How gold performs in deflation

Despite the undue attention that has been paid to the chimera of inflation this year, it should be clear by now that deflation is the far greater structural problem. One clue that deflation, not inflation, is the main issue can be seen in the biggest form of savings and investment among the U.S. middle class, namely real estate.

Real estate is an excellent asset to own during the inflationary phase of the long-term cycle of inflation/deflation but it’s one of the worst assets to own during hyper deflation. As an illiquid asset, housing prices tend to depreciate in the final years of the deflationary winter season, as many have discovered. This is one of the biggest proofs that the economic long wave, or Kondratieff Wave, is still in its deflationary phase and hasn’t bottomed yet.

Consider the following real estate prognosis from Doug Ramsey, an analyst with the Minneapolis investment firm Leuthold Group. Ramsey has calculated that single-family housing starts would have to increase from 60 to 70 percent from their current 50-year low of 419,000 annual rate just to reach the average low of the past six housing busts since 1960. Needless to say this would be asking a lot for even an energetic housing market.

Ramsey, who is an avid student of financial history and has studied numerous financial bubbles, has said that every housing statistic he follows has so far matched the price pattern following the bursting of other asset bubbles. According to Ramsey, asset bubble collapses tend to follow a similar pattern, including most famously the 1929 stock market crash and Japan’s 1989 Nikkei crash. He says it starts with a steep decline lasting three to four years followed by a brief rally that is followed by years of stagnation. He points out that the Dow Jones Industrial Average took 35 years to return to pre-crash levels. Japan’s Nikkei stock market index, meanwhile, trades at less than a third of its 1989 peak.

Ramsey concludes, “The housing decline will be a long, multiyear process, and the multiplier effect across the economy will be enormous.” Until housing prices bottom investors are safe in assuming that deflation is the dominant trend underscoring the economy, notwithstanding occasional periods of Fed-induced (QE) pockets of inflation.

Many investors have asked, “If deflation is the main problem facing the economy, why should I own gold?” Gold, they reason, is an inflationary hedge and if that be so, how can it possibly benefit from deflation?

Gold is more than an inflationary hedge, however. As Samuel Kress has shown in his cycle work, gold benefits from both extremes of the 60-year cycle, namely hyper inflation and hyper deflation. During the inflationary period of the current 60-year cycle in the 1970s, gold benefited from the extreme inflation as the cycle was peaking. In more recent times gold has benefited from deflation while the cycle is declining. Consequently, investors look to the precious metal for financial safety in times of uncertainty.

Gold has in fact become the new long-term investment vehicle of choice for retail investors. Traditional forms of savings such as real estate have become depreciating assets and no longer offer protection against the ravages of the long-term cycle. Meanwhile savers are punished with extremely low interest rates while the value of the currency diminishes through central bank money printing schemes. It’s no wonder then that investors are turning to the yellow metal as the safe haven du jour during the “winter” season of the 60-year/120-year cycle.

Gold is in the unique position of benefiting from Fed-driven inflation, as the recent quantitative easing program proved. Yet it also derives strength from uncertainty in the global financial and economic outlook. Certainly there have been more than a few instances of this in recent years. A survey of the year-to-date alone would suffice to provide enough examples of how gold has benefited by the recurrence of worry. The current worry among investors is how a potential Greek debt default would impact global markets. In the last few days since this worry has made headlines, the gold price has managed to climb from its June correction low of $1,483 to its latest high of $1,563.

The current leadership of the Federal Reserve are committed to fighting against the forces of long wave deflation and have shown a steely determination in carrying out an anti-deflationary policy. This can be clearly seen in the Fed’s first and second “quantitative easing” programs, a dignified term for fighting deflationary pressure by increasing debt. The latest round of quantitative easing (QE) ended on June 30, yet on Tuesday, July 12, the Fed released the minutes of its June meeting and hinted that a third round of QE may be in the offing. The minutes suggested that most members of the Fed’s board of governors would favor another round of QE if the economy continues to show signs of weakening. This may have been one reason behind gold’s spike to new highs on Tuesday.

Gold should ultimately benefit from either course of action, whether it be the uncertainty that accompanies long wave deflation or the artificial boost in asset prices brought about by quantitative easing. This is one reason why gold remains the investment safe haven du jour in the final years of the deflationary cycle.

Gold & Gold Stock Trading Simplified

With the long-term bull market in gold and mining stocks in full swing, there exist several fantastic opportunities for capturing profits and maximizing gains in the precious metals arena. Yet a common complaint is that small-to-medium sized traders have a hard time knowing when to buy and when to take profits. It doesn’t matter when so many pundits dispense conflicting advice in the financial media. This amounts to “analysis into paralysis” and results in the typical investor being unable to “pull the trigger” on a trade when the right time comes to buy.

Not surprisingly, many traders and investors are looking for a reliable and easy-to-follow system for participating in the precious metals bull market. They want a system that allows them to enter without guesswork and one that gets them out at the appropriate time and without any undue risks. They also want a system that automatically takes profits at precise points along the way while adjusting the stop loss continuously so as to lock in gains and minimize potential losses from whipsaws.

In my latest book, “Gold & Gold Stock Trading Simplified,” I remove the mystique behind gold and gold stock trading and reveal a completely simple and reliable system that allows the small-to-mid-size trader to profit from both up and down moves in the mining stock market. It’s the same system that I use each day in the Gold & Silver Stock Report the same system which has consistently generated profits for my subscribers and has kept them on the correct side of the gold and mining stock market for years. You won’t find a more straight forward and easy-to-follow system that actually works than the one explained in “Gold & Gold Stock Trading Simplified.”

The technical trading system revealed in “Gold & Gold Stock Trading Simplified” by itself is worth its weight in gold. Additionally, the book reveals several useful indicators that will increase your chances of scoring big profits in the mining stock sector. You’ll learn when to use reliable leading indicators for predicting when the mining stocks are about o break out. After all, nothing beats being on the right side of a market move before the move gets underway.

The methods revealed in “Gold & Gold Stock Trading Simplified” are the product of several year’s worth of writing, research and real time market trading/testing. It also contains the benefit of my 14 years worth of experience as a professional in the precious metals and PM mining share sector. The trading techniques discussed in the book have been carefully calibrated to match today’s fast moving and volatile market environment. You won’t find a more timely and useful book than this for capturing profits in today’s gold and gold stock market.

The book is now available for sale at:

Order today to receive your autographed copy and a FREE 1-month trial subscription to the Gold & Silver Stock Report newsletter. Published twice each week, the newsletter uses the method described in this book for making profitable trades among the actively traded gold mining shares.

Clif Droke is the editor of Gold & Silver Stock Report, published each Tuesday and Thursday. He is also the author of numerous books, including most recently, “Gold & Gold Stock Trading Simplified.” For more information visit Welcome to Clif Droke dot com

I Have Good News and Bad News about the Mining Stocks

By: Kenneth J. Gerbino

Let’s start with the big picture:No deflation
Debt defaults and bailouts in Europe are coming and will be met with paper money creation
Inflation is in the Pipeline
Interest Rates Must go up with Inflation
Mid East chaos will affect the oil price
Austerity measures could take hold but slowly in EU, England and maybe the U.S.
Gold and Silver now looked at as Monetary Insurance by a wide universe

Next is the Good News and the Bad News but and then a practical solution for you to ride the great roller coaster of the precious metals. It is the solution we use at the Gerbino Gold Group LLC mining fund.

First the Good News for the Bullish Case
In 1980, Gold and Gold Stocks were 2.5% of all Global liquid assets and that was a bubble. Today they are less than 1%.To catch up with 1980, $4.5 trillion of gold needs to be produced (40 years of mine supply) or the price needs to go much higher, which means we are along way off from the next bubble.
Latest annual money supply increases from gold and silver buying countries: China: 15.6%, India: 13.2%, Brazil: 12.9%, USA: 12.8%, Switzerland: 9.2%. Inflation is coming to these countries.
Real interest rates in China and India are negative. -2.4% and -1.5% respectively. This is always a basic support for gold and silver prices
Annual budget deficits as % of GDP predicts even more money to be created. UK: 11.4%, Spain: 11.1%, USA: 9.2%, Japan: 8.4%, Euroland: 6.3%, India 5.1%
Central Banks are buying gold. They sold over 6500 tonnes at average price of $475 between 1992 and 2007. Now they are buyers and have almost unlimited funds
Mine supply versus money creation annually is about 1 to 25. Considering a lot of that gold goes into jewelry, the ratio of investment gold (bullion jewelry, bars, coins) is easily 1 to 50. This means, as an alternative investment or money substitute, the ratio is saying too much new money not enough new gold
There are many people in India and China who will be buying gold and silver as these economies grow and inflation shows up.

The above would lead one to believe the mining stocks should be selling at much higher prices. The majors are currently selling at only 8-10 times 2012 expected cash flow – very conservative cash flow multiples for any industry sector.

Now for the Bad News
All the bullish news above has already been discounted by the gold and silver markets and the investment community that buys mining stocks. This is why gold and silver are roughly 600-900% higher than a decade ago.
The horrendous problems of Portugal, Spain, Greece and the U.S. has been dissected and known and is already in the price of the metals currently
The bullish consensus for gold was over 96% a few weeks ago. That means everyone is in the pool. A negative sign.
The recent correction in Silver was a major crack in the bullish scenario and this needs to be respected. One of the few writers/analysts who called this top in silver was Bob Moriarty. An impressive call backed up by solid thinking and research
The mining community in Canada has flooded the world with new mining companies over the last 5 years and that has diverted money from your favorite stocks
The Gold ETF (GLD) is a new player in town and billions of “gold related” investment capital has found an easy home here instead of mining shares
Many huge gold players are not committed philosophically to the metals. These are people that still think inflation is “cost push” or that the Fed should control interest rates or that a little bit of easy credit and money printing is good for business. They only bought gold because it was going up. If it stalls they will be big sellers just like the silver players the last two weeks
Real estate may start to compete with gold for a long term inflation hedge as prices in many parts of Europe and the U.S. are at very low levels
The deflation crowd (plenty of big money managers in this group) who bought gold because of deflation are seeing no deflation and selling. They are not that concerned yet about inflation. When inflation does return they will probably be back buying the metals for that reason
China and India are growing because of outrageous money supply increases propping up the economies beyond what would be considered normal. If a recession hits these countries, even a short term one, gold and silver buying could dry up for some period of time.
Remember all this bad news may be discounting events that could take place 6-12 months from now so take that into consideration

What to Do

Mining stocks are not excessively valued. The world has plenty of challenges that look to make investing in gold and silver a “no brainer”, yet most of the quality mining shares have been going nowhere for 6-9 months and silver has just had a huge sell off and gold could follow with a nasty correction.

Because of the volatility of the precious metal markets one has no choice but to divide your portfolio into a 50% core position and 50% trading position. One cannot tag along and hold onto your gold stocks when gold hits $2,000 and then corrects back to $1,200…then goes to $2,500 and then back to $1,500 and then to $3,000 over the next 10 years or whenever.

If nothing else your mental health and your spouse will drive you crazy if you just sit back and take it on the chin on the big pullbacks. So the solution of a 50-50 portfolio allows you to have your monetary insurance by owning a core position in the mining stocks (hopefully with solid growth and value attributes) and having a mind set of selling on big run ups the other 50% and taking some off the table and coming back on sell offs. This trading could be once or twice a quarter or whatever suits your mind. Make it a common sense trading mentality. Hit some singles and doubles and even bunts with this 50%. Leave the big homeruns for the other 50% over the long term. I get up every morning and I could care less which way the gold and silver price is going as I am hedged as well as looking for trading opportunities all the while having a solid core position always.

There is so much money in the world today and so much debt that the forces that move markets are now huge. There are also so many money managers with gigantic assets under their control who do not understand gold or solid Austrian school economics who will see the world 180 degrees different than you as a philosophical gold stock investor. So take advantage of this.

Read this Book

Friend John Mauldin has written an important book. He has managed to combine solid investment advice, economic reasoning and a host of graphs and wisdom from very smart people he refers to the reader.

The title of the book is Endgame and is published by Wiley. This book is on the bestseller lists and is loaded with so many insights I found myself dog-earing many pages (for later reference) and scribbling notes everywhere….always a sign of a good book for me.

He pounds home convincingly one the best concepts you need to know today to preserve your money. By consulting history and a host of economic studies he is telling his readers that when certain economic scenarios are present – like right now in almost all countries – history shows that without warning and seemingly out of nowhere comes a trigger event and then a major panic, a collapse or big bang default that mushrooms and destroys asset values beyond reason. He is warning people that one tipping point in unsustainable government debt in the U.S. and elsewhere that could erupt in an unpredictable form at any time and create havoc beyond what even the skeptics believe.

Mauldin is a seasoned writer who mixes investment savvy as well Will Durant style comments that make the read enjoyable. Quips like this to his daughter…” no Melissa, that is not some Republican research conspiracy” and “we wrote this book so even a politician could understand it”

He is warning the world that global markets and investments are connected and that a panic over here or there or anywhere can affect global markets. The book is filled with quality revelations and data.

He devotes an entire chapter to a revealing study by two scholars that look back 800 years and analyze panics and crashes. The data, with his insights, is a tour d’ force of solid wisdom for investors.

The book then takes you to various countries and analyzes the risks and opportunities in each. This is a unique and commendable effort and one I don’t recall anyone ever doing before. He may not be right about deflation or inflation but at least you will have the concepts better understood.

All in all this is a book that deserves your attention. You will not fall asleep and will come out the other end prepared for the future.

A Must See Documentary

The greatest economist of our era was Nobel Laureate F.A. Hayek. Nobel Laureate Milton Friedman has said that the greatest economist that ever lived was F.A. Hayek. George Orwell was inspired to write his classic book, 1984, after reading Hayek’s great work The Road to Serfdom.

Years ago I took a film crew to Germany and interviewed Hayek. The interview has been turned into a documentary and is being entered into various film festivals around the world. This is the only interview in his career where he answered very controversial and politically sensitive questions.

His answers to these questions and his discussions of two dozen subjects pertaining to economics and politics very much relate to the investment climate today. This documentary, I believe, will be hailed as one of the greatest dissertations on economics ever recorded. Without using any big words and with brilliant clarity, the best of F.A. Hayek in a never before interview is now available.

The film is called The Hayek Prophecies and can be viewed at

If you have confusions or are unclear about economic concepts, this interview will set you straight.

For other economic and market commentaries please go to

Ken Gerbino

CFTC’s delay on position limits aggravates Chilton

Statement on Position Limits, “Keeping Promises”
Commissioner Bart Chilton
December 2, 2010

Statement on Position Limits, “Keeping Promises”

Yesterday the Commission held the sixth in a series of open meetings to address rules implementing the Wall Street Reform and Consumer Protection Act of 2010. I commend the CFTC’s staff for working diligently on the myriad rules mandated by the Act, even now in the face of a pay freeze. The staff of the CFTC truly exemplifies the meaning of “service” in the performance of their roles as dedicated public servants.

I am concerned, however, with regard to the potential derailment of what I consider to be one of the most important rules required by the Reform Act: implementation of speculative position limits. Congress put special emphasis on this provision, to protect markets and consumers from excessive speculation in commodities markets. Indeed, we were given a specific implementation date for position limits on energy and metals contracts—January 17, 2011—well in advance of the majority of other Reform Act rules. We have a commitment to enact this rule on time, a “promise to keep,” with the American consumer who is affected daily by the prices discovered on commodities markets.

The Commission had originally intended to discuss position limits at yesterday’s meeting; unfortunately, that did not occur. Now, it appears that the Commission does not intend to address position limits at its next scheduled open meeting, on December 9, 2010. This makes meeting the mandatory statutory deadline difficult, but certainly not impossible.

The Reform Act was passed over four months ago—this provision isn’t a “surprise” to anyone. It didn’t fall out of the sky. Of course there are issues surrounding its implementation, but none of those excuse us from meeting the statutory requirements Congress has given us. This proposal should be discussed on December 9th at the Commission’s next meeting; a proposal should be put out for public comment as soon as possible; and we should commit to meeting the statutory deadline. We can always find excuses, justifications, or pretexts for inaction—this rule is too important to let any of those get in the way of fulfilling our statutory responsibilities, and keeping our promise.

Rob Kirby: The Genesis of the Gold-Tungsten – The Rest of the Story

By Rob Kirby

Abstract: Back in October, 2009 I penned an article titled, A Blight on Humanity, where I reported that, in an Asian depository there had been found 60 metric tonnes of “Good Delivery” gold bricks that had been gutted and filled with tungsten. That article was followed up with, On Doing God’s Work, where additional information on the fake gold bricks was presented. This lengthy report has been written to provide the background and genesis of who was involved, why the fake gold was produced and how it was fed into the international gold market.

Background of the London Gold Pool: Cause and Effect

According to Wapedia:

The London Gold Pool was the pooling of gold reserves by a group of eight central banks in the United States and seven European countries that agreed on 1 November 1961 to cooperate in maintaining the Bretton Woods System of fixed-rate convertible currencies and defending a gold price of US$35 per troy ounce by interventions in the London gold market.
The central banks coordinated concerted methods of gold sales to balance spikes in the market price of gold as determined by the London morning gold fixing while buying gold on price weaknesses. The United States provided 50% of the required gold supply for sale. The price controls were successful for six years when the system became no longer workable because the world’s supply of gold was insufficient, runs on gold, the British pound, and the US dollar occurred, and France decided to withdraw from the pool. The pool collapsed in March 1968.

The London Gold Pool controls were followed with an effort to suppress the gold price with a two-tier system of official exchange and open market transactions, but this gold window closed in 1971 with the Nixon Shock, and resulted in the onset of the gold bull market which saw the price of gold appreciate rapidly to US$850 in 1980

So the London Gold Pool was an amalgamation of 8 countries “pooling” their gold reserves so that coordinated sales could be undertaken to defend a global gold price of US$35 per ounce. The problem with selling ANY physical asset to maintain an artificial price is preserving an adequate physical supply of the asset to continue the price fixing. The London Gold Pool failed because the U.S. Federal Reserve was printing too much fiat money – which informed individuals were redeeming for increasing amounts of sovereign U.S. gold bullion. In August 1971, President Nixon finally told the rest of the world, NO MORE GOLD BULLION FOR DOLLARS. The point to take away from this is that price-capping creates a constant drain or stress on supply of the commodity being suppressed in price.

Observable or Believable Physical Supply Must Back Paper Promises
That issues are emerging regarding the sanctity of the global gold bullion supply should not surprise anyone and, in fact, make intuitive sense. As the chart below supplied by the St. Louis Federal Reserve attests – a MASSIVE amount of fiat money has been printed in recent years. Using history of the London Gold Pool as our guide, we know from experience that physical supply of gold is MATERIALLY impacted when money is printed in excess. In this light, it makes a ton of sense that ANY deficiency or abnormality in the underlying physical stock of gold would be more susceptible or likely of being discovered during such time of monetary stress.

Tungsten Genesis

21st Century Breakdown

Gold-Speculator comment: Another great article by James Quinn

“Wherever we’re headed, America is evolving in ways most of us don’t like or understand. Individually focused yet collectively adrift, we wonder if we’re heading toward a waterfall. Are we?” Strauss & Howe The Fourth Turning

Political leaders and the mainstream media have been blindsided by the sudden mood shift of the country in the last few years. The reason they have been blindsided is they believe world history is linear. Liberals have now begun referring to themselves as progressives. These people think the world only progresses. The facts indicate otherwise.

History is cyclical. History is replete with grand empires like Rome, Spain and Britain. It is also replete with Dark Ages, depressions and wars. Strauss & Howe have established that history can be broken down into 80 to 100 year Saeculums that consist of four turnings: The High, The Awakening, The Unraveling, and the Crisis.
The First Turning is a High, an upbeat era of strengthening institutions and weakening individualism, when a new civic order implants and the old values regime decays.

The Second Turning is an Awakening, a passionate era of spiritual upheaval, when the civic order comes under attack from a new values regime.

The Third Turning is an Unraveling, a downcast era of strengthening individualism and weakening institutions, when the old civic order decays and the new values regime implants.

The Fourth Turning is a Crisis, a decisive era of secular upheaval, when the values regime propels the replacement of the old civic order with a new one.
This isn’t some variety of mystical Nostradamus conjecture trying to foretell the future. Strauss & Howe have been able to link the human life span to generational shifts in mood. This makes logical sense. As generations progress through the four stages of life their attitudes and views change. When you are born within the four cycles will greatly sway the course of your life. History forms individuals and generations as individuals and generations shape history. In this age of individualism, Americans are highly insulted by being lumped into a generational category. The fact is that a generation is composed of individuals who share common experiences, music, literature, and economic circumstances. This shared time frame leads to recurring attitudes and reactions to events. Generations come in four archetypes, always in the same order, whose phase-of-life positions comprise a constellation. They are:
The Prophet archetype is born in a High, enters young adulthood in an Awakening, midlife in an Unraveling, and elderhood in a Crisis.

The Nomad archetype is born in an Awakening, enters young adulthood in an Unraveling, midlife in a Crisis, and elderhood in a High.

The Hero archetype is born in an Unraveling, enters young adulthood in a Crisis, midlife in a High, and elderhood in an Awakening.

The Artist archetype is born in a Crisis, enters young adulthood in a High, midlife in an Awakening, and elderhood in an Unraveling.
During a Fourth Turning, the constellation contains all four archetypes born in the current saeculum. We are now in the midst of the fourth Crisis period in U.S. history. The previous Fourth Turnings The American Revolution, Civil War and Great Depression/World War II all required immense sacrifice and entailed great danger. There are only a few Americans alive who experienced and recall our last Fourth Turning. This is one of the foremost reasons the country seems surprised when the next Turning arrives. Just think about the response of politicians, mainstream media pundits, supposedly brilliant economists, and the elite thought leaders during the last five years. They have been blindsided by the housing collapse, worldwide financial crisis, election of Barack Obama, and furious rage of the Tea Party movement. This is because they prescribe to the belief the world only moves forward, never backward.

They failed to identify the signs of Crisis. Threats that have been ignored and/or deferred for decades are now coalescing into a once in a lifetime emergency that will require public consensus, aggressive action, and personal sacrifice. Leaders who think the old way of governing will continue to work are learning a difficult lesson. This is why so many old time politicians like Chris Dodd are fleeing Washington DC. A maelstrom of government debt, unfunded liabilities, looming energy catastrophe, and consumer collapse is about to hit the United States. There is no politician in Washington DC willing to stand up in front of the American people and tell them the truth about the storms on our horizon.

The Turnings in American History First
(High) Second
(Awakening) Third
(Unraveling) Fourth
(Crisis) Saeculum:
Augustan Age of Empire
Great Awakening
French & Indian Wars
American Revolution
Civil War
Era of Good Feelings
Transcendental Awakening
Mexican War & Sectionalism
Civil War
Great Power
Reconstruction & Gilded Age
Third Great Awakening
World War I & Prohibition
Great Depression & World War II
American High
Consciousness Revolution
Culture Wars
Millennial Crisis?

Born Into Nixon

Born into Nixon I was raised in hell.
A welfare child where the Teamsters dwelled.
The last one born and the the first one to run.
My town was blind from refinery sun.
We are the [cries of] the class of ’13
Born in the era of humility
We are the desperate in the decline
Raised by the bastards of 1969
Green Day 21st Century Breakdown

The music of today best captures the generational shifts and attitudes that reflect the true mood of the country. Billie Joe Armstrong, the lead singer of Green Day, was born into Nixon in 1972 in the midst of an Awakening. This was a period of upheaval and passion. He was the last child born to a large working class family in Oakland, California. His reference to hell refers to the lower blue collar city he grew up in. Oakland was an awful place to be raised in, with drugs, gang violence and racial unrest. His Dad died when he was 10 years old, leaving his five older siblings to raise him while his mother worked the graveyard shift as a waitress. The family was on welfare and Armstrong’s childhood was disconnected and discontented. He fits the classic Nomad (Generation X) description of a tough, hard edged pragmatist who does not trust government or corporations. Armstrong’s lyrics have always reflected his distrust of traditional institutions. His description of their current album reflects his Nomad view:

“The album is a snapshot of the era in which we live as we question and try to make sense of the selfish manipulation going on around us, whether it be the government, religion, media or frankly any form of authority.” Billie Joe Armstrong

The lyrics about the Class of 2013 reflect the fact that his eldest son Joseph will graduate high school in 2013. Born in 1995, he is part of the new Hero generation. This is the generation that will do the heavy lifting in the current Crisis. This cohort is known as the Millennial generation. This generation has been nurtured with increasing protection by pessimistic adults in an insecure environment. They will challenge the political failures of their elder leaders during the coming years, leading to a secular crisis. Armstrong’s son was born in an era of humility during the Unraveling. The Clinton years were a time of little action, with problems ignored and public civility declining. This generation has been raised by Generation X parents and will now be expected to guide the country through the desperate times ahead. If there are wars to fight, they will fight them. Since their elders have made impossible financial promises, the Millennials will have to make the sacrifices and tough decisions. Every generation will have their part to play in the current Crisis. Boomers will be the elder leaders who push the country to resolve the major issues of our time. They will summon the Heroes to make the ultimate sacrifice for the nation. Generation X will provide the tough resolute leadership in the midst of the Crisis, defending society. Let’s hope the country will produce Nomad leaders on par with previous Nomads – George Washington, Stonewall Jackson, George Patton and Dwight Eisenhower.

There is no way to avoid this Crisis. It can’t be bypassed. Just as the seasons must progress from Spring to Summer through Fall and into Winter, a Crisis must follow an Unraveling. History does not have a rewind button. Secular Winter has arrived and the country couldn’t be less prepared for the challenges ahead. The government and the governed enter this highly dangerous period weakened and fragile. The short-sighted economic choices and deferred fiscal decisions will collide with peak oil and uncontrolled globalization to inflict a horrific resolution to this Crisis. The gravity of our situation cannot be overstated. As politicians and the mainstream media play pretend games of recovery and false optimism, the country hurtles closer to the abyss. The country had a chance to prepare for this Winter by:
Forging consensus regarding the problems we face.
Preparing our governmental institutions for the challenges ahead.
Political leaders bluntly describing the issues before us, stressing duties over rights.
Developing community teamwork to solve local problems.
Treating our youth as a national priority.
Preparing elders for the sacrifices and unfulfilled promises in their future.
Reducing government and personal debt.
Conserve military resources for the long road ahead.
You may have noticed that as a country we not only did not prepare for Winter, we proceeded like it would never come. No leader has emerged to bluntly speak the truth to the American people. Culture wars still rage. Government has expanded and our military has been depleted in useless wars of choice. All that is left is for individuals to prepare their families for the immense challenges ahead.

Generation Zero

My generation is zero
I never made it
As a working class hero

21st century breakdown
I was once lost but never was found
I think I am losing what’s left of my mind
To the 20th century deadline.

Videogames of the tower’s fall
Homeland security could kill us all
Green Day 21st Century Breakdown

To comprehend what awaits us in the next fifteen years, the blizzards of 2010 provide a preview.

“Reflect on what happens when a terrible winter blizzard strikes. You hear the weather warning but probably fail to act on it. The sky darkens. Then the storm hits with full fury, and the air is a howling whiteness. One by one, your links to the machine age break down. Electricity flickers out, cutting off the TV. Batteries fade, cutting off the radio. Phones go dead. Roads become impossible, and cars get stuck. Food supplies dwindle. Day to day vestiges of modern civilization bank machines, mutual funds, mass retailers, computers, satellites, airplanes, governments all recede into irrelevance. Picture yourself and your loved ones in the midst of a howling blizzard that lasts several years. Think about what you would need, who could help you, and why your fate might matter to anybody other than yourself. That is how to plan for a saecular winter. Don’t think you can escape the Fourth Turning. History warns that a Crisis will reshape the basic social and economic environment that you now take for granted.” Strauss & Howe The Fourth Turning

The two principal political parties that control our government continue to act like we are in the early days of Autumn, anticipating a mild Winter. They persist in adhering to their conservative and liberal talking point agendas. They continue to push forth more policies like those that put the country in its current mess. They govern based upon weekly poll results, not upon what is best for the country. Big Government, big Military, and big Debt is the mantra of both parties. In his new documentary, GENERATION ZERO, director Steve Bannon scorches both parties and particularly the Baby Boom generation that now holds the reins of power in Washington DC and in corporate America. It is not a coincidence that 4 out of 5 CEOs of the investment banks that leveraged 40 to 1 and brought the worldwide financial system to its knees were Baby Boomers. George Bush, Hank Paulson, and Ben Bernanke are all Baby Boomers. Their greed, fiscal mismanagement and warped ideology led to the financial disaster.

“This film is about a crisis one that is as profound as The Revolution, The Civil War, or The Great Depression and WWII.” The title ‘Generation Zero’ is ironic, as it refers to both the Baby Boomers and the generation born today: the one generation whose greed and fiscal mismanagement has destroyed the financial legacy and inheritance of the other.” Steve Bannon

Anyone who doubts that Baby Boomers are most responsible for the current state of affairs just needs to review the following charts. These politicians have voted for bailouts of criminal banks run by Boomers, voted for hundreds of billions in pork projects for their corporate constituents, delegated their Constitutional duty of declaring war to the Executive branch, voted for the Patriot Act and creation of a Department of Homeland Security which have stolen freedoms & liberties from the citizens, and have deferred the critical cuts that must be made to entitlement promises they’ve made to the American public in order to get elected. These “honorable” politicians have doubled the National Debt of the United States to $12.4 trillion in less than 8 years. It took 213 years to accumulate $6 trillion of debt ($5.6 trillion added since 1971) and only 8 years to add another $6.4 trillion. These same politicians have approved current budgets that will add $1.5 to $2.0 trillion per year to the national Debt for the next 10 years. Progressives put forth the preposterous idea that piling on more debt will solve a problem created by too much debt. They have pressed the accelerator to the floor as we approach a turn on a mountain road.

U.S. House of Representatives
Generation Birth Years
Count GI Generation
1901 1924


Silent Generation

1925 1942


Boomer Generation

1943 1960


Generation X

1961 1981


U.S. Senate
Birth Years
Party Division
GI Generation
4D, 0R

Silent Generation

15D, 1I, 1ID, 16 R

Boomer Generation

32D, 23R

Generation X

4D, 3R

We are truly in the midst of a 21st Century breakdown. Armstrong’s lyrics twist the lyrics of the inspirational Amazing Grace psalm. The inspirational message is changed from:

“I once was lost but now am found, was blind, but now I see,” to “I was once lost but never was found, I think I am losing what’s left of my mind.”

These lyrics reflect hopelessness and frustration as the country approaches financial collapse. We are on an unsustainable fiscal path built upon an altar of debt. Progressives believe that debt is inconsequential and is necessary to the advancement of the welfare state. No politician will tell an American voter that their entitlements must be slashed. No politician will vote to reduce pork projects or useless programs or worthless Federal departments. No politician will vote for a reduction in Defense spending. Someone within the ruling elite must sense danger, based on their overt and covert actions in the last nine years.

Allowing the government to monitor phone calls, emails, and internet messages along with stationing combat troops within the U.S. border is a warning sign of how government will treat American citizens during the current Crisis. The Department of Homeland Security has already issued reports suggesting that Tea Party members and returning Iraq War veterans are potential terrorist threats. The mainstream media has perpetuated these lies. Financial chaos will lead to social chaos. The recently signed Executive Order 13528 established a Council of Governors, an “advisory panel” chosen by the President that will rubber-stamp long-sought-after Pentagon contingency plans to seize control of state National Guard forces in the event of a “national emergency.” Would U.S. troops fire on American citizens? That question will be answered in the coming decade.

Dream, America Dream

My name is No One
The long lost son
Born on the 4th of July
Raised in the era of heroes and cons
That left me for dead or alive

I praise liberty
The “Freedom to Obey”
Is the song that strangles me
Don’t cross the line

Dream, America Dream
I can’t even sleep
From the light’s early dawn
Green Day 21st Century Breakdown

The American dream has turned into a nightmare. Led by the selfish, materialistic, self-absorbed Boomers, the nation has degenerated into an individualistic society of wealth seekers. The country’s common good and attitudes of thrift, hard work, and self reliance have been cast aside for the corporate good, immediate material satisfaction, and entitlement attitude. America is no longer the land of opportunity. It is the land of corporate fascism, benefitting the few.

“The American Dream is that dream of a land in which life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement. It is a difficult dream for the European upper classes to interpret adequately, and too many of us ourselves have grown weary and mistrustful of it. It is not a dream of motor cars and high wages merely, but a dream of social order in which each man and each woman shall be able to attain to the fullest stature of which they are innately capable, and be recognized by others for what they are, regardless of the fortuitous circumstances of birth or position.” — Historian and writer James Truslow Adams in his 1931 book Epic of America.

This version of the American dream has been slowly fading away for decades. Those with ability who have earned a better life through their hard work, superior intelligence and integrity should attain a higher spot in the social order. Instead, government rewards those Americans who have taken unwarranted risks, made corrupt choices, and willingly chose a path of excessive debt to scale the social order. The game is stacked in favor of the elite, while middle class wages have stagnated for the last 40 years. Government bureaucracy strangles the entrepreneurial spirit of the people, while empowering those who want to control our every action.

Today’s aristocracy consists of Wall Street bankers, corporate chiefs, Washington lobbyists, the military industrial complex, and corrupt politicians, all engendered by the printing presses of Ben Bernanke and the Federal Reserve. The rich get richer and the middle class disappears, as their jobs are shipped overseas by corporate conglomerate CEOs who preach globalism as a benefit to society. It is a benefit to their country club elitist society. These elite Boomers have sucked the life and vitality from the American financial system. The three previous Crisis periods in U.S. history were all initiated by a financial related trigger based on excess.

The American RevolutionCrisis was instigated by the colonist response to overly burdensome taxation by the English Parliament. This ultimately led to the dumping of English tea into the Boston harbor. Parliament’s response to the Boston Tea Party ignited a colonial tinderbox—leading directly to the first Continental Congress, the battle of Concord, and the Declaration of Independence. The Civil WarCrisis had its roots in the issues of property rights and industrial versus agrarian society. The economic widening of the gap between slave and free states was symbolic of the changes occurring in each region. While the South was devoted to an agrarian plantation economy with a slow growth in population, the North had embraced industrialization, large urban areas, infrastructure growth, as well as was experiencing high birth rates. This boost in population doomed Southern efforts to maintain balance in the government as it meant the future addition of more free states and the election of a Northern, potentially anti-slavery, president. The Civil War began with a presidential election that many southerners interpreted as an invitation to secede. The attack on Fort Sumter triggered the most violent conflict ever fought on New World soil, with over 600,000 dead Americans. The Great Depression & World War II Crisis began suddenly with the Black Tuesday stock-market crash. The events leading up to the “sudden” collapse were caused by loose monetary policy by the Federal Reserve, Wall Street greed and corruption, and government incompetence. After a three-year economic free fall, the Great Depression triggered the New Deal revolution, and a vast expansion of government. The worldwide economic collapse led to the rise of Nazism and Fascism, a World War that killed 65 million souls, and mass destruction in Europe and Asia. The parallels with previous Crisis periods are eerily visible today.

The current Millennial Crisis which we are attempting to grasp was commenced by the combination of a housing collapse caused by loose Federal Reserve monetary policy, no regulation of financial institutions and corrupt greedy bankers on Wall Street. The depth and breadth of this financial disaster is being exacerbated by government borrow and spend policies and the free market globalism mantra of big business being sold to the American public. This fraudulent economy has been supported by a world awash in cheap oil. The American people have been scammed. Free market globalism didn’t benefit the middle class and the era of cheap oil is running out. James Howard Kunstler describes the scam perpetrated on the American people in his book The Long Emergency:

“Globalism had the same tendency to impoverish and enslave huge populations while enriching the elite who managed its operations. The American people were sold on it, even while it destroyed their towns, their landscapes, and their vocations. Globalism was primarily a way of privatizing the profits of business activities while socializing the costs. This was achieved by discreetly discounting the future for the sake of short-term benefits. Globalism was operated by oligarchical corporations on a gigantic scale, made possible by cheap oil. As Wendell Berry put it, ‘a corporation essentially, is a pile of money to which a number of persons have sold their moral allegiance …. It can experience no personal hope or remorse. No change of heart. It cannot humble itself. It goes about its business as if it were immortal, with the single purpose of becoming a bigger pile of money’.”

We’ve sold out America for cheap Chinese hair dryers, low-priced Chinese TVs, inexpensive Mexican apparel, economy packs of Fruit of the Looms from Indonesia and yellow smiley face stickers for our kids.As reward for gutting the American economy by shipping jobs overseas, American CEOs have enriched themselves at a rate 500 times higher than the average worker’s pay. Wall Street bankers were paying close attention to how corporate CEOs were able to reap ungodly profits while socializing the costs. With a clear signal from Alan Greenspan that the Federal Reserve would save any moron on Wall Street that got in trouble, the gluttonous Harvard MBAs created exotic financial products and convinced the world they could spin gold from straw. The CEO’s of the five biggest investment banks (including Hank Paulson of Goldman Sachs) convinced the SEC to waive their 12 to 1 leverage ratio and leveraged their Wall Street gambling casinos at 40 to 1. This excessive leverage combined with financial products designed to confuse and bamboozle investors generated billions in profits for these banks and hundreds of millions in pay and bonuses for their Boomer leaders. When the crooked house of cards collapsed under the weight of lies and fraud, these banks were essentially insolvent. At that point Hank Paulson, who was now Treasury Secretary, along with Ben Bernanke decided to socialize their losses by having the U.S. taxpayer pick up the tab. Middle class Americans lost 8 million jobs and Wall Street bankers used the taxpayer bailout to generate billions in fake profits while paying themselves hundreds of millions in pay again. The resentment of average Americans is boiling over and will play a main role in the unfolding Crisis.

Scream, America Scream
I am a nation
A worker of pride
My debt to status quo

The scars on my hands
And the means to an end
Is all that I have to show

I swallowed my pride
And I choked on my faith
I’ve given my heart and my soul
I’ve broken my fingers
And lied though my teeth
The pillar of damage control

Scream, America scream
Believe what you see
From heroes and cons?
Green Day 21st Century Breakdown

Progressives like Arianna Huffington clearly don’t comprehend what is happening. The anger and disillusionment of the population are seen as worrisome and disturbing by those who believe history is linear. The entrenched ruling elite should be apprehensive. During a Crisis existing institutions are torn down as the social fabric of the country undergoes wrenching changes. Those in power are rightfully fearful of the masses they have screwed for decades. President Obama, Ben Bernanke, Timothy Geithner, and the majority of economists and TV pundits are convinced the Crisis has passed and they have successfully maneuvered the country through the worst, avoiding a second Great Depression. History suggests otherwise. We have yet to experience the nastiest part of the Crisis. We can expect to encounter private and civic choices analogous to the cruelest ever confronted by ancestral generations. The recently submitted Obama budget, adjusted for reality, will add at least $12 trillion to the National Debt in the next ten years. That would bring the National Debt to $24 trillion in 2019. At a modest interest rate of 5%, the country would be paying $1.2 trillion per year in interest. The more likely scenario would be a 10% interest rate, resulting in annual interest costs of $2.4 trillion. The entire spending of the Federal Government was only $1.2 trillion in 1990.

Mr. Progressive, Paul Krugman, insists that worries about the debt are overblown. Despite the fact that our economy isn’t capable of growing more than 2.5% over the long term, he sees no problem growing our National Debt by 10% per year. It’s as if his Nobel Prize was coated in lead and he has been sucking on it. Only someone who is brain damaged would argue that doubling our debt will solve a crisis caused by too much debt. It’s as if Krugman wants to become the Irving Fisher of his time. One week prior to the Stock Market Crash of 1929 Fisher famously pronounced:

“Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as (bears) have predicted. I expect to see the stock market a good deal higher within a few months.”

The truth is our lenders will not allow our National Debt to reach $24 trillion by 2019. The U.S. dollar has already lost more than 80% of its purchasing power since Nixon closed the gold window in 1971. The amount of currency in circulation since that time has gone up by a factor of 16 to $800 billion. The result has been a stagnation of real wages for the middle class, while the ruling elite have seen their wealth soar to astronomical levels. The correlation between printing more of something and its relative value are as clear as day to anyone with a smattering of intelligence. Ben Bernanke is attempting to print his way out of this financial crisis. He is playing a game of chicken with our foreign lenders. He wants to devalue the U.S. dollar slowly to reduce the unbearable weight of U.S. debt. Foreign lenders from China, Japan and the Middle East know what he is doing. They will be the long-term losers in this scenario. At some point in the next few years they will balk at buying more US debt. A “Weimar Moment” will strike the United States like a sledgehammer. The veil of financial stability will be revealed to be a fallacy and the worldwide reserve currency will revert to its intrinsic value of zero. The chaos that would ensue as people’s life savings are wiped out would test the mettle of our country’s citizens, government, and military.

The dollar is likely to collapse just based upon current spending and borrowing trends. The unsustainable entitlement promises made by politicians over decades would have guaranteed a dollar collapse by 2030 anyway, so we will just arrive sooner. Not one politician from either political party has the courage to stand in front of the American people and tell them they will not receive the Social Security and Medicare benefits they were promised. Not one politician from either party is even willing to discuss the fact these promises cannot be honored. This train has been headed down the track since the 1960s, picking up speed, and no one is willing to apply the brakes. The Baby Boomers have sold their children and grandchildren into slavery. Their unwillingness to sacrifice entitlement benefits, guarantees a vastly lower standard of living for their descendents. How very egocentric and superficial of them. The most coddled, self absorbed, egotistical generation in history would rather crash the economic system than make any personal sacrifice for future generations. The $106.8 trillion of unfunded promises will not by paid, because there will be nothing left to pay. The country is bankrupt today. By 2030, half of all tax revenue would be needed to fund these programs. The Boomers will be forced to accept much less than they expected. The delusion of getting something for nothing will be put to rest during this Crisis.

The wildcard within the current Fourth Turning is cheap easily accessible petroleum. Progressives and those who only view the world in a linear way, fail to recognize that easily accessible oil only came onto the scene 150 years ago and we have depleted the easiest to reach 50%. The implication of these facts is beyond the comprehension of linear thinkers. They trust our ingenuity and brilliance to solve the problem. A new form of energy will magically appear on the scene and save our industrial world. Brain power and human resourcefulness played only a small part in the economic boom of the last 150 years, produced by cheap oil. The industrial revolution began more like Jed Clampett shooting at some food and getting bubbling crude. The world benefited from a positive Black Swan event. In other words, we got lucky. Now the luck is running out. There is a finite amount of petroleum on the planet. Most of the remaining supply is trapped beneath deep oceans, within tar sands, in shale rock and in inhospitable countries. Cheap sweet crude is running out. New oil discoveries peaked in 1964. Worldwide oil production peaked between 2005 and 2010. As supply enters terminal decline and demand continues its relentless rise, prices will soar and the world will be transformed forever. This could even put a creak in America’s military machine that consumes over 150 million barrels of oil per year.

The deniers believe that technology will save the day. They don’t step back and think that their technology couldn’t function without cheap oil. The hardware and software are made in factories run by fossil fuel. The amount of energy that exists on the planet is a closed loop system. The sun’s energy created fossil fuels. The population of the planet has converted 50% of these fossil fuels back into CO2 and other byproducts. This is the process of entropy. Entropy is the movement of energy from complex, higher states to simple, lower states. Energy cannot be created or destroyed, only changed entropy dictates that energy flows in only one direction, from being concentrated in one place to becoming diffused or dispersed and spread out; from being ordered to being disordered. After 150 years of profligate use of oil, we are within a few years of experiencing an unsolvable oil shortage which will affect transportation, industry, heating, plastics, fertilizers, pharmaceuticals and all the myriad products essential to our contemporary lives. Our energy-devouring civilization has been accelerating entropy. Kunstler sees this entropy leading to a crisis of epic proportions:

“We don’t really need to reach the end of oil to experience the disorder that accompanies entropy. The economic efficiency we praise creates one-industry towns that become simplified and vulnerable communities. Businesses evolve into big corporations that dehumanize and feudalize our lives. Our monocultures of specialization create ecological disasters. We poison our water, land and air using the justification that more and faster are always better. Mass production produces the homogeneity that deadens the spirit and vitality of people they compensate by becoming hyper-consumers, fad-chasers, unsettled and disquieted beings in search of the meaning denied to them by a loss of complexity.”
The combination of debt, dollar devaluation, delusion and depletion will make this Fourth Turning the most challenging and dangerous in U.S. history.

The Five Ds of the Fourth Turning


Every previous Fourth Turning in U.S. history was triggered by an economic conflict or devastating financial event. The current Fourth Turning was activated by the collapse of our housing market, the subsequent revelations of Wall Street fraud and excessive risk taking and the actions of politicians to protect Wall Street from their hubristic exploits. The choices by leaders after these triggers will have a dramatic impact on the future course of the Crisis.

George Washington decided to fight and stayed on the battlefield for eight years before succeeding. Abraham Lincoln could have let the South secede. He decided to fight in order to retain the Union. The result was 600,000 dead and abolition of slavery. Franklin Delano Roosevelt decided to implement massive social welfare programs to keep Americans employed. These programs planted the seed for our current Crisis. He also committed 16 million American men in World War II, with 450,000 dying for their country and another 670,000 wounded. All previous Fourth Turnings began as financial episodes and eventually led to total wars of destruction. There is nothing about this current Crisis that would lead me to an alternative picture of our future.

I could propose a number of logical Crisis scenarios based on the facts at hand, but the truth is that no one knows how the next fifteen years will play out. We do know there will be much upheaval, worldly peril, and cataclysmic changes to the exiting institutional and social order. I believe the financial crisis will transform into a Depression as the layers of new debt piled upon the old debt ultimately collapse our economic system. It could be a deflationary collapse or an inflationary collapse. Both scenarios would lead to further destruction of the middle class. When the U.S. dollar is no longer viewed as the reserve currency for the world, America’s worldwide influence will wane. How global economic rivals like China, Russia, and the Middle East react to our economic and social weakness will determine the next phase of the Crisis. When countries are experiencing severe domestic problems, they seek out or invent a foreign threat. The likely flashpoint which could lead to foreign conflict would be a terrorist attack on U.S. territory and/or a clash over depleting worldwide oil supplies. Strauss & Howe explain the nature of Fourth Turnings:

“The ‘spirit of America’ comes once a saeculum, only through what the ancients called ekpyrosis, nature’s fiery moment of death and discontinuity. History’s periodic eras of Crisis combust the old social order and give birth to a new. A Fourth Turning is a solstice era of maximum darkness, in which the supply of social order is still falling—but the demand for order is now rising. It is the saeculum’s hibernal, its time of trial. Nature exacts its fatal payment and pitilessly sorts out the survivors and the doomed. Pleasures recede, tempests hurt, pretense is exposed, and toughness rewarded—all in a season.”

Personally, I have grave apprehensions about the coming years. As a libertarian minded person I will not be happy, as it is highly unlikely that government will willingly get smaller. The last two Crisis periods resulted in a much more powerful Federal government. It is difficult for me to conceptualize how the country will come out the other side of this Crisis as a stronger society. The likelihood of the citizens rallying around the flag and following a Boomer Prophet into a world war seems farfetched to me. I fear the angry have-nots are more likely to rise up against the ruling elite, with potential dire consequences as the military may have to choose sides. My principal fear is that Crisis periods always rely on the Hero generation to make the greatest sacrifices. An entire generation of Heroes was wiped out in four years during the Civil War. A million Heroes were either killed or wounded in World War II. My three sons are all part of the Hero generation. I’m not prepared to sacrifice them for a cause that I do not believe in or agree with. The Boomer generation has been discredited in my eyes. Following a Boomer leader into battle seems out of the question today.

My guess on the end result of this Crisis is that Americans will need to localize. Reduced fuel availability will force people to depend on their neighbors and locally produced food. Forging closer relationships with family and neighbors will stand you in good stead during the remainder of this crisis. This Fourth Turning has only just begun. Strauss & Howe do not predict the outcome, only the challenges that await us and the hope that we will rise to the occasion.

Thus might the next Fourth Turning end in apocalypse or glory. The nation could be ruined, its democracy destroyed, and millions of people scattered or killed. Or America could enter a new golden age, triumphantly applying shared values to improve the human condition. The rhythms of history do not reveal the outcome of the coming Crisis; all they suggest is the timing and dimension.
A Fourth Turning harnesses the seasons of life to bring about a renewal in the seasons of time. In so doing, it provides passage through the great discontinuities of history and closes the full circle of the saeculum. The Fourth Turning is when the Spirit of America reappears, rousing courage and fortitude from the people. History is seasonal, but its outcomes are not foreordained. Much will depend on how tall we stand in the trials to come.

Strauss & Howe The Fourth Turning

Will America in 2025 look anything like the America of today? Will the country resemble a dictatorship? Will it resemble socialist Europe? Will it break apart into regions? Will it reaffirm its roots as a Constitutional Republic? Or, will it no longer exist? The choice is ours.

-James Quinn

Michael Crichton’s Speech On Complexity Theory and Environmental Management

Regarding the foolishness of simple thinking (especially from government)… I don’t think there is any better read than this speech on complexity by Michael Crichton.

In the speech he goes into detail on the absurdity of misinformed-people-with-agendas, the enormous swirls of fear they create, and the disastrous consequences of “linear thinking”.

In a complex world, you cannot reduce complex problems down to simple solutions. Sadly, this is not very apparent to most in the west, especially those do-gooders in Washington.

Read it here.

… It was his third visit. Roosevelt saw a thousand antelope, plentiful cougar, mountain sheep, deer, coyote, and many thousands of elk. He wrote, “Our people should see to it that this rich heritage is preserved for their children and their children’s children forever, with its majestic beauty all unmarred.”

But Yellowstone was not preserved. On the contrary, it was altered beyond repair in a matter of years. By 1934, the park service acknowledged that “white-tailed deer, cougar, lynx, wolf, and possibly wolverine and fisher are gone from the Yellowstone.”

What they didn’t say was that the park service was solely responsible for the disappearances. Park rangers had been shooting animals for decades, even though that was illegal under the Lacey Act of 1894. But they thought they knew better. They thought their environmental concerns trumped any mere law.

What actually happened at Yellowstone is a cascade of ego and error. But to understand it, we have to go back to the 1890s. Back then it was believed that elk were becoming extinct, and so these animals were fed and encouraged. Over the next few years the numbers of elk in the park exploded. Roosevelt had seen a few thousand animals, and noted they were more numerous than on his last visit.

By 1912, there were 30,000. By 1914, 35,000. Things were going very well. Rainbow trout had also been introduced, and though they crowded out the native cutthroats, nobody really worried. Fishing was great. And bears were increasing in numbers, and moose, and bison.

By 1915, Roosevelt realized the elk had become a problem, and urged “scientific management.” His advice was ignored. Instead, the park service did everything it could to increase their numbers.

The results were predictable.

Antelope and deer began to decline, overgrazing changed the flora, aspen and willows were being eaten heavily and did not regenerate. In an effort to stem the loss of animals, the park rangers began to kill predators, which they did without public knowledge.

They eliminated the wolf and cougar and were well on their way to getting rid of the coyote. Then a national scandal broke out; studies showed that it wasn’t predators that were killing the other animals. It was overgrazing from too many elk. The management policy of killing predators had only made things worse.

Meanwhile the environment continued to change. Aspen trees, once plentiful in the park, where virtually destroyed by the enormous herds of hungry elk.

With the aspen gone, the beaver had no trees to make dams, so they disappeared. Beaver were essential to the water management of the park; without dams, the meadows dried hard in summer, and still more animals vanished. Situation worsened. It became increasingly inconvenient that all the predators had been killed off by 1930. So in the 1960s, there was a sigh of relief when new sightings by rangers suggested that wolves were returning….

And by now we are about ready to reap the rewards of our forty-year policy of fire suppression, Smokey the Bear, all that. The Indians used to burn forest regularly, and lightning causes natural fires every summer. But when these fires are suppressed, the branches that drop to cover the ground make conditions for a very hot, low fire that sterilizes the soil. And in 1988, Yellowstone burned. All in all, 1.2 million acres were scorched, and 800,000 acres, one third of the park, burned.

Then, having killed the wolves, and having tried to sneak them back in, the park service officially brought the wolves back, and the local ranchers screamed. And on, and on.

As the story unfolds, it becomes impossible to overlook the cold truth that when it comes to managing 2.2 million acres of wilderness, nobody since the Indians has had the faintest idea how to do it. And nobody asked the Indians, because the Indians managed the land very intrusively. The Indians started fires, burned trees and grasses, hunted the large animals, elk and moose, to the edge of extinction. White men refused to follow that practice, and made things worse.

Here’s a modern chart, from a sustainability website. It shows the relationships of pretty much everything: lithosphere, biosphere, market, community, customers. Who makes a chart like this? Who thinks the world operates this way?

Because look. It does not explain the world.

In fact, the chart on the right, showing everything, is absurdly simple. Nothing in nature is so simple.

30 Reasons for the Second Great Depression

This is from the Jim Sinclair section from about a year ago, but I wanted to bring it to everyone’s attention again. Please review the following bullet-points and prepare yourself financially, mentally, physically….

Because at some point the “Great Depression” will end and the strong will come out stronger. Corrections are necessary to liquidate mal-investment (kinda like a forest fire). Over the past 2-3 decades we have had tremendous amounts of mal-investments which require a MAJOR liquidation. Unfortunately the powers-that-be are going to fight the natural order, tooth-and-nail which means that they will only make things worse.

The key to not only surviving this mess, but prospering… is to own gold.

Dear Comrades In Golden Arms,

On or before January 14th, 2011 Gold will trade at or above $1650. This is simply reporting on the symptoms created by my Formula originally posted in 2006.

30 reasons for Great Depression 2 by 2011
New-New Deal, bailouts, trillions in debt, antitax mindset spell disaster
By Paul B. Farrell, MarketWatch
Last update: 11:53 a.m. EST Nov. 19, 2008
(Excerpted from larger article)

30 ‘leading edge’ indicators of the coming Great Depression 2
Every day there is more breaking news, proof Wall Street’s greed is already back to “business as usual” and in denial, grabbing more and more from the new “Bailouts-R-Us” bonanza of free taxpayer cash and credits, like two-year-olds in a toy store at Christmas — anything to boost earnings, profits and stock prices, and keep those bonuses and salaries flowing, anything to blow a new bubble.

Scan these 30 “leading indicators.” Each problem has one or more possible solutions, but lacks unified political support. Time’s running out. We’re already at the edge. Add up the trillions in debt: Any collective solution will only compound our problems, because the cumulative debt will overwhelm us, make matters worse:

America’s credit rating may soon be downgraded below AAA
Fed refusal to disclose $2 trillion loans, now the new “shadow banking system”
Congress has no oversight of $700 billion, and Paulson’s Wall Street Trojan Horse
King Henry Paulson flip-flops on plan to buy toxic bank assets, confusing markets
Goldman, Morgan lost tens of billions, but planning over $13 billion in bonuses this yea
AIG bails big banks out of $150 billion in credit swaps, protects shareholders before taxpayers
American Express joins Goldman, Morgan as bank holding firms, looking for Fed money
Treasury sneaks corporate tax credits into bailout giveaway, shifts costs to states
State revenues down, taxes and debt up; hiring, spending, borrowing add even more debt
State, municipal, corporate pensions lost hundreds of billions on derivative swaps
Hedge funds: 610 in 1990, almost 10,000 now. Returns down 15%, liquidations up
Consumer debt way up, now at $2.5 trillion; next area for credit meltdowns
Fed also plans to provide billions to $3.6 trillion money-market fund industry
Freddie Mac and Fannie Mae are bleeding cash, want to tap taxpayer dollars
Washington manipulating data: War not $600 billion but estimates actually $3 trillion
Hidden costs of $700 billion bailout are likely $5 trillion; plus $1 trillion Street write-offs
Commodities down, resource exporters and currencies dropping, triggering a global meltdown
Big three automakers near bankruptcy; unions, workers, retirees will suffer
Corporate bond market, both junk and top-rated, slumps more than 25%
Retailers bankrupt: Circuit City, Sharper Image, Mervyns; mall sales in free fall
Unemployment heading toward 8% plus; more 1930’s photos of soup lines
Government policy is dictated by 42,000 myopic, highly paid, greedy lobbyists
China’s sees GDP growth drop, crates $586 billion stimulus; deflation is now global, hitting even Dubai
Despite global recession, U.S. trade deficit continues, now at $650 billion
The 800-pound gorillas: Social Security, Medicare with $60 trillion in unfunded liabilities
Now 46 million uninsured as medical, drug costs explode
New-New Deal: U.S. planning billions for infrastructure, adding to unsustainable debt
Outgoing leaders handicapping new administration with huge liabilities
The “antitaxes” message is a new bubble, a new version of the American dream offering a free lunch, no sacrifices, exposing us to more false promises
No. 30:
At a recent Reuters Global Finance Summit former Goldman Sachs chairman John Whitehead was interviewed. He was also Ronald Reagan’s Deputy Secretary of State and a former chairman of the N.Y. Fed. He says America’s problems will take years and will burn trillions.

He sees “nothing but large increases in the deficit … I think it would be worse than the depression. … Before I go to sleep at night, I wonder if tomorrow is the day Moody’s and S&P will announce a downgrade of U.S. government bonds.” It’ll get worse because “the public is not prepared to increase taxes. Both parties were for reducing taxes, reducing income to government, and both parties favored a number of new programs, all very costly and all done by the government.”

Reuters concludes: “Whitehead said he is speaking out on this topic because he is concerned no lawmakers are against these new spending programs and none will stand up and call for higher taxes. ‘I just want to get people thinking about this, and to realize this is a road to disaster,’ said Whitehead. ‘I’ve always been a positive person and optimistic, but I don’t see a solution here.'”

We see the Great Depression 2. Why? Wall Street’s self-interested greed. They are their own worst enemy … and America’s too.


Note to junior exploration, development and producers:

Unless the person or company is well known to you, already a large “registered” stockholder or a proven long, do not take private placements. The shorts are looking to cover.

Things may well be turning. Deal with well known friends only, not strangers and most certainly none of the bad guys.

When the HUI turns, the cover is on.


Gerald Celente Tells It Like It Is.. We Are A Fascist Nation Now

If you’ve got some time, then I highly recommend this interview with Gerald Celente by Eric King of King World News. Gerald cuts through all the bull shit and calls it like it is. The United States is now a fascist nation. Fascism is the merging of private and state enterprises. Let’s see… the US government now controls the auto industry, it also controls the major media corporations, it now supports a large portion of the housing industry, it is in bed with the major banking firms, it is now the owner of a very large insurance agency that has its hands in all sorts of derivative instruments (AIG) …. and the list goes on and on and on.

Oh, and I should mention that we have a Video Channels section where all these videos are posted into. I believe it’s well worth your time to have a look.

The video comes in 5 parts.

Part 1/5:

YouTube – pt 1/5 Gerald Celente on King World News

Part 2/5:

YouTube – pt 2/5 Gerald Celente on King World News

Part 3/5:

YouTube – pt 3/5 Gerald Celente on King World News

Part 4/5:

YouTube – pt 4/5 Gerald Celente on King World News

Part 5/5:

YouTube – pt 5/5 Gerald Celente on King World News

Every gallon of gas delivered to troops in Afghanistan costs taxpayers $400

The Super Rich are Laughing

The US as Failed State

The US has every characteristic of a failed state.

The US government’s current operating budget is dependent on foreign financing and money creation.

Too politically weak to be able to advance its interests through diplomacy, the US relies on terrorism and military aggression.

Costs are out of control, and priorities are skewed in the interest of rich organized interest groups at the expense of the vast majority of citizens. For example, war at all cost, which enriches the armaments industry, the officer corps and the financial firms that handle the war’s financing, takes precedence over the needs of American citizens. There is no money to provide the uninsured with health care, but Pentagon officials have told the Defense Appropriations Subcommittee in the House that every gallon of gasoline delivered to US troops in Afghanistan costs American taxpayers $400.

“It is a number that we were not aware of and it is worrisome,” said Rep. John Murtha, chairman of the subcommittee.

According to reports, the US Marines in Afghanistan use 800,000 gallons of gasoline per day. At $400 per gallon, that comes to a $320,000,000 daily fuel bill for the Marines alone. Only a country totally out of control would squander resources in this way.

While the US government squanders $400 per gallon of gasoline in order to kill women and children in Afghanistan, many millions of Americans have lost their jobs and their homes and are experiencing the kind of misery that is the daily life of poor third world peoples. Americans are living in their cars and in public parks. America’s cities, towns, and states are suffering from the costs of economic dislocations and the reduction in tax revenues from the economy’s decline. Yet, Obama has sent more troops to Afghanistan, a country half way around the world that is not a threat to America.

It costs $750,000 per year for each soldier we have in Afghanistan. The soldiers, who are at risk of life and limb, are paid a pittance, but all of the privatized services to the military are rolling in excess profits. One of the great frauds perpetuated on the American people was the privatization of services that the US military traditionally performed for itself. “Our” elected leaders could not resist any opportunity to create at taxpayers’ expense private wealth that could be recycled to politicians in campaign contributions.


T2 Partners Presentation on the Mortgage Crisis – June 2009

Whitney Tilson and Glenn Tongue of T2 Partners have come out with a very well done presentation on the mortgage crisis. Link here (pdf file). This is a crash course outline of what is detailed in their book More Mortgage Meltdown: 6 Ways to Profit In These Bad Times. (Which I think is a very worthy read. Probably one of the best assessments on the mortgage crisis I have read so far. )

The presentation puts the crisis into perspective through many data points and charts showing, where we have been, where we are currently, and what is to be expected down the road, which isn’t pretty…

Some of the things that stood out to me are:

1. They mention that wave 1 of the mortgage crisis began with speculators who jumped ship quickly and defaulted on loans. This is largely behind us.

2. Wave 2 came from borrowers who defaulted when their mortgages reset due to payment shock. These were mostly the “subprime loans” that you heard so much of in the news. As the teaser rates reset, the payments increased dramatically, thus leading to defaults.

3. There are still 3 “waves” of defaults that have yet to hit. These will come from defaults on Prime Loans (the cream of the crop) that are A.) under water because of home price declines and/or B.) cannot be paid because of job losses. Jumbo prime loans, seconds and HELOCs have yet to see a major set of defaults, which are inevitable…..

But most importantly, the $3.5 Trillion commercial real estate market has yet to go through a serious round of price write-downs and defaults. It’s coming… and it won’t be pretty.

4.) $2.4 Trillion in Alt-A mortgage resets still lie ahead of us. And this peak in resets goes out to January of 2013 !!!

All of this leads any rational speculator to scoff at the idea of “green shoots” or whatever other stupid name the spin-doctors have come up with. This debacle is going to carry on for a long time because the political goons refuse to let the market self-correct. We may be following the Japanese lost decade (actually two-decades) template.

I have no doubts that we will see a reflation in asset prices, because of the stupendous amount of money printing that is going on across the globe.. but the timing of it all, I’m not so certain. There are still massive debts that will simply disappear due to bankruptcies and defaults, which is all counter-productive to the Fed’s inflationary policies. So this tug-o-war going on is jerking the markets back and forth.

At the end of the day, however, I’m of the opinion that the inflationary pressures will come sooner than later and all these deflationary scares will be a non-event. If only, because the Fed’s ability to print is infinite and at this point I really think they have commited themselves to that necessity if pushed into the corner. And let’s not forget a politician will never just sit on his hands !!

The key to navigating through all of this unscathed and richer, is to anticipate where the money will flow. My bet is out of bonds, out of the dollar, out of Euros, out of housing, and into foreign equities (in particular BRIC nations, minus Russia. So BIC), into commodities, into gold and silver, into farmland, into agriculture, into well run companies with the pricing power…. and … and….. many other places.

We are seeing a massive paradigm shift occurring. Study history and you will see how fortunes are lost and fortunes are made during these times.

Good luck!


— Pip Tradewell
Editor for