-Caveat Lector- <A HREF="http://www.ctrl.org/"> </A> -Cui Bono?- WJPBR Email News List [EMAIL PROTECTED] Peace at any cost is a prelude to war! IN SUMMARY, America and the other Western powers are building Communist China into an economic and military superpower through massive aid, trade and high-tech transfers; the PRC is in bed with Russia and cooperating in joint arms building, which will expand China's armed strength very rapidly over the next few years; China is planning to attack and conquer America's long-time ally Taiwan; the Chinese have established a beachhead in Panama from which they can expand their influence in Latin America and eventually control America's most vital maritime chokepoint the Panama Canal; and the PRC is building its capability (with Clinton Administration collaboration) for an eventual nuclear strike against the U.S. mainland. C. TERRORIST ATTACKS ON AMERICA "We are on the verge of a global transformation. All we need is the right major crisis and the nations will accept a New World Order." - David Rockefeller The U.S. government believes that massive terrorist attacks could be launched against America in the not-too-distant future. They do not really believe that these attacks will come (ala Project Megiddo) from domestic, right wing, or millennialist terrorists who, incidentally, were conspicuous by their absence during the millennial turnover. While it is politically advantageous for the political left to make such accusations against the political right, America's top intelligence and military authorities know and understand that the real terrorist threat (which includes weapons of mass destruction -nuclear, chemical, and biological - comes from foreign groups or governments. Russia, China, North Korea, Cuba, the radical Islamic states, and the governments or groups America has bombed or attacked in recent years are all candidates for organizing terrorist attacks inside the U.S. They all have operatives in the U.S. and our intelligence agencies know that they have smuggled weapons of mass destruction into the U.S. over the past decade or so. With thousands of miles of coastline and borders with Canada and Mexico, it is not difficult to infiltrate terrorists or smuggle weapons into the U.S. [ED. NOTE: The recent "terrorist flap" at the Canadian border near Seattle in late '99 and threats against the Seattle Space Needle don't completely pass the sniff test. This writer believes that those "terrorist flaps" were not all they appeared to be. Really serious, professional terrorists don't normally come into the U.S. at well traveled border check points or bring weapons or explosives in at those points. Those "flaps," along with the well-publicized "threats" of cyberterrorism (i.e., 200,000 New Year's viruses) appear to this writer to have been deliberate government disinformation perhaps to distract from Y2K, or to have something or someone to blame Y2K failures on if they become very large.] Nevertheless, it appears that U.S. military and intelligence agencies seem to have a real, genuine fear of real, genuine foreign orchestrated terrorist attacks on America. This may be why the 40 or so large, underground government bunkers were built. The U.S. government knows that TWA 800 was shot down by a missile (very possibly a terrorist missile) and that the Swiss Air and Egyptian Air flights (all out of JFK, and all crashing in the Northwest Atlantic) may have been terminated by terrorists. [ED. NOTE: They would never say this publicly for fear of triggering a panic. Kind of like, "It isn't related to Y2K." "It isn't related to terrorism," etc. etc.] Joel Skousen recently wrote the following in his World Affairs Brief: "Terrorism represents one of the biggest threats to freedom that faces us over the next decade. It plays out in two areas of significance: (1) Violent terrorism can be seriously disruptive to the life and stability of western economies and cultures. The threat of weapons of mass destruction - nuclear and biological - being used by terrorists is real and even a single major incident could overwhelm the infrastructure's ability to deal with it. As terrorist bombers have demonstrated in Israel, no matter how tight security is, sooner or later, someone `gets through.' "(2) Equally grave are the Draconian measures, which governments will want to employ to combat terrorism. These measures can easily become a source of terror for law-abiding citizens themselves. They invariable result in increasing encroachment on Constitutional safeguards with a corresponding decrease in civil rights. "While Americans and citizens of other western countries may go along with these measures in the name of guaranteeing security -at least for a short while - the truth is, these measures are not likely to provide any significant increased security from terrorist acts. However, if the incidence of terrorism rises, the clamor for security at any cost will rise with a corresponding decrease in freedom." One of this writer's greatest concerns over the next six to 12 to 18 months is that a series of terrorist attacks in America by whoever (i.e., even by leftist agent provocateurs) would lead to overnight implementation of a State of National Emergency; Martial Law; possible government seizure of firearms; censorship of the conservatives' "politically incorrect" alternate media; and even persecution of Christians and traditionalists who don't toe the government/media line of the day. Remember how the Nazis used the Reichstag fire (the burning of the German Parliament in 1933) to seize power, shut down their opposition and virtually all civil rights, and catapult themselves into a total dictatorship. Could history repeat itself, but this time in America? [ED. NOTE: This is the subject of this writer's new book: "Storm Warning: The Coming Persecution of Christians and Traditionalists in America." As evidence of this coming persecution, in early January it was reported that religious broadcasters and station owners are worried about new Federal Communications Commission (FCC) rules, which, they say, seek to diminish Christian-based television programs that promote a specific faith because they are not generally "educational." Worse, the decision may force many of the 125 religious stations around the country to drop all faith-based programming.] The Clinton Administration has spent the past seven years installing massive legal (i.e., executive orders), military, and law enforcement machinery for installation of a State of Emergency and Martial Law. They have run practice exercises all over America, including most recently in Seattle and conducted the most widespread mobilization in U.S. history over the New Years holidays. All that is needed now is the right major crisis- one in which the American people (manipulated by the media) cry out "for the government to do something." Will a series of terrorist attacks be "that right major crisis"? If America were in the midst of social and political turmoil while under a State of Emergency; greatly weakened militarily; and in a state of total confusion, would that be an opportunity for Russia, China or our other enemies to attack and neutralize the U.S.? It is worth pondering! D. THE EXPLODING FINANCIAL BUBBLE - PRELUDE TO HYPERINFLATION? 1999 was the most prosperous year ever especially in the financial markets in U.S. history. The stock market and other financial assets set new records and enormous wealth was created literally overnight out of thin air. Is the U.S. economy really that strong? Are corporate earnings and fundamentals really that good? Do they even matter any more? Have we finally reached that "new era," that financial Nirvana whereby asset values, like Jack's beanstalk, will grow to the sky overnight and keep on growing forever? Are hard work and 8 to 5 jobs now outdated anachronisms of the "old era" to be replaced by a "new era" of day trading, instant riches and prosperity, and overwhelming financial wealth, affluence, and prosperity? Has the Internet, unlike Ponce de Leon's elusive "fountain of youth" become our perpetual "fountain of wealth" - satisfying our every personal or financial whim or need? This is now becoming the dream (or is it the delusion) of tens of millions of Americans - many of whom have concluded that instant, pain-free wealth from "playing the market" is better than working for a living. We have finally found (like the "perpetual motion machine") a "perpetual money machine." All the old rules have been repealed. We are in a "new era" of perpetual wealth creation. QUESTION: What is wrong with that picture? ANSWER: It is a delusional psychology that emerges only once in many decades or even centuries at the peak of a speculative boom and blowoff. It is driven by rampant greed, a rampant something-for-nothing philosophy, and the very arrogant belief on the part of the masses that they are invincible, bulletproof, invulnerable to financial loss. It is a delusion and defies 6000 years of financial history. It always ends in a crash and financial disaster for its participants. 1. THE MOST MASSIVE MONETARY EXPANSION IN WORLD HISTORY QUESTION: What has caused the present, largest ever-in-history financial bubble and stock market buying frenzy? ANSWER: The most massive monetary expansion, the most massive injection of financial liquidity into a financial system totaling trillions of dollars in U.S. or world history. It has been done by the Fed, the U.S. Treasury, and other monetary authorities since 1994 - but especially over the past 16 months since September, 1998. It has created the greatest speculative buying frenzy (in U.S. financial assets) since the ill-fated Tulip Mania and financial collapse in Holland in 1637. Only this mania is a hundred times larger. In October/November '98, in the wake of the near-collapse of Long Term Capital Management, the Fed/U.S. Treasury and monetary authorities pumped over $200 billion in new liquidity into the U.S. financial system to prop up the faltering U.S. stock market. In the last 13 weeks of 1999, the Fed pumped in another $194 billion to keep the bubble market expanding and to insulate against a Y2K-induced financial collapse which the Fed desperately feared. In the last 60 days of 1999, the Fed expanded the adjusted monetary base at an unprecedented annualized rate of over 48% - the highest in U.S. history! Much of that excess liquidity has flowed into the U.S. stock market. The public is now stampeding into stocks like at no time in history, with stocks that have no earnings or near term prospects for earnings (i.e., they are losing money) going up 10, 15, 20 or 25 times in 1999. In November '99 alone, margin debt rose $24 billion to $206 billion - a $65 billion or 46% increase in margin debt for the year. An explosion of derivatives trading in stocks has added massive leverage to the stock market. And that does not include all the indirect borrowing that has made its way into the stock market from an increase in mortgage and other debt for the household sector as well as unprecedented stock buybacks by the corporate sector. Underscoring the present buying panic and mania is the fact that from October 27 to December 22 (less than 60 days) the Nasdaq grew 40% - that is an incomprehensible $1.4 trillion increase in market value or new wealth. Over the past nine weeks, over $2 trillion in stock market wealth has been created. Over the past 14 weeks, our already overleveraged financial sector increased its commercial paper borrowings another $123 billion to $1.1 trillion, while the broad money supply (M3) increased $230 billion to $6.8 trillion. We are presently seeing the greatest credit expansion in U.S. history and most of it is pouring into the stock market. Some is also beginning to pour into real estate. 2. ARE WE ENTERING HYPERINFLATION? QUESTION: What is happening? ANSWER: The Fed and the U.S. monetary authorities have triggered a hyperinflation which is currently manifesting itself in financial assets (primarily stock). It is now beginning to roll into real estate where prices in certain California real estate markets are now rising 25 to 35% per year. It is likely that at some point in the coming months, this hyperinflation in financial assets will roll into wages and prices. Indeed, industrial commodities were up almost 40% in price in 1999. If the present hyperinflation in financial assets rolls into the real economy, our currency could be destroyed in a matter of days or weeks. This phenomenon is beginning to take hold all over the world. Hyperinflations are normally followed by financial/economic collapse and the rise of a dictatorship. The hyperinflation of the German Weimar Republic was followed by economic collapse and the rise of Adolf Hitler and the Nazi Third Reich. 3. WHAT IS A "CRACK-UP BOOM"? Ludwig von Mises, history's greatest free market (Austrian) economist, wrote in his epic work The Theory of Money and Credit about a concept he called the "crack-up boom." As he wrote: "The boom can last only as long as the credit expansion progresses at an ever-accelerated pace. The boom comes to an end as soon as additional quantities of fiduciary media are no longer thrown upon the loan market. But it could not last forever even if inflation and credit expansion were to go on endlessly. It would then encounter the barriers which prevent the boundless expansion of circulation credit. It would lead to the crack-up boom and the breakdown of the whole monetary system." Dr. Frank Shostak, a leading Austrian economist and Chief Economist at Ord Minnett in Sidney, Australia, explained the concept of "crack-up boom." "According to von Mises, whenever people are observing ever expanding money supply they start to form expectations that the purchasing power of money will fall. Once they become convinced that the monetary pumping will never stop and consequently prices of goods and services will continue to rise, they will spend their money as fast as possible, i.e., their demand for money will fall. "Ultimately this could reach an extreme, i.e., no one wants to hold money and there is a flight to real goods. This von Mises calls a crack-up boom. In other words, the increase in the money supply that generates expectations of a fall in money's purchasing power leads to the fall in the demand for money. Eventually, prices of real goods are rising to such high levels that people don't have enough money to buy them. Consequently it is not possible to conduct monetary transactions. The monetary system breaks down." When von Mises wrote about credit excesses precipitating a flight to real goods (i.e., super or hyperinflation), he may not have envisioned today's stampede into stocks. Nevertheless, there are some strong similarities in his "crack-up boom" and in the stampede to convert money into stocks today fed and exacerbated by the Fed's promiscuous, non-stop monetary expansion. So we have the masses dumping cash to borrow more money to buy more stock. The same is beginning to happen in the real estate market and could begin to happen in commodities and other real goods including the much maligned, manipulated, and suppressed gold and silver markets. The Fed may be losing control. Von Mises describes an accelerating situation which finally eventuates, wherein the monetary authorities must keep injecting more and more financial credit on an accelerating basis into the bubble to keep it going. When they slow it down, to stop the monetary inflating, the bubble collapses. This is like a drug addict who must take ever increasing doses of drugs to maintain the same high. There is a principle of diminishing returns at work and if he levels off, slows down, or stops the drug intake, he will crash. The same thing applies in accelerating inflation, hyperinflation or a "crack-up boom." For the first time since the 1970s, this writer now believes that there is the potential for high and rising inflation in the U.S. possibly leading to super or hyperinflation. A financial collapse will surely follow. IN SUMMARY, Americans are still partying on the deck of the Titanic - driven by raw unadulterated greed, materialism, pride and arrogance believing that nothing can touch them, nothing can bring them down. They are very wise and indestructible in their own eyes. They just dodged the Y2K bullet (or so they believe) or was it an iceberg? But they don't see that there are other, even larger icebergs directly ahead. The Bible says that "pride comes before the fall." Americans are a very proud and prosperous people and this writer suspects they are headed for a major fall in the not-too-distant future. III. YOUR PREPARATIONS WERE FOR MORE THAN Y2K This writer (and a few close friends) have had the recurring feeling in recent months, even as we were preparing for and urging preparations for Y2K, that we might actually be preparing for something much, much larger than Y2K. A number of potentially very large crises, perhaps much larger than Y2K, were discussed briefly above. There are others. Nothing but a crisis such as Y2K, with a deadline such as midnight 12/31/99 could have brought about the level of physical, financial and even spiritual preparedness which took place in America and elsewhere over the past year or so. No warnings of nuclear war, terrorist attacks, financial collapse, a State of Emergency, Martial Law or even a looming dictatorship in America would have brought about the level of self-sufficiency preparations which Y2K precipitated. This writer believes that there is a hard-core movement of people in America who still follow the God of the Bible; who love righteousness and hate evil; who grieve over the present spiritual, moral, political decline in America; who are mavericks who still retain the ability to think and discern the true from the false and the good from the evil in our day; who love and understand freedom; who understand the times (and the dangers) we live in; and who have the mentality of survivors. It is primarily to this group who this writer writes these letters each month. This writer suspects that this group is rather small (i.e., 250,000 people plus/minus) although it could be much larger or smaller. Only God knows. They are not distinguished by quantity but by quality. Many, or most of this group made serious self-sufficiency preparations for a Y2K crisis that at least initially turned out to be quite small. Many have been laughed at, ridiculed, and mocked by relatives, friends, co-workers, etc. for having made "useless preparations in vain" after all, that money could have gone into the stock market. Many believed they were hearing the Lord in making those preparations (and this writer believes they probably were). I strongly believe those preparations were not useless or in vain. They may have simply been for a different, perhaps far bigger crisis than they anticipated. If we have fire, auto, health, and life insurance, and don't really mind if we don't collect on it this year or next, why not disaster insurance? [ED. NOTE: This writer and his investment company, International Collectors Associates, have been recommending precious metals for financial disaster insurance for 28 years and food reserves for other disasters for over ten years. This writer continues to believe that such disaster insurance is very important for the times that lie ahead.] The media and some commentators have encouraged the people who made preparations to sell or give away (to the poor) their food reserves; to get rid of their generators or other preparations; and get on with the good life. In this writer's strong opinion, that would be a very serious mistake. Today the remnant is stronger, better prepared, more independent and more self-sufficient than at any time in modern history. If war, terrorism, financial collapse (with loss of employment and income) or martial law should eventuate in the coming months, would you rather be independent and self-sufficient, or dependent on the government for your food and survival. The good news is that Y2K helped the remnant to become self-sufficient. This writer still believes that Proverbs 27:12 applies: "The prudent see danger and take refuge, but the simple keep going and suffer for it." FINAL THOUGHT As the reader can tell, this writer still believes that America faces a great period of danger in the times which lie ahead. Great human, physical, financial, and spiritual discernment (a subject MIA will discuss in future issues) will be needed in the times of great deception which lie ahead. We still live in the day of the great lie, and it will get worse before it gets better. There are three groups of people in America and the world today. The wicked, who hold many of the levers of power around the world today; the great masses who don't have a clue - who have little or no discernment, and who are driven by the winds and tides of the day; and the remnant, who have a stable foundation which is the God of the Bible. Psalm 10 seems to address all three of these groups and gives encouragement to the remnant in times of great trouble: "Why, O Lord, do you stand far off? Why do you hide yourself in times of trouble? In his arrogance the wicked man hunts down the weak, who are caught in the schemes he devises. He boasts of the cravings of his heart; he blesses the greedy and reviles the Lord. In his pride the wicked does not seek Him; in all his thoughts there is no room for God. "His ways are always prosperous; he is haughty and your laws are far from him; he sneers at all his enemies. He says to himself, `Nothing will shake me; I'll always be happy and never have trouble.' [ED. NOTE: Does this sound like America and most Americans today?] His mouth is full of curses and lies and threats; trouble and evil are under his tongue. He lies in wait near the villages; from ambush he murders the innocent, watching in secret for his victims. "He lies in wait like a lion in cover; he lies in wait to catch the helpless; he catches the helpless and drags them off in his net. His victims are crushed, they collapse; they fall under his strength. He says to himself, `God has forgotten; he covers his face and never sees.' "Arise, Lord! Lift up your hand, O God. Do not forget the helpless. Why does the wicked man revile God? Why does he say to himself, `He won't call me to account'? But you, O God, do see trouble and grief; you consider it to take it in hand. The victim commits himself to you; you are the helper of the fatherless. Break the arm of the wicked and evil man; call him to account for his wickedness that would not be found out. "The Lord is King for ever and ever; the nations will perish from his land. You hear, O Lord, the desire of the afflicted; you encourage them, and you listen to their cry, defending the fatherless and the oppressed, in order that man, who is of the earth, may terrify no more." 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