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

Smoke and mirrors. Mirrors and smoke. The mainstream spin is so pathetic that, if it wasn't so sick, it would be funny. What motive could there be, that would have the darkside spend so much of their ill gotten gains on propaganda and even more on the dissemination of of these lies by their mainstream media puppet stooges? Could it be, perhaps, that Wall Street controls the Federal Reserve and with it, the stock market. And that control provides them with the ability to liquidate any American stock issue at will (a different way of saying, "the ability to steal any and all of your stock market investments along with your savings and retirement accounts")?

Wall street also controls the government. All aspects of the government. Ninety-five percent of all politicians, justices, law enforcement, correction facility management, regulation officials, and one-hundred percent of the administration, are in the pockets of the Wall Street banksters. They are lobbied, bribed, rolled over, put on the take, bought and paid for, slimeball criminals. So what else is new? The tragedy is that the sheeple are, as yet, unaware.

From Simon Black:

The Dow Jones Industrial Average, one of the key benchmarks of the US stock market, has soundly surpassed its all-time high. And most of the investing world is toasting their collective success and celebrating the recovery.

It's a funny thing, really. Most investors only think in terms of 'nominal' numbers, i.e. Dow 14,000+ is 40% higher than Dow 10,000 (back in November 2009). But few think in terms of 'real' numbers... inflation-adjusted averages.

Everyone knows that inflation exists. We can all look back on prices from the past and realize instantly how much more expensive things have become. Conversely, though, most people don't think about the stock market like this.

The reality is, though, that when you adjust for inflation, the Dow is well below its highs from over a decade ago.

I thought I'd put this into a bit of perspective.

Take beef, for example. Based on USDA retail price data, today the Dow will buy you 3,332 pounds of beef in the supermarket. This sounds like a lot. But it's actually about 20% less than the 4,046 pounds of beef the Dow would buy back in December 1999.

And if beef's not your thing, let's look at fruit. Based on the wholesale price of bananas, the Dow currently buys you a whopping 15.35 tons of the tropical fruit.

But this is exactly the same amount of bananas the Dow would buy back in February 2008, when the Dow was just 12,266. And it's a massive 60% drop from June 1999 when the Dow bought 38.51 tons of bananas.

Gasoline is an even more interesting example. Today, the Dow will buy roughly 3,812 gallons of unleaded, non-premium gasoline in the United States. This is almost exactly the same as last January, just fifteen months ago, when the Dow was only 12,633.

But to match its high of 10,718 gallons set in March 1999, the Dow would need to almost triple from where it's at today.

Look, there's nothing wrong with investing in great companies. But it's important to recognize that the 'buy and hold' strategy espoused by the vast majority of financial advisors has been a serial loser for the last 10-15 years.

Given that you can't eat or fuel up your car with stock certificates, it's important to remember that we all live in an inflation-adjusted world. And that there are serious, serious consequences to out of control money printing by central banks.

Anyone who doesn't understand this system need only refer to the rules of the popular board game 'Monopoly':

"The Bank never goes broke. If the Bank runs out of money, the Banker may issue as much as needed by writing on any ordinary paper."

Have a great weekend.

On the Economic War Front

It has been apparent, to some of us, for quite a while, that the dismantling and destruction of the American economy is part of a greater agenda, and that that agenda is held and is being perpetrated by our current administration. Before our current administration the agenda was pursued by the former administration, and before that by the two administration that preceded that one. Demopublicans, Republicrats, puppets of the elitists, and bozos all.

The recognition, that there is, indeed, a conspiracy in motion and that the conspiracy is a "bipartisan struggle" (LOL) is finally being realized by such shills as Rush Limbaugh, Sean Hannity, and quasi-conservative radio host Mark Levin. People speak of the need for a three party system. I would be interested in seeing how a two party system might work...

When I was much younger, and Rush Limbaugh was just starting out, he was a favorite of both mine, and my Dad's. Back then he was a conservative, not unlike the last great conservative, Barry Goldwater. His message was that of a god fearing, constitution loving, champion of liberty and justice. He has since "rolled over" and now purports himself to be a Republican, whatever the hell that is suppose to be. He has made a lot of money shilling for the Neo Cons and he, like Glen Beck believes that he is now rich enough to buy his liberty. He is a fool, albeit a rich fool. Seems like there is a lot of that going around.

From Mark Levin:

I'm going to tell you what I think is going on.

I don't think domestic insurrection. Law enforcement and national security agencies, they play out multiple scenarios. They simulate multiple scenarios.

I'll tell you what I think they're simulating.

The collapse of our financial system, the collapse of our society and the potential for widespread violence, looting, killing in the streets, because that's what happens when an economy collapses.

I'm not talking about a recession. I'm talking about a collapse, when people are desperate, when they can't get food or clothing, when they have no way of going from place to place, when they can't protect themselves.

There aren't enough police officers on the face of the earth to adequately handle a situation like that.

I suspect, that just in case our fiscal situation collapses, our monetary situation collapses, and following it the civil society collapses – that is the rule of law – that they want to be prepared.

There is no other explanation for this.

The Pentagon and military have been war-gaming large-scale economic collapse and civil unrest for nearly four years. Those within our government who understand the ramifications a massive breakdown in our systems of commerce, transportation and justice are preparing by stockpiling weapons and ammo, tens of millions of food rations, and even emergency shelters. They are spending hundreds of billions of dollars on continuity of government programs and exercises, preparing for what they know is coming.

Now why would the government be doing this if there wasn't a reasonable chance that such events could come to pass?

And, on a note concerning the incredible effectiveness of the NDDC (National Dumbing Down Campaign) a piece from Jon Rappoport which illustrates the lack of resistance that will meet the goons and their tyrannical onslaught.

From Jon Rappoport:

Josh Welch. Seven years old. Park Elementary School, Baltimore. Bit off pieces of strawberry tart, trying to make shape of mountain. Tart ended up looking like gun. Josh suspended for two days. No bullet wounds reported.

On top of all that, the students at Park Elementary were sent home with a letter stating there had been a disruption at the school.

So far, no federal troops have been deployed to guarantee the security of the students.

I can think of a solution to this problem. Every pupil at Park Elementary should make a gun out of his/her next strawberry tart. All at once. An armed rebellion.

Then the parents should yank their kids out of Park and start their own school. I’m reasonably certain they can find, among themselves, teachers and a principal who aren’t absolutely insane.

In the wake of this Strawberry Statement, perhaps we’ll see waves of supporting protests across America: kids bringing paper guns and pictures of guns and pastry guns and bubble gum guns and water pistols to school.

"Suspend all of us!"

Thousands of new private schools and home schools then spring up. Parents defect out of the public school nightmare. No more random diagnoses of ADHD and drugging with cheap speed called Ritalin or Adderall. No more pressure to take dozens of toxic vaccines. No more social engineering programs in classrooms. No more sex ed for kids. No more junk food lunches. No more pastry scares.

Precious Metals

As I have been voicing for many years, I am sure that the precious metals markets are manipulated. Why? Because anything that can be manipulated will be manipulated. The bad guys don't want Joe Sixpack to even consider that precious metals may be a healthy, beneficial alternative to their "funny money" fiat currency.

For most of the time I was growing up (I'm not quite finished) there was something, in America, called the rule of law. I know, I know, that's sooo last year. The rule of law went out the window, along with the ability of the average citizen to exercise critical thought. A coincidence? I don't think so. I read, this morning, that 80% of NYC high school students could not read well enough to attend community college. Back to the NDDC and its stunning effectiveness.

When the sheeple either didn't know, or quit caring whether or not the banksters obeyed the rule of law, the hen houses of the country were opened up to the foxes. Just to make sure, the law enactors were were greased and bribed into to making legal what was there-to-fore illegal. Although this incidence was incredibly detrimental to everyone that paid taxes, the consideration that their elected officials could be screwing them (think, roll up your sleeves and bend over, this won't hurt a bit) was such an affront to their comfort zones, that they essentially shut it out.

"They just hear what they want to hear and disregard the rest" - Paul Simon

From Mike McGill:

Let's begin with a definition. Investopedia.com defines the Law of Supply and Demand as follows:

The effect that the availability of a particular product and the desire (or demand) for that product has on price. Generally, if there is a low supply and a high demand, the price will be high. In contrast, the greater the supply and the lower the demand, the lower the price will be.

A solid definition, agreed? The Law of Supply and Demand should be the core premise of all economic studies as it has proved itself to be historically true.

How can we explain what has happened recently with the price of silver? In about three months, silver has declined from its late-November price of about $34 per ounce to its current price of about $28.50 as of today's close (February 28, 2013). That's a drop of about $5.50, which equates to a decline of over 16% in about 90 days. An economist with a solid grounding in the supply and demand theory, when viewing this decline, would have to conclude one of two things. Either the supply of silver had recently rapidly expanded or the demand for the precious metal had substantially decreased over the same period. These would appear to be the only logical explanations for this situation.

However, in the alternate universe of manipulated markets, insane derivatives, massive criminal fraud in both the banking and commodities markets, central bank machinations with currency handouts, and complete dereliction of duty on the part of regulatory bodies, it seems that the basic laws of economic price discovery no longer apply.

We need to ask ourselves how is it possible for the price of silver to undergo a substantial drop in price while simultaneously experiencing extremely tight supplies and burgeoning demand. In order to make a professional inquiry regarding this conundrum, we will dispel all the blather from the CNBC crowd that precious metals are in a bubble (they are NOT; both gold and silver remain firmly in a ten year upward channel of growth) and adopt an attitude like Dragnet's Sergeant Friday, "Just the facts, ma'am, just the facts."

Energy

As I edit essays on a daily basis that relate to energy, the forum has become wide enough to house essays, articles and missives that often involve aspects of human life that relate to issues greater that simply those pertaining to oil and natural gas. The energy that I require to simply cope is a subject in and of itself.

The following is an excerpt of an article that came up in conversation the other day. Occasionally I am fortunate enough to come across a contemporary essay that is so concise and well written that it allows me the opportunity to crystallize and clarify my understanding of a particular subject. This work, by John Meyer, ranks among the best I have ever been privileged to read. Please take the time to absorb the depth of Mr. Meyer's understanding, and be thankful that you have been let in on the truth. The truth will set you free, but first it will make you sick.

From John Meyer:

We all today live in a twilight zone where things seemingly are and yet aren't. We must travel down some roads, which are troubling and rather dark. But, it is necessary, because it is today's reality. We can say at the start that you will find the trip unbelievable - I know I did when I first stumbled down this path. Matter of fact, at first I totally dismissed it as absolute insanity and therefore not possible. For, it was inconceivable that the morality of man could descend to such naked malevolence.

To look more deeply into our history is necessary, because almost all that comes from our "intellectual" community, is propaganda and spin. Before we heap cures on a dying patient, first and always diagnose. Diagnosis is the art or act of identifying the disease. All the talk about free markets and capitalism having failed and always what we need is more regulation and intervention are deliberate obfuscations. Naturally, with this propaganda barrage, Socialism keeps "gaining" by default. You have to be on another planet to think that what we have had for the last century is capitalism or free markets.

So - every once in awhile it pays to stand back and locate one's position in reality. Events have gone well beyond the field of economics, finance and politics. Sub rosa forces seem to be spinning us deep into an Orwellian existence. The Founding Fathers created a Constitutional Republic. It was not a democracy. The Founding Fathers were quite outspoken on this. Madison in a passage in The Federalist wrote: "there is nothing to check the inducements to sacrifice the weaker party or an obnoxious individual. Hence it is that such democracies have ever been spectacles of turbulence and contention; have ever been found incompatible with personal security or the rights of property; and have in general been as short in their lives as they have been violent in their deaths."

The natural and inalienable rights of the individual trumped the majority vote of a mob. The State was to be the servant of the individual. The Declaration of Independence was the culmination of the Enlightenment and Classical Liberalism. The individual and the concept of property rights were elevated to be supreme. The individual was set free from the collective, king or god to pursue his own rational self interests. This noble experiment propelled the United States to a level of achievement, which has never been equaled. Productivity is the essential requirement of life. In fact, life demands it. It is metaphysical. That is, it is biocentric. Life is a constant process of self-sustaining and self generated action. The individual is the creator and to deny or impinge, in any way, on the products of his efforts leads society down the road to slavery. The right to life and by extension his property is the source of all rights.

The State is the institutionalization of force, of all exploitation, directly or indirectly. There are essentially only two ways to survive. Wealth is achieved either through industry and production or by force and plunder. The State does not create wealth. The State can only obtain wealth from the productive individual. The State becomes the political means, through "rationalization", by which the wealth of the citizen is looted. The State's power is maintained until the people begin to catch on to the nature of the systematic plunder, and until people begin to challenge this colossal con game. At this point, the State usually turns brutish. We are there today.

 

The Fed

One of the perks of editing "the Bear" allows me to post my own rants. I originally published an essay entitled Paradise Lost in January, 2005. I believe that it is currently, more timely than ever. I have since taken the artistic license to update the illustration from that essay, with Ben Bernanke's likeness instead of Alan's. In 2005 Alan Greenspan was the FED Chairman. Greenspan was primarily responsible for getting us into the catastrophic mess (economically) that we find ourselves in today, but Ben Shalom Bernanke, a faux academic from the "white shoe boys club", has exacerbated our economic malaise by a factor of ten. The results of the perverse machinations of these power-mad bozos is beginning to show up in North Africa and the Middle East as well as the Euro zone and Japan (and Jackson County, Alabama). It is easy to see how it will turn out. The travesty is that the sheeple are too distracted to put up any resistance to the wholesale destruction of their standards of life. As a result, they are not helping those of us, that do care, in any way shape or form.

First, they came for the Jews. But I wasn't a Jew, so I didn't say anything. Next they came for the raw milk drinkers, but I wasn't a raw milk drinker, so I didn't say anything...

From Michael Pento:

It is sad to say there are just two reasons why the U.S. is not yet a banana republic.  The first reason is that the US dollar has not yet lost its world’s reserve currency status, which is helping to keep interest rates at record low levels.  If the dollar, yen and euro were not involved in a currency war, the dollar’s intrinsic decline would become much more evident, causing domestic inflation to soar, and our bond market to immediately collapse.

However, the perpetual erosion of fiat currencies will eventually cause investors to eschew the sovereign debt issued by the over-indebted nations of America, Japan and Europe—even if the dollar’s decline does not manifest itself against the euro and the yen.

The other reason why we have not been declared a banana republic is because America is not located between the Tropics of Cancer and Capricorn.

The Definition of a banana republic is a nation that suffers from chronic inflation, high unemployment and low growth; primarily due to massive government debt and deficits that are purchased by its central bank. There is no doubt that the U.S. has suffered from structurally high unemployment, stubbornly high aggregate price levels, and low growth for the past five years, which is the direct result of our debt-saturated economy.

So let’s just assume there exists a country located 15 degrees north of the equator that had amassed $7.5 trillion of new debt in the last 5 years alone.  This nation also has nearly $17 trillion in issued debt outstanding, a debt to GDP ratio above 106%, and has clearly shown it is incapable of preventing that ratio from rising. 

The central bank of this tropical land artificially pegged interest rates at 0% for over 4 years, has pledged to keep them there for at least three more years, owns $1.8 trillion of government debt and has pledged to buy $1 trillion more during 2013.   Let’s not forget that $1 trillion worth of central bank buying just happens to coincide perfectly with the projected annual deficits of $1 trillion for the foreseeable future.  What adjective would you use to describe this country?  Of course, any objective observer would designate it a bona fide banana republic!

Financial Survival

I think, looking back on all my commentary for this week's Bear Tracks, that there is a cohesive thread which is apparent in each section and that flows through out.. That is, unmistakenly, the sorry condition that we are in as a country. That the majority of, not just the country, but the majority of the middle class is clueless, has been clueless, and, as discusting as it may sound, will remain clueless, and consequently impotent, in respect to righting our ship of state. The Tea Party was co-opted before the first Obama election. The Religious Right has not, and will not provide any answers (anyone who thinks gay marriage is a priorty problem is waaay out of touch) and Occupy Wall Steet, understandably, didn't get it to begin with but has even less of an idea now. This means that, as far as I can tell, those of us that are aware need not waste any more time trying to wake anyone else up. The brain dead will remain so. Instead, must seek out those of us who are already aware and make alliances. The stinky stuff is just about to hit the mix master. So you should "get ready, 'cause here it comes..."

From Katherine Austin-Fitts:

Ultimately, the fiscal cliff is the tip of the iceberg of our economic and cultural woes. Our problems are deeper. The more of us there are, who are prepared to look honestly at our situation and take responsibility for it, the sooner authentic solutions will become possible and emerge.

As we look over the fiscal cliff into our financial abyss, now is a good time to “Come Clean” about the real state of our lives, our communities, and our economy, starting with the U.S. federal finances that flow deeply and intimately throughout every aspect of our lives.

First, a Story

Imagine that you live in a historical mansion in a large, privileged family on a fine property -- rich with good land, good water and natural resources that your ancestors originally acquired through surreptitious means.

Imagine that the mansion and estate have serious structural problems that accumulated over many years. The reasons are complex.

There is enormous distrust within the family. As the vigor of the generations dissipated, expenses rose and numerous members have turned to activities that are unproductive at best, or fraudulent and criminal at worst.

Those in charge of family finances were highly distrustful of the collective family intelligence and wisdom, and have mortgaged the estate and cut reinvestment in infrastructure to liquidate as much capital as possible to reinvest abroad - albeit in hidden legal forms. They have engaged in numerous criminal activities, including ones that had significantly harmed the neighborhood economy.

Almost no one in the family objected as allowances continued to be funded, even increased and promises continued to be made. As long as everyone was getting his or her check, most everyone was willing to ignore the deterioration of the real human and physical assets and equity on the family balance sheet. They were also willing to ignore the harm done to their neighbors.

The occasional relative who demanded a financial accounting of what was happening, or was not satisfied with petty bribes of various kinds, was sent packing or to work abroad, or even occasionally dealt with in a way that we pretend never happens - they developed diseases, were admitted to mental institutes, were said to have committed suicide or just disappeared. These instances were sufficient to strike terror throughout the family, leaving those in command of the family trusts unquestioned, as their offshore accounts and numerous enterprises grew.

The result was a fragile peace that grew thin, as the deterioration in the infrastructure of the estate and the structure of the mansion accelerated. Innovation was not encouraged. The managers were interested in their own global competition. They did not want any pesky entrepreneurs taking risks that could in any way attract attention or create liabilities for their grand plans. Indeed, young members were encouraged to use student loans to get their advanced education, thus ensuring their dependence on their allowance and reluctance to branch out on their own. Thus the family members' general understanding of the world around them and how to navigate it deteriorated rapidly.

So now the day has come when the deterioration in the management of the estate, the growing debt, the structural problems in the mansion and the diminution of the family trusts has necessitated a dramatic reduction in allowances.

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.