Wednesday, April 24, 2013

Which economic theory allows the demand to increase while the price falls?


In which version of Economic Theory does the demand of a commodity increase, while both the supply and price drop? In classical economic theory this is considered impossible. (See below for answer). That is because classical economic theory is at best incomplete and it does not adequately account for presence of force, fraud and coercion in supposedly "free market" systems. Someone actually made a theory about this a long long time ago which fits perfectly the times we are in. The theory is called "Gresham's Law" and is embraced by those (like myself) who follow the Von Mises or Austrian Economic Philosophy. According to Wikipedia Gresham's Law encompasses the following:

"Gresham's law is an economic principle that states: 'When a government overvalues one type of money and undervalues another, the undervalued money will leave the country or disappear from circulation into hoards, while the overvalued money will flood into circulation.' It is commonly stated as: 'Bad money drives out good'.

This law applies specifically when there are two forms of commodity money in circulation which are required by legal-tender laws to be accepted as having similar face values for economic transactions. The artificially overvalued money tends to drive an artificially undervalued money out of circulation and is a consequence of price control."

In other words, by de-coupling gold and silver from the US $, which ocurred in the 1960's, governments actually encouraged the hoarding of physical gold and silver and the spending of US $. Since then for the most part, the gold just sat around in vaults while people traded gold and silver notes instead instead of moving the actual physical commodity around and thus there was little "demand" for paper gold, which were just promissory notes to deliver the actual goods - only recently have institutional investors become interested in these paper IOU's. But when people no longer believe those notes are backed up by the real goods, as is the case now, what happens? The price of paper gold plummets as people try to cash in their Gold Notes for the underlying physical en masse which depletes the supply and decreases the "price" in a seeming act of gravity defiance. In a more philosophical sense, Gresham's Law has also been taken to mean that "fake" investors drive out real investors, ponzi schemes drive out genuine wealth creation. It took a long time for this process to grow to where it is today. Today what we have is a market rigged by the Central Banks attempting to short-sell gold and silver PAPER to drive the price down artifically through the act of "naked short selling" (please educate yourself on what this means and how it impacts the market - good video here:

I have been reading many articles on the big drop in "gold" (aka GLD) and "silver" (aka SLV) prices which are really just the paper representation of the underlying asset. Most of us "gold bugs" and "silver bugs" have been saying for a long time that the paper price has become unhinged from the underlying asset price as the supply of both physical gold and silver plummets which means the central banks are selling massive "naked short" positions (i.e. "IOU's" or promises to deliver physical gold/silver). All indicators suggest that the demand has actually increased exponentially for the underlying physical assets of Gold and Silver which means the price should be sky-rocketing when in fact it is plummeting. This is actually a bad sign which is explained in the following article:

10 Signs The Takedown Of Paper Gold Has Unleashed An Unprecedented Global Run On Physical Gold And Silver

"According to today's data from the US Mint, a record 63,500 ounces, or a whopping 2 tons, of gold were reported sold on April 17th alone, bringing the total sales for the month to a whopping 147,000 ounces or more than the previous two months combined with just half of the month gone.....

In the U.S., all of the dealers I talk to are reporting huge demand and brisk buying. Silver in any form is quite hard to come by unless you want to pay premiums of 20%+ per ounce above spot price. Delivery times are 5 to 6 weeks out now – that's an unusual situation.  If this recent slam was designed to scare people away from gold, it did not have that desired outcome; in fact, just the opposite."

In fact I have been getting emails from Gold and Silver Dealers I have worked with in the past (hint hint) that they are running out of inventory. That is because we have entered the final phase of "Gresham's Law" or "Gresham Dynamics" where by paper currencies are being devalued and inflated. The bad money is driving out the good. The fake investors are driving out the real ones. The signs are everywhere. The stock market will see a short lived burst followed by huge losses in the coming months and years. Even the large institutional investors like Warren Buffet are getting out. Yesterday's "flash crash" in the Dow as a result of the hacked Associated Press Article that falsely claimed the US White House had been attacked sent the market plummeting briefly until it was corrected. At that point precisely supply and demand did not meet as bids and asking prices separated and the market froze up - that's  because the market trade is almost 70% algorithmic or robotic high frequency trading or "wash trades" which is basically a giant game of hot potato that makes it look like trading volume is high when in reality it's mostly algorithmic hedge fund front running brief price spikes as these programs instantaneously scan headlines for pessimistic or optimistic news. Sounds crazy I know but it's entirely real. I can not go into detail to explain how all of this works to you folks but it is VITALLY important you understand that it exists and does not work in your best interests as an investor.

My advice on Gold and Silver began several years ago when it was dismissed as paranoia and quackery. The Mainstream US Media continues to promote their idiocy in spite of mountains of evidence to the opposite and now seems complicit with the Central Banks in their effort to smash the price in order to increase confidence in the US $ which is on the verge of being dumped globally (Euro will go first, then US $). US companies are not hiring in spite of the labor stats being presented - the net number of labor participants in the work force has barely changed since 2001 - how is that possible if unemployment is decreasing? It's because people are just plain giving up and leaving the work force so they don't get counted - what a farce. Personally I am tired of this game of cat and mouse.

I am preparing for the largest market collapse in our lifetime this year and I would suggest others prepare for the same....

Saturday, April 13, 2013

The Place Beyond the Pines: Life in the Waning Years of the American Empire

Let's face it, right now we are in a "film slump" with very few movies of any quality or meaning being released however there are still a few goodies that pop up every now and then.  One of those films is "The Place Beyond the Pines" which I just saw today. The namesake of the film is apparently the Native American meaning of Schenectady where the the film was shot. For those of you who are familiar with this area, you will find the film is very much connected to the real life struggles of poverty, corruption, bad economics and crime that seems to have entrenched itself in that region. If you need more background on the region I suggest reading some of Jame's Howard Kunstler's work (

During the spring and summer of 2012 when I was still living in the Hudson Valley Region of New York (Near Albany/Schenectady) I had heard stories and rumors about a new drama movie being filmed in downtown Schenectady starring Eva Mendes, Bradley Cooper and Ryan Gosling. This year I finally learned that the film "The Place Beyond the Pines" was the one rumored about last year so in remembrance of my former region I decided to watch it. I have to say, I was surprised, shocked and pleased all in one.

The film begins with a seemingly simple plot where the main character Luke Glanton (Ryan Gosling) is a locally-famous motorcycle stuntman working in a traveling act for state fairs. While the fair is in Schenectady, Glanton is visited by his ex-lover, Romina, and learns that he is the father of her son. Glanton quits his job as a stuntman to stay in town and provide for his child, but Romina does not want him in the child’s life, as she has become involved in a relationship with another man, Kofi.

However, things turn dark pretty quickly. Initially Luke meets a man named Robin while out riding his motorcycle in the woods and eventually begins to work for him doing various kinds of manual machine work. Later on a sort of wager is placed when Luke mentions he needs to make more money. Robin suggests he rob a bank utilizing his motorcycle skills. At first Luke is offended and taken aback but Robin suggests he has already successfully accomplished this feat years before and that Luke of all people would be quite talented in that arena with his motorcycle skills.

So off Luke and Robin go in a spree of bank robberies throughout the Hudson Valley region. When Luke pays a visit to Romina's place to build a new crib for his son with his new found money he gets into a fight with Kofi, bloodying his face, and winds up going to prison where he built up his rap sheet further. When he gets out he wants more action robbing banks but Robin is suspicious and weary - he knows when to quit.

Luke attempts another robbery with a new motorcycle he purchased after Robin scrapped his old one. This time however things take a turn for the worse, figuratively and literally. The cops are notified quickly and chase ensues. Eventually Luke is trapped in house he randomly breaks into while the cops give chase. Luke's final moments are spent on a phone where he calls Romina to tell her not to lie to her son about him, knowing his final fate. The cop, Avery Cross, played by Bradley Cooper, kicks in the door to the room Luke is bunkered down in and fires the first shot, killing Luke who manages to get a shot off himself as he falls out the window. Cross too is injured, having been shot in
the leg.

When Cross awakes in the hospital the film's true plot begins. Suddenly we are introduced to several new characters including Cross's father, a prominent local politician, corrupt fellow police bureaucrats and officers (played by Harris Yulin, Ray Liotta and Bruce Greenwood) as the story makes it's way through the next generation. Bradley is initially questioned by internal affairs who need to deem the shooting legitimate even though it wasn't. In a sense, we are made privy to the corrosive forces within police departments - the pressures to heroicize the un-heroic and demonize the application of true justice. Everything is perverted and twisted inside this machine culminating in Cross being taken out on an illegal search and seizure where they essentially force themselves into Romina's house under the threat of deporting Romina's mother (who is clearly an immigrant). They then seize money that Glanton left for his son - now gifted to Officer Cross who is clearly uncomfortable with the unlawful entry and seizure.

Cross decides to come clean initially trying to give the money back to Romina who refuses it, cursing him as the killer of her son's father. Later however he brings the money forward as evidence to be used against his fellow cops in corruption cases. This coincides with internal struggles he is having within his own karmic nature. Having difficulty looking at his own son he is constantly reminded that he robbed another son of the life of his father - he now wants to help make the world a better place and rid it of the corruption he sees around him. He has been awoken internally but is trying to fight his own good intentions and this is very much apparent throughout the film. However, his desires are unwanted as the entire Police Department turns against him and he must find a way to not only preserve his career but possibly his life - at one point in the film it appears that Ray Liotta attempts to lure him into the woods on a backcountry road after which Cross backpeddles in a hurry. Finally after talking to his father he concocts a scheme, a wild crazy and risky one, that results in the entire police department being ratted out on corruption charges as he is lifted to the ranks of D.A. through an act of blackmail.

The film fast forwards 15 years with the two sons as older teens in high school who become friends not knowing the identity of the other. As the plot thickens these two youths are caught up in their own struggles, AJ (the son of Avery Cross) and Jason (the son of Luke Glanton) become friends not knowing the true identity of the other. As time goes on and various drugs are smoked and ingested, run-in's are had with the cops and break-ins to pharmacies occur, we are taken to a pivotal moment which I will not reveal. However I will say that the film seems to end on somewhat of a positive note.

So what's happening here? Well, as I mentioned we are perhaps for the first time, given a glimpse of what the power of the badge really means and the inner machinations of Police Departments with their own "Codes of Honor" that are very different from what we the public are told. I believe the film is directly questioning the "Fraternal Orders" of modern man (i.e. police departments, politicians and perhaps even Free Masonry) by questioning both their efficacy as well as their intention to deliver any true form of justice in the world. Slowly but surely the US is sinking into an abyss of anti-constitutional, bureaucratic and legal technocracies as well as deeply entrenched corruption that seems to be metastasizing before our eyes with no clear remedy in sight. This film, in my opinion, provides a warning shot across the bow to those corrosive and corruptive forces in our governmental, judicial and law enforcement branches that even if they are granted the absolute forms of power they seem to be seeking, the horrific karma they are creating from these events will come back to haunt them. That is because in part, all the crime and corruption we participate in is in fact a "zero sum" game. The film makes it clear that each crime, each act of betrayal, has a repercussion that can come back, both psychologically and in actuality, to haunt the perpetrator of these misdeeds in the future. I would urge ALL law enforcement officers and public officials (elected or otherwise) to heed this warning.

Now that I have moved on from life in the Hudson Valley I frequently tell people about how corrupt the police are known to be in that region so I don't think it was a coincidence in the least that this area was chosen for the location of the film. I recall one trip to work where I passed no less than nine state troopers on the side of the highway in a mere four miles (five of which had pulled someone over and one of whom tailgated me illegally before moving on to someone else). This region is brimming with testosterone-doped, jack-booted officers ready to not read you your rights and send you off to the local Kangaroo Court where you will be subjected to all kinds of absurdities like not having the right to contest your speeding ticket, being forced to stand in line for your "hearing" (which really isn't one btw) or being told it is illegal to have your cell phone on (it isn't) while an officer paces up and down next to the queue.

Some of the fundamental pillars of a civilized and free society have really broken down in that particular region of the US in spite of GE's presence in Schenectady (also hinted at in the film) which seems to do virtually nothing for the economy there - one that isn't recovering (for more in this topic see This malaise is also mirrored in nearby Albany which is known to be one of the most corrupt State Governments in the US - one quickly gets the sense from living there that it's all "who you know" and not about why you were elected or put into a position of power in the first place. And if you want some really creepy stuff to dig into about the region, read David Wilcock's stories about supposed "Illuminati" activity ( near where he grew up in Scotia New York (just across the river from Schenectary and the location of Cross's house). I will say no more on that topic.

So if you haven't seen it yet, go watch it because this is a film worthy of an Oscar of one form or another in my humble opinion....

Friday, April 12, 2013

Room a Thousand Years Wide....

"Listen, hear he is inside
One who lives while others lie
I close my eyes and walk a thousand years
A thousand years that aren't mine

It seems he's near me when I walk
One who loved what love denied
He lives these years that I walk blind
All these years can not be mine!

Tomorrow begat tomorrow
Begat tomorrow
Begat tomorrow

A thousand doors a thousand lies
Rooms a thousand years wide
He walks in the cold sun and wind
All these years can not begin!

Tomorrow begat tomorrow
Begat tomorrow
Begat tomorrow "

Saturday, April 6, 2013