Miles Franklin is proud to announce its Swiss partner - BFI Consulting of Zurich - is holding three "Inner Circle Briefings" in September, to discuss its full product line of Swiss Annuities, Managed Accounts, and bullion storage.  These full-day meetings are being held on the following dates:

September 10^th - Austin, TX

September 15^th - Santa Barbara, CA

September 17^th - Berkeley, CA

The cost is $169 per person, and the limited space is filling up quickly.  Notably, Andy Schectman - Miles Franklin's President - and myself will appear at the Berkeley Presentation, where we will be making a presentation.

First off, a FINAL REMINDER that Andy Schectman and I are holding our third FREE Webinar on Monday, August 20^th at 4:30 PM EST, to answer any and all questions.  There will be limited space available, so if you are interested in participating, please sign up ASAP (link to registration page at top of this RANT).  Those participating in the audio/visual presentation can type questions in real-time, while others may email them in advance to info@milesfranklin.com.  Irrespective of whether we get to your question on the Webinar, it will be promptly answered! 

On to today, another extremely quiet summer Friday, care of powerful "elites" that have forced the "summer doldrums" upon markets; an ILLUSION that will quickly dissolve when REALITY hits after Labor Day...

At least 10 European banks are suddenly hoping the bout of euphoria continues for at least two more weeks, so the executives of these 10 dollar-impaired banks can continues their vacations in peace, until the eye of the European hurricane passes on September 1^st.

Yes, those same European banks whose stocks have soared in recent weeks, simply because ECB head Mario Draghi - without consulting heads of its member nations - said he would do "whatever it takes" to save the Euro.  Not that PRINTING MONEY and giving it to said banks has helped in the past - or will do so in the future - but "when the cats (investors) are away, the mice (PPTs) will play"...

Short-Term ECB Dollar FX Swaps With Fed Soar To Highest Since December 2009

...no matter how counterintuitive to REALITY such manipulations are...

Spanish Bad Loans Soar By Most In 3 Years As Bond Issuance Set To Surge

Germany has still not ratified such universal bailouts...

Merkel Says Germany Backs Draghi's ECB Aid Conditionality

...and its Constitutional Court has the power to wreak havoc on September 12^th (although I doubt they will)...

German Constitutional Court to Keep Sep 12 Date for ESM, Fiscal Pact Decision

...while other European nations are preparing for the inevitable...

Finns Prepare For Euro's End: "Deeply Suspicious" of EU's 'Gang of Four'

...as NOTHING can save most European nations - particularly their major banks - from MATHEMATICALLY CERTAIN doom...

Source: Zero Hedge

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It is no longer about living the American dream, living within your means and enjoying your "golden years".  No, it is now about "keeping what you have" or just plain outright survival.

Earlier this week, Bill Holter wrote these prophetic words, describing EXACTLY what the "average American" faces - care of SURGING unemployment,  

...SUFFOCATING inflation...

...SOARING debt...

...a TERMINAL real estate market...

...and NON-EXISTENT interest rates...

I then came across an excellent article by Ron Hera, concisely discussing the demise of the U.S. since - NOT coincidentally - the 1971 abandonment of the global gold standard.  Not everyone will be sucked into the aforementioned vortex; however, those that don't will succumb to the inevitable hyperinflation - be it in 2012, 2013, or beyond...

The Grinch that Stole the American Dream - Ron Hera, August 9, 2012

A majority of Americans believe that if they work hard and make prudent financial decisions, they can get ahead and eventually own their own home, enjoy a good standard of living and one day achieve financial security.  For a long time, the American dream was achievable, at least in principle, for a majority of Americans.  But is the American dream still attainable for a majority of Americans?  If not, what went wrong?

Setting aside the fact that the real unemployment level is approximately 23%, the majority of the dwindling surpluses produced by American citizens are already spoken for.  Thus, the vast majority of Americans certainly cannot achieve the American dream.

For an affluent society, where the chant "U-S-A, U-S-A, U-S-A..." is often heard, the facts are shocking.  Approximately 49 million Americans live in poverty and 1/3 of Americans are "one paycheck away from homelessness."  According to the U.S. Department of Health and Human Services (HHS), 100 million households have incomes between 1 and 2 times the poverty level.  And Americans are becoming poorer.  Real wages, adjusted for the rising cost of living, have remained flat or have declined for nearly 40 years.  Median household income has fallen for more than 10 years and the net worth of American families has fallen nearly 40% in the past 5 years alone.

Roughly 2/3 of Americans "own" their own home, which is a high percentage of home ownership, but, in reality, banks own more than $10 trillion worth of American homes.  Ignoring the fact that the American dream is already out of reach for the poorest 1/3 of Americans, about 1/3 of homeowners are currently "under water" and the majority of American homeowners would be wiped out financially if their income were disrupted.  The basic problem is that consumer debt in the United States has increased more than 300% in the past 20 years.

The extreme level of debt in the U.S. economy points to increased economic fragility.  Despite the appearance of affluence, the majority of Americans are running ever faster on a hamster wheel of debt service, desperately trying to stay one step ahead of bankruptcy or foreclosure.  In other words, pursuing the American dream has become a high stakes game where a few will win but the majority will lose.  But, just like in Las Vegas, the house always wins.

Promoting the American dream, as if it were a trip to Disney World that an average family can one day afford, is a fraud.  Fraud is an intentional misrepresentation of the facts made by one person to another with knowledge of its falsity for the purpose of inducing the other person to act, e.g., to borrow money that can never be repaid.  The idea that a majority of American families can finance their homes, enjoy a high standard of living and still achieve financial security is false.  Cui bono?  Banks cash in, municipalities collect property taxes and, when real estate is sold, capital gains taxes are generated.

Of course, homeowners can profit through asset price appreciation, but only if prices are rising.  Technically, the economy grows as a function of asset price appreciation (and the corresponding expansion of the money supply) but, although they are marketed as investments and as a path to financial security, homes are merely long-lived consumer goods.  Increased consumption boosts the economy but it does not represent a real increase in the wealth of society.  Wealth is the result of a surplus derived from excess production.  Excess consumption, on the other hand, leaves nothing but a pile of debt when the proverbial party is over.

Asset price appreciation induced by monetary inflation, i.e., debt expansion, became the engine of the U.S. economy under the policies of former Federal Reserve Chairman Alan Greenspan.  Greenspan's fraud encouraged consumption funded by debt, which, at the time, served to justify outsourcing and globalization.  In 2008, the party ended.  U.S. manufacturing was gutted and the companies that profited had moved on to greener pastures in other countries.  The dot-com bubble and the housing bubble wrecked the U.S. economy leaving mountains of debt behind.  The average American family was left running on a hamster wheel chasing the shadow of the once great American dream.  Wages, income and household wealth all declined while poverty and unemployment skyrocketed.

The majority of Americans have yet to understand that there is no way to get off of the hamster wheel.  The debt will never be repaid.  All of the wealth they will generate in their lifetimes has already been consumed, along with that of their children and grandchildren, in the name of quarterly profits and globalization.  No matter how hard they work, the wealth they create will be transferred to the government and to banks through debt service, taxes and government deficit spending, and through debt monetization ("money printing") by the Federal Reserve.

Economist John Maynard Keynes once wrote: "The ideas of economists and political philosophers ... are more powerful than is commonly understood.  Indeed the world is ruled by little else.  Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist."  Just as Keynes suggested, Americans have been sold into debt servitude for the benefit of a few large, multinational banks and corporations.  Greenspan's fraud facilitated the greatest heist in the history of the world: the theft of American dream.

Look long and hard at the FACTS presented in this RANT, and decide for yourself is there is any  hope of an alternate outcome.  If you are unbiased, you'll realize there is NONE.  The U.S. economy - and all those tied to it - are doomed to repeat the collapses of history's flawed empires; replete with poverty, social unrest, and draconian government decree.

In essence, the LIES underpinning the PROPAGANDA of the "American Dream" have been exposed, creating - for the foreseeable future - the "AMERICAN NIGHTMARE."

PROTECT YOURSELF, and do it NOW!

Call Miles Franklin at 800-822-8080, and talk to one of our brokers.  Through industry-leading customer service and competitive pricing, we aim to EARN your business.

Dear David, Andy, Andy and Bill:

First, I think your newsletters are outstanding ... they are without question the best of the best.

Regarding Bill's article today, about gold being the "Ultimate Collateral" ...

Here is a question that I hope you can touch on during the Webinar, because it relates to an issue that is absolutely fundamental if Bill's thesis (central banks re-backing their currencies with gold and perhaps other precious metals) turns out to occur.

I agree 100% with Bill ... gold revaluation is THE only legitimate solution remaining for central banks and governments. Other illegitimate solutions they might come up with might buy them some more time, but they will fail, because they will be false at the core.

FDR demanded the people's gold at a lousy price ($20.66 per ounce), before he revalued the U.S. currency (increasing the price of gold to $35.00 per ounce).

It was a pleasant money party for the government, but unfortunately, not for the people.

Let's say the U.S. government, via the Treasury and Fed, restates the value of its gold to $10,000 per ounce.

The U.S. government is said to own 261 million ounces of it ... personally, I think the likelihood that the U.S. government still possesses its supposed gold is ZERO ... but let's be trusting and nice, and assume that they are telling the truth about their holdings.

So now, by increasing the price to $10K / ounce the U.S. government's gold holdings are worth $2.61 trillion. Let's say other central banks simultaneously cooperate (obviously, this would all be internationally colluded and agreed upon prior to being announced) by raising their prices to $10,000 per ounce, too.

(Let's not worry for the time being about the fact that the $10,000 / ounce price doesn't fix anything for the U.S., given the gargantuan existing debts and deficits ... it's just a stalking horse number for the purpose of the discussion.)

If they reprice gold in this fashion, some big names (Paulson, Einhorn, Soros, etc.) will enjoy HUGE gains. And so will lots of other people, such as your customers, and other individuals who have been believers in and buyers of gold.

The ONE PERCENTERS, or, more like it, the TENTH of ONE PERCENTERS (the small number of U.S. citizens who actually own gold) will therefore enjoy WINDFALL PROFITS.

The entire communist apparatus in this nation (government, unions, mainstream media, etc.) is going to go COMPLETELY NUTS if the One Percenters are allowed to have windfall profits while everyone else suffers losses from the devaluation of the currency.

The One Percenters will be demonized from here to Hell and back for being greedy hoarders, scammers, thieves, unpatriotic pigs who fed at the trough of the nation's misery and won while everyone else lost, carpetbaggers, dishonest insiders who somehow acted on knowledge that others did not have and won while everyone else lost, and on and on and on it will go.

Do you REALLY think there is any chance whatsoever that the owners of metals, the ONE TENTH of ONE PERCENTERS are going to be able to enjoy windfall profits from a gold revaluation, while the remaining 99.9% of the nation financially suffers from it???

I am not being confrontational ... I love your work ...

I am just trying to figure out what is going to happen here, because our financial futures are going to depend on it, big time.

For the life of me, particularly with given totalitarian / communistic direction in which this nation is unabashedly hurtling ("If you have a business, you didn't build that. Somebody else made that happen." ... Andy and David, I bet you didn't realize until Obama recently re-educated you that Miles Franklin has had nothing to do with you. You didn't build your business; the government did.) ... I simply cannot see how Obama would let the ONE TENTH of ONE PERCENTERS win in the current environment, where producers are demonized and scapegoated.

The current political climate is all about fomenting envy, and hatred of the One Percenters. So to my way of thinking, there is no way they can allow the ONE TENTH of ONE PERCENTERS to enjoy a windfall. That is contrary to everything this government is all about.

Clearly, those of us who have them would like to see metals revalued, but if it means that what we have patiently accumulated will be stolen from us for "the good of the nation" or some such nonsense, it would be much better if there were no such major Central Bank "solution."

It would be better for us, the private owners of metals, if central banks figured out some other "solution," even though we all know it would be a false solution ... but if it would kick the can down the road, as opposed to unleashing the dark, nuclear financial attack on the people, namely, the call in of their gold at some false, low price, then a false solution would be far better for the people.

Per Bill, for the Central Banks, THE only solution is to reprice gold. Yes, I hear that.

But for the people, THE only financial solution is to be able to own metals, even if that means that their prices continue to be manipulated, and can only rise slowly and steadily ... and anything that destroys that capability and that freedom to privately own metals must be fought or at least forestalled at any cost.

Just some thoughts from the field that I hope you'll consider.

Thanks again for everything you folks do to help people.

With best regards,

Stewart

Hi Stewart, 

WOW, well thought out!  Your core question is about the 1 percenters.  I really don't have an answer for you other than you need to own various metals in various forms.  I personally believe that you should own Gold, Silver and Platinum in case of a confiscation of Gold  I cannot believe that Silver and Platinum would also be included in a confiscation.  Personally, I opened an international trust which is custodian of nearly all of my metal and mining shares.  This way I can sign any form and legally say that I personally do not own the metal.  I also advocate owning mining shares of the various metals and in diverse geographical areas, will the tax code differentiate between the "businesses" of different equities?   In other words will there be one tax for owners of IBM but another for Newmont?  Could be but hard to imagine. 

Agreed, we will be vilified as hoarders or having traded on "inside information" ...you know, the information "inside" our brains that is merely common sense and nothing more.  We will see but I'm thinking that we'll have to take it as it comes because this really is uncharted territory now as the rule of law seems to be seriously weakening, could be that Mad Max was not fiction, just early. 

Best regards, 

Bill H.

Stewart,

We are all on the same page, but let me add this.

As you say, $10,000 is arbitrary number, particularly as DAILY inflation pushes the ultimate "target price" higher - eventually to INFINITY, when the dollar inevitably crashes.  Too much  "past is prologue" analysis is done in markets, assuming - for instance - that because FDR "revalued" gold in 1933, that will be the same course today.  This is now a GLOBAL gold market -and a GLOBAL fiat currency system - so I don't think a revaluation to an arbitrary number will be feasible.  This time, the markets will FORCE the true price of gold, as government manipulation is what caused the problem in the first place.

Second, when PHYSICAL gold prices rise, it will be due to currency crashes rather than "profits" in today's dollars.  There is no real means of taxing PHYSICAL to start with - especially as you can sell it in Utah, and shortly several other states, tax-free - and aside from declaring gold usage illegal, no real way of stopping people from capitalizing on increased purchasing power.  Of course they can try to impose a windfall profits tax, but what would they use to prove cost basis?  Also, if gold is illegal, it will be because it is so valuable - so of course a black market will develop, with no taxes anywhere.  Why?  Because vendors won't take ANYTHING else!

Of course - assuming markets don't go on "holiday" or client assets "misplaced" - windfall profits taxes can - and WILL - be imposed on miners, and ultimately, nationalizations.  In other words, anything PAPER is subject to all the dangers you discuss, while all things PHYSICAL aren't.  Then again, if these questions ever become REAL, my guess is gold profits will be WAY down on our list of worries.

Andy

Hello Bill,

Thank you for your very well-crafted and thoughtful response. I really appreciate it.

Your point that silver and platinum are unlikely to be called in makes perfect sense. Platinum's action today was impressive. I wonder if lots of other smart money is coming to your conclusion right now, too.

Regarding different tax rates for different stock categories (e.g., IBM versus Newmont), currently the long term tax treatment for metals is about 100% higher than for equities (28% versus 15%), so clearly, the government has already shown its fangs when it comes to gold, silver and the rest.

There is no question in my mind that when it comes to demonizing gold and gold stock ownership, and to depressing the gold price, the government will do anything and everything in its power to do so. They are fighting for survival here, and they are going to take off the gloves.

As to the rule of law seriously weakening, and our being in uncharted territory, you are again 100% correct. Now we have the UK government saying it will not just violate, but utterly TRADUCE international law by raiding the Ecuador embassy to get Assange. Imagine if Assange were in the Russian or Chinese Embassy. Would these UK cowards be so arrogant and "brave"??? Of course they wouldn't; they'd be politely on their knees while handing over their requests. But Ecuador is small, so they bully them. I have never in my life been so proud of a politician as I am of Ecuador's president, standing up to these tyrants as he is.

Assange stood up for freedom of information, and therefore freedom of ALL kinds, and the so-called "free" countries like the UK and US went completely BALLISTIC, because they want to describe freedom in their own Orwellian way: namely, Tyranny is Freedom. And now these tyrants want to put Assange in a cage for the rest of his life, so he doesn't cause any more trouble. What did he DO, other than release THEIR OWN messages??? For that, he is Enemy Number One. Apparently, we can have lies to the end of the universe, but we cannot have one ounce of truth.

This proves that these people are far, far more deadly than nuclear radiation. And underestimating them will be a dangerous, and possibly fatal mistake. I worry about all of us, but particularly those on the front line, like you and Andy.

They are boxed in a corner, and they are completely desperate. The one and only thing they understand is lying through their teeth, and anyone who calls them on that, like Assange, is going to be targeted. It is bad now, but if the election goes the wrong way, this goes to Marxist totalitarianism virtually overnight.

There is $50+ trillion in private wealth in the U.S., and that is the target. Not that it will fix what ails the United States, but it will buy time. Time for more lavish White House parties; time for more demagogic speeches; time to continue receiving adulation from dumb masses, which Narcissists require as psychological fuel; time for more golf; time to continue flying around in the world's largest "private jet" (remember the demonizing of "private jets"??? What is Air Force One but the the world's largest "private jet" ... the hypocrisy is simply astonishing); time to enforce NDAA; time to "disappear" enemies; time to go from mere "President" to "Dear Supreme Leader for Life."

The people have no idea how serious this is.

Thanks again for your thoughtful and helpful response.

Best regards,

Stewart

Hi Andy:

Thanks for your response ... I thought it was excellent.

Some quick thoughts, because I know how busy you folks are.

I totally agree that the global market will ultimately dictate the gold price ... though it is irritating and pathetic how the New York market falsely continues to dictate it, and how the rest of the world just continues to go along.

Why doesn't New York just print oil at $25.00 per barrel, too??? That would certainly be politically popular, and politicians could claim they were responsible for Morning in America. Could it be that New York knows that unlike the brain dead and cowardly mining executives, the oil industry here and worldwide would rip off their faces if they attempted a fraud like that???

At some point, the manipulators will lose their power, and truer markets (e.g., Shanghai) will print the gold price for worldwide truing. (At this point, we can forget about India ... what a great opportunity to be monetary leaders those bureaucratic morons squandered.)

Personally, I'm not too optimistic about opportunities to trade in a black market. If this goes to Marxist totalitarianism, which to me is a serious, absolute risk, then the first thing they are going to do is to crush any and all emerging black markets ... because those black markets will be stake in their heart, and they will know this. They will make EXTREME examples of those who trade in black markets, including lifetime imprisonment and ultimately executions, and they will scare the living hell out of people. They will enlist the unemployed and the pathetic to "sniff out" and report on black markets, and then the blacked out Suburbans will descend in numbers, and they will shoot first and ask questions later.

It will basically be the War on Drugs transformed to the War on Money, or the War on Black Markets. Job security and a whole new Adventure for the enforcers, who will be desperate for continued salaries and free family health insurance.

Andy, I wish you knew me ... I am no conspiracist or paranoid ... I am merely a well educated person with a BA in English and History, and an MBA (Harvard), and when I match history to the present, it appears that Mark Twain was wrong ... he said History might not repeat, but it rhymes. Well right now, it isn't rhyming, it is DIRECTLY REPEATING.

Nobody wants to admit that, because the truth singes, and hurts. But it is the truth. We are racing into a totalitarian nightmare.

Regarding your loathing of metals equities, I do not agree with you 100%. I agree with you 10,000%. They will have their upside manipulations and excitements and dramas, but ultimately, they are nothing but Money Morgues.

Thanks again for your thoughtful response, and I look forward to your Webinar.

Best regards,

Stewart

Stewart,

They can't print oil at $25/bbl because the PHYSICAL market is far more transparent.  Plus, the GLOBAL cost of production is pushing upwards of $100/bbl now, and OPEC would commence a debilitating trade war.

As for the black market, it is not something I look forward to either.  But the black market will not develop because of soaring gold, but crashing fiat currencies.  Vendors WILL NOT accept anything but ITEMS OF REAL VALUE - such as PHYSICAL PMs - so who cares what the government decrees.  If one wants to eat, they will have to play by the laws of economics, not governments.  Anytime I am asked this question, I simply post my RANT titled "PRICELESS PRECIOUS METALS OR WORTHLESS DOLLARS."  In such scenarios, the dollar (and other fiats) will likely have crashed, so ALL that matters is whether you'd rather have dollars or PMs at that time, "contraband" or not.

As for mining stocks, what more can I say.  The upside potential for a handful is high, but the risks are 10,000x more so.  I don't think there's a chance in hell the mining stocks will last long after the Cartel is broken, as windfall profits taxes and nationalizations will kill them.  Let alone, capital gains taxes, brokerage failures, stock title issues, bank holiday, etc..  But I guess we'll see, won't we?

Andy

Andy, 

What if "they" make it illegal and punishable by 20 years in jail and a $10 Million fine to trade in or hold physical Gold?  What then?  I still to this day believe that it is a mistake to go "all in" with physical metals, I know and have heard your arguments against the miners but ...there is a season for everything and right now the season is for physical so you look correct.  Doesn't mean that it will always be and the miners are another way to diversify...just a "little bit" everywhere will hedge circumstances we haven't even contemplated yet.  It is even possible that ownership of metals becomes illegal while miners are "nationalized" and become the ultimate utility stocks, I can envision other scenarios also.  No one of us knows exactly and to go all one way or the other is a mistake in my opinion.  You might not be correct about the shares and I promise you that there are those out there just waiting to call you on it because this is a very divisive issue.  ...just saying.  Best,  Bill   P.S. you need to check on the tax issue because in Utah for example it is "state" tax free, not "federal" tax free.  In an audit, the honus will be on YOU to prove your cost basis...if you cannot...your cost basis will be deemed to be zero, you can bet on that!

Bill

Bill,

Per what I just wrote to Stewart...

As for the black market, it is not something I look forward to either.  But the black market will not develop because of soaring gold, but crashing fiat currencies.  Vendors WILL NOT accept anything but ITEMS OF REAL VALUE - such as PHYSICAL PMs - so who cares what the government decrees.  If one wants to eat, they will have to play by the laws of economics, not governments.  Anytime I am asked this question, I simply post my RANT titled "PRICELESS PRECIOUS METALS OR WORTHLESS DOLLARS."  In such scenarios, the dollar (and other fiats) will likely have crashed, so ALL that matters is whether you'd rather have dollars or PMs at that time, "contraband" or not.

PHYSICAL PMs are not "investments," they are the ONLY way to preserve wealth in a hyperinflation.  If they make it illegal and punishable by 20 years in jail and a $10 Million fine to trade in or hold physical Gold, it will ONLY be because the dollar has been collapsing, and gold is now priceless.  I'll take my chances with priceless contraband over being flat broke any day, although frankly, that will probably be the least of my worries in such a (likely anarchistic, militaristic) world.

As for miners versus physical, you are entitled to your opinion.  However, if it is illegal and punishable by 20 years in jail and a $10 Million fine to trade in or hold physical Gold, MINERS will be long nationalized, and the stocks ZERO.  That is, if the brokerages/banks/markets are still open to price them, and send you your funds.

As for Utah/taxes, etc., again, ONLY in the aforementioned anarchistic, hyperinflationary scenarios would such draconian laws come to pass - which is EXACTLY what I expect, by the way.  With food in shortage, riots, social unrest, and martial law, I frankly will have little care of proving my cost basis to the government.  Let alone, as I won't be "selling" my gold, but USING it to buy things.

ANYTHING can happen, but I believe PHYSICAL is - BY FAR - the better risk.  I simply cannot envision a scenario where mining stocks are allowed to run higher - with banks and markets OPEN, BTW - while the rest of the world (and PHYSICAL holders) suffer.

But I guess we'll have to wait and see.

Andy

Andy,

I still believe a "bank holiday" reset is coming.  Markets will reopen at some point and it is THEN that the leverage of the miners will show.  Yes there will be nationalizations but not every single miner in every single country.  All you will need is just ONE current $25,000 position in a junior to work out which will be worth more than 500 ounces of Gold.  All I am saying is that going all in...either way...physical or miners is a mistake.  I say "mistake" because this will be the biggest wealth transfer in all of history, not owning a position in the production of money will be leaving a lot of leverage on the table unnecessarily.  This all assumes that we pass through and exit Mad Max world!

Bill

Bill,

We have both done more due diligence on the topic than 99.9999% of the world, and come to the same conclusion.  We just choose to execute our plan in slightly different ways - both of which can still be changed if circumstances warrant.

Andy

____________________________________________

Andy,

Because the banks own your government, not the other way around.

http://dailybail.com/home/barofsky-geithner-admitted-to-
us-privately-that-obamas-housi.html

Roy

Roy,

Yep, I'm on it.

Putting in Friday's RANT.

Thanks,

Andy

____________________________________________

Andy,

Here are my questions:

1. In what proven ways does the Fed help the banks at the expense of the American people? 

By PRINTING MONEY, which helps financial institutions by propping up PAPER assets, while just creating inflation for the public.  And the same goes for 0% loans from the Fed, used by banks to speculate with government backing - causing manipulation of true asset prices, and INFLATION of consumer prices.  Not to mention the favorable treatment such banks receive when they commit financial crimes, which we don't get.

2. If your answer for number 1 is "bailouts",aren't bailouts payed back? Even if bailouts are not payed back, bailouts are loans. If the bailouts are not payed back, banks must be drowning in debt, how does this help them?

Bailouts are part of it, but they are not necessarily paid back.  When some are - often with public money via stock offerings (like when Buffett pretended to invest in GE and Goldman to enable secondary equity offerings) - they are publicized.  However, much of those "loans" are not returned at all, which is why the Fed keeps lengthening its ZIRP timeline.  And it helps banks by KEEPING THEM OPEN, so they can continue to pay their executive bonuses with taxpayer money; and, oh yeah, to manipulate markets and sucker investors into buying offerings like FB, ZNGA, GRPN, and MANU.

3. I heard we pay interest to the Fed, but doesn't this interest go back to the Treasury? What's the big deal? Sure the Fed isn't audited, but thinking the Fed doesn't pay the interest back to the Treasury would be a theory, not fact.

Who is "we?"  Since QE is monetizing essentially all Treasury issuance - and fiscal spending - who cares how much such "transfer payments" are?  Immaterial, and BTW, the Fed will NEVER be audited.  Even when partial audits are done - like when they found the secret $16 trillion of loans, no one could care less.  They'll only care when the dollar has already crashed, and it's too late.

4. Fractional Reserve lending isn't really a scam right? It's just a business. People "lend" money to the banks, and the banks "invest" it and take a cut, what's the big deal?

The concept itself is not a scam, but in a fiat money system - where the government continues to funnel FREE money to the banks, it creates MASSIVE inflation and mal-investment - to be paid for, of course, by taxpayers.

5. Mike Maloney says that in order to pay the interest on money borrowed into existence, you have to borrow more money into existence. Is this really true, though? Banks spend money collected from interest back into the economy through wages and interest to depositors, right? Therefore, couldn't all debt theoretically be payed back? For example:

Bank loans Person $100, with a monthly interest payment of $1

In the entire world there is only $100 and $100 of debt

Person spends all the money on a cash register the Bank sells him.

Person works for the bank, his monthly paycheck is $2. (Person has $2, Bank has $98)

Person pays $2 to the bank. (Person has $99 of debt, Bank has $99)

etc

The first interest payment was payed off, without going into more debt. Money and Debt are still equal. Couldn't this go on until there was NO debt and NO money? All debt and interest would be payed off without going into more debt.

It seems to me that Mike Maloney is making it seem that when you pay interest on debt, then that interest money vanishes, but it doesn't. Money only vanishes when DEBT is payed off, not INTEREST, right?

I'm not a fan of the mumbo-jumbo behind how the money supply is theoretically expanded via news loans.  The fact is, the money supply is NOT being grown via fractional reserve expansion anymore, as BANKS ARE NO LONGER LENDING (as they are already insolvent).  Instead, it is now the Fed inflating asset prices (like Treasuries) by printing money to buy them.  Also, funding the government by printing money and handing it to government agencies.  And printing money (but calling it "swaps") and giving it to European banks and dying corporation (like GM).

Elijah Johnson, Founder

Unconventional Finance

____________________________________________

Andy,

Subject: Ranting Andy Hoffman - Monopoly Money

Simply beautiful. Like a breath of clean clear fresh air. Your words still ring with a truth that few are able [or are willing] to hear. My family enjoys every rant. Did we hear a little stomping this time? Listen---I was looking for another word that might go along with "bankster" How about BANKSTER PRANKSTER? The definition of prankster is 'Hoaxer-Tricker-Mischief Maker and of coarse Trouble Maker' A synonym of a Hoax is----'An act intended to defraud and or to deceive' Also 'Something that has been established or accepted by Fraudulent means' This sounds EXACTLY what these stinking banks have done to the WORLD and it;s people. They are THIEVES by FRAUD. If it were not for Gold and Silver there would be little to no hope of protecting ourselves. They can;t "trick" my family again. Thanks Andy---Enjoy your summer my friend. This fall I fear the masses will RISE.

Al

Al,

Thanks, much appreciated.

There are MANY names for these monsters, most of which I cannot publish here!

Andy

____________________________________________

Andy,

Did you see this?

http://worldtruth.tv/china-launching-gold-backed-global-currency/

Brendan

Brendan,

Thanks, I actually featured this in a RANT last week.

In due time, in due time.

Andy

  ____________________________________________

Andy,

Where the H do you think these buckerooooos are coming from?

Unreal  !

Port Canaveral Gets $24 million To Finish Harbour Improvements
Port Canaveral will get $24.4 million in state funding to complete its harbor widening and deepening project to accommodate larger cruise and cargo ships. The money from the Florida Department of Transportation will allow the project to be completed four years earlier than possible through the federal process. A study by the FDOT showed every $1 invested in seaports generates $7 to the state's economy. The channel improvement project is expected to yield $11 for every dollar invested. 'Port Canaveral is a key component to the region's long-term vitality and a driving economic force of the Space Coast, as well as Central Florida's hub to the world,' said Gov. Rick Scott 'This port and this region cannot wait several more years for this crucial project to be complete.'

Mel

Mel,

Yes, when you have a $1.2 trillion (and growing) deficit, you have to work HARD to waste money.

Andy

____________________________________________

Dear Bill,

I read Andy's, David's and your blogs every day (that you write one, that is).

I love read reading David and Andy, but I want you to know that I never before understood the concept of 'collateral' and running out of it  You wrote it so simply and uncomplicatedly that even a financial simpleton like me could comprehend it.

Thanks for your blog. It's amazing that between you, David, and Andy you can find so many different topics to write about and only very rarely duplicate each other's thoughts.

Thanks to all of you.

Barry K

Barry,

That's the beauty of our topic.

There is no shortage of material, and Bill, David, and I all look at it from a slightly different perspective.

Andy

____________________________________________

Andy,
 
So you don't think there is any scenario where the government will allow the Wall Street banks' stock prices to collapse, even for a short while?  I know this temporarily happened back in the 2008 meltdown until Washington rescued them, and I'm wondering if it might happen again in the near future.  Maybe the PPT regrets having let the market tank back in 2008 and has already decided to print enough money not to let that happen again?  With the markets so heavily rigged it's hard to tell what's going to happen other than the government will be printing money.
 
Thanks,
 
Douglas    

Douglas,

The 2008 collapse took TPTB by surprise, as they felt invincible and were SHOCKED by the rein of horror in the markets.  Trust me, they didn't "let" the market fall - they just didn't have as strongly mandated a PPT as they do today (which they have BECAUSE OF 2008).

They will NEVER "let" the banks collapse voluntarily, as the ENTIRE SYSTEM - including their power base - would go with it.

However, the PPT is not all powerful, and neither is the Cartel.  They WILL lose to fundamentals, it's only a matter of time.

Andy

____________________________________________

Andy,

Have been a reader of your newsletters and have been listening to your podcasts over the past year.

Your insight into the precious metals is second to none, well perhaps at least up there with the Turd over at TF Metals.

There are a lot of people here in Australia that think we're immune to what's happening in the US and Europe - very complacent indeed - and quite frightening to say the least.

I've done alot of research myself and as a result, have been stacking phys for over the past 2 years. I find it also very difficult to at least discuss with others what so blatently is happening before our very eyes. The whole world is asleep!

Anyway, just wanted to say thankyou for all your hardwork and the hours you put in to wake up as many people as possible to what's really going on behind the scenes.

Thought I'd throw in a link below to a clip I saw a few months back. Not sure if you've seen it. Basically, it's Robert Downey Jr visiting Wallstreet many moons ago and his take on the whole casino. His rant at the very end is absolutely priceless! Be warned, don't watch in front of any children because the language is very explicit.

http://www.youtube.com/watch?v=Dtc58sTsTpE

Cheers

From Down under

Steven

Steven,

Thanks for the kind words.

I'm thrilled that my work is making an impact so far away, and hopefully it gets spread to millions in the Southern Hemisphere.

Looking forward to seeing the video.

Andy

____________________________________________

Andy,

"You can't keep a good man down."

It's amazing that you can still churn out your useful blog in spite of a broken 'pinkie'.

Bill

Bill,

Correction, I have a broken pinky AND a broken toe!

I also hurt the toe playing soccer, about six weeks ago.

Andy

____________________________________________

Andy,

Subject: Cme says gold is money

cmegroup.mediaroom.com/index.php?s=43&item=3304&
pagetemplate=article

Kevin

Kevin,

Yep, I'm all over it!

Thanks,

Andy

____________________________________________

Andy,

Crazy Annie B busts loose with this on her site today:

".....Oh, wait. Except for one thing.

RT stands for "RUSSIA TODAY" and is fully funded by the Vladimir Putin regime. It is Putin's propaganda arm to the English-speaking world.

And so, after a nano-second's thought, the answer is NOPETY, NOPETY NO.

See, Vladimir Putin is the enemy. He is a very, very evil man and is the enemy of freedom. Those Russians are very, very clever and have essentially checkmated the western world, and the United States. They infiltrated the government, the academia, the media and the Church in the 20th century and put in place and set rolling the Marxist policies that are now in full bloom and have destroyed us. At the same time, Putin's propaganda news outlet, RT, is the only news outlet that is reporting on what a massive, unfixable clusterbungle the Western economies are. I'll grant RT that - their reportage on financial and economic matters IS INDEED ACCURATE, but their motives are not to help save the system or even to warn people of the looming disaster. The motive of the RT ownership is to bring about the collapse of the West that Russian Communists designed and executed over the last 70+ years, and thus set the stage for a Russian-backed and Russian-controlled currency and global economy.

So, no, I won't be appearing on RT, no matter what. Even if the show anchors aren't explicitly Communists and are merely people who think that the ends justify the means, the fact that RT is a Putin property and operational arm means that there is no possible way that I could ever, ever appear on that network.

Christians do not treat, parley, negotiate, compromise or converse with the enemy - even through intermediaries. The ends do not justify the means. If it is indeed the will of God Almighty that I have an audience of tens of millions of people, then I trust that He, in His omnipotence, can make that happen without my having to crawl into bed with VLADIMIR FLIPPING PUTIN."

Wow, she is just SO dangerous. She knows so much, but UNDERSTANDS so little. Including the true history of Russia and who and what was (and is) the driving force behind Marxism, Bolshevism and Communism. Nevermind that Vlad is a devout Russian Orthodox Christian who must contend with the ahem "Oligarchs" (msm code word for Jewish, not "Russian", Mafiya kingpins) in wrestling Russia from their control and setting it back on its proper historical course. Do I have illusions that Mr. Putin is squeaky-clean? Hell no. But if anyone thinks he's the main problem in Russia, or that he poses a threat to America and the West 1/10th as deadly as the financial criminals and terrorists who are busy busy busy destroying and dismantling America by the day, they are, well, insane. They simply must be as they have no ability to assess proportionality of the various threats we face.

Which brings us back full circle to Crazy Annie B. The same woman who's been spot on re Sentinel, MFG, and the rest. Very hard to fathom what she gets versus what she has her head way up her ass about.

Enjoy the weekend, and good luck with that pinky!

Best,

Ed

Ed,

Ann Barnhardt is the premier expert on the topic of re-hypothecation and other MF Global-type brokerage frauds.  And certainly one of the nation's leading gun advocates (can't argue with her there).

However, on all else, I STEER CLEAR!

Andy

Andy,

When it comes to her, that's the only wise choice. I'm just amazed at the level of dichotomy she represents. Stupefying.

Ed

____________________________________________

Andy,

For all intents and purposes the Law of Supply and Demand died a generation ago.    It was financialized into oblivion.   Today, virtually all significant commodity prices are 'discovered' in the derivative markets.    Most of these derivatives are futures contracts but some are denominated in forward contracts in London which are similar in nature.    All of these derivative contracts have one thing in common:  they are paper promises to deliver a given quantity of commodity at some time in the future.    They are effectively un-regulated.

The effect of using derivatives to set spot prices in commodities is to suppress prices massively.   You see, the 'market' cannot tell the difference between a futures contract for wheat, oil, or gold and the real physical bushel, barrel or ounce.    On average, on the Chicago Mercantile Exchange, every commodity is sold AN AVERAGE of TEN TIMES the physical supply.    Essentially, for every bushel of corn that actually exists, ten paper bushels are sold into the market which means MR. MARKET sees a 'supply' of 11 bushels.    The commodity with the most realistic ratio of paper to reality is wheat, where every real bushel is sold twice, once as a futures contract and once as a real, physical bushel.    To my simple mind, that means wheat is a bargain at only half price in the spot market.    This has been going on for generations.   To compensate American farmers for the suppression that the government endorses in the futures exchanges, the government has an extensive system of agricultural subsidies, which back fill in the money that the futures market has stolen from farmers' income.

The problem with all this is that the subsidies only apply to American farmers, and only to farm produce that Americans produce.    A foreign producer of wheat or soybeans is receiving half to one tenth what he should be receiving when he sells his crop, unless the foreign producer also has a government subsidy program, like they do in Europe.    Most don't.   Most farmers around the world are impoverished, or shift to farm products that do not have an associated futures contract that suppresses the price, like marijuana, poppies, or carnations.   Note that all three of these commodites command high prices.....

Some ratios of paper futures contracts to the underlying physical supply go much higher than 10 to 1.    In the precious metal field, the ratio is over 100 to 1.    That means for every ounce of physical supply in stockpiles, 100 paper ounces of gold or silver is sold each day.   At critical times, the volume of paper sales can rise dramatically higher than this.    For example, on February 29, 2011, 22 million ounces of 'gold' in futures contract form was dumped on COMEX in 20 minutes.    Total annual mined supply of gold is only 80 million ounces.     There have been cases where a billion ounces of paper silver was dumped on the derivative markets in one day.    The world produces only 700 million ounces of new silver each YEAR.      There is absolutely no chance that these paper contracts have any actual metal behind them.   Selling a futures or forward contract for which you have no metal to fulfill the contract is called naked shorting.     Naked shorting on a mammoth scale is how the financial system suppresses the price of precious metals.    The people doing the shorting are money-centered banks and a few others that ride the trade.   How do they get away with this?    Answer:  only 1-5% of the contracts are ever called for delivery, so someone who naked shorts, need only worry about covering as little as one in 100 of the contracts.    Most have enough metal to at least do this.    The point is, if futures contracts are only delivered 1% of the time, why are they used to set 100% of the physical supply price?    The answer to that question is 'because the system is set up to suppress using a kind of fractional supply delivery system that is INTENDED to suppress the market'.

Futures markets suppress prices of commodities.    In some cases this is extreme, and intended for political reasons.    Western central banks have a vested interest in keeping commodity prices low, particularly in precious metals because it maintains the illusion that their paper currency products are more valuable.   In other words, a suppressed gold price creates the illusion that Dollars are more valuable and that inflation is lower.    Gold down means dollar up.

When and how will this abusive pricing system end?    I can think of a number of scenarios, but basically the system breaks when currency creation becomes too big to hide.    When inflation leaks out of the banks on to mainstreet, you will see price inflation and that in turn will lead people to buy tangibles to protect their savings.    This will lead eventually to high demand for precious metals.    That will destroy the capacity of the futures market to sell every ounce 100 times, as people will begin buying contracts and taking delivery instead of cashing out.    This will put a lid on naked shorting, which in turn will curtail supply of paper.   Prices will rise.    Eventually there will be a default on contracts and that will end the paper over-supply.    Logically, to clear the market, prices could rise 100 fold.    That implies hyperinflation.

P.S.   I know you don't think a 100 fold increase in gold and silver prices is possible but consider Zimbabwe.    Back before their hyperinflation in the 1990's  a Zimbabwean dollar had a one to one exchange rate to the Dollar.    Now, it takes billions of Zimbabwean Dollars to buy an ounce of gold.    (In reality nobody is presently willing to exchange a gold for Zimbabwean dollars in any quantity, as the currency is worthless.)    This is what is coming for many Western currencies......

There is another possible scenario too.    If confidence in the brokerage system that operates the futures markets and the forwards market in London should be broken, we could see a drop in demand for futures contracts on the buy side.    This would make the naked shorting of gold and silver futures even easier, leading to a drop in the spot price.    Gold would fall in price even as the REASONS to own gold (drop in confidence in financial institutions) would be rising.    So, how could confidence in the brokerage system be undermined?   Simple: steal clients money:

Regards,  

Bryan

Bryan,

Will post in my Mailbox, but too busy to read and respond to at the moment.

Will do in the coming days.

Thanks,

Andy

____________________________________________

Hey Andy,

Reading your article from yesterday you were answering questions regarding real estate and IRAs.  You indicated that a paid off house was a good thing to have but you fail to take into account there's always a tax lien on the property.  Do you know why this is?  The way I see it if there is always a lien on your property then you never really own it.

Also, regarding getting out of all IRAs, does this hold true for precious metal IRAs?  I would suspect so but haven't heard anyone say so or not.  Why does MF still offer this service if one should get out?

Thanks again for all that you do to inform the public and for taking the time to read and hopefully answer my questions.

mm

Mm,

That's a good point, but there's ALWAYS SOMETHING to worry about.  I'll take my chances with a fully-paid house over dealing with mortgages and other government agencies any day.  And if society crashes, it won't matter either way.

Re: IRAs, YES!  I am NOT a proponent of PM IRAs, and frankly believe they'd be the biggest target of all IRAs.  My advice is to get OUT of all IRAs, but - to answer your question - MF offers this service because some people simply will not sell out of their IRAs, no matter what.  It is not for us to judge people, and we do not have a crystal ball as to what will actually happen to IRAs; we are just giving our opinion, to be used in due diligence.

Andy

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Andrew ("Andy") Hoffman, CFA joined Miles Franklin as Marketing Director in October 2011.  For a decade, he was a U.S.-based buy-side and sell-side analyst, most notably as an II-ranked oil service analyst at Salomon Smith Barney from 1999 through 2005.  Since 2002, his focus has been entirely on Precious Metals, and since 2006 has written free missives regarding gold, silver, and macroeconomics under the moniker "Ranting Andy."  Prior to joining the company, he spent five years working as an Investor Relations officer or consultant to numerous junior mining companies.   An archive of Andy's "RANTS" can be found on the Miles Franklin Blog here.