But, most of us know they will try again anyway, they have to, it’s the only ammo they have left.
BEA LEVER
September 22, 2015 8:34 am
Term for the day……..tail hedge.
Helicopter Ben said GOLD is not money it is a tail hedge. When do you need a tail hedge? In a reset, so take Ben’s advice and protect yourself with some gold.
Resets are a bitch without PM’s.
Backtable
September 22, 2015 9:09 am
Ask them how much the S&P 500, adjusted for inflation, has returned since 2000?
[img[/img]
Backtable
September 22, 2015 9:21 am
Karma?
“Goldman-Sachs CEO Blankfein says has ‘highly curable’ form of lymphoma.”
Anonymous
September 22, 2015 9:27 am
Unless and until we start pegging the value of our money -everyone else’s as well, but that’s another matter- to real goods and services production nothing will be solved or even get better.
Our money no longer represents anything real that has been produced (i.e. a dollar could represent 10 grade 8 bolts or twenty grade 5 bolts and it would be backed by something real, it wouldn’t have to be a precious metal just something really produced by our workers labor).
For some reason, there is no national political will to do this, so prepare for current conditions to progress to an unpleasant end.
Rise Up
September 22, 2015 9:35 am
Last month when I went to the bullion store where I get my gold/silver they had also begun to deal in diamonds. They told me it’s harder and harder to get physical gold/silver and they needed to “diversify”.
Maggie
September 22, 2015 10:03 am
We were in a group of “semi-preppers” and got into the stacking business early on. My husband has had some really hard days watching the PM prices dropping even below the prices we bought most of our stash. He tends to get discouraged easily, but personally, I’m thankful it never spiked up to where he would have been tempted to sell it in order to hire people to help us with some of the hard work here.
I admit that when I sit down with paper and try to get a “handle” on the whole derivatives business, my head spins and my eyes begin to blur. I’m one of those people who needed to see how the equation works before I’d trust a calculator. I actually worked a Factor Analysis by hand one time to make sure the math really was LEGIT.
I have to give up on the derivatives… it is just too big to grasp. (I know what they ARE… I’m just trying to find a way to get an idea of the SIZE.)
My husband says that since TPTB know it (the debt/derivatives issues) can never be fixed, they will just keep it floating along until something (??? what???) causes them to just say they get a do-over. I just want all our FRNs spent on tractors and livestock before that happens. And then, we can get our junk silver out and see if all those hours spent sorting through bags of dimes and quarters were well spent. The bullion is supposed to buy the “new” improved currency…
At least that was the idea when we started buying and stacking. Now that the whole world has gone mad? Who knows…
Anonymous
September 22, 2015 10:06 am
Maggie,
Diamonds are a fine investment, you can sew a small fortune in the seams of a garment where it is almost undetectable (The aware Jews did this in the earlier days of NAZI Germany and escaped with their wealth intact).
The problem is that you really need to know what you are doing in order to deal in diamonds, there are many pitfalls that can destroy the amateur in the diamond market.
Anonymous
September 22, 2015 10:08 am
Sorry, that comment above was meant for Rise Up, not Maggie.
Not enough coffee yet.
starfcker
September 22, 2015 10:08 am
When I traded in my junk a few weeks back, I had to take bars, rounds were 4-6 weeks estimated wait time. I didn’t want an IOU, even though I trust the dealer. They are going to be forced to settle in fiat, and soon. There are going to be some pissed off (screwed) people.
Backtable
September 22, 2015 10:12 am
“According to one of the world’s leading derivatives experts, Paul Wilmott, who holds a doctorate in applied mathematics from Oxford University, $1.2 quadrillion is the so-called notional value of the worldwide derivatives market. To put that in perspective, the world’s annual gross domestic product is between $50 trillion and $60 trillion.”
“The IMF has put Monetary gold right at the top of the global reserve assets list – above SDRs. The IMF writes, ‘…The gold bullion component of monetary gold is the only case of a financial asset with no counterpart liability.'”
Koos Jansen
DRUD
September 22, 2015 11:41 am
The system is so complex and so unstable it is impossible to guess how it will, inevitably, break. I do believe, however, systems fail from the bottom up rather than from the top down, but most people are tor-down thinkers. To almost all ‘Murikans the DOW is practically just a number. BUT, that number has, over a period of decades, become a symbol, an indicator, of how the economy is doing. I am with Maggie, I don’t begin to understand derivatives or CAPE ratios or margin shorts or all the other financial mumbo-jumbo that Admin does such a fine job of condensing into lingo and concepts that all of us can sink our teeth into. However, I do understand the real fundamentals. Stripped of all jargon, abstraction and financialization, any economy is, at its most basic level, a surplus energy equation from a physics perspective and a CONFIDENCE equation from a sociological one. I often ask myself what the fuck is keeping this bullshit system standing? Well, it is fairly obvious, isn’t it? Most people still have confidence in it. That’s it. The top-level power structures (governments, central banks, corporations, etc.) ONLY have power because of confidence. The reason people still have confidence, is also simple: despite everything, the system still works. I can still go virtually anywhere I want, at high speed, using incredibly cheap and readily available energy carrying 4000 lbs of steel with me and I can acquire virtuously anything I need or desire using a little rectangle of plastic which represents a vague promise to pay someone some money at some future time and I can do this without every removing my fat ass from the couch. And this is all perfectly normal to us…in fact, certain elements would even say we have a RIGHT to these things. It is natural for us to believe in such a system because we live it every day…but if one widens his perspective just a little, it becomes glaringly obvious that these things have been true for only the tiniest fragment of history and that they are entirely, ridiculously unsustainable for any real length of time. This is where collapse happens…not when central banks make their silly policies…not when governments enact new laws or write new treaties…(all these things are PART of it, but they are merely symtoms, reactions)… The CAUSE is when the people on the street lose confidence in their institutions and our of shear panic withdraw their participation. In other words, when the herd bolts. A process that is just as impossible to time or predict as it is inevitable.
It IS a Crisis of Trust…A Crisis of Confidence…that not breaks they system, but REVEALS its brokenness.
Are you saying the entire teetering edifice of debt will collapse at free fall speed once the floors below give way? 🙂
Bea Lever
September 22, 2015 11:49 am
Please don’t get DUD riled up over free fall speed Admin. He said he can go anywhere he wants at high speed………..interesting.
Stucky
September 22, 2015 11:54 am
DRUD
Very nice post. I like the way you think.
But, can you use more paragraph breaks?
Backtable
September 22, 2015 12:13 pm
DRUD
I agree with you, but
“This is where collapse happens…not when central banks make their silly policies…not when governments enact new laws or write new treaties…(all these things are PART of it, but they are merely symtoms, reactions)… The CAUSE is when the people on the street lose confidence in their institutions and our of shear panic withdraw their participation.”
If the markets lock up in a single day, as they were apparently set to do the Monday morning open following the Lehman weekend, and creditors won’t fund trucking companies, what happens within a week when food doesn’t arrive on the local grocery store shelves. Or fuel isn’t delivered to your local gas station?
“Trust” is also built on expectation, and in the “Just-In-Time” delivery economy we’ve built, that “trust” goes out the window as a direct result of what central banks have done. Almost all aspects of the economy as we presently know it are by default dependent upon “their” system.
Persnickety
September 22, 2015 12:36 pm
Economy #7 collapsed and wasn’t even hit by a plane.
Also, SEVEN MILLION WILL DIE!!!!
Maggie
September 22, 2015 12:36 pm
Thanks DRUD… that’s a very good point. “…when the herd bolts…” Is why we are out here in the hills… far from the madding crowd.
Rise Up
September 22, 2015 1:26 pm
Question(s) of the day:
How many days/weeks/months/years of food do you have stored?
How will you heat your home and cook your food if there is no electricity?
Have you discussed emergency scenarios with your neighbors?
Do you have firearms and an adequate supply of ammo should civil unrest breakout?
Reminder: September is National Preparedness Month
Yes…the thermite is in place on the pillars of the economy…just waiting for the remote control/holographic planes to hit.
DRUD
September 22, 2015 1:34 pm
Backtable – Of course you hit upon a point that I didn’t get to in my long ass post. JIT is a brand new concept as well, historically speaking. It is another house of cards, constructed to “improve efficiency” which it does, but again on the false premises of infinite cheap energy and the ability to increase complexity indefinitely.
Backtable
September 22, 2015 2:03 pm
DRUD
“on the false premises of infinite cheap energy and the ability to increase complexity indefinitely.”
I read you 5×5 on that.
JIT is a disaster when it comes to systems-resiliency based on the premise of cheap, infinite energy. As to complexity, dead on again, the system is designed this way to ensure reliance on TPTB. (Yeah, it may maximize profits, but it also brings with it an inherent degree of higher risk.)
It’s a massive, creaking edifice, built on the fallacy of infinite growth. Believing in double-digit corporate RoI, which so many who ran these companies were want to do, made one realize they were either incredibly ignorant, sociopathic, or a powerful combination of both. CEO’s in league with politicians. What other outcome could be expected?
And yet the media repeated this crap ad nausea to a lumpen public willing to believe it just so long as the lights stayed on, their credit cards worked, and the Big Box stores stayed open.
The mindless consumption that involved extraordinary waste, both physical and financial, is coming due. It’s alright that some don’t see it this way. They never had a clue 2008 was coming either, regardless of the warnings, or of the dot.bom bust, when P/E multiples were at infinity because THERE WERE NO earnings…”This time it’s different…” Yeah, right.
Reset will happen. The unknowns are how long it takes to work through and how difficult the process?
DRUD
September 22, 2015 2:13 pm
I kind of missed Backtable’s point which I just now got: that a credit crunch leading to a failure of the JIT systems is a top-down failure. This is true, but that was kind of where I was beginning. The herd only panics when it really hits home (ie empty grocery store shelves and no gas at the gas stations, etc).
And this brings up another point: what really gets the party going is POSITIVE FEEDBACK. Panic begets more panic, defaults beget more defaults, etc. All the while we can count on government to do EXACTLY the wrong things, ie cost controls, bank holidays, martial law, etc.
DRUD
September 22, 2015 2:19 pm
Terrific post, Backtable..I was writing mine at the same time. Another issue, of course, is that technology HAS allowed us to exponentially increase complexity. Linear thinkers believe this can go on forever. While electronics technology is a new player in the game of empiric collapse, I tend to doubt it. Can technology be our savior or has technology just allowed us to build an unimaginably high version of the Tower of Babel doomed to utter ruin?
DRUD
September 22, 2015 2:24 pm
Stucky,
I am (much like yourself) and incurable and unrepentant smart ass. 🙂
You are right, of course. My issue is that my typing skills can never keep up with my chain of thought. This leads to long paragraphs and occasional Logorrhea.
Faith in technology to solve everything has become the equivalent for over-driving the headlights. We’re racing balls-to-the-wall into the wide unknown, relying on sheer assumption that technology will deliver all the answers. The answers may be found, but implementing them “in time” could be another matter altogether.
Energy is a prime example. Get it wrong and you’re not simply blowing your corporation’s budget for this year’s i-phone model, but the entire system as we know it.
I think too many people are placing far too much faith in technology. Technology is amazing, sometimes staggeringly so, but the issues at stake are very big indeed. I’m not nearly as assured as some claim to be.
ASIG
September 22, 2015 4:02 pm
What I consider even more valuable than PM, and rarely see discussed is the ability to produce or fix/repair. The ability to produce or repair consists primarily of two things, skills and tools. To put a face on that idea consider the TV character MacGyver, Yes a fictional character, but that should make the point. The more skills a person has and the tools to go along with it, the more a person is able to deal with difficult situations.
There are people that couldn’t fix a flat tire if they couldn’t take it to the corner gas station. Could you fix a flat tire on your own? Could you fix a plumbing or electrical problem on your own? If your generator crapped out on you could you fix it? Could you build a generator from scratch?
The more basic skills you have and the necessary tool to go along with those skills, the better off you will be when TSHTF and the more value you will be to your neighbors. To me that’s has more value than gold.
robert h siddell jr
September 22, 2015 4:08 pm
If you think technology is the answer after TSHTF, think before the 1800’s.
ASIG
September 22, 2015 5:52 pm
@Robert h
“If you think technology is the answer after TSHTF, think before the 1800’s.”
Not entirely true- That implies no electrical or electronic devices and no internal combustion engines as an example.
Even if the electrical grid is down for some time or worse case down forever, the knowledge of electricity and electronics will still exists. The knowledge of how to generate electricity will still exist along with the knowledge of how to build electrical and electronic devices.
Hell the semester project of the first electronics class I took in college was to build a radio using common items you would find in your home, and just about any country boy can build you a lead acid battery. You want to build a generator take a look at You Tube—Ok fine You Tube won’t be available but those guys that made those videos will be somewhere out there building generators.
No internal combustion engines? Hell there are enough internal combustion engines laying around to last at least 100 years.
Fuel- plenty of choices including bio-diesel to name just one.
Westcoaster
September 22, 2015 6:49 pm
Drud not to be picky but that’s “nano-thermite”. Gotta get it spot-on when mixing with the non-truthers, else they’ll try to nail you for a “that’s impossible, you’re full of shit”.
Personally I think we’re one CME or EMP from mass disaster. Might be a combination, say a CME mistaken for an EMP, compounded by nuke retaliation.
Dies the fire.
Maggie
September 23, 2015 4:31 am
I just got this rant in my email from my FF pal…
This guy is a riot!
Maggie
September 23, 2015 5:05 am
I take that back… he goes on a good rant and that is a “riot.” But he makes a LOT of sense…
Maggie
September 23, 2015 6:02 am
The second one… at 41:30… his discussion of why the Clintons are so stinking rich now is powerful.
Backtable
September 23, 2015 6:27 am
At 8:00 minutes he explains what few people paid attention to while it was happening: Basically that US consumer credit-spending (debt), beginning in the 1980’s a.) accelerated the exodus of U.S. jobs overseas b.) provided increased profits to the companies that out-sourced their manufacturing there c.) which wildly inflated the US stock market, and d.) brought us to our present predicament.
Certainly the wars have added to it, as has the concurrent US government deficit spending, but the harsh reality is that people were so busy living beyond their means they didn’t pay attention to what was happening right before their eyes as a result.
Credit. We bought into the concept of living by it and those who built the system milked it for all it was worth, across all sectors of the economy, and then some. It was all be design. When the company store can’t extract enough from wages alone, they extend credit.
Try talking to people about this sometime and watch how defensive they become. How they defend the, “American way of life!” How they’ll argue that credit, used judiciously, can be wise, a way to leverage one’s circumstances (be prepared to get an earful from those defending credit in the FIRE sectors). As a consumer, the use of credit is not a sign of financial strength. Having it available to you and choosing not to use it, is.
Beginning In the 1980’s the country was commercially inundated (and purposefully indoctrinated) with the “credit is good” mantra. And why not? What’s could be easier than spending money one doesn’t have? “It’s all good!” Even our own government was reassuring us “Deficits (debts) don’t matter.” (Dick Chaney et al). Entire generations have now been born that believe that credit is simply a way of life. Perhaps the ultimate tragedy of this mindset has been student loans?
The bill always comes due. This is what’s happening for most of the world. The bill is rapidly coming due and those at the table are suddenly realizing no one has the money for the tab.
Maggie
September 23, 2015 6:59 am
You are so right, Backtable. I got my first credit card in 1985 and was almost afraid to use it.
My son is still in college and is champing at the bit to have a credit card.
He is one of that generation that thinks buying things on credit is the way to go. Fortunately, we made him bust his ass to save money bagging groceries and working crap jobs (mucking horse stalls for 8 bucks an hour on weekends) to pay for his first three years. Now, the last year is on us and he can’t wait to get a credit card.
Shaking my head and rolling my eyes.
IndenturedServant
September 23, 2015 8:15 am
I don’t think this particular tightening of the pm markets is much to sweat over. It’s a good opportunity to take a break from buying and save up some more frn’s until supply and premiums become reasonable again.
I’ve made it a point to buy very few slicks when it comes to junk silver but a few slip through the cracks from time to time. I’m going to use the currently insane premiums on 90% to cull the slicks I have and turn them into something prettier. Twelve weeks ago I would have received less than spot but today I can easily make more than spot.
I’m still on the fence with the circulated dollars though. I’m inclined to hold since premiums have been ludicrous for well over a year and recently topped 100%.
I agree with those advising against diamonds. I have a good friend who is a certified gemologist. It’s her day job. One rule to remember is that diamonds are a “Jewish thing”. They will get the best deals before you ever see them and it’s damn hard to out Jew a Jew. No offense intended. It’s like buying used cars from Russian or Ukrainian immigrants. Just say no.
IndenturedServant
September 23, 2015 8:29 am
Maggie, a good way to sort of get your mind around the scale of the derivatives bomb is this:
Say you wanted to spend one trillion dollars at the rate of $1,000,000 per day. That’s $ 365,000,000 each year. It would take you 2739 years to spend it with no days off. It would take 49315 years to pay off our national debt at one million dollars per day and it’s only 18 trillion dollars. (kinda makes me wonder what they did with all that money) One trillion is a one followed buy 12 zeros. The derivatives exceed one quadrillion dollars. Fifteen zeros! 2.7 million years to pay off at that same rate of one million per day.
Could the current US dollar ever be re-denominated (as the video above, Bill Holter – All That’s Left is Reset discusses), say at 5:1, and be reissued “backed with physical gold”?
If not, re-denominating does wipe out investments as well as debts, but it also simply puts into circulation one “new” fiat currency (based on promises to pay), to replace another.
It’s Banana Republic stuff implemented under the guise of, “We’ve learned our lesson. Let’s have a Do-over.”
Maggie
September 23, 2015 12:54 pm
@IS… I almost got my mind around that and then my brain exploded.
Maggie
September 25, 2015 8:39 am
FWIW, my FF pal in Oklahoma read your comments and replied to me. He does not connect to the internet with his home computer but sent this comment to me. I’ll share it here and would love intelligent feedback on it… However, the other kind will suffice.
I have known for some time now that once the confidence breaks, its all over. We see it happening today, all the focus on the political system like some new figurehead in the white house can undo what has been done.
The electorate still thinks, or hopes rather, that this coming election will fix things. It is not fixable, not now. Like Bill Holter keeps saying, it is mathematics. It is just a matter of time until the some unseen trigger event happens, whether orchestrated by our government, or one out of their control.
I had a guy come out yesterday to fill some diesel tanks I bought a couple years ago, I paid $1.78/ gal. Last fall I paid $3.10. I now have enough fuel stored to last me 5 years at current rate of consumption. That is not counting what I bought 5 years ago. We had a conversation about the oil patch. Delivering fuel, he sees a lot of what is going on behind the scenes. The yards that are all stacked up with equipment, with no one around.
I don’t think we’ve felt the brunt of it yet. We haven’t felt the impact on the hedge funds, banks and private investors that are going to lose their collective asses as these oil companies and their support structure work their way through bankruptcy court. The trickle down of this is going to kill the southwest. Tax revenues are way down, politicians keep hoping for a crisis that will raise the price of oil back up and soon so they don’t have to deal with the budget shortfall. I remember back in 08, OK had over 600 million in the rainy day fund. It was gone in less than a year. You and I and others like us are the only ones that truly get it, see what is coming, and are taking action. The rest are content to watch OU football and wait in anticipation for Thunder basketball to return. End of his comment…
Derivatives + Sovereign Debt + Credit =PAIN.
Period. You don’t “print” your way out of this.
“You don’t “print” your way out of this.”
But, most of us know they will try again anyway, they have to, it’s the only ammo they have left.
Term for the day……..tail hedge.
Helicopter Ben said GOLD is not money it is a tail hedge. When do you need a tail hedge? In a reset, so take Ben’s advice and protect yourself with some gold.
Resets are a bitch without PM’s.
Ask them how much the S&P 500, adjusted for inflation, has returned since 2000?
[img
[/img]
Karma?
“Goldman-Sachs CEO Blankfein says has ‘highly curable’ form of lymphoma.”
Unless and until we start pegging the value of our money -everyone else’s as well, but that’s another matter- to real goods and services production nothing will be solved or even get better.
Our money no longer represents anything real that has been produced (i.e. a dollar could represent 10 grade 8 bolts or twenty grade 5 bolts and it would be backed by something real, it wouldn’t have to be a precious metal just something really produced by our workers labor).
For some reason, there is no national political will to do this, so prepare for current conditions to progress to an unpleasant end.
Last month when I went to the bullion store where I get my gold/silver they had also begun to deal in diamonds. They told me it’s harder and harder to get physical gold/silver and they needed to “diversify”.
We were in a group of “semi-preppers” and got into the stacking business early on. My husband has had some really hard days watching the PM prices dropping even below the prices we bought most of our stash. He tends to get discouraged easily, but personally, I’m thankful it never spiked up to where he would have been tempted to sell it in order to hire people to help us with some of the hard work here.
I admit that when I sit down with paper and try to get a “handle” on the whole derivatives business, my head spins and my eyes begin to blur. I’m one of those people who needed to see how the equation works before I’d trust a calculator. I actually worked a Factor Analysis by hand one time to make sure the math really was LEGIT.
I have to give up on the derivatives… it is just too big to grasp. (I know what they ARE… I’m just trying to find a way to get an idea of the SIZE.)
My husband says that since TPTB know it (the debt/derivatives issues) can never be fixed, they will just keep it floating along until something (??? what???) causes them to just say they get a do-over. I just want all our FRNs spent on tractors and livestock before that happens. And then, we can get our junk silver out and see if all those hours spent sorting through bags of dimes and quarters were well spent. The bullion is supposed to buy the “new” improved currency…
At least that was the idea when we started buying and stacking. Now that the whole world has gone mad? Who knows…
Maggie,
Diamonds are a fine investment, you can sew a small fortune in the seams of a garment where it is almost undetectable (The aware Jews did this in the earlier days of NAZI Germany and escaped with their wealth intact).
The problem is that you really need to know what you are doing in order to deal in diamonds, there are many pitfalls that can destroy the amateur in the diamond market.
Sorry, that comment above was meant for Rise Up, not Maggie.
Not enough coffee yet.
When I traded in my junk a few weeks back, I had to take bars, rounds were 4-6 weeks estimated wait time. I didn’t want an IOU, even though I trust the dealer. They are going to be forced to settle in fiat, and soon. There are going to be some pissed off (screwed) people.
“According to one of the world’s leading derivatives experts, Paul Wilmott, who holds a doctorate in applied mathematics from Oxford University, $1.2 quadrillion is the so-called notional value of the worldwide derivatives market. To put that in perspective, the world’s annual gross domestic product is between $50 trillion and $60 trillion.”
Or the BIS, http://www.bis.org/statistics/derstats.htm
@Anon: re: diamonds. Agree, you need a lot of expertise in examining and appraising diamonds.
I would not attempt to deal in diamonds unless I was a trained gemologist.
“To know the truth is the best thing.
To know that you do not is the second best.
To pretend to know – when you do not know?
Is a disease”.
– Lao Tzu
“The IMF has put Monetary gold right at the top of the global reserve assets list – above SDRs. The IMF writes, ‘…The gold bullion component of monetary gold is the only case of a financial asset with no counterpart liability.'”
Koos Jansen
The system is so complex and so unstable it is impossible to guess how it will, inevitably, break. I do believe, however, systems fail from the bottom up rather than from the top down, but most people are tor-down thinkers. To almost all ‘Murikans the DOW is practically just a number. BUT, that number has, over a period of decades, become a symbol, an indicator, of how the economy is doing. I am with Maggie, I don’t begin to understand derivatives or CAPE ratios or margin shorts or all the other financial mumbo-jumbo that Admin does such a fine job of condensing into lingo and concepts that all of us can sink our teeth into. However, I do understand the real fundamentals. Stripped of all jargon, abstraction and financialization, any economy is, at its most basic level, a surplus energy equation from a physics perspective and a CONFIDENCE equation from a sociological one. I often ask myself what the fuck is keeping this bullshit system standing? Well, it is fairly obvious, isn’t it? Most people still have confidence in it. That’s it. The top-level power structures (governments, central banks, corporations, etc.) ONLY have power because of confidence. The reason people still have confidence, is also simple: despite everything, the system still works. I can still go virtually anywhere I want, at high speed, using incredibly cheap and readily available energy carrying 4000 lbs of steel with me and I can acquire virtuously anything I need or desire using a little rectangle of plastic which represents a vague promise to pay someone some money at some future time and I can do this without every removing my fat ass from the couch. And this is all perfectly normal to us…in fact, certain elements would even say we have a RIGHT to these things. It is natural for us to believe in such a system because we live it every day…but if one widens his perspective just a little, it becomes glaringly obvious that these things have been true for only the tiniest fragment of history and that they are entirely, ridiculously unsustainable for any real length of time. This is where collapse happens…not when central banks make their silly policies…not when governments enact new laws or write new treaties…(all these things are PART of it, but they are merely symtoms, reactions)… The CAUSE is when the people on the street lose confidence in their institutions and our of shear panic withdraw their participation. In other words, when the herd bolts. A process that is just as impossible to time or predict as it is inevitable.
It IS a Crisis of Trust…A Crisis of Confidence…that not breaks they system, but REVEALS its brokenness.
DRUD
Are you saying the entire teetering edifice of debt will collapse at free fall speed once the floors below give way? 🙂
Please don’t get DUD riled up over free fall speed Admin. He said he can go anywhere he wants at high speed………..interesting.
DRUD
Very nice post. I like the way you think.
But, can you use more paragraph breaks?
DRUD
I agree with you, but
“This is where collapse happens…not when central banks make their silly policies…not when governments enact new laws or write new treaties…(all these things are PART of it, but they are merely symtoms, reactions)… The CAUSE is when the people on the street lose confidence in their institutions and our of shear panic withdraw their participation.”
If the markets lock up in a single day, as they were apparently set to do the Monday morning open following the Lehman weekend, and creditors won’t fund trucking companies, what happens within a week when food doesn’t arrive on the local grocery store shelves. Or fuel isn’t delivered to your local gas station?
“Trust” is also built on expectation, and in the “Just-In-Time” delivery economy we’ve built, that “trust” goes out the window as a direct result of what central banks have done. Almost all aspects of the economy as we presently know it are by default dependent upon “their” system.
Economy #7 collapsed and wasn’t even hit by a plane.
Also, SEVEN MILLION WILL DIE!!!!
Thanks DRUD… that’s a very good point. “…when the herd bolts…” Is why we are out here in the hills… far from the madding crowd.
Question(s) of the day:
How many days/weeks/months/years of food do you have stored?
How will you heat your home and cook your food if there is no electricity?
Have you discussed emergency scenarios with your neighbors?
Do you have firearms and an adequate supply of ammo should civil unrest breakout?
Reminder: September is National Preparedness Month
https://www.youtube.com/watch?v=lNEadTX6zBY&feature=youtu.be
Yes
I
Can
Admin,
Yes…the thermite is in place on the pillars of the economy…just waiting for the remote control/holographic planes to hit.
Backtable – Of course you hit upon a point that I didn’t get to in my long ass post. JIT is a brand new concept as well, historically speaking. It is another house of cards, constructed to “improve efficiency” which it does, but again on the false premises of infinite cheap energy and the ability to increase complexity indefinitely.
DRUD
“on the false premises of infinite cheap energy and the ability to increase complexity indefinitely.”
I read you 5×5 on that.
JIT is a disaster when it comes to systems-resiliency based on the premise of cheap, infinite energy. As to complexity, dead on again, the system is designed this way to ensure reliance on TPTB. (Yeah, it may maximize profits, but it also brings with it an inherent degree of higher risk.)
It’s a massive, creaking edifice, built on the fallacy of infinite growth. Believing in double-digit corporate RoI, which so many who ran these companies were want to do, made one realize they were either incredibly ignorant, sociopathic, or a powerful combination of both. CEO’s in league with politicians. What other outcome could be expected?
And yet the media repeated this crap ad nausea to a lumpen public willing to believe it just so long as the lights stayed on, their credit cards worked, and the Big Box stores stayed open.
The mindless consumption that involved extraordinary waste, both physical and financial, is coming due. It’s alright that some don’t see it this way. They never had a clue 2008 was coming either, regardless of the warnings, or of the dot.bom bust, when P/E multiples were at infinity because THERE WERE NO earnings…”This time it’s different…” Yeah, right.
Reset will happen. The unknowns are how long it takes to work through and how difficult the process?
I kind of missed Backtable’s point which I just now got: that a credit crunch leading to a failure of the JIT systems is a top-down failure. This is true, but that was kind of where I was beginning. The herd only panics when it really hits home (ie empty grocery store shelves and no gas at the gas stations, etc).
And this brings up another point: what really gets the party going is POSITIVE FEEDBACK. Panic begets more panic, defaults beget more defaults, etc. All the while we can count on government to do EXACTLY the wrong things, ie cost controls, bank holidays, martial law, etc.
Terrific post, Backtable..I was writing mine at the same time. Another issue, of course, is that technology HAS allowed us to exponentially increase complexity. Linear thinkers believe this can go on forever. While electronics technology is a new player in the game of empiric collapse, I tend to doubt it. Can technology be our savior or has technology just allowed us to build an unimaginably high version of the Tower of Babel doomed to utter ruin?
Stucky,
I am (much like yourself) and incurable and unrepentant smart ass. 🙂
You are right, of course. My issue is that my typing skills can never keep up with my chain of thought. This leads to long paragraphs and occasional Logorrhea.
Faith in technology to solve everything has become the equivalent for over-driving the headlights. We’re racing balls-to-the-wall into the wide unknown, relying on sheer assumption that technology will deliver all the answers. The answers may be found, but implementing them “in time” could be another matter altogether.
Energy is a prime example. Get it wrong and you’re not simply blowing your corporation’s budget for this year’s i-phone model, but the entire system as we know it.
I think too many people are placing far too much faith in technology. Technology is amazing, sometimes staggeringly so, but the issues at stake are very big indeed. I’m not nearly as assured as some claim to be.
What I consider even more valuable than PM, and rarely see discussed is the ability to produce or fix/repair. The ability to produce or repair consists primarily of two things, skills and tools. To put a face on that idea consider the TV character MacGyver, Yes a fictional character, but that should make the point. The more skills a person has and the tools to go along with it, the more a person is able to deal with difficult situations.
There are people that couldn’t fix a flat tire if they couldn’t take it to the corner gas station. Could you fix a flat tire on your own? Could you fix a plumbing or electrical problem on your own? If your generator crapped out on you could you fix it? Could you build a generator from scratch?
The more basic skills you have and the necessary tool to go along with those skills, the better off you will be when TSHTF and the more value you will be to your neighbors. To me that’s has more value than gold.
If you think technology is the answer after TSHTF, think before the 1800’s.
@Robert h
“If you think technology is the answer after TSHTF, think before the 1800’s.”
Not entirely true- That implies no electrical or electronic devices and no internal combustion engines as an example.
Even if the electrical grid is down for some time or worse case down forever, the knowledge of electricity and electronics will still exists. The knowledge of how to generate electricity will still exist along with the knowledge of how to build electrical and electronic devices.
Hell the semester project of the first electronics class I took in college was to build a radio using common items you would find in your home, and just about any country boy can build you a lead acid battery. You want to build a generator take a look at You Tube—Ok fine You Tube won’t be available but those guys that made those videos will be somewhere out there building generators.
No internal combustion engines? Hell there are enough internal combustion engines laying around to last at least 100 years.
Fuel- plenty of choices including bio-diesel to name just one.
Drud not to be picky but that’s “nano-thermite”. Gotta get it spot-on when mixing with the non-truthers, else they’ll try to nail you for a “that’s impossible, you’re full of shit”.
Personally I think we’re one CME or EMP from mass disaster. Might be a combination, say a CME mistaken for an EMP, compounded by nuke retaliation.
Dies the fire.
I just got this rant in my email from my FF pal…
This guy is a riot!
I take that back… he goes on a good rant and that is a “riot.” But he makes a LOT of sense…
The second one… at 41:30… his discussion of why the Clintons are so stinking rich now is powerful.
At 8:00 minutes he explains what few people paid attention to while it was happening: Basically that US consumer credit-spending (debt), beginning in the 1980’s a.) accelerated the exodus of U.S. jobs overseas b.) provided increased profits to the companies that out-sourced their manufacturing there c.) which wildly inflated the US stock market, and d.) brought us to our present predicament.
Certainly the wars have added to it, as has the concurrent US government deficit spending, but the harsh reality is that people were so busy living beyond their means they didn’t pay attention to what was happening right before their eyes as a result.
Credit. We bought into the concept of living by it and those who built the system milked it for all it was worth, across all sectors of the economy, and then some. It was all be design. When the company store can’t extract enough from wages alone, they extend credit.
Try talking to people about this sometime and watch how defensive they become. How they defend the, “American way of life!” How they’ll argue that credit, used judiciously, can be wise, a way to leverage one’s circumstances (be prepared to get an earful from those defending credit in the FIRE sectors). As a consumer, the use of credit is not a sign of financial strength. Having it available to you and choosing not to use it, is.
Beginning In the 1980’s the country was commercially inundated (and purposefully indoctrinated) with the “credit is good” mantra. And why not? What’s could be easier than spending money one doesn’t have? “It’s all good!” Even our own government was reassuring us “Deficits (debts) don’t matter.” (Dick Chaney et al). Entire generations have now been born that believe that credit is simply a way of life. Perhaps the ultimate tragedy of this mindset has been student loans?
The bill always comes due. This is what’s happening for most of the world. The bill is rapidly coming due and those at the table are suddenly realizing no one has the money for the tab.
You are so right, Backtable. I got my first credit card in 1985 and was almost afraid to use it.
My son is still in college and is champing at the bit to have a credit card.
He is one of that generation that thinks buying things on credit is the way to go. Fortunately, we made him bust his ass to save money bagging groceries and working crap jobs (mucking horse stalls for 8 bucks an hour on weekends) to pay for his first three years. Now, the last year is on us and he can’t wait to get a credit card.
Shaking my head and rolling my eyes.
I don’t think this particular tightening of the pm markets is much to sweat over. It’s a good opportunity to take a break from buying and save up some more frn’s until supply and premiums become reasonable again.
I’ve made it a point to buy very few slicks when it comes to junk silver but a few slip through the cracks from time to time. I’m going to use the currently insane premiums on 90% to cull the slicks I have and turn them into something prettier. Twelve weeks ago I would have received less than spot but today I can easily make more than spot.
I’m still on the fence with the circulated dollars though. I’m inclined to hold since premiums have been ludicrous for well over a year and recently topped 100%.
I agree with those advising against diamonds. I have a good friend who is a certified gemologist. It’s her day job. One rule to remember is that diamonds are a “Jewish thing”. They will get the best deals before you ever see them and it’s damn hard to out Jew a Jew. No offense intended. It’s like buying used cars from Russian or Ukrainian immigrants. Just say no.
Maggie, a good way to sort of get your mind around the scale of the derivatives bomb is this:
Say you wanted to spend one trillion dollars at the rate of $1,000,000 per day. That’s $ 365,000,000 each year. It would take you 2739 years to spend it with no days off. It would take 49315 years to pay off our national debt at one million dollars per day and it’s only 18 trillion dollars. (kinda makes me wonder what they did with all that money) One trillion is a one followed buy 12 zeros. The derivatives exceed one quadrillion dollars. Fifteen zeros! 2.7 million years to pay off at that same rate of one million per day.
https://www.fiscal.treasury.gov/fsreports/rpt/goldRpt/current_report.htm
This site raises several questions, first of which, is it really there?:
Second, if so, why does the US government currently value it on the books at $42.20 an ounce?
Third, if, and this is a big IF, it really is there, what’s it worth if gold ever hit $10,000 an ounce? (add four zeros).
At present, in a $17 trillion economy, there’s $1.2 trillion in “physical” cash in this country;
https://research.stlouisfed.org/fred2/series/DEMDEPSL
Could the current US dollar ever be re-denominated (as the video above, Bill Holter – All That’s Left is Reset discusses), say at 5:1, and be reissued “backed with physical gold”?
If not, re-denominating does wipe out investments as well as debts, but it also simply puts into circulation one “new” fiat currency (based on promises to pay), to replace another.
It’s Banana Republic stuff implemented under the guise of, “We’ve learned our lesson. Let’s have a Do-over.”
@IS… I almost got my mind around that and then my brain exploded.
FWIW, my FF pal in Oklahoma read your comments and replied to me. He does not connect to the internet with his home computer but sent this comment to me. I’ll share it here and would love intelligent feedback on it… However, the other kind will suffice.
I have known for some time now that once the confidence breaks, its all over. We see it happening today, all the focus on the political system like some new figurehead in the white house can undo what has been done.
The electorate still thinks, or hopes rather, that this coming election will fix things. It is not fixable, not now. Like Bill Holter keeps saying, it is mathematics. It is just a matter of time until the some unseen trigger event happens, whether orchestrated by our government, or one out of their control.
I had a guy come out yesterday to fill some diesel tanks I bought a couple years ago, I paid $1.78/ gal. Last fall I paid $3.10. I now have enough fuel stored to last me 5 years at current rate of consumption. That is not counting what I bought 5 years ago. We had a conversation about the oil patch. Delivering fuel, he sees a lot of what is going on behind the scenes. The yards that are all stacked up with equipment, with no one around.
I don’t think we’ve felt the brunt of it yet. We haven’t felt the impact on the hedge funds, banks and private investors that are going to lose their collective asses as these oil companies and their support structure work their way through bankruptcy court. The trickle down of this is going to kill the southwest. Tax revenues are way down, politicians keep hoping for a crisis that will raise the price of oil back up and soon so they don’t have to deal with the budget shortfall. I remember back in 08, OK had over 600 million in the rainy day fund. It was gone in less than a year. You and I and others like us are the only ones that truly get it, see what is coming, and are taking action. The rest are content to watch OU football and wait in anticipation for Thunder basketball to return. End of his comment…
Who will help me bake the bread?