“We already live in a financial economy in which the debt and capital markets exceed the value of the real economy by far,” Marc Faber explains to Germany’s Finanzen100, “and that’s before the current formation of bubbles.” His most ominous warning, and one that fits perfectly with the seeming insanity of Federal Reserve (and all developed market central banks) is that “the next time a bubble bursts, then the capitalist economic system as we know will falter.”
The numbers speak for themselves: In 1980, the market capitalization of the U.S. stock market was less than 40 percent of gross domestic product (GDP). The debt, measured in credit markets, was about 130 percent of GDP. Today these figures are higher, according to Marc Faber many times: The market capitalization has reached over 100 percent of GDP, the debt about 300 percent. This is consistent with figures from the consulting firm McKinsey. After calculation, the global debt still stood in 2010 at 158 ??trillion. In 2012, there were already $ 200 trillion – and rising. This makes for a worldwide economic power of slightly more than $71 trillion about three times.
It is a powder keg on which we sit. In a normal real economy, said Marc Faber, the debt and equity markets are small – and there in order to steer the accumulated capital into investments. Net interest acts as a regulator. That is, there are only those made with the capital investment that is truly an attractive return, so a higher yield than fixed-income investments bring.
Speculative bubbles encourage innovation
However, it can also come here to the formation of speculative bubbles, as Faber points out. They are there but small, focused on little damage. On the contrary, you might even be necessary because they enabled quantum leaps in progress and can only increase the production capacity. Such a bubble bursts, then prices will fall, and so more consumers can benefit from the development. Examples give it enough: Whether the railroad boom in the twenties of the last century, the Internet boom in the late nineties or real estate bubbles. When prices dropped after the bursting of a speculative bubble, it benefited from broad sections of the population.
Such bubbles are therefore an integral part of the capitalist system. They promote the progress and increase productivity. But the decisive factor: In a real economy, the amount is limited to credit, as much as the real economic performance. Otherwise, with quasi unlimited credit available, investment is driven purely by liquidity – not real economics. And this is even more true when the market interest rate is distorted, as explained Cindy Sweeting of Franklin Templeton. The capital costs are no longer currently being determined by the market, but distorted by the intervention of central banks. Short-term financing costs are close to zero in nominal terms and negative in real terms.
Central banks override market mechanisms
The seemingly favorable debt financing and the affects it also on the decisions of the company. Incorrect or depressed capital costs can prevent new growth and lead to business transactions operate on, which should give it better. Insolvency and bankruptcies are mechanisms to ensure capitalism that no capital flows in companies that do not use it effectively. This mechanism is, however, set by the central banks suspended.
“The unintended consequences of the current artificial reduction and manipulation of interest rates and finance charges are potentially very serious,” Sweeting explained: “The risk of asset price bubbles by cheap credit financing, the resolution of leveraged carry trades and the continued preference for cheap, financed on credit, investment in existing systems instead of productive and. because the capital costs are no longer determined by the market growth-enhancing investment in the creation of new facilities, many companies are able to finance subsidized low quality. “
Too much speculative and leveraged capital
…in an economy driven by liquidity accept this very different proportions. The benefit that instigate these bubbles can then be significantly lower than the destroyed by the bursting of such bubbles prosperity. Because there is too much speculative and leveraged capital within the game. There are just too many white elephant ‘investments made.
The crises of the past decades due to Faber’s view on interest rates too low. In every crisis, but the banks increased the dose they took a more expansionary monetary policy. The patient, however, the real economy, more and more immune to it. So the doctor increased the dose and on. Although the medicine brings temporary relief, but it does not eliminate the cause. The liquidity-driven economy, it is growing like a cancer, according to Faber and on. And that will, as Karl Marx predicted, lead to the ultimate collapse that will put the foundations of our capitalist society on fire.
How it will actually go out is open. Investors should nevertheless take the warning seriously, because the end result will be a violent crash in the capital markets.
By now, thanks to Edward Snowden, it is common knowledge and not just conspiracy theory, that every bit of information sent out into the wired or wireless ether is scanned, probed, intercepted and ultimately recorded by the NSA and subsequently all such information is and can be used against any US citizen without a court of law (because the president’s pet secret NISA “court” is anything but). Sadly, in a country in which courtesy of peak social networking, exhibitionism has become an art form, the vast majority of Americans not only could not care less about Snowden’s sacrificial revelations, but in fact are delighted the at least someone, somewhere cares about that photo of last night’s dinner. However, it turns out that far from being a passive listener and recorder, the NSA is quite an active participant in using the internet. The weaponized internet.
Because as Wired reports, “The internet backbone — the infrastructure of networks upon which internet traffic travels — went from being a passive infrastructure for communication to an active weapon for attacks.” And the primary benefactor: the NSA – General Keith Alexander massive secret army – which has now been unleashed against enemies foreign, but mostly domestic.
Enter the QUANTUM program….
According to revelations about the QUANTUM program, the NSA can “shoot” (their words) an exploit at any target it desires as his or her traffic passes across the backbone. It appears that the NSA and GCHQ were the first to turn the internet backbone into a weapon; absent Snowdens of their own, other countries may do the same and then say, “It wasn’t us. And even if it was, you started it.”
If the NSA can hack Petrobras, the Russians can justify attacking Exxon/Mobil. If GCHQ can hack Belgacom to enable covert wiretaps, France can do the same to AT&T. If the Canadians target the Brazilian Ministry of Mines and Energy, the Chinese can target the U.S. Department of the Interior. We now live in a world where, if we are lucky, our attackers may be every country our traffic passes through except our own.
Which means the rest of us — and especially any company or individual whose operations are economically or politically significant — are now targets. All cleartext traffic is not just information being sent from sender to receiver, but is a possible attack vector.
… which is basically packet injection:
The QUANTUM codename is deliciously apt for a technique known as “packet injection,” which spoofs or forges packets to intercept them. The NSA’s wiretaps don’t even need to be silent; they just need to send a message that arrives at the target first. It works by examining requests and injecting a forged reply that appears to come from the real recipient so the victim acts on it.
The technology itself is actually pretty basic. And the same techniques that work on on a Wi-Fi network can work on a backbone wiretap. I personally coded up a packet-injector from scratch in a matter of hours five years ago, and it’s long been a staple of DefCon pranks.
Traditionally, packet injections has been used mostly for censorship purposes:
The most infamous use of packet injection prior to the Snowden leaks was censorship, where both internet service providers (ISPs) and the Great Firewall of China injected TCP reset packets (RST) to block undesired traffic. When a computer receives one of these injected RST packets, it closes the connection, believing that all communication is complete.
Although public disclosure forced ISPs to stop this behavior, China continues to censor with injected resets. It also injects the Domain Name System (DNS) — the system all computers use to turn names such as “www.facebook.com” into IP addresses — by inserting a fake reply whenever it sees a forbidden name. (It’s a process that has caused collateral damage by censoring non-Chinese internet traffic).
And user identification, especially in making Tor obsolete. That’s right: all users of Tor believing they hide behind the veil of anonymity – you aren’t.
User cookies, those inserted by both advertising networks and services, also serve as great identifiers for NSA targeting. Yet a web browser only reveals these cookies when communicating with such sites. A solution lies in the NSA’s QUANTUMCOOKIE attack, which they’ve utilized to de-anonymize Tor users.
A packet injector can reveal these cookies by replying to an unnoticed web fetch (such as a small image) with a HTTP 302 redirect pointing to the target site (such as Hotmail). The browser now thinks “hey, should really go visit Hotmail and ask it for this image”. In connecting to Hotmail, it reveals all non-secure cookies to the wiretap. This both identifies the user to the wiretap, and also allows the wiretap to use these cookies.
So for any webmail service that doesn’t require HTTPS encryption, QUANTUMCOOKIE also allows the wiretap to log in as the target and read the target’s mail. QUANTUMCOOKIE could also tag users, as the same redirection that extracts a cookie could also set or modify a cookie, enabling the NSA to actively track users of interest as they move across the network — although there is no indication yet that the NSA utilizes this technique.
But all of the above are largely passive interception and surveillance strategies. Where it gets interesting is when the NSA’s mission is…
The NSA has a collection of FOXACID servers, designed to exploit visitors. Conceptually similar to Metasploit’s WebServer browser autopwn mode, these FOXACID servers probe any visiting browser for weaknesses to exploit.
All it takes is a single request from a victim passing a wiretap for exploitation to occur. Once the QUANTUM wiretap identifies the victim, it simply packet injects a 302 redirect to a FOXACID server. Now the victim’s browser starts talking to the FOXACID server, which quickly takes over the victim’s computer. The NSA calls this QUANTUMINSERT.
The NSA and GCHQ used this technique not only to target Tor users who read Inspire (reported to be an Al-Qaeda propaganda magazine in the English language) but also to gain a foothold within the Belgium telecommunication firm Belgacom, as a prelude to wiretapping Belgium phones.
One particular trick involved identifying the LinkedIn or Slashdot account of an intended target. Then when the QUANTUM system observed individuals visiting LinkedIn or Slashdot, it would examine the HTML returned to identify the user before shooting an exploit at the victim. Any page that identifies the users over HTTP would work equally well, as long as the NSA is willing to write a parser to extract user information from the contents of the page.
Other possible QUANTUM use cases include the following. These are speculative, as we have no evidence that the NSA, GCHQ, or others are utilizing these opportunities. Yet to security experts they are obvious extensions of the logic above.
HTTP cache poisoning. Web browsers often cache critical scripts, such as the ubiquitous Google Analytics script ‘ga.js’. The packet injector can see a request for one of these scripts and instead respond with a malicious version, which will now run on numerous web pages. Since such scripts rarely change, the victim will continue to use the attacker’s script until either the server changes the original script or the browser clears its cache.
Zero-Exploit Exploitation. The FinFly “remote monitoring” hacking tool sold to governments includes exploit-free exploitation, where it modifies software downloads and updates to contain a copy of the FinFisher Spyware. Although Gamma International’s tool operates as a full man-in-the-middle, packet injection can reproduce the effect. The injector simply waits for the victim to attempt a file download, and replies with a 302 redirect to a new server. This new server fetches the original file, modifies it, and passes it on to the victim. When the victim runs the executable, they are now exploited — without the need for any actual exploits.
Mobile Phone Applications. Numerous Android and iOS applications fetch data through simple HTTP. In particular, the “Vulna” Android advertisement library was an easy target, simply waiting for a request from the library and responding with an attack that can effectively completely control the victim’s phone. Although Google removed applications using this particular library, other advertisement libraries and applications can present similar vulnerabilities.
DNS-Derived Man-in-the-Middle. Some attacks, such as intercepting HTTPS traffic with a forged certificate, require a full man in the middle rather than a simple eavesdropper. Since every communication starts with a DNS request, and it is only a rare DNS resolver that cryptographically validates the reply with DNSSEC, a packet injector can simply see the DNS request and inject its own reply. This represents a capability upgrade, turning a man-on-the-side into a man-in-the-middle.
One possible use is to intercept HTTPS connections if the attacker has a certificate that the victim will accept, by simply redirecting the victim to the attacker’s server. Now the attacker’s server can complete the HTTPS connection. Another potential use involves intercepting and modifying email. The attacker simply packet-injects replies for the MX (Mailserver) entries corresponding to the target’s email. Now the target’s email will first pass through the attacker’s email server. This server could do more than just read the target’s incoming mail, it could also modify it to contain exploits.
Amplifying Reach. Large countries don’t need to worry about seeing an individual victim: odds are that a victim’s traffic will pass one wiretap in a short period of time. But smaller countries that wish to utilize the QUANTUMINSERT technique need to force victims traffic past their wiretaps. It’s simply a matter of buying the traffic: Simply ensure that local companies (such as the national airline) both advertise heavily and utilize in-country servers for hosting their ads. Then when a desired target views the advertisement, use packet injection to redirect them to the exploit server; just observe which IP a potential victim arrived from before deciding whether to attack. It’s like a watering hole attack where the attacker doesn’t need to corrupt the watering hole.
Can anything be done to prevent the NSA’s internet army from running over a world that spends the bulk of its time in its reaches? Not much:
The only self defense from all of the above is universal encryption. Universal encryption is difficult and expensive, but unfortunately necessary. Encryption doesn’t just keep our traffic safe from eavesdroppers, it protects us from attack. DNSSEC validation protects DNS from tampering, while SSL armors both email and web traffic.
There are many engineering and logistic difficulties involved in encrypting all traffic on the internet, but its one we must overcome if we are to defend ourselves from the entities that have weaponized the backbone.
Alas, in the battle against the NSA, the biggest enemy is not the authoritarian state’s Super Big Brother, but apathy itself. It is that war that is by far the most important one, and which America has already lost.
President Kennedy: November 14,1963
There is a plot in this country to enslave every man, woman, and child.
Before I leave this high noble office, I intend to expose this plot.
It is human nature to follow fads, no matter how strange or cultish they may seem. Anything from Beanie Babies to cupcakes to even tech IPOs fall into this category, but, ConvergEx's Nick Colas asks, why do some of these trends manage to stick around while others die off? We might laugh now at bellbottoms and the so-called “grapefruit diet”, but at one point in time these were both fashionable – and profitable. So what does it take to make a fad last? Colas looks at a number of quirky trends past and present and importantly for market participants, finds lessons that extend directly to investor psychology and discipline.
via ConvergEx's Nick Colas,
Note From Nick: In today’s note Sarah addresses the psychology of short-lived trends, the humble avocado, and the challenge of investing. If you have a set of Crocs in your closet, or went to prom in a leisure suit, or are waiting for headbands to come back, please read this note. Please…
Remember when pet rocks were “a thing”? What about lava lamps and mood rings? Bellbottoms and “leisure suits”? If you need something a little more recent to test your memory: how about MySpace and Furbies?
Feeling nostalgic (or more accurately, embarrassed) yet? Don’t be. Consumer research and psychological studies across the spectrum of sectors and disciplines tell us joining in on a fad is a natural and expected human behavior:
First and foremost, following fads is part of human nature from an evolutionary perspective. According to a 1982 paper from Dr. Karl Dieter Opp, we learned to follow trends early on because certain behaviors had been tried and proven to pay off. This goes as much for a caveman’s technique of hunting in groups – for which the “pay off” was most certainly survival – as it does for stilettos or yoga pants in 2013. The payoff isn’t as tangible, maybe, but psychic rewards can feel good too.
Societally speaking, we tend follow trends because of the positive feedback we get from conforming. A paper from Princeton University by B. Douglas Bernheim proposes that societies condone certain behaviors, rewarding and giving high societal value to some while shunning others. We choose to imitate particular behaviors, therefore, based on these expected rewards and responses. In layman’s terms, that’d be equivalent to someone saying “I like your jacket” – your behavior is validated, and you are probably going to wear that jacket again.
Perhaps most importantly, some researchers suggest that the main reason we follow fads is to simplify decision-making. According to a 1998 paper titled “Learning from the Behavior of Others: Conformity, Fads, and Informational Cascades” by Bikhchandani, Hirshleifer, and Welch, we follow others’ direction because we assume they have made the best possible decision. We assume that they faced the same decision we do, with the same information, same alternatives, and same costs/benefits. By following an example, we eliminate the process of weighing the decision for ourselves.
This is the same part of our brains that encourages us to buy the latest fashion trend or to jump on the bandwagon in the market. Our natural reaction is to assume a stock is worth buying if everyone else is doing it; clearly someone knows something good about it, and you don’t want to miss out on a good opportunity. Just like you didn’t want to miss out on the chance of a well-priced sea-monkey colony 10 years ago. The difference is, while we might be willing to admit we made a mistake with the sea monkeys (we did), it’s a lot harder to convince ourselves that we botched an investment.
So if our nature is to buy into fads that might fail, how do we teach ourselves to avoid this pitfall? Behavioral finance research gives the following advice to avoid the “sunk cost fallacy”, or loss aversion:
Know when to let go. You don’t have to be committed to a stock forever just because you feel you’ll have wasted money if you sell lower.
Don’t stress. Everyone makes mistakes, including experienced, professional investors such as yourself.
Separate yourself from your caveperson emotions and think independently. The old saying “Sunk costs are sunk” is painful but accurate. Bad decisions today don’t need to be an even worse decision tomorrow.
Easier said than done: every investor can be headstrong enough to deny that he or she has made a mistake. So to bring this subject closer to home, we want to put it in a more relatable context: how we react to fads. As we’ve said, joining in on a fad is only human – whether it’s the newest toy, fashion, or market trend. But it’s also pretty common to regret jumping on the bandwagon later on.
There are some exceptions, of course.
- 10 years ago the iPod was all the rage, and in 2013 its evolutionary product – the iPhone – still holds center stage.
- Ugg boots first debuted around 2000 and are still going strong.
So-called “superfoods” – the topic of discussion today – are still on the rise after first gaining popularity in the mid-2000s (charts from Google Trends above). Unlike some fad diets or exercise trends, superfoods have gained some real traction that has lasting potential. 10 years ago, you weren’t likely to find kale or Greek yogurt in anyone’s fridge at home, much less chia seeds or quinoa in their cabinets. And yet there they are. What is it about the superfood fad that’s made it outlast trendy diets, weight loss supplements, and even Beanie Babies and bellbottoms?
At the most fundamental level, superfoods share a few key elements with successful fads like the iPod and Ugg boots. Good endorsement is one, of course, but even the best ad campaigns can’t prop up a failing product. Instead, there are a few key elements superfoods have that enable them to succeed, all of which we can attribute to learning more about long-term investment:
1. Simplicity. All of us have seen one version or another of the “get thin quick” diet, where you’re promised 3+ inches off your waistline within a month if you stick to the rules. The Atkins diet, the “Master Cleanse”, Nutrisystem, and weight loss pills are all iterations of this concept. Just eat no carbs – or no solid food, or only the food we give you – and the results are there. Notice something here? All of these trends also require quite a bit of effort on the part of the consumer: rules and exceptions and prohibitions must be observed. It’s no wonder many of them fade out after a while.
The message of a superfood, though, is perfectly simple: eating this is good for you. Nowhere on an avocado or a can of lentils will you see any phrase relating to a “superfood diet”, let alone that the product is a superfood at all. Moreover, superfoods are not exclusionary: choosing to buy a bag of pistachios alongside a bag of potato chips is not off limits. Nor does buying turmeric necessarily mean you’re obligated to buy chia seeds. Superfoods are independent. The same concept goes for the iPod and Ugg boots: they are utterly simple, non-chaotic, functional products. And that’s part of the reason they’re so successful.
The market lesson here: keep it simple. Peter Lynch of Fidelity fame used to say that if he couldn’t describe a business to his six year old, he wouldn’t buy the stock. Part of Warren Buffet’s folksy appeal comes from his message to buy businesses you understand. To borrow from Gordon Gekko: Simplicity, for lack of a better word, is good.
2. Reach and affordability. Superfoods, unlike many fads gone by (remember the “Snuggie” blanket? Neither do I…), catch the entire population in their net: they are accessible at virtually any food market you walk into, regardless of whether it is a health/organic food store or not. Kids, adults, teens, you name it – all of them are the target market of a superfood.
And anyone can buy a superfood. Avocados range from $1-3, quinoa from $2-5, and nuts are usually about $3/lb. Consumers of virtually any income level are capable of buying superfoods at their local grocery store. They will probably buy them more than once. When we extrapolate this affordability concept to the iPod and Uggs, remember: “affordability” is in the eye of the consumer. $100-200 is the sweet spot for iPods and Uggs, but it’s doubtful any avocado would go for that much. Rather, consumers buy these products because the perceived benefits – in the case of superfoods, more vitamins, minerals, omega 3s, etc. – outweigh the costs.
Market lesson: look for the right mix of market reach and affordability. Business models have to provide actual utility to their customers in order to thrive. That utility can be expensive – think Tiffany jewelry – or affordable, such as Wal-Mart. Either way, as with superfoods, the consumer has to feel they are getting real value. Anything else is a Snuggie. Whatever that is.
3. Popularity. According to research from Jonah Berger and Gael Le Mens at Wharton, the quicker a fad is picked up the faster it is doomed to fail. To rework an old phrase, “the quicker they rise, the harder they fall”. Kids’ toy fads are probably the best retail example of one of these fads: sillybandz and webkinz only lasted about a year in the spotlight, according to Google trends search data. They rose quite quickly, as any parent could probably tell you, but (as the Berger and Le Mens research predicts) fell out of fashion just as fast.
The adoption speed of superfoods, by contrast, was years in the making. Dieticians began to identify certain foods that had “more bang for their buck”, or a disproportionate amount of fiber or protein or vitamins for their size or composition. Soon you could find lists of superfoods on the web; next television hosts were doing “top 10 lists” of their favorite superfoods. The movement wasn’t advertised like a diet or weight loss plan, and the trend caught on relatively slowly. The same happened with the iPod and Uggs: not everyone owned them at first, but with some organic growth in the consumer base they became the successes they are today.
Market lesson: anything that comes from nowhere is likely to return to its place of origin. Business models which rely on a one trick pony – no matter how good the trick might be – are at great risk for new competition or the quick shift of consumer tastes elsewhere. Remember the huge crowds at the iPod launch in 2001? There weren’t any – the room at Steve Jobs’ 2001 presentation is half full. Check out the link at the end of this note.
4. Psychological positivity. Finally, superfoods have managed to stick around partially because of how the consumer reacts to buying them. Purchasing a superfood is cognitively positive: the consumer is going to feel better about him/herself for choosing this over, say, a burger. Moreover, that’s a feeling that, if repeated, is likely to last.
Market lesson: The old line about a good investment being a large castle surrounded by a wide moat comes to mind. Competitive advantage drives valuation as much as earnings.
The majority of these “lessons”, of course, are for investors looking for long-term investments. If you only want something for the short term, it’s probably best to focus on the popularity point here: just know that the quicker it rises, the quicker it’s going to fall, so sell when you can, not when you have to.
The bottom line is that we are sometimes blind to our own trading (and fashion) mistakes in the moment, but we are not preordained to make the same errors in perpetuity. Superfoods are an example of how a ‘Fad’ can be productive, harnessing our group instincts to a healthier life. And the lessons from quinoa, avocados and Greek yogurt can apply to better investment decisions as well.
Rising energy bills are a political hot topic at the moment but one YouTube user has devised a way of heating a room for just 8 pence (2 cents) a day.
Journalist and boat owner Dylan Winter created his DIY heater using tealights placed inside a bread tin and covered with two ceramic flowerpots.
The system uses the scientific principles of convection heat transfer and Winter claims it can heat his home for around eight hours a day.
Winter bought tealights from Ikea that cost £1 for 100, a standard loaf tin, and two different-sized flowerpots.
The smaller flowerpot, when placed upside down, needs to just cover the centre of the loaf tin, while the larger flowerpot needs to sit comfortably over the smaller one.
In the video explaining how to build the heater, Winter lights four of the candles and places them inside the tin.
He places the smaller flowerpot upside down on top of the tin and covers the hole in the pot with one of the metal cases leftover from the tealights.
The larger flowerpot is then placed on top of the smaller one, and its hole is left uncovered.
In the video, the tealights are put inside a bread loaf tin and covered with a small upside-down flowerpot.
The hole in the top of the upside-down pot is covered with the metal casing leftover from one of the tealights.
This pot is covered by a second, larger pot and the hole in the bigger flowerpot is left uncovered
Journalist and boat owner Dylan Winter, pictured, created his DIY heater using tealights, a loaf tin and two ceramic flowerpots. In the video, pictured, Winter places the tealights inside the small tin before lighting them
Winter explains that the heat from the candles warms the inside of the smaller flowerpot, which becomes an ‘inner core’ that gets ‘very hot.’
A ‘convection of air’ is then created between the smaller and larger pots and this heated air comes out the top of the homemade heater.
The system works because the candles produce gases full of heated particles that are captured and channelled through the pots.
These hot gas particles are lighter than the gases in the air, meaning they rise up into the colder area.
Winter covers the tealights and tin with a small upside-down flowerpot, pictured. The hole in the top of the pot is covered with the metal casing leftover from one of the tealights
This causes the cold air to fall into the warm areas and creates a convection current which transfers heat from the pots and through the hole in the top.
Winter said: ‘People have told me that judicious positioning of flowerpots help to make the heating more efficient. I did not believe it but it really does seem to work.
‘You get a nice flow around the [pots] and it warms the room up. You’d be amazed.’
KeepTurningLeft works for Practical Boat Owner magazine and claims he uses the DIY heater on his boat.
Each tealight burns for around four hours, and Dylan Winter uses four tealights in the morning, and four in the afternoon to heat his rooms for eight hours a day.
The smaller pot is covered by a second, larger one and the hole in the bigger flowerpot is left uncovered, pictured. The system works because the candles produce gases full of heated particles that are captured and channelled through the pots
HOW DOES THE DIY HEATER WORK?
In the video, the tealights are put inside a bread loaf tin and covered with a small upside-down flowerpot.
The hole in the top of the upside-down pot is covered with the metal casing leftover from one of the tealights.
This pot is covered by a second, larger pot and the hole in the bigger flowerpot is left uncovered.
The system works because the candles produce gases full of heated particles that are captured and channelled through the pots.
These hot gas particles are lighter than the gases in the air, meaning they rise up into the colder area.
This causes the cold air to fall into the warm areas and creates a convection current which transfers heat from one pot to another, and out of the hole on top.
by Greg Hunter
Dr. Jim Willie, financial writer and Editor of the Hat Trick Letter, says, “I’ve been getting overwhelmed in the last month or two at the plethora, the litany of signals the financial system is imploding. U.S. dollar is in a sell-off. Treasury bonds are rapidly losing their integrity . . . and both banking and military sectors losing their global leadership.” “The U.S. dollar and its trading vehicle, the Treasury bond, are dead . . . we have extraordinary tactics in place to keep the system going because they don’t want all the big U.S. banks to die.” He warns, “Banks, bonds and currencies are all on the edge of collapse.” A “50% dollar devaluation . . . we’re going to see a doubling of the gold price overnight.” “The Treasury bond will be phased out and gold will be phased in.”
Join Greg Hunter as he goes One-on-One with Jim Willie who can be found on GoldenJackass.com
by Joseph P. Farrell
Excellent analysis of Vladimir Putin and post-USSR Russia.
Taper & No Taper
The United States has ushered in hyper monetary inflation with the series of Quantitative Easing programs, as in QE1, QE2, Operation Twist, and QE3. My belief is no longer than hyper inflation is inevitable, since already part of current policy now. Hyper-inflation is already here! As a result of the hostile monetary war, the USDollar and its USTBond vehicle are facing not simply opposition, but broad-based earnest organized initiatives to avoid them. The goal is to replace them in workarounds. A reset is apparently near. The pressures to install a more fair, more just, and more enduring system is enormous, and will not cease. The demand is to bring back the Gold Standard, the equitable arbiter, the true enforcer. The demand for Gold is inelastic. As price rises, so does demand. It is called Gold Fever. Something big is near, as the tremors are being felt in every global corner, and every global market.
As introduction to this article on the bizarre nature of all things economic and financial within the Untied States, consider once again the Deflation Knuckleheads. Be sure to know that the Jackass considers Rick Ackerman to be one of the premier technical chart analysts in the world. He has taught me in the past from his T/A work, even as his hidden pivots are unique and enlightening. In 2011, we were at odds over the incessant errant ramblings about deflation and its great threat. In August of that year, the Jackass penned a public article in an attempt to clarify the inflation and deflation factors being simultaneous, not at all mutually exclusive or in some debated sequence. While respect is still high for Rick, he has misquoted me, not demonstrating the depth of knowledge concerning the incredibly difficult topic of inflation. The distortions run so deep on the topic, that even smart folks fail to comprehend. The syndicate desires such confusion. After trying to set the record straight two years ago, one more attempt is necessary. The respect for each other is mutual.
The motive here is to further shed light on the nasty gnarly tangled topic of inflation and how deflation is interwoven as the financial and economic domains are locked in the weave. They are twisted together to produce a storm the likes of which have never been witnessed before in history. What follows is a critique of obtuse perceptions of all things relating to inflation and its opposite. Ackerman might have stepped down as King of the Deflation Knuckleheads, but he continues to preach its shallow school of thought. No hard feelings, Rick, but you do not misrepresent my work correctly. We might have a common goal, but we do not follow similar perceptual paths to arrive at the promised land, the Gold Standard. The critique in this article is not designed as a personal attack on Ackerman. At times, the competent among us have big differences in perceptions. The motive is to clarify in a continuing theme the shortcomings of the deflationist camp, which cannot see either the monetary inflation or its interwoven nature with policy. The result is a vicious cycle that escapes them. We will not witness one or the other, but rather both together. Acute inflation and persistent deflation co-exist and even feed off each other, due to policy action and response. My own belief is that the Knuckleheads will never comprehend the two factors woven together to produce the financial & economic hurricane of unprecedented type.
PARADIGM SHIFT OVERSHADOWS CHARTS
In a November 4th address to his subscribers, Ackerman discussed the Gold price and the risk for a decline to the $1125 level, another potential 15% fall from here in the COMEX posted price. He went on to show nice respect for the Jackass analysis and work. However, in his final attempt to distinguish our work on differences, he presented my position incorrectly, in an important misquote. The Jackass practice of not looking much at the official Gold chart in the last two years or more flies in the face of any chart expert. Their skill is recognized, but the relevance is not apropos. My belief is that the important non-linear factors have kicked into gear. The extraordinary events dominate within the COMEX and MF-Global, such as thefts of accounts, refusal to deliver on gold futures contracts, rapid depletion of official gold inventory in vaults, raids on the GLD Fund, even quick shifts in inventory from one major bank to another in order to cover demands. The revolt in the Eastern Hemisphere has not entered into the work of much of any prominent analysts, surely not chartists. Therefore, a grand blind spot persists. The chart experts believe all external information is wrapped inside the chart somewhere, a belief once embraced by the Jackass. No longer, not for a major structural shift in systemic revolt. The entire Eastern Alliance, with its visible front in the BRICS nations and the G-20 Forums, is working on a USDollar alternative. They include some ancient wealthy families in China, who have decided to produce change by draining the London banks of several thousand tons of gold. They influence the change factors in the most awesome manner, behind the curtains, with phone calls and surely threats. They have enlisted the aid of the trust Triads, in a counter-action to the security agencies resident among the three major nations in the Axis of Fascism. Refer to the United States, Great Britain, and their small ally.
The chart as a primary tool has been superseded by a Global Paradigm Shift in progress. It is like trying to follow a chess match, but the game is changing like to a more advanced game. The pieces soon will not move like they used to. The King Dollar piece will not command his subjects on the chessboard with the same authority as before. The bishops and knights are being neutralized. The Queen USTBond is caught in a derivative straitjacket. Be sure to know that in past history, a paradigm shift involved a world war, the ultimate in altered infrastructure. The last few years have marked a significant change, often minimized by the label of Global Financial Crisis. It is much more, since endless and without solution on the present course. The Jackass name given is of a Global Monetary War, since the corrupted Anglo bankers wage war in defense of the system and their USDollar regime. They insist on perpetuating the inflation to cover deficits, perpetuating the distortions to bend the markets to their will (see USTBonds, US Stocks, even FOREX currencies), and altering the rule changes to force participation (see SWIFT for banks). Any nation that attempts to bypass the current Anglo dominated system based upon the USDollar for trade and the USTBond for bank reserves is branded a rogue nation. The deviant nation is then smeared as a human rights violator, as well as a nuclear community renegade. The accuser is the most culpable.
The deviant behavior is with the Anglo enforcers though. They cannot dictate geopolitical criminality on a unilateral basis. They cannot oppose other methods between two independent nation parties for conducting trade. They cannot obstruct commerce like with natural gas pipelines and expect to remain unopposed, to escape without oil on their hands. The United States and Great Britain have become rogue leaders in defense of increasingly fascist regimes and financial systems. As a result of the hostile monetary war, the USDollar and its USTBond vehicle are facing not simply opposition, but broad-based earnest organized initiatives to avoid them. Not to wreck them, but rather the goal is to replace them in workarounds. Thus the Gold chart means very little in Jackass analysis. A reset is apparently near. The pressures to install a more fair, more just, and more enduring system is enormous, and will not cease. The demand is to bring back the Gold Standard, the equitable arbiter, the true enforcer. The ultimate installation will render the chartists an embarrassing day, week, and month, in a non-linear price rise that will take their breath away, and bring a rejoicing battle yawp from the gold community. Something big is near, as the tremors are being felt in every global corner, and every global market.
The pressure has turned international to agree upon a grand reform for the present system of sovereign bond issuance, of bank reserves management, of bilateral trade settlement, of settlement with distributed systems (PCs or Blackberrys), even of debt ratings. The current USD/USTB system is broken. The managers and operators have no interest in either reform toward efficient function, nor enforcement of law against banker criminality. So the world pursues an alternative. When it arrives, a grand shock wave will hit the world like a tsunami, a wave of justice in finance. The winner will be the world. The new king will be Gold. The loser will the host nations to financial crimes, the United States and Great Britain. Thus the chart is of less importance when a big boot cometh to kick over the table. It is the Cossack Boot on one leg, and the Genghis Boot on the other.
SYNCHRONOUS BIG PICTURE
Rick Ackerman and the Jackass agree on many factors and perceptions. We both see the big cracks in the US financial fortress, the precarious position of the Saudi regime as it faces pressures for regime change, and the gigantic flow of Gold bullion eastward, as untold supply of bars flow from Exchange Trade Funds in illicit manner. Where we differ is where we have always differed, on the perceptions of inflation and deflation. My contention is simple, that the Deflation Knuckleheads do not comprehend inflation concepts at all, and surely cannot define the concept of deflation. Ackerman misquotes the Jackass position, which must be set straight. It seems despite my past efforts to set the record straight, Rick cannot comprehend my position of simultaneous hyper monetary inflation amidst powerful asset decay, for a simple reason. He does not comprehend inflation or deflation. Inflation has always been a monetary phenomenon, when Rick believes it occurs only with very fast rising prices. The Jackass position is that prices are rising in disruptive manner, but mostly within the cost structures. The result is more asset deflation pressures realized in a cycle. We both observe the veritable armada of black swans threatening to undo the banking system. A hat tip to RickA for saying, “This conclusion might seem extreme, especially to readers who believe such things only when they read about them in The New York Times or The Wall Street Journal. But only those who are blind to the obvious would say that Jim Willie has exaggerated.” Much thanks among professionals. My apology for calling him the King of the Deflation Knuckleheads. But honestly, he continues to strive toward the same lowly distinction with its broken script and scepter.
The main issue at odds is the Jackass perception of the current situation and its enduring degeneration. My August 2011 article attempted to set the record straight. Let me take this opportunity to haul out a section from an old article. Let the record be put in clear bullet items for the current Jackass analytic position. Deflation Knuckleheads, please read the following. Let it sink in.
Yet another attempt to set the Deflationist crowd straight. The Jackass viewpoint:
- Hyper monetary inflation is exactly QE, the bond monetization
- Hyper inflation exists now, on the monetary side (completed correct forecast)
- Home values, mortgage bonds, bank equity all fell (seen as deflation)
- The massive decline in asset prices has already occurred
- The United States is totally dependent on inflation now (dispensed by USFed)
- The bond monetization has supported the USGovt deficits
- The monetary easing has supported mortgage rates
- Except for redirected amplified inflation, asset prices would collapse
- As asset prices weaken, the call for more inflation comes (vicious cycle)
- The pressures rise constantly for more monetary inflation
- INFLATION AND DEFLATION EXIST SIMULTANEOUSLY NOW
- The two forces have interacted together since 2011, when QE began
- They are not exclusive, but rather simultaneous, even interwoven
- Tremendous inflation derivative devices are at work behind the scenes
- Tremendous downdrafts on asset prices are prevented by official intervention.
CRITICAL MISQUOTE OF JACKASS POSITION
It is incredible how the great density in erroneous thought can be encapsulated in such a short wrong single sentence (in bold). It incorporates the wrongful awareness of my forecast and analytic position. It also incorporates the wrongful grasp by the Knuckleheads for the current complex situation (too complex for them). Here is the Ackerman misquote, “He and I have had our differences in the past. Jim Willie believes hyper-inflation is inevitable, and although I tend to agree, I think it will come like a thunderclap after deflation has laid waste to the financial system. In the past, we have both recommended holding physical gold against any and all possibilities. However, I also suggest keeping a shoebox full of intrinsically ‘worthless’ paper currency to hedge against the ultimate deflationary event – i.e., the forced closure of US banks for more than a day or two. Although no one can predict what might cause this, we should not be in doubt of its likelihood. If Jim Willie and I are in complete agreement about one thing, it is this: the dollar’s long reign is near an end.” The tone is positive. The agreements are many. The end goal is in common. However, it would be greatly appreciated if the Jackass analysis and conclusions were not misquoted. The above is NOT the analytic position written by me, never has been, and never will be. Although briefly summarized, it is incorrect in reference at the opening statement. The hyper-inflation is already here. The wasteland of financial markets is obvious also in their depletion. The overlooked part is the key integral part, the interaction of the two with central bank monetary policy after financial market calls and its resulting vicious cycle. The entire Taper Talk episode should have demonstrated to Ackerman the interaction and existing hyper-inflation at work and in progress. It did not. He is not an economist or monetary expert. He is a technical analyst extraordinaire.
The United States has ushered in hyper monetary inflation with the series of Quantitative Easing programs, as in QE1, QE2, Operation Twist, and QE3. My belief is no longer than hyper inflation is evitable, since already part of current policy now. The Jackass forecasted it in 2010, and it arrived in 2011 in the force of QE. It is better named QE to Infinity after the wrong-footed blunder of the Taper Talk to draw down the monetized bond purchase plans. Ackerman seems unaware to comprehend that the hyper-inflation that my forecast called for has already arrived. It not only arrived, but its continuation into perpetuity (QE to Infinity) is being debated with formally stated rational in the three-part mandate. Refer to tame price inflation, full employment, and stable markets. My forecast has been for Zero Interest Rate Policy forever and Quantitative Easing to Infinity. Events of the last several months are proving the twin monetary forecasts to be correct.
Q.E. AS DEFLATION MACHINE
As for the financial system, it has been laid to waste already. Ackerman surely perceives the wasteland, although he is not specific. It seems he might anticipate the financial destruction as yet to come, when in fact it is already here. The Jackass expects, adequately made clear on frequent public articles, that the hyper monetary inflation goes hand in hand with the financial and economic destruction underway. My emphatic point has been that the QE debases the USDollar, forcing a hedge in defense in the investment of hard assets. The result is the rise in hard asset prices in terms of the rapidly debased USDollar units. The rising cost structure results in shrinking profit margins, and lost profitability for companies large and small alike. Then follows the retirement of capital (equipment, machinery, buildings), and their mothball storage, later followed by liquidation. Therefore, ironically, the Jackass joins the Deflation Knuckleheads in expecting deflation, but through capital destruction, something they also do not comprehend.
Thus the Jackass sees the monetary policy to hyper-inflate as tied directly to the wrecked capital, or as the Knuckleheads would say, the Deflation. They are not mutually exclusive as they perceive them in extremely shallow intellectual manner. They are instead integrally related, the deflation called upon in result to the inflation. Worse, the reaction to falling asset prices has been for yet more inflation to prop prices, as freshly printed money is devoted to support bond prices, home prices, and bank equity prices. For those who do not see the home prices propped, notice the growing legion of Private Equity firms who purchase 100-home blocks of properties from the big bank portfolios. They do so with easy money made available at the USFed for the preferred clients, the associates at such firms with names like Blackrock led by Larry Fink, the most active of its players. As footnote, the Knuckleheads fail to realize the greatest suppressive factor (deflationary in their flawed lexicon) is the ultra-low USTreasury Bill and Bond yields, something the Jackass has harped upon for three years. Not only do they slow the tangible economy by providing pitiful paltry low interest income for savers, but they fail to provide adequate income from bond spread engines for the entire pension and insurance industry, plus the investment banker sector.
ACTIVE STORM DIFFERENTIAL
The feedback loop from a vicious cycle is at work in feverish fashion. The inflation causes capital destruction. The assets fall in value. The response is for more inflation directed at the ailing assets, under the cover of financing the gargantuan yawning USGovt debts. More capital destruction results from the rising cost structure. More response to the deflation. The Deflation Knuckleheads do not perceive the inter-relationship because they are stuck in monoline types of thinking, with mutually exclusive errant shallow concepts. Sadly, the Jackass does not believe the Knuckleheads will benefit from this article as explanation, in attempt to right their wrong-headed perceptions on inflation and deflation. They lack the intellectual capability to discern and comprehend the complexity of the inter-relationship and feedback mechanisms. It is like teaching the German language to a French poodle. They naively believe one happens or the other happens, since they tend to miss the central banks response to the system. They think passively, when the real complex systems are dynamic and active. They think in shallow terms, when the financial system and economies are totally interwoven in delicate ways. They cannot define Inflation, and cannot define Deflation.
The Inflation and Deflation are manifested simultaneously to produce a horrific financial and economic storm which cannot be quelled except by a return to the Gold Standard. They are simultaneous with direct effects upon each other, from the monetary spigot to the dynamic asset valuations. They are not exclusive of each other. Rather, they occur at the same time to create an historically unprecedented storm vortex as center, seen over every continent active in trade and finance.
The above is sadly beyond the intellectual grasp of the Deflation Knuckleheads. Many are the steps in the reluctant re-installment of the Gold Standard, since it will be imposed by the Eastern Nations in the form of the Gold Trade Standard. It will not arrive as the Gold currency standard for the many defective major currencies, implicitly backed by sovereign bonds. It will not arrive as the Gold banking standard for the many insolvent banks and national banking systems, those zombie standing columns of toxicity and corruption.
REMINDER: JACKASS ANALYSIS AUGUST 2011
This section shows a direct quoted passage from a public article entitled “Inflation & Deflation in a Storm” (CLICK HERE) which without doubt the Knuckleheads did not read or else, did not comprehend. Perhaps they read and did comprehend, but later forgot, much like a creature that reverts to old stubborn behavior, since it is more comfortable and certainly more familiar. After reading the brief passage, conclude that the Knuckleheads are incapable of comprehending the complex storm underway, as are most of the mainstream public. The storm picked up speed and intensity since mid-2011 by means of QE to Infinity. The central banks provide the high pressure zone (inflation), while the damaged economy and financial markets provide the low pressure zone (deflation). Inflation has been and always will be a monetary phenomenon. The August 2011 passage read as follows, written over two years ago but still very relevant…
The best description of the current situation is the collision of high pressure zones against low pressure zones. The high pressure is the result of thrust by central banks of monetary expansion that has actually wrecked the USFed balance sheet, and the EuroCB balance sheet. Each is the shameful owner of worthless mortgage bonds and sovereign bonds respectively, that nobody wants, that will never recover in price. The low pressure is the result of a powerful push by falling housing prices and big bank balance sheet insolvency. The banks are making a transition from insolvent Zombies to undercapitalized Dead Made Men. They are soon to be recognized as dead. They are agents of the Syndicate, and thus guaranteed for slush fund income from multiple sources.
The investor community incorrectly believes that actual money is flowing into USTBonds as safe haven. They are fooled by the powerful Interest Rate Swaps applied by the big US banks, the agents of the Syndicate. The only massive asset bubble in existence is the USTreasury Bond. It loudly proclaims USEconomic recession also, just like Chairman Bernanke’s admission following the FOMC meeting this week. More still, the chart contradicts the myopic focused Deflation concentration that ignores the monetary inflation consistently and errantly. They earn their Knucklehead label every passing day, from being half blind. My contention is that none of them is very intelligent.
Aside from the grand deception, the markets, the pundits, the investors, and the analysts, all blessed by eyes and ears and clipboards are realizing the record price level for Gold. The Deflationist crowd and the Wall Street hive cite instability, uncertainty, and shaky confidence, all true, but off the mark. The actual motive and thrust behind the record Gold price are:
- Endless chronic 0% official interest rates in the United States, England, and Europe. The nil rate is the traditional trigger and sustaining force for the Gold market.
- The crumbling fortress of sovereign bonds, broken on the peripheral nations, the deep damage working its way to the core of USTreasurys and UKGilts through Italy and Spain, despite the sheep-like retreat into USGovt bonds. Watch out for France!!
- The utter wreckage of the big US banks, kept afloat by the generous FASB accounting rules since April 2009, insolvent to their core, under siege from both toxic mortgage assets and bond investor lawsuits, under Basel II strain on reserve management, and suddenly finding themselves grossly under-capitalized after showing unwillingness to recapitalize when their stock shares were much higher last year.
- The witness of the Euro Central Bank putting up another EUR 850 billion to bail out Italian and Spanish Govt debt, after several bailouts of Greek debt fixed nothing and only served to apply patches amidst continual bank redemptions.
- The general sense that fiat money is losing its value, its meaning, and public confidence, as central banks are observed in the HariKari Keynesian Monetary exercise ritual, having lost their prestige and credibility, but seen still as the last hope. Every action they take debases the currencies further and lifts the Gold price.
(This marks the end of the August 2011 passage.)
REICH FACTORS & & EXCEPTIONALISM
The world is being subjected to the most bizarre and unwieldy banking and economic policy. Within the United States, delusions of capitalism persist, when almost none exists at the top tiers. What is seen instead is a queer mixture of business fascism and ordained socialism, as the welfare state expands. Something like 46% of the US population benefits from some sort of state assistance, the most egregious elements being the Worker Disability Income and Food Stamps. The delusion of capitalism is actually a tragic claim and the cause of great laughter. The Big US Banks are protected from failure and liquidation. No capitalism there, as liquidation is perhaps the cornerstone of capitalism itself. These rotten pillars infect the entire economic body and cast long shadows on capital formation. The price inflation, economic growth, job creation, and even home prices are all objects of great deceptions and lies. All data is managed, massaged, manipulated, with laced deceptions. Recession is outlawed, as all quarters must conform to average. Pure fascism there, as accurate monitors are the hallmark of systems with integrity. Without proper readings, the decisions by corporate heads is often prone to error.
The financial markets are the bastion of control and intervention where favored, and suppression where not favored. The flash trading and derivatives have become fixed features. Pure fascism there, as free markets are not even remotely the case. The entire set of asset prices is the domain of policy makers, who wish to enrich their henchmen, while at the same time avoid a nationwide rebellion from cratered pension funds and mutual fund savings. The USEconomy has become dependent upon consumption and handouts. It has evolved in a pathetic manner. The Jackass belief is that after the tangible industry was displaced and forfeited to Asia in the 1980 decade, the US leadership crew of heretics decided to change the philosophy. They declared financial engineering a step forward in evolution, higher on the economic food chain. They also declared consumption to be the tacit privilege of the supposedly superior financial driven American tribe. The nation did not need to work for money, since it came from asset inflation and the USGovt dole.
Monetary policy in today’s terms is replete with heresy. Recall the off-loaded risk in derivatives that Quack Greenspan called sophisticated financial calibration. The next stage in the heretical assembly line is the installed (never to be removed) hyper monetary inflation delivered by the US Federal Reserve, given the euphemistic name of Quantitative Easing. It should be called financial engineering in climax, the last chapter of destruction that is, not development. This is pure Weimar national socialist failure to the extreme. When the Japanese ran QE for years, the Wall Street muppets called them a failure in a debt suffocation state. But when the Americans do it, just salute and call it sophisticated preservation of an advanced delicately balanced machinery. It is in reality failure to the extreme, destined to destroy sufficient capital to cause a systemic failure. The USFed inflation is in position to cover debts, public and private. The debt is not covered by legitimate income anymore. It is printed. At times, one can read or hear that the USFed is printing capital, or providing capital for the big New York banks, more extreme heresy. Inflation is not capital, when in fact inflation destroys capital. The US is exceptional. The great lie is that the USFed Quantitative Easing programs of printing money, using the phony money to cover the debt (called debt monetization), is actually called STIMULUS. It destroys capital the way inflation always has. Actually, keep in mind that under Greenspan, the entire concept of bond monetization was considered heresy and deeply destructive, by the USFed itself. Memories are short. The heresy is an integral part of what can be called Reich Economics, laced with propaganda from the controlled media. The forces of economics, finance, and money are pointed at the United States. It will bend to the forces, despite the ample nazi banker efforts.
The USEconomy is not the byproduct of exceptionalism. It is the result of three decades of inflation abuse and warmongering and bank sector fraud and a generation of heretical teaching. Half the USGovt debt is from war costs. The American nation has very little concept of inflation, as exemplified by the Deflation Knuckleheads. They cannot observe a high pressure and low pressure zone in the current financial and economic storm center vortex. The public could not identify a rheumatic fever, surely called a beneficial sweat. The sad fact of American University life is that the USFed pays for 35% of chaired Economics professor chairs. The teaching of false doctrine is complete, performed by economic high priests. Nowhere in the Finance and Economics curriculum is corruption taught as a key factor that influences the markets and economy itself. The formal study of derivatives is delicate, and surely does not include outlier events like the Morgan Stanley $8.5 trillion infusion in the second half of 2010 that caused the phony flight to safety in USTreasurys.
Russian President Putin took great exception with the amateurish US President in rationalizing the global reserve currency abused privilege. The US is exceptional in its criminality and heresy and war aggression, not in its innovation for industry. It is exceptional in its devious destructive financial engineering that helped heap wreckage upon the USEconomy and the entire Western financial structures. The foreign resentment is deep. As a nation, it is exceptional in the protection it offers the criminal elite for the gradual imposition of a police state. Forgive the Jackass, who is going off the deep end and is clearly delusional in criticism.
The United States does not deserve privilege in financial abuse, bond fraud, banker criminality, and war on credit card. The US as a nation is indeed exceptional. It is exceptional in the extreme degree of criminality and protection provided by the many official USGovt offices. This is precisely the bitter fruit of the Fascist Business Model that the Jackass has written about for nine years, yet almost no other financial analyst even mentions. The merger of state with big business led by the financial sector has produced a grand corrupt nation and illegitimate leadership, unless criminal syndicate leadership is given high value. Full spectrum dominance has been an exercise in theft, pilferage, fraud, market frontrunning, insider trading, murder, bribery of Congressional members, twisted agendas for the Intl Monetary Fund, the World Bank, and even the major regulatory bodies, including the Debt Rating Agencies. The USGovt leaders strut their puffed arrogant chests like mutants. The democratic process (like voting system) has been turned on its head, as corrupted as Third World nations except more sophisticated with Diebold software. The police state will have little opposition, since recruits will be easy. The brutality of police is a time-honored characteristic that appeals to the dark side of humanity. Just as the USMilitary at times has appealed to those who wish to kill in the national interest, the domestic police at times appeals to those who wish to beat heads and distribute pepper gas to unruly crowds. The dark side is prominent in humans, the debate being whether dominant.
INELASTIC GOLD MARKET
The Gold Market is truly unique. It represents money and savings. It represents defense against inflation and even against corruption. It represents a store of value free from debt counter-parties, and even corrupt banks that exploit and prey upon their clients. Apart from its innate defensive properties, the gold market is full of unique characteristics. To be sure, gold is the fungible, transportable, recognized store of value that is immune to effects of time decay. However, its micro-economic effects are fascinating. The demand for Gold is inelastic. As price rises, so does demand. It is called Gold Fever. Recall in year 2001, gold could not be given away at the rock bottom $280/oz price. The gold demand shoots up whenever the price makes significant upward strides. The opposite is true of demand for television sets. The supply of Gold is inelastic. As price rises, supply diminishes, the opposite of what one would expect. For years, the coverage of the insanely acidic hedge book maintained by mining firms resulted in a massive drainage of cash. Note the several Barrick Gold stock issuances to cover their hedge book, except they lied and never covered it. The toxic hedge books continue to leak. As they continue to drain cash, they inhibit devotion of capital to productive projects. Another recent bizarre phenomenon has occurred. It is a cousin effect to the inelastic supply factor. As the USDollar is debased by USFed monetary inflation to the extreme, and forces are applied to lift the Gold price, the many foreign governments marshall forces to confiscate gold mines and to impose heavier royalty taxes. Worse, as the USFed inflation raises the cost of living universally, the gold mine labor forces react. They go on strike for higher wages. The result is confiscation to reduce gold mine output, and strikes to reduce gold mine output. Gold is an exceptional industry indeed. The opposite is true of supply for milk and beef.
PARADIGM SHIFT ON GOLD
Paradigm Shift will be the climax crescendo to the entire currency market, its king gold included. The Gold price will someday before long enjoy a quantum leap upward in a global reset. The design and details are not for the common unwashed among us to be informed. We plebeians must plan and decide according to anticipated decisions which come. The great Global Currency Reset will come like a thief in the night. It is being demanded by a multitude of foreign nations, which are beyond fed up with US banker criminality and abused USDollar privilege. Foreign leaders are angry and motivated to produce change. The Voice has given several messages in the last couple months about enormous pressures by many nations. The Eastern nations hold a staggering amount of Gold reserves and USTreasury Bonds. They strive to bring about by force an overnight 50% USDollar devaluation. When the discussion turns to the impact on other fiat paper currencies, the conclusion is simple. All major currencies will likely retain their relative exchange rates. But they will all adjust to the 50% devaluation versus the benchmark currency: GOLD. What he is describing is a Global Currency Reset that features an overnight double in the Gold Price. The biggest loser will be the United States, the site of the greatest financial crimes and the location of the greatest abused privilege.
THE HAT TRICK LETTER PROFITS IN THE CURRENT CRISIS.
From subscribers and readers:
At least 30 recently on correct forecasts regarding the bailout parade, numerous nationalization deals such as for Fannie Mae and the grand Mortgage Rescue.
“Jim Willie is a gift to our age who is the only clear voice sounding the alarm of the extreme financial crisis facing the Western nations. He has unique skills of unbiased analysis with synthesis of information from his valuable sources. Since 2007, he has made over 17 correct forecast calls, each at least a year ahead of time. If you read his work or listen to his interviews, you will see what has been happening, know what to expect, and know what to do.”
(Charles in New Mexico)
“I commend the Jackass for being the most accurate of all newsletter writers. Others called for the big move in Gold right away, but you understand that the enormous fraud in the system needs to play out before free market forces can begin to assert themselves. You seem to have the best sources and insights into the soap opera that is our global financial system. Most importantly, you have advised readers to be patient, stay safe, and avoid mining shares like the plague. Calling the top in the USTreasury Bond (10-yr yield at 1.4% yield) stands out as a recent fine accomplishment. The Jackass understands the markets, understands the fraud, and also has the sources to keep him the most up-to-date on the big geopolitical and financial events and scandals. Few or no other writers have all three of these resources.”
(Austin in California)
“A Paradigm change is occurring for sure. Your reports and analysis are historic documents, allowing future generations to have an accurate account of what and why things went wrong so badly. There is no other written account that strings things along on the timeline, as your writings do. I share them with a handful of incredibly influential people whose decisions are greatly impacted by having the information in the Jackass format. The system is coming apart on such a mega scale that it is difficult to wrap one’s head around where all this will end. But then, the universe strives for equilibrium and all will eventually balance out.”
(The Voice, a European gold trader source)
Jim Willie CB is a statistical analyst in marketing research and retail forecasting. He holds a PhD in Statistics. His career has stretched over 25 years. He aspires to thrive in the financial editor world, unencumbered by the limitations of economic credentials. Visit his free website to find articles from topflight authors at www.GoldenJackass.com. For personal questions about subscriptions, contact him at JimWillieCB@aol.com
Financial writer and radio host Kerry Lutz predicted six months ago the ObamaCare website would be a train wreck. Lutz says, “Hospitals wouldn’t know, insurance companies wouldn’t know if you had insurance or not. This thing was going to be total chaos, and that’s what we’re headed for–total complete chaos in health care.” Beyond the health care computer system, there are deep flaws in the plan, such as allowing people to buy insurance after they get sick. Lutz contends, “You’ve given people incentives to not have insurance until they need it. That’s bad behavior and guaranteed failure.” This is going to be a disaster for millions of people who will be canceled and forced to buy new health care policies. Lutz says, “They’re getting replacement policies that are anywhere between 50% to 300% more in costs with huge deductibles, huge co-pays and co-insurance, which is a new term Americans are going to learn about.” Lutz goes on to say, “It’s a tragedy for America. It’s going to speed up the ultimate collapse that we’ve been warning about. . . . There is nothing to be happy about.” Join Greg Hunter as he goes One-on-One with Kerry Lutz of the FinancialSurvivalNetwork.com.