Economic pressures

[Danny B]

Confiscation

The third article linked above makes it painfully clear that all accounts in major banks will be confiscated to pay off the derivatives.
http://www.24hgold.com/english/news-...=Jim+Willie+CB
Just imagine what the country will look like with all accounts stolen. I suggest that you go to Weiss ratings and find a credit union that does not have exposure to derivatives.
Weiss Ratings

This is absolutely CRITICAL for everyone to understand. The regulatory changes will take EVERYTHING.
"However, it made standard Chapter 13, in restructure of debt with respect to income, establishing a lifetime of tax obligations. But the corporate side is far more pernicious, learned only two years ago by the Jackass. It subordinated all bank assets under the derivatives owned by financial firms. The subordinated structure still exists, like senior & junior bond holders, savings accounts, certificates of deposit, mutual funds under management, money market funds, but these all lie subordinated UNDER the vast derivatives, the unregulated contracts. "

For the readers who are not clear on this subject. The banks will fail (as planned) and all their assets will go to the holders of the derivatives. YOUR account is part of their assets. ALL YOUR ACCOUNTS.
One of the black swans will go splat,,,, maybe a naked COMEX. There will be a short bank holiday called. When the few banks reopen, the major banks will NOT reopen. Their assets ( your money) will have been liquidated to pay off failed derivatives. A big part of the derivatives will evaporate in mutual-cancellation. The banksters had to run the notional value of the derivatives up to hundreds of $ trillions to ensure that there would be hundreds of $ billions left over after the mutual cancellations.

Now, you understand why homeland security bought billions of bullets. Just imagine what the country will be like when all the cops and military get burned for their life savings. Keep in mind that the big banks administer the distribution of funds from GOV for SNAP (food stamps) and other GOV programs. When all the accounts evaporate, the country will be in massive deflation. Cash will be scarce. Fossil-fuel power generators will go out of business from loss of cash flow. Looks pretty messy to me.

[Danny B]

Say's law

Say's law tries to explain the connection between employment and production of goods. Say's law - Wikipedia, the free encyclopedia
The Industrial Revolution is slowly working it's way up the ability ladder and fewer and fewer people are actually producers. As workers are more and more distant from actual productivity, their wages are more and more tenuous. There is no limit to demand. There are few limits to productivity.

The limiting factor is purchasing power. In it's basic form, an economy is a production-consumption cycle. If purchasing power is not adequate, production will slow or stop. The economies of the West are slowing way down. We lost our jobs in the value-added industries to the East. Aggregate national income has fallen and purchasing power has fallen. As the value-added industries diminish, this drags the rest of the economy down.

GOV has a solution. GOV gives money to the banks and the banks lend money to the people. This is supposed to stimulate consumption.
People are already debt-saturated and do not want to borrow. Fear over-powers greed and people stop consuming The banks are chock full of funny money but, nobody wants it. As the economy slows, jobs are lost and confidence falls even further.

GOV prints even more money and those closest to the issuance get even richer. Those who don't have access to free money get ever poorer because of the price inflation caused by all the new wet-ink money. Those in the upper loop are doing fine. The actual productive economy just keep falling.
hundreds of $ billions have flowed into mutual funds and the stock market. Asset valuations have gone way up even though consumption has dropped.

The law of supply-and-demand holds true for everything. There is just too much money floating around. Since the valuation of currency is subject to demand, it can drop far faster than demand of a tangible. Bitcoin just dropped $ 1 billion in valuation.
The money masters have tried to produce great wealth by printing paper that says that you owe them great amounts. The eventual result is that bankruptcy results.
Every region has a certain wage-price structure. The West is slowly moving towards wage parity with the East. The West is trying to maintain it's price structure at the same time that it's wage structure is dropping. GOV prints to do this but, there is no way to maintain the wage structure. Prices will follow.
GOV is trying to maintain consumptive power even though income has fallen drastically. More reading.
The Daily Bell - Why Money Printing Makes You Poorer

[Danny B]

Monetary theory

Here are 2 good articles that lay out the recent history of monetary theories / beliefs.
The Prudent Bear: Things Have Gone Too Far

The Daily Bell - Introducing the Updated 4th Edition of the Book That Helped to Change the Internet

[Danny B]

Armstrong and March

I've already explained who Martin Armstrong is. I've already explained about his program. He claims/proves that there are several cycles of different periods that control/affect our general lives. He reports that a major cycle (224 years) comes to an end soon. "This Cycle Turns March 22nd, 2013". He had a thriving business. GOV destroyed it and threw him in prison for 7 years ++. The report in the 44 page version is for sale for $ 125. I don't begrudge him making a living. Here is the short version.
The 224 Year Cycle – March 22nd, 2013 | Armstrong Economics
"We will begin a 72 year decline"
You could also search "Elliot long waves" and "Fourth turning"
Capital flows control the world. Armstrong Economics | Forecasting the World

[Danny B]

failure to deliver

Most of you are already aware that as the gold price goes down, the sales of PHYSICAL gold go screaming up. The U.S. mints sold 63,500 ounces in one day. The rest of the world is even crazier. The COMEX and LBMA are very close to default.
Odds of COMEX Default Increasing Exponentially | SilverDoctors.com
There is talk that the "shorts" want to force a default so that they won't have to cover in the event of 'force majeure".

This article is very interesting. It argues that even though the FED is printing money, the money supply is shrinking. There are a LOT of complexities involved.
Mish's Global Economic Trend Analysis: Is the Fed Printing Money?
The thing to remember is to have cash on hand. Your local grocery mart and gas station will not accept gold and silver.
If you want to know the future of the economy in Japan, here is a vid that shows what will happen.
Sick! Seagulls Explode in Mid Air!!!!! - YouTube

[MonsieurM]

thought it might interest you :

Green Mountain Daily:: Austerity Study was 100%, completely, and totally Wrong

harvard + IMF employee

[Danny B]

reinhart and Rogoff

MonsieurM, Reinhart and Rogoff wrote a great book,, 8 Centuries of Financial Folly. Then, later R&R wrote the cited paper. It went against their first work,,, strange. A grad student found the first big flaw. Krugman, et al have cited the flawed work as being justification to print until the cows come home.
Abe in Japan is charging ahead with this idea.
Peter Schiff writes about the problem in Japan.
The Daily Bell - Japan Steps into the Void

[Danny B]

The curse of debt money

The recent action in the gold market can be very hard to understand. Gold is the LARGEST commodity market. Billions can be made in an hour.
The Secret World Of Gold Part 1 - YouTube
How can gold surpass wheat or iron or coal or oil???
ALL commodities are produced to be consumed. Gold is not. This is referred to as the "stock-to-flow" ratio. Gold doesn't have much of a stock. All the gold in the world would fill 3 Olympic swimming pools. 90--94% of silver is consumed.
Since gold doesn't go anywhere, it's all available for trade.

When you barter, I give you my stuff and you give me your stuff. The deal is closed/extinguished. You and I are happy BUT, the non-producer on the sideline is unhappy. Gold is an intermediary in the barter system. You either have to work for it or steal it. With the introduction of paper currency, the non-producer has a much better chance of stealing your wealth through manipulation. This has led to a huge increase in the numbers of non-producers,,, beggars, bankers and bureaucrats.
http://i8.photobucket.com/albums/a28...ps0a4cda16.png

The bankers speculate until there is a huge bubble so that they can take the real wealth from you.
http://i8.photobucket.com/albums/a28...1287634884.jpg
They steal your money through currency inflation.
http://i8.photobucket.com/albums/a28...ps9b9f6d51.gif

Debt gets out of control and it all crashes down.
http://i8.photobucket.com/albums/a28...ps95b138d5.png

GOV is printing money like crazy but, it isn't moving in the economy.
http://i8.photobucket.com/albums/a28...psf6837ae0.jpg

Back to gold and barter. We barter directly or with an intermediary TANGIBLE,,, like gold. ALL DEBT IS EXTINGUISHED. Since our money is debt money; if all debts were paid, there would be no money left in circulation. GOV creates more debt because that is the only way that it can circulate money. The debts are NEVER extinguished.
Those who are holding paper promises are holding notes that are only as good as the productivity and HONESTY of the counterparty. Now, we see that morality enters the picture.
"I know of no nation that fell into immorality that did not disintegrate" Douglas Macarthur. There might be a possibility of changing our economic course. There is NO POSSIBILITY of changing our moral course.

Antal Fekete explains what happens when gold goes into hiding and debts are never extinguished.
The Daily Bell - Who Said the Hydra Would Take It Lying Down

Hugo Salinas Prise is a very rich guy who is trying to get people to change the system and save themselves. He is not very optimistic. He is not pushing a newsletter or looking for donations or subscriptions or any of that.
The Daily Bell - Hugo Salinas Price on Gold and the Potential for '500 Years of Darkness'

[Danny B]

No gold

I'm going to try to do this without links. You'll have to take my word for it OR do your own research.
In 1922, the Head of the German central bank came to America for a visit. Germany's gold was on deposit at the FED. The head of the FED, Benjamin Strong asked the head of the German CB if he would like to see Germany's gold. They never could find it.
The Anglo-American empire needed lots of cash to prosecute all the wars that they had planned for Pox Americana. They secretly sold all the gold to get the cash. GATA has reported for years that there were many thousands of tons TOO MUCH gold CLAIMED to be in vaults.
The FED has refused to let anyone audit the gold. 92% of the gold that the FED stores in New York is foreign owned. Evidently, the FED couldn't even scrape together a few bars to let the Germans see them in the latest attempt from the German GOV to get it's gold back. The FED told the Germans to wait 7 years.

America/england needed to make sure that there was plenty of gold for investment purposes and debt clearing. The gold was all gone so, they invested paper gold to take the pressure off the physical market. The main outlet for paper gold was an electronic trading fund that CLAIMED to have hundreds of gold on deposit to back the movement of paper. (GLD) There were rumors for years that the gold wasn't actually there.
Just a week? ago, some pundit from NBC went to the GLD vault and came out with a gold bar and showed it to the camera and claimed. "THIS is what the vault is full of". A few days after that, a company called ETF Holdings checked the bar number from the broadcast and found that it was one of THEIR BARS from their vault.
Apparently, GLD couldn't even scrape enough bars to fake it.

Jeffery Christian from one of the big bullion banks admitted that they sell every ounce of gold 100 times. Everybody is getting very nervous. A Swiss citizen tried to get delivery of his gold from a Swiss bank recently. they told him that gold was used in terrorism and money laundering. They would not give it to him.
The gold from the GLD fund is reportedly held in COMEX approved warehouses. It just isn't there and people are demanding delivery of paper gold, allocated gold, and their private physical holdings. Texas university just demanded deliver of $ 1 billion in gold because they didn't trust the COMEX approved warehouse. One of the big investment houses claimed that the COMEX will default within a week..... or a few weeks.

The U.S. claims to have about 8,000 tons of gold. the treasury claims that the gold belongs to the treasury from the 1934 gold act. The FED claims that the gold belongs to them. In reality, the gold left years ago and now resides in China.
The COMEX will eventually default. Those who thought that they were rich will find themselves suddenly poor. This will cause a chain reaction of defaults. If 99 out of 100 paper gold investors find that they got the shaft, there will be a lot of leveraged losses.
Hugo Salinas Price spoke about hyper deflation. There would be NO money circulating. Gold and currency are referred to as high-powered money. Credit is called low-powered money. Credit can just evaporate and leave the system starved.

[Danny B]

gold and panic

EVERYBODY is trying to take delivery of their gold. Even delivery of allocated accounts is failing. Here is an article comparing the silver crash during the days of the Hunt Brothers to the problems of today. The 1980 silver crash was engineered but, wasn't sustainable on it's own. GOV had to raise interest way up (20%) to get investors to leave precious metals. There is no possibility of raising interest today. If it hit even 6%, there would be a total debt crash.
My Blog

"People need to be reminded that when the market broke in 1980, from $887 down to $449, it then recovered in a straight line to $750. If it wasn’t for the fact that Volcker had taken the cost of overnight money into the 20s (percent), and that 10-Year money was at almost 15%, gold would have gone and made a new high based on the tremendous amount of fear that was present at the time."

The market is leveraged 130---1 and almost broke last week.
Ronald Stoeferle: "Last Week We Were Really Close To A Default of The 130-to-1 Paper Gold Market" | Bull Market Thinking
The one thing that the market can not stand is a panic.

The senior bondholders of the Irish banks are going to be wiped out 100%. GOV has put a gag order on the Irish press to keep bondholders from demanding a redemption before they get skint. There will be plenty of panic to go around.

[Danny B]

Gold moving to the East

This is the latest on physical gold withdrawals from Approved warehouses to ???
65% of JPM's Gold Vanishes as Massive 8 Tons of Gold Withdrawawn Overnight! | SilverDoctors.com

5.5 million ounces gone in 4 weeks.
COMEX Hurtling Towards Default And People Will Be “Settled� With Dollars, No More Metal Will Be Delivered! | InvestmentWatch

The banks are losing bullion also.
COMEX PHYSICAL GOLD PLUMMETS - GOLD DISAPPEARING FROM DEPOSITORIES EVERYWHERE | Liberty Gold and Silver News Blog
This guy from SocGen has 30 years experience and is predicting a big crash and hyperinflation. Absolutely amazing to see people predict huge downward crashes and then predict hyperinflation. It's all deflationary.
ALBERT EDWARDS: Confidence In Policymakers Will Collapse, Hyperinflation Will Come, And Gold Will Go Above $10,000 - Business Insider
Jim Willie said that bulk gold is going for $ 2,000 an ounce.
Jim Willie interview April 15 2013 about the metal smash down - Real physical gold over $2000 - YouTube

At first glance it may seem that gold is unimportant to the average person. BUT, there are a few things to consider.
1,625 tons of gold are mined on an annual basis but the LBMA is trading 20M ounces (625 tons) per day.

That is 150,000 tons a year,
This is the sum total of all the gold that has ever been produced in history

Gold is traded in enormous quantities because it has historically been the preeminent intermediary for barter. It is THE reference for physical value. It bypasses all currencies. 625 tons a day at $ 62 million a ton. The links above show thousands of tons leaving the country. What happens when the reference point goes way up in price from shortages?

Power corrupts and attracts the already-corrupted. GOV is by definition corrupted. The founding fathers demanded gold and silver money to keep corruption in check. The gold standard limited GOV and allowed the average worker to prosper.
The Correlation Between The Gold Standard And Stupendous Growth Is Clear - Forbes
The gold standard is gone and now, the gold is gone.
There are between 100 and 135 owners of every ounce of gold. Should the COMEX default, there are going to be a lot of unhappy people. They will stop spending currency when they find that they are much poorer. This will add to deflationary pressures.
There is speculation that a failure of delivery will destroy the entire COMEX.
Harvey Organ: The Moment London is Out of Silver, the COMEX Will Be Out in a Nano-Second! | SilverDoctors.com
It's hard to imagine what the precious markets will do when they have no metal to speculate with.

[Danny B]

Senor Price and Larry Parks

Hugo Salinas Price has a great interview at the Daily Bell. He claims that America industry is dying out because we don't have to make stuff. We can just print dollars to buy everything that we want. He proposes a simple plan to turn this all around.
The Daily Bell - How to Get the US Economy Going Again
Larry Parks gives a breathtaking presentation on the realities of our money situation.
The Daily Bell - Larry Parks: Everything You Ever Wanted to Know About Money Metals

[Danny B]

The success of the rich resulting from the failures of Bernanke's monetary policies

The Pew Report came out and said that the stimulus only benefited the rich.
The Daily Bell - www.thedailybell.com
Steve lindman has some interesting numbers.

"Since 1979, America's top 1% tripled its share of national income. It went from 8% to about 24%. It keeps rising annually.

From 1993 - 2000, top earners got 45% of income growth. From 2000 - 2008, they got 65%. In 2010, it was 93%. Corporations also benefitted hugely.

From 1998 - 2007, corporate profits rose 10% a year on average. In 2009 and 2010, they increased 243%. Excluded are sheltered amounts offshore.

In 2012, corporate profits were 12.4% of GDP. It was the highest level since WW II. At the same time, worker compensation hit a 57-year low.

In 2011, profit margins reached their highest level in over 80 years. Federal, state, and local government tax cuts benefitted bottom line performance. In 2012, profit margins increased further. They grew by 7.6% compared to 4.6% the previous year.'
SteveLendmanBlog: Simpson-Bowles 2.0

So, the rich are doing quite well.

Big, Bad, Bald, Ben Bernanke bet the farm that he could have cured the '29 crash. "THEY" gave him the chance to prove it on the current depression. His theory was that the CB could supply endless liquidity and that a depression could be avoided. He provided liquidity to the rich but, the problem was insolvency of the middle class. There is no cure for debt saturation other than default. He papered over the defaults to get the middle class back into action.
His stimulus was aimed at the rich and didn't do anything for the middle class. Global wage arbitrage wiped out the middle class. B,B,B,Ben Bernanke offered more debt to the middle class when they wanted jobs. He could have offered social credit to get a bit of inflation but, that still wouldn't have been more than a bandage.
The wage-price structure in America can not be supported by wages that would bring manufacturing back from the East. The price structure will crash in tandem with the wage structure. Kicking the can has deferred the crash in prices for a time BUT, it didn't create any jobs.
Bernanke's simplistic view was that he could inject money into the top of the pyramid and it would percolate down through the whole population. This view is simplistic because only employment allows percolation. He ignored debt saturation and global wage arbitrage. He attempted to devalue the currency and bring back manufacturing. America wages were somewhat of a hindrance to this ploy but, there was a far bigger problem.
50% of the cost of the average item is for finance charges. So, even if American productivity were on a par with other wage markets, American manufacturers would be at a cost disadvantage because of the high cost of finance and tax.
The hyper-productivity of the Machine Age is burdened more by the cost of finance than it is by wages.
The excess reserves can only move into the general economy as more DEBT. In reality, those excess reserves were never meant to move into the economy. The banks have no income BUT, they get paid interest on the free money. B,B,B,B, Bernanke is scared witless of deflation and has now discovered that employment is the key to inflation,NOT printing. His printing has also taught him a lesson about the marginal utility of debt.
You print TOO MUCH and the debt evaporates that much faster. ZIRP has brought capital destruction that offsets printing.
http://static.seekingalpha.com/uploa...47184308_9.jpg

Printing has brought deflation and a crash in velocity.
The stock market seems oblivious to this.
Margin Debt Hits Levels Seen Only ONCE Before! | Elliott Wave Market Service
A mega dose of deflation. Some of the big boys have already left.
Billionaires Dumping Stocks, Economist Knows Why

[Danny B]

Employment and Luddites

The industrial revolution slowly works it's way up the "ability ladder". First, it eliminated the need for draft animals. It eliminated most of the need for brute human labor. It displaced weavers in Britain a long time ago and resulted in a movement to stop automation.
Luddite - Wikipedia, the free encyclopedia
The argument against the Luddites was that automation would always create new jobs and lower prices. There has been a return to the idea.
Neo-Luddism - Wikipedia, the free encyclopedia
The latest version is technological unemployment.
Technological unemployment - Wikipedia, the free encyclopedia

The argument is;
"but the main benefit to the innovation is the increase in aggregate demand that results from the price decrease. As long as real prices fall (or real incomes rise), the additional purchasing power gives consumers the ability to purchase more products and services"

This appears to be true but, only to a point. The "invisible hand" demands efficiency. That generally means that the most efficient producer gets the job.
I already posted a bunch of links showing some amazingly "good" robots.
Reportedly, there are a billion computers in use today.
The private sector sheds workers who are the least qualified. GOV hires them to do make work-jobs.
The percentage of producers relative to the percentage of non-producers is constantly shrinking. 53% of Americans rely on a check from GOV.
100 million workers are not in the labor pool.
GOV has convincingly proved that it can NOT create legitimate jobs.

This problem is not talked about by those in power because they have NO answer.
Others have noticed and predicted this increase in the numbers of people who no longer have a job niche.
James Dines has predicted this and most other developing problems.
'"The Coming End of the Age of Jobs," or that it would lead to "The Coming New Social Order," but it is already unfolding. Unemployment in Europe already ranges between 20% and 50%, depending."
Kitco Commentary

Middles class wages and consumption are dying out.. Elizabeth Warren has a great lecture that gives all the details.
The coming collapse of the middle class. [VIDEO]
Wages will NEVER be coming back. Our competition works too cheap. One of the biggest Chinese manufacturers bought 500,000 robots.
If wages won't go up,,,, prices have to come down. The master resource is energy. A huge reduction in the price of energy would lower costs for MANY things that we want to maintain our standard of living. The alternative is a continuing drop in the standard of living.

[Danny B]

credit and employment

Japan has had 20+ years of deflation. They and the rest of world monetary authorities don't have A CLUE what to do. Japan with high-labor-cost crashed into China with low-labor-cost. The crash of labor brought deflation but, GOV rescued the banks to fight deflation. Now that this has failed miserably, Japan plans to print tons more money. Japan already tried to spend tons of money on infrastructure projects. That didn't work. Next plan doesn't look good;
"Especially shocking is the delusion that adding inflation to a deflation would somehow cancel each other out, but is in fact the futile attempt to cure a problem with its cause."
James Dines Follows His Prediction of a Commodity Crash with Another One the Mainstream Media Is Ignoring - The Gold Report

America, ruled by the bankers, plans to go down the same road as Japan. Labor has crashed,,,, money has been funneled to the bankers. There is/was a delusion that making the bankers richer would rescue the rest of the workforce.
Deflation is described as a reduction in the supply of currency AND credit. Since most people are debt-saturated, they have no use for credit and it is CRASHING .
http://www.zerohedge.com/sites/defau...rds%203.16.jpg
You can see from the graph that banks and corporations have shut down credit operations. GOV has borrowed $ trillions to stop the huge deflation.
The FED regularly talks about shutting down the printing presses. It's painfully obvious that shutting off the presses would bring a total freeze of the economy. GOVs use the words "austerity" and "cutback",,,, deflationary crash.
The timeline seems to be set
The markets will crash before the end of the year. We are expected to have 5 years of hard deflation,,,,, then, an eventual default.
"Ultimately, as my colleague Dylan Grice writes, I think we head back to double-digit inflation rates as governments opt to default. I certainly again expect to see CPI inflation above 25% in the UK and indeed in most developed nations in my lifetime"
Albert Edwards Predicts Deflation Followed By Double-Digit Inflation As "Governments Opt To Default, And Monetization Is Policy Lever of First Resort" | Zero Hedge
The economy was built on credit. Employment was built on the economy. With credit gone, employment will leave.