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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Some weeks ago, before Xmas, I floated the proposition that “The West” might be about to shoot itself in the head, heart, AND foot, just to make sure.
My reasoning was that Russia, might be about to demand payment in Rubles for their gas and oil and other things, which would effectively shoot the west in the aforementioned organs, as they sought to ratchet up pressure on President Vladimir Putin.
The U.S. through its monetary influences and power in International Organisations – the World Bank, the IMF, BIS, Federal Reserve, and of course the ECB, Bank of England, U.N. and Bank of Japan etc, is waging a war against Russia, in a vain attempt at defending and extending its influence in the middle-eastern region, and throughout the near east, ostensibly to protect itself from the rise of China and a resurgent Russia. (more of which later)
The beginnings of this madness began with the end of the Soviet Union. The west in NATO, and through European organisations made agreements with the Soviets, to not encroach into former soviet countries, yet many of those countries, in order to avoid the risk of re-colonisation, chose to join the North Atlantic Treaty Organisation (NATO) and/or the European Union. (E.U.). This was also of course to strengthen the U.S’s Federal Reserve backed monetary system, which as I’ve mentioned numerous times is now no longer backed by physical precious metals.
Of course, when the U.S., under its attempt to extend its influence in the region, encouraged the western larger part of Ukraine to throw off its recently elected leader as it were, to rub Putin’s nose in it, and incurred the wrath of the Crimean Russians, and the Russian speaking ethnic Russians east of the Dneiper River, it essentially wandered into Russia’s back-yard, and that was the straw that broke the camel’s back.
The Crimeans, who are predominately ethnically Russian, were backed into a corner, as the new western backed government in Kiev, made the Russian language illegal.
Imagine if you were a Welsh speaking Welsh person, and the incoming British government, made your language illegal? Or Irish? or Highland Scottish and they tried to make Gaelic illegal?
You’d be pretty PO’d too…
The Crimeans, who felt Russian, spoke Russian, and historically WERE Russian – If we remember our history – Balaclava, near to Sevastopol, on the western coast of Crimea, is where the British Light Brigade, charged the Russian guns, to such detrimental effect, in 1854, and it is remembered in the rousing poem by Alfred, Lord Tennyson. So, a hundred and fifty years ago, this part of the world, was as Russian as it surely is today.
The President, of Russia, kept a low profile recently, and even disappeared from view for ten days, prompting mass media speculation by western media about his health. Of course, when he reappeared, the President issued a wry smile, and joked about “gossip”.
But behind the scenes, the Russian bear is fighting back against the Dollar hegemony. Of course the war of words is being ratcheted up as American military conduct war games in Estonia, this week-end, a former Soviet satellite nation, and right next to the Russian mainland.
Guyane Chichakyan a journalist for RT, posed an interesting question to one of the U.S. government’s PR spokespersons today (Saturday) when she asked Jeff Rathke of the U.S. State Department: Why was it that when Russia conducted military exercises on their own soil, it was supposedly raising tensions, but when Americans conducted military exercises several thousand miles away from home on Russia’s borders, it was in the guise of international peace and security.
The PR guy nearly choked on his reply, denying that they had ever said such a thing, to which, RT showed a clip of Jen Psaki of the U.S. State Department, on August 14th, 2014, doing just that, when referring to events in Ukraine and close to the Ukrainian border. As I mentioned some months ago, the next world war has already begun as a war of words, and for people’s hearts and minds. Every channel, both public and private will be used. It will in all inevitability end in a military war, though perhaps not on such a full-scale as the last one in 1939.
But perhaps also the anti-U.S. state of mind is gathering steam… As I mentioned some weeks ago, Britain applied to become a founding member of the AIIB (Asian Infrastructure Investment Bank) the alternative to the U.S. dominated World Bank and IMF, and we hear from the New York Times, that now Germany, France and Italy wish to join in defiance of U.S.’s (cough) “requests”.
Perhaps the dollar’s end as a major world currency is finally coming to an end, as a result of the mass Q.E. exercise of recent years.
It is time we all engaged our brains.
And then last week, I read this… http://russia-insider.com/en/2015/03/19/4696 which discusses just that.
If a shooting war does begin in earnest, money – hold in your hands money – will allow you to survive the inevitable inflation that will ensue, and the grey market will offer up far more than the government enforced, and controlled ones. If you value your freedoms, liberties, and the health and well-being of your family and friends, I strongly suggest you begin preparing – if you haven’t already.
Gold and Silver coins and widely accepted silver and gold ingots of widely known mints will prove to be good ways to secure your own future “essentials”. And Bitcoin, and other [Alt-coins] will enable international transactions. You can begin your own FREE collection of these precious [Alt-coins], when you set up an account by merely supplying an e-mail address.
I’ve been giving some thought to, Monopolies and Oligopolies and Geo-Politics recently.
Many economists will tell you that both Monopolies and Oligopolies are detrimental to the economy. Monopolies generally are not allowed to exist – and where they do exist, they are generally in state control. Mostly in countries with one-party or no-party apparatus, whether that be Fascist, or communist and for many reasons, these two regimes allow or enable them, and share one common thread.
Both state types seek to compel people to do or not do, things that are, or are not in their own best interests – depending on the “thing” we are referring to.
Communists disallow ownership, and vest almost everything in the state, while the Fascist country vests the wealth of the country in the hands of one or a few “wise men” who own the bulk of the productive assets, and tax the rest of the society to pay for things that are generally considered in the nation’s good.
Oligopolies are a slightly different matter.
These have a tendency to become cartels, where these organisations secretly work to protect their own interests, while apparently working for the good of the customer and the nation, it is obviously not competitive, so are not in the consumer’s interest, but governments quite like these because it makes taking policy decisions easier to implement, when they can get the heads of these half-dozen or so corporations in one room – after taking their advice of course.
Here in the UK, we have an oligopoly in the energy market, and for this reason it’s heavily regulated, though if the energy regulator wasn’t trying to get them to improve their customer service, they might be focussed on the thing, that consumers worry about more – prices.
But there’s another oligopolistic industry, and monopolistic practice that is at the root of many other problems in Western Societies.
Banking oligopolies, and Monopolistic Central Banks.
The Central Bank determines the supply of the currency, and the governments allow this, in its own self-interest. The government can pay its bills with money it doesn’t have, which it otherwise would have to tax from its taxpayers, instead it borrows from the bankers, and then has to pay interest, which steals from the citizens, silently through the process of price inflation.
But what it takes with one hand, it gives with the other, in higher stock-market values, and rising asset prices – which benefits those wealthier citizens, who own stocks, properties and other financial assets. This makes those on limited incomes fall further back in the “getting on the ladder” rungs of success.
It happens through the agents of the Central Bank, the major clearing Banks, who form an effective oligopoly linked into this nefarious practice, (also as their owners – as in this case – of the Federal Reserve) while the population are enslaved by debt-slavery, because their taxes are used to pay the interest of the debts to these banks, who buy these Treasuries, using money they don’t really have, but who get it from their paymaster – the Central Bank.
Of course, for all this to work, people have to keep their wealth in cash form, or invested in things that can be manipulated for the ends of the Bankers. – homes, the stock-market, bank deposits etc,
Of course, they would deny this… but as Mrs Margaret Thatcher once opined: “They would say that, wouldn’t they?”
But, once people begin saving their wealth in forms that can’t be taxed, or that the authorities – the government, and the Bankers can’t manipulate, governments and politicians begin to worry.
For example: Crypto-currencies are things that Bankers fear, because they don’t control them, and aren’t taxable – at least not yet. If you have these great. If you haven’t, then perhaps you ought to check them out at Qoinpro. After all, if you can’t beat ’em, then join ’em. And numerous Bank employees and senior executives are now buying into these in increasing amounts – in particular – Bitcoin.
After all, for hundreds of years, the Bankers have controlled the printing presses that gave them immense power over the country and its institutions.
It was President Andrew Jackson of the United States who commented that:
“Banks of issue, are more dangerous than standing armies”
And Thomas Jefferson, who said:
“Paper is poverty. It is not money, it is the ghost of money.”
So what did they mean? As I’ve previously explained, paper currency is a receipt for money, while real money is both Gold and Silver.
So, why do they fear them?
If we look back into history, a Bank Note once said with authority – “I promise to pay the bearer on demand the sum of …”
The missing words originally were the sum involved – ‘in Gold’, or ‘in Silver’ depending on the country of origin, or as the twenty dollar bill from the early 1900s stated: “There has been deposited twenty dollars in gold at the Federal Reserve”
And this prevented the Central Bankers from printing too many of them, unless they had the gold in the vaults to back that up. It meant they could only lend out “savings”.
But what they do now, is lend out debt – because there is no savings, or nowhere near enough at any rate. And when that happens, we are borrowing from our children’s future – Which is fine for investments that add to our stock of goods, but what about those debts used for holidays or other consumption services? And what if they can’t be re-paid?
It also means the taxpayers of the future – our children, and their children, will have to pay off these debts through higher taxation, or face a lower standard of living through reduced government services, and experience greater control of their lives by a centralising government.
All industries tend to grow towards having a few large entrants, before newer entrants change things and shake up the industry just as Tesla has shaken up the motor industry in the U.S..
As a further example: TESCO, the UK’s largest of the big 4 grocery retailers, has suffered recently in this fall-out, suffering a 50% share-price decline, as new entrant Aldi has grown its profits by 65%.
And to get to the geo-political issues, as ISIS rears its head in the middle-east, and Ukraine hots up, and once more unrest in Libya is raising its ugly head again, and now I hear two nuclear nations are on the brink of a conflagration, as Islam butts up against alternative lifestyles and religions. Many of these wars could embroil the west, and that will mean the amount of money the west needs to spend to fund its military activities, could be the straw that breaks the camel’s back. As stock markets have reeled in recent days, perhaps the market collapse that many predicted is already upon us.
And apparently the Indian and Pakistani peoples are on the verge of yet another major war between these two nuclear powers. And this is over a resource that neither can afford to lose – water.
Of course with both governments in dispute over the region of Kashmir, in the mountains of the north, the two governments came to an agreement over the Indus river many years ago, which allowed for both nations to tap into this resource which flows through the region, and they have already fought four wars over the territory.
But, since the agreement, both nation’s populations have risen exponentially. India now has a population of 1.2BILLION, while Pakistan has 178million. With senior figures in Pakistan now talking of Jihad, as India extracts more water, this is raising tensions, as Pakistan has only 30 days supply for the whole country.
The Indus river travels the whole length of Pakistan, from its source in Kashmir, to emerge near the Capital Karachi, on the west of the Indian subcontinent, and is responsible for 90% of Pakistan’s water needs. The river holds such a powerful drag on the nation’s minds, because it is used to generate electricity, and is responsible for 50% of Pakistan’s employment.
It could be used to trigger Pakistan’s “first use” policy, starting a nuclear war, given that many Pakistanis are affiliated to one of eight different radical Islamic organisations, who recently formed a joint committee of Jihad. Kashmir could well be that straw that breaks the world’s financial back, causing relations between allies to worsen, triggering a new world war.
Rising tensions and a nuclear war would be hugely detrimental to world economy and financial markets, as Pakistan and India fight over this precious liquid.
Prices of stock-markets would go into free-fall, as much as 40% almost overnight, and trigger losses on derivatives, which as some highly influential, and well-informed people now believe, is as much as 10 times the notional value of the world’s economy – or some 700 TRILLION American dollars.
If that happens, then the flight to safe haven assets will be huge, and if you don’t physically, own either Gold or Silver, your wealth could be totally eliminated. The world’s economy could be so badly damaged, that for a time supply chains break down, and Banking organisations suffer, like Bear Stearns and Lehman Brothers in 2008, reducing many corporations to pennies on the dollar as their chickens come homes to roost.
As a result, Indian Gold price premiums were as high as $50+ in 2012, despite government attempts to stem Gold imports, as the population eschewed rupees for Gold and Silver. Silver, now at prices not seen since 2009/10, could rise over its previous peak of circa $50, and take out a new all-time high.
As Warren Buffet, who has run Berkshire Hathaway since its inception, and where one share currently costs over $200,000, has been repeatedly quoted as saying in relation to markets: “Be fearful when others are greedy, and greedy when others are fearful.”
Now is the time to be greedy where silver is concerned as the world uses approximately 200 million ounces more than it produces. Sometime soon, those who cannot run their businesses without silver, will find they will have to cease operations because there isn’t any available, and the price will have to rise, to enable supply to increase.
And in 2013, not only have the Chinese and Russian Central Banks been buying Gold – But RUSSIAN Banks too bought 181.4 Tons of Gold in 2013. It was more than double that of Russia’s Central Bank additions in 2013.
The biggest buyers according to the Russian Finance Ministry include:
– Sberbank (48.5 tons),
– VTB (38.9 tons),
– Gazprombank (29.1 tons),
– Nomos Bank (19.6 tons),
– Lanta Bank (8.6 tons).
And if this has intrigued you, as to WHY? You can learn how these bankers over 2 centuries worked towards enslaving the people of Europe, Britain and America, in my book: “The Coming Battle – 2013” and you can learn how YOU can claim back your liberty.
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An important anniversary slipped quietly by last month without any fanfare, on August 15th, as the anniversary of the day, that President Richard M Nixon, closed the Gold Window, and put the world on the path to financial armageddon.
From that day to this, the U.S. has essentially been able to print up as many dollars as it felt it needed to pay for things it wanted, and forced the rest of the world to accept “funny money” – aka. – Fiat Currency.
The fact that they were able to strengthen the dollar in 1973, temporarily when it convinced Saudi-Arabian leadership to accept an offer it could hardly refuse is still highly relevant…
America would back the House of Saud, with the full military might of its national forces, and the Kingdom of Saudi-Arabia (KSA), would accept only U.S. dollars for its oil, forcing dozens of other countries to trade for dollars, to pay for that oil, and the KSA, would re-invest those surplus dollars in Treasury Bills. Eventually the rest of OPEC would be forced to follow suit or commit commercial suicide.
Over the last 9 months, events in the precious metals markets and geo-political and economic circles, world-wide have been making headlines.
As geo-political tensions rise around the world, I wonder out aloud what is the end game. To learn where we are going, it’s important to know where we’ve been, and we have to look back 40+ years.
If we look at the ageing baby-boomers who are retiring in droves here in the west, (Of which I am one) and as our spending patterns change, we need to understand why this has such a big impact on economies.
In my experience, young people spend their money on a handful of things – Music, Fashion, Booze, travel and generally having fun, primarily in their pursuit of their partner in life – irrespective of their sexual proclivities.
As these people mature, they buy a bike/car, and their first flat or small starter home, and all the essentials of normal urban life – beds, tables, chairs, sofas, kitchen gadgets etc.
Then as they pair and begin to settle down, their partner now safely esconced in their home, perhaps 5 years have passed, and two incomes in one household means for a while they can experience a rise in social status and maybe buy a bigger home or have more expensive holidays. (though things are a little different in recent years as gap year students take the young to the far-flung corners of the globe.)
With women now making up more than half the working population in the west, women are now leaving “bonding” later, and perhaps seeking someone who meets and exceeds their expectations, and thus probably for professional women (i.e. those with degrees and/or professional qualifications) they’re leaving the having of children until they are in their early 30s, or as late as early 40s causing problems for over-stretched maternity departments, and over-stretched National Health Services, as increased age introduces greater risks and higher costs.
By their mid-thirties, people are climbing the corporate ladder, getting increases in pay, generally as their productivity rises in line with their experience.
Output on a national scale rises but this is only temporary unless higher investment in capital goods (new vehicles/machinery etc., that gets goods to market quicker, and/or cheaper) increases productivity further, these gains are not carried through indefinitely though. This is where political mistakes are made, as politicians think that the growth will continue.
As people hit their forties and early fifties, their willingness to learn unless pushed, seems diminished as they become experts in their field, just at the time newer technologies are adopted by the young first.
By the time people hit their mid 50s and early 60s, their abilities are beginning to decline; health issues begin to rise on average and national governments see a fall off in taxes, as some retire early, or die young – though the demands on their national budgets increase as improvements in health-care put additional burdens on national budgets.
Intermittent overseas wars also add to these burdens as those apparently with historical empires adopt the role of world policemen.
This adds further financial burdens on countries, and leads to overspending to maintain prestige, or to appease emotional electorates, or to maintain their leadership role, allowing those with more quiescent military to improve and begin spending in increasing amounts.
This was the nature of things in the west when Britain began losing its pre-eminence, and the U.S. took up the political and economic cudgels.
As a result, we now see the extent to which Britain, and America have over-spent in recent years, as the U.S. deficit grows to 105% of national income, and its budgets become overstretched as its military tentacles have extended now to over 145 countries.
The role of World policeman is an onerous one, and like all great empires this eventually causes a collapse at home, due to excessive spending as tribute (the term used by the Romans to refer to taxes) begins to lessen.
As demographics affects all economies, those with rising populations have greatest demand for housing, food, water and the other essentials of life, and when economics fails to meet those requirements, people look for scapegoats. Those with the most usually get the most scrutiny and criticism.
But to get back to the title of this piece, where will this ultimately lead us?
As Vladimir Putin, and Xi Jinping, grow their economies, and grow increasingly wary of U.S. dollar hegemony their actions have consequences for all of us.
China has in recent years agreed bi-lateral trade deals with a rising number of countries to reduce the dollar from its trading, and China in particular has used its excess dollar reserves to buy increasing amounts of Gold and Silver, and overseas resource assets with precious metals and other precious resources for its industries.
Russia too has sought to lessen its dependence on dollars, and the BRICS Development Bank recently announced, will wean these emerging economies off the dollar as the $100billion in Capital gets used to help out economies in difficulties. Will some of this capital be used to buy Precious Metals? It would appear so, as China now trades more Silver in physical metal form, than the COMEX, the former leader in precious metals derivatives trading.
This will ultimately lead to a dollar collapse, and like a wounded animal, this may lead to the U.S. lashing out to protect its interests, as it has been in the middle-east and in Ukraine, where fights to protect access to middle-eastern oil, paid for with dollars, and for access to Ukrainian agricultural land are being waged by proxy military. But the collapse of the dollar unless mitigated by the increasing energy production, may cause the whole world economic woes, or worse.
This involvement in the middle-east has caused many of the problems as those with a different view of the world seek to eliminate western ideologies from their countries. These skirmishes though, may grow to encompass those other major economies – China and Russia.
James Dines, the economic mind behind the Dines Letter and Dr Paul Craig Roberts former adviser to Ronald Reagan, also thinks that we are on the verge of a major conflagration and James Rickards a CIA adviser on financial matters, in a recent interview claims the U.S. is staring down the barrel of an economic gun.
But also in January 2014, the United States government entered into a deferred prosecution agreement with JPMorgan Chase which is the biggest bank in the United States and one of if not THE biggest banks in the world giving those who have benefitted most from the financial mess the U.S. has gotten itself into essentially a free pass.
The recent prosecutions of Financial Institutions has resulted in fines being paid, and JPM – probably the biggest offender, has paid approximately $29 billion in fines – yet not one senior banker has done any jail time.
When Janet Yellen begins the next round of Quantitative Easing (which might be called something else) all hell will break loose in the precious metals markets.
Buying Silver… Why NOW?
The reasons are not so obvious.
Silver is collectively, a monetary metal, an investment vehicle, and an industrial material.
Silver’s role in international finance has been prominent over several millennia, as this shiniest of metals was used in Roman currency, and only when Emperors devalued the money by reducing the silver content of coins, did they suffer the wrath of the people. (See: The Coming Battle – 2013)
Industrially, silver is the most widely used commodity on the planet, reputedly used in 10,000 applications and rising. Second only to oil in importance, but its price has been walked lower for decades, as silver was first taken from its pre-eminent role in both American and Chinese money with its removal from the dollar, to junior partner, to minimalist role, and finally in 1964 to negligible role as U.S. currency removed the last remnants of the metal from American currency.
Is it significant, that just 7 years later, on August 15th 1971, the last vestige of precious metals, was removed from the American financial system?
If the death of President Kennedy, and Louise Auchincloss Boyer are anything to go by, I think so.
But silver’s western denouement, means that the East has been able to accumulate this most precious of precious industrial commodities at prices unlikely to be seen again, after this financial collapse begins in earnest.
Silver historically was bought in ratios circa 16:1, compared to gold. We see evidence of this still all around us – 16 ounces to the pound, in the U.S. – 16 fluid ounces to the Pint and this ratio has varied in recent years as silver’s role in monetary matters has been slowly extracted, but its time will come again – it always does…
And with the current Silver/Gold ratio of circa 65:1 when it does go up, because it currently comes from the earth at circa a 9:1 ratio, then its rise will be meteoric.
And if that wasn’t reason enough to be accumulating…
These links should help you make up your mind…
And this page shows you were you can STILL buy silver coins and bars at VAT free prices, and have them discreetly shipped to your door.
And you can get further news on these matters at:
As the war of words continues between the Western and Russian sponsored media channels over what really happened in the Ukraine, it is evident that there is much more to this, than meets the eye.
I am an avid watcher of alternative media, and much of what gets aired through the MSM (That’s MainStream Media) which are dominated by American Corporations – CNN, FOX News, ABC, and in the UK, SKY News, which is part of Rupert Murdoch’s global media group, and of course good old Auntie Beeb – the BBC, seems to be supplied by media flunkies perhaps with an agenda to push – the PR guys.
Of course this is a natural course of events where money is the dominant force driving corporation’s decision making processes, but we would do well to remember that the media, are supposed to serve us, by providing a diversity of views, and by having a diversity of outlets.
Russia, China, and the Middle-East came late to the media party, with RT (Russia Today), CNC (China News Corporation) and Al-Jazeera UK, and US, (funded ostensibly by the Qatari, media group – Al-Jazeera Media Network)
Whilst these media corporations may have existed prior to the European wide Satellite Broadcasting revolution of the 1980s, the people of Europe and America were not granted the opportunity to see these channels, due to limited broadcasting rights, and limited distribution channels, and thus the population’s view of the world is clouded by the political views at the heads of these corporations, and thus any agenda pushed by their paymasters..
That said, we all have to recognise that national corporations will have a bias in favour of their own country, and the culture of the society colours the style of presentation of the news, and the historic value systems of the nation in which these corporations originate.
Wherever though we see media bias, we have to be able to filter out the noise, to get to the truth, that we as voters, need to fulfil our role in society as citizens (Tony Benn, prefers this particular word to the one of “Subjects” with its historical significance).
The citizen’s duty in a democracy, is to watch those who would seek power over us, to hold them to account, and we cannot do that if the media corporations are in the pockets of politicians, or financiers, who set the agenda, and the tone of the news and the politicians imbue us with an acceptance of secrecy.
The old adage of Edmund Burke that: “The only thing needed for evil to triumph is that good men do nothing” is a truism, but for the demos (the public) we rely on media corporations to expose those events of relevance, and to bring to our eyes and ears through print, and multi-media, the bad or evil that some men (and women) do .
American President, John F. Kennedy is widely respected on many things, and widely held up as a beacon of probity in public office (if not for events in the bedroom), and in a televised public address he stated:
” The very word ‘secrecy is repugnant’, in a free and open society, and we are as a people, inherently and historically, opposed to secret societies, to secret oaths, and to secret proceedings.
We decided long ago, that the dangers of excessive and unwarranted concealment of pertinent facts, far outweighs the dangers which are cited to justify them.
Even today, there is little value in opposing the threat of a closed society, by imitating its arbitrary restrictions. Even today, there is little value in ensuring the survival of our nation, if our traditions do not survive with it.
And there is, very grave danger, that an announced need for increased security, will be seized upon, by those anxious to expand its meaning to the very limits of official censorship and concealment,. That I do not intend to permit, to the extent that it’s in my control. And no official of my administration, whether his rank is high or low, civilian or military should interpret my words here tonight, as an excuse to censor the news, to stifle dissent, to cover up our mistakes or to withhold from the press or the public, facts that they deserve to know.”
So, is Edward Snowden a traitor, as he is painted by certain sections of the political class and media, or the saviour of the American ideal as espoused so eloquently by President Kennedy?
More recently Ron Paul, that Libertarian, who rather belatedly joined the republican ticket in America, because his views were shut out by the media channels, focussed as they are on the duopolistic activities that shape American politics, and the view that politics should be viewed through the left-right paradigm.
As the Estonian Prime MInister was recorded stating that the group known as the “Maidan” were indiscriminately shooting both sides of the Ukrainian divide we have to ask “WHY?” and also the seemingly oft quoted latin phrase “Qui Bono? – Who benefits?”.
Whenever economies suffer downturns, there are those who offer one or other solution to the perceived problems, and those who would be on the losing side undoubtedly wish to hang on to the money they have made which others take offence to, or wish to use in government taxation.
Just as the last time that the west was mired in economic pain – the 1970’s and early 80’s, we saw unrest in the middle-east in places like Libya in 1969 as Muammar Gaddafi seized power, 1973, when Saddam Hussein seized power in Iraq, and as Khomeini re returned to Iran from Paris, France to begin the Iranian Revolution, when the Shah, who had been appointed or at least supported by American Oil Barons, was forced to flee.
These revolutions occurred precisely for the same reasons we see unrest in the middle-east and Ukraine today – MONEY – or rather “Sound Money”.
When one country can just print up its own currency to buy things that other nations have to provide through blood, sweat, intellect, and capital (savings) to produce, then that country has an unfair advantage, And sound money is the antidote to many of today’s problems, which is why former presidential nominee, and Republican – Senator Ron Paul, has on numerous occasions called for limited government, a smaller military, and a return to the policies of the early republic, when the constitution required the new republic to maintain good relations with all countries, and to not favour any of them.
And to defend itself from tyrannical rulers, the new constitution required the population to have a well armed civilian population, who could be relied upon to rise against tyrants and those who would seek to use the population for their own selfish political ends.
This is the main reason why those in power at the head of the U.S., are keen to influence the Constitution’s 2nd amendment, because without those guns in the hands of the good people (In the main) of America, they can’t impose many of the rules and regulations that they feel they need to keep order, and it is precisely why the use of drones is such a cause of controversy.
There are some who feel that the 9/11 disaster was a secret plot that was allowed by some Neo-Cons (New Conservatives) who want to return the country to a pre-republic era when the Aristocracy controlled everything, and the people were mere serfs – like cows, to be milked daily, and that the events in the Ukraine is an extension of that thinking, as European politicians controlled by the aristocratic bankers of yesteryear, want to extend their control over the fields of the Ukraine, for the food needs of the European population, and for its military significance, with its Port in the Crimea, which President Putin, needs to allow his Naval vessels to access the Black Sea, and through the Bosphorus, to the Mediterranean and beyond..
In fact the phrase a “New World Order” has been used by many politicians keen to have a one-world government, ruled by the few who will no doubt appoint those who already wield significant power by mere dint of wealth – the Plutocrats.
Those groups in the dark recesses of Ukrainian politics, with fascist tendencies it is alleged, have been financially supported in an effort to overturn the backward looking Yanukovych government which sought financial help from its former Soviet pay-masters, and there were many who in the west of the country wished to look towards the European Union for help and progress. Perhaps the choice was a lesser of two evils?
Perhaps the REAL reason that the west has been so vociferous against its former Soviet opposition, is because the West needs pro-western middle-eastern oil, (and oil from the “Stans”) and Syria’s Basher Al-Assad, has already agreed a pipeline from Iranian gas and oil-fields, to the Mediterranean coast, from Iran (a Chinese and Russian ally), through Southern Shia controlled Iraq, Syria and Lebanon (a Syrian ally) to allow Iranian oil and gas to western and European markets, by-passing the pro-Western. Arab nations of Saudi-Arabia and Jordan, and Russia’s Naval Fleet stationed as it is in the Black Sea stands as a bulwark against their political machinations?
Any attempt by the west to use force in the region could be blocked by the Russian Black Sea Navy, which in 2011, added to the number of ships stationed in the Eastern Mediterranean Sea, and which use the Syrian Port of Tartus, which has been in operation since Soviet days.
The events in the bread-basket of the former Soviet Union, may well lead to major political upheaval, and the secession of the Crimea, which given recent unrest, is looking increasingly likely, despite Ukrainian protests that their referendum is un-constitutional.
Watch this Space.
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I’ve heard it said by some, that there is a “Tug of War” being waged between the forces of Deflation and Inflation.
The Federal Reserve is attempting to create just a little inflation with its political goal of 2% inflation. This halves the value of your money over 36 years by the way – under the “Rule of 72”, which states that the number 72, divided by the interest rate (or inflation rate) is the number of time periods that your money will halve, or double – assuming you are on the receiving end of the deal.
The West’s demographic time-bomb, which got a mention in last night’s television programme on the rise in the number of benefits recipients was a case in point – and which includes amongst others – Peter Stringfellow, who has returned his winter fuel allowance to the chancellor with a note to say he doesn’t need it, for the last 3 years.
The end of the second world war in 1945 in Europe, saw the west’s population embark on the emotional equivalent of a spending spree, and all those returning husbands, boyfriends, fathers, and brothers – relieved at having survived, set about creating the “Baby-Boom” generation. (of which I am a member)
In America over a 15 year period, 75 million new citizens joined the population of America, and a further 8 million joined them from around the world, but mostly from the Hispanic community. That bubble in births, has been the driving force behind much of the economic success and malaise of the last 65 years.
The first of those baby-boomers began retiring as long ago as 2003 – 2007, as some of the better off ones could, and were buying property to rent out as a way of funding their retirements, of course, given the ages of their offspring, who were at the time also setting up single family homes to raise their impending brood, the price of housing went through the roof. Of course this was all made a little easier than perhaps it should by the lax lending policies of several countries, as the banking sector gave the population the rope with which to hang themselves.
This also happened to almost coincide with the wild spending spree that business of the late nineties was forced to make, as the world’s computer systems had to be replaced en-masse as the end of the millennium approached.
At the time, I was an I.T. Consultant, advising companies on their computer hardware and software needs, but I also spent time as a software engineer, writing the code, that would allow the storage of a full date with a four digit year, which needed 32 bits of data to encompass, and allow calculations with.
As the computers in use the world over had to be replaced with 32-bit hardware, 32-bit operating systems, 32-bit applications and 32-bit databases, particularly for financial applications where accuracy was paramount, especially for debts and credits on Bank ledgers and on Insurance Industry policy statements.
This immovable deadline, forced the biggest boom in tech-spending the world has ever seen, created a boom in tech company profits, produced a boom in tech-wages, and in the financial world’s profit centres of New York, London, Berlin, Paris, Frankfurt, Singapore, Hong-Kong, Tokyo and other major centres of finance, drove up property prices as these newly rich technical staff competed for the limited supply of housing, with the financial industry stalwarts of the previous 25years.
The housing boom rippled out into the wider economy, pushing up house prices elsewhere too, like the spreading rings of a pebble thrown into a pond, as the waves spread out around the original “Bloop”, of the stone…
Of course it was inevitable that come January 1st 2000, the bulk of the spending would have already been done, and the hangover would start – apart from a few companies whose systems needed further remedial work. By March 2000, the numbers on the corporate profit and loss and balance sheets of these tech giants revealed the truth – the splurge was over, and the Nasdaq collapsed.
The baby-boomers didn’t just happen in Europe, and America though. Because the whole of the world was involved one way or another in the worldwide conflagration, the relief felt the world over led to similar expressions of relief, and China, and the surrounding east did likewise.
Japan was perhaps different. Perhaps because they were isolated from the world their baby boom was ten to twenty years in advance of the rest of the world, as they had their baby-boom during the 1920s, as America expanded in the Pacific Ocean region, and new trade began as the cities of San-Francisco, Seattle, Los Angeles, and the others of the West Coast of America traded with their Asian and Australasian peers. Japan now has the highest average age population in the whole world, with 25% of its citizens either in, or close to retirement.
The earthquake of 1906 off-shore San-Francisco which almost totally demolished the city, led to a rapid housing boom, with this influx of new capital, from Insurance companies, which caused the financial problems of the era, but also led to a boom in Asia, as trade rose to rebuild the stricken city.
This leads me to the meat and drink of this post.
Deflation Rules. Ok?
The current forces of deflation are largely being caused by the baby-boomers saving for their retirements. This huge pool of accumulating wealth, drove down interest rates, gave Gordon Brown, Barack Obama and others the opportunity to tax these pensions, drove up the prices of equities to previously “overbought” territory, and has led largely to the problems of the last 15 years.
As the amount of accumulated wealth was parked in Pension funds, Insurance Savings, Exchange Traded Funds, and other products the Banks were able to take these huge sources of funds to lend to Governments, and Corporations who assumed this money tap, was never going to be turned off, and governments spent with gay abandon as might have been said a few decades ago.
Of course, the public sector managed to grow because the taxes generated during this heady period, came at a time when the private sector was having to compete with the newly emerging manufacturing nations, and as a result were forced to become efficient by exponential degrees.
The public sector, which went largely unscathed during this period, now needs to be reined in, as the tax base shrinks, and that has led governments to reach for money from central banks. Of course the Central Bank of America – The Federal Reserve – was set up after the 1908 financial crisis, which had partly been caused by the San-Francisco earthquake, mentioned previously, but also because of the growth of the Banks and their power to control the supply of money through fractional reserve lending practices.
For every $100 or £100 deposited in a Bank’s deposit account, they are allowed to lend out the vast majority of that money. Of course when interest rates are low, and the markets stable, they tend to lend out a bigger percentage – as much as 95% of the money, than otherwise, and that money lent, gets deposited in another bank, which gets lent out again and again. As interest rates begin to rise Banks need to carry more capital as some of their loans turn bad. This is why in recent months, the ECB and BoE have required their banks to increase their capital base, and this led Barclays to ask its shareholders to stump up some new cash last year.
It is also why Lloyds-TSB, and RBS needed rescuing by the British tax-payer, and Northern Rock suffered the ignominy of seeing its depositors standing outside its doors trying to get their money out before the Bank went under. It’s also why Cyprus had to rob its citizens of their cash held in their nation’s bank vaults… Rumours abound that other banks within the UK are far from over this recent turmoil, and in fact may be in a worse situation.
Money in bank vaults is secured by deposit insurance, but only up to a point. So if you have just won a sum on the lottery, sold your old uncle’s E-type Jaguar or old Ferrari, and one or two of his Gainsboroughs, Picassos, Rembrandts, Renoirs, or even Hockneys, then you would be wise, to ensure you don’t have more then £85,000 in one bank or branch.
Of course if you hold your wealth in Gold and/or Silver, the storage fees might be burdensome, but at least you might get your money back – assuming the government doesn’t do what President Roosevelt did in 1932, and make the holding of Gold illegal once again. (Silver was added to the prohibited list in January 1934)
So how is the Fed trying to tackle this world wide saving spree?
By conjuring up money out of thin air to lend to the banks at below inflation rates, it does two things: First it is a low cost way of re-capitalizing the banks, who can lend it to the government at slightly better rates (1% on a few billion is not bad for just parking your money)
But second, this cheap money has also rescued the collapsing equity markets, and driven them to new highs in America. The UK, FT100, which has a higher proportion of Gold and Silver miners has suffered in the retrenchment of the commodities space. But all this new money will one day have to be paid back by hard-pressed tax-payers.
During the 1970s, taxes were higher, and incoming Chancellor of the Exchequer – Denis Healey famously said in 1974 that he would “Tax the rich until the pips squeaked”. Just 2 years later, he had to suffer the embarrassment of being re-called from his holiday near the mediterrannean sea to deal with a currency crisis, and later call in the IMF to bail out this once proud nation. Britain was reduced to the begging bowl to fund its government spending.
Thus began monetarism in Britain, which ultimately led to the “Winter of Discontent” in which the unions attempted to force through wage rises not earned by being more efficient, and the next year Margaret Thatcher was elected in May 1979, vowing to “Get Britain working” again.
The Debt in Britain, which grew steadily during the early New Labour years, ballooned as the taxes from lax Banking regulation, and Tech industry arrived, and then subsequently disappeared forcing Gordon Brown to move the goalposts, inducing sole-traders to register as Corporations, on the pretext of a 10% base tax-rate, before reversing it the following year, snapping it shut again by doubling the rate once more.
As the manufacturing base shrunk in Britain during the 90s, as more and more of what was once manufactured here, was now bought in – designed in the U.S., and manufactured in China and the Far-East, Japan had stagnated for 20 years as their debt which ballooned during the 80s weighed heavy on their economy, and its population aged.
Britain’s aging population also began retiring in earnest at the start of the millennium, and the tax base shrank even further. More and more of the working age population are now retiring, collecting their pensions, and reducing the tax take of the Government.
Britain’s national debt is now believed to be close to £1.4 TRILLION. (1,400,000,000 British Pounds Sterling)
Which brings me to the name of Britain’s money. Back in the dim and distant past, Britain’s currency was literally – a pound weight of Sterling Silver. (.925 under the millesimal fineness system) and the British Golden Guinea, was a one ounce Gold coin – James Bond used some of them in one of the early Bond films.
Imagine for a moment owing 1,400,000,000 pounds of Sterling Silver... The world wide production of silver is about 700 million troy ounces of silver. That means the British people would owe the equivalent of 29.19 years of the global annual production of Silver to these Bankers…
So who are these Bankers?
Think, Goldman-Sachs, JP Morgan, Deutsche Bank, Warburgs, and Barclays; think Rockefeller, Rothschild, and others of the wealthy banking elite who now hold court over Governments at Davos in the World Economic Forum you see on Bloomberg every January. And why are many of these meetings held in secret? Perhaps because they wouldn’t like the sheeple – that’s US – from knowing what gets discussed there.
The additional paper notes (currency) bid up all kinds of prices, and this is where the Tug of War comes in. Depending on the rate at which these notes are printed, or produced electronically these days, this will determine the rate of “Price Inflation”, and the point when the deflation spills over into inflation is unpredictable.
Deflation first… Inflation later.
I expect that in the short term, inflation will be modest or negative over the next year or so, as the number of baby-boomers retiring increases, but by 2017, or 2018, this will change as retirers peak. That will be the critical juncture in my opinion.
The money that has been pushed into the system since 2009, will leak into the wider economy, and begin to increase prices, and employees will probably begin fighting for wage increases as the current inflation rates calculated by the CPI method, hides the real inflation rate for most ordinary citizens.
By understating the effect of inflation on incomes and food and other essentials such as petrol, you postpone the backlash, but it will come.
Unfortunately, if you have to go to work in your own vehicle these days, the price of fuel is a major factor, and not one you can easily avoid. This will probably mean that the price of gold and silver will remain in the doldrums, rising gently until China notifies us of its intentions to hold 10,000 tonnes (or tells us it’s achieved it), and/or inflation gets to 5% as measured by the CPI numbers.
If you love movies, there’s films produced by Mike Maloney, of GoldSilver.Com, who after his mother lost her former husbands savings, took up the role as her financial adviser, and built a business around it. He now educates the people around the world about money, and acts as a global advocate for precious metals backed currencies.
The outcome of this global experiment will be messy. If the world’s Central Banks continue to inflate the money supply, the outcome is a given. The Weimar Republic and Austria, in the post World War 1 world, tried this experiment, and Zimbabwe in recent years tried it too with the Zimbabwean Dollar, which in one of the Mike Maloney videos, Mike gives away hundreds of millions of Zimbabwean dollars to the participants in his lecture.
In the book – “When Money Dies: The Nightmare of the Weimar Collapse.” by Adam Fergusson, the author examines the economy in Germany and Austria in the post WW1 period, and by way of analysis looked at the price of eggs. The price of just one egg in 1923, would have bought 500 Billion eggs in 1913 – That’s inflation.
I’m not saying that will happen, but something approaching it might.
In Britain in 1973/74, inflation raged at 26.9%, and the lights went out as Coal miners, and Power station workers went on strike for higher pay, against a background of rampant inflation. Edward Heath went to the polls in February 1974, and asked – “Who governs Britain?”, and the electorate said – “Not you!”.
If you are saving for your retirement, then some Silver or Gold or other hard assets are a must. If you want to read in a little more depth about the above, you can still get a FREE copy of “The Coming Battle” from the web page linked to.
Mike Maloney can be found on YouTube.com and has probably a dozen videos, which tells the story of the world’s money since the time of the Babylonians, and how you can protect yourselves.
Because Gold and Silver are both money and commodities, they are useful as money, and have been for more than 5,000 years. If, or rather WHEN, inflation takes off, the price of both will rise exponentially.