April 24, 2018 

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Correspondence from the President of OAU


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 By Michael Miller

03/23/2018  1:46PM

Our office (Alleghany) lost all satellite internet service for two weeks less one day, today when it resumed. Northern California rural areas, the extreme rural spots like Alleghany do not have cell phone as well. The cause was the inaccurate disconnection from our provider, Hughesnet discontinued our address not the address it was ordered to turn off. A technician is necessary to make the reconnect on site.
Rae, Edda and I spent hours, many hours communication with voices all over the world to get it fixed to no avail. Among zero emails our website was silent.

I was in a grocery market in Oroville when its computer service went down. What a scene! Shoppers waited with full and partially filled baskets. The cash registers would not work. After about twenty minutes waiting everyone left and left our baskets. I was in the bank one time when its computers went down. Adios dinero!

Can you imagine the scene when this happens on a larger scale: no money exchange, no purchase of gas or food, a ruckus on every roadway.

Thank you for staying informed about our business in California’s greatest goldfield. We are somewhat backlogged and will knock away at keeping you UP TO DATE.
 By Michael Miller

02/13/2018  8:44AM

Why is the United States reliant on China and Russia for strategic minerals when we have more of these valuable resources than both these nations combined?

This has nothing to do with geological impediments. It is politics and business or more broadly, economics.

Rarely do I see a news report with this economic reality that is vital to America’s industries. The rapid decline in mining jeopardizes American security. The U.S. Geological Survey reports Americans are 100 percent import dependent for 20 critical and strategic minerals (not including each of the "rare earths"). It gets worse. America is reliant for another group of 30 key minerals. Who will sing for the miners? (I’ll tell you later how I asked Willie Nelson to sing for the miners as he sang for the cowboys).

This import dependency continues to grow as forces continue to misrepresent the effects of site specific regions where nature influenced our mineral wealth, our deposits. Why? Ignorance is blight against governmental and private planners to look to and anticipate future needs

The Trump administration is working to reverse decades of policies that have inhibited our ability to mine our own abundant resources; however Washington DC cannot solve this dilemma. When flying throughout the United States, I am always amazed at how much land resembles “open space”, even in the most populated state, California.

“No nation on the planet is more richly endowed with a treasure chest of these metals than the U.S. The U.S. Mining Association estimates there are more than $6 trillion in resources. We could easily add $50 billion of GDP every year through a smart mining policy” writes Stephen Moore. Stephen Moore (born February 16, 1960) is an American writer and economic policy analyst. He founded and served as president of the Club for Growth from 1999 to 2004. Moore is a former member of the Wall Street Journal editorial board.

Thank you, Mr. Moore. You have publicly addressed long standing, social and growing behaviors…IGNORANCE. My industry knows the extent and many reasons for America becoming a second rate resource country. I am less familiar with how the multinational corporations think but have close up and personal experiences for small mining operators.

Rare earth minerals are the seeds for building new technologies, and a strong case could be made that these strategic metals are the oil of the 21st century. Yet here in California an economic deposit of these vital multifaceted minerals has changed ownership under suspicious machinations.

Mr. Moore explains, “The suite of 15 primary minerals -- which the U.S. has in abundance domestically -- has been referred to as "the vitamins of chemistry." They exhibit unique attributes, such as magnetism, stability at extreme temperatures, and resistance to corrosion: properties that are keys to today's manufacturing. These rare earth elements are essential for military and civilian use for the production of high-performance permanent magnets, GPS guidance systems, satellite imaging and night vision equipment, flat screens, sunglasses and a myriad of other technology products.”
 By Michael Miller

01/25/2018  4:23PM

January 24, 2018

My friend in Germany sent me an English Translation of a recent Chinese analytical release by Dagong Global Credit Rating Co. LTD (China). It is considered a negative outlook. Not by me. The international outlook or perspective about gold has never been a topic of wide spread consideration and analysis. Many that undertake the project are hopelessly overly optimistic that gold will reach thousands of dollars on data similar to what Dagong did to project a weak dollar or negative dollar conclusion. The English translation is numbered. The unnumbered paragraphs are some thoughts.

Response to Dagong Downgrade:
The main reasons for downgrading the sovereign credit ratings of the United States are as follows:
1. Deficiencies in the current US political ecology make it difficult for the efficient administration of the federal government, so the national economic development derails from the right track. Under the political ecology which is built by the factional rivalries, factional interests are prioritized, and it is hard for the government to focus on the management of the national economy and social development. Therefore, the national economy is highly debt-driven. Nevertheless, the government did not discover from the financial crises that it is the debt-driven mode of economic development that has hindered the country from making ends meet. Instead, it continues to seek credit expansion through direct issuance of the US dollars, therefore serves as the “track walker” on the wrong track that departs from logic.

Response: US, California and Sierra County are not nor have they been operating as “efficient administration”. Federal, state and county governments’ management has derailed economies from the right track, a main explanation for a President Trump instead of a President Clinton. Factional rivalries and factional interests were prioritized creating the difficulty to focus on management, social development and international relations. The direction has changed and the future holds fresh outlooks for overly suppressed businesses and people.

2. The distorted credit ecology that violates the law of value leads to the abnormal solvency of the federal government. Capital’s desire for profits makes the financial sectors of the United States strive for more profits through continuous expansion of the chain of credit transactions by designing capital products and trading structures, and the virtual value-added model of capital self-circulation that runs out of the real economy provides living space for the ever-blooming debt bubble of the federal government. The government has formed a virtual solvency by increasing new debts in the name of the United States through abusing the right of issuance the US dollar as the international reserve currency. Therefore, the distorted credit ecology has made the federal government's abnormal solvency become its derivative product.

Response: The above paragraph is tough to read and comprehend. Perhaps its intent is lost in the translation from Chinese to English. USA and Californian governments are not operating according to capitalism ecology today or last year or last decade or last century. The first sentence of Chinese #2 is an inaccurate or at best a weak assumption. Therefore what follows is worth nothing. International economic concerns are well established by some before January 16, 2018, the date of the Dagong downgrade.

3. Massive tax cuts directly reduce the federal government's sources of debt repayment, therefore further weakens the base of government's debt repayment. The tax cuts act implemented from 2018 did not attack the root cause of the unsustainable debt-driven economy of the US, so it is projected that the US economy growths only 2.3% in 2018, and would grow even more slowly in the years after. Besides, fiscal revenue of the federal government will keep declining due to the tax cuts, so it is projected that the fiscal revenue to GDP ratio will fall to 14.0% in 2022, a 3.3 percentage points down from that of 2017. The rising demand for national defense, infrastructure and rigid spending will made it hard for the federal government to reduce fiscal expenditure effectively, thus it is estimated that the fiscal deficit of the federal government in 2018 and 2019 will rise to 3.9% and 4.1% respectively.

Response: No “base of government’s debt repayment” is large enough to dent the level of debt. What is this base? The multi trillions of paper? Therefore, the speculated massive tax cut has little or no significance in accomplishing the Dagong reason to fear. The 2018 tax cut won’t violate the root cause of the unsustainable governmental malfeasance in economic, social and international operations; however it is an initial step. Identifying “the root cause” is currently a popular buzz fad of government thinking. Unfortunately, government employees I meet are unable to identify root causes.

4. Using the rising debt to make up for the fiscal gap brought by the tax cuts will inevitably increase the credit risk of the federal government. The financial gap and the pressure to repay maturing debts raise the financing needs of the federal government. It is estimated that ratio of fiscal revenue-to-debt of the federal government will be 14.9% and 14.2% in 2018 and 2019 respectively, and the ratio will deteriorate to 12.1% in 2022. The government will then have to raise the debt ceiling frequently. In addition, the government’s realizable assets-to-debt ratio is merely 7.3% in 2017. That is to say, the government cannot stay solvent relying solely on its realizable assets and it has to resort to debt monetization to maintain the balance between repayment sources and debt. However, interest rate increase and balance sheet reduction of the Federal Reserve raise the cost of finance through debt roll-over. Thus to roll over debts is unsustainable.

Response: Sure, the tax cuts may inevitably increase the credit risk of the federal government; however true capitalists and economic theorists embrace risk because it may bring obscene rewards. Obscene thinkers are ones whose obscene management contributed to today. Which side of the monetary picture are you on? It’s the yin and yang of social sciences. Maybe China wants large multinational entities to prosper now that it has become a large player in international economics. Good bye small business. Ho hum.

5. The virtual solvency of the federal government would be likely to become the detonator of the next financial crisis. The serious imbalance between the sources of debt repayment and liabilities makes the federal government the weakest link in the US debt chain. Taking the advantage of its right to print money, the US strives to maintain its solvency by purchasing treasuries with newly-printed dollars, which, in itself, is a debt crisis. The market's reversing recognition of the value of US treasury bonds and US dollar will be a powerful force in destroying the fragile debt chain of the federal government.
Response: Why did Dagong inset the adjective “virtual” to illuminate solvency? Americans of all ages are now familiar with virtual reality, being in effect but not in form. Solvency of the federal government is unlikely to become the “detonator of the next financial crisis”. History proves that America’s threat of insolvency is transferred from the public (government) sector to the private (corporate) sector. The history is long in tooth. Think: dot-com; tulips; automobile industry; oil/gasoline; saving & loan associations; corruption.
Thank you, China’s government and non-government thinkers and leaders. I hope the rest of the like-minded share your conclusion, below. I hope they act and do business according to Dagong’s report. Why? We are resource miners. We produce gold, inventory it and sell it for dollars
【Dagong Downgrades the Sovereign Credit Ratings of the United States of America】

CONCLUSION: Debt economy model determined by US political system, strategy and economic base will not change; tax cuts have increasingly adverse effects on the government’s repayment sources; continuous reduction of fiscal revenue and increase of debts show that the government’s repayment ability is weakening. Hence, Dagong holds a negative outlook for both the local and foreign currency sovereign credit.



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