deflation REAL soon.
    “Bloomberg) — President Barack Obama will propose that
    U.S.-based companies pay a minimum 19 percent tax on their
    future foreign earnings, capturing profits that are now often
    beyond the government’s reach.
    Obama will also seek a 14 percent mandatory tax on about $2
    trillion in stockpiled offshore profits, said two people
    familiar with his budget proposals, declining to be named
    because the document won’t be made public until Feb. 2.
    Companies would pay that tax regardless of whether they bring
    the money back to the U.S., the two said, creating a revenue
    stream the president would use”

    FECES for brains. Only 3 U.S. companies have a AAA rating. ALL empires die of deflation because they tax to death. High-yield is crashing through the basement. The buffoon-in-chief wants to give a real shot in the arm to the BRICS bank.
    Zurich, Frankfurt and London have Yuan swaps and bonds on the table. China has no external debt,,, Russia has little.

    Where do you think threatened capital will flee?

    • Joelg

      Interesting stuff, Danny B. Money or capital will go where it always goes: to wherever it is treated best. Just like Kentucky and Alabama enticed automobile manufacturing south of Detroit with better deals and Toronto and other locales entice movie makers out of southern California with better deals, competition will emerge.

      This is all about control. The American public will cheer on their enslavement. The money harvested from corporate taxes will be a drop in the bucket to the macro-economy, and just disappear into the Neo-Con War Party machine. But it will be crippling to investment and corporations to a degree that brings on the deflationary depression conditions Jay Taylor talks about in the DB interview. I believe that is the end game of Obama, Hilary and the Neo-Leninists, Neo-Bolsheviks, Stooges, Pikettys and other accomplices. What Hilary says about only the government creating jobs will indeed become true. The Totalitarian State movement always operates in the same way: Go after the hated enemies. Can’t go after the Jews in the USA. But Corporations will serve well as the Evil De Jour Responsible for Society’s ills. Scapegoat mentality. Witch hunt mentality. Both have always been strong in the USA and elsewhere. Kill capitalism in the USA, as the government has been doing in the USA, and capitalism will go elsewhere, just as persecuted minorities have always gone elsewhere (including to the USA, where they can have freedom for their religions and then ironically persecute other religions). Capitalism and freedom will flee the USA, just like they fled the USSR after the Bolshevik Revolution. Where they go matters little. Maybe Colombia will become a corporate haven.

      In an uncertain investment environment, there is less investment, pure and simple. Maybe the money will go into gold, oil, farmland, real estate and other assets instead of investments that create jobs and growth. If the Trend looks unfavorable, with too much risk and too little return after plunder, taxation, tribute, bribes, etc. then people will hold onto their money. Velocity of money will decline with higher tax rates and more government controls. The result will be what Jay Taylor predicts in the DB interview, a deflationary depression. The USA Politburo is just laying on layers and layers of complications in the name of Equality, Fair Share and other Socialist Claptrap Slogans. All we are getting is minuscule extra revenues compared to the vast slowing of the velocity of money relative to an unfettered economy. OWS and those who hate the limited liability corporation with a passion beyond reason will not rejoice long, unless they have one of the government jobs like the kind that made Bill and Hilary rich. Socialism has never been about freedom (it is about equality). Equality trumps Freedom in the Socialist Mindset. Surrender your Freedom in the Name of Equality, Comrade Danny B.

  • B. Downs

    John Exter was a gold standard economist who was in charge of gold and silver operations at the NY Federal Reserve Bank. He learned Keynesian economics and even taught it, briefly, while at Harvard. Exter recognized, early along, how dangerous Keynesianism was. He rejected the doctrine and crusaded for a return to a gold standard and sound money policies.

    Exter looked at the global economy as a system of countries with individual inverted debt pyramids. The most risky categories were at the broad top of each debt pyramid with descending levels of risk until cash and equivalent was reached at the very bottoms of each inverted pyramid. Everything, within the pyramid, had a liability against it. In Exter’s model, the various pyramids balanced on the world’s known block of above ground gold. He believed there would ultimately be a loss of confidence in the categories, inside the various pyramids, to the extent that people would go outside the pyramid and want to hold only gold as money. Gold, of course, doesn’t have a liability against it and it has never defaulted.

    If Exter were still alive, he would most likely conclude that the world was on the brink of fleeing risky debt categories, within the pyramids , which would mean leaving the pyramids, altogether, for the safety of gold money that doesn’t default.

  • TAYLOR: “The only currency that is stable and has existed over centuries, and that since mid-December is now gaining against all other currencies – even the “strong” U.S. dollar – is gold.

    BISCHOFF: Gold has served as currency, long before it was MONEY. Jay Taylor contributes to the bamboozlement of the public when he fails to make the distinction between currency and money.

    Currency is a medium of exchange. Anything, but anything at all can function as a medium of exchange. Gold, silver, sea shells, pottery, etc. all functioned as currency going back to the early Chinese Dynasties, as well as the Indus Valley civilizations.

    Gold became MONEY only about 2500 years ago when in Lydia gold coins (electrum) were minted which were of specific weight and fineness. Thus, besides gold being a currency, it also became a measure of value. The amount of human exertion which was expended in the mining and striking of the Lydian gold (electrum) coin was set as the standard of value (quantified amount of human exertion) by which the value (amount of human exertion expended in production) of any other good or commodity was judged.

    Thus, GOLD became MONEY. It also functioned as currency until the early Middle Ages. Nobody uses gold coins as currency, today. The 133,000 tons of gold specie and gold bullion presently in private hands are an insurance against the collapse of the worldwide fiat currency system. This is a currency system in which every currency in the world is without a standard, because none of the currencies can be redeemed for a specified amount of specie.

    With the increased use of ninety day Bills of Exchange in conducting transactions, the Venetian city states used the Bills of Exchange as a form of currency, only to require that the Bills of Exchange be cleared with gold coins upon maturity. This left the majority of gold holdings, normally used for currency (medium of exchange), to be employed to finance the production of goods and commodities through Bills of Exchange

    The U.S. currency had a value standard until FDR nationalized the gold savings of the American people in 1933. While the U.S. currency circulating inside the United States was irredeemable (people were barred from holding gold by Executive Order 6102), a standard for the U.S. Dollar circulating outside the United States was preserved, albeit its value was reduced from 1/20 of an ounce of gold to 1/35 of an ounce of gold by the NBA of 1933. In early 1971, the Congress further reduced the value of the overseas U.S. Dollar to 1/42 of an ounce of gold, just before Nixon defaulted on the Bretton Woods Agreement of 1944. With the Jamaica Accords in 1979, the overseas U.S. Dollar, aka “Petro Dollar”, was given a flexible value standard. The flexible value standard of the overseas USD depends on the varying world price for crude oil set by the Saudis (in concert with the oil majors).

    That’s the system we have today. A U.S. domestic currency without a standard, and a U.S. overseas currency with a flexible standard. They intermingle when it comes to clearing trade deficits. Only, if an understanding about the present monetary system exists, can one make sense of all the geo-political maneuvers played out in the media.

    It is no wonder that the overseas U.S. Dollar is still the strongest currency. While it does not have a fixed standard, it does have a flexible standard, which is better than not having a standard at all. The shear volume of those overseas USD circulating attests to its value. If the potential value of the overseas USD were in doubt right now, it would not circulate as it does. Every country uses the overseas USD to pay their oil bills. How long this will last is the REAL question.

  • TimeToWakeUpAmerica

    “Next to a belief in gold, a belief in God is the most dangerous threat to dictators.” What about a belief in God, gold, and GUNS?

    to a belief in gold, a belief in God is the most dangerous threat to
    dictators. – See more at:
    to a belief in gold, a belief in God is the most dangerous threat to
    dictators. – See more at:

  • TimeToWakeUpAmerica

    Who, exactly, is behind the coming (orchestrated) “global economic collapse” (as well as behind the phony “war on terror”, and the “global warming” – oops! – “climate change” meme? Find out, here:

    X22 Report: Central Bankers Can’t Stop The Economic Collapse Instead They Will Cover It Up

    Be sure to read ALL the comments.

  • Danny B

    2 people are making BIG waves in Canada;

    • Bill Ross

      Thanks, I smell a DB article on this one, but not holding my breath. A mistake, allowing the “wrong” judges, to be remedied by selecting the “right” judges.

      What a concept, Canada belongs to (controlled by) Canadians. Now, if only, “the law” is not the property (controlled by) “rule of some men”, but of ALL:


      ‘ain’t gonna happen until WE make it happen.

    • Danny,
      I watched the Still Report cited with your link. Interesting case. Let’s see what happens at the Supreme Court of Canada.

      The one thing Still does not seem to fully understand is the difference between “Money”, “Bills of Credit” and “Monetized Debt”.

      Until FDR nationalized the gold savings of the American people in 1933, the U.S. had a paper currency created against the value of Bills of Exchange and redeemable in silver (until 1900) and gold (gold only after 1900) on demand. Since this paper currency was convertible into gold (Money), the currency had the value standard connected to gold. It therefore could justifiably be called MONEY.

      From 1865 until 1965, we had a parallel currency circulating alongside the “U.S. Money” currency, and Federal Reserve Note currency, which was called the “U.S. Greenback” currency. The “Greenback” was issued as a “Bill of Credit” by the U.S. Treasury. It was not redeemable, except that Congress on several occasions announced brief periods during which Greenbacks could be redeemed for gold at the U.S. Treasury.

      The main purpose for issuing the U.S. Greenback was to create the payroll for federal employees. As such, it carried the value of the service provided by federal government workers. As long as people felt that the value of the services received from the federal government was equal to the value of U.S. Money currency earned by productive workers in the private sector, the U.S. Greenback currency was accepted at par for any consumer purchases. Only investment trusts were hesitant to accept Greenbacks for long term investments.

      After engaging illegally in the Open Market Sale of government gold bonds beginning in 1920, the FRB of NY managed to collapse the U.S. Money currency. With the NBA of 1933 and 1935, it got the Congress to agree to take on debt which was then “monetized’ by a federal government central bank agency, the post-1935 FED, into an irredeemable, and later legal tender form of paper currency, aka irredeemable Federal Reserve Note.

      As to the claim that it was necessary to go into debt to bring the economy out of the Great Depression in the 1930s, I can only say that FDR caused the Great Depression by prohibiting Americans from holding gold. This act by FDR killed the market for Bills of Exchange. Without Bills of Exchange, there was no longer a “wage fund”, something that is part of the nature of Bills of Exchange. Without this “wage fund” as part the redeemable currency the was no positive value currency with which to pay workers.

      Despite going into debt to print tons and tons of “irredeemable” Federal Reserve Notes, the health of the economy did not improve during the 1930s. The U.S. would never have gotten out of the Great Depression, if it had not been for WW II.

  • Chris

    This US treasury scam could continue because no central bank is allowed to buy gold in large amounts except for China and Russia. Any country that is found to buy gold will be severely punished as history had proven to be so. US treasuries can be bought but not sold in large amount. Russia is already in trouble and how it will end is still up in the air. The time will come when nations gather enough courage to move en bloc, probably starting with some big boys from EU, then the stampede out of US$ into gold will make gold unavailable. This will overflow to the next precious metal and silver will take off like a rocket to catch up with the price of gold.

  • Danny B

    I keep finding interesting things to post.

    “If this currency war gets out of hand,
    our boys could drive the London price as low as they want it to go! The
    paper won’t be worth much in real gold, but every trader, market maker
    and mine owner/investor is contractually locked to that price making
    medium. It could all go down in a huge ball of fire and only the physical holders will be whole.
    Notice I said holders not just owners”
    The part of “contractually locked in” is important. Gold production is off 10% since the price was driven down.

    January 30, 2015, ” Year to date 202 tonnes have been withdrawn from the SGE vaults”
    202 tons isn’t chump-change. Reportedly, the Russians are exchanging all of their petro dollars for gold.
    Fascinating stuff.

  • David Horace

    Jay Taylor? LMAO.
    I used to read him for entertainment purposes, now I don’t even waste my time doing that.
    Subscribed to his newsletter for years and listened to his “Weekly Hotline.”
    Please… take my advice and don’t waste your time. I’ll send you some nice wallpaper stock certificates if you like… you know, his “highly recommended stocks.”

  • Danny B

    The very big question is; Can the FED and GOV carry along the whole economy by just printing.
    “The S&P is under 1% from its all time high.” OK, sounds good. What about sales and profits?
    There aren’t any.


    This is a huge disconnect. Total aggregate wages are in a monstrous deflation at the same time that credit creation is growing at $ 2.3 billion a day.

    “The Federal and State government directly employs over 20 million
    Americans and millions more indirectly through their largess to arms
    dealers and other crony capitalist corporate entities. Over 145 million
    Americans receive a check of some sort from the Federal government every
    month, with over 100 million enrolled in a government welfare program.”

    How much of the economy can the FED GOV carry along?,,, for how long? Strange stuff.

  • Danny B

    Oh Great Bell, this seems to be the right thread for a very interesting article that I found written by Charles Hugh Smith.

    Neocolonialism benefits both the core’s financial Aristocracy and national oligarchies/ kleptocracies. This is ably demonstrated in the recent essay Misrule of the Few: How the Oligarchs Ruined Greece.

    With the bankruptcy of Greece now undeniable, we’ve finally reached the endgame of the Neocolonial-Financialization Model. There
    are no more markets to exploit with financialization, and the fact that
    the mountains of debt are unpayable can no longer be masked.
    Now that the financialization scheme of the euro has run its course, the periphery’s neocolonial standing is starkly revealed: the
    assets and income of the periphery are flowing to the core as interest
    on the private and sovereign debts that are owed to the core’s central
    bank and its money-center private banks.

    The reason that I believe it is so important to understand the “model” at work here is that; it’s failure will make socialism attractive to the losers.
    The neo-feudalism model is unworkable in the face of automation and mechanization. While this might not be obvious right now, it will become increasingly painful. “Assets flow to the core”. Germany is at the highest level of poverty it has seen since reunification. Assets are flowing to the core. http://www.presstv.ir/Detail/2015/02/19/398330/Poverty-in-Germany-highest-since-unity
    This is internal to Germany. While capitalism is a good idea, there are limits to everything. Internecine warfare is a bad idea. If internal German poverty is rising, what does that say about the future of Spain?