Here's a Plan I can live with...
(with credit to G. Edward Griffin)
Stop the creation of federal reserve notes (FRNs).
Disband "Legal Tender" laws.
Audit & publish the gold and silver in the US Treasury vaults.
Define the US Dollar as 371.25 grains of silver.
Start minting Silver Dollars, half-dollars, quarters & dimes.
Start printing 100% silver/gold-backed money.
Divide the $ in US silver & gold by all outstanding FRNs.
Exchange all FRNs for good 100% silver-backed Dollars.
Dissolve the Federal Reserve System.
Outlaw fractional reserve banking.
Deregulate banks and cancel their federal insurance.
Demand deposit accounts (checking/debit) earn NO interest.
CDs are only deposits that earn interest.
Review and cancel most alliances.
Get out of the U.N. Sell the building. Evict the tenants.
Monday, September 29, 2008
Thursday, September 11, 2008
How We Got Here, And What To Do About It
You know,
I didn't love the high interest rates that Paul Volker, the 12th Chairman of the Federal Reserve Bank of the USA imposed on us back in the late 70's and early 80's, but I loved that he had the political will and the backing of Carter (and later Reagan) to "get the job done."
The interest rate hikes were long overdue by the time Volker instituted them, and that's what made them so painful. I submit that the alternative -- milder rate hikes over a longer period of time -- would have failed to control the runaway inflation, and the pain/suffering of the poor and downtrodden masses would have been much worse than it was.
In order to explain why I feel so strongly that Volker's actions were necessary then, and are once again necessary today (if we desire to preserve the present, evil money system we have), I need to tell a long-winded story. It starts with this simple table::
Low interest rates => Too much credit.
Too much credit => Too many loans.
Too many loans => Too much debt.
Too much debt => Too much money.*
Too much money => Inflation.
Too much debt => Inflation.
Too many loans => Inflation.
Too much credit => Inflation.
Low interest rates => Inflation.
High interest rates => Less credit.
Less credit => Fewer loans.
Fewer loans => Less debt.
Less debt => Less money.*
Less money => Deflation
Less debt => Deflation
Fewer loans => Deflation
Less credit => Deflation
High interest rates => Deflation.
* The concept of Debt = Money, or, "all money comes from loans," is true, and is key to understanding what the hell is going on in our economy.
These characteristic relationships are always true for a fiat-money, fractional-reserve central banking system like ours.
By dramatically raising interest rates, Volker cooled off the massive, runaway inflation we had that was threatening to move us to hyperinflation and total economic collapse.
The relationship between these characteristics and boom/bust/recession/depression are less simple, because business cycles are influenced not only by the basic inflationary/deflationary mode of the Fed, but also (and largely) by malinvestment.
Malinvestment is caused by government intervention in the form of tax breaks, subsidies or other favored-status actions, and is wildly variable depending upon which dept/branch of the government is subsidizing what particular business/sector of the economy.
We will always have these types of boom/bust cycles with our current, corrupt system, because of the unethical partnership between the Fed and Congress, which was designed in 1910 (and enacted in 1913) to work in the following manner:
Congress directs the Treasury to issue Bonds. Another way to say this is that Congress authorizes a certain debt-ceiling for the USA -- the national debt, and Treasury Bonds are the certificates used to issue that debt to whomever wishes to buy it, hold it and earn the stated interest rate on it over the stated period of time.
Some individuals, pension funds, businesses and foreign governments buy these bonds directly from the Treasury, but the majority are sold to the Federal Reserve Bank of the Unites States of America. In return for these bonds, the Fed writes a check to the Treasury.
The "money" used by the Fed to purchase T-Bills "comes from nowhere."
It is invented, and exists only "on the books" as a promise by the Treasury to "pay it back."
The government then takes the Federal Reserve Checks ("money") they received for their Bonds (T-Bills) and issues checks to customers and dependents, who then deposit them in commercial banks throughout the country. They are classified as "reserves" at this point. Those Bonds initially issued by the Treasury, become the "reserves" that every bank is required to keep on hand in our "fractional reserve" banking system.
The banks then take most of the deposits they now have, make loans with this money, and begin to realize an income stream of interest payments on these loans. Banks are making interest every day on loaned capital that they did NOT have to earn. The loaned money can be traced all the way back to the Bonds that Congress ordered the Treasury to issue -- the national debt.
WE wage-earners and taxpayers pay the national debt through the mechanism of taxation, either directly, or more unethically and immorally, via the hidden tax called inflation.
Inflation is built into this system. It has to exist, in order to constantly keep creating the money that people use to pay interest on their debts.
Congress just "raised the debt ceiling" again last week up to 10.9 Trillion Dollars. This is the "official government-declared" national debt, which you now understand from www.chrismartenson.com Chapter 16 of the Crash Course on Economics, "Fuzzy Numbers," represents only about one-fifth to one-tenth of the real debt that we, our children and our grandchildren MUST pay.
Ironically, since all money is created by the making of loans, then if all debts were to be paid off, all money except that used to pay interest on debt, would disappear. This is true.
This means that our system REQUIRES DEBT in order to have money, and in fact, REQUIRES that this debt NEVER BE PAID BACK, otherwise all money would disappear from whence it came, which means VANISH INTO NOWHERE.
I believe that the REAL reason we have income taxes is as a diversion. The same legislature that established the Federal Reserve also managed the ratification of the Constitutional Amendment (#16) establishing the IRS and the Income Tax. Income taxes are not necessary for the Congress to run government. All they have to do is "raise the debt ceiling," authorizing the creation of more funny-money, and voila! They have all they need. If the American People really, truly understood what their government is doing to them with all this flim-flammery, blood would be running in the streets of Washington DC.
We are paying a HUGE tax, far beyond the paltry amounts that are withheld from our paychecks each week. It is called inflation, and it is built into our system.
If the government were to confiscate every penny of every paycheck of every worker in the USA, it would not be enough to pay back the national debt.
To illustrate how insidious this hidden tax really is, I need only to point out the FACT that today, a Dollar will buy only what FOUR CENTS would buy in 1913.
We don't need another Volker, really. What we NEED is to abolish the Fed, and all FAKE Dollars, and go back to a gold/silver-based money system, where Congress CANNOT create money out of nothing for the purpose of lining its own pockets via political contributions from banks, based on interest payments from you and me, that they did not earn.
Clear as mud?
Thus I conclude that all the political haggling over what party "stands for this," and which candidate "stands for that," is all meaningless crap. NONE of it matters, until we crash the system and start over with something that doesn't depend on corruption for its continued success...
I didn't love the high interest rates that Paul Volker, the 12th Chairman of the Federal Reserve Bank of the USA imposed on us back in the late 70's and early 80's, but I loved that he had the political will and the backing of Carter (and later Reagan) to "get the job done."
The interest rate hikes were long overdue by the time Volker instituted them, and that's what made them so painful. I submit that the alternative -- milder rate hikes over a longer period of time -- would have failed to control the runaway inflation, and the pain/suffering of the poor and downtrodden masses would have been much worse than it was.
In order to explain why I feel so strongly that Volker's actions were necessary then, and are once again necessary today (if we desire to preserve the present, evil money system we have), I need to tell a long-winded story. It starts with this simple table::
Low interest rates => Too much credit.
Too much credit => Too many loans.
Too many loans => Too much debt.
Too much debt => Too much money.*
Too much money => Inflation.
Too much debt => Inflation.
Too many loans => Inflation.
Too much credit => Inflation.
Low interest rates => Inflation.
High interest rates => Less credit.
Less credit => Fewer loans.
Fewer loans => Less debt.
Less debt => Less money.*
Less money => Deflation
Less debt => Deflation
Fewer loans => Deflation
Less credit => Deflation
High interest rates => Deflation.
* The concept of Debt = Money, or, "all money comes from loans," is true, and is key to understanding what the hell is going on in our economy.
These characteristic relationships are always true for a fiat-money, fractional-reserve central banking system like ours.
By dramatically raising interest rates, Volker cooled off the massive, runaway inflation we had that was threatening to move us to hyperinflation and total economic collapse.
The relationship between these characteristics and boom/bust/recession/depression are less simple, because business cycles are influenced not only by the basic inflationary/deflationary mode of the Fed, but also (and largely) by malinvestment.
Malinvestment is caused by government intervention in the form of tax breaks, subsidies or other favored-status actions, and is wildly variable depending upon which dept/branch of the government is subsidizing what particular business/sector of the economy.
We will always have these types of boom/bust cycles with our current, corrupt system, because of the unethical partnership between the Fed and Congress, which was designed in 1910 (and enacted in 1913) to work in the following manner:
Congress directs the Treasury to issue Bonds. Another way to say this is that Congress authorizes a certain debt-ceiling for the USA -- the national debt, and Treasury Bonds are the certificates used to issue that debt to whomever wishes to buy it, hold it and earn the stated interest rate on it over the stated period of time.
Some individuals, pension funds, businesses and foreign governments buy these bonds directly from the Treasury, but the majority are sold to the Federal Reserve Bank of the Unites States of America. In return for these bonds, the Fed writes a check to the Treasury.
The "money" used by the Fed to purchase T-Bills "comes from nowhere."
It is invented, and exists only "on the books" as a promise by the Treasury to "pay it back."
The government then takes the Federal Reserve Checks ("money") they received for their Bonds (T-Bills) and issues checks to customers and dependents, who then deposit them in commercial banks throughout the country. They are classified as "reserves" at this point. Those Bonds initially issued by the Treasury, become the "reserves" that every bank is required to keep on hand in our "fractional reserve" banking system.
The banks then take most of the deposits they now have, make loans with this money, and begin to realize an income stream of interest payments on these loans. Banks are making interest every day on loaned capital that they did NOT have to earn. The loaned money can be traced all the way back to the Bonds that Congress ordered the Treasury to issue -- the national debt.
WE wage-earners and taxpayers pay the national debt through the mechanism of taxation, either directly, or more unethically and immorally, via the hidden tax called inflation.
Inflation is built into this system. It has to exist, in order to constantly keep creating the money that people use to pay interest on their debts.
Congress just "raised the debt ceiling" again last week up to 10.9 Trillion Dollars. This is the "official government-declared" national debt, which you now understand from www.chrismartenson.com Chapter 16 of the Crash Course on Economics, "Fuzzy Numbers," represents only about one-fifth to one-tenth of the real debt that we, our children and our grandchildren MUST pay.
Ironically, since all money is created by the making of loans, then if all debts were to be paid off, all money except that used to pay interest on debt, would disappear. This is true.
This means that our system REQUIRES DEBT in order to have money, and in fact, REQUIRES that this debt NEVER BE PAID BACK, otherwise all money would disappear from whence it came, which means VANISH INTO NOWHERE.
I believe that the REAL reason we have income taxes is as a diversion. The same legislature that established the Federal Reserve also managed the ratification of the Constitutional Amendment (#16) establishing the IRS and the Income Tax. Income taxes are not necessary for the Congress to run government. All they have to do is "raise the debt ceiling," authorizing the creation of more funny-money, and voila! They have all they need. If the American People really, truly understood what their government is doing to them with all this flim-flammery, blood would be running in the streets of Washington DC.
We are paying a HUGE tax, far beyond the paltry amounts that are withheld from our paychecks each week. It is called inflation, and it is built into our system.
If the government were to confiscate every penny of every paycheck of every worker in the USA, it would not be enough to pay back the national debt.
To illustrate how insidious this hidden tax really is, I need only to point out the FACT that today, a Dollar will buy only what FOUR CENTS would buy in 1913.
We don't need another Volker, really. What we NEED is to abolish the Fed, and all FAKE Dollars, and go back to a gold/silver-based money system, where Congress CANNOT create money out of nothing for the purpose of lining its own pockets via political contributions from banks, based on interest payments from you and me, that they did not earn.
Clear as mud?
Thus I conclude that all the political haggling over what party "stands for this," and which candidate "stands for that," is all meaningless crap. NONE of it matters, until we crash the system and start over with something that doesn't depend on corruption for its continued success...
Sunday, September 7, 2008
Massive Evidence of Precious Metals Market Manipulation -- By Our Own Government...
Well, how interesting! No sooner did I ask my question (Do Large Institutional Investors Avoid Precious Metals -- posted earlier today) then this link comes across my desk. It is a speculative analysis (is there any other kind?) of the recent events in the gold and silver markets by Ted Butler, for Investment Rarities:
TED BUTLER COMMENTARY
September 2, 2008
Fact Versus Speculation
(This essay was written by silver analyst Theodore Butler, an independent consultant. Investment Rarities does not necessarily endorse these views, which may or may not prove to be correct.)
What’s happening in the silver and gold markets is, without a doubt, the most sordid scheme in the history of finance. It makes a mockery of financial regulation and the rule of law. It allows a large financial entity, or entities, to rip off the investing public and gouge them for obscene profits.
It is cronyism, back-room dealing, market fixing and inside information at its worst. I am terribly disappointed and dismayed that such a thing could happen in our great country.
In the following paragraphs I will outline and explain how a major bank or banks, in likely concert with the U.S. government, pulled off financial shenanigans that will literally take your breath away. This is an outrage that cannot be allowed to stand.
The recent revelations in the CFTC’s Bank Participation Report for August provided stunning proof of concentration and manipulation in the COMEX silver and gold futures markets. Two U.S. banks held a short position in COMEX silver futures, as of August 5, of 33,805 contracts, or almost 170 million ounces, an increase of 138 million ounces in one month. That increase is equal to 20% of the world mine production. If one or two entities bought or sold 20% of the annual world production of oil or wheat in a month, it would bring about a congressional feeding frenzy.
In gold, no more than 3 U.S. banks sold short in one month more than 10% of world annual mine production. This was the largest short position in gold and silver ever recorded by U.S. banks. After the massive and concentrated silver and gold short position was established by these U.S. banks, the markets experienced a historic decline in price. It all took place during the first widespread retail silver shortage in history. It is completely at odds how the law of supply and demand works.
The facts are so clear that the CFTC should have provided an immediate explanation as to why this doesn’t constitute manipulation. They should move against the manipulators just as promptly. Silence is not an option. The U.S. banks (or bank) in question are at the top of the financial food chain when it comes to size, power and importance. They are publicly owned by millions of investors. These banks are generally open about their financial dealings, which are closely scrutinized. There is an archaic rule that prevents the CFTC from revealing the identity of these banks. But there is no rule preventing these banks acknowledging they were responsible for these silver and gold short sales and explaining the economic justification behind them. These are material transactions that should be disclosed to their shareholders. Apparently transparency does not apply to manipulative transactions.
One U.S. Bank?
While the report lists two U.S. banks in silver and three in gold, it may be that only one bank, and perhaps the same bank, held the greatest amount of the total short position in silver and gold. The published data is not specific enough, but objective analysis raises the strong probability that just one bank held 30,000 or more short silver contracts (150 million ounces), and 75,000 gold contracts in the current report. What are the odds of two or three banks suddenly deciding to short unprecedented amounts of silver and gold contracts spontaneously? If it were two or three banks it would raise the issue of collusion. If it was just one U.S. bank, it would mean that bank held 34% of the entire COMEX silver market and 30% of the gold market. Such a concentration would be manipulation to any reasonable person.
The Bank Participation Report is a monthly snapshot on a predetermined single date. Therefore, it is unlikely to capture the extreme high or low holdings of participants. Based upon the weekly Commitment of Traders Report (COT) for positions as of July 22, the 4 largest traders, including the big U.S. banks, held a record net short position of 63,740 silver contracts, or 7,779 more contracts than they held for the COT and Bank Participation Reports of 8/5. Thus, it is almost certain that the big U.S. bank(s) held a substantially larger position on 7/22 than it held in the Bank Participation Report of August 5. That would mean the true net percentage of the entire market possibly held by one U.S. bank could be even higher than 34%, and may in fact, exceed 40%. That is truly shocking.
I have a simple solution to determine if what I am suggesting is true. Let the CFTC tell us. I’m not asking them to violate the rule that they and the big traders hide behind, the one that protects the identity of the traders. I’m asking something else entirely. Instead of telling us what two or three U.S. banks held, as they do in the Bank Participation Report, or what the 4 or 8 largest traders may hold, as they do in the COT report, just tell us what the one largest trader held in silver and gold. That will settle the matter. Let them protect the identity, just tell us how many contracts the big U.S. bank held on July 22 and August 5.
This is a perfectly reasonable request. There is no taxpayer cost involved. It will take one employee only a few minutes to determine this. There is no valid reason why the CFTC, in the interest of monitoring concentration and preventing manipulation, should not disclose what the very largest trader in every market held. The CFTC should answer forthwith. If they don’t, we must make them, through our elected representatives. They will try to weasel out of this reasonable request. We can’t let them.
A U.S. Government Silver Intervention?
For many years, I have openly alleged an ongoing manipulation in the silver (and gold) market. As that message became more believable to growing numbers of readers, their feedback indicated that their most popular motive behind the manipulation was some type of U.S. Government involvement. I rejected these "conspiracy" theories, preferring instead my simple explanation of control by big financial firms.
There were a few things I didn’t report on in my previous article, "The Smoking Gun" (By the way, since so many have referred to that article, let me acknowledge and thank Carl Loeb for his valuable contributions to that article.) It wasn’t just that 2 U.S. banks were short almost 34,000 silver futures contracts, as of August 5. It was also that they replaced what the other big financial entities had been short. The key here is the replacement angle. The data in the weekly COTs, and in the monthly Bank Participation Report, confirm this. What does this data mean?
I am going to speculate based upon the known facts. Maybe I will be proven correct, maybe not. However, the nature of this speculation is so disturbing, that I hope I am wrong. But I need to state it because if I am close to the mark, the implications for the silver market are profound.
I think the data in the COT and the Bank Participation Reports indicate that the U.S. Government may have bailed out the biggest COMEX silver short by arranging for a U.S. bank to take over their position. This coincides with JP Morgan’s takeover of Bear Stearns. In fact, it would not surprise me if the bailout was JP Morgan taking over Bear Stearns‘ short silver position, at the government‘s request. While this silver bailout (if it happened) was no doubt undertaken with financial system stability in mind, it has disturbing implications of legality and equity.
JP Morgan has been mentioned as a possible big silver and gold short. If it’s not them, it is someone like them. How many big U.S. banks fit the profile? Certainly, if JP Morgan isn’t one of the big silver or gold shorts, they can instantly dismiss such talk by stating so.
Logically, there would appear to be no way that a big money center U.S. bank would choose this time and place to suddenly decide to short 150 million ounces of silver and 7 million ounces of gold voluntarily. The banks are hemorrhaging losses due to poor quality mortgages and other ill-advised bets. They’ve cut back credit and are circling the wagons. A CEO, like Jamie Dimon, is not going to risk the wrath of shareholders with a massive and dangerous impromptu bet on the short side of precious metals. No bank CEO would, as it is too reckless to contemplate. And no CEO would do it without prior approval from the regulators.
I believe the bank involved did not seek approval, but merely followed the request of the U.S. Government to sell quantities of silver and gold to bailout the former big short. If that former big short bought back this position, we would have seen $50 or $100 silver in a flash. If my speculation is correct, someone in the government wished to prevent that. Worse, the government (most likely Treasury and the Federal Reserve) allowed the new short to further rig the market to the downside with a variety of dirty tricks.
In other words, it was the U.S. Government that arranged and sanctioned the sell-off. That the government might undermine confidence in our markets and sanction manipulation and illegal market behavior for any reason is beyond my understanding. I love this country. But I certainly don’t love our government. Nor do I trust them. What to do about it?
Well, a start is to insist that the CFTC disclose how many contracts the largest trader held short in COMEX silver and gold futures on 7/22 and 8/5. Ask them and ask your elected officials to ask them. I’m including the e-mail addresses of the commissioners and the Inspector General.
Wlukken@cftc.gov
Mdunn@cftc,gov
Bchilton@cftc.gov
Jsommers@cftc.gov
Alavik@cftc.gov
Now that the Chicago Mercantile Exchange Group is the new owner of the NYMEX/COMEX, they should be notified of the alleged manipulation and also asked to provide the number of contracts held net short by the largest short position holder on 7/22 and 8/5. I’m including the e-mail address of the Chief Regulatory Officer. Dean.payton@cmegroup.com
If my speculation is close to the mark that the U.S. Government is now involved in the silver manipulation, does this mean the manipulation can be extended indefinitely? In my opinion, the answer is no. In the end, what will terminate the manipulation will be a lack of adequate wholesale supplies of silver to the industrial users. It’s similar to what is now happening in the retail market. Uncle Sam does not have any silver, and is powerless to secretly subsidize the users. Additionally, the government is more subject to scrutiny than others. The single inevitable solution to this manipulation is higher prices; sharply higher prices.
What I’ve explained here, if true, cannot be condoned for any reason. It’s illegal and contrary to everything that America stands for.
TED BUTLER COMMENTARY
September 2, 2008
Fact Versus Speculation
(This essay was written by silver analyst Theodore Butler, an independent consultant. Investment Rarities does not necessarily endorse these views, which may or may not prove to be correct.)
What’s happening in the silver and gold markets is, without a doubt, the most sordid scheme in the history of finance. It makes a mockery of financial regulation and the rule of law. It allows a large financial entity, or entities, to rip off the investing public and gouge them for obscene profits.
It is cronyism, back-room dealing, market fixing and inside information at its worst. I am terribly disappointed and dismayed that such a thing could happen in our great country.
In the following paragraphs I will outline and explain how a major bank or banks, in likely concert with the U.S. government, pulled off financial shenanigans that will literally take your breath away. This is an outrage that cannot be allowed to stand.
The recent revelations in the CFTC’s Bank Participation Report for August provided stunning proof of concentration and manipulation in the COMEX silver and gold futures markets. Two U.S. banks held a short position in COMEX silver futures, as of August 5, of 33,805 contracts, or almost 170 million ounces, an increase of 138 million ounces in one month. That increase is equal to 20% of the world mine production. If one or two entities bought or sold 20% of the annual world production of oil or wheat in a month, it would bring about a congressional feeding frenzy.
In gold, no more than 3 U.S. banks sold short in one month more than 10% of world annual mine production. This was the largest short position in gold and silver ever recorded by U.S. banks. After the massive and concentrated silver and gold short position was established by these U.S. banks, the markets experienced a historic decline in price. It all took place during the first widespread retail silver shortage in history. It is completely at odds how the law of supply and demand works.
The facts are so clear that the CFTC should have provided an immediate explanation as to why this doesn’t constitute manipulation. They should move against the manipulators just as promptly. Silence is not an option. The U.S. banks (or bank) in question are at the top of the financial food chain when it comes to size, power and importance. They are publicly owned by millions of investors. These banks are generally open about their financial dealings, which are closely scrutinized. There is an archaic rule that prevents the CFTC from revealing the identity of these banks. But there is no rule preventing these banks acknowledging they were responsible for these silver and gold short sales and explaining the economic justification behind them. These are material transactions that should be disclosed to their shareholders. Apparently transparency does not apply to manipulative transactions.
One U.S. Bank?
While the report lists two U.S. banks in silver and three in gold, it may be that only one bank, and perhaps the same bank, held the greatest amount of the total short position in silver and gold. The published data is not specific enough, but objective analysis raises the strong probability that just one bank held 30,000 or more short silver contracts (150 million ounces), and 75,000 gold contracts in the current report. What are the odds of two or three banks suddenly deciding to short unprecedented amounts of silver and gold contracts spontaneously? If it were two or three banks it would raise the issue of collusion. If it was just one U.S. bank, it would mean that bank held 34% of the entire COMEX silver market and 30% of the gold market. Such a concentration would be manipulation to any reasonable person.
The Bank Participation Report is a monthly snapshot on a predetermined single date. Therefore, it is unlikely to capture the extreme high or low holdings of participants. Based upon the weekly Commitment of Traders Report (COT) for positions as of July 22, the 4 largest traders, including the big U.S. banks, held a record net short position of 63,740 silver contracts, or 7,779 more contracts than they held for the COT and Bank Participation Reports of 8/5. Thus, it is almost certain that the big U.S. bank(s) held a substantially larger position on 7/22 than it held in the Bank Participation Report of August 5. That would mean the true net percentage of the entire market possibly held by one U.S. bank could be even higher than 34%, and may in fact, exceed 40%. That is truly shocking.
I have a simple solution to determine if what I am suggesting is true. Let the CFTC tell us. I’m not asking them to violate the rule that they and the big traders hide behind, the one that protects the identity of the traders. I’m asking something else entirely. Instead of telling us what two or three U.S. banks held, as they do in the Bank Participation Report, or what the 4 or 8 largest traders may hold, as they do in the COT report, just tell us what the one largest trader held in silver and gold. That will settle the matter. Let them protect the identity, just tell us how many contracts the big U.S. bank held on July 22 and August 5.
This is a perfectly reasonable request. There is no taxpayer cost involved. It will take one employee only a few minutes to determine this. There is no valid reason why the CFTC, in the interest of monitoring concentration and preventing manipulation, should not disclose what the very largest trader in every market held. The CFTC should answer forthwith. If they don’t, we must make them, through our elected representatives. They will try to weasel out of this reasonable request. We can’t let them.
A U.S. Government Silver Intervention?
For many years, I have openly alleged an ongoing manipulation in the silver (and gold) market. As that message became more believable to growing numbers of readers, their feedback indicated that their most popular motive behind the manipulation was some type of U.S. Government involvement. I rejected these "conspiracy" theories, preferring instead my simple explanation of control by big financial firms.
There were a few things I didn’t report on in my previous article, "The Smoking Gun" (By the way, since so many have referred to that article, let me acknowledge and thank Carl Loeb for his valuable contributions to that article.) It wasn’t just that 2 U.S. banks were short almost 34,000 silver futures contracts, as of August 5. It was also that they replaced what the other big financial entities had been short. The key here is the replacement angle. The data in the weekly COTs, and in the monthly Bank Participation Report, confirm this. What does this data mean?
I am going to speculate based upon the known facts. Maybe I will be proven correct, maybe not. However, the nature of this speculation is so disturbing, that I hope I am wrong. But I need to state it because if I am close to the mark, the implications for the silver market are profound.
I think the data in the COT and the Bank Participation Reports indicate that the U.S. Government may have bailed out the biggest COMEX silver short by arranging for a U.S. bank to take over their position. This coincides with JP Morgan’s takeover of Bear Stearns. In fact, it would not surprise me if the bailout was JP Morgan taking over Bear Stearns‘ short silver position, at the government‘s request. While this silver bailout (if it happened) was no doubt undertaken with financial system stability in mind, it has disturbing implications of legality and equity.
JP Morgan has been mentioned as a possible big silver and gold short. If it’s not them, it is someone like them. How many big U.S. banks fit the profile? Certainly, if JP Morgan isn’t one of the big silver or gold shorts, they can instantly dismiss such talk by stating so.
Logically, there would appear to be no way that a big money center U.S. bank would choose this time and place to suddenly decide to short 150 million ounces of silver and 7 million ounces of gold voluntarily. The banks are hemorrhaging losses due to poor quality mortgages and other ill-advised bets. They’ve cut back credit and are circling the wagons. A CEO, like Jamie Dimon, is not going to risk the wrath of shareholders with a massive and dangerous impromptu bet on the short side of precious metals. No bank CEO would, as it is too reckless to contemplate. And no CEO would do it without prior approval from the regulators.
I believe the bank involved did not seek approval, but merely followed the request of the U.S. Government to sell quantities of silver and gold to bailout the former big short. If that former big short bought back this position, we would have seen $50 or $100 silver in a flash. If my speculation is correct, someone in the government wished to prevent that. Worse, the government (most likely Treasury and the Federal Reserve) allowed the new short to further rig the market to the downside with a variety of dirty tricks.
In other words, it was the U.S. Government that arranged and sanctioned the sell-off. That the government might undermine confidence in our markets and sanction manipulation and illegal market behavior for any reason is beyond my understanding. I love this country. But I certainly don’t love our government. Nor do I trust them. What to do about it?
Well, a start is to insist that the CFTC disclose how many contracts the largest trader held short in COMEX silver and gold futures on 7/22 and 8/5. Ask them and ask your elected officials to ask them. I’m including the e-mail addresses of the commissioners and the Inspector General.
Wlukken@cftc.gov
Mdunn@cftc,gov
Bchilton@cftc.gov
Jsommers@cftc.gov
Alavik@cftc.gov
Now that the Chicago Mercantile Exchange Group is the new owner of the NYMEX/COMEX, they should be notified of the alleged manipulation and also asked to provide the number of contracts held net short by the largest short position holder on 7/22 and 8/5. I’m including the e-mail address of the Chief Regulatory Officer. Dean.payton@cmegroup.com
If my speculation is close to the mark that the U.S. Government is now involved in the silver manipulation, does this mean the manipulation can be extended indefinitely? In my opinion, the answer is no. In the end, what will terminate the manipulation will be a lack of adequate wholesale supplies of silver to the industrial users. It’s similar to what is now happening in the retail market. Uncle Sam does not have any silver, and is powerless to secretly subsidize the users. Additionally, the government is more subject to scrutiny than others. The single inevitable solution to this manipulation is higher prices; sharply higher prices.
What I’ve explained here, if true, cannot be condoned for any reason. It’s illegal and contrary to everything that America stands for.
Jim Rogers Predicts Bigger Financial Shocks Loom...
The following appeared August 19th, 2008 as a two-part interview of Jim Rogers by Keith Fitzgerald, the Investment Director for Money Morning:
Keith Fitz-Gerald
Investment Director
Money Morning/The Money Map Report
VANCOUVER, B.C. – The U.S. financial crisis has cut so deep – and the government has taken on so much debt in misguided attempts to bail out such companies as Fannie Mae (FNM) and Freddie Mac (FRE) – that even larger financial shocks are still to come, global investing guru Jim Rogers said in an exclusive interview with Money Morning.
Indeed, the U.S. financial debacle is now so ingrained – and a so-called “Super Crash” so likely – that most Americans alive today won’t be around by the time the last of this credit-market mess is finally cleared away – if it ever is, Rogers said.
The end of this crisis “is a long way away,” Rogers said. “In fact, it may not be in our lifetimes.”
During a 40-minute interview during a wealth-management conference in this West Coast Canadian city last month, Rogers also said that:
- U.S. Federal Reserve Chairman Ben S. Bernanke should “resign” for the bailout deals he’s handed out as he’s tried to battle this credit crisis.
- That the U.S. national debt – the roughly $5 trillion held by the public– essentially doubled in the course of a single weekend because of the Fed-led credit crisis bailout deals.
- That U.S. consumers and investors can expect much-higher interest rates – noting that if the Fed doesn’t raise borrowing costs, market forces will make that happen.
- And that the average American has no idea just how bad this financial crisis is going to get.
“The next shock is going to be bigger and bigger, still,” Rogers said. “The shocks keep getting bigger because we keep propping things up … [and] bailing everyone out.”
Rogers first made a name for himself with The Quantum Fund, a hedge fund that’s often described as the first real global investment fund, which he and partner George Soros founded in 1970. Over the next decade, Quantum gained 4,200%, while the Standard & Poor’s 500 Index climbed about 50%.
It was after Rogers "retired" in 1980 that the investing masses got to see him in action. Rogers traveled the world (several times), and penned such bestsellers as "Investment Biker" and the recently released "A Bull in China." And he made some historic market calls: Rogers predicted China’s meteoric growth a good decade before it became apparent and he subsequently foretold of the powerful updraft in global commodities prices that’s fueled a year-long bull market in the agriculture, energy and mining sectors.
Rogers’ candor has made him a popular figure with individual investors, meaning his pronouncements are always closely watched. Here are some of the highlights from the exclusive interview we had with the author and investor, who now makes his home in Singapore:
Keith Fitz-Gerald (Q): Looks like the financial train wreck we talked about earlier this year is happening.
Jim Rogers: There was a train wreck, yes. Two or three – more than one, as you know. [U.S. Federal Reserve Chairman Ben S.] Bernanke and his boys both came to the rescue. Which is going to cover things up for a while. And then I don’t know how long the rally will last and then we’ll be off to the races again. Whether the rally lasts six days or six weeks, I don’t know. I wish I did know that sort of thing, but I never do.
(Q):What would Chairman Bernanke have to do to “get it right?”
Rogers: Resign.
(Q): Is there anything else that you think he could do that would be correct other than let these things fail?
Rogers: Well, at this stage, it doesn’t seem like he can do it. He could raise interest rates – which he should do, anyway. Somebody should. The market’s going to do it whether he does it or not, eventually.
The problem is that he’s got all that garbage on his balance sheet now. He has $400 billion of questionable assets owing to the feds on his balance sheet. I mean, he could try to reverse that. He could raise interest rates. Yeah, that’s what he could do. That would help. It would cause a shock to the system, but if we don’t have the shock now, the shock’s going to be much worse later on. Every shock, so far, has been worse than the last shock. Bear-Stearns [now part of JP Morgan Chase & Co. (JPM)] was one thing and then it’s Fannie Mae (FNM), you know, and now Freddie Mac (FRE).
The next shock’s going to be even bigger still. So the shocks keep getting bigger because we kept propping things up and this has been going on at least since Long-Term Capital Management. They’ve been bailing everyone out and [former Fed Chairman Alan] Greenspan took interest rates down and then he took them down again after the “dot-com bubble” shock, so I guess Bernanke could try to start reversing some of this stuff.
But he has to not just reverse it – he’d have to increase interest rates a lot to make up for it and that’s not going to solve the problem either, because the basic problems are that America’s got a horrible tax system, it’s got litigation right, left, and center, it’s got horrible education system, you know, and it’s got many, many, many [other] problems that are going to take a while to resolve. If he did at least turn things around – turn some of these policies around – we would have a sharp drop, but at least it would clean out some of the excesses and the system could turn around and start doing better.
But this is academic – he’s not going to do it. But again the best thing for him would be to abolish the Federal Reserve and resign. That’ll be the best solution. Is he going to do that? No, of course not. He still thinks he knows what he’s doing.
(Q): Earlier this year, when we talked in Singapore, you made the observation that the average American still doesn’t know anything’s wrong – that anything’s happening. Is that still the case?
Rogers:Yes.
(Q): What would you tell the “Average Joe” in no-nonsense terms?
Rogers: I would say that for the last 200 years, America’s elected politicians and scoundrels have built up $5 trillion in debt. In the last few weekends, some un-elected officials added another $5 trillion to America’s national debt.
Suddenly we’re on the hook for another $5 trillion. There have been attempts to explain this to the public, about what’s happening with the debt, and with the fact that America’s situation is deteriorating in the world.
I don’t know why it doesn’t sink in. People have other things on their minds, or don’t want to be bothered. Too complicated, or whatever.
I’m sure when the [British Empire] declined there were many people who rang the bell and said: “Guys, we’re making too many mistakes here in the U.K.” And nobody listened until it was too late.
When Spain was in decline, when Rome was in decline, I’m sure there were people who noticed that things were going wrong.
(Q): Many experts don’t agree with – at the very least don’t understand – the Fed’s current strategies. How can our leaders think they’re making the right choices? What do you think?
Rogers: Bernanke is a very-narrow-gauged guy. He’s spent his whole intellectual career studying the printing of money and we have now given him the keys to the printing presses. All he knows how to do is run them.
Bernanke was [on the record as saying] that there is no problem with housing in America. There’s no problem in housing finance. I mean this was like in 2006 or 2005.
(Q): Right.
Rogers: He is the Federal Reserve and the Federal Reserve more than anybody is supposed to be regulating these [financial institutions], so they should have the inside scoop, if nothing else.
(Q): That’s problematic.
Rogers: It’s mind-boggling. Here’s a man who doesn’t understand the market, who doesn’t understand economics – basic economics. His intellectual career’s been spent on the narrow-gauge study of printing money. That’s all he knows.
Yes, he’s got a PhD, which says economics on it, but economics can be one of 200 different narrow fields. And his is printing money, which he’s good at, we know. We’ve learned that he’s ready, willing and able to step in and bail out everybody.
There’s this worry [whenever you have a major financial institution that looks ready to fail] that, “Oh my God, we’re going to go down, and if we go down, the whole system goes down.”
This is nothing new. Whole systems have been taken down before. We’ve had it happen plenty of times.
(Q): History is littered with failed financial institutions.
Rogers: I know. It’s not as though this is the first time it’s ever happened. But since [Chairman Bernanke’s] whole career is about printing money and studying the Depression, he says: “Okay, got to print some more money. Got to save the day.” And, of course, that’s when he gets himself in deeper, because the first time you print it, you prop up Institution X, [but] then you got to worry about institution Y and Z.
(Q): And now we’ve got a dangerous precedent.
Rogers: That’s exactly right. And when the next guy calls him up, he’s going to bail him out, too.
(Q): What do you think [former Fed Chairman] Paul Volcker thinks about all this?
Rogers: Well, Volcker has said it’s certainly beyond the scope of central banking, as he understands central banking.
(Q): That’s pretty darn clear.
Rogers: Volcker’s been very clear – very clear to me, anyway – about what he thinks of it, and Volcker was the last decent American central banker. We’ve had couple in our history: Volcker and William McChesney Martin were two.
You know, McChesney Martin was the guy who said the job of a good central banker was to take away the punchbowl when the party starts getting good. Now [the Fed] – when the party starts getting out of control – pours more moonshine in. McChesney Martin would always pull the bowl away when people started getting a little giggly. Now the party’s out of control.
(Q): This could be the end of the Federal Reserve, which we talked about in Singapore. This would be the third failure – correct?
Rogers: Yes. We had two central banks that disappeared for whatever reason. This one’s going to disappear, too, I say.
(Q): Throughout your career you’ve had a much-fabled ability to spot unique points in history – inflection points, if you will. Points when, as you put it, somebody puts money in the corner at which you then simply pick up.
Rogers: That’s the way to invest, as far as I’m concerned.
(Q): So conceivably, history would show that the highest returns go to those who invest when there’s blood in the streets, even if it’s their own.
Rogers: Right.
(Q): Is there a point in time or something you’re looking for that will signal that the U.S. economy has reached the inflection point in this crisis?
Rogers: Well, yeah, but it’s a long way away. In fact, it may not be in our lifetimes. Of course I covered my shorts – my financial shorts. Not all of them, but most of them last week.
So, if you’re talking about a temporary inflection point, we may have hit it.
If you look back at previous countries that have declined, you almost always see exchange controls – all sorts of controls – before failure. America is already doing some of that. America, for example, wouldn’t let the Chinese buy the oil company, wouldn’t let the [Dubai firm] buy the ports, et cetera.
But I’m really talking about full-fledged, all-out exchange controls. That would certainly be a sign, but usually exchange controls are not the end of the story. Historically, they’re somewhere during the decline. Then the politicians bring in exchange controls and then things get worse from there before they bottom.
Before World War II, Japan’s yen was two to the dollar. After they lost the war, the yen was 500 to the dollar. That’s a collapse. That was also a bottom.
These are not predictions for the U.S., but I’m just saying that things have to usually get pretty, pretty, pretty, pretty bad.
It was similar in the United Kingdom. In 1918, the U.K. was the richest, most powerful country in the world. It had just won the First World War, et cetera. By 1939, it had exchange controls and this is in just one generation. And strict exchange controls. They in fact made it an act of treason for people to use anything except the pound sterling in settling debts.
(Q): Treason? Wow, I didn’t know that.
Rogers: Yes…an act of treason. It used to be that people could use anything they wanted as money. Gold or other metals. Banks would issue their own currencies. Anything. You could even use other people’s currencies.
Things were so bad in the U.K. in the 1930s they made it an act of treason to use anything except sterling and then by ’39 they had full-exchange controls. And then, of course, they had the war and that disaster. It was a disaster before the war. The war just exacerbated the problems. And by the mid-70s, the U.K. was bankrupt. They could not sell long-term government bonds. Remember, this is a country that two generations or three generations before had been the richest most powerful country in the world.
Now the only thing that saved the U.K. was the North Sea oil fields, even though Prime Minister Margaret Thatcher likes to take credit, but Margaret Thatcher has good PR. Margaret Thatcher came into office in 1979 and North Sea oil started flowing. And the U.K. suddenly had a huge balance-of-payment surplus.
You know, even if Mother Teresa had come in [as prime minister] in ’79, or Joseph Stalin, or whomever had come in 1979 – you know, Jimmy Carter, George Bush, whomever – it still would’ve been great.
You give me the largest oil field in the world and I’ll show you a good time, too. That’s what happened.
(Q): What if Thatcher had never come to power?
Rogers: Who knows, because the U.K. was in such disastrous straits when she came in. And that’s why she came to power…because it was such a disaster. I’m sure she would’ve made things better, but short of all that oil, the situation would’ve continued to decline.
So it may not be in our lifetimes that we’ll see the bottom, just given the U.K.’s history, for instance.
(Q): That’s going to be terrifying for individual investors to think about.
Rogers: Yeah. But remember that America had such a magnificent and gigantic position of dominance that deterioration will take time. You know, you don’t just change that in a decade or two. It takes a lot of hard work by a lot of incompetent people to change the situation. The U.K. situation I just explained…that decline was over 40 or 50 years, but they had so much money they could have continued to spiral downward for a long time.
Even Zimbabwe, you know, took 10 or 15 years to really get going into it’s collapse, but Robert Mugabe came into power in 1980 and, as recently as 1995, things still looked good for Zimbabwe. But now, of course, it’s a major disaster.
That’s one of the advantages of Singapore. The place has an astonishing amount of wealth and only 4 million people. So even if it started squandering it in 2008, which they may be, it’s going to take them forever to do so.
(Q): Is there a specific signal that this is “over?”
Rogers: Sure…when our entire U.S. cabinet has Swiss bank accounts. Linked inside bank accounts. When that happens, we’ll know we’re getting close because they’ll do it even after it’s illegal – after America’s put in the exchange controls.
(Q): They’ll move their own money.
Rogers: Yeah, because you look at people like the Israelis and the Argentineans and people who have had exchange controls – the politicians usually figured it out and have taken care of themselves on the side.
(Q): We saw that in South Africa and other countries, for example, as people tried to get their money out.
Rogers: Everybody figures it out, eventually, including the politicians. They say: “You know, others can’t do this, but it’s alright for us.” Those days will come. I guess when all the congressmen have foreign bank accounts, we’ll be at the bottom.
But we’ve got a long way to go, yet.
Part Two Follows:
VANCOUVER, B.C. - Despite its many problems, China remains such a strong long-term profit play that giving up on that country now would be like selling all your U.S. stocks at the start of the 1900s - before America created massive wealth by evolving into a world superpower, global investing guru Jim Rogers said in an exclusive interview with Money Morning.
“I have never sold any of my Chinese companies,” Rogers said. “You know, selling China in 2008 is like selling America in 1908. Sure, let’s say the market goes down another 40% - so what! You look back over 100 years, you look back from the beauty of 1928, or even 1938 [in the depths of the Great Depression], and there is somebody who bought shares in 1908. He was still a lot better off having not sold in 1908.”
During a 40-minute interview during a wealth-management conference
in this West Coast Canadian city last month, Rogers also said that:
* The anti-travel policies China has put in place to reduce gridlock and slash pollution during the Summer Olympic Games may
actually have created a “bottom” in China stocks - possibly creating a great entry point for long-term investors.
* The 34-day worldwide Olympic torch relay leading up to the opening ceremonies likely re-awakened China’s deeply felt nationalism - which will be key as that country strives to build demand for its domestically produced products.
* And noted that the country must still deal with such problems as pollution, rising inflation and an overheated economy.
A long-time China bull, Rogers first made a name for himself with The Quantum Fund, a hedge fund that’s often described as the first real global investment fund, which he and partner George Soros founded in 1970. Over the next decade, Quantum gained 4,200%, while the Standard & Poor’s 500 Index climbed about 50%.
It was after Rogers “retired” in 1980 that the investing masses first really got to see him in action. Rogers traveled the world (several times), and penned such bestsellers as “Investment Biker” and the recently released “A Bull in China.” He also made some historic market calls: Rogers predicted China’s meteoric growth a good decade before
it became apparent to everyone else, and he subsequently foretold of the powerful updraft in global commodities prices that’s fueled a year-long bull market in the agriculture, energy and mining sectors.
Rogers’ candor has made him a popular figure with individual investors, meaning his pronouncements are always closely watched. Here are
some of the highlights from the exclusive interview we had with the author and investor, who now makes his regular home in Singapore:
Keith Fitz-Gerald (Q): There’s a lot of talk that the Chinese will
use the Olympics to launch a new wave of nationalism and to move ahead. Are the Olympic Games as relevant as some
people think?
Jim Rogers: They’ve already got tremendous nationalism. But the international reactions about Tibet and the Olympic torchbearers re-awakened it.
And the politicians, of course, need it because they’ve got their own problems with
inflation and overheating and [pollution and] the rest of it.
So, like politicians throughout history, they fan it - do their best to say: Hell, it’s not our problem. It’s the evil farmers. It’s the French. See that store over there: It’s their fault. It’s the Americans.”
So that is happening, anyway.
As far as the Olympics themselves, they’re irrelevant.
America had the Olympics in
‘96 and it had no effect on the American economy - before or after. Some people in Atlanta were affected before and after. And some people who were involved with the Olympics were affected before and after.
America at that time had 270 million people. China’s got five times as many people, and it’s a much bigger country geographically.
Sydney, Australia had the 2000 Olympics. It had virtually no effect on the Sydney, or on the Australian economy - even though Australia had 18 million people. It’s tiny … nothing. Yes, it had an effect on some people.
Greece, in 2004, had the Olympics. You haven’t heard stories of a major collapse or a major revival of Greece in 2005, because the fact is that the Games didn’t have much of an effect - not a noticeable effect, anyway. It had spot effects only, so I ignore the Olympics as far as the Chinese economy - and its stock market - is concerned.
(Q): Are you still bullish on China?
Rogers: Oh, yeah. I never sold anything in China. In fact, I bought more. I bought Chinese Airlines (PINK: CHAWF) last week. I flew one coming here. Maybe I made a mistake [with the investment], because it was emptier than I thought it would be.
(Q): Any thoughts why?
Rogers: One thing, you know, is that China’s made it extremely difficult to get a visa right now. In the past, it’s been hard to get a seat because Chinese airlines were so full. On this flight there were empty seats.
That brought home to me that they are cutting back enormously on visas right now. Discouraging travel, trying to clean the air, trying to protect against somebody blowing up the Forbidden City, et cetera. So the fact that planes are empty right now may be smarter than I thought.
Maybe I did get the bottom on the airlines, because if they are going to reissue the visas again, after all this, after September [after the Olympic Games have concluded], then the planes are going to fill up pretty quickly again. I would have picked the stock up at a bottom.
(Q): Yes.
Rogers: Anyway I’m still around China. I have never sold any of my Chinese companies. You know, selling China in 2008 is like selling America in 1908. Sure, let’s say the market goes down another 40% - so what! You look back over 100 years, you look back from the beauty of 1928, or even 1938 [in the depths of the Great Depression], and there is somebody who bought shares in 1908. He was still a lot better off having not sold in 1908.
Do Institutional Investors Avoid Precious Metals?
I have often wondered about the fact that institutional investors are very light in precious metals. In talking with others about this, it is often pointed out that "big money" avoids investing in gold and silver for two main reasons:
1) the perception among owners of pension funds that gold and silver are not "productive positions" (they don't "do" anything to increase value like a stock might)
2) the perception that gold prices in particular are subject to manipulation.
Companies (stocks) typically exert some form of "control" over their own price destiny to the extent that they can make decisions to do things that will increase their value. Precious metals are simply commodities without any inherent control over their own price, nor do they have any ability to stop the perceived manipulation of naked short sellers, central banks, or other speculators.
"Big Money" institutions such as retirement pension funds may never jump into gold because gold prices do not always demonstrate the expected "rational behavior" in the marketplace. They evade reliable predictability.
They may also be considered "only a defensive position" used to preserve wealth in time of financial crisis and declining paper-asset values.
Just look at the latest trends in gold and silver prices (as of Sept 5th) and it's clear that something is affecting prices other than free-market forces...
I say this because there is a shortage of physical metal in the marketplace, yet prices have steadily and dramatically declined in the past several weeks. What is going on?
1) the perception among owners of pension funds that gold and silver are not "productive positions" (they don't "do" anything to increase value like a stock might)
2) the perception that gold prices in particular are subject to manipulation.
Companies (stocks) typically exert some form of "control" over their own price destiny to the extent that they can make decisions to do things that will increase their value. Precious metals are simply commodities without any inherent control over their own price, nor do they have any ability to stop the perceived manipulation of naked short sellers, central banks, or other speculators.
"Big Money" institutions such as retirement pension funds may never jump into gold because gold prices do not always demonstrate the expected "rational behavior" in the marketplace. They evade reliable predictability.
They may also be considered "only a defensive position" used to preserve wealth in time of financial crisis and declining paper-asset values.
Just look at the latest trends in gold and silver prices (as of Sept 5th) and it's clear that something is affecting prices other than free-market forces...
I say this because there is a shortage of physical metal in the marketplace, yet prices have steadily and dramatically declined in the past several weeks. What is going on?
Friday, September 5, 2008
Great Article -- To Vote or Not to Vote... That IS The Question
Wilton D. Alston makes a great case that voting is completely irrelevant, and always will be in our current system of elections...
http://www.strike-the-root.com/82/alston/alston1.html
From early childhood onward, we are indoctrinated to believe that it is the solemn duty and responsibility of every adult American to vote in every election in which they are eligible to vote.
Well, there are some who point out that it doesn't matter if you vote or not -- that your efforts will simply further-establish the scope and grip of big-government upon you as an erstwhile free individual.
There are no longer any good choices offered up to us.
What do you think?
http://www.strike-the-root.com/82/alston/alston1.html
From early childhood onward, we are indoctrinated to believe that it is the solemn duty and responsibility of every adult American to vote in every election in which they are eligible to vote.
Well, there are some who point out that it doesn't matter if you vote or not -- that your efforts will simply further-establish the scope and grip of big-government upon you as an erstwhile free individual.
There are no longer any good choices offered up to us.
What do you think?
Wednesday, September 3, 2008
More About ShadowStats.com and Government Prevarication
Check out this website -- www.shadowstats.com -- a Shadow Government Statistics website that analyzes the TRUE money supply, TRUE CPI, REAL unemployment rates, TRUE gross domestic product figures, etc., etc. It is published by John Williams, and he has done fantastic work.
It is very instructive to see direct comparisons of what the government is telling its citizens, vs what really seems to be going on.
I think the traditional descriptions of cost-push vs demand-pull inflation make sense in localized markets over short periods of time, but I also think that the overriding influence and main cause of the type of inflation we're seeing right now, in the U.S. and worldwide, is the rapid acceleration in the creation of fiat currency by the US Fed and other nations.
Several things are acting strongly to devalue our currency -- the creation of billions of paper dollars more than are "retired" annually, AND, the massive write-down of hundreds of billions of dollars worth of wealth in the form of CDOs, CMOs, SIVs, Credit Default Swap premiums and the rest of the stinky "Tier-III assets."
Since in our fractional-reserve banking system, all money is "created" through the process of making loans, and since much of the debt in this country is backed with worthless assets used as collateral to secure those loans, massive defaults are going to be the natural result. A borrower defaulting on a loan, in our current system, is the worst possible outcome for a lender, because it means that the income stream from interest on that loan goes away, and that income stream is the ONLY thing that keeps the whole Ponzi Scheme from collapsing. Lenders honestly don't care that much about losing the loaned principle, since it wasn't theirs to lend in the first place! They want and need that interest-income stream.
These loan write-downs also have the same effect as printing more fiat-money -- there are suddenly far more paper dollars chasing after far fewer "real" assets... and the invariable result is that it soon costs more dollars in exchange for the purchase of the same number of assets... the very definition of inflation.
Fact: In the past hundred years, this inflation mechanism has resulted in our current dollar being able to purchase what only four cents would buy in 1908!
It's clear to me that the various government reporting agencies have been "trying to hide something" for several decades. They started changing the methodology of their data-gathering, data-analysis and reporting practices back in the late 70's when inflation numbers began to create political heat for too many incumbents.
Even now, the federal government is reducing funding to statistical reporting agencies, forcing them to reduce their sample sizes and/or leave entire segments of the economy un-reported.
What to do? Well for one thing, throw the bums out. I categorically vote against all congressional incumbents. I know some good ones will invariably be affected, but 99% of politicians just cannot seem to release their grip on the government teat once they latch onto it. It is totally and completely corrupting. You are living the result.
I'm willing to consider voting for an incumbent, if they prove themselves to be honest, forthright, full of integrity, leadership and if they sponsor "real money" policies and the right for law-abiding citizens to own and use any firearms. So far there have been "no takers" in any of my districts or on any of my ballots...
I'm also one of those pesky constituents who write letters (that are never read) to their elected representatives, and I've gone so far as to make appointments and meet with them when possible, just to let them know how I feel. I have a stack of meaningless auto-responder letters from my representatives and senators in Congress, thanking me for taking the trouble to contact them, and assuring me that my concerns are their concerns... blah, blah, blah...
Liars.
~H
"He can compress the most words into the smallest idea of any man I know."
-- Abraham Lincoln
It is very instructive to see direct comparisons of what the government is telling its citizens, vs what really seems to be going on.
I think the traditional descriptions of cost-push vs demand-pull inflation make sense in localized markets over short periods of time, but I also think that the overriding influence and main cause of the type of inflation we're seeing right now, in the U.S. and worldwide, is the rapid acceleration in the creation of fiat currency by the US Fed and other nations.
Several things are acting strongly to devalue our currency -- the creation of billions of paper dollars more than are "retired" annually, AND, the massive write-down of hundreds of billions of dollars worth of wealth in the form of CDOs, CMOs, SIVs, Credit Default Swap premiums and the rest of the stinky "Tier-III assets."
Since in our fractional-reserve banking system, all money is "created" through the process of making loans, and since much of the debt in this country is backed with worthless assets used as collateral to secure those loans, massive defaults are going to be the natural result. A borrower defaulting on a loan, in our current system, is the worst possible outcome for a lender, because it means that the income stream from interest on that loan goes away, and that income stream is the ONLY thing that keeps the whole Ponzi Scheme from collapsing. Lenders honestly don't care that much about losing the loaned principle, since it wasn't theirs to lend in the first place! They want and need that interest-income stream.
These loan write-downs also have the same effect as printing more fiat-money -- there are suddenly far more paper dollars chasing after far fewer "real" assets... and the invariable result is that it soon costs more dollars in exchange for the purchase of the same number of assets... the very definition of inflation.
Fact: In the past hundred years, this inflation mechanism has resulted in our current dollar being able to purchase what only four cents would buy in 1908!
It's clear to me that the various government reporting agencies have been "trying to hide something" for several decades. They started changing the methodology of their data-gathering, data-analysis and reporting practices back in the late 70's when inflation numbers began to create political heat for too many incumbents.
Even now, the federal government is reducing funding to statistical reporting agencies, forcing them to reduce their sample sizes and/or leave entire segments of the economy un-reported.
What to do? Well for one thing, throw the bums out. I categorically vote against all congressional incumbents. I know some good ones will invariably be affected, but 99% of politicians just cannot seem to release their grip on the government teat once they latch onto it. It is totally and completely corrupting. You are living the result.
I'm willing to consider voting for an incumbent, if they prove themselves to be honest, forthright, full of integrity, leadership and if they sponsor "real money" policies and the right for law-abiding citizens to own and use any firearms. So far there have been "no takers" in any of my districts or on any of my ballots...
I'm also one of those pesky constituents who write letters (that are never read) to their elected representatives, and I've gone so far as to make appointments and meet with them when possible, just to let them know how I feel. I have a stack of meaningless auto-responder letters from my representatives and senators in Congress, thanking me for taking the trouble to contact them, and assuring me that my concerns are their concerns... blah, blah, blah...
Liars.
~H
"He can compress the most words into the smallest idea of any man I know."
-- Abraham Lincoln
A B-17 story worth reading...
A B-17 story worth reading...
(This may have been around previously but it's worth reading again) If you have time for only one story to read today, make it the B-17 story, for only a veteran can imagine the true heroism of this pilot and crew.
A B-17 Story
Tomorrow morning they'll lay the remains of Glenn Rojohn to rest in the Peace Lutheran Cemetery in the little town of Greenock, Pa., just southeast of Pittsburgh. He was 81, and had been in the air conditioning and plumbing business in nearby McKeesport. If you had seen him on the street he would probably have looked to you like so many other graying, bespectacled old World War II veterans whose names appear so often now on obituary pages. But like so many of them, though he seldom talked about it, he could have told you one hell of a story.
A B-17 Story
Tomorrow morning they'll lay the remains of Glenn Rojohn to rest in the Peace Lutheran Cemetery in the little town of Greenock, Pa., just southeast of Pittsburgh. He was 81, and had been in the air conditioning and plumbing business in nearby McKeesport. If you had seen him on the street he would probably have looked to you like so many other graying, bespectacled old World War II veterans whose names appear so often now on obituary pages. But like so many of them, though he seldom talked about it, he could have told you one hell of a story.
He won the Distinguished Flying Cross and the Purple Heart all in one fell swoop in the skies over Germany on December 31, 1944. Fell swoop indeed... Capt Glenn Rojohn, of the 8th Air Force's 100th Bomb Group, was flying his B-17G Flying Fortress bomber on a raid over Hamburg. His formation had braved heavy flak to drop their bombs, and then turned 180 degrees to head out over the North Sea. They had finally turned northwest; headed back to England, when they were jumped by German fighters at 22,000 feet.
The Messerschmitt Me-109s pressed their attack so closely that Capt Rojohn could see the faces of the German pilots. He and other pilots fought to remain in formation so they could use each other's guns to defend the group. Rojohn saw a B-17 ahead of him burst into flames and slide sickeningly toward the earth. He gunned his ship forward to fill in the gap. He felt a huge impact. The big bomber shuddered, felt suddenly very heavy and began losing altitude. Rojohn grasped almost immediately that he had collided with another plane. A B-17 below him, piloted by Lt William G. McNab, had slammed the top of its fuselage into the bottom of Rojohn's. The top turret gun of McNab's plane was now locked in the belly of Rojohn's plane and the ball turret in the belly of Rojohn's had smashed through the top of McNab's. The two bombers were almost perfectly aligned - the tail of the lower plane was slightly to the left of Rojohn's tailpiece. They were stuck together, as a crewman later recalled, "like mating dragon flies."
The Messerschmitt Me-109s pressed their attack so closely that Capt Rojohn could see the faces of the German pilots. He and other pilots fought to remain in formation so they could use each other's guns to defend the group. Rojohn saw a B-17 ahead of him burst into flames and slide sickeningly toward the earth. He gunned his ship forward to fill in the gap. He felt a huge impact. The big bomber shuddered, felt suddenly very heavy and began losing altitude. Rojohn grasped almost immediately that he had collided with another plane. A B-17 below him, piloted by Lt William G. McNab, had slammed the top of its fuselage into the bottom of Rojohn's. The top turret gun of McNab's plane was now locked in the belly of Rojohn's plane and the ball turret in the belly of Rojohn's had smashed through the top of McNab's. The two bombers were almost perfectly aligned - the tail of the lower plane was slightly to the left of Rojohn's tailpiece. They were stuck together, as a crewman later recalled, "like mating dragon flies."
No one will ever know exactly how it happened. Perhaps both pilots had moved instinctively to fill the same gap in formation. Perhaps McNab's plane had hit turbulence. Three of the engines on the bottom plane were still running, as were all four of Rojohn's. The fourth engine on the lower bomber was on fire and the flames were spreading to the rest of the aircraft. The two were losing altitude quickly. Rojohn tried several times to gun his engines and break free of the other plane. The two were inextricably locked together. Fearing a fire, Rojohn cuts his engines and rang the bailout bell. If his crew had any chance of parachuting, he had to keep the plane under control somehow.
The ball turret, hanging below the belly of the B-17, was considered by many to be a death trap - the worst station on the bomber. In this case, both ball turrets figured in a swift and terrible drama of life & and death. Staff Sgt Edward L. Woodall, Jr., in the ball turret of the lower bomber, had felt the impact of the collision above him and saw shards of metal drop past him. Worse, he realized both electrical and hydraulic power was gone. Remembering escape drills, he grabbed the hand crank, released the clutch and cranked the turret and its guns until they were straight down, then turned and climbed out the back of the turret up into the fuselage. Once inside the plane's belly Woodall saw a chilling sight, the ball turret of the other bomber protruding through the top of the fuselage. In that turret, hopelessly trapped, was Staff Sgt Joseph Russo.
Several crewmembers on Rojohn's plane tried frantically to crank Russo's turret around so he could escape. But, jammed into the fuselage of the lower plane the turret would not budge. Aware of his plight, but possibly unaware that his voice was going out over the intercom of his plane; Sgt Russo began reciting his Hail Mary's. Up in the cockpit, Capt Rojohn and his co-pilot, 2nd Lt William G. Leek, Jr., had propped their feet against the instrument panel so they could pull back on their controls with all their strength, trying to prevent their plane from going into a spinning dive that would prevent the crew from jumping out. Capt Rojohn motioned left and the two managed to wheel the grotesque, collision-born hybrid of a plane back toward the German coast.
Leek felt like he was intruding on Sgt Russo as his prayers crackled over the radio, so he pulled off his flying helmet with its earphones. Rojohn, immediately grasping that crew could not exit from the bottom of his plane, ordered his top turret gunner and his radio operator, Tech Sgts Orville Elkin and Edward G. Neuhaus, to make their way to the back of the fuselage and out the waist door behind the left wing. Then he got his navigator, 2nd Lt Robert Washington, and his bombardier, Sgt James Shirley to follow them. As Rojohn and Leek somehow held the plane steady, these four men, as well as waist gunner Sgt Roy Little and tail gunner Staff Sgt Francis Chase were able to bail out. Now the plane locked below them was aflame. Fire poured over Rojohn's left wing. He could feel the heat from the plane below and hear the sound of 50 caliber machine gun ammunition "cooking off" in the flames. Capt Rojohn ordered Lt Leek to bail out. Leek knew that without him helping keep the controls back, the plane would drop in a flaming spiral and the centrifugal force would prevent Rojohn from bailing. He refused the order. Meanwhile, German soldiers and civilians on the ground that afternoon looked up in wonder. Some of them thought they were seeing a new Allied secret weapon - a strange eight-engined double bomber. But anti-aircraft gunners on the North Sea coastal island of Wangerooge had seen the collision.
A German battery captain wrote in his logbook at 12:47 p.m.: "Two fortresses collided in a formation in the NE. The planes flew hooked together and flew 20 miles south. The two planes were unable to fight anymore. The crash could be awaited so I stopped the firing at these two planes." Suspended in his parachute in the cold December sky, Bob Washington watched with deadly fascination as the mated bombers, trailing black smoke, fell to earth about three miles away, their downward trip ending in an ugly boiling blossom of fire.
In the cockpit Rojohn and Leek held grimly to the controls trying to ride a falling rock. Leek tersely recalled, "The ground came up faster and faster. Praying was allowed we gave it one last effort and slammed into the ground. The McNab plane on the bottom exploded, vaulting the other B-17 upward and forward. It hit the ground and slid along until its left wing slammed through a wooden building and the smoldering mass of aluminum came to a stop. Rojohn and Leek were still seated in their cockpit. The nose of the plane was relatively intact, but everything from the B-17's massive wings back was destroyed. They looked at each other incredulously. Neither was badly injured. Movies have nothing on reality.
Still perhaps in shock, Leek crawled out through a huge hole behind the cockpit, felt for the familiar pack in his uniform pocket and pulled out a cigarette. He placed it in his mouth and was about to light it. Then he noticed a young German soldier pointing a rifle at him. The soldier looked scared and annoyed. He grabbed the cigarette out of Leek's mouth and pointed down to the gasoline pouring out over the wing from a ruptured fuel tank.
Still perhaps in shock, Leek crawled out through a huge hole behind the cockpit, felt for the familiar pack in his uniform pocket and pulled out a cigarette. He placed it in his mouth and was about to light it. Then he noticed a young German soldier pointing a rifle at him. The soldier looked scared and annoyed. He grabbed the cigarette out of Leek's mouth and pointed down to the gasoline pouring out over the wing from a ruptured fuel tank.
Two of the six men who parachuted from Rojohn's plane did not survive the jump. But the other four and, amazingly, four men from the other bomber, including ball turret gunner Woodall, survived. All were taken prisoner. Several of them were interrogated at length by the Germans until they were satisfied that what had crashed was not a new American secret weapon. Rojohn, typically, didn't talk much about his Distinguished Flying Cross. Of Leek, he said, "In all fairness to my co-pilot, he's the reason I'm alive today." Like so many veterans, Rojohn got back to life un-sentimentally after the war, marrying and raising a son and daughter.
For many years, though, he tried to link back up with Leek, going through government records to try to track him down. It took him 40 years, but in 1986, he found the number of Leek's mother, in Washington State. Yes, her son Bill was visiting from California. Would Rojohn like to speak with him? Two old men on a phone line, trying to pick up some familiar timbre of youth in each other's voice. One can imagine that first conversation between the two men who had shared that wild ride in the cockpit of a B-17.
A year later, the two were re-united at a reunion of the 100th Bomb Group in Long Beach, Calif. Bill Leek died the following year. Glenn Rojohn was the last survivor of the remarkable piggyback flight. He was like thousands upon thousands of men -- soda jerks and lumberjacks, teachers and dentists, students and lawyers and service station attendants and store clerks and farm boys -- who in the prime of their lives went to war in World War II. They sometimes did incredible things, endured awful things, and for the most part, most of them pretty much kept it to themselves and just faded back into the fabric of civilian life. Capt Glenn Rojohn, AAF, died last Saturday after a long siege of illness. But he apparently faced that final battle with the same grim aplomb he displayed that remarkable day over Germany so long ago. Let us be thankful for such men. A great story. I wonder how many more stories like this one are lost each day as members of the Greatest Generation pass on.
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