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

I was taken with Suzanne Collins "The Hunger Games" trilogy when it was released in 2008. It is written in the voice of 16-year-old Katniss Everdeen, who lives in the dystopian, post-apocalyptic nation of Panem in North America. The Capitol, a highly advanced metropolis, exercises harsh, at the point of a gun, political control over the rest of the nation. The Hunger Games are an annual event in which one boy and one girl aged 12–18 from each of the twelve districts surrounding the Capitol are selected by lottery to compete in a televised battle to the death. Your quintessential reality show.

Many reviewers of this work have deemed it aimed at young adults. I found the story line compelling, to the point of prophetic. I have reread Ms. Collins' work three times. Recently, with the release of the movie adaptation of the second installment, "Catching Fire", one of the stars of the film, Donald Sutherland, who portrays tyrannical president Coriolanus Snow in the story, was quoted in an interview as stating, 'I want Hunger Games to stir up a revolution'.

Longtime readers of "the Bear" might recall my 2011 rant, Hippies in which I heaped praise on the Occupy Wall Street participants as young persons who were, at least, trying to do something. As I pointed out in that essay, I didn't particularly agree with the occupy movement (especially after it was so thoroughly co-opted by some extreme leftist organizations) but I did, very much, appreciate the energy and dedication of the young people involved. It was refreshing to see any reaction what so ever from the otherwise complacent millennials.

It seems to me that our situation, in the U.S., parallels the story line of "the Hunger Games". I doesn't take much imagination to recognize that we are well on our way to being subjugated through the same tyrannical programs that the occupants of Panem endured for over one hundred years. I believe that there are sufficient signs to warrent the imminence of a quasi-dystopian, pre-apocalyptic condition right now. Is this where we are headed? Could the powers that be have been corrupted by the Darkside so completely that a fascist dictatorship is inevitable?

In this weeks most favored Financial Markets contribution, Jim Quinn continues to reacquaint us with the prescience of Strauss and Howe. They too share a dystopian view of our country's future. Most of the readers of this web site are a little past the point of participating in street demonstrations. The path that the country follows from here, will be determined by the young. From where I stand, the millennials will have to become a great deal more enlightened and socially involved to have even the slightest chance at affecting a change in direction. And, if we don't change direction, we will, most likely, end up where we are heading. You just can't argue with logic like that.

FromJim Quinn (click for the entire piece):

We are five years into the Crisis that will not resolve itself until sometime in the 2020's. No one can predict the specific events that will fundamentally change history over the next decade, but the catalysts of debt, civic decay and global disorder were evident sixteen years ago when Strauss and Howe wrote their prophetic generational history. The volcanic eruption occurred in 2008 when the worldwide financial system blew and the molten lava continues to spew forth and flow along the Federal Reserve created channels, protecting the corrupt establishment while incinerating senior citizens, the working middle class and Millennials. Deep within the volcano the pressure is building again as the mood of the country darkens. It will blow again and the economic, social, political and military distress will catalyze into a catastrophic emergency that will tear the fabric of the country asunder. The existing social order will be swept away and replaced by a new paradigm which could be better or far worse.

"Imagine some national (and probably global) volcanic eruption, initially flowing along channels of distress that were created during the Unraveling era and further widened by the catalyst. Trying to foresee where the eruption will go once it bursts free of the channels is like trying to predict the exact fault line of an earthquake. All you know in advance is something about the molten ingredients of the climax, which could include the following:

• Economic distress, with public debt in default, entitlement trust funds in bankruptcy, mounting poverty and unemployment, trade wars, collapsing financial markets, and hyperinflation (or deflation).
  
  
• Social distress, with violence fueled by class, race, nativism, or religion and abetted by armed gangs, underground militias, and mercenaries hired by walled communities.
  
  
• Political distress, with institutional collapse, open tax revolts, one-party hegemony, major constitutional change, secessionism, authoritarianism, and altered national borders.
  
  
• Military distress, with war against terrorists or foreign regimes equipped with weapons of mass destruction."

The Fourth Turning - Strauss & Howe - 1997

Linear thinkers are incapable or unwilling to understand that history is cyclical, primarily driven by national mood changes and the interaction of generations entering different stages in their 80 year life cycle. We've seen this story before, but those who lived through the last Fourth Turning have mostly died out, and our techno-narcissistic populace has absolutely no interest in understanding history beyond last night's episode of Duck Dynasty. The mood of the country during a Turning is often captured in literature and/or film produced during that period.

On the Economic War Front

Earlier this week, I became aware of an initiative, by the Swiss, to vote on a referendum that would, provide an unconditional monthly income to every adult. If passed, each citizen will be guaranteed $2,800 per month - that's $33,600 a year.

At the onset of my attempting to wrap my head around such an inititive, and what would appear to be the penultimate application of a socialistic construct, I continued to read and began understand how much more efficient a system of that nature might be, as compared to the one we now have. It would provide that all current social programs, including social security, food stamps, school lunch, unemployment, medicare and medicaid, and the plethora of similar social welfare schemes be cancelled, and the administrators of those programs be dismissed. Think of how much money that would save. The programs are, without a doubt, expensive. But the amount of money that dissapears, through the cracks, into the hand of corrupt administrators, provides us with a severe wake up call. Lets review some other exploited programs.

Through my tireless research as your editor, I continually uncover instances whereby certain political figures, regulators, banksters and insiders, currently, as well as previously, have conspired to mislead the citizenry for personal gain. Duh! Over the years, these lapses of morality and ethical behavior have become more and more frequent, blazingly apparent, and even when exposed, elicit little to no remorse, what-so-ever. I have finally come to understand that these assholes will stoop to the lowest levels possible to steal from their constituents. Almost all of the hundreds of slime balls I am referring to, have equally criminal spouses. It's usually a tag team match.

Bringing up, again, my previous essay, Hippies, I will ask that you reference my research of the Vietnam War and become aware of the shenanigans of LBJ who, apparently, was one of the most dishonest and evil persons who ever lived. The obscene amounts of money that he stole, under the guise of some ridiculous war effort, defies belief.

LBJ also brought us "the Great Society" and the "War on Poverty", which, as it turns out, was just another ruse to steal from middle class American taxpayers.

We have, over the years, highlighted the highjacking of America, through transgressions of those such as Nelson Rockefeller, when, in the early 1950s, he wrested control of American military resources away from Eisenhower. Ike warned us of this event with his "military industrial complex speech" upon leaving office. There are billions upon billions of dollars funneled through the "Black Budget" for non-sanctioned, "off the books", military projects that the American people are completely unaware of. These projects are financed by criminal activities, ranging from the sale and distribution of Afghani opium, to iniquitous drug distribution partnerships with groups like the Mexican Drug Cartels.

With the help of Catherine Austin Fitts, we have explored other aspects of the government's involvement in the drug trade, and the Clinton's complicity during their gubernatorial stay, exploring events that centered around Mena, Arkansas, where hundreds of tons of cocaine were smuggled in, all under the watchful eye of the Clintons and the CIA.

Ms. Fitts also taps into her experience as Assistant Secretary of Housing in the Bush One regime, and exposes HUD as nothing more than a criminal money laundering operation.

So the idea that public servants have, and continue to embezzle trillions of dollars by gaming the system is not surprising to me, at all. Yet my friends tell me that I am a cynic and that I have a bad attitude.

In Jon Rappoport's expose below, we find that the war on poverty has cost us more than it would have cost to send every citizen in the country a monthly check. When you consider, not only the purported costs of the programs, along with the cost of the administration of the programs, and the enormous amount that is being siphoned off the programs, we realize that the trillions would have been more efficiently spent by sending everyone a check, cutting out the middle man, so to speak. The main reason this would benefit our society is because of the alleviation of the criminal payouts to politicians and administrators. Cutting the Darkside out of the loop would provide for a much kinder and gentler distribution system.

From Jon Rappoport (click for the entire piece):

Remember something called the War on Poverty? The Great Society?

President Lyndon Johnson declared it and announced it in 1965. Since then, the federal government and state governments have poured staggering amounts of dollars into the program.

How many dollars? Does anyone know?

In his 1992 book, Paved With Good Intentions, Jared Taylor puts the figure (1965-1992) at $2.5 trillion. So, for the sake of argument, let's accept that.

Yet, by 1992 (and to an even greater degree since then), poverty had accelerated in America. Had gotten much, much worse.

So the logical question was and is: where did all that money go?

This question doesn't call for a general answer; it cries out for a compete and detailed and scathing investigation.

Dollar by dollar, inner city by inner city, program by program, outcome by outcome, for every month and every year since 1965.

How much of that $2.5 trillion never arrived at its destination? How much was utterly wasted, and how? How much was diverted from its assigned objectives, and to whom? And what did these thieves do with it?

Where is the record of all the canceled checks and money transfers, from point of origin to recipient? Where is the record of what each and every recipient did with the money?

Any organization, earmarking $2.5 for trillion (!) a specific purpose, would track it and report on it, and assess its results, in real time. Right?

But of course, when it comes to government…wrong.

Precious Metals

"We are not being shepherded by altruistic wise men, but, rather, herded by megalomaniacal desperadoes." - JSB

The precious metals markets are about to explode. The wanton and criminal abuse of the markets, through manipulation, has caused an imbalance unlike any that has ever occurred before. Never before in history has the criminal element been permitted to steam roll regulation and do away with all checks and balances.

The megalomaniacal desperadoes have caused a supply squeeze in the precious metals markets that cannot be resolved without a violent implosion. While the perps are aware that their power base is dependant on their ability to create money out of nothing, and that their suppression of precious metals prices in the paper markets is the only thing that allows them to maintain that power, and the loss of that power will expose them, to the world, as the worthless witless scumbags they are, their scumbaggedness is about to become apparent to all.

History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and it's issuance.- James Madison

Gold and Silver (and Palladium and Platinum) are on sale, and the sale is almost over. If one half of one percent of Americans each went out and bought ten ounces of silver, that would amount to 14,000,000 ounces of silver. I am not sure that there is, any longer, that much physical bullion available for delivery. Supply and demand pressures are about to finally overtake the criminal paper markets.

From Koos Jansen (click for the entire piece):

Wednesday I had the privilege again to interview Alex Stanczyk, Chief Market Strategist for the Anglo Far- East group of companies, who just returned from a trip to Switzerland. Alex confirmed to me the distribution of gold from west to east is not slowing down whatsoever. Refineries in Switzerland are still working 24 hour a day to cast bars for China, sometimes having difficulties sourcing the gold..

Koos Jansen: What was the purpose of your trip to Switzerland?

Alex Stanczyk: The purpose was two fold. We go to Switzerland once a year as part of our governance, we’re required to have an annual inspection of the gold, that was the main purpose of the trip. But in addition to that we also liked to talk to the refineries. It was myself, it was the managing director of Anglo Far-East mister Philip Judge, and Jim Rickards went with us, he sits on our advisory board.

We met with the managing director of the largest refinery in Switzerland and spend about two hours talking to him, we learned some very interesting things. Whats going on in the gold market as far as the price, is I think very counter intuitive. Everybody understands, knows and believes the price should be higher than it is, but it isn’t. There’s confusion in the marketplace, and there are two reactions; the reaction in the west is fear, confusion and uncertainty; the reaction in the east is buying. Now, this gentleman we were talking to probably has a better idea of physical gold flow than anybody else globally. He sees what is coming from the mines, he sees what is coming from the UK, and all over the world, as well as where its going. He indicated the price didn’t make sense because he has got so much fabrication demand. They put on three shifts, they’re working 24 hours a day, and originally he thought that would wind down at some point. Well, they’ve been doing it all year. Every time he thinks its going to slow down, he gets more orders, more orders, more orders. They have expanded the plant to where it almost doubles their capacity. 70 % of their kilobar fabrication is going to China, at apace of 10 tons a week. That’s from one refinery, now remember there are 4 of these big ones [refineries] in Switzerland. 

Koos Jansen:That makes sense because withdraws from the Shanghai Gold Exchange vaults are 40 tons a week on average this year.

Alex Stanczyk: Well, there you go. At this Swiss refinery there have been several times this year on which they were unable to source gold, this shocked me. They’re bringing in good delivery bars, scrap and dore from the mines, basically all they can get their hands on. This gentleman has been in the business for 37 years, he was there during the last bull market in the late seventies. I asked him when was the last time this has happened, that he was unable to source gold, he said never. And I clarified it, I asked: let me make sure if I understand what you’re saying to me, in the last 37 years you’ve worked in the gold industry this has never happened? He said: this has never happened.

There was one other comment that was fascinating, he said sometimes when they get gold in, it’s coming from the back corners of the vaults. He knew this because these were good delivery bars marked in the sixties. This is a huge supply squeeze and its worse than anything that has happened in the last four decades. At some point there is going to be a massive squeeze on the price.

Energy

As I have related many times before, I am of the mind that technological breakthroughs in energy production have been occurring for years, only to be quashed and buried by those that would prefer to benefit at the expense of everyone else. Enlightened and altruistic individuals do not have to benefit at the expense of others. They are often enriched from the production of goods and services that ultimately benefit those in the market place. Consequently it requires a little more snap, more intelligence, to incite a win win situation. Those that, because of inherent shortcomings, or laziness, or sloth or greed, pursue a course they view as "the easiest way" and have little or no concern for their fellow men, seem to have more prevalence amidst the decaying nature of the world today.

Between 1936 and 1950, National City Lines and Pacific City Lines - with investment from GM, Firestone Tire, Standard Oil of California, Phillips Petroleum, Mack Trucks, and the Federal Engineering Corporation - bought over 100 electric street car systems in 45 cities including Baltimore, Newark, Los Angeles, New York City, Oakland and San Diego and converted them into bus operations. They did this, at great costs to the consumer, and the environment, and society as a whole, in order to "make a buck".

General Motors wanted to sell internal combustion engines and parts and service to the resulting high maintenance operations. Firestone wanted to sell tires which were not necessary with trolleys, Standard Oil wanted to sell gasoline which was not necessary with trolleys. Phillips Petroleum wanted to sell oil. And Mack Trucks wanted to sell buses. The electric trolley system had needed none of that superfluous crap. Every one in all 45 cities, except those whose profits depended on the sales of the afore mentioned products, had their standard of life diminished as a result of the visionless putzes that ran those companies. Not only did they lack vision, but their actions necessated legislation that they bought from corrupt slimeball politicians.

I am constantly on the lookout for stories and articles, like the one below, that focus on the probability that the technology necessary to tap in to the electromagnetic fields of the earth have already been discovered and refined. I honestly believe that Nikola Tesla figured it out in the 1890s, but was denied the ability to make his research public by the likes of Thomas Edison, George Westinghouse, and JP Morgan. Each depended exclusively on revenue streams that would have disappeared if Tesla's inventions had been allowed to "see the light of day". Explanations of the involvement of these scalawags, as well as dozens of others, are available in the archives. Simply go to the "Home" page" and "search the Bear".

From Michael Suede (click for the entire piece):

Two Brazilian inventors, Nilson Barbosa and Cleriston Leal, claim to have invented a free energy device and are now selling this device to the public. The device is called the Earth Electron Captor Generator, or "GERADOR CAPTOR DE ELÉTRONS DA TERRA" in Portuguese.

There is one catch, they are presently only offering the device to people who live in the city of Imperatriz. However, they are working to license production with several manufacturing firms that will allow for online sales. Their website says they will update their page with distributor information when it becomes available. The rumor mill says global distributors will come online in January of 2014.

The device requires a small amount of initial input power to start some kind of sensor rolling, which then produces over-unity power. The device looks small, which means it could be used for vehicular power, as well as residential power. They advertise it can be used in either roll, as well as an industrial power source. The site claims the input power needed to run it is around 2% of its output power.

They have several sizes of the generator. The smallest prototype they built is capable of generating 12.1 kw of power, with a load of 6000 watts, using only 21 watts input energy. The prototype unit weighs 1.5 kg measuring 20x30x15 cm. The average home needs around 15 kw of power.

The product looks legit. If this is for real, it will replace Dark Wallet as the second most important creation in the history of man, behind Bitcoin of course. The petro-dollar will surely topple in the face of this invention.

The Fed

"Fiat Money Is Backed By Nothing More than Men With Guns"
- Paul Krugman

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 one hundred years! They didn't want people to use gold and silver for money because they couldn't manufacture it themselves.

It should come as no surprise that the dollar has now lost 98% of its purchasing power since the Federal Reserve got control of its value one hundred years ago.

In my opinion, if everyone that worked for either the Federal Reserve or the IRS died tomorrow...there would be more parking places, and God knows, we could use the space.

From Richard Ebeling (click for the entire piece):

One hundred years ago this month, on December 23, 1913, the Congress passed the Federal Reserve Act, establishing a national central-banking system in the United States. The governing board of the Federal Reserve was organized on August 12, 1914, and the Federal Reserve banks opened for operation on November 16, 1914.

On the surface, the preamble to the Act, which summarized the purpose of the new government-created institution, seemed fairly innocuous:

"An Act to provide for the establishment of Federal reserve banks, to furnish an elastic currency, to afford means of rediscounting commercial paper, to establish a more effective supervision of banking in the United States, and for other purposes."

But what this meant was the start of the monopolization of monetary matters in the hands of a single politically appointed authority within the boundaries of the United States.

Those innocuous sounding functions listed in the Act's preamble, however, gave the Federal Reserve the power to:

(a) Control the quantity of money and credit supplied in the United States.

(b) Influence the value, or purchasing power, of the monetary unit that is used by the citizenry of the country in all their transactions.

(c) Indirectly manipulate the rates of interest at which borrowers and lenders transfer savings for investment and other purposes, including the funding of government budget deficits.

Financial Survival

We have all heard the story of the ant and the grasshopper. It is one of Aesop's Fables, providing an ambivalent moral lesson about the virtues of hard work and planning for the future.

We all know the lesson that this fable provides, and the remedies available. Preparation is the key to the future, but having some idea about what is going to happen can help us immeasurably, in planning for what's coming.

Consequently, there is a whole bunch of prognostication currently, by those whose ulterior motives might mislead you and cause you to stray. For instance, if you bought in to the global warming theory, you might be tempted to sell your stove. Bad idea. They recently recorded the lowest temperature in history in Antarctica at 136 degrees below zero.

If you bought into Obamacare, you might end up paying four to ten times as much as you have been paying for health insurance and still end up with practically nothing. Much less than that even, if you are young.

If you dismissed the peak oil projection because of the recent shale discoveries in the U.S. you might sell your oil stocks. Another bad idea.

If you bought into the "no problem with radiation" story, you might move to California. Please don't misunderstand me. I have nothing against California, I just think that, because of the Fukushima disaster, it might be a prudent time to consider relocation .

This week, Louis James familiarized us with the research of Professor Krassimir Petrov. Professor Petrov explores the ratios between the price of gold and silver and the price of oil. His conclusions may surprise you. As I repeat at the end of each of my commentaries, Its not what you don't know that will screw you up, it's what you are absolutely sure of that is absolutely 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.

From Louis James (click for the entire piece):

In April of 2008, Casey International Speculator published an article called "Gold—Relative Performance to Oil" by Professor Krassimir Petrov, then at the American University in Bulgaria, now a visiting professor at Prince of Songkla University in Thailand. He told us he thought the Mania Phase of the gold market was many years off, which was not a popular thing to say at the time:

"In about 8-10 years from now, we should expect the commodity bull market to reach a mania of historic proportions.

"It is important to emphasize that the above projection is entirely mine. I base it on my own studies of historical episodes of manias, bubbles, and more generally of cyclical analysis. In fact, it contradicts many world-renowned scholars in the field. For example, the highly regarded Frank Veneroso and Robert Prechter widely publicized their beliefs that during 2007 there was a commodity bubble; both of them called the collapse in commodity prices in mid-March of 2008 to be the bursting of the bubble. I strongly disagree with them.

"I also disagree with many highly sophisticated gold investors and with our own Doug Casey that the Mania stage, if there is one, will be in 2-3 years, and possibly even sooner... Although I disagree that we will see a mania in a couple years, I expect healthy returns for gold."

It turned out that Dr. Petrov was right. Five and a half years later, here's his current take on gold and the metal's ongoing correction…

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 are absolutely sure of that is absolutely 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.