The Changing World, and investments to watch.

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As the old world of manufacturing, I.T, Services and financial markets evolve, the internet has been quietly (and not so quietly) changing the way things get done, to make improvements in output, and capability possible, and this cooupled wiith demographics, is at the root of the world’s current economic woes. This is 1928 in market cycle terms, when the abundant supply, and low oil price justified Henry Ford in building his Model T, and the same technology was used to build tractors, which allowed farmers to buy a tool, that freed up thousands of labourers used to manage farms and produce crops. Back then, the typical farmer had lots of debt, and the bumper crops of those years led ultimately to lower agricultural prices and thus food costs, which helped cause deflation, and made thousands of farm hands unemployed. It also allowed large crop outputs to be transported to cities nationwide, on the new trucks that were just emerging, opening up new markets.

In the early millennium, the ubiquitous smart-phone changed the PC and I.T. infrastructure market, when it put essentially a PC in our pockets, with the processing power, and storage capacity of an office PC of fifteen-twenty years ago, all in a form factor that sits nicely in the palm of the hand. Yes, the screen size wasn’t as big, but the pixel size was certainly an improvement, allowing the clarity of contrast, line width, colour rendition, resolution, saturation and hue all improved to the point that watching a movie on our portable handset was possible, and now a major step forward over the 640-480 screen images of the early PC days (so-called VGA – Video Graphics Array) of circa 1992. The next major standard after VGA, gave us 800px by 600px, – SVGA – Super VGA. Then came improvements in rapid succession – XGA, and then CDs, and DVDs, with resolutions upto 1600 x 1200, these standards and Blue-Ray upto 1920px by 1080px, got the viewing public used to step-wise improvements, for larger screens viewed at several metres distance across a typical front room, drawing room or Family room, depending on your social milieu.

But every improvement gets us closer to the limits of what most people’s eyes can resolve. So now Graphics Processor Companies, such as nVidia are using the mathematical capabilities of the GPU (Graphics Processing unit) for Quantum Computing.

A few years ago, Google purchased a company called DeepMind out of London, and DeepMind is an artificial intelligence (AI) Corporation. Now if you think back to 2011, IBM was able to beat the world champion of chess with its super-computer – Deep Blue. Steps forward in certain areas of computing have now gone exponential, and as a former software engineer, I know about the already fast pace of change in the industry.

So Deep Blue knew every possible outcome of every move. But what happened just a few weeks ago in South Korea is light-years beyond that.

DeepMind used an algorithm it developed called AlphaGo to play the Chinese game Go in South Korea with the world champion.

DeepMind’s AlphaGo artificial intelligence (A.I.) already beat the European champion last year. He was ranked 275th worldwide. The score was 5 to 0.

Now, what’s really interesting about this, is that A.I. experts did not think this was possible. They estimated that AI could not beat a human Go master for another 10 years.

These are the experts. These are the people in the industry who focus on nothing but AI. And even they did not think this could happen.

The main reason is that there are 361 opening moves in Go, compared to chess, which has 20. That puts the number of possible patterns and possible outcomes of the game into the hundreds of billions. In fact, it’s such a large number, we don’t even have the computer processing power to count all the possible outcomes, but this system beat the world champion 4-1. Everybody is completely shocked that AI basically destroyed the world champion in the most complex game on Earth… more than a decade sooner than any expert thought possible.

Cars and Trucks using these technologies are in development to make driverless vehicles a reality within 5 years for cars, and within 10 years for most heavy goods vehicles. The technology already has been tested, But like super-computers, we all haven’t got one in our pockets – YET…

The vast Internet, with fibre-optics enabling communication at light-speed is changing everything. Think of all the industries being affected… TV is now almost entirely digital, Netflix is destroying the business model of cable companies. Uber, is likely going to destroy TAXI companies, Air BnB, will impact the small hotel business, Tesla is changing the automotive industry and in the process changing the energy market. Solar, Wind, Wave and Geo-Thermal are pressuring carbon-based energy.

So, couple AI, Robotics, the Internet of Things (IoT) and the next depression which should happen anytime soon, we will emerge in five or so year’s time into the sunlight of a brave new world. But those without high-tech skills, able to add value to these industries, will suffer, will not be employed, as AI replaces almost every menial job, and many that are currently professional level including middle-management positions, accountants and lawyers. But we will also need a stable economy, and that means price discovery, and a world without wars and unrest.

Is this emerging trend the reason for the surge in IS membership in the middle-east?

Infographic: Why Young Arabs Think People Join The Islamic State | Statista

Robotics, Military and Civilian Drones, Artificial Intelligence (A.I.) Quantum Computing, Virtual Reality, Augmented Reality and IoT Companies, will all require hardware engineers, software engineers, chip designers, and scene designers able to transform a series of images, or video into data in computer memories.

Boston Dynamics
Honeywell
3M
General Dynamics Corp.
Lockheed Martin Corp.
Northrop Grumman Corp.
Thales Group
BAE Systems (Part of ESA and producer of parts for the Airbus)
Elbit Systems
Israel Aerospace Industries Ltd.
Saab
Turkish Aerospace Industries
IBM
NVidia
HP
D-Wave
Samsung
Facebook
Google who bought – Oculus Rift
HTC and Sony

These are the hardware companies, but there are also software corporations, who will produce Augmented Reality, and Virtual Reality experiences – Hollywood Studios for example… That will produce Millionaires, and Billionaires.

And the experience of users in these VR worlds, is going to be enhanced as long as those users can touch and feel their environment.

Imagine climbing to the top of a virtual Everest, and picking up a handful of soft powdery snow, pressing it into a ball, using the VR gloves you’re wearing, that allows you to feel the snow, to make a VR snowball…and looking down from 28,000 feet to the valley below, launching that snowball to some climbers coming up behind you, 1,000 feet below…

Or visiting a virtual, Val d’Isere, France, in January, and skiing down slopes you wouldn’t normally dare risk, so that you can hone your technique – in August… Or going back in time to a virtual Bastille Day, to take part in a virtual peasants revolt, and watching Robespierre take his revenge on those who had gone before in power or who threatened the new republic.

That will be VR content, or Augmented Reality, where you’re on your sofa, but using your augmented reality set, you’re at the controls in an aeroplane at 4,000 feet, feeling the plane bouncing around, in 1917, in an old Sopwith Camel, or the Fokker Tri-plane, holding a joy-stick, and flying these ancient machines, in a WWI aerial battle. And when you land, you lift the VR hood, and go inside the engine bay to fix that subtle misfire that scared the hell out of you as you were coming into land…
Sports, Training, Exercise and Games will be quantum leaps ahead of the Nintendo Wii, that got us off the sofa in our front rooms ten years ago, to play tennis against our other half.

These experiences, will be driven by the hidden technologies that will go into the devices that Samsung, Apple, Microsoft, Nintendo, Sony and Google, will supply.

Those sensors and chipsets, will make other millionaires too… Mobile sensors, (MEMS – Micro-electronic Mechanical systems) which know which way up they are in any of 10 different directions, and 3D stacked sensors will be part of them.
ST Microelectronics NV
Invensense Inc
Photronics Inc
AVX Corp
Oclaro Inc
Coherent Inc
IPG Photonics Corp
Vishay Intertechnology Inc
II-VI Inc
Universal Display Corp
and others of these will supply the sensors or manufacturing machinery fabrication technology and fibre-optics and laser equipment to produce elements of these new technologies.

But Blockchain technology will also change the world. In the financial world, crypto-currencies may replace fiat currencies, this will likely eliminate the need for Central Banks and the control that they exert over the rest of us. But you can bet your bottom dollar, that they will fight it tooth and nail to maintain that control, or influence what comes afterwards to ensure they’re still in charge. In fact they may have already started the fight back. I recently learned of the Open-Ledger Project, set up by the Linux foundation, which attracted, financial institutions, technology firms, as well as two blockchain startups based in New York, Digital Asset Holdings and R3CEV, the consortium that has attracted 40 major banks, including: JP Morgan, Goldman Sachs and others. The name given to this project is the name Hyperledger.

And as I’m sure you know, Crypto-currencies use the blockchain to ensure that any currency transferred between nodes is valid. Peer reviewed. Even Law Firms might use blockchain technology to ensure contract performance, and enforce agreements. Already, Ethereum Foundation has a two year head-start almost, in building a platform for such infrastructure.

But at this juncture, BitCoin, and the other crypto-currencies perhaps offer the best opportunities… (See my previous piece -Why we could see  Bitcoin = $1,000,000)

But here are also a couple of companies to watch.

Cuvva is a startup that is using the blockchain, to buy insurance to allow someone to buy insurance on an as needed basis, rather then an annual agreement.

Helm is a financial technology firm using a database of legal compliance requirements, that allows small firms to do away with an army of lawyers.

As I learn of other companies involved, I will bring them to your attention.

Note: Any mention of the above companies is not a solicitation to buy nor financial advice. I am not an investment or financial adviser, and any mention of such companies is for general information and education purposes only.

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The Threat of War –

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– And what you can do to prevent it.

MacedoniaUnrestOver the last 15 years, we have seen wars in the Middle-East and North Africa (MENA) and many here in the U.K. and in the wider Europe, have been suspicious of the motives of both American, and European political classes, to destabilize the middle-east for their own ends.

Of course, when Tony Blair, supported George Dubya Bush, in his efforts to rid the Iraqis of their so-called WMD, he incurred the wrath of a huge percentage of British people opposed to his so-called “imperialism”.

Of course Dr Kelly, whose death triggered a plethora of accusations regarding these operations, in the aftermath of the adventures in Afghanistan, and Iraq, as it emerged that WMD were not there (at least we never found any) caused a media storm briefly, but to my knowledge no-one was held responsible, or culpable, but at least we got rid of Saddam Hussein – didn’t we?

I hope you sense my cynicism there, but you didn’t come here for cynicism.

Over the last 15 years, I’ve become seriously interested in world affairs, because what happens overseas, can have a major impact on what happens here at home and what happens in economics terms. I read extensively, I watch programmes that force me to critically think about global issues. I seek out those whose views are not mainstream, and ask the questions – if it is not obvious – WHY? Events in Europe, in Austria, Greece, Cyprus, Germany, the Balkans, Belgium and France, as well as Spain, and Portugal suggest we are heading towards a tumultuous time, that may lead us back to 1939, all over again.

I’ve watched Vladimir Putin, host a live question and answer session with huge numbers of Russians, and people in the broader Russian republics. And in my research for this piece, I came across an interview that really made me wake up, to how WE THE PEOPLE, can effect change – turn back this tide.

It’s an interview that makes some serious allegations, about political and corporate life, that many will not want widely shared, but I hope, you take the time to listen to it, and draw attention to how this internet thing, can make those who sit in ivory towers, dance to our tune…

Mike Dillard, the interviewer, is a man, who has come from waiting tables at 21, to becoming a hugely successful internet businessman over those same 15 years, and on this page –  http://mikedillard.com/confessions-economic-hitman/  you will find the link to his interview.

The page name should provide enough of a clue, but for those who just want to go straight to the audio, click HERE.

Here’s where you come in. Listen to the above audio, and consider doing some of what John Perkins, a former economics hit-man, outlines in this marvellous thought provoking 48 minute slice of life.

Politicians everywhere, as in London,  in the U.K, are apt to deal with the problems that sit under their noses. As senior figures, from the governmental departments bring to the cabinet, issues of the day, and the media, who are there to serve the interests of their advertisers, and corporations who are there to serve the interests of their shareholders bring issues to the fore, as do the lobbyists.

Outside this small circle of influencers, it is easy for politicians to forget the issues further afield, and so local democracy gets short shrift, and yet, when we give the people the information, and ask them to do the right thing, we can start revolutions in thinking.

It’s not enough to have industrial control north of the M25, we need Political and Financial control too…

Too many governments, have relied on the largesse that emanates from the City of London, rather than realise, that the city, is part of the problem.

Financialization, distorts the economy, raises property prices in an already over-crowded city, which spread out like ripples on a pond, to all points – N. S. E. and W. Land and property costs, increase fixed costs for businesses making us in the U.K., uncompetitive with countries less densely populated – and as a nation, where four or five large landholders keep land out of access for the other 59+million we keep land prices high… Add in Health &Safety obsession, and to that, too little research into industrial machinery and equipment, and in ensuring that those who live outside the guilded cage of the M25, have sufficient skills and mathematical abilities, and are sufficiently motivated, by having a benefits system, that is more strictly controlled, and for their benefits, people have to prove daily in a benefit office, that:

A) They are getting up every day;
B) Attending a place to do job searches;
C) Are given help and advice to do a better search;
D) and Are given the resources (PC/Printer/email access etc) to do a proper search.

That should instill discipline in those looking for work, but we also need more support for start-ups particularly with incubators.

Those people made redundant from large employers, with redundancy sums in 5-figures, may hold the future for those who lack capital. They should be encouraged to form business networks, and help one another to provide services – as needed supported by local needs. Governments both local and central can hold statistics on which industries hold promise for the future, and thus direct start-up help and limited financial assistance.

We do not want to go back to the days of De Lorean, when huge sums are spent on ideas that yield short-term gain, with little long term promise. We need a broad based economy, with little domination from one industry or sector, a flexible economy, able to adapt to consumer and national needs, whether local , regional, or national.

Politics here and overseas can and is influenced by shadowy figures, who pull the strings because of financial outcomes. As in the film “All the President’s Men” in which a young Robert Redford plays one of the two journalists who brought down the Nixon Presidency, we have to follow the dictum of the shadowy figure who advised Woodward and Bernstein in the basement car-park to: “follow the money”. Macedonia as we speak is suffering political unrest, which many feel is because of that nation’s willingness to do business with people, others wish to ostracise, for financial gain… The middle eastern unrest as I have said is a pawn in a huge mega-corporate game.(See my previous post )

But we also need to understand we live in an inter-connected world, where the aspirations of all both inside the EU, and in the wider world are considered. Suspicion of the motives of others only breeds distrust, and our media could and should do more to help us understand wider issues, rather than pandering to to the lowest common denominator with “fluff” items to titillate and excite, rather than educate, inform, and make us think critically about the issues. In the meantime, it helps to broaden your information sources.

I hope this is my few penny’th towards that.

After writing this piece, I came across another interview with Dr Paul Craig Roberts, who was a former Assistant Treasury Secretary to Ronald Reagan, and who became editor, journalist, writer, author, and more recently political commentator. The interview makes concerning viewing/listening.

 

Regards

 

Will Stirrup

The Economics of the Mad-House

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BankerRulersIn the lunatic asylums of the 18th and 19th centuries, those who went there, were disallowed from making contracts – anyone who studies law, will sooner or later learn about contract law, and the maxim that anyone entering into a contract must be of sound mind – in legal jargon, they must have “Capacity” – it is one of the basic tenets.

Capacity is granted to any person over the age of majority – 18 in the UK, ( and which varies from country to country) but must be of “sound mind” and not under the influence of any substance that reduces that capacity – alcohol and drugs being cases in point.

Since the whole of the capitalist world is based on this premise, economics is therefore based on these principles. Contracts entered into by people of sound mind. Free to enter into them, and free to choose at what price. The so-called “Price discovery mechanism”. This therefore is by reason of logic, and of course they must have the wherewithal to exchange for the service or product rendered – a “Quid Pro Quo” – something of value, for something of value.

Central Bankers, who create currency out of NOTHING BUT INK AND PAPER or worse, KEYSTROKES ON A COMPUTER, can use that currency to buy bonds, or other assets that yield an income, and can use that ink and paper (or digits) to indebt the rest of us (taxpayers) and the government. Politicians can borrow that currency, to indebt our children, and grandchildren. There are times – usually of war – when having that capability is a necessary evil, but when certain people create a situation, that ensures we are in a perpetual state of war – a war of religious idealism set against another religion then we need to undo this capability.

How did they create such a situation? Well anyone who has heard the name Jess Ventura, may have an inkling. Jesse Ventura, stage name of James George Janos, is an investigative journalist, but he is also a former U.S. Navy Seal, former wrestler, actor, political commentator and 38th Governor of the State of Minnesota. He now investigates conspiracy theories for a major TV Network. In one recent episode, he looked into the so-called 9/11 conspiracy, and reached the conclusion, that the puppet-masters who pull the strings in U.S. politics – those behind the scenes, actually wanted to cover up who was really behind the events of 9/11… Structural engineers, fire-fighters, survivors, rescue workers and FBI agents all made contributions that the commission report into the 9/11 events were false. The flight data-recorders which were supposedly not found, actually were. One eye witness reported seeing one, and others reported to him, that the others were seen. The steel structure which was designed to withstand 1100° Celsius, melted, and both towers, and building 7, adjacent to the towers, all collapsed vertically, as would be normal in a controlled demolition. A scientific study found evidence of explosives, which were likely to have been painted onto the steelwork. In another report on BBC, which reported that building 7 had fallen, the building was actually shown in the background of the reporter, in a supposedly live video link.

This and other facts convinced him and I, that 9/11 was a “False Flag” event, to ensure that those who pull the strings – think Bankers, Military figures, Oil men, and Political figures, all colluding to bring the U.S. public to such a pitch, that the constitution and its amendments, could be overturned. In other words, two planes were flown into the towers, and the adjacent building, were demolished to provide the precept to bring in The SOPA, Act, and other Acts that meant that the republic is now not what was intended. A coup d’état has been carried out, so that the real directors of U.S. foreign policy could get their way. The ends justify the means, seems to be the policy.

And the ends? To allow unrestricted spending on military, to fund the wars that were now in train to create the surge in oil prices, that would allow fracking back home, and make it profitable for those same oil barons, but also, it would destabilize the middle-east for decades leading to unlimited spending for America’s military industrial complex. Eisenhower warned of the potential corruption of the military-industrial complex, in his final farewell speech, and is credited with coining the expression, and it’s what JFK tried to fight, before he was eliminated. Ronald Reagan had an attempt on his life, almost 35years ago this week, for similar reasons, because of his attempts to rein in the Bankers and their cronies in the shadows.

According to one source, GHWB, father of George Dubya, an ex-CIA man, was at the centre of these events including the death of JFK. Of course, Bush snr., was Vice President, at the time of Reagan, and like LBJ was ready to take power in the event of the President’s demise.

But we have a problem. Savings in Banks are a liability for the Bank. When Central Banks print currency, and essentially give it to the Big Banks – JPM, GS et-al, at zero per-cent, those Banks (who are also the owners of the Fed) get to make a six per-cent return on their ownership of that Central Bank. And the population and their children, get to pay.

Capital is essentially savings, and those savings are loaned out to others – bearing interest, but savings have been going down for the last thirty years along with interest rates. Except in Pensions companies, where they have been accumulating, and now those stocks are being put up for sale.

The Poem below, explains why Central Bankers, and the Bankers, and Politicians that feed off them, should go…And in its place, we need a sound money system, where Gold and Silver are money, freely exchanged – value for value. And interest should neither be compounded, nor above nominal rates. Interest paid is the price of forgone consumption. Savings form the capital, that we use to build new businesses, not the output of some central banker’s printing press, that they then charge interest to the government on, who then tax us to pay for their spending plans, and bribes to an ill informed electorate.

Hang them all, perhaps we should be shouting from the rooftops, squares, and courtyards. The revolutions of France and the New Republic, were to slough off the coats of politicians, monarchs and Bankers feeding at the trough, with their noses in the deepest, and the politicians behind.

If you don’t understand it, you have my sympathies. If we don’t undo this wrong, the future will not be as you hoped for.

The Gods of the Copybook Heading

As I pass through my incarnations in every age and race,
I make my proper prostrations to the Gods of the Market Place.
Peering through reverent fingers I watch them flourish and fall,
And the Gods of the Copybook Headings, I notice, outlast them all.

We were living in trees when they met us. They showed us each in turn
That water would certainly wet us, as fire would certainly burn:
But we found them lacking in uplift, vision and breadth of mind,
So we left them to teach the gorillas while we followed the march of mankind.

We moved as the spirit listed. They never altered their pace,
Being neither cloud nor wind-borne like the Gods of the Market Place;
But they always caught up with our progress, and presently word would come
That a tribe had been wiped off its icefield, or the lights had gone out in Rome.

With the hopes that our world is built on they were utterly out of touch,
They denied that the moon was stilton; they denied she was even dutch;
They denied that wishes were horses; they denied that a pig had wings;
So we worshipped the Gods of the Market who promised these beautiful things.

When the cambrian measures were forming, they promised perpetual peace.
They swore, if we gave them our weapons, that the wars of the tribes would cease.
But when we disarmed they sold us, and delivered us bound to our foe,
And the Gods of the Copybook Headings said: “Stick to the Devil you know.”

On the first feminian sandstones we were promised the fuller Life
(Which started by loving our neighbour and ended by loving his wife)
Till our women had no more children and the men lost reason and faith,
And the Gods of the Copybook Headings said: “The Wages of Sin is Death.”

In the carboniferous epoch we were promised abundance for all,
By robbing selected Peter to pay for collective Paul;
But, though we had plenty of money, there was nothing our money could buy,
And the Gods of the Copybook Headings said: “If you don’t work you die.”

Then the Gods of the Market tumbled, and their smooth-tongued wizards withdrew
And the hearts of the meanest were humbled and began to believe it was true
That all is not gold that glitters, and two and two make four —
And the Gods of the Copybook Headings limped up to explain it once more.

. . . . . . . . . . . . . . . . . .

As it will be in the future, as it was at the birth of man —
There are only four things certain, since social progress began: —
That the dog returns to his vomit and the sow returns to her mire,
And the burnt fool’s bandaged finger, goes wabbling back to the fire;

And that after this is accomplished, and the brave new world begins
When all men are paid for existing and no man must pay for his sins,
As surely as water will wet us, as surely as fire will burn,
The Gods of the Copybook Headings with terror and slaughter return!

————————————————————————-

And if you want to know, why the Bankers need you, but you don’t need Bankers, then watch this video.

 

As long as Energy (which is a substitute for YOUR labour and time) can be metered and charged to you, then you need money, but if you can create FREE, or almost FREE energy, then your labour and time can be used to produce wealth for yourself and others…

Read up on Serbian technologist, and maverick scientist – Nikola Tesla  (you know the name, but perhaps in another context) competed with Guglielmo Marconi, who made many revolutionary ideas in the field of Electricity and Energy, but died a pauper due to those who control the purse strings who now control the world. John Pierpont Morgan, of JP Morgan-Chase fame who with others, set up the Federal Reserve, and created the monster it has become. The behemoth that has its tentacles in every other Central Bank: ECB, BoJ, BoE, the IMF, the World Bank, the U.N., the Trilateral Commission, the Bilderberg Group, the World Economic Forum, The Council on Foreign Relations of America and who through its political hirelings, is about to introduce financial totalitarianism.

WHAT? I hear you ask… When EVERY transaction you make is on a computer somewhere, and the government knows how much money – sorry currency – you have they can introduce taxes on every purchase to pay back the debt on the currency conjured up out of thin air these last 100 years, and you will be economic slaves. When the government can decide who can purchase what, deny you access to your bank account, force you to pay by card, and not by any other means, all supposedly to fight the terrorism, that 9/11 ensured, and impose negative interest rates, then we have Soviet or Fascist style Totalitarianism, leading to war like WWII, in which up to 70 million people in total died.

And the EU, controlled as it is by Bankers, is on the point of disintegrating – Yanis Varoufakis in an interview on BBC on 31th March, laid out what will happen if the EU is not democratised.

He speculated that an area centred around North Eastern Europe – will head into a recession as their currency strengthens, and the latin countries together with Greece and Ireland, will lapse into an inflationary depression as their currency depreciates. Britain, whether in, or out will fall into this abyss.
If we fail to address these issues, we will head inexorably towards a third world war.
There are always three stages to war. First we have currency wars – such as happened since 2000 with a fight to devalue.
Next we have Trade wars – such as with China Steel dumping, and cries of foul.
Then we have hot wars, when finger-pointing gives way to forcible admonitions.

You have been warned.

You can read a little about this Here…  and Here…

Share this with others, Like us, and Link to us. Get the message out.

 

Investing in the Meltdown, or Melt-Up?

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As I study the markets this morning of March 22nd  – Brussels was under attack from persons unknown, though what we’ve heard so far, it suggests, it is Islamic Fundamentalists, with an axe to grind.

Don’t they realise, that they can’t expect Allah, to provide them with anything… Killing themselves and others in the process helps no-one – except maybe: politicians, security experts, the police, the military, coffin makers and funeral directors – every situation, no matter how gruesome, has its winners and losers. These Islamists have to get off their butts, and produce for the wider community, and in that process get justly rewarded in this life, rather than the next. But, societies keeping over half the population unproductive, by restricting what women can do doesn’t help either.

Unfortunately, as time goes by though, it gets harder. Most of the basic human needs have already been taken care of… Water, Food, Homes, Clothing, have been produced for humanity ever since our ancestors got busy making the agrarian society a viable proposition. The Industrial Society, took care of our transport needs, and the first dark satanic mills, spun us our yarn, and weaved our fabrics making mass produced clothing possible and cost effective.

Increased power coming from oil, allowed us to produce ever more stuff. And the improvements in logistics operations: ships, trains, cars, aeroplanes, allowed us to distribute that stuff all around the world. That’s why so many of our newly emerged adults are finding that their skills to make a coffee, or toast a spicy tea-cake are more in demand, as more things are automated, causing the number and type of job changes to escalate.

Now China has become the manufacturing powerhouse of the planet, and those I-phones, I-Pads, and other high-tech gadgets are clocking up more air-miles as fast as the world’s aircraft can carry them. But even there, the Peoples Republic of China is struggling to keep its 1.4 billion people fully occupied and quiescent.

We are fast moving to a post-industrial society, with the emergence of 3-D printers, Bio-Tech developments, and Artificial Intelligence (A.I.) being built into more and more technology, and QE to infinity won’t change that.

The demand side of the world economy, depends on sufficient income, but if people only get their income from jobs, then it is not looking good. The producers are in the ascendancy, those with more and more technology, will win out, forcing those who are less efficient and their uneconomic competitors out of business. Capital, wins out over Labour in the final analysis. And we live in a capitalist world – at least according to what I’ve read.

But, those who see the changes coming and prepare themselves accordingly, can at least make a fast buck if they take the time to study the markets as I have been doing for the past 30+ years.

Late last year we passed a major inflexion point. Several events converged to make the not too distant future uncertain. Mystic Meg, would have a field day, but we don’t have to rely on mysticism, or astrologists to see the future. All we need to do is observe society.

All western societies are getting older (meaning more of them are in, or saving for, their retirements, and therefore are, or will become net consumers.)
The people retiring, are those with the highest skill levels as a lifetime of skills are removed from the workforce. Skills that were honed and polished over almost 50 years.

Those people born in the 40s, 50s and early 60s, went to school, and trade school, did apprenticeships, engineers were trained because of several industry training bodies, and governments who made training pay – for the individual and the company. Pocket calculators didn’t exist, meaning these people learned to do and practice mental arithmetic, and even more complex maths in their heads. Grammar was drummed into them at an early age, spelling was pulled up at every opportunity as all teachers had to have excellent capabilities, and were rewarded with excellent salaries. The cream of the crop were sent to Grammar schools, and educated for Governmental Departments, Banking and Finance, the Law, Accountancy and other professions. The rest of us did Woodwork, Metalwork, Technical Drawing and learned what it was felt we might need, for the industrial manufacturing world we would enter.

But all that began to change in the 70s, as a new social agenda came through. No longer were we to be segregated into professions and trades people. No longer were we educated to be the best. Now we were being educated to be mass consumers – unthinking, and servile – dumbed down. The population by 1970, had already become 4 billion inhabitants on the planet. By 1985 this was 5 billion. It took just another 15 years to bring that to 6 billion people, and a further 12 years  to make that 7 billion. Demand for Food, Water and Clothing will grow with the population, but the ability to produce, is about to make major steps forward. Driverless cars, even trucks will reduce needs for workers, and lower costs as people perhaps opt not to buy a car, but to call one up as and when they need one. How will this affect the motor-industry when one in every 5 cars is a Google car, or a Tesla fitted with similar technology?

How will the logistics industry adapt when Amazon gets the go ahead to deliver its parcels by drone the last few hundred yards from the local service centre to the home? Who will employ all those unemployed truckers, delivery staff, and vehicle producers as demand is lowered?

Unfortunately, such changes cause major dislocations in employment demand, and those who spot the trends early can invest in the right companies.

So that brings me to the next major market change. Where will the stock markets go – the DOW, and FTSE, the CAC Index, and DAX index, the Hang Seng, or any of the so far minor indices on the bourses of India, Greece, Italy, South Africa, Brasilia or wherever in the world they are? My guess is that we are heading for a 70% fall on most of the major indices.

See this:

WhereTheDOWisHeaded-6000

The blue lines show the major channel over the last 20 years.  The thinner red lines show the minor trends, which give us a clue as to the steps I expect will happen over the next few years as the DOW reverses the trend of the last 7 years. Will it go as low as 6,000 or below?

Well, if we look back to the 1970 recessions and look at the charts there. The DOW  fell to 850, and significantly, Gold rose to match it… a 1:1 relationship existed between Gold and the DOW. But here’s where QE does have a major impact. The money supply of the U.S, has quadrupled since 2008, so…

I wouldn’t be surprised that this time when the DOW collapses, to get a potential 2:1 relationship between Gold and the DOW…Gold 12,000: DOW 6,000? Or DOW $5,000 and Gold $10,000? Though, I long ago suggested we might see $8,500 Gold. Given the amount of QE that has been introduced since 2008, we may see all that currency run to ground.

As Bill Bonner might put it: “Sell Stocks: Buy Gold.”

Of course precious metals of all colours – Silver, Palladium, and Platinum will also receive some of the fleeing capital and even Bitcoins, as my last missive suggested, but when the new economy emerges phoenix like from the ashes, where then to put your capital – if you have any left?

So, when the SHTF moment arrives… will you make money on the way down, and then on the way up?

Anyone who gets to grips with Spread-betting, Options, or reverse ETFs that make money on the way down, or who have deep pockets and even longer arms, to borrow stocks, to sell, and then buy back at the bottom (which is how many other fund managers make their funds money) will do well.

The rest? The Buy and Holders…Those whose main investment money is in their retirement fund – out of their control – they’ll be like lambs to the slaughter. Pension firms with their client’s money invested for the long term, will lose Billions.

BUT… when the tide turns, as it will, it will be the biggest buying opportunity since the 1932 bottom in the stock market, when the DOW had fallen, from its highs in 1929, peaking at 381.17 on September 3, 1929, to July 8, 1932 when it closed at 41.22 almost a 90% fall (89.19%).

Over the coming weeks, I’ll be searching for situations where those who want, can make some serious money and giving you the heads up.

W.

 

 

Why Bitcoin could go to $1,000,000+

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Bitcoin

Ever since I first heard of Bitcoin, my moods have oscillated with emotional highs and lows between optimism, and pessimism. I got involved about eighteen months ago, mostly out of mere curiosity.  However, I first learned of Bitcoin, about 4½ years ago, and perhaps because back then, there was a lot of hype, I was highly suspicious of it. I asked myself… What was this new technology? What are its implications? What are its strengths or weaknesses? Will it succeed?

Like you I had so many questions. But I didn’t know enough to commit to it.

However, I had some experience of cryptographics when, as a former software developer, early in my studies, I wrote cryptography software using a simple alphabetic replacement system. For those not familiar with this, it was the simplest form, which involves letter substitution.

Let’s take the Alphabet.

ABCDEFGHIJKLMNOPQRSTUVWXYZabcdefghijklmnopqrstuvwxyz
GHIJKLMNOPQRSTUVWXYZABCDEFghijklmnopqrstuvwxyzabcdef

As you can see from the above, you can shift each letter a number of times. In the above example from A to G, from B to H, etc. etc., to encrypt or decrypt the text.

As long as you know the shift count, you can simply unscramble the text. This however would be laughed at by any modern cryptographer, worth their salt. We know which letters in the English language are used most frequently, so having a few guesses at the piece of text would quickly, reveal the key (the number of letters shifted – 6 in the above example)

During the second world war, the Germans of course used two characters to denote a character in their encrypted messages, with random coded substitution, and it wasn’t until the British managed to get hold of an Enigma machine from a captured U-boat, to send to Bletchley Park where they worked on the decryption that they were finally able to decrypt the messages, and listen in on German U-boat communications, so helping bring the war to a speedier close. And cryptography is at the heart of global communication, and Bitcoins and other Alt-Coins. It is also at the heart of Apple’s attempts to restrict U.S. authorities from gaining information from devices, that are encrypted, by fighting a court decision forcing it to build software for the authorities to allow access – Apple of course designed its software because of increasing concern at the intrusive political and authoritarian institutions of all Governments, some of whom appear to have carte-blanche access to whatever communication traverses the globe – at least according to Edward Snowden.

Lately however, I have been doing further research into Crypto-Currencies, and both the theory and the practice.

What fired my enthusiasm for this research was listening to an interview, between a sceptic, and an enthusiast.

As a result, I began looking at a number of Web-sites, and following up on this conversation. To see what’s happening in the Bitcoin and crypto-currency space. After much thought, and research, I realised that there are at least 7 Network Effects which might lead to wider acceptance:

1. Speculation –
People buying to make a fast buck. This drove early adoption, taking the price to almost $1200 at one point.

2. Merchants –
Companies accepting it for goods, simply because people hold them, and they are convertible into fiat-currency or money at known rates. In the world there are over 100,000 merchants already accepting the coins, including major providers such as Microsoft, and Target in the U.S..

3. Consumers –
These are using it because merchants are accepting it, and they are now doing so in ways that allow consumers to gain discounts of upto 35%, even on web-sites such as Amazon.

4. Miners –
There are a number of crypto-currency miners, with computing power approaching 1 Exahash, which is about the equivalent of 10,000 of the top 5 supercomputers in the world

5. Developers –
These will use the above processing power to build out the infrastructure, to produce software that is more secure than all the others and to build functionality in the hope of receiving Bitcoins or Fiat.

6. Financialisation –
The Banks and CFTC have already discussed using the Bitcoin Network and blockchain technology for transfer of financial instruments denoted in Bitcoin. And one of Max Keiser’s former regulars, decided to invest heavily in building out the technology for this process almost eliminating Brokers and brokerage fees.

7. World Reserve Currency –
IF, or rather, WHEN the US. Dollar crashes, then people will hold their reserves in an alternative or alternatives. Gold and Silver are obvious candidates, but also increasingly Bitcoin crypto-currency, is a candidate rather than some other Fiat currency, because of the current currency wars, which could turn into trade wars, and then hot wars..
This is still to happen but, the instability in the Middle-East and around Africa, is a sign of things to come.
If the price of Bitcoin, begins to rise towards, four, five, then six figures, more and more people will hold their reserves in Bitcoin, and other fiat currencies will recede in value – including other currencies such as: British Pounds, Euros, Japanese Yen et-al..
This will accelerate the acceptance and expand the wider use of crypto-currencies in general, and Bitcoin in particular. The rise of Bitcoin, and the fall of the U.S. Dollar therefore, will be as much an opinion of the dollar, as it is of Bitcoin

So, as more and more of these people and organisations, developers, merchants, financial organisations, miners and finally those who hold their nation’s reserves increase their use of Bitcoin, then the value will explode exponentially, and the price speculated in the header will be a distinct possibility.

But, the alternatives to Bitcoin – Alt-coins – and of course Gold and Silver may take up some of that slack. Gold appears to be in increasing demand, at least amongst 4 particular countries. India, China, Russia, and Turkey alone out of the world’s 200+ nations, currently (according to Mike Maloney quoting a Zerohedge article on 3/3/2016) are already consuming the entire planetary output of gold – and then some. The excess demand is currently being met by Western Central Banks reserves.

Canada which has suffered in recent months as the oil price has tanked, perhaps made pledges to its people, that were based – at least in part – on an expected almost permanent high oil price, so the current $38/bbl is causing problems for those states with Tar-sand production, which is a high cost energy item, and thus costs may already be exceeding revenue from such operations. Those modest Canadian Gold reserves were apparently sold off in one month or less. The reserves stood at a mere 1.7 tonnes according to February reports, but by Feb 29th, the remainder was just 77 ounces, which is a pitiful amount. This is down from 1,000 tonnes the Canadian Central Bank reported in 1965, but since the end of the Bretton Woods agreement (15/8/1971) these have been replaced by U.S. Dollars in the main. It took Canada, 20 years from 1965 to reduce those reserves by 50%, and the last 30years to rid themselves of the rest of this Keynesian Barbarous relic. Which begs the question… What will the Canadian Government use for currency/money, when the dollar collapse occurs?

But what might trigger this Tsunami? Anyone who is not a Keynesian, has to study – observe – what happens in the real world. Economics is one of those dry dusty subjects given to study by essentially – Nerds – I count myself amongst them. The original economists: Adam Smith, John Gresham, Ricardo, and the other early economists, studied markets and what happened in them. They then formulated ideas based on those observations.

But since the dawn of the Federal Reserve, and the end of WWI, economists have been looking for ways to manipulate the economy to serve politicians, who as the old saying goes – “Don’t want it to happen on my watch.” IT, being a recession or a depression.

But what causes depressions? Think about it for a second. A new idea comes along. Lots of people begin to provide that service or product. Lots of small businesses are built. Over time, these small businesses get swallowed up by competition, over decades ultimately half a dozen huge corporations provide that product or service, freeing up people to do other things – (unemployment) and concentrating the industry into a few corporate hands.

When this happens, the unemployed inventive ones with access to capital invent new products or services, to replace, or make better what went before. Perhaps even to the point where what went before, gets replaced almost completely – such as cars replacing trains, which replaced horses and canals. But for the additional products, you need additional consumers, not hundreds of millions, retiring, or on the verge of retirement, looking to save, rather than spend.

Since the end of WWII, the computer has gone through several metamorphoses – from Mainframe, to mini-computer, to PC, to Laptop, to smartphone and tablet computer. They each in their turn improved on previous designs, made them smaller, more productive, cheaper and widely available due to cost reductions.

But for industry to grow (so they can grow the share price) they need new products, new markets, or lower costs, and it is this last item, that means doing either more with the same, or the same with less that is causing the problem… As that means fewer workers. We are at one of those inflexion points. Apple, and Samsung, Sony and just a few others in China and the Far-East, now dominate the smartphone and tablet industry. HP, IBM and other American behemoths have shrunk or got out of the computer business altogether. Britain’s Computer industry has gone from a handful to one, producing designs for chips in smartphones, and tablets (but also increasingly servers for server farms).

The capital sitting in corporate bank accounts should be going into research, but research can take years to produce anything, and corporate execs need to deliver share price rises today, tomorrow, next week, next month, and at the end of the financial year. Not maybe, in three years time if the research proves fruitful. Much easier to buy up a new corporation that has already proved up the technology, and can be tacked on to existing business.

And so to force companies and large holders of capital to invest, we have the prospect and reality of NIRP – Negative Interest Rates Policy – already in place in 3 countries in Europe: Switzerland, Sweden, and Denmark. The ECB and Japan too is trying them, but none of them appear to be working to the extent they would like. In Switzerland, the Tax collecting service even told its taxpayers not to pay up-front, so that the money held on deposit at the banks wouldn’t be “charged”. This is monetary madness. Anyone with 6, 7 or 8 figures in a bank account should be worried. And those living from week to week, or month to month, will need to grow their income rapidly as the dollar declines.

JP Morgan (according to Satyajit Das, finance expert and author of “A Banquet of Consequences”) has speculated – sorry modelled – that -3% might be necessary for the dollar. But with Bank notes, people can just take that cash out of the bank and keep it under the mattress so to speak. So Central Banks want to get rid of banknotes, and that is why they are starting with large denomination notes – the €500 note, the $100 bill et-al. They use ephemisms, and downright lies to attempt to achieve this, but the moment that the U.S. does that, all those dollar bills will return to U.S. shores, and the trickle of deals away from the dollar – the 30 countries that now have bilateral trade deals with China, Russia, India, and the middle-east, for oil, and commodities outside of the dollar, will become a flood – fleeing from the dollar. To what? We can but speculate, but to my mind, Bitcoin will be one of them, and of course Gold and Silver. Of course, we may yet see governments attempt to outlaw the ownership of Bitcoin, Gold or Silver, just as was tried once before in 1933. THAT moment may arrive far sooner than many think.

Bitcoin – are there any drawbacks? What are the Risks? What if…?

The total number of Bitcoins is limited to 21,000,000,  so I hear, which sounds a lot, until you realise how many transactions there are in the world, and how much economic value people have added to the planet over the centuries. Money therefore is used to value those objects – Buildings, Corporations, and the time value of Labour, to all the products and services we take for granted in our modern world. So a modern money must be the measure we use to assign our value to these. IF therefore, Central Banks can just conjure up currency out of their printing presses, or computers, they are esentially stealing value to be created out of human labour. Whether that is a corporation that took 50 years to build, or it is someone’s work, the value of the currency itself therefore, should also reflect its time value to produce. THAT is why both Gold and Silver served our purposes so well over the millennia.

Think of the worldwide number of large corporations, sky-scrapers, huge mines, roads, motorways, bridges and tunnels built since the dawn of the Industrial age, together with their cost in materials, time, energy, and lives lost. That value runs into the hundreds or even thousands of trillions of U.S. dollars.

$200,000,000,000,000 – is reputedly, the total currency debt of the world – divided by 21,000,000 Bitcoins is 9,523,809.5238095 per Bitcoin, and that is in dollars alone.

This assumes that all other currencies go to zero, and we only use Bitcoin for our financial transactions.

Which means theoretically, it could go higher, when you add in Pounds, Yen, Euros, Rubles, Yuan, Dinar, Riyahls etc. etc.

Of course this is perhaps unrealistic, but not outside the bounds of possibility.

We also need to consider what are the pitfalls.

As Bitcoin is more widely adopted, over time there will be inevitable losses – people storing their coins on a smart-phone or flash-drive and losing it, or not backing it up, or finding out that electronic storage and strong magnets are not a good mix, or someone dying with their coins held in a smartphone, that no-one else knows about, which gets wiped and re-sold on, or given to a partner, relative or someone, who has no real interest in such electronic coins. There will be other ways that currency could be lost, so shrinking the pool of available coins, which might also lead people to not adopting them, out of fear of loss. There are those who speculate the earth could receive an Electro-Magnetic Pulse (EMP) which could lead to a major fault in the global telecomms infrastructure, killing digital coins – but with the Banks and Governments so keen to rid the world of ALL paper currencies, there is little choice except for those stand-bys of the last 5 millennia – Gold, Silver and Bronze.

Could Bitcoin go higher? Will it?

Could Bitcoin really go higher than the $1,000,000 speculated on? These are unknowns. The theoretical maximum of 21 million coins assumes that all the coins are mined, but which according to Trace Mayer, Bitcoin Expert, would take upto 140 years, as the mining rate halves every 4 years. The first such halving was in 2013 – Did this cause a price spike? (Basic law of Supply and Demand?) We don’t know for sure, but possibly; the next such halving is next year in 2017. It is possible that this time, people will front run it this time, to try to maximise their positions ahead of the reduction causing another price spike.

As I have said several times, there are about 80 different crypto-currencies. I hold over 10, and receive daily interest into my crypto-currency accounts – as can you (See below). I also have an app on my smartphone, in which I have deposited some of these coins to spend, with a QR Scan Code to make using them easier, just like I might with ApplePay(®) or the PayPal App and it is possible that I will be able to do this with all the others shortly.

There are already ways to exchange these different crypto-currencies, on exchange sites (listed below)

So, now do you think it is time to maybe check out this new currency system?

Where do I get Bitcoin, or these crypto-currencies?

Bitcoin, is available in so many places now it is almost impossible to recommend one or two sites over others, but the one site I do recommend, mostly because they set-up a number of crypto-currency [Alt-coin] accounts, simultaneously, for the price of an e-mail address, and you receive FREE daily deposits into them – albeit very small sums to begin with, but with loyalty bonuses, increasing with time and other ways to improve deposits. For those keen to promote or evangelise the site, additional bonuses are given in increasing amounts for more referrals.

You can earn upto 10 crypto-currencies, including Bitcoin, and Litecoin FREE at… Qoinpro.com, for the price of an e-mail address. Backing both horses in a two horse race may seem like wasting money or effort, but it depends on your view of risk…and the potential rewards. And in investing circles, NOT losing money is the first rule to financial security.

You can buy Gold and Silver with your crypto-currencies at: https://www.vaultoro.com   or with Fiat at  https://www.bitgold.com  or https://www.libertysilver.ee. At Liberty Silver, because it is based in Estonia, which does not charge V.A.T. on silver coins, as long as you purchase and arrange collection from their site (done via a courier) you can still legally buy your coins VAT free.

And you can trade between different crypto-currencies here at: https://shapeshift.io or at https://btc-e.com or even learn how to trade from your fiat to BTC here http://www.coindesk.com/information/how-can-i-buy-bitcoins/

Banking Crisis 2.0 – Hyperinflation Everywhere?

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Since the start of the year, the stock markets around the world have begun their slow grind into Japanese style retrenchments.

And yet, there has been precious little commentary in the MSM, about this, who prefer to discuss train derailments, Russia’s involvement in Syria and the middle-east or current and former celebrities’ antics or the machinations of Brexit, or the refugees walking their way across Europe, from the middle-east to new lives throughout northern Europe and Britain.

However, to return to the title of the piece, it appears that cracks are once again appearing in the Banking edifice, that legislators and those who fund them have built, and sometime in the not too distant future, a minor tremor, will bring this edifice down around our ears.

Indications that this was going to happen became evident, and were laid down over a four decades ago, with the end of the Bretton Woods Agreement, in August 1971, but in recent months, evidence that we are peering over the precipice has emerged, in some wonderfully inciteful interviews. Hugo Salinas-Price – a Mexican National, who grew up in the U.S. and made his money in Mexican Retail. In recent days and months has been involved in a number of interviews. At 82, he owes no allegiance to anyone including the U.S. where he was born. He does however, show support to the people from where he came – the poor Mexican community. For those who don’t know him, Hugo Salinas Price, built a chain of stores – Electra – in Mexico, which made him a billionaire. In the first interview I saw with Greg Hunter, he talked about the reintroduction of money (not currency) made from silver, which had a fineness and a weight stamped on it, not a value – once upon a time, a British Pound Sterling was exactly that… a pound weight of sterling [925] silver, which closely equated to a one ounce gold coin, which for many years was called a Golden Guinea, and was valued at 21/- (i.e. 21 shillings, i.e. £1.05). He talked about a price “Quote” that could be announced by the Treasury…

Of course human nature could mean that the price would be quoted to perhaps 5 digits, and over time an unimaginably small amount could be taken from those 5 digits to devalue the money over time, because that is what Governments and Treasuries and Bankers do. Steal from the people stealthily. Did you notice the two words Steal and Stealthily? They have the same root. But he is right, Precious metals will need to be revalued upwards to eliminate the world debt of some $200TRILLION, or the debt will never be repaid. So anyone who holds this wondrous substance, will have it revalued up against other things of value.

In a later interview, he talked about China’s devaluation, to keep the Chinese export market humming. Salinas-Price felt that the devaluations were insufficient to keep Chinese factories at full tilt, and that perhaps 40% might be needed. However he also talked about the Banking System, being so out of kilter, that impossibilities were being expected. For example Greece had a population of 11,000,000 people, but the bank bailout, to Greece, amounted to some €400 BILLION which was impossible to pay – because it means that every man, woman and child, owes €36,363.63, and Greg reminded us, that Puerto-Rica, which had a population of 3,500,000 people, owed $71,000,000,000. and the state of North Carolina, has about 10 million people, and close to $1 billion of debt.

In a more recent interview Salinas-Price showed a chart of the World’s Central Banks assets (physical reserves + interest bearing instruments etc) over time. Since the 1940s, this showed the asset base rising, gently at first, but increasing during the 1950s, 60s and 70s, as Gold was revalued over a ten year time frame, to its 1980 high, then as bonds became the preferred method of financing deficit spending governments, to the point where the chart line went almost vertical peaking in August 2014. Since that time however, there has been a gradual decline of Central Bank Assets in a slow arc, which levelled off then began to turn down in recent weeks. The fall went from 12.032 trillion, to 11.025 trillion over 18 months (to Feb 2016) His interviewer – Greg Hunter, made a reference to the “Hockey Stick”, moment,  of which I have mentioned in one of my earlier posts (the J Curve). Salinas Price, then talked about the revaluation of Gold to some figure, which various commentators have suggested would range from $8,000 to $50,000 per ounce for Gold. (I myself suggested some years ago, that we might see $8,500/oz Gold) With Gold amounting to 183,000 tonnes worldwide, which will need to be all be revalued. (no matter in what form that takes whether that be in vaults or around someone’s neck, or finger)

Greg then went on to ask the question, “Could this pick up, and go down as fast as it went up?” and I think Salinas-Price recognising the seriousness of the question said “I think it will go down faster than it went up.” I suspect he didn’t want to state outright, that when it did, it would be the end of the western hegemony in world affairs, as the Central Banks funding governments through deficit spending, have allowed governments to buy arms, and munitions for the last 5 decades – since the start of the Vietnam war – to punish those with which it disagreed. And on that fateful day in August 1971, the die was cast.

Paper Currency – no going back?

Beginning in late 1997, we saw the far east undergoing financial problems as small national currencies collapsed. The beginnings of the crisis were caused by overheated economies, primarily as I see it because these countries were manufacturing electronic components going into PC systems, that western nations were replacing on a wholesale basis as the Y2K issue grew ever closer. The U.S. economy too was selling huge amounts of consultancy services, hardware and software to replace non-compliant systems that required all applications, operating platforms, and device drivers to be rebuilt on 32bit hardware to ensure compliance. This surge in income led to overheating of their respective economies, and led investors to over-estimate the underlying strength in particular of the far-eastern economies, until events turned south as that surge receded. As hardware needed to be replaced first, the surge should have been anticipated upto circa 1997/8, to allow time for programmers, to rewrite applications ready for that fateful day, when some believed the hype, that some in the media who were ignorant of events in the I.T. world had created. The IMF came to the rescue of those 3 countries, but all they did was postpone the inevitable.

The problems began starting with the Thai Baht, causing ripples throughout the international financial system spreading throughout Vietnam, China, and moving on to Russia causing the collapse of the rouble.

The decline in these eastern economies, led to a decline in oil demand, and this impacted the Russian economy, already stretched due to the war in Chechnya, and a strike by Russian coal-miners on 12th May as their wages had gone unpaid. The inability to meet government expenses, lowered investor confidence, and this put additional pressure on an already falling rouble.
The Russians learned a valuable lesson, and have since been raising their Gold reserves levels using dollars, that were gained by selling oil and gas to Europe and the world, and converting them into Gold. Their debt to GDP level on the last figure I saw was just 11% of GDP compared with Britain’s 97% and America’s over 105%.

However, a return to a gold backed currency in the 1970s, would seriously have curtailed U.S. military spending, in Vietnam, just as the Soviet Empire was brought to heel by undermining its financial strength, by driving down the price of its main export – oil, which has also happened in recent years by oil from fracked wells, to undermine Vladimir Putin’s regime. Of course we can never be absolutely sure when the precipice fall moment will arrive, but one possibility, appeared on the Max Keiser show recently. Max talked with Stacy Herbert, about the current financial strength of Deutsche Bank. Had the board of Directors expressed their full support for the strength of the business, just like a Premier League Football team board,who announce support for the Team Manager just days before he is ousted, and fired?

In Germany, the German Finance Minister said that the Bank was sound. In reality, in Max Keiser’s words – “It’s a dead man walking”.  Deutsche Bank has a derivatives book, which is leveraged just like the Federal Reserve beyond its capabilities, and will likely come unstuck if events unfold as can be reasonably expected. The trigger? Probably Greece, which has a population of 11 million, but owes over €400 billion. Can this small south European nation, who historically made their money from shipping, with the Baltic Dry Index at all time lows, and with an increasing number of migrants turning up on its shores, in boats, in dinghies, with over 100,000 so far this year and all in desperate need. Can it pay back this huge sum? And if or rather when, it says NO – We can’t. What then?

Many believe this will be the straw that breaks the camel’s back, and crashes the Euro, the ECB, and the European dream. It was Goldman Sachs, who of course cooked the books, by hiding a 12% deficit, and making it look like they were meeting their Euro obligations, when in reality they should have limited debt to 3% of GDP.

In recent weeks, from a technical analysis perspective, Gold has risen through several major Moving Averages – all the way up to, and through, the 600 day Moving Average (SMA- Simple Moving Average) Of course it has to remain there, above that threshold, to hold the thesis that the upturn has started. Silver meanwhile has still to confirm such a move, but usually, the silver price is like it is tied with elastic, to the gold price, so that the move is delayed, but accelerates far faster as those who have chased the price of gold higher, switch to silver because the price of gold is out of reach of many, and silver catches up.

And silver which had huge stockpiles that have been sold off over the last 70 years, is now just off its most recent lows, and likely to go higher… much higher.

See the Hockey Stick Moment turn south…


— Hugo Salinas Price…

…and Bo Polny – says —– THIS YEAR is the year that PMs re-value —–

And if you want an intellectual education on the monetary systems of the world, then this is probably one of the better ones I’ve seen…

Mike Maloney has a series of You-tube videos (Episodes 1-5) on the history of money, and currency (currency is not money as he explains) Of the 5 episodes, number 4 is perhaps the most informative for those without the motivation to sit through them all, though, the others certainly inform as to the extent of control and manipulation by Bankers. Knowledge of money and how the Central Banks, have gained control of the monetary system, and used it to feather the Banker’s nest and control politicians will perhaps enrage you, but it will show you how you have been deceived and what you can do about it.
And whilst researching this piece, I came across a piece from August 2005, written by Marc Faber, for the Daily Reckoning.

This should serve as a reminder that we have been here before, and it didn’t end well…
——————————–

THE RISE TO RUIN
by Marc Faber

“Everything in the world may be endured except continued prosperity.”
– Goethe

In the late 1970s, investors became increasingly concerned about accelerating consumer price inflation. Since consumer prices were rising at more than 10% per annum, the prevailing view was that cash was depreciating by approximately 10% per annum.

People rushed into precious metals and drove the price of gold and silver to $850 and $50 respectively in January 1980. At the same time, investors were dumping bonds, which became known as “certificates of confiscation”. US long-term government bond yields soared to more than 15% in September 1981. I would argue that there was at the time a real panic about the role of paper money as a store of value.

Today, we have a similar situation. However, people are not concerned about paper money losing its purchasing power as a result of consumer prices rising, but as a result of paper money losing its value because of rising asset prices.

If real estate prices rise for an extended period of time at a faster rate than incomes and interest rates on cash deposits, it is only natural that people become concerned that they won’t be able to afford to purchase their own home in future. Their concern about future affordability, which is nothing else than the fear of their income and savings losing their purchasing power, then induces them to purchase their homes now rather than later.

This incremental demand drives prices even higher and attracts speculators who want to capitalise on the rise in prices, which is driven first by the genuine buyers and later by themselves as well.

As a result, prices then overshoot and lead to even deeper apprehension about the loss of purchasing power of paper money on the side of the household sector. A general rush from liquid assets to “illiquid assets” inevitably follows and creates a bubble.

This is nothing new. The first well-documented instance of such a loss in the purchasing power of paper money was John Law’s Mississippi Scheme. In 1716, John Law had opened, under the patronage of the French regent, a bank (Banque Generale), which issued paper money backed by gold. With the help of the regent, the bank became an immediate success. Its banknotes were very convenient, since the government accepted them for tax payments.

Based on this first success, in 1717 Law managed to convince the regent to grant his new venture, the Mississippi Company, a monopoly on all commerce between France and its French territories in North America, which included the present states of Louisiana, Mississippi, Arkansas, Missouri, Illinois, Iowa, Wisconsin and Minnesota, in return for accepting outstanding notes of the French government in payment for the Mississippi shares.

This arrangement basically amounted to nothing other than a partial conversion of France’s government debt into shares of the Mississippi Company.

The operations of the company didn’t prove to be profitable, partly because when it issued shares it hadn’t received cash, but debts of the French government, which had been converted into shares of the Mississippi Company, and partly because very few French wanted to emigrate to the territories in America.

Still, the shares of the Mississippi Company performed well after the regent took over Law’s bank and began to run its money printing press around the clock. (Presumably, Law gave him the bank in exchange for having obtained so many privileges.)

But, whereas John Law had always maintained a small balance of gold reserves to back up the paper money the bank issued, he now advised the regent that the public had gained sufficient confidence in paper money and, therefore, gold reserves in the bank’s vault were no longer necessary.

As a result, in 1719, the government increased the money supply dramatically and lowered interest rates by lending money for as little as 1-2%. The vast increase in the supply of paper money, combined with the ability to purchase shares in the Mississippi Company on margin, led not only to the shares rocketing towards the end of 1719 to over 20,000 livres (from 300 at the beginning of the year), but also to rapid price increases across France.

The cost of bread, milk, and meat had risen six-fold, while cloth was up by 300%. The horrendous inflation made the holders of Mississippi Company shares and of paper money nervous.

In January 1720, just two weeks after John Law had been appointed as comptroller general of finance (minister of finance), a number of large speculators decided to cash out and switch their funds into “real assets” such as property, commodities, and gold. This drove down the price of the Mississippi Company shares since the speculators could only pay for real assets with banknotes.

As confidence in paper money was waning, the price of land and gold soared. This forced Law, who still enjoyed the backing of the regent, to take extraordinary measures. He prevented people from turning back to gold by proclaiming that henceforth only banknotes were legal tender. By then the Banque Generale had practically no gold left. Thus, payments in gold and silver above 100 francs were prohibited; in addition, the ownership of gold exceeding 500 livres in value was declared illegal. Severe penalties were imposed on people who hoarded gold. To enforce this most blatant expropriation, Law encouraged the public to turn informer by handing out large rewards to those who assisted in the discovery of gold, which was then confiscated. At the same time, he stabilised the price of the shares of the Mississippi Company by merging the Bank Generale and the Mississippi Company, and by fixing the price of the Mississippi stock at 9,000 livres.

With this measure, Law hoped that speculators would hold on to their shares and that in future the development of the American continent would prove to be so profitable as to make a large profit for the company’s shareholders.

However, by then, the speculators had completely lost faith in the company’s shares and selling pressure continued. In fact, instead of putting a stop to the selling, the fixed price acted as an inducement to sell, which led the bank once again to increase the money supply by an enormous quantity.

The result was another round of sharply escalating prices. In four years, the supply of circulating medium had been trebled. John Law suddenly realised that his main problem was no longer his battle against gold, which he had sought to debase, but inflation. He issued an edict by which banknotes and the shares of the Mississippi Company stock would gradually be devalued by 50%.

The public reacted to this edict with fury, and shortly after Law was asked to leave the country. In the meantime, gold was again accepted as the basis of the currency, and individuals could own as much of it as they desired.

Alas, as a contemporary of Law’s noted, the permission came at a time when no one had any gold left. The Mississippi Scheme, which took place at about the same time as the South Sea Bubble, led to a wave of speculation in the period from 1717 to 1720 and spread across the entire European continent. When both bubbles burst, the subsequent economic crisis was international in scope.

Today, I am a firm believer that Mr Greenspan, Mr Bernanke, and their colleagues in other central banks around the world are modern-day John Laws. They, like him, will not only manipulate and intervene in markets but, over time, will also totally destroy the value of paper money. In fact, I believe that, given the very high levels of debt we have in the US and other industrialised countries compared to the size of their economies, the central banks have no other option now but to print an ever-increasing quantity of money.

Whereas John Law tried to fix the price of the Mississippi Company by printing money, the Fed chairman has tried – and managed, at least so far – to inflate asset prices through an extraordinary money and credit expansion. But in the same way that asset price inflation replaced consumer price inflation in the early 1980s – unexpectedly, I might add – in the near future CPI inflation and rising commodity prices could begin to exceed asset inflation rates, and in particular home price inflation.

This would likely depress long-term bond prices and lead to a very unappealing global economic and financial environment. It would eventually discredit central bankers and bring about the end of central banking as we know it today.

Regards,

Marc Faber
for The Daily Reckoning
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Rob Kirkby – The ESF is behind the mess…

This financial problem, is expanding into the surveillance state – 1984, just got ugly…

This is how they do it…

And The Financial Elite, will use WAR to cover up their mess…

And the antidote to all this is?

GOLD and SILVER, because when the people have that, Government has to raise taxes, and justify every penny spent.

But what about food, water and having people around you who are self-reliant, and will help each other… Where’s the best place to live in the U.S. when the SHTF?

This audio, discusses the expected timeline for the coming financial reset…
Senator Ron Paul, is a medical doctor, who spent almost 40 years in politics. A man, who stood for free markets, and against the Federal Reserve, and stood for the Presidency first as a Libertarian, and latterly as a Republican, but his greatest achievement, was together with Lewis Lehrman, they wrote a comprehensive 245 page report advising the government of the day back in 1982, on the monetary system, and how they could get the U.S. back on track. The report – “The Case For Gold”, was buried for years, in congressional records office, but now you can download a copy of the Ron-Paul-Case-For-Gold-Report for free.

And you can listen to him on his 80th Birthday, in fine voice, when perhaps he gave his best speech ever.

 

You have been warned!

Electronic Coin Clipping?

Posted on Updated on

HelicopterBenIn my last post, I reposted Alan Greenspan’s now famous 1969 piece, in which he clearly lays out for all to see, the tactics that the International Bankers have used to wrest control of this planet for their own ends.

The methods and tactics used over two centuries to move the people of the world into a giant supra-national state, owned by this banking Cabal, for the benefit of the bankers have been stealthy, and protracted. Each world citizen, will be essentially a slave, and those that can’t or won’t work will be used to wrack up debt, which the rest of society will be obliged to pay for, in ever higher taxation. The increasingly controlled health systems will be controlled by Mega Pharmaceutical, and Bio-Technical Corporations. Taking care of your own health via use of natural remedies, and food supplements to prevent ailments, will be increasingly not only frowned upon but illegal. (CODEX ALIMENTARIUS – 2001 in Europe, began this process)

As to claims regarding silver supply/demand fundamentals, worldwide demand has been at best steady, and supply has been robust, though longer term, demand is set to rise, as more and more electronic devices will use increasing amounts – Think: Munitions, Aircraft, Cars/Electric Vehicles, Solar Panels, Wind Turbines, Medicine, and Personal care products for silver’s Anti-viral/fungal/bactericidal properties, as well as Wearable Devices, and Silver Nano-fibres in clothing, Catalysts in chemical processes, and in plastics and paints – And the list goes on.

Whilst the high price in 2011 did indeed encourage higher production, as has been stated, some specialist pure silver mines and mostly silver mines (i.e. silver is the predominant ore in the body) with lead, zinc, plus other trace metals ( Gold, Uranium, etc et-al) increased production. BUT, If 70% of production is secondary (as a result of demand for industrial metals) and industrial metals demand is in a collapse, then this will therefore affect supply, and will over the next 2-3 years lead to a serious supply shortage especially IF the silver stackers continue their stacking, and the Apples and Googles of this world continue their technical developments, which should underpin price above the $12.50/oz level and more likely circa $13.50(ish) because production costs for all but the cheapest miners are in the $15-18 range.

Price has levelled out over the last six months after falling briefly to the $13.60 area (under £10) and leaving aside the price fix the other day, that took the silver fix price 84 cents lower than the spot price, leaving many commentators aghast, as it began rising to the current $14.20-$14.50 range, and is set to rise modestly until circa 2018/19 (IMHO), when I believe it WILL then begin to rise exponentially, as the supply glut diminishes, and the demand rises, working its way through the market. But also because of policies discussed below.

In the 1970s, the same thing happened over a shorter time frame… What was driving the markets then? DEMOGRAPHICS – just as today. The only thing then was most retirees only lived on average circa 3-5 years post-retirement. Those who worked in nice well-paid office jobs might have lived 20 years post-retirement, but your average factory worker didn’t. Those retirees, were born during the Edwardian period, i.e. 1901, to 1910.

These days, WE baby-boomers will last 30+years post-retirement (money & health care costs willing) That means any retirement monies, will need to fight inflation for at least that length of time.

Think back 30years, and try to remember what prices were like then… In Britain, an average week’s wage for a low level worker was about £60. ($150ish at exchange rates then) Today, even with average wages falling, the low wage workers are earning circa £300-£400 per week for a full week’s work of circa 35-40 hours. ($650ish)

So in 30 or so years, time your money will need to have 5-6x its current value to maintain purchasing power parity assuming similar inflation rates – Like YEAH, that’s gonna happen with $4trillion printed in the U.S. alone.. With negative interest rates in Japan introduced this week, and several Euro-land Central Banks doing the same over the last year, how long will your cash-pile last? It’s like Electronic Coin-clipping, which ultimately led to the decline and fall of the Roman Empire, as the Roman Guard, were paid in debased coinage as silver was removed little by little, making the coins less valuable over time.

And today, I heard of the final insanity. Central Bankers in Switzerland, are now considering the ultimate ignominy of paying everyone in the economy a monthly sum of money, as a supposed antidote to deflation. The Swiss are discussing paying $2,500 to every adult, and $750 to every child direct into their bank account. Keynes thought this might be the ultimate solution to the problem, of deflation. In fact, Ben Bernanke who reputedly said that in the final analysis…

…the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation…

and that is how he got his nickname – “Helicopter Ben” for his allusion to dropping money from helicopters. This madness will not end well.

As Prime Minister and subsequently – Lady – Thatcher so eloquently put it – “Eventually, you run out of other people’s money”, but the plan as mad as it sounds, echoes what Mike Maloney has said in several videos available on You-tube, when he said that the Central Banks, would do a “Helicopter drop” to attempt to kick-start the economy, when all it does is create ever bigger debt loads, which have to keep growing – until they don’t – and then the sky falls in. You can read a piece that explains it in more detail HERE.

So the answer is easy… Keep Stacking