2015 Real Money Perspectives

TABLE OF CONTENTS

2015: PREPARE FOR THE WORST "¦ WHILE EXPECTING THE BEST!
By DEAN M. HESKIN

SHOCKING TRUTHS ABOUT MODERN BANKING
By CRAIG R. SMITH and LOWELL PONTE

BOOK REVIEW: DON'T BANK ON IT!
By Dr. ILEANA JOHNSON PAUGH

THE GOLDEN NUMERAIRE
By DAVID BRADSHAW

GO FOR GOLD IN 2015!
By JIM CRAMER

THE U.S. DOLLAR
By CHRIS HOLTON

A TERRIFYING YEAR - YET THERE'S HOPE
By BEN STEIN

FIVE BIGGEST RISKS FOR GLOBAL ECONOMY IN 2015
By NOURIEL ROUBINI

2015: THE YEAR OF DOLLAR DANGER FOR THE WORLD
By AMBROSE EVANS-PRITCHARD

SWISS AMERICA - IN THE COMMUNITY

From the President's Desk ...
2015: Prepare For the Worst ... While Expecting the Best!

This year Swiss America humbly embarks on our 33rd year of business. As the tide of political and economic uncertainty continues to swell, so does the necessity of protecting your life savings with tangible assets you can hold in your own two hands.

This issue of Real Money Perspectives will shine the light of truth upon our increasingly unsafe banking system. Swiss America Chairman Craig R. Smith was among the first to issue a serious warning to the public about this vulnerable world in his 2014 book, DON'T BANK ON IT!

If you invest a half-hour reading this issue from cover to cover, your perspective on money and banking safety will be changed forever. You are about to discover the truth regarding ...

* The alarming G20 Summit's global green light to redefine your bank deposits as bank "assets" which, in a crisis, are available to the Federal government for Cyprus-style depositor "bail-ins."

* An excellent book review of DON'T BANK ON IT! which will put you on the fast track to understanding the fascinating history of money and banking, while identifying today's 20 major risks.

* Rediscovering the true value of GOLD, the Numeraire extraordinaire! Learn why physical gold is much more than a mere commodity or investment; GOLD is the world's ultimate currency and foundation for growth!

Speaking of solid foundations for growth, I've had the privilege of working side-by-side with Craig Smith for over twenty years now - watching and learning true leadership in action and witnessing him choose to serve others first.

At Swiss America our goal is simple: We help our clients achieve the peace of mind that comes from owning tangible assets. My job is make sure Swiss America clients are prepared - no matter what 2015 may bring.

This year will hold many financial challenges, unexpected risks and potentially great rewards. The key is to grasp the basics of economics, seek wise counsel and then take action diversifying assets for safety.

The stock market could suddenly crash, bonds may become a graveyard for the dying U.S. dollar and public panic could induce a major bank run; which would send gold prices rocketing. But even if we amazingly dodge all of these potential financial bullets, owning physical gold as "wealth insurance" remains very prudent.

As the famous 19th century scientist Louis Pasteur once said, "Chance favors the prepared mind."

Sincerely,
Dean M. Heskin
CEO, Swiss America

SHOCKING TRUTHS ABOUT MODERN BANKING

By Craig R. Smith
and Lowell Ponte

The bank we trust to safeguard our money might now be one of the riskiest places to put it.

Your bank account today faces 20 major risks, as we explain in our 2014 book DON'T BANK ON IT! THE UNSAFE WORLD OF 21st CENTURY BANKING. Many of our warnings in this book are already coming true, as we show in our free White Paper After the G-20: A FollowUp: Did Your Dollars in the Bank Just Become Dollars At Risk? [1]

The People's Republic of China, for example, has 125,000 "cyber warriors" in its military who spend every day hacking into the computers of governments, corporations and banks around the world. They may have helped communist ally North Korea to loot and erase the computer records acknowledged by Sony Pictures Entertainment's Hollywood movie studio in late November 2014. [2]

Your bank account now exists mostly as mere flickering electronic impulses, digital ghosts inside bank computers that can be stolen, garbled or erased in nanoseconds by sophisticated hackers half a world away. Such hackers reportedly have already compromised more than 500 million customer bank records.

This new form of warfare is no mere computer game, warned former U.S. Secretary of Defense Leon Panetta; it might soon bring our computer-dependent nation crashing down in a "cyber Pearl Harbor."

"When you open a bank account you are taking a risk. You are making an investment, gambling with the fruits of your labor," we warned in Don't Bank On It!

"The risk you take by trusting your money to a bank," we wrote, "...is far greater than most people realize - and that risk is rapidly increasing." [3]

Your bank might look like the one your parents and grandparents trusted, but on the inside today's modern banks are very different.

In the financial crisis that began in 2007-2008, the Federal Reserve rushed to prop up "Too Big To Fail" (TBTF) giant banks - so called because the collapse of such "Systemically Important Financial Institutions" (SIFIs) could risk bringing down the entire economy - by quietly making or arranging a staggering $16.115 Trillion - roughly equal to the entire annual Gross Domestic Product of the United States - in various loans arranged to rescue banks and other major financial institutions. [4] Our economy has not recovered after six years from the devastation following the near-collapse of our banks.

To prevent another such crisis, the world's most powerful nations resolved to replace future taxpayer bank bail-outs with what they called "bail-ins." They wanted to stick somebody other than governments and politicians with the cost of resolving future bank crises. They began planning the best ways to expropriate the assets of bank shareholders, creditors and depositors to pay a bank's shortfall before taxpayer money would again be used.

By April 2012 this new doctrine was already being developed in detail by economists of the International Monetary Fund, as evidenced by their study From Bail-out to Bail-in: Mandatory Debt Restructuring of Systemic Financial Institutions. [5]

In December 2012, America's Federal Deposit Insurance Corporation (FDIC) and the Bank of England published a joint memo that approved this new "bail-in" banking doctrine. [6]

Scarcely three months after the FDIC-Bank of England memo agreeing to this, the Eurozone carried out its first "bail-in."

Citizens of the Mediterranean island nation Cyprus awoke one morning in March 2013 to find their banks padlocked, their accounts inaccessible via ATM, and their bank credit cards no longer usable. The government, with European and International Monetary Fund approval, had seized their bank accounts to pay the deficiencies of Cypriot banks. [7]

This "bail-in" would be the "template" of future government policies towards troubled banks, the Netherlands finance minister told a reporter.

The people of Cyprus have been under currency controls ever since, restricted in how many Euros they may take out of their island country.

Why Cyprus? It is a small nation on which to test the new deposit-grabbing policy. Worse, in the view of European welfare states with high taxes, Cyprus was a tax haven whose banks paid depositors higher interest and did more to protect their privacy than most other European nations.

By seizing Cypriot banks and their accounts, the European Union aimed to shut down a competitor and snatch billions of Euros from Russians and others sheltering their wealth on the tiny island. The EU succeeded in choking Cyprus as a tax haven, but the EU failed to prevent wealthy Russian oligarchs from withdrawing their bank accounts before it could seize them.

Could a Cyprus-like bail-in happen here? It can, and probably soon will.

"Laws and rules are being changed to make government confiscation of bank deposits as 'unsecured assets' easier via what governments now call 'bail-ins,'" we warned in Don't Bank On It!

"Under today's law," we wrote, "you no longer necessarily 'own' your bank account. Your bank does." [8]

On Sunday, November 16, the G-20 - including President Barack Obama in attendance at this meeting of international financial powers in Brisbane, Australia - voted that its member nations would commence rapidly enacting new banking laws and policies remarkably close to what our book described.

Surprised by what the G-20 nations were about to approve, Examiner.com financial writer Kenneth Shortgen, Jr. seemed dazed as he reported:

"[W]e are all now faced with the realization that the money we thought was our own, and protected in our checking and savings accounts, no longer is."

"And after Sunday at the G20 meeting," Shortgen continued, "the risks of holding any cash in a bank or financial institution will have to be weighed as heavily and with as much determination of risk as if you were holding a stock or municipal bond, which could decline in an instant should the financial environment bring a crisis even remotely similar to that of 2008." [9]

"We took new steps toward strengthening our banks," said President Obama at the G-20 gathering, "....making sure that we've got a financial system that's more stable and that can allow a bank to fail without taxpayers having to bail them out."

What he meant is that, henceforth, those who thought their money was safe in the bank will now be among the first in line to lose if their bank starts to run out of money.

The G-20 hurry to impose this new bank "bail-in" policy worldwide is happening for a reason. The world's central bankers and political leaders know that the global economic system is fragile and getting worse. Europe with its double-digit chronic unemployment is on the knife edge of falling back into deep recession. China's economy is weakening.

The system is being held together with cheap money and interest rates kept artificially close to zero so government can afford to borrow trillions of dollars. This easy money keeps the stock market casino rising, but in the real economy it stifles growth, jobs and economic health. We continue to have the lowest job participation rate since the economic malaise of President Jimmy Carter in 1978, and a large share of the jobs being created are part-time work for hamburger flippers.

But the easy money will continue because the world could plunge into near-fatal economic withdrawal symptoms if this addictive drug of easy money is taken away.

Economists use a formal term for the Federal Reserve policy of holding bank interest rates below the rate of inflation. That term is "financial repression." [10] It robs and discourages savers, who lose purchasing power every day their money is in the bank.

This was imposed, in part, to help the government and others "deleverage" their enormous debt - but instead of seriously cutting back spending, those in power pushed our national debt in December 2014 above $18 Trillion - nearly doubling it in the last six years.

Truth be told, our global banking system is now a house of cards that might be blown down by any gust of financial, political or computer-hacker wind in our stormy, high-risk world.

The London Telegraph's James Titcomb reports that the chairman of the international Financial Stability Board Mark Carney, who is also Governor of the Bank of England, reveals how future bank problems will be handled. [11]

His plan is that future problems in "Too Big To Fail" banks will involve government bail-outs by taxpayer money only as a last resort. Instead, as we explained in Don't Bank On It!, governments will first use "bail-ins," forcing bank "creditors" of various kinds to bear banks' losses. These "creditors" include not only bank stockholders but also bank employees and depositors.

Carney's focus was also on raising the ability of 30 major "systemically important banks" globally to withstand financial problems. Of these 30 banks subject to additional regulation and requirements, eight are American: JPMorgan Chase, Citigroup, Bank of America, Goldman Sachs, Morgan Stanley, Bank of New York Mellon, State Street, and Wells Fargo.

The London Telegraph quotes one major bank chairman as saying that these new policies "are about distributing the burden of failure; they are not about avoiding the burden of failure."

"Bail-in rules will still mean the public being on the hook for banks," writes Titcomb. Safety for the taxpayer remains an illusion.

A healthy economy needs both risk and reward - reward to encourage effort, and risk to encourage prudence. One reason our banking system has problems is that banks deemed "Too Big To Fail" could gamble more than their smaller competitors, because everyone knew that if these megabanks started to fail, taxpayer money would bail them out; they have lived in a heads-I-win, tails-taxpayers-lose world that encouraged unwise speculation.

Another problem in our banking system is that depositors believe - no matter how unwise, reckless or risky their bank might be - that the Federal Deposit Insurance Corporation guarantees their bank account safety. Depositors therefore feel no need to seek out prudent banks - merely more convenient or higher-paying ones.

Created during the Great Depression to prevent depositor runs on fractional-reserve banks that are able to redeem only a small fraction of deposits at the same time, the FDIC is what we call "fractional-reserve insurance." It at any given time has only around $37 Billion of its own reserves funded by bank payments, plus vague promises of up to another half-trillion dollars of crisis money that the U.S. Treasury and Federal Reserve might provide.

This sounds impressive until one learns that the FDIC currently says it insures more than $7 Trillion in depositor accounts. The FDIC at best would be able promptly to restore roughly one dollar of every $14 it claims to insure. If even one of the biggest five banks - which among them hold approximately half of all U.S. accounts - were to fail, the FDIC might be unable to restore the accounts in that single bank. [12]

In a major economic collapse, the FDIC might within months be able to reimburse all depositors with money hot off the government presses, debased dollars printed out of thin air by the trillions that would have only a fraction of the purchasing power of the dollars depositors lost. The resulting high inflation would also bleed away the value from paper dollars hidden under your mattress or closet floor. (In fact, the government and Fed are doing this already - taxing you by deliberately creating dollar-devaluing inflation. [13]) Ask yourself: how many days, weeks or months could you go without your bank account or credit?

Fractional-Reserve Banking is why regulators have demanded that banks maintain a certain percent of cash in reserve, write "Living Wills" to show how their bank could go broke without causing major economic disruption and undergo "stress tests" to show their financial fitness.

Under new G-20 Financial Stability guidelines, the top 27 G-Sibs (Global Systemically Important Banks) must demonstrate "Total Loss Absorbency Capacity" (TLAC), which involves, among other things, reserves of 15-20 percent of deposits or more. The aim is to make banks well-enough funded that governments can let them fail without facing major problems in the whole economy. [14]

Extreme regulatory power has become a tool politicians use to strong-arm banks into lending billions to partisan allies; spying on and revealing customer financial activities to government; cutting off banking services (under the current Administration's "Operation Choke Point") to law-abiding businesses that ruling politicians dislike, such as gun stores; and producing regulatory fees and penalties as a source of tens of billions of dollars in government revenue for both politicians and their activist comrades. We document all this and much more in Don't Bank On It!

The Federal Reserve conjures paper money out of thin air. Other banks conjure derivatives, various exotic contract agreements that magically "derive" their value from a wide variety of underlying things.

Derivatives, including commodity option agreements, began as a way of distributing and thereby reducing risk for investors such as banks. These financial instruments are so lucrative and useful, however, that their quantity and theoretical value have grown wildly. Derivatives now pose a vastly greater risk to our banks and the American economy than the dangers they were conjured to prevent.

As we wrote in Don't Bank On It!:

Many of America's big investment banks have made risky bets and left themselves dependent on government and the Fed to bail them out. These megabanks are too deep in potential trouble to be saved in a dire crisis. The Fed, according to the Government Accountability Office, from 2007 through 2010 committed $16.115 Trillion in various loans to rescue banks.

However, today's biggest banks have stratospheric exposure to derivatives that even the Fed would find hard to bail out: reportedly at least $44.19 Trillion for Goldman Sachs, $50.13 Trillion for Bank of America, $52.1 Trillion for Citibank, $70.15 Trillion for JPMorgan Chase, and $72.8 Trillion for Deutsche Bank. Just 9 major banks on which the world economy depends have derivative exposure of more than $290 Trillion in a global $693 Trillion derivatives market! Listen for a moment and you can hear this time bomb -- called by Warren Buffett a "Financial Weapon of Mass Destruction" -- ticking. If this explodes, neither the Fed nor the FDIC could put your bank or deposits back together again. The paper dollar would be ashes to ashes, dust to dust. [15]

Regulators have tried to reduce the peril of derivatives. The Economist described an 18-bank handshake deal to slow down derivatives from reaching critical mass during the first 24 hours of a bank crisis as "throwing sand into the gears of the financial doomsday machine," and heralded the agreements as "Armageddon delayed." [16]

A November 2014 Wall Street Journal editorial described how "18 giant banks signed on to a plan 'developed in coordination with' global regulators, including the Treasury and Federal Reserve." [17]

The Journal notes that "the world's largest banks have 'agreed' to forfeit contractual rights in order to help regulators during a crisis" by agreeing "to rewrite all of their derivatives contracts with each other." [18] But note that this agreement applies only to specific bilateral agreements these banks have with each other, and nobody else.

If regulators believe they can make $290 Trillion of potential nominal value on the books of our biggest banks - roughly four times the annual Gross Domestic Product of our entire planet - simply vanish by having banks modify their contracts, this should be proof why sane people, including one former Harvard economics professor, are taking their money out of our biggest banks as fast as they can. Many are also fleeing our paper fiat dollar currency and dollar-denominated investments.

This deal, notes the Journal, was achieved not via an open democratic legal process but involved "the world-wide surrender of contractual rights in a closed-door meeting one Saturday at the Fed" that included regulators eager to have an agreement before the G-20 meeting.

Nobody can see the future, but this deal-under-pressure has the potential to undermine the rule of law, compromise bank investor interests, beget lawsuits, involve possible comingling of derivative debt with savings accounts, and perhaps even lead to taxpayers backing a U.S. bank because the agreement coerces it into losing money by helping a foreign bank.

By December 2014, however, bank lobbying paid off big during the lame duck session of Congress. A key provision of the Dodd-Frank law was rolled back by the Omnibus Funding Bill that would have prohibited the trading of risky financial derivatives in bank operations that are insured by the FDIC. Critics said that this change puts taxpayers on the hook for potentially-vast bank derivatives risk. [19]

Banks "Too Big To Fail" may yet get bailed out. The Wall Street Journal warned: "Taxpayer, beware." In light of what happened at the G-20, we would add "Bank Depositor, beware."

If, as the G-20 agreed to, your bank account becomes merely one of many creditors if your bank fails, then what matters is whether the emerging law makes depositors high or low priority for repayment. The G-20 agreement makes reimbursing you a low priority. But prior to the 18-bank agreement, according to Public Banking Institute President Ellen Brown, bank derivatives had "Super-priority status." [20]

Why were these urgent efforts underway to neutralize the explosive risk of banks with exposure to tens of trillions of dollars' worth of derivatives? Will banks be protected against oil-related derivative exposure as petroleum prices plummet? And, as happened at the G-20, why are bank depositors now being set up as almost the lowest guys on the totem pole who could be stuck paying the bill when a major bank collapses? What do big bankers know that we do not?

Bank depositors, as we revealed, now face 20 major risks to the safety of their accounts, risks from both foreign powers and our own bankers, bureaucrats and politicians. American depositors now receive near-zero interest for taking all these risks. European banks have already begun paying "negative interest," charging depositors a fee just for having a risky zero-interest account.

Truth be told, it has become a high-risk, low-reward gamble - and hence is illogical - for most people to keep much money in a bank account. As we explain in Don't Bank On It!, you have far better, safer ways to secure what you worked so hard to earn and save.

[1] Craig R. Smith and Lowell Ponte, After the G-20: A FollowUp: Did Your Dollars in the Bank Just Become Dollars At Risk? Phoenix: Idea Factory Press, 2014. For a free copy of this White Paper, call 800-289-2646.

[2]Gordon C. Chang, "Did China Help North Korea Hack Sony?" Forbes Magazine, December 21, 2014. URL: http://www.forbes.com/sites/gordonchang/2014/12/21/did-china-help-north-korea-hack-sony/

[3]Craig R. Smith and Lowell Ponte, Don't Bank On It! The Unsafe World of 21st Century Banking. Phoenix: Idea Factory Press, 2014. Page 213.

[4]Ibid., p. 187.

[5]Jianping Zhou and others, From Bail-out to Bail-in: Mandatory Debt Restructuring of Systemic Financial Institutions. Washington, D.C.: International Monetary Fund, April 24, 2012. URL: https://www.imf.org/external/pubs/ft/sdn/2012/sdn1203.pdf

[6]"Resolving Globally Active, Systemically Important, Financial Institutions: A Joint Paper by the Federal Deposit Insurance Corporation and the Bank of England" (monograph), December 10, 2012. URL: http://www.fdic.gov/about/srac/2012/gsifi.pdf

[7]Craig R. Smith and Lowell Ponte, Don't Bank On It!, pp. 141-151.

[8]Ibid., p. 216.

[9]Kenneth Shortgen, Jr., "Bank Deposits Will Soon No Longer Be Considered Money But Paper Investments," Examiner.com, November 12, 2014. URL: http://www.examiner.com/article/bank-deposits-will-soon-no-longer-be-considered-money-but-paper-investments

[10]Carmen M. Reinhart, "Financial Repression Back to Stay," Bloomberg, March 11, 2012. URL: http:// www.bloomberg.com/news/2012-03-11/financial-repression-has-come-back-to-stay-carmen-m-reinhart. html; Carmen M. Reinhart and M. Belen Sbrancia, "The Liquidation of Government Debt," National Bureau of Economic Research (NBER) Working Paper # 16893. March 2011. URL: http://www.imf.org/ external/np/seminars/eng/2011/res2/pdf/crbs.pdf; Alberto Giovanni and Martha De Melo, "Government Revenues from Financial Repression," American Economic Review, Vol. 83 #4 (September 1993). URL: http://www.jstor.org/discover/10. 2307/2117587 uid=3739560&uid=2&uid=4&uid=3739256&s id=21101221127691; Buttonwood, "Carmen Reinhart and Financial Repression," The Economist, January 10, 2012. URL: http://www.economist.com/blogs/buttonwood/2012/01/debt-crisis/print; Member of the European Parliament Nigel Farage, "Europe Is About to Impose Extreme Repression," King World News (Interview), June 22, 2012. URL: http://kingworldnews.com/kingworld- news/KWN_DailyWeb/ Entries/2012/6/22_Nigel_Farage_-_Europe_is_About_to_Impose_Ex- treme_Repression.html

[11]James Titcomb, "Mark Carney: No More Bank Bail-outs," London Telegraph, November 10, 2014. URL: http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/11220192/Mark-Carney-No-more-bank-bail-outs.html

[12]Darrell Delamaide, "Can FDIC Handle the Failure of a Megabank?" USA Today, May 30, 2013. URL: http://www.usatoday.com/story/money/business/2013/05/28/delamaide-fdic-megabank-failure/2365955/; see also Craig R. Smith and Lowell Ponte, Op Cit., pp. xi, 217.

[13]For a complete explanation, see Craig R. Smith and Lowell Ponte, The Inflation Deception: Six Ways Government Tricks Us...And Seven Ways to Stop It! Phoenix: Idea Factory Press, 2011. Pages 1-264.

[14] "Bank Regulation: Buffering," The Economist, November 15, 2014. URL: http://www.economist.com/node/21632647/print

[15]Craig R. Smith and Lowell Ponte, Don't Bank On It!, p. 187.

[16]"Armageddon Delayed," The Economist, October 11, 2014. URL: http://www.economist.com/news/finance-and-economics/21623739-throwing-sand-gears-financial-doomsday-machine-armageddon-delayed

[17]"Another Big Bank Handshake," Wall Street Journal, November 9, 2014. URL: http://online.wsj.com/articles/another-big-bank-handshake-1415577485

[18]Ibid. See also Gregory Mott, "Banks Back Swap Contracts That Could Help Unwind Too-Big-To-Fail," Bloomberg, October 11, 2014. URL: http://www.bloomberg.com/news/2014-10-12/banks-back-swap-contracts-that-could-help-unwind-too-big-to-fail.html; Peter Eavis, "Expected Change in Derivatives Aims to Curb Damage From Bank Failure," New York Times, October 8, 2014. URL: http://dealbook.nytimes.com/2014/10/08/expected-change-in-derivatives-aims-to-curb-damage-from-bank-failure/?_r=0; Eleanor Bloxham, "How We Can Prevent Another Financial Derivatives Disaster,: Fortune, October 20, 2014. URL: http://fortune.com/2014/10/20/derivatives-big-banks-living-wills/; Philip Stafford and Tracy Alloway, "Banks Agree to Derivatives Rules to Cope with Future Crisis," Financial Times, October 11, 2014. URL: http://www.ft.com/intl/cms/s/0/923fbbe6-509b-11e4-b73e-00144feab7de.html#axzz3KxnhIuq2

[19]Robert Lenzner, "A Christmas Present For the Banks From the Omnibus Bill, Forbes Magazine, December 13, 2014. URL: http://www.forbes.com/sites/robertlenzner/2014/12/13/wall-street-reverses-ban-on-trading-derivatives-backed-by-uncle-sam/

[20]Ellen Brown, "Winner Takes All: The Super-priority Status of Derivatives," Huffington Post, April 11, 2013. URL: http://www.huffingtonpost.com/ellen-brown/winner-takes-all-the-supe_b_3054522.html; see also Adequacy of Loss-Absorbing Capacity of Global Systemically Important Banks in Resolution: Consultative Document (Monograph). Basel, Switzerland: Financial Stability Board / Bank of International Settlements, November 10, 2014.

BOOK REVIEW: Don't Bank on It!
By Dr. ILEANA JOHNSON PAUGH

"There is something strange about fighting debt by incentivizing more debt."
-Jaime Caruana, head of Bank of International Settlements, "the central bank of central banks"

Craig R. Smith and Lowell Ponte's book, Don't Bank on It!: The Unsafe World of 21st Century Banking, should be a required primer for high school and college students who often graduate economically illiterate unless they major in Economics. The average American's economic literacy would be tremendously augmented by reading this book, written for the average person who is not an investor or a banker.

Smith, the Founder and Chairman of Swiss America Trading Corporation, and Lowell Ponte, a former think tank futurist, offer sound advice and options for a future that "you could bank on" as well as a lengthy list of risks to Americans' bank accounts.

The detailed and fascinating history of money and banking, the value of the dollar, its depreciation, and the attractiveness of gold as an alternative to illusory electronic investment that can be hacked overnight and disappear, are laid out carefully and logically.

Touting a cashless society that would eventually deal in electronic entries only, is not so far-fetched. It is a reality that "97 percent of transactions in Stockholm now happen via credit cards, smart phones, checks, and other means of transferring disembodied money that exists almost entirely as flickering digital signals inside computer circuits." Entire towns in Sweden accept no cash. The risks of hacking from a world away can never be underestimated, potentially "breaking the banks." (p. 24)

Financial warfare originating from unfriendly nations makes "too big to fail" banks "much too big to fail" by falling prey to full-time hackers. (p. 27)

The firewalls and the gate keepers entrusted with our money may allow the theft of billions of dollars. Cyber financial warfare such as the Stuxnet computer worm can make anybody vulnerable. (p. 32)

Smith and Ponte explain how the Pentagon was "war gaming" the possibility of a social breakdown caused by a potential economic collapse. Computer-generated trading in nanoseconds can certainly cause "flash crashes." And "high-frequency trader interaction with computerized algorithms of large-cap financial institutions is providing opportunities for high-speed, virtually undetectable market manipulation." (pp. 36-39)

Russia, China, and Saudi Arabia could affect a "flash crash" on Wall Street or an attack on the vulnerable power grid and water supply in order to replace the dollar with a "new gold-backed Russian Ruble and Chinese Yuan/Renminbi during the next U.S. or global panic." (p. 45)

Smith and Ponte explain that the inflationary history of money and of governments with their "fiat currency" should teach us that money is not a good store of value. Fixing prices, debasing the money, and price controls are also good arguments in favor of gold as store of value.

Because the "magical" fractional reserve banking that the Fed engages in is a Ponzi scheme and should not create a sense of security of our money stored in any bank, Smith and Ponte call it the "Fractured Reserve Banking." Your bank is a "de facto owner of an unsecured loan or asset you have given it." (p. 61-65)

Printing money ad nauseam is not something new. Smith and Ponte state that, from the original 13 colonies with 2.4 million people and only $12 million Spanish dollars in circulation, in five years there were $225 million in circulation, the creation of the "federal trough." (p. 66)

Smith and Ponte opine that the centralization of banking in America started in December 1914 when 95 percent of the 27,349 banks in existence did not have branches. The dawn of the Fed in 1913, "a new cartel of 12 private central banks," marked the beginning of politicizing banks. (p. 80-84)

The argument presented at the time that creating the Federal Reserve took politics out of the money supply decisions was preposterous. Minnesota Republican Congressman Charles A. Lindbergh recognized the Federal Reserve Act as the "most gigantic trust on Earth." Using other people's money, "They [Fed] know in advance when to create panic to their advantage. They also know when to stop panic." (pp. 85-86)

In addition to the Federal Reserve Act of 1913 "imposed by the new Progressive President Woodrow Wilson," the 16th Amendment created the Progressive income tax, taking more from the rich, a recommendation made by Karl Marx in 1848 in his Communist Manifesto as one of the ten ways to destroy capitalism. (p. 88)

Smith describes how President Woodrow Wilson "took the dollar off the classic gold standard by making it more difficult to convert dollars into gold." FDR issued an Executive Order that confiscated Americans' bullion gold coins, forcing them to exchange any non-numismatic coins at the rate of $20 per troy ounce. (pp. 94-95)

The 1944 Bretton Woods treaty, pegging the dollar at $35 per troy ounce, gave rise to the World Bank (run by an American) and to the International Monetary Fund (run by a European). (p. 98)

Beardsley Ruml, the Chairman of the Federal Reserve Bank of New York in 1945, listed federal taxation "as an instrument of fiscal policy to help stabilize the purchasing power of the dollar." He devised income tax withholding from paychecks which enabled the out-of-control federal spending and thus the weakening of the purchasing power of the dollar through inflation brought on by excessive money printing no longer backed by gold. Before Ruml's withholding, only seven percent of Americans paid income tax. (p. 99)

Craig Smith expounds on the Progressives' giveaway of trillions of dollars since the 1970s and how "this political extortion of the banks led to the 2008-near collapse of our economy" and to the current economic situation. (p. 103)

What Smith aptly calls the "Great Unraveling" has cost more than five million people their homes, $5 trillion loss to homeowners when home prices fell by 30 percent, and a forfeiture of $50 trillion in investor equity.

President Carter gave us in 1977 the Community Reinvestment Act which eventually led to forcing banks to give ARM loans to non-credit worthy home buyers in previously red-lined areas, and to the bursting of the mortgage bubble in 2008, all in the name of imposed equality. It was not fair for the rich to be the sole fortunate "winners of life's lottery." (p. 110)

The two monster banks, Fannie Mae and Freddie Mac, pooled, securitized, and sold mortgages to the tune of $5.4 trillion in 2008 when they were bailed out, said Smith, $1,4 trillion sub-prime. (p. 111)

According to Smith and Ponte, Fannie and Freddie became profitable in 2012, made enough money to pay the required 10 percent to the government, and had money left to pay private investors. However, the Treasury changed the terms such that the 10 percent dividend due to the U.S. Treasury became 100 percent, an act of expropriation not unlike the deal with the Chrysler bankruptcy. (p. 115)

Forcing banks to lend to sub-prime customers restarted in 2013 with the Progressive social engineering of the Obama administration "Affirmatively Furthering Fair Housing" HUD rule. According to Craig Smith, mapping all U.S. neighborhoods by race and publishing "˜geospatial data,' HUD will find out segregated areas and will force them to change zoning laws to include subsidized housing for low-income and minorities in "˜white suburbs.' The minorities will include illegal aliens. (p. 131)

Americans will be unable to escape the tax man no matter in what corner of the world they might move to - the arm of the IRS will reach them thanks to a new arm-twisting law, FATCA, the Foreign Account Tax Compliance Act, which forces foreign banks to report any Americans with accounts over $50,000. Incredibly, 77,000 banks and financial groups abroad have registered to comply.

And if anyone should harbor the erroneous thought that their money is safe in banks, all they have to do is read what happened to the citizens of Cyprus and their bank accounts, when the EU technocrats decided to help themselves to other people's money who worked hard and saved wisely.

"The bigger a Progressive welfare state becomes, the more of other people's money it needs to devour. Our politicians have targeted banks, and our accounts in those banks, as pools of wealth they intend to plunder," explained Craig R. Smith. (p. 153)

Of the 101 million Americans who work full-time, 86 million are employed in the private sector. These Americans own retirement accounts, 401(k(s, IRAs, and other pension funds for a total of $20 trillion. Politicians are trying to figure out how they can tap into this goldmine. Smith describes how a Progressive-proposed "Guaranteed Retirement Account" power grab might seize your savings. The federal government has already "borrowed" $5 trillion from various government programs that were supposed to be safe lock-boxes. And $5 trillion of unfunded Social Security liability accrues each year. (pp. 166-169)

Smith and Ponte conclude that it is not out of the realm of possibility that banks and the dollar may cease to exist in the future. Banks are already nationalized via confiscation of property by regulation. Near zero interest rates punish the savers, the retired, and investors in general. The crypto-currency called bitcoin, an attempt to replace the dollar is not "legal tender." Smith says that it can cause deflation, "an increase in value over time as owners hoard it." (p. 194)

Will we become a cashless society as the government eliminates the middlemen and becomes America's bank?

THE GOLDEN NUMERAIRE
The Only Economic Solution To Mispriced Money & Markets
By DAVID BRADSHAW

Today's world is defined and driven by numbers.

But what if the numbers we're using are all wrong? What if everything, including money itself, is mispriced? What if only one numeraire matters in the end?

In 2014, author and Swiss America Chairman Craig Smith taught about us the importance of the word "numeraire" - which is an economic term that represents an ultimate unit of account and serves as a universal plumb line for all financial transactions.

In French, numeraire means money, coinage or face value. A numeraire is usually applied to a single good, which becomes the base good. All similar goods are then valued and priced against the base good. This comparison makes it possible to identify which goods are worth more than others.

The U.S. dollar is still falsely presumed to be the world's numeraire, based on the mid-20th century Bretton Woods Agreement which defined a U.S. dollar as 1/35th of an ounce of gold. Linking the dollar with gold once provided a gold standard for all other currencies because the dollar was fixed to a defined weight of gold.

But today, with the U.S. dollar currently valued at 1/1200th of an ounce of gold, we have strong evidence the dollar is no longer a numeraire for anything! Yet somehow, the global financial markets appear to function and expand despite the widespread "mispricing of money" as economist Chris Martinson calls it, which he says creates a "mispricing of everything."

So if virtually every financial asset (stocks, bonds, T-bills, real estate, currencies, etc.) in the world is currently mispriced and misvalued in terms of U.S. dollars, what possible chance does an individual have to protect themselves against a worldwide currency and asset crisis?

Not much, unless they discover the timeless truth about money.

The solution - so simple it escapes most people and virtually every politician - is to Reboot! Convert some of your assets back into the original numeraire - GOLD! In recent years this solution is catching on and helps explain why central banks worldwide are suddenly stocking up on physical gold at the fastest rate in decades.

You may be asking, in today's upside-down financial world, isn't it possible then for gold to also be mispriced? Can speculators ruin even the purest form of money which has served the world as the ultimate plumb line of value since day one?

In the short-term, yes, all things are possible. In fact, some experts firmly believe the gold price is currently very undervalued and provides concerned citizens with a golden buying opportunity - especially for those who have not yet converted any assets into gold. But over the longer-term (5, 10, 25 or 40 years) gold prices are unimportant.

You could argue the price of gold never really changes at all in the exchange for goods and services, due to gold's unique 'store of value' qualities. But gold prices will always fluctuate in comparison to mispriced, fiat currencies; like the U.S. dollar.

As difficult as it may be, I'm asking you to forget almost everything you've been told about gold by a vast multitude of so-called experts. For example, every day the press refers to physical gold as being either a commodity or an investment, right?

But they are wrong! Gold is neither a commodity nor an investment - it is the world's one and only trustworthy numeraire. If Gold were a commodity it's price would have fallen in half, like oil prices did in 2014. If gold were an investment, it's price would not have remained stable during the 2014 stock market and dollar rally.

Because Gold is the world's true numeraire, it explains why the Gold Standard provided a stable foundation of growth and prosperity in America for over 170 years (1792-1964). In fact, the buying power of Gold gradually increased over time, in stark contrast to the declining value of the dollar reflected in the rising cost of living.

Today virtually every currency, stock, bond and bank deposit is at risk of being mispriced. The daily headlines are screaming of the potential risks of new market bubbles created by the Federal Reserve's rampant artificial money creation over the last five years; as documented in The Inflation Deception, The Great Debasement, The Great Withdrawal and Don't Bank On It! books.

But not so for the ultimate Numeraire - physical money consisting of gold coinage will always be respected and accepted worldwide, because it is a pure, debt-free asset that can be held safely in your own hand. With gold in hand you're positioned to preserve your wealth for a lifetime as well as for the next generation.

Such is the secure and peaceful life behind the financial shield of a personal gold standard - no matter what "the numbers" may say, no matter how much mispricing is allowed by progressive politicians living under the delusion they can create money from thin air forever.

One day the rug may be pulled out from under the value of every single paper currency and investment on earth, but throughout all of history, physical gold coins have faithfully served as wealth insurance against runaway price inflation ... or worse!

When will this day of reckoning come? It could be tomorrow, in a month or even a year from now, but as Swiss America spokesman Pat Boone says, "Be prepared! It's better to be a month early, than one second too late!" In today's crooked world everyone needs a golden plumb line in order to build a portfolio that will stand the test of time.

GO FOR GOLD IN 2015!
Jim Cramer, CNBC

Jim Cramer is teaching investors a new way to diversify their portfolio. The old school method of picking stocks in each sector will no longer protect your portfolio.

Gold brings a special element into a portfolio, one that makes it different from all other metals.

"I consider gold as an insurance policy," says Cramer.

Cramer recommends gold because it tends to go up when everything else is going down. It is the investors' insurance against geopolitical events, uncertainty and inflation.

Just as you wouldn't own a home or car without insurance, you shouldn't have a portfolio without gold.

Do you get upset when your insurance doesn't go up in value? No. So, don't ridicule gold.

Owning gold is not about upside potential. It is about minimizing risk to the downside.

As for mining stocks, remember what makes gold so valuable: its scarcity and the difficulty of getting the metal out of the ground cheaply. Cramer noted that almost every single time he has gotten behind a gold stock, he's gotten burned. There are just too many issues with them and the stocks get hammered.

The U.S. Dollar
Healthiest Horse in the Glue Factory
By CHRIS HOLTON

A strong dollar over the long-term is a sucker's bet, but the hedge fund industry - which has badly underperformed benchmarks for some time now has pushed net bullish-dollar positions to a record $48 billion.

This might be the bubble of all bubbles.

What have we seen to justify such an optimistic view of the dollar? Is the US economy hitting on all cylinders? Hardly.

The reality is the US national debt is still soaring toward $18 trillion and the federal government continues to rack up huge budget deficits every fiscal year. Nothing has changed.

Nonetheless, the lemmings are pushing the dollar as the latest flavor of the month.

Perhaps if the US economy was soaring, there might be some justification for all of the sudden adoration for the dollar, but that's not what we're seeing.

It has been said that the US dollar is merely the "healthiest horse in the glue factory." Gold remains the only form of real money over the long-term.

The Swiss Referendum

Swiss voters went to the polls on November 30, 2014 to vote on several issues, including whether to compel their central bank to add substantially to its gold holdings.

This issue was always overblown by gold market observers. The amount of gold in question would not have significantly altered the physical gold market. Moreover, the issue was less about gold and more about who gets to be in charge of such decisions in Switzerland. Politicians and bureaucrats are customarily loath to relinquish control and power and as such launched a huge campaign to influence the election outcome among the voting public.

The referendum's failure was not a surprise. Polls showed this was a foregone conclusion.

The important thing to remember is, no matter what anyone else says, the issue at hand was not gold but political and bureaucratic power and authority. The election outcome changes nothing for gold--not the current market conditions, nor gold's role in the global economy and financial markets.

A TERRIFYING YEAR - YET THERE'S HOPE
By BEN STEIN, The American Spectator

2014 was a terrifying year. Unspeakable brutality by Islamist terrorists in the Middle East and in Africa. A level of barbarity towards the innocent that would have made Eichmann envious. A world that in large measure kowtows to the most violent and bloodthirsty and turns on the most innocent and law-abiding (think Hamas vs. Israel).

In 2014, the President and the Attorney-General, both men of color, sought to awaken the demons of racism for votes. That was not "just politics." That was something like sedition from on high. People are fragile on the subject of race. To have the most exalted in the land stir up fear and anger about race over highly dubious claims of racism was in fact wildly dangerous racism in and of itself.

To see the "black power" flags run up on Pennsylvania Avenue by the mightiest of the mighty was a distressing spectacle. It got the GOP overwhelming control of Congress. I am sure it will get the GOP the White House if it continues, for even Hillary is not inevitable if the Democrat party makes itself the party of anti-white racist feeling.

Is America racist? Well, Americans are people. People dislike other people pushing them around. Black people do not like being pushed around and white people do not like being pushed around. That is not racism. That is basic humanity. Nations get into trouble when one sector pushes another sector around for grievances that were once horribly real, but no longer are.

In other words, until Mr. Obama came along to capitalize on racial feelings, poll data showed Americans feeling pretty good about race relations. Now, Americans are fearful and anxious about race. This is a colossal step backwards. This is what happens when the President is beholden to extremists and agitators and must dance to the tune they call about race-baiting.

In other words, when the President of the United States listens to Al Sharpton and takes him seriously, we are in a lot of trouble. We are a glorious, God-centered nation. We can rise above racial antagonisms. We have done it in the past. We can do it in the future, if, if, if politicians can step back from mortgaging America's future to win votes. A big "if"...

But I also have seen great things this year. My job is, in large part, to speak at events, often business-related events. And here I see magnificent things happening. I see auto dealers who have completely changed the way selling and financing and servicing of cars works. A business notorious for sharp practice is now a business people trust and love. It is fun to buy a car.

I have seen the tenacious oil people, who fought like warriors to drill-and now they have brought cheap gasoline to America-at huge cost to themselves. When you fill your tank for roughly two-thirds of what it would have cost a year ago, it's no thanks to the government. No thanks to Hollywood. It is thanks to those oilmen whom the government loves to criticize and lambaste.

But the most surprising and impressive people I saw were the finance people. Cursed and double-cursed by the media, they have wrought miracles. In health care especially, they have financed breakthroughs in diagnosis and cures for disease, in management of pain, in making the lives of us humans longer, more pleasant, and pain-free.

Yes, they do it for money. That's fine. That is a perfectly good motive. But they do it, and the meds get in the pipeline and heart disease and tumors get diagnosed early. This is what finance should be.

I have seen America working together for a better life for the whole world, the intelligence and money coming out of finance and into the hearts and bloodstreams of Earth's people. It is an inspiring sight. Capitalism is working beautifully. If we can keep the wolves of envy away from the door, man's world will be sunnier.

Five Biggest Risks for Global Economy in 2015 - MoneyNews

Ace economist Nouriel Roubini of New York University has put together a list of the top five risks for the global economy this year.

1. Eurozone crash "With a very real risk of deflation looming, the eurozone might become a destabilizing force in the global economy."

2. Another bout of weakness in Japan "Abenomics may be backfiring, squeezing consumers, increasing economic hardship, and causing Japanese corporations to give up on their domestic market."

3. An economic slowdown in China "China's financial system is exhibiting signs of significant stress. If its economic growth slows too much, it will severely affect commodities and trade-driven economies, like the U.S."

4. Geopolitical risks abound That includes Russia and the Mideast.

5. The dollar's rise "The recent strengthening in the dollar is viewed as a positive by most Americans, but the dollar's upside could be limited by the crushing effect it has on emerging markets." (The dollar hit a seven-year high against the yen and a two-year high against the euro in 2014.)

Meanwhile, the ruble's plunge - it dropped 44 percent against the dollar in 2014 - endangers the global financial system.

"The threat of a race-to-the-bottom, beggar-thy-neighbor currency war is very real."

2015: THE YEAR OF DOLLAR DANGER FOR THE WORLD
By Ambrose Evans-Pritchard
International Business Editor, London Telegraph

America's closed economy can handle a surging dollar and a fresh cycle of rising interest rates. Large parts of the world cannot. That in a nutshell is the story of 2015.

Tightening by the US Federal Reserve will have turbo-charged effects on a global financial system addicted to zero rates and dollar liquidity.

The Yellen Fed will be forced to back down in the end, just as the Bernanke Fed had to retreat after planning a return to normal policy at the end of QE1 and QE2.

For now the Fed is on the warpath, digesting figures showing US capacity use soaring to 80.1pc, and growth running at an 11-year high of 5pc in the third quarter.

At best we are entering a new financial order where there is no longer an automatic "Fed Put" or a "Politburo Put" to act as a safety net for asset markets. That may be healthy in many ways, but it may also be a painful discovery for some.

The eurozone will be in deflation by February, forlornly trying to ignite its damp wood by rubbing stones. Real interest rates will ratchet higher. The debt load will continue to rise at a faster pace than nominal GDP across Club Med. The region will sink deeper into a compound interest trap.

Expect a shake-out of 20% comparable to the LTCM crisis in 1998 when the wheels came off in Russia and East Asia, though don't be shocked by worse. Emerging markets are a much bigger part of the world economy today, and their combined debt ratio is a record 175% of GDP.

Swiss America
IN THE COMMUNITY
In serving, we lead.

Throughout the year Swiss America's helping hands can be felt in our local community - fulfilling the visionary leadership of Swiss America's founder and chairman, Craig R. Smith.

Over the last three decades Craig has taught the Swiss America family the importance of earning money for our families and saving it for the future but more importantly, giving as much as we each possibly can through charities and community service.

Mr. Smith defines true wealth as a lifestyle of giving, offering far more fulfillment and lasting value than material things. Since the firm first opened over 30 years ago, Swiss America has done just that.

Swiss America's charitable and community service includes:

* Supporting the families of our fallen first responders
* Making meals for the families of those fighting terminal illnesses
* Helping wipe out homelessness for Phoenix veterans
* Rebuilding shattered hopes, dreams and broken lives through the Phoenix Dream Center
* Raising money to help feed the hungry among us
* Inspiring baby boomers to discover their true calling in the second half of life

Visit SwissAmerica.com/service for more information about our community service partners and the latest updates on what is happening in our community.

1. Over 300 years combined experience in U.S gold & silver coins.

2. Serviced over 700,000 inquires in 30 years of business.

3. Serviced over 50,000 clients in 30 years of business.

4. No unresolved complaints with any agency.

5. U. S. Coin Industry Affiliations:
* American Numismatic Association (ANA) - Life Members
* Industry Council for Tangible Assets (ICTA) - Member
* Numismatic Guaranty Corp (NGC) - Dealer
* Professional Coin Grading Services (PCGS) - Dealer
* Canadian Numismatic Assoc. (CNA)
* National Silver Dollar Roundtable (NSDR)
* World Proof Numismatic Assoc. (WPNA)
* Certified Acceptance Corporation (CAC)
* Numismatic Consumer Alliance (NCA) - Sponsor
* Coinplex Authorized Dealer

About Craig R. Smith
Craig R. Smith is Chairman of Swiss America Trading Corporation, an investment firm specializing in United States gold and silver coins. Smith founded the company in 1982 out of a bedroom in his home with $50.00. It has since grown into one of the largest and most respected firms in the industry. He is an author as well as a frequent radio and television guest because he instantly engages audiences with his common-sense analysis of economic trends. He also publishes the Real Money Perspectives newsletter.