Bubbles, Peaks & Valleys

Sun, Oct 27, 2013 - 1:11pm

Here is a recent interview with Alan Greenspan: (you only need to hear up to 1:21)


First Mr Greenspan said there was no bubble, but now he is selling his book he says he just "didn't get it". However, he did get Brooksley Born, who saw problems, fired. I advise readers to never forget that the qualifications which got this guy into his job are the same qualifications being used for selection of his successors.

The case for physical metal investing at the moment relies upon the thesis that there is a financial bubble which when it ends will present those in charge with two choices.

  1. Deflate the bubble: They can allow prices to fall to levels which are appropriate to a market in which credit is hard to get. (And the price of houses without mortgages is a lot lower than what it is when loans are available to their unfortunate buyers.) This option favours those on fixed incomes as prices fall and their purchasing power increases. But it’s not so pleasant for those who borrowed and leveraged up to buy assets, businesses, stocks, etc. You know .... those in charge.
  2. Inflate the bubble: They can inflate the currency, increasing money supply until the debts are reduced in real terms, and those with anything left can pay their debts off. For “anything left” please consider the phrase “income producing assets” as the prime choice of those in charge. This option screws those on fixed or negotiated incomes which will remain lower than the new higher prices applying to everything worthwhile in life, like food, etc.
  3. Both the above. (Stagflation): They can do a mix of the above two options. See Ray Dalio's "A Beautiful Deleveraging" and similar papers. This involves inflating the money supply, but restricting availability of that money so the consuming masses cant access it. This keeps the good stuff within the upper classes which I am sure many of them appreciate gladly. BUT a concession is also made to let a certain of the goodness leak out into “the economy” (like there are not several separately managed economies comprising the economy). This leakage will be used to finance the loans and credit of the next suckers, ooops consumers .... who want to buy a house off somebody like Blackrock, JPM, Citibank or their fellows who happen to presently have a rather large inventory of same, which they acquired for peanuts. Option 3 has the advantage that it moves cash into the wealth funds and banks, and moves debt where it belongs - onto the backs of the little folks.

We know well who the decision makers are, and which part of society they support, and so we can infer the motivation of those in charge. This requires we apply a total disregard for all announced policy statements and press releases, and we focus on who and what they are instead.


Changing the subject slightly just for a moment, the investor has always had to make a choice to do his job well. The trick is to buy value, and also to sell overvaluation. It is necessary to either have deep pockets to withstand adverse market moves before the investment comes good, or to have stops to exit the position with the plan of re-entering for a second or third or more attempt to get it right.

So no matter what the investment vehicle we always come up against this decision:

  • Is this a periodic swing? If so, and it is caused by cyclical forces, then it will abate after a while. So it should be traded for a counter swing as it moves back to the mean, or middle of it’s trading channel/range.
  • Is this a secular up trend? If so, the new high will be followed not by a swing back, but instead by a new move to an even higher high, the correct thing is to stand back, or enter for a continuation of trend.
  • Is this a bubble? If it is, it has no real economic underlying support, just a perceived support. It may behave as a secular trend, but after some point the emperor will be revealed as having no clothes, and the bubble bursts, and price will collapse suddenly.
  • Is this a secular down trend? If so, the new high will be followed by a fall, and then by a new rally which will fail to make a higher high, and keep on declining while every so often mounting one more suck-in-the-bulls rally which fails and so on. The correct thing is to stand back, or short this downwards trend.
  • Oh it all seems so simple when written down, doesn’t it? If only real life in the markets were anything like so easy! But it isn’t.

    The reality is we can never tell for sure what scale either of the last swing was, or the present swing is. Is this a swing within a swing which larger swing is going in the other direction? Or is a swing within a swing within a swing and all is opposite? We will always have a problem of making good judgment calls with regard to perspective and scale in our decisions.

    If we look for information there is a plethora of conflicting information available to us which may be used to build a case for any of the 4 basic scenarios outlined above. Indeed, our internal bias will actually make us more open and accepting of the information which conforms to out bias, and we enter into an imaginary world where the facts seem to confirm and strengthen our incorrect beliefs!

    ....and .... that’s all before making allowances for the false information and misinformation spewed out in vast quantity from our investment colleagues on the other side!

    So when your problem is a limitation of good information you have two choices: you can play the probabilities based upon the information you have, using stops to cut the bad ones off and give room for multiple attempts.

    Or .... you could look at the motivation of your colleagues and infer what they will do in the circumstances. Then you add this extra item of information to your existing information base, and make a decision based on the two resources together.

    Taking this principle to the precious metal markets in particular I usually ask myself “What are the other guys doing?”

    It bothers me that there is public evidence and news of Central Bank buying of gold. This bothers me a lot, because I would expect the CBs to make that announcement on the day that they end their buying!

    There is a possibility that the CBs have decided to go for brand new digital fiat fictional money, and they will have a toll, a gatekeeper to take my money when I wish to convert from PM back to the currency of the day/place I happen to be. I take comfort from the likelihood that other people will always want to avoid the same new currency, and will be happy to deal with me if and when that time comes.

    I do not like to see that some people say that precious metals will lose their monetary value, and then decline to their industrial, and lower value. This would hurt me. But I look at those individuals and their past history of success. They seem to a large extent to be the ones who never saw the sh!7fest coming and even cheered on the the organizers. Hi Mr Greenspan, Krugman, et al! The track record of these people tells me they serve other masters than the brochure says. I want to see what their masters do. Lets see, those entities are selling property bought at the lows right now, and going into the captive lower class property rental market, like trailer parks. They may be quietly buying stocks in certain EU countries which are already “pre-declined” based on what my charts show. That counts as inflation protective assets in my book.

    I want to consider the overvaluation and undervaluation of the various markets from a possibility of a prospective exponential move up or down. We hear talk about bubbles ready to pop. If any market is in a bubble, there should be herding behaviour visible when one looks for it. Ahem, can anyone connect Bernanke and low interest rates, and mention US stocks in the same sentence? This has been Bernanke's stated policy - to lower returns on bonds and herd investors into stocks! So that’s a bubble. Bonds first, US stocks second, spillover from those into related global markets third. Anyone want to buy some JGBs? It might be ready to pop or it may still take more time.

    Another problem that bothers me is the lack of growth globally. This is a big worry. If there is no growth where will the money come from to raise the price of the inflation (stagflation) assets? I hope the uber-wealthy have enough to make up the difference if the working class has been gutted. Oh wait! The top 0.1% has three quarters of everything. I guess that’s covered, so long as I buy what they want and make it so they can’t steal it from me with their laws and all!

    So these are some of the things which bother me, and I wonder if I am weighing them up correctly with an appropriate amount of due importance allocated to each. I’m glad I use charts as the prime source of information.

    There is one other little thing.

    The financial risks. Lets add those up. Sovereign risk. Derivative risk. Risk of nationalization, and punitive taxation. Bank risk. Fraud risk. Risk from accounting standards which are to put it kindly unconventional or when viewed under the law applied to everyone else overtly fraudulent. And risk in corporations which have borrowed up to their eyeballs to buy back stocks which are themselves at highs caused by money printing by the central banks. Risks like that will support gold while they are a source of worry.

    I think that can be summed up as debt and hidden debt, and unwillingness to apply the laws of the land to those entities with the debts. It is likely that those parties are the colleagues I need to pay attention to most of all.

    So their debt will govern policy. What did Bernanke say “the Fed policy will assume a reactive nature”. Yes. They will react to events in that case. Yellen will do the same too. Events are in control. Which is to say of course - if it is rephrased differently - that things are out of control!

    The debt is therefore now running policy. This simplifies the possible future choices somewhat.

    De facto policy is therefore:

  • default and inflation and deflation (stagflation) against the weak,
  • inflation against the more powerful,
  • appeasement & accommodation with the very powerful who have standing armies and can cause trouble of the life threatening sort to those-in-charge; which might include allowing and helping those entities to acquire their inflation hedge at good prices
  • denial of all the above amid a huge cloud of misinformation
  • Argentus Maximus


    The author posts daily commentary on the gold and silver markets in the TFMR forum: The Setup For The Big Trade. More information about the author can be found here: RhythmNPrice.

    About the Author


    Ferd Torgerson
    Oct 27, 2013 - 1:12pm


    Should never have done this but the temptation was too great.

    Oct 27, 2013 - 1:14pm


    Me too! (Sorry everyone)

    Mr. Fix
    Oct 27, 2013 - 1:18pm


    Oct 27, 2013 - 1:27pm

    Gold may cross Rs 33,000 level on supply squeeze

    NEW DELHI: Gold prices may cross the Rs 33,000 level on 'Dhanteras', a day considered auspicious for buying the precious metal, on account of rising demand amid tight supplies, experts and bullion traders say. Despite the expected price rise, the festive demand for jewellery on 'Dhanteras' on November 1 is expected to remain stable, but sale of coins and bars would see a decline by almost 50 per cent from the year-ago period, they estimated. The all-time record for gold prices is Rs 34,500 per 10 grams in the New Delhi market. The precious metal hit this level on August 28 this year. Currently, gold prices are ruling at Rs 32,570 in the national capital and around Rs 31,700 in Mumbai, trade data showed. "There is bearishness in gold prices at present. But some run up in prices are expected, say an increase of Rs 300-1,000 per 10 grams on the Dhanteras day, due to higher premiums with squeeze in supplies," city-based brokerage firm SMC Comtrade Chairman and Managing Director D K Aggarwal told PTI. Premium on gold could further increase from the existing level of Rs 1500-2000 per ten grams if demand-supply gap widens on the festival day, he said. However, the year-on-year jump in domestic gold prices on Dhanteras this year would be very small from over last year's period because of weak global factors, he added. As per the trade data, gold prices rose by 20 per cent to Rs 32,485 per 10 grams on Dhanteras day in 2012. Rates jumped by 37 per cent to Rs 27,130 per 10 grams on the festival day in 2011. In 2010, gold prices on Dhanteras day stood at Rs 19,740 per 10 grams. In the domestic market, gold is being sold at a high premium due to supply crunch caused by government measures to restrict the import of precious metal in an effort to cut current account deficit. All India Gems and Jewellery Trade Federation Chairman Haresh Soni said: "Impact of high gold premiums will be there on prices on the Dhanteras day because supplies have dried up in the absence of imports in the last three months due to government curbs." Jewellers are depending on recycled gold to meet the coming festive and wedding demand. They are also geared with innovative schemes to attract customers, he added. All India Gems and Jewellery Trade Federation Chairman Soni said jewellery demand would remain stable but coins and bullion sale is likely to drop by almost 50 per cent on Dhanteras this year from the year-ago period. Echoing his views, Bombay Bullion Association former president Suresh Hundia said: "Government has banned import of bars and coins. So, there is no supply to meet the demand for such items on the festival day." https://economictimes.indiatimes.com/markets/commodities/dhanteras-gold-...

    Oct 27, 2013 - 1:29pm

    Thanks A.M.

    Another great read!!!

    Oct 27, 2013 - 1:30pm

    Tamil Nadu invites bid for supply of one lakh gold coins

    CHENNAI: It's a gold rush of a different kind. Tamil Nadu government has invited bid for supply of one lakh gold coins embossed with the state emblem to be disbursed under its five marriage assistance schemes. Tamil Nadu is perhaps the only state to give away free gold to economically poor women as part of marriage assistance schemes implemented by the Social Welfare and Nutritious Meal Programme Department The Director of Social Welfare has issued tender recently, seeking prospective dealers to supply one lakh gold coins weighing four gm (each 22 carat) for 32 districts in the state. Going by the tender, Kanyakumari, Madurai and Tiruchirappalli districts top the allocation at 5000 gold coins each, followed by Salem (4500) and Villupuram (4200). The tender has not disclosed the sum involved in this multi-crore transaction but has asked the bidders to deposit a refundable Earnest Money Deposit or ERD of Rs 1.20 crore, giving ample indications of the sum involved in this massive programme. The government has laid down a series of stipulations including mandating the financial stability of the bidders, pegging them in the Rs 100-crore club. "The average annual turnover of the bidder/manufacturer/ Dealer shall be not less than Rs 100 crore per annum in the last successive two financial years," it stipulated, adding, the supplier should have the capacity to supply at least 25,000 coins with BIS hallmark standards. Government has made it clear that it will carry out random checks of the gold coins to ascertain purity and warned of action in case of supply of sub-standard ones. "Coins may be selected at random and subjected to testing for their purity and weight in any approved testing laboratory, if the Director of Social Welfare deems it necessary..." the tender document said. "..In case the quality is found to be deviating from the specifications, the supplier shall take back and replace the coins fulfilling the specifications at his cost or buy back the gold at a price paid for the gold or at the open market price (including the overhead charges) at the time of buy back whichever is higher," it said. The 20 mm in diameter coins should be embossed with the state emblem (of the Srivilluputhur Temple tower), and on the other side, technical specifications like purity, weight and hall marking details must be mentioned, besides an assigned secret code. Sealed bids will be received till November 11 this year and opened the next day at the Directorate office here, it said. https://economictimes.indiatimes.com/news/news-by-industry/cons-products...

    Bongo Jim
    Oct 27, 2013 - 1:33pm

    Oh Geez


    edit: AG didn't "get it," but he may still in the end.

    So what we have to do is see how the Fed reacts and react to that?

    Bongo Jim
    Oct 27, 2013 - 1:49pm

    @Bongo Jim: >> So what we

    @Bongo Jim:

    >> So what we have to do is see how the Fed reacts and react to that? <<

    Not necessary to wait. It's out of their hands already. They are chasing the debt and must do as they do.

    Consider: The far east are buying gold to hedge against dollar inflation and devaluation. The raids to drop prices in the precious metals help who exactly? That would be those buying gold. But the western countries already had their gold, and therefore this is to appease the Chinese, and other nation governments, who can cause damage if hurt by the falling dollar. A deal was done.

    All future Fed actions will (while varying in the individual case) be in like form. The wealth is moving east to protect the east from hurt due to dollar collapse. This appeasement and aiding China to purchase gold cheaply by manipulating it's price lower avoids a world war as a consequence of that dollar collapse.

    Oct 27, 2013 - 2:03pm

    That's the view for all to see...

    ...that have their eye wide open that is!!!

    argentus maximus wrote:

    "Not necessary to wait. It's out of their hands already. They are chasing the debt and must do as they do.

    Consider: The far east are buying gold to hedge against dollar inflation and devaluation. The raids to drop prices in the precious metals help who exactly? That would be those buying gold. But the western countries already had their gold, and therefore this is to appease the Chinese, and other nation governments, who can cause damage if hurt by the falling dollar. A deal was done.

    All future Fed actions will (while varying in the individual case) be in like form. The wealth is moving east to protect the east from hurt due to dollar collapse. This appeasement and aiding China to purchase gold cheaply by manipulating it's price lower avoids a world war as a consequence of that dollar collapse." (argentus maximus)

    So true! And yet most sit back and believe all that is said and repeated by the MSM!

    Bongo Jim
    Oct 27, 2013 - 2:17pm

    Out of their hands

    Thanks for the reply AM, good read.

    Oct 27, 2013 - 2:17pm

    the Christian-Maguire marathon

    This Got Gold Report link dated Sat Oct 26, 2013 contains what I call the Christian-Maguire marathon.

    The YouTube video in this link is: "GATA vs. CPM Group - Watch the Great Silver Manipulation Debate - Uploaded October 25, 2011".

    It really sets the stage for what is currently unfolding in Jeff Christian's latest installment of thorough journalism. Perhaps Mr Christian's own CV is now ready for submission to CNN enabling him to become a regular correspondent there.

    CPM’s Christian Allegations about Maguire Not Really New

    Saturday, October 26, 2013


    Don’t miss this:

    “That omission opened up the window for Christian to dive into the world of amateur private investigator by interviewing Maguire’s ex-wife”.

    Did you catch this at the bottom of that last link?

    “Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication”.

    Thanks for clearing that up Daniela.


    And last but certainly not least, is GATA:

    GATA's Chris Powell responds at this link. Saturday, October 26, 2013 https://www.gata.org/node/13169

    "So Maguire's existence is no longer challenged. Maybe that's progress," wrote Powell on the GATA website. "While advocates of free and transparent markets in the monetary metals may be grateful for Christian's exposure of his own side in the gold and silver war, some may get a bit too agitated about him, as he is but a small cog in the machinery of central banking and bullion banking who is just trying to make up for the damage done to his side by a couple of moments of candor. The war has gotten far too big for Christian to make much difference in it now. The central banks and bullion banks can't show themselves without giving themselves away. Indeed, they already have given themselves away this year with their increasingly desperate paper bombings of the markets.

    Christian is all they have left, and all he has left is to search out ex-wives," Powell said.

    The full GATA response is at the link above.


    Mr. Fix
    Oct 27, 2013 - 2:19pm

    @ argentus maximus:

    Your analysis is impeccable, particularly as to the rationale for exporting our gold to China. I think the American government lost its ability to act in its own best interests a long time ago, and very well may be trying to avert World War III, but I think it's more insidious than that.

    The dollar will be printed to oblivion, there are no other realistic options, but American sovereignty will wind up in the hands of our traditional enemies, the current administration is making sure that there will be absolutely nothing left to bargain with.

    I am curious to know whether you think the demise of the dollar will be a long, drawnout process,

    or if it will unfold in a very quick “hyperinflationary crash”?

    I think the “hyperinflationary crash” is the scenario that they are preparing for.

    I read somewhere this week, that if you were to add up every single asset in the United States, all of the government, and combined with all of the personal wealth in the entire country, it is considerably less than the $17 trillion that we owe .

    At this point, what the heck are we using for collateral?

    Oct 27, 2013 - 2:28pm


    "This appeasement and aiding China to purchase gold cheaply by manipulating it's price lower avoids a world war as a consequence of that dollar collapse."

    I'm not sure about that; nobody is going to initiate a war with the USA. If we broaden the definition of starting a war, then we could argue that dumping the dollar is to throw that very gauntlet, and defacto to start that war. War would actually seem to better suit the USA than the rest, since militarily she is strongest, and war is part of the US economic bankster model.

    Like you say, 'This bothers me a lot,' because if the USA does not need to expend physical metal in order to remain top dog, then why is she doing it?

    I suppose that one theory, is that they and their UK franchise are expending everybody else's (e.g. Germany's), and not their own.

    My favoured theory, is that they seek to ensure that gold can never be supported for adoption again as a monetary metal by western citizens, as we will simply have too little. Refer to Sun Tzu, and 'always burn your bridges.' Whether this stance can outlast a world that does believe in gold, would be an interesting one to watch.

    So if we can agree that TPTB want to finally, conclusively and emphatically kill gold as a monetary rival to their fiat constructs, then they will need the support and approval of their citizens; and the best way of achieving that as a nation, is to have no gold.

    Oct 27, 2013 - 2:48pm

    On wars: we are near the end

    On wars: we are near the end of a war against the property owning middle and lower classes. The law and structures and institutions of money and finance were used to prosecute and win that war for the oligarchy.

    Basically the US is not historically known for starting wars against nations who are capable of delivering real damage back. They prefer to use (successfully) the safer ex-colonial tactic of arming opposing factions in those cases and then watch the disintegration take place. So wars can be in many forms, whether it be a proxy war with bombs and bullets in a third country (a favourite during the 20th century) or a currency war to destabilize (as used by UK against China, US against Iran) or even by selling in cheap drugs to breakdown society (as also used by the UK, and even insanely by the US against itself during the contra affair).

    I think that the economic vulnerability of the US, UK, and EU is well understood by their own respective leaders and intelligence communities. They don't have a way out but through pain, and I believe are sorting things so that the pain is divided between those with the least say in their own lands, and people outside their borders foolishly holding their currency. A great curiosity in this regard is what will happen to the value of the overseas US dollar notes.

    I agree with you about the possibility of gold having value in the east, and less demand in the west due to lack of knowledge and accessibility. Isn't this already beginning? I refer to the premium on the gold price in Asia compared to the west. This may be a shipping delay vs demand vs arbitrage reward thing, and to a certain extent it surely is. But it can also be the beginning of a new paradigm, where gold has a greater value in the places where people resist digital currency more, or mistrust it.

    Will we have to somehow get our gold to Asia to obtain the best exit price? I hope not, but that's a hope!

    Mr. Fix
    Oct 27, 2013 - 2:57pm

    @Mr Fix: They know too much

    @Mr Fix:

    They know too much about hyperinflation to fall for it. They are more sophisticated, and are aware of the dangers. Now if things get away from them it's possible, especially if Asia were to bring the dollars back too fast. But I'll bet a deal was done to stabilize the rate at which Chinese proxies buy up US companies and properties with overseas US currency which China is returning to sender.

    But the US/UK/EU aim as I consider it to be is to do a slow burn of stagflation for about 15 years, with the inflation running constantly about 6%-10%, and brief surges of 9%- 12%, and the switching between the two to be done without warning to kill off protective strategems, like for instance the little people buying precious metals! There is a clear shift to taxing consumption which means taxing property water energy and food, the things we need to live on, and this is I think a salvo fired at the black economy. It at the same time favours the oligarchy who consume less as a percentage of asset appreciation "income".

    Bongo Jim
    Oct 27, 2013 - 3:03pm

    Sorry OT

    Sorry AM, don't mean to hijack your thread, but this is coming up tonight and might be something to take a look at. Even though I don't watch much if any T.V., others in the house do and I hear what they're watching (Football at the moment). I posted this at the end of a previous thread.

    Tonight on the National Geographic channel is a program titled: "American Blackout."


    From the looks of the preview, it shows what happens when the lights go out. Things of this type have also been shown in the last year or two with shows/movies such as Hunger Games, Jericho, (ramping up this year with) Under the Dome, Preppers, and Revolution (where the "Patriots" are the bad guys).

    Folks, it is my contention that America is being (and has been) conditioned (in many different ways) for a collapse through these shows. From what I've gathered, the patriot/prepper in some of these programs is being portrayed as the enemy/bad guy/nut job - much like the DHS has designated Veterans, Tea Partiers, "patriot" groups, etc. as possible terrorists.

    If you watch this, as I am going to try and get everyone at home to agree to do, try to do so with an open mind towards this possibility.

    Oct 27, 2013 - 3:25pm

    one last Andy Maguire-related clip

    I too do apologize but this AM issue will be resolved this week. Will Bill Murphy be collecting $5000 this week?

    Go to 11:30 mins & listen here (from Oct 2011):

    The Great Silver Debate - Manipulation: Fact or Fiction? - GATA vs. CPM Group
    Mr. Fix
    Oct 27, 2013 - 3:37pm

    So much food for thought here:

    Personally, I think that our attempts at appeasement are for appearances sake, and for all will practical purposes, we have already lost the war to China. It is common knowledge here that I ascribe the lowest possible motives to our current president, (or at least his puppet masters), and leaving the United States in the worst possible position both economically and militarily is a prerequisite to things really heating up.

    Pres. Obama has already proven said that he is not averse to getting us into a war, but I think if we were to actually wind up in a hot war against an enemy who could defeat us, Obama would simply surrender.

    (It is also just as probable that he would switch sides, and actively aid and abet the enemy).

    It could also be argued that he already has, and all that we are waiting for is for the invasion to become public knowledge.

    Little Timmy the treasurer already admitted that United States policy was to “crash the dollar”.

    I believe him, and although our government is well aware of what a hyperinflationary collapse of the dollar is, and could avoid it if it wished to, I still believe that that is exactly what their intent is.

    Bongo Jim,

    I will definitely be watching “American Blackout” tonight,

    I have not yet missed an episode of “Revolution”, but this looks even better!

    As far as the “mind control” or propaganda value of tonight's show , you are right, it will be full of it,

    But there is one other major part of the puzzle, it will instill a pre-determined emotional reaction in the populace of sheer terror when the lights go out.

    In other words, they are looking for maximum impact in the next power outage, and a terrified populace is exactly what they are looking to maximize.

    They are not just painting predators and patriots in a bad light, they are undermining their best efforts, and will bring to the forefront of everyone's thoughts who they know that might be prepared.

    This of course will destroy most of the best prepared, since when the hungry zombies finally start roaming the land looking for food, they will start with anyone who they think has some.

    These guys are really diabolical.

    Oct 27, 2013 - 4:11pm

    @ Mr Fix re China

    The only country in the world that has a global domination potential, and ambition, is the USA (unless one subscribes to the view that Israel controls the US). Nor is there any longer any underlying ideological schism in the world, and that is why the war on terror had to be dreamt up.

    China and Russia likely seek no more than to rid themselves of US interference, and threatening US presence, in their own spheres of influence, and over sea lanes and trade partners, and to achieve this outcome without a war. They are probably pretty fearful of the USA, even though they are by no means helpless themselves.

    The only country that can project its power across the globe is the USA. If she loses this power, she doesn't suddenly become vulnerable to attack, but rather becomes instead, just a regional power, but always secure from external attack.

    I wouldn't worry too much about some Chinese intention to hasten the implosion of the USA; the possibility of US implosion is largely due to home grown corruption and dysfunction.

    All in my humble opinion of course.

    EDIT: after writing this, I realised that this is essentially Ron Paul's thesis too, is it not? There is no need for the USA to have global dominance, in order to thrive, and be secure.

    Oct 27, 2013 - 4:16pm

    @ argentus maximus: They know too much

    You assume that Western governments are guided by superior intellects, capable of engineering outcomes. Wouldn't that be nice, but in fact the very same decision-makers who were blind-sided by the housing bubble, have now boxed themselves into unrepayable debt, progressive economic decline, unsustainable deficits, uncontrollable money-printing, and investment markets disconnected from underlying supply and demand guidance. Let's try to be optimistic, but also well-prepared for the more-or-less sudden collapse of one or more major currencies.

    Mr. Fix
    Oct 27, 2013 - 4:32pm

    @ Byzantium, Prelude to invasion:

    There is a relatively famous quote from World War II spoken by a Japanese admiral as to why it would be foolish to invade the United States. “There would be a gun pointed at us from behind every blade of grass”.

    That is by far and away the best defense against invasion.

    Now, why is Barack Obama obsessed with eliminating private gun ownership?

    I would contend that it is a prelude to invasion, although others would effectively argue that he simply wants to eliminate any possibility of the people retaining control of their own country.

    In the end, it is a is distinction without a difference.

    Either way we wind up with a dictator, who has absolutely no regard for the American populace, or the American Constitution.

    Oct 27, 2013 - 5:32pm

    How well does inflation work

    How well does inflation work as a government debt elimination tactic?

    Take an inflation rate of 8% per annum. That's 4% each 6 months. So after 6 months 100% debt is reduced by 4% to 96% debt in present value.

    After 12 months the 96% reduces another 4% and is then at 92.16 of original value. (debt x .96 ^2)

    Let's say they run stagflation (or inflation) for 12 years at 8% real inflation, which is 24 x 1/2 years.

    .96 ^ 24 = ..375 x the original debt. In other words compounded inflation has removed 63.5% of the debt.

    Now if we work on 200 Trillion dollars of debt, that means 63.5% of that goes away

    so out of $200,000,000,000,000 debt an amount of $127,000,000,000,000 disappears by inflation and the remaining debt in present terms is $75,000,000,000,000.

    If they do 8% inflation for 15 years the debt reduction is 71% of the amount owed. At the same time an item of food that used to cost $ 2 inflates into costing $6.49.

    If it's inflation people get pay raises to cope, if it's stagflation income is capped by law or maybe increased taxation taking the raises.

    I don't know how much people can take. The IMF would have many case studies about pain thresholds of populations.

    That's the plan - whether it works or not.

    Mr. Fix
    Oct 27, 2013 - 5:34pm

    I wonder if it was ever supposed to work? I doubt it.

    Guest Post: The Plan Is Not Working

    Submitted by Tyler Durden on 10/27/2013 - 16:13

    You didn’t want to be the guy chosen to tell Stalin that the wheat crop failed or the production quotas on trucks and cars were not met. Why? Because despots always blame people, not systems. In the same way, you don’t want to be the guy chosen to tell Obama that his health care websites are a disaster. But that’s what they are, and he’s managed to blame everyone but himself. The problem is that government is not the best means to do anything well. The problem is the absence of two crucial things: the knowledge to assemble the resources properly and the means to make the economic assessment of the value of competitive resources.

    Oct 27, 2013 - 5:52pm

    Crowdfunding: London Real with Max Keiser and...

    Crowdfunding: Interview by London Real and Max Keiser with Simon Dixon from Bank To The Future UK https://www.youtube.com/watch?v=iMgU-_s9DNY&feature=youtu.be&utm_source=...

    Oct 27, 2013 - 6:51pm

    OT, but of concern ...

    On a previous thread (I've lost track and the thread is probably dead or dying), there was some discussion and concern about the impending reduction in food stamp monthly $ allocations. So much concern, apparently, that DHS has spent on the order of $80 million preparing for some excitement as soon as Nov 1.

    My question: I have not seen the background info regarding this monthly "dole" reduction. Is this a reduction that is part of a planned, ongoing, legislated reduction in entitlement spending? Is this something Barry just pulled out his butt in an effort to annoy 50 million of his supporters? Is this just an experiment - poke the beast with a stick and see how pissed off it gets? Color me confused and, apparently, uninformed.

    wax off

    Mr. Fix
    Oct 27, 2013 - 7:31pm

    @ waxybilldupp

    Off the top of my head, the reduction in the food stamps benefits are the result of an old Obama stimulus package, I think it was called “The Community Reinvestment Act”, which expires at the end of this month.

    So a few years ago, the welfare crowd, who received food stamps got a raise in benefits, but it was not permanently legislated, it was a temporary boost, supposedly “to get the economy back on its feet”.

    Since that legislation has expired, the benefits will be cut back to their previous level.

    As far as annoying 5o million of his supporters, I'm sure Barry has considerably more devious tricks up his sleeve,

    but I suspect that DHS is planning for events far bigger than the ones that they are stating.

    Oct 27, 2013 - 7:38pm

    States Move Ahead With Food Stamp Cuts

    A girl pays for her mother's groceries using Electronic Benefits Transfer (EBT) tokens, more commonly known as food stamps, at a market in New York City. (Getty Images)

    Some states are already embracing deep cuts to the food stamp program similar to those passed by House Republicans in Washington, ending the food subsidy for tens of thousands of low-income Americans regardless of what Congress does.

    Spurred by the ballooning cost of the Supplemental Nutrition Assistance Program, the GOP-dominated House voted Thursday 217-210 to cut $39 billion in the food assistance program over 10 years. Among the changes: Ending waivers for states that during the recession allowed as many as 4 million people to collect food stamps who otherwise would not have qualified.

    The fate of the congressional legislation is uncertain. The Senate approved much smaller reductions, and the White House threatened to veto any large cuts to food stamps.

    But in six states—Delaware, Kansas, New Hampshire, Utah, Vermont and Wyoming—similar reductions are already in place, or soon will be. Two more states will join them once their waivers expire, potentially taking away food stamps from tens of thousands of current recipients.

    Republicans blame the program’s ever-increasing rolls and cost on lax enrollment criteria rather than real need. Since before the recession, the price tag for food stamps has more than doubled, topping $82.5 billion in fiscal year 2013. Enrollment hit record highs, with 15 percent of Americans now collecting benefits. Many states have more than 20 percent of their population enrolled (see chart).

    Costs have continued to spike as well, as Washington pays for the benefits and states administer them. A new Congressional Research Service report released this month showed fiscal year 2012 was the 12th year in a row a new historical high was reached for federal food and nutrition programs, the vast majority of which is food stamps. Since fiscal year 2000, the report said, spending on federal food assistance has more than tripled.

    Put in a different context, the U.S. Census Bureau said food stamps lifted 4 million Americans out of poverty last year if the benefits were counted as income.

    Top 10 States with Highest Share of Population on Food Stamps
    1. D.C., 24%
    2. Mississippi, 22.5%
    3. New Mexico, 21.6%
    4. Tennessee, 21.3%
    5. Oregon, 21.3%
    6. Kentucky, 20.2%
    7. Louisiana, 20.2%
    8. Georgia, 20.1%
    9. Alabama, 19.1%
    10. Florida, 19%
    Source: June 2013 data, USDA

    What States Are Doing

    Kansas is the latest to embrace the cuts, ending a federal waiver on Oct. 1 that allows unemployed, non-elderly and able-bodied adults without children to remain on food stamps despite failing to meet certain work requirements. The change is expected to affect 20,000 Kansans. Wisconsin will let its waiver expire in July 2014, and Oklahoma will also let its waiver at the end of this month; 71,000 and 47,000 people, respectively, received benefits through the waiver in 2011, the latest year for which data is available.

    The waivers, part of the 1996 welfare reform, were designed to give states flexibility in times of high unemployment. It suspends a requirement that limits benefits to three months unless recipients work 20 hours a week or spend a certain amount of time on work-related activities, such as job training.

    Until this year, 45 states took advantage of the waiver during the recession, and two that did not – Vermont and New Hampshire – weren’t eligible for statewide coverage, which is based on unemployment and job market data. Delaware and Utah chose not to request a waiver, while Wyoming wasn’t eligible.

    Many Republican-led states are trimming safety nets as the recession wanes. In addition, food stamp benefits for all recipients are set to fall Nov. 1 when federal stimulus money ends. Some states have changed welfare enrollment criteria. Others enacted unprecedented cuts in unemployment insurance, as Stateline

    previously reported.

    Against that backdrop, supporters of the cuts see the work requirement as a prime opportunity to trim the rolls. Those possibly affected by ending the waivers comprise less than 5 percent of Americans collecting food stamps.

    Republicans see the improving economy as a sign enrollment should be dropping anyway, with cuts to benefits a good way to push some people back into the labor market. Kansas made its case clear, calling the policy “an effort to encourage employment over welfare dependency.”

    “Employment is the most effective way to escape poverty,” Kansas Department of Children and Families Secretary Phyllis Gilmore said in a statement announcing the move.

    Those who support ending the waivers also promise robust job placement and training programs to help those affected meet work requirements, which could allow them to keep their benefits. Wisconsin, for example, is spending an additional $33 million on those efforts as its waiver expires.

    Are Cuts Premature?

    Others say the cuts are premature in the face of a weak job market— 11 states and the District of Columbia have unemployment rates measurably higher than the national 7.3 percent jobless rate. The waivers are designed to end once employment improves. Ending them sooner could strip flexibility to deal with lingering joblessness, which is expected to remain above normal for years.

    “It’s hard to imagine any state would want to lose the flexibility to use waivers to tailor the policy to meet local conditions,” said Dottie Rosenbaum, a senior policy analyst at the Center on Budget and Policy Priorities, a left-leaning think tank. Rosenbaum added that the work-requirement policy can have “harsh effects on very poor individuals.”

    Underlying the debate is the question of whether policies enacted during the recession have increased enrollment levels beyond actual need. Critics cite the outsized growth of food stamps compared with other safety net programs during the recession.

    Projections paint a bleak picture. The Congressional Budget Office estimates more than 43 million will collect food stamp benefits in 2017, just 4 million fewer than today. By 2022, the CBO estimates enrollment will be 9 million more than pre-recession levels and total spending will be nearly $73 billion—more than double than it was in 2007.


    Oct 27, 2013 - 7:44pm

    Food stamp recipients will see payment cut in Nov.

    Officials in Brunswick County are trying to get the word out about changes that will affect food stamp recipients nationwide: Though benefits will go up in October, they will drop in November.

    Though social services employees cannot determine how much any individual will receive after food stamp benefit changes, they estimate the cuts for those receiving the maximum benefits as follows:

    Household size Prior to Nov. 1 After Nov. 1 Difference
    1 $200 $189 -$11
    2 $367 $347 -$20
    3 $526 $497 -$29
    4 $668 $632 -$36
    5 $793 $750 -$43
    6 $952 $900 -$52
    7 $1,052 $995 -$57
    8 $1,202 $1,137 -$65
    Each additional member $150 $142 -$8

    Source: Brunswick County government

    In October, the program's annual cost-of-living adjustment will provide an increase in the amount of benefits program recipients see, effective Oct. 1. Reductions will follow in November as a result of the loss of funding from the American Recovery and Reinvestment Act, which was put in place in 2009, Brunswick officials said.

    "In other words, people will see an increase in benefits in October, but then see a reduction in November," said Cathy Lytch, Brunswick County's social services director, in a statement. "We know this reduction will create a hardship, which is why we want people to be aware that there will be a decrease, so they can plan ahead."

    According to estimates, the change will cut a family of three receiving the maximum benefit by $29 a month, from $526 to $497.

    Despite the cost-of-living boost some recipients will see this month, all will see cuts in November, according to the state Department of Health and Human Services.

    Local officials stressed that the decision for the reduction is based solely on federal requirements and the local office has no control over the amount of reductions.

    Local departments of social services administer the Simplified Nutritional Assistance Program, commonly called SNAP.

    In the case of the temporary boost provided by the stimulus act, a household is not able to appeal the decrease in benefits because it is the result of a change in federal law, according to the state DHHS.

    Notice was sent to all county DSS offices on Sept. 5, DHHS said in a release.


    Dagney Taggart
    Oct 27, 2013 - 7:55pm

    Prepared for the Rat Stampede!!

    Jeff Christian leading the charge followed closely by Alan Greenspan. I wonder who's next.

    Who's ready for a world-class comedy show complete with excuses, distractions, sweat, tears, and concluding with ................... green blood? Looking forward to them begging the mountain to fall on them.

    Remember the 5th of November.

    Damn it got cold here all of a sudden. Speaking of odd weather, I wouldn't mind seeing an independent Canada because of the mysterious disappearance of the UK in a hurricane. A few survivors of course.

    Oct 27, 2013 - 7:57pm

    Latest Report from Richter re: Kitco

    Report 16 came out on the 22nd of October.


    Still reading when I get the time, haven't posted much lately. Thanks to all the contributors for keeping this site such a valuable resource.



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