With the 2013 Santa stock market rally in full euphoric swing, any discussion of a crash in 2014 strikes a note of cognitive dissonance. With the Fed promising to keep interest rates at zero until 2099 (or whatever date signifies “forever”), the prospects of ever-higher prices in every asset class never seemed brighter.
But the nagging question remains: if everything is so great, why does the Fed need to keep interest rates at zero forever?
As a result, there are two mutually exclusive forecasts floating around: that the Great Bull Market will run for years to come, so no worries; and that markets are exhibiting bubble-like characteristics that presage another crash.
The “new normal” phase strongly implies that future declines will be as dramatic as the advances and that the five-year clock is ticking on the current equities Bull market. Forecasting an advance that lasts years beyond this five-year pattern is equivalent to forecasting that the “new normal” phase is now ending and a new phase of much longer Bull advances is beginning.
Stripped of complexity, the charts suggest that the current run will top out within the next few months and retrace most of the advance from 2009; i.e., a crash of significant amplitude.

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By Charles Hugh Smith, Of Two Minds:

We’ve recently been treated to two mutually exclusive forecasts: that the Great Bull Market will run until 2016 or 2018, so no worries; and that markets are exhibiting bubble-like characteristics that presage another crash.

So which forecast is more likely the correct one?

Analysts of every stripe—fundamental, quantitative and technical—pump out reams of data and charts to support one forecast or another, and economists (behavioral, macro, etc.) weigh in with their prognostications as well.  All sorts of complexities are spun as a by-product of producing research that’s worth paying for, and it all becomes as clear as…mud.

As an experiment, let’s strip away as much of the complexity as possible and look at a few charts of what many observers see as the key components of the U.S. economy and stock market.

Let’s start with a basic chart of the S&P 500 (SPX), a broad measure of U.S. stocks:

Without getting fancy, we can discern three basic phases: what we might term “the old normal,” from the late 1950s to 1982; an amazing Bull Market from 1982 to 1994 that saw the SPX more than double; and a third phase that some consider “the new normal,” a leap to the stratosphere in the 1990s, followed by sharp declines and equally sharp rises to new highs.

This third phase of extreme volatility does not look like the previous phases; that much is clear.  Is this a new form of volatile stability; i.e., are extreme bubbles and crashes now “normal”?  Or are these extremes evidence of systemic instability? About the only things we can say with confidence is that this phase is noticeably different from the previous decades and that it is characterized by repeating bubbles and crashes.

Let’s zoom in on this “new normal” from 1994 to the present. Does any pattern pop out at us?

Once again, without getting too fancy, we can’t help but notice that this phase is characterized by steeply ascending Bull markets that last around five years. These then collapse and retrace much of the previous rise within a few years.

The reasons why these Bull phases only last about five years are of course open to debate, but what is clear is that some causal factors arise at about the five-year mark that cause the market to reverse sharply.

The ensuing Bear markets have lasted between 2.5 and 1.5 years. We only have three advances and two declines to date, but the regularity of these advances and declines is noteworthy.

Next, let’s consider other potential influences on this “new normal” of wild swings up and down. Some have observed a correlation between the cycles of the sun’s activity and the stock market, and indeed, there does seem to be a close correlation—not so much with the amplitude of the market’s recent moves but with the economic tidal forces of recession and Bull/Bear sentiment.

But there is nothing here to explain why the highs and lows in the stock market have become so exaggerated in the “new normal.”

Many have attempted to correlate key dynamics in the U.S. and global economy to the stock market’s gyrations.  Let’s look at a handful that are often offered up as important to the U.S. markets: the bond market (TLT, the 20-year bond index), the Japanese yen, gold, and the U.S. dollar.

If there is some correlation between the SPX and the TLT, it isn’t very visible.

How about the Japanese yen? Once again, there is no correlation to the SPX that is obvious enough to be useful.

Some analysts see the yen and gold as tightly correlated; here is GLD, a proxy for gold:

There is a clear correlation here, but as we all know, correlation is not causation, which means that some underlying forces could be causing the yen and gold to act in a similar fashion. Alternatively, the yen is acting on gold in a causal role.

In either case, the problem with correlations is that they can end without warning.  Since neither the yen nor gold correlate with the S&P 500, neither one helps us forecast a continuing Bull or a crash.

Lastly, let’s look at the U.S. dollar (DXY).

As I have noted elsewhere, the dollar doesn’t share any meaningful correlation with the S&P 500, yen, gold, or bonds in terms of trends, highs, or lows.  Here is a longer-term view of the Dollar Index, and once again we see no useful correlation to the SPX:

Proponents of cycles (17.6 years, for example) claim a high degree of correlation with actual highs and lows, but these cycles do not exhibit the fine-grained accuracy we might hope for in terms of deciding to buy, short, or sell stocks.

Analyst Sean Corrigan has described a remarkable 33-year cycle of highs and lows in the SPX:  lows in 1949, 1982, and (forecast) 2015, and highs in 1967 and 2000, (forecast of next high, 2033). While interesting on multiple levels, these cyclical data points are rather sparse foundations for decisions on whether to sell or hold major positions in the stock market, and they do not provide a forecast of the amplitude of any high or low.  Given the extremes of the “new normal,” we would prefer a forecast, not just of time, but also of amplitude.

Though it is unsatisfyingly imprecise, the “new normal” phase strongly implies that future declines will be as dramatic as the advances and that the five-year clock is ticking on the current Bull market. Forecasting an advance that lasts years beyond this five-year pattern is equivalent to forecasting that the “new normal” phase is now ending and a new phase of much longer Bull advances is beginning.

That is a bold claim, and there is little historical data to give it much weight.  Stripped of complexity, the charts suggest that the current run will top out within the next few months and retrace most of the advance from 2009; i.e., a crash of significant amplitude.

In Part II: The Case for Cash, we analyze the indicators that help us determine the likelihood of a coming crash similar in magnitude to 2000-02 and 2008-09, and why a strategy of selling risk assets now, and holding the cash until income-producing assets “go on sale” at the trough of the next market decline, seems especially prudent at this time.

 

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  1. Nowadays one can’t put too much meaning into charts, however, the Sunspot cycle chart is most interesting.  Sunspots affect the weather.  Weather affects agriculture.  Food prices affect the economy.  Weather cycles are historically powerful influences on regional economies.  

    • weather affects markets. Particularly agriculture. Remember the 1929 crash started with a Dust Bowl. When we have the Sun at its next peak 2016 I suspect another agriculture disaster that will kick off an economic one. The next sunspot cycle height is mid 2020s this is when I believe WW3 will begin. The fed could print money but they cant print food. this is when they will lose control. The sunspot cycle temporarily spiked in 2012 thats when Egypt experienced the arab spring.

  2. Almost every nation in the world is printing money like lunatics and pumping it in to bonds and equities to keep them artificially inflated, very soon this whole piramid scheme will come crashing down hard and fast.They have cut some many incomes of the middle classes in Europe with their austerity measuries just to keep the show running.125.000.000 Europeans are living below poverty and are to poor to buy food, boy you guys in America are in for one rude awakening I can tell you that because it is worse in Europe than in the United States you can take that to the bank.Unofficial private debt calculations in Europe have us reach about 1000% of our GDP this is no joke our governments and central banks are gutting us like pigs here my friend.Gasoline and food alone cost twice as much here as they are in American while the incomes here are about the same houses here are still about 200% overvalued it’s going to be a massacre of epic proportions you can take that to the bank, the first signs of hyper inflation you have already seen manifesting in stocks, stock prices rising unreasonably and unrealistically not in line with the economy in any way shape or form is a form of inflation also.

    • Words to the wise:  Do not take ANYTHING you value to “the bank”.  There are WAY too many sticky fingers there just waiting for it to come in so they can loot and pillage it.

  3. Europe is flat broke even more so then the United States we don’t have a petro-dollar world reserve currency to rely on just the euro junk currency, in my country alone the tiny and once Great Netherlands 60% of the people who rent their home are living below poverty people who rely on food hand outs to get by have never been larger in numbers then this christmas.
    We are so dillussional over here that our media spins it like this and I kid you not: Poverty projects have never had more poor people looking for hand outs in the history then they have this christmas and never in history have rich companies donated so much to poverty projects and food banks then this christmas this is the undeniable evidence of “economic recovery” and “total solidarity”.

    • And yet, despite the situation in the Netherlands, your country still rolls out the red carpet to immigrants, who live on handouts once they move in.  Including the muslims who hate everything about your country, religion and culture.

    • Allowing 3rd world immigrants into your country in large numbers is like having a bum move into your spare bedroom… and then his friends start showing up.  There is just no way for it to end well.
       

  4. I say the stock market wont crash hard till the election over then America can melt away.  This Obama care thing has to stand down I think it will happen when Obama leaves office. Its going to be riots an pissed off people who are against the wall with nothing to lose. An the riots in big cities will start protesting Obama care. first of next year somrthing huge has to happen.

  5. This is an interesting article.  It’s title especially attracted my attention.  My first thought was, “You mean that there is a case for not having a market crash?”.   ;-)
     
    The stage certainly seems set for it.  The entire US stock and bond markets are genuine houses of cards created with cheap money from the Fed inflating both stocks and bonds.  As with other things that are not sustainable, this too shall pass.
     
    There was a time when the primary business of the US was to create wealth.  Which is to say REAL wealth.  New necessary products and services that helped others to create new products, new companies, and whole new industries.  When wealth is created, it tends to flow into various areas, creating jobs and wealth for others who serve the needs of those who have the wealth.  Today, there is FAR less emphasis on creating wealth.  Instead of making the soup, all too many are content to simply stir it, somehow thinking that this is a worthy use of their time.  Hence we have a financial sector that is 4-5x as large as we need and it is supporting itself by creating these oddball financial instruments that no one really needs but that bankers continue to convince gullible people that they do.  Derivatives are a prime example.  The financial sectors in various nations have not had these in huge extent until just recently, yet it now seems as if we cannot survive without them.  Why?  If we did fine before they came to be, we should be able to do just fine without them, shouldn’t we?  The scary thing about them is the huge amount of leverage that is inherent in them.  Yes, if one wins their bet, HUGE profits can be made.  If one does not, then just as HUGE losses can occur.  Many of these bets are so large that they not only exceed the net worth of the companies making them but the entire annual production of the Earth itself.  This IS insane.  But it is allowed to continue, likely because those with the power to end it are being paid off.  What other reason could there be to allow artificial investments to become so large that they threaten the entire financial system of the world with utter destitution?  This is the financial equivalent of playing Russian Roulette with 5 of the 6 chambers loaded, rather than only 1.  It WILL end and very badly.
     

    • You’re right, it is really sad it has come to this, and it is even worse that many of us keep mmisleading themsellves that everything if fine and dandy, over here people with higher income have already started to look way down on the 70% of middle and lower class incomes.
      They blame bums over here for accepting handouts as the primary cause of the financial crisis, if I did not know any better it would make me weep, now I can only smirk at the absurdity and dellusionsional fantasy world build on debt and dreams many people still live in, and that everyone will eventually reap what they sow.
      Europe is going down hard and fast I believe that we will even hit rock bottom before you guys do, because we don’t even have the farmland or national production to sustain our need for food here it is heavily overpopulated with consumers only if ever imports come to a halt most of us would die here of starvation because most of our food is produced in the east.
      The Europe parlaiment has only 15% of the peoples approval and still they keep pressuring and forcing their austerity measures through the throats oft he other 85% poor and middle class that make up most of Europe, sounds are getting louder to disown and confiscate with great voilence towards them and their profiteering beloved ones, all assets of the people who have been profiting greatly of this missery and to lynch them publically these sounds are getting louder with each day passing, this is facism but it is the way we are heading at the speed of light.
      It is really worrysome that many people are now calling for politicians and bankers to be disowned, tortured, shot and hanged in public for high treason.
      Europe has become and explosive barrel and the fuse has been lit there is no way back out of this and we all have to see it through to the end.

    • “You’re right, it is really sad it has come to this, and it is even worse that many of us keep mmisleading themsellves that everything if fine and dandy…”
       
      Yes, it is sad, very sad, and we have a large share of it here in the US as well.  People who choose to ignore the truth of our situation are referred to as “sheep” or “sheeple”, because they are content to just browse on grass, and do the other meaningless things that sheep do, rather than make an effort to improve either themselves or their situation.
       
      “They blame bums over here for accepting handouts as the primary cause of the financial crisis…”
       
      There might be some responsibility there but in the vast majority of cases it is far more likely that it is the economic crisis that we are having that has caused so many to need the support of government and various charities.  It is incredible that anyone should suffer from hunger or cold in this day and age, yet many do.  Some of these do so because they have accepted that lifestyle but many more have not and are simply trapped between a rock and a hard spot.  It is wrong to blame people for not working if there are no jobs to be had.  If there are jobs and they refuse to take them, then that is a different matter altogether.
       
      “…now I can only smirk at the absurdity and dellusionsional fantasy world build on debt and dreams many people still live in, and that everyone will eventually reap what they sow.”
       
      Yes, many mistake debt and credit for money… and currency for money as well.  There is a huge difference between “I can buy that” and “I can afford that”, yet many do not see it.  Debt is one of those things that is like fire.  Used carefully and in small amounts, it is a wonderful servant.  But used without care and it can become a terrible master.
       
      “Europe is going down hard and fast I believe that we will even hit rock bottom before you guys do, because we don’t even have the farmland or national production to sustain our need for food here it is heavily overpopulated with consumers only if ever imports come to a halt most of us would die here of starvation because most of our food is produced in the east.”
       
      This is a great point.  In the not too distant future, it is quite possible that countries will measure their wealth in the amount of farm-able land they have.  The US has a lot of farmland as well as a lot of land that could be farmed but currently is not. The US has been called “the breadbasket of the world” and that’s not too far off the mark either.  I also would not like to see either the US or Europe suffer a financial collapse.  We are trading partners and what affects one will affect the other.  My family and my wife’s family can trace our roots to several European countries and no doubt have many long lost cousins there.  In both cases, the US and Europe simply must get their debt beasts under control, for if we do not, they WILL consume us.
       
       “The Europe parlaiment has only 15% of the peoples approval…”
       
      That’s bad but still a little better than the citizen approval rate for the US congress.  That figure seems to be around 10% these days.  In politics, a citizen satisfaction rate that low SHOULD be a strong sign that those in power will soon be cast out by the voters.  Somehow, they seem to hang around for decades anyway.  If ever there were a good argument for term limits for congress, it is the way things are turning out on their watch.
       
      “…sounds are getting louder to disown and confiscate with great voilence towards them and their profiteering beloved ones, all assets of the people who have been profiting greatly of this missery and to lynch them publically these sounds are getting louder with each day passing, this is facism but it is the way we are heading at the speed of light.”
       
      There is a lot of that here in the US as well.  No surprise, really.  The primary banking families in the US are heavily inter-married with those of the UK and Europe.  They very well might be just one big happy family of thieves.
       
      “It is really worrysome that many people are now calling for politicians and bankers to be disowned, tortured, shot and hanged in public for high treason.”
       
      I would be worried about that if it didn’t seem like justice to me.  Unfortunately, it does seem just considering all the financial shenanigans that these bankers have carried out.
       
      “Europe has become and explosive barrel and the fuse has been lit there is no way back out of this and we all have to see it through to the end.”
       
      Same here!  I keep hoping that someone will be able to pull a lucky rabbit out of the hat that unwinds all of these debt problems before they explode and destroy the US, UK, EU, Japanese, and world economies.  Unfortunately, that does not seem to be happening.  Maybe it will but the odds do not look good.
       

    • Ed_B … “the economic crisis that we are having that has caused so many to need the support of government and various charities.”
       
      Ed, I gave The Doc a heads-up on this interview a few days ago and your comment above prompted me to repeat it here for your perusal as well (or ANYONE interested in classical social structure alternatives from the current government-centric paradigm). I really think you’ll find it fascinating. In the advent of what’s about to hit us all, these old ‘standards’ are damned good candidates to re-learn and apply again.
       

      http://tomwoods.us5.list-manage.com/track/click?u=77713d21ff56f1c126607d2c5&id=fe0934d91f&e=d07e29809c

    • I listened to some of that, Pat, but it seems very long and very “chatty”.  Not my cup of tea, although the subject would be good if they would get right to it.
       
      From family history, I know what happened before the welfare state developed in this country.  In the 1920s and 1930s, community was a very big deal.  So was attending the neighborhood school and church.  Service clubs of various kinds were also big.  All of these had interests in helping others less fortunate than themselves.  This is exactly where charity belongs… at the local level where people know each other and who deserves help and who doesn’t.  Creating these grand government programs wastes a lot of tax-payer money, is ineffective at helping most people, and creates both a sense of theft in the givers and entitlement in the receivers.  The best gift that a lot of people down on their luck can get is a job, not a hand-out.  I was raised to believe that all honest work was of value and so were those who engaged in it.  We didn’t look down on people who did the dirty jobs because we knew that they were necessary.  These days, a lot of welfare recipients refuse to do dirty jobs and that’s too bad.  They may be dirty but they are honest work than need doing.  There is dignity in that… unlike sitting on one’s behind with their hand out. demanding benefits that they have not earned but that someone else has.
       

    • Ed_B … “it seems very long and very “chatty”.”
       
      Oh man, Ed, in your hurry to ‘get the shopping done’, you’re rolling over a bag of silver dollars laying there in the parking lot!

      Yes, the earlier part is a little ‘mutual admiration society’ junk, but Woods’ shows are only 30 minute segments and you can skip over the first quarter or so to get to the fascinating parts.

      Skip to the 5 min: 15 sec. spot … I assure you, you will come away enlightened for the expense of a little patience.

    • Time is money, Patrick, and I only have so much to spare.  ;-)
       
      When I started listening to this, it wasn’t played via a standard player, so I had no idea of how long it was and neither was there any sort of timeline which I could use to fast-forward to later parts.  Perhaps, I should have DL’d it and then used a standard audio player for the resulting mp3 file?

      OK, I did DL it and played it with the Windows audio player. Skipping to the 5 minute mark was good. Yes, I did learn a bit about the various fraternal organizations in the US but find them to be quite similar to the Mormons and how they handle such things to this day. While I am not a Mormon, my older 1/2 brother is, so he’s more than happy to tell me all about how they work. I very much appreciate that they are willing to help any of their church members but not for free. They fully expect that once back on their feet, they will repay the church in some way so that others can then be helped. It’s a good system that perpetuates itself, unlike many government programs that are not sustainable.

    • Ed_B … “When I started listening to this, it wasn’t played via a standard player”
       
      No, Ed, it’s a QuickTime Flash MP3 (like Eric King uses on his Broadcast segments), but RealPlayer will prompt to download it. Not that you ought to even go the extra step.

      The player (at the top of the page) has a fully functional positioning bar to skip forward or back. The time indicator is above the slide-bar. The spot I suggested (5 mins,:30 secs.) us right above the ‘Month Field’ ‘Down Arrow’ for searching any certain Month.

      Try again, I’m pretty sure you’ll find it VERY interesting.
      http://tomwoods.us5.list-manage.com/track/click?u=77713d21ff56f1c126607d2c5&id=fe0934d91f&e=d07e29809c

  6. Good luck and god have mercy on America and Europe, many people here have made it known that they stand with their backs against the wall and that there will be large scale civil warfare between rich and poor if this goes on any longer.
    It is really sad it has come this far because now the general consensus is that we the middle and lower class don’t give a shit whether you worked hard for those two houses and 5 cars because we have none so we will cut your throat or shoot you and kill your whole family if you believe you can have much while others have nothing, solidarity is long gone.

  7. We are an inch removed here in Europe where politicians and bankers can’t show up in public or they will be hurt badly.
    They are despised around the west in numbers that are growing larger by the day for being the vile oppertunists they are profiteering and leeching of and preying on their lower class fellow human beings missery.

    • That entire episode in US financial history could be titled, “When amateur investors use leverage that they do not understand”.  :-/

  8. I think charts only show the result of actions that have been decided by some people at an earlier date.  In other words, I believe if there will be a crash in 2014, it will be planned well ahead of time, in time for the “important people” to make their preparations.  It has nothing to do with cycles or charts.
    Have we forgotten these markets are manipulated?

    • Yes, it did.  Does this mean that it is “Game ON!” time?  A 10-year bond at 3% is not a big deal… unless this is that first little snow pebble that rolls down the face of a snow cliff and starts a horrendous avalanche.
       

  9. MaxSilver 
    I’ll give a try at my Google translation 
    With a Matrix twist when le DOW se rendre trois mille
    Merovingian dit “Putain ca craint–ma 401K est fini”
    Jamie DImon  ‘Va niquer ta mere’   LE LOL  ;-)

  10. If the fed reduces/exits its QE program then yes we will crash, but if they turn face and increase QE then there’s no way we crash in 2014 as the party will go on and the hangover will ultimately be worse just not yet in 2014, if so, party on wayne!

    • @andrew james ,
       
      I was one of those sheep.  The margin call was so bad, that not only did I lose a quarter million dollars invested, I had to put 30K on a credit card to cover the margin.  Then insult to injury, Uncle Sam stuck his hand out for 7K for the tax on the dividends that I was paid.  LOL.  Then I became a stacker.

    • What really sucks is going through something like that and learning the wrong lessons from it.  In the 2001-02 recession, I “lost” about $220k from my 401k plan.  This was completely recovered via market actions in 2003-2007 and then some.  Then we had the 2008 recession and about $250k was “lost”… well, on paper, anyway.  By mid-2010, all was recovered and then some.  From this experience, a couple of lessons can be learned: 1) do not sell shares AFTER the market has had a big pull-back; and 2) invested money is a lot like the tide… it rolls in AND out, so be prepared for that psychologically.  Above all else, never ever use leverage.  That path leads to the dark side.
       
      I also became a stacker as I see it as financial insurance against a true financial “Oh, S***!” time.  It is good diversification from other assets that can move up and down in closer sync.  It is also removed from the sticky-fingered banking system and all its attendant bail-outs, bail-ins, derivatives, leverage, and other shady dealings.  Topping it all off, there is simply nothing in the financial world quite like the feel of gold and silver coins in one’s hands.  :-)
       
      Only problem with diversifying into PMs has been the difficulty in setting the percentage of my wealth that I want in PMs.  The more I try to get it to 10%, the more difficult it becomes… stocks up, PMs down does not make for an easy chase!  Even with a substantial addition to the stack this year, I am still losing ground.  :-/
       
       

  11. EdB  I did take my meds   Red Pill.  I was channeling my inner Gaul when responding to Maxsilver and what constitute an exchange between Merovingian and Jamie Dimon when the Dow gooes to 3,000
    French is not my second language. English?  Who knows

    • No fair!  Easier for you to write in French than for me to write in Cyrllic, because it takes some calisthenics since there are no Cyrllic keys on the keyboard.  And anyway – it all looks like Greek to y’all.
      (But I do know enough French to understand what ‘Merde’ means.)

    • @AGXIIK
       
      Yes, I know!  I was messing with you!  Take the purple pill, AG.  That way you have ALL of the bases covered!  lol
       
      @Mammoth
       
      Yep, merde… and ventilateur or some such… bad juju when they meet!    ;-)

  12. Excerpt: “If everything is so great, why does the Fed need to keep interest rates at zero forever?”

    The more critical question to ask is … What right has the Fed, to dictate interest rates at all? What possible good can come of any centralized control of these rates?

    In a genuinely Free Market, where such rates derive … in consequence of naturally arising economic variances … who is declaring this outrage as the Common Law crime of Combination and Conspiracy to Defraud that it plainly is?

    Since license is government issued to permit this criminal conduct … and the effect is greviously harming The People in general … WHETHER OR NOT that ‘entity of governance’ is proceeding in its own exclusive extra-Constitutional jurisdiction, or originally intended character … IT IS COMPLICIT TREASON AGAINST THE PEOPLE … who are in fact the very embodiment of The Country!.

    • @PatFields
       
      Bravo, Pat!  I have been asking that very question for a long time now and have yet to receive an intelligent answer… until now.  
       
      History is replete with examples of the utter folly of central control in politics and the disasters that result therefrom.  We really do not need to test this theory any more.  It has been thoroughly tested and we KNOW that it blows chunks.  Central Banking is merely central control applied to banking.  It will not work a damn bit better than any of the communist countries have… which is to say horribly.
       
      Yet, for some inane reason, we persist in trying it over and over.  Well, ENOUGH, says I.  End this farce and RTHN.  The free market should be setting interest rates via daily competitive bidding and not by Gov or pseudo-Gov (The Fed) fiat.  This will work well for ALL durations, so whether short, medium, or long term money is involved, the open competitive bidding process will handle it just fine.  
       
      I sincerely believe that the current interest rates are too low and are damaging our economy more than they are helping it.  We cannot continue to throw the savers under the bus so that we can treat the spenders to an orgy of very cheap money that they can borrow and misallocate.  The savers will be screwed in 4 ways by this: 1) they get little to no return on their savings; 2) all this money printing that is done to keep interest rates low is creating inflation problems at the consumer level; 3) this only feeds the idea that an economy constructed of 70% consumers and 30% producers is stable and viable, which it isn’t!; and 4) after the obvious result occurs and things collapse, the Gov will be called in to bail out the mess that they and the Fed have created via all these shenanigans using our tax money as their personal mop, bucket, and broom.  Not having learned a damned thing from this, of course, we will be treated to round after round of it in ever increasing amounts until the US economy is totally destroyed.  At that point all we will hear from these cretins in the Gov and at the Fed is that their plan would have worked had we done more of it or it failed because we did not support their efforts.  Bleah!  A pox upon BOTH their houses!
       
       

    • Ed_B … “We cannot continue to throw the savers under the bus so that we can treat the spenders to an orgy of very cheap money that they can borrow and misallocate
       
      No, Ed, we can’t. Nor can we cavalierly condemn the ‘Average Joe’ sad-sack to ‘the fates’ either … however righteously tempting that may seem.

      Since banknotes are all borrowed items with only a tiny amount of genuine Purchase Valuation left in real terms (two 1912 copper ‘cents’ by weight), I’ve concluded that we can independently revert them to their physical form through fair trade and send the damned notes all back to the damned banks and government. while we restructure our lives on a solid physical footing again.

      This project would give us a PERFECT outlet for our silver at the old 100:1 ratio of weight, by trading for ‘scrap’ copper to use as ‘small money’ amongst each other … for new business institution and wage funding to grow our immediate economic well-being! In also establishing secure ‘Metals Warehouses’ (perfect fit for ‘born again’ bankers like AGXIIK), we can exchange copper, silver and banknotes (under exempt original State jurisdictions), to accommodate holdout monopoly industrialists like utility and fuel companies, while freeing ourselves from bank slavery and, yet, also handle hard money ‘sight drafts’ and discounting of Real Bills between businesses and neighboring communities.

      Of course, we’d need to have sufficient smelting, assaying, rolling, punching and coining facilities for each town or region, but NOTHING’S IMPOSSIBLE when the objective is under assault by determined folks ‘on a mission’. The goal, after all, is to preserve the bulk of our present conditions, while concurrently insulating ourselves from any further impoverishment through the banknote paradigm … KEEPING OUR COMMUNITIES CIVIL AND CONGENIAL DESPITE THE DOOMSAYERS.

      Something worthy of serious, unbiased thought … don’t you think?

    • @PatFields
       
      “Nor can we cavalierly condemn the ‘Average Joe’ sad-sack to ‘the fates’ either … however righteously tempting that may seem.”
       
      I don’t think that I am doing that but will ponder it a bit to see if I am.  I am thinking that it is more of a tragedy that may well not be preventable.  I take no joy in it but am recognizing what appears to be obvious.  It simply is not possible to save people from themselves, particularly before they realize that they are in danger and have no interest in discovering that fact.
       
      “I’ve concluded that we can independently revert them to their physical form through fair trade and send the damned notes all back to the damned banks and government. while we restructure our lives on a solid physical footing again.”
       
      Would that we could!  TPTB do not seem at all interested in either doing this or in allowing anyone else to do it.  Their “damned notes”, as you say, are the heart of their power base and are not anything that they will willingly give up… pried from their cold dead hands must they be.
       
      I believe that the states could be sources of metallic medallions made from copper, silver, and even gold in the usual 1/10, 1/4, 1/2, and 1 oz. sizes.  These would simply be metal medallions created to a standard spec such that all would be interchangeable.  They would not be called money but they could be used as money if anyone so desired.  They definitely would not be called dollars or cents.  Perhaps they could merely be labeled as mg or grains of metal?  This seems possible to me, particularly in states like Utah that have legalized the use of silver and gold as money, if the participants in a trade agreement so desire.
       
      Freeing ourselves from the slavery of banksters begins with shunning them and not using their “services”.  We should start with the big 5:  JP Morgan Chase, Bank of America, Citi, Goldman Sachs, and Morgan Stanley.  By not dealing with these and by holding a minimal amount of fiat, we can do quite a lot to starve these beasts into submission.  Of course, numbers matter in such things and 2-3% of the US population doing this is not going to get their attention.
       
      “KEEPING OUR COMMUNITIES CIVIL AND CONGENIAL DESPITE THE DOOMSAYERS.”
       
      Being civil and congenial may or may not be strictly related to this issue but I do admit that it is a worthy goal in virtually any human endeavor.  As to the “DoomSayers”, it is not they who are causing doom to descend upon us.  They are merely the ones who first see it coming and are noting that fact.  They are also prepping for its arrival, unlike many others who are not.
       
      “Something worthy of serious, unbiased thought … don’t you think?”
       
      I do.  But first, the problem of vast numbers of people who do not see this as an issue worthy of their interest will not see the value in making any effort to achieve what you suggest.  Many of us have tried to open their eyes but have met only minimal success.  It seems likely to me that this will not happen until AFTER the S has HTF and the majority of people then and only then see a genuine need for it.  Until then, they are content to label most of us as “chicken littles” or worse, salving their alarm via minimizing our message to a more comforting level with which they can deal with minimal effort.
       

    • Ed_B … “As to the “DoomSayers”, it is not they who are causing doom to descend upon us.”
       
      That wasn’t my intended meaning, only that their ‘refrain’ is to predict bedlam and mayhem as something to expect without question. I see that sort of ‘desperate behavior’ as emanating from an absence of any means to rather choose alternative to it. This project of re-instituting metallic based trading, could PROVIDE that alternative, so they’d HAVE a choice to struggle toward retention of civility.

      For the really poor folks, they’d have an outlet to earn a living collecting up scrap copper for smelting and with enough of that in circulation … it can serve as wage funding to keep them working. All houses, large or small, need a foundation.

      Ed, I’ve been asking shop owners (of course, most clerks haven’t a clue yet) if they’d be amenable to taking silver in trade and LOTS are anxious enough that when I had to admit I wasn’t quite ready yet to start … they were visibly disappointed. Those folks, if they knew copper would readily and eagerly exchange with silver along the historic norms, would find logic and reason in the prospect, I’m certain of it. AND, if they ALSO knew the copper and silver would exchange for banknote necessities, they’d be all the more enthusiastic.

      The ‘nut’ to crack is acquisition and fabrication of copper at or below that ratio, so easy interchange can start very quickly. That seems surmountable by initial use of scrap copper. Wire, pans, radiators, plumbing tube … et cetera.

      Nothing at all against ‘locking and loading’, but if there’s even a faint prayer of defusing such situations before they can spring up … so much the better. Yes. making plans for the collection, smelting, assaying, rolling, stamping and striking the pieces, is DEFINITELY no simple matter, but with the end result being intimately responsible for of holding our social fabric together in it’s greatest time of danger is something that will become a dying comfort beyond description.

  13. Hi Pat  I just completed a note to you about your post above but the site dropped it.  Not having time to recompose this post I’ll just say that I would hope of civil and congenial resolution to decades of debt and FIAT penury.  But so many people are trapped in the dependency cycle of government control through FIAT, debt and all forms of interest attached, with constant interest accruing forever, that breaking this dependency and addiction will require the most seriously painful Cold Turkey rehabilitation that most people will not be able to survive it. Not because they don’t have that internal toughness.  They just don’t know how to survive without the governments warm and loathsome embrace.
    I hope for the best beause I have confidence that some will have recourse to survive
    I plan for the worst.  So I’m off to the range for some instruction and run and gun.  Just in case.
    Cheers

    • AGXIIK … “so many people are trapped in the dependency cycle
       
      True, but as my Dad used to often remind me … ‘Nothing worthwhile is easy of attainment.”

      Sometimes, a truly worthwhile thing is a mere viewpoint, where its attainment is simply to adopt it. There, the difficult effort is to overcome one’s prejudices, formed and solidified throughout a lifetime. Although deceptively simple, THAT task can require Herculean effort to accomplish.

      The challenge to the Teacher, then, is to bear that in mind and yield patience enough to achieve … just that little step.

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