IMF Tells Bankers to Rethink Inflation

What we have here is a rare and candid statement in print of the International Monitary Fund, The World Bank, The “Fed” being involved in currency manipulation, world wide currency manipulation.  This public admission should internationally cause nation after nation to have court hearings, to demand the secret records of these national currency banks and begin serial prosecutions of the members in charge of their national currency and the seizure of said banks all their holdings and wholesale dismantaling of these organizations and their international spiderwebs.

Obviously this is not going to happen and in the US. The movement in Congress last year to force the Fed to open up its books and disclose the looting they have done with the US currency both here and abroad has stalled altogether.


This admission here as to what is soon coming to pass in every nation is massive inflation. Last year we warned beleivers in the strongest terms that this will come to pass and that all cash in savings accounts and retirement accounts would become severely devalued to the tune of 75% or more based alone on the amount of trillions of dollars in cash the Fed has been rolling off the printing presses. 


Already we can see almost daily the rise of many food products, and the threat of Oil going up over 100 dollars a barrel is being written about  “Peak Oil” so that it sounds like a globally planned event that will take place in 2013 [Strangely after the US elections.]  We are also on the verge of the the bursting of a second housing bubble that is a combination of hundreds of thousands of Adjustible Rate Morgages in houses and the Commercial Realestate bubble bursting.


The stock market is going to drop percipitously, the Gold bubble and  Commodity Market bubbles are also going to pop now also.


There is one other major issue and that is concerning our national debt and the trillion or so dollars that we let Communist China purchase. It emerged last week that China is now using this as a weapon to exert its will over the US in military situations and in Political situations. The threat is that they will dump on the open market that trillion or so dollars worth of bonds they are owned, which would immediately destablize our currency by immediately driving up interest rates. A move that would throw the US into immediate depression.  This debt owed to China has now become a crisis level national security issue.  


What is sound and strong investment, where can I put my corrupt mammon and not have it turn into ashes in an instant? Not all commodities are part of this bubble. Corn is not.  The US and the EU and Brazil are all upping corn being converted into Bio-Diesel and Ethenol.  This greatly affects the Wheat and the Rice markets as well as these are the most basic and primary sources of food in the world, and we can throw in certain kinds of beans as well.  Whether buying commodities or being able to purchase tons and tons of these products and to be able to store then in a clean and dry and pest free environment.  These will not lose their value. Not to mention this is prophesied of in the book of Revelation as part of a world wide famine that is to come.  If this is that, then the famine will be man created by a combination of sucking up the corn crop for political expediance and driving up the world wide cost of all other main stay food products beyond the price which poor nations and poor people can afford.  Another factor is that in this situation much of the middle class will be dragged down in this to join the plight of the poor.


One could also invest in land and real estate that has already suffered a significan drop in value – however in all realtity if things occur as we suggest they will, these investments will be far from liquid and even deemed worthless in a world wide crisis of such epic or biblical proportions. 


After the stock market collapses again that would be the real time to invest.  The choice of stocks in energy, Oil Gas and Coal, in farming and food stocks, in  daily use stocks like proctor and gamble selling soap deoderant cleaning supplies and laundry soap and things, mining stocks, would be the safest and most likely to weather the kind of storm we are talking about. But the selections of the individual companies would have to be reseached carefully before investing.  And there is no better time than now to do your homework so you are ready and able to buy when the stock market has died back and is nearing the bottom. Stock unlike land is quickly and easily converted into cash.


Any real investing in hoarding products, buying land or property at pennies on a dollar, or buying stocks will be affected by the state of the currency and interest rates.  We are in a limited window with low interest rates now.  We are kind of in a lull before the full storm hits. One other alternative is to in someway become a producer of basic needs goods,  as in a farmer, a miner, an oil or gas producer, a manufacturer or in selling such products. Most of these would require a good deal of money with exception to having a small farm or a small mining operation.  And by small we mean a 1or two person or a family operation.  For those concerned about these things and their households the time now is to pray and to seek guidance.  So that when this storm comes in its full fury you will be founded upon the rock spiritually and economically and be able to lend and disburse to the poor and needy instead of having one’s cupboards and pantry empty and becoming a beggar and a borrower to squeak out an existance.


This is in no way to say that having faith and trust in the Lord for one’s daily needs is to be in anyway replaced or superceeded by what one owns or has invested in. But rather we are to be led and guided by the Lord in all things, and as in the days of Paul in acts a famine was prophesied of and the beleivers prepared themselves for that day and in that hour they were able to provide wagons full of food and supplies to needy brethren in other churches and in other nations.

The International Monetary Fund's top economist, Olivier Blanchard, says central bankers should consider aiming for a higher inflation rate than they do currently to lessen the chances of repeating the recent severe recession.

Mr. Blanchard, a macroeconomist on leave from the Massachusetts Institute of Technology, said the global economic downturn revealed flaws in macroeconomic policy, especially the reliance primarily on interest rates to manage economies. Although Japan had fallen into a decade-long funk despite low inflation and low interest rates, "most people convinced themselves that the Japanese didn't know what they were doing," Mr. Blanchard said in an interview.

In a new paper with two other IMF economists, Giovanni Dell'Ariccia and Paolo Mauro, Mr. Blanchard says policy makers need to consider radically different approaches to deal with major banking crises, pandemics or terrorist attacks. In particular, the IMF paper suggests shooting for a higher-level inflation in "normal time in order to increase the room for monetary policy to react to such shocks." Central banks may want to target 4% inflation, rather than the 2% target that most central banks now try to achieve, the IMF paper says.

At a 4% inflation rate, Mr. Blanchard says, short-term interest rates in placid economies likely would be around 6% to 7%, giving central bankers far more room to cut rates before they get near zero, after which it is nearly impossible to cut short-term rates further.

"Now we realize that if we had a few hundred extra basis points"—a basis point is one-hundredth of a percentage point—"to rely on, that would have helped" fight the recent downturn, Mr. Blanchard says. "So it would have been good to start with a higher nominal rate. The only way to get there is higher inflation."

For decades, the IMF has pressed countries to slash inflation and counts as a major accomplishment its success in persuading governments in Latin America, Africa and elsewhere to abandon the idea that they could inflate their way to prosperity. But Mr. Blanchard says the IMF should lead the rethinking necessary after the worst recession since World War II.

Most big-country central bankers, recalling the mistakes they made that led to high inflation rates in the 1970s and 1980s, aren't likely to immediately embrace the IMF advice. They remain convinced that keeping inflation low, and persuading markets that they will do so, remains critically important. John Taylor, a Stanford University monetary-policy specialist who served in the Bush administration Treasury department, says that inflation could become hard to constrain if the target is raised. "If you say it's 4%, why not 5% or 6%?" What will come will be more in the order of 10% 15% and even 25% inflation in a year for most of a decade. Interest rates may well rise to 15-18 % under those conditions completely strangling any investment. And in such financial calamity the world may well call for the beast to take the healm and save all from complete financial ruin.  But that is for another discussion Mr. Taylor said. "There's something that people understand about zero inflation."

Mr. Blanchard argues that there isn't much difference in maintaining inflation at 2% or 4%. Tax brackets could be adjusted so that higher inflation, by itself, doesn't push taxpayers into higher tax rates. Inflation-adjusted bonds could protect investors. The IMF paper notes the possibility that inflation could jump higher if governments start adjusting wages automatically for inflation, "but the question remains whether these costs are outweighed by the potential benefits" in terms of avoiding zero interest rates.

The new paper, titled "Rethinking Macroeconomic Policy," also recommends that central banks use regulatory weaponry try to prick asset bubbles before they grow dangerously large. Complete socialist state control over all goods and commodities Relying exclusively on raising interest rates to do such work risks damage to the broader economy, an argument that Federal Reserve Chairman Ben Bernanke has made.

"If leverage appears excessive, regulatory capital ratios can be increased," the paper says. "To dampen housing prices, loan-to-value ratios can be decreased; to limit stock price increases, margin requirements can be increased."

Mr. Blanchard says governments should rethink the design of automatic stabilizers – spending increases or tax cuts that are triggered by a recession. The classic stabilizer is unemployment insurance, spending on which increases automatically as more workers lose jobs. Governments could design new programs that have more bang for the buck, he says, such an automatic reduction in taxpayer bills when the gross domestic product declines by a certain percentage. Another possibility: an investment tax credit that takes effect when economic activity slows down. "Companies would get it automatically without Congress having to vote on it," Mr. Blanchard says.