My Two Cents Worth

On the election and the coming few days.  

A few weeks ago, Mrs. Graybeard asked me what I thought. I've seen nothing that changes what I thought back then, so it's going to follow here.

I think Trump is going to win. I think the best case, regardless if it's Trump or Biden is for the winning margin to be so big that the planned actions against the winner, as the Transition Integrity Project has been organizing since about the day after the '16 election, won't happen.  Best case would be a replay of Reagan '84, where Mondale took one state; 525-13 in the electoral college.  How are they gonna organize against that?  

Unfortunately, I don't see that happening.  That means some amount of crap is going to happen and exactly where you are will determine how bad it's going to be.  This is a wonderful time to be from Washington DC.  Far, far from Washington DC would be best.  No matter what happens the poop hits the air moving device in DC perhaps starting as soon as tonight. whether it's from Government Employees themselves trying to take down the government or professional revolutionaries pushing armed revolt.

John Wilder likes to refer to where he lives as Modern Mayberry.  That's a reasonable description for The Silicon Swamp, but I think of this area in the context of a peculiar country song from 1994, and refer to us as the home of the High Tech Redneck.  We have tons of electronics manufacturing.  In addition to being 30ish miles from the Kennedy Space Center, we have a big name general aviation manufacturer in town here, and a startup company that's working on supersonic passenger jets.  I don't think that the city police or the county Sheriff would stand down like the police in so many of the blue cities have since the George Floyd Overdose Death started the riot season and I don't think the city leadership would request or order them to stand down.  While I suspect that tomorrow there might be open shooting war in Washington DC, my gut says that it will be a regular Wednesday here. 

Your situation will depend on where you are.  Any and all of the summer's riot hot spots could flare up tonight and the next few days.  As an example, Wirecutter today posted this Tweet from Denver (as a jpeg, not a link to Twitter).  Denver wasn't the scene of extended riots but that doesn't mean someone won't try to do it now.  The same goes for the blue cities and counties in Florida as much as anywhere else.

It's just as important that regardless of whether Trump wins that the Stupid party take back the House and maintain control of the Senate.  Those tend to be more local and hard to pick with my minuscule knowledge.  If they can take back the House and retire Nancy Peloski it would be idyllic beyond belief.

May we emerge after this as a better Republic and on the track of fixing the problems instead of tearing it down and replacing it with a socialist tyranny.   

Looking A Month Into the Future - The Transition Integrity Project's Plans

To paraphrase Jeff Foxworthy, “If you complain the US isn’t democratic enough, you just might be living in a country designed by geniuses and run by idiots.”

This is an exploration of the document from the Transition Integrity Project, “Preventing a Disrupted Presidential Election and Transition.”  The 22 page .pdf is currently available at:
https://paxsims.files.wordpress.com/2020/08/preventing-a-disrupted-presidential-election-and-transition-8-3-20.pdf

As I don't know that site, I assume it could go down at any time.  I can't emphasize enough that everyone should read and understand this.  I mentioned the TIP a month ago in my post about the Color Revolution against the US, as one of the groups organizing the revolution. 

The TIP pretends to be unbiased but is rabidly anti-Trump, anti-constitution, and anti-America as founded.  An easy example is in a footnote on page 3 (the start of the actual text of their study).   “TIP recognizes and shares the view that the Electoral College is profoundly anti-democratic, and that numerous long-standing practices also function to create structural biases in our voting system. For present purposes, however, these constraints are treated as givens.”  

The electoral college, like all of the constitutional government, is designed to balance the rights of less populated states with the higher population states.  Our legislative branch has a House of  Representatives, with the number of representatives proportional to the population of the state, and a Senate where every state gets the same number of senators.  In the electoral college, each state has a number of electors equal to the number of its representatives and senators; there are an additional three electors appointed to Washington D.C.; as if they were the least populous state.  Currently, there are 538 electors; with the mass flight out of New York and California, perhaps their numbers of electors go down and destination states get more.

As best as could be agreed upon, every aspect of the constitution is written to protect the rights of the minority while having majority rule.  Every gunnie I’ve ever talked with about it knows the axiom, “Democracy is two wolves and sheep voting on what’s for dinner.”  A simple majority-rule system with none of the constitutional protections offers just that much protection of minority opinions on policies.   Calling for the country to abolish the electoral college for being anti-democratic is simply saying they want all the power for themselves. 

But that's not what TIP is about.  TIP did a classic DC thing and had politicians role play four scenarios for the election.  It should go without saying that with people pretending to be other people, the results are not likely to be exactly what the people being modeled would really do in the scenarios, but simply illustrates how the players viewed the situations.  

The document describes the scenarios this way:

The four scenarios were developed after a consultative process involving outreach to experts on elections and transitions, political violence and instability, governance, and scenario planning and game design.  Each of the four scenarios developed was different. (See Appendix B for a summary of the scenarios and key actions.)  In one scenario, the exercise posited that the winner of the election was not known as of the morning after the election and the outcome of the race was too close to predict with certainty; in another, the exercise began with the premise that Democratic party candidate Joe Biden won the popular vote and the Electoral College by a healthy margin; and in a third, the exercise assumed that President Trump won the Electoral College vote but again lost the popular vote by a healthy margin. The fourth exercise began with the premise that Biden won both the popular vote and the Electoral College by a narrow margin.

What strikes me about this is that in no scenario do they consider president Trump would win the electoral college and the popular vote.  Joe Biden won both by a wide margin in scenario two and won both by a narrow margin in four.  In scenario one, it was too close to call the morning after the election and they prepare for a long period of actively finding votes to count.  

 

Note that in case three, where Trump wins the electoral college but loses the popular vote by “a healthy margin” that the constitutional term for that is “elected president.”  Even in that case, the role-players go all out to take power back from the president.  This scenario played through three turns; by the end of the first turn:

...the country was in the midst of a full-blown constitutional crisis characterized by: 1) Political chaos; 2) Widespread threats of violence, and sporadic actual violence in the streets; and 4) A hostile, dangerous, highly-partisan, and frequently unconstrained information and media environment.

Throughout the document, the TIP players pretend that violence in the streets is right wing phenomenon and not the "peaceful protests" of antifa and BLM.  They talk about right wing agents provocateur going into democrat party protests to ensure violence happens.  There is no limit to projection.  

Turns two and three deteriorate farther.  This is the scenario I mentioned last month in which Washington Oregon and California secede from the country, but Obama convinced them to declare a bunch of other conditions. Among them was to divide California into five states to increase the number of senators they have, make Washington D.C. and Puerto Rico states, so they can get even more blue senators and representatives.  Think of it as stacking the legislature instead of (or in addition to) stacking the court.  

One of the most consequential moves was that Team Biden on January 6 provoked a breakdown in the joint session of Congress by getting the House of Representatives to agree to award the presidency to Biden (based on the alternative pro-Biden submissions sent by pro-Biden governors).  Pence and the GOP refused to accept this, declaring instead that Trump was reelected under the Constitution because of his Electoral College victory. This partisan division remained unresolved because neither side backed down, and January 20 arrived without a single president-elect entitled to be Commander-in-Chief after noon that day. It was unclear what the military would do in this situation.

The degree to which the TIP role-playing games will affect what happens to the country is hard to put number on.  The mere fact that they've been planning for conflict over this election since 2016 is itself a sign of bad things coming.  As we've seen vividly lately, in Portland and most recently Denver, antifa is resorting to murder more often these days.  The election will be contested first, and at no time that I can remember has the need to win by more than the fraud margin been more vivid.  Every option involved violence, started by Trump or “Alt Right / Boogaloo supporters.”   Naturally, the left-wingers wouldn't do such a thing - or so they imply. 

The TIP study is full of TDS (Trump Derangement Syndrome) but I still think everyone should at least skim it.  When you read of the thousand and one bad things they say Trump will do, just substitute the left wing mob to get a more accurate picture.

Quarantined Cruise Ship in Japan May Now Be The Best Place to Study the Virus

The news broke today that the cruise ship Diamond Princess that has been in the news for being quarantined in Japan now has 175 confirmed infections from the 2019 novel coronavirus (2019-nCoV).  There are 39 new confirmed cases among passengers and crew members and one confirmed case in a Japanese quarantine worker.

Since the outbreak began in December, there have been over 45,000 confirmed cases of COVID-19 worldwide and at least 1,115 deaths. But while 2019-nCoV has spread to at least 24 countries beyond China, nearly all of the COVID-19 cases and all but one death have occurred in China.

According to the latest figures from the WHO, 44,730 cases are confirmed in China, while a remaining 444 are outside the country—including the 175 cases linked to the Diamond Princess. The tally is by far the largest outside of the outbreak’s epicenter; the country with the next-largest COVID-19 outbreak is Singapore, with 50 confirmed cases, according to WHO.

It's reported that the Japanese quarantine worker wasn't wearing highly protective clothing for high biosafety level areas, just wearing a mask and gloves.  He was handing out questionnaires and checking the health of passengers and crew members. 

Assuming passengers don't jump overboard and find ways to get back onshore (always easier at a dock than when miles at sea), this seems like a good opportunity to study the virus.  It could allow study of how long the virus survives on surfaces, and how effectively it spreads.  This is an isolated population, after all.  Patient zero, the first patient to contract the virus on the ship, is known:

Screening for COVID-19 on the ship began after a previous guest tested positive for the virus in Hong Kong on February 1. The man, who is from Hong Kong, boarded the Princess January 20 in Yokohama at the start of a 14-day round-trip voyage. The man sailed a leg of the voyage before disembarking during a stop in Hong Kong on January 25. Meanwhile, the ship sailed on. Upon news that the guest tested positive on February 1, the Diamond Princess returned to Yokohama a day early and has been quarantined ever since, with guests in isolation in their cabins.

It is still unclear when and where the man from Hong Kong became infected and how the virus has spread among people on the ship. It may be that the outbreak involved a so-called “super-spreader,” which means that a single infected patient sheds the virus extremely efficiently and infects an inordinate number of people. But again, it is unclear how many people may have brought 2019-nCoV aboard and how—or if—the 175 cases are all linked.  

I suspect that most of you have been reading what Aesop at Raconteur Report posts about the virus, like this one.  I sure have.  Having an isolated population like this might be a good way to study this virus and perhaps reduce the uncertainties that seem to apply to just about every characteristic.  There are 3,711 people on board the Diamond Princess; Reuters reports that roughly 80 percent of the passengers (over 2,900) are aged 60 or older, with 215 being in their 80s and nearly a dozen over 90. Those age groups have been among the most vulnerable demographics in the outbreak overall.  If those same percentages apply to the 175 cases and 80% of the cases (140 people) are over 60 years old, I'm afraid that will be where the largest number of deaths come from. 

The Diamond Princess at dock in Yokohama.  Getty Images photo.

Deutsche Bank Dying? Probably Not This Calendar Year

The Deutsche Bank Death Watch has been going on for at least a year, and tracked by author Michael Snyder on the Economic Collapse Blog.  Deutsche Bank is in deep trouble and almost certainly going to go bust, but my view is it won't be before the end of the year, and probably much longer.  (Hat Tip to ZeroHedge via Kenny at Knuckledraggin')

Why?  The usual; they're hemorrhaging cash and going broke.  How bad is it?

We know that Deutsche Bank has been losing money at a pace that is absolutely staggering...

If you add the losses for the second and third quarter of 2019 together, you get a grand total of nearly 4 billion euros.

How in the world is it possible to lose that much money in just 6 months?

If they had hired people to throw $100 bills out the window every second of every day, 24/7 for 6 months, they would have only thrown $1.57 Billion out the window.  They've laid off thousands of workers; at one time (July of '19) 20% of their employees on one day.  (I've been through a lot of layoffs in my career, even laid off a couple of times, and 20% is a big cut!)  They've even canceled this year's daytime, coffee-and-cake Christmas reception for retired employees. 

Again, why?  The usual, bad management.

There have been so many bad decisions, so many aggressive bets have gone bad, and there has been one scandal after another…

In April 2015, the bank paid a combined $2.5bn in fines to US and UK regulators for its role in the LIBOR-fixing scandal. Just six months later, it was forced to pay an additional $258m to regulators in New York after it was caught trading with Myanmar, Libya, Sudan, Iran and Syria, all of which were subject to US sanctions at the time. These two fines, combined with challenging market conditions, led the bank to post a €6.7bn ($7.39bn) net loss for 2015. Two years later, it paid a further $425m to the New York regulator to settle claims that it had laundered $10bn in Russian funds.

Those two are relatively easy questions; the hard ones are do they really go broke and (my favorite question) then what happens?  Author Snyder thinks the first one is easy.  Hell yeah, they're going down.  Snyder says Deutsche Bank “ ...is just a zombie bank that is stumbling along until someone finally puts it out of its misery.”  The second question, of course, is harder and long time readers know one of my favorite quotes of all time, “prediction is very difficult, especially about the future” (physicist Niels Bohr).

Deutsche Bank is the largest domino in Europe’s very shaky financial system.  When it fully collapses, it will set off a chain reaction that nobody is going to be able to stop.  David Wilkerson once warned that the financial collapse of Europe would begin in Germany, and Jim Rogers has warned that the implosion of Deutsche Bank would cause the entire EU to “disintegrate”…

Then the EU would disintegrate, because Germany would no longer be able to support it, would not want to support it. A lot of other people would start bailing out; many banks in Europe have problems. And if Deutsche Bank has to fail – that is the end of it. In 1931, when one of the largest banks in Europe failed, it led to the Great Depression and eventually the WWII. Be worried!

How can I say they probably won't collapse for a while?  Overlay their share price on Lehman's from 2008. 

(Deutsche Bank share price, from Bloomberg posted on ZeroHedge  In plots like this, I always assume the prices are scaled or offset or otherwise manipulated to make the similarities stand out better.)

Speaking of quotes, I'm also a fan of the one that “history doesn't repeat, but it rhymes.”  I think these plots rhyme.  By the time scale shown, Deutsche is at about January of '08, while Lehman made it to September, eight months later.  We'll see how these plots overlay as we go along.  I suppose some unexpected event could speed up the approach of their end, and conceivably even save them.  Probably not a safe bet.

Water Filters Compared

Most of us have water filters for use in the event of Bad Things that might require bugging out.  Perhaps filters for when you're out in the woods, hunting or even just hiking and don't want to lug gallons of water in and out.  Even bugging in - staying locked in your house - can require the use of filters if the infrastructure goes down or isn't well maintained.  After the 2004 hurricanes, we were on boil water advisories for a couple of days, but it's not just then.  We've had water mains break and the pressure go down at random times without the S getting remotely near the Fan, let alone hitting it.  One time, Mrs. Graybeard was in the local hospital and the city lost a water main, rendering all of the water sources in the hospital unsafe.  I bought a diet Coke, patients had nothing to drink! 

Like many of you, I get notices from a few gun/outdoor/survival related companies calling attention to a big project they've done or a blog post they're proud of.  Ordinarily, I don't post these because I prefer to deliver content everyone else can't, doesn't or won't.  Today, though, I got a link to a water filter test and evaluation from Widener's, the shooting and reloading company. 

Without a doubt, this is the most thorough and well-documented set of tests I've ever seen.  I looked up some good names, that we have, and was concerned about some of the results I saw.

The testing group worked with BCS Laboratories, an accredited water testing facility in Gainesville, Florida, to get quantitative results.  They sent water from three sample locations to the lab for assays of bacteria, viruses, and cysts. Then sent sent water from the seventeen filters they tested in to see how well they filtered. 

Go read.  Long, but worth looking at.

My After Action Review on Dorian

The storm missed us by a wide margin, turning north farther east than originally expected and staying well offshore.  The local NWS said we got 0.76" of rain yesterday and 0.37" today.  Let's assume it was all from Dorian, and say we got 1.13".  The highest wind measured at the airport in two days was 38mph and the highest gust was 51.  We were under hurricane warnings through early morning today, which means conditions of sustained 75 mph or greater winds were expected.  The last forecast graphic I have for our area predicted winds from 75 to 110 mph.

As a result, it's hard to assess an After Action Review because there really was no action.  Yes, we took down antennas, put up shutters, made sure batteries were charged and ice was on hand, but that's routine prep stuff.  We never needed the flashlights, batteries or the ice.  Our generator never came on.  It was just a quiet day here. 

On the other hand, it's very easy to get cocky over hurricanes and warnings when they're consistently alarmist and, frankly, wrong in critical predictions.  That could lead to people not paying attention when they need to and with this storm, we needed to pay attention.  As Dorian closed in on the Bahamas, it became one of the strongest hurricanes ever recorded in the Atlantic.  Winds were 185 mph sustained with gusts to 200.  The storm moved at an incredibly slow 1mph over Abaco and then stalled over Grand Bahama Island; DiveMedic at Confessions of a Street Pharmacist posts a pair of  commercial satellite photos of the destruction on Grand Bahama, and they are mind-boggling.  I combined those two images into this one.  It looks like Grand Bahama has been reduced to about 1/3 the amount of dry land it used to be. 

Everything that's outlined in yellow in upper portion of the bottom picture is land that's no longer there.  All of those light lines in the upper right of the bottom view represent streets and residential areas that don't exist.  I know the official death toll has been announced at 20, it's just hard to imagine that only 20 people would have been lost in that kind of devastation. 

Since then, I've found a larger scale image on NPR that overlays the two views at identical scales - these views are slightly different scales.

Government at all levels seems to say "when in doubt, evacuate", but that assumes there's no cost to evacuating which is never true.  I'm talking not just about the cost of gas, and hotel rooms, but also disruption to work.  What if the people don't have a car they could trust to drive long distances?  What if they don't own a car at all?  In this storm, it was possible for people on the east coast to evacuate to the west coast, but there aren't many routes across the state; just more routes than going north out of the state.  The worst thing that could happen might be getting stuck in your broken down car as the storm builds around you. 

The same atmospheric changes that pushed Dorian away from us are what caused it to stall and wipe out Grand Bahama (explained in great detail here).  It's unfortunately usually true with these storms that any change that's better for one location is worse for another.  The stall caused the storm to stir up the water underneath it so that a cold water upwelling occurred, which started sapping the storm's strength and the winds started dying down.  Essentially there were two competing weather systems, one wanting to steer it north and one trying to push it south.  The steering winds canceled each other out causing it to stall.  An approaching upper level low pushed the system on the west side south allowing the northward motion to start, and the ULL is now pushing Dorian near the Carolinas. 

Hurricanes are Nowhere Near as Scary As This

Lost in 24/7 news cycle about a big name Hollyweird producer playing casting couch with any hot young aspiring actress he came across - not to mention assorted fruits, vegetables and barnyard animals - was a scary story out of the Canary Islands.  The Canary Islands, off the NW coast of Africa, are the home to La Palma a volcano that ought to scare the snot out of you if you live anywhere in the Western Hemisphere that's on the Atlantic or on water connected to it and under a few hundred feet in elevation.  If you live inland, and there's a ridge that high between you and the ocean, you're probably OK; otherwise, you might want to pay attention.

The islands of La Palma, Tenerife and Gran Canaria have now been rocked by 50 tremors after a “swarm of seismic” movement of low magnitude between 1.5 and 2.7 were measured. 

Express.co.uk reported on Tuesday the islands, popular holiday destinations with Britons, had been struck by 40 earthquakes in just 48 hours.

This is reminiscent of the earthquake swarms in Yellowstone over the last few months, which prompted a lot of "what if the Yellowstone volcano blows?" speculation.  Similar thoughts go here, but the threat is entirely different. 

The shape of La Palma hints that a likely scenarios is for the southwest slope of the volcano to slide into the sea.  This would create a tsunami that puts the 2011 Japanese tsunami into the "tiny" category.  Perhaps millions of cubic feet of rock and dirt sliding into the Atlantic at hundreds of miles per hour.  Displacing millions of cubic feet of water. 

The physics-based simulations of what would happen have yielded predictions for much of the Atlantic coast line.  Tsunamis behave differently in the open ocean than along beaches and shorelines and the shape of the underwater slopes cause the local effects that will be experienced.  The calculations predict tsunamis of 20 to 30 meters high along the entire US east coast, followed shortly by tsunamis of 10 - 20 meters along the gulf coast.  All this transpires about 7 to 9 hours after the volcano slides into the ocean.


Over the years, there have been many big budget movies based on the idea that some number of people suddenly find out they had days or hours left to live. The one kids talked about when I was in 8th or 9th grade was "On the Beach", about Australians waiting around after a thermonuclear war, knowing they all would die.  Much more recently, "Armageddon" and "Deep Impact" both showed society waiting for Earth to be hit by a recently discovered comet.  The reality of a big slide is something like the last two, waiting for the impact tsunami to hit.

Are you in a position where you could get to a couple of hundred feet elevation in a short drive?  How about in under 8 hours?  You'd have to be ready to hit the road the moment you heard the volcano blew.  Every reporting station in the area would be wiped out, but other seismographic stations would report quickly.  Like so many other situations, it would be better to leave an hour early than a minute late.  We've just seen the problem in Florida during the Irma evacuation.  There's really only two highways out of the state.  It seems that being on one of Florida's highest elevations might be enough to survive. 

Either that, if you have a boat, get in the boat and prepare to be buffeted around by currents and floating debris.  From what I recall seeing of the Japanese tsunami in 2011, the "seas" in the sense of waves are not a problem, it's the floating crap and obstacles.  Those are NOT trivial, but nothing about this scenario is. 

Recommended Reading on Civil War 2.0

On Thursday,  Tam posted a link to a very thought provoking and rather long piece on a blog I'd never heard of:  Days of Rage on Status 451.  The author pokes at many things going on that lead to the widely stated thought that we're in the low-intensity phase of the second civil war in our country. I haven't actually finished reading it, but I will when I'm done here.  The title, "Days of Rage" was the title of a book about the violence of the early '70s (for reasons that aren't clear to me, much of what people consider "the 60s" actually took place between '68 and '72).  “People have completely forgotten that in 1972 we had over nineteen hundred domestic bombings in the United States.” — Max Noel, FBI (ret.)

As I always do, I'm going to pull a few quotes here to whet your interest to go read it.

One thing that Burrough returns to in Days of Rage, over and over and over, is how forgotten so much of this stuff is. Puerto Rican separatists bombed NYC like 300 times, killed people, shot up Congress, tried to kill POTUS (Truman). Nobody remembers it.

Also, people don’t want to remember how much leftist violence was actively supported by mainstream leftist infrastructure. I’ll say this much for righty terrorist Eric Rudolph: the sonofabitch was caught dumpster-diving in a rare break from hiding in the woods. During his fugitive days, Weatherman’s Bill Ayers was on a nice houseboat paid for by radical lawyers.
...
You have to understand: in 1968, many radicals absolutely believed that the United States was getting ready to collapse. One Weatherman puts it: “We actually believed there was going to be a revolution. We believed 3rd World countries would rise up and cause crises that would bring down the industrialized West, and we believed it was going to happen tomorrow, or maybe the day after tomorrow, like 1976.”
...
The FBI was up SDS’s ass, and Weatherman’s. They harassed the core cadre. Beat them. Threatened them. This does not dissuade revolutionaries. Weatherman started doing crazy stuff with SDS: street brawls, public nudity, sexual orgies, ordering established couples to break up. If you think it sounds like a cult, you’re right. This is literally cult indoctrination stuff. They were remaking people, seeking the hardest of hardcore.
...
Institutions are one of two major assets that the Left has and the Right lacks. The other is Shock Troops.
...
My point is: did you notice the Left and the Right use fundamentally different tactics?

This is no accident. They’re different cultures. The Left and Right don’t just want different things. They also have different abilities, goals, resources, and senses of propriety. Meaning contemporary political violence from the Left and from the Right will look very different.
...
People tend to think that the Right will be an awesome, horrific force in political violence. The SPLC’s donations depend on that idea. Righties tell themselves that *of course* they’d win a war against Lefties. Tactical Deathbeast vs. Pajama Boy? No contest. Why, Righties have thought about what an effective domestic insurrection would look like. Righties have written books and manifestos!

It’s horseshit.

The truth: the Left is a lot more organized & prepared for violence than the Right is, and has the advantage of a mainstream more supportive of it.

The whole thing goes 48 screens on my desktop, here.  Column widths are about what I run (close to 100 characters per line).  On the other hand, it's rather interesting.  I was unaware that Puerto Rican separatists shot up congress in 1954 and tried to assassinate Harry Truman in 1950.  The same group was behind a wave of bombings in the '70s.  They were well trained, probably by Cuban intelligence, and well-disciplined bombers.  The biggest asset they had, like all leftist groups, was support from mainstream organizations.  Their biggest benefactor was the Episcopal church.  Heck, I was a young adult while this was going on, but reading it feels like reading somebody else's history.  It's not just that I was too busy trying to get into adulthood, and trying to get my life going; it's like a memory selectively destroyed by our culture.  The author talks about not remembering any of this, too.   

Final words to Status 451

There’s a famous case where a shadowy group was after a high-value, high-status target who used his considerable resources to retreat. The group couldn’t get to him. So they targeted everybody associated with him: Friends. Family. Staff. Lawyers. Sympathetic journalists. Eventually, that utter devastation of infrastructure led to the death of the high-value, high-status target, whose name was Pablo Escobar.

That’s what I’m really scared of. Killing like that, on repeat. It’s my nightmare scenario. I know it’s unlikely. But — and this is the stupidest part of this whole thing — after 2016, I’m a little superstitious, and I’m wary of omens.

The shadowy group that unleashed carnage on Pablo Escobar’s Institutions had a name.

They were known as Los Pepes.

PoTD

Today was an off day...  To be specific, our electricity was off all day.

This morning at about 5AM, a powerful squall line went through, and a nearby lightning strike took out our power.  It wasn't restored until just about 6 PM, so 13 hours.  On one hand, it's really inconvenient to live without power.  On the other hand, if we're supposed to be ready to deal with anything at a moment's notice, it's a good excuse to drill with all of our preparations.  We decided to deal with the day without our backup generator.  We have a natural gas stove that can be lit manually if the electricity is out, so we were able to heat water for coffee or tea, and cook on the stove top (although we didn't).  Thankfully, the weather was comfortable for the rest of the day, and it wasn't too hot or cold for comfort.

I took the time to totally rearrange two of our 7' bookshelves, and straighten up a lot near my computer.  The books I used to have in my office now have a home just out of reach to my left.  This area is close enough to some windows that there was enough light so that I could work until just about the time the power came on.   

So since I haven't had the time to put together any content, have a Photo of the Day, from The Firearms Blog:

A place called Nelson Precision Manufacturing (Facebook warning) is making these miniature scale AR lowers, calling them AR.5, and selling them as bottle openers or key chain fobs.  The TFB pages has a photo of one of these next to a full size AR15 lower, and I'd guess it's around quarter scale.    Before you ask, they are not fully finished and so are not firearms.  There's no fire control pocket or magwell, so they're under 80%. 

EDITED TO ADD:  This is post number 2000 of this blog.  Yay me!

Another Technical Analyst Weighs In

A few weeks ago, I drew on an article by Peter Degraaf showing technical analysis that a major market crash is likely to come.  Tonight I want to draw you attention to another analyst, Clive Maund, who repeats many of the same diagrams and adds more context.  For example, he mentions the dome pattern in that previous post and points out some more details.  This chart is from August 7th, before the big drops, but based on the dome pattern and how the 50 day moving average was dropping below the 200 day MA, he started warning.  By using the dramatic red arrow pointing down, he was saying the market could go into free fall from there. 

Which it did.  And he presents several plots to indicate it's not done falling yet.  This is not the time to be buying on the dips.  He even shows how the plunge protection teams have done nothing but set up all the indicators that the next big drop is coming. 

The article features several good graphs with lots of explanations.  It includes terms I've never seen before, so I'll have to go research them. 

I don't think there has been a real stock market rally since the crash of '08 and I don't think it has been a real recovery.  The market still hasn't recovered to even its 2008 numbers when corrected for inflation, and has come nowhere near its peak in early 2000.   John Williams of Shadowstats has data that says the real unemployment number isn't the 5.1% they reported, it's more like 23% and the reason for the difference is the millions of people out of the labor force and no longer counted as unemployed. 

The Fed is between the proverbial rock and a hard place.  As Clive Maund puts it:

The Fed faces a desperate dilemma – it wants to start a rising interest rate cycle in order to eventually scale down its massive balance sheet and to head off a threatening collapse of the dollar and Treasury market, but if it does so it will collapse the stockmarket and create a depression. If it raises rates at its next meeting on 16th – 17th markets will crash. If it doesn’t raise them, markets will probably crash anyway, because it will be interpreted as meaning that the economy is too weak to handle even a miniscule rate rise.

As an opposite to his last point, I think there's some chance that if they were to raise rates, it might well show the rest of the world that there are adults in charge who know they need to do so and that might encourage the markets. 

Go RTWT.

US Mint Coin Sales Soar

The US mint set very healthy year over year sales increases in August.

According to the latest data on the mint’s website, sales of the American Eagle Bullion gold coin amounted to 101,500 ounces last month. ... Year-over-year, coin sales rose 306% when compared to the 25,000 ounces sold in August 2014.
...
The mint reported American Eagle silver one-ounce coin sales of 4.935 million ounces, more than double the 2.088 million ounces sold during the same month last year.

But everyone knows gold is doomed, right?   Hey, that's the Washington Post!  Who are we to question?  I'd say that apparently whoever they were that bought three times more gold in August 2015 than 2014 thinks it's alright to question the WaPo.  Likewise, a substantial number of people seem inclined to agree with Jim Sinclair's observation that "Silver Will be Gold on Steroids" in what he sees as the coming rally.  (You might recall me asking "Is the Next Bull Market in Precious Metals Starting?" about a month ago). 

Sinclair believes that in the coming economic collapse/massive corrections that "...gold is going to levels that today are considered more mental illness than monetary analysis."

Renowned gold expert Jim Sinclair stands by his prediction last year of an eventual gold price of $50,000 per ounce. Sinclair explains, “You have to understand we are going into unprecedented deflation, and it’s the reaction of central banks around the world to the concept of deflation that brings about hyperinflation. . . . There will be debt monetization of all kinds of debt to maintain some sort of equilibrium. The price of gold is going to go to a level that is going to surprise everybody. I was told that this is a rally that you won’t sell. That means gold will go to a level and not react violently down from that level. . . . This is when gold is going to levels that today are considered more mental illness than monetary analysis. Silver is best understood as gold on steroids because whatever potential and direction is taken up by gold, silver will be multiplied by 2 or by 5. . . .Silver will outperform gold.”

"May you live in interesting times"?

 That's a good start...

I Don't Think It's Over

The 531 point drop in the DJIA yesterday set off a lot of hand-wringing among the chattering classes.  The DJIA is down 10.1% since its May high, meeting the technical definition for a correction.  Barrons points out:

It wasn’t just the Dow that got hammered today. The Nasdaq Composite fell 3.5% to 4,706.04, while the S&P 500 dropped 3.2% to 1,971.10. The small-cap Russell 2000 declined 1.3% to 1,156.79. The S&P 500 is off 7.5% from its all;-time high, while the Nasdaq is off 9.8% and the Russell 2000 is off 10.7%.

This week alone, the S&P 500 lost $1.1 trillion of value. As S&P Dow Jones Indices’ Howard Silverblatt put it: “Ouch.”

You can find any economist you want willing to say this is just a hiccup and it will recover, or that it will get worse.  For my two cents, I don't think it's over.  A 20% correction down to 14630 is not only not out of the question, it could well be the best case scenario, as I will explain.  (I recall telling Mrs. Graybeard we'd see Dow 16,000 by the end of this month, but I don't seem to have written it down anywhere).  In 2014, I posted these words from Seeking Alpha, quoting Andrew Lapthorne of SocGen.

"The number of 1% down days for the S&P 500 in any given year has averaged 27 since 1969; the S&P 500 has seen just sixteen 1% down days over the last 12 months. It has now been 468 days since a market correction of 10% or more, the fourth longest period on record, and, as we show below, the annualized peak to trough loss has only been 5% compared to typical annual drawdown of 15%."

The last time we had a 10% correction was in October 2011, about 1400 days ago.  A 20% correction would be like a reversion to the mean, which some think we're overdue for.  The concept of reversion means the longer something remains an outlier, the more likely it is to revert back to the average.  In this case, it means the longer US stocks go without a meaningful correction, the more statistically likely a meaningful correction becomes.  A 20% correction meets the definition of a bear market and would certainly be meaningful.  It would be bad but nowhere near as bad as it could be. 

In the articles which I've been cautioning about a possible snap back coming this September/October, like the last one, I've been referring to this graphic from my 2014 post.  There's one little difference here: I put a red mark near where we are today.  I say "near" because the May record high was off the top of this chart, and the chart was bad enough to start with!

What this chart is showing is that since the late '90s, the middle of Alan Greenspan's days as Fed Head, the DJIA has been in a diverging wedge pattern: setting higher highs and lower lows.  Twice before, when it hit a new all time high, there was a snap back to a new lower low, and that was in the second year after that previous high.  Back in 2014, I was looking at that pattern and saying the previous all time peak in 2013 will lead to a snap back, probably in September or October of this year.  The target for that snap back (lower line) looked to be 6000.  Dow 6000?  There would be blood in the streets.

Has the new higher high invalidated this; that is, did it just set the snap back further into the future - and predict a lower DJIA of around 5000?  I. Don't. Know.

Notice this doesn't have anything to do with anybody's prophecies, or anything that the extremely atheistic will dismiss as "religious nut job" stuff.  This is pure technical analysis.  Read the indicators.  This doesn't require sheep entrails or any other divination, just pattern recognition, knowledge of the markets and stuff taught in any technical analysis seminar or class.  Reversion to the mean can be a nasty thing; some say that's what Greece's problems are.  The problem is that it's the least nasty of these possibilities. 

Silver is Down - Don't Buy Silver?

Not me.  Not now. 

I believe in dollar cost averaging and just getting a set dollar amount on a regular schedule.  But not tonight.  I went to the usual dealers I go to.  The spot price for silver as I write this is $14.70.  The price at Apmex right now for their cheapest 90% silver, also called junk silver, coins is $5.86/oz over spot, a 39.7% markup.  Most of the other grades are $6.34/oz over spot, a 43.1% markup.  Silver eagles from the US mint are in the range of $4.45/oz over spot in small quantities; in large quantities, they're $3.33/oz. over. 

A divergence between the price of physical metal and the paper price we get from those spot price numbers (like the one just to the right of this column) usually indicates a disconnect between the amount of metal actually available and demand.  Good luck getting it for any price closer to the normal.  The companies that hold the coins figure the price will be higher in a few weeks or so, and they can sell the coins then.  For now, if you want to pay a 43% markup, they'll take your money.  I personally don't see any sense in buying at a 43% markup, even though I pay the same amount of Federal Reserve Notes at some time in the future and get the same ounce of silver only with a smaller markup.  I fully admit that may not be rational!

There's always some difference between the spot price and the physical metal price.  You could say that spot is a theoretical number based on pure metal with no processing involved, but in reality it's the price of hypothetical silver in a paper trade.  It's a regular occurrence that more paper is traded on a given day than all the silver in the world.  If anyone called the bets on those days, there wouldn't be enough silver to back the paper. 

Do I think it's all unraveling?  Most likely not, although a serious disconnect between the spot price and the hold-it-in-your-hand price is often thought of as a warning sign.  There's a famous saying that "markets can remain irrational longer than you can remain solvent" and that seems to me to be what's going on.

Now Young Skywalker...You Will Die

(reference) On Sunday, Brock over at Free North Carolina posted an article about a simple and probably unexpected way to die during a grid down situation: spider bite.

Let me just emphasize one more way.  I'm sure everyone has thought about it, or strange as it may sound, thinks they've thought of it.  Infection.  The thing about infections is that they can pop up at any time without any warning or indications, and not just from a cut or other injury.  

The main reason for the quiet here over Sunday/Monday was an abrupt run in with the medical system.  Part was planned, but part was an out of the blue infection unrelated to any injury or other affront I can recall.   Within 12 hours, I was able to start antibiotics.  A quick trip to the local Doc-in-a-Box "urgent care" facility and then a stop at our local Publix for antibiotics, and I'm on the road to recovery.  If the grid had been down when this struck, I might well be dead by now, or pushing my limits.  Instead, Publix gives away two weeks worth of several antibiotics for free.  I assume that's because the cost of the generic forms they dispense are less than the cost of administering payment systems, or possibly they do it to attract business. 

I believe it was back on the old, abandoned Geek with a 45 blog that I read a similar post where he was simply astonished at the widespread availability of antibiotics, compounds that would have saved millions upon millions of lives from pneumonia alone, and he could be cured of pneumonia for a few dollars.  Now add in that many of them are free and compound that wonder. 

There are at least three big problems with having antibiotics around as general preparations for times with collapsed or just less-than-optimum health systems.  The first is that they're not just something you take they're specific; certain antibiotics only affect certain bacteria, so that you just don't need AN antibiotic, you need THE antibiotic for the infection you have; taking the wrong one could cause damage.  Needing several types of antibiotics means lots of storage.  The second problem is partly based on that issue; they are typically available by prescription only (although most folks already know the system hack for that).  The third big problem is that you shouldn't just give someone a bottle of something and think you're done.  They really do require knowledge on a caregiver's part.  

Something everybody who thinks they'll be administering first aid in shaky times should know is not just which antibiotics to try first for which conditions, but when not to administer them, and what to do if they don't work or the patient gets sicker (from the illness or from reaction to the drug).  I'm certainly not the guy to teach such a class, but I'd sure like to take it.  I know there are people in our community who could put on such a program, so it may be available and I'm just not aware of it.  Patriot Nurse on YouTube comes to mind, as does Dive Medic. 

My bottom line here is that there are lots and lots of ways to die when civilization goes fully dysfunctional.  Spider bites, snake bites, tick bites and other critters can get you.  Or you could wake up with an infection out of nowhere.  It often seems to me that people talk about something major like an EMP happening and over a hundred million people dying, yet the implication is that they're somehow not among those who do.  This hasn't even touched the many ways of dying that don't have anything to do with infection at all.  

(probably a stock photo of a hand model pouring out pills - from)

Peering Out of the Bunker of Doom

I'm cautiously peering out of the Bunker of Doom, wishing the AR in my hands was a BAR.  Nobody rioting.  Nobody with ruck sack and a rifle slung over their shoulder.  No MRAPs.  Just a normal summer evening.

China's markets lost again today.  They're down over 32% from the peak of the bubble.  Bayou Renaissance Man points out that they're on the virtually the same slope as the US crash of 1929.   Estimates are that the total amount of wealth that has vanished in China totals $3.2 Trillion, which is approximately the GDP of the UK. 

It's spreading.  The commodities China has been buying - to fund its mal-invested State Run Enterprises that do things like build cities with no inhabitants - are now sitting.  Peter points out that iron ore is down 10%.  Copper is down 15% in the last 60 days.  Chinese steel is cheaper than cabbage.  Silver is at five year lows.

The market shutdown on the NYSE was unsettling.  Zerohedge has the post mortem,

What began as a glitch in pre-market trading turned into the NYSE's longest trading halt since Hurrican Sandy battered the East Coast. The ever-increasing complexity of US equity markets combined with an ever-decreasing pool of greater fools leaves windows open on down days (for it appears these 'glitches' only ever occur on down days) for markets to break. While NYSE traders defended the very market structure they have abhorred in the past as evidence that today was "not a failure," we can't help but find CNBC's Scott Wapner's amusing remark that "if retail investors want low cost liquid trading they are going to have learn to live with it" the perfect post-mortem for a rigged system brimming with confident insiders ever excited to take mom-and-pop's money.

ZH also speculated that we could be seeing what cyberwar looks like:

After a series of cyber failures involving first UAL, then this website, then the NYSE which is still halted, then the WSJ, some have suggested that this could be a concerted cyber attack (perhaps by retaliatory China unhappy its stocks are plunging) focusing on the US. So we decided to look at a real-time cyber attack map courtesy of Norsecorp which provides real time visibility into global cyber attacks.

What clearly stands out is that for some reason Chinese DDOS attacks/hackers seem to be focusing on St. Louis this morning.

Mrs. Graybeard finds links that St. Louis is actually a headquarters of the folks who research hacking attacks, and they put out honeypots to catch them.  Naturally, that will make it look like they're concentrating on St. Louis.  I mean, the NYSE really isn't even in New York anymore, not all of it.  But St. Louis?  Unless their going after Anheuser Busch...

So reassured the Zombies haven't started shuffling, and feeling simultaneously relieved yet somehow slightly depressed that it looks like I go to work tomorrow, I flip the happy switch to SAFE, drop the magazine and eject the round from the chamber. But I'll be watching the markets a bit more closely tomorrow.

Guest Post - Economic Life After the Collapse

I'm pretty sure that in the life of this blog, I've never run a guest post.  With the exception of comments and quotations, every word has been mine.  Tonight, that changes.

A couple of months, I got into a discussion with someone I've known for 10 years or so about how economic cooperation could exist after it hits the fan.  I think most of us agree that the prospects for the collapse of the dollar have never been greater, which would render our current dollars useless. Then what?  Many people think of pure barter, but barter has an immediate issue.  Both parties have to own something the other wants.  If I want to trade my tomatoes for your chicken, but you don't want tomatoes, no deal.  I can hear some folks asking "what about silver or gold?".  A reasonable agreement for the value of the metals has to exist.  Chances are, there will be a need to a way to make change.  These are among the reasons paper money got started in the first place. 

Of course, anything larger in scale than barter or help between two friends or neighbors requires a stable social environment.  You can't have a flea market if wide scale social disruption is happening; that's time to be locked up in your hidey hole.  But if the society is stable enough for a weekend flea market, my correspondent proposes an interesting model.

He suggested I post this under my name, but I'd rather he get the credit.  On the other hand, he didn't say I could use his name.  Consequently, I'll post this anonymously, and if he tells me how to identify him, I'll do that.

The Casino Model For Barter

When the currency collapses there will still be a need for something that can be used for commerce. Plain barter is a problem for many reasons. A new currency will be needed. A big problem with any new currency is that it is hard to trust. The Casino model is partly a way around this problem.  This will work for a small town or for a market place in a larger city. An exchangeable local scrip has the property of goods preference, you don't have to find a person who has what you want that wants what you have. The scrip also has the time preference, if you don't spend it you can convert it back to something stable. A scrip also preserves the price/value concept. An item can be priced at so much silver.

Money is a measure of value and a store of value. Money is a general medium of exchange. It is often used as a store of value because it is relatively stable. If the store of value property is separated from the exchange property it is easier to replace the dollars that are used now. The Casino model is a way to separate these two features. The value is stored in physical metal or in goods. The exchange is done with tokens or paper scrip. It can be done as a low trust activity.

When a person comes to a Casino to gamble, they trade their dollars for chips. When the person leaves the Casino they trade their chips for dollars. The chips are easy to use in the Casino but have no value outside of it. The local function is done with the chips and the longer term is done with dollars. The chips are only good in the Casino that issued them.  The goal of using the scrip is to allow a goods or service preference. Also the paper scrip is easier to use than big coins. Because the life time of the scrip is short it doesn't have to be as secure as a normal currency. Every night the scrip is exchanged back to metal and becomes scrap paper with no value.

When a person arrives at a trade area they may have goods to sell or they may have gold or silver to spend.  If the person has silver they exchange the silver for local trade scrip. If they have goods they sell the good for trade scrip. Some of the trade scrip is used to buy goods. When they leave the exchange they trade any remaining trade scrip for silver. The local fractional values are handled with the scrip. The long term store of value is done with the silver or other goods 

Value can also be stored with other commodities. Anything with a reasonable shelf life and low storage costs will work. It can be brass or guns or lumber. The local exchange operator can buy and sell silver or gold or foreign currencies. There can also be the equivalent of a pawn broker who is ready to buy and sell anything.

When a new currency is created there is a problem of counterfeiting. For a local trade scrip the problem is handled like a cryptography problem. Any code can be broken but it will take time. If it takes more time to break the code then the info is worth, the code is effectively secure. A local trade scrip doesn't need super security. It is intended to last for only a day or two and will be converted to a different more secure money. Each day or week the exchange can use a slightly different scrip. Each trade day a notice is given to the local venders which scrip is valid for the day.  A local market can have supplies of several different scrips. A different color or pattern is used each day. Some local merchants can get a discount on the exchange of scrip.

For fractions of a dollar, local coins can be used. These can be copper or steel and there can be a big variety of them. The current coins in use can continue to be used as long as someone is willing to convert then to gold or silver scrip or take them in exchange.

Robbery is also less of a problem because the scrip has no value outside of the local market. Inside the market it only has value for the day it was issued. This makes it almost valueless except to the local owner. If some scrip is stolen from the money changer over night it will not get redeemed and as such it will be worthless. During non business hours the scrip has no value.

The money changer can also act as a bank for larger amounts. The amount of scrip is entered into an account that the person can write checks on for larger amounts. Again the value is in the scrip for only a short time.  A merchant can leave his gold or silver with the money changer to make it easy to change.

Because the scrip is converted back to another form within a day, the local bank cannot inflate the value. Because the time span is short there is no fractional reserve banking. Everything turns into something other than money every night. The scrip has no intrinsic value except for the promise to trade back into something else at the end of the day. There is no need to keep track of how much gold or silver is exchanged each day to prevent too much gold from coming in or going out. This is not  a problem because what is exchanged into scrip is exchanged out of scrip the same day. The daily conversion also means that there is no practical limit on how much scrip can be issued. The only requirement is to exchange out every thing that was exchanged in.

A bi-metal standard is hard to work with. The local scrip should be either gold or silver. The metal that is not used can fluctuate. There can also be two scrips, one gold and one silver.  The ratio of gold to silver will probably change over time.  Different towns will probably have different exchange ratios for gold  to silver. The people who use the scrip will work out the local ratio.

The same pieces of silver will probably get converted by local merchants each day. This will make it easier for the money changer to spot bad coins. An area will need a supply of silver or gold but not that much is needed since it is recycled each day. An example would be a gun dealer who converts an ounce of gold into scrip in the morning and then buys a gun. The person who sold the gun then buys some food. The person who sold the food buys some clothes. The single ounce of gold can support trades that would otherwise involve 10 or 20 ounces. At night, the gun dealer's store of value is gold or the guns he has.

Different other value stores can be used but they cause more trouble. For simplicity the scrip should be in terms of a single item like silver or gold. The money changer can exchange the different currencies like Euros, Pesos, Dollars, Yen, Silver, Gold. if the scrip is in terms of more than one item there might be a case where a person changes silver for scrip but wants to get gold when the scrip is changed back. There is also the problem of what kind of silver coin. Bullion coins don't sell for as much as US silver dollars.

They money changer or a local dealer can also use non money items for exchange. There can be a dealer near the entrance to the market that buys and sells things the region is noted for like grain or lumber. For transport to other areas there is still the need to change to some other form. A dealer can stock up on things by trading silver for scrip that is then exchanged for goods. Of course a person is still able to bypass the scrip if they find a person who wants to do a direct trade.

A trade scrip like this will allow a town to have a well functioning market place even if there is no valid local currency.  A person can save part of their wealth in dollars or gold or silver or many other forms. A person can also store wealth in goods like grain or copper or guns. Each day the local merchant for that good sets the value.

If a local entity tries to use a local scrip for long term storage of value it becomes more difficult.  The longer the scrip is in circulation, the more secure it needs to be from counterfeiting. There is always the temptation to inflate the value a little. If the scrip is converted back to silver every day this is not a problem. There might need to be some kind of tradable object that can be used for the scrip that is less than an ounce of silver or whatever size coin is available. In a pinch the person can be given a receipt for a fractional amount of silver. The receipt can be converted to scrip within a few days.

The money changers will get 2% or 5% for the service of changing silver for scrip or scrip for silver. The service charge can also be partly a sales tax to support the market place. It can pay for physical security of the market place. If the market has enough of an advantage over simple barter or bad currencies the market will still be popular. Towns or cities can compete on how well their markets function. The money changer that issues scrip can turn a profit from having a place where commerce can take place.

The scrip people can also do a banking service. If the person has less than an ounce of silver, they can start an account with the money changer. The fractional ounce can then be converted back to scrip when needed. Because it is on deposit, there is still the ability to change the scrip each day to prevent counterfeiting.

A pawn shop operator can also be an important part. If a person has something to trade but it is big they sell it to the pawn shop and get scrip to buy things with. Other people will buy the item from the pawn shop for scrip. The pawn shop gets some scrip in the morning by changing gold or silver for scrip. The pawn shop converts its scrip back to gold or silver at night. When there is a long term relationship between the pawn shop and the money changer, the pawn shop might take a paper promise of some gold/silver instead of the physical metal. The paper promise can be fractional ounces.

If there is an active pawn shop or a few used property dealers then not as much gold or silver is needed. The scrip is for the daily use but other things are used to store value. Because value can be stored in different forms there might not be a big inflation in terms of gold.

There might be a virtual dollar that is used as the nominal measure of value. The virtual dollar can be pegged at $1000/oz. The price of gold in US dollars can change. The price of silver in virtual dollars can also change. The prices of items might go up or down depending on supply or demand. The ratio of silver to gold might change. The money changer can also issue silver based money. The only important thing is to be able to completely convert back at the end of each day.

Different towns will have their own barter setups. Different towns will also have different preferred stores of value. Some big bars of copper or aluminum might as as value stores.

When a big item is bought or sold the value is converted to a variety of items. A car, thru the use of scrip, might get changed into some gold, a few guns, and even some cases of food.

A manufacturing operation that sells to a big area will have more trouble. An intermediary will be needed to get the requested amount of value. This creates an opportunity for traders.

A gun company wants $500 for a gun. It sells it to a dealer who gives the company $500 in scrip for it that the company can convert to gold in the local market. The dealer takes the gun to the remote market and trades it for some furniture. The dealer brings the furniture back and sells it for scrip that can then be converted back to gold.

Every town will need a few big merchants that can trade a package that is worth many thousands of dollars in goods or services.  The goods travel between towns, the scrip does not.

An example would be a farming town. The farmers bring their produce to town and sell it for scrip. They use the scrip to buy clothes or tools. The dealer who buys the produce takes it to a city where it is sold for their kind of scrip and that scrip is used to buy clothes and tools and things for the farming town. There can be two way trade or three way or four way trade. The trade can be direct or indirect. A merchant can do all the links of the trade or only one of them.

As things become more stable a barter scrip can evolve into a new stable currency.

The money changers need to get better known. The idea of using something other than money for a store of value needs to be accepted.

It is possible that after using a service like this, people will get used to storing value in something other than money. Either trade goods or metal will be the store of value. Furniture or works of art can store larger amounts of value. A business can grow up that buys and sells value items. The items are not intended to be used for anything other than storing value. Guns have a very big value to size/weight ratio. Jewelery also has a very high value to size ratio.

If a person has a big enough storage place, almost anything can be a store of value. Even tons of scrap iron can store value. There will be specialists in different kinds of things. Some dealers will buy/sell guns. Some will buy and sell canned food. Many different things are possible.

After there is more trust, merchants can have goods in warehouses and trade warehouse receipts. This requires that there is a warehouse that can be trusted. it is possible to do a virtual exchange between towns if a merchant is active in both places, he buys in one place and sells in the other place.

A consignment shop is also possible. The merchant gets possesion of the item. The owner gets a promise of so much gold or silver or the item back after a period of time. The payment can be specified as so much scrip to be paid when the item sells or when the time is expired. Some small groups of merchants will trust each other more and will trade their own promises to deliver goods or gold or silver.

Surpluses or shortages do not affect the Casino model as much because the money is only a unit of exchange and not a unit of stored value. The value is stored in something else.

In some ways people are already adopting part of this model. The local currency is good for trade but not for storing value. In many countries there is an effort to keep from getting hurt when the currency is devalued like in Argentina or Venezuela.  In many countries they use the local currency for trade but they use US dollars for storing value. Many people in India and China use gold or silver to store value. Preppers are buying physical gold and silver and some trade goods. A large number of recent gun sales might be an effort to get something that has value to store.

There are many things besides gold and silver that are worth storing. The goods can be sold directly or through a middle man when the time comes. Anything with a long shelf life will work.

A larger town has an advantage because it is more likely that there is a buyer for a large valuable item.

Big companies look at how to avoid being hurt when a bank defaults. In some countries they try to keep their reserves in the form of commodities that they sell when they need cash.

Real Money is
a medium of exchange
a store of value
a measure of value
a standard of value
no one else's liability
redeemable
moves purchasing power through time and space

A trade scrip in a barter Casino is not perfect but it is better than simple barter.
yes - a medium of exchange
no - a store of value
yes - a measure of value
yes - a standard of value
yes - no one else's liability
yes - redeemable
no - moves purchasing power through time and space

The Fed IS The Recovery and The Economy

Came across an interesting chart today with a good video explanation of what it all means.  First, the chart:

The raw data here is from the St. Louis Federal Reserve Bank, which has a nifty web site for extracting and plotting your own data.  This plots the Wilshire 5000, the adjusted Fed monetary base and effective Federal Funds rate.  The Adjusted monetary base, in red, is the amount of cash in circulation, in Billions of $.  The Wilshire 5000, plotted in dark blue, is another one of those indices of the stock market; this time the 5000 biggest companies on the NY Stock exchange, so 10x the size of the S&P500, and a really broad measure of the market.  In order to scale it so that it's proporitonal to the monetary base, the value of the index is multiplied by 46.  Finally, in a greenish color is the effective Federal Funds rate; and to scale it so that it looks like it's in basis points, it's multiplied by 250.  Are you good and confused? 

All of the recessions since about 1950 are shown as vertical gray bars, and you can see that the Fed tried to lower the funds rate and stimulate the economy after each one - although they were always badly timed. 

The point of this is most easily seen on the right side of the chart, after about 1990.  The bull market run up of the stock market and burgeoning economy are traced by the Whilshire 5000 (blue).  The adjusted monetary base is increasing, but slowly perking along.  The Fed funds rate hovers around 1000, dipping below in the recession of 1990 and then going to around 1500 (1 1/2%) through most of the decade.  Then comes the tech bubble pop, which leads into the recession of 2000 and the Fed dropping the funds rate to try to stimulate the economy.  Leading to the bubble/boom cycle starting in '02 and ending in the crash of '08. 

That sets the stage.  Around late '08 to '09, you can see a dramatic change in the patterns of the chart.  The adjusted monetary base goes from poking along (at too high a rate for sane people!) to going vertical, an incredibly fast, almost infinite, rate of change.  Likewise you see the Fed rate drop to essentially zero, their famous ZIRP or Zero Interest Rate Policy, where it has stayed ever since.  And you can see the Wilshire 5000 and the monetary base going up in lock step.  In fact, the author says those two curves' correlation coefficient is 0.97.  A correlation coefficient of 1 is perfect and you basically never see that. I don't think I've ever seen one as big as 0.97. 

Now notice the spacing between the gray bars.  Notice that they're always less than a decade apart?  Some of them are only two years apart (1980 and '82).  Now, they've been telling us that the recession has been over since '09, which says we should be running a really healthy economy right now.  Instead, what we see is that the Fed is creating money and that money is being used to pump prices: although this only shows the stock prices, the same seems to be happening for real estate prices.  Further, if the recession really ended in '09, we're five years out and therefore either midway, or less!, from the next recession.

Go watch that video.  You know how many of keep saying this isn't going to continue, that a really bad collapse is coming?  Look at that chart again: the Fed has already run interest rates to zero, what are they going to do next time?  They've already created about $3 1/2 Trillion.  What can they do next time?  Create 10 trillion?  $20 Trillion?  Direct deposit a million dollars in everyone's bank account? 

It's nothing less than the death of the dollar. 

Weekend Find

Saturday was the annual hamfest here in the Silicon Swamp.  I report on hamfests regularly because Mrs. Graybeard and I go to a couple regularly.  Not every one within a few hundred miles, but a couple.  For those unfamiliar with the term, a hamfest is a generally a swap meet with a lot of other interactions - a place where hams meet in person, catch up with old friends, share new stories and just be social.  Some fests have a full schedule of meetings and technical talks; some are simple swap meets.  Amateur radio is a social hobby, by and large, and is full of guys who can talk for hours on many things.  The granddaddy fest is held every year in Dayton, Ohio, the Hamvention.  If you're a ham, you should go to Dayton at least once.

For the first time in several years, I found something I wanted to take home.  A radio called an Icom IC-703 in a complete station.  Here's the illustration from their brochure. 

The '703 is not currently in production, but I consider it a good SHTF radio, and it frequently gets mentioned in places like Arfcom.  It covers all of the HF ham bands from 1.8 to 30 MHz and the 50 MHz 6 meter band.  The radio I found came with that microphone and backpack you see, along with too much to list.  It included the 9.6V BP-288 NiCad battery pack Icom sold for the radio.  The radio is a low power (also called QRP) transmitter, 5W off that 9.6V battery, but 10W off a car battery (or my 35 AH AGM battery from my solar panel).  It didn't come with that antenna, though! 

The Icom specifications page shows the transmit current draw to be 2 amps with unsquelched audio from the receiver around 350 to 400 mA.  Most commercial radios are rated for about 20% transmit, which would equate to 0.72 Amps average (20% 2 and 80% of 0.4).  That 9.6V battery pack's 2800 mAH will power around 4 hours of operation at that current drain.  My 35AH battery will power it for over 38 hours (and it will transmit at twice the power output). 

The radio was in excellent shape, the subject of an estate sale.  The ex-owner's widow was selling it and said she thought he had never used it.  Regardless if that's true, it looks mint and had virtually everything that comes with the new radio along with a good assortment of accessories.  I had it on the air long enough to verify the major functions are working.  The antenna tuner was happy with my antennas (it should be: they're all full-sized, good antennas), the DSP worked, it had an optional narrow filter for CW (Morse code) operation, and an hour of poking around with it showed no problems.