Podcast

David Collum: We're Headed for a Showdown

Broken markets and abuse of law have consequences
Saturday, December 29, 2012, 3:49 PM

In the Big Rock Candy Mountains,
The jails are made of tin.
And you can walk right out again,
As soon as you are in.

-- Harry McClintock, Big Rock Candy Mountain (1928)

Fresh from releasing his exhaustive and excellent Year In Review last week, Dave Collum sits down with Chris to discuss the key developments of 2012 in detail.

One area they focus on in particular is how 2012 appears to be the year when consequences died for criminal acts by the powerful and connected. MF Global, HSBC,  LIBOR-gate -- the lesson from these broad-daylight scandals seems to be that, IF you're punished, the worst you'll experience is a fine that's a mere fraction of the profits earned from your crime:

Dave Collum:  Corzine is a particularly problematic case, because Corzine, while being investigated, was bundling funds for Obama, and Obama's Justice Department was in a terrible conflict. They should have shut down the bundling at the very least for the optics. They did not. In the end they dropped the charges against Corzine. They never gave immunity to his second in command. If you get immunity, you not only cannot be charged but you are forced to testify. You cannot plead the fifth. If they had taken the second in command and said you have immunity, now spill your guts, Corzine would be in jail now, I think. That is my guess. We certainly would know what happened. They do not want Corzine. He is too connected. 

Chris Martenson:  This is an interesting sort of theme, that if you are connected enough some sort of a story is made up. What just came out recently was this whole story around HSBC. They got caught laundering billions and billions of dollars for drug cartels. You and I know that as a private citizen, if you are just driving down the road and you get pulled over and you have cash in your car, no matter how much you can prove it is yours the police can still seize it and hold it. They can force you to prove that it is not illegal. Even in some cases that is not sufficient, with some test cases we have out there. HSBC gets absolutely nailed. The Justice Department swoops and declines to press any criminal charges because I believe the quote is “They worried that it might prove to be systemically bad for the bank to have any sort of charges laid against them.” What is going on here?

Dave Collum:  It is funny. I had to wrap my Year in Review at some point. As you know, I had to get it in a little earlier this year than we anticipated. On that particular point, I stated, that at the point I uploaded it to you, that it is said that HSBC could be charged as much as 1.5 billion. That is peanuts for the kind of crime they committed. There could also be criminal charges. In the review I said yes, there could be, but there will not be. About two days later they said that there would be no criminal charges.

I think HSBC actually inherited the BCCI (Bank of Credit and Commerce International) clientele. I said that somewhat facetiously, but not totally. The BCCI collapsed in the 1990s. That released an awful lot of dark clients, CIA and various intelligence agencies, the drug cartels, you name it. Anyone who wanted to do nefarious things with the banking system was there. It was a huge bank. They went belly up. They went somewhere. I think they went to HSBC. Now they got caught.

Chris Martenson:  That could be. The thing that is mysterious to me is that every so often they will trot out pictures of cash and say they found $25 million. As you and I know, the actual global drug trade is over one trillion dollars. Ninety-nine percent of that gets laundered back through the banking systems somehow. The idea that this is vaporized, difficult to track, or unknown is ridiculous to me. When finally something does happen where somebody gets caught – HSBC in this case – the idea that no criminal charges are coming is another sort of statement. It is the same statement.

The reason I am connecting this right here is that while Jon Corzine is doing things for very politically powerful people – in this case you mentioned the bundling of funds for Obama – HSBC also must have had some very powerful clientele within that roster of things. The next thing you know, there are no charges that get filed. I understand this is kind of how the world works a little bit. It is so pervasive, so in-your-face, and so outrageous that I feel this growing gap between what you and I as citizens are expected to comply with on a yearly basis under penalties that are fairly swift and certain if we fail to, and what the institutions seem to be able to get away with. My perception, and maybe I am getting cranky in my older age, is that this seems wider than it has ever been to me.

Dave Collum:  It has gotten so blatant that they do not seem to feel the need to hide it. I think if the BCCI scandal broke now that nothing would happen. There is a great example. They got caught doing all of these things that HSBC got caught doing. That bank imploded because the curtain got pulled back too far. They could not put the scandal away. I think a lot of the things in the past that caused trouble would no longer cause trouble now. There is no penalty. They are temporary regulators or something. They are just waiting for their job on Wall Street. They have gotten no one. They have convicted no one of anything that I can tell. I know of no instance.

Chris Martenson:  I think the one story they have managed to get away with, and they used it again with HSBC, is the too big to fail. That is their story. If we somehow collapsed HSBC, this would be systemically awful. We are in such perilous times right now that we cannot afford to even test that theory out. Therefore we cannot press criminal charges because somehow holding a few people responsible at a giant institution like HSBC would cause it to collapse or something. I am not quite clear on what the story line is. It does not really hold water to me. It looks more like excuse-making than a solid rationale by any decent measure.

Dave Collum:  They almost do not even say that now. I am not even hearing that. I am just hearing that it goes away. They have even stopped making fake excuses. It just goes away. They said we cannot get Corzine and we cannot get HSBC. We cannot get these guys. They do not give an explanation. This is some form of Stockholm syndrome, where you start enabling your captors. I think at some point this all comes to a head. I think these guys should be careful. They have decided that the rule of law is not important. If that is the case, then they might suffer the consequences of no rule of law. I think we are heading for a problem. We are going to have a showdown at some point, or we are heading for a much more closed society and more corrupt society. 

Beyond this, Chris and Dave discuss resource depletion, the box the Fed is in, and the future price direction of stocks, bonds, gold and the dollar.

Click the play button below to listen to Chris' interview with David Collum (54m:37s):

Transcript: 

Chris Martenson: Welcome to another Peak Prosperity podcast. I am your host, of course, Chris Martenson.

This week we welcome Dave Collum to the podcast. For those of you unfamiliar with Dave, he is a professor of chemistry and chemical biology at Cornell University, the place I got my MBA from. In addition to his academic interests, Dave authors an annual macroeconomic assessment titled “Year in Review.” It is hands-down the best synopsis of everything that mattered during the previous 12 months. If you want to read it, it is at [PeakProsperity.com]. You can find it. It is around there. It is a great synopsis.

We are going to discuss that today. Dave's latest Year in Review really touched on some things that I am very anxious to talk about. I am excited to have him here with us now live. Dave, thank you so much for joining us again this year.

Dave Collum: Hey, I am thrilled to be here. We had a podcast about two years ago that was my favorite of all recorded events that I have ever done. I jumped at this opportunity.

Chris Martenson: Then we should make it an annual occurrence at least. You know where I want to start? One of the things I am most struck by in reading your 2012 review, all of this compressed into a single document, is just how far off the track we seem to be. Markets are structurally broken by allowing computer-driven trading strategies on one end of the spectrum, while the truly powerful institutions and in some cases individuals are allowed to get away with blatant thefts, felonies, and other assorted misdemeanors and malfeasances. Here is the question: Is this just how things have always been, but are now being exposed by macroeconomic weakness, Buffett's famous tide going out? Are these things actually getting worse? You have been tracking this year after year. What do you think?

Dave Collum: I think it is a little of everything you mentioned. There is no question that we have access to this information now, which we did not use to have. The Internet is a phenomenally democratic device. I hear people say it was the greatest thing since Gutenberg. I was dismissive of that as hyperbole. [But] the more I think about it, the more I tend to agree with that. I can reach out to people that were unimaginably distant from me in the past. Government, as it gets bigger and bigger – even a fixed level of corruption will get bigger. I think that is a problem.

I draw an analogy in the review about global warming and monetary policy. The global warming debate is one where if we are heating the planet, what we not only get is a higher temperature, which would be analogous to inflation, but we also get an increase in volatility. We get more turbulent weather, as in Sandy-like events. I think that happens in the markets themselves. I think it also happens in the corruption that you get. As trillions move around the planet, the crime syndicates are going to go straight for that money. There is no money to be made in the little stuff when you can make so much money based on Federal Reserve and central banking largesse. I think it is has gotten massively problematic.

Chris Martenson: This is interesting to me. To pick a couple of cases and one that you did highlight, the case of MF Global – and in particular, to name an individual, Jon Corzine – he appears to have been allowed to get away with what occurs to be blatant theft. The thing that just absolutely drives me nuts in this story is this story line that they immediately came out with that the money vaporized. Somehow money can just go away. Oops, we cannot track it. You and I both know that everything is tracked. If money could just randomly appear and disappear, the Russian mafia would have figured that out long ago and just done the opposite of vaporizing, depositing money out of nowhere into accounts. It does not happen. How are they getting away with pushing that story line, that it just disappeared?

Dave Collum: That particular story, I think, was in the Wall Street Journal. That got denounced by a lot of people. That drew scorn very quickly. It was certainly a planted story. That was an attempt to front-run it and try to come up with some story line that people would accept as if the money were no longer traceable. That is just nuts.

My best suggestion is that they should get a computer, too. That would allow them to track it. Then afterward, as they started sort of entangling the mess that this MF Global created, you get these trustees, a guy named Giddens and then Louis Freeh in there started negotiating with the depositors, the ones who got hosed in this deal. You discover that the money really does exist. What these guys are negotiating is that if the depositors agree to take their money, which means therefore it was not vaporized, they also have to agree to not press charges. This means that theft is not theft if you give the money back. It would be a nice system for the bank robbers. If they get caught, they can turn it back in and all is forgiven. That is what MF Global did.

Corzine is a particularly problematic case, because Corzine, while being investigated, was bundling funds for Obama, and Obama's Justice Department was in a terrible conflict. They should have shut down the bundling at the very least for the optics. They did not. In the end they dropped the charges against Corzine. They never gave immunity to his second in command. If you get immunity, you not only cannot be charged but you are forced to testify. You cannot plead the fifth. If they had taken the second in command and said you have immunity, now spill your guts, Corzine would be in jail now, I think. That is my guess. We certainly would know what happened. They do not want Corzine. He is too connected.

Chris Martenson: This is an interesting sort of theme, that if you are connected enough some sort of a story is made up. What just came out recently was this whole story around HSBC. They got caught laundering billions and billions of dollars for drug cartels. You and I know that as a private citizen, if you are just driving down the road and you get pulled over and you have cash in your car, no matter how much you can prove it is yours the police can still seize it and hold it. They can force you to prove that it is not illegal. Even in some cases that is not sufficient, with some test cases we have out there. HSBC gets absolutely nailed. The Justice Department swoops and declines to press any criminal charges because I believe the quote is “They worried that it might prove to be systemically bad for the bank to have any sort of charges laid against them.” What is going on here?

Dave Collum: It is funny. I had to wrap my Year in Review at some point. As you know, I had to get it in a little earlier this year than we anticipated. On that particular point, I stated, that at the point I uploaded it to you, that it is said that HSBC could be charged as much as 1.5 billion. That is peanuts for the kind of crime they committed. There could also be criminal charges. In the review I said yes, there could be, but there will not be. About two days later they said that there would be no criminal charges.

I think HSBC actually inherited the BCCI (Bank of Credit and Commerce International) clientele. I said that somewhat facetiously, but not totally. The BCCI collapsed in the 1990s. That released an awful lot of dark clients, CIA and various intelligence agencies, the drug cartels, you name it. Anyone who wanted to do nefarious things with the banking system was there. It was a huge bank. They went belly up. They went somewhere. I think they went to HSBC. Now they got caught.

Chris Martenson: That could be. The thing that is mysterious to me is that every so often they will trot out pictures of cash and say they found $25 million. As you and I know, the actual global drug trade is over one trillion dollars. Ninety-nine percent of that gets laundered back through the banking systems somehow. The idea that this is vaporized, difficult to track, or unknown is ridiculous to me. When finally something does happen where somebody gets caught – HSBC in this case – the idea that no criminal charges are coming is another sort of statement. It is the same statement.

The reason I am connecting this right here is that while Jon Corzine is doing things for very politically powerful people – in this case you mentioned the bundling of funds for Obama – HSBC also must have had some very powerful clientele within that roster of things. The next thing you know, there are no charges that get filed. I understand this is kind of how the world works a little bit. It is so pervasive, so in-your-face, and so outrageous that I feel this growing gap between what you and I as citizens are expected to comply with on a yearly basis under penalties that are fairly swift and certain if we fail to, and what the institutions seem to be able to get away with. My perception, and maybe I am getting cranky in my older age, is that this seems wider than it has ever been to me.

Dave Collum: It has gotten so blatant that they do not seem to feel the need to hide it. I think if the BCCI scandal broke now that nothing would happen. There is a great example. They got caught doing all of these things that HSBC got caught doing. That bank imploded because the curtain got pulled back too far. They could not put the scandal away. I think a lot of the things in the past that caused trouble would no longer cause trouble now. There is no penalty. They are temporary regulators or something. They are just waiting for their job on Wall Street. They have gotten no one. They have convicted no one of anything that I can tell. I know of no instance.

Chris Martenson: I think the one story they have managed to get away with, and they used it again with HSBC, is the too big to fail. That is their story. If we somehow collapsed HSBC, this would be systemically awful. We are in such perilous times right now that we cannot afford to even test that theory out. Therefore we cannot press criminal charges because somehow holding a few people responsible at a giant institution like HSBC would cause it to collapse or something. I am not quite clear on what the story line is. It does not really hold water to me. It looks more like excuse-making than a solid rationale by any decent measure.

Dave Collum: They almost do not even say that now. I am not even hearing that. I am just hearing that it goes away. They have even stopped making fake excuses. It just goes away. They said we cannot get Corzine and we cannot get HSBC. We cannot get these guys. They do not give an explanation. This is some form of Stockholm syndrome, where you start enabling your captors. I think at some point this all comes to a head. I think these guys should be careful. They have decided that the rule of law is not important. If that is the case, then they might suffer the consequences of no rule of law. I think we are heading for a problem. We are going to have a showdown at some point, or we are heading for a much more closed society and more corrupt society.

Chris Martenson: It is interesting. When I look at Greece's problems, for instance, corruption is part of the Greek culture currently in their political system. Guess what? People do not feel really obligated or like they have to pay taxes. Their tax collections are really awful. There are a number of things that happen when you corrode not just the reality but also the appearance of rule of law, where it is even and fair. I think that is one of three or four things that actually made – or makes, depending on your point of view – the United States a really fantastic place to be. There are contracts, contract law, rules, and criminal penalties that are evenly applied. That is falling apart. I do not want to complain about this; I want to paint this. I think this gives us an insight into what comes next.

Dave Collum: I agree totally.

Chris Martenson: Let's talk about what comes next. Here we are in a system. Let's hold that thought aside about where our broken markets are sitting and the rule of law. I want to talk to you about resources for a minute. This is the other big dot I want to connect here: water, oil, natural gas, coal, copper, tin, fish, land and all of the rest. They all seem to fall under one of two views – resources, that is. The dominant view is that supplies of them are never going to be either limited or limiting. The other view holds that the best non-renewable resources have already been stripped bare and we are down to lesser grades, while every renewable resource we can think of – land, water, fish – are obviously under human pressure. There are a couple of scientists here. I want to talk to about resources. I think the dominant view is not just wrong, but dangerously wrong.

Let's start with the most critical, oil. There has been a magnificent campaign lately to convince us that there is so much still to be had and there is really nothing to worry about. What are your thoughts there?

Dave Collum: The fracking has produced a perception of a game change and some really smart guys buy the model. I am agnostic in the medium term. That is to say that I think it bought us some time. I saw a report that came out that said we will be producing something like 20.1 million barrels of oil a day in the year 2028, some ridiculous thing. It was a three-decimal-point estimate of our production. I was thinking that whoever did that was an idiot. You cannot estimate something like that in three decimal points. It goes nuts. Everyone trumpets the numbers. That is the kind of propaganda you have got. I saw an estimate out there that said in 2028 that Saudi Arabia would become an importer of oil. I am reading this and I am thinking who are they going to import from? The journalist did not ask that question. Where are they going to import from, Mars? This is a silly concept.

They do not take it to the next step. The journalists are not very discriminating, in my opinion. They do not scratch their heads and go into uncomfortable places that you have to sometimes go and ask uncomfortable questions. I think resource depletion is a killer. Jeremy Grantham is out there saying this. There are a lot of people who are. We will eventually be told, when it starts to become a problem, that no one saw it coming. Of course they did. I totally agree to varying degrees, depending on the resource. The one thing I did point out in my review was that I got to talk to the CEO of Chemetall. He said the rare earths are not rare. He said that particular fear of running out soon, the idea that China has them all, is not correct. He said China dominates the market because they undercut everybody. There is some bright news. We are going to run out of helium here. The helium shortage is a big one. People do not know why that is important. It is profoundly important.

Chris Martenson: It is extraordinarily important. Helium, and in particular one isotope, helium-3, is extremely important in medical imaging technology, neutron detection, and other things like that.

Dave Collum: It is also a coolant though. You use vast quantities of helium for a number of these MRI imaging devices. We could find out that we used up all of the helium that would have allowed us to get scans of our knees in party balloons. That will be a silly realization when we get there.

Chris Martenson: Right. Let me turn back to oil for a second. There has been something that has been driving me a little bit nuts for a while. It started in February of 2012. That is where my first instant was that I started tracking it. That is where this idea of energy independence came along. That was the first confusion in this story. They started talking about the United States in terms of energy independence. Of course, forms of energy are not interchangeable. If you are in a lab, your Bunsen burner gives you a very different thing that you can do with it than the electricity that is in the wall switch or anything else.

Energy independence is one thing. Really it is the liquid fuel story that is the most important one. I saw that first clouding. The second thing was that they started lumping all kinds of things in terms of barrel-of-oil equivalents (as if they were truly equivalent), natural plant gas liquids (which nobody can put in their gas tank yet), and other things like that which are just not actually oil.

When we peel all of that fluff away and we actually ask the question about where we are in the oil story, for whatever reason – as I am talking to you today, Brent is $109 a barrel and WTIC is $90 a barrel. When we look at this, those numbers are not consistent with a world awash in oil, given where we are in the macroeconomic story. There is something here, where I am finding a larger and larger disconnect between what we are being told about the energy story and what the actual data is telling me. It is a fairly profound gap right now, both in price information and volume information. Those two things are out of alignment with the official narrative. Why is that happening?

Dave Collum: That crisscrosses a number of troublesome factors. I have trouble getting my brain around this. The commodity market pricing is being set by the futures market. Somehow it appears, and the commodity guys all understand this while I do not, but somehow the guys trading paper get to set the prices for the guys actually trading the hard commodity or soft commodity. If at some point the paper traders take the markets to someplace where the actual supply of the commodity cannot go, we are going to have this gigantic disconnect. That is the first thing.

The other thing is that if you look at the price of oil, people say there is no inflation in this world that we have lived in for the last couple of decades. They rant about the inflation being tame for so long. You know about ShadowStats.com and how John Williams counts inflation in a different way. I like to use college tuition as an inflation measure. Since the late 1990s, oil has gone up tenfold. Here these guys are saying inflation is tamed, but the energy that is fueling the planet has gone up tenfold. That causes a serious brain crack for me. I think the oil is telling us something about the inflation numbers too. You know much more about this whole commodity sector than me. You should keep talking.

Chris Martenson: When we look at the total basket of commodities, it is up close to tenfold as well over the last ten or 12 years. It is up extraordinarily. For the rest of the world that is pricing things in dollars because of the nature of the world commodity exchange, and where the local populace has to spend upwards of 50% of their total income on food and fuel, they are not experiencing anything close. The United States is busy telling the world that there is no inflation. I will guarantee you approximately three-quarters of the world's population is not experiencing it that way. They are experiencing it quite differently.

Dave Collum: That is true. I think the inflation/deflation debate reaches levels of absurdity when you realize that something so complex as inflation and deflation – which I find have an asymmetry already because I can understand inflation better than I can understand deflation and I am not sure why – that the whole debate to talk about something so complex using a binary language is just nuts. This is like asking if it is sunny or raining. There are a lot of other choices out there. I think we are going to have things that matter to us getting expensive and Beanie Babies getting cheaper. They will declare that Beanie Babies are the best inflation measure and declare inflation tame.

Chris Martenson: Absolutely. My final point on resources is that the non-renewable resource sector, which I track carefully looking at things like grain prices, land availability, water aquifers and things like that, is that it is just so clear to me that we are under tremendous pressure already at seven billion. As we head to nine, nine and a half, or maybe ten billion people by the end of the century, clearly those pressures are just going to increase. Has this factored into your investment strategies at all, personally?

Dave Collum: Yes, big time. As you know, my portfolio has not been a standard balanced 60/40 stock/bond portfolio since about 1999. I went totally into hard assets, first exiting every mutual fund, and second, by the middle of 1999, I had started buying lots of gold and silver. In 2001 I started investing in energy. It started out as an inflation hedge. Then I started running into these odd articles about Peak Oil. I had to dig into those. I started hearing about how Ghawar is the Saudi's biggest field and it is gasping. I ran into the whole Matt Simmons story, and Colin Campbell. I realized that oil and energy were more than an inflation hedge.

At the same time, the reason I like those investments is because if for some reason you and I are nuts and are a couple of monkeys with our brains in a Bell jar and they are tweaking us while the world is actually rather normal for everyone else, energy ought to do well then, too. It is my way of attempting to be normal and hedge against inflation and risk. The one thing I do not like being is long the dollar, which is what cash is. I have attempted to invest in things that hurt when you drop them on your foot.

Chris Martenson: I like that. That is solid resources and tangible things. I like all of that.

Before we get to that dollar story, which I do want to get to, you mentioned before that you like to follow ShadowStats for inflation. I have to tie this back to something that I think you pointed to in your Year in Review, which is that right around the election, it turned out that these fuzzy numbers that are being presented to us – the unemployment numbers, housing, inflation, and GDP – I found those to be absolutely bizarre the closer we got to the election. What was your perception there?

Dave Collum: You know the numbers coming out of the Federal agencies are suspect at all times. I think they are politically motivated. I talk about the birth/death model. Here is a model in which there are jobs that you cannot detect. I can buy that model. Then they say we have to figure out how many there are. You say you cannot detect some of them, so how do you figure that out? Then they start fabricating, as best I can tell. The birth/death adjustment now is so substantial and so politically motivated that in some months the birth/death correction is substantially bigger than the job counts themselves. Here they are fabricating fictitious numbers. They never, during the depths of the recession, the birth/death model never said there were jobs disappearing that we cannot detect. There is a highly cooked number.

I think the one you are referring to is right before the election. Unemployment dropped by 0.4%. In units of employment, that is a cliff in itself. That is a free fall. That is, I think, sponsored by Red Bull, that plummet. The visceral response by everyone immediately was that these numbers were just wrong. Then it turned into this political football. You had Jack Welch getting into this big brawl over his Tweet in which he said that the Chicago boys cooked the numbers. It is clear that you cannot believe the numbers in the most general sense because they cook them for political reasons, but during an election year when everything is at stake you cannot believe that they are squared. They are corrupted to the point. In my opinion, the election clouded 2012 so much that it was difficult to tease out the truth, even relative to other years.

Chris Martenson: There is still this crazy thing that happens where the market buys the number, whatever it happens to be upon its release, but then with the inevitable downward revision in prior periods it does not respond to that. Is this just a Pavlovian market response? What is going on?

Dave Collum: That is an Escher diagram. The guy keeps running around. ZeroHedge has been all over this where they say look; it is a three-step process. You announce great numbers. In the quiet of some later moments, you say, “By the way, those numbers are adjusted down.” Then you report the next numbers and you say, “These numbers are fantastic compared to the revised downward numbers.” It is this constant game.

The markets respond in a way that I think Bill Fleckenstein used to say best. He said the guessers are guessing what the other guessers are guessing. It just becomes absurd. It makes no sense. It is a bunch of computer algos chasing news reports. The noise is huge now.

Chris Martenson: We have the price of everything and maybe the value of nothing. I spent some really valuable time talking with Eric Hunsader of Nanex. That is an exchange information outfit. What they do is they have access to all of this exchange information down to millisecond resolution. When I wanted to understand certain things that happened, like why oil suddenly plunged four dollars in two minutes or why gold had 3,000 contracts dumped at 8:40 in the morning or things like that, I have to run over to Eric. He shows me the data. What is happening now is that you have to see this at the millisecond execution time frame now. An entity will come in, and we cannot tell which ones from the data because that is obscured, but you can tell it is an entity who just dumps massive contracts. Clearly this is only to move price. This is why you do something like that. It is not because you are a sophisticated investor.

Two things came out to me around that. One is that these are obvious price manipulations. Those are being left not investigated. That has important long-term implications because price discovery is now broken.

Dave Collum: Totally.

Chris Martenson: The thing that really sort of gets me around these is that it looks like the tiniest amount of money can move giant markets now, because what you will do because all of these computers are out battling with each other like Battle Bots, there is an arena and they are all in there, and all somebody has to do is toss something warm and fuzzy in there and they are all over it. I asked him how much it took for this line in the S&P E-mini to be defended. It was coming at a critical support juncture. All of a sudden it reversed the other direction because somebody bought 30,000 contracts. It has a notional value of quite a bit of money, but the actual amount was a few tens of millions of dollars. That is it.

Dave Collum: Seconds later, if not fractions of seconds later, they can get rid of them. The exposure to tens of millions is on this unbelievably short time scale. This is a metastable system, right? You know this, as a scientist. You get these complex systems with these feedback loops. Anyone who thinks that we are not going to have a catastrophic market seizure at some point going forward, not just in the past, is nuts. This is a system that has the most spectacular feedback loops I have ever seen. These guys at Nanex are treasures. One time I saw something odd. I sent it to Saluzzi. He sent it to Eric. I got the answer back. It is so fantastic that these guys can watch this.

Berkshire Hathaway at $120,000 a share flash-crashed to $1. It does not even make it to CNBC because they are too busy sniffing around Warren Buffett for nuggets of wisdom from this guy who is the biggest stock jobber I have ever seen. Buffett drives me completely nuts. He is a total insider. He trades on inside information. At the same time he has got this little-old-man thing. He is like the Mafia Don walking around in his bathrobe looking innocuous. He drives me crazy.

Chris Martenson: That is all right. I am really interested in this phenomenon. Here is my perception: The markets have all of this fuel being dumped into them, 85 billion a month courtesy of the Fed. That fuels finds its way into the market.

Dave Collum: Not to mention other central banks. That is just us. There are more central banks out there doing this. It is amazing.

Chris Martenson: There is lots of fuel. That is on one side of the equation. On the other side, like the real slow-burn rocket fuel for any market, there needs to be widespread participation. This means you have a productive class of people out there who are busy producing real things. In the consequence of doing that, they earn income and they have some left over for savings that flows into the markets. That is a fairly virtuous route, where you have productivity, value creation, and really productive enterprise. I love that cycle. You can see how that one will work. Retail participation has been negative for how long now? They do not even talk about it. I have to hunt for the information now. It has been 30 or 40 months. I do not even know anymore.

Dave Collum: It is deeper than retail participation. Now it comes down to demographics. Back in the 1990s, they kept saying these markets were going to soar because the Boomers are just going to put more and more in. No one really thought about the fact that Boomers would start going conservative before they retired. You cannot go into retirement carrying Dell and Worldcom, then get out of it later. You have got to start downsizing. The Boomers are downsizing everything. At some point they are going to sell their McMansions. They are going to sell their equity. They are already selling their equity. They are not going back because they cannot afford to. There is this idea that retail has somehow got to come back. The average person has no savings. Their income has been pounded. There is no return trip for these people. The average Boomer has something like $70,000 in savings. This is crazy.

Chris Martenson: Even if they were to sell their McMansions or their portfolio, to whom would they sell it?

Dave Collum: To our kids, and they are making nothing. They have student loans. In the olden days if you go into some burg like Ithaca where I am at, you go downtown and you see these big Victorian mansions. They are not single-owner occupied. What they are is funeral homes and multi-resident dwellings. They are all of these things. They converted them to something useful. I presume those things were built during a heyday when there was a pile of people who had money and they said let's build a big house. They discovered they could not afford a big house.

Now we did the same thing again. [But] there is a difference. Our McMansions are spread all over the countryside. They are not downtown where they can be converted to Victorian stores or McMansion things. They are out in the hills. There is no one who is going to be able to buy them unless you and I are dead wrong and there is some big boom coming and our kids are going to be stinking rich and want to buy a house with 5,000 square feet that costs a fortune to re-roof and heat –by the way – that is also going to depreciate at a rate that is unimaginable, because they are made like garbage.

Chris Martenson: The greatest story never told is that houses are not assets that appreciate. They are depreciation machines.

Dave Collum: They are liabilities.

Chris Martenson: They are liabilities. You feed them money, capital, and effort, and all of that. There is another big story that comes in here that is still not even remotely talked about enough. This is the idea that Ben Bernanke, following in Alan Greenspan’s footsteps, decided that the infinite wisdom is that we are just going to fix things by running interest rates down to 0% for as long as necessary. I think we are committed through 2015 now, or forever? Is that right? We have to wait for unemployment to hit a certain rate it may never hit. This is potentially forever.

Against that backdrop, we have all of these people who are retiring. They should have had money parked in something safe, navigating away from the Dells, Microsofts, and all of that, into some other form of safe bonds, money market funds, or something where they are earning some rate of interest that at least approximates inflation. You and I know that inflation is not zero. It is higher than that. [Bernanke] saddled us with negative real returns. Are we four years into that experiment? If you are a pension fund, an endowment, or somebody with actuarial liabilities, if you are in any way responsible for an entitlement program with investments on the back end of it, this is negative compounding for four years going on five. That is a hole that cannot be climbed out of at this point, because of what Bernanke has done. He has ruined saving. He has ruined actuarial investments. What are your thoughts on that?

Dave Collum: Look at what happened to peoples' nest eggs during the 2007-2009 calamity, which I do not think is the last one as I am sure you agree. their equities were getting pounded and their houses were getting pounded, the people who were 60/40, which is most people even if they did not know it because most people had their money in some sort of pension fund or something, and let's call it 50/50 to keep the math easy, while the equities were getting clobbered the bonds were rocketing. The bonds were soaring because they drove interest rates down. It provided this buffer. As equities got beaten up and bonds soared, it produced a bit of a wash. Some people were hurt but their bond funds were spectacular. Here we are at. It is 2013. Now you have got this ugly case scenario. In the best possible scenario interest rates stay low forever. That is not going to happen, but let's pretend like it is. If that is true, then it means half of their portfolio will return zero. They are getting nothing, a couple of percentage points for a ten-year bond.

As a consequence, it means that they are going to have to get all of their returns on equities. It is not going to happen. There is this folklore out there that says equities go up when rates are low. That is wrong. Equities go up when rates are dropping. Warren Buffett said that in 1999, and it is clear: Dropping interest rates means rising equities. It is a P/E interest rate relationship. Once they are low, the profit is squeezed out. It is gone.

Now, the more logical scenario is that rates rise against Bernanke's will. What would cause that? That would be inflation showing up and you can no longer keep them low. You end up in some high inflation or runaway inflation scenario. Now you are going to lose principal. Now your bond fund is going to get annihilated. The equities are going to get annihilated because who is going to pay for a dividend of 2% when inflation is running high? The equities get pounded when interest rates are rising. As a consequence, you are going to have dropping equity prices. You are going to have dropping bond fund principal. You are going to have no slack. We squeezed the slack out. I do not know if Bernanke gets this or not. He is a smart guy, but he is also a fool. You can be both.

Chris Martenson: I think that is a great point you make. It is not low interest rates that support a rising equity market; it is falling rates that support a rising equity market. Of course the reverse is true: Rates rise and equities fall. That is the world. That potential energy has now been stored in the system. There it is.

I want to talk about gold and silver against that backdrop, that context there. I mentioned that you do not like the dollar. This is all going come together into one conversation here. Gold and silver have a tough end to kind of a lackluster year, the first out of 11 or so where that has been true. Let's talk about the precious-metal markets first, and then what the fundamentals are for the metals. For markets, what do you see when you look at the gold and silver markets?

Dave Collum: They have been flopping around in a way that is pretty standard for a secular bull market. If you look at the previous bull market, there were periods where the metal investors got beaten up pretty well en route to some spectacular returns. None of this troubles me. It is clear to me at this point that the case for intentional intervention in the precious-metals market is not a bad case. I do not know if I sign off on it, but I think that there are those who say powerful forces are getting in there and messing around with the metal price.

It is undeniable now, thanks to Rob Kirby who came up with a document from the Comptroller of the Currency showing that JP Morgan has a short position in silver. We know they have a short position in silver. We know that Blythe Masters claims that they were hedging. If so, it turns out their short position in silver is equivalent to 50% of the entire global bullion supply. I think Masters is fibbing a little bit there. They have got some serious speculation going on. At some point, does the price get out of the corral they have put it in? That would be my bet. As long as central bankers are printing, how can you not like the metals? It is hard for me to imagine this.

The other thing is that they said it was a bubble. It is not acting like a post-bubble period either. When you really hit a bubble, take a look at Qualcomm or some stock like that. After that bubble popped, it was a free fall. It went straight down.

Chris Martenson: This bubble talk always gets under my skin a little. Let's name one other bubble where you had broad participation that you had to measure in the 1% range.

Dave Collum: That is a great point. It is estimated that the percentage of the investing world of the metals is in the ballpark of 1%. I have seen below 1%. If you take all of the portfolios around the world and you ask what percentage metals is, it is around 1%. Historically it is supposed to be around 5%. That is a five-fold gain in front of you to get back to historical norms. Then you have central banks, who are now net buyers. This is the smartest money on the planet. These are not day traders. These central banks are not buying and intending to flip it like flipping condos or anything.

China, which everyone knows is a financial juggernaut, is buying gold and silver. Their gold position is something like 2% of their reserves. They could ramp that to 50% and it would do unbelievable things to the price discovery mechanism of gold. It is hard to be pessimistic. I admit it is painful watching the metals get bashed back and forth and the metal equities getting bashed back and forth. You and I bought the metals back when they were in the $200s. It is painful, but it is not that painful.

Chris Martenson: I do not think it is very painful. I am just patient like you. I know the day will come. I have really stopped paying hour-to-hour and day-to-day attention to the prices because it is not really relevant unless I am thinking of adding more. Then I will trot out some charts, look at them, and think about when I want to put some more into my portfolio. For the markets themselves, I did track – using Eric over at Nanex – some of these raids that happened recently in both gold and silver. You would see thousands and thousands of contracts dumped in a single 80 millisecond period. That has nothing to do with normal price discovery. That is a price manipulation moment. Nobody is doing that to suddenly balance their portfolio or liquidate something, as they commonly like to trot out, like that rumor that maybe Paulson, one of the most sophisticated hedge fund operators in the world, just one day pushes a cell phone button and unloads his gold position like a complete novice. That is not true.

I look at that, but I have seen that same behavior in many other markets, in equities markets. I have seen it in the oil markets. Somebody out there is able to push price around to their benefit. If you wanted the price to go down, these to me are not two very hard dots to connect. If I happen to own the largest short position in silver, I might be the first institution I would go looking at if I was an investigator, to say who pushed that massive sell button right at that moment in time? Without the investigation, we will not know.

I do not have to get into theories about why they are doing it, or if they are doing it because the central banks want them to, or any of that stuff. I can just say that by looking at the market structure, with shorts that are that outsized and are by definition manipulative when you hold that concentrated a position in a future position in market. On the other hand, we see these things come through which are clearly price manipulation events. How can these two dots not be connected? It leaves fertile territory for average inquiring and somewhat intelligent people to say there is some smoke there. Can we please investigate and assure me there is no fire? Of course the CFDC refuses to really do that in anything like a meaningful way.

Dave Collum: So at one point there were 75,000 sell orders for silver in one second. That is not an investor. That is something altogether different. That is a cheater trader doing that one. This is why the Nanex guys are so important. They show us this. They look in these short-time scales. They can see the monkey-hammering going on in these markets. There are still two levels though. One possible level is that the markets have just been discovered, that the precious metal markets have been discovered by the HFTs. What looks like manipulation is really just algos banging away at the problem and pounding away. They are finding air pockets and drilling down the prices and making money going down and going up. The other is that there is a more intended purpose behind it. The former is certainly happening. The algos have got a hold of the precious metal markets now in a serious way. With the latter, certainly the Gata guys would say that the intention is price suppression.

I make a case for price suppression in my review, where I point out that, for example, the central banks lease gold to traders. Why would you ever lease gold? You say well, they can rent it. This is a profit. The lease rates are something like two-tenths of a percent. There is no profit motive there. That is free capital in the very least. You also lease out the gold and they sell it. Then it is going to drop the price. It also means that the central banks do not have the gold. It is out there and has been sold. It is suspicious that our central banks report gold as a single line item, both the leased gold and the gold supposedly in possession. They actually do not dissect those two. They pretend leased gold is as good as gold, as one might say. It is not. It is gone.

Chris Martenson: That is a great point, too. I have this conversation from time to time, about the things I know my central bank openly admits to manipulating. The one that is most important and drives me the craziest is that they manipulate the price of money.

Dave Collum: Right.

Chris Martenson: When you do that, every other price by definition becomes distorted or manipulated, depending on which verbiage you are more comfortable with.

Dave Collum: It renders our money worthless. That is the key. Our capital, in the olden days, used to have value. We would work. We would save. Someone would come along and say you know, if you lend me the money that you have saved, I will pay you for it. I will find a productive use for it. Therefore you would get a return. Now the central banks have decided that they will render our hard-earned capital worthless. It is worthless at this point. It returns nothing.

Chris Martenson: They have distorted the time-value of money, which is one of the biggest distortions out there. Of course, 85 billion a month is my number-one fundamental statistic. We are building up this pressure across the world where we are just throwing more and more money. The central banks have some crazy idea. They are running a social experiment, the largest one ever, with an N of 1. It has got a binary outcome. It works or it fails.

This feels a little risky to me because this same experiment has been run on a microscale hundreds of times throughout history. It has never worked. They have never come forward and said this time, when we run this grand printing experiment of printing our way to prosperity, here is why we think it is going to work this time. They have never had that actual explicit conversation come out. Ron Paul used to bang at Bernanke with questions like that. Bernanke would just dodge and nobody would follow up. That was the end of it.

Here we are. I think this is the thing. I look at your Year in Review and I think about where we are. If five years ago or ten years ago you had just picked me up and dropped me into this moment and showed me what the central banks were up to, I would have gotten up out of my chair with my hair on fire and run outside. I want to back up. All of our baselines have been shifted. It has been creeping up. We get assaulted with this news constantly. The Federal Reserve is doing more and more, as well as the other central banks. Stop. Time out. Back up. This is insane.

Dave Collum: Do you remember when they bailed out the system by basically dropping $30 billion into Bear Stearns? You could taste vomit in your mouth when you read that article. Oh my God, they just dumped $30 billion into Bear Stearns. You are kidding me. That is such a quaint number now. They desensitized us to the point where they go on TV and not only talk about numbers in the trillions, but they actually get people in the system cheering for it. This is going to be historically bizarre. There are going to be people looking back and saying explain this to me again. Why did you guys think the system was okay? It looks insane retrospectively. Prospectively it would look insane, too. If you took some person from 1950 and beamed them forward, they would say you guys are nuts. This does not work.

Chris Martenson: Absolutely.

This is my final question here. You have managed a very impressive 11% average compounded annual rate of growth for ten years or more.

Dave Collum: Thirteen. I just use January 1, 2000, because that really represents it. That is the one I cite because that is the one where everyone else started suffer. If you go back, it worked fine, too, but everyone was fine. As of January 1, 2000, I have averaged 11% compounded. Admittedly it was two years in a row that are break-even.

Chris Martenson: Here is the question around that. That is very impressive. We just had a long conversation here. You have it in the Year in Review around how broken and dysfunctional our markets really are, that money is mispriced and that this is insane. What is the poor confused investor to do, if you were to pass on some sage advice? How do we navigate these next few years here?

Dave Collum: Someone who has money has a nasty problem. This really is. You and I, we like metals. We like energy. We think if you have to go somewhere, those are it. They can be hurt, too. It is not like we are sitting around saying there is no way these things are not going to get whacked. We know they can be whacked. We just think it is the best bet we have got. I have no optimum bets. I wish I could think of something that was safe. There is nothing safe now. We are in the middle of a mess.

My advice, first and foremost, is do not underestimate what it costs to retire. You will be told by the authorities what it takes to retire. Those estimates are way off. Fidelity is saying you need eight times your annual salary to retire. If you do the math that will only get you about ten years worth of retirement. Then you are done. You need more like 20 or 25. I guarantee your listeners [who are Boomers] are very unlikely to be on track to get 20 or 25 multiples of their annual salary in the bank before they retire.

These are scary numbers. I just say hang on as long as you can. Do not retire. Do not retire if you do not have to. Do not retire thinking you are going to get a part-time job. It is going to be at a drive-through window if you do.

Chris Martenson: How about the importance of living frugally? Does that factor in?

Dave Collum: Yes, it certainly does. For one thing, the more frugally you live the less you need to retire and the more you save. It is a two-for. If you could live off of half your salary, you would not only need a lot less but you would have a lot more. Unfortunately, for a lot of people we are past the fail-safe point. I hate to bring that news, but for someone who is 60 years old who is way behind the eight ball – and this is a very large percentage of the population – I do not see a mathematical solution beyond austere old age. It is a consequence. It is not a cause. Europe is a consequence. They say they decided to do austerity in Greece. No, Greece is a pathetically dysfunctional country – no efficiency, no prosperity, no nothing. That is not a choice. That is a consequence. We are going to suffer the same, in my opinion.

Chris Martenson: The alternative is that we are going to be allowed to live beyond our means forever.

Dave Collum: Yes, that will happen.

Chris Martenson: History is not really supportive of that as an awesome strategy.

Dave Collum: Hope is not a strategy, as they say.

Chris Martenson: Absolutely not. Yet there is still a lot of hope in this story for me. We can shape our lives. We can take control of our finances. I recommend very strongly that everybody listening, the best investments you can make are in yourself. My best investments this past year were a solar hot water system and insulation, both of which are going to have triple-digit returns in the first case and high double digit returns in the second case. I am investing in myself in ways that minimize my future cash flow.

Put it in a spreadsheet and it makes perfect sense. We have been captured in a lot of cases by the idea that investing means taking your money, closing your eyes, sending it to Wall Street, crossing your fingers, and hoping. There are many better ways now to get involved with investing that begin right at home. It is all around the idea of minimizing future cash flow out the door, rather than trying to maximize future cash flow in the door. It is a little flip, but it is actually a story that I can make perfect sense of, get my arms around, and there is no risk in it unless oil goes to zero dollars a barrel.

Dave Collum: I did have this one idea. That is one that people talk about, especially people like you. That is to invest locally. I have this image of investing in local businesses. You pool resources and then you invest in things you can kick the tire on. I pieced this whole model together and I say we will call it a Savings and Loan.

Chris Martenson: That is a great idea.

Dave Collum: Do not give the money to HSBC unless you want to support drug cartels. Then you should.

Chris Martenson: With that, Dave, it has been my pleasure, as always. We are going to have to do this much more frequently than biannually. Thank you so much for your time and for the Year in Review.

Dave Collum: I appreciate you letting me do it.

Related content

102 Comments

RJE's picture
RJE
Status: Diamond Member (Offline)
Joined: Aug 31 2008
Posts: 1369
For me, handsdown the best Podcast EVER...

Two charts Folks, and I ask, what more do you need to understand. One the most important resourse and the other Money.

http://www.forecast-chart.com/chart-crude-oil.html

http://www.kitco.com/charts/popup/au3650nyb.html

They are the only two charts on my office wall so I NEVER forget what the truth is.

Terrific Podcast

BOB

westcoastjan's picture
westcoastjan
Status: Gold Member (Online)
Joined: Jun 4 2012
Posts: 466
thanks!

The single best thing I am getting out of these podcasts is that they serve to reinforce my beliefs and give me confidence to continue on this path even when others might disagree with my thinking. Many of us who buy into this storyline are often viewed as being fearful or negative in our thinking. Most people just do not want to hear this message. It is not always easy being the lone contrarian in the room.

So thanks for the constant reinforcement that we are indeed on the right track. I will continue preparing with confidence that I am both awake and aware, enabling me to make better decisions.

Jan

Jim H's picture
Jim H
Status: Diamond Member (Offline)
Joined: Jun 8 2009
Posts: 1560
Excellent podcast...

It is often the simple points that are the most profound.  Two nuggets for me;

1)  Our money is already worthless.  I have been making this point for at least two years now.. and I can tell that David feels it exactly the same way I do.  When the bankers tell you that they don't want your money...that capital can now be created effortlessly within their system and that your savings are not needed (have no yield)... then the game is already over.  Sure, you can still buy stuff with your money, for now.. but the writing is on the wall... the dollar is worthless.  Once you realize this, there is no turning back.. you will relentlessly pursue the aquisition of real assets and invest in yourself and your own resiliency.   

2)  The next crisis will be different than 2007-2008 in that Bonds are already at or near the zero bound.  This is a very interesting point that David brings up...simple, yet profound. There is scant little room for buffering effects from bond funds next time the stock market dives.. a little maybe, but not much.  My own personal belief is that the realization that bonds as a safe haven are over will be the real catalyst for the parabolic phase of PM's that lie ahead.                    

Grover's picture
Grover
Status: Platinum Member (Offline)
Joined: Feb 16 2011
Posts: 507
How much is enough?

Chris,

It sure would be nice to have 20 or 25 times annual salary saved up before retiring, but that isn't a realistic goal for most people. Is that going to mitigate all foreseen and unforeseen problems in retirement? A few unfortunate incidents could wipe out that nest egg quickly or make it irrelevant.

What options are available for those who started too late in life to amass such a fortune? Could you give some insights to those of us with 2, 5, or 10 times current annual expenses saved up and not enough years left to increase it substantially?

Grover

By the way, as others have noted, these podcasts are wonderful! Thanks for tirelessly providing these.

ao's picture
ao
Status: Diamond Member (Offline)
Joined: Feb 4 2009
Posts: 2220
thoughts on the decline

Again, another superb piece of information from David Collum and Chris.

The following was one of the priceless gems:

"Berkshire Hathaway at $120,000 a share flash-crashed to $1. It does not even make it to CNBC because they are too busy sniffing around Warren Buffett for nuggets of wisdom from this guy who is the biggest stock jobber I have ever seen. Buffett drives me completely nuts. He is a total insider. He trades on inside information. At the same time he has got this little-old-man thing. He is like the Mafia Don walking around in his bathrobe looking innocuous. He drives me crazy."

Yes!!!  Thank you, David!  Glad to know I'm not alone.  As a former Berkshire Hathaway share holder and as one who has been blessed with an ability to sniff out phonies from miles away, I've felt this way for years.  It's only been in recent years though that Buffet has revealed his true colors.  In fact, he's outright blatant with it now.  Anyone who believes his line of bull any more is hopelessly gullible.

 

This transcript makes me think of pivotal times in history ... times when, for those with eyes to see and ears to hear, everything changes.  The passage of the Federal Reserve Act and the implementation of the federal income tax in 1913 (the latter of which was implemented by progressives and look, my, how it has grown), the Bretton Woods Agreement in 1944, and Nixon closing the gold "window" in 1971 are monetary events that are well known to most of us here.  In my earlier life time, the assassination of JFK and the Vietnam War were other pivot events when there was a massive change in the sociological and psychological orientation of the US.  More recently, 9/11 heralded an epic change in the politics of this country.  On a more subtle level, two other even more recent events stand out for me.  The first was the US Congress completely ignoring the wishes of its constituents who were, by a margin of 100:1, against the bail-outs of the big banks.  To me, it was the culmination of the death of a representative form of government in this country.  The second was the failure to prosecute Jon Corzine for his egregious crimes.  To me, it was the death of the rule of law in this country, as it applies to the connected elite.  This particular article simply reinforced that perception on my part.

At this time, it strikes me as extremely unlikely that there will be any near term change in the graft and corruption in this country simply because THERE ARE NO CONSEQUENCES!  Regulation and law enforcement, as it applies to the power elite, will simply be a sham with an occasional non-compliant or lower level financial and/or political figure being thrown under the bus as a human sacrifice to satisfy the public's perception that "something needs to be done about this".  Regulation and enforcement, as it applies to the average, law abiding, middle class citizen, however, will become increasing harsh and repressive.  Ditto for many middle sized businesses.  Witness Hobby Lobby bracing for a $1.3 million a day fine beginning January 1 for noncompliance with the Patient Protection and Affordable Care Act.  Seems a bit harsh to me.  Corzine can steal over a billion dollars and walk, with no civil or criminal consequences, but Hobby Lobby tries to exercise its constitutional right to religious freedom and is catching it in the neck.  The contrast is bizarre ... and frightening at the same time.

One can look at Weimar Republic Germany and wonder how the Germans ever let their country be taken over by the Nazis, a political minority.  Study how Hindenburg was maneuvered and manipulated by General Kurt von Schleicher, for example, and see if you don't see parallels to what is occurring in our country.  Most have the assumption that our leadership is trying to "fix" our problems.  But when I would analyze what Obama (or Bush, for that matter) was doing and especially, what they were influenced by their advisors and behind-the-scenes forces to do, their actions seem insane.  And these actions were and are insane, IF their intentions were to improve circumstances.  But these people are not insane.  On the contrary, they are highly intelligent and politically astute at a diabolical level.  So let's apply paradoxical thinking here to gain some insight.  If you were purposely trying to take down the country (and the West) economically but wanted it to appear as if you were attempting the opposite, what would you do?  I'd do EXACTLY what has been done.  Then, their seemingly nonsensical actions become perfectly logical and rational.  Read "Tragedy and Hope" by Carroll Quigly and other related books and understand the "level the playing field" doctrine and it all becomes very clear.

Also, note how virtually every aspect of our society is becoming increasingly chaotic, how nothing stays the same, how there is no certainty, how nothing can be relied upon or trusted for sure any more, how every bastion of stability and security and constancy in our society is being eroded and disassembled.  There are enormous advantages to chaos when one has the capital and the power and is seeking to consolidate and concentrate that power and control even more.  Banned topics prevent full discussion of the negative spiritual power of chaos but from a more practical and tangible perspective, wars are the classic example of the advantage of chaos to a power elite (such as when transnational banking interests lend money to both sides in a conflict).  Chaos also provides the destabilizing influence that enables more ready implemention of  behaviors, doctrines, and laws amenable to a diabolical power elite's interests.  Pretty soon a population becomes so numbed by the whirlwind of change and irrationality that their sensibilities are deadened and they let changes wash over them that they would have strongly resisted before, simply because they just want to be left alone, shut out all the negativity, and just "lie back, close their eyes, and think of England". 

I fear that recent events related to the Second Amendment will initiate another key pivotal event that will close the final door to freedom.  Unfortunately, we are past the point where writing your Congressman or attending a political rally will make any difference.  Note how the massive Tea Party rally in Washington, DC was marginalized by the media to a non-event and how the rapidly spreading fire of Occupy Wall Street movement burned itself out to ashes.  And the recent removal/retirements of Generals Petraeus, Ham, and Allen and Admiral Gaouette and a few select others seems a strange coincidence, to say the least.  A prime tenet of warfare involving decapitation of leadership of insurgents (or potential insurgents) comes to mind.  The number of options left is shrinking and frighteningly small.  And I don't see the will in the general population to initiate any of those options. 

RJE's picture
RJE
Status: Diamond Member (Offline)
Joined: Aug 31 2008
Posts: 1369
ao, hogwash.Too extreme for

ao, hogwash.

Too extreme for me but hey, free country. Right? Well isn't it?

Greenpeace is not radical enough for you? Really? Funny ao.

I really like your really BIG script that you write with as if your message isn't loud enough. Hahahaha.

[Moderator message: This tone is not proper when addressing another user.]

You're a stitch and your message so important because we must prepare for anything and everything for sure.

Goldtraderseller in my inbox! Anyone else? Will these type advertisements be the norm?    

BOB

RJE's picture
RJE
Status: Diamond Member (Offline)
Joined: Aug 31 2008
Posts: 1369
The issue is Debt...

...and who takes the hit when Debt gets destroyed.

Next, it is a use it all energy "PLAN". We must get off Oil exclusively and use everything with a "PLAN". In conjunction to this we need to get as much physical Gold and Silver that we are comfortable with. I am not holding 100% in these metals because it just won't be necessary are my thoughts. I do have approx. 20% of my wealth in these metals however. My wife will keep her job and the medical field will be a terrific hedge against a future that is uncertain but not yet determined. NOT YET DETERMINED to make a stronger point and to steal ao script for effect.

To think as ao does is to already admit defeat. He is certainly not a realist in my world, he is just someone who gets his 15 minutes of fame here at PP. We all due in fairness. 

He is colorful however, and he does seem to be educated but a little paranoid are my conclusions.

Hey, that's OK, people here actually believe everything he says. If so, why are you preparing at all? In the scenario ao presumes, we will have no control so confiscation of everything we have will be a cinch. Better then to eat everything in your pantry and build the fat layers as at least you can live on that for a bit.

Regards

BOB

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ao
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RJE wrote: Greenpeace is not

RJE wrote:

Greenpeace is not radical enough for you? Really? Funny ao.

I really like your really BIG script that you write with as if your message isn't loud enough. Hahahaha.

Bob,

What you're saying here really doesn't make any sense.  Can you explain?

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The fire had a little water thrown on it, as well.

ao wrote:

...and how the rapidly spreading fire of Occupy Wall Street movement burned itself out to ashes.  And the recent removal/retirements of Generals Petraeus, Ham, and Allen and Admiral Gaouette and a few select others seems a strange coincidence, to say the least.  A prime tenet of warfare involving decapitation of leadership of insurgents (or potential insurgents) comes to mind.  The number of options left is shrinking and frighteningly small.  And I don't see the will in the general population to initiate any of those options. 

http://www.guardian.co.uk/commentisfree/2012/dec/29/fbi-coordinated-crackdown-occupy

"The Partnership for Civil Justice Fund, in a groundbreaking scoop that should once more shame major US media outlets (why are nonprofits now some of the only entities in America left breaking major civil liberties news?), filed this request. The document – reproduced here in an easily searchable format – shows a terrifying network of coordinated DHS, FBI, police, regional fusion center, and private-sector activity so completely merged into one another that the monstrous whole is, in fact, one entity: in some cases, bearing a single name, the Domestic Security Alliance Council. And it reveals this merged entity to have one centrally planned, locally executed mission. The documents, in short, show the cops and DHS working for and with banks to target, arrest, and politically disable peaceful American citizens."

ao,

I second the thoughts you put forth here. The government has truly become a frighteningly powerful machine.

Those that do show the will you mention will be violently dealt with as a warning to others that may think of exercising their rights and opinions. Why do you think the Federal Government(DHS) has been so open to arming local police?

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RJE wrote: ...and who takes

RJE wrote:

...and who takes the hit when Debt gets destroyed.

Next, it is a use it all energy "PLAN". We must get off Oil exclusively and use everything with a "PLAN". In conjunction to this we need to get as much physical Gold and Silver that we are comfortable with. I am not holding 100% in these metals because it just won't be necessary are my thoughts. I do have approx. 20% of my wealth in these metals however. My wife will keep her job and the medical field will be a terrific hedge against a future that is uncertain but not yet determined. NOT YET DETERMINED to make a stronger point and to steal ao script for effect.

To think as ao does is to already admit defeat. He is certainly not a realist in my world, he is just someone who gets his 15 minutes of fame here at PP. We all due in fairness. 

He is colorful however, and he does seem to be educated but a little paranoid are my conclusions.

Hey, that's OK, people here actually believe everything he says. If so, why are you preparing at all? In the scenario ao presumes, we will have no control so confiscation of everything we have will be a cinch. Better then to eat everything in your pantry and build the fat layers as at least you can live on that for a bit.

Regards

BOB

Bob,

As I've said previously, I wish I could return to your level of naivete.  I've spent 34 years interacting with people in my work in one of the most populated areas of the country and one of the least populated.  I've also interacted with people and taught people in the same capacity in 40 different states.  I've had had medically confidential conversations with people from all walks of life, from top business leaders to government internal auditors to people in the various intelligence agencies to people working in black-ops.  They've told me things that they haven't even told their spouses. 

Frankly Bob, you don't have a clue and you don't know what you don't know.  I'll be polite and leave it at that.

And as far as the medical field, I'm in it.  And those who are in it with any kind of brains see the handwriting on the wall and it isn't good.  You can whistle all you want to make yourself feel safe walking through the dark and scarey woods but when the wolf pops up, the whistling isn't going to do you any good.  You have to get real and see what is there.  Self delusion is a bigger enemy than anything external.  And you've already been defeated unless you wake up. 

And please stop putting words in my mouth.  What you say I'm saying is not what I'm saying but I understand that it's easy for you to get confused and fall back on simplistic assumptions.

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A Matter of Perspective

To a large degree we each judge the world based upon our individual circumstances. Someone who is employed, has a strong supportive family, a little extra disposable income and feels safe might find hope and optimism easy to come by. Conversly, if a person is unemployed, or hates their job, has money troubles, very little support and feels insecure the world will seem very scary and difficult. We also never know what goes on at home in a persons private life which affects their view of the world. During the period I took care of dying family members I would meet people I knew in the grocery store, smile and chat and they had no clue to what I was going home to. Different perspectives are good, I personally am glad to regularly get a dose of optimism as our attituide determines the quality of our life.

My 2 cents
AK Granny

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all in the name of our safety

MarkM wrote:

Those that do show the will you mention will be violently dealt with as a warning to others that may think of exercising their rights and opinions. Why do you think the Federal Government(DHS) has been so open to arming local police?

I couldn't agree more Mark.  When DHS buys 1.6 billion rounds of ammo (much of it .40 S&W for domestic LE use rather than military use), bullet resistant checkpoint booths, assorted acoustic and directed energy crowd control devices, armored cars for obscure small towns, drones for domestic use (30,000 of them, in fact, with current discussion about arming some of them), etc, one is given pause.  Of course, Bob probably thinks it's for providing extra security at Tigers games, lol.

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We Get It

To ao, Mark and all those that are trying to share with us what is really going on and how bad thing are and are going to get...... A lot of us do understand, we get it. Yes the government of today is nothing like it used to be, we do live in unpredictable and scary times. The point is we can chose to live in fear or chose to have a positive influence on the world we touch. I refer you to Victor Frankles book, I believe he was a Dr., he survived A Nazi concentration camp, and addresses why some people survive and some don't.

Waking up and being afraid won't make the world better. Spreading fear won't help, however improving the world at a grass roots level will.

AK Granny

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I guess were doomed then ao...No hope...

...then again:

BOB

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it's all about balance

AkGrannyWGrit wrote:
To a large degree we each judge the world based upon our individual circumstances. Someone who is employed, has a strong supportive family, a little extra disposable income and feels safe might find hope and optimism easy to come by. Conversly, if a person is unemployed, or hates their job, has money troubles, very little support and feels insecure the world will seem very scary and difficult. We also never know what goes on at home in a persons private life which affects their view of the world. During the period I took care of dying family members I would meet people I knew in the grocery store, smile and chat and they had no clue to what I was going home to. Different perspectives are good, I personally am glad to regularly get a dose of optimism as our attituide determines the quality of our life. My 2 cents AK Granny

AKGranny,

Optimism is good when it's reality based.  When it's not, it becomes self delusion.  Personally, I'm very secure in my employment with an excellent career and a 6 figure income, I have a wonderful wife and kids and good friends, I've invested wisely and am financially secure, I live in a community that is close and supportive (voted in many polls as one of the best places to live in the country) and is preparing for the future, I'm in excellent health and have an excellent fitness level, I'm well prepared in the area of security, and, as anyone who knows me will tell you, I don't scare easily and I'm not intimidated easily.  I live in two worlds though.  There's the world that's planning a trip with my son to hear Ben Bernanke talk at University of Michigan, a trip with him to the car show in Detroit, a business trip to learn some new skills, a family trip to Europe in the spring, and I'm looking forward to playtime at the lake when the warm weather comes again.  And then there's the world that sees what is happening in this country.  The first world brings me joy but the second world causes me considerable concern.  I don't let one overwhelm the other but I always keep them both clearly in sight.  The key is balance.     

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No Bob.  The doomed is your

No Bob.  The doomed is your perspective of my perspective, not my perspective.  

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Hey ao...

Boo!

lol

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Start Over

It is becomming increasing obvious with each new article and pod cast that we really need to start over locally from scratch. I have known for a long time that things would eventually come to this and that can create a kind of complacency.  The steady stream of information really helps to keep up the motivation level when you have been at something for a long time.  Some times I feel like I can't listen any more.  At the same time it is critical  that we be aware of what is going on.  Its like watching a slow motion train wreck, you want to turn away but you just can't.  The problem is, while we may not all be on the train, we are all close enough that we can get hit by pieces of the wreckage and we have to know which way to move.

My heart felt thanks Chris for keeping the information coming.  It saves a lot of time doing the research on our own so that we can focus our efforts doing the foundational community rebuilding that needs to be done.

My new years resolution is to try and spend more time on the resilient life side of the site, and double the efforts on the home front.  God Bless and happy New Years to you all.  Thanks again Chris  and Adam for all of your hard work.

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ao, honestly, give it a rest.

ao, honestly, give it a rest. Such a person of mystery, and for one who has balance you have NOT shown any but for the dark side of every darn thing.

My gosh man you are trppin' me out. You sound like an experiment, like Bourne or some such hollywood script.

Hey, maybe we'll bump into each others at the auto show but they'll have Fords there you know. You wouldn't want to be hypocritical.

Be good Folks

BOB

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AO, Have A Super Sparkly Day!

In the future, please keep your comments to yourself.  Unless you wish to comment on unicorns, fluffy puppies, or similarly positive but unimportant tangents to the issues we face.

I couldn't agree more with your posts.  You're spot on.  IMHO, PP has become for many, nothing more than a "feel good mental 'spa' "of sorts.  Anything not positive is negative.  It's largely why I don't frequent the site much.  Keep the faith.

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ao, rje, akgranny, markm, treebeard ...

I've read through this entire thread and I think that most of us agree that there is a significant risk that our government and those aligned with it could become (and has already become to some degree) an oppressive, destructive and even deadly force in the lives of many of us.  That said, ao, I would love to hear any more details (that you are comfortable sharing) about what you know, how you know it and how much you trust your sources.  You seem to have more information than the most of us.  From your writings you seem to know what you're talking about, but we don't really know who you are.  This can be a challenge since trust is built on knowing people well.  I can understand why you, me and many others keep your identity confidential on this site.  The question is "How can you build our trust without revealiing info you want to remain private?".  I think your post #15 is a good step in that direction. Responding to my request halfway through this paragraph would be another step.

Even more I would love to hear anyone's ideas about the best way to live and act in the face of this risk to maximize the chance that we, our families and communities will get through (as intact as possible) whatever stoms the powers that be might bring upon us.

I like treebeard's idea about starting locally from scratch.  But I'm concerned about how much those storms that may be on the way will make this difficult or impossible.  A big question is "How much will our own government's oppression be disrupted by collapse, however fast or slow it might come?".

I also like Akgranny's mention of Victor Frankl and ao's mention of reality based optimism.  Frankl's gift was the ability to maintain a reality based optimism that got him through the most inhumane of circumstances with his life and sanity intact.  He later attempted to generalize his experience (his book Man's Search for Meaning and other work) so that others could apply it to their situation.

Also, what is the common ground between ao's and rje's perspective?  I think it's more in how you describe the storm that is likely to be coming (at least how you decribe it through your posts to Peakprosperity.com) than in any significant difference in the type of future we are preparing for.  Are either of you willing to try on that perspective, stay in a place or inquiry and dialogue and see if there's common ground?  I would eagerly follow that conversation.

Respectfully,

QB

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QB

Thanks for the attempt at self-moderation..  I appreciate the energy both AO and Bob put into their posts and I don't think we who "get it" should be arguing when so few in the US even get it.  My reading of this thread is that Bob picked a fight... and I say that as a friend.   

Unlike QB, I would not question AO ... he can reveal as much or as little about who he is.  What I do know is that AO has been around these parts quite a while, and his record of posting is consistent, energetic, and of value.  You (QB) seem to be questioning the source of some of AO's liberty-oriented comments.  I would suggest that you tap in to some of the information sources that focus on this aspect of our situation in the US as it is not a focus here at CM/PP.com.  

The best sources I have found, written by very credible sources are;

http://libertyblitzkrieg.com/       Krieger is ex-Wall Street.. turned to a liberty focus.

http://www.paulcraigroberts.org/     You might not like his politics, but PCR lays it out there.   

And finally, for the broadbrush overview;

http://sgtreport.com/     A consolidator of Liberty-oriented news... as with all sources, use your own filters as to what is real, and what is conspiracy.. you will find that you need to use your filter more often here than with the other two, as some of the posting moderators are a bit off the deep end, posting BS like Chemtrails articles.   

All the Best,  Jim

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pot and kettle

RJE wrote:

ao, honestly, give it a rest.

Hey Bob.  You say "give it a rest" but you were the one this morning who jumped in with not one but two posts deriding my post.  I think it was you who expressed the thought that it is (was?) a free country?  So if you'll pardon me, I'd still like to exercise my freedom of speech, while I still have it.

Happy Kwanzaa

"Don't be in a hurry to condemn because he doesn't do what you do or think as you think or as fast. There was a time when you didn't know what you know today."  Malcolm X

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Back To The Podcast

This was a great podcast, I enjoyed listening to every word.

Like Jim H, one of the segments of the conversation which I focused in on the most was the value of the dollar and what comes next.  I could not agree more that the value of the dollar is gone.  I think about this often and it has begun to become part of my purchasing habits.  For example, as a middle class guy with a child support payment, I don't have a lot of disposable income after the mortgage payment.  Despite this, I have been using the purchasing power of the dollar today to try and help my future life situation.  If and when a collapse does come, I don't want to look back and think that I didn't do enough while I had the chance.

It doesn't matter if I've chosen to buy extra canning lids with what little purchasing power I have left, a couple more ounces of silver, or more canned food....buying THINGS now will make the pain of tomorrow a little more tolerable. 

Constant reminders of this are always helpful.

JB

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Jim is correct I have been picking at ao scab...

...but ao and I DO NOT see clearly our future. I have said that others share in ao style and beliefs and that's cool. ao and I are bantering our thoughts is all, and offense shouldn't be taken. I believe we are grown Men who have our differences is all. Life moves on regardless of what is said here. He will have no influence with me, he isn't telling me anything I am not prepared for. My gosh, Detroit taught me all I need for my Preparations for the coming new world order but I am not going to give up, not write my congressman or any such thing. I still feel we can have an impact and that is that. Geezus!, am I a minority here? 

ao has had no positive energies what-so-ever as he doesn't reflect my thoughts even marginally (that doesn't even seem logical to me but...), and he shows no future that resembles any of what we have control over as a possibility, so why even try then?

While I respect that he has a voice I haven't screamed at him. I just absolutely, positively disagree with most his content and conclusions especially when he shares really nothing but secretly gathered black opt dark shit matter. Has he interviewed any sane Folks then or have they all been baaaaaddd? Look, any bum on the streets of Detroit has a story if that's the one you want to hear. Everyone of them were soldiers in some deep dark opts operation somewhere in the world. That's not to say they are not telling the truth though. 

Please, we/I  get this dark side to our government and ao feeds on it because we have easy visuals. It's called FEAR TACTIC based on what? His words and observations? Pallleeeese. "Trust me" he says, ah, no thank you, I don't want to. OK? It makes my head hurt is my reason.

I DO NOT believe at all his rather one sided views, and think him some sort of psychoanalyst. He is one sided, and I say so. I thought a balanced approach was necessary, and gave it as comfortably as I could without it being mean spirited. I am NOT a fan at all though as his approach is to demeaning for my tastes.

His dialogue while consistent is of an extreme nature that I do not share, and I even have allowed that HISTORY be written first but history has already been written because he has had some obscure and sensitive Intel that he can't share or " he may have to kill me " as the popular phrase is often applied.

I have no issues with sides being taken as it applies to any thread, I take no offense.

ao called me naive and I call him a little on the extreme edge of thought as it applies to my visuals of the future. No doubt things will be bad but hand to hand combat with my government and my Brothers and Sisters at arms is a crazy notion are my thoughts. Just crazy, and you Folks don't buy into this bullshit as a rule. Their will be rogue everythings, there are now. Soldiers and Cops, but I have faith they will be addressed because I have seen it addressed before, and this time will be no different.

I guess one of us will be right and the other wrong and as I said I hope it's somewhere in the middle.

No one here has ever consider what will happen when the Woman of this country get sick of what's going on so maybe a look see would help: Levity has its place.

My point with this Video is not a sexual one but showing that Women have strength that has NEVER before been realized as they could throw at the Elite today. Men DO NOT like when Women, their Women get shoved around, and God forbid the children. So NO, I do not agree with ao's central thesis that there's just no point in writing letters to congressman or those sorts of things. Rosa Parks sparked a revolution in this country and God forbid the Elite get too cute.

Regards

BOB...and Jim we are friends.

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Posts: 1882
Enough

ao & Bob -

Your personal jibes on this thread have become excessive & distracting to the discussion here. If you want to continue the 1-to-1, please use the PM system.

Normally, both of your public contributions are useful and valued. I'd like to see a return to that normalcy.

Please review our posting guidelines if you need a refresher and keep your further comments germane to the podcast, and constructive. We'll moderate out future content that isn't.

Adam

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Jim H wrote: Thanks for the

Jim H wrote:

Thanks for the attempt at self-moderation..  I appreciate the energy both AO and Bob put into their posts and I don't think we who "get it" should be arguing when so few in the US even get it.  My reading of this thread is that Bob picked a fight... and I say that as a friend.   

Unlike QB, I would not question AO ... he can reveal as much or as little about who he is.  What I do know is that AO has been around these parts quite a while, and his record of posting is consistent, energetic, and of value.  You (QB) seem to be questioning the source of some of AO's liberty-oriented comments.  I would suggest that you tap in to some of the information sources that focus on this aspect of our situation in the US as it is not a focus here at CM/PP.com.  

The best sources I have found, written by very credible sources are;

http://libertyblitzkrieg.com/       Krieger is ex-Wall Street.. turned to a liberty focus.

http://www.paulcraigroberts.org/     You might not like his politics, but PCR lays it out there.   

And finally, for the broadbrush overview;

http://sgtreport.com/     A consolidator of Liberty-oriented news... as with all sources, use your own filters as to what is real, and what is conspiracy.. you will find that you need to use your filter more often here than with the other two, as some of the posting moderators are a bit off the deep end, posting BS like Chemtrails articles.   

All the Best,  Jim

Thanks Jim.  And I would urge QB to listen to you as well.  We have good folks here, including Bob.  Bob may not realize it but I actually like him.  If we met in person, we'd probably exchange some good natured ribbing and get along fine.  But if I see something I disagree with or I think is not fully accurate or truthful or whatever, I'm going to speak up ... it's just in my nature ... as I think it is in his.  And we can learn from the exchange.

There're only a few things in this world that are really important.  Truth, love, and helping others are things that come to mind.  But love isn't always all smoochy-smoochy, I'll-scratch-your-back-you-scratch-mine.  Sometimes it hurts when it's a truth we don't want to hear but need to hear (and I fully include myself in this category since we're all on this same soul journey together).  Excuse my rough edges but that's just me. 

To answer QB's question more directly, a few people know me here but most do not.  And quite frankly, for a whole host of reasons, I prefer to keep it that way.  As to sources of information, it's been like a jigsaw puzzle ... some information here, some there.  I'm not privy to anything special but a lot has fallen into my lap over the years, for whatever reason.  I know it sounds hokey but I can't and won't reveal who I've gotten most of the specific information from.  Some has been professional so there are confidentiality issues, some is from friends, acquaintances, or their contacts and most of them are very private people, as I am.  If I tell the specific employment venue or job description of an individual, AI driven computer searches can find very quickly find out who that person is just through health insurance, phone, and e-mail contacts (and I don't even have a personal cell phone which I carry on a regular basis, don't text, don't use Facebook, don't use Twitter, don't have a vehicle with a black box, etc., all of which are becoming mechanisms for tracking habits, movements, relationships, etc.).  Hence my reticence.

I would urge you to not take anything I say at face value but do your own research.  Personal contacts help fill in gaps but there is A LOT of information online and Jim has give you a start.  Follow the leads and links but don't be surprised if you learn things you'll wish you never learned.  Good luck.        

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Adam Taggart wrote: ao & Bob

Adam Taggart wrote:

ao & Bob -

Your personal jibes on this thread have become excessive & distracting to the discussion here. If you want to continue the 1-to-1, please use the PM system.

Normally, both of your public contributions are useful and valued. I'd like to see a return to that normalcy.

Please review our posting guidelines if you need a refresher and keep your further comments germane to the podcast, and constructive. We'll moderate out future content that isn't.

Adam

Sorry Adam.  Just saw this after I did my last post but nothing negative there (I hope). 

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Last post was fine

Last post was fine, ao. Thanks for helping us get back on the rails.

A

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Adam done for sure so how

Adam done for sure so how about a balanced thread from you or Chris. Is it that you believe absolute armageddon or is there hope.

You yourself on several occasions have written it's something we should talk about, such as population explosion, and I assume this topic because here it is provided by you. Others have given their thoughts and it appears constructive. I guess I will have to read the guidelines again.

I think what is happening is allot of pent up anxiety, and the rhetoric is really flying, and everyone is trying to stay calm. Not just here at PP but we can clearly see the nation is about to head into another 2008 type crash and we are coming here to talk. Isn't that what we should be doing? I have these type conversations with many Men and Women and it really helps to get some chills out of the bones. Maybe moderating this and joining in with the conversation would be helpful. You guys seem to have all the answers after all. How about some input then?

Adam, I am NOT being disrespectful but we get this type stuff from our leaders too, just push it aside, no need to discuss anything, and if you do then we'll talk from the floor of the Senate so we don't have to discuss anything with you Folks.

Even in the Podcast the guest and Chris were pretty intense with some of their statements, and did incite a little bit. ao and I have taken this as far as we ever wanted, and were not to terribly rude. Just honest. Others joined in so that's a good thing I think. You're the boss though so I submit.

Respectfully Given

BOB

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My bad too as I was writing and not reading.

ao, admittedly we may have many things in common (not been my impression though) and I will just let your threads go in the future.

BOB

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A suggestion, a hope, and a challenge

Speaking as a former therapist, I have a suggestion that may help when a thread turns this personal. Rather than comment on another person, try to  make your comments about yourself and your reactions to the topic at hand. We are unique individuals as AKGranny has pointed out and will naturally differ. But we can differ without disrespecting another person's viewpoint in the process. There is a rich mixture of life experience here and I would hate for anyone to hesitate sharing out of a fear of being attacked. In my experience, speaking from an "I" perspective helps keeps things from turning negative and creates a space for everyone to feel heard.

We are all dealing with the stress of the times we live in. Our commonality on this site is in sharing a certain perspective on what is going on. It's not easy or pleasant to know what we know.  How we each process that knowledge and integrate it into our lives reflects our own particular makeup. My hope is that we can communicate about these serious issues without resorting to judging or shaming.

We live in a dysfunctional world. Let's try do our best not to bring it here. My understanding of the intent of this site is in part to find a better way to live on the planet. Rather than seeing our differences as a problem, let's welcome them as part of the texture of the whole cloth. So much in the world is dangerous, why not make this a safe place for discussion and support one another? In other words, "be the change we wish to see in the world". It's something I struggle with in my own life, so I understand  how challenging that can be!

As Bob might say in baseball-speak, let's "up our game"!

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local investment

Dave Collum wrote:

Dave Collum: I did have this one idea. That is one that people talk about, especially people like you. That is to invest locally. I have this image of investing in local businesses. You pool resources and then you invest in things you can kick the tire on. I pieced this whole model together and I say we will call it a Savings and Loan.

I have given lots of thought to local investments and haven't really found anything suitable.  Has anyone on this site had success (or solid ideas) in this area?

Nate

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I would not be surprised if

I would not be surprised if there is another thread devoted just to this topic alone.  I imagine many of the opportunities have to do with investing in food or land.  There would seem to be other opportunities, depending on the degrees of the collapse.

Tried to put a bit of thought into this a while ago, and I always wondered if making wood pellets locally would be a good idea, particularly here in the northeast.  Even in a world of global warming fears the high temperatures here in Vermont for the next couple days are supposed to be in the teens  Below zero at night.  Anyway, concepts like this one seem like they are worth exploring.

JB

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jdye51 I so agree and want you to read this...

...I have seen so much in my life and have known so many brave people who just didn't give in. These Folks will show up again or we deserve all that we get. That is my overriding thought and belief, that we will show up and have what is rightfully ours.

This is not my story but it rhymes a bit:

http://www.militarycodeofhonor.com/WarriorsCodeofHonor/

Respectfully given

BOB

PS: [removed by moderator]

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thanks Jim H and ao

I appreciate your links.  I don't have time to explore them at the moment, but I intend to.  I've done a bit of research in this area before and am probably already pretty much aligned with your perspectives.  My biggest question centers around what to do with this info other than what I'm doing already - build community, develop resilience for my family, be smart about protecting myself and family, gently talk about the subject to the few people who have shown some signs of being willing and able to listen.  Perhaps you have some thoughts on this? 

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Thanks all....

This has been a very constructive thread so far, learning and growth require edges and I love seeing that this community can skate up to an edge and then self-moderate avoiding the dreaded and useless flamewars that are so prevalent on the 'net.

I think there are two good thread/article ideas in here, one being on local investment ideas and success stories, and the other on the pattern of government encroachment on civil liberties.  Where some might accidentally paint that as a 'Libertarian' position, to me civil liberty belongs to no political party but is a basic tenet of living in a prosperous and healthy country.

That both major parties seem to have turned their backs on the concept for what I assume are a few dollars in the reelection coffers (so cheap, so sad...) is a really disturbing development for those paying attention.

Recent developments in the FISA Amendment Act reauthorization, specifically stripping out any possibility of oversight by anybody for the agencies doing the e-snooping on you and me) and then the FOIA revelation in a Guardian article today that the FBI in partnership with DHS, private security firms, the Federal Reserve and other private banks had fully infiltrated and tracked the OWS movement from start to finish speaks to a level of fear-based controls from DC that are extremely hard to justify in terms of either improved safety or constitutional legality.

That we will never get a proper cost-benefit analysis is a given.  That the Subprime Court [sic] will side on the 'legality' of these moves despite the very clear violation of easy to understand constitutional language is another given.  That Congress will not bother (risk?) amending the constitution so that their new laws and acts will be legal is another given.

What is not yet known is to what degree we need to actually individually fear these encroachments,  I confess to not liking the pattern very much at all.  I value my own liberty but, more importantly, I think living in a country that tries to legislate perfect homeland security and citizen safety even as it brings the exact opposite to countries all over the world seems like a perfect recipe for living in a miserable state of perpetual fear - something I really have no interest in doing.

Just as importantly, there were truly a few things that made this country great, and one of those was equal protection under the law.  Did it ever operate perfectly?  No, of course not.  I am not being overly sentimental for a time that never existed.  But I will note that both the appearance and actuality of 'one set of laws' is being dismantled right before our very eyes and that road is a dangerous one indeed.  

When people lose respect for the laws because some of them are obviously rigged against them, then even the good laws will eventually get tossed under the bus.  I have no interest in living in a lawless society either and that is where our good Senators and Congresspeople are taking us step by step, both by acts of commission and omission.  

The consequences are possibly quite dramatic and I, for one, surely wish that we were at least having some sort of a national dialog over whether this is really the direction we'd like to go.  

Personally?  I would rather live with a sense of being secure in my 'house and papers' living a life of private dignity and against that accept living with a tiny bit of risk that something awful might happen to me or my loved ones.

As I said, there's plenty to noodle on here and it probably deserves its very own posting and comment thread.

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Deja vu

Jbarney wrote:

I would not be surprised if there is another thread devoted just to this topic alone.  I imagine many of the opportunities have to do with investing in food or land.  There would seem to be other opportunities, depending on the degrees of the collapse.

Tried to put a bit of thought into this a while ago, and I always wondered if making wood pellets locally would be a good idea, particularly here in the northeast.  Even in a world of global warming fears the high temperatures here in Vermont for the next couple days are supposed to be in the teens  Below zero at night.  Anyway, concepts like this one seem like they are worth exploring.

JB

JB,

Both of us contributed to the link below.  Wood pellets sound like a good local idea.

http://www.peakprosperity.com/forum/peak-oilpost-peak-business-opportunities/68133

Nate

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Podcast

Seems to have exposed more than one exposed nerve in this community.  This was a wonderful podcast which I plan to listen to again.  AO, QB, RJE you are on the right side......I fear WROL and what that may mean for our country as we near more tumultuous times........it is for real as CM cites.  My hope and prayers are for us and that we have the strength and wisdom to take our country back from the bandits; in that respect I have RJE's optimism that maybe there is a light at the end of the tunnel instead of darkness.

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...of course Chris, this is some serious stuff we read, see and

...hear. That to even contemplate arms against my neighbors is a bit much but then again, it usually is the ones closest to you who are the perps. I hate it, I really do. Then again, what are you/me/us suppose to do but prepare for everything, and that is overload frankly. The intensity is all going to rev up in the next few months and the good Folks out their are going to want their pound of flesh if these shenanigans stay the course. These politicians are not understanding things at all. It is not hard to imagine people getting hurt because they are afraid and take unnecessary means on someone who just knocks on their front doors, at home as they cower in fear. We don't want to inflame this so it is best to defuse it are my thoughts but I'm not really good at that to someone behind the blue screen as much as I am in person. False bravado I'm guessing. I think it best to be positive and sure than to be over reactive and murderous.

I don't know what rule of law you Folks have lived under but cops are not the "perfect creatures" some would believe. They are NOT perfect citizens at all, and that is just fact. Who here doesn't think they have too much power? Nor has our politicians been stellar EVER or our FBI been so squeaky clean, so I don't even care about that dyed in the cast crowd, I can avoid them. However, when you steal earned Social Security after these Folks see the MF Global crap, and Congressman raises as Obama just gave them. You are really asking for an eruption and rightfully so from those who played by all the rules. 

We are asking for whatever comes, and radicals this angry mob will be called, and the people will understand the sham being played out on them, and if history is any indication then I expect a very serious revolt especially since the crowd will get instantaneous messaging. and if the Internet or testing, and such things are shut down then God forbid. really, again the powers that be can't understand what this would mean.

I hope we crash and burn, and start over. It is just time. Hopefully, the rule of law is re-established with the good cops and good Folks in command again. Enough.

Regards

BOB

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Armageddon vs hope

Bob -

Is it that you believe absolute Armageddon or is there hope.

Fair question. And a tall order (at least, to answer succinctly - which is all I have time for at present).

I just saw Chris' post. In addition to saying "ditto", I'll add the following:

My observation has been that people, consciously or sub-consciously, choose one of two paths when wrestling with the predicaments we address here on this site. They decide to either start preparing for collapse, or preparing for life after it.

(I suppose there's a third option of "ignoring it altogether" which 99% of the populace appears to fall into. But I'm referring to the folks willing to actively engage with this material)

I can't fault those who focus on collapse. About how bad a state things could devolve to. I have good friends and close family members that are in this camp - they're primarily motivated by protecting the safety & security of their loved ones, and who can criticize that?

Certainly, there are lots of flashing indicators that we risk systemic failure in many areas, and have a populace that is ill-prepared for the rude reality-check awaiting it. I think we are years/decades past the point where, had we taken prudent measures (which we didn't), we could enter the future on a pain-free glide path. So, I do think temporal and geographic flashpoints of unrest are inevitable.

How bad will it get and on what scale? I have no idea. My thinking is that the more people we can wake up  & engage beforehand through movements like that here at PeakProsperity.com, the more informed action we can enable them to take now -- the less severe our self-inflicted wounds will be.

Personally, I choose to focus on "life after". Whatever changes the future may bring with it, I'm highly confident the sun will still rise, gardens will still grow (if tended), and babies will be born. I share Chris' vision that there are models for living well (very well, IMO) in this future, grounded in sustainable practices that respect our planetary resources and our relationship to them, as well as our relationships to one another. There's a very good reason we re-branded this site Peak Prosperity.

I believe that the resilience core to our approach will help those who are focusing on the long game now increase their odds of making it through whatever interstitial turmoil we might experience on our way there. By no means are we closing our eyes to the threats collapse may bring - we're deciding not to let them take up our entire focus. And the long-term skill sets that we're developing now should also serve us well in the near-term, if called upon to by systemic strife.

Bob, I hope this answers your question at the high level. I'm happy to elaborate further on more specific areas if that would be helpful.

Nate -

I have given lots of thought to local investments and haven't really found anything suitable.  Has anyone on this site had success (or solid ideas) in this area?

I agree that models for sustainable local investment opportunities are a huge and critical component of the solution set a better future requires. It's something I've been giving a lot of thought to, in terms of how this site could play a bigger role in highlighting good models and matching local entreprenueurs with willing capital.

No hard decisions made yet, but we'll be open about them once they are.

In the meantime, those interested in this topic may want to revisit these past podcasts/articles which we're created to advance the local economy discussion. In particular, Francis Koster toils tirelessly at TheOptimisticFuturst.org in cataloging  positive-ROI local investment models in hopes of identifying and spreading best practices. Perhaps we'll have him on again soon as a podcast guest.

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Jesse's post this evening

Jesse's post this evening has several elements that are very relevant to this discussion.  On one hand he reminds us just how bad/dark/violent it has gotten in the past by referring us back to the dying days of the Nazi empire.  Are we headed for something as bad as Nazi Germany?  Who knows, but it has happened before and it can happen again.  In fact, we are on a path which makes that kind of nightmare a very real logical possibility (among others).  Jesse's remarks set up a 27 minute Chris Hedges interview in which he discusses many of the issues addressed by this podcast and discussion.  I heartily recommend it to you.  Some of you may not like what Hedges has to say about "positive thinking" at about the middle of his remarks.  All in all, though, very thought provoking.

http://jessescrossroadscafe.blogspot.com/2012/12/empires-of-illusion-and...

Tom

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Wendy S. Delmater
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Non-traditional investements

When Jim H says...

"When the bankers tell you that they don't want your money...that capital can now be created effortlessly within their system and that your savings are not needed (have no yield)... then the game is already over.  Sure, you can still buy stuff with your money, for now.. but the writing is on the wall... the dollar is worthless.  Once you realize this, there is no turning back.. you will relentlessly pursue the aquisition of real assets and invest in yourself and your own resiliency."

I could not agree more. So, Nate?  "Invest" in what Dr. Chris invested in: things that will make your life more frugal. Dr. Martenson mentioned his best investments:

"...the best investments you can make are in yourself. My best investments this past year were a solar hot water system and insulation, both of which are going to have triple-digit returns in the first case and high double digit returns in the second case. I am investing in myself in ways that minimize my future cash flow."

And that's what we did, too. We invested by repairing an exisiting solar hot water system by replacing a cracked roof tank, and invested by adding Eco foil reflective inuslation in our attic. In previous years we invested in an airtight woodburning stove (fireplace insert) and a solar-powered attic fan. Since we live in a hot climate we also invested in screen doors and got all our window screens repaired or replaced. We even "invested" in insulated window shades, a closeline, and a cat door so our garden mouser cat was not making us heat or cool the great outdoors every time she wanted in or outside. And we are putting in a screened-in outdoor cooking/dining/sleeping area with the goal of weaning ourselves off the A/C.

We have, like most American Southerners, a heat pump for heating and cooling. Our elecricity cost per kilowatt has skyrocketed, but because of our non-tradtional "investments" our electric bill has stayed the same or gone down, even though an extra person started living here.

Other categories of  non-traditional investments include things like water and food. We invested in a well, and are planning to invest in a whole-house filter and get our water for close to free. We invested by starting a big square foot garden (raised beds), by planting fruit trees/bushes/vines, and by learning home canning. And are going to "invest"  by building a chicken coop.

I took the money out of my IRA to do all this. I'd do it again in a heartbeat. The IRA was breaking even. The woodstove ($4,500 after rebate) and summer cooling investments ($1K) are yeilding $700 a season so far, and will do so for at least 25 years, totalling at least $17,500 in today's dollars - much more when we stop using A/C. The garden start-up cost $700 ($200 for renewable seed, $30 for a truck full of compost, lumber for raised beds, hardware cloth, trelises, saplings, etc) and is so far saving us $700 in store-bought food a year. That savings will only go up as the fruit trees, etc mature: of the hazelnets, olives, blueberries, grapes, raspberries, peaches, apples, strawberries, figs and mulberries only one of two peach trees and the figs are mature.

Once we set up the whole house filter (building it ourselves for a couple of hundred bucks) we will save what is currently $38 a month on water. Note: our water bill went up 10% a year for the past three years. Can you see why water resiliency is an investment? I could go on and on.

Invest in resiliency. Invest in food, water, and energy-efficiency.

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I'm going for humor

Here's the art of possitive thinking taught by the best:

Armageddon be damned!

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This has been a good healthy

This has been a good healthy discussion.  I guess I mention this now because tomorrow is New Year's Eve, and I may not have access to the internet for most of the day.  Thoughts of safety and calm go out to all.  I want to thank folks for the discussions and the community.   Good luck in 2013 everyone.

JB

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gee, that sounded familiar

thc0655 wrote:

Jesse's post this evening has several elements that are very relevant to this discussion.  On one hand he reminds us just how bad/dark/violent it has gotten in the past by referring us back to the dying days of the Nazi empire.  Are we headed for something as bad as Nazi Germany?  Who knows, but it has happened before and it can happen again.  In fact, we are on a path which makes that kind of nightmare a very real logical possibility (among others).  Jesse's remarks set up a 27 minute Chris Hedges interview in which he discusses many of the issues addressed by this podcast and discussion.  I heartily recommend it to you.  Some of you may not like what Hedges has to say about "positive thinking" at about the middle of his remarks.  All in all, though, very thought provoking.

http://jessescrossroadscafe.blogspot.com/2012/12/empires-of-illusion-and...

Tom

Thanks for the excellent recommendation Tom.  Chris Hedges is one of the most eloquent people out there on these issues.  When I read "War Is A Force Which Gives Us Meaning" a number of years back, I was awestruck by his writing abilities.  I look forward to reading this book as well.

Regarding Nazi Germany, as I mentioned in another post, I've recently been reading about Hindenburg, von Schleicher, and others and how Hitler transitioned to power.  The parallels to our present situation cannot be ignored .  I've also been reading about such things as Sondergruppe R and, likewise, the parallels with such things as our CIA prisons is fascinating.  Overall, the political maneuvers and Machiavellian scheming were simply astounding to me. I have pretty good strategic thinking abilities but I would feel like a babe in the woods dealing with these people.  And we're seeing similar diabolical political maneuvering in this country today but with the added threat of technology that is orders of magnitude more difficult to resist or oppose than what existed in Hitler's day.  I remember reading how when the Japanese attacked Pearl Harbor, their secret police were rounding up enemy civilians in certain occupied territories who could present a security threat within hours ... all with simple paperwork, no computers.  It's chilling when you realize how much faster they could function nowadays with technology.

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People, People, People...

...please, the Jack boot is not our future. Honestly, this is just nuts, it is. Hard times are hard times, and it isn't the ends of time. If it is then it is. I am done here as I just will not be bombarded with this any longer.

Mentally I am quite solid unless of course my optimism is not quite yours.

Just do your Preparations, be Resilient, and share with Folks when things turn as some of you expect to the extremes. Never, ever, go it alone, you will need strength in numbers. Gauranteed.

Arthur I will miss you Brother. Jim H, good luck in Costa Rica if you end up there. Me, I'll be right here or in Northern Michgan depending on the ends of time thing. Canada just across the bridge for Golf with friends too, and to pick up some stash when necessary.

No one person is chasing me away just the negative energy of the doomsday folks.

I wish you all well.

Respectfully given

BOB

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Wendy S. Delmater

Wendy S. Delmater wrote:

Invest in resiliency. Invest in food, water, and energy-efficiency.

Hi Wendy,

I have been aware of energy problems since January 1974.  My preps have been proceeding at a low level since then. In 1987, weeks after the stock market crash, my wife and I purchased 10 acres in the San Joaquin Valley.  We picked the location based on "community", climate, wall-to-wall farmland, an agricultural based economy, ground and (generally) abundant surface water.  At the time our electric supply was about 50% hydo.  My preps are essentially complete.

Adam Taggart wrote:

My observation has been that people, consciously or sub-consciously, choose one of two paths when wrestling with the predicaments we address here on this site. They decide to either start preparing for collapse, or preparing for life after it.

My post was aimed at preparing for life after a collapse.  I have really kicked tires on some local opportunities.  A local dairy needed capital - friends in the business indicated negative cash flows were torching the small operator.  Beef feedlots were another opportunity - talk about opaque!  Several individuals have asked about planting grapes, cherries, and  month ago almonds on our property.  A 20 year commitment to a permanent crop at this time makes no sense to me.

Opportunities seldom come labeled.  I wanted to tap into the PP braintrust for ideas I might be missing.

Nate

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ao wrote:thc0655

ao wrote:

thc0655 wrote:

Jesse's post this evening has several elements that are very relevant to this discussion.  On one hand he reminds us just how bad/dark/violent it has gotten in the past by referring us back to the dying days of the Nazi empire.  Are we headed for something as bad as Nazi Germany?  Who knows, but it has happened before and it can happen again.  In fact, we are on a path which makes that kind of nightmare a very real logical possibility (among others).  Jesse's remarks set up a 27 minute Chris Hedges interview in which he discusses many of the issues addressed by this podcast and discussion.  I heartily recommend it to you.  Some of you may not like what Hedges has to say about "positive thinking" at about the middle of his remarks.  All in all, though, very thought provoking.

http://jessescrossroadscafe.blogspot.com/2012/12/empires-of-illusion-and...

Tom

Thanks for the excellent recommendation Tom.  Chris Hedges is one of the most eloquent people out there on these issues.  When I read "War Is A Force Which Gives Us Meaning" a number of years back, I was awestruck by his writing abilities.  I look forward to reading this book as well.

Regarding Nazi Germany, as I mentioned in another post, I've recently been reading about Hindenburg, von Schleicher, and others and how Hitler transitioned to power.  The parallels to our present situation cannot be ignored .  I've also been reading about such things as Sondergruppe R and, likewise, the parallels with such things as our CIA prisons is fascinating.  Overall, the political maneuvers and Machiavellian scheming were simply astounding to me. I have pretty good strategic thinking abilities but I would feel like a babe in the woods dealing with these people.  And we're seeing similar diabolical political maneuvering in this country today but with the added threat of technology that is orders of magnitude more difficult to resist or oppose than what existed in Hitler's day.  I remember reading how when the Japanese attacked Pearl Harbor, their secret police were rounding up enemy civilians in certain occupied territories who could present a security threat within hours ... all with simple paperwork, no computers.  It's chilling when you realize how much faster they could function nowadays with technology.

Another thank you, Tom, for the link. A person who ignores Chris Hedges does so at his own peril. His experiences, his critical thinking and his ability to communicate in both spoken and written word make an amazing package.

ao,

Chilling does not do justice to the apparatus that has been put in place. So much of it is right in the open or at least available with only a bit of investigation. It is amazing to me that so many choose to ignore the signposts and at least put these things on the list of potential outcomes.

robie robinson's picture
robie robinson
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Posts: 656
"For this reason god...

...will send them strong delusion that they would believe the lie"  somewhere in the new testament

more on topic esp. the aftermath. fiber production and small scale milling, i reeally like this http://bobwhitesystems.com/ i would be in small scale dairy however, the VDACS gestapo makes it a virtual impossibility in Virginia. there was a member here who contacted me years ago,in PP's infancy about the small scale custom combining of grain for groups of farmers. there is alot of potential there to include the milling/degroating etc. of the grains.

I think i might be on the wrong thread, robie

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