US Economics – Crashin’ & Burnin’

Cash Fails!Things aren’t so hot on the US economic front these days.  Word is that mortgage giants, Freddie Mack and Fannie Mae – the largest backers of US mortgages – are facing serious finanical troubles.  Just as with Bear Stearns, a major investment banker, the Federal Reserve is being asked to make up the shortfall.  Don’t misunderstand, such an act will have a devastating impact to our economy and will send us into a downward spiral that will last for years to come.

Where the Bear Stearns bailout alarmed me with billions of US taxpayer’s dollars going towards preventing assured destruction of the US economy (from systemic collapse), this latest bailout has me in an absolute state of panic.  These two mortgage firms financially back nearly half of all US mortgages – trillions upon trillions of dollars of investment dollars.  We’re talking a multi-TRILLION dollar bailout here with the capacity to nearly double the US national debt overnight.  Yes, folks, that means our money will be worth nearly HALF as much once the trickle effect of that money being spent into the world’s economy is felt.

Oddly, after the news of the Federal Reserve backing the failed mortgage firms came out, the US dollar rallied back up.  This is completely counter-intuitive and clearly shows how well the market is manipulated and misinformed.  With multiple trillions being induced into the economy, the only *logical* result is for the value of the dollar to go DOWN.  More money in the economy, unbacked by anything of value EQUALS inflation.  Yet, mark my words, it will fall…and it’s gonna fall harder than I ever expected.

News reports are also saying that this bailout marks the last and final we will see from the Federal Reserve.  On one hand, that’s good news because US taxpayers are footing the bill – but on the other hand, it means that systemic collapse is a very real risk.  Once the collapse begins to occur, there is no stopping it – and we WILL feel an economic recession that makes the 1920’s look like child’s play.

As was expected, gold and silver rallied back up to levels seen several months ago – a surefire indication that things are in trouble.  I only expect these to continue their upward trend, despite being heavily manipulated.  Those who control the market can only do so much.  These two investments will be one of the few that can survive the up and coming disaster that is looming on our doorstep.

Have a great week.  😉

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