Saturday, February 28, 2009

Dow 800??

Some have expressed disbelief at my forecast of Dow 800 by 2020. I have no doubt I am right. None. I issued that forecast at 14,100 (when people thought I was really nuts); we're already halfway there. How do I know something will happen that seems so unlikely?

Because it is not unlikely. What is unlikely is inflation continuing forever. Inflation is simple crime, immoral, premeditated theft perpetrated by deeply evil people. Nature does not allow a system built on systemic corruption to thrive.

So where are we now? Let's take inventory.

The latest Big Bull Market started in 1932 at Dow 40 and it peaked (according to more broad indexes than the Dow) in 2000 at Dow 12,000. Lest one mistake that for natural growth...

$40 compounded at 3% real growth for 68 years is a whopping $298.53. That's right, in 2000 when our most recent bull officially died, the Dow was roughly 97%-pure inflation. To think inflation will continue when 11,700/12,000 dollars is nothing but stolen buying power, well, seems just as odd as predicting it will go on ad infinitum.

The hardest thing to me, about forecasting Dow 800, is justifying a number so high. Well, part of that is cheating. I'm adding 20 years to the above, so the steady state growth number is more like Dow 540. Call me an optimist, but I think Americans are a hard working people, we can squeeze out another 50%.

Another clarifier is Elliott Wave analysis. Anyone who has watched stocks thorough an EW lens for a while knows that 2nd wave retracements of entire first waves are not only possible, they are common. In fact, it is pretty uncanny how many 1st waves retreat to about their stating point, spanning all degrees, from minute-to-minute to year by year. The most common EW retracement, which is technically a guideline but happens predictably, is a wave 2 termination in the vicinity of the previous wave 2 of one lesser degree, that is, at wave 2 of the previous 4-to-5 wave of the same degree. That indicates a strong probability of revisiting the price territory of the Dow's 1974 to 1978 low (the wave 2 retracement within the previous 5th wave), or 740.

Next, there is gold. When the elite index of what was, then, a true industrial power, lost 90% in the 1930's, partial gold backing was still an inflation mitigator. Even thought the US didn't have near enough gold to cover all the dollars in circulation, the "gold standard" still enforced some wealth reserve to reign in mega-inflation.

U.S. Capitol Steps, 1932

Contrast to today. Not only did we allow 97% of our collective national wealth to be purchased away from us using nothing but worthless printed paper, now we have a gold price of $950 pumped from just $20 at the beginning of the inflationary bull market. That means that if this decline equals the 90% decline of the 1930s (which was on the gold standard), look out, because this time asset prices, reflected by globally priced gold, have as much as 97% to fall just to return to the steady-state baseline. In other words, we have exponentially more paper inflation in our prices than they had at the kickoff of the Great Depression. I guess that should be obvious, the Federal Reserve's Great Depression pilot program peaked at Dow 390, the mature program deployment peaked at Dow 14,000+.

LA County Employment Bureau, mid-1930's

Now consider the boat anchor. The inflation kludge, the one criminal central bankers forced upon Americans to cause their original Great Depression, is still with us in larger form. No surprise that the exact same poor-->rich wealth-transfer schemes that caused the Great Depression, are causing GD 2.0. FDR's creation of the welfare state, his socializing the losses of wild bank speculation with customer deposits through the FDIC, his heavy handed FHA/government influence in real estate markets--all remain the direct and immediate causes of both depressions--ours being an entire EW degree larger than the Great Depression.

Living on birds hunted by the children. Nipoma, California, 1936

So let's check ourselves in for a quick financial physical. Our deficit in 2009 is projected to be about $1.5T, about a 45% shortfall. Problem is, that assumes income taxes keep rolling in. They won't. New York City, a huge windfall for D.C. paid 97% less tax revenue in 2008 than at peak. California was a bigger economy than China by many measures, our largest Federal cash cow at peak inflation. Now CA can't fund their own tax refunds, let alone contribute to the national scene. With national spending on a pace to double every few months or so, our physical exam looks downright ugly.

We had about 140M taxpayers; we've got an official U6 of 14% and we're losing a million taxpayers every six weeks. Let's say the real number right now is about 120M contributors. Median income is around $50K. $12T in overt debt/120M is negative $100K per taxpayer, twice the most common income. Take your income and double it, that is roughly your mind-numbing debt. Don't forget to add a couple of trillion every year for the foreseeable future. Our national obligations, including promises congress has made on behalf of unborn Americans, total about $70T, or half the cumulative wealth of every human living on Earth. The patient is flat-lined.

Dow 800? Ready or not, here it comes.

Monday, February 23, 2009

Burn Baby Burn

"I would like your opinion. I understand your graphic on the money supply of various different nations, and how the exchange rate is matched by the relevant abundance of each currency. However, can you say something on supply and demand.For example, if the USA was to double its cash supply by just printing it, and country X did nothing. "

Hope you don't mind the indirectness, but I would like to answer with a metaphor:

Let's say the total currency supply of a given nation is a house, and day after day, construction crews slave to add rooms to the country's mansion. In that case, let's call it the norm, yes, country X can dial up their construction rate (their inflation rate) by hiring more crews. They can either encourage shakier borrowing to pay for it, or they might emigrate a new pool of hard workers willing to build for less. So during normal operation, they may voluntarily devalue their nation's currency by method of inflation, so as to increase bank profits.

Today is not the norm.

Today, fire crews are on the scene. Rooms hastily added have caught fire. There is an inferno in progress. What little construction we can muster is dwarfed, both in pace and scope, by the blaze.

So to me, your question is sort of like asking the Fire Marshal, "How long before you double the size of this house?"

The reality is that all national mansions are burning. Since burn rates dwarf construction rates, the comparative rate of decline is fairly even all around, scary fast, with no effective way to temper or control pure entropy.

If you want to complete the metaphor, make the Fire Marshal an arsonist who also happens to be the listed insurance beneficiary. Now, ask the same question...

Sunday, February 22, 2009

Deflation & Exchange Rates

Anonymous wrote: "I was reading an article this morning that said that the Chinese will continue to buy our debt. I think the truth is that Chinese have decided to stop buying our debt. I wonder what this means to our $ against the other currencies."

It's an interesting question. In general and theoretically, deflation in a global economy has no affect on exchange rates. If Currency A was priced 1:1 with Currency B and you burn cash due to loans imploding with similar exposure across the globe, you can expect global interest rates to plummet near 0% as new cash becomes difficult to generate from existing cash. But exchange rates don't care:

If China is smart, they'll want to own more of our debt as interest rates fall. Like most things financial, it is counter intuitive but true that lower interest rates are more valuable than higher interest rates. In other words, a lower interest rate note (assuming market value) will pay you more stuff (value) over the life of the note.

China's existing U.S. debt is skyrocketing in value, because older notes continue to bear relatively high rates in a now-deflated environment. Every dollar promised is now worth much more.

Lending to Subprime Borrowers

"I have a jumbo cd getting 4.25% untill October of 09. Please give me your advice, I know others are in my boat too !"

The bottom line is that if you want 4.25%, you'll have to take substantial risk. I own no CDs and no MMFs, because these are promises to pay by bankrupt institutions or by second hand brokers on behalf of bankrupt institutions.

Some CDs are insured by the private FDIC, some are not, others say they are, but are not. So be careful.

For example, if you buy a brokered piece of a Jumbo CD that pools buying power to pump up the bank rate of return, then the note probably lists the broker's name as the beneficiary, not you. The broker might divide the CD into portions, and accurately portray the note as FDIC insured, but the insurance could be insufficient after it stops at the FDIC limit. Even if the (stone broke) FDIC actually paid on the note when the bank couldn't, brokered-CD holders would probably be left with nothing. What little was paid would go to cover the broker's losses.

That is the kind of risk you take in this kind of market, which is why I do not recommend CDs, MMFs, or even holding a significant amount of cash in a bank account.

Realize that any bank paying you more than the Treasury rate (near 0%) is counting on their ability to inflate the dollar supply from new borrowing, in other words, their Ponzi scheme continuing. If they can't lend to others, they can't pay you.

Think of all banks as FICO-400 subprime borrowers who are already in default (that's what "bailout" means, right?). Sure, you can accept their promise to pay you a high rate, but you both know there is no hope of the arrangement working over the long run.

Saturday, February 21, 2009

The Basics

I don't know how many times I've posted this over the past year and a half, but...

If you don't have at least a year's worth of cash in home (i.e. physically stuffed in the mattress), the time is rapidly approaching when it will be too late. Preferably, several years of cash. Five years+ is better, because that could last 10 years+ after the full effects of deflation kick in.

By "a year's worth" of cash I mean enough to cover all expenses, from food to shelter to gas. Everything you must spend to survive.

By "in home" I mean physical green cash inside your four walls. "Money in the bank" is as good as gone. Safe deposit boxes have a history of being raided by the U.S. government in times of depression.

Exactly when it will be too late to obtain cash is anyone's guess, but we do know that when we know it will too late. There is about $750B in green paper cash circulating in the entire world, minus what has already been put away, which is most of it. Compare that to about $20T in U.S. dollar denominated bank accounts.

Remember the Fed's own words about the Federal Reserve's own effectiveness during the last depression:
At the slightest hint of trouble, depositors would run to the bank and line up to withdraw their money. All too often, only the first few people in line had any hope of ever seeing their money again; others lost everything. " - Federal Reserve Bank of Boston
The rest of your money should already be in U.S. Treasuries. Defund all revolving interest bearing Treasury Bills, Bonds, and Notes to your C of I account within the Treasury. Never redeem to a bank account, until the money is desperately needed, and only then, as much as you need to transfer and no more.

World Censorship

Some people found the UK Telegraph's story that European banks will collapse if they don't grab $24T of their peoples' money, right away, rather disturbing. I didn't. Tell us something we don't know.

The disturbing thing about the story is that it was immediately censored.

As soon as the story was published, like all things on the internet, it was instantly archived by gazillions of computers around the world:

Yet, "somehow," the critical $24T number was quickly censored from the original story's headline and text. See the standing story here:

Even the text of the link above, itself, preserves the $24T number (in Pounds Sterling).

The Fragility of Complexity

jayhawk: "lately I've been thinking about how just when one finds economic collapse incomprehensible is exactly when it is probably most likely"

Yes, I couldn't agree more. It should go without saying that more complex systems break more easily than less complex systems. All moves in the direction of complexity are underpinned by blind faith in a given support system. When one buys a Toyota Prius (substitute any modern auto), they know that the car is undrivably complex without a healthy mother ship to provide eternal support. Their blind faith in an endless support system is what drives their decision to buy the car.

The same is true with an MRI machine, an HDTV, a computer, a dial tone, your bank account balance, our military's most basic war fighting capability, the government's ability to deliver a warm bowl of soup to an elderly man, you name it. All of these things will go dark, instantly, with any number of single point failures. A highly complex system, blindly thought to be indestructible, will go into shock at the drop of a misbehaved feather.

Friday, February 20, 2009

GM Eaten Alive by D.C.

One Month into the Obama Administration.

Among other rousing successes, it looks like congress and President Obama have successfully flattened GM on behalf of the internal financiers that own them. Not that it was ever in doubt...

With nearly $100B in ultra high interest debt, predator bankers are now in complete control of over 3M American jobs. GM, with a tiny $1B market cap, is paying between 5 and 10 times their total value in annual interest, alone. The President and Congress will move quickly to throw GM into bankruptcy coupled with a wildly expensive restructuring, backed by the sweat of unborn American children. They know the People won't want an American icon to fall, and will easily be coerced into paying what ever it takes to keep GM on perpetual, double digit interest rate life support.

As I've said many times, this deeply evil crew of D.C. pirates and international swindlers are well aware that human emotion is the only true commodity.

The Obama Administration and 111th Congress have been nothing short of a stupendous triumph for the international money power that owns them. One month down and they have already transferred $trillions of dollars from the American-poor, helpless elderly, infant and yet-to-be-born, directly from the United States Treasury into their mostly non-citizen owners' bursting pockets. At the current rate, one can only wonder how many months it will take to break America's back.

New Gold Target (and other things)

$475 by 2010.

The reason is simple, the world economy has collapsed. It is all over but the pricing.

The long chain of stimulus bills will take us far deeper into depression than we would have otherwise traveled, as President Obama and congress work hard to stuff the bursting pockets of the super rich at the direct expense of the growing class of American homeless and destitute.

The official total unemployment rate (including those who have given up) stands at 14% and skyrocketing. Shadowstats places UE at 18%.

Chart of Unemployment Rate. U-3, U-6, SGS

Amazingly, Elliott tells us that after our foray into the Dow 6000s, it will be time to take a short breather. Guidelines indicate that any respite will be shallow (though fairly lengthy), perhaps into the 9.5K range before starting the most violent leg down of this depression.

If we are lucky we will see a higher counter trend peak than 9.5K to set up another "twice in a lifetime" shorting opportunity. The problem with this one will be hanging on to your money as brokers likely crumble along with banks and perhaps another default of the Federal Government.

Once the first brief leg of our depression ends [Oct 2007 - March(est.) 2009], we will have no choice but to bet on the train wreck while on the careening train.

As forecast, the dark encircling gloom has us surrounded.

Wednesday, February 18, 2009

A Tax Question

"The White House chief of staff [Rahm Emanuel] said this week that he did not pay rent during the five years he bunked at the Capitol Hill home of Rep. Rosa DeLauro (D-Conn). But that raises questions whether Emanuel reported the rent-free lodging to Congress, since DeLauro is married to pollster Stan Greenberg. And will either of the parties report what could be “imputed income” to the IRS?” -National Review

My tax question is not, is Rahm Emanuel a criminal?

I think we all know the answer to that question rests on selective enforcement of our tax laws based on the whims of those in power.

My tax question is, has it ever been a criminal act to stay with a friend in any other civilization over the course of human history, without paying the government for the privilege?

Wednesday, February 11, 2009

Total Economic Collapse

Many in the business world are telling me it is unfolding very rapidly. Wave of panic layoffs in progress.

Last month's official unemployment rate was 14% (counting those who've given up looking for work). That is probably rosy, and old, so we have at least 15% out of work right now. At the current rate of 1 million layoffs every 6 weeks, not counting clear acceleration of the downturn, it looks like we should pass the Great Depression peak UE rate of 24% in six months to a year, or so.

Curious as to what others are seeing...

Tuesday, February 10, 2009

Eight Steps to Freedom

"FDR - If you were in Obama's shoes what would you specifically do to end this mess?"

That is a great question that deserves to be answered, it is too easy to complain without proposing a fix. Problem is, the fix is in, and by that I mean the scheme is rigged to prevent exactly what needs to be done. With that in mind, here is a 24 hour fix for the foolishly-brave President who loves his country more than his own life. It would put the economy on a rocket, and we'd all be rich in short order. It will never happen, because that President is nowhere in sight.

Don't think you can fix this problem in 24 hours? Think again. This is not your run of the mill solution.

1. The President has the power to end the crises instantly. Why? Because it isn't an economic accident, just like the last 75 years of inflation was no accident, this is an intentional act of malice. That is the key to ending it, RIGHT NOW. The President simply has to finger the enemy of the United States, declare them as such, and it is over. The risks are huge, they will immediate try to kill him as they have done so many times before. Should Barack try it, they have Biden in place and ready to go, they'll cover their tracks and control every aspect of the media coverage.

For this to actually happen today, several miracles would have to occur- the President would have to (1) understand the magnitude of the problem, he doesn't, and/or (2) not be a part of the problem, he is, and (3) out-fox his killers by the course of action he chooses.

JFK thought he could go public, out the bandits in a speech, coordinate and execute a brilliant market based solution, and win. The rest is history. As much as he understood exactly who he was up against, he was no match for them; they killed JFK and exterminated his family with little effort, and at no price at whatsoever. LBJ was their Joe Biden.

Same goes for all the other dead presidents the Fed brags about by trading heads on their notes.

Andrew Jackson is the only exception, he beat them resoundingly. But he was an extraordinary man, he was much better educated that our "elite" today, he had no immediate family to lose, he was incredibly lucky to survive his assassination attempt, and he was not afraid to kill the key actors himself. Jacksons are a gift from God when the time is right, not happenstance.

Anyway... step one is to finger the Federal Reserve as a criminal institution at war with the United States. They are. Blame them solely, squarely, and exclusively for manufacturing this crises.

Then, duck.

2. Issue presidential pardons for all of your trusted allies, also pardon yourself for all future acts you take on behalf of the preservation of the USA as you determine. This is legal.

3. Declare a national emergency. Elucidate that the nation is under financial attack, summon troops under the War Powers Act. Deploy troops to protect all US centers of gravity, inside and outside the US. Cordon off all Federal Reserve buildings. Send in US Marines to seize all computers and records and to hold the buildings. Once they are empty, destroy them.

4. Declare the Fed a clear and present danger to the people of the USA, they are engaged in an Economic Total War aimed at our destruction. You can decide that, on your own, as Prez. Undertake full scale military actions under the WPA. By Executive order, pierce the Federal Reserve's fraudulent corporate veil and immediately expose all Fed shareholders to full personal liability for the debt they've fraudulently encumbered upon the people of the US. The Constitution is clear on this, but try all cases in military courts that you can fully control, the Fed owns the Supreme Court. Conduct actions under Martial Law. Freeze their private wealth, seek them out using force, drag them into the town square for a military trial.

Recover the rightful assets of the United States of America and turn them into the US Treasury.

5. Declare that all Federal Reserve currency is now USA currency, honored by the full faith and credit of the United States. All debt "owed" to the fraudulent Fed is now null and void. The notes will be replaced with constitutional US notes by attrition, at no interest to a bank or to the people, ever.

6. Issue an Executive order that the Constitution must be followed, no central bank is legally permitted under Art I Sec 8, reaffirm that is why the Constitution was written, congress "shall" issue all US money backed by gold.

7. Issue USA Notes, backed by semi-annually audited US gold. Set the dollar value of gold where it needs to be today and peg it there forever. Never issue any more US currency. There is no need to do so, it will grow in buying power to accommodate economic growth. The appreciation will be a national blessing. Prices of everything will slowly fall as we become rich, meaning we can all afford more, and the poor get richer, as it should be.

8. You can allow bank currency issued at interest, but only at each bank's own risk. Establish a Presidential doctrine that banks which cannot pay back their depositors lose their corporate license and all stakeholders face full personal liability if the FDIC must intervene. This will end mindless speculation and obscene fractional reserve banking. Central banks are already illegal under the US Constitution, as written.

9. We are free.

Monday, February 9, 2009

Barack's Question

"Do you want the government to do something, or to do nothing?"

I choose none of the above, I want the government to stop doing something: digging.

When the economy is tanking due to 40:1 paper leverage on top of soon to be $12T government debt, it is important to understand that borrowing more paper (increasing the leverage working against you) will make the problem proportionately worse.

Q: Why is this so hard to understand?
A: It's not.

If you've max'd out 40 credit cards just to make minimum payments on the first one, then the next, and so on, who in their right mind would think that number 41 is the charm? No one.

Conclusion: Foul play. Thievery. Treachery. Treason. Corruption to the rotten core.

Saturday, February 7, 2009

Obama's 99.5% Top Tax Bracket

If you figure $50M as high exec pay, Obama's new $500K salary cap on government-owned businesses works out to a new top tax bracket of only 99.5%, conservatively assuming half of gross pay goes to more taxes.

And why stop there?

Why not return to the original construct of paying $6 Per Diem (subject to appropriate deductions if meals are taken) in total compensation to congressman, the president, and their staffs, when they are in town? The current government Per Diem rate is $3/day for D.C. plus unpaid meal compensation of up to $61/day.

Sounds more than fair to me. Ever heard of service?

Friday, February 6, 2009


Anonymous said...

Please explain the part about FDR's New Deal claiming 100M lives?


It went something like this:

FDR spent most US citizen wealth and stuffed it into the bursting pockets of the world's richest men. He did it with direct spending to the corporations and international bankers that owned him. He declared weeks-long federal holidays to protect uber-rich bankers from having to pay their legal obligations. He created tax-funded agencies to pay the banks debts. He ordered armed federal agents door-to-door to confiscate American wealth. He ripped American fathers from their children and jailed them if they didn't deposit all of their gold (money) at the nearest Federal Reserve bank window. Then with a pen stroke, he revalued the stolen money, and only the Fed's stolen money, 70% higher, at direct citizen expense.

FDR's "stimulus" routed the US taxpayer and leveled the world economy. So many people were put permanently out of work that they simply resigned, and permanent fell off our payrolls (and thus off unemployment stats). The masses learned they could live in poverty. Most figured out how not to die.

The economy ground to a halt, moneyless. The Dow hit rock bottom for a second time in 1942. It took a World War of unthinkable (except in select circles) horror to finally scare citizens back to work for little to no pay, to kill off industrial competition, to eliminate the excess of hungry mouths competing for the wealth still circulating.

A decade after the smoke cleared and 25 years after the bear market started, the Dow finally clawed its way back to 1929 levels by mid-1954, but it had little DNA in common with the Dow that FDR looted and plundered. That economy died, broke.

FDR's New Deal theft of common US citizen wealth on behalf of the Federal Reserve and their global network of central bankers was the one of the greatest crimes against mankind, a long string of abuses that together live in infamy. It directly resulted in the greatest human disaster ever to engulf God's green earth.

Whether FDR was evil, or just plain stupid, is a question that may never be fully answered. I suspect the former and have no sympathy for the latter.

The same goes for FDRAllOverAgain, whom I accurately fingered as the same brand of brazen thief hellbent on causing another World Depression to please his owners, long before any of the current evidence. The avatar I created to illustrate the clear and present danger to our children remains date-tagged: Oct 2007.

The daylight rape of our nation continues...

Thursday, February 5, 2009

Government "Spending"

= handing citizens a high interest rate bank-financed credit card and forcing them to run it up to the limit.

There is no such thing as government "spending" in a debt based monetary system. It is not possible, every dollar charged is financed, extracted from the citizenry, and paid to ultra-rich paper financiers 2.5x over the life of the loan (not counting perpetual refinancing). Most congressmen know this but are too dumb, or corrupt, to take this crises seriously. They've never known real pain and think the US worker is an indestructible, inexhaustible cash cow.

FDRAllOverAgain's statement of natural law:

When those in power are uniformly convinced that nothing can truly harm them, nothing can possibly save them.

Wednesday, February 4, 2009

Does "Stimulus" Work?

FDR's June 1934 Fireside Chat declared an end to the Great Depression. His New Deal Stimulus package, which ultimately rocketed American child debt to bankers to 130% GDP (about $18T in today's banker-inflated dollars), he believed, had substantially ended the downturn. Here are his thoughts on the effectiveness of his stimulus spending:

"It has been several months since I have talked with you concerning the problems of Government. Since January, those of us in whom you have vested responsibility have been engaged in the fulfillment of plans and policies which had been widely discussed in previous months. It seemed to us our duty not only to make the right path clear, but also to tread that path.

As we review the achievements of this session of the Seventy-third Congress, it is made increasingly clear that its task was essentially that of completing and fortifying the work it had begun in March, 1933. That was no easy task, but the Congress was equal to it. It has been well said that while there were a few exceptions, this Congress displayed a greater freedom from mere partisanship than any other peace-time Congress since the Administration of President Washington himself. The session was distinguished by the extent and variety of legislation enacted and by the intelligence and good-will of debate upon these measures.

I mention only a few of the major enactments. It provided for the readjustment of the debt burden through the corporate and municipal bankruptcy acts and the Farm Relief Act. It lent a hand to industry by encouraging loans to solvent industries unable to secure adequate help from banking institutions. It strengthened the integrity of finance through the regulation of securities exchanges. It provided a rational method of increasing our volume of foreign trade through reciprocal trading agreements. It strengthened our naval forces to conform with the intentions and permission of existing treaty rights. It made further advances toward peace in industry through the Labor Adjustment Act. It supplemented our agricultural policy through measures widely demanded by farmers themselves and intended to avert price-destroying surpluses. It strengthened the hand of the Federal Government in its attempts to suppress gangster crime. It took definite steps toward a national housing program through an act which I signed today designed to encourage private capital in the rebuilding of the homes of the Nation. It created a permanent Federal body for the just regulation of all forms of communication, including the telephone, the telegraph and the radio. Finally, and I believe most important, it reorganized, simplified and made more fair and just our monetary system, setting up standards and policies adequate to meet the necessities of modern economic life, doing justice to both gold and silver as the metal bases behind the currency of the United States.

In the consistent development of our previous efforts toward the saving and safeguarding of our national life, I have continued to recognize three related steps. The first was relief, because the primary concern of any Government dominated by the humane ideals of democracy is the simple principle that in a land of vast resources no one should be permitted to starve. Relief was and continues to be our first consideration. It calls for large expenditures and will continue in modified form to do so for a long time to come. We may as well recognize that fact. It comes from the paralysis that arose as the after-effect of that unfortunate decade characterized by a mad chase for unearned riches, and an unwillingness of leaders in almost every walk of life to look beyond their own schemes and speculations. In our administration of relief we follow two principles: first, that direct giving shall, wherever possible, be supplemented by provision for useful and 'remunerative work and, second, that where families in their existing surroundings will in all human probability never find an opportunity for full self-maintenance, happiness and enjoyment, we shall try to give them a new chance in new surroundings.

The second step was recovery, and it is sufficient for me to ask each and every one of you to compare the situation in agriculture and in industry today with what it was fifteen months ago.

At the same time we have recognized the necessity of reform and reconstruction—reform because much of our trouble today and in the past few years has been due to a lack of understanding of the elementary principles of justice and fairness by those in whom leadership in business and finance was placed—reconstruction because new conditions in our economic life as well as old but neglected conditions had to be corrected.

Substantial gains well known to all of you have justified our course. I could cite statistics to you as unanswerable measures of our national progress- statistics to show the gain in the average weekly pay envelope of workers in the great majority of industries—statistics to show hundreds of thousands reemployed in. private industries, and other hundreds of thousands given new employment through the expansion of direct and indirect Government assistance of many kinds, although, of course, there are those exceptions in professional pursuits whose economic improvement, of necessity, will be delayed. I also could cite statistics to show the great rise in the value of farm products—statistics to prove the demand for consumers' goods, ranging all the way from food and clothing to automobiles, and of late to prove the rise in the demand for durable goods—statistics to cover the great increase in bank deposits, and to show the scores of thousands of homes and of farms which have been saved from foreclosure.

But the simplest way for each of you to judge recovery lies in the plain facts of your own individual situation. Are you better off than you were last year? Are your debts less burdensome? Is your bank account more secure? Are your working conditions better? Is your faith in your own individual future more firmly grounded?

Also, let me put to you another simple question: Have you as an individual paid too high a price for these gains? Plausible self-seekers and theoretical die-hards will tell you of the loss of individual liberty. Answer this question also out of the facts of your own life. Have you lost any of your rights or liberty or constitutional freedom of action and choice? Turn to the Bill of Rights of the Constitution, which I have solemnly sworn to maintain and under which your freedom rests secure. Read each provision of that Bill of Rights and ask yourself whether you personally have suffered the impairment of a single jot of these great assurances. I have no question in my mind as to what your answer will be. The record is written in the experiences of your own personal lives."

- FDR, Fireside Chat, June 28, 1934

Contrast FDR's impression of a 1934 government-stimulated "recovery" with what happened next:
  • The Great Depression raged-on for 20 more years
  • The Dow finally reclaimed 1929 levels in 1954
  • 25% of American families became unemployed, most destitute
  • 70-80 million people died to affect the actual recovery which followed WWII

Sunday, February 1, 2009

Currency Evacuation

The following comment isolates a critical concept regarding our depression, and why it is, and will be, a horrible depression. If you understand this, you will understand why it makes no sense to own anything but cash and Treasuries (unless you want to risk some capital shorting stocks in the hope your broker actually survives). All businesses are equally affected in a currency meltdown, which is why there will be no good stock buys for perhaps decades.

An anonymous commenter wrote:

FDR: "All those dollars disappear."

Now I get it! I've been trying to grasp the concept of currency "going away". It's the same as when you pay off a note at the bank...there is no longer a loan, and the note is now worthless.

Correct. Add that there was never any collateral to lend, only a paper debt receipt against phantom money being traded as currency. So when the note is paid down or defaults, the "illusion of money" (paper currency with no backing wealth) simply disappears.

The easiest way to mentally model this massive super-cycle depression, from it's beginning in late-2006, to its end (I'm not ruling out another Dark Age), is as if a high-tech counterfeiter had successfully printed, then spent into circulation, almost all of the currency in existence.

After decades of asset accumulation, the counterfeiter is smart enough to continually lend his phony paper out, at interest. He is sooo greedy, that he lends/prints/counterfeits 40 times as much as he owns (in reality, roughly $500T) at peak insanity. This pumps all prices to the Moon, because he has introduced sooo much artificial, bogus, concocted, counterfeit, fabricated, fake, fictitious, forged, fraudulent, invented, make-believe, mock, phony, pretend, pseudo, reproduced, sham, simulated, spurious, un-backed, funny-money.

Now that the world is indebted to him, at 2006 mega-prices, it's time to cash in.

Turning on a phony dime, he cleverly admits to his crime. Repenting, he agrees to pull back all of the phony cash he introduced. He starts burning every paper dollar he can acquire. His partners in crime do the same. They burn and burn and burn cash. Poof! The entire paper mountain goes up in a blaze.

Prices plunge as his funny-money is destroyed. In the end, all that is left is an Earth brimming with ludicrous, inflation pumped debt (30 year mortgages sporting 2006 price tags at ultra-high interest rates, etc.) payable to the counterfeiter, because he lent and lent and lent before "coming to Jesus." Now there is no cash left in circulation to pay him back.

A world enslaved.

That is EXACTLY what is happening, right now. Our counterfeiter is a private banking cartel with an iron fist monopoly on all U.S. paper currency issue: the Federal Reserve banks.

Light Bulb Moment: If you can manage to smuggle a chunk of phony cash (debt notes) from 2006 into 2020+, those slaves are indebted to YOU, too.

The USA's political-economc system is best described as:

On Nov 2, 2010, I plan to vote (FOR or AGAINST) my incumbent congressman

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