Citigroup: Gold Over $2,000, Massive Inflation, Depression, and Civil Disorder

An internal client note from Citigroup lays out what the company predicts for the world’s economic future: the price of gold above two thousand, massive inflation, world-wide depression and wars.

This stunning news came from an article in the U.K.’s Guardian.

According to the Daily Mail, Citicorp’s client note contained a “worse” case scenario, blaming the upcoming fiasco on “financial excess of the last quarter century”. Citigroup believes “steps” taken by the world’s authorities is a gamble that will end in either two ways: a “resurgence of inflation” or a “downward spiral into depression” which will lead to “civil disorder” and possibly “wars”.

Gold is now trading at $812 an ounce, down from its high of $1,030 in February. Citigroup predicts the price of gold will hit $2,000 by next year. Gold has also tripled in value in the past 7 years, far better than Wall Street.

Britain sold off half its gold reserve between 1999 and 2002, when gold was at the “bottom of the market” while China may boost its gold reserve from 600 tonnes to 4,000 in order to diversify from its paper currencies.

While an internal note from Citigroup claims the price of gold will substantially rise, Donald Selkin, the chief market strategist at National Securities Corp. in New York, says gold has “run out of gas” and that gold is “too closely correlated with the dollar today”.

Ron Goodis, a retail trading director at Equidex Brokerage Group Inc., claims “inflation will continue to make gold bullish”.

Are we are the verge of a “great” depression similar to the Great Depression that crippled our country beginning in 1929 and lasted through the 1930′s?

Congressman Ron Paul has been a voice in the Congressional wilderness, warning the current trillion dollar bailout won’t even begin to work. Paul spoke to Congress on October 3 and warned that “that our government is insolvent, that we’re on the verge of bankruptcy”.

We want to do this, it is said, to prevent the recession or depression, because that is “unbearable”. But the truth is, you should have thought of that about 10 or 15 years ago, because the financial bubble created by the excess of credit and the lowering of the interest rates is the cause of the recession.

The recession is a demand. It’s a must. You can’t avoid it. Yes, it’s been papered over several times over these last several decades, but that just made the bubble bigger. But the message now is you can’t paper it over any longer, so the recession and/or the depression will come.

Paul argued that there is “too much regulation and lack of regulation of the Federal Reserve system and the Exchange and Stabilization Fund” and that the government, in not allowing the markets to adjust, debts to be liquidated, you’re going to guarantee a depression”.

The Great Depression, with a staggering 1/4 of workers out of job, followed an era known as the “Roaring 1920′s”.

Historian Frederick Lewis Allen, in his book, Only Yesterday, published in 1931, “depicted the 1920s as a cynical, hedonistic interlude between the Great War and the Great Depression–a decade of dissipation, jazz bands, raccoon coats, and bathtub gin. Allen argued that World War I shattered Americans’ faith in reform and moral crusades, leading the younger generation to rebel against traditional taboos while their elders engaged in an orgy of consumption and speculation.”

The Roaring Twenties had other labels: the Jazz Age, the Age of Wonderful Nonsense, and the Age of Intolerance.

Prohibition

The Roaring Twenties, and Prohibition, spawned underground” speakeasies and “bathtub” gin after the sale of alcohol was banned by the 18th Amendment in 1919. What started out as an endeavor to “clean up” crime and corruption, ended in a surge in organized crime and corrupt officials. Prisons became overcrowded and the courts, clogged with “alcohol” related offenders. “Limited amounts of wine and hard cider” were allowed in homes while “Malt and hop stores popped up across the country and some former breweries turned to selling malt extract syrup, ostensibly for baking and “beverage” purposes”. A shot of whiskey meant a trip to the Doctor, as whiskey was only allowed by prescription, while wine was sold only for “religious” purposes.

It was also the Jazz Age, where women became “flappers” who raised their hemlines, wore makeup and smoked in public, and cut their hair short into styles such as the “bob”. Women were also finally allowed to vote due to the 19th Amendment which was ratified in 1920. Women purportedly earned this right after filling in and working men’s jobs in the factories while the military was off fighting WWI. The KKK joined the fray after Hiram Evans, the Imperial Wizard of the Knights of the Klu Klux Klan and the Imperial Kloncilium, established the Women of the Klu Klux Klan.

The Twenties was also an age of America’s first “consumerism”.

Whereas only sixteen percent of American households were electrified in 1912, by the mid-20s almost two-thirds had electricity. This meant that the average family could replace hours of manual toil and primitive housekeeping with the satisfying hum of the electric vacuum cleaner, the electric refrigerator and freezer, and the automatic washing machine, all of which came into wide use during the 20s. By the end of the 1920s over 12 million American households acquired radio sets. All the while, the number of telephone lines almost doubled, from to 10.5 million in 1915 to 20 million by 1930.
–Joshua Zeitz, F. Scott Fitzgerald and the Age of Excess

According to Joshua Zeitz, the 20′s crowd became obsessed with the “cult of celebrity”, with mass media focusing more on sports figures, such as Babe Ruth, and entertainment, rather than political and business leaders. It was also the nucleus of the “It” Girl, actress Clara Bow.

Bow defined the “liberated” woman of the 20′s. She was sexy and incredibly popular, and the like the current “It” girls of today, she suffered from internal “demons” while Hollywood culture that condemned her as “immoral”. In 1927 she starred in the movie, “It”, and after the film’s release, Bow became the “It Girl”, and a standard feature in the tabloids. Bow, whose films were successful, was considered “taboo” by her Hollywood “peers” and her “presence at social functions” was “taboo”. In 1931, Bow wound up in a sanatorium suffering from “shattered nerves”. In 1944, Bow attempted suicide, and was later diagnosed as suffering from schizophrenia.

Prior to the Great Depression, during the Roaring Twenties, America had its first taste of mass consumerism and excess. It was also America’s first “sexual revolution”.

The Twenties was a time of “profound social changes” and “deep cutural conflict” with battles being raged over “Immigration, race, alcohol, evolution, gender politics, and sexual morality”.

Fast forward to 2008, and the cultural wars being waged today: immigration, race, illegal drugs, evolution, religion, gender politics, and sexual morality. In the 1920′s, ” Wets battled drys, religious modernists battled religious fundamentalists, and urban ethnics battled the Ku Klux Klan”.

In the 1920′s, crime and corruption centered around alcohol, today it’s illegal drugs. Religious modernists still battle religious fundamentalists, while extremists gather to wage terrorism. There’s a long list of organizations which “fight” such offenders as Global Warming, the unethical treatment of animals, world hunger, and environmental pollution, while others attempt to “save” the ocean, the Amazon, and animals from extinction, to name a few.

The old adage, history repeats itself, comes to mind. Could our own “age of excess” and cultural wars be a harbinger of what is yet to come: the next “Great Depression”?

Ron Paul warned Congress that “the recession is a demand. It’s a must. You can’t avoid it. Yes, it’s been papered over several times over these last several decades, but that just made the bubble bigger. But the message now is you can’t paper it over any longer, so the recession and/or the depression will come”.

Yet, perhaps, a recession, or depression, is a natural progression, of excess, followed a period of adjustment or “atonement” for our economical “sins”.

The internal note from Citigroup forecast a dire warning of recession, and/or a depression, with worldwide upheavals, turmoil, and wars if the current “gamble” to save the economy doesn’t “pay off”. Yet times of trouble tend to “bring out the best” and another old adage about American’s “rolling up their sleeves”. If we’re faced with throwing away our credit cards, conserving energy, and learning how to budget, then perhaps, we’ll start requiring our own politicians to do the same.

America has always been the one country in the world that other countries have looked to “save” them in times of trouble. As in the time of the Great Depression, it was up to us to “save ourselves”. This may be the “next” such time.

By LBG

Source – Digital History
Source – Ron Paul addresses Congress
Source - Bloomberg – Gold Futures Fall, Ending Rally, as Dollar Gains; Silver Drops
Source – Flapper Culture
Source – Clara Bow
Image – Great Depression
Image – Clara Bow

Tags: Citigroup, Clara Bow, depression, Great Depression, recession, Ron Paul, The Economy, war