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The Broader Field of Low Oil Prices and Prohibited Precious Metals Trading

SK O'Neal
12 January, 2015

Below is a link to the latest Stockman analysis of the effects of low oil [1].  We enjoy the benefits directly, but our economic infrastructure is pathologically addicted to price inflation, and price drops do not return us to life as it was.  The thermodynamic cycle for economic-industrial growth is not adiabatic - non-recoverable losses occur in large price cycles, especially for economies that are significantly taxed and prone to criminal metastasis as our is.  Instead, the system develops selective or perhaps general necrosis until a secondary equilibrium is established, having fed upon the multitudes of investors not holding privileged information, and upon the secondary economies of people subjected to the infarcted cash flow.  The route to equilibrium in our current economic structure is not the price drops that beguile us into economic nostalgia and in reality send industries off their rails, but sustained wage and employment increases and their consistent growth in buying power.  The lack of this last aspect, plus the depleting effect of deflated equity bubbles, are arguably primary reasons that the monumental QE monetization has not resulted in prima facie or hyper inflation, and is likely a significant factor in the lackluster metals prices, also controlled to hide long term fundamental weakness in the US economy and the dollar.   I take Armstrong's point of the differential net effect of cyclically favored currencies quite seriously, but there is a behemoth of derivatives whose partition between dollars and other currencies has never been definitively stated by any analyst, but whose critical balance may hold the key for determining whether the dollar will be left standing or will be pulled as well to the bottom after its initial service in monetary buoyancy.  There also remains the equally unfathomable context of a complex dynamic of global power now in play, and whether the developing Sino-Russian alignment will toe the line with the Old Money or else break ranks, most likely in the fog of ultimatum that crosses the often invisible line between economic and military warfare. 

Another unmentioned factor in waiting is the Fed rate ramp up to three and a quarter percent over the next couple of years, another deflationary effect that is worse than useless if the currency is already in a deflationary cycle.  The elite are not fond of deflation because it is far more difficult to control currencies, unless interest rates happen to be quite high.  Some may argue that our current situation indicates that the Fed has spent away its ability to regulate the dollar.  Some analysts see the Euro falling further into deflation as Europe's banks diddle with negative interest rates, a fundamentally unstable condition.  The irony is the monumentally inflationary demeanor of the last six years of dollar monetization, but as said before, the secret is that the monetization was scarcely put in the economy at all, but into latent buying power of a few institutions. This may be a perfect setup for a deflationary collapse, followed by a 1906 style predatory JP Morgan style acquisition of every major asset in the nation, and possibly the world, terminating in a fulminate hyper-inflationary status for all real property and control of essential commodities.  As mentioned above, such a matter must be taken in view of the global monetary and economic direction, but there we see increasing evidence of polarization of economic and military power that could easily leave the West with the short end of the industrial and manpower wishbone, either as a Third World de-industrialized sociology or restoring world dominance as victor in a terrible war - see note [3].

As it is, inflation of goods and services has been higher than officially reported, but a real estate bust and the loss of middle class buying power has redefined the CPI, along with pernicious slight of hand in the government agencies trying to hide what inflation there is.  In reality, the last half dozen years have had fully double digit real inflation, but transfer of wealth to latent buying power in the larger institutions has kept three quarters of the money velocity out of the main street economy, and a large difference between stated and actual reality, if inflation is to legitimately represent the price in per capita time and true imputed costs per normalized unit goods and services received [4].  The collapse of the oil industry venture capital will induce a strong compression on our economy.  We also have yet to feel the increased pressure for state and municipal governments to tax their faltering revenues.  Perhaps this is in part the issue with Minnesota's recent law restricting sale of precious metals, per discussion [2]:

from Armstrong [2]:
Normal antique coins, even Roman, can no longer be shipped to Minnesota. Dealers will not ship any coins, even collector coins, to Minnesota. Why? Because the politicians have defined “bullion” as ANY COIN containing more than just 1% of gold, silver, or platinum. Bullion is defined in Minnesota Statutes §80G.01, subd. 2 and means any coin containing more than one percent by weight of silver, gold platinum, or other.precious metal.

Minnesota’s law has shut down ALL COIN BUSINESS in its state, even rare collector coins. When I warn that readers should buy COINS rather than BULLION, I am deeply concerned about this hunt for money. Governments are DEAD BROKE and instead of reforming, they are without question sending us in the direction of COMMUNISM and/or a pure DARK AGE. They are destroying the world economy so rapidly all because of this Marxist theory. This is not a joke.

This situation in Minnesota is a morbid development, both from the standpoint of the degree of desperateness that states and municipalities are entering, but also from the very implication that precious metals may become illegal to trade and a state legislature is positively obtuse enough to propagate such a constitutionally vulgar policy.  This issue of encumbrance of metals ownership and trade has already been considered in private discussions, and it points directly toward both an end-stage subduction of personal wealth to black markets and also a mechanism to fleece the public of its last small hold on precious metals as a legitimate investment, sending it into the hands of the central banks, and peoples' life savings into the whim of bank holidays and the vagaries of the G20 policies of November 16th [6].  If this sort of legislation becomes an epidemic, then we might expect a collapse of private American holdings of gold by the vast majority of those who are not disposed to paralleling the vast criminal network that operates world finance.  Indeed, precious metals, at least in the U.S., could come under the same encumbrances as firearms.  Frankly, this is a shot across the bow for common sense and unfortunately for our country, there is no solid premise upon which the people of Minnesota may be regarded as more or less morbid and stupid than the rest of the nation, despite the perplexity some educated opinions may offer with Andrew Myrick's answer to the starving Sioux.  

Consequences of the recent low oil price situation are themselves significant and contrary to the intuitive reflexes of the populace.  The fact that oil prices can rise and cause general hardship and then fall and cause general hardship should be a clue to every American that they do not grasp what is being done to them.  When we add, for instance, arbitrary sanctions against something as fundamental as metals trade, those who are in fact paying attention may intuit the imminent situation about to unfold.   Roosevelt's gold seizure was executed during a desperate time by a marbled president.  Today, more subtle methods are required, although perhaps not as subtle as some may suppose.  International Man [5], in its interesting collage of perspectives, gains strength in its mantra of expatriation for intelligent and free men, for those willing to entertain a candid appraisal of the consensus of  our society's devolution in priorities and norms, soon to be completely dis-availed of the principle of "give me liberty or give me death," or more likely, unceremonious consignment to the latter.   

[2]  Armstrong Economics - Minnesota Hunting Bullion – Govern

[2]  Armstrong Economics - Minnesota Hunting Bullion – Government is Raging Against the Dying of the Light - 11 January 2015

[3]   Most relevant but beyond the scope of the immediate topic, the ultimate disposition of this situation might arguably ride upon a Machiavellian decapitation of the Sino-Russian leadership or a preemptive military strike after a skillfully manufactured justification sent to its doom by an unbridled willingness to use a large number of nuclear explosives.  This assumes a true polarization of world power.  Although the true balance of power in the Cold War is enigmatic to even most scholars [5], the original LeMay first-strike doctrine to maintain nuclear supremacy over the Soviets was taken very seriously in Moscow, as well as the post-war German-American alignment and its technologies as the augmented pariah of a traditional arch-enemy.  We are now in a new era of undeniably emasculated and impetuous ethos that is largely insulated from the consequences of all-out war and human suffering in general, an unprecedented time-frame in which such a ruthless doctrine would not again be dependably arrested by horrified rebuke in the current mentality of our Congress and certainly not within its executive Branch.  One must wonder about the true purpose of the evisceration of our nuclear command and certain departments in the Pentagon, and the presence of so many Russian operatives on American soil.  That would suggest a very nontraditional battlefront more resembling a Sudetenland arrangement executed on American soil, and its heirs to endure total subjugation under social and economic doctrines completely foreign to American norms.  Certain questions remain unanswered regarding a plethora of strategic emplacements and a battery of presidential directives functionally identical to Hitler's Reich, pointing toward the theory that critical departments of our government and its posture relative to the interests of the American people have been compromised by foreign interests, both financial and military.  There can be little doubt that the true role of the Pentagon and American resources are not defense of the American people and their socioeconomic foundations, but as the modern enforcer of the Rothschild and other principal dynasties' global mineral and labor interests.  America is, however, exsanguinated and the economic argument may follow a new center of military power if indeed the Old World money has its arrangements made in the East, or else in the desperate results of a most terrible war so clearly foreseen by Stormberger and other talented individuals for whom World War III is the final stage of already verified accuracies in their predictions.

[4]  This would be in terms of the average consumer normalized to a reference points for quality of life and quantity of time-lab our for an integrated spectrum of America's population.  The demographics today are far more asymmetric, and the differential gains of a dollar's worth of wealth of the wealthy is far less than the effect of a dollar's loss to the middle and lower income classes.  

[5]  An excellent reference in this matter is Carter Hydrick, "Critical Mass"

[6] The G20 effectively rendered individual bank deposits as common stock, with depositors placing monies into their checking and savings accounts with the newly implied understanding that they now hold the risk of forfeiture if the institution fails and the FDIC is not able to cover the loss.  In the backdrop of this is the paltry sum reserved in the FDIC that is scarcely able to recover more than a penny on the dollar in the event of a general bank failure.  The G20 meeting is in effect a prodromal symptom of an anticipated general banking collapse.