“If gold is ‘past its day’, what of toxic derivatives and today’s deluge of US Treasury bonds…?” Just like poor Pip Dickens’ Great Expectations, central banks keep inheriting unwelcome bequests.

Today’s “legacy assets” are toxic derivatives; a decade ago it was gold reserves. Both are proving hard to shrug off, but for very different reasons. Both legacies also come thanks to previous central-bank history; the fossils remain only too livid today.

And 10 years from now, if not sooner, just how welcome will the current central bank must-have become – freshly printed government debt, bought with money that doesn’t exist until the central bank wills it?

Seeking first to defend against inflation and war, the West’s central banks built up huge reserves of the ultimate hard money –gold bullion– during the early-to-mid 20th century. Long before the turn of the millennium, however, these hoards grew to look quaint and expensive. Unyielding and relatively

Starting with the re-opening of formal trade arrangements in 1971, China has undergone a near unprecedented level of economic transformations. The country’s per-capita income doubled from 1978 to 1987 and again from 1987 to 1996.

In those 20 years, more than 300 million Chinese ascended out of poverty with accompanying dramatic changes in lifestyle, professions, and diet: between 1985 and 2008, average Chinese meat consumption more than doubled from 44 pounds to 110 per annum.

However, most Americans (including the Government) have been blind to this economic reality, choosing to focus instead on China’s social qualities. Indeed, it was not until the Chinese Dragon was literally breathing down Uncle Sam’s neck ¾ China overtook the US as the world’s largest consumer of coal, meat, grains, and steel in 2004¾ that the latter became aware of the former’s economic developments in any real fashion.

Which brings us to today, where the US is trapped …

GDP report is just plain wrong Chris Martenson’s Blog

The great reflation experiment The Big Picture

Who gets a piece of the pie? The Daily Reckoning

How you finance Goldman bonuses Zero Hedge

Who is Capco? NYT

UBS and US reach tax agreement Swiss Info

Why minimum wage means maximum slavery Whiskey and Gunpowder

After an $182 billion taxpayer rescue, is AIG on the verge of collapse? Daily Finance

Why isn’t anyone talking about these incredible investments? DailyWealth

America’s military empire is bleeding country dry The Daily Crux

So where are we now in the 19th month of the recession/depression? Perhaps not where we expected we’d be. The Dow finished its best gain for July since 1989. The index was up 8.6%. The S&P 500 also had a good month. It finished up 7.4%. 

Boosting stocks, of course, was “better-than-expected” news about US GDP. This was typical second derivative stuff: the pace of decline slowed, but the figures were still heading in the wrong direction. According to the Commerce Department, US GDP shrank “only” 1% year-on-year in the second quarter, 0.5% less than forecast. And this was taken as reason for optimism!

The problem is the Commerce Department also revised down its reading of first quarter GDP to 6.4% from 5.5%. It will revise down the last quarter’s numbers, too. As underground economic number cruncher John Williams of ShadowStats.com points out:

The second-quarter GDP “improvement” was only in terms of relative

Alex’s Notes: Our friend Chris Martenson is becoming one of the most well known names in the financial news, analysis, and education spaces.

He has created an amazing short video series called “The Crash Course” that condenses essentially what took me over 3500 hours of study to piece together, only he does it in less than 4 hours.

My personal opinion? Its the best education on what is currently and about to happen in the economy available right now, bar none.

Chris recently posted an interesting article on his blog regarding the Baby Boomer generation and how it has effected the economy. Great read:

Baby boomers’ financial illusion

Saturday, January 17, 2009, 6:15 pm, by cmartenson

In Crash Course Chapter 14 - Assets and Demographics I make these statements:

The boomers are the wealthiest generation ever, they hold nearly all

Alex’s Notes: I have read quite a few articles today commenting on the new $700 Billion (revolving) bail out package.

The best explanation/article goes to Chris Martenson

By Chris Martenson

www.chrismartenson.com

Now that the details are out, we can safely state that the US political and financial leadership has completely sold out the taxpayers and has done so in a manner that is startling, both in its recklessness and its brazenness.

The reckless part I will spell out in the details below.

The brazen part is in how this is being spun out, as if the entire plan were hatched in a hurried rush, at the last minute, after events forced the issue.  This is the spin, but it is completely false.

Because many financial commentators, ranging from Roubini to Roach to Calculated Risk to myself, foresaw