Interesting Times …

The Chi­nese have an ancient curse which states:

May You Live in Inter­est­ing Times”

Well guess what? That’s exact­ly what you are doing right now, but maybe
you just haven’t noticed it. Or maybe you just accept it now as nor­mal.

Let me explain. We are liv­ing in the most unusu­al (read inter­est­ing) set
of finan­cial cir­cum­stances that this world have ever seen.

Maybe you have been so exposed to it and so famil­iar with it that you now
accept it as nor­mal. We no longer have a sound finan­cial sys­tem. It has
been replaced with the biggest Ponzi Scheme of all time. What is
con­sid­ered nor­mal or accept­able has shift­ed, slow­ly but sure­ly with the
pas­sage of time.

Cen­tral Bankers are to be blamed for all of these woes (ok TBTF banks
too). But con­tin­u­al­ly manip­u­lat­ing the sup­ply of mon­ey in their respec­tive
sys­tems, they have dilut­ed all our pre­cious mon­ey. so much so, that we are
near­ing the point of col­lapse, where it is just not cred­i­ble any­more.

Take some pre­cau­tions and make sure that you have at least 5 per­cent of
your net worth in some form of mate­r­i­al asset: Gold, Sil­ver, farm­land,
land, or some­thing. Of all Gold is prob­a­bly the eas­i­est to han­dle. That’s
why we rec­om­mend gold. It’s REAL MONEY!

So to recap. Don’t loose the faith and keep stackin’ …

© Copy­right MMXIII RagingGoldenBull.com

Top Job Going at the Federal Reserve

Want a Top Federal Reserve System Job?

Top Fed­er­al Reserve Sys­tem Job

Fan­cy a cushty job at the Fed­er­al Reserve? Nice and easy like their mon­e­tary pol­i­cy? The rumor mill is busy sug­gest­ing that Ben Bernanke will do a run­ner at the end of the year — just before con­tract renew­al in Jan­u­ary 2014.

Go on! give it a try — you might just get it! I mean, how hard is it to print mon­ey, because that is the only “tool” in the Fed­er­al Reserve arse­nal of tools.

Give it a try because you might just get it 😉

© Copy­right MMXIII RagingGoldenBull.com

Video — The Creature from Jekyll Island (G. Edward Griffin)

This is a must watch video. If you real­ly want to know how we got here, in the finan­cial mess that we are in today, then you need to watch this video and under­stand exact­ly how we got here.

The Fed­er­al Reserve Sys­tem is the great­est scam of all his­to­ry — Because it is NOT:

  • Fed­er­al
  • a Reserve (there are no Finan­cial Reserves)
  • a Sys­tem (it is New York based — with the illu­sion of Nation­al pres­ence)

Mr Grif­fin sites sev­en rea­sons why the Fed­er­al Reserve Sys­tem shoul be abol­ished:

  • It is inca­pable of acheiv­ing it’s stat­ed objec­tives
  • It is a Car­tel — Oper­at­ing against the pub­lic inter­est
  • It is the Supreme instru­ment of Usery
  • It gen­er­ates our most unfair tax
  • It encour­ages war
  • It desta­bilis­es the econ­o­my
  • It is an instru­ment of Total­i­te­ri­an­ism

It’s long weigh­ing in at 105 min­utes — but Mr Grif­fin is a mas­ter pub­lic speak­er, a dili­gent researcher, and above all it is high­ly enter­tain­ing piece that every­one should hear.

And know this — You can watch/listen to this video much quick­er than it took Mr Grif­fin the years of painstak­ing research, or ever to read his weighty tome as the same (which is a MUST read, btw ;-)).

Split it into two parts if you must, or more, but make sure you under­stand all that is in this great, great lec­ture.

A clos­ing thougt from Mr Grif­fin:

Fed­er­al Reserve Sys­tem does not need to be audit­ed…  It needs to be abol­ished!

 

I hear you Mr Grif­fin!

Keep stackin’ — FPOW Far­leyB

© Copy­right MMXIII RagingGoldenBull.com

John Embry on Gold and Silver

Here is a recent inter­view with John Embry for the Hera Research Newlet­ter (HRN):

HRN: Thank you for join­ing us today. Let’s talk about gold stocks.

John Embry: Gold stocks rep­re­sent a tremen­dous val­ue in rela­tion to the price of gold and to the fun­da­men­tals of the sec­tor. There has been tremen­dous short­ing activ­i­ty by hedge funds and, as a result, ded­i­cat­ed gold funds have expe­ri­enced redemp­tions. Retail investors, who are nat­ur­al buy­ers of these stocks, have been anni­hi­lat­ed by the price action. This has cre­at­ed one of the finest oppor­tu­ni­ties, if not the finest oppor­tu­ni­ty, that I have ever seen.

HRN: Do you have a short term price tar­get?

John Embry: I don’t look at short term price charts for gold. In a mar­ket as heav­i­ly inter­fered with as this one, charts can be made to look any way you want in the short run. As I see it, if you don’t like gold at these prices, then you must like cur­ren­cies. My part­ner Eric Sprott often says, the U.S. dol­lar is the best look­ing horse in the glue fac­to­ry. If the U.S. dol­lar is the world’s strongest cur­ren­cy, that’s the best endorse­ment for gold that I can think of.

HRN: Do you believe that cur­ren­cies are los­ing val­ue?

John Embry: The fact is that economies are slow­ly melt­ing down. The prob­lem is exces­sive debt in almost every cor­ner of the world. The only way to deal with the debt is through aggres­sive growth, but fab­ri­cat­ing growth through more debt won’t work. The idea that you can get the econ­o­my to move for­ward by cre­at­ing even more debt just does­n’t wash. We can’t ser­vice the exist­ing debt, even at arti­fi­cial­ly low inter­est rates. I don’t see any easy way out. We have to get the exces­sive debt out of the finan­cial sys­tem. Either pol­i­cy mak­ers are going to cre­ate mount­ing infla­tion or there will be a defla­tion­ary debt col­lapse.

HRN: Europe seems to be a case in point. Do you think the Euro will break up?

John Embry: The Euro­crats who con­struct­ed the cur­ren­cy aren’t going to give it up eas­i­ly. The key is how much the Ger­mans are going to go along with. They real­ize that there’s a huge loss for them if the Euro falls apart. I would­n’t want to be in Ger­man Chan­cel­lor Angela Merkel’s shoes. Ger­many is trapped in the Euro because it relies on exports and Ger­man banks hold the debt of oth­er Euro­pean coun­tries. Despite the bailouts and the infla­tion­ary poli­cies of the Euro­pean Cen­tral Bank (ECB), Ger­many does­n’t have much choice.

HRN: How can Euro­pean gov­ern­ments solve their debt prob­lems?

John Embry: The prob­lem is that it would take a hor­rif­ic debt col­lapse to set the stage for future expan­sion. There is no politi­cian on earth that wants that to hap­pen on their watch. Con­se­quent­ly, pol­i­cy mak­ers will resist defla­tion and we’re going down the oppo­site road, which means mount­ing infla­tion or pos­si­bly hyper­in­fla­tion. I don’t think politi­cians will change the sys­tem. I think the sys­tem will change the politi­cians.

HRN: Can the econ­o­my recov­er in a high infla­tion sce­nario?

John Embry: Cre­at­ing even more debt is not going to work. To me, high infla­tion is the most cor­ro­sive thing that can hap­pen to an econ­o­my or to a coun­try. I’m real­ly wor­ried that neo­clas­si­cal, Key­ne­sian econ­o­mists like Paul Krug­man, who are pre­scrib­ing even more debt, will bring about a col­lapse.

HRN: Are these prob­lems the result of Key­ne­sian eco­nom­ics?

John Embry: If you real­ly applied Key­ne­sian­ism as Keynes orig­i­nal­ly envi­sioned it, the gov­ern­ment was sup­posed to run sur­plus­es when the econ­o­my was grow­ing to pay for the deficits that would be cre­at­ed dur­ing down­turns. That’s been con­ve­nient­ly for­got­ten. We’ve had an astound­ing build up of debt. I don’t think peo­ple ful­ly real­ize how seri­ous this is. I’m amazed at how com­pla­cent peo­ple are. We’ve nev­er been in a posi­tion like this in the entire his­to­ry of the world.

HRN: Why do you think peo­ple are so com­pla­cent?

John Embry: I think it’s cog­ni­tive dis­so­nance. When con­front­ed with some­thing that’s real­ly unpleas­ant, and to which there’s no easy solu­tion, the aver­age per­son will basi­cal­ly block it out and look for some­body to tell them that every­thing is fine. The main­stream news media and the gov­ern­ment are doing that as we speak. Con­se­quent­ly, the aver­age per­son does­n’t have a chance of under­stand­ing what’s going on. The man in the street does­n’t have a clue what’s com­ing.

HRN: What about invest­ment pro­fes­sion­als?

John Embry: I have a lot of close friends who have been in the invest­ment busi­ness for 40 years and they don’t want to hear it.

HRN: Won’t the Fed­er­al Reserve and oth­er cen­tral banks sim­ply bail out the sys­tem?

John Embry: They think that print­ing mon­ey will buoy the mar­kets and that that’s good, but it won’t solve any of the prob­lems. Although you may get a momen­tary lift in the finan­cial mar­kets, when it plays itself out we’ll be back in the same sit­u­a­tion, but with mon­ey that’s being sys­tem­at­i­cal­ly destroyed.

HRN: Does print­ing mon­ey work in the short term?

John Embry: There are nom­i­nal prices and real prices. Print­ing mon­ey is very decep­tive and peo­ple are con­fused by its effects. I am only inter­est­ed in real returns, not nom­i­nal returns. If you have a nom­i­nal return that’s caused by infla­tion, you’re los­ing mon­ey because gov­ern­ments tax nom­i­nal gains.

HRN: Can gov­ern­ments inflate their way out of debt?

John Embry: The U.S. fed­er­al gov­ern­ment, for exam­ple, has reached a stage where forty cents of every dol­lar spent at the fed­er­al lev­el is bor­rowed and a lot of that mon­ey has been print­ed. There has nev­er been a case in his­to­ry where that has­n’t led to finan­cial dis­as­ter. If you study any empir­i­cal evi­dence, they’re in a hope­less posi­tion. They’ve only been able to get away with it so far because the U.S. dol­lar is the world reserve cur­ren­cy. If the Unit­ed States was­n’t able to print mon­ey and was trapped in the Euro­pean Union, it would just be a mas­sive Spain.

HRN: So, gov­ern­ments can’t inflate away their debt?

John Embry: Infla­tion is the eas­i­er, more expe­di­ent route to take, but I would not rule out an acci­dent. For exam­ple, if pol­i­cy mak­ers push aus­ter­i­ty too far they could trig­ger a defla­tion­ary spi­ral that would be impos­si­ble to reverse. I sub­scribe to the Aus­tri­an the­o­ry of eco­nom­ics. In his book Human Action, Lud­wig von Mis­es wrote that there is no way to avoid the col­lapse of a cred­it boom and that more cred­it expan­sion sim­ply destroys the cur­ren­cy.

HRN: Don’t infla­tion­ary poli­cies help banks and sup­port the finan­cial sys­tem?

John Embry: The ECB could do anoth­er Long-Term Refi­nanc­ing Oper­a­tion (LTRO) or the Fed­er­al Reserve could buy more U.S. Trea­suries in the open mar­ket but that’s not real­ly solv­ing the prob­lem. If you actu­al­ly eval­u­at­ed the bank­ing sys­tem and marked all the assets to mar­ket, the sys­tem would be insol­vent.

HRN: And the basic prob­lem is too much debt and lever­age?

John Embry: The over the counter (OTC) deriv­a­tives sit­u­a­tion is so sur­re­al I can’t begin to express it. Cor­rect­ly cal­cu­lat­ed, the notion­al val­ue of all OTC deriv­a­tives is in excess of one quadrillion dol­lars glob­al­ly. The vast major­i­ty are relat­ed to inter­est rates. Cen­tral banks have to keep cre­at­ing liq­uid­i­ty to pre­vent these instru­ments from col­laps­ing.

HRN: What can the Fed­er­al Reserve and oth­er cen­tral banks do?

John Embry: They’re lost either way. They’re run­ning a mas­sive lab exper­i­ment with mon­e­tary pol­i­cy and don’t have a clue what the out­come is going to be.

HRN: Do you think the U.S. econ­o­my can grow its way out of debt?

John Embry: When I was a kid back in the 1950’s, most women did­n’t work. Amer­i­cans main­tained their stan­dard of liv­ing by putting a sec­ond per­son to work. When that was expend­ed they made up the dif­fer­ence by going into debt and, even­tu­al­ly, they used their homes as cash machines. Now stu­dent loans total more than $1 tril­lion. I just don’t see where the con­sumer demand is going to come from going for­ward. You can’t get blood out of a stone.

HRN: What do you think the out­come is going be?

John Embry: I believe that before this is over we’ll have a new cur­ren­cy sys­tem, prob­a­bly backed by gold.

HRN: Do you sup­port the gold stan­dard?

John Embry: One of the great­est peri­ods of wealth cre­ation was when we had a gold stan­dard in the sec­ond half of the 19th cen­tu­ry. It’s hard to believe that it’s going to be 41 years since there has been gold back­ing for any of the major cur­ren­cies in the world. That is what has allowed the mas­sive build up of debt that we have today. If there had been a gold stan­dard, we would­n’t be in the posi­tion we are in. West­ern gov­ern­ments don’t want the gold stan­dard because it restricts their abil­i­ty to dole out favors.

HRN: But the gold stan­dard does­n’t pre­vent finan­cial pan­ics.

John Embry: There are always going to be finan­cial pan­ics, but, under the gold stan­dard they tend to be short term. If we had had a gold stan­dard, there would have been a num­ber of cleans­ing peri­ods where excess debt was elim­i­nat­ed. The Fed­er­al Reserve allowed the build up of debt that led to the stock mar­ket bub­ble and crash of 1929 and to the Great Depres­sion, which was fol­lowed by World War II. It took about a decade to build up the debt and more than a decade to deal with the fall­out. It’s tak­en more than 40 years to build up the debt we have today and I don’t know how long it’s going to take to cor­rect it.

HRN: What does this mean for the aver­age per­son?

John Embry: I think liv­ing stan­dards of most peo­ple in the world, par­tic­u­lar­ly in the West are going to decline pre­cip­i­tous­ly. The Fed­er­al Reserve recent­ly report­ed that the net worth of the medi­an Amer­i­can fam­i­ly has fall­en near­ly 40% since 2007 after adjust­ing for infla­tion. Before this all plays out, I think the per­cent­ages are going to be far larg­er.

HRN: Do you fore­see any wider impact on soci­ety?

John Embry: When I was grow­ing up in the Unit­ed States after World War II, I did­n’t real­ize how remark­ably for­tu­nate we were as a soci­ety to have such a strong mid­dle class. Sel­dom in his­to­ry has there been a mid­dle class to equal what tran­spired in the U.S. and Cana­da from the 1950s to the 1980s. We basi­cal­ly took it for grant­ed because that’s all we ever knew. The mid­dle class in the Unit­ed States is dis­ap­pear­ing. What hap­pens is that you have mas­sive pover­ty and a small wealthy class. It’s one of the worst things that can hap­pen to a soci­ety and it can lead to civ­il unrest. If there’s no rea­son to buy into the sys­tem, peo­ple will act up.

HRN: Do you view gold and sil­ver as com­modi­ties?

John Embry: I view gold and sil­ver as mon­e­tary met­als. The main­stream news media con­flates gold and sil­ver with indus­tri­al com­modi­ties, but they’re real­ly a com­peti­tor to the cur­ren­cy sys­tem. Gold is the antithe­sis of paper mon­ey.

HRN: I’ve read that cen­tral banks are buy­ing gold.

John Embry: Con­fi­dence in cur­ren­cies is mis­placed. There is a strong flow of gold from West to East. The Chi­nese, Indi­ans, Rus­sians and Viet­namese know per­fect­ly well what’s going on with the U.S. dol­lar and the Euro. They are buy­ing phys­i­cal gold and the West has been stu­pid enough to sell it to them.

HRN: What’s your view on Chi­na?

John Embry: I’m not opti­mistic on Chi­na in the short run. The Peo­ple’s Bank of Chi­na (PBoC) recent­ly cut bank reserve require­ments by 150 basis points to stim­u­late 1.2 tril­lion yuan ($190 bil­lion) of new lend­ing because they don’t want growth to fall from around 8% to 7%. As I see it, they’ve dined out on West­ern profli­ga­cy for 20 years and have become the most unbal­anced econ­o­my in the world. An inor­di­nate amount of Chi­na’s eco­nom­ic activ­i­ty is gen­er­at­ed by exports and by all man­ner of cap­i­tal spend­ing on man­u­fac­tur­ing, real estate, infra­struc­ture and more. The slow­down in the world econ­o­my has revealed mas­sive over­ca­pac­i­ty in many sec­tors.

HRN: Can Chi­na devel­op a con­sumer-dri­ven econ­o­my?

John Embry: The idea that Chi­na’s econ­o­my can morph into a con­sumer-dri­ven econ­o­my is pre­pos­ter­ous. The very same con­sumers are employed in sec­tors like man­u­fac­tur­ing where there is mas­sive over­ca­pac­i­ty. If the world slides into anoth­er glob­al reces­sion, which is not beyond the realm of pos­si­bil­i­ty, I don’t see how Chi­na stays out of it and if they don’t then there’s no engine of growth left in the world.

HRN: So, even with a ris­ing mid­dle class, Chi­na remains depen­dent on exports?

John Embry: The fact is that Chi­na has become the world’s man­u­fac­tur­er but the abil­i­ty of their two largest cus­tomers, Europe and the Unit­ed States, to con­sume is being con­strained. Chi­na is not going to be able to keep sell­ing more year over year. The HSBC man­u­fac­tur­ing index has fall­en to reces­sion­ary lev­els.

HRN: It has been pre­dict­ed that Chi­na will become the world’s largest econ­o­my. Do you think that’s true?

John Embry: I think Chi­na will prob­a­bly dom­i­nate the 21st cen­tu­ry. The U.S. dom­i­nat­ed the 20th cen­tu­ry but it went through some very tough times in the first half of the cen­tu­ry.

HRN: With a slow­down in Chi­na, what’s your view on com­modi­ties like cop­per or crude oil?

John Embry: In the short term, I’m wor­ried about com­modi­ties. In a deep glob­al reces­sion, I expect there will be extreme mon­e­tary debase­ment, which will hold up the nom­i­nal prices of com­modi­ties more than sup­ply and demand fac­tors would sug­gest.

HRN: Do you fore­see a bear mar­ket in com­modi­ties?

John Embry: We are in a short-term bear mar­ket that will be arrest­ed by mon­e­tary debase­ment.

HRN: But there are val­ue buy­ing oppor­tu­ni­ties?

John Embry: Giv­en my views on cur­ren­cies, com­modi­ties that are already depressed could be decent repos­i­to­ries for wealth. I like agri­cul­tur­al prod­ucts. As the glob­al econ­o­my con­tin­ues to devel­op, I think the sup­ply of food is going to be a major issue.

HRN: How can investors pro­tect their assets in a glob­al reces­sion?

John Embry: The only things I’m com­fort­able hold­ing are pre­cious met­als and, because they are so cheap now, pre­cious met­als min­ing shares.

HRN: Where do you think the price of gold will end up?

John Embry: I’m more con­cerned with how many ounces I own than with how many U.S. dol­lars I can get for them at any giv­en point in time. Gold and paper mon­ey are going in oppo­site direc­tions.

HRN: Thank you for your valu­able time.

John Embry: It was my plea­sure.

© Copy­right MMXII RagingGoldenBull.com

Yra Harris predicts Gold will Close Higher at Year End

Yra Har­ris is called a “trader’s trad­er.” He says the lat­est deal on Greek debt is just

pre­tend and extend.… ”

The real prob­lem is Spain because they’re big, they’re in debt and they have 27% unem­ploy­ment.” Every­one in the West­ern world is deal­ing with the sov­er­eign debt mess by print­ing mon­ey and sup­press­ing inter­est rates.

 

Har­ris pre­dicts:

As long as real yields are neg­a­tive, of course, gold is going to go up.”

Har­ris is afraid infla­tion could get out of con­trol and says:

It’s like being a lit­tle preg­nant, you can’t real­ly con­trol it. Noth­ing destroys democ­ra­cy like inflation–end of sto­ry.”

If Democ­rats and Repub­li­cans can’t reach a deal to avoid the so-called “fis­cal cliff,” then Har­ris con­tends,

Defla­tion … is bull­ish for gold because every­body knows what the cen­tral bank will do to answer the call … the Fed will become that much more aggres­sive.”

No mat­ter what, Har­ris is bet­ting that

gold will be high­er by the end of the year.”

© Copy­right MMXII RagingGoldenBull.com

Quote — Ludwig von Mises on the Final Collapse

Ludwig von Mises

 

Austrian Economist Ludwig von Mises

Aus­tri­an School Econ­o­mist — Lud­wig von Mis­es

 

There is no means of avoid­ing the final col­lapse of a boom brought about by cred­it expan­sion. The alter­na­tive is only whether the cri­sis should come soon­er as the result of a vol­un­tary aban­don­ment of fur­ther cred­it expan­sion or lat­er as a final and total cat­a­stro­phe of the cur­ren­cy sys­tem involved.”

© Copy­right MMXII RagingGoldenBull.com

The First and Last Too-Big-To-Fail-Bank-Liquidation in History

Sign o the times - Lehmans going under

Lehmans Liq­ui­da­tion near­ly brought down the whole glob­al finan­cial sys­tem

There are plen­ty of things to be wor­ried about at the moment. Some­times it
is like the Case of the Miss­ing Cen­tral Bank Gold is pret­ty minor in
com­par­i­son. For exam­ple, the impli­ca­tions of the Lehman Broth­ers Event
are pro­found indeed.

The Lehman Broth­ers event was very unique indeed. One of a kind. It was the first, and the last case of a mon­ster bank being liq­ui­dat­ed and the cen­tral plan­ners soon realised that they had cho­sen the wrong path here. This one bank in 2008 almost brought down the entire sys­tem. If the rumours were to be believed then we were with­in hours of the col­lapse of the entire glob­al finan­cial sys­tem.

For the first time we could see the real and dec­i­mat­ed val­ue of assets dur­ing a liq­ui­da­tion sce­nario in the 2008 envi­ron­ment. Any­one who has been close to any kind of bank­rupt­cy or debt event knows that assets are worth noth­ing and no buy­ers. Cred­it sup­ply was seiz­ing-up and it was almost time for the end.

The Cen­tral Plan­ners watched and learned. If you notice, there have been many oth­er events, banks, coun­tries, and busi­ness­es like since Octo­ber 2008. But none have been allowed to fail. It would cause too much tur­moil and desta­bilise too much infra­struc­ture. The les­son learned here is that it would be much bet­ter to just kick the can down the road. The expres­sion that we have heard so often now. Keep the illu­sion going for a bit longer. But how much longer? Days? Weeks? Years? Cen­turies? This is where we must do our think­ing — how long have we got?

Greek austerity measure start to warm up

Greek aus­ter­i­ty mea­sure start to warm up

Reflect on all that has hap­pened since — Greece, Spain, Por­tu­gal, Ire­land, Italy, Dex­ia, Bankia, AIG, Fan­ny Mae, Irish Banks, Ice­landic Banks, North­ern Rock, and the hand­ful of banks that qui­et­ly fail every Fri­day after­noon in Amer­i­ca. All bar none, have been helped — no liq­ui­da­tion for them. It would be messy.

Wit­ness Mario Draghi and his print­ing press­es, EFSF, any­thing but actu­al­ly let the prob­lems die out. So we print more mon­ey, sell more bonds, and use the mon­ey to kick the can down the road again. But one day this will come to an end.

So I feel that we will not see any more BIG LIQUIDATIONS — They are just too dan­ger­ous — Let’s just draw out a long slow death instead.

This is the proof of QE to Infin­i­ty and beyond — Pur­chase your phys­i­cal gold now while it is still in the 1,700 USD range — In a few years most peo­ple will be locked out from buy­ing (if not already) com­plete­ly — buy sil­ver too. Buy BOTH, with both hands. Now.

Oh, an by the way — start think­ing, plan­ning, and tak­ing mas­sive action now — it’s the best chance of sur­vival for us and the peo­ple we care about.

© Copy­right MMXII RagingGoldenBull.com