Never Underestimate the Power of Stupid People in Large Groups
Johnny Silver Bear

What can be said about the current state of the American stock market? All numbers coming from the government are false and misleading. The economy is in a shambles. If and when the Federal Reserve ceases its bolstering of the markets with money out of thin air, those markets will collapse. I predict that the collapse will be sudden, leaving most investors hanging out to dry. Depending on a criminal cartel to insure your future is moronic.

The Fiscal Cliff is not only a distraction. The "fiscal cliff" is a myth.

Instead, what we are facing is a descent into lawlessness.

Wikipedia notes:

In many situations, austerity programs are imposed on countries that were previously under dictatorial regimes, leading to criticism that populations are forced to repay the debts of their oppressors.

Indeed, the IMF has already performed a complete audit of the whole US financial system, something which they have only previously done to broke third world nations.

Economist Marc Faber calls the U.S. a "failed state". Indeed, we no longer have a free market economy … we have fascism, communist style socialism, kleptocracy, oligarchy or banana republic style corruption.

Yes, it is an excuse to milk the middle class for more taxes, but it fails to address the bigger problem. The global economic system is broken, almost beyond repair. That is the conclusion being pedaled by the eminent Boston Consulting Group in a new paper headed 'Ending the Era of Ponzi Finance'.

Boston Consulting Group comes to Armageddon conclusion about a coming global economic reset.

These are hardly flat-earth, conspiracy theorists. BCG has most of the world's top companies on its client list. It says:

- The global debts are now insoluble and unworkable. Therefore you have to acknowledge that the debtors will never be repaid and countries and companies will default.

- The state should be downsized and immigration encouraged. The retirement age must go up and benefits be slashed.

- Where governments should act is in spending on infrastructure, not consumption. Energy efficiency should also be promoted.

It's tempting to say run out and buy as much as you can on credit and then default. Yet what works for nations may not work for individuals who might just find themselves bankrupt, as they would not keep the assets bought on credit in a crash.

Actually you want to be debt-free in case interest rates sky rocket. How do we become debt free? What do you have that you don't really need? What do you have that you don't even use? All assets will plunge in value relative to gold and silver – if past precedents of previous resets is followed – so that is what you need to own to come out on top.

Otherwise it is hard to see much good coming out of this reset for most people. Anybody living in a credit bubble with a lifestyle sustained on cheap money will suddenly be subjected to a very painful wake up call.

We all have a responsibility to insist on the vigilant protection of our Liberties. This, given the present state of affairs, means that we must protect them ourselves. Consequently, protecting our rights and Liberties also means protecting the rights and Liberties of our neighbors, even if they remain, metaphorically, asleep. My attempts to wake you up to the tyrannies and misgivings of the criminal cartel that is calling the shots is not selfless, but rather tempered with selfishness. I need lots of help!

From Tom Chatham:

With all of the discontent with the establishment in Washington, this should be a time to reflect on the type of government we have and why it works the way it does. We should also reflect on the reasons our government is set up the way it is. Far too many people have abdicated their power and let the government run free of the constraints initially placed on it and we are now paying the price for that lapse of judgment. A young child may not understand or care about the repercussions of health and tooth decay and when allowed to run free in a candy store can do a great deal of damage to himself if it is allowed to continue every day for years. These repercussions will be felt by the child over time but will also exact a price from the parent in medical costs and disrespect to authority over time. We as a country have let the public servants run free for so long that they now consider it their right to do as they please and we will have to pay the price for it.

Our nation was set up with checks and balances to insure no one branch would get out of control. Each branch, Executive, Judicial and Legislative, acts as a regulator on the other branches and stops any blatant abuses of power before they cause irreparable harm to the nation. At least that is how it is supposed to work. But, what happens when the three established branches of government are all corrupted and act in unison to usurp power and take actions that will ultimately cause great harm to the nation and its people?

The metals markets have been generally disappointing of late, trading sideways. With the giant bullion banks (JP Morgan Chase and Goldman Sachs) breaking security laws with impunity, due to lack of regulation, those of us who are silver stackers are being blessed with bargain basement prices. Russia and China are accumulating as much as they can without tipping their hands. A Comex default is in the wind, and such an event will trigger a unprecedented event.

All bubbles are also powered by two distinct emotional states, fear and greed. Each bubble is obviously different, but there are always similarities. Many readers of "the Bear" have already participated in the first two phases of the present PM Bubble. When the general public finally wakes up to the criminal scam being perpetrated by the Fed, it will initiate the mania phase. I believe that this event will take place this year. For the purpose of discussing the Precious Metals arena, simplistically, four phases can be identified:

1. Stealth. This phase, in the current precious metals class, started in 2002, when I started "the Bear" and silver was $3.50 an ounce. Those who understood the new fundamentals realized an emerging opportunity for substantial future appreciation. So the "smart money" got invested in this asset class, often quietly and cautiously. This category of investor tends to have better access to information and a higher capacity to understand the wider economic context that would trigger asset inflation. Prices gradually increased, but went, pretty much, unnoticed by the general population. Larger and larger positions are established as the smart money started to better understand that the fundamentals were well grounded and that precious metals were likely to experience significant future valuations. The stealth phase ended in 2007.
   
   
2. Awareness. As many investors started to notice the momentum, they brought additional money in and pushed prices higher. However, because of the prevalence of naked short sellers, a "Bear Trap" was sprung and an almost year long correction ensued. This lasted until 2008. There was an attempt to define this period as a short-lived sell off phase taking place as a few investors cash in their first profits. I believe it was criminally motivated. Today we are three quarters through the awareness phase. The smart money is continuing to take this opportunity to reinforce its existing positions. As a member of our inner circle,we will help you become educated in the nuances of the markets and become part of the "smart money". In the last stage of this phase the media will start to notice with positive reports about how this new boom is benefiting the economy by "creating" wealth.
   
   
3. Mania. Everyone will notice that prices are going up and the public will jump in for this "investment opportunity of a lifetime". The expectations about future appreciation will become a "no brainer" and a linear inference mentality will set in; future prices will be thought of as an extrapolation of past price appreciation, which, of course, goes against any conventional wisdom. This phase, however, will not be about logic, but about psychology, the psychology of greed. Floods of money come in, creating even greater expectations and pushing prices to stratospheric levels. The higher the price, the more investments pour in. Fairly unnoticed from the general public caught in this new frenzy, the smart money as well as many institutional investors are quietly pulling out and selling their assets. At this point, you too will need to prepare to deploy your "exit strategy". The market continue to become more exuberant as "paper fortunes" are made from regular "investors" and greed really sets in. Everyone tries to jump in and new entrants have absolutely no understanding of the market, its dynamic and fundamentals. Prices are simply bid up with all financial means possible, particularly leverage and debt. If the bubble is linked with lax sources of credit, then it will endure far longer than many observers would expect, therefore discrediting many rational assessments that the situation is unsustainable. The mania stage could last for years. At some point statements will be made about entirely new fundamentals implying that a "permanent high plateau" has been reached to justify future price increases; the bubble will be about to collapse. Obviously, you will have known prior to the collapse and will have liquidated your holdings.
   
   
4. Blow-off. A moment of epiphany (a trigger) arrives and everyone roughly at the same time realize that the situation has changed. Confidence and expectations encounter a paradigm shift, not without a phase of denial where many try to reassure the public that this is just a temporary setback. Some are fooled, but not for long. Many try to unload their assets, but takers are few; everyone is expecting further price declines. The house of cards collapses under its own weight and late comers (commonly the general public) are left holding depreciating assets while the smart money has pulled out a long time ago. Prices plummet at a rate much faster than the one that inflated the bubble. Many over-leveraged asset owners go bankrupt, triggering additional waves of sales. There is even the possibility that the valuation decline overshoots the long term mean, providing a significant buying opportunity. However, the general public at this point considers this sector as "the worst possible investment one can make". This is the time when the smart money starts re-acquiring assets at low prices.

Energy

The use of corn ethanol for fuel is a very bad joke. Not only is it a horrendous waste of food when people all over the world are starving, it is also horrible for your car's engine.

From Hugh Pickins:

About 80 percent of the gasoline consumed in the U.S. is blended with ethanol, primarily with a 10 percent mix of ethanol, generally derived from corn.

Now Kate Sheppard writes that the Environmental Protection Agency has approved a new policy that will allow states to raise the blend to up to 15 percent ethanol (also known as E15), approved for use for cars and light trucks from the model year 2001 and later.

A few weeks ago, AAA issued a statement saying that the EPA's new policy creates the 'strong likelihood of consumer confusion and the potential for voided warranties and vehicle damage.'

AAA surveyed vehicle manufacturers, and found that only about 12 million of the 240 million vehicles on the roads today are built to use E15 gasoline.

The EPA will require that gas pumps with E15 bear a warning sign noting the blend and that it is not recommended for cars older than the 2001 model year. But what happens if you accidentally use it?

'Nobody really knows what negative effects [E15 is] going to have on the vehicle,' says Brian Lyons, Toyota's safety and quality communications manager.

'We think that there needs to be a lot more study conducted to make sure there are no longer term effects on the vehicle. So far everything we've seen says there will be.

' The concern is that repeated, long-term exposure could cause the higher-alcohol-content fuel to degrade engine parts like valves and cylinder heads — which could potentially cost thousands of dollars to replace.

Gas station owners don't like it very much either, because they'd likely have to upgrade their equipment to use it. Nor are environmental groups big fans of the EPA's decision, arguing that increasing the use of ethanol can drive up food prices, and isn't the best means of reducing our reliance on foreign fuels. The ethanol lobby is the only group that really seems to like the new rule.

We've force fed a fuel into every American's car that benefits Archer Daniels Midland, a few thousand corn farmers and ethanol refiners, at the expense of virtually every other American.

The Fed has painted itself into a corner. "Bubbles" Yellen knows that she cannot continue to keep the bubbles inflated, if bond prices continue to tank as the buyers wise up to her shenanigans. The bond market is huge compared to the stock market. In fact, it is way too big to be controlled by any one entity. It is controlled by speculators, which include countries like Japan, China, India, and Russia, among many others.
 
No one, who has a clue, should be interested in acquiring depreciating assets. Falling bond prices are deterring domestic demand, and much more importantly foreign investment capital. In order to attract that investment capital, the FED must raise interest rates. When they raise the rates, bond prices will fall, presenting a real "Catch 22". The only way to keep this from happening all at once, (key words; at once), is to allow the stock market fall as they raise interest rates. That will be easy as they have been artificially holding it up, through the use of the quasi-legal repo-pool, for the last eight years. As investors panic and dump their equities, they will seek 'safe haven' in the bond market, and in gold and silver. That will keep the bond market artificially propped up for a little while. Of course the sheeple still holding stocks will be big losers.

Get out of equities.

After the stock market falls. the bond market will follow, and when the bond market implodes the decimation of the dollar is going to blow the economy to bits. This is not a matter of if, it is just a matter of when.
 
Because the Fed has failed to responsibly raise rates before now, I can only assume that they will not raise rates until they are forced to. This will, IMO, bring on the worst case scenario, hyperinflation.

I could go on for days about how evil the Federal Reserve is. Like my darling wife use to say: "Don't get him started." Instead I'll leave it, this week, to Mr. Schooner;

From Jonathon Schooner

The first misconception that most people have is that the Federal Reserve Bank is a branch of the US government. IT IS NOT. THE FEDERAL RESERVE BANK IS A PRIVATE COMPANY. Most people believe it is as American as the Constitution. THE FACT IS THE CONSTITUTION FORBIDS IT'S EXISTENCE. Article 1, Section 8 of the Constitution states that Congress shall have the power to create money and regulate the value thereof, NOT A BUNCH OF INTERNATIONAL BANKERS! Today the FED controls and profits by printing WORTHLESS PAPER, called money, through the Treasury, regulating its value, AND THE BIGGEST OUTRAGE OF ALL, COLLECTING INTEREST ON IT! (THE SO-CALLED NATIONAL DEBT). The FED began with approximately 300 people or banks that became owners, stockholders purchasing stock at $100 per share - the stock is not publicly traded) in the Federal Reserve Banking System. They make up an international banking cartel of wealth beyond comparison. The FED banking system collects billions of dollars in interest annually and distributes the profits to its shareholders. The Congress illegally gave the FED the right to print money through the Treasury at no interest to the FED.

The FED creates money from nothing, and loans it back to us through banks, and charges interest on our currency. The FED also buys Government debt with money printed on a printing press and charges U.S. taxpayers interest. Many Congressmen and Presidents say this is fraud. Who actually owns the Federal Reserve Central Banks? The ownership of the 12 Central banks, a very well kept secret, has been revealed: 1. Rothschild Bank of London 2. Warburg Bank of Hamburg 3. Rothschild Bank of Berlin 4. Lehman Brothers of New York 5. Lazard Brothers of Paris 6. Kuhn Loeb Bank of New York 7. Israel Moses Seif Banks of Italy 8. Goldman, Sachs of New York 9. Warburg Bank of Amsterdam 10. Chase Manhattan Bank of New York.

These bankers are connected to London Banking Houses which ultimately control the FED. When England lost the Revolutionary War with America where our forefathers were fighting their own government, they planned to control us by controlling our banking system, the printing of our money, and our debt. The individuals listed below owned banks which in turn owned shares in the FED. The banks listed below have significant control over the New York FED District, which controls the other 11 FED Districts. These banks also are partly foreign owned and control the New York FED District Bank: First National Bank of New York, James Stillman National City Bank, New York, Mary W. Harnman, National Bank of Commerce, New York, A.D. Jiullard Hanover, National Bank, New York, Jacob Schiff, Chase National Bank, New York, Thomas F. Ryan, Paul Warburg, William Rockefeller, Levi P. Morton, M.T. Pyne, George F. Baker, Percy Pyne, Mrs. G.F. St. George, J.W. Sterling, Katherine St. George, H.P. Davidson, J.P. Morgan (Equitable Life/Mutual Life), Edith Brevour, T. Baker.

How did it happen? After previous attempts to push the Federal Reserve Act through Congress, a group of bankers funded and staffed Woodrow Wilson's campaign for President. He had committed to sign this act. In 1913, a Senator, Nelson Aldrich, maternal grandfather to the Rockefellers, pushed the Federal Reserve Act through Congress just before Christmas when much of Congress was on vacation. When elected, Wilson passed the FED. Later, Wilson remorsefully replied, referring to the FED, "I have unwittingly ruined my country". Now the banks financially back sympathetic candidates. Not surprisingly, most of these candidates are elected.

The bankers employ members of the Congress on weekends (nickname T&T club -out Thursday...in Tuesday with lucrative salaries. Additionally, the FED started buying up the media in the 1930's and now owns or significantly influences most of it. Presidents Lincoln, Jackson, and Kennedy tried to stop this family of bankers by printing U.S. dollars without charging the taxpayers interest. Today, if the government runs a deficit, the FED prints dollars through the U.S. Treasury, buys the debt, and the dollars are circulated into the economy. In 1992, taxpayers paid the FED banking system $286 billion in interest on debt the FED purchased by printing money virtually cost free. Forty percent of our personal federal income taxes goes to pay this interest. The FED's books are not open to the public. Congress has yet to audit it. Congressman Wright Patman was Chairman of the House of Representatives Committee on Banking and Currency for 40 years. For 20 of those years, he introduced legislation to repeal the Federal Reserve Banking Act of 1913. Congressman Henry Gonzales, Chairman of a banking committee, introduced legislation to repeal the Federal Reserve Banking Act of 1913 almost every year. It's always defeated, the media remains silent, and the public never learns the truth. The same bankers who own the FED control the media and give huge political contributions to sympathetic members of Congress.

THE FED FEARS THE POPULATION WILL BECOME AWARE OF THIS FRAUD AND DEMAND CHANGE. We, the People, are at fault for being passive and allowing this to continue. THE FEDERAL RESERVE BOARD, A GOVERNMENT BOARD, HAS CHEATED THE GOVERNMENT OF THE UNITED STATES AND THE PEOPLE OF THE UNITED STATES OUT OF ENOUGH MONEY TO PAY THE NATIONAL DEBT SEVERAL TIMES OVER. The depredations and the iniquities of the Federal Reserve Board and the Federal Reserve banks acting together have cost this country dearly.

They are private credit monopolies which prey upon the people of the United States for the benefit of themselves and their foreign customers; foreign and domestic speculators and swindlers; the rich and predatory money lenders. This is an era of economic misery and for the reasons that caused that misery, the Federal Reserve Board and the Federal Reserve banks are fully liable. Half a million dollars was spent on one part of propaganda organized by those same European bankers for the purpose of misleading public opinion in regard to the Federal Reserve Bank.

Financial Survival

Buy anything, buy gold, buy silver, buy land, buy silver, buy commodity stocks, buy silver, buy diamonds, buy silver, buy a '56 Chevy. Buy any damn thing but get out of dollars!

If you can't think of anything else, you might consider buying some more silver...

Live within your income, or below it, if possible. The only way that this economy will recover is by increasing our rate of savings. Today’s rate of household savings has dropped to .4% from 7.7% in 1992. We need to resurrect the virtue of thrift.

EverBank’s FDIC-insured World Currency Deposit Accounts and CDs – denominated in any of the world major currencies, including the euro, Swiss franc and New Zealand dollar – offer you an incredibly simple and efficient way to invest in to many attractively priced currencies.

Simply exchange your dollars for the currency or currency basket of your choice, and receive interest rates several times as high as those offered on dollar deposits.

Or for more information call 1.888.882.EVER (3837) and remember to mention the "Silver Bear Cafe" when applying!

Eliminate as much debt as possible, especially “variable rate” debt, such as credit cards and lines of credit. Interest rates will be rising, so the elimination of debt offers a “real return” of escaping rising rates by creditors.

Get some control over some fresh water.

If you are depending on Social Security, stop.

Follow the course opposite to custom and you will almost always do well...

Its not what you don't know that will screw you up, it's what you know that is wrong. The spin you hear from the mainstream media is intended to mislead you. Open your eyes and face the future. If you leave your head in the sand and ignore it, you are only leaving your butt exposed for the world to kick. This all may sound like gloom and doom, but when you get a handle on what is going to happen, you will have a future filled with opportunity. Fortune favors the Informed.

More next week...

May the Great Spirit be with you always,

Johnny Silver Bear
Chief cook and bottle washer, The Silver Bear Cafe

Kenneth Parsons, aka Johnny Silver Bear, is an IT professional in Texas and the President of Silver Bear Communications, Inc. Mr. Parsons has been involved in the advertising and promotion industry for over twenty-five years. He is the editor of the Silver Bear Cafe and, as such, is responsible for shaping the content of "The Bear". Mr. Parsons has served as CEO for Fiberscape Communications, Inc., a web site development / hosting and streaming multi-media company in Richardson, Texas since 1997. He is a Jeffersonian and a passionate supporter of the U.S. Constitution. He is also an outspoken advocate of gold money and equal tax rates. You can contact Mr. Parsons with questions or comments via email at [email protected]