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QE 4: Folks, This Ain't Normal

What you need to know about the Fed's latest move
Friday, December 14, 2012, 1:22 PM

Okay, the Fed's recent decision to boost its monetary stimulus (a.k.a. "money printing," "quantitative easing," or simply "QE") by another $45 billion a month to a combined $85 billion per month demonstrates an almost complete departure from what a normal person might consider sensible.

To borrow a phrase from Joel Salatin: Folks, this ain't normal.  To this I will add ...and it will end badly.

If you had stopped me on the street a few years ago and asked me what I thought would have happened in the stock, bond, foreign currency, and commodity markets on the day the Fed announced an $85 billion per month thin-air money printing program directed at government bonds, I never would have predicted what has actually come to pass.

I would have predicted soaring stock prices on the expectation that all this money would have to end up in the stock market eventually.  I would have predicted the dollar to fall because who in their right mind would want to hold the currency of a country that is borrowing 46 cents (!) out of every dollar that it is spending while its central bank monetizes 100% of that craziness?  

Further, I would have expected additional strength in the government bond market, because $85 billion pretty much covers all of the expected new issuance going forward, plus many entities still need to buy U.S. bonds for a variety of fiduciary reasons.  With little product for sale and lots of bids by various players, one of which – the Fed – has a magic printing press and is not just price insensitive but actually seeking to drive prices higher (and yields lower), that's a recipe for rising prices.

Then I would have called for sharply rising commodity markets because nothing correlates quite so well with thin-air money printing as commodities.

That's what should have happened.  But it's not what we're seeing.

Instead, stocks initially climbed but then closed red.  Gold was mysteriously sold in the thinly-traded overnight markets and again right after the announcement in large, rapid HFT blocks that swamped the bids. U.S. Treasury bonds actually sold off on the news.  The dollar hardly budged. Commodities were mixed across the board but more or less flat on the day, with the exception of the metals, and especially the precious metals, which were sold vigorously.

The markets are now well and truly broken.  Not because they don't conform to my predictions, but because they are no longer sending useful price signals.  Instead, my hypothesis here is that the markets are now just a giant and rigged casino, where a relative handful of big firms and other tightly coupled players are gaming their orders to take advantage of this flood of money.

When your central bank badly misprices money and then bids up everything related to bonds, nothing can be reasonably priced.  Risk is mispriced; the few remaining investors (as distinct from speculators, which are now the majority) are forced to accept both poor yields and higher risk – so we know the price of everything, but the value of nothing.

QE4

So what exactly is this new thin-air money printing program all about?  Well, unlike any prior Quantitative Easing (QE) announcement, this one was tied to a fuzzy and quirky government statistic: the unemployment rate.

QE4 is Just-In-Time Fed Policy to Avoid Calamity

Dec 13, 2012

We got the most thunderous Just-In-Time monetary policy today that is a substitute for the absence of any degree of stimulative fiscal policy.

You might say that QE4 is now going to act as both monetary and fiscal stimulus– another $85 billion worth of Fed accumulations of Treasury bonds and mortgages- that is meant to keep stock prices moving higher and residential home sales climbing briskly.

The goal is to drive economic activity, especially residential home building, so that unemployment drops from 7.7% to 6.5%. The surprise move is meant to signal the Fed’s awareness of the softening economy; it sees the gritty numbers before we do.

Getting unemployment down to 6.5% without inflation rising to a level higher than 2.5% is not expected to happen until 2014 at the earliest. And it could go longer if there is no deal and we go over the cliff.

But, you should know that the only reason unemployment is 7.7% is because hundreds of thousands of males have dropped out of the search for regular work. A very depressing tale.

The key point here is that the Fed is now actively running both monetary and fiscal policy because it will now be in the business of funding nearly 100% of all the new government deficit spending in 2013.  And it is pumping a bit more than $1 trillion of hot, thin-air money into the economy as it does so.

The odd thing here is that by tying their policy to the unemployment rate, we could be in for a very long wait for the stimulus to end.  The reason is that the unemployment rate has a couple of moving pieces, one being the number of people who are unemployed, and the second consisting of people who have given up looking for work, which is tracked in something called the 'participation rate.' 

As more people leave the labor force and the participation rate goes down, the unemployment rate goes down, too.  Somewhat confusingly, as more jobs are created, the unemployment rate goes down, too.  As you can see, these numbers work in opposition to each other because as more jobs become available, more people re-enter the work force.

Before the crisis struck, the participation rate was around 66.5%. But now it sits at just 63.6%, meaning that, at roughly 1.4 million jobs for each percent, a bit more than 4 million jobs would have to be created just to absorb the folks who left the labor force but presumably would like to work again. As those 4 million folks come back to work, the unemployment rate will not budge at all.

It will require two full years of 150,000 jobs per month just to absorb the 4 million missing workers, which means that this QE effort will be with us for a very long time.  Three to four years is my best guess, and that's only if the economy magically recovers.  And I have very strong doubts about that.

This means that the Fed is most likely on track to increase its balance sheet by another $3-4 trillion.  Ugh.  That's 300% to 400% more money created in the next year than was created than during the entire 200 years following the signing of the Declaration of Independence.

The other part of this new QE policy is that they will continue this as long as inflation remains below 2.5%.  Again, this is a very fuzzy government statistic subject compared to the usual massaging and political biases, but it has top billing as the one that is most likely to force an early termination of the thin-air money printing efforts.

However, I remain convinced that the Fed will change any rules and move any goalposts it needs to in order to continue its mad money printing experiment.  Because there really isn't any other alternative at this point.

Secretly in the Open

Once upon a time, it would have been considered in bad taste to suggest that the world was being centrally managed in secret by a small-ish cabal of bankers whose actions served to either prop up the excessive spending habits of the very governments that conferred upon them the power to print money, or to bolster the health and profits of the banks they mainly serve.

That was then. Today you can just read about it in the Wall Street Journal:

Inside the Risky Bets of Central Banks

Dec 12, 2012

BASEL, Switzerland—Every two months, more than a dozen bankers meet here on Sunday evenings to talk and dine on the 18th floor of a cylindrical building looking out on the Rhine.

The dinner discussions on money and economics are more than academic. At the table are the chiefs of the world's biggest central banks, representing countries that annually produce more than $51 trillion of gross domestic product, three-quarters of the world's economic output.

Of late, these secret talks have focused on global economic troubles and the aggressive measures by central banks to manage their national economies. Since 2007, central banks have flooded the world financial system with more than $11 trillion. Faced with weak recoveries and Europe's churning economic problems, the effort has accelerated. The biggest central banks plan to pump billions more into government bonds, mortgages and business loans.

Their monetary strategy isn't found in standard textbooks. The central bankers are, in effect, conducting a high-stakes experiment, drawing in part on academic work by some of the men who studied and taught at the Massachusetts Institute of Technology in the 1970s and 1980s.

While many national governments, including the U.S., have failed to agree on fiscal policy—how best to balance tax revenues with spending during slow growth—the central bankers have forged their own path, independent of voters and politicians, bound by frequent conversations and relationships stretching back to university days.

If the central bankers are correct, they will help the world economy avoid prolonged stagnation and a repeat of central banking mistakes in the 1930s. If they are wrong, they could kindle inflation or sow the seeds of another financial crisis.

If it feels like you are part of a very grand, high-stakes experiment, congratulations!  You're exactly right. We are all collectively prisoner to whatever outcomes are in store.

The rather politely ignored truth right now, at least by most news outlets and politicians, is that the world's central banks have wandered very far off the reservation and are running an experiment that really has only two possible outcomes.  One is a return to what we all might call 'normal and stable' economic growth.  The second is the complete collapse of the fiat money and their attendant financial systems and markets.

While it is technically possible to achieve some other middling outcome, that possibility has been receding to ever more remote territory with every passing month and new round of money printing. 

The basic predicament here is that more and more money is being printed while the world economy, predictably for those who follow the net energy story, has been entirely stagnant and constantly threatening to slip back into economic retreat. Of course, more money + the same amount of (or even less) hard assets = the perfect recipe for inflation.

So the rise of inflation will signal the beginning of the end of this slow-motion tragedy.  I use the term 'tragedy' here because it doesn't have to end this way.  We have other options; we could make other choices and use our time and resources to try and do something other than maintain a broken financial system that desperately needs to be changed.

In Part II: It's Better to Be a Year Early Than a Day Late, I explain the facts behind why I am more convinced than ever that this all ends in one of the most disruptive financial and currency events ever seen on this planet.  And while the repercussions will be felt by all, taking prudent action while there is still time can greatly improve our individual odds of weathering them safely.

Click here to read Part II of this report (free executive summary; enrollment required for full access).

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40 Comments

NJINEAR's picture
NJINEAR
Status: Member (Offline)
Joined: Aug 7 2012
Posts: 19
new financial regime

so help me out here.  it seems like bernankes plan could work.  the government now prints the money it needs instead of borrowing it.  so there is no interest payments.  now that they are offering such low interest rates no one in their right mind will want treasuries, so it will be entirely printed.  good-by private financing of government.

but that could be good.  interest rates are irrelevant to the borrowing since there is none.  inflation is determined by the entire quantity of dollar denominated equity--let say 70 trillion for round numbers.  then 85 billion a month is chump change, and would only cause .1% per month inflation, 1.2 % per year.  even adding on the nominal deficit spending of the government, the net infaltion is only 2%.

in the previous scheme, growth casued inflation and this paid the interest on loans.  now in a regime where there is little or no growth, then printing money causes the inflation, and this money now pays the interest.  any money the government doesnt get from taxation it can get from printing.

now 16 trillion is a lot, and a significant fraction of the dollar equity, maybe 25%.  but even if it goes to 100%, this is only 75% inflation, which over 10 years would only be maybe 6%.  so the government is no where near the point where the system is out of control.  in fact, in a no-growth world, this inflation takes the place of growth in funding interst payments.

and those that hold equity are unharmed in the sense that the value of their property goes up with the inflation.  so for example this helps homeowners, whose homes are inflating in value--so this reduces the effective rate they pay in interest in real term, or said another way, increases the value of their property so it is worth paying the interest.

of course the printed money doesnt go out in a fair way, and those that spend it first get the most out of it.  but in the end t seems like this regine will work.

and i think bernanke has convinced the rest of the worlds bankers that this is a workable new regime, and they can all benefit by it.  so they all start printing money.

for commodities, they will see the same level of inflation as other things.  the inflation rate is measured against the total of all money divided by the total of all equities. 

you folks are the smartest people i know.  explain why this is wrong.  thanks

gillbilly's picture
gillbilly
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Posts: 378
re: New Financial Regime.

Njinear,

It depends on how you calcuate the inflation rate and/or what you include in the CPI (many high inflationary products are subracted out). The same is true with unemployment. The same is true when calculating the GDP, etc. Markets are being dramatically manipulated by the greater powers, and what CM is pointing out is that the usual economic model indicators are not acting in correlation with the expectations inherent to those models. Manipulation has always occured at some level within the economic data presented by officials and governments and of course within the economic mechanisms, but the problem I see is that the manipulation (and increasing black market) has reached dangerous levels, which is why markets and expectations are not correlating. When manipulation is low or even moderate, markets are more or less predictable within the models we have created, but when things don't add up?...well, I get the feeling the Fed is rolling the dice and hoping this "new" course will be something that works. Honestly, I think they're terrified.

On another note, my heart breaks for my CT neighbors who have lost or been effected by this tragedy. I have a seven year old daughter, I could only read the news and cry.  My thoughts and prayers go out to all of you. People often point to this or that as to reasons the reasons why these things happen, but I think it's too complicated to know what brings a person to do such a terrible thing. In the end it is just horrifically tragic. Please let's all continue to try and create a better world.

Peace!

NJINEAR's picture
NJINEAR
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re: New Financial Regime.

well, how equity is calculated and inflation is calculated is interesting but in the end it's the ratiuo between the money quantity and the assets that are owned.  in the short run there will be dislocations and trouble for individuals, but in the end the question is what is the aggregate effect.  in this case, since only asset and money totals are involved, the calculation is somewhat independent of method.

Hawkeye's picture
Hawkeye
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New Financial Regime

"inflation is determined by the entire quantity of dollar denominated equity--let say 70 trillion for round numbers."

I'm not convinced.  Maybe the relevant baseline is not the entire quantity of dollar denominated equity but rather something like M2, which I believe is around $10T.  That's a big difference.  Of course, if we add credit as part of the money supply (as I believe we should) then we're back to a much larger number.  What happens if credit starts to expand, amplifying the effect of the Fed's printing?

courageousone's picture
courageousone
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responce to NJINEAR

There are several facts that are unaccounted for. 

1.  The Federal Reserve is NOT federal... it is owned by 6 banking families.  This happened in 1913.  Thomas Jefferson warned us about this possibility.  Apperently that was a concern when the constitution was first written.  Therefore you must understand what is happening with the money that is thought to be printed.  The 85 billion a month is purchasing morgage backed securities.  In plan English this means;  the six banking families are "printing" (that is creating funds).  The funds are put into their accounts and they buy the morgages of every American citizen who has a bank owned morgage.  The banks, not our government, now are in place to own every piece of real estate when the final collapse of the economy happens.  This collapse is designed by the bankers.   They have all the money in the world... now they are after control. 

out of time... a lot more could be said.  check it out.

LogansRun's picture
LogansRun
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Posts: 1369
NJINEAR wrote: so help me out

NJINEAR wrote:

so help me out here.  it seems like bernankes plan could work.  the government now prints the money it needs instead of borrowing it.  so there is no interest payments.  now that they are offering such low interest rates no one in their right mind will want treasuries, so it will be entirely printed.  good-by private financing of government.

The government prints nothing, the Fed prints everything.  And it's LOANED, not given freely.  And of course it's loaned at interest, the interest is just very low right now.  But that won't stay that way forever....it can't!  And when the interest rates rise to address inflation, we're screwed. 

As was said before, the FED is not a Federal Agency, but run by a group of banking families, who's soul purpose is to keep power from the people.

This will not end well.  It CANNOT end well.

I think you need to go back and try to understand "What money is".  Then you'll understand the predicament.

ghendric's picture
ghendric
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inflation

Higher interest rates don't matter to me the consumer because inflation has already screwed me. My money doesn't buy me the same amount of goods it did 25 years ago. I can't got to the grocery store without spending $300+ a week just for food to feed a family of 3. Its ridiculous! So all this talk about being screwed when the interest rates go up is just a bunch of baloney. We're already screwed...

NJINEAR's picture
NJINEAR
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still not convinced

well, i still see this as a game changer.  i dont see why you would only include one form of dollar equity like m2 in comparison to the whole enchilada.  and no matter who owns the fed, essentially the money is given to the gov at no interest.  hell, i could do it, gimme a piece of paper.

and there is crcumstantial evidence that i am right.  ALL the central banks are doing it.  i bet they got a convincing arguement from mr  B.  i'll bet a little research would reveal this is the "MIT" plan subscribed by the cohort from which mr B and many other central bankers come.

i dont think this is necessarily a bad thing.  after all, i would rather just have the government print the money than borrow it from private capital--who ever came up with that stupid idea anyway?? private funding of the government has caused a world of troubles--not just interest payments, but control by the rich too.

and it still leaves us all wanting some kind of equity--after all as the lake rises we want to have our net worth float on the total money supply, not be denominated in a fix number of dollars.  but it may mean that there are a wide variety of equities that will work.

Own_Physical_Silver's picture
Own_Physical_Silver
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re: new financial regime

So help me out here. it seems like bernankes plan could work.  the government now prints the money it needs instead of borrowing it.  so there is no interest payments.  now that they are offering such low interest rates no one in their right mind will want treasuries, so it will be entirely printed.

Help you out is right.  The government now prints the money...  Absolutely not.  The treasury issues bonds and the FRSystem prints the money out of thin air against those bonds.  The Government owes all of that money back plus interest.  So contrary to your statement we are still borrowing money, and lots of it.  The only thing you really need to know is to buy physical gold and silver, which have been on the rise since 2000, and when to finally exit that market once the cycle is nearing it's end.  Silver this year alone is up 17% this fiscal calendar year.  Do not buy so called precious metal stocks or ETFs.  As unlikely as it sounds, expect the Dow and Gold to meet in terms of value (1 to 1 ratio) at some point as it did in the 1980's.  Play to win and exit with your profits before that peak.

LogansRun's picture
LogansRun
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Posts: 1369
After this response, I'm not

After this response, I'm not going to waste my time trying to convince you.  You haven't done your research, that's painfully obvious by some of your comments.  You're wasting your time here with this attitude.

NJINEAR wrote:

well, i still see this as a game changer.  i dont see why you would only include one form of dollar equity like m2 in comparison to the whole enchilada.  and no matter who owns the fed, essentially the money is given to the gov at no interest.  hell, i could do it, gimme a piece of paper.

and there is crcumstantial evidence that i am right.  ALL the central banks are doing it.  i bet they got a convincing arguement from mr  B.  i'll bet a little research would reveal this is the "MIT" plan subscribed by the cohort from which mr B and many other central bankers come.

i dont think this is necessarily a bad thing.  after all, i would rather just have the government print the money than borrow it from private capital--who ever came up with that stupid idea anyway?? private funding of the government has caused a world of troubles--not just interest payments, but control by the rich too.

and it still leaves us all wanting some kind of equity--after all as the lake rises we want to have our net worth float on the total money supply, not be denominated in a fix number of dollars.  but it may mean that there are a wide variety of equities that will work.

gillbilly's picture
gillbilly
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Posts: 378
I agree

with LogansRun. Please read the CC, and do more DD. You are trying to argue within an economic framework that really doesn't exist anymore. What the central banks are doing has never been done before on a global scale. The cracks in all our systems, economic or otherwise, are opening in a big way. That's one of the reasons most of us are here. We are trying to make sense of how to prepare for what is looking like a major change in the way we all will live. None of us knows exactly how this will play out, but we are in agreement that our current systems are not sustainable and are beginning to fail. Look around, countries are simultaneously running into sovereign debt insolvency, our environment is changing at an uprecedent pace, species and cultures are being wiped, our resources are becoming more scarce and more expensive to mine. Even if what you suggest works according to a "model" in the short run, there are too many other forces at work here (EEE) that will throw a wrench into the mix. CC, DD, and EEE...I kind of like that.

Thank You

angle's picture
angle
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Posts: 6
Never GIve Up

Something I've never been able to understand: how exactly can so many people be counted as having "given up" looking for work? It seems ridiculous to claim that all of these people can support themselves solely on means other than working a regular job, at least over an indefinite period of time.

SailAway's picture
SailAway
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Posts: 346
LogansRun wrote: The

LogansRun wrote:

The government prints nothing, the Fed prints everything.  And it's LOANED, not given freely.  And of course it's loaned at interest, the interest is just very low right now.  But that won't stay that way forever....it can't!  And when the interest rates rise to address inflation, we're screwed. 

I could be wrong but my understanding was that the FED pays back to the Treasury most of its benefit. So if this is correct that would mean that the interrest rate paid by the Treasury to the FED doesn't really matter?

CM Wrote:

The key point here is that the Fed is now actively running both monetary and fiscal policy because it will now be in the business of funding nearly 100% of all the new government deficit spending in 2013.  And it is pumping a bit more than $1 trillion of hot, thin-air money into the economy as it does so.

I thought that the $40B/month of QE3 was used to buy mortgage-backed securities (MBS) so that's not really government dept?

ao's picture
ao
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Posts: 2220
simple

angle wrote:

Something I've never been able to understand: how exactly can so many people be counted as having "given up" looking for work? It seems ridiculous to claim that all of these people can support themselves solely on means other than working a regular job, at least over an indefinite period of time.

It's called living off relatives or significant others OR

welfare OR

Social Security disability (whether you do or don't deserve it) OR

workman's compensation disability (whether you do or don't deserve it) OR

taking an early retirement lump sum payout OR

retiring early, period OR

working outside the tax system for cash OR

conducting a criminal enterprise OR

becoming homeless OR

take your pick ...

KugsCheese's picture
KugsCheese
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Posts: 655
What will happen?

The central bankers, including China, are coordinating shell game moves.  China certainly is not going to rock boat as long the shell game can be managed (after all that is how Communists work).  But at some point greivances will come to the fore as the free market is not involved (think Mafia).   So I expect the first event to be a large war.  South Chin sea?  Probably not.  Israel bombing Iran?  Most likely.  It is good to remember governments never admit mistakes; they only find scapegoats to deflect the electorate attention.  Ask the Jews (no offense intended).  Be damned British!

Wendy S. Delmater's picture
Wendy S. Delmater
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$300+ a week just for food

ghendric said

I can't got to the grocery store without spending $300 plus a week just for food to feed a family of 3.

Good Lord, in SC I feed a family of FOUR for $130/wk, including toiletries and a little wine. In NY--three years ago-- I fed a family of one for $70, and I cooked all my food from scratch even though I was working 80-hour weeks. It's just healthier than the prepared stuff - healthy food was how I could manage 80 hour weeks in my 50s. Is it the cost of diapers? Otherwise, unless you are buying a lot of prepared foods I cannot see how a grocery bill that high that is possible. This is not to disparge you or your partner - many younger people today lost the skills and do not realize that cooking from scratch often takes less time than eating out or heating something pre-made. It always saves you money and much of it is incredibly easy to learn.

Send me a private message and I will be happy to help.

ao's picture
ao
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Posts: 2220
To paraphrase GE Griffin, the majority of pivotal events

in history have been conspiracies.

So it's surprising how often this reality is rejected by the masses until it slaps them upside the head.

And even then, there is much doubt and disbelief lingers.

"Once upon a time, it would have been considered in bad taste to suggest that the world was being centrally managed in secret by a small-ish cabal of bankers whose actions served to either prop up the excessive spending habits of the very governments that conferred upon them the power to print money, or to bolster the health and profits of the banks they mainly serve."

Wait a minute Chris.  Doesn't this belong in the basement?;-)

It's interesting that just this week, I'm confronting the issue of dealing with G codes and a whole new level of bureaucracy involved in Medicare reimbursement.  More time spent documenting that isn't reimbursable time.  More time spent with the patient explaining why we have to do certain measurements and tests that seem to be only obliquely related to the actual problems they are experiencing.  More time spent on this means less time treating them.  And for all this, we will be paid even less.  And not only that but our taxes will go up to support an army of non-productive bureaucrats that will be regulating us ever more closely ... and imposing more rules which take more time to learn and comply with and for which we will be paid even less.  And the circle continues ... in a downward spiral. 

Here's a cute little gem we came across this week.  This is a patient that I've seen in the past so I'm very familiar with him and we have a very good relationship.  He was seen by me earlier this year but still had some Medicare visits left before reaching his cap (i.e. spending limit).  I saw him this week for a new problem and we submitted his claim but it was rejected.  It's rejected because Medicare has access to motor vehicle records and this patient was in an accident recently.  He was experiencing neck and back pain so Medicare assumes it's from the accident.  The only thing is, the accident did not involve any personal injury and the patient's problems are from a completely different cause altogether.  And it's a bureaucratic mess to get it all straightened out.  But the big question is, what is Medicare doing with this patient's motor vehicle records?  The answer, of course, is that in our emerging totalitarian global state, little by little, more and more is being controlled by fewer and fewer via progessive restrictions of liberty and freedom through fear based means and via the progressive extraction of wealth from the middle class, shrinking its size, power, and influence and redirecting the flow of that wealth to the very top to consolidate the power and control of the elite (while still allowing a small token volume of wealth to trickle to the bottom to ensure that the voting block of the entitlement class is securely bought so there is still the appearance at least of legitimately acquired power).

When we begin looking at people and events ranging from the House of Rothschild, the Rockefellers (and John D. and, more recently, David in particular), the British Royal family and the power and control they still hold (both overt and covert), the events behind the start of most modern wars (ranging from the Lusitania to the Gulf of Tonkin incident), the creation of the Federal Reserve, the implementation of the Federal income tax, the global banking system (including the BIS and IMF), US presidential assassinations (and attempts) linked to ill fated monetary reform measures (Jackson, Lincoln, Garfield, McKinley, Kennedy), overseas economic and geopolitical exploits described by economic hitmen such as John Perkins, acceptance of Nazis into the US when their technology is to our benefit (i.e. Werner von Braun and NASA's rocket program), Nazi mind control techniques from MK Ultra being integrated into the CIA (and being involved with a host of individuals from Ted Kaczynski to Sirhan Sirhan and perhaps James Holmes and other contemporary gun linked nutcases), the development of the surveillance state (from Echelon and Carnivore to the Utah Data Center to drones and nanorobots), the relationship between the CIA and companies such as Facebook and Google, the growth of the size and scope and power of the TSA, the development of military groups for domestic operations in violation of posse comitatus, the Patriot Act, the NDAA, the occult involvement of the elite in such things ranging from the Skull and Bones Society to Bohemian Grove to the Chateau des Amerois, false flag events (both planned and actual), the prevalence of the sociopathic personality among the elite, the documentable and traceable corruption of almost every high level government official, the two tiered rule of law allowing a Jon Corzine to walk while some lowly financial advisor gets hammered because he didn't submit government mandated indecipherable paperwork in a timely manner, the absence of any regulatory teeth to organizations such as the SEC or CFTC when it comes to dealing with connected and powerful corporate entities, the long standing absence of tort reform, the absence of any substantial tax reform that would enforce fair and equitable corporate taxes for such entities as GE and Google, the pharmaceutical functional decimation of the population with everything from statins to SSRIs, the poisoning of our food supply (with everything from GMOs, fluoride, aspartame, etc.), etc., if we don't start to get just a little bit suspicious, we are crazier than the tin foil hat crew (who, by the way, may have something there, given some of the nefarious uses of maser technology).

By the way Chris, I see that your statement above has unofficially initiated you into the tin foil hat crew on one of the blogs.

"With his commentary this week Chris Martenson became the latest financial writer to earn his tinfoil hat."

http://www.pinnacledigest.com/blog/dscaron/everything-manipulated-gold-oil-libor-electricity#comment-44325

Don't feel bad.  It was a small and lonely club for a while but membership is growing fast ... exponentially, in fact.;-)

LogansRun's picture
LogansRun
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Posts: 1369
Yes, that's what the official

Yes, that's what the official story is via propaganda.  It's not reality though.  

Do you really think a private bank would give their profits back from their own loan????  No way in hell! 

Take the time to think about this subject...please.....Why would a privately run bank, want to print the money/currency of a country?  For shits and giggles?  No way.  It's for profit..!!!  So with this, do you really believe the current banking cartel is sitting there thinking " Oh, it's cool that we're making nothing off of the money that we're creating...no biggie!"  No way.

Sailaway, I respect you very much.  And I appreciate what you bring to the forum!  But I'd hope that you'll take the time to really understand the workings of the SOB's that are running the world.  The Elite Banking Families aren't going to GIVE power/money away, without a reason.  There are NO coincedences.  

If you need help in understanding the real workings of the Western World, PM me...I'm sure AO could do the same.

LogansRun wrote:

The government prints nothing, the Fed prints everything.  And it's LOANED, not given freely.  And of course it's loaned at interest, the interest is just very low right now.  But that won't stay that way forever....it can't!  And when the interest rates rise to address inflation, we're screwed. 

I could be wrong but my understanding was that the FED pays back to the Treasury most of its benefit. So if this is correct that would mean that the interrest rate paid by the Treasury to the FED doesn't really matter?

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NJINEAR
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money printing

hey folks, i am just an engineer.  i follow the facts and evidence.  i have no interest in making important decisions personal. following the evidence is always the best strategy in the end.  even if it uncomfortable for a while.

folks, the fed is not "loaning" the gov money that has to be paid back.  they are doing a shell game that in the end is an interest free (print-money) plan for the us government.

thats the way money printing works.  there aint no stinking interest.  they dont even have to keep track of the amount.. because in the end it will resolve itself with inflation.

just take a look at the smirk on bernankes face.  you think he is panicking?  i tell you this plan can work.  then we just have environmental degredation, resource depletion, and climate change to worry about.  one less thing.

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NJINEAR

You said,

i tell you this plan can work.

OK... I am an engineer as well, and I manage engineers.  I am also a truth seeker in these monetary waters.  So I get the part where the FED sends the interest on the balance sheet back to the Treasury, and I assume this is your justification for things working out.  And you admit that there is inflation to come.  My question to you is, when the inflation comes, how will the FED control it?  No matter how much of the deficit spending the FED monetizes.. if every holder of US debt wants to sell at the same time, the FED will not be able to control that.  As well, once the confidence in US debt is lost, so goes confidence in the dollar, and all those petro/reserve currency dollars spread all over the world start coming home, and fast.  What then?  How will this scenario in any way resemble, "working out" ?  Why has this business of money-for-nothing money printing never "worked out" before?  If you are going to start using monetary aggregates in your justification... you should do a little research on the one that measures all money, including "Euro" dollars.. or dollars abroad... oops, they stopped publishing M3 in 2006.    

http://inflationdata.com/articles/2006/03/16/goodbye-m3-what-is-the-government-hiding/     

Earlier you talked about private capital and gov't funding.. you don't know what you are talking about.  The gov't is funded by tax dollars... our problem is that we can't live within our freaking means... that is the solution, period.             

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RJE
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ao, you pretty well covered

ao, you pretty well covered everything. Hey, are there specs on how to make that tin foil hat? I'm in Brother.

Happy Holidays

BOB

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NJINEAR wrote: then we just

NJINEAR wrote:

then we just have environmental degredation, resource depletion, and climate change to worry about.  one less thing.

The resource based economy, as put forward by Jacque Fresco, a self-taught engineer, resolves these issues as well as the monetary one. Science has answers, but, institutions can't implement the steps that would make them obsolete.

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Science has answers

PCMcGee wrote:

"Science has answers, but, institutions can't implement the steps that would make them obsolete."

People had the answers well before science was invented.  I love and value science as much as anyone and as much as any other subject, but I don't value it more than any other subject. That is where I differ from most. I am often labeled a science and technology basher by those that don't understand my position.  Unfortunately, this is part of the social myth/narrative that has gone awry. As the saying goes, if all you see in your toolbox is a hammer, everything looks like a nail. This quote keeps coming up in these conversations for good reason. Science and Technology alone will not solve this EEE predicament. It can share equally in how we reshape our way of thinking going forward.

Engineers in this thread, please read Willem Vanderburg's "Our War on Ourselves." He has a PhD in engineering from MIT as well in the social sciences. He is the Director of Technology and Social Development at Univ. of Toronto. He shows in the book how today's engineers are some of the worst at seeing outside of their disciplinary silos. He argues that engineers continue to design within circular end-of-pipe solution models which continue to create and perpetuate the predicaments we are facing, i.e. too often engineers look only at the "facts" that exist within their engineering models.

Saying that we have to live within our means doesn't address the paradox of thrift in the current economic models. Doesn't the fiat currency economic model depend on ever expanding debt? Living within our means, i.e. spending less than we make, would cause this model to collapes. One of the most common narratives we live by, but I don't hear from posters is that of "if you work hard in this country/world you will succeed." That is another narrative that is built into the system. Many of us took loans out to buy houses, cars, etc. with the expectation that if we worked hard, whether in conjunction with educating ourselves or not, that our incomes would eventually catch up. We have to "pay our dues" in the beginning don't we? Taking a loan is a risk, but the narrative implied is "if you work hard you will be able to repay it." We must remember this is the narrative banks live by and promote. This narrative became exaggerated by the banks through the mechanism of advertising and because of their participation in derivatives. The narrative was fraudulantly distorted making it difficult for most individuals to sort out what was manageable. Many went to the bank and asked "what can I afford?" This is and was a part of the social contract between the rich and poor. A contract that is now under attack primarily from the elite class (hence...the poor are just lazy and would rather mooch off the system). The poor and uneducated rely on those above to be honest and genuinely care for them.

Isn't this "work hard" part of the narrative that makes the "free market" model work? Unfortunately, I'm seeing more and more people to whom this doesn't apply. I see people in their 50s that have lots of experience and wisdom in their fields, they have worked hard, but they are often being passed up by employers for "easier to work with" cheaper kids in their 20s. I also see many of those in their 20s coming out of college with debt that they will not be able to repay, and they can't find a job. 

So, to talk in terms of monetary procedural models says nothing about the underlying narratives that are collapsing. This monetary policy is only as good as the "faith" that exists within it. So we can talk about this and that technical model, but if the faith on which they are built collapses, well, we have to have a different conversation.

Thank You

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ao
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oh no, not again

PCMcGee wrote:

NJINEAR wrote:

then we just have environmental degredation, resource depletion, and climate change to worry about.  one less thing.

The resource based economy, as put forward by Jacque Fresco, a self-taught engineer, resolves these issues as well as the monetary one. Science has answers, but, institutions can't implement the steps that would make them obsolete.

There has been extensive discussion on this issue, Jacque Fresco, Peter Joseph, etc. in the past ... ad nauseum.  Check the friendly archives and pllleeeaaaassssseeeeee, let's not go there again.  Science appears to have the answers but, in fact, doesn't.  When there is a working, successful model, then, and only then, could you claim any kind of success ... and that's not gonna happen. 

"... it's all happened before and it'll happen again ..."

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ao, i fell your pain!

Back in the 80s when I was in college, my advisor was Tom McGuire, one of the leading health economists in the country. He was dismayed with the condition of the health field then, I can only wonder what he thinks now. Too much beauracracy is involved in medicine and too much control is in the hands of the insurance companies (with government policy being written by them). I have many friends that are doctors and I hear the same concerns. Keep up the good fight!!

Thank You

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Deflationary cycles = creative destruction

Gillbilly said,

Saying that we have to live within our means doesn't address the paradox of thrift in the current economic models. Doesn't the fiat currency economic model depend on ever expanding debt? Living within our means, i.e. spending less than we make, would cause this model to collapes.

While I have to agree with you that the system, as being run by the modern FED, is acting like the entire model would collapse if debt did not continue increasing, by hook or by crook...I don't think this is strickly true.. it's just a matter of who eats the losses.  The secret to this modern painless era is of course to make sure that there is a constant uplift from inflation to aid in times of low or no-organic growth.. this new era can be seen very clearly on Doug Short's wonderful chart;

http://www.advisorperspectives.com/dshort/charts/inflation/inflation-since-1872.html?inflation-1872-present.gif

This modern era also encompasses the period of the last four decades that Chris points out where debt has grown with an exponential curve fit (correlation coefficient) of 0.99!  I think the two charts are telling the same story from different angles - the banishment of deflation and the enablement of continuous debt growth. It is also true that the timeframe Chris points to corresponds to the pure fiat portion of our monetary history.. so Gillbilly's point is not without support from the data.     

With a FED/Gov't unwilling to allow any major TBTF institution to go under, and unwilling to allow the interest rate mechanism to impose it's usual cruel discipline(see Greece)... something will have to give ultimately.  I believe that something will be the currency.   

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whew, the secret is finally out!

Ao, your post is a breath of fresh air and has allowed me to momentarily lift up my tin foil hat to get some much needed circulation underneath wink

You have nailed it with your most excellent writing, mirroring many of my own thoughts, which have largely been kept to myself. It is bad enough being looked upon as being a bit paranoid for doing some prepping. But to voice some of these kind of thoughts would have my friends and family wondering if they should be giving me a gift certificate to the looney tunes hotel for Christmas!

So, with tin foil hat firmly in place again, I have always wondered...

About Facebook and Google, with the thinking that, especially in the case of Facebook, hmmm, how convenient to have all this personal data in one big pot for Big Brother data mining. It would not surprise me one iota if the CIA was the seed and ongoing support behind both of them. What a brilliant manipulation to get info on the people ("sheeple")! I don't do Facebook myself, never have, and I am just absolutely and continuously stunned/shocked/amazed by the info that people put on there.

Another thing that I have always wondered about are flu pandemics and how the sheeple have reacted to them. In Canada the craziness set in after a seemingly healthy 12 year old boy in Toronto died of the H!N1 flu (2009 I think). In the ensuing panic, there was a mass rush to get innoculated, with allegations of queue jumping by people with money. I read that about 40% of the population ended up getting flu shots. That is a whack of people. As there has long been speculation, at least in the tin foil hat circles, that there will be some eventual population control, I thought hmmm... how convenient is this - masses of un-questioning people stampeding to be injected with god knows what?!?

I have no doubt that we are monitored in far more insidious ways that we like to imagine, just as I have no doubt that TPTB are doing things that would horrify the sheeple. But as long as the herd is passive and complacent, numbed with their focus on consumerism and the inane programming on the boob-tube, they do not have to worry about being found out.

Okay, time to shift out of my conspiracy thinking mode and into my baking Christmas cookie mode, which is much more pleasant!

Cheers,

Jan

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SailAway

I just realized that your response was a question, not a statement.  I apologize if my response was terse.  

But what I said holds true.  The interest is supposedly paid back from the Fed, but it's all smoke and mirrors, as the Fed is a  for profit (and power) organization.

LogansRun wrote:

Yes, that's what the official story is via propaganda.  It's not reality though.  

Do you really think a private bank would give their profits back from their own loan????  No way in hell! 

Take the time to think about this subject...please.....Why would a privately run bank, want to print the money/currency of a country?  For shits and giggles?  No way.  It's for profit..!!!  So with this, do you really believe the current banking cartel is sitting there thinking " Oh, it's cool that we're making nothing off of the money that we're creating...no biggie!"  No way.

Sailaway, I respect you very much.  And I appreciate what you bring to the forum!  But I'd hope that you'll take the time to really understand the workings of the SOB's that are running the world.  The Elite Banking Families aren't going to GIVE power/money away, without a reason.  There are NO coincedences.  

If you need help in understanding the real workings of the Western World, PM me...I'm sure AO could do the same.

LogansRun wrote:

The government prints nothing, the Fed prints everything.  And it's LOANED, not given freely.  And of course it's loaned at interest, the interest is just very low right now.  But that won't stay that way forever....it can't!  And when the interest rates rise to address inflation, we're screwed. 

I could be wrong but my understanding was that the FED pays back to the Treasury most of its benefit. So if this is correct that would mean that the interrest rate paid by the Treasury to the FED doesn't really matter?

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Tin foil hats can come off now

Because our loss of liberties is simple fact, not fiction.

http://libertyblitzkrieg.com/2012/12/14/ever-heard-of-the-national-count...

Top U.S. intelligence officials gathered in the White House Situation Room in March to debate a controversial proposal. Counterterrorism officials wanted to create a government dragnet, sweeping up millions of records about U.S. citizens—even people suspected of no crime.

Not everyone was on board. “This is a sea change in the way that the government interacts with the general public,” Mary Ellen Callahan, chief privacy officer of the Department of Homeland Security, argued in the meeting, according to people familiar with the discussions.

A week later, the attorney general signed the changes into effect.

Thanks for the justice Holder.

The rules now allow the little-known National Counterterrorism Center to examine the government files of U.S. citizens for possible criminal behavior, even if there is no reason to suspect them. That is a departure from past practice, which barred the agency from storing information about ordinary Americans unless a person was a terror suspect or related to an investigation.

I know, I know.... you only have to worry if your a bad guy.    

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ao
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Amen Jim. Jim H wrote: I

Amen Jim.

Jim H wrote:

I know, I know.... you only have to worry if your a bad guy.    

Isn't that a favorite line?  As we know, the problem is good guys can be bad guys to bad guys.

My response to that line is, tell that to the Jews who lived in the Warsaw ghetto.

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It might work

It could be argued that some countries have been in a currecy war for decades with the casualty being American manufacturing. China has pegged it's currecy and massively subsidises industries and some products. The price of gasoline is fixed in china for example. QE can be seen as a reply to decades of currency manipulation in other nations.

The positive benefits of inflating away debts are that your exports are cheaper on the world market, imports are more expensive to bring in from other countries. The labour force in the USA is becoming relatively cheaper. There will be a point at which they have inflated away enough debt, and made the cost of producing in the US cheap enough to stimulate a revival in manufacturing.

I can see the economic argument about what they are doing and it makes a certain kind of sense.

On the other hand the costs would be deflating away the value of any savings and punishing fiscally prudent people. The real problem is in making sure they don't create hyperinflation, only time will tell. For what it is worth all my savings are in gold, I just don't trust someone who didn't see the problem coming years ago.

There is a reason Harry Truman asked for a one armed economist.

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treebeard
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We have the power

The real secret that needs to get out is that we have the power.  Get out of this system now.  Lead a dual life as a way of exiting, one foot in and one foot out, as a transition.  We know what we need to do.  The current system, as so well articulated by most of the posts, is parasitical.  That is both its strength and its weakness.  It generates nothing on its own, it is dependent on us.  Stop feeding it.  Even discussing it in this  much depth sucks your life energy from you.  If we need to collectively blow off steam, by all means let it rip, but lets not stop there.

Natural systems by there nature are abundant and self healing. Mechanistic, reductionist, cartesian systems invented by man are limiting and self destructive.  Gillbilly, I totally understand where you are coming from.  I am not antiscience either, but sometimes come off that way.  The survival instinct is useful part of human consciousness, but if you live there all the time and someone cuts you off in traffic and you see that as a threat to your survival, that will have disasterous effects on your life and the life of others. The knowledge of science has it critical and useful place, but it is not a substitute for wisdom.

AO your lengthy "tin foil hat" rant is all true.  The frustration of keeping a secret can drive one crazy, but we need to let it go, let the dead bury the dead.  Give life to those that are living.

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conversation

hi Jim, i mean by private funding that treasuries are purchased like any other financial instrument, and classically they have been purchased by private individuals.  but my point is that the government borrowing money from anyone to pay the current account is a rediculous plan, deferring inflation but making it worse because of interest payments.

now imagine the gov just printing whatever it doesnt collect in taxes to cover the current account.  then there is no need to even keep track of "debt" per se--there is no debt.  there is inflation, which essentially takes value from all dollar denominated savings to pay for the gov account. 

so here is what i think bernanke, and at this point almost all the central bankers, are thinking.  the inflation caused by printing (or the shell game between the CBs and the gov treasuries, which in the end is the same thing) is measured against the entire dollar denominated equity, not just m2, not just dollar bills in circulation, etc.  in fact most of the "money" in circulation has been generated by loans from banks, and this is a huymongous amount of $$.  so 85 billion is small compared to that.  so right now the governments can print and cause very little inflation, and eliminate the investors buying soveriegn debt, which is a good thing.  the money will never be repaid, it is printed.  so they can get away with this for quite a while.

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Nobody has latched onto this very important statement...

...nor have any real explanation been given as to how this is even possible. Chris said: If you had told me 4 years ago (?) that we would have printed what we have that he thought you" would be nuts"! Does this mean that if asked the same question four years ago what percentage he or any expert would give to High or Hyperinflation would be 90% as Chris (I believe, so please correct me if I am wrong) now gives, and that the 10% would have profitted handsomely as they were right, and the answer would have been YES, to higher inflation. So we do the same thing again for the next four years does this mean 90% Hyperinflation? Hell, I love Chris, and I believe the numbers would suggest that this would be realistic but it may be that we are wrong. I am trying very hard Folks to watch very carefully that I DON"T get hung up on what I think will be the case but what IS the case. What iIS the case is we have doubled our monetary base and we ARE going or are in a RECESSION. World Wide!!! Obviously "WRONG" is a relative term as we have been very profittable in all things Preparations and Resiliency. My point is that we would have all expected much higher Inflation than we have had to date. As we monetize the Baby Boomers to the tune of 80 to 100 Trillion dollars strongly suggest that we go HyperInflation but we won't be allowed to do that so where this goes is still a guess. If retirement is changed to 75 then this problem goes buy, buy and that will mean what exactly?

We will continue this stock buy back plan with the FED buying back the Debt of all distressed assets to make the banks balance sheets whole where the banks then buy treasuries. No money enters or leaves the system as the banks are not lending a darn thing, and business are building nothing as there is no demand, and the consumer pays down debt with lower and lower wages. Plus are about to get really slammed with taxes from Obama care to any other kind of tax that the State and Federal Government can conjure up to balance the books. That is not a receipe for Inflation Folks.

Some think housing has bottomed and I call Bullshit on that theory. Until the workers are paid a living wage or housing falls to the point where the wage earners can afford, and are secure in their current jobs, that this housing beast is foreplay to the next serious down turn, and more and more of these good Folks struggling just to hang on finally relent and bankrupts in mass their entire debt problems. It is so easy to do that resisting this tactical move will be hard indeed. This will occur the more the good Folks out there realize that the FED cannot provide enough money to keep things as they have. So far each and every QE has had the shelf life of raw meet left in the sun for 24 hours. All of this and more will feed a negative feedback loop until balance is restored. Balance will always get restored come what may. 

We look now at the reality of all that printing and we still have the FED in full frontal battle with Deflation. They are losing Folks. We will have a Recession. The U.S. is now in negotiations to raise taxes and cut spending, and this is by definition, Deflationary. Europe, Japan are in a serious Deflationary cycle that risk a world wide Depression as both systems are unsustainable, and neither will be capable of righting their respective ships. China is just a Rich kid who doesn't consume anything, and have very little value to the world, especially when the world requires nothing from them today. The DRYS indicate no commerce/trade, and train traffic is minimal.

We have a long way to fall yet as the purchases made from the future get used up. I know, absolutely, positively, that I can live on what I have right now, in my home. I can purchase for some time yet items used instead of new, and not have to buy a thing but the essentials for the next 20 years. I have all the materials for repairs for the rest of my life as just inventory I took with me into retirement.

Retirement consists of working harder at this (learning markets and world events) than I ever had to physically working. I just can put more hours in as this is less taxing. For me this is just history in the making, and a blip when recorded and read years from now. My guess is the history books will read of this time and chuckle as we will win this battle and thus write the books. 

I think that wanting Inflation so BAD that we are missing terrific opportunities to play parts of the market for great gains, and I for one will NOT allow myself to tow the line because of something that was suppose to happen, hasn't. That too is a TELL, and next up is a Recession, and perhaps a horrible one. NO ONE KNOWS but the trend suggests that the FED is out of options. Muddle through would be great are my thoughts.

In all of our history we printed paper in such large amounts that we doubled the current output in just 4 years! We have 3% Inflation!! with a Deflationary event days away. That is truly a shocker, and the why of that is pretty important to understand. I know what SGS follows but reality and what should be are obviously two different beasts.

I would like the Professor to step back, take the numbers of 4 years ago then add the new money added to the system in the last 4 years and guess estimate the Inflation and Gold price today. I would venture the numbers would be quite large in Inflation and Gold prices, and he would have been wrong, we would have been wrong, we ARE WRONG! Maybe not tomorrow but maybe tomorrow too. We have all I suppose benefitted from the stock market and Gold rising. We have benefitted from our Preparations and are more Resilient so we have done great. We are NOT NUTS, if anything we are exceptionallt bright are my thoughts. In all of this turmoil I have NEVER enjoyed myself more, valued more, walked out of my front door with a greater sense to life. This is really terrific stuff Folks. It really is. I DO NOT wear a foiled hat either as I want all of my senses overloaded as it excites the hell out of me. Endorphines are a rushing through me that I couldn't imagine ever being more alive. I want what happens to happen come what may, and I want to fight the good fight.

Inflation in our future, you would think, but maybe not. We will have Inflation that's a given but high Inflation, Hyperinflation? Are you sure? Are we sure? Today it is Recession and Deflation, and I say those with GOLD, physical GOLD will NOT have the stones to hold when this next RECESSION rears its ugly head. Plenty of opportunity lies ahead for those who wait. In saying all of this I have decided that GOLD is just my insurance because I refuse to have a catastrophic claim against my dollars destroy me. So just a good business decision. I will hold, and besides Gold has to drop considerably for me to lose at this point. Perhaps the new trend will be defined at some point where selling or buying more will be crystal clear.

We throw around "The Sheeple" rather loosely around here sometimes, and I get this, and have used the phrase myself. However, and to be clear, I have way more faith in the American people, and that includes my Brothers and Sisters in arms that defending the Constitution of the United States is a serious DNA marker, and that we as a people WILL right the ship at some point in the future. It doesn't have to be perfect as it never has been but we will get this beast/ship righted. Those who wish to leave please do so but don't worry about shutting the lights off, I'll tend to that, and those like me. My guess, there's allot like me (for those who leave, please DO NOT take this personal as we are allowed to do as we wish, no problem. I could give a shit).

I now live in a farming community but this is evident all over America. The cemetery plot facing Main St. U.S.A. In these plots are boys and girls who gave their lives for their country, and an ideal for over 200 hundred years. and we are the greatest single country the world has ever known. We are the military and economic might of the world still. All because "We The People" have made this so. That is a trend I don't see changing any time soon. Civil War, World Wars, Depressions, Recessions, natural catastrophes, our racial problems, and the Mighty Mississippi actually stopping and going the other way has NOT changed what we all are, FREEDOM fighters to our core, problem solvers, and good Folks that can get ugly when affronted by anyone who wishes to change these very basic values. We have been complacent many times before just like we are today but we worked it out. Again, "what are you prepared to do"?, that is the most important question we all face going forward. It may cost you your life but the banner you represent will be picked up by the next soldier of Freedom and carried along until this soldier falls and then at some point you raise that banner of victory. Those days may lay ahead of us and it is now we decide. Some will leave, and that's cool but many will stay, and that is righteous, my kinda Folks.

It is unimportant for anyone to respond to my posting as history has yet to be written, and until it is, there really is NO arguing anything. I think, you think, doesn't matter one tiny bit. All that matters is living life itself. Preparations and Resiliency are two words I believe in very much. They just make sense no matter what may come. Gold and Dollars are money and I suspect will be for many years to come so having both are a must. I just keep thinking about our National Debt and the fact that we are borroughing 40 plus cents on the dollar to pay bills and this Fiscal Cliff is just a down payment to getting our finances in order. It is going badly and it represents a smidge of what will have to be accomplished. Will it end up Inflation or Deflation? Hell, Europe and Japan scares the hell out of me more than anything, and these two economies could implode at any moment, and I have to believe this to be Deflationary in spite of anything we try to do. Still, if wages stay low and falling, and they are, then Deflation it is, and that is the trend right now soooo I protect my Dollars. I will short Oil, and hold my PM's, and maintain no Debt but my mortgage, and I reserve to change my mind at a moments notice as that appears to be where we are and that is that.

Folks, I read how nationally born citizens who were born in America has to pay taxes, and on the surface that is just so unfair. So, lets just say this person lives in China and the State Controlled Military goes all nuts on the citizenry, who the hell do you think will be the first in line at the nearest American Embassy to get his or her ass out of that country on the dime of the American tax payer? You betcha, RED and WHITE and BLUE will be screamed out, God Bless America will be sang loud and clear, and the American flag will be present just to save their lives. What is that worth, your life? 

67 days before catchers and pitchers report.

Happy Holidays Folks

BOB

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Joined: Aug 31 2008
Posts: 1369
Next up: Deflation...

...and just how bad will this be? Who defaults, when, and how quickly? Does it really go mainstream and the periphery bankrupts in droves? Does the FED have the tools to fight what is coming? Will they be late? Round two is a very real possibility as compared to 2008 is just a guess but a serious guess. 90% probability and how bad? Some think S&P 400 and Janjuah thinks S&P 800. My guess, YES, lower from here, much lower, and the market usually over corrects to the top and the bottom. It isn't going up and I give that a 95% chance but I could be wrong.

http://www.zerohedge.com/news/2012-12-17/albert-edwards-%E2%80%9Csomething-bad-happened-november

Be safe Folks

Happy Holidays

BOB

gillbilly's picture
gillbilly
Status: Gold Member (Offline)
Joined: Oct 22 2012
Posts: 378
New Pledge of Allegiance

Bob, I love your posts. You always write with such passion! I love my country too but as you know there are many countries doing a lot of things better than we are. We also can't forget the U.S. has been the greatest pillager of the earth, therefore the biggest contributor to the 3Es predicament. I just wrote a new pledge of allegiance. I figure it's alright to do so since the original pledge was written by a flag salesman with the intent of selling flags. I apologize if anyone takes offense. This is partly humor, but who knows, maybe it'll go viral.

I pledge allegiance to Planet Earth, To creatures great and small

And to the environment for which sustains

One World, we shall guard, indivisibly, with liberty and justice for all

Thank You

Jim H's picture
Jim H
Status: Diamond Member (Offline)
Joined: Jun 8 2009
Posts: 1477
Modern Monetary Theory is something for nothing...

NJINEAR... you are just rehashing the argument that MMT'ers make to have the Gov't exercise the ability to create debt-free money... Platinum coins.. blah, blah, blah.  Such a scheme, I believe, would end in tears even more quickly I think than having the printing press in the hands of the FED, who prints at interest.  This has been discussed here before...   

RJE's picture
RJE
Status: Diamond Member (Offline)
Joined: Aug 31 2008
Posts: 1369
Gillbilly, My Brother, I am a song and dance Man...

...and one week before Christmas I have but one thing in this world I care about, that makes EVERYTHING I do worthwhile and hopeful. I cannot acknowledge how others live their lives poorly as they are sowing the seeds of their destruction, and may very well take me with them but I can go kicking and screaming. I intend to.

Here's what I'm talking about, so enjoy.

I signed your pledge Gillbilly (thumbs up) and am committed to recycle and take care as you have pledged. This has been an ongoing delight of my Wife and I, the very least we can do.

I love you all as a Man does a fellow human being.

Happy Holidays

BOB

gillbilly's picture
gillbilly
Status: Gold Member (Offline)
Joined: Oct 22 2012
Posts: 378
I hear that

Oh yeah, The Temptations. I'll make you a deal. If and when we have a Peak Pros. holiday party, I will provide the live music. You won't be disappointed. Happy Holidays!

Thank You

Khannea's picture
Khannea
Status: Member (Offline)
Joined: Sep 28 2010
Posts: 8
It makes perfect sense.  We

It makes perfect sense. 

We live in a world of contrived happiness. There is a lot of people that expect stuff, by and large because they had stuff in the past. Most of these people fully well realize the party is over and this roll of the dice is not going to last even if we all inherited super powers or fusion tomorrow. 

So what the established interests do, for as long as they can bear with it, is pour any kind of volatile in to the engine, in the hope it will last another few days. They have been pouring all the brandy in the gas tank and amazingly the engine has not much sputtered yet. But very soon it will and people will start dying in droves, the protesting will start, and then the looting and then the angry mobs will start looking for the assholes that did this to us. And trust me, they'll find them.

Or at least some of them. The very rich (I know a few) have diversified their investments. Check up on these people buying incredibly remote estates. I know one who billionaire bought a massiver, almost insanely hard to reach estate against the border of Canada. Huge sprawling estate build over a former nuclkear fallout shelter on some hill. Veritable maze of roads leading to the estate. Guns. Massive stores of nonperishable foods and means to make more of it in splendid isolation. Hydrogen cars and means to make more of that, such as solar panels.

I read these kind of investments by those people as a giant "you are on your own, idiots". And I guess we are. So my suggestion is, when all this collapses, is to look really hard for where all the rich responsible people went. Because clearly we'll have a lot of lynching to do and they won't majke it easy. 

Atlas's head rolled from the Guillotine, right?

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