Energy

Why We Need To End The Power Of… The Banks.

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Bitcoin

The whole of not just American life, but the lives of those in the West, is predicated on cheap energy, and lots of it. Energy is a substitute for human Labour, so its cost and value, should reflect the human labour required to produce it, and of course the cost of wages that is provided by that labour. But, when you have a political and economic system, that means that SOME people can get that capital essentially at ZERO cost, because they have access to the printing presses that the major Central Banking institutions provide, you skew the system, and not in a good way.

The US is spending more than it produces, and using fraudulently produced currency, to pay the difference…
In 2007, Agora Finance stated:

“Our current military adventures in the Middle East, are predicated largely on keeping the old arrangements going. We’re in Iraq because we built Dallas, Atlanta, Orlando, Houston, Phoenix, Los Angeles, and Long Island the way we did, and the only way we can hope to keep these organisms going even a little while longer is to keep open our oil supply line to the Persian Gulf. The truth is, these organisms will not survive the oil-scarcer future in the form they’re in. The American people need to come to grips with this. No amount of chest-thumping around the globe will change it. In any case, sooner or later we’ll exhaust our military and bankrupt ourselves trying to project our influence into these places overseas – meaning, sooner or later we will withdraw back into our own hemisphere. I wonder if Wolf Blitzer of CNN will ask any of the candidates, what happens then?”

“A basic rule of reality is that you can’t get something for nothing. Sooner or later the financial sector will have to come to grips with this rule, meaning that that debt is not wealth and the revolving reallocation of debt in the form of credit does not amount to wealth creation.”

Of course the money that these Bankers create, funds the political processes that promote the interests of Capital over Labour, when in reality, Capital is inert. It is only when combined with Labour, that it can generate wealth. The trouble is, those in power for the last 40 years, have duped the rest of society, and I count myself amongst them, into believing that only by enabling and protecting the rights of capital, can we have a just society, and a bustling economy. I now realise that it was just a ruse, so that the Bankers could dominate the planet… WE are ruled by the Bankers

How so?

Read On…

QUOTES ON BANKING AND THE FEDERAL RESERVE

 

“By this means government may secretly and unobserved, confiscate the wealth of the people, and not one man in a million will detect the theft.”

– Lord John Maynard Keynes, “Economic Consequences of Peace”

“The eyes of our citizens are not sufficiently open to the true cause of our distress. They ascribe them to everything but their true cause, the banking system; a system which if it could do good in any form is yet so certain of leading to abuse as to be utterly incompatible with the public safety and prosperity.”

– Thomas Jefferson

“The modern banking system manufactures money out of nothing. The process is perhaps the most astounding piece of sleight of hand that was ever invented.”

– Major L.B.Angus

Congressman Patman: “Mr. Eccles, how did you get the money to buy those two billions of government securities?” Eccles: “We created it.” Patman: “Out of what?” Eccles: “Out of the right to issue credit money.”

– Testimony of Marriner Eccles, Chairman of the Federal Reserve Board, before the House Banking and Currency Committee, 1941

“Every circulating Federal Reserve Note represents in actuality a one dollar debt to the Federal Reserve system.”

– Money Facts, House Banking and Currency Committee

“Every Congressman, every Senator knows precisely what causes inflation…but can’t, won’t support the drastic reforms to repeal of the Federal Reserve Act because it could cost him his job.”

– Robert A. Heinlein, Expanded Universe

“Every effort has been made by the Federal Reserve Board to conceal its powers, but the truth is that the Federal Reserve System has usurped the government. It controls everything in congress and it controls all our foreign relations. It makes and breaks governments at will.”

– Louis McFadden, Chairman of the House Committee on Banking and Currency

“I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a monied aristocracy that has set the government at defiance. The issuing power of money should be taken away from the banks and restored to the people to whom it properly belongs.”

– Thomas Jefferson

“If all the bank loans were paid up, no one would have a bank deposit, and there would not be a dollar of currency or coin in circulation. This is a staggering thought. We are completely dependent on the commercial banks for our money. Someone has to borrow every dollar we have in circulation, cash or credit. If the banks create ample synthetic money, we are prosperous; if not, we starve. We are absolutely without a permanent money system. When one gets a complete grasp upon the picture, the tragic absurdity of our hopeless position is almost incredible – but there it is. It is the most important subject intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it is widely understood and the defects remedied very soon.”

– Robert H. Hemphill, Federal Reserve Bank of Atlanta

“Most Americans have no real understanding of the operation of the international money lenders. The accounts of the Federal Reserve System have never been audited. It operates outside the control of Congress and manipulates the credit of the United States.”

– United States Senator Barry Goldwater

“The financial system has been turned over to the Federal Reserve Board. That board administers a finance system by authority of a purely profiteering group. That system is private, conducted for the sole purpose of obtaining the greatest possible profits from the use of other people’s money. This (Federal Reserve) Act establishes the most gigantic trust on Earth. When the president signs this bill, the invisible governments by the monetary power will be legalized. The people may not know it immediately but the day of reckoning is only a few years removed, the worst legislatives crime of the ages perpetrated by this banking bill.”

– Charles A. Lindbergh, Representative, MN

“Some people think the Federal Reserve Banks are the United States government’s institutions. They are not government institutions. They are private credit monopolies which prey upon the people of the United States for the benefit of themselves and their foreign swindlers.”

– Congressional Record 12595-12603 June 10, 1932

“The issue which has swept down the centuries and which will have to be fought sooner or later is the People vs. The Banks.”

– Lord Acton, Lord Chief Justice of England, 1875

“The central bank is an institution of the most deadly hostility existing against the principles and form of our Constitution. I am an enemy to all banks discounting bills or notes for anything but coin. If the American people allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all their property until their children will wake up homeless on the continent their fathers conquered.”

– Thomas Jefferson.

“The Federal Reserve Banks are not federal instrumentalities.”

– Lewis vs. United States 9th Circuit 1992

“The Federal Reserve banks are one of the most corrupt institutions the world has ever seen. There is not a man within the sound of my voice who does not know that this nation is run by the International bankers.”

– Congressman Louis T. McFadden

“The Federal Reserve bank buys government bonds without one penny.”

– Congressman Wright Patman, Congressional Record, Sept 30, 1941

“The few who understand the system, will either be so interested in its profits, or so dependent on it’s favors, that there will be no opposition from either class.”

– Rothschild Brothers of London, 1863

“The regional Federal Reserve banks are not government agencies. …but are independent, privately owned and locally controlled corporations.”

– Lewis vs. United States, 680 F. 2d 1239 9th Circuit 1982

“This Federal Reserve Act establishes the most gigantic trust on earth. When the President Wilson signs this bill, the invisible government of the monetary power will be legalized. The worst legislative crime of the ages is perpetrated by this banking and currency bill.”

– Charles A. Lindbergh, Sr. , 1913

“The Federal Reserve is answerable to no one.”

– Ronald Reagan

“You are a den of vipers and thieves. I intend to rout you out, and by the Eternal God, I will rout you out. If the American people only understood the rank injustice of our money and banking system, there would be a revolution before morning.”

– Andrew Jackson

“When you or I write a check there must be sufficient funds in our account to cover the check, but when the Federal Reserve writes a check there is no bank deposit on which that check is drawn. When the Federal Reserve writes a check, it is creating money.”

– “Putting it Simply”, Boston Federal Reserve Bank

“We have in this country one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board and the Federal Reserve Banks. They are not government institutions. They are private monopolies which prey upon the people of these United States for the benefit of themselves and their foreign customers. This evil institution has impoverished the people of the United States and has practically bankrupted our government, and it has done this through the corrupt practices of the moneyed vultures who control it.”

– Senator Louis T. McFadden, Chairman US Banking & Currency Commission

“The principle we must keep in mind is that two people cannot both be the exclusive owner of the same thing at the same time. Yet fractional reserve banking operates on the theory that bank account holder A and borrower B can both own the same money at the same time. This practice is just as fraudulent as selling two buyers the same vacation home and giving them both exclusive title to the home, hoping that they don’t both show up to use it the same weekend. With fractional reserve banking, titles to money (gold) are spuriously created, meaning there are more titles to property than there is actual property. In fact, no new money is created, but the number of titles to existing money is expanded. And it is in this manner that the value of the dollar is diminished.

In the absence of a gold standard, the crime is exceeded today to the point of absurdity, as only titles themselves are traded with no tie to any real property whatsoever. We have been swindled.” – Unknown

“We shall have world government whether or not you like it… the only question is whether or not it be by conquest or consent.”

– James Warburg, Rothschild Banking Agent, 1950

“If the American public knew how the money system really worked, I believe we would be chased down the streets and strung up before morning.”

– Henry Ford

“There are two methods or means, and only two, whereby man’s needs and desires can be satisfied. One is the production and exchange of wealth; this is the economic means. The other is the uncompensated appropriation of wealth produced by others; this is the banking and political means.”

– Albert Jay Nock

“All the perplexities, confusions, and distresses in America arise, not from defects in the Constitution or confederation, not from want of honor or virtue, as much as from downright ignorance of the nature of coin, credit, and circulation.”

– John Quincy Adams

“Banking was conceived in iniquity and born in sin. Bankers own the Earth. Take it away from them but leave them the power to create money, and, with the flick of a pen,(or Switch [Ed:]) they will create enough money to buy it back again. Take this great power away from them and all great fortunes like mine will disappear and they ought to disappear, for then this would be a better and happier world to live in. But, if you want to continue to be the slave of the bankers and pay the cost of your own slavery, then let the bankers continue to create money and control credit.”

– Sir Josiah Stamp, President, Bank of England (2nd richest man in England)

“But if in the pursuit of the means we should unfortunately stumble again on unfunded paper money or any similar species of fraud, we shall assuredly give a fatal stab to our national credit in its infancy. Paper money will invariably operate in the body of politics as spirit liquors on the human body. They prey on the vitals and ultimately destroy them. Paper money has had the effect in your state that it will ever have, to ruin commerce, oppress the honest, and open the door to every species of fraud and injustice.”

– George Washington in a letter to Jabez Bowen, Rhode Island, Jan. 9, 1787

“History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and its issuance.”

– James Madison

“I am afraid that ordinary citizens will not like to be told that the banks can, and do, create and destroy money; and they who control the credit of the nation direct the policy of governments and hold in the hollow of their hands the destiny of the people.”

– R. McKenna, Chairman, Midland Bank London (Now part of HSBC. [Ed.])

“We contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.”

– Winston Churchill

“If two parties, instead of being a bank and an individual, were an individual and an individual, they could not inflate the circulating medium by a loan transaction, for the simple reason that the lender could not lend what he didn’t have, as banks can do. Only commercial banks and trust companies can lend money that they manufacture by lending it.”

– Professor Irving Fisher, Yale University, in his book “100% Money”

“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. 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.”

– Alan Greenspan, Gold and Economic Freedom

“It is absurd to say that our country can issue 30 million dollars in bonds and not 30 million dollars in currency. Both are promises to pay, but one promise fattens the usurer and the other helps the people”.

– Thomas Edison

“The actual process of money creation takes place primarily in banks. Bankers discovered that they could make loans merely by giving their promise to pay, or bank notes, to borrowers. In this way banks began to create money. Transaction deposits are the modern counterpart of bank notes. It was a small step from printing notes to making book entries crediting deposits of borrowers, which the borrowers in turn could ‘spend’ by writing checks, thereby ‘printing’ their own money.”

– Modern Money Mechanics, Federal Reserve Bank of Chicago.

“The Government should create, issue, and circulate all the currency and credits needed to satisfy the spending power of the Government and the buying power of consumers. By the adoption of these principles, the taxpayers will be saved immense sums of interest. Money will cease to be master and become the servant of humanity.”

– Abraham Lincoln

“Money is not based on gold anymore; money is only an idea. Ideas are not scarce. There should be no shortage of money to lubricate the gears of commerce any more than there should be a shortage of imagination. Today money is created on computers and paper, and since it is so easy to create, no one should have a right to charge interest on its creation. Yet, that is what the Federal Reserve System does – loans money to the people, charges interest on it, and puts the working public into debt just for being given permission to build for itself its own prosperity.” –

“Neither paper currency nor deposits have value as commodities, intrinsically, a ‘dollar’ bill is just a piece of paper. Deposits are merely book entries.”

– Modern Money Mechanics Workbook, Federal Reserve Bank of Chicago, 1975

“Permit me to issue and control the money of a nation and I care not who makes its laws.”

Mayer Amschel Rothschild, founder of the Rothschild international Banking Dynasty, 1790

“The youth who can solve the money question will do more for the world than all the professional soldiers of history.”

– Henry Ford Sr.

“There is no more direct way to capture control of a nation than through its credit and money system.”

– Phillip A. Benson, President of American Bankers’ Association, 1939

“We fix the price of gold and silver to make them valuable or not.”

– J. P. Morgan, in a letter to his son

“Our goal is gradually to absorb the wealth of the world.”

– Cecil Rhodes, “The secret banking cabal”

Watch a little bit of history here…

But that doesn’t tell the whole story… THAT is told here below…

The Bankers finance the Oil business, and OIL is where the problem is. It takes HUUUGE amounts of capital to find, drill, capture, transport, crack into its distillates, and deliver that distillated fuel to thousands of locations across the west so that vehicles of all shapes and sizes and their economies can run.

And the solution is in that last video…

Former President Barack Obama asked Americans in an Oval Office address to accept that the United States is running out of places to drill for oil. President Obama said in his first live televised address from the Oval Office that:

“For decades we have known the days of cheap and accessible oil were numbered. For decades we’ve talked and talked about the need to end America’s century long addiction to fossil fuels and for decades we have failed to act with the sense of urgency that this challenge requires.”

The US government’s claim that the World is running out of oil was made to drive up the prices, to make it viable to frack at home, so that they could wage their war in the middle-east. Higher gas prices means bigger profits for US oil companies. Just look at the Fortune 500 list of a few years ago – Exxon Mobil, Chevron and Conoco-Phillips were number 2, 3 and 4 respectively. The world is not running out of oil we are being fleeced by the oil companies. With the technology readily available today – specifically liquid to gas vapour technology – they are also wasting precious oil.

“Governments and the national oil companies are obviously controlling about ninety per cent of the assets. Oil remains fundamentally a government business. While many regions of the world offer great oil opportunities, the Middle East with two thirds of the world’s oil and the lowest cost, is still where the prize ultimately lies, even though companies are anxious for greater access there, progress continues to be slow.”

– Dick Cheney speech at the Institute of Petroleum Autumn lunch, 1999.

If you were to incorporate vaporizing technology into the manufacturing of a new ultra fuel efficient car those cars could travel a hundred times farther on one gallon of liquid fuel. On average the fuel efficiency of most cars on the road today is approximately 20-30mpg (US. Gallons). 20 mpg x liquid to vapor conversion factor of 160 = 3200 mpg.

I wonder if Henry Ford, perhaps had shares in oil companies? If so, then perhaps he had a disincentive to produce cars that were fuel-efficient, and as such may even have attempted to bury technology, that would make his cars either less competitive, or reduced demand for the product of one of his sources of income?

However, the quote above by Henry Ford about Banks and the money system, has been solved by a man known only as: Satoshi Nakamoto. He has never been identified, but it is presumed, he created the crypto-currency, called Bitcoin. Bitcoin is a way of you becoming your own Banker, your own Financier, and Sovereign. YOU can be free from being controlled by Bankers. YOU can be King of everything you work for and get rich in the process. As long as others accept your crypto-currency.

Many companies operate in this sphere, but, one company mines for Bitcoin, Litecoin, and 9 others using hardware and software systems, and encrypted software, using the strongest systems. And, for the price of an e-mail address (and a confirmation) set up 11 on-line crypto-currency accounts, and make an initial deposit, and subsequent daily deposits for FREE for you… Their plan is to become a crypto-currency exchange, and thus make money that way, but by then, the value of Bitcoins could be in the tens of thousands.

One Bitcoin has gone from 5 cents ($0.05) to now (August 8th, 2017) over $3,000 over the time since its initial creation, though the price varies, sometimes a lot but, each time it falls, it rises again, and gets ever more valuable.
Because the Banks, haven’t yet figured out how to control the price, and because there will only ever be 21,000,000 bitcoins, the value of each one could rise exponentially.

I can’t give you the whole story here, but I can give you a link to help you get set up with a free account, and get daily deposits.

(HERE ===>>> Https://www.qoinpro.com/)

IF you don’t trust the Crypto-currency sphere, and you haven’t got GOLD or Silver yet, then the coming crash (the fall that JP Morgan spoke of) will finally convince you that we cannot go on with this Paper and Debt Paradigm. The Banks and Governments want to trick us into a world where digits on a computer screen are our only form of money, and those under 40 and even many above that age, that should know better seem to not care. But when The ATMs Go Dark (to borrow a phrase from Bill Bonner writer and publisher), you and your money will be separated from one another – perhaps permanently and then you WILL care.

Get Gold, Silver and Crypto to buy your Gold and Silver with, time is short. I suspect by this time next year, the dominoes will have begun to fall.

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A Letter to a Central Banker

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Warrington, Cheshire, UK.

25th June, 2017

Dear Central Banker,

I was searching through my e-mail inbox recently, in the hope of finding a reply to a sent email, a few days’ ago and in searching for it using his name as search criteria, I found an e-mail several years old – still unread.

I won’t take it personally, because this reader receives in the region of 150 e-mails per day, and hasn’t time to fully read them all, so I scan the header, and read and digest but a few, so have to be selective.

What struck me most though fom this e-mail, was the price of Gold, which had been predicted to rise inexorably, yet, 8 years’ on, the price is currently, pretty much where it was in 2009, despite it’s subsequent 2 year rise and 5-6 year bear market fall.

Not that I am chastising the sender of this e-mail – for his, or many others wrong predictions (at least so-far?) but what I found interesting is that the powers that be, (TPTB) to use a Mogambo Guru (aka: Richard Daughty) expression, they (and you) have managed to keep the lid on its obvious under-value. We know from their admission, that Deutsche Bank was found guilty of manipulating the market, but others, have a bigger hand in it, and their fingerprints all over the crime.

I suggested, approximately 12 years’ ago, that Gold would ultimately achieve circa $8,500/ozt, and Silver circa $500 in the blow-off phase…The rises in price, I predicted would, go to circa $2,000, then fall back to just above the $1,000/ozt mark, and would not rise to achieve their ultimate price (at least in this bull market) until around the 2018-20 period.

My reasons were (and are) several.

I looked at Gold charts from the 1970’s of the rise, fall and rise again, and of income levels, and prices, and using deductive reasoning, came to the conclusion that it was, in the final analysis, demographics and the financial system of the era, that was affecting the price, and the concerns economic of retirees , of course along with U.S. government spending on its overseas wars.

My father, born in the early flapper era of 1922, and like others reaching retirement age during the 1970s and early 80s decades had, just as many others, who had been born in the post-WWI era, saved for their retirement, and no doubt their saving, spending and investing habits, faced similar analysis, emotions and results as today.

So, what has changed in the intervening time period? Let’s look shall we…

The first thing to change, is that women are leaving it later to procreate. Most educated women (by educated, I mean graduate or equivalence) leave giving birth until they are in their early 30s (some ten years later than early 20th century folk). They also have fewer children. Back then, having three or four was a typical small family, with some, having 6 or 8. These days, many women have at most two, except where they divorce and re-marry, and the new couple have a further child or two.

Secondly, spending patterns and thus saving and investing patterns have changed, and are also being left later, because children are expensive, and more is needed to buy first and subsequent homes. Back in the 1970s, most people could borrow only 3 times, the annual earnings of the husband (main earner) or even 2½ times, and if both parents were working, this was increased to 3½ times earnings. This kept house prices at modest levels.

Thirdly, increased debt levels: today’s young families (and this may be just an Anglo-Saxon trait) are more likely to spend more on holidays, their homes and families to live more comfortably.

And fourthly, people are living a whole lot longer.

My father, was a working man who spent 44 years in the glass industry, just 4 miles away from where we lived. He never needed a car, as the bus service was every 6 minutes at peak times, and 10 or 12 minutes at off-peak. He was forced into retirement aged 58, and given access to his pension, when the company reduced its workforce, as inflation ripped into their profitability, and they strove to reduce costs, but he died just 5 short years later aged 63… Today’s retirees, are likely to live ten to twenty years plus, post-retirement.

Fifthly: Their pension plans were totally different than today, based as they were on Defined Benefits, rather than today’s DC (Defined Contribution) plans, but the drivers are the same; their search for yield, amid rising inflation and a legal requirement to buy Bonds, which would lower interest rates, while government costs would rise, as pensioners began drawing their government pension money.

Interest rates went lower post 1974, until bond prices collapsed, but before the oil spike of 1980 when on the back of the Iranian Revolution, rates were forced up again particularly in the U.S. by Fed Chairman – Paul Volcker, to qwell rising inflation once more. Of course back then, in Britain, we had to go “Cap in hand”in 76, to re-use a well-worn phrase, to the IMF as Britain’s bond holders, sold off Britain’s debt and this raised interest rates driving up government’s costs.

But despite these differences, the parallels are obvious: Ongoing Overseas War(s), a search for yield, a spike in oil prices (2007) and subsequent fall, the collapse of the Banks, (1973) and also, the bailout of them, and a major economy that has stalled and needs a QE intravenous drip – back then it was Britain.

The baby-boom births of post WW2, from 1947-62, rose to a peak in the U.S. in the period 1955-58 and totalled 75 million, plus 8 million migrants. I suspect there were slightly more in Europe and that it occurred slightly later, but those are driving the west’s economy. Changes in penson law in the 1990s with amedments to ERISA in 2014, – and regarding when (or in the UK case – HOW) people could take their pension (and thus postpone tax payable) to 70½ yrs in the U.S., and also recently in the U.K. now allowing people to withdraw their whole pension and use it as they see fit, is likely to cause problems in itself, as people use that money, and in some cases, mal-invest, but that’s a story for another day too. All this means that the falling retirement numbers post 2018, will probably mean rising output, and total demand, at the same time as the millennials, begin their own baby boom, which should begin to affect inflation, and demand for oil at a time of rising extraction costs. BUT, as the price of oil has fallen, and will likely fall further, and remain in the $30-50/bbl range, for the next couple of years, this means those fracked wells that were profitable at perhaps $60+ are closing and new wells that have not been spudded will have been postponed, just as corporate bonds go bad which will lead to lower oil output just as demand begins rising. This will ultimately lead to a price spike again.

The rise in the oil price will cause inflation to spike again too, which will probably again lead to further unrest overseas like the Arab Spring in 2010 (and maybe here in the UK and U.S.too), as food costs, which are so linked to oil prices, rise once more.

The current and previous quantitative easing, will no doubt finally begin to push inflation up around the world, as that money leaks into the economy, and a spike in interest rates to circa 10% are not outside the bounds of possibility – if you react too slowly – as is likely. A hyper-inflationary event is the likely outcome, as all the QE injected over the last 8 years, leaks into the economy and begins bidding for increasingly scarce raw materials, and THAT is when the system collapses..

That will, I believe, mean Gold and Silver prices will explode, but governments and Central Banks will do exactly what they did over 40 years’ ago, and try to cap the PM’s prices – and fail.

But, as Gold approaches the $10,000 per ounce price, you and the rest of the west’s Central Banks will as a block, throw everything at the derivatives and physical markets to stop the price breaching the psychologically important 5 figure sum, of that I am sure. Whether that will work I don’t know for sure.

But, IF, I am wrong, you can send this back to me in 5 year’s time, and tell me so with a wry smile and a jaunty wave.

Yours VERY sincerely,

 

Your humble serf.

 

PS: IF you do like this, please like it, and link to it via social media or re-tweet

 

 

Lazy Sunday Afternoon… How The Corporataucracy is Losing Its Grip

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It’s late Sunday, 26th February, and the oligarchy is fuming…

The large Corporate behemoths are concerned, because the Free Media – that’s the media, that doesn’t have corporate sponsorship, or control by the legacy media channels, are winning, and the legacy media are losing their power to control us, and that’s really pissing them off..

The old News media channels, the main-stream media, such as here in the UK – BBC, and ITN, and the 6 major U.S. news channels, are pissed off, because the so-called FAKE News channels, are in reality more in tune with what is really going on in the world, than the mainstream media channels would have you think.

For example:

Did you know that last year, President Obama and Secretary of State, John Kerry, BOTH visited Antarctica? Now why is is that news? And if not, WHY not?

So, what was the Presidential interest in Antarctica all of a sudden? Is it because back in 1512, Turkish Admiral Piri-Reis, produced a map of Antarctica, which accurately showed the land-mass including rivers and lakes under the 1 mile deep sheet of ice? Did, President Obama, want to check it out for himself – just to be sure?

Or was it because back in 1946/7 the U.S. had Operation High-jump, which was organised by Rear Admiral Richard E. Byrd, Jr., and led by Rear Admiral Richard H. Cruzen, USN, Commanding Officer, Task Force 68.

Operation High-jump commenced 26 August 1946 and ended in late February 1947. Task Force 68 included 4,700 men, 13 ships, and 33 aircraft. Operation High-jump’s primary mission was allegedly, to establish the Antarctic research base Little America IV.

High-jump’s objectives, according to the U.S. Navy report of the operation, were:

Training personnel and testing equipment in frigid conditions;
Consolidating and extending the United States’ sovereignty over the largest practicable area of the Antarctic continent (even though this was publicly denied as a goal even before the expedition ended);
Determining the feasibility of establishing, maintaining, and utilizing bases in the Antarctic and investigating possible base sites;
Developing techniques for establishing, maintaining, and utilizing air bases on ice, with particular attention to later applicability of such techniques to operations in interior Greenland, where conditions are comparable to those in the Antarctic;
Amplifying existing stores of knowledge of electromagnetic, geological, geographic, hydrographic, and meteorological propagation conditions in the area;
Supplementary objectives of the Nanook expedition (a smaller equivalent conducted off eastern Greenland). {https://en.wikipedia.org/wiki/Operation_Highjump}

However, what was the real intention of this task force? According to some reports, and at least one guarded comment by Admiral Byrd, the U.S. Task Force, was involved in a military expedition, and ultimately involved in a battle… exactly 70 years ago today.

This particular operation returned early after only two months, allegedly after having a battle with Unidentified Flying and Submersible Objects, which cost this particular task force several ships, men and aircraft.

Was this the first interstellar battle? Or where these flying machines a legacy of work done by German Researchers, who had also allegedly had contact with extra-terrestrials and fled to the Antarctic region to continue their research? This Russian video (with English sub-titles) suggests the former…

So, if the President of the U.S.A goes to Antarctica, via a stop-over in Argentina, why did this not make the evening news? And for the Secretary of State?

It has been stated by some in the Financial elite, that they fear what is coming, and that if they could, they would get “Off Planet”. In fact so many have sought hiding places in far away places such as in New Zealand, or in the Argentinian Andes. That it has driven up land and farm prices. They also have been buying gold, silver and bitcoin, in ever larger quantities, pushing prices up, and stashing large sums in currency in an attempt to minimize the worst affects of what is to come.  Some of these “preppers” have even bought space in what used to be nuclear facilities in what are known as DUMB bases (Deep Underground Military Bases) The Russians, have also allegedly provided sufficient space underground for their whole population, but the U.S. has rather selfishly, only provided sufficient space for approximately 200,000, of its population – those senior military, political and financial elites and their families. In towns near these bases, demand for essentials has sky-rocketed.

But what if any of the above is the reality, and we have been fed a lie, for 70 years, that we are alone in the Galaxy, and that the July 1947 incident in Roswell New Mexico, which was reported originally as a UFO, before it was retracted, was in fact a real inter-stellar craft (or two) that crashed and this was retrieved, along with several alien bodies?

 

We have been told it never happened? Yet the officer involved in the cover-up confided in retirement, to his son, that it really was a cover up and that it really was an extra-terrestrial craft that crashed, and elements of it were taken to PhD students in several universities to examine, in attempts to reverse engineer the technology…

What if the post WWII technological revolution that brought about the Integrated Circuit, the Ceramic silicon wafer that made the PC and smart-phone revolutions that took place 50 or so years later possible, but were in reality reverse engineered technology from alien space-craft?

What would widespread acceptance of this fact mean for established religions when their whole edifice is placed on the crucible of scientific research and found wanting? What will happen to people if the Vatican, or the Mullahs in the middle-east have to re-design their religious texts to explain the unexplainable?

We can but imagine.

But in this WooWoo world, where the previously unscientific paradigms, are over-turned as the implications of this sink in…we could see this world turned upside down, and its finances along with it

Nikola Tesla, dreamed of a world where free energy could be distributed via high-towers such as the Wardencliffe Tower, that was unintentionally funded by J.P Morgan, until he realised what Tesla was upto and had it torn down.  And extra-terrestrial space-craft, will obviously require another paradigm shift, as our oil based economy suffers its own implosion, and the financiers that funded the industry along with it…  After all… if these beings are travelling distances measured in light-years, they aren’t using rockets or burning fossil fuels…  So the oil coal and nuclear industries have much to lose from this paradigm shift…

So… get with the program…

Prepare for the change – Disclosure.

Just Another Fake News Story?

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Whilst browsing the internet, I come across many things, that deserve a wider audience, but am unable to offer any further evidence of these sometimes outlandish claims. Not so today.

This piece linked to below, really revolves around a much talked about subject, and one I have myself been involved in writing about, so this piece would appear to add further credence to the mystery.

http://themillenniumreport.com/2016/10/treason-who-did-911-and-why-did-they-do-it/

Who was responsible for 9/11?  WHY did they carry out the attacks of the World Trade Center (WTC)?  And if two planes brought down buildings one and two, how did building 7, a block or two away, across a wide expanse, collapse vertically, and yet was still upright when a BBC news anchor with a live link behind her, showing the building – that could be seen by all those sufficiently awake to notice, – was still visible, while we were being told that the building had already gone down?

The piece linked to above reads like an episode of: “The Bourne Trilogy” with a cast of characters taken from: Politics, Corporate Energy, Mafia and Banking Interests across the western world. I wrote too in the book  “The Coming Battle – 2013”  that events were spiralling out of control.

General Wesley Clark in a video interview explained that he was told in advance of plans to intervene in seven middle-eastern countries, all based on the lie of 9/11… The latest in a long line of black-ops “False-Flag” events, that were used to sway American -and in this case – worldwide opinion to permit those with their own agenda to influence events. And he also discussed what happened next and he recalled how the decision was taken back in 1991 –

It used to be that the propagandists with people inside the military and secret service industries, could modify the News agenda to get the outcomes that they wanted, and due to secrecy laws, their misdeeds would go unpunished for thirty years or more until after the secret documents could be widely accessed. BUT, the Internet has changed all that. The Mainstream News Organisations (MSM) exist to make money for their shareholders and senior management teams – and the corporations that advertise and market their wares on them, are generally large multi-nationals – the very corporations that the MSM is supposed to be keeping a beady eye on, in its role as defender of the public and the customer,  are the very same ones using politics to pursue their own agenda.

As ever, “He who pays the piper, calls the tune.”

So, as corruption apparently swirls around the world, I hear of imminent plans to rid the world of physical coins and notes – particularly in America, where many of the U.S.’s states, and institutions are seemingly hell-bent on destroying the last vestige of freedom – the freedom to spend as you like – by outlawing payment in anything other than digital means.

So will Gold and Silver be once more used to “Barter” with?

Will the closure of your bank, be the event that makes you take action?

Will the ATM closing, or your Bank closing one weekend and not re-opening again on Monday make you take action?

Will the disappearance of your pension fund make you take action?

The time has come.

 

 

 

Bloomberg: Russia’s Only Escape From More Deficit Pain Is Economic Growth

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Bloomberg – Russia’s Only Escape From More Deficit Pain Is Economic Growth http://bloom.bg/2aWh4Tf

Of course, to grow any economy, and  improve the living standards of an economy’s citizens, the economy must grow over and above the growth in population.

When an economy stagnates, but the population does not, the citizens are essentially sharing a cake amongst more people, so all other things being equal, everybody gets a smaller slice – which means they get poorer.

When people invest in businesses, and raise the output of goods and services, the economy grows, and people are richer, but ONLY, if the rate of growth in output is more than the population growth.

This conundrum, is at the heart of economists problems. The rate of growth of the economy.

During the early Industrial Revolution, the increase in automation added lots more goods and freed up people who were moving from agriculture, to industry. These individuals were released from agriculture because it too was mechanising..

In a service based economy, it is difficult to grow the output, because it is more difficult to automate.

A restaurant frees up people from the drudgery of cooking,  setting and laying the table, and washing dishes, but it produces not much additional value, because those citizens, cannot improve their own output by not doing these tasks because they are involved in waiting for food, between courses etc..

However, if we replace these waiters and waitresses with automatons, (Artificial Intelligence servers) and an experienced waiter to resolve difficulties, then those staff are released to produce more goods, and services elsewhere. THIS is the way to improve productivity in the economy.

However, when people are released from one industry to work in another, they have to be able to move their skills easily, and in an increasingly technological world, the time to retrain may take years. It is simply not cost-effective to retrain a 55+ year old, if he or she is going to retire perhaps two years after gaining the skills, but has (or would have) taken 4 or more years to gain the necessary expertise.

This is the problem, for economists, and politicians, because money can flow like water from one part of the economy to another, but people don’t move quite so easily.

That is at the heart of the European Union’s (EU) freedom of movement dictum. As one economy expands, people moving in, will dampen wages, and lower output per person. That’s the theory anyway,.

However, large corporations, when they use cheap money to merge with, or to take over in a hostile fashion, other corporations, do not add much value, if the people displaced do not have capital to build businesses, because their savings have been depleted by poor wages, poor interest rates, high taxation or other methods of losing value.

But, in the near future, we are about to see a positive explosion in technological advances, that will likely revolutionize the world economy. Artificial Intelligence, Virtual Reality, Augmented Reality, Robotics, Spintronics, Thorium Energy production,  and Solar Energy production coupled with storage technologies to move the energy that hits the Earth during the day, to those parts of the energy demand curve usually later at night,  to heat or cool homes, or to drive factories such as Tesla’s Giga-Factory in Nevada.

This factory, which Elon Musk, has committed to producing 500,000 vehicles per annum in, by late 2017, will catapult demand for Lithium Carbonate, critical in building the batteries for his car for everyman.  Warren Buffet, who made a major investment in China’s BYD a similar automotive corporation with aspirations to produce huge numbers of electric powered vehicles using Li-ion cells, will also require huge amounts of Lithium Carbonate.

By the end of the year, according to Reuters, BYD should have 10 GWh of battery production capacity, which it expects to increase to 34 GWh by 2020 with a new factory in Brazil—about the same capacity as Tesla’s.

Other Tesla rivals rushing to the battery production scene will be iPhone manufacturer Foxconn and LG Chem, which is already one of the top three battery makers.
Samsung is also hot on the trail, having just acquired Magna’s battery production division.

According to Credit-Suisse, the lithium industry is “poised for significant volume growth,” which could lead to shortages of supply.  As a result producers of lithium are set to enjoy significant earnings throughout the decade.

Elon Musk’s aspirations, if met, will require as much Lithium as is currently produced world-wide, and such demand will also be required by BYD, and the other major manufacturers working to catch up, such as: BMW, Mercedes, General Motors, Ford et-al.

“The key drivers of the continued growth in the market are electric vehicles (“EV”), which have been pioneered in Nevada in recent years, but the larger catalyst for global mass market uptakes is EV technology in China.

Deutsche Bank has forecasted that global sales of EVs in 2025 to be 16 million vehicles per annum (current sales are just 2 million).

This increase should lift lithium consumption in EV’s 8-fold from 25-kilo tonnes (Kt) of Lithium Carbonate Equivalent (“LCE”) in 2015 to 205Kt in 2025.

This along with the other increases in global lithium demand is expected to increase LCE demand to around 535Kt of LCE by 2025.

This new demand is being driven by the improved economics of electric vehicles and energy storage products.

In particular in the last five years lithium-ion costs have dropped from US$900/kWh to US$225/kWh.”

In the world, there are essentially 4 major producers of Lithium. Albemarle being the biggest in Nevada, but right next to it, is a junior Lithium explorer,  with capital from major investors, who see this as a huge financial opportunity to grow output to meet this expected demand. And at a mere $1.66-1.70 range on the day I was writing this, it values the business at $114.27m (Source: Bloomberg)

Some Lithium miners, are lying about their resources, and others, simply lack the expertise to bring the Lithium salts to production.

From this small company’s web site they have this to say:

[Our Company] has an option to become the largest claims holder with over 15,020 acres (6,078 hectares) in Nevada’s Clayton Valley and land positions both north and south of Albemarle’s Silver Peak mine, North America’s only lithium producer.

Clayton Valley North covering approximately 5,480 acres (2,217 hectares) in northern Clayton Valley, Nevada. The claims are contiguous to private lands and placer claims belonging to the lithium production facility of Albemarle Corporation. Historic drill information and a geophysical survey show the Property covers basin-fill sediments which are similar to the sediments currently producing lithium brines. Two Albemarle production wells lie along the boundary. Two holes are proposed within the Clayton Valley North claims as offsets to the production wells to test the complete stratigraphic section. Drilling and exploration are active in the basin and the permitting process is well established.

[Our Company] has also acquired the Clayton Valley South Expansion, totalling approximately 9,540 acres (3,861 hectares). The property is strategically located between and contiguous with the Silver Peak lithium mine operated by Albemarle Corp. on the northern boundary, the Clayton Valley South project operated by Pure Energy Minerals Ltd to the east and the Neptune property owned by Nevada Sunrise Gold Corporation to the west.

But Eric Anderson, CEO of the lithium engineering consultancy TRU, was bearish on lithium investment as early as 2009, when a flood of new projects were being planned.

“I made this statement that people snickered at—that plants would be built and closed . . . because of the hype surrounding the industry,” says Anderson.

Anderson’s lithium predictions have been largely vindicated. Demand rose more slowly than some expected—still currently between 5 and 10% per year—and new operations have been plagued by problems.

In 2012, Galaxy Resources suspended production at its Mt. Cattlin mine in western Australia. In 2013, RB Energy Inc. opened a new lithium carbonate plant in Quebec, only to suspend operations in 2014.

Nevada-based Western Lithium, which has been repeatedly floated as a potentially convenient supplier for Tesla, has taken shareholders on a very bumpy ride, and is not yet online.

According to Anderson, Western Lithium, like many new lithium operations, simply aren’t working with the right raw materials.  Though lithium isn’t rare in the environment, the cost of extraction varies greatly with its concentration and form.

With existing technology and present prices, truly profitable lithium comes only from the evaporation of highly concentrated brine.  Those sorts of brine deposits are nearly all in southwest South America, and controlled by established players.

The three biggest lithium producers are Sociedad Quimica y Minera, based in Chile, American FMC Lithium, which controls the ominously-named Hombre Muerte mine (Dead Man Mine)  in Argentina, and the U.S. based  Albemarle, which recently acquired competitor Rockwood Holdings.  Albemarle is developing lithium brine holdings around Magnolia, Arkansas too—the only American deposits that Anderson thinks might make economic sense in the near future.

Together, these three companies provide more than 90% of the world’s lithium, and have absorbed much of the rising demand simply by bringing untapped capacity online.

A dearth of technical talent seems to be another widespread problem. The Bolivian state has faced serious management and technical hurdles in extracting the massive, high-density lithium deposits in the other-worldly salt flat Salar de Uyuni.

Similarly, Chinese producers Quinghai Lithium and Citic Guoan MGL, hoping to exploit sources near Tibet, have experienced major hurdles, and plans to expand Chinese capacity to 60,000 tons a year by the end of  this year have been revised downward by half.

Elon Musk however, is eyeing a “complete transformation of the entire energy infrastructure of the world to completely sustainable zero carbon,” and what he’s talking about here is lithium-battery production on a mind-blowing scale.

Tesla is planning to produce more lithium-ion batteries in this factory than in the entire global marketplace combined.

Lithium—the lightest and most versatile of the metals—is the backbone of this exploding battery market.

Lithium is already a key part of our everyday lives, but as batteries become the rule of the day in a new global energy picture, demand for lithium is soaring—and we are only at the beginning of this curve.

Battery manufacturers across the board are moving to lithium because it has the highest electric output per unit weight.

And nowhere will this demand soar more than with the production of hybrid, plug-in hybrid and electric vehicles used by everyone from Toyota, Honda, Nissan, Renault, and Mitsubishi to Ford, Chevrolet and GM.

By the end of the year, according to Reuters, China’s BYD should have 10 GWh of battery production capacity, which it expects to increase to 34 GWh by 2020 with a new factory in Brazil—about the same capacity as Tesla’s.

Other Tesla rivals rushing to the battery production scene will be iPhone manufacturer Foxconn and LG Chem, which is already one of the top three battery makers.
Samsung is also hot on the trail, having just acquired Magna’s battery production division.

According to Credit Suisse, the lithium industry is “poised for significant volume growth,” which could lead to shortages of supply.

As a result producers of lithium are set to enjoy significant earnings throughout the decade.

Therefore, this little company, stands to be able to produce Lithium Carbonate, even quite possibly at the Albemarle facility which we know meets Tesla’s Standards, and it has even  been suggested, Musk might be interested in buying the whole company to guarantee Lithium for his Nevada Giga-Factory, and his future plans.

And, the name of this Lithium junior placed to take advantage of this rapid surge in demand is: Lithium X (TSXv.LIX) and LIXXF in the U.S.) .

And remember, we’re not Investment Advisors, so nothing in this piece should be considered a recommendation. Prices of shares can go down as well as up. We do not hold, and have no short-term intentions to do so.

 

 

Lehman 2.0 – The End.

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Breakdown Over the last few days, I have been reading, and hearing some concerning stories, that suggest the end of the Dollar as World Reserve Currency is merely weeks, or at most months away.

As of late, certain banks were recently being bailed out, because the banks loaned out currency to people to buy property, which collapsed in price in the aftermath of the 2008 crisis – Italian Banks were the most recent recipients of ECB largesse. But most large Western Banks, are in an impossible position, Deutsche Bank being the most recent one facing the threat of failure, but perhaps even one of Wall Street’s grand-daddy banks.

That bank, even now, according to one economic and geopolitical forecaster is on the brink of failure with a derivatives book of 349:1 leverage on its assets – If you were aware and remember, Lehman Bros, was a mere, a MERE 73:1 when it finally failed.

BUT, as to how this dollar problem has affected the International Trade scene, has remained largely ignored by the financial media and journalists.

Countries who sell to the U.S., have been getting paid in, as one commentator put it – “toilet paper”. Indeed, Fed Chairman Ben Bernanke said as much, at the time of the 08 crisis, when he said that they have a printing press, that can create dollars essentially at zero cost, which means, that that, is ultimately their value. But, those dollars, because of the Bretton Woods agreement, are used to settle International Trade agreements, between for example Saudi-Arabia (for its oil) and India for its I.T. services, or Brazil, and its coffee, in exchange for Australian wine. As a result, China has told the U.S. that the International dollar has to go, and a U.S. treasury dollar has to replace it, but that its value will have to be halved over a period of approximately 2 years.

I hear that circa 20 International Container Ships are anchored off-shore in the Pacific, because the providers of those goods, now do not want the U.S. dollar in payment, and that other reasons are being given for the lack of access to Port Authorities in Los Angeles and points north.

In its place for International Trade, will be the SDR, which will be partly (circa 40%) backed by Gold, as I mentioned in my last piece, the Americans, who have been trying to control the price of Gold on the COMEX, will have to have Gold revalued on International Markets, and as at this particular point in time, the price is under negotiation. However, my finger in the air best guesstimate, would be circa $5,000/oz, with a rise to closer to $10,000 as the world economy adjusts, and people rush to buy.

The revaluation will be an overnight affair, rather as FDR’s gold revaluation took place once it was safely stored at the Fed, after he issued his now famous Executive Order 6102 on 3rd April 1933, confiscating the nation’s gold, forcing Americans to surrender their gold (excluding jewellery) on pain of a $10,000 fine, and/or 10 years in the pokey. Silver was also confiscated the following year. But even then, it is estimated that barely 30% fully complied.

However, because of International Trade, this revaluation of Gold and SDR currency introduction, needs to take place in a safe, secure, standard way to minimize shocks to the world economy, and trade.

In the wider world, all International Trade would now be carried out in SDRs, which would include the Chinese Yuan, and as stated would be valued based on a basket of currencies as per my previous post, but backed ultimately by Gold.

It is not widely known, but there are families in the Far-East, who collectively, like the Rothschilds and Rockefellors, have huge dynastic wealth, which some estimates put at 100,000 to 150,000 tonnes of Gold. (I think this is slightly exaggerated but not by much)

In fact one Japanese Army officer, claims to have discovered some of this wealth hidden, in a cave system, when they invaded other islands and nations in the second world war. A solid gold buddha of circa 24″ high, and weighing hundreds of pounds was one such piece, reputed to have been discovered. Details of all such finds are obviously viewed suspiciously by those behind the veil, and generally have scorn poured on them, in efforts to hide these truths that might embarrass the legal owners, if nothing more than but for their sheer ostentatious displays of wealth.

When these events unfold, the price of both Gold and Silver, and to some extent all commodities, will shoot up on international markets, at least when priced in Fiat currency terms. But derivatives books, will also be affected, meaning banks will undoubtedly be affected. Bank Accounts that in Britain and America are currently backed by insurance, that the British Banking Regulator – the FSA – has been pushing on local radio, and the FDIC supposedly insures for Bank accounts in the U.S., may be “bailed in” as happened in Cyprus, as banks fail, and we are likely to see a change to International trade of the major contracts into the SDR, to make trade more equitable.

America currently has a $500 billion annual trade deficit. Britain too, has just suffered a further imbalance to our trade book, and costs and inflation, can only go one way, if events transpire as I suspect. But at least Brexit, will make things easier for us to adapt as a nation.

In the events leading up to this introduction, we could see an overnight re-valuation of gold, to an unprecedented level, with further rises as those with huge sums of money, rush to transfer their wealth from Federal Reserve Notes, to Gold (and silver). Rumours suggest an initial price of circa $5,000/oz, but if that occurs, we may see a stampede towards precious metals from other asset classes. And what price silver? Possibly $400-$500 per oz.

Which brings me to the other concerning development suggesting these events are moving apace. It has come to my attention that Bank Accounts with large sums of money in them, are being frozen by the Banks, and their “Anti Fraud” departments. Two such acquaintances of mine have informed me that they cannot access their accounts and when questioning this, they have been told, that they are under investigation. Nothing else is divulged. No further information given.

Is this the first step in the events leading up to the re-liquidating of the Western Banking System to stop those with large sums from spreading them around several banks, and thus limiting the FSA’s and the FDICs liabilities? We can at this point but guess…

BUT… are the Banking elite, attempting to ensure that the banks remain in service post crisis? Moving large sums from one account to another, could be the straw that breaks the camel’s back… Is that why access has been frozen?

Imagine for a moment, you are unable to access your bank account, and your salary for a moment…

How would you fare if your Bank-Card and your Credit card stopped working?

How would you buy groceries, purchase milk, bread, fuel for your car? breakdowns Pay the children’s school meals bills? How would you pay the Window Cleaner? The Taxi Driver? The Bus Company? Would these people and companies, still provide their services and goods, on a credit basis until things get back to normal?

For one person, they perhaps could do that, but when the whole local economy is cashless… How do they, and you just survive?

Whilst I am not advocating mass panic, it would be prudent to have available (however you define that) at least one month’s money (currency) at your disposal. If you haven’t bought Gold or Silver, in a reasonable quantity yet, there may be still a little time. Crypto-currencies too, because a banking collapse is a very real possibility, on the scale of 2008 or worse, much worse.

The people of America will feel the pain the hardest, but Britain, Japan and Europe too – excepting perhaps the northern germanic nations, and close neighbours, who will suffer considerably less. We even may see a figure similar to Donald Trump, advocating that he (or she) alone has the solution, all the people need to do is follow them, and then we will have travelled back in time to 1932, when Adolf Hitler arose to great acclaim, and sealed the west’s and his nation’s fate.

Of course, having sufficient staple foods, water, perhaps fuel – like bottles of Gas for camping stoves etc. – tanks of fuel for the car, and candles, matches, canned fruit, vegetables, and batteries as well as water purification tablets, will all make life more liveable, if the SHTF moment arrives.

Time to prepare, and that is not an idle request.

Oil, Solar, Wind and Water Don’t Mix

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2005-2015-Oil-Prices
It would seem that the Saudis want every one of their oil competitors to go bust in the attempt to tear down the shale oil revolution, only to push oil prices back up again in the future. But do they still have control of the market? Judging by the persistent weakness observed in the oil market, it seems that everything is falling apart, all around the Arabian peninsula. And given events in Nice on Thursday, and Turkey yesterday, it appears that turmoil, is extending further afield.

Oil prices have still not fully recovered from the lows seen at the peak of the financial crisis (in February of 2009). If the current trend remains in place, the market will remain subdued for an extended period. On the one hand, this maybe exactly what the Saudis, and to some extent, the Iranians, want, in order to regain their market share and push other recent entrants out of the market; on the other hand, given that the worst of the recession is behind us, with prices  now in the $50-$60 range, that would still be below marginal costs for many oil exploring areas. In fact, one could ask whether these low prices are just the result of OPEC’s output decisions or whether they hide other developments.

Saudi Arabia’s task has been easier than it could have hoped for, due to a mix of international developments. Unlike events in 2009, when oil prices were boosted by a declining US dollar driven by the FED’s massive asset purchases, now QE has for the moment ended, and the interest rates are being talked up again. Anticipation of this event alone has driven the dollar higher, although weakness of other currencies has also contributed, (Brexit, of course, making the pound particularly vulnerable) which has had a negative impact on commodity prices in general, and of course, oil in particular.

2016 – US Outlook

While a rise in US interest rates would have a direct negative impact on oil prices, the eventual effect is usually positive. The reason for this is the fact that a rate hike usually comes at times when the economy is improving and we would then see rising economic activity. This would usually come with higher aggregate demand, which would boost the appetite for energy products.

However, as suppliers attempt to increase production to fill the higher demand for their products, this may be limited as fracked wells do not respond well to just opening spigots, they require more wells, and this requires capital. So, this time, not even an improving US economy might be able to spare oil these losses. Many feel that the excess oil production has been so large for so long, with stocks piling up everywhere, that more demand will merely offset the surplus effect stemming from aggregate output. But that may be just half the story.

Back in November 2015, the IEA predicted a rise in demand for oil of less than 1% per year until circa 2020 and modest growth rates thereafter. If these predictions transpire, it may take years for the current stockpiles to normalise and, unless OPEC and the wider world cuts production, the bearish trend for oil prices may continue for years.

This bearish oil market, is the consequence of depressed demand and over-production, and may not be reversible for several reasons.

The world is in an unfavourable growth scenario, with the US running at the front of the developed world pack, but Europe is still struggling with the aftershocks of the global recession. At the same time, the threat of rate hikes in the US is hitting oil prices and leading to capital outflows in the once high-flying emerging economies.

If the number of SUVs with new more efficient engines, Toyota Priuses, Nissan Leafs and Teslas, I’ve seen locally is anything to go by, the world is moving away from its oil dependence for transport. China is no longer hungrily demanding raw materials to grow its economy, as it moves from an investment-driven economy towards a more consumer-orientated one. Given the China outlook, any change in demand is likely to be lower, and lead commodities into a further bearish market. Because the finding and extraction of raw materials takes years to achieve, past decisions to expand capacity will take time to be reversed, as countries and companies adjust to the new reality. In the meantime, prices will take care of the imbalances but huge volatility is expected. In fact Dr.Kent Moors, sees problems for the oil production companies in the U.S., for a few years yet

So these and other important shifts in the world, – Wind power, Tidal, Solar, and increased Nuclear, with increases in efficiency are all taking their toll. Faced with high oil prices and being dependent on a small group of countries, governments and companies in oil-dependent countries invested in the development of these new energy sources and improvements in the efficiency of the existing ones. Cars, household appliances, consumer gadgets et-al, today need a fraction of the energy they once did.

This means that for the oil market to remain stable and growing, needs higher global GDP growth rates than hitherto. Unlike what many predicted decades ago, it won’t be the supply side controlling this market, leading prices higher, but rather a suspicion of ever decreasing demand. Saudi Arabia may already not be in control of this market and may run into trouble, along with any other entity that is dependent on petro-dollars. Of course, the value of the dollar, as well as whether oil is marketed worldwide in dollars, will ultimately define markets. But reports of a 45% split between oil and the water that is used in the waterflood of old oil wells, is also increasing costs of extraction for Saudi fields, and thus requires a higher commodity price, to balance Saudi national budgets.

Shares in the biggest oil companies trading in the FTSE, like Royal Dutch Shell and BP, lost 40% in the last year before their bounce back in recent months. In less than a year, oil prices retreated 60% and these companies couldn’t avoid the downturn. Smaller companies, including low-cost producers face an even bleaker outlook, as share price declines have surpassed 80% in many cases. Companies operating in the shale oil revolution have been decimated and many won’t be around by year end.

2016 – OPEC Outlook

If OPEC has in the past helped to boost a number of energy alternatives and driven gains in user-efficiency (via higher oil prices), they are now contributing to the development of improved technology on the supply side, as the low price is a great incentive for the remaining companies to increase cost efficiency. A low price will certainly drive many companies towards bankruptcy, but will also force the surviving companies to become highly efficient. Oil projects in remote areas or regions with high risks (being economic, political, or of any other type) will be delayed indefinitely, but part of the shale industry in more productive areas will remain. That industry has effectively placed a cap on oil prices. OPEC won’t be able to drive prices above a certain level, because many companies would enter the market again and force prices down.

The strategy followed by Saudi Arabia has severe shortcomings. This is no longer about the shale oil industry but also about OPEC members. The high production strategy is crippling growth, leading to capital outflows and increasing budget deficits in all OPEC members. Venezuela and Angola are heading towards complete economic and social chaos, with growth spiralling down and oil income not enough to finance government spending.

2016 – Angola & Venezuela

At the beginning of 2007, one US dollar would buy 75 Angolan kwanzas. In early July this year the exchange rate stands at 1 to 165, as a result of declining oil prices. That’s a decline of 50%, but the official rate doesn’t even reflect the observed reality, which is that people aren’t able to get US dollars from banks, and instead are forced to exchange them on the streets at a rate of 1 to circa 300. Many construction companies are already shutting down their business in the country, as the government is delaying payments.

Venezuela, is in even worse shape. In 2011, the Venezuelan Bolivar was 4.3 to the USD, but today stands at circa $1:10.0(VEF). This loss of purchasing power, caused riots after Hugo Chavez died, and the oil revenues upon which the nation depended, bought less and less on world markets. Queues for such luxuries as Toilet Rolls were seen, and the Socialist miracle of Venezuela, is gone, possibly for good.

Angola and Venezuela are the weakest links in the OPEC group and are thus expected to be the first to experience a deterioration in their financial positions following oil price declines. But they won’t be alone in the medium term.

The Long and Short of the Oil Market?

Take the Saudi Arabia case, for example. The country had a debt-to-GDP ratio of less than 2% at the end of 2014 and foreign reserves of around $738 billion (at today’s exchange rate). In a country where people don’t even have any experience of taxes, there seems to be a lot of margin to drive all others bankrupt before feeling the heat. Nevertheless, the country lost $90 billion in foreign reserves in the year to October. If this pace continues, the country will run into trouble in a matter of just a few years. From a balanced budget the country is going to hit a deficit of near 20% this year and another 20% next year (as predicted by the IMF). Oil-producing countries in the Gulf are already tapping money from their sovereign wealth funds to keep afloat.

OPEC long ago shot itself in the foot and will never recover from the damage. While Saudi Arabia tries hard to bust everyone, let’s enjoy the lower oil prices as consumers. As investors, or traders, it may be time to look for something sweeter than oil like cocoa and wait for the markets to stabilise, as price declines aren’t over yet. In the meantime, perhaps time to sell any oil-holdings, and time to buy, commodities that are undervalued and thus oversold? Can you say Gold, Silver, Platinum, Palladium or Crypto Currencies?