At the beginning of the year, I wrote: “The financial system has become so abnormal, the Fed has to keep inflating to prevent the system from literally going off the rails. But the irony is that eventually the financial system dies as a consequence of accumulated inflation.” I then went on to identify three things that everyone needs to watch in 2013.

Two of these events have already happened. I still expect the third to occur this year too. Here they are, with my current thoughts:

1) “The Federal Reserve balance sheet starts growing.”

The Federal Reserve began expanding its balance sheet soon after my article was published. It does this in a process called “quantitative easing”, or QE, in which the Fed creates money “out of thin air” to buy debt instruments.

Its total assets on 9 January, 2013 were $2.93 trillion. In the latest financial statement issued on 19 June, total assets are $3.47 trillion.

So in 23 weeks, the Federal Reserve’s balance sheet has grown by $540 billion, which is a 41.7% annual rate of growth. The inflationary implications are staggering. This monetised debt can be compared to a huge pile of tinder just waiting for a lit match. That spark will likely come from rising interest rates.

2) “The yield on the 10-year T-note climbs above 2%.”

…..continue reading HERE

“HYPERINFLATION has ONLY taken place in minor peripheral economies. It has NEVERtaken place in a major economy. All major economies implode from deflation because as they need money, they attack their citizens destroying their own economies as we are doing right now. So while you wait for HYPERINFLATION, your taxes will rise, your rights will vanish, and you will see tanks on your streets before $30,000 gold that will still be the cost of a men’s suit. Forget this HYPERINFLATION and fiat nonsense. Government began getting involved with money first out of just standardizing the weight to facilitate trade as pictured above. That was it.”

“All money is fiat if you define it incorrectly as intangible money rather than An arbitrary order or decree. As long as money floats in value and it is legal tender meaning government accepts it in return for taxes, then it is not fiat in real terms. The idea that money must be tangible also has no basis in fact. Money has been many things to many people. The entire basis of money is you will accept something as money as long as you have CONFIDENCE that in turn someone else will accept it from you.”

……read the entire article “Forget the Fiat – It’s CONFIDENCE” HERE

“The yen is oversold, and stocks are overbought, and the correction is forthcoming,” Dr. Faber says. “But anytime the market would drop in Japan and the yen would strengthen, there will be more money printing.”
“As a result of massive money printing,” Dr. Faber continues, “the yen goes down and the bond market in Japan collapses. This would force the Bank of Japan to monetize even more because as interest rates go up on the Japanese debt, it becomes a burden on the Japanese government to pay the interest on the debt. So it would have to be met by more money printing, and that would lead to more yen weakness.”
And on and on it goes… until the yen is worth even less than the paper it’s printed on.

Such is the fate of all paper currencies backed only by the “faith and credit” of an untrustworthy government. The principles of “sound money” are largely ignored or forgotten. No one practices them anymore. They are the “Latin language” of global economics — discussed only in “theory” by a few steadfast economists who continue to pine for their return. – in wallstreetpit

In Asia, we see a huge demand for Physical GOLD. Personally, I do not sell my GOLD.

…..Faber’s answer to a question “has the Gold Bubble finally Burst – HERE

The US Can ‘Artificially Depress’ Prices And Confiscate Your Gold

…..Faber addresses the danger’s of storing Gold Bullion HERE

G8 Going to Hunt Down ALL Capital

These people cannot understand what they are doing to the world economy or even grasp why the liquidity has shrunk by about 50%. People do not believe the rise in the Dow claiming it is on low volume. They fail to grasp that everywhere we look, there is a massive contraction in global liquidity. As the VELOCITY of money declines, so does economic growth and that results in rising unemployment.

Sorry, there is no HYPERINFLATION. I have stated before, there will come the day you will PRAY forHYPERINFLATION for what we are headed into a black hole beyond anything historically within the global economy. This is getting worse week by week and in all honesty, the collapse in the VELOCITY of global investment is very, very serious. When this turns down from 2015.75, it will be far worse than what we saw with the 2007.15 turning point. They can control the press to hide the truth, but that will not prevent the demise. In fact, all the loss of the free press will accomplish is total shock and that will result only in a much more pronounced panic in the future.

It is the Guardian in Britain that is becoming the leading newspaper to read:

G8 countries agree to tackle tax evasion

Joint declaration by leaders at Northern Ireland summit falls short of demands by tax campaigners

…..read HERE

Things have been a little erratic lately here in US, but not really headline-worthy. The economy continues to grow, sort of, houses continue to sell and stock and bond prices fluctuate but can’t seem to follow through in either direction. We are not, in short, engulfed in any kind of crisis.

But out in the world, especially in once-hot emerging markets like Brazil and China, the story is very different. As Prudent Bear’s Doug Noland explains in his most recent Credit Bubble Bulletin:

…..read it all HERE