My clear sight of watching the Earth fall up to me….

On my blog and at SUFA, I’ve been posting a number of comments with the same theme:

“There is no way out of the disaster”

Charles Rowley, Professor of Economics at George Mason University has a blog and I’ve reposted a few comments I’ve made there on my blog and here as well.

Prof. Rowley is writing a comment on Alan Meltzer’s comments in the Wall Street Journal.

Meltzer is the preeminent expert on the Federal Reserve System – as such, his comments on the FED must be strongly considered.

Prof. Rowley is expanding on the short piece of Alan Meltzer – and I believe his comments and thoughts are critical for you, at SUFA, to read.

It is worth noting that if a learnedly economic autodidact (Black Flag), the preeminent expert (Alan Meltzer) and a lettered academic at a preeminent school of economic study (Prof. Rowley) make essentially the same predictions – I would urge the utmost attention to what they say.

http://charlesrowley.wordpress.com/2010/02/06/does-the-fed-have-an-anti-inflation-exit-strategy-1/

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15 Responses to “My clear sight of watching the Earth fall up to me….”

  1. Maggie Says:

    Just saying I dropped in to see what you have written. Sounds like we have a lot in common 🙂

  2. Birdman Says:

    Some videos I found:

    http://eclipptv.com/viewVideo.php?video_id=9917&title=US_Economy_Bankrupt_part_1

    http://eclipptv.com/viewVideo.php?video_id=9919&title=US_Economy_Bankrupt_part_2

  3. Birdman Says:

    Another article:

    The International Forecaster Bob Chapman asks How will the U.S. Service Its Debt?

    Even with taxpayer assistance the private sector cannot recover. It has been just 2-1/2 years since these problems began and Wall Street and banking are right back doing what they did before, wildly speculating. How can the taxpayer continue to fund such insanity? Remember, zero interest rates have nowhere to go but upward. Adding more to the soup 40 states are essentially broke. Do you really think the crisis is over with 22.5% unemployment? We do not think so. There is no easy exit short of a purge of the system, which is inevitable. Any kind of stringent financial reform will bring the system down. Aggressive bank lending would bring about more monetization and more inflation. The markets believe it is back to business as usual. The only events that can bring us back to reality is a purging of the system and the end of Wall Street and the banking control of our country. The revolving door between Washington and NYC has to be dismantled. The credit system is broken and has to be changed and fixed. The shift has begun. The reign of Goldman Sachs over our government is in the process of ending. The successor will be JP Morgan Chase, which has been and will be every bit as bad as Goldman as been. The control is going to change but not the looting of the American people. The changes won’t come and the system will collapse, that is how the elitists retain control over our country. The final war for our freedom is underway.

    At this point, we are stuck between a rock and a hard place. The financial and economic systems are going down. Regardless of what we do now, the system will be purged, one way or another.

    The powers that be have two choices:

    1) Stop all stimulus and bailouts, raise interest rates, and let the system collapse in a deflationary spiral that will further destroy home values and other assets as the natural cycle of deleveraging and contraction plays out

    or,

    2) Continue pumping unlimited dollars into the system, eventually leading to insolvency of the United States of America and a hyperinflationary collapse.

    It’s not a pretty picture, but that is pretty much where we stand now. If I had my choice, I’d prefer a stop to all stimulus, bailouts and money printing, and let the system contract right here and now. We will experience a serious depression for many years as millions will lose their jobs, retirement funds, and value in any assets they hold.

    The alternative, however, is a lot worse, as was described in Hyperinflationary Depression – No Way of Avoiding Financial Armageddon. In a hyperinflationary collapse, we can expect a total collapse in the purchasing power of the US dollar, a halt in the normal stream of economic activity, destruction of the US financial system, and realignment of the US political system as we know it.

    Which would you prefer?

    Read Bob Chapman’s Full Article…

  4. Birdman Says:

    Marc Faber video:

  5. Birdman Says:

    Another gloom and doom article:

    Karl Denninger of The Market Ticker asks Is That A Bailout Or A Lit Fuse?:

    The lesson here? We have not only fixed nothing the so-called “coordinated actions” of so-called “world leaders” have set up a potential catastrophe originating in Europe.

    More than two years ago I predicted that Europe was the most likely place where the second leg – the real “Oh…. My…… God” moment – would originate in this economic mess. These ratios were the reason for my prediction, and all that has happened over the last two years is that they’ve gotten worse.

    Neither Germany or the rest of the EU can fix this without massive reform – read that as restructuring and/or default – of the external debt in these nations, including Germany itself.

    Go ahead and believe this won’t blow up if you want to. I look at today’s action, and indeed that of the last couple of weeks, as a clarion call and a warning that when we had the opportunity in the depths of 2008 and early 2009 to take the CDS monster out and shoot him – to lock up the fraudsters – to change the way banking works worldwide – we instead refused and let the “wise guys” off the hook.

    As a consequence we have fixed nothing and the fuse has not only been lit, it is now much shorter than it was two years ago and may have gone inside beyond the reach of a pair of scissors.

    The United States, ironically, is one of the better-positioned nations to survive what is coming. No, it won’t be easy for us, but of the developed world there are few who have the internal capacity to pull in the horns and make it – not comfortably, but to survive.

    “Here it comes”

    Europe is literally on the brink of collapse. Germany and the other big players in the EU have a big decision to make, and that is whether or not they bail out Greece. If they bail out the Greeks, then Spain, Portugal, Ireland and Italy will want a bailout too. But, just like here in the US, the bailouts will only prolong the problem longer, while also destroying serious value in the Euro as the EU would have to print trillions to make this work.

    In any case, because nothing is being fixed fundamentally, no long-term resolution will come of it, and Europe will collapse financially in the future anyway.

    It’s reminiscent of what happened with the USA and Europe in the mid-1920’s, when Europe was on the brink of collapse and got bailed out by the USA. Various European countries borrowed in excess of $7 billion to help with their economies, but eventually the USA got hit with an economic depression as well, and once the loans stopped, Europe fell apart, leading to the well known hyperinflations of the Weimar Republic, Hungary and Austria.

    As was the case in the 1930’s, the current depression is global and this time it will include China and other Asian exporting countries. The economies of the world are interdependent and have yet to ‘decouple’ from each other.

    If Karl Denninger is right and it is coming, then it is going to hit just about every developed and emerging nation on earth.

  6. USWeapon Says:

    So depressing to read all the doom and gloom of it all. I guess for my part I fall into the realm of I know that what you are talking about here makes sense, logically. Because of that, I accept what it is at face value: a logical argument that is convincing to a novice when it comes to economics. While I have learned a ton in the year or so we have discussed things over at SUFA, to say I know enough about economics to debate it would be foolish of me. I think one of the interesting things you could do would be to take some time and offer some articles that offer a completely different, but educated version of the future. I know that you regard them as foolish. But offering a different perspective, or even helping others to truly understand the mainstream theories better, can only strengthen your articles that refute them. In other words… A makes sense, but when presented with B, A makes even better sense. Just a thought.

    USW

    • Black Flag Says:

      Thanks for the suggestion, USWep.

      The future may be doom and gloom economically for many, but there is – indeed – great innovations are coming.

      A report recently stated that the first Millenarian is walking among us – the first human to live 1,000 years. With the progress of knowledge and technology – they will be able to, soon, solve natural death – we will only die by accident or purpose.

  7. Birdman Says:

    Black Flag, I hope you don’t mind me posting these articles on gloom and doom. Here is another.

    An economic calamity is brewing, and as Brian at Survive Right points out, “ the articles are becoming more urgent, more prevalent and from more mainstream sources.” The collective consciousness senses that something is not as it’s supposed to be.

    Paul Farrell at the Wall Street Journal’s Market Watch describes the coming global-debt-bomb explosion:

    The Big One is coming soon, bigger than the 2000 dot-com crash and the 2008 subprime credit meltdown combined. A huge market blowout. And as Bloomberg-BusinessWeek predicts: “The results won’t be pretty for investors or elected officials.”

    After the global-debt bomb explodes don’t expect a typical bear correction followed by a new bull. Wall Street’s toxic pseudo-capitalism is imploding. Be prepared for a massive meltdown. Yes, already the third major bubble-bust of the 21st century, triggered once again by Wall Street’s out-of-control Fat Cat Bankers. And it’s dead ahead.

    We’re glad that more mainstream media outlets are warning investors of the destruction to come. While most will continue to believe the fairy tales spouted on CNN, CNBC and ABC News, at least some will survive the financial destruction to come with their retirements intact – or at least not completely wiped out.

    Mr. Farrell asks if your family will survive the anarchy that follows:

    This is no joke, folks. Are you prepared? Or preparing? Will your family survive in a post-apocalyptic world, when anarchy is rampant in America? Look at Washington, Wall Street and Corporate America today. You know it’s already begun.

    You are witnessing a fundamental breakdown of the American dream, a systemic breakdown of our democracy and our capitalism, a breakdown driven by the blind insatiable greed of Wall Street: Dysfunctional government, insane markets, economy on the brink. Multiply that many times over and see a world in total disarray. Ignore it now, tomorrow will be too late.

    The politicians will continue to play games up until the very minute the system falls apart. Whether that happens this Summer, or in 2012, or in 2015, it will happen. The system as we know it is unsustainable. We have overdrawn our ChinaCard Visa and eventually there will be no one left to lend.

    In the near future we won’t be able to service our debt anymore.

    The the US Dollar collapses.

    Foreign nations will no longer be able to trade with the US, because our currency will be worthless.

    Production, transportation and consumption of goods, essential and luxury, will cease.

    The economic, political, and social systems in America will descend into chaos.

    Only the prepared will have a fighting chance.

    Not to worry, though, because Mr. Farrell does provide a bit of advice similar to what we have suggested to readers since SHTF Plan came into existence:

    So what can the average Joe and Jane, the other 299 million Americans do? Warning: In anarchy, nobody knows. Period. The only possible strategy: “Think Swiss Family Robinson.” Stockpile like a “Happy Conspiracy Insider.”

    The engine is running out of motor oil. Are you prepared for what happens when it seizes up?

    Author: Mac Slavo

  8. Birdman Says:

    Another article from the same site:

    Jesse, of Café Américain, says that we are Approaching a US Dollar Reserve Currency Crisis:

    The No matter how they wrap it, spin it, try to hide it, we have seen an epic expansion in the US monetary base not seen since 1932.

    This monetary expansion has not yet reached into the broader money supply figures because it is not reaching the public, despite the chant from the “Yes We Can” Kid. Bernanke has most of that liquidity bottled up in a few big banks collecting an easy riskless spread, with some of it chasing beta in the speculative markets.

    Ben can talk a tough game, and jawbone rates with his plans to someday return to normalcy. But at the end of the day, the US is playing out a well worn script that is highly predictable.

    There are three choices the Sith Lords at the Fed and their western central bank apprentices have at this point: inflation, inflation, and inflation.

    The only question is how and when it will become obvious even to the most stubborn believers in the Dollar Über Alles. Ben will seek to control it, to unleash it from its cage very slowly, spread the pain to the US trading partners overseas.

    The US dollar reserve currency status is faltering, but not yet under a serious assault. The monied elite will try to eliminate any serious competition, such as the euro or precious metals, by any and all means possible.

    Greece is roughly 2.6% of the Eurozone GDP. California is 13% of the US.

    How long they can continue this is anyone’s guess. These things tend to play out slowly, over years. I do not expect the US dollar to fail precipitously in the manner of the Zimbabwe dollar or with Weimar Reichsmark, but rather to be devalued in a step-staggered manner, over time, until it stabilizes and the debts are liquidated.

    When the US starts closing the greater portion of its 700+ overseas military bases, we will know that it has become serious about financial reform and balancing its books. Until then, all is posturing, self-interest, demagoguery, and deception.

    We recently discussed various economic forces at play including deflation, inflation and biflation in Gold Projection: Price Collapse to $250 an Ounce. With so much uncertainty in today’s global economy, it is our view that exploration of the different possibilities and being able to identify what is happening as a result of government intervention into free markets is critical to protecting one’s wealth and liberty.

    We do, however, maintain a similar view to Jesse’s, in that we believe that regardless of the deflationary pressures, the Keynesian economists currently in charge of our monetary system will stop at nothing to prolong the pain and kick the can as far down the road as they can.

    Our reasoning is that economists like Fed chairman Ben Bernanke and Paul Krugman have this idea that the Great Depression of the 1930’s could have been prevented had the powers that be at the time just printed more money and pumped more stimulus into the system.

    Mr. Bernanke, a scholar of the Great Depression, will not make that mistake on his watch. Thus, no matter what it takes, even if it means complete destruction of the US Dollar, The Fed and Treasury will continue to expand money supply ad infinitum, until the system is either saved or destroyed.

    We can opine and attempt to predict the short-term effects of these policies, but those focused on the long-term will likely come to the conclusion that inflation, perhaps on a hyper scale, is the probable end result.

    Author: Mac Slavo
    Date: February 12th, 2010
    Visit the Author’s Website: http://www.SHTFplan.com/

  9. Birdman Says:

    I found this today.

    By Rocky Vega

    02/09/10 Stockholm, Sweden – Trillions of dollars have been spent on US stimulus, and like all activities — the good, the bad, and the extremely dubious — it must eventually, necessarily come to an end. This is true if for no other reason than it’s simply too expensive to support. Heck, even the Brits have ended their version of quantitative easing… and so now Bernanke is reviewing US options for doing the same.

    An article in Barron’s today suggests the stimulus has been a good thing, and points to the fact that “the money stock is shrinking in real terms” to defend why it should persist. To support the case, John Williams of ShadowStats is cited:

    “As John Williams, the proprietor of Shadow Stats, explains, the drop in real M3 is a sign of the double-dip ahead. ‘In modern economic history, every time there has been such a year-to-year liquidity contraction, the economy subsequently has turned down, or if already in recession, the economic downturn has intensified,’ he writes in a report to clients.

    “‘A signal for such an intensification of economic contraction was generated in November and December, and the signal got significantly stronger in December,’ Williams adds.

    “Based on this contraction in broad money, the question for a double-dip isn’t if, but when.

    “‘The timing on this is open, but I would be surprised if the recognition of the onset of a largely unexpected new major dip in a double- or multiple-dip economic downturn does not roil the markets significantly in the year ahead. The renewed economic weakness should be increasingly evident in the next couple of months,’ he concludes.”

    The quote from ShadowStats shows that Williams is dissatisfied with the way the stimulus has worked, because it’s clearly still ongoing — it hasn’t been stopped — and yet it’s been ineffective. But somehow, in light of this data, the Barron’s author comes to a different conclusion, stating:

    “If so, why the rush to withdraw the reserves the Fed pumped into the system to make sure banks had a more-than-adequate cushion? That’s the question I’d like to hear Bernanke answer. But I doubt it will be asked.”

    It seems fairly straightforward that stimulus needs to be wound down because the financial burden to the nation is too high. This is, of course, in addition to the fact that the stimulus has already been shown to be ineffective at boosting the economy. The market has experienced a temporary upturn, but with little support in job growth or other key areas needed for ongoing economic expansion.

    Poke around a bit more on the Shadow Stats site and Williams’ intensive and ongoing research into government figures actually seem to result in opinions more consistent with this reaction that he has to the work of the Federal Reserve:

    “The U.S. economic and systemic solvency crises of the last two years are just precursors to a Great Collapse: a hyperinflationary great depression.

    “Such will reflect a complete collapse in the purchasing power of the U.S. dollar, a collapse in the normal stream of U.S. commercial and economic activity, a collapse in the U.S. financial system as we know it, and a likely realignment of the U.S. political environment.

    “The current U.S. financial markets, financial system and economy remain highly unstable and vulnerable to unexpected shocks. The Federal Reserve is dedicated to preventing deflation, to debasing the U.S. dollar.”

    Williams predicts a “hyperinflationary great depression,” within the coming year. He also fingers the Fed for “debasing the U.S. dollar.” It’s difficult to see him supporting the use of his statistics in a case for ongoing stimulus.

    However, you can make your own opinion on the matter by visiting Barron’s coverage of money supply data and what the figures may mean for the US economy.

  10. Birdman Says:

    One more and then I’m done for the day.

    By Bill Bonner

    02/12/10 Baltimore, Maryland – We were snowed in Tuesday, Wednesday and Thursday. By Thursday, essential supplies were running short. All we had left was two cases of red wine. Would that be enough to last until Friday? We had our doubts…

    Cabin fever had set in. In desperation, we read the paper. Big mistake. The papers in Washington take themselves seriously. They tell us about congressmen, senators, agency heads, lobbyists, crooks, perverts and other politicos. One man has held up a liquor store. Another has waylaid an entire nation. These are the people who could be called the “power elite.” They are at the head of our government…they are leading and directing our great empire. Which only makes us wonder about the whole thing. Maybe a country isn’t so great after all…but just an accident…one that happens in spite of the dumbbells running it? And maybe an empire comes about not because of the drive and vision of the imperialists, but of its internal momentum…and on its own schedule…no matter what the nincompoops think.

    This may seem like a trivial thought to you but it has its roots in a respectable intellectual tradition. Is it men who make history…or history that makes men?

    Probably a little of both. But if we’re counting on the men (and by that we also refer to the distaff half of the population) in Washington to guide this empire on to greater glory…we’re going to be deeply disappointed. They aren’t capable of it.

    Take the wars in Iraq and Iran…please! Everyone who’s ever cracked a history book knows that you don’t fight expensive wars in distant places with your own troops and your own money when you have nothing to gain from it. Especially not when you have to borrow the money! You get someone else to fight the war…at his own expense.

    But our beat here at The Daily Reckoning is money…not war. Still, our opinions are the same about them both. America is overstretched…overextended…and overdue for a serious correction. Her wages are too high. Her debts are too heavy. Her expenses are too great. And her leaders have no idea what is going on.

    As to most of the foregoing list, our opinions are probably no better than anyone else’s. But as to the last item, we speak with authority. We are connoisseurs of imbecility. We have watched it for decades. It amuses us. It fascinates us. It intrigues and perplexes us. How come people can drive down the highway at 70mph…making thousands of precise calculations with mortal stakes, but then ask them a question about economic policy or foreign policy or no-shirt, no-service policy…and psssht…their good sense goes out the window? We’ve studied this question for many years….

    In other words, we know an imbecile when we see one. And when we see Ben Bernanke or Tim Geithner our eyes light up. Our nostrils flare. And our chest expands. Before us is a specimen we know very well. Boobus Americanus Economistica. It is a variety of imbecile that has gotten far too little attention from the academic world. Too little research has been done on them, in our opinion. That’s why it is left to us amateur imbecile-spotters to keep track of them.

    Mr. Bernanke is a standout example. The former head of the Princeton University economics department knows all there is to know about a depression – except the important part. He doesn’t understand what causes them. And he completely misunderstands what the role of government should be in dealing with them. But we have already explained all this to you, dear reader, so we won’t repeat ourselves here…except to say that any truck driver and hair stylist knows you can’t spend your way out of debt. Mr. Bernanke doesn’t believe it. That’s the very definition of Boobus Americanus Economistica; he has educated himself out of his common sense.

    Mr. Geithner, meanwhile, tries to make up for what he lacks in scholarly gravity with one heckuva nice wardrobe and a spiffy haircut. It’s definitely a plus to have such a sartorial crackerjack at the head of the Treasury Department, but it would be nice if he had some dim notion of how the bond market works too.

    Moody’s warned that the US would lose its triple-A rating if it continues borrowing money at the present rate. Our old friend Marc Faber was on TV this week explaining what the consequences would ultimately be: the US will default on its debt, he said.

    Mr. Geithner did not even bother with the idea of default. It was beyond his imaginative powers. As to losing the three As, he said that would “never” happen. Which is what set us to thinking about the quality of US leadership. Of course, the US will lose its bond rating…and will default. There is no question about it. No nation has ever existed, except for present company…whose histories have yet to be completed…that didn’t default, renege, collapse, go bankrupt, disappear, disintegrate, capitulate, or otherwise fall over and die. The only questions are when and how.

    Enjoy your weekend,

    Bill Bonner,
    for The Daily Reckoning

  11. zombiehero213 Says:

    Great stuff and great comments.
    Double dip, triple dip…how many dips will this recession take? Who knows, we still have people in charge that never learned the economic lessons of the Great Depression, they are intent on making the same mistakes over and over again.

  12. Birdman Says:

    Another article. This guy tries to be funny but I think he is correct in that we are screwed.

    By The Mogambo Guru

    02/26/10 Tampa Bay, Florida – I knew that something was amiss when I woke up and the house was quiet. Having the benefit of seeing a lot of movies where things were “too quiet”, I instantly knew that things being “too quiet!” meant that Indians were going to be attacking, or the Japanese attacking, or the Germans attacking, sometimes government goons rushing the place, or zombies, or the police. I dunno who, but you get the point.

    Grabbing the bare necessities (a couple of pistols, a few Uzi submachine guns, a rocket-propelled grenade launcher and a lot of spare ammunition) I rolled off the bed onto the floor with the idea of scuttling into the closet to cringe in a defensive posture, bristling with weapons, making my enemies stop and think before killing me, giving me, I figure, a additional three more seconds to live!

    Unfortunately, all those armaments were heavy, and it was pretty stupid of me to carry so much weight, now that I think about it, and I fell on the floor with a big clanking noise.

    Still, nothing!

    Then I saw why: it wasn’t attackers at all! The family had cleared out because my Mogambo Machine To Measure Magical Money (MMTMMM) was going nuts, banging and beeping, and clanging and cleeping, which is not even a real word, which only shows you how freaked out I still am when I instantly saw why: Federal Reserve Credit (the magical “money out of thin air” of story and song, which the gold standard would prevent), jumped a massive $31 billion last week – $31 billion in One Freaking Week (OFW)! – taking the total to a record $2.264 trillion.

    The banks, for their part, can take this new credit that has appeared, as if by magic, on their books, and loan out Huge Freaking Multiples (HFM) of this $31 billion, according to the Fed’s preposterously-low required fractional-reserve ratio which is (and has been for almost two full decades) almost a zillion-to-one, which (multiplying a zillion times $31 billion) is slightly more than, as I understand it, a freaking gazillion.

    Well, apparently, none of this reached the banks, as the Fed bought up, for itself in a disgusting orgy of monetization of government debt, in One Freaking Week (OFW), a massive $53.6 billion of “Securities bought outright”! The Fed created the money to buy government debt! Gaaaaagakkk!

    That last word, properly pronounced with a guttural ending, was to indicate another in a series of Timeless Mogambo Truths (TMT), which, in this case, is don’t eat a burrito while you are reading Bad, Bad News (BBN) because you will gag and choke, mostly because it makes a big mess all over everything and the guy in the next cubicle starts whining, “Hey! Stop spitting on me!”, but also because transcripts of the people bugging your office will read it as “unintelligible, followed by gagging and choking”, which proves my point about eating burritos while reading BBN, although I am not sure if it works with, for example, tacos, so they are still OK as far as I am concerned.

    In case you were wondering how much credit the Federal Reserve has made, so that it can use up some of it to buy, for itself in a loathsome fraud known as “monetizing the debt”, government debt, that particular horrific total comes to a record of $1.967 trillion, which is an astonishing $1.397 trillion higher than this time last year!!

    As you would expect, the money supply is still rising, and the monetary base rose a whopping $56 billion in the last week, which is more than $560 for everybody in the Whole Freaking Country (WFC) that has a non-government job! In One Freaking Week (OFW)!

    As Junior Mogambo Rangers (JMRs) know, perhaps intuitively or perhaps because I (as a proxy for the Austrian school of economics but who, if you call them up and ask them, say, “We never heard of this Mogambo person you speak of! Goodbye!”, but you can tell by their suspicious change of mood that they have) never seem to shut up about inflation being properly defined as an increase in the money supply and that inflation in consumer prices is a result of that, and here it is!

    This increase in the money supply usually, firstly, has a stimulating effect or, in our case, prevention of the Big Freaking Bust (BFB) and economic devastation that we so richly deserve for a ridiculous, laughable half century of experimental socialist governmental deficit-spending and “putting every leveraged dollar to work!”, and the abysmal, total failure of the loathsome Federal Reserve to control the money supply so that the damned government couldn’t do crap like that without entering the money marketplace and bidding for the funds, like any other borrower, thus driving up interest rates, which made the economy slow down, which infuriated worker/voters, and the government would stop doing that fiscal incompetence immediately, or as soon as the next election rolled around, ignoring the possibly of a recall election in the interim, or even a general insurrection and revolution, perhaps ending with the people carrying me on their shoulders, a hero to rule the country as Emperor Mogambo (EM) who immediately installs a gold standard to protect the people’s money from inflation (which keeps from making the poor poorer because of the inevitable higher prices that the additional money causes), and, also as a treat for all my adult loyal subjects, dovetailing the arrival of 3-D TV with hearty encouragement to develop, at great speed, a brave, new world of 3-D pornography, leading America to a new golden age in many, many, many ways! I can hardly wait!

    In the meantime, however, accumulate gold, silver and oil, especially using some kind of Dollar-Cost Averaging scheme, which has not been improved upon, either in its simplicity (you spend the same number of dollars per month, month after month) or its efficacy; it kicks butt over a long trend, as you are always buying more when they are cheap, and you buy less when they are more expensive.

    Or, if you are like most people, you are an impatient, greedy little bastard who wants to make the biggest, most maximum profit possible, as soon as possible, by taking maximum risk that gold, silver and oil will never be cheaper than they are now, then you should rush out and buy as much gold, silver and oil as possible Right Freaking Now (RFN), exhausting every source of credit you can get your clutching, grasping little hands on, and then selling the kid’s stuff and buying more gold, silver and oil with that money, too!

    Somewhere in between these extremes you will find yourself, my budding Junior Mogambo Ranger (JMR)! The effects of massive increases in the money supply (horrifying inflation) will lead you to True Mogambo Enlightenment (TME) about how economics really, really works, and in a blazing moment of incandescent, transcendent clarity, you will suddenly realize you have to buy gold, silver and oil, right away, because, “Whee! This investing stuff is easy!”

    The Mogambo Guru
    for The Daily Reckoning

  13. Birdman Says:

    Another doom and gloom article from SHTF:

    Karl Denninger of the Market Ticker asks How Long Before You Wake Up, Politicos?

    So let’s cut the crap – we are in a Depression right now. We are pretending we are not, just like you can pretend you didn’t really lose your job so long as your credit card does not reach its limit. We have been in that depression for about 18 months and there is no evidence that we will exit it, as we have yet to find a way to pull back the deficit spending without an instantaneous collapse in the economy.

    Yet at some point we must and will stop. We will either do so of our own volition, or we will do so when the cost of borrowing skyrockets, as others get tired of funding our profligacy. If we attempt to “print” our way out of it the cost of petroleum products will shoot the moon and destroy our economy anyway.

    You haven’t seen the half of what happened though – not yet. It appears that AIG – the company we have bailed out (thus far) to the tune of some $100 billion plus, in fact isn’t done. It appears they may have written credit protection on Greece. If this allegation by the German equivalent to The New York Times is true Americans are going to be asked to pay billions of dollars – or more likely, hundreds of billions (since Greece is almost certainly not the only place – try Spain, Portugal, Ireland, etc) to bail out a bunch of FOREIGN NATIONS.

    Do you both think Americans can and will pay that bill? A bill that has been forced on us, and yet benefits not The United States economy, but foreigners?

    Wars – big wars – start over much less, my friends.

    The PIIGS’ exposure (Portugal, Italy, Ireland, Greece, Spain) is somewhere in the area of $3 Trillion. Did AIG et. al. write credit protection on Greece and the rest of the PIIGS? If so, get ready for more printing, or will our government stand up and finally say that we are no longer going to bail out the TBTF’s? According to Ben Bernanke, we will no longer monetize debt, but does that mean the Federal Reserve will not use other methods to bail out big banks or insurance companies who backed bad debt?

    If we have to print trillions more to bailout out foreign banks and countries, it will not bode well at home. According to Denninger:

    To the politicians who are reading this, your Thorazine dosage needs adjustment as well. The math is irrefutable. If, in point of fact, AIG has entangled itself with the European Continent there is no escape from what is to come. There is only destruction, and our only two choices are to cause as much of it as we can to occur there, by pulling the plug on these clowns now, or risk a literal World War. We may get one anyway, but if we bring the bulk of the damage here we’ll be dealing with a civil collapse at the same time, and have no chance of being able to deal with the geopolitical implications. We must not allow that to happen. You must not allow that to happen.

    It’s time to stop. Not because you want to, not because you fear us (even though you should – after all, we’re your employers and can fire you) but because if you don’t there won’t be a nation worth governing left. You know who the crooks are – including those among you.

    As we come closer to what many believe will end with a total collapse of our economic system, analysts and bloggers have been writing more and more about the response of federal and local law enforcement in the event of civil unrest and lawlessness. Mr. Denninger suggests that when it really hits the fan, federal law enforcement will not come to the aid of their local colleagues:

    If it gets bad, and I believe both history and the math says it will, who’s going to help you? Do you really think the entirety of the 150,000 Federal Officers will come to your aid? Or will they sit in Washington DC and in their big black Suburbans (armored, of course) issuing orders for you to go into the streets in your (unarmored) Crown Vics and die in their place? Remember that the “bad guys” in such a circumstance outnumber you 10 or even 20:1 and not only are they probably armed as well as you are, they’ve actually shot – offensively – at other human beings. Unless you’re one of the “bad cops” you’ve never done that, and few of you have had to fire in self-defense. Your only realistic advantage in such a situation is that most of the gangbangers are pretty poor marksman.

    Do not underestimate the power of panic, especially if local law enforcement personnel choose to head home to protect their own families if the SHTF.

    Karl Denninger discusses a host of issues related to the financial crisis, domestic law enforcement, and the coming fallout in his article How Long Before You Wake Up, Politicos? and we highly recommend you give it a read in its entirety.

    Author: Mac Slavo
    Date: February 27th, 2010
    Visit the Author’s Website: http://www.SHTFplan.com/

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