Alasdair Macleod’s 2014 Forecast: Fiat Currency Corruption & Destruction!

dollarInstead of being drawn into the futility of making forecasts for 2014 I will only offer readers the barest of basics and focus on the corruption of currencies. My conclusion is the overwhelming danger is of currency destruction and that gold is central to their downfall.
If we take a realistic view of price increases, including capital assets, price inflation may even be in double figures. The corruption of price inflation statistics in turn makes a mockery of GDP numbers, which realistically adjusted for price inflation are contracting.
This gloomy conclusion should come as no surprise to thoughtful souls in any era. These conditions are the logical outcome of the corruption of currencies. I have no doubt that if in 1920-23 the Weimar Republic used today’s statistical methodology government economists would be peddling the same conclusions as those of today. The error is to believe that expansion of money quantities is a cure-all for economic ills, and ignore the fact that it is actually a tax on the vast majority of people reducing both their earnings and savings.

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By Alasdair Macleod, GoldMoney:

“Now the New Year reviving old desires
The thoughtful Soul to Solitude retires”

Rubaiyat of Omar Khayyam

Yes folks, it’s that time of year again; but unlike old Khayyam who reflected bucolically on the continuing availability of wine, we must turn our thoughts to the dangers and opportunities of the coming year. They are considerable and multi-faceted, but instead of being drawn into the futility of making forecasts I will only offer readers the barest of basics and focus on the corruption of currencies. My conclusion is the overwhelming danger is of currency destruction and that gold is central to their downfall.

As we enter 2014 mainstream economists relying on inaccurate statistics, many of which are not even relevant to a true understanding of our economic condition, seem convinced that the crises of recent years are now laid to rest. They swallow the line that unemployment is dropping to six or seven per cent, and that price inflation is subdued; but a deeper examination, unsubtly exposed by the work of John Williams of Shadowstats.com, shows these statistics to be false.

If we objectively assess the state of the labour markets in most welfare-driven economies the truth conforms to a continuing slump; and if we take a realistic view of price increases, including capital assets, price inflation may even be in double figures. The corruption of price inflation statistics in turn makes a mockery of GDP numbers, which realistically adjusted for price inflation are contracting.

This gloomy conclusion should come as no surprise to thoughtful souls in any era. These conditions are the logical outcome of the corruption of currencies. I have no doubt that if in 1920-23 the Weimar Republic used today’s statistical methodology government economists would be peddling the same conclusions as those of today. The error is to believe that expansion of money quantities is a cure-all for economic ills, and ignore the fact that it is actually a tax on the vast majority of people reducing both their earnings and savings.

This is the effect of unsound money, and with this in mind I devised a new monetary statistic in 2013 to quantify the drift away from sound money towards an increasing possibility of monetary collapse. The Fiat Money Quantity (FMQ) is constructed by taking account of all the steps by which gold, as proxy for sound money, has been absorbed over the last 170 years from private ownership by commercial banks and then subsequently by central banks, all rights of gold ownership being replaced by currency notes and deposits. The result for the US dollar, which as the world’s reserve currency is today’s gold’s substitute, is shown in Chart 1.

Chart1FMQ 311213

The graphic similarities with expansions of currency quantities in the past that have ultimately resulted in monetary and financial destruction are striking. Since the Lehman crisis the US authorities have embarked on their monetary cure-all to an extraordinary degree. We are being encouraged to think that the Fed saved the world in 2008 by quantitative easing, when the crisis has only been concealed by currency hyper-inflation.

Are we likely to collectively recognise this error and reverse it before it is too late? So long as the primary function of central banks is to preserve the current financial system the answer has to be no. An attempt to reduce the growth rate in the FMQ by minimal tapering has already raised bond market yields considerably, threatening to derail monetary policy objectives. The effect of rising bond yields and term interest rates on the enormous sums of government and private sector debt is bound to increase the risk of bankruptcies at lower rates compared with past credit cycles, starting in the countries where the debt problem is most acute.

With banks naturally reluctant to take on more lending-risk in this environment, rising interest rates and bond yields can be expected to lead to contracting bank credit. Does the Fed stand aside and let nature take its course? Again the answer has to be no. It must accelerate its injections of raw money and grow deposits on its own balance sheet to compensate. The underlying condition that is not generally understood is actually as follows:

The assumption that the Fed is feeding excess money into the economy to stimulate it is incorrect.
Individuals, businesses and banks require increasing quantities of money just to stand still and to avoid a second debt crisis.

I have laid down the theoretical reasons why this is so by showing that welfare-driven economies, fully encumbered by debt, through false employment and price-inflation statistics are concealing a depressive slump. An unbiased and informed analysis of nearly all currency collapses shows that far from being the product of deliberate government policy, they are the result of loss of control over events, or currency inflation beyond their control. I expect this to become more obvious to markets in the coming months.

Gold’s important role

Gold has become undervalued relative to fiat currencies such as the US dollar, as shown in the chart below, which rebases gold at 100 adjusted for both the increase in above-ground gold stocks and US dollar FMQ since the month before the Lehman Crisis.

gold adjusted 311213

Given the continuation of the statistically-concealed economic slump, plus the increased quantity of dollar-denominated debt, and therefore since the Lehman Crisis a growing probability of a currency collapse, there is a growing case to suggest that gold should be significantly higher in corrected terms today. Instead it stands at a discount of 36%.

This undervaluation is likely to lead to two important consequences. Firstly, when the tide for gold turns it should do so very strongly, with potentially catastrophic results for uncovered paper markets. The last time this happened to my knowledge was in September 1999, when central banks led by the Bank of England and the Fed rescued the London gold market, presumably by making bullion available to distressed banks. The scale of gold’s current undervaluation and the degree to which available monetary gold has been depleted suggests that a similar rescue of the gold market cannot be mounted today.

The second consequence is to my knowledge not yet being considered at all. The speed with which fiat currencies could lose their purchasing power might be considerably more rapid than, say, the collapse of the German mark in 1920-23. The reason this may be so is that once the slide in confidence commences, there is little to slow its pace.

In his treatise “Stabilisation of the Monetary Unit – From the Viewpoint of Monetary Theory” written in January 1923, Ludwig von Mises made clear that “speculators actually provide the strongest support for the position of notes (marks) as money”. He argued that considerable quantities of marks were acquired abroad in the post-war years “precisely because a future rally in the mark’s exchange rate was expected. If these sums had not been attracted abroad they would have necessarily led to an even steeper rise in prices on the domestic market”.

At that time other currencies, particularly the US dollar, were freely exchangeable with gold, so foreign speculators were effectively selling gold to buy marks they believed to be undervalued. Today the situation is radically different, because Western speculators have sold nearly all the gold they own, and if you include the liquidation of gold paper unbacked by physical metal, in a crisis they will be net buyers of gold and sellers of currencies. Therefore it stands to reason that gold is central to a future currency crisis and that when it happens it is likely to be considerably more rapid than the Weimar experience.

I therefore come to two conclusions for 2014: that we are heading towards a second and unexpected financial and currency crisis which can happen at any time, and that the lack of gold ownership in welfare-driven economies is set to accelerate the rate at which a collapse in purchasing power may occur.

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Comments

  1. Alistair I agree with you 100% but I’m not afraid to come out and forcast that we are heading downhill fast in the coming weeks and Gold and Silver will be heading up in the coming weeks. Lol Keep Stacking

    • Marchas45  Gold won’t do much until China is unable to source and buy the phyzz it demands.  That’s my forecast.  I hope that happens as fast as you believe.  Silver will do better than gold this year since it was monkey hammered way more than gold.    

  2. Here is an economic indicator: Three NFL Playoff games are not sold out. Cincinati, Green Bay and Indianapolis. The NFL threatened to black out the games in those markets. Large companies stepped up and purchased the remaining tickets, to avoid the black out. Blackouts have occured in the past, but never in a playoff game. This is unheared of. I watched a bunch of NCAA Bowl games, and very few were sold out. People are reducing expenditures on entertainment.

    • …and her in Indiana we supposedly have one of the BEST state economies in the U$A! 
      While I believe that we do, it is simply one of the last turds circling the drain…  :(

    • @Silver Dollar
       
      “People are reducing expenditures on entertainment.”
       
      Yes, many people are doing just that.  But that’s not all.  They are also reducing their spending on ALL non-essential items, putting off buying replacement items, delaying medical & dental procedures when possible, and giving less to charity… just at a time when charity is most needed.  
       
      People are also finding cheaper alternatives for various things in order to save a little.  Basic satellite TV instead of more expensive cable, over the air free TV instead of either cable or satellite, and Red Box, Netflix, and Hulu+ instead of going to the movies or renting a digital video recorder.  It is amazing at just what can be found to watch if one uses Red Box, Netflix, Hulu, and wires up a TV antenna these days.
       
      Food shopping is a an area where a lot of a person’s disposable income goes, yet there are many ways to cut food bills while not lowering and even increasing nutrition if one only seeks them out.  Coupons, sales, buy 2 and get 1 free, 10 for $10, etc. all can provide substantial savings.  Making more meals at home is a great alternative to going out to a restaurant and it gives us more control over what’s in our food.  Growing some of our own food and buying local produce at local farmers markets is also a great way to meet new people, get a little closer to the land, and get some nutritious and healthful food for ourselves and our families.
       
      This trend is just starting to rev up.  We definitely have not seen the last of it.  More to come and sooner rather than later.
       

  3. The frail cardboard legs that are holding up what is supposed to be an economy getting stronger is without a doubt engaged in immediate collapse. When the highly leveraged paper derivatives backing Gold and Silver hit the deck, there will be no known guess of how fast and far the metals will rise. Interest rates rising will be the black swan flying and diving! If M45 agrees, I see Silver going quickly to $400.00 and Gold going to $4500.00 and that is just the first leg of the upward spiral!

    • Nope I don’t see it going up that high especially quickly but I wish it would. But it’s definitely going up and you hit it on the head, the Interest Rates and the  Derivatives Market will be the end game. Keep Stacking

    • Although the numbers vary with the articles we read, the ones that I have see indicate that the US gold hoard is about 8300 tons.  Yeah, I know… IF we still have it, and IF we still own it, etc.  But, if we did have it and we have printed off the $12T mentioned in this article, then the price of gold would have to be nearly $45k per oz. in order to back all that currency with gold.  Think about what that really means.  With the current gold price around $1240, that would mean that gold prices would have to rise by over 36 fold.  While it may come to that at some point, that seems an awful lot and will likely take a long time to occur.  But it sure makes gold at $5-10k per ounce look not only possible but probable… and even reasonable.  With gold and silver joined at the hip, both PMs could see significant price increases in the not too distant future.
       
      The alternative to this would be for the Fed to remove a lot of the already printed currency from circulation.  They won’t do that because that would cause a deflationary depression, the one thing that the Fed fears above all else.  While none of the people in this country want to see that, the impact of deflation on a person depends upon whether or not they have money.  If they do, then deflation is great because the money they have buys more stuff and lasts longer… unlike with inflation, which also can be called the rate of monetary value destruction.  With inflation, having money is no protection, as prices can often climb faster than earnings.  This is where we are today, with falling incomes and rising prices… and no, the Fed and Gov blowing smoke up our skirts via made-up numbers for inflation, economic growth, worker productivity, and employment is not convincing us that all is well.  The evidence of this confronts us on a daily basis.
       

    • @Ed.B
      Lets really hope they have more gold.  I’m sorry but I don’t follow that they would revalue the gold to cover the money supply.  Gold is valued low but it is to high for me to buy.  The higher it goes up the more collectors, stackers, jewelry purchasers, will go to silver.  Who will buy at 10k an oz?  Who will buy at 10k an oz during a world depression?  Supply and demand take over and it goes down or up according to non manipulated laws of supply and demand.  Am I wrong here?  That is why I love silver!  Can’t afford 10K an oz gold…buy $500 an oz silver (from me cause I will be selling most of my small stack left).  From what I understand from the super stackers the trick is to trade an overvalued commodity to an undervalued one. 

    • @OldArmy/NewStacker
       
      “Lets really hope they have more gold.”
       
      Actually, that’s one of the higher numbers I’ve seen in articles on this.  Some say 8100 or even 8000 tons.
       
      “I’m sorry but I don’t follow that they would revalue the gold to cover the money supply.”
       
      If they were to do this, most certainly as a last resort, we can be assured that it is because something else far worse will happen if they do not.  Like a complete US dollar collapse.  China IS building a massive and financially strategic gold hoard.  They are also making agreements with at least 2 dozen other countries to settle trades in their currencies without involving the US dollar in international commerce.  They are not doing these things for no reason.  At a guess, they are doing it so that they can back either the yuan or a new world trade currency with gold as a direct attack on the US dollar, the current World Reserve Currency, and replace the US dollar with the yuan or some international currency that the Chinese will propose at some point.  
       
      WRC status IS a BIG deal.  Because we have it, we do not need to convert our currency into any other currency to settle international goods trades.  All other countries do.  This results in a lot of demand for US dollars which increases the dollar’s value.  If WRC status is lost, it could cost the dollar 25-35% of its value, depending on which economist you read.  Huge numbers of dollars held overseas would then not be needed for trade settlement and would come flooding back to the US causing some very nasty inflation.  I don’t know that this would be “hyper-inflation” but it would likely be bad… probably worse than that of the 1970s and early 1980s.
       
      “Who will buy at 10k an oz?  Who will buy at 10k an oz during a world depression?
       
      Those who have LOTS of fiat and are afraid that gold will go higher and perhaps much higher.  Think hedge funds, ETFs, billionaires, banks, insurance companies, and even mere multi-millionaires.  All of these would be seeking protection from monetary mayhem in the US economy, financial markets, and currency.
       
      “Supply and demand take over and it goes down or up according to non manipulated laws of supply and demand.  Am I wrong here?”
       
      There’s no way to know.  The future is VERY complex.  It’s a bit like trying to think about a chart with about 5,000 different axes when we understand a 2-axis chart pretty well but struggle a bit with a 3-axis chart.  Supply and demand do have an effect in today’s market.  It just is not the primary effect that it once was before markets became manipulated and distorted.  The general hope among stackers is that the manipulators will one day crash and burn, allowing manipulated markets to be free at last of the manipulation and able to once again have true price discovery via a competitive bidding process.  If that were to happen, then the metals would break out to the upside.  How high they would go cannot be known ahead of time but that they will rise when they are no longer suppressed is pretty well accepted in the stacker community.
       
      Whether or not we can afford gold has no bearing whatever on the current situation.  I agree that it is expensive but it can be worthwhile to buy some anyway on major price dips such as we have had recently.  I added another 8 oz. to the 12 oz. I already had and did it when the spot price was $1195.  I had to pay a premium on top of that price but such is the nature of the small volume PM market.
       
      “From what I understand from the super stackers the trick is to trade an overvalued commodity to an undervalued one.”
       
      That is a pretty good general investing technique that works well for things other than gold and silver.  This is how the act of re-balancing a portfolio on an annual basis very often leads to higher returns over time.  During the re-balance, shares of more successful investments are sold off and under-performing shares are purchased with that money.  Because the under-performing assets are lower in price, more shares are obtained.  Over time, this can work very well, particularly if a time comes when those formerly under-performing assets start to out-perform the others.
       
      Some stackers watch the Gold to Silver Ratio rather carefully.  When the ratio is high, they buy the lower performing asset, which is silver in this case, trade it for gold when the G / S ratio falls, which it does from time to time, and then trade back to silver when the G / S ratio is once again high.  By doing this, they increase the size of their stack over time and end up with a lot more ounces of metal than if they had just bought and held.  They end up paying more in premiums but that can be a lot less than the gain.  I haven’t tried this but can see how it works.  It would be helpful to have a particular pair of G / S ratios to use as guides in this kind of trading.  For example, someone could pick a range of between 30:1 and 60:1 for their G / S ratio range.  At 60, they buy silver or trade gold for it.  At 30, they buy gold or trade silver for it.  They repeat this process as the ratio oscillates.  The tricky part is that the ratio may head up towards 60 and then fall back before reaching it or it may fall to just above 30, not quite get there, and then rise again.  A lot of educated guessing / Kentucky windage is needed to do well with this but it is certainly possible to do well with it even if the G / S ratio targets are not hit if the stacker is willing to trade when prices get reasonably close to their targets.
       
       

  4. Charlie and Silver Dollar  Here Here!  We are in a mess of hurt.  Here in the vil’ I have two stories that might seem unrelated but are emblematic of the economics of a town reliant on tourists but still subject to the laws of economic as well as a comment on the general economies of this country
    The only major hotel, Hyatt, has a very upscale restaurant called the Lone Eagle–with a spectacular lake view.  In the last 2 years they’ce increased prices on food and alcohol by at leats 35-40%.  A 1 oz  Dewars now costs $20; $15 for house red wine with aa puny pour.  I can buy a bottle of Dewars for $20 or some really good red for $12.  No more drinks at the Long Eagle. Not even a nice night out which is what this was—my wfie’s birthday. This place has ripped us off for the last time
      One Ribeye steak–sans any spuds or veggies—$55.  Poorly cooked and cool to the touch when served no less.   Back to the kitchen it went. No sale.
    This place is getting a really bad rep with the locals who expect good service, good food and reasonable prices. I don’t know who is going to buy there when the tourists leave.  Certainly not us.  This is sympomatic of a business model that thinks the good times will never end—until they do.  Tourists may have lots of money but they are not stupid. In shoulder seasons the hotels should be dropping prices.
    Hey, we’ll to Bodine’s Casino in Carson City NV for a decent meal at 25% of the price.  One glass of wine non-comped; $3.50.  Scotch comped at the machines  $1 tip.  Tulamore Dew—a nice drink similar to Jamesons. We vote with our wallets, open with good prices, closed when the prices are rip offs.

    Next sad story

    We have eaten at a small family Mexican restaurant–name withheld–serving decent and decently priced food to the locals; 30% of whom are Hispanic workers, seasonal employees and the working poor (that group now includes us) They will be forced to close in about 30 days for one and only one reason.
    The North Lake Fire Department, ostensibly a service that is supposed to serve the people, acting as emergency first responders and putting out fires (Maybe one house fire in 3 years) sit around on their butts, filling two fulls service fire stations when one would be more than enough.  About the ony thing they do is respond to false fire alarms caused by broken pipes plus the occasional medical malfunction that needs a first responder. 
    Either of these events brings one large fire engine, one smaller one and an ambulance with a total crew compliment of 6-8 people, allof whom are earning $75-100,000 a year plus a gold plated pension and Cadillac health care. 
    Kind of overkill if you ask me. 
    The costs to transport a person in an ambulance for a 3 mile ride to the local hospital can easily $3,000. One ambulance and two paramedics would do the job. 2 fire trucks jsut sit idly around looking for Smokey Bear I guess  
    Word to the wise in this little town.  DO NOT CALL THE FIRE DEPARTMENT.  Walk, limp, crawl, call a cab or roller blade to the emergency room unless you have some sort of platinum plated insurance program. 
    One trip to the ER can bankrupt you when you include the $10,000 that our local monopoly hospital takes over your health care
    And the rest of the story
    This same fire department decided to visit the Mexican restaurant, doing their highly paid but perfunctory inspection of the fire control system in the kitchen.  For reasons that escape me and anyone I talked to, this year the fire department inspector decided to force the eatery owner to install a $40,000 fire sprinkler system. 
    This place has been in business for decades with no fire. 
    $40,000 is an impossible cost for a business owner who does not own the building and with a landlord who refuses to pay for this system  
    The landlord decided to terminate their month to month tenancy because Mom andPop could not afford the system
    This kills the business
    Here are two hard working folks who pay their taxes, serve the community with decent meals and they will be forced out of business. 
    5 employees will be laid off, the owners will lose their entire investment in the business and the landlord will have an empty building, with limited chance of re-leasing the space to anyone other than a restaurant. 7 people unemployed and who knows how many in their families will be affected. This upsets me no end
    Like i said, this is emblematic of the overreaching government, foolish pricing practices and the dangers of being in business today when confronted with the two pronged pincers of the goon squad bureaucracy and an economy which, at best, barely supports an entrepreneur.
    I’ll drop by and see the owners and find if there is something I can do but the landlord has drawn a line in the sand but maybe there is a solution
    This is my vent of the unfairness and incompetence of the systems today
    Like Charlie says Keep Stackin’ It may be one of the few forms of insurance that you can rely on and poses no counterparty risk to the owner of the physical Cheers all!

    • @AGXIIK
       
      “We vote with our wallets, open with good prices, closed when the prices are rip offs.”
       
      Which is, of course, the very essence of competition.  Some business owners recognize this part of the game and some do not.  The ones who do are the same ones that will be around for a while, while those who do not are on their way out of business.  Clearly, this business is counting on their million dollar view as their main attraction.  While that may bring some folks in it is not what will bring them back over and over, which is what they really need to survive.  Although there are some rich tourists out there, the vast majority of travelers are probably upper-middle class folks who know what a bargain is and who want one just as much as anyone else out there.
       
      “I’ll drop by and see the owners and find if there is something I can do but the landlord has drawn a line in the sand but maybe there is a solution”
       
      I concur on this being a lousy situation but then so is a grease fire that spreads rapidly and costs people their lives.  Is the whiz-bang fire suppression gear state mandated?  If it is, then the local FD boys don’t have anything to say about it.  Too bad that people can’t work together for everyone’s benefit.  A practical, if not legal, solution would be: 1) require extra wall-mounted dry chem fire extinguishers be added to this business; 2) train the people working there in the fire suppression techniques needed to safely put out a small fire and prevent it from becoming a large one; and 3) require regular grease trap cleaning, logging, and FD inspecting.  Work like this tries to strike a balance between the threat of a dangerous fire and the realization that not everyone can afford the latest and greatest fire suppression system.  But things can be done to reduce the hazard without killing off the business and that should be a primary goal of everyone involved.  It is unfortunate that not everyone realizes that there is no perfect safety available to any of us.  Everything we do and don’t do involves a risk of some kind.  I believe that they call this “life”.  We need to manage risk, not completely eliminate it.
       

    • AG & Mexican restaurant
      I see this kind of Bureaucraty and legal troubles every days with some of my customers (I sell Hardware & software solutions for small/medium businesses, so I meet businessman’s every days). Some of them are completely discouraged. I thought it was a speciality of the “Socialist People’s Republic of France” but that seems to be a wide spread cancer.
      Our political liars complain about human rights in China, but I can tell you, at the beginning of my career I worked in Taiwan, China and HK, none of them was democracy, but I feel much more free in these 3 countries.
      Last years I study many about the debt crisis and concluded that during 3000 years history, many governments – empires – systems disappears due to excess of debt. But one day I read an article about a guy wrote a book (don’t remember his name) that concludes that many systems – empires- civilisations have disappear due to excess of complexity.

  5. @AGXIIK I hear you, I live in a town of 1700, 2 fire engines and an ambulance and4 paid staff and like you said, for gods sake, don’t take the ambulance.
    On another issue, the Reset is coming and our PM’s will be rising. Keep Stacking



    • “Who said Priests were Perfect?” 
      LOL! 
      Good Report, Charlie! I LOL’ed like 3-4 times  :D
      “I’ma gonna be a pain in the @$$!” 
      What 100 year old like you wouldn’t be?   Hehee  ;)

    • Thanks Charlie for the refocus!  Its not just silver….it is everything for an extended freeze up of the worlds economic engine.  Prepare now and don’t panic, everything will be fine if you do…at least that is what I keep telling myself.  I too worry about the young people.  It will be a new world.  I know that is dramatic and I don’t pretend to know what is going to happen but I know it will be bad.  
      I do have a question for anyone who wants to give their 2 cents.  I look at my remaining 401k plan as funny money…I have cashed out most of my accounts and got PM along with some farm equipment.  I have most of what is left in stocks of Jr gold and silver miners and have done quite well as I got them at the bottom.  Thinking of putting the rest in the Jr miners ETF basket (GLDJ).  Anyone have any ideas on how to play the end of game with my last bit of funny money? 

    • “I’ma gonna be a pain in the @$$!” 
       
      No sweat, Charlie.  If you make it to age 100, you have a right to be a PITA!  lol
       
      Good message for the beginners and a good reminder for the rest of us.  I agree 100% on the food stacking.  This is a critical aspect of a SHTF scenario.  Crazy stuff WILL be happening out there, so the less we have to be out and about, the less chance there is of us getting involved in it when we just don’t need to be.  And you can bet that there will be crazy people running all over the place, doing all manner of bad things to both other people and to property.  These so-called flash mobs are one thing but in a SHTF scenario, people will be armed in many ways and going absolutely nuts.  If they fight like hell over game systems and sneakers during the Christmas sales, as we’ve all seen on the TV news, just imagine what they will do when they and their kids are hungry and thirsty!  It will be bad… REAL bad.  Stay close to home.  Stay armed with something, even if it is just a baseball bat.  Keep your head down and don’t invite others to take a shot at it… because some of them will and for very little to no provocation.
       
      The freeze dried food, like you had in that bucket, will be of great value to those of us who have it.  I have some and will be ordering more very shortly.  This is good stuff and, stored properly, will last a LONG time, so it is something that can be used at need or just to rotate your stock of emergency supplies.  My wife and I are eating the freeze dried food we bought about 2 months ago to see what it tastes like and which kinds we prefer.  We prepare a packet of it every week or two.  Most of them are surprisingly good.  We like the Prepare Wise type because is it GMO and MSG free.  My wife is allergic to MSG and gets serious headaches from it.  It doesn’t bother me but if it bothers her, it is something we need to address.  This food is high in nutrition, stores for 25 years, is reasonably priced compared to their competition, and is low in fat and salt.  A low salt diet is a healthy diet, especially for many of us older folks.
       
      I don’t know that the S will HTF this year, although I do have this very strong feeling that something bad is about to happen.  You make a good argument for that happening in 2014 but we’ve been surprised before by how long this whole situation can be dragged out.  Maybe it’s this year, maybe next, but who knows for sure?  No one.  But it sure is better to be early to this party than late, I’ll tell ya.  If you’re early, the worst that happens is that you have more than you need to get through any hard times that come our way.  If you’re late, the worst that happens is that you run out of food and end up in the same crap that those who have not prepared are in.  Given this, I am more than happy to be in early!
       
      Give some thought to drinking water too, everyone.  Water is critical to survival and is VERY cheap these days.  Get some containers and store up as much as you can.  If the water systems stop functioning for any of several possible reasons, having a few weeks worth of water stored will be of great value.  I like those 5-7 gallon size plastic water containers used for camping, as well as plain old ordinary 1-gallon plastic milk jugs.  These work well for storing drinking water once they have been thoroughly rinsed out.  That takes 4-5 rinses with about a quart of water each and then a drain for several seconds.  I like to shake the jugs during the rinsing so as to completely wash down the entire inner surface of the jug.  I store water for a year and then dump and replace it.  It’s not wasted because I dump it on my garden in the summer.

    • Here is one of my closets. Keep Stacking
       

    • Whoa, that’s a VERY nice food stash, Charlie.  Well done.  I can see that I need to do some serious catching up in this department.
       

  6. Hi Charlie I was just getting ready to sit back in my recliner and watch your report . Zoots Alors, no youtube.  Malfuction at my end or has youtube decided you are too incindiary for their milquetoast little station.  Dont call the FD though.  Just check and see what sort of malfunction there might be.   I need my SR rreport!  It makes my day

    Funny thing about Incline Village is that we have about 9,000 full time residents but 75% of the homes are vacant. Most are second and third vacation homes. So we locals are the main financial support of the community and yet the local bureaucracy–FD and LEO are little more than collection agencies for Washoe county. Deputy Ben sits at curve in the road and writed $250 tickets for being 5 MPH over the limit.
    TPTB know there are enough uber wealthy locals can pay the freight but they are very part time and the rest of us get the short stick in fees and taxes. We are little more than a poorly served tax farm where the sheeple get sheared early and often.
    sheesh We keep a low profile and work it like a day nice job to make it lower.
    thanks for your posts and great sense of humor It enlightens the day

  7. I read all the posts from AGXIIK, Ed_B, etc an I have so many thing to say and share. The problem is that say my mind in English is a difficult task for me, I try do my best but I know my English is poor. And read all the posts saying that the apocalysps is coming soon. and unfortunathy I am agree with that. Like AG says I thing His 2 And 3 wiews are likely. Bahhh. I choose tonight invite some friend take a dinner. My wife made an oustanding dinner for 10 people. We drink a lot of Champagne, Saint Emilion with Salad, Côte Du Rhone with a Thai style cooconut Lobster I made, Loupiac with Foie Gras, Chateau Margeau with rosted Beef, And pink champagne for the 5th old anniversarry for my yougest lovely girl cake (I have 4 kids from 5 to 21). What a beautiful night ! My daugther was so happy! ” Dad I love you so much” I had some good time with my old friends, I know some of them since 45 years. There is some important things in life ! Don’t forget Friends and Family !!!

    • @MaxSilver Now that was some dinner, I just had Chicken and Brussel Sprouts and Chips with Ginger Ale. Lol and Yes Family and Friends are very Important. Hopefully we don’t ever forget that. Keep Stacking

    • That was no dinner, that was a FEAST!  Sounds terrific.  
       
      My dinner was somewhat more subdued than that… pork and veggie stir fry over boiled rice with a cup of tea.  Dessert was a piece of delicious carrot cake with topping.  Simple but good.  :-)
       
      Agree that friends and family are where it’s at in this life.  Hard times tend to be hardest on those who have little or no support, so the love and help from family and friends is a critical prep in anyone’s book.
       
      Your English is just fine, Max.  I’m having no trouble figuring out what you are saying and I am sure that this is typical here.
       

    • Good to see you on the Boards, Max! 
      Sounds like a great time. Happy Birthday to your 5 Year Old! 
       
      Here’s a MAX Silver pic for you LOL
      from My Archives

  8. Max silver
    don’t worry for a second about your abilities with the English language. They are just fine
      I’ll speak for the people here on Silver Doctors and say your meaning comes through more than adequately. I think we understand you with considerable ease.
     The English language is complex and has inumerable ways to say the same thing. The French language has a poetry and lyricism of its own.Blended together they tell the story quite well.
    Fortunately these two lenguages are sufficiently close that the meanings are pretty easy to follow, even if there are occasional misinterpretations.  Like a few wars 300 years ago.  But those make for some good drinking stories
    I envy your cuisine  and as pater familias your love of your children is inspiring.  Cheers 

    EdB   when things are down and the economy stinks, this is the time to be even more generous to charities.  They suffer the most in hard time because they are the first to take it on the financial chin. When we suffer it is assured they suffer more.
    We may have to forgo some of the little things that were commonplace when the economy was flush but the extra pennies go a long way with the most needy of the charities including our religious institutions, those groups who help the elderly, hungry and poor. 
    We’ll not miss those little things in the long run but the immediate needs of charities are just that, immedaite and need some take care of. 

    • “EdB   when things are down and the economy stinks, this is the time to be even more generous to charities.  They suffer the most in hard time because they are the first to take it on the financial chin. When we suffer it is assured they suffer more.  We may have to forgo some of the little things that were commonplace when the economy was flush but the extra pennies go a long way with the most needy of the charities including our religious institutions, those groups who help the elderly, hungry and poor.  We’ll not miss those little things in the long run but the immediate needs of charities are just that, immedaite and need some take care of.”
       
      Understood, AG, and I agree completely.  My point was that a lot of people who would like to donate and who often do may not be able to as times get hard and money very tight.
       
      My favorite charity is the Salvation Army.  They do great work and are very efficient with the money donated to them.  When I send them some money, I know that it will be used locally and to the best effect possible.  I support their work and will continue to do so.
       
       

  9. Flying Wombat  I read your take on the potential for credit expansion and the reason why.  It was intriguing.   I was thinking that the US business and consumer environment will see a contraction due to the strict requirements of BASEL III capital retention and Dodd Frank’s harsh impostion of credit culture contraction via their increasingly strict requirements for loan approvals and retention of capital against long term residential loans.  The government backed home loans will see about a 20% increase (more restictive) in debt ratio coverage and FICO scores that must be 720 or so.  This will impact the resi lending like Comet ISON crashing down on to a small town.
    How the Fed works to mitigate this will be seen.  NIRP is a wrecking ball.  QE will never stop.  My superficial review may be just that—superficial.  I am more of a boots-in-the street researcher and my views are colored by these paradigms hitting home to my wallet. We work closely with business and personal credit daily in my company.   If the banks don’t pull back and are willing to lend, they will be lending into a credit enviroment beset by a new recession and the FULL RETARD impact of Obamacare- a $1 trillion wrecking ball from hell.  
    I see nothing in this that will end well in eithre case, yours or mine, notwithstanding the government’s continual MOPE and statistical  cotton candy verisimilitude (fancy word for total BS)

    • @ AGXIIK
      It is hard for me to imagine that they are not doing this on purpose.  How can the sheeple not see see what is going on?  Power and greed have thrown the most ingenious, freedom inspiring system ever devised in to chaos.  We need to end the fed, get back to the gold and silver standard and pay for their (our) sins.  I can’t believe we as a country have let this and continue to let this happen…myself included. 

    • “If the banks don’t pull back and are willing to lend, they will be lending into a credit enviroment beset by a new recession and the FULL RETARD impact of Obamacare- a $1 trillion wrecking ball from hell.”
       
      It is that, AG, and probably a lot more besides.  I know that it is early on in the O-Care implementation but the damage done so far is pretty nasty.  I find it interesting that very few libs seem concerned about all the broken promises that have occurred with this program.  It was sold on the basis of saving people money, reducing costs, keeping docs and plans, insuring more people etc. and none of that has worked.  Like the “Great Leap Forward” that virtually castrated China back in the late 1950s and early 1960s, this will be yet another lib flopperoo of a program.  The costs will be high, the results poor, and none of this will discourage the boneheads from continuing to offer up this kind of BS as “progress”, when it is anything but.  As a nation, we should all take Nancy Reagan’s comment to heart about kids being offered drugs and “just say no”.  If millions of young healthy adults do not sign up for this disaster, it will implode.  So far, they do not seem tempted by the high costs and limited medical care it offers.  They are not as dumb as this administration hoped.
       

  10. MaxSilver, your English is just fine and we understand you here.  I also speak a second language so I understand the difficulties.  Besides, the English language is inconsistent and is not an easy language to learn.
     
    For the price of a mediocre dinner out at a restaurant, you can have guests over and eat like a king.

  11. Maxsilver  You are accurate in your assessment regarding the statement that government adds complexities to business.  From personal experience and working with 10-20,000 businesses over the last 37 years, there is one thing that creates serious troubles for businesses.  Business ownership has great risks. It is a complex system. Businesses fail due to these complexities alone. But when you add the heavy hand of government, that alone will tip a business in bankruptcy and failure.  And the worst of that is the government never cares about the damage it causes.  Government is like a bull in a china shop. Destruction ensues
    When Roman was in its long fall and the currency was being diluted to pay for the Empire, there was a story about taxation that left me stunned. The need for tax revenues was so large that the Roman government placed a tax collecter at each business owner’s door. The first job was to collect taxes right at the source. As each customer bought something the collector made sure the taxes were collected.  The second job was to arrest the business owner if they failed to collect. I read that failure to comply was a capital offence.  The collector could literally execute the business owner if he failed to comply
    That is complexity at its most gross. Or simply–depending on which end the sword you found yourself
    I hate taxes and tax collectors and do everything within my power to avoid paying them
    My favorite line when dealing with a business owner is:
    “Can we conduct our business without involving the governor”?  It works nearly every time
    My second favorite line is:
    “Would you accept payment in silver?” 
    That works too–sometimes   I have more work to do on that matter but am getting a few toe holds in the local community

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