From there to here.

Tue, May 20, 2014 - 10:44am

On Sunday I took my family out for lunch at a restaurant on the Navajo Reservation near our home in Arizona. Afterwards, we drove to an “informal” location where you can see dinosaur footprints in the sandstone. The Navajo residents nearby have set up awnings and sell jewelry. As a kid, this was always one of my favorite stops. No paved parking, no visitor center, no drinking fountain, just a windswept plain in the high desert. This time, the local entrepreneurs had ratcheted up their operation. Someone stepped out as we drove up and offered to take us on a tour. I had always suspected there were more than footprints here, that one could find dinosaur bones if you knew what to look for. As she led us further away from the parking area, the site came alive with weather-beaten bones and eggs turned to grey sandstone—a different color than the usual tan shade of other fossils I have viewed. I had been stumbling across these bones my whole life focused on the footprints. I just needed a tour guide to point out the rest of what was right in front of my nose. How could I have been so blind for so many years?

The last time I looked at those footprints was in about 2007. If you had asked me back then some simple questions about the Federal Reserve System, I was equally blind and would have bumbled through some uninformed explanation trying to make you think I understood economics. I would have said that the Fed was that benign branch of the government that prints our paper money and sets the prime interest rate for banks to borrow so they can lend to us. I would have insisted that inflation occurs because the economy is complicated and you have unions and suppliers continually pressuring industry for higher wages and higher prices for raw materials.

To be honest, I really didn’t have a clue. But I would have balked if you suggested that the Fed wants inflation, that the Fed was NOT part of the US Government. So how did I get from There to where I am Today? Which tour guide opened my eyes? Can we learn anything useful about that journey that will help us enlighten our friends and relatives?For the next few weeks, I hope to submit a series of articles on practical persuasion, and hopefully hear in the coming months that your friends and relatives are moving from there to here, taking steps to prepare for our new economy.

Today, I hold that the Fed was created by sociopathic, greedy, power-hungry people who want to control this nation and steal its wealth. Just last night I was thinking about the Fed, about how they promised to cut back on the Quantitative Easing and get our economy back to normal, and how what they really did was just give money to a mystery buyer in Belgium to keep up the QE Bond purchases. The Fed has lied to America and the world. The Fed's policies have destroyed our economy. The Fed creates inflation to steal the wealth of our nation, bit by bit. Worst of all, the Fed is not part of the American Government.
But I could not have concluded this in 2007. Why? Because of human nature: cognitive dissonance, normalcy bias, a conservative impulse to resist change, or any number of social-psychological theories that do a darned good job of explaining why I do what I do. But the problem is not in understanding why, but in learning what we can do to help others to get from there to here.

Persuasion begins and ends with your credibility. Aristotle (my fine avatar on the right with his teacher,. Plato) taught that your “character,” is the “controlling factor” in your ability to influence others. Your character is made up of several factors that all work together (or against) one another in the persuasive process.

First is your reputation—all your failures, successes, sins, blunders, brilliance—in fact, everything from your past. People, especially friends and family know you. They must see you as a reasonable person who does not act on impulse or fall for hair-brained schemes.

Your arguments comprise the second portion of your character. People who listen to your (or read your stuff) are evaluating your arguments, and evidence. Are you using “accepted” argument formulas, or using fallacious arguments? Is your evidence outlandish, believable? Take care not to present arguments with shaky evidence that cannot be verified, or is not common knowledge.

The third aspect of character is the way you speak and write. What people are looking for is called “naturalness.” This one is hard to nail down in the same way as the quality of arguments and evidence. At the core, naturalness is forfeited by a “scripted” presentation, like a salesperson following a memorized flowchart, or a motivational speaker telling tried and true stories. Naturalness comes from the heart, not the head. Your passion is involved to the degree that you believe what you are saying or writing. It’s why we love to read “rants” of members here who are fed up with something. It’s why we love to hear a speechmaker lose their composure, just a bit, giving a wedding speech. We see the veneer of social respectability giving way to the heart underneath. And when you hear some slick salesman, Like our good friend Porter Stansbury, you can just tell that something isn’t natural. The words are too scripted, the voice too polished. Beware.

But I don’t believe that “naturalness” is the problem for most of us as we attempt to teach our friends & relatives. Frankly, I believe our biggest challenge in helping others see the poor condition of the economy due to Fed policy, to wake up, and to take steps toward self-sufficiency is that we have been wrong thus far. We have been wrong about the timing of the collapse, and wrong about “metals to the moon.” Our reputation has been damaged.

We have been hollering to anyone who will listen about black swans, bail-ins, liquidity crises that will freeze the banks, bank runs, market collapse, paper wealth to zero, hyperinflation and new currencies. I have withdrawn my funds twice after hearing about bank closings in America. So far, we have been wrong, and we look like idiots.

What makes our reputation look even worse are the charlatans out there calling for $600 silver—the pump & dump hawkers. This leads to bloggers saying we are part of a cult. They have just enough evidence with one or two arguments to make a “superficial case” while preaching to the choir of disillusioned metals investors.

I hang around this blog, I have committed time writing up these posts, because I am convinced, convinced by several strong arguments and a mountain of evidence, that this paper system will collapse … soon. I do not want to be ruined financially, so I continue to invest 95% of my meager increase in a diverse portfolio of commodities, rather than ETFs and other paper instruments. I keep a modest pantry filled, just in case; I stock up on other items that may be needed, just in case; and I am working on building a more remote farm/cabin to live in, just in case. I am also attempting to re-habilitate my reputation with friends and relatives with conservative advice that points the right direction to the degree that they can accept it.

Retreat and regroup
So, how do we repair our reputation? First, we admit we have been wrong and over-reacted. Now, buying $30 silver in early 2011 and encouraging our friends to do the same was not an overreaction. We were wrong on the timing. Mistakes were made in not hedging positions with out-of-the-money option contracts as the spike occurred. I bet many good traders here did not make that mistake and profited nicely in the big silver smackdown.

So admit we were wrong (even though we dodged a bullet, economically), eat your hat, let your friends and relatives gloat a bit. You have to repair your reputation here. It may also involve saying “I’m sorry” if you panicked a friend into selling their paper and buying silver. (For the record, the several friends I persuaded to buy back then are still holding for the same reasons I am). My sense in talking with these friends and relatives today is that they are more concerned for the future than they were in 2008, even though the economy has not derailed. They sense the problems and see the gulf between what is happening in their local economies and with what Washington says is the state of the union.

While your character must be solid in the three ways I describe above, the rationale motivating a decision must be logical and warranted by solid evidence. Also, a good persuasive presentation takes what is far away and brings it near—whether it is presented as a fearful situation or an opportunity that engages ones dreams and desires for the future. But as we bring that far-off situation near to our friends, we must stay on reasonable, solid ground that won’t crack beneath our feet and leave us in the position of Wile E. Coyote here. Metals to the moon, FEMA camps, widespread rioting & looting are all possibilities, but they are not possibilities that most people are ready to consider. If you discuss these much, people will tune you out.

Stay on solid ground. Argue for physical metal ownership on grounds that your friends can accept—grounds like an underpriced asset, metals cheaper than the cost of mining, an insurance policy for the future, insufficient metal to fill contractual claims. Avoid arguments of "silver to 600," "total economic collapse," "mad max world." While this all may come to pass, people just cannot go there … yet.

To help people see the real state of the economy, I suggest discussing that the Fed and other CBs want inflation, pointing out the real inflation rate they see every week in the store. Show people that the CBs are privately owned, yet run our governments and implement policies that produce bubbles and inflation. These are easy positions to support without looking like a whacko.

We have the logical arguments and evidence in support of the wisdom of long-term metal ownership to tip the persuasion scale! If we want to encourage anyone to begin setting themselves up for the new economy, we have to found our efforts on reasonable arguments, solid evidence, delivered at a “speed” that someone can process. Too much too soon typically backfires and will damage your reputation.

For me it was recognizing that the Fed was not who they claimed to be; the chain of logic began with understanding the Fed. The rest fell into place. If you can convince someone that the Fed is working in the interests of others, then a cascading chain of logic will lead a person to be skeptical about many more things at a pace they can accept, eventually opening their eyes, and reaching the same conclusions most of us have. But today, I cannot tell people that he Fed works on behalf of nefarious, greedy sociopaths to enslave people with debt.

What I wish help with from all of you is boiling down why the Fed wants inflation, and why they will lose control of inflation. I want to boil these reasons and evidence into easily understood talking points that I can memorize and explain to neophytes in the five minutes they are willing to discuss the topic.

Many of you readers have a firm grasp on these issues surrounding the Fed and can be Plato to those of us who get it, but cannot quite articulate it. I needed a guide to point out the bones last weekend. And I need to learn a bit more about how the Fed works so I can be that guide to help my friends open their eyes to what is happening out there.

About the Author


May 20, 2014 - 12:28pm

Dr. J


sierra skier
May 20, 2014 - 12:29pm

Credability and Reputation

You need credibility to keep your reputation in line.

When Silver dropped into the $28 range back in April 2013 my son asked about it and I told him the price was lower than it had been in 2 and a half years. He immediately bought a roll of ASEs. Promptly silver dropped more and I got the what happened question to which my answer was, How was I supposed to know they were going to slam the prices of PMs.

He did not panic and sell or belittle me because I had bought plenty as well. To this day he holds that roll of coins with the faith that when things go bad he will have something of great value along with the rest of his tangible tools and preps.

I hope some day to see his holding prove me correct and his patience rewarded.

Great post Dr. J

May 20, 2014 - 12:38pm

Dr J

Content. That says it all. Good for you.

May 20, 2014 - 12:42pm

Y2K and what's happening now


What happened with y2k is completely different to what is happening now with the economies of the world.

Y2K was an uncertainty, nobody really knew in advance what would happen.

With the world economies all tied to fiat currencies, it is a certainty that they will fail. The currencies are all instruments of debt. You HAVE to keep increasing the debt or it all collapses. Yet by increasing the debt, it WILL eventually collapse.

There is NO WAY out of this.

Judging by the absolute EXPLOSION in the growth of debt over the last few years, this collapse cannot be far away.

I repeat, there is NO WAY out of this. Collapse is a certainty.

Mr. Fix
May 20, 2014 - 12:46pm

We might be winning the information war, but…

Dave Hodges is a little bit more optimistic today than usual, in that the real story is getting out.

However, the banker elites have a plan, particularly what to do if they lose the propaganda war:

May 20, 2014 - 1:11pm

All You Can Do

Is warn people. Then It's up to them to take action one way or another. If they choose to ignore you, you have done what you could...but you have planted that seed and maybe, just maybe they will recall one day that they were warned...hopefully before its to late..... 1) Get your spiritual house in order 2) Get your family in order 3) Get your preps in order

May 20, 2014 - 1:38pm

Dr. J re: the Fed wants inflation . . .

"What I wish help with from all of you is boiling down why the Fed wants inflation, and why they will lose control of inflation."


The Fed wants and NEEDS inflation.


Because all "money" today is debt. Growth of the economy requires growth of debt. If debt grows faster than assets, it is the end of "money" because the debt cannot be serviced, as the collateral becomes worth less than the debt.

The housing crash killed off much collateral. Rules were changed so banks could pretend the value of the collateral was still there, and they still do today.

May 20, 2014 - 1:44pm

Why Most People Simply Do Not Care

Most people work very hard to earn their living.

That's universally true today...maybe more than ever.

Yet, they never stop and actually read the words on the notes that they are paid with.

They read the numbers, not the words. The denomination not the promise of the note. You probably already know this of course. That's why everyone thinks you're crazy.

Regarding The Fed, I used to think that people were in an actual state of ignorance. That is, I could enlighten them if I had a good argument and an above average character.

I was wrong.

Let me repeat: WRONG

How so?

Well, most people are not interested in building wealth. They may be materialistic and perhaps greedy but that's not the same thing. They don't care about the integrity of their money. The do care about Social Status and hedonic pleasure. So if the paper currency buys 1% of that big house or new car, they'll sign the contract and buy.

The reason is that most people are don't hold much currency...we do not 'save money' as a nation. "Consumer Spending" is actually 'policy' It is encouraged. And if you do manage to work and save money you'll only find that later in life it will be taken from you when you are 'means tested' for Medicare. Perhaps slowly, but you'll bleed it out. Trust me.

Did you know that our currency, the FRN is NOT intended to be savings vehicle? I know you know this. I know you heard it before. So have I. Yet I cannot bring myself to accept it as truth. It is indeed 'play money' for the system and apparently every Alfred E. Numan in the United States is OK with that. If you're not...well, here's your tinfoil hat. The rest of us will be partying with all this cool stuff.

Sadly, that's why nobody cares about our national wealth being stolen. We just want the stuff. We don't really want the money. The Fed knows this. That's why it's such a wildly successful scheme... it's designed to appeal to the lowest aspects of human nature. None of us should be surprised.

It is our lack of character as a people that sets policy and public sentiment and why, finally, we will be ruined as a nation.

May 20, 2014 - 1:46pm

Why not have a currency backed with nothing

U.S. Exports 128 Metric Tons Of Gold Jan & Feb 2014… Supply Deficit Increases
Filed in Precious Metals by SRSrocco on May 18, 2014

Not only did the U.S. export 128 metric tons of gold in the first two months of the year, its supply deficit continues to increase. While gold exports to Hong Kong fell in February, Switzerland imported another 28 metric tons of gold during the month, more than twice the 12 metric tons it imported in January.

May 20, 2014 - 1:50pm

Inflation? Even Mickey Mouse gets in on the act

Inflation in wonderland: Disney hikes prices as much as 10%
By Jeff Macke May 19, 2014 12:13 PM

Disney (DIS) just keeps ringing the cash register. Over the weekend the Mouse House announced unexpected price increases for visitors to its Disney Land resort complex in Los Angeles. As of yesterday morning a day pass to Disney Land will cost $96, up from $92, and the popular "One Day Parkhopper" passes give visitors access to both Disney Land and the adjacent California Adventure Park will run a cool $150, nearly 10% more than the passes cost last week. Disney also said it will stop selling new annual passes which had been available to local residents.

It’s another triumph for CEO Bob Iger who chose to spend billions upgrading Disney Parks during the recession while other companies pulled back. Disney paid $1.1 billion on California Adventure alone, and now it’s cashing in. Even before last weekend’s price hikes, domestic park attendance and profits have been up double digits every year since 2011 and park attendance is at record levels.

To be sure, Disney customers are used to price hikes but the company is showing signs of getting more aggressive in recent years. The company normally waits until school lets out in June before hiking annual prices, but the Disneyland ticket boost comes immediately ahead of the unofficial start of summer with Memorial Day weekend starting Friday (the park also increased prices by 4% last June). Visitors to Disney World in Orlando took an even harder hit last February when the price of a one day pass was hiked to $99. Industry analysts are now placing bets on when the company will break the psychologically daunting $100 level with most expecting the company to hold off until 2015.

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