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

Borrowing from a 46 year old Bob Dylan song, I set the theme of this week's commentary by considering the possibility that there are those among us, like you and me, who are extremely concerned with the current state of America and our future. Consequently, there are also those that don't know and don't care. Those folks don't give a hoot which way the wind blows...

As I continue to relate to you the state of my research, I can say that it has provided me ample information to "connect many of the dots" and, as a result, realize that all aspects of our lives are very much affected by the actions of "those that would be kings".

I began to realize several years ago that the Federal Reserve, an institution owned by "those that would be kings" was at the root of all of our economic woes. Those woes can be summed up as being a reduced standard of life, which is manifest in many different ways. Each forum on "the Bear" deals with one part of the whole.

Energy for instance, obviously affects us through its cost. The price of gasoline, natural gas and heating oil cut heavily into our family budgets. But the availability and price of oil and natural gas is not the only way our lives are affected.

Lately (for the past couple of years) we have been told that, as a result of new oil and gas field discoveries, coupled with new drilling and extraction technologies, the country was well on its way to, once again, achieving "energy independence". To 99% of Americans, that seems like a good thing and they have bought the story, hook, line and sinker. There are, however, a couple of tragic flaws in this reasoning.

First, the idea that the United States could, so long as we are dependent on oil and natural gas, ever again become energy independent, is erroneous BS. The recent plays in the various shale deposits around the country are deceptively expensive to drill and operate, are systematically decimating the water tables in each of the new "pay zones", and the depletion rate is so extreme that it takes an ever increasing investment to continue to drill new wells. Without the new wells coming online, the old ones could not continue pay for themselves which is, essentially, a Ponzi Scheme.

As an example, in the 1930s, with the discovery of enormous quantities of oil around Kilgore, Texas, an oil well cost $400,000 (in today's dollars) to drill, gushed out of the ground (no pumping necessary) and produced 1000s of barrels of oil a day for decades. Today, in the Bakken Shale, it costs $6,000,000 to $12,000,000 to drill a well, requires complex fracking, and produces, plus or minus, 100 barrels a day, for a couple of years (hat tip to James Howard Kunstler).

Another consideration should concern the increase of the amount of oil and natural gas consumed world wide. According to a Chatham House report:

Saudi Arabia's surging domestic oil consumption – coupled with its inadequate supply growth – could turn the kingdom into a net oil importer by 2038. Guzzling more than a quarter of its 11.1 million barrel per day production in 2011, Saudi Arabia is the fifth-largest oil consumer in the world. The kingdom even recently surpassed Germany's consumption level, despite having less than one-third of Germany's population and one-fifth of its economic output. Continued consumption growth, if left unchecked, could devastate the country's economy in the coming years.

Demography partly explains this growing use of oil. The population has doubled since 1985 and demand has risen accordingly, but the main culprit is the kingdom's growing economic prosperity tied with its reliance on oil-fired power generation. Almost all of Saudi Arabia's energy needs are met by oil and gas – and burning crude oil to overcome gas shortages has increasingly become the norm. Given that oil in particular accounts for nearly 90 percent of the country's exports and state budget, it is no wonder that Saudi officials hope to rein in consumption as the kingdom continues to eat up more and more of its own export wares.

Within three years, China will consume more oil than U.S. According to energy market researchers at Woods Mackenzie.

China's demand for crude oil imports will grow significantly, requiring spend of US$500billion (bn) by 2020. The price China pays will far outstrip the peak cost ever incurred by the US of US$335bn, with US import spend falling to only US$160bn by 2020. This demonstrates the growth of the Chinese market and reliance on oil imports in relation to the US, whose import requirements have already and will continue to decrease due to a previous weakening in oil demand and growing domestic supply. The opposing trends in crude oil imports will affect the cost to both countries and inter-regional trade flows.

What these, and the many other reports I have read tell me, in no uncertain terms, is that the value of oil and natural gas will continue to increase, simply based on global demand alone. Couple with that the geopolitical possibilities, which include any war anywhere, we should expect that the cost of energy shall continue to bite more deeply into our family budgets, year by year, in the decade to come. And that is just the first reason we should all be concerned.

Secondly, as I have been exploring in several of my recent commentaries, the deal that the U.S. has made with the various members of OPEC is something that we will not easily get out of. The "Petro Dollar System" is absolutely necessary to the Federal Reserve in order for them to retain their ongoing ability to control the creation of currency. The power to create currency is the greatest power on Earth. I have spoken, ad nauseam, about the evils of central banking in general and the Federal Reserve in particular, but I now feel the need to personify the evil, to "put a face on it", so to speak. This personification will prove to be a lot more difficult that most could ever imagine.

In a recent missive by Paul Rosenberg, we are reminded of several things:

We do know that the Fed is a private banking group that has been given a monopoly on the creation of US currency, and the list of its owners is a closely held secret.

The true owners are almost certainly reflected in the roster of Primary Dealers who skim from US dollars (actually Federal Reserve Notes) as they are being made, but we really don't know much more than that. There was a list that circulated in about 1930, but that was a long time ago.

So…

Who are the people that Bernanke and Yellen take orders from? We don't know.

What do these people want? We don't know.

What are their long-term asset positions? We don't know.

Who might they protect, aside from themselves? We don't know.

If things get rough, will they obey politicians? Probably not, but we don't know.

What I do know is that the breakdown of the current deal we have with Saudi Arabia for instance, considering the requirement to purchase Saudi oil in dollars, will result in the repatriation of $trillions from all over the world, which will flow like a tsunami, back to the U.S., and the overt dilution of the purchasing power of Federal Reserve Notes will be catastrophic and cause our reserve currency status to take a terminal hit.

In the last eleven days I have posted a couple articles and exposés (here and here and references here) that highlighted another evil clown on the international scene, Saudi Arabian Intelligence Chief, Prince Bandar (pictured far left next to Condoleezza Rice). The following is an except from some of the research of Gordon Duff:

More frighteningly, the articles published this week in Rupert Murdoch's New York Daily News, written by Hoover Institute fellow and AIPAC member, Paul Sperry, now not only blame Prince Bandar of Saudi Arabia as the 9/11 mastermind but tie Bush (43) in as well.

In fact, the entire AIPAC apparatus, the largest lobbying organization in Washington, is currently engaged in a "full court press," to stop congress from pushing for the release of the real report. Is this because the real report accuses Israel, not Saudi Arabia, and AIPAC wants the Murdoch/Sperry story to stand?

This comes right on the heels of my research, highlighted in last weeks commentary, that ties Bandar to the terrorist bombings in Russia:

Earlier this week news surfaced of a verbal exchange between Arabia's intelligence chief Prince Bandar bin Sultan and Vladimir Putin which occurred July 31st, 2012 when Bandar bin Sultan had threatened Putin with acts of terror that would be committed by Chechen terrorists who were in the employ of the Saudis, the same terrorists who have been attacking Russian targets for years. At the time, Putin warned Saudi Arabia of potentially severe consequences -- suggesting military retaliation -- if Bandar's implied warning was followed up by actual terrorist attacks.

The Volgograd terrorist bombings on Monday, only 400 miles away from the site of the Winter Olympics in Sochi, Russia killed more than 30 people. It was suggested in an article in the Tehran Times that those attacks were intended to be a warning and that Bandar would proceed with a terrorist plan to disrupt the Winter Olympics if Russia continued to support the government of Bashar al-Assad in Syria.

We can begin to understand that the subject of energy, specifically that of oil and gas, have a wider reaching influence on us than we may have previously thought. With the Olympics coming up next week, you might want to keep an eye out for further terrorist activity, and the added knowledge of who might be responsible and why. You might also ponder the eventualities if terrorist attacks do occur. Would you not agree that Russia, through an attack on the Olympics, as has been suggested, be sufficiently provocated to retaliation? And if they retaliate (against Saudi Arabia) what would those who own the Federal Reserve, and thereby pull the strings of our government do? To what lengths would they go to protect the Petro Dollar System, given that its failure would mean their loss of the greatest power on earth, and their probable demise?

It would appear that the people who, from behind the scenes, run this country, are joined at the hip with terrorists. It also occurs to me that, by definition, that would make them terrorists as well. Their actions are putting our collective well being, as middle class Americans, at risk, not only through the decimation of our standards of life, but also from the possible retalliation from those who they choose to assualt.

Given the pandemic apathy, that addles the collective mind-set of our nation, there is not much hope for a substantial number of Americans waking up to the drama that is currently being played out. By the time the sheeple wake up, get off their butts, and attempt to do something about it, it will be far too late. We are witnessing the future of the world as we know it being threatened. It will, however, make for some incredibly interesting theater. "Fasten your seat belts. We are in for a bumpy ride".

Conclusion

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.