Podcast

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David Collum: Broken Markets, State Capitalism & Eroding Liberty

Understanding the dominant trends of 2013
Sunday, December 22, 2013, 1:47 PM

Annual chronicler Dave Collum sits down with Chris again this year to discuss the major themes of his epic 2013 Year In Review recap.

2013 was a frustrating year for those who believe in cause-and-effect. Markets have been levitated far above what fundamentals would justify. Sovereign debt has increased tremendously, but seemingly without repercussion. Central planners have become more brazen in their belief that intervention is the best way to control both an economy and its citizens to surprising little outcry from the populace:

To me, this year was about civil liberties. It just dominated my field of view.

You can touch upon Snowden, but there were all sorts of breaches of civil liberties this year, all sorts of warning shots that say it's problematic. You can track concerns about the NSA's potential to go to totalitarian to 1975, Senator Frank Church. There have been whistle blowers all along saying these guys are dangerous. And then all of a sudden, somehow Snowden clicked. But he was not the first.

So civil liberty is a huge issue. They've got facial recognition software to make your shopping experience better. Right... I do not want my shopping experience being approved by face recognition software. We're at great risk of going Orwellian here. And this really came through clear this year.

The debt just keeps getting worse; we just keep going bananas on the debt. And these guys, they go on TV. They say we've got to get the consumer consuming. The consumer has no money: it's that simple. The consumer is out of money. Student debt is soaring because the parents are broke. We've got an entire generation that is being damaged daily by opportunities that do not exist that they were promised. And this is scarring.

And then the markets look broken to me. They are so state controlled and anyone that says that is conspiracy theory, then excuse me: What is QE? If the market are rigged, then what is QE? What are zero percent interest rates? What is that?

And so I think broken markets, civil liberties, state capitalism that is the plot.

Meanwhile, because the Dow is up, everyone is partying. But since the numbers are so bogus, we know we are going to get a regression of the mean. History of bear markets show three big legs down. We have only had two. The next one will rip the souls out of investors if it shows up. And the markets, the economy is immuno-compromised. We are fragile. If we get hit with another Lehman-type event, we are going to really crumble this time. We are really going to have a mess on our hands. And I think it could come.

Click the play button below to listen to Chris's interview with David Collum (62m:34s):

Transcript: 

Chris Martenson: Welcome to this Peak Prosperity Podcast. I am your host, Chris Martenson. If you want to know where you headed, you have to know where you are and where you have been. Well, continuing with our annual tradition, we have got the best year-end review in the business thanks to today’s guest, Dave Collum. And for those of you unfamiliar with Dave, he is a professor of chemistry and chemical biology at Cornell University – obviously, the perfect guy to talk to us about macroeconomics. And in addition to his academic interests, Dave authors an annual macroeconomic assessment titled The Year in Review and is hands-down the best synopsis of anything that mattered during the previous 12 months. And Dave’s latest Year in Review can once again be found on peakprosperity.com. And I am excited to have him with us now, in order to expand on his excellent insights. Hey, Dave, thanks so much for joining us again this year.

David Collum: It is great to be here. I enjoy your podcast more than anything else I do.

Chris Martenson: Thank you so much for that. Before we jump into the macro, let me go micro for a second. The Fed just came out with a taper announcement. And they are going from $85 to $75 billion a month extensively. Although, as you and I have noted in the past, if you actually look at the Fed’s expansion of its balance sheet, it has been running a little over $90 billion a month for the past year. So who knows where the $85 billion a month number comes from? And what did we see in response? Well, stocks are vaulting higher. Bonds are vaulting higher. Gold is subdued. Can you help us make sense at all of what the market is thinking? And I have to put quotes around that work here “thinking” at this juncture.

David Collum: And the answer is no. I cannot help you with that question. You could actually take a try – chance and say that is a “buy the rumor, sell the news,” or “sell the rumor, buy the news” moment, right. So to the extent they are afraid of the taper. Now they are not afraid of the taper. So they buy, right? It is something that is silly. But we are still $75 billion away from zero. And if we got rid of the entire taper, we are still at unprecedentedly low Fed funds rate. So it appears as though we have taken out 5% of some tumor embedded in the monetary system. So it is hard for me to get excited about. But otherwise, what you are seeing is market behavior that has a turbulence to it that is what you would expect and call rational only in the context of massive monetary printing causing money to slosh around wildly.

Chris Martenson: Well, I feel like this is going to be a challenging podcast because we are going – we have been handed a rubber yardstick. And we are in a hall of mirrors. And people are asking us to give them something firm that they can look at and make sense of. And this is really, this Year in Review, if I was going to scan through your list of things that I have read, it is not really a case of here are the really truly exceptional things that really happened. We did not have a Lehman collapse. We did not have certain things besides Snowden’s big revelations on the NSA. What we really have are just continued distortions. And they are so distorted now at this point that many of the things that you have cataloged, to me, just come across as literally like a fun house of mirrors. They are so distorted at this point. Most people cannot even recognize them as distorted any longer. And we have been living under some fairly grotesque conditions for quite a while now financially.

So where do we start with all of this? Let us start right in with where you think the stock market is, and whether you have seen a market that smells, tastes, and feels like this one before. And what is propping it up here?

David Collum: A lot of measurements out there are truly unbelievable. You will read about the housing recovery is in full force. And then you actually look at it and say, Wait a minute. I cannot even detect it on a plot. And earnings fall into that particular category. So there is a massive distortion of earnings. I was just listening to some this morning where they kept talking about how earnings jumped. And then they say but that is due to share buy-backs. So now you have major corporations that, instead of putting their capital – which in my opinion is largely borrowed – into capital expenses, which would grow the business, this year’s capex is approximately zero. So we are eating our seed corn this year. We are not doing a lot of R&D, according to the numbers. We are putting it into share buybacks. Even a company like Merck did that. Their pipeline looks like it dried up in their responses to buy back shares. And that makes no sense.

But then you get into the guts of the earnings. And you have got two problems there. One is, stockmen estimated that the X items – where these keep doing these one-off items, which turn out to occur in every earning’s report every quarter – he estimated that that might be causing as much as a 30% distortion to the earnings to the upside. And then the second trick that they do is they use forward earnings.

And I got into a spat with some prominent bull. He used forward earnings. And I said, Why would you use those? They are the only ones that do not exist, right. They are fixed. They are being fabricated. And it is also well documented that as the earnings come in, the forward estimates start dropping down as reality strikes. And then they get to the point they are so low that they start using the next year’s forward earnings. And I think the forward earnings estimates are another double-digit percent contribution to distorting the so-called earnings – the so-called PE ratio.

So some guy will go on TV and say the PE ratio is 15. I think it could be 25. You have got the Case-Shiller PE that is sitting at 24, which is nosebleed. And they use trailing earnings. You use trailing earnings. The Russell 2000 is something like 60 or 70. It is a disaster. So I think we are getting a bad read on earnings. And I think that elevates the market. I think the day traders, the algos, they are bidding up the market with easy money. They just wanted it badly. But I do not know when. Time scale, who knows! We are back to the land of the insane.

Chris Martenson: There are a couple of things that have legitimately boosted corporate earnings. One is, they are not paying workers. Famously, you have got McDonald’s and Wal-Mart, whose business model in corporate profits also entirely depends on the taxpayer providing their workers with food, medicine, and things like that, and basic living things. And the second thing that is really boosting corporate earnings right now is that they are feasting on the lowest-ever cost of capital. And what is interesting to me is what you mentioned, capex, the capital expenditures. That is the reinvestment in your productive property plant and equipment. That is investing in your R&D pipeline. That is building your company back up and investing for the future. It is at all-time lows while money is at an all-time cheap position.

And so what are corporations doing with all that cheap money that they are getting? Well, they are buying back shares, which tends to boost earnings per share. So when you look at the debt side of the equation on corporations, they have actually been levering up pretty handily. And so that makes sense, I guess. At the same time, anybody who is projecting that all-time historical high corporate earnings – and we look at corporate profits as a percentage of GDP; they are at the highest they have been in 70 years, and I do not think they have been higher – and the idea that they would then stay there that permanently high plateau of prosperity. Where have I heard that before?

David Collum: Irving Fisher. Let us stick on that idea for a minute because it could be confused. So you say well, we are at record-high corporate earnings. And you say well, of course, because we have a growing economy. But we are at record-high profit margin. And that is a plot I know you know and I think you were referring to. And profit margins are one of the most regressable measures out there. And that is, when your profit margins are at record high, they are going to regress back to the mean. And what I can tell you is, if your profit margin is cut in half – which is easy to do; it is hard to cut your total earnings in half – next thing you know, you have got no earnings. And they tend to arbitrage away. So being at record-high profit margins is decidedly bearish. There is no way of looking at it any other way, because you are going to regress to normal profit margins.

And, as you said, they are getting it off of free money. They are getting it off of capex-like investing. They are not putting money into plan, hardware, and R&D. And so they are basically just taking all profit right now, right here in the present. And they are not taking – we got workers going on temporary status so they do not have to pay health benefits. And oh my God, that will take us into Obamacare in a heartbeat there. And so it is optimum from profit margins. And that will regress not only to the mean, it will regress through the mean. Because otherwise you do not have a mean.

Chris Martenson: Yep, well, the idea that we are going to permanently live at these corporate profit margins is a really bizarre idea, and one that does not have a lot of data to back it up. But that is what you get when you are in a bubble. I am a big fan of thinking we are in the largest liquidity-driven bubble ever. And by the way, if we widen the lens a little bit, we discover this is not a U.S. story. I am not talking about U.S. stocks only here. The German DAX is in the same sort of territory. Even the Greek stock market has recovered against every possible underlying economic statistic, right. So with that, we have to just adjust to the idea that we are living an in incredible liquidity fueled abundance at this point in time. And the part that is just starting to sneak through, this is the interesting development for me this year.

The part that is starting to sneak through is awareness that that regime of flooding the world with liquidity has not floated all boats. In fact, not even the majority of boats. In fact, not even ten percent of the boats. In fact, you can even argue that the 1 percent versus the 99 percent, yeah, it really lifted the 1 percent’s boats. But within the one percent, the fraction of that, the .1 percent, they really got their boats lifted. This was an absolutely regressive, repressive, and deeply unfair – if I can use a qualitative term like that – a deeply unfair way to go about trying to boost things, as it were.

David Collum: Yeah, I am going to give the Fed a little bit of credit, in the sense that I do not think they saw that coming. If they did, we should just line them up and hang them, because you are right. It is unfair. I think they actually believed that they could pump money into the system and it would pump it somehow into the economy. I do not get this. You and I talk about this every year about how you cannot print your way to prosperity. In fact, if you say okay, let us go back and look at the historical record. Who has printed their way? Who has inflated their way to prosperity? And that list has not yet been uploaded to the internet. That is a list of zero right now. And so they are doing highly experimental things.

I view the unfairness of it as almost antiseptically, in the sense that it is not about redistributing wealth. So as soon as you start talking about unfair, people start saying, Oh, boy, now you are going to try to take it away. You are going to start putting in high taxes and all this stuff. No, I think a healthy economy naturally distributes wealth in a rational way.

And I cannot say it is a simple way. And I cannot say I even know what it is. But my sense is that when an economy is really chugging along efficiently, wealth will spread out various ways. And the rich will get richer; there is no question. That is true. But everyone else will get their share of the pie. It is not happening right now. And history shows that when you have the masses getting pounded, forget about whether it is fair on the way you redistribute it or not. Bad things happen, right? And if you tell those masses, let them eat cake. The next move is not a pleasant one. So that is my view. I think we should worry about the unfairness from a purely pragmatic perspective. And that is that civil unrest is what follows.

Chris Martenson: We have already seen that, of course, in certain municipalities that have collapsed where somehow there just was not enough juice to keep the whole thing going. Camden, New Jersey pops to mind, Detroit, certain suburbs of other major cities and other areas. So we see that already that there is sort of a decaying going on. And this is the thing that gets me is just the shortsightedness both on the fiscal side out of D.C. and the monetary side on the Fed. You spotted the Fed credit and said, Well, maybe they did not know how this was really going to turn out. And they thought that if they could just boost the markets and boost asset prices – they famously still confuse rising asset prices with wealth – and so go ahead; they do that. They did not really see this coming. But we are going on our seventh year of this at this point in time. And we can arguably look out and say there is no organic growth really coming up that is going to lift us out of this.

The idea that people are familiar with is the headline numbers that unemployment seems to be falling. But a lot of that is statistical fudgery. And honestly, it is so dishonest. I do not even know where to begin on that. And our economy is ostensibly growing a little bit. But it is not growing at all if you factor out deficit spending by the Federal government, which is completely enabled by debt monetization by the Fed. Once we factor those things out, we say look, there is not real growth in the economy yet – still. So that brings us to having our own Japan moment.

And you have a bunch of great lines in your Year in Review. This is one that actually made me chuckle out loud. I love this one. You said Japan’s 24-year-old lost decade is often attributed to inadequate intervention by central bankers and policymakers, insufficiently armed with untested theories of academic economists mired in state capitalism.

David Collum: It is a mouthful.

Chris Martenson: Untested theories of academic economists mired in state capitalism. Well, here we are, entering our seventh year of state capitalism. What kind of a grade can we give the Fed for perspicacity, forecasting, and responsiveness?

David Collum: I give them an F. But I them a high echion F is what I give them. What they suffer from is the “fatal conceit” that I titled one of those books. And I talked to an economist at Cornell with whom I have no axe to grind. But I asked her, When in your economics education do you learn about the history of economics? When do you get the historical backdrop? And I bet you there are economists in major economic departments who have not read the Wealth of Nations, for example. They are out there. And she said to me, she said, Well, I took a course in economic history. And I am thinking, You took a course?

My definition of economics is really ultra-simple. The question, you say, is, We have been here before. What happened next? That is it. That, to me, is economics. And the problem is, you got all these computer-mathematically-driven economists. And I think they are losing the perspective of what really got us here. And they have got their models. And they have got their math. But they are forgetting about the fact that Bitcoin – I am going to really irritate the Bitcoin crowd out there. I am sympathetic to why they like Bitcoin, but it is up 90-fold. That is a tool of mania, right? There were things that people referred to metaphorically as tool of mania. But Bitcoin is tool of mania. In all its magnitude, a tool of mania.

So in any event, the Fed somehow thinks that they can set the price of capital. Now, I know of no market in the world more important. And I know of no mechanism more important than price discovery. Yet the Fed takes this system that is attempting to equilibrate, that is attempting to get the borrowers and the lenders together and say, Okay, what price is capital? And the Fed is saying, No, you are wrong. We know better. Here is what it should be to optimize the system. And that is a fatal conceit. That is a kind of arrogance that I cannot get my brain around. If they were biologists, they would be redesigning the damn elephant. They would be saying it is too fat. They would take away its trunk. They would make its legs longer. Ignoring the fact that billions of years of evolution created this miracle. And so that is where I blame the Fed, that they do not even understand that they should not be using price controls.

And by the way, everyone acts shocked that capitals were zeroed, my hard-earned savings! I have saved aggressively through the years. And it is now worth zero because the Fed has decided to feed the system all the capital at once. So some guy wants to borrow from me, he simply borrows from the system now. And that is not fair. That is what intervention in the capital market does. It renders my capital worthless. And that makes me kind of irritated.

Chris Martenson: Well for you, it is an irritation. But for people who are living on fixed incomes, it is absolutely –

David Collum: It is life-threatening.

Chris Martenson: It is deadly. And that is really where we are at. And of course, the other fatal flaw the Fed – and I completely agree. I read hubris all over these people. They have looked into their little models. I was at this conference awhile back. And I think Jim Rickers had it right. He said, They run their models perfectly. The only problem is their models are all wrong. And so you can get perfect outputs. But if your model is wrong, you are still going to get bad results. And so they are running their models. They are dutifully cranking them.

And for me, even if they had the right economic models, even if they had something more in the Austrian version that understood you cannot get a free lunch and you cannot print prosperity, even if they were operating that model well, they still do not seem to have any inputs coming in from the natural world in terms of actual limits, in terms of how much energy it is, how much it is going to cost now, the fact that net energy is declining, the fact that the seeds are basically stripped clean of protein at this point time, whatever those other things are we might want to look at. The Fed is completely unaware of those. So let us just drop with them into their world. They are running their system. They are turning their cranks. Do you not think that at some level they have a gut fear over the fact that real robust growth has not happened?

David Collum: One of the sections I write about is, you can make the case that from statements made by guys at the BIS, the World Bank, the IMF, and the Troika that they actually realize the system is heading for a big reset. The statements that they have made about the way they bailed out Cyprus in a completely hamfisted way that they realize the system is going to go through an up-scheming, cataclysmic shaking of the Etch-a-Sketch. And that they are trying to figure out how to survive that. And it is a high-probability view of what they are thinking; I do not know. But there is some arithmetic nonsense out there.

I did a little bit of math, for example, on the unfunded liabilities. And I bounced this off Kotlikoff. And he seemed to like it. You never know; he might be humoring me. But I took the $200 trillion of unfunded liabilities – these are the promises we made. Subtracting away projected revenues, that is a key distinction. And it is the promises that we simply do not have a clue how we are going to pay for. And you project them out to infinity. So you say, Okay, based on all the promises we made now, it tapers off. That therefore confuses me. So I say, let us demonetize this. So I take the $200 trillion, which he confirmed as little as two weeks ago. And I say, okay, there are about 100 million taxpayers. And on average, they earn about $50 thousand. So I start diving through. And then I say, what happens if the average taxpayer commits half of their salary, $25 thousand dollars of their salary, to pay off these unfunded liabilities. How many years do they have to do this? And the answer is a staggering 80 years. And therefore, it is nonsense.

The payback rate, the payoff rate, the amortization rate is nonsense. But even without an aggressive one, it is 80 years – a lifetime. And so therefore, they are not going to be paid off. There is no mechanism for payoff. Let us say Kotlikoff is off; I have seem estimates as low as $70 trillion. That gets you down to a 25-year payoff time. That is still in the land of unicorns and Skittles rainbows. That is nuts.

So the bottom line is these promises are going to be welshed on. And we are either going to inflate them away, and it is going to be one these things where sure, you take all the money you want because it is worthless. Or we are just going to default on them. And by the way, the Cyprus bail-in looks like a deflationary default mechanism they are testing. That is what my read on Cyprus is. That is a deflation.

Chris Martenson: Well, now, let us check that out, because the thesis you’ve got running here is that they know that the numbers do not line up and that there is some sort of a reset event. Whether that is inflationary or deflationary, it is still an open question. We know that “they” (again, air quotes around that, the word “they”) would really prefer an inflationary outcome, particularly one that is in a medium-hot level. That sort of, somehow, in their models, cures most of the ills. And most people cannot detect it. So you get away with it, and that is fine.

But really, what we have here is a case of who is going to take the losses. That is the question du jour. And they started to answer that question, I think, in Cyprus. Which, for the people listening who somehow are not familiar with Cyprus, it was a case where the banking system was bust. And they decided to tag the depositors in the banking system as the people who should eat the losses in this particular case. And they tried to pin it on Russian oligarchs skirting financial rules or something like that. But in truth, the Orthodox Church of Cyprus lost quite a bit of money in this little fiasco.

So there was this island nation. You could put a ring fence around it. They thought they could run the whole thing and run a little test – a Petri dish – and say what happens when we do a bail-in? And the first thing is, you cannot even shut down the banking system in a tiny island nation, with the holes and crevices appearing all over the place, because it turned out –

David Collum: London; oh, God.

Chris Martenson: So that is an intriguing thing. But then I saw that the rule sets for banking and how banks would survive another Cyprus-like crisis included bail-ins. And bail-in language has been included in FDIC documents, in Canadian banking documents, in New Zealand banking documents that I have seen. So do think that is the model?

David Collum: So I think that Cyprus is the story below the story. I am always talking about the Michael Lewis narrative. And beneath the surface, Cyprus is a huge story-fill, because I think it is a beta test. And when I talk about prominent people, I am talking about major, major, central-banker-type/size players, who were talking about how this bail-in model – they say, We do not want to charge the taxpayers. So we are going to take depositor money. Who do you think is paying taxes? The guys with the deposits, right? So it is this fictional distinction. And it does not even matter if you had your money in a valid solvent bank. You still got gutted like a fish. Do you know what the final percentage was, by the way?

Chris Martenson: No.

David Collum: I have seen numbers all over the place. I have heard up to 90%. But that sounds high.

Chris Martenson: Yeah, it was more than 40%. My guess would be, it averaged in around 60%. But I would really have to check that number to be sure because I never got a final print on that.

David Collum: But I have sighted a bunch of instances of players saying, We like this model. Now, if you start confiscating bank accounts. I think that is a deflationary model. I think if you follow the bouncing ball, then you go, That is deflationary. Why would they play with that? One of the possibilities is that Bernanke and these guys recognized that the inflationary model is failing because they are creating socially unacceptable bubbles. And they cannot seem to just get the inflation to go where they want, which anyone who knows about inflation knows that is exactly the problem. You release inflation. You do not get to direct it. And they are getting these effects that are going to lead to civil unrest. They know that.

So there was this very scary article that was in ZeroHedge just the other day, where the IMF declared to ZeroHedge that they were wrong about a one-time hit to global bank accounts. And ZeroHedge went right back at them and said, Here are your words, dude. And there is no question that the IMF basically came out and said, If we hit them hard, fast, and once, people will just dust themselves off and move on. And I do not want to be in a banking system that does that.

Chris Martenson: This is the big mystery to me, because Cyprus was clearly and obviously both a test case and a PR campaign. I watched carefully how it was packaged and sold for consumption. There was a little wild wooliness around the edges; I do not think they had the story completely contained very well. But it was clearly a trial run. And that is all you have to tell me. The idea that people would leave their money in the system after that is just startling to me.

David Collum: So here is the problem, though. I have got a huge amount of sheltered accounts. A lot of my wealth is in 401K, IRA, SEP-IRA, employer-based accounts. And so the question is, what do I do? That money is a sitting duck. They have locked the doors to the casino, and now they are lighting it on fire. This is high-risk stuff. And so I did not do it this year, but I am thinking about stopping contributions to all sheltered accounts because I have heard discussions of capping them. Okay, if they want to tell me I got too much, I cannot add anymore, I am fine by that. But if they say, You have got too much; we are taking it. That gets real problematic.

There was another reference to an IRA retirement account as an annuity, which means do what you want, but when you die, it is gone. The word annuity should scare the hell of out your heirs –

and you, if you care about having heirs. So there has been a lot of this chatter that tells me that confiscation of retirement money is on their radar.

And I have a lot in there. And I am not quite sure how to handle this. But if I take it all out at once, I take it out at the marginal rate, I get crushed. It is a very expensive put option I am buying if I do it.

Chris Martenson: One of my operating principles – and I have several – one of our operating principles at Peak Prosperity is that when circumstances call for it, they will just change the rules. So here is how you line up the ducks. The system is structurally insolvent, just from a pension and entitlement standpoint. But looking at the fact that we have been increasing debts at a rate roughly twice the rate of underlying even nominal GEP growth and we want to keep doing that, that is the system that the Fed is attempting to preserve, with all of the entitlements and flows of money that go to certain preferred individuals, institutions, and things like that. That is a fundamentally non-sustainable system anyway.

And then we wander over and look at the various ways in which we have gone about, at the official level, thinking how we are going to deal with crises. I have to give an F on this one because it always felt wrong to me. So the bondholders do not take the hit. The people who took the risk do not take the hit. It always gets foisted off on the taxpayer and then depositors. But these are fundamentally innocent parties, as far as I am concerned, given what actually caused the transgressions in the first place. And through all of that, I am 100% convinced that when the time comes, just like Willie Sutton robbed banks because that is where the money was, the government will go after the pools of places where there is enough identifiable wealth to figure out where the losses are going to be eaten. So there, you just look at your pyramid of financial assets. Money Market funds are an obvious target. Certain pension holdings are obvious targets, particularly if you can strip them for assets and put IOUs back in their place.

There are all kinds of things that can be done. And that is a few things we did see this year. We did see – what was it? Ireland did a one time (I am putting air quotes up again) attachment of 0.9% on all pension assets to help balance out the national budget over there, I believe. So this is the theme. And this confiscatory regime that has been put in, we will take it if we need it. So look at me with the timing in this. Cyprus comes through. And it was just shortly after that that the biggest rate on gold and silver happened. And it just struck me as just too cute by half that the “response” of the market to seeing the Cyprus story would be to sell out of the assets that give you your best – and as far as I know, only – monetary protection from confiscation of assets that are tucked within a banking system.

David Collum: Yeah. This year you mentioned gold. That is about a four-hour podcast right there.

Chris Martenson: Yep.

David Collum: Gold’s price and the behavior of physical gold in the global marketplace were absolutely unconnected this year. And I may sound like a disgruntled gold bug, but absolutely every shred of information out there says that there was a massive spike in physical demand for gold this year. You can track it using official sources. You can track it. It all got pulled out of all the depositories. It got pulled out of GLD. The Indians, the things the Indian authorities were doing to keep Indians from buying gold, they were going to go after the religious organizations’ gold. And they took Cyprus’s gold. So all of the evidence points to the fact that there was a huge grab for physical gold.

Meanwhile, the price of gold dropped the whole way. And I cannot even reconcile those two, unless you want to say that the futures market and the physical market have just become completely disconnected. And the way that would happen would be if – as sort of the phrase you use – if the seller in the futures market was a price-insensitive seller. Clearly, a bear raid, though. I mean, this was a bear raid in gold; it was not just skittish sellers. It was a raid. It was set up, teed up, and someone really took a swipe at gold. And it happened all year long, best I can tell.

Chris Martenson: Certainly, and we saw that on the tape. It is completely obvious if the CFTC ever wanted to do a little investigation, all they would really have to do is look at any one of probably 20 or 30 separate raids that I saw this year, where somebody would come into the overnight markets very thinly traded and dump several thousand contracts, typically in a single blast. And we saw that even just in the last few weeks where the gold market had to be halted. Interestingly, once to the upside, too, out of many, many, many examples to the downside.

But regardless of who is doing this and their motivations for doing it, we can clearly look at an event where market participants, one or more, come in and just crushed the bid structure. That is just blatant price manipulation. That all of those events happened to be to the downside, that strikes me as just a little too cute by half, given what we just saw with Cyprus and looming issues around confiscation.

David Collum: The other one that jumped out at me, which left me slack jaw, was when Goldman came out in a public forum and said “short gold.” Now, I have no recollection of any major brokerage coming out and recommending a short position in any asset class. When they do not like something, they say we thin up, we lighten up, and we would underweight this. I have never heard of a brokerage come out and say short it. They said short it! There were two days of relative calm. And then two days after they did this, there was this $40, $50, $60 monkey-hammering of gold.

Where, by the way, tens of billions of dollars of selling occurred in minutes. Billions within the sub-second range, so this is not skittish investors. Someone was in there banging the gold price that day. And then they shut down the physical market. So you had to hedge by going into the futures market selling more. And it was on a Friday so that they could then line up their margin calls on the following Monday. And so it was just crazy in the gold markets.

Meanwhile, breathlessly, the news commentators would say GLD liquidated another 20 tonnes of gold this week. And I had this funny exchange with Tony Deaton, who tends to keep to himself, but he gets out there a little. And he mentioned to me that he had tried to pry $60 million worth of gold out of GLD, and they would not give it to him. And he said I have got a team of lawyers. And they would not give it to him.

And it hit me that the only people – and if you look at GLD, what is it? It is an EFT. And if you have a warehouse full of gold and the shares reflect the price of the gold, I cannot figure out why gold should be bought and sold from that. I just think it ought to just sit there. And so the question then is, well, then who is liquidating the gold? And the answer the 20 big ass banks. They are the ones who can take gold from GLD. So here is this bear rate on gold.

Meanwhile, the 20 biggest banks are turning in paper promises to gold for the actual physical metal. And somehow we are told that is bearish. And that makes no sense. And every depository this year got leveled of their gold. And that somehow is supposed to be bearish. That gold went to Asia. And that somehow is supposed to be bearish. And I cannot get my brain around that.

I called and I told Grant Williams this. He wrote about it. Then it went viral. I asked Tony to confirm it. He said, well, it was actually public record in 2007. It was in a blog in 2007 that this happened as a funny hint able that goes out on the Internet.

So in any event, the physical demand for gold was huge. It was undeniably huge this year. And it was all slopping to the West. I think – it is my thought position that we are seeing the beginnings of a change in the currency regime. We are seeing the beginning of the dollar hegemony going away. And I think that probably the Chinese said, Look – something like this is my plot line. This is my made-for-TV movie plot line that the Chinese said – we will keep buying your Treasurys. But you have to give us some gold. And we want it cheap. And so you sell us the gold. And so we basically shook the tree to make the gold fall out of it and go to Asia. That is my thesis, that the move of the gold to Asia and the drop in the price were a geopolitical quid pro quo.

Chris Martenson: It is interesting, if you follow these things, because these hints are there. So we are going to look back on this, I am convinced, and we are going to say, How did people miss the most bull-market case for gold ever? Look at all the public information that was available about its flows! When we look at everything on a fundamental basis, whether that fundamental piece is around the worries around confiscation that they are rightly rooted post Cyprus or we look at the actual flows of gold from West to East, it is just a stunning story. The only thing that is out of lockstep of course is price. And I get in routine discussions, if not debates, with people who say, Well, that is just sour-gold-bug kind of thinking.

And then I wander over into – it was in 2007 or 2006, I remember reading a report from the Electronic Frontier Foundation that had a deposition by an AT&T engineer who said, I do not know what is going on, but I can tell you that all of our routers are compromised, that the government is siphoning all of our data. And that was just fringe kind of stuff. People said, That is crazy talk. And then, of course, you need a Snowden to come along and prove that not only is that not crazy talk, but with every new release that comes out of the documents – and by the way, he has only released 1% of the documents that he took – it just gets worse and worse. I mean, we are spying on Brazil’s oil companies, Angela Merkel’s phone, and other allied affiliated leaders of the world who are presumably on our side. They are not just taking metadata. They are actually sweeping entire phone calls, on and on, and on and on. That was all crazy talk just a few years ago. Now people just numbly look at it and say, yeah, I guess.

So I am looking at the footprints I see in the markets today. And it just basically looks like complete utter state craft, if you will. There is so much manipulation going on. And my theory around that, along the lines with your gold theory, is that they know there are some really big problems in the system. That is why we still have $75 billion a month minimum in QE going on.

What the Fed talks about in terms of unemployment and inflation is just republican consumption. Deep down, there are worried about something else. They see that it does not line up. And the markets and prices, they have learned, are really potent signaling mechanisms. And so if you had said to me, Chris, last year, I want you to script out the perfect script for the power centers. I would say, Oh, well, here is what I would do with equities. I would keep commodities well contained except for oil. We need that over $90 a barrel, because tracking does not work otherwise. If we want that miracle story to keep going, we are going to need to keep oil over $90. But everything else, keep the commodities down, because people across the world get unhappy when their food goes up in price. And we will keep Treasurys mysteriously well bid through all of this. And of course, gold will have to go down.

That is exactly what we are seeing. And it is just again, it could just be a coincidence. But I am really starting to get very leery of coincidences these days.

David Collum: So there are a bunch of leaked memos out there that over the year’s surface. The one that came out this year – and I think it was new this year, although it could be one I missed –was a 1974 Volker, in which he wrote about five or six pages describing the U.S.’s best interest in demonetizing gold. And he goes through country by country and says the Germans will not like this or this and this. He talks about the Arabs. He goes on and on.

But it is crystal-clear that the dollar reserve currency has every vested interest to keep the price of gold from getting too high. And of course, they lost that battle. But the point is that I do not think that gold ever lost its importance in the global currency regime. I think the United States would love it to be completely irrelevant, because that means the dollar wins. But I think they got it in remission like a cancer. But it never went away. And now it’s starting to surface. And now we have a problem. And we are worried about the renminbi or the yuan – I never know which one to call it –we are worried about that becoming a reserve currency.

I think that anyone who comes along that says, Our currency is gold-backed, all of a sudden they own the reserve currency at that point. But I think it is a battle. I think we are looking at Bretton Woods – what is it, 4, 3, 2, and 1? – I think we are looking at a change in the system taking place. And maybe not, but that is what I am sensing. And that Volker memo is worth a read. Anyone who actually goes to this review and reads the Volker memo, start to finish, it is a great read. It really tells you gold is important, was important, and probably will be important. And they do not want it to be important.

Chris Martenson: This is the interesting part. I am a little torn on this, whether the West thinks it can just be done with gold and is perfectly happy to let the East take it. Or if under the covers there are not a whole lot of people in the West getting very concerned about where the gold is all landing. Because if we do have some sort of a currency crisis – and to me, it is a question of when, not if, at this point – whether it is 20 or 2 years, I do not know. But when we have a currency crisis, there is a very strong chance that gold is going to have a prominent role in how we start to resettle those accounts. And then it is going to be whoever has it. And will that not be the surprise, because India and China will have most of it at that point in time, by any measure. And I do not think that the idea of just handing or ceding a big chunk of power to other countries is part of our plan. It does not make sense to me.

David Collum: I am not sure the gold is coming from our sovereign stash. So this year this year was about shoving gold to the East. I think it was about shoving gold to the East that came from somewhere else. So every hint that gold is being shaken out of the system and then pushed to the East, there was no whiff of it coming out of Fort Knox or the Fed or whatever. It was coming out of other places that were not part of sovereign stats. So it seems to me that maybe we should look. We will get someone to sell you the gold, but not us. So that is a Rickards model. Rickard thinks they are not going to get the gold unless they bomb us.

By the way, I am sure you have seen that great Grant Williams’ plot where he shows the price of gold.

Chris Martenson: Yep.

David Collum: And he indicates where Venezuela asks for repatriated gold. And the gold price went down because of that. Then the Germans asked for repatriated gold this year – which by way, I was hinting at last year. But it finally came to pass this year. Then the gold got crushed after that. And I think it is our way of getting someone else to fork up the gold to these guys, not us. Not us the nation, I think he wanted to get it out of the private stashes and force it by a sell-off. It did not work, in my opinion.

Chris Martenson: Well, we will see. They had some reasonable success shaking it loose from GLD, and I am sure from other weaker hands as well. But that is how these markets tend to work.

David Collum: Well, I think they can just gut GLD. So I do not think they shake it out of GLD. I think they are doing a Corzine MFGlobal on GLD. I think the removal from GLD is not about shaking it loose. I think it is about taking it because at any moment, those banks can take their share and turn them in and take the gold from GLD. Some people say GLD is being used as a fractional reserve gold banking system, which makes sense.

I never trusted it. I read their perspectives. You saw that. It was so vague. It is not allocated gold. But they basically said it could be here, could be there, could be anywhere; go back to sleep. And it was about five pages long. And it was nothing. And so if there is gold in GLD, the banks can take it. So they do not need to shake it out. They can just scoop it up.

Chris Martenson: It is thoroughly interesting to me that gold and trying to figure out where it is at is literally one of the opaque subjects out there in terms of getting hard data. You can get pretty hard data about what is going on in Comex and in its inventories. But that is chump change compared to the OTC market. And then, of course, the central banks are completely opaque about what they are up to.

And I have had long conversations with people who understand the actual mechanisms of gold leasing. And it turns out that it is very difficult to lease gold from central banks. They have really big 20-page contracts. And they detail every possible circumstance around it. But the number one rule is the gold does not actually leave anybody’s vaults when they go. And so when I look at GLD, they list that the custodian for them is HSBC. And then just list the sub custodian as the Bank of England. And then you wander over and notice that Finland says, Oh, yeah, we have a bunch of gold. But the Bank of England has it, and it is being used for something.

David Collum: But do you think that the gold going to China is physically going to China? I would think so.

Chris Martenson: Oh yes, absolutely, because we have one report that the LDMA had shipped 700 tonnes of gold to Switzerland. And a quick phone call confirmed that that all went to Swiss refiners who were turning it into one kilogram bars. And that all left the country.

David Collum: Right, and also, there was this Hong Kong Metals Exchange (HKME) that got set up and then got vaporized. I have no idea what happened there. But that was a short-lived entity. And presumably that somehow involved taking physical possession of physical gold. And I would have thought that the Swiss would go to the HKME and then to China. But also, then the HKME disappeared.

By the way, India shut down their gold market. They completely shut it down. They shut down their gold exchange. This is nutty stuff. So in any case, the gold market is in a state of chaos. I think we are getting more questions this year than answers. But I tell you, I do not think GLD owners ought to think about that as being gold. I think at some point we are going to find out that is a MF Global Ponzi scheme.

Chris Martenson: That is entirely possible. Of course, I have never dabbled in GLD, ever. And have never recommended anybody do so. Talk about confusing things, let us shift to something humorous at this point: CNBC. What a strange, strange thing. This is the part that got me about all of media – I will put CNBC into my media bucket for a moment.

So you look at something like New York Times or any of the other newspapers, and they are just hemorrhaging readers. And they are like, well, this is just – people do not really read anymore that the world is changing. I am like, No, wander with me over to the Internet space where there are lots and lots of readers and eyeballs and actually increasing interest. But the gap between the two is that apparently young people do not think they should pay for their propaganda. They think it should be free. And on that basis, they are not subscribing to newspapers.

And it is a mystery to me when you see somebody like CNBC; they are hemorrhaging viewers. You would think with the stock market hitting all-time new highs that the level of interest would be at all-time highs. Average retail investors have turned away. They are not interested in the story as much anymore, largely because they know that it is just big institutions. It is algorithms. It is hedge funds. It is basically just an ultra-sophisticated playground at this point in time. And CNBC continues to cater to that crowd. And they lose viewership. And that is not their model.

And so I am confused. How do you see that?

David Collum: Well, I went on two Twitter campaigns this year. One was to try to get CNBC to invite me to be a guest host. That was obviously a zero percent probability. But I started harassing them and saying, Come on, I will speak for Joe Sixpack. I can do it. I will give you my resume. I will tell you what I have done. I want to be on your show. And I just got nothing – zero.

But the second campaign I went on was to challenge them on reporting earnings X items, which that is just pro forma earnings. That is just a bald-faced lie. There is just nothing honest about X items earnings. And I challenged a bunch of them on Twitter, saying, Why do you not say what are the items and how much are they when you are talking to these guys? And I got answers like, Well, our traders want those numbers. They would say we do not have time. That was another great answer. I got lots of – oh, there are others. We talk about that a lot. That is a lot of action!

So the bottom line is that it seems as though they want to present the X items earnings because those people are traders, but the 20 million viewers that they could have or should have or did have, whatever it is, they are not the traders trading off. So CNBC is completely missing the point. The people who buy the products on their commercials, they want honest numbers. They do not want fake numbers. And they are trying to get it better.

Kernan, for example, who was a waste of oxygen for a long time, is now starting to realize that the central banks are a problem and starting to realize that rigged markets are a problem. You can hear it. He is getting better. They seem to realize it is the masses, who are supposed to be paying their bills, do not like the garbage. So maybe they will figure it out. Then CNBC will become an honest source of news again.

Did you see the Steve Liesman/Jim Grant debate the other morning?

Chris Martenson: Yeah.

David Collum: That was spectacular. Grant took Liesman right to the math.

Chris Martenson: Yeah.

David Collum: The great line was, I can listen to you from my bed. Now it is time for you to let me talk. I have never seen Jim Grant irritated.

Chris Martenson: I know.

David Collum: He was irritated. So that is what CNBC is facing, though.

Chris Martenson: For a guy with a bowtie, he certainly took it to him.

David Collum: He was tough that morning, yeah.

Chris Martenson: Yeah, he must have got up early. But he had a lot of good points to make. And I think he is channeling – I wish you had gotten on, because it really needs to be said much more directly, which is, We are just tired of all the lies, all the spins, and all the distortions that seem to serve everybody the majority of people.

David Collum: Maybe they listen to your podcast. So it is a standing offer: I will guest host. I will drive down there, all expenses paid by me. I want to be on your show. How is that, guys? If you hear me, invite me down. You can get my email. I am not holding my breath, by the way; just for the record. I do not think they will give me two minutes, let alone guest host. But I got to ask.

Chris Martenson: I know. So in the time we have left, I am interested now – we look at this summary of things. We see there is a bear case to be made on a number of fundamental areas. But fundamentals do not seem to matter, really, at this point in the prices of things. And that is to be expected when you have the price of money itself distorted. Guess what? It turns out that everything gets distorted.

So here we are in our hall of mirrors. We have got debts still increasing at extraordinary rates. So the housing market has not recovered on anything except at the institutional Blackstone sort of level. We have got just bizarre things going on at the Federal government level, with the government just seemingly unaware of any sense of limits. All of that, you put all of that into your magic Year in Review, and peer forward. What do you see coming?

David Collum: To me, this year was about civil liberties. And it just dominated my field of view. We did not really talk about it. You could have touched upon Snowden. But there were all sorts of breaches of civil liberties this year, all sorts of warning shots that say it is problematic. You mentioned Snowden. You can track concerns about the NSA’s potential to go totalitarian, those kind of words, to 1975, Senator Frank Church. And there have been whistle blowers all along saying these guys are dangerous. And then all of the sudden, somehow, Snowden clicked. But he was not the first.

So civil liberty is a huge issue. They have got facial recognition software to make your shopping experience better, but I do not want my shopping experience being approved by face recognition software. We are at great risk of going Orwellian here. And this really came through clear this year. The debt just keeps getting worse. We just keep going bananas on the debt. And these guys, they go on TV. They say, We got to get the consumer consuming. The consumer has no money! It is that simple. The consumer is out of money. The student debt is soaring because the parents are broke. We have got an entire generation that is being damaged daily by opportunities that do not exist that they were promised. And this is scarring.

And then the markets look broken to me. They are so state-controlled. And anyone that says that is conspiracy theory, then excuse me; what is QE? If the market are rigged, then what is QE? What is zero percent interest rates? What is that?

And so I think broken markets, civil liberties, state capitalism that is the plot. Meanwhile, because the Dow is up, everyone is partying. But since the numbers are so bogus, we know we are going to get a regression of the mean. History of bear markets show three big legs down. We have only had two; the next one will rip the soles out of investors if it shows up. And the markets, the economy is immunocompromised. We are fragile. If we get hit with another Lehman-type phase, we are going to really crumble this time. We are really going to have a mess on our hands. And I think it could come.

So my advice is, buy physical gold. I have not lost my enthusiasm for physical gold. And that is my take.

Chris Martenson: That is certainly a take that conforms with mine at this point in time. I have become just absolutely convinced that what the Fed has managed to do is secure the price of everything but really understand the value of nothing. We look at all of the structural weaknesses that existed and all of the structural issues that were there in 2008, and I actually score most of them as worse now, not better. And I think the markets are hopelessly addicted to Fed stimulus. I think the Federal government could not operate without the Fed buying its debt. I am absolutely astonished that the world has just sort of yawned and said, That is fine; you guys go ahead and just monetize your debt.

I will note that emerging economies have been soundly spanked for similar behaviors in the past. Just horribly abused – their currencies, their debt markets, and the IMF forcing them to cough up private assets, utilities, phones, things like that because they have tried to engage in this behavior. Somehow, the U.S. gets away it. Japan gets away with it. The European Central Bank (ECB) is courting a slightly different path. But at the same time, this is all just fake. It is just as fake as can be. But I do not think they know what else to do at this point besides do more of the same.

And the only thing that really annoys me about this because I am perfectly happy to sit back and watch it happen. I have got myself squared away. And I am pretty happy with where I sit in life at this point around all of this. But the part that does still get under my skin is watching the apologists who come out and try to make sense of it and squeeze it through distorted practices and filters. Paul Krugman is my poster child for this behavior.

David Collum: The catch phrase that I have used throughout, and I finally just ended up saying that I will just put it in the title of Year in Reviews, is that Austerity is not a policy; austerity is a consequence of bad policies. And we are talking about saving Europe; austerity was [considered] a bad idea. I am going, What about austerity as a policy? That is what happens when you pull demand forward. That is what happens when you spend yourself into oblivion. Now it is time to pay the piper. This is it. Now we get to deal with the fact that the average boomer has $70 thousand saved. That is it. Game over. It is killed. There is no austerity policy left. There is just austerity.

Chris Martenson: That is ultimately where I see us going. And this is the part that mystifies me. When I peer forward 30 years, I can clearly see that I am very happy going out on this limb, because it is fact that we are going to have to deal with things like you just said – the entitlement programs and the fact that the average boomers who are retiring at the rate of 10,000 a day at this particular part of the boomer bulge are heading into that retirement woefully unprepared. And then I wander over and I look at a 30-year Treasury bond selling at the prices they are selling at. I am like, Who could possibly buy those at that price, except somebody who thinks they will be able to sell out of that when that turns out to be a bad deal?

David Collum: Right. Well, the bond investors are going to be taken out on boards by the time this over. They are just not going to survive. It might be slow. But it will be a fatality for serious – and Ray Dalio said, the way you deal with the bond market is you use leverage. I am going, are you kidding me? You are telling us to lever up in bonds right now. I used to give that man credit. But that is a scary one.

Chris Martenson: Maybe he has got a lot of bonds to sell.

David Collum: Well, he has got a Fed to buy them. So I do not know what the problem would be. I do not know how to explain it.

Chris Martenson: All right. Well, Dave, thanks so much for your time today. This is all the time we have got. I really want to encourage people to read your full report. It does take some time to get through. But it is just beautifully referenced. And I love your witty style in there. And it is just a clean summary. I am sorry we did not get a chance to really dive into civil liberties, because that is actually a very hot topic for myself. Because I do believe that a wealth of a nation comes from having free citizens who are capable of making their own decisions, operating with what they believe to be fairly enforced laws and rules, and that their privacy and patent protections will be honored. And I do think that a robust middle class is a key to the prosperity of a nation. And all of these things have really taken hits this year, big time. So I wish we could have gone into that more. But people can read your Year in Review. And then we can talk about it in the comments underneath.

Thanks so much for your time today. And we will see you in the comments section.

David Collum: You bet.

About the guest

David Collum

David Collum, is the Betty R. Miller Professor of Chemistry at Cornell University and is a regular and valued presence on the internet commenting on the financial system and the predicaments of our time.  David has contributed many Year in Review articles and podcasts to the Peak Prosperity community. 

2013 Year in Review

 

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32 Comments

sand_puppy's picture
sand_puppy
Status: Diamond Member (Offline)
Joined: Apr 13 2011
Posts: 1926
Wheat vs Corn?

 

Wheat vs Corn?

An untrue story: 

Two Sicilian families dominated the business landscape in the City of Commerce.  One, the Polentas, established control of the corn industry.  The other, the Panos, came to dominate wheat.

A edgy rivalry took on a rough tone when the Polentas don decided to boost profits by imposed a blockade on the Pantino wheat market. He stationed his rough and hostile “intimidators” outside the store in the parking lot.  People would fear for their safety shopping at Pantino stores and soon avoided it.  Sales plummeted.  Corn became very popular in the City of Commerce, restaurant’s came to favor corn based dishes, and the Polentas made serious money.  Wheat prices bottomed far below production costs and farmers made plans to abandon planting wheat next season.

Facing ruin, the Pantino’s changed strategy by marketing to “families” in nearby cities.  The don invited them to his store in caravans with armed escorts who could stare down the Polentas thugs stationed in the parking lot.  Local people also discovered that they could safely get into the store to buy wheat when the out-of-town caravans were in the parking lot. Business resumed.  The Pantino wheat market recovered and came to prosper and croissants reappeared in the City and in peoples homes.  The price of wheat recovered.

---------------------------

So what just happened?

Answer:  Market forces drove wheat prices down.  The numbers of sellers outnumbered the buyers and the price fell.  Later, buyers returned and the price rose.

--------------------------

The “market forces” answer is correct, yet it also obscures understanding of what actually happened.  To accept the “market forces” explanation above, is to miss the deeper story of what is actually going on.  So, in that sense, this explanation, though true, is a deception.

In the gold market, we often see the late night smack down when an entity THAT HAS NO GOLD, “sells” $50 million dollars worth of “gold” in the middle of the night sending the price down.  The explanation for the fall in price is offered: “There were no buyers at that price level.”  Yet this flies in the face of the most avid buying of physical gold ever seen that is now occurring at this very price level.

---------------------------------

My own take on how to respond to this situation is to purchase a small amount of physical gold or silver each month.  And stash it away, long-term, for retirement.   Turn off the TV and avoid the commentary of anyone you do not deeply trust is showing you the very deepest and truest understanding of the forces at work.  And to read Collum’s “Year in Review” again, twice.

 

aggrivated's picture
aggrivated
Status: Platinum Member (Offline)
Joined: Sep 22 2010
Posts: 544
David Collum civil liberties podcast anyone?

What a great interview!  Here is my vote for an in depth podcast discussion on the state of our civil liberties.  If CNBC doesn't want him, we do!

The fiscal side of the situation is a done deal.  David's comments on the Kotlikoff fiscal gap payback amortization schedule sum that up well. Do we want the good news at 50% of all income over 20 years for payback, or the bad news for 80 years?  How about just compromise at 50 years?

So, since this ship really is sinking, I'd love to hear David's thoughts about how to avoid getting locked in the hold and drinking bilge water.  When the passengers realize we are sinking, our fighting chance at surviving comes from being on deck, not down below. He alluded to civil liberties lost in 2013.  Here is a nice discussion on 85 year old Kitty Werthmann's message of loss of freedom under the Nazi's in Austria.

http://skeptoid.com/blog/2013/01/07/kitty-werthmann-history-distorted/

The point to me isn't that we are feeling a great loss of civil liberties now, but that when the ship starts to list and really take on water, the protections of law to prevent the loss of liberties have already largely been removed. I have heard the  point  made that everything that happened in Nazi Germany was legal under German law.  I do not know what percent of that statment is true, but my question is, "Are we willing to live with what is legal under American law right now when the crew of this ship decides finally to sound the alarm that we are going down?"  That is what I would love to hear discussed.

gbcm's picture
gbcm
Status: Bronze Member (Offline)
Joined: Sep 3 2009
Posts: 36
Market Forces - remains the correct answer

Dear Sand Puppy,

I enjoyed the interview and especially DC's amusing wide ranging classic article, and I believe Hussman's market analysis BUT, 

as a former gold bug , I feel your pain - both of us would not be spending so much time going over the entrails of this 'dead man walking' investment if we had ignored the hyperbole of the gold bug blogosphere and simply had a 'stop' in place - the most simple, basic  chart based trading rule. No doubt those who pick the bottom in the gold price (which is not in sight) may make good money if they apply proper trading discipline - but whatever your investment , 'buy & hold' is not a long term viable strategy unless your a fully paid up member of the crony capitalists club like Buffett or a debt free farmer. Yes the markets appear very irrational, but as Keynes once said, they can remain irrational longer than an individual can remain solvent. Moral indignation is a poor investment tool, particularly when your main opponents are robots (machines & morally bankrupt immensely powerful Wall Streeters)(TBTF)

Only 3 things will push up gold in my opinion - none of which appears likely in the short term (2-3 years).

1.significant inflation (appears less likely, and as Chris & Dave discussed, TPTB are becoming leery of the social divisiveness of inflation & may elect for a deflation),

2. a currency crisis in the US$ (NOT going to happen anytime soon) - all other currency crisis will lead to the Indian Government response - shutting down the gold market and a further downward pressure on the gold price, and

3. the Chinese announcing a massive increase in their gold holdings with stated or implicit suggestion that they are trying to discredit the US$ & get their currency reserve status - why the nation that does the most QE and has more impaired banks would wont a gold standard that restricts QE , and why they would declare economic war with the IOUSA and the EU their main markets ? is beyond me - anyway, the Yuan is already an international currency which is being used for direct trade between China and its trading partners, circumventing the need to use US$, which the Chinese have more than enough of anyway.

The only solace for PMS owners is that they will always be worth something, but many gold miners are now worthless and likely to remain so, as bankruptcy is approaching for many. 

Trader Dan's article http://traderdannorcini.blogspot.com.au/2013/12/commitment-of-traders.html is a timely reality check for those who give credence to the 'gold conspiracy' theories about gold's "takedown" "manipulation" etc etc - even if theses things are true they appear to be supported by central banks and not to be illegal (prosecutable) nor is there any real effective opposition (no buyers) - until big buyers appear gold ain't going to rebound, and most punters are not flush - gold needs prosperity to create surplus funds to push the price up - FPIIGS citizens are on the verge of selling the family silver & gold to meet basic needs. His articles subtext could be " beware of conformational bias " ( seeking points of view that reinforce your own beliefs / prejudices , and rejecting the validity of or avoiding opposing views ). 

The following is a comment posted below 'Trader Dan's' article - reality check. It also mentions wheat so that adds extra gravitas to the comment.

Dan I am one of those that lost 50% of my account due to following certain prominent gold cheerleaders, and especially one, whom was considered to be the bard in the industry. The $5000 pronouncements were loosely thrown around, and in a most cavlier manner.
What an incredibly painful lesson that was. Now I just look at the charts, and with gratitude that I have you to guide me through this process.
I wish you and your family a blessed Christmas.

Reply

Replies
 
  1. b36-rounded.png

    John Andrew Szokolay;

    I sympathize with your plight - I really do. 
    I see something similar at times in the grain markets among certain analysts in that sector. They are always wildly bullish, always looking for reasons to be bullish, etc., instead of reading the charts.

    the problem there is that many farmers listen to their stuff or read it and then refuse to sell portions of their crop or at least get some hedge protection because of all the bullish slants to their analysis. In the meantime the price of the grains continues to move lower and the poor farmers end up selling into a hole. It could have mostly been avoided by being judicious and remaining Objective - something which is perhaps the hardest thing for we human beings to do.

    Merry Christmas to you and yours as well John.

 

treebeard's picture
treebeard
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Posts: 609
Less tepid

We need to be less tepid about what is going on.  We are still, in many ways, in the incredulous phase.  Even those of us who are not, in many ways behave as if we are.  Like at other times in history, those who simply couldn't believe what was happening, paid dearly in many ways.

Great podcast by the way, we are getting finally to the meat of the matter.  Everything is being done to keep people in the system, most importantly crushing precious metal prices.  I still believe that when gold and silver price get out of control it will become illegal to hold those metals.

I am not necessarily against being "in the system".  The problem is that our "leaders" do not believe in the people that they are leading or that they can handle the truth.  I am not against making sacrifices for the greater good, but we need to have an adult conversation about what is going on.  At this point that does not seem to be in the cards.  We must transcend the "us vs. them" mentality and dig a little deeper into the nature of "evil" to find the "evil" within ourselves. If we cannot transcend those issues, the foundation that will allow us to survive, community, cannot be built.

We are finally discovering that we are part of this world, our bodies are ecosystems that mirror the places that we live.  That knowledge is starting to transcend our view of the world.  We don't have a financial problem, we have a consciousness problem.  Charles Eisenstein sums it up pretty well in a book that a friend recommended to me recently "Sacred Economics".  

Consciousness is quantized, like the rest of energy in the universe, and can seemingly shift abruptly without apparent cause.  What may seem impossible from a rational point of view, is becoming inevitable. Old wine cannot be poured into new skins, what we may consider safe and secure now may have no meaning in the future.  "Invest" in what you love, no person besides you yourself can tell you what that is.  In these times the most important thing not to miss is yourself.

cmartenson's picture
cmartenson
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Posts: 5754
The Price of Everything, The Value of Nothing

It is absolutely without any question in my mind that virtually every financial market, and everything with a paper price, is being manipulated, gamed, rigged, and otherwise adulterated for fun and profit by those with deep pockets and deeper connections to Wall Street (as a metaphor for all financial centers across the globe).

If a paper market suddenly arose for houses in my neighborhood and Wall Street gamed it so that my house was "worth" less and less each year, or spiked massively in price, what would change for me personally? Not much unless I wanted to or had to sell.

From my perspective my home is actually becoming more valuable as I improve it and add to the soil fertility and ecosystem richness and abundance.

But to those fully caught in the hologram of illusion being peddled to us daily by virtually every orifice of the state, including especially its lackeys in the mainstream press, price is all that matters.

Once you buy into the idea that money is everything, then price is everything too.

But that's the point of being here at PP.com; we are actively trying to decide for ourselves what is really and truly valuable. Sure money has a role, but it's not the only role. Yes, the powers that be have a very firm hand on the paper markets, and they may continue that way for a while longer, or perhaps even a lot longer.

But 'they' cannot alter reality. They cannot create real wealth out of thin air, that requires real people doing real things.

No, moving electronic digits here and there does not actually create billions and even trillions in real wealth.

No, you cannot print up more bluefin tuna.

No, you cannot reverse ocean acidification by monetizing a nation's deficit expenditures (but you might speed it up).

The efforts to force the world back into the old paradigm of growth are nothing short of stunning, and speaks shrilly of level of unconscious level of denial that passes for modern 'wisdom.'

The younger generations are where my hope now lies because I see that more and more of them understand that we are decidedly on the wrong path in how we are living on this planet. Their understanding goes far deeper than money and so many of them have disconnected from the narrative now being bullied into one last hurrah by the ever feckless boomers who are rapidly cementing a truly dispiriting legacy for themselves.

The 'me generation' was the perfect tag for the boomers and will be a fitting epitaph too I suppose.

So here's to the younger generations.  Decide for yourselves what's truly important and live according to your inner compass which always knows right from wrong.  

Doug's picture
Doug
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Consciousness

Good post Treebeard,. 

One subject that is notably lacking in Collum's article and interview is the environment.  It mystifies me that someone can write a year-end-review article that touches on such a wide range of topics that are important to our well-being but completely ignore the big kahuna in the closet.  Chris brought up the sorry plight of our oceans and repeated it in his recent post, but Collum failed to follow up on the opening.

To his credit, Chris has mentioned on a number of occasions what our pollution is doing to the oceans, but it is vital to remember that ocean acidification and warming only represent one, albeit a big one, consequence of injecting massive amounts of carbon into the atmosphere.  All the effects of those injections need to become a big part of our consciousness going forward.  Even if we do everything else right, if we continue to crap in our nest, we won't be able to live in it much longer.  Chris is right about us boomers, but it is important to note that boomers brought environmental consciousness to the masses and still lead the movement.  Younger generations are coming along, but fossil fuel interests continue to corrupt the mass media and the gov't with their billions of $.

Climate change, along with our numerous other environmental obscenities, needs to be front and center in all discussions of our and our children's futures on this planet.  Gavin Schmidt has recently been pushing an agenda that climate scientists should be "speaking up and speaking out" about climate change. 

http://www.skepticalscience.com/gavin-schmidt-speaking-up-speaking-out.html

He is of course right, but as consumers of that information, it is our responsibility to ferret it out ourselves.  It's all there, we just have to dig a little and distinguish the flack coming from the denialosphere from solid science.  Then we must act!

Doug

 

treebeard's picture
treebeard
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Frustration and Criticism

Apologies if anything I said in my last post was taken of as a criticism of the PP team or the site.  I have this stream of consciousness writing habit; anything that may come off as an admonishment is often directed more at myself than anybody else.  Kudos to Chris and Adam and all the hard work the do here to raise the level of culture awareness.

Yesterday we had a seed exchange out our house.  Our local transition group has made a decision to move away from an educational role (movies, discussion groups, etc.) to a more apprenticeship approach, where each of us that have something to give reach out to a group that is interested, so that we start creating alternative structures, community connections, and a different way of doing business in real time.

It always feels like things are not quite moving fast enough, that we are months, if not years behind where we need to be.  I guess we are going to need that constant back pressure to keep us moving, and bring those in the "system" out so they too begin to look for alternatives, and those of us half out of the "system" doing the hard daily work of creating and facilitating those alternatives. So much work to do and the time is starting to feel real short. This Podcast was just another reminder of how short the time frame is getting.  Hence that frustration and anxiety it elicited in me.  Sorry if I may of passed some of that along.

Holiday blessing and cheer to the all in the PP family.

SailAway's picture
SailAway
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Posts: 404
cmartenson wrote: No, you
cmartenson wrote:

No, you cannot print up more bluefin tuna.

No, you cannot reverse ocean acidification by monetizing a nation's deficit expenditures (but you might speed it up).

Thank you Chris for reminding this!

For those interested in learning more about our oceans, here is a good site:

State of the Ocean.org

Their State of the Ocean Report 2013 is available pdf & videos.

Maybe we should have a “State of the Ocean thread” here at PP.com?

Happy Holidays to all!

Fred

 

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anexaminedlife
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Posts: 48
The Younger Generations

The younger generations are where my hope now lies because I see that more and more of them understand that we are decidedly on the wrong path in how we are living on this planet. Their understanding goes far deeper than money and so many of them have disconnected from the narrative now being bullied into one last hurrah by the ever feckless boomers who are rapidly cementing a truly dispiriting legacy for themselves.

The 'me generation' was the perfect tag for the boomers and will be a fitting epitaph too I suppose.

So here's to the younger generations.  Decide for yourselves what's truly important and live according to your inner compass which always knows right from wrong.

I can hope that is true but I am not seeing it! At least the baby boomer generation started off with a vision that was truly revolutionary. Yes, adulthood finally settled in for that generation and they became the Yuppies of the 80's. What I see of the younger generation now is a disillusioned, mostly apathetic, generation where the individual's self worth is measured by the number of "likes" he or she gets on Instagram. Sure there are individuals within the younger generation who can give us hope, and allegedly many of them have sworn off cars and the burbs (that's until they start having children, I suspect), but I don't see any evidence that the younger generation has any vision as a whole. The only cohesive movement, which lasted but a short while, was Occupy and that movement turned into an appeal to Big Daddy Government to save us all.

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kaimu
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Posts: 160
AMERICA THE CONSUMER

Aloha! No matter our age we are the Empire now and we are the reserve currency and that comes with the privilege of global consumer. America consumes more! So PCE/GDP is now at 68.2% in 2013/Q3, down from 69.1% high.

LINK: http://tinyurl.com/lqwqxxb

We have become a society of "tip analysts". The markets move based on whether the inflation rate for Q3 2013 is 1.4 or 1.6%, yet totally ignores the 97% loss in purchasing power(the part of the inflation iceberg covered unseen by the media) of the USD since the US Fed opened its doors. OFFICIALLY 100 YEARS AGO!!!! The market moves if the unemployment rate moves down .2% or up .2% yet ignores the vast majority who no longer participate in seeking work or have just resigned themselves to parttime work hoping they never get seriously injured or ill.

Taper goes down $10BIL due in part to a projected skewed measure of unemployment rates and yet the markets ignore the flatlining real household income and the largely record lows in savings and 47mil Americans who cannot afford to eat without government aid. In one analysis if disability fraud were cut by 10% the official unemployment rate would rise to 9.9%. Some 29 million Americans are on disability. That is like getting off the Qantas flight in Sydney and nobody is working in the entire country. No taxi drivers, no Qantas hosties, no hotel workers, no Sydney Bridge tour guides ... nobody. What is that 1-in-11 Americans are disabled? And 1-in-7 can't afford to eat and here on the Big Island, a rural farmland, 1-in-5 can't afford to eat. Why is it that the farmers and the farm employees and rural America has so little wealth while the NYC bankers and DC politicians live in abundance? How did it end up that the producers of the world are so poor in comparison to the index and futures market owners and brokers?

It is a well known fact in the treatment of addiction that denial is key to maintaining the high and in order for an addict to affect that denial they need to distort reality. They need to abuse the system to stay high. We have a country being led by 535 elected power addicts whose main goal in life is to preserve their addiction to power. They love their political and monetary high! So much so that they have no qualms in maintaining the status quo by any means possible. Even if it means selling out the entire Nation and scraping the US Constitution. If they must distort reality and blow market bubbles with the aid of the private central bank cartel then so be it. It is the giant price we pay for their short sighted high. There is no 1% or 99% there is only the 100%! But try to convince a Lloyd Blankfein of that.

After all isn't it all human nature? If you look deep enough you will see that our monetary system is purely based on human nature. Sovereign debt is the blank check mentality. Hand me a blank check and I will make sure I fill it full of as many 9s as possible and I will also make sure only my friends and relatives get some after I do. 

The first sentence in George Orwell's classic book on government sponsored reality distortion is ...

"It was a bright cold day in April, and the clocks were striking thirteen." - George Orwell, 1984

 

KugsCheese's picture
KugsCheese
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Posts: 1449
401K Confiscation - How to avoid?

To guard retirement savings in 401K couldn't one go to a private IRA with investment assets outside USA and EU?  Say invest in PM, land, and other resources, stocks in cratered markets?

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sand_puppy
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Spiritual Integrity and Architectural Failure

A brief Christmas note.

If we are willing to "see" this building as *falling down* or *collapsing,* then we will probably be reasonably comfortable diverting our societies resources to wars and having our emails read "for our own protection." But what if we noticed that it looks a lot like an explosive destruction? If the Prince of Peace is to reign on the earth we will need to see through the deceptions that feed the military industrial complex and its preferred approach to the world--that of perpetual war. I believe that this *seeing through* is an act of the highest spiritual integrity.

aggrivated's picture
aggrivated
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Posts: 544
spiritual integrity

Just for fun this holiday week I read "The Hunger Games" trilogy.  Suzanne Collins has nailed (or should I say 'arrowed')the military industrial paradigm in the head.  I highly suggest reading this teen oriented story. 

First, it is a page turner with political and economic themes for an adult audience. 

Second, I think she has her finger on the pulse of the youth sentiment in our time. 

Third, she presents a well thought out future world with limited resources that are unequally parceled out by a central government that uses a Russian Roulette type of hope to keep the populace in control.

sand_puppy, I think she is 'seeing through' in her fiction. Reading this helped me to become more attuned to the details of what is involved.

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Stan Robertson
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Failure to understand architecture

Having watched the sequence of events of the collapsing towers from impact of a 747 through the collapse as many times as I can stand, I would say that the collapse was a direct result of the plane impact. It is beyond belief that any explosives were planted to aid a process that began at the impact site. Anyone who has watched the planned demolition of buildings knows that it does not start at the top. It requires the weight of parts overlying the site of the explosives to bring it down.

One might argue that it required elements of cooperation with the attackers to permit the attack to succeed  and that such cooperation was nefariously intended to garner support for subsequently planned wars and massive invasions of privacy, but most folks don't buy it. I certainly do not, however I AM appalled at the unconstitutional NSA invasions of privacy.

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thc0655
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Posts: 1631
aggrivated

I'm with you aggrivated! Note my Mockingjay pin. wink

"Welcome to the Hunger Games.  And may the odds be ever in your favor."

Tom

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sand_puppy
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Posts: 1926
Thanks, Stan

Thanks for looking at the information, weighing its implications, and then coming to your own conclusion.  At the end of the day, that is really all I would ask of anyone.  

And you are certainly correct in your observation that most explosive demolitions, particularly the "implosion", charges are fired in the sub basement and basement levels first to establish downward momentum of the building.  The momentum is an integral part of the destructive process.  This also limits the lateral ejection of debris and damage to surrounding buildings.

It turns out that buildings destroyed by fire and buildings destroyed by explosives each have a separate list of distinguishing characteristics.  Armed with this list,  even those of us not experienced in forensic analysis of destroyed buildings can take a pretty good shot at identifying the differences.  I personally thought the list was helpful and summarized a great deal of research from many sources.  (It can be found on the lower right edge of this page.)

And, as always, especially with controversial topics, everyone is entitled (and encouraged) to develop their own opinion.

Bellinghamster's picture
Bellinghamster
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Posts: 27
science vs narrative......

Unfortunately most as a whole, will throw this into the category of chemtrails, Illuminati or anything else "way out there" as we have most definitely been programmed our whole lives to do. Not to say that any of that subject matter does not exist... probably all of it does. A life of plopping us in front of a cerebral structuring machine (t.v.) for hours on end from the very start of our perceived conception of reality (possibly 2yo and on..) is undoubtedly the plan. That "plan" is working very well.  I still have relatives that are not willing to listen or interject in an adult conversation about any of these issues. Why not?? Why cant we even talk about it?  The "people" that have structured this plan are very well educated, probably far more than most, and have slowly and patiently implemented this social structuring for a very long time. As you can see it has been working autonomously since its inception. We cannot survive as a species in concert with one another by blaming "the boomers", "Gen X" or any other designation, designed as all designations are, to separate. This very pivotal incident above that sand_puppy has most courageously posted here is a perfect example of how something so horrible can be thrown in our faces and next to incontrovertible scientific evidence is overlooked and thrown aside because our "Leaders" say it just is not so. Yeah they fell down all right. Everyone here would like to think they are awake or at least waking up. By the clear non-response to your post it appears to me that this subject is not convenient enough to be touched on. It also proves to me that "they" can and are willing to continue to throw these things in our faces largely because no one is even willing to talk about it. Don't believe in "Chemtrails"? Wake up and look up. 

"I believe, therefore, that a grand game of chess is being played on a level that we can barely imagine, and we are the pawns. Pawns are valuable only under certain circumstances and are frequently sacrificed to gain an advantage. Anyone who has studied military strategy is familiar with the concept of sacrifice. Those who have seriously studied history have probably discovered the real reason we go to war on a regularly scheduled basis."  - W.C. 

 

 

Grover's picture
Grover
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Posts: 864
War On Terror
Stan Robertson wrote:

<snip> Anyone who has watched the planned demolition of buildings knows that it does not start at the top. It requires the weight of parts overlying the site of the explosives to bring it down. <snip>

Stan,

I don't know enough about building demolition to agree or disagree with your statement. Whenever I've seen videos of buildings being demolished, it follows the pattern you describe. That could be because the demolition team gets the most bang for the buck this way. Does that mean this is the only way a controlled demolition can occur? Besides, didn't the Tower collapses originate a number of stories below the top rather than the tippy top?

Is the collapse of this building more in line with your idea of planned demolition? This building wasn't hit by a plane. You can find out more information at http://www.ae911truth.org/

wtc7-collapse-256x169

Stan Robertson wrote:

<snip> I AM appalled at the unconstitutional NSA invasions of privacy.

Would the public accept these invasions of privacy if we weren't fighting the "War on Terror"? When did this war begin? Hmmmmm.

Grover

Doug's picture
Doug
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Posts: 3176
wtc collapses
Quote:

Besides, didn't the Tower collapses originate a number of stories below the top rather than the tippy top?

As I recall, the twin towers collapsed beginning at the level the planes hit.  I haven't seen a video of Bldg 7.

Grover's picture
Grover
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Posts: 864
Collapse Video

Doug,

I pasted a .jpg graphic in my last post containing multiple frames. It shows Bldg 7 as it is collapsing. There are only a few seconds of video because the building fell at approximately free fall speeds. I tried to download some videos from http://www.ae911truth.org/ but they are quite large. Here is a youtube video that is about an hour long.

http://www.youtube.com/user/ae911truth?feature=mhum#p/u/4/CpAp8eCEqNA

Grover

LogansRun's picture
LogansRun
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Posts: 1444
Bellinghamster...

This has been discussed here for years, but most of the people that took the time to try to get other members to open their eyes are now gone.

I suggest you go into the Controversial Topics Section and do a search....I think you'll find much to continue your education, as well as a more substantial understanding of what used to take place here.

 

Bellinghamster wrote:

Unfortunately most as a whole, will throw this into the category of chemtrails, Illuminati or anything else "way out there" as we have most definitely been programmed our whole lives to do. Not to say that any of that subject matter does not exist... probably all of it does. A life of plopping us in front of a cerebral structuring machine (t.v.) for hours on end from the very start of our perceived conception of reality (possibly 2yo and on..) is undoubtedly the plan. That "plan" is working very well.  I still have relatives that are not willing to listen or interject in an adult conversation about any of these issues. Why not?? Why cant we even talk about it?  The "people" that have structured this plan are very well educated, probably far more than most, and have slowly and patiently implemented this social structuring for a very long time. As you can see it has been working autonomously since its inception. We cannot survive as a species in concert with one another by blaming "the boomers", "Gen X" or any other designation, designed as all designations are, to separate. This very pivotal incident above that sand_puppy has most courageously posted here is a perfect example of how something so horrible can be thrown in our faces and next to incontrovertible scientific evidence is overlooked and thrown aside because our "Leaders" say it just is not so. Yeah they fell down all right. Everyone here would like to think they are awake or at least waking up. By the clear non-response to your post it appears to me that this subject is not convenient enough to be touched on. It also proves to me that "they" can and are willing to continue to throw these things in our faces largely because no one is even willing to talk about it. Don't believe in "Chemtrails"? Wake up and look up. 

"I believe, therefore, that a grand game of chess is being played on a level that we can barely imagine, and we are the pawns. Pawns are valuable only under certain circumstances and are frequently sacrificed to gain an advantage. Anyone who has studied military strategy is familiar with the concept of sacrifice. Those who have seriously studied history have probably discovered the real reason we go to war on a regularly scheduled basis."  - W.C. 

 

 

sand_puppy's picture
sand_puppy
Status: Diamond Member (Offline)
Joined: Apr 13 2011
Posts: 1926
Explosive Demolition Videos

There are a number of different charge placement and timing patterns used in explosive demolitions, so it is probably better to talk about the twin towers and building 7 separately.  So this post is about Building 7 (aka-World Trade Center Building 7, WTC7, "7" and the Solomon Building).

 

Building 7, The Classic Implosion

Building 7 is the easiest for most people to feel uncomfortable about surprise as it was a Fire Safety Class 1 building (steel frame, cement floors, no flammable structural elements), was not hit my an airplane and  did not have jet fuel spilled into it. (These are the issues used to explain why the twin towers collapsed.) A point whose importance simply cannot be overstated is that no Class 1 building has ever, before or since 9/11/01, collapsed due to fire even though there are about 400-500 documented cases of fires in Class 1 buildings. 

And as Stan mentioned, the implosion demolition pattern is based on destroying basement and sub-basement support columns first to establish downward momentum in the building.  Charges beneath different sections of the building are fired a few seconds apart, so that the different sections start their downward movement at slightly different times.  This creates sheer forces between the sections that rip the building apart during its collapse.  Sometimes they will start one end, and other times the mid section. (See video link below.)  Starting with the center section is "cleanest" in that it pulls the outer edges of the building inwardly reducing damage to surrounding structures.  Starting in the middle is essential for very tall buildings where the risk of tipping over is greatest.

World Trade Center Building 7 was such a tall thin building (47 stories).  "7" was a BIG Building with a large height to width ratio making it very high risk for tipping over during its destruction.

To get a feel of what an implosion looks like, I'm including a nicely done compilation of the Implosions done in 2003.  It is made by the professional society of demolition companies (ImplosionWorld).  Even a few minutes of review gives a good feel for the characteristics of the implosion pattern demotion.  Once exposed, this pattern is highly recognizable.

 

David Collum concludes his 2011 Year in Review with a link to this compilation video of the collapse of WTC Building 7.  Notice the drop in the central section of the roof first, wrinkling of the building face as evidence by window breakage, the almost perfect vertical drop of the entire building.

Dan Rather describes what he sees:

http://www.911research.com/wtc/evidence/videos/docs/wtc_7_cbs.mpg

 

Grover's picture
Grover
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Joined: Feb 16 2011
Posts: 864
The Dungeon
LogansRun wrote:

This has been discussed here for years, but most of the people that took the time to try to get other members to open their eyes are now gone.

I suggest you go into the Controversial Topics Section and do a search....I think you'll find much to continue your education, as well as a more substantial understanding of what used to take place here.

LR,

Thanks for providing the link to the Controversial Topics Section. I had posted a couple of posts to a thread that had been moved to this area (unbeknownst to me.) I was wondering why my posts weren't showing up on the "Most Recent" section of the main page. Now I know.

I find this portion of PP, "the dungeon," to be cumbersome (at best.) It is a good place to review what has been said, but terrible if you have a pertinent question that hasn't been answered before. Unless someone who knows the answer is lurking in the dungeon, you won't get an answer and will likely give up asking. Is there any notification mechanism? I haven't found it.

I don't mind answering the same question over and over. If I know the site and what related information has been said, I can search much easier, copy, and paste (with accreditation) and subsequently add nuanced meaning. I may even point the person to areas that may be pertinent.

Grover

Grover's picture
Grover
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Posts: 864
Re-Post

I posted this message on ao's Definitive 9/11 Documentary thread. That thread was moved (at some time prior to my recent posts) to the dungeon where it has suffered the ignominy of abandonment. I could rewrite the post, but I'd rather just copy and paste it here. In it I refer to a video that Doug posted. It is only 4 minutes 5 seconds long. Listen to what is said and how it is said. My post works best if you listen to this first.

This is my second response to Doug's post. If you're interested, you can read the first response here: http://www.peakprosperity.com/comment/160998#comment-160998

http://www.peakprosperity.com/comment/161701#comment-161701

Doug,

After I posted my last post here, I went to the front PP page. I noticed that my post didn't register in the recent comments. I opened the recent comments to look deeper. Still not there. Then, I looked for your post. Nope. Nowhere to be found. I thought about it for a couple of days and decided to flag my post so the administrator could check into it. I wrote my concerns in the justification for flagging. I never heard anything so I sent a PM to Jason on 12/5. I didn't hear anything back, so I copied the PM and sent it to Adam on 12/9. Adam responded on 12/20. He told me that he's working Jason like a "rented mule" and that it sometimes takes a while for comments to show up on the recent comment list. When receiving his PM, I looked through the recent comment list. It still wasn't there. I sent another PM, but haven't heard back. I'll give him a week to sort out the problems. Then, I'll post this on another thread.

That's the way it seems to be with anything related to 9/11. There isn't any conspiracy here. Nobody from any Czar's office came down to Chris and Adam and told them to react this way. There wasn't any need to. After all, if you just ignore the kooks, they'll crawl back into their holes and wait for other pieces of sky to fall. Right?

I'd like you to listen to that link you posted and (in your mind) substitute "Global Warming" anytime anyone says anything about 9/11 and replace "truther" with "wormer." (I know it should be "warmer," but you have to admit that they twist the word "truther" a wee bit.) If you do that, you'll see that Chomsky's tone wasn't exactly conducive to an open exchange of ideas. The Talking Head was even more closed minded.

If you compare the investigation of the towers collapsing with the space shuttle Columbia's disaster, you'll see the difference between a ramrod and an actual search for a cause. For the Columbia disaster, they collected space debris from several states and painstakingly arranged it in a hangar. After reviewing all the evidence, they concluded that some foam struck and damaged some heat shield panels. The following picture was contained in this article: http://en.wikipedia.org/wiki/File:Grid_with_Columbia%27s_Debris_-_GPN-2003-00081.jpg

640px-Grid_with_Columbia%27s_Debris_-_GP

The towers never got that treatment. The steel superstructure was loaded onto barges and shipped to China for recycling. Granted, at the beginning, there was a rescue component to the 9/11 scene. After all, there were several thousand people in there. After it was obvious that there were no more survivors, they continued with the demolition operations. They didn't need to investigate because it was obvious that planes flew into the buildings and the buildings subsequently fell. That's where the story ends for most people. Anyone who questions the stories is derisively called a "truther" and then subsequently ignored.

So, Why don't I buy the official story? I'm not a structural engineer; however, I took at least one structural engineering class during each semester of my junior and senior years for my undergraduate studies. That was about 3 decades ago. The laws of physics haven't changed one iota. The practice of engineering has changed somewhat, but the underlying theories are still intact.

There were 3 buildings that collapsed that day. These were the first, second, and third, steel framed buildings in the entire world to ever collapse as a result of fire. To date, those 3 are the only buildings to ever collapse as a result of fire. (Reread that last sentence until you understand how unprecedented the collapses were.) Two of the 3 were struck by airplanes. All 3 collapses are beset by nagging questions. You see, when buildings fail ... they don't fail into the strongest component.

Many 9/11 "truthers" focus on the WTC 7 collapse as the smoking gun. In my opinion, it's collapse is the most suspect. Nonetheless, the tower collapses were suspect also. Here is a documentary from NPR showing the building of the World Trade Center. It is only 18 minutes long and well worth watching! http://www.pbs.org/wgbh/americanexperience/features/bonus-video/newyork-construction/ (Sorry, but the video is part of the page. I don't know how to embed it here.)

The towers were constructed with a central core of 47 columns that carried about 2/3 of the building's load to bedrock. The other third was carried by the outer skin. These components were connected by the lightweight floors. The combination of all these components made a strong, resilient structure capable of withstanding all the loads it was subjected to ... until 9/11.

When you watch the video, I'd like you to pay particular attention:

  • At 2 minutes, 15 seconds, you'll see a oblique artist's rendition of a typical floor. You'll see the central columns, clear span floor, and exterior skin.
  • At 9 minutes, 45 seconds, you'll see a section of one of the interior columns being hoisted. This column section is about 30' long and consists of 4 plates of steel (4' wide X 2" thick) that are welded together to form a hollow 4' X 4' square column section.
  • At 11 minutes, 10 seconds, you'll see a flyover view from a helicopter that shows the central columns, the lightweight span, and exterior skin. There's another flyover at 13 minutes, 50 seconds.

I can't imagine that anything during the construction of these buildings was left to chance. At the time, these were the tallest buildings in the world. New technologies and construction techniques had to be invented for these buildings to be constructed. I'm sure that the welding was performed by qualified personnel and tested by other qualified personnel. Every aspect of construction of these buildings was scrutinized and built within acceptable design tolerances. (I haven't reviewed the construction documentation, so I take this entire paragraph as an article of faith.)

The accepted collapse theory goes something like this: Planes flew into the buildings, asbestos insulation was dislodged from the lightweight trusses as a result of the impact, the fuel in the plane ignited and caused the lightweight trusses to heat up and lose strength, floors started collapsing, the added weight couldn't be supported by lower floors, and a "pancake collapse commenced. Once the lightweight floor trusses collapsed, the exterior skin lost support and disintegrated.

That almost makes sense. If support from the floors vanished, the exterior skin wouldn't be able to stand more than a few stories before collapsing.

Remember the 47 interior columns? The elevators, stair cases, and utilities were housed in this area. There was framing around the group of columns and that is what the lightweight trusses were connected to. Assuming all the floor trusses on the triggering floor collapsed simultaneously (highly unlikely given the eccentric airplane hit,) the collapse should have looked more like a donut than a pancake. After the collapse concluded, there should have been 47 weakened columns sticking a quarter mile in the air. This column group relied on the exterior skin to provide lateral support. Without support, the columns would have toppled haphazardly into adjacent buildings. That didn't happen.

The investigators want you to believe that the floors were weakened enough to instigate the collapse sequence, but were strong enough to take the 4' X 4' X 2" thick steel columns with them. Really??? There are many other inconsistencies with the accepted collapse theory, but this is the one that gives me the most heartburn.

To me, knowledgeable investigators would have been able to question the plausibility of every theory. Not one of the Commission members was an engineer. They were appointed by Bush II with blessings from the Republican controlled congress. They were tasked with producing a final report (and they did that) glossing over key details that could possibly be politically damaging. Here is a very short and succinct link that explains (in laymen's terms) some problems with NIST's WTC 7 collapse report: http://www.rememberbuilding7.org/nist-collapse-model/

So, Why should we care?

When we look back at major events in life, we can remember where we were when we first heard the news. The bigger the event, the more details we will remember. Based on that definition, you have to agree that 9/11 was a very big event. Government leaders are expected to make changes to prevent these events in the future. Look at the space shuttle. They investigated the problem, determined the cause (foam blocks striking heat shield,) and instituted design and procedural changes to minimize the risk. That was appropriate.

Let's look at changes that have been instituted as a result of 9/11:

  • We have a "War on Terror (WOT)." This is as nebulous as the "War on Drugs." There is no face or name that can be associated with it. When will it be over? How many resources are required to fight it effectively?
  • We have a new Federal Agency - "Homeland Security." They are the first line defense on the WOT. Thanks to Edward Snowden, we know that the NSA collects all manner of information about us. The computing power would have gotten to this point regardless, but would the people (as in "We The People") accept this intrusion without the WOT? (I'll bet this post has been analyzed and rated by the NSA before you had a chance to read it. Does that bother you?)
  • Our then fearless leader declared war on Afghanistan to attack al Qaeda (and teach them a lesson.)
  • We then shifted attention to Iraq because of purported weapons of mass destruction that Saddam had or was trying to develop. (They have gobs of oil, right?)
  • We've spent $trillions, killed or wounded tens (hundreds?) of thousands, and created lifelong enemies. (No wonder the WOT can never end.)

Those are just the high points. I'm sure we could list many, many more. The point to me is that all of this was predicated on an event that simply could not have happened as reported. And yet, anyone who questions the events (or the subsequent remedies) is considered a whack job conspiracy theorist. After that, everything that person says is considered suspect.

So, where does it go from here? How do we stop the madness if we can't question the cause? Do you realistically expect anything (along these lines) to get any better with time? How many more liberties will be removed in order to "keep us safe"?

I hope it isn't too late.

Grover

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sand_puppy
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Thank you, Grover…

 

Thank you, Grover, for your very well written post on your misgivings, as an engineer, about the demise of the World Trade Center buildings.    I notice the care you took in writing this post and interpret that as an act of conscience, intelligence and caring for the world that we leave to our children.

The task of sorting out the many writings on 9/11 has become a bit of a Herculean task.  Perhaps I could ask other pp’ers to take away a single point:  Some very intelligent and perceptive people who have studied it closely, feel sure that the official story just does not add up.

This is a group of very high caliber individuals:

-2,100 Architects and Engineers who disbelieve the official explanation for the building collapses.

-400 Professors who openly disbelieve the story we are told:  Professors of mathematics, physics, computer science, geology, architecture, religious studies, psychology.

-Neils Harrit, Professor of Chemistry, University of Copenhagen, who reports finding large amounts of thermite, an explosive used to cut steel beams in the demolition of steel framed buildings, in dust from the world trade center.

-Graeme MacQueen, Professor of Religious Studies University of Ontario, who analyzed the Oral Histories of 9/11 and found that 118 firefighters spontaneously reported hearing explosions and believed that the buildings were being destroyed by explosives.

David Ray Griffin, Professor of Theology, who documents the failure of the FAA and the military to follow normal procedures regarding hijacked aircraft.  He documents the evolution of THREE incompatible and entirely different stories offered to explain this failure.

If I may, could I kindly ask people to simply peruse through the list of the 400 Professors who question 9/11.  Simply notice that many very bright and high quality people are listed there.
 

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darbikrash
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Tower 7

 

I reviewed the video link Grover provided that shows a video comparison with the engineering simulation of the building collapse.

 

I found the critique of the NIST model to be inflammatory, and does not reflect an understanding of the principles and objectives of dynamic structural simulation.

 

I do not wish to become embroiled in the controversy, but I have domain expertise in this area so I will comment.

 

The introduction suggests that selection bias was in place due to the analytical method used in comparing the video of the collapse with the simulation results. This statement is not necessarily accurate, as it is common to “calibrate” simulation models with observable events in order to insure validity of a priori critical assumptions used in model construction. Some of these would include the phenomenological material models, boundary conditions, connecting ties, strain rate dependencies, work hardening curves of the steel material properties, etc. One would also expect uncertainty of distributed mass within the building floors, which is unknown to the analyst, such as the presence and placement of dead loads prior to collapse- any of these can cause significant artifacts and deviations in the simulation results.

 

It is not clear from the simulation results if the exterior shell of the building is modeled.

 

The solver used for this simulation is LS-DYNA, which is an explicit non-linear code. It is routinely used for (automotive) collision simulations as well as explosive blast wave modeling. It is well suited for simulating this type of dynamic structural failure in a relatively short time domain. A coherent interrogation of the model results would not rely on an animated movie to divine engineering data. A frame by frame comparative framework would be established, using the clock or time stamp as a means of model correlation.

 

Trust me, if the analysts wanted this to look just like the collapse, they could have done so with far less effort than trying to create an engineering benchmark.

 

A quick web search yielded one of the summary reports on WTC1 and WTC2. You can download it here:

 

http://www.dynalook.com/international-conf-2006/24ImpactAnalysis.pdf

 

I looked this over, and I am very familiar with the methods and constitutive models used in this analysis, including the fluid/structure interaction model space. I see they used SPH elements (smooth particle hydrodynamics), essentially point elements with assignable state variables such as viscosity, surface tension effects, etc. I do not see anything untoward in the way the model was setup and run, at least as outlined in this brief summary document.

 

It looks like the objectives and methods were realistic and correctly implemented, with multi-step validation phases.

 

I do not see any results documents for Tower 7, so I cannot comment, but I would have no reason to believe that the methods were suspect, although I would mention that the simulation would be significantly easier than the other two towers as they were not hit by high velocity aircraft with resulting fuel dispersal- and as such do not require the fluid/structure interaction component of the other simuation.

 

It is important to understand that the simulation is never going to mimic the video collapse, rather, the objective is to validate the physics behind the collapse explanation, and perhaps to compile a sensitivity study to determine high gain variables, and how these might impact the collapse dynamics.

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Thanks

for keeping this issue alive. I was on the streets of Edinburgh yesterday offering passers by leaflets, printed from the Rethink911 website, entitled "What you are not being told about 911". The leaflets are very professionally designed, and detail the points highlighted by "Architects And Engineers for 911 Truth" regarding the destruction of the 3 towers by 2 planes.

The response from the general public was less than enthusiastic I have to say. It does seem to me that many people are trapped in the mindset of self interest and an overall collective delusion. I know and understand this, as I was once myself in this position.

Having said that, there were a handful of folk that did respond positively, and the guy behind the counter in old bookshop if I did not know any better could have been a PP member and a 911truth expert. Despite the lack of interest from the majority, the small number of positive encounters did make the whole experience worthwhile. I think a few more people are Rethinking911 this morning.

 

 

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Arthur Robey
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Steady!

Did anyone else notice how rock-steady some of the cameras were? Almost as if they were pre-positioned on tripods in anticipation.

We are so used to seeing well composed action shots on TV that we take them for granted.

In contrast to the UFO amateur shot that have wobbly, unconvincing, out-of-focus representations of reality.

So why were the cameras steady?

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Thanks Darbikrash--But We Are Already Embroiled

Thanks, Darbikrash, for thinking and speaking on the subject of the modeling of structural damage to the towers by aircraft impact.  If you would be willing to stay with the topic, I would love to hear your evolving assessment.  I don’t get to converse with people with expertise in this field and appreciate the chance.

I also understand your desire to not be embroiled in this controversy.  Unfortunately, the fight was brought to us--we are all already embroiled.  Every TSA pat down, drone assassination and Muslim man who is tortured at Guantanamo is a result of this story.  We must get it right.

Post-9/11 humor:  "My First Cavity Search: Helping your child understand why he may pose a threat to national security."  

We are all embroiled.

I personally do not have experience with computer simulation of building collapse but have heard talks from several people who do.   And yes, many are inflammatory in tone.  When one's impression is that the scientific method is being used to obscure or deceive, anger seeps in.

Reviewers critical of the computer simulations used by NIST include:

 

 

(I'm sorry that I don't have links to isolated specific comments about the computer modeling issue as their comments were included in broader discussions.)

A main criticism is the use of computer modeling to create a plausible story only for the preconditions leading to collapse.  When the analysis stops at the moment the collapse actually begins, the physical evidence for explosive demolition (which lies in the pattern and totality of the buildings’ destruction; the rate, symmetry and smoothness of fall; and content and layout of the debris field; witness testimony of sights and sounds of explosions) is excluded.  Thus, there is concern that computer simulation models are actually being used to obscure the evidence supporting controlled demolition from those without the time skill or inclination to read deeply, i.e.-- the public. 

Fire safety engineers criticize the government's reports (especially NIST) for failure to follow a crucial, standard, post-arson, forensic procedure—that of searching for residues of incendiaries and explosives in the debris.  Yet the same reports conclude “We found no evidence for use of explosives.”  When directly asked by Steven Jones, "Did you look for residues of explosives?" NIST responds, "No we did not."

Unfortunately, we are in a situation where the words of a scientist cannot be accepted without also considering who signs his paycheck. And NIST is a government contracted study.

Eastman and Cole recently presented a summary of the way the peer-reviewed literature on the cause of collapse has shifted over the last 12 years  (WTC Destruction: An Analysis of Peer Reviewed Technical Literature:  2001 — 2012).  The conclusions (on page 5) are very worthy of review.  They note an increasing numbers of papers in the last 5 years shifting away from the progressive gravity driven collapse (PC) hypothesis to  the controlled demolition (CD) explanation and a complete failure of the professional community to reach consensus on this vital topic.  This is unheard of.

Please stay consciously embroiled in this controversial story.  ☺  

Does the controlled demolition hypothesis seems plausible to you?  What are your misgivings?  I would love to hear your evaluation of this literature as it develops.  Thanks for participating.

 

 

 

 

 

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Newfound Appreciation

darbikrash,

We only have our words, our screen names, and our avatars to relate to one another at this site. You and I have engaged in a few conversations over the last few years. Your moniker was always a mystery to me. At first, I read it like a pirate would see an economic crash from the lookout perch - "Dar be krash." That image stayed with me until yesterday, when I read your post. Now, I have an entirely different image in my mind.

You have an abundant vocabulary and you like to exercise it. There have been several times that I have to look up the words you've used - sometimes, because I haven't seen them before and sometimes because I want to capture the nuance that you intended. I appreciate your robust usage. Thanks.

I've also noticed that you rarely make definitive statements. This is a characteristic I've noted from people who are called in court as expert witnesses. They are judicious with the facts, quick to find faults, and sparing of opinions. From what I've seen, you exhibit all of these tendencies on this site.

That said, I find that you would make this admission quite intriguing:

Trust me, if the analysts wanted this to look just like the collapse, they could have done so with far less effort than trying to create an engineering benchmark.

I've had to perform enough forensic modeling to know that models can be manipulated to produce whatever results are desired. I also know enough to question any model out there. If I, as a reviewer of the output, don't understand all the implications, assumptions, granularity, tensors, etc. built into the model, I would hire a trusted source who does and can convey the intricacies in a common language. Of course, in that case, I wouldn't be the best expert witness.

Can you imagine any expert witness testifying in a court of law, under oath, about the output from a model that they didn't have the opportunity to review completely? If I were called to testify, I would state that I wasn't able to answer any questions related to the output and (when pressed) rattle off a litany of reasons. I can imagine that any reasonably competent attorney could easily sway a judge or jury that a non-disclosed model's findings were completely bogus.

And yet, that (in essence) is what NIST is asking the American Public to do. They have a model of the Building 7 collapse that they claim is an accurate simulation, but they won't release their model data. There is no way to verify the model or question the reasonableness of the assumptions. Does this strike you as odd? I find it damning.

darbikrash wrote:

I reviewed the video link Grover provided that shows a video comparison with the engineering simulation of the building collapse.

I found the critique of the NIST model to be inflammatory, and does not reflect an understanding of the principles and objectives of dynamic structural simulation.

I agree that the tone isn't conducive to collegial debate. I see the tone to be more or less a result of scorn and frustration. NIST has been asked to release the model data. They have refused. The short web page was written for a laymen's level of understanding. [Insert tone of ardent disgust] Do you really believe that the architects and professional structural engineers who are legally responsible for designing and building skyscrapers wouldn't understand a useful tool like dynamic structural simulation? Really??? [/disgust]

Grover

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darbikrash
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Posts: 573
First of all, thanks for the

First of all, thanks for the thoughtful replies to my post #26. The purpose of the post was to comment on the link, which I felt unfairly accused the analysis team of selection bias, and the author(s) clearly did not understand the objectives of computer simulation.

I have no idea if the cause of the collapse was due to the initial conditions represented by the explanation (and the model), or if was due to deliberately placed explosive charges. Presumably, the analysts were given initial conditions, and left to their own engineering judgment to establish test data and modeling methods using these inputs as a given.

I doubt very seriously if they were given the leeway to examine alternative collapse theories, such as has been proposed by critics. Such studies would be extremely expensive, and well, who is going to pay for this?

But the conclusion that because the animation does not precisely match the video and as such, indicates fraud and deception is incorrect, and I wished to make that point. It also indicates the commentators (in the link) do not have the slightest clue as to how to interpret simulation data.

I find that the more I know about engineering simulation and correlation of same to the empirical (and observable) the less prone I am to making definitive statements. I have yet to have an aerodynamicist give a plausible explanation of how a bumblebee can fly, yet to consider that we can explain with absolute certainty how every particle displaced in a building collapse will behave with absolute precision seems more than a bit ambitious. The more you think you know the more apparent it becomes just how much you don’t know.

 

You are absolutely right though, any competent review would in fact delve deeply into the input deck. Have you ever seen an input deck for LS-DYNA? Lots neatly aligned rows and columns (thousands of pages) of integers- and not much else. Unfortunately, other than asking the questions that you’ve asked, the only way to really dig deeply into validating this type of work product is to have a third party completely re-do the analysis, at significant cost. I also am not surprised that the input decks are not released to the general public, this work product is likely owned, at least in part, by for-hire engineering consultants who would have contractual ownership over the data set. But here I speculate.

 

This does not mean that the numerical input values could (and should) be released to the public, I’m not close enough to the controversy to know if they are available. But based on the (brief) summary report I found in less than 5 minutes and linked to in post 26, it should not be too hard to find.

 

Do you really believe that the architects and professional structural engineers who are legally responsible for designing and building skyscrapers wouldn't understand a useful tool like dynamic structural simulation? Really??? [/disgust]

As to the above comment, I think you would be very surprised how naive so-called professional architects and engineers are when it comes to understanding and interpreting computer models.

 

One last remark, although I am loathe to deflect any potential compliment-I must advise you that your conclusion as to the meaning behind my screen and avatar, are shall we say, somewhat off the mark.

 

But thanks anyway.

Grover's picture
Grover
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Levels of understanding

darbikrash,

I can drive a car, but not well enough to compete in a NAScar race. I've never used LS-DYNA, but I've used (and written) other engineering modeling software. I know that I could hire a consultant to provide assistance in interpreting results of LS-DYNA if need be. Negotiating the rights to the data would have been easy to do before commencing the work. I can't explain why NIST wouldn't want to own the data. Perhaps the consultant who analyzed the building owns the data but is contractually prohibited from revealing it. That would be a convenient mechanism to lock up the results.

You nailed the problem when you said:

I doubt very seriously if they were given the leeway to examine alternative collapse theories, such as has been proposed by critics. Such studies would be extremely expensive, and well, who is going to pay for this?

The controlled demolition theory was considered, but was dismissed early in the investigation. There is no possible way for explosive charges to be placed after the airplanes hit the towers. There wasn't enough time. The only way this could be an option is for explosives to be placed in the buildings prior to 9/11. Stage IV conspiracy (the highest level - Make It Happen On Purpose) is the only plausible explanation if explosives were the cause of the collapses.

The modelers were hired to find a possible mechanism that would explain the collapse. They knew the type, size, location, and connections of each structural component. They knew that diesel electric generators were present in 2 locations, and they knew that there was approximately 10,000 gallons of diesel for each generator. They had video to show how fires in the building progressed, and at least as much video as we've seen concerning the way the building collapsed. We don't know how many other significant known knowns they knew.

They could adjust any and all aspects of the model to achieve the purpose. They could play with furniture and file cabinet placement, but it had to be reasonable. If they needed a million pounds of weight, they had to explain how that got there in the first place. Temperature was the least controversial aspect to adjust. As you know, steel loses structural capacity rapidly as temperature increases above some point. The hotter the air in the immediate area and the longer the steel is exposed, the warmer the steel will become. At some point, it will lose strength and collapse will begin. (Let's ignore that this mechanism has not worked in any other steel frame buildings ... ever.)

I'm assuming that the version they released (we've seen visual models built from the time stamped data) was as close as they could get without torturing the limits of reasonableness beyond recognition. (Actually, it doesn't make sense for NIST not to release the data if the shadow of reasonableness existed. I'm speculating about this.) All they needed to do was find a possible solution that fit reasonably well. They didn't need to find the exact cause.

So, we've got a published result and video based on model data that isn't very close to what actually occurred. NIST won't release the model data. Are the assumptions and model parameters reasonable? We simply don't know. Just as the NIST modelers didn't need to find the exact cause of collapse to be successful, the AE911Truth argument doesn't need to be completely accurate at every granularity. Their goal is to get the data and analyze it. If someone who is knowledgeable (like you) objects and can whip up enough support from Americans (who frankly don't have the stomach to relive the horror again,) then the AE crowd can refine the request based on the objection.

You have convinced me that there is no way to know exactly what happened. The best we can do is find out what possibly happened. If the explanation requires unrealistic situations in order to "work," they haven't found an explanation. Also, if the collapse of Building 7 were the only questionable event that occurred on 9/11, there wouldn't be the level of controversy that we have. If the Commission were able to provide a reasonable explanation for Bldg 7, there are still many more questions that were glossed over. This is just the most egregious.

Grover

PS - Your last post was the best I ever read from you. Constructive and very informative. Thanks. I'll keep searching for meaning in your screen name.

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