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 pandemic economic insanity, that seems to afflict every central banker in the world, is overtly rearing its ugly head for everyone to see. Most refuse to care about it, as the alternative is sooo distasteful. They would rather not think about it. To quote Scarlet O'Hara:

" Oh dear, oh dear. What ever shall I do. I can't worry about that today... I guess I'll just have to worry about that tomorrow."

During a conversation with a good friend the other day, we tried to consider how Japan's imminent economic collapse might affect different issues in his portfolio. Japan's economy is so entrenched in the world's economy that an industrial failure would be to the American consumer goods markets, what the drying up of diesel fuel would be to America's grocery stores. So many parts and devices are provided by Japanese companies that a supply shortfall would surely have a deleterious effect on many, if not all, markets.

The same holds true for supply side support given by the European union (and they are in about the same shape as Japan) but to a lesser degree.

Even if you don't have a portfolio, a Japanese implosion will negatively affect your standard of life. Golly, now I'm starting to sound like Chicken Little...

From Sartre:

The financial system of the third largest economy on the planet is starting to come apart at the seams, and the ripple effects are going to be felt all over the globe.  Nobody knew exactly when the Japanese financial system was going to begin to implode, but pretty much everyone knew that a day of reckoning for Japan was coming eventually.  After all, the Japanese economy has been in a slump for over a decade, Japan has a debt to GDP ratio of well over 200 percent and they are spending about 50 percent of all tax revenue on debt service. 

In a desperate attempt to revitalize the economy and reduce the debt burden, the Bank of Japan decided a few months ago to start pumping massive amounts of money into the economy.  At first, it seemed to be working.  Economic activity perked up and the Japanese stock market went on a tremendous run.  Unfortunately, there is also a very significant downside to pumping your economy full of money.  Investors start demanding higher returns on their money and interest rates go up. 

But the Japanese government cannot afford higher interest rates.  Without super low interest rates, Japanese government finances would totally collapse. 

In addition, higher interest rates in the private sector would make it much more difficult for the Japanese economy to expand.  In essence, pretty much the last thing that Japan needs right now is significantly higher interest rates, but that is exactly what the policies of the Bank of Japan are going to produce.

On the Economic War Front

Yes, there is an economic war being waged against the middle classes everywhere. It is, to me at least, most obvious right here in the U.S. What is the Problem? Here is an esoteric explanation provided by your truly...

When we are born, (at least in the case of middle class America) our parents have a natural tendency to shelter us. A parental shield provides a filter that attempts to insure we are not exposed to the the plethora of societal flaws that permeate the day to day lives of adults in this cold, hard world.

As we come of age, as a result of the insulation provided by our parents, we are, understandably, naïve, and remain, for a time, unaware of some of the more discomforting aspects of life. As we become old enough to know better, most contemporary Americans seem to adopt a state of convenient ignorance. I don't believe that this is a natural or healthy state of being, but, instead, is the result of an insidious dumbing down campaign that has been waged against us, through the darkside controlled media, clergy, academia and government for several generations. The sheeple have been conditioned to go through a process of devolution which strips one of the survival instinct and self defense mechanisms.

An inordinate number of people in the U.S. have arrived at the final stage of this conditioning, which I call "stupid on purpose" (SOP). This is anti-Darwinism. How many people do we know that refuse to even entertain the notion that there is anything wrong, much less that it is the result of an intentional plan to rob us of our capacity to exercise critical thought?

The term ,"survival of the fittest" requires that one be both physically and mentally fit. In the United States today, the sheeple are neither. We are ranked 37th in the world when it comes to health. Monsanto, Archer Daniels Midland and many others are intentionally killing us for a profit. Corn syrup, as a sweetener has done more damage to our collective health than anything else. Genetically modified animals (frankenfish for example) and vegetables (soybean, corn, canola, and cotton seed oil) are being developed that have the potential to alter our genetic make up. The giant agri-conglomerates utilize lobbyists to bribe corrupt politicians to pass legislation which mandate their use.

Our politicians (so called representatives) work for the giant agri-conglomerates, big oil, big pharma, big war, and big banks. What would you expect from such a traitorous clanjamfry? (Editor's Note: Clanjamfry is one of my favorite words. It means, from old Scottish, an assemblage of worthless persons. - JSB)

From Brandon Smith:

The Republican Party is an embarrassment to many conservatives, but not for the reasons that should be most embarrassing.  Sadly, many Americans only care about belonging to the "winning side", rather than the right side.  Currently, Republican excuses for consistent losses revolve around the fantasy of "changing demographics" and "a disconnection from the more moderate and liberal public".  These scapegoats have nothing to do with the disintegration of the Republican Party. 

In truth, the Republican establishment continues to degrade not because it does not appeal to some imaginary growing faction of budding American socialists, but because it no longer appeals to conservatives and constitutionalists.  The Neo-Con leadership of the backwards party continuously supports nearly identical legislative actions to the hated Obama paradigm.  Unfortunately, there are still some naïve people out there who hope against hope that the GOP will rise up and defeat the Democratic stronghold, all while the GOP openly energizes Democratic policies.

Consider that both Republicans and Democrats strong armed the American public into massive banker bailouts which have so far produced no real jobs, and no tangible recovery, but have created perhaps the largest stock bubble the world has ever seen.

Consider the "Safe Act" legislation of New York, which imposes draconian restrictions on the 2nd Amendment; long held as a Republican line in the sand.  Yet, 11 Republicans voted YES in line with Democrats to pass the bill.

Consider that many Neo-Con Republicans attacked the filibuster against anti-gun rights legislation in the Senate as if the move was "outlandish".

Consider that the wire tapping of the Obama Administration is merely an extension of the wire tapping used by the Bush Administration under FISA and the Patriot Act. 

Consider the expansion of executive assassination and rendition powers under the NDAA, which are widely supported by both Republicans and Democrats.

Consider that the AUMF, the resolution which is often used to justify the further passage of NDAA provisions for treatment of U.S. citizens as "enemy combatants", was established under George W. Bush, and is defended to this day by many Republicans despite the abuses of Barack Obama. 

Consider that provisions within the latest immigration legislation that call for biometric ID's as well as tracking of U.S. citizens are supported by both Democrats and Republicans. 

Consider that John McCain, often labeled a "die-hard Republican" and hero to islamophobes everywhere, has now personally visited with Syrian insurgents openly working with Al Qaeda to overthrow the Assad government.  These are the same insurgents that have been accused of false flag chemical weapons attacks which were then blamed on Assad, and the same insurgents that have a penchant for severing the heads and eating the raw hearts of their prisoners in front of video cameras.  For all the talk of Obama being secretly supportive of Islamic terrorism, the Republicans seem to be just as friendly. 

Precious Metals

Suppose you go to a casino. If you are paying attention, you will notice that everyone is playing with chips. Why? Because the owners of the casino know that their customers, (marks), seem to be more willing to play their games with chips, rather than cash. They have, at least temporarily, demonetized Federal Reserve Notes, (FRNs), by substituting chips.

Now let's take this situation to the extreme. Suppose you could buy everything you needed in the casino. Food, clothing, shelter, everything. And you could pay for everything with chips. Now lets additionally suppose that you could also work in the casino, and they paid you with chips. Stay with me here. Let's additionally suppose that you lived there all your life, that you raised your family there and that your kids raised their families there. Eventually, no one would have any need of FRNs. The casino would have successfully demonetized cash and would obviously be in control of the manufacture and issuance of chips. With the production of more chips, they could easily dilute the value of the chips you had already amassed. With that control they would have achieved absolute power in the casino. No matter whether you won or lost, they would win. They would rule the microeconomic world of the casino.

Hey, that's exactly what the collectivist owners of the Federal Reserve started doing in 1913. Instead of a casino, they used a whole country to get it started. They progressively got everyone to forget about gold and silver, to dismiss them as, in the words of John Maynard Keynes, "barbarous relics". John Maynard Keynes was a puppet pretending to be an economist. Those that prescribe to "Keynesian Economic Theory" are, IMHO, either idiots, or criminal economic predators. Those predators include every member of every Federal Reserve Board this country has had in the last eighty years! They didn't want people to use gold and silver for money because they couldn't manufacture it themselves.

They could, however, manufacture as many FRNs as they wanted. At the Breton Woods conference of 1945, they expanded the size of their "casino" to include most of the world. The verdict of history must be that the Federal Reserve has failed dismally. Far from making financial crises impossible, as it initially promised, the Fed, in league with the Bank of England, intentionally engineered the first Great Depression, it is basically responsible for all the economic malaise that we, as a country, currently face, and is about to present us with a Super Depression, which will ultimately result in worldwide economic disintegration.

From Deepcaster:

The Cartel's motivation for takedown attempts of Gold, Silver, and other Tangible Assets is clear: they do not want the further legitimization of Gold & Silver (or Tangible Assets in general, for that matter) as Measures and Stores of Value (i.e. Real Money) to compete with their Treasury Securities and Fiat Currencies.

But, notwithstanding the Interventions, one can still utilize a "comparative valuation" approach. The benefit of the "comparative valuation" approach outlined above is that it actually gives one a different and illuminating perspective on Asset Inflation, Asset Deflation, and Purchasing Power. For example, if the reader chooses not to use Gold (Deepcaster's "baseline asset" of choice) or other Precious Metals as a baseline asset, we invite the reader to consider the consequences of using the Agriculture or Energy Assets Class instead.

But again, the Interventional Caveat applies: there exist $Trillions of OTC Derivatives available to manipulate the price of Crude Oil and other Commodities - - see BIS Table referenced above. (Total OTC Derivatives outstanding were $632 Trillion as of December, 2012.)

So long as the private-for-profit United States Federal Reserve and ECB and now the Bank of Japan and other Central Banks continue to profligately expand the supply of money and credit, we will see continuing debasement of the U.S. Dollar and Euro and other Fiat Currencies in Purchasing Power Terms and this virtually guarantees Price Inflation. Thus much of the Financial Asset and Equities Price Inflation we have seen recently is an "Artificial" (per PIMCO CEO El-Erian) result of ongoing Fed and other Central Bank Q.E.  in terms of U.S. Dollars.

In sum, therefore, if one holds appreciated (in dollar terms) financial "assets" one must consider "appreciation (or depreciation) vis-à-vis what?" Depending on one's choice, one may find that the ostensible appreciation is really depreciation. [And especially so, if one factors in the tax consequences of being taxed on a larger number of U.S. Dollars which have a substantially decreased Purchasing Power.]

Energy

This week I posted an article about the resurgence of nuclear energy. I post articles of a similar nature frequently because, aside from their newsworthiness, they provide extremely valuable investment information. If you have already started, or are currently considering, putting some of your hard earned capital in uranium mining issues, the more pertinent information you can find, the better.

I, personally, am not in favor of the use of nuclear fusion to generate electricity. Not because it isn't efficient, but because, in the current climate of no regulation, the private sector consistently exhibits a propensity to cut the costs of safe guards because the cost of bribing politicians is cheaper than the cost of upgrading to more reliable technology. After all, who cares if our Grandchildren glow?

Until we regain control of our government, and insist on the protection of the American people that can only be attained through regulation, nuclear energy will remain suspect.

The following contribution from Sebastian Anthony explores the promise of cold fusion, a process which has, here-to-for, seemed like an unattainable dream. Obviously, such a discovery would be a game changer, that is if the powers that be allow its application.

From Sebastian Anthony:

Against all probability, a device that purports to use cold fusion to generate vast amounts of power has been verified by a panel of independent scientists. The research paper, which hasn’t yet undergone peer review, seems to confirm both the existence of cold fusion, and its potency: The cold fusion device being tested has roughly 10,000 times the energy density and 1,000 times the power density of gasoline.

Even allowing for a massively conservative margin of error, the scientists say that the cold fusion device they tested is 10 times more powerful than gasoline — which is currently the best fuel readily available to mankind.

The device being tested, which is called the Energy Catalyzer (E-Cat for short), was created by Andrea Rossi. Rossi has been claiming for the past two years that he had finally cracked cold fusion, but much to the chagrin of the scientific community he hasn’t allowed anyone to independently analyze the device — until now.

While it sounds like the scientists had a fairly free rein while testing the E-Cat, we should stress that they still don’t know exactly what’s going on inside the sealed steel cylinder reactor. Still, the seven scientists, all from good European universities, obviously felt confident enough with their findings to publish the research paper.

The Fed

In order to keep the dollar from tanking the Federal Reserve must raise interest rates (and I mean double digits) but if they do, it will crush the economy. They won't raise rates, so the dollar is toast. The loss in value of the dollar is simply a result of the ravages of inflation, that we have been talking about, ad nauseum, for the last twelve years. When Joe Sixpack can't buy his sedative six pack on Friday, he, too, will crack and react.

Meanwhile, back in New York, the banksters' insolvency will soon become apparent, and they will finally start to go belly up, one after another, which will result in their depositors' funds disappearing, like the $2,000,000,000 from M.F. Global. A lot more people will react.

Finally the treasury bond market will collapse, and everyone who holds treasury paper will react. This is a lot of reaction! The government thinks that they are ready to deal with the crisis, but they are, in general, the morons that caused the crisis in the first place. The insane thing is that all central banks, the world over, will accelerate the devaluation of their currencies in a "race to the bottom. This will continue to put pressure on everyone. Governments, that are already insolvent, will go "belly up". No checks. No welfare. No pensions. No food stamps. What do you think will happen then?

From Joe Russso:

Today, central banks create fiat currency, for the benefit of themselves and the corrupt governments, banking institutions, and corporations to whom they lend.

The debt-based fiat currency created by central banks is not money.  Apart from the faith-based legal mandates forcibly imposed by government dictate, fiat currency is neither an effective means of exchange, reliable measure of account, or sustainable store of value.

The IRS in the United States, also established in 1913, coercively enforces various iterations of this fiat currency system by imposing a rather questionable income tax code, most likely written by corporate lawyers, and then mandated by the central government.

In effect, large central governments around the world force their citizenry to participate in a criminal system designed by, and for the benefit of an elite gang of overlords, who control, promote, and profit from the grand illusion and deception of this treasonous monetary fraud.

This extremely dangerous global trend will continue until the corrupt elite money culture implodes upon itself or replaced by a decentralized, organic monetary system grounded solely in free market fundamentals. We can plausibly consider ourselves victims of Stockholm syndrome by extension of this argument.  We have all been capture-bonded and held hostage by the overlords of banking and their political puppets. Politicians are also bound but they gain special favor in the acquisition of above-the-law privileges and technocratic power for continuing to foster the false paradigms promoted by the central banking cartels.

Financial Survival

I have long since lost any confidence in the current state of American politics, politicians, law enactors, law enforcers, judges and courts, and an out-of-control penal system. Until all of these factions of the jurisprudence system are cleaned up, the criminal perps brought to task, and the operation of each is returned to the Constitution mandates that they have all sworn to obey and uphold, there is no longer a United State of America. And there is certainly no hope. Hopelessness will breed insurrection quicker than anything else. That's why they have been preparing for the irate citizens' reaction for a decade. There is, at least, one FEMA detention camp in every state. Most have two. Some have three or more.

Consider these recent efforts to keep you safe:

The Department of Homeland Security, along with the Social Security Administration, the National Oceanic and Atmospheric Administration (NOAA), the Federal Reserve, the Internal Revenue Service, and several other U.S. Government alphabet soup agencies have collectively purchased over 1.6 billion rounds of rifle and pistol ammunition. Durning the Iraq war, all of the U.S. Armed Forces, together, only used 70 million rounds of ammunition per month.

Sound like a bit of overkill to keep citizens safe? Kind of leaves me wondering what the government has in mind. Who are they preparing to go to war against?

What will you do? What will your neighbor do? Folks, the world over, are beginning to push back. They, mostly, have never had it as good as Americans have, nor have they been as thoroughly brainwashed. Europeans are much closer to their collective "breaking point" and, will snap sooner. When I say sooner, I mean, like, next week or next month. The contagion of their reaction will spread around the world. As the banksters continue to bribe the local politicians to squeeze their constituents for more taxes to pay the interest on the fraudulent loans, more and more will wake up to the scam and balk.

How are you going to retire if there is a war going on in the U.S. How are you going to retire if your pensions and savings accounts are nationalized and turned into worthless treasury bonds. What is your "exit strategy"? There are answers to these questions, but you must take the inititive to ask them.

If you are a long term reader of the Silver Bear Cafe, you are prepared. Consequently there are millions of mindless sheeple that, to this day, remain clueless. They are about to become desperados. Desperation breeds contempt. Contempt breeds insurrection. Insurrection breeds chaos. What chaos breeds is, basically, unknown.

From The Doug French:

The dream of virtually every American is to retire as early as possible. Who doesn’t want to have each and every day to do exactly what he or she wants to do?

Sure, for some people, that would be work. They like having somewhere to go every day, being valued for their services, and the interaction with fellow employees and customers. But most people, provided they have enough money to live on, would just as soon hang up their timecards and play gin poolside.

The retirement plans of millions were ruined by the 2008 stock market crash, not to mention the real estate crash of the same year. If their stock portfolios didn’t take enough of a beating, Ben Bernanke’s zero interest rate policy will keep them punching a clock for years more, long after their backs, knees, and patience are crying out to call it quits.

According to a Gallup survey, the average retirement age is up to 61. That’s a four-year increase from 20 years ago. The average working American now plans to work until age 66. That’s up from age 60, which was the plan back in 1995.

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 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.