Category Archives: United States
The United States of America (also referred to as the United States, the U.S., the USA, the States, or America) is a federal constitutional republic comprising fifty states and a federal district
by Tyler Durden
Sep 6, 2016 6:30 PM
Why does it seem like almost everything is made in China these days? Yesterday I was looking at some pencils that we had laying around the house and I noticed that they had been manufactured in China. I remarked to my wife that it was such a shame that they don’t make pencils in the United States anymore. At another point during the day, I turned over my television remote and I noticed that it also had “Made In China” engraved on it. With Labor Day just hours in the past, I think that it is quite appropriate to write about our transition from an industrial economy to a paper economy today. Since the year 2000, the United States has lost five million manufacturing jobs even though our population has grown substantially since that time. Manufacturing in America is in a state of stunning decline, our economic infrastructure is being absolutely gutted, and our formerly great manufacturing cities are in an advanced state of decay. We consume far more wealth than we produce, and the only way that we are able to do this is by taking on massive amounts of debt. But is our debt-based paper economy sustainable in the long run?
Back in 1960, 24 percent of all American workers worked in manufacturing. Today, that number has shriveled all the way down to just 8 percent. CNN is calling it “the Great Shift”…
In 1960, about one in four American workers had a job in manufacturing. Today fewer than one in 10 are employed in the sector, according to government data.
Call it the Great Shift. Workers transitioned from the fields to the factories. Now they are moving from factories to service counters and health care centers. The fastest growing jobs in America now are nurses, personal care aides, cooks, waiters, retail salespersons and operations managers.
No wonder the middle class is shrinking so rapidly. There aren’t too many cooks, waiters or retail salespersons that can support a middle class family.
Since the turn of the century, we have lost more than 50,000 manufacturing facilities. Meanwhile, tens of thousands of gleaming new factories have been erected in places like China.
Does anyone else see something wrong with this picture?
At this point, the total number of government employees in the United States exceeds the total number of manufacturing employees by almost 10 million…
Government employees in the United States outnumber manufacturing employees by 9,932,000, according to data released today by the Bureau of Labor Statistics.
Federal, state and local government employed 22,213,000 people in August, while the manufacturing sector employed 12,281,000.
The BLS has published seasonally-adjusted month-by-month employment data for both government and manufacturing going back to 1939. For half a century—from January 1939 through July 1989—manufacturing employment always exceeded government employment in the United States, according to these numbers.
You might be thinking that government jobs are “good jobs”, but the truth is that they don’t produce wealth.
Government employees are really good at pushing paper around and telling other people what to do, but in most instances they don’t actually make anything.
In order to have a sustainable economy, you have got to have people creating and producing things of value. A debt-based paper economy may seem to work for a while, but eventually the whole thing inevitably comes crashing down when faith in the paper is lost.
Right now, the rest of the world is willing to send us massive amounts of stuff that they produce for our paper. So we keep producing more and more paper and we keep going into more and more debt, but at some point the gig will be up.
If we want to be a wealthy nation in the long-term, we have got to produce stuff. That is why the latest news from Caterpillar is so depressing. In addition to the thousands of layoffs that had been previously announced by the industrial machinery giant, it appears that a fresh wave of layoffs has arrived…
Hundreds of mostly office employees received layoff notices at one of the largest Caterpillar Inc. facilities in the Peoria area this week, just as the company announced plans to close overseas production plants and eliminate thousands more positions.
A total of 300 support and management employees at Building AC and the Tech Center in Mossville this week received job loss notifications that included severance packages, 60 days notice and mandated Illinois Worker Adjustment and Retraining Notification Act letters.
During this election season, you will hear many of our politicians talk about how good “free trade” is for the global economy. But that is only true if the trade is balanced. Unfortunately, we have been running a yearly trade deficit of between 400 billion dollars and 600 billion dollars for many years…
When you have got about half a trillion dollars more going out than you have coming in year after year that has severe consequences.
Let me try to break it down very simply.
Imagine that I am the United States and you are China. I take one dollar out of my wallet and I give it to you and then you send me some stuff.
After a while, I want more stuff, so I take another dollar out of my wallet and send it to you in exchange for more products.
But that stuff only lasts for so long, and so pretty soon I find myself taking another dollar out of my wallet and giving it to you for even more stuff.
Ultimately, who is going to end up with all the money?
It isn’t a big mystery as to how China ended up with so much money. And when we can’t pay our bills we have to go and beg them to let us borrow some of the money that we sent to them in the first place. Since we pay interest on that borrowed money, that makes China even richer.
This is why I am so obsessed with these trade issues. They truly are at the very heart of our long-term economic problems.
But most Americans don’t understand these things, and they seem to think that our debt-based paper economy can just keep rolling along indefinitely.
In the end, history will be the judge as to who was right and who was wrong.
In a fair election, my best estimate is that Donald Trump would win in a landslide.
But this election will not be fair. In fact, few of them are.
For Trump’s part, there is no doubt that he has been this year’s sensation. A newcomer to politics, he has thrown out all the conventional rules, played by his own, and found a captivated country hanging onto his every word. Love him, hate him, or somewhere in between… no one can look away from the spectacle.
After a war within the party and the convenient disposal of 16 conventional GOP contenders, Trump is now the official Republican candidate and he is in a strong position. Coming out of the relatively calm Republican National Convention and going into the tumultuous DNC, Trump has enjoyed soaring poll numbers while Hillary has been losing ground fast to the scandals and corruption revealed by Wikileaks and other related mouthpieces.
But the fat lady has not sung.
Hijacking the Party, Keeping Dissent Under Wraps
Hillary’s coronation last night as she formally accepted her party’s nomination could hardly have been more forced. The entire Democratic convention has been stage-managed to downplay the overwhelming noise from Bernie supporter who are outraged and feel betrayed by Hillary.
The entire convention has had a certain air to it, a quality that reveals the desperation for power, and the crisp sense of danger that brings with it.
To a casual observer, things might look typical enough, with a few sore losers and pipe dreamers wishing for an ideal country run by decent and fair people that either don’t exist or haven’t figured out how to win an election. But things are not typical – the paradigm is shifting. Politics realigns every 30 years or so, or at least that is the maxim that has held in political science. Only, the last shift has been 30 or 40 years overdue.
There is a reason for that, and the establishment has been fighting to stop the change for the past generation. They have faked out the cycle and kept the population under their thumb (when was the last time you saw a “real” presidential election that wasn’t a means to keeping the status quo?)
But delaying the inevitable won’t hold.
Why Trump Should Win…
As Michael Moore argued, Trump has been preaching the gospel of restoring America’s manufacturing, and is working to woo and turn to “red” the “blue” Rust Belt states where Americans once had strong middle class jobs, especially in Michigan, Ohio, Pennsylvania and Wisconsin. According to Moore’s numbers (which are cited to motivate support for Hillary and opposition to Trump), if Trump captures those key states in addition to the red states that Mitt Romney, a weak candidate, won in 2012, then Trump should win the electoral college:
I believe Trump is going to focus much of his attention on the four blue states in the rustbelt of the upper Great Lakes – Michigan, Ohio, Pennsylvania and Wisconsin. Four traditionally Democratic states – but each of them have elected a Republican governor since 2010 (only Pennsylvania has now finally elected a Democrat). In the Michigan primary in March, more Michiganders came out to vote for the Republicans (1.32 million) that the Democrats (1.19 million). Trump is ahead of Hillary in the latest polls in Pennsylvania and tied with her in Ohio. Tied? How can the race be this close after everything Trump has said and done? Well maybe it’s because he’s said (correctly) that the Clintons’ support of NAFTA helped to destroy the industrial states of the Upper Midwest.
In fact, Moore is right. Nobody wants any more Flint, Michigans (where the water is contaminated and poverty seems to be airborne and contagious), least of all Michael Moore.
Trump’s appeal is much broader than just his sensational antics and controversial statements. He is resonating with America because he is speaking to the wounds of those struggling to cling to what’s left of the middle class American Dream.
And the strength of Trump’s position there is buttressed by the cold fact that the Clinton’s strong support for NAFTA played a major role in the downward spiral of the Rust Belt, and many other parts of the United States.
Trump’s appeal to bringing jobs back to America has to sound like not only a good campaign strategy, but an actual sound idea.
Things have reached a point where nearly every American – regardless of how little they pay attention to news and world affairs – is feeling the damage that has been done. NAFTA, GATT, the WTO and an entire shift into pseudo-governing structures of globalism that have eaten away at the sovereignty of the United States and devoured the prosperity of its people have taken a serious toll on our way of life. And we have all been programmed to take it lying down.
The steady flow of funny money, artificially pumped out by the Federal Reserve has kept many from noticing it, but the real world effects are still hitting people on the street. Not only does the dollar not go as far as it used to, but everything in life is increasing in cost, and getting watered down in value and substance. Society is acting out one big charade, and pretending not to notice the outrage, dissent and anger seeping through the cracks and edges.
Inevitable and determined to win at all costs
Rather than let that burst on her watch, and during the only opportunity she has left in this lifetime, Hillary Clinton and her minions have rearranged all the deck chairs in her favor to force a win. It certainly hasn’t come from the grassroots. Where necessary, the Democratic party has fudged primaries and stolen them outright. The mainstream media has been scripted around her as an anointed figure who is untouchable and beyond reproach. They have stifled exposure of Bernie and would have done so to any other rival… if only any others had dared to enter the race.
Instead, the campaign to elect Hillary became an unrelenting junta to force her into office in spite of the will of the people, the rules of the game or the ever-expanding negative image of the former First Lady, Senator and Secretary of State whose corruption and ties to bad deeds are both legendary and sufficiently documented to warrant life without parole.
There was a never a realistic chance that Hillary would be prosecuted or even reprimanded over her email scandals, because the fix was in a long time ago. Those who would theoretically hold her into account were appointed by her husband, or by President Obama, and their cooperation was assured in private.
Though many have argued that you can’t put lipstick on a pig, that is exactly what has taken place. 2016 is more of a farce than ever… and there is still another round to go.
Only One Persons Stands Between Her and the Presidency
Can anyone else see that the most rigged and stolen election of all time is shaping up? If the Democratic party doesn’t want Hillary, what makes anyone think the entire country wants anything to do with her?
Before you answer that openly, make a strong educated guess about who the next president is going to be… and how many bodies she will have to climb over to get there.
What Wikileaks exposed with Debbie Wasserman Schultz and the DNC, and what the emails have revealed about Hillary and the Clinton Foundation are surely only the tip of the iceberg. The stories of the delegates who were silenced or kicked out of the convention, and many other deceitful acts to destroy dissent and keep up appearances suggest some of the rest of the story… and it is anything but democratic or “of the people” – though very likely the whole of it will never be known.
There is something very, very wrong going on and it is time that everyone – regardless of ideology, party affiliation or politics – needs to face up to. Preliminary evidence indicates strongly that there has been a very carefully orchestrated coup taking place… and if successful, it will have only one logical conclusion:
Total power, at any price, with a facade of support and momentum that just isn’t there from anyone other than a handful of elite billionaires, and a cadre of clients with addresses that are either foreign or based on Wall Street.
If you missed the convention coverage, then you have got to see Hillary playing with the balloons after her speech.
There really is no wondering who she is concerned about… herself, of course.
As I mentioned above, it is reminiscent – even spot on – of Charlie Chaplin’s amazing parody in The Great Dictator, where his version of a Hitler-esque autocrat toys with the world as his plaything.
We are in for a world of hurt if what I think is going to happen turns out. The entire democratic process is being pushed back under the water, and a crude, fake smile is broadcast for appearances, while holding it all down.
09.12.2015 Author: Henry Kamens
Before oil is sold, it is tested. Oil test labs know exactly where the oil they test comes from and where it goes. We knew this even before the Las Vegas Sun broke a story about it.
But even though this story provided confirmation that there is no mystery about the oil sales funding ISIS, or the mechanism behind them, it hasn’t prevented these sales and transports continuing. This is because the logistics behind them are so sophisticated, and overseen at such a high level, that it is very difficult to isolate and expose the weak links in the chain.
When Bob Woodward of Watergate fame investigated drug use in Hollywood for a biography he found it more difficult to get to the truth than he had with Watergate, because the film industry closed ranks. Imagine how hard it is to expose what world governments are doing to support terrorism, when they try so hard to pretend they are doing the opposite. But maybe, just maybe, enough fingers are pointing in one direction to make it easier for other players to find an alternative, and sacrifice an ally along the way.
Would-be emperor with no clothes
We don’t know all the players involved in the transport and sale of ISIS oil. Inevitably, many are actually reputable oil testing and transport companies who go through the same procedures every day without them being called into question. But a few names which keep cropping up are a bit less than reputable, largely due to the concerns over their existing connections and how they maintain the bottom line.
One of these is Genel Energy Plc. This is one of the Rothschild companies, which should start alarm bells ringing in itself. Giving it the benefit of the doubt, we can say that it has made vast investments in Syria and Northern Iraq and it would make more business sense if it could deal with one compliant government in these countries rather than two unreliable ones. Taking a less charitable line, we can suggest, as some pundits have, that there has long been a Rothschild plan to create a Kurdish state for this purpose, and it was in the works even before the 9/11 attacks.
However, no one is going to sacrifice the Rothschilds, who can buy and sell any country on earth, and through investing in military actions. So if one of the players has to be cut out for being an embarrassment, it would have to be one the West already has plenty against. This is where, once again, Turkish president Recep Tayyip Erdogan comes in. He and his clan have made a lot of money by abusing their authority to become major components in this business. But if anyone has to take a fall to keep the operation running, they are the prime targets, and they know it.
Divorce of convenience
Turkey is a US ally because of where it is. It may be under constant disapproval for being everything the West claims to oppose, but as long as it is useful that doesn’t matter, unless, of course, you have the misfortune to live there.
One of Turkey’s most useful features is its ports – or rather, certain ports not actually in Turkey. Under the Treaty of Kars, signed in 1921, the area now known as the Adjarian Autonomous Region was ceded by the transitional Turkish state to the Georgian Soviet Socialist Republic. However, one clause of that agreement states that Turkey has the right to transport goods in and out of the port of Batumi without paying any duties and can use the port whenever it wants without paying any duties. In effect, this means it retains control of Batumi’s port facilities, and can classify them as a “strategic interest”.
This arrangement has several useful aspects. Firstly, the Georgian authorities cannot police the port. Turkey can do whatever it wants there, transporting goods which would be too risky to move elsewhere, and Georgia’s best bet is to claim a piece of the inevitable action. Secondly, as the port is a “strategic interest” any threat to it can be met with a military response, under another clause of the Kars treaty. Get too close, Turkey sends troops in, you risk World War Three over some dodgy goods.
Thirdly, the port was once in the Soviet Union and is now very close to Russia. People, as well as goods, can be smuggled through it, and this has created the smoke-and-mirrors world Batumi presents today, in which no one knows who really controls what. It has long been known as a can of worms best steered clear of, and this is the advice routinely given to reporters, diplomats, businessmen and even Black Sea holidaymakers who get too close to something they aren’t even aware of.
The nature of this port operation was confirmed in 2007. In that year Georgia embarked on an investigation into alleged Russian spies in its Ministry of Defence, including links to Saybolt Georgia. This was conducted with the help of Turkish and Israeli intelligence, but focused not of the Georgian MoD itself but on Batumi, where a thorough investigation was done into everything no one else is allowed to get near. It goes deeper than that … but let’s start with pipeline wars and all kinds of intrigue for the record.
It was later alleged that Russia had set up a spying facility in Batumi, disguised as an oil testing laboratory. But that would have nothing to do with the Ministry of Defence. The ministry’s name had been used to justify bringing in outside intelligence services for another purpose, Georgia having its own intelligence service, which calls in the CIA, not Turkey and Israel, when it wants extra help. So several of the managers of Saybolt Georgia, Armen Gevorkian, director and Ruben Shikoian, his deputy were arrested based on trumped up spy charges. The purpose was to secure actual control of oil exports from Georgia, and this was done in collaboration with Turkish intelligence—as now there would be no oversight.
When the long-preplanned Georgia-Russia war came the following year some regional analysts wondered why Georgia’s largest seaport was not being bombed by Russian planes. Israel is, of course, always seeking friendly terms with Russia as well as being a US ally, and secures a regular supply of oil through Batumi. They also asked why the war only lasted eight days, despite the Western protestations of support for Georgia. Turkey’s behind-the-scenes reminders of its right to intervene to protect its interests, and the disruption this would cause to global oil supplies, go a long way to explaining this.
So it is hardly surprising, given this background, that influential people in the Turkish state use the port for their own purposes. These include the son of President Erdogan. Bilal Erdogan owns the BMZ group, a marine transport company. Of all the companies he might own, this is the one he considers the most useful and unimpeachable.
Both Russia and Syria have openly accused the Erdogan family of transporting undocumented crude oil deriving from ISIS. Russia has also stated that the shooting down of its plane was retaliation for Russia bombing truckloads of oil supplies near the Syrian border.
Obviously the Erdogans deny all this. But Turkey is known to have smuggled Kurdish crude oil through another port, Ceyhan, for years. That port is state-owned. It is also Turkish state policy to support the Syrian opposition through oil sales, alongside the Western powers who arm, fund and train them, and therefore a state-controlled oil smuggling mechanism must exist and be part of a wider Western oil supply operation.
Turkey is serving a purpose, in exchange for the usual payoffs. But maybe the gravy train is about to come to an end. It is possible for test labs to tell exactly where the oil came from. Exactly!
Proof of the pudding
All the information now being released in the Western media conveniently smears Turkey. It is not the only country involved of course. But it is the one which will suffer most when the West tries to continue its game by investigating the allegations which are now being made.
When oil tankers arrive at their destinations the oil they carry can be retested. If results are falsified in Batumi or elsewhere, this will be picked up later on. At the moment the BTC oil pipeline, which passes through Batumi and Ceyhan (the ‘B’ and ‘C’ of its name) does not keep backup samples after testing, which suggests that some of the oil going through it is not what it is purported to be. But this must have been exposed elsewhere, by end users who may now be being given the signal that to maintain their existing supplies, it is in their interests to say what they know.
After all, this process has been gone through before. One of the oil testing labs in Batumi was once run in collaboration with a company called Saybolt Georgia. It parent company, based in The Netherlands, has a sordid history, having been implicated in Food for Oil deals with Iraq between 1996 and 2003.
Saybolt was set up as a scapegoat by US testing company Intertek Caleb Brett, working with US and Turkish intelligence. These parties raised no objection when it hired the son of Alex Bakradze, the former Head of State Security for former Adjarian ruler Aslan Abashidze. When the time came, Caleb Brett dropped the word and it was reported that Saybolt wasn’t all it presented itself as. Saying it was obliged to investigate its own allegations, it discovered that the head of the testing had had no qualifications whatsoever and removed several staff for having failed drug tests, which were of course undertaken in-house.
Thereafter Saybolt’s history revealed, and its connection with Bakradze and the reviled regime his father worked for made public knowledge. Caleb Brett did not pretend this was anything other than a plot: one of its management told one of the dismissed employees, “I can continue to list all non-conformities in QHSE/Compliance, Georgian Branch to explain the departure of one testing employee who was terminated and to share it with the media”.
It is no coincidence that both the BTC pipeline and the smaller Baku-Supsa pipeline are often down for repairs. The oil is merely abstracted from the point at which the repairs are being made, usually before it arrives to Georgian pumping station number 2, and sold on to third parties who use other routes controlled by the same logistics mechanism, off the books. Employing incompetents appears, on the surface, to give a very good reason for undertaking repairs. The repairs themselves also involve filling the pipeline with oil which has not been documented or tested, as theoretically, it isn’t being sent there, until the next political realignment of the logistics arrangements needs to take place.
Ignorance is not bliss
Few would shed tears if the Erdogan family were brought down by oil testing as the case study shows in Georgia. Turkey would likewise present itself as cleansed of its rotten apples, with the same vigour the US displays when distancing itself from Richard Nixon, whose many crimes were not only known about but encouraged by many of those who vilify him today. Then it would continue as an ally on new terms, and we would be told that its ISIS-funding past had been forgotten.
The mechanism for doing this is there, as Caleb Brett tests everything which passes through the BTC pipeline and always has. It has enough knowledge to bring Turkey’s leadership down overnight, and the information we are now receiving indicates that it is interested in doing this. It would also implicate itself of course, and its US and Turkish intelligence partners, if the full extent of its institutional knowledge was revealed. But only the discredited Turks will reveal it, while the international logistics mechanism will be subtly rejigged, with different players, and supplies of ISIS oil to the West, which suit both parties, will continue.
Insider sources claim that these same companies, and players, are tied in with the tankers used today in the smuggling of ISIS oil, and that nexus will give us the link with a group of Georgians working out of the Ukrainian port of Odessa, including former Georgian president Mikheil Saakashvii.
When Jimmy Carter was US president he made a number of public addresses about energy, including his famous “malaise” speech. He eventually stopped doing it because the American people were no longer listening. You can get away with a lot if people aren’t really interested in what you’re doing. The progressive exposure of the Erdogan family’s oil smuggling for ISIS will bring down an ally which has pushed its luck too far, but that, rather than what they have done, will be the story.
The actual oil smuggling, and devastation it funds and causes, continue because none of us care enough to stop it. But that is no excuse for cynically exploiting the fact to destroy your own allies, simply because you have the power to do so.
Henry Kamens, columnist, expert on Central Asia and Caucasus, exclusively for the online magazine “New Eastern Outlook”.
By Bill Bonner Of Bonner And Partners
Literally, Your ATM Won’t Work…
While we were thinking about what was really going on with today’s strange new money system, a startling thought occurred to us.
Our financial system could take a surprising and catastrophic twist that almost nobody imagines, let alone anticipates.
Do you remember when a lethal tsunami hit the beaches of Southeast Asia, killing thousands of people and causing billions of dollars of damage?
Well, just before the 80-foot wall of water slammed into the coast an odd thing happened: The water disappeared.
The tide went out farther than anyone had ever seen before. Local fishermen headed for high ground immediately. They knew what it meant. But the tourists went out onto the beach looking for shells!
The same thing could happen to the money supply…
There’s Not Enough Physical Money
Here’s how… and why:
It’s almost seems impossible. Hard to imagine. Difficult to understand. But if you look at M2 money supply – which measures coins and notes in circulation as well as bank deposits and money market accounts – America’s money stock amounted to $11.7 trillion as of last month.
But there was just $1.3 trillion of physical currency in circulation – about only half of which is in the US. (Nobody knows for sure.)
What we use as money today is mostly credit. It exists as zeros and ones in electronic bank accounts. We never see it. Touch it. Feel it. Count it out. Or lose it behind seat cushions.
Banks profit – handsomely – by creating this credit. And as long as banks have sufficient capital, they are happy to create as much credit as we are willing to pay for.
After all, it costs the banks almost nothing to create new credit. That’s why we have so much of it.
A monetary system like this has never before existed. And this one has existed only during a time when credit was undergoing an epic expansion.
So our monetary system has never been thoroughly tested. How will it hold up in a deep or prolonged credit contraction? Can it survive an extended bear market in bonds or stocks? What would happen if consumer prices were out of control?
Less Than Zero
Our current money system began in 1971.
It survived consumer price inflation of almost 14% a year in 1980. But Paul Volcker was already on the job, raising interest rates to bring inflation under control.
And it survived the “credit crunch” of 2008-09. Ben Bernanke dropped the price of credit to almost zero, by slashing short-term interest rates and buying trillions of dollars of government bonds.
But the next crisis could be very different…
Short-term interest rates are already close to zero in the U.S. (and less than zero in Switzerland, Denmark, and Sweden). And according to a recent study by McKinsey, the world’s total debt (at least as officially recorded) now stands at $200 trillion – up $57 trillion since 2007. That’s 286% of global GDP… and far in excess of what the real economy can support.
At some point, a debt correction is inevitable. Debt expansions are always – always – followed by debt contractions. There is no other way. Debt cannot increase forever.
And when it happens, ZIRP and QE will not be enough to reverse the process, because they are already running at open throttle.
The value of debt drops sharply and fast. Creditors look to their borrowers… traders look at their counterparties… bankers look at each other…
…and suddenly, no one wants to part with a penny, for fear he may never see it again. Credit stops.
It’s not just that no one wants to lend; no one wants to borrow either – except for desperate people with no choice, usually those who have no hope of paying their debts.
Just as we saw after the 2008 crisis, we can expect a quick response from the feds.
The Fed will announce unlimited new borrowing facilities. But it won’t matter….
House prices will be crashing. (Who will lend against the value of a house?) Stock prices will be crashing. (Who will be able to borrow against his stocks?) Art, collectibles, and resources – all we be in free fall.
The NEXT Crisis
In the last crisis, every major bank and investment firm on Wall Street would have gone broke had the feds not intervened. Next time it may not be so easy to save them.
The next crisis is likely to be across ALL asset classes. And with $57 trillion more in global debt than in 2007, it is likely to be much harder to stop.
Are you with us so far?
Because here is where it gets interesting…
In a gold-backed monetary system prices fall. But the money is still there. Money becomes more valuable. It doesn’t disappear. It is more valuable because you can use it to buy more stuff.
Naturally, people hold on to it. Of course, the velocity of money – the frequency at which each unit of currency is used to buy something – falls. And this makes it appear that the supply of money is falling too.
But imagine what happens to credit money. The money doesn’t just stop circulating. It vanishes. As collateral goes bad, credit is destroyed.
A bank that had an “asset” (in the form of a loan to a customer) of $100,000 in June may have zilch by July. A corporation that splurged on share buybacks one week could find those shares cut in half two weeks later. A person with a $100,000 stock market portfolio one day could find his portfolio has no value at all a few days later.
All of this is standard fare for a credit crisis. The new wrinkle – a devastating one – is that people now do what they always do, but they are forced to do it in a radically different way.
They stop spending. They hoard cash. But what cash do you hoard when most transactions are done on credit? Do you hoard a line of credit? Do you put your credit card in your vault?
No. People will hoard the kind of cash they understand… something they can put their hands on… something that is gaining value – rapidly. They’ll want dollar bills.
Also, following a well-known pattern, these paper dollars will quickly disappear. People drain cash machines. They drain credit facilities. They ask for “cash back” when they use their credit cards. They want real money – old-fashioned money that they can put in their pockets and their home safes…
Let us stop here and remind readers that we’re talking about a short time frame – days… maybe weeks… a couple of months at most. That’s all. It’s the period after the credit crisis has sucked the cash out of the system… and before the government’s inflation tsunami has hit.
As Ben Bernanke put it, “a determined central bank can always create positive consumer price inflation.” But it takes time!
And during that interval, panic will set in. A dollar panic – with people desperate to put their hands on dollars… to pay for food… for fuel…and for everything else they need.
Credit may still be available. But it will be useless. No one will want it. ATMs and banks will run out of cash. Credit facilities will be drained of real cash. Banks will put up signs, first: “Cash withdrawals limited to $500.” And then: “No Cash Withdrawals.”
You will have a credit card with a $10,000 line of credit. You have $5,000 in your debit account. But all financial institutions are staggering. And in the news you will read that your bank has defaulted and been placed in receivership. What would you rather have? Your $10,000 line of credit or a stack of $50 bills?
You will go to buy gasoline. You will take out your credit card to pay.
“Cash Only,” the sign will say. Because the machinery of the credit economy will be breaking down. The gas station… its suppliers… and its financiers do not want to get stuck with a “credit” from your bankrupt lender!
Whose credit cards are still good? Whose lines of credit are still valuable? Whose bank is ready to fail? Who can pay his mortgage? Who will honor his credit card debt? In a crisis, those questions will be as common as “Who will win an Oscar?” today.
But no one will know the answers. Quickly, they will stop guessing… and turn to cash.
Our advice: Keep some on hand. You may need it.
APRIL 14, 2015
ISIS is operating a camp just a few miles from El Paso, Texas, according to Judicial Watch sources that include a Mexican Army field grade officer and a Mexican Federal Police Inspector.
The exact location where the terrorist group has established its base is around eight miles from the U.S. border in an area known as “Anapra” situated just west of Ciudad Juárez in the Mexican state of Chihuahua. Another ISIS cell to the west of Ciudad Juárez, in Puerto Palomas, targets the New Mexico towns of Columbus and Deming for easy access to the United States, the same knowledgeable sources confirm.
During the course of a joint operation last week, Mexican Army and federal law enforcement officials discovered documents in Arabic and Urdu, as well as “plans” of Fort Bliss – the sprawling military installation that houses the US Army’s 1st Armored Division. Muslim prayer rugs were recovered with the documents during the operation.
Law enforcement and intelligence sources report the area around Anapra is dominated by the Vicente Carrillo Fuentes Cartel (“Juárez Cartel”), La Línea (the enforcement arm of the cartel) and the Barrio Azteca (a gang originally formed in the jails of El Paso). Cartel control of the Anapra area make it an extremely dangerous and hostile operating environment for Mexican Army and Federal Police operations.
According to these same sources, “coyotes” engaged in human smuggling – and working for Juárez Cartel – help move ISIS terrorists through the desert and across the border between Santa Teresa and Sunland Park, New Mexico. To the east of El Paso and Ciudad Juárez, cartel-backed “coyotes” are also smuggling ISIS terrorists through the porous border between Acala and Fort Hancock, Texas. These specific areas were targeted for exploitation by ISIS because of their understaffed municipal and county police forces, and the relative safe-havens the areas provide for the unchecked large-scale drug smuggling that was already ongoing.
Mexican intelligence sources report that ISIS intends to exploit the railways and airport facilities in the vicinity of Santa Teresa, NM (a US port-of-entry). The sources also say that ISIS has “spotters” located in the East Potrillo Mountains of New Mexico (largely managed by the Bureau of Land Management) to assist with terrorist border crossing operations. ISIS is conducting reconnaissance of regional universities; the White Sands Missile Range; government facilities in Alamogordo, NM; Ft. Bliss; and the electrical power facilities near Anapra and Chaparral, NM.