Brilliant!! QE II Explained

Overdose: The Next Financial Crisis

Jim Sinclair's Mindset on Federal Reserve

Seriously, it is hard to hide my contempt of this disgusting scene. This band of fools somehow believes that prosperity can be created by printing money without any consequences whatsoever. The US is sinking under a mountain of indebtedness and the Fed chairman tells us that it stands ready to engage in even more QE should the need arise. Flash to Ben – the need shall arise. China is already balking at buying US debt meaning you are going to have to buy it all yourself Ben.

What we are witnessing is the death throes of a debt-based monetary system of which those presiding over it apparently have come to believe their own delusions. The US public is learning what our grandfathers learned as a result of the Great Depression – Debt is something to be avoided – not heaped up and accumulated. That the borrower becomes the lender’s slave and that living beyond ones own means is inherently foolish and dangerous. That saddling one’s children and grandchildren with a debt burden that they did not create is immoral and wicked. Yet, all of this is lost upon the monetary lords who have their noses so close to the ground sniffing out the scent that they cannot see the path ahead leads off the edge of an abyss from which there is no escape. Or perhaps they do see and are attempting to secure their own parachutes before leading the rest of the masses over the edge.

I repeat – if lasting prosperity could be created by printing money and giving it away, previous generations that were wiser and more frugal than ours would long ago have stumbled upon this axiom.

That brings us to the war on gold. I am still amazed that after all these years and notwithstanding all the evidence to the contrary, there are still those obtuse enough to insist that there are no official sector attempts to manage or stem the rise in the price of gold. Gold is the only currency that these debasement thieves cannot pollute by conjuring more of it into existence. It rises when distrust of paper currencies is high and confidence in the ability of those who supposedly manage monetary affairs wanes. Thus it is and always will be in direct competition with unbacked fiat currencies.

Our money masters hate the yellow metal because its rise mocks their absurd assertions and debunks their claims of being able to “manage the economy”. It strikes, dagger-like, at the very hubris of these elitists who think that they are wiser than the collective judgment of the entire market, they alone possessing such keen insight into the nature of these matters that we should entrust our financial health to their hands. Imagine the conceit of a few men who think that by pulling on this lever or pushing on this button, that they can assure continuous prosperity and lasting wealth for all. Every generation considers itself wiser than the previous one which is why history does indeed repeat itself. Arrogant men never learn for they lack the one thing essential to make one truly wise – the ability to admit that we do not know all things nor that we mere mortals can always fix what ails us.

-Dan Norcini

Taken from Jim Sinclair's MindSet

Tony Robbins Economic Warning 1-2

Part I: Eric Janszen interviews Elizabeth Warren for The Postcatastrophe...

The Story of Spending

Again I have learned with my studies that its really not a left or right, Republican or Democrat, all politicians love to spend our money...

Jim Rogers on Sovereign Debt

Ron Paul : Greece Is Just The Beginning!

Time to sit down and start to really listen...

The Making Work Pay Credit

Part of the government's 2009 American Recovery and Reinvestment Act, this credit was designed to put more money in taxpayers' pockets by taking less money out of their paychecks throughout the year. With less money being withheld, fewer people are getting large refunds. Remember, getting a tax refund means you've given the government too much and now you're getting your money back. Since the government took less, you have less to get back.


I believe there are going to be a lot of pissed off people when they realize this when they pay taxes this year. You do not want to owe the government and do not want the government owing you. If you are a saver than you would rather owe than be receiving tax return. This is why you set up a fund and withhold taxes(you want to be around $0.00). So when it is time to pay uncle sam you have that money sitting somewhere making a little interest rather, than letting the government borrow it from you and they make interest off it.

The Great American Bubble Machine

Money As Debt

This should be mandatory viewing in order to get a High School Diploma.

What Happens If The Debt Ceiling Is Not Raised?

Yesterday America just got permission to hit 100% Debt/GDP. The Senate approved an amendment increasing the US debt ceiling by $1.9 trillion. for a total of $14.3 Trillion. I was reading Zerohedge when someone asked what would happen if the ceiling wasn't raised? This is what came out of the comments section that I found very interesting.

(The following are from comments by readers on Zerohedge.com)

Short answer: Nothing happens (but you knew that)

Long answer: Current law requires a budget ceiling and a vote to raise it. Violating that law would open up violation of other similar laws. Not too far down the path of similar broken laws, the states start printing their own money. In US dollars. At which point hyperinflation ignites and the USofA ceases to exist as a functioning union. Much hilarity ensues.

The monetary system of the world (not just the USA) is based upon the illusion that there will always be greater fools available to pay the last greater fool.

The only reason people remain in the room that's about to be flooded with poisonous gas is the complete and utter belief (supported by group think and conventional wisdom along with healthy dollops of denial and self interest trumping rationality) that each person can get out before the gas can over come them.

As long as the majority continues to believe in the lie, the lie remains solid and fully formed. Thus the illusion is reality because the belief (and by extension the actions) of the people makes it real. One of the realizations one has when looking at this philosophically is that reality is simply what the majority says it is.

The banks are stable despite horrendously convoluted and distorted balance sheets and non-performing assets simply because the government says they are and people want them to be. Thus they are. If a rule or law threatens to upset the illusion, it's changed to conform to the group think.

What most people don't understand is that this "reality" is extremely fragile and will fail quickly. The Fed, Treasury and the President understand this extremely well. This is why this is considered a National Security issue and every lie, theft, payoff and Ponzi is encouraged and endorsed at the highest levels. Our reality is supported by a lie and thus by extension is a lie. Since there is no more real support under our economic reality, every effort must be extended to support the lie.

Do or Die! Seen from that point of view, everything that's going on is perfectly understandable.

The lie holds until the first person breaks the pact and heads for the exit. It takes no more than one. Then the stampede erupts because while nobody wants to be first, everyone wants to be second.

I think California is that "person" at the sovereign level. As goes Cali, so goes the nation, so goes the world and in rapid fashion. We will see, come summer, if Cali stays within the illusion or bails.

Someone pointed out this video as metaphor for our current situation:

Cunning lions await the herd as it lumbers forward, trustingly, behind their dear leader. If divided, the weak in the herd are slowly picked off, unless...

Anyways, if someone has a better explanation to what would really happen, send it to me!

Zimbabwe Ben

Gold Thoughts: Arnold Bock

The following is Copyright © 2009 Arnold Bock and can be found over at Financial Sense.

So why am I so optimistic about the eventual price of gold?

It is because an affinity for and an understanding of the political mindset causes me to understand what decision makers will do…and why. Because a politician follows the political calendar, s/he only concerns himself/herself with the time horizon leading to the next election.

Anything requiring decisions beyond the date of the next election will be the responsibility of whoever is on the next watch. If the politician in office today is in office after the next election, a shrug of the shoulder indicates that worries of that kind can be dismissed for now to be dealt with later.

So major and difficult, but necessary, decisions are inevitably deferred. In their place spending money gives the appearance of concern and of doing something to fix the apparent problem. Aren’t those elected officials doing what we elected them to do? It certainly looks as if they are.

More cynical observers would characterize these actions by the political class and their senior bureaucratic minions as buying time hoping that something positive might magically emerge.

Those who are super cynical would even conclude give-away programs are designed simply to bribe the voters in order to curry goodwill for another term at the levers of power.

What all this means is that there is no discipline or inclination to do anything of real value in fixing the core economic and financial problems. That being the case, new programs, more spending stimulus and money creation will always be the order of the day. Hence the currency will devalue and investors will find gold as their best safe-haven refuge.

The dollar will devalue because massive dilution caused by incessant money creation allows future obligations to become more manageable – for government – because it is the only way that it can meet its future obligations for employee pensions, accumulated debt, Medicare and social security.

A nominal dollar which buys much less in the future than it does today is still a dollar. Unfortunately the holders or recipients of those devalued pieces of paper will find they are essentially fraudulent promises.

These realities make gold the closest thing to a sure-bet investment. They are also the reasons why gold will go much higher than most of us allow ourselves to contemplate.

Buckle your seatbelts and enjoy the ride ahead!

I still think Gold is overbought, it is always a good reminder to keep myself honest by reading stuff like this. I have a lot of events coming up this year wedding, honeymoon, trying to buy house, etc...With all these I am going to need liquidity and not sure holding on to bullion is going to be my best option. I am looking to buy some on the dip (if that ever happens) think I might as well get into som Sliver and Oil.

National Debt

We recently just passed $12 trillion, keep stepping on that gas administration, no one is watching, we are all to busy watching American Idol and enjoying the recovery...

U.S. National Debt Clock : Real Time

Total: $12,030,203,408,433.00

Debt Per Person: $39,058.00

Debt Per Taxpayer: $110,681.00

Your Wealth Being Destroyed Daily

Cash For Clunker Revisited

If you traded in a clunker worth $3500, you get $4500 off for an apparent "savings" of $1000.

However, you have to pay taxes on the $4500 come April 15th (something that no auto dealer will tell you). If you are in the 30% tax bracket, you will pay $1350 on that $4500.

So, rather than save $1000, you actually pay an extra $350 to the feds. In addition, you traded in a car that was most likely paid for. Now you have 4 or 5 years of payments on a car that you did not need, that was costing you less to run than the payments that you will now be making.

But wait, it gets even better: you also got ripped off by the dealer.

For example, most dealers in LA was selling the Ford Focus with all the goodies including A/C, auto transmission, power windows, etc for $12,500 the month before the "cash for clunkers" program started.

When "cash for clunkers" came along, they stopped discounting them and instead sold them at the list price of $15,500. So, you paid $3000 more than you would have the month before. (Honda, Toyota , and Kia played the same list price game that Ford and Chevy did).

So lets do the final tally here:

You traded in a car worth: $3500

You got a discount of: $4500

---------

Net so far +$1000

But you have to pay: $1350 in taxes on the $4500

--------

Net so far: -$350

And you paid: $3000 more than the car was selling for
the month before

----------

Net -$3350

We could also add in the additional taxes (sales tax, state tax, etc.) on the extra $3000 that you paid for the car, along with the 5 years of interest on the car loan but lets just stop here.

So who actually made out on the deal? The feds collected taxes on the car along with taxes on the $4500 they "gave" you. The car dealers made an extra $3000 or more on every car they sold along with the kickbacks from the manufacturers and the loan companies. The manufacturers got to dump lots of cars they could not give away the month before. And the consumer got saddled with even more debt that they cannot afford.

Your government convinced the consumer that he was getting $4500 in "free" money from the "government" when in fact Joe was giving away his $3500 car and paying an additional $3350 for the privilege.

When will we wake up?

Surfing, To Big To Fail, and Capitalism

*Monday December 5th, 2005 was a dark day at shaping bays and in surf shops around the country. Orange County-based Clark Foam -- far and away the world's largest supplier of surfboard blanks -- shut its doors after over 45 years in business due to a series of ongoing environmental and safety concerns.

*It's estimated that 90% of the world's blanks came from Clark Foam. Sure, there are other blank manufactures in Australia and a few here in the US, but no one is prepared to deal with the huge gap left by Clark Foam's closure. Surfboard prices will go up overnight and shapers still aren't quite sure what will happen next.

*Some folks think Clark Foam's closure is the beginning of the end.

*Grubby Clark, sole owner of Clark Foam and its patents, could throw in the towel on his long-standing battle with the EPA, effectively starting the board-building Great Depression. Can you say Black Monday?

*“This could be the surfboard industry’s H-Bomb,” says Randy Adler “I can’t even imagine how many people this will affect.”

*“This is going to affect everyone,” says a stunned Bob Hurley, of Hurley International

*Even those more apt to look for silver linings are having a tough time with this one. Overnight, the careers of hundreds of shapers and glassers across the globe are effectively over.

These were just some of the stories coming out that day in December 2005. The surf world had come to a stand still. Clark foam, the too big to fail in the surf industry had been pressured to shut its door by the United States Environmental Protection Agency. It was a shock to the system for sure, overnight the prices of surfboards had doubled and tripled, there was a panic from the industry. The future of surfboard building was uncertain, how was the industry going to survive?

In 2005 the economy was booming (bubbling), life was good, and the government did not bail out companies/industries that went out of business, especially the ones that were forced to quit by the government. Clark invented the polyurethane foam and blank designs used by surfboard shapers worldwide, in what was estimated to be a $200 million dollar (USD) industry in the U.S. alone. How could we allow a $200 million dollar industry to be so effected without the help of the government? If it was 2009, and we treated Clark Foam like the to big to fail companies of today, we the tax payers would give money to restructure, re-innovate and create something new and environmental friendly, whatever it took to be viable.

Well, government never stepped in and Capitalism roared it strength in the early first half of 2006 when shock gave away to opportunity. Diverse groups of entrepreneurs and suppliers quickly adapted and filled the void. Not only did new polyurethane companies step up, but alternative technologies popped up at a recorded setting pace. The surfing industry today is still seeing new technologies, which has pushed the sport to new levels. If you do not believe me read this article, excerpt from article:

“In the four months following the Clark closure, startup Just Foam (San Clemente, Calif.) grew from 3 to 26 employees and from 25 to 150 blanks produced daily on the strength of founder/president Scott Saunders' proprietary hybrid-TDI chemistry, which reportedly meets environmental regulations with unusually low VOC emissions.”

“In one of the more unusual developments, researchers at Sandia National Laboratories (Livermore, Calif.) are marketing TufFoam, a low-density, water-blown, modified MDI/polyether urethane foam.”

Gary Linden, now operations manager of Walker Foam (Wilmington, Calif.), a long-time Clark Foam competitor, admits that Clark's were some of the best engineered blanks in the world, but believes that Walker's TDI-based polyether urethane is denser, with better cell bonding.”

These are just a few of the examples...

With Clark Foam, polyurethane was roughly 90% of what surfboards were made of back then. Since the collapse, polyurethane has become more environmentally safe. Other new technologies including polystyrene, expanded polypropylene, compression molded, hollow(using aerospace composite technology), carbon fiber, and polyfoam have all come to the forefront in 4 short years. Each bringing with them lighter, stronger, and more durable surfboards, not to mention better performance, including Firewire—my preference in surfboards.

Unfortunately for America we have missed this opportunity for capitalism to step in. We have missed out on smaller, more innovating companies coming to the forefront and leading us out of this recession. To take us into new heights, producing new and better technologies. We have missed out on those same smaller companies to grow and to expand, to create new jobs for the unemployed. Instead we are stuck with the same companies that have made bad business decisions after bad decision while producing bad products. Now that they have the government on their sides they are "supposedly" starting to change their act, this time with the unlimited backing of us, the taxpayers.

Capitalism is a beautiful thing when is it given the opportunity to flourish. It is a shame that we are at a place which is a total distortion of capitalism. This is just the beginning, from here on out, it is going to be even harder. With the greed on wall street, the media, and the **sheeple that will hang onto Michael Moore's new movie "Capitalism", which will distort it even farther. I am sure that he will twist the movie to show that capitalism caused the economy to collapse. I believe he will not speak on that crony capitalism was the reason.

Please understand...Capitalism is not perfect, but it by far the best economic system we have and it is not an opinion, a theory, or hope. Captain Capitalism says it best:

Our ideology is based in truth. What makes us capitalists, and free-marketers, is the fact that our belief in capitalism is not a belief at all, but rather a knowledge, a knowing that capitalism is the best system. And it is because the truth forms our ideology, that capitalism will always surpass socialism and communism as economic systems.

Please pass along to anyone who has any doubts about capitalism and the theory of "To Big To Fail", as they obviously do not know America and what has made this such a great country.

**Sheeple - It is often used to denote persons who voluntarily acquiesce to a perceived authority, or suggestion without sufficient research to understand fully the scope of the ramifications involved in that decision, and thus undermine their own human individuality or in other cases give up certain rights. The implication of sheeple is that as a collective, people believe whatever they are told, especially if told so by a perceived authority figure believed to be trustworthy, without processing it or doing adequate research to be sure that it is an accurate representation of the real world around them.

Great Article from Entrepreneur Magazine about Firewire surfboards:
http://www.firewiresurfboards.com/pdf/EntrepreneurMag.PDF

*Quotes from the following articles:
http://www.surfline.com/surfnews/article.cfm?id=1618
http://www.surfingmagazine.com/news/surfing-pulse/clark-foam-120505/
http://www.surfermag.com/features/onlineexclusives/clarkfoam/

photo by RB surfboards

Feel free to leave me a comment and let me know your thoughts!

Thomas Sowell: The Pattern of Failure

A coworker of mine who is a Ron Paul supporter gave me a book to read. Already 2 chapters into the book and it is blowing me away. The book is The Vision of the Anointed: Self-Congratulation as a Basis for Social Policy by Thomas Sowell

The interesting perspective I see is that it was written in 1996 and the ideas still apply today as they did in the past. I will give you an example how we are still seeing his thoughts played out. He starts off by pointing out the elitist, government-expanding crusaders share several key elements:

The following excepts are from The Vision of the Anointed by Thomas Sowell ©1996

1. Assertion of a great danger to the whole society, a danger to which the masses of people are oblivious.

2. An urgent need for government action to avert impending catastrophe.

3. A need for government to drastically curtail the dangerous behavior of the many, in response to the prescient conclusions of the few.

4. A disdainful dismissal of arguments to the contrary as either uninformed, irresponsible, or motivated by unworthy purposes.

He also points out patterns that have developed among the anointed for dealing with repeated failures of policies based on their vision.

The "Crisis"
Some situation exists, whose negative aspects the anointed propose to eliminate. Such a situation is routinely characterized as a "crisis," even though all human situations have negative aspects, and even though evidence is seldom asked or given to show how the situation at hand is either uniquely bad or threatening to get worse. Sometimes the situation described as a "crisis" has in fact already been getting better for years.

The "Solution"
Policies to end the "crisis" are advocated by the anointed, who say that these policies will lead to beneficial result A. Critics say that these policies will lead to detrimental result Z. The anointed dismiss these latter claims as absurd and "simplistic," if not dishonest.

The Results
The policies are instituted and lead to detrimental result Z.

The Response
Those who attribute detrimental result Z to the policies instituted are dismissed as "simplistic" for ignoring the "complexities" involved, as "many factors" went into determining the outcome. The burden of proof is put on the critics to demonstrate to a certainty that these policies alone were the only possible cause of the worsening that occurred. No burden of proof whatever is put on those who had so confidently predicted improvement. Indeed, it is often asserted that things would have been even worse, were it not for the wonderful programs that mitigated the inevitable damage from other factors.

There you have it...

Economy In Much Worse Shape Than Expected