Wall Street Thieves Are Happy; Main Street Worker Bees Not So Much.

QEWall Street thieves have never had it so good. Not only do the immoral bankers lie and cheat and run common folks and foreign nations into bankruptcy but then the politicians who are bought and paid for bail out their crony capitalist banker bedmates.

The financial crisis of 2008-09 provided an excuse for even more redistribution of wealth from common folks to the rich and powerful. Just look at the chart on your left, which shows the massive amount of money created with computer keystrokes that is in control of Wall Street.

Now look at the chart of the Dow Jones Industrial Average. Notice how the market has risen dramatically along with the insane increase in the U.S. dollar monetary base. On March 9, 2009, the Dow was at 6,547.05. It closed this week at 18,080.14. That’s not far from a triple in eight years! If the market reflected economic growth, the American economy would be booming. But in fact, based even on the phony statistics of our own government, we are experiencing lackluster growth at best. More likely the picture drawn by economist John Williams that illustrates we have not yet emerged out of a recession since 2008-09 is closer to the truth.

IDW-2015-04-24Actually, at first during Q1 and Q2, Main Street was showing some regeneration of growth or at least emergence out of the depths of recession. Up until 2011, commodity prices as well as gold and silver rose dramatically off their 2009 lows. But when the U.S. Treasuries were downgraded, suddenly gold, which had been closely correlated to the growth in the U.S. monetary base, began a 4+ year bear market even though the money spigots remained wide open! Along with the bear market in precious metals, commodities prices, which are directly related to growth or lack of growth in the economy, also began a very significant bear market, with oil being the last major commodity to fall. And that is why, despite massive money printing that continues around the globe, my IDW is in the process of topping out since 2011. Notice in the chart below how all of the precious metals and commodities as well as year-over-year Global U.S. Dollar Liquidity is in decline. Were the real economy growing, prices of these key commodities as well as Global U.S. Dollar Liquidity would be growing.

From the top of my IDW on March 28, 2011, until Friday, April 24, the items noted above demonstrate that central banks policies are at the least not working and at worst are in the process of outright destroying our capitalist economy. Main Street is sucking wind because it is the middle class that actually produces items of use for society. The parasites in Washington and Wall Street continue to suck the lifeblood out of Americans with the systemic theft of money printing, which is simply handing “tickets” to crony capitalist friends, which they then use to bid away wealth from those who produce it to their own accounts. By destroying middle class income, items used in a growing real economy like copper, oil, and commodities in general (the Rogers Raw Materials Fund) have plummeted in value, thus causing my IDW to top out even as equities make new highs.

And there is absolutely no reason for optimism in the global economy, because central bankers around the world are in the process of destroying capitalism by suppressing interest rates. How in the world can we have growth if capitalism is destroyed by denying price discovery to occur for the lifeblood of capitalism, namely capital?!!!

One word about Global U.S. Dollar Liquidity (GUSDL) may be in order. That statistic is comprised of the monetary base (chart shown above) plus foreign central bank holdings of U.S. dollars. The chart on your left measures GUSDL since the Asian crisis in 1998. Now note the percentage of foreign holders of U.S. dollars in the chart above on your right. The sharp drop-off in terms of foreign holdings is the main reason GUSDL has stagnated and is now at a very troubling zero annual growth. I say “troubling” not because I want to see money growth but


because the system is addicted to fiat money narcotic, and without it we may be heading for another massive credit market implosion followed perhaps by a “crackup boom.” The chart above right also shows that foreign governments have lost their appetite for U.S. dollars, as you should also be doing. How can you adore any asset that can be created in infinite quantities out of thin air?

Meanwhile, with the capitalist system being destroyed by Keynesian (communist light) politicians and central bankers, the middle class is systematically being destroyed and along with it the creature comforts that require commodities for the production of middle class comforts. But at some point, a shortage of those commodities caused by the disruption in the capitalist system will come back to bite the Washington and Wall Street parasites. With all manner of gold market manipulation, media propaganda, political spin, outright lies, and lots of bread and circus American style, the system is being held together. But at some point this con game will end and when it does, price charts for “stuff” could rise in hockey stick fashion when people recognize the non-gold-backed dollar as the absolute fraud it is!

Indeed, David Jensen called me to take note of the dramatic rise in rare earth producer Molycorp (NYSE-MCP), which rose today by 17.86% today alone. And Avalon Rare Earths (NYSE-AVL), my recent pick to replace long-dated U.S. Treasuries (NYSE-TLT) in my Model Portfolio, is showing some life as well. It is up 12.32% in the last month. Molycorp is a current producer, whereas Avalon has perhaps the best rare earth deposit in North America and has a French partner that was the factor that caused me to add it to my list. So far, the replacement of TLT with AVL has worked out really well.

About Jay Taylor

Jay Taylor is editor of J Taylor's Gold, Energy & Tech Stocks newsletter. His interest in the role gold has played in U.S. monetary history led him to research gold and into analyzing and investing in junior gold shares. Currently he also hosts his own one-hour weekly radio show Turning Hard Times Into Good Times,” which features high profile guests who discuss leading economic issues of our day. The show also discusses investment opportunities primarily in the precious metals mining sector. He has been a guest on CNBC, Fox, Bloomberg and BNN and many mining conferences.