Sudden or incremental

Mon, Mar 24, 2014 - 10:32am

Given the overnight action in metals, perhaps discussing the big picture my be more interesting today.

I bought a house some years back that had an old curved roof barn. The architecture was amazing to behold to a wannabe carpenter like me, with curved roof beams, large oak support beams for the floor. It was probably built in the 1920s. It was dug into the side of a hill with the south side of the foundation exposed so you could walk into the lower level, the north side dug in so you could drive your tractor into the large sliding doors to store your hay. But there was a problem. That hill was saturated with water flowing underground out of hundreds of uphill acres north of the barn. The builders did not install a drainage tile. At some point, the water pressure from the north cracked the 8" thick concrete foundation wall horizontally along its 100 foot length about three feet above the lower level floor. The prior owner had re-supported the floor with vertical beams, but water seeped out continually reminding me of the problem. A contractor gave me a bid of 40K to fix it. We ended up selling the place. We have owned other homes in the American mid-west with cracking foundations and water issues in the basements. It seems to be a hazard of the region. Sump pumps are wonderful for managing the water, but they don't fix the foundation.

Fortunately, I have never owned a home too close to a river, ocean or sinkhole. But when such buildings have their foundations undermined, the collapses are sudden, spectacular and perilous. You can see it coming in many cases, if you pay attention, but there is nothing to be done but evacuate. Perhaps its the fault of the builders? Perhaps a lack of foresight? Perhaps it’s just a hazard of building anything in certain terrain where the view is beautiful, where water is abundant, where crops grow, where making a living is easier than where ground is hard, dry and stable. Certain precautions can be taken with wet ground--giving the pressurized water a route of escape. But too often it seems that the builders wanted to save money and create a quick easy structure and not worry about what would happen 40 years down the road.

In the past week, I have noticed a few posts on the boards about economic collapse, economic decline and how fast it might happen. I thought many more might be wondering the same things, and indeed the burning question in my mind these days has to do with the collapse of our nation's, indeed, the world's, financial system. Clearly, it has been unwisely constructed upon shifting, unstable fiat currencies. The bankers put band-aids on immediate issues, but have set up the economy for trouble later (perhaps sooner). Meanwhile, the architects of these currencies profit greatly and have a means of control that no person should have over an entire economy. And when the erosion forces of time, hidden underground water, or the violent forces of floods, waves or shifting ground inevitably exert their will, these fiat architects have no answers. Collapse is inevitable. But but is our foundation simply crumbling due to pressure & stress, or is the entire hillside being undermined. Will this “collapse” be sudden or incremental.

I am arguing, to anyone who will listen, that the collapse will be incremental, somewhat speedy, and have to avoid several hazards that could bring sudden disaster along the route. Verily I say unto thee, the beginning of the decline may be at hand with the ending of the petrodollar system.

Jim Sinclair: Russia Can Collapse US Economy, Gold Update, Silver is Gold on Steroids & More

I urge you to watch Jim Sinclar's recent interview if you have not already. He says that "Russia has the dollar by the” uh … short hairs uh balls? ... uh ... “has the dollar ... right in their hand.” It would behoove us to recall that the US played a part in the collapse of the Soviet Union not that long ago. I can't imagine Putin (or the Russian citizens) has any sympathy for the US. Russia will do what is good for Russia, and that means breaking the petrodollar system. All Russia has to do, says Sinclair, is accept other currencies for their energy products. And Putin is headed to china to likely sign such an arrangement, one that they have been negotiating.

A few years ago, my daughter and I climbed up to the top of a cliff that overlooked my home town. The view was fabulous. but the route back down was hazardous, with slippery places along the trail where, if one fell, you could tumble off and pretend you were Wesley in The Princess Bride yelling "As you wish..." until you were dashed on the rocks below. Our current situation is like that trail. Unstable, downward sloping, with the risk of disaster upon a misstep.

In a best case scenario, the world reserve currency is under attack. The US will see the inflation of commodities as the rest of the world no longer needs to buy dollars to convert their fiat into energy. The petrodollar's days are numbered. The value of dollars will decline. Cost push inflation will create more expensive imports. Increasing oil prices will increase food transportation costs. My rural students squealed about the price of gas when it hit 4.25. They couldn't afford the gas to drive to work and school.

When I say "incremental," I mean quick, definite increments. Not a long slow decline, but steeper, fairly fast, and fraught with the cliffs of banking freezes, war, grid shutdowns, food scarcity due to transportation shutdowns, rioting & martial law. I can't see rioting in the US being widespread. the first few riots will be met with a very heavy hand and the images of police quelling the action promptly will be splashed all over every media outlet. I bet DHS and the police are itching to try out their new gear!

The US is treading a narrow steep narrow trail, with Russia's goad at our backs. But Russia and China don't want the US and the West to completely collapse, which would not be in their best interest. They want and need a stable world economy. They want the west to lose the wealth and power to them. They want to see the west's standard of living decline while theirs rises.

But these sociopathic, power-lusting, greedy, central bankers have created an untenable monetary system that is failing the citizens of the world. Their plan, the IMF Code of Reforms that will create the SDRs--the new international world reserve currency, their plan may stabilize things for a while, but the foundation is still in need of great repairs. Indeed, the waves are undermining it as I type. I am NOT convinced that greedy IMF-led bankers will man-up and do what is needed to create real stability. As I understand it, the SDR will be 25% backed by gold. Will that be sufficient to stabilize the 50% backing of fiat? Or is this like Nebuchadnezzar's statue with feet made partly of iron and partly of clay.

I have noticed that in spite of their high intelligence and shrewdness, sociopaths do not show extended foresight.

Well that's my theory. A quick steady decline (6 months to a year after the petrodollar is broken) with many risks that could bring on a fast collapse. I am hoping that this thread might test this theory with a sensible rationale and evidence. I am also wondering if Turdville readers actually have some kind of consensus.

By the way, My wife's sister is married to a City of Phoenix policeman--25 year veteran of the force. He and his comrades have been trained to deal with rioting recently. He had ridiculed his wife for a couple of years about her conspiracy theories and prepping, but a year ago he told her to "keep prepping." For her birthday last week, he bought her a pink assault rifle and encouraged her to use it if needed.

By the other way, I think my efforts to build cheap solar panels have been successful. The beta tests have been positive. I'll share more in a later post. The quick report is that my concerns were overblown and it was much easier to solder the cells together than I expected. However, paying .25-1.50 per watt for solar capacity may be the better alternative.

Buy gold my friends, it may become scarce before we know it.

About the Author


4 oz
Mar 24, 2014 - 10:35am


Wasn't gonna say it---even had I been.

Urban Roman
Mar 24, 2014 - 10:38am

Two ways,

Gradually and then all at once.

(now I shall read the article)

Mar 24, 2014 - 10:39am

James Rickards-Dollar Going to Collapse 80% or 90% or More

James Rickards-Dollar Going to Collapse 80% or 90% or More
Mar 24, 2014 - 10:40am

British teenager and boyfriend 'take own lives' after US police

Alex Hollinghurst, 17, and Brandon Goode, 18, suspected of shooting dead police officer before killing themselves in Florida

The bodies of Alex Hollinghurst (above) and Brandon Goode were discovered after police officer Robert German was shot dead nearby by a man and a woman.

A British teenager and her American boyfriend are suspected of having shot dead a policeman before killing themselves, police in Florida have said.

Alex Hollinghurst, 17, and Brandon Goode, 18, were both found dead on Saturday having apparently taken their own lives, according to the Orange County sheriff's office. Their bodies were discovered after a 31-year-old police officer, Robert German, was shot dead nearby by a man and a woman.

Sheriff Jerry Demings said that German stopped the pair in the early hours of the morning and called for backup. When colleagues arrived, they found German, who had been shot, and was pronounced dead soon afterwards.

Both Goode and Hollinghurst were later found dead in brush, the Orlando Sentinel reported.

Mar 24, 2014 - 10:40am


I shall do the same as Urban Roman


Edit: I plead the fifth

Mar 24, 2014 - 10:40am


at bat.

Good article to stimualte thinking. I'm of the opinion although a slow steady decline, the USD is definitely key. The Petro $ is finished as the dominant currency, yet I see 3 taking world stage,Euro, Yuan, and the USD.

Gold will have its ebbs and flows with silver taking a back seat but if roller coaster rides are your forte my belief is silver will give you the tilt- a- whirl experience alright.The moves should be exciting but i would not 'stack' my wealth on it.

metalsbyamile4 oz
Mar 24, 2014 - 10:42am

Yes you were!

Wasn't gonna say it---even had I been.

Mar 24, 2014 - 10:49am

As I have warned for weeks

the cyclical's say we go down to higher lows that shall resolve themselves in June, July, or August. I would not add new positions here if you need liquidity.Other wise you may end up with rather large losses.

I started pounding the table about this at $1380 plus. If you recall it was an assumption we may experience a down draft that even i did not suspect would be this pronounced.. Sure enough we are there.

The breach of $1320 is omminous in my opinion, short term if we crack the $1300 barrier $1290 comes in to play.(Oh well, it is all really just guess works, where is that Eric Von Prague).

Stack on , when the time is right. Trade only that which you can move out daily,be careful out there!

Mar 24, 2014 - 11:03am

Turkish foreign capital flow halts amid fuse of forex reserves

Turkey being punished for providing Iran with a gold-based workaround out of the SWIFT system?

The total current account deficit reached $13.1 billion in the December-January period, while the net capital entrance scored zero in two months.

Turkey has been witnessing radical changes in its vitally important foreign capital inflow and economic turbulence corresponding to that in the past few months, when the economic contraction is coupled with political crisis. The transition is primarily observed in the payment balance.

It was found normal when the current account deficit remained at $5 billion in January when the economy slowed down. The deficit was $8.2 billion in December 2013 and the 12-month gap – between January 2013 and 2014 – has risen to $64 billion. This is the highest current account deficit among developing countries and its ratio to the national income is almost 8 percent.

January faced capital outflow instead of inflow and no new loans could be secured to pay due loan debts. This situation obliged spending from foreign exchange reserves.

While the reserves melted by $5.8 billion in January, $2.2 billion was provided by the “net errors and omissions,” also known as “under the pillow,” revealing the deficit was financed through $8 billion worth of “internal” resources.

In January, $1 billion foreign direct investment entered the country, but investment drawn to the portfolios – stock exchange and government bonds – have fallen instead of rising, according to Central Bank data.

More importantly, the debtors failed to find new loans to pay due foreign loan debts and the deficit on loan payments have surpassed $4 billion.

Analysts foresee the lack of foreign resources entering the country persisting throughout April and May. Looking at the decline in reserves, it is predicted that the capital outflow may even increase the current account deficit.

This situation also causes the foreign exchange rate to remain high despite the hiked interest rate. The U.S. dollar’s rate’s constantly testing the 2.25 level is associated with the drop in foreign money entering the country and a failure in the payment of due debts with new resources.

The foreign exchange position, also defined as disposable foreign exchange stock, consists of the “net foreign exchange assets” and “internal liabilities.” Foreign exchange reserves expect gold to be the most important item within new foreign exchange assets. Internal foreign exchange liabilities, meanwhile, are mostly made of foreign exchange accounts of individuals and institutions. The difference between the two creates the disposable foreign exchange stock, or foreign exchange position.

Turkey’s total debt is around $380 billion. Around one-third of this belongs to the public sector and the total debt that should be paid within 12 months is near $170 billion. This means even the current account deficit will remain at $50 billion, unless there is a significant demand for foreign exchange.

In the case that direct foreign capital and foreign capital inflow in the shape of foreign loans cannot be secured, the forex demands’ lira provision will hover high. The forex position at $33 billion shows that an important weapon in the Central Bank’s hands has become inoperable. The interest rate hike has remained the only tool to lure money from abroad, but even this will not work considering the ongoing political crisis.

Mar 24, 2014 - 11:07am


How does Turkey compare with Greece in terms of size and importance in the world economy? I thought Greece was the first domino a couple of years ago, but the CBs papered over the problem. Turkey may not be so easy.

Key Economic Events Week of 10/14

10/15 8:30 ET Empire State Fed MI
10/16 8:30 ET Retail Sales
10/16 10:00 ET Business Inventories
10/17 8:30 ET Housing Starts and Bldg Perms
10/17 8:30 ET Philly Fed MI
10/17 9:15 ET Cap Ute and Ind Prod
10/18 10:00 ET LEIII
10/18 Speeches from Goons Kaplan, George and Chlamydia

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Key Economic Events Week of 10/14

10/15 8:30 ET Empire State Fed MI
10/16 8:30 ET Retail Sales
10/16 10:00 ET Business Inventories
10/17 8:30 ET Housing Starts and Bldg Perms
10/17 8:30 ET Philly Fed MI
10/17 9:15 ET Cap Ute and Ind Prod
10/18 10:00 ET LEIII
10/18 Speeches from Goons Kaplan, George and Chlamydia

Key Economic Events Week of 10/7

10/8 8:30 ET Producer Price Index
10/9 10:00 ET Job Openings
10/9 10:00 ET Wholesale Inventories
10/9 2:00 ET September FOMC minutes
10/10 8:30 ET Consumer Price Index
10/11 10:00 ET Consumer Sentiment

Key Economic Events Week of 9/30

9/30 9:45 ET Chicago PMI
10/1 9:45 ET Markit Manu PMI
10/1 10:00 ET ISM Manu PMI
10/1 10:00 ET Construction Spending
10/2 China Golden Week Begins
10/2 8:15 ET ADP jobs report
10/3 9:45 ET Markit Service PMI
10/3 10:00 ET ISM Service PMI
10/3 10:00 ET Factory Orders
10/4 8:30 ET BLSBS
10/4 8:30 ET US Trade Deficit

Key Economic Events Week of 9/23

9/23 9:45 ET Markit flash PMIs
9/24 10:00 ET Consumer Confidence
9/26 8:30 ET Q2 GDP third guess
9/27 8:30 ET Durable Goods
9/27 8:30 ET Pers Inc and Cons Spend
9/27 8:30 ET Core Inflation

Key Economic Events Week of 9/16

9/17 9:15 ET Cap Ute & Ind Prod
9/18 8:30 ET Housing Starts & Bldg Perm.
9/18 2:00 ET Fedlines
9/18 2:30 ET CGP presser
9/19 8:30 ET Philly Fed
9/19 10:00 ET Existing Home Sales

Key Economic Events Week of 9/9

9/10 10:00 ET Job openings
9/11 8:30 ET PPI
9/11 10:00 ET Wholesale Inv.
9/12 8:30 ET CPI
9/13 8:30 ET Retail Sales
9/13 10:00 ET Consumer Sentiment
9/13 10:00 ET Business Inv.

Key Economic Events Week of 9/3

9/3 9:45 ET Markit Manu PMI
9/3 10:00 ET ISM Manu PMI
9/3 10:00 ET Construction Spending
9/4 8:30 ET Foreign Trade Deficit
9/5 9:45 ET Markit Svc PMI
9/5 10:00 ET ISM Svc PMI
9/5 10:00 ET Factory Orders
9/6 8:30 ET BLSBS

Key Economic Events Week of 8/26

8/26 8:30 ET Durable Goods
8/27 9:00 ET Case-Shiller Home Price Idx
8/27 10:00 ET Consumer Confidence
8/29 8:30 ET Q2 GDP 2nd guess
8/29 8:30 ET Advance Trade in Goods
8/30 8:30 ET Pers. Inc. and Cons. Spend.
8/30 8:30 ET Core Inflation
8/30 9:45 ET Chicago PMI

Key Economic Events Week of 8/19

8/21 10:00 ET Existing home sales
8/21 2:00 ET July FOMC minutes
8/22 9:45 ET Markit Manu and Svc PMIs
8/22 Jackson Holedown begins
8/23 10:00 ET Chief Goon Powell speaks

Key Economic Events Week of 8/12

8/13 8:30 ET Consumer Price Index
8/14 8:30 ET Retail Sales
8/14 8:30 ET Productivity & Labor Costs
8/14 8:30 ET Philly Fed
8/14 9:15 ET Ind Prod and Cap Ute
8/14 10:00 ET Business Inventories
8/15 8:30 ET Housing Starts & Bldg Permits

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