Zarathustra

THE DOW THEORY CON! PART 1

2006-04-04T02:51:00.000-07:00

Charles Dow never had a Dow Theory! Charles Dow never wrote a book, or a pamphlet. Charles
Dow's entire collection of market observations appeared as editorials in his publication from the Dow, Jones, & Company.

This series will accumulate the historical evidence from many reliable sources that will prove that the " DOW THEORY" is a con. Our sources include the people who definitely know the history of the Dow Jones numbers, and Charles Dow's work.

We will present the evidence, and you, the readers (our trusty jury) will determine the verdict. You will find that the time and effort you spend reading this series will be profitable for you! You will also be introduced to a number of brilliant analysts that the modern salesman/broker/financial writer would rather that you never knew about!

Let us begin PART 1 of this series.

Who was Charles Dow?

Charles Henry Dow was typical of the individuals who created the original financial markets of the US.

Independent of thought, confident of their ability to formulate correct conclusions from their observations of the world, generally from working class families, most being recipients of only a rudimentary education at best, and all seemingly oblivious to their inferior education, status, and lack of advantages. This was the American of the 1850-1920's!

"Charles Dow was born November 6, 1851, on a farm near Sterling, Connecticut. His father died when he was six, and his mother saw to it that he attended the one-room schoolhouse to gain a basic education. At age 16, he set out on his journalism career, beginning at a weekly newspaper and moving up to dailies in Springfield, Massachusetts, and Providence, Rhode Island. His reporting reflected an interest in history and economics, which attracted the attention of a group of financiers that were interested in the silver rush at Leadville, Colorado, in the late 1870s."

This is origin of the man who did the "key" research for what would later come to be called "The Dow Theory" by unscrupulous stock promoters who wanted to make their sales pitch appear legitimate.

Charles Dow's professional career!

"Thus did "Charlie" Dow become fascinated with business, finance and investment. Not surprisingly, when he headed back east after the mine trip he went to New York rather than returning to Providence. After a stint on the New York Mail and Express, he joined the Kiernan News Agency, which gathered news on Wall Street and distributed it by means of handwritten bulletins on thin paper known as "flimsies," which messenger boys scurried to deliver to clients throughout the day. He persuaded John Kiernan to hire a journalist friend from Providence, Eddie Jones, and before long the two were talking about starting their own news company. They did so in 1882, in large part with the financial help of a frugal Pennsylvania Dutchman named Charles Bergstresser, who also worked at Kiernan. Mr. Bergstresser was content to be a "silent partner" as well as a working journalist at the new Dow, Jones & Company.

While Jones and Bergstresser handled the "hard," breaking news, the professorial Dow began writing analytical pieces that were a new contribution to the Wall Street scene. He had two basic topics, the economy and the market, and he tended to view any other subject such as politics through those prisms. These pieces became more substantive as Dow Jones evolved from a bulletined news service into a newspaper publisher, first of the Customer's Afternoon Letter in 1883 (basically a compilation of the day's "flimsies") and then of The Wall Street Journal, beginning in 1889." By John Prestbo
"One further indication of Dow's intimate familiarity with the Stock Exchange and the financial matters related to it is at least partially evidenced by the fact that for several years he personally was a member of that exclusive institution. The exhaustive research undertaken by Dr. George W. Bishop, Jr., in his effort to uncover every possible shred of information available regarding Charles H. Dow and the "Theory" which bears his name, reveals that, "on Christmas Eve, 1885, Dow became a member of the New York Stock Exchange and remained one until April 30, 1891, when the firm dissolved. Dow is not listed as a partner in the successor firm, Robert L. Goodbody & Company." "by Perry Greiner, 1963

Charles Dow hones his skills !
Charles Dow was a keen student of market behavior, and utilized his position as a financial journalist, and floor broker on the NYSE to observe successful traders, and to determine what they did to become winners in a game that most lose.
"After the founding the Dow, Jones, and Company, "the professorial Dow began writing analytical pieces that were a new contribution to the Wall Street scene. He had two basic topics, the economy and the market, and he tended to view any other subject such as politics through those prisms. These pieces became more substantive as Dow Jones evolved from a bulletined news service into a newspaper publisher, first of the Customer's Afternoon Letter in 1883 (basically a compilation of the day's "flimsies") and then of The Wall Street Journal, beginning in 1889."
"Dow needed something to represent the stock market in his analytical dissections of the economy and investor behavior. His simple solution was selecting several actively traded stocks and averaging their closing prices from time to time. He first used this device in the Customer's Afternoon Letter of July 3, 1884, citing the average of eleven stocks, nine of which were railroads. Readers didn't quarrel with Dow's methodology, but they complained that he didn't include enough stocks in his average, grumbling that echoes through the decades to today. Over the next three years he experimented with averages consisting of twenty and then thirty stocks. Then he noticed that however many stocks he was tracking, his averages all portrayed the important advances and declines in the market. The key wasn't the number of stocks but selecting truly representative ones, which is equally true now."
"Though railroads were the mammoth corporations of the day, and thus dominated Dow's early averages, he had his eye on a new, budding segment of the market: industrial companies. He observed, as he had in Leadville, the combining of smaller, proprietor-owned and family-run businesses into sizable corporate entities that sooner or later offered shares to public investors. He understood that this trend in time would create an industrial sector big enough to be the primary engine of US economic growth in the fast-approaching Twentieth Century. In the meantime, however, he couldn't find more than two or three industrial stocks that attracted investor interest of the magnitude the railroads commanded."
We must realize that the railroads were the "market" in the late 1800's, To talk of the Dow Transports confirming the Dow Industrials would have been absurd, as the Railroads were the market! Charles Dow couldn't find enough industrials to put in an average! Later the Industrials gained prominence over the Railroads as the economy evolved (changed).
"The probable activity and possible investment value of US Steel will attract new attention to industrial properties," Dow wrote on the eve of adding the new giant's stock to his industrial average. In time, he prophesized, "trading in railroad stocks will decrease and the industrial market will become the great market in Wall Street"
Charles Dow had already prophesized that trading in the railroad stocks would wane! Charles Dow knew that a company's significance for inclusion into his average was its contribution to the economic machine!
Imagine Charles Dow's shock to discover that a hamburger slinger (McDonalds), a big soda fountain franchise (Coke), some retailers, a big movie producer, and a bunch of golf course hustlers (insurance salesmen) are in the Dow Industrial Average. Despite this obvious reality, the Dow Theorists continue to demand confirmation by the Dow Transports.
They might be better off using student loans approved for the Apollo Group (APOL) customers, the new customer bookings at the Corrections Corporation of America (CCA), and the weekly sales at Starbucks, Krispy Kreme and Blockbuster Video. This group must be confirmed by the weekly lap dances produced report, the take at the local casinos, and the weekly Lotto sales report.
The great Charles Dow could foresee a time when the Industrials would supplant the Railroads, but his alleged students can't see the lap dance in front of their noses! They seem adamant that the Transports must confirm the Industrials for a move to be valid.

"There is always a disposition in people's minds to think the existing conditions will be permanent. When the market is down and dull, it is hard to make people believe that this is the prelude to a period of activity and advance. When prices are up and the country is prosperous, it is always said that while preceding booms have not lasted, there are circumstances connected with this one, which make it unlike its predecessors and give assurance of permanency. The one fact pertaining to all conditions is that they will change." Charles Henry Dow

We are deeply indebted to John Prestbo for the information about Charles Henry Dow's history.

Wayne N. Krautkramer onlypill@cox.net http://onlypill.tripod.com/toolsofthetrade/id36.html

POP GOES THE REAL ESTATE WEASEL! Part 3

2006-03-30T01:42:00.000-08:00

POP GOES THE REAL ESTATE WEASEL! Part 3

This is the the third part of the Pop Goes The Real Estate Weasel Series. This part focuses on the key event behind the current Real Estate hysteria.

What has the Real Estate Industry has known since the late 1990’s?

Why has the Real Estate Industry been using the most absurd arguments to motivate buyers?

What do they hope that you don’t know? After all, if Real Estate really is a lay up, then the industry would be keeping it’s mouth shut, and quietly buying all they could! History proves that a group usually bad mouths an investment when they want to buy some "for their own account".

Conversely, they "manufacture" the most absurd sales pitches while making the most noise when they want to "unload" on the "unsuspecting" public. This is called "Ringing of the Dinner Bell’ or Marketing! The media depends on the advertisers for their revenue, so they must accommodate their customers (the advertisers) by publishing any and all articles that praise the product.

What’s the Story?

The Chicago Mercantile Exchange (CME) is going to make you free from the hype of the National Association of Realtors!

How is the CME going to do this?

The CME is creating a futures market for single family housing!

This means the creation of a real data base for single family housing market values, based on the actual buying and selling on the CME.

Real buying and real selling with participants standing by with real money to buy or sell as the trend dictates is our idea of a market. This includes selling residential housing short to capitalize on overbought markets!

Why is the CME doing this?

Because they were asked to!

Who asked the CME to do this?

The "real" professionals in the Real Estate business

Just who are the "real" professionals in the Real Estate business?

The major home builders, the bankers, the mortgage brokers, the building material suppliers etc.

When is the CME going to do this?

On Tuesday, March 21, 2006, the Chicago Mercantile Exchange and Tradition Financial Services, together with Fiserv Case Shiller Weiss and Standard & Poor’s, announced the launch of S&P CME Housing Futures and Options.

According to the CNN Money article:

These derivatives will enable investors to take a position on the direction of home prices either for the nation as a whole or for 10 major cities to start, including New York, Los Angeles and Chicago. Of the three major asset classes, the bond, the stock and the housing markets, only the housing market, which represents some $20 trillion in assets, cannot be speculated on easily, said Robert Shiller, the Yale economist and author of "Irrational Exuberance," the 2000 book that foresaw the bursting of the tech-stock bubble. Shiller sees these derivatives mostly as tools that large, institutional investors can use to reduce risks. Mortgage bankers, for example, could hedge against falling real estate markets that would increase their exposure to delinquencies and foreclosures.
But John Labuszewski, of the CME, says, "Although the main customers will be institutional, there is a surprising amount of interest on the part of retail consumers."
On March 21,2006, the CME threw a launch party at the Waldorf -Astoria , NYC. Reports indicate the party was well attended; "The place was totally packed. Institutional investors, investment banks, hedge funds, real estate developers, etc. were all there. Standing room only."

The introduction of trading is imminent. The CME anticipates the opening bell for trading will occur in April. The groundwork is complete, and the education of the professionals on the use of the futureshas just begun!

Where is the CME doing this?

The trading opportunities will be offered on CME Globex® Sundays-Thursdays 5:00 pm-2:00 pm the next day

What’s this going to cost the investors/hedgers at the CME?

The cost will depend on the value of the Index you are buying/selling.

The formula that the CME will use is the Index X $250USD/contract.

Let’s use the December 2005 Las Vegas Index of 229.47 as an example. This generates a $57,395.50 value. To buy or sell the index at this value for a $286,837.50USD house equivalent would be five contracts.

The commission cost to buy and sell five futures contracts would be $100.00 assuming a commission of $20.00USD/contract.

The commission cost of a house bought through a real estate broker (latest national average is 5.1 percent) would be $14,626.71USD.

The net difference is $14,526.71. or a savings of 99.3 percent!

The bizarre part of this is that fact that the CME will give you almost instant transactions, and confirmation of your orders.

The Real Estate hookup network may, or may not, find you a buyer/seller sometime in the future!

A question arises! Just what are these people being paid these outrageous commissions for?

How worried is the Real Estate Industry?

With all the hype for the Real Estate Industry over the last two years, this "Big Story " was drowned out! This is probably just a mere coincidence!

There is a big demand for this product, yet it has been given very little media coverage. The extreme case of media blackout would be in Clark County, Nevada. Las Vegas, with a hot housing market, has managed to censor all references to this new housing product.

The Las Vegas Review Journal ( the only real newspaper as the Las Vegas Sun is distributed by the LVRJ) has managed to keep almost a total blackout of the CME media launch for housing market futures!

The amazing thing about this media blackout is that Las Vegas is one of the Indexes that the CME has for the trading launch. One can only assume that Las Vegas will try to keep the real estate scam going till the bitter end!

The famous slogan "What Happens in Vegas Stays in Vegas" must be amended to "Stupid Is What Vegas Does" (Copyright applied for).

What does this mean to the investor?

There is a very real possibility that the housing market is finished, and the major institutions know it! That would explain the professional enthusiasm being shown for this new futures product!

The major players such as the government sponsored agency, Fannie Mae, know that they are in serious trouble if the housing market breaks apart. The same applies to the mortgage brokers, and the investment trusts holding all this real estate paper for income!

The major home builders, and the building materials suppliers also are in trouble should the housing market break.

The local government budgets are also threatened in the event of a major real estate price break.

We can foresee some serious short selling of the Housing Indexes as many of the players currently having too much risk decide to reduce their exposure by hedging! I personally know many individuals who are eager to hedge their financial risk by short sales of the Housing Index!

We know that the hedge funds could place big money on the short side of this market.

What we can prove is that the story that real estate cannot drop significantly for extended periods of time is totally refuted by an analysis of the Los Angeles Housing Index.

The Los Angeles Housing Index made a top at 100.23 in January of 1990, and didn’t make bottom until March of 1996 at 73.07. This data provided by the CME

That’s a 27 percent price decline that lasted six years and two months. I suggest that this qualifies as a Bear Market! This also occurred during the so-called immigrant invasion into California! Imagine what would happen to real estate if those illegals left California?

The CME may have just brought home ownership out of the Dark Ages. The availability of the Housing Index futures contract can protect the homeowners, the lenders who finance them, and the US taxpayers. We may all now have an opportunity to prosper in the real estate market. The availabilty of Housing Futures at CME commission rates (99.3 percent lower that the standard real estate hookup fee) will encourage many new participants. It just doesn’t get any better than this!

One Small Step for the CME, One Giant Gain for Homeownerkind! (Copyright applied for)

Wayne N. Krautkramer onlypill@cox.net Http://onlypill.tripod.com/factsthebrokersandfinancialreporterswonttellyou

The Pop Goes The Real Estate Weasel Series links are below:

Http://onlypill.tripod.com/generaleconomics/id26.htmlhttp://onlypill.tripod.com/generaleconomics/id26.htmlhttp://onlypill.tripod.com/factsthebrokersandfinancialreporterswonttellyou/id38.html

Welcome to The Battle For your Money and Your Mind! The Perpetual War!

2005-07-03T21:31:00.000-07:00

We are in a perpetual War. We must understand what war is to be effective in dealing with our adversary's strategy. War is the battle for power, or dominance. This is nature's directive to ensure the survival of the species. It's as natural as life and death, and it's an inescapable fact of life.

We are a social species! This means that the real war is fought on the intellectual, and the social level. Ideas, or concepts, is the way we make war. Every word has a denotation, and a connotation.
Those who teach you the denotation of a word control the symbol (picture) that you see in your mind when that word is used. The connotation of a word is the emotional meaning attributed to a word (good, bad, nice, mean). When someone controls the pictures you associate with a word, they control your mind! This is where the real battle is fought to control the Homo Sapiens!

You might ask, what does a word really mean?

"When I use a word it means exactly what I want it to mean, nothing more and nothing less."

If we would learn the true nature of war, we will stop reacting to our adversary's wiles. We have wasted our precious resources in foolish skirmishes, which have ending badly. The Korean and Vietnam conflicts should have taught us to avoid unwinnable wars. However, the next generation only knows its conditioning. They have no real experience with which they might challenge the foolishness of the Wizard of Oz., the fantasy of his favorite stepchild, Disneyland, or the programming from the public school system! The victims of the media, and the school systems, are just conditioned organisms. The products of the system will react in a predictable way to the words (symbols) that are invoked! This is the perpetual war.

Hostilities only commence as the almost vanquished nation strikes out in agony (a mass psychotic event). Competent people would never let events go this far. The objective of free people is to avoid all entanglements with nations, and cultures, that are freedom phobic. Freedom phobic is defined here as those who are collectivist by heritage, or instinct. Most of the world adheres to a collectivist ethic The reality is that all these cultures, and nations, are the natural enemies of freedom.

The Stages of War.

The Social Battlefield.

This is the real arena for war. Democratic societies are forever embroiled in social conflict, as the various special interest groups seek to achieve the "moral high ground". Morality is relative in the social arena, because the majority of the electorate lack the training, experience, or instincts to evaluate the merits of an idea.

True morality (survival value) is the minimum requirement for a society's survival. Without knowledge of the survival requirements, the voters will follow their emotions! "If it feels good, what's wrong with it?"

Any legislation not based on true morality (survival value) will lead that society into extinction. The classical republics only allowed property owners to vote. The founders of the great republics knew that only people with a strong connection to the republic could be entrusted with the power of the vote. Military service was always mandatory for citizens to prevent intellectual dilettantes from voting for conflicts that might weaken that nation. Intellectuals are proficient at sending the other man (Alpha man) into a conflict, while these personal pacifists (Omega man) always seem to have an exemption from combat!

We must remember that deceits and treacheries are the primary weapons of war. Illusions, propaganda, and fraud will always be employed against the free state. The more freer the nation, the more often these tactics will be used against that nation.
"All war is based on deception." -- Sun Tzu, The Art of War

Propaganda to enlarge the voting franchise has always been a tactic employed by the adversaries of a free nation. Propaganda is the tactic that conditions a society to eventually vote itself into extinction! The adversary uses different words that sound more noble to describe each "new social improvement". All new propaganda is nonsense to the current generation of voters. Then the years of Pavlovian, and Skinnerian conditioning by the public schools, and the media do their job. The system virtually guarantees that the next generation of voters will believe that the old "absurd" propaganda is "mother's milk".

If you think that this is just a coincidence, read II -- PROLETARIANS AND COMMUNISTS, Communist Manifesto, 1848, Karl Marx
10. Free education for all children in public schools.

The alien's strategy is to plant the seeds of extinction into your nation, nurture them through the taxpayer financed public schools, and the media, and then harvest the crop by invoking the programmed keywords. This ensures the outcome of their collectivist vision, as the logic pathways of the electorate have been neutralized, or electronically lobotomized. Hence, no rational dialogue will interfere with the outcome. Your adversaries have been busy, creating the new superstitions that will govern our nation when the new generation comes to power! The brilliance of this tactic is that you finance the institutions that program your children to destroy your culture, and your economy.

"Rituals are superstitions; they are adventitiously reinforced. The more conspicuous and stereotyped the behavior upon which the reinforcer is accidentally contingent, the greater the effect." -- Skinner, B. F. (1980), Notebooks, 303-304.

The Diversion The Military Conflicts
The military conflicts are just part of the diversion. If the targeted country goes for the bait, it will dispatch its most masculine men to go to slaughter. They will be destroyed in a conflict that has been designed to fail. This is easily achieved by defining the terms of engagement (combat rules) so as to guarantee failure. The real purpose of the exercise is to kill, or cripple, as many of our alpha males as is politically acceptable. This reduces the number of alpha males, and leaves the omega (passive) males as the only check against the emoting nature of the female. This war of attrition against the alpha males gradually removes a nation's ability to act independently of other nation's opinions, because self sovereignty is a patriarchal trait.
The rise of the matriarchy is guaranteed over time. The gradual change of values that occurs as the nation moves from a patriarchy to a matriarchy ensures that more socialist programs are demanded by the voters. With the creation of each new generation, more wars are started to liquidate the new alpha males, but all of the women remain. This further skews the voting pattern by increasing the percentage of female voters versus male voters. A good war can really decimate the alpha male population.
The joke is that the legislators have become totally captive to the wants of a militant welfare society, although the euphemism "entitlement "appears to conceal the obvious. There is nothing more frightening to a politician than having to work for a living. By the time a nation has devolved to this condition, the politicians are nothing but overpriced hamburger flippers.
"Do you want Pork with your Burgers and Fries?"
The other result is the slow, but relentless disarmament of the population by the government. The men who know how to use weapons are slowly slaughtered, or crippled, by wars. Because ego is a constant in human nature, many of the males who copped out from combat rationalize their decision by embracing a non-aggressive, anti-gun, psychological posture. Everyone is a victim in a non- judgmental society! Psychopaths, and sociopaths, are miraculously transmuted into good children doing bad things. This attitude becomes inoculated into the society at large as right thinking! This attitude then becomes promoted by the media, and the public schools, as enlightenment!
The other subtle effect of these military conflicts is to convince the population that fighting is futile. They now actually believe that conflicts are unwinnable. It is a just a cleaver version of "Better Red Than Dead".
To fight and conquer in all your battles is not supreme excellence; supreme excellence consists in breaking the enemy's resistance without fighting.
-Sun Tzu, the Art of War

The Economic War
This is the second stage of the destruction of a nation. The objective of war is to destroy your opponent's ability to make war. The economic war gradually reduces a nation into a state of poverty. Once this is accomplished, even the will to prevail is just another delusion. The nation will be reduced to guerilla warfare, as the street gangs take control of the inner cities. You thought they were just friendly drug dealers, providing "Mother's Little Helper"! They rule you through your needs, so you can't control their deeds.!
You're so proud of your strategic nuclear and biological weapons! It's a damn shame that you can't use these weapons on the drug dealers, and the street gangs, because your connection is in your neighborhood. You are in total delusion, as your nation is already bankrupt, demoralized, and probably nearing a state of civil war at this time. Live with it! Your nation is already dysfunctional. Your real enemy is as near as your mirror. Therefore, you have already lost!
The nation is first bankrupted by insane social policies financed by debt to hide the real costs. Soon the number of people on the government payrolls, and the number of the entitlement recipients, outnumber the wealth producers. The government must now depreciate its currency at ever faster rates. This is mandatory to avoid the obvious confiscatory taxes that would be implemented otherwise. Many wealth producers would balk at 90 to 95 percent tax rates.
The government also uses its reputation to issue massive amounts of debt. The rule that it takes 10 years to make a reputation, and 20 years to lose it applies here. The government knows that it will be given the benefit of the doubt long past the point of insanity. It also knows the golden rule of debt. When you owe someone enough money, the lenders have really made an equity investment in you, instead of a loan. Who wants to walk away from megalosses? This automatically gains the government more time. There is also the fallacy that big countries can't fail.
The government now begins creating military adventures to transfer money to their contributors from the defense contractor industry. This spends up the process of looting the host nation, and allows more money to be stuffed into their offshore banks. More control of the media is justified by the "crisis", which slows down the speed at which the information circulates! This gains more time for the government to plunder the treasury prior to the citizen's response.
Just the principle of paying women to have children guarantees that the nation will be overrun with non-producers with a militant attitude. "You owe us our entitlements because we voted for you" is the battle hymn of the majority of the voters." The political system has turned into a circus by this time, in a desperate attempt to avoid a civil war. The pressure on the politicians is enormous to give an ever increasing amount of money, and services to an ever more militant nation of parasites.
Lest you think that I'm overstating the argument, you will find it instructive to learn that prison inmates have been receiving federal tax refunds while incarcerated. No, I'm not making this up! Prison inmates have been receiving tax refunds for taxes paid while employed. The problem is that these prisoners are incarcerated, and could not have been employed. Yet the IRS has been sending them checks.
The current spectacle of reparations being paid to various groups because of some past injustice is more of the absurdity of the entitlement culture. The people who committed these acts are long gone. Let's steal more wealth from the living to mollify the leeches! We can always issue more bonds that are worthless. We can't really feel sorry for the idiots who are buying these bonds. The Keynesians told us that we never have to repay the debt! "What, Me Worry?"

Abraham Lincoln paved the way to total collectivism by destroying the Republic. State Right's were the most critical check on the natural rapaciousness of a centralized government. The end of States Rights effectively canceled the Constitution, if not de jure, then certainly de facto. The post Civil War era witnessed the parasites flocking to Washington.
The Republican President, Ulysses S. Grant, signed the Pendelton Act in 1883.
BACKGROUNDER ON THE PENDLETON ACT
"The federal bureaucracy in the years after the Civil War was generally undistinguished, because the system of selecting officials and supervising their work was irrational. That system had evolved in the early nineteenth century, and relied on the well-known political adage, "to the victor belong the spoils." That did not necessarily mean that bad people were appointed; many government officials were quite good, but the system itself was ill-suited to efficiency."
"The idea of rotation in office, however, was thought to be "democratic." Andrew Jackson in 1829 had declared: "No man has any more intrinsic right to official station than another. The duties of all public officers are, or at least admit of being made, so plain and simple that men of intelligence may readily qualify themselves for their performance." This had not been true in 1829, and was certainly not true fifty years later. The constant turnover provided no institutional memory; government workers panicked at every election and had little sense of loyalty to their jobs, because their tenure was often of such short duration. As Henry Clay put it, government officials after an election are "like the inhabitants of Cairo when the plague breaks out; no one knows who is next to encounter the stroke of death.""
"Over the years, the flaws became more serious and obvious. Political leaders required their patronage appointees to devote time and money to party affairs. After each election, winners were besieged by hungry office-seekers, and wrangling between the president and Congress over patronage became endemic. By the 1880s, one could open a Washington newspaper after an election and find many advertisements like this one:
"WANTED -- A GOVERNMENT CLERKSHIP at a salary of not less than $1,000 per annum. Will give $100 to any one securing me such a position.""
"The situation was compounded by the growth of the federal bureaucracy. In Jackson's time there had been 20,000 persons on the federal payroll. By end of the Civil War the number had increased to 53,000; by 1884, 131,000; and by 1891, 166,000. Presidents were hounded by office- seekers. When James Garfield became president he discovered hungry office-seekers "lying in wait" for him "like vultures for a wounded bison."
Moreover, new government jobs required special skills. The use of typewriters, introduced in the early 1880s, meant that mere literacy and decent penmanship were no longer enough for a clerk's job. With the creation of administrative agencies like the Interstate Commerce Commission and specialized agricultural bureaus, one needed scientific expertise. The spoils system was not the way to get them.
A civil service movement started in New York in 1877, and although it developed considerable public support, the politicians refused to go along. Then came the assassination of President Garfield by Charles Guiteau, a disappointed office-seeker, and the public clamor could no longer be ignored.
The Pendleton Act classified certain jobs, removed them from the patronage ranks, and set up a Civil Service Commission to administer a system based on merit rather than political connections. As the classified list was expanded over the years, it provided the American people with a competent and permanent government bureaucracy. In 1883 fewer than 15,000 jobs were classified; by the time McKinley became president in 1897, 86,000 -- almost half of all federal employees -- were in classified positions. Today, with the exception of a few thousand policy-level appointments, nearly all federal jobs are handled within the civil service system."
For further reading: Ari Hoogenboom, Outlawing the Spoils: A History of the Civil Serivce Reform Movement, 1865-1883 (1961); Paul P. Van Riper, Hstory of the United States Civil Service (1958).

Time has revealed the strategy that the alien's have utilized against us. The establishment of the Civil Service was the first step in turning the US into a nation of slaves. We now had an "elite " group of parasites who are tenured, and who receive a lifetime dole from the taxpayers. The Civil Service's loyalty is to the intellectuals who direct their efforts into the establishment of a collectivist utopia. Even the politicians can not fire a Civil Servant. Civil Servants are not elected, and are not subject to the voter's will. They are the "real" government!
The danger of the election of a president, and legislature, with a real pro taxpayer agenda, has already been defeated. The Civil Service will just ignore the new occupants of the Executive Branch, and the Legislature. The Civil Service system guarantees that the bureaucracy will continue on, just as their collectivist masters have programmed them! They are sovereign, and can never be terminated unless they murder someone! This tactic ensures that there will never be an interruption of the collectivist agenda. Their real motto is "So many people to enslave, so little time in power!"
The very concept Civil Servant was the beginning of Orwellian doublespeak. The irony was that George Orwell wasn't born yet.
Eric Blair was born in India in 1903. Educated in England at Eton, he moved to Burma in 1922 where he joined the Indian Imperial Police for five years. He eventually resigned because of his increasing disillusionment with British imperialism.
Eric Blair is George Orwell. He was forced to write under a pseudonym to prevent the Imperialists from destroying him. The English Crown (the City of London) is the headquarters of the western world.

After the establishment of the Civil Service, the collectivist's moved to increase the voting franchise. Women were given the right to vote (1920) only after the collectivist's had achieved control of the government bureaucracies.
Woodrow Wilson (a past president of Princeton University) was the next key Collectivist. His presidency was bought so that he could create the Federal Reserve Bank, the Income Tax, and the Selective Service Act of 1917. He also brought us into World War I.
The US entered WW1 to assure the elimination of many Alpha males, and to start the conditioning process to bring the US citizens into their new role as state slaves.
The final destruction of liberty occurred under Franklin Delano Roosevelt. Most of his Marxist ideas were initially struck down by the Supreme Court. He proceeded to alter the legal environment. FDR knew that his threat to stack the Supreme Court with his collectivist coterie would bring the Supreme Court into total compliance with his wishes. FDR made the correct assumption! He bet that these parasites would do anything to stay on the federal dole! The irony of the Supreme Court's capitulation to FDR, is that FDR later managed to pick eight more Supreme Court judges. His time as president was so long (four terms) that he appointed nine judges! FDR delivered the coup de grace to free speech when he forced the Supreme Court to give the ownership of the airwaves to the government in 1934.
It's probably just a coincidence that government control of all communication is number 6 in II -- PROLETARIANS AND COMMUNISTS, Communist Manifesto, 1848, Karl Marx
Federal judges, including Supreme Court justices, have what amounts to lifetime tenure and a guaranteed salary. Although justices can theoretically be removed from office by impeachment, none ever has been removed The last time Congress attempted to pull this off was two centuries ago. The attempt failed, in the process proving the point that little short of criminal behavior could result in judicial removal. Political views —especially personal judicial views— are plainly off limits to those who might wish to impeach a hostile jurist. Congress can overturn Supreme Court decisions only by means of the cumbersome process of constitutional amendment. Such efforts have succeeded exactly four times in the history of the republic. In each instance, it was the Supreme Court that determined the meaning and application of the amendment. Catch 22 strikes again!
This reality ensures that no incoming President could get rid of these collectivists without the majority support of the Congress. Thus, we began the new world under an activist court. This was another brilliant move by the collectivists. The Hive's media, and its public schools, praise the concept of an activist court to their listeners (victims)! According to the Constitution, only the Congress can create a law. The Supreme Court's only constitutionally granted power is to determine whether a law is constitutional or not! The Court has no legal right to order anything, except lunch.
The media collectivists are continually creating new more stories to feed the folk. These people are professionals at creating stories. Rewriting all those history books has given them a lot of practice They can count on the support of the public schools to preach the" new" and "improved" history with great enthusiasm. By the time the WW1 was over, there was no point to reading history books. "History is more or less bunk." Henry Ford, May 25th, 1916
The irony is that the Hive's reforms (always new and improved) claimed that Civil Service would prevent money from being stolen from the government. Now we see the spectacle of the government looters diverting all this money to their friends, while voting themselves huge salaries, and benefit packages. The comic part of this is realizing that these bureaucrats, and politicians, are deluded enough to believe that the wealth creating sector can, or will, continue to pay for this giant theft machine. It's amazing that so many government workers have dual passports, and are citizens of a nation that refuses to extradite their citizens to any other country to face trial. I believe that we have a big conflict of interest here!
We have to admit that the government workers, and the politicians, are just plundering before the end. They know that the cupboard is getting a little bare! The voters appear to be indifferent to the rampant theft, as long as they get their entitlements. Election after election has shown that taxing the productive, and spending on pork for the folk, is the winning combination in politics. This allows the politicians to avoid the effort of personally creating wealth. Politicians generally abhor the stress of working, and would rather steal the wealth of others via taxes. They give the looted money to their constituencies, less a large service and handling charge!
2. A heavy progressive or graduated income tax. II -- PROLETARIANS AND COMMUNISTS, Communist Manifesto, 1848, Karl Marx
On the 23 of June, 2005, the Supreme Court of the United States of America ruled against the last illusion of property rights. This latest incroachment upon our constitutional guarantees opens the door for complete confiscation by the government. The government will become more predatory as their need for money continues to accelerate. Gone are the days when they slowly sucked you dry through property taxes. Now they take your property even if you have paid the taxes! They have shown their hand, and have already begun to grab your land!
1. Abolition of property in land and application of all rents of land to public purposes. II -- PROLETARIANS AND COMMUNISTS, Communist Manifesto, 1848, Karl Marx
"In politics, nothing happens by accident. If it happens, you can bet it was planned that way."
Franklin D. Roosevelt

Why are we suprised that so many companies, and talented people, are fleeing this vampire nation? These valuable resources are voting with their feet. The best would rather start anew, where they have found a saner society. The ultimate irony is watching the US compete with Sweden in the race to economic oblivion! We will win the Economic Doomsday Cup, even if it means destroying ourselves!
"Vampirism as the ultimate form of communism, in which blood is redistributed from producers to parasites." Thomas M. Sipos, Vampire Nation.

You know that it's a vampire nation when the Hive demands Dignity with their Dole!

Wayne N. Krautkramer
Onlypill@cox.net
onlypill.tripod.com

2005-06-29T19:29:00.000-07:00

OUR LATEST SPECIAL REPORT IS NOW AVAILABLE! THIS IS A MUST READ FOR THOSE WITH 401(k)’S, OR IRA’S. ESCAPE FROM THE TRAP!

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THE RIGHT INFORMATION, AT THE RIGHT TIME, WINS THE DAY!

A NEW FEDERAL AGENCY FOR A NEW ECONOMY! AN IDEA WHOSE TIME HAS COME!

2005-06-20T16:55:00.000-07:00

We need a permanent economic stimulus generator in this time of financial trepidation!

Too many Americans are feeling financial angst. Uncertainty breeds fear, and fear slows consumption. We must eliminate the tyranny of uncertainty from our shores forever!

As Franklin Delano Roosevelt said, "we have nothing to fear but fear itself!"

It is time for The Agency For The Enablement of Consuming!

This new and necessary agency's primary mission will be to provide perpetual stimulus for the economy.

This agency will also guarantee the consumer with the security and dignity befitting their true contribution to global job creation.

Finally, the professional consumer will be recognized for their heroic efforts on the behalf of those who do not have talent to be true consumers.

Never again will Americans have to tolerate the tedium and stress associated with working. Let the populations of other nations do the working. We have evolved beyond being mere workers. In this era of global competition, Americans must do what we do best. Americans are the best at shopping, creating codependent support groups, and doing lunch.

We ask all to come together to insure that the Congress creates this vital agency. This is a "now" agency for a N.O.W. nation!

Powers Granted to The Agency For Enablement Of Consuming

This new federal agency will be empowered to guarantee complete total financing of all consumers. This agency's authority will insure that the economy maintains a minimum growth rate of twenty percent per annum.

This agency will have authority over the bankruptcy laws of the United States. Any time the Consumer Confidence Index drops below 95 percent, this agency is empowered to dissolve all consumer mortgage and credit card debt.

This new agency will forever remove uncertainty over the future for the professional consumer by providing pensions and medical insurance for all qualified consumers. This is in addition to an entitlement of $2500 per month for living expenses for a single consumer. Each dependent will increase the consumer's entitlement by $750 per month, up to a maximum of $10,000 per month.

The accumulated psychic damages from prior generation's attitudes towards minorities are automatically redressed by the authority granted this new agency. All victims of persecution (both prior and current generations) will receive double the monthly entitlement allowed to white males, and their families. However, mixed marriages will receive a special bonus consumption allotment for assisting in our nation's goal of diversity!

This agency also redresses the physical and mental risks of consuming that have been traditionally borne by women throughout history. Should a woman have a physical or mental breakdown while consuming for her country, the business owners that caused this event will be subject to a $1,000,000 fine and payment of all expenses necessary for her complete physical and psychic recovery. This new agency will guarantee that no woman will ever again be subjected to any stress which might impair her consumption function!

This agency will also hire psychic healers and channelers to insure that any and all psychic damage to consumers is identified and redressed. The agency will establish professional standards that healers and channelers must meet prior to employment with the agency. The agency will also work with the appropriate government agencies to facilitate the financing for professional schools of psychic healing and channeling. This will allow the agency to fulfill its objective to insure a sufficient quantity of qualified psychic care practioners to meet the needs of the new society.

California has already mandated tribal psychic healing methods as mandatory for the Hmong peoples. New careers abound in California as a result of this enlightened court ruling! Sacramento's Third District Court of Appeal ruled that the slaughtered animals and herbal medicines were part of a traditional Hmong spirit-calling ceremony called Hublee, designed to heal the souls of those who are sick and injured. The new agency would automatically address this pressing need via its
professional cadre of psychic healers and channelers.

This agency will insure that all student loans are placed in a suspense account, pending later resolution by a rescheduling of all government debt. In the interim, the necessary interest payments will be borrowed by the government. These new IOU's will be placed into the same trust fund that holds the Social Security IOU's. This will insure confidence by the lenders in this government agency's creditworthiness.

This agency will be responsible for the issuance of Consumer Debit Cards to all citizens over three weeks old. This will insure that all consumers will have their own Consumer Debit Card. This will allow minors to learn the art of consuming from the beginning of their development This new childhood conditioning program will eradicate antisocial traits such as saving, investing, and frugality from the society in only one generation. Studies have shown that this double crediting of family's accounts will create 1,000,0000 new jobs.

This agency will be responsible for the creation of, and the enforcement of the Professional Consumer status. The Agency will have complete access to all consumer expenditures to insure that no moneys are diverted into selfish, socially deviant activities such as buying assets that do not depreciate.

Buying raw land or commodities is a forbidden activity. The purchasing of gold, silver, collectibles such as gold jewelry and rare watches, and the hoarding of currency over $25.00 are also prohibited activities The penalty for these activities is suspension of the citizens Professional Consumers status.

The establishment of IRA's or 401 K's show a lack of faith in your government. This deviant behavior will be deemed an antisocial action, and will result in a permanent loss of your Professional Consumer status.

Any consumer who has lost their Professional Consumer status will be denied all medical services (including dental and psychic health services), all further credits to their good consumer retirement account, and a 80 percent reduction of their monthly entitlement ration. Any consumer who allows more than a five percent equity buildup in their residence will lose their Professional Consumer status until such time as they refinance their residence, and begin consuming with the funds.

The last power given to this agency is the authority to award the Medal Of Honor to any consumer who dies while engaging in extraordinary consumption. This new category of the Medal Of Honor will show the public what is expected of them in this new economy. All recipients are eligible for burial in the shopping center of their choice at the government's expense!

The Costs and Benefits of this New Agency

Studies suggest that all the costs incurred by this agency will be offset by the new bull market in equities. Investors may have complete confidence that the Dow Jones Industrial Average will reach 1,000,000 three years after the creation of this agency. This will completely eliminate the pension crisis that so many corporations are facing today.

Economists in the real estate sector estimate that housing prices will increase 40 times with this new stimulus. The taxes collected from real estate sales should eliminate the true National Debt in four years.

Some economists estimate that the net trickle down effect will result in quintupling the GNP, and create 1,900,000 jobs No wages and benefits have to be paid, because all consumers will have their Consumer Debit Cards, which provides for all expenses.

A small increase in business taxes will occur, but most businesses will be so happy to have free labor that the new 90 percent business tax should not be considered onerous. The reality is that the consumers have most of the votes, so there will be no real resistance to this tax increase from the Congress.

Freed from the tyranny of employee costs, businesses will create huge staffs. Some studies have shown that there will be soon more jobs available in the US than there are workers on the planet. This will create major breakthroughs in robotics, which will transform the US into the supreme technologist of the globe.

One study estimated that the creation of this agency will create $17,000,000,000 in new spending for the US. It will also eliminate counterfeiting of our currency, and identify theft, as there would no longer be any profit in these activities. Violent crime would plummet as most people will now be properly medicated.

In fact, many criminals have already changed their behavior as a result of the existing Medicare program. In earlier years, sex offenders would have resorted to crime to get their Viagra. Now Medicaid provides Viagra for them, removing the need for them to resort to crime to get their drugs. Medicaid may be the only process left in America that hardens American males at this time.

Here we see the first hint at how successful this new government agency will be at stimulating new business opportunities. Medicaid coverage providing Viagra for sex offenders has already yielded many benefits. The drug companies profits are up, demand for sex abuse therapists is up, increased demand for sex crime experts in the police departments, more tax collectors hired to collect the new taxes, more newspaper ads for property tax liens filed and the resulting tax auctions, etc.

This federal agency will create untold wealth for the entire globe!

If none of the expected financial benefits should materialize, we can always issue 100 year bonds. One Hundred year bonds were popular in the 1890's.After all, "we owe it to ourselves" Issuing 100 year bonds insures that the generations yet unborn will get stuck with the whole bill, and we won't have to listen to them complain about their status as financial slaves. Think of all the wonderful benefits that will occur from issuing all these new bonds. The money supply will go into Warp nine!

Forget E Pluribus Unum. This nation's motto is Got Pork?

Wayne N. Krautkramer
Onlypill@cox.net

THE COMMITMENTS OF TRADERS REPORT! WHAT IS IT? WHAT DO YOU DO WITH IT?

2004-10-20T13:26:00.000-07:00

The Commitments of Traders report is now being referred to as a conspiracy by some writers. Others are claiming the Commercials are wrong, and that the Speculators are correct. Another camp claims the Large Commercials (Hedgers) are never wrong. A quick analysis should assist us in resolving this controversy.

WHAT IS THE COMMITMENT OF TRADERS REPORT?

The first Commitments of Traders (COT) report was published for 13 agricultural commodities as of June 30, 1962. At the time, this report was proclaimed as "another step forward in the policy of providing the public with current and basic data on futures market operations." Those original reports were compiled on an end-of-month basis and were published on the 11th or 12th calendar day of the following month.

Over the years, in a continuous effort to better inform the public about futures markets, the Commodity Futures Trading Commission has improved the COT in several ways. The COT report is published more often—switching to mid-month and month-end in 1990, to every 2 weeks in 1992, and to weekly in 2000. The COT report is released more quickly—moving the publication to the 6th business day after the "as of" date (1990) and then to the 3rd business day after the "as of" date (1992). The report includes more information—adding data on the numbers of traders in each category, a crop-year breakout, and concentration ratios (early 1970s) and data on option positions (1995). The report also is more widely available—moving from a subscription-based mailing list to fee-based electronic access (1993) to being freely available on the Commission's internet website (1995).

The COT reports provide a breakdown of each Tuesday's open interest for markets in which 20 or more traders hold positions equal to or above the reporting levels established by the CFTC. The weekly reports for Futures-Only Commitments of Traders and for Futures-and-Options-Combined Commitments of Traders are released every Friday at 3:30 p.m. Eastern time
.
Reports are available in both a short and long format. The short report shows open interest separately by reportable and nonreportable positions. For reportable positions, additional data are provided for commercial and non-commercial holdings, spreading, changes from the previous report, percents of open interest by category, and numbers of traders. The long report, in addition to the information in the short report, also groups the data by crop year, where appropriate, and shows the concentration of positions held by the largest four and eight traders.

Current and historical Commitments of Traders data are available on the Internet at the Commission's website: http://www.cftc.gov. Also available at that site are historical COT data going back to 1986 for futures-only reports and to 1995 for option-and-futures-combined reports

We now know that the COT is a government generated report that publicizes the total commoditity futures positions held by each of the two main categories (Commercial, and Non-Commercial). This report is issued weekly by the Commodity Futures Trading Commission (CFTC). This allows one to see the changes in their holdings.

It is very questionable that the COT report represents a conspiracy of some kind, given the source, and the continual updates of the information. This would require a massive government conspiracy, covering numerous agencies.

HOW DOES ONE INTERPRET THE COT REPORT?

This part of the study becomes murky. It appears that there are three differing opinions. The basic argument comes down to their belief in a "battle" between the Large Commercials (Hedgers), and the Large Speculators. Each side either believes that their "team" is the superior in terms of success, or that the COT is irrelevant. In the interest of objectivity, I will present all positions.

The Forecasting Methodology By William L. Jiler COMMODITY RESEARCH BUREAU

Basically, we tried to determine the "forecasting" performance of the major identifiable groups of market participant—Large Hedgers, Large Speculators, and Small Traders. It was logical to assume that the larger and more sophisticated traders should have market insights that would enable them to predict futures price movements, if not infallibly, at least more accurately than the small traders who presumably included the "uninformed public." We also thought it was possible that the sizes of the various market positions, at different times, could well result in a type of self-fulfilling prophecy.

From the statistics in the "Commitments if Traders" report, we were able to approximate the net positions at the end of each month for Large Hedgers, Large Speculators, and Small Traders. We averaged their month-end statistics over a number of years to find out what their normal positions would be at any given time of the year. We then compared each group's actual position with their so-called normal position. Whenever their positions deviated materially from the norm, we took it as a measure of their bullish or bearish attitude on the market.
By studying subsequent price movements, we were able to establish "track records" for each of the groups. As anticipated, we found that Large Hedgers and Large Speculators had the best forecasting records, and the Small Traders the worst, by far. We were somewhat surprised to find that the Large Hedgers were consistently superior to the Large Speculators. However, the predictive results for the Large Speculators varied widely from market to market.

The differences between their current net open interest position and the seasonal norm supply us with a tangible percentage measure of the degree of bullishness or bearishness of each group towards a particular market to a certain extent. From these "net-net" figures, we obtain a configuration of market attitudes of the principal players. From our research and long experience we have drawn up some general guidelines:

The most bullish configuration would show large hedgers heavily net long more than normal, large speculators clearly net long, small traders heavily net short more than seasonal. The shades of bullishness are varied all the way to the most bearish configuration which would have these groups in opposite positions-large hedgers heavily net short, etc. There are two caution flags when analyzing deviations from normal. Be wary of positions that are more than 40% from their long-term average and disregard deviations of less than 5%.

We'd like to present some examples of how we utilized this open interest analysis in our "Technical Comments" section of the CRB Futures Chart Service. In late August of 1983, we turned bearish on sugar when it was over 10¢ a pound. Throughout 1983 and 1984, we advocated a bearish stand even though prices had dropped below 4¢ to 16-year lows. An important reason for our doggedness, in addition to the bearish chart, was our analysis of the "Commitments" report. For over two, years, the Large Hedgers' average net short position was over 20% larger than their previous 6-year average. Small traders, despite tremendous losses, averaged almost 20% higher net long positions throughout the entire debacle.

In August of 1983, Chicago wheat futures soared to new contract highs. The charts were very bullish, which we acknowledged in our "Comments" of August 12, 1983. However, we noted that the latest "Commitments of Traders" report sounded a negative note. Large Hedgers were 36% net short and Small Traders were 24% net long, both way over their 10-year averages at that time. Subsequently, the market topped out and prices trended lower for the next 6 months.

A study of the open interest configuration for corn and soybeans just prior to their spectacular bull move in the summer of 1983 will show how the analysis "did" and "didn't" work. It worked for corn, which showed Large Hedgers with net long positions well above normal and Small Traders net short. This bullish pattern was just the opposite of the soybean open interest. Here, Large Hedgers were heavily net short and Small Traders had a net long position of 20% versus a more normal 10% for June. Yet, both commodities enjoyed similar bull moves. An unforeseen drought that summer probably accounted for the strange results.

While we have shown only some relatively recent examples of this kind of open interest analysis, our experience with the technique goes back over two decades. The performance patterns are fairly consistent. Yet, we have to admit that there were exceptions that proved to be quite dramatic. Therefore, it is important also to utilize other available technical and fundamental tools to arrive at a high probability of success in forecasting prices. The nature of the events that shape price trends of futures contracts should keep even the most proficient of technical and fundamental analysts on their guard and flexible at all times. International developments, weather, and politically-motivated legislation are among the unpredictable forces that can change the direction of the markets in an instant. There is no master key that can unlock all the doors to successful price forecasting. Nevertheless, we believe that the proper interpretation of the Commitments of Traders" reports is valuable and belongs on the analyst's key ring.

Jim Bianco, President of Bianco Research

Looking at things from a different angle (as he is wont to do), Jim Bianco, president of Bianco Research in Barrington, Ill., focused on the Commercial hedger's vs. Large speculators rather than hedgers vs. small traders. Why? Because "small traders" refers specifically to the volume of activity rather than style (hedgers or speculators), Bianco explained. Large speculators are just that, he said, "trend-following technical types" with no position in the underlying asset, in this case the S&P 500 cash. In the latest report, the large speculators were net long 10,721 contracts -- near-record levels as well.

Historically, "commercial hedgers have been right the vast majority of time and the speculators wrong," Bianco said plainly. How wrong? Large speculators were net short S&P 500 futures every week except five for the six years ending May 16, while commercial hedgers were net long roughly 95% of the time, or all but about 16 weeks, he reported. (Given that the S&P 500 went from roughly 300 to 1500 in that span and these are "naked shorts," Bianco wondered how speculators managed to stay in business. He mused that there probably has been a big turnover in their ranks.)
Bianco offered two caveats to analysis of the report:

One, when commercial hedgers get it wrong, it's usually in a "major way" where they miss a major secular change. For example, commercial hedgers were net short crude futures for much of 1998 and 1999 as the commodity plunged to $10 a barrel, but remained so during the initial phase of its recovery to above $30 this year. "Eventually, they got back in synch, but struggled in the beginning."
Two, May 16 is significant because the hedgers and speculators swapped positions (the former getting short, the latter long) in conjunction with a change in the reporting requirements by the CTFC. Previously, trades above 600 contracts were considered "large" vs. small. Since May 16, the threshold has risen to 1000.
"The CTFC is not going to recalculate [the reports] going back in time so we effectively have six months of history and can't read into this either way," Bianco
said.

The Myth of Commercial Superiority in the Futures Markets Dan Norcini

Once again we see that many in the gold community are anxiety-laden with dread over the prospects for poor "ol Yeller. As can be expected, the "I never met a gold rally I could not pick a top in" expert advisors are warning of impending disaster for gold bugs. Some of these gold perma-bears, and I hate to sound too piquant, remind me of roaches that emerge as soon as the lights go out in the kitchen. They run hither and thither defiling everything they come in contact with only to scurry back into the cracks and crevices as soon as the lights come back on. "Gold is finished". ""The top is in and we are looking for gold to move back down in earnest". "The nth super-cycle has combined with the xth sine wave that has harmonized with the zth multi-year squiggly whatever to tell me that the golden goose is cooked". And so on and so on and so they pontificate, ad infinitum, ad nauseam!

To buttress their claims, they trot out the war-wearied, old soldier argument that the Commercial category, comprised of the "genius, boy wonders, miracle working, epitome of wisdom and knowledge" traders have amassed a sizeable net short position against the poor, dumb, ignorant, hapless, witless speculators who have moved over to the net long side of the market. Obviously, the "smart" money is betting on declining gold prices while the dim-witted speculators are long and wrong or so the argument goes.

Is this really the case however? Are the commercials the superior traders? Do they always make money? Can the hapless speculators, especially the feeble small traders ever hope to beat the commercials? If the answer to this last question is, "NO", then I submit the futures markets might as well be shut down since no small trader should ever attempt to defy the powerful commercial interests. Happily for us, the answer is not, "NO", but is rather the opposite. The small specs and the large specs are quite capable of regularly taking money out of the market and right out of the commercial category's pocketbooks if they trade smart.

We find no reason to believe that Commitments of Traders Report is manipulated by the CFTC or the FDA. However,the increasing frequency of the COT Reports may be having a deleterious effect on its usefulness. The historical value of the COT Report was based on the monthly cycle. We are now using a weekly report. We may be comparing apples to oranges. A monthly chart is more reliable than a weekly chart for trend determination!

Another problem is the interpretation of a Large Commercial's (Hedgers) activites. They are long the commodity by definition. Their primary concern is to avoid a price break which would reduce the value of their inventories.A rising market is not a major focus of their trading activites. Therefore, it seems likely that the Large Commercials (Hedgers) will be the best guide for predicting bear markets. The very size of their positions preclude trading for quick profits.

The question of proper interpretation of the COT must be adressed.Fortunately, various authors have shared their perspective on the value and use of the COT report.

Jim Bianco found that the Commercials (Hedgers) were almost always right, and the Large speculators were almost always wrong. (Given that the S&P 500 went from roughly 300 to 1500 in that span and these are "naked shorts," Bianco wondered how speculators managed to stay in business. He mused that there probably has been a big turnover in their ranks).

William L. Jiler "We were somewhat surprised to find that the Large Hedgers were consistently superior to the Large Speculators. However, the predictive results for the Large Speculators varied widely from market to market".The Commodity Research Bureau studies validate the Large Commercial's superiority in market forecasting.However, one would have to use the interpretative rules developed by the CRB.

Dan Norcini finds that the COT is a secondary input to his trading activites Mr. Norcini is adamant that the following the trend is the primary approach, and all other factors are for confirmation only.

Jim Sinclair gave this response to a question about the COT. "I put more attention on the price movement of gold and the MACD 3,7 & 9 plus Momentum 14 than I would now on COT. Therefore, I make nothing of COT either bullishly or bearishly on gold. Also, do not look at static numbers on anything but rather look for trend. COT is more important on Cotton than it is say for gold."

George Paulos volunteered the following observation; "I watch the COT myself for gold and silver. There seems to be some correlation with intermediate trends, but the other markets don't make sense to me.".

Summation

The readers will have to make their own minds from the evidence presented. My personal opinion is that Mr. Sinclair, Mr. Norcini, and Mr. Paulos have the best of this argument Perhaps it's time to downplay the COT Report. It appears to be needlessly complicating our trading strategies! Most of the time the markets are in a trading range, or trending upward. The COT is the most useful only a small percentage of the time, but we must trade most of the time. Let's rely on tools that work most of the time!

FORGET THE DRAMA! TRADE WITH THE TREND!

Wayne N. Krautkramer Email:onlypill@cox.net
http//onlypill.tripod.com

THE FEDERAL RESERVE'S LATEST SCHEME TO STEAL YOUR MONEY!

2004-10-18T01:22:00.000-07:00

The biggest change of the banking law in years becomes effective in October 28,2004. This "enhancement" is called Check 21! You will probably have higher checking account services fees if you are a customer of the Federal Reserve System. Upgrading is mandatory and automatic for all personal and business checking customers. Sir Alan is now learning from Microsoft. Let's cut to the chase, and see what Sir Alan has created for us.

THE HISTORY OF CHECK 21

On December 21, 2001, Chairman Greenspan sent the original Check 21 proposal to both the Senate and the House Banking Committees.

The Check Clearing for the 21st Century Act (Check 21) was signed into law on October 28, 2003, and will become effective on October 28, 2004. Check 21 is designed to foster innovation in the payments system and to enhance its efficiency by reducing some of the legal impediments to check truncation. The law facilitates check truncation by creating a new negotiable instrument called a substitute check, which would permit banks to truncate original checks, to process check information electronically, and to deliver substitute checks to banks that want to continue receiving paper checks. A substitute check would be the legal equivalent of the original check and would include all the information contained on the original check. The law does not require banks to accept checks in electronic form nor does it require banks to use the new authority granted by the act to create substitute checks.

CHANGES TO CHECK 21 SINCE ORIGINAL LAW PASSAGE

The Federal Reserve Board on Monday approved a proposed rule to amend Regulation CC and its commentary to implement the Check Clearing for the 21st Century Act (Check 21 Act). The Check 21 Act was enacted on October 28, 2003, and becomes effective on October 28, 2004.

To facilitate check truncation and electronic check exchange, the Check 21 Act authorizes a new negotiable instrument called a "substitute check" and provides that a properly prepared substitute check is the legal equivalent of the original check for all purposes. A substitute check is a paper reproduction of the original check that can be processed just like the original check. The Check 21 Act does not require any bank to create substitute checks or to accept checks electronically.
The Board's proposed amendments: (1) set forth the requirements of the Check 21 Act that apply to banks; (2) provide a model disclosure and model notices relating to substitute checks; and (3) set forth bank indorsement and identification requirements for substitute checks. The proposed amendments also clarify some existing provisions of the rule and commentary.
The Board's Federal Register notice is attached. Comment on the proposed rule is requested by March 12, 2004.

PROBABLE EFFECTS OF CHECK 21 AS ESTIMATED BY THE AICPA!

As we move toward a truly electronic society, what we once demanded in print is changing before our eyes. Electronic delivery is affecting almost every industry, and banking is no exception. In fact, many banks have already begun truncating checks by delivering photocopies of checks or by sending a list--detailing the check number, the amount, and the clearing date--and holding on to the originals instead of sending them back to consumers. On October 28, 2004, the Federal Reserve will authorize entities in the check clearing process to take this one step further. Any entity in the clearing check process will be able to truncate checks and forward an electronic copy of the check. When this occurs, the electronic image of the check must be capable of being transformed into a "substitute check" or a printed, electronic image of the original that will now be recognized as the legal equivalent of the original check.

The check truncation concept had been around for many years, and many drawer banks truncated checks in their monthly statements to customers. The passage of the Check Clearing for the 21st Century Act, or Check 21 Act, was helped by the terrorist attacks of 9/11. The grounded planes cost the banking industry billions of dollars as check processing was grounded as well. Electronic delivery means banks will no longer have to fly checks all over the country, and consumers may receive copies of their checks instead of cancelled paper checks. While the Act is voluntary, most banks are expected to take advantage of potentially significant cost savings, with the larger institutions leading the pack. It is expected that the process will take a number of years before it becomes ubiquitous.
The intent of the Act is to cost-effectively and efficiently streamline check processing by enabling the electronic processing of checks. The ability to process checks electronically will decrease processing time, transportation costs, and the possibility of items lost or destroyed in transit. Checks will clear in hours instead of days because a substitute check can be accepted as legal. And although the process is voluntary for all banks in the clearing process, once one bank decides to create a substitute check, all other downstream banks involved in the clearing process must use the substitute check.
Any bank in the check clearing chain can initiate "truncation" and create a substitute check. Whether the substitute check is then forwarded physically or whether it is transmitted electronically will be determined by the agreements between banks in the clearing system. Banks and institutions will also make their own policies on how long to keep the original check.

What is a Substitute Check?

The Check 21 Act authorizes a new negotiable instrument called a "substitute check." A substitute check is a paper reproduction of the original check that contains an image of the front and back of the original check and bears a MICR line containing all the information appearing on the MICR line of the original check. It conforms, in paper stock, dimension, and otherwise, with generally applicable industry standards for checks; and is suitable for automated processing in the same manner as the original check.To create a substitute check, an electronic image of the original check is made. Once this happens, the original check is truncated, or taken out of circulation. The substitute check contains a legend that reads "This is a legal copy of your check. You can use it the same way you would use the original check."
The Check 21 Act provides that a properly prepared substitute check is the legal equivalent of the original check for all purposes. It does not require a bank to create substitute checks or to accept checks electronically. In addition, it includes new warranties, an indemnity, and expedited recredit procedures that protect substitute check recipients. The substitute check is expected to replace paper checks from the processing system over time. You will always be able to get substitute checks from your financial institution but they may only be available upon request.

How will it affect me?

Although the effects of the Act will not happen overnight, there are several implications to be aware of.As banks begin to truncate you will see fewer and fewer original checks as they are replaced by substitute checks. Also, as banks begin to move towards electronic transmission, the physical substitute checks will be replaced by electronic images. Decreased processing time means that there will be a reduction in the "float time," the amount of time between when you write your check and when it clears. This can be a negative for consumers, because the speed of electronic transfers decreases the "float" that enables consumers to keep their money in their account until the check they have written clears.Deposit clearing rules are not affected by the Check 21 Act. Therefore, while the decreased processing time will reduce the length of time that a check written on your account remains in the check clearing system before being charged to your account, the length of time that a bank holds checks deposited into your account before crediting your account with the deposit will vary depending on your relationship with your bank.

In disputes, substitute checks will be recognized as the original by the courts, retailers and other providers. Detecting check fraud may be more difficult as a result of the Act. But the Federal Reserve maintains that since the original check is no longer used for processing, the security of the electronic systems will reduce human access to your financial information. In addition, the shorter processing time will allow the identification of check fraud or forgery more quickly. However, proving alterations and forgeries may become more difficult if there is no access to the original paper and ink which can provide important clues such as pressure points.

Implications for Auditors and for Businesses

Banks have never been required to return original checks to commercial clients. The new Act does not specify what must be returned to the customer. That decision is left up to the bank. For instance, a bank may simply send a monthly electronic list of checks and the dates they cleared with links to the electronic check image. However, a customer can require the bank to return a "substitute check" if the customer has a need for a legal equivalent of the original check.
Because of the range of delivery options, understanding what a financial institution will return should be a top priority for auditors and for management. Management should make it a top priority to speak directly with their financial institutions to determine exactly what a bank will provide. Knowing exactly what a bank will disseminate and return will enable management to revise, if needed, their internal controls over cash.

Since the Act specifically states that the substitute check has all the force and effect of the actual cleared check, auditors may use a substitute check as evidential matter. In certain cases, an electronic check image will suffice depending upon an auditor's judgment and his or her assessment of fraud risks. Since the original check will no longer be available, auditors should be aware of the Act and consider, while planning an audit engagement, what changes they may need to make to their audit procedures. Both auditors and their clients should be prepared to have these discussions during audit planning.
More information… The Check 21 Act was enacted in October of 2003, and becomes effective on October 28, 2004. More information on the Act, including Frequently Asked Questions can be found at http://www.federalreserve.gov/paymentsystems/truncation/default.htm.

THE ECONOMIC CONSEQUENCES OF THE CHECK 21 ACT

Sir Alan has outdone himself with this legislation. He has not only lowered the check clearing costs for the banks, but he has also created the probability of a large increase in fee income for the banks as many customers "bounce" checks. Yes, the "float" is gone. Many consumers and small businesses have relied on the "float" to "get by" for years. This option is soon extinct. There is also the possibility of major fraud with this new system (at least in the opinion of the AICPA). The bean counters may be right on this potential problem. "But wait. There's more!"

SIR ALAN'S MONETARY "PIECE DE RESISTANCE"

Sir Alan has played the liquidity card to defeat the recent slowdown in the growth of the money supply. Most readers are familar with the monetary indicators and their interpretation. We diligently watch the rate of change in M1, M2, M3, etc. However, the wild card in monetary calculation is velocity. The velocity variable is the rock that sank the Chicago School of Economics. Milton Friedman failed to incorporate velocity into his economic models. J. M. Keynes made the same mistake. Ironically, Monetarists and Keynesians may have more in common than either one would ever acknowledge.

Sir Alan is ready to implement the upgraded velocity turbocharger. The termination of the float guarantees that the velocity of the monetary measure M1 will go up. We are now entering the uncharted parts of the monetary universe at Warp Nine speed.

We may be doomed, but we will be liquid!

Wayne N. Krautkramer onlypill@cox.net
http://onlypill.tripod.com/zarathustra

FLASH! CONTRACT NEGOTIATIONS WITH TITANIC MUSICIAN'S BREAKDOWN!

2004-09-24T18:23:00.000-07:00

This just in! Contract negotiations have broken down in the final session between management and the musician's union. Management is said to be firm on its refusal to increase pension benefits. Management claims that they cannot afford to give full retirement benefits to musicians with only eighteen months of service to the firm. Management also claims that retirees and their dependents should not have a right to free services from the company. The union claims that it just not true that the last two cruises had 80 percent non paying passengers. It was only 78.3 percent non paying passengers. Complicating the problem is the government. The prices of luxury goods and services are being forced down by government edict. Social workers believe that exposure to luxury may help build the self esteem of the entitlement recipients.

Another hurdle is the sex change on demand policy. Management claims that maintaining a sexually balanced workforce has become impossible due to this policy. The law requires the firm to have equal numbers of men and women. Additionally, the ratio of heterosexuals and homosexuals must be constant. With all these sex changes and sexual preference changes occurring, the firm is finding it difficult to maintain legally mandated ratios. The management reports that the firm owes over $15 million to the government in back fines for failure to comply with the sex/ sexual preference ratios. The government has deferred enforcing the fines until the firm becomes profitable.

Another hurdle appears to be the maintenance of the lifeboats. The union claims that the lifeboats are poorly maintained, and therefore unsafe. Management selected ten lifeboats, and put them overboard. Only four lifeboats sank. Management contends that the test proves that the majority of the lifeboats are safe. The union workers seem to be disenchanted with this argument. Management admits that maintenance has been reduced, but claims that the last union contract giving maintenance engineer's $340,000 per year made maintenance uneconomical.

The firm has tried to replace some of the lifeboats, but the last lifeboat manufacturer went bankrupt last year. It was discovered that their pension and medical liabilities exceeded the firm's assets by 17,000 per cent. They were unable to get new financing. Their bankers are currently in reorganization. It appears that the bankers had been making real estate loans based on overstated appraisals. The regulators have assured us that there was no wrong doing by these banks. It is standard trade practice to over appraise in a bubble. After all, how often do major economic contractions occur? Our truth is that we are will never be economic girlie men! Nor will we ever be economic manly girlies!

Management has informed us of an exciting internal challenge.There is an extrodinaryly high turnover in their supervisor and junior executive ranks. This is accompanied by a high cost of death benefits as the suicide rate continues to climb. Management is confident that ongoing negotiations with a foreign service center will allow management to subcontract basic management tasks. This will transfer these costs to a country where wages and death benefits are much cheaper, and the population is too high. Their trade ministry is very excited about the potential population reduction. They are waiting for a US. foreign aid bill to be approved by Congress. The proceeds will pay for the funeral homes, crematoriums, and cemeteries. Their trade ministry has graciously volunteered to recruit their family members to buy, and manage the funeral operations.

The company has assured its customers that their reservations are still valid. The last day of music will occur on October 1, 2004. However, the ship will continue operating, and management will provide Karaoke, bingo, and various parlor games. The ship's social director is predicting a real turnaround in bookings as people hear about the Back to Basics theme for the new cycle. She feels that innovations such as the BYOB (bring your own bottle) are just the kind of details that will make booking a cruise on the Titanic unique. Gruop discounts are available for for Titanic passengers at all participating Zodiac dealers. "But wait.There's more." Next month, all Zodiac purchasers will receive free delivery to their staterooms. A great price for a great cruise!

The spokesperson for the International Brotherhood of Navigation and Hazard Detection Engineers has just informed us that they will support the musician's union. They will not be aboard for the cruises after October 1, 2004. Management has assured us that this will not affect the cruise schedule. They feel that people will become more aware of their environment once the music stops. Their social director is confident that October 1, 2004, will be the start of a new trend for the Titanic.

Wayne N Krautkramer onlypill@cox.net
http://onlypill.tripod.com/id14.html

BOOMBUST Cycle Predictor Point
October 1, 2004: http://onlypill.tripod.com/id14.html

THE FEDERAL RESERVE! ITS ORIGINS, HISTORY, AND CURRENT STRATEGY

2004-09-15T02:52:00.000-07:00

Few perceive the truth about the Federal Reserve. Rare are those who know its origins. It is right in front of us, but our relative ignorance of economics and history is their protection. A quick history lesson is in order.

On October 14, 1066, AD., King William I (the Conqueror) founded the English monarchy. The Corporation was created by William in 1067 AD. to facilitate trade, and assure the continuation of the wealth of the monarchy. The City of London's legal name is The Corporation of the City of London. The City of London has unique political and economic privileges that do not apply to Greater London, or anywhere else in the British realm. The "City" even has its own police force that is sovereign.

The Bank of England was granted a royal charter on July 27, 1694, by William III to regularize the monarchy's finances. This scheme was invented by a Scot promoter named William Paterson. The scheme was to create a bank with a "fund for perpetual interest". Fractional reserve banking was created, along with the radical monetary concept of a "monopoly" bank which would create money for loans that would never be repaid. A perpetual money machine for the monarchy was born. The permanent National Debt was born. The Bank of England would finance the emerging empire from its headquarters in the City of London. Never again would the lack of money, or liquidity, hamper the British empire under normal economic conditions. Conveniently, the monarchy also controls the City of London. This assures that the heart of the economic machine will always be protected.

The United States fought a hard and expensive war against England in 1776 to achieve sovereignty. That included the right to have her own currency, control her own tax policies, and the avoidance of involvement in the affairs of other nations.

HistoryCentral.com > > War of 1812> United States Declares War on Great Britain
The United States declared War on Great Britain on June 12, 1812. The war was declared as a result of long simmering disputes with Great Britian. The central dispute surrounded the impressment of American soldiers by the British. The British had previously attacked the USS Chesapeake and nearly caused a war two year earlier. In addition, disputes continued with Great Britain over the Northwest Territories and the border with Canada. Finally, the attempts of Great Britain to impose a blockade on France during the Napoleonic Wars was a constant source of conflict with the United States.

The US did everything in their power to remove British influence and control from this continent. Again and again we defeated all attempts to allow our money to be controlled by a National (Central) bank. When Central banks were established, we abolished them. Times changed, and Thomas Woodrow Wilson was elected. The intellectual who wanted the League of Nations (the progenitor of the United Nations) was elected. Under his leadership, we received the Federal Reserve, and the Sixteenth Amendment (Income Tax) shackling us into slavery to the British Crown forever. In 1917, Wilson made the world safe for democracy by plunging the US into World War I

On December 23, 1913, the Federal Reserve Act, also known as the
Glass-Owen Bill, was passed. The Republican controlled Senate rammed the bill through when many members of the US Congress were home for the holiday. The President, Dr. Thomas Woodrow Wilson, signed it into law one hour after being passed by the Congress! Somebody very powerful really wanted this law passed. The Federal Reserve System is an independent central bank. Although the President of the United States appoints the chairman of the Fed, and this appointment is approved by the United States Senate, the decisions of the Fed do not have to be ratified by the President, or anyone else in the executive branch of the United States government.
Buried in the legislation was the granting of total power over the monetary policies of all US banks. A very curious statement is found in the original 1913 law. SEC. 30. The right to amend, alter, orrepeal this Act is hereby expressly reserved. Reserved expressly to whom, or what? No definition isprovided. This is the entire Section 30 statement! "Curiouser and curiouser, cried Alice".

Stock not held by member banks shall not be entitled to voting power. This clause guaranteesthat no outsider can justify buying shares in the Federal Reserve. "But wait! There's more!"

Sec. 341 Second. To have succession for a period of twenty years from its organization unless it is sooner dissolved by an Act of Congress, or unless its franchise becomes forfeited by some violationof law. The Federal Reserve was only given a corporate life of 20 years! Their time was up in 1933. Who was President at that time? Franklin. D. Roosevelt, of course. Somehow, the Federal Reserve's termination did not occur. Reader, do I have your attention yet? My research failed to find any reauthorization of the Federal Reserve Act of 1913, other than the tacit approval given by the Sarbanes-Oxley Act of 2002.

No Senator or Representative in Congress shall be a member of the Federal Reserve Board or an officer or a director of a Federal reserve bank. No member of Congress is have access to the inner sanctum! Hello, what is this? Are they afraid that an American might come upon something untoward?

12 USC 3019 Federal reserve banks, including the capital stock and surplus therein, and theIncome derived therefrom shall be exempt from Federal, State, and local taxation, except taxes upon real estate. People, I think we are a roll now.

SEC. 25.Any national banking association possessing a capital and surplus of 1,000,000 dollars or more may file application with the Federal ReserveBoard, upon such conditions and under such regulations as may be prescribed by the said board, for the purpose of securing authority to establish branches in foreign countries or dependencies of theUnited States for the furtherance of the foreign commerce of the United States, and to act, if required to do so, as fiscal agents of the United States. Such application shall specify, in addition tothe name and capital of the banking association filing it, the place or places where the banking operations proposed are to be carried on, and the amount of capital set aside for the conduct of its foreign business. The Federal Reserve Board shall have power to approve or to reject such application if, in its judgment, the amount of capital proposed to be set aside for the conduct of foreign business is inadequate, or if for other reasons the granting of such application is deemed inexpedient. Wow, the US government has no formal control over the foreign operations of the Federal reserve banks! The Federal reserve banks are exempt from all taxation. These people are very independent. Independent of audits, independent of congressional supervision, and independent of the American voter.

The Federal Reserve claims that nobody owns it – that it is an "independent entity within the government." The Federal Reserve is subject to laws such as the Freedom of Information Act and the Privacy Act which cover Federal agencies but not private corporations; yet Congress gave the Federal Reserve the autonomy to carry out its responsibilities insulated from political pressure. Each of the Fed's three parts – the Board of Governors, the regional Reserve banks, and the Federal Open Market Committee – operates independently of the federal government to carry out the Fed's
core responsibilities. Once a member of the Board of Governors is appointed, he or she can be as independent as a U.S. Supreme Court judge, though the term is shorter. As the nation's central bank, the Federal Reserve derives its authority from the U.S. Congress. It is considered an independent central bank because its decisions do not have to be ratified by the President or anyone else in the executive or legislative branch of government, it does not receive funding appropriated by the Congress, and the terms of the members of the Board of Governors span multiple presidential and congressional terms. (The Fed's financial independence arises because it is hugely profitable due to its ownership of government bonds. (It gives the government billions of dollars each year.) However, the Federal Reserve is subject to oversight by the Congress, which periodically reviews its activities and can alter its responsibilities by statute. Also, the Federal Reserve must work within the framework of the overall objectives of economic and financial policy established by the government.

The only statements of ownership made by the Federal Reserve Board is an allusion to the twelve Federal district banks. This circle puts us back at the beginning, for no information is provided regarding the ownership of the twelve Federal district banks. However, a 1976 government study commissioned by the Federal Reserve Directors revealed the following:

OWNERSHIP OF THE FEDERAL RESERVE Most Americans, if they know anything at all about the Federal Reserve, believe it is an agency of the United States Government. This article charts the true nature of the "National Bank." Chart 1 Source: ** Federal Reserve Directors: A Study of Corporate and Banking Influence ** - - Published 1976 Chart 1 reveals the linear connection between the Rothschilds and the Bank of England, and the London banking houses which ultimately control the Federal Reserve Banks through their stockholdings of bank stock and their subsidiary firms in New York. The two principal Rothschild representatives in New York, J. P. Morgan Co., and Kuhn, Loeb & Co. were the firms which set up the Jekyll Island Conference at which the Federal Reserve Act was drafted, who directed the subsequent successful campaign to have the plan enacted into law by Congress, and who purchased the controlling amounts of stock in the Federal Reserve Bank of New York in 1914. These firms had their principal officers appointed to the Federal Reserve Board of Governors and the Federal Advisory Council in 1914. In 1914 a few families (blood or business related) owning controlling stock in existing banks (such as in New York City) caused those banks to purchase controlling shares in the Federal Reserve regional banks. Examination of the charts and text in the House Banking Committee Staff Report of August, 1976 and the current stockholders list of the 12 regional Federal Reserve Banks show this same family control.

George Bush presided over a minor change in the Federal Reserve Act. The Sarbanes-OxleyAct was passed in 2002. The American Congress failed again to deal with the Federal Reserve. Bush managed to keep all discussion and changes confined to some reporting requirements for financial institutions. Bush knows very well who he serves, and he really serves his master well. It's amazing how few grasped the significance of Alan Greenspan being knighted by the Queen of England! Greenspan was knighted on September 26, 2002. An obvious reward for preventing any real discussion, or change, of the Federal Reserve during the Sarbanes-Oxley Act debates. Had an American President been knighted, serious questions would have arisen. It was so each easier to reward her manager, Alan! Do you still believe that Alan Greenspan has the power of Dearth Vader? He is only a little man, faithfully serving his queen.

The British Crown, or the British monarchy is the owner of the Federal Reserve. This is their real secret. The strategy of the Federal Reserve is their other secret. Again, it is right of front of us, but no one sees the obvious. The strategy of the Federal Reserve is to accumulate all the wealth through the very slow, but effective, technique of currency debasement. The monarchs of old used to shave or clip the coins as they passed through their treasuries. Now the process is more sanitary (no more clipping and scraping all those dirty coins). John Maynard Keynes clearly stated that at there is no more effective method of destroying a society than through currency debasement.

The primary reason for its success is the inability of most people to understand that more is not necessarily better. A recent conversation highlighted Kenyes's observation. There is some agitation to raise the minimum wage in my state. I listened to a proponent of a higher minimum wage. I attempted to point out that an increase in a large number of people's income would only result in prices going up, along with the obvious tax increases. "What was I talking about?" was the response. I explained that some percentage of people might wind up dealing with tax bracket creep (increases), and all will have with the obligatory tax increases that follow from any price increase. If nothing else, the sales tax must go up because the prices have gone up. I was immediately informed that I was the most negative person they had ever talked to.

The Federal Reserve will always debase the currency to take its cut, and guarantee that the government has a tax base available to feed its bureaucratic family. The government is a total slave of the Federal Reserve. For example, analyze the latest real estate boom. There will be a major boost in property taxes based on the new valuations. Many people will be surprised when they receive their new tax bill. This will guarantee more money for the government coffers. They know that people will do almost anything to keep their homes. What's another job or two per family? Besides, the extra job will provide more tax revenue for the government. This will require more day care, or baby-sitting services for many families, which create more income for the government. This will cause more meals to be eaten out, which creates more revenue for the government Meanwhile, prices will continue to go up, which creates more sales tax revenue for the government. Are you getting the point yet?

Deflation is end of the government. The local, state, and federal government will all fail! This is the strategy of the Federal Reserve. The majority of the people will always believe that more is better. Knowing that, and now having a democracy ensconced in the US, it was time to feed and breed. Prices always go up, and everything is "Wunnerful, Wunnerful" Bring on the Champagne Lady. Alan runs the bubble machine. The illusion of money has destroyed most people since society (goverment) developed socialism. Democracy feeds on the illusion of something for nothing. As each demagogue promises more than his competition, the tax burden becomes oppressive. The monetary illusion serves to conceal the costs through currency debasement. This assures the complete destruction of the society that embraces this perversion. Any attempt to introduce logic into a dialogue will be defeated by claiming you're an elitist devoid of compassion. Envy, hate, and manipulated passions are the hallmark of democracies. While all this destruction is occurring, money diverted by the mechanism of currency debasement is constantly being transferred to the British Crown in the City of London.

Any questions, gang?

Free Markets For Free Men

Wayne N. Krautkramer onlypill@cox.net

The Corporation of the City of London:http://www.fact-index.com/c/ci/city_of_london.html
The Bank of England:http://www.fact-index.com/b/ba/bank_of_england.html#History
The Sixteenth Amendment:http://www.lovetolearnplace.com/SpecialDays/IncomeTax/
Federal Reserve Act of 1913:http://aor.cat4.net/federalreserveact1913/
Federal Reserve: 2002 Amendment:http://www.frbdiscountwindow.org/federalreserveact.html
Federal Reserve ownership:http://land.netonecom.net/tlp/ref/federal_reserve.shtml

IS THERE TROUBLE IN THE EMPIRE OF PRINTALOT?

2004-08-24T00:09:00.000-07:00

Is it the best of currencies, or the worst of currencies?, asked the emperor. His economics advisors suggested that the currency will only be safe if the Mad Hungarian is neutralised. The Emperor gleefully agreed. Another chance to use the latest robotics threat remover had surfaced. I need a reason, said he. The geopolitical advisors instantly answered. The Mad Hungarian has weapons of currency destruction! Can you prove that?, asked the Emperor. Sire, look what he did to the British pound; the Queen is still demanding massive amounts of foreign aid from us! OK, said the Emperor, your point is made. Just make sure you eliminate him in the most expensive way possible. I have to have better numbers in the economic reports.

The Emperor mentioned the increase of wailing and gnashing of the teeth by his subjects. His advisors told him of the new demand for cosmetic dentistry as a result of the gnashing of teeth. A new entitlement program for cosmetic dentistry will be a big hit with voters, and the dentists will be big contributors for the upcoming election. The Emperor inquired as to the possibility of wailing being classified as a disease. The advisor's response was swift and sure. No problem! There might be a small delay, but easily managed. Why a delay?, asked the Emperor. Sire, there are no professional wailing therapists at this time. Great!, exclaimed the Emperor. We will need new schools, which will create more construction contracts. More teachers will be hired to teach the new students, and more loans for the tuition. The textbook publishers are always good for campaign contributions. The empire will rally around the War on Wailing.

The Emperor became concerned over rumors that the food supply might be unsafe. His advisors reported that there were no mad cows. Every cow they checked was happily mooing and chewing. Therefore, the scientists and reporters were obviously mad, and in need of another chemical dosage adjustment. This would also help the sales of Prozac, which had been stagnant in recent months. Wonderful, replied the Emperor. Well-adjusted scientists, reporters, and more campaign contributions for the small cost of surplus Prozac. The Emperor then suggested that pizza should be part of the new school breakfast program. Sire, pizza is not a breakfast food!, was their response. Slowly the emperor explained that if emperor Reagan could call ketchup a vegetable, then he could call pizza a breakfast cereal. The emperor mentioned that Pizza Hut was the best Italian pizza in the US. When informed that Pizza Hut is not Italian, the emperor decided to declare Pizza Hut Italian naturalization day as a National holiday. The advisors pointed out that the emperor does not have the legal authority to give Pizza Hut Italian citizenship. He responded by pointing out that the Italians are an under appreciated group in the US, that everybody loves another holiday, and that the Roman Catholic vote might be important in the next election. Struck speechless, the advisors scurried away.

The next major event was a review of the education system. The advisors were concerned that the latest initiatives were failing. The emperor explained the logic of the "Leave No Child Behind" Program. He asked if they found many children falling behind? The advisors pointed out that less children were getting ahead. The emperor reminded the advisors that the program only left no child behind. No one had claimed that all the children would go ahead. He pointed out that all the money being spent was stimulus The teacher's union vote was in the bag. The "All Children Move Ahead" program would be saved until more votes are needed. The education, and children's programs were always big winners, so you used them sparingly. The speech writers were already submitting speeches. The emperor always has 10 to 20 programs complete with emotionally loaded speeches ready to launch at any given time. The government is not the largest employer of psychologists by accident. Every word you see and hear has been scripted for effect. This also creates a demand for more college graduates with degrees in psychology.

Soon all you lucky homeowners will get your new property tax bills. Just keep remembering that you're getting rich while your paying that new bill. It's very expensive to get rich. Don't weaken now; stay the course. The Emperor Printalot may, or may not, come to your rescue

The new cost of energy is a minor disturbance unless you need to use transportation that won't burn hay. Oil and gas are beginning to reflect the Printalot strategy.The Amish might yet rule the world. At least they will have some wealth left. They could less about the Middle East, or any of this other nonsense. Actually, the Amish don't use much electricity either. Why did we used to laugh at these people?

"Life is a tale told by the media, full of taxes and regulations, signifying bankruptcy" I personally guarantee that no politician ever said this!

Wayne N. Krautkramer onlypill@cox.net

Oil:http://www.csmonitor.com/2004/0818/p03s02-usec.html

NOTICE: My new articles will be potsed at http://onlypill.tripod.com/zarathustra/

STRANGELY DRESSED MEN ARE MARCHING AROUND THE OUTSIDE WALLS WHILE BLOWING RAM HORNS! COULD THIS BE JERICHO?

2004-08-02T05:09:00.000-07:00

Plagues and pox, and lakes where boats have no longer have docks, and then it gets serious. There's less water for the crops, and you can't operate the river locks. What does it take to get your attention? The birds can't navigate, and the farms can't be irrigated. Hoover Dam's power generation ability will be impaired if the level of the Colorado River continues to fall. This failure would have a major impact on the power supply for the entire region. I detect the demented mind of FDR at work here. It now appears that the 1930's plan for the development of the West was based on a grave miscalculation about available water. The citizens are beginning to squeal about this old New Deal.

The latest in the financial follies by the FDRians appears to be in Florida. The Mogambo Guru has reported that the telephone and power companies are now recruiting families to enroll their children into the National School Lunch Program. These entitlement recipients will receive subsidized phone service for the entire family. The Florida telephone and power companies are now pimps for the welfare state! Let's hear it for the Gators.In Stimulus Or Bust, We Trust.

Medicos and nurses are busy suturing the tears in Leviathan these days. The one lesion that is spreading quickly is the pension fund problem. On July 23, 2004, United Airlines announced that it had ceased payments to its pension fund. The company had scheduled over 4 billion dollars to be paid into its pension fund over the next few years. On the same day, Turner & Newall announced the cessation of all further contributions to its pension fund. This affects some 40,000 workers. Turner & Newall, located in the UK, is a division of Federal Mogul Corporation (US). The recent bailout of the steel industry by Bush was only a thinly veiled attempt to avoid massive defaults on their pension liabilities.

A short history is order. The Employee Retirement Income Security Act (ERISA) of 1974 was the start of this monster. The Pension Benefit Guaranty Corporation had been formed to insure private pensions. Theoretically, this Federal Agency receives no money from taxes. The PBGC is funded by premiums from employers. On September 5, 2003, the PBGC had news for us. I know this is going to shock you. The PBGC has a deficit. According to the auditors, 80 percent of the single private employers were under funded. The shortfall was estimated at 400 billion dollars.

On April 10, 2004, George Bush signed the Pension Funding Equity Act. This novel piece of legislation allows the government to set the implied rate of return for use in the computation of pension contributions. At some future date, the bureaucrats are going to determine a permanent implied rate of return for pension funds. The higher the implied rate of return, the lower the contribution needed to achieve a specific amount of future money. If one uses an implied rate of return of one percent, large contributions must be made. However, if one assumes a ten percent rate of return, minimal contributions would be needed. Visualize the chicanery that is going to occur with this program. FDRians have never been strong in logic. If they feel that the investments will return at least 20 percent per annum, we could see a scenario where the PBGC begins giving the pension funds money for over performing. In the world of economics, this is called fiscal stimulus. But Wait! There's More!" If you vote for this government in the next 24 hours, they will send everybody 30 more fiscally stimulating entitlements.

On July 28, 2004, the Internal Revenue Service announced that American income has dropped for two consecutive years. This is the first time that this has happened since the inception of the modern tax system during W.W.II. This information is coming directly from the IRS. Do we have a discontinuity here? People, this trend is burnt toast. "We need more spending programs", sayeth the Keynesians. We are already 81 trillion dollars in debt! Let's roll the dice one more time.

Troubled times create great leaders. The Canadians are already providing that leadership. The Canadians have managed to take a firearm registration program that was estimated at cost of 2 million dollars, and blew it up to a final real cost of over one billion dollars. They are horrified because the program doesn't work. Wink, wink! We are talking about some serious fiscal creativity here. Never underestimate a desperate democracy that has access to high quality drugs.

The US continues to ignore the problems of Fannie Mae, Ginnie Mae, Sallie Mae, and its other relatives. The FDRians consider this to be an opportunity for more fiscal stimulus. I humbly offer a solution. We will just reschedule all payments. Payments are to be deferred until January of 3000. Remember, you heard it here first! After all, we owe it to ourselves! John Maynard Keynes would be proud if he were here now.

IT'S 2400 HOURS. DO YOU KNOW WHERE YOUR AMMUNITION IS?

Wayne N. Krautkramer onlypill@cox.net

Links:

Plagues and Pox:
Http://www.hc-sc.gc.ca/english/westnile/
Http://www.lib.uiowa.edu/hardin/md/necrotizingfasciitis.html
Water:
http://msnbc.msn.com/id/5239212/
http://www.rma.usda.gov/news/info/2004/pdf/IrrAssessment2004Billings.pdf
Pensions:
http://www.teamster.org/04news/hn_040726_1.htm
Http://news.bbc.co.uk/1/hi/business/3919199.stm
http://www.detnews.com/2003/business/0309/05/b03-263076.htm
IRS:http://www.nytimes.com/2004/07/29/business/29tax.html?position=&ei=5006&en=26b81d34ef09dc4e&ex=1091678400&adxnnl=1&partner=ALTAVISTA1&pagewanted=print&adxnnlx=1091446899-xfadYaPoAUx31moCJrfxXg
Canada:
Http://www.baselinemag.com/article2/0,1397,1620245,00.asp
The Mogambo Guru:
http://www.321gold.com/editorials/daughty/daughty072804.html

YOU'RE TRAPPED IN A BOX CANYON, STUPID!

2004-07-25T21:32:00.000-07:00

A recent article by a financial writer asked the question, "When will Atlas Shrug?" The writer appears to be assuming that Atlas Shrugging means an immediate total collapse. That is not the way a socialist industrial system fails. Socialist industrial systems fail incrementally. Each subsystem fails, and a temporary patch is applied. First, the roads and bridges deteriorate; then the power, the water, and finally, the food distribution systems malfunction. The usual next step is the establishment of a Blue Ribbon Committee to study the problem There can be no solution, for that would require a focus and investment that a socialist system cannot generate. The never ending claims for increased social spending, and the continuing appeasement of all real and imagined inequities, preclude the option of addressing a major industrial system's malfunction. Machinery and infrastructure have no votes. Politicians only serve the voters, for reelection is their only priority. This continual decline is marked by the increasing calls for tolerance, and a lethargic acceptance of the new reality. After all, the good old days are gone, aren't they?

The last 40 years in the US has been an interesting study in group suicide. The late 1950's to the early 1960's was the climax of large scale capital investment in the public sector. The interstate highway system was completed. The policies of the New Deal had confiscated too much energy (resources) from the private sector. The economy was slowing down. Harold Geneen, the CEO of I.T.T., created the multinational corporation. His rationale was simple. He saw no way that the modern socialist systems of the West could solve the coming crisis. Harold Geneen was correct. He knew that their socialist policies were the cause of the problem; therefore, they would be incapable of solving the problem. The mid 1960's revealed the creation of the Vietnam conflict, as the US government became more desperate to hide its continuing failures. Lyndon Johnson announced the Great Society in 1964. On January 8, 1965, LBJ declared that the "unconditional" War On Poverty had begun. LBJ then proceeded to create the Medicare/ Medicaid programs on July 30, 1965. LBJ's grand finale occurred on January 13.1966 with the creation of the US Department of Housing and Urban Development Act. This became the umbrella for Fannie Mae, Ginnie Mae, Freddie Mac, Sallie Mae, and the FHA. August 15, 1971 was the day that Richard Nixon repudiated the last US dollar link to gold, and 1972 brought us Nixon stating that "We are all Keynesians now". Nineteen seventy-four ushered in the Employee Retirement Income Security Act. This extension of government power occurred under the "conservative" Richard Nixon. The capstone of the socialist onslaught occurred in 1978, a gift from Jimmy Carter. This was the passage of the Humphrey-Hawkins Full Employment Act. America's most underrated economist, Peter Ferdinand Drucker, had predicted all of this in his prescient book, The End of Economic Man (The Rise of Totalitarianism). This brilliant insight into the future of the West was written in 1939.

We should view this progression as nothing more than a continuation of the tax and spend strategies of FDR. Roosevelt was a master of dissembling. Students of political science hold FDR in awe. All employed politicians religiously follow the blueprint that FDR created. Bill Clinton recently stated that he considered FDR to be the greatest American of the last century. No politician leaves the formula. Why should they? The voters have continuously rewarded the socialist agenda by returning these politicians to office. The public worshiped FDR even as he ordered them slaughtered on foreign soil. FDR was (and still is) heralded as the American savior even though unemployment continued to climb through most of his presidencies It was only when we started selling arms to the warring parties in Europe (1938-1939) that the economy showed any signs of recovery. LBJ knew what Americans will tolerate.Ronald Reagan created more government offices, a new executive agency, and ran the US from the largest creditor nation in the world into the largest debtor in the world. He is still hailed as a tough conservative, and the man who held government back. The formula worked again. Ronald Reagan just packaged it differently. Everybody is a marketing manager in the modern socialist countries. Substance is now a historical curiosity.

We have witnessed 40 years of the Great Society, so an audit would not be unreasonable. The "unconditional" War On Poverty has turned into one of the greatest frauds of all time. Poverty has not been eradicated, but billions of dollars have been funneled into the friends and families of the bureaucrats. Food stamps are the unofficial currency of Puerto Rico, and WIC stores are now springing up everywhere in the US. Fannie Mae, Ginnie Mae, and the FHA are a total disaster. The Federal Reserve is totally committed to pumping up the equity markets to avoid the possibility of a bailout of the pension system. Alan Greenspan recently testified that he has real problems with the liabilities of the GSE's.Government Sponsored Enterprises include Fannie Mae, Ginnie Mae, Sallie Mae, etc. The government has implemented the Full Employment Act, and has turned the US into a service worker paradise. The premise that the government can create jobs is true. The problem is that the government cannot create productive jobs. What would Congress and it's entourage of lobbyists know about productive work? We no longer produce goods. It is an economic fact that the production of goods creates wealth through operating leverage. Service industries are inherently inflationary, because there is an equal amount of labor required for every incremental unit of service provided. There are no wealthy service economies. The big problem is tax revenue. How can low paying service jobs generate the taxes required to pay for all the social services they use? We witness the absurd spectacle of service workers receiving social services from government workers who are paid three to five times more than the services workers are paid! Will somebody please explain this logically? Government workers produce nothing except more government workers! We are trapped in a circle with no exit.

The Social Security pyramid scheme has hit the wall. The pyramid is disappearing. There will soon be more people collecting benefits than there are people working. The Social Security Fund never existed. The trust fund fiction was created by FDR to defeat the program's critics. The one variable that might give the system more time, is the fact that you have no legal right to Social Security. Keynesian economics, and socialist central planning, have trapped the Western economies into a slow death. The true US government debt has been estimated to be 82 trillion dollars. Should this socialist delusion continue, we will have to start computing the National Debt in googols. Googols represent very large numbers. Naturally, the government will announce the conversion to googols as a major cost saving measure. All those very big numbers will be reduced to a few googols. The government will save on forms, and computer data storage space. Once the politicians find out that less trees are being cut down as a result of the conversion to googols, the new numbers base will be heralded as a brilliant environmental decision. We are talking about Nobel prizes, and KBE's from the Queen of England! This could warrant the establishment of a new government agency! The government will claim that the new agency will actually be free because it will be funded with the savings from the conversion to googols. It may run a little over budget, but no plan is perfect. Of course, how would one know if they were over budget using googols?

The obvious question is where do we go from here? Dick Stoken, a veteran commodity trader and a very astute observer of the markets and the economy, made an interesting argument in his first book, Cycles (1978). Stoken said that all modern societies have washed away their debts with inflation (debasement of the currency). This would seem like the obvious move for the socialist governments at this time. As Shakespeare said, "Ay, there's the rub". We have to deal with the probability that the past will extrapolate in a linear way into the future. We may be confronted with a discontinous event, which defines a major change in trend. We are witnessing the largest inter generational wealth transfer scheme in history. We are trying to shift our financial obligations onto the next group of workers. Do we really believe that these new workers are this stupid? Why should they be impoverished by paying their elder's bills?The most bizarre part is the fact that the most of elders will dead when these younger workers get the bill for this lunacy! Will they support a government that has enslaved them financially? Would you? Should you wish to revert to legalisms about their duties, The Declaration of Independence will help you to understand their inalienable rights.

When will Atlas Shrug? Atlas has not only shrugged, he has sold his real estate at the top, and is now ensconced in Thailand, China, India, the Baltic States, and anywhere else that has economic freedom. Corporations are fleeing the US as if there were vampires here. Corporations are aware of the differences in the value systems of different countries, and are acting rationally by leaving the US for environments that are more" producer friendly". We should remember that the American value system was once very producer friendly. Calvin Coolidge was the President from 1923 till 1929. Coolidge said, "After all, the chief business of the American people is business". There is a very serious disease in the US. It is highly contagious, usually fatal, and requires extreme measures to stop its spread. It is the ultimate biological weapon. It slowly destroys entire societies. All of the nation's creative energies are utilized in working the system, whether it be for handicapped privileges, or for increases in the particular entitlement they are currently receiving. Slowly, the economy has changed from production to parasitism. Collectivism makes Ebola look like a Christmas present.

Free Markets For Free Men!

Wayne N Krautkramer

COMMODITIES, A NEW AND RADICAL CONCEPT!

2004-07-25T21:29:00.000-07:00

Some time ago, a discussion with some modern college graduates revealed an interesting fact. In spite of their graduate degrees, these people had never heard of a commodity. I explained as best I could, and they seemed to accept my explanation. I mentioned propane and palladium. They watched me closely for more aberrant behavior. Their eyes began scanning the surrounding area for the mother ship as I mentioned rapeseed and barley. Perhaps they were only trying to protect the community from threats. That is what social workers and child psychologists are supposed to do. Child Protective Services is an official government agency, and these women were its employees. Perhaps the rapeseed word caught their attention. Rape is definitely a word that meets the profile. Was I distributing seedy rapists? Oh My God, I might be a seed rapist! The very mention of the Winnipeg Commodity Exchange implied an international network. Perhaps palladium is the latest designer drug. One cannot be too careful in these terrifying times!

The next event occurred when a young man recognized me in a restaurant He introduced me to his lady, and some small talk occurred. They invited me to sit with them at the bar. He told me that they were soon getting married. I offered my congratulations, and asked them about their plan. The young lady was soon bored, and began to play the video poker machine in front of her. Dutifully, the young man turned, and placed a large amount of coin in front of the video poker machine. Now very curious, I asked if it might not be a good idea to save the money. I mentioned that the money might come in handy in their new life as a married couple The young lady informed me that they were going to win enough money playing the video poker machine to have a nice honeymoon. I was fond of the young man, and mentioned that money might be made by trading the long side of copper the next week. The young lady looked at me with horror. "That's insane" was her retort. "Why should we just gamble our money away?" This conversation slammed shut.

The next incident occurred during a discussion with a casual friend. The subject of the markets came up. He immediately started talking about the stock market. I suggested that the world of investments was bigger than the stock market, but to no avail. He continued to discuss his "safe" investments. When queried as to their safety, he retorted that his financial planner has already optimized his portfolio for his age and income. Now curious, I asked him what he was talking about? He looked at me as if I had just escaped from the psychiatric wing of Bellvue Hospital, NYC. He took a deep breath and began to slowly explain about his optimized mix of balanced investments. I thought he was going to perform an exorcism on me when I mentioned gold and currencies.

Houston, we have problem! The commodity industry has a non-reputation at best. The antichrist gets a better reception. People pay their hard won video poker winnings to have channelers bring Ramtha and her good buddy Beelzebub into their living rooms. None of these people would pay a commodity advisor to come into their living room. The commodity community has been snookered! We see an industry based on the reality of the supply and demand of the basic necessities of life being ignored at best, or castigated as a fraud. People who will invest in a mutual fund due to the influence of a full moon are adamant that commodities are for crazy people. "What we have here is a failure to communicate."

Why is most of the public totally ignorant of commodities? The few members of the public who are aware of commodities believe that they are a scam. This compounds the problem of discussing commodities. The question is how did this happen? Part of the mystery is found in the 1950's. Merrill Lynch started a major marketing campaign in the high schools. They distributed brochures on investing in the schools. Some schools even allowed Merrill Lynch to conduct seminars on investing. There was no mention of commodities. We all witnessed the famous lion leaving the subway. Was this a harbinger of things to come? The lions were now afraid of the NYC subways, and began seeking shelter on the streets. This lion was the symbol of the Dreyfus Fund. Jack Dreyfus pioneered the mass marketing of mutual funds. Again, there was no mention of commodities. Time moved on, and the ads changed. Merrill Lynch continually stated "We are bullish on America". We witnessed John Houseman bellowing "Smith Barney. They make money the old fashioned way. They earn it." Can we ever forget that old saw "When E. F. Hutton speaks, people listen"? Have you ever wondered why you have this uncontrollable urge to buy stocks or mutual funds? Please note that we never witnessed Clara Peller asking "Where's the Commodities?".

The other part of the mystery is the profound change the American economy is experiencing. Does anyone remember the argument that the new "service economy" was going to revitalize America? This position was very popular with the Reagan administration in the 1980's. Service workers are unaware of the various activities of a production economy. The existence of basic commodities was common knowledge to most Americans when we were a production economy. Raw materials are acquired, treated, processed, or consumed in a production economy. The only function in the service economy is consumption. The service economy removes people from the reality of production. Salesmen, school teachers, nurses, and other white collar workers have no reason to think about commodities. Shopping at Office Max, Home Depot, and Costco are the closest they come to a production process. We are witnessing the spectacle of the American airline industry being overwhelmed by fuel costs. Only one major airline had the sense to hedge its fuel cost exposure in the futures market.

The commodities industry needs to develop a new approach when dealing with the public. The public needs to be informed as to the value of commodities and the futures markets. We live in a political economy, and that means the most votes get what they want. Invisibility is a dangerous strategy. The public couldn't care less about the industry. The mines, farms, and forests are not meaningful to most people. The futures market is of no relevance to the public. Compounding this problem is the current hysteria over the attempted manipulation of prices in the gold and silver markets. Most commodity web sites carry these articles. The public will become more uneasy due to these allegations. MARKET MANIPULATION, written by Sol Pahla, discusses the problem that arises from emphasizing conspiracy themes. More participants in the market increase the liquidity of that market. Making the public more wary is not the way to go. The public needs to know that the gold and copper markets trend very well. Directing the public to information that will help them understand trends helps everyone. J. L. Livermore had much to say about the chances of success in manipulating markets, and held to the view that the only way to successfully manipulate a market was to go with the underlying trend. Richard Davoud Donchian was in complete agreement with J. L. Livermore on this rule of the trend.

Forget the drama, trade with the trend, and prosper

Wayne N Krautkramer onlypill@cox.net

THE TRADING RANGE BLUES

2004-07-15T02:56:00.000-07:00

"Summertime and the living is easy". The heat is back, and the humidity is up. The barbecue has been cleaned, and the pool is refurbished. Vacation bound friends say good-bye, and the beach gear is kept near. This year we have a double drag on our energies. The markets are doing the trading range game. The slowdown of activity demanded by nature is a restful time. However, there are those among us who need a little more stimulus, and the summer slowdown is a drag on their psyche. The markets provide the addtional stimulus for them

The summer trading range is a treacherous time for these individuals. Activity gets so slow by mid-August that these traders are ready to explode. Their attention shifts to the markets for the stimulation they require. This trading range market thwarts their profit desires. The weather gets hotter, nature gets slower, and the markets get tighter. Desperate for an outlet to release their energies, they come closer to the markets. Soon they begin to check intra day quotes. The media presents the latest winners of the hour. CBS MarketWatch shows potential profits everywhere. The Street.com pitches tomorrow's biggest hits. The shoulda's, coulda's, and woulda's overwhelm these traders.

The fills get worse as the liquidity declines. Unless the quotes are in real time, they become meaningless. Our aggressive investors pay more money to get real time feed, believing that this will help them to meet their wants. Day trading software ads are now noticed, as these traders become more driven. The ubiquitous black box enters their life, and their equity statements go into decline. The monitor is on all day, lest our budding Livermores miss a trade. The losses mount, but in a very small way. The commission bills are small, like the house percentages in Las Vegas. System players are adored, fed, and catered to in every way. Airfare, rooms, and meals are always free. Only later do you realize that your wealth is history. Did you really think the trades were for nothing, and the profits were free? You have trading confused with listening to Dire Straights. Trading is not like playing guitar on the MTV. The debits are not for nothing and the bankruptcy is not free! In trading you either right or history

The insiders paint their pictures for all to see. They know your greed will reveal you under pressure. These people paid a fortune in blood, and money to learn their trade. Do you really believe that you could beat professionals at their game? The floor traders are in charge from the opening up until the close. Your stops are routinely faded. Do you really believe that the floor brokers are ignorant of your price stops? They know exactly what will happen when certain price levels get hit.

Your day trading black box system is their greatest ally. Let''s assume that someone sold you a system to play championship baseball, and you lost playing the New York Yankees. What a surprise! Would you really believe the salesperson when they claim that the Yankees cheated?

The brokers sell the tickets for the ride. Their job is to maintain the equipment and keep the amusement park customers happy. They do a great job, and are far more honest than many of their customers. They even provide you with free quotes. You bought your ticket and got your ride. If the truth be known, you received a lot for your money. You are the one who wants to ride a trading range. Your greed betrays you again. The broker only rings the dinner bell. What you eat, and when you eat is your choice. Professionals play the trend. Trade with the trend, or shame on you. There are no victims here!

Once you have lost most of your money, and worn yourself out emotionally, the markets will trend. Anger and frustration will do you no good. The market is just doing its job. Tha't's why it's called the trading range blues. When the markets begin to trend again, you will waste the greater part of that move just breaking even. You really should avoid the trading range blues. Save your energy and money to do more productive things. A good plan would be to do your research when things get very quiet. This will leave you rested and ready when the markets begin to trend again.

Reminiscences Of A Stock Operator by Edwin Lefevre is a good place to start learning. This book is a thinly veiled description of the life of J.L.Livermore.You will find this book invaluable for the insights offered. Financial web sites offer many articles that teach or refer to other valuable articles. Those with an interest in the precious metals will find a wealth of information, suggested links, and quotes on the metals web sites. The precious metals web sites also offer the largest amount of material on trading. Some even provide 24/7 cash gold prices. There are good advisors available, and they can be found by reading the articles posted on these web sites.

Wayne N. Krautkramer

THERE ARE NO "EFFECTIVE" GATA OR COT CONSPIRACIES

2004-07-05T02:02:00.000-07:00

Articles on market websites continue to discuss these conspiracies. Today it will be wailing and gnashing of the teeth about the infamous COT conspiracy. Tomorrow, it will be the ongoing drama of GATA conspiracy. These commentaries are beginning to resemble the rhetoric one would expect from bookies, race track touts, and Las Vegas gamblers. Continuance of this rhetoric is not only wrong, but it will hurt the entire industry. I ‘m referring to the futures markets, the bullion market, and the advisory services. Yes, you are hurting the entire commodities business. One might suspect that Wall Street, and the mutual fund industry are writing this rhetoric.

In the new information world, young people use the Internet for their basic research. A novice investor searching the Internet at this time would have the impression that commodities are scams, and immediately look to the stock market for opportunities A young person would have no hint that the stock market is the most manipulated game in the world. Stock brokers and mutual fund promoters will mesmerize a young person. Novices will find themselves invested in stocks and bonds faster than you can say COT conspiracy.

This person would never suspect that gold and copper are some of the best trading markets in the world. They would never know that there is not a single stock on a U. S. stock exchange that trends as well as orange juice. They would never perceive the nuances of trends, for most stocks merely respond to monetary, and fiscal stimulus. If anything, they would be led to believe that more socialism is the key to their wealth. Supply and demand will always be an alien concept to them.

Gold is one of the most liquid markets in the world. It is traded on a cash basis 24/7 somewhere on this planet. There are many future exchanges in the world today. Some websites offer 24 hours quote coverage for free. The Comex exchange is open 24 hours a day for all practical purposes. Even crude oil does not have this much trading information available.

The wailing and gnashing of teeth over the big gold mines hedging operations would be funny, were it not so pathetic. These are very successful mining companies that are locking in current prices to insure profits and the ability to finance ongoing operations. The critics would have us believe that these companies are fools. When the amateurs and critics challenge the professionals, you should know where to place your bet! Do you really believe that people who are professional miners are selling gold futures to prevent a price increase?

The COT is a different animal. The Commitment of Traders report incorporates all trading activity. This means both speculative and commercial accounts. Hedging is a normal part of a commercial’s activities. Commercial firms rarely engage in market speculation. A commercial firm has already made its speculative statement by investing in the business, and the inventories needed to continue in business. They use hedging to lock in their best estimate of future prices. One would need to know the forecast a commercial was using before you could interpret its actions. When a commercial buys and sells, it may only be adjusting its inventory exposure to market forces. Speculation on the meaning of the COT is treacherous at best. The premise that commercial firms buy and sell futures contracts to create misleading signals in a government report may be flawed.

J. L. Livermore stated that no one can move a market against the prevailing trend. Knowledgeable wealth has better sense than to attempt the bullying of a market, for they would soon be poor. This result would defeat the whole purpose of any conspiratorial effort. Ed Seykota stated that one should only rely on the trend for trading. He referred to all other information as funny-mentals.

Forget the drama, trade with the trend, and prosper.

Wayne N. Krautkramer

THE BEST INVESTMENTS for THE NEXT FIFTEEN YEARS

2004-06-28T03:26:00.000-07:00

I have found perfect investments for the next fifteen years. Yes, it is true. You cannot lose. The fact that this article says that it cannot fail proves it is true. The most important thing to remember is the predicted bellowing of the boomers. Yes, the boomers will bellow incessantly at the demise, or diminishment of their "Nice Life." Frank Capra’s "It’s a Wonderful Life"’ and the Magic Kingdoms are history. The predicted bellowing and whining are the basis of this investment strategy.

The first part of the strategy involves investments in cheese and cracker producers. Cheese sales are going to rocket. Ditto for the crackers. When the boomers start their whining, we will need large amounts of cheese and crackers to match the whine. Cheese and crackers have the additional advantage that you may buy these without the government being notified of your purchases. The government may come for your guns and money, but they will never know about your hoard of cheese and crackers. You may even buy stocks of companies who specialize in these products for further diversification. Another advantage is theft prevention. Money, jewels, and weapons are very portable, and easy to conceal. This is an incentive to steal your hoard. A thousand-pound wheel of cheese is difficult to steal, very difficult to conceal, and a no-noser for cheese sniffing dogs. This strategy has the additional advantage of investment in cheese protection devices. You will need mouse traps for your cheese. Imagine having a monopoly on mousetraps in your area! Secure a supply now before others realize the potential.

The second part of this strategy involves the purchase of large quantities of ear plugs. This will be necessary to protect one from the inevitable whine of the boomers. Boomers are group animals, so their combined noise will be horrific. Visualize cicadas on hot summer night! Again, you may be able to further diversify your investments by buying stocks in this industry. Because of their compact size, many people will want more than one set of ear plugs. Convenience stores will always want an inventory of ear plugs. This strategy recommends the purchase of soundproofing products for the home and office. The initial capital outlay, and the expense of storage may preclude the actual ownership of these products. Fortunately, stocks representing this sort of product exist. Not only does this give you further diversification, but you have the additional thrill of participating in the fluctuations of the stock market.

The third part of the strategy involves providing support services to the afflicted boomers and their families. We can start academies for the training and certification of counselors to assist boomers entering the uncharted waters of reality. Boomer’s families will need 12 step programs, and you can fill this market. Boomer counselor institutes can be sent up quickly. You should found a Boomer Counselor Accredation institute immediately. This will allow you to control the market, and facilitate the franchising of boomer counselor academies globally. The commercials will emphasize the pride and prestige that come with being a professional boomer counselor. This part of the strategy may be the most lucrative as it has infinite multilevel network marketing opportunities.

This strategy also guarantees that you will have an ample supply of cheese and crackers to eat, or trade for other basic necessities. The worst case scenario is that the infinite expansion of the quantity of money is continued infinitely. Should this occur, the price of a hamburger will be 75 dollars. It follows that a pizza will cost 200 dollars. Imagine how much your 1000 pound wheels of cheese will be worth! The price of mousetraps could go to infinity!

Wayne N. Krautkramer