Saturday, March 30, 2013

Arizona moving toward gold and silver coins being treated as legal tender

Some time ago, Utah wrote it in to state law that gold and silver coins are legal tender in that state.  The important implications of this are that, as far as Utah - a state that charges state income tax - is concerned, gold and silver "gains" are un-taxable by the state.  The law doesn't say this explicitly but that is the de facto result.  The opportunity to collect taxes is when something is bought or sold.  When gold and silver were treated as collectibles then it was feasible to charge sales tax upon purchase and / or capital gains tax upon sale.  But now that these coins are legal tender no state level taxation is possible on these transactions.  In the same way as making change from a $1 bill into 20 nickels does not attempt to levy tax on a metals purchase (even though that is exactly what you did when buying the nickels), changing $1650 into and out of a gold coin carries no tax in Utah, no need for records, no special tracking no nada.

Following in the obvious direction away from collapsing funny money, Arizona is now well on the way to making gold and silver coins legal tender as well.  The proposed law again exempts gold and silver purchases and sales from the list of taxable events and allows taxes to be paid in gold and silver coins. The Arizona law appears to target gold and silver coins issued by the US government just like the Utah law did before it.  While these laws may sound like quaint pandering to the prepper crowd I can assure you that they carry significant impacts and as a result everyone will want the same benefits for themselves when they finally figure it out.

You see, nobody is really interested in carrying around gold and silver coins and using them to buy and sell other goods.  It is obvious that electronic representation of the coins is being targeted.  So you will in essence see the arrival of "People's Metallic Banks" where people deposit gold and silver coins and the banks keep track of the number of coins stored, not the dollar value of them.  This will include the accounting of fractional coins and the automatic conversion to and from gold and silver coins upon demand. 

Note that once transactional metals aggregation points like a metals bank are established, the notion that coins must be US minted to qualify as legal tender goes out the window.  If you have an Austrian Philharmonic gold coin, they will allow you to deposit it just as if it were US minted because in the international gold trade that the metallic banks must operate in, gold is gold.  They can, if they wish, accept unlimited gold coins of any type and then exchange them with foreigners who hold US minted coins.  The proof that there is really little chance that only US-minted gold and silver will be treated any differently from other gold and silver coins in the long run is reflected in the very similar pricing between US gold buffalos and Austrian gold philharmonics.  Both are 1oz .999 pure gold coins, both produced by trusted minting operations, both stamped with weight and purity.  The small cost delta between these coins (~1% at present) represents the small odds that the market is giving that US minted gold and silver coins might receive any special, long term benefit under the law over foreign minted gold coins.

An interesting consequence of all this will be that if you want to pay off some bill, and if the recipient banks at the metallic bank, then the funds need never get converted into dollars.  Some fractional portion of gold can just move from one account to the next.  If enough people do this they might start to wonder why they need paper money from the government who keeps stealing the value of it out the back door in order to prop up the current political and economic status quo.  Keep in mind that government's only real power comes from control of the money supply folks.  If it loses control of the money supply it loses control of everything.  Now, if the recipient does not bank at the metallic bank then the bank will convert some of the depositor's gold into dollars and pay the bill.

At a time when the only thing Bernanke knows to do is to debase the money supply in order to keep Obama and the con men in power, the metallic bank protects any depositors against inflation while giving them all of the liquidity that they desire.

Today the Utah news and the Arizona news are being treated as "interesting but kind of silly" by people who do not understand what money is or how it works.  I predict that another couple of states, perhaps North Carolina and Virginia will follow suit and then the big kahuna -Texas- will join the crowd.  That is when the movement to re-monify gold will start to get noticed.  Each state that adopts these laws is putting a knife into the backs of the con men running fellow states who do not treat gold and silver a legal tender.  Businesses (and thus jobs) and then people will be attracted to states where government can no longer force them to deal only in fraudulent paper money.  Alternatively, people will open accounts in out of state metallic banks.  Once one state has legal tender laws it becomes effectively impossible for any state to not have them or all banking will be done using out of state banks with no tracking of metals-dollars transactions.

This is going to turn into a big deal and then into a big stink at the federal level because if too many people protect themselves from the ravages of inflation, the suckers who are remaining take a double load of it.  If you don't immediately understand that, consider it like this:  In Florida where condos are rampant, the monthly rip off condo fee is fixed for the entire building.  Then the per unit cost is simple division of that cost by the number of paying tenants.  Now, when some if not most of the tenants moved out or got foreclosed on during the bust, those units were not paying the monthly rip off condo fee.  So instead of ratcheting down the fees to reflect less service for less paying customers, the condo associations simply increased the monthly bills of the suckers that remained in order to make up for the shortfall.  Many of these systemically captured souls ended up paying more in condo fees per month than in rent.

The US government is no different than the condo association.  Its monthly rip off fees (called taxes) are, in significant part, extracted via the sneaky tax known as inflation.  Right now very few of us have taken the pains of storing our wealth in gold and silver.  And even with that, our monthly spending cash has to stay in dollars because the conversion between dollars and gold is expensive and time consuming.  But when the metallic banks come these concerns will evaporate and hoards of people will keep all of their money in gold and silver backed accounts.  As this happens, those who are too stupid to figure it out are still holding dollars each month.  And all during this time, Bernanke has to keep on printing at the same rate as before.  But instead of all that fraudulent printing being absorbed by the entire population, the debasement is placed on the shoulders of the sheeple that store their money in dollars.  Each day while they are at work, and each night while they are sleeping, the Bernanke printing presses eat away at their wealth as would termites take over a wooden house.

And so now you get it.  The metallic banks will speed the public understanding of the true inflationary aspects of fiat currency.  Those whose savings are metals based will go to sleep with x gold coins on account worth say $100,000.  When they awake they will still have x gold coins but those same gold coins will convert to $100,500.  Even at this slow rate, those who are not in the gold bank will quickly fall behind economically to those that are.

The movement toward the re-monification of gold is very significant.  Mock it at your own peril.  I predicted that it would happen years ago not because I had a gut feeling but because the evidence showed that it was the only thing that the people would eventually accept as money after the global debt Ponzi had gone bust.  Well, we are seeing a slo-mo collapse of the debt Ponzi right now.  Nothing is fixed and with every kick of the can down the economic street the problem actually gets bigger and the eventual collapse becomes more extreme. 

Keep your eye on the state by state legalization of gold and silver as legal tender.  It's a very significant next step in the collapse of the Global Debt Ponzi that was started in 1913 with the creation of the Federal Reserve Bank.

Monday, March 25, 2013

Do I sound a little less crazy each month?

Mish talks about Spaniards, etc. getting money out of banks but for Cypridiots it’s too late.  In fact, many things will be too late for them including the ability to buy food soon.  The stores there are now down to 2 day’s worth of food on hand.  Suppliers to the stores are demanding payment in cash.  That screws up the system that was designed to float for a period of time on credit.  The result is store shelves going empty while prices skyrocket.  At the same time, cash is fleeing the country at a massive pace:

Well, Cyprus is doomed, period.  But we’re all Cypridiots to some degree.   The dominos will fall and the US will be the last to get hit.  But it will get hit simply because we consume more than we produce.  When people stop loaning us their goods because they finally figure out that we cannot and therefore never will repay them, they will stop loaning us goods.  That is, in fact, what they are doing when they run a trade deficit with us -loaning us goods- and then they use the "markers" we send them (AKA dollars) to buy our national debt (they need to park that money somewhere and they cannot spend our dollars in their own economy…).   

Failure to buy our national debt in the future (because of fear of default or of massive inflation) will occur in locked step with failing to ship more goods to us than we ship to them.  This means there will be shortages in the US until we recover and rebalance the US economy to the coming new world economic order.  Many weeks could transpire, months even, when food and other necessities could become scarce.  This could leave many who have not prepared very scared, very desperate.  Too many people rely on the government just for food these days and the government will lose its ability to feed them.   What do you think these people will do, lay down and just die?  I think not.  They will do what it takes to survive.

Again, this is math and odds here, not doomsday “prepper” emotional foolishness.  There is a Gaussian distribution of likely outcomes.  At one extreme we could have doomsday martial law or even civil war and I think government is preparing for it while such preparations are still pretty easy and few suspect anything.  But right now I only give such an extreme outcome 5% chance of ever happening.   I think the fat part of the probability curve covers a range that includes annoying but manageable shortages (i.e. like 1970s gas lines) to real “there just isn’t any food” for a couple days each month in rolling outages throughout the country.  It’s only the very very extreme (and thus unlikely) case that would see tanks roll, martial law, military dictatorship, use of FEMA camps as concentration camps, etc. 

Right now it is still very cheap and very easy to make simple preparations in the US.  Buy and store some extra nonperishable food.  Own a gun and learn how to use it.  A nice medical kit might not be such a bad idea either because in hard times like are happening in Cyprus, the police and medical services start to act like private services for the very rich (staff get cut and those who remain get bribed and normal people do not get the kind of service they are used to).  Medicines become scarce and expensive.  Call 911 during times like that?  Go ahead.  Nobody will show up.  Get hurt and want medical service?  They might demand cash payment up front while the government has you locked out of your bank account or only trickles enough of your money to you per day to eat and buy the basics. 
Look at Cyprus folks.  Capital controls are in effect.  The money in the banks does not belong to the depositors if they can't have it back when they want it.  So part of any plan should be to have some cash where you can get it and government cannot stop you from getting it. 

Again all of these things sound so fantastic that it almost seems like a crazy rant.  Except that I predicted much of this was coming years before the signs were as obvious as they are today.  Pretty much nobody that I know was talking about gold ownership back in 2007 (besides me).    But now you can't read the daily news without seeing some mention of gold and many of these stories are about attempts to repatriate gold from the federal reserve.  In fact, now even the state of Texas has demanded its gold back from the federal reserve.   A con job collapses when the confidence of the patsies collapse.   Having a major state like Texas demand its gold back from federally controlled vaults is clearly a reduction in confidence.

Don't kid yourself.  This is going to get serious.  Again, I think the odds of a Mad Max dystopian outcome are low (but nonzero).  But buying a little insurance (in the form of stored food and other items) against a major economic restructuring that so obviously must occur some day is just common sense.

Sunday, March 24, 2013

Cyprus is just the tip of the sword in the ongoing collapse of the Global Debt Ponzi

Quoted from the bottom of the linked article:

“This is precisely what happens in a fractional reserve lending system when faith is lost. And faith certainly has been lost. Why shouldn't it be lost? The entire global financial system would be recognized as insolvent if even 25% of the people tried to get their deposits.

This is pure math speaking, not hyperbole.  The question then becomes, “What could possibly cause 25% of the people to try to get their money out at the same time?”.  The answer has been buzzing around us for year now: government debt crisis.  Keep in mind that banks and government are so intertwined that they cannot be told apart from an economic perspective.  So the real answer is “any big crisis with either government or banks”.  Of course, if the economy tanks then banks and government will by definition have a crisis so the real, real answer is “any big crisis with either government or banks or corporations or unemployment rate or, or, or…”.  In short, any sufficiently large crisis be it man made or of natural causes will be reason for government to steal any of your wealth that you have entrusted to its care. 

Nobody can say when the next big US crisis will hit.  However,  with current on-book national debt of 16.7 trillion (which is going up at an exponential rate despite government jawboning about caring about it), it’s a cinch that we are not far from our own “Cyprus moment”.  It simply cannot be avoided at this point.  The only possibilities are to pump it up into an even bigger Ponzi which will collapse later but in a worse fashion or collapse it now for merely catastrophic results.  Smart people will see this and will take possession of their own wealth in a form that cannot be tracked, taxed, or stolen with the stoke of a bureaucrat’s pen.  Gold and silver bullion coins fit the bill perfectly.

Thursday, March 21, 2013

Mish: France is bankrupt.

Not that it should come as a shock to any long time readers of my emails and blogs but Mr. “show me the data” now acknowledges the obvious: France is indeed bankrupt:

Two things that I think are worth mentioning about this:
1.       Statists believe that the state can never be actually bankrupt because the state has the ability to print money and tax its citizens (both of which are just 2 different ways of doing the same thing).  These sound great when spoken but are much harder to do in real life.   Citizens put up with a good deal of taxation and currency debasement but at a certain point they rebel.  If the state goes after all the people in the same way across the board then the poor people starve and riot.  If the state tries to steal mainly from the rich, the rich simply leave.  Forever.  That means no possibility of a quick recovery.  Once the rich leave all that’s left are the poor who of course begin to starve and then riot. 

2.       I knew France’s perceived economic strength was an apparition based on cooked books propped up by vendor finance sales.  I wrote it many times in by blog.  What most people don’t understand is that Germany, the supposed pillar and anchor of the EU, is no better off.  Germany is bankrupt too even though they have not had to admit it yet.  Europe is bankrupt.  Japan is waaaay bankrupt.  The US is bankrupt and so is Russia.  The admissions will be coming.
Keep in mind that the only people who are not bankrupt will be those with real money once the global Debt Ponzi finally collapses.  Holders of gold and silver coins are not bankrupt and the collapse of the Ponzi will only make their holdings more valuable.  Gold and silver bullion coins are outside of the corrupt global economic scam and thus exempt from fiat currency collapse antics.

Wednesday, March 20, 2013

We're all Cypridiots now

Everyone should now be aware that the IMF is trying to play hardball with Cyprus by demanding a depositor’s bank account "tax" of 6-9.9% depending on how much dough a person (or business) has in Cyprus banks.  The initial demand was 9.9% haircut for anyone with more than 100k Euros on deposit.  Of course, the Cypridiots who still have money in the banking system went ballistic at the idea and sent immediate lash back to their politicians about it who are now suddenly against the idea. 

But here is what the Cypridiots don’t understand: the minute they get kicked out of the EU is the minute that their Cyprus Pound is treated as nearly worthless by their trading partners.  So they are going to take a huge cut in buying power no matter what they do.  Also, Cypridiots don’t produce as much as they consume so their cash will be nearly worthless AND their store shelves will be empty. 
Remember what happened to Iceland for declaring bankruptcy?  Their stock market plunged by 90+% and their currency lost 50% of its import buying power in very short order.  Anyone who stored their wealth in Krona got whacked (see chart below of Krona vs. USD).  Of course, anyone in Iceland who stored their wealth in gold and silver got by untouched or even did very well.

Cyprus’ push back from the direct withdrawal tax did not fix anything.  All that did was give the EU grounds to stop sending them more debt that they can’t pay off without being viewed as “the evil landlord” by the rest of the liberal world. 

Bottom line: anyone in Cyprus who does not have their wealth stored in gold or silver is now going to lose badly or lose worse.  There is no positive outcome possible for anyone who leaves his wealth in corrupt, bankrupt banks OR in corrupt, bankrupt paper money.  History will show that they are one in the same. 

Of course, the EU is itself worried by this because if they don’t get the money they are owed then they will not be able to meet their cash flow requirements either.  If a good deal of your net worth is tied up in debt notes backed by someone who is declaring BK, what’s that going to do to YOUR solvency, credit rating and interest rates?  

As if this weren’t bad enough, others are considering the same type of crazy solutions for bailing out the owners of the banks:

If these bozos aren’t careful they are going to start a global bank run and if that happens then the global economic scam can easily collapse at exponential speed.  The US will not be saved from this.  We are like Cyprus but larger.  We have incredible, un-payable debt and whole cities are living off of government largess which are essentially the new food lines.  Government is making it all look good right now but it is nothing but an illusion. 
When we finally tell our creditors that we can’t pay, they will cut us off and our shelves will go empty as well because we, like Cyprus, consume more than we produce.  Those areas of the country that got used to government cheese will see the bottomless pit of free stuff dry up and they will not be happy.  There will be hunger or worse.  There will be a massive rise in crime or worse.  The liberal idiots will demand that government “do something”.  The only thing government can do is steal from those who saved and give it to those who are threatening to riot.  Money in banks and money in retirement accounts are easy targets for this.  As I have been warning for a looooong time now, someday the retirement savings of Americans stored in banks or in pension funds or in stocks will not be safe from some form or fashion of confiscation.  We’re all Cypridiots now.

Saturday, March 16, 2013

Cyprus citizen's bank savings stolen by government for their own good.

If you really think anything has happened to fix the ongoing collapse of the global debt Ponzi then have a look at this:

If you were too lazy to click the link, it basically says that the Cypriot President announced a 10% "levy" on all the bank deposits of all "Cypridiots" who did not figure out in time that their government was colluding with banks to run a massive debt Ponzi.  Was the new tax money that was just stolen from their bank account used for public works?  How about to pay down government debt?  OF COURSE NOT!  It was simply spent as a prepaid insurance policy premium that would protect their creditors as part of the terms to be eligible for EVEN MORE DEBT!!  These poor sheeple do not realize the math of the situation.  They have entered the debt spiral whereby the parasitic aspects of owning too much debt kill you.  These aspects include fees, interest payments, and now insurance payments on future debt increases.  If allowed to continue, the con men will steal everything from the Cypridiots.

It is unquestionably true that without continuous new growth of debt, a debt Ponzi must collapse.  That's just how Ponzis (a form of pyramid scheme) work.  The people had no say in this "levy".  When government taxes you it is supposed to be done with the consent of the people.  When your bank account is simply dipped into by the heavy hand of taxation without representation then it is nothing more than theft.  Since it took labor for people to earn that money in the first place, then the government effectively stole years worth of labor from the people.  In civilized society, theft of labor is known as slavery.

I have written several times in these blog pages and in private emails to family and friends that banks are not safe because banks are in bed with corrupt, debt laden governments.  Banks are supposed to be private savings organizations whose job is the safe keeping of your money.  Common ignorance and webaganda make people believe that this is the case.  What they don't tell you is that you are really investing in the bank when you deposit your money. 

Yes, that's correct!  From a legal perspective, a bank deposit is an investment in which you to get some small interest payment and free checking in return for allowing the bank to use your money as reserves against new loans.  In other words, "use" means "reinvest at a high degree of leverage".  With so much leverage available to them the banks can't help themselves but overinvest with ridiculous leverage.  Since investing is a form of gambling, banks all over the world are nothing more than leveraged gamblers.  Generally, the bigger the bank the more corrupt leverage it had to use in order to get big.  During normal times bank deposits are supposed to be low risk, low reward investments.  In fact, the risk is generally so low that people forget that it is an investment and that all investments can lose money. 

Unfortunately, during the collapse phase of a debt Ponzi of such historic size as we are experiencing right now, risk is amplified across the board and in fact, traditional models of risk begin to become completely unreliable.  Cyprignorant Cypridiots learned that the hard way today.  I wonder how many of them will realize this is only the tip of the iceberg and that things are now so bad that it has come to this.  Which means that the problems remain and that a 10% haircut of their wealth is not nearly enough to fix the problem even if profligate government spending could ever be controlled.  I suspect that the smartest of them will say "once bitten twice shy" but that the masses will say "well, maybe this is the last time".  That is the mindset of the herding species called Homo Sapiens.  After the collapse I think we should change the official name of our species to Homo Victimus or perhaps Homo Patsius because we seem to be genetically predisposed to getting screwed by strangers and never learning from the pain.

Those on the margin (marginal players on a relative basis) are always hit the first and the worst.  Expect to see this same sort of theft occur over and over again, spreading to Japan, Euroland and eventually to the US as well.  It's not that they want to do it, it's that they have to do it in order to retain their corrupt control of their livestock which provide them a living from our labor.  In other words, when the drought comes and the rancher's land will no longer support all the livestock which the rancher has been using for production of wool and milk, the rancher starts culling the herd and eating meat.

The defense against this coming outrage is so simple: do not let strangers hold onto your cash.  That means, eschew the corrupt banks (and which of them is not in the pocket of government?).  Do not accept a pittance in return for the real and rising risk of default.  Do not believe that some stranger will be a better shepherd of your retirement funds than you because the minute they can no longer make money representing you is the minute they will make money stealing from you.  Do not believe that the FDIC will make you whole in the face of market collapse and/or government theft.  The FDIC is bankrupt.  Also, know what is and is not money.   Real money cannot change value by decree!  Real money has a value placed upon it by the free market, not by government con men.  Gold is real money.  Government can try to manipulate its value but any downward manipulations are nothing more than a buying opportunity for those who understand how the debt Ponzi can, must and therefore will eventually collapse.

After all that has gone on, after all that we have been shown about how government and banks are thick as thieves, I have little sympathy for anyone who does not do the right thing for themselves and their families.  Gold is your retirement account.  Not paper gold shares in an ETF or fund but rather real, physical 24 kt gold bullion coins which are valued only by their gold content and purity and without consideration of any other factor.  Anyone that can't figure this out will eventually suffer the fate of today's Cyprignorant Cypridiots.  JP Morgan (the man) was no Cypridiot.  He wrote and said on many occasions, "Gold is money and everything else is not" and "Gold is money and everything else is credit".  This was common knowledge before the world was pulled over our collective eyes by the fraudulent scam of fiat currency and fractional reserve banking.

Thursday, March 14, 2013

Police story vs. eyewitness story: be careful of headlines

The headline of this story is,"Sheriff: Elderly Bastrop man shot after he refused to disarm".  It seems pretty cut and dried.  Hero cops got called out to deal with a threat.  They gave him every chance to drop his gun so they shot him.  Rightous shoot, it would seem.  Thank God for our police who work so hard to protect and to serve.

That's the way it seems to most people because most people don't do anything but scan the headlines.  In order to find the real truth you have to take 2 minutes and read the story.  Of course, that is 2 minutes too many and so the headlines stand.

When you start reading, of course, the Sherrif's office gets first say:
"...deputies responded to a 911 call from a female resident of 121 Stony Mont Drive in Del Valle for a domestic disturbance call. When they arrived on site just before 4:30 p.m., they were confronted by Jose Cantu, 78, who was in possession of a firearm.

The two responding deputies, 30-year-old Mark Garcia and 32-year-old Stephen Broderick, repeatedly asked Cantu to disarm, which Cantu “disregarded” before pointing his weapon at the deputies.
“Fearing for their safety,” the statement reads, “deputy sheriffs discharged their weapons, striking Mr. Cantu.”

OK, still sounds kosher. But then again, what else would the Sheriff's office say?  Now let's compare that to what non-government employee type witnesses say really happened:
  • One witness said one of two deputies first on scene yelled a single command to "lower the weapon" before opening fire.
  • The "dangerous perp" was 78 years old.
  • The gentleman was shot in his wheel chair.
  • The gentleman is a stroke victim who was paralyzed (that was his condition before the heroic police arrived).
  • The heroic police shot "over a dozen bullets" into him. 
  • The dangerous weapon that required a hail of police bullets was a BB gun that the old guy carried with him in his wheel chair "because of nuisance chickens disturbing his yard".
So, I'm supposed to believe that not one but two highly trained police geniuses can't tell a real gun from a BB gun.  Bullpucky!  And I'm supposed to believe that they could not have backed off to a safe distance behind their car upon seeing the gun and find a better way to control the situation?  Balderdash!!  They saw their opportunity to shoot someone, make up a story about being in danger and then collecting a bunch of PAID TIME OFF while the whole thing gets reviewed.  That could take weeks in which time the cops can have a nice vacation on the public's tab.

I gotta tell you.  I've about had it with trigger happy cops.  They take any opportunity to draw and shoot that they can get.  If you have a dog then whether he is dangerous or not they will often kill it "for everyone's safety".   Here, see for yourself:  google police shoot dog for no reason.

It's almost like they are trying to push people into retaliating against them so that they can declare martial law.  But why ever would they do such a thing?  I mean, people don't just do random acts.  There is always a reason for the actions even if you don't agree with it.  Perhaps the reason is right under our eyes.  Perhaps they fear the collapse of the global debt Ponzi and what that could do to their job security to say nothing of their pensions.  Perhaps if they were being attacked by people who were getting revenge for foul past actions of cops then there would be justification for increased police "protection" of the public.  

Don't laugh.  Many police departments have gotten decimated by the collapse of city budgets and in a growing number of cases the police pension fund is defaulted upon by the city.  This paper claims that, "Pension plans operated by state governments on behalf of their employees are underfunded by an estimated $452 billion".  Do you think that the police are oblivious to this reality?  Really??  Police are aggressive personalities by nature.  It's a job requirement.  Those kind of people don't take it lying down folks.

In the chart below compares the public's Google searchs for the term "police shootings" (blue) against their searchs for "city default" (orange) over the same time period.  There is at least some correlation there.  And it only makes sense.  Police are just people.  When they get attacked they are going to respond somehow.  Sometime it will be consciously and other times it will be subconsciously but to think that police will not behave like other people in aggregate is to believe in the tooth fairy.  RT did a story on it here.

Sunday, March 10, 2013

Amazing Ted Talk by a young scientist

This Ted Talk sounds like something out of a Disney movie: a bored kid sees family member die of illness, becomes inspired, decides to try to do something about it, ends up with a major medical breakthrough.  But this is not Disney, it is real life:

My takeaways from this video (many of which I already knew):

·         Without a profit motive to improve, technology does not improve.  So if government subsidizes the same ole’ same ole’ then guess what?  Improvements will be slow because improvements mean you have to work harder to get paid the same.  When government is picking winners and losers with its subsidies, etc. it is really picking those who will get to coast and still earn an outsized living while everyone else works harder to make up for it (or simply lives without).
o   This "kid" turned an $800 test (which made it accessible only the very wealthy) into a 3 cent test.  He did it pretty much by himself in a year.  HE’S FIFTEEN!  Shame on academia for letting him show them up so badly!  Good on him for just doing it!
 o   Deflation is the engine of change!!  When deflation hits it means the easy money that supports the status quo dries up and people begin to innovate in order to close the gap.  Repeat after me: inflation is a friend of the government while being a knife in the back of the people.  I wonder how many people die each year needlessly because inflationary government policies incentivize corporations to stand in the way of progress while conning the people that all this is being done for our benefit.  We are as livestock to them, nothing more.  We are only of value to the degree that something can be extracted from us.  They "keep us around" because they need to parasitically profit from our labor.  People need to wake up to the math associated with this economic reality.

·         College is overrated today.  It is overpriced for sure, leaving kids whose parents are not rich with many tens of thousands of debt.  College used to be the gateway to knowledge.  You simply had no access to the good stuff if you couldn’t pony up the tuition.  Those days are long gone now that you can attend Stanford lectures for free over the Internet as well as review tons of technical documentation online. 

·         Products/productivity starts with a vision and then requires execution expertise (which can require a significant background in science to be effective at).  Academia often excels in the latter while being nearly devoid of the former.  In my professional career I have found that a good combination is to get ideas from free thinking people who are not bound by years of college rigor and systemic indoctrination and then use classically trained subject matter experts (college grads) to execute on the vision.  In case no subject matter experts are available, expertise can be developed if you have a bright, interested person who is willing to put in the time and focus.  The kid in the video is literally the poster boy for this. 

 The young man finishes his talk with an upbeat message: we CAN do great things if we understand how empowered we really are.  But look at how this guy had to show a ridiculous, almost inhuman amount of tenacity in order to overcome the roadblocks of an  incestuous academic system: 199 of 200 government controlled dens of academia turned him away.  Government is not helping progress, it is inhibiting any progress that government cannot tax or somehow be in control of.  A big part of future empowerment of the people HAS to be to put government back into its rightful place as a servant of the people instead its current position as master over the people. If America can do this without a bloody revolution it will probably be viewed one day as the greatest contribution to world history ever achieved.

Sunday, March 3, 2013

Peter Schiff discusses the Global Debt Ponzi and more

This video of Peter Schiff explaining the truth about the global economy is worth 30 minutes of your time for sure:

You’ve heard it before from me, you’ll hear it again, and one day you’ll actually be talking about it with other people:

·         It’s a Global Debt Ponzi.  Period.
o   By the way, the Economati BlogSpot was the #1 hit on Google for the search terms global debt Ponzi last week.  This week it is #3 and #4.  And that’s without me having any ads on the blog and zero work done on setting up search terms, etc.

·       The game is over as soon as others won’t buy our debt cheaply.  You will know this is the case when interest rates rise again.

·        We will eventually default on everyone either through outright default or through massive inflation.

·        Government has thrown the kitchen sink at the problem and all they’ve succeeded in doing is getting the economy to the point where it feels like a really bad recession.  In order to keep things sliding to only this level they have had to do unprecedented and unsustainable things.  They have had to ignore their own rules ("regulatory forbearance").  Nothing has been fixed, the can has just been kicked down the road.

·        Those exporting to us are running a vendor finance scam.  I've written this dozens of times starting back in 2007.

·        The real economic purpose of exports is supposed to be trade.  The real value of trade is diversity of consumption which allows people to specialize, get good at producing a small number of things which allows them to efficiently overproduce.  The excess production is then exported to someone else in exchange for receiving what the trading partners specialize in.  In this way, everyone doesn't have to know everything but everyone gets to benefit from the fact that someone, somewhere is really good at producing some item that you don't produce and that you don't want to learn how to produce or to spend money on re-inventing someone else's production "wheel".  Using exports as a mechanism to try to get ahead is economically impossible, period.  Anyone who exports more than they import is collecting IOUs for the excess and that is the definition of vendor financing.  Vendor financing at the levels we are talking about here is a scam. 

Everything Schiff says is based on sound, real life economics.  Forget the vaporous models and formulae of academic economists.  Their only goal is to keep their job.  So they become the captured mouthpieces of the government agenda.  Academia is the marketing arm of corrupt government's funny money scheme. 
The part where Schiff might be missing something is that China is corrupt, Canada is also corrupt, everyone is corrupt.  So there is no “better” place than the USA as he seems to believe.  All global governments are in the same sheep dip because they all use the same fraudulent money supply.  Sure, they have different names for their pieces of fraudulent paper than we do but that doesn't change the nature of the fraud.  Each player has a slightly different take on the scam. 
  • The US is the recipient of other people's goods which we "pay for" with IOUs that we can never cover with real goods.  Our goal in the scam is to get something for nothing.  In other words, we want to benefit from their labor without paying for it.  That used to be called slavery.  Today it is called global economics.
  • The Chinese are playing the game from a different perspective and with different goals. China's massive export machine was only possible because they leveraged up on debt in order to create production capacity that was faaaar in excess of their own ability to consume.  So they HAVE to sell it to someone in order to service their own debt.  Same with Japan.  Those factories were not bought, they were borrowed.  If you don’t service the debt on your plant, someone shuts it down and sells the equipment in order to recoup whatever they can from their loan.  China believes that when it all collapses that nobody will be able to come onto Chinese soil and repossess all of the financed buildings and factories, etc.  Thus, when the new money system takes over, they will have real production capacity that has no debt associated with it because the debt will have been wiped out by bankruptcy while the equipment will have been confiscated by a sovereign, nuclear capable nation.
Schiff thinks the US is worse off than others.  I strongly disagree.  The con men in the US will hold their own against the con men in other places for decades to come.  We have the dream team of lying, crooked moneymen.  The coins and small change that roll off of the stolen cash pile that’s sitting on their table go directly into the US economy.  And if that doesn't work we will simply kill anyone who disagrees with us in the name of national security.  If there is one thing that the US is clearly the world's greatest exporter of, it's military power.

Friday, March 1, 2013

Daily grab bag as the global debt ponzi continues to collapse.

I always said Apple stock would turn out to be a massive bubble.  I also said that when it finally went into free fall it would be a sign of big sign that the market is losing confidence in the con game.  Apple stock has now broken down in a big way.  Apple may have some cash in the bank but it's only $42 a share.  That's not as much as you might think when the stock is trading well north of $400 a share.  In other words, it is not a credible threat to shorts that AAPL will be able to buy the share price higher either through share buybacks or dividends.  In fact, AAPL dividend is only a crappy little 2.4% right now even after the recent share price crush.

In related news (yes, it's all tied together at the fractional reserve hip), Wal-Mart CEO is out making up excuses for falling profits: shelves that are not being stocked quickly enough.  He blames his employees and anyone else within blaming distance.  I call bull$hit.  His employees are doing the same reasonable job that they did last year and the year before.  They didn't just turn into lazy shiftless slugs.  Everytime I go in there late at night they are stocking the shelves diligently.  Not at a frenzied pace, but nobody is sitting around bulltalking either.  Long ago I predicted that one day the collapse would catch up to us an we would see dramatic shortages of products.  The first shortages are expected to be spotty, here and there.  They are caused by less shoppers coming in which makes store managers hold off on restocking so that Wal-Mart is never carrying more than X days of stock.  Shortages of certain other items at this early stage, like gun ammunition, should be a warning shot to anyone paying attention.  This is due to hoarding. When people get worried about the future, they hoard. 

In a Debt Ponzi collapse situation, hoarding is the main cause of early shortages.  As the collapse wears on, the product shortages are caused by lack of profitability by suppliers.  They simply get tired of giving their stuff away at a tiny profit or even at a loss.  As Wal-Mart screws its suppliers into the woodwork, the suppliers revolt by breaking off ties.  But the suppliers have to make a living somewhere and so after the shortages cause prices to rise they begin selling in alternate markets (like out the back of their van, out of their garage, etc.).  At some point government steps in to try to force people to go through the corporations.  Why: BECAUSE PEOPLE SELLING STUFF OUTSIDE OF GOVERNMENT BACKED CORPORATIONS CANNOT BE TAXED.  Corporations get in bed with governments because corporations want special treatment that small guys don't get.  The government provides these incentives because corporations have to submit to government scrutiny and it is easy to determine if taxes are being collected.    This is why corporations and government are so tight and for no other reason.  They have ganged up to screw the people.

Sooner or later the unholy corporation-government alliance breaks down and black markets are the result.  This is coming.  It has to.  This is math speaking.  If you have any sense at all, make sure you have a food stockpile and access to other things that you will need in order to live like you want to.  An economy built by massively leveraged debt must eventually collapse.   Try not to fear it.  Those who understand it and prepare for it in the sure and certain knowledge that it will eventually arrive will be just fine.

In perhaps sooner to be relevant than one might believe news, here is one of the best written interpretations of the 2nd ammendment that I have ever read.  It was written back in 1998 and so there is little reason for anyone to still be doubting the true meaning of the 2nd ammendment.  In case you are not sure, I invite you to have a look.

And finally, under the catagory of "a house divided against itself cannot stand", check out the fiery, anti-Obama rantings of Texas' own congressional representative Steve Stockman.  This isn't some cheezy blog (like Economati ;  0) but rather the web site of an official elected to a federal position from a major state.  He likes to use terms like "scarequester" and "Obama Failometer" in his posts.  He wouldn't be doing this if the people weren't eating it up with a stick.  Fake political correctness is flying out the window.  In fact, so it a good deal of common civility.  And it will get a Hell of a lot worse before it gets any better. The herd is very restless these days.

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