Early Sunday gunfire across Lake Peachtree leaves questions

The Fayette County 911 center received numerous calls during the early morning hours of Oct. 27 reporting multiple gunshots around Lake Peachtree in Peachtree City.

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via The Citizen http://www.thecitizen.com/articles/10-29-2013/early-sunday-gunfire-across-lake-peachtree-leaves-questions

Guest Post: The Adverse Effects Of Monetary Stimulation

Submitted by Alasdair Macleod via GoldMoney.com,

A number of people have asked me to expand on how the rapid expansion of money supply leads to an effect the opposite of that intended: a fall in economic activity. This effect starts early in the recovery phase of the credit cycle, and is particularly marked today because of the aggressive rate of monetary inflation. This article takes the reader through the events that lead to this inevitable outcome.

There are two indisputable economic facts to bear in mind. The first is that GDP is simply a money-total of economic transactions, and a central bank fosters an increase in GDP by making available more money and therefore bank credit to inflate this number. This is not the same as genuine economic progress, which is what consumers desire and entrepreneurs provide in an unfettered market with reliable money. The second fact is that newly issued money is not absorbed into an economy evenly: it has to be handed to someone first, like a bank or government department, who in turn passes it on to someone else through their dealings and so on, step by step until it is finally dispersed.

As new money enters the economy, it naturally drives up the prices of goods bought with it. This means that someone seeking to buy a similar product without the benefit of new money finds it is more expensive, or put more correctly the purchasing power of his wages and savings has fallen relative to that product. Therefore, the new money benefits those that first obtain it at the expense of everyone else. Obviously, if large amounts of new money are being mobilised by a central bank, as is the case today, the transfer of wealth from those who receive the money later to those who get it early will be correspondingly greater.

Now let’s look at today’s monetary environment in the United States. The wealth-transfer effect is not being adequately recorded, because official inflation statistics do not capture the real increase in consumer prices. The difference between official figures and a truer estimate of US inflation is illustrated by John Williams of Shadowstats.com, who estimates it to be 7% higher than the official rate at roughly 9%, using the government’s computation methodology prior to 1980. Simplistically and assuming no wage inflation, this approximates to the current rate of wealth transfer from the majority of people to those that first receive the new money from the central bank.

The Fed is busy financing most of the Government’s borrowing. The newly-issued money in Government’s hands is distributed widely, and maintains prices of most basic goods and services at a higher level than they would otherwise be. However, in providing this funding, the Fed creates excess reserves on its own balance sheet, and it is this money we are considering.

The reserves on the Fed’s balance sheet are actually deposits, the assets of commercial banks and other domestic and foreign depository institutions that use the Fed as a bank, in the same way the rest of us have bank deposits at a commercial bank. So even though these deposits are on the Fed’s balance sheet, they are the property of individual banks.

These banks are free to draw down on their deposits at the Fed, just as you and I can draw down our deposits. However, because US banks have been risk-averse and under regulatory pressure to improve their own financial position, they have tended to leave money on deposit at the Fed, rather than employ it for financial activities. There are signs this is changing.

Rather than earn a quarter of one per cent, some of this deposit money has been employed in financial speculation in derivative markets, or found its way into the stock market, gone into residential property, and some is now going into consumer loans for credit-worthy borrowers.

In addition to the government’s deficit spending, these channels represent ways in which money is entering the economy. Furthermore, anyone working in the main finance centres is being paid well, so prices in New York and London are driven higher than in other cities and in the country as a whole. They spend their bonuses on flashy cars and country houses, benefiting salesmen and property values in fashionable locations. And with stock prices close to their all-time highs, investors with portfolios everywhere feel financially better off, so they can increase their spending as well.

All the extra spending boosts GDP, and to some extent it has a snowball effect. Banks loosen their purse strings a little more, and spending increases further. But the number of people benefiting is only a small minority of the population. The rest, low-paid workers on fixed incomes, pensioners, people living on modest savings in cash at the bank, and part time employed as well as the unemployed find their cost of living has gone up. They all think prices have risen, and don’t understand that their earnings, pensions and savings have been reduced by monetary inflation: they are the ultimate victims of wealth transfer.

While luxury goods are in strong demand in London and New York, general merchants in the country find trading conditions tough. Higher prices are forcing most people to spend less, or to seek cheaper alternatives. Manufacturers of everyday goods have to find ways to reduce costs, including firing staff. After all if you transfer wealth from ordinary folk they will simply spend less and businesses will suffer.

So we have a paradox: growth in GDP remains positive; indeed artificially strong because of the under-recording of inflation, while in truth the economy is in a slump. The increase in GDP, which reflects the money being spent by the fortunate few before it is absorbed into general circulation, conceals a worse economic situation than before. The effect of an expansion of new money into an economy does not make the majority of people better off; instead it makes them worse off because of the wealth transfer effect. No wonder unemployment remains stubbornly high.

It is the commonest fallacy in economics today that monetary inflation stimulates activity. Instead, it benefits the few at the expense of the majority. The experience of all currency inflations is just that, and the worse the inflation the more the majority of the population is impoverished.

The problem for central banks is that the alternative to maintaining an increasing pace of monetary growth is to risk triggering a widespread debt crisis involving both over-indebted governments and also over-extended businesses and home-owners. This was why the concept of tapering, or putting a brake on the rate of money creation, destabilised worldwide markets and was rapidly abandoned. With undercapitalised banks already squeezed between bad debts and depositor liabilities, there is the potential for a cascade of financial failures. And while many central bankers could profit by reading and understanding this article, the truth is they are not appointed to face up to the reality that monetary inflation is economically destructive, and that escalating currency expansion taken to its logical conclusion means the currency itself will eventually become worthless.


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/8ZxAPyhdcnQ/story01.htm Tyler Durden

THIS is where our Monetary System is Headed

By: Chris Tell at http://capitalistexploits.at/

 

 

I’ve never been trapped in a fire before and trust me, I have had plenty of opportunity. Yes, I was THAT kid, the one who played with fire. The trick was, and still is to steer clear of the flames, to anticipate what and where. Fire is however notorious for doing what it wants and once its out of control even the best firefighters don’t stand a chance.

  Each day that passes we come closer to the arrival of a monetary fire that threatens to dwarf anything in our collective living memories. Watching the Australian bush fires in New South Whales recently made me think of our monetary system. Funny that.

The Australian bush has been burning long before the Brits began exporting their best and brightest to the “lucky country.” Right now the fires are raging. It was inevitable. Like the business cycle nature too abhors excess and steps in to correct it, clear the dead wood and prepare for rebirth.

What is often forgotten is that nature has evolved to rely on bush-fires as a means of reproduction and new “birth.” Fires are an integral part of the ecology of the planet’s surface. Humans can try and prevent these inevitable fires by “controlled burnings”, clearing out much of the dead underbrush, but it’s not foolproof.

The fires now raging in New South Whales are in part due to an extensive build up of dry brush which is likely overdue a good burning. The longer the dry bush remains unburned, and the more that accumulates the greater the risk of an inevitable fire. The result will be much greater than that which would have preceded it should a fire have taken place sooner. This is a basic, easy to understand law of nature.

Financial markets are NO different. The dry brush of excessive credit, monetary stimulus, rampant fraud, and government interference, which has caused the largest sovereign bond bubble the world has ever seen, has not been cleared or burned to allow for regeneration. In contrast we’ve actually been ADDING to it, doing the exact opposite of the “controlled burn.”

The market, like nature, has attempted to correct these excesses many times, only to be met with central bankers fire hoses spraying liquidity at ever increasing volumes and velocity. As the outbreaks of financial fires increase so too do the tools and technologies used by the central bankers. This postponement of the inevitable leads to massive mis-allocation of capital. monetary bsae

That’s a lot of dead wood buildup there

The above graph shows all the dead wood build-up. Quite a bonfire awaits us.

It is possible that the fires will continue to be contained, central bankers promise that this is indeed the case. We DO know however that it is not possible to contain it forever. This time is not different…or is it?

Let’s compare what’s different this time around in Australia and the world’s monetary system?

  • The bush fires have invaded the suburbs. So too have the monetary bush fires directly impacted most western “suburbs”.
  • The “tools” available to the firefighters are more advanced than at any time in human history. The tools that are at the disposal of central bankers are more “advanced” than at any time in human history.

What’s happening in New South Wales right now provides us with an instruction manual for how to proceed forward in a world of monetary madness. We need to BURN THE UNDERBRUSH. Simply hoping that the fires will fail to erupt simply defies history and mathematics. “Hope and Change” be damned.

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The likely outcome is that we’re heading deep into asset confiscation mode. Government meddling will fail, it always has and it always will. The playbook from throughout history tells us that governments will steal anything and everything from the most productive before they default.

This happens either overtly (taxation, fines, penalties, asset seizure) or covertly via destruction of currencies (quantitative easing). Everything not nailed down is up for grabs. Don’t say you weren’t warned! If you need an example look at what’s happening in France. Hollande is insane, but he’s not unique.

As such, aside from structuring myself in order to protect what I have, which I hope I’ve done, ensuring that what I invest in going forward is structured properly is just as important. It makes no sense to invest intelligently only to have some thug steal the proceeds because I failed to set myself up to deal with the inevitability just mentioned.

So, how are Mark and I choosing to allocate our capital:

  • Investing in private equity. We like businesses where we can get to know and deal directly with CEO’s and management, and where we are not at the whim of black box trading systems, plunge protection teams and assorted other “firefighters”. This is by far our most overweighted asset class. If you want to know more about how we do this, drop us a line.
  • Trading the volatility created by these madmen. Our friend and colleague Brad Thomas, the new editor of our Trade Alert service, “The Capex Options Alert” is our guru in this area. You can get to know Brad a bit and sign up for this complimentary service for a limited time HERE.
  • Continuing to buy and store physical precious metals. This just seems a long-term no-brainer.
  • Investing in agriculture. A guy’s gotta eat, right!
  • Select real estate. Maybe some premium scorched earth in New South Wales, Australia. After all, the risk of a devastating fire is now significantly reduced! But seriously, a nice piece of land where you can escape the madness and “grow your own” if need be.

The above is neither a recommendation nor an endorsement of any particular asset class or strategy. Obviously everyone’s situation is different, and we don’t know yours. Some could probably do just fine with a couple hunting rifles, some ammo and a nice piece of land to grow food and run a few livestock. Albeit that’s not going to work for urban dwellers.

The bottom line is that we are just encouraging you to consider how to prepare for a monetary firestorm. Do it your own way, use common sense, but just don’t be the dupe who ignores the obvious.

– Chris

“So just as I want pilots on the planes that I fly, when it comes to monetary policy, I want to think that there is someone with sound judgement at the controls.” – Martin Feldstein


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/nm9tXpH-L0I/story01.htm Capitalist Exploits

Nov. 9 F’ville ceremony to unveil memorial to war dead

This year’s Veterans Day observance at Patriot Park in Fayetteville will be something special. The Nov. 9 ceremony will include the unveiling of the Fayette County Veterans Memorial which will feature monument walls listing the names of soldiers who fought in numerous wars and who were born, raised and died as residents of Fayette County.

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via The Citizen http://www.thecitizen.com/articles/10-29-2013/nov-9-f%E2%80%99ville-ceremony-unveil-memorial-war-dead

Sheriff Babb: Map sex offenders before kids’ trick or treat Thursday

Fayette County Sheriff Barry Babb wants residents to know where the county’s 34 active registered sex offenders live so parents can avoid those houses when kids are out for trick-or-treat activities this Halloween.

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via The Citizen http://www.thecitizen.com/articles/10-29-2013/sheriff-babb-map-sex-offenders-kids%E2%80%99-trick-or-treat-thursday

5 burglaries charged to F’ville man

A Fayetteville man linked to five recent burglaries in unincorporated Fayette County was arrested Oct. 24 after being located by Fayette County deputies responding to a burglary in progress call to 911.

Brantley T. Vinci, 34, of Rosedell Court, was charged in five burglaries in Fayette County, though other charges are pending, said Sheriff Barry Babb.

“We have good evidence against Vinci in these burglaries and are continuing to build the case and any other connections to more crimes if supported,” Babb said Monday.

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via The Citizen http://www.thecitizen.com/articles/10-29-2013/5-burglaries-charged-f%E2%80%99ville-man

Screen Traded Fiat Gold Could Get a Violent Wake-Up Call

Today’s AM fix was USD 1,346.75, EUR 978.81 and GBP 837.06 per ounce.
Yesterday’s AM fix was USD 1,351.00, EUR 978.28and GBP 833.69per ounce.

Gold climbed $1.50 or 0.11% yesterday, closing at $1,353.00/oz. Silver slipped $0.05 or 0.22% closing at $22.47. Platinum rose $9.20 or 0.7% to $1,382.00/oz, while palladium climbed $6.50 or 0.9% to $707/oz.

Gold for immediate delivery gained as much as 0.6% to $1,360.76/oz, prior to a sharp bout of  concentrated selling just before European markets opened at 0800 GMT, that saw gold fall to just above $1,340/oz .

Gold had been near the highest level in five weeks after U.S. economic data showed how weak the U.S. economy remains leading to concerns that the Fed will continue with ultra loose monetary policies.


Gold in US Dollars, 10 Days – (Bloomberg)

Gold is currently 1.3% higher in October. Gold fell into the middle of the month (see chart below) and then as U.S. lawmakers wrangled over the nation’s budget and debt ceiling, triggering a 16-day partial government shutdown, gold began to recover and is now nearly $100 above the low seen mid October at $1,252/oz.

U.S. factory output trailed forecasts in September, while pending sales of previously owned homes fell the most in three years, separate reports showed yesterday.
Asian demand remains robust and holdings in the SPDR Gold Trust, the biggest gold  exchange traded product, held steady at 872.02 metric tons yesterday.


Gold in US Dollars, 1 Month – (Bloomberg)

In the Financial Times, veteran financial journalist and gold watcher, John Dizardnoted the increasing strain in the physical gold market and detailed how that should lead to much higher 
gold prices.

“Something is unsettling the animals in the forest of the gold market. Usually there is a chorus of chirrups and squeaks that are significant, momentarily, for one species or another, such as a few cents of arbitrage between Zurich and London, or a dollar-an-ounce rise in India caused by a dealer’s near insolvency. Then the noise settles down to the murmur of wind through the trees

However, the continuing high level of premiums for physical gold over the kinds you can trade on a screen suggests that the next move in the major gold indices or the various exchange traded funds could be discontinuous and dramatic. It would be much better for the financial world if gold were just bumping along, with only enough volatility and liquidity to keep a few dealers’ lights on. That would mean electronic or paper assets have retained their essential credibility with the public …”

“This could turn into a very violent wake-up call for [screen-traded gold]. People talk about ‘fiat currencies’, but we also have ‘fiat gold.’ Volatility is too cheap right now.”

Taken together, this collection of persistent microeconomic signals in gold could flag macro trouble to come. These noises worried me in August. They worry me more now.

Dizard’s article, ‘Strange gofo cry heralds trouble for gold’ in the Financial Times can be read here.

He has previously warned that ETF gold holdings and central bank gold reserves may be being lent to bullion banks, who then re lend that gold into the market.

Owners of gold exchange traded funds (ETFs) would be surprised and worried to discover that certain banks might be lending out gold that they have bought and believe that they own.

The leading gold ETF, GLD has been criticised by many analysts for its extremely complex structure and prospectus. There have also been warnings about the possible conflict of interest and overall lack of transparency.

If as has been suggested, banks are lending gold into the market that has come from exchange traded funds then this would validate the many concerns raised about the gold ETF market.

Questions would again be asked as to whether many of the ETFs are fully backed by the gold that they claim to own in trust on behalf of clients. 

 
Gold Prices / Fixes /Rates /Volumes – (Bloomberg)

Already more prudent hedge fund, investment and pension fund managers have liquidated their ETF positions in favour of allocated physical bullion.

We would expect that trend to accelerate as prudent investors rightly seek to avoid the high level of counterparty and systemic risk associated with exchange traded gold and other forms of unallocated gold and paper gold.


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/LdEbZ7mHGG0/story01.htm GoldCore

The Steve Cohen Era Is Over: S.A.C. To Plead Guilty To Securities Fraud, Stop Managing Outside Money

Nearly three years ago, before anyone had heard of expert networks, before the SEC had brought any major enforcement action against any hedge fund and long before anyone had to gall to accuse SAC of insider trading, Zero Hedge started a series of posts commencing with “Is The SEC’s Insider Trading Case Implicating FrontPoint A Sting Operation Aimed At S.A.C. Capital?” exposing the fraudulent transactions of Steve Cohne’s hedge fund despite fears of violent legal reprisals. We are delighted to inform our readers that this particular chapter is now over: the WSJ has just reported that SAC will plead guilty to securities fraud, pay a final $1.2 billion penalty (still a tiny sum compared to all the ill-gotten gains by Steve Cohen over the years), and most importantly, end the fund’s management of outside money.

From the WSJ:

SAC Capital Advisors LP will plead guilty to securities fraud as part of a landmark criminal insider-trading settlement with federal prosecutors set to be announced by next week, people familiar with the discussions said.

 

The exact timing of the pact isn’t set, and if final details are ironed out quickly, it could still be unveiled by the end of this week, these people said.

 

SAC, run by Wall Street titan Steven A. Cohen, also will agree to stop managing outside money and pay the government criminal penalties of about $1.2 billion, according to these people—which would be the largest-ever insider-trading penalty.

 

 

A spokeswoman for the Manhattan U.S. attorney’s office, Jennifer Queliz, declined to comment, as did SAC spokesman Jonathan Gasthalter, Federal Bureau of Investigation spokesman J. Peter Donald and SEC spokeswoman Judy Burns.

 

After any settlement is approved, Mr. Cohen would remain under criminal investigation, though no charges are expected against him barring unexpected developments in the probe, the people said.

And since in the hedge fund world the bulk of “retained earnings” comes not from capital appreciation, manipulated, centrally-planned markets or not, but from charging outside investors the exorbitant privilege of 2 and 20 or, in SAC’s case 3 and 50, the Steve Cohen era is now effectively over.


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/OaNw3uiGE2I/story01.htm Tyler Durden

Gary Weishaupt, 59

Gary Weishaupt, 59, of Augusta, Ga., beloved and devoted companion of Ms. Becky Wallace, entered into rest suddenly on Wed., Oct. 23, 2013.

Born in Japan and a resident of Augusta, Ga. and Lexington, S.C., most of his life, he was a son of the late John A. and Janice F. Weishaupt.

A Vietnam Veteran, he proudly served his country in the United States Army. He was Hiker with Penske. Gary enjoyed shooting pool and singing karaoke.

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via The Citizen http://www.thecitizen.com/articles/10-29-2013/gary-weishaupt-59

Doris Pennington Gould, 89

Mrs. Doris Pennington Gould, 89, of Louisville, Ga., died Monday, Oct. 28, 2013, surrounded by her loving family.

Mrs. Gould was born Nov. 25, 1923, the daughter of Moody T. and Lena Eason Evans of Matthews. The widow of Gailord Gould of Grovetown, Mrs. Gould was a graduate of Wrens High School and a caregiver for many years. She was a member of Mt. Moriah United Methodist Church.

Funeral services will be held Thursday at 11 a.m. at James Funeral Home in Wrens, Ga. Visitation will be held Wednesday evening from 6-8 p.m. at the funeral home. Pallbearers will be grandsons.

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via The Citizen http://www.thecitizen.com/articles/10-29-2013/doris-pennington-gould-89