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9:17am gold 1299.10 silver 21.38 eom
Try this link for W/L half dollars. It's a decent price guide that is current. You can tell the common date stuff from the rarities by the price.
http://www.pcgs.com/prices/PriceGuideDetail.aspx?MS=1&PR=1&SP=1&c=733&title=Walking+Liberty+Half+Dollar
........al
I really can't say whether or not a civil war or uprising is coming, or chaos or violence in the streets. I always say watch Detroit as IMHO that's where any large social disorder will start and spread to the other major cities from there. I could well be wrong. I know several people that have lived in the Detroit area that ran away as fast as they could and from what they tell me I don't want to get within 100 miles of that area. Again JMHO. As far as "throwing" gold for self defense, I take that metaphorically. In case of social breakdown, gold and silver along with tobacco and alcohol are great barter items. As for self defense I have a lot of other metal stored to throw at pillagers if needed. It's mostly good old fashioned lead. No I'm not a radical survivalist living in a cave. Just would rather be prepared than caught with pants down. And I dare say I am not alone.
.......al
IMHO gold and silver have a long way to go before reaching the top. He may be better off holding unless there is a financial emergency. Ebay is a good way to get a decent price, far more than the local coin shop is willing to pay. Even after fees the return would be better. Maybe this will help determine value. It is the formula I use for dtermining the melt value of US 90% silver coins.:
Spot price of silver X .715 = number to multiply face value to determine melt value
example:
spot POS = $21.18
21.18 X .715 = 15.1437
IOW the melt value of US 90% silver coins when spot silver is $21.18 is 15.1437 times the face value of the coin or coins.
Say you have $67.80 in face value of dimes quarters and half dollars.
67.80 X 15.1437 = $1026.74 silver value if melted
Most people would use 15 instead of all the decimals until it hits 16 or higher. It's just the way it is. This is the formula to find melt value of the silver content. If you can get that you are extremely fortunate. Unless you are located near a large metals refinery that melts silver you would be selling to either someone that is willing to hold it for a higher return or will be passing it along. Either way don't expect melt value or you will be disappointed. Close is good.
Hope this helps.
...........al
The Folly Of Investing Today
from Karl Denninger
Investing is all about trying to determine a longer-term direction for the market such that risk and reward align in some meaningful way.
Yesterday, on Blogtalk, I stated that I was pulling all of my long-term investments that were market-related, and for an indeterminate time forward I would be only short-term trading this market.
That deserves an explanation, and toward this end, I would like to present the following 10 year weekly chart.
The regular "trace" is the S&P 500 price. The white trace is the 10 year Treasury yield as a comparative.
You need to pay attention to this.
"This time it's different" is often said.
It is almost always wrong, and believing in it will almost always make you broke.
Here's reality folks. Over the previous 10 years the TNX has never declined meaningfully without the S&P 500 following it, and declining to near or below it on a comparative basis.
The TNX almost always leads on declines too, sometimes by as much as six months.
Well, it's been six months.
In 2007, the TNX peaked in late June, after which it began a dive. The market peaked in the middle of October of that year at 1576. The decline essentially reached the comparative bottom.
Now the TNX has peaked the first week of April of this year, and is quite close to the March 2009 lows. Yet the S&P, after it took a swoon, has recovered.
Exactly as it did in 2007.
We all know what came next.
The same thing happened in 2000, when the market peaked and fell apart. Again, the TNX led. It in fact peaked almost exactly at the end of the year in 1999. Three months later "it" began.
The TNX move today, as I outlined in Ticks in real-time, broke a triangle formation that should have moved higher. That was a continuation pattern. Instead, it broke the wrong way - hard - even before The Fed announcement. After The Fed announcement the move was accentuated dramatically.
This is not a sign of "improvement" nor is it a sign to "buy stocks", as Cramer claimed today after the FOMC announcement. To the contrary. It is a strong signal to sell everything and get the hell away from the stock market. It is an indication that the market should, if it follows past precedent, decline by as much as 30%, and perhaps more.
The market usually leads the TNX when it bottoms and the market heads higher.
The TNX always leads the market when it declines.
The 2yr is at all time record low yields.
Lower than during the decline in 2008 and 2009.
This strongly implies that the March 2009 "666" low in the S&P 500 is NOT a "generational low", AND IT WILL IN FACT BE BREACHED.
The bond market is very, very rarely wrong folks. When it disagrees with equities you're a fool to believe the equities, unless of course you hate money.
This has always been true, and it will always be true.
The market is "betting" that Bernanke will come in with more "Quantitative Easing", or even better, that it can force Bernanke to implement more "Quantitative Easing." Japan in fact did this, and has continued to do so.
Where was the all-time high in the Nikkei 225, and where does it trade now? Did it ever get back to those highs?
No.
Does Japan have a massive foreign account deficit? No - they have a foreign account surplus. Their debt is owed to Japanese - not to foreigners, as ours is.
"Quantitative Easing" is a scam. It's yet another sop and fraud to allow the government to deficit spend "allegedly" without consequence. It covered $1 trillion of deficit spending the last time. If they do come in again all they will do is cover another $1 trillion in deficit spending by the government, while your actual disposable income in terms of goods and services will see yet more declines, just as occurred from 2000-2010.
That's all folks.
The "scam" part of it is that there is no way The Fed can ever reduce it's balance sheet once it does this, because to do so the government will have to decrease spending by an equivalent amount to that "eased." It will never do so. Not voluntarily, anyway. Gold is moving higher on the bet that the attempt to "allow" continued government spending will fail and ultimately the government will be forced to default (either literally or through massive unsterilized money printing that destroys the currency.) I don't think that will prove correct - I think our foreign creditors will pull our credit card first. But that's what Gold is saying, and if Gold is right, then America as a nation is finished, and our government will eventually dissolve either into outright tyranny or civil war and you will be THROWING your gold at people to defend yourself.
The only way The Fed can "fix" the market and economy in the intermediate term is to raise rates. That is, remove liquidity and force rates higher. Doing so will cause the TNX to rise along with the rest of the yield curve.
It will also shut down the Federal Government's deficit spending binge immediately as they will not be able to fund both that binge and the (higher) interest payments on the debt.
Bernanke is not going to do it.
Not now, not ever, unless he is forced by external events, and I believe eventually he WILL be.
Unlike Japan we cannot play this game as they did, simply because of our foreign account deficits. Japan got away with it for as long as they did for that reason, but even their capacity to do so is becoming strained.
The simple truth is that Bernanke can't pull liquidity at the present time because the government is spending all of its tax receipts paying for entitlements.
Even if the economy "recovers" he still can't do it because doing so means that interest expense would more than double, and the government doesn't have the money now and won't even under a rosy economic recovery scenario.
This is an environment in which it makes sense to own stocks as investments?
The hell it does.
This is a classic "death spiral" situation and equity valuations are in a severe bubble as a consequence of all the government "cheese", despite "appearing" to be "cheap."
Bernanke has bricked himself into the outhouse and he knows it. Thus, all the "soft threats" to "quantitative ease" and all the screaming from both the left and right for yet more of it - both sides know exactly what sort of box they're trapped in, and it's a box of their own design.
Oh sure, there can be short-term pops in the market. They might even last months. There could even be parabolic moves upward. The Nikkei has had several of them.
But you cannot invest in them.
You can trade them, and if you have the time and patience to do so in a dispassionate fashion then have at it, but you cannot invest in equities, nor can you buy any coupon (bonds) with any sort of meaningful duration.
If you do, you will ultimately be destroyed.
Those pension funds and other investors who are "reaching for yield" and "reaching for risk" at the present time are making the biggest mistake of their lives. It is inevitable that this strategy will fail and when it does what you formerly thought was "safe" - whether it be your pension, your Social Security, your Medicare, your kid's prepaid college education - all of it will be gone.
This preoccupation with Bernanke's folly is not only unhealthy, it is certifiably insane.
The TNX does not lie folks.
It has not in the past - not even when "Easy Al" was running the joint and handing out money like candy. Nor has it this time, with Bernanke doing the exact same thing Easy Al was doing.
Policies haven't changed and until they do neither will market relationships.
Act as you deem best, but ignore the bond market at your considerable peril.
It is rarely wrong.
9:03am gold 1294 silver 21.09 eom
Greenspan’s Warning on Gold
http://www.nysun.com/editorials/greenspans-warning-on-gold/87080
Editorial of The New York Sun | September 15, 2010
Alan Greenspan spoke at the Council on Foreign Relations earlier today, and what was his advice? That central bankers should be doing what these columns, among others, have been rattling on about, namely that they should be paying attention to gold. “Fiat money has no place to go but gold,” the former Fed chairman said at the Council, according to economist David Malpass, who quotes Mr. Greenspan in one of Mr. Malpass’ emails on the political economy. Mr. Malpass writes that the former chairman of the Federal Reserve’s board of governors was responding to a question in respect of why gold was hitting new highs.
Mr. Greenspan replied that he’d thought a lot about gold prices over the years and decided the supply and demand explanations treating gold like other commodities “simply don’t pan out,” as Mr. Malpass characterized Mr. Greenspan. “He’d concluded that gold is simply different,” Mr. Malpass wrote. At one point Mr. Greenspan spoke of how, during World War II, the Allies going into North Africa found gold was insisted on in the payment of bribes.* Said the former Fed chairman: “If all currencies are moving up or down together, the question is: relative to what? Gold is the canary in the coal mine. It signals problems with respect to currency markets. Central banks should pay attention to it.”
To which, forgive us, one can only say, “Now he tells us.” The fact is that if Mr. Greenspan governed the Fed with an eye on gold, it wasn’t a particularly steady eye. He might argue that when he left the chairmanship of the Fed, in January 2006, he left a dollar worth a 400th of an ounce of gold, slightly more valuable than the 461st of an ounce of gold that it was worth when he came in nearly 20 years before. But in the first five years of the 21st century, when he was in the last quarter of his years as chairman, the value of the dollar started its long collapse, plunging from the 282nd of an ounce of gold that it was worth on January 4, 2000. In the years since, it has cratered to record lows once imagined only by such sages as Ron Paul.
Mr. Greenspan’s remarks at the council were not the first time he gave us a glimpse of his views on gold. He discusses gold on several pages of his memoir, “The Age of Turulence,” reminding that he once told a Congressional committee that “monetary policy should make even a fiat money economy behave ‘as though anchored by gold.’” He wrote that he had “always harbored a nostalgia for the gold standard’s inherent price stability.” But he confesses that he’s “long since acquiesced in the fact that the gold standard does not readily accommodate the widely accepted current view of the appropriate functions of government — in particular the need for government to provide a social safety net.”
The American people, he asserted in his book, have for the most part “tolerated the inflation bias as an acceptable cost of the modern welfare state.” And he claimed, “There is no support for the gold standard today, and I see no likelihood of its return.” We’ll hazard a guess that the statement makes him a man more of the past than of the future. But at least some politicians are hearkening to his advice about the price of gold. They’re people like Congressman Ron Paul and his son, Rand, who may yet be a senator, and Governor Palin, who was one of the first to warn about the gold price, and Congressman Paul Ryan, who asked Mr. Greenspan’s successor, Ben Bernanke about gold.
And, by the way, a few journalists, like Glenn Beck, who are students of history and just can’t believe their eyes that the dollar has plunged to the level it has with so few people raising an alarm. We are in a period when gold is more than a canary — to cite Mr. Greenspan’s bird of choice — it’s a full-throated rooster, cock-a-doodling at the top of its lungs. It was nice to see Mr. Greenspan mark the point at the Council. Would that he’d taken more of his own advice. And nice to see Mr. Malpass mark the Greenspan comments so prominently in his letter to his economic clients. He is more for a gold price rule in monetary policy than a gold standard, but we hope he makes another run for high office at the first chance, and presses the principle for all its worth. It’s what we need in the national debate, and none too soon.
________
* Not just in World War II did the special role of gold come into focus. Covering the fall of free Saigon for the Wall Street Journal in April 1975, your editor witnessed a bank run in which panicked Vietnamese citizens, in the streets outside the financial institutions, bought, when they could, gold that had been pressed into sheets the size and approximate thickness of cigarette paper.
Good afternoon all. I cut that thread off before it got out of hand. Please just disagree with the post or poster w/o getting personal. Disagree but respect the right to have an opposing opinion.
Thanks to all.
............al
How To Truly Take Back America
from Karl Denninger
Here's what the mainstream media isn't talking about, but the Republicans better be paying attention to.
Notice how some Tea Party candidates are knocking off Republicans in primaries? That's mostly because the "big spend, big bailout, no matter how you do it" crap has worn out its welcome with the American people.
Oh sure, you "saved the banks." Or did you? But you didn't do a damn thing for the American people, and worse, you didn't really save anything - you just let people lie.
The people have figured it out, and they're ****ed.
So here's a winning agenda. Run on it, you win. Don't, you might get votes this time, but you're in trouble in 2012 - maybe enough to be unseated as a national party.
Without further ado, here it is:
Roll back the bankruptcy "reform law." Specifically, drop all exemptions from discharge, with the possible exemption of Stafford Student Loans. If you're broke, you're broke. Fraudulent conveyance and similar remains, so if someone's trying to game the system it can still be denied. This means, among other things, that private student loans suddenly become not so safe for all those lenders. Good!
Set up a special bankruptcy court option, good for three years, that all individuals may access once. You can walk in, leave your assets (ex qualified retirement accounts such as 401ks and IRAs) on the table, and walk out clean. Fast, easy, no games. No you can't have a free house, but you're also not saddled with one you can't pay for either. Yes, your credit gets trashed. But the lender gets trashed too. Mandate that the lenders must dispose by public auction of all assets within 180 days to establish a price through the market. This is the right way to do it and it has to happen - we must clear the system, and this is the only way. This will also establish prices for all the assets - whether they be cars, houses, boats, or whatever.
Adopt a deflationary platform. Yes, I mean it. Nobody complains about computers being cheaper every year - not even the computer makers. If you want there to be more of something in the economy and for it to be more accessible, the easiest way is for that thing to be cheaper. No more price supports for houses, stocks, anything. Period. Make it an explicit goal that people should be able to buy houses for 1x their incomes. Really. Yeah, ok, they won't be mansions. And? It's a damn house, not a showpiece! Apply this to the rest of the economy as well. Force The Fed to either actually deliver price stability, defined as exactly that - zero inflation - or replace them.
Make it a policy that state taxation systems must change so that ad-valorem property taxes are abolished. You don't own something if you have to pay a tax to keep it - you're renting it from the government. That must stop. It also prevents states from tying their budgets to bubble housing, which is absolutely essential and must be done right now.
Recognize that people have a right to be left alone - and stop acting like a police state. The government has put in place at all levels the essential requirement to use some sort of vehicle to get around. Just try to ride a horse in any urban area and tell me how that works out! You can actually get a DUI riding a bicycle in many states, including Florida. The founders would have never tolerated "horse-riding licenses", but we tolerate "driver licenses" along with prosecuting people for activity that, realistically, can only cause harm to themselves. This is insanity, especially when current technology is used to robotically scan every license plate on the road. We have become a nation where sticking your head out of your front door means you are effectively wearing your official government barcode on your damn shirt, enforced by Federal and State law. This is increasingly being used to screw people for profit. I am noticing an increasing and very-disturbing pattern - a citizen is stopped for some routine traffic violation and given a ticket. They don't have the money and don't pay; the state revokes their driver license and plates. The insurance company then revokes their insurance (being notified by the state.) Two weeks later the same citizen is pulled over (likely due to a robotic scan of their plate) and now they are arrested for driving with a revoked license. This results in a short jail sentence and now the citizen loses his job! He gets out and has to drive to get a new job, and gets caught again. After the second or third time this guy is now facing a felony charge. His actual offense, when you boil it all down? He has to get to work to put food on the damn table and fed his kid instead of paying a traffic ticket! SINCE WHEN IS ATTEMPTING TO FEED YOUR FAMILY A FELONY OFFENSE? WE HAVE TO STOP DOING THIS SORT OF CRAP DAMNIT! Adopt the official position (and back it up with repeal of laws to the contrary) that what i do in my bedroom, behind the closed door of my residence or in the ordinary course of living my life is none of the government's damn business until and unless I hurt someone else, or until I wish to cross a national border. This means no more driver licenses, no more license plates, no more drug war and no more "red light cameras." If and when I hit someone in my vehicle due to something that's my fault, I should be hammered for the harm I did to the other person and/or their property - but not until then. Make it the law of the land that if I do said harm and can't cover the damage either personally or via insurance then the state comes down on me with a criminal charge. We don't need new laws for this, incidentally - felonious assault is already illegal! If I want to smoke a joint or screw a goat (that I own) behind the closed door of my home, it's none of the government's damn business. Likewise if I want to pray facing Mecca, a Cross, or the graven image of some Nordic Deity, or I am traveling not in commerce going about my personal life. There is every reason for the government to police our national borders and be absolute jackasses about what comes in and out - or who - but those who are here lawfully in this nation have every reason to expect to be left alone. This is indeed the foundation of America. Start acting like the party of limited government instead of lying out both sides of your mouths.
Adopt a 100% energy independence plan and mean it. This means nuclear power and lots of it. The Thorium Fuel Cycle (liquid salt reactors) is the obvious way forward. We discard more fuel for these devices (it's a natural part of coal) by a factor of ten (in terms of thermal energy available) than we burn in coal every year! That's idiotic. Put a gigawatt reactor on every military base in the nation for starters, and have the Navy run 'em. They have a history (since the Nautilus) of being able to do so with zero accidents. No, this is not risk-free. But within 20 years we will be able to exit the Middle East and most of our other "international" entanglements related to energy dependence - which, incidentally, is what drives the actual necessity of most of that involvement, whether we wish to admit it or not. Liquid hydrocarbons are used for transportation because they have excellent energy density. We can't get close to that energy density with anything else today, and won't be able to to for a long time - so deal with reality instead of denying it, and put in place the infrastructure to make all of the liquid hydrocarbons we want to consume. Pass a law that any vehicle that can achieve 75mpg at 70mph on a level road on a continuous basis and will run on any mixture of two or more of ethanol, gasoline and diesel fuel (including biodiesel of any percentage) is emissions exempt. Do this and within five years half the car fleet will be getting that 75mpg which will more than double the fleet mileage from today's levels.
Fair Tax. Two words. Not just because it will stop most of the games (although it will) but because it exposes the cost of government to everyone, with no hiding of the sausage. It also gets rid of the entirety of the tax code and compliance costs, which are huge. This will unleash an economic boom at least as powerful as the one following WWII.
Everything is marked to the market, all the time, with no games. If this blows up the banks then it does. Close 'em and spend the money to pay the depositors.
One dollar of capital. If a bank wants to lend unsecured in any amount they must have one dollar of capital at all times behind that loan, and everything in this regard has to be marked nightly. This instantaneously removes systemic risk from the system. Yes, it also makes the 33:1 leverage games impossible and severely constricts bank profitability. Banks are public utilities, since by definition their "strength" and "trust" come about as a consequence of the currency of the nation - and nothing else. Start treating them as utilities instead of gambling houses and 99% of the problems we have with credit bubbles and all of the ill effects therefrom (e.g. meteoric rises in the cost of health care, college, houses, etc) are impossible to sustain. The immediate whine will be "but all these institutions will go to other countries!" Fine - let 'em. If someone wishes to play with financial nuclear weapons I prefer they do it over there, not here, and blow up their economy instead of ours. The truth is that they'll comply - they want access to our markets and our people, and if this is the price, they'll shut up and swallow.
Outlaw public unions and transfer all their pensions to the PBGC at whatever they have - and close them. These "promises" were extracted by extortion. If you get me to "agree" to give you money at gunpoint that's unenforceable. What's happened here is no different, and besides, we don't have the ability to pay even if it was just to do so, and it's not. So shut 'em down. If the teachers, firefighters and cops don't like it fire 'em all - with unemployment north of 10% there will be no shortage of people lining up to get a nice middle-class job.
Allow citizens to bring suits in the name of the government for frauds and scams, with them getting 50% of the recovery, with no exceptions. Basically, radically expand the "Qui Tam" provisions. And while you're at it, change the anti-fraud laws so that any fraud committed by a financial institution is punishable by a fine 100 times the amount of the gross handled or the profit made, which ever is greater. If you want to stop this crap you have to make it so bad if you get caught that there are good odds you'll be out of business. That ought to turn loose the Landsharks to clean up the slop that has infested our financial system.
Enact my Health Law, repealing the Obama Abortion, piece by piece if necessary. We have to get costs down - bigtime. This is the only way to do it - true competition, forced published pricing so that there's no discrimination, and solving the "I don't have insurance" cost-shift problem by making such a person's debt theirs, enforced by what's left of the IRS. We in addition must end the arbitrage game played by device and drug manufacturers where they effectively charge off the entire R&D cost to Americans and then allow the rest of the world to have that developed technology at "reproduction cost."
End Fannie and Freddie. Place them in run-off. No guarantees. If the bondholders take losses, they do. If the MBS holders take losses, they do. Again, the point here is to withdraw price supports so that house prices find their natural level. We can't do it so long as we have "back door" $1,000 down payments being funneled through these "agencies" who parleyed a guarantee that never really existed via political favors. Stop it! It should be damn expensive to borrow money for 30 years. The way to prosperity is to stop enabling debt slavery - if you want to borrow money to buy a house the price beyond 10 or 15 years to do so should be exorbitant. Yes, I'm well-aware that this contracts home prices to ~1-1.5x incomes. If we're truly interested in sustainable home ownership this is what has to happen - people need to be able to save the price of a house in 10-15 years and pay in cash by saving 10% of their income.
Enact wage and environmental parity tariffs. We cannot have a solid middle class without manufacturing being it's base, and we cannot import 90+% of everything we consume that is manufactured. So long as multinational corporations can find a slave labor encampment that allows them to dump toxic waste into the air and water, they will - it's the profit motive stupid! The only way to stop it is to make it unprofitable, and that means exercising the just and lawful power in The Constitution to lay and impose tariffs. If we really care about employees and the environment then we care about them no matter where in the world they are. If these standards are not worthy of enforcement everywhere then we need to shut the hell up about them here and let the manufacturing take place here under the same conditions that it now happens there.
End welfare - period. SSD (Disability) assistance is ok, provided it's not gamed. Right now it is gamed. Make gaming it a serious felony and actually prosecute it. When we let all the people in prison for smoking weed out, we'll have room for the fraudsters - including those who claim to be "totally disabled" who aren't. If you need public assistance you will have to work for it from the first day. Getting rid of public unions will fix the objections to this too - right now we "can't" use prison labor, we "can't" have workfare instead of welfare (e.g. maintaining roads, including light repair and trash collection) because it takes "public union jobs" and similar nonsense. We cannot pay people to sit on their ass if they're able to move their ass. The fundamental nature of an economy is that you must always produce more than you cost, or the economy eventually rolls over and dies. While we can, and should, help those who truly are unable to help themselves, this is a vanishingly small percentage of those who get government handouts - nearly all can, in fact, do some sort of work, from manual labor on up.
Shut the hell up about "wedge issues." Get out of my bedroom, my bathroom, my doctor's office and my home. It's none of the government's damn business and you will never convince the people on the other side of these issues that you're right. So shut the hell up and understand that 225 years ago the founders put in a system of limited Federal Government because they understood that The Federal Government in fact can only secure and enforce rights - it doesn't grant that which it never had to grant in the first place.
There you have it. A political platform that ****es off all the "establishment" types but if enacted would lead to an immediate flush of all the bad debt and distortions in the economy, followed by a sustained, powerful and STABLE period of economic prosperity, along with a restoration of our Constitution and Rule Of Law.
We either choose a bright future - the future laid out in this platform - or we sink into darkness and ultimately will wind up as a failed state when the "powers that be" have stripped the carcass of America to the bone.
Good morning Basser- just thinking here, but why couldn't they sell both the old and the new star trek urns? People do like to have choices.
.......al
Good morning all. For the record my search engine has been very active in the past 24 hours. This star trek urn news has been picked up by many different sites, too numerous to post them all. Happy autumn days everyone.
..........al
There is much disagreement on the direction of this company and where it will end up. We are all entitled to our opinions. Sometimes we need a little humor to dial back a bit, relax, have a beer or two. The world didn't begin with Eternal Image, Ihub, nor anyone's opinions. It will end devoid of all of the above I'm sure. I don't post much as I have not much to say, but I read daily between keeping the minifarm going and winter preparations.
Mr lawrenzo this was a response to your post however it was not directed towards you. It is meant for all.
FTR- I am still holding 3+ million shares. March 2012 is coming Heppie.
..........al
Just my 2¢. I question the agenda and identity of someone that posts information on a message board that cannot be linked nor verified independantly. Where does the info come from and how was it made available and why can't anyone else find it? I added my position a couple of weeks ago and am still holding. GL2 all.
..........al
I read that one late yesterday. The general consensus of opinion seems to be that FINRA was throwing the public a bone. No one will touch the big houses for doing the same thing.
.......al
Any truth to the rumor that trekkies all over are lining up at their local funeral homes with checkbooks in hand? Board needs a little humor now and again.
........al
There was a rumor floating around the internet right after the invasion of Iraq. The mainstream press gave it no coverage. It was rumored that Saddam Hussein was trying to influence OPEC to quit trading their oil in the US dollar and use an alternative currency as in gold. That was supposedly the real reason the US invaded Iraq to depose Saddam. I have read other blogs, none recently, that the US will and is using their superior military strength to support the US dollar in world markets. 2000 years ago the Roman empire was doing the same with their legions as Rome was debasing their own coin of the realm by adding less and less silver and gold as time went on. Parallels with the same ending? A given IMHO.
...........al
Oh what is a president to do. Long read but full of good info.
.............al
http://www.stratfor.com/weekly/20100913_elections_obamas_foreign_policy_choices?utm_source=GWeekly&utm_medium=email&utm_campaign=100914&utm_content=readmore&elq=09d5c535524347f8ae659e83d1406457
"Elections and Obama's Foreign Policy Choices is republished with permission of STRATFOR."
By George Friedman
We are now nine weeks away from the midterm elections in the United States. Much can happen in nine weeks, but if the current polls are to be believed, U.S. President Barack Obama is about to suffer a substantial political reversal. While we normally do not concern ourselves with domestic political affairs in the United States, when the only global power is undergoing substantial political uncertainty, that inevitably affects its behavior and therefore the dynamics of the international system. Thus, we have to address it, at least from the standpoint of U.S. foreign policy. While these things may not matter much in the long run, they certainly are significant in the short run.
To begin thinking about this, we must bear three things in mind. First, while Obama won a major victory in the Electoral College, he did not come anywhere near a landslide in the popular vote. About 48 percent of the voters selected someone else. In spite of the Democrats’ strength in Congress and the inevitable bump in popularity Obama received after he was elected, his personal political strength was not overwhelming. Over the past year, poll numbers indicating support for his presidency have deteriorated to the low 40 percent range, numbers from which it is difficult, but not impossible, to govern.
Second, he entered the presidency off balance. His early focus in the campaign was to argue that the war in Iraq was the wrong war to fight but that the war in Afghanistan was the right one. This positioned him as a powerful critic of George W. Bush without positioning him as an anti-war candidate. Politically shrewd, he came into office with an improving Iraq situation, a deteriorating Afghanistan situation and a commitment to fighting the latter war. But Obama did not expect the global financial crisis. When it hit full blast in September 2008, he had no campaign strategy to deal with it and was saved by the fact that John McCain was as much at a loss as he was. The Obama presidency has therefore been that of a moderately popular president struggling between campaign promises and strategic realities as well as a massive economic crisis to which he crafted solutions that were a mixture of the New Deal and what the Bush administration had already done. It was a tough time to be president.
Third, while in office, Obama tilted his focus away from the foreign affairs plank he ran on to one of domestic politics. In doing so, he shifted from the area where the president is institutionally strong to the place where the president is institutionally weak. The Constitution and American tradition give the president tremendous power in foreign policy, generally untrammeled by other institutions. Domestic politics do not provide such leeway. A Congress divided into two houses, a Supreme Court and the states limit the president dramatically. The founders did not want it to be easy to pass domestic legislation, and tradition hasn’t changed that. Obama can propose, but he cannot impose.
Therefore, the United States has a president who won a modest victory in the popular vote but whose campaign posture and the reality under which he took office have diverged substantially. He has been drawn, whether by inclination or necessity, to the portion of his presidency where he is weakest and most likely to face resistance and defeat. And the weaker he gets politically the less likely he is to get domestic legislation passed, and the defeats will increase his weakness.
He does not, at the moment, have a great deal of public support to draw on, and the level of vituperation from the extremes has reached the level it was with George W. Bush. Where Bush was accused by the extreme left of going into Iraq to increase profits for Halliburton and the oil companies, Obama is being accused by the extreme right of trying to create a socialist state. Add to this other assorted nonsense, such as the notion that Bush engineered 9/11 or that Obama is a secret Muslim, and you get the first whiff of a failed presidency. This is not because of the prospect of midterm reversals — that has happened any number of times. It is because Obama, like Bush, was off balance from the beginning.
If Obama suffers a significant defeat in Congress in the November elections, he will not be able to move his domestic agenda. Indeed, Obama doesn’t have to lose either house to be rendered weak. The structure of Congress is such that powerful majorities are needed to get anything done. Even small majorities can paralyze a presidency.
Under these circumstances, he would have two choices. The first is to go into opposition. Presidents go into opposition when they lose support in Congress. They run campaigns against Congress for blocking their agenda and blame Congress for any failures. Essentially, this was Bill Clinton’s strategy after his reversals in 1994, and it worked in 1996. It is a risky strategy, obviously. The other option is to shift from the weak part of the presidency to the strong part, foreign policy, where a president can generally act decisively without congressional backing. If Congress does resist, it can be painted as playing politics with national security. Since Vietnam, this has been a strategy Republican presidents have used, painting Democratic Congresses as weak on national security.
There is a problem in Obama choosing the second strategy. For Republicans, this strategy plays to their core constituency, for whom national security is a significant issue. It also is an effective tool to reach into the center. The same isn’t true for the Democrats. Obama’s Afghanistan policy has already alienated the Democratic left wing, and the core of the Democratic Party is primarily interested in economic and social issues. The problem for Obama is that focusing on foreign policy at the expense of economic and social issues might gain him some strength in the center, but probably wouldn’t pick him up many Republican votes and would alienate his core constituency.
This would indicate that Obama’s best strategy is to go into opposition, government against Congress. But there are two problems with this. One of the underlying themes of the Obama presidency is that he is ineffective in getting his economic agenda implemented. That’s not really true, given the successes he has had with health-care reform and banking regulation, but it is still a theme. The other problem he has is the sense that he has surged in Afghanistan while setting a deadline for withdrawal and that his Afghan policy is merely a political gesture.
Obama can’t escape national security issues. Clinton could. In 1996, there were no burning issues in foreign policy. There are now two wars under way. Obama can’t ignore them even if his core constituency has a different agenda. Going into opposition against Congress could energize his base, but that base is in the low 40s. He needs to get others on board. He could do that if he could pass legislation he wanted, but the scenario we are looking at will leave him empty-handed when it comes time for re-election. His strongest supporters will see him as the victim, but a victimized president will have trouble putting together a winning coalition in 2012. He can play the card, but there has to be more.
We come back to foreign policy as a place where Obama will have to focus whether he likes it or not. He takes his bearings from Franklin Roosevelt, and the fact is that Roosevelt had two presidencies. One was entirely about domestic politics and the other about foreign policy, or the Depression and then World War II. This was not a political choice for Roosevelt, but it was how his presidency worked out. For very different reasons, Obama is likely to have his presidency bifurcated. With his domestic initiatives blocked, he must turn to foreign policy.
Here, too, Obama has a problem. He ran his campaign, in the Democratic tradition, with a vague anti-war theme and a heavy commitment to the American-alliance structure. He was also a strong believer in what has been called soft power, the power of image as opposed to that of direct force. This has not been particularly successful. The atmospherics of the alliance may be somewhat better under Obama than Bush, but the Europeans remain as fragmented and as suspicious of American requests under Obama as they were under Bush. Obama got the Nobel Prize but precious little else from the Europeans. His public diplomacy initiative to the Islamic world also did not significantly redefine the game. Relations with China have improved but primarily because the United States has given up on revaluation of the yuan. It cannot be argued that Obama’s strategy outside the Islamic world has achieved much. It could be claimed that any such strategy takes time, Obama’s problem is that he is running out of political maneuvering room.
That leaves the wars that are continuing, Iraq and Afghanistan. We have argued that Afghanistan is the wrong war in the wrong place. It is difficult to know how Obama views it, given his contradictory signals of increasing the number of troops but setting a deadline for beginning their withdrawal. We have argued that a complete withdrawal from Iraq without a settlement with Iran or the decimation of Iran’s conventional forces would be a mistake, but we don’t know, obviously, what Obama’s view on this is. We do not know his view of the effect of the Afghan war on U.S. strategic posture or on Pakistan, and we do not know his view of the impact of U.S. withdrawal from Iraq on Iranian influence in the Persian Gulf.
Let’s assume that he has clear views, which is likely for a president, and he is playing a long and quiet game. This would not be a bad strategy if he were stronger and had more time. But if the polls hold he will be weaker and running out of time. It would therefore follow that Obama will come out of the November election having to turn over his cards on the only area where he can have traction — Iraq, Iran and Afghanistan. The question is what he might do.
One option is to solve the Iraq problem by attacking Iran’s nuclear facilities. This carries the risk, as I have said many times, of Iranian retaliation in the Strait of Hormuz and a massive hit on the Western economic revival. In that sense, a strike against Iranian nuclear targets alone would be the riskiest. Far safer is a generalized air campaign against both Iran’s nuclear and conventional capability.
But launching a new war, while two others go on, is strategically risky. From a political point of view, it would alienate Obama’s political base, many of whom supported him because he would not undertake unilateral military moves. The Republicans would be most inclined to support him, but most would not vote for him under any circumstances. Plus, brilliant military strokes have the nasty habit of bogging down just as mediocre ideas do. That would end the Obama presidency. Clinton’s war in Kosovo was not an easy option for him strategically or politically.
That leaves another option that we have suggested before, one that would appeal both to Obama’s sensibility and to his political situation: pulling a Nixon. In 1971, Richard Nixon reached out to China while Chinese weapons were being used to kill American soldiers in Vietnam. Roosevelt did the same with the Soviets in 1941. There is a tradition in the United States of a diplomatic stroke with ideological enemies to achieve strategic ends.
Diplomatic strokes appeal to Obama. They also would appeal to his political base, while any agreement with Iran that would contribute to an American withdrawal from Iraq and perhaps from Afghanistan would appeal to the center. The Republicans would be appalled, but Obama can’t win them over anyway so it doesn’t matter. Indeed, he can use their hostility to strengthen his own base.
What the settlement with Iran might look like is murky at best. Whether Iran has any interest in such a settlement is murkier still. But if Obama gets hammered in the midterms, his domestic agenda will be frozen. He doesn’t have the personal strength and credibility to run against Congress for two years and then get re-elected. He retains his power in foreign affairs but he has not gotten traction on a multilateral reconstruction of America’s global popularity. He has two wars ongoing, plus a major challenge from Iran. Attacking Iran from the air might or might not work, and it could weaken him politically. That leaves him with running against Congress or addressing the Middle East with a diplomatic masterstroke.
It is difficult to know the ways of presidents, particularly one who has tried hard to be personally enigmatic. But it is easier to measure the political pressures that are confronting him and shaping his decisions. I wouldn’t be so bold as to predict his actions, but I would argue that he faces some unappetizing choices that he could solve with a very bold move in foreign policy. His options on the domestic side will disappear if the polls are right.
Just a suggestion, but someone may want to keep in close contact with the TA. I am one of the crybabies and whiners that ran away with a small loss when the dreaded words reverse split hit the airwaves. Kept watching this for a post R/S entry and am smelling dilution here. I hope I'm wrong for everyone's sake but the volumes and share price decline are very telling IMHO. Good luck to all here.
.........al
Bob- makes a lot of sense and answers a lot of "why"s lately. China could take a miniscule amount of their dollar reserves and literally bankrupt the COMEX in a day if they chose to do it.
.........al
Denninger on 9/11:
Remembering 9/11
How many of us don't remember exactly what we were doing?
I woke up and turned on the television in my bedroom, preparing to start my day. The north tower was on fire, and I thought "Oh crap, what a horrible accident."
While I listened to the TV people prattling on and the growing collection of firefighters and other emergency personnel around the tower, the second plane came screaming toward the South Tower in the infamous frame that we have all replayed thousands of times in our mind...
And, of course, the rest.
For nine years we have heard of conspiracies and other things I place firmly in the category of "nutters." That we still have these debates nearly ten years later is a disgrace and an indictment of every public school system in this nation for the last fifty years. In short, if you have any sort of grounding in science at all, along with a working pair of eyeballs, you both know that a plane hit each of the buildings, they were set on fire by the enormous amount of kerosene contained in each aircraft, and the structural steel failed as a consequence.
Yes, I've heard the claims - that "thermite" was used, that there were charges, etc. Again, basic science says this is utter crap. First, both buildings failed originally right at the point of the fire. This is clearly visible in the video images. Second, it would essentially be impossible to know in advance, within a couple of floors, where those planes would hit, and in fact the impacts were not precise at all - one was much higher than the other. Third, the amount of demolition material (irrespective of the type) to do this and the interconnection and firing mechanisms necessary to coordinate it (you've all seen controlled demolitions, right?) would have required months of work, all of which had to happen without one person who worked there in the tower becoming suspicious about columns being sc****d clean of insulation, insane amounts of noise generated by the mechanical abrasion necessary, radical intrusion into the working spaces of the towers and their offices, and other similar acts. Finally, such a coordinated action would have required the involvement of hundreds if not thousands of individuals from the provision of the supplies to the mechanical preparatory work involved to the actual operation, and none of them - not one - could defect.
I'm supposed to believe this?
I'm particularly supposed to believe this while the President of the United States cannot hide and prevent coming to the public's knowledge one semen-stained dress?
These "theories" are bereft of fact or reason. They are the product of nutcases. To repeat or give them time and credence is to spit on the graves of the 3,000 men and women - American Citizens - who perished at the hand of Islamic Terrorists on 9/11/01.
Speaking of which, we must never forget, nor allow to be wiped from the public discussion, that these were ISLAMIC TERRORISTS.
These were not "random people" who were ****ed off and decided to attack America. This was a highly-coordinated and executed military operation, exactly as was the Japanese attack on Pearl Harbor. Those who claim we have no "identified enemy" in this regard are not mistaken, they are liars.
And exactly as occurred on December 7th, 1941, we were caught flat-footed. On December 7th the US Military saw the incoming planes on a new technology that at the time had not yet been perfected - radar. The incoming flight of bombers was reported up the chain of command. These are historical facts, and no amount of spin changes them. Just as on 9/11, our military chain of command and our civilian government made mistakes. We did not sound the alarm on December 7th, and if we had we would have been prepared to meet force with force. The Arizona might not be on the bottom of Pearl Harbor and many Americans might have survived that, in fact, died that day.
There is no way, of course, to know what the change in outcome would have been on December 7th, just as there is no way to know what the change in outcome would have been on 9/11.
What we do know, however, is that Americans, when they quit the nutter crap and decide they've had enough, have what it takes. American Flight 93 is proof of this - 33 passengers, Americans, made the decision mid-air to not permit their aircraft to be used as a flying bomb to attack what was (at the time) an unknown target on the ground. They decided that they would either retake the aircraft from the hijackers or die trying. They died, and America owes each and every one of them full military honors for their acts of bravery that day, as the intended target of that plane was apparently either the Capitol or the White House.
There are also those who claim that a "missile" hit the Pentagon. This too is nonsense.
Literal thousands of people saw a large civilian aircraft ram the building.
We also know that there were apparently more aircraft intended to hit buildings that day. They failed to get off the ground due to weather. This puts yet another stake in the heart of those who claim some grand conspiracy, in that one of the first reactions from the Administration and the FAA, once it became clear that we were under attack when the second plane went into the WTC, was to issue a "ground stop" on the entire aviation system under SCATANA, the then-existing national security structure for civilian air traffic. But for that act the number of impacts on their intended target would have been higher than three, and the death toll would have been higher as well.
Today we pay our respects to those who died, and those who loved or knew those who died. I knew people who met God that day, and I also know someone who missed being killed by literal hours, having been in one of the towers on the impact floor the evening before the attack.
But today we should also cast from our circle of friends, acquaintances and associates those who persist in the ridiculous and unsupportable assertion that the towers were "detonated", that the Pentagon was hit not with a plane but rather a missile, and other similar acts of idiocy. Each and every one of those people is a disgrace to the memories of those who died, especially those who died successfully preventing the object of one of these attacks from being hit - the passengers on AA 93.
We still, as a nation, nine years on, refuse to admit what happened on 9/11. We refuse to properly characterize this act just as we refused to properly characterize the attack on the USS Cole less than one year before 9/11. That too was a military operation directed at our military - a warship that was peacefully refueling in Yemen. We were not in Yemen to occupy the nation. We were there refueling - that is, buying fuel for our ship. Our visit to Aden was a peaceful one.
This was not the first attempt. Ten months earlier a similar act of war was attempted against a different US Navy Destroyer. The attack failed because the boat full of explosives was overloaded and sank.
Why is the USS Cole attack important and how do we know it was interlinked? Primarily because one of the future 9/11 hijackers, Khalid al-Mihdhair, was involved in preparing it, and he later commandeered the aircraft that hit the Pentagon on 9/11. It doesn't get much more "interlinked" when you participate in two successful attacks and kill yourself executing the second one.
Those who claim that we have no "identified enemy" in these actions are liars. We do - we have enemies that have self-declared acts of war against America. After the USS Cole was bombed the Yemeni Parliament called from the floor for jihad against America. FBI agents sent to Yemen to investigate were "greeted" by Yemeni Special Forces pointing loaded AK47s at their plane.
This last week we were told by our President that "we have laws to deal with that" when a nutball pastor said he intended to burn a Koran today. Do you all understand how insane that sort of statement is?
Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.
What part of that wasn't clear Mr. President, when you took your oath of office? Your thinly-veiled threat is in fact an impeachable offense, in that it is a direct violation of not one but two of the clauses in the First Amendment.
First, you may not respect an establishment of religion. Therefore, any act of Congress - that is, any law - that you assert to provide "supra-protection" on the premise of religion is void.
The Muslim faith is granted no more or less right to not be offended under the Constitution than is any other faith. Christian faiths are attacked and ridiculed all the time. "**** Christ" and similar "artistic expression" is protected by the First Amendment. So is burning a Koran. That you refuse to recognize this and stand for the rights of Americans when it happens to offend one religion - but not another - is a direct violation of your oath of office for which you must resign.
Second, burning of a book (that one owns) is a clear political statement - that is, speech, as is burning a flag. Both are highly offensive to the persons who find comfort in that particular symbol or artifact. The test of whether someone supports The First Amendment and thus honors their oath of office as a government official occurs when the speech in question is offensive.
After all, nobody ever bothers to try to censor speech that does not offend!
Now let me be clear: I believe that burning books as a political statement is rather idiotic, as is burning flags. You're clearly not going to do anything other than **** people off by doing so. Yet we are witness to Muslims burning American flags and chanting "Death to America" all the time. Do you propose to levy your much-vaunted "laws" against those people? Of course you aren't, and of course you haven't.
If someone is a murderous thug and finds "incitement" in someone else's clear political speech - an act that is without doubt covered by the First Amendment, the problem is theirs. A proper and just government in this nation would arrest and prosecute those who rose and issued death threats as a consequence of that speech. You, personally, along with Gibbs, have instead decided to violate the US Constitution and your oath of office, and threatened the speaker, while remaining silent and taking no enforcement action whatsoever against the thousands who have issued death threats over this "anticipated" act of speech before it even happened!
The Constitution is not your plaything Mr. President. Millions of Americans have given their life in its protection over the last 200+ years, including 33 Americans on flight 93 along with hundreds more who died trying to save citizens in NY on 9/11. They roll in their graves today as a direct and proximate consequence of your despicable acts in this regard.
We are currently trying to prosecute a "police action" in Afghanistan using our military. This is idiotic. Nearly a decade after 9/11, you, along with your predecessor in office, have prosecuted the precise same sort of "war" that you, during the campaign, said you would not. That is, you lack the balls to ask Congress to declare war when in fact we are at war and have been since the USS Cole was bombed, just as did George Bush. I don't care why you lack the gonads for what has to be done to put a stop to this, but do very much care about where this will ultimately lead.
These people have shown over the last decade and more that they understand exactly one thing: overwhelming military force. That's it. Nothing else. You cannot reason with a man who believes that he will go to heaven if he kills in the name of his God, and it does not matter what that God's name is. One who believes in an "eternal reward" for an act of savagery has no mental faculty left with which to reason. You, along with President Bush, have wasted American treasure, both in the form of money and souls, on a path of action that is both futile and idiotic, and our Congress has lacked the balls to force either of you to stop it.
In point of fact that failure is ours as Americans. We the people have the power, as I have repeatedly documented. Congress, along with you and the US Supreme Court, have none that we do not explicitly grant you. By refusing to work and thereby collapsing your tax base, we can shut down Washington DC tomorrow.
But we the people have become too pussified to do so. We therefore will send our young men and women into harm's way on a fool's errand.
Do not take this as a call to "come home and let live." We can no more do that than we can shoot ourselves. More than forty years of our failed policies, specifically in the form of energy policy, are responsible for this. We thus must protect our energy sources in the Middle East, irrespective of all other desires, or our economy will collapse overnight, along with our government. This you do understand, which is why you're maintaining your "police action" in Afghanistan.
But you could address this tomorrow. The US Military has bases in virtually every state of this union. You could direct the US Navy to construct and operate nuclear power plants on each and every one of them. As Federal facilities you could tell the NIMBY weenies to go stick it where the sun doesn't shine. You have the authority to do this right now, today.
Then, having secured our energy infrastructure, both through that and immediate and full exploitation of our resources in The Gulf, in the Shale out west on federal land and elsewhere, we then could bring our troops home - all of them.
The only other option is to meet the ten-year-old declaration of war with one of our own - in Congress, as the Constitution requires. And I'm not talking about the sort of "war" we waged in Iraq and Afghanistan. I'm talking about actual WAR - that is, blow it all to Hell, shoot anything that moves, and do so until the other side sues for peace. Make clear that if they kill one American, we will kill 1,000 of them - and we will fill our bullets and bombs with pig's blood so each and every one of them will burn in eternal Hell (or, at least, so they will believe.)
We have no business asking our servicemen and women to play policeman - their business and their purpose is to kill people and break things, and our military does it better than any other in the history of mankind.
Turn them loose or cut the crap Mr. President.
We know who's responsible for this garbage and we also know which governments and which banks and other civilian institutions worldwide enable and permit it to go on. They're some of our "favored" energy and financial "partners", which is why you don't like this course of action.
Indeed, as was recently disclosed by The Wall Street Journal, you and Tim Geithner at Treasury are allowing banks who are alleged to have intentionally illegally routed money to Iran to get away with nothing more than mere fines. Iran, for it's part, has been paying the Taliban "bounties" for the murder of our troops. Yet these institutions continue to be allowed to profit by being a dealer in US Government debt auctions! HOW DARE YOU!
That you don't want to tell those "favored" nations and institutions that have repeatedly screwed and in fact murdered our citizens to go to hell, or that you fear the "political" implications of doing so, doesn't make that course of action wrong.
It just makes you a spineless, ball-less wimp, exactly as George Bush was.
Your intentional and willful failure to deal with this, as was the case with Bush, does not come without consequence. Oh sure, we haven't had a "material" terrorism incident since 9/11. That is, unless you count the dead GIs at Ft. Hood, who were killed by an Islamic Terrorist in our midst! Nor can you count the "Honor Killings" in America - a search that returns 201,000 "hits" on Google. I suppose all those girls are just "victims of common crime", and not Islamic Terrorist Murder, right? After all, how many Christian girls have been run over by their fathers with their car or shot to protect the family's "honor" for an offense so mere as dating a boy that is of the "wrong" faith?
Here are two of the victims Mr. President - victims who's blood is on your hands:
Their crime? Dating a non-Muslim. Their punishment? Death, exactly as prescribed in the "Great Religion of Peace Holy Book", the Koran.
The chief suspect in their murder? Their father.
Where is your protection of the First Amendment - the right to freedom of religion - in this instance Mr. President?
Oh yeah, I know the media is mostly-silent on this subject. Why actually reporting on that would mean that public awareness might rise, and that would be bad, right? After all, you can't possibly stand for the First Amendment when at the same time you threaten a man for burning a book while any girl from a Muslim family who DARES to act outside of their faith's boundaries - IN AMERICA - risks being sentenced to die AT THE HANDS OF THEIR OWN FATHER!
This is the legacy of 9/11 my fellow Americans.
We spent a couple of months united against Islamic Murderers. But not for long.
Soon both the left and right came in and did what they always do - split the issue, hiding the reality from us and instead putting forward their own idea of "bad" and "good." Instead of dealing with the fact that the people who acted on 9/11 were and are murderous animals and are not a "tiny minority" of people, we have since intentionally and routinely ignored the thousands, if not millions, who show up in the streets to chant "Death To America" and are willing to make it happen if they get the opportunity. We willfully ignore the deaths of girls like Amina and Sarah Said instead of calling their execution what it was - Islamic Terrorism - along with those who fell at Ft. Hood.
We refuse to declare war despite having war declared upon us, and despite knowing which governments provide aid and comfort to these murderous thugs.
We must reverse course. Appeasement never works. Neville Chamberlain tried this same crap with Nazi Germany in 1938 and the result was twenty million dead soldiers and over fifty million dead in total through WWII, when many of those deaths could have been prevented by, instead, immediately meeting force with force in Czechoslovakia.
He was wrong and millions died as a consequence.
Both George Bush and you are wrong Mr. President, and if you don't cut this crap out millions will die again, as a direct and proximate consequence of both your and former President Bush's actions.
In a world where nuclear weapons are a reality, and building them is as simple as acquiring the materials, which takes nothing more than money (and these jackals are sitting on a lot of it thanks to our willful decision to cripple our energy infrastructure and thus make their oil valuable), it is only a matter of time before one or more of them acquire the means to make good on their threats and incinerates one or more of our cities because we have the "audacity" to pray while facing the "wrong" direction.
We were warned with the USS Cole and again on 9/11, with the latter warning costing 3,000 American lives. We have continued to be warned with the terrorism at Ft. Hood and the murder of innocent American girls - in America - by Islamic Radicals that live here, in this land.
What we should do, in my opinion, is burn lots of Korans. (And incidentally, if you're so inclined, burn some Bibles too. It's your property, it's your right to speak using it.) Every damn day. And each and every Muslim who stands and announces an intent to commit murder as a consequence (or who actually does so) should have a Predator drone send one of it's AGM-114s right up their ******* with a warhead dipped in pig's blood. (I'm willing to bet you won't find one Christian who will similarly stand and issue death threats, although if they do, I'm all for sending an AGM-114 their way as well.)
It is time for America to stand up and say in a loud, clear voice that we have had enough of this crap and we are not going to stand for it any longer.
Gasoline was under a quarter a gallon back in the early 60s. That was all prior to OPEC when the oil companies had an economic lock on the middle east oil wells. Then in the 70s along came Henry Kissinger who prodded the Nixon administration into letting Iran nationalize their oil wells so they could have money to buy military items from the US military industrial complex. The domino theory that tried to give credibility to the war in Vietnam worked well in the middle east as shiek after shiek nationalized their oil wells. Wonder wher the money came from to fund the global troubles caused by Islamic militants? Thank Henry Kissinger. And we all are still paying at the pump for all of it.
..........al
better with charts:
http://goldscents.blogspot.com/2010/09/deflation-never-had-chance.html
Wednesday, September 8, 2010
DEFLATION NEVER HAD A CHANCE
Lately we've been hearing a lot of talk about Kondratieff cycles, Elliot Wave super cycle, end of the world, deflation, deflation, deflation.
What the deflationists fail to acknowledge is that in a purely fiat monetary system deflation is a choice not an inevitability. To put it in simple terms, if a government is willing to sacrifice its currency there is absolutely no way deflation can take hold in a modern monetary system.
It doesn't matter how large the debt contraction is, 10 trillion, 100 or 1000 trillion, any government with a purely fiat currency can, with the stroke of a computer key, print enough money to wipe out the debt. Granted they will destroy the currency by doing so, but at some point we are going to be faced with the choice of print or deflate. I have little doubt Bernanke will choose to throw the dollar on the sacrificial alter.
Consumer credit isn't growing you say. Consumers are deleveraging. Not possible to have inflation unless consumers are borrowing and wages are rising. Pure nonsense!
Let me point out one indisputable fact and then I will delve deeper into the deflation/inflation argument and where investors need to put their capital to protect themselves from the coming inflationary storm. In a purely fiat monetary system a government that is willing to sacrifice its currency can, if they so desire, print enough money to mail every man, woman, and child a check for $1,000, $100,000 or a million dollars. To do so would halt any deflationary force right in its tracks. It would for most practical purposes wipe out all consumer debt. Impossible you say? Well the US has already done it twice. (It was called a tax rebate, in case you forgot.)
Here's the thing, where the inflationary forces show up is determined by who gets first use of the money. So far that has been the banking system. Through the myriad bailout programs the Fed has created money out of thin air and forced into the insolvent financial system. That has resulted in selective inflationary forces being unleashed. Instead of loaning credit to consumers or businesses who don't really want it, the financial system has plowed the money back into financial marketss. It's the reason the stock market rallied 80% despite flawed fundamentals. It's why oil rallied from $35 to over $80 despite impaired fundamentals. It's why gold is threatening to break out again to new historic highs.
If instead of forcing the liquidity into the financial system it had instead been mailed to the average consumer, we would now be seeing real estate prices rising rapidly again, food prices and gasoline would be going through the roof. Wages would be rising out of control.
Where inflation shows up is a direct result of who gets first use of the freshly minted dollars. I can assure you we don't have an impending deflation problem; we have a rapidly approaching inflation problem and currency crisis.
I've said for a long time now that eventually the market is going to make Bernanke pay a terrible price for his insane monetary policy. That price is going to be a currency crisis in the dollar and I think it's already begun.
While everyone was busy watching the Euro crack during the first part of this year what no one foresaw was that eventually the cancer that began in Europe would at some point spread into the dollar. It began 3 months, ago although no one has noticed yet.
Next I'm going to illustrate the long term cyclical nature of the dollar as the cycles are now lining up perfectly to bring on a major currency crisis in the US dollar, much worse than what just transpired in the Euro.
First let me show you a chart of the largest cycle, the three year cycle.
I've marked the last six 3 year cycle lows. These have tended to bottom about every 3 to 3 1/2 years with most running 3 years and 3 months. The consideration here is that the next major three year cycle low is due next year sometime around the March to June time frame.
As they say, the doody is going to hit the fan when the dollar moves down into this major cycle low, and Bernanke's foolish attempt to print away the credit crisis is going to blow up in our face. By spring of next year we are going to be mired in a full-fledged dollar collapse.
The first warning is going to come when the dollar breaks back below 80. That will signal that the current intermediate cycle has failed. As soon as that happens we can close the door on the dollar.
We should first see a test of the all time lows by late this year when the next larger yearly cycle is due to bottom. After that we should have one more leg down into late spring or early summer that I expect will send the dollar to new all time lows
The only way to abort this from happening is for Bernanke to immediately start withdrawing massive amounts of liquidity from the market. That won't stop the 3 year cycle from coming but we might have hope that the dollar could hold above the all time lows and we might avert or at least reduce the damage that will be caused by the impending currency collapse.
I can assure you he will do no such thing though. For one he has no idea the crisis is brewing. (This is the same man who assured us in '07 that the credit problems were contained in the sub-prime markets and in '06 that real estate was not in a bubble.)
And second, if he were to withdraw liquidity the country, and world, would quickly sink back into recession and then depression. No, I don't think we have to worry about Uncle Ben turning off the presses.
So what should investors do to prepare themselves for the approaching conflagration? They must be invested in real stuff, commodities. There is a reason virtually the entire commodity complex was showing relative strength as the market put in the intermediate cycle low in early July. Smart money was and still is positioning to weather the coming storm.
I would point out that the beginning phase of the crisis isn't going to feel like a crisis at all. A falling dollar will act to support all asset prices. We may even see nominal new highs in the stock market.
But eventually too much of a good thing will turn deadly and the true scope of the mess we are in will dawn on the market. At that point the collapsing dollar will no longer support stocks and we can expect the market to roll over and begin the next leg down in the ongoing secular bear market. Unlike stocks, commodities will thrive in a currency crisis with one in particular shining above all the rest.
That one of course is the only remaining secular bull market...Gold!
Here's a link to that blog. I should have posted it with the article. Noted for future reference.
http://goldscents.blogspot.com/2010/09/deflation-never-had-chance.html
I can't seem to get those charts to paste most of the time. Any helpful suggestions would be appreciated. My computer skills do not go much above the novice stage.
.......al
link to that blog:
http://goldscents.blogspot.com/2010/09/deflation-never-had-chance.html
.........al
No sir. I don't have enuff language skills to write a piece like that.LOL. I am tho in full agreement with the author. I can post a link to the blog if anyone wants it.
........al
A lot of action today. Anyone interested? eom
DEFLATION NEVER HAD A CHANCE
Lately we've been hearing a lot of talk about Kondratieff cycles, Elliot Wave super cycle, end of the world, deflation, deflation, deflation.
What the deflationists fail to acknowledge is that in a purely fiat monetary system deflation is a choice not an inevitability. To put it in simple terms, if a government is willing to sacrifice its currency there is absolutely no way deflation can take hold in a modern monetary system.
It doesn't matter how large the debt contraction is, 10 trillion, 100 or 1000 trillion, any government with a purely fiat currency can, with the stroke of a computer key, print enough money to wipe out the debt. Granted they will destroy the currency by doing so, but at some point we are going to be faced with the choice of print or deflate. I have little doubt Bernanke will choose to throw the dollar on the sacrificial alter.
Consumer credit isn't growing you say. Consumers are deleveraging. Not possible to have inflation unless consumers are borrowing and wages are rising. Pure nonsense!
Let me point out one indisputable fact and then I will delve deeper into the deflation/inflation argument and where investors need to put their capital to protect themselves from the coming inflationary storm. In a purely fiat monetary system a government that is willing to sacrifice its currency can, if they so desire, print enough money to mail every man, woman, and child a check for $1,000, $100,000 or a million dollars. To do so would halt any deflationary force right in its tracks. It would for most practical purposes wipe out all consumer debt. Impossible you say? Well the US has already done it twice. (It was called a tax rebate, in case you forgot.)
Here's the thing, where the inflationary forces show up is determined by who gets first use of the money. So far that has been the banking system. Through the myriad bailout programs the Fed has created money out of thin air and forced into the insolvent financial system. That has resulted in selective inflationary forces being unleashed. Instead of loaning credit to consumers or businesses who don't really want it, the financial system has plowed the money back into financial marketss. It's the reason the stock market rallied 80% despite flawed fundamentals. It's why oil rallied from $35 to over $80 despite impaired fundamentals. It's why gold is threatening to break out again to new historic highs.
If instead of forcing the liquidity into the financial system it had instead been mailed to the average consumer, we would now be seeing real estate prices rising rapidly again, food prices and gasoline would be going through the roof. Wages would be rising out of control.
Where inflation shows up is a direct result of who gets first use of the freshly minted dollars. I can assure you we don't have an impending deflation problem; we have a rapidly approaching inflation problem and currency crisis.
I've said for a long time now that eventually the market is going to make Bernanke pay a terrible price for his insane monetary policy. That price is going to be a currency crisis in the dollar and I think it's already begun.
While everyone was busy watching the Euro crack during the first part of this year what no one foresaw was that eventually the cancer that began in Europe would at some point spread into the dollar. It began 3 months, ago although no one has noticed yet.
Next I'm going to illustrate the long term cyclical nature of the dollar as the cycles are now lining up perfectly to bring on a major currency crisis in the US dollar, much worse than what just transpired in the Euro.
First let me show you a chart of the largest cycle, the three year cycle.
I've marked the last six 3 year cycle lows. These have tended to bottom about every 3 to 3 1/2 years with most running 3 years and 3 months. The consideration here is that the next major three year cycle low is due next year sometime around the March to June time frame.
As they say, the doody is going to hit the fan when the dollar moves down into this major cycle low, and Bernanke's foolish attempt to print away the credit crisis is going to blow up in our face. By spring of next year we are going to be mired in a full-fledged dollar collapse.
The first warning is going to come when the dollar breaks back below 80. That will signal that the current intermediate cycle has failed. As soon as that happens we can close the door on the dollar.
We should first see a test of the all time lows by late this year when the next larger yearly cycle is due to bottom. After that we should have one more leg down into late spring or early summer that I expect will send the dollar to new all time lows
The only way to abort this from happening is for Bernanke to immediately start withdrawing massive amounts of liquidity from the market. That won't stop the 3 year cycle from coming but we might have hope that the dollar could hold above the all time lows and we might avert or at least reduce the damage that will be caused by the impending currency collapse.
I can assure you he will do no such thing though. For one he has no idea the crisis is brewing. (This is the same man who assured us in '07 that the credit problems were contained in the sub-prime markets and in '06 that real estate was not in a bubble.)
And second, if he were to withdraw liquidity the country, and world, would quickly sink back into recession and then depression. No, I don't think we have to worry about Uncle Ben turning off the presses.
So what should investors do to prepare themselves for the approaching conflagration? They must be invested in real stuff, commodities. There is a reason virtually the entire commodity complex was showing relative strength as the market put in the intermediate cycle low in early July. Smart money was and still is positioning to weather the coming storm.
I would point out that the beginning phase of the crisis isn't going to feel like a crisis at all. A falling dollar will act to support all asset prices. We may even see nominal new highs in the stock market.
But eventually too much of a good thing will turn deadly and the true scope of the mess we are in will dawn on the market. At that point the collapsing dollar will no longer support stocks and we can expect the market to roll over and begin the next leg down in the ongoing secular bear market. Unlike stocks, commodities will thrive in a currency crisis with one in particular shining above all the rest.
That one of course is the only remaining secular bull market...Gold!
DEFLATION NEVER HAD A CHANCE
Lately we've been hearing a lot of talk about Kondratieff cycles, Elliot Wave super cycle, end of the world, deflation, deflation, deflation.
What the deflationists fail to acknowledge is that in a purely fiat monetary system deflation is a choice not an inevitability. To put it in simple terms, if a government is willing to sacrifice its currency there is absolutely no way deflation can take hold in a modern monetary system.
It doesn't matter how large the debt contraction is, 10 trillion, 100 or 1000 trillion, any government with a purely fiat currency can, with the stroke of a computer key, print enough money to wipe out the debt. Granted they will destroy the currency by doing so, but at some point we are going to be faced with the choice of print or deflate. I have little doubt Bernanke will choose to throw the dollar on the sacrificial alter.
Consumer credit isn't growing you say. Consumers are deleveraging. Not possible to have inflation unless consumers are borrowing and wages are rising. Pure nonsense!
Let me point out one indisputable fact and then I will delve deeper into the deflation/inflation argument and where investors need to put their capital to protect themselves from the coming inflationary storm. In a purely fiat monetary system a government that is willing to sacrifice its currency can, if they so desire, print enough money to mail every man, woman, and child a check for $1,000, $100,000 or a million dollars. To do so would halt any deflationary force right in its tracks. It would for most practical purposes wipe out all consumer debt. Impossible you say? Well the US has already done it twice. (It was called a tax rebate, in case you forgot.)
Here's the thing, where the inflationary forces show up is determined by who gets first use of the money. So far that has been the banking system. Through the myriad bailout programs the Fed has created money out of thin air and forced into the insolvent financial system. That has resulted in selective inflationary forces being unleashed. Instead of loaning credit to consumers or businesses who don't really want it, the financial system has plowed the money back into financial marketss. It's the reason the stock market rallied 80% despite flawed fundamentals. It's why oil rallied from $35 to over $80 despite impaired fundamentals. It's why gold is threatening to break out again to new historic highs.
If instead of forcing the liquidity into the financial system it had instead been mailed to the average consumer, we would now be seeing real estate prices rising rapidly again, food prices and gasoline would be going through the roof. Wages would be rising out of control.
Where inflation shows up is a direct result of who gets first use of the freshly minted dollars. I can assure you we don't have an impending deflation problem; we have a rapidly approaching inflation problem and currency crisis.
I've said for a long time now that eventually the market is going to make Bernanke pay a terrible price for his insane monetary policy. That price is going to be a currency crisis in the dollar and I think it's already begun.
While everyone was busy watching the Euro crack during the first part of this year what no one foresaw was that eventually the cancer that began in Europe would at some point spread into the dollar. It began 3 months, ago although no one has noticed yet.
Next I'm going to illustrate the long term cyclical nature of the dollar as the cycles are now lining up perfectly to bring on a major currency crisis in the US dollar, much worse than what just transpired in the Euro.
First let me show you a chart of the largest cycle, the three year cycle.
I've marked the last six 3 year cycle lows. These have tended to bottom about every 3 to 3 1/2 years with most running 3 years and 3 months. The consideration here is that the next major three year cycle low is due next year sometime around the March to June time frame.
As they say, the doody is going to hit the fan when the dollar moves down into this major cycle low, and Bernanke's foolish attempt to print away the credit crisis is going to blow up in our face. By spring of next year we are going to be mired in a full-fledged dollar collapse.
The first warning is going to come when the dollar breaks back below 80. That will signal that the current intermediate cycle has failed. As soon as that happens we can close the door on the dollar.
We should first see a test of the all time lows by late this year when the next larger yearly cycle is due to bottom. After that we should have one more leg down into late spring or early summer that I expect will send the dollar to new all time lows
The only way to abort this from happening is for Bernanke to immediately start withdrawing massive amounts of liquidity from the market. That won't stop the 3 year cycle from coming but we might have hope that the dollar could hold above the all time lows and we might avert or at least reduce the damage that will be caused by the impending currency collapse.
I can assure you he will do no such thing though. For one he has no idea the crisis is brewing. (This is the same man who assured us in '07 that the credit problems were contained in the sub-prime markets and in '06 that real estate was not in a bubble.)
And second, if he were to withdraw liquidity the country, and world, would quickly sink back into recession and then depression. No, I don't think we have to worry about Uncle Ben turning off the presses.
So what should investors do to prepare themselves for the approaching conflagration? They must be invested in real stuff, commodities. There is a reason virtually the entire commodity complex was showing relative strength as the market put in the intermediate cycle low in early July. Smart money was and still is positioning to weather the coming storm.
I would point out that the beginning phase of the crisis isn't going to feel like a crisis at all. A falling dollar will act to support all asset prices. We may even see nominal new highs in the stock market.
But eventually too much of a good thing will turn deadly and the true scope of the mess we are in will dawn on the market. At that point the collapsing dollar will no longer support stocks and we can expect the market to roll over and begin the next leg down in the ongoing secular bear market. Unlike stocks, commodities will thrive in a currency crisis with one in particular shining above all the rest.
That one of course is the only remaining secular bull market...Gold!
Sellers Cut Prices on 50% of HomesBy Sheree R Curry Sep 3rd 2010 @ 2:04PM
A A A Homeowners are slashing prices more drastically and more frequently, according to recently released data from ZipRealty. The average price reduction is now 7.1 percent of list price.
List prices dipped about $19,000 in August compared with July, across the 26 markets studied. On average, sellers made two price cuts during that time.
Seven cities saw price reductions on more than half of their inventory, with Jacksonville, Phoenix and Minneapolis on top with 55 percent, 54.4 percent and 52.4 percent, respectively.
"Earlier in the year we saw sellers being aggressive with their pricing, but not reducing as much," says Leslie Tyler, vice president of marketing for ZipRealty. "What we are seeing now is that the trends are reversing."
With the seeming desperation of home sellers, and the continued drop in mortgage rates, buyers are in a very good position. But the plunging rate at which buyers are applying for mortgages tells a different story, which might explain sellers' attitudes.
Fewer homes are sold near the end of the year, and with the homebuyer tax credits now gone, people who have to move due to a job or a divorce will more quickly lower their asking price, she says. However, buyers are also being more patient. "Knowing prices are going down, buyers are more willing to wait for the right house."
America's Cleanest Cities on Forbes.comFor buyers looking for the best deals: the deepest discounts, with more than a 10 percent price reduction from the list price, were all in Florida. Miami/Ft. Lauderdale dipped 12.32 percent, Orlando, 11.49 percent, and Jacksonville, 11.24 percent. Their median price reductions were $26,000, $20,000 and $19,000 respectively.
The next closest contender was Baltimore, with a 9.6 percent reduction in price that amounted to a median $19,000 dip. San Francisco, whose median list price fell the furthest of all, down $35,000, actually had the fewest number of reductions per listing, at 1.76 on average. No city cut their prices three times or more, but Chicago and Phoenix tied for first in the highest number of average reductions per listing: 2.43.
Texas sellers made the smallest price cuts, with a median price cut of only $10,000 in Houston and Dallas. The Raleigh-Durham, N.C. area was a close third with $10,100.
With mortgage rates at record lows, it's not a bad time to consider buying.
I am surprised that any attorney would allow posting on a public board about the case when their client is in litigation. I think I'd be looking for another attorney. JMHO
...........al
An Exception in Equities
(Doug Casey, interviewed by The Gold Report)
Editor's Note: Just recently, our friends at The Gold Report interviewed Doug on his thoughts about the precious metals bull market, how high gold will go, his views on gold stocks, and much more. Some of what he says below is not new to longtime readers, but we think his comments on gold investments being a potential exception to the rule for what's coming are well worth bringing to your attention.
* * *
The Gold Report: Doug, at a recent conference you said that the U.S. ought to default on its national debt now. Why that rather than letting it play out?
Doug Casey: Several other things almost equally radical should be done besides defaulting on the debt. I recognize that an outright default is most unlikely, but the national debt should be defaulted on for several reasons.
To start with, once the U.S. government defaults on its debt, people will think twice before lending it any more money; giving politicians the ability to borrow is like giving a teenager a bottle of whiskey and the keys to a Corvette. A second reason is that the debt is an albatross around the necks of the next several generations; it's criminal to make indentured servants out of people who aren't even born yet. A third reason would be to overtly punish those who have been lending money to the government, enabling it to do all the stupid and destructive things that the government does with that money.
The debt will be defaulted on one way or another. The trouble is they're almost certainly going to default on it through inflation, by destroying the currency, which is much worse than defaulting on it overtly. That's because inflation will wipe out the relatively few people who are prudent in this country, those who are actually saving money. Because they generally save in the form of dollars, they're going to wipe them out financially.
It's just horrible. Runaway inflation will reward the profligates who are in debt – people who've been living above their means. And punish the producers who've been saving and trying to build capital. That's in addition to the fact it will destroy millions of productive enterprises. A runaway inflation is the worst thing that can happen to a society, short of a major war. They just should default on it honestly, as it were.
TGR: But your belief is we'll try to inflate our way out of it to pay for it.
DC: Don't say "we." Say the U.S. government. I don't consider myself part of the problem. Americans have to learn that the government isn't "us." It's an entity that has its own interests, its own life, its own agenda. It views citizens as milk cows – or perhaps even beef cows – strictly as a means to its ends.
TGR:Whether it's overt or by default, doesn't that end up in the same place down the line?
DC: There are two ways they can default – one by saying, "We don't have the money and we're not going to pay you," and the other by continuing to print up money and giving people the number of dollars that they're owed, except the dollars are worthless. The first alternative is by far better, for many reasons we can't fully explore now. But it's going to be traumatic either way.
TGR: But the assumption that we could actually just print more dollars and pay off the debt implies that somewhere the debt will stabilize.
DC: Oh no. It doesn't have to stabilize. To pay interest on the national debt, and to pay for additional spending, all the Federal Reserve has to do is buy bonds from the U.S. government. It doesn't have to stabilize at all. The government is most unlikely to cut back on its spending, most of which has become part of the social fabric – Medicare, Social Security, unemployment benefits, food stamps, corporate bailouts, continuing foreign wars, domestic "security"…These people are crazy enough that it could get like Germany in the ‘20s or Zimbabwe a few years ago.
TGR: At what point do we tip over and turn into a situation such as Zimbabwe or the Weimar Republic?
DC: At the moment we're in an economic twilight zone or, if you wish, the eye of a hurricane. There is apparent stability in the economy. The stock market's high. The bond market's high. Only the real estate market is in visible trouble. Retail prices are level; they're not going up and maybe they're even going down in some cases. This is a temporary situation. We will inevitably – and soon – hit the other side of the storm. At some point those trillions of dollars created by the U.S. government – and many other governments around the world have created trillions of currency units – are going to have an effect. When will that be? The timing is uncertain. But I think it's going to be soon.
TGR: Will it be rapid?
DC: If these things were perfectly predictable, it would be easier to dodge the bullet. This is an almost unique time in world economic history, and I think we're not only going to have economic consequences, but social and political consequences, and very likely military consequences. So hold on to your hat.
TGR: To protect what individual wealth we may have, you've recommended selling real estate and renting, holding assets outside the United States, owning gold, etc. When we're out of the eye and in the thick of this economic hurricane, what types of equity investments should people be holding?
DC: Now is a very bad time to have most kinds of equities; stocks in general are very overpriced, by almost every parameter. I'm not looking to sell my gold until I can buy solid blue chip stocks for dividend yields in the 8% to 10% area. That's after they cut their current dividends. Although it's certainly not the bargain it was 10 years ago. Nonetheless gold will go higher. Stocks will go lower. I don't know exactly when I'll sell my gold and buy stocks, but it will be when there's a panic into gold and when stocks are bargains. I'm sure I'll be afraid to make the trade when the time comes – but good trades almost always run counter to your emotions. Perhaps the tipoff will be when Newsweek or Time – if either still exists then – run a front cover with a golden bear tearing apart the New York Stock Exchange.
I think it will be a generation before American real estate is a solid buy again. And the world at large will likely have quite a different character then.
TGR: I take your point about equities in general, but are you also staying away from gold equities? Or do you maybe see an opportunity there?
DC: They're a special situation; on the one hand they are a play on gold, but on the other hand they're stocks. There's an excellent chance that with the trillions of currency units being created, the government inevitably will wind up inflating other bubbles. There's a very good chance for a bubble in gold and a very big bubble in gold stocks. So I would say that they are an exception to other equities. We could see these juniors go up by an order of magnitude or more, even while most other stocks are going down.
Historically, junior resource stocks are the most volatile class of securities in existence.
TGR: Might other sectors also be in that situation?
DC: My crystal ball is hazy, but it seems to me that junior resource stocks are the best speculative place in the equities market. There'll probably be others, but I don't see them very clearly at this time. I'm waiting to see what materializes. You have to look at all markets of all types, everywhere in the world, to find things that are overpriced, as well as things that are underpriced.
Most of the time the trend in any given market is uncertain. I prefer to act only when, in my subjective opinion, the odds are greatly in my favor, and when the potential return is a multiple of my investment. In other words, most people invest 100% of their capital in hope of a 10% return. I prefer to wait until I can invest 10% of my capital for a 100% return.
As to what's going to happen over the next few years, I feel confident that we've entered into the Greater Depression in earnest. It will be an extended period of time when most people's standard of living drops significantly. But as I said, I think there's an excellent chance of a bubble igniting in resource stocks. That will build on the bubble that's going to come in gold.
High levels of inflation make "investing," in the Graham-Dodd sense of the word, very hard. And inflation makes speculation almost necessary. Just don't confuse speculation with gambling – they're very different. Speculation is the art of capitalizing on politically created distortions in the market.
TGR: What's your definition of resource stocks? For some, it's very broad and includes metals, agricultural commodities, and such. Are you referring specifically to gold?
DC: I'm most friendly toward gold; it's the only financial asset that's not simultaneously someone else's liability. I'm friendly toward silver, too, because silver is kind of poor man's gold. I'm very friendly toward oil because I do believe a good, solid argument can be made for what was first defined by M. King Hubbert as "peak oil." Also, oil is likely to be a major player in the next major Mideast conflict. I like uranium; nuclear is certainly the safest, cheapest, and cleanest form of mass power generation.
There's an excellent case to be made for agricultural commodities in general, and live cattle in particular. I'm not very friendly toward base metals such as lead, zinc, copper, aluminum, iron, and so forth. Usage of industrial metals could drop considerably in the ongoing depression.
TGR: You mentioned earlier that you thought it would be a generation before real estate represents a good investment again. Many economic theories, though, tell us that real estate is a good thing to have in an inflationary environment. How do you reconcile those two schools of thought?
DC: The problem is that we've just finished a decade-long real estate boom. Actually, there's been a property boom, largely driven by debt, since the end of World War II. There's been immense overbuilding and it's got to be absorbed. A lot of the overbuilding will have to be bulldozed, quite frankly, because it's completely uneconomic. I think the economic contraction we're going in to is so serious that in this country you'll be able to buy real estate for back taxes, much like in the last depression.
But it's much more serious than what happened in the 1930s when real estate taxes were de minimis. Now many people have to pay $10,000, $20,000, even $30,000 a year in taxes on their houses before they even start paying the mortgage and the utilities and maintenance. And municipalities are likely to try raising the mill rate, because they're largely bankrupt, and assessed values are way down.
There's a great deal more I could say about what's yet to come in the real estate sector. But let me just say the real estate bubble has a long way to deflate yet.
TGR: Is it both residential and commercial or is it worse in one sector?
DC: That's tough. Is emphysema worse than Parkinson's? I suspect, however, that commercial is going to be worse than residential.
People's shopping habits are one of the things that the Internet has changed and will continue to change. It makes more sense to buy things online and have them delivered to you, than to take the time and expense of going shopping, and the merchant having to deal with retail space, inventory, a geographically limited clientele and so forth. I wouldn't be surprised to see prices on a lot of commercial property come down 80% or 90%. You'll see a lot of properties permanently shuttered. That's a disaster for owners, who will still have to pay taxes. There will be no money for maintenance.
TGR: We spoke earlier about inflation and the likelihood of the U.S. government printing its way out of debt. Do you see a point in time where the United States or even other governments will go back to the gold standard?
DC: It's both essential and inevitable. That's because they have no reason to trust one another. They need a medium of exchange and a store of value that's not faith-based.
All the other governments of the world know that the U.S. is bankrupt and the dollar is nothing but a floating abstraction. Why should they hold billions or in some cases trillions of these things on their balance sheets? They're going to go back to gold because it's the only financial asset that's not simultaneously somebody else's liability.
It's not because gold is magic in any way. It's just because it has characteristics that among the 92 naturally occurring elements make it uniquely well suited for use as money. It's durable. It's divisible. It's convenient. It's consistent. It has use value in and of itself. And it can't be created out of thin air by some government. It's a better combination of those things than any of the 92 elements. It's infinitely better than paper. So yes, I think they'll go back to gold within this generation.
TGR: You were speaking of buying things online. Most people today don't even use paper bills. We do everything electronically in terms of banking. Aren't those properties of gold that you described irrelevant in the electronic era?
DC: To the contrary. Gold is an asset. You can put it in your bank account and transfer it. You can buy and sell it electronically. The fact that it can be transferred electronically today makes it a better money than ever before. So no, not at all, gold is quite relevant. It's not in any way an anachronism. I pity fools like Bernanke and Geithner who don't understand that. If they totally destroy the dollar, they may end up hung by their heels from a lamp post.
TGR: You said you're very partial to oil and uranium. Are you attracted to any other energy resources?
DC: Yes. My friend Rick Rule has justifiably and very intelligently been a big promoter of geothermal energy, because it's actually superior to even nuclear in some ways. It should have a huge future. There's very little geothermal being generated right now, and a great deal could be generated in the future. Many other forms of power generation are possible – tides, ocean currents, heat differentials in the ocean, solar microwaved down from collectors in high orbit – there are many, many innovative technologies out there.
Of course as technology keeps advancing, conventional solar will become cheaper and more efficient. Energy shortages, and high energy costs, are totally caused by political issues. In a true free market world they wouldn't even be worth talking about.
TGR: But will technology-reliant sources such as solar and wind power be able to sustain through this downturn that you're expecting?
DC: Well, most of the power we have is now generated via coal. Coal is very problematical as an energy source – it's dirty, bulky, and could be used for better things than burning. Stupidly, most new plants will be running on coal, not nuclear.
That said, you can expect that the average guy will be cutting his standard of living, driving less, turning down his heat in the winter, turning down his air conditioning in the summer, and turning off the lights when he leaves the room. So I'm not sure that electricity consumption will be going up for years to come, especially with a lot of stores being shuttered and so forth.
Wind and solar are trivial sources of power. Good for certain applications in certain locations, but not suitable for mass power in an industrial civilization with anything like our present technology.
TGR: So if electricity consumption goes down... wind and solar are barely economically viable now.
DC: That's right. It's just a question of the alternatives. You weigh what you pay for a kilowatt hour on the grid versus what it costs an individual to put up private wind or solar, or for utility to put up commercial wind or solar. I see no reason to invest in these alternatives other than economics.
The way I see it, arguments made about saving the planet and so forth are basically ridiculous, even if naively well intended. All the blather about "carbon footprints" is scientifically nonsensical. It's not a matter of tree hugging. If you're paying more for something than necessary, you're misallocating capital. You're destroying capital. That's a real crime against humanity.
To me, it's strictly a matter of economics. If at some point technology makes a great breakthrough, maybe solar will become the best and cheapest power source; that would be wonderful. That's not the case right now. As I said before, maybe they'll be able to put solar collectors into geostationary earth orbit and beam down solar to earth by microwave. There are lots of possibilities for solar to become economic. It's just that right now, it costs several times what other forms of power do. It doesn't make sense, except in certain places, in certain applications.
TGR: Given that, would we expect to see any solar in your portfolio?
DC: If somebody makes a cosmic breakthrough, I'm happy to buy the stock. I'm certainly not inclined against solar on any philosophical grounds.
TGR: The Chinese recently announced that they will start selling gold coins through their banking system. What do you make of that? Is it really big news?
DC: I think it is. The Chinese know that one of the reasons Mao took over is because the government of Chiang Kai-shek destroyed the national currency. The Chinese can see the problems with the U.S. dollar. That it could blow up in their hands. They also see the problems they're creating for themselves by creating trillions of new renminbi. So I think that they're encouraging the average guy in the street to do some saving with gold so that if things go sideways with these paper currencies, the average guy isn't left too destitute and too angry. At least he'll have some gold coins. I think they're being quite intelligent about encouraging their people to buy gold.
TGR: What do you make of the fact that a country with a communist orientation encourages its citizens to buy gold, while the world's supposedly premier democracy does not?
DC: First of all, let's recognize that communism was a very short-term aberration in the 5,000-year grand scheme of Chinese history. Mao only ruled the country for about 30 years. Since the late ‘70s, China's been returning to its old ways. Everybody knows that the Communist Party in China is nothing but a scam for its members to cream something off the top of everything. It's ludicrous to say China is a communist country. It's easier to do business in China than it is in the U.S. – lower taxes, less regulation, fewer legal hassles.
In point of fact, the Chinese are reverting to the mean. For many centuries, up until the Industrial Revolution, China was much wealthier than the West. Now it's rising again.
As far as the United States is concerned, unfortunately it's going the other way. The issue has nothing to do with democracy. Democracy is just mob rule dressed up in a sports coat. It's much overrated. The U.S. government is becoming more powerful, and the U.S. is radically departing from the economic philosophy of free markets that made it great. It's simultaneously becoming more politically repressive. The Chinese are just reverting to their traditional economic philosophy, which is not communism, it's capitalist trade and production.
TGR: Presumably, participants will get a lot more of what we've been talking about at the Casey Summit that you have scheduled for October 1–3 in Carlsbad, California.
DC: For sure. We're going to be talking about specific ways to take advantage of the problems that we have today. It's important to remember that as the Greater Depression deepens, most of the real wealth in the world still will be here. It's just going to change ownership. The key for this conference is we're going to examine why things are the way they are. But perhaps even more important is how to capitalize on them, how to take advantage of them.
TGR: Of course you'll be at the conference too. And your lineup includes Bob Bishop, Eric Sprott, Richard Russell, Bob Prechter, and obviously Rick Rule.
DC: And Neil Howe, who with William Strauss wrote The Fourth Turning and Generations: the History of America's Future, 1584 to 2069. It's among the most brilliant, and original, analyses of long-term trends of history I've ever seen.
TGR: And I understand you'll be introducing the Casey NexTen. How does that complement your Casey Explorers' League?
DC: When Ross Beaty, Bob Quartermain, Simon Ridgway, and the other members of our Explorers' League come out with a new deal, it automatically carries a huge premium because they're proven commodities – highly technically competent, honest guys with good work habits, who have found and made economic more than three mines.
With the Casey NexTen, we've done a lot of work on finding the next generation, guys who have all the makings of these veterans, the young editions of our Explorers' League. With this group, you can still buy in cheap and get them as they're just moving into the most productive stages of their lives as opposed to moving toward retirement.
Getting to know them personally, which is possible for people who attend the conference, would be one of the most financially productive things that you'll be able to do if you have any interest at all in resource stocks.
-----
As Doug says, to weather the economic storm we're already in the midst of, gold and sound gold-related investments are the best ways to protect yourself. As the dollar and other fiat currencies decline further, and global economies are raking up mountains of debt, these precious metals instruments may well become the saving grace for any smart investor. Learn more here.
An Exception in Equities
(Doug Casey, interviewed by The Gold Report)
Editor's Note: Just recently, our friends at The Gold Report interviewed Doug on his thoughts about the precious metals bull market, how high gold will go, his views on gold stocks, and much more. Some of what he says below is not new to longtime readers, but we think his comments on gold investments being a potential exception to the rule for what's coming are well worth bringing to your attention.
* * *
The Gold Report: Doug, at a recent conference you said that the U.S. ought to default on its national debt now. Why that rather than letting it play out?
Doug Casey: Several other things almost equally radical should be done besides defaulting on the debt. I recognize that an outright default is most unlikely, but the national debt should be defaulted on for several reasons.
To start with, once the U.S. government defaults on its debt, people will think twice before lending it any more money; giving politicians the ability to borrow is like giving a teenager a bottle of whiskey and the keys to a Corvette. A second reason is that the debt is an albatross around the necks of the next several generations; it's criminal to make indentured servants out of people who aren't even born yet. A third reason would be to overtly punish those who have been lending money to the government, enabling it to do all the stupid and destructive things that the government does with that money.
The debt will be defaulted on one way or another. The trouble is they're almost certainly going to default on it through inflation, by destroying the currency, which is much worse than defaulting on it overtly. That's because inflation will wipe out the relatively few people who are prudent in this country, those who are actually saving money. Because they generally save in the form of dollars, they're going to wipe them out financially.
It's just horrible. Runaway inflation will reward the profligates who are in debt – people who've been living above their means. And punish the producers who've been saving and trying to build capital. That's in addition to the fact it will destroy millions of productive enterprises. A runaway inflation is the worst thing that can happen to a society, short of a major war. They just should default on it honestly, as it were.
TGR: But your belief is we'll try to inflate our way out of it to pay for it.
DC: Don't say "we." Say the U.S. government. I don't consider myself part of the problem. Americans have to learn that the government isn't "us." It's an entity that has its own interests, its own life, its own agenda. It views citizens as milk cows – or perhaps even beef cows – strictly as a means to its ends.
TGR:Whether it's overt or by default, doesn't that end up in the same place down the line?
DC: There are two ways they can default – one by saying, "We don't have the money and we're not going to pay you," and the other by continuing to print up money and giving people the number of dollars that they're owed, except the dollars are worthless. The first alternative is by far better, for many reasons we can't fully explore now. But it's going to be traumatic either way.
TGR: But the assumption that we could actually just print more dollars and pay off the debt implies that somewhere the debt will stabilize.
DC: Oh no. It doesn't have to stabilize. To pay interest on the national debt, and to pay for additional spending, all the Federal Reserve has to do is buy bonds from the U.S. government. It doesn't have to stabilize at all. The government is most unlikely to cut back on its spending, most of which has become part of the social fabric – Medicare, Social Security, unemployment benefits, food stamps, corporate bailouts, continuing foreign wars, domestic "security"…These people are crazy enough that it could get like Germany in the ‘20s or Zimbabwe a few years ago.
TGR: At what point do we tip over and turn into a situation such as Zimbabwe or the Weimar Republic?
DC: At the moment we're in an economic twilight zone or, if you wish, the eye of a hurricane. There is apparent stability in the economy. The stock market's high. The bond market's high. Only the real estate market is in visible trouble. Retail prices are level; they're not going up and maybe they're even going down in some cases. This is a temporary situation. We will inevitably – and soon – hit the other side of the storm. At some point those trillions of dollars created by the U.S. government – and many other governments around the world have created trillions of currency units – are going to have an effect. When will that be? The timing is uncertain. But I think it's going to be soon.
TGR: Will it be rapid?
DC: If these things were perfectly predictable, it would be easier to dodge the bullet. This is an almost unique time in world economic history, and I think we're not only going to have economic consequences, but social and political consequences, and very likely military consequences. So hold on to your hat.
TGR: To protect what individual wealth we may have, you've recommended selling real estate and renting, holding assets outside the United States, owning gold, etc. When we're out of the eye and in the thick of this economic hurricane, what types of equity investments should people be holding?
DC: Now is a very bad time to have most kinds of equities; stocks in general are very overpriced, by almost every parameter. I'm not looking to sell my gold until I can buy solid blue chip stocks for dividend yields in the 8% to 10% area. That's after they cut their current dividends. Although it's certainly not the bargain it was 10 years ago. Nonetheless gold will go higher. Stocks will go lower. I don't know exactly when I'll sell my gold and buy stocks, but it will be when there's a panic into gold and when stocks are bargains. I'm sure I'll be afraid to make the trade when the time comes – but good trades almost always run counter to your emotions. Perhaps the tipoff will be when Newsweek or Time – if either still exists then – run a front cover with a golden bear tearing apart the New York Stock Exchange.
I think it will be a generation before American real estate is a solid buy again. And the world at large will likely have quite a different character then.
TGR: I take your point about equities in general, but are you also staying away from gold equities? Or do you maybe see an opportunity there?
DC: They're a special situation; on the one hand they are a play on gold, but on the other hand they're stocks. There's an excellent chance that with the trillions of currency units being created, the government inevitably will wind up inflating other bubbles. There's a very good chance for a bubble in gold and a very big bubble in gold stocks. So I would say that they are an exception to other equities. We could see these juniors go up by an order of magnitude or more, even while most other stocks are going down.
Historically, junior resource stocks are the most volatile class of securities in existence.
TGR: Might other sectors also be in that situation?
DC: My crystal ball is hazy, but it seems to me that junior resource stocks are the best speculative place in the equities market. There'll probably be others, but I don't see them very clearly at this time. I'm waiting to see what materializes. You have to look at all markets of all types, everywhere in the world, to find things that are overpriced, as well as things that are underpriced.
Most of the time the trend in any given market is uncertain. I prefer to act only when, in my subjective opinion, the odds are greatly in my favor, and when the potential return is a multiple of my investment. In other words, most people invest 100% of their capital in hope of a 10% return. I prefer to wait until I can invest 10% of my capital for a 100% return.
As to what's going to happen over the next few years, I feel confident that we've entered into the Greater Depression in earnest. It will be an extended period of time when most people's standard of living drops significantly. But as I said, I think there's an excellent chance of a bubble igniting in resource stocks. That will build on the bubble that's going to come in gold.
High levels of inflation make "investing," in the Graham-Dodd sense of the word, very hard. And inflation makes speculation almost necessary. Just don't confuse speculation with gambling – they're very different. Speculation is the art of capitalizing on politically created distortions in the market.
TGR: What's your definition of resource stocks? For some, it's very broad and includes metals, agricultural commodities, and such. Are you referring specifically to gold?
DC: I'm most friendly toward gold; it's the only financial asset that's not simultaneously someone else's liability. I'm friendly toward silver, too, because silver is kind of poor man's gold. I'm very friendly toward oil because I do believe a good, solid argument can be made for what was first defined by M. King Hubbert as "peak oil." Also, oil is likely to be a major player in the next major Mideast conflict. I like uranium; nuclear is certainly the safest, cheapest, and cleanest form of mass power generation.
There's an excellent case to be made for agricultural commodities in general, and live cattle in particular. I'm not very friendly toward base metals such as lead, zinc, copper, aluminum, iron, and so forth. Usage of industrial metals could drop considerably in the ongoing depression.
TGR: You mentioned earlier that you thought it would be a generation before real estate represents a good investment again. Many economic theories, though, tell us that real estate is a good thing to have in an inflationary environment. How do you reconcile those two schools of thought?
DC: The problem is that we've just finished a decade-long real estate boom. Actually, there's been a property boom, largely driven by debt, since the end of World War II. There's been immense overbuilding and it's got to be absorbed. A lot of the overbuilding will have to be bulldozed, quite frankly, because it's completely uneconomic. I think the economic contraction we're going in to is so serious that in this country you'll be able to buy real estate for back taxes, much like in the last depression.
But it's much more serious than what happened in the 1930s when real estate taxes were de minimis. Now many people have to pay $10,000, $20,000, even $30,000 a year in taxes on their houses before they even start paying the mortgage and the utilities and maintenance. And municipalities are likely to try raising the mill rate, because they're largely bankrupt, and assessed values are way down.
There's a great deal more I could say about what's yet to come in the real estate sector. But let me just say the real estate bubble has a long way to deflate yet.
TGR: Is it both residential and commercial or is it worse in one sector?
DC: That's tough. Is emphysema worse than Parkinson's? I suspect, however, that commercial is going to be worse than residential.
People's shopping habits are one of the things that the Internet has changed and will continue to change. It makes more sense to buy things online and have them delivered to you, than to take the time and expense of going shopping, and the merchant having to deal with retail space, inventory, a geographically limited clientele and so forth. I wouldn't be surprised to see prices on a lot of commercial property come down 80% or 90%. You'll see a lot of properties permanently shuttered. That's a disaster for owners, who will still have to pay taxes. There will be no money for maintenance.
TGR: We spoke earlier about inflation and the likelihood of the U.S. government printing its way out of debt. Do you see a point in time where the United States or even other governments will go back to the gold standard?
DC: It's both essential and inevitable. That's because they have no reason to trust one another. They need a medium of exchange and a store of value that's not faith-based.
All the other governments of the world know that the U.S. is bankrupt and the dollar is nothing but a floating abstraction. Why should they hold billions or in some cases trillions of these things on their balance sheets? They're going to go back to gold because it's the only financial asset that's not simultaneously somebody else's liability.
It's not because gold is magic in any way. It's just because it has characteristics that among the 92 naturally occurring elements make it uniquely well suited for use as money. It's durable. It's divisible. It's convenient. It's consistent. It has use value in and of itself. And it can't be created out of thin air by some government. It's a better combination of those things than any of the 92 elements. It's infinitely better than paper. So yes, I think they'll go back to gold within this generation.
TGR: You were speaking of buying things online. Most people today don't even use paper bills. We do everything electronically in terms of banking. Aren't those properties of gold that you described irrelevant in the electronic era?
DC: To the contrary. Gold is an asset. You can put it in your bank account and transfer it. You can buy and sell it electronically. The fact that it can be transferred electronically today makes it a better money than ever before. So no, not at all, gold is quite relevant. It's not in any way an anachronism. I pity fools like Bernanke and Geithner who don't understand that. If they totally destroy the dollar, they may end up hung by their heels from a lamp post.
TGR: You said you're very partial to oil and uranium. Are you attracted to any other energy resources?
DC: Yes. My friend Rick Rule has justifiably and very intelligently been a big promoter of geothermal energy, because it's actually superior to even nuclear in some ways. It should have a huge future. There's very little geothermal being generated right now, and a great deal could be generated in the future. Many other forms of power generation are possible – tides, ocean currents, heat differentials in the ocean, solar microwaved down from collectors in high orbit – there are many, many innovative technologies out there.
Of course as technology keeps advancing, conventional solar will become cheaper and more efficient. Energy shortages, and high energy costs, are totally caused by political issues. In a true free market world they wouldn't even be worth talking about.
TGR: But will technology-reliant sources such as solar and wind power be able to sustain through this downturn that you're expecting?
DC: Well, most of the power we have is now generated via coal. Coal is very problematical as an energy source – it's dirty, bulky, and could be used for better things than burning. Stupidly, most new plants will be running on coal, not nuclear.
That said, you can expect that the average guy will be cutting his standard of living, driving less, turning down his heat in the winter, turning down his air conditioning in the summer, and turning off the lights when he leaves the room. So I'm not sure that electricity consumption will be going up for years to come, especially with a lot of stores being shuttered and so forth.
Wind and solar are trivial sources of power. Good for certain applications in certain locations, but not suitable for mass power in an industrial civilization with anything like our present technology.
TGR: So if electricity consumption goes down... wind and solar are barely economically viable now.
DC: That's right. It's just a question of the alternatives. You weigh what you pay for a kilowatt hour on the grid versus what it costs an individual to put up private wind or solar, or for utility to put up commercial wind or solar. I see no reason to invest in these alternatives other than economics.
The way I see it, arguments made about saving the planet and so forth are basically ridiculous, even if naively well intended. All the blather about "carbon footprints" is scientifically nonsensical. It's not a matter of tree hugging. If you're paying more for something than necessary, you're misallocating capital. You're destroying capital. That's a real crime against humanity.
To me, it's strictly a matter of economics. If at some point technology makes a great breakthrough, maybe solar will become the best and cheapest power source; that would be wonderful. That's not the case right now. As I said before, maybe they'll be able to put solar collectors into geostationary earth orbit and beam down solar to earth by microwave. There are lots of possibilities for solar to become economic. It's just that right now, it costs several times what other forms of power do. It doesn't make sense, except in certain places, in certain applications.
TGR: Given that, would we expect to see any solar in your portfolio?
DC: If somebody makes a cosmic breakthrough, I'm happy to buy the stock. I'm certainly not inclined against solar on any philosophical grounds.
TGR: The Chinese recently announced that they will start selling gold coins through their banking system. What do you make of that? Is it really big news?
DC: I think it is. The Chinese know that one of the reasons Mao took over is because the government of Chiang Kai-shek destroyed the national currency. The Chinese can see the problems with the U.S. dollar. That it could blow up in their hands. They also see the problems they're creating for themselves by creating trillions of new renminbi. So I think that they're encouraging the average guy in the street to do some saving with gold so that if things go sideways with these paper currencies, the average guy isn't left too destitute and too angry. At least he'll have some gold coins. I think they're being quite intelligent about encouraging their people to buy gold.
TGR: What do you make of the fact that a country with a communist orientation encourages its citizens to buy gold, while the world's supposedly premier democracy does not?
DC: First of all, let's recognize that communism was a very short-term aberration in the 5,000-year grand scheme of Chinese history. Mao only ruled the country for about 30 years. Since the late ‘70s, China's been returning to its old ways. Everybody knows that the Communist Party in China is nothing but a scam for its members to cream something off the top of everything. It's ludicrous to say China is a communist country. It's easier to do business in China than it is in the U.S. – lower taxes, less regulation, fewer legal hassles.
In point of fact, the Chinese are reverting to the mean. For many centuries, up until the Industrial Revolution, China was much wealthier than the West. Now it's rising again.
As far as the United States is concerned, unfortunately it's going the other way. The issue has nothing to do with democracy. Democracy is just mob rule dressed up in a sports coat. It's much overrated. The U.S. government is becoming more powerful, and the U.S. is radically departing from the economic philosophy of free markets that made it great. It's simultaneously becoming more politically repressive. The Chinese are just reverting to their traditional economic philosophy, which is not communism, it's capitalist trade and production.
TGR: Presumably, participants will get a lot more of what we've been talking about at the Casey Summit that you have scheduled for October 1–3 in Carlsbad, California.
DC: For sure. We're going to be talking about specific ways to take advantage of the problems that we have today. It's important to remember that as the Greater Depression deepens, most of the real wealth in the world still will be here. It's just going to change ownership. The key for this conference is we're going to examine why things are the way they are. But perhaps even more important is how to capitalize on them, how to take advantage of them.
TGR: Of course you'll be at the conference too. And your lineup includes Bob Bishop, Eric Sprott, Richard Russell, Bob Prechter, and obviously Rick Rule.
DC: And Neil Howe, who with William Strauss wrote The Fourth Turning and Generations: the History of America's Future, 1584 to 2069. It's among the most brilliant, and original, analyses of long-term trends of history I've ever seen.
TGR: And I understand you'll be introducing the Casey NexTen. How does that complement your Casey Explorers' League?
DC: When Ross Beaty, Bob Quartermain, Simon Ridgway, and the other members of our Explorers' League come out with a new deal, it automatically carries a huge premium because they're proven commodities – highly technically competent, honest guys with good work habits, who have found and made economic more than three mines.
With the Casey NexTen, we've done a lot of work on finding the next generation, guys who have all the makings of these veterans, the young editions of our Explorers' League. With this group, you can still buy in cheap and get them as they're just moving into the most productive stages of their lives as opposed to moving toward retirement.
Getting to know them personally, which is possible for people who attend the conference, would be one of the most financially productive things that you'll be able to do if you have any interest at all in resource stocks.
-----
As Doug says, to weather the economic storm we're already in the midst of, gold and sound gold-related investments are the best ways to protect yourself. As the dollar and other fiat currencies decline further, and global economies are raking up mountains of debt, these precious metals instruments may well become the saving grace for any smart investor. Learn more here.
7:15am gold 1253.40 silver 19.46 eom
Credibility Inflation
Here's a neat little concept that FOA introduced briefly in 1999. I think it explains a lot about the inflation, deflation, hyperinflation debate when it finally sinks in that this is where all the money went for the past 30 years: into inflating the credibility of the $IMFS far beyond the underlying reality. And yes, it has a direct impact on the Freegold revaluation as well. So here I will try to expound on this enlightening concept just a bit.
The Setup
Part of the reason the rest of the world did not abandon the dollar in 1971 was that the rate of economic expansion flowing from Middle Eastern oil cheaply priced in U.S. dollars was already exceeding the expansion rate of the money supply. So the switch from a semi-gold-(con)strained monetary system to a much more expandable "balance sheet money system" as I like to call it — or another name I like is "purely symbolic monetary system" — allowed for the non-deflationary addition of many new "quality of life" gadgets, widgets and shipping lanes that the world had never before imagined.
For the next three or four decades we would be able to comfortably afford the new introduction of Betamax VCR's, microwave ovens in every home, personal computers, DynaTAC cell phones, camcorders, digital cameras, LaserDiscs, Compact Discs, DVD's, MP3's, and on and on. Eventually, all of these wonderful products would be built cheaper by someone else on the other side of the world and shipped to us cheaply using the oil purchased from the Middle East with easily available U.S. dollars.
Sony BetaMax®
The reason I like the term "balance sheet money" is that whenever there is a need for more dollars they can be easily gotten from any bank's balance sheet. The dollars don't have to be there in the bank. You simply jot down the "need" for them on one side of the balance sheet and the dollars magically appear on the other side. Presto!
Of course once that "need" (demand) is supplied, the balance sheet must then be serviced with interest. But the thing about easy money is that you can always borrow new to service the old. In the previous system (con)strained by its parity fixation to the U.S. Treasury's limited supply of gold all these wonderful life-enhancing advances would have put a deflationary pressure on the dollar.
What this means is that when all these new products came to market, the dollars we needed to purchase them would have become more and more precious with each new widget that came to market. The cost to borrow dollars to buy a new BMC-100P or DynaTAC-8000 would have been prohibitive. And even if you did borrow the money, the service of that debt would have grown more and more burdensome over the life of the loan as dollars became ever more precious.
This deflationary dynamic would have stifled the global economic growth rate and confined it to only reasonable risk-taking. Which is part of the reason the foreign central banks, represented by the BIS, did not lobby the U.S. to officially devalue the dollar against its Treasury gold in 1971.
Rather than closing the gold window, the U.S. could have, for example, raised the price of gold to $200 and kept the system going for another 30 or 40 years. A move like this would have been the mathematical equivalent of increasing the Treasury's physical stockpile 5X to double what it was at the height of the Bretton Woods experiment.
But while that would have satiated the monetary transgressions of the past, it would have done little for the future. It would not have substantially changed the system to one of easy money. It would only have extended the old system of hard money.
BMC-100P - The first camcorder
It was reasoned at that time that more than just the ridiculous price of gold being broken, the system itself was broken, and needed a global finance structural change. So the international consensus was to let the U.S. default outright on its gold obligations rather than lobbying for a revaluation of its gold at a new fixed rate. But then continue using the dollar anyway, as long as relatively cheap oil could be gotten for dollars.
And with this decision, the stage was set for a renewed global (Western?) economic growth spurt, much like after the end of WWII. Only this time, the value lost through the non-delivery of U.S. Treasury gold would be more than replaced by the value oil brought to the new world economy, especially with first-of-a-kind products like Pong, released for the Christmas season in 1975.
Pong™ - The first video game
Even at the higher oil prices of the 1970's, the economic demand for oil proved to be a far superior "backing" to the dollar than the depleting Treasury gold had been. And in a certain (limited) sense, the world got its first small taste of Freegold in the 1970's.
But as gold's price began freely rising in the global marketplace, the old alarm bells went off in the dollar's management office. The dollar, which had always been viewed at par with gold, was now seen to be falling as gold soared. So during the mid to late 70's the U.S. Treasury and the IMF held a series of gold auctions to flood the market and quell the perceived danger. But by 1979 the demand for gold was so overwhelming that the auctions had to be stopped.
Through '78 and '79 the dollar plunged against foreign currencies, and in July of 1979 a desperate Jimmy Carter appointed the tough New York Fed President Paul Volker to head the "deeply divided, inexperienced, soft and indecisive" Federal Reserve Board. Then in early October of that year, while attending an IMF meeting in Belgrade, Yugoslavia, Volcker received "stern recommendations" from his European counterparts that something big had to be done immediately to stop the dollar's fall. The general fear at that meeting was that the global financial system was on the verge of collapse.
TRS80 (Pronounced "Trash Eighty")
Returning to the U.S. on October 6, Volcker called a secret emergency meeting in which he announced a major change in Fed monetary policy. The Fed would switch from controlling interest rates through the Fed Funds rate to directly controlling the money supply through bank reserves. One of the side effects of this sharp policy change was that interest rates would now be governed by the marketplace rather than the Fed. The Fed did still raise its discount rate from 11% to 12%, but then the market took the Prime Rate up to 20% within 6 months where it mostly stayed for the next year and a half.
It was later observed that Volcker's 1979 policy change was the most significant change in Fed policy since 1932, when in the middle of the Great Depression the Fed abandoned its "real bills doctrine" and started massive open market purchases of government bonds.
In early 1980, Volcker's new Fed policy began to bite. As interest rates rose, the Dollar first slowed its descent, then stopped falling, and then began to rise. Both the public and the investment community which had stampeded into Gold were lured back into paper by this huge rise in interest rates – and by the prospect of a higher U.S. Dollar.
LaserDisc™
Many facets went into this change in investment attitude, but one concrete change in the U.S. financial system was the most telling. Way back in March 1971, four months before Nixon closed the Gold window, the "permanent" U.S. debt ceiling had been frozen at $400 Billion. By late 1982, U.S. funded debt had tripled to about $1.25 TRILLION. But the "permanent" debt ceiling still stood at $400 Billion. All the debt ceiling rises since 1971 had been officially designated as "temporary!" In late 1982, realizing that this charade could not be continued, The U.S. Treasury eliminated the "difference" between the "temporary" and the "permanent" debt ceiling.
The way was cleared for the subsequent explosion in U.S. debt. With the U.S. being the world's "reserve currency," the way was in fact cleared for a debt explosion right around the world. It was also cleared for five of the biggest bull markets in history.
The global stock market boom of 1982-87
The Japanese stock market/real estate boom of 1988-90
The Dow (and then Nasdaq) led boom - late 1994 to March/April 2000
The great global real estate boom of 2002-06
The global stock market revival of 2006-07 [1]
DynaTAC-8000
And thus, in 1980, began the modern era of Credibility Inflation.
Salting the Mine
Most simply stated, credibility inflation is the expanding confidence in the fiat financial system to always deliver a higher payoff tomorrow than today. And through credibility inflation we ultimately destroy the currency structure by believing it can somehow deliver more than reality will allow.
Credibility inflation is the exact antithesis of price inflations like the 1970's. It is why we saw low consumer price inflation for the last 30 years relative to the massive monetary and financial product inflation. It is partly why we saw gold stagnant or falling for 20 years. Yet it is just as much a product of monetary inflation as regular price inflation is (more on this in a moment). And it is much more catastrophic in the end.
Periods of high credibility inflation are generally not followed by smooth cycles of credibility DEflation. Instead, they tend to SNAP BACK into sudden real price inflation when confidence abates. What happens in the most extreme cases is real price HYPERinflation.
This is one of the main concepts deflationists and mainstream economists completely miss; the SNAP-BACK of credibility inflation that can instantly take down their precious fiat currency. And it is their intentional avoidance of this obvious concept that delivers aid and comfort to masterprinters like Gideon Gono and Ben Bernanke.
When people try to protect their assets against the effects of fiat money, what are they really fighting against? The first inclination is to say "rising prices." Yet it's much more than that! Most everyone agrees that the interest rate paid by the banks never covers the loss of buying power brought on by price inflation. Especially the "after tax" return. It's the same old story, played out decade after decade. We must "invest our savings" (or become a day trader?) because the money will erode in value! Even at 3%, price inflation can eat away at any cash equivalents.
But, price inflation isn't the only story that impacts us. Rising prices come and go, but money inflation continues to affect us without fail. So why do people feel better when price increases slow or stop, even as money inflation runs ever upward? The good feelings usually evolve from the effects that money inflation (increases in the money supply) has on financial instruments. These assets take on the very same characteristic that the rising prices of goods once exhibited. They run up in currency price.
During these periods of "less goods inflation" another sinister form of mindset lurks in the shadows. Credibility inflation! Yes, it has been here many times before as every fiat currency alternates its effects upon the feelings of the populace.
Fiat currencies must, by definition, always expand in quantity. Their continued usage and acceptance is always obtained with the bribe of "more wealth to come!" Without that bribe, humans would never fall for holding a debt to receive the same goods in the future if they could get the real thing today. Human nature has always dictated that we buy what we need now instead of holding someone's IOU to receive it later. That nature is only changed through the "greed to obtain more." Like this: "I'll hold my wealth in dollars as long as my assets are going up. Later those increased assets will buy me a better lifestyle as I purchase more goods and services than I could buy now."
This is the hidden dynamic we see today. Just as destructive as "goods price increases," "credibility inflation" impacts our emotions to "hold on for the future, more is coming!" In every way, "credibility inflation" is just as much a product of an increase in the money stock as "regular price inflation" is. As cash money streams out to cover any and all financial failures, we begin to attach an ever higher credibility to the continued function of the fiat system. In effect, the more money that is printed, the higher we price the credibility factor. [2]
Selling the Salted Mine
Is this not where we are today? Interest rates – and with them, bond valuations – have run their 30 year course from 20% down to 0%. The credibility of paper assets has taken at least three severe beatings in the last decade. And now, to simply slow the acceleration of credibility DEflation, every manner of bailout and market rigging is being employed, practically in broad daylight. And this on the assumption that the global flock of sheep will only watch the numbers, not the men making them or the underlying economy from which they spring.
GDP is one of the great deceivers in the fiat money world. During the last century (??) or so, some form of GDP has always been used to measure the great mass of human endeavors. Yet, throughout this time, some form of fiat currency has always been in effect. Even during the Gold standard, fractional reserve banking expanded "gold note money" more so than the "gold money" in existence. Prior to 1929 this effect, if not creating outright "price inflation" during a time of Gold standard policy, was creating "credibility inflation" in the minds of investors. Using the backdrop of a growing GDP, people bought into inflating financial assets and ignored these signals as evidence that the fractional currency system was failing. Even though the dollar contained a policy statement to supply gold, back then a gold loan was still only good until everyone asked for gold.
The same thing is happening today. People destroy the currency structure by thinking it can deliver more than reality will allow. Instead of all debt failing slowly with each upward march of price inflation, prolonged "credibility inflation" snaps all at once as investors try to suddenly revert to a "buy now mentality." The inability of government authorities to contain the fiction of "good debt" is usually the feature behind the investor mood change. The "snap back" into a sudden "real price inflation situation" caused during this stage by a currency failure always breaks the whole structure. We approach this end today!
The GDP has been the relative gauge to mark all other measurements against. Even so, its numbers reflect little more than the result of an "expanding fiat money supply." Yes, there have been recorded downturns in GDP, but these contractions would have been worse if measured in real (gold) money. In opposite fashion, expansions paint a much brighter picture as all financial liabilities seem less a threat if held against a rising GDP. I submit that the GDP figures offer little more than a way to entice investors to increase their "credibility image" of our monetary system. Fiat moneys are always on a long term upward expansion, and they can hardly do less than bloat the picture.
Someone I know once said; "your wealth is not what your money say it is!"
A great historical example of credibility inflation with parallels to our present financial and monetary system was the system in France under the direction of the esteemed Scottish economist, John Law. In 1716 Law established the first French central bank, the Banque Générale, which was later nationalized and renamed the Banque Royale. Law used the Banque to introduce paper money in France.
Simultaneously, Law aggregated the trading companies in the French colony of Louisiana into a singular monopoly under the name "Company of the Indies" and sold shares of this company back in France. Law exaggerated the prospects of the company so well that he was actually appointed Controller General of Finances (essentially the first French Central Banker) by Philippe d'Orléans and given the official job of pumping this stock. In a way, John Law was kind of like the "Jim Cramer meets Larry Summers" of his time.
Wild speculation on the shares of the Company of the Indies led to the Banque Royale issuing more and more paper money to fund the monetary demands of the buying frenzy. And the "company profits" owed to the shareholders were also paid in fresh paper money. John Law's credibility was being entirely financed by his printing press.
Then, in late 1720, opponents of John Law's paper money attempted en masse to exchange their paper notes for gold. This forced the Banque Royale to cease physical gold "delivery," declare the essence of "force majeure" (which incidentally is a French term from French law), and admit it had issued much more paper than it had in gold. Both the Company stock value and the paper money itself plunged, ultimately to worthlessness. The monetary system in France was revamped six years later, but by the end of 1720 John Law had been disgraced, relieved of his official job, and had to flee France a poor man. He died in poverty nine years later.
Trading Salted Mines
One observation we can make is that in the long-line cycles of monetary history, technical (momentum) trading emerges in the very late stages of cycles in its most frenetic fashion. This is when it draws the most people into the unproductive activity of trading for trading's sake. And this is when it draws in the greatest profits, right before it delivers a catastrophic total loss.
In the early stages of these long-line cycles the greatest profits in society come from productive enterprises like building large companies from the ground up. But in the very late stages the greatest profits seem to come from paper churning and speculation in things that were previously traded mostly on fundamentals, based on actual, physical use.
We can see this in the famous bubbles like the tulip bubble, the Mississippi bubble, the South Seas bubble, the dot com bubble and the housing bubble. But it also occurs at the end of currency cycles. History is full of stories of traders frantically trying to trade out of their positions at the end of long-line cycles, while the currency burns around them. Look at any list of historic hyperinflations to find examples.
The modern version of this late-stage trading fad is most prevalent in the West, because that is where modern currency flows into financial assets at the highest rate relative to their real world, physical counterparts. For example, Western paper gold traders look to the seasonal preferences of Eastern physical gold users to plan their buys and sells. The Asian harvest season, after which farmers invest some of their year’s surplus income in gold is closely watched by Western traders. As is the Indian wedding season where every year Indian brides are adorned with physical gold.
Western paper gold traders love front-running these Eastern gold-buying seasons. Recall ANOTHER's comment on this from my last post:
Everyone knows that western minds don't like or want gold, but if they think you like it they will trade it up in price for the sake of "sticking it to you." Enter the world of "paper gold."
This paper trading mentality works really well right up until the moment it doesn't. And that's when it can deliver a total loss. I sometimes wonder if it should even be considered a profitable activity when a split second of fundamental phase transition can take away a decade of technical trading profits. Or the inverse, when the price of a fundamental misjudgment can be the opportunity cost of generations' worth of wealth. In a way, this is the hard question Freegold poses.
Getting Out Before the Collapse
Above I mentioned that the snap-back effect when a fiat currency loses its credibility (hyperinflation) is one of the obvious concepts intentionally ignored by deflationists and mainstream economists alike. Another obvious concept they remain oblivious to is that the two primary functions of money are in no way necessarily tied together. Those two functions being: "medium of exchange" and "store of value." Just because we have suffered their apparent fixation for centuries, they are most definitely not fixed by nature.
As long as you have the freedom to spend your money – the freedom to spend the fruits of your labor, which exists everywhere outside of outright whips-and-chains slavery – you have the choice of how to save your money. If you can spend your money then you can save your wealth in something other than money.
This is the essence of Freegold.
A medium of exchange need only have value in its usage (trade clearing) function. It can quickly lose all value when it is no longer used. This long-forgotten principle can be easily comprehended in Antal E. Fekete's "A 'fairy' tale" which I used in The 100 Year Clearing:
A ‘fairy’ tale
Let us look at another historical instance of clearing that was vitally important in the Middle Ages: the institution of city fairs. The most notable ones were the annual fairs of Lyon in France, and Seville in Spain. They lasted up to a month and attracted fair-goers from places as far as 500 miles away. People brought their merchandise to sell, and a shopping list of merchandise to buy. One thing they did not bring was gold coins. They hoped to pay for their purchases with the proceeds of their sales. This presented the problem that one had to sell before one could buy, but the amount of gold coins available at the fair was far smaller than the amount of merchandise to sell. Fairs would have been a total failure but for the institution of clearing. Buying one merchandise while, or even before, selling another could be consummated perfectly well without the physical mediation of the gold coin. Naturally, gold was needed to finalize the deals at the end of the fair, but only to the extent of the difference between the amount of purchases and sales. In the meantime, purchases and sales were made through the use of scrip money issued by the clearing house to fair-goers when they registered their merchandise upon arrival.
Those who would call scrip money "credit created out of nothing" were utterly blind to the true nature of the transaction. Fairgoers did not need a loan. What they needed, and got, was an instrument of clearing: the scrip, representing self-liquidating credit.
In this example the scrip money at the fair had value only through its use at the fair, not intrinsic in itself. After the fair, if you ended up with a trade surplus (extra scrip money), you turned in your medium of exchange for gold coins, the tradable store of value at the time. Can you imagine how this concept could work in a fair that's open for business 24/7/365?
So how can we possibly have one thing as a medium of exchange and something else as the store of value in our modern world? Has this ever been tried before in recent times? Of course it has! We have been doing it all along!! But the problems that ultimately come arise from those stores of value that are denominated in, and tied to, the durability of the scrip money, the medium of exchange.
Once upon a time, when the medium of exchange was physical gold coin, it was very durable. And stores of value denominated in that durable medium of exchange, denominated in gold, were quite durable for a time. But through the gold standards of the past century that "paper denominated in gold" became the medium of exchange. And now gold will once again become the store of value.
You see, these two monetary functions play off each other in a see-saw fashion. As "assets" (claims really) denominated in the medium of exchange fail and collapse, true physical "store of value" assets alternately rise to the occasion. It is only our ingrained misconception that both monetary functions must be somehow fixed at parity with each other that leads us to foolish ends. And understand also that the Giants of this world know better.
The Freegold Monetary Quadrangle – Explained in Gold is Money - Part 3
Today all governments of the world hold only two assets in reserve, meaning "for a rainy day." They hold claims against counterparties denominated in the medium of exchange and they hold gold, the store of value. And some of the more forward-thinking governments are already floating their gold reserves on the books, for all to see.
Now, the claims held in reserve have two vulnerabilities; the solvency of the counterparties and the durability of the scrip they are denominated in. Of course new scrip can be easily conjured on the national balance sheet to keep the counterparties technically solvent so most assuredly it will be the scrip itself that fails. The gold in reserve, on the other hand, has no counterparty and plenty of durability. So what monetary asset do you think will rise to fill the global monetary reserve void when the scrip finally fails? Palladium?
Bear in mind too that these Giant balance sheets can move the price (value) of gold more in a split second than all of us could in a lifetime of buying. And with any such tectonic shift in the importance of gold on international balance sheets, you can say goodbye to the fractionally reserved commodity (paper) gold trading arena and anything remotely associated with it.
The Collapse of the Salted Mine – Hyperinflation
First of all I would like to clear up probably the most common misconception about hyperinflation. What most people believe is that massive printing of base money (new cash) leads to hyperinflation. No, it's the other way around. Hyperinflation leads to the massive printing of base money (new cash).
Hyperinflation, in most people minds, conjures images of trillion dollar Zimbabwe notes. But this image is simply the government's reflexive response to the onset of hyperinflation, which is actually the loss of confidence in the currency. First comes the loss of confidence (hyperinflation), then, and only then, comes the massive printing to keep the government and its obligations afloat.
And what sets the stage for hyperinflation is a period of high credibility inflation followed by the loss of credibility. During our period of high credibility inflation the dollar was invisibly hyperinflated in a near-monetary sense. This has already happened. We are already there.
When I say the dollar has already hyperinflated in a near-monetary sense, I am talking about the number of dollars people, entities and even foreign nations think they have in reserve. Not in a shoebox, but in contractual promises of dollars to be delivered more or less on demand by somebody else. Claims denominated in dollars. This is how the vast majority of "dollars" are held; as promises to deliver more dollars. And this is why they are held this way. Because of the more in "more dollars." "Let me spend your dollars today and I will give you more dollars tomorrow!"
The Credibility Waterfall
I think it is fair to say that we have finished our 30-year run of high credibility inflation and we are now in the early stages of credibility deflation. The real question now is, can the credibility of the financial system deflate without tripping a breaker, without causing a credibility waterfall in the currency in which it is denominated?
The difference between today and a few years ago is that a few years ago credibility inflation was being fed by private credit (debt) expansion. Asset values, like homes, were being sustained and driven higher with the arrival of new marks. But today the Ponzi cycle of credibility inflation has peaked, there are no more new marks, and its decline is being managed centrally with the government expansion of new base money to conceal the failures one at a time.
And as in any Ponzi scheme there comes a point when redemptions can no longer be financed by new marks. I think the tipping point of credibility must come once it is clear that Bernie Madoff, I mean Uncle Sam is writing redemption checks that can never be cashed. The point is, we are already past the tipping point. So timing isn't really a question anymore. The credibility waterfall has already happened. But somehow we still have early marks continuing to stockpile rubber checks as if they are worth something. Does this mean credibility still exists? I think not.
I suppose this begs the question, is all that dollar debt out there in the world really worth anything anymore? If you answer yes simply because you cashed some of it in today for new underwear, then I say you didn't answer the question. The question is, is all that dollar debt out there in the world really worth anything anymore? The answer is no, it is not. Only at the margin, where you reside, can it still be cashed in for new underwear. But in aggregate, it is worthless, even today.
And then the next logical question should be, what is gold really worth today? If you answered $1,240 per ounce simply because you bought a gold Eagle today for $1,240, then I say you didn't answer the question. The question is, what is gold REALLY worth today? And the answer is it is priceless, but probably could be had in extremely large volumes for somewhere between $10,000 and $50,000 per ounce. (How much physical gold could China realistically get today if it tried to cash in $2T in debt paper for gold? At today's price it could get more than 50,000 tonnes, but only if that's the real value of gold.)
Only at the margin, where you reside, can physical gold still be had for $1,240 per ounce. But in aggregate, in the vaults of the world's central banks as the only reserve asset not tied to the medium of exchange, it is priceless, in the truest sense of the word.
My advice: Get as much of this priceless reserve asset as you can while it's still going for $1,240 at the margin. Seems like a bargain to me.
Sincerely,
FOFOA
Credibility Inflation
Here's a neat little concept that FOA introduced briefly in 1999. I think it explains a lot about the inflation, deflation, hyperinflation debate when it finally sinks in that this is where all the money went for the past 30 years: into inflating the credibility of the $IMFS far beyond the underlying reality. And yes, it has a direct impact on the Freegold revaluation as well. So here I will try to expound on this enlightening concept just a bit.
The Setup
Part of the reason the rest of the world did not abandon the dollar in 1971 was that the rate of economic expansion flowing from Middle Eastern oil cheaply priced in U.S. dollars was already exceeding the expansion rate of the money supply. So the switch from a semi-gold-(con)strained monetary system to a much more expandable "balance sheet money system" as I like to call it — or another name I like is "purely symbolic monetary system" — allowed for the non-deflationary addition of many new "quality of life" gadgets, widgets and shipping lanes that the world had never before imagined.
For the next three or four decades we would be able to comfortably afford the new introduction of Betamax VCR's, microwave ovens in every home, personal computers, DynaTAC cell phones, camcorders, digital cameras, LaserDiscs, Compact Discs, DVD's, MP3's, and on and on. Eventually, all of these wonderful products would be built cheaper by someone else on the other side of the world and shipped to us cheaply using the oil purchased from the Middle East with easily available U.S. dollars.
Sony BetaMax®
The reason I like the term "balance sheet money" is that whenever there is a need for more dollars they can be easily gotten from any bank's balance sheet. The dollars don't have to be there in the bank. You simply jot down the "need" for them on one side of the balance sheet and the dollars magically appear on the other side. Presto!
Of course once that "need" (demand) is supplied, the balance sheet must then be serviced with interest. But the thing about easy money is that you can always borrow new to service the old. In the previous system (con)strained by its parity fixation to the U.S. Treasury's limited supply of gold all these wonderful life-enhancing advances would have put a deflationary pressure on the dollar.
What this means is that when all these new products came to market, the dollars we needed to purchase them would have become more and more precious with each new widget that came to market. The cost to borrow dollars to buy a new BMC-100P or DynaTAC-8000 would have been prohibitive. And even if you did borrow the money, the service of that debt would have grown more and more burdensome over the life of the loan as dollars became ever more precious.
This deflationary dynamic would have stifled the global economic growth rate and confined it to only reasonable risk-taking. Which is part of the reason the foreign central banks, represented by the BIS, did not lobby the U.S. to officially devalue the dollar against its Treasury gold in 1971.
Rather than closing the gold window, the U.S. could have, for example, raised the price of gold to $200 and kept the system going for another 30 or 40 years. A move like this would have been the mathematical equivalent of increasing the Treasury's physical stockpile 5X to double what it was at the height of the Bretton Woods experiment.
But while that would have satiated the monetary transgressions of the past, it would have done little for the future. It would not have substantially changed the system to one of easy money. It would only have extended the old system of hard money.
BMC-100P - The first camcorder
It was reasoned at that time that more than just the ridiculous price of gold being broken, the system itself was broken, and needed a global finance structural change. So the international consensus was to let the U.S. default outright on its gold obligations rather than lobbying for a revaluation of its gold at a new fixed rate. But then continue using the dollar anyway, as long as relatively cheap oil could be gotten for dollars.
And with this decision, the stage was set for a renewed global (Western?) economic growth spurt, much like after the end of WWII. Only this time, the value lost through the non-delivery of U.S. Treasury gold would be more than replaced by the value oil brought to the new world economy, especially with first-of-a-kind products like Pong, released for the Christmas season in 1975.
Pong™ - The first video game
Even at the higher oil prices of the 1970's, the economic demand for oil proved to be a far superior "backing" to the dollar than the depleting Treasury gold had been. And in a certain (limited) sense, the world got its first small taste of Freegold in the 1970's.
But as gold's price began freely rising in the global marketplace, the old alarm bells went off in the dollar's management office. The dollar, which had always been viewed at par with gold, was now seen to be falling as gold soared. So during the mid to late 70's the U.S. Treasury and the IMF held a series of gold auctions to flood the market and quell the perceived danger. But by 1979 the demand for gold was so overwhelming that the auctions had to be stopped.
Through '78 and '79 the dollar plunged against foreign currencies, and in July of 1979 a desperate Jimmy Carter appointed the tough New York Fed President Paul Volker to head the "deeply divided, inexperienced, soft and indecisive" Federal Reserve Board. Then in early October of that year, while attending an IMF meeting in Belgrade, Yugoslavia, Volcker received "stern recommendations" from his European counterparts that something big had to be done immediately to stop the dollar's fall. The general fear at that meeting was that the global financial system was on the verge of collapse.
TRS80 (Pronounced "Trash Eighty")
Returning to the U.S. on October 6, Volcker called a secret emergency meeting in which he announced a major change in Fed monetary policy. The Fed would switch from controlling interest rates through the Fed Funds rate to directly controlling the money supply through bank reserves. One of the side effects of this sharp policy change was that interest rates would now be governed by the marketplace rather than the Fed. The Fed did still raise its discount rate from 11% to 12%, but then the market took the Prime Rate up to 20% within 6 months where it mostly stayed for the next year and a half.
It was later observed that Volcker's 1979 policy change was the most significant change in Fed policy since 1932, when in the middle of the Great Depression the Fed abandoned its "real bills doctrine" and started massive open market purchases of government bonds.
In early 1980, Volcker's new Fed policy began to bite. As interest rates rose, the Dollar first slowed its descent, then stopped falling, and then began to rise. Both the public and the investment community which had stampeded into Gold were lured back into paper by this huge rise in interest rates – and by the prospect of a higher U.S. Dollar.
LaserDisc™
Many facets went into this change in investment attitude, but one concrete change in the U.S. financial system was the most telling. Way back in March 1971, four months before Nixon closed the Gold window, the "permanent" U.S. debt ceiling had been frozen at $400 Billion. By late 1982, U.S. funded debt had tripled to about $1.25 TRILLION. But the "permanent" debt ceiling still stood at $400 Billion. All the debt ceiling rises since 1971 had been officially designated as "temporary!" In late 1982, realizing that this charade could not be continued, The U.S. Treasury eliminated the "difference" between the "temporary" and the "permanent" debt ceiling.
The way was cleared for the subsequent explosion in U.S. debt. With the U.S. being the world's "reserve currency," the way was in fact cleared for a debt explosion right around the world. It was also cleared for five of the biggest bull markets in history.
The global stock market boom of 1982-87
The Japanese stock market/real estate boom of 1988-90
The Dow (and then Nasdaq) led boom - late 1994 to March/April 2000
The great global real estate boom of 2002-06
The global stock market revival of 2006-07 [1]
DynaTAC-8000
And thus, in 1980, began the modern era of Credibility Inflation.
Salting the Mine
Most simply stated, credibility inflation is the expanding confidence in the fiat financial system to always deliver a higher payoff tomorrow than today. And through credibility inflation we ultimately destroy the currency structure by believing it can somehow deliver more than reality will allow.
Credibility inflation is the exact antithesis of price inflations like the 1970's. It is why we saw low consumer price inflation for the last 30 years relative to the massive monetary and financial product inflation. It is partly why we saw gold stagnant or falling for 20 years. Yet it is just as much a product of monetary inflation as regular price inflation is (more on this in a moment). And it is much more catastrophic in the end.
Periods of high credibility inflation are generally not followed by smooth cycles of credibility DEflation. Instead, they tend to SNAP BACK into sudden real price inflation when confidence abates. What happens in the most extreme cases is real price HYPERinflation.
This is one of the main concepts deflationists and mainstream economists completely miss; the SNAP-BACK of credibility inflation that can instantly take down their precious fiat currency. And it is their intentional avoidance of this obvious concept that delivers aid and comfort to masterprinters like Gideon Gono and Ben Bernanke.
When people try to protect their assets against the effects of fiat money, what are they really fighting against? The first inclination is to say "rising prices." Yet it's much more than that! Most everyone agrees that the interest rate paid by the banks never covers the loss of buying power brought on by price inflation. Especially the "after tax" return. It's the same old story, played out decade after decade. We must "invest our savings" (or become a day trader?) because the money will erode in value! Even at 3%, price inflation can eat away at any cash equivalents.
But, price inflation isn't the only story that impacts us. Rising prices come and go, but money inflation continues to affect us without fail. So why do people feel better when price increases slow or stop, even as money inflation runs ever upward? The good feelings usually evolve from the effects that money inflation (increases in the money supply) has on financial instruments. These assets take on the very same characteristic that the rising prices of goods once exhibited. They run up in currency price.
During these periods of "less goods inflation" another sinister form of mindset lurks in the shadows. Credibility inflation! Yes, it has been here many times before as every fiat currency alternates its effects upon the feelings of the populace.
Fiat currencies must, by definition, always expand in quantity. Their continued usage and acceptance is always obtained with the bribe of "more wealth to come!" Without that bribe, humans would never fall for holding a debt to receive the same goods in the future if they could get the real thing today. Human nature has always dictated that we buy what we need now instead of holding someone's IOU to receive it later. That nature is only changed through the "greed to obtain more." Like this: "I'll hold my wealth in dollars as long as my assets are going up. Later those increased assets will buy me a better lifestyle as I purchase more goods and services than I could buy now."
This is the hidden dynamic we see today. Just as destructive as "goods price increases," "credibility inflation" impacts our emotions to "hold on for the future, more is coming!" In every way, "credibility inflation" is just as much a product of an increase in the money stock as "regular price inflation" is. As cash money streams out to cover any and all financial failures, we begin to attach an ever higher credibility to the continued function of the fiat system. In effect, the more money that is printed, the higher we price the credibility factor. [2]
Selling the Salted Mine
Is this not where we are today? Interest rates – and with them, bond valuations – have run their 30 year course from 20% down to 0%. The credibility of paper assets has taken at least three severe beatings in the last decade. And now, to simply slow the acceleration of credibility DEflation, every manner of bailout and market rigging is being employed, practically in broad daylight. And this on the assumption that the global flock of sheep will only watch the numbers, not the men making them or the underlying economy from which they spring.
GDP is one of the great deceivers in the fiat money world. During the last century (??) or so, some form of GDP has always been used to measure the great mass of human endeavors. Yet, throughout this time, some form of fiat currency has always been in effect. Even during the Gold standard, fractional reserve banking expanded "gold note money" more so than the "gold money" in existence. Prior to 1929 this effect, if not creating outright "price inflation" during a time of Gold standard policy, was creating "credibility inflation" in the minds of investors. Using the backdrop of a growing GDP, people bought into inflating financial assets and ignored these signals as evidence that the fractional currency system was failing. Even though the dollar contained a policy statement to supply gold, back then a gold loan was still only good until everyone asked for gold.
The same thing is happening today. People destroy the currency structure by thinking it can deliver more than reality will allow. Instead of all debt failing slowly with each upward march of price inflation, prolonged "credibility inflation" snaps all at once as investors try to suddenly revert to a "buy now mentality." The inability of government authorities to contain the fiction of "good debt" is usually the feature behind the investor mood change. The "snap back" into a sudden "real price inflation situation" caused during this stage by a currency failure always breaks the whole structure. We approach this end today!
The GDP has been the relative gauge to mark all other measurements against. Even so, its numbers reflect little more than the result of an "expanding fiat money supply." Yes, there have been recorded downturns in GDP, but these contractions would have been worse if measured in real (gold) money. In opposite fashion, expansions paint a much brighter picture as all financial liabilities seem less a threat if held against a rising GDP. I submit that the GDP figures offer little more than a way to entice investors to increase their "credibility image" of our monetary system. Fiat moneys are always on a long term upward expansion, and they can hardly do less than bloat the picture.
Someone I know once said; "your wealth is not what your money say it is!"
A great historical example of credibility inflation with parallels to our present financial and monetary system was the system in France under the direction of the esteemed Scottish economist, John Law. In 1716 Law established the first French central bank, the Banque Générale, which was later nationalized and renamed the Banque Royale. Law used the Banque to introduce paper money in France.
Simultaneously, Law aggregated the trading companies in the French colony of Louisiana into a singular monopoly under the name "Company of the Indies" and sold shares of this company back in France. Law exaggerated the prospects of the company so well that he was actually appointed Controller General of Finances (essentially the first French Central Banker) by Philippe d'Orléans and given the official job of pumping this stock. In a way, John Law was kind of like the "Jim Cramer meets Larry Summers" of his time.
Wild speculation on the shares of the Company of the Indies led to the Banque Royale issuing more and more paper money to fund the monetary demands of the buying frenzy. And the "company profits" owed to the shareholders were also paid in fresh paper money. John Law's credibility was being entirely financed by his printing press.
Then, in late 1720, opponents of John Law's paper money attempted en masse to exchange their paper notes for gold. This forced the Banque Royale to cease physical gold "delivery," declare the essence of "force majeure" (which incidentally is a French term from French law), and admit it had issued much more paper than it had in gold. Both the Company stock value and the paper money itself plunged, ultimately to worthlessness. The monetary system in France was revamped six years later, but by the end of 1720 John Law had been disgraced, relieved of his official job, and had to flee France a poor man. He died in poverty nine years later.
Trading Salted Mines
One observation we can make is that in the long-line cycles of monetary history, technical (momentum) trading emerges in the very late stages of cycles in its most frenetic fashion. This is when it draws the most people into the unproductive activity of trading for trading's sake. And this is when it draws in the greatest profits, right before it delivers a catastrophic total loss.
In the early stages of these long-line cycles the greatest profits in society come from productive enterprises like building large companies from the ground up. But in the very late stages the greatest profits seem to come from paper churning and speculation in things that were previously traded mostly on fundamentals, based on actual, physical use.
We can see this in the famous bubbles like the tulip bubble, the Mississippi bubble, the South Seas bubble, the dot com bubble and the housing bubble. But it also occurs at the end of currency cycles. History is full of stories of traders frantically trying to trade out of their positions at the end of long-line cycles, while the currency burns around them. Look at any list of historic hyperinflations to find examples.
The modern version of this late-stage trading fad is most prevalent in the West, because that is where modern currency flows into financial assets at the highest rate relative to their real world, physical counterparts. For example, Western paper gold traders look to the seasonal preferences of Eastern physical gold users to plan their buys and sells. The Asian harvest season, after which farmers invest some of their year’s surplus income in gold is closely watched by Western traders. As is the Indian wedding season where every year Indian brides are adorned with physical gold.
Western paper gold traders love front-running these Eastern gold-buying seasons. Recall ANOTHER's comment on this from my last post:
Everyone knows that western minds don't like or want gold, but if they think you like it they will trade it up in price for the sake of "sticking it to you." Enter the world of "paper gold."
This paper trading mentality works really well right up until the moment it doesn't. And that's when it can deliver a total loss. I sometimes wonder if it should even be considered a profitable activity when a split second of fundamental phase transition can take away a decade of technical trading profits. Or the inverse, when the price of a fundamental misjudgment can be the opportunity cost of generations' worth of wealth. In a way, this is the hard question Freegold poses.
Getting Out Before the Collapse
Above I mentioned that the snap-back effect when a fiat currency loses its credibility (hyperinflation) is one of the obvious concepts intentionally ignored by deflationists and mainstream economists alike. Another obvious concept they remain oblivious to is that the two primary functions of money are in no way necessarily tied together. Those two functions being: "medium of exchange" and "store of value." Just because we have suffered their apparent fixation for centuries, they are most definitely not fixed by nature.
As long as you have the freedom to spend your money – the freedom to spend the fruits of your labor, which exists everywhere outside of outright whips-and-chains slavery – you have the choice of how to save your money. If you can spend your money then you can save your wealth in something other than money.
This is the essence of Freegold.
A medium of exchange need only have value in its usage (trade clearing) function. It can quickly lose all value when it is no longer used. This long-forgotten principle can be easily comprehended in Antal E. Fekete's "A 'fairy' tale" which I used in The 100 Year Clearing:
A ‘fairy’ tale
Let us look at another historical instance of clearing that was vitally important in the Middle Ages: the institution of city fairs. The most notable ones were the annual fairs of Lyon in France, and Seville in Spain. They lasted up to a month and attracted fair-goers from places as far as 500 miles away. People brought their merchandise to sell, and a shopping list of merchandise to buy. One thing they did not bring was gold coins. They hoped to pay for their purchases with the proceeds of their sales. This presented the problem that one had to sell before one could buy, but the amount of gold coins available at the fair was far smaller than the amount of merchandise to sell. Fairs would have been a total failure but for the institution of clearing. Buying one merchandise while, or even before, selling another could be consummated perfectly well without the physical mediation of the gold coin. Naturally, gold was needed to finalize the deals at the end of the fair, but only to the extent of the difference between the amount of purchases and sales. In the meantime, purchases and sales were made through the use of scrip money issued by the clearing house to fair-goers when they registered their merchandise upon arrival.
Those who would call scrip money "credit created out of nothing" were utterly blind to the true nature of the transaction. Fairgoers did not need a loan. What they needed, and got, was an instrument of clearing: the scrip, representing self-liquidating credit.
In this example the scrip money at the fair had value only through its use at the fair, not intrinsic in itself. After the fair, if you ended up with a trade surplus (extra scrip money), you turned in your medium of exchange for gold coins, the tradable store of value at the time. Can you imagine how this concept could work in a fair that's open for business 24/7/365?
So how can we possibly have one thing as a medium of exchange and something else as the store of value in our modern world? Has this ever been tried before in recent times? Of course it has! We have been doing it all along!! But the problems that ultimately come arise from those stores of value that are denominated in, and tied to, the durability of the scrip money, the medium of exchange.
Once upon a time, when the medium of exchange was physical gold coin, it was very durable. And stores of value denominated in that durable medium of exchange, denominated in gold, were quite durable for a time. But through the gold standards of the past century that "paper denominated in gold" became the medium of exchange. And now gold will once again become the store of value.
You see, these two monetary functions play off each other in a see-saw fashion. As "assets" (claims really) denominated in the medium of exchange fail and collapse, true physical "store of value" assets alternately rise to the occasion. It is only our ingrained misconception that both monetary functions must be somehow fixed at parity with each other that leads us to foolish ends. And understand also that the Giants of this world know better.
The Freegold Monetary Quadrangle – Explained in Gold is Money - Part 3
Today all governments of the world hold only two assets in reserve, meaning "for a rainy day." They hold claims against counterparties denominated in the medium of exchange and they hold gold, the store of value. And some of the more forward-thinking governments are already floating their gold reserves on the books, for all to see.
Now, the claims held in reserve have two vulnerabilities; the solvency of the counterparties and the durability of the scrip they are denominated in. Of course new scrip can be easily conjured on the national balance sheet to keep the counterparties technically solvent so most assuredly it will be the scrip itself that fails. The gold in reserve, on the other hand, has no counterparty and plenty of durability. So what monetary asset do you think will rise to fill the global monetary reserve void when the scrip finally fails? Palladium?
Bear in mind too that these Giant balance sheets can move the price (value) of gold more in a split second than all of us could in a lifetime of buying. And with any such tectonic shift in the importance of gold on international balance sheets, you can say goodbye to the fractionally reserved commodity (paper) gold trading arena and anything remotely associated with it.
The Collapse of the Salted Mine – Hyperinflation
First of all I would like to clear up probably the most common misconception about hyperinflation. What most people believe is that massive printing of base money (new cash) leads to hyperinflation. No, it's the other way around. Hyperinflation leads to the massive printing of base money (new cash).
Hyperinflation, in most people minds, conjures images of trillion dollar Zimbabwe notes. But this image is simply the government's reflexive response to the onset of hyperinflation, which is actually the loss of confidence in the currency. First comes the loss of confidence (hyperinflation), then, and only then, comes the massive printing to keep the government and its obligations afloat.
And what sets the stage for hyperinflation is a period of high credibility inflation followed by the loss of credibility. During our period of high credibility inflation the dollar was invisibly hyperinflated in a near-monetary sense. This has already happened. We are already there.
When I say the dollar has already hyperinflated in a near-monetary sense, I am talking about the number of dollars people, entities and even foreign nations think they have in reserve. Not in a shoebox, but in contractual promises of dollars to be delivered more or less on demand by somebody else. Claims denominated in dollars. This is how the vast majority of "dollars" are held; as promises to deliver more dollars. And this is why they are held this way. Because of the more in "more dollars." "Let me spend your dollars today and I will give you more dollars tomorrow!"
The Credibility Waterfall
I think it is fair to say that we have finished our 30-year run of high credibility inflation and we are now in the early stages of credibility deflation. The real question now is, can the credibility of the financial system deflate without tripping a breaker, without causing a credibility waterfall in the currency in which it is denominated?
The difference between today and a few years ago is that a few years ago credibility inflation was being fed by private credit (debt) expansion. Asset values, like homes, were being sustained and driven higher with the arrival of new marks. But today the Ponzi cycle of credibility inflation has peaked, there are no more new marks, and its decline is being managed centrally with the government expansion of new base money to conceal the failures one at a time.
And as in any Ponzi scheme there comes a point when redemptions can no longer be financed by new marks. I think the tipping point of credibility must come once it is clear that Bernie Madoff, I mean Uncle Sam is writing redemption checks that can never be cashed. The point is, we are already past the tipping point. So timing isn't really a question anymore. The credibility waterfall has already happened. But somehow we still have early marks continuing to stockpile rubber checks as if they are worth something. Does this mean credibility still exists? I think not.
I suppose this begs the question, is all that dollar debt out there in the world really worth anything anymore? If you answer yes simply because you cashed some of it in today for new underwear, then I say you didn't answer the question. The question is, is all that dollar debt out there in the world really worth anything anymore? The answer is no, it is not. Only at the margin, where you reside, can it still be cashed in for new underwear. But in aggregate, it is worthless, even today.
And then the next logical question should be, what is gold really worth today? If you answered $1,240 per ounce simply because you bought a gold Eagle today for $1,240, then I say you didn't answer the question. The question is, what is gold REALLY worth today? And the answer is it is priceless, but probably could be had in extremely large volumes for somewhere between $10,000 and $50,000 per ounce. (How much physical gold could China realistically get today if it tried to cash in $2T in debt paper for gold? At today's price it could get more than 50,000 tonnes, but only if that's the real value of gold.)
Only at the margin, where you reside, can physical gold still be had for $1,240 per ounce. But in aggregate, in the vaults of the world's central banks as the only reserve asset not tied to the medium of exchange, it is priceless, in the truest sense of the word.
My advice: Get as much of this priceless reserve asset as you can while it's still going for $1,240 at the margin. Seems like a bargain to me.
Sincerely,
FOFOA
Just a big AMEN on that!!!!eom
Ulysses Diversified Holdings Corporation Subsidiary Awarded Contracts for Installation of Life Safety Fire Protection in Chicago
Ulysses Divsd Hldg Corp (USOTC:UDHC)
Intraday Stock Chart
Today : Friday 27 August 2010
Ulysses Diversified Holdings Corporation (PINKSHEETS: UDHC) announced today that its subsidiary, JNS Power & Control Systems, Inc., has been awarded contracts for the installation of the life safety fire protection systems at the Northwest and Crosby Commonwealth Edison (ComEd) Substations in Chicago, Illinois.
Jean Howe, President of JNS Power & Control Systems, Inc. stated “JNS Power will be responsible for the installation of a complete upgrade of the existing life safety fire protection systems at both sites. We were chosen because we are known for our core business being life safety and building automation. Construction costs for these two projects will be in the $500,000 range. We have worked with ComEd since the inception of our company starting at the bottom as a third tier sub-contractor and rising to the top. We have worked very closely with ComEd paying close attention to safety and we are now listed as a direct vendor with ComEd bidding projects directly to them.”
“We’re pleased to have been selected to work on these projects. JNS Power is a well established and recognized leader delivering high quality construction services for clients and nothing is more gratifying than knowing we will be satisfying both our client and its customers.”
Please continue to visit the company’s website for future contract listings under the new “President Updates” page at www.jnspower.com.
This press release does not constitute an offer of any securities for sale. This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements involve certain risks and uncertainties that could cause actual results to differ. All forward-looking statements in this press release are based on information available to the company as of the date hereof, and the company undertakes no obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this press release.
News out. eom
New company may have some trouble with the name:
http://ih.advfn.com/p.php?pid=squote&symbol=TYTN
Titan Holdings is already a listed company, unless it's the same company which I seriously doubt. Titan holdings is into farm machinery.
.......al
Funny thing. They weren't registered last year either, but their products were shown. Other vendors will have their products on display. EI is not much of a retailer anymore, at least in the funeral industry. The 2 majors have taken over most of the retail end.
..........al