muses of the moment

March 20, 2012

Chris Martenson

Another great, great interview from Chris Martenson on his website. This is part two on “Answering Your Questions” series (about 50 min).

Click here.

Lots of topics are covered.

But he offers extremely important information about the fall of Russia and how people reacted. They drank.

Groovygirl has mentioned again and again on this blog that the most difficult part of the coming paradigm shift is mental and emotional, not physical and practical. I have listened to this podcast twice now, there is nothing I disagree with.

Some important points from the written transcript (bolded is gg), full version available here:

Chris Martenson: Great question. You know, we have a set of seminars coming up; one at the end of this very week, over this weekend of March 23rd through 25th at Rowe. Then one later out at the end of June, stretching over that final weekend of June to the 1st of July at Kripalu. Both of those seminars are designed exactly to talk about how it is we want to incorporate the information, the implications of the crash course into our lives. What we really care about here is not so much that everybody figures out how to maybe protect a little more of their wealth than the next guy or finds a way to squeak through. We want people to be happy, healthy, living into this period with as much purpose and joy as possible. There are really so many examples out there in history, Russia being a prime one, when the USSR broke down economically and became Russia and the satellite states again. What happened there, what we saw, was that most people of the deaths that were recorded, over half of them were because of alcohol consumption. People had housing and they had food. What they didn’t have what a sense of purpose. What they didn’t have were jobs. What they didn’t have was that other thing to live for. What they had was the narrative that said I need a job in order to feel purposeful. I need to be plugged into the system in order to have something that I can attach myself too. If that goes away there is no reason if that being your job or the larger infrastructure somehow changes, that shouldn’t lead you to, personally, collapse inward on yourself. We spend time really thinking about how we want to be. This is one of those great moments in history where we get to ask some of those awesome fundamental questions, which is what gives me a sense of purpose. How do I want to be remembered? What kind of jobs do I want to work in? Which ones do I not want to work in? Where do we find hope and inspiration?

My personal inspiration lately, the people I have been turning to are those who can really help guide us on our inner journeys to find out how it is that we can become the masters of our own domain. Meaning that whatever happens in the outer world, I want to have the calmest, most centered mind-frame so that I will be in the best position to react and respond to whatever is going on around me. I don’t want to be full of anxiety, I don’t want to be freaked out. I will come into this whatever is going to happen next. Whether it is a really positive future or one that is going to require a lot of attention. Whichever future comes, I want to be standing there with as much calm certainty and purpose as I can. There are a variety of books and teachers out there, we will go over some of those at these weekend seminars. I will be happy to tell people about some more of those. These are not, I don’t think, for everybody, but they certainly fit for me at this particular stage of my life right now. Some of them are Eastern and some are Western, others sort of hodge podge at this point.

Next question comes from user GiraffeOK; what is your advice about leaving some money in the system? E.g., banks, credit unions, brokerages that type of thing? Especially with regard to retirement funds?

Chris Martenson: Well, I still have a retirement fund that is in the system. It’s an IRA, it’s a legacy from my corporate days. I know that for many people they have sufficient funds that and need for cash flows that having money in the system is not just a reasonable thing to do, it is an essential thing to do. I hope everybody was paying attention during the MF Global debacle. There are other warning signs out there that would suggest to us that we really want to be very careful about which institutions we want to be working with. I don’t know if I can say this legally, so I am going to hedge this carefully; but there are certain very large banks out there that I would absolutely not be working with right now simply because of their derivative exposures. In fact, my personal know list is very simply found at the Office of the Comptroller of the Currency, the OCC. OCC plus derivatives, they put out a wonderful quarterly report and if you scroll on down through that big PDF you will find a table, which will show you the top 25 banks in terms of derivative exposures. Anybody who is in the top 10 or 15 of that list would be an institution I would be very leery about working with at this particular juncture. That is just my own personal sort of measure of safety.

As well though, for people who do have money in the system, I understand like this has got to be one of the most challenging, I am putting air quotes up here right now, investment environments that we have every seen.

Next question comes from user Stan Robertson who asks; are you concerned about confiscatory taxes or other liquidation challenges imposed in the future when those who have bought physical precious metals today go to exchange them for other forms of wealth?

Chris Martenson: Of course. Of course, Stan. We all have to be worried about that. I am worried a little bit more about other forms of wealth first and foremost. I don’t believe that we will see gold singled out ahead of other asset classes at this point. Where will the government go first for needed revenues? Well, we have already seen I think the future has been played out in a couple of places. We saw Ireland impose a “one time”,  let me put air quotes up, one time, because I don’t think it is going to be a one time thing. Air quotes are going around one time, tax on pension holdings. We have seen already there have been little trial balloons that have been floated out that maybe money market funds ought to have special treasury bonds put into them instead of other holdings. These would be the kinds of moves that I would expect to see first. So if the government was really going to start, gets in a pinch and decides to start taxing things, we could do worse than to look at what is going on over in Greece; the sales tax gets hiked first and foremost. Secondarily, we are going to see potentially one-time special taxes on pensions and things like that. We might see the income tax rates, we probably definitely will see the income tax rates get hit and hiked. We will see capital gains get hit and hiked. Maybe we will even see, I saw another trial balloon a couple of congressman I believe, were going to hold a hearing into whether there were undo windfall profits being bestowed upon Apple and other tech companies at this moment in time.

These are the kinds of things that tell you, listen, when a government or any set of governments gets into fiscal trouble they are going to be looking for revenue anywhere and everywhere they can. I’m not that worried about it with respect to gold at this stage because, frankly, it’s such a tiny piece of the pie and it would be a really difficult thing to enforce and would have a lot of unhappy people. It just the trouble to return ratio on that, I think, is rather poor.

I have really been surprised that the pension funds have been as quiet as they have been. Just sort of taking their lumps and just kind of hoping that they won’t do any worse than their peer group. I think this requires something a little more extra ordinary than that. There is really some extraordinary risks and they should be, and this is a judgment, stepping up to the plate a little bit more with their concerns and being much more public about them.

The final thing is I would really look at how all of this money that has been collected by pensions; let’s imagine I am a county pension in a state and I take all of this money that I collect from people who work in my county and then I ship it out in my county, off it goes. Where? To Wall Street and they do stuff with it. Sometimes fraudulent things. It ships whether they do fraudulent things or not, its irrelevant here, what happens is my money leaves the county. Hopefully, it goes out into the world and does great things. If I was in the position of running one of those pensions I would certainly be considering right now, how I can take that same money and bring it back and have it operate within my own community so that when it’s doing its good work, when people are taking that capital and becoming more productive with it, creating products with it, delivering services with it, building businesses with it, whatever they are doing that then I would get sort of a double or maybe a triple bottom line a benefit to my county. What would happen is not just would people have jobs, not only would services and goods be produced, but there would be these other benefits as well that accrue when you spend your money locally. That would probably be the final thing I would really think about for some of these pensions, absolutely would be where am I putting that money to work in these particularly, given everything we know about how the world is working right now.

Adam Taggart: I’m really glad you brought that up because I was going to ask about that because as you know, we have had several pension funds ask us about our opinions in exactly that matter and I think you described it all very well. I think the only other thing I would mention is that when you are keeping the money within your region rather than just shipping it off to Wall Street, there is also the opportunity to define a return on that investment in matters other than just exact dollars and cents in terms of how much more money it made last year than this year. That is a measure of resiliency. If you are investing that money into energy production of the local level into creating a better food shed or into creating a better water shed for your territory that you are a steward for. Those are all very good things that people who have a trustee responsibility should be thinking of and obviously, that is just another factor that these local pensions can be factoring into their models.

Chris Martenson: Hyper-inflationary, yes. We are definitely on that path. This is something I have always been, my core belief has been that humans will behave just as they always have. So far, I will not be disappointed in that belief and all the data sort of stacked up. If we look at a chart over the past five years of the eight largest central banks in the world to the Bank of Japan, Federal Reserve, Bank of England, the ECB broken into its member states so that would be Germany and France primarily. When we look at these banks we see that they have grown in the past five, maybe six years about $10 trillion of balance sheet expansion. There is no way they are going to ever be able to reverse that then. I had this discussion with Mark Faber, recently, on a podcast. When I look at that line what is really noticed here, I think the most important part that really came out of that Faber podcast was him noting the observation, which I have heard elsewhere as well and made the same observation myself which is that these crisis, they started kind of smallish you know, long-term capital management that was a gigantic, gigantic problem back in 1998. It was about a $3 billion hiccup, right? Which was huge at the time. It was an unthinkable amount of money. Federal Reserve and Greenspan had to intervene. Now, we look at that and just laugh; $3 billion? Really? Oh, that’s nothing. That’s Tuesday morning for the Federal Reserve now.

China is designing their own reserve currency

Filed under: Dollar Crisis, Fiat Currency — totallygroovygirlfriday @ 4:24 am

The shift continues to the yuan as a trading and reserve currency. Click here.

The currency swap deal, known as the Chiang Mai Initiative, is designed to prevent a financial crisis in countries with relatively small foreign exchange reserves by giving them a safety net against future liquidity shortages.

Remember how the Chinese work. They will agree and nod when visited by the IMF regarding floating their currency. Then, they will do exactly what will be best for them…..design their own reserve currency system in the East. The Chinese never announce their intentions. You must watch their actions to find that out.

More MF Global Non-US News Coverage

Filed under: MF Global bankruptcy — totallygroovygirlfriday @ 3:33 am

Click here for a post from EB via zerohedge.

MF Global and the way it is being handled, ( i.e. customer funds stolen), is the blueprint for future crimes against investors. This includes your pension fund, 401k, hedge funds, and brokerage houses.

Think of all the possible triggers out there that could take down investment funds/derivatives, and thus trading houses in the future.

Isn’t this a good way for the Big Five to cover losses without asking the government for another politically charged hand-out?

Why are non-US investors leaving in droves? The few that were still around after the 911 laws were put into effect.

Groovygirl can not emphasize enough the seriousness of this case. You must protect your investments. The next time this happens it will be blamed on some external factor that no one had control over, but the result will be the same.

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