The Real War is Alive and Well

May 28, 2003

Anyone who trades markets for a living knows that neither the US Treasury nor the US Federal Reserve creates trends in the dollar or interest rates.

We do not need Treasury Secretary Snow to tell us that currency values are better set in the marketplace because everyone already knows they are. Talk like that is only public relations for the sole purpose of maintaining the illusion that a Treasury Secretary is an all powerful person. He reacts, he does not act, and that is the total story of both the Treasury as well as the Federal Reserve.

Now having said that, someone might want to emphasize to the Bush Administration that Iran and its friends have amassed a multi-trillion dollar position in US Treasury instruments that were shoved down their throats by the US via the World Bank and IMF.

With the US threatening to take action against another member of the "Axis of Evil" (Iran), the specter of Iran and its proxies letting loose with a blast of US Treasury instruments into the marketplace in the first quarter of a US election year looms large.

The US dollar and the United States at large are in serious trouble because of the scale of delusional thinking in Washington. A lower US dollar will not cure the economic problems of the USA Inc.

The present tax reduction will not stimulate US consumers back into conspicuous consumption. And today's nearly 200 point jump in the Dow isn't fooling anyone even though so-called "professional money managers" are throwing other people's money into the market based on slightly improved economic reports that vary from week to week.

What the tax bill is proving is that the lunatics are back in charge of the insane asylum and anytime now we'll be watching the sequel of "One flew over the Cuckoos Nest." But this time Nurse Ratched's diagnosis will be right.

Keep in mind that we are in a new kind of World War. The recent acts of well-planned terrorism in Saudi Arabia and Morocco show that al Qaeda is very much alive. The war in Iraq accomplished nothing and the mounting US casualties suggest the real war is just beginning. Despite our efforts to cut off their funding sources, al Qaeda appears to be well financed and capable of initiating other terrorist events.

If we found billions in Iraq behind walls and under floors, what do you think Saddam and his terrorist friends brought out with them? Since the majority of Hussein's funds were in gold, one could conclude that Hussein and bin Laden understand something about gold's value.

The dollar is a weapon that will be used to unseat the sitting administration. As a defense strategy, the Federal Reserve with "Credit Money" (The Fed in such a transaction draws a non-funded check on itself for which the purchased instrument becomes the asset) will buy any and all US government bonds offered which in itself has even more serious economic implications for the United States.

In fact, that is the most unwise reaction possible for the long term health of the dollar. The US dollar may well become the Tanzanian Shilling if the Federal Reserve follows through with Bernanke's promise to open the money printing spigot in defense of the US economy.

All wars from the beginning of time have been economic. Why should the "Forces of Centrally Organized Cell Structured Terrorism" versus the "Colossus of Texas" be any different? God help the US administration and all of us because the US is caught up in a Third World War that it doesn't know exists.

Read the history of Sheik Mansur who led a popular uprising against Russia oppressors in Chechnya and continued it for four generations. Read the history of how Czarist Russia failed in Chechnya many years ago and you will understand how modern Russia is failing now and how that conflict, which the US now supports by omission, may well go on for another four generations.

Then look at what the US has bitten off in Afghanistan and Iraq and now potentially Iran. Do not opine if you refuse to read history. This is undoubtedly the beginning, not the end of the beginning, of the Third World War. Yet the present US administration, world wide investors, and money managers are clueless. Now look again at this US dollar chart with all that in mind:

http://futures.tradingcharts.com/chart/US/63

Jim Sinclair
http://www.lemetropolecafe.com/