( Source : R.T newsletters "Conspiracy of The Rich" #110)
I sat in my dentist’s office, having my teeth cleaned, and watched TV. My dentist is a great dentist because he is a great businessman. He knows how to treat his customers. On top of that, I rarely see him. He has a great staff of friendly and attentive workers. Before I walked out, his receptionist had already scheduled me for my next visit.
But this Conspiracy of the Rich (COR) update isn’t about the euphoria of having my teeth worked on. It’s about the euphoria I watched on TV at my dentist’s office. With my mouth open, I watched the stock market climb by 400 points and the prices of gold and silver climb, wondering what was going on. Why were prices screaming up?
Here’s what I found out from my friends in different parts of the world.
Apparently, one or two European Banks were in big trouble with money flowing out, a.k.a. a bank run. To stop the run from spreading, six central banks stepped in to prevent a European panic. The six banks were The Federal Reserve, Bank of Canada, Bank of England, Bank of Japan, Swiss National Bank, and the European Central Bank.
These central banks lend money at extremely low interest rates to nations, such as Italy, that are in trouble and to large commercial banks in Europe. Last week, these central banks loaned out tons of US dollars printed out of thin air, which caused markets to rally.
At the same time, China’s central bank, The People’s Bank of China, cut reserve requirements for their commercial banks.
For those of you who have read Conspiracy of the Rich, you know that a reserve requirement is the percentage of money held in reserve, with the bank lending out the rest. For example, if a bank has a $100 deposit from a saver, and the government requires banks to hold a 10 percent reserve, the bank can lend out $90 while holding $10 in reserve.
The US requires banks to have a 10 percent reserve. The Chinese banks now require their banks to hold 21 percent reserve, down from 21.5 percent. This 0.5 percent reduction freed about 390 billion yuan (about $61 billion) into the Chinese economy.
The problem for China is that Europe is their biggest customer, and as Europe slows, the Chinese economy also slows. That’s why the Chinese central bank responded by reducing its reserve requirements, hoping to “ease” more money into their economy.
Will this solve the problem? No. But it’s a nice euphoria, although temporary.
One big, hot air balloon
The reason for the happiness is that the markets feel the central bankers of the world will keep printing money to save the economy.
The problem is that the global economy is like a giant hot air balloon with a tear in the side, and the rip is growing. In an attempt to prevent a global depression, central bankers of the world are throwing money into the gash, hoping the cash will plug the leak.
The more counterfeit money central banks throw into the gash, however, the higher prices go due to inflation and taxes. Taxes have to go higher in order to pay the interest on the counterfeit dollars. Those taxes come from you and me. The central banks put their hands in our pockets via taxes and inflation.
Life will get harder
As stated in COR, this is how the ultra rich get richer. Unfortunately, this is also how the poor and middle class get poorer.
The best way to avoid being a victim of this massive conspiracy is to change your mindset and the rules of money by which you play. As stated in COR, the rules of money were changed in 1971, the year the US came off the gold standard. Life is very difficult for those who operate via the old rules of money, such as work hard, save money, get out of debt, and invest for retirement in the stock market.
Rather than euphoria, I’m afraid we will only have more rioting around the world. The rioting in Egypt was caused by the price of food going up. That problem is now spreading around the world. This is why you s
see the prices of gold and oil going up, causing more inflation and more rioting.
At the risk of sounding commercial, I recommend people read Unfair Advantage, my book with more information on how I use the new rules of money. Also, you may want to consider our advanced education and coaching programs.
As you know, this crisis has already damaged millions of people. As the crisis grows, millions more will be wiped out financially. Please don’t be one of them.
Can the crisis be solved?
It’s possible this crisis can be solved, but not likely. Our leaders are too weak and too chicken to do what must be done. Their lack of guts will only cause the problem to grow bigger. Besides, many of our leaders get richer off the misery of others.
I’m not counting on my leaders. I don’t think it matters who becomes the next President. I think it’s time to start saving yourself and your family.
So the good news is that in a few years there will be lots of money thanks to the cash pumped into our system by the central banks.
The bad news is that prices and taxes will be much higher—if we’re lucky.