There's Probably No Way Out For the US Economy

I say that because there is a way out it's just this crowd of spendthrifts haven't the courage to take it.  

Reading Martin Armstrong tonight and he brings up a good observation.  All the debt the US government has created pays interest.  So much that 70% of the current debt is the amount of interest already paid.  If the government created its own money there would be no interest to government.  Instead the FED orders the money the Treasury prints it, gives it to the FED who then sells the debt through their Primary Dealers (banks).  Who purchases the debt.  Well 40% of it is purchased by foreigners and foreign central banks in particular who for the most part “park” the money to be use in international settlements.  When these bonds come due the US government simply pays the interest owed to the foreigners and that money (US Dollars) leave the US.  The flow of capital leaves the country. 

With the interest rates near zero there is not too many foreign purchasers of our current debt creation so for now the FED is playing the role of purchaser of last resort. (Hey, the bonds get sold that’s all the politicians care about because they for sure don’t know what they are doing.)  But, foreigners are still one of the biggest holders of US debt.  There’s been no real beneficiary of all this deficit spending except exporting our capital to foreign bond holders. 

GDP numbers sucked today and the FED chairman indicates that rates will stay near zero as long as it takes.  To what?  ….. Meanwhile the Fed is injecting $85 billion per month into the markets mostly buying up bad real estate bets.  Now, I admit I’m just a lay person and not a big time financier but to me this is just insane. 

I look at Obama’s budget and right off can see that it surpasses smoke and mirrors and leaps right into the category of “pipe dream”  (as in what’ s in that pipe he’s smoking)  Ever since he took office they’ve been using a shade over 4% for an annual growth figure and project that well into 2022 each and every year.  I don’t buy the 2% that gets reported after the ‘shape shifting’ of numbers in mysterious ways.  So, now get this;  they show that tax revenue will be up 100% or so by 2020.  That means they count on the economy growing 100% and if it doesn’t guess what.  They just increase taxes by 100% (that’s the likely scenario if this thing doesn’t explode by 2020, which, I’m confident it will).  Already the additional burden on taxpayers from increases (I know what Obama said but have you looked at your check since the first of the year) in taxes, additional cost of Obama care alone will likely bring the nation to its knees.  Plenty of mid to small size businesses are going to be forced to lay off or cease business altogether and unemployment won’t improve and may begin to eek upward.  That adds to the GDP problem so the economy continues to slowly tank. 

Meanwhile with the FED pumping out billions of dollars per month into the market, they will go up.  But up in what?  Fiat dollars.  The values of the hard assets just remain the same its just the dollars are worth less throughout the world and the market just adjusts the price up without any real gain an perhaps an actual loss of value.  This give the media “green shoots” to tout about how well everything is going while the nation participates in this long slow suicidal debt creation.

So, because we will continue to create more massive deficits, increase taxes, less people will spend causing the GDP to go further down which causes more business failures and layoffs which take even more money out of the economy and the death spiral continues.  Especially if they keep idiots like Krugman around and worse if they keep listening to him.  Yeah, I know he’s got a Nobel prize but so does Obama.  

Self-Created Societies

From the beginning our nation and our very security and liberty had to contend with what Madison termed “factions”. Factions are groups of citizens forming together to advance their own causes regardless of any overall effect on the rest of the citizenry. This practice began as soon as our fledgling nation was born. One of the major reasons we are founded as a Constitutional Republic rather than an actual Democracy is that adage which says “Democracy is 3 wolves and a sheep deciding what’s for dinner””. That a minority will find itself at a distinct disadvantage and there is not just a risk but a certainty that sooner or later a majority will encroach on the liberty and rights of a minority. Hence, the reason for the structure of our government with 3 branches checking each other and representing the interest of the people, the states and the nation as a whole.

 In a letter to Thomas Jefferson, November 30, 1794 James Madison was describing what he called “a critical situation”. “Dear Sir, The attack on the most sacred principle of our Constitution and of Republicanism, has given rise to much discussion in the House of Representatives, and has left us in a critical situation.” Madison had warned in Federalist 10 of the danger of “factions” and in this letter I find the use of a term that further describes these factions, that is “self-created societies.”

 If you think about it that accurately describes a plethora of self serving organizations today for, what else are these thousands of groups who constantly lobby the Congress if not self-created societies. Our society in the 1700’s formed our government and declared it was “In order to form a more perfect union”. What has happened is, after 225 years or so we have see these self-created societies proliferate to a point where they have refined the influence peddling to an art. Self-created societies has exercised localized power and influence (read paid money) over politicians in such an organized fashion as to set policy and law affecting the millions upon millions of Americans, many of whom, don’t even know who they are. We have all heard about the ADA, NAACP, AARP and the larger groups but there are likely thousands of such groups crawling all over K St. in Washington spreading money and influence among the insatiable politicians who spend more time raising money than representing the people. In the letter I spoke of Mr. Madison said. “If the people of America are so far degenerated already as not to see, or to see with indifference, that the citadel of their liberties is menaced by the precedent before their eyes, they require abler advocates than they now have to save them from the consequences.” He also indicated that the methods of these self-created societies though not illegal, “contributed by their proceedings to mislead the weak and ignorant.”

 So here we have Madison a supporter of a Republic describing the battles on the floor with those who prefer strict Democracy. Many today simply don’t know the difference and constantly refer to our Republic as our democracy when making reference to America. What they mean is democratic principles upon which our Republic is based. This basic principles are long forgotten by many today and the only reason I can think of is they have never had the proper instruction. The reason for not getting the proper instruction is, the teachers themselves don’t understand any of this as they were not taught. After all, these Democratic societies have had over 200 years to work the floor.

 I have obvious issues with the current Democrat party because it is made up of these self-created societies. Republicanism is barely recognizable in today’s Republican Party for the simple reason that over the years it has slowly suffered the encroachment of its own brand of the aforementioned Democratic Societies. The House and Senate is filled with politicians sent to Washington by this multitude of self-created societies all seeking advantage for themselves to the detriment of the nation and the rest of the citizens. Much of this has as its root the discovery that through the office or our lawmakers, wealth can be extracted from the average citizen and transferred to the pocket of individuals leading or founding these self-created societies.

 I write these words as an exercise for myself in order to understand how we as a nation have come to this point. It’s by no means any in-depth study but simply one man’s attempt to understand what really happened and what chance there is to leave a nation somewhat intact for my descendants to enjoy as I have. I guess it’s the old cop in me that requires nothing more than simple truth and clarity in the thought process.

I Guess Cultural Marxist Piss me off

Thesis to antithesis to synthesis………dialectic Each time synthesis is achieved it "generate[s] new internal contradictions, and then a further resolution" Result is continuous crisis and continuous resolution required. Seems screwed up to me resulting in an endless dialogue among members of society of which there are as many opinions as there are participants. We see it every day with the cultural Marxist never being satisfied and always finding that someone has more than he so back into this useless endless loop. Marxism and socialism certainly must be based on the jealousy of men.

 This must be the reason I become so frustrated and angry with socialist as practically all of them employ this methodology as though it was a hereditary trait. In order to facilitate the promulgation of this most annoying cult of Marx may become what the leftist call facilitators. Many of our young become facilitators without even knowing it since most of these issues appeal to matter of the heart as opposed to those of the head.

 Sure, no decent human would relish in the suffering of another but the truth is any one of us would exhaust every waking moment and everything we have to the point of self destruction and still not make a noticeable difference in the condition of the majority of the less fortunate. In the meantime, if left alone to pursue one’s own interest the majority of mankind would first secure the basic needs and safety of himself and family and then a portion of the excess results of his labor would be freely used to help those he feels deserve his attention. This wealth/safety building effect would exponentially and eventually become wide spread and the most people would be able to participate in the process.

 Now, granted the competition on a planet with limited resources naturally results in winners and losers but from natures standpoint is that necessarily a bad thing?

Old Prediction

A little over a year ago (May 5th 2011) I post what I called a “Quick look at Gold”.   In that article I said “In the chart below, I have put a scenario for gold should this play out in this fashion. Gold as you can see, had a fairly long sideways channel of about 3 months duration before this last breakout and now appears to be correcting. This would be in timing with a run at a low mid-June.” You may click on these charts to enlarge.

What actually happened was Gold begin its down move in mid June and bottomed the week of June 16th. Not bad for a guess. Chart showing results is below.

Since last year gold made a new high the week of September 15 2011 and has been in a sideways to down trend ever since. Making lower highs and lower lows. UNTIL the low made May 14th which coincidentally produced what's called a 'doji' candle for that week. Doji's many times indicate a change in trend. Since the trend for the past year has been down that might be a good sign for gold. The following week of 5-21-12 was without question the time to go long gold for the mean time. I think gold represents an indicator of confidence in governments and the economy in general.

 I can't explain in a few paragraphs what's been going on with the attempts to keep gold down by governments and others but will leave it as this is one perception they don't want to lose a grip on. As things progressively get worse for the politicians gold will continue it rise. It has definitely changed trend for the time being, now it's just a matter of a confirmation on the trend change. That confirmation will come by making a higher high perhaps sometime in November. It needs to break above about 1790 and hopefully above 1805 to prove it's on a roll to me.  THEN I wait for a pull back to enter if wanting in and have not already entered back in May/June.

Armstrong's computer says the following:  "Looking at our empirical models, the ideal primary target for the next turning point appears to be March 2012 thereafter we see a two-month move in the opposite direction initially there appears to be a fairly large change in Trend developing in September of 2012 which can lead to a move into the January 2013. Therefore if March unfolds as a reaction high we could see a retest of support in May with a   reaction high into August for Labor Day and a decline into a final low in January 2013. It is clear that January 2013 should be a very important target. If that is a low then we should be able to see a significant rally into 2017 thereafter.”

I rarely disagree with Martin's forecast.  This Little burst upwards could really just be a reaction high followed by a decline into January.  That would be the best scenario for a big rally lasting years in gold.  

Police Investigating Hate Crime After Bacon Found At S.I. Ramadan Site « CBS New York

Police Investigating Hate Crime After Bacon Found At S.I. Ramadan Site « CBS New York:

Careful where you leave a sandwich or you might be charged with a "Hate Crime"  folks we gotta just get a grip on reality.

CIVIL WAR Texas Judge thinks it's possible

Don’t think I have mentioned on this blog before but have in many other places the concern about revenue for local governments.  With the economic strife going on for the last 5+ years, the unemployment, loss of wealth due to foreclosures and small business’s contracting the States, local and county coffers are shrinking.  Unlike the Federal government these governments cannot print money and by law must balance their budgets. 

With the loss in tax revenue these local governments are and have been feeling the pinch for money.  In the several localities that I’m familiar with, local leader simply mention raising real estate taxes and the public response gets irate.  Citizens begin calling for change in leadership, cuts in large government salaries and benefits and anything that will prevent the government from putting its hand deeper into the pocket of the citizen.  It’s a though people realize their power in local government and take action against further taxation but somehow feel helpless to have any effect on the Federal side.  It’s almost like living a dual life.  One, a citizen and participant in local affairs and the other a victim or servant of a giant central government. 

It’s not easy to get locals to go along with any tax increases so, local officials have to make a case and explain to the locals why such increases are needed.  The success of this revenue gathering depends on how well the officials present their case.  If it’s not generally accepted and the boards proceed with tax increases anyway, it is likely they get voted out in the next election or at least challenged aggressively and are put through a mudslinging contest.   At the local level this can put plenty of stress on citizen leaders and divide families so the results are felt more severely on a personal level than is the case with those in Washington.  In the big league of Beltway politics all this seem to just run down the back of the politician and back into the mire to be recycled in the next election.  In other words,  those in Washington don’t pay much attention to such ire because they are separated by miles and miles and are no longer a real part of their community.  Other than a few trips back to the local office to drum up votes most of these politicians have their sights set on living the big life as a mover and shaker in Washington.   

To convince the citizens of Lubbock County, Texas Judge TomHead has taken a novel approach to convincing citizens of the need for a tax increase.  He says they need the money to prepare for civil unrest that will follow a re-election of President Obama. 

The short video is a news interview of the Judge explaining the why’s of a 1.7% tax increase for next fiscal year.   

Here's a link to an article about the same subject.

Texas official warns of Obama civil war

Delta Flight 15

Ample proof that most people are inherently good is in this story of how people respond in need.  Left to their own devices and without government mandate the people in the Gander area responded to the need of fellow humans during the time just after the 9-11 events.  This is a story about people helping people and being what they were intended to be.

Here is an amazing story from a flight attendant on Delta Flight 15, written following 9-11:

"On the morning of Tuesday, September 11, we were about 5 hours out of

Frankfurt, flying over the North Atlantic. All of a sudden the curtains parted and I was told to go to the cockpit, immediately, to see the captain. As soon as I got there I noticed that the crew had that "All Business" look on their faces. The captain handed me a printed message. It was from Delta's main office in Atlanta and simply read, "All airways over the Continental United States are closed to commercial air traffic. Land ASAP at the nearest airport. Advise your destination."

Velocity of Money

I hope my friends will take the time to read this, study this chart and gain a little more insight into what’s going on.  Even if I am wrong it will give you something to think about and maybe even a different way to look at your country and economy. 

Velocity of Money is the rate of turnover in the money supply;  In other words, the number of times one dollar is used to purchase final goods and services included in GDP. 

In a healthy robust economy this velocity is high and in a growing economy the number is increasing. 

Fair Share

Haven't been posting lately so though I would fire up the old blog for a bit.

There's plenty of talk about people getting their fair share lately.  My question how do people come up with these ideas?  I have to say to the best of my ability to determine that it all seems to come from the "political class".  Yes, here we go with another "class" in the species, but over the last 50 years or even more a new class of citizen has emerged ..... the politician.  That's right they are now in a class by themselves and guess what.  You are likely not in the club nor will you be invited to join.  That's a dog eat dog environment and the normal rules of a sane society do not apply.  (But more on that later)

Meanwhile enjoy the "paws" video and be forewarned it contains strong crude words.  If cuss word offend you ..... don't watch it.  I have never been one to really hold back on such language except for a brief period as the "Couth Control Officer" at the Simmons Army Airfield Officers Club annex at Fort Bragg where, during brief reading of passages from the Terry Southern novel "Candy" I would stick to the written text rather than inject my own colorful interpretation of what he really meant.

Dylan Ratigan For President

Dylan is know for his rants but this latest one is a Jewel.  

Today's Thoughts

 "There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose."  -John Maynard Keynes – (The Lavender Bolshevik ) speaking of monetary inflation

“It gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.” - Warren Buffet- On gold

A man whom I much admire spent a lifetime and was awarded the Nobel Prize for his work in economics.  In order to understand economics one must also be a philosopher.  In order to succeed in this endeavor one must practice a moral self-discipline based on logic and reasoning.  Milton did this until he drew his last breath.  He was always the champion of self determination and always the first to defend liberty.  Too many fail to understand the inseparable relationship between man’s economic life and his liberty and freedom.  Milton did his best to spread the word in a manner even the common man could understand through a series of made for TV documentaries in 1980.  I doubt that many paid attention simply because of the condition in which we find ourselves over 30 years later.  Below I include Dr. Freidman’s words as best as I could transcribe for your consideration.  His words in quotations, mine in italics.

“The great depression was NOT a failure of private business but was produced by a failure government monetary policy. A  Failure of the Federal Reserve System to act in accordance with the intentions of those who established it.  It was a failure of the Federal Reserve, that despite the knowledge of many people in the system of the right course of action.
 

Why is the myth that private business caused the depression so prevalent?  The answer is simple; private enterprise has no press agent.  The Government has a great many press agents.  The Federal Reserve has a great many press agents.  Naturally, neither would ever 

admit nor claim that they had produced the great depression."

Herd's and the dangers of Following the Herd

With the volatility increasing in the market I think it approiate to remind everyone what panic and following the herd can lead to.  This picture is worth a thousand words.  Enjoy ..and ..  THINK.  

Let's Tax the Rich!

OK, Congress has done its share now let's tax the rich.  This video explains how it works.  For all you socialist out there you might want to get some popcorn it's 6 minutes and 25 seconds of some 'splaining.

Understand the Delphi Technique

Beware the Delphi Technique

Political Correctness is Cultural Marxism (Part III) : speech by William Lind « The New Anti-Jacobin

Certainly something to think about!  Most of the current wave of socialism has at it's roots the Frankfurt School and lessons the Marxist learned during WW1.

Political Correctness is Cultural Marxism (Part III) : speech by William Lind « The New Anti-Jacobin

Ron Paul Interview

I've been pretty inactive lately with the blog thing mainly because not that much has really peaked my interest as congress grinds out the same old crap on the Debt problems.


As far as the market goes it's just up and then up some more as they try to suck more people into the pen for the slaughter eventually but that's another story.


Somehow I got this link to a Ron Paul video which I think is enlightening and informative so I will urge you all to watch it.  It's in three segments about 12 minutes each so it does take some time but with elections beginning to get closer I would put a plug in for Dr. Paul.  He brings to the table something I cannot say with any confidence the other candidates bring and that is honesty and morality coupled with common sense and an in depth understanding of how an economy works.


Granted if all his policies were to be put in place it would cause some hardship BUT, if we continue down the road we are on, the hardship is coming any way, and kicking the can down the road as has been the case for well over 40 years the hardship will be far greater than we can imagine. There has come a time for us to stop voting for the political "rock stars" and put a patriot at the helm, who believes in the Constitution and means it, rather that the polished professional bureaucratic America seems to fall in love with every election cycle.


In this video he talks a lot about the currency and debt. I know that can be a boring subject but pay special attention about 10 minutes into video one where he talks about simply not paying the debt the US government has to the Federal Reserve. That would free up 1.6 trillion $$ instantly.


The US government has defaulted on it debt at least 5 times in our past so from a historic point of view, all this drama being used by the politicians ensconced in positions of power, is little more that noise from the idiots in Washington. News flash: They don't intend to pay the debt and never have, so let's just clear the air over that issue and put the nation back on the road to viability for the people of this nation and not simply to serve the politico's and their corporate "handlers.


For a little further explanation on what stiffing the FED would mean I include a link (here) to a very good article By Robert Murphy at the Mises Institute.

Happy 4th of July

Holidays are always fun and enjoyable.  Sometimes, we get so involved in the celebration that we forget about the actual reason for celebration.  Today I include a copy of the Declaration that set the country in motion and urge everyone to read the entire document.  It won't take but a few minutes so go ahead and look it over and reflect what the words say and mean.  It is after all the basis of our freedom and independence.

Now more that ever, it is imperative every American have some understanding of the actual role of government.  As you read this you can see it was never intended for government to "take care of you" but rather act by consent of the people to protect our basic right as citizens so that we might as individuals act in our own best interest in order to prosper individually thereby thereby creating a good for the whole.  The power the government has comes from the consent of the governed.  Remember that the next time you vote.  

Senate Official Complaining about Code Word "Geronimo"

I'm not about to rehash the “Indian” thing or even the “native American” thing, that’s been done Ad nauseam.   

The news today is, some director for the Senate Indian Affairs Committee is objecting to the military using “Geronimo” as a code name for Bin Laden.

I suggest that Loretta Tuell, the director I mentioned just go find something useful to do for crying out loud.  Besides she is a member of the Nez Perce tribe and not an Apache as was Geronimo. It is well known and well documented that the Apache were a war like group and the word in the Zuni language means “enemy”.

Osama Bin laden Death house

I may be wrong but pretty sure this is the house UBL was killed in.  you can see how close this guy was living to a facility suppose to be the Pakistan Military Academy.  He was right under their noses.  Hard to believe no one knew of this.  I located the compound which looks much like what is being shown on TV now (Sunday) and the coordinates are
 34 11 15.76 N  73 14 33.18 E .

I have seen this relationship shown no where in the media so thought I would put it here.  If I'm wrong I'm wrong but it is what I believe to be the scene. Just click on the photo to enlarge.

And zoomed in......

Global Warming, Climate Change and Financial Bubbles

Someone made the comment on Facebook “It is a global climate change due to a shifting of the earth's crust.” In response to another mention of global warming/climate change.

I don’t believe the earth’s crust is having any significant effect on weather patterns but rather the weather patterns are a direct result of what is called Solar Lunar Action. Peirs Corbyn, an astrophysicist and meteorologist has for years made accurate long range weather forecast based on this science.

It is my opinion that the earth receives all of its energy in varying ways from the sun. The earth is a constant recipient of radiation and magnetic forces via the sun which vary according to solar activity. This energy is further affected by the forces and relationship of the earth to the moon’s gravitational pull. (think how it affects tides etc). These forces are measurable and science has plenty of data.