One Last Look At The Real Economy Before It Implodes Part 6 of 6
by Brandon Smith
(Editor’s Note: Here is the final installment.)
One Last Look At The Real Economy Before It Implodes Part 6 of 6
by Brandon Smith
(Editor’s Note: Here is the final installment.)
One Last Look At The Real Economy Before It Implodes – Part 5 of 6
by Brandon Smith
(Editor’s Note: Brandon surprised me! He has two more installments of this series! Here is Number Five. I do not agree with all of Brandon’s conclusions, but he does understand that the American economy…as well as the US Government…is on a headlong rush to the cliff’s edge.)
By Russell D. Longcore
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I am happy…but not for any reason you may think. Happiness depends upon your perspective and ultimate goals. Cause and effect issues here. If an unexpected event causes other events to happen that move you toward your ultimate goals, it’s good. More later.
Mr. Obama will be with us for another four years. Deal with it.
The Republican Party allowed Willard “Mitt” Romney to buy his way onto the Presidential ticket. And that is as it should be. As 20th Century humorist Will Rogers said:
“We have the best politicians money can buy.”
“The short memory of voters is what keeps our politicians in office.”
“Be thankful we’re not getting all the government we’re paying for.”
CONGRESS has made the rules whereby campaigns are run nowadays. Therefore, when smart guys figure out how to game the system, they should do it. Mitt is a smart guy.
No one in America has fronted the ridiculous notion that Mitt was the best man that the Republicans could find to be the presidential candidate. He just outspent and outlasted the others. And his campaign staff, in league with the Republican National Committee, blackballed Ron Paul.
No one in America has fronted the ridiculous notion that Americans rejected Mitt as president because they rejected his core beliefs. That is because nobody knows what Romney’s core beliefs are. He was the Chameleon Candidate. Reminded me of the 80s hit record “My Obsession” by Animotion. In the chorus, the singer sings, “who do you want me to be to make you sleep with me?” Mitt would be anything you needed to get elected. Remember he ran for Senate in 1994. He’s been doing anything he can to get elected to some office for 18 years. He got the governorship in 2002, only serving one term.
The Republicans made a mildly compelling case that America should fire Mr. Obama. However, they did not make a compelling case that America should hire Mr. Romney.
Think about the HUGE thing that Romney AVOIDED in his campaign…Obamacare. Had he solemnly vowed to abolish Obamacare as President, he probably would have won. Even though he invented Romneycare in Massachusetts, he could have made a convincing case that what works on a state level does not translate to 315 million people…especially when Washington runs it. Or, if his ego wasn’t so enormous, he could have repudiated it.
Think about Mr. Obama’s own words about his “one-term” presidency. Mitt should have beat Barry about the head and shoulders with that for months. But nary a word was heard.
Think about the debates. Romney pulled his punches over and over, refusing to go for the jugular on issues like the Benghazi Embassy deaths.
In Texas Hold-’em parlance…Mitt was not “all in.” He was not willing to get some blood on his hands, so to speak.
American politics is a blood sport. Republicans are not willing to play rough. In NASCAR there is a saying…”Rubbin’ is Racin’.” A NASCAR driver has to be willing to exchange a little paint with other cars or he will not win. But Republicans are not willing to get mean or use a little saucy language. They are not willing to get up in somebody’s face and raise their voices. Give me a candidate who would tell a reporter to “fuck off’ when he asked a stupid question. Give me a candidate who would use some four-letter words in a speech. And give me a candidate who can speak without a teleprompter…a candidate who had such deeply-ingrained core beliefs that he could defend them on the fly. Remember Ross Perot? There was a guy who didn’t put up with a bunch of crap. Scrappy little dude that cost George HW Bush the race against Bill Clinton.
Democrats are always willing to get down in the mud and mix it up. I’m not saying it’s right…just saying that if you know that the rules of the game are that there really are no rules, the one who wants it most usually wins. Barry was fighting for his political legacy and his place in history. Mitt Romney was running to enhance his resume. Who wanted it most?
But keep in mind that Romney is the guy that got beat by McCain who got beat by Obama in 2008. He got the Runner-up trophy in 2008. This year, he gets the Miss Congeniality tiara. Romney is only the best that the oligarchy could find to do their bidding. It is over for Mr. Romney and his quest for the White House.
Apparently, he is not The One.
The big joke is that The One doesn’t exist. Obama is not The One. He is merely The Current One.
Both men are textbook Sociopaths.
So, what are you going to do over the next four years? You may not be happy, but are you going to just bitch about it, or are you going to take control of your own life? Don’t you think that NOW is a good time to seriously consider secession?
In military operations, there is a strategy known as the “OODA loop.” It is one of those famous military acronyms like AWOL, FUBAR and SNAFU (Google them). OODA is Observe, Orient, Decide and Act.
Let us Observe:
• The collapse of the American Dollar the American economy, and subsequently the collapse of the world economic system that is built upon the Dollar, will continue apace. But the pace might quicken. I do not think that Romney would have slowed it, even though he said he would. But it will certainly move ahead now.
• Washington will continue to devour privacy and individual liberties a bite at a time. Or, now that Obama has nothing to lose, the bites might get bigger.
• The Federal Reserve will continue with QEIII in their clueless desperation, intending to kick the can down the road just a little farther on the calendar.
• The Eurozone will continue its slow-motion collapse.
• Washington will continue to foment a shooting war in the Middle East.
• China will continue to very quietly produce and buy gold now that they have the world’s largest gold reserves.
• China will continue to very quietly go around the world and negotiate shrewd trade deals with other nations.
• China, Brazil, Russia, India and South Africa will continue to work toward a new world reserve currency, with China’s money as lead dog.
• China will continue to offer financing to those other nations in the renminbi, their currency. The other nations will gladly accept it.
• When the American economy collapses, and hyperinflation rages, there will be widespread chaos and blood in the streets of most cities.
Then comes Orient:
Orientation usually is done based upon our cultural traditions and experiences… our preconceptions and world view. Orientation is the pair of glasses we wear and through which we see our world. Only this time, very little of our old world view will be true any more. Orientation will have been stood on its head. We must develop a new, functional world view seemingly overnight. Most will not be up to the task. Compare this to the Pentagon. They are still fighting the last big war. But warfare has gone into its Fourth Generation orientation. The days of carriers, battleships and submarines are past. They are stuck in the Third Generation.
Secession serves as a perfect new world view…if you can call it “new.”
Next is Decide:
The best player in an OODA loop moves at a faster tempo than his adversaries, thereby getting into their OODA loop and f**king it up. It creates confusion and a perception of unpredictability about the best player. It also fits perfectly in the strategies proffered by Sun Tzu in the legendary book The Art of War.
Once you see the inevitable progression of events that is going to happen, and come to realize that Secession is the only way to restore individual liberty and property rights to North America, a decision should be made whether or not to participate. Here is a thought…at some point, crossing the Mississippi River westbound may be a problem. You might want to do that before TSHTF. Thought 2: if you want to expatriate, you might want to do that before TSHTF.
Action involves testing what works and what doesn’t. Once you act, you begin the OODA loop all over again. Secession action might be moving your family to a secession-friendly state and getting involved in a secessionist group. Expatriation takes a little more planning.
Think. Use your brain. Do not let anyone tell you how to think. Question ALL authority. Free Your Mind.
Secession is the only hope for humanity. Who will be first?
DumpDC. Six Letters That Will Change History.
© Copyright 2012, Russell D. Longcore. Permission to reprint in whole or in part is gladly granted, provided full credit is given.
By Russell D. Longcore
This has been a news-filled week!
To view this article as an entertaining animated video, click below.
The Nation I: Breitbart’s revenge: On Wednesday night on the Sean Hannity Show on Fox, the Obama video footage was shown. It shows Barry on the Harvard University campus, speaking to a crowd of students, asking the students to “open up your hearts and minds to Professor Derek A. Bell.” Who is that? Bell…now deceased…was the first tenured black professor at Harvard, and was a Professor of Law. He was the leading American proponent of the Critical Race Theory, which basically holds that white people have systematically oppressed blacks and Latinos over centuries. His writings moved radical thought and led to the recent aberration of criminal law into “hate speech” and “hate crimes.” That’s YOUR president, folks. Derek Bell’s philosophy was integral to Obama’s “hope and change” and “fundamental transformation of America.”
The Nation II: On Super Tuesday, Romney won six of nine contests. There was outrageous vote counting fraud, just like in every other caucus or primary. But our boy Ron Paul came in second in Virginia and North Dakota. One question that comes to my mind is: What is Ron Paul going to do with all the hearts and minds he has won during this pre-election circus? There are tens of thousands of civilians and soldiers that did not vote in the primaries and caucuses, yet have been brought over to what I call “retro-conservatism.” Watch for an article about this topic at DumpDC next week. I have a suggestion.
The Nation III: The Federal Reserve now owns more United States Treasury bonds (debt) than China. Think about what a mega-Ponzi scheme this is. The very entity that prints greenback dollars…creating money from paper and ink…prints up a few hundred billion and hands them to the US Treasury to buy debt, thereby propping up the government. It’s the highest form of counterfeiting ever witnessed in human history. The tragic part of this story is that the Fed cannot stop printing and buying. If other nations around the planet want to dump DC debt, the Fed will be forced to buy it so that the bond market does not crash. Get ready for hyperinflation, ladies and gentlemen. It’s coming to a wallet near you.
International I: What would a Nobel Peace Prize winner do in the Middle East? Especially if he were President of the USA and serious about avoiding a war with Iran? He would call a summit between himself, PM Bibi Netanyahu of Israel, Iman Khamanei and President Ahmedinajad of Iran in a neutral place like Basel, Switzerland. At that summit, he would broker a peace agreement. Part of that peace agreement would be to look Bibi in the eye and say, “On the day that you make any military moves against Iran in any manner, I will cancel ALL financial and military aid of every kind from the USA to Israel…forever. Pre-emptive air strikes are not defense…they are offense. If you still choose to make war against Iran, I will tear up all treaties with Israel and you are on your own.” That is what a Peace Prize winner who actually wanted to live up to the Prize would do.
International II: Quick quiz: Which nation has the third largest population of Jews on planet Earth? The US is #1. Israel is #2. Give up? It’s Iran. If Iran was such a threat to Israel, why do the Jews in Iran live in peace with no persecution? There has been a Jewish community in Iran since the 6th century…BC!! Oh…by the way. If Israel starts raining bombs down on Iran, it will likely be killing its own Jewish people who live there. Collateral damage??
International III: Both Germany and Switzerland have begun the process of bringing their gold reserves back to their own soil. Where do you think they have been keeping their gold? In the basement of the Federal Reserve Bank of New York. But who knows if the gold is actually still there? By the way…Switzerland has always had this legendary reputation for secrecy and security for money. Why the hell would they send their sovereign gold to America? This is going to get interesting!
International IV: The Financial Times ran a story this week stating that China has offered loans to the other BRIC nations…Brazil, Russia and India…denominated in the renminbi, China’s money. This is a HUGE move away from the world reserve currency, the US Dollar. The four BRIC nations represent the strongest economies on the planet, and almost 3 Billion people out of the 7 Billion on earth. Dear readers, when the dollar is not reserve anymore, look for massive hyperinflation. We will make Zimbabwe’s experience look like kindergarten.
International V: Vladimir Putin was elected President of Russia this week for a six-year term. Expect little to change, since Putin was effectively running the country while he was Prime Minister. But he will preside over the fall of the United States. Ironic, isn’t it? In 1989, the Soviet Union imploded from many of the same things infecting America right now…socialism being one of them. Planned economies and imperialism don’t work on either side of the Atlantic. 23 years later, it’s America’s turn to implode. Only this time…we’re going to show ‘em how to do it RIGHT. Remember…the Ruble wasn’t the world reserve currency when the USSR tanked.
Shameless Plug: Nearly everyone over 16 buys insurance. But is it a good idea to switch companies? Are any of the TV commercials by insurance companies telling the truth about switching? How often should you shop for new coverage and lower rates? Does loyalty to one particular company matter anymore? How do you find the best value in insurance? A new way to shop is online. But low price is not everything. Learn to think like an insurance adjuster, not like an insurance agent. To learn more and get FREE quotes online, go to: www.InsuranceQuoteHQ.com
Business: We read today that certain executives of MF Global, currently in bankruptcy, are actually going to get bonuses this year. The Court actually approved the bonuses, said to be in the millions. Remember that MF Global embezzled hundreds of millions from their own customers in wildly risky commodities investments. Men who should be in prison are getting bonuses. This is what is happening in high finance in 2012.
Economy I: The number of actual new unemployment claims under state programs, unadjusted, totaled 355,754 in the week ending March 3rd, a 31,000-claim increase over the week previous. The real unemployment rate, calculated by ShadowStats.com, a highly reliable DC Watchdog, is above 22% overall, and much higher in pockets of the country like Detroit. Looking for a job? North Dakota cannot find enough people to fill all the positions available. True unemployment in North Dakota is around 2%, which is statistically zero.
Economy II: Dr. Gary North’s articles can be found very regularly at LewRockwell.com. He has written a new book about money entitled “Banks, Bubbles and Busts.” If you click on that link, you can get a free copy. Do it. Do it NOW.
Sports: Peyton Manning seems to have become addicted to adoration. Why else would a superstar NFL quarterback who has had FOUR neck surgeries in the last TWO YEARS want to continue to play in the NFL? Manning has been paid perhaps a hundred millions dollars over his football career. Can you really imagine that his wife wants him to risk becoming a quadriplegic by playing again? Does anyone think that the opposing defensive squads would treat him softly so he doesn’t get another neck owwie? Apparently the owner of the Indianapolis Colts still has some common sense, and has placed Manning on waivers. Peyton…retire already. Don’t become pathetic…or become Christopher Reeve. You are magic in front of a TV camera. Take a color commentator’s job with a network for a couple million a year and relax. You’ll never buy a drink in another bar for the rest of your life.
Entertainment: The Hunger Games movie opens March 23rd at a theater near you. Based upon the books by Suzanne Collins, the movie is a loose update to the theme in the 1987 Schwartzenegger movie, ”Running Man.” In a post-collapse America, the nations goes buggy over the annual Hunger Games, in which only one contestant survives. The main character is a 16-year-old girl, Katniss Everdeen, who wins. (Spoiler Alert) I hear the film has a good anti-government message, so I’ll be seeing it first week it’s open.
DumpDC. Six Letters That Can Change History.
© Copyright 2012, Russell D. Longcore. Permission to reprint in whole or in part is gladly granted, provided full credit is given.
By Russell D. Longcore
The time for Secession is coming to your neighborhood very soon. Read on.
The Nation: The theater production called the Iowa Caucuses is over, with Romney winning by an eyelash over Rick “No Chance in Hell” Santorum. The vote tabulation was done in an undisclosed location, not in easy view of voters and vote watchers. Even though I suspect massive vote fraud, Ron Paul still got over 21%. The neocon leadership had been openly announcing for two weeks that they would not allow Ron Paul to win Iowa. They weren’t lying.
The Nation II: The right third party candidate could win this election. And I submit that the right candidate would be Ron Paul. It would be even better if he chose his son as his running mate, Senator Rand Paul. I also submit that any third party that does not offer a substantive anti-Washington choice would be a waste of time and money, and would likely place Obama back in the White House. But I believe that Ron Paul as a third party choice could beat both Republicans and Democrats. There is only one man that is an actual conservative, obey the Constitution, shrink the Federal government candidate available. Ron Paul. I believe that if a Ron Paul/Rand Paul candidacy emerged, they could take 35% in November 2012. The biggest problem is getting on the ballots. They could go write-in, but that’s unlikely. The state-to-state election rules have been written expressly to keep viable candidates out of the races. The other big challenge is the electoral college. Paul would have to take some pretty big states to win.
The Nation III: My prediction of the presidential election in November 2012 is that no matter which candidate the Republican Party chooses, the Republicans will win in an astonishing landslide. Barack Obama may not win in a single state. This will be the widest margin of victory in American history. In addition, a wave of Republicans will win in Congressional and Senate races. But don’t think for a moment that this will divert the American train from the economic derailment ahead. Just a different crew on the train when it crashes.
International: The insane nations of the West continue to threaten Iran with economic sanctions to punish Iran for having a nuclear fuel program. Of course, it’s OK for thirty other nations to have nuclear power reactors, and OK for 10 nations to already have nuclear weapons. Meanwhile, Iran sells the West oil and natural gas. All Iran must do is to stop delivering to the West and sell it to China. Oil prices will quickly hit $400 per barrel and a gallon of gasoline will cost $15-$20.
International II: A Japanese restauranteur paid over $736,000 for ONE single Blue Fin Tuna caught off the Japanese coast this week. This 592 pound fish, once cut up, could cost 5,000 Yen per slice.
Business: Ann Barnhardt posted articles this week that showed how the MF Global debacle is beginning to cause huge waves in the commodities markets. Here’s the problem. A grain farmer sells his harvest to a grain dealer who keeps it in a grain storage facility, like a grain elevator. The farmer gets paid as the grain sells over time. And the grain broker sells or buys futures contracts, which are nothing more than bets on what prices will be like in the future. If the broker is right, he makes money. But if he’s wrong, he’s got to settle a margin call. Recently, futures brokers are finding it tough to find those who will play the game. And if a broker goes bankrupt, the farmer cannot just back his truck up to the elevator door and take back his harvest. The stored grain becomes assets of the broker to be liquidated. The farmer stands at the back of the line of creditors, hold his warehouse receipts and futures contracts in one hand and his balls in the other.
MF Global was one gigantic futures bet that they lost. And MF was using its own customers’ segregated funds to bet with, which is worthy of jail time or death.
The commodities marketplace is so leveraged that it will not be able to meet margin calls (or collateral calls) if futures contracts implode. This is yet another financial market that is likely to collapse, and with its collapse, could trigger the complete economic collapse of the US economy and the Dollar. It is inevitable, friends. When the system is built on debt, fiat money and fractional reserve banking, those three things will take it down. Live by the sword, die by the sword.
Business II: More about MF Global. The Feds have turned the bankruptcy proceedings upside down, and set the stage for the confiscation of YOUR money in bank accounts, retirement accounts, and stock market accounts. In the MF bankruptcy, the Feds are placing the other big banks at the front of the line of creditors. The customers of MF who had their money invested through MF, and in escrow accounts, are not even being allowed to stand in line. That means the customer’s money is going to be used as assets to pay off the other big financial institutions, not the assets of the corporation. This sets a precedent previously unknown in Bankruptcy law. That also means that when the other big financial institutions fail, depositors and investors will have their assets confiscated to pay off other people’s debts. If you have paper assets in any financial instrument whatsoever, you now have a new market risk. That is the market risk of no Rule of Law. The very government agencies that you would run to for protection are now the agencies dedicated to screwing you. You will have no recourse. Your only option is to get your assets changed from paper to hard currency and take delivery at home or at a local depository.
Shameless Plug: Heard about SOPA yet? The Stop Online Piracy Act purports to protect intellectual property on the Internet, but critics say the bill will give the entertainment industry the power to censor your website if THEY deem that you are infringing somebody’s copyright. They could actually block your domain name or Internet Protocol (IP) address. Don’t expect your Congressman to read this bill. They don’t read bills anymore. Bob Parsons, Founder of GoDaddy.com, took an early position in favor of SOPA. But the “free market” spoke to him, and he pulled his support. We here at BigGenieDomains.com are completely opposed to SOPA, and we know that the law is unconstitutional. Come see us for all your domain registry and webhosting needs.
Economy: Friday night’s network news broadcasts were all a dither with the announcement that the unemployment rate had dropped to 8.5% just since last month. What they did not speak about is the 372,000 NEW unemployment claims in the last seven days, or the fact that the new unemployment claims numbers were above 400,000 WEEKLY for the last six months. Folks, if you do not see how stupid Washington thinks YOU ARE, you’re lying to yourself. These monthly unemployment numbers are entirely fabricated by this Administration. Remember that when an unemployed person’s weekly benefits expire, Washington stops counting them in the numbers. They also do not count persons who are unemployed but have part-time jobs. The REAL unemployment rate is above 18% nationally, and in certain places like Detroit, is FAR HIGHER.
Sports: I predict that the 2012 Superbowl will be the New Orleans Saints against the Green Bay Packers, and the Saints will win. But for this weekend…playoffs, Baby.
Entertainment: This weekend, I am filling out my final ballot for the Grammy Awards. Your editor has recorded 17 CDs on the Telarc label with the Atlanta Symphony Orchestra and Chorus. Five of those CDs have won Grammy Awards. I am a First Tenor in the Chorus. I joined the National Academy of Recording Arts and Sciences in 1998 after winning the first Grammy and have been voting for the Grammy Awards ever since. Some hobby, eh?
DumpDC. Six Letters That Can Change History.
© Copyright 2011, Russell D. Longcore. Permission to reprint in whole or in part is gladly granted, provided full credit is given.
by Michael S. Rozeff
A “run” is a mass withdrawal of cash funds from a borrower. We are in the midst of a continuing worldwide credit crisis, punctuated by “runs” of varying prominence and publicity.
These runs are rational, not panics and not due to quirks of psychology. They occur when investors realize that their funds are endangered in an institution. They try to get them out before they lose them.
The danger comes when the institution no longer is getting cash inflows in sufficient amounts to pay off all its obligations. In businesses, this comes about through sour investments. In governments, it comes about through wasteful spending that fails to be recovered in tax revenues.
In the year 2008, we saw runs on major Wall Street investment banks, money market mutual funds, domestic banks and foreign banks. Now we are seeing runs on governments in Europe such as Greece and Portugal. Sovereign debts are being sold down hard as investors flee from them, converting their bonds into currency.
Three years from the 2008 credit crisis, the Federal Reserve is still providing massive credit to U.S. banks. This props them up against bank runs. Every so often, the FED extends credit to foreign central banks to prop them up so that they can prop up their financial institutions. These are stopgaps. All of this propping up depends on faith in one currency: the U.S. dollar.
Runs on various institutions often show up as a flight into short-term U.S. treasuries, i.e, the dollar. This is because the treasury market is deep.
Since the dollar is also a credit instrument, it is subject to credit risk. What happens when trust in the dollar drops sharply? What happens to all these financial institutions being propped up by creating dollars when trust in the dollar fails? That is when the financial system cracks wide open. That is when governments will be tempted to freeze funds in banks and prevent withdrawals the way that Argentina did. That is when the FED will be tempted to guarantee almost any institution against cash withdrawals, but when such a guarantee will be ignored. That is when gold will soar in price against the dollar and all other fiat currencies.
I am describing a run on the United States government. This will be a withdrawal of cash financing from the U.S. government. This is the ultimate credit crisis upheaval. This will be accompanied by mass social unrest and political reorganization. Stock and bond prices will fall sharply. The S & P 500 will lose at least 60 percent. Government bonds will yield at least 10 percent. This event is foreseeable. It is also avoidable, but not without much pain and travail. Hence, although foreseeable and avoidable, it may still occur.
Whether we like it or not, we are all currency speculators now. This is hardly a burden we can relish.
Whether or not a run on the United States government occurs is in the hands of its creditors. It depends on their trust in the dollar. Their trust depends on their understanding of America’s political economy.
Anyone who looks objectively at actions being taken by the U.S. government to bolster its credit or cause its credit to deteriorate has to reach a very negative conclusion. Why? Simply because the country’s leadership has been taking it downhill for decades on end. America is like a bright and fresh red apple in which rotting has been proceeding inexorably. The apple still has some edible portions but large parts of it are gone. The seeds need to be planted and a new tree grown.
Dagong Global Credit Ratings Co. Has 15 categories of ratings of sovereign debt (AAA, AA+, AA, AA-, A+, A, A-, BBB, BB+, BB, BB-, B+, B, B-, CCC.) The U.S. has a rating of A+. Dagong lowered it from AA- to A+ in November 2010 after the FED announced a new QE program.
In a remarkable statement made in mid-June 2011, Dagong’s president said “In our opinion, the United States has already been defaulting.” Dagong has spent $1 million to enter the U.S. market, but the SEC has so far turned it down.
The debate over the debt ceiling, like all Washington debates, is throwing off negative signals about U.S. credit. Obama is the key person. He is airing various proposals in public in press conferences. If he were serious about any of them, he’d be working closely with key Congressmen in private behind closed doors. He would not be trying to box in Republicans or embarrass them in public or score political points. He would have been working on controlling the budget long before this. He would have shown leadership on this long ago. One does not place multi-trillion dollar proposals on the table and expect them to be taken seriously, debated and acted upon within 2 or 3 weeks. Obama’s credibility on serious budget control is nil. The Republicans and even members of his own party have little reason to trust him when he paints himself as on a high road and willing to compromise. Any compromise will be on his terms to further his agenda. The debate, such as it is, can’t be taken seriously.
Did the near-miss of the 2008 credit crisis prod the U.S. government into corrective action? Sure, bailouts and wars and deficits and the absorption of Fannie Mae. The U.S. government has had three years to enact measures to revive the economy, clean out the bad debts in the banking system, and get the U.S. budget under control. Make that thirty years or more. At this moment, I can’t think of one good step it has taken. Look for yourself. Do I see healthcare in there as the centerpiece along with Wall Street reform? Don’t make me laugh.
The U.S. government has no credibility in terms of restoring America. The government is living off its past reputation, like a once great entertainer grown tired and going through the motions.
Under these conditions, trust in the dollar and all the other fiat currencies that are linked to the dollar will continue downwards.
Unless there is a change in these conditions, someday there will be a run on the United States government. I see nothing that suggests a change in these conditions.
Michael S. Rozeff is a retired Professor of Finance living in East Amherst, New York. He is the author of the free e-book Essays on American Empire: Liberty vs. Domination and the free e-book The U.S. Constitution and Money: Corruption and Decline.
Copyright © 2011 by LewRockwell.com.
courtesy The National Inflation Association
(Editor’s Note: We were also stunned when Barry (The One) dipped into the Strategic Oil Reserve for no apparent reason, at a time when world oil prices were dropping. Clearly, the US President has no clue whatsoever what supply and demand means. But he is certainly a Marxist, since he believes in government intrusion into the market. God help the USA when idiots are in the highest offices.)
NIA is very disturbed by President Obama’s decision to sell off oil from the U.S. emergency oil reserve, in an attempt to drive down oil prices. One week ago it was announced that the U.S. and other oil-consuming nations that are a part of the International Energy Agency (IEA) will begin releasing 60 million barrels of oil from their reserves, with 30 million barrels coming from the U.S. government-owned reserve. They hoped that by flooding the market with excess supply, they would cause an artificial forced liquidation of oil futures contract holders who bought using leverage.
The U.S. Strategic Petroleum Reserve is the world’s largest government-owned stockpile of emergency crude oil reserves and is maintained by the U.S. Department of Energy (DOE). It holds 727 million barrels of oil reserves at four different sites along the Gulf of Mexico. Considering that the U.S. is releasing 30 million barrels of oil from these reserves, we are reducing the size of our emergency reserve by 4.1%.
After Obama’s decision was announced on June 22nd, crude oil prices originally dipped as much as $5.71 per barrel from $95.41 per barrel down to a low of $89.70 per barrel on June 23rd. Oil prices declined slightly more during the next two trading days, reaching a low this past Monday of $89.61 per barrel and closing Monday at $90.61 per barrel. However, oil prices have surged $4.81 during the past three days and are currently $95.42 per barrel. Oil has recovered the entire dip that came after Obama’s decision was announced and is now a penny higher than before his announcement. Unlike 2008 when most oil futures contract holders were hedge funds using leverage in an attempt to make short-term profits, today most oil investors are much stronger hands who bought with cash, because the world is now flooded with dollars thanks to Federal Reserve Chairman Ben Bernanke.
It certainly wasn’t worth jeopardizing the homeland security of this country by reducing our emergency oil reserve by 4.1%, just to see a $4 reduction in oil prices that lasted for only 3 days. If the White House had any faith whatsoever in Bernanke’s assertion that rising oil prices are only transitory, there would be no reason to release 30 million barrels of oil from our emergency reserve. The rising oil prices we have experienced so far is far from an emergency. The emergency will come soon when the world turns its back on the U.S. dollar and we see a rapid decline in its purchasing power. The emergency will be here when the U.S. can no longer import oil from foreigners at any price due to hyperinflation, and we are forced to live with only the oil produced in this country.
At any time that they choose, China has the power to set off in our country the economic equivalent of a nuclear bomb. China can at any time announce that they are no longer going to buy U.S. treasuries, but they are going to take their $2 trillion in U.S. dollar reserves and use them to buy gold. The price of gold would double overnight, with the U.S. dollar immediately losing half of its purchasing power. The yuan would then skyrocket in purchasing power, automatically giving China the world’s largest economy with the Chinese GDP soaring past U.S. GDP. There would be a massive rush out of the U.S. dollar with our trading partners unwilling to export any oil to us.
The U.S. currently produces only 5.5 million barrels of oil per day, but consumes about 19.3 million barrels of oil per day, with total input into refineries of 14.7 million barrels of oil per day. This means the U.S. currently needs to import 9.2 million barrels of oil per day. U.S. commercial crude oil stockpiles are currently 359.5 million barrels or enough to last for 24 days without any domestic production. In the event of hyperinflation where the U.S. is cut off from oil imports, if we were forced to live off of our own oil production of 5.5 million barrels of oil per day, our commercial stockpiles would be gone in 39 days.
Without an emergency oil reserve, in the event of a major oil shortage due to hyperinflation, after a period of just 39 days, farmers won’t have enough oil to produce food, manufacturing plants won’t have enough oil to process and package food, and logistics companies won’t have enough oil to get finished food products into our supermarkets. This is why we have an emergency oil reserve, to prevent store shelves from becoming empty in our supermarkets due to a fuel shortage.
It takes 13 days for oil from our emergency reserve to begin entering the market and once it does, the most it can add to the market on a daily basis is 4.4 million barrels of oil. Therefore, in a crisis we must first use only our commercial stockpiles for 13 days, which would cause our commercial reserve to decline down to 239.9 million barrels of oil. Beginning on the 14th day of a crisis, 4.4 million barrels of oil per day can come into the market from our emergency reserve with 4.8 million barrels of oil per day entering the market from our commercial reserve.
After 50 additional days, our commercial reserve will be depleted and all that will be left is 507 million barrels of oil in our emergency reserve. That will give us 115 more days where we can withdraw 4.4 million barrels of oil per day, but the U.S. will be forced to reduce its daily oil consumption by 33% during those 115 days. This is based off of an emergency reserve of 727 million barrels of oil. With Obama this month prematurely releasing 30 million barrels of oil from our emergency reserve, we will actually only have 108 days where the U.S. will be able to consume 2/3 of its normal oil consumption, after 63 days of full oil consumption.
The solution to high oil prices is not more government intervention, but is less government interference in the free market. Instead of trying to manipulate oil prices down using artificial methods that will only last temporarily, the U.S. government should look at the root cause of rising oil prices. Oil is rising due to the U.S. government’s deficit spending and the Federal Reserve’s willingness to monetize our deficits and debts. If they want to see lower oil prices, the government should start out by eliminating the DOE. The DOE was created in 1977 to make the U.S. less dependent on oil imports. In 1977, we imported 44% of the oil used in U.S. refineries. Today, we import 63% of the oil used in U.S. refineries. Eliminating the DOE would save this country $27 billion annually.
Priced in terms of real money (gold), oil prices haven’t been rising at all. The Federal Reserve’s QE2, in which it printed $600 billion out of thin air, has created artificial demand for oil. If it wasn’t for the Federal Reserve working tirelessly trying to prevent a much needed recession, Americans would be cutting back on oil consumption and oil prices would be declining. If the free market was allowed to operate, falling oil prices would make it easier for Americans to live with the real unemployment rate currently at 22.3%.
It is important to spread the word about NIA to as many people as possible, as quickly as possible, if you want America to survive hyperinflation. Please tell everybody you know to become members of NIA for free immediately at: http://inflation.us
TEOTW Is Foolishness – TEOTWAWKI Will Happen Soon
by Russell D. Longcore
The world media was all abuzz last weekend with the prediction of an event known by evangelical Christians as “The Rapture.” Seems a radio preacher named Harold Camping, head of Family Radio International in Oakland, California (what a surprise…California) made a prediction that Jesus Christ would descend from Heaven on May 21, 2011 and call all Christians…dead or alive…up into the sky to meet him, then going from there on the speed-of-light express directly to Heaven. This prediction is based on various Scriptural references to this event, most notably I Thessalonians 4:17, although most biblical scholars agree that the date of the event is unknown. The term “Rapture” is not found in the Bible, but is a term attributed to 18th century American Puritan preacher Cotton Mather. It is based upon the Latin word “rapio,” which means “to take up.”
Can you blame the media, though? I mean, throw the dice on this one. What if the guy had been right? The video footage would have been the most remarkable footage in the history of mankind. Billions of humans disappearing into the sky in an instant? And all of those billions simply disappearing would have caused complete chaos on earth for those who remained earth-bound…”Left Behind,” like the series of Christian novels by Tim LaHaye outlined. News stories ad infinitum!
But Mr. Camping was mistaken once again. No, this is not his first time making this prediction. Still, it was very entertaining while it lasted.
Let’s drop back a little and discuss The End of the World.
In previous articles, I have written about “connotation words.” They are words with an emotional association in addition to the literal meaning of the word. In today’s world there are many words and phrases for which the literal meaning has been lost and only the emotional association remains. Examples? How about love, liberty, freedom, conservative, liberal, racist, faith, belief, Christ? All emotionally charged, yet their meaning is subject to private interpretation. Also consider the word “nigger.” There’s a word so charged with emotion that white people are deathly afraid of using it, replacing it with “n word.” Of course blacks call each other “nigger” all the time. Try watching a black comedian do a standup routine and play a drinking game while you watch. Do a shot every time the comic says “nigger.” You’ll be passed out before he finishes his routine.
But I digress…
The phrase “The End of the World” is just such a connotation phrase. No one ever seems to define it. The term “End of Days” is used interchangeably. But whatever they mean, they do not mean exactly what they say. The end of days would literally mean that time stood still, the earth stopped spinning on its axis and there were no more days. No one believes that will happen. Even if Harold Camping would have been right, the world would not have ended. Even the Mayan predictions of the “end of the world” do not include the destruction of the earth in 2012.
So what is TEOTWAWKI…the end of the world as we know it??
Here is my explanation, and no supernatural event need happen for the end of the world as we know it to occur. Hang with me, this might take awhile.
This really should be known as “The End Of The Global Super Bubble.” Issuing counterfeit money in conjunction with fractional reserve banking created a super bubble that has distorted nearly every human activity worldwide. And every time throughout history that a government has issued counterfeit money, it has created a bubble that eventually bursts. Seems human beings don’t learn from the past.
All of the nations of the earth have conspired together over the last 70-plus years to use counterfeit money and to inflate their currencies. They have chosen one particular nation’s money as the world reserve currency…the money they use to settle debts between nations. That nation chosen for reserve currency status is the United States of America. In fact, America kind of chose itself. After WWII, America was about the only economy not left in tatters. Great Britain, whose Pound Sterling was formerly the world reserve currency, had been pounded to dust. And at that time, the Dollar was backed by gold.
No nation’s currency is backed by gold now. ALL nations have printed fiat money. The world economy of late has been entirely debt-driven. Between the ever-growing worldwide public debt and the steady inflation of currencies fueled by that public debt, money is becoming more and more worthless. And in a few locations, the money actually completely failed. Remember Weimar Germany, Argentina and Zimbabwe? Their currencies became entirely worthless, and they experienced an “end of the world” in their nations.
When the Confederates States of America was founded in 1861, the Confederate money was entirely based on debt instruments, as the Confederacy sold bonds to raise capital. Most of the gold the South could lay their hands on went to Europe to buy war materiel. As the war progressed, the Confederacy issued more and more paper money. Confidence in the money waned and the dates of redemption on the bonds were extended further into the future. By the end of the war, Confederate money was already worthless. So this is the perfect example of secession that failed because the seceding states got money creation all wrong.
The USA’s dollar cannot continue much longer as world reserve currency. This simply means that of all the criminal nations of the earth that have stolen from the population of the earth, the USA’s level of theft has been the most egregious. Some nations have stolen from just their own people, but the USA has robbed everyone. Washington has borrowed trillions of dollars that it can never repay. Combined with a central bank that has printed additional trillions of dollars with no hard value behind it, the dollar’s value is rapidly eroding. So, in a world where many nations hold US Treasury bonds, those nations face the real possibility that they will either be repaid in dollars of drastically diminished purchasing power, or simply left holding Treasury bonds of no value whatever. That is what’s known as “monetizing the debt.”
There is talk worldwide of replacing the Dollar as reserve currency. China’s Yuan is the most likely candidate. China’s economy sits in the catbird seat, much like the US enjoyed after WWII. When the American Dollar collapses, China’s economy is so vibrant…and China’s government is so robust…that it will be able to absorb a complete American collapse in which Washington defaults on 100% of its debt. But most other nations will suffer greatly. Let’s turn our attention now to the suffering that WILL occur after the collapse of the US Dollar.
When Zimbabwe-like hyperinflation occurs, DC will revalue the currency. The Federal Government will have a redemption period, in which you can bring your old Federal Reserve notes to the bank to receive the new money. After that period, your old money will be entirely worthless. It may add a zero, or two zeroes, or six. Two zeroes would mean that your ten dollar bill will only be worth ten cents. To buy a $2.00 loaf of bread you would have to present $200.00 in new money notes. Hyperinflation burns through your cash like fire.
When the dollar collapses, the banks of the world will shut down their Automatic Teller Machines (ATMs). The banks and credit card companies will also shut down the point-of-purchase machines, otherwise known as credit card machines. That means that unless you have cash on hand, you will not be able to buy anything using a credit or debit card. That will also mean that those on government assistance who receive a pre-loaded debit card will not be able to buy food or anything else.
The banks will declare a “bank holiday.” Sounds fun, but nobody will be smiling. A bank holiday is the bank shutting down and not doing business with ANYONE. So, if you’re checking or savings account has money in it, you will be unable to make a withdrawal. The holiday will likely last indefinitely, or at least until the US Treasury prints up the new money to replace the old failed fiat money. Banks might allow customers access to their safe deposit boxes, but that will depend on the physical risk the bankers must assess.
Legal tender laws will be entirely ignored as people understand that the value of the money is evaporating. Merchants will see that currency values are so volatile that the dollar value at 8 am could be higher than it is at close of business. Why should a seller accept “money” that is decreasing in value? So, many sellers will demand either gold and silver, or some other form of value as payment.
The black market of goods and services will spring into life rapidly after the crash. If you have hard money, or if you can barter goods or services, you will have a chance of survival. If you do not have gold and silver coins…real money…you will not have much chance of survival. And naturally, if you have set aside survival stores, you have a chance of coming out the other side alive and in one piece.
Within hours of the collapse, looting of stores will begin. The looting will begin in inner cities, where the greatest concentration of poor, desperate people live. Then the looting will spread outward from there, eventually spreading to the suburbs and out into the countryside. But don’t think that the looters will only be from the inner cities. There are lots of your neighbors who will become looters too. And once stores have been looted, suppliers will be unwilling to re-supply since their trucks will be targets for highjacking. Envision a beer truck or a bread truck with heavily armed men “riding shotgun.” Just like the stagecoaches of the Old West.
Armed thugs will fill their gas tanks for free as an accomplice holds a gun on the gas station cashier. Gasoline companies will only roll their tanker trucks and refill the tanks with armed escorts. But that only happens if the gas station owner can pay for the gasoline. He’s going to be in the same no-cash boat as most other people.
Those people who are not armed with firearms and a mindset to use deadly force to protect themselves, their families and their property will be victims. It’s not an issue of whether, it will be an issue of when. Almost no one will avoid roaming looters. The question will be who is the greater threat to whom. Thugs only respect superior force. Be sure that your force is superior.
The Internet may be interrupted by your government. Cell phones may stop working, because how are the cell companies going to get paid for service when the money’s no good? And don’t forget radio stations. Most radio stations operate from advertising revenue. The public broadcasting stations operate from donations and government subsidies. After the dollar collapses, and people are scrambling to survive, how many businesses will slash their advertising expenditures? How many people will stop making contributions to charities? So expect to see the majority of radio stations shut down very soon after the collapse. Television stations, cable TV and satellite TV will follow suit, as their revenue is primarily from advertising. We recommend that you become a HAM radio operator as well as CB radio operator.
Hunger and Death
The poor and aged will suffer first and most. Those without food or the means to buy it will die of starvation…a long painful death. Millions will die, and a great many of those millions of bodies will not be buried. Think about it. Who will have money to pay for a casket, burial or cremation? Rotting bodies left unburied always facilitate disease epidemics. Cholera, tuberculosis, HIV, staff infections, Hepatitis B and C, bubonic plague, typhoid and other epidemics regularly occur as the result of mass casualties. So if starvation doesn’t kill you, a plague might. Rapidly, there will be geographic areas you shouldn’t go into because of plague.
People who are weakened by lack of food are also susceptible to a disease epidemic. So it won’t just be the aged or poor that die like flies. People who are on maintenance medication who cannot pay for their medicine will die too.
Law Enforcement Officers (LEOs)will face challenges and dangers never before witnessed in the history of this nation. There are already far too few LEOs to effectively prevent crime. After the collapse, it will get worse. LEOs have families too, don’t they? Remember what happened in the wake of Hurricane Katrina? Most of the New Orleans cops didn’t show up for work because they had families to protect. If you dial 9-1-1 after the American economy collapses and the money hyperinflates, you should not expect to ever see a cop at your door. They will only respond to the most serious and grave law enforcement issues. Or, they may be busy enforcing martial law. In my opinion, the functions of the police that we take for granted will be a memory. You will be entirely on your own to protect yourself, your family and your property.
The ONLY human action that can rescue humanity from TEOTWAWKI is the re-establishment of gold and silver-backed money. Simply anointing another nation’s fiat currency as the new world reserve currency may kick the can down the road for a short time, but it won’t fix the worldwide problem. That is, unless a nation like China converted its currency to hard currency and then refused to accept any other currency than the Gold Yuan or gold itself. Remember that the international bankers and the International Monetary Fund are closely allied to Washington. If DC dies, the IMF dies. And if the Yuan becomes the new hard money world reserve currency, the international bankers are stripped of their power to steal. So expect the international bankers to fight Chinese supremacy unless they can continue to inflate and create money from thin air.
We here at DumpDC believe that the gold that is purported to be in Fort Knox is likely long gone. So the statistical chances that Washington could revert to a gold standard are zero. The ONLY logical place that hard money is likely to occur in North America is inside a US State that secedes from the Union. That state will see the hopelessness of central banking, legal tender laws, fiat money and fractional reserve banking and deduce that only hard money can save them from destruction. This must be the first and most important priority for any seceding state. Nothing else will matter if a seceding state gets this wrong. If a seceding state gains its independence from the USA, only to buy into another world currency, it will simply join all the other failing nations in a “me too” effort.
The End Of The World As We Know It is just over the horizon. And it’s true…the world will never be the same once the Dollar collapses. The carnage around the world will be horrific and historic. I sincerely hope that you, dear readers, survive. But individual liberty and property rights could be the phoenix that arises from the ashes of the global financial meltdown. That is, if JUST ONE AMERICAN STATE secedes and establishes gold standard money. If JUST ONE nation of the world makes a decision to fight for its own survival with gold money instead of being dominated by the internationalists and one-worlders. Make sure you place yourself and your family in that sanctuary.
How about a little music that talks about living when “the money’s no good?”
Secession is the Hope For Mankind. Who will be first?
DumpDC. Six Letters That Can Change History.
© Copyright 2011, Russell D. Longcore. Permission to reprint in whole or in part is gladly granted, provided full credit is given.
by Linda Brady Traynham
(Editor’s Note: Linda has been making comments here for a while. I like her writing style and her content is outstanding. She writes about Texas liberty issues and other stuff that engages her mind…just like your un-humble Editor. I am confident you’ll enjoy this reprint from August 27, 2010.
This one shows you why you should relocate to Texas before secession happens.)
We Texans pride ourselves on everything being bigger and better, but the definition of a “better” depression is a smaller, lighter one. I wrote months ago about how Texas was last into the Depression and has been hit less hard than most areas. At that time, only Brownsville, on the Mexican border, had an unemployment rate that matched the national average, which was in the mid-seven range then. At present we’re running 8.2 per cent., here in Texas, using government figures, with the national rate holding stubbornly at “9.7%.” I put that in quotation marks because I consider it a fairy tale, over and above that using traditional accounting methods would yield results almost exactly twice the official version. That half a point drop from 10.2% not long ago came too suddenly for me to find it believable.
I’m just a simple arithmetician but I understand the sort of figures we’re talking here and it is no use for the government to tell me there is no inflation — it has been at least 3% by the most stringent definition for the last three years — and that national unemployment averages 9.7% if we just don’t count everyone without a job. Laughter…my husband was a genuine mathematical genius who had a passion for statistics and understood numbers the way I understand words. I would love to hear John’s answer on what the unemployment rate is.
One reason we’re doing better in Texas is in the diversification of interests and in the tightly closed systems in our many small towns. Those are not totally immune, and in Hamilton the little, more expensive grocery store “down town” (that being the four blocks which surround the Courthouse square) has gone out of business. David’s, a small local chain, no doubt smiled, and stopped running so many loss leaders. What else? When it is twenty-five to forty miles to the next grocery store of any sort, pretty much you have a captive audience. I imagine the newest restaurant in town will go under, but pretty much nothing much will change. It can be frustrating that kids who aren’t going to inherit a family business have to go elsewhere to find jobs in “normal” times, but it is quite comforting to know not many jobs will be shed in your town because there weren’t any superfluous jobs in the first place. Each business has a place in the local economy that isn’t going to go away, from the two drug store (neither chain) to Ace is the Place, to the feed stores. In the cities and industrial parks many areas are humming along nicely turning out machinery, computers, chemicals, and electronic devices. No, we’re not just about beef and oil. We’re making things they want in BRIC. The first quarter — first two months, actually — exports rose 24.3% over 2009, close to thirty billion dollars’ worth. Patrick Jankowski, Vice President of research for the Greater Houston Partnership, commented that there are over 700,000 jobs in Texas geared to manufacturing goods for export, probably not counting mounted steer horns and armadillo ashtrays. We account for about ten per cent. of the entire export output of the USA, a scary thought, in some ways. Bell Helicopter is gearing up for a big, new project in Amarillo, hiring now, starting at over twenty dollars an hour to assemble widgety things.
Sure unemployment is high in the barrio. When isn’t it? Teens in general are having a harder time finding summer jobs because there are those with more work experience and better motivation willing to take what they can find. Life is tough in some sectors of the oil business, thanks to the power of the Greenies and Mr. Obama outlawing the most promising drilling areas under the guise of expanding exploration. One of the articles I read posited that Texas began adding jobs again last fall, “thanks mostly to its great position in the largely recession-proof energy industry.” Well…sort of. Maybe. Out in Odessa and Midland things are stalled because there is no way to get that sweet, light Texas crude over to the refineries, and for sure it’s too far to build a pipeline. Mr. Obama has decreed that no new refineries may be built (just which section of the Constitution would that be?) and if you can’t refine oil and can’t move it, once your storage facilities are full the best you can do is hope for a better future. One landman I know has cut her price from $450 to $200 a day because there isn’t a whole lot of leasing going on. Last November Texas crude production was down to 1.08 million barrels per day, on the order of half the amount pumped in the Reagan years. Natural gas is doing well — up about a third between 2004 and 2008 — which is cheering both because I expect the coal industry to be destroyed by fake science and a great deal of money put into that campaign by the LNG folks who stand to take over coal-fired plants. Seems to me, as a long-time Texan that we’ve got a bunch of capped wells that were shut down over the years because they produced “too much” gas and not enough oil to suit demands of the time.
We Texans are proud of having our own electric grid — bearing in mind that a hamlet about thirty miles from me went without power for over three weeks after Ike. Their juice came from a different plant in Houston. I’m not a big fan of wind power, myself, between the cost of the enormous three-bladed devices (about a quarter of a million dollars, which doesn’t include shipping and handling and perhaps not even installation) and the difficulty of “storing” electricity; it is commonplace to see a lot of those pricey units turned off when there is ample wind to spin them merrily. There are those who hope to begin exporting electricity to the rest of the US, such as Paul Sadler of Wind Coalition. That might be fine for wind power operators, but it would almost certainly raise prices locally, judging from what happened a decade or so ago when Washington started selling power to Oregon and California, which was in a bind because of foolhardy insistence in flushing away water needed for irrigation and hydroelectric facilities in the name of dear little fishies. There isn’t a person reading this who can’t come up immediately with “Same amount of product sought by more people equals higher prices.” I don’t think anyone has come up with “Keep Texas for Texans,” but it sounds reasonable to me. It may be too late since we have already gotten the attention of Denmark, Spain, and Queen Beatrix. Fortunately, one reason we could construct our grid fairly easily is that we weren’t tied down with federal regulations or coordinating with other states. With luck, trying to connect to Boston, Kansas City, and San Diego (just for examples) would turn out to be as frustrating and time-consuming as attempting to build a nuclear plant. I noted that Texas can now put out 10,000 megawatts which was stated as being sufficient for three million homes, and I thought, immediately not “NIMBY” but “KIIMBY” for Keep It In My Back Yard. Sure, I can handle Vestas and Iberdrola coming over to play, but retaining control of our power strikes me as “prepping” on a national level. Mr.T. Boone Pickens considered putting what even he thought was a bundle into wind power and decided there were faster, better ways to make a good ROI.
Our housing market remains far more stable for several reasons. Turnover has always been slow in rural areas, and we had a hefty influx of dazzled Californians early in the century. They may have been buying while the bubble was bursting, but compared to prices in the Golden State our housing was considered ludicrously under-priced. Dallas has been especially fortunate over the years, and prices there are only 7% off the 2007 highs, Case-Shiller indicates. That’s okay, there’s no point in coming to Texas if you’re going to live in Houston, Austin, San Antonio, DFW, or El Paso. You seen one big city, you seen ‘em all. Sure, the River Walk is pretty (if you like tourist attractions), but other than that SAT is five million people, two freeway rings, and traffic that would scare anyone other than a Los Angeles cab driver. We’re doing better in terms of lower delinquency rates on mortgages. In particular, those three or more months behind average 5.78% here and 8.78% nationwide. (Do you suppose someone makes these figures up? With 99 other choices, yet the terminal two digits are the same?) It should also be noted that Texas law limited taking out secondary loans that amounted to more then eighty per cent. of the value of the property. People were protected somewhat from their own greed and the myth that “Real estate will always increase in value!”
I bridled somewhat when I read, ‘Once a separate nation, Texas has recently been behaving more like an independent economic republic than a regular state. While it hasn’t been immune to the problems plaguing the nation, the Texas housing market, employment rate, and overall economic growth are relatively strong. Chalk some of this up to accidents of geology and geography. But Texan prosperity also reflects the conscious efforts of a once-parochial place to embrace globalization.” and “Texas today is more suburban engineer than urban cowboy, more Michael Dell than J.R. Ewing. Austin, home to the University of Texas, the state government, and Dell Computer, has a 7 percent unemployment rate…ExxonMobil is based in Irving. But the state’s energy complex is increasingly focused more on services and technology than on intuition and wildcatting. And it is selling those services into the global oil patch. Russian, Persian Gulf, and African oil developers now come to Houston for equipment, engineering, and software. While its political leaders may occasionally flirt with secession, Texas thrives on connection… ”
I couldn’t help feeling that this was a little condescending and I was reminded of an ancient expression, “Poor boy, he must be tetched in th’ head.” We may enjoy wheelin’ and dealin’ but at heart we’re still Texans, with our own unique culture that we’ve done a lot better hanging on to than the USA has of agreeing on how to define an American. Businesses come and businesses go, like a li’l ol’ company that had a base here on my stomping grounds long ago, name of Texas Instruments, but cattle and corn fields are forever. We aren’t going to get over feeling that an Aggie ring (signifying graduation from Texas A&M, not 20 minutes from me) is worth two degrees from Harvard and Yale any day. Besides, Dell’s in Round Rock. Laughing at myself. This is like only Aggies being allowed to tell Aggie jokes (non-Aggies can tell ‘em if they make the dunce a Polack, a perfectly respectable term ’round here.)
The important part isn’t what I interpreted as a slur on my own, my native land, but that we’re doing some things right here the rest of the country isn’t.
Linda Brady Traynham is a former editor and analytical project report writer and is now a Whiskey & Gunpowder field correspondent on a ranch in the Republic of Texas. She studied Counseling at Boston University and got her Masters degree in Philosophy from the University of Hawaii.
courtesy National Inflation Association
The rioting and looting currently taking place in Egypt is primarily a result of massive food inflation and shows what all major cities in the United States will likely look like come year 2015 due to the Federal Reserve’s zero percent interest rates and quantitative easing to infinity. On December 16th, 2009, NIA named Time Magazine’s 2009 ‘Person of the Year’ Ben Bernanke our ‘Villain of the Year’, saying he created “unprecedented amounts of inflation in unprecedented ways” and “When it costs $20 for a gallon of milk in a few years, Americans will have nobody to thank more than Bernanke.”
What started out a few weeks ago as protests in Algeria with citizens chanting “Bring Us Sugar!” and five citizens being killed, quickly spread to civil unrest in Tunisia which saw 14 more civilian deaths, and has now spread to riots in Egypt where 300 Egyptian citizens have been killed. Food inflation in Egypt has reached 20% and citizens in the nation already spend about 40% of their monthly expenditures on food. Americans for decades have been blessed with cheap food, spending only 13% of their expenditures on food, but this is about to change.
NIA was the first to predict the recent explosion in agricultural commodity prices in our October 30th, 2009, article entitled, “U.S. Inflation to Appear Next in Food and Agriculture”, which said we have a “perfect storm for an explosion in agriculture prices”. A couple of months later in ‘NIA’s Top 10 Predictions for 2010’ we predicted “Major Food Shortages” and said, “Inventories of agricultural products are the lowest they have been in decades yet the prices of many agricultural commodities are down 70% to 80% from their all time highs adjusted for real inflation”. Over the past year, agricultural commodities as a whole have outperformed almost every other type of asset, with silver being one of only a few other assets keeping pace with agriculture. (On December 11th, 2009, NIA declared silver the best investment for the next decade at $17.40 per ounce and it has so far risen 64% to its current price of $28.39 per ounce).
The world is at the beginning stages of an all out inflationary panic. Wheat, which NIA previously called on ‘NIAnswers’ its favorite investment besides gold and silver, is now up to a new 30-month high of $8.63 per bushel and has doubled in price since June of last year. Algeria bought 800,000 tonnes of wheat this past week, bringing their total purchases for the month of January up to 1.8 million tonnes, which was quadruple expectations. Saudi Arabia is also beginning to stockpile their inventories of wheat. Rice futures have gained 8% during the past few days with Bangladesh and Indonesia placing extraordinary large orders. Indonesia’s latest rice order was quadruple its normal allotment and Bangladesh plans to double rice purchases this year. Meanwhile, the U.S., which is the world’s third largest exporter of rice, is expected to cut production by 25% in 2011.
NIA considers rice to be one of the world’s most undervalued agricultural commodities at its current price of $15.96 per 100 pounds and forecasts a move back to its 2008 high of $24 per 100 pounds as soon as the end of 2011. NIA believes cotton, at its current price of $1.80 per pound, may have gotten a bit ahead of itself in the short-term. In NIA’s first ever article about agriculture on February 17th, 2009, we said that cotton’s “upside potential is astronomical” at its then price of $0.44 per pound. NIA pointed to increasing sales to textile companies in China and the fact that cotton was down 70% from its all time high as reasons to be very bullish on cotton at $0.44 per pound. Early NIA members could have made 309% on cotton, but today we see much bigger potential in rice. The recent spike in cotton reminds us of the 2008 spike in oil. Although we believe cotton will ultimately rise above $3 per pound later this decade, we could possibly see a dip to below $1.40 per pound first.
Many people in the mainstream media have been criticizing NIA’s recent food inflation report, claiming that agricultural commodity prices have very little to do with prices of food in the supermarket. CNBC’s Steve Liesman, in particular, claims that “rising commodity prices won’t cause inflation”. Liesman has it backwards. NIA has never claimed that rising commodity prices cause inflation. Soaring budget deficits that the U.S. government can’t possibly pay for through taxation causes inflation when the Fed is forced to monetize the debt by printing money.
Rising commodity prices are only a symptom of inflation. The reason NIA was so bullish on agricultural commodities going back two years ago when we produced our first documentary ‘Hyperinflation Nation’, is because while gold is the best gauge of inflation and is often the best tool for predicting future money printing, agriculture is where the majority of the monetary inflation ends up going after the Fed’s newly printed money trickles down to the middle-class and poor. With gold prices already surging two years ago when we produced ‘Hyperinflation Nation’, NIA said in the documentary “food prices have the potential to surge most during hyperinflation”.
One thing NIA is almost 100% sure of is that come year 2015, middle-class Americans will be spending at least 30% to 40% of their income on food, similar to Egyptians today. As NIA warned in its latest documentary ‘End of Liberty’, if you don’t have enough money to accumulate physical gold and silver, it is important to begin establishing your own food storage, and store enough food to feed you and your family for at least six months during hyperinflation. Many store shelves in Egypt are now empty after recent panic buying, with shortages of nearly all major staple items throughout the country.
The U.S. Treasury is getting ready to sell $72 billion in new long-term bonds next week, as the U.S. rapidly approaches its $14.29 trillion debt limit. The debt limit is now expected to be reached by April 5th and Treasury Secretary Geithner warned the U.S. will see “catastrophic damage” if it isn’t raised. With the Federal Reserve now surpassing China and Japan as the largest holder of U.S. treasuries, the real “catastrophic damage” ahead will be hyperinflation as a result of the U.S. government doing absolutely nothing to dramatically reduce spending. It is an absolute joke that Obama during his State of the Union address announced $400 billion in spending cuts over the next 10 years, but then the very next day, the Congressional Budget Office increased its 2011 budget deficit projection by $400 billion to $1.48 trillion.
Not raising the debt limit would be a good thing, as it would force Washington to live within its means. Sure, the stock market would collapse and the U.S. economy would enter into its next Great Depression, but at least it would save the U.S. dollar from losing all of its purchasing power. In fact, the standard of living for middle class Americans might actually improve if the government allowed the free market to put our economy into a depression, because goods and services would get cheaper.
The U.S. economy has become a drug addict that is dependent on cheap and easy money from the Federal Reserve. While Wall Street bankers took home a record $135 billion in total compensation in 2010, up 5.7% from $128 billion in 2009, this money was stolen from middle-class and poor Americans through inflation. The more monetary inflation (heroin) the Federal Reserve creates in order to satisfy the (in the words of Gerald Celente) “money junkies” on Wall Street, the more middle-class and poor Americans become dependent on unemployment checks and food stamps just to survive. Millions of American students are graduating college with hundreds of thousands of dollars in debt but no jobs. Luckily for them (but not holders of U.S. dollars), NIA is hearing reports from both unemployed and underemployed college graduates with student loans that the government is reducing their required monthly payments by sometimes 90% or more based on their current incomes.
China and Japan recently saw their credit ratings downgraded, while the U.S. credit rating remains at “AAA”. NIA believes it would make far more sense for the world’s largest debtor nation to be downgraded instead of the world’s two largest creditor nations. The Federal Reserve’s second round of quantitative easing has yet to even reach the halfway point and the Fed already holds about $1.11 trillion in U.S. treasuries. By the time QE2 is over at the end of June, the Fed will own $1.6 trillion in U.S. treasuries, about what China and Japan own combined. Shockingly, Kansas City Fed President Thomas Hoenig is already dropping hints about QE3. According to Hoenig, the Fed may consider extending treasury purchases beyond June 30th, 2010, (the scheduled completion date for QE2) if U.S. economic data looks disappointing.
With the Fed taking over as the largest holder of U.S. treasuries, China is beginning to rapidly move away from the U.S. dollar and into gold. In just the first 10 months of 2010, China imported 209 metric tons of gold compared to 45 metric tons in all of 2009, a stunning five-fold increase. While the western world is downplaying the threat of inflation as much as possible, Asian countries understand that hyperinflation is the most devastating thing that can possibly happen to any economy. The demand for gold in Asia right now is the most intense it has ever been, as they look to tackle rising inflation before it becomes hyperinflation.
The Chinese are so smart that families are now giving each other gold bullion as gifts instead of traditional red envelopes filled with cash. China is now on track to soon surpass India as the world’s largest consumer of gold. The China Securities Regulatory Commission recently gave Beijing-based Lion Fund Management Co. approval to create a fund that will invest into foreign gold ETFs.
U.S. stock mutual funds saw $6.7 billion in net inflows during the past two weeks, the most in any two week period since May of 2009. The rioting, looting, and civil unrest in Egypt is now making the U.S. look like the safe haven of the world, even though it should be considered the riskiest place to invest. From the Dow’s low in August until now, about $38 billion was actually removed from U.S. stock mutual funds, despite the stock market rising 20%. The Dow Jones has been rising from September until now solely due to the Federal Reserve printing around $350 billion out of thin air. When central banks print money, stock markets often act as a relief valve due to there being too much inflation going into the hands of financial institutions.
The U.S. M2 money supply surged by $46.6 billion during the week ending January 17th to a record $8.8623 trillion, following a rise during the previous week of $7.6 billion. The rise in the M2 money supply over the past two weeks of $54.2 billion equals an annualized increase of 16%. The M2 multiplier now stands at 4.218 compared to a long-term average of 10. When QE2 is complete, the Fed’s monetary base will likely stand at $2.59 trillion. A return to the long-term average M2 multiplier of 10 means we are due to see a 192% increase in the M2 money supply and that is not even including a possible QE3 and QE4.
The U.S. economic ponzi scheme could unravel very quickly in the years ahead, with the velocity of money increasing much faster than anybody expects. As more Americans learn about NIA and become educated to the truth about the U.S. economy and inflation, a complete loss of confidence in the U.S. dollar could occur very suddenly. It is important for all Americans to prepare as if hyperinflation will be here tomorrow. At least in Egypt, their currency still has purchasing power and their citizens are trying to implement a regime change before it is too late. By 2015 in America, it will already be too late and the civil unrest here has the potential to be many times worse.
It is important to spread the word about NIA to as many people as possible, as quickly as possible, if you want America to survive hyperinflation. Please tell everybody you know to become members of NIA for free immediately at: National Inflation Association