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Latest Comments55 Comments
Another Brick in the Wall: the GDP, Gold and Silver
Ignore the Hype - Gold as Currency is Dead
What's It Going to Be: Inflation or Deflation?
I agree with brewtul - near term deflation then long term (probably hyper)inflation, thanks to both the feds and the Fed. The history of fiat currencies is pretty stark in this regard - we have centuries of history to rely upon for clear lessons. Just look at any chart of *real* inflation (i.e. increase in money supply) noting 1933 and 1971 and what happens to money supply afterward. A good primer:
www.chrismartenson.com...
Sections 6 to 10 are relevant to this discussion, but all are worth watching and thinking about.
Inflation Could Cure Our Economic Ills
GLD Amassing Physical Gold
Your statement that "When one fiat currency DOES fail, we do not see a gold-based economy springing up in its place, but instead we see another fiat currency replacing the old." demonstrates that you have a nearly non-existent grasp of history, or are just making it up as you go along, because that is NOT the pattern that even a cursory analysis of history yields. Do you know what a 'Continental' was? How about a 'greenback'? These are only 2 relatively recent examples of fiat currencies which failed and were followed by gold or silver back currencies and they occurred in our own country within the last couple of centuries - the fact that you seem blissfully unaware of even these obvious counter-examples which give the lie to your assertion tells us your postulations about history are uninformed and not credible.
After re-learning history, your next task would be to explain how the last 37 years (since Nixon closed the international convertibility window and ended once and for all the prevailing gold exhange regime) are somehow completely different than all of the other experiences of fiat currencies for the last 1000 years. Once you've done that, I'll be willing to listen to your arguments.
Suggest you spend a couple hours reviewing the material here:
www.chrismartenson.com...
GLD Amassing Physical Gold
Need Gold? Check Your Fed Holdings
Regarding the gold constituting "77% of U.S. central bank reserves" - hilarious. That gold was leased out to bullion banks and sold on the private market to keep gold prices depressed. This is the story per Gary North anyway:
www.lewrockwell.com/no...
I have no way of knowing the truth, but it certainly fits with all of the other fraudulent activities of the criminal gang that is the Fed.
How would one go about verifying that 8k tons of gold is actually in the physical possession of the Fed? My guess is this was looted a long time ago, one reason they need to resort to the crass bailout scam being rammed through Congress as we speak.
It's the End Of the World As We Know It and I Own Gold
Quick comment on this clueless statement:
"@900 an ounce everyone is taking their grandmother's jewlery to the smelters, increasing the supply,"
Ummm....that doesn't increase the supply, Mr Genius. Mining gold increases the supply. I smell public schooling...
Winners and Losers in the Bailout Bonanza
"Assuming the managers of the government’s new $700 billion slush fund are even halfway competent, they’ll avoid the real rubbish, and leave the biggest losses for banks’ shareholders to absorb."
Government money managers competent? What planet are you from? The whole point of this deal, Paulsonanke's blatant lies notwithstandnig, is to stick the taxpayer with as many of the toxic assets as humanly possible. They'll go straight for the rubbish - and pay top dollar (hold-to-maturity prices rather than 'fire sale prices') for it, as recent quotes from the deadly duo PROVE. The only way this would NOT catastrophically impact taxpayers is if the real estate market goes rocketing upward while the default rates plummets immediately. Anyone see that happening any time soon? If so, I have some ocean front property here in Phoenix and I'm ready to make you a sweet deal.
Let's please understanding something quite simple: this is a BAILOUT. It is not an economic rescue plan - obviously, since it does not address root causes of the actual economic problem. As Mish Shedlock astutely puts it:
"Before one can work out a solution, the first step is to identify the problem. The problem is not a lack of liquidity, it is not a lack of trust, it is not lack of consumer confidence, it is not subprime lending, and in fact the problem is not housing at all.
The problem is consumers and corporations are deep in debt with no way to service that debt.
Attempts to bail out banks and brokers at taxpayer expense will do nothing but add to consumer debt, weaken the US dollar, and literally waste $700+ billion dollars that can and should go to more productive uses."
It's a bailout - and who is getting bailed out? The crooks in the executive suites of Goldman Sachs and Morgan Stanley, et.al. And it's being rammed down the throats of the other set of crooks...err...of our inaptly titled 'representatives' who pitifully bleat about the need for 'oversight' (to anyone who believes that these clowns and stuffed suits are even *capable* of such a feat, I re-ask my question: what planet are you from?) before handing over a probable multi-trillion dollar check (consider: when was the last time a govt program cost what they said it would cost at the start of it? Seventeen eighty-something?).
To take a Goldman Sachs flunky like Paulson at his word - arguably a man more responsible than any other in the world for the toxic garbage now steadily and ineluctably poisoning our economy to death, thanks to his actions while CEO of GS (doesn't *anyone* do due diligence on these shady govt characters?) - is to exhibit the most astonishing level of naivete.
Why I Got Gold Wrong
Musta been one of those people who whined 'I hate history - it's so boring!' Just because we are facing near term deflationary pressures does not mean that we are facing longer term net deflation. In fact, the lessons of history are utterly clear: empires at this stage, having exhausted their currency via monetary manipulation and fiscal abuse, who owe and cannot possibly pay, have only two choices: default or debase. Either scenario is a positive for gold.
Fiscally speaking, this nation owes, not $10T, or even $11T - $12T now, but anywhere from $60t - $90T, depending on assumptions. Boomers are starting to retire. This is imminent. Where will that money come from? The only *possible* answer: the printing presses.
Monetarily speaking, the size of the tsunami heading our way has barely registered yet - $700B for a "bailout" plan? Think that's 'real money'? Are you kidding? There are $60T in CDS's out there, and over $600T in derivatives of dubious value. This bailout is aptly named, however - it is intended to serve as an opportunity to the money elites to cash in for a few weeks, a few months, and then leave regular investors holding the bag when it all comes crashing down when the tsunami hits.
Trillions and trillions and trillions of dollars are coming due, both in private and public, and China, Russia, Japan, and the petroStates are almost done lending.
As Arthur Silber has put it: "How in the world does any adult -- any adult who is not suffering fatal impairment of his cognitive faculties -- convince himself that this kind of make-believe can continue indefinitely? The United States government is completely broke and drowning in debt that extends through the next three, five, ten, who knows how many generations. Finished. Washed up."
And Mike Whitney notes: "The system is at the breaking point, and despite Wall Street's elation from the proposed $1 trillion dollar bailout to remove toxic mortgage-backed debt from banks balance sheets, the market is still correcting in what has become a vicious downward cycle. This cycle will persist until the bad debts are accounted for and written off for or until the exhausted dollar-system collapses altogether. Either way, the volatility and violent dislocations will continue for the foreseeable future."
You got gold wrong not because gold bugs got lucky, which is essentially your assertion here (and a rather snide one at that). You got gold wrong because you are ignorant of both history and of the reality surrounding you at this moment in time. Your analysis is laughably limited, that's why you got gold wrong, and why you still have gold wrong for the longer term . For you to be right, the US govt and the financial sector would both have to be essentially solvent, such that there would be 'good places' to put 'money' once the current 'unpleasantness' is over and things return to 'normal'. Normal is over. Things may well 'look' more or less normal again, and this may persist for some time, but real 'normal' is ancient history.
Peak Insanity: SEC Plans to Temporarily Ban Short-Selling
Mish, please advise your friend that a 'free economy' has not existed in these United States for almost 100 years. This is the predictable culmination of a century's worth of State economic intrusion and corporatist authoritarianism. Welcome to the really real world.
Oil May Trade in the $80-100 Range for a While
Oil Demand Down, Supply Up
www.theoildrum.com/nod...
Includes, but does not limit itself to, the megaprojects data. So the question becomes: if you use this production analysis as a basis for comparison to anticipated consumption, does that change the conclusions? Or does it just obfuscate things?
Charlie Maxwell to Barron's: $300 Oil is Inevitable
What seems senseless to me are those analysts who employ magical thinking to assert that an increase in price will seemingly magically create more oil in the ground (light, sweet, of course) to drive the price down. Or to assert that 'human ingenuity' will miraculously be capable of wholesale massive fossil fuel replacement at the precise moment when we're on the way from being an affluent nation to 3rd world status due to decades of extreme fraud in the financial and political systems.
If human ingenuity could produce miracles on schedule, where's the battery technology that would enable feasible electric cars? Decades, and a huge dollar prize, have not facilitated success in this one technical area, and we'd need dozens of similar breakthroughs to replace oil.
Friday's Employment Report: A Sobering Dose of Reality
BTW, regarding the 'New Deal' - in fact, those policies did not 'save' America back in the 1930s - rather, they tipped us from a bad recession into a full-out depression - and then into a global war to obscure that fact! And the war itself did not 'rescue' our economy - that did not happen until 1947, after some (but only some) of the socialist economic controls had been dismantled (does nobody in America believe in free market capitalism anymore? the New deal was socialism, pure and simple - how anyone can still entertain the notion that gross misallocations of capital and monstrous distortions of the pricing system could have led to 'prosperity' is beyond me). The mythology that FDR 'saved' us is just one of the innumerable absurd illusions to which Americans cling, and which have led us to the edge of the precipice, where we stand today, confronting the abyss.
So what is to come? Well, let's not forget that America does not operate in a vacuum. A vast amount of government debt is held by foreign nations, and in many cases we've worked hard to ensure their enmity even as we've begged them to keep buying US Treasuries. As we continue to follow hegemonic policies (and make no mistake - both McCain and Obama are solidly on board with continuing these illusion-driven policies) which give the rest of the world cause to hate us, it seems more and more likely that a global realignment is coming, with America left purposefully isolated. Does anyone seriously think that the Chinese, the Indians, the Russians, the Japanese, the EU and others are not discussing amongst themselves possible new monetary systems to replace the post-Bretton Woods insanity? It was the US, after all, which reneged on that agreement and pushed the rest of the world toward fiat money which is the underlying engine of destruction.
Consider: we now have a 3rd world political system and a 3rd world banking system, in terms of the egregiousness of institutional fraud in both systems (not to mention the more general corporate entanglements in every aspect of that corruption). And it seems likely that we are descending into 3rd world status economically as well - though never was a 3rd world country so despised, even by its friends.
Is it so hard to grasp that our situation may not be a problem which needs to be fixed (it's unfixable), but rather a new condition to which we will need to adapt? At some great cost, obviously.
There seems to be every reason to think so (and very strong historical lessons which indicate this is highly probable) and very few logical or fact based reasons to think not. The Age of American Empire is over. We were warned - over 200 years ago, by a great American allegedly esteemed by all but in fact all but ignored except by a few:
"If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them, will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered."
- Thomas Jefferson