The fatal attraction of government is that it allows busybodies to impose decisions on others without paying any price themselves. That enables them to act as if there were no price, even when there are ruinous prices — paid by others.
– Thomas Sowell
The struggle for freedom … is not the struggle of the many against the few, but of minorities — sometimes of a minority of but one man — against the majority.
– Ludwig von Mises
The greatest Glory of a free-born People, is to transmit that Freedom to their Children.
– William Havard
The War on Freedom
What would we do without Barrack Obama as President? I mean it is amazing. The guy proved he was an American citizen and got public enemy number one all in the same week! And what ladies and gentlemen do we get as a reward for this PR stunt? Well, we immediately got more terror threats and fear mongering as we were conveniently told we were back on a war footing (the never ending “war on terror” just like Orwell wrote about in 1984). We saw an infant being frisked by the TSA as a potential terrorist (http://www.boston.com/travel/blog/2011/05/tsa_responds_to.html). We also now find out that ALL cell phones will be equipped with a chip that will then be able to blast out warnings or instructions from our criminal, incompetent and corrupt Federal government. Wait, here’s the best part NO ONE can opt out. If you have a cell phone you will be required to get these messages. http://www.myfoxtampabay.com/dpp/news/local/emergency-alerts-coming-to-cell-phones-05102011 I can’t wait to have Obama propaganda blasting me 24/7. Again, this is straight out of the 1984 police state playbook. Even if you think this service is a good idea you should still be very disturbed that you do not have a CHOICE in the matter. Think about what Obama has done since he got into office. This guy is all about taking away you choices, your freedoms. First, he rams through a very unpopular healthcare bill that is designed to force you to act in a certain manner. Now you are being forced to receive government messages on your cell phone. This whole charade shouldn’t be called “The War on Terror.” It is actually all about keeping the citizenry terrified. The government loves keeping you in a state of fear so that then they can do anything they want to the little sheep. It should be called “The War on Freedom.” Your freedom.
Furthermore, will these messages really make anyone safer? Not a chance. This is another power grab and nothing else. To quote my friend Tony Greer.
“Here’s a great slip up by Mike Bloomberg:
‘if people need to take action, the system will tell them what to do.’
I don’t know about you but I don’t even like the sound of THE SYSTEM telling me what to do. If the SYSTEM were in place 10 years ago this September 11th, it would have been texting people in the North Tower of the World Trade Center, urging them to “REMAIN CALM, DO NOT LEAVE YOUR WORK AREA” as the system that was in place broadcasted all over the buildings PA system. So amid utter chaos, the government can go text itself. The strategy in a life threatening emergency should ALWAYS BE – to use your judgment and pray a lot.”
He is dead right. The government cares way more about not creating panic than saving lives. I would suggest doing the opposite of whatever these propaganda messages tell you to. Or as Greer says, THINK FOR YOURSELF.
Central Planning Phase 1: Down in Flames
Now that Barry has pretty much squeezed out all of the marketing juice he could from his Rambo vs. OBL act, Team America can move on from hunting down ex-CIA operatives in caves that we created in the first place as a result of our misguided foreign policy and military industrial complex empire building, to hunting down “domestic terrorists,” ie commodity speculators. Now does Barry stop to think for a second that perhaps the Bernank’s printing of enough money to buy every treasury bond we issue might have something to do with the rising costs of things? Of course not. What do centuries of economic history have to do with anything. They are government, which means they are our masters. Thus, it must be something else. It must be those evil speculators that are rushing into commodities as a store of wealth. Not because they don’t want to invest in companies or the economy but because they don’t trust the government enough to invest. Can you really blame them?
Do you remember TARP? Let me tell you a little story about TARP. I was at my old job at Bernstein and after this thing got rammed through I was apoplectic. It was 7am and I was spouting like a madman on the trading desk about how this was the end of the last vestiges of a market economy. That this was the beginning of all out central planning and we had just sold out best chance to reform the system so that Hank Paulson’s criminal friends could get their bonuses back. I spouted this to anyone that would listen. People looked at me as if I was insane (they still do, it is just that the issues change). People respected me at work and so they listened but everyone thought I was exaggerating way too much. My boss actually told me to “go take a walk around the block.” I didn’t.
Anyway, there is a point to this story. That was phase one of the implementation of complete central planning in America. From the perspective of the planners, they thought they had it all figured out. They would save the system, print money, jack stock prices up and restore confidence. They correctly knew that the only way to get any economy to function is to restore confidence. What they missed was that the people that really make things happen in an economy are not idiotic sheep. The holders of wealth and entrepreneurs can see a crony system when it is front of them and they could see the rule of law being destroyed and the theft of the Wall Street banksters as clear as day. So what has happened since 2008? The fascist Federal Reserve has given all of America’s wealth to the Wall Street criminals on both the sell-side and also many on the buy-side who are ”playing ball” (you know who you are and you are a disgrace to investors the world over) and nothing good has happened except a destruction of what was left of the middle class. So yes stock prices went up a lot. But guess what else happened. Jobs never really came back and now they look like they may be rolling over again. The housing market is at the beginning what could be a brutal double dip. Most important, the costs of everything we need to buy like food, energy, rent, insurance and tuition have been soaring. This is not what the central planners had in mind. In comes Team America led by terrorist killer Barry. Welcome to Phase 2.
Price Controls: Team America Style. Welcome to Phase 2 of Central Planning
When central planners bet it all on black and up comes red do they turn around, eat their free breakfast and go home? Of course not. They double down. That is exactly what they have just done. Notice how the silver slam and now the oil sell-off came almost immediately after Barry sent his hit squad out to deal with those “speculators.” Coincidence? I think not. Since late 2008 I have suggested investors make huge bets on commodities, specifically precious metals, oil and agriculture. It has worked very well for anyone that has followed my advice. That said, the key to this working is that futures markets remain somewhat legitimate and serve as a reasonable price discovery mechanism. While everyone knows I believe the government manipulates and rigs all markets on a very consistent basis there are degrees to this and up until recently futures markets were at least still functioning to some degree (unlike the stock market which I believe is almost completely controlled).
With what I have seen in margin hikes in silver and now the oil complex I believe we may be entering phase 2 of central planning, which by definition will be more thuggish and overt than phase 1 since the planners have lost phase 1 and are bitter about it. They want to punish those that cause them to lose. I personally have never traded futures markets. Mainly because I know the history of the Hunt brothers, I believe our government is owned by the Wall Street banks, big corporations, military industrial complex and is therefore criminal and so I do not trust capital on these exchanges. That said, I never went so far as to say investors shouldn’t play them. Now I am not here saying that everyone should sell all futures and buy physical. For most commodities this is not possible. We still don’t know how far they will take this but it doesn’t look good . Therefore, I am handing out a major warning. I think we have entered phase 2, which means you may not be able to trust futures markets anymore. They will be used as tools of the government in an increasingly harsh manner to punish those that do not fall in line. Therefore, I think most investors should start to allocate more and more of their money into physical gold and silver. Not GLD or SLV. Not Comex futures. The real stuff and you need to figure out a way to store it outside the banking system. I would start to do this as soon as possible. I also wouldn’t be surprised if we saw shortages of gasoline and other goods within the next 6-12 months as the government mandates lower prices via futures and supply simply disappears.
For those than want t continue to trade and invest in the old way I think gold and silver miners and as well as equities in some of the more attractive areas of commodities are the only way to go. I have no idea what the comex really has in its inventory. I do know that when I buy a miner I own metals reserves and real production. When you own comex futures you own a derivative and there is major counterparty risk. The whole point of owning gold is to avoid counterparty risk. Again I want to finish by saying I am not advocating everyone go out and sell all their futures right away. However, the hairs on the back of my neck are standing up straight as an arrow and I think the time is now to start only moving more wealth out of derivatives and into the real stuff.
Peace and wisdom,