Servias Ministries Blog

I rarely have a watch date but August 12th happened to have come up on the “radar”.  It could be economically oriented.  Be vigilant!  I have no other details.  If nothing happens on that day other than the usual, no worries.  It may be personal or corporate.  At this juncture, I have no idea.

All of us take part in transactions everyday of our lives.  A transaction is any activity that involves an exchange of value.  When you breathe, you exchange carbon dioxide for oxygen.  The plants win, you win.  What a great and fair system of exchange.  Transactions occur inside your body as well as all across the universe.  In economics, we mainly focus on business transactions and their impact on our finances and our wellbeing.  In this sense, a transaction is any activity in business that involves money. It occurs when something of value is exchanged with something else of value.  In this arena, man has the ability to directly influence the outcome whether it is good or bad.  Our Heavenly Father placed the Law of Equal Weights and Measures to establish a standard by which men and women should conduct business:

Leviticus 19:35 ‘You shall do no injustice in judgment, in measurement of length, weight, or volume. 36 You shall have honest scales, honest weights, an honest ephah, and an honest hin: I am the LORD your God, who brought you out of the land of Egypt.

37 ‘Therefore you shall observe all My statutes and all My judgments, and perform them: I am the LORD.’ ”

There should be no question where Our Heavenly Father stands concerning business conduct.  The buyer should never pay too much nor pay too little.  It does work both ways.  It should be a fair exchange of value.  It should be a win-win situation.  This standard should permeate throughout business and economics but it doesn’t.  Lies, deception, misleading statements, exploitation… have all become commonplace in our society.  All of these are acts of lawlessness will one day be reconciled.  It seems we have to be vigilant nearly everywhere we transact business these days.  How refreshing it is when we do business with an honorable person.  There are many laws on the books concerning truthfulness but for the most part, they are not enforced.  Man, I wished I received a hamburger that looked like the one advertised in the commercial!

Government reporting has become substandard.  Why?  Men have interjected their bias for political gain into the equations to improve the perception rather than simply report the facts.  They understood the power of managing perception of the populace by reporting an illusion so often people actually believe it to be real.  Remember the Titanic?

John Williams at www.shadowstats.com created a business of reporting the facts about the economy using the government’s own data.  He simply uses the formulas the government used prior to their manipulative adjustments so that his subscribers could look at “apples to apples” comparisons, a fair look at the economic trends.  He provides us “truth in the transaction”.  The latest employment numbers in the following graph provide the stark comparison of the truth versus man’s manipulation”

John’s Blue line shows the reality of the U.S. unemployment.  The red line shows the managed perception.  Yes there are pockets of prosperity around the country but they are offset by the severity of unemployment in other areas.  Remember, he uses the raw numbers generated by the government’s data collection process.

Each of us makes decisions based on the information available at the time.  If the information is based on unequal weights and measures, our decision will be flawed and could prove to be disastrous.  If an auto manufacturer has a design flaw in their braking system, wouldn’t you like to know before you purchased their vehicle?  If a business has a history of deception, would you want to buy a product or service from them?  In the end, we all want truth to prevail in our transactions.

In 2008 when the Fed lowered the savings rate to virtually zero, the retirees were severely hurt.  To add insult to injury:

Swaps Probe Finds Banks Manipulated Rate at Expense of Retirees  

See: http://www.bloomberg.com/news/2013-08-02/swaps-probe-finds-banks-manipulated-rate-at-expense-of-retirees.html

I will soon be writing about “Truth in the Transaction”.  It’s time.

Gold went into to backwardation recently.  Backwardation is the name for the condition that the market quotes a lower price for a more distant delivery date, and a higher price for a nearby delivery date.  This means that people want the delivery of gold now rather than later in the futures market.  Why?  There is developing an expectation that delivery might not occur later and the settlement could take place in cash instead.  Trust is leaving the system.  People are now getting concerned there might be a shortage of physical gold available for sale and delivery.

Consider this, the global economy is worse off today than it was in 2008 and the stock markets are at record highs.  Why?  The central banks keep pumping money into the system but the underlying system is not improving.  Can the U.S., Britain, Japan, and other large European countries ever pay off their accumulated debt?  Not in today’s currency value.  Only by further depreciating the currencies can they attempt to pay off debt.  Yes, you can print enough dollars to pay off outstanding debt but the currency would severely devalue as you complete the process.  Your creditors would be the losers.  Do you think bondholders will tolerate a severe depreciation of value of their holdings?  No, they will demand higher interest rates to offset devaluation.  If this happens then the United States will have a severe increase in interest expense and consume much of its tax revenue.  The Federal Reserve manipulated the interest rate down to cap the nation’s interest obligations.  The Fed is between a rock and a hard place.

As I have written in the past, the price of gold is the canary in the mine.  If the price shoots up, it is an indication that currencies are depreciating at a higher rate.  This is why the central banks have committed to manipulating the price of gold, especially in the last two years.  This can only happen to a point before the global investors as a whole see through the scam.  Once that happens, the paper price of gold (futures market) will decouple from the physical price of gold.  Backwardation is the first sign of this occurring.  Premiums for physical gold are beginning to increase.  At some point you will not be able to reconcile the paper market with the physical market.  When this day arrives, the paper market will crash and the physical market will take over in pricing.  I would expect us to see dramatic increases in the price of gold on a daily basis.

In the last seven years, the U.S. official debt has gone from $8 Trillion to $17 Trillion.  Employment numbers do not reflect any true improvement thus the tax base cannot pay off the increased debt.  It took the country 200 years to get to $8 Trillion.

Government bonds will collapse and pension funds will suffer dramatically.  Expect to see additional cities and municipalities file bankruptcy when this occurs.  Wealthy investors’ bond portfolios will dramatically contract which will cause them to quit spending.  This will have a cascading affect further affecting the Gross Domestic Product and reducing tax receipts.  In turn, the government will have to borrow more money.  There is not a positive outcome to this situation for the current system.

Currently in most countries, governments are the only buyers of their own debt.  What’s wrong with this picture?  This means that debt is increased simply by printing more money with no backing.  A decline in purchasing power is assured for those holding that currency.  Isn’t this fraud at the highest level?  This satisfies the Ponzi scheme definition.

A hyperinflationary depression is a likely outcome.  This is where prices increase even though demand from lower output decreases.  It’s a double whammy.  Higher prices with less people employed.  This would ultimately cause a reset to the system.  A system of equal weights and measures is the only plausible alternative once you have lost trust in the current system.  If people no longer trust the current money being issued, they will flock to an alternative store of value.  Gold backwardation is the first sign that this could be happening on a large scale.

John Williams of www.shadowstats.com stated in his July 17th newsletter:

Nothing is normal: not the economy, not the financial system, not the financial markets and not the political system.  The financial system still remains in the throes and aftershocks of the 2008 panic and near-systemic collapse, and from the ongoing responses to same by the Federal Reserve and federal government.  Further panic is possible and hyperinflation remains inevitable.

Our Heavenly Father is the only One with the path of deliverance from this mess we are in.

Recently, I was sent an email from the Marriott Hotel chain warning me that their “world-class” site had been compromised and that hackers had obtained some of the passwords to their clients:  “There have recently been attempts made to gain unauthorized access to a small number of members’ online accounts.”  Notice how there was little information concerning the extent of the compromise.  I wrote my first software program forty-two years ago in Fortran IV and have written over a million lines of code since.  If there is anything that I have learned over the years, there is always a weak link in any system and it can be exploited by hackers.  A system can be “fool-proof” but may not be “hacker-proof”.  Systems are built by people and those people are of varying levels of expertise.  Personal assumptions and bias are embedded in the design and implementation of those systems thus the hackers look for the unanticipated.  Since Our Heavenly Father is the only flawless One, all of men’s systems will contain flaws.

J.C. Penney’s computer network has been compromised for over seven years by hackers.  Other companies that were victimized included electronic stock exchange Nasdaq, JetBlue, Heartland Payment Systems Inc. and the Belgium bank Dexia Bank Belgium.  Hackers stole over 160 million credit card numbers.

We have a perception of security but the reality is we don’t have a guarantee of security.  This is why physical paper checks are superior to electronic transactions from the consumer point of view.  The physical piece of paper eliminates the ability of someone on another continent creating a fraudulent transaction on your checking account.  Banks assure us that online checking is safe.  Yes, the transmission link may be encrypted but how do you know that a hacker hasn’t loaded a “ghosting” program on your pc that records every keystroke of your keyboard then sends it to his database for later use?  If he knows what website your are at and knows what keystrokes you entered, then he knows your User ID and password.  Get my drift?  A smart hacker will simply gather the data until such a time he decides to sell it to someone else.  If hackers target a single bank or group of banks, how much damage could they inflict?  This is why I don’t do internet banking.

The Weakest Link applies to all aspects of systems and organizations.  The weakest link in credit processing is the minimum wage server who takes your physical card, takes a picture of the front and back and texts it to a buyer for $10.  Later that buyer encodes a card for use at a gas station or fast food restaurant.  The transaction may not be noticed.

As man’s systems become more complex, there are more inherent weaknesses in the systems.  At some point, those systems are at risk of collapsing.  This is true of the current global fiat currency system.  Since all of the major countries are fiat-based, there is no physical backing to keep men from exploiting the weaknesses of the system.  This is what lawless men do.  With over 1 quadrillion dollars in financial derivatives in existence, the question is not whether they system will have a fatal flaw causing a collapse, but when.

Another reason to simplify.  Also, you can’t “hack” gold & silver coins.  It may not be a bad idea to keep a couple of coins around, just in case.