An American Insurgency

  • Your local police can no longer collect heavy weapons from the Pentagon…
  • … but ISIS is a whole other story: Are the feds trying to stop an American insurgency?
  • Social Security at 62: Who needs it?
  • Gold withstands a rising dollar… China’s SDR endgame… a reader who’s had his fill of Jim Rickards… and more!

  If your local cops want a grenade launcher, they’ll have to buy one on the open market now — instead of relying on Pentagon surplus.
This morning, President Obama imposed new limits on the “1033 program” that supplies local law enforcement with military surplus for merely the cost of delivery.
The 5 threw a spotlight on this program in late 2011, long before it was fashionable to do so. At the time, the feds had supplied $2.6 billion worth of gear since the program’s launch in 1997. That total has now surpassed $4 billion.

Richland County, South Carolina, Sheriff Leon Lott posing with what he calls
“The Peacemaker” — supplied by the 1033 program…

But the mess in Ferguson, Missouri, last summer brought police militarization into public consciousness — enough that the White House has to look as if it’s doing something.
Thus, eight categories of military supplies will no longer be furnished to local law enforcement under 1033. “The list includes grenade launchers, tracked armored vehicles, armed aircraft, bayonets and guns and ammunition of .50 caliber or higher,” according to the beltway-insider pub The Hill.
“Other federally supplied equipment, such as wheeled armored vehicles, drones, helicopters, firearms and riot gear, will come with new strings attached for local police to ensure officers are trained in their use and in ‘community policing, constitutional policing and community input.'”
A White House task force found, in its words, a “substantial risk of misusing or overusing these items,” which “could significantly undermine community trust.”
That’s the public rationale for this morning’s announcement. There might be another one, as you’ll soon see…
  ISIS has just scored its biggest military victory in nearly a year — capturing a city of 700,000.

Ramadi is — was? — the capital of Iraq’s giant western province of Anbar. Large chunks of Anbar started falling to ISIS way back in January 2014… and the Iraqi government still couldn’t get it together to save Ramadi yesterday.

“They’ve had more than a year to prepare — billions in international aid, hundreds of U.S. airstrikes, and they just got overrun in a day,” says McClatchy Newspapers correspondent Mitchell Prothero, interviewed on Liberty Radio Network by our acquaintance Scott Horton.
  And just as happened when ISIS captured Iraq’s second city of Mosul last June, the Iraqi army threw down its U.S.-provided weapons and fled.
We imagine ISIS is busy taking inventory today — well, in between bouts of executing locals it accuses of collaborating with the government.
That’s not a phenomenon unique to Iraq: The Houthi rebels in Yemen have likewise captured weapons provided by Americans to the now-fallen government there.
  “It seems that whenever Americans arm, train and equip an army, that army stands a really big chance of simply melting away, with the weapons falling into the hands of those who want to use them against American interests,” writes Dmitry Orlov.
Mr. Orlov is an engineer who’s moved back and forth between Russia and the United States several times since the 1970s. In the ’90s, he witnessed the post-Soviet collapse of Russian society up close. For several years, he has written about eerie parallels he sees between Russia then and the United States now. His book Reinventing Collapse is a short and sobering read.
And so in a prescient blogpost last week, Orlov wrote about the prospect of an American insurgency acquiring weapons the same way ISIS does.
He wrote with future Fergusons and Baltimores in mind: “If you shoot at, imprison and otherwise abuse a defenseless civilian population long enough, what you get in response is an armed insurgency. The place insurgencies are easiest to organize is in prison.”
  And it’s in an American-run prison where ISIS got its start in the mid-2000s.

ISIS operatives “took this opportunity to work out an efficient organizational structure and, upon release, found each other and got down to work,” Orlov wrote.
“Having a third of young American blacks locked up gives them all the opportunity they need to organize an effective insurgency.
“To be effective,” Orlov continued, “an insurgency needs lots of weapons. Here, again, there is a procedure for acquiring military technology that has become almost routine. What weapons are being used by ISIS? Why, of course, American ones…”
An extreme line of thought? Perhaps. But we can’t help wondering if that White House task force was thinking along the same line when it decided to stanch the flow of grenade launchers and tanks to local cops.
  To the markets: The major indexes are inching back into record territory this morning, the S&P 500 at 2,127.
Gold is holding its own despite a healthy dollar rally. As we write, the bid on the Midas metal is up a skootch, to $1,227, while the dollar index is up three-quarters of a percent, at 94 on the nose.
Crude, which spiked big last June when ISIS took over Mosul, can barely react to the fall of Ramadi. It’s nearly flat at $59.58.
  Work till you drop: At least that’s the takeaway from new Social Security research performed by Boston College.
At issue is how many people are claiming early benefits at age 62. The official numbers from the Social Security Administration say of all the people who began collecting during 2013, 47.5% of women were 62 and 41.9% were men.
Here’s the thing: The numbers are skewed by the fact that the size of the population turning 62 varies from year to year. And it’s been growing steadily since 1997. So the Boston College team dug into unpublished numbers from the Social Security Administration to get a more accurate picture.
The reality is that 39.6% of women claiming Social Security in 2013 were 62… and only 35.6% of men. The numbers have fallen steadily since the mid-’90s, and the drop is accelerating.

  The numbers square with previous numbers your editor unpacked last year in The Daily Reckoning.
The over-55 workforce has grown by 5 million since the onset of the “Great Recession” in late 2007. But the under-55 workforce is still struggling to reclaim all the jobs lost in 2008-09.
Usually, it’s the better-educated and higher-earning who stay in the workforce, too: “Employment rates are falling among younger unskilled people, whereas older skilled folk are working longer,” asserted The Economist a year ago. “The divide is most extreme in America, where well-educated baby boomers are putting off retirement while many less skilled younger people have dropped out of the workforce.”
And as those “less skilled younger people” age, they die early: Life expectancy among Americans who lack a high school diploma is falling, according to exhaustive research from the University of Illinois-Chicago. Among white men with no diploma, life expectancy is now only 67. It’s worse for women and people of color.
So how about it? Well-educated high-earning Americans working to an advanced age and paying into Social Security as long as they do so… while the least-educated Americans die off before they can collect many benefits. Hell of a way to “save Social Security,” eh?
[Ed. note: We’ve had an overwhelming response to our expose on how Americans just like you can piggyback on Canada’s version of Social Security — which is managed by professional investors, runs a surplus and is set to quadruple its reserves by 2040.
We know of a retired businessman in the Chicago area collecting up to $2,230 a month using this method. You might do even better. See for yourself when you click here.]
  “Is that an oxymoron or just a joke?” writes a reader after Jim Rickards’ remark here on Friday that the U.S. will let the yuan into the International Monetary Fund’s SDR basket “provided China acts responsibly and pegs the yuan to the dollar.
“Pegging to the dollar responsible!!!” our reader exclaims. “Stupidest thing I’ve heard in at least a week. Beijing would be a basket of fools if they pegged to the USD! China was for a short time the largest economy in the world, and it will be again. Why should the pending largest economy in the world peg its currency to that of the second-place and declining economy? China should let the yuan free float and tell Washington to go sprinkle salt on the printing presses.
“China is doing fine expanding its currency swap agreements. At present, the IMF needs the yuan in its basket more than China needs it to be there, so China should just tell the IMF to either include it with no U.S. conditions or go pound salt.”
The 5: “China is not trying to destroy the old boys’ club — they are trying to join it,” Jim writes in an essay for today’s Daily Reckoning.
We urge you to watch your inbox and check it out. If you don’t have the chance, we’ll do our own exploration of the phenomenon, with Jim’s help, later this week…
  “The reader you quoted in Friday’s 5 must be such a Pollyanna for clean energy that he is completely ignorant of the facts,” a reader writes in reaction to another of Jim Rickards’ musings.
“One has only to look at all of the locomotives, ships, power generation plants and automobiles in the world to know that we are going to be dependent on fossil fuels long into the future, whether the Keystone pipeline is built or not. The fact is that Keystone is a much more environmentally responsible way to move the Canadian oil than the method currently employed — railroad tank cars.
“Either way, the Canadian sand oil is going to find its way to the existing refineries and to the market. And while renewable energy is a good thing, there is not enough of it to supplant fossil fuels until long into the future. Too bad you reader’s left-wing ideology cannot be converted to a source of energy.”
  “I was all for Keystone,” writes another, “till I found out that the Nebraska had taken away its citizens’ eminent domain protection to accommodate the pipeline’s developers. That’s not free enterprise; that’s fascism.”
“I am wondering what you folks at The 5 think of the Keystone pipeline, which Jim supports,” chimes in still another. “Do you realize that if that pipeline is approved, eminent domain will be used by one or more Canadian companies to take property from many ‘everyday’ American citizens? Actually, I’ve not heard anyone discuss this aspect of the proposed pipeline.”
The 5: We don’t enforce orthodoxies around here, either with investments or politics.
Jim likes Keystone XL. Likewise Byron King, who’s called its delay a “strategic energy disaster.” But Chris Mayer took the other side two years ago.
As long as you asked, I’ll man the ramparts with Chris; you have to read the takings clause of the Fifth Amendment mighty loosely otherwise. If you think the Supreme Court’s Kelo decision was an outrage, you’ll be hard-pressed to justify Keystone.
  “I could go a few weeks (would months be too much to ask?) without hearing from, or about, Jim Rickards,” a reader writes. “He’s more overexposed than Marc Faber right now. Yes, they’re bright guys, but everyone needs a rest from time to time.”
The 5: Jim joined our team last fall. We can’t ignore him any more than our other editors. Here in The 5, you’re exposed to ideas he doesn’t always share on TV or his Twitter feed.
And it happens, his ideas are gaining currency, as it were, at this very moment. Thousands of people have collected his new book, and hundreds are taking advantage of his IMPACT trades. He’s a powerful and unique voice when it comes to “macroeconomic” issues… and it’s our privilege to have him on board.
Best regards,
Dave Gonigam
The 5 Min. Forecast
P.S. Heck, we have a special announcement to make about Jim in the next few days.
I can’t say any more than that. Just watch this space.

Dave Gonigam

Dave Gonigam

Dave Gonigam has been managing editor of The 5 Min. Forecast since September 2010. Before joining the research and writing team at Agora Financial in 2007, he worked for 20 years as an Emmy award-winning television news producer.

Recent Alerts

Here Comes the AI Cartel

Maybe you saw the news earlier this week: An outfit called the Center for AI Safety issued a 22-word statement — as dire as it is terse. Read More

A Deal in D.C., a Wipeout on Wall Street

Debt ceiling deal, U.S. Treasury auctions, Wall Street liquidity, Fed policy reversal, BlackRock recession call, gross domestic income, GDI, Maryland license plate snafu Read More

Climate, Carbon… and Control

“The climate change agenda is not about climate change,” says Jim Rickards. “It’s about total political and economic control of the population.” Read More

White House’s New Witch Hunt

Go figure: The stock market is at nine-month highs, but the Biden administration is amping up its jihad against short sellers Read More

The Biden Bleed

Presidents have meddled with the SPR for political purposes. But Biden is really leveling up. Read More

Natural Gas Gets Blacklisted

The EPA — with Team Biden’s blessing — proposes an overhaul of U.S. power plants by 2042. Read More

Green Smokescreen

Ray Blanco is on the lookout for presumed do-gooders… blowing “Green Smoke” up our collective rear ends. Read More

“No Blood for Chips!”

Fair warning: This edition of The 5 might be the most controversial issue we’ve ever published. Read More

The Dollar’s Death March

Nine years after The 5 started writing about “de-dollarization,” you can’t get away from headlines about it now. Read More

The “F” Word

No sooner did G7 leaders sit down yesterday than they declared they’re doubling down on sanctions targeting Russia. Read More