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 economy, not unlike the Sword of Damocles, is hanging by a thread

The majority of the American population seems to labor under a popular misconception which is provided by the left-right debate/distraction. I do not believe, on a professional politician's level, that there is a shred of difference between a member of the Democratic party and a member of the Republican party. Neither pay the least bit of attention to their constituents. Both are self absorbed and consumed with getting re-elected. All (with very few exceptions) accept illegal bribes from criminal lobbyists and are, therefore, skumbags.

The markets are being levitated by the Federal Reserve. Why, you might ask? It is because, if they didn't artificially prop them up, they would violently crash. When they crash (not if) trillions of dollars of "pretend" value will go away. I say "pretend", because it was never there to start with. The "illusion" of value will disappear, and when it does, the Fed's game will be over. The world will, suddenly, wake up to the truth, and lose all faith in fiat. When the fiat bubble bursts, and it may do so before the end of the year, it will not be reinflatable. This will be, albeit very painful, a good thing. Inflation is not possible without the sheeple's faith, trust and confidence, but the world is, perilously, on a downward spiral, and it will never recover until the power to inflate is done away with.

Paul Krugman, who is either a very well paid shill working for the skumbags or the most confused student of economics in history, will have you believe that Keynesian Economics is a real science.

John Maynard Keynes was a fake that became popular, among politicians, because he came up with some hooey that somehow seemed to justify tax and spend programs and capital controls by the government. Whenever you hear a politician or economist speak of "Keynesian Economics" hold on to your wallet because they are out to steal it.

You don't find Krugman's blather taken seriously on this site. Inflation (which I seem to be treating this week ad nausum) is how the banksters criminally create bubbles. Deflation is the only remedy. You know...inflate...deflate. How can anyone argue with that logic? Krugman, and the rest of the faux science Keynesians have either sold out and agreed to spread confusion for those pulling their strings, or are simply delusional.

I believe that the criminal Fed, who, through their manipulations, machinations, economic perversions and blatant stupidity, will successfully destroy the dollar through hyper-inflation. Meanwhile, the value of most assets will deflate. At that point (becoming much more apparent between now and Christmas) we will experience the scourge of both hyper-inflation AND deflation at the same time. When the dollar loses another 50% of its purchasing power, and the amount of dollars you can get for your house remains the same, you will experience the sensation of being ravaged from both ends at the same time. All that without even being kissed...

In the following piece, Mr. Rubino points out that the rich a just as subject to "fleesing" as the rest of us. Because they are rich, they can afford to go to greater lengths to protect themselves from the abject thievery.

From John Rubino (click for the entire piece):

Clearly, inflation is raging. But because so much of society's wealth is flowing to the top 1% — who after all can only drive one car at a time and tend to eat no more than the rest of us – inflation isn't showing up in food, suburban houses or other mass-market products. Instead, trillions of disposable dollars are pouring into real assets that are then hoarded in mansions and high-end storage facilities. This is a truly startling asset grab when you think about it.

The one unique thing about this episode is that past migrations of capital from financial to tangible assets have included precious metals, which tend to be in demand when paper currencies are being mismanaged. That gold and silver aren't participating is the strongest proof yet that they're being manipulated to hide the impact of rising debt and excessive currency creation. After all, if you're going to spend $100 million on art, your financial adviser will almost certainly tell you to diversify into farmland, oil wells and gold bars.

That this hasn’t happened doesn't mean it won't. Picture a chart tracking the tangible asset classes of the super-rich: art, jewelry, high-end London and Manhattan apartments, beachfront property, gold bullion, etc., things that exist in limited supply and will be prized no matter what the S&P 500 or 10-year Treasuries are doing. Virtually all the lines on that chart would would be looking parabolic right about now – except precious metals. A billionaire, trying to figure out where to move his next hundred mil would look at this chart and see one outlier, one thing that hasn't yet gone through the roof, and make the obvious choice. That day is coming.

But looked at another way – in terms of the amount of paper currency being used to buy them – you could say that gold and silver are by far the most popular tangible assets in the world. China, India, and Russia between them have snapped up about 4,000 tons of gold this year, worth about $153 billion at the current price. That's a lot more than was spent on art. It's just that these purchases, massive though they are, aren't moving the price.

But they are moving something: the gold reserves of the Western central banks that are sending their gold eastward. Those reserves are falling, at an unsustainable rate. So Western central banks face a tough choice: keep sending their gold to Asia until it’s gone, or let the super-rich bid it into the stratosphere in line with art and diamonds. Sooner or later, the central banks will have to choose door number two.

On the Economic War Front

At a gathering of friends yesterday, celebrating my wife's sixtieth birthday, I was reminded that, although I had been predicting a catastrophic economic meltdown for close to thirteen years, that none had occurred. These are friends not unlike your own who stubbornly refuse to even contemplate the gist of my message. Happily (at least for me) I am not alone on my crusade. There are many others, although not nearly enough. I politely conceded their point. However, to those of us who have awakened, the signs are everywhere. The lives of my middle class friends in the Dallas/Ft. Worth Metromess have remained, pretty much, unaffected. This is because of the wealth of oil and natural gas resources which have lent to the tax base. In many other parts of the country folks have not been so lucky.

It is astounding, to me, with so many commentators raising the alarm concerning just how over bought the markets are, that no one seems the least bit concerned over the likelihood of a crash. They don't seemed concerned that the status of the dollar as the world's reserve currency is threatened or even what effect it would have on their lives if that status was lost.

The fact that there is something called a "petro dollar" is just as important to the standard of life of the average American as the reserve currency status. All the hoopla over Syria has changed, in a negative way, our relationship with the Saudis, yet not one person in one hundred has the slightest notion of how that relates to Syria or what that means to them and everyone they know.

The prevalence of this ignorance pervades every aspect of our well being as a country. The sheeple have become as much a part of the problem as the satanic cult of globalists.

The world is a dangerous place to live; not because of the people who are evil, but because of the people who don't do anything about it. - Albert Einstein

From Brandon Smith (click for the entire piece):

By any reasonable measure, I think it is safe to say that the last quarter of 2013 has been an insane game of economic Russian Roulette. Even more unsettling is the fact that most of the American population still has little to no clue that the U.S. was on the verge of a catastrophic catalyst event at least three times in the past three months alone, and that we face an even greater acceleration next year.

The first near miss was the Federal Reserve's announcement of a possible "taper" of QE stimulus in early fall, which sent shivers through stock markets and proved what we have been saying all along – that the entire recovery is a facade built on an ever thinning balloon of fiat money. Today, markets function entirely on the expectation that the Fed will continue stimulus forever. If the Fed does cut QE in any way, the frail psychology of the markets will shatter, and the country will come crashing down with it.

The second near miss was the possible unilateral invasion of Syria demanded by the Obama Administration. As we have discussed here at Alt-Market for years, any invasion of Syria or Iran will bring detrimental consequences to the U.S. economy and energy markets, not to mention draw heavy opposition from Russia and China. Though the naïve shrug it off as a minor foreign policy bungle, Syria could have easily become WWIII, and I believe the only reason the establishment has not yet followed through with a strike in the region is because the alternative media has been so effective in warning the masses. The elites need a certain percentage of support from the general public and the military for any war action to be effective, which they did not receive. After all, no one wants to fight and die in support of CIA funded Al Qaeda terrorist cells on the other side of the world. The establishment tried to hide who the rebels were, and failed.

The third near miss was, of course, the debt ceiling debate, which has been extended to next spring. America came within a razor's edge of debt default, which many people rightly fear. What some do not yet grasp, though, is that debt default of the U.S. was NOT avoided last month, it is INEVITABLE. Debt default will ultimately result in the death of the dollar as the world reserve currency, and the petro-currency. This final gasp will lead to hyperstagflation within our financial system, and third world status for most of the citizenry. It is only a matter of time, and timing.

"Timing" is truly what we are all concerned about. Those of us in the field of alternative media and economics understand well that the U.S. is on a collision course with disaster; it is a mathematical certainty. We no longer think in terms of "if" it happens - we only question "when" it will happen. Our fiscal structure now hangs by the thinnest of threads, a thread which for all we know could be cut at a moments notice. However, economic and political storms appear to be brewing with the year 2014 as a target.

Globalists have been openly seeking the destabilization of U.S. sovereignty, and they have openly admitted that the destruction of the dollar and our economic foundations will aid them in their goal. It is important to never forget that international financiers WANT to absorb America into a new global economic structure, and that the U.S. must be debased before this can be accomplished. Here are a few reasons why I believe 2014 may be the year they make their final move...

Precious Metals

I like to use the comparison of the sun going down to the rise in the value of precious metals. Neither has ever happened. If you think either has ever happened, you are confused. The sun doesn't go down, the horizon moves up. The value of precious metals does not go up, the value of the dollar goes down.

Prior to 1964, American coined dollars, halves, quarters and dimes were ninety percent silver. In 1963 you could by a gallon of gas with a 1963 quarter. Today you can buy two gallons of gas with a 1963 quarter. The value of silver has not gone up, the value of gasoline has gone down. The American Government was bribed into taking the precious metal out of the coinage in order to allow the Fed to more easily steal your wealth through the erosion of your buying power (inflation).

If it wasn't for the Federal Reserve, the price of everything would continually go down, instead of up. The standard of life, for everyone, would get better, not worse. If the Dark Side hadn't debased the value of the coinage, a person working for $5.00 an hour would have the purchasing power of what amounts to $50.00 an hour today...twenty silver quarters = $5.00. Let's say a silver quarter is worth $2.50 today (it's actually worth closer to $4.00). If you worked eight hours a day, five days a week, fifty-two weeks a year, for $5.00 an hour, you would be making $9600.00 before taxes. But consider how much less you would be paying in taxes if you only made $9600.00 per year. Meanwhile, your income would have the purchasing power of over $96,000.00. We (the middle class) would be much better off, and all these stupid wars and stupid bailouts and parasitic thieves would not be possible.

Gold and silver will contribute greatly to our eventual economic salvation. The Chinese have long been aware of the intrinsic superiority of precious metals to fiat. They are buying the world's current above ground stock as if it were a fire sale. When the time comes, they will exert their fiscal superiority with a vengeance.

From Byron King (click for the entire piece):

"Never laugh at live dragons," wrote J. R. R. Tolkien in his classic book The Hobbit, published in 1937.

Tolkien was on to something, I believe. His words come to mind because I keep seeing more and more news about China — the national symbol of which is the dragon — and its many citizens buying more and more gold. It's fair to say that China and the Chinese hoard yellow metal.

Not long ago, for example, I saw video of Chinese rioting over access to a gold-selling mall in Shanghai. Evidently, some Chinese are desperate to convert their currency into gold. It's a gold-lust much like that of Tolkien's gold-loving dragon named Smaug:

First, let's take another look at Chinese gold-buying. It's just astonishing. The Chinese government and people are buying gold by the tonne (metric ton). See the nearby chart of Chinese gold imports from Hong Kong, showing strong, steady accumulation over the past two years.

In specific numbers, since September 2011, China has imported 2,116 tonnes of gold. That is, in just over two years, China has imported almost the equivalent of the entire gold reserves of France (2,435 tonnes) or Italy (2,451 tonnes).

According to the World Gold Council, about one-third of China's gold imports are due to individual Chinese buyers who want to own "personal" gold, as bullion and/or jewelry. That is, the buyers are people who don't want to tie up their wealth in the Chinese yuan — the national currency. There's also a modest amount of imported gold going for industrial use in electronics and such.

Much of the rest of the gold going to China — well over half — is, apparently, destined for the Chinese central bank. This gold is intended to back up government monetary policy.

Like Smaug the dragon, the Chinese do what they do. Or look at it another way. Here in the West, monetary players and many mainstream media pundits heap disdain upon gold. The conventional wisdom is to sell gold.

We see that conventional wisdom reflected when nominal gold prices fall and large gold holders like SPDR Gold Shares (GLD) liquidate holdings. Of course, for every seller, there's a buyer, and right now, on net balance, the Chinese are buying every ounce sold, and then some.

Energy

I have, in my life, been very fortunate. After having majored in Biology in college, I became involved in the worm business. Worm business, you might exclaim! What in the world could the worm business have to do with energy? Well, let me tell you.

It seems that a worm's diet ( in this case Red Wigglers) consists exclusively of bacteria. More specifically, the kind of aerobic bacteria that eat anything that is organic and decomposing. In fact the bacteria provide the most necessary part of the decomposition equation. The worms, being voracious in their appetites eat, pretty much, all the time. They consume and digest anything that is organic and decomposing in their quest for bacteria.

When I was in the worm business they were selling for $2.50 per pound. At the same period in history, cows were selling for $.75 a pound, on the hoof. Worms were fetching more than three times as much as cows when purchased live.

One aspect of our business was the bio remediation of organic waste in the form of green and yellow vegetable material that ended up as a cumbersome waste product at frozen vegetable packing plants. This was happening in the seventies before the packers discovered a way to recover some of their costs. We had engineered a process and were doing it for them.

We had a very large supply of green and yellow vegetable material. Our process was designed to render methane from the waste. In order to generate methane it requires that you first achieve the proper carbon nitrogen ratio. Our initial facility was located in south Georgia where there also happened to be a slew of chicken farms. The chicken manure was also problematic to the chicken farmers who were very open to the idea of us cleaning out their chicken houses. Yellow and green vegetable material and chicken poop provided the proper carbon/nitrogen ratio. With the simple addition of bacteria (we used the kind that you put in septic tanks) we were suddenly making methane. It did require a digester which we had manufactured and was like a giant sized water bed bladder. We then laid it out on a sixteen degree slope, and voila, a gravity fed methane digester and bio remediation. When the digestion process was completed, we fed the leavings, which were toughly laced with bacteria, to the worms, which in turn grew fat and multiplied. The methane obviously had value, but don't forget the $2.50 per pound for the worms, and $.50 a pound for the worm poop (castings).

Being young capitalists and entrepreneurs, the situation provided us an opportunity to exploit. We were converting the green and yellow vegetable material as well as the chicken poop, which both cost a substantial amount of money to produce, with the help of the worms, back into cash. The following story reminded me of that period, during my wonder years so many years ago. If you keep your eyes open, opportunities abound in this country.

From Joanna M. Foster (click for the entire piece):

There’s an almost comical juxtaposition of glamour and grime in New York. The trendiest dessert spot and most expensive new boutique are often barricaded behind a bulging wall of trash bags, spilling onto the sidewalk. Designer perfume and decaying food notes mingle in the air together.

Fortunately for New Yorkers, obsessed with the newest and the best, enormous trucks routinely appear out of nowhere to rescue them from their banana peels, old sneakers and unwanted lamps. Within seconds the putrid black bag barricades are dismantled, stuffed out of sight in the back of the truck and disappear down the street, out of the city and across state lines. The vast majority of the city’s trash — 10,000 tons a day — ends up in Ohio, Delaware, Pennsylvania and North Carolina. Once the trash is properly out of sight and out of mind in a distant landfill, that’s the end of the story as far as most people are concerned. But while it might no longer be an immediate nuisance to a New Yorker, trash ‘lives’ on for decades in landfills and the methane produced from rotting organic matter, which accounts for one third of what gets thrown away, exacerbates climate change, impacting everyone on Earth.

The Fifth Assessment of the Intergovernmental Panel on Climate Change recently increased its estimate of the global warming potential of methane to 34 times more powerful than carbon dioxide. According to the Environmental Protection Agency (EPA), landfills are the third largest source of methane in the nation. In landfills, food waste also adds an enormous amount of water to the decaying mess, which causes toxic chemicals to leach into the soil.

But what if there was a way to not only keep food waste out of landfills but actually create something valuable out of what otherwise produces only methane and contaminated soil? There is, and the technology has been around for decades.

Anaerobic digesters have been used on farms to help process manure for several years. An anaerobic digester is essentially just an airtight tank filled with a special mix of bacteria, similar to what you’d find in the stomach of a cow. In fact, Patrick Serfass, Executive Director at the American Biogass Council, likes to call anaerobic digesters “optimized cow stomachs.”

When organic waste is shoveled into the digester tanks, the bacteria devour the food and other scraps and produce a biogas, which is mostly methane. The biogas can be combusted to generate electricity and heat, or can be processed into natural gas and transportation fuels. Unlike natural gas from shale, the biogas produced through anaerobic digestion is completely renewable. The digestion process also results in separated solids that can be composted, used for dairy bedding, or just spread directly on fields as a fertilizer. Nutrients from the liquid stream can be used as fertilizers as well.

The Fed

What we all need to understand is that inflation is not a natural economic occurrence. There are those, i.e. Keynesians, that would tell you different. They are lying to you. They are the bad guys. They are on the criminal side of the biggest rip-off ever perpetrated, and you are the victims.

Inflation is theft. A little inflation is a little theft, and a lot of inflation is a lot of theft. There is nothing natural about inflation. The Federal Reserve is the only cause of inflation in the U.S.A., and a major cause of inflation throughout the world. Everyone involved with the Federal Reserve are thieves. The IRS is the collection agency for the Federal Reserve. They, too, are thieves. Not one in a hundred persons employed by the Federal Reserve, the IRS or the BATF realizes it. But that hardly matters. We are talking about thousands upon thousands of thieves. No wonder we are in such a mess.

Central Bankers everywhere are crooks. They are counterfeiters, and through their actions the quality of our lives is slighted, and their's, along with the quality of the lives of the slimeballs they steal for, is enriched. Vast amounts of value has been transferred from the middle class (the only group that produces value), to the parasitic banksters.

We work, we save, we build. They don't work, they steal. They don't save, they steal. They don't build anything, they just steal stuff. In the U.S. our currency has been debased by 98% since 1913. That means that the Federal Reserve, working hand in hand with the government and Wall Street, has stolen 98% of all the value that that the citizens of the United States have created over the past 100 years. When you hear the term "QE" (which stands for Quantitative Easing) please be aware that it is nothing more than a ruse whereby the Dark Side counterfeits vast amounts of currency out of thin air, spreads it around amongst themselves through bailouts and excessive salaries and bonuses, and spends it buying up corporations, businesses, commodities, and real estate the world over. And you wonder why you have to work so much harder just to stay afloat..

If "The Bear" has a central theme, it would be an attempt to wake up the American public to the fact that the Government has been hijacked by a criminal cartel (the Federal Reserve) , that the hijacking has been progressive and taken place over the period of 100 years, and that until these criminals (those that are still living) are apprehended, prosecuted, incarcerated, and in some cases executed, America will continue to sink into ruin. Actually, if it was up to me, I'd dig up the dead ones and hang them. Now let me tell you how I really feel...

From Peter Schiff (click for the entire piece):

Herd mentality can be as frustrating as it is inexplicable. Once a crowd starts moving, momentum can be all that matters and clear signs and warnings are often totally ignored. Financial markets are currently following this pattern with respect to the unshakable belief that the Federal Reserve is ready, willing, and most importantly, able, to immediately execute a wind down of its quantitative easing program. How this notion became so deeply entrenched is a mystery, but the stampede it has sparked is getting more violent, and irrational, by the day.

The release last week of the minutes of the October Fed policy meeting was a case study in dangerous collective delusion. Although the report did not contain a shred of hard information about the certainty or timing of a "tapering" campaign, most observers read into it definitive proof that the Fed would jump into action by December or March at the latest.

But while the Fed was gaining much attention by saying nothing, the Chinese made a blockbuster statement that was summarily ignored. Last week, a deputy governor of the People's Bank of China said that buying foreign exchange reserves was now no longer in China's national interest. The implication that China may no longer be accumulating U.S. government debt would amount to the "mother of all tapers" and could create a clear and present danger to the American economy. But the story barely rated a mention in the American media.

Instead, the current environment is all about the imminent Fed taper: the process of winding down the Fed's monthly purchases of $85 billion of treasury debt and mortgage-backed securities. However, the crowd fails to grasp that the Fed has embarked on an impossible mission. The herd is blissfully unaware that the Fed may not be able to reverse, or even slow, the course of QE without immediately sending the economy back into recession.

Financial Survival

If the U.S. is on the verge of becoming a "Banana Republic", it will be at the behest of those that are waging an economic war against us. No, not the terrorists, religious fanatics, or the communists, but those in government who have purposely led us here.

It never ceases to amaze me at how many people have not the slightest inkling of what these pompous bozos are doing or why it even matters. Their actions have produced the equivalent of a world wide economic plague. The fact is that every American taxpayer has been fleeced, and their futures stolen from them.

Whether you realize it or not, the quality of your life is being systematically eroded.

First through the inflation that has been created.

Second, in higher taxes, not only for us, but for our children, our children's children, and so on, in perpetuity.

And thirdly through the unbridled cancer that has been allowed to fester and become a zombie global economy.

Banks, corporations, insurance companies, global agribusiness and big pharma has been allowed to continue operating even while insolvent. That has had the effect of preventing failure where failure was due. The resulting calamity is we have been collectively cursed with a terminal system. Survival in a terminal system is questionable at best. The perps should be executed.

Mr. Christenson brings us up to speed on how the immediate future of ourselves, that of our parents and grandparents has been stolen, along with everything else, through the collectivists' insipid interference.

From GE Christenson (click for the entire piece):

In simple terms the Federal Reserve has lowered short term interest rates to nearly zero (ZIRP – Zero Interest Rate Policy) and is "printing" $85 Billion per month (QE) to bail out bankers and our politicians who can't balance the government budget or even pass a budget.

So What? Aren't low interest rates good for the economy and for home prices?

Well, maybe in the short term they appear to be beneficial. The politicians and bankers have assured us of such. But politicians and bankers are benefitting from QE so perhaps we should question their assessment. Consider these points:

Would you loan your money for 30 years to an insolvent government that chronically spends far more than it collects in taxes? Would you consider that 30 year bond a wise investment if the government paid you less than 4% per year? Think back to what your expenses for gasoline, housing, food, and health care were in 1983 to help determine if 4% per year is enough to compensate for your guaranteed higher expenses and for the decline in the value of the dollar in the years to come. (Hint: NO!)
Retirement systems, life insurance policies, annuities, city and state government pensions and so much more depend upon the interest earned from government and corporate bonds, saving accounts, and Certificates of Deposit. If the interest earned over the past five years has been about 1% to 3.5% per year and most pension plans have assumed earnings in the (typical) 7% to 9% range, those pension plans have been underfunded by a larger amount each year. Think California public employees, Chicago public employees, New Jersey, Detroit and so on. Most pension plans for city and state employees are currently underfunded while they are optimistically assuming future interest earnings much higher than the Federal Reserve has repeatedly assured us will be possible.

The ZIRP and QE are causing the retirement funds for many governments and corporations to be more underfunded each year. If your retirement comes from a government pension, it is less secure each year. It can't remain underfunded forever. Ask the retirees from Detroit!

Corporate pension systems invest similarly. If your retirement comes from a corporate pension, it is less secure each year. Ask the retirees from a bankrupt airline or from Enron Corporation.

If your retirement is funded by your personal savings and you have been earning perhaps 1% per year for the past five years, you already know the devastation that ZIRP and QE have caused in your personal finances.

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 exclusively 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.