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US Dollar Collapse
Pension Fund Confiscation
The FED will continue on their path of tapering until there’s a lot of pain in the market.
And then they wil panic.
And then they will give in.
Then everyone will heave a sigh of relief and say everything is going to be okay.
The markets will then rally.
Then it will be the final crash.
It may not be until 2015 or 2016, Jim says he doesn’t know, but that’s his idea of how the FED will proceed.
There’s an election coming in India, so the politicians will do everything they can to pander to the voters. One of those things may be to try to remove some of the restrictions on gold.
Jim says he wouldn’t be too optimistic that it will last after the election. The problems are not going away — like the balance of trade.
There was a gigantic short position in gold earlier this year, and that will probably lead to a rally.
When there’s a big short position in anything it often leads to a rally.
Jim has no idea if the bear market, the correction in the market, is over.
He suspects there will be another chance to buy gold, and doesn’t plan on selling his gold until it turns into the eventual bubble — which it probably will some day.
Commitment of Traders is published every week in the US, and normally when you see the “speculators” very big on one side of the market, the market usually goes the other way.
US DOLLAR COLLAPSE
Jim believes that John Williams of Shadowstats is a smart man, and reads John’s work, but is skeptical that there will be a US dollar collapse in 2014, as John predicts. But Jim believes anything is possible.
There’s enough madness going on in Washington and other parts of the world, so why not.
Jim is long the US dollar at the moment, so he is not expecting a US dollar collapse this year. He is long the US dollar because there is going to be a lot more turmoil in the world in the next year, or two or three. Normally when there’s a lot of turmoil in the world, people flee to the US dollar because they believe it’s a safe haven.
Jim says that the US dollar is not a safe haven, but that many people think it is so that’s where they will go.
But the US is only perceived as a safe place to go.
The US is the largest debtor nation in the world, and the debts are going higher and higher. It’s not that the US is stable, it’s that they are perceived to be “less bad”.
PENSION PLAN CONFISCATIONS
Jim believes that pension plan confiscation is going to happen. Confiscation has already happened with bank accounts in Cyprus.
The EU banking authorities have already made it possible for the governments to take people’s bank accounts. The Federal Reserve has also made it possible in their regulations, that in a desperate situation they too will confiscate people’s bank accounts to save the banks. They decided that the banks are more important than the individuals or their money.
Poland has already confiscated some of the pension plans. Other countries are preparing, so certainly it will happen in the US.
There have been bills introduced in Congress setting up how it will be done.
In the 1930s they confiscated everybody’s gold. They said it was to save the financial system. Gold is not part of the monetary system the way it was in the 1930s, so this time they will confiscate the pension plans.
There is “a lot lot lot” more money in pension plans than there was in gold.
The savings class is not being threatened — it’s being destroyed.
All of those people did what was considered ‘right’ with their money. They didn’t go deep into debt, they didn’t buy five or six houses with no money down, and they’re now getting wiped out in order to save the people who did it the wrong way.
The people who saved up their money are now getting no return on it.
The way the government is talking, it’s going to continue for some time.
Everyone is looking for how to get a proper return without too much risk.
Unfortunately, people are taking more and more risk, and ultimately that leads to problems down the road.
There are many equities markets.
If you go to Turkey or Indonesia or some other places you will see they’ve already had big melt downs.
In China, it’s stock market all time high was in 2008, and it’s down nearly 70% from there. It could go down more. There’s nothing preventing any market from having more collapse.
There are debt problems in China, just as there are debt problems all over the world.
Jim says he doesn’t know where the next spark will come from.
Usually what happens in any market is that the marginal players start having problems first, and then that spreads to more and more people. We’re already having some marginal players having more and more problems, and it will undoubtedly spread to more and more people.
Jim expects the FED to continue to cut back (taper) on QE. Other Central Banks are not cutting back, and eventually, sometime in the next few months, that will lead to problems in the market.
Then the FED and other Central Banks will panic. Then a big, big rally will come.
Jim suspects that will be the last rally before a collapse comes.
He doesn’t know if that will be 2014, 2015 or 2016 — it just depends on how things unfold.
If the US dollar collapses this year, then the equity markets around the world are going to collapse this year too.
Jim is mainly watching at the moment and hasn’t seen anything totally new.
The Chinese government had a huge meeting in November, and they said one of the most important things in China in the next 35 years is to decide which industries they are going to focus on. Jim is looking at those industries too.
Jim’s theory is that if the Chinese government is going to spend a lot of money on an industry, then he should put some money there too.
China has been more successful than most countries in the world for a while, so Jim is watching.
He’s also watching Japan and is considering buying more Japanese yen.
Another Week on Wall Street
words and music Elaine Diane Taylor
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