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Guest Post: Get Ready For The Next Great Stock Market Exodus

Tyler Durden's picture


Submitted by Brandon Smith via,

In the years 2006 and 2007, the underlying stability of the global economy and the U.S. credit base in particular was experiencing intense scrutiny by alternative economic analysts. The mortgage-driven Xanadu that was the late 1990s and early 2000s seemed just too good to be true. Many of us pointed out that such a system, based on dubious debt instruments animated by the central banking voodoo of arbitrary fractional reserve lending and fiat cash creation, could not possibly survive for very long. A crash was coming, it was coming soon, and most of our society was either too stupid to recognize the problem or too frightened to accept the reality they knew was just over the horizon.

The Federal Reserve had cheated America out of an economic reset that was desperately needed. The 1980s had brought us utter destruction disguised as “globalization.” Our industrial center, the very heart of the American middle class that generated enormous wealth and decades of opportunity, had been dismantled and shipped overseas to the lowest bidder. It was then that the U.S. economy actually died; we just couldn’t see it. From that point forward, Americans were fully dependent on the charity of central bank money creation and international bank lending standards. The collapse that should have occurred in the 80s was delayed and thus made more volatile as the Fed artificially lowered interest rates and allowed trillions upon trillions of dollars in dubious loans to be generated. Free money abounded, and average citizens were suckered royally. Their greed was used against them, as they collateralized homes they could not afford to buy more crap they didn’t need. Of course, you know the rest of the story...

Today, credit markets remain frozen. Lending is nowhere near the levels reached in 2006. The housing market is showing signs of life; but that’s only because most home purchases are being made by banks, not regular people, for pennies on the dollar, as bankrupt properties are then reissued on the market for rent rather than for sale. If you are lucky, maybe one day you’ll get to borrow the keys to the house you used to own. And, millions of higher-paying full-time jobs have been lost and then replaced with lower-paying part-time-wage slavery positions. The image of American prosperity carries on, but it is nothing but  a cruel farce; and anyone with any sense should question how long this false image can be given life before the truth dawns.

The novice will question why it is necessary to re-examine all of this information. Is it not widely known? Am I not simply preaching to the choir a message heard over and over again since the crash of 2008? Maybe - or maybe it is time for us to finally apply some foresight given our knowledge of the recent past.

Why did 2008 creep up on so many people? Weren’t there plenty of economists out there “preaching to the choir” at that time? Weren’t there plenty of signals? Weren’t there plenty of practical conclusions being made about the future? And yet, the world was left stunned.

The truth is, human beings have a nasty habit of ignoring the cold hard facts of the present in the hopes of using apathy as a magical elixir for future prosperity. They want to believe that disaster is a mindset, that it is a boogeyman under their bed that can be defeated through blind optimism. They refuse to accept that disaster is a tangible inevitability of life that pays no heed to our naïve, happy-go-lucky attitudes. The American people allowed themselves to be caught off guard in 2008, just as they are setting themselves up to be caught off guard again today.

Again, the reality is clear; the Federal Reserve has propped up equities and bonds using money created out of thin air — so much so that both markets have become totally reliant and disturbingly addicted to fiat injections. The distribution of this fiat threatens the continued dominance of the dollar as the world reserve currency and will invariably lead to currency collapse and hyperstagflation. This process is much more likely to climax in the near term given the accelerated rate of quantitiative easing within our system to date and the accelerated rate at which our primary lenders (namely China) are dumping the dollar in bilateral trade with each other. The endgame is obvious, but I still fear millions of people within this country and around the world will be shell-shocked once again by a renewed crash.

The argument is always the same: “Yeah, things might get dicey, but it won’t be as bad as all the doom-mongers claim, and probably not for many years.”

Similar statements were made by naysayers before the Great Depression and before the 2008 crash. So why are the skeptics wrong again this time around?

The Stimulus Fantasy

Let’s put this in the simplest terms possible: Stimulus is now the lifeblood of our economy. There is nothing else sustaining our nation. Period. Stimulus in the form of bailouts and QE are keeping the stock market and bonds afloat.  This means that the continued existence of equities, and the continued existence of healthy treasuries, and thus the foundation of our currency, our general economy, and a functioning (or barely functioning) government, is completely dependent on the Fed continuing to print.

In recent weeks, the Fed hinted at possible intentions reduce or remove stimulus measures, which would effectively shut down the life-support machine and let the patient drown in his own fluids.

Day traders and common investors are not very bright, but they do understand well that no stimulus means no stock market and no bond market. In response, indexes have become erratic, shifting on the slightest rumor that the central bank might continue QE for a little longer. Pathetically, the Dow Jones now rallies upward whenever bad financial news hits the wire, as insane investment groups pour in money in the hopes that dismal economic developments might cause the Fed to extend the bailout bonanza.

In our modern nightmare era of hyper-centralized economy, one word or rumor from Ben Bernanke now determines whether stocks dramatically rise or fall.  This is NOT the behavior of a healthy and vibrant fiscal system.

The anatomy of American finance and trade has been horribly mutilated; and clearly, such a monstrous creation cannot last. Stocks are supposed to perform based on the true profitability of individual businesses as well as the political and social health of the overall culture. The wild printing of paper money by private banking magnates is not a catalyst for a successful economy. Whether the Fed actually ends QE is ultimately irrelevant. No fiscal structure can survive when it abandons fundamentals for fantasy. Either QE continues, becoming less and less effective in staving off negative results in equities, inspiring a flight from the dollar leading to a crash, or QE ends, exposing the inevitability of negative results in equities, leading to a crash.  If the Fed ends stimulus, the process of collapse will merely take place slightly faster than if stimulus remains.

But every historic economic crisis has a defining moment, a moment in which the tide turned overwhelmingly sour for a majority of the public. The question now becomes what, exactly, will trigger the avalanche?

Precious Metals Signal Secret Shift To Asia

As I have discussed in numerous articles over the years, China's shift away from the U.S. consumer and the U.S. dollar is well under way.  Over half of the world's major economies now have bilateral trade agreements in place which remove the dollar as the world reserve currency in trade with China and the ASEAN economic bloc.  China is issuing trillions in Yuan and Yuan denominated bonds around the globe, setting the stage for a higher Yuan valuation and allowing Chinese consumer markets to replace American consumer markets as the number one driver of manufacturing in export countries.  At the same time, China has increased its purchases of precious metals exponentially to the point that the nation is now set to become the largest holder of gold and silver in the world in the next two years.  This is clearly in preparation for a currency crisis event...

The buying spree in Asia seems to directly contradict the "paper market" value of metals in recent weeks.  Demand for gold and silver has only increased throughout most of the world, even in light of Federal Reserve suggestions that QE might end.  Manipulations within metals markets by the CME and JP Morgan explain half the story, but there may be another issue at work.

It is very possible that the COMEX is now essentially broken, and that gold and silver ETF's (paper gold and silver) are decoupling from the street value of physical metals during the last gasp of a failing system.  In the near term, I believe that premiums on physical coins and bars will skyrocket, even as the official market prices of those metals is held down.  At the same time, China, Russia, and other countries heavily invested in gold may break from Western COMEX valuations completely using their own metals markets to establish their own prices.

As the dollar loses its world reserve status, the countries holding the most physical gold in their coffers stand to weather the storm most effectively, and because U.S. gold stores have never been officially audited, we have no idea if America has any reserve whatsoever.

Crushing Energy Prices Coming Soon?

While China continues a careful strategy of decoupling from the dollar and the U.S. consumer through bilateral agreements and trading blocks, another issue is arising: the issue of energy. I would like to note that despite globally diminishing oil demand caused by the 2008 credit collapse, gas prices have experienced little to no deflation.  I would also like to note that after the Federal Reserve hinted at shutting down QE, oil was one of the few commodities that continued to rise.

This has not been caused by a lack of supply, as many American-based companies ramp up production. (I am aware of all the arguments behind peak oil. As soon as a peak oil proponent can show me an example of oil demand not being met because of a legitimate lack of supply, then I’ll be happy to consider that peak oil is the main cause of price increases.)

The fact is current regressive global demand and ample supply should have led to lower gas prices, not higher. If speculation was the cause, then price shifts within the oil market should have been far more volatile, with increases lasting weeks or perhaps months, but certainly not years.  The only plausible explanation for this kind of commodity activity is a weakening of the currency it is directly tied to.  The petrodollar is slowly but surely coming to an end.
I believe the next market exodus may be triggered by the weakening effects of stimulus (or the removal of stimulus altogether) along with extreme energy prices cause by steady inflation and a global political crisis in the near future.

China, being strangely and consistently prophetic when it comes to economic calamity, has recently established an astonishing oil trade deal with Russia, which plans to supply China with an alternative petroleum source for the next 25 years. (This news went almost completely unnoticed by the mainstream media.)

Now, keep in mind that in 2010, China and Russia signed an agreement completely removing the U.S. dollar in bilateral trade. The dollar has been the world reserve and the only currency used to purchase petroleum for decades. The Russia/China oil deal changes everything. It sets a trend toward the removal of the petrodollar function of the Greenback which ultimately destroys any credibility the currency has left. This news flies in the face of dollar proponents who consistently claim that the dollar's ties to oil make it invincible. Apparently, there are some weaknesses in the armor.
Ongoing social unrest in Egypt has also made oil markets jumpy, being that the Suez Canal oversees the transfer of a significant portion of the world’s oil shipping.  Clearly, there are two opposing factions within the country vying for power, and regardless of who is best suited to U.S. interests, the Egyptian people overall have no love for the West.  There is a distinct chance of a shooting war, similar to Syria, in the coming months in Egypt.

Meanwhile, the engineered conflict in Syria continues to go exactly as I predicted in my article 'The Terrible Future Of The Syrian War'.

Syria remains an explosive trigger point for regional war which will, in the end, draw in Iran and result in the closure of the Strait of Hormuz, which annually handles the shipping of about 20 percent of the world’s oil. All trends point toward higher gas prices over the horizon, and the U.S. economy is barely able to survive on the cost of energy we have today.

So Close They Can’t See It

Reduced stimulus combined with adversely high oils prices may very well be the tumbling boulders that bring down the mountain. We are close now. Beyond the undeniable economic factors, the very fabric of American government is crumbling. Corruption is openly rampant. Scandals are exposed daily. The establishment leadership is unapologetic and grows even more despotic with each truth that escapes into the open air. They are becoming MORE bold, not less bold, and those of us who seek transparency in all things, from politics, to economics, to surveillance, are being attacked as the source of the problem rather than the solution.

Collapse, from a historical perspective, seems to occur when the searchlights of the individual mind are dimmest, when the threat is the greatest, and when we are most comfortable in our ignorance. In 2008, the U.S. public was mostly oblivious to the danger, and they were painfully stung. Today, I hope that the liberty movement, the alternative media, and alternative economic analysts have created a window of opportunity by which millions of people can this time see the writing on the wall and prepare accordingly. At this point, there is no question that Americans have been warned. Whether or not they pay heed, is out of our hands.


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Fri, 07/12/2013 - 17:37 | 3746690 Chupacabra-322
Chupacabra-322's picture

Off topic, my appologies for spaming.  Lets light these District of Criminals phone lines up and stop contributing to your own debt bondage and enslavement to the Criminal TBTFBanksters.  WithDraw you money OUT of them!

Credit unions promote the economic well-being of their members, especially those of modest means, through a system that is member-owned, volunteer-directed and not-for-profit.  As a credit union member, I know firsthand that my credit union offers financial products that provide better returns on savings, reduced rates on loans and lower or no fees on services.

Unfortunately, the big banks and some in Congress want to raise taxes and impose new fees on millions of credit union members, who together represent 40% of all Americans. And, they want to do this despite the fact that credit unions are not-for-profit.

Please don’t raise taxes on 96 million credit union members. Don’t tax my credit union!

Fri, 07/12/2013 - 17:44 | 3746703 MisterMousePotato
MisterMousePotato's picture

Yeah, I'm gonna spam, too. Why not? It's Friday afternoon.

Anyway, I just saw this, and it's just too good not to share to brighten everyone's mood going into the weekend. I was gonna save it for one of those "Just How Stupid Americans/Whorespondents/Voters/Etc. Are," but why wait?

In a perfect world, someone would reassure me that this is just parody or humor or something.

Fri, 07/12/2013 - 18:13 | 3746722 MisterMousePotato
MisterMousePotato's picture

Bloody Hell. It's true:

p.s. Nice article, Mr. Smith.

Fri, 07/12/2013 - 18:41 | 3746819 Never One Roach
Never One Roach's picture

oi vey

Fri, 07/12/2013 - 18:03 | 3746750 Not Too Important
Not Too Important's picture

They may have a hard time when they try to fuck with the military credit unions.

Just a guess.

Fri, 07/12/2013 - 18:19 | 3746758 ACP
ACP's picture

Not really. Obama will just Article 32 any military member who objects. It's the "Chicago Way."

Fri, 07/12/2013 - 18:13 | 3746765 orez65
orez65's picture

Fuck your credit union.

Like a "not for profit" business is some kind silver bullet to save the economy.

You fractional reserve banking just like any other bank.

Which means that you commit fiat money fraud just like any other bank.

Go fuck yourself.

Fri, 07/12/2013 - 18:34 | 3746805 notquantumdum
notquantumdum's picture

Credit unions aren't better than banks because they are non-profit.  They are better because they are member-owned by the people who keep accounts with the credit unions.  The credit unions' best interests are aligned with their account-holders, not other share-holders.

Fiat / fractional-reserve or not is a good debate to have; but given our current fractional-reserve system, I favor using a credit union due to the less expensive cost of doing so.  That doesn't mean that I don't support ending fractional-reserve banking (or not).

Fri, 07/12/2013 - 18:56 | 3746850 Jack Napier
Jack Napier's picture

The only real reason to use a credit union is to stop supporting the derivatives empire, but since they get free Fed punch bowl money they don't even need customers anymore.

If your motivation is a cheaper loan then you're a debt slave anyway. If everybody lived within their means and only bought what they had the money to afford up front these sock monkeys wouldn't be here in the first place.

Fri, 07/12/2013 - 19:54 | 3746971 notquantumdum
notquantumdum's picture

They often seem to be more affordable for most all banking services:  loans, checking accounts, savings accounts, or other such services (if one is willing to have such a terrible thing, as a "bank" account).  But, shop around, of course, for the best deal you can find.

I'll be the first to sign up for an account with a mega-bank if they ever gave me a better offer, but they never seem to do so.  Imagine that.

(Oh, wait, I forgot.  I have a mortgage with a mega-bank.  And, I really can't complain about them so far.  I hope that's not evil.)

Fri, 07/12/2013 - 23:30 | 3747488 dark pools of soros
dark pools of soros's picture

you can do p2p lending too... lending club, etc

Sat, 07/13/2013 - 10:50 | 3748077 quikwit
quikwit's picture

When I give my money to a regular bank, I am an unsecured creditor.  When, as a "member" of a credit union, I give it to my credit union, I am an equity holder.  Even lower than unsecured creditor on the bankruptcy scale.  Right?

Fri, 07/12/2013 - 19:07 | 3746866 Tortuga
Tortuga's picture

I gave you a alt + 18 because I belong to a credit union also and they haven't got crazy yet but they are gonna tax them, hell, they tax taxes.

Fri, 07/12/2013 - 17:39 | 3746695 francis_sawyer
francis_sawyer's picture

Jump u fuckers...

Fri, 07/12/2013 - 19:03 | 3746858 CrashisOptimistic
CrashisOptimistic's picture

"(I am aware of all the arguments behind peak oil. As soon as a peak oil proponent can show me an example of oil demand not being met because of a legitimate lack of supply, then I’ll be happy to consider that peak oil is the main cause of price increases.)"

No, you aren't. 

You don't understand joules scarcity.

Two paragraphs later you declare the rise in price is tied to the currency.  Note that 2008's $147/barrel spike was before QE was in the lexicon.  Note also that the currency didn't suddenly get stronger since then, which in your world would explain the decline from 147.

Now you'll retreat to the sanctuary of handwaving about . . . well it's currency driven when it goes up, but it's something else driven when it goes down.

The price is $106.  It was $147 in 2008.  A lot more dollars have been printed since 2008.  If your world held sway, the price via those diluted dollars would be $547/barrel.

You're wrong.  You don't understand oil.  Say nothing more about it.

Fri, 07/12/2013 - 19:08 | 3746871 Tortuga
Tortuga's picture

I understand oil. Without oil, we collapse.

Fri, 07/12/2013 - 19:32 | 3746930 runningman18
runningman18's picture

Another Peak Oil cultist denying reality.  You never answered Smith's question - If peak oil is really the cause of rising gas prices, then where is the scarcity?  Where is demand not being met?  The spike in 2008 was market manipulation designed to prepare the public psychologically for inflation.  The current longstanding price increases are an extension of that inflation.  The only reason we aren't seeing $15 a gallon gas now is because oil is traded in dollars, but as Smith points out, that is changing. 

So, answer the question:  Where is this scarcity caused by peak oil?  Where is demand not being met?


Fri, 07/12/2013 - 20:44 | 3747097 Oracle of Kypseli
Oracle of Kypseli's picture

There is a case to be made for most of the oil scenarios argued here. I believe that it is very possible that you are all right, and that these scenarios play interchangeably which sometimes proves and/or disproves each theory.

Just think about being Saudi Arabia and knowing that your wells are being depleated, but you do not tell. You still want to get top dollar for your oil without having to admit peak oil. At the same time, you do not want to show too much of it and have the price plunge. Therefore, you use the yoyo misinformation effect.

The seven sisters (now eight) have been at this game forever and besides being good at it, they control gov's, they control media and they control production.

Fill in the rest. Best revenge: Be less dependent on oil. Invest a bit of money in oil companies enough to hedge gas price hikes, stack PM's, make love to your spouces and hug your kids.




Fri, 07/12/2013 - 21:15 | 3747170 Hohum
Hohum's picture


There are only two questions worth asking: (1) what is the marginal cost of the most expensive to get oil? and (2) what price can the economy tolerate and still grow?

Sat, 07/13/2013 - 16:01 | 3748926 AgLand
AgLand's picture

There is no 'peak oil', there is only 'peak cheap oil'.

We will never run out of oil, but the EROEI to get it may one day be so high it will not be worth in in most cases.

Look at the cost of drilling a conventional well in,say, West Texas v. The cost, complications, and possible end results of drilling a well like the BP one that blew out in the Gulf.

Or how about the 'return' on a shale oil/gas well, which peter out far sooner than a conventional one.

It's not about how much oil is left, it is about ease and costs of 'mining' it. A few years ago the costs of a bbl of tar sands oil stood at $75/bbl. no idea what it is now but it is higher, no doubt.

The 'peak cheap oil' question is really one of how an energy dependent US will fare with oil consistently climbing higher while the avge man on the street sees his purchasing power shrink. And what are the global implications in trade of such.

The US miles driven is back down at rates where we were 10 years ago, yet oils prices are more than double. How does this occur when our energy usage is shrinking? Simple, usage by others is growing at the same time.

And... quality and quantity are much harder and costlier to attain.

But it's not just oil, you see this trend in all raw commodities mined from the earth. Ore grades for gold,copper, zinc, you name it -- all declining as we go thru 'peak cheap everything'.

You have been warned, Mr. Smith.

Fri, 07/12/2013 - 19:39 | 3746949 Imminent Crucible
Imminent Crucible's picture

Oil went from $70 to $147 to $35 to $106, all in the space of a few years, and you're going to explain that insane volatility with "joules scarcity"? ROFL!!

You're wrong. You don't have a clue about futures markets, dark pools, Goldman Sachs, Vitol or I.C.E.

Fri, 07/12/2013 - 20:12 | 3747021 CrashisOptimistic
CrashisOptimistic's picture


I am not required to explain price volatility.  I didn't make the claim.  The article did.  That's the hypothesis.  I showed its failure.

And you might want to keep in mind refineries don't have to pay NYMEX prices for product.  They need not care about trading.

But that's what puts food on your grocery store shelf -- what they buy at the price they and the producer, not NYMEX, agrees on.

Trading is relevant for things not consumed or things replaced.  Things like copper, which when "consumed" really isn't.  It's still in the pipes behind your walls.  Or corn, which can be grown again.

Only oil and natgas disappears.  Only oil and natgas are really consumed.

Fri, 07/12/2013 - 22:12 | 3747327 Hohum
Hohum's picture

70 to 147 production up a little

147 to 35 production down more than a little

35 to 106 production up--Bakken producing about 130 barrels per day per wells not as good as a short while back.

Fri, 07/12/2013 - 17:40 | 3746696 observer007
observer007's picture

Watch Your Data Traveling Through The Internet


(and how it is collected by the NSA):

Fri, 07/12/2013 - 18:18 | 3746774 Sid James
Sid James's picture

So the only relatively safe place to visit is Youporn? Result!

Fri, 07/12/2013 - 18:24 | 3746785 I am Jobe
I am Jobe's picture

Forget about NSA, BH and Verint are the real stalkers. Remember the govt does not have competent folks to do this kind of stuff hence contractors.

Fri, 07/12/2013 - 17:58 | 3746708 Shell Game
Shell Game's picture

"The truth is, human beings have a nasty habit of ignoring the cold hard facts of the present in the hopes of using apathy as a magical elixir for future prosperity."


Spot on. The hardest part of taking the Red Pill is dealing with these hard-headed dolts...

Fri, 07/12/2013 - 19:03 | 3746859 eatthebanksters
eatthebanksters's picture

I kept telling myself up until 2007 that the real estate market was overvalued and to be very careful.  Then, after 6 years of saying this (since 2001) I said that maybe i was wrong and that what we were living was the new normal.  I took on a bit more debt and a year later paid for my complacency in a big and painful way.  As I read ZH I sometimes wonder if the bearish, sky is falling attitude is real, since nothing ever seems to go really wrong.  Then I think back to 2007 and I am eternally grateful for the one place on the internet that delivers the truth.  Thank you ZH...I don't know when the shit is going down, but it is going down.  We just need Bawney Fwank to say everything is fine and then wait 3 months.

Fri, 07/12/2013 - 19:35 | 3746940 Citxmech
Citxmech's picture

Where I shit-the-bed on the RE market was, while knowing RE was over-valued - I anticiapted a long pleateau rather than a collapse.  Didn't want to be priced out of the market so we dove-in the shallow-end.  

Luckily we were cautious, chose well, and actually still have some equity inspite of purchasing near the top (it helped that wifey and I are are handy and bought a POS that needed major fixing). 

Fri, 07/12/2013 - 19:51 | 3746980 Arrowflinger
Arrowflinger's picture

Hit it damn near perfect with CRE and timberland.

HOWEVER, the cash has not turned out to be 'safe' has it?

Fortunately I got hard and ready, not necessarily in that order.

Fri, 07/12/2013 - 20:50 | 3747114 Serenity Now
Serenity Now's picture

+1 for honesty.

Sat, 07/13/2013 - 04:20 | 3747760 jmcadg
jmcadg's picture

I hear you. At that time I was not aware of the up and coming shit. I had still not connected the dots in 2008-9 other than not being able to sell in a depressed market. The scales fell off for me in 2010.

It's been bloody hard to deleverage and get straight. Still not fully there, but slashed my debt burden by 80% in three years - mostly by selling up before going underwater.

Hands up got caught up in the property bubble, so now don't own, but still here and have a chance when the real crash happens.

In 2010 I found hard assets and then ZH. My world is totally different now.

Prior I was oblivious - I think the fraud is much more blatant now, but maybe it is still possible to live unaware. 

I'm not fully ready yet. As much as I know Ben's policy is totally wrong, I for one am glad I got the chance to start preparing. If the shit had fallen in 2008, I would have been screwed.

Would like to add my thanks to Tyler and all the great posters here for truth and great discussion (mostly).


Fri, 07/12/2013 - 17:53 | 3746728 q99x2
q99x2's picture

Dude the FEDs hold most of the stocks today and they ain't selling anytime soon. Much different than in 2008. Bonds that's different but still even that is subsidized.

Folks, its different this time.

Fri, 07/12/2013 - 18:36 | 3746804 ATG
ATG's picture

The Fed will sell when more people have precious than $USD...Then comes DHS door to door with metal detectors and weapons of war on US citizens...At that time Americans recover their spirit of Independence and self-reliance...

Fri, 07/12/2013 - 17:56 | 3746735 NOTaREALmerican
NOTaREALmerican's picture

Hope springs eternal.  

Fri, 07/12/2013 - 19:16 | 3746744 Not Too Important
Not Too Important's picture

Now you can see why the Chinese are volunteering to be the first one to collapse, as they massively stock up on the 'Barbaric Relic':

“Whenever government sets out to manipulate the money supply, regardless of the intelligence or good intentions of those who attempt to direct the process, the result is inflation, economic chaos, and political upheaval. By contrast, whenever government is limited in its monetary power to only the maintenance of those weights and measure of precious metals, the result is price stability, economic prosperity, and political tranquility…”

 “As we shall see…, the centuries of monetary upheaval that followed that early period (of monetary stability due to a PM standard - nti) contain NO EVIDENCE that this law has been repealed by modern man.”

 ‘The Creature From Jekyll Island’, pp. 152-153

The Chinese are following the wisdom of history. This isn't rocket science.


The first one to reset wins.

Fri, 07/12/2013 - 19:14 | 3746887 Not Too Important
Not Too Important's picture

Yup. 'Confessions of an Economic Hitman':

It's all there.

Fri, 07/12/2013 - 20:20 | 3747038 JFKFC
JFKFC's picture

Great book.

Fri, 07/12/2013 - 18:13 | 3746766 kito
kito's picture

Collapse, from a historical perspective, seems to occur when the searchlights of the individual mind are dimmest, when the threat is the greatest, and when we are most comfortable in our ignorance


absolutely. the more complacent america becomes, the more delusional our govt becomes, the more ripe the crisis moment becomes. a crisis isnt a crisis when everybody is vigilent and waiting for a crisis. it rears its ugly head when the masses and the govt are lulled and dulled into their comfort zone. and it seems, by the looks of things, america is not too far away from the next leg down in the terminal decline of america into third world status.

Fri, 07/12/2013 - 19:13 | 3746881 Tortuga
Tortuga's picture

I have never, ever been comfortable with my ignorance, even when I hypothocate it to the 4th party.

Fri, 07/12/2013 - 20:01 | 3746996 kito
kito's picture

One isn't comfortable with ignorance, one is comfortable in ignorance.

Fri, 07/12/2013 - 20:05 | 3747007 fonzannoon
fonzannoon's picture

I can't even remember how I got "here" anymore. I can't remember being ignorant, and I can't remember a shift happening that got me "here".


Fri, 07/12/2013 - 20:55 | 3747134 Serenity Now
Serenity Now's picture

I can't say that I remember being ignorant (although I'm sure I was and still am), but I do remember my shift:

I had the thought that true freedom meant not owing anybody any money, and it all took off from there. 

Fri, 07/12/2013 - 21:34 | 3747211 kito
kito's picture

Perhaps peter Schiff sparked you?

Fri, 07/12/2013 - 21:39 | 3747228 fonzannoon
fonzannoon's picture

Schiff may have sparked the currency/gold aspect.

But Schiff is too busy feeding the Zimmerman beast to understand that he is helping deflect his own disciples from the true issues that need to be dealt with.

On one hand that makes him a better man than Rogers/Faber to me because he is staying put and trying to fight the good fight. But he is clueless on another level.

Fri, 07/12/2013 - 22:24 | 3747358 kito
kito's picture

I'm not following you.

Fri, 07/12/2013 - 22:36 | 3747382 fonzannoon
fonzannoon's picture

This may explain it better. Schiff and Ron Paul agree on the currency thing. Ron Paul tends to stay on topic more when it comes to our rights being taken away. To me anyway. Maybe Schiff does too. He spends a lot of time on this Zimmerman thing, which to me is the biggest distraction in history, and schiff took the bait. bigtime.

I think he does it because his heart is in the right place, and he sees this country going to shit, and is trying to educate people.

I don't blame u for not following me. I'm not following me.

Fri, 07/12/2013 - 23:33 | 3747489 kito
kito's picture

Why is Schiff opining on a sensationalistic trial instead of keeping his eye on the economic ball?

Sat, 07/13/2013 - 04:24 | 3747763 jmcadg
jmcadg's picture

I think he's fed up that no one listens to his truthiness and is probably after Alex Jones' ratings too!

Sat, 07/13/2013 - 07:16 | 3747851 fonzannoon
fonzannoon's picture

I can't answer that. I wish I knew.

Sat, 07/13/2013 - 10:52 | 3747993 OneTinSoldier66
OneTinSoldier66's picture

I listen to his show every day. Perhaps you are too. If so, then I wonder if you caught him saying that he thinks that he would make a good trial lawyer, or something very much to that effect. He has feels he has an aptitude for it and stated as much. I think that's one of the reasons why he's going on about it quite a bit. But if you ask me, he certainly hasn't let off of Bernanke. He's still been hot on Bernanke's butt even if he's not concentrating on economics in general as much during the Zimmerman trial.


Just my two cents fwiw.

Fri, 07/12/2013 - 18:14 | 3746767 world_debt_slave
world_debt_slave's picture

ha, ha, I exited in 2000

Fri, 07/12/2013 - 19:13 | 3746882 Tortuga
Tortuga's picture


Fri, 07/12/2013 - 18:15 | 3746771 EmmittFitzhume
EmmittFitzhume's picture

Collapse when people are most ignorant or complacent is the key.  That's they only way they can maximize their profit on the downturn.  There are a lot more non-ignorant people now that are still watching.  That's why they are delaying and waiting for the watchers to turn away but they are watching for much longer than ever before.  That's why Bernanke cannot stop the pump

Fri, 07/12/2013 - 18:15 | 3746772 Long-John-Silver
Long-John-Silver's picture

Corzine is still free. That's all you need to know about our situation.

Fri, 07/12/2013 - 18:24 | 3746786 Mordenkainen
Mordenkainen's picture

So is Kissinger. We've been in this situation for a very long time.

Fri, 07/12/2013 - 18:25 | 3746790 I am Jobe
I am Jobe's picture

Is that guy still alive?

Fri, 07/12/2013 - 18:36 | 3746812 Mordenkainen
Mordenkainen's picture

"Undead" is more like it.

Fri, 07/12/2013 - 19:01 | 3746842 Not Too Important
Not Too Important's picture

Have any of you ever read this quote by Henry Kissinger?

"Military men are just dumb, stupid animals to be used as pawns in foreign policy".

He's still in demand as a foreign policy expert with the US government, helping to implement the NWO:

'Kissinger: U.S. and China to Collaborate on Globalist "World Order"'

"David Rockefeller has paid homage to the communist Chairman Mao, the most prolific mass murderer of the 20th century (responsible for the liquidation of between 49-78,000,000 Chinese)."

“Whatever the price of the Chinese revolution [an indirect reference to millions killed] , it has obviously succeeded not only in producing more efficient and dedicated administration, but also in fostering high morale and community of purpose… The social experiment in China under Chairman Mao’s leadership is one of the most important and successful in human history,” Rockefeller wrote for the New York Times on August 10, 1973."

He's such a psychopath, even the Jews ex-communicated him:

Just a little bit of (current) history for the military folks.

Fri, 07/12/2013 - 21:49 | 3747250 WillyGroper
WillyGroper's picture

Your last link made my day.
Could not have happened to a more EVIL excuse for a human being.

Sat, 07/13/2013 - 16:23 | 3748985 DosZap
DosZap's picture

Have any of you ever read this quote by Henry Kissinger?

"Military men are just dumb, stupid animals to be used as pawns in foreign policy".



Yep, and he is,and has been OUR George Soros for decades,an IN HOUSE one.

Fri, 07/12/2013 - 19:15 | 3746892 Tortuga
Tortuga's picture

Heck yea. His retainer starts at $1 million a year. If you actually want to talk to him, it's more.

Fri, 07/12/2013 - 19:14 | 3746883 Kirk2NCC1701
Kirk2NCC1701's picture

And yet Obama called Putin today about Snowden.  The US is 'not happy' about Russia granting him temporary asylum.

Hate to say it, but it is no longer possible to bury the head in the sand of "Patriotism": You must have a second residency status or passport.  Or suffer the consequences of the "willfully naive" or "pathologically stubborn".

Fri, 07/12/2013 - 19:17 | 3746897 Tortuga
Tortuga's picture

My momma always called me pathological. Guess I'm about to find out if she was right.

Fri, 07/12/2013 - 18:22 | 3746782 I am Jobe
I am Jobe's picture

Need the bitch back says USSA


US Calls On Egyptian Army To Free Ex-President Mohamed Morsi

Read more:


Sat, 07/13/2013 - 16:20 | 3748975 DosZap
DosZap's picture

US Calls On Egyptian Army To Free Ex-President Mohamed Morsi

Hahahahahaha, GOOD ruck with that one, free him, and send him to the carrier.As political Asylum on the USA is the only place he could go.

Fri, 07/12/2013 - 18:23 | 3746784 Seasmoke
Seasmoke's picture

All I know is. SOM TING WONG

Fri, 07/12/2013 - 18:25 | 3746788 I am Jobe
I am Jobe's picture

Man who walk through airport door sideways is going to Bangkok.

Fri, 07/12/2013 - 18:28 | 3746795 polo007
polo007's picture

According to CIBC World Markets:

The world remains a place where enormous amounts of debt just keep stacking up. Paying this debt back is constantly believed to be less of an issue given the crucial assumption that economic growth rates in the order of 3% to 5% will return AND will be sustainable. Even if it does, it must be noted that “total payback” of the debt could be unlikely to ever be achieved. At some US$18 trillion of total debt in the U.S., it would take 14,400 million ounces of gold or some 160 years’ worth of annual global gold mined supply (at the current price of some US$1,240/oz. and at current global output of some 2,800 tonnes per annum) to pay this down. At the same time, gold production is about to take an almighty knock and we won’t be surprised to see as much as 25% less gold output in the next five years.

Still, much of this precarious (let’s just stop the debt load from growing) position is critically dependant on very low interest rates being maintained – once rates start moving higher, debt repayment schedules quickly blow out, while the value of bonds, in particular government bonds, starts to decline. The current dramatic decline in the value of government bonds will already see banks’ balance sheets shrinking again, with possible resultant liquidity squeezes across the globe. Euro sovereign debt costs are already up dramatically and Italy is seemingly also sitting with an apparent +30 billion euro loss in the derivatives market…

This could very quickly turn out to be a very bad scenario, but the point, as far as we are concerned, is really that it does not even need to get to this for the markets to start realizing that currencies will have to depreciate much further – we believe this to be a crucial mechanism for delivering lower sovereign debt levels long term. Gold will be the currency that continues to benefit in the longer term. So, making a positive case for the gold price is not too difficult – particularly if inflation becomes a problem much sooner than everybody currently expects.

The real problem, unfortunately, is that all of this argument is dependant on data that will only become apparent much later down the line. Right now, nobody is willing to go against the Fed. That simply means bonds and gold are both getting the “chop” because the Fed is signaling a return to stronger economic growth – leading to a stronger U.S. dollar.

Fri, 07/12/2013 - 18:30 | 3746798 ATG
ATG's picture


Got puts?...

Fri, 07/12/2013 - 18:38 | 3746815 notquantumdum
notquantumdum's picture

Yes, but they sure haven't helped recently.

Fri, 07/12/2013 - 18:34 | 3746808 giggler123
giggler123's picture

On a long enough timeline the survival rate for everyone drops to zero - No point in doing anything now, is their?

Fri, 07/12/2013 - 19:21 | 3746880 Not Too Important
Not Too Important's picture

Between the increase of methane, the collapse of oxygen, and the massively increasing radiation from Fukushima, I'd say no, other than maybe a good Scotch and cigar.

Fri, 07/12/2013 - 20:03 | 3747001 TrulyBelieving
TrulyBelieving's picture

Your 'survival rate for everyone drops to zero, but not your rate of return.

Fri, 07/12/2013 - 19:11 | 3746877 BullyBearish
BullyBearish's picture

As a reformed shorter I now say with enthusiasm:

B T F D   works until it doesn't..."I've got my mind right"

Fri, 07/12/2013 - 19:15 | 3746890 Citxmech
Citxmech's picture

"As soon as a peak oil proponent can show me an example of oil demand not being met because of a legitimate lack of supply"

Brandon, you're looking for the wrong evidence.  The fact that production is increasing in places like The Bakken, the Canadian Tar Sands, and various deep-water drills, is the evidence you are looking for.  Oil is not going to run out - people's ability to pay for the volume necessary to condcuct business as usual wil kill the old economy long before that happens. 

Fri, 07/12/2013 - 19:36 | 3746943 runningman18
runningman18's picture

Then by your very definition, Smith is right.  Peak oil is not the cause of rising market prices.  Inflation is.

Fri, 07/12/2013 - 19:43 | 3746961 Citxmech
Citxmech's picture

I have no doubt that inflation is a huge contributor - but depletion of the "easy oil" is increasing the average marginal cost to produce each bbl of oil as well.  

Unfortunatley, the whole cycle, at this point, is a "snake eating it's tail."  Regardless, CBs will print, and oil producers will have to move to more expensive extraction technologies compounding the problem on two fronts.  The percentage of available capital dedicated to energy will increase, decreasing economic productivity.

This is what happens post peak.

Fri, 07/12/2013 - 21:09 | 3747157 DanDaley
DanDaley's picture

As in Colin Campbell's book, The End of Cheap Oil...not the end of oil.

There are huge resevoirs of oil in the south of Venezuela, for example, but it is a heavy, tar-laden oil, not your WTI or light sweet crude, or perfumed prolific petrol; it's hard to get to, marginal, not-cheap oil.  

Sat, 07/13/2013 - 00:47 | 3747592 lakecity55
lakecity55's picture

Russian research into abiotic oil has never been disproven/proven.

Even if it is proven (as I think it will) there will still only be x supply available.

Fri, 07/12/2013 - 19:15 | 3746891 Blazed
Blazed's picture

It's not coming, near, or around the corner, at least not for the ramainder of this year! 

Fri, 07/12/2013 - 19:16 | 3746896 jim249
jim249's picture

Not gonna happen. Ben will never let that occur under his watch.

Fri, 07/12/2013 - 19:20 | 3746906 Tortuga
Tortuga's picture

Blazed and Jim are both right. Why in only the last 2 hours I have given them 5 empty cans to kick.

Fri, 07/12/2013 - 19:21 | 3746909 Debt Slave
Debt Slave's picture

Stackers and readers of Zero Hedge will survive.

Fri, 07/12/2013 - 19:50 | 3746978 gnomon
gnomon's picture

And even if we don't survive, there will be a bunch of bodies piled up on our lawns before we are done in---wilding agents, riff-raff, the insane, white trash, black trash, dopers, gang bangers, our "blue pill" next door neighbor, etc. etc.

Fri, 07/12/2013 - 20:33 | 3747068 JR
JR's picture

Eventually the answer is to stop giving this rogue government money; because it is using our money against us.

On Lew Rockwell today Paul Huebl writes in his article, THE GEORGE ZIMMERMAN TRIAL IS NOT ABOUT JUSTICE that it turns out that our Federal tax dollars were used to organize anti-Zimmerman protests demanding a legal lynching. Attorney General Eric Holder can be thanked for that waste of cash."

Writes Huebl from Sanford, Florida: “A young, athletic and hooded thug with lots of texting messages about guns, fighting and drugs, Trayvon Martin attacked George Zimmerman. And, he adds: “the already divided nation has an agenda that has nothing to do with this isolated shooting in Florida.  This is about clashing races and attitudes about Gun Control.

“There are those that hate guns or are African-American and intolerant of Whites that want Zimmerman’s blood.  They don’t really care who was beating whom. They want Zimmerman to be publicly hanged.”

The people who believe as we do have underestimated the threats to this nation outlined here by Brandon Smith and Huebl. And, now, they are being slapped in the face with them. And they are visibly shocked and angry.

Fortunately, the American people have a lot of wherewithal to bring to this all-encompassing collapse in America. They are not just going to be writing letters and carrying signs. They are going to rise up. Because, if they want this nation to survive, they must.

As for the Zimmerman story, this is a guy on trial for murder and the politicos and racists, including the President of the United States and his Attorney General, don’t care if he’s guilty or not. They just want some kind of conviction and if they don’t get it, their supporters are going to riot.

It’s a national spectacle and, believe me, people are not missing the story. Yes, the media has been incredibly unethical, but worse, the Federal government all the way to the Oval Office has been involved to bias the murder case. They are equally duplicitous in the economic tragedy we the people are facing.

Sat, 07/13/2013 - 12:47 | 3748294 RockyRacoon
RockyRacoon's picture

I'll admit to being less than enthusiastic about the whole Zimmerman/Martin affair; I quickly pass by any channel that is featuring it at the moment.  And those are lots of moments.  So, stating that I'm less informed than many won't keep me from making my own comment -- it hasn't stopped anyone else.  For the life of me I can't figger out why Mr. Zimmerman wasn't at home that night, chomping on some chips, and watching the latest installment of America's greatest boob-tube episode of whatever.  Sounds like he audibly profiled the kid (oops...) and then followed him after explicit instructions not to.  Bottom line:  He shouldn't have been where he was and put himself in a position of getting himself mauled by a spindly teenager.  I reckon without that firearm he woulda got his ass whooped (MMA aside).  How smart was that?  I'll predict that he's adjudicated to have committed manslaughter and is lightly sentenced.  Just my one-cent's worth (inflation ya know).

Sat, 07/13/2013 - 13:03 | 3748342 JR
JR's picture

Rocky, this case is a defining moment in the culture devastation we are experiencing. And when the verdict comes down, there will be huge repercussions and you owe it yourself to identify two things about this trial:

1)      The facts related to the Florida law and how many of them were violated by Zimmerman (if he was out of line in following Martin, where is the illegality?)

2)      The incredible tampering with the police investigation, the Obama regime pressure on the prosecution and the total incompetence and bias of the judge.

Fri, 07/12/2013 - 21:30 | 3747141 swampyankee
swampyankee's picture

Get ready for a parabolic ramp. Stupid Mutha Fuckas.

Fri, 07/12/2013 - 21:32 | 3747206 masaccio
masaccio's picture

The role of the Fed is to squelch the crises that financialized capitalism produces as part of its regular operation.

Fri, 07/12/2013 - 21:35 | 3747212 polo007
polo007's picture

The predicament the Fed is in is that it is in the process of "losing the bond market," and it is trapped. It can't even hint about reducing its buying by a measly $20 billion (which used to be a big number but is a rounding error nowadays, when it comes to monetization) because of how bonds -- and, at some point, stocks -- misbehave whenever the subject comes up.

As far as the eye can print

The takeaways of what our Fed chairman had to say were that "highly accommodative monetary policy" would be needed for the foreseeable future, and that he finally made a point that I think many of us could agree with, which is that the unemployment rate of 7.6% might "overstate the health of the labor market." Bernanke also made it clear that the Fed would not raise rates for some time, even after we hit 6.5% unemployment.

In short, Bernanke corroborated all of the points that have been espoused by those of us who have felt that we understood the DNA of the Federal Open Market Committee doves. They really don't want to stop printing unless the employment gains are very strong. Which means fretting over taper talk is silly, for two reasons:

  • The economy will not be strong enough, I don't think.
  • And even if it is, the kind of tapering Fed officials are talking about is really quite small.

However, I don't want to lose sight of the fact that while Bernanke (and many others) thinks the bond market is declining because the Fed appeared to talk tough, some of us believe that the bond market is actually in the early stages of taking away the printing press from the Fed. If market participants finally get it through their heads that tapering, let alone any sort of tighter money conditions, is off the table and bonds can't make a substantial rally back near the old highs, then we will probably be able to conclude that the Fed has "lost" that market. (If bond holders begin to discipline the Fed, we will be on our way to the funding crisis I have long warned of.)

It's his way or the high-yield way

This is all very subjective, and we will have to see how it plays out. But what Bernanke made clear is that if the Treasury market doesn't cooperate with him (or the stock market, for that matter) he will respond.

This is the Bernanke quote that I think really got people's attention: "And I guess the final thing I would say in terms of risks of course is that we have seen some tightening of financial conditions, and that if, as I've said and as I said in my press conference and other places, that if financial conditions were to tighten to the extent that they jeopardize the achievement of our inflation and employment objectives, then we would have to push back against that."

So there you have it. The Fed is essentially trapped. If the financial markets don't continue to go higher, or if the bond market doesn't stay where the Fed wants it, it will fight that. Therefore, down the road, if interest rates move higher and the Fed thinks they shouldn't, it will take action (i.e., "push back against that"), which will only reinforce the idea that the Fed has indeed lost control of the bond market, and the ramifications of that will be quite ugly. Said differently, the Fed will conclude that any rate rise against its wishes is unwarranted and resist that, which will make matters worse.

To be sure, taking action premised on that outcome is not today's business. For now, markets are joyous and, at this point, stocks have really set themselves up for disappointment as we go through earnings season. Of course, now that Bernanke has promised stock bulls that he has their back again, the response to negative news will be that much more informative.

The two points I think we want to take away are that the Fed can't even talk about tapering, and the question of at what interest rate will the bond market really fail.

Fri, 07/12/2013 - 22:37 | 3747389 Gift Whores
Gift Whores's picture

<Rant on> This is all bullshit.  +1000 for this article.  I work in the construction industry (management) and I'm glad I still have a job.  I saw a lot of my peers lose theirs and they are sitting at home or building decks.  Things are still very shaky and as an estimator, jobs are still damn hard to get for a decent profit.  Shit is tight.  We are all still worried this fragile "recovery" is going to actually materilize.  God forbid they turn the stimulus off.  I'm fucked when that happens.  A lot of us will be fucked.  

That being said, I know in my heart it needs to happen.  The reset needs to happen.  I wish it would have happened when everything tanked in 08.  At least now I would be typing how fucking happy I am that we are in a recovery rather than merging with Greece.  Don't fool yourself compadres.  Crash is coming.  Hopefully then the reset occurs. I'm tired of wondering when the big tank is coming. 08 was the shot across the bow compared to what's coming. 

For now I'm stocking up on bullets and bullion.

And fuck that guy behind the green curtain.

<Rant off>

Sat, 07/13/2013 - 08:54 | 3747922 d edwards
d edwards's picture

Isn't it fairly plain to see that this is the master plan of the marxist, muslim-loving maggot in the half-white house and his cadre of similair f-heads?


On their way to yet another socialist utopia that will only end in disaster for the common man?



Fri, 07/12/2013 - 23:33 | 3747493 thestarl
thestarl's picture

I just wonder when the moment comes we're gunna get up off our arses or cop it up the arse even more so.Just walk around any shopping mall and look at all these clueless barely functioning fucking slob morons ha.

Sat, 07/13/2013 - 11:32 | 3748155 kurt
kurt's picture

Ay Up me cucaburra right right 'ad me one of them slobs perched on the end of me willie an you got 'er after me so you musta supp'd good on me goo.

Sat, 07/13/2013 - 02:17 | 3747675 Pandorable
Pandorable's picture

See ya's....I'd rather take my chances with John Galt.

Sat, 07/13/2013 - 07:54 | 3747872 jubber
jubber's picture

With Europe in a even bigger mess than the US I can't see how the Dollar will fall?

Sat, 07/13/2013 - 11:07 | 3748101 ThisIsBob
ThisIsBob's picture

Chicken little was right but timing is still off.

Sat, 07/13/2013 - 12:55 | 3748320 moneybots
moneybots's picture

"The collapse that should have occurred in the 80s was delayed and thus made more volatile as the Fed artificially lowered interest rates and allowed trillions upon trillions of dollars in dubious loans to be generated"


Collapses come after booms.  The Cold War had not ended until the end of the 80's, setting up the 1920's style peacetime easy money boom.

Sat, 07/13/2013 - 13:33 | 3748409 Voicefather
Voicefather's picture

The problem is not that the average American is ignoring the signs of coming collapses, it is that they are utterly clueless about the macroworld of economics and so do not even see the signs at all. Five years ago I knew jack and shit about economics other than supply and demand, which I knew very well. I could talk for hours about astronomy, WW2, ancient history, archaeology, Egyptology, airplanes, geology, solar power, physics and a few other subjects, but I knew nothing of economics. When the 2008/2009 crash happened and cost me a job and then another job I decided OK I'm gonna figure what the fuck is going on with economics so I never get another surprise like that again. Anyone who did not lose a job in 2008/2009 never wanted to understand this stuff and a lot of the people losing jobs in that era didn't take the step to learn about economics, they were too busy eagerly blaming Bush and crying to Imam Obama. Then add to that that so much of what happens in the economic world is made up bullshit rules where there is so much flat out lying and the rules change on a dime to the whims of TPTB and you have a subject that is irritating to learn about. It cannot be done by the average person.

Sat, 07/13/2013 - 15:45 | 3748875 DEVILDOG
DEVILDOG's picture

Americans are 99% stupid sheeples controlled by the dancing with the stars and bacherolet propaganda media. How else can you explain the sociopathic endless wealth and power of the .01% that fuck the sheeples every single day? They deserve to be slaughtered until they decide to aggresively retaliate. I just hope the DEPRESSION gets so bad that even the beyond stupid sheeples finally wake up their dormant brains and violently destroy the .01% and are then smart enough to form a civilization that will no longer be dominated by a few global sociopaths. The human race has a very long way to go. After all these centuries of human endeavor GOD (the real one not LORD b. or jamie) must be very dissapointed. If I was him I would have flooded the place again and started over back in 1980 when the .01% began peeing in everyone's face and calling it "trickle down economics".

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