The privately owned Federal Reserve

runs our Country

Unemployment on the rise
by Bob Chapman

Last week the Dow fell 1.6%; S&P fell 1.9%; the Russell 2000 fell 3.3% and the Nasdaq slipped 1.8%; cyclicals fell 3.6%; transports 1.5%; consumers 1.6%; utilities 1.4%; banks 2.3% and broker/dealers 2.8%. High tech fell 1.8%; semis 1.8%; Internets 2.1% and biotechs 2.7%. Gold bullion fell $19.50 and the HUI gold index fell 8.4%.
Two-year T-bill rates fell 10 bps to 0.82% and the 10’s fell 21 bps to 3.30%. Ten-year German bunds fell 8 bps to 3.26%.
Freddie Mac pegged the 30-year fixed rate mortgage off 12 bps at 5.20%. The 15’s fell 8 bps to 4.6% and the 1-year ARMs fell 12 bps to 4.82%.
Fed credit declined $9.5 billion to $1.977 trillion, off $269 billion ytd and up 123% yoy. Fed foreign holdings of Treasury and Agency debt jumped $20.5 billion to a record $2.787 trillion. Custody holdings for foreign central banks rose 20.7% ytd, and were up 18.6% yoy.
M2 narrow money supply fell $36 billion having expanded 9.1% yoy. Total money market fund assets rose $4.4 billion to $3.668 trillion.
This past week the dollar index, the USDX, was unchanged at 80.26.
During the week of the G-8 meeting the US pushed the dollar up. They attempted the same with the stock market unsuccessfully and successfully drove bond yields down and bond values up. They also smashed commodities, especially oil and pressured gold and silver lower. The problem is they cannot continue. They do not have the power to do so. Those suppressed markets will reverse and rise.
The dollar was on the verge of breaking below 79 on the USDX, so the ECB announced they would pour $613 billion into 1-year deposits. This was to encourage bank lending in the eurozone, which gained by only 1.8% in the first half of the year. The US banks had a similar experience.
One thing is for certain and that is that low interest rates encourage carrying long gold and silver positions. That is true for commodities as well, which in the second quarter rose. Oil gained 45%; copper 28% and wheat 20%. Gold and silver were not allowed those gains by our government. While holding interest rates at 1% the ECB now has M3 increasing at a paltry 3.7%. In our mind there is no question that the eurozone is about to slip into severe depression. The 16 economies are being strangled to death. ( Learn more at )