Fed

Sorry – We don’t need you now – You’re Redundant!

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The words you don’t want to hear.

Like many before you, imagine hearing those words, just as many do each year usually
when they least expect or need it – like just before Xmas in December 1999, as
happened to me, and again after I and two others completed the project we’d been
working on for 6months, just 8months later, I heard those words a second time…

And less than 18months later as my employer Marconi Software Solutions was closed
down by its parent corporation, GEC-Marconi, as the then parent company reduced its
workforce from 55,000 employees to just 12,000 in a worldwide re-organisation.

I was a software specialist – a “Techie” who worked in and for, some of the biggest
corporations in the world. and the life I had worked for 20years to make, was
gone…

Within the next 5years, if you don’t work for one of the many organisations who make
at least some of their living via the internet, or run one of these organisations
yourself, then you may be destined to hear those same words for yourself.

How would that affect YOUR life?

How would having no visible means of earning a living affect you? Your mortgage?
Your kids? Your spouse or partner? Your retirement? How would that affect your
relationship if you’re supporting another individual for years, or if that someone
was supporting you?

I understand, its difficult to see things when they’re far away, when you can’t see
the direct impact on you. BUT we’re in the early stages of another part of the
Digital Revolution.

Don’t believe me?

The Western democracies are experiencing the biggest financial upheaval since the
dawn of the Industrial Revolution. They might not know it yet, but they are.

How so?

When I was a much younger man, I read a couple of books by a man called Alvin
Toffler, the first called “Future Shock” and the other “The Third Wave” were a
visionary’s peep into the future.

His style, though eclectic, served up a vision of the future, that might just
finally be arriving.

At the time, we were experiencing the start of the digital revolution – a transition
if you will, from an analogue world to the digital world we now enjoy.

Just like the Industrial revolution that had two major waves – initially coal and
steam engines, then later oil, and petroleum production which ushered in a huge new
wave of industries, and the motor-vehicle, we are now experiencing the second phase
of the digital revolution.

The first phase shrunk the huge mainframe computers used by the military, and Universities – first to mini-computers, and then to micro-computers; it saw the end of the “typing pool”, and secretaries, and they all became admin personnel, or administrators.

The tail end of this phase ushered in inter connectivity of computers beginning in 1969,
as they connected four Universities in DarpaNet, (Defence Advanced Research Projects
Agency NETwork) and later Arpanet in 1976 as Unix became the Education sector’s
Operating System platform of choice, and ‘C’ became the third of a trio of
programming languages that were readable by humans. – The first being A and B.

But that was then, and this is now.

The end of the PC era effectively began towards the end of the millennium, as the
world’s computer hardware manufacturers realised they needed 32bits to store a
“Date”, and a 32-bit software environment to run it all, just at the time that Tim
Berners-Lee was working in the Hadron Collider and wanted to share industry files
with others in the Physics community, and came up with the World-Wide Web.

That little way to allow people to find documents on other computers without needing
to know what they’re called, or even where they are, coupled with the extensions to
embed pictures, and later videos, and then a new wave of this digital revolution
started, as it merged the web with the phone, shrinking it and making it wireless,
putting the power of a mainframe into your pocket.

That was the final stage of the communications revolution, but now the real changes
will sweep away whole industries, put millions of Chinese factory workers, out of
jobs, send Bankers into a tailspin, shrink some of the biggest companies on the
planet to the size of a handful of people, and enrich their owners like the wealth of
Kings and Queens of the early rennaissance.

How so I hear you ask?

Just as the printing press put scriveners out of work, and ushered in the publishing
industry, and the PC put secretaries out of work, so the 3D-Printing Press will
revolutionise manufacturing.

3D Printing

Software supplier Dassault Systemes of France and 3D Systems Corp are among the
leaders in this 3D-Printing revolution. According to the Motley Fool web-site, we are at the beginning of the end of Chinese manufacturing dominance, but will it be also a revolution in other industries.

Imagine, if you will, having one of these $1200 printers in your garage – just like
the one found in a Manchester out-building late last year, which had the designs and
a partially completed functioning gun.

The same gun design which an Austin, Texas, University student, video’d firing at a
rifle-range. The magazine was also manufactured on that same printer.

Now, we learn that these 3D-printers can manufacture – print – live cells creating
live organs such as the kidney used in a live organ transplant, rubber, plastics,
metals, even building materials in upto 99 different materials.

If you work in the building industry and the housebuilder you work for doesn’t use
this technology, how will they compete with a company that manufactures 40 storey
tower blocks in a factory and builds them in sub-assemblies to be assembled on site
in days, rather than weeks. If you’re an administrator, brickie, techie, plumber
electrician or driver, where’s your JOB if the company you work for no longer
exists?

Of course, designers, architects and engineers, will also find this technology a blast.,
just as many already are. Printing in glass, wood, rubber, steel, concrete, or even
a combination of materials.

For the ladies, you might be pleased to learn they can even print chocolate.

BUT, if we can produce a design in one part of the world, and print it off on the
other side of the world, where does that leave the transport and logistics
industries? And if designs are everywhere, then where does that leave factory
workers if components can be manufactured -printed – as and when needed? A complete car has already been produced using this technology.

If you work in the minerals industry – producing the raw materials for this
brave new world then you would appear to be relatively safe perhaps even increasingly in demand – for now.

If you don’t need a refinery to make things, what happens to those workers who work
in those industries?

And if China and India have several hundred million, perhaps a billion people
between them unemployed, what will those two countries do to employ their hundreds
of millions of unemployed, and angry young men?

The last time this happened was after the 1908 Banking crisis, leading ultimately to
the first world war, and we all know what that outcome was.

The Banks though too, need to be concerned at these changes, as the crypto-
currencies previously mentioned replace real folding paper money, and everyone’s
computer or smart-phone can be a bank vault, how will Banks make money?

Perhaps the GRG (Global Restructioning Group) of RBS which was recently criticised
for aggressive tactics, when it “pulled the rug from under” the feet of dozens of
small businesses, is the way they’ll do it, making everyone a rent or debt slave.

A report on RT today told of a hotelier, who was just 11 days from re-opening a hotel
after a major refurbishment, when their Bank Manager rang and said that the £1.6m of
their loan agreed and still outstanding, couldn’t be paid, as they had run out of money, and the business was effectively bankrupt.

As the man told of losing his hotel, and the Bank taking it into their property division, the hotel opened on the day his wife was diagnosed with cancer except now the Bank owns it.

The Banks who enslave people with mortgage debt are using the original old french
meaning of the mortgage – the “DEAD-HAND” of the mortgagor, who controls the life of
the mortgagee. Only the elimination of the debt can free the energies of the world,
and this means taking away the power of the Central Bankers to create money out of
thin air.

Gold, Silver and even Bit-coin may be the tools of retribution. However, in 1933,
President Franklin Delano Roosevelt, issued executive order 6102, which made the
ownership of Gold a criminal offence punishable by upto a fine of $10,000 – a HUGE sum at that time, or a period of upto 5years in prison. Silver was added to this list in 1934.

It has just been made illegal in China to trade bit-coin, how long before other
autocratic governments do the same?

But this new industry can’t be un-invented.

Business Insider research analyst – Pascal Gobry calls it:

“THE NEXT TRILLION  DOLLAR INDUSTRY.”

If you are at risk, maybe the answer is to start your own business, and accumulate Gold or silver.  Just make sure you keep it under wraps, and out of the hands of Bankers.

As Long-Term Capital Management, MF-Global, Lehman Brothers, Bear Stearns, and others have left so-called gold owners without their physical metal, meaning they are just another creditor of these now defunct Institutions and Banks. It seems as if Cyprus is the model of the future…

How will you pay for food if your savings go the way of the Dodo?

Until Next time…

W.

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TAPER TANTRUMS AT THE FED? (Dec 19th, 2013)

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“You can resist an invading army; BUT you cannot resist an idea whose time has come.” 

 VICTOR HUGO

Outgoing Fed Chairman Ben Bernanke yesterday informed us that the Fed would begin tapering its Bond purchasing programme and would reduce its next round of bond buying by some $10 Billion, to $75 Billion.
This was interpreted by the markets as good news – because the good chairman, had previously told the markets, that they would begin tapering “when the numbers supported it”. Stock markets rose instantly by 1% or over.

This means the markets now believe that the economy is growing sustainibly, and that we are on the road out of the financial turmoil we have experienced over the last 5 years. One further outcome is that the Gold and Silver precious metals markets sold off.  Gold dipped below $1200, with Silver dipping below $20 per ounce.

However, I am not so sure. Although the tapering is likely to be spread over a year, as the commentators on Bloomberg suggested, it is not outside the bounds of possibility that weak numbers from the Xmas retail sales, will show up in January and February and suggest that the economy is not growing, but it was merely a splurge as eviscerated consumers fight back at the gloom and doom they see all around them, particularly as house prices are reported as having risen to bubble levels again. Pull backs in precious metals were to be expected, though there were many who have suggested that the current price news means that the boom in precious metals is over, and that the price will likely fall further to perhaps the $870 region.

There are a number of reasons why I think this premise is false.

Reasons to be Cheerful – Part 2

A fall to the $1,000 level for Gold, I once thought possible, as it might follow the pattern set in 1974-76, when it halved from almost $200/oz to $100/oz in a little over an eighteen month period. However, I now feel the Chinese, Middle-Eastern and Indian Gold and silver buying this time around has raised the floor to the level reached back during the summer. Silver too had a major pull-back during the 1970’s.

To understand the reasons for any outcome, we have to understand several things: We have to understand the drivers and the levers applied then and now to make a comparison.  Back in the late 1960s and 70s, those retiring were born at the turn of the century (1890 – 1910) Those born during the “Fin de Siècle” (The end of the 19th century) were the off-spring of those who had enjoyed the boom years of the 1880s. They grew up during the late-Victorian, and early Edwardian periods, and were the cannon-fodder of WW1, and the Flappers of the 1920s.

In the UK, that same generation led mostly gruelling working lives in factories, with the lucky ones who lived near the capital finding work in government and commerce – banking, finance, journalism, publishing, local and central politics et-al…

Their hard work and tenacity in the face of adversity led to the creation of the welfare state, we took advantage of after WWII. As they matured, when they saved, that capital built up on Pension companies and Bank balance sheets, and led to lower interest rates. As they began retiring in the late 60s they drew down their pensions and bought gilts (Bonds) which drove down interest rates further, and pushed up house prices, as mortgages got cheaper due to the lower rates, just as the baby-boomers were buying their first flats and homes.

When home prices got too high by the early 70s, as the baby-boomers married and had kids, their parents (our grand-parents) were retiring in an economy that was shrinking for several reasons. We were at the end of the technology cycle – the Railway had begun shrinking in usage as the car became cost-effective due in large part to cheaper oil, and Cheap Air Travel was only just beginning for the masses. But also because of demographics.

Those retirees began dying in droves during the 70s and early eighties, because at the time, they lived on average to late 60s.
The Politicians injected free money (QE) which because of lack of investment opportunities went into Gold and other hard assets at a time of rising oil demand, and the oil price had to rise. Of course, at the time, demand for middle-eastern oil was rising, partly due to greater usage, but also, for political reasons too, because they had rising populations back home… (Just as now) – Mubarak, Ghadaffi, Saddam Hussein and Khomeini, all came to power during that period.

The BIG change between the 1970’s and now is that people are living longer – on average to 81 for a white American woman, and slightly less for a white man. Black women and men live slightly less than both white men and women on the average.  So, the 75 million American baby-boomers (and a similar number of Europeans) will be dying off come the 2020-2030 period. THAT will probably mean MORE QE to counteract it, and so I expect to see the blow off phase in precious metals – sometime after 2018.

Reasons to be Cheerful – Part 3

The mainstream media announced the other day, that Bitcoin, which I have written about previously, had suffered a serious decline in price because the Chinese authorities, had attacked it and made its trading illegal. People can still use it to pay for goods and services, but it therefore becomes like any other digital currency. In some Western European states, Eg: Germany, taxation is payable at the VAT rate as for any other currency. Bitcoin therefore is losing a little of its lustre.

As I have written about elsewhere, this was inevitable as it is seen as a threat to the Central Bankers and the politician’s power, and in authoritarian states, it is likely that any threat to the power of the politicians and their power over the economy will be challenged, so we may see further attempts by central authorities elsewhere, to weaken its new found status. Bitcoin prices have fallen from over $900 to $500 as a result.

So, where does this leave us…

Anyone concerned at the deficiencies of crypto-currencies, especially in an inflationary environment will undoubtedly have to follow the sheeple into the stock-markets of the world to maintain or grow their savings. However, there will be many of those very same persons who will be tempted back into precious metals, works of art, and other collectibles, such as stamps, coins, rare vintage cars, fine wines and period furniture.
All these items will help preserve and increase wealth for those with the know how, or access to it.

We shall see when the price inflation will finally arrive, but it won’t be pretty when it does…

And, when it happens… GOD it will be scary – Weimar Republic territory I suspect… (See the book – “When Money Dies” by Adam Fergusson) or “The Coming Battle” by M. W. Walbert and Me – for the time being available for free.

There have been at least 6 countries that have suffered economic collapses – France during the 1760s, Germany and Austria in the post WW1 period.  Argentina during the 1980s and 90s, Yugoslavia in the early 1990s, Zimbabwe in the early 2000s and the whole of the Middle-East in the last few years. And we all know where that led.

Until next time…

Dinosaurs, Debt and Destruction

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I’ve been thinking about the World Debt problem for some days, and searching for a theme to make it lively. I couldn’t see how the citizens of the world can get out from under this pile of debt we’re leaving our children… (Mine’s 19 by the way and a Bio-Chemistry student at Manchester University and loving it. – Hi Rachel?)

Anyway, we have a US. economy, with a national debt of close to $17 trillion, a European one with €14 trillion, a British one with over £1trillion, and a Japanese debt to economy ratio of 270% of GDP by the end of next year… (And the Chinese?)

When will politicians realise you can’t steal from the future, you can only borrow it. And the day you start to pay it back you shrink the economy.

Every hundred years or so, we need to clear away this debt so that we can get out from under it, and that is usually done by a war…

The Central Bankers have for a hundred years been building this ship, and the ship is now getting so big the ocean won’t be big enough to sail it.

Banks – Too Big to Fail?

So, the “Too Big to Fail” Banks, who get their blood money, from the Fed… They remind me of Tyrannosaurus Rex, Gigantosaurus, and the great plant-eaters the Brontosaurus and Diplodocus… They must have felt quite secure in their bigger than you world, just days before the sky darkened, and flamed, and a meteor hit the boggy marshland that is now beneath the Gulf of Mexico, throwing up mud, plants, rock dust and huge plumes of water and spume. Over the days that followed, the dust encircled the globe, and the planet cooled.

The day that changed the world, and the world view.

The Tidal wave probably spread to the shores of Africa, Europe, and beyond. The entrance to the Mediterranean was opened and washed away sending the wave as far as present day Israel and Egypt, and perhaps even through the straits of the Bosphorus to the Black Sea. and even the Persian Gulf.

In the space of three days or less, the planet probably cooled by 5-10 degrees, and the world had changed irrevocably. Plants died from lack of sun, rain was acidic, and the mammals scurrying beneath their feet, who were warm blooded took their opportunity as ever larger dinosaurs succumbed to the devastation, providing a veritable feast of the carcasses now rotting in the moisture laden atmosphere.

Over the next decades the air cleared, and new plants and animals emerged to take the place of the great lizards.

Sometime in the next 10-30 years we are going to see a similar event, and the TBTF Banks, will be like T-Rex and the Brontosaurs.

Smaller, nimbler, perhaps warmer creatures will grow up and replace the cold-blooded dinosaurs of the Industrial Revolution. The Internet, and the Internet of things will replace them, and a new currency system will have emerged.

Is Bitcoin, Litecoin and the others the financial equivalent of the mammals of 65 million years ago. Will these crypto-currencies, and precious metals replace the Dollar, just as the guinea-pig replaced the Tyrannosaurs. And on that day, the true value of these 5,000 year old monies will be known once again?

What the Fed has done for us?

A hundred years ago, an ounce of Gold bought a Savile Row suit, and today, it still does. A Pound weight of Sterling silver the same. Now that British Pound Sterling, will not buy a loaf of bread, and a carton of milk. THAT’s what the Fed and the politicians have done for us…

But over the next 5-20 years, that pound weight of Sterling Silver will once again buy that suit, and the wardrobe to put a dozen others in. As we speak, the ratio of Silver to Gold coming out of the ground is 9:1… Historically it was 16:1, and yet if we check the current prices… Gold today, is circa $1213.22, and Silver is $19.04 – a 63:1 ratio.

50 years ago, the amount of above ground Silver was 5 times that of Gold, today the reverse is true. In my lifetime, Silver will be gone from metals warehouses, and the only silver will be available from mines and scrap. To encourage more mining, the price will need to go a LOT higher. Those who have even just a little will be the “Nouveau Riche”.

And miners with large reserves and resources will be probably FTSE 100 companies. Companies such as Arian Silver a British AIM registered company, but traded also on the Toronto Stock Exchange has that and will be tens, possibly 20 times their current price…

(Incidentally that is not a recommendation – but an invitation to do your due diligence – Arian Silver)

But with 50 million ounces proven, and another 80+ million probable, and who knows how many ounces still to discover, the prospects are at least positive, given the current price point of silver. No other substance on the planet apart from oil has so many uses- 10,000 and counting. And Silver is irreplaceable in so many of those applications. Silver is my number one long-term investment. Eric Sprott a multi-billionaire is reputedly 70% in on silver and silver miners, and he knows Arian Silver well, which is why he owns 14% of the company.

And if you’d like some Silver… Just in case… Liberty Silver

Until next time…

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Kicking the Can – Again (Thurs 31 Oct, 2013)

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So, as the Hurricane passed over the UK, on Sunday, and into Monday, we counted the cost.  It took a day or so for the damage control systems to take account of the damage, and we learned there had been further major traumas to several people, and even the death of one woman.

Our sympathies extend to their friends and families.

No doubt the Insurance companies  providing insurance to these property owners will be looking for ways to shave off a few thousand pounds of disbursements as the claims start coming in with immediate effect.  And those whose properties have been damaged will be spending their disbursements having their properties refurbished to get their businesses back up to productive use, adding to GDP, and if that involves materials imported from overseas, and value added here in the UK, then also GNP – but we won’t be any better off.

On the other side of the Atlantic today, we learn that the Fed (Federal Open Market Committee) met to discuss the U.S. economy, and decided to take no action, leaving in place another further dilution of the nation’s wealth by a further $85 BILLION – $1,940,639.25 per minute, raising the Fed’s balance sheet to almost $4 TRILLION. ($4,000,000,000,000).

I find it peculiarly confusing, that the Central Bankers can print out another $85,000,000,000 and no-one bats an eyelid, but we learn that in the U.K., a man who had decided to make his own U.K. British Pound coins (allegedly upto £1.5 milion including blanks) and that man got 8 years in prison (currently up for appeal)

So rich bankers can do it, and give themselves large bonuses for doing so, but poor folks can’t… Doesn’t sound fair to me?

Which is why originally, money was just gold and silver… (and Copper of course for pennies)

In other words the only people who used to make money – legally – were the miners, who sold it to the lawful mint, to be coined into legal tender.

Ah!  Yes, but there’s the rub, the Banks don’t get their cut when that happens.

And that’s why the price of Gold and Silver is manipulated using paper derivatives. If the sheeple* were allowed to see the REAL value of Gold and Silver, more and more would likely begin to buy it, and that means currency, that the Fed would like to have put into risk assets, such as property and stocks and shares (and to a lesser extent T-Bills) rather than a lump of metal, that gains in value but doesn’t employ people, would leave the economy.  (and prop up miners in foreign climes)

Makes you wonder why foreign governments and miners aren’t kicking up a fuss about it?

W.

* The word ‘Sheeple’ is a derogatory term used to define the great uneducated and uninformed masses, who follow the rest of the herd, rather than get educated and think for themselves.