Guest Post: The Rats Are Cornered

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From Mike Krieger, former macro analyst of Bernstein Research, and currently of KAM LP

The Rats Are Cornered

Be the change you want to see in the world.

- Mahatma Gandhi

Back from the Road

I have just come back from a 40 day road trip across the United States of America.  It was without a doubt the single best experience of my life on every level imaginable.  I recognize how hard such a trip is for most people given individual circumstances but at some point in life if possible I would highly recommend doing something similar.  It was a total game changer for me. 

I started Memorial Day weekend and went from NYC to Philadelphia, Pennsylvania then on to  Alexandria, Virginia;  Bedford, Virginia;  Asheville, North Carolina;  Nashville, Tennessee;  Memphis, Tennessee;  Clarksdale, Mississippi; Shreveport, Louisiana (not recommended unless you live on the East Texas border and have a gambling problem); Dallas, Texas;  Sweetwater, Texas; Alamogordo, New Mexico (White Sands);  Santa Fe, New Mexico;  The Grand Canyon;  Sedona, Arizona;  Las Vegas, Nevada;  Mt. Zion National Park, Utah (where my brother got married); Bryce Canyon National Park, Utah;  Salt Lake City, Utah;  Jackson, Wyoming (Grand Teton National Park); Yellowstone National Park, Wyoming;  Bozeman, Montana;  Mt. Rushmore/The Badlands, South Dakota;  Omaha, Nebraska (home of the sellout and recent propaganda mouthpiece Warren Buffett);  Indianapolis, Indiana;  Harrisburg, Pennsylvania;  Montauk, New York.             

For a kid that grew up in Manhattan this was almost too much to handle, but in a profoundly positive way.  The communion with nature, the amazing conversations with random people in far off places about the things I write about in these emails and the new friends I made.  To the new people on this list that I met along the way, thanks for being a very important part of this trip which will forever hold a powerful grip on me.  Now onto the other stuff…

The Rats are Cornered

This email will be pretty brief as I am still getting used to getting back to the fake world.  Although I did work a little every day and kept up with the major news both financial and otherwise I am certainly behind on the details.  This is how I would summarize what has gone on and where we are headed.  The stimulus and gimmicks initiated by a desperate political class prodded on by our Keynesian witch-doctors Summers and Geithner ran their course and at the end of that road was a massive pile of debt, chronic unemployment, a populace that doesn’t believe or trust anything the government says or does and a housing market set to resume its downward spiral.  So basically the forces of deflation have taken over once again. Banana Ben Bernanke knows it and he knows what he wants to do about it.  He wants to print so much money it would make your head spin.  He wants to drop nuclear bombs of QE2 all over this great land.  That is his answer to everything.  The man is 100% insane according to Einstein’s definition.  I quote: “The definition of insanity is doing the same thing over and over again and expecting different results."

There is a major problem however.  Bernanke knows how unpopular he and his fascist institution are right now after all of the crimes they have committed in plain view since 2008.  As such, he knows he needs cover for QE2 and that means some sort of deflationary shock that scares the masses and makes many clamor for help like sad, scared little children (we are being conditioned like animals).  This is why I think the Fed and others have been fine with the recent market plunge.  The only issue for them is they absolutely need gold, silver and other commodities to collapse as well.  Bernanke cannot have the S&P500 at 850 and gold at 1,200 and announce QE2.  Gold would surge to new highs and it would look horrible.  This is why so much emphasis is being placed on getting gold and silver to retreat in a major way via propaganda pieces and also likely surreptitious selling behind the scenes.  While there has been a decent pullback, it is nothing close to what they need and I am particularly impressed with how well silver is hanging in.  I think this is due to a run on physical silver by investors and the dearth of government or central bank stockpiles to sell in the shadows. 

This is what I mean by the rats being cornered.  So far they have failed in decimating the precious metals markets and if they can’t do that in a deflationary scare then they are in huge trouble.  Of course they will never stop trying because they are addicted to power and control and will do almost anything to protect their positions.  I think a key thing to think about now that we must accept that they are in a corner is what is the next move on the chess board.  I read this from Jesse’s Café yesterday (http://jessescrossroadscafe.blogspot.com/2010/07/currency-wars-selling-them-rope.html)

What is disconcerting to me, and you can see it to some extent in Rickards own work, is that the Wall Street financiers clearly have their eyes on the Pentagon budget: opaque, patriotically defensible, and huge. A currency war, with the Wall Street crowd providing tactics and weaponry and mercenaries to both the US and to its adversaries, might make the bonuses taken from the mortgage bubble look like pocket change by comparison. It’s an old idea really, the basis of some legendary fortunes, adapted to the modern world. It produces nothing but misery, while transferring wealth from the many to the few.

Ok, so this fits into a lot of what I have been warning about for some time now.  Namely that once they lose control they will go to the next plan which is pure desperation.  They will single out the two greatest threats to their power and I think those two things are: 1) Gold and Silver (independent money) 2) The Internet (free speech).  If they can’t control the population with inane television and propaganda they will demonize these major threats.  This will probably be sold to public in the name of national security since who could argue with that (if you do argue you will be labeled unpatriotic or a terrorist).  So expect more and more announcements of Russian and Chinese cyber attacks or the like, which will be used as an attempt to censor the web and there will also be more and more news stories related to gold and silver being used by terrorists or those that wish to harm “America” (which is not the Republic but a small group of corporate, financial and political elites from both owned parties that have control via the monetary system).  This group will then use “national security concerns” as a further justification to grab even more power and wield it in the name of protecting us from whatever threat they wish to use, real or fabricated.

What can we Do?

For those that care about real freedom, genuine progressive reforms and this Republic in general there are all sorts of things you can do and they are being done all over the place.  I actually think this group will fail miserably and ultimately be brought to justice.  I simply think too many smart people have woken up to the scam and the entire system will implode on itself.  So as I have written before the key is NOT to be consumed by fear but rather to take action.  Get your finances in order with gold and silver and other real assets but also get mentally and emotionally prepared.  This is because if you are not in a position to help your neighbors then you are no good to anyone.  This will not be about hunkering down in a bunker and emerging rich once the dust settles.  It is about staying intact financially and emotionally so that you can help rebuild a better nation when the current world paradigm comes to an end which should happen swiftly within the next 1-2 years.  Most importantly do not look for leaders to save anything or anyone.  It not about looking outside it’s about looking inside as Gandhi said.  If we become the change we want to see in the world the world will change.  Messianic leaders are a myth and meant to control you and stop you from personal action and independent thought.  Thinking a new leader will change the world just gives you an excuse to be lazy.  

Let’s do this,
Mike