Investment Indicators from
Peter George issue #65
US flying on empty
Time for a 'Golden Parachute' part
December 16, 2004
."..If my people, who
are called by my name,
Will humble themselves and pray and seek my face
And turn from their wicked ways,
Then I will hear from heaven and will forgive their sin,
And will heal their land."
2 Chronicles chapter 7, verses 13 & 14
It is ironic to reflect that
the man who penned: 'Gold and Economic Freedom' as an article
of monetary faith in 1966, should find himself presiding over
the 'nerve centre' of the FIAT money system - particularly at
a time when the nation's economic freedom is on brink of being
severely curtailed by circumstance.
The clearest evidence of the
US flying on empty is the accelerating slide of the dollar. The
underlying cause has been the nation's relentless pursuit of
monetary and credit policies in direct opposition to those its
Fed Chairman so boldly espoused in his original article of 1966.
The tragedy is that responsibility for the coming crisis lies
largely with the Chairman himself, due to errors of policy committed
under his watch. One cannot escape the fact that he has been
steering the US engine of debt for 17 years, ever since August
This report attempts to analyze
the state of the US economy. It presents some conventional forecasts
- based on past experience - as to what could happen if events
proceed unchecked. It considers the two most likely scenarios
of depression and hyper-inflation, depending on the strategies
chosen. Finally, it proffers a radical third alternative, one
which ought to be far less painful than going down the road of
depression but simultaneously has the ability to avoid the currency
destruction implicit in the hyper-inflation option. It lays a
foundation for gradually returning to financial discipline, balanced
budgets, and sound money - but in ways which retain the dollar's
role as major 'reserve currency.'
Implementation needs to be
rapid to halt the accelerating process of destruction already
underway - a process which will otherwise dethrone the dollar,
forfeiting its role to a politically unstable EURO ruled by increasingly
'godless' Europeans. A group of erstwhile Christian nations that
can exclude a man from office because of his expression of Christian
faith in action - his opposition to 'gay' marriage - can never
be trusted to sustain a sound monetary unit requiring strict
adherence to a code of mutually agreed principles. European Union
commitment to the Maastricht Treaty espousing financial discipline
is already honoured only in the breach by the EU's dominant members,
France, Germany and Italy. It goes to show that when push comes
to shove, Europe has no respect for principle - neither in morals
nor in finance. Those who believe the EURO can fulfill its role
as a reliable store of value for any length of time are in for
a disappointment. Investors will be jumping from the frying pan
into the fire. The rate can probably rise from $1,34 to $1,80
over the next 18 months but long before those levels are reached
the European Central Bank will be printing EURO's for all they
are worth, in an attempt to stem the tide.
The course of action we propose
requires a bold unilateral step of faith from President Bush
- in terms of restoring the dollar's role as a long term stable
store of value. To take the step, Bush will need to draw on the
unique experience of Alan Greenspan. The Fed Chief will have
to dump his long love affair with FIAT money and return to the
beliefs and principles of his youth. Without such a move, prospects
for US markets look bleak, as does the outlook for the standard
of living of the average American.
Only a Bush could do what is
proposed. Only a Greenspan could help him do it. Bush has the
moral courage to act. Greenspan has the experience to implement.
What we propose is the re-introduction of a working Gold Standard.
The keys are METHOD and PRICE. We discuss them in our conclusion.
The main body of the report will demonstrate that no other solution
can work without incurring untold global economic damage and
leaving America vulnerable to the accusation of having acted
dishonestly towards her creditors. There is a better way for
the US to pay her debts.
1. Greenspan's reputation in
Despite the eulogies of politicians who don't understand what
Greenspan has done, there are some in the financial world who
do. Their assessment of the Fed chief's overall performance since
1987 has been far less flattering. In the words of critic Doug
Henwood, Editor of Left Business Observer:
"He has lurched from
crisis to crisis - I don't know who could have been worse. He
turned McChesney-Martin's dictum around. Instead of taking the
punch bowl away, Greenspan was SPIKING it."
Henwood concludes with a comment
on Greenspan's easy-money policies:
."..a recipe for future
disaster- ... hard to deflate a bubble gently"
In his latest fortnightly economic
tour de force, The Privateer's Bill Buckler was even less restrained.
What led up to his scathing attack was the way in which Greenspan
unburdened himself in an address to bankers in Frankfurt on November
19, prior to the start of the recent G20 meeting in Berlin. First
look at what Greenspan himself said:
"It seems persuasive
that, given the size of the US current account deficit, a DIMINISHED
APPETITE for adding to US Dollar balances must occur at some
point....International investors will eventually ADJUST their
accumulation of Dollar assets or, alternatively, seek HIGHER
Dollar returns to offset...risk, elevating the COST of financing
the US current account deficit and rendering it increasingly
The Privateer commented as
"Greenspan has now
joined the chorus of concern... that US current account deficits
are simply unviable. But current account deficits don't just
happen, they are CAUSED. They are caused by artificially lowered
internal rates of interest which generate in their turn much
higher rates of borrowing and debts. Then, as this new stream
of BORROWED PURCHASING POWER joins existing quantities
of cash and deposits in banks, it leads to increased CONSUMPTION
followed by climbing IMPORTS. The trade balance swings into deficit,
followed by EXTERNAL DEBTS piling ever higher."
"The wonder of it all
is that Greenspan now stands forth in Frankfurt and identifies
the assured OUTCOME of precisely the monetary and credit policies
which he himself has been the initiator and sustainer of for
"How Greenspan will
be greeted when he returns to the USA is anybody's guess."
"If there is justice
- then based on Patriot Acts 1 and 11 - he ought to be arrested
as a financial terrorist."
"Greenspan has, by
deceit, placed the US in a position where the credit expansions
he originated have left the US exposed to a "debt maelstrom"
which can arrive anytime the rest of the world decides not to
Having deserted the discipline
of his first love, gold, for the deceptive allure of serving
the monied elite, the Fed Chairman can learn from Shakespeare.
It may help him understand the cause of his current difficulties:
who sups with the devil must needs have a long spoon."
Greenspan deliberately befriended
the Bankers. He exchanged his belief in sound money for a key
role in extending the tentacles of their fraudulent FIAT money
system. In fact he once boasted:
"I look forward to
being Fed Chairman and printing my way out of the next Kondratieff
His wish was granted. He was
appointed to the position on August 11, 1987. What followed two
months later was not his fault, he inherited it, but the way
he dealt with it set a pattern which has given us the mess we
find ourselves in today. On October 19, a date that subsequently
became known as 'Black Monday,' the Dow fell 22%. This was the
greatest loss Wall Street had ever suffered in a single day.
There were two acknowledged causes:
One was legislation which passed
the House Ways & Means Committee on October 15, 1987, eliminating
the deductibility of interest on debt used for corporate takeovers.
The offending provision was later removed.
The other - which brings us
closer to the events of last week - was the announcement of a
large trade deficit on October 14, 1987, which led Treasury
Secretary James Baker to suggest the need for a FALL in the dollar
on foreign exchange markets. Fears of a lower dollar led foreigners
to pull out of dollar-denominated assets, causing a sharp rise
in interest rates, which in turn hammered stock prices.
2. Greenspan and the crash of
It is not the specific CAUSES of each crisis which concern us
so much as the countervailing measures adopted by the Fed under
the guiding hand of Greenspan and his predecessors. What makes
our discussion controversial is that on each and every
occasion when the Fed has intervened - both before '87 and since
- most of those in politics or the financial world have only
had praise for the successful strategies repeatedly adopted to
prevent financial melt-downs. A particular case in point was
Greenspan's rapid re-liquification of the financial markets in
the days following the crash of '87. His actions were so successful
that within 24 months markets had completely recovered. It is
however the cumulative long term costs of each and every
intervention which plagues us today as the required 'fix' balloons.
3. US Flying on empty
Collective central bank interventions, like the Plaza Accord
of 1985, have had very mixed benefits and we discuss them in
detail. It is necessary to still the growing clamour for yet
another joint agreement, leading to yet another devaluation of
the dollar. The most powerful advocate of this strategy has cleverly
- and only very recently - been Greenspan himself as he openly
PREDICTED what he wanted to see happen. His co-conspirator was
- and still is - President Bush, as he unrepentantly pursues
the 'borrow and spend' policies he and his administration devised
to counter the crash of 2001.
We strongly disagree with the
strategies both of them colluded to implement, but the flaws
only become apparent when the results of Fed intervention are
studied collectively, in retrospect, and over an extended period
of time. By doing this, can we count the true cost of intervention.
It will help us allocate responsibility for the problems the
US faces today. It may assist us in suggesting a way out of the
current economic impasse. What is undeniable is that the US economy
is maxed out and flying on empty. All categories
of debt have been pushed to the limit - internal, external, private
and public. Thanks to the low interest strategies of the Fed,
the US middle class has mortgaged itself to the hilt - either
by 'trading up' or 'extracting equity.' In the process house
prices have ratcheted to an unsustainable peak.
If the dollar slide gathers
momentum it could conceivably lead to a panic collapse in the
international value of the currency. US bond prices will eventually
follow as foreign central bank support slowly wanes. Long term
interest rates will then DOUBLE from 5% to 10%. Mortgage rates
will move in step. The housing bubble will burst. Retail sales
will fall off sharply. The US could face depression which will
then spread to her trading partners as their biggest market wilts
and shrinks to a shadow of its present size.
4. The FIAT alternative leads
In the recent past concerted currency intervention by Asian central
banks served to lend artificial support to both the dollar and
US debt markets. We discussed this extensively in an earlier
report we wrote on March 12, 2004, entitled:
in 'FIAT Folly' - face Abyss of destruction."
(Subscribers are welcome to
access all previous reports.)
In a recent article Bill Gross
of PIMCO called the actions of Asian central banks a 'Faustian
Bargain.' By artificially supporting the dollar and US bonds
at the expense of their own currencies - printing Yen and other
currencies to buy dollars - they were effectively subsidizing
their exports to US markets. Without such intervention, American
consumers would either buy something cheaper - or nothing at
all. Asian central banks get left holding a swelling stock of
increasingly worthless dollars, but down the line there is likely
to be a more damaging and dangerous result.
Although the printing of Yen
in small quantities inflicts minimal damage while Japan is experiencing
deflation, large-scale printing would have dire consequences.
In a fruitless and vain attempt to hold up the currency of a
country far larger than hers, Japan would eventually jeopardize
her long term bond market, causing prices to fall and yields
to rise. This would create far greater damage in the banking
and pension sectors, than a slide in the NIKKEI due to a slowing
Yield on the 10 year Japanese
Government Bond peaked at 9% in 1990, fell to half a percent
in 2003, but has since risen to 1,45%. In so doing, it has broken
a 14 year down trend line. This suggests that in the next few
years Japanese bond yields could rebound sharply, in line with
rising yields in the US. Ultimately they look to bounce right
back up to their previous peak of 9%. That would decimate the
asset values of Japanese bank stocks.
The above is an example of
how sustained currency support operations by America's trading
partners will simply transfer the American malaise to those countries
that intervene. The end result will be the destruction of the
FIAT money system through a spreading and accelerating process
of inflation which finally goes 'hyper.'
5. Facing the pain of reality
The South African Sunday Times of November 28, carried an article
on the US economy headed:
the US sneezes, the rest of the world catches a cold."
It contained a quote from Scott
Campbell of Optimal Fund Management:
"The US dollar can
tank to smithereens and the current account problem will not
disappear. The twin deficits in the US - budget and trade - are
a consequence of living beyond one's means for some time, and
the only way to fix the problem is through some belt tightening.
The US economy badly needs a RECESSION to reduce import demand,
and bring consumer credit back into line."
Most recent figures indicate
a trade deficit running at $665billion a year, equivalent to
6% of GDP. The budget deficit is running at an annualized rate
of almost the same - $630billion - equivalent to 5,7% of GDP.
Ruthlessly trimming the budget deficit would go a long way to
curbing the trade deficit, without dramatically trashing the
dollar. However, if budget pain is not on the table for discussion,
the dollar is being set up for a major fall.
6. Refusing to face the pain
Greenspan and Bush currently have a totally different strategy
from Scott-Campbell's. Although Greenspan admits it is important
that BOTH deficits be cut, conceding that cutting the budget
deficit would help reduce the trade deficit, he went on to warn
to suppress consumption would not be constructive."
In sympathy with this attitude,
and a day prior to Greenspan's routing of the dollar on November
19, the US Congress aligned itself with the Fed Chief's 'soft
option' approach, by RAISING the federal debt limit $800billion
to $8,18trillion, thereby automatically REJECTING restrictions
on both tax cuts and spending,
Economist Robert Brusca of
the UN's FAO Economics division saw right through Greenspan's
DOUBLETALK. He said Greenspan is NOT warning about the consequences
of a weak dollar - to the contrary:
"If anything Greenspan
is afraid that the dollar will not get WEAK ENOUGH, and as a
result the US current account deficit could stay too large for
too long...while Greenspan voiced support for closing the budget
deficit, it's really the CURRENT ACCOUNT deficit that worries
him more. And one way to close the current account deficit is
to see the DOLLAR DROP even further compared to other major currencies."
Brusca went on:
"A call to shrink the
US current account deficit - as long as we conclude it is NOT
a call for RECESSION in the US - is also a call for STRONGER
GROWTH abroad AND for a weaker dollar."
In other words it places blame
and the burden of change on America's trading partners - more
so than on the US itself.
7. Why the strategy for a weaker
dollar won't work
Following the PLAZA Accord of 1985, France, Germany, Japan and
the UK agreed to assist the US to effect a substantial devaluation
of the US dollar in order to bring the US trade deficit back
under control. At that stage it was running at 3% of GDP. Over
the next three years the dollar exchange rate declined by an
average of 50% against the currencies of the countries in the
Accord. By 1991, five years after the Accord, the trade deficit
had been completely eliminated and replaced with a small surplus,
but the unseen costs were substantial. Two years into the slide,
the deflationary effects on world trade triggered the crash of
'87. Two years later, despite a sharp and sustained bounce back
in Western markets, the Japanese NIKKEI collapsed, forcing the
nation into a 14 year recession from which it has yet to recover.
The position the US finds itself
in today is more serious than 1985. On June 22 of this year,
The Economist published an article entitled:
to slay America's monster trade gap"
The writer mentioned how hard
it would be for the US to close the now MUCH HIGHER trade gap
without causing substantial pain - not just to herself, but to
her trading partners, most of whom would struggle to find alternative
markets as US demand is curbed by the rising cost of imports.
Because the American market is so dominant, its loss implies
a substantial drop in overall sales for trading partners whose
currencies appreciate. The deflationary impact of these influences
will in turn have a knock-on effect on the US, making it difficult
for the latter to maintain exports - let alone increase them.
The article referred to a study
by economists at the OECD who reckon that to narrow the deficit
by TWO percentage points by the end of the decade - six years
out - will require the dollar to LOSE 25% of its current value
by the end of 2004. The article was written in June. Since then
the dollar index has fallen 7,8% and the EURO 10,2% - still nowhere
near sufficient to turn the situation around. Even so, the OECD
prescription only looks to trim the deficit by 2% of GDP. The
problem is that latest figures place the deficit closer to 6%,
if the latest quarterly figure of $166 billion is annualized
to $664,8 billion.
On October 28 the Economist
followed up its June 22 article with an update entitled:
After interviewing Stephen
Roach, chief economist at Morgan Stanley, The Economist wrote
"In the three years
from 1985, the dollar fell by 50% against the other main currencies.
Inflation and bond yields rose and, in October 1987, the stock
market crashed. America's current-account deficit is now almost
twice as big as it was then, so the total fall in the dollar
- and the FALL-OUT in other financial markets - could well be
larger. The WOLF is licking his lips."
In other words, a 50% devaluation
is nowhere near ENOUGH, even given that it has already fallen
8. The problem of China
Official US policy repeatedly urges the need for a substantial
REVALUATION of the Chinese Yuan in order to reduce ballooning
Chinese exports to the US market. Some recommend a Yuan up-move
of as much as 40%. Many US domestic manufacturing industries
have been gutted by Chinese competition. Quite recently my wife
went shopping for her grandchildren. Chinese 'Barbie Dolls' sell
for less than 15% of the cost of an American 'original.' How
can the US compete?
Understandably there is a groundswell
of rising protectionism. Many US industries have re-located their
plants to China to take advantage of labour rates which don't
even bear talking about. Unfortunately a Yuan revaluation causes
more problems than it solves.
First of all, China is running
an OVERALL trade deficit, but admittedly not a large one. Although
her surplus with the US constitutes between 20% and 25% of the
US total of $665 billion, it gets dissipated financing imports
of food, raw materials, metals and crude oil. In fact the Chinese
economic miracle has been largely responsible for booming commodity
prices despite a GDP which is only 3,5% of the world total.
While Americans may rue
the rate at which Chinese increasingly swap bikes for motorized
transport, thereby developing an insatiable thirst for oil, the
flow-through benefit down the supply chain is substantial as
third world exports of commodities take off skywards. They are
beginning to enjoy a measure of economic blessing for the first
time in 20 years - this is certainly true of South Africa, the
continent's 'commodity treasure chest' - hence the strong Rand.
The last thing they wish to see is the Chinese Tiger shot at
Secondly, the Chinese are reading
their economic history books. The first PLAZA Accord, in 1985,
ruined Japan and drove her into a 14 year deflationary recession.
China needs similar treatment like a hole in the head. She still
has 200m unemployed. They are being absorbed into the economy
at a rate of 14m a year. She desperately needs a further decade
Thirdly, 65% of Chinese exports
source from foreign-owned factories answering to shareholders
in the US and Japan. To that extent, even marketing strategies
are out of her ambit. China simply supplies cut price labour
and an environment free of the health, pension, and insurance
costs which burden manufacturers in the West. China's central
bank Deputy Governor Li Rougo described the extent of the wage
disparity as follows:
"The appreciation of
the Yuan will not solve the problems of unemployment in the US
because the cost of labour in China is only 3% that of US labour.
They should give up textiles, shoe-making and even agriculture....
They should concentrate on sectors like aerospace ....sell those
things to us ...we would spend billions.... We could easily balance
The fourth problem with a Yuan
revaluation is that for various reasons, 50% of Chinese loans
are deemed shaky and worse. Raising interest rates or revaluing
the Yuan could trigger widespread defaults in the banking sector.
In the first instance debt-laden customers would finally sink
under the weight of rising rates. In the second, a revaluation
could spark a run on deposits as money flees the country.
In an article entitled:
of fiddling with the Yuan"
Henry C.K. Liu, Chairman of
New York-based Liu Investment Group, put it this way:
"With every passing
day more market watchers join the ranks of those predicting a
looming crisis in the US financial system due to excessive debt,
particularly external debt. This danger cannot possibly be defused
by China, regardless of the monetary policy she adopts. The dismal
record of Fed monetary policies which induced the crashes of
1987, 1994, 1997, and 2000, discounts the value of US advice
for Chinese economic and monetary policy....China's growth has
largely been led by GROWING processing and assembly operations
in China for re-export, operated by TRANSNATIONAL corporations
mainly to DEMOLISH the hard-won gains of labour movements in
the capitalistic West."
As a passionate believer in
free markets, my own comment would be:
"What is wrong with
international investors locating plants where labour costs are
lowest? When critics exercise the right to call for tenders for
capital construction projects, they insist on keenest prices.
Why can't investor's do the same in the area of labour costs?
Chinese Premier Wen bluntly
told US Treasury Secretary John Snow that the dollar crisis is
America' s problem, not China's. He could have added that America
needs to start living within her means before trying to pass
the buck and blame trading partners like China. Wen well knows
that a sharp appreciation of the Yuan will drive China back into
More than a year ago, David
O'Rear, Chief Economist of the Hong Kong Chamber of Commerce
summed up calls for a Yuan revaluation as follows:
"If Japan's mature
financial institutions and exporting corporations were devastated
by the aftermath of the first PLAZA Accord, imagine what would
happen to China's far less developed banks and other financial
sector companies. The implications for Hong Kong are severe as
The 1999 economics Nobel laureate
Robert Mundell attended a conference in Beijing this year. He
"Never before has there
been a case where international monetary authorities have tried
to pressure a country with an INCONVERTIBLE currency to appreciate
its currency. China should NOT appreciate or devalue the Yuan
in the foreseeable future. Appreciation or floating of the Yuan
...would have important consequences for growth and STABILITY
in China and Asia."
In concluding the section on
China, we quote from a short article by Michael Darda, Chief
Economist of Polyeconomics, an economic forecasting firm in New
Jersey. It was headed:
Ruinous Dollar Policy"
"The Fed is fixated
on the current account deficit. This has led them to imply the
dollar should fall....Those advocating a weak dollar to redirect
trade flows do not have history on their side. While a depreciating
currency is assumed to boost exports and shut off demand for
imports, this is only the FIRST EFFECT. Eventually a weak currency
invites INFLATION, which neutralizes the effect of the lower
exchange rate.....Persistent currency depreciation has NEVER
brought lasting prosperity to any government in the history of
the world. If the dollar continues to depreciate, it will bring
higher inflation, higher interest rates, lower real growth rates,
and a reduced standard of living for most wage earners."
Darda ended by urging Greenspan
to focus his attention on his own area of responsibility, the
creation of EXCESS supplies of money. This is Key number one.
The second was pinpointed by author Richard Duncan in his book
Duncan highlighted what he
considered to be the greatest danger to the world economy - the
curtailing of American demand for imports. He predicted
that as the dollar crash proceeds, the US trade deficit will
eventually shrink. If the bond market collapses simultaneously,
the process could accelerate out of control. Americans will literally
stop buying products from overseas. This will instantly remove
a huge source of global demand from the world economic equation.
UNLESS REPLACED, Duncan says we face the likelihood of an acute
Unfortunately the SOLUTION
he proposes comes from fairyland. He would have the international
community pressure emerging market nations to raise wage rates
by an average of 25%. He says this will give a balancing boost
to world demand. Try telling that to the Chinese and Indians
while their unemployed still number in the hundreds of millions!
The strategy won't get off first base. The ultra low wages of
workers in China and India will rise as and when the situation
demands. Right now it does not.
But we draw attention to Duncan's
key phrase "UNLESS REPLACED." We will address it in
9. Biggest Danger for US market
- crashing bonds, rising rates
Top US economist Fred Bergsten - a well-entrenched 'establishment'
figure - forecast a 'financial quagmire' unless Bush took steps
to tackle the deficit problem. But he never told him HOW to do
it. All he did was repeat the warnings of others:
"A sharp US dollar
fall is possible in the next six to twelve months, and US interest
rates could go to DOUBLE DIGITS."
Until the Presidential election
was out of the way, dollar and bond bears were confused and out-maneuvered
by the stubborn refusal of bond prices to crack and rates on
the 10 year and 30 year bonds to rise. Bill Gross of PIMCO gave
the reason why their forecasts came to nothing. He said that
until Japan and China began to lose their appetite for recycling
dollar surpluses into the US bond market, the bigger the trade
deficit became, the greater the degree of support for US bonds.
In fact he maintained that Asian buying actually pushed rates
Following Greenspan's bearish
forecast on the dollar and US bond rates, there was an immediate
and overwhelming market turnaround. Asian support began to fade
and long term bond charts began to give clear SELL signals with
rates breaking sharply upwards.
The conclusion of our analysis is simple and stark. Last time
the US trade gap hit crisis point was in 1985 when it reached
3% of GDP. At that stage it required a 50% devaluation of the
dollar over a three year period. This successfully but painfully
brought the trade deficit back into small surplus after six years.
The cost was heavy. It led to the crash of '87 and caused the
collapse of the NIKKEI in '89. Today the trade deficit is pushing
towards to an annualized rate of 6% - DOUBLE the crisis level
reached in 1985. To make matters worse, 15% of total US imports
come from China who is in turn responsible for 23% of the total
US trade deficit of $650billion. They are refusing to be part
of the adjustment process.
This means that those countries
responsible for the remaining 85% of exports to the US are going
to have to bear the total burden - but from a far wider deviation
from the norm than the US encountered in 1985. Even a EURO rate
of $2,00 would be insufficient, as would a Yen rate of 52. Yet
the economic implications for both these countries would be catastrophic
at the currency levels specified. They would drive them into
depression. The average level of their exports to the US would
have to fall by 50% if Chinese exports continue unabated.
They will be forced to find
replacement markets or their own economies will be severely dented.
We are talking about a diversion of $670billion of fresh buying,
which has to come from somewhere. It simply isn't there.
Alternatively, there has to
be a compensatory increase in US EXPORTS to these same trading
partners and the rest of the world - but excluding China. Either
way, the required swing of trade in favour of the US will suck
$670billion of buying power out of the world economy. It will
be highly deflationary. Somehow or other, there has to be a compensatory
boost to international liquidity - preferably not by raising
In his book 'The Coming Dollar
Crisis' discussed at the end of section 8 above, Richard Duncan
highlighted a further dimension to the loss of buying power.
He predicted that as the dollar crash proceeds, it could trigger
panic foreign selling of US bonds. The process could accelerate
out of control if Americans literally stop buying products from
overseas. The figure of $670 billion could even be exceeded.
------------END OF PART 1------------
PART 2 of this report is headed:
"TIME FOR A GOLDEN
It describes a method by means
of which the US could return the world to a working GOLD STANDARD.
It suggests various price levels for the various STAGES and the
hurdles which would have to be cleared in each case before one
could proceed from one stage to the next. It also discusses the
probability of each of the 3 scenarios - hyperinflation, dollar
devaluation or golden parachute and the investor's response.
Part 2 is only for SUBSCRIBERS.
We encourage you to access
it at Peter George's website with a view to becoming a
SUBSCRIBER. The address is:
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