A Tale of Two Countries

I see a beautiful city and a brilliant people rising from this abyss, and, in their struggles to be truly free, in their triumphs and defeats, through long years to come, I see the evil of this time…making expiation for itself and wearing out…
― Charles Dickens, A Tale of Two Cities

In 2005, economist Raghuram Rajan, 42 years old at the time, delivered a speech at the annual meeting of the crowned heads and elder statespeople of central banking telling them how those in attendance were brewing up a wicked credit crisis. After the speech, former US Treasury Secretary Lawrence Summers led the charge against Rajan, describing himself as “someone who finds the basic, slightly Luddite premise of this paper to be largely misguided.” According to Bloomberg:

Summers also said “while I think the paper is right to warn us of the possibility of positive feedback and the dangers that it can bring about in financial markets, the tendency toward restriction that runs through the tone of the presentation seems to me to be quite problematic.”

We all know now that Rajan was right and Summers, who had spent several years helping to tear down any restrictions on the gambling and deception by Wall St banks, was wrong in many ways.

India just made Rajan–who clearly saw the financial crisis coming and had the courage and intelligence to publicly state his case to those who were aiding and abetting it–the new head of India’s central bank, the Reserve Bank of India.  And Obama is considering appointing Summers–who aided and abetted the ongoing financial crisis mightily and who didn’t see it coming–the next head of the US central bank, the Federal Reserve. Summers is also infamous for abruptly resigning as the President of Harvard after losses in the endowment fund, his public statement that women are unable to learn science and math as well as men, and a no-confidence motion from the faculty.

Obama’s alternate candidate for the next head of the Federal Reserve is said to be Janet Yellen. She testified to Congress that she didn’t see the financial crisis coming either. Yellen was in charge of the Federal Reserve Bank of San Francisco from 2004 through 2010. So she was one of the top regulators presiding over the ramping up of the deranged lending that supported the real estate bubble in her territory that included California, Nevada, and Arizona.

So India has appointed someone with a track record of getting economic things right, and who is willing to risk career to state truth about a seriously dysfunctional status quo. And the US is poised to appoint someone who not only got it wrong about the financial crisis, but who, it could easily be argued, was on the team of architects who helped to create it. Worse still, Summers and Yellen have been in positions of financial power since and have done little to solve those architectural problems that still plague the system. My guess is that they have resisted real solutions.

One would think that Obama would prefer to appoint someone like Rajan, who had seen the financial crisis coming. But that is not the way things work in the US. Those who saw it coming would be similar to Rajan in clearly pointing out the structural problems in the US system, and that would seriously step on the toes of the rich and powerful. That is not tolerated at this time in the US.

And this is not limited to the financial sphere. Obama just appointed Director of National Intelligence James Clapper to head a commission to review the practices of the NSA despite the fact that Clapper lied at a Senate hearing in March, telling the Senate that the NSA does not collect the phone records of millions of Americans. He has since apologized for his lie. But how can such a person be expected to objectively review the practices of the NSA? Clearly, this is strictly political theater.

India has its problems. In Rajan’s first speech on the job, he went right after the corruption that is plaguing India’s economic system. India, a nation on the rise, is trying to solve its problems. The US, on the other hand, looks like it has no intention of arresting its own decline.

Pathetic Beating of War Drums

There are 40,000,000 men under arms in the world today, and our statesmen and diplomats have the temerity to say that war is not in the making.

Hell’s bells! Are these 40,000,000 men being trained to be dancers?
–1935, Major General Smedley Butler, War Is A Racket

Since the story broke around May 13 that the US Department of Justice collected the phone records of Associated Press reporters and editors for months in revenge for their printing a story about the CIA that the Administration did not like, the Administration has faced an avalanche of scandal. What did they expect? Directly attacking the press with a massive wiretapping operation? The press was rightly furious. Many boycotted the off-the-record press conference (how’s that for twisting language and taking oxymoronics to new depths, an “off-the-record press conference”!) held by Attorney General Eric Holder to explain how they really weren’t doing any harm with all those wiretaps. Sure.

They pushed the press too far. It inspired at least a small number of those who claim to be journalists to live up to their name and unleash the avalanche: the IRS targeting political enemies, the admission that the War on Terror is permanent, that Attorney General Eric Holder lied to Congress under oath, that the US collects millions of personal phone records from telecom companies, that they collect everyone’s internet activities shown here and here, that the US is drawing up a list of targets for cyber warfare, that the US “hacks everyone everywhere”, and so forth. What a month!!!

So now what do we get? The distraction supreme: War! They’ve conveniently and officially decided that Syria has used chemical weapons (“weapons of mass destruction”) and so now the public discussion will be: what weapons will be sent, where will warships be placed, how many “advisors” are needed, when will a no-fly zone be implemented, and so forth. Haven’t we seen this script before? Didn’t they actually make movie like that? A war would nicely dominate the news. The assumption is that people are stupid and they’ll forget about the illegalities and theft of freedoms from the previous paragraph, and they’ll allow the country to get sucked into yet another war.

Well, are we that stupid? Are we going to let them sucker us into another war that profits the very few and kills the many? In the name of the many? Paid for by the many?

Let’s review some history here. In 1935, the most decorated US war hero up to that time, Marine Corp Major General Smedley Butler, published the amazing pamphlet War Is a Racket, perhaps the best summary ever of what war is really for: Profit! They taught us all that in school, right? Sure.

As Butler predicted in 1935, they were preparing for war, which turned out to be World War 2. After that war, They saw that it would be impossible to keep up that level of intensity forever, so They came up with the Cold War and regional war. That keeps the weapons procurement process going big time for the defense companies, and keeping all those ships and jets and trucks running around the world at somewhere between 700 and 1,000 bases worldwide brings huge profits for the energy cartel.

They succeeded in having a very profitable regional war in Korea. Following that war, US President Eisenhower warned about a takeover by the military-industrial complex. But few listened.

Then They wanted a regional war in Viet Nam. John F. Kennedy resisted. So They assassinated him and soon after there were hundreds of thousands of well-armed troops fighting in Viet Nam. Martin Luther King caught on to their game and started including a lot of anti-war remarks in his speeches in 1968, so They assassinated him. Robert F Kennedy showed all signs of campaigning against war, so They killed him. So then the young people who were being sent to Viet Nam and whose friends were being sent to Viet Nam started protesting that war in earnest. The Woodstock concert in 1969 was the largest peace rally ever held. Since there was no police presence there, that concert proceeded peacefully. So in 1970 They killed some of the heroes of that concert like Jimi Hendrix and Janis Joplin. And They killed four war-protesting students at Kent State University. But people still protested until the US government couldn’t take it anymore and ended its involvement in Viet Nam in 1973.

Soon thereafter, They switched most of their attention on the Middle East. The money was flowing in from oil, so They armed everyone to the teeth. Arabs versus Jews, Sunnis versus Shiites, Muslims versus Christians, dictators versus democracies, wow, what an endless platform for weapons sales and continuous regional war, which they have now achieved.

The question for all of us is: if we let them create a larger war in Syria, clearly, won’t Iran be the next stop? And will the Iran war go beyond regional, will that one go nuclear, will that be World War 3?

Will They be satisfied with the steady profits from Their successful creation of continuous regional war, or are They greedy for something much larger?

Folks, our so-called leaders are not going to put a stop to this. They know that the leaders who tried to put a stop to it got killed for their efforts. So our “leaders” will either be the paid salespeople for war or they will stand aside and let others play that role. Either way, the political honchos are not going to stop this. People have to stop it. We have to stop it.

They know we can stop it. That’s why They have to resort to such elaborate hoaxes and false flag attacks to drag people into these wars. So let’s not fall for it. Let’s peacefully put a stop to it.

Update on Metals, Deposit Confiscation, and Capital Controls

…one goal is to get to the point where all market participants understand with certainty that if a large SIFI (systemically important financial institution) were to fail, the losses would fall on its shareholders and creditors
–Governor Jeremy C. Stein, US Federal Reserve Board, Regulating Large Financial Institutions, speech at a conference sponsored by the International Monetary Fund, April 17, 2013

* * *

“Bank creditors,” as it happens, is a class of people that includes bank depositors. Everything about the rhetoric of banking is designed to obscure this. You deposit money in your bank account…But what you’ve really done is loaned the money to the bank…
Slate.com

A big price drop in the precious metals. So let’s see, on Thursday, April 11:

     CEOs of biggest U.S. banks to meet with Obama on Thursday

and the big selling in metals took place on Friday, April 12 and Monday, April 15.  No chance of any causation in that correlation. Nah. Move along. As Leslie Nielsen said, “Nothing to see here.

Anyway, with all that selling, there must be lots of inventory of coins around. That’s what they teach in Econ 101, right? That if a price is plunging, it’s because people are dumping large quantities of that item onto the market.

But there isn’t lots of inventory. Inventory is very tight, sold out in many cases. Delivery lead times are out to five or six weeks, and that’s if you can even place an order for what you want.  Big-volume dealers like Tulving.com are entirely out of one-ounce silver coins minted by any country, and they have been since April 15. You can scroll down this page at their web site to see how many items they normally sell are currently sold out.

And these people make a living buying and selling lots of coins. They really want to do a lot of business. And they are happy to buy right now, but they can’t sell lots of items because there aren’t any available.

This scramble to buy physical bullion coins is going on worldwide.

In Australia:

     Golden times for Perth Mint

The volume of business that we’re putting through is way in excess of double what we did last week,” Treasurer Nigel Moffatt said, without giving precise figures. “There’s been people running through the gate.”

In Japan:

     As global price slumps, “Abenomics” risks drive Japan gold bugs

But on Tuesday, buyers outnumbered sellers by a wide margin. At Ginza Tanaka, the headquarters shop of Tanaka Holdings, gold buyers waited for as long as three hours for a chance to complete a transaction.

In India:

     India’s Response To The Gold Sell Off: A Massive Buying Frenzy

In China:

     Chinese Gold & Silver Exchange Society Runs Out of Gold…Importing from Switzerland and London

Now we discover that the Chinese Gold & Silver Exchange Society has essentially sold out of gold bullion, and must wait until Wednesday for shipments to arrive from Switzerland and London.

     Gold Buying Frenzy Continues: China, Japan, And Australia Scramble For Physical

In the US:

     US Mint Sells Record 63,500 Ounces Of Gold In One Day

According to today’s data from the US Mint, a record 63,500 ounces, or a whopping 2 tons, of gold were reported sold on April 17th alone, bringing the total sales for the month to a whopping 147,000 ounces or more than the previous two months combined with just half of the month gone.

     Bullion Shortages Develop As Retail Demand Skyrockets

…on Monday there was such chaos in the markets that some of the larger wholesale dealers had to shut down at various times because of the massive demand on the buy side… Gold and silver buyers are still outpacing sellers by a stunning 50 to 1.  There were premium increases on everything bullion related.  The wholesalers are now telling us four to six weeks on silver maple leafs, and wholesalers quit taking orders on one ounce silver rounds.

In Canada and Europe:

     Massive Run On Physical Gold & Silver At UBS & Scotiabank

At the Bank of Nova Scotia in Toronto the gold window has been absolutely swamped. I have confirmed there were people lined up in droves recently for multiple-hours at a time to buy gold and silver bars and coins….

“I then confirmed with UBS today in Zurich, Switzerland, that they are experiencing exactly the same thing. They told me people are waiting in long lines for bullion related bars and coins. The physical market is incredibly tight…

In Switzerland:

     Refiners Can’t Keep Up With Massive Global Gold Demand

If you look at our company, as just one example, we did not have one single seller in the last few weeks.

So during this takedown in gold and silver there wasn’t one single seller, only buyers….

If we turn to the Swiss refiners, Eric, the premium over spot for physical gold is rocketing. Swiss refiners are unable to keep up with the demand for immediate delivery. They are working flat out, including the weekend, and still can’t keep up.

The Swiss refiners are seeing global demand coming in from everywhere, especially from the Middle-East and the Far-East. So, again, this proves that the artificial manipulation of paper gold has nothing to do with the physical market.
–Egon von Greyerz, Matterhorn Asset Management

So, with all that buying interest in real physical gold and silver, why has the price been falling? Because the two largest trading venues on the planet for metals, the LBMA (London Bullion Market Assoc.) and the COMEX in the US, are the places where the price of gold is currently set. And 99% or more of the trades there that are said to be related to gold are not for the physical metal, they are futures contracts that are traded for cash, not physical gold. In other words, these are very large trading casinos. But like the banks, they are fractional reserve systems. In other words, if everyone who had a futures contract for gold actually wanted physical gold for their contract, there would not be anywhere near enough gold to go around. Even supporters of the LBMA admit there is maybe 1% physical gold backing all these contracts. So that’s even more leverage than is used at most banks. A lot more.

Monday, April 15 was a good example. Andrew Maguire–an LBMA trader and whistleblower who the Powers That Be ran down, but did not kill, with a car in 2011 right after Andrew gave testimony on silver price manipulation to the authorities—reported that on Monday, there was a period during which 155 tons of gold was sold on the LBMA in one hour. I can tell you for sure that no one who owned or was the custodian for 155 tons of physical gold would sell it in a panic into a falling market. This was selling of futures contracts that will be settled in cash. They have little or nothing to do with physical gold. People in charge of 155 tons of real gold do not sell in a panic. If they wanted to sell—and such a thing would be quite unusual these days when even central banks are net buyers of physical gold—they would do so carefully, trying to get the best price. They would sell on days when the price was rising, not falling. This is the way anyone with a strong profit motive sells, they hire good traders to sell over time when they can get the best price. They do not panic dump their holdings regardless of price.

In fact, Maguire reports that central banks picked up 55 tons of physical gold during that one hour period when 155 tons worth of paper gold contracts were sold.

Here are Maguire’s comments about Monday, April 15.

At some point, this charade will fall apart. The price of physical gold will separate from the price quoted in these paper instruments. This is already visible when one needs to buy coins at a premium above the spot price of the metal. During these smashdown selloffs (we’ve seen these before in 2006 and 2008), the premium above the quoted spot price for physical gold and silver rises, sometimes to as much as 50% above the spot price if you want prompt delivery. During those periods, the price for physical coins is not the quoted spot price, it is the spot price plus the premium, and that price can be substantially higher. These are the indications of the separation of the paper and physical gold and silver prices to come.

The press duly reported nearly the same quote from representatives of all of the banks. Yes, reps from those same banks that met with Obama on April 11. “Gold has lost its safe haven status. “ “Gold is no safe haven.” And on and on. They should have dressed them up in silly costumes and they could have danced and sang together, at least that would have been entertaining.

So why do they want to scare you out of, or away from, gold and silver? Two main reasons:

First, so that you cough up your goods so they can buy them on the cheap.

Second, when they go to “Cyprus” your accounts, that is, when they want to confiscate some of your money, they want it easily available with a few keystrokes. Confiscating gold and silver coins would be inconvenient at best, dangerous at worst.

Do you think “they’ll never do that here”? Here is the overall order of events in Cyprus:

1. On Feb 10, the Financial Times published the plan for the confiscation of depositor money in Cyprus called Radical rescue proposed for Cyprus.

2. On Feb 11, the Central Bank of Cyprus posted a letter shown at this link saying that the Financial Times article was incorrect, that confiscating depositor money was against the constitution, etc.

3. In mid-March, the confiscation of depositor money was announced.

4. The Cyprus parliament voted against it.

5. The central bank of the EU overruled the Parliament of Cyprus and went ahead with the confiscation. So democracy and the constitution were thrown out the window along with the promises.

On the day after the confiscation, the new head of the EU finance ministers, Jeroen Dijsellbloem, gave not one, but two interviews in the mainstream press in which he said the Cyprus bank resolution was a new template for such actions. From Reuters:

A rescue programme agreed for Cyprus on Monday represents a new template for resolving euro zone banking problems and other countries may have to restructure their banking sectors, the head of the region’s finance ministers said.

The rest of the EU and IMF politicians nearly had a baby on the public stage. For the next three weeks, all they would say was that Cyprus was not a template. We should have put them in a chorus line too. Even Dijsellbloem tweeted that he didn’t say what he said.

But then a member of the US Federal Reserve Board, Governor Jeremy C. Stein, said that if a Too Big to Fail bank failed, that private investors and creditors would have to bear the losses. His speech was on April 17, well after the Cyprus event wherein depositors were ruled as “creditors” of the bank. These people choose their words carefully. I hope everyone out there listens to them carefully.

And it’s worth remembering this: In the US, for example, the bank insurance fund held by the FDIC has $25 billion. That’s the amount insuring $9 trillion worth of deposits.  So that’s 370 times more deposits than the amount in the insurance fund. And the insured banks have an additional $297 trillion in exposure to derivatives. So that’s almost 12,000 times more than the amount in the insurance fund. Very safe and sound, eh? Now you know why the authorities have just hinted that banks won’t be simply bailed out anymore; people’s deposits will be bailed in. Just remember, they’ve put you on notice now that you need to determine whether or not your bank is safe. People who spend their whole lives trying to do that can’t figure out which banks are truly safe anymore, but so what, you are now supposed to be able to do that. You can see a chart of the FDIC situation here. And you can find out a little about the safety of any US bank at the Safe and Sound section here. I am not aware of what is available publicly available for bank analysis in other countries.

Also part of the Cyprus event were strong restrictions on how much money a person could take out of Cyprus, the dreaded capital controls. This is also part of the template. When that happens, people are stuck in their own currency even if it tumbles mercilessly in value. When people tried to switch their money into the electronic currency Bitcoins because it recognizes no borders, it doubled the price of Bitcoins in a few weeks. TPTB then smashed down the price of Bitcoins as well, to show people that there is “no safe haven.”

Throughout history, currency devaluations, capital controls, and asset confiscations are denied until after they have happened. Governments typically say, “Sorry, we didn’t want to do that, but we had no choice.” You need to either anticipate them or be a connected government crony. Here’s a chart of monthly deposits into and withdrawals from the Cypriot banking system. The large withdrawals in January and February show the strong likelihood that some people were given advance notice:

CyprusOutflows

Most people were not given advance notice; if the time comes, you and I will be in that group.

Lots of people are showing that they understand. As the stories above show, people were waiting in line for metals at these prices across the globe. We have seen this play before. Sometimes the elites smash down the prices of metals. Did I see it coming? Nope. Can they do it again? Yep. But as the rising price of gold over the last 12 years proves, they can’t push it down too far. If they do, the Asians and regular people will end up owning all of the gold. And the banksters won’t like that at all since they know the financial (per)version of the golden rule: he who has the gold makes the rules.

Lots of regular people on the planet take these price smashes as a gift. I think these people are smart.

Here is Jim Sinclair’s latest comment on the topic: The US Will Be Cyprused & We Will See $50,000 Gold.

And the recently-released video The Secret World of Gold, while not perfect, has Andrew Maguire briefly explaining how gold and silver prices are manipulated, and brings up the interesting question of whether there is any real gold (and not just gold-plated tungsten bars) at the US gold depository at Ft Knox. Channeled information agrees that Ft Knox is empty of real gold.  It will be a very interesting day when the world finds out about that.

CashGrab1

What is the Transition? Part 5

ACCELERATION

People’s Perception of Time

Everyone whom I have asked, including young people, feels like time is speeding up, like the day, the week, the year starts, and “before you know it,”, it’s gone. People feel like they have little time to carry out their plans. I would guess that this not universal, but perhaps it is.

Technology

And everyone, or certainly close to it, is aware of Moore’s Law, that the number of transistors that can fit on a chip doubles every two years. And Intel’s David House added that processor performance would double every 18 months. This acceleration in performance, and the fact that the price for that performance has steadily dropped, has changed the world in magnificent ways that have been difficult to envision at any point in time. People like Ray Kurzweil are famous for utilizing this increasing performance and for having made some prescient estimates of the impact of this exponential increase in price/performance, though some of his predictions have been wide of the mark, and it seems his general view that processors will outdistance human intelligence is destined to fail as well since a pathway to program a machine to have a higher self, intuition, noble emotions, will, self-awareness, and a sense of humor seems unavailable, to put it mildly.

Exponential, parabolic trends

As we did with the weather and Earth changes, let’s look at some data.

Money

It took the USA until 1990, that is, over 200 years, to create the first trillion US dollars.  The rate of money growth had increased so much by 2007 that it took less than a year to create each additional trillion.  Now, it’s seemingly all in day’s (OK, maybe a month’s) work. Here’s a chart of the money supply in the US and China combined:

USChinaMoneySupply

Yep, between the US and China, that’s $25 trillion floating around.

Another way to look at things is this: From 1971 to 2007, the world economy grew fourfold. Over the same period, the amount of money floating around increased forty-fold. And central banks were just leaving the proverbial starting gate in 2007; the continuing financial crisis had just begun, and the response was, and continues to be: Print Money!

And don’t think the Europeans want the euro to be left out of this print-a-thon:

ECB_BS

And the Japanese just joined the US and the Eurozone saying they would print “whatever it takes” to get their economy humming again.

And the Swiss!?!? The most pronounced money printing line on this chart (in light blue) represents Switzerland, purported to be so conservative about money. Ah, the good old days! No longer. For the size of their economy, they are the current money-printing front-runner by a wide margin:

CentralBankBalanceSheets

Et tu, Canada? (from zerohedge.com)

CanadaPrinting

And this has little to do with political parties, as shown on this chart of federal government debt in the US:

USDebt_DemsRepubs

though I would ask that you note the super-acceleration of this trend that started in the year 2000.

And in today’s world, the Chinese are the ones doing the heavy lifting in terms of manufacturing, so they are collecting a lot of this printed paper money, in other words, the West prints paper, sends it to China, and gets real goods in return. But the Chinese aren’t stupid, they are well aware of how much more of this paper is being created. So what’s their solution? To get real:

ChineseGoldAccum

The Chinese mine more gold than any other country now—none of which leaves the country–and they import even more physical gold from other countries. Insiders at the London Bullion Market Association, the leading venue in the world for trading physical gold, say that the Chinese are vacuuming out the London gold warehouses. And the Chinese are scouring the planet to buy mines, wells, and so forth, especially in Africa

But really, one would think that, with all this money floating around—there must be at least 200 times the money around now versus 1971–everyone must be rich! But we know that’s hardly the case. Sure, there are other parabolic charts, like the one for corporate profits:

CorporateAfterTaxProfits

The corporations seem to be doing quite well. And US banks had profits of $35 billion in the fourth quarter of 2012 alone. (Yes, the same banks that needed those big bailouts. As a group, they had a total of four quarters where they weren’t profitable. It’s been business as usual ever since. And they are hard at work telling legislators, as they bribe them, that any new regulations will seriously hurt their business.)

But other parabolic charts tell a different story. Here’s one for youth unemployment in the Eurozone (from zerohedge.com):


GreekYouthUnemployment

Yes, that’s over 60% youth unemployment in Greece, with Spain right behind.

And gasoline prices are “doing great”—for the oil companies, that is. Here’s the price chart for the US, with gas up 243% since 1998:

GasPrices

That chart is only through 2011, but since US gas prices just registered their highest ever price for a February here in 2013, this trend does not seem to be in jeopardy.

And the Food Price Index of the UN Food and Agriculture Organization is up 132% since the year 2000, with the all-important cereals/grains index up 190%. This is putting an extreme and accelerating squeeze on the budgets of the poor around the world.

This article contains the chart below showing that in 2005, it cost the US government one penny to mint a penny and one nickel to mint a nickel. Now, after all that money printing, it costs twice as much:

PennyAndNickel

resulting in a loss of $436 million for the Government of the US (GUS) to mint pennies and nickels since 2006.

So it seems clear that the accelerating money printing is accelerating the cost of real things that people need: gasoline, food, the metals that go into manufactured products, and so forth.

Here’s the accelerating cost of Social Security in the US:

SSA_TotalCost

Well, we saw the accelerating youth unemployment in the Eurozone above. And the EU just announced that its overall unemployment rate is 12%. And, as this chart shows, there hasn’t been any growth in the EU economy since late 2011 (chart source):

EU_GDP

In the US, GUS says the economy hit stall speed (0% “growth”) in the Fourth Quarter 2012. Here is a chart that shows that, of the 41 largest national economies in the world, only 18% of them expanded in the Fourth Quarter of 2012:

OECD_Expanders

Astute chart readers will notice that such a reading corresponds with the worst recessions (1973-74, 1981-82, and 2008-2009) of the last 50 years, so now you know why the central banks have started printing even more money–yes, accelerating!

How is it going for jobs in the US? As this chart shows,  the US is still 3 million jobs short of where things were in 2008:

JobsUS

Even worse, as the next chart shows, the large increase in the number of people working part-time means that a lot of the apparent job gains shown on the previous chart are part-time rather than full-time jobs:

PartTimeUS

If you think it’s only uneducated people who are suffering from all this, check this:

     Number Of PhD Recipients Using Food Stamps Surged During Recession

The number of PhD recipients on food stamps and other forms of welfare more than tripled between 2007 and 2010 to 33,655, according to an Urban Institute analysis cited by the Chronicle of Higher Education. The number of master’s degree holders on food stamps and other forms of welfare nearly tripled during that same time period to 293,029, according to the same analysis.

These job difficulties are reflected in household income in the US. The following chart shows two problems. While the red line shows income growth since 2000, it is still lower than it was at the start of the financial collapse in 2007. And the blue line shows household income adjusted for inflation. When GUS-calculated inflation is taken into account, income for the average household is 8% lower than it was 13 years ago:

RealIncome

Here is a chart of US household net worth (annotated by Of Two Minds) compared to all of the debt that has been created, showing that all of that debt is not making people richer:

NetWorthbyDebt

All of these economic charts were compiled by governments who, as we’ll show in a future post on the acceleration in lying, have a strong vested interest (it’s literally and even proudly called MOPE by academics—Management of Perception Economics) in making things look better than they are. In that light, I ask that you consider the following two charts compiled by a private bunch of computer geek types at a place called Consumer Metrics Institute. They thought, in this time of highly-networked business, that it was silly to have to wait until governments spent months collecting data before telling us what happened some months back, that the data could be collected and reported in near-real-time. If you wish, you can find out what they do at their FAQ.

But what they essentially do is track, in real time, discretionary purchases for things like automobiles, housing, vacations, durable household goods and investments.

These two charts show the trend in these purchases where a value of 100 would equal the same level of purchasing as was taking place in 2005. The first chart is the last 60 days:

CMIRecent

And the second chart is of the last three years:

CMILong

So, both charts show their index hovering around 85 or lower, which means that this large portion of the US consumer economy is 15% smaller than it was in 2005! Perhaps that aligns better with the income and net worth charts shown above rather than the rosy “we’re in a wonderful economic recovery” MOPE spewed by minions of The Powers That Be.

So what it looks like is that all that money printing is making a select few richer and, by driving up the prices of real goods, squeezing regular people—whose income is falling and who spend a far greater percent of their income on real goods. And the Western central banks say it isn’t their fault that people are rioting in countries where people’s costs for food have gone from 40% to 80% of their income. Nope, they aren’t driving prices up at all with their money printing, it’s those “evil speculators.” Well, perhaps it is evil speculators, but they are aided and abetted by a vast surplus of gambling chips supplied by the central banks.

There’s more to come. Stay tuned for Part 6.

Gold Goes Mainstream

Gross: Stock and bond managers today must be alchemists: turn lead into gold. NOT likely. Too much lead (bubbled assets).
–Tweet from Bill Gross, Founder of PIMCO, which manages $1.8 trillion

**************

“Do you own gold?” “Oh yeah. I do…There’s no sensible reason not to have some.”
–Ray Dalio to the Council on Foreign Relations

This is being written to put the precious metals market in a larger context for those people who still see the world proceeding much as it has proceeded in the past, a world without the large financial and supply chain disruptions that we foresee.

Strong multi-year upmoves in the price of any asset, aka a secular bull market in that asset, go through three stages:

  1. The speculative, early-proponent phase during which the mainstream investment community ignores or derides the potential of that asset.
  2. The mainstream phase, where the mainstream decides that exposure to that asset is a good idea for just about everyone.
  3. The mania phase, where just about everyone feels that they must own that asset and will tell you so when you meet them by chance in the supermarket.

Phase 1 for gold has been marked by derision from the mainstream investment community. Quoting Keynes, they call gold the “barbarous relic.” Otherwise-intelligent economic commentators such as Nouriel Roubini have been calling for a price top in gold for several years. Some who are old enough to have experienced the gold bull market of the 1970s have been saying, “We heard all this before in the 1970s, anyone who buys gold now will regret it later.” All of these people have been wrong all along as gold and silver have powered higher in price.

During most of Phase 1, the major central banks of the world have been sellers of gold, preferring to buy government bonds of various countries (such as Greece and Spain!) to “get a return” on their money. Gold has been a far better investment for the last 12 years. Over the last three years, central banks have become net buyers of gold, to the tune of hundreds of tons per year. Most but not all of this buying has come from Asia as the western central banks have been preoccupied with printing money in a mad scramble to keep their markets afloat.

Gold has been in Phase 1 since 2001. Most in the financial community regard it as an annoyance when their clients ask about it. The price increased from $256 in 2001 to $1,911 in August, 2011.

A couple of weeks ago, Ray Dalio gave a presentation to the CFR. He was asked if he owned gold, and he said, “Oh yeah. I do.” This marked the start of Phase 2, the mainstream phase.

Who is Ray Dalio? Most people in the investment community respect him as the best active hedge fund manager on the planet. We mentioned his firm, Bridgewater Associates, in a previous post. They manage about $140 billion. Ray is highly respected in both financial and political circles.

And the CFR is the Council on Foreign Relations. If you had to pick one organization that has the most influence on the mainstream political thought in the US, it would have to be the CFR. It was founded by the Rockefellers. You have to apply for membership. There are currently 4,700 members, including Bill Clinton, Robert Zoellick, Janet Yellen, Paul Wolfowitz, Lloyd Blankfein, Jamie Dimon…in other words, the CFR is the public face of The Powers That Be/Were.

Now that all of these mainstream movers and shakers have heard from what some consider the smartest money man on the planet that owning gold is a good idea, well, if we haven’t yet convinced you to get rid of a mainstream financial advisor such as a broker, said broker is likely to be calling you in the not-too-distant future with their “innovative” idea that you should get some gold. Of course, being mainstream, they will likely advise you to own it in paper rather than physical form, which will be a big mistake, but that will be their advice. And they will advise that you put a maximum of 5% of your assets into gold or gold mining stocks. In normal times, this would characterize the mainstream phase for gold, during which its price would rise steadily for years.

More evidence that we’ve entered the mainstream phase comes from Bill Gross, known to many as the “Bond King.” Gross founded PIMCO, which manages over $1.8 trillion. Yes, that’s trillion with a T. Almost all of the money is in conservative bond funds. But here’s a tweet this week from Gross:

Gross: Stock and bond managers today must be alchemists: turn lead into gold. NOT likely. Too much lead (bubbled assets).

Note that Gross, the Bond King, is saying that stocks and bonds are bubble markets. That money managers should turn that lead into gold. Though he also says that’s not likely.
Those who hate gold claim gold is in a bubble. Great examples of bubble markets are internet stocks in 1998 through early 2000; or real estate running up to 2006; or government bonds now. Gold, on the other hand, has had a nice steady rise for years, nothing meteoric or bubble-like at all. And here is someone, Bill Gross, who may know more about bonds than anyone on the planet, saying that bonds and stocks are the bubble, not gold.

Gold can’t possibly enter a bubble until it enters Phase 3, the mania phase. During this phase, you will be regaled on a regular basis from media sources and individuals with stories of people who got rich from gold and silver. Like the stock day traders of the year 2000, or the real estate flippers of 2006, there will be lots people trading gold on a daily basis, probably at gold trading shops like the day trading shops that were operating in 1999. People will be quitting their jobs to trade precious metals to “make their fortune.” 90% of people who talk about gold will assure you that it is the surest thing on earth to guaranteed riches. CEOs of gold mining companies will be like rock stars, getting interviewed by Charlie Rose. That’s what a bubble looks like. How many people do you know who own gold and silver?

Now, with the acceleration that is all around us, it is unlikely that we will proceed through these three phases of a secular bull market as we would in normal times. It is far more likely that gold will have a meteoric rise quite soon. But if you think that the world will proceed in a conventional manner in the years to come, we have outlined the path of the precious metals for you.

Beware the False Flag Attack

Cruisers, aircraft carriers and minesweepers from 25 nations are converging on the strategically important Strait of Hormuz in an unprecedented show of force as Israel and Iran move towards the brink of war.
The Telegraph

What do Daniel Ellsberg, Zbigniew Brzezinski, former high-level CIA officers Robert David Steele and Michael Scheuer, Seymour Hersh, and the Brookings Institution have in common? All have warned of the possibility of a false flag attack staged by the US and/or Israel to make it look like Iran has attacked and killed US citizens. This is covered in its usual excellent way by Washington’s Blog: “What I Fear The Most Is a False Flag – Something Happening Where One of Our Ships Goes Down, Or … a Plane Goes Down, And of Course It HAD To Be The Iranians, You Know, For Sure, For Certain”

A false flag attack is a war operation carried out by a government against its own people but appearing to be carried out by another group or nation; or an attack about which a government knows in advance but which it allows to freely proceed to demonstrate the evil nature of an enemy it wishes to attack.  The World Trade Center attack on 9/11 and the Japanese attack on Pearl Harbor are excellent examples of false flag attacks.  If there is anyone still left on the planet who thinks 9/11 was what the US government says it was, please see the following documentary aired recently on PBS: 9/11: Explosive Evidence — Experts Speak Out.

As the US marks its eleventh year of war in Afghanistan, where 2,000 US soldiers and far greater numbers of Afghanis and Pakistanis have died, many as “collateral damage” from unmanned drone attacks, we think it appropriate to sound the warning because we are convinced that the Powers That Be are aiming to ramp up war to a much greater level.

Why do we think that a large false flag attack is on the way?

To gain public support, large increases in war-making are typically preceded by a false flag attack that is devastating enough to be an emotional shock for in the citizenry. The shock makes people sitting ducks for war propaganda against the alleged perpetrators. People are confused by the shock and are then told precisely where to channel their rage, fear, dismay, etc.

Governments faced with insoluble financial predicaments often try big war as a way out. And many governments, including that of the USA, are in precisely such a predicament.

People and governments around the world are clearly on tenterhooks as shown by recent rioting in many countries, acrimonious borders disputes between Turkey and Syria, China and Japan, etc.

In a few days, the US will have three aircraft carrier groups in the waters off Iran.

And the war propaganda machine is in high gear, in both blatant and subtle ways. Here is a perfect example of the war propaganda machine in its more subtle form. This was the lead story on the front page in a recent USA Today: Defense cuts starting to pinch economy.

First, the idea that war helps the economy, propaganda that most of us were fed in school and which fallacy is still perpetuated by economists such as Paul Krugman, has been debunked by many. Washington’s Blog has covered this topic in great detail: Proof that War Is Bad for the Economy.

Second, while the US Department of Defense (DoD) and its military contractors claim defense spending is falling, others see it, well, otherwise.  Here’s the chart of US defense spending from wikipedia, not including black ops for which no budgets are published:

The bottom area is the budget for the DoD. Above that are other categories of defense-related expenditures that are not included in the formal DoD budget. Both the formal DoD budget and the combination of all expenditures have been rising strongly in unison, even while we have had a Nobel Peace Prize winning president. Also note that most numbers to the right of the vertical dotted line, numbers for the future, are projected to decline. But wikipedia has some honesty here. If go to detail page for this chart, you’ll see previous versions of this chart from prior years. In each of those previous charts, future expenditures were projected to drop. But they never did. When future becomes present, these expenditures always rise strongly. In other words, there are threats of defense expenditure cutbacks, but since the Clinton years, they have never materialized.

Third, whether or not war is good or bad for the economy is clearly a topic of debate. We think it is horrendous, but others claim it is good. So what USA Today is doing here is taking sides in a debate in what was printed as a Page 1 news story. This article is an editorial disguised as news. As such, it is a lie.

Fourth, how about a little common sense. The article, by linking military spending with the concept of a “good economy,” is telling you that war spending is good for you. Tell it to more than a hundred million people who died in wars in the last 100 years.

Fifth, how about some more common sense. The following countries each have one operational aircraft carrier: Russia, UK, France, India, China, and others. The US has eleven operational carriers and three more under construction. Can it really be “good for an economy” to spend trillions on hardware that is very rarely actually used, which is paraded around the world with an armada of other ships in what is called a “carrier group” devouring incredible amounts of fossil fuels, and which hardware is ultimately scrapped when it is deemed obsolete? Does the US really need eleven carrier groups?

This covers just the tiniest slice of the war propaganda machine. But you get the idea. We ask that whenever you hear a report about war, military spending, the countries that are said to be our enemies, weapons systems, or people who go off and get killed or maimed being characterized as heroes rather than as people who were duped by politicians, that you recall this little post and ask: What is really being said here? What is the real point? Who is the actual enemy?

A Quick Note on Them

We are creating a detailed future post on Them. You know, The Powers That Be/Were. It will make a strong point that those in the true ruling class on this planet have intelligence and will. And these abilities are well-honed in them. In part because that’s all they have. They are not in the least hampered in their pursuit of power by those abilities that are highly valued by the vast majority of us, namely compassion, wisdom, love, and an allegiance to peace and freedom for all. They simply don’t have these things. That is what’s so tough to understand about them. If you think these statements are incorrect, please read this article:

Poor In India Starve As Politicians Steal $14.5 Billion Of Food