How long till its weaponized?

So I'm mucking about the internets... minding my own business.. and what do I see?? This.

Bloody. Hell.

We have a fungus... that turns ants into zombies. Are you listening people? How long do you think it will be before this crap is weaponized and ready for use on humans? Years? Months? Hell it probably already is.

That's it... Zombie Preparedness... that's the next big startup. We need Zombie Preparedness camps... corporate retreats... everything.

TSHTF boys. Its a matter of time before some psycho rag head lets this crap loose in the name of Allah... or... the US government itself doses the whole country from the sky to save money on public schooling.

Debt is Not Money

There is a lot of hand-wringing right now about something called "debt deflation". See... some folks... like our beloved Vox Day... think that debt deflation is a legitimate deflationary force that will render any inflationary force ineffective.

I want to explain why they're wrong.

Remember first what we're discussing here... its the size of the money supply... its a measurable... theoreticly anyway. Unfortunately in order to measure something you have to agree on what you're measuring. We don't.

Consensus is that debt is indeed part of the money supply. Consensus, typically, is wrong.

Debt is not part of the money supply and cannot be counted as such. Lets examine it.

Lets say you lend me 1000 dollars... and I go buy something with it. You handed me 1000 dollars in cash... or you wrote a check... or the money was transfered... whatever. In some way 1000 dollars was transfered to me. That money... has just been accounted for in the money supply. Even if you're a bank and you have the privilege of pulling money from thin air. Once it hits my accounts it is accounted for in what we call M2. The real money supply. Now... you have also added 1000 dollars in your accounts receivables... a debt. So that's a total of 2000 dollars. But wait... only 1000 exists. The debt doesn't exist. Its just future money that I pay you... that will be accounted for in the accounts of future M2. If you count the 1000 debt in the money supply... you've counted the same money twice. That's just bogus.

So... this is why debt deflation... is not a real deflationary force. See... sure... numbers are getting smaller.. but it doesn't matter... because they weren't real anyway. its like complaining that the supply of monopoly money is shrinking. its an oddity sure... but it doesn't matter.

on the other hand... governments handing out trillions of real dollars going into real accounts... that is in fact inflationary. Very inflationary. No amount of disappearing monopoly money will ever mitigate its effect.

Debt deflation is only scary to the bankers who are realizing that their accounts receivables are not nearly as reliable as they had assumed.

You can't spend debt. You can borrow money... you can sell debt... but think about what whores sell every day. Is that money to?

I think I am gonna write up an accounts receivable for 2 trillion dollars.... I will just pull it outta my butt. Then I'll wad it up and throw it away... cause no one is gonna pay it. Vox and the deflationistas will no doubt catch the vapors over the devastating effects to the money supply. Its ridiculous I know... just as ridiculous as counting debt in the money supply.

Now... clever Josh asks... "wait... you deposit 100 dollars.. and the bank turns it into 950 dollars of loans.. and the money supply is not increased?"

Says I...

Of course its increased.. but each of those loans had a payout. Someone received the new money at which point it was accounted for in the M2. So the m2 increased by 950 dollars. But it did not increase by 1900 dollars. You can count the money in the accounts. You cannot count the debt created. So in the future.. when the dead beats refuse to pay the loans back... you can't claim its deflationary. It isn't deflation. The 950 dollars is out there...in various accounts... just not the banks.

License to Reload?

Go Time approaches.

It seems like every few days I'm reading about some new attack on the Second Amendment. Clinton wasn't this aggressive in his wettest of dreams. The fact is all these tactics are indeed having their effect.

Yesterday I was over at Bass Pro. The boys there at the gun counter told me they'd been averaging 120 handgun sales per week since December. That's a lot of firearms boys. But get this... the last 2 days? Practically none.

Why?

No ammo. People ain't paying 700 bucks for a fancy new firearm they can't shoot. It'd just be an expensive, extremely well engineered paper weight. For the first time ever... a shortage of ammo is negatively affecting firearm sales. Not good.

I also took the time to talk to them about their Primers. Seems like you boys that like to poopoo rumors better start perkin' up. When a company as big as Bass Pro can't get CCI small rifle primers... there's a problem.

And yes... I'm well aware that Cabellas "appears" to have them... but if you'll take the time to add those primers to your cart you'll see that they are on backorder. You can't get them.

Bass Pro has no idea when they are gonna get some. Neither does anyone else.

The good news is... I have a line on .223... but no... I ain't sharing.

End Game: Hyper-Inflation vs. Hyper-Deflation

When it comes to predicting doom... Those Who Read the Bones are divide into two camps... there are those who believe there will be hyper-inflation... and those who believe just the opposite... hyper-deflation.

I'm going to explain the two catastrophes in extremely simplified terms... and yes... some accuracy will be lost in the translation but bear with me. Lets start with the Hyper-Deflationists.. whom we'll call the Downers... for the sake of brevity.

Now... first of all I need to state the position of the Downers isn't nearly as clear cut as the Uppers (hyper-inflationists). What the Downers fear, and among them you can count the Fed, is another a decline in the value of treasuries held by... you guessed it... the Fed. Look.. the Fed is out to make money... and make money they do. So if the market for US Treasuries starts to dry up then you can bet they won't hesitate to raise rates. That's why Hillary is out there begging at the feet of the Chinese. The administration has been told clearly... if the treasury market turns down... the Fed will raise rates... maybe dramaticly. That would result in a perfect storm. Banks, already terrified of even the slightest risk (because of their insane leveraged positions), would be forced to pay even more for money. Credit card interest rates go up. Mortgage rates go up... and that drives home prices even lower. The economy shuts down. Full Stop. Now Maggie Thatcher could handle that... How do thing Barak Obama will do?

Ok... that sounds pretty scary... and pretty reasonable... what's the other side say?

Well... the Upper position is a little more clear. We've been staving off economic collapse for decades by inflating one bubble after another. Think of the tech bubble in the 90s. We had a soft landing because at the same time it was popping, we were inflating a new real estate bubble. That's all good and fine... but its just ducktape on a dyke. We've been printing money and printing money... So much so that the Fed won't even release M3 anymore. Now.. the End Game for the Uppers is when everyone wakes up and realizes one day that the emperor has no clothes. And when I say that... I'm talking about not just dollar inflation... but everything inflation. The dollar is more leveraged than any bank ever was. Why? Because the currencies that are being used to prop the dollar up are also incredibly inflated. We have inflated a dollar bubble with a Euro bubble with a Yen bubble so to speak. Virtually every currency is inflated... So its very similar to a bank run. Its the true downside to globalization. Once one currency falls, they all start falling... then all those dollars start coming home to roost and the value of the dollar hits the floor. Its Germany in 1923. The dollar is losing its value so fast that literally people are leaving work to go shopping before their money is completely worthless. Also scary. Also not good.

The problem I have is... and maybe someone can clear it up for me... Why can't both happen?

Why can't China stop buying our debt... at the same time the dollar crashes? Sure.. the Fed raises rates through the roof... but it doesn't matter because the US government is spending money that doesn't exist like there is no tomarrow... because well... they honestly believe there isn't. So home prices crash because the dollar is worthless... and crash further because the rates are so high... and crash further because even at the high rates very few banks will lend. But even that deflationary influence isn't enough because the government is spending so much.

What you have is something akin to the Great Depression... where money was worthless... but you still can't get any of it, because the government controlled institutions were simultenously limiting supply to the people, while the government itself was choking the life out of the currency by spending the hell out of it. Of course buy spending it, what I mean is, printing it up from no where and giving it away to people or banks that gladly take it... then run like hell.

Its a big bloody damned mess people. And all I know is... you better buy gold. Ya know why? Becuase if the Downers are right... you aren't gonna be able to get ahold of any currency at all. But if you have gold... you can spend it. Dig? You'll have something to use to trade.... something with a known market value.

On the other hand... if the Uppers are right... well... your gold will be invaluable for the same reason.

The moral?

It doesn't matter who's right. They may both be right. All you need to know is... buy gold.

My biggest hope is actually tied to my biggest fear. The globalisation that leads to the crash could be the saving grace of the dollar... because when the fed does crank up the rates... the demand that disappeared could easily come back... lifting up the dollar inspite of the inflationary pressure of government gone wild.

In other words... if the government would just do nothing... we'd be fine in a few months. But the government will not do nothing... and it will drag out this whole thing for several years before the international demand finally catches up with us and brings us back to normalcy.

The Forcast for 2009

Its shitty... very very shitty indeed... and I shall explain why.

Right now as we speak the 2009 federal budget deficit is at 500 billion... and that does not include anything from TARP... or the soon to be past "stimulus". It doesn't include all manner of costs of the current war which are funded on the fly.

What I'm saying is... in 2009 the federal government is going to spend 2 trillion dollars more... at least... than it collects. That 2 trillion dollars will have to be borrowed... and since we already owe 5 trillion... and the rest of the world is in the same pathetic state we are... its quite clear that the "lending" will be done by the Federal Reserve Bank.

It will "lend" this money to the federal government by "monetizing" the debt. That's what they call it when they print money from thin air. The government wants to spend it... so they literally print up how ever much they need and call it a day.

This is new money. 2 trillion dollars of new money.

I want you to ask yourself... what would happen to the price of gold if 2 trillion ounces of the stuff suddenly found their way into the market? You're right. It would drop like a stone. Gold would be worth less than silver.

Now... what do you expect is going to happen to your dollar when they print up 2 trillion new ones?

This is compounded by the fact that GDP is actually shrinking. We're producing less. So the money supply should also be shrinking... in order to maintain the value of the dollar. But no.. we're doing the opposite. We're literally destroying the dollar.

This is how a big recession turns into a Great Depression.

This is how financial systems die.

How will it effect you specificly though? Prices on everything will go up. Way up. They'll double. They'll more than double... because each of your dollars will only buy what .50 cents will buy today.

There is no getting around this. There is no stopping it. This is not a prediction. This is fact.

If you have cash assets... get rid of them. Convert them to something tangible. Gold or silver will go up in price as the dollar's value goes down. You will be protected to a point. The time is now people. You should be planning for the bad times to come with your family. Very few of us are going to be able to make it on our own during these times... fewer still will thrive.

Most will be forced to pool resources... to improvise... to do without.

Buy a pressure cooker.. learn to can... start as large a garden as you can.

If you know nothing about any of this... there is a book called Country Wisdom and Know-how. Go buy it and start doing for yourself. For a few months it may be a fun hobby. A few months later than that... you'll be damned glad you learned from the experience and made all your mistakes when they didn't matter so much.

Time to get to work folks.

A Telling Quote...

"They will judge you by what you build... not by what you destroy."

In otherwords... then ends justify the means. Lincoln would love that statement... I mean after all... He is judged well because he built a strong union. No one seems to give a damn that he destroyed half of the nation and killed 3 million people to do it.

That's arguably the scariest thing I've known Herr Obama to say.

Pardon me... I have ammo to stack and firearms to clean.

How Worthless is the Dollar?

Well.. its worthless enough that some yankees are considering printing their own money. This is of course little more than isolationism. I mean... if you have money that's only good in your town.. folks have to buy local right?

Ya don't hear about this stuff in a recession people. This is the kind of thing you find when a country has a year or two of recession... which means now we just have to wait till the bankers start jumping out their windows and splattering all over wall street... then we can officially call it a depression.

Who says there's nothing to smile about?

The Crash

What you are looking at is a graph of the Baltic Dry Index. Now most likely you have no idea what that is. Basicly its a tool that estimates the demand for shipping world wide. It estimates the price of a standard cargo shipment, and tracks the cost change over time. The higher the cost of the shipment, the higher the demand for shipping.

Now this is important... because when economies are working... things are moving around. Stuff has to go from factories to stores... from country to country. Dig? These types of tools tell us a lot about the state of the economy world wide.

Now take a good look. From a high of 12,000 a few months ago... to 1000 today.

Ya know what that means? It means stuff ain't moving around. It means... factories aren't selling goods. It means factories aren't even making goods.

Consider as well... Its Christmas people. This is supposed to be the busiest time of year for shipping companies. Look at the graph. At the end of each year there is a spike. Not this year.

Not good.

Not good at all.

Paranoia and the Curse of Interesting Times

So... Given my readership... I'm assuming a lot of you have already read this. If you haven't... I'll sum up. Basicly the US Joint Chiefs and their equivelents from all around the world flew into a small town airport in upstate New York for a meeting.

Now... granted... it could be that this did not happen at all. It could be that they do this sort of thing every so often and its just not a big deal. It could also mean they wanted to talk about the World Series.

The paranoid among us tell us they were laying plans to deal with the possiblity of world wide civil unrest due to wide spread economic instability. They site several recent events... changes in legal procedure and law that lay the ground work. They point out that federal officials have been throwing around the phrase "martial law".

But before you disregard the mad ravings of the paranoids... consider... who was right about the economy? Was it the main stream talking heads?

No.

No. It was the Lunatic Fringe that correctly predicted the stock market crash... and they also explained why it would happen before it did.

I'm not saying martial law is on the way people... but I am saying you should be prepared to deal with it. Not because a plan landed in upstate New York... but because you should ALWAYS be prepared for it.

Rumors like this... true or false... serve as a very good reminder indeed.

Be Prepared.

Blame Harvard Business School

"If its Not Growing, Its Dieing"

You want to know whats to blame for your current economic crisis? Greed you say? Harvard Business School says I. Its that theory.. that wretched buzzword style catch phrase... so often repeated... its impregnated every fascit of american economics.

Its a deplorable, loathesome, and ultimate suicidal business theory. Its one that eventually damns and destroys everyone and everything that adopts it... from a business, to a school, to a city or town. But why? Why is it so destructive?

Several different ways actually.. and I'm going to provide some fairly varied examples from completely different, and seemingly unrelated, areas to demonstrate them.

I want to explain the mechanics of why this theory is so wretched. The theory mimics greed. It creates a strip mining mentality. 10% profit is good. Its not bad. But see... 10% profit 2 years in a row... is not seen as consistant performance... instead when you apply this Harvard Business School Abortion of a Theory... its actually viewed negatively. Its illness and death. Its not growth... therefore its "death". So... 10% isn't good enough in year 2. In year 2... you have to have 10.1%... and you'd much rather have 11% or more.

Now compound this attitude with the hype driven world of Wall Street trading. More profit is more hype. More growth is more hype. More hype is more money... more money is more infrastructure... more aquisitions... more growth... and remember.. If its not growing... its dieing.

You ask were the greed comes from? It comes from that mentality. It is the direct result of the application of that mentality... to every aspect of business.

So... Lets look at specific examples...

Lets start with sports... and there is no more obvious example than NASCAR. The drive for growth has driven NASCAR to sacrifice its soul to appeal to "new" markets. This is seen by NASCAR pulling races from traditional south eastern tracks and giving them to California... or Las Vegas... where no one gives a damn. More than that... its seen in the ultra PC turn we've seen in NASCAR bigwigs over the last 10 years. Driver quarells are crushed immediately. Any show of fire and emotion is squashed immediately... all in the hopes to repackage the sport to appeal to new markets. Never mind the fact that the repackaging has pissed off the loyal fans who've been around forever.

NASCAR has found itself in a crisis. For the first time in decades it is boring... and people are ignoring it. Blame the Car of Tomarrow...but the real culprit was their idiotic attempts to market the sport by removing all the aspects that made it marketable in the first place.

Lets look at the housing market. Its all "greed" right?

Let me suggest that much of the Fannie Mae / Freddie Mac contraction can be directly attributed to Harvard Business School thinking. Look.. if everyone that qualifies for a home has one... and has recently financed... you really have a problem. You have to grow... if you don't grow... you die. So what do you do?

Duh.

You do the same thing NASCAR did... you go find a new market. And if there aren't any new markets... you better damned well create one. After all... its a matter of survival.

Do the math.

And all the while I find myself thinking of that little store up in Oark. The Oark General Store in Arkansas has operated continuously since 1890. Its the same general store today that it was 100 years ago.

It has not grown.

And look at that...

It has not died.

That's because 10% profit... over and over and over again... is successful business.

10% profit... followed by 20% profit... followed by 50% profit... followed by 60% profit.. followed by bankruptcy and collapse... Well we have a word for that to... We call that failure.

You want to fix the economy?

You can start by razing Harvard Business School... and salting the earth.