Bob Chapman | February 25, 2009

Since 1997, real inflation, as opposed to ridiculously understated official inflation, has raged at a minimum of 8% annually, and has soared as high as 14-16%. This means that you have lost a minimum of two thirds of your 1997 purchasing power. So, if you invested $10,000 in the Dow components in 1997, not only would you have no gain whatsoever, you would have losses on the stocks which were dropped from the index due to poor performance and, in addition, to add insult to injury, your purchasing power has been reduced from $10,000 to approximately $3,000 in terms of 1997 dollars. In other words, that $10,000 you invested in 1997 will today only buy what $3,000 would have bought in 1997.

Effectively, anyone playing the general stock markets has been wiped out by this combination of lost capital gains and reduced purchasing power. Those who began investing after 1997 have done even worse because they have suffered major capital losses in addition to having suffered reduced purchasing power. So much for the much touted 10% average annual gains for stocks. By contrast, you could have bought gold in 1997 for about $300 per ounce and more than tripled your money at today's prices. Your $10,000 would have become $30,000+, however, due to inflation caused by the Fed's profligate increase in the money supply, which the Fed intentionally orchestrated in order to impoverish you and bring you to your knees so you will accept world government, your purchasing power would only be about $10,000 in 1997 dollars. So you would at least be even in terms of purchasing power. Certainly, $10,000 in purchasing power is a whole lot better than $3,000. This example is a classic illustration of how gold preserves your wealth. As you can see, failure to invest in gold, silver and their related shares is tantamount to committing financial suicide. The bankruptcy courts will soon be full of the tens of millions of US citizens who ultimately will ignore gold and silver as a safe haven, or who will simply lack the capital to invest in gold and silver in any case because they are in hock up to their ears, or because they have become unemployed, or both.

Pension plans, often heavily invested in stocks and real estate, asset classes which have seen tens of trillions of dollars disappear in a matter of months, are now so far behind in funding due to their ludicrous underlying assumptions about ROI (return on investment) that they are effectively bankrupt and will have to be bailed by the grievously under-funded PBGC (Pension Benefit Guaranty Corporation), which of course can only provide pennies on the dollar unless another bailout is orchestrated to save middle class pensions, which is not going to happen, and these losses do not even take into account loss of purchasing power due to inflation, which is understated officially to screw retirees out of their social security benefits. Instead of a PBGC bailout, we more likely will see the US follow in the footsteps of Argentina by nationalizing private pension money, mixing it with government entitlements. If you were wondering where the elitists plan to park a large portion of those new treasuries being issued to fund all the bailouts, look no further than your IRA's, 401(k)'s and your company pensions, which will be forced to purchase these treasuries as part of the process by which the elitists will nationalize your pensions. Also, as part of this process, the types of assets you are allowed to invest in will be greatly limited, and your pension will be overseen by your corrupt, bungling government, insuring a complete financial clusterf--k. That way, you get the unspeakable privilege of owning dollar-denominated paper assets that will be vaporized along with Federal Reserve notes (aka toilet paper, aka "worthless paper") when foreign owners of dollar forex all head for the exits to see who can dump their dollars the fastest as they try to purchase as many tangible, real assets as they can find in the US. You won't know, of course, because statistics about foreign ownership in the US are, conveniently, no longer published by the FTC. However, you will find out soon enough as you are Zimbabwe'd and Weimar-ized. And that only addresses problems due to devaluation of the dollar. Wait until the interest rates skyrocket as hyperinflation takes hold and risk reaches new heights. This will collapse the treasury market, and the value of all your pension plan assets, which the government will have forced you to invest in treasuries, will go down in flames with it.

Also, many pension-sponsoring companies are going to go under because they are being systematically starved of necessary capital by the big, so-called "legacy banks," who are using the financial debacle to eliminate their competition and that of their fellow elitist business corporations, especially transnational conglomerates. When these victims of the financial holocaust go under, the pension funds they sponsor will go under with them and there will be precious little in the way of bailouts to make up for these losses. Rest assured that the elitist companies will get their equity injections, toxic waste buyouts and loss assumptions, while everyone else gets the shaft. This is what the Pelosi Political Pork/Plunder Payoff Plan is all about, as well as the multi-trillion Obama bank bailout, which supposedly will help Main Street in addition to Wall Street, based on the tiresome platitudes offered in Tuesday's presidential speech. If you believe that, then we still have that bridge in Brooklyn for sale at pennies on the dollar, at least until one of the dollar surplus nations uses its hundreds of billions in dollar forex to gobble it up.

Note that all the new tax laws concerning pensions encourage you to put more money in, and to keep it there longer. The scum in our government and on Wall Street want to encourage you to place your money into accounts to which they have strings attached with onerous tax law penalties. They want to make sure you put as much of your hard-earned savings in such accounts as possible, and to keep it there as long as possible, so they have sufficient time and opportunity to steal it from you via inflation, dollar devaluation, insider trading, investment fraud, depreciation of asset values through deflation, direct taxation, foreclosure sales, bankruptcy auctions and outright confiscation. That is with the assistance of the SEC and CFTC.

There is no end in sight for the real estate market, which will not bottom for several years. Once interest rates go into double digits, option ARM's implode and unemployed government employees bring the overall unemployment rate up to 30% or even higher, we could be looking at a roll-back to 1981 home prices. Once these three factors are in full swing, you won't be able to give a house away. No one wants to buy a home that is plummeting in value, few will be able to afford it even if they did want to buy it, and the few remaining who wanted to buy it and were still able to afford it will not have the credit or down payment money that is necessary to obtain a loan to buy it. Bank sales of foreclosed property will dominate the markets at all levels, and in all geographic areas. Few areas in the US will be spared from drastically declining home values. Also, once deflation takes over during the next one to three years, those who are liable under those big mortgages they took out based on inflated real estate prices will be unable to sell in any case, because they will be underwater and unable to clear their liens. If we get cram-down authority for our bankruptcy judges, where loan balances can be reduced to levels commensurate with value, there will be few if any homeowners who are drastically underwater who will not take advantage of this bankruptcy protection whether or not they can swing the mortgage payments. No one wants to pay more for a home than it is worth. That means that virtually all real estate derivatives could become worthless regardless of quality. That also means that all the large banks are hopelessly insolvent even if we set aside the Quadrillion Dollar Derivative Death Star waiting to implode as ongoing business failures set off counter-party liability on credit default swaps (CDS's), and as double digit interest rates fry those on the wrong side of interest rate swaps (IRS's). Therefore, all money thrown at these zombie financial institutions is not only being wasted, but is also stoking further hyperinflation without generating any offsetting benefits whatsoever in return. In addition, any common stock, preferred stock or bonds given to taxpayers by any of these walking dead elitist banks and financial institutions is absolutely worthless. These walking dead must be shot in the head with a silver bullet or have wooden stakes driven through their hearts to put them out of their misery, and all their existing accounts should be given to the successful regional banks whose executives had the foresight to stay clear of all the financial carnage. Many of the current and former executives of these zombie institutions and of the Clinton Administration, which set up this nightmare scenario, are now advising the Obama Administration on what to do about the depression we are in. So we are now asking drunk drivers and reckless speeders to give us lessons about highway safety. Only in America.

The bailout for mortgage borrowers is rife with moral hazard, as is the bailout of zombie banks and financial institutions. We keep hearing Barack "Nero Fiddled While Rome Burned" Obama and Sheila "We Just Can't Let This Happen" Bair, the head of the FDIC, tell us that we have to bail out bankster gangsters and borrower felons, and that we just can't allow these banksters and borrowers to go under, nor can we allow the overall financial situation to deteriorate further. Not only can we, but we absolutely should allow these borrowers and bankster gangsters to go under. The situation is going to deteriorate further no matter what they do, and they are in fact exacerbating the ongoing debacles by creating money out of nothing and then throwing it at people and institutions that are already dead, financially speaking. Tim Geithner, the Fed's hatchet-man and tax cheater who is now acting as our Treasury Secretary, wants to apply stress tests to these banks like some sort of bank doctor, when he should be acting as the official bank coroner. Instead of trying to see how banks will react to various financial stresses, which tests should have been conducted years ago by our bogus regulators who looked the other way while collecting their pay, he should simply be determining the cause of death and listing it on the banks' death certificates. Had these stress tests been conducted in a timely fashion, it would not have mattered anyway, because as our subscribers know, these deaths were by suicide, and not by natural causes. These institutions have self-destructed on orders from the Puppet Masters to collapse the world financial system to make way for a new one-world system in place of the nation-state system.

People who acted wisely and stayed on the sidelines while everyone else want on a felonious spending and lending binge in the real estate markets, which felonious activity occurred with the full encouragement of our government who practically arm-twisted many lenders into giving loans, under threat of discrimination lawsuits, to anyone who could fog a mirror, and which felonious activity and loan malfeasance the Fed actively encouraged via Mr. Bubbles, Alan Greenspan, who was the former Fed Chairman before Buck-Busting Ben took over, still cannot get into the real estate market because the prices are being kept artificially high by all the bailouts. They watch in silent anger and consternation as those who committed felonies by taking out "liar loans" get their mortgage principal reduced and payments lowered to avoid generating foreclosures which would take real estate prices down to a more realistic level that honest, qualified buyers could afford. They watch in stupefied horror and frustration as those banks which engaged in derivative and loan fraud and over-leveraged speculation get hundreds of billions of taxpayer largesse doled out to them so they can continue to defraud the public and make nonsensical loans to keep the daisy chain of fraud going while they collect their commissions and spreads on new issuance of toxic waste using money that has been borrowed interest-free, while charging usurious rates, relative to their borrowing costs, to anyone else who needs to borrow money. These bankster gangsters then have the gall to say they are not accountable to taxpayers as to how the money is used, while glomming salaries, bonuses and dividends out of money that has been handed to them which they did nothing to earn, and some of this money is even used as takeover money to hostilely acquire the honest, healthy banks in order to eliminate competition while simultaneously hoarding the gifted bailout money to force the rest of their competition to fail and go under because they can't borrow to meet their capital requirements. Obama's bogus promises that these horrendous and fiendish practices will not be allowed to occur with respect to future bailout funds is just window-dressing and inane platitudes for the ignorant masses. Business will go on as usual in Washington and on Wall Street -- as corrupt as ever. Right has become wrong, and wrong has become right, just as the Bible warned. Surely, we are in the End Times.