Psychologist Carl Jung knew what he was talking about when making this statement. Repressed and thus delayed suffering is bound to cause even more distress at a later time due to an imbalance that fails to be rectified. The same is true for how the government is handling the current crisis.

Where does one begin? Firstly quantitative easing (newspeak for ‘creating money out of thin air’) has become a global reality. It started in the United Kingdom on March 13th, but went global three days later through the IMF joining in and issuing of their basked of currencies of so called Special Drawing Rights. But it gets better: Bernanke told the Senate Banking Committee at the 24th of February that there is “a reasonable prospect” of recovery beginning next year if the president, Congress, and Fed succeed in restoring stability. Wait - did I hear that right? People who live long die old? Well gee wiz! Who would have thought…

It soon became clear however, that Helicopter Ben would not take long to take bold new action in unfreezing the credit market by announcing a whole new round of $US1.25 Trillion in quantitative easing at the 18th of March and thereby ushering in the first steps in the long feared destruction of the US Dollar sending Gold and the Euro soaring. The Chinese in the meanwhile keep raising their voice, worried about an irresponsible US inflating their US bond holdings towards worthlessness while at the same time backing Russia in calls to strip the US Dollar from its global reserve currency status. A notion that will next week be officially proposed by the U.N. Commission of Experts on International Financial Reform.

Not willing to wait for such a move central banks across the world have already turned into net buyers of Gold to the tune of 1.1 million ounces in January 2009. And by the way: why do we have to hear about the Gold manipulation in the Russian media? How else is one to explain negative gold lease rates? Add to that the fact of Silver being in backwardation since January 21st and you get an appreciation why holding anything but physical bullion in your hot sweaty hands becomes an increasingly risky proposition. Zimbabwe in the meantime is two steps ahead of the US now and has stopped beating up their currency by finally declaring their Dollar to be dead after 231 million percent of hyperinflation. How long until the Fed realizes that you simply can not reinflate a burst bubble?

For understanding everything that is wrong about how the government is handling the economic crisis in one handy, neat little package on need go no further than to watch this video. Further distress is surely on the way.

This entry was posted on Tuesday, March 24th, 2009 at 5:02 am and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.