Thursday, July 8, 2010

The Rats are Cornered

By Mike Krieger

Back from the Road

I have just come back from a 40 day road trip across the United States of America. It was without a doubt the single best experience of my life on every level imaginable. I recognize how hard such a trip is for most people given individual circumstances but at some point in life if possible I would highly recommend doing something similar. It was a total game changer for me.

I started Memorial Day weekend and went from NYC to Philadelphia, Pennsylvania then on to Alexandria, Virginia; Bedford, Virginia; Asheville, North Carolina; Nashville, Tennessee; Memphis, Tennessee; Clarksdale, Mississippi; Shreveport, Louisiana (not recommended unless you live on the East Texas border and have a gambling problem); Dallas, Texas; Sweetwater, Texas; Alamogordo, New Mexico (White Sands); Santa Fe, New Mexico; The Grand Canyon; Sedona, Arizona; Las Vegas, Nevada; Mt. Zion National Park, Utah (where my brother got married); Bryce Canyon National Park, Utah; Salt Lake City, Utah; Jackson, Wyoming (Grand Teton National Park); Yellowstone National Park, Wyoming; Bozeman, Montana; Mt. Rushmore/The Badlands, South Dakota; Omaha, Nebraska (home of the sellout and recent propaganda mouthpiece Warren Buffett); Indianapolis, Indiana; Harrisburg, Pennsylvania; Montauk, New York.

For a kid that grew up in Manhattan this was almost too much to handle, but in a profoundly positive way. The communion with nature, the amazing conversations with random people in far off places about the things I write about in these emails and the new friends I made. To the new people on this list that I met along the way, thanks for being a very important part of this trip which will forever hold a powerful grip on me. Now onto the other stuff…

The Rats are Cornered

This email will be pretty brief as I am still getting used to getting back to the fake world. Although I did work a little every day and kept up with the major news both financial and otherwise I am certainly behind on the details. This is how I would summarize what has gone on and where we are headed. The stimulus and gimmicks initiated by a desperate political class prodded on by our Keynesian witch-doctors Summers and Geithner ran their course and at the end of that road was a massive pile of debt, chronic unemployment, a populace that doesn’t believe or trust anything the government says or does and a housing market set to resume its downward spiral. So basically the forces of deflation have taken over once again. Banana Ben Bernanke knows it and he knows what he wants to do about it. He wants to print so much money it would make your head spin. He wants to drop nuclear bombs of QE2 all over this great land. That is his answer to everything. The man is 100% insane according to Einstein’s definition. I quote: “The definition of insanity is doing the same thing over and over again and expecting different results."

There is a major problem however. Bernanke knows how unpopular he and his fascist institution are right now after all of the crimes they have committed in plain view since 2008. As such, he knows he needs cover for QE2 and that means some sort of deflationary shock that scares the masses and makes many clamor for help like sad, scared little children (we are being conditioned like animals). This is why I think the Fed and others have been fine with the recent market plunge. The only issue for them is they absolutely need gold, silver and other commodities to collapse as well. Bernanke cannot have the S&P500 at 850 and gold at 1,200 and announce QE2. Gold would surge to new highs and it would look horrible. This is why so much emphasis is being placed on getting gold and silver to retreat in a major way via propaganda pieces and also likely surreptitious selling behind the scenes. While there has been a decent pullback, it is nothing close to what they need and I am particularly impressed with how well silver is hanging in. I think this is due to a run on physical silver by investors and the dearth of government or central bank stockpiles to sell in the shadows.

This is what I mean by the rats being cornered. So far they have failed in decimating the precious metals markets and if they can’t do that in a deflationary scare then they are in huge trouble. Of course they will never stop trying because they are addicted to power and control and will do almost anything to protect their positions. I think a key thing to think about now that we must accept that they are in a corner is what is the next move on the chess board. I read this from Jesse’s CafĂ© yesterday (

What is disconcerting to me, and you can see it to some extent in Rickards own work, is that the Wall Street financiers clearly have their eyes on the Pentagon budget: opaque, patriotically defensible, and huge. A currency war, with the Wall Street crowd providing tactics and weaponry and mercenaries to both the US and to its adversaries, might make the bonuses taken from the mortgage bubble look like pocket change by comparison. It’s an old idea really, the basis of some legendary fortunes, adapted to the modern world. It produces nothing but misery, while transferring wealth from the many to the few.

Ok, so this fits into a lot of what I have been warning about for some time now. Namely that once they lose control they will go to the next plan which is pure desperation. They will single out the two greatest threats to their power and I think those two things are: 1) Gold and Silver (independent money) 2) The Internet (free speech). If they can’t control the population with inane television and propaganda they will demonize these major threats. This will probably be sold to public in the name of national security since who could argue with that (if you do argue you will be labeled unpatriotic or a terrorist). So expect more and more announcements of Russian and Chinese cyber attacks or the like, which will be used as an attempt to censor the web and there will also be more and more news stories related to gold and silver being used by terrorists or those that wish to harm “America” (which is not the Republic but a small group of corporate, financial and political elites from both owned parties that have control via the monetary system). This group will then use “national security concerns” as a further justification to grab even more power and wield it in the name of protecting us from whatever threat they wish to use, real or fabricated.

Read the rest here.

Mike Krieger was macro analyst at Bernstein Research, and is currently with KAM LP.


  1. "So far they have failed in decimating the precious metals markets and if they can’t do that in a deflationary scare then they are in huge trouble."

    What in all economic reality is this *supposed* to mean? Obviously, nearly the entire world in in a recession, if not worse. But spectacularly, this is the FIRST recession to refuse to see commodities DEFLATE.

    In so much as that is an obvious, blatant upside-down PERVERSION of what really should be taking place, one thing is just as obvious...


  2. Gold and Silver, in my opinion, haven't fared worse because some high % likelihood of future money printing is currently priced in

  3. "Gold and Silver, in my opinion, haven't fared worse because some high % likelihood of future money printing is currently priced in "

    Or perhaps the collapse of the dollar system.

  4. Gold and silver resist the downward pressure because people are realizing that all fiat currencies eventually fail and the dollar will too. The dollar has nothing backing it other than the US government which everyone knows is going to crumble under the weight of is debt and it's crimes and lies.

  5. Name a "backed" currency that didn't fail.

  6. It is a controlled market, all markets are, and they...are backed into a corner? All they need to to is make owning gold illegal and set a price for gold to their liking, just like they did in the 1930's. Backed into a corner? A stroke of the pen and they can change any law. What kind of muscle do you imagine the people have to back them in a corner. Write a intelligent article outlining that. They are in the drivers seat of this controlled demolition of the world economy and who do you think will be further entrenched when the dust settles. What are you guys smoking over there, anyway?

  7. Enjoy travel while you still can. Efforts are underway to suppress travel and enjoyment in general, which in turn would prompt people to "work harder" in hopes of achieving "the good life". The beaches of the Gulf are destroyed, with the possibility of the Atlantic beaches included. Work hard and make $$$ for corporations like good patriotic Americans, now!

  8. I think what you and our fascist government have forgotten is that our most precious commodity is our citizens. The people have been screwed and sold out for generations to come to finance the greed of our evil empire. If you have not seen "V Is For Vendetta" I suggest you watch the domino scene which illustrates the interconnected events leading from repression to revolution. All we need is a spark to ignite the anger and disillusionment of the youth and the general population. People are literally starving in the streets now with the cut off of aid to the unemployed and homeless. It will not be pretty when payback time comes...

  9. I spent my business career around the world, working for US DoD. The only college course I ever took was Economics from the U of Chicago while working a towboat in the Gulf of Mex. Economics is all about emotion, as are almost all retail/econ decisions made by the consumer. The whole scheme of the elite, the government, or whomever has been abusing the Constitution, rests on either destroying the dollar as the reserve currency,(petro-dollar), or being in control of the next "commodities" that will back a new reserve currency..( again, Oil & Gas)
    Does the willingness to use atomic bombs create a new "economic model"? If we destroy most of the world, will our currency stay as powerful as in the past?.......hmmmmmmm