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Answers 4 the Economic Roller-Coaster Explained

Detective Krum

Detective Krum

Answers 4 The Economic Roller-Coaster Explained

By: Detective Krum

People have been asking why the economic roller-coaster in the Dow and other areas. I certainly do not have all the answers and no one may, but God. Some clues have led to a Federal Reserve System that has hijacked the American way of life through inflation then deflation policies. Fractional banking, a complex word maybe, but I mean it as a banks deposits are leveraged with money that was created out of thin air. This fractional banking policy has put banks into a position of being over-leveraged. Want a comparison? Forex markets, basically where traders trade currencies against other currencies. Fractional leveraging in Forex means you can put in $100 and leverage it up to 9 times the amount. Do you really have the money? No. What if you loose your $ 100? You loose your $100 plus what you leveraged so you loose the $100 plus the 9 times of leveraged dollars.

This brings us to what is going on with the banking industry today and why 86% of Americans have opposed President Bush and Congress on bailout programs. When real estate plunged, value went down while bank payments went up through fractional banking and adjustable rate mortgages (ARMs). Instead of banks renegotiating those mortgages (mainly because they sold them in something they call tranches {google tranches} to China) they forced homeowners to walk away and let the property go into foreclosure.

While foreclosures grew, banks became strapped because of their fractional banking practices, possible fraud and a federal reserve banking system gone power hungry to take over the American economy. But is there really more to this story? Yes, and here it is:

The link to this is here. I claim no association with Money and Markets other than as a subscriber to their newsletter. In part, the explanation goes like this:

Beijing knows that the dollar’s status as a reserve currency is soon going to be history. Just like the pound sterling lost its status as the world’s reserve currency in the early 20th century.

And authorities in Beijing also believe that as China rapidly progresses toward superpower economic status, the yuan should be a world-class, stable medium of exchange.

They envision the yuan as a major international currency some day, with as much (or more) status than the U.S. dollar. That’s why they’re going to back the yuan with gold … loads of it.

Plus, there’s another reason for Beijing to buy more gold as part of China’s piggy bank. China has an estimated $1.3 trillion invested in dollar-denominated investments. They can’t get out of the dollar quickly. It would destroy the U.S. economy which would have a direct negative impact on China.

So the smart thing to do: Hedge and diversify existing dollar holdings with gold.

Consider this: Right now, China has a mere 0.9% of its reserves in gold (600 tons). That’s the lowest of any industrialized economy! To put it into perspective …

* The U.S. has 77.3% of its foreign reserves in gold.

* The European Union has 23% of its reserves in gold.

* Lithuania, Mozambique, and even tiny Nepal all have more of their reserves in gold than China.

Just to up its reserves to 5% in gold, Beijing would have to purchase $93 billion worth of bullion. That could easily send the yellow metal skyrocketing to more than $2,000 an ounce.

Plus, let us not forget India’s roll in this world market.

Congress and President Bush’s plan to nationalize America’s banking industry is clearly against the united states Constitution. America is a Republic of laws not a Democracy of majority rule because America opposed this bailout 86% and Congress sided with the President.

What can one do? Every Congressman/woman that voted for the bailout should resign or be voted out. Repeal the bailout bill, elect strict Constitutionalists.


October 16, 2008 - Posted by | 1, Victory 1 News | , , , ,


  1. I’ve been reading along for a while now. I just wanted to drop you a comment to say keep up the good work.

    Comment by Tony Orlando | October 16, 2008

  2. I found your site on Google and read a few of your other entires. Nice Stuff. I’m looking forward to reading more from you.

    Comment by Tony Orlando | October 16, 2008

  3. Thanks Tony.

    Comment by victory1project | October 21, 2008

  4. […] Answers for our readers is posted here. […]

    Pingback by Weak Banks and Weak Bank Directory « Victory 1 Project | October 7, 2009

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