Category: Weekly Articles 2010

Macro Themes for 2011

Death may come invisible, or in the holy wall of fire
In the breath between the markers, or on some black I-80 mile
From the madness of the government, to the vengeance of the sea
Everything is eclipsed by the shape of destiny
- Conor Oberst/Bright Eyes, No One Would Riot for Less


2010 Recap:  Macro Trends Playing Out as Expected with Some Surprises…

Heading into 2010 I focused on three investment areas that I thought would benefit the most from the insane policies of desperate global Central Banks and governments adhering to the orders of the financial oligarchs that control them.  They were to be long precious metals, agricultural commodities and oil.  Not only was I a believer that most globally traded “hard assets” (as opposed to residential real estate) would do well as global fiat currencies are competitively devalued, but I thought that the three subgroups mentioned above would do particularly well since they are also strategic commodities.  Basically, in a world going through the type of dangerous geopolitical shift we are in at the moment (these happen once in a generation and are called “Fourth Turnings” by Neil Howe and William Strauss) governments and in fact all institutions become subject to upheaval and revolution.  Since governments are made up of human beings (generally narcissistic power hungry ones) we can generally forecast how they will react to such tension.  In their attempt to maintain power and status governments usually do one of two things.  They turn on their own people (or minorities within their own societies) or they turn the anger of the populace on a foreign enemy.  In an environment where the global financial system is based on digital monopoly money created with a keystroke by Banana Ben and company, money itself will become suspect and any large foreign government with even a basic understanding of money matters will buy all the gold they can so that if necessary they have real money to use the basis for a new currency if necessary down the road.  Just as gold is a necessary hedge for individual Americans that can see the destruction of currency values by their own government, it is too a hedge for China, Russia and others against their U.S. dollar reserve assets and indeed the global financial system to which they are a major participant.  Agricultural commodities are just as important since if a nation like China cannot provide food at a reasonable cost to its citizens there will be revolution overnight.  In fact , this is true in any nation.  Oil fits in to the equation as a hedge if the whole thing breaks into global warfare which can occur once a nation loses the financial war happening now.  If you don’t have access to enough oil you will lose any major conflict.  Why do you think we are in the Middle East and are looking for an excuse to attack Iran?  To spread Democracy?  Don’t make me laugh.

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A Silver Bullet for Modern Vampires

vam·pire
noun ˈvam-ˌpī(-ə)r

Definition of VAMPIRE
1: the reanimated body of a dead person believed to come from the grave at night and suck the blood of persons asleep
2 a : one who lives by preying on others

Does the above definition of vampire by Merriam Webster remind you of anything?  Yes of course it does, it reminds you of the Too Big To Fail Banks.  It was extremely appropriate for Matt Taibbi to refer to Goldman Sachs as the “Vampire Squid.”  Just as the above definition lays out, vampires are able to come back from the dead and once they have done so they drain the life out of the living while they sleep.  Need I say more?  The big banks and the Federal Reserve are modern day vampires and they are feeding off what remains of the living (productive) parts of the economy while the majority of Americans are stuck in a reality tv, Prozac induced coma of endless propaganda and brainwashing.  Indeed the vampires are feeding off of an American public that still by and large remains “asleep.”  These are ideal hunting grounds for vampires.

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The Biggest Trade of My Life

The man who has begun to live more seriously within begins to live more simply without.

Every man’s life ends the same way.  It is only the details of how he lived and how he died that distinguish one man from another.

There is nothing to writing.  All you do is sit down at a typewriter and bleed.
- All Quotes by Ernest Hemingway

The Biggest Trade of My Life

If all goes according to plan the next time you hear from me I will be settled in my new home of Boulder, Colorado.  This is a huge move for me as I have essentially spent my entire life aside from college and a semester in Spain living in NYC.  When I resigned from my prior job in January of this year I didn’t know what to expect.  I was taking a huge risk walking away from a very comfortable life and income.  Nevertheless, I knew that stage in my life had run its course and it was time to open my life up to other possibilities.  More than anything else I wanted to see how I would feel and what would happen if I just let all the things that were tying me down fall away and experience total personal freedom in every way imaginable.  What has happened is that I have just lived the most fulfilling year of my entire life.

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The Giant Cover Up

An end to “banking as we know it” is fine with us.  The “banking” in today’s Western economies is simply a monopoly-distribution point for the dissemination of fiat currency.  Central banks have got to distribute money through banks because the alternative – simply distributing it to people – would reveal the scam for what it is.  By filtering the money-printed-from-nothing through banks, the process retains a mysterious quality.  It is also rendered more complex, which is necessary when one is promoting a Ponzi scheme.  Finally, bank distribution allows for a debt add-on that further controls the process.  The situation is incredibly destructive, ruinous and benefits, essentially, on a very people who are the most direct beneficiaries of central bank funding stream.

– The Daily Bell, Staff Report

http://www.thedailybell.com/

The Giant Cover Up
Much has been written about QE2, too much really.  However, today I want to take a step back and look at it from another angle.  QE2, or the latest round  of Federal Reserve quantitative easing is in all reality just a move of extreme desperation by what Max Keiser appropriately calls “financial terrorists” to cover up the recent coup d’etat of what was left of America’s wealth by special interests across the spectrum from politicians themselves, the military industrial complex and crucially the big Wall Street firms that gamble with taxpayers money all the while calling themselves banks.  At the center of the theft is and continues to be the Federal Reserve.  Using the financial collapse of 2008 as a smoke screen, the totally bankrupt large Wall Street firms using their puppet ex Goldman Sachs CEO and then Treasury Secretary Hank Paulson sufficiently scared our politicians to give them unlimited sums of money, suspend accounting for their bad assets and then go right back to gambling again and paying huge bonuses all the while never accounting for their assets at market value.  The hope from the perspective of the Federal Reserve has been that by pumping virtually unlimited amounts of newly printed money into the banking system (which is what quantitative easing is) they could create another fake Keynesian economic boom that would get people back to work and back to sleep again.  Housing prices would start rising again and none would be the wiser until the system collapsed again a few years later (which it would be guaranteed to do) but then it would be much too late to stop it.

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Let Them Eat Mud Pie

Bankers own the earth. Take it away from them, but leave them the power to create money and control credit, and with a flick of a pen they will create enough to buy it back.
– Sir Josiah Stamp, former President, Bank of England

Dr. Bernanke unfortunately does not understand economics, he does not understand currencies, he does not understand finance.  All he understands is printing money.
– Jim Rogers at Oxford University yesterday

Let Them Eat Mud Pie
The monetary and financial system that we are enslaved under at the current moment in human history has recently transformed itself into one of the most immoral and destructive forces the world has ever seen.  The reason many citizens in America cannot see the extent of it at this time is because the Federal Reserve in coordination with Washington D.C. and the money center banks are doing everything in their power to keep you blind and complacent while they rob you blind.  Many of the people in these institutions are not cognizant of the theft they are engaging in as they are either useful idiots or so wrapped up in their ego and false belief that they are making the paycheck they are based on some useful skill rather than simply working at the institutions that are instrumental in carrying out the ponzi scheme.  You see, at the highest levels the elite must understand that the U.S. is flat broke; however, an admission of this would mean loss of power and possibly criminal prosecution.  As a result, they have zero, I mean ZERO interest in the outcome for the general public and will do “whatever it takes” to quote Ben Bernanke to cover up their economically fatal mistakes and keep the mirage alive.  As I mentioned above, there are two main segments that are crucial to keeping the ponzi scheme going, Washington D.C. and the big money center banks.   This is why the Federal Reserve is quite purposefully directing all of the new money they are creating out of thin air into these two already bloated and corrupt cancers on the American landscape.

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The Tipping Point has Arrived

Our age is retrospective.  It builds the sepulchres of the fathers.  It writes biographies, histories, and criticism.  The foregoing generations beheld God and nature face to face; we, through their eyes.  Why should not we also enjoy an original relation to the universe?  Why should not we have the a poetry and philosophy of insight and not of tradition, and a religion by revelation to us, and not the history of theirs?  Embosomed for a season in nature, whose floods of life stream around and through us, and invite us, by the powers they supply, to action proportioned to nature, why should we grope among the dry bones of the past, or put the living generation into masquerade out of its faded wardrobe?  The sun shines today also.  There is more wool and flax in the fields.  There are new lands, new men, new thoughts.  Let us demand out own works and laws and worship.
- Ralph Waldo Emerson, Nature

The Tipping Point has Arrived
I believe we have finally breached the tipping point in the socio-political landscape of the United States of America.  There will be no going back from here.  Everyone on all levels of society including the elites must make a choice.  Will you stand for real reform and an end of the feudalistic rule of the oligarchs and their paid-off puppets that line the streets of Washington D.C., or will you keep your mouth shut and play the old and dying game in the context of a completely different cultural environment?  While many will disagree with what I am about to say, I believe the oligarchs and the Federal Reserve have already lost.  This will not be clear to the vast majority at this time because the powerful institutions that dominate and rob us will continue to fight for survival but the wind is already blowing in a different direction and cannot be reversed.  The smart elites are starting to see this and are hedging their bets.  The dumb or stubborn ones may want to start looking at countries with non-extradition treaties or start blowing the whistle on someone above them and fast.  The window of opportunity to make the choice is closely quickly.  “I was just following orders” will not cut it when the dollar collapses and Disneyland shuts down.  There have not been any major arrests and people have seemingly gotten away with all their frauds and crimes.  This too will change and 2011 will represent a change in trend in this regard.  We have entered the terminal phase of this ponzi scheme economy and those responsible for its creation and its continued support at the expense of the vast majority of the populace will see their foul deeds rise to the surface.

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Gold Will Explode Higher as the U.S. Dollar Bubble Bursts

I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.
- Thomas Jefferson

Gold Will Soar as the U.S. Dollar Bubble Bursts
I haven’t taken the time to write about gold in length as of late because quite frankly there is so much quality stuff being written about it at this point.  In addition, the understanding of the monetary system and the dangers of fiat money in general is so much better than it was even a year ago.  Nevertheless, while the understanding is considerably better it remains poor.  While it has become a bit cliché, the statement that “gold is not going up but the dollar is going down” is the most important concept for every investor and indeed citizen to understand at this point.  Completely wrapping one’s head around this concept may very well be the difference between economic survival and complete destruction in the years ahead.  For when you truly comprehend this notion you stop thinking about gold in terms of its price and you can then make a rational decision about where it is going.  Gold is not up 23% this year to $1,345/oz, rather the U.S. dollar has depreciated by 23% versus the world’s neutral money supply, gold.  As we all know by now, there is no limit to the amount of money Banana Ben Bernanke can or will print.  Thus, gold’s theoretical upside is infinite in a purely paper money world.  Once you understand this, you recognize that gold is not the bubble but rather the biggest bubble on planet earth today is the U.S. dollar itself.

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Plaza Accord 2.0: Is it Coming? Is it Here?

If we desire respect for the law, we must first make the law respectable.

The greatest dangers to liberty lurk in insidious encroachment by men of zeal, well-meaning but without understanding.

Experience teaches us to be most on our guard to protect liberty when the government’s purposes are beneficent.

Fear of serious injury alone cannot justify oppression of free speech and assembly.  Men feared witches and burnt women.  It is the function of speech to free men from the bondage of irrational fears.
- Quotes by former Supreme Court Justice Louis Brandeis

Is Plaza Accord 2.0 Coming?
On the fringes of the typical daily news blitz in which I fully immerse myself, I have noticed heightened chatter about this concept that we may be on the cusp of some sort of “Plaza Accord 2.0” type agreement between governments and central banks globally.  I feel the need to address this because I do indeed think that some sort of informal or unspoken agreement of this nature may already have been agreed upon behind the scenes.  First, just a quick recap on the first Plaza Accord.

The Plaza Accord was signed on September 22, 1985 and it consisted of an agreement between the major Western economic powers at the time  (including Japan) to devalue the U.S. dollar relative to the Japanese yen and the German Deutsche Mark.  The trade backdrop was similar in many ways to today.  According to Bloomberg the current account deficit as a percentage of GDP in September 1985 was -2.59% and today it is -2.96%.  While many have pointed out the similarities, I want to make it very clear that I believe the structural, social and political environment in the United States right now is multiples worse of what it was back then.  One statistic that I think is worth mentioning is the budget deficit as a percentage of GDP.  The latest available data here is for June 2010 when it stood at a banana republic -9.1%.  In September 1985 it was -5.0%.

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The Biggest Sell the News Event in Stock Market History

But when you recall that one of the first moves by Lenin, Mussolini and Hitler was to outlaw individual ownership of gold, you begin to sense that there may be some connection between money, redeemable in gold, and the rare prize known as human liberty.
- Howard Buffett (Warren Buffett’s father and former U.S. Congressman)


The Biggest Sell the News Event in Stock Market History

The end game is accelerating toward us at an a frantic pace as we approach the midterm elections, the launch of QE2 and the complete collapse of the global monetary order as we now know it.    Time itself seems to be experiencing a quickening as the quantity of major changes becomes increasingly compressed into shorter periods of human experience.  The markets are now set up for complete and total chaos unlike anything we have seen since 2008.  While I have many times before stated that the next crisis will make 2008 seem like a picnic it has been a waiting game…until now.

The U.S. Federal Reserve, which is in charge of the world’s reserve currency has gone completely and totally insane.  Every time the stock market is down 2 points some maniac academic with a printing press delivers a speech about how much money they are going to print, basically daring anyone to short or sell the market.  No one is smart enough to know how much QE is priced into the market, is it $500B?  $1 trillion?  $3 trillion?  No one knows, but what we all do know is that the Fed through its non-stop yapping has now set up the ultimate moral hazard in financial markets.  It doesn’t matter if all of the economic data miraculously comes in extraordinarily bullish over the next three weeks.  The markets have put the Fed into the biggest box they have ever been in.  They must do QE2 at this point and they probably have to do it big.  The problem is, with the equity market up at the levels it is I don’t think ANY amount of QE2 will cause a rally.  In fact, this might be the biggest “sell the news” event in the history of the stock market.  If you are smart you will take appropriate actions while you can and sell to someone with less of a clue (believe me there are plenty out there).

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The FED Cannot Keep Stocks Up

What the future will hold is such a dramatic sharp burst to astonishing new price levels of several thousands of dollars.  This does not even require hyperinflation.  It is not likely that the United States would enter a hyperinflation mode.  The system would collapse long before that takes place.  The much more likely result will be a complete currency default with a replacement of a new currency.  This is one way government defaults by using a shell game so that the average person does not understand he was just taken to the cleaners.
- Martin A. Armstrong on Gold

The FED Cannot Keep Stocks Up
What a difference a month makes.  As I prepared to begin my Labor Day weekend in late August the financial media was abuzz with predictions of stock market doom.  You could barely read anything without being confronted with several references to the dreaded Hindenberg Omen and how the appearance of several of these had all but guaranteed an imminent stock market collapse.  There were plenty of reasons to be bearish.  The market performed horribly in August and the economy was clearly still in the dumps despite a continued endless propaganda to the contrary.  Nevertheless, the constant predictions of doom was indeed a great contrary indicator and barring some monster reversal today we are about to finished the month of September +10% in what is typically the worst month for stocks.  It is set to be the best September in 70 years.

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