This Time It Will Work!

Central bankers and Congress only solution for improving the economy: Just need some more debt to fix the more debt that was added to the debt. It's the same old story... bankers get paid, politicians kick the can down the road, the sheeple are poorer and none the wiser.

Here's the truth.  This time isn't different.  Keynesian economists are limited in their scope of "solutions" because their psuedo-science of monetary experiments are always evolving when the latest gem of an idea backfires. From what I can see, Keynesians only have one weapon: the creation of new money to paper over bad debts (or the last batch of money creation).  Call it QE, Operation Twist, money printing or anything, it's still the same thing.  It's a transfer of wealth and the first people or corporations who get their hands on the newly created money benefit the most.  By the time it gets to you and me, we collectively wonder why our grocery bill is higher this month.

Unfortunately, we the people are the ones who have to live with the consequences of manipulated interest rates (LIBOR scandal), the current Zero Interest Rate Policy (ZIRP), an unaccountable Federal Reserve,  crony politicians who look the other way, and a mainstream media that won't report the truth that I and others (Peter Schiff, Doug Casey, Lew Rockwell, Ron Paul, Jim Rogers, Charles Hugh Smith, Thomas Woods, Bill Bonner, Nelson Nash, Rick Bueter, Barry James Dyke, Mike Maloney, Jeff Berwick, and countless others) share on the web. By the way, if you don't follow these people on Facebook and/or Twitter, I highly recommend you do.

I would be doing everything I can to protect whatever assets you have from a government starved for more revenue and a Wall Street financial system rigged to exploit you.  The answers are out there.  Do the research.  If want to know what I'm doing and recommending for my clients, reach out to me here: http://jlmwealthstrategies.com/contact-us/

John Montoya

The Facts about the Federal Reserve

The Facts about the 'Federal' Reserve

The Federal Reserve is a private institution. It is owned by the 12 regional Federal Reserve banks, which are each in turn owned by a combination of regional banks, commercial banks, foreign banks, and miscellaneous individuals who have inherited pieces passed down through generations. (Rockefellers, Rothschilds, etc.)

The Federal Reserve holds a monopoly on the issuance of currency in the USA. In essence, this is the power to borrow an infinite amount of money at 0%. The dollar bill in your pocket is a 0% loan to the Federal Reserve. The Federal Reserve then uses these 0% loans to purchase income-producing assets. Before 2008, the assets purchased were primarily Treasury debt, which is backed by the taxation power of the US Government. In other words, we are exchanging the property rights to our valuable assets (land, labor, entrepreneurship) for little slips of green paper to buy trinkets with. The government can then tax these valuable assets to pay for our excess. The more we spend, the more the Fed owns.

If all money created is debt and counts as principal, where does the money come from to pay interest on this debt? It comes from the money that gets printed in the future. This is why inflation is a natural result of our current monetary system.

Prior the the Emergency Economic Stabilization Act/TARP Act of September 2008, commercial banks were required to hold 10% of deposits as reserves. This placed a limit on the potential amount of money creation at around 9x the original deposit. An obscure clause in the TARP Act changed the reserve requirement to 0%, immediately making the potential money supply infinite.

The reason for the credit spread blowups of October/November 2008 was because in the same TARP Act the Fed was allowed to pay interest on deposits without publicly stating the interest rate. Before the TARP Act, there was around $20 billion deposited by commercial banks at the Fed. After the TARP Act, deposits immediately jumped 50x to $1 TRILLION. This resulted in a disappearance of demand for risky assets, which led to blowouts in credit spreads.

As a result of various acts of Congress in 2008, the Federal Reserve now has the authority to buy all sorts of assets (commercial paper, corporate bonds, mortgage loans, etc.). A cynical person would say this essentially allows the Fed to seize all valuable assets in this country directly by exchanging fancy bits of green paper for them without having to go through the intermediate step of coercing the US Government into spending more money and taking on more debt.

Much of the Fed’s activity is not made public because of the use of off-balance sheet vehicles.

There is debate over the constitutionality of the Fed’s various awesome powers.

From:
http://fedsecrets.webs.com/

The Cons of Debt Monetisation

Read the commentary from Steve Saville in full: http://www.321gold.com/editorials/saville/saville071712.html



"Even believing that under certain conditions the central bank does no harm (rather than does some good) when it creates new money requires disabling the part of the brain devoted to logic and common sense. Of course it does harm! Adding to the supply of money cannot possibly add to the total wealth in the economy, and yet some people get richer as a result of the monetary injection. If some people get richer while the total wealth is not increased, then other people must be made poorer and what we are dealing with is a forced transfer of wealth.
We now get to the essence of what central bank debt monetisation is: a means of transferring wealth from some people to other people."

I wish more people understood this!!

Are Precious Metals The Only Way To Go?

Will there be anything safe other than metals and art as the mess becomes further known?

I can’t comment on art as an asset class since I own nothing of value in that category.  Metals however can purchased by someone of any means.  That said, I regularly buy precious metals for physical possession and storage elsewhere.  I also advise my clients on doing so for at least a small portion of their overall assets.  Some will, some won’t.  There, however, is no arguing that silver and gold have maintained their purchasing power for thousands of years while currencies of every monarchy and government have been purposely diluted to the point of revolution and/or worthlessness.

Ultimately, nothing will preserve value like metals.  But there are two problems with owning metals.  First, knowing when to sell.  The only people who think they know have something to sell and at best, it’s only a guess.  Prices will fluctuate wildly, more so for silver, so it takes a strong stomach to ride the ups and downs of this very manipulated market.  Secondly, metals produces no income.  Regarding the 2^nd issue, I’ve found that the best way to purchase metals is through a Bank on Yourself policy.  This is because a policy loan, no matter how it is used, will continue to earn interest and dividends.  If used to buy metals, the full cash value of the policy continues to grow as if never touched.  It allows you to own and control two assets with the same dollar. A true win-win.

There is a monthly metals programs I utilize for small purchases each month that I’m happy with.  When I purchase in larger amounts for physical delivery, I use one of my policies to borrow from and payback.  I have no crystal ball on how long the government can continue to kick the can down the road.  It could be a few years, or it could be a couple decades.  I am certain, though, that 1) the dollar will continue to lose value (so I hedge my assets by purchasing metals) and 2) that there will always be need to control the flow of money (privatized banking aka the Infinite Banking Concept).  

Private contracts for money held domestically is a must because life insurance companies (compared to traditional banks and Wall Street) are the most financially solvent of all finance institutions.  Owning metals is also must in my opinion.  If you can combine both, you have the opportunity to ride the ups and downs of the metals market while knowing you’re continuing to earn interest and dividends on your gold/silver holdings.  If the dollar crashes hard, you’ll be able to pay back your policy loans with the proceeds of your heavily appreciated metals portfolio.  Think of it as insurance for your insurance. 

Eventually, my gut feeling is that the western financial system will fail, but banking won’t go away.  Money allows the exchange of goods and services and, ultimately, money must be warehoused somewhere. The process and business of banking will survive even as other businesses come and go because every business and household must decide where to keep their money.  My best advice, practice privatized banking and use the banking process to purchase metals with a portion of your money you want to protect against the loss of purchasing power. 

Worst case scenario, depending on how deep the dollar crash is, it’s not going to take a lot of precious metals to be instantly better off than most who don’t own even an ounce of silver and face the prospects of being completely wiped out.  Compare that to a household that perhaps has any % of their net worth in metals.  The household with any % of metals is infinitely wealthier compared to the household that has none.

Here's What's Wrong With Medicare in a Nutshell

This segment is from: http://www.dollarvigilante.com/blog/2012/7/3/american-medicalcare-its-terminal.html

 How can Americans justify lining up for Medicare while being against ObamaCare?

The most common response to this question?  "I paid for it.  I deserve it." 

The problem with that response?  It is wrong. Charles Hugh Smith summarized the numbers as follows: 

"Medicare tax is 2.9% of wages, 1.45% each for employer and employee. If the typical worker makes $30,000 a year for 35 years, then lifetime earnings are about $1 million. If we take the $40,000/year average, then that rises to around $1.4 million in lifetime earnings. The 2.9% Medicare tax thus totals about $30,000 to $40,000 in lifetime contributions for the average worker.  The average benefits extracted from the system run from $393,000 to $525,000 (due to the benefits extended to non-working spouses, benefits for never-married people may be somewhat lower). Average annual costs per beneficiary run as high as $18,000, though expenses typically rise significantly in the last year of life."

Medicare isn't insurance.  It is not something you fund with a willing counterpart taking the risk for a negotiated premium based on individual underwriting. Medicare is welfare, plain and simple.  It is a government transfer program.  Few receiving Medicare today paid enough to justify the government largess they are now receiving (or are hoping to receive). 

Medicare is nothing more or less than a contemporary bread line for the sick and is destined to hasten the bankruptcy, and ultimate default by the United States.