Pimpernel the Hermit, news and thoughts.

It has been pretty non-stop for the past month. Yesterday alone was a bit much, lots of talking and finding out that another friend has passed away. I decided I needed a time out, a day of silence. The world is becoming noisier and more frantic, people seek out constant amusement and information; but, take less and less time to think about the world around them.

For most of us, our daily life is pretty routine. We wake up, eat breakfast, possibly catch some news and go off to work. In the United States most of us work in offices or in the service industries because we have destroyed our manufacturing base. 8 hours behind a desk or providing whatever service we do. The day ends and we head off to see our spouse who was being doing the same or we return to our living spaces. For many today that is renting a room in someone else's house. We get home and watch television reality shows or play video games. Then we go to bed and do the same the following day unless it is a weekend.

The weekends that we all look forward to are spent by many watching sports on television. For many there is the week vacation that they take wherever. The truth is that most are okay with the way things are and never expect it to change. In many other countries it is even worse, 14 hour days in a Chinese factory where you are limited to 3 minute bathroom breaks and they live in little compounds, well, not that little, just lots of people in them.

A few people escape this and become rich or famous or just chuck it all. All of this leads to a life pace that burns you out eventually. People spend their free time attempting to escape their life, a temporary reprieve from the drudgery. I believe this is why most people don't really understand what is going on in the world or even how the world really works.

The question is why do we accept this situation? Not all do, the Occupy movement showed that and that is why it was so severely reacted to. The same is true for the Hippie movement of the 60's. I believe we accept it because people seek conformity and peace more than anything else, they seek to not be disturbed. This is the same reason most reject the truth of where we are headed as a world and certainly as a nation.

As I was writing this, I stepped out into my living room to get some orange juice from the kitchen. The television was on and there was Lady Gaga singing "Born this way". Charming video with her made up to look like a corpse as she made out with another person also made to look like a corpse. The imagery that we expose our children to on a daily basis is unhealthy and also dumbs them down.

The articles and things I post here and the views I express are matters of concern, they are of things that will effect our lives and determine what our future society will look like and the outlook is grim in many ways and will be openly embraced by most. I was talking to a couple of people yesterday, first time meeting them, it was about business. My assistant needed to get some information on something so the rest of us left to get some coffee. We ended up chatting about some things, things I have written about here in the past. The big lie because the big truth is unsettling and forces us to reconsider all we have been taught and told about the world.

There is an incredibly big change coming, a change to the world's financial system, all of them. China is now talking about issuing gold backed currencies. If this were to occur the dollar would crumble and even Americans would be seeking to buy the Gold backed Yuan. I don't see that happening, the world will not go to a gold standard. It makes no sense, has no intrinsic value and doesn't work well in an electronic currency environment.

In Europe they have what is called a Value Added Tax. In simplest terms as a product is being made it begins as raw material (iron ore), is increased in value as it is turned into metal which can then be used to make a car. At each point in the process it is taxed based on the value added to the material. The same can be done for wages or revenue, you could set up a system that pays people based on how much value they have added. Most of us contribute little to our product, primarily because most products today require so many steps in their creation. Just think about all the steps and all the efforts that go into creating a simple cell phone.

Now is the part that you have to understand if you are understand why the world's economies are failing. In the financial sector, people are rewarded on how much take out of the system and not how much they contribute to it. This has led to the destruction of our business model. The people that run the businesses now are financial people and not business people. They are rewarded for manipulating the value of the stock and not for what they produce. Nowhere was this truer than with the big auto companies. GM ceased caring about cars because they made more money on financing loans than in producing cars. GM was not bailed out because it couldn't sell cars, it was bailed out because it lost money in bad loans and risky investments.

Now, here is a video of Dr. Paul Craig Roberts, he had been an Assistant Secretary of the Treasury under Ronald Reagan. In this video he is discussing how the dollar is going to collapse. YouTube - Dr. Paul Craig Roberts: America is Going to Crash Big Time. Scary stuff if you believe him and hardly really discussed in the mainstream media. While I completely disagree with him on gold, long term, I understand where he is coming from.

The currencies are going to collapse and anyone who really pays attention to these things, as does Dr. Roberts, knows it. Many think that Wall Street is doing well and that the value of the stocks is increasing, it is not, that value of your dollar is going down, we call this inflation. It takes more dollars to buy the exact same thing. The inflation is hidden to most and does not appear in our Gross Domestic Product because the houses are worth less. One product lost it's value because the worth was never actually there. When viewed on a national scale, the loss in value is more than the TARP bill cost (around $800 billion) and the stimulus cost (around a trillion). It is an economic shell game. A false picture of our Gross Domestic Product. It is the reason that the Federal Reserve is buying the bad mortgages, to hide the truth. Let me explain what has happened and how the game works.

All the mortgages were packaged along with other debts into what we call derivatives. Imagine me selling you my mortgage, car loan and personal loan at the bank. The thing is you have to buy them as a group, you cannot just buy one. The pundits and news readers tell you that these are very complicated financial instruments, they are not, pretty simple actually. Now, your mortgage was valued when placed in these transactions; but, they were valued at a time that your house was worth twice what it is not and based upon the assumption that you would pay them for 30 years. The valuation has not changed and doesn't as far as the derivative is concerned. As we all know, loans have different pay off periods, it could be for two, twenty or thirty years or whatever. When the derivatives were put together this would have been calculated and an actuarial table would be made showing what they could be expected to generate each year. Because you would expect the smaller loans to pay off earlier, the derivative would be weighted to pay more in the first few years, with the total value still based on the original valuation of the houses keeping the overall value up. If those houses get foreclosed on then the valuation of the house is reset based on it's payoff amount or what the bank ends up reselling the house for. In other words the loss the holder of the derivative faces only comes when if the house is sold; but, here is the coming game. The houses won't be sold, the Fed and the government will rent them out thereby never showing the loss.

This has two effects, firstly, the length of the derivatives life is lengthened. Rather than expecting to be paid over 30 years, the holder can now be paid indefinitely. Because the government owns 80% of all mortgages it shows as part of our Gross Domestic Product and as a revenue source for the government, same is true for the Federal Reserve. Now, I have just broken down in a few paragraphs a lot of what is going on and in simple terms; but, how many will bother reading them all? What is the attention span of the average person now and how much do they really care about what is truly changing and will effect your children's lives and the future of this country and this world?

Sorry, I was interrupted with a phone call. I lost my train of thought; but, this may have been enough for one night.