Market Analysis: June 29, 2015

The financial markets were embroiled today due to the Greek debt crisis looking like it is finally reaching its denouement.   But this is only the beginning for what the final disposition of the Euro and Eurozone will look like after Greece defaults on its IMF payment tomorrow and then decides how it wants to move forward, within the EU or outside of it. You can bet that Italy, Spain, Portugal, and Ireland have been closely watching and are now examining each step in this tug of war between the EU and Greece from now to its final breaths. The Eurozone and Euro economic and geopolitical structures were ill-conceived, badly designed, badly implemented, and unresponsive to the people’s concerns of various constituent countries. That anybody in their right mind, after observing and studying the constructs of this amalgamation of disparate countries now joined at the hip, can suddenly solve their devastating economic problems after seven years of flailing in the dark while protecting their big governments and precious big banks from further damage as well as from exacting more damage on the populations of these countries is only in the minds of a naïve and incurable optimist (brainwashed/indoctrinated/bought off public could be substituted here as well) or someone who has something valuable to gain for themselves, such as power and/or profit, from this mess created by a big government/big bank (along with their central banks)/big corporation cabal. I think all of these major fiat paper currencies, that are backed by nothing but the hot air of their governments and their enforcement arms are doomed to a large degree and we are now approaching the beginning of the final takedown of these paper tiger regimes. I think you will see the Euro, Yen, Pound, and U.S. dollar be seriously harmed if not destroyed from its present form. I have more hope for the Yuan, Ruble, Australian dollar, Canadian dollar, and other currencies that are either hard asset (such as precious metals) backed or of countries with large mineral/resource wealth.

All that said, the thing I noticed most today about how the various financial markets reacted to the latest from the EU/Greek imbroglio is that the U.S. dollar did not rise strongly in the face of these troubles in Europe. It gapped up on the open and not only fell and filled the gap from the open but ended up declining further and closing lower than the close of the previous three days. This is not the action of a safe haven currency in times of extreme stress being exhibited and felt around the world. On top of the EU/Greek problem, you have a Chinese stock market that has now corrected into bear market territory over the last few weeks, the continuing Ukraine/Russian (really U.S./Russian) war, Syrian (really U.S./Syrian) war, U.S./China South Sea tensions, and ISIS (really U.S. created and backed) (do you see a pattern here?).  So watching the action of the U.S. dollar over the next few weeks may be the tell we are looking for in an attempt to determine when all these paper money fueled bubbles in the U.S. bond, stock, and currency market start to blow up. If the U.S. dollar continues to go up as it should in world crisis times like these, then that will likely support the U.S. stock market and maybe keep a lid on the bond blow up for awhile longer.  If not, I think you will still see the U.S. stock market make one last laboring ride to glory as it methodically grinds its way to another high rather than some type of spectacular blow off run off a cliff. I think the spectacular blow off gallop of the final stage of a stock market bull run might be seen in Chinese stocks, which I think we have already seen to a large degree. I think somewhere along the way you will see more and more U.S. market participants shift into hard asset stocks such as precious metals, commodities, and resources and continue to move out of former high flying stocks that themselves are laboring to maintain their current altitudes. I think, over the next couple of weeks, that the U.S. stock market could make a short term bottom and start back up along with the Chinese stock market. Stock selection will be critical to benefit in this move. Some of the non-resource/non-commodity stocks I have already recommended should benefit from the next move up. But as I have said, I also think you will see a continual shift into the commodity/resource sectors as well, especially if the U.S. dollar starts to fall. If the U.S. dollar continues to rise then I think you will see more bottoming action in the commodity/resource sectors but initial signs of interest have already been observed in many of these areas but better entry levels may appear in the not too distant future. I believe you should have a portion of your assets in the stock market, but now is the time to seriously consider ways to preserve much of your wealth as we enter even more uncertain times ahead. The best way to do that, I believe for most people, is to own gold/silver coins or bullion in a few diversified vaulted locations directly owned or allocated to you as well as some precious metals mining shares. As far as the precious metals mining shares(as well as gold/silver), I still believe you will have an opportunity to buy these at lower prices over the next few months but for the investor to dollar cost average in high quality names over the next few months is a good strategy also. High quality names include NEM (Newmont Mining), ABX (Barrick Gold), RGLD (Royal Gold), AEM (Agnico Eagle Mines), FNV (Franco Nevada), GG (Goldcorp), and AU (Anglogold Ashanti). Lower priced and more speculative names that include some silver miners are KGC (Kinross Gold), GFI (Gold Fields), CDE (Coeur D’Alene Mines), SA (Seabridge Gold), AG (First Majestic Silver), and FSM (Fortuna Silver Mines). To bypass the trouble of doing due diligence on individual precious metals miners, one can invest in ETFs such as GDX (Market Vectors Gold Miners), GDXJ (Market Vectors Junior Gold Miners), NUGT (Direxion Gold Miners 3X leverage), and JNUG (Direxion Junior Gold Miners, 3x leverage). When using leveraged ETFs, timing is more critical as leveraged ETFs often lose value in choppy or non-trending markets due to the way they are constructed and implemented. So the next couple of weeks will be interesting as financial markets usually are and it pays to keep your eyes wide open and a tight grasp on your wallet until you see a good risk to reward opportunity.

Market Analysis: June 27, 2015

I was listening to another interview of Rick Rule, Chairman and Founder of Sprott U.S. Holdings, by TF Metals and he said several things that caught my interest. One, he noted that the more established precious metals mining companies have already started to do well especially as compared to the junior mining companies and this is something you typically see after the start of a bull market instead of before the bull market actually begins. As he also noted, gold and silver are already in a bull market when priced in almost any major currency other than the U.S. dollar and this, I think, is why you are seeing this bifurcation of performance, as he called it, between the large, established mining companies and the juniors. This concept reminded me of something I read in one of Benjamin Graham’s books a long time ago. That is the larger, more established companies take off in early phases of the new bull market and then the secondary stocks/companies tend to follow. This bifurcation between the establish precious metals mining companies and the juniors is probably easier to see on the Toronto and Vancouver Venture exchanges than on the U.S. exchanges that have far fewer precious metals mining companies listed in both number and in percentage of companies listed. Though on the U.S. exchanges, Newmont Mining, one of the largest precious metal mining companies in the world, and Royal Gold a large established gold royalty company are outperforming their smaller cohorts. Again, I think it is primarily due to the extreme disparity in the performance of most of the major fiat currencies and the U.S. dollar causing this bifurcation between the established and the junior mining companies along with the fall in oil price that possibly favors the mining processes of the already more efficient established companies more so than the junior companies. This situation is, I think, setting the table for the outperformance of the junior or secondary precious metals mining stocks. This should occur when the gold price finally bottoms and reverses as well as when the U.S. dollar reverses and follows the rest of the major world currencies downward and probably to their rightful grave due to debt levels that were unimaginable only a few years ago. As discussed before, especially at the start of moves, all of the expected confirming signs may not be in place but the price performance (as well as silver) of gold will probably be the primary sign to look for, other than the price performance of the companies themselves. Another thing Mr. Rule mentioned, was that Eric Sprott, Chairman of Sprott Inc. and one of the most accomplished resource investors ever, is acquiring a group of junior mining companies that hold real mining assets in a company that is not yet public. He did this same thing at the beginning of the last gold bull market in the early 2000’s and it performed extremely well. It pays to watch the actions of accomplished market veterans and take note. I have been watching the ETFs of the junior mining companies such as GDXJ and JNUG (3x leverage) and have noted that these ETFs appear to be more undervalued than their large cap brethren like GDX and NUGT (3x leverage). As I have mentioned before, I think the gold price will drop sharply to below the psychologically significant $1000 threshold in an attempt to scare gold out of weak hands as well as to fool the people into thinking that these paper fiat currencies are much stronger than they really are. But I believe this will be a relatively short swing below $1000 and then the gold price will reverse strongly to the upside and along with it the mining companies. This is often called the capitulation phase in the markets and we have not seen it yet in the gold and silver markets as they have been basically range bound for the last couple of years. I think, in addition to acquiring precious metals mining stocks during this capitulation phase, that it is also prudent to own actual gold and silver coins or bullion as an insurance policy against the malfeasance and madness of government policies and actions that is most likely to have serious consequences upon the general public.

Netflix Stock Split

On June 23, Netflix announced a 7 for 1 stock split that will be effective on July 15, 2015. This is the type of event you see near market highs. Netflix has had a huge run-up from 8/3/12 when it traded at $52.81 to its recent all-time high of $706.24. Trees do not grow to the sky and any reasonable investor could not possibly expect much more price appreciation from these levels anytime soon. The P/E is a stratospheric 173. The Wall Street Journal had an article today on Carl Icahn, a hall of fame investor, selling all of his Netflix shares according to recent SEC filings while making a huge profit from where he bought shares less than three years ago. Zero Hedge displayed a chart today displaying the last time Netflix had a stock split back in early 2004 which resulted in a steep decline over the next seven months. These are not good indications for near term returns in a stock. Historically, stock splits like this have been done to attract the public or retail investors so the current stock holders who have ridden the stock up for very nice gains have someone to sell to. The public is drawn in by the much lower trading price of a high flying stock that they can now afford to buy. Many unthinking investors may even believe that they are getting a much better value now that the stock is trading at greatly reduced levels or that now it has a chance to magically fly back up to previous price levels. Netflix is a sell not a buy at these levels.

New Stock or ETF Recommendation: June 24, 2015

Recommend positions in TMV (3X leverage Short of 20+ year Treasury) or TBT (2x leverage Short of 20 year Treasury).  These instruments go up as the bonds decline.  The recent strong moves in interest rates with those gains being held onto make bonds appear to be poised to decline further (interest rates increase as the bond or note that they are associated with decreases).  Would expect some further consolidation of the prior move up in this current region before possibly moving higher.  Bonds typically move slower than stocks so applying leverage to a bond trade is not as risky as with a stock.

Correction:  I believe in a prior post I described the FXI China ETF as 3X leverage.  That is incorrect as FXI is an unleveraged China ETF for Chinese large Cap stocks.

Financial Market Analysis: June 24, 2015

Commodity and resource stocks including oil are typically late cycle movers in a bull market. This bull market is over six years old, which is at long end of a range for the length of a bull market and valuations are high. Government rigged statistics no longer support the narrative of a recovering economy and even the Fed announced after their last meeting in June that economic conditions may warrant keeping interest rates lower than normal in the longer run and for some time. So there is not much promise of the economy taking off and driving the stock market higher for any sustainable period after more than six years of money printing. The money printing inflated the bond, stock, and U.S. dollar currency (the dollar was indirectly inflated because the inflated U.S. stock and bond markets made the U.S. dollar still look like a safe haven compared to other regions) markets, but with little real economic growth to show for the huge amount of debt we have acquired in that time.  So I think it is safe to say we are in the late stages of this bull market.

That does not mean it will end in a few weeks but within a few months, the odds rise steeply. But before it ends, I think there is a good chance you will see the commodity and resource related sectors start moving up. As I have been saying in previous posts, there are signs in the market that these areas are bottoming. The final bottom does not look to be in quite yet and I think you will have to see the U.S. dollar start to decline to see these hard asset areas move up with real purpose. As I have said in an earlier post, one possible scenario is for the dollar to continue to move up since it is still viewed by many to be the safe haven currency in the world and there are many things in many areas of the world to be worried about. That is not to say that the commodity/resource sectors including precious metals could not start to move up with the dollar moving up. As Rick Rule, famed resource investor and founder of Sprott U.S. Holdings, said in a recent King World News interview, in the early days of the last gold bull market, gold started to move up strongly even though the dollar was still rising. In the early days of a major move it is not unusual to have confusing market signals to keep the majority confused and/or just because of a sudden major shift in the supply to demand ratio, possibly just due to significant price changes (due to major fiat currencies collapsing) without any big change in economic activity. That is the world we now live in, significant changes in markets are more likely to be due to the change or failure of some financial engineering mechanism or central bank move or misstep rather than due to any real change in economic activity. A lot of the resource markets have been in the doldrums for a few years now and many are probably selling their product below the cost of production. This leads companies to either shut down or decrease production or for more marginal businesses to go out of business. Iron ore is selling at 10 year lows for example. So this state of decreased production can contribute to explosive moves after making a bottom. As Mr. Rule said in that same interview, after a resource sector has been operating for a long time in an environment where they have to sell their products below the cost of production, then this creates the condition for the likelihood of an even bigger bull market move than normal because there is so little supply available in this type of market bottom.

Market Analysis: June 22, 2015

The financial markets in general trade on less volume during the summer months than during the rest of the year. So a few big players who might want to push the market in a certain direction, would find it easier to do during the summer months and particularly during days or parts of the day when volume is lower than normal. So sometimes in the summer or other low volume periods one may see movements in the markets that are hard to explain based on recent history, fundamentals, or other observations that lead to certain expectations. In addition to this phenomena, indicators, correlations to other markets, and other expected confirmation signals may be absent or delayed at critical turning points in a market, a sector, or a stock. This may be due to unexpected demand at a certain point in time which may trigger more demand with the only confirmation signal being the price movement itself. A corollary to critical turning points occurring at unexpected times (at least for the majority of market participants) is that the market is designed to fool the majority most of the time based on historical market evidence. Once the trend gets a head of steam going, then the historical or expected correlations and confirmations start appearing to help bring the rest of the market participants onboard to further fuel the momentum of the trend and probably to an even greater degree than the strong opening move. The primary signal that further fuels the trend that has started is the price action itself, especially if other market sectors or other markets look much riskier or are returning much less to investors in search of returns.

During relatively low volume markets as we have currently in U.S. stocks, large transactions or players can unduly affect the action of a stock or an entire market if the player can print money out of thin air like a central bank.  The central bank can also be helped by its agents such as the big banks to make things appear as they are not in reality because of the huge capacity to print money out of nothing.  In a grinding market  like this, you need to be very careful and pick your spots and targets carefully.  You do not want to get caught up playing short term because then you are competing against players who have you woefully outgunned for that type of market trading and the market is not moving in one direction long enough to take the risk.  At the same time, stocks are not like diamonds in that they are not forever either.

Interest Rates

Although the volume is not that low in the long term Treasury markets the liquidity does not appear to be there.  This is probably due to the big banks no longer participating as market makers in that arena due to the Dodd-Frank bill as well as few available buyers for the Treasuries being sold.  Another reason may be that the banks are fully aware of how risky the bond market is and they do not want to hold a large amount of toxic Treasuries in their accounts.  Interest rates have made a strong move up over the last few months and are holding on to their gains.  I expect some further consolidation here, but bond markets could easily go higher in an ill-liquid market.  The central banks will have to support the market by printing more paper to sop up these discarded Treasuries, most likely from foreign creditors.  There have been some unprecedented moves in bonds during the last year, most likely due to this illiquidity.   Similar occurrences have been observed in German Bunds and other Euro country bonds as well.  The European Central Bank and its EU constituents are playing the same game as the Fed and the U.S. government in running up huge debts and using its central bank to try to print its way out this debt mess they have created.  But the answer to solving a huge debt problem is not by taking on more debt on top of the huge existing debt load, especially when the economies supporting this debt do not warrant the amount of debt that already exists.  Needless to say, this kind of irresponsible and mad behavior is going to end very badly.

Financial Market Analysis: June 22, 2015

Continuing on the theme of my most recent two posts on the alternate scenario of the U.S. dollar going up because it is still considered the safe haven in the world, this would likely result in commodities going down including oil. Oil, as I have stated previously, is inversely correlated to the U.S. dollar. The Oil futures chart has been basically drawing a straight line across for the last several weeks holding on to its previous gains but unable to make further moves upward. What cannot move upward often goes down so I would not be surprised to see the oil price retest its recent lows again. This also suggests that the U.S. dollar would resume its prior movement to the upside (see my earlier posts for next dollar chart resistance areas).  Many of the commodity/resource related stocks and country ETFs I have recommended over the last 1.5 months would probably exhibit similar downside action before making a final bottom. As I have said previously, many of them look to be making a bottom but are not quite there yet. This would also fit in with my thesis of precious metals making a move downward below $1000, before they have a big reversal move to the upside.

Financial Market Analysis Update: June 21, 2015

In my last analysis post, I said a very likely scenario is that the U.S. dollar will continue to go down but after listening to a recent interview of Jim Rodgers, famed investor who co-founded the Quantum Fund, I have another very likely scenario to put out for thought. I have thought of and heard others espouse upon this scenario in the past but I was weighting my recent thoughts on the likely action of the U.S. dollar toward what I see in its chart as well seeing reports that would support the continued decline of the dollar from here. The new scenario is the U.S. dollar will continue to be viewed as the safe haven and continue to attract additional money flows. This will drive its value up still higher in comparison to other currencies. Technically speaking, the dollar is still in a bull market phase and could very easily through attracting additional money flows go up further. The next two significant resistance areas are its previous recent high of about 101 and then at around 120. Positive upward action in the dollar market towards these levels would probably also be a support if not an outright boost to the U.S stock market. The current turmoil in the European Union with Greece (possibly resulting in secession from the EU for Greece) could be a reason at some point to push the dollar back up, in an effort to seek more safety. In reality, the dollar has the same problems and more than most of these other beat up fiat currencies.  Also, the further rise in the U.S. dollar would support my thesis that the price of gold will fall below $1000 since these two markets are generally inversely correlated.  Another way of putting it is when the gold price is significantly rising, that is the result of a loss of confidence in the U.S. government and results in the declining value of the U.S. dollar.   This is because the only thing backing the U.S. dollar is faith in the U.S. government promise to keep the system operating reasonably well, at least for a significant portion of the participants in the system.

Financial Market Analysis: June 20, 2015

The stock market indices have continued their choppy action with a slight upward bias over the last week. The Nasdaq Composite and the Russell 2000 both made all-time new highs this week so all is well as far as the U.S. government narrative that the economy is still in the recovery mode. New sector highs this week included major banks (KBE), Healthcare (XLV), Biotech (IBB), and Healthcare Services (XHS). An article today by Zero Hero mentioned that the VIX put/call ratio is at extreme lows (which means a lot of the big players are expecting a serious stock market correction or at least heavily hedging their bets) which, historically, is a bullish indicator when sentiment is this negative. So for all intents and purposes, the bull market is still intact. Just do not look under the hood of this purported economic engine because all you will find is duct tape and chewing gum holding everything together i.e. Fed funny money, Fed manipulated low interest rates, and the Fed’s most favored customers acting as the Fed’s little elves/agents (big banks, big corporations, and hedge funds) in keeping the stock prices moving in the right direction despite the lack of legitimate economic activity much less economic growth. All of this innovative financial engineering is being done in the face of continued extremely high government spending further contributing to an already extremely high government debt. Ah, the powers of the printing press. No wonder the U.S. government goes to war or threatens nations with war if they do anything that would jeopardize the status of the U.S. dollar (made with the finest paper and ink available) as the world’s primary reserve currency.

The U.S. dollar continues to look heavy and has continued its recent decline on higher than average volume and is closely approaching the low made on 5/14/15 of 93.155. Between that low and around 91.54 is the next current range of support for the dollar. If it breaks through that then it looks like a quick trip to the 84.7 area is very possible. As I have written before, I believe the U.S. dollar will continue to decline although only time will tell. One possible fundamental reason for the current and continued decline in the dollar is that many creditors holding U.S. debt obligations may be cashing in their Treasuries while the U.S. dollar is at a relatively high price because they consider Treasuries as a high risk investment due the extreme debt burden the U.S. government has accumulated and continues to add to with abandon. This way the creditors get more bang for their buck (pun not intended) and can buy other assets with the dollars they receive for their Treasury sales that they perceive as more valuable and maybe even under valued at the present time such as precious metals, other hard assets, or make loans to businesses that have bright long term prospects. This type of behavior in the Treasury markets would put the dollar under continued pressure. This possibility is supported by continuing reports of China and Russia buying more gold and silver, investing in term long business enterprises with bright prospects, and decreasing their holding of U.S. Treasuries (recent reports of some of these items have been presented by Koos Jansen and Dave Krantzler). The continued fall in the dollar would favor hard asset (commodity/resource) type groups in the stock market.

I believe the precious metals group (gold and silver) as well as precious metals miners will have a relatively quick sharp decline before presenting a huge buy signal. For long term investors, the current range is fine for buying. Looking at long term charts, I believe gold will go below the psychologically significant $1000 before reversing and going sharply higher. Gold going below $1000 may scare some gold out of weak hands before the major reversal appears shortly after.  Also, gold going below $1000 keeps the U.S. government narrative of the U.S. dollar as king even as the dollar continues to decline as I expect.   This is my high probability scenario that is apt to change if the facts change.

A consequence of my purported reason of current Treasury sales as related to the decline of the dollar, is that longer term interest rates have pretty much held on to their recent gains and could continue to rise. This upward path would increasingly put pressure on government expenditures at a time when they can least afford it. To prevent interest rates from rising, the government (Fed) may print more dollars, as they would be the only buyer of Treasuries at this point (who wants to buy a debt obligation with little chance of being repaid their principle), thus further putting pressure on the dollar and hasten its decline.

This effect on the stock market would be positive initially, as I have pointed out in an earlier analysis, but when the dollar reaches around the 71 level (its previous all-time low), the financial system at large would be in jeopardy. Reaching the 71 level would be a continuing sign that the dollar is having its value inflated away just as most of the other major currencies have done over the last few years and are continuing to do.   And if interest rates continue to rise in unison with the depreciating dollar, then the negative effects for the economy will be compounded which could lead to significant political upheaval depending on the severity of economic conditions. I also have another indicator I am watching to help in timing the occurrence of a serious stock market crash, which I will go into later. This does not mean that all sectors of the stock market will do poorly. I have already pointed out which sectors I like in this environment and will continue to provide updates and times to close of any investments or trades. Some sectors are suitable for a portion of your assets while other sectors or stocks are suitable for trades on an intermediate level. I think we are getting close to a short term bottom in some stock market areas (such as FXI, China 3X leveraged ETF;YOKU & BABA, Chinese stocks) that would provide a good level for entry but we are not quite there yet.

Economic Essay: June 17, 2015

The U.S. economy has devolved from primarily a producer economy into a consumption economy over the last several decades.  This circumstance could not have occurred without the U.S. dollar being the world’s primary reserve currency since World War II.  A number of other constituent parts combined with the U.S. dollar hegemony during this period to create the biggest fascist state that history has ever known and all based on the USA being the lone standing power after World War II.  These include the increased power of the big banks, big corporations, military-industrial complex, and the growth of other big government agencies of power.  Yes, we did have the Soviet Union as the creditable threat, as historian Carroll Quigley would say, to justify the maintenance of a huge military and to create fear in order for the government to more easily manipulate and control the populace.  But the Soviet Union economically and as we later found out, militarily was no match for the USA. During this time, the U.S. government and their closely aligned big corporations had become the biggest unchecked block of power in the world and they constantly looked to take full advantage of that situation with little regard to the rights of other countries, entities, or its own citizens.  The U.S. fascist state looked to continually increase its empire at any cost to those who stood in their way or could not be bought off by the “funny money” it created out of thin air because it possessed the world’s primary reserve currency.  The U.S. dollar was backed by gold until 1971, when that became too much of a hindrance to the powers that be in their lust for power, that could only be fueled and supported by more paper money and so they abolished the gold backing of the dollar.  You see, parts of the world (the French for one) were slowly catching on to the profligacy of the U.S. government and started exchanging their paper dollars for U.S. gold, a hard asset with real value as opposed to paper.  The U.S. dollar was now backed by the full faith and confidence in the U.S. government along with the largest military in the world and a little side deal the U.S. did with Saudi Arabia, which required them to sell their oil in transactions denominated only in dollars.

The U.S. government did not just blossom into this overwhelming power overnight, although the result of World War II was a major impetus to their top billing on the world stage.  Most U.S. citizens have been indoctrinated to believe that this rise to rise to power is a good or even great thing.  But only for a relatively select few, because those in power have to have people to take advantage of or rule over for power to be profitable and enjoyable (only for the sociopath type minds).  Those in power want to stay in power, so they cannot have everyone freely competing in an open marketplace to improve their lot in life.  That would be too much of a threat to the status quo, so the populace at large just like the world at large must be cleverly and covertly controlled through the buying off of the people through social welfare programs, state indoctrination camps called public schools, propaganda called mainstream news, and government spokespeople and reports (more propaganda).  Other countries are bought off through foreign aid and promises of military protection.  Now if the carrot does not work, then the stick is applied through first covert means if possible, such as the CIA, clandestine military operations, and other secretive government agencies that do not look to attract too much attention to their activities except when they want to or have to put a positive spin on some of them if they are discovered.  If the US fascist government cannot accomplish their ends through covert means or if they need a reason to justify the existence of their huge “peacetime” military, which is basically a continuous operation, then a bigger, much more overt stick is applied.  This type of invasive aggression can be because the country has valuable natural resources, it does not want to continue using the U.S. dollar in its commercial transactions, it does not have nor want a central bank, or it is unwilling to cooperate with the always “good” (as promulgated in their propaganda and brainwashing activities) USA in whatever it feels like doing at any particular time because it’s the biggest, baddest, meanest, SOB in the world. The target of attack is also always demonized as a serious threat to humanity in an effort to make the U.S. government look like it is the “good guy”. Of course, the U.S. government could not get away with this masquerade without distributing copious amounts of paper money to both its citizenry and allies, as well as the always present potential use of force against anything or anyone that opposes its agenda.  This type of power structure is designed to keep a relatively few at the top at the expense of the many below as exemplified by the pyramid structure.  This system that the population at large has been brainwashed to support and be loyal to is akin to the slave worshiping and loving their oppressive master because the master may give you a nice bed to sleep in or reasonably good and plentiful food to eat or regular assortment of entertainment.  But in the meantime, the master and its corporate cronies will use you as a statistic in increasing their market share for its largely unnecessary consumer goods and pharmaceutical products due illnesses created by the master and it cronies.  They enslave you to their corporations, jobs, government dependencies, and an unquestioning respect for government through the use of debt, illness, fearmongering, propaganda, plenty of funny money, and strictly limited (and limiting) “education” process.  This is also designed to keep you from competing against the status quo in a widespread manner that would normally occur in free, open markets.  The system is designed to protect the status quo and the status quo will use all the power it has built up to do so while at the same time presenting a very nice picture to the public, that has little to do with the actual truth, about its activities and intentions. The irony of all this is the U.S. government, and any other government that follow similar methods, are perpetrating their own demise in this mean, ugly, and criminal process. The premises of their system is leading to self-destruction, slowly at first but quickly hastening as the end nears.  For all their extensively and excessively aggressive actions against citizens, countries, or other groups that they perceive either as their pawns to do as they wish to or foes to their agenda that they need to destroy, these central bank funded, fascist states are quickly reaching the limits of projecting their power that requires the further printing (it’s primarily digital creation) of paper money.  Because the system has lasted so long, most of the older and not so old generation is heavily vested in the current system as the primary or sole means of their support.  This makes the demise of the system in the U.S. very hurtful to many as well as basically buying their support for a system that is already obviously not working for a large number of people and that number will continue to grow to include many of the people within the system for whom it still appears to work for.

To go all the way back to the first sentence of the last paragraph, where I said the U.S. government did not blossom overnight into this overwhelming power, I just wanted to highlight a few events preceding World War II that incubated this monstrosity.  You have to start with the creation of the Federal Reserve, the U.S. central bank. Without its own independent source of funding, the U.S. government, or any government for that matter, would be much more limited in its power as well as much more representative of the people and its interests. Giving the government and its corporate cronies their own piggy bank where the money is created out of thin air, takes the power from the people and gives it to institutions and companies.  Instead of representing and responding to the interests of the people, governments and their corporate cronies look to use the people as pawns to accomplish its own goals irrespective of the effects upon the people, whether it be as soldiers for its wars, guinea pigs and externally (and unnaturally I might add) sickened recipients for its drugs, labor for its corporate/government jobs, and targets to justify the existence of various bloated government agencies.  And again, all of this is to ensure the protection and enlargement of the status quo against any competitive threats that would normally and naturally appear in a free, open market.  Another event that further benefited the continual enlargement and encroachment of big government into the everyday life of the American citizen was the Great Depression. There are a lot of details here and I am not an expert on this event, but suffice to say this allowed the U.S. government to institute a lot more, new government programs with the intent of making the government appear to be the savior of the people.  With all the machinations of the U.S. government apparatus, the nation did not emerge from its economic doldrums until World War II started, some 11 years later. Like many in government are now fond of saying, “do not let a serious crisis go to waste”.  The government (like some people or entities), to increase its footprint of power, likes to prey on people who are in a vulnerable state due to circumstances.  Fearmongering or demonization of a target are often used as tools to either induce/or further exacerbate that vulnerable state of mind or projecting the image that only the government is capable of reining in these targets, respectively. Anyway, the creation of the Federal Reserve central bank paved the way for the government and its cronies to basically rig the game in their favor at the expense of the people.  Once the U.S. dollar became the primary world’s reserve currency after World War II, that and being the sole military and financial superpower in the world, the capabilities of the fascist big government/corporate cabal were greatly enlarged.


After World War II, other events occurred that will eventually lead to the self-destruction of this system such as the huge decline in small businesses starting in the early 1950’s, the moving of much of the U.S. manufacturing base offshore, the continuing increase of already heavy economic and business regulatory burdens (especially for small, startup businesses) , the almost constant warmongering (both overtly and covertly), the huge expansion of federal, state, and municipal governments, the immense encroachments of government on individuals and their rights in just trying to navigate a normal life, and the buying off of large segments of the population through social welfare programs that do not contribute to the progress of the individual nor to the productivity of the country. These events and actions not only lead to the self-destruction of the system and its accompanying economic downturn (probably collapse but I don’t want to be accused of fearmongering) but also to large societal problems and unnecessary social tensions. When the government, its central bank, and its relatively few favored corporations (and support contractors) become the major force in an economy, you do not have a healthy, robust, diversified, and vibrant economy that is capable of quickly bouncing back from normal downturns in a typical business cycle. The business cycle has become so distorted and extreme, on both the upside and downside, due to the funneling of make believe paper money into a relatively few favored hands. A Zero Hedge article the other day stated that only 60% of the U.S. population is fully employed, which I believe is much closer to the truth than the government rigged numbers that you get on unemployment. The 40% not fully employed take into account those that are only working part-time as well as those listed as no longer in the work force due to not being able to find a job for a long period of time.  Since we are now supposedly in an economic recovery, how many of those 60% will be negatively affected in the next economic downturn? And since we are already in the sixth year of this “recovery”, the next downturn is not far away based on historical records (not government rigged statistics). And if you add to the next economic downturn, the possibility that the U.S. dollar will no longer be the world’s primary reserve currency, then how much more severely will the U.S. economy be affected? The U.S, economy is now largely a consumer economy but without the U.S. dollar being the primary world reserve currency, the ability to consume in the future will greatly diminish, as it already is for large segments of the population. Without the U.S. dollar being the world’s primary reserve currency, will the U.S. government be able to continue to spend (print paper money) and support large segments of its population through government jobs and social welfare programs? The prospects of the U.S. dollar retaining its unchallenged supremacy as the world’s primary reserve currency does not look promising as the government continues to run up huge amounts of debt. The only buyer of its debt obligations is its own central bank, which is a strong indication of the lack of credit worthiness of the U.S. government and as such is a direct reflection on its currency. The only reason the U.S. dollar looks relatively strong internationally is that most of the other major countries/regions are just as credit unworthy as the U.S. government. In effect, it is a race to the bottom for most of these fiat currencies. Just because the dollar is strong at the moment on a superficial price scale does not mean it is time to get comfortable.  It just means that all of these countries are operating from the same corrupt, criminal, and failing playbook but the US dollar due to its world primary reserve status will be the last to go, but it will quickly bring up the rear when it hits bottom.  So being largely a consumer economy where the government is also a huge force in the economy when you no longer have the world’s primary reserve currency, is a big fat zero.   The government and it corporate cronies have systematically and purposely destroyed a once flourishing, diversified, and vibrant (yes, that almost seems like ancient history now) economy in quest for more power, more profits, and empire building at the expense of the people of the USA.  My intent in this essay was to give you a quick overview on how we got here and what being here actually is and means.  Books have been written on this and various parts of this subject matter so I have just begun to scratch the surface.  Look to books by Murray Rothbard, G. Edward Griffin (The Creature of Jekyll Island), John Perkins (Confessions of an Economic Hitman), Carroll Quigley (Tragedy and Hope), Robert Chalmers Johnson (Blowback), John Whitehead (Battlefield America: The War on the American People), and others for further details as well as how the world really works.