[quote=tricky rick]…when the going gets tough…TPTB change the rules.
First to go: the concept of legal protection for all (almost daily examples of this - drones, banksters shenanigans, etc)
Without that protection? We are woefully weak in our defensive positions…
[/quote]
Tricky Rick,
You are so right on …that the rules can and will be changed. Obvious investments like PM's and Commodities could be decimated. Diversity has saved many investors from ruin.
We need to distinguish between investments in the financial markets and our real investments at home. The financial markets are clearly rigged, whereas your true home investments such as your pantry; silver stash; ammo; gardens; water reserves; shelter (hopefully not mortgaged); and fuel are less prone to confiscation and manipulation.
For those of us still linked to the financial markets in IRAs and 401Ks, I think it is foolish to go "all in" in any one direction no matter how sure you are that you are correct.
In your home investments absolutely go "all in" and get prepared.
If you look at Prof Husmanns graph of the stock market you will see a change in it's behaviour.
(I will not put the graph here because of his copywrite clause)
Since 2002 to me it looks like the surging of an engine that is running out of fuel
In January of 1974 my Calculus professor brought in a speaker to discuss our (1st) energy crisis. He outlined the now familiar DOE energy diagram covering both energy sources and end uses. Walking back to the dorm during a brutal Iowa winter really drove home the points he had made. There was nowhere to turn - so I bought lots of books and have kept them ever since. A brief listing:Producing Your Own Power (Carol Stoner) 1974
Handbook of Homemade Power (Mother Earth News) 1974
Practical Building if Methane Power Plants (L. John Fry) 1974
Methanol and other ways arough the gas pump (John Lincoln) 1976
I have many (~20) other books from the 1970's and keep them as a reminder to myself.
By the 2nd energy crisis I KNEW we were toast. About this time a coworker and myself saw what was coming. He heated with wood, had a huge garden, and planted a small orchard. We were at different places in life so my preps consisted of oil company investments and junk silver. And mobility.
I vividly remember Reagen getting elected. We were scared shitless. There was no way we were ever going to get out of this economic turmoil. There was no way the North Sea and the North Slope would pull us out of the economic mess we were in.
During lunch I spoke with a friend about where we were day after day. He called me Mr. Gloom and Doom. That didn't stop me from purchasing a small farm (1987) and learning as much about growing food as I could. We still live on that farm today.
Fast forward to 2008. Market cut in half. PM's through the roof. Horrible economy. I vividly remember Obama geting elected and being scared shitless. There is NO WAY we are ever going to get out of this economic turmoil. There is no way the Bakken and Marcellus shale plays will pull us out of the mess we are in.
Time to Choose. Despite the OVERWHELMING evidence Adam presented (great job, AT), and I am firmly in the Defense camp, no one knows the timing. IMHO, Oliveoilguy get's it right (diversity).
Great article. Thanks Adam.
Although I’m not a paid subscriber, nevertheless Chris Martenson started it all off for me and I keep revisiting the crash course chapters.
I have a shortlist of websites that I trust and I keep revisiting. Peak Prosperity being one of course. All our assets are now split between productive farmland and precious metals. A direct result of ‘The Crash Course’ alarming me enough to really research more.
Just recently I came across the theory of the Kondratieff Cycle. Refined and clearly explained by Ian Gordon of Longwave Analytics.http://longwavegroup.com/financial-analysis
Facinating and I really get the logic.
I feel as if I’ve found a missing link that empowers me to an even greater degree that the strategy I’ve laid out for my family is the correct one.
Not for everyone… but it makes complete sense to me.
Just thought I’d share that.
Thanks for the great work Chris and Adam.
Best wishes.
Paul
UK
As John Hussman says (much more eloquently than I can): market rotation is a myth. Every bond and every piece of stock is always owned by someone. So if the late comers are moving into stocks from bonds, someone is selling the stocks and buying the bonds. And since the system seems well rigged to buy its own bonds, I think it's going to be a while before rates rise.
So the system buys it's own bonds because if it doesn't, then the sellers lower the asking price (and cause interest rates to rise) until they find a buyer. And everyone knows what rising interest rates mean. I guess that's what's been happening all along as a way to keep bond prices up and interest rates low - which of course encourages people to buy stocks because who wants such a low interest bond other than the fed?
There isn't a post here I wouldn't agree with, the clarity of collective mind and vision, we're doing it together. We're going to beat this thing and create an amazing future for ourselves. Thanks to Chris and Adam for having the vision to put together this website, allowing those of us who have felt isolated and crazy all these years to connect to other sane voices in these rather turbulant times.
The world out there is so full of mind numbing BS, its hard to take it sometimes. I used to listen to snippets of the local NPR station occationally, but I can't take even that any more. But things are turning. Our local transition town group has a film series that we are running. Attendence is up and people seem to be more engaged. I think that more and more poeple are being to understand that this mess is the new normal for the "system" and that if we want something better we will have to take matters into our own hands and create something better. To borrow a phrase from times past that will show my age, drop out, tune it and turn on. We may be near the 100th monkey moment after all.
We DO have another option; one that has worked well at twice in our history; recommended by major economists. Google - "The Chicago Plan Revisited", IMF Working Paper. Iceland is considering non-debt money. The idea is picking up steam… except with the Movers of the Universe (which include the 'economists', 'financiers' and banksters who didn't seem to see the collapse coming… in 2005, or 2006… it wasn't hard in 2007.
When the house of cards collapses, the time will be ripe to install a system that works for everyone…of, by and for the people. And having as many people as possible educated about this feasible, tested, simple solution will make the transition as smooth as possible. To learn more, check out Bill Still, Stephen Zarlenga, Michael Hudson, Positive Money, etc. (I can't do this alone! 
Iceland is considering non-debt money. The idea is picking up steam... except with the MoversNice Moniker Delphinium. And a good observation in your first post. Welcome.
For our future big infrastructure projects we will need to to have access to pools of capital.
…and because I did and with the snow, and a warm wood fire going in the fireplace I looked up everything on Robots, and its effect on labor.
A sample: http://www.nbcnews.com/business/holy-hal-robot-stole-my-job-1B8057232
I did not get the numbers still that I wanted. Basically, how many are being produced and deployed daily, monthly, yearly, and what orders are now in the pipeline going forward, where too and how many people will be displaced just in the U.S. Is it 10K, 20K, 50K,100K, 200K this year, next, 5 years? How many Robots can Robots build in a year? For whom?
If 50K Robots are built and deployed in the next two years, and they remove (now in the work force) 5 laborers each, and I think this is a modest amount of Robots then that is a lot of labor that has been removed. With no real end in site. Plus all that spent cash by humans into the economy, and spin off jobs that will be destroyed and this just goes on, and on,…>
However, what I did get was a genuine feeling that all business, all industry, and all manufacturing are on a mission to replace high cost labor with low cost Robots. In every corner of the market from flipping burgers, to flipping heavy steel objects, drilling holes and sanding the steel without skipping a beat. If I'm a CEO I want to move first.
This is the future, the first to use this technology can absolutely, positively, destroy or put a serious hurt on their competitors.
Further, unemployment will rise, and there's nothing the Fed can do about that. So one mandate will fail and miserably. Then again, I am sure the BLS and some Hedonic rational will use the Robot, and count it as 5 perhaps 10 laborers, and add this to the employment number. We just KNOW this will happen somehow, and of course be revised up or down depending. Sheesh!
Further, middle class Americans are all at risk, and risk is the name of the game so credit for those who have always paid their bills on time is NOT going to happen as it once did. No job, no credit. It is Not a stretch to think credit for anything will be denied because the trend is Robots and that is that.
If business doesn't take advantage of this technology, like yesterday, they are foolish. So, to the quick will be reward, and to the late, transition is only bankruptcy.
Amazon is a terrific and awe inspiring system. I use it for shopping first and last usually. They have a great business model, they get the product to me as promised, cheaper, and I have no hassles as I sit in my office chair and use NO fuel or other expenses. That alone will fracture the retail industry, retail space will lay vacant, and commercial real estate will go bankrupt. It looks like the not to far off future either. IMHO
The cost to the government (that's us, we pay the bills) in welfare entitlements are going to skyrocket from here. Already off the charts now, expect this to be a steady and ever rising strain.
OK, labor will not participate in any growth going forward, so housing that everyone outside of this site thinks is bottomed will just take another hit going forward as who can even consider asking for a 30 year, fixed mortgage from banks who are loaning the Big Bucks to corporate types who's plan is to eliminate your job. I personally would not give 20% down and purchase a home today if you paid me yourself. Well, maybe I would if that were the case but you get my point.
The Government who's mandate is employment and managed flotations (yes, a gentle bit of humor intended) will fail horribly in their antiquated modeled plan because they haven't modeled yet for Robots as was so revealing when Krugman had his ah-ha moment. He plans on thinking about Robots in more depth but his inclination is to charge taxes on Robots as they replace labor. "OH, GOOD GRIEF"!, (stolen from Wendy as she used this phrase recently, and it reminded me of so many yesterdays with my Mom's).
Folks, if you didn't know this, Bernanke is Krugman's mentor, and spiritual guidance counselor, and Bernanke runs the Fed, and he prints lots and lots of money and he has a beard and Krugman has a beard and Krugman is now thinking about Robots. "Class, Class!, Class!!, shut up!!!, thank you". Krugman thinks the Fed hasn't done enough and who really cares about spending now ,just spend, spend, spend and we'll mop up the excess later. "Oh GOOD GRIEF" (Wendy).
Oil is near $100 bucks a barrel, is he mad, seriously, is he mad?
I think too that there is a saying in the market that it will exact the most damage to the most people it can, and I'm wondering if that means the Fed too as they are actively in the market today. If so, then good. Then again it is OUR money they are playing with.
104% of money managers are bullish. How is that possible. I thought 100% was the highest one could be bullish. That means a negative 4% are Bearish! Really? I must have misunderstood then. Then again, the numbers being bandied about all over the place are just not even to be believed. Make believe then.
Do markets tank in make believe land? Serious, is this possible? I'm guessing it can, and will. Why? 104% of money managers are bullish (if I read this number correctly), that seems like the optimum number to put a good hurting on, don't you think?
BOB
Note: All spelling errors are the spell checks problem, and I no longer care. Do you?
Just because I'm a stickler for accuracy, the article Consumers Taking Financial Hit From Rising Fuel Prices (CNBC) seems less than so: Meanwhile, the U.S. Energy Information Administration reported Monday that gasoline expenditures in 2012 for the average U.S. household reached $2,912, or just under 4 percent of income before taxes.
Well the median household income in 2011 was $50,054, so $2912 would be 5.8% of that.
What they appear to have done is used the number for median household income - married couple households, which is $74,130. Now your $2912 is 3.93%. But that's not really the "average U.S. household" now is it?
Here's an article with perhaps a more nuanced assessment: http://money.cnn.com/2011/05/05/news/economy/gas_prices_income_spending/index.htm
That's a year and a half old (not that gas prices have come down any, and median household income has declined the last two years in a row) meaning the numbers could be worse. This piece indicates 9%, and the reality that in low income locales the purchase of gasoline consumes up to 14% of household income (Mississippi). Household income figures BTW are usually given pretax, which also underestimates the bite anything takes - food, rent, insurance - on a percentage basis.
…research and my knowledge now gathered on everything Robotics. Like most everything these days when I do research the subject matter soon becomes a major headwind to everything I have every known before in my life.
I have determined long ago that from here on out it will be Oil that motivates everyone to seek alternatives to powering Industry and Manufacturing, and that means Labor will suffer as it always has. Still, I remain positive and forward looking. That DNA marker I suppose will never be changed. The Human spirit then.
Thank you
BOB
"Present market conditions now match 6 other instances in history: August 1929 (followed by the 85% market decline of the Great Depression), November 1972 (followed by a market plunge in excess of 50%), August 1987 (followed by a market crash in excess of 30%), March 2000 (followed by a market plunge in excess of 50%), May 2007 (followed by a market plunge in excess of 50%), and January 2011 (followed by a market decline limited to just under 20% as a result of central bank intervention). These conditions represent a syndrome of overvalued, overbought, overbullish, rising yield conditions that has emerged near the most significant market peaks – and preceded the most severe market declines – in history:"
http://www.hussmanfunds.com/wmc/wmc130204.htm
Perhaps these times are different. After having read all that I have about Robots (Gregor inspired) it is my firm belief that joblessness is the wave of tomorrow, next week, next month and YoY. 70 percent of the economy is consumer spending, and consumers are to be directly correlated with jobs.
You know, I had a thought while out this morning sledding with my grandson's (taking a quick break from the action) that if the Fed is printing and spending our forward expected earnings trying to get the economy going, and if the Fed is as clueless as Krugman (A Nobel Prize Winner) is about the effects Robots will have on the economy, and if we anticipate in loss wages and added welfare entitlements in the next 5 years then who will pay this massive Debt in the future? Default? Bankruptcy? I think lots and lots, and perhaps a title wave of a combination of the two.
Respectfully Given
BOB
Since I am a budding, self-taught monetary theorist, I was intrigued by your posting. What is this Chicago Plan I wondered? As well, I wanted to understand what I have come to believe is the most important question one can ask about any money system; Is there a printing press, and who runs it?Well, I got my answer quickly with a bit of Googling;
In a nutshell, the Chicago Plan provides an outline for the transition from a system of privately-issued debt-based money to a system of government-issued debt-free money, transferring the real control of money creation from private sector banks to the government. By inference, the Chicago Plan would also eliminate the Federal Reserve's ability to create money as a private institution, as it would be nationalized by incorporating it into the U.S. Treasury. Further, such a system would eliminate the need for the FDIC (Federal Deposit Insurance Corp.) as banks could only lend from the deposits they actually had. source: http://www.istockanalyst.com/finance/story/6105849/forget-dodd-frank-revisited-chicago-plan-would-eliminate-bank-money-creation-the-fomc-and-fdicOK, so we have our answer: Chicao Plan = Modern Monetary Theory = Chartalism = $1 Trillion coin idea. These are all fundamentally the same thing! How could anyone think handing the printing press to the Gov't is better than having the printing press in the hands of the bankers? Even without the printing press, our Gov't is spending us into bankruptcy. If you want to see the results of the Gov't (effectively) controlling the printing press.. look to Venezuela and Argentina today. When too much money gets printed, bad things happen.. no matter who is doing the printing. This is not to say that bad things don't happen in a debt based money system when too little debt is taken out... they do.. but the bad things consist of those investors, banks, and other entities who made risky bets or loans being wiped out. What ensues is Schumpeter's creative destruction and a wonderous process called deflation, whereby the money held by savers actually increases in buying power... imagine that! The deflationary outcome is only theoretical at this point, as the bankers don't run the system as intended anymore... rule of law is gone, bankers always win, tax payers and savers always lose now. Reading about the Chicago plan, you can get flummoxed over terms like Dynamic Stochastic General Equilibrium (DSGE)... but don't! When analyzing any system of money, consider the mechanism behind its creation, and who (if anybody) controls its scarcity, and the integrity of this scarcity? Let's review; Money System Who controls relative scarcity? Tendency (Inflation/Deflation) ------------------- --------------------------------------- ------------------------------------ Debt based Banks, Private + FED Inflationary, with rare bouts of deflation MMT Government Always inflationary (see Zimbabwe) Gold and Silver Scarce in Nature Stable or deflationary Bitcoin Algorithm limits production Deflationary by design, highly divisible. Government made money is not the answer. While one might argue that Gov't will be more humane in how it distributes the money it creates vs. bankers... this does not change the fact that when too much money is created in relation to the real wealth that exists in the world, this imbalance can ultimately lead to the destruction of the money system. Short term good (if you consider government's tendency to create cultures of dependency good), long term horror. You will see my reference, once again here on PP.com, to Bitcoin. Bitcoin is endlessly fascinating to me because it is the only manmade form of money whose scarcity integrity is not in the control of any person, Gov't, or private entity. It's scarcity is built into its digital DNA.. and eventually all Bitcoins will have been mined out, just like is the case with Gold and Silver. Therefore, barring people rejecting it as a form of money (vs. the trend of growing adoption that exists thus far) the tendency of Bitcoin is to increase in buying power... deflation. Great for savers! Take a look at how Bitcoin has performed in dollar exchange terms of the last year; http://bitcoincharts.com/charts/mtgoxUSD#rg360ztgSzm1g10zm2g25zv
Jim,Your comparison matrix on money systems is interesting, and probably worth testing and expanding. I do have one quibble:
Debt based | Banks, Private + FED | Inflationary, with rare bouts of deflationAssuming "deflation" is roughly the same as "recession/depression", it's not particularly rare. For example, in the US, there have been 20 such episodes in the last century, or an average of one every 5 years. I share the unease about turning the system over to the government, although in today's context, the governments and financing networks are heavily intertwined in the Western nations and economies, so I'm not sure it would make that much difference in practice, whatever the theoretical basis. In the broader context, I find it encouraging that the nature of the money system is being re-examined openly, and in high circles.
Thanks for the dialogue Dwig. My statement about the inflation with rare bouts of deflation is based on the graph by Doug Short in this article… sorry I can't get the graph embedded directly. Note that the red areas below the graph represent periods of deflation;
The graph argues that since about 1950 the financial engineers behind the US dollar have effectively eradicated deflation from the picture. Recession and currency deflation are two different things... and although it would make sense to have the two go hand-in-hand... Doug Short's data suggests that this is no longer the case. Your loss of buying power for dollars held has effectively been a continuous process since 1950, which is why I said what I said. You said,
http://www.advisorperspectives.com/dshort/updates/Inflation-Since-1872.php
the governments and financing networks are heavily intertwined in the Western nations and economies, so I'm not sure it would make that much difference in practice, whatever the theoretical basis.And I agree with you... the unholy alliance between governments and bankers has created a situation where the banks are the enablers of gross deficit spending.. almost as if our elected leaders had their hands on the printing press. All I can say is, imagine how profligate would their spending be if there were no longer any debt-based drag to it? The dollar would be toast in no time IMO.
Any large centralized system leads to trouble, unless we have a sudden evolution in human consciousness (I'm not holding my breath). It matters liittle whether its a private central bank masquerading as a quasi federal agency or the federal government itself. Lets have local community owned banks printing the money they need to support the level of local economic activity. That way all the brilliant minds here could be on the local bank boards having real debates about actual monetary policy that matters rather than academic discussions about how fast to pull money out of a collapsing system.
Of course we would then need actual local economies, which we don't now (most important bit of work that we have in front of us). Here in quasi rural New England (in my little piece of the world) what do we have for primary wealth creators? Maple syrup, firewood, hay, some fruits and vegatabes, a dairy or two, some meat production. There is some small hydro electric, wind power is close by to the north in southern MA. but nothing here. A smattering of light manufacturing. Almost all of it powered by nonrenewable fuel sources thousands of mile away. We do have some local bakeries, but all the grain of course is not local.
Then of course the secondary economic tier, hospitals and doctors that we can not afford, other professional services, lawyers, insurance agents, etc. The constuction industry which is flat on it's back, but all the building material are not local. If a disruption happens lifestyles are going to change real fast.
Then there is the overhead, sources to spend discretionary income, retaurants, theaters, retail stores, bowling alleys, etc. In my mind there is a place to start, if it ain't local don't go in a spend a nickel, if you know friend who is out of work and thinking of start something up, preorder something from them. For the short term how the money is printed is less important than how and where you spend it. We have the rest of the world taking our dollars and the biggest baddest army in the world making sure that they do. It seems like this arrangement is not going to change for a little while anyway.
Then I would go after the creation of a local currency. We have one to the north, don't know how well that is doing. I know some of my northern neighbors are up in that territory post here regularly, how are the Berkshares doing anyway? My two cents anyway. I do get the occational wave of optimism, then I start to think about how much work we have in front of us…but wait we have really high unemployment…hmmmm?
Berkshares seem to still be functioning, unlike the Burlington Bread, and the Ithaca Hours, both of which have withered on the vine.
As with other local currencies, the problem I see with Berkshares is how they are created... the mechanism by which more shares come into being. From the Berkshares website;
http://www.vpr.net/news_detail/90075/despite-limited-success-local-currencies-make-come/
(Kirschner) "The most popular businesses, always food businesses, would end up with a stockpile of bread, and they were always the ones who were dissatisfied because they had nowhere to spend it. We tried to get them to give it back in change but that was difficult, it literally didn't fit in cash registers, it was slightly too big, so it stayed in the back offices."
(Bodette) A business could accept bread in lieu of cash, but then couldn't convert it into dollars. So their only choices were to spend bread at another business that accepted it, or to pay their employees with it. Soon stores stopped accepting bread altogether.
Burlington Bread finally fell apart after ten years in circulation.
Kirschner says she learned competing with the U.S. dollar is not easy.
http://www.berkshares.org/whatareberkshares.htm How are BerkShares placed in circulation? BerkShares are placed in circulation when citizens exchange federal dollars for BerkShares at any of the BerkShares Exchange Banks (see list below). Some restrictions may apply. Citizens may exchange federal dollars for BerkShares at any of the BerkShare Exchange Banks during normal bank hours (some restrictions may apply):So, Berkshares are created anytime anyone wants to buy some with the a few of the infinitely printable US dollars. In this way the future scarcity of Berkshares is tied to the future scarcity of dollars... therefore I would not participate as I would expect them to lose buying power over time. I do support re-localization, and voted $800 last year to buy in to a boutique 15 share CSA around the corner from my house. I don't think that local money is the key to re-localization.. these are two separate challenges... and I have become very opinionated as of late on the question of what makes good money. Good money cannot be printed to infinity, period. That is why Gold and Silver will always be money.. and why Bitcoin will, in my opinion, take the world (literally) by storm... because it is the first and only manmade money that shares this unique quality. It has other positive qualities as well.. but scarcity integrity is the most important one.
…and that tells me that all means have been tried to stay afloat and bottom has now been reached. Sure, the schemers are playing the system but I still contend that even the schemers are doing all things necessary to maintain their current lifestyles. All these Folks are just hanging by a thread, and will have some serious unintended consequences at some point in the future. Make sense? This report certainly says one thing and that is things are getting worse and not better. It has been this way for some time now, and all the government reports are basically a wet finger to the wind, and fabricated to fit what is necessary to continue an illusion.
http://www.zerohedge.com/news/2013-02-11/chart-day-households-foodstamps-rise-new-record
The question now is, is this report good for the economy. We have to choose now.
Regards
BOB
I don't think Bitcoin will ever have a future other than as a niche currency for short term transactions. Why would anyone select using Bitcoin over using gold and silver? Do you really trust that the algorithms are sound? Plus your going to have a mighty tough time using Bitcoin in a non-digital world of things. Try using Bitcoin to buy eggs from a farmer when the power/internet is down!
It's too reliant on technology and there are already well recognized, sound money alternatives. I just don't see any advantage to bitcoin over gold, silver, platinum, etc.
I think a much more likely scenario is the world transitions to hard money and simply uses electronic record keeping methods to make it convenient. Credit cards, checks, paypal, etc can all be used to represent movements of sound money just as well as they can fiat currencies. In fact, my guess is we will simply transition to a government issued currency that is backed by gold. This will last for at least a few generations until the next government convinces people that this current experiment was just not done quite right…