The Fed Is Dead… Long Live The Fed

Keep Calm and Carry On

Global macro-economics solutions now available in the form of coffee mugs and Iphone cases at www.keepcalmandcarryon.com

In celebration of the Independence Day, Dave has an important announcement to make about the future.  Dave has reason to believe a decision has been made to fundamentally restructure the finances of the United States in a formal consolidation with the European Union via the elimination of the Federal Reserve and the introduction of a new “divorced” currency system.  How does Dave know this you ask?  Take a look at the evidence. 

Here’s the evidence…

Exhibit A: Alan Greenspan came out last week and blamed the failure on the banks… not the government policy or GSE such as Fannie Mae or the FOMC itself. No… it was the banks. Why did he say this? Because the plan is to consolidate the bulge bracket, demonize the banks and describe the Fed as a failure.

Exhibit B: Jamie Dimon confronted Ben Bernanke that no “study” had been done of the impact of the Fed’s actions. Why? Because we need to make the Fed look bad because the Fed is going away. Here’s the Dimon v. Bernanke/Burr v. Hamilton redux: http://tradewithdave.com/?p=6833

Exhibit C: Ron Paul is having his way. What he may not realize is that the Ron Paul way is also the Barack Obama way. Since the audit is coming down the pipeline, there’s no way around it. Time to demonize the Fed because the plan is to kill it.

Exhibit D: Charlie Munger came out with a statement demonizing the banks. It was their fault… not enough regulation. Charlie owns the banks, but he’s willing to carry water because he knows the plan.  Here’s a link to the “Megalomania In The Morning With Charlie”: http://www.bloomberg.com/news/2011-07-01/berkshire-s-munger-says-wall-street-megalomania-insanity-fueled-bubble.html

Exhibit E: Timothy Geithner is resigning. He’s the bag man for the plan and the package has been delivered… time to move along.

Exhibit F: Jamie Dimon will get to exchange an “abandon ship free card” in exchange for signing every dollar as the new Secretary of the Treasury. JP Morgan and the U.S. Government will become one in the same. That’s not really a bad deal… unless you’re an equity holder, then you’re history. If you’re a bond holder… you get a nice haircut and a “double-stuff” debt for equity swap… not for JPM stock, but instead you get a restricted T-bill… not a bad deal.  Remember JPMorgue will be USGovt by that point.  If it doesn’t work out for Jamie, then Erskine Bowles is a good back-up plan.  I believe his wife serves on the board of directors of JP Morgan, so that’s close enough for horseshoes.  The money to be made in shorting these bank stocks will be of epic proportion. 

Exhibit G: If you own some of that short silver paper care of Bear Stearns and JP Morgan (SLV)… you also get a crew cut and a restricted T-bill because that puppy’s being wrapped up in a burlap sack and throw in the river with the CME Group and a concrete block. You don’t think they could pull this off without the full participation of BlackRock and Larry Fink now did you. We covered the story here: http://tradewithdave.com/?p=6107 and a lot of smarter people have covered the facts on the silver market in much greater detail and they all say the same thing… the numbers don’t crunch.  Here’s one for the smart folks: http://www.zerohedge.com/article/eric-sprott-lashes-out-against-tyranny-rigged-paper-monopoly-over-silver-price-discovery

Exhibit H: DSK was in the way… enough said on that subject – no longer a problem.

Exhibit I: Jim Rickards so much as came out and detailed this entire plan and endorsed Mervyn King’s “divorced currency” plan which is the cornerstone of the plan to kill the Fed once and for all.  We covered that here: http://tradewithdave.com/?p=7114

Exhibit J: Chris Walen explains why the bulge bracket banks won’t be able to withstand the litigation coming down the pike and the details on how their restructuring will be required.  What he doesn’t tell you is that they’ll be nationalized into the Treasury and when combined with the U.S. Military will create the new value for the Treasury Notes once the Fed is sunk in the good bank/bad bank/stick it to the Chinese plan.  Here’s a link to the Whalen interview on King World News that spells it out for you smart folks who enjoy the numbers.  Click on the MP3 icon to listen to the interview:  http://www.kingworldnews.com/kingworldnews/Broadcast/Entries/2011/7/2_Chris_Whalen.html

Exhibit K:  The Wealth Effect of the Dow.  Hang onto your hats.  Dave made the call on June 24 right here on the blog.  I also made a call on February 18th.  Those are the only two calls I have made in the past year.  You can call it lucky if you like.  The stock market will be unleashed in a massive cover operation for the restructuring of the Fed and the anihilation of China’s financial interests.  Read the posts for yourself and whatever you do, consult your financial advisor because DAVE IS NOT A FINANCIAL ADVISOR. 

Exhibit L: Goldman Sachs…. oh yes, Goldman Sachs.  Hmmm?  I skipped over them.  Where do they stand on all this?  I guess we’ll see won’t we.  They’re a bit of a linch pin, but I would say they’re also between a rock and a hard place both legally and politically.

Exhibit M:  Ben Bernanke.  He did the one thing you never do.  I’ve sat through hundreds of business meetings about sales, marketing, finance, operations, production, distribution, etc., etc.  The one thing you never do is to say you don’t know what to do.  When you say that, you’re finished.  Ben’s finished and so is the Fed.  It’s only a matter of time.  It may take two years or five years or ten years or ten days, but the other shoe has fallen and it fell right on the Fed. 

Exhibit N:  What’s next?  Dave has a very sneaky suspicion that something is buried within the $1 presidential coin act.  There was a media blitz last week on what a bust the $1 coins have been.  Well, people don’t realize that the $1 coin act wasn’t really about $1 coins.  It was about the $50 gold buffalo coins that were slipped into the act.  Dave covered that story here:  http://tradewithdave.com/?p=6640.  They are circulating some propaganda designed to repeal the act under the premise that the $1 coins have been a bust.  Of course they’ve been a bust.  But somewhere in there is buried the answer to the accounting change that FASB just made under the guise of “reconsideration.”  Mark to market for both the gold and the real estate must be addressed.  Take a look at this document and the number of times the worlds “collateral maintenance” have been marked through in regard to REPO transaction treatment as a sale or a secured borrowing: http://www.fasb.org/cs/BlobServer?blobcol=urldata&blobtable=MungoBlobs&blobkey=id&blobwhere=1175822403435&blobheader=application%2Fpdf

Exhibit O:  Banks are suddenly modifying mortgages voluntarily.  They are sending out letters to upside down homeowners offering the the opportunity to right their mortgage through a huge writedown.  Why?  Two reasons.  The balance sheets are destined to be owned by the U.S. Treasury and the pathway has been cleared by the new FASB “mark to whatever” rules.  The FASB domestic shennanigans contrasted with the international accounting standards is making a laughing stock out of Basel 3 and sets the stage for what Dave is calling the new Occidental currency for the West.  I almost forgot.  Bill Clinton called last week for broad principal writedowns in the mortgage market.  There’s nothing quite like the former president to take credit for the plan.  The New York Times explains:  http://www.nytimes.com/2011/07/03/business/03loans.html?_r=2&hp

Just to recap, so that there is no misunderstanding.  Dave’s making a bold claim.  The Fed is toast.  Not because of some libertarian movement, but because it no longer serves it’s purpose as a tool for financial leverage.  Sure, Ron Paul is a player in this, but his Von Mises plan has been co-opted and become the Von Sunstein (read Sheryl Sandberg) plan for behavioral economics.  When the likes of Ron Paul and Ralph Nader agree on the plan you know something is up.  What’s up is something known as libertarian paternalism.  What does it mean?  That’s simple.  It means that someone else claims to know what is best for you and your family.

In this case, that thing that they have decided is best for you and your family is to swap sovereignty in exchange for the elimination or at least the significant curtailment of systemic risk.  From a business perspective that makes perfect sense.  However, I don’t recall the last time (Fukushima withstanding) where people said they were willing to go to war and die for their business.  Then again, we have Blackwater and drones for that.  Those who have lost family members in the defense of the freedoms of our country (and Greece for that matter) should be in an uproar over this plan.  The sovereignty of nations is being bought and sold like so many playing cards.  The fact that the United States is the consolidator rather than the consolidatee doesn’t make this any less of a tragedy and a dimunition of the sacrifices made for those who believe(d) they were fighting for our country. 

Fortunately for most of the grandmother’s out there who have photographs of their grandsons sitting atop their mantles who gave their lives in defense of liberty, they’ll never know what hit the currency.  You see in the new “divorced” currency system, the top layer will still be dollars, but the pension money will be tied up in the new gold-backed SDR’s (Special Drawing Rights) that you don’t see.  It’s like having your sovereign cake and eating it too.   Which is worse?  Continuing to penalize grandma with a zero interest rate on her savings or boosting interest rates along with the stock market.  There’s something for everybody in the new plan, just don’t ask the new Treasury Secretary if  “In God We Trust” is printed on the SDR’s.    

Have a great 4th!

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24 Responses to “The Fed Is Dead… Long Live The Fed”

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