...and Atlas shrugged

Among the happy, upbeat economic outlook being peddled by the federal government to a somewhat still lethargic and puerile public, news has begun to break that the American economy may potentially be at the threshold of not only a "W-shaped" recession, but, when combined with other poor conditions of our currency, GDP, record low treasury yields, and national debt, a severe economic collapse.

The Hidenburg Omen, an economic harbinger used to predict substantial market corrections by tracking various indicators around the NYSE, has been triggered on four separate occasions within the last two weeks, indicating a high probability of serious market volatility within the next approximately six weeks.

In general, a single cluster of triggering of the Hindenburg Omen has historically resulted in the following:

1. A 77% chance of a market correction of more than 5% within the next 40 days
2. A 41% chance of investors pulling money out of the market in panic
3. A 24% chance of a major market crash

The Hidenburg Omen has correctly predicted every NYSE crash for the last 25 years.

I might remind you that the market crash of 1929 and the resulting depression of the following 10 years were filled with short periods of rapid "recovery," which were hidden within the overall decline of the economy as a whole. America has been here before, and unfortunately for us, we have applied the exact same "solutions" as before - massive federal government debt spending on new social entitlements and public-works projects, reduction of interest rates, abuse of the so-called "discount window," and the general stringing along of the public under the guise that "government is the answer." The result of these policies in the 1930's was drastically prolonged economic depression and a legacy of unsustainable social programs (social security, for example) to burden future, unborn generations for short-term gain.

Hold on to your seats - it's going to be a long, bumpy ride down.

In love of liberty,
The Bulletproof Patriot

[1] http://www.zerohedge.com/article/hindenburg-omen-confirmation-1
[2] http://en.wikipedia.org/wiki/Hindenburg_Omen
[3] http://www.zerohedge.com/article/third-hindenburg-omen-confirmation

Federal Reserve purchases own debt, endangers the dollar

Years ago, the Fed stopped publishing the M3 Money Supply indicator, which was used to measure (among other things) inflation and the amount of money available in circulation.  The M3 indicator is now showing inflation similar to what was seen in the 1930's, probably indicating that we have succeeded in extending this recession by foolishly diving head first into Keynesian economic spending.  The same thing was accomplished during the Great Depression, where the United States prolonged the depression by establishing massive federal government social programs and engaging in debt spending.  The rest of the world did not follow our lead and subsequently exited the depression nearly a decade before the United States.  The depression was only known as the "great" depression here.  Similar action was taken in Japan in the 1990's, which led to what the Japanese now call "The Lost Decade."  Federal debt spending has never worked any time it has been tried.  It is truly a "failed policy of the past" and history bears this out very clearly.

http://www.telegraph.co.uk/finance/economics/7769126/US-money-supply-plunges-at-1930s-pace-as-Obama-eyes-fresh-stimulus.html

Now, the Fed (in the story I sent out earlier) is purchasing US Government debt, or monitizing the debt.  This literally means that the Federal Reserve is printing money to loan to the government, because the government has been much less successful in selling our debts to places such as China recently.  The United States is becoming a money hole and foreign governments no longer recognize us as a good investment - they don't know whether or not they'll get their investment back.  As such, we have resorted to the situation we are in now, where we are taking money out of one pocket and putting it in the other.  (The only alternative is auctioning debts at an increased interest rate or for a shorter period, i.e. 6 months rather than 60, which has been happening for several months.  The problem now is that we can't raise our interest rates high enough to entice foreign interests to invest.)

http://www.bloomberg.com/news/2010-08-10/fed-to-reinvest-principal-on-mortgage-proceeds-into-long-term-treasuries.html

If the current actions continue at this pace, the US Dollar is in serious danger of hyperinflation.  We have already opened all of the valves that the federal government can open to try to stop the recession - there aren't any left to open.  We are in serious risk of not only a W-shaped recession, but a severe economic collapse never before seen in the United States.

In love of liberty,
The Bulletproof Patriot

A Comment on Democracy and Individual Liberty

The Administration is pushing to have an existing law changed to allow the FBI to obtain domestic internet traffic records (i.e. email, access records, etc) - without a warrant.  In addition, the law requires the internet service to remain silent about the request.  This is extraordinarily dangerous and a rapid erosion of individual liberties.  Just another sector of life under the unconstitutional scrutiny of the federal government.  This is in addition to the FCC and DOJ actively arguing in court this year that they are within their rights to obtain domestic emails without a warrant.  Please read:

 

http://www.washingtonpost.com/wp-dyn/content/article/2010/07/28/AR2010072806141.html

 

In addition, there is a dangerous movement afoot to abolish the electoral college among the states.  This is an unveiled move to appeal to popular, direct 'democracy' (please read James Madison's words in Federalist #10 and #14 to learn why a republic was chosen for the United States and the dangers of true democracies).  I might remind you that Hugo Chavez, Hitler, and Mussolini were all 'democratically elected.'  Now, the Massachusetts (story is below) legislature has approved a bill that will award the state's 12 electoral votes not to the winner of the most votes by county within the state, but to the winner of the national popular vote tally.  This is exactly what the founders were trying to prevent - the state is voluntarily giving up its rights and sovereignty to the will of the public.  The Founders expressly warned that such moves would lead to mob rule and the destruction of the rights of a minority.

 

This move follows a similar one made in 1913 (during the Progressive Era of Woodrow Wilson) in which the 17th Amendment was passed, removing the election of senators by the state legislatures and subjecting them to 'direct democracy' - i.e., by direct, popular election of the People of the state.  Why is this important?  Shouldn't the People choose their representatives?  Yes - but in a federal republic, the states' are also represented independently of the People.  This balance was established by having the People represented in the House of Representatives and the States represented in the Senate.  The balance was destroyed in 1913, and now the states no longer have any representation.  Hence the slide of states' rights and the rapid move towards the gigantic, repressive national government we are now experiencing.

 

Federalist #10:

http://www.constitution.org/fed/federa10.htm

 

Federalist #14:

http://www.constitution.org/fed/federa14.htm

 

Mass. Legislature Approves Plan to Bypass Electoral College:

http://www.boston.com/news/local/breaking_news/2010/07/mass_legislatur.html?p1=News_links

 

In love of liberty,

The Bulletproof Patriot