1/ The recent takedown in gold and silver and the incredible physical demand which followed.
2/ News and behind-the-scenes events related to the recent G20 meeting in Turkey.
3/ The Fed’s ongoing ZIRP and QE∞ and their total inability to exit the treasury market. Ever.
So there you have it. Nearly 45 minutes of uninterrupted Jackassian wisdom. Enjoy.
Rob Kirby and Andy Hoffman join Elijah Johnson for a MUST LISTEN interview on Sunday’s silver smash, which saw 10% shaved off the silver futures price in only 4 minutes in a massive waterfall raid taking the metal to $20.30. Kirby had this to say about the raid:
The take-down in precious metals is a contrivance, and it reeks and absolutely stinks of desperation on the part of the protectors of the world’s reserve currency, and that would be the US Treasury in cahoots with the Federal Reserve. I want to take the gloves off here. Let’s just get this right up on the table. JP Morgan’s positions aren’t JP Morgan’s positions. JP Morgan’s positions are the positions of the exchange stabilization fund, which is a branch of the US Treasury. When the US Treasury intervenes in the markets, they do so through the trading desk of the NY Fed, and their positions are executed by the NY Fed, who farm the trades out to the big derivatives banks. In that context, JP Morgan is the Federal Reserve. They are one and the same!
JHK shoots the breeze with David Collum, the Betty R. Miller Professor of Chemistry at Cornell University, who has become a regular and valued presence on the internet commenting on the financial system and the predicaments of our time. Dave is a live wire and lots of fun and he often disagrees with my point of view or corrects me… which is okay, ‘cuz I don’t pretend to know everything.
A few weeks ago Matt Taibbi said in a 14 page article in Rolling Stone said that the Conspiracy Theorists were right and that every market was rigged by the bankers. And that included interest rates. commodities, Credit Default Swaps and the gold and silver markets. This has been confirmed by the courts and the securities markets. BP and Shell are being investigated in Europe for rigging oil prices. If the CEO of a small company were arrested, the stock price would go down. But BP and Shell stock prices remain unchanged. JP Morgan, HSBC, Wells Fargo-Wachovia and Goldman Sachs have all had legal difficulties but walked away from the courts with no jail time and fines that were a miniscule fraction of the money involved.
This confirms that the courts, the regulatory system, the politicians and the media are fixed and it is not just the 2.2 trillion dollar petrochemical markets that are run by the banks. The oil company executives and the bankers know they are not going to jail.
Stacy Herbert made mention recently of 40 charts that used to correlate and give us an idea of what is happening in the real world. In the old days unemployment used to indicate economic activity and hence stock price levels. No more. Now stock prices and employment do not correlate. We are in the midst of the greatest recession in decades with record breaking low employment levels yet the DOW 30 and S&P indices could not go higher. That is without even more help from the Federal Reserve.
Total company debt and the interest rate they have to pay bear no relation to each other. In fact some companies with the greatest debt levels pay the lowest rates. The Federal Reserve loaned out 7 trillion dollars at 0.01% interest. I doubt that money was loaned to the most credit worthy organizations with plans for innovation and expansion who wanted to hire thousands of new employees. Instead the money was loaned to speculators who wanted to double the price of food and energy. Blythe Masters of JP Morgan bought older electrical generation plants while Obama and the EPA shut down her competitors doubling utility rates in some areas. Also money the FED loaned to news organizations like MSNBC that lie to us. Their ratings are faked but even those phony rates are plummeting. They are a poor credit risk but that does not matter. The Banker Occupied Government does not want you to ever hear the truth. If you did hear the truth on TV, the bankers and the politicians would be in jail.
Dr Michael Hudson was made famous by his book Super Imperialism in which he explained how the US was paying for its wars and military occupations by printing dollars. People overseas paid for their occupation by accepting US Federal Reserve Notes as if they were gold coins because they are printing an international reserve currency. Today the US admits to have troops engaged in combat related activities in 74 countries.
Hudson’s latest book is The Bubble And Beyond. He correlates obvious market manipulation with the creation of a lifetime of debt. He says we have moved past industrial capitalism to Finance capital. We used to make things. Now the product is money. The object of Finance Capitalism is to create mountains of Unpayable Debts to enslave us.
Hudson in an interview mentioned the US trillion dollar student debt as holding down working people who want to make a living sufficient to buy a house. Of course student loans were abused by the system to give educations and even scholarships to people who might to have been learning a skilled trade so we could get back to making things.
Half of today’s American college grads cannot find full time jobs. The average college grad has $28,000 in student loans and almost $4,000 in additional credit cards.
Obama and Bush have been allowing their man Ben Bernanke at the Federal Reserve to create money by the tens of trillion not to create jobs but to raise the prices of assets. To do this Hudson points out that Bernanke must keep interest rates low. At 3% you can handle 6 times as much debt at 18%.
A 3 bedroom house in San Jose that could have been bought for $25,000 in 1964 this month sold for $805,000. Catherine Austin Fitts in an interview once said that one reason for all the legal and illegal immigration was to drive up housing prices and to keep that Bobble going.
Another source of outrageous interest rate burdens on taxpayers is government debt. Total US federal and local debt is more than 21 trillion dollars. The government gave the right to privately owned banks on 1913 to issue out currency as a loan at interest. Since the money to pay the interest was never created at the time of the originating loan, the banks must create additional money to pay for the interest in the second round of loans. Interest on the federal debt is 535 billion dollars. And there is an additional 100 billion dollars in local and state government interest rate payments making life unbearable for working people and small businesses.
Obamacare raised the cost of medical care and required everyone to buy over priced insurance.
Dr Hudson gave an example of a young couple with high paying jobs and mortgage and student debt who next year under Obamacare will be lucky to keep 25% of their gross income after taxes and payments. That is all you have to buy food, gasoline, utilities and clothes. All but the last have been deliberately kept expensive which further enslaves us to Unpayable Debts. If you add up federal. state and local taxes, payments on student loans and mortgages plus mandatory over priced health insurance, you will understand why Hudson said the economy can never recover until we have Debt Cancellation.
The purpose of this system is to lower our wages and further enslave us to debts even though they created all that money out of nothing.
This situation cannot last. The Japanese are printing yen with wild abandon, They have cut the value of the yen by a third and doubled the interest rate on long term government bonds. Raising interest rates and and lowering the value of the currency is how this Bubble will end. As Professor Steve Keen said, we have the greatest Bubble of Unpayable Debts in 500 years. Depressions cancel debts, we can only conclude that we are therefore headed to the worst Depression in 500 years.
I will conclude with what I have said before.
The Fundamental Fact of Your Existence as a modern man or woman is that the bankers of New York and London want to reduce you to Debt Slavery.
Accept that fact and move on to the solution.
That is their plan for you.
What is your plan for them?
This Is Your Final Warning: The Worst Financial Disaster In 500 Years Is Nigh
On the heels of continued propaganda from the Fed today, 40-year veteran, Robert Fitzwilson, wrote the most extraordinary piece for King World News. Fitzwilson, who is founder of The Portola Group, discusses the tragedy of what is unfolding and how key markets are responding such as gold and silver to the ongoing drama. Below is Fitzwilson’s exclusive piece for KWN:
“Whether intended to be so or not, today was the equivalent of the stress tests that the Federal Reserve and their counterparts overseas conducted on banking institutions. It was the markets instead which were tested this time.
While the cultural foundations of the United States are unraveling the unconscious programs of American society lay outside of public dialogue. Where there was once an American Dream, a spiritual void remains. As the framework of consumer society breaks down, will an economic system of inverted totalitarianism reverse become explicit? Why do our elites seem incapable of formulating a rational response to this crisis of civilization?
In Extraenvironmentalist #60 we discuss the current condition of American culture with Chris Hedges and Morris Berman. Chris describes the process of breakdown he’s witnessed in other countries as elites withdraw when they feel their system of control crumbling. Morris reflects the current crisis of capitalism against the breakdown of the feudal system hundreds of years ago to describe a broader historical process. Then, we speak with Dmitry Orlov about his new book: The Five Stages of Collapse. Dmitry talks about the psychological damage created by access to large amounts of money and explains how to think practically about a failing global economic system.
The collective state of mind in the USA these days may be even more peculiar than what went on in Germany in the early 1930s, when the Nazis were freely elected to lead the country and reconstructed the battered national psyche into a superman cult that soon beat a path to mass death and ruin. America has its own way of going crazy. We don’t goose-step to tragedy; we coalesce into an insane clown posse and stumble into it by pratfall — juggaloes dancing backwards off the cliff edge.
We’ve been softened up and made extra-stupid on a 60-year-long diet of TV and kreme-filled donuts. Instead of a “master race,” our political fantasies revolve around a master wish – to get something for nothing. Want to feel good about yourself? Smoke some crank. Want to become economically secure? Buy a Powerball ticket or drive to the local casino. Want political esteem? Plug a flag pin into your lapel. Want status? Borrow free money from the Federal Reserve at zero interest and arbitrage it into massive earnings for your primary dealer bank. All these behaviors are the consequence of a culture that elevated advertising to such a high social good, it ended up drowning in its own manufactured bullshit.
A subset of our master wish has been on vivid display in recent months, namely the idea that God has blessed the USA with a limitless supply of new oil that will allow us to keep driving to WalMart forever. This propaganda from an oil industry desperate for capital investment has been swallowed whole by people in authority who ought to know better, just as that same class of people in Germany of 1934 should have known better about what they were bargaining for in economic well-being with the Nazi agenda. In our case, the propaganda drumbeat is being led by formerly respectable news organizations. The New York Times, National Public Radio, Bloomberg News, Forbes, andThe Atlantic Magazine are media giants that have lately spread the “good news” that America will soon be 1) “energy independent,” 2) the world’s leading oil exporter (greater than Saudi Arabia is now!), and the “go-to nation” for cheap manufacturing.
All of these claims are false, by the way. The American way-of-life was designed to run on $20-a-barrel oil, not $90-a-barrel oil, and “new technology” has not changed that. The unfortunate and, to some extent, mendacious memes about the wonders of “new technology” have only snookered the public into a false sense of security about a future that will disappoint them badly and probably provoke an extreme political reaction as the reality of our predicament sweeps through daily life.
Most of the current “endless oil” fantasy revolves around shale oil. Just to get a visual idea of what this amounts to, consider this map. It depicts the two major shale oil production regions of the USA: the Bakken in North Dakota and the Eagle Ford “play” in Texas. Bakken production is confined almost entirely to four counties in North Dakota (Williams, Mountrail, McKenzie, Dunn). The Eagle Ford region touches perhaps ten Texas counties. Now, realize that the oil fields all over the rest of the USA (including Alaska) are in decline. Here’s where the “bonanza” of new oil all comes from:
The oil coming out of these places is high cost and low flow-rate oil. This is exactly the opposite of what US oil production used to be (low cost and high flow-rate) when we were busy building all the freeways, strip malls, housing subdivisions, suburban office parks and all of the other stranded assets that now make up the infrastructure of daily life in this country. Those were the days when you could pound a single pipe vertically 1000 feet down (not much deeper than many home water wells) into the temperate wheatfields of Oklahoma (drive to work in shirtsleeve weather!) and after that modest investment in drilling you could kick back and depend on a great flow rate (5,000 barrels-a-day, not unusual) of sweet light petroleum for years.
Horizontal drilling (often more than 10,000 feet down + many “laterals” an additional 10,000 feet horizontally) and then fracturing “tight” rock for shale oil is not only a way larger capital expense (lots of steel!) but the flow rates per well (82 barrels-a-day average) are laughable compared to the halcyon days of conventional oil — little better than “stripper” wells. Consider also that shale oil well flow-rates decline greater than 60 percent in the first year (rapidly thereafter, too) and you can see easily that there will be no “kicking back” to run the pump-jacks like cash registers, as in the old days. In fact, the rapid depletion only prompts more frantic drilling and re-drilling to keep the production at its current rate – the “Red Queen Syndrome” (“I’m running as fast as I can to stay where I am”), which means fantastic capital expenditure to keep drilling and fracking more wells (even more steel!). Consider also, that the small “sweet spots” in the shale oil regions were the ones drilled first (in earnest after 2003), for the simple reason that they were the most promising. This was the “low hanging fruit” — easy to pick. Outside these sweet spots the oil may be too meager or difficult or costly to bother drilling for.
This is a picture of a boomlet that may run a few more years — if the banking system doesn’t implode and the massive stream of capital doesn’t quit flowing to the shale counties. The excitement will all be over before 2020, but I suspect that troubles in finance and banking will put the schnitz on the shale gas mania long before that date. What will happen when the American public discovers that they were lied to about yet another important matter? The discovery will coincide with very severe changes in daily life that won’t be avoidable. Everyone will be affected. Many will be impoverished and suffer real hardship. That’s when the public goes apeshit and starts tearing down the house.
Apart from the issue of sheer economic suffering and all the damage that will ensue, consider that it will be generations before anyone believes the “authorities” again — though, like the oil age itself, the era of giant national media will probably prove to be a one-shot deal, too. Future generations — if they are lucky — may read the news on one-page circulating broadsides, printed laboriously in hand-set type by letterpress. Or maybe they’ll be reduced to just parsing out rumors.
For a complete list of books by James Howard Kunstler and purchase links, Click Here .
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It could be the biggest, most explosive story in modern history. We are just starting to put the pieces together and understand what is going on in the occult financial geopolitical scene, and how a 117-nation alliance is working to free the Earth from financial tyranny.
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