Something doesn't smell right about this recovery

I had a long chat with an old friend the other night. Our daughters were close friends at age 4 through 8 before we chased a career into another state. My daughter’s best childhood friend is getting married and she and I drove from AZ to Memphis TN for the wedding. She is 20 and I don’t expect I will get to talk with her this much again. For me, the road trip has been enjoyable, and I think it has for her as well.

So my old friend, the father of the bride, and I started talking about the economy. He and I have a common concern in that our kids are striking out on their own, looking for careers. As we chatted for several hours, I did my best to try to explain economic issues as I saw them, but several constraints were in my mind, filtering what I said

  • I really ought to listen as much as I talk.
  • I don’t want to come off as an alarmist
  • It’s not advisable to continually say, “No, you are wrong.”
  • He does not understand economics, and our time is too precious for a series of lengthy lectures.
  • We had many daughter-raising issues to discuss.

I desire to appear to him as the rational, educated, concerned person that I am who has decided to take action to protect our financial future, rather than trusting in the system that has failed. I am hoping he will think, “Hmmm, Jerome seems like he has this all figured out. Maybe I’ll follow his lead and buy gold.” But as he sat there listening and smiling, he may have thought,” Oh my God. What happened to my dear friend. He is off the deep end.” He tactfully asked me twice, “Don’t you think the recession natural, that we should expect this now and then?”

He believes that we are recovering but I suspect that he knows in his heart that we are not. He asked me the question, instead of making an assertion, because his mind knows that he does not have the evidence to back an assertion. People like my friend suspect that this recovery we keep hearing about is more mist than substance. He may not be ready to admit it yet, but he did listen to me for a long time the other night.

People are still out of work.  My 23 year old son has not been offered any high paying jobs that would tempt him out of college the way I was seduced away from college when I was 19. Our kids are working at fast food joints and still living at home when they should be getting their own places and finding roomates. Even young couples are renting homes rooming with other young couples (according to my property manager), not to save money, but to make it on their own at all. A large landlord friend of mine reports more and more families shacking up with extended family to make it. That is how they’ve made it in Mexico for several decades now.

Last night our member silverismoney disclosed to us that he had friends in finance that are waking up and interested in PMs. He asked them, Why are you guys looking into it?" and they replied, "It's becoming obvious to a lot of us that something is NOT RIGHT with the paper markets so we have decided to move some of our paper into physical and do not know where to begin."  

My wife and I watched Margin Call the other night. As the film wound down to a close, Jeremy Iron’s character (not sure if he was Blankfein or Dimon) explained to Sam, who thought it was wrong of them to sell the toxic mortgages to their clients,  that crises like this were normal—what they did in dumping the bad MBS securities on their clients was justified. Iron’s character recounted a lengthy list of crises dating back into the 19th century, as though 2008 was simply another. That particular scene has led me to conclude that the movie was allowed to be made to explain to all the sheep that 2008 was normal and we will recover—just another crisis like the ones we have always weathered.  Is that our take-away from a good movie—that financial crises are normal and we should expect them? That we will always recover? What Hollywood failed to mention in Margin Call was that the FEDs actions after the crisis may have saved your IRA, but it didn’t stimulate a recovery this time.

This was not just another crises and the FED has tried everything  to “fix” the economy. While they may have staved off a collapse, nothing is better and people are beginning to figure it out

The all-wise FED governors, lowered interest rates to ZERO and didn’t stimulate a thing. Enter QE as the FEDs next trick. But QE1 & 2 failed to reignite the economy.

Third time is the charm. The FED unveils Operation Twist. I view that effort NOT as an attempt to help the economy, but as the FEDs desperate action to keep interest rates from rising , to get all those high-interest bearing T-bills out of the market elbowing retirees like my Dad out. They took the safest option off the table for investors, forcing them to turn to stocks to chase some kind of yield. But the economy did not get better.

So in desperation the FED began QE3 (infinity) to keep the stock markets moving higher. But people are catching on… they suspect something is wrong, pressuring the FED into tapering QE to convince people that we are recovering... because recoveries do not continue the emergency measures for 5 years.  So as QE has been tapered, some Belgian investor has been picking up the slack, buying up all the excess T-bills so our government can keep deficit spending.

Interest rates must not rise! When you are a 17 trillion debtor, who borrows money to make the payments on your loan, rising interest rates mean you have to borrow even more from a world that does not have it to loan.—except for that Belgian investor who is happy to keep loaning to this US debt-addict. I wonder who it is? This economy has been ruined and people are beginning to wake up.

I wonder what the FED will try next. No doubt the plan will have a highly technical economic title—like “Monetary Collateral Amplification”—so they can fool people into thinking the FED knows what they are doing. or maybe they do what the SEC was doing at their computers all day, frustrated that they can actually do nothing.

I hate it when a mechanic replaces a part and it still doesn’t fix the car. After the 4th or 5th attempt, I start to get really pissed about him running up the bill and having no clue as to what is wrong or what to do about it.

And why else are people not quite sure about the “recovery?” On one hand, they do not see it. Even those with jobs recognize their employer’s challenges. But our media continues to parrot “Recovery! Recovery!” every chance they get to keep the general population from panicking or protesting, and to keep them spending. While one factory may be ramping up in North Carolina, another three have close in Ohio. But we only hear about the one these days. People are in cognitive dissonance about it, wanting to believe the lie, but intuitively concluding that the economy is still very weak.

There is too much debt personally and at every level of government. And there is not enough collateral to cover that debt if the crisis re-asserts itself. The good full-time jobs are evaporating as our leaders point at the job numbers (inflated with part-time positions) and brag.

The FED is the major buyer of stocks, followed by corporations buying their own stock to keep the values high. Market volume is declining.

The only assets that can survive the debt fueled inflation that is fast approaching are tangible goods. Gold holds the most value in the least physical space and has great potential to increase your value. Food will be essential—especially IF another crisis strikes. Any other tangible goods that we need for life is a great place to store what value you have.

I do not consider real estate safe—it is better than paper, but Detroit gives us all reason to question how valuable a home really is. Looks like Flint is next. And I know from personal experience that homes throughout the American Midwest are still selling at only half their value of 2008—cheaper than you can build one.

Paper securities can go to zero faster than you can log in to your online broker and sell out, faster than you can call your busy broker on “stock crash morning” and get her on the phone. Even the dollar is not exempt from an instant devaluation. Store your treasure in heaven and keep your money in gold, grain & goats.

You all remember Maslow’s pyramid from your Psych and Soc 101 classes. Humans strive to achieve success at each level, moving up the pyramid as they are able. Well, I predict we will all abandon our efforts at achieving self-actualization soon and be working real hard to maintain our position on those lower levels.

But I am preaching to the choir here. And if all this is new to you, maybe now you are part of the choir. 

We all still have a burden to do everything we can to wake up our friends and relatives who are weary of us crying wolf. If we calm down and point out a few things that get people to thinking, we’ll have a better chance to get them to listen and take some reasonable actions.The first step in convincing people to take action is to convince them that action is needed.

They know something is wrong. Start there. If you can confirm their suspicions, it naturally and logically leads to very important questions, “What can I do about it? How can I protect myself?” And I think you have some ideas about what to do...


lnardozi's picture


Guess so.

DeaconBenjamin's picture

Good article

I agree, the first step is to convince them that there is something wrong. Then they can start to look for answers.

erewenguy's picture

I read on another site this

I read on another site this morning that Chipotle Mexican Grill (pre-market $653/share) has 1500 restaurants has a market cap of $18 BILLION, with a 55 P/E.

Jose at our local Mexican restaurant serves seriously great food. I'm sure he would be more than happy to sell his business for under $12 million.

I've been amazed at the swindle people have come to accept even in their food - That Red Lobster is great seafood, that Olive Garden is great Italian, and now Chipotle is great Mexican.

Seriously. The only bad thing about the effects of this red pill is that it never wears off.

Safety Dan's picture

Bank Of England Leads Push

Bank Of England Leads Push For Deposit Confiscation - Japan, China, Russia Against Bail-Ins


Check this out for more information; For a hint of how the next

Great thoughts Dr. J. We know the numbers and such are not correct. Who wants their all/portion of savings taken in one time tax or bail in? How I wish others were open for knowledge as to what to look for as the cookie crumbles. Knowledge and action will help reduce the impact of the reset. 

Btw, what do you think will happen to the price of Au & Ag once a bail in or one time tax happens in a G20 country? 

More stuff not right-

Government Agents "Directly involved" in Most High-Profile US Terror Plots

Nearly all of the highest-profile domestic terrorism plots in the United States since 9/11 featured the "direct involvement" of government agents or informants, a new report says.

Serious Fraud Office to Launch Criminal Probe into Forex Rigging

The Serious Fraud Office is poised to launch the first criminal investigation into alleged rigging of the £3 trillion-a-day foreign exchange markets at leading City banks.

ata's picture

Guess who?

If a kingdom is ruled by a king, an empire is ruled by an emperor and a dictatorship is ruled by a dictator, who rules a country?

crylandjr's picture


A Count?

erewenguy's picture

What the ????Just happened

What the ????

Just happened with gold and silver?

edit: CPI numbers out. Wow. Got a spike in response to persistent inflation. Imagine that. Carry on, stackers.

Barfly's picture

Margin Call out-takes

I have yet to see this movie, but I took the time to watch the choice cuts on youtube. Links below....

In commerce, there are some situations where it comes down to "us or them." Clearly the people portrayed in this film ***were*** ethical at one point. But, it came time to make a choice. They chose themselves over their clients and their partners and threw ethics out the window.

cashonly's picture

reality is only a perception to some

I just had a conversation with my neighbor who is in his mid 40's and he and his wife both are teachers.   He stated that they just received some pretty good raises this year and things really couldn't be better for them (new house, new in-ground pool).    I couldn't help but think how many folks don't analyze their situation, especially those who derive their incomes from the public.   I thought how disconnected he was from someone who is running a business and can feel the pulse of the economy real time.   My neighbor's mentality may also be "I'll worry about it when the time comes", as many do.    During this conversation I discussed how the stock market had become so disconnected from representing economic health and is dependent on the FED printing money out of thin air to grow.  I told him I didn't feel comfortable plowing 15% of my weekly earnings into something I really didn't trust.   Then he gave me a clue as to how maybe some of these folks think as to what is going on and where the future is headed.  I stated China was hoarding gold and so were other nations and this is very inconsistent with recent history.  I explained that Germany wanted its gold back that was stored at the FED.  I said to him if you interpret the interest that there is in gold by Nations then one could surmise the dollar as that world's reserve currency may be coming to and end, and if that happens then there would be global turmoil during the transition.   He stated he didn't see a global collapse coming because he BELIEVES China wouldn't want that as they are growing economically.  He THINKS  China will not do anything to harm the dollar (status quo) as they would be the one most hurt by it.  Therefore he ASSUMES that things, although shaky, will get better - AS THEY HAVE ALREADY!!

I am just amazed by the simple fact that after 6 years of "education" there is no critical thought process what so ever taking place in this man's head.  Maybe he just doesn't want to realize the fact that his lifestyle of extremely high pay, an amazing pension and benefits all while enjoying summers off may be in jeopardy.  We live in a state that carries the third largest debt load in the U.S. that has watched an incredible amount of middle class jobs evaporate.  Middle class jobs do provide a tax base? if they leave? tax base provides the pay to public workers?  Believing, thinking, and assuming is exactly what I run into with most "positive thinkers" who would categorize me into the "DOOMER" category.   I remember George Carlin, a great observer of life, stated something to the effect of "they don't want educated Americans, they want you smart enough just to do your job and that's it.  They DON'T WANT CRITICAL THINKERS!"

I have met many intellegent folks out there.   But unfortunately those smarts and intellegence seem to be "pinpoint focused" in just their area of expertise and they never venture out of their comfort zone.   Dr. Jerome once stated if you tried to discuss the FED, GOLD, the DOLLAR to him prior to 2008 he would have dismissed it.  But Dr. Jerome is proof that education alone does not make you a "critical thinker".   I'm glad he is here!!!!

4 oz's picture

Russia Adds 500,000 Ounces Of Gold~~~

Russia Adds 500,000 Ounces Of Gold 

Reserves In June 2014

According to the report--

-Based on the latest update of the Russian central bank, it appears that Russia has added another 500,000 ounces of physical gold to their reserves. Total Russian gold reserves now stand at 35,200,000 ounces, which equals 921.35 tonnes.-

Quick hit of the calculator shows 500,000 oz of REAL PHYZZ GOLD  @ say $1300 an oz is $650 Million  USD worth of gold coming off the market...with next to no change in spot price.... from only just that one source buying alone.....hmmmm.

(Not even asking 'Where was that Gold vaulted in say, May? Hmmmm.)

"It's becoming obvious to a lot of us that something is NOT RIGHT with the paper markets...." 

Might actually be an perception some NYC financial peeps might be able to make, not just us stoopid stackers out here among the muppets ....   

Spartacus Rex's picture

@ atarangi- NZ Is Now A Dictatorship, And Here's Your Leader...


Sound Money Minnow's picture

Reply to Barfly


Your posts are excellent. You nailed it on Margin Call. They knew what was right, but did what they felt was necessary in spite of what the ramifications were for others. It is a most interesting dilemma. 

Those on the TF Metals blog should watch this movie in its entirety. It really explains Wall Street very well. My favorite line in this movie is " you want Wall Street with its fingers on the scale for you".

This explains dollar hegemony. It basically explains in common language what is happening in the global world today. The US has an unfair advantage due to dollar hegemony. Wall Street benefits the most from this hegemony since they are the money changers. The same Wall Street can rationalize their manipulation, because they feel they are in fact patriotic, in that Americans benefit from this Ponzi scheme, which allows us to afford a higher standard of living.

This makes everyone okay with the US exporting inflation on one hand, while feeling we have to take care of the rest of the world due to guilt.

I wish the dollar collapsed, not because PM's would soar, but mostly because we would have a more fair monetary system.

Am I crazy to feel this way Barfly. My bet is most people want ethical and transparent monetary policy, which is why most of TF Metals thread wish for ethical monetary policy and an end to the FED.

Curious as to what others think. Regardless, check out the movie Margin Call, it will become one of your favorites.

Thorus's picture

The Waltons, coming to home near you

In pondering over where the course of our nation might lead, I was trying to figure out how we, as a country, would handle a permanently lower standard of living.

One of the possibilities that came to mind was more multi-generational housing.  Most of the folks here seem to old enough to remember the old TV show, The Waltons.  It was about a US family back in the Great Depression, and it had grandparents, parents, and a bunch of kids all living in one house.

Decreasing the national housing bill by having more people/generations/extended families living under one roof is one way to handle a large scale lower national income.

I just concluded the sale of a rental property that we'd had since the early 90's.  The house was paid off, and I intend to use the proceeds to build a house in the next couple years on some property out in the country that I own.  I'll design the house with a bedroom on the ground floor specifically with the idea that my parents might be moving in with us someday.  And once they've passed on, that bedroom will be available for the wife and I in our golden years if that turns out to be necessary.

Dr Jerome's article mentioned kids living at home longer - I figure it's just the beginning of what will happen if we don't have a drastic economic change of course as a nation.  (away from fascism/crony capitalism and towards truly free markets)

Best Regards,


Barfly's picture

SMM - What Rothschilde said

“The few who understand the system will either be so interested in its profits or be so dependent upon its favours that there will be no opposition from that class, while on the other hand, the great body of people, mentally incapable of comprehending the tremendous advantage that capital derives from the system, will bear its burdens without complaint, and perhaps without even suspecting that the system is inimical to their interests.” The Rothschild brothers of London writing to associates in New York, 1863.

Honest money would go a long way to solving many, many issues our  civilization faces. If a grandmother put a quarter in a jar for her grandchild's education, it would be a wonderful thing if that quarter had the same value the day she paid tuition with it as the day she set it aside. The problem with that is that there is a wealthy class of people who could find no benefit from savings of the masses if they couldn't inflate away the value of that savings. Thus, the world we live in. Permanent underclass, social welfare, vote buying on the part of politicians, horrible foreign policy, perpetual war. All due to dishonest money.

I want it to end, too. It may very well be my end when it does, as I may not survive it, nor my stack remain mine. As I've taken the proverbial journey of self discovery before, I know that if I do get through it, my character will not be as it is today. Too many hard choices change a man. But, in the end, when the world is different, I think it will be different in a much better way for future generations. One thing is for sure, and this will not change from today; I won't be trusting other people with the outcome of my fortunes.

Spartacus Rex's picture

@ Dr. J re: Maslow’s pyramid

I have to strongly disagree with your prediction, Dr. J

I have been around a long time, and from my own experiences, I have met those who were financially successful and yet never mastered pyramid level two even in the fat years, since family never mattered much to them. Not their spouses, not their children, and they simply couldn't care less about "respect of others". In fact Wall St. is filled with these types.

On the other hand, I have met many who through circumstances beyond their control, whether a long protracted battle of dementia of an elderly parent, or leukemia /cancer in their child, even compounded w/ a spouse losing their job and health coverage who could still maintain a mastery of "self actualization"

Anyhow just my observations and 2 cents, and reminding all that it is not wise to either think or speak in terms of absolutes, and/or one answer fits all.

Cheers, S. Rex

erewenguy's picture

Distorted markets?

All is well. It's only been 81 weeks since SPY has touched its 50 week moving average.

112 weeks since coming near its 100 week moving average.

Remember "average" indicates some values are higher, at least one value lower.

erewenguy's picture

Delta cancels flights to Israel

Delta cancels flights to Israel and DJT ramps a little higher. Yay!

erewenguy's picture

On the other hand

On the other hand, silver says screw this and attempts to regains it's role as the little engine that could.

Sound Money Minnow's picture

Reply to Barfly

You definitely get it Barfly. I pray folks like you end up on top. Regardless, I am somehow certain, either way you will sleep well at night.

I wish I could land in a community made up of Turdites. Even those I disagree with on occasion. What this country needs more than anything is intelligent dialog. For that I thank Dr. Jerome, Spartucus Rex, Barfly, Pattaya, and even Stephaine. Even when we disagree I am very appreciative for others insight and willingness to listen to intelligent thought. I have very limited resources, but I really think everyone mentioned above cares about the truth. For that I thank you all and many more i didn't mention.

Even a mental midget recognizes the truth when it is spoken. 

Sound Money Minnow's picture

Spartacu Rex

Right on brother. That is 100% correct. Self interest, independent of honor, integrity, dignity, is what is bringing us to the brink. Those that rise to the top now resemble a literal turd, more than a Turdite. I just wonder how you turn the table without going to actual war with those in political high office. Isn't that really the same tyranny we have fought against since our founding?

Knowing your military background, and my own, it is difficult to wage war against the same system that put a tear in my eye every time I heard the national anthem. Now I pause, and question what I am pledging allegiance to. I hope no one misunderstands me. I love the America we were before the Free Shit Army, and self interested oligarchs took over.

edvardd's picture

marauders and gangsters MH17

Order № 432

To all parts and subdivisions  of "Military Powers of Donetsk Folk Republic", to the separate fighters and commanders, being in an area shipwrecks of airplane «Boeing 777» from 18 to July, 21 and prepossessing the personal things, relating to this airplane, on to July, 20-00 23 of 2014y to hand over the found objects in the staff of Military Powers of DNR. Valuable objects (clock, ear-rings, coulombs, other decorations and wares from precious metals) are sent in Fund of defensive of DNR

Kommanduyushchiy by military powers of Donetsk Folk Republic  Igor Strelkov

treefrog's picture

obamacare takes a big hit

Lintltj5's picture

While working at my summer

While working at my summer job I have the opportunity to listen to audio books as I perform my tasks. Today I finished 30 Years A Slave: From Bondage To Freedom by Louis Hughes. Louis was a slave in Virginia, Tennessee, and Mississippi between 1832-1865. 

While in Alabama on business for his master at a salt works for several weeks, Hughes and one of the white officials of the salt works endeavor to sell plugs of scarce tobacco at $5 per plug. This was late 1864 early 1865 and inflation was rampant in the Confederacy, the script being almost worthless.

I found this statement regarding the situation intriguing:

"In two weeks we had taken in $1,600.00, and I was happy as I could be. Brooks was a fine fellow—a northerner by birth, and did just what he said he would. I received one-half of the money. Of course this was all rebel money, but I was sharp, and bought up all the silver I could find."

A slave with no education took more currency than he had ever owned up to that point and switched it from worthless Confederate script, not into Northern paper currency, but silver. All of it. 

The paper currency game always ends the same. If an uneducated slave can see where real monetary value is, how much more should we?

Spartacus Rex's picture

@ Sound Money

You know exactly how I feel, what I have experienced and seen, and how those who are dedicated to their community, volunteered countless hours, only to frustrated and made to feel as if chumps or suckers, while strangers walk in and take the reward unearned.

How it makes my blood boil, when a criminal ambushes and kills a dedicated public servant and the anarchist choir on the internet cheer, saying X really "Gave it to the Man", just as much as when wholly unprofessional badge 4 bux ignore their sworn oaths and thus paint a target on the backs of their brethren in blue.

There is but One Way to walk Our Republic back from the Abyss, and that is to simply convert the counterfeited fiat back into Lawful Money Silver Dimes, Quarters, Halves & Dollars, and do business locally with Citizens who value Honest Money, versus Corporations who prefer Fiat FRNS and the DEBT that such represents.

It is simply that the latter is far more convenient/easy.

It takes EFFORT to walk the walk, but like everything else, the more One does it, the easier it gets.

Cheers & Semper Fi, "Spartacu" Rex

Lamenting Laverne's picture

Rest in peace all you murdered people

​I had hope for the truth for a while there. To provide some vindication for your lives wasted by criminals. Talk about wolves guarding sheep. Sad. So incredibly sad. I have no words for it.

Dr Jerome's picture

Road Trip

While my daughter is hanging out in Memphis with childhood friends, I drove up to Ohio to help my friend work on his house. He has two adult sons who are struggling to establish any kind of work history here. Both have "social and personality issues" due to their mother having epilepsy and taking $800 worth of medication per month in the 90s to control it while she was pregnant. When the economy was "normal" both kids could fine employment because employers were willing to provide the extra supervision they need. But today? No. the jobs in this town go to friends and relatives of the management. His "dis-abled" sons hardly stand a chance except at getting jobs nobody else wants, like wearing a statue of liberty costume and standing outdoors in a harsh winter with a sign for the tax prep shop.

But my friend is 59 and recognized that his two boys are not ready to be on their own. so we are converting his upper story to a separate unit, separating out the electric and water so they have their own bills. He will be trying to teach them to live on their own, because he and his wife will not live forever, nor can they afford to feed them after he retires, if he isn't laid off first.

Life is getting tough already for many people.

Fortunately, my friend "gets it!" He just doesn't have the extra income now to stack.

Sound Money Minnow's picture

S Rex

Thanks S Rex. Feeling like a chump and a sucker for doing the right thing, is why I have real concern for even our military right now. While strangers walk in, and take the reward unearned, couldn't be said better.

As a believer in sound money, I also believe we have to return to something that is not easily manipulated. Paper ETF's is a killer to this, as is a dollar hegemony backed by nothing.

A country backed by virtual currency, not allowing a way out of poverty, due to dollar hegemony, means many in the rest of the world may be on to something. 

How principled are we as a country, if we allow this to continue. Our military becomes nothing more than a mercenary force for the oligarchs. That is why I am so conflicted right now. I love America, but can see why there is a hatred to what we represent right now.

That is what I fight against.

I can no longer believe anything that comes from Washington. Whether it come from Jay Carney, or the most recent empty suit, it is most often polar opposite to my sense of moral righteousness. This has me rooting against my own country. Which makes me sad.

Spartacus Rex's picture

@ Sound Money Minnow

BTW, re: "The Free Sh*t Army"

We shouldn't overlook the Free Sh*t NAVY either!



Cheers & Semper Fi, S. Rex

Dagney Taggart's picture

It's John Galt Line Day!!

July 22nd: the maiden run of the John Galt Line.

Will be back soon. Been doing battle with vultures ............... while supposed to be on holiday!

Margin Call free (courtesy of my in-house geek):

Spartacus Rex's picture

BTW; Marines Have Bad Days Too.

MgySgt: Weapons Check completed? 

Snuffy Snow Job: Yes Sir, Master Guns! 

MgySgt: Commence firing.   

Oh, oh, Snuffy gets busted!

MgySgt: O.K. THAT's coming out of your paycheck!!


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