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This Is The Government: Your Legal Right To Redeem Your Money Market Account Has Been Denied
- Agency Paper
- American International Group
- Bank of Japan
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- Ben Bernanke
- Breaking The Buck
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- Prudential
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- Swiss National Bank
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When Henry Paulson publishes his long-awaited memoirs, the one section that will be of most interest to readers, will be the former Goldmanite and Secretary of the Treasury's recollection of what, in his opinion, was the most unpredictable and dire consequence of letting Lehman fail (letting his former employer become the number one undisputed Fixed Income trading entity in the world was quite predictable... plus we doubt it will be a major topic of discussion in Hank's book). We would venture to guess that the Reserve money market fund breaking the buck will be at the very top of the list, as the ensuing "run on the electronic bank" was precisely the 21st century equivalent of what happened to banks in physical form, during the early days of the Geat Depression. Had the lack of confidence in the system persisted for a few more hours, the entire financial world would have likely collapsed, as was so vividly recalled by Rep. Paul Kanjorski, once a barrage of electronic cash withdrawal requests depleted this primary spoke of the entire shadow economy. Ironically, money market funds are supposed to be the stalwart of safety and security among the plethora of global investment alternatives: one need only to look at their returns to see what the presumed composition of their investments is. A case in point, Fidelity's $137 billion Cash Reserves fund has a return of 0.61% YTD, truly nothing to write home about, and a return that would have been easily beaten putting one's money in Treasury Bonds. This is not surprising, as the primary purpose of money markets is to provide virtually instantaneous access to a portfolio of practically risk-free investment alternatives: a typical investor in a money market seeks minute investment risk, no volatility, and instantaneous liquidity, or redeemability. These are the three pillars upon which the entire $3.3 trillion money market industry is based.
Yet new regulations proposed by the administration, and specifically by the ever-incompetent Securities and Exchange Commission, seek to pull one of these three core pillars from the foundation of the entire money market industry, by changing the primary assumptions of the key Money Market Rule 2a-7. A key proposal in the overhaul of money market regulation suggests that money market fund managers will have the option to "suspend redemptions to allow for the orderly liquidation of fund assets." You read that right: this does not refer to the charter of procyclical, leveraged, risk-ridden, transsexual (allegedly) portfolio manager-infested hedge funds like SAC, Citadel, Glenview or even Bridgewater (which in light of ADIA's latest batch of problems, may well be wishing this was in fact the case), but the heart of heretofore assumed safest and most liquid of investment options: Money Market funds, which account for nearly 40% of all investment company assets. The next time there is a market crash, and you try to withdraw what you thought was "absolutely" safe money, a back office person will get back to you saying, "Sorry - your money is now frozen. Bank runs have become illegal." This is precisely the regulation now proposed by the administration. In essence, the entire US capital market is now a hedge fund, where even presumably the safest investment tranche can be locked out from within your control when the ubiquitous "extraordinary circumstances" arise. The second the game of constant offer-lifting ends, and money markets are exposed for the ponzi investment proxies they are, courtesy of their massive holdings of Treasury Bills, Reverse Repos, Commercial Paper, Agency Paper, CD, finance company MTNs and, of course, other money markets, and you decide to take your money out, well - sorry, you are out of luck. It's the law.
A brief primer on money markets
A very succinct explanation of what money markets are was provided by none other than SEC's Luis Aguilar on June 24, 2009, when he was presenting the case for making even the possibility of money market runs a thing of the past. To wit:
Money market funds were founded nearly 40 years ago. And, as is well
known, one of the hallmarks of money market funds is their ability to
maintain a stable net asset value — typically at a dollar per share.
In the time they have been around, money market funds have grown
enormously — from $180 billion in 1983 (when Rule 2a-7 was first
adopted), to $1.4 trillion at the end of 1998, to approximately $3.8
trillion at the end of 2008, just ten years later. The Release in front
of us sets forth a number of informative statistics but a few that are
of particular interest are the following: today, money market funds
account for approximately 39% of all investment company assets; about
80% of all U.S. companies use money market funds in managing their cash
balances; and about 20% of the cash balances of all U.S. households are
held in money market funds. Clearly, money market funds have become
part of the fabric by which families, and companies manage their
financial affairs.
When the Reserve fund broke the buck, and it seemed like an all-out rout of money markets was inevitable, the result would have been a virtual elimination of capital access by everyone: from households to companies. This reverberated for months, as the also presumably extremely safe Commercial Paper market was the next to freeze up, side by side with all traditional forms of credit. Only after the Fed stepped in an guaranteed money markets, and turned on the liquidity stabilization first, then quantitative easing spigot second, did things go back to some sort of new normal. However, it is only a matter of time before the patchwork of band aids holding the dam together is once again exposed, and a new, stronger and, well, "improved" run on the electronic bank materializes. It is precisely this contingency that the SEC and the administration are preparing for by "empowering money market fund boards of directors to suspend redemptions in extraordinary circumstances to protect the interests of fund shareholders."
A little more on money markets:
Money market funds seek to limit exposure to losses due to credit, market, and liquidity risks. Money market funds, in the United States, are regulated by the Securities and Exchange Commission's (SEC) Investment Company Act of 1940. Rule 2a-7 of the act restricts investments in money market funds by quality, maturity and diversity. Under this act, a money fund mainly buys the highest rated debt, which matures in under 13 months. The portfolio must maintain a weighted average maturity (WAM) of 90 days or less and not invest more than 5% in any one issuer, except for government securities and repurchase agreements.
Ironically, the proposed change to Rule 2a-7 seeks to make dramatic changes to the composition of MMs: from 90 days, the WAM would get shortened to 60 days. And this is occurring at a time when the government is desperately seeking to find ways of extending maturities and durations of short-term debt instruments: by reverse rolling the $3.2 trillion industry, the impetus will be precisely the reverse of what should be happening, as more ultra-short maturity instruments are horded up, leaving a dead zone in the 60-90 day maturity window. Some other proposed changes to 2a-7 include "prohibiting the funds from investing in Second Tier securities, as defined in Rule 2a-7. Eligible securities would be redefined as securities receiving only the highest, rather than the highest two, short-term debt ratings from a requisite nationally recognized securities rating organization. Further, money market funds would be permitted to acquire long-term unrated securities only if they have received long-term ratings in the highest two, rather than the highest three, ratings categories." In other words, let's make them so safe, that when the time comes, nobody will have access to them. Brilliant.
The utility of money market funds has long been questioned by such systemically-embedded financial luminaries as Paul Volcker (more on this in a minute). After all, what are money markets if merely an easy, and 401(k)-eligible option to not invest in equity or bonds, but in "paper" which is cash in all but name (maybe not so much after the proposed Rule change passes). And as money markets account for a huge portion of the $11 trillion of mutual fund assets as of November (per ICI, whose opinion, incidentally, was instrumental in shaping future money market policy), $3.3 trillion to be precise, and second only to stock funds at $4.8 trillion, one can see why an administration, hell bent on recreating a stock-price bubble, would do all it can to make money markets extremely unattractive. In fact, the current administration has been on a roll on this regard: i) keeping money market rates at record lows, ii) removing money market fund guarantees and iii) and even allowing reverse repos to use money markets as sources of liquidity (because we all know that the collateral behind the banks shadow banking arrangement with the Fed are literally crap; as we have noted before, we will continue claiming this until the Fed disproves us by opening up their books for full inspection. Until then, yes, the Fed has lent out hundreds of billions against bankrupt company equity, as we have pointed out in the past). Money Markets are the easiest recourse that idiotic class of Americans known as "savers" has to give the big bank oligarchs, the Fed and the bubble-inflating Administration the middle finger. As you will recall, recently Arianna Huffington has been soliciting all Americans do just that: to move their money out of the tentacles of the TBTFs. In essence, the money market optionality is precisely the equivalent of moving physical money from TBTFs to community banks in the "shadow economy." Because where there is $3.3 trillion out of $11, there could easily be $11 trillion out of $11, which would destroy the whole concept of Fed-spearheaded asset-price inflation, and would destroy overnight the TBTFs, as equities would once again find their fair value. It is no surprise then, that the current financial system, and its political cronies loathe the concept of Money Markets, and have done all they could to make them as unattractive as possible. Below is a chart of the Net Assets held by all US money market funds and the number of money market mutual funds since January 2008:
Obviously, attempts to push capital out of MMs have succeeded: after peaking at $3.9 trillion, currently money markets hold a two year low of $3.27 trillion. Furthermore, the number of actual money market fund operations has been substantially hit: from 2,078 in the days after the Lehman implosion, this is now down to 1,828, a 12% reduction. At this rate soon there won't be all that many money market funds to chose from. While the AUM reduction is explicable through the previously mentioned three factors, the actual reduction in number of funds is on the surface not quite a straightforward, and will likely be the topic a future Zero Hedge post. Although, the impetus of managing money when one can return at most 0.6% annually, and charge fees on this "return" may be missing - the answer may be far simpler than we think. Why run a money market, when the Fed will be happy to issue you a bank charter, and you can collect much more, risk free, courtesy of the vertical yield curve.
Yet what is strange is that even with all the adverse consequences of holding cash in Money Markets, the total AUM of this "safest" investment option is still substantial, at nearly $3.3 trillion as of December 30, a big decline yes, but a decline that should have been much greater considering even the president since March 3 has been beckoning his daily viewership to invest in cheap stocks courtesy of low "profit and earning ratios" (that, and the specter of President's Working Group on Financial Markets). Could this action, whereby investors will no longer have access to money that historically has been sacrosanct and reachable and disposable on a moment's notice, be the last nail in the coffin of money markets? We believe so, however, we are not sure if it will attain the desired effect. With an aging baby boomer population, which would rather burn their money than invest in the stock market again and relive the roller-coaster days of late 2008 and early 2009, the plan may well backfire, and result in even more money leaving the shadow system and entering such tangible objects as deposit accounts (at community banks, of course), mattresses and socks. And speaking of the President's Working Group...
The Group of Thirty
When discussing the shadow economy, it is only fitting to discuss the shadow decision-makers. In this regard, the Group of 30, is to the traditional economic decision-making process as the President's Working Group is to capital markets. Taken from the website, the self-description reads innocently enough:
The Group of Thirty, established
in 1978, is a private, nonprofit, international body composed of very senior
representatives of the private and public sectors and academia. It aims to
deepen understanding of international economic and financial issues, to explore
the international repercussions of decisions taken in the public and private
sectors, and to examine the choices available to market practitioners and policymakers.The Group's members meet in plenary sessions twice a year with select guests
to discuss important economic, financial and policy developments. They reach
out to a wider audience in seminars and symposia. Of most importance
to our membership and supporters is the annual International
Banking Seminar.
Sounds like any old D.C.-based think tank... until one looks at the roster of members:
- Paul A. Volcker, Chairman of the Board of Trustees, Group of Thirty, Former Chairman, Board of Governors of the Federal Reserve System
- Jacob A. Frenkel, Chairman, Group of Thirty, Vice Chairman, American International Group, Former Governor, Bank of Israel
- Jean-Claude Trichet, President, European Central Bank, Former Governor, Banque de France
- Zhou Xiaochuan, Governor, People’s Bank of China, Former President, China Construction Bank, Former Asst. Minister of Foreign Trade
- Yutaka Yamaguchi, Former Deputy Governor, Bank of Japan, Former Chairman, Euro Currency Standing Commission
- William McDonough, Vice Chairman and Special Advisor to the Chairman, Merrill Lynch, Former Chairman, Public Company Accounting Oversight Board, Former President, Federal Reserve Bank of New York
- Richard A. Debs, Advisory Director, Morgan Stanley, Former President, Morgan Stanley International, Former COO, Federal Reserve Bank of New York
- Abdulatif Al-Hamad, Chairman, Arab Fund for Economic and Social Development, Former Minister of Finance and Minister of Planning, Kuwait
- William R. Rhodes, Senior Vice Chairman, Citigroup, Chairman, President and CEO, Citicorp and Citibank
- Ernest Stern, Partner and Senior Advisor, The Rohatyn Group, Former Managing Director, JPMorgan Chase, Former Managing Director, World Bank
- Jaime Caruana, Financial Counsellor, International Monetary Fund, Former Governor, Banco de España, Former Chairman, Basel Committee on Banking Supervision
- E. Gerald Corrigan, Managing Director, Goldman Sachs Group, Inc., Former President, Federal Reserve Bank of New York
- Andrew D. Crockett, President, JPMorgan Chase International, Former General Manager, Bank for International Settlements
- Guillermo de la Dehesa Romero, Director and Member of the Executive Committee, Grupo Santander, Former Deputy Managing Director, Banco de España, Former Secretary of State, Ministry of Economy and Finance, Spain
- Mario Draghi, Governor, Banca d’Italia, Chairman, Financial Stability Forum, Member of the Governing and General Councils, European Central Bank, Former Vice Chairman and Managing Director, Goldman Sachs International
- Martin Feldstein, Professor of Economics, Harvard University, President Emeritus, National Bureau of Economic Research, Former Chairman, Council of Economic Advisers
- Roger W. Ferguson, Jr., Chief Executive, TIAA-CREF, Former Chairman, Swiss Re America Holding Corporation, Former Vice Chairman, Board of Governors of the Federal Reserve System
- Stanley Fischer, Governor, Bank of Israel, Former First Managing Director, International Monetary Fund
- Philipp Hildebrand, Vice Chairman of the Governing Board, Swiss National Bank, Former Partner, Moore Capital Management
- Paul Krugman, Professor of Economics, Woodrow Wilson School, Princeton University, Former Member, Council of Economic Advisors
- Kenneth Rogoff, Thomas D. Cabot Professor of Public Policy and Economics, Harvard University, Former Chief Economist and Director of Research, IMF
and, of course:
- Timothy F. Geithner, President and Chief Executive Officer, Federal Reserve Bank of New York, Former U.S. Undersecretary of Treasury for International Affairs
- Lawrence Summers, Charles W. Eliot University Professor, Harvard University, Former President, Harvard University, Former U.S. Secretary of the Treasury
and many more. Given the choice of being a fly on the wall at a G7 meeting or that of the "Group of 30", we would be very curious to see who would pick the former over the latter. These are the people, whose "reports" and groupthink determines the financial fate of the world: their vested interest in perpetuating the status quo is second to none. Which is why we read with great interest a recent paper from the Group of 30: Financial Reform, A Framework for Financial Stability, released on January 15, 2009, deep in the heart of the crisis. While the paper has enough insight for many, non-related posts (we are already working on several), we will focus on the policy recommendations presented for money market funds.
Money Market Mutual Funds and Supervision
Recommendation 3:
a. Money market mutual funds wishing to continue to offer bank-like services, such as transaction account services, withdrawals on demand at par, and assurances of maintaining a stable net asset value (NAV) at par should be required to reorganize as special-purpose banks, with appropriate prudential regulation and supervision, government insurance, and access to central bank lender-of-last-resort facilities.
b. Those institutions remaining as money market mutual funds should only offer a conservative investment option with modest upside potential at relatively low risk. The vehicles should be clearly differentiated from federally insured instruments offered by banks, such as money market deposit funds, with no explicit or implicit assurances to investors that funds can be withdrawn on demand at a stable NAV. Money market mutual funds should not be permitted to use amortized cost pricing, with the implication that they carry a fluctuating NAV rather than one that is pegged at US$1.00 per share.
The phrasing of "with no explicit or implicit assurances to investors that funds can be withdrawn on demand at a stable NAV" should be sufficient to whiten the hairs of every proponent of money markets as a "safe" investment alternative. Yet what the SEC has done, is to take the Group of 30 recommendation, and take it to the next level: not only will funds not have explicit assurance of any kind vis-a-vis funding, but in fact, the redemption of said funds would be legally barred upon "extraordinary circumstances."
Rule 22e-3
Proposed rule 22e–3(a) would permit a money market fund to suspend redemptions if: (i) The fund’s current price per share, calculated pursuant to rule 2a–7(c), is less than the fund’s stable net asset value per share; (ii) its board of directors, including a majority of directors who are not interested persons, approves the liquidation of the fund; and (iii) the fund, prior to suspending redemptions, notifies the Commission of its decision to liquidate and suspend redemptions, by electronic mail directed to the attention of our Director of the Division of Investment Management or the Director’s designee. These proposed conditions are intended to ensure that any suspension of redemptions will be consistent with the underlying policies of section 22(e). We understand that suspending redemptions may impose hardships on investors who rely on their ability to redeem shares. Accordingly, our proposal is limited to permitting suspension of this statutory protection only in extraordinary circumstances. Thus, the proposed conditions, which are similar to those of the temporary rule, are designed to limit the availability of the rule to circumstances that present a significant risk of a run on the fund. Moreover, the exemption would require action of the fund board (including the independent directors), which would be acting in its capacity as a fiduciary. The proposed rule contains an additional provision that would permit us to take steps to protect investors. Specifically, the proposed rule would permit us to rescind or modify the relief provided by the rule (and thus require the fund to resume honoring redemptions) if, for example, a liquidating fund has not devised, or is not properly executing, a plan of liquidation that protects fund shareholders. Under this provision, the Commission may modify the relief ‘‘after appropriate notice and opportunity for hearing,’’ in accordance with section 40 of the Act.
Lots of keywords there: "fiduciary", "impose hardships" but most notably "permit us to take steps to protect investors." Uh, SEC, no thanks. We can protect ourselves. Your protection so far has resulted in the Madoff scandal, the BofA fiasco, billions in insider trading profits and not one guilty person, who did not manage to escape unscathed with merely a wrist slap in the form of some pathetic fine. With all due respect, SEC, any proposal that involves you acting to "protect" us should be immediately banned and any further discussion ended.
Especially in this case: what the SEC is proposing is simple - the entire market structure has been converted to a hedge fund. When investors hear the word "suspend redemptions" they envisioned a battered, pro-cyclical, leveraged, permabullish hedge fund, that suddenly "found itself" down 30, 40, 50 or more percent, and to avoid instantaneous liquidation, had to bar redemptions. Forgive us, but is the SEC confirming that the entire market is now one big casino, one big government subsidized hedge fund, where as long as things go up, all is good, but the second things take a leg down, just like any ponzi, nobody will be allowed to pull their money? Maybe Madoff should have created the same redemption suspension: his fund would still be alive and thriving, now that the government has become the biggest ponzi conductor of all time. And nobody would have been the wiser. But instead, the Securities and Exchange Commission, in discussions with the Group of 30, Barney Frank, and any other conflicted individuals who only care about protecting their own money for one more year, has decided, in its infinite wisdom, to make money markets a complete scam. And this is the gist of regulatory reform in America.
Conclusion
At this point it is without doubt that even the government understands that when things turn sour, and they will, the run on the bank will be unavoidable: their solution - prevent money from being dispensed, when that moment comes. The thing about crises, be they liquidity, solvency, or plain-vanilla, is that "price discovery" occurs all at once, and at the very same time. And all too often, investors "discover" they were lied to, as the emperor, in any fiat system, always has no clothes. Just like in September 2008, when the banks were forced to look at each-others' balance sheet and realize that there are no real assets on the left backing up the liabilities on the right, so the moment of enlightenment occurs are the most importune time: just ask Hank Paulson. Had he known his action of beefing up Goldman's FICC trading axes would have resulted in the "Ice-Nine'ing" (to borrow a Mark Pittman term) of money markets, who knows- maybe Lehman would have still been alive. Perhaps risking the cash access of 20% of US households and 80% of companies was not worth the few extra zeroes in Goldman's EPS. But we will never know. What we will know, is that now i) the government is all too aware that the market has become one huge ponzi, and that all investment vehicles, even the safest ones, are subject to bank runs, and ii) that said bank runs, will occur. It is only a matter of time. And just as the president told everyone directly to buy the market on March 3, so the SEC, the Group of 30, and Barney Frank are telling us all, much less directly, to get the hell out of Dodge. Alternatively, the game of "last fool in", holding the burning hot potato, can continue indefinitely, until such time as the marginal utility of each and every dollar printed by Ben Bernanke is zero.
h/t Geoffrey Batt
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I've only yet read reviews, but the movie Avatar comes to mind...
So where do I need to put my money in order to keep "value".
What is a value asset in "Worst Case Scenario" as opposed to cash.
If equities are questionable, if MMarkets can be "suspended redemptions", where in the world is the "safe haven"????
Is this now the state of the union that any asset I gain no longer has value?
Does this mean that "intrinsic value" is really just that, eye of the beholder????
When does the shooting start?
Gold? (bitches)
Gold.
Not exactly.
Default-driven deflationary times are not good
for gold or most tangible assets except cash
in hand. When bank runs come, people
may be startled to learn how little cash banks
have to give out. In November the FDIC quietly
stopped guaranteeing over $250,000 in accounts.
BAC, C, JPM, WFC just quietly announced
they are dropping out of the FDIC account
guarantee program. Try to withdraw more
than $3000 in cash, suffer the procto-
logical exam and be told to wait overnight.
A friend withdrew $30,000 cash from one of
the Big4 and was told he had taken all their
cash. Either Brinks is going to get rich, or
people are going to have a rude awakening
when they try to get 'their' money and find
out the Courts treat deposits as Bank property.
http://www.jubileeprosperity.com/
Good point. Cash, physical gold, physical silver are going to rule.
Yes, and have a small amount in cash. Say, no more than 10 Benjamins, $1,000. That way you can flash a Benjie at the idiot that is stupid enough to take it, and you can get what you need, whether it's safe passage or a freaking loaf of bread. If you still can't get safe passage you whip out your 2nd Amendment and see if he will change his terms. Nothing says 'don't touch' like a firearm. Whether or not you use it is a personal decision - hopefully you won't have to.
And whoever brought up bread for gold in a crisis is a moron. Bread doesn't last longer than a week. And whoever the baker is in a crisis is going to have to have some serious firepower to keep the zombies away with the smell wafting for miles. In a crisis you do not want to be bartering. Bartering is for after the dust settles where one can come to a reasonable agreement in exchange of goods or a service. If you wait until things get ugly to procure necessities you can be sure you won't get full value for your PMs and you are putting yourself and loved ones at risk. Bank runs are in times of desperation - don't plan on civility and order.
Have the means to sustain life for at least a month while things settle. It won't be the same in all areas, but when the bank runs occur you do not want to be among the mob at the local supermarket.
Collapse of Argentina will provide some documented insight. Be prepared:
http://video.google.com/videoplay?docid=4353655982817317115#
I have always thought of preps as my way to get through the bottle neck. The bet is, how long will the bottleneck take? Whatever you think that could be, stock up for it. But preps are transition, not what is on the other side.
That's the ultimate question! The 'transition' is the freaky part - who will be left standing after the proles realize there are no more food stamps (overnight Hurricane Katrina)? Sure, what if they start a rationing scheme - 'breadlines'. Imagine standing in line with guns pointed at you. They had an armed law enforcement officer when I was standing in line for Avatar - in a nice part of town!
Will everyone sit at home, patiently awaiting assistance? Or will they hit the streets? My belief is that any longer than 7 days of crippled infrastructure will unavoidably result in exponential meltdown. The police and military will be easily overwhelmed, especially when the former realizes there may be no paycheck and that they would rather be at home protecting their family.
When the FRN is at least devalued a lot of people will wake up - it will be emotionally devastating for many. Even if they transition us into the EURO or a new currency, redeemable with devalued FRNs, I question how people living at the edge will pay all their utilities, gas to commute downtown from the burbs, food. Food!
I cannot imagine a transition without martial law - allowing connected elite to flee to wherever with their Xe (Blackwater) escorts. Think about how ordinary people act when they can't get money from an ATM: no cigarettes, no booze, no twinkies - not to mention if they have an illegal drug problem. Imagine more than two or three days of that. If they can't electronically 'bankrun' you can bet they will go to the bank to talk to the manager - with a whole lot of other pissed-off, awakened slaves.
So instead of having to be in the thick of it, content to trade your gold or silver for last-minute necessities, why not plan wisely to 'get away from it all' and wait until it has calmed down again.
Where are the connected elite gonna go? If one nation goes kaboom, sure, there's always someplace better to skip to. But if the whole world hits a financial wall, IMO, no place will be safe for elite. Or perhaps, the only safe places will be already-existing, heavily-armed police states (who might decide to charge a lot of "rent", anyway).
I think this time around, there is no obvious escape hatch. Hopefully, the experience will teach all of us something about a sustainable society.
They had an armed law enforcement officer when I was standing in line for Avatar - in a nice part of town!
Whoa! What was up with that?
Maybe so, but try telling that to these guys in Brussels who are blowing up my phone.
What's your number, can I blow up your phone?
You might got what I want.
But I am small fry, as for my budget.
Like yourself, I am not Chumbawamba.
50 kg is the minimum amount that I can export from Accra, Ghana.
Still interested?
Oh golly, wish I could, sir. Wish I could.
- am just a middleman bro.
EXCUSE ME. Cash, by which I can only assume you mean dollars, are paper instruments. They are a claim on an intangible promise by a bankrupt entity. Yes, it is "money" in the sense that people can use it to barter for stuff, but seriously, what's your problem?
Gold is money. Gold is cash.
That you won't want it when this fraud finally implodes is of little consequence to me since a few BILLION other people on this planet will.
Gold is money. In a default-drivent deflationary environment, gold will do exactly what it's supposed to do, which is to perserve your wealth. You will still be able to buy the same amount of shit with gold as with paper money. And on a long enough time scale, the viability of your paper money backed by debt will return to its intrinsic value, while gold will still be there, shining away as always.
As the great Gordon Gecko said, you're an idiot.
I am Chumbawamba.
True, cash is only a "virtual gold" able to exist only to the extent that the trading public have confidence that it will fulfill its role as such.
It has ceased to function appropriately to its design, and the people (deluded, by long usage, into believing fiat the same as AU) are increasingly repudiating it.
The gov't will pull the trapdoor on a devaluation operation as soon as they determine that the "run on the currency" poses greater jeopardy to the state than a currency dilution.
They are near this point. They have been driven by the fraud, abuse of public confidence, and criminal accounting to ONLY these two choices...devalue the currency incrementally over time, or INSTANTLY.
Time dilations are allowing the saavy to escape too readily, they are about to pull the lynchpin. They choose the time and place of their action, we either PREPARE NOW or endure further the arbitrary caprice of a bankrupt state efficient only in the daily innovation of their honor (or dishonor).
Indeed.
ATG says banks dont have enough cash, then says cash is king.
ATG says cash is king, then denies the king of cash (gold).
ATG comments remind me of a passage from Frank Zappa's book:
@ATG,
Munch on this for awhile;
WASHINGTON -- US currency should include tracking devices that let the government tax private possession of dollar bills, a Federal Reserve official says.
The longer you hold currency without depositing it in a bank account, the less that cash will be worth, according to a proposal from Marvin Goodfriend, a senior vice president at the Federal Reserve Bank of Richmond.
In other words, greenbacks will get automatic expiration dates.
"The magnetic strip could visibly record when a bill was last withdrawn from the banking system. A carry tax could be deducted from each bill upon deposit according to how long the bill was in circulation," Goodfriend wrote in a recent presentation to a Federal Reserve System conference in Woodstock, Vermont.
The 34-page paper argues a carry tax will discourage "hoarding" currency, deter black market and criminal activities, and boost economic stability during deflationary periods when interest rates hover near zero.
It says new technology finally makes such a scheme feasible. "Systems would have to be put in place at banks and automatic teller machines to read bills, assess the carry tax, and stamp the bills 'current,'" the report recommends.
Goodfriend said in an interview that banks might place a kind of visible "date issued" stamp on each note they distributed. "The thing could actually stamp the date when the bill comes out of the ATM," he said.
http://www.scribd.com/doc/22172267/ASC-2009-Carry-Tax
Rusty,
It just doesn't stop, does it? Again, it isn't happening, but that it is even being discussed.
END THE FED.
As a nice dessert after our munch I offer imbedded chips , no cash at all . Don't use the chip and starve . Simple , easy , who cares what fiat garbage backs the chip. Prison for selling gold or silver and it becomes untradable, worthless. I too ask for a real answer on what to do . Truly there will be no safety . We will be slaves . Starvation is a powerful tool . Ask North Korea. Ask Ghetto Jews in WW2 . All this childish speculation is entertaining , but offers NO ANSWERS . Just more fears ad infinum .
The answer is gold.
I am Chumbawamba.
Here is an answer. Make the study of virtue and perfection of your character a priority. Make yourself useful in a basic way by mastering an essential, necessary craft for society (small or large) to continue. Make a strong coalition through a network of friends and family, and reach out making more friends with the idea of NEVER TAKING from them in larger gradient than you provide. Store your accumulated wealth in Gold or Silver which is significantly more insulated from the systemic plunder which we know find our globe. Make yourself able in martial arts and use of weapons, but cross yourself never to resort to their use unless all other options are exhausted. Store up a basic food survival kit for you and loved ones which will last at least 4 weeks. Consider storing some fuels. Make preparation for living "closer to the ground" and growing your own. Secure your perimeter. Pay off your debt. Make close examination of your financial situation: come to a realistic conclusion on your ability to possess. Become lean, payoff loans, default upon those which you will NEVER be able to service. To the extent possible, obtain shelter with independent heat source free and clear. Have a "bug-out" bag for all your family members.
Commit yourselves to strict adherence to the rule of law until such time that laws are made immaterial. Then plan escape to any other land.
That's the long answer :)
(A very good one, BTW.)
I am Chumbawamba.
Doesn't inflation effectively imposed a tax on those who hoard cash already. Double taxation on money held outside the banking system, sounds like a C-corp.
sigh, like that info is going to help moderate my attitude-alternator consumption...:) Things just get spookier, wierder and worser...
Authentication requested, please.
ATG cannot authenticate it, because it's bullshit.
Corporations like Chase and Citibank are dropping out of one part of FDIC coverage, specifically the Transaction Account Guarantee Program, which offers the 'double' insurance of protecting accounts above $250,000 per depository account. They are NOT dropping out of general FDIC coverage.
Here are the Chase and Citibank statements on their changes.
ATG is oversimplifying, but that's really no surprise, is it?
If the point of ATG is to draw attention to bank weakness, well, No Shit Sherlock!
http://www.creditinfocenter.com/wordpress/2009/12/23/chase-and-citibank-...
after a slick 2 second goog search - viola !!!
Yeah, but that's NOT what ATG contended.
ATG is trying to make it seem like they are out of FDIC coverage altogether, which is bullshit.
And as for the $3000 withdrawal problem, WELCOME TO 1999. It's been a reporting requirement to Treasury's FinCEN since around 1999, perhaps as early as 1996. For a few years there they were lowering the requirements a few thousand bucks at a time (30,000 then 10,000 then 3,000 was I think the progression).
And if ATG would be so kind as to show where the FDIC has 'quietly stopped guaranteeing funds over 250,000' well that would just be giggity for me to see.
Here, ATG, I'll even help you with the FDIC link. Now you show me where they have stopped guaranteeing above $250,000?
Interesting thought, but do you really believe TPTB would allow such a conflagration when it could all be so easily stopped by simply putting ink to paper?
There can never be a real shortage of a non-redeemble paper-ticket currency of any consequence.
It can be produced at virtually no cost and in unlimited amounts.
The Fed has mfing vaults full of paper notes.
Paper notes are easily creatable. There will never be any shortage of paper notes.
A bank lockup to prevent a run is a precursor to outright seizure and/or devaluation.
You will NOT want to hold paper notes in the event that they lock up the eDollars. You will want to transition those into something else because the devaluation is coming up the driveway.
I had similar experiences in Fla. , I told them I wanted to withdraw 10k in cash and they looked at me like I was crazy, then said that they didn't have that much at the bank which must have been a lie or delay tactic. So I was given a cashiers check. In Japan and Singapore they don't even question it. In Japan 2 million yen at the time roughly 20k in dollars. In Singapore I've seen them hand 40-50k no problem and no questions. They claim its a safeguard against moneylaundering, but I believe its so they can keep cash flow under control. If it leaves the banking system then they have a hard time tracking it.
My bank did this to me when I asked for 4 grand. I took 2 grand away. I talked to the manager on the phone who freaked out that I was ever told that. She chewed her assistant managers out and I can pull that much when I want to. She did say that if I was pulling 10 grand that she would like a heads up for that, but it was no big deal.
ATG,
"In November the FDIC quietly
stopped guaranteeing over $250,000 in accounts"
Do you have a current link to this?.
My Bank, not on the ESList, straight up told me this was still in effect.
$250 per account holder, add sub holders, and you can hold well over.
IRA's, are totally separate from that $250k...................
Gold. Physical gold. And hold that gold at your home, in your own safe. If not Gold, then Silver, same conditions. This is now the ONLY solution I can think of.
And become a robbery statistic or have the gold
confiscated? Try to get a loaf of bread and
change for a gold coin at the grocery.
The only (currently unpopular) solution is cash
for the crash...
http://www.jubileeprosperity.com/
Thieves will be more than happy to relieve you of your cash also.
Whats up with the link?
Read my comments just above yours.
ATG is full of crap, spreading crap, and probably just hucking his link.
Sure, you can confiscate my gold. When you find it. Ditto for the robbery. I could give a robber a couple of large, flashy, gold coins, while most of my stash is hidden safely away.
As far as "buying a loaf of bread" is concerned, try this: you contact a baker, a real baker who still makes his own bread. Tell him you know times are tough. Nobody has money. Then ask him if he would agree to bake one (or more) loaf of bread per week for your family for the next three months. Then show him one -- exactly one -- gold coin.
I guarantee you that, if times are tough enough, he'll take your offer.
If times are really tough, replace gold coin by silver. Works everytime.
Let's see, a decent loaf of bread currently costs about $5. Let's assume it takes an average family of average size to consume two loaves of bread every week. That's $10/week, $40/month.
Gold currently trades at around $1,100/ozt. $1,100 / $40 = 27.5 months of bread.
A lot of assumptions here, but you get the idea.
That's why we have gold fractionals, and of course silver. And don't forget copper.
I am Chumbawamba.
need copper for filling those magazines
Really like your blog content the way you put up the things…I’ve read the topic with great interest and definitely will stick your blog routinely for other great posts. mediahuset nova as svindel
"That's why we have gold fractionals, and of course silver. And don't forget copper.”
Exactly!
What gold I have is meant for large purchases, silver for medium and copper for smaller. One doesn't head to the store to buy a loaf of bread with a fist full of benjamins. I’d add that I also stock piled (for trading) basic tools, cooking gear, seeds, etc..
I am a Chumbawamba fan
Anton,
I agree with you except for the point that you might misunderstand your opponents. My copy is in a box somewhere but A. Solzhenitsyn's Gulag Archipelago has a chapter on gold confiscation, but there it was done by the government. " Now wheres the rest of it". I read it somewhere else that the first move after the bolshevic revolution was the debasement of the currency and confiscation of all the gold.
The Kolima River in Irkutsk is the Russian equivalent of the Alaska goldfields. It was very remote and reachable only once a year between freezeups. The mortality rate according to A.S. was slightly below 100% per annum amonst the residents of gulag. They were there for the gold.
Slippery roads ahead
Buy and store flour and get a breadmaker.
Fast rising yeast too.
Won't have to waste gold on food
Use Gold to buy property, pay taxes.
Use silver for wages, buy protection from
pros and or gangs...
Rinse and repeat....
Become the next phase of bankster
Rinse and repeat...
Remember the phrase:
"The best laid plans o mice and men often go awry"
Its the best we can do..
Better yet: buy a cheap grain mill ($27 - hand operated) and grind your own flour (grain is easy to store), make your own bread...become self-sufficient. It is not difficult and you don't have to be a wingnut to rationalize it (not suggesting anyone here is a wingnut - but then again, I don't think I am a wingnut, just saying...)...your own bread will taste much better than anything you can buy in the store, yeast starters are easy to keep.
Even better: brew your own beer, save the grain and make your own bread with the spent grain...it is delicious. Americans need to become more self-sufficient. A person can make most of the stuff they need to survive (with minor storage issues regarding raw materials).
I find it interesting when people discuss using Gold as a medium of exchange during a TSHTF scenario. The only time you'd really be using gold is for exchange for safe passage or trade for free and clear real property.
Of course don't expect change back when you and your family are starving and 1 toz of Au is the smallest demonination you got. If you had the gumption to obtain some Au, you should of have obtained some junk Ag like some Mercs and even pre82 pennies (95%) copper.
Then again if there is an exodus good luck shelpping anything besides Ag or Diamonds.
The trick is to hold on to your gold until stabilization when you can exchange back for a fiat currency (hopefully not 100% fiat) free of massive obligations.
Nice summary. Here's mine, even more terse:
Gold and silver.
Guns and bullets.
Garden and water.
I am Chumbawamba.
hey chumba, don't forget the chickens
...
Goats and chickens.
I've been considering getting chickens. I grew up with them and they are probably the most enjoyable animals to have because they're so silly, second only to cats chasing after laser pointers.
My suburban dwelling situation is not entirely applicable for a full-fledged farm, so I've been putting a lot of thought over the last several months into moving to the country or the mountains, something I ultimately hope to do before the end of this year, but there are certain challenges on my end that must first be overcome. It's not solely my decision to make or else I would've been out right now tending to the animals and the fields instead of wasting precious time interacting on the internets.
My guess is that the cities will be very dangerous places to be in the not too distant future. I'm actually right on the edge of suburbia where I'm at (the "country" is literally about a half mile from my house) but it's not far enough. Especially because of what's between me and the wide-open country.
I am Chumbawamba.
There's going be "loafs of bread" at the grocery???
Yes, but only for those who will be paying with gold or silver.
I am Chumbawamba.
I think people are not clearly thinking this through. If the SHTF and money becomes worthless, gold will be worthless too. The Government simply has to make it illegal to trade or barter with gold. It has already done so for marijuana. When you can be jailed for flashing a gold coin, you will use Government issued stamps for butter, bread and fuel... Just like everyone else.
The simplistic view that one can use gold when the $ = 0 isn't rational IMO. As long as the Government holds power, it has the means to make anything you currently own worthless as a currency. That includes gold, paper money or marijuana. Get used to it.
Sure, and I can pick up my phone and call a few different people and within 24 hours have anywhere from 1/8 of an ounce to a pound or more of marijuana delivered directly to me. Granted, I live in California, but it was like this before we started legalizing the stuff.
The point is that the black market is more established and entrenched than you think. The black market has always been there. From time immemorial. It's called trade and barter between two people. It will always be there, no matter what government is in place. To think otherwise is rather naive.
And the government has no such power as you speak to "make anything you currently own worthless as a currency". They cannot dictate value. If I want something, and someone else has it, and they're willing to trade it to me for what I have, it's going to happen. The government might be able to dictate money, but they can never, ever dictate value and wealth.
I am Chumbawamba.
Well according to your reasoning, when the SHTF we can all just become heroin dealers and everything will work out just fine. Yes, the Government can dictate value. It does this with laws that, when violated, will land your sorry ass in jail where you will probably eat better food than the rest of the population.
Again, you're missing the bigger picture (and making a silly argument to boot). Government cannot be everywhere at all times. People will trade. It's what poeple do. Just like people have sex. Look how long the (US) government's been trying to crack down on that, and yet more people are born every year. And you expect that they'll be able to outlaw trade? When's the last time you bought something off craigslist or ebay? Was the government involved?
Silly.
I am Chumbawamba.
"As long as the Government holds power, it has the means to make anything you currently own worthless as a currency. That includes gold, paper money or marijuana. Get used to it."
Wow, I think that may be the dumbest thing I've ever read on ZH. Anonymous, just read from now on, thanks.
F-ing-A!
That's what a lifetime of public education does to you I guess.
The STATE is all knowing and all powerful and can command the tides. If it says a square now has 3 sides, then that makes it true.
^^^^ +1 Trillion...
LOL.
Stupid.
Is marijuana WORTHLESS?
The government cannot legislate the worth of something.
HAHA
yeah exactly
Didn't the criminalisation of marijuana make it worth MORE???
I am anonymous
Last I looked the government derives its power from the people. I'd add that it does so quite literally, as in taxes. If people have no USD, because, you know, it's been taken away, then what the heck is the government going to operate off of with which to "make anything you [we] own worthless"?
Perhaps in the short-term the government will try all kinds of things, but such attempts will be quite futile and, in the end, will ultimately fail.
Have you ever heard of the concept called a "black market"? Obviously not.
When TSHTF, as you say, people will trade in marijuana, gold, silver, cigarettes, etc. Trust me, they will. And they will do it whether the government outlaws it or not.
It has been said many times that anything could be bought in Soviet Russia, just as long as you had US dollars to exchange. And this, despite the fact that trading in dollars on the black market could get you sent to the gulag for many years. If you did not have dollars, you bartered. I have heard toilet paper - genuine 3-ply toilet paper - was actually a very good item to trade. Ditto with cigarettes.
The same will happen pretty f*ck*ng fast when currencies become worthless. Trust me on this one. When a cop arrests you for trading in gold, you'll just have to come up with a suitable, shall we say, "incentive" for him to release you and leave you alone.
Right, because no one has ever been robbed or mugged for cash, because, I guess, everyone knows the true secret behind fiat money.
Try getting a loaf of bread and change for fiat money when it is hyperinflated to the cosmos.
It is idiots like you that are needlessly confusing this issue with your shit advice to hold paper. I hope nobody is actually being influenced by your idiocy, but I hope the ones that are will somehow find a way to thank you for your advice once they are completely destitute from a complete fiat system meltdown, coming soon to a corner near you.
Can people please joining me in junking this guy's comments, for what it's worth (in fiat dollars), because of his constant shameless plugging of his stupid website?
I am Chumbawamba.
Got your six bro.
As always, you're a sweetheart :)
And I am Chumbawamba.
Yes, and I just busted him above lying (or at best spreading misinformation).
ATG = Shit from a dog's ass.
I too understand your hesitant stance on physical gold. However, years ago after reading Robert Precther's book Conquer the Crash inspired me to purchase not large quantitiesof gold but silver in ounce bars My reasoning silver in ounce bars could be used as currency alternative. Now I see gram coin sales, which would be trad-able at the local level?
I too understand your hesitant stance on physical gold. However, years ago after reading Robert Precther's book Conquer the Crash inspired me to purchase not large quantitiesof gold but silver in ounce bars My reasoning silver in ounce bars could be used as currency alternative. Now I see gram coin sales, which would be trad-able at the local level?
Aren't you the expert on nuclear physics as well as global energy policy? Now you offer advice on gold too. What a genius.
You're right. From here on out, each person can only be an expert in ONE area.
(Otherwise, Anon will be a total pussy and stalk you.)
Cindy, You don't understand- Landrew and I go back a ways. Stick to your own affairs.
Oh sorry, my bad.
No the robber will become a manslaughter or justifiable defense statistic, and more room in the prison system will be made.
They're letting LOTS of people out of prisons NOW because of a lack of funds to operate them!
So, nobody can rob your cash and the gov't cannot confiscate it??
ROTFL.
Cash can be confiscated at the stroke of a pen. eDollars can be confiscated with the click of a mouse.
Cash is IMMEASURABLY easier to confiscate than gold is.
Cash...the ultimate faith instrument.
Good advice, with one thought to ponder.
Slvr, is HEAVY...........if your in a bug out mode, best have alternate storage location.
500/1000oz's +/- is a wad.Even in coin style.
SILVER bags of junk silver coins, and 100 oz bars. gold will be valued in large increments, making it difficult to use for barter silver is valued, at close to the cost to mine and refine, right now, and more is used per year, than mined. we're consuming reserves. above ground refined silver, is rarer than gold
Wait would this than make money in a community bank worth 10 times more? And this only pertains to runs on MM accounts?
Or would this basically be the canceling out of all electronic money accounts?
Yes - assuming they don't close all the banks
when the RUN begins. Cash you can access
now is worth more than cash you cannot
access. Cash the government will give you
later will have a net present value - as TD
mentioned - INSTANTANEOUS PRICE
DISCOVERY. LOL.
If people can't get cash then they'll just revert to barter and other tangible forms of money. Once these new organic payment systems spring up, nobody will want stupid FRN anyway.
I am Chumbawamba.
So many people who are aware of the fraud that is our current system seem to think that the coming collapse in the next year or two will be immediate and so complete that governmental power and authority will be immediately rendered impotent and of null effect.
The lesson of history is that dying governments tend to cling to life much longer than people ever think they can. For example, the Roman Republic collapsed slowly over the course of the first century BC, but it wasn't until the 300's that the barbarians first breached the gates of Rome.
When the system collapses, the government will use every resource at its disposal to clamp down and maintain the semblance of law and order. This is not to say they will be able to maintain full control; I am sure the black market will thrive like never before in this country. But the government has one very important resource that people forget about: the loyalty of most of the citizenry. This will of course erode quickly once people see that the government is not acting in good faith. But it could take a generation for this to reach a critical mass. Just because the number of people who think the government is little better than an organized criminal gang went from 1% to 2% this past year does not mean a significant minority is ready to let go of the system completely.
There will probably be a couple of crazy months when the big banks collapse or almost collapse later this year, but after that, the system of order that is likely to be put in place will be more like Nazi Germany than like early post-Communist Russia, i.e. there will be plenty of jack-booted thugs who are ready to challenge your belief that the government has no more power. Dystopian romances about barter systems, local exchange networks, and a return to an agrarian village society will likely not be fulfilled until after the coming police state collapses. When a culture dies, it spends its last strength suppressing and oppressing its successor. Once that strength is spent, it collapses in a heap. But the struggle can last years, generations, and, for great civilizations, for centuries.
The Republic has fallen, but the Empire has yet to come into being. When the Empire collapses, then we will have a new "Dark Age" of some sort, whether shorter or longer. Unfortunately, the demise of European civilization will likely drag out into centuries of collapse and decline. This current downturn will merely usher in a new form of totalitarian regime never before witnessed in the history of man. It will all be tolerated to a certain extent because the people cannot imagine the alternative, or else they do not hold themselves responsible for fashioning it. The question I have yet to hear a satisfactory answer for is how we will outlast such a regime without being turned into serfs and slaves on the neo-feudalist plantation.
Today we're much more sophisticated, as such we crash a lot faster. The U.S.S.R. is a good example (doesn't matter what kind of govt); and it was one of the world's only super powers (one of two)!
Here's how the US goes down hard and fast:
1) China's current bubble blows (Doug Noland also believes this is the ticking timebomb- http://www.prudentbear.com/index.php/creditbubblebulletinview?art_id=10326 bottom of article);
2) US is unable to roll over its debt;
3) US cranks up the printing presses;
4) Oil-producing countries drop dealing oil in USD (there's been some steady progress down this path already- some, like Saddam Hussein didn't make it);
5) US citizens' routines basically grind to a halt, and with it, lose currency with which to transact.
Another exceptional piece of investigative analysis and reporting. I've been trying to get Fidelity to advise me on their POV on reverse repos in their MMFs. The issues you've raised make that a moot point. Time to cash out to relatively safe local bank and (more) PMs.
Take a good look at the local commnity bank
balance sheets first. Many are upside down with
bad loan assets including mortgages, and cannot
cover deposit liabilities. No substitute for cash
in hand now. If houses sell for 1930s prices,
may be glad you saved your cash...
http://www.jubileeprosperity.com/
How many?
Umm, that's 20 'junks' at my post timestamp. Marla, you keep track of these? Maybe we can get a top 10 junked list of comments from yesteryear?
Will you be glad before or after your cash is inflated to infinity?
Your crap advice is tiresome.
I am Chumbawamba.
the cash argument, is good right now, but it definitely has a use by date.
Yeah, just about every bank I see driving around my neighborhood can be found on the FDIC shitlist over at CalculatedRisk.
I consider gold to be more "cash" than FRNs, but for now I'm hedging my bets with some of each. I agree that paper is at least superior to electrons in the computer at the bank.
No good community banks where I live either.
You are smart to hold gold (& silver) as well as cash FRNs. You can spend the FRNs really quickly if you have too (like WTSHTF). The wealthier you are, the more you should put into PMs.
Good point as well re paper FRNs are better than electrons in the bank.
You can look at their monthly holdings by googling (for example) FMPXX "monthly holdings" and you'll get a page like this:
http://content.members.fidelity.com/mfl/composition/0,,316175207,00.html...
Scroll to the bottom and click the link "For full portfolio holdings view the most current Monthly Holdings, Quarterly Holdings, Semi-Annual, or Annual Report."
Also, a (long) article on Repos:
http://henryckliu.com/page15.html
I tried to get Fidelity to state whether or not they would be doing Reverse repos with triparty agents (via the Feds QE ) They had no idea . Broker I talked with hadn't even heard the news of same , then old news . Broker then directed me to an alledged no MBS stacked MM fund , non MBS bond fund , et al . All stated "safe" funds were loaded to Gills with various MBS . Bye Bye to Fidelity - stuck with 401k there , but cashout tax hit sounds better all the time . Nothing in a bag at home is still worth more to me than nothing in a worthless shysters , uh that would be InFidelity's, account.
That's it. That is the final straw for me. I am going to buy physical gold and stash it where th govt. cannot get it. This is now even for me, a long time investor and one who understands what is happening...scary.
"stash it where th govt. cannot get it."
And pray tell exactly where would that be?
The Asieri Umar (rectal) storage plan?
Be careful, gold may go down as well as up,
particularly after a ten-year bull market...
http://www.jubileeprosperity.com/
Gold does not go up or down. Gold just is. It's the dollar price that moves. Get your basic facts straight.
You can't hide dollars from the government. All they have to do is declare them null and void, and they got you. You can hide them up your ass or on pluto, doesn't matter. However, the government cannot redefine the laws of physics and chemistry by fiat. No matter how hard Tiny Timmy G. incants his spells, he cannot turn gold into lead (unless be buys lead with gold).
All That Glitters, indeed, but paper certainly doesn't.
I am Chumbawamba.
A ten year bull market, with many years to come. Never have the fundamentals for gold been as good as now. Unsustainable debt levels, parabolic-spending Obama and Ben-the-moneyprinter will destroy the dollar. Greenspan already said in 2005 that the dollar will end in hyperinflation. Smart money is piling into gold. Central banks are net buyers. The gold market is tiny and everybody will be rushing to get any. As Paulson told us: 'within a few years people will kick themselves for not having bought gold in 2009'.
"stash it where th govt. cannot get it."
And pray tell exactly where would that be?
How about inside your empty skull, buried behind the garage?
"How about inside your empty skull, buried behind the garage?" ROFLMAO...thanks for the laugh, I needed that...:)
Unfortunately the plan to have Americans become economically illiterate has worked. Therefore, only the type of people that look at sites like this one will understand what it means to "suspend redemptions to allow for the orderly liquidation of fund assets." The rest of the sheeple will continue to be blissfully ignorant until it is much too late.
Ah, now we are getting somewhere. It appears that not a few ZH space monkeys are reaching the point of understanding the central thesis of Hans-Hermann Hoppe's book, "Democracy: The God That Failed".
http://www.hanshoppe.com/
The quick & dirty is the Constitution itself is a seriously flawed document. That's because not only was the power of the federal government codified by popular decree, but it was granted absolute monopoly control over territory, tariffs & laws. Once power was centralized by legitimate consent, it thus became a target for corruption by those who understood that activities undertaken by political representatives could direct the incredible wealth of the state to chosen individual parties AND be justified as explicit consent of the governed by the full force & weight of LAW.
Think about it from their perspective; blogs like Zero Hedge provide an excellent release valve for the very small number of people who have the capacity to figure out what is actually occurring, but have absolutely zero influence or capability of changing the essential underlying facts of the game.
It's why my posts tend to focus on the essential matter: will current policy prescriptives work, or will they not? Because if they do work (the first time a centrally directed command economy has ever worked), there are going to be tremendous inflationary sectors that will enable some "regular folks" to become very wealthy. Likewise, if the policies fail (which is most likely), they very well may take the federal government down with them, which will result in a very wild ride for all of us.
At this level of abstraction, little things like the equities, bond & currency markets are really pointers to the bigger picture. Keep you eyes focused on the prize: survival, with possibly some wealth preserved to claim a stake in the next stage of history.
"The quick & dirty is the Constitution itself is a seriously flawed document."
Why don't you try reading the Constitution some
time?
Not surprisingly, you have no clue.
You're an ass.
I am Chumbawamba.
ATG is right (about the Constitution, not his other spam bullshit) and Chumbawamba is, as always, wrong. Hey cocksucker, since you never have anything interesting to say you need to stop fucking posting.
Wow, clever.
Hey, guess what? My comment-to-junk ratio is 29:2 while yours is 1:1*. That ought to say something, no?
* No, that wasn't me or else you'd have been 1:2, which would've been downright embarassing, and I didn't want to make you look like a complete douche, just a douche.
I am Chumbawamba.
Update: your comment-to-junk ratio is currently 1:8, while the comment to junk ratio for my comment above is 1:3 currently. I'm still beating you. You so suck.
I am Chumbawamba.
Check that your junk to comment ratio is 2:29.
I'm wondering how long the ZH crew is going to allow a troll such as yourself to continue disrupting the flow of conversation. This isn't just a gussied up parlor game - people are getting pretty serious about what's really goin' down; lives & fortunes are literally at stake.
As to your point, the Constitution is seriously (fatally) flawed because it negated the dynamic tension that existed between 13 sovereign states. Recall that the original 13 colonies were chartered separately with little/no regard for a unified whole.
The challenge facing the Framers was how to achieve a certain level of balance between the states & federal government. They badly miscalculated in their design, because once power was consolidated, the Federalists immediately began their (successful) efforts at corrupting and utilizing the full force & power of the law to benefit themselves.
We are now so far gone that I doubt we could ever elect an Andrew Jackson type of person ever again. Recall that he KNEW the country would undergo a huge economic contraction that would last years by taking on the then Bank of the USA (the Fed of its time). Yet he had popular political support of the People & the balls to do what was right, so it was full steam ahead.
We have now progressed to the point where the orgy of looting is out in front of everyone in broad daylight. If the fact that a taxpaying cheat like Timmy is the fucking SoT, I don't know what else can elicit a deep understanding of what is really happening. As for myself, I think we're looking at USA 2.0. My interest is how to survive and make it through the resulting bottle-neck.
+1
+1
+1
+pi
It's all about the bottleneck.
Nice! +1
For 100 years the "great" US Constitution didn't recognize/protect the right to vote for many of its own citizens!
So, you'd say, it worked, the constitution prevailed. Well, how about you give me at least a 100-year head start and we'll see how things go?
Racist and classist from the get-go. That's how centrally-controlled entities operate (it's a club thing you know)...
From http://www.justice.gov/crt/voting///intro/intro_a.php:
Before the Voting Rights Act Reconstruction and the Civil War AmendmentsBefore the Civil War the United States Constitution did not provide specific protections for voting. Qualifications for voting were matters which neither the Constitution nor federal laws governed. At that time, although a few northern states permitted a small number of free black men to register and vote, slavery and restrictive state laws and practices led the franchise to be exercised almost exclusively by white males.
Shortly after the end of the Civil War Congress enacted the Military Reconstruction Act of 1867, which allowed former Confederate States to be readmitted to the Union if they adopted new state constitutions that permitted universal male suffrage. The 14th Amendment, which conferred citizenship to all persons born or naturalized in the United States, was ratified in 1868.
In 1870 the 15th Amendment was ratified, which provided specifically that the right to vote shall not be denied or abridged on the basis of race, color or previous condition of servitude. This superseded state laws that had directly prohibited black voting. Congress then enacted the Enforcement Act of 1870, which contained criminal penalties for interference with the right to vote, and the Force Act of 1871, which provided for federal election oversight.
True, that's the whole point of reading ZH for me (along with some other sites). It's most likely that the current policies will fail spectacularly, slowly and then all at once. I try to learn and focus on what I can do to help my family survive and survive well, if at all possible.
The current stage of history is unbearable, soul-less and miserable. I'm ready for intermission and the next stage. It really can't get much worse, considering the things I care about.
The current stage of history is unbearable, soul-less and miserable. I'm ready for intermission and the next stage. It really can't get much worse, considering the things I care about.
Damn. Words stolen right out of my mouth.
I am Chumbawamba.
exactly...
ΜΟΛΩΝ ΛΑΒΕ,
It will get worse friend.
Claaaaass. Pop Quiz.
Are they propping up the zombified broken economic system because:
A. they want to rob us more, they ain't got all the juice outta this lemon.
B. they are afraid of all of society falling apart, and it is, after all, their society too.
C. they are afraid we will hunt them and kill them after we have seized their wealth.
D. all of the above are true, they inherited this sytem like the rest of us and they are conflicted with conflated, operating at cross purpose, motives (ie they are disorganized, fucked up, and rudderless).
E. None of the above/something we have not thought of...
I know, but I believe it will then get better - so let's hasten to worse.
The answer to the quiz is a little of A through E. I think a big part of it is that they have found themselves with their hands on the levers of wealth and power, they like it a lot, and don't want to turn loose or share.
What's the phrase, the institutional survival instinct?
One of the principles of homeopathic medicine is to make a symptom of a disease worse, so that you will bring on the crisis in the disease process sooner, get through it, and get back to good health sooner.
I agree, bring it. Mostly, I hate living inside a lie. Bad enough I have lived inside lies I created for myself and had to dump (this is called getting older), I abhor living inside someone else's lies. It makes it so that all relationships have dishonest baggage that has to be unpacked before you can start connecting. I know many here do not see that as the point of this blog, but for me, really connecting with folks is what it is all about. Our economy as it stands now, blocks that and makes everything sick.
Live long and well, Spartan!
+2
Please, if you will, break off a big chunk of that for ΜΟΛΩΝ, too.
Move along now, it is all for the common good.
Remember that today's central bankers are just inheritors of the age-old attempts to alter the virtually immutable atomic periodicity and nature of matter.
In ancient times, alchemist desired to turn base metals (especially lead) into the noble metals. Of course they failed. But enter fractional reserve banking and unbacked fiat paper money, and WALLA! EUREKA!, the same effect.
Instead of using the physical constituents of the earth, the solar gain through photosynthesis of the sun, and strength of the earth's beasts to transform and order nature for necessary comforts, the Alchemists ever attempt the shortcuts. They work only by trickery, preying upon the ignorance of their fellow man. They are a failure and lie from the beginning, and in the finality they are discovered for what they are. In the interim, these wizards can move all nations and tribes though.
Too bad they don't exert their energies in the ultimate alchemy (which can be effective). Turning the base nature of man into a refined and superior being.
Central banking is a failed, shadowy attempt to mimic the much GREATER WORK of tranforming common man into something truly valuable and eternally enduring.
This is just great.
I am Chumbawamba.
Thanks for that. A very artful explanation.
We are living in a counterfeit culture, exchanging the truth for lies (and not even noble ones).
Great, except:
Too bad they don't exert their energies in the ultimate alchemy (which can be effective). Turning the base nature of man into a refined and superior being.
I would argue that it has been this exact point, of man thinking himself the superior being, that has lead us to where we are now. Man believes that he is apart from nature, this is the folly.
http://www.allspecies.org/ideas/clever.htm
What is the "new strategy" now for investing or wealth building?
Is it now indeterminate?
Buy and hold is gone, and we have pundits talking about "going back to earnings and fundamentals", however the "gold is it" rings a little hollow as well.
Silver, copper (when the price collapses) or food? Do you fill up the larder now?
First we fill our faces.
Then we talk finance.
With apologies to Bertolt Brecht...
http://www.jubileeprosperity.com/
Can someone please put this shill for whatever web site out of our misery please?
Your larder should always be full. The economy can be fine and a Katrina level event can happen, you can become unemployed, etc. It used to be normal to keep a year's worth of food on hand in the household. Mormons still do it and massively warehouse extra food for their communities. Think of it as "insurance." Get stuff you would normally eat. Experiment with stuff that can be stored that you might be willing to put into your regular diet, that way you can 1. Eat the food before it goes bad and 2. Not be eating food your body is not used to, in the middle of a crisis.
Get the larder full NOW. When you are sure you need it, so is everyone else. That would be called a run on the grocery store, rather than the bank. All groovey to have green or gold, no food & clean water green and gold are irrelevant.
Not everyone agrees on guns as an essential (I say yes) but the empty larders across America are symbolic of our dependency on "The system." It could kill us.
Food (and other nonperishables) for thought.
100 Items to Disappear First
http://www.thepowerhour.com/news/items_disappearfirst.htm
I have this bookmarked. My sytem is different, but I may look into this.
http://lds.about.com/library/bl/faq/blcalculator.htm
Thanks for the info. Just a few years ago I would have said this is all crazy talk, now with probability as it is, I am acting more and more on shorter time scales. What books on sustainability would you recommend? Funny, my grandmother always kept boxes of powdered milk, bags of rice/beans and dried potted meat during the Cuban missile crisis.
Any book on gardening will be a good investment ;)
I am Chumbawamba.
Also, a book on basic farm animal care. If one can barter for a goat (this sounds so 19th century) and ensure it's well-being you will have milk and meat for your family. Chickens are the easiest of all farm animals to raise but understanding what keeps them healthy and laying on a regular basis would be critical. Nothing can replace hands-on experience, but at least realizing all the work it takes to maintain a healthy animal in relative captivity will help you decide what the best choice to make will be down the road. Food supplies only last so long - MREs provide calories, but they will eventually run out. I only recommend MREs for situations that would require immediate evacuation: natural disaster, civil unrest, war, etc (all of which could never happen no our dear soil in the US :-o).
Having the means to provide a sustainable source of food will be invaluable; or you'll be paying someone else your gold to feed your family. I have read that the Mormon leadership has repeatedly warned adherents that food warehouses are not to be counted on in a crisis. The truly faithful Mormons take it upon themselves to prepare like the parable of the 10 virgins. Is it worth it hoping someone will be there to provide? Ask survivors of Katrina what it was like to still have no food and water after five days. There are over 1,000,000 in the Salt Lake valley - there is absolutely no way the Mormon church has contingency plans to feed all comers. You can bet it will get ugly when people are scrounging to find something for their kids. Have some extra supplies for charity; 'give until it hurts'; but understand the consequences of revealing the extent to which you have prepared to keep you and yours above room temperature.
For all you urban dwellers that have thought about having a stash somewhere more rural consider putting supplies in a storage unit within a 2 - 3 day walk; faster on bicycle. If a road gridlock occurs you will still have supplies to sustain life within reasonable distance of where you live. Consider it a wise investment towards starting a new life. After Katrina the residents were shipped all over the United States. They had no home to return to anyway, but most of the evacuated were not even told were they were going. They didn't know until they got off the plane at times - and it didn't matter if you had relatives living in Atlanta, this bus is going to Oklahoma! Never be a complete refugee.
I had read somewhere that a woman discovered an enormous food stash at her father's home after he passed away. It was the #10 can long-term dehydrated kind and had been stored under good conditions so it was still potentially edible. But the woman wondered if the investment had been worth it, after so many years of just sitting there. I can't remember the exact response, but it was something along the lines of 'best life insurance policy you can still eat'.
@Chumba For anyone in Cali who lost his job:
http://www.amazon.com/Marijuana-Horticulture-Outdoor-Medical-Growers/dp/187882323X/ref=pd_sim_b_1
-
I have had too much homebrew today...here goes another post.
Buy stuff that you use regularly...then rotate your stock...I am just trying to add advice here. Tuna in cans, oatmeal, flour (or, a grinder and wheat/corn), dry pasta (by the way, pasta is easy to make with a Kitchenaide and pasta rolling attachments - all you need is flour and eggs). You can purchase food-grade 55-gallon drums (plastic) from Craig's list all day for $15. Buy a couple (a few) just to have around...they are great for storage of stuff. Purchase a foodsaver system and bags...most food items (dry stuff) can be repackaged and vacuum sealed, placed into a 55 gallon plastic drum and kept for years. If you vacuum seal into small quantities (5-1 lb flour bags from a 5lb bag purchased at the store), you can slowly use them in the absence of a crisis, while constantly replenishing your stock as you go (Jeeze, I sound like I'm crazy). A little planning goes a long way. Buy dry milk (~$4 per lb - great for making cream stout beer by the way (1/2 - 1 lb per 5 gallon batch)). A 1 month supply of food is simple to store...1 year takes more space, but can be done pretty easily if you make a lot of your own stuff. Buy canned soup...it is an easy meal that can be eaten cold if necessary (and easy to store).
If you are going to purchase a gun, make it a .22 rifle...you can get a box of .22 shells for around $6 (for 500 shells)...a shotgun is the second choice as the shells are still inexpensive. You can kill a deer with a .22 (not legally in most states). Make sure you buy some slugs for your shotgun if you choose it over the .22.
+rotate
I envy your beer-making skillz. Haven't tried it yet for some unwise reason.
+1 for the Ruger 10/22 with light, inexpensive ammo (be sure you are a great shot, although you can afford to miss initially @ [where did you find .22 for] $6[!] - I would recommend this as a bare minimum if you live in a rural area with trustworthy neighbors.
The only problem with shotguns is that they near the opposite side of the chart for ammunition cost, storage, and weight - and it doesn't shoot as fast - but Behold! the knockdown power! Also, as a home defensive weapon you won't have a free hand to guide yourself, turn on lights, open doors, bitchslap your kid for sneaking in late at night, etc - kind of a handicap.
Some helpful links in this regard:
http://www.thesurvivalpodcast.com/thoughts-on-basic-survival-firearms
http://www.lewrockwell.com/gaddy/gaddy66.1.html
http://www.lewrockwell.com/orig10/gillespie2.1.1.html
http://www.lewrockwell.com/orig8/clark-d4.html
I am Chumbawamba.
I'm hitting my craigslist in the morning. Good post.
Kind of a "all-in-one book":
http://www.amazon.com/Self-sufficient-Life-How-Live/dp/0789493322/ref=sr...
Another good one, especially in in northern latitudes:
http://www.amazon.com/Four-Season-Harvest-Organic-Vegetables-Garden/dp/1...
Carla Emery's Country Living Book (http://www.carlaemery.com/country-living-book.htm)
I've got several other books, but this one, if I'd have to pick just one out of them all, would be it.
+1 to you and tomdub.
Square Foot Gardening will totally change your perspective on gardening. That was a great read. Pragmatism and efficiency to the core. Just be sure to get the new one.
I want to get a whole house generator fueled by propane (although I do have a portable gas generator). I also want to get a wood stove (although i do have a fireplace). Also, have a pellet stove and some pellets.
Although, what I have and I think would be one of the most valuable things is a gas powered chain saw with extra chains, 2&1 Oil and gasoline. Yes, have a propane grill for cooking and a propane tank.
Lots of tools would also be handy. Where I live our electric can go out for 3 or 4 days or you could get snowed in for 3 or 4 days so most are at least somewhat prepared to survive for at least 5 days or more.
One of the reasons I want a Propane Generator is that I wonder what will happen if the electric goes out and you cannot get gas from the gas station to fuel a gas generator. I have wonered how would you be able to get the gas pumps to work at a gas station if there was no electricity? You would not want to use the gas in your car as you may need it to get around for or take flight from an area.
I also live on a well but the well pump does not work without electricity and does not have a plug for a portable generator. A whole house generator would be needed to kick on the well pump.
I also have a gun and a rifle with many bullets. Not just for protection but also for hunting game like deer, squirls, birds etc.
I have most of the other things as well like lamp oil, batteries etc.
Also, I agree that Gold will not mean anything for your survival. What most will need is Water, Food, Heat, Shelter. If you have all of the things on the list and my other suggestions I think you could survive for quite a while. Which is all that will matter. Wealth will not be in the forefront of your thoughs. Gold will not matter just things needed for your survival.
No one will trade food, a generator, woodstove for gold as they would not have what they needed for survival and gold would have absolutely no meaning.
Plus, even if there was no disaster you can still use the above items to make your life better, save money on Utilities, avoid blackouts from utility failure, buy canned food on sale and save on grocery's. Gold does not provide any of the above benifits.
P.S. Whiskey or Beer could be a great barter item.
Good ideas, and set up your plan to be able to function completely without propane, gasoline, or pellets. Buy a solar oven instead of chopping wood all day - save chopped wood for your new wood stove to 1) cook when the sun is hiding and 2) take the chill off on the coldest of nights. Forget that you have a fireplace (inefficient, but looks nice) and a generator (emergency use only, or when the inlaws are over) - imagine what you will have to do to stay alive.
Buy a small solar panel that you can bring back inside to charge a deep-cycle battery to power an LED lamp or lights - they drain the least amount of energy. This would be with an inverter, which should not be used to power your fridge or TV - get ready for a major change in paradigm; no more fridge, no more TV (at least for a good while!). We're camping inside kids.
Solar oven = check
Wood Stove = check
Ignore pretty fireplace = check
On the fridge
We believe we need the fridge more than we do. I don't have links this second, but there are lists of foods we assume need the fridge, that don't.
Google root cellars. Enjoy. Moisture is an issue, but if you go below ground, you will have cool available to you.
Easy cool. Dig a hole. Insert plastic trash can. Put tarp over it. Hold down with bricks, rocks, whatever.
Almost as easy cool. Dig deeper, wider hole. Use wood pallets discarded from hardware store to butress sides and bottom. Cover with tarp. Hold down with bricks, rocks, whatever.
There are all kinds of ways to protect produce in the ground, too, and let it winter over. Pull back insulative mulch, pull out of ground when you want to eat it.
There is so much to know it is scary.