Friday, October 1, 2010

Morning Update/ Market Thread 10/1

Good Morning,

Equity futures are higher overnight, ramping initially on more trumped up economic reports from China overnight – what both our countries can’t print monetarily, they simply make up. The dollar is diving, the Yen is climbing, bonds are falling, oil is zooming straight up now well above $81 a barrel, and gold is again setting new highs just below $1,320 an ounce.

Oil zooming above the $80 mark is an economic show stopper for the U.S. Every jaunt above that mark has caused severe economic damage. Yet, because our government is pumping momo POMO, the hot money rotation has decided it’s time to leave soft agricultural products and move into oil. Watch, our government will blame the oil industry and the “speculators,” the very people who they are fueling.

It’s a good thing that personal incomes rose in August by .5% then, right? July rose .3% (oops revised lower to .2%), and this was above the .3% repeating monkey consensus. Here’s Econopay:
Highlights
Despite sluggish job growth, the combination of modest growth in average hourly earnings, private employment, and steady or firming weekly hours is gradually boosting wages and salaries-at least in the private sector. Personal income in August advanced a healthy 0.5 percent gain, following a 0.2 percent rise the month before. The latest number for personal income topped the market forecast for a 0.3 percent gain. Unfortunately, a notable part of the latest increase came from a jump in government unemployment benefits. Still, there was moderate strength in wages & salaries component which posted a 0.3 percent boost after increasing 0.4 percent in July. Private industry wages & salaries rose a sharp 0.5 percent, matching the July gain.

In August, consumers kept their wallets open. Personal spending advanced 0.4 percent, equaling the pace in July. The August figure matched analysts' expectations. By components, durables slipped 0.2 percent, nondurables jumped 1.4 percent, and services gained 0.2 percent

PCE inflation was a little higher than usual at the headline level but still quite subdued at the core. The PCE price index rose 0.2 percent in both August and July. The core rate firmed 0.1 percent in each of the last four months. The market had called for a 0.1 percent uptick for August.

Wow, so the hyper-inflationists were right!? The one missing link for sustainable price increases is income, and here it is…

Oh, wait, did you catch why it jumped? This is according to Bloomberg, “Incomes were up 0.5 percent, the biggest advance this year, propelled by the resumption of extended and emergency unemployment benefits.”

Niiice. Here’s the thing – government deficit spending only adds to the DEBT which is a drag on the economy. Is it sustainable? Don’t think so.

Not mentioned by Econospin is the fact that year over year consumer spending is decelerating from 3.4% to 2.7% in just one month. Gee, I guess the unemployed don’t really have that much to spend, who could have guessed? But the good news is that at least they’re not out rioting in the streets like they are in Europe and now Ecuador! Right? I mean, sure, they will be paying more at the pump and the dollar has lost nearly 6% of its purchasing power in the last month, but their spending is up a whopping 2.7% over the last year based largely on unemployment checks, so it must be a time to buy stocks, right? Like I said, it’s both a comedy and a tragedy.

Motor vehicle sales are released throughout the day, Consumer Sentiment comes at 9:55 Eastern, the Manufacturing ISM at 10 Eastern, and Construction Spending will also come at 10 this morning.

Yes, this September was the best since 1939 all the media shouts! Yet they fail to tell you what occurred just following that… WWII immediately began and the markets swooned for 4 more years, that’s all. And before you think that events like that won’t happen this time, I will remind you that the type of volatility we are seeing now is most definitely NOT normal! The largest gains and losses occur when volatility is high. These times historically see overall FALLING prices, not rising prices! If you don’t believe that’s true, just pull up a chart showing the last 11 years in the NASDAQ, or draw a line from where the SPX was in 2007 to now. Alternatively you can look at the SPX and go back in time to the first time we were at this level, the year was 1998. So now we get to see how volatile this October will be. It’ll be interesting one way or the other.

Yesterday’s up/down action produced yet another small movement in the McClelland Oscillator. Again, we can expect a large price move either today or tomorrow. The McClelland is still positive, but barely.

All the major indices produced Key Reversal candlesticks yesterday by running to new highs and closing below the prior day’s lows. This is a marker that should not be ignored, it greatly raises the odds of a significant decline. You can see that candle on the DOW, and it came on much higher volume:



The VIX jumped higher yesterday, closing above both the 200 and 50 day moving averages. It was above the upper daily Bollinger band for a time, but closed beneath it, thus avoiding the set up for a market buy signal. Note how price is climbing the wick of that inverted hammer from two days ago. The Bollinger bands are pinched, that means that a large movement is likely to follow. Also note that it's been awhile since we got the VIX market sell signal, and since that time we ran from being beneath the lower bollinger to tagging the upper bollinger yesterday! While that was occuring the price of equities continued to rise - that is a MAJOR divergence:



BANK produced a potential shooting star right on the 50dma, we need to watch today’s action to see if prices close today below yesterday’s low (the XLF closed below its 50dma):



The down move yesterday did leave a little gap up to about 1149. That is the same place as a 61.8% retrace of the down move and it looks like we’re moving to fill that gap at today’s open. You can see 5 clear waves down from yesterday’s high, that makes it a potential subwave 1 down and the bounce since wave 2. Again, we’ll see…



Here’s a tune that goes out to all the narcissistic fraud producing central bankers the world over… enjoy!

Thursday, September 30, 2010

Congressman Alan Grayson Explains the Foreclosure Fraud Crisis…

Must watch video explaining rampant fraud against the citizens of the United States. Had enough?

Morning Update/ Market Thread 9/30

Good Morning,

Here we are, the end of September and the market has done the opposite of its seasonal pattern, thus drawing in almost no one real, and that’s because it isn’t real, it has been accomplished solely by creating fake digits and using those fake digits to create a fake market. Besides the outright admission of market pumping POMOs, we know it’s fake because the dollar has lost 5.7% over the past month, gold has risen $73 an ounce (5.5%), volumes are down dramatically, and there have been phony gaps in the charts all the way up.

This morning the market is higher on the back of more massaged data – as it all has become. The dollar is lower some more, bonds are higher some more – no wait, lower, oil is making another run at the economy killing $80 mark, while gold soars onto new all-time highs once again. Nice.

The final revision of Q2 GDP was monkied up to 1.7% from 1.6% (quarterly number annualized). Unfortunately for those buying into this number, the rise was based primarily on increasing inventories. That is not a good thing, it is yet another sign of low demand. Here’s Econoday:
Highlights
GDP for the second quarter was revised up incrementally – but the added growth was not where you really wanted it. Second quarter GDP growth was revised up to 1.7 percent annualized from 1.6 percent in the second revision. The third estimate for the second quarter came in just above the market forecast for 1.6 percent.

The upward revision was primarily due to a moderately higher estimate for inventories. This added boost was relatively minor, however. Partially offsetting were downward revisions mainly to net exports and government purchases. Other revisions were marginal.

Real final sales to domestic purchasers were unrevised at up 4.3 percent from the prior estimate while final sales of domestic product (adds in net exports) were tapped down to 0.9 percent annualized from the second estimate of 1.0 percent.

On the inflation front, the GDP price index was unrevised at up 1.9 percent annualized. Analysts had projected 1.9 percent for the third estimate.

Just as a reminder, the GDP number is as real as the digits on the Fed balance sheet – in other words it’s not real. Its “growth” is based on financial engineering and on playing with the way inflation is measured – GDP is grossly overstated. The trend for GDP the past three quarters is down, and quarter 2 is now ancient history. Now that the third quarter is over, I believe we’re currently close to negative. Of course when we get the first Q3 report it won’t reflect that, but revisions will I believe.

Jobless Claims for the prior week came in at a still shamefull 453,000. The prior week was 465,000 (revised up to 469k) and the consensus was looking for 459,000. Like we haven’t been here before, Econoday shamelessly calls a 453k print “recovering:”
Highlights
You wouldn't know it from consumer confidence readings, but the labor market appears to be recovering, not sinking. Initial jobless claims fell for the fourth straight week, down 16,000 in the September 25 week to 453,000 (prior week revised to 469,000). The four-week average is down for a fifth straight week, at 458,000 which is down a convincing 30,000 from a month ago.

Continuing claims have been no better than steady. Continuing claims fell 83,000 in data for the September 18 week to 4.457 million. The four-week average of 4.527 million is slightly higher than the month-ago reading. The unemployment rate for insured workers edged one tenth lower to 3.5 percent.

The dip in initial claims points to improvement for monthly employment data. This report will offer strength for the day's financial markets.



I love the game of revise the number higher, then compare it to the next trumped up number in the series and say that it improved for the 5th straight week! No, actually we’ve been in the 450k to 500k range for the entire year, take a look at the chart. This is so far from job creation or “recovery” that it’s not even funny, it’s certainly no joke for the millions who are out of work or who are losing their homes. Where’s the jobs creation? It’s not in this report, that’s for certain.

The Chicago PMI is released at 9:45 Eastern this morning.

Europe is a complete disaster. Like the U.S. it’s a dyke that’s springing leaks all over creation. Spain was downgraded by Moody’s this morning, while Ireland steps into rescue two of its failing (ed) banks with money from who knows where, since they claim they don’t need outside help to do it. Sure, a bankrupt country bails out its own bankrupt banks, its party time, spreads are coming in!

Japan spent 4.6 trillion Yen to force the value of the Yen lower. It lasted for a little more than a week and now it's almost entirely gone. Talk of more has had zero effect. Talk about the theatre of the absurd and the obscene, it’s a comedy and a tragedy all in one play:



The news flow of bizarre happenings in our own administration and suggestions to deal with our own economic problems seems surreal. Trade wars starting up, currency wars in progress, POMOs out the whazzoo, QE2, rats bailing on the administration, a government that owns 90% of it’s mortgages - it’s a bizarre freak show, and I have yet to spot any sign of REAL economic life or of an adult leader.

The markets meanwhile continue to do their dollar beat-down drift-up. Yesterday produced a small change in the McClelland Oscillator, so the spring is wound to expect a large move today which appears to be up.

Yesterday the DOW finished at the bottom of a rising wedge. McHugh believes it needs one thrust higher from there, we are certainly getting that this morning. The wedge is now well defined as you can see in the 10 minute chart of the DOW below, however, in the SPX it looks a little bit more like a flat topped triangle which can be read bullishly:





Obviously the market had not sucked in enough money or people, the bears have been too eager to pounce. Yet the VIX continued to rise yesterday as it moved up the wick of the previous day’s inverted hammer:



Today is yet another Bradley Model turn date – will it mark a top, or will it have no effect? If the DOW’s rising wedge is valid, and it may not be, then today could be it. But but we’ve been here before shakin' the bears, haven’t we?

Wednesday, September 29, 2010

Morning Update/ Market Thread 9/29

Good Morning,

Equity futures are slightly lower before the open this morning. Bonds are higher, the dollar is down, the Yen and Euro are stronger, oil is up, while gold touched $1,315 an ounce overnight as it nears its $1,325 target.

The still worthless MBA Purchase Applications index rose 2.4% over the prior week, but the Refinance Index fell 1.6% leading to an overall decline in the index of .8%. Here’s Econoday:

Highlights
MBA Purchase Applications rose 2.4 percent in the September 24 week to end two prior weeks of decline in what has been an up-and-down month. The gain is centered in a 4.5 percent rise in government purchase applications vs. a 0.8 percent rise for conventional applications.

Yet the great bulk of mortgage applications, 81% in the latest week, is for refinancing where the index slipped 1.6 percent. MBA's composite index fell 0.8 percent. Rates are extremely low, at 4.38 percent for 30-year loans, down six basis points in the week and a new low for the series.

Here’s the deal – the private bankers who own the Fed have managed to buy off all the politicians to get their financial engineering (derivatives) and false accounting put into place. This has saturated everyone and every level of government with debt. The GSE’s have been used as a conduit to push off THEIR bad debts onto the American public and we’ve been far too passive and have let them. Since the entire economy is saturated with debt they are looking for any way possible to continue their schemes.

The latest trial balloon that’s beginning to get traction involves a new House Bill that would allow anyone with a FNM or FRE backed loan (30 million households – 90% of loans) to recast their loan at a low rate of interest (approximately 4%) REGARDLESS of the creditworthiness of the borrower or the value of the property!

Make no mistake that should this occur it is a bailout of the BANKS, not of the people. And this would have a very large effect, and it is possible that it happens due to the desperateness of the coming mortgage crisis. It would take the Option-Arm reset chart I’ve been showing and it would immediately flatten the curve:



It would also be used to shed the broken mortgage paper trail, thus killing two birds with one stone. You can bet, however, that any such reset program would turn any loan that wasn’t a recourse loan into a full recourse debt.

Should this occur, you will not want to be short the equity markets, especially bank stocks! Any pop received, however, would be short lived as the dollar would suffer and Americans would find that their cost of living will increase a commensurate amount. There is no free lunch – all debts get repaid with interest in one way or the other. A falling dollar, like what’s been occurring recently on QE rumors, is the other.

A mortgage reset scheme will simply further saturate America with debt, but it will kick the can down the road just a little further. If they do it at 4%, we will find that the kick wears off in 6 months or a year and then they will be forced to do it again at 3%, then 2%! But interest rates that low would also remove any profit from the banks in terms of arbitraging interest rates. The ending destination is thus the same, it would simply create a wild ride in-between. For now this is just a trial balloon, but remember that wild animals, and wild bankers, will do anything when they are backed into a corner.

Yesterday’s read on Consumer Confidence was awful and reflects the fact that an artificially rising stock market does exactly nothing for the majority of people who are still wallowing in debt saturation. It does nothing to Investor Confidence as it too is collapsing despite ultra-bullish sentiment readings in the market:



For now the market is still stuck between SPX 1130 and 1150. The action in bonds and in the Yen say that the break when it comes will be lower. McHugh is pointing to a potential ending diagonal on the DOW, but I don’t think it’s very well formed so I won’t show it. Tomorrow we have a bunch of important data and that could be impetus to move the market off the fence.

Yesterday’s action produced many hammer candlesticks in the indices, the RUT is a good example below. Those are potential reversal indicators, however most are inside the previous day’s candle and they need confirmation with today’s action below yesterday’s high:



The NDX produced a Hung-Man candle. You can see that the red uptrend line was broken and that the man is “hanging there” with no floor beneath him. Again, potentially bearish we will need confirmation:



Many of the NDX momo stocks faltered yesterday with AAPL stumbling on not one, but two mini flash-crashes. That’s got to make the average investor very nervous. Many other stocks are showing signs of rolling over as the rotation trade appears to be reaching exhaustion.

The VIX yesterday rose dramatically and then fell. That action produced a large black inverted hammer. That is also a potential clue, I would expect the VIX to rise up that stem and negatively impact equity prices. Again, when dealing with candle shapes we need confirmation:



On the plus side, the McClelland Oscillator did return to positive yesterday, but it’s close enough to the zero mark that a small decline will turn it negative again. All the divergences I’ve been pointing out have been growing. These WILL get resolved – the longer they go on and the bigger they get, the worse it will be. For example, yesterday I showed you how the bond market and stock market are divergent. Yes, most of it is due to the government buying up their own debt, but to put that divergence into perspective, the last time bonds were at this same level, the SPX was 300 points lower (more than 3,000 points lower on the DOW)! This will be resolved, and when it is we’re likely to see a lot of people looking a whiter shade of pale!

Tuesday, September 28, 2010

Morning Update/ Market Thread 9/28

Good Morning,

Equity futures swooned overnight but miraculously recovered with a straight up pump this morning into the green. The dollar is down slightly, bonds continue higher, the Yen is strengthening again, oil is down, and gold has fallen back below $1,300 an ounce.

Today is yet another POMO day. The correlation between POMO days and up days in equities seems to be quite high, and we need to watch that correlation progress. Look, as frustrating as it is, I can guarantee you that it WILL come to an end. Why? It’s simple. Because the PD’s and only a handful of other players have accumulated nearly ALL the stock already! Once they own the entire market, which won’t take long at the rate of $20 billion per week, then what? Then we have 10 or 20 firms trading almost all the stock? How’s that going to work out? It’s not, that’s how – once again our knuckleheaded leadership is getting us into a battle which they do not understand and one for which they have no exit strategy.

Can you say Iraq or Afghanistan? That’s what our stock markets resemble - the same exact type of flawed “thinking,” that is really only just a profit center for a few in disguise. They don’t care as they know it’s just a short term profit opportunity for them, they will leave behind a decimated populace with no effect on their narcissistic conscious whatsoever. I’m telling you that the POMO fueled stock market correlation is going to end, and it’s going to end badly as all attempts to manipulate price always do.

The Case-Schiller Home Price Index came in with a July 10 city seasonally adjust price increase of ZERO.ZERO% – nada. This is down from June’s supposed .3% increase. All the numbers reported were weaker. Keep in mind that this is a trailing report and that closing prices for July were not yet free of influence from our nutty government’s interventions. This summer’s selling season was DECIMATED because they simply pulled forward what little demand there was, and now the traditional selling season is over. In my neck of the woods (Puget Sound area of Washington State) prices are still far above rents and above what average incomes can support. That alone tells me that price correction is not over.

Yesterday Brazil admitted that there is a currency war occurring with countries competing to devalue their money. That’s definitely true. Now there’s also trade wars firing up. We accuse China of undervaluing the Yuan, they retaliated by sticking tariffs on chicken imported from America. Yesterday America responded:
US sets duties on copper pipe from China, Mexico

WASHINGTON, Sept 27 (Reuters) - The United States on Monday set final duties ranging up to 61 percent on hundreds of millions of dollars of copper pipe from China in one of several disputes causing friction between the two countries.

The U.S. Commerce Department announcement came one day after Beijing slapped final duties ranging from 50.3 percent to 105.4 percent on chicken parts from the United States.

Action in both cases came as the House of Representatives is considering a bill this week that would treat China's "undervalued" currency as an export subsidy under U.S. trade law, opening the door for more U.S. duties on Chinese goods.

Trade wars are not going to end well for anyone.

Consumer Confidence will be released at 10 Eastern this morning. These low confidence reports have been largely ignored by the markets so far.

The SPX 1150/1160 area is an import level, and it has held so far. Divergences continue to grow, they are all over the place. Here's a huge one - bonds versus stocks:



Another BIG red flag appeared yesterday when the McClelland Oscillator closed back below zero. This is one of the prime ingredients to look for when there is a Hindenburg Omen on the clock as there is now. As long as that oscillator remained above zero the odds of large declines was small, but below zero it picks back up dramatically.

The market has been leaving huge gaps in the chart all the way up from the bottom. Gaps get filled. Below is a 30 minute chart of the NDX, there are 5 open gaps just on this latest parabolic ramp, there is yet another even below that. Note the RSI divergence against price here – that divergence is even larger on the 60 minute chart. The longer the time frame of the divergence, the larger the coming correction:



The red line on that chart above is your clue point. The NDX is being fueled by the action on a narrowing number of momentum stocks. Those stocks are showing signs of tiring, and there are fewer of them now participating in the momo rotation. This is the same type of activity seen before at major tops. POMO fueled ramps will work until they don’t.

Monday, September 27, 2010

Morning Update/ Market Thread 9/27

Good Morning,

Yet another Monday morning which means that the debt pushers are hard at work building a false façade in the markets for maximum psychological effect… they must really like the democrats to be pushing so hard against what’s normally a negative election and seasonal cycle. Just wait until the debt pushers are not getting their way, then we will be right back to blackmail the economy via the markets again, a lesson we just haven’t seemed to learn despite being beat about the Head & Shoulders repeatedly throughout our history.

The dollar continues its plunge this morning, bonds are higher however, oil is also higher, and gold is setting yet another all-time high (although looking somewhat tired).

This latest run in stocks has been nothing but a government sponsored run on the back of billions and billions of YOUR money/ indebtedness. Just last week alone the Fed provided more than $20 billion in POMO activity. This and the expectation of some QE2 program are sinking the dollar, and sinking America’s future right along with it. In other words, the rise in stocks you see is false, what is really occurring is the torpedoing of the dollar, a move which is confirmed by gold.

Taking another look at the dollar chart, you can see that we have broken convincingly through the important 80 level, and we have confirmed the H&S target of 71/72ish by breaking below the neckline. This structure is inside of a larger triangle or pennant, the bottom boundary of which is currently just above 76. Should that 76 level be broken, that pennant says that America is in for some interesting and very difficult times:



Japan, of course, has been experiencing interesting and difficult times for the past three decades! Remember their recent attempt to stop the rise in the value of the Yen? It more than half melted away already, so this weekend they announced the following:
Japan Said to Consider Stimulus of as Much as 4.6 Trillion Yen

Sept. 27 (Bloomberg) -- Japan’s government is considering compiling an economic stimulus package totaling as much as 4.6 trillion yen that will be funded with existing revenue, a government official said.

That’s only $54.6 Billion in U.S. Dollars… sure, sure, it will “be funded with existing revenue.” Riiiigggght. Just like the last 10 trillion injection and the 10 trillion injection before that. Note this press release is nothing more than lip service, an attempt to scare traders into covering their positions. In other words, it’s blatant market manipulation… but we all know that by now, don’t we? Does it work? The chart says NO, not even a wiggle. This is the SAME exact thing that happened in Zimbabwe… the amounts got bigger and bigger, but they had less and less effect. This is also occurring in the United States, we’re just a little bit behind Japan. We are now deep into competitive devaluing of our currency. If it continues, it is going to completely destroy our economy.

That said, those are some pretty bearish dollar comments, and I know that we are flirting with record levels of dollar bearishness, that makes a reversal likely in the not too distant future, at least temporarily. However, from a technical perspective I just don’t see any meaningful support until we reach that 76 level.

There are no economic releases today, but this week is fairly busy with Case-Schiller home prices and Consumer Confidence tomorrow, the final revision of Q2 GDP on Thursday (consensus expecting no change at 1.6% - I think this is high), Chicago PMI, and several other reports come throughout the week.

The count in the market still looks like we are close to ending wave c of wave 2. SPX 1150 is an important level, and actually the market closed just above the 1146 pivot point on Friday. The next higher pivot is at 1168, however, 1160 is approximately where wave c equals wave a. The next lower pivot is located at 1136.



Friday’s run up was absolutely insane – again very artificial looking. There are massive gaps all the way up the charts. There are divergences all over the place, the number of 52 week highs is an important new one, there is also a developing divergence in the Advance/Decline line to go along with all the previous divergences and severe overbought market condition. Additionally, several of the sentiment indicators are at record levels of bullishness.

Again, the climb upwards has been an artificial illusion. It is not based upon climbing some mythical “wall of worry,” it is based upon $20 billion POMOs that fuel Fed sponsored HFT activity designed to knock down the value of the dollar while the American people are robbed. People who are robbed of all their productive efforts will eventually stop being productive. They will have less and less money that they can use to be “consumers.” As the consumer well runs dry, corporate profits will continue to collapse as they already have. Sometimes it’s real, sometimes it’s not – it’s our job to know the difference. Right now we’re 8 miles high…

Sunday, September 26, 2010

Still Bombarded by Gold Bugs - Here’s the Other Side of the Coin

I still receive many comments and emails from gold bugs who believe that hyperinflation is coming/ has begun and that ultimately the solution is that we must return to some sort of gold as/ behind money construct.

For the record, I currently see price deflation in things that most consider to be “Assets,” while at the same time I recognize price inflation in things that people need. Overall I believe that “asset” deflation is far larger and that it is caused at the root by an overall deflation in the total quantity of money – today that is base money, debt (other “deposits), AND derivatives. I believe that all currencies constructed to date have/ will fail due to their flawed construct. They all die for the same exact reason – that is a loss of confidence (which usually leads to massive increases in money quantity).

Yes, our dollar is dying in the same manner as all other currencies throughout history, regardless of what backs them. I believe the sequence of events will include another round of very significant asset deflation, and that the reaction to it may be the trigger for a loss of confidence event/s. Timing of those events is not clear, but as I say, I do not believe this is a problem that will be passed onto our grandkids, nor our children, it is this generation that will be forced to live through the transition to whatever is next.

This morning I received an email from someone who at first glance was just another gold bug… but at second glance, he is really a free money advocate believing that gold should be free to perform a savings (store of wealth) function, alongside of a fiat trading medium that is not generally considered a store of wealth. This concept is labeled the “Free Gold” concept, and many detailed articles can be found at the FOFOA blog.

I HIGHLY recommend reading this blog and have marked it in my blog roll for you. So, in the past two days I have posted an article about complexity, another about a man who also sees deflation then hyperinflation, and today I am linking you to that blog with many articles by someone who sees hyperinflation as the destination and is very good at spelling out the reasons why he sees that. What I appreciate about the FOFOA blog is that he is NOT proposing that gold be our next money system, but instead believes that it is a store of wealth alongside of our next money system. In fact, that is exactly what I recommended in Freedom’s Vision when I say that gold must be FREE to trade without manipulation.

However, because I’m still bombarded by hardcore gold bugs, here is my response to those who profess their undying admiration of gold’s utility as money itself. No, I’m not much fun at a gold bug’s or a debt pusher’s party, those two paradigms are not the only answer, they both belong to a false and failed framework of a box that is as failed as the Republican/Democrat box in which we live. Things are not either this or that… real answers to things that have failed EXCLUDE the very “this” and “that” of the past!

While my perspective is “out there” relative to traditional (BS) theory, here’s my overall perspective and response to gold bugs for what it’s worth:

While I appreciate the gold bug’s sentiment, gold is simply the other side of the same old coin. There is only ONE REAL WEALTH, and that is people, not gold. All gold standards have failed throughout history in the very same manner as have “fiat” currencies – history is through the eye of the beholder’s bias, I encourage everyone to view both sides of monetary history for what it is – all monies have failed, do we simply repeat a multiple human failure? Isn’t that the definition of insanity?

Recall the specter of the roaring twenties… Who owned the gold? How did credit dollars get so out of control that the Great Depression followed? Were we not on a gold standard then? How many times during periods of gold standards do politicians (in bed with bankers) recast the ratio of gold to paper and why? Has the gold bug myth of mining more gold from the earth as prices rise really worked to control inflation and deflation? Who has it worked for?

Economies are built upon people, not gold… empathy and communications lead to the rule of law, which includes a shared means of exchange. That exchange allows the coming together of monetary, natural, and human capital that then build the infrastructure that support people, not gold. It is people who BUILD wealth, wealth does not just simply exist on its own. What is far more important than WHAT backs money (ultimately only people can) is WHO controls its production and its quantity! This is the realization that civilization is working towards… if we must go through another gold standard on the way to that destination of understanding, then it will bring nothing but pain to all but those who control it – and that is NOT you, nor is it I.

There is only ONE currency that will survive the test of time, and that is a currency based upon MATH and the rule of law that the people uphold via transparency and checks and balances. The math MUST target ZERO PRICE inflation/deflation, and then, and only then, will a stable system be made that can last.

The real store of wealth is the intellect of the human mind, not an arbitrary rare earth element. ENERGY is far more important than minerals and is the ONLY INTRINSIC thing in nature. In fact, modern science (not the crap you and I learned in school and is still be perpetuated) is rapidly finding that all minerals, all matter, literally springs forth from energy. The universe is comprised of ENERGY, everything, all matter including gold, oil, water, and people are energy… we are all simply waves upon the fabric of the universe and we are all connected by it. Gold is simply one state of energy, as is soil, rock, the sun, you, me and everything else. This is the truth that people are on collision course with, all roads lead to the truth.

Again, if humanity must suffer through yet another gold standard, we will have been miserable failures to yet another generation that will have to learn that WHO controls the money is FAR, FAR more important than what backs it. Gold and debt are both controlled by the very same people… control is the key word, they use BOTH gold and debt to control the masses. Ultimately the only real money is backed by the masses, their energy, their creativity, and their imaginations. That is the long-term path that humanity is on.

You, me, and everyone else, should be free to trade gold unrestricted from the manipulations that are occurring now and have occurred throughout history. Gold is THE most manipulated substance on the planet, and has been for as long as it has been used as “a store of wealth.”

All that said, I realize that current perceptions are everything in the short term, and thus I own small quantities of precious metals and recommend that others do too. However, it should be noted that I began recommending that ownership at $300 an ounce, not $1,300… not that it can’t and won’t go higher, it can and probably will as the speculative 3rd phase of its parabolic rise probably has yet to occur.



As the velocity of debt has come to a screeching halt (debt saturation), the PRIVATE central bankers dependent upon never ending growth have been throwing greater quantities of money to make up for the lack of velocity. That has failed, and will fail as long as debt saturation remains. Meanwhile we walk down a dark hallway of events that are leading us to our currency’s final destination. Failure to recognize current problems and history for what they are will doom another generation to a repeat of the same mistakes. We must continue on our evolutionary path, and to do that we must regain control of our rule of law and our monetary system.

Once the people have done that, then humankind will advance our knowledge of the universe, and in turn secure the survival of our species.

Again, let me connect the dots for you… communication → empathyrule-of-law → monetary system → capital formation → natural resources → human resources → wealth → scientific understanding → long term SURVIVAL of the species!

Note that each is built upon the last – we cannot accomplish the upper level functions as quickly or as efficiently without a solid foundation. It is our non-nature-conforming rule-of-law and monetary systems that are our present drag to understanding the true nature of the universe.

Yes, I know this sounds fanciful, but matter can be created from energy! Our experience is limited to the opposite! That is we can and do readily convert matter into energy, but we are still infants in our ability to do the opposite. As we wise up to the way the universe really works (forget the “Big Bang” and all other such world is flat nonsense) we will discover the processes through which water (how did it get on our planet?), oil, gold, and other matter came into being. We will learn that we are quite literally swimming in energy, and we will learn to use it to our advantage. But first we must make sure that we progress forward and not step backwards in terms of our rule of law and in terms of our monetary system.

Mike Maloney Schools Bankers on Deflation…

Obviously from a gold background, Mike Maloney does a good job presenting to a group of Russian bankers what they probably don’t want to hear. Indeed, our currency is on a collision course with math that simply doesn’t work. Our bankers do have choices – they can either let deflation run and allow another future debt cycle, or they can continue to attempt to stimulate in which case our dollar eventually becomes worthless.

We have a very important election at hand. Changing out politicians will likely result in the inability to stimulate as easily as they have in the past couple of years – that is the foundation of wave C down, it represents a psychological shift because the stimulus that created wave B (the dead cat bounce) has FAILED. Maloney’s market analysis is good. His money analysis is also good, but don’t be fooled, there is currently NO real banking reserves of any kind. Derivatives and the swapping of worthless debt to the Fed have pushed the real overall reserves to zero, thus fractional ability is infinite! (ht Mr. Guest)

Mike Maloney Schools Bankers on Deflation – Part I (15 minutes):


Mike Maloney Schools Bankers on Deflation – Part II (11 minutes):


Those who truly understand charts, and the math that creates them, will see a parabolic rise, and collapse. Yes, there is a clear Head & Shoulders pattern forming. Note, however, that if the right shoulder is symmetrical time wise with the left, that we may be range bound for some time (a large descending range) as the left shoulder required approximately 3 years to complete, not that they must be exactly proportional…