Saturday, October 22, 2011

Weekend Funnies...





















Weekend Open Thread...





Friday, October 21, 2011

Monetary Madness – The Real Money Bomb!

For the record, there is no such thing as “real” money. All money is a human construct. It doesn’t matter what is behind the money or what the money itself is made of – that’s all bunk. The supposed self-correcting attributes of gold, for example, are complete bunk, very easy to disprove if one simply and objectively examines history.

The “Roaring Twenties” roared because of a flaming credit bubble – and the country was on a gold standard at the time. All gold standards have failed, as have all money systems to date, as will ours soon. In fact gold as money systems last for shorter durations than do non-gold systems if you look back in time – Talley sticks in England, for example, lasted more than 800 years, during which time gold standards came and went.

Of note is that the stock market bubble that crashed in 1929 was one built upon MARGIN, not just general credit growth. I note this because those who wish to eliminate fractional reserves entirely are barking up the wrong tree. It is easy to create leverage, that is to multiply effective money through many, many schemes. Today there are hundreds of them, they are growing unchecked - $600 Trillion just in known derivatives today in the United States alone. In fact, if you eliminate fractional reserves but do nothing to regulate other forms of leverage, then I will guarantee you that I can multiply the money in the system to infinity through other means that more closely resemble gambling.

Again, all money is a human construct; its purpose is to enact trade. The only way to make money a “store of value” is to keep the total quantity of ALL money(ness) under control. That’s it.

All money that is approved by your government is “fiat.” Again, it doesn’t matter what it is made of or what is behind it, since fiat means “by decree.” If your nation decrees that gold is to be used as money, then it is fiat. Gold is only not fiat when it is allowed to trade freely alongside of whatever else has been decried. Gold is the flip-side of the proverbial control-you coin (the other side is debt). Those who own the gold control those who do not – get over it, or own it – most do not.

The most important attribute about money is WHO controls its production. The natural rule-of-law is that its production benefit/not benefit everyone equally. Once you give a few private individuals the power to produce money, they will use that power to buy rules that favor them, and then the government and their money production become intertwined – as has obviously happened today.

The only solution to this is to restore the power of money production to the people. Since it cannot be private people, it MUST be done through your representatives as the Constitution correctly dictates (it does NOT dictate gold money, by the way, read it).

Once the money power correctly rests in your representative’s hands, then the problem becomes vote buying with that money creation power. This is where the Constitution falls short – they failed to get strong enough checks and balances in place to ensure that your representatives cannot cede this responsibility, THE MOST IMPORTANT RESPONSIBILITY THEY HAVE. Not only should they not cede this responsibility, but they MUST keep the quantity of money under control. This is why I say there is only ONE responsible target for the supply of money, that being ZERO percent price inflation (the quantity of money should change up/down to allow for changes in population, etc.). This can be accomplished as I spelled out in Freedom’s Vision.

The entire economy is now saturated with debt – not just the Federal Government, but state and local governments, corporations, and the people collectively too. Addressing any single problem in this regard will NOT cure the economy, it will take unsaturating all levels to reach a real cure – the exact opposite of what the current money producers are doing or attempting to do. Transitioning to an unsaturated condition DOES NOT have to involve “pain” for the people! The ones who rightly should take the pain are the ones who purveyed the fraud in the first place, again it is possible to make them eat the pain, and to restore a proper rule-of-law, money system, and economy without the “pain” they would like you to believe everyone must take! Solutions are found only when you get outside of the central banker box, and stop being a willing party to their lies.

It’s been awhile since I ran a lot of charts by you, here come a lot, but don’t be intimidated – they all revolve around the same subject, our money supply. Stand back and take a big picture look at the supply of money and you will see that a MONEY EXPLOSION is occurring right now!

Below I am displaying charts in order from the smallest measurement of money, Base, to the largest, MZM. The first series is the basic amount expressed in dollars - here you will see a progression - exponential growth that turns into a parabolic shaped curve. Note that the upwards trend did not stop, in fact is now taking off straight up within the smaller measurements and still parabolic on the larger ones:

Base:


M1:


M2:


MZM:


Just to get a handle on the zeros, that MZM equals $10.7 Trillion.

Now let's take a look at each money measurement in terms of how much it has changed in just the past year in terms of dollars. What you will find are one year dollar amounts that rival or surpass the emergency measures taken during 2007/2008:

Base:


M1:


M2:


MZM:


See how changing the parameter of the chart reveals more than just the basic chart itself?

Now let's look at each in terms of the percentage change from a year ago. Here again we see wild numbers, huge numbers in percentage terms, that are certainly disconnected from the inflation statistics pandered by the "Fed."

Base:


M1:


M2:


MZM:


Wow, I'm nauseous just looking at those wild moves! Those moves are dangerous, they are the exact opposite of stability. Remember, when the quantity of money is allowed to grow beyond that necessary to handle REAL expansion, then the value of the money falls. The worst situation is exactly what we're experiencing where the things you hold fall in value, and the things you need rise in value. This is true for the 99% who don't create the money, while the 1% (or less) who do, take from those who don't.

Here's a little fun with numbers, in the year 1980 (230 million people) there was approximately $4,347 of MZM per person in America. Today (310 million people) that number has grown to $35,516, more than eight times as much!! Are you eight times more wealthy? Didn't think so. Now look at debt. Debt has grown multiples of times more, especially if you count unfunded liabilities - that figure is now way beyond $300,000 per person, but just the National Debt has grown from the exact same (coincidence?) $4,347 per person in 1980, to $46,774 per person today - nearly 11 times as much! Wow, we're only talking 30 years here, not even half a lifetime - how's that "Fed" mandate of low inflation looking?

Once again, let's look at the impact that rapid increase in money growth is having on the unemployed - below is the Base Money Supply alongside of the Mean Duration of Unemployment:



Now here's a chart that may startle you - here I told the "fed's" own chartmaker to divide the MZM by the Base Money to see the ratio of Base Money compared to the much larger MZM... and what do you think it shows? It shows a CRASHING ratio from the peak of 10 to 1 to today's 4 to 1. That means that today it takes way more base money to create a commensurate move in MZM.



Since our money is backed by debt, what this is really reflecting is the drop off of velocity caused by macroeconomic debt saturation - yet more proof of the impossible math and that debt saturation has occurred.

While I'm not a fan of GDP because I believe it is VASTLY overstated, I had some fun dividing first Base Money, and then MZM, into GDP. This tells us how much "productivity" we are getting per our money creation... are you ready?

GDP/Base Money


GDP/MZM


Kaboom! Cliff Diving. That, my friends, is called ECONOMIC FAILURE. You are witnessing it in progress. Those charts are VERY telling, and very important to understand, they deserve to go viral.

The root cause of this failure is WHO it is that controls the production of our money. There are solutions, but none can or will be implemented while the same WHO is in charge. Only the people can change the power structure, there is change in progress one way or the other.

To view just how clueless the "Fed" is, below is their latest issue of monetary trends where you find tons of irrelevant charts (except for velocity which is in the gutter), and mundane commentary designed to lack insight - all designed to keep you in the dark.

Monetary Trends - November

Morning Update/ Market Thread 10/21 - Reality Explosion/ Eurodiculous Edition…

Good Morning,

Equity futures, highly manipulated equity futures, are currently fantasizing about the supposed largesse of global central bankers who, according to this genius headline on Bloomberg, are going to save the Eurozone (again, but delayed, maybe, but for sure this time, well, maybe) with, get this, (the figure keeps changing but the manipulated markets like it)… here’s the Bloomberg headline, “E.U. Considers Wielding $1.3 Trillion to Break Debt Impasse.”

LOL! (Insert roaring laughter here)



As if: A. They have $1.3 Trillion to wield. B. $1.3 Trillion in DEBT can cure a DEBT problem. C. $1.3 Trillion given to the purveyors of fraud will help anyone but the fraudsters.

And so we have this crazy world where the people who currently run the globe via fraud (hereto forth known as “the 1%,” or bribe givers), create debt money from nothing and demand hard work from the world’s citizens to pay it back, plus interest (aka “austerity”), and so you have violent riots on the streets of Greece occurring the same day that the fraud enabling government (aka bribe takers) pass the central banker demanded austerity measures.

Not that the world cares, because oh my gosh, we got Gaddafi and we’re proud that we “saved the world” from yet another evil doer by illegally targeting yet another head of state (karma will eventually repay that rule-of-law that isn’t being followed).

Are you distracted yet? Did you notice that the “Fed” stepped in to guarantee $75 Trillion worth (!!) of Bank of America’s wild derivatives? We make the Eurofools look good. Have you noticed that the impossible math right here in the good old U.S.A. is far worse than it is in Europe and it’s getting worse by the minute, or did we forget? Take a look at what’s NOT on the books if you want to see reality. No matter, the impossible math will keep coming back to remind us all, again, and again, until the purveyors of fraud are removed from power.

But for now the “markets” are higher on the fantasy, the dollar is lower of course, the Yen is breaking out to new and ridiculous highs, bonds are lower (but still at ridiculous manipulated levels), oil is higher of course despite securing the Libyan oil fields (oops, did I say that?), and food commodities roar higher in response to the thought of more trillions in debt money, thus choking the literal life out of the real, non-fantasy world.

But I digress. What I really want to talk about today besides Eurodiculous, is that I’m beginning to see more and more reality making it into the people’s consciousness. They are figuring out that they are living an economic lie, and that they’re being held captive inside of the central banker box.

The thing about lies is that it takes TWO to pull off a lie! That’s right, a lie requires not only the fraudster cranking it out, but it also takes the fool on the other end to believe it. The fool must “give permission” to the fraudster to lie to them! To stop a lie, all one must do is refuse to participate in it, then the lie has no power! “LYING IS A COOPERATIVE ACT.”



Gee, isn’t YouTube great? Do you think you can spot any lies when Bernanke is talking? Have you bought into the lie of the “Federal Reserve Bank?” Do you hang on the words that come with the FOMC announcement? Lying is a cooperative act.

Here’s another great YouTube that is getting more on point and corrects some major myths of history – not all mind you, but understanding these three myths of the Great Depression is a start:



Did you hear that? The “reality” you’ve been taught in your history book is “the opposite” of the truth! Now we’re getting someplace. Because the monetary system and the economy are behind and underlie every major event in human history! And we’ve all been living in a control you economic lie, where reality is exactly the opposite, to a large degree, from the truth. I, for one, am no longer willing to participate in the lies – how about you, still waiting for that next FOMC announcement or rumor out of the Eurozoo? Go long, “there’s never been a better time to buy!”

Thursday, October 20, 2011

Morning Update/ Market Thread 10/20

Good Morning,

I'm out of the office this morning and will not be able to post an update today. Please use this as today's Daily Thread, thank you.


Wednesday, October 19, 2011

Morning Update/ Market Thread 10/19 - Walk of Life is Getting on Target Edition…

Good Morning,

What used to be the somewhat free equity markets are drifting higher again this morning following yesterday afternoon’s run up on European rumor mongering – something about 2 Trillion Euro injection, LOL, as if creating more money from nothing to indebt the people of Europe will do anything positive for, oh, about 99% of the population… oh sure, that 1% who create it will be living high on the hog on the backs of the labor of the other 99%. Hey, I think I’m getting into the swing of this “Occupy” thing!

Meanwhile the dollar is melting to pay for the manipulation, bonds are lower too, oil is higher because Goldman Sachs says so, gold & silver are just waiting for their moment to shine, while food commodities continue to choke the life out of those living on the margins – those who live furthest from the production of money.

The hypocritical and morally bankrupt Mortgage Broker’s Association says that Purchase Applications fell last week by 8.8%, and that Refinancing activity also fell by a whopping (and unbelievable) 16.6%! Econodream incorrectly hints that the Columbus Day Holliday is to blame, but the MBA manipulates their data in a myriad of ways, one of which is to make adjustments for holiday weeks, so I’m not buying their excuses, not that I believe any part of an MBA release, I simply don’t as they are nothing but spin masters cranking out manure to fit their own very special interests:
Highlights
In the Columbus Day shortened week of October 14, application activity for home mortgages fell a very steep 14.9 percent. The headline's two components show a 16.6 percent drop for refinancing applications and an 8.8 percent drop for purchase applications. The federal holiday is one likely factor behind the decline as is a rise in interest rates with the average 30-year loan up eight basis points to 4.25 percent.

Note that rates on the long end are already rising as the effects of the “Twist” manipulation are already waning.

CPI data came in hot once again despite their hedonistic adjustments:
Highlights
Headline inflation for the consumer remained on the warm side while core inflation softened. The consumer price index in September increase 0.3 percent, following a 0.4 percent jump the month before. The latest number matched the consensus forecast. Excluding food and energy, the CPI posted a mild 0.1 percent boost after rising 0.2 percent in August. The market expectation was for a 0.2 percent gain.

Turning to major components, energy increased a strong 2.0 percent after rising 1.2 percent in August. Gasoline spurted 2.9 percent higher after increasing 1.9 percent in August. Food price inflation continued hot, rising 0.4 percent in September after accelerating to a 0.5 percent pace the month before.

Within the core, apparel declined 1.1 percent after a series of strong gains. Recreation dipped 0.1 percent. Used vehicles fell 0.6 percent while new vehicles were flat. Also, shelter cost inflation slowed to a 0.1 percent rise after two moderately strong gains.

Year-on-year, overall CPI inflation rose to 3.9 percent from 3.8 percent (seasonally adjusted) in August. The core rate held steady at 2.0 percent on a year-ago basis. On an unadjusted year-ago basis, the headline number was up 3.9 percent in September and the core was up 2.0 percent.

Today's report was more encouraging than yesterday's PPI report. However, energy and food components are remaining stubbornly strong despite softening in the core. The September CPI report will not encourage the inflation hawks within the Fed to back down.


Oh poor babies, inflation too hot for a “Fed” wonk to handle? How will they ever justify printing trillions more? I know, they can create “Primary Dealers” out of the big Canadian Banks in order to make sure every last Canadian is debt saturated, and they can also feed the Europeans trillions that they can never afford to pay back so that they can stake their claim to the productive efforts of the European people too (insert eye roll here).

Of course John Williams at ShadowStats also calls B.S., he tracks inflation and says that the CPI is actually running closer to 12%!



Even if you look at the “Fed’s” own trumped up CPI data, the rate of inflation they’ve worked hard to create means that it’s impossible to get ahead, save for retirement, and now eat for millions of workers – again, the further from the production of money you are, the harder this hits you. Just look at the following chart, take a look at the year you were born, or the year that you began to work and see how much their index has risen since then – for me it has risen nearly eight fold! And that’s the trumped up data!



Housing Starts came in higher than expected, but still at extremely depressed levels. Note that here, too, they are having problems knowing what’s real and what’s not because of the way they calculate the data:
Highlights
September housing data appears in part to be coming off hurricane effects in August as starts jumped and permits eased back. But strength also appears to be more broad based than this effect. Housing starts in September rebounded a sharp 15.0 percent after declining 7.0 percent the month before. The September annualized pace of 0.658 million units topped the consensus forecast for 0.590 million units and is up 10.2 percent on a year-ago basis. The comeback in September was led by a monthly 51.3 percent surge in the multifamily component, following a 16.8 percent drop in August. The single-family component edged up 1.7 percent after a 2.8 percent decrease the month before.

By region, the jump in starts was led by an 18.1 percent increase in the West. Other regions also gained with Northeast up 12.7 percent; the Midwest up 9.3 percent; and the South up 15.7 percent. Only the increases in the Northeast and South were partially related to rebounding from hurricane effects in August.

Housing permits edged slipped 5.0 percent after rebounding 4.0 percent in August. The September rate of 0.594 million units annualized came in lower than analysts' projection for 0.620 million. Permits in September are up 5.7 percent on a year-ago basis.

The September starts report shows new housing activity to be stronger than expected. The big question is whether the demand exists to absorb added supply. Yesterday's modest improvement in the NAHB housing market index suggests that there could be some lift coming in new home sales. But home builders are not getting too optimistic as indicated by pullback in housing permits. At this point, caution is still a good idea.

Now let’s get on point. I watched two excellent and on point videos yesterday, the first is of Bill Black talking to Dillon Ratigan:



Bill Black is a key player – he is THE human being on this planet who needs to be the first person leading the resurrection of a proper rule of law! We need to PROSECUTE THE FRAUD, and restore a proper rule-of-law.

The second video is with Chris Hedges in New York at the OWS protest. Chris is right on point, good to see people who get it and can verbalize it well:



The protests are for real, they are on target, yet real solutions elude them – in regards to solutions I think I’m once again way ahead of the pack. And I strongly dispute those who say that we ALL have to “take the pain.” No we don’t!

It’s very possible to have the purveyors of FRAUD take the pain while simultaneously breaking the debt saturated bonds that hold the 99% back. That’s what Freedom’s Vision is all about, it returns the power to the people! What power is it that they seek? The power to create money on behalf of humanity instead of on behalf of a few self-privileged individuals – it is possible, keep up the protests, sweep those in power out, and when you want to know how to create a proper rule of law and proper monetary system, the correct answers are available here.

You are witnessing the progression of humanity in action – it’s the walk of life…

Tuesday, October 18, 2011

Morning Update/ Market Thread 10/18 - Winds of Change Edition…

Good Morning,

Equity futures are slightly lower this morning with the dollar higher, bonds higher, oil higher, gold & silver lower, and food commodities lower.

The slide in the futures began right after the bell yesterday on IBM’s Q3 report which came up short on revenues. There are a couple of clear trends I’m noticing with the reports, one is that “earnings” are coming up usually close to expectations, but revenues are not. How’s that possible? In comes the second trend, and that is one of more accounting tricks – banks in particular are playing so many games it’s hard to track, a new one this quarter seems to be that when a bank’s CDS is under pressure in a negative way (higher interest rates for them) that said bank (JPMorgan in particular) is then able to magically turn that pressure into an accounting gain!? It represented nearly 30% of JPM’s “earnings.”

This morning we then learn that Bank of America (BAC) is joining into the shell game that Citi and JPM are already playing by ILLEGALLY moving “bad assets” into a shell company. This game is illegal, it is FRAUD, it always has been until just recently when the government has given their approval to do so because, you know, they don’t want their biggest financial supporters to go under – that would be “bad” for the economy (good for the economy in my book):
Bank of America Said to Split Regulators Over Shifting Merrill Derivatives

Bank of America Corp. (BAC), hit by a credit downgrade last month, has moved derivatives from its Merrill Lynch unit to a subsidiary flush with insured deposits, according to people with direct knowledge of the situation.

The Federal Reserve and Federal Deposit Insurance Corp. disagree over the transfers, which are being requested by counterparties, said the people, who asked to remain anonymous because they weren’t authorized to speak publicly. The Fed has signaled that it favors moving the derivatives to give relief to the bank holding company, while the FDIC, which would have to pay off depositors in the event of a bank failure, is objecting, said the people. The bank doesn’t believe regulatory approval is needed, said people with knowledge of its position.

Three years after taxpayers rescued some of the biggest U.S. lenders, regulators are grappling with how to protect FDIC- insured bank accounts from risks generated by investment-banking operations. Bank of America, which got a $45 billion bailout during the financial crisis, had $1.04 trillion in deposits as of midyear, ranking it second among U.S. firms.

“The concern is that there is always an enormous temptation to dump the losers on the insured institution,” said William Black, professor of economics and law at the University of Missouri-Kansas City and a former bank regulator. “We should have fairly tight restrictions on that.”

What the banks are doing is dumping bad assets not only into shell corporations but they are dumping them into the biggest shell dumping grounds of them all, Freddie and Fannie. The banks are making bad loans with money from nothing, then moving the garbage off their books to appear healthy themselves, while putting the taxpayer on the hook for their mistakes – but we already know that, don’t we?

What many are overlooking is that the banks, meanwhile, have stuffed their coffers full of “Excess Reserves,” to the tune of $1.6 Trillion!



In September, 2008, Hank Paulson, former Goldman Sachs CEO and then Treasurer turned chief criminal of the United States, wanted and then got the “Fed” to begin paying the banks for any “excess” reserves they hold! Where does the money to pay them come from? Why YOU, of course. And just look at “excess reserves” today.

Now let’s get a few things straight about this $1.6 trillion that is just sitting there with you paying the banks interest… The banks have never had any (to mention) real reserves – they have generated so much debt that they have saturated the planet. Because they were so successful at saturating the planet, they have destroyed their own lending model – there are now so few qualified borrows because of saturation that they have a difficult time just taking in deposits and then lending at a profit. Besides, why pay depositors their pittance .25% when they can make money from nothing to lend anyway and then offload their horror show onto Freddie and Fannie and now their other shell corporations?

Talk about broken, the money system and the rule-of-law in the United States are so far gone it’s not even funny. What’s more, just turn on the television and you will see “analysts” proclaim that there’s never been a better time to own bank stocks, “They’re cheap!” Only problem is that they are nothing but giant leverage and fraud baskets that the winds of change are about to sweep clean.

Of course I tell it like it is, if you want to hear the PC version, Meredith Whitney is smoother:



Many people worry about that $1.6 trillion in “excess reserves.” They worry that it’s going to come flooding into the economy at some point and cause hyperinflation. Well, let’s examine what a bank really can do with all that money – they can’t lend it because they saturated everyone with debt already and the populace can’t service still more debt. Hmmm, that’s a problem. But what they could do is use it to buy up cheap assets and strip the poor saps of America of the rest of their belongings… hmmm. But if they did that then they may not be properly capitalized, so what’s a poor, poor bank to do?

If I had my way, I’d force out the leverage and bad debts during a special bankruptcy procedure, and I’d use a big portion of that money to buy back U.S. treasuries or Fannie, Freddie debts – of course that won’t even scratch the surface, but the purveyors of fraud should not be allowed off the hook that they created, and when the winds of change sweep them from power, they should not be allowed to abscond with their loot, certainly they should not be paid off – that is a part of restoring the natural rule-of-law.

This morning the PPI came in hotter than expected, remember that the PPI leads the CPI, both are dramatically understated, and right now the PPI year over year is running at 7.0%! Heck 2% will destroy a money system and nation in short order, what’s happening now is just criminal:
Highlights
Headline inflation in September surged at the producer level while the core rate nudged up. Producer prices jumped 0.8 percent in September, following no change in August. The September number was much higher than analysts' projection forecast for a 0.3 percent boost. Turning to major components, energy rebounded 2.3 percent after falling 1.0 percent in August. Gasoline gained 4.2 percent, following a 1.0 percent decrease the prior month. Food costs slowed to a still warm 0.6 percent rise after surging 1.1 percent in August.

At the core level, PPI inflation posted a 0.2 percent rise, compared to a 0.1 percent increase in August. The median market forecast called for an increase of 0.1 percent. In September, one-third of the advance can be traced to prices for light motor trucks, which rose 0.6 percent.

For the overall PPI, the year-ago pace in September came in at 7.0 percent, compared to 6.5 percent in August (seasonally adjusted). The core rate in September held steady at 2.5 percent. On a not seasonally adjusted basis for September, the year-ago headline PPI was up 6.9 percent while the core was up 2.5 percent.

On the news, equity futures edged down. Treasury yields were little changed with traders still focusing on less robust GDP growth in China. The latest PPI data indicate that underlying inflation is not yet easing as soon as the Fed had hoped despite recent softness in commodities prices. This likely will heighten the internal Fed debate over the costs and benefits of additional easing.

Just as a reminder, here’s what’s happening to base money, and gee, look at the coincidence with “excess reserves!”



But wait! There’s more!

Now let’s look at the effects of that wonderful “fed” tinkering on the unemployed, think that’s a coincidence?



Isn’t it great having a few private individuals control the production of your money? You know they pay you with a certificate of DEBT? And that the money you earn they make you pay them interest on it? LOL, are we gullible or what? Can I offer you gold as money? LOL, of course they control the majority of the gold too, and control is the key word as they use it to control you with it too (this is Ron Paul’s Achilles).

As far as the “markets” go, they are nothing but a rigged and manipulated casino arm of the private banks. Again I encourage people not to feed the animals, move your money into a local bank or credit union and stop playing in their casino.

Last night I helped a small group of people form up their town’s version of “Occupy.” It is nice to see average and conservative people begin to get it. I can tell you that a few years ago when I was giving seminars on this subject almost no one had any knowledge and they certainly didn’t get it or want to hear it. Last night, I’m pleased to report, they all were knowledgeable and they all got it.

I think there is a seismic shift underway – people where living a false storyline, when that storyline began to crumble they didn’t know how to react, they were in shock and they certainly didn’t accept that the world they believed in wasn’t real.

But now they know that storyline was a fantasy, a lie, and now they want and are going to create the winds of change necessary to sweep the fraud clean – that means that there is a power and control shift of huge proportions in progress. The majority don’t realize it yet, but the power they desire will be obtained when they restore the power of money creation to where it rightly belongs – the people.

Monday, October 17, 2011

Morning Update/ Market Thread 10/17 - Reality & Fantasy Gap Grows Wider Edition…

Good Morning,

Equity futures are lower this morning with the dollar higher, bonds higher, oil lower, gold & silver mixed, and food commodities also mixed.

Today I want to talk about what’s “real” and what’s not. In “Federal Reserve” parlance, the term “real” means that they have measured something in dollars but then corrected for inflation to make that statistic “real.”

Only problem is that where the “Fed” is concerned nothing is real, especially their measurements of “real.” This is because they set out to falsely, fraudulently, manipulate the inflation data. This data has been changed several times, the largest changes came via the “Boskin Commission” in 1996. That commission’s changes where motivated by the runaway exponential math associated with government deficits and Social Security – thus their mission was to find ways to lower the appearance of inflation so that they could artificially slow down the progression of the impossible math – of course that reasoning is not admitted publically, never will be. But by changing what’s in the measured “basket,” they created a fantasy world in which they believed they could make these adjustments because:
- Substitution bias occurs because a fixed market basket fails to reflect the fact that consumers substitute relatively less for more expensive goods when relative prices change.
- Outlet substitution bias occurs when shifts to lower price outlets are not properly handled.
- Quality change bias occurs when improvements in the quality of products, such as greater energy efficiency or less need for repair, are measured inaccurately or not at all.
- New product bias occurs when new products are not introduced in the market basket, or included only with a long lag.

Adjusting for these supposed biases, they are then able to say, for example, that because the car you purchase today is better than the car you purchased 10 years ago, that the increase in the price of the car is partially offset by the addition of those better features (like many safety features mandated by the government). Of course you are driving a better car, but in the end it’s still just a car that is used to get you from point A to point B. And you no longer have access to buy cars for what they used to cost, it is now impossible to buy a car that has not inflated in cost.

They apply this same logic to almost everything – if steaks get too expensive, no problem, they simply remove steak from the basket and replace it with hamburger (because that’s all you can now afford because of inflation, lol). And substitution bias is just one of many ridiculous hedonistic adjustments. Doesn’t that term “hedonistic” (self-indulgent) fit perfectly for these types of adjustments? It does because these self-indulgent adjustments are made by the narcissists who really run this country. Many credit Bill Clinton for the Boskin Commission adjustments, but the truth is that Bill didn’t dream this fantasy up all by himself, oh no, I can guarantee you that those interested in seeing the fantasy system perpetuated are the ones who really dreamed it up and simply used their bought-and-paid-for politician to sign it into being.

Once the data, then, is skewed towards underreporting, then reality and fantasy begin to diverge. At first this divergence is hardly noticed, but then the slippage begins to accumulate, one lie mathematically piled on top of the next. This produces exponential growth, and the next thing you know the reality gap is growing so fast that it pinches the people in their pocketbooks – reports of 1% or 2% inflation don’t match the reality of $14 hamburgers.

The reason I’m revisiting this MUST UNDERSTAND concept was a chart posted on Zerohedge last week showing Friday’s Consumer Sentiment, which cratered, and Retail Sales which magically rose 1.1%!



This reality disconnect is directly related to the inflation measurements – Retail Sales are measured in dollars, made “real” (not real), and also contain their own substitution bias because only same store sales are counted which do not reflect the missing sales from stores gone out of business. For example, Lowes just announced this morning they are closing 20 stores that will affect almost 2,000 workers. The Retail Sales report will miss the fact these stores are no longer open and that most of their sales are picked up by other stores – if you close all the home improvement stores in the nation but one, then you would say, “man, look at the Retail Sales soar!” How ridiculous would that be?

Of course we possess the technology to track sales instantly, but don’t because those who profit from the current system want to perpetuate that myth that all is well. And that’s why you have a historic disconnect between reality and fantasy. That is why you have politicians and bankers saying no recession when in fact the people of America know better, they can feel the squeeze that they are caught up in. Think about that chart in another way – retail sales soar because of inflation, while consumer sentiment plunges because of the same inflation – “consumer’s” income is not keeping pace with that inflation and thus they are depressed amongst reported inflation.

Of course once this reality gap grows too big, then you have people out on the streets, which is exactly where we are today. The root cause of this reality disconnect traces directly back to WHO it is that is allowed to control the production of money. If the people wish to truly end the fantasy then they must strive to recapture the money production power – it is rightfully theirs, that is the natural rule of law, and the proper order to the economy!

Today we have more conflicting data like Friday’s, and for the same reasons. The Empire State Manufacturing Index remained in the gutter for a fifth month in a row with a -8.48 reading. This index is NOT measured in dollars, it is accomplished via a survey (with its own errors). Here’s Econodream:
Highlights
Business conditions in the New York manufacturing region are contracting for the fifth month in a row according to the Empire State index for October which shows little change at minus 8.48 vs September's minus 8.82. Positives include new orders which at plus 0.16 show a fractional monthly gain to end two months of contraction. Shipments, at plus 5.33, show a moderate monthly gain. Also positive is employment, at plus 3.37, to indicate a mild monthly rise in the sample's workforce.

Now the negatives. Unfilled orders, at minus 4.49, are contracting for the fourth month in a row. Manufacturers in the region have been keeping shipments and employment up by working down backlogs which however are becoming increasingly thin. Inventories, at minus 8.99, are contracting for the fourth month in a row suggesting that the region's manufacturers, hit by weakness in new orders, see their inventories as too high. Delivery times, at minus 1.12, have been getting a bit shorter hinting at over capacity in the shipping sector as truck and rail firms chase fewer and fewer orders.

Pressures on both input and output prices are easing in what is also consistent with slowing conditions. Another negative is the six-month outlook which at 6.74 is down from 13.04 in the prior month and is at a new low for the recovery. This echoes other readings on sentiment, including those on consumer sentiment, that spirits are unusually depressed. The next look at this month's conditions in the manufacturing sector will be Thursday with the Philly Fed's report.

No doubt about it, a negative reading, one consistent with recession (from already recessed levels).

Now we look at Industrial Production which was just reported at +.2%, same as the month prior – here’s Econodeadasleep with their report:
Highlights
Manufacturing-especially autos-continues to lead industrial production. In September, industrial production advanced 0.2 percent, following no change the month before (originally up 0.2 percent) and a 1.1 percent jump in July (previously up 0.9 percent). Analysts had projected a 0.2 percent rise for September.

By major industry, manufacturing improved to a 0.4 percent rise after a 0.3 percent boost in August (previously estimated at up 0.5 percent). The auto component increased another 0.7 percent after a gain of 1.5 percent in August. Outside of autos, manufacturing is still healthy. Strength was in durables as nondurables declined marginally. Excluding motor vehicles, manufacturing rose 0.3 percent, equaling the pace for the prior month.

In other major sectors, utilities output fell 1.8 percent after declining 2.9 percent in August. Mining output expanded 0.8 percent, matching the growth rate for August.

On a seasonally adjusted year-on-year basis, overall industrial production was up 3.2 percent in September, compared to 3.3 percent in August.

Overall capacity utilization in August improved to 77.4 percent from 77.3 percent in August (originally 77.4). The September rate was slightly lower than analysts' estimate for 77.5 percent.

The manufacturing sector continues to post better numbers at the national level than in many regional surveys. Gains continue to be moderately healthy and somewhat broad based though more in durables than in nondurables.

On the news release, equity futures were mixed and little changed compared to prior to the release. The earlier released Empire State manufacturing survey was a little disappointing and weighed on equity futures.

The traditional non-NAICS numbers for industrial production may differ marginally from the NAICS basis figures.

Catch all the talk about autos leading this report? Remember what they do with autos when measuring “inflation?” Let’s look at how the “Fed” assembles this report, “The production index measures real output and is expressed as a percentage of real output in a base year, currently 2007.”

You catch that “real output,” and remember what “real” means? It means that they measured Industrial Production in dollars and then adjusted for “inflation” (measured their way) to make it “real.” And so it’s not real! It’s BUNK. And that’s why you have one report that’s negative and one report that’s positive – one is really real, and the other simply is not.

Yes, I do know how to fix this. The people on the streets need to create the void and then ensure that people like me are put in place to take the proper actions – people with no special interest who will work on behalf of humanity and are not interesting in controlling the planet for their own personal narcissistic power trip.

Speaking of fantasy, the leaders of Europe and the G20 are up to their necks in it. They meet this coming Sunday are going to decisively, once-and-for-all, swiftly, permanently, and above all “unitedly” print money, give it to the insolvent banks, and put the people of Europe (and the U.S.) on the hook for it all! Or not. Well, maybe.

Or not, if the Germans follow through on what is being reported this morning: “Germany said European Union leaders won’t provide the complete fix to the euro-area debt crisis that global policy makers are pushing for at an Oct. 23 summit.”

Oops. I think we’ve seen this fantasy before. Buckle up, the void is coming and that void is the critical juncture in history, probably for this millennium. It can swing either way from there, be careful what you ask for.