Central Planners ensure Collapse

Lawmakers and central bankers in India, Indonesia, Turkey and several emerging-market economies are scrambling to contain the damage from falling currencies and to keep foreign investors from heading for the exits.

Money has poured out of those economies over the last few weeks, pushing down the prices of a wide array of assets, including stocks, bonds and currencies. 

The Indonesian rupiah dropped to its lowest level against the dollar since 2009.

In an effort to slow the exodus of foreign money from Turkey, the country’s central bank raised a key interest rate on Tuesday. That came as the Reserve Bank of India announced that it would start buying Indian government bonds later this week to “address the risks to macroeconomic stability.”
The indian rupee has plunged very recently and it is now at an all-time low vs the U.S. dollar. The Indian government had been making everything at his hands to kill the demand in the Indian gold market.

As a consequence of this measures Gold is now the most black-market trafficked item into India.

According to a Reuters article from earlier today, Australian bank Macquarie has reported that gold is flooding out of London and into Switzerland at a mind-boggling rate. Specifically, 240 tons were exported in May alone and 797 tons during the first half of 2013. That means gold is being exported at a annualized run rate of 17x the 92 tons exported for all of 2012. That’s insane.

Moreover, it seems a lot of that gold is being sent to Switzerland so that the 400oz bars can be melted down into different sizes that are more amenable to Asian sensibilities.

Very recently the dollar has been losing ground vs other major currencies. There has been continued liquidation from countries such as China, who own large amounts of dollars.

Well, eventually this will all unravel and get completely out of control. Bernanke seems to think he can turn off the money spigot simply by using the correct timing, and that this will not cause massive inflation. But they are causing inflation. Any person in the street who buys goods or services in America knows this. The U.S. continues to put out phony inflation numbers so they can can justify pumping all of this money into the system.

Eventually this is going to have serious repercussions. There is absolutely no doubt that this will end in disaster, and in the coming ‘Great Inflation,’ gold and silver will soar.

All of this has only solidified the reason why the Indian people buy gold and silver, which is to protect their wealth. Yesterday the IMF was talking about making an emergency loan to the Indians with them selling some of their large gold hoard. The idea was that this would theoretically help India with its balance of payments.

You have to remember the Western central planners never want to see the price of gold advance because it is an important alternative to holding U.S. dollars.

In Asia they are dumping dollars as quickly as possible without trying to crash the price of the U.S. currency, and at the same time they are desperately buying as much physical gold as they can get their hands on.

The bottom line here is this is rather tragic to witness the West near the edge of a cliff, as central planners recklessly endanger the entire global financial system and ensure that the West will eventually collapse.

Nunez Report

From King World News and Zero hedge