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American Survival Newsletter:
Combining the World of Finance, Health & Politics
11/20/15

American Gold

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Edited by Alfred Adask
Friday, November 20, AD 2015
 
MARKETS
 
Between Friday, November 13AD 2015 and 
Friday, November 20, AD 2015, the bid prices for:
Gold fell 0.6 % from $1,083.90 to $1,077.00
Silver fell 1.0 % from $14.28 to $14.13
Platinum fell 0.8 % from $858 to $851
Palladium rose 3.7 % from $538 to $558
Crude Oil fell 3.3 % from $40.73 to $39.39
US Dollar Index rose 0.8 % from 98.80 to 99.61
DJIA rose 3.3 % from 17,245.24 to 17,823.81
NASDAQ rose 3.6 % from 4,927.88 to 5,104.92
NYSE rose 2.8 % from 10,155.10 to 10,444.20
 
 

"Only buy something that you'd be perfectly happy to hold
if the market shut down for 10 years." --Warren Buffett 

"If the markets shut down for 10 years, what investment would you dare to hold-- 
other than gold"? --Alfred Adask

The "Pop" Heard 'Round the World
by Alfred Adask

I have no doubt that the cornerstone of the New World Order (N.W.O.) is a debt-based monetary system. I have no doubt that, if today's debt-based monetary system were to fail, The Powers That Be would work relentlessly to install a second, debt-based monetary system. If the today's debt-based monetary system (built on fiat dollars and/or petro-dollars) failed, the N.W.O. would seek to impose a "new-and-improved" debt-based system that might be built on Special Drawing Rights (SDRs). These SDRs are nothing more than debt-instruments issued by the IMF rather than debt-instruments issued by the Federal Reserve and other central banks.

Despite the N.W.O.'s dependence on debt-based currency, it's conceivable that, in the chaos that would follow if the current debt-based monetary system failed, the people of the world would "connect the dots," realize that they've been robbed by the current debt-based monetary system and refuse to accept a newer debt-based monetary based on SDRs or some other debt instruments.

In a debt-based monetary system, the fundamental debts that we're conditioned to value are the "promises to pay" (debt instruments, like bonds) issued by the world's governments and also by some major corporations.

Those governmental bonds (promises to pay) are used as collateral (assets; payments) by fractional reserve banks to privately issue loans worth 9 to 23 times the bonds' face values. Used as fractional-reserve bank collateral, the governments' bonds can "magically multiply" masses of new currency that will presumably stimulate the world's economies until everyone is happy-or, at least, everyone thinks they're happy.

* Most people have heard governments and central banks tell us that the entire monetary and economic system runs on public confidence. That's old news. But I don't recall anyone ever asking "confidence in what?" Likewise, I don't recall any government or central bank telling us what, exactly, we must have confidence in.

We all agree that we must have confidence. But, confidence in what? The Dallas Cowboys? The Keystone Pipeline?

Using sovereign debt (bonds) as collateral to increase the amount of currency needed stimulate the economy is a Ponzi-scheme. Even so, it's worked surprisingly well for at least four decades. This scheme will continue to work brilliantly-so long as the people have confidence that their governments can and will redeem their "promises to pay" (bonds) by actually paying the debt owed, in full, on the bonds they've issued.

It's becoming increasingly clear to me that the ultimate confidence that must be maintained is confidence in government's ability and willingness to repay all of its debts by redeeming all of its bonds.

So long as the world has confidence that the US government can and will repay the official National Debt of $18 trillion, that the Japanese government can and will repay its public debt of 1.3 quadrillion yen, that China can and will repay its $30 trillion national debt, and the EU can and will repay its €12.5 trillion total governmental debts-then the debt-based monetary system's Ponzi scheme can continue to function and government can continue to "kick the can further down the road".

Q: What, incidentally, is in the particular "can" that's being kicked so enthusiastically?

A: The can contains a confession that government can't pay its debts.

Once government is forced to admit (or at least can no longer plausibly deny) that it can't pay its debts, confidence in US bonds will disappear and the US (and probably global) economy will almost certainly collapse.

I.e., consider the following hypothetical chain of events:

  1. The public realize that some significant percentage, probably most, maybe all, of the governments' promises to pay (bonds) can't and therefore won't ever actually be paid by the government.
  2. The public loses some or all of the fundamental confidence in governments' ability to pay its debts;
  3. That lost confidence in governments' ability to pay their debts would cause the market value of many government bonds to fall;
  4. Much of the perceived market value of bonds used as collateral by banks to justify creating and then lending trillions of dollars' worth of digital loans would be extinguished;
  5. The loss of market value of bonds, held by banks as collateral, could cause trillions of dollars' worth of loans to be called in by the banks;
  6. Calling in trillions of dollars in loans could cause some or all of the existing national and global economies to collapse;
  7. There'd be very little real collateral (physical assets like gold, not paper debt-instruments) remaining for banks to use as collateral to begin to restore lending and rebuilding the collapsed economy; and then,
  8. The perceived value of real, physical assets sufficiently liquid to use as an asset-based money (like gold and silver) could skyrocket. It's conceivable that people could buy a decent car for one or two ounces of gold and a good house for ten.

Note that a chain of events similar to that listed above would be triggered by the loss of public confidence in governments' ability to pay their debts (bonds).

* What could cause the public to lose confidence in governments' ability to pay their debts?

Well, a small percentage of people will read articles like this one, consider the arguments presented and, if they agree with those arguments, begin to doubt government's ability to pay its debts. If their doubt grows large enough, they'll dump their paper debt-instruments and convert their wealth, earnings and/or saving into real assets, like gold.

But, the number of people who read, understand and agree with the arguments presented in articles like this one will be relatively few.

The vast majority of people won't begin to understand, agree with or try to apply arguments of the sort I'm presenting until after the "stuff" has clearly begun to hit the fan.

How will the "stuff" begin to hit the fan?

It will begin whenever one or more of the four major economies (US, China, Japan and EU) begin to openly default on their paper debt-instruments (bonds), or fail to pay promised pensions, Social Security, entitlements and subsidies that people have heretofore relied on-or if government causes the currency to hyper-inflate (another means to avoid paying government debts).

In retrospect, future historians might even argue that the "sovereign" debt default began when subordinate governmental entities like Illinois, California, Detroit, Spain, Portugal or Greece began to default on their "sovereign" debts.

* This line of conjecture leads us to a central conclusion: It's not the economy (stupid), or the US Dollar Index (stupid), the price of gold (stupid) or even the stock markets (stupid) that will signal and precipitte doomsday-it'll be the bond markets.

If bond prices begin to fall significantly in any of the four major economies, that fall will reduce the market value of bonds held as collateral in major banks. That reduction in bond/collateral market value may cause some significant percentage of outstanding, fractional-reserve loans to be called in. If those loans are called in, they'll slow and perhaps collapse the particular national economy. The consequences might topple the entire global economy.

For example, suppose a major American bank held $1 billion in US bonds (mere promises to pay) and had used that $1 billion as collateral to lend $10 billion to private customers. Suppose the government defaulted on 40% of its bonds. The bank that had $1 billion in US bonds/collateral in its vaults would then have $600 million-only enough collateral to justify $6 billion of the current $10 billion in loans it had made to private customers.

In theory, the bank would be forced to call in $4 billion worth of current loans. If it did, investments would fail, businesses would be bankrupted, jobs would be lost, spending would fall. If something similar happened to enough other banks, the entire economy might sink into overt depression.

* Not all bank loans are based on using government bonds as collateral. Still, insofar as some bank loans are based on government bonds, it's arguable that the entire, modern debt-based economy starts with government bonds (promises to pay) and depends on maintaining the perceived value of those bonds. That "perceived value" is a function of public confidence in government's ability to pay its debts-not just issue more "promises to pay".

Must a chain of events similar to that outlined above necessarily take place?

Yes.

Why?

Because governments are so deep in debt they can't possibly repay their existing debts in full. What can't be paid, won't be paid. Sooner or later, the governments must default. When they do, the public will awaken, lose confidence in government's ability to repay its debts, and the price of bonds will fall.

Evidence?

Yes. The national debt has been growing steadily, almost exponentially, since government established a pure fiat currency in A.D. 1971. The steady growth of the National Debt is evidence that government hasn't actually been able to pay all of its debt for, at least, four decades.

The debt isn't just holding steady-it's constantly growing. That's evidence that the existing debt can't be paid.

* More, the size (and true growth) of the debt has probably been concealed.

I.e., while the Obama administration claims that the National Debt is roughly $18 trillion, some credible sources (John Williams at Shadowstats.com, economist Laurence Kotlikoff, and the Congressional Budget Office) estimate the true National Debt (including unfunded liabilities) to be at least $100 trillion-and probably over $200 trillion.

Anyone who does the math can see that the National Debt will never be repaid in full.

When enough people do the math, public confidence in the government's ability to pay its debts will fall. The value of bonds will drop. The use of bonds as collateral will decline. Bank loans will presumably be called in. If enough loans are called in, the economy will be impaired and could collapse.

The whole chain of events starts with a significant loss of public confidence in government's ability to repay its debts/bonds. We don't know when the process will clearly manifest. However, we do know that process is inevitable for the simple fact that it's mathematically impossible for the government to repay most of its debts. Therefore, sooner or later everyone will recognize that truth, lose confidence and trigger an economic depression.

* We don't know when that chain of events may begin, but it's arguable that it already has.

In September of A.D. 2012, Mother Jones magazine published an article entitled, "Is the Fed Really Buying Three-Quarters of All Treasury Debt?" In that article, Republican Party candidate for President, Mitt Romney, was quoted as saying,

"[T]he former head of Goldman Sachs, John Whitehead, was also the former head of the New York Federal Reserve. I met with him, and he said as soon as the Fed stops buying all the debt that we're issuing-which they've been doing, the Fed's buying like three-quarters of the debt that America issues. He said, once that's over, he said we're going to have a failed Treasury auction, interest rates are going to have to go up."
 

A year to two earlier, I recall reading about a "failed Treasury auction" somewhat similar that which John Whitehead and Mitt Romney had described: The US Treasury held one of its usual auctions to sell US bonds to private investors-and nobody would offer to pay a price close to the bonds' face value. So far as I know, that had never happened before. Previously, the US Treasury had little or no problem selling US Bonds to private investors at or near "full price".

This time, however, private investors would not purchase US Bonds unless the price was dramatically reduced. That refusal to buy except at a significantly lower price was evidence that the public was beginning to lose confidence in the US government's capacity to pay its debts. A falling bond price indicated that the public viewed the bonds as increasingly risky and unlikely to be repaid.

The government couldn't risk allowing the private investors' market to set a dramatically lower price for US bonds. The problem was not merely one of price. The problem was one of public confidence.

If private investors lowered the price of US bonds for sale at that auction, they'd cause the market price for US bonds (held as bank collateral) to fall around the world. Under fractional reserve banking, a general decline in the price of US bonds could cause banks to call in billions or even trillions of dollars in loans. The negative impact on the US and global economies would be negative and might be disastrous. The real point, I suspect, was that significantly lower bond prices would signal a loss in the public confidence required to keep the whole Ponzi Scheme running.

That would truly be a "failed Treasury auction" or historic proportions.

What did the US Treasury do?

Rather than allow evidence to be created on the public record of a "failed Treasury auction," the Treasury Department closed the auction without selling a single bond. They prevented even a single sale that would help prove that the free market price for US bonds-and public confidence in government's ability to pay its bills-had fallen significantly.

That was a "failed Treasury auction" of the sort that John Whitehead and Mitt Romney had described. However, because Treasury closed the auction rather than allow one sale that would be evidence of that failure, the result was not the calamity Whitehead and Romney had expected.

Instead, for the next few years, whenever the US Treasury held an "auction," the Federal Reserve intervened to not only buy most of the US bonds that were being sold, but also to pay "full price" for those bonds. Figuratively speaking, the Fed was over-paying $900 for a $1,000 US bond in order to conceal the fact that the private investors' markets might not pay even $700 for the same bond.

Treasury auctions were, in fact, failing-but the Fed concealed evidence of that failure. Thanks to the Fed, Treasury auctions looked like "business as usual" and US bonds appeared to retain their value.

By buying US bonds and paying "full price," the Federal Reserve maintained the illusion of steady value in US bonds. So long as that illusion of value (redeemability) remained, the public retained confidence that the government could repay its debts in full. Unfortunately, that confidence is unfounded since it's based on the Fed's manipulation of the bond markets rather than honest, free-market prices for bonds.

* Thanks to Fed's intervention in the sale of US bonds: 1) US bonds are overpriced to an unknown but significant degree; and 2) the bond market has become a massive "bubble"-maybe the mother of all bubbles.

If the bond market "pops," it'll be the "pop heard round the world".

Why? Because, as I've tried to show in this article, bonds in general and US bonds in particular, may the cornerstone on which much of the US and global economies are based. If the bond market "pops," the price of US bonds could fall by 20%--and perhaps much more. Every pension fund that holds US bonds would see its capital reduced. Every retiree whose income relies on bonds would see their income reduced. Every investor who's stored his wealth in US bonds could lose much of that wealth. Banks that rely on US bonds for collateral might be forced to call in enough loans to tip an already fragile economy into an overt depression.

You can see why the Federal Reserve is so skittish about raising interest rates by a mere 0.25%. Fundamental rule: If interest rates rise, bond prices fall. Would a 0.25% rise in interest rates cause enough of a fall in US bond prices to "pop" the bubble? Probably not.

But who can say for sure? In an economy as fragile as ours, a 0.25% rise in interest rates might be just the needle needed to cause the "pop heard round the world".

* Lesson?

If we want reliable evidence as to what's happened, happening or about to happen to the US or global economies and markets, we'd best start following the bond markets.

HEALTH
20th century medical procedure-lobotomy
 
by Herbalist Wendy Wilson
 

A branch of scientific medicine is psychiatry. The word psychiatry was coined in 1808 by a German physician, Johann Christian Reil. The term stems from the Greek spykhe which means "soul". So, it seems the field of psychiatry is an attempt at a medical treatment for the soul. In this field, professionals study to treat mental disorders and we call them mental health physicians. This area of medicine has developed over the years and currently has three specialties; mental illness, personality disorders and learning disabilities. The modern world has seen psychiatry manifest from a conceptual to a biological field. There are some former procedures in this field of science for depression or anxiety that were unconscionable to say the least.

OLD BOOKS ON THE MIND

According to scholars, the oldest books on psychiatry are from ancient India in the Ayurvedic text, Charaka Samhita. India developed hospitals (or insane asylums) in the 3rd century BC. In the 4th century, the Greeks wrote theories on mental disorders and there were books written on madness and melancholy (depression). In the 5th century, the Greeks and Romans considered mental disorders that were of a psychotic nature to be based in the supernatural (demon possession). In most instances, patients were turned over to religious leaders for exorcisms. History also mentions how the field of mental illness blossomed in Persia and Islamic countries. Here is where they began to classify neurotic disorders and cognitive therapy was born. There were four classes of neurosis; fear and anxiety, anger and aggression, sadness and depression and obsession. By 705 AD, Baghdad had a hospital specializing in mental illness and by 800 AD Cairo had one too. By the 13th century, mental hospitals started popping up all over medieval Europe. The seed of psychiatry had been germinating from the late 1700's but did not become a medical profession until the mid 1800's. Soon how mental illness was looked at changed from a demon possession to a dysfunction of the brain.

TYPICAL TREATMENTS

When a patient is diagnosed by a mental health professional there are several ways to approach the treatment strategy. Today the main focus of treatment is the use of psychotropic drugs and therapy. History shows us a very different treatment strategy was used by licensed physicians such as: electric shock and lobotomy.

NEURO-SURGERY

A neurosurgery that was not based in science but on theory was done for years called a lobotomy. Science still uses procedures and treatments today which are based on theory such as radiation, chemotherapy and vaccines. The neurosurgical procedure called a lobotomy was a surgery that severed brain connections in the prefrontal lobe. This procedure was legally done for over twenty years for patients suffering from schizophrenia, manic depression, bipolar disorder, hysteria, anxiety and other medical conditions. A lobotomy purposely damages the brain and causes brain trauma turning patients into vegetables. The theory science used to justify the procedure is that the surgery addressed the abnormal brain connections and corrected the bad behavior. The instrument doctors used to perform a lobotomy was essentially an ice pick. A physician who specialized in lobotomies, traveling the country doing them and teaching other doctors how to do them was Walter Freeman. Freeman made lobotomies popular in the 1940's. He performed thousands of lobotomies during his career. He called the lobotomy a cure for mental illness when in fact he cured nothing. A lobotomy is an assault on the patient in which his conscious mind is murdered. However, for decades scientific medicine called it a cure. Freeman was a medical butcher who was awarded the Nobel Prize for Medicine in 1949. He once boasted that the standard ice pick helped him perform 25 lobotomies per day. He did this neurological surgery within ten minutes without anesthesia. You'd think that if an ice pick was inserted into your eye socket and whisked around scrambling your brain that it would be excruciatingly painful. It was, however Freedman would stabilize his patients with a jolt of electricity first before he turned them into permanent zombies. Think of it as if you were tazered before your brain was turned into scrambled eggs. What this procedure did was make caring for the mentally ill easier for hospital staff.

CRUELTY CONTINUES

Many people believe that doctors do not do lobotomies anymore. Has medicine put that cruel and misfortunate era away, never to see the light of day? The answer is no. Medicine still performs the procedure but calls it a lobectomy. Doctors will perform a lobectomy to try to correct epilepsy or other seizure disorders. Surgeons will remove the part of the frontal lobe where seizures tend to happen. There is no ice pick involved and surgeons are precise, however patients can experience a personality change. Medicine experimented on dogs and learned that when the neurological connections were cut in the front part of the brain it left dogs quiet. In the 1930's the medical research called this area of the brain that was targeted by lobotomy or lobectomy as the "seat of reason." When Freeman and his other colleagues moved to experimenting on humans, they were drilling holes in skulls and guessing what part of the brain they were cutting. This was called scientific research and was published in the scientific journals. The articles were written describing the patients as being violent and "horrific burdens" on their families and that the procedure made them docile (NY Academy of Medicine 1942). Although the lobotomy made patients catatonic, it became a standard practice in mental hospitals in the 1940's and 1950's. It was comically referred to as the "ice pick cure". Keep in mind the lobotomy was not a precision surgery. It was shockingly brutal and barbaric. In some instances Freeman would recommend and perform a lobotomy to treat headaches. In 1947 a study done by the Columbia-Greystone Project evaluated the lobotomy procedure and showed it failed to produce sufficient evidence of positive effects. It was a procedure that was criticized of having no scientific controls. Ethical objections started to accumulate citing irreversible brain damage with severe collateral effects personally and emotionally to the patient. Doctors opted to use the antidepressant drugs just developed and abandoned the lobotomy but not before 70,000 people experienced the ice pick cure. More lobotomies were performed in the UK (about 1,000 per year) in the ten year period of 1940 to 1950. Why was it so popular? It was a simple, cheap operation and made life easier on the caregivers. Countries which still perform lobotomy psychosurgery for violent behavior are: Japan, Australia and Sweden.

"It (lobotomy) reflected very bad medicine, bad science... if you saw a patient after the operation they were totally ruined as social human beings..."Dr. Henry Marsh, UK Neurosurgeon

CHEMICAL LOBECTOMY

Today modern medicine has traded in the ice pick for thorazine. This is essentially a chemical lobectomy without performing surgery. The rise of the anti-psychotic drugs has made nullifying a patient's conscious seat of reason much easier. These drugs are used for the same reasons the ice pick was used. It is not to cure but to make dealing with the mentally ill easier for family and medical professionals. Therefore, patients on antidepressants and other mind-altering drugs should research them carefully before using them.

NUTRITIONAL ALTERNATIVES

If medicine would create a procedure such as lobotomy with not more than guesswork, what else is medicine willing to create? Most natural physicians will try to address mental illness with nutrition in order to correct an imbalance in the brain neurotransmitters. Mentally ill people tend to have very poor eating habits. We should pay close attention to being vitamin deficient in B2, B6 and B12. These natural B vitamins help the nervous system and assure normal transmission of neurotransmitters. A loss of normal levels can leave us depressed and with other neurological health problems. Many psychiatrists are turning to nutritional supplements to help their patients without drugs. If you are looking for whole-food organic supplements contact Apothecary Herbs, they have the natural B vitamins and more. For anxiety and depression ask about Valerian Root and Body Foundation Food Mix. Call 866-229-3663, International 704-885-0277 http://www.thepowerherbs.com, where your healthcare options just became endless.

Sources:

http://www.bbc.com/news/magazine-15629160

http://psychcentral.com/blog/archives/2011/03/21/the-surprising-history-of-the-lobotomy/

http://www.cracked.com/article_15669_the-10-most-insane-medical-practices-in-history.html

http://www.cerebromente.org.br/n02/historia/lobotomy.htm

http://io9.com/5787430/the-strange-sad-history-of-the-lobotomy

http://www.livescience.com/42199-lobotomy-definition.html

http://www.currentpsychiatry.com/home/article/vitamin-deficiencies-and-mental-health-how-are-they-linked/db4fbfd1534c62b9e1a9d7dcf6dc311e.html

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