Lessons From The Past (Part 2)

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This piece follows on from the previous one by Chris Mayer. It is by none other than Former Fed Chair – Alan Greenspan, who penned this long before he was bewitched by power, and began to follow his Banking pals requests for liberty to lend to their hearts content.

We all know where that ended.


by Alan Greenspan

Since the beginning of World War I, gold has been virtually the sole international standard of exchange.

Gold, having both artistic and functional uses and being relatively scarce, has always been considered a luxury good. It is durable, portable, homogeneous, divisible and, therefore, has significant advantages over all other media of exchange.

But if all goods and services were to be paid for in gold, large payments would be difficult to execute, and this would tend to limit the extent of a society’s division of labour and specialization.

Thus, a logical extension of the creation of a medium of exchange is the development of a banking system and credit instruments (bank notes and deposits) that act as a substitute for, but are convertible into, gold.

A free banking system based on gold is able to extend and thus to create bank notes (currency) and deposits, according to the production of the economy. Individual owners of gold are induced, by payments of interest, to deposit their gold in a bank (against which they can draw checks).

But since it is rarely the case that all depositors want to withdraw all their gold at the same time, the banker need keep only a fraction of his total deposits in gold as reserves. This enables the banker to loan out more than the amount of his gold deposits (which means that he holds claims to gold rather than gold as security for his deposits). But the amount of loans which he can afford to make is not arbitrary: He has to gauge it in relation to his reserves and to the status of his investments.

When banks loan money to finance productive and profitable endeavours, the loans are paid off rapidly and bank credit continues to be generally available. But when the business ventures financed by bank credit are less profitable and slow to pay off, bankers soon find that their loans outstanding are excessive relative to their gold reserves, and they begin to curtail new lending, usually by charging higher interest rates. This tends to restrict the financing of new ventures and requires the existing borrowers to improve their profitability before they can obtain credit for further expansion.

Thus, under the gold standard, a free banking system stands as the protector of an economy’s stability and balanced growth. When gold is accepted as the medium of exchange by most or all nations, an unhampered free international gold standard serves to foster a worldwide division of labour and the broadest international trade. Even though the units of exchange (the dollar, the pound, the franc, etc.) differ from country to country, when all are defined in terms of gold, the economies of the different countries act as one – so long as there are no restraints on trade or on the movement of capital.

Credit, interest rates and prices tend to follow similar patterns in all countries. For example, if banks in one country extend credit too liberally, interest rates in that country will tend to fall, inducing depositors to shift their gold to higher-interest-paying banks in other countries. This will immediately cause a shortage of bank reserves in the “easy money” country, inducing tighter credit standards and a return to competitively higher interest rates again.

A fully free banking system and fully consistent gold standard have not as yet been achieved. But prior to World War I, the banking system in the United States (and in most of the world) was based on gold, and even though governments intervened occasionally, banking was more free than controlled. Periodically, as a result of overly rapid credit expansion, banks became loaned up to the limit of their gold reserves, interest rates rose sharply, new credit was cut off and the economy went into a sharp, but short-lived, recession. (Compared with the depressions of 1920 and 1932, the pre-World War I business declines were mild indeed.)

It was limited gold reserves that stopped the unbalanced expansions of business activity, before they could develop into the post-World War I type of disaster. The readjustment periods were short and the economies quickly re-established a sound basis to resume expansion.

But the process of cure was misdiagnosed as the disease: if shortage of bank reserves was causing a business decline – argued economic interventionists – why not find a way of supplying increased reserves to the banks so they never need be short! If banks can continue to loan money indefinitely – it was claimed – there need never be any slumps in business. And so the Federal Reserve System was organized in 1913. It consisted of 12 regional Federal Reserve banks nominally owned by private bankers, but, in fact, government sponsored, controlled and supported. Credit extended by these banks is in practice (though not legally) backed by the taxing power of the federal government.

Technically, we remained on the gold standard; individuals were still free to own gold, and gold continued to be used as bank reserves. But now, in addition to gold, credit extended by the Federal Reserve banks (“paper” reserves) could serve as legal tender to pay depositors. When business in the United States underwent a mild contraction in 1927, the Federal Reserve created more paper reserves in the hope of forestalling any possible bank reserve shortage.

More disastrous, however, was the Federal Reserve’s attempt to assist Great Britain, who had been losing gold to us because the Bank of England refused to allow interest rates to rise when market forces dictated (it was politically unpalatable). The reasoning of the authorities involved was as follows: If the Federal Reserve pumped excessive paper reserves into American banks, interest rates in the United States would fall to a level comparable with those Great Britain; this would act to stop Britain’s gold loss and avoid the political embarrassment of having to raise interest rates.

The “Fed” succeeded: it stopped the gold loss, but it nearly destroyed the economies of the world in the process. The excess credit which the Fed pumped into the economy spilled over into the stock market – triggering a fantastic speculative boom. Belatedly, Federal Reserve officials attempted to sop up the excess reserves and finally succeeded in breaking the boom. But it was too late: By 1929 the speculative imbalances had become so overwhelming that the attempt precipitated a sharp retrenching and a consequent demoralizing of business confidence.

As a result, the American economy collapsed. Great Britain fared even worse, and rather than absorb the full consequences of her previous folly, she abandoned the gold standard completely in 1931, tearing asunder what remained of the fabric of confidence and inducing a worldwide series of bank failures. The world economies plunged into the Great Depression of the 1930’s.

In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold.

If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.

This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the “hidden” confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.


Alan Greenspan

In looking for the possible PIN, mentioned in Chris Mayer’s piece, I think I may have found it…

Which Bank Is Missing From This list of the Top 25 American Banks?

It’s the one that is hidden, and is going to go under – according to Lombardi Financial… actually the figures are provided by a government agency, but Lombardi’s interpretation is that this Bank is leveraged 349:1, and thus its demise is assured, and with no parachute this time around, the inevitable market gyrations will be huge…

Here’s a clue… Gordon Brown allegedly sold off 50% of the UK’s Gold to save this bank in 2001.


You can see the entire video Here:

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Lessons from the Past…(Part 1)

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After going back through some of the musings of the last fifteen years, that I’ve been following this slow motion car-crash of a world economy, I came across a couple of pieces that deserve to be read again, by the wider public.

The two items: one by Chris Mayer, and the other by non other than Alan Greenspan, former Federal Reserve Chairman.

Yes, THAT Alan Greenspan.

Chris Mayer examines the ideas of Jacques Rueff, the
eminent French economist and former minister of finance
to Charles de Gaulle.


by Chris Mayer

Jacques Rueff was accused of being a perennial prophet of doom – a doom that never seemed to arrive.

Rueff first began to voice his concerns in 1961, alerting the world to the dangers inherent in the world’s monetary system, then operating under the Bretton Woods agreement. It would take ten years before Rueff’s view was fully vindicated.

The international community must have shivered as Reuff evoked the haunting memories of the Great Depression. He compared the years 1958-61 to the years 1926-29, which many could still chillingly recall as the prelude to an economic disaster none wished to see again. As Rueff notes, “there was the same accumulation of Anglo-Saxon currencies in the monetary reserves of European countries, in particular France, and the same inflation in creditor countries.”

In the 1920s, the world had the gold-exchange standard; in the 1960s we had Bretton Woods. Both systems were monetary jalopies, jerry-rigged contraptions that could not hold together for long. The two convertible currencies, dollars and pounds, became reserve currencies, effectively held by European banks as reserves instead of gold.

Rueff uses the example of the years after WWI, when a large influx of US and British capital flowed to Germany and France. The new liquid funds entered these recipient countries and were held as reserves, since they could theoretically be converted to gold. In the previous Gold Standard days, these dollars and pounds would find their way back to the banks of issue and be redeemed for gold.
In this way the debt was settled. Gold was the money accepted as final payment; not dollars or pounds, which were essentially notes – promises to pay the holder in gold, which was real, as opposed to printed paper, which was not.

But in the booming Twenties this was not the case. So, France and Germany held dollars and pounds, and issued more of their currency and credit against these dollars and pounds. In the gold-exchange standard of the Twenties, only dollars and pounds were redeemable in gold – all other currencies were redeemable in pounds, which were in turn redeemable in dollars. Very confusing, I know. Why the Genoa experts recommended this is another sorry episode of political expediency, compromise and historical accident, which we will skip here or I may never get to my conclusion.

Such a system, only loosely tethered to gold, allowed considerable inflation. As Rueff noted, it was “probably one cause for the long duration of the substantial credit inflation that preceded the 1929 crisis in the United States.”

The ensuing collapse of this pyramid scheme was to figure prominently, in Rueff’s estimation, in explaining the birth of the Great Depression.

Anyway, the point of the comparison with the 1920s was that Rueff thought that, mutatis mutandis, the same thing was happening again in 1960. He noted how the international community held tremendous reserves of dollars against an ever-smaller base of gold reserves.
As in the 1920s, the US was able to expand its supply of dollars skirting the old discipline that would have shackled it under a gold standard. No final payment was required; dollars – lots and lots of printed dollars – were accepted as final payment. Again, this allowed considerable inflation of dollars.

Here Rueff gives us one of his most famous sayings, when he called this situation circa 1960 and the situation in the 1920s as creating a “deficit without tears”. He wrote that, “it allowed the countries in possession of a currency benefiting from international prestige to give without taking, to lend without borrowing, and to acquire without paying.” Rueff does not lay all this at the feet of the US. After all, these other creditor countries willingly accepted US notes in lieu of gold. Rather, Rueff calls it an “unbelievable collective mistake”.

The holding of vast dollar reserves by foreign creditors puts the credit structure of the US on notice. In the days of the Gold Standard, and even in the gold-exchange and Bretton Woods eras, this was more acutely felt because the gold stock of a country was visible, could be counted and was routinely reported. In the Sixties, Rueff noted that an uncomfortable gap was growing between the dollars outstanding and gold in stock that backed it.

Writing in 1960, Rueff felt that if foreigners “requested payment in gold for a substantial part of their dollar holdings, they could really bring about a collapse of the credit structure in the US.” Rueff called for a return to the old Gold Standard.

This article – in Le Monde – caused a stir. A rash of criticism followed, in which Rueff was chided as an old-timer, applying a quaint antique analysis to a modern problem. The Gold Standard was a thing of the past, one author noted at the time, like sailing ships and oil lamps.

The new iterations of money, though, did not represent an advance in man’s understanding of money. On the contrary, each new monetary wrinkle, each new invention, each creative expedient only cheapened it.

We will skip ahead a bit in Rueff’s chronology to 1965. By this time, Rueff had continued his attempts to persuade the monetary authorities to alter their course.
On 4 February 1965, Rueff would gain something of a public victory when General de Gaulle made his now famous speech on the need for gold as a basis for international monetary cooperation. Rueff finally had the ear of an important head of state; he had the ear of de Gaulle, who would eventually refer to Rueff as the “poet of finance”.

After giving a brief history of the international monetary scene beginning with the Genoa Conference, de Gaulle noted how the acceptance of dollars to offset balance of payments deficits with the US lead to a situation where the US was heavily in debt without having to pay. He correctly observed how the dollar was a credit instrument and recommended that the system be changed.

“We consider that international exchanges must be established,” proclaimed de Gaulle, “as was the case before the great worldwide disasters, on an unquestionable monetary basis that does not bear the mark of any individual country.”

“What basis?” continued the French head of state, “Actually, it is difficult to envision, in this regard, any other criterion or any other standard than gold. Yes, gold, which does not change in nature, which can be made either into bars, ingots, or coins, which has no nationality, which is considered, in all places and at all times, the immutable and fiduciary value par excellence.”

Rueff pressed on with renewed vigour and the US monetary situation continued to deteriorate with accelerating gold losses. Yet, negotiations continued, as Rueff says, “at a snail’s pace on a volcano, which may erupt all of the sudden.” While the experts dallied, the volcano belched and smoked all around them. That a crisis was brewing was now obvious even to the sceptics.

European nations that had been accumulating dollars at a pace of $1-2 billion per year began liquidating them – more than $2 billion were liquidated inside the twelve months of 1965 alone. By 1970, there was $45 billion in dollars held by foreigners against only $11 billion in gold stock.

At this point, the ending was inevitable. Though there were some changes made to the monetary structure in the waning days of dollar convertibility, it would finally expire in the summer of 1971 when Nixon brought the Bretton Woods agreement to an end by taking the US entirely off any kind of Gold Standard.

I think there are many ways in which Rueff’s criticisms to the monetary systems of the ’20s and the ’60s apply to the monetary world of today. There are many observations that we can take from this tale and apply to our current situation.

For one thing, note that the inflation of money and credit was able to continue for a long time after Rueff’s initial diagnosis that a crisis was brewing.  Like any bubble, the pin is hard to find. Though he could not point to when the crisis would break, he thought that any number of events could trigger it – a continued weakening of the balance of payments deficit, some banking or financial incident, some political event, a mere shift in opinion.

Any of these could effect the “subservience of dollar holders and induce them to request conversion of their dollar holdings in whole or in part, even at the risk of antagonising the Washington authorities.”

In the end, the maths simply became too stark to ignore.


Chris Mayer

Things are getting messy – Bankers and Politicians unite.

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Since my last post, the middle-east has got a little more messy. Russian military are now helping the Assad regime (Read: – the Syrian Government) to fight the numerous factions now trying to overthrow Basher Al-Assad – some supported by the U.S.

The U.S. media machine has come out in full force against this support by Putin’s military, as can be seen in this video.

But, with the “accident” of 1st November, when the Russian aircraft fell from Egyptian skies, maybe a new chapter in this messy situation has begun.

There are those who believe the inevitable result of the investigation will be that the plane was brought down by an organisation hostile to Russia’s involvement in the middle-east and Syria’s government.

Now, of the actors in the middle-east – Iran, Saudi-Arabia, the U.S., Islamic State (ISIL/IS), Al-Nusra, Al-Qaeda, and the other militants such as the Free Syrian Army (FSA), who would gain most?

A spokesperson for the Egyptians has already dismissed the notion of an Islamic group based in Egypt being involved, but given that the democratically elected Egyptian Islamic President was removed from office, by military forces, is that outside the bounds of possibility?

If we know anything about the Banking Cabal, we know that politicians, need money to pay for wars for political ends, and Bankers don’t really care why they need it, as long as there’s a profit in it, and we increasingly have currencies that can be just “magicked up” out of thin air, making political intervention, that much easier and that much more profitable for the Bankers.

There are those who feel the end result of all this meddling, will inevitably lead to WWIII, and some even, that it has already started – as can be seen in the you-tube videos above and below. (published in May and October 2015) And even that a third world war, has been pre-ordained ever since 1871, when Albert Pike allegedly wrote a letter to Mazzini, dated August 15, 1871, in which he outlined his thoughts.

(though claims it was in the British Museum have not been verified – see the comments on this page: http://www.infiniteunknown.net/2012/02/17/albert-pike-predicted-three-world-wars-in-1871/ )

But the result of all this political meddling, is seen in increasingly larger distortions in financial markets, and resource wars can lead to hot wars, and hyper-inflation, which if you remember your history, was the fuel that Hitler needed to begin his military build up in the 1930s.

Mike Maloney who has monitored the financial system in the U.S. since the early 2000s, published a recent video to show how these political decisions are only making things worse as a result of FED manipulations as evidenced here.

We have to assume therefore, that this is either naiveté, ignorance, ineptitude, OR we must assume, that these decisions are for their own political agenda. Any other assumption is outside the bounds of possibility.

And America’s involvement in the middle-east, has been less than successful – if you judge success by nations working together to solve problems, but what IS the problem?
Answer: Resources.. and control of them. In other words. Oil! (and Gas.)

Which suggests that the world is quickly teetering towards the financial reset that would eliminate the bankers and this debt and release the Central Banks to raise rates without causing a global downturn of 1930 proportions.

But the rising stars in the world’s economy, also want a bigger say in affairs – see this: http://www.nytimes.com/2014/02/05/opinion/the-imf-needs-a-reset.html?_r=2

On a different, but related note, Bix Weir suggests that the recent Glencore price fall is due largely to these financial manipulations and here you can hear his thoughts on what might happen as a result.

And as is mentioned in the video, one of the people accused of financial crime, was finally pardoned by Bill Clinton, just before he left office, and who went on to found Glencore.

Lastly, Bloomberg on 3rd Nov, 2015, released by Julie Hyman, said lower U.S. factory order numbers were down 1%, slightly worse than expectations of 0.9% which would suggest, that all this additional debt being produced around the world is still unable to stifle the larger demographic trend I have often spoke about leading to lower global demand.

And that is just one of the reasons you need to buy silver, gold and crypto-currencies. If you want other reasons, here’s, Alasdair Macleod to explain why…


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Silver Shortages?

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According to reports, the demand for silver from retail investors is driving the refiners to produce 24/7. The price has been slammed down by those behind the scenes in the derivatives markets, but according to the CEO of Sunshine Mint – Tom Power, he’s running at full capacity, and has already turned out 75 million ounces in 2015 so far, three times the level demanded in the last shortage year of 2008.

This has been exacerbated by “a major mechanical production issue” at the Royal Canadian Mint, who contracted with Sunshine, to produce the RCM 10oz silver bars.

Also according to reports, the Fund Manager Dave Kranzler, of Investment Research Dynamics Inc., has speculated that the U.S. Mint, is diverting output to both China and India, to satisfy massive demand there too.

BUT, also the Sunshine Mint, has already sold forward its entire productive capacity for the rest of 2015, and is now not accepting further orders.

Does this mean the price rise is imminent, that I have speculated about in several posts?

Perhaps it has already started, as the price has rebounded slightly, reaching $16.00 several times in recent weeks, and bullion dealers are already charging premiums as high as 30% over spot on bulk orders for less than 1,000 ounces, and even $4.75 per ounce for orders over 5,000 ounces…

Of course this might be coin dealers taking advantage of a short-term rise in demand, having bought silver slightly higher up in price, to get coins out to retail buyers without selling at either a loss, or a lower profit margin than they want, (or need?).

However, the Managing Director of the IMF, Madame Lagarde, has intimated that before 2017, we are likely to have another recession. She has avoided blaming China, which suffered its own slowdown in recent months, for the expected downturn, and the financial commentators have also supported this, partly because India is growing at a robust clip,which according to the Times of India, is forecast to grow at 8% p.a.

To be honest, I have long felt that the rise in precious metals of which I have often spoken, is unlikely to occur before the demographic timebomb that reaches its crescendo in the period 2017-2023, has begun falling. Then all that money that has been pushed into the system, will begin leaking into the economy in circa 2018-19.

However, it could also be the start of the third stage of this precious metals Bull-market, that I have been waiting patiently for ever since I began watching this financial crisis back in 2001. That happened to coincide with my being made redundant, for the third time within 28months, as the Software Company I worked for was wound down, post the Tech fallout in the March of 2000, and the parent Company went from having $4billion in cash reserves, to having the equivalent in debt as the companies they’d bought in the height of the tech-boom failed to realise the income that some thought they would and valuations collapsed.

It was then that Alan Greenspan, began juicing the economy, lowering interest rates to 1%. It was Greenspan’s reference to “irrational exuberance” in 1996, that meant the good chairman raised interest rates to their peak of 6.5% in May 2000, before the economy stalled, and starting January 2001, over the next two years interest rates were lowered in 12 baby steps to June 2003. This provoked the housing boom, as baby-boomers saving for their retirements bought buy-to-let property pushing up an already over-heating market due to the shadow boomers – the children of the baby-boomers – who began moving into starter homes, and trading up in their droves.

Of course the Banks, played along on this wild ride providing “Liar Loans” on the back of dubious proof of income – what did they care if people wanted to borrow 6,8,10 times their income, pushing up property prices still further, into the realms of fantasy. By 2006, prices at the high end were reaching the stratosphere.

And then, when the banks, having loaned out this toxic debt, packaged it up into parcels, bribed the ratings agencies to give it a “Triple A” rating, and then sold it on to unsuspecting pensions companies as Collaterised Debt Obligations – CDOs, but knowing it was bound to fail, then shorted the market to make a killing on Mortgage Backed Securites (MBSs) as they did so.

Hank Paulson, who went on to become Treasury Secretary, after he’d made his millions with his Bank Bonuses after serving as Chairman and CEO of Goldman Sachs until 2006, then begged the President and Federal Reserve Chairman, to bail his sorry ass out, and rescue the banks, post Bear Sterns, and after the weekend when it was decided to let Lehman Brothers fail and the Credit Crunch got under way.

In all, eight major U.S. financial institutions failed – Bear Stearns, IndyMac, Fannie Mae, Freddie Mac, Lehman Brothers, AIG, Washington Mutual, and Wachovia — six of them in September alone, yet not one of the senior excutives of any major financial institution, has been charged with malfeasance of any sort. Of course this side of the pond, Northern Rock went under, and Lloyds-TSB, and RBS (Royal Bank of Scotland) along with other major financial institutions across the continent, were supported by government’s access to the nation’s credit card.

Were the actions of these banks’ loans officers not monitored by their supervisors? Were the supervisors not monitored by their managers? Were the managers not monitored by their executives? And finally, were the Banks not monitored by the regulators?

Whose heads then should roll?

After $4 trillion was pumped into the American Financial system, with the Troubled Asset Relief Programme (TARP) and then QE1, QE2, Operation Twist, and lastly QE3, which put $85 Billion a month in for nigh on 18months. But not forgetting the $15 Trillion, that was pushed through to Europe’s Banks and Financial Institutions via the Federal Reserve of New York, and RBS., or the heavy hand of the Federal Reserve, when the BLICS – Belgium, Luxembourg, Ireland, Cayman Islands and Switzerland, mysteriously bought Treasurys as the QE programme came to an ignominious end after the taper tantrums, raising their Bond holdings from $151Billion, to $818 Billion. (Source: Treasury (TIC) Federal Reserve)

And through currency swaps, these nations are helping the Federal Reserve export QE. Yet, as Madames Yellen and Lagarde admitted this week another recession looms on the horizon, and so does QE4 according to Bloomberg.

When that does happen, I wonder what that will do for Silver and Gold purchases? Or the value of crypto-currencies such as Bitcoin.

For those still not sure what crypto is all about, here’s a couple of videos.

– Bitcoin, the fundamentals

– Why Bitcoin worries the Bankers.


As many of those contributors to the above videos say, part of the reason for the rise of Bitcoin, is because of overly regulated markets, and governments increasing involvement in markets via central banks.

As government involvement has increased, so has the volatility, as decisions are poured over, by the markets as soon as announcements are made. And volatility threatens markets, because it frightens people away. They can’t make investments, when their lives are guided by making a living, and investing the excess (savings). People need relative stability.

One of the strengths of the free market is that each purchase and sale decision sends a signal to the markets. Is the deal price above or below other prices for similar products, thus sending a signal to other participants in the market. This leads to relative stability. Increases in prices, sends a signal to entrepreneurs to produce more of something, whilst a fall in price sends the reverse signal.

When governments and central bankers get involved, their heavy hand pushes markets this way and that, and those on the inside get the information before the rest of the market meaning they get to benefit. That’s why Bankers’ power has risen exponentially since the dawn of the Federal Reserve in 1913.

For those of you concerned about your privacy, there are tools that can limit the capability of the industrial recording of your on-line inter-actions.

Whilst we don’t advocate nefarious activity, we also believe in the Magna Carta principles enshrined in law in 1215AD, that required a “Writ” to be produced, making an accusation of wrongdoing, “Habeus-Corpus” and for a conviction to be made, there had to be undeniable proof laid before 12 of the wrongdoer’s peers, the basis of our jury system.

Without the government services trawling the internet and recording everything. You should be innocent until proven guilty, and mass surveillance serves no-one’s interests, least of all the wider public.

In a world where almost every activity can have political overtones, theoretically, any action could be used against you in the future.

You have been warned.

The following link, leads to a free download page, of a browser, that allows privacy. Yes there are restrictions, but it is a lot better then having nothing.


And for those who wish to go down the rabbit hole, and disappear from view, there’s a whole new operating system, that can be booted from a DVD or Flash-drive.


We receive no compensation for this service, but we’d appreciate it if you like us, or link to us.

And if you find this info useful, entertaining or informative, and want to help us you can donate, Bitcoins to us…

at: 1DfUtUmn7JMcDVxdzWuUiiiUaqxw2DLj2e

– whatever you feel we are worth.

After posting this, I came across this link, which shows the extent of the government largesse on behalf of the taxpayers of the U.S….



When the money (Gold) runs out…

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As governments have used their ammunition in fighting to retain power for their Fiat currencies, the price of Gold and the Exchange Traded Product (ETP) or Exchange Traded Fund as it is more commonly called for Gold – the GLD has fallen.

But there comes a time in every charlatan’s performance when those watching no longer believe in the power of the magician pulling the strings behind the scenes.

In this case the arm of power behind the throne – the Central Banks – have sold or leased much of their Gold to Bullion Banks, who have sold this gold on the markets as their futures contracts came to an end, and the buyers took delivery, rather than as might have happened previously – settled in cash – it is increasingly obvious that as the number of contracts increase and more and more gold heads east to China and India, and north to Russia, and to numerous other central banks worried about their gold held in U.S. vaults, and have begun to increase their holdings, and repatriate their gold from overseas vaults, that it couldn’t go on forever.

And then this piece caught my eye…


So what will happen when the gold does really run out?

Initially, I suspect Bankers will settle for cash, but probably have to pay a premium to do so, as those who own the metals contracts extract their pound of flesh. This will probably be under the radar, at first, but it will eventually leak out, and as more and more people have to settle for cash, the premiums will rise. This will feed through into the published prices, as the disconnect between the paper price and the settle price increasingly becomes obvious.

According to figures I’ve seen there are between 100 and 200 contracted ounces, for every real ounce in existence. This is how the Bankers came to dominate the world and its economies. The left hand not letting the right hand know the truth or what it was upto.

Fractional Reserve Lending meant lending out upto 10times the amount held on deposit. Of course this assumes they hold ten per-cent in reserve. BUT in the last ten years, those same bankers have had as little as 3 per-cent and that means they were lending out in excess of 30x their reserves. And that is the reason for the boom, and the bust when we had our Bear Sterns and Lehman moments.

If the Bankers persist in this lending and futures contracts binge, then it will end in disaster for the banks (and us) but at that point, the price of gold – both official and unofficial, will explode to the upside.

Of course in the meantime, as Harry Dent has stated on several occasions, the price may fall in the meantime, as first deflation due to demographics, and his convergence waves take hold, but as has been mooted on Bloomberg today, perhaps QE4 is but a printing press away?

And if it happens, when all that money leaks into the economy?

Can you say Boom?

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Digital Currency – The Last Refuge of a Banking Scoundrel?

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In the news over the weekend, we heard the story that Andrew Haldane, the chief economist and executive director for monetary analysis and statistics at the UK’s Bank of England, has tried to run up the flagpole, the prospect of a digital only currency. America too is discussing this.

Now, why would a Banker do this?

What is a Bank? Primarily it stores savings (Capital) for its customers, and loans out this money (well we’ll call it money for now) to businesses and others to finance the development of new products and services, which add value, assist in growth, employ people, and spread prosperity throughout the nation (or currency union).

However, when a country has excess savings, these are liabilities on the bank’s books, and has been touched on several times throughout the time of this blog, these have to be paid back. However, there may be times when there are fewer good opportunities to loan money out for the banks, with huge amounts of money sitting in savings and today is one such time.

The driving force behind this excess savings is demographics. Demographics is the study of populations. The studies look at birth, and death rates, gender etc, and at how those births and deaths impact the society, and the economy. Where we build schools, hospitals, and even infrastructure like industrial parks.

After the second world war, all those returning service personnel got busy making babies. It happened in America and the Pacific region in ’47, it happened in Europe in ’46, as those two major conflagrations came to an end.

Twenty years later in the sixties, those babies, now young adults drove the swinging sixties, and Carnaby Street, the music and fashion scene as they all began doing what young people do. The children of those people reached maturity 20 years later, in the 80s and early 90s, driving Punk music, New-wave and the New Romantics, the “Acid house” scene, and the Brit-pop and Indie scenes of the 90s. This was the shadow boom as you might call it. These children of the baby-boomers are driving the economy now, as they reach their 40s, and lead consumption spending, but soon this too will slow.

Of course the baby-boomers as they are known, those born after WWII, are now frantically saving for their retirements, buying buy-to-let properties, and investing in their pension funds and therein lies the rub. All that capital going into savings has led to several booms; in Technology, in Housing, and since the 2009 credit crunch, the stock-markets in general. But since early 2012, the baby-boomers have been retiring in droves at the rate of circa 8-10,000 people per day, in the U.S. alone, and because of the low interest rates, and the drive to “save the economy” the Central Banks have loaned the people, and their representatives (governments) huge amounts of money.

America has an $18 Trillion public debt. Britain is in an even worse situation (person for person) with a public debt of £1.4 Trillion ($2Trillion+) And those Bankers are now worried that they might not get their money back.

And what IS money? When money was just Gold and Silver, the Bankers got rich, by lending pieces of paper, that were exchangeable for Gold and Silver, that they had mysteriously created out of nothing more than paper and ink. This fractional reserve lending, grew their power, and grew their immense wealth.

The Houses of Rothschild, Morgan, Seif, Rockefeller and others who ran or owned Banks became the powers behind the thrones of more countries than could be imagined.

Digital Currency Drawbacks?

If we can just take our money “out of the banks”, this should force Bank Presidents to be prudent with it, or, as we saw with Northern Rock, we get a run on the Banks. When our money (or rather currency) is just digits on a Bank Balance sheet, we cannot. This means Bankers can fund whatever they want, without worrying about us cutting off their drug supply.

But a purely digital currency has several other drawbacks too.

With a purely digital currency, EVERY transaction will register on a computer somewhere. Tax Authorities will therefore be able to trace every transaction – And TAX it. That tax goes to pay salaries of government employees, but it also pays for those in politics, who may not always disclose where that money goes: Funding Wars overseas, providing incentives and making deals in private rooms under the guise of “National Security”, and it pays off the loans that bankers make to governments – all made possible by greater tax taking.

But a further worry is that the account details of every person will also need to be held somewhere too, making the prospect of 1984 as written about by George Orwell a frightening reality.

The informal economy disappears too.

Tipping a waiter, a Cabbie, a Pizza Delivery boy or even the Bin-man come Xmas time, becomes almost impossible. The loss of these ways of showing appreciation, potentially makes poor service a given, as with no financial incentive to provide excellent service, these people may offer mediocre service at best, or even leave the industry making many restaurants forced to pay higher wages forcing up costs, and thus reducing the number of visits per week, per month or per year. Giving someone a £50 note for a Birthday present, or Xmas present becomes impossible too. Teenagers everywhere will suffer, and grand-parents will actually have to get to know them and find out what their kids actually need – or want – and they may get a few unusual requests or worse…

But, the one big drawback for everyone, is not zero interest, it is negative interest rates. Which means charging you to hold your money. Anyone with savings in an account, or perhaps as the result of a house sale, becomes just another potential donor to a Banker’s lifestyle.

BUT the ultimate issue is one of liberty and trust. A business deal of old, demanded nothing more than the money, and a handshake. This relied on trust of the money, and the person. In a digital world, all trust comes down to is your credit rating, and your government granted identity number. Perhaps ultimately your radio frequency identification (RFID) chip implanted under your skin, so you don’t even need to carry a bank card.

But it also opens up a world of potential to deny you access to things the government thinks you shouldn’t see, or get access to. In effect WE become slaves to government, and the people who pull their strings, instead of government working for us. And that is the most important reason, why it should NEVER be considered the only way to pay.

“Bank paper must be suppressed and the circulation restored to the nation to whom it belongs.
“The power to issue money should be taken from the banks and restored to congress and the people.
“I sincerely believe that banking establishments are more dangerous than standing armies.
“I am not among those who fear the people. They and not the rich, are our dependence for continued freedom. And to preserve their independence, we must not let our rulers load us with perpetual debt.”

Thomas Jefferson – Former President of the U.S. of A.

And in his farewell address to the people, March 3, 1837, President Andrew Jackson solemnly warned the people against the Banker’s power, after the recent financial crisis; as the “Credit Crunch” is still ringing in our ears, it appears VERY apposite

“We are not left to conjecture how the moneyed power, thus organized, and with such a weapon in its hands, would be likely to use it. The distress and alarm which pervaded and agitated the whole country, when the Bank of the United States waged war upon the people in order to compel them to submit to their demands, cannot yet be forgotten.

The ruthless and unsparing temper with which whole cities and communities were oppressed, individuals impoverished and ruined, a scene of cheerful prosperity suddenly changed into one of gloom and despondency, ought to be indelibly impressed on the memory of the people of the United States. If such was its power in a time of peace, what would it not have been in a season of war, with an enemy at your doors.

No nation but the freeman of the United States could have come out victorious from such contest; yet, if you had not conquered, the Government would have passed from the hands of the many to the hands of the few; and this organized money power, from its secret conclave, would have dictated the choice of your highest officers, and compelled you to make peace or war, as best suited their own wishes. The form of your Government might for a time have remained, but its living spirit would have departed from it.”
(Read more at: The Coming Battle 2013 )

And Finally, if the above comes to pass, what will our International trading partners make of a currency, that can be conjured up on a computer by a banker? If China sells us Cars, Computer Equipment, Smart-phones etc, and all they get in return is a ledger entry on a computer, what confidence will they have that those digits will be worth anything, when they decide to spend them, possibly years later. What would you do if you were China?

If we are ever to have international finance based on trust, then there is only one solution – currency must be in the final analysis, backed by precious metals. and those metals represent true value, even if their value may vary from time to time – but Gold is still gold, and Silver is still silver. Platinum, and Palladium too are useful – usable in catalysts, jewelry and other uses. Silver is usable in 10,000 uses and rising, and its value and availability are about to get a whole lot rarer, and a whole lot more expensive as a result.

So if this does come to pass, who is really in charge in the UK? The Government? or its Financiers?

If you want to move your money out of the Bankers’ way? Then Click Here to get started.
After posting this I discovered a video clip by Max Keiser of the Keiser Report, which mentions the speech by Andy Haldane. Let me know what you think below.


Chinese Torture?

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Anyone over 50 (at least in the UK.) will no doubt have learned of so-called Chinese Water Torture, which was discussed in the playgrounds of schools the length and breadth of the country during the 50s, and 60s – perhaps this misplaced discussion was just childish minds being over imaginative, or the result of the war films that were the standard fare of the era, or perhaps just the result of propaganda by a biased media, or just by ill-educated professionals, who had been mis-informed and we juniors picked up on it – we can but speculate.

According to the stuff of legend, this involves suspending a bucket or other recepticle full of water in which a small hole has been punctured, such that water will drip out at a fairly consistent rate over a fairly lengthy period of time.

The torture victim, is placed under this recepticle, and strapped in a fixed position. The slow but monotonous dripping, at first appears to offer no threat to the intended victim, but over time, first becomes an inconvenience, then a minor irritation, then an annoyance, then a major irritation, then downright torturous.

The slow drip, drip, drip, ratchets up the pressure on the intended victim…

Applying the Torture?

So, this analogy brings me to the reason for this tortuous piece.

As I wrote some weeks ago, China informed the world, back in May, that they had improved their Gold holdings over the previous six years from April 2009 at 1,065 tonnes to 1,658 tonnes (allegedly – since many commentators think this was significantly under-reported)

According to reports, China announced it had purchased an additional 19 tonnes in July, but news released a few days ago, says they have also now added an additional 16 tonnes in August. This now brings their total to 1,693 tonnes, and according to silverdoctors.com, they’ve imported “a whopping 112 tonnes” so far in the first half of this year from the LBMA, up from the 110tonnes in the whole of 2014.

So is this “Drip, Drip” of additional purchases the equivalent of the torture method mentioned earlier for the FEDs?

China sold some $94 Billion in Treasury Bills, which might also be sending a signal to those in the non-BRICS Banking world.

And according to Alisdair Macleod, who referenced a Zero Hedge article, he said that if nothing else, it confirms the gold market is plagued by disinformation, not limited to Comex. Besides the conflict between the bears in the futures market and the physical bulls, on one day we are told of record Indian gold and silver imports at 126 and 1,400 tonnes respectively for the month of August (Koos Jansen), and of Indian gold demand “remaining weak” (HSBC). The former is a hard number, the latter an opinion, but it is opinions that are quoted most in the mainstream market commentaries.

Also in August, Chinese public demand reported on the Shanghai Gold Exchange totalled 265 tonnes, so between India and China identified demand exceeded the world’s monthly mine output by about 56% – Over half. Given anecdotal evidence of increasing physical demand from elsewhere in Asia and also in western markets by the general public, the drainage of physical gold previously available to cover futures and forward contracts, as well as unallocated bullion bank accounts is at very high levels. No wonder there is so little registered gold in the Comex vaults.

Alisdair Macleod September 3rd 2015, interview…

Now we hear via Jim Willie interviews, that the Tianjin explosion, may MAY, have been a Langley (i.e. CIA) inspired or managed incident. Remember, this was in an industrial park, port, and the home of a chinese super-computer, which according to JW, managed not only financial transactions of the emerging Chinese Banking and Financial Services Industries, but Chinese Military, and with a footprint of 1,000 square feet is HUGE. Within days of the explosion, the whole of the North-East of the U.S. Airline databases went down. Was this a revenge attack by Chinese hackers? We shall never really know, but we can speculate.

As things stand, the British, German and American Financiers, who essentially rule western industry and politics, will have control wrested from them, when the Chinese wrest control of the Gold market, and Precious Metals are priced in Yuan/Renminbi (RMB) and Chinese currency will be required in most trade deals, and many east-asian nations may, MAY only accept Renminbi for their products, and that will help seal the fate of the dollar.

As things stand now, 32 nations have currency swap facilities with China in Chinese currency, as I suggested some months ago, when Saudi-Arabia began discussing oil deals with China, as a way of balancing the emergence of the changes in the oil markets which have driven down oil prices largely because of fracking, and deep water production made possible by cheap money loaned out in the form of Corporate Bonds, we may see oil wars, but therein lies the problem.

As oil prices have collapsed from their 2007 high of $147/barrel, those corporate bonds, and finance raised to drill for shale oil, will come due, and many of those companies, are now struggling to make money. According to Jim Willie, the oil bond market collapse could be greater than the sub-prime crisis, that exploded onto our screens in 2008.

And at this particular point in time, the world credit markets stand on $700 TRILLION worth of derivatives. When the derivatives market collapses, perhaps as a result of those oil bonds, we could be seeing the end of the dollar empire, and thus the end of Western hegemony.

But this is of course all speculation…

However, when this collapse happens those who have savings in Banks, Savings in Stocks, Savings in Pension Funds, IRAs, SIPPs and bonds, will all suffer. When all those savings – excess savings as “Conant” once in the late 1890s called them, sought out productive assets overseas, in the round advocating a dollar Empire in the process, rush for the exits, from assets with counter-party risk, to assets with none, then the long awaited price reset in Precious Metals will begin.

And this price reset, will cause a spike in metals prices as many of those manipulators, who are currently shorting the price using leveraged shorts in such products as ETFs, ETPs, Options, Covered Warrants, CFDs, Spread-Betting accounts, and Binary options accounts, will all be rushing for the exits at the same time.

And where will the carnage lead them? To the one asset class with no counter-party risk.

Have you got yours yet? The sand in the hour-glass may be fast running out, as reports emerge of severe shortages in small denomination coins and bars. 100 Kilo bars are still plentiful in Silver, and larger bars. This may be a fabrication issue – i.e. refineries struggling to keep up with coin and small bar demand, or it may be that there is an emerging shortage of silver in the supply chain. If you were a miner, would you sell your ore into a falling market?

Remember, no-one will sound the bell identifying that now is the time to act. If you haven’t already begun to prepare, time may be fast running out.

It will be prudent too if Jim Rickards and Bill Bonner are correct, who have been following this inevitable crisis from its inception in the 1970s to its current conclusion, advise us to take currency from our bank account, and keep it outside the banking system, while we still can. About a month’s currency should suffice.

The banking crisis in Cyprus, in 2013, and Greece in 2014/15 were just stepping stones on the way to this one. Legislative changes forcing European Banks to seize their depositors’ currency rather than hit tax-payers for another bailout have been put in place. The digits on the banks ledgers are now theirs, not yours. You have been warned.