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QE for Dummies

Understanding the most outlandish monetary experiment ever c
Tuesday, February 5, 2013, 11:25 AM

A PeakProsperity.com reader recently lamented:

I have been trying to get my head around the mechanism of QE. Not being an economist or experienced investor I don't really understand a lot of the jargon. The usual simple definition of QE as "thin air money printing" does not satisfy my need for understanding either. Have hunted for a description of QE for dummies that leaves me feeling like I get it, but with no luck. My difficulty is in understanding how thin air money gets into circulation.

So I'm going to do my best to answer this plea in as intuitive and straightforward a manner as I can. I, too, share the need to understand the mechanism of a process in order to feel like I have a grasp of it.  And I think it's critically important to understand QE (also known by its full name, "quantitative easing") and what it really represents. Because it is, without a doubt, one of the largest market-shaping forces of our times. 

Further, it presents extraordinary risks and may well turn out to be a decisive shaping process for the future, as well. And not in a good way.

Despite its sophisticated-sounding name, QE is nothing more complicated than the Fed buying "assets" from commercial banks and other private financial institutions.  I put assets in quotes because the Fed does not buy things like land, Stradivarius violins, diamonds, gold, or silver from these institutions, but rather various forms of debt.

The main forms of debt purchased are Treasury bills/notes/bonds and Mortgage Backed Security (MBS) paper. 

There could well be other forms, too, but we currently have no visibility into the composition of the sizable portion of the Fed's balance sheet that comprises the "other assets" line.  I'll get into that in more detail in a minute.

QE Explained

First, here's the an explanation of QE:

Quantitative easing (QE) is an unconventional monetary policy used by central banks to stimulate the national economy when conventional monetary policy has become ineffective. 

A central bank implements quantitative easing by buying financial assets from commercial banks and other private institutions, thus creating money and injecting a pre-determined quantity of money into the economy.

Quantitative easing increases the excess reserves of the banks, and raises the prices of the financial assets bought, which lowers their yield.

(Source - Wikipedia)

The reason that QE differs from normal monetary policy is that, in the normal case, the purchase of various bond types by the Fed does two things: It lowers interest rates, and it increases the amount of money in the system.

QE, on the other hand, cannot lower interbank interest rates any further than they already are, because they are at 0%.  So a different name is used for the process in which the only thing being eased is the quantity of money.  Hence Quantitative Easing (QE).

This is just a fancy way of saying that the central bank, via prior errors and miscalculations, has found itself stuck in a trap where it has lost one of its most potent tools: the price of money.  And now it can only fiddle with the quantity of money.

Here's a simple picture that I drew to illustrate just how simple this fancy-sounding process really is:

When the Fed performs this trick, what happens is that the assets end up on its balance sheet as well, assets of course.  Luckily the Fed provides reasonable clarity in a timely manner on the expansion of its balance sheet.  So we can see pretty well what's going on here as it happens.

In graph form, we can see that the Fed's asset balance had been holding steady at around $2.75 trillion for a bit over a year.  But then the latest round of QE (QE4) began, which has swelled the Fed balance sheet above than $3 trillion and it's way to (at least) $4 trillion by year end (2013).

Here's a nice short description of the process of QE:

A central bank [performs QE]  by first crediting its own account with money it has created ex nihilo ("out of nothing"). It then purchases financial assets, including government bonds and corporate bonds, from banks and other financial institutions in a process referred to as open market operations.

The purchases, by way of account deposits, give banks the excess reserves required for them to create new money by the process of deposit multiplication from increased lending in the fractional reserve banking system.

The increase in the money supply thus stimulates the economy. Risks include the policy being more effective than intended, spurring hyperinflation, or the risk of not being effective enough, if banks opt simply to pocket the additional cash in order to increase their capital reserves in a climate of increasing defaults in their present loan portfolio.

(Source - Business Insider)

The Price of Thin Air Money

At this point you might be thinking, where did the Fed get the money to buy these assets?  The answer to that is simple:  It was created out of thin air.  Or ex nihilo, if you want to use Latin to make it sound more official. 

In these modern times, no actual paper money was created and exchanged, of course; just a few clicks on a computer keyboard.  And voila! billions and billions of dollars are created.

There are several critical risks to flooding the world with invented money.  Once we understand them, it becomes clearer how the Fed's decision to pursue QE has put it in a box, where its available options are becoming fewer and fewer.  And it explains why the Fed is continuing and will continue until it simply can't with its aggressive money printing. 

In Part II: Why You Really, Really Need to Care about the Implications of QE, we lay out these risks and identify the markers you can follow to track them. We then detail how the QE process is destined to devolve and the implications this will have for your wealth and well-being.

To make our situation clear, we are living through the largest and most outlandish monetary experiment ever conducted by humans upon themselves.  These are extraordinary times, and no matter how many times the mainstream press tries to convince you that a rising stock market or a rebounding housing market implies that we are returning to healthy economic balance, don't fall for it.

The Fed is in uncharted territory, having created a monster it can no longer control.  In the process, it is blowing new asset bubbles that are benefitting those with first access to the newly-printed money (banks and corporations) at the expense of savers, pensioners, and anyone exercising fiscal prudence.  This, of course, is creating a vast and growing inequality between the top 1% and everyone else.

When this misadventure in monetary policy ends, as both math and history says it must, it will be messy, uncontrolled, and very painful for holders of just about every sort of finanical instrument out there (stocks, bonds, derivatives, etc).  That's why understanding the root causes and risks of QE is so important, in order to identify the best shelters for protecting the purchasing power of your wealth through this transition.

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

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38 Comments

westcoastjan's picture
westcoastjan
Status: Gold Member (Offline)
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Posts: 466
Thanks Chris

One of the things I so admire about you is how you engage and interact with us, you listen to us, and then you do what you say you are going to do. The integrity and class you display is wonderful, as is the absence of ego. Thank you so much Chris, for taking the time to write this article, as well as part II, for we novices. A few more light bulbs have been illuminated smiley

Jan

Alasdair Macleod's picture
Alasdair Macleod
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Posts: 29
QE

An excellent and clear description of what QE is. But I'm afraid I have to add to the bad news on this: the Fed is now committed to QE, not to rescue the economy, but to finance the government and keep the banks afloat. Ironically, the last thing the Fed needs now is sustained economic recovery, for the reason Chris implies: there is no way QE can be unwound. Rising interest rates will break the banks, the government and undermine the dollar. Here in the UK we have the same problem, and both Japan and the eurozone have different versions of the same problem.

Alasdair Macleod

RJE's picture
RJE
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Alasdair,

...then the Fed needs to step aside and let the natural cycle clear the air of all this garbage, yes? Would this then destroy all the illusionary fiat paper? If so then perhaps it must happen and we do as we have always done and rebuild from the ashes. Honestly, damned if you do and damned if you don't. I understand Depression, and have no idea about Hyperinflation except with PMs. With PMs I know it won't go to zero.

Respectfully Given

BOB

AndyR's picture
AndyR
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Posts: 9
Quantitative Easing explained

The plumber is clearly smarter than the Ben Bernank!

jturbo68's picture
jturbo68
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Posts: 193
Is there a piece missing here?

Can you clarify the other side of the equation?

When the QE is given to the banks in exchang for Assets, does this have any effect on the national debt?

How do these banks have the quantity of treasury bill needed to soak up the QE?  I assume this is where the national debt comes into play.

If we slowed out defecit spending greatly, what would the fed have left to purhase?

What happens when the Fed has soaked up all the assets that the banks have.  It sounds like a good deal for the banks to lose all ogf that crappy MBS paper.

Can the fed simply default on the bad paper it is holding, eliminating that bad debt from the system?  and would this be a good thing?

Thx

LogansRun's picture
LogansRun
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Posts: 1369
Bob, you need to understand the End Game

The Fed will never back away and allow the natural cycle to take place.  That's not what they're around for.

This is all a scam based on the Hegelian Dialectic:  Problem - Reaction - Solution

The Central Banks have created the Problem themselves.  They will create huge amounts of money out of thin air world wide (as is happening NOW).  When it all comes tumbling down, they'll blame the individual countries for spending too much and creating too much debt (National Debt).  The masses, Congresses, Parlaiments, etc...will React, and scream for a Solution.  

But before a Solution is brought forth, the Central Banks will create as much pain as possible on the Citizens/Congresses/Parlaiments.  They will be screaming so loud for a Solution, the Central Banks of the world (specifically the Bank of International Settlement (BIS) will then roll out their One World Currency.  What that will look like, is anyone's guess.

How many can't see this shaping up, is frustrating.  But, we've been conditioned so long to trust the Central Banks, I can understand a bit of why people fight the truth on this situation.  But it's all there, and has happened over and over again.  Maybe not in regards to a One World Currency, but in other ways (Patriot Act).

Study the Hegelian Dialectic.  It will tell you all you need to know about how the elite families rule.

RJE wrote:

...then the Fed needs to step aside and let the natural cycle clear the air of all this garbage, yes? Would this then destroy all the illusionary fiat paper? If so then perhaps it must happen and we do as we have always done and rebuild from the ashes. Honestly, damned if you do and damned if you don't. I understand Depression, and have no idea about Hyperinflation except with PMs. With PMs I know it won't go to zero.

Respectfully Given

BOB

RJE's picture
RJE
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Posts: 1369
LogansRun,

I do understand exactly what you are saying, and can only image your frustration with me or anyone else who doesn't see things as you do. I say this with all due respect. HOWEVER, I am not yet in the court of print until this all ends in some crazy, unrecognizable mess, and until that happens I will follow along with enthusiasm as I just WILL NOT accept the assumption being made by you or others. For me, as delusional as you believe I am is how I see this world. So, bottom line, I will let History be written as we go along, and let things develop just a bit longer. Believe as you may, no problem. I remain unconvinced with your outcome. Honestly, I see no reason for you to be so concerned with me or others who don't believe the doomsday scenario you are so certain will happen.

I respect your opinions very much but only from an informational point of view that is stored, and will be used to recognize when or if your thesis reveals itself. Only then will I be convinced. Sorry Brother, I just can't go there just yet.

Hegelian Dialectic: I have read twice, and all I could think about was this was before they banned all the hallucinogenic drugs were my thought. Anyways, I found the whole thing to be so subjective and way above my pay grade (this isn't to suggest you are a user but if you get this, and are able to discern a certain future from this material then God love you Brother).

http://en.wikipedia.org/wiki/Dialectic#Hegelian_dialectic

"quotes Marx and Engels:"

"As the most comprehensive and profound doctrine of development, and the richest in content, Hegelian dialectics was considered by Marx and Engels the greatest achievement of classical German philosophy.... “The great basic thought”, Engels writes, “that the world is not to be comprehended as a complex of ready-made things, but as a complex of processes, in which the things, apparently stable no less than their mind images in our heads, the concepts, go through an uninterrupted change of coming into being and passing away... this great fundamental thought has, especially since the time of Hegel, so thoroughly permeated ordinary consciousness that, in its generality, it is now scarcely ever contradicted. But, to acknowledge this fundamental thought in words, and to apply it in reality in detail to each domain of investigation, are two different things.... For dialectical philosophy nothing is final, absolute, sacred. It reveals the transitory character of everything and in everything; nothing can endure before it, except the uninterrupted process of becoming and of passing away, of endless ascendancy from the lower to the higher. And dialectical philosophy, itself, is nothing more than the mere reflection of this process in the thinking brain.” Thus, according to Marx, dialectics is “the science of the general laws of motion both of the external world and of human thought”

Within this Paragraph it is written:

"For dialectical philosophy nothing is final, absolute. sacred."

Then subjective are my thoughts LogansRun. We see what we want and I want to see what is there. Just a different time line I suppose to Nirvana?

Respectfully Given

BOB

Note: I have no idea why this printed three times and if the moderator would could you please remove two of them. I have tried deleting or erasing those extra paragraphs to no avail. Thank you. BOB - Admin - Done.

LogansRun's picture
LogansRun
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Posts: 1369
Bob, I'm not trying to convince you of anything...

Just explaining what's going on.  

Believe as you'd like.  

Unfortunately, history shows exactly what's to take place, and it ain't pretty.  The group that's in power are going to make life extremely painful for us "Serfs", but will make it look like it's anyone's fault but theirs. Then will roll out the Solution that benefits them and only them.  It's all in writing, or verbilized by them.  You just have to take the blinders off and realize, it's not CT anymore, it's now reality (which it's been for many, many years).

Good luck to you and your family.

basildave's picture
basildave
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Posts: 1
Mortgage Backed Securities

Hi, new to this site...

So instead of just creating new money and injecting it into the federal reserve system (because banks aren't lending the money they have, so why would they borrow more from the fed, even at 0% interest), the government is purchasing the very securities that caused the crash to begin with?  In fact, I have some background in fixed income investments and almost worked at a software company that modeled MBSs and CMBSs (commercial and residential mortgage backed securities).  The risk involved in these financial instruments can be quantified by aggregating the risk of early pay off of principal and default.  These are techniques that are known within the financial world.  So is the government using these techniques to determine which secruties to buy?  What about the underlying loans and properties?  Have they been valued?  Shouldn't the financial profile for all this information be made public or at least available through a FOIA request?

Also, this seems to be nearly the same thing as the auto bailout.  The U.S. Government is purchasing securities that represent real things.  If the real estate market tanks again, can the government call in these investments and essentially just take real property? 

Why didn't the government just do what it did in the 80's by creating the Resolution Trust Corporation, a quasi government entity, that would buy the properties who's loans were wrapped up in the MBSs and CMBSs?  This way, they would have a value, and private value seekers could be purchasing these properties at a discount, resulting in a more stable market later?  By proping up the value of the securities we are setting ourselves up for a huge fall again, only this time, the Fed is holding the bag.

darbikrash's picture
darbikrash
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Posts: 573
LogansRun wrote: This is all

LogansRun wrote:

This is all a scam based on the Hegelian Dialectic:  Problem - Reaction - Solution

............................

Study the Hegelian Dialectic.  It will tell you all you need to know about how the elite families rule.

I wonder if you could clear up for me the numerous references to dialectics, as I am not sure I follow the concern. A layman’s definition of Hegelian dialectics is simply the association <Thesis>, <Antithesis>, and <Synthesis>.

This three value logical system is most often used as a key element in deductive reasoning, a critical component of the Scientific Method. Not sure how this appears to be such a threat?

If you are somehow referring to Marxism when you use the term dialectics, Marx used this concept in a very different manner. Most will tell you that Marx’s use of dialectics is radically different from Hegelian dialectic, as it is almost 180 degrees opposite. A layman’s definition of Marxian dialectic would describe the ability to look at many different factors that can influence a particular situation, each independent, influencing, and at the same time operating independently of each other.

An simple example might be given regarding the relationship of banking with the advent of ATM machines. There is multi-party behavior associated with banking before ATM’s- for example if you wanted to withdraw money you went to a physical branch, went inside and stood in line to make a withdrawal from a physical teller. The bank had a process, you had a process, and indirectly, any people that received money from you as result of these cash withdrawals also had a process.

With the advent of ATM machines all of that changed. The banking system changed, the way the consumer handled money changed, and the way that cash influenced the economy changed- and changed profoundly. Note that this happened exclusively by a change the banks alone instigated, they are the ones that added the machines, however, this affected many unrelated things in the general economy, and these impacts were behavioral and permanent.

Marxian dialectics can be used to examine the large scale, multi-variable impact on many stakeholders, as they evolve dynamically, and how this evolution impacts other stakeholders. In mathematics we would call this a complex non-linear relationship, (like predicting the weather) but in the 19th century no such mathematics existed, or more accurately, insufficient compute power existed to solve these types of differential calculus. So people used philosophy to help them understand complex non-linear dynamics.

Beyond this, the concept was extended to include dialectical materialism, which is something altogether different.

I’d like to understand how the elites are using this process of Hegelian dialectic to “rule”, can you elaborate?

RJE's picture
RJE
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Posts: 1369
LogansRun,

...I do see but what are we ever going to do about any and all prophecy or right from the horses mouth outcomes. Truthfully, what are we going to do? I will just go about my business until I am confronted with a new reality and then decide how I wish to proceed.

A quick story: I went to my accountants this morning with my son. Anyways, taking I-94 West towards Port Huron and I didn't know this but they did some road work some time ago and the lane I normal travel and gets me off the freeway now takes me to the off ramp, to a bridge that crosses into Canada. OK, no problem until I remembered my son and I were planning on shooting at the gun range when we were finished with the accountant. Here I am with weapons sticking out the window and enough shells to carry on an assault, shot gun and shells, 45 and shells, 9mm and shells!!! Going over a Bridge to Canada!!!! Freaked out and I was certain this was going to be a long ass day, maybe confinement in some fenced in yard somewhere where they could hold my son and I indefinitely. Anyways, thankfully I got a free pass to do a turn around and still had to be stopped, ID checked, and thankfully no one checked the back seat of my truck.

So Yes, I was well aware of how the world had changed and I was quite worried, and what can I do about it? Not a damn thing except to watch out where I was going. This is going to sound a little silly too but one of the first things I thought was, "yes, I had clean underwear on". See, that was huge back when I was a kid and if Mom asked me/us once then a thousand times. Crazy stuff.

LogansRun, I don't doubt for a second that you could be 100% correct. I just don't want to deal with that just yet I guess. I have read everything, and read what you left here for me to read. I just will wait it out until things get just a bit clearer. All I want out of this life now is to get to Yellowstone with my Lady, put up a chair, drink a nice Crown and Sprite, maybe fire up a little somethin, somethin, and chill for 30days.

Be Good Brother

BOB

phecksel's picture
phecksel
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Posts: 148
RJE, That would have been

RJE,

That would have been ugly... Several people have been jacked by that construction.  Me, I probably would have stopped in the middle of the bridge and thrown everything into the river... certainly would have cost less to replace it then paying for an attorney

RJE's picture
RJE
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Posts: 1369
Ugly Indeed,

...I was truly lucky.

BOB

westcoastjan's picture
westcoastjan
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Posts: 466
welcome and good questions

Hi basildave,

Welcome to the site - your first post asks some very good questions.

I am no expert but I think part of the answer to what you are suggesting would be that this would bring more transparency to the game, which is not wanted by TPTB (the powers that be). A lack of transparency helps shield their shennanigans from the sheeple, who don't really pay attention anyway, but why take any chances? I see a financial system full of financial instruments that are so complex that  no one, banksters included, really have a handle on what is in some of these paper products, making everything 50 shades of opaque - anything but transparent - just the way they like it!

I watched a documentary awhile back on how people are using debt to cope with life stuff - both needs and wants. Many people were either re-mortgaging their houses or using their credit cards to pay large medical expenses, utility bills, renos, vacations etc etc. The end result is large personal debt with no underlying asset to support it. This debt was then sold off to the banksters who, with their math whizzes and fancy shmancy algos, collated it all into a basket of commercial paper and sold as securitized (not!) investments like MBS, to God only knows who all over the world.

In trying to understand this concept I created a picture in my mind: Imagine one of those old clear barrels used for contests where all the names go into the barrel, it is spun and spun around and then a name picked to declare the winner. The names in this instance represent commercial and mortgage backed paper. The "winner" is now the proud owner of one of these opaque securitized investments, which really means they are now the proud owner of "A's cancer treatment pyments, B's overdue hyrdo bill, C's house reno, D's big trip around the world, E's college tuition, and maybe, if they are lucky, a house that is now worth less than half of what the mortgage is.

There was so much of this crap issued that at this stage no one knows with any certainty who or what institutions own what. Therefore there is no certainty at all around the value of any assets being shown on balance sheets. This caused the credit crunch - banks became scared to lend as they could not accurately discern what the value of the collateral was.

The kicker, and the ultimate insult to we the peons, is that regardless of true asset value, the banksters now get the wonderful happy solution of getting rid of their toxic assets of unknown value, by selling them at 100% face value to the fed. How good is that? In the process the fed may very well end up holding title to half of american real estate. The rest of us, well, we are getting royally shafted as the fed does not care about us, or helping people by doing things like easing mortgage payment requirements to make it easier for people to keep thier homes. TPTB are most happy to see the 99% weakened even further by leaving us holding the bag, while the 1% continue to skim the cream off of the top. This is how it has always been - keep the serfs in a poor and weakened state to prevent them from gaining any power.

Like others have said, there is no way this is going to end well. People are awakening, and will only take so many hits before they start swinging back. TPTB know this too and are preparing accordingly. Thus we need to prepare ourselves for whatever might unfold, whenever it might happen.

Jan

locksmithuk's picture
locksmithuk
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jturbo68 wrote: What happens

jturbo68 wrote:

What happens when the Fed has soaked up all the assets that the banks have.  It sounds like a good deal for the banks to lose all ogf that crappy MBS paper.

Can the fed simply default on the bad paper it is holding, eliminating that bad debt from the system?  and would this be a good thing?

Thx

Good questions. I was wondering the same thing. Sounds like once the debt has disappeared the Fed is in effect just handing over free, risk-free, unsecured money. Oh wait.....

RJE's picture
RJE
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I Believe,

...the bad paper would just stay on the books at the Fed until (with inflation) they get back the value they paid for the paper. If paper cost $50 bucks then they sell at $50 bucks. Then zero balance sheet at Fed. However, they paid way to much to keep the banks whole but they have their fingers crossed or legs, and will wait I suppose before selling. It's just an entry by the Fed I suppose, and they could wait forever. Their the Fed.

Regards

BOB

Adam Taggart's picture
Adam Taggart
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Posts: 1827
The sound of one hand clapping

Those asking how long the Fed can keep these bad assets on its balance sheet should revisit this piece from Chris from back in 2009: The Sound of One Hand Clapping

Excerpts below:

If we treat the credit doubling that occurred between 2000 and 2008 (from $26 to $52 trillion) as a normal bubble that will follow the same pattern of decline as numerous historical bubbles, then we might reasonably predict that some $26 trillion of debt will somehow "go away" over the next 6 years.  This is indeed a massive black hole.

Yet everything just keeps perking along.  What gives?

The answer, I believe, requires us to ask a Zen-like question along the lines of, "What is the sound of one hand clapping?"  That question is, "If nobody recognizes a defaulted debt on their balance sheet, does it exist?"

This is the world in which we currently live.  Trillions in probable and provable losses quietly exist, out of sight, on the balance sheets of the Federal Reserve and other financial institutions.  If they ever come out of hiding and onto the books, I think the deflationists will be proven correct beyond all doubt.

But let me ask this:  What prevents the authorities from simply storing them out of sight forever?  Or at least long enough to allow the wave of liquidity to work its inevitable magic?  So far, much to my great surprise, they've managed to do exactly that, with hardly a squeak from the mainstream press (although the blogosphere is on the job, as usual).  I am now wondering if they cannot keep this up indefinitely.

In order to answer the main question of this article, we regretfully have to turn to Dadaism* to develop an appropriately absurd non-sequitur:

"What is the sound of one hand clapping?   Insanely high stock and bond prices."

The full article can be read here.

ao's picture
ao
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Posts: 2220
going through the 5 stages and cyber warrior attacks

LogansRun wrote:

Just explaining what's going on.  

Believe as you'd like.  

Unfortunately, history shows exactly what's to take place, and it ain't pretty.  The group that's in power are going to make life extremely painful for us "Serfs", but will make it look like it's anyone's fault but theirs. Then will roll out the Solution that benefits them and only them.  It's all in writing, or verbilized by them.  You just have to take the blinders off and realize, it's not CT anymore, it's now reality (which it's been for many, many years).

Good luck to you and your family.

LR,

Just a reminder (although I know you know this) of the 5 stages, not of death and dying, nor of the 3Es, but of realization of the debt and death paradigm.  One passed through the anger stage a while back (and if you want proof, I'm show you the PM) ... now in the bargaining stage.  Certain statements are warning of feelings indicating oncoming depression stage (with denial of depression being a probable indicator of early signs of developing depression).  It takes time to take this all in when one's paradigm is being systemically disassembled.  BTDT.

For those who doubt, think about Damon Vrabel (strabes) being driven off of his plans to educate the masses by death threats. 

Chris Duane just pulled down two videos and underwent hacker attack.  Former Marines don't frighten easily.

Sgtreport was just shut down by a hacker attack.

It's interesting how those who are speaking out most vociferously against the elite are being attacked the most viciously.  Obama cyber warriors are becoming increasing active.

http://www.canadafreepress.com/index.php/article/52923

With articles like this, I would expect Mike Adams and Natural Health News to be one of the next sites attacked.

http://www.naturalnews.com/038970_gun_control_backfired_America.html

And yes, there are things that one can do to oppose this.  It's one of the reasons why I chose to do paperwork and listen to music rather than go to a Super Bowl party.  Why support elite-theme dominated half time shows and trashy commercials, among other things.

RJE's picture
RJE
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Posts: 1369
The PM (private message) ao is speaking of is ...

ao Dec 30 2012 - 8:51pmDelete
 Unblock

ao message to me that he has referenced here so lets show it. I found it to be condensending as I have always seen this person so...

"Bob, really ... do you kiss your mother with that mouth?  Be nice.  I know it's tough when you're confronted with the truth and have to face your true self but the time to work on addressing deficiencies is now, before the real pressure is on.  It's all about emotional stability and balance.  False bravado and a hot temper won't do it at crunch time.  If I see you at the car show, I might say hello but with your attitude, I wouldn't be inclined to go out of my way to meet you.  Not until you grow up a little.  Here're a few things that might help to get yourself under control.
 
http://www.chenghsin.com/chenghsin-main.html
 
http://www.russianmartialart.com/main.php?page=article_info&articles_id=48&osCsid=a977df05cf79cea66069fa4e3af70d82
 
http://www.russianmartialart.com/forum/viewtopic.php?t=4041&sid=4a974922ade490935f2820add8c9a982
 
You're just angry because you got beat up ... virtually.
 
Here're a couple of other things to chew on.  First, think about some of the things Chris talked about in the Collum podcast.  He would have banned them to the basement 3 years ago.  Now he's talking about them.  Second, think about what this country was like in 2000 and compare it to now.  Did you ever dream you'd see such changes occur?  And the changes are accelerating.  That doesn't mean eternal doom and gloom nor imminent (not immanent) Armageddon nor any of the other silly things you seem to project that it does.  There are dark days ahead, to be sure, and I know the thought of that frightens you, not necessarily for yourself but for your way of life and your family and children and their children.  That's why you react so strongly and oppose considering possibilities involving an epic change in the status quo.  But there's also a light at the end of the tunnel.  Unfortunately, with your attitude, I think explaining it to you at this stage, before you're ready to expand your mind to other possibilities, would be just a waste of my time.  But if you're interested, read some books like Evidence of the Afterlife and My Descent into Death and read about Edgar Cayce, Ralph Moody, Brian Weiss, and others.  It might give you a different perspective on things.  The funny thing is, I think I'm the positive one and you're the negative one, lol.  You think I'm afraid but I have no fear of events to come but I think you do.  Otherwise, you wouldn't react as you."

ao, I don't care what stage of grief you think I'm in or not. Like I said originally to you in the previous PM (personal message, it still stands.

FO

Bob

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ao
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omission is a form of lying

Bob,

How about putting down the swearing, insulting, and name calling you did via PM that induced me to write that?  And please tell us what FO means Bob.  Unlike you, I have too much class to put it out there.  Let's see if you're man enough to be honest about the situation and write what you wrote.  I doubt it. 

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RJE
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This then,

"Bob,
 
I won't bother posting in the thread any more with respect for Adam's wishes but you project a hell of a lot into what I say that's based on your own fears, whether those fears are conscious or subconscious.  Read what I write, my friend, not what you project into what I write.  The fact that my comments stir such an emotional reaction in you demonstrates that fear.  The two most important preparations that one can make for what is coming are spiritual and psychological.  I don't know where you are spiritually.  That's your business but I'd be more than willing to share with you, if you're interested.  If not, that's fine too.  But psychologically, you're all over the place, up and down, left and right.  First you're RED, WHITE, AND BLUE.  Then you're buying Canadian coins and keeping them it Canada.  First you don't have quit in your DNA.  Then you're saying, give it a rest.  First you claim to have weapons expertise.  Then you say things that don't seem to reflect that expertise.  First you claim to be willing to defend your loved ones unto death (and I think you would).  But the fact you crow about it so much reveals that you're not so sure if you'll have what it takes or not. First you claim that one needs to follow rules.  Then you use words like f***, bull***, ****, etc., make ad hominem attacks, and make abortion references (a woman's right to choose), all of which are against the rules.  You makes claim of being very knowledgeable but your frequent spelling errors (bazaar for bizarre, for example) barely reflect a high school education.  And your compulsive need to appear as a modern replacement for Gloria Steinem in terms of women's advocacy, is so forced that it reflects a deeper inclination that is probably at odds with how you would like to be perceived.  As you would say, it's bizarre.  And that concerns me, especially when you're giving advice to others.  I get the sense that you think gold, guns, and a garden will get you through.  Maybe it will, maybe it won't.  But emotional stability is going to be very, very important and I see that as a deficiency that you haven't addressed in your preps.  That being said, I'm speaking to you like I'd speak to a brother.  No bull****, straight up man-to-man talk.  I actually like you.  I just disagree with you, as you do with me, but I don't harbor any ill will.  Best of luck 

ao I do respect woman (Pops taught me this) and I am sorry that feels strained to you. I have 5 sisters and a Mom. What? Really!? Spelling errors are common among the brightest here, Chris even. I blame spell check frankly, who doesn't anymore? As for the rest of this critique, just psycho babble to me. Oh, and  I do believe woman have the right  to chose and who's rules exactly are they breaking?

Respectfully Given

BOB
.
 

Adam Taggart's picture
Adam Taggart
Status: Peak Prosperity Co-founder (Offline)
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Posts: 1827
Warning

Bob & ao -

We've been here before.

If you two have differences you can't resolve over PM, take it up with the moderators. Or take it up with me. Don't spillover your personal issues onto the public threads. It devalues the discourse this community deserves

As always, here's a reminder to review this site's rules for posting

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ao
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partial truths are untruths

RJE wrote:

"Bob,
 
I won't bother posting in the thread any more with respect for Adam's wishes but you project a hell of a lot into what I say that's based on your own fears, whether those fears are conscious or subconscious.  Read what I write, my friend, not what you project into what I write.  The fact that my comments stir such an emotional reaction in you demonstrates that fear.  The two most important preparations that one can make for what is coming are spiritual and psychological.  I don't know where you are spiritually.  That's your business but I'd be more than willing to share with you, if you're interested.  If not, that's fine too.  But psychologically, you're all over the place, up and down, left and right.  First you're RED, WHITE, AND BLUE.  Then you're buying Canadian coins and keeping them it Canada.  First you don't have quit in your DNA.  Then you're saying, give it a rest.  First you claim to have weapons expertise.  Then you say things that don't seem to reflect that expertise.  First you claim to be willing to defend your loved ones unto death (and I think you would).  But the fact you crow about it so much reveals that you're not so sure if you'll have what it takes or not. First you claim that one needs to follow rules.  Then you use words like f***, bull***, ****, etc., make ad hominem attacks, and make abortion references (a woman's right to choose), all of which are against the rules.  You makes claim of being very knowledgeable but your frequent spelling errors (bazaar for bizarre, for example) barely reflect a high school education.  And your compulsive need to appear as a modern replacement for Gloria Steinem in terms of women's advocacy, is so forced that it reflects a deeper inclination that is probably at odds with how you would like to be perceived.  As you would say, it's bizarre.  And that concerns me, especially when you're giving advice to others.  I get the sense that you think gold, guns, and a garden will get you through.  Maybe it will, maybe it won't.  But emotional stability is going to be very, very important and I see that as a deficiency that you haven't addressed in your preps.  That being said, I'm speaking to you like I'd speak to a brother.  No bull****, straight up man-to-man talk.  I actually like you.  I just disagree with you, as you do with me, but I don't harbor any ill will.  Best of luck 

ao I do respect woman (Pops taught me this) and I am sorry that feels strained to you. Spelling errors are common among the brightest here. As for the rest of this critique, just psycho babble to me.

Respectfully Given

BOB
.
 

You still haven't told the truth Bob, have you? Post your comments.  No?  I'm not surprised.  I'd be ashamed to post them too.  Plus, you'd get banned if you did.  We could carry on this discussion on PM, which is more appropriate, but for some reason, you seem afraid of me and blocked me.  That's fine but it leaves posting as my only means of replying. 

You know, when you posted about your physical problems to Mark, hoping for a reply (which he isn't really professionally educated or equipped to do which is why he didn't respond), I really wanted to write you giving you some advice.  It's what I do and I've been acknowledged as one of the best in the country at it.  But I also wasn't going to waste my time composing a lengthy reply only to have it thrown back in my face.  If you're interested, I'm willing to help.  If not, that's fine too.  I can understand.  Just don't let your pride get in the way of your common sense.  I'm offering you a peace offering if you're willing to accept it.  Ball's in your court.   

LogansRun's picture
LogansRun
Status: Diamond Member (Offline)
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Posts: 1369
I'll PM you when I get a chance

As this is a pretty in depth question, but not too hard to understand.  

Problem - Reaction - Solution

Problem - Reaction - Solution Part 2

Hegelian Dialectic

Darby, these are probably way below what you're looking for in an explanation.  But they're a good start.  And truth be told, it really is as simple as what the 3 video's above teach!  As is stated "Simple and Diabolical".

darbikrash wrote:

LogansRun wrote:

This is all a scam based on the Hegelian Dialectic:  Problem - Reaction - Solution

............................

Study the Hegelian Dialectic.  It will tell you all you need to know about how the elite families rule.

I wonder if you could clear up for me the numerous references to dialectics, as I am not sure I follow the concern. A layman’s definition of Hegelian dialectics is simply the association <Thesis>, <Antithesis>, and <Synthesis>.

This three value logical system is most often used as a key element in deductive reasoning, a critical component of the Scientific Method. Not sure how this appears to be such a threat?

If you are somehow referring to Marxism when you use the term dialectics, Marx used this concept in a very different manner. Most will tell you that Marx’s use of dialectics is radically different from Hegelian dialectic, as it is almost 180 degrees opposite. A layman’s definition of Marxian dialectic would describe the ability to look at many different factors that can influence a particular situation, each independent, influencing, and at the same time operating independently of each other.

An simple example might be given regarding the relationship of banking with the advent of ATM machines. There is multi-party behavior associated with banking before ATM’s- for example if you wanted to withdraw money you went to a physical branch, went inside and stood in line to make a withdrawal from a physical teller. The bank had a process, you had a process, and indirectly, any people that received money from you as result of these cash withdrawals also had a process.

With the advent of ATM machines all of that changed. The banking system changed, the way the consumer handled money changed, and the way that cash influenced the economy changed- and changed profoundly. Note that this happened exclusively by a change the banks alone instigated, they are the ones that added the machines, however, this affected many unrelated things in the general economy, and these impacts were behavioral and permanent.

Marxian dialectics can be used to examine the large scale, multi-variable impact on many stakeholders, as they evolve dynamically, and how this evolution impacts other stakeholders. In mathematics we would call this a complex non-linear relationship, (like predicting the weather) but in the 19th century no such mathematics existed, or more accurately, insufficient compute power existed to solve these types of differential calculus. So people used philosophy to help them understand complex non-linear dynamics.

Beyond this, the concept was extended to include dialectical materialism, which is something altogether different.

I’d like to understand how the elites are using this process of Hegelian dialectic to “rule”, can you elaborate?

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LogansRun
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Shove instead of gentle push

I understand.  Everyone must go through the stages on their own.  

I hadn't heard about Chris Duane's situation, but not surprising. 

Life is getting more and more interesting.  They're starting to shove, more than gently push....

ao wrote:

LogansRun wrote:

Just explaining what's going on.  

Believe as you'd like.  

Unfortunately, history shows exactly what's to take place, and it ain't pretty.  The group that's in power are going to make life extremely painful for us "Serfs", but will make it look like it's anyone's fault but theirs. Then will roll out the Solution that benefits them and only them.  It's all in writing, or verbilized by them.  You just have to take the blinders off and realize, it's not CT anymore, it's now reality (which it's been for many, many years).

Good luck to you and your family.

LR,

Just a reminder (although I know you know this) of the 5 stages, not of death and dying, nor of the 3Es, but of realization of the debt and death paradigm.  One passed through the anger stage a while back (and if you want proof, I'm show you the PM) ... now in the bargaining stage.  Certain statements are warning of feelings indicating oncoming depression stage (with denial of depression being a probable indicator of early signs of developing depression).  It takes time to take this all in when one's paradigm is being systemically disassembled.  BTDT.

For those who doubt, think about Damon Vrabel (strabes) being driven off of his plans to educate the masses by death threats. 

Chris Duane just pulled down two videos and underwent hacker attack.  Former Marines don't frighten easily.

Sgtreport was just shut down by a hacker attack.

It's interesting how those who are speaking out most vociferously against the elite are being attacked the most viciously.  Obama cyber warriors are becoming increasing active.

http://www.canadafreepress.com/index.php/article/52923

With articles like this, I would expect Mike Adams and Natural Health News to be one of the next sites attacked.

http://www.naturalnews.com/038970_gun_control_backfired_America.html

And yes, there are things that one can do to oppose this.  It's one of the reasons why I chose to do paperwork and listen to music rather than go to a Super Bowl party.  Why support elite-theme dominated half time shows and trashy commercials, among other things.

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RJE
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Posts: 1369
Dummy me, I root for the underdog...

...as just sometimes a home run is called when the ball hits the FOUL pole. When the little shortstop hits the homer to win the World Series (Bucky Dent), and when Bob Gibson loses (he seldom did) and the Tigers win the World Series.

Here at PP we have a diverse group of people, and honestly we have our thoughts and expectations. Not always are we wanting to live in the Matrix, believe in the Illuminati (Angels and Demons, DaVinci code) or like to be challenged by the enlightened ones. Some of us have skirted lifes tragic ways just fine until now, and have found the same resourses as we all have here at PP. We have all arrived at the same place and time for the truth, Dr.Martenson's character has brought many of us here, and now we have to contend with the babblers who see things already finished and in total and complete disrepair. As it is rigged against all us "Sheeple". I say right now I am not "Sheeple" and to believe you are is already a self fullfilling prophesy.

It becomes too much, for me anyways. Not in the way that I can't handle the TRUTH but because no one knows the ending, and if they say they do then I will question them. Hopefully not be censored when I answer what is an obvious slander to another person here. I figure, if reference material is available then share it with everyone and let the words speak. I have no ego with regards to the TRUTH.

Some of us guard ourselves against those who have particular syndrome's like the "God Complex":

http://dictationtherapyfordoctors.blogspot.com/2007/09/battling-god-complex.html

Some  of us even reason why would someone of such stature and good works, and are well regarded chase a simple minded house builder around a site like PP. I mean, he's world renowned a "Legend in his/her own mind" perhaps?:

http://www.urbandictionary.com/define.php?term=Legend%20in%20his%20own%20mind

My point to all of this is I will let the numbers tell the tape, allow for history to be written by the winners, and just live now, for the moment, and I really do not care what is only guessed at in the future. I won't be consumed in other words by something yet transparent. I certainly don't want to be brow beaten by anyone who claims to have the truth, the whole truth, and nothing but the truth. These type Folks in my world are scam artists, less, and try and give Gold coins away on some board walk somewhere. Their creepy in other words, and to be avoided.

Does anyone here really care if everyone knows the price of Gold? Does it impact your life in the least, and how exactly? So perhaps a venue was created for shits and giggles, and I think now that was what was achieved, and only that.

I understand they (any member here at PP) are well regarded by some, and so I walk away from them, avoid them, BLOCK THEM, and then sometimes you have to give an alternate answer to the self righteous crowd. Some balance then.

I'll stand alone then if necessary, have always reserved the right to change my mind at a moments notice and are quite adaptive as I see this (always) as a necessary tool.

NO!, I need no psychobabblers blowing in my ear telling me to follow them, that I am in trouble if I can't see the light. Just so not me to do anything because someone tells me this is the way. Not me. I'll take the long route then, and I am supremely confident  that I will arrive wherever this is going and have a place. I have arrived here with many of you at PP, at the same time nearly! Go figure.

In my world, not the World over, I am Bob, Dad, Grandpa, Husband, and I excel in my role here. That's  enough for me.

Food for thought: I think we criticize most in others what we have seen in ourselves. Just a thought.

Note: Any mispellings are spell checks fault and if anyone has issues with this then take it up with the Professor as his spelling is not flawless either, and he can answer this better than I. He's the Professor. I'm not. Just a student.

Regards

BOB

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westcoastjan
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Posts: 466
Value is found in diversity

With regard to opinions, disagreements and conflicts...

The strongest teams/societies are those that embrace diversity - indeed it is the only way that vital perspective can be found. There is nothing to be gained from being in a place where everyone displays similar thoughts and actions. A business full of "yes men" rarely prospers; a hockey team with only right shooting wingers will not win the cup; a community with only one ideology is not truly a community, and will not prosper in the same way as one that embraces several ideologies.

PP is a community of global followers, and therefore geographically, culturally, economically and politically different. This is cause for celebration! How lucky we are to have such a wealth of diversity to share perspectives with us!

There are times when perhaps some do not appreciate this diversity, and do not appreciate other perspectives. That is okay. We are allowed to disagree. It is good and healthy to debate. The whole point to a discussion is to get information, filter it and take from it that which one finds useful to their own life. We are not obligated to act upon that which does not resonate with us. What is not okay is when discussion shifts to include insinuations on how people should feel or act or believe; or when beliefs are purported to be the "right" way, or the "only" way. Each person must decide what is the right way for themselves. It is not our place to tell someone else how they should feel, no matter how adamantly we might believe in our own particular perspectives, and no matter how much we disagree with the other perspectives.

This site recently received accolades as being one of the top 100 financial blogs. I personally think it should be #1, but that is beside the point. The point is, it is a top 100 site largely because, in addition to the fabulous wealth of information, there are lots of intelligent and lively debates that take place each and every day. It is what attracted me to the site in the first place. We owe it to ourselves to not allow the discussions to become divisive or acrimonious, which detracts from the professionalism CM et al have worked so hard to create.

My two cents folks. I just felt I had to chime in on this.

Jan

RJE's picture
RJE
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Posts: 1369
Agreed Jan,

...and I cringed a bit as I said this because it is apparent that complimenting intelligent women is somehow trying too hard and means something else. Really? Your a person right? You write intelligent things I think so I will still compliment, and risk being called out for being something I'm not. Gosh, I'm so insecure, and wondering now how I ever survived in the land of the Big Bad Wolf.

Friends Still? Should we be? You're a Girl you know, and I'm a Boy. Ah. Lets risk it.

Respectfully Given

BOB

VeganD's picture
VeganD
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Posts: 597
Bob You made me laugh today

Your humor is appreciated. Hopefully we boys and girls can be friends here.

Denise

RJE's picture
RJE
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Posts: 1369
Denise,

...I am glad you laughed today.

I like Girls

Respectfully Given

BOB

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whatsupprahalad
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Joined: Oct 4 2009
Posts: 2
QE was actually a bank rescue and market collapse

1. FED was the primary reason for market collapse..

FED decided that on Oct 6,2008 that it will start paying interest on deposit of money with the fed by banks.. This was initially supposed to be implemented in 2011 but was fast forwarded to Oct 1,2008 here is the FED notice about paying interest on deposits with FED. (Notice given on 6th Oct 2008 but implemented from Oct 1,2008)

http://www.federalreserve.gov/monetarypolicy/20081006a.htm
 
DowJonesIndustrialAvg
Oct 1,2008:- 10,831
Oct 10,2008:- 8,451
 
Even after FED has reduced interest rates to near Zero and FED Money printing .. actually all the money is going back to the FED as Deposits.. 
 
FED has 1.5 Trillion dollars of Excess Reserves deposited by Banks instead of lending it out in the financial system.. decreasing the flow of funds and creating an artificial dollar scarcity.. 
So on the face of it .. FED is showing that it is doing all it can to increase liquidity ..
but actually its just the opposite.. it has tightened the flow of funds by giving the Banks a Risk free option of income.. 
http://4.bp.blogspot.com/-S7qi8SiXBww/TnxOGypQLaI/AAAAAAAAAUQ/Nq1D6rKR6lE/s1600/FED-Reserve-Chart.png
 
There are FED linked banks and there are local banks (which are not dependent/linked to FED) This artificial Scarcity by FED controlled banks is leading to collapse of small banks (started by professional bankers) 
The FED Linked banks are then taking over these local professional bank`s for pennies to a dollar again gaining control of the banking business..
-------------------------
Now the question is .. when interest rates rise.. the excess money from the FED will flow out .. making assets prices rise even when the economy is doing badly..
 
=happy investing
derelict's picture
derelict
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Posts: 6
Pondering the mechanics

Here's a thought: you've read about hedge funds like Blackstone buying up actual properties. This has provided support to the housing market, much to the government and industry's pleasure. I am betting the hedge funds will be able to flog on these properties just as they have been able to flog on mortgages, and so essentially what you are seeing is the government become the backstop for the housing industry, but quite literally at the level of purchasing houses themselves. Yikes.

As to the purchasing of treasuries. Alasdair hints at this when he says QE is now wrapped up in financing the government. The Fed tells the primary dealers how much (how many billion, and what duration) treasuries it wishes to buy. The primary dealers buy the notes and bonds with newly printed money as described. The money goes to the Treasury. The Treasury uses the money to fund unemployment and Medicare payments, hire defense contractors, etc. The money is not sitting at the bank. The original description doesn't capture that process fully or makes it sound like there's a cash injection into the banking system but it's really a cash injection into the funding of the federal government and, when you consider such programs as ARRA, the state and local government as well.

johnnybrocker's picture
johnnybrocker
Status: Member (Offline)
Joined: Feb 11 2013
Posts: 2
QE

Is holding physical Silver going to help me?  I put every and I mean every spare dollar I have into American eagles and canadian Silver Maples.  My wife thinks I'm crazy!!!

Wendy S. Delmater's picture
Wendy S. Delmater
Status: Diamond Member (Offline)
Joined: Dec 13 2009
Posts: 1515
Hello, johnnybrocker.I can't

Hello, johnnybrocker.

I can't tell you what's right for your situation, but here is what we did. We paid off all debt first. Then we built up ways to cover our food, water and energy needs: garden and pantry, rain barrels and water filter, solar hot water tanks & woodstove. Only when those were fixed did we bother with a little silver. Our home state (SC) takes it as legal tender at the spot price, and we bought enough silver to pay a few years worth of homeowner taxes. We got a very small mount of PMs (precious metals) but only after we were prepared for things like power outages, disruptions to our local deliveries (for whatever reason), and such. In my opinion, unless you are wealthy you are better off taking care of other priorities first. You cannot eat silver, nor can you drink it, nor can you wrap yourself in it to keep warm. It's good stuff, but keep it in perspective.

Check out the Take Action steps here at PeakProsperity.  And welcome.

Jim H's picture
Jim H
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Posts: 1478
On eating Silver

Silly Wendy.. of course you can eat Silver!  You can drink colloidal Silver, and rub it on your skin too.  

On a serious note, I agree with Wendy that Silver should not be anyone's only prep.  It is though probably the best way that I can think of to store generational wealth.  It is dramatically undervalued today due to the price suppression going on.    

Paul Karason

reference:  http://www.dailymail.co.uk/news/article-1212557/Blue-man-Paul-Karason-bl...

RJE's picture
RJE
Status: Diamond Member (Offline)
Joined: Aug 31 2008
Posts: 1369
JB,

I so agree with Wendy, and I think all here at PP would advise the same, and satisfying all the necessities first are a must. Silver will have to be spent anyways if you leave yourself improperly prepared so her reference material was a thoughtful suggestion.

Think three years ahead and prepare all possible scenarios, options, for all eventualities. PMs would then be your next step.

Welcome

BOB

johnnybrocker's picture
johnnybrocker
Status: Member (Offline)
Joined: Feb 11 2013
Posts: 2
Silver

Thank you Wendy for your thoughful words.  I'm so new to this whole world economic trouble.  All debt is paid but it's really difficult to prepare so many areas of life that we take for granted.  It's a road we have just got on and hopefully we will continue to get advise from thoughtful folks who are also preparing for big changes.

cmoorer's picture
cmoorer
Status: Member (Offline)
Joined: Nov 29 2013
Posts: 1
OUr Money

Please help me to understand what you are saying:

Basically, the fed is buying up assets (financial assets) or the interest on these assets that we, the people, have invested and placed in the care of our banks (our money in savings accounts, checking accounts, cds, etc). So, in all actuality, we the people are paying the fed to buy up our money and then pump it back into our economy.

So basically, the money that the fed is using is/are based on intangible assets (investments/bonds) instead of something tangible such as gold/silver.

Is this correct?

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