Figured it Out - Bail-Ins are for Amateurs

Thu, Aug 7, 2014 - 12:29am

Fiat paper schemes always end with the currency devaluing to zero, worthless. Along the way, though, through the years, history teaches us that those in power, that is, those issuing the worthless colored paper, always resort to trickery, deceit, then war all in an effort to remain in power.

Recently, we have seen, as was done in Cyprus, and has been commented upon by many pundits, and can expect the banking institutions that are too big to fail to resort to outright theft of depositor funds to remain solvent. Remember, to a bank, a deposit is a liability, which must be repaid.

We have also seen countless schemes whereby the big institutions holding onto deposits, or investors' cash, have simply rehypothecated, or pledged the same funds time and time again as collateral for loans, which are then used to speculate in the markets or with exotic derivatives. Anyone need a refresher course need only google MF Global and Corzine for an in-depth lesson.

Of late, there has been open outcry, that it is impossible to earn large, crazy wealthy sums simply from creating a business and selling products. No, something more is required to get one's hands upon generational wealth. That "something more" requires one to embrace the paper fiat scheme, and immerse oneself.

This concept of wealth creation being possible only from immersion into the paper fiat scheme, whether through investment banking, stock trading, hedge funds, buying and selling paper assets, speculating on commodities, what not, has attracted the very best and brightest. There is no comparable upside income potential, aside from crony capitalism and generational wealth that can be earned from political favors. However, that career path and trajectory are beset by extreme odds against success.

As a result of this obvious path to extreme wealth creation, naturally, those seeking such fabulous riches are irresistibly drawn to the financial sector. In this sector, all that matters is "scoreboard." It is not how hard one tries, or that one put in a good effort, or that one acted with high moral character, or honor, or any of the imbedded, traditional values that made the USA great long ago. Instead, the extreme short term time frame, 3 months, and an objective financial bottom line are the measuring sticks of success or failure, where coming in soundly within the bell curve is tantamount to an admission of mediocrity and necessarily, failure, because there is no incentive for any market participant that rewards mediocrity. None. In the end, it is all about the bottom line.

In this paradigm, then, naturally, rewards are doled out to those that succeed, that is, who do better than their peers, some of the best and brightest that have ever lived. Who among such a rarified breed, is going to be content as a middle-of-the-packer, when to enter the industry one must abandon any pretense of morality? Easy! NO ONE!

Based on this reasoning, then, those who do not share the financial industry type value system, cannot fathom the most basic understanding of what is driving the system, nor what to look for in predicting outcomes.

Like Mr. TF, who correctly, and for years, has predicted short and long term physical metals prices, based on his understanding that the commodity spaces are manipulated, once one embraces that concept, radical as it seems, and as unbelievable as it is, then making sense on the charts is, as TF so aptly notes, not too complicated at all.

In that spirit, I offer up a thought experiment that lead me to a conclusion that I believe explains a plausible end-game, slow burn, that is not at all a collapse, but is instead an orchestrated, but not controlled, descent of fiat towards its ultimate value of zero. Of course, this entails substitute currencies, under central control, likely backed by something of value. What that is is uncertain for now, but will reveal itself as time passes.

For now, let us turn to the facts upon which I base this analysis and conclusion.

What started me down this path is the seeming impossibility that regular folks in the USA will tolerate any such bail-in nonsense. I was bolstered in this thinking the other day at a local gun show I attended. I went to get a feel for the mood, and see whether the market had corrected back to normal following the Sandy Hook story. I believe strongly that it was staged, designed to usher in massive gun control, but failed as the powers that be realized that the red states are just not going to part with their guns. The puppet masters misread their abilities, and their puppet politicians could not complete their masters' tasks. Gun control failed for now, but as normal, will creep up time after time, as marginally, regular people lose interest, and the slick politicians erode rights at the margin. As I type this, California is looking to enact laws that allow family members to rat out a loved one, and enable authorities to seize firearms. No due process, screw the Second Amendment. This marginal erosion of gun possession rights is coming to every single place, eventually. Count on it.

Anyhow, back to the story. So, I am at the gun show, and I see table after table of guns, ammo, as far as the eye can see. Production has never abated, and people are buying hand over fist. New market suppliers are springing up in the face of increased demand. Supply and demand forces are working as should be, unlike in the physical precious metal space . . . But, I digress.

As I took this scene in, I became instantly struck by the likelihood of anyone in that building accepting some government decree taking any portion of anyone's hard-earned money, stored at a local bank. Not a chance in hell that the regular folks just meekly take losses like that. No way.

The regular folks are SEETHING. Washington politicians do not see it, nor do they want to see it. When Obummer comes to Los Angeles, traffic is snarled all day. Folks are PISSED OFF. It reminds me of the simmering racial tensions following the Rodney King video beating. It was all there, right out in the open, but most people did not want to talk about it. In mixed company, no one dared mention it. I was lucky, I had friends from all walks of life. I heard a total disconnect between my reality, and the reality of those less fortunate. We all remember the riots in Los Angeles in 1992. Koreans, armed, on rooftops, gangs of black youths rampaging, National Guard, fires, riots, lockdowns. OJ Simpson ripped open the wounds for more pain. Nothing was solved. Look what happened to OJ after a two-bit burglary in Las Vegas? Think the public is dumb, or disengaged? Not a chance. They are just uninformed, because their sources of information have been feeding them a massive daily infusion of brainwashing. Call it MOPE, or spin, or misdirection, whatever, the fact is that the truth has been withheld from the masses, deliberately.

As the truth leaks out, gradually, as it always does, people are slowly, ever so slowly, becoming aware. The gun crowd gets it, for sure, hence the effort to secure firearms and ammunition. Those red state voters understand that their colorful scraps of banker paper do not by as many rounds of ammo as they used to. The solution for them is not to complain about auditing the FED, or of returning to sound money, away from fiat. No, not at all. Heck, most of them know Fiat as a break-down prone Italian sportscar. Audit the FED? FED who? What's an audit? Like the IRS, and produce receipts? What?

Anyhow, the simple fact is that people know to spend their banker paper on durable goods. They got taken to the cleaners on the housing bust, so many people are wary, and renting. People are not foolishly taking on debt to buy the latest consumer good, either. Most people who need a flat screen TV, have one. New car? Maybe, but more likely is they are making do with less, repairing their things that break rather then replacing them with new. So, the people are aware and reacting, just not in ways politicians want them to react.

Which leads to the next huge understanding I reached. It dawned on me that there really are very few retirement options most people have. The wealthy do not worry, as they are invested in paper assets. They, by and large, see nothing, because they have reached success, and will do and say what it takes to keep the status quo operating, as they have benefited from it. They do not want change. The poor have no delusions of "retirement." Every day is a challenge. They are already getting government benefits, and they too want the system to remain intact. These are the great masses that make up the Free Shit Army. These are the voters coddled and coveted by those in elected office. These lower information voters are not at all going to do or say anything that upsets their free government transfer payments. If anything, they will complain and demand more, under various MOPE scenarios based on division and class envy.

The middle classe, though, is wholly dependent upon their pensions, whether from their 401k's, or their union pensions, or their govt pensions, what have you. The days of buying and holding, saving, and living on interest, are long gone, and are never coming back anytime soon. We all know this, as do all the overlords and secret back room meeting bosses. They know full well that the system is collapsing, in real time, and are desperately trying to keep it together.

They have seen fiat paper schemes implode, and are anxiously attempting to find a solution to the existing mess. For this, there is no doubt.

Only recently, though, did I see something that caused me to understand just HOW those banksters are going to pull of the greatest scam ever.

Remember, they cannot simply bail-in the Americans, because there will be massive uprisings, and there will actually be consequences. There are just too many guns, and too many pissed off, seething angry people who will, at the first chance, become active, violent, and will enact real reforms, with death and suffering as a result for many of the wealthy. For this, I have no doubt at all. There are not enough police personnel to quell the uprisings, and further, many of the local police forces will be taking care of their own families. I know this personally, on a big scale, and I also know that the powers that be know this as well. There is no delusion amongst the central planners that massive civil unrest will spell doom for those in charge.

As a result of this, and based on what transpired and is transpiring in Argentina, over the default on bonds, and the financial engineering that underlies that whole mess, I believe with 100 confidence that the end game scenario is going to play out in this fashion, as follows:

(1) Pension funds will be financially engineered such that the workers that have contributed their wages to the pension fund, will be given massive haircuts, on order of at least 50% or greater, both in the holdings of the pension fund, as well as upon payout based on the diminished holdings;

(2) The funds stolen by the pension fund managers, will be used to capitalize the TBTF institutions, keeping the system afloat;

(3) Because the pension funds will be, essentially raided, the workers will demand safeguards in the future, which the politicians will be only too happy to grant, thus requiring pensions to no longer invest in "risky" things like the stock market, or CDO's or any of the wall street financial schemes, but instead to invest in "safe" long term government bonds;

(4) After most of the pensions are looted, and the balance of funds are now invested in government bonds, there will be a currency reset, and the value of the pension funds that were converted to govt bonds will be further eroded, and of course,

(5) None of the pension funds will have invested in hard physical precious metals, which will explode in value to the upside.

(6) Anyone riding the bull this long will have amassed generational wealth, provided their family and friends still even talk to them.

If anyone doubts the premise of the very first point above, that is, that pension funds will be stolen by way of sophisticated financial engineering, then to those people, I ask them to please read this excellent piece over at nakedcapitalism:

The bottom line from the nakedcapitalism piece is that the workers, who contributed to their pension fund, had their funds stolen from them through outright theft by a corrupt fund manager, who also invested the funds in a high yield scheme whereby the pension fund was left holding the bag on worthless CDO's.

See, the crooks at the top are not going to just plainly "take" the money. No. They will use arcane concepts, driven by classic human emotion, like fear and greed (hat tip, Argentus for his great post on this recently), and will engineer turnover of the fund investments such that the poor, dumb workers end up taking the losses. The gains of course, all went to the corrupt, TBTF banks, which silently "hypothecated" the funds in the normal course of business and "thems is the breaks!"

This scenario will take place over years, not days or months. The system will hold together until it doesn't. But so long as it does, it will be a slow, gradual descent, marked by the occasional failed bank, headline, and then back to bread and circuses.

Remember the Greek bailouts? What happened to that? See what I mean?

Please, whatever you choose, prepare accordingly.

About the Author


Aug 7, 2014 - 12:40am



Safety Dan
Aug 7, 2014 - 12:48am

From Bullion Baron: Buy gold,

From Bullion Baron:

Buy gold, just make sure you don't buy fake gold:

Or gold that's stored on your behalf by other parties:

And once you have your hands on the real thing, keep it safe!

Walmart CEO sacked just after telling truth about questionable economic recovery:

Mr. Fix
Aug 7, 2014 - 12:53am

CL, I like how you think

Of course, they could just kill us......

2c piece
Aug 7, 2014 - 1:12am


First, now to read.

Thank you for your thoughts CL. You present an interesting, possible future scenerio. Another possible option is hyperinflation. This would have the effect of devaluing pensions in a more hidden manner. It would also have the effect of raising taxes by putting lower wage earners in higher tax brackets. (The tax brackets are determined by the quantity of fiat earned not its value.) In addition, investments in government treasuries would be paid back in cheaper fiat as time goes on. Unfortunately, there are many winning move for the government but few for the people. Keep stacking.

Aug 7, 2014 - 1:13am

Good to See You, Mr. Fix

Stop by more often, my friend. I always appreciate your insights.

Aug 7, 2014 - 1:19am

Cal you do a great job breaking things down.

I've been studying this stuff since 1997, and knew something was wrong long before that.

The only thing that will fix this is breaking the 'illusion' that has allowed it to happen.

I come to this site, not as a subscriber, but to measure how far America has gone down and look to those that might actually understand it, and spread the truth.

I love Turd for creating the site, and I think he has learned more from doing it than he would of himself if he hadn't done it. It's nice to see people finally waking up.

This isn't the only site doing it, and I can't send money to them all, even though I appreciate a great deal of them. And I don't have the time to spend all day writing posts.

To me, it comes down to the Golden Rule, and My Efforts are to isolate me from everything else that is trying to distort it.

EVERYTHING else has been used to destroy the values I hold dear.

Simple is kinda nice when one appreciates a peaceful evening.

Spartacus Rex
Aug 7, 2014 - 1:30am
Spartacus Rex
Aug 7, 2014 - 1:32am

So Cal...

Have you had the chance to read The Creature from Jekyll Island yet?

Cheers, S. Rex

Spartacus Rex
Aug 7, 2014 - 1:39am

Aug 7, 2014 - 1:57am

Never a Disappointment from Spartacus Rex

I like the gun salesman of the century poster, hilarious. Seriously, though, it makes me wonder if the gun manufacturers hedge by donating to the democrats?

As for reading the Creature from Jekyll Island book, no, I have not yet cracked it open. I hope to get to it soon, though.

Spartacus Rex
Aug 7, 2014 - 2:11am

@ Cal, I Like The Way You Think!

"gun manufacturers hedge by donating to the democrats"

Cheers, S. Rex

Aug 7, 2014 - 2:35am

one of my favorite "gotta love the U.S.A." moments...

i'm west of Atlanta Ga. about 30 minutes in a populated semi-suburbish area

on New Year's Eve i wander outside at about midnight to t... get some fresh air... and hear some midnight gun fire celebration. Then there was more gun fire from other directions, and then others and then others... shotguns booming, handguns rapid firing, the old 5.56 3 round burst, AK-47 distinctively emptying magazines into the New Year, life was good.

Spartacus Rex
Aug 7, 2014 - 2:55am

@ SS121 WTH?

"in a populated semi-suburbish area"?

Yeah, real fun until a round comes back through someone's roof and either injures or kills someone!

Who respects F'n Idiots?

Cheers, S. Rex

Aug 7, 2014 - 3:18am

S. Rex, you obviously never party in the South

Down here, New Year's Eve party hats are all made of Kevlar. Safety First!

Spartacus Rex
Aug 7, 2014 - 3:48am

@ SS121 WTH? South?

Hell, Atlanta is further North than even Dallas! South my A**!

Cheers, S. Rex

Aug 7, 2014 - 6:34am

Very plausible

CL I could also imagine it playing out very much like that, great post. There may be variations due to war which is very real threat. Psycho war mongorers are racheting up tensions very successfully at the moment it appears.

Aug 7, 2014 - 6:40am


propoganda - Y

false flags - Y

wars - Y .. however the big one is still work in progress

disease - Y

natural disasters - Y ... but more will be needed, crank up Haarp

currency collapse - In progress

mope - Y (business as usual)

Aug 7, 2014 - 7:56am

the red states are just not going to part with their guns

Visiting with a local LEO who had served trying to train police in Kosovo and Iraq. He states that the cultural disconnect between Mohammedans and Christians in Kosovo is coming to be matched by the cultural disconnect between the South and the East/West Coast.

Other American LEOs he meets cannot understand why he owns one personal gun, let alone 12, with accompanying ammunition. He responds to them -- "just what are you going to do when TSHTF?" in Chicago, or Baltimore, or wherever. Local LEO has water, a garden, can fish and hunt, and provide for his family.

Aug 7, 2014 - 8:04am

Turkey’s gold imports sink by 94 percent over previous month

Turkey’s gold imports last year skyrocketed by 150 percent to reach a record level of 302.3 tons totaling $16 billion.

Turkey’s gold imports plummeted by 94 percent on a monthly basis to 1.45 tons due to Ramadan and geopolitical tensions in the Middle East that steeply curbed demand, according to new figures.

The country bought 24 tons of gold in June 2013 and 37 tons of gold in July last year, according to figures announced by the Borsa Istanbul Precious Metals and Diamond Market on Aug. 6

Troy Precious Metals Chairman Cumhur Taşdelen said the monthly decline mainly stemmed from a slowdown of business in Muslim countries during the month of Ramadan, coupled with escalated political tension due to violence in Iraq and the Gaza Strip.

With the announcement of July data, the total gold imports of the country in the first seven months of the year were 50.95 tons, a 77 percent decline from the same period last year.

Turkey’s gold imports last year skyrocketed by 150 percent to reach a record level of 302.3 tons totaling $16 billion, as Ankara continued paying for Iranian natural gas and oil imports using the Turkish Lira and as Tehran used deposits held in Turkey’s state-run Halkbank to buy gold.

Some of the gold was retained inside Turkey at the peak of the trade while some was taken to Dubai by couriers to be sold for foreign currency, which was urgently needed by Iran as sanctions against its atomic program have increasingly cut off access.

Analysts also argued that the simultaneous weakening of the lira and the upsurge in global gold prices further increased gold’s price in liras, curbing demand for the precious metal.

Turkey’s gold trade has followed an undulating course over the past seven months.

The country imported 6 tons gold in January, 1.27 tons in February, 2.03 tons in March, 4.16 tons in April, 11.76 tons in May and 24.28 tons in June.

Aug 7, 2014 - 9:02am

some great analytics there, Cal Lawyer

excellent observation and analytics, try telling that to your associates!!! Then to put the icing on the cake tell them the government already has the mechanism/warehouse for the pensions, 401(k)s and the like. When they ask what would that be you can simply reply "MyRA".

I happen to know many gun owners and most don't feel anger (yet) but do feel that something is definitely not quite right.

I hope we have years to go which would give me more time to stack. But we seem to be at a crossroads now and I believe the key is the FED: as we have already entered a deflationary state as proven with the (real) GDP and not the bogus positive one, will they sit back and let it happen? The gov't. would then have the excuse "to save us" as the market craters and grab the bounty, but what good does that do for consumption and growth going forward - the deflation?. But if the FED jumps in with printers a blazin' to stop the deflation then I believe hyperinflation will be in our future as we know they can never stop. It would seem both roads lead to the bottom no matter what.

If only there was a way to force the world on the (unbacked, full of promise, debt based, fiat, worthless) dollar forever?!!! If only we could pick a nation who resents the dollar and punish them so bad that any other nation would think twice about......... nah, never going to happen.

Aug 7, 2014 - 9:08am

Nice article CaLawyer. I'm

Nice article CaLawyer.

I'm sure what you described will come to pass.

It's so sad. But "the system" only moves forward, as Ed Seykota observed. Trying to reverse "progress" is a waste of effort, time and reputation. We can only prepare, adapt, or move out of the way as best we are capable.

Aug 7, 2014 - 9:56am

uh oh......

Europe Furious That Putin Dares To Retaliate To Sanctions, Blames Economic Slide On Kremlin

Russia getting blamed for everything. Europe was in a recovery too!! Just like the U.S.

Aug 7, 2014 - 10:05am

screwing with the fiat north of the border

The Royal Canadian Mint has just announced they are going to remove the polar bear from the "Toonie" ($2 bill) in view of it's demise soon with global warming.

In the height of political correctness, they will replace it with two gay deer. Instead of calling it a "toonie" it will now be called "two fucking bucks."

lakedweller2 SS121
Aug 7, 2014 - 10:31am


Are you sure you weren't in downtown Atlanta. :)

Aug 7, 2014 - 10:48am

@CalLaw and @SparRex

Great read Sir. Thank you for your time and boundless energy. And yes, The Creature is a must read for everyone interested in how we got into this shit hole.

Aug 7, 2014 - 11:21am

Good stuff CaL


Aug 7, 2014 - 12:13pm


Well stated and I agree with your premise. Thanks


Aug 7, 2014 - 12:51pm

Cal Lawyer re: pensions . . .

Most are way, way underfunded.

Like Illinois' state govt. employee pension plan; IL pension plans are underfunded by $100,000,000,000. Yes, that's $100 Billion dollars of missing money.

Yet, the IL supreme court recently ruled they cannot reduce any benefits.

How can they pay out benefits with no money? The only way is to borrow it. Who will lend to IL? The Fed, I s'pose.

However, when it's all over with, the people who have "good" fully-funded pensions like employees of the state of WI will be little better off than those with IL pensions.

Because the dollar-devaluations that will occur will make all pension payouts minuscle in purchasing power.

The BRICs are forming their own currency/trade zones to bypass the buck. That makes it all the harder for the western banker elites to hide their agenda.

What happens when the ROW no longer accepts dollars or USTs as payment for real goods? The greatest depression the world has ever seen--or the war to end all wars, and civilization to boot.

Aug 7, 2014 - 1:36pm

selling some coins

Hi everyone, I have 6 coins I am looking to unload, a total of around 6.6 ounces. 3 Mexican gold pesos around 1.2057 ounces each 2 Chinese gold pandas 1 South African krugerrand I would preferably like to sell to one buyer if possible. I have dealt with Urban Roman in the past where I traded around 100+ buffalo silver coins for some gold, the process went very smoothly. If you are in the DC Metro area all the better, we won't have to deal with shipping. For price I thought we meet somewhere in between spot and what you as an individual could buy from a shop so it would be an ideal situation for both. Going by today's prices: Best price for a chinese panda right now is 1360 I will do 1340.00. So 2680 for both. Krugerrand is going for 1342, I will do 1330. Mexican Gold peso is going for around 1588 lowest, I will do 1578 right at spot price. So that is 2680+1330+4734(3x1578)= 8744 would be the total For someone buying all 6 I could go under spot for the pesos a bit. If you are in the DC metro area we could meet up. Looking forward to serious inquiries.

Aug 7, 2014 - 3:34pm

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