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I began writing analysis on the macro-economic situation of the American financial structure back in 2006, and in the eight years since, I have seen an undeniably steady trend of fiscal decline.
I have never had any doubt that the U.S. economy as we know it was headed for total and catastrophic collapse, the only question was when, exactly, the final trigger event would occur. As I have pointed out in the past, economic implosion is a process. It grows over time, like the ice shelf on a mountain developing into a potential avalanche. It is easy to shrug off the danger because the visible destruction is not immediate, it is latent; but when the avalanche finally begins, it is far too late for most people to escape…
If you view the progressive financial breakdown in America as some kind of “comedy of errors” or a trial of unlucky coincidences, then there is not much I can do to educate you on the reasons behind the carnage. If, however, you understand that there is a deliberate motivation behind American collapse, then what I have to say here will not fall on biased ears.
The financial crash of 2008, the same crash which has been ongoing for years, is NOT an accident. It is a concerted and engineered crisis meant to position the U.S. for currency disintegration and the institution of a global basket currency controlled by an unaccountable supranational governing body like the International Monetary Fund (IMF). The American populace is being conditioned through economic fear to accept the institutionalization of global financial control and the loss of sovereignty.
Anyone skeptical of this conclusion is welcome to study my numerous past examinations on the issue of globalization; I don’t have the time within this article to re-explain, and frankly, with so much information on deliberate dollar destruction available to the public today I’ve grown tired of anyone with a lack of awareness.
If you continue to believe that the Fed actually exists to “help” stabilize our economy or our currency, then you will never find the logic behind what they do. If you understand that the goal of the Fed and the globalists is to dismantle the dollar and the U.S. economic system to make way for something “new”, then certain recent events and policy initiatives do start to make sense.
The year of 2014 has been looming as a serious concern for me since the final quarter of 2013, and you can read about those concerns and the evidence that supports them in my articleExpect Devastating Global Economic Changes In 2014.
At the end of 2013 we saw at least three major events that could have sent America spiraling into total collapse. The first was the announcement of possible taper measures by the Fed, which have now begun. The second was the possible invasion of Syria which the Obama Administration is still desperate for despite successful efforts by the liberty movement to deny him public support for war. And, the third event was the last debt ceiling debate (or debt ceiling theater depending on how you look at it), which placed the U.S. squarely on the edge of fiscal default.
As we begin 2014, these same threatening issues remain (along with many others), only at greater levels and with more prominence. New developments reinforce my original position that this year will be remembered by historians as the year in which the final breakdown of the U.S. monetary dynamic was set in motion. Here are some of those developments explained…
Taper Of QE3
When I first suggested that a Fed taper was not only possible but probable months ago, I was met with a bit (a lot) of criticism from some in the alternative economic world. You can read my taper articles here and here.
This was understandable. The Fed uses multiple stimulus outlets besides QE in order to manipulate U.S. markets. Artificially lowering interest rates is very much a form of stimulus in itself, for instance.
However, I think a dangerous blindness to threats beyond money printing has developed within our community of analysts and this must be remedied. People need to realize first that the Fed does NOT care about the continued health of our economy, and they may not care about presenting a facade of health for much longer either. Alternative analysts also need to come to grips with the reality that overt money printing is not the only method at the disposal of globalists when destroying the greenback. A debt default is just as likely to cause loss of world reserve status and devaluation – no printing press required. Blame goes to government and political gridlock while the banks slither away in the midst of the chaos.
The taper of QE3 is not a “head fake”, it is very real, but there are many hidden motivations behind such cuts.
Currently, $20 billion has been trimmed from the $85 billion per month program, and we are already beginning to see what APPEAR to be market effects, including a flight from emerging market currencies from Argentina to Turkey. A couple of years ago investors viewed these markets as among the few places they could exploit to make a positive return, or in other words, one of the few places they could successfully gamble. The Fed taper, though, seems to be shifting the flow of capital away from emerging markets.
The mainstream argument is that stimulus was flowing into such markets, giving them liquidity support, and the taper is drying up that liquidity. Whether this is actually true is hard to say, given that without a full audit we have no idea how much fiat the Federal Reserve has actually created and how much of it they send out into foreign markets.
I stand more on the position that the Fed taper was actually begun in preparation for a slowdown in global markets that was already in progress. In fact, I believe central bankers have been well aware that a decline in every sector was coming, and are moving to insulate themselves.
Is it just a “coincidence” that the central bankers have initiated their taper of QE right when global manufacturing numbers begin to plummet?
Is it just “coincidence” the taper was started right when the Baltic Dry Index, a global indicator of shipping demand, has lost over 50% of its value in the past few weeks?
Is it just “coincidence” that the taper is running tandem with dismal retail sales growth reports from across the globe coming in from the final quarter of 2013?
And, is it just a “coincidence” that the Fed taper is accelerating right as the next debt ceiling debate begins in March, and when reports are being released by the Congressional Budget Office that over 2 million jobs (in work hours) may be lost due to Obamacare?
No, I do not think any of this is coincidence. Most if not all of these negative indicators needed months to generate, so they could not have been caused by the taper itself. The only explanation beyond “coincidence” is that the Federal Reserve WANTED to launch the taper program and protect itself before these signals began to reach the public.
Look at it this way – The taper program distances the bankers from responsibility for crisis in our financial framework, at least in the eyes of the general public. If a market calamity takes place WHILE stimulus measures are still at full speed, this makes the banks look rather guilty, or at least incompetent. People would begin to question the validity of central bank methods, and they might even question the validity of the central bank’s existence. The Fed is creating space between itself and the economy because they know that a trigger event is coming. They want to ensure that they are not blamed and that stimulus itself is not seen as ineffective, or seen as the cause.
We all know that the claims of recovery are utter nonsense. Beyond the numerous warning signs listed above, one need only look at true unemployment numbers, household wage decline, and record low personal savings of the average American. The taper is not in response to an improving economic environment. Rather, the taper is a signal for the next stage of collapse.
Stocks are beginning to plummet around the world and all mainstream pundits are pointing fingers at a reduction in stimulus which has very little to do with anything. What is the message they want us to digest? That we “can’t live” without the aid and oversight of central banks.
The real reason stocks and other indicators are stumbling is because the effectiveness of stimulus manipulation has a shelf life, and that shelf life is over for the Federal Reserve. I suspect they will continue cutting QE every month for the next year as stocks decline. Will the Fed restart QE? If they do, it will probably not occur until after a substantial breakdown has ensued and the public is sufficiently shell-shocked. The possibility also exists that the Fed will never return to stimulus measures (if debt default is the plan), and QE stimulus will eventually be replaced by IMF “aid”.
Government Controlled Investment
Last month, just as taper measures were being implemented, the White House launched an investment program called MyRA; a retirement IRA program in which middle class and low wage Americans can invest part of their paycheck in government bonds.
That’s right, if you wanted to know where the money was going to come from to support U.S. debt if the Fed cuts QE, guess what, the money is going to come from YOU.
For a decade or so China was the primary buyer and crutch for U.S. debt spending. After the derivatives crash of 2008, the Federal Reserve became the largest purchaser of Treasury bonds. With the decline of foreign interest in long term U.S. debt, and the taper in full effect, it only makes sense that the government would seek out an alternative source of capital to continue the debt cycle. The MyRA program turns the general American public into a new cash stream, but there’s more going on here than meets the eye…
I find it rather suspicious that a government-controlled retirement program is suddenly introduced just as the Fed has begun to taper, as stocks are beginning to fall, and as questions arise over the U.S. debt ceiling. I have three major concerns:
First, is it possible that like the Fed, the government is also aware that a crash in stocks is coming? And, are they offering the MyRA program as an easy outlet (or trap) for people to pour in what little savings they have as panic over declining equities accelerates? Bonds do tend to look appetizing to uninformed investors during an equities rout.
Second, the program is currently voluntary, but what if the plan is to make it mandatory? Obama has already signed mandatory health insurance “taxation” into law, which is meant to steal a portion of every paycheck. Why not steal an even larger portion from every paycheck in order to support U.S. debt? It’s for the “greater good,” after all.
Third, is this a deliberate strategy to corral the last vestiges of private American wealth into the corner of U.S. bonds, so that this wealth can be confiscated or annihilated? What happens if there is indeed an eventual debt default, as I believe there will be? Will Americans be herded into bonds by a crisis in stocks only to have bonds implode as well? Will they be conned into bond investment out of a “patriotic duty” to save the nation from default? Or, will the government just take their money through legislative wrangling, as was done in Cyprus not long ago?
The Final Swindle
Again, the next debt ceiling debate is slated for the end of this month. If the government decides to kick the can down the road for another quarter, I believe this will be the last time. The most recent actions of the Fed and the government signal preparations for a stock implosion and ultimate debt calamity. Default would have immediate effects in foreign markets, but the appearance of U.S. stability could drag on for a time, giving the globalists ample opportunity to siphon every ounce of financial blood from the public.
It is difficult to say how the next year will play out, but one thing is certain; something very strange and ugly is afoot. The goal of the globalists is to engineer desperation. To create a catastrophe and then force the masses to beg for help. How many hands of “friendship” will be offered in the wake of a U.S. wealth and currency crisis? What offers for “aid” will come from the IMF? How much of our country and how many of our people will be collateralized to secure that aid? And, how many Americans will go along with the swindle because they were not prepared in advance?
Bailed-out euro-area countries are facing “painful” challenges with worse-than-anticipated consequences of economic adjustment, including high unemployment and slow growth, central banks and finance ministries said.
Officials and ministers from Greece, Ireland, Portugal and Cyprus, in responses to European Union lawmaker questions published yesterday, described how their countries’ emergency aid had been followed by social hardship and continuing economic difficulties.
The bailout program had a “worse-than-expected impact on both output and employment,” Portugal’s finance ministry said. The program in Cyprus was “rigorous and painful,” according to the island’s central bank. Adjustment in Greece, after four years of cuts and efforts to make the economy more competitive, has come at “an extremely high socioeconomic cost,” Greek Finance Minister Yannis Stournaras said.
The testimonies come three-and-a-half years after Greece became the first euro-area country to be bailed out, using EU and International Monetary Fund loans. Since then the German-led path of aid in return for reforms and debt cuts has seen 396 billion euros ($538 billion) committed to the region’s four most fragile economies, with an additional 100 billion euros pledged for Spain’s banking sector. The bloc has endured the longest recession in its history and unemployment has reached record levels.
Government bonds in the euro-area’s most indebted nations have rallied this year, pushing Portugal and Ireland’s 10-year yields to the lowest since 2010 and 2006 respectively, as recovery sign’s in the region have boosted demand for higher-yielding debt.
Portugal expects to restart bond auctions in the first half of 2014, its debt agency said yesterday, after selling one-year bills at the lowest yield since November 2009. Greece’s Stournaras said last week that the government may sell five-year notes in the second half of the year, for the first time since being shut out of the bond markets in 2010. It would follow Ireland, which sold bonds last week for the first time since completing its bailout program.
Greek 10-year yields have dropped 68 basis points this year to 7.74 percent, after touching 7.53 percent on Jan. 13, the lowest since May 2010. The yield on similar-maturity Portuguese securities reached the lowest since August 2010 at 5.07 percent yesterday.
EU lawmakers questioned whether the so-called troika, comprising the European Commission,European Central Bank and IMF, which sets conditions for the countries receiving bailouts and monitors their progress, should have been more accountable and could have prevented the most painful effects of austerity. The European Parliament’s economic and monetary affairs committee is today discussing the responses received about the troika’s work.
European lawmakers will continue to work to make the troika more accountable, EU Parliament President Martin Schulz said on Twitter yesterday. Schulz is a member of Germany’s Social Democrats, the junior partner in the country’s coalition government.
While finance ministries and central bankers said that the hardships associated with the bailout conditions could not be ignored, they said they backed the process.
“The program, although rigorous and painful, is the only way that will enable the country’s exit from the crisis,” Cyprus’s central bank said in its letter to the 28-nation European Parliament.
Portugal’s finance ministry said that it “remained convinced” a bailout program had been inevitable and that “on the whole it remains a suitable and rational response to the crisis of credibility threatening our country.”
Ireland’s bailout-program exit last month and its return to financial markets “confirms that our strategy of providing assistance to euro-area countries that requested it in return for strict conditionality is working,” Jeroen Dijsselbloem, the Dutch finance minister who chairs meetings of his 17 euro-area counterparts, said in his letter to EU lawmakers.
He said that while growth is returning to the euro area and the economic outlook is improving “a number of important challenges remain, most importantly unacceptably high levels of unemployment.”
Ireland’s bailout program can be considered a success, Michael Noonan, Ireland’s finance minister, said in his response to the parliament. Even so, unemployment is still high, economic growth has returned more slowly than predicted and the country’s overall level of debt remains elevated, with a peak of slightly over 120 percent of gross domestic product expected this year.
The Chinese military, especially the navy, made great strides last year in improving its combat capabilities, enabling it to better defend the nation against threats to its sovereignty, according to analysts. As China Daily reports, less than a month after being named the head of China’s Central Military Commission, President Xi Jinping asked PLA officers to adopt realistic combat criteria in military training. “It is the top priority for the military to be able to fight and win battles,” he said during an inspection to the Guangzhou military theater of operations in December 2012. While some have suggested the rapidly expanding PLA navy is driving a seismic shift in Asia’s military balance, Chinese experts have refuted such rhetoric, saying military moves by China are only aimed at creating improved self-defense by providing capabilities to match the other parties in the region.
A Calgary woman’s developmentally disabled son is caught in a U.S. tax quagmire that she fears may cost him the money she spent years setting aside for his financial future.
“He’s entrapped,” said Carol Tapanila, the 70-year-old mother. “There’s no way out. He is entrapped into U.S. citizenship.”
Her 40-year-old son was born in a Calgary hospital, but automatically received U.S. citizenship because both his parents were American. That simple fact may soon create financial woes for the Tapanila family.
Starting in July, a new U.S. tax law, the Foreign Account Tax Compliance Act (FATCA), goes into effect. It requires banks around the world to sift through client accounts to find anyone with U.S. connections and send that information to the U.S. Internal Revenue Service.
- Canadian banks to be compelled to share clients’ info with U.S.
- FATCA under fire from tax experts and Canadians
The law is aimed at Americans who are hiding offshore accounts, but the information sharing is likely to unearth many unsuspecting Canadians with U.S. citizenship, like Tapanila’s son, who didn’t realize they were required to file U.S. taxes.
Tax law expert Allison Christians calls the Tapanila case “ridiculous” and a “classic example of why the law is unjust.”
The law “was intended to find rich American tax cheats hiding out in Switzerland,” said Christians, who teaches tax law at McGill University, but it “will now punish poor, disabled Americans living in other countries, who are only American by birth.”
These so-called “accidental Americans” also include an Ottawa woman who was born in the U.S. to Canadian parents and moved back north at one year of age.
This woman, who asked to remain anonymous, said her husband is livid that their joint account information will soon be shared with U.S. tax authorities.
Both fear that FATCA will reveal her U.S. citizenship and saddle them with hefty penalties for failing to file U.S. tax returns that will eat into their retirement savings.
“It’s stressful. I think about this every day,” said the woman. “It’s like a big weight over your head that never really goes away, and I’m starting to wonder when and if it’s ever going to go away?”
In advance of the law taking effect, more than a dozen countries have inked intergovernmental information-sharing agreements with the U.S.
These arrangements allow either for banks to hand over information directly to the Internal Revenue Service, or indirectly via their national tax agencies.
Canada is currently in negotiations with the U.S. The banking industry notes that FATCA will affect many Canadians indirectly because of the extra costs of industry compliance.
“We have to comply with FATCA,” said Marion Wrobel, vice-president of policy and operations at the Canadian Bankers Association. “While we don’t like it and we’ve lobbied against it, FATCA is going to be a reality.”
If banks refuse to comply, they face severe financial penalties — a 30 per cent withholding tax on all American-sourced income or sales of American-based assets.
But financial institutions also face costs to comply. Some estimate the manpower and administrative systems required to find clients with U.S. connections could cost up to $100 million per institution, said Wrobel.
“It is expensive, and as far as we see it, it adds nothing,” said Wrobel. “It doesn’t make the banks any safer or sounder.”
Thousands on legal advice
For Tapanila, the financial burden has already been costly. She spent thousands of dollars seeking legal advice on how to renounce her son’s U.S. citizenship. Under the law, a parent, guardian and trustee cannot renounce on someone’s behalf.
‘I wanted my son to have something when I was gone from this Earth.’– Carol Tapanila
She refuses to file U.S. taxes for her son, fearful that it would chip away at the funds she’s stashed in a Registered Disability Savings Plan (RDSP) and a Tax Free Savings Account (TFSA).
“I see no common sense in it,” she says. “Put me in jail. I don’t care. But I’m not going to do that.”
RDSPs as well as TFSAs are considered “offshore trusts” by U.S. tax authorities. That makes any gains from these plans — which include contributions from Tapanila and matching ones from the government — taxable by the IRS.
The CBA’s Wrobel said that, based on his talks with the federal government, he’s hopeful that the U.S.-Canada agreement will include exemptions for registered savings accounts.
That would provide some relief, but Tapanila notes that the cost of filing U.S. taxes every year could actually be the largest drain on her savings.
Accounting firms estimate that personal tax filings can cost from $500 to $5,000 a year because of the complexity of U.S. tax law.
“I wanted my son to have something when I was gone from this Earth and so I was a saver,” said Tapanila. “And now I don’t want the U.S. to take one penny that should go to my children.
“I want my hard-earned Canadian money that I’ve saved to go to my children, not to the U.S. or some compliance tax lawyers year after year after year after year.”