Below is Fitzwilson’s exclusive piece for KWN:

“One of the most insidious and feared weapons ever created was the S-mine, also known by the soldiers as the "Bouncing Betty".  It was designed as an anti-personnel mine by Germany in WWII.  Buried underground, a small explosive charge would propel the device up into the air when triggered by the weight of a passing soldier or by a tripwire.  At that point, the main explosive charge detonated and sprayed lethal steel balls in a wide radius.

The unfolding tragedy of Hurricane Sandy reminds us all that we are surrounded by unseen economic, social and natural disaster Bouncing Bettys.  When one device is triggered, the ensuing chaos and panic can trigger many more....

Continue reading the Robert Fitzwilson piece below...  


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“Humans have created a chaotic system.  We and others have laid out the history and the context of societies who have done it before, how they did it, why they did it, and how it ends.  The only mysteries are what triggers the chaos and the specific events along the way toward resolution in our particular era.

Leading up to the Panic of 1907 was another natural disaster, the San Francisco earthquake of 1906.  The massive damage triggered wholesale liquidation of securities by insurance companies as well as the transfer of significant amounts of gold to the U.S. to pay for claims. 

The Bank of England nearly doubled interest rates which also helped to weaken the U.S. economy.  The damage from the earthquake alone was estimated to be about 1% of the U.S. GNP at the time.  While the ultimate trigger of the Panic of 1907 was the failure of the Knickerbocker Trust Company, the natural disaster of the earthquake helped to set the stage for that dramatic event.

Looking at the world today, if we turn to the last 20 years, globalization has been enabled by the internet as well as tremendous enhancements to the speed and efficiency of the transportation system.  The onset of vastly cheaper labor in developing countries was also a critical factor.

There were downsides.  The sudden appearance of dramatically cheaper labor could be viewed as a figurative hole in an artery of the old economic order.  For labor, the offer was $50 per hour.  The bid was $1 per hour.  There remains a wide differential between that bid and offer.  The differential is highly deflationary. 

Cheaper prices for imports is a benefit, but the offset was the permanent transfer of high wages for a few to smaller, but rising wages for many.  The pie might have been bigger, but each cut of it was smaller.  It is no wonder that wealth, incomes and retirement plans are declining in the "developed" world.  The massive printing of money by Central Banks has slowed down the deflationary economic forces, but unimaginable amounts of new printing must lie ahead for those running monetary policy.

While there are differing views on these changes, the fact is that the changes in what had been the world order and globalization have made us much more vulnerable to economic and social "Bouncing Bettys".  The chaos in the New York and New Jersey areas are the most recent reminders of how fragile, interconnected and reliant upon energy our globe has become.  We have seen it before with outbreaks of flu or the volcanic eruptions that shut down air travel in much of Europe.  Whatever the cause, slight disruptions can quickly magnify and spread throughout the world

The U.S. election brings us close to another one.  Oil, gold and silver sold off sharply on Friday.  There are those which believe that a Romney win is bad for real assets.  Perhaps the selloff was an "economic poll" to which handicappers of elections should pay attention?  There are discussions in New York of extending the election by 20 days.  Who knows what that could engender?

For investors, the U.S. elections change nothing.  It could provide hope to those who wish to return to sound money and smaller deficits.  Hope will not make it happen.  The only way out of this mess is a decade of hard work, sound money and a reduction of expectations.

There was a recent estimate of U.S. debt both on and off the books.  The number was $230 trillion.  Since a quick check of the collective checkbook would show that the $230 trillion does not exist, what we have is mass delusion on a grand scale.  People are fighting over a piece of an imaginary pie.  The delusion is global.

Changing out the politicians accomplishes very little.  The people have to come back to reality and accept that expectations must be lowered.  Unfortunately, there is no evidence that hard work, sound money and sacrifice are heading our way.

The whole concept of money hangs in the balance.  Will money as humans have known it be resurrected or will money take the form of electronic chits issued by governments under some allocation scheme?  It seems that we are at that fork in the road.

In any event, the delusion will continue.  "Bouncing Bettys" are all around us.  Focus on wealth preservation and protection.  Cash can provide a temporary port in the storm, but has lost the historic role as a safe asset.  So investors should take advantage of any continuing selloffs in real assets to accumulate more because, sadly, history tells us that this story will end badly.”

© 2012 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.  However, linking directly to the blog page is permitted and encouraged.

The interviews with John Embry, Stephen Leeb, Don Coxe (BMO $538 billion), Rick Rule, James Turk, Egon von Greyerz and Gerald Celente are available now.  Also, be sure to listen to other recent KWN interviews which included MEP Nigel Farage, Jean-Marie Eveillard, and Art Cashin (UBS $612 billion) by CLICKING HERE.

Eric King

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© 2012 by King World News®. All Rights Reserved. This material may not be published, broadcast,

rewritten, or redistributed.  However, linking directly to the blog page is permitted and encouraged.

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