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Bill Buckler On The Incompatibility Of Money And The Modern Financial System; A Look At The Upcoming Great Unwind Now That All 'Talk' Has Failed
In the past few weeks, there have been tomes of disjointed literature written on why the final days of the modern financial system may be approaching. Disjointed, as it goes against everything that existing economists believe in, and thus are forced to forget all they have learned from Ive League professor-written textbooks and start from scratch, i.e., acknowledge their religion has been flawed all along. Bill Buckler (author of the Privateer newsletter), who has seen this for ages, shares some of the most comprehensive views on the upcoming great financial unwind, first analyzing the case study of the aftermath of Volcker's 1979 Belgrade meeting, which was everything that Bernanke's "easy way out" QE choice was not. Buckler then analyzes the broken fabric of financial reality, and explains why at its very core, money is incompatible with everything that modern finance stands for. Lastly, Buckler looks at the aftermath of the failed G20 meetings, and concludes that: "Now that the LAST hope of an international agreement to solve an insoluble problem has been lost, it is just a matter of time before talk is followed by action." We may in fact see the first "action" today if, as some rumors are swirling Portugal or Greece may escalate to the "next level" of bailout action.
From Buckler's as always must read The Privateer (number 666).
On Volcker and Bernanke: a compare and contrast in success and failure.
The Successful Rescue - 1979-1982:
When
the US Fed under Paul Volcker stopped “targeting interest rates” in
late 1979, they stopped trying to hold US interest rates below levels
set by the markets. The result, of course, was that US interest rates
SOARED. They soared because there was now no impediment which prevented
them from reflecting both the risk of a depreciating currency and the
risk of the debtor reneging in part or in whole on the debt. Until late
in 1980, these risks were also reflected in the $US “price” of Gold
which soared to $US 850 in January of that year and had a secondary
rally to $US 720 in September. But while all this was happening, the US
Dollar had stopped falling in the international currency markets simply
because high US interest rates were compensating US Dollar and
$US-denominated debt paper holders for their risk.At the time
when this was happening, US Treasury funded debts were hovering just
below the $US 1 TRILLION level. Interest payments could still be met,
albeit with some difficulty. But as these high interest rates persisted,
the global attitude towards the US Dollar changed profoundly. All of a
sudden, it was possible to earn a very good rate of return on US Dollar
investments. Even better, US Treasury debt paper was selling at rock
bottom prices on the secondary markets and had been falling for a
decade. With the Dollar now stabilised and indeed starting to go up on
the currency markets, everyone knew that US rates would start heading
down at some point and when they did, the prices of Treasury paper on
the secondary markets would soar. The world was enticed back into US
paper with a rush, starting in 1982.On the surface, this looks
like the “classic” means by which a chronic balance of payments deficit
is resolved. But it was not. There was still no “final means of
payment”. The entire financial world still relied totally on the “full
faith and credit” of the US Government.
The Failing Rescue - The GFC - 2007 To Date:
In
1980-81, the US Treasury was in hock (on the funded debt side) to the
tune of just under $US 1 TRILLION. Today, the US Treasury is in hock (on
the funded side) to the tune of just under $US 14 TRILLION. In 1980-81,
the US was still an international net creditor nation. It became an
international net debtor nation in early 1985 and has long since become
the biggest international debtor the world has ever seen. In 1980-81,
the US central bank let the market reflect the true financial status of
the US by ceasing to interfere (for a short time) with interest rates.
In December 2008, the US Fed under Ben Bernanke
got rid of interest rates altogether by lowering their controlling rate
to 0.00-0.25 percent. In 1980-81, Fed Chairman Volcker faced the stark
choice of letting interest rates free or throwing in the towel and
directly monetising the “reserve” behind the Dollar - the debt issued by the US Treasury. He chose the former course. In early 2009, Fed Chairman Bernanke
faced the same choice. The intervening three decades had seen US debts
increase to a point where the system could literally not afford any
interest rate at all. He chose the latter course with “QE1". On November
3, 2010, he compounded this by ushering in “QE2". The introduction of
QE2 is an acknowledgement that QE1 failed.In the lead up
to the announcement of QE2, Mr Bernanke stated publicly that he hoped to
INCREASE “inflationary expectations” amongst the American public to
induce them to borrow and spend NOW before prices increased further. He
has since reversed his field, too late to make any difference. US cost
of living increases already bear no resemblance to the official figures
so beloved of the Fed. To give just one example, the prices of
ingredients in many staple packaged foodstuffs sold in the US have
jumped 20-30 percent since August. US retailers are at the point where
they can no longer keep prices down without suffering actual losses. The
inflation is rampant. The pressure under prices is a pent-up volcano.
The only “incentive” for the rest of the world to hold US Dollar debt
paper is that they already hold so much of it. The only rationale for
the US Dollar to remain as the world’s reserve currency is that the
global financial system is set up on that basis. The only thing holding
the system together is fear of the consequences of dismantling it. But
the world can now see, at least in outline, that three years of US
“stimulus” has just made things worse. There has got to be a better way,
but what is it?
On the intractable problem of modern money:
Money Isn’t Power - But The Control Of What Is Used As Money IS!:
The original Bretton Woods agreement of 1944 had the US Dollar as the world’s “reserve” currency. Exchange rates between all foreign currencies and the US Dollar were “fixed” (except when governments decided to devalue or revalue). In return for this, the US government promised to redeem its Dollars (to foreign central banks and governments ONLY) at $US 35 per troy ounce of Gold.
In 1971, this promise was withdrawn, an act which led to the era of floating fiat currencies which has been given the name “Bretton Woods II”. Exchange rates between currencies were “free” to fluctuate as the “markets” decided they should. If you look at the cumulative deficits of almost any major nation in the world, you will find that almost ALL of it has been taken on since 1971.
In more recent times, talk has begun to flow about the need for a “Bretton Woods III”, a system in which multiple currencies would take the role of “reserves”. In the week leading up to the Seoul G-20 meeting, Gold has been mentioned as an “indicator” to try and keep the nations issuing the (as yet undecided) reserve currencies more or less on the straight and narrow. But any talk about Gold AS money is as heretical as ever. Ellen Brown says money is credit, neatly putting the cart before the horse. Edmund Conway says Gold is incompatible with modern banking practices - notably fractional reserve banking (true) - and with “democracy as we know it” (very true).
The Privateer has said this before - nearly 16 years ago when we first put up the Gold Pages at our website: “There really is no place for Gold - in the modern financial system. That leads us, however, to a further question: What does that say about the modern financial system?” We’ve been saying it ever since and we are now saying it again. In essence, you can have money or you can have the modern financial system. YOU CAN’T HAVE BOTH!
Every participant at the G-20 Heads of State summit is aware of that fact. So are the advisors they have taken with them to Seoul. So are the treasurers and central bankers who preceded them to South Korea. To hang onto their power, they MUST hang onto their control over what is used as money. They need it to issue the debt they incur to feed that power. They need it to maintain the fiction that is modern “democracy” - that political freedom stands or falls on unlimited majority RULE.
Most importantly, now that all talk has failed and yielded absolutely nothing, the time for action may begin. Sadly, it will do nothing more than confirm that America has now lost its hegemony as an absolute power. What happens next is anyone's guess.
The First Glimmerings:
At the just concluded G-20 Heads of State summit in Seoul, the US did not get ANYTHING it wanted. This is universally known. Even the Wall Street Journal acknowledged it, running a headline on November 13 which reads: “US Gets Rebuffed at Divided Summit”. So it did - decisively.
In the Global Report in this issue, we mention a November 8 article that World Bank President Robert Zoellick wrote for the London Financial Times advocating that Gold “prices” (not Gold itself) be used as an international reference point for global economic fundamentals. The problem here is that Gold “prices” are set on paper markets in which only paper, not Gold, actually changes hands. This affords ample scope for the control of these prices - and they have been controlled for decades now.
Before he travelled to South Korea for the G-20 meeting, President Hu of China spent almost a week in Europe. Shortly before Portugese banks were being downgraded by US ratings agencies, Mr Hu was concluding large trade deals with Portugal. He was concluding even bigger trade deals with France, and going much further. With the Seoul summit now over, France has taken over the presidency of the G-20 from South Korea. At a State dinner in his honour in Paris, President Hu publicly said that “China supports France in its efforts to ensure the success of the G-20 summit next year”. French President Sarkozy has made it clear that his top priority is a fundamental reform of the world’s monetary system, a priority he shares with Germany and, in President Hu’s own words, with China.
In 1979-81, Fed Chairman Volcker postponed the demise of the US Dollar as the reserve currency by, at least temporarily, taking away the punch bowl. Mr Bernanke has done precisely the opposite. It is, or should be, crystal clear that the days of the global monetary system in its present form are numbered.
Recent Events:
In the immediate aftermath of the conclusion of the G-20 meeting in Seoul, China came to the forefront on global markets. On November 12, a rumour that the Chinese government was about to further tighten the reserve requirements of their banks and were going to increase their controlling rates sent almost ALL markets into chaos. Stock markets either stopped going up or slumped dramatically, in Asia in general and in China in particular. Commodity and precious metals prices - all denominated in US Dollars - fell sharply. The US Dollar itself abruptly ended a five-day rally on global currency markets.
The most ominous movements on global markets, however, came in the US Treasury market. Longer-term bond yields have been rising, and prices falling, ever since the announcement of QE2 on November 3. On November 12, the Fed made their first Treasury purchases under QE2. Despite a fall on almost all other US markets, Treasury yields rose further and prices slumped some more.
What’s Next?:
Mr Obama returns to Washington on November 14. He faces a “lame-duck” Congress and the almost certain prospect of political gridlock. Globally, the US policy of Treasury debt monetisation is being condemned almost everywhere. Now that the LAST hope of an international agreement to solve an insoluble problem has been lost, it is just a matter of time before talk is followed by action.
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YES With viagra and steroids. Dont dwell on it.
With viagra and steroids
...and a solid direct injection of a 70/30 mix of lith/crystal meth for that added boost to longevity with a twinkle. AKA The CondomNation
Sadly, it will do nothing more than confirm that America has now lost its hegemony as an absolute power.
The concept of a true sovereign government of any sort has been rendered moot. Next.
...very good, ZH is getting somewhere today. Now, whose fault was that?
Not a matter of who is at fault but who gets the credit.
It is good to remember that with only 50% +/- actually voting that means that 50% +/- have already voted None Of The Above rendering the current paradigm of representative government false.
But ya, fixing the blame is the game of choice among those still captured. If it makes some feel better they can blame me 100%. As long as these folks are fully committed to the resolution the blame game is then rendered moot.
Try again CJ fresh meat. Thanks for the snack
Cheers
We will give you a solid answer - "maybe".
See, This is what i mean. What you have is a paid Naysayer saying OMG, This is so wrong. The world is going to end. Kinda like Elizabeth Warren, But in the background The printing press is in full vigor. Its all an illusion thats going to end badly. The script is becoming obvious with the final curtian approaching.
I see a difference between a "naysayer" and one who just lays out current events within the relevant context(s). Buckler has been spot on, although early, for the 10 years that I have been subscribing to his writing. Better early than late: "Nobody saw THIS coming!".
We've been slammed with that lousy excuse too much lately.
It is thanks to him that I am into PMs and out of securities since 2001.
In this regard (into PMs early) shout out also to Jim Sinclair, Bill Murphy, Richard Russell and the Jackass Willie...
The signed Obama note was sold by a poor woman for $7k...now they want to auction it out...it might fetch 10x as much.
"the US Dollar had stopped falling in the international currency markets simply because high US interest rates were compensating US Dollar and $US-denominated debt paper holders for their risk."
This is a circular argument, that the USD stopped falling because the $US-denominated debt paper holders were getting more USD. I think the USD stopped falling in the international currency markets because there was a very aggresive ramp up in foreign exchange reserves by foreign central banks around 1981. That is to say other countries devalued their own currencies.
Why the USD price of gold fell into a down trend for the next 20 years is the real question. Are the Saudi's & the Chinese really the chumps?
Why the US price of gold fell? What he said, a re-rating of risk associated with holding the US $ in lieu of gold. Gold became less attractive to risk takers.
And how was this re-rating of risk achieved, by giving holders more of the same? That's like saying; "I'll give you more mortgage backed securities if you continue to hold mortgage backed securities".
Makes no sense.
I lived through that era. In addition to the 'risk' of holding rapidly devaluing dollars there was a rush into gold because of fear of dollar collapse.
Part of the reason for the decrease of the price of gold was that fear of dollar collapse subsided when Volker let interest rates rise, imo. I bought a new home in 1976 and sold it in 1983 for almost double the purchase price in nominal dollars. Most of the 'profit' went to Krands.
It is possible that some Wall St banks were taking large short positions in gold, as they do now. Don't know for sure.
Buyers of 30 year long bonds in the early 80s are still collecting 13-15% interest annually on their bonds. Not bad but not good if measured in inflation adjusted dollars. $13,000 in 1980 would buy one a couple of new cars with money left over. What does a new car cost today?
I still have those Krands.
ZH video on QE... lol this is great!
http://fdlaction.firedoglake.com/2010/11/13/cartoon-quantitative-easing-explained/
Bob Brinker's opening monologue today.
S & P 500 up 9%, despite the naysaying "bad news bears"...
Says interest rates are "ridiculously low". Inflation protected bonds say that the Treasury market says that the implied inflation rate is 2.15% for the next 10 years and 2.60% for the next 30 years.
He goes on to bash those who are criticizing the Fed and its QE program, stressing that politicians should stay out of monetary policy decisions...
LOL....
http://vaca.bayradio.com/kgo_archives/01400.mp3
I was listening to Brinker in the late 1990's, just shaking my head, going, "What on earth is this guy thinking?"
Balls to the wall he was. I even tried to call and tell him he was sadly mistaken but the program was tape-delayed in my area. Even after clear signs that the Naz was going to tank, he still recommended buying on the dips. Even after it really started to roll over, he recommended that it was coming back.
If you don't believe me and you have access to such records, please look it up.
Sorry, I have zero respect for Bob Brinker because he refused to admit he got it wrong. He was as wrong then as he is now.
/:
I wonder what Angelo's security is like...
Was listening to a money show while on a 1200 mile trip Saturday. Supposed to be the top money show on am radio. Was telling people that thier 401k's were safe and 2 senators and 1 house member told him so. E-mails said he was a POS. I was screaming at the radio. " Don't you read Zerohedge ya f'n moron?" People are clueless.
E-mails said he was a Piece Of Shit?
how do we arrive on the eve of collapse?
it all begins when 'you can only pay your temple tax with a special coin'. government creates the mechanism for control. The creation of centralized government's 'legal tender' opposes competing currencies, including gold and silver, and provides the opportunity for counterfeiting. Only strict laws with capital penalties against counterfeiting curtails any treason against honest production from hard-working people.
However, it is when counterfeiting becomes legal and institutionalized that this manmade system truly begins to favor the existing rich at the expense of the existing poor. the temple siphones wealth upwards at the expense of liberty. This process creates an everburdened working peasantry while simultaneously fueling gluttoneous consumption at the top.
fractional reserve counterfeiting is best maximized with existence of fiat (faith-based paper) money. The digital age makes it as easy as pressing a keyboard, and the printing takes on the speed of light. The fraud expands exponentially across international borders allowing for incredible leverage for the existing rich against the existing poor who have no such ability to counterfeit. they must run faster or starve. bankers must do less and less to control more and more resources. they can enact environmental laws that favor themselves and restrict upward mobility.
imagine, if you lend money out directly (buy a bond), the money leaves your hands and goes into the hands of the borrower, who can then either pay this money back to you with interest or lose this money (or some combination of the two).
if you deposit money in a bank, the bank can lend this money out while simultaneously keeping this money in your account. After which, the borrower of this newly created money can then either pay this money back to the bank with interest or lose this money (or some combination of the two), in which case the taxpayer bails out the bank.
in essence, there are two sets of rules. one for bankers, and one for everyone else.
of course, you do not have to imagine this as it takes place each moment that you are either awake or asleep.
"modern democracy" is a scam, and so is the 'Welfare State' which allows the wholesale raiding of central government coffers with the promises of carrots on sticks which actually result in no carrots and all stick for the gullible masses who trade their freedom for lies of cradle to grave security.
break this treasonous international banking cartel before we arrive at marshall law and are being marched off to death camps whilst our farmlands and factories are nationalized by oligarchial fascists who will not give up the government force they both monopolize and use as a weapon of terror against those who wish to 'follow the law'.
sound familiar?
"in essence, there are two sets of rules. one for bankers, and one for everyone else. "
When I hear this kind of drivel I just shake my head in amazement. Who instituted the policies for "Bankers Gone Wild"? Your elected representative?
The venom on this website should be directed at the policy enforcers and makers who create and enforce the rules of banking. No?
oh, here we go. MeTarz, the usual dipshit who i am always educating with no return on investment.
NO. The 'venom' should be directed at centralized money planning, fractional reserve counterfeiting, and paper money; the greatest wealth destroying schemes of thievery ever known to mankind.
you are livestock to the international banking cartel, even if you work within its ranks (as i suspect you do with your treasonous response).
bankers are individual men that can counterfeit money that other individual men cannot. THIS IS TWO SETS OF RULES FOR DIFFERENT MEN, IS IT NOT?
this is a system designed by bankers to serve bankers. its no wonder they are gobbling up every resource on the globe as the Wall Street Industrial Complex (NYC) and the Wealth Redistribution Center (DC) grow to epic proportions, the latter of which has 7 of the top 10 wealthiest counties.
http://voices.washingtonpost.com/local-breaking-news/dc/7-of-10-richest-...
this system tramples the existing poor to serve the existing rich. MONEY CANNOT EVEN BE CREATED UNTIL IT BECOMES INTEREST BEARING DEBT TO THE CARTEL!!
http://www.economist.com/blogs/dailychart/2010/11/government_debt?fsrc=s...
ARE YOU FUCKING DEAF, DUMB, & BLIND, MeTarz, OR JUST A FUCKING ASSHOLE?!!!!
I know a couple of folks who are all 4.
lol +1
Yeah, we have all run across them.
I've been watching gold/silver trading tonight.
http://finviz.com/forex.ashx
Lots of meandering.... Maybe it's the Viet Namese black marketeers/smugglers paying over spot?
Is the root of your frustration based on your lack of power to change the paradigm?
The power is in the hands of the people. Vote for change, see where it gets you. You will live a life of frustration.
i find your 'don't worry, be happy' viewpoint incredibly naive. while it is likely that our compliance with this system has allowed us to personally prosper, there comes a day when principal and foundational philosophy must take precedence over short-term gain. If you have children, you must consider the world in which you would like for them to compete. Will this world reward machiavellianism and insider dealings? Or, will this world reward honesty, hard-work, intelligence, many of these attributes, or perhaps all three? Or, will it punish these traits and reward the stupid and lazy who possess unjust control through physical and financial violence and terror?
frankly, i live a great life, MeTarz. i have a wonderful wife and a newborn child. I am independently wealthy. In general, my life gets better every single day. Further, I am one of millions of Americans whose bloodline on this North American continent extends back to before we were a United States. This resonates deeply with me as it relates to where i wish my offspring to proliferate and prosper. As a result, in my quiet moments, I am forced to consider the fact that sinister international forces are systematically stealing this country from underneath the feet of those who have settled here for centuries.
vote? I do. however, for every one politician who rises on his/her own merit, there are 99 who are bribed by international power brokers through a two-party system that offers no true choice. The mechanism used to circumvent liberty is always the same. Each politician is offered short-term gain (bribes) for themselve or their cronies in return for to enacting more laws that crush freedom and secure the positions of the ruling elite. Those brave elected officials who do stand for an asset-backed currency and liberty over personal gain soon pay with their lives. WAKE UP AND SMELL THE DOGSHIT, MeTarz!
the private Federal Reserve Bank prints $1,000 in Federal Reserve Notes ($USD) to be circulated as currency amongst business people and offered to the US Government/IRS as the only 'legal tender' for tax payments.
In order to bring this money into circulation, the Treasury must create a $1,000 bond (which pays interest). As a result, The Fed earns an interest rate as long as there is a money supply circulating. The larger the money supply, the more interest they earn and the less your existing savings is worth.
Those who are first in line to borrow this newly printed money can spend it at today's prices in competition with everyone else. Those who are last in line to receive borrowed money, or those who do not borrow money, will always pay the highest prices for goods and services which have adjusted upward for an increase in the money supply.
importantly, the money supply begins as a loan and expands further through the lending process because 'fractional reserve lending' (counterfeiting) within the banking system is legal. Assume 'reserve requirements' are set at 10%. In this scenario, when an individual deposits 10 FRNs/$USDs, a bank can lend out 9 FRNs/$USDs to another individual while simultaneously still showing the original 10 FRNs/$USDs in the depositors bank account. When the borrowed 9 FRNs/$USDs are deposited in a new bank, this bank can then lend approximately 8 FRNs/$USDs to another individual while simultaneously still showing the original 9 FRNs/$USDs in the first borrowers bank account. In essence, 27 FRNs/$USDs now exist from the original 10 FRNs/$USDs loaned out from The Fed. If the lending bank holds all three bank accounts, then interest is earned on the 17 FRNs/$USDs of the total 27 FRNs/$USDs now showing on deposit. As long as the interest earned and principal returned amounts to 10 FRNs/$USDs then the original deposit can be returned in full (with modest interest). Of course, if the original deposit is withdrawn, then it simply gets redeposited into another private bank in the system and the process begins all over again.
There is also a borrowing market between competing banks in order to manage cash withdrawals. The Fed always stands ready as the 'lender of last resort' to any bank in the system. In fact, many banks currently borrow directly from The Fed in order to buy US Treasury Bonds, which is to say that they lend the money back to the US taxpayer in return for interest. Good work if you can find it.
Finally, if all loans go busts as a result of poor lending practices, then all deposits are ultimately insured by us, the taxpayer (FDIC 'insurance'). Depositors incur no costs for gaining deposit interest payments, and bankers can walk free with no civil liability (or criminal).
Clearly, this is a system designed by bankers to serve bankers. Individual bankers have an advantage over individual men outside of banking. The system favors the existing rich (bankers) at the expense of the existing poor who cannot operate with these advantages.
Of course, this would be impossible if any of this were attempted with 10 ounces of gold, because the same gold cannot be in multiple places at once. Further, if any gold is loaned out poorly, then the gold will be partially or entirely lost forever. In this way, the risk is shared by the depositor and the individual banker who they have hired to find borrowers. In this way, bankers would need to compete on a level playing field with everyone else who lends via the bond market or directly to a friend or acquaintance.
as it is, our system punishes savers and investors, and rewards existing wealthy bankers and excessive risk-taker alike. prices never come down, consumption is always artificially high and driven by the most aggressive borrowers.
Much like the former USSR, our system is unsustainable. Big Government "Solutions" are a broken window fallacy. "Progressive" Democrats and Republicans have further accelerated our demise by undermining State and local government rights and individual liberties in order to concentrate evermore power within both our Wealth Redistribution Complex (Washington D.C.) and our Wall Street Industrial Complex (New York City) which have evolved into vehicles for white collar crime in virtually every facet of their parasitical existence.
The key culprits are centralized money planning, fractional reserve counterfeiting, and faith-based paper money. It is our debt-based monetary system which allows for illegal leverage via fractional reserve counterfeiting that gives the international banking cartel and their cronies significant power and influence over our lives. because we compete against these newly printed Federal Reserve Notes with our existing FRNs that we have earned through providing valuable goods/services, we are subjected to a system which favors the existing rich, hurts the existing poor, and creates strong headwinds to upward mobility in our economy.
if FRNs were not the only 'legal tender', then they could not be counterfeited. you would only need to deal with other honest business people at your own risk, and so would other individuals. in other words, nobody would have an unfair advantage.
The Welfare State, for example, cannot exist without keynesian money printing within a debt-based monetary system. keynesian money printing is dependent upon infinite amounts of loans expanding exponentially. obviously, this is not sustainable. this is a sick, twisted system of fraud, with the promise of "free lunches" all around and a "chicken in every pot". Obviously, these promises are on the eve of being broken and leading us ever-closer to economic collapse by the moment.
a rule of law protecting your property from other monkeys is paramount. 'more government regulation' is not. this is sleight of hand misdirection that only results in making your life more difficult and never results in solutions. namely, end the private federal reserve gosbank, outlaw fractional reserve lending, and open up regional economies to competing asset-backed currencies including gold and silver.
bigger centralized governments are not the solution. they simply succeed in creating large public coffers to be raided by corporate and labor cronies and their lapdog politicians. starve the beast and place our government workers in soup lines immediately so we can go back to being sovereign men and women who are responsible only for not imposing upon the liberty of our neighbors and other global inhabitants.
Further, if Trillions of $USDs were not tied up in U.S. Treasury Bonds supporting the Welfare State, this capital would be in the private sector because it would have no other place to go. The Dow Jones Industrial Average would be at 100,000 and everyone would have a helicopter in their back yard. Hurricane Katrina victims, for example, would not need to rely on central planners who currently have a monopoly on both "force" and incompetence. The abundance of wealth would increase the generousity of fellow Americans to unseen levels, and dwarf financial outpourings towards Haiti's hurricane victims and Bali's tsunami victims by comparison.
instead, we are paying ever-expanding interest payments on nearly $15 Trillion with approximately $160 Trillion in unfunded liabilities to the further enrichment of The Federal Reserve and extended members of the International Banking Cartel.
I long for the day when these traitors and foreign enemies hang from the gallows for all of the emotional and physical pain and suffering, divorces, suicides, murders, assassinations, and wars that they have caused in pursuit of their own interests at the expense of decentralization, peaceful free trade, and individual liberty.
Hey Janie Boy:
Get Your Head Out of Your Ass!!!
Democracy has been dying for the last 30 years in politics,fiat currencies have also had there lifespan.Most countries are loosing their identities,culture,history and economic stability (every high street looks the same and each year there is less free money to spend).Banks have grown greater powers and control over citizens and their wealth,free money ie after paying for life,s essentials has been gobbled up by corporate and government greed to attain some kind of utopia for the few while the masses are seen as surplus to requirements and ultimately expendable.Talk of an electric currency really is the final nail in the coffin of the world financial system due to the fact that it would never be 100% secure to withstand fraud and official manipulation,despite the lies that would be used for its inception.Gold and Silver is really the only alternative with constant value,limited supply and lack of fraud.Whatever system is adopted we have to look at freedom of money from debt and tax,wealth creation and stability,which only gives one option and that is Gold.Fractional reserve banking,National debt,Globalisation,lack of democratic choice,truth,national identity and home industries is literally choking the supposedly free world to death.The Criminals have too much to loose so perpetuate a fraudulent system against the national good for their own ends.The Criminals Government (puppets)see,s every source of private,honest wealth as ultimately theirs and this has to stop.Accountability has to become a 2 way street.
well put! +1776.
Big snap back rally tomorrow. Nothing really bad came out over the weekend and Japan put up some strong growth numbers. Risk back on tomorrow unless something terrible comes out of Europe. But at this point anything "terrible" out of Europe will meet screams that it's already priced in.
How do you price in a collapse.Thats whats happening,the dam will burst when you run out of fingers and toes,the markets just don,t want to see what is obvious and as in the the last 2 years think things will stumble along,sooner or later its going to fall over into the abyss.The traders will realise to late that what was not allowed to happen will happen and the results will be devastating,whether tommorrow,next week or next year it will happen.
Collapse should be bullish right? After all in a collapse they will unleash nearly infinite QE and that aught to bid up stocks :) Just might need to figure out what the breakdown in the future will be for shares of XOM per loaf of bread.
By the time you,ve worked it out it will have gone up,try to make sure you own the bakery.
lol good point! Though owning the bakery is not a good call, expect unless the gov goes down with it they will nationalize the food producers. Don't want the serfs rioting. Better to stay light and agile with capital and goodies.
Does crackup boom ring a bell?
http://crackupboom.net/2009/03/what-is-a-crack-up-boom/
Ooops!
Whats the deal with volume tonight?
/es contracts are trading quite heavily.
Agreed. - 4hr has been in a channel for a long time. It's testing the bottom of the channel. If it broke support it would cascade. It must be government computers buying to support, getting traders on the long side so they can POMO the hell out of it tomorrow. TOS is saying 13mm+ contracts. That's insane. Heaviest volume in last 6 months - if valid ????
Dollar is shitting so def. POMO related.
Na-na na na-na na na na;
Na-na na na-na na na na;
Na-na na na-na na na na;
Na-na na na-na na na na.
Them belly full, but we hungry;
A hungry mob is a angry mob.
A rain a-fall, but the dirt it tough;
A yot a-yook, but d' yood no 'nough.
You're gonna dance to Jah music, dance;
We're gonna dance to Jah music, dance, oh-ooh!
Forget your troubles and dance!
Forget your sorrows and dance!
Forget your sickness and dance!
Forget your weakness and dance!
Cost of livin' gets so high,
Rich and poor they start to cry:
Now the weak must get strong;
They say, "Oh, what a tribulation!"
Them belly full, but we hungry;
A hungry mob is a angry mob.
A rain a-fall, but the dirt it tough;
A pot a-yook, but d' yood* no 'nough.
We're gonna chuck to Jah music - chuckin';
We're chuckin' to Jah music - we're chuckin'.
----------------
Bob Marley
Why are US 'leaders' and media saying QE2 is ~$75B per month? It's much higher than that.
QE2 = $600B + [MBS 're-investment'] ($250B+$300B)/2) = $875B
Set to run 7.5 months, or ~33 weeks, therefore;
QE2 = $875B / 7.5 = $116.6B per month
QE2 = $875B / 33 = $26.5B per week
So why do the media keep referring to ~$75 billion per month when the Fed has said it is going to be doing about 36% more $$$ 'stimulus' than this, in monthly averages?
And why in the wash-up of the G20 is anyone in the media seriously suggesting there's been an agreement to a, "...cease-fire in the currency war..." (the 'phony-war' that is yet to get-a-killin' ...)? What justifies that assertion?
There is no 'cease-fire', and there won't be a cease-fire, and there cannot be a ceasefire. The US Govt has effectively abdicated its economic policy responsibilities to the Fed as of early 2009, and has since been trying desperately not to hold or be held responsible for economic policy again, as the economy lunches itself and spits out the pips.
We all know how proficient the Fed is at optimizing economic policy incentives, and we know of its erudite 'philosophy', its impeccable judgment and its perfect timing ... oh, and its remarkable predictive capacities.
A Washington that's overwhelmingly concerned with not ruffling-feathers or creating a "bad look" via acting in the best interests of 100% of the population is never going to harness an effective and credible economic policy.
What this is, is the NET effect of decades of pretending, both in the private and public spheres, that the US is much richer than it really is, or can become.
That's ultimately why all the debt grew, the allowance of that grand delusion, deliberately propagated without restriction or significant challenge by the so-called 'Leadership' clique (and especially not by the Fed in particular). It was THE grand lie, the mother of all subsequent lies over the decades, and most people in a position to know, knew the 'growth' modes they sprouted were a deadly lie. And almost none of them had the inner-spark to assert the Emperor was actually stark-bollocks-naked. Until that futile pretense is entirely ripped away and held to open ridicule and this 'Leadership' clique is required to actually directly and without obfuscating explain this naked lie, there can be no re-emergence of real economic stability, because there can be (and will be) no sustainable policy formulation and implementation - until then.
Hence the Fed's "Great Immoderation" has begun to reveal what the 'Leadership' was terminally afraid to admit. And terminal is the right word because what we see the Fed now doing is analogous to the end scenes of Terminator-2, where the liquid Terminator falls into molten metal and as it mixes in it tries a rapid-fire run through its repertoire of past morphing tricks and forms as it discovers none of them can make any difference to the new and terminal situation. The question is; do you want the Fed to survive, like it did the 1930s?
Even if the answer is no; what would ever preserve you from a small-l ‘leadership’ class that's premeditatedly intent on lying endlessly in order to have power over you even to the extent of 'misleading' you to your destruction?
...what would ever preserve you from a small-l ‘leadership’ class that's premeditatedly intent on lying endlessly in order to have power over you even to the extent of 'misleading' you to your destruction?
Answer: guns, ammo, gold, silver, seeds and farmland, productive equipment, self-sufficiency equipment and supplies. And hopefully, mobs of well-armed and angry neighbors ready to defend each other from all forms of predators-that-be.
Apparently we cannot realistically hope for very many "normal folks" to wake up and see reality for what it is. Therefore, those of us who "get real" (or always have been) must be fully prepared to defend ourselves. The vast majority of humans are terminally brainwashed and/or braindamaged.
The first indications will be rumors of plane loads of troops returning from overseas but kept in seclusion. Next will be a week long bank holiday. The Teleprompter will go on TV telling everyone to be calm. Banks will finally open with armed troops in front while you exchange your dollars from the new "crapola" at a ration of 1:10. Then the fun will really start.
You'll be able to identify ZH die-hards by their absence in those lines. We've already converted 90% or more of our savings into gold, silver, seeds and farmland, productive equipment, self-sufficiency equipment and supplies. Only our short term pocket change will be subject to conversion from old-fiat to new-fiat.
Let's hope millions of folks get angry. We'll have the gold and silver to buy them ammo and guns --- so they can defend themselves [and us].
Bring it on.
On November 12, a rumour that the Chinese government was about to further tighten the reserve requirements of their banks and were going to increase their controlling rates sent almost ALL markets into chaos.
This one ain't so deep as a well...There has been tremendous pressure on China to revalue its currency for the past five years. Of course, they don't want to and so, consequently, oceans of "hot money" flow in and send inflation through the roof.
When (and only when) it's in their best interests to damp down inflation through tightening...they do so, which results in damping down the RMB a bit & they can tell the US they are "complying with their revaluation requests".
This is not the first step in some "master plan", it's only about the 4th time they have done this in the past five years to swat the annoying USA aside while taking care of their own inflation business.
Someday [soon] the Chinese currency will revalue (up) dramatically. The Chinese will hold their breaths, assuming something terrible will happen.
Then, over a few weeks or months, they'll notice they just became much, much richer, and they'll have a very important opportunity:
#1: Act like Chinese and buy up productive assets.
#2: Act like gringos and buy consumer goods.
I am too busy to have very many friends, but probably 1/3 of my friends are Chinese. More than 1 year ago, I would have estimated that 99% would act like #1 above. Today I estimate that 90% would act like #1 above, and 10% act like #2 above.
Therefore, for the next 2 or 3 years, I expect Chinese will be mostly smart, and will take good advantage of their wealth. But in the long run, the good Chinese attitudes are becoming more and more gringo-ized or "westernized". Two friends of mine are in the luxury retail market (very expensive goods). In the past year their sales of luxury [brand name] goods to Chinese has risen from 10% to 60% of their sales, even as their total sales has dropped 20% to 30%.
If the Chinese people ever succumb to buying on credit, you can imagine what will happen over the next several years --- even more massive inflation for everyone. Let's hope they retain their sanity. Sadly, current trends are not promising.
Humans are such morons.
"Someday [soon] the Chinese currency will revalue (up) dramatically."
Sooner than you think.
The 40 year oil well leases in Iraq are just for that.
Kick the can down the road ..... again...
cute icon
lol
Sure all talk has failed, but that's just an excuse to do more dumb stuff!
I reckon Beach Sand might make a better Reserve Currency...there's less of it sloshing around out there, and California gets to make a come-back...Iceland's still fucked tho.
People need to stop confusing "progressive" with neo-liberal and neo-conservative. Nothing could be farther from the truth historically and presently. Historically progressives were the strongest advocates for the working class, against slavery, for women's right to vote, for civil rights, for a living wage and a 40 hour work week (even pushing for a 30 hour work week). Presently progressives on the right and left have been agitating overwhelmingly to end foreign wars, to prosecute the banksters, to investigate and prosecute torture, to pursue a public option in health care, and the list goes on. Neo-liberals love to co-opt the tem because it allows them to recuperate concern for others into their failed welfare state framework. True progressives are grass-roots, working people's populists not welfare state government apologists. Who is pushing for transparency and accountability? Not neo-liberals or neo-conservatives. It's progressives. Don't soil the term or abandon it to the hypocrites and opportunists.
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Yesterday Ireland didnt need a Bailout And now Ireland might need a bailout. Beware the Bear traps gents.
http://www.businessinsider.com/ireland-banks-bailout-2010-11
The post above refers to the FT article about Zoellick on Nov 8th. The following day the FT wrote an incredibly weakly argued editorial pouring scorn on gold and the whole idea of using gold (see “Gold digging at the World Bank” FT editorial - 9 November 2010)
I wrote the following response to them:
I refer to your editorial about gold on 9 November 2010. I must say that I would rather own a “barbarous relic” than a worthless piece of paper issued by a money-printing central bank controlled by a cabal of corrupt financial oligarchs.
You state in your editorial that “it is beyond doubt that the world’s current monetary arrangement is not serving us as well as it should.” You don’t say! This is quite an extraordinary understatement. The current global monetary arrangement is nothing short of catastrophic. As your own columnist Martin Wolf has stated in his blog a few days ago the current choice is between ZIRP (frenzied money-printing) and “mass bankruptcy”. This is a stunning admission reflecting the total failure and bankruptcy of the present system.
You may think pegging the monetary base to gold is impractical. Increasingly market participants do not appear to share your view. As the volume of printed money accelerates exponentially there will eventually be a tipping point at which people are no longer willing to accept fiat money as payment for goods or as a unit of account much less as a store of value.
I fail to understand why gold should need to be ‘representative’ of the economy. In what sense is the US dollar or the Euro representative of the underlying economy? On this logic shouldn’t we be using coffee or silicon chips, or perhaps bricks as currency – are these representative enough of the ‘real’ economy?
As far as international coordination is concerned gold seems to have facilitated this quite successfully from 1815 to 1914 – somewhat longer and with a record of far greater stability than the paper dollar standard that has oppressed us for the last 39 years. Also I would be curious to know what “better anchors” you have in mind. And having floated “better anchors” as a solution you then state “until then gold will not work.” Please explain if this is until the other anchors prove to be non-existent? Or until you are proved wrong? Are these really the best objections to the gold standard that you can come up with?
You then state that ‘there is no sign that confidence in central banks is about to collapse’. This is so laughable I could barely believe you had the audacity to print it. Central banks, and particularly the Federal Reserve, are a global laughing stock as the total bankruptcy of the system is increasingly widely noticed. It is equivalent to saying that Lehman was solvent a few months before it suddenly proved not to be. By trying to sustain such a weak position you risk becoming a laughing stock yourselves when the denouement comes.
To add further to my incredulity you then stated that “bond prices show that inflation expectations are well anchored.” Are these the same bonds that are being continuously monetised by the increasingly desperate QE money-printing antics of the Federal Reserve and other central banks? Is it not the case that a number of central banks, particularly the Federal Reserve, are officially and unofficially printing money to buy every single bond on the horizon thereby totally distorting all bond prices in the reserve currency and a number of other major currencies? Is it not the case that most of the so-called buyers are official or semi-official participants who are either acting out of coercion or a mercantilist desire to prevent currency appreciation? How many highly indebted governments are truly selling bonds on the open market to genuine private buyers? The idea that present bond prices have anything to do with inflation expectations or indeed with market determined prices is frankly absurd. I am astonished that you seek to maintain this pretence.
Finally you appear to suffer from the central planning fallacy, which is surprising for a newspaper ostensibly devoted to financial matters. “The challenge is to find tools that countries will agree to use to rebalance the global economy.” Another version of this ideology is the absurd idea (reminiscent of a Soviet 5 year plan) that numerical targets for current account deficits should be introduced. No. The challenge is actually to remove the financial oligarchy that enslaves us and to find a way of stopping them from persisting with this perpetual money printing experiment – a lunacy that distorts every price, every outcome and makes economic calculation all but impossible. The global economy will rebalance itself (without the need for any pointless international talking shops) on the day that money-printing stops, the corrupt financial oligarchy is completely bankrupted and the present monetary system is replaced by a return to the classical gold standard.
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