Bernanke - "Nobody really understands gold prices and I don’t pretend to understand them either."
Bond Bubble
Bang:
Systemic complexity and lack of redundancy result in unexpected collapse
Lack of trust stunts economic growth
World turns on U.S. and the Dollar and opts for an alternative reserve currency
Black swan: fill in the blank
Crack-up boom
Velocity of money slows to deflation or hyper-deflation
Inflation, hyperinflation
Unfunded liabilities
Municipal default-ageddon
Derivatives blow up
Obamacare and the Cloward-Piven Strategy
The One Bank presses CTRL+Alt+Del and Resets the System
Bernanke shows Yellen how to CTRL+P on his way out of the Fed.
Gold drains out of West until, for all intents and purposes, it's gone
Sharknado!
If you haven't already, buy gold and silver and hold it outside the banking system. Consider holding some cash outside the banking system in case the bang (crash) finally comes. Be prepared. Have a couple of weeks to a few months worth of water, food and other provisions in case things get sideways. I'm not too sure about the Zombie Apocalypse, but be on the lookout for the blood sucker below.
Ben Bernanke, Vampire Chairman (Photo credit: DonkeyHotey)
One of the definitions of hip from the Merriam-Webster dictionary is:
aware or appreciative of something —used with to<got hip to their plan>
Using the above definition, it's hard not to be hip to government. It seems omnipresent. So, while some might be appreciative of government (perhaps for higher taxes, endless war, Obamacare, the NSA, the IRS, War on Drugs, War on Terrorism, etc.), many are aware and wary of it like a gazelle
on the lookout for hyenas (jackals, IRS agents, TSA agents, Congressmen and other synonyms). But what else does being hip to government entail?
How about being hip to the Hidden Intervention Price (HIP) of everything government does? For all of that stuff - from the Post Office, to subsidies to favored businesses, and from foreign aid to military spending and social programs - there is a hidden, or unseen, price. Sure, if you build a shiny new aircraft carrier and load it with missiles you have those high tech weapons of war, at least until they are used during the next war in Iraq, Iran, Syria, Libya, Iran, North Korea or fill in the blank. Yes, if you teach a man or woman to swipe an Electronic Benefit Transfer (EBT) card for their next meal, they don't need to learn to fish, and you'll keep government bureaucrats "gainfully" employed and their cronies who accept the EBT cards fat and happy. But, at what price?
Let's start with something simple. When government takes a dollar from you and gives it to someone else, that is one less dollar you have. Whether or not you want shiny warships, or a War on Drugs, you're going to get them. There is no choice. It's an all or nothing proposition. There is no a la carte menu to choose from. As a side note, I played a small role in creating anti-drug propaganda in Central America. Back then, the Columbian drug cartel could buy commercial jets, strip them down, fill them up with drugs, fly them into Mexico, unload them and abandon them. The jet plane was just a cost of doing business. I "fought" the drug cartel and the cartel won. But, I digress. The dollar taken from you and handed to someone else is taken by force. If you don't believe it's taken by force, stop paying your taxes. A friendly IRS agent will be dispatched to remind you that your taxes are overdue and that they will be paid one way or the other.
The process of wealth transfer isn't friction-less either. The path of that dollar from you to someone else is determined by a messy political process. There is lobbying of Congress. There are bureaucrats to be paid. A few years ago there were even ads on the radio practically urging people to file for food stamps - or SNAP (Supplemental Nutrition Assistance Program) as it is now called. SNAP sounds so chipper and easy. It pays to advertise, because there are now well over 40 million Americans on SNAP. That's somewhere around 15% of the population. Administering that dollar and siphoning off money to political supporters costs money. So, what started out as a dollar when it left your pocket, is not a dollar when it arrives in the receiver's pocket.
Worse yet, what's taken from you is choices. Every dollar taken from you by government limits your choices. Had the government not taken that dollar by force, you may have chosen to use it to help a family member, donate to a local charity, put new tires on your car, make repairs to your home, etc. Government grows not like Jack's magic beans, but more like a parasite living off its host. The parasite (government) / host (populace) relationship merely benefits government and other parasites. As a parasite, government sucks up our time and resources leaving us less well-off than before.
All of this government HIPness starts as a ripple, that becomes a wave, and ultimately transforms into a tsunami that destroys everything in its path. I call the process whereby government intervention slowly builds into a deadly destructive wave the Principle of Compound Errors (PCE). Unlike the Principle of Compound Interest, the Principle of Compound Errors is one of the greatest destroyers of wealth known to mankind. So what is PCE? PCE is HIPster government on steroids. Clarence Carson in "The Hidden Fallacies Behind Intervention" wrote:
Government intervention is a kind of self-fulfilling prophecy. It is premised on the notion that the market and economy are out of kilter and require the ministrations of a benevolent government. As soon as government begins to intervene, they do get out of kilter; it does introduce defects into whatever market or economy it intrudes. Each intervention sets the stage for an endless round of further interventions in the futile effort to bring the whole back into balance. Mises gives us an example of how this would work if government attempted to lower the price of milk for children. If the price is fixed below the market level, he says, there will be less milk available because many producers would lose money at that price. The government would then be faced with this alternative: either to refrain from any endeavours to control prices, or to add to its first measure a second one, i.e., to fix the prices of the factors of production necessary for the production of milk. Then the same story repeats itself on a remoter plane: the government has again to fix the prices of the factors of production necessary for the production of those factors of production which are needed for the production of milk. Thus the government has to go further and further, fixing the prices of all the factors of production—both human (labour) and material—and forcing every entrepreneur and every worker to continue work at these prices and wages.
Government intervention led us down the primrose path to Obamacare. During World War II the United States imposed wage and price controls. This laid the groundwork for Employer Sponsored Health Insurance:
...the link between employment and private health insurance was strengthened by three key government decisions in the 1940s and 1950s. First, during World War II the War Labor Board ruled that wage and price controls did not apply to fringe benefits such as health insurance, leading many employers to institute ESI. Second, in the late 1940s the National Labor Relations Board ruled that health insurance and other employee benefit plans were subject to collective bargaining. Third, in 1954 the Internal Revenue Service decreed that health insurance premiums paid by employers were exempt from income taxation.
Wage and price controls ended up radically changing our entire healthcare system in the United States. One error -- wage and price controls -- gave birth to a system of employer sponsored health insurance that has almost completely severed any connection between patients and the cost of their healthcare. Once people no longer directly paid the costs of their medical treatment or medicine, prices skyrocketed. From 1977 to 2007 healthcare costs in the United States have risen nearly 8% per year according to the OECD.
So, what is the government's "solution" for the healthcare inflation disaster it created? Obamacare. Why not? If at first you fail -- fail, fail again. In the process of compounding its past errors, the government has accelerated and expanded them. The Healthcare.gov web site has been an unmitigated disaster. Many hoping to register and log in to the site have found it impossible. But, that's just the visible manifestation of Obamacare's failure. The ill effects began far ahead of the Healthcare.gov fiasco. For example. I know of an advertising agency that had just over 50 employees that ended up letting go of a few of them and putting off plans to move to a new location due to Obamacare. This story is being repeated all over the U.S. Many businesses are reducing full-time staff and replacing them with part-time staff in order to avoid having to provide insurance for them.
All of this almost certainly leads to a single payer healthcare system because government cannot admit failure. They can only break things and then offer to fix what they broke in the first place. HIP government will continue to intervene until the Principle of Compound Errors wipes out any trace of free markets and personal freedom. That's what government HIPsters do.
After a parabolic move to almost $50.00 in 2011, it has taken silver several years to consolidate. So, the question on the minds of many in the silver community is, what does 2014 hold for the silver price? Don Harrold of the Day Trade Show, in a little over 15 minutes, explains why he wouldn't bet against silver in 2014.
Below is one chart view of the silver price. If I had to guess, it's possible the silver price could continue to consolidate, and then move up somewhere in the May to August 2014 time frame.
Could the silver price go higher sooner? Time will tell. Important resistance on the way back up will be found between $24 to $26.
While I have been skeptical for quite some time about the silver price, I have become more optimistic over the past few weeks given the charts and price action.
If you haven't watched the Monty Python video above, go ahead and do so first, then read on. It's important, plus you'll need the laugh.
Did you watch the video? Good. Hope you enjoyed it.
Like the character played by John Cleese in the sketch, you have been sold a Dead Parrot. In this case, the idea that America exists. It doesn't. It hasn't for a long time.
Some argue that America strayed from its Constitution, leading to the current state of affairs - leviathan government, NSA spying, reduced freedom, endless wars, etc. However, you could trace the long slide to the moment when America traded its weaker form of government, under the Articles of Confederation, for a stronger one under the Constitution.
Setting the above argument aside for the moment, the Constitution created a republic with three co-equal branches. It divided power, not only between the legislative, executive and judicial branches, but also between the state governments and the federal government. State power was intended to act as a buffer between the federal government and the people.
This constitutional construct began to fall apart almost immediately from the foundation of the republic. Whether Marbury vs. Madison (Judicial Review), the emphasis of the popular vote vs. the Electoral College, the Civil War and the effective end of nullification, the 16th Amendment (direct taxation), 17th Amendment (direct election of senators) and the Federal Reserve Act - each represented a step away from a sounder structure towards a less sound one.
The combination of the 16th and 17th Amendments with the Federal Reserve Act, in particular, undermined the foundations of the constitutional system. Power was tilted heavily toward the Federal Government and away from the states, and thus from the people. The 17th Amendment effectively eroded the role of the states as a protector of the people. All of this leads us to today.
America is dead. It's as dead as Monty Python's ex-parrot. No politician can revive it. Barack Obama can't "hope it" back to life. The Republicans can't wish it back into existence. Don't even talk about a third party. Why? Karl Denninger writes how America is now past the tipping point.
There were 108,592,000 people in the United States in the fourth quarter of 2011 who were recipients of one or more means-tested government benefit programs, the Census Bureau said in data released this week. Meanwhile, according to the Census Bureau, there were 101,716,000 people who worked full-time year round in 2011. That included both private-sector and government workers.
There are more people receiving government benefits than workers to support them.
He continues:
None of the people getting means-tested government benefits will ever vote to reduce them, nor vote for any politician that will reduce them.
But it's factually much worse than it first appears because federal government workers will not vote to fire themselves either, just as the 17th Amendment (ed: The worst thing to ever happen to this country) is inviolate because
Does it make sense yet? This is not a small margin and it cannot be politically reversed because the margins are too high. Were the skew relatively small (and it looks small until you subtract out federal workers) you could potentially do so, because some people won't vote and you could "motivate the base." But note that with the federal workers out, and we're not subtracting the State workers, which also exist on this same largesse, you can't get there because this means nearly 40% of those receiving such benefits would have to stay home when reductions are proposed, and they never will.
As such you cannot vote your way out of this.
You cannot politically organize your way out of this.
You can't do it in the Democrat Party and you can't do it in the Republican Party. Nor can you do it in a third party.
Every single person who argues otherwise is an idiot or worse, a fraudster (if they have run the numbers above.)
It's over unless people go on strike, peacefully resist and deny the government beast the consent and money needed to keep it alive. However, it doesn't take as much to collapse the system as you think. Once you collapse the system there are risks: 1) It doesn't come back to its former state; 2) The system comes back extremely slowly resulting in shortages, civil disorder, unemployment, etc.; or 3) During the collapse some unsavory group takes over and you end up worse off than what you started.
Even if the people react, there is a good chance that we're already past the tipping point. The Senate isn't going to vote to allow the states to choose senators again. Congress isn't going to vote to repeal the 16th Amendment and the tax revenues it brings. The Federal Reserve, and all those who benefit from its existence, aren't going to allow it to be dismantled. The people receiving government benefits aren't going to vote for politicians who take them away. Federal employees aren't going to vote for politicians who cut their jobs and benefits. It's difficult to imagine one of the above things happening, much less all of them.
So, what can you do? One of the smartest things you can do is buy physical gold and silver and hold it in your personal possession. Keep it out of the banking system (safe deposit box, etc.) where it could be taken from you. Build up some cash savings and, again, keep them outside of the banking system. Have several weeks to several months of fresh water, and food on hand in case there are any disruptions that prevent you from making normal purchases at the grocery store. Finally, consider other residency or citizenship options outside of the United States. One excellent source of information is Sovereign Man. All is not lost. The situation is not hopeless. But, you must be willing to take responsibility for your own future and not expect that any one government or country is the solution to the challenges you face.
In case you disagree with the above analysis, here's Monty Python's rebuttal:
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