Monthly Archives: October 2010

“The U.S. Dollar Is Doomed,” Says Puru Saxena of Hong Kong Wealth Management

To understand what is happening to our economy, sometimes it takes a fresh set of eyes examining it from the outside.  This article explains what the Federal Reserve Bank is doing to our currency and how we all are affected:

“Austerity be damned, at this rate Mr. Bernanke will go down in the history books as one of the greatest money creators ever to have walked this planet!  

Never mind sky-high deficits and a crushing debt overhang, at its most recent FOMC meeting, the Federal Reserve all but guaranteed another round of quantitative easing.

 While the American central bank did not officially expand its quantitative easing program last month, it did reiterate its willingness to institute more aggressive monetary policy measures in order to combat the risks of deflation.  Furthermore, Mr. Bernanke did officially downgrade the Federal Reserve’s outlook for inflation.

The truth is that the US is insolvent and its policymakers will stop at nothing in order to avoid sovereign default.  So, it should come as no surprise that at its latest meeting, the Federal Reserve downplayed the risk of inflation, thereby setting the stage for another round of money creation.

Make no mistake; Mr. Bernanke has already created copious amounts of money. Granted, the Federal Reserve’s previous monetisation was highly secretive, but you can be sure that it did occur.  Allow us to explain:

You will recall that during the depths of the financial crisis, the Federal Reserve expanded its own balance-sheet and bought all sorts of toxic assets from the financial institutions.  By doing so, Mr. Bernanke created money out of thin air and bailed out the major banks. 

Thus, the banks were able to dump their garbage assets on to the Federal Reserve and once they received the newly created cash in exchange for these securities, they loaned this money to the US government by purchasing US Treasuries.  In summary, in the previous round of quantitative easing, the Federal Reserve created new money and instead of lending it directly to the US government, it used the banking cartel as its conduit.  Back then, not only did the Federal Reserve create more than a trillion dollars, it also dropped its discount rate to almost zero; thereby allowing banks to borrow money cheaply!  It should be noted that since the banks were able to obtain such inexpensive funding from the Federal Reserve, they had absolutely no qualms about re-investing this capital in US Treasuries.  

At first glance, the Federal Reserve’s stealth monetisation plan seemed flawless.  The banks offloaded their toxic assets on to the Federal Reserve, they made fortunes by investing in US Treasuries and the American government got access to a cheap source of funding.  Magic!

Despite the fact that this financial wizardry was a lifeline for American policymakers and their banking cronies, let there be no doubt that it was an unmitigated disaster for the American public.  Not only did the Federal Reserve nationalise the banks’ losses but more importantly, Mr. Bernanke’s money creation efforts have seriously undermined the viability of the US Dollar.   

It is noteworthy that since bailing out the major banks and orchestrating the stealth monetisation, the Federal Reserve has been busy purchasing US Treasuries.  Furthermore, it is now almost certain that in next month’s FOMC meeting, Mr. Bernanke will unleash yet another round of quantitative easing.  In other words, in order to fund Mr. Obama’s out of control spending, Mr. Bernanke will create even more dollars out of thin air!  Allegedly, this new round of money creation will drive interest-rates lower, thereby helping the US economic recovery.  Or so the story goes.  

Unfortunately, as any serious student of economic history knows, there is no such thing as a free lunch.  By adding trillions of additional dollars to the monetary stock, Mr. Bernanke may succeed in bailing out his friends in high places but he is seriously jeopardising the US Dollar.  In fact, bearing in mind the recent developments, it has become clear to us that the Federal Reserve wants to debase its currency.  In our humble opinion, the US Dollar is a doomed currency and there is a real risk of an abrupt plunge in its value.

If our assessment turns out to be correct and Mr. Bernanke unleashes the second phase of quantitative easing, you can be sure that the US Dollar will slide against most un-manipulated currencies (which are few and far between) and hard assets.  In fact, monetary inflation is the prime reason why we believe that the ongoing bull-market in stocks and commodities will continue for several more months. 

Look.  The US economy is swimming in debt and the total obligations (including social security, Medicare and Medicaid) now come in at around 800% of GDP!  Furthermore, this year alone, Mr. Obama’s administration plans to spend another US$3.5 trillion, meanwhile the US Treasury will raise roughly US$2.2 trillion from issuing new government debt!  Clearly, these numbers are unsustainable and you can bet your bottom dollar that the Federal Reserve will end up buying a large proportion of the newly issued US Treasury securities.  As the American central bank funds more and more of Mr. Obama’s spending by creating new money, it will trash the value of its currency.  In fact, given the growing imbalance between the government’s spending and tax receipts, very high inflation is inevitable and even hyperinflation cannot be ruled out.

For the sake of their financial well being, it is crucial that investors understand that inflation or even hyperinflation is a monetary phenomenon and a strong economy is not a pre-requisite for the debasement of a national currency.  Whatever the reason, if a central bank decides to significantly increase the quantity of money in the system, that currency’s purchasing power will always diminish.  This is how fiat-money regimes have operated since the beginning of time and this era is no different. 

It is interesting to note that throughout recorded history, the worst excesses of inflation occurred only in the 20th century.  Undoubtedly, this was a direct consequence of the adoption of fiat-money…” [To read more of this article that “highlights all the hyperinflationary episodes in recorded history” in chart form, go here: http://news.goldseek.com/GoldSeek/1287727560.php ]

He finishes by writing: “Unfortunately, the Federal Reserve and its allies have not finished inflating and over the following years, they will create even more confetti money.  Under this scenario, cash will continue to lose purchasing power and the asset poor middle-class will get even more impoverished.  If our assessment is correct, cash will prove to be a disastrous ‘asset’ over the next decade and once the Federal Reserve’s manipulation ends, fixed income securities will also depreciate in value. 

 Bearing in mind our grave concern about high inflation and the very real possibility of hyperinflation, we continue to favour hard assets such as precious metals and energy.  At present, we have allocated roughly half of our clients’ capital to these sectors and it is our belief that this should be an adequate inflation hedge.” 

 Puru Saxena publishes Money Matters, a monthly economic report, which highlights extraordinary investment opportunities in all major markets.  In addition to the monthly report, subscribers also receive “Weekly Updates” covering the recent market action. Money Matters is available by subscription from www.purusaxena.com

Puru Saxena is the founder of Puru Saxena Wealth Management, his Hong Kong based firm which manages investment portfolios for individuals and corporate clients.  He is a highly showcased investment manager and a regular guest on CNN, BBC World, CNBC, Bloomberg, NDTV and various radio programs.

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“Be Ye Perfect”–Christ’s Impossible Command?

Christ gave us this command to “be  perfect.”  And, of course, the knee jerk response comes, “Wait a minute.  With all due respect, that can’t be right.  Nobody’s perfect.  Nobody can be perfect.  So why would He give us a command that’s impossible to keep?”

This is where some will begin to toss Christianity into the trashcan, never realizing that ‘Be perfect’ is a paradox, which is ‘a statement seemingly absurd yet really true’ (Dictionary.com).

But some will dig down to a deeper level and find that one man was and is perfect–Christ.  And they’ll see that He was perfect because of the Spirit that filled Him.  And they’ll understand that He has now given His Spirit to the sons and daughters of God, who will realize that they can grow in faith where “it is no longer I that lives, but Christ that lives in me” (Galatians 2:20).

And armed with this knowledge, they will see that “with God all things are possible” (Matthew 19:26).  They’ll see that the glass is not half empty nor half full, but brim full and running over with the living waters of His Spirit.

It will dawn on these princes and princesses of God that “no idle word” proceeds out of the mouth of God.  They’ll take this admonition to heart: “Let us go on unto perfection” (Hebrews 6:1-2).  And they’ll learn that there is so much more to God’s spiritual house than the foundation of “repentance from dead works and faith toward God,” which are the first steps of “newborn babes in Christ.”

They’ll realize that they have received in their hearts the seed of perfection.  Christ is that Seed.  And now that Seed is growing, for “one plants and another waters, and God gives the increase.”  This growth is likened to a planted seed of wheat or corn.  It comes up, “first the blade, then the ear, then the full corn in the ear.”  And then harvest will come when He will have been perfectly reproduced in us.  And we then in full maturity will have completed the life cycle of God.  And that is perfection.

The princes and princesses of God will realize this in the command: “Be perfect.”  For they will see these two words as His challenge to “overcome all things” and walk on down His road to the Heavenly City.  They will answer the challenge and embark on this quest for perfection.  Because He said to.              Kenneth Wayne Hancock

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Filed under apostles' doctrine, body of Christ, eternal purpose, sons and daughters of God

Simplifying the Worship of God–Offering the “Calves of Our Lips”

How does God want us to worship Him?  The biblical answer is really very simple, but humans lean to their own understanding and make it extremely complicated. 

They put worshippers in the bondage of certain conditions and offerings and meetings three times a week where you have to come to the ‘house of the Lord’ because no other place will do and money, money, money and pilgrimages and forced prayer times and hocus pocus rituals and incense and holy water and fastings and observances and physical sprinklings and beads and prayercloths and sundayschool and bar mitzvahs and idols and images that ooze and gotta-read the Bible everyday and giving our children to be brainwashed into another manmade religion  and, and…

Is that what God wants us to do to worship Him?  To blindly follow what others have imagined that we should do?

God does not need us to give Him or His “ministry” money; He owns the whole earth and everything in it.  The only thing that He does not have is our grateful heart.  And that is all He wants.  He wants us to just sincerely thank Him and praise Him for all that He has done for us.

Why do we not thank Him?  It is because we do not believe that He has delivered us and saved us from a disastrous and futile existence.  He has already done this; all we must do is believe it.  He has delivered us from sin and from sinning.  All we need do is walk in His grace and mercy.  Those who do this will thank Him, for they know what a deep pit they have been lifted out of.  And they are thankful to Him for His love to them.

And so they continue to call upon Him in “the day of trouble,” and He delivers them, and they thank Him, and in so doing, together they create a circle of glorification of God.  God is glorified through us thanking Him (Psalm 50: 15).

We are admonished to “offer unto God thanksgiving” (v. 14) and to “offer the sacrifice of praise to God continually..the fruit of our lips giving thanks to His name” (Hebrews 13: 15).

The thanksgiving and praise we give to God are the sacrifices we give to Him now in this present age.  Our offerings should not be money but thanks and praise.  We now should offer “the calves of our lips” instead of the animal sacrifices under the old testament (Hosea 14: 2).

We simply thank Him now, sincerely from a broken and contrite heart.”  And He hears us and has compassion on us and is near to us.  This is worshipping Him in Spirit and in truth.  KWH

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Filed under prayer, sin, thankfulness