Today one of the top economists in the world
spoke with KWN in the aftermath of the dramatic developments surrounding
yesterday’s breaking news from King World News that two JP Morgan
whistleblowers had confessed that JP Morgan manipulates the gold and
silver markets. This is a powerful discussion with Michael Pento, and
the interview ends with a timely and exclusive piece from the acclaimed
economist.
The
King World News interview with Andrew Maguire just revealed that two JP
Morgan whistleblowers have come forward with hard evidence that JP
Morgan manipulates the gold and silver markets. This has exposed the
fact that the big banks, the primary dealers, which are very closely
related to the Federal Reserve, work in tandem to suppress the price of
gold -- all at the bidding of the government.
This
means the price of gold could skyrocket. That’s what I think the
after-hours action was about, money beginning to position itself
accordingly, as well as some short covering.”
Pento: “Gold
has no friends in government because it’s the ‘Great Revealer.’ It
exposes the government for what it is -- virtually all governments are
counterfeiters and middle class destroyers. So I’m not surprised that
people in power would love to see gold prices taken down even more
aggressively.
“When I look at the chart of the after-hours move in gold on Friday, right after the KWN interview with Maguire was
released, not only do you see a substantial move in gold, but also a
very dramatic increase in volume. And, again, this was after-hours on a
Friday (see chart below).
My
thoughts are that any entities which are naked short gold, and don’t
have the ability to deliver the underlying commodity, now have to be a
very nervous group of individuals. And anything that exposes their
highly tenuous position makes them want to cover.
This
also makes entities which have been on the sidelines, waiting to buy
this artificially manipulated price of gold, want to come in to the
market on the buy side because when you see entities which are that
naked short, and unable to deliver, they want to bring them a lot of
pain.
Wall Street is now reflecting upon the
fifth anniversary of the Lehman Brothers bankruptcy and the start of the
Credit Crisis. In fact, most are celebrating the belief that the
complete collapse of the American economy was avoided thanks to a
massive intervention of government-sponsored borrowing and money
printing.
However, it is much more
accurate to maintain that the Great Recession was only temporarily
mollified by our proclivity to re-inflate old bubbles. Therefore, the
Great Recession should not be thought of as something that is behind
us. Quite the contrary; the last five years have been spent creating
the conditions conducive for producing a depression.
It was our reliance on
asset bubbles to generate economic growth that caused the Great
Recession of 2007. Therefore, to believe that the U.S. has truly
overcome our problems, we should have already weaned the economy from
its addictions to debt, low interest rates and inflation. But nothing
could be further from the truth.
Our central bank pushed
down interest rates to one percent during 2002-2003, and that was the
primary contributor to the creation of the housing bubble. Now the Fed
has resorted to providing a zero percent overnight lending rate, from
December of 2008 until today. The monetary base has jumped from just
$800 billion, before the start of the Great Recession, to $3.7
trillion—and it’s still growing at a rate of one trillion dollars per
annum. The money supply is back to the same growth rate we witnessed
during previous bubbles.
Our nation’s debt is now
at 107% of GDP and the aggregate debt now stands at 350% of our annual
output—the same level as it was at the start of the Credit Crisis. Home
prices are rising at the same double digit clip as they were during the
height of the real estate bubble and stock prices are up nearly 20%
year-over-year on little or no earnings and revenue growth. And,
keeping in line with our tradition of lending money to people who can’t
pay it back, subprime auto loans now make up 36% of all car financings.
Yet despite of all the
above facts, most investors now believe our problems are behind us and
interest rates can rise without causing a slowdown in growth. But if
that were indeed the case, why is it that the Fed is still conflicted
over whether or not the economy can withstand even a slight reduction in
its $85 billion worth of monthly counterfeiting? It seems they are
tacitly admitting that our GDP growth (anemic as it may be) is still
contingent on the perpetual growth of asset bubbles, debt, low interest
rates and money printing.