### David Morgan: We Are On The Precipice

###### Derivatives threaten to topple the global financial system

Wednesday, January 20, 2016, 1:04 AM

Precious metals guru David Morgan returns to address the great threat to the global financial/monetary system from derivative risk. He sees the world at an unprecedented moment in history where the interconnected nature of the global economy makes all players vulnerable to the mind-boggling volume of outstanding derivatives, which makes the sum of all world equity + debt look tiny in comparison (if you haven't seen it yet, look at this visual from The Money Project):

I want to give a very clear example that comes from gaming theory and I think this is a very concise and easy way for most people to understand our derivative risk exposure .

There are all kinds of gambling programs out there but one of the simplest ones before any computers was: you are at the roulette table (or you could be wherever, but roulette serves as the best analogy), and you bet a dollar on black and you lose. Then the next bet, you bet \$2.00 and you lose. And then the next bet, you bet \$4 and you lose. And the next bet, you bet \$8 and you lose. The idea is that you keep betting on black, and eventually that's going to come up and you're going to win on the roulette table. The problem with that is this. You start to bet 2 4 8 16 32 64 128 256 and on and on, and what you are doing is you are betting \$256. For what? To win a dollar. That is what you are doing. And that, Chris, I think is the best example I can give to the listeners about what we are doing in these derivatives.

This is based on simplified "delta hedging" which is fairly easy to understand. But now you've got these mathematicians out there writing these derivatives that make the example I just gave you look like child’s play. That's literally a fact. And these things are so interdependent and there is so much counter-party risk — that is, of course the biggest, issue — If you win the bet in the derivatives market, what happens if the counter party can’t pay you? That's what happened in 2008. People still don’t realize how close we were to the edge at that point because banks were not trusting each other or each other’s paper. So they weren’t trusting their counter-party. What happened was the Fed came in and said: Well, Bank A you don’t trust Bank Bs paper; Bank B you don’t trust Bank As paper — here's what we are going to do: I’ll take your paper. The Fed is taking these worthless mortgages and saying: We'll settle in T-bills. You like those things, don’t you? The answer is: Of course. What is better than a T-bill?

So then they settled out and, of course, this is where this whole expansion of the Fed’s balance sheet has taken place over the past several years. Everybody is happy because you have paper you can trust. But what happens when you don’t trust government paper? And Chris, that is really what is happening now. If you look at the foreign markets ,what has been going on is they basically have been dumping the dollar. The exchange stabilization fund has come in and sopped it up so it's not transparent to the markets unless you really know how to dig deep.

We are, in my view, in a place where the world has never been. We are on the precipice of a situation that is global in scope and  — for all practical purposes — is going to effect almost everybody on the planet.

In this podcast, Chris and David also discuss the upcoming Solutions Conference in Las Vegas on February 22, where they will both be featured presenters. Those looking for more information about attending that conference can find it by clicking here.

Click the play button below to listen to Chris' interview with David Morgan (49m:51s)

### Transcript

Chris Martenson: Welcome to this Peak Prosperity podcast. I am your host, Chris Martenson. Well, 2016 certainly got off to a rocky start at least for the paper bulls out there. Equity markets got off to a very bad start, in some cases their worst first week of trading ever—as was the case for US equity markets. And for everyone following our work, you know that we believe the perpetual expansion of financial assets was just another bubble in search of a pin. Has that pin been found? Will there be another rescue or sets of rescues engineered by the central banks? Who knows. But we do know that it would be a mistake to pretend as if you have got all the time in the world or to assume that a tiny group of appointed individuals that mainly serve the interest of their major client banks are omnipotent and all capable, or that they care about you and your family, your community—even your country—in the slightest.

So as we kick off 2016, who better to talk to than David Morgan, a precious metals aficionado with degrees in finance, economics and engineering. He created the silverinvestor.com website which is in the process, I understand, of becoming TheMorganReport.com and he is the publisher of The Morgan Report, a monthly newsletter that covers economic news, overall financial health of the global economy, currency problems and the key reasons for investing in precious metals. We'll be talking to David about money, sound money, silver and the many other important things each of us might do to prepare for what is obviously going to be a very different and turbulent future. Welcome, David.

David Morgan: Well, thank you, Chris. It's great to be with you.

Chris Martenson: Well, let’s start with the markets. You follow macro economics, you follow the markets very closely. That was a rough first week. Now was that a blip, David, or was that the start of a very long overdue correction?

David Morgan: Well, I’ll pull a Janet Yellen on you, Chris [laughter]. I need more data to say that. And I actually am being sincere. It certainly was a bad start and abnormal—meaning, as you said, the biggest drop probably since we have been recording these things. Additionally, of course, it is the China Syndrome I call it. China is basically a huge exporter to the world and they are really having problems internally. And of course we know about the Baltic Dry Index, which I’m sure we will get to. All signs, all the objectivity that we can muster points that not only are we slowing down, we are probably going through the R and into the D—meaning we are really in a recession and probably heading toward a depression or maybe touching a depression, depending on how you define it. But it is worrisome.

One thing I want to start with is a bit positive. I mean a lot of people have a misconception or connotation about a crisis, a collapse, a monetary failure and it is this—and this is from the feedback that I receive. This is my opinion, but it is a strong one. They have the idea like everything ceases, and it is not the case. People have a financial survival instinct, a survival instinct, and things do not stop or go to zero. However, there are huge dislocations, there are huge readjustments. There are areas of extreme strife and that type of thing, but it isn’t just as if everything stops. And I want to make that clear. In a “normal”—and there is no such thing as a normal financial or currency crisis—there is a re-allocation of assets, meaning that malinvestment is taken out of the market and things that we really need, really want in the market says "that is viable, continue on."

But that process takes time. And it is my opinion, again, that it is going to take much more time this time around versus let’s say the 1930s because it is a global basis, we are all tied together, there is so much interdependency, there is so much extra specialization, there is not enough diversification in some areas—take the banking sector as an example. Rather than being diversified and strong or resilient, as you put in the book, it is not resilient. It is very fragile. And that is the tendency that has been taking place. Even though there are more people on the planet, the tendency is going to be—I'll call it "anti resilient". It is more fragile.

Chris Martenson: More fragile, and I think a key word you said in there is this "interconnectedness," which I think has got some benefits while everything is going smoothly, but let’s talk about the risks of this. So here we are we are recording this. It is Monday. It is the 11th. It is after we had that bad week. Some very obvious overnight rescue attempts by the Chinese government, particularly a Yuan intervention to prop that currency up. And US futures in the overnight went from 10 down to 10 up. A 20 point swing in the S&P based on what Chinese monetary authorities were doing at the margin on their currency. That is how interconnected things are. That is how I see it. Is that an inappropriate conclusion to draw, that overnight decisions by Chinese at the margin of their currency market have impacts now on equity markets? And if so, why should the price of the stock of General Motors have anything to do with a minor wiggle in the Yuan?

David Morgan: Great question. First of all, yes. I mean we have gotten to the point, in my view, where if I can step back and digress into a comic movie with Rodney Dangerfield—I think it was Caddyshack—and it shows him with a cell phone before they existed on his golf bag and he gets a call from his broker and he says "everybody is buying; sell." Gets a call back "everybody is selling; buy." I mean it is as if these financial markets are so volatile and there is no real direction that, as you said, Chris, just a currency move will cause GM to go up. And this is ridiculous. There is no reason for that in any way, shape or form and yet this is the way the markets are acting.

So the point is, succinctly, there is no reality to these markets at this point in time. I have been saying for months now that in a normal market the stock market reflects pretty much the physical economy. So if you have a good idea and a good business and you are an entrepreneur and you create something the market wants, the market is going to vote. Your share price is going to go up, there is going to be more demand and you are going to see that in the market price of the equity. And does that take place today? Of course. Let me say it is not in all cases—but generally speaking from the broad brush point of view it is absolutely disconnected from reality.

So you are seeing these moves and it is a point where, for those that are as old as I am, there used to be a gentleman, he is deceased now, named Elliot Janeway. Janeway was sort of a maverick type economist and he said, “You know the end is nigh when you and I are sitting across a table from each other and we are both trying to sell each other life insurance policies.” In other words, when all we have done is this financial manipulation to the point where all we have is a thought—in other words, a life insurance policy is based on a financial instrument that pays off at some point. But it is just the extension of the financial markets, which we have seen huge growth in the financial industry but it is based on a lot of quantitative quants—these mathematicians that make up these derivatives and on and on and I don’t want to go too far down the rabbit hole, Chris you can bring me back. But the idea is that this produces absolutely nothing in the financial economy at all and yet the talking heads constantly point to it and say "look, look, look things are fine—they are fine—they are fine." If you have a deep understanding of it, the more you can see the financial instruments increase, the more you know we are in trouble. That is my point.

Chris Martenson: If this gentleman had been alive a little later on he would have been talking about derivatives because, honestly, a life insurance policy is a derivative and the underlying asset is your life, right? So if he had been really looking at what we see in the derivative markets—not to follow you down that rabbit hole too far, but derivatives are fundamentally at the heart of a lot of what I think is really going to go wrong because you have been talking about the unreality of these markets—they are disconnected from the fundamentals. The price is now disconnected from reality. Derivatives allow us to go even one step further over into avalanche territory. One step further out into the cornice by, I think, allowing risk to be not just mispriced but to give the wrong and false illusion that risk has been somehow banished.

Of course this was Greenspan’s—he loved derivatives. And he said "oh my gosh, these things are fantastic. They allow people to manage and mitigate risk." And he really I think—wink wink, hint hint—thought that we made risk go away. I have sort of a second law of thermodynamics rule of risk which is you can’t make it go away, you can only transform it. So the derivatives have spread the risk a little bit. But as we found out in the housing crisis with the collateralized debt obligations on the housing stuff, it didn’t make the risk go away. A bad decision is a bad decision. Malinvestment is malinvestment. You can paper over it all you want. It doesn’t really help you underneath it all. So I would like to get your comments on really how you managed to think about derivatives in this world, knowing that nobody—I mean do you know anybody that actually knows really how they—not just what an individual one is, but how they are going to behave in total in a crisis?

David Morgan: Awesome question. I will give you my opinion on that because I can’t cite facts exactly. I can give a little bit of history. I think it was Anglo Ashanti back in the start of the bull market blew up based on their derivative book. And the derivatives were so complicated that they had to get the quants and the mathematicians to find out who was owed what because these things were very, very difficult because of the math involved. It is an idea that Jim Rickards talks about and I will talk about it more. I am certainly not trying to talk over anyone’s head here and it is maybe difficult on the radio, maybe not. But we all kind of know what the bell curve looks like. And you know in the middle if you get the most common situation, whereas at the tail end either at the front or the back end it trails off to almost zero. So that is called the tail end of the curve. I think most people can picture that in their heads.

And so the idea that Greenspan and others have said is that we are working in the tail end of the curve and because of that the risk is almost zero. This is basically preposterous, based on the assumption that 1.) You can predict human behavior. The best example of that is Longterm Capital Management. Longterm Capital Management was run by people that were Nobel laureates. They won the Nobel prize; they were very smart. There is no doubt about that. And they felt that their software, their program could predict human behavior. And you know what? You can predict human behavior some of the time, but not all of the time. So when they went into the Russian Ruble and it was so many orders of magnitude off of what their math program said, it meant that the risk was certain to come back—and I put "certain" in quotation marks—and therefore they continued with the trade and guess what? That is not what happened, because you can’t predict human behavior all the time.

And so it blew up Longterm Capital Management. This is one of those shots across the bow that the Wall Street establishment had right in their face. And of course did they learn from it? The answer is no. Not at all. The Fed came in and rescued everybody and the game goes on. So that is an example.

So now I want to give the example of an asymptotic curve. Asymptotic is just a fancy word that means if you get to that tail end—so if you picture a bell curve, when it starts to get very low towards the X axis, that that line is parallel to the X axis. So what it means is the further you go out in time, the risk stays the same. No matter how much time—no matter how many derivatives you put on it—the risk is a constant risk. That is asymptotic. That means that it is parallel. I think I got my math right on this, Chris. And the idea is that this Delta hedging where if you have made a bad bet in a commodity and you have infinite money, which the banks do, then what you do is you keep loading up one side so that you almost force the market to go the direction that you want.

I want to give a very clear example. This comes from gaming theory and I think this is a very clear, concise and easy way for most people to understand it. There is all kinds of gambling programs out there. But one of the simplest ones before any computers was if you are at the black jack table—or you could be wherever but blackjack serves as the best analogy—and you bet a dollar and you lose, then the next bet you bet \$2.00 and you lose. And then the next bet you bet four and you lose. And the next bet you bet eight and you lose, the idea is that eventually you are going to keep betting black and eventually that is going to come up and you are going to win on the roulette table. The problem with that is this: You start to bet \$32 \$64 \$128 \$256 and on and on and what you are doing is you are betting \$256 for what? To win a dollar. That is what you are doing. And that, Chris, I think is the best example I can give to the listeners about what we are doing in these derivatives.

This is based on the simplified thing, which is Delta hedging, which is fairly easy to understand, but now you have got these mathematicians out there writing these derivatives that make the example I just gave you look like child’s play—and that is literally a fact. And these things are so interdependent and there is so much counter party risk. That is of course the biggest issue is if you win the bet in the derivatives market, what happens if the counter party can’t pay you? And that is what happened in 2008. And people still don’t realize how close we were to the edge at that point because banks were not trusting each other and they were not trusting each other’s paper. So they weren’t trusting their counter party. What happened was the Fed came in and said "well, Bank A you don’t trust Bank Bs paper, Bank B you don’t trust Bank As paper, here is what we are going to do: I’ll take your paper." Meaning the Fed is taking these worthless mortgages and saying "we will settle with T-bills, you like those things don’t you?" The answer is "oh of course. What is better than a T bill?" So then they settled out and of course this is where this whole expansion of the Fed’s balance sheet has taken place over the past several years because everybody is happy because you have paper you can trust. What happens when you don’t trust government paper? And Chris, that is really what is happening now. If you look at the foreign markets, what has been going on in the US Dollar is they basically have been dumping the dollar and the exchange stabilization fund has come in and sopped it up so it is not transparent to the markets unless you really know how to dig deep.

We are, in my view, in a place I have written about in the early 2000s—a place where the world has never been. We are on the preface of a situation that is global in scope and is going to probably affect, for all practical purposes, almost everybody on the planet.

Chris Martenson: And that is what is different this time—dangerous words in investing—but what is different is there is nowhere really to run. I get this question from people like "oh, maybe I’ll go to another country." And I look at this and I go "I don’t see anywhere to really hide this time," unless you are going to hang out with a stone age tribe somewhere or you are just going to hang with the Amish and they have a well defended perimeter or whatever. You have got this situation where at least if you were in Weimar Germany or in Zimbabwe in the '90s or in Yugoslavia in the '80s you could always go across a border and hide out somewhere. Where do you hide out today? Well, as we mentioned this is not just an interlinked but it is a globally interlinked world; all the markets are tied together, and I don’t see anywhere to particularly hang out.

This thing about the derivatives is very important because the magic word in there is the counterparty risk—aside from all the unfathomable complexity of these things, not just individually but interlinked—the unfathomable complexity—because... I might do a bad justice to explaining this, but I think about it like let’s say you are a hedge fund, David, and you decided you are going to invest in Greek bonds because that makes a lot of sense to you, but you are worried they might default on them or something like that so you buy a credit default swap from me and I will pay you if your bonds go bad. Now because you are covered you are like "well, I’ve got this bet. It either goes up or I am covered." So now I can actually take on more leverage and take on another bet. So you take on another bet with another counterparty and so on and so forth.

If I can’t pay you, it is not just a simple matter of you going "aw, shucks. I lost the \$10 million in coverage I thought I was going to have with Chris." It is, all of a sudden, because I couldn’t pay you, you can’t pay the next person who you were hedged out in an opposite direction with, all just trying to skim a little off the top. That is the best I understand this, which it isn’t just a simple matter of derivatives ultimately are a zero sum game that is true—but everybody has taken on extra leverage and assumed that they were risk free on the basis of owning these things.

When you have badly priced risk and extra leverage—come on, haven’t we seen this story written out before?

David Morgan: Yes, we have, but not to this level. You are right. A common sense approach is—the collapse of complex society is the general idea being that the more complicated the system is, the more points of failure that exist. And you have never had more points of failure in the financial system than you have now because these derivatives have become so ubiquitous. They are everywhere and they are so interconnected. You might have Bank A and Bank B just fine, but then they find out after they study what their risk exposure is that there was something dependent on some obscure bank somewhere that has failed and then they can’t pay and it goes down the line, meaning that it topples. It is the one domino hitting two, hitting four, hitting eight, the analogy close to the one I gave on gaming theory where all of a sudden just one little miscue can take out the entire system. That may be a bit of an exaggeration, but the idea is clear: These problems are not understood very well by the market. In fact, the belief is it is the opposite. The belief is that they are risk free or nearly so. And whenever you look into the human realm and you think that you have got it figured out, you better look again.

Chris Martenson: Well said. So this is why when I ask this next question—we have obviously a very active conversation going on at the site and people have a wide range of opinions and they all—I have to hold that they all equally have the same chance of outcome. Some people are relatively convinced that there is a chance for this correction to really get out of hand and to really shut things down. And then there is another group of people that believe we get corrections, life goes on. Somewhere in between those two extremes I think is reality somewhere in there. What we have been talking about with derivatives has the capability of literally shutting down the banking system for a period of time while we try and sort all of this out. This is exclusive of any geo political event or war with Russia or an EMP or some real game changer like that. Just within the construct of how over extended, how over leveraged, how over indebted our system is, this reset could be pretty bad, couldn’t it?

David Morgan: Oh absolutely. I think it is going to go down in the historical record books. It will be a monumental point in history and it will be absolutely a new point in the financial record because there is nothing like this that has existed on the planet before. I think it was Doug Casey that years ago wrote—and I agree with him—I think when this thing all comes to a head and falls down and is resurrected at some point, I think that you will see derivatives basically outlawed or somewhere close to that. I want to give the correct idea. I don’t exactly know how it is going to go, but we will see the problem after the fall, not before the fall. Some of us will see it before the fall, but most won’t. And after it takes place they will say "oh, I see what happened is we got way too leveraged, derivatives were a bad idea, we cannot make derivatives anymore," and of course that will go for some time just like a fiat money scheme. And then of course someone will say "well we really need some derivatives because we need to be able to hedge our risk and duh duh duh," and then it will start all over again, most likely. I base that on human nature.

But I think that is what will take place, Chris, is that we will see the events go into the historical record book because we have never experienced this. We have seen subsets, as you said—Weimer or Zimbabwe—and it doesn’t necessarily mean hyperinflation. In fact, I don’t think we will see hyperinflation. I think we will see enough of a distrust of the US Dollar and maybe the equity markets simultaneously. So if you saw the bond and stock markets sell off together, it doesn’t have to be at a hyperinflation rate; it just has to be enough of a distrust—or a loss of confidence, is a better way to state it. So when a loss of confidence takes place at a great enough level, that is when it is game over as far as I am concerned.

Chris Martenson: And that plays right into a lot of the advice I have been both giving and living by for a while, which is that that loss of trust ultimately comes with, I think, a revelation where people star to see reality a little bit more clearly. And one of the big distortions that sits out there as well is I think the degree to which people have confused price with value. So I don’t think there is going to be any way to avoid what is coming next. I think there are ways to evade it a little bit. So the difference between avoid and evade. To me, my evasion tactics include hiding out in real assets—gold and silver have been favorites of mine. Real estate, owning my home outright. Making productive investments in my energy production and efficiency in my own house. Beginning to invest more in companies that have real defined products that I can understand and believe in. That has been sort of my approach so far. But of course it has been a tough couple of years because of the prices of things—in particular all commodities. I hate to put gold in as a commodity, but that is where it sort of gets talked about. The whole commodity complex has just been under assault since 2011. Massive wipeouts coming across the agricultural, mining, precious metals spaces, energy as well. Obviously coal companies going out of business almost weekly now at this point in time. Oh my gosh, I am looking at oil, it is at \$31.75 on my screen right now. Yikes.

Around all of that, how do you think that this idea of investing in real assets is going to play out in what I consider to be real value. Value is stuff that you can touch, eat, use, feel, smell. It is like the real things in life. As we have seen it play out, though, the real things in terms of price have been getting killed. How do you read that and do you think that you would modify a strategy that would mean maybe hide out in dollars for a lot longer and wait for things to get cheaper or is that a bad strategy because boy, you are taking a risk? Because nobody knows when things are going to finally turn. How do you cope with this really bizarre environment?

David Morgan: Great question. First of all, I concur with you for the most part but I am glad you added on the dollar part because I want to address that.

I think the most important thing is to get a real grip on reality. I think our society, especially in the west, reflects the non reality that we are all living in. I mean the idea of an iPhone and I certainly have one and certainly use it more than I need to but this virtual reality that we are all living in with the computers and all that is a good reflection of basically the derivatives market. I don’t want to overstate the derivative case. But the point being is you need to be, first of all, real. Real with yourself. Going to your book, Prosper!: How To Prepare for the Future and Create a World Worth Inheriting, and I’m glad you added that last part because I have two daughters and one of the big things to wake me up from being kind of a low-key non transparent consultant for the financial markets to out with the website and talking and doing interviews like this that is available for almost everyone if they care to listen—is because of my daughter. When she was born I thought you know what? I didn’t want her to be 18 and say "well dad if you knew so much how come you didn’t do anything about it?"

I know talking is just talking but let’s go to the reality. Well, I live on a property that has five acres. I have grown my own food for years. I have a hand pump on my well. I have a septic system. I have some solar, very minimal, but I have it. And the idea is that I am more self sufficient than most people because I too, Chris, think that you need real things. That is of course the commodity markets, and they have been creamed here in the last several years, which is reality. It is not whether we want them to be this or that; it is what it is. Primarily I think the reason is that the world is broke. There has just been too much again in the financial markets and not enough in the physical economy. The China boom, the industrial revolution, if you will, that took place in the early 2000s has run out of steam. It is not that they can’t produce. In fact, they are at a productive capacity greater than what they need or the world needs, it is just that there aren’t buyers on the other side. The American middle class has been pretty much wiped out for the most part.

So people, generally speaking, if they have money they are holding onto it. A great majority don’t really have any disposable income. They are just getting by. We are in this "pushing on a string" mode—the deflation argument where there is capacity to make stuff, but there is no demand. Oil is a good example of the overall global economy. On the US Dollar part it is always good really to have cash, no matter what the form, until it blows up because it gives you liquidity. The reason I have been strong on a fairly decent cash position is not me. It is someone better than me—John Exter that did the upside down pyramid. I was one of the first, to my knowledge—in fact, I will take credit for it—to bring forth his work into our community, meaning the hard asset, real look at the economic environment. And the upside down pyramid is the liquidity pyramid, derivatives didn’t exist when John made the upside down pyramid.

But what it shows is people go towards safety. And the safest thing for 99% of the population is a dollar. It is a physical piece of paper. I am talking about green backs. And that is at the very bottom of the pyramid, save one other asset class and that is gold. So anything tied to the dollar will deteriorate, meaning like the stock market, the bond market everything else, derivatives especially. So the worse an investment is, like subprime mortgages as an example. We have already seen this through 2008 and onward. Those things go to the buy and buy. They get sold off and of course the buyer of last resort pretty much has been the Fed. Those are at the base of the pyramid, which remember is upside down. So as we work toward things we trust, we have more confidence in, it moves down toward the dollar. So the dollar will be like the big guy on the block just before the world, the economy, a nation state, a hedge fund manager, who knows where it will start, where the flame will catch—and at that point there is a distrust of the dollar and then we get the run to gold.

So the idea is if you look closely at where we are now in the scheme of things, I could build a very strong case that this thing is playing out exactly or very close to what Exter predicted and I agree with is that it looks bleak for us in the precious metals community because the dollar is so strong. But no, that is because everyone is trusting the dollar. They want short-term instruments. They don’t want to lend their money long. They are not sure about the equity market so they go to cash. And so that will probably continue to push the dollar higher, even though the smart money—meaning some of the nation states, etc. like China, Russia, India—have been moving out of the dollar and into gold for a long time.

They have started—let’s not say a run to gold. They have been walking into the gold space quietly and unobserved by most of the population of the planet. Nonetheless they have been doing it and they do it as a professional. They accumulate slowly over time as to not rock the markets or move the price. It doesn’t take much more for that little walk to turn into a jog, to turn into a full out run, to turn into a sprint and then we have got the run to gold because the dollar isn’t trusted by more than don’t trust it now, which—if I can go on and maybe belabor it—we have seen this over the last several years where the BRICS have come to the fore, they have a competing block of nation states, they have the Asian Infrastructure Investment Bank, they have a system of electronic settlement that competes with the SWIFT system. So they are definitely trying to move away from the dollar in a very large way that if the dollar fails perhaps it can remain standing. Personally, I doubt it. I think too much is tied to the dollar for them to come out the other side whole. But it might help them at some level.

So we are again in a situation, if you truly understand it, you have to get grounded. You have to get your emotions under control. You have to realize that financial collapse or currency crisis or whatever and however it manifests isn’t the end of the world, but it is large disruptions. So be grounded and be prepared for it and that goes back to your personal reality which is again why I like the fact that you wrote the book because you have to look into what you can control.

One of the things, of course, as you talk about is your physical health. I mean we have gotten so far away from value. I want to come back to what you said about price and value. The idea in the west primarily is that a person’s life is priceless. You cannot put a dollar amount on a human being. It is unbelievably priceless. Yet, how many of us really live our lives with that thought in mind, or at least in our consciousness, let’s say even on a weekly basis? But it is true. And so if you value life you certainly should value your own and you should be of value to others. Are you adding value when you are writing these derivatives contracts? I am not trying to pick on derivatives but the idea is that you really need to get settled in and look at what you need versus what you want. The pendulum has swung so far in the stuff that we don’t need. I mean do I need an iPhone? I could build a case. I probably do. But I certainly had a decent life without it.

We need to get back to basics and I think the markets are going to force us to get back to basics because we are going to be in a world where, for example if you go back to when I was a young man, if you walked into a grocery store when I was in my late teens or early 20s the idea that you could buy any kind of grape, any time of year was preposterous. You got them when they were in season and that was it. But now with this global empire it is very nice to be able to buy concord grapes from Mexico in the middle of the winter time. It is wonderful. But that may cease because as things contract and the reality shines through, those type of situations may break down. In fact, I am almost certain that they will.

Chris Martenson: I certainly agree. Even if they don’t, the risk is high enough that people ought to consider it even if it is just to weight that possibility and discard it. I know many people who haven’t even taken that first part of that thought process. I absolutely agree. I am very excited to come out and talk with you and whoever else wants to attend this seminar and workshop out there in Las Vegas, if we can talk about that for a bit because now that you opened up the whole idea of health and all of this. It is a very central thesis.

David, after studying this and studying this—I started all of this because economics is where I started. Then I understood energy a little more. Then the environment comes in. I got that larger picture. But when I first started all of this it was really for myself a strong sense of thinking like I was going to be able to or I needed to figure out how to control everything. Like how could I like get a storage shed full of everything I would miss if these global chains broke down. And over time of course this matured and has become a circumstance where I understand there is a lot of things I can’t control. So letting go of those has been very helpful. But really being very clear and doubling down on the things that I can control. And then thirdly, coming into this year it is like oh it is not just about making things safe for me and my family, it is really about creating this world worth inheriting.

Let me just put my cards on the table: The direction humanity is heading right now is going to leave behind a really terrible, destroyed world. Just simple things like the fact that almost every major African megafauna animal that exists in a child’s storybook right now will be fiction or in extinct history in just 20 years at this current rate. That is just wrong. To me life isn’t worth living to survive in. This is a beautiful world and we have the capability to make of it what we want. And I think that starts with—as you mentioned—it starts with our own health and our own bodies. That is certainly something very much under your control and it is a good place to start.

I am very excited to start talking about the solution space. I got to be honest with you, I am a little bit tired. I am in the cat seat on this. This is what I do every day is I really catalog what is going wrong, and I really need to be putting more of my time into what we can do on the other side of that spectrum on solutions. Let’s talk about this upcoming event in Las Vegas and the Las Vegas Solutions Conference on February 22nd that is 2016, not that far away. In your words what is it going to be about and who will be there as presenters besides yourself, myself and Adam Taggart?

David Morgan: Okay. Well thank you for that. Yeah, I have been in the same space, meaning that for the last I guess year or two I’ve thought all I have been doing is focusing on the problem. I really want to focus on the solution. And I was asked to speak in Kalispell Montana, and I was asked... I drove over there and I did my presentation. Before the presentation I took a couple of extra days and went to the national park and I met this gentleman that was introduced to me named Rich Heben. And Rich lives totally off grid in Montana. And he used to be a pharmaceutical rep from New York. You don’t get much more citified than a New York human being that is driving thousands of miles every month as a pharmaceutical rep for one of the big pharmaceutical houses. And yet this guy is living off grid.

I drove out there. It was a little hard to find this place. I always try to stay open minded Chris and not have any pre disposed ideas about anything, but it is hard to do. I had a very vague picture, but I kind of expected sort of a mountain man kind of thing; this is just what is going on in my head. He comes out. He is dressed better than me and I am dressed in jeans a shirt and a jacket. But he is in khakis and a dress shirt. I mean he is a pharmaceutical rep; that is what he looks like. And he has been living off grid for a number of years and he took me through the whole acreage that he has there. I didn’t walk all 20 acres, but we saw what he does outdoors for growing food, what he does with his greenhouse and the kind of lifestyle he has. And I really felt grounded. We had lunch with him, he and his girlfriend. He was actually pushing me a little bit to start doing some conferences on the solutions. I, like you, Chris, and I am speaking for you which makes a presupposition, but you know on a lot of this stuff I am sort of in the middle. There are people that say the gold market is manipulated. There is people that say it isn’t. I am saying yes, it is, but I am sort of in the middle. It is not like it is as extreme as some people think or advertise. There is some misunderstanding about it.

So Rich would be someone that would be at the extreme. Basically totally off grid. Has a great lifestyle. And then there are people that are like in the middle of an apartment in downtown Vancouver, which is I would say the opposite end of the spectrum. And then where I am sitting is near a small major city, Spokane, Washington. As I said, five acres. I am sort of like not off grid, but if the grid went down I still have water, I can still flush my toilets, I wouldn’t have any sewage problems because I am on a septic, all that stuff. And I have some solar that I can use as a backup. But I am certainly tied to the grid. In other words, I am trying to make the case that I am kind of in the middle.

That is what I like to do with my thinking. With my engineering degree you look at everything from zero to infinity. So if you are integrating a forcing function, as an example, you look when it is at rest and you look when it is at infinity or approaching toward it when bending the wing so many times will make it break, as an example.

So if you look at that type of approach, which is what I was trained as an engineer, what you are going to find is that somewhere in the middle between 0 and infinity lies what we call the sweet spot or where most of the data is or the bell curve or however you want to think of it. And that is pretty much how I align my life.

Now I am certainly extreme to the mainstream, but that doesn’t mean I’m wrong. All it means is that my—excuse the ego—but they aren’t awakened enough to the point of monetary history or what really goes on in these complex situations. So that is what we are shooting for, Chris. We will have Rich Heben will be speaking, Greg Manorino. Greg’s whole premise is basically that you want to become your own bank. You want to beat the bankers at their own game. He is very good at trading. He has some great advice. It is all for free and he will be speaking at our conference. And then we have Robert Ian, who is helping me put everything together logistically. And Robert has a website called Conquer Change. And Robert has a great, strong message because the one thing that we all know for a fact is that change is becoming more and more pervasive through our daily lives and it is happening at a more and more rapid pace. So how do you cope with that? So it hits more on the emotional side that you wrote about in Prosper! where you can stay grounded. And it intersects other areas like what do you have control of? Obviously, your physical health, the way you think of others, your social capital and these type of things. It is a great lecture that I think everyone will benefit from. We basically have you and Adam to be our keynotes kind of laying the ground work. I think a brief review of the problems so everyone has an understanding.

And then of course there is always questions that come up: "well, technology will save us," or "don’t you know that there is a free energy system that is going to take over the planet?" I am not going to rule that out, it is just that the powers that be—I don’t want to go too far down that path. To get from here to there is going to be difficult. It is like labor pains. Even if the other side has all these wonderful things—nanotechnology and being able to create more things from human ingenuity. I don’t discount that too heavily. What I am trying to be realistic about is that you don’t get there in a straight line. It is going to be very, very difficult for some period of time. That is what I think the purpose is, is to help people see that the future can be very bright, it can be our creation. We do have a lot to do with it, but we are going to have to pay for our past sins, if you will.

That is why I think it is so important to create this message that let’s not just focus on money alone or real money because that alone will not save you. That has been kind of the idea in the west. Financial freedom is all about "if I have got enough money I can do whatever I want." That might have held true in the '80s and '90s, but it doesn’t hold true now and because of this reality we knew to address what is exactly happening right now and how people can best prepare for it. Again, I compliment you because I really wanted this to be very impactful, hopefully it will catch some traction. I think if it does I think people really want this, maybe we can take this further. That depends on the free market. I am a free market advocate, as I announced, and the market is going to tell us whether this is a good idea or not.

But thank you for coming. Thank you for being a keynote. I am really looking forward to it.

Chris Martenson: I am too. And of course you say we have to pay for our past sins. Naturally, we should hold this in Sin City. It is a perfect location and I’m really looking forward to—Las Vegas is a great place. So for anybody listening, if you wanted to come—one of the chief complaints which is totally valid is I often hold seminars in very hard to get to places. Las Vegas is not one of those. It is very easy to get to and February is a good time if you are from one of the colder places, like I am, to escape out there. So anybody listening feel free to come—because you know, David, you can get the best line up of people and just have all the best presenters in the world. What I have found with Adam is that when people who share this mindset of understanding where the world is and then wanting to do something about it, when they get together, magic happens all by itself. You can have the worst presenters in the world and it will still be a great conference for these people because they look around, they don’t feel crazy, they are not alone. They see a lot of other very successful individuals. Typically, these are very successful people who come. These are people who are curious. They figured the world out. They got to this place because they were already investigating things which means they probably were doing that in the rest of their life professionally as well. So you know, we find a lot of—you are an engineer so we find a lot of doctors, lawyers, engineers, people who have been trained in numerate and/or logical sort of professions. Those are a lot of people that come and of course other people as well. Whomever. That is my big plug is, listen, regardless of who is talking if you come you are going to have a great time just meeting the other people. And that is really one of the larger value propositions. It's sort of hard to scratch out on a piece of paper and tell people about, but it really is true.

David Morgan: And the synergy too. An idea you throw out, I might talk about in my lecture. And then at the end there is going to be like a round up where everybody has the opportunity to meet with each individual speaker and ask their own personal question. So really we are trying to make this as valuable for the attendees as humanly possible. We want people to come out and get that feeling of like "you know what—no matter what happens I have got this kind of control and I feel so much better." It is more than a feeling. You have to put this stuff into action. But when you give the ability for people to kind of maybe rethink or re-evaluate where they are. There is a point in time or maturity that you get to that you really get to go introspective and ask the question we all ask, what is it all about? What is my purpose in life? What am I doing here? And my answer has been: I want to be of maximum value to others. And how do you do that? Well, I think you do that by speaking the truth. And this is part of the movement that you and I are in. I mean some people refer to it as the truth movement.

I don’t really care what label you put on it, and I am not a big fan of labels, but what I am a fan of is the human experience. So when I wrote the book The Silver Manifesto I spent a great deal of time with Chris Marchese on all kinds of things that deal with the financial markets: economics, the manipulations and on and on. But the last chapter I wrote was "Beyond Silver". I said "Before moving beyond the silver markets, perhaps best to inform the reader that there is a very high probability that the best lies ahead for silver investors." And I went on to explain that.

I said further that there is more to life than the financial markets and we have to get back to our human roots. I quoted three different really deep thinkers about where society may go in the future. And so this isn’t David Morgan’s look about where we should be going in the future—or could be going is a better word—it is some of these and I don’t adhere to any of them exactly. I put it out there to get critical thinking because, again, we can create a great deal and all we need to do is start speaking the truth to each other.

And, Chris, I will leave it at this—I know we have gone almost an hour—I am a bit of a Sci-Fi fan and Rod Sterling to me was one of the best writers out there and a very great thinker. One of the Twilight Zones that I watched as a kid was that the entire planet had to tell the truth to each other for one full day. At that time, it closed out like Rod Sterling often did and it showed Kennedy and Khrushchev and of course this mandated you can only speak the truth. I thought how interesting to think about—a concept that is far from something taken to heart at the political class, which is unfortunate. These people are not leaders anymore, they are rulers. They are ruling over us. That is a very unfortunate state of affairs and that is part of the problem as well as many others. It is something we need to have the ability to stand up and talk about, and we do.

Off on another topic, but Chris it has been a true pleasure. I am honored that you are taking the time to come here. I think we are both heartfelt men that we are willing to give of our time, our most important commodity, to others to help them help themselves.

Chris Martenson: Thank you for that and well said. We will, of course, be posting the links where people can click directly through to register and find out more. But for people who might be listening in the car or finding this on YouTube or through another channel, where can people register for the Las Vegas Solutions Conference?

David Morgan: It is that simple—SolutionsConference.us. Doesn’t matter if it is capitalized or not. SolutionsConference.us. Vegas for the warmth and affordability and ease of in and out. I mean it works well. Certainly, I’d like to comment on Sin City, but it is a very easy place for almost anybody to get to and it is warm that time of year.

David Morgan: TheMorganReport.com. Just go to TheMorganReport.com. We have a free report on, we think, a possible breakthrough technology in the junior space only. We tell you everything about this new technology without giving you the symbol so you can kind of have a free look and say "that is some speculation I am interested in." You can sign up for the full paid report, or not. So we are giving you like everything you would want to know about this new technology without giving you the how to call your broker on it. That is something that may be of interest to some of the listeners.

Chris Martenson: Fantastic. I am sure it is. Well, David, thank you so much for your time. We didn’t get to a number of topics. We will have to get to those at some other point. Can’t wait to do that and can’t wait to see you in February.

David Morgan: My pleasure. Thank you, Chris.

Looking for a financial adviser who sees the world through a similar lens as we do? Free consultation available.

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• Wed, Jan 20, 2016 - 3:07am

#### Arthur Robey

Status: Platinum Member

Joined: Feb 03 2010

Posts: 1814

0

I was wanting to jump right in there and say that our decisions aren't digital*.  They are not this or that. But David covered that aspect,  which was very relaxing.

There is a confidence bead on a length of wire. A healthy mind moves that bead around this way or that as it thinks about things.  It is rarely parked in one spot for any length of time. In a healthy mind. In an unhealthy mind the bead is rusted onto the wire.

But a wire is a one dimensional surface. (Forget about the circumference,  spinning the bead does nothing)

So then the metaphor becomes a plane and the bead has two degrees of freedom,  and because this is a mathematical model we can add as many dimensions as we like. And there are a lot of variables, each with it's  own dimension. So that should be a very busy bead.

Dogmatism is when the bead falls off the wire. You lose. The penalty is a healthy  ego bashing. Trouble starts when the Ego is too embarrassed to pick bead back up from the floor.

* Evidence that intelligence is a Quantum phenomenon. It's all about statistics.

• Wed, Jan 20, 2016 - 3:13am

#### AKGrannyWGrit

Status: Silver Member

Joined: Feb 06 2011

Posts: 1055

0

"These people are not leaders anymore, they are rulers. They are ruling over us. That is a very unfortunate state of affairs and that is part of the problem as well as many others. It is something we need to have the ability to stand up and talk about, and we do."

Such a simple statement and yet prophetic!  I would add that we, middle America, are no longer the country's backbone but rather its enemy, or at least it seems that way.

AK GrannyWGrit

• Wed, Jan 20, 2016 - 3:33am

#### jturbo68

Status: Bronze Member

Joined: Aug 04 2009

Posts: 127

0

#### HAA Cash Question

Wrong forum

• Wed, Jan 20, 2016 - 4:16am

#### 000

Status: Bronze Member

Joined: Dec 10 2013

Posts: 253

0

#### Asia down 3%

Asian markets are down 3% with 3hrs to go.

Fasten our seat belts, get coffee early and be ready for battle before 9:30?

TZA anyone, or is it too late?

• Wed, Jan 20, 2016 - 6:23am

#### sand_puppy

Status: Platinum Member

Joined: Apr 13 2011

Posts: 2472

0

#### Bah Humbug at Davos

Even Cramer thinks there might be something wrong.... Charts show huge sell-off could be coming

And from the telegraph

World faces wave of epic debt defaults, fears central bank veteran

by Ambrose Evans-Pritchard, in Davos

The global financial system has become dangerously unstable and faces an avalanche of bankruptcies that will test social and political stability, said William White, ... former chief economist of the Bank for International Settlements (BIS).

"The situation is worse than it was in 2007. Our macroeconomic ammunition to fight downturns is essentially all used up."

"Debts have continued to build up over the last eight years and they have reached such levels in every part of the world..."

"It will become obvious in the next recession that many of these debts will never be serviced or repaid, and this will be uncomfortable for a lot of people who think they own assets that are worth something," he told The Telegraph on the eve of the World Economic Forum in Davos.

The next task awaiting the global authorities is how to manage debt write-offs - and therefore a massive reordering of winners and losers in society - without setting off a political storm.

Mr White said Europe's creditors are likely to face some of the biggest haircuts. European banks have already admitted to \$1 trillion of non-performing loans: they are heavily exposed to emerging markets and are almost certainly rolling over further bad debts that have never been disclosed.

The European banking system may have to be recapitalized on a scale yet unimagined, and new "bail-in" rules mean that any deposit holder above the guarantee of €100,000 will have to help pay for it.

...QE and easy money policies by the US Federal Reserve and its peers have had the effect of bringing spending forward from the future .... In the end, the future catches up with you. "By definition, this means you cannot spend the money tomorrow," he said.

OK.  If I thought this was true, I would get cash out of the bank now and buy gold.  What will the billionaires at Davos think?

• Wed, Jan 20, 2016 - 7:22am

#### Arthur Robey

Status: Platinum Member

Joined: Feb 03 2010

Posts: 1814

0

#### The prognosis for 2016.

The prognosis for 2016.
https://youtu.be/-lsHWLpPfAkV

• Wed, Jan 20, 2016 - 8:20am

#### Time2help

Status: Platinum Member

Joined: Jun 08 2011

Posts: 2366

0

#### Friggin' twilight zone is where we are headed

• Wed, Jan 20, 2016 - 11:21am

#### pinecarr

Status: Gold Member

Joined: Apr 13 2008

Posts: 1170

0

#### Market shift from Greed to Fear?

If nothing else, Sand Puppy, it sure seems like the market sentiment has shifted from greed to fear.  And if so, that in itself marks a tipping point.

• Wed, Jan 20, 2016 - 2:50pm

Status: Silver Member

Joined: Aug 31 2013

Posts: 223

0

#### Plans to videotape the Solutions Conference?

Chris and David,

Do you guys have any plans to videotape this solutions conference? I actually live in Salt Lake City, but I absolutely cannot make this conference - I'm in graduate school and Mondays (Feb 22 is a Monday) are our test days. I love the idea of a solutions conference and I know I would have a great time, but some people (including me) may be willing to purchase the rights to view videos of this conference. I'm not sure how much it would cost to hire a videographer, but I think it's worth considering, especially if you guys are trying to reach as many people as possible.

• Wed, Jan 20, 2016 - 3:29pm

#### Cornelius999

Status: Bronze Member

Joined: Oct 17 2008

Posts: 365

0

#### Faber is again recommending

Faber is again recommending gold and says stockmarket will drop 40% - Goldcore.com

• Fri, Jan 22, 2016 - 2:16am

#### bronx43

Status: Member

Joined: Nov 23 2015

Posts: 12

0

#### Faber is full of crap. The

Faber is full of crap. The stock market isn't dropping below 2008 highs.

• Fri, Jan 22, 2016 - 5:40am

#### mememonkey

Status: Bronze Member

Joined: Nov 01 2009

Posts: 142

0

#### pray tell

[quote=bronx43]

Faber is full of crap. The stock market isn't dropping below 2008 highs.

[/quote]

What do you base your  'insight' on?

Seems like that scenario is easily in the range of possible outcomes given the debt overhang and deflationary impulse in evidence.

mememonkey

• Sat, Jan 23, 2016 - 12:30am

#### bronx43

Status: Member

Joined: Nov 23 2015

Posts: 12

0

#### The major cause for the

The major cause for the equities market to increase in the past 7 years has been the Federal Reserve's massive infusion of base money into the banking system, who then pumped that money into the stock market. In simply looking at the graphs, you can see how high of correlation it is between the base money chart and the Wilshire index. Mike Maloney covered this in his videos recently, actually. So, in comparison to the 2008 crash, which was really a popping of a giant private credit bubble, this stock market surge is due to base money... which doesn't behave like private money. Sure, there can still be fluctuations like we are currently seeing (market up today, anyone?), as the banks buy and sell, but the chance of a monumental collapse is unlikely since it's not mountains of leverage built upon private credit.

• Sat, Jan 23, 2016 - 7:34am

#### mememonkey

Status: Bronze Member

Joined: Nov 01 2009

Posts: 142

0

#### Are stocks not in a bubble?

[quote=bronx43]

The major cause for the equities market to increase in the past 7 years has been the Federal Reserve's massive infusion of base money into the banking system, who then pumped that money into the stock market. In simply looking at the graphs, you can see how high of correlation it is between the base money chart and the Wilshire index. Mike Maloney covered this in his videos recently, actually. So, in comparison to the 2008 crash, which was really a popping of a giant private credit bubble, this stock market surge is due to base money... which doesn't behave like private money. Sure, there can still be fluctuations like we are currently seeing (market up today, anyone?), as the banks buy and sell, but the chance of a monumental collapse is unlikely since it's not mountains of leverage built upon private credit.

[/quote]

Interesting perspective. It would seem to me though that since  cyclically adjusted price to earning ratios are in the nose bleed section a la 1929, 2000, 2008 that would be prima facie evidence of a bubble.  the signature behavior of a bubble is binary  ie. grows until it pops and then reverts to the mean possibly over correcting for a time.

My take is that at it's core, a bubble is reflecting herd behavior both on the way up and the way down.  Whether the bubble is in tulips,  Mc Mansions with granite counter tops or stocks, the gross overvaluations will revert regardless of the underlying origin of the funds.

I'm not saying the crash has to be a linear step function straight  down (market up today anyone?) 2008 wasn't, but if stocks are in a bubble, and the bubble has popped  than the overall  direction of the 'fluctuations' will be downward until the prices  reflect valuation reality.

If I understand your argument, you are saying that base money behaves differently  which I think implies that un levered free money that the fed injected  is essentially acting like an inflationary coefficient which is reflected in a permanently higher level of stock prices.

What I don't understand is how you can reconcile that with company earnings ie. the PE ratio.  Especially as earnings come under pressure from deflationary and currency forces.

To summarize  you are saying base money behaves differently but I would argue that the behavior that counts is of the people allocating the base money.

But this is not my forte, so I would be interested in learning more from you  about how this base money difference manifests.

mememonkey

• Sat, Jan 23, 2016 - 12:22pm

#### Michael_Rudmin

Status: Gold Member

Joined: Jun 25 2014

Posts: 881

0

#### Then could we not say that gold was in a bubble?

If we look at the behavior of gold, it would appear that it was in a bubble for 2008.  Further, bubbles do not get reblown:  they tend to shift.  If that's the case, then the current downward trend of gold could be a couple of things:

Part of the deflation of the bubble
Post-bubble-pop, but part of the general state of deflation.

Of course, it could just be massively slammed on futures as a way of keepin the good folk down.  But I'm just thinking that there are a number of scenarios which should be looked at, including that gold may have been in bubble, and still be popping its bubble.

And, of course, my favorite, Pd, having lost fifty percent or more of its value... is also in a more violent version of that mode.

• Sat, Jan 23, 2016 - 7:15pm

#### mememonkey

Status: Bronze Member

Joined: Nov 01 2009

Posts: 142

0

#### Relative value

Valuation of all things is of course relative to what it is measured in.  The bubble argument for gold is complicated by the special case that gold historically functions as money. ie medium of exchange and store  of value.  It also pretty clearly carries a component of 'insurance' with premiums over relative purchasing power correlated with perceived future geo political and currency risks.

For example gold priced at 7000 Venezuelan Bolivars/OZ     big number, but not because Gold is in a bubble down there.

Which isn't to say that there won't be a speculative blow off of animal spirits in gold  some day,  Gold at  \$1900  though adjusted for inflation doesn't qualify historically as the type of 'relative over valuation ' that I perceive is reflected in the PE ratios of stocks

at \$1900  It appears more like within  the range of it's historical purchasing power value with a risk premium.

But the single biggest factor arguing against gold having been in a bubble that peaked is...

I own some.

mememonkey

• Wed, Jan 27, 2016 - 5:09am

#### CleanEnergyFan

Status: Member

Joined: Jan 29 2012

Posts: 110

0

#### I love the title "Solutions Conference"

Great to hear Chris and Adam will be at this conference..a fitting opportunity to start developing the new narrative. I am looking forward to making the conference and thanks for the heads up as I have been looking for some other diversified conferences like this to go to (and Vegas is easier to get to than some of the others).  See you there.

• Wed, Feb 24, 2016 - 10:37pm

#### pinecarr

Status: Gold Member

Joined: Apr 13 2008

Posts: 1170

0

#### Chris, Adam: How did the Solutions Conference go in Vegas?

I'm curious about the turn-out you got, the mood of the crowd, and other take-aways you guys picked up on.  Thanks!