Tuesday, January 1, 2013

THE SHAPE OF WAR IN 2013

Maybe you didn't know that you are already in World War 3. Its been going on for several decades and is now accelerating. Its been a low level infiltration until the last few years, but has now been ramped up into a full frontal assault. There will be a "nuclear" event that signals the end to this war, but for now the war is being fought in the developed countries digital currency rooms. This is to maintain control of the developing country's labor and precious resources through a carefully crafted mechanism of various currencies and paper products designed to "control" and "distort" markets. Of course for most of us this is a form of "soft war". Its barely perceptible to the "average" man on the street. There are various small fires that alert one to problems within this war such as the oil spike to 145 in 2008 and of course the slow ramp up on food commodities but overall the analogy of boiling a frog seems to fit quite nicely to this game.

Years ago decisions for market control were implemented with refinement an ongoing process. Now we are at a point in the system where many very knowledgeable pundits question whether this system of market control can be maintained. How long can developing countries rich in natural resources allow their commodities to flow into the hands of developed countries just on the promise of a digital key stroke backed by a paper promise that has been openly stated to be in a world wide debasement race. Framing this in another way....why would any country take billions in dollars for oil that is not being made anymore for paper dollars that are being digitally printed by the trillions each year....and digital Yen that is being counterfeited now by the trillions.....and Euros.....well....you get the picture.  Someone is starting to get nervous holding these currencies and that someone is starting to ask questions on just what to do with all of these FRN's ..... after all they are essentially worthless on a long enough timeline. Now here is where it gets interesting.....the "timeline".  As long as you have CONfidence that you can get out of your FRN's before the music stops or the "timeline"  evaporates then the game can go on. Of course we are currently enforcing this reserve dollar game with our numerous military interventions ( see 800 military bases in 145 countries) but that has now reached an extreme and chaos seems to be testing the limits of this process.

So what happens as CONfidence begins to ebb? Well of course the seller begins to ramp the price up in a stagflationary mechanism that begins to even further strain the social infrastructure holding fragile countries together. After all how does a country with 90% of its populace spending 70% of its family income on food staples manage to absorb a 50% rise in a staple like rice for instance? Oh wait! That's already happening just look at what happened to Egypt after Fed money printing. Look at what is happening now in places like Greece with food lines. This is the war already here. HOW LONG can we keep printing currency in "developed" countries to pay for our bloated appetites. HOW LONG can we TAKE and just pay with counterfeited paper. What happens when the holders of this paper realize that they cannot turn around and receive an equal value with their growing piles of FRN's? We think we are in a Currency WAR with other developed countries to debase our currencies faster so that we can make our manufactured goods and products more affordable for our current account deficits and GDP......but the real game is when resource holders say ENOUGH is ENOUGH! In other words we have a CONfidence problem. Simply put the PONZI is over and now nature takes over. How much longer can the shell game go on? I do not have a clue, but its not indefinite so play the paper game with this admonishment......it WILL end and you may have very little warning.

21 comments:

  1. Kabuki theater.....and not even that good of Kabuki..........so what's next.......hmmmmm.....next crisis will be in exactly 5 days.....stay tuned

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  2. This was all about loading up the shorts for another squeeze..... A large amount of puts were loaded last week//poooof

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  3. carefully controlled move in miners which is not surprising....not gonna let that price blow out but watch the last half hour today...if they let it go then nice few days ahead

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  4. What's the current best in breed miners? PPP still a good catch?

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    1. AUMN AUY HL SSRI To name a few and yes I still own some PPP we may get one last good near term shake out but the beatdown could be over

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    2. I own around 20 miners Hubz so picking a fav is like choosing between your children....some are more speculative plays and are hard for me to recommend....such as BRD PGZ CGR and on

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    3. Thanks for the recomendations. Have some spare cash and zero miners. Already have physical. Thinking this year we get the nice moves up but who the hell knows. Don't want to potentially miss out on it.

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  5. Haven't looked at GPL in months. Good lord they smashed it into the ground.

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  6. Ki - with you bright, cheery, optimistic outlook I keep thinking you need an outlook reset. I think reading "Revelations" in the Bible will cure that bright outlook of yours. Hehehehe

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    1. hey inlet....glad to see you're getting back to your irascible old self.......you had us worried for you last year......gl and get ready to eat lots of Spam

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  7. Kli - Mar-Jul were tough. Lots of time in the hospital, but the pacemaker finally kicked in and I feel good now. Walk 2 miles every morning and about got my glucose back under control (A1C now 5.5) after spike following surgery. Not sure about the spam - may have to graze with the cattle if my sugar levels spike.

    After last year priorities are different - can deal with anything now.

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    1. Grrrreat! I know this sounds repetitive and "too" easy but the exercise is the key.....get a stationary bike like the schwinn air dyne.......and alternate or supplement it with walking

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    2. I second that! Good to hear your feeling better. Nice call on silver..looking at your cycle dates it looks as though Feb. would be best to be in cash...

      I've been trying a lot of gluten free foods and they are pretty darn good. Organic veggies and fruits just make it even better....

      Don't forget a good massage to help ease the pain...cheers and happy new year.

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  8. Spec play wise anything know anything about Cayden Resources?

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    1. too illiquid for me and no i can't tell enough otherwise to comment.....that's too far out on the limb for me Hubz

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  9. Hello everyone.

    So what's the real reason for inaction here??
    Just a lack of powerful friends??

    http://jessescrossroadscafe.blogspot.com/2013/01/house-republicans-refuse-to-bring.html

    Inlet, I'm happy for you that you are better. It was a long haul,...and you made it.

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  10. Sandy help for NY/NJ is over $60 Billion. That's almost a year's tax increase we got.

    Inlet, good to see you here.

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  11. Gold flat today? C'mon, 4 trillion just added to the US deficit 4/16 = 25%,
    1.25 X $1,680 = $2,100. That's how I see it.

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  12. Honestcreditguy - don't ignore shorter cycle topping mid Jan, gains after mid Jan will be offset to a substantial degree as the shorter cycle goes down.

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