Why Larry gets it wrong. World heads to financial meltdown.

Financial reporting in the US has gone in the same direction as the reporting of other news: part facts, part distorted facts and part fantasy. Let's dissect the issues one by one.

1. The employment picture.
The "conventional wisdom" (i.e. what is reported by the Media) is that the economy is getting better as can be seen in the employment numbers. For the sixth time since 2010, the Media see green shoots: signs of a robust and sustainable recovery. This will be followed by activating an exit strategy by the FED and things will return to normal. What is this based on? Why, none other than the ajusted numbers of the Labor Department. Initial jobless claims (on the adjusted basis) had dropped to 335,000 - the lowest since 2008. Unadjusted numbers tell a different story: the actual number was 437,000. The average work week decreased and the % of companies reporting an employment decrease (16%) exceeded the companies reporting an increase (11%). Thus, the siting of green shoots is once again a fantasy.

2. Is there an exit strategy for the FED?
The short answer is NO. The FED can not allow interest rates to return to what the market would dictate. The National Debt is now 16.4T and growing. If this were financed by 30Year Treasuries at 3% the payments on it are 480B, at 4% it is 640B and at 5% it is 800B. The Liberals claim that  the debt does not matter because we owe it to ourselves. But, that's not how it works. The Treasury prints the Treasury bills and sells it to private interests. That includes private individuals and banks. The FED then digitizes the Dollars to buy some of this and pays interest on it (by digitizing more dollars). Whether, the FED pays the interest to the banks or the Treasury Dept, the new money is added to the money supply. The reason we do not see inflation is because the new money is tied up in banks reserves or Treasuries. The FED owes about 1.7T in Treasuries, so the majority of Treasuries is owned by someone else. Larry believes that at some point people will dump Treasuries and go into gold.

3. The Chinese put for gold.
The Chinese are smart buyers of gold. Every time gold drops, they buy more and insist on delivery. Official figures put Chinese acquisition at 1,000 tons for 2012. Since, US gold holdings are reported as about 8,000 tons, at some point China's gold reserves will top ours. Where is all that gold coming from? Good question.

4. The looming shorts squeeze in gold and silver.
It is esimated that the amount of gold contracts exceeds the available gold by a factor as large as 100, maybe 150. People who own gold bars and coins own gold.  The rest own papers promising delivery. Supply of silver is getting short. A shorts squeeze is building. The longer the FED gets us into this Ponzi scheme, the greater the danger when the scheme unwounds.

5. Daren Jonescu, writing in American Thinker, explains the Liberal/Progressive march into the abyss. "Hillary Clinton's angry blurting out of the truth is applicable to much more than just the Benghazi fiasco. With that revealing little qualification -- "at this point" -- she actually gave away the entire progressive game that has been played on Western civilization for more than a hundred years, and has now all but shut the door on the five hundred year adventure the West has dubbed "modernity."

This is the big secret at the core of the progressives' conception of "progress": You cannot justify the unjustifiable in advance, or persuade people of the rationally unpersuasive. Rather, you must simply push "forward" into ever-deepening waters, repeatedly building reserves of social pressure and then releasing them in little thrusts of propelling energy to carry civilization ever nearer the vortex -- all the while promising to save men from the frightening depths, if only they will hold on tight, and follow you, the progressive, just a little farther forward, just a little farther forward.

The key to the progressive "ratchet," as it is often, correctly, called, is that no step forward may ever be retraced. Each stage of degradation is to be rationalized after the fact, precisely by the means exemplified in Hillary Clinton's stark question: "What difference -- at this point -- does it make?"

As the Treasury keeps printing and the FED keeps digitizing, we are pushed nearer the abyss every day. Th failure of Democratic Socialism is no longer just a theoretical possibility far on the horizon. At this point, we can hear the roar of the waters as the whirlpool of chaos sucks in the nations of the world. That's the difference it makes.