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Terminal

251
Tue, Jun 18, 2013 - 11:33am

As we await the FOMC Fedlines tomorrow, time for another math lesson.

So I'm laying in bed last night, flipping through the channels and I stumble across Fox Business News. I usually stop there as I flip by because they regularly cycle the current gold price in the lower right hand corner of the screen. As luck would have it, Neil Cavuto (who is kind of a douchebag) was just beginning a segment with David Stockman, the former Budget Director for President Reagan and author of this great new book.

Anyway, I start watching this and, before long, I find myself talking back to the screen, even raising my voice from time to time. First, Cavuto is infuriating to deal with. His douchebaggery permeates his interview style and keeps Stockman from elaborating on critical points. However, what really drove me crazy was the avoidance of the main point. The United States is at the terminal stage of its debt and deficit financing. The only remaining method of maintaining The Great Ponzi is record low interest rates combined with extremely short maturities. If rates were allowed to return to "normal" and if the U.S. were to prudently spread their debt obligations across the yield curve, the budget line item "interest on the national debt" would simply swamp and overwhelm the entire federal budget.

First, before we continue, here's the clip of Cavuto and Stockman:

Fortunately, for all of you that are math-challenged, this isn't complicated. Here are two charts of the national interest cost that I found at this website: https://www.treasurydirect.gov/govt/reports/ir/ir_expense.htm. First, here's the breakdown month-by-month of interest paid so far in fiscal 2013:

Interest Expense Fiscal Year 2013
May $24,378,480,861.09
April $35,951,751,963.63
March $23,472,400,737.30
February $16,901,310,565.17
January $17,816,590,831.57
December $95,736,594,801.52
November $25,068,968,472.99
October $12,922,741,407.27
Fiscal Year Total $252,248,839,640.54

The interest expense varies from month to month because of the maturity and coupon schedule. The main point to note is the total. Through 8 months, the total interest is about $252B. Now remember, in the previous post, I showed you that the total deficit so far this year, which includes this interest line item, is about $626B. Projecting forward, fiscal 2013 will likely come in at an interest cost of $350B or so and a total deficit of around $1T.

Now take a look at the total interest cost broken down by year since 1988. This, too, was taken off of the treasurydirect website.

Available Historical Data Fiscal Year End
2012 $359,796,008,919.49
2011 $454,393,280,417.03
2010 $413,954,825,362.17
2009 $383,071,060,815.42
2008 $451,154,049,950.63
2007 $429,977,998,108.20
2006 $405,872,109,315.83
2005 $352,350,252,507.90
2004 $321,566,323,971.29
2003 $318,148,529,151.51
2002 $332,536,958,599.42
2001 $359,507,635,242.41
2000 $361,997,734,302.36
1999 $353,511,471,722.87
1998 $363,823,722,920.26
1997 $355,795,834,214.66
1996 $343,955,076,695.15
1995 $332,413,555,030.62
1994 $296,277,764,246.26
1993 $292,502,219,484.25
1992 $292,361,073,070.74
1991 $286,021,921,181.04
1990 $264,852,544,615.90
1989  $240,863,231,535.71
1988 $214,145,028,847.73

And also consider this chart:

And this is where you stop me and say: "Hey wait a second, Turd. How the heck does this work? Back in the early 90's, the total debt was just a quarter of what it is today but the interest costs were almost the same. Even as recently as 2005, the debt was half of what it is today yet the interest cost was the same."

It's quite simple, really. Since the early 90's Clinton Administration, the policy of the Treasury Department has been to shorten the average maturity of the total outstanding debt. Why would you do this? Think of the "yield curve". A "normal" yield curve slopes positively, as bond yields increase over time. So, the shorter the maturity of the bond, the lower the interest rate.

Additionally, since 1994, The Federal Reserve has aggressively maintained a very low interest rate policy. The side effect of this policy has been the rapid inflation of the tech and housing bubbles. However, the main goal of this policy has been to provide financing for the federal debt and deficit at the lowest interest rate possible. And it has worked!

Therefore, by continually shortening maturities and issuing and refinancing debt at lower and lower interest rates, the "interest on the national debt" has been remarkably stable for nearly two decades.

But here's the problem that Cavuto and Stockman failed to cover: The jig is up. Rates can't go any lower and the average maturity of the outstanding debt can't get much shorter. We've reached the terminal stage and now we have a major problem on our hands.

The only reason that rates remain as low as they are is consistent Fed involvement in the bond market, to the tune of $85B/month. Should The Fed remove or "taper" some of that bond buying, interest rates will rise. Why? Less buyers of treasuries means that prices will fall. Falling bond prices mean higher interest rates. It's no more complicated than that.

And what if rates were to rise? Though admittedly an oversimplification, let's look at it this way:

For fiscal 2013, the U.S. will pay interest of $350B on a debt level of about $16T. That's an average interest rate of about 2.2% with an average maturity of around 5 years. Oh my goodness. (https://www.treasury.gov/resource-center/data-chart-center/quarterly-refunding/Documents/TBAC%20Discussion%20Charts%20Feb%202012.pdf)

Hmmmm. Now let's remove The Fed from the picture. That's what everyone seems to be expecting nowadays. Without direct Fed intervention, interest rates will rise. (I would say that they will rise substantially as we already know that foreigners are aggressively selling treasuries as it is. (https://www.zerohedge.com/news/2013-06-14/treasury-sales-foreigners-hit-record-high-april) Can you imagine the rush for the exits if rates are rising and bond prices are rapidly falling?) If rates were allowed to "normalize", what would be the average interest rate on the federal debt once it's all refunded and rolled by 2018? Well, again by simplifying the math we get:

$20T (2018 debt level) X 5% average rate on a 5 year average maturity = $1,000,000,000,000 per year

So, if rates are allowed to rise and normalize, the line item "interest cost of the national debt" will be equivalent to the entire national deficit of fiscal 2013.

With the continued growth of entitlement and defense spending, the entire federal deficit for 2018 would be $2T, at a minimum. And from where do you think all that funding will come from? Continued and increased demand from creditor nations such as China, Japan and India? Not likely. $85B/month in Quantitative Easing would have to be increased to $170B/month. Do you see now why we call it QE∞?

In the end, as the title of this thread states, we have reached the terminal phase of our debt-induced, deficit spending and growth economy. Rates can't go much lower and the Treasury can't shorten maturities much farther. Their only hope is to maintain and sustain, propping up The Great Ponzi and maintaining power for as long as possible. In this environment, any move by The Fed to "taper" QE would be very short-lived and done for appearances only. The only option is ever-increasing QE, to infinity. Your only financial protection against the eventuality of devaluation and collapse is the acquisition and storage of physical precious metal. Buy some more today, while you still can.

TF

About the Author

Founder
turd [at] tfmetalsreport [dot] com ()

  251 Comments

Beastly Stack · Jun 18, 2013 - 5:53pm
Katie Rose · Jun 18, 2013 - 5:59pm

when I pause and realize that for every $1.oo the Federal Government spends, approximately $ .40 is borrowed. And our elected representatives keep up the mantra, "Deficits don't matter." The MSMchimes along with them, "Deficits don't matter."

It. makes. me. crazy! Americans are brain dead.

And so I do the only thing I know to do. Today I am celebrating the completion of my second 12' x 24' greenhouse. It's only purpose is to grow vegetables. All that needs to be done is placing the hooks on the two double front and back doors, both inside and out. That's it. Very soon it will be bursting with life and fabulous organic food. smiley

All of us who visit TF Metals know that the system is doomed.

The question is, "What are we going to do to protect our families, and help our neighbors?"

We have 3 greenhouses now. One is the mother greenhouse. We use it to grow all the starts. It is a hard shell greenhouse. It is awesome.

The next project is to take our well off-grid. How do I get water to the house, barn, greenhouses, garden, orchard when the power grid is down for more than a day or so? I have no interest in hand pumping water from the well and then lugging it where it is needed. I am simply too old for that.

I am praying for more time. I need more time. I can yell at the TV (which I often do) or be grateful that all the delays allow me more time to prepare.

I agree with TURD. The USA is a Stage 5 cancer patient. We are terminal.

Boardwalk · Jun 18, 2013 - 6:06pm

One other consequence of the FED moving to the short end of the curve is that having done so, they not only need to find buyers to plug the annual budget deficit, they also need to find enough buyers for all the bonds that mature and need to be rolled over.

According to the source linked below, the US now rolls 1/2 its debt every two years. So, the US needs to find buyers for $1T in NEW debt each year, PLUS find buyers for ~$4T of maturing debt that needs to be rolled over.

We're all good at math here in T-Town so we can see that adds up to $5T worth of auctions in an environment where foreigners are starting to say . . . NYET, NEIN, NON to MOAR bonds! 

https://johnhcochrane.blogspot.ca/2012/11/debt-maturity.html

Disintermediate yourself while you still can!

That_1_Guy Katie Rose · Jun 18, 2013 - 6:12pm

Hydrolic Ram Pump is what you want.

Video unavailable

Also look into Rocket mass heaters.

I would go into more detail.

This weeks hell at work.

Great stuff.

GUY

· Jun 18, 2013 - 6:20pm

Even China doesn't like the prospect of tapering QE. I'm wondering if we should change the "Get Out Of The US NOW meme to get off the planet meme" ? I know not very optimistic. But I've yet to see a good persuasive argument that when the domino's start falling, every single country tied to the the reserve currency doesn't face extreme chaos and goverments, all goverments, start to use heavy handed methods to control public rage.

Fitch says China credit bubble unprecedented in modern world history

https://www.telegraph.co.uk/finance/china-business/10123507/Fitch-says-C...

China's shadow banking system is out of control and under mounting stress as borrowers struggle to roll over short-term debts, Fitch Ratings has warned.

Once the US Federal Reserve starts tightening. "China will face large-scale capital outflows if there is an exit from quantitative easing and the dollar strengthens

The agency said the scale of credit was so extreme that the country would find it very hard to grow its way out of the excesses as in past episodes, implying tougher times ahead.

"The credit-driven growth model is clearly falling apart. This could feed into a massive over-capacity problem, and potentially into a Japanese-style deflation," said Charlene Chu, the agency's senior director in Beijing.

"There is no transparency in the shadow banking system, and systemic risk is rising. We have no idea who the borrowers are, who the lenders are, and what the quality of assets is, and this undermines signalling," she told The Daily Telegraph.

The journal said total credit in China's financial system may be as high as 221pc of GDP, jumping almost eightfold over the last decade, and warned that companies will have to fork out $1 trillion in interest payments alone this year. "Chinese corporate debt burdens are much higher than those of other economies. Much of the liquidity is being used to repay debt and not to finance output," it said.

Continued https://www.telegraph.co.uk/finance/china-business/10123507/Fitch-says-C...

Sad-descent grinners · Jun 18, 2013 - 6:20pm

"Does the Fed wanting a shorter average bond duration explain operation TWIST? Taking longer maturities off the hands of the public and into the hands of the Fed?

Does the US government really pay any interest to the Fed? Surely they get a massive discount on bonds held by the Fed (90%+?)?"

1. The Fed returns "profits" from operations to the treasury.

2. The purpose of twist is to lower long term (ten year) interest rates as this is the key rate for mortgages etc. 

While this means the US pays a lower interest rate on its debt it also means that it must refinance the entire national debt far more frequently. Also any rise in rates will impact the budget more quickly.

Trappist · Jun 18, 2013 - 6:21pm

as always good posting, and agree on the implications on a longer term perspective (2 à 3 yrs to go before the final burst?), would not call it terminal stage. more global worry has to pass through markets and Equity will be the main victim, again driving back US Treasury yields to 1.25%ish for the 10yr yield (lower part of the very long trend channel, tens trading today at 2.20%)

technical remark: if US Treasury would be able to refinance its complete debt in one shot at the average maturity of 5yrs, they would half their interest rate cost from the 2.2% being quoted to roughly 1.05% today for current fives.

For fiscal 2013, the U.S. will pay interest of $350B on a debt level of about $16T. That's an average interest rate of about 2.2% with an average maturity of around 5 years.

Also, again a technical remark not changing the idea of your posting. This year and maybe next year Treasury is paying off some old long bonds with a juicy 10+% coupon, increasing the average interest uncle sam is paying.

those are some quick remarks from a ust portfolio manager

btw

Goldman did a survey amongst its fixed income clients, checking Hatzius fomc view. surprising to me was that almost half of the respondents was expecting tapering ALREADY in September and tapering in UST (and not in the less liquid MBS market).

Feels like some Tapering expectations for tomorrow are already finding their way in some asset classes by some economist i am following...

I have a VERY hard time to understand why both gold as USD are dropped today, Equities rallying and UST hovering around in front of the FOMC meeting.

I am digesting and digesting this market. Think worse thing to happen is He mentions tapering and put it on the table (the 3layer approach would be discuss it on "plein public" at Humphrey Hawkins, get FOMC approval at the end of July and get the party starting at Jackson Hole in August with tapering in September) but that Gold (and prob Treasuries too) initial sell but quickly recover. Gold already selling so long on QE ending worries. Guys, sell the rumor buy the fact (PHYSICAL)

pls let me know your view or comments on the above

Trappist

· Jun 18, 2013 - 6:34pm

Ron Paul is saying US government could try to kill Snowden with a drone. This could make for some exciting afternoon television news if the USA sends a drone into Hong Kong. Makes for good bloggin'

It might even be more interesting if Snowden gets immunity from Iceland. Iceland is now one of the few countries that has told the Washington based IMF to f@$K off. If Snowden moves to Iceland, it would give us reason to send in the boms

If I were a kid again (some accuse me of still being one) instead of playing doctor, I'd play IMF. Rules: I am the head of the IMF, all the kids in the neighborhood are the member states. I tell each and everyone of them what to do with their allowance money. If you disobey, I dismantle your house.

Icelandic PM says he'll ignore IMF's advice

https://www.globalpost.com/dispatch/news/afp/130617/icelandic-pm-says-he...

Ron Paul: US government may try to kill NSA whistle-blower

Read more: https://www.foxnews.com/politics/2013/06/11/ron-paul-us-government-may-try-to-kill-whistleblower/#ixzz2Wbp37FfL

Former Rep. Ron Paul (R-Tex.) told FOX Business Network that he fears the U.S. government may try to assassinate the whistleblower who leaked information about National Security Administration surveillance programs to the media.

In an interview with FOX Business on Tuesday, Paul said he was worried that someone within the U.S. government might try to use a missile to kill Edward Snowden, the 29-year-old who has been the source of information about two top secret NSA programs.

“I’m worried about somebody in our government might kill him with a cruise missile or a drone missile,” Paul said. “I mean we live in a bad time where American citizens don’t even have rights and that they can be killed, but the gentlemen is trying to tell the truth about what’s going on.”

Paul, father of Kentucky senator Rand Paul (R), also dismissed suggestions that Snowden may defect to a foreign nation such as Russia:

“He's not defecting, there are no signs of that happening,” he said. “It’s a shame that we are in an age where people who tell the truth about what the government is doing gets into trouble...No, I don't think for a minute that he's a traitor.”


Read more: https://www.foxnews.com/politics/2013/06/11/ron-paul-us-government-may-try-to-kill-whistleblower/#ixzz2WbpaRcaI
Bollocks · Jun 18, 2013 - 6:34pm

Just watching BBC Newsnight. They're debating what's been going on in the banking sector over the last few years (bailouts, the ppi scam, massive bonuses, heads of bailed-out banks leaving with huge payouts and pensions, manipulating libor etc) and one of those being interviewed is Sir Martin Jacobs, a former chairman of Barclays bank.

Here's what he just said:

"You're talking about yesterday's disasters. All the banks, all the major banks now are run by different people with a different ethos. The bad apples are no longer in charge".

Asked if bankers should be sent to jail...

"Going to jail is completely out of the question right now, because first of all you have to find an individual guilty of some crime, so let's talk about liability rather than going to jail which is well over-dramatised".

"You have to stop demonising bankers, because as long as people go on demonising them they can't behave as bankers really should".

"The bad apples are no longer in charge"

"...first of all you have to find an individual guilty of some crime"

angryangryangryangryangry

=====

edit: by saying you have to find an individual guilty of some crime, he is saying that market manipulation, scams and outright theft is NOT a crime. ie - this IS the what bankers do. That is the business of banking!




Sad-descent Bollocks · Jun 18, 2013 - 6:34pm

That's as bad as what we have in the US. I have gotten to the point where I just laugh at the ridiculousness of it all.

JackPutter · Jun 18, 2013 - 6:49pm

Major pipeline explodes in Louisiana, area evacuated

https://www.chicagotribune.com/news/sns-rt-us-explosion-louisianabre95h0...

SilverSurfers · Jun 18, 2013 - 6:50pm

Hong Kong of course, its the mid point of that treasonous conspiracy, and birds of a feather. Hey I found out where those gigolo camel jockeys are hanging out. Fire up the drones .....

The Clash - Rock the Casbah (Official Video)
The Watchman · Jun 18, 2013 - 6:53pm

Tonnes1,001.66

Ounces32,204,529.04

Value US$44,002,477,798.26

Rui · Jun 18, 2013 - 7:05pm

I think his last two calls for metals to turn both fell short. Santa is hurting his own credibility by promoting this kinda shaky calls.

Bollocks · Jun 18, 2013 - 7:12pm

Indeed, you have to at least try laugh at the ridiculousness of it all.

It's just that whenever it appears as it did tonight on live TV and nobody seriously challenged him on what he said, and then the debate ends - moving swiftly on to the next story - it's like watching something that is meant to have NO meaning. It doesn't matter. Nothing to see here everyone. Let's move on and forget - because it's not important and everything is just fine. That's the point of the MSM.

MSM reporting will NEVER genuinely question to get to the truth. Sure, we all know that, but every time I see this sort of thing it's a punch in the face from the faceless. Difficult to laugh it off, at least for me.

Strawboss · Jun 18, 2013 - 7:13pm

This site is awesome. You guys are top shelf. Knowledgeable. Willing to share. Encouraging each other. Open minded. Seeking truth above all else. A strong desire to gravitate towards that which seems pure, decent, without tarnish. Good people. My kind of people.

I wish you all were neighbors (well - most of you anyways...). I would invite you all to a BBQ potluck. Good times would be had by all...

tyberious · Jun 18, 2013 - 7:39pm

I make a mean Carolina pulled pork!

And oh yeah, welcome a board and spread the news!

Mantis · Jun 18, 2013 - 7:41pm

Like i was trying to say earlier, control of the media. Thats how the sheep are taught what to think, just like in Animal Farm by George Orwell.

I can hardly bear to watch any telly at all lately, get too riled up.

The other key components of the matrix of control are control of education. And above all control of money.

Anyway its late, mantis out angel

Strawboss · Jun 18, 2013 - 7:51pm

New post on my AGQ Trading thread

https://www.tfmetalsreport.com/forum/4560/agq-trading-system?page=1#comm...

Tyberious - I am an addict watching all the BBQ cooking shows/contests on TV. Having a BBQ restaurant - serving awesome food at reasonable prices is a dream of mine. 

Lumpy · Jun 18, 2013 - 7:53pm

That was a GREAT post! You really brought the big picture into better focus. Thank YOU!

SilverLeaf · Jun 18, 2013 - 7:54pm

https://www.nasdaq.com/article/jim-rogers-the-gold-correction-is-not-ove...

Hard to argue his track record. 2013 might be a negative year for the metals.

Bollocks · Jun 18, 2013 - 8:00pm
Jail reckless bankers, standards commission urges City of London skyline

Senior bankers guilty of reckless misconduct should be jailed, a long-awaited report on banking commissioned by the government has recommended.

The Parliamentary Commission on Banking Standards was set up by Chancellor George Osborne last year after a number of scandals involving the industry.

The cross-party group's fifth report attacked the lack of accountability of bankers and also said some bonuses should be withheld for up to 10 years.

The Treasury has welcomed the report.

It called it "a very impressive piece of work" and promised to provide a response before the summer recess.

"Where legislation is needed, we have said we will support it, and the banking bill currently before Parliament can be amended to ensure they are quickly enacted," a spokesman added.

The 571-page report also called on the government to review alternatives for selling off the Royal Bank of Scotland (RBS), including breaking it up, and demanded action to make the banking market more competitive.

Criminal liability

"Too many bankers, especially at the most senior levels, have operated in an environment with insufficient personal responsibility," the report says.

"Senior executives were aware that they would not be punished for what they could not see and promptly donned the blindfolds.

"Where they could not claim ignorance, they fell back on the claim that everyone was party to a decision, so that no individual could be held squarely to blame - the Murder on the Orient Express defence."

https://www.bbc.co.uk/news/business-22954586

=========

"The Treasury has welcomed the report."

How wonderful!

Spartacus Rex · Jun 18, 2013 - 8:07pm

TUESDAY, JUNE 18, 2013

Edward Snowden: "This country is worth dying for"

Bathtub falls and police officers kill more Americans than terrorism, yet we've been asked to sacrifice our most sacred rights for fear of falling victim to it. - Edward Snowden Since the mainstream media, as directed by the Government and corporate entities who control the flow of news, is smearing Edward Snowden as a traitor and are flooding all of the news outlets with outright lies, I wanted to publish a follow-up open Q&A held by The Guardian and Glenn Greenwald. I've posted some of the most "piercing" answers from Snowden, including this one about Obama, which summarizes exactly what went through my mind about Obama after his first 100 days:
 Obama's campaign promises and election gave me faith that he would lead us toward fixing the problems he outlined in his quest for votes. Many Americans felt similarly. Unfortunately, shortly after assuming power, he closed the door on investigating systemic violations of law, deepened and expanded several abusive programs, and refused to spend the political capital to end the kind of human rights violations like we see in Guantanamo, where men still sit without charge.
Here's a sample of some other quotes from Snowden, with the link to the Q&A at the end:
"I did not reveal any US operations against legitimate military targets. I pointed out where the NSA has hacked civilian infrastructure such as universities, hospitals, and private businesses because it is dangerous. These nakedly, aggressively criminal acts are wrong no matter the target. Not only that, when NSA makes a technical mistake during an exploitation operation, critical systems crash."

[Note: think about the potential for the abuse of private information for political purposes by the Party in the White House with access to all this information. Think about how J. Edgar Hoover or Nixon would have abused this. Oh wait, the IRS under Obama has been abusing this, as has the Justice Department/Eric Holder]

"Initially I was very encouraged. Unfortunately, the mainstream media now seems far more interested in what I said when I was 17 or what my girlfriend looks like rather than, say, the largest program of suspicionless surveillance in human history."

"due to the FISA Amendments Act and its section 702 authorities, Americans’ communications are collected and viewed on a daily basis on the certification of an analyst rather than a warrant. They excuse this as "incidental" collection, but at the end of the day, someone at NSA still has the content of your communications"

And his coup de grace:
it's important to bear in mind I'm being called a traitor by men like former Vice President Dick Cheney. This is a man who gave us the warrantless wiretapping scheme as a kind of atrocity warm-up on the way to deceitfully engineering a conflict that has killed over 4,400 and maimed nearly 32,000 Americans, as well as leaving over 100,000 Iraqis dead. Being called a traitor by Dick Cheney is the highest honor you can give an American, and the more panicked talk we hear from people like him, Feinstein, and King, the better off we all are. If they had taught a class on how to be the kind of citizen Dick Cheney worries about, I would have finished high school.
Here's the article: LINK

FYI, one of the ranking Congressional Republicans smeared Snowden as being a high school drop-out. That's incorrect. He does in fact have a GED. However, here's a sampling of some famous high school dropouts:

Thomas Edison, Benjamin Franklin, Albert Einstein (later returned), John D. Rockefeller, Walt Disney, Colonel Sanders, Charles Dickens (one of my favorite authors), Ray Kroc (McDonald's).

POSTED BY DAVE IN DENVER https://truthingold.blogspot.com/
Spartacus Rex · Jun 18, 2013 - 8:13pm

Same in this side of the pond: 

Strawboss · Jun 18, 2013 - 8:14pm

Snowden is a Patriot - in the truest sense of the word. He succinctly said it best - "this country is worth dying for".

The things we take for granted...sigh...

I fear that his efforts will fall upon deaf and feeble ears here in the US. Too distracted by American Idol, Facebook and all that stuff...

Spartacus Rex · Jun 18, 2013 - 8:18pm
Author : Bill Holter 
Published: June 18th, 2013

I was going to write a piece today about the current Fed meeting which we will hear a statement tomorrow. It used to be that the term used was “exit plan” from QE (monetization) now the politically correct term is “tapering.” “Exit plan” I guess just sounded too scary, too final to be used. It sounded like throwing a 5 year old into the water with no life preserver and walking away (my Dad did this but didn’t walk away…yes, I learned how to swim). Neither the markets nor the economies can deal with this because of the lead weight tied to their necks…debt, too much of it.

“Tapering?” Nope, it cannot happen. They might talk about it and maybe even try it for a week…until both the stock and bond markets lock up like a crack addict going cold turkey. It is either pedal to the metal or the markets will implode within 72 hours. The economy which is merely treading water will slip below the surface and drown. I have written several times, “What can they say?” when referring to these Fed meetings. Unfortunately the answer is not much, unless they want to upset and turn over the apple cart. I would not expect anything Earth shattering as the Fed understands the fine line that they’ve confined themselves too.

Rather than harp on the Fed’s lack of options, I’d like to mention that we stand before THE greatest and most pre-advertised bank run in history, let me explain. If you have kept your ear to the ground then you know that Europe, Canada, New Zealand and most importantly the U.S. have all legislated “bail ins” for future bank failures. The BIS (the central bank’s central bank) even publicly put forth their own “simple” (as they call it) plan to handle bank failures. The new “plan” is that there will be no more taxpayer bailouts, no more central bank bailouts…no, let Mother Nature rule! Stockholders, bondholders AND depositors will now be on the hook and “fund” any bank reorg’s. In other words, Cyprus is the future and can be used as a pretty close roadmap to what’s coming!

I used the term “well advertised” which has actually happened. With any due diligence at all you can see exactly what’s coming and you can bet your bottom dollar that you will hear after the fact “we tried to tell you.” Well yes they have, they did, but few have listened and fewer have acted so far. As with any bank run, it starts slowly with just a trickle (the smartest money), then it will gain pace. My only question is of the “chicken or the egg” type. Does a bank run force the banks to close? …or does a bank closure get blamed for a systemic bank run? It’s really a stupid question because the “result” is exactly the same, banks close and people lose money so who cares “why?”

The “noise” about bail ins is getting louder and louder every day which as I’ve said will actually cause bank runs on its own, but, there is another “run” which is getting very little to no press at all. This is the “run” on vaults. If you just look at the Shanghai metals exchange, they have delivered nearly as much gold so far year to date as all of the world’s mines have produced. If you look at the NY Fed and even though there are numbers to look at showing “tons upon tons” of gold, they told Germany that they’d have to wait 7 years to get theirs back…good luck with this! GLD has seen its inventory drop about 25% since the beginning of the year and even JP Morgan shows a nearly 70% drop. Can you imagine that JP Morgan holds only a “whopping” 136,000 gold ounces for their customers? The echoes inside of this vault must be deafening!

In any case, it’s pretty easy to see the “warnings” (if you’re listening) have been quite straightforward and loud. They are telling you in no uncertain terms to “get your money out of the banks” because when push comes to shove no more bail “outs” will exist…only bail “ins” which unfortunately will include YOUR money that you thought you “had.”

https://blog.milesfranklin.com/the-most-well-advertised-bank-run-in-history

tyberious · Jun 18, 2013 - 8:18pm

My Dear Extended Family,

The international bankster plan now is delay and dissuade, so hurry up and do the needed NOW!

1. Many people are finding that withdrawing large sums from the banking system that used to be done on the same day by bank wire now takes two weeks or more.

2. Any new account you wish to open anywhere in the world, you must open in person.

There is a real reason why this is happening, but I prefer to discuss it in our private meetings and not in public writing. I know exactly what is happening and you have to GOTS, now!

Regarding banks most likely to be bailed in, they are those that took bail-out money.

Here is the list. Do the necessary please and do it now. For your sake, not mine!

https://projects.propublica.org/bailout/list

Spartacus Rex · Jun 18, 2013 - 8:21pm

Black Market

Author : Andrew Hoffman  Published: June 18th, 2013

Read the Monday Afternoon Wrap-Up for 6/17/2013 and the Tuesday Morning Commentary for 6/18/2013

Last week, I saw the below article about how Europe’s “black market” is booming…

Europe’s Black Market Economy is Booming

…in other words, the “off the books” movement to avoid onerous taxes in a socialist – bordering communist – society gone BERSERK…

Soaring tax rates feeding Europe’s booming black markets

, study says

…which is EXACTLY where America is heading…

Record Number of Households on Food Stamps– 1 out of every 5

Record number of Americans on disability would make up 8th most populous state

…particularly when Obamacare is rolled out next year…

President to explain how Great ObamaCare is

…per punitive, BUSINESS-KILLING taxes such as this…

All employers with an annual payroll bigger than $400k who do not pay to enroll employees in the public insurance option will pay an 8% tax on all payroll; while employers with an annual payroll between $251K & $400K who does not pay to enroll employees in public insurance option will pay a 2-6% tax on all payroll.

-Kevin Collins

The “BLACK MARKET” has always been citizens’ favored option when oppressed by unjust tax regimes (not to mention, contraband products and services); and care of today’s GLOBAL FIAT PONZI SCHEME, sovereign debts have risen so high, governments are guaranteed to TAX to oblivion

I in no way condone such activities – as they are illegal. Conversely, I am simply pointing out that they have not only occurred throughout HISTORY…

The Big Business of Black Markets

…but are doing so NOW; and will continue to gain momentum as worldwide taxationexplodes

Argentina Inflation and Black Market Money: A Report from the Ground

Just in the past two weeks, France banned the purchase of bullion coins via the mail; while India prohibited banks from selling gold altogether. These are the kind of conditions that foster black markets to develop…

France bans Shipment of Gold & Silver in the Mail!

India Central Bank Prohibits Sales of Gold Coins

…and rest assured, if the U.S. government is dumb enough to enact similar legislation (prices would skyrocket overnight); the same would happen here…

CONFISCATION PROPAGANDA

People constantly ask me why they should consider owning PHYSICAL gold and silver, given the possibility a 1933-like confiscation decree could be enacted. As noted above, I believe such a draconian act would make little practical sense; but then again,desperate governments are not known for their adherence to logic…

Executive Order — National Defense Resources Preparedness

Irrespective, my answer to such questions is always the same. That is, the only way such decrees would be considered would be after the dollar has crashed; at which point, would you rather own…

PRICELESS PRECIOUS METALS OR WORTHLESS DOLLARS?”

The “BLACK MARKET” may not be an optimal method of enacting business. However, if governments continue to TAX, PRINT, and SPEND like drunken sailors, they willinevitably proliferate – WORLDWIDE.

https://blog.milesfranklin.com/black-market

Lumpy · Jun 18, 2013 - 8:21pm

I'm not sure that I would call him a hero...

I would call the THOUSANDS of other Americans who know the same thing he does cowards for not stepping forward.

10th Amendment Powers · Jun 18, 2013 - 8:21pm

I've got a graph in excel I'd like to share. Can't seem to figure out how. Can anyone help?

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