As the editor of the Silver Bear Cafe, I spend most of my time researching current events. I explore the markets, the economic war that is being waged on the middle class, precious metals, the Federal Reserve, energy, and how to go about surviving financially. In this weekly column I will attempt to condense the week's events and examine how the news might affect your pocketbook. JSB

Financial Markets

The American Government is financially insolvent and can no longer make good on its social safety net liabilities. Social Security, Medicare, Medicaid and even governmental pensions will have to be eliminated. I recently posted a video that explains this in graphic detail. Congress can't balance to budget, even if they shut down the government and the military! What's going to happen is that , one day soon, the checks will simply stop. This is about to become very big news, although you probably won't hear it from the presstitutes that make up the main stream media. The current regime is desperate to maintain power. They have to make it through the mid term elections, after which all hell is going to break loose. They are (and have been) very aware of what will happen. Two out of every ten families, nationally, are already insolvent. Six more are one paycheck away from being broke. There was a time when we could have worked our way out of it. Those times are long gone.

The collusion between government and the big banks has bastardized capitalism to the point that it is no longer "workable". Capitalism has always provided the economic cornerstone that allowed the U.S. to enjoy the highest standard of living in the world. This high standard was initially achieved in the latter part of the 19th century in spite of Lincoln. A free market no longer exists anywhere in the world. I'm constantly confronted with technical analysis charts. How can anyone expect to technically analyze a rigged market. These markets are not being driven by the normal influence of fear and greed, but rather the criminal influence of infinite amounts of counterfeit money (Federal Reserve Notes).The markets are manipulated and rigged, and the wealth of America is being transferred from the middle class (those of us who work for a living) to both the rich and the poor. The intentional creation and support of the poor is expensive, don't you know. The instigation of the welfare state changed America forever. Snap cards anyone?

From Jeffrey Tucker:

You have to ask the question: Where does investment come from? Of course, people like Obama never ask this question. To him, the answer is obvious: The Fed can just print money and people will invest it. Or the federal government can just tax people and use the money to "invest" in his favorite sectors, like electric cars and electricity-generating windmills.

This is sheer fantasy. There is only one source of genuine investment. That is savings. Savings comes about from forestalling consumption. You have to give up things today so that you can have more tomorrow. There is no other path. The attempt to skirt that savings obligation and replace it with fiddling by the central bank and the government is pure folly. At best, it creates another round of false booms that end in busts. At worst, it destroys wealth and creates nothing at all.

What's interesting is how individuals and institutions seem to understand something here that government and its economists do not. Despite every attempt to stop savings altogether — under the misbegotten theory that consumption causes growth — savings in general actually soared after 2008. Only recently has the rate dipped among most of the populace, even as it has continued to increase among the smart set.

You will note that the same thing happened at the attacks of Sept. 11, 2001. The president went on television to demand that everyone immediately go out and buy something. But Americans were at the point of assuming that whatever the president wants is probably not what is best for them and their families. Savings went up. But this was nothing compared with what happened after 2008. This was when people really started stuffing their mattresses.

The beautiful thing about this example is that it shows that government can't always get what it wants. In fact, it rarely gets what it wants. The whole of its economic policy models are predicated on the idea that people respond to economic signals like machines. Change the signal and people fall in line. But that's not how it works in the real world. People have brains and they have memories. The memory of 2008 is still with us, and it's a good thing, too, for the prosperity of the future can come only from the savings of the past.

Let's hear it for the Scrooge McDucks of the world. They dare to disobey, and, in so doing, they are building for the future, from which we will all benefit. We might all consider emulating them. Saving money is the ultimate revenge.

On the Economic War Front

I posted Mark Thorton's article, not as an endorsement of marijuana usage, but rather as an example of the misinformation that has been spouting out of the government for, as the good doctor proclaims below, 70 years. If we have been mislead about this issue, what other lies have been spread on the behalf of campaign contributors. My feeling is most everything we have been told is crap.

In the 1930s, innovations in farm machinery would have caused an industrial revolution when applied to hemp. This single resource could have created millions of new jobs generating thousands of quality products. Hemp, if not made illegal, would have brought America out of the Great Depression.

William Randolph Hearst (Citizen Kane) and the Hearst Paper Manufacturing Division of Kimberly Clark owned vast acreage of timberlands. The Hearst Company supplied most paper products. Patty Hearst's grandfather, a destroyer of nature for his own personal profit, stood to lose billions because of hemp.

In 1937, Dupont patented the processes to make plastics from oil and coal. Dupont's Annual Report urged stockholders to invest in its new petrochemical division. Synthetics such as plastics, cellophane, celluloid, methanol, nylon, rayon, Dacron, etc., could now be made from oil. Natural hemp industrialization would have ruined over 80% of Dupont's business.

Andrew Mellon became Hoover's Secretary of the Treasury and Dupont's primary investor. He appointed his future nephew-in-law, Harry J. Anslinger, to head the Federal Bureau of Narcotics and Dangerous Drugs. Secret meetings were held by these financial tycoons. Hemp was declared dangerous and a threat to their billion dollar enterprises. For their dynasties to remain intact, hemp had to go. These men took an obscure Mexican slang word: 'Marijuana' and pushed it into the consciousness of America.

A media blitz of 'yellow journalism' raged in the late 1920s and 1930s. Hearst's newspapers ran stories emphasizing the horrors of Marijuana. The menace of Marijuana made headlines. Readers learned that it was responsible for everything from car accidents to loose morality. Films like 'Reefer Madness' (1936), 'Marijuana: Assassin of Youth' (1935) and 'Marijuana: The Devil's Weed' (1936) were propaganda designed by these industrialists to create an enemy. Their purpose was to gain public support so that anti-Marijuana laws could be passed.

To once again visit my favorite Mark Twain quote, "Its not what you don't know that will screw you up. It's what you are absolutely sure of that is absolutely wrong." We must realize that there are those that would mislead us, and in way too many cases, they are posing as our representatives.

From Mark Thornton:

Dr. Sanjay Gupta has recently reversed his opposition to marijuana legalization and apologized for supporting marijuana prohibition. The brain surgeon and CNN medical correspondent obviously takes his own viewpoints very seriously and his mea culpa should be a big boost to the medical marijuana movement. Dr. Gupta admits,

"We have been terribly and systematically misled for nearly 70 years in the United States, and I apologize for my own role in that."

His reversal is a good reminder that our ultimate goal is to be rid of an entire health care system by which we are ruled by health care technocrats, bureaucrats, and politicians.

The mainstream perspective is that experts and technocrats should establish what the best medical practices are and then bureaucrats should enforce those practices on everyone. Practices deemed suboptimal, unproven, or potentially dangerous should be prohibited by politicians and the prohibition enforced by bureaucrats. This is a one-size-fits-all system with the state determining what fits and what does not.

Never shy about intervention, the government has provided monopoly privileges for doctors through licensing, for drug companies through patents and trade restrictions, and for hospitals, who can prevent competitors from entering their market through "certificate of need" requirements. The combination of monopoly suppliers and subsidized consumers is the primary reason for this era of rising medical costs and falling health care outcomes.

Precious Metals

As the editor of the Silver Bear Cafe, I try to focus on the ramifications of world events. I try to understand how what's going on now will affect your pocketbook next week, next month, next year. It is my sole intent to help you consider the possibilities which will, in turn, help you prepare for your financial future.

One of the most important aspects of your financial survival concerns your understanding of the nature of money. If you believe that precious metals do not constitute "money", you may have been misled. If you have been misled, who misled you? Why? And "What's wrong with this picture"?

What is money? The whole point of money is suppose to be the provision of a convenient and liquid medium that can be exchanged for less liquid value. It is a go between. One strives to accumulate money so it can be exchanged for something else.

In our illustrious history, we humans have tried everything from salt to sardines as a medium of exchange, but nothing has seemed to work as well as gold and silver. A person bringing a relatively illiquid item to market could swap it for gold or silver, secure in the knowledge that the metal would retain its value for as long as he chose to hold it and would be accepted as payment for anything he wanted when he chose to spend it.

The condition that your gold and silver will retain its value for as long as you chose to hold it is the most valuable characteristic of the "barbarous relics", and provides the fodder for me to champion the cause of precious metals ownership, and for my ensuing attack on the debasement of the American dollar.

From Adam Hamilton:

Silver has suffered a miserable year so far, bludgeoned by gold's unprecedented selling anomaly.  The exceptional weakness in both metals was greatly exacerbated by futures speculators piling on short-side bets.  But with silver shorts hitting record extremes, a super-bullish short squeeze now looms.  Any rapid silver rally is likely to spook the highly-leveraged futures traders, sparking a massive stampede to cover.

Even greater short-squeeze potential exists in gold, as I discussed in an essay several weeks ago.  And gold is the dominating primary driver of silver prices.  Since silver's secular bull was born nearly a dozen years ago, silver has had a stellar 0.924 correlation r-square with gold.  Over 92% of all silver's daily price action in that long secular span was statistically explainable by gold's own!  This is very important today.

Futures speculators' total short positions in gold recently soared to wildly-outlying record highs.  The only way these radically excessive shorts can be closed is by buying offsetting longs, and the sheer quantities required are gargantuan.  And as the gold price surges on this heavy buying to cover, the silver price will follow it higher.  Gold short covering will likely provide the initial spark to ignite the silver short squeeze.

This silver buying is likely to spread like a wildfire in a bone-dry forest.  Silver's great volatility and incredible potential to soar has a seductive allure that's never stamped out.  There are hordes of investors and speculators waiting to buy, ready to pounce on any significant rally.  Even though silver's price was hammered down 39.0% at worst this year by late June, silver exhibited remarkable relative strength.

Energy

Longtime readers are aware of my stance on the rampant, criminal lack of regulation we are currently experiencing in America. We have become a country were laws only apply to some. Certainly not all. As George Orwell was so prescient to point out in Animal House, all animals are equal, just some more than others.

We have reached an "Animal House Moment". All the ills that plague humanity are basically caused by renegade factions of humanity, making up only a small fraction of the whole, but still incipiently soiling the social environment with their foul excrement of greed and corruption.

As I pointed out last week, the deepwater Horizon catastrophe was the result of criminal neglect on the part of Haliburton, as well as the management of BP. The criminals that were responsible, were not even admonished, much less prosecuted. The criminal neglect that was the cause of the Fukushima disaster was directly attributable to Tepco management (the bozos that were responsible for building and running the plant) and General Electric, the manufacturer of the reactors. First of all, how insane was it to build a nuclear reactor on a fault line? All those miscreants, and many more, need to be prosecuted, convicted and taken out of the population. They should, additionally, be made to experience a very uncomfortable existence.

Until all the putzes, from the CEOs down as well as those that occupy high level government positions, that have chosen to allow these activities to happen, should be severely punished. Until there is some accountability, this same shit will continue, over and over.

From Harvey Wasserman:

Just when it seemed things might be under control at Fukushima, we find they are worse than ever. Immeasurably worse.

Massive quantities of radioactive liquids are now flowing through the shattered reactor site into the Pacific Ocean. And their make-up is far more lethal than the "mere" tritium that has dominated the headlines to date. Tepco, the owner/operator–and one of the world’s biggest and most technologically advanced electric utilities–has all but admitted it cannot control the situation. Its shoddy performance has prompted former U.S. Nuclear Regulatory Commissioner Dale Klein to charge: "You don’t what you are doing."

The Japanese government is stepping in. But there is no guarantee–or even likelihood–it will do any better. In fact, there is no certainty as to what's causing this out-of-control flow of death and destruction.

Some 28 months after three of the six reactors exploded at the Fukushima Daichi site, nobody can offer a definitive explanation of what is happening there or how to deal with it.

The most cogent speculation now centers on the reality that, simply enough, water flows downhill.

Aside from its location in an earthquake-prone tsunami zone, Fukushima Daichi was sited above a major aquifer. That critical reality has been missing from nearly all discussion of the accident since it occurred. There can be little doubt at this point that the water in that underground lake has been thoroughly contaminated.

In the wake of the March 11, 2011, disaster, Tepco led the public to believe that it had largely contained the flow of contaminated water into the Pacific. But now it admits that not only was that a lie, but that the quantities of water involved–apparently some 400,000 gallons per day–are very large. Some of that water may be flowing from the aquifer. Much of it also, simply enough, flows down Japan's steep hillsides, through the site and into the sea.

Until now, the utility and regulatory authorities have assured an anxious planet that the contaminants in the water have been primarily tritium. Tritium is a relatively simple isotope with an 8-day half-life. Its health effects can be substantial, but its short half-life has been used to proliferate the illusion that it’s not much to worry about. Reports now indicate the outflow at Fukushima also includes substantial quantities of radioactive iodine, cesium, and strontium. That, in turn, indicates there is probably more we haven't yet heard about.

This is very bad news.

The Fed

The subjects I personally editorialize are usually concerned with the wholesale attack on our freedom and liberty, the theft of our assets through Federal Reserve initiated inflation, and the socialistic mind set of the puppet masters, who are bound and determined to destroy the Republic.

I constantly attempt to refrain from the discussion of politics in my examinations, usually to no avail, as I view the left-right debate as a contrived distraction, but it still pisses me off. The more important issue is the battle being waged by collectivists against individualists, which can be more easily understood by grasping the "Y axis" rather than the "X axis". On the "Y axis", totalitarianism occupies the top extreme and anarchy occupies the bottom. For a graphic explanation of this concept, please follow this link and take the test.

If you have been paying the least bit of attention to the underlying theme of my rants you would also realize that I consider the "Dark Side" to be made up of institutional wealth in the hands of multinational corporations, the various banking cartels, and "Old Money" elitists that were not responsible for creating the wealth but rather are simply endowed with the ability to wield the power that comes with such wealth. These factions are, IMO, grossly abusing their powers and, as a result, selling out America. They are disrupting the course of natural evolution.

The technology of the "Dark Side" owned media has reached the point where it has achieved the power of creating realities for the people that are distorted and unnatural. As corporations merge, so that they control more and more of the technology and want to use more advertising to create false needs, the costs of basic human survival will continue to escalate.

Most imperative is the "Dark Side's" obsession with increasing government power and surveillance. Citing a need to combat drug dealers and terrorists, the government has infringed more and more on the liberties of the citizen. Through Patriot Acts I & II, the Bill of Rights has been effectively dismantled. Get ready for Patriot Act III. Cash transactions are being restricted and the Internet fully monitored. The next step will be forcing the move to a cashless society, controlled by a central authority. All we need is electronic credit money, devoid of all checks and balances, and a system by which we can all be tracked on a 24/7 basis, cradle to grave, and the central banker conspiracy will be complete. This growth toward a central, spiritless governmental authority in a high tech, virtual world, divorced from natural processes, where food, water, and the routines of living have been commoditized and distorted, marks the beginning of the end, of the world as we know it, for everyone.

From Mac Slavo:

With individual Americans underwater, unemployed, and on the edge of complete disaster, the future for millions is looking bleak.

This is an accelerating trend… one that touches all of our lives directly, no matter what income category you're in, educational background, or political affiliation. This trend will alter your own job, business, and everyone around you.

It's over. There is no fixing this mess. We are looking at either a planned reset, or a reset that will arise from the ashes of an economic disaster. We are now in a situation where the global economies depend on an unsustainable amount of debt…

When it all ends it is going to end badly. Every business will be affected.

The middle class is one crisis away from broke… We are now at the point where it will happen almost overnight.

The latest micro documentary from Future Money Trends explores the critical nature of the situation in which we find ourselves and provides key strategies that can help you depression-proof your life for the coming decade and beyond.

Financial Survival

The country is suffering traumatic stress and strain and is beginning to show signs of disintegration. Through the implementation of class stratification, different ethnicities are banding together out of a inert defence mechanism and a will to survive. Unfortunately, these primal drives are cursory and have been, for the most part, bred and educated out of us. I say educated because I recently found that 27% of all Californians and 63% of all persons living in Los Angeles County are illiterate. At first you might think "well, they're Mexicans, they can't read or write English". You would be mistaken. They are illiterate. The can not read or write any language. They are ignorant and can hardly keep themselves afloat. Without government subsidies, they could probably not survive. And the government thinks: "Now we have them where we want them".

The government is the cause of this disorder. The people are the cause of of the government. Which came first? The chicken or the egg? Why won't we, as a nation, do something about it? Is it because this fiat money experiment has rendered us all impotent?

The world is not and has never been an intrinsically friendly place. Nature is a formidable foe. Perverse and demented people are an even more daunting hurdle to overcome. Especially when they become organized to put forth a self absorbed agenda. When they start messing, not only with the teeming masses, but with mother nature as well, we are presented with an energy induced ionospheric nightmare. Floods, tornados, earthquakes, tsunamis, fires, droughts, ignorance and civil unrest. Boy, the powers are really doing a bang up job. I sometimes get the idea that we are being led by blood thirsty gremlins...

From Ol' Remus:

DC increasingly stands alone, and if we rely on what they do rather than what they say, it's no unintended side effect. But pulling up the drawbridge and manning the parapets has consequences. Insular command from above falsifies the notion of unity, it replaces "we're all in this together" with "you're all in this together." DC no longer pretends their window on the nation is the freely expressed will of the people, rather it's surveillance of the kind once deployed against kidnap-murder suspects or, further back in time, of the kind feudal kings used to repress their subjects.

The absence of a constitutionally legitimate central government warranting the trust and support of the people, and DC's us-versus-them internal realignment which decouples it from the people, and DC's sponsorship and protection of groups hostile to elementary civic duties, have encouraged and enabled fragmentation on a scale not seen since the 1850s. There are those who see this as an intentional unraveling of the republic by DC so their power may be nearer to absolute. A compelling case can be made neither for nor against such a proposition so we'll let it be for the moment. Here's what we do know.

Some Hispanics are busily constructing a breakaway confederacy called Aztlán, to consist of the southwestern states and southern California. The goal is to evict Asians, whites, blacks and all others not of La Raza—The Race—which goal they declare at street gatherings large and small. Spanish language radio and television promote this goal nationwide, often in the crudest terms possible lest any nuance confuse the troops. The National Council of La Raza, the storefront Cloward-Piven face of the larger la raze movement, disavows Reconquista and exclusionary rhetoric—on the record. They even supply a dewey-eyed definition of the term La Raza only a law school sophomore could love. Unsurprisingly, the National Council of La Raza is federally funded.

Elsewhere, some of the native population of Hawaii are building a parallel government which excludes Asians, whites, blacks, Hispanics and all others not of the race. The goal is to model all of Hawaii after the mainland's Tribal Nations, use everybody else as a revenue stream, withdraw from treaties, declare an independent nation—a monarchy actually, and get foreign recognition. It's suggested all or some of this is derived from factions within the Lakota Sioux. Incidentally, the similarities of the Hawaiian separatists's rhetoric with the narrative of early Christianity is too obvious to miss.

The Congressional Black Caucus, The National Conference of Black Mayors, The National Association of Black Journalists and many other organizations also pursue overtly racial ends. The goals of black activists are not easy to summarize, they're ever-shifting and difficult to reconcile. Supremacist outfits like the Black Panthers and the Black Moslems are straightforward enough, they advocate zero-sum plunder—taking the country by force and exterminating everybody else. Oddly, their rhetoric is cribbed from paleo-socialist screeds already antique when Hoover was president.

While they recite some supremacist cant, street level politicos and pseudo-academic community organizers opt instead for urban-based, de facto separatist enclaves, to be supported by everybody else. Still others choose to dress for success, lose the preacher cadence and work within the establishment to promote a general system of mandatory privilege and preferences. The latter two deploy a pastiche of diversity blather and White Privilege dogma—which is a parody of nineteenth century notions about White Man's Burden. The militants don't much care how they're thought of by outsiders, while the "privilege and preference" activists have made adulation obligatory. This has been up and running for so long it's too familiar to belabor. Unsurprisingly, again, it's federally funded.

 

You must first realize that there are, present in our lives, enemies. You must then know who those enemies are and act accordingly.

Eliminate as much debt as possible, especially “variable rate” debt, such as credit cards and lines of credit. Interest rates will be rising, so the elimination of debt offers a “real return” of escaping rising rates by creditors.

Get some control over some fresh water.

If you are depending on Social Security, stop.

Follow the course opposite to custom and you will almost always do well...

Its not what you don't know that will screw you up, it's what you think you know that is wrong. The spin you hear from the mainstream media is intended to mislead you. Open your eyes and face the future. If you leave your head in the sand and ignore it, you are only leaving your butt exposed for the world to kick. This all may sound like gloom and doom, but when you get a handle on what is going to happen, you will have a future filled with opportunity. Fortune favors the Informed.

More next week...

May the Great Spirit be with you always,

Johnny Silver Bear
Chief cook and bottle washer, The Silver Bear Cafe

Disclaimer

All statements and expressions are the sole opinions of the editor and are subject to change without notice. A profile, description, or other mention of a company in the newsletter is neither an offer nor solicitation to buy or sell any securities mentioned. While we believe all sources of information to be factual and reliable, in no way do we represent or guarantee the accuracy thereof, nor the statements made herein. The staff of Silver Bear Cafe are not registered investment advisors and do not purport to offer personalized investment related advice. The publisher, editor, staff, or anyone associated with, or associated to the Silver Bear Cafe may own securities mentioned in this newsletter and may buy or sell securities without notice.