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Blown Up Commodity Hedge Fund Has Some Wise Parting Words On The Great __flation Debate
Ebullio Capital Management which basically blew up over the past week, due to some unpleasant experiences in the London tin market, has some relatively wise (as much as one who loses nearly 90% of their AUM in one month can be called wise) parting words in the great inflation-deflation debate.
Either we are going to get hyperinflation and all tangible assets will explode 100 pct or more to the upside, gold will be at $5000/oz and paper money is history. Or we are getting Japan in the ‘90s with no chance of inflation because consumers will save, not spend no matter what the politicians do and all markets will be down 50/80 pct from here.
Pay your money and make your choice.
Since our getting long against conviction play early January 2010, we have been doing some thinking and come to the conclusion that the Japan scenario has at least been tried and tested in the real, civilized world, whereas the hyperinflation (discounting Weimar Germany and various kleptocratic African quasi States) has not.
Thus we come firmly down on the Japan scenario and expect these markets to go much, much lower once the diversification-into-commodities-as-aninflation-hedge by the big pension funds and other institutions has been done and people realize that China cannot go it alone (just as Japan couldn’t), and whilst our main focus is on extracting the great value inherent in our physical activity for the foreseeable future, we will be placed to take advantage of the eventual collapse.
Despite our very upbeat view on the future and performance of the Ebullio Commodity Fund, we have obviously had a tough couple of months and have certainly come to realize with Bad Blake(played by Oscar winning Jeff Bridges) in “Crazy Heart”:
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Life is a series of cycles. You had inflation that ranged from the lowest 5.5% to all they way up to nearly 15% during this cycle until 2009 since 1944... see Federal Reserve Z1. After inflation comes deflation.
Sorry but credit is not hyperinflating, it's eroding before our eyes... negative for 3 quarters straight... you are already in a death spiral.
The idiot that thinks you can hyperinflate out of debt is a moron. The current US system is $52.7T down from $52.9T from Q3 to Q4.
It's all based on all you upright monkeys expanding the credit system or money supply. The problem is upright monkeys do not have unlimited power to supply the demand or meet the demand.
Credit creation has gone negative for the 3rd quarter in a row, it's over folks.
mako,
The idiot that thinks you can hyperinflate out debt is a moron.
Hyperinflation is never a deliberate act. Hyperinflation is not merely really bad inflation, it is a currency crisis brought on by a complete lack of faith in a sovereign host nation's ability to service its sovereign debt. But you already knew that.
You've been reading too much Shedlock.
Like you suspect I do mostly agree with you.
I disagree with the hedge fund that wrote those words. It always ends up destroying the system, which is credit. Currency is only now a portion of the credit system. The hedge fund doesn't write what happens after any huge bounce like he is suggesting... which could in this case be hyperdeflationary to zero.... that is if nukes are used.
The author seems to indicate that there is a way out, and large spikes will be met with even further large spikes down. Whether or not something is then priced in dollars or cowpaddies is hard to say.
The use of what we call "credit" is not hyperinflating and I doubt you will really see significant inflation for the rest of my lifetime. What we are witnessing is system unable to expand yet needs to expand to survive but I can see me and you are basically on the same page.
Yes the human element. Unpredictable.
The table is set. When will the main course be served?
Could end tomorrow or back in September 2008 or it could be slow death. I don't expect inflation for a generation. That is true credit creation and expansion. The last down wave lasted 22+ years depending on how you measure, this one will be a generation or more.
Agree with SWR, except I'm not sure that hyperinflation is never a deliberate act, or at least that it won't be a deliberate act this time. With accelerating deflation, someone is going to have to make the decision to devalue and given the extent of our collective balance sheet, it will take hyper-inflation to purge the unpayable liabilities fromo the system.
You can't purge debt by creating more, you create more you have more and you must then service more. The system has been creating more since 1944... between 5.5-15% until 2009 that is.
You have $52.7T in the US system and $200T worldwide. The system has been doing exactly what you have suggested for 66 years, it's when it no longer is getting the needed supply or demand that it starts to eat itself. Numbers are irrelevant... you could use .527 in stead of $52.7T... the system doesn't care what your units are.
I love when people throw large numbers to shock and awe. The system doesn't care if you use .000527 5.27 .527 527 527000 or whatever they are simply numbers.
Mako,
My point exactly which is why they either default or simply print more money - the kind that doesn't pay interest! Devaluation through literal printing, not the new debt fiat approach, is the only way because the unfunded liabilities, waiting in the wings, will always be an impediment to new capital formation. By devaluing, they still pay the nominal amounts with devalued specie. It strikes me as the only way.
Yes, yes that's exactly right. No more bullshit selling Treasuries, pure "quantitative easing"--money printing/counterfeiting. It is the only way. So solly, Chawrie.
My estimated $2,000 per month or so Social Security when I turn 65 will, indeed, be $2,000 per month as promised. Too bad I won't be able to buy so much as a box of Cheerios with it.
Money printing and devaluing the currency is a form of default, in my opinion. We've already defaulted. Instead of letting true defaults ripple through the system we printed. Instead of fucking our creditors up front we've pushed the day of reconning down the road a piece and beat up our currency. It's hard to see that we've devalued when everyone is devaluing simultaneously. Sterling, Yen, Euro, USD- have synchronized their devaluations. This makes everyone look better. You have to look at their value against gold. This trend will continue.
Could there be a hyperinflationary currency crissis in any of these countries. It can happen to any nation that runs persistent budget deficits. Bad debts can be repudiated in one of two ways (if your a nation state or central banker) default (I can't pay you back, I just don't have the money) and hyperinflationary/currency crisis (I'll pay you back, I'll just print the money). From the point of view of the creditor, the effect is largly the same: you made a bad investment and lost your shirt. Debating inflation and deflation is a funny game. What we should be agreeing on is the fact that the west is insolvent and accelerating towards bankruptcy. Wars, poverty, social unrest. This sucks.
We have been inflating our way out of debt since we won WW2 (by inflating)
And the inflation answer while not honest seemed to work --- but it started a cycle of untruthfullness ---and now the culmination of all of those unpaid debts all that untruthfullness
All the pay-offs to American interests to paper over problems that needed to be solved
Someone wrote that all of the gold produced in 1 year is only 80 billion dollars
If the Hunt brothers ---- 2 men from Dallas --- could almost corner the silver market in 1981---- the Gold market has been easily cornered by the corrupters.
But even though the corrupters appear to be winning --- the game does not go to the wise --- but to the truthful---- eventually. Beause coruption is it's own worst enemy
We have been inflating our way out of debt since we won WW2 (by inflating)
And the inflation answer while not honest seemed to work --- but it started a cycle of untruthfullness ---and now the culmination of all of those unpaid debts all that untruthfullness
All the pay-offs to American interests to paper over problems that needed to be solved
Someone wrote that all of the gold produced in 1 year is only 80 billion dollars
If the Hunt brothers ---- 2 men from Dallas --- could almost corner the silver market in 1981---- the Gold market has been easily cornered by the corrupters.
But even though the corrupters appear to be winning --- the game does not go to the wise --- but to the truthful---- eventually. Beause coruption is it's own worst enemy
'Hyperinflation is never a deliberate act. "
So Mister Ben accidently printed all that money?
Hyperinflation is a currency event, not an economic event.
Wrong. Hyperinflation is NOT a crisis of confidence. A fiat currency is backed by nothing. If users lose all confidence, the currency does not hyperinflate; it ceases to exist. This is the fate of the Argentinean austral, Zimmy dollar, Ecuadorean sucre, etc.
You only hyperinflate when you have an incredibly major supply shock (say war) or when you have a very significant increase in money supply / extension of existing credit.
Perhaps you have not studied the Zimbabwe case, but the currency was definitely hyperinflated due to overissuance. The "pass the crap" occurs when people try to spend their nearly worthless dollars as quickly as possible before they devalue further. And our country hyperinflated scrip during the Revolutionary War, as well as during the Civil War. It punishes savers and rescues debtors. When legislators and policymakers have to choose between austerity measures that will be extremely unpopular, or creating more dollars through legislative chicanery, which do you think they will choose??
I think that you're both correct.
As the credit markets further delve into the Great FED Sinkhole, the deleveraging effect blows prices to smithereens. During this period, cash, and - got gold, bitches? - are king.
However, from the ruins of incinerated M3 comes the Phoenix from the ashes!, the almighty, the glorious, the infallible
Federal Government! *Cue circus music*
Yes, you heard it. Have no fear, the "Gov" is here. Your public servants, the court jesters and carnival barkers of congress on the scene to save you from themselves.
They'll spend and spend and spend away, throwing money everywhere to help the people. And when THIS money gathers velocity, against a deflated and unproductive private sector producing scarcity in goods, look out!
$20 bread headed our way.
Mako, I agree with you. The US gov't can't produce enough money to account for the shortfall that occurred as a result of the contraction of fractional reserve banking. How is the Fed going to get this new money into the system to create hyperinflation? Will foreigners take their newly printed debt-repayments and spend it on things here in the States? Doubtful, and even this amount of money probably wouldn't be enough to cause real inflation. Deflation is a reality. There is no way to increase the money supply without lending...and this won't occur until assets values stablize or grow.
http://en.wikipedia.org/wiki/Fractional-reserve_banking
They certainly can blowup the system, but what purpose would that solve.
They keep telling Helicopter Ben is coming but I surely don't see him. You certainly could get othe point where the credit worthiness of the system just collaspes ie Sept 2008 but it was never due to hyperinflation... it will always be from the system unable to expand further.
Simply put like you suggested... credit demand is non-existent. It's over. The government will eventually get run over from the on coming train.
You are right, deflation is here for a while, how long we do not really know. You think a generation, I think a couple of years, one of us is bound to be right and we both have a right to change our mind as events unfold. However, there is something that can happen, more QE, just like Ben told Japan to do in 2003 which would weaken the dollar. Sure, there is no velocity of money, but that does not mean the value of said dollar cannot decline.
A devalued dollar is a form of inflation, much of which we cannot see since we consume 87% of what we produce domestically. However, we will see it with imported products, food and energy. Obama wants to double exports within 5 years, how do you do that with a strong currency? You don't, you devalue it. If you cannot devalue through traditional inflation you do QE or enter into an agreement with some banks to start lending, Obama did just that with some of the TARP funds recently to spur small buisness lending. We have serious problems and deflation is the first part of it right now, it will morph into something else which I call inflation and maybe you would call it a currency crisis or something else.
That is just my opinion and I think my opinion falls within the realm of reason since no one knows what the hell is going on now. I do disagree with your Helicopter Ben statement, he has been out in force. He sucked in trillions in MBS and God knows what else, but that money has not been kicked back out yet. However, it was not from a lack of effort and I think you will be surprised to what he was up to when he has to release the discount window records during the crisis.
Credit expansion may not come again, but I do not think you need it as Ben is creative in his ways. Overall, we agree, game over and social unrest is not far off.
the problem with modern banking mechanic(s) is not fractional reserve itself but compound interest. compound interest is what makes fractional reserve banking so utterly ludicrous simply because a) if new money stops being issued/created there is no money to account for interest payments and the rate of defaults would be sky high b) of all the new money created in period T only a small percentage is going toward debt servicing (i.e. interest payments) and since the total amount of money is always far smaller than the money which is owed in interest on a loan default is a certainty b) fractional banking is in itself a practical and smart way to facilitate and ease transactions and economic expansion but the concept of compound interest rate is what will eventually be the end of the modern banking mechanics simply because goods and services will not match or even follow money production, not to say the cost to service debt. So, eventually there will come a time in which hyperinflation will be rampant just to provide enough money for debt servicing. How long can this go. For centuries, or until the last tree on the planet earth is cut down and last drop of oil is used to power the chainsaw which will cut that tree. Till the, party like its 1999.
Party like it's 1929
We have so many experts, so many books, so many writings and speeches
Why can't we narrow the spread between hyperinflation and depression
Up or Down ----- middle
Cold or Hot ----- warm
Big or Small ---- medium sized
Life or death ---- ????
There I have gotten you all started
"Life or death----????" Zombie
Hyperinflation is actually deflation on [CB injected] steroids.
Yep... Inflation and deflation are the same thing... They both erode the total money supplys purchasing power... You may find my explanation of why that is a little off the map but would appreciate it if you read "what is money" in the general forums and give me your opinions ;-)
- Inflation is expansion of the amount of money available in an economy.
- Deflation is contraction of the amount of money available in an economy.
They are NOT the same thing, and you CANNOT have both at the same time. And this is Econ 101: they are the complete opposite of each other.
Please note that both are equally destructive. Inflation can be somewhat stimulating in the short run (it, at least, give the illusion of activity), but they both result in huge economic problems.
Inflation produces price rise because more money, chasing the same amount of goods = more demand, and more demand = price rise, at least temporarily. That is truly eroding the buying power of the average Joe. If you have a lot of debt, inflation is good for yopu, provided your income is inflation-indexed and rise in tandem with inflation. If you have a lot of cash, inflation is bad, since the value of your cash diminishes day by day. If you have precious metals, such as Gold and Silver, inflation is good, since these will tend to keep their values and see their prices rise with inflation.
Deflation produces price falls, since less money in the economy = less demand. Less demand = production destruction, including massive layoffs, since demand is not there. If you have cash in a deflation, you are king, since you can buy things more cheaply than before. On the other hand, if you have cash, but no job, you'll simply keep as much of your cash as you can, by curtailing your consumption. And therefore, you "remove" cash from the economy, and perpetuate the cycle. If you have debt in a deflation, game over: your creditors will skin you alive, simply to get at some cash.
Hyperinflation is simply inflation done deliberately, on a massive scale, in order to make debts - especially external (foreign) debts - disappear. Imagine owing 100 million dollars, with a 100pc/year inflation.
The problem with the current situation is that massive amounts of money have been 'printed' electronically, in order to 'save' the economy. Sorry, in order to save the banking oligarchy. That money is, so far, stored by the banks in order to provide an appearance of life to their rotten and diseased accounting books. Private (bank) losses have been 'socialized', meaning they have been taken over by the Government, and, indirectly, by the tax-payers (= us).
So, Deflation is - so far - the order of the day, since this massive amount of money is not being injected back into the economy, which has been badly devastated by the stock market crash, and subprime fiasco (defaulting on a loan = deflationary pressure, since your 'remove' money from the economy).
Now, the question really becomes: what is going to happen once this massive government borrowing is going to push all governments to the brink of default? There are only three solutions: (a) massive, deliberate hyper-inflation in order to render the debts worthless (Good Morning Zimbabwe!), (b) massive hyper-deflation, triggered by governement defaults on their debts (See: Greece, Dubaï, etc), the whole castle of card then crumbling to dust, or (c) stagflation: very high, but manageable, inflation (15-20% per year is a nice ballpark figure), in order to make debts worthless, accompanied by severe economic stagnation, since the economic problems have NOT been solved in any way.
Do you trust your government to competently manage a stagflation?
My prescription is: no debt, cash, gold, silver.
(Yes, I know the above is somewhat simplified)
The inflation trade appears a bit crowded.
If the inflation trade is crowded, what do you call 10-year treasuries at 3.6% combined with record month over month inflows into bond funds worldwide?
The answer - Stagflation
Stagflation is high inflation and high unemployment. Inflation that is total money supply went negative almost a year ago and had been falling for a year prior to that.
See Federal Reserve Z1 report for details. This ain't no disco.... I mean it's not the 70s.
Unemployment will stay high, wages will be cut or raises will be at most a couple percent. Some large corporation pensions will go under. Taxes will increase. Federal government employees will get their automatically raises.
Discretionary spending will go down, homes will deflate due to shadow inventory.
Food and energy will increase, since wall street cannot peddle MBS and CDS's anymore, they have to bid up what people need, not what they want. Also any serious hurricane or drought will spike prices.
US dollar will get competition from new Gulf state currency and other new regional currencies and countries by-passing using USD for transactions, so it should devalue vs a basket of currencies.
But it's OK, we have ObamaCare to take care of us.
I've had a wage freeze 3 of the past 4 years. I effectively make the same amount that I did in 2006.
Mako
When the Fed removes the extended period language the markets will falter. The relentless pursuit of yield/return at any price will end in tears. There are lots of examples but the one that sticks out at me are CRE REits - multiples of book and 3% yield (with taxes on unearned income going up and deflation in CRE rents and prices). The other trigger may be after health care is signed and sealed, govt will come clean on the problems at the GSE and FHA and the implications will be even tighter standards in mtg lending for the future.
When the Fed is buying large portions of the treasury auctions I call it prestidigiflation.
i want Hank Paulson to define "grin-fucked" for me.
http://www.independent.co.uk/arts-entertainment/books/reviews/on-the-bri...
Tin, copper, and nickel? In the middle of a paradigm shift? You've got to be shitting me.
Sure! Its the coming Neo-Bronze Age! That's what the copper and tin are for. I guess the nickel is for a phone call (heh).
Can't remember the source, but heard an alleged quote from a politician - "If you can put a good face on this, you should be a mortician." The Ebullio boys sure give it their best to make the corpse look pretty. Next time, spend a little more time in the risk management section instead of the makeup aisle.
Price of crude oil has swung over $2 today. Gyrations!
you guys don't understand.
more humour please.
the yankees are killing us.
http://nymag.com/daily/intel/2010/01/hank_paulsons_valley_of_the_do.html...
Not quite a LTCM but pretty embarrassing for any Fund Manager. What were they thinking?
Inflation is not possible in these conditions. Asset prices are headed back to pre-1980 levels.
Eventually, probably 10 years from now, when the masses wake up to the fact that all the "product" sold by Wall Street in the 80s, 90s, and early 00s was a giant fraudulent mirage, there's going to be a demand for blood and calls for "I want my money back you rat bastards" - and i could see that causing hyper-inflation. But until then, its deflation.
Cash and shorts - for at least 10 years. The future is year after year after year of accelerating bankruptcies, foreclosures, liquidations, lawsuits, congressional hearings and special prosecutors.
It will be just like Japan - but with a lot more private and public sector bankruptcy.
So I will be able to buy a sports car for $5k and a house for $50k? Doubtful.
You can already get the house, just have to have a desire to live in Detroit in a questionable neighborhood
http://www.trulia.com/MI/Detroit/#for_sale/Detroit,MI/5000-25000_price/p...
And your ride is available too, kinda nearby.
http://minneapolis.craigslist.org/hnp/cto/1655157508.html
Maybe you should qualify your nouns with the adjective: "new".
It would have to be a domestic sportscar.....so yeah, you would be living a Detroit dream.
Your forgetting that the fed and other central bankers will print untilt the end to prevent deflation...we are gradually witnessing the end of the fiat system. And americans will learn what it means to pay a fair price for commodities..deflation will exist in some sectors yes, but necessities are going to the moon mÝ friend.
+100 - Japan's parasitic mercantilism comes on the back of the US debt money. Deflation not only bankrupts the gov't in the death spiral that is ZIRP it also destroys what is left of the atrophied bank balance sheets - and the insurance complex loaded to the gils with MBS and corporate debt in the rush for yield. This would be a self defeating strategy for the Fed after spending trillions to ward it off.
No turning back now --> one way road to currency crisis
I believe you are correct sir or madam. The credit behind the currency is crap, ergo, so is the currency. That is why hard assets will increase in value vis the currency,
i had a conflagration up my butt one time
Their fund Chart looks like martingale. LOL
SWR lays out the correct causes of hyper-inflation and readers of this sight should know by now. Only PM dealers should be using this term to exaggerate future event.
Now, the reason we will NOT see even rampant inflation anytime soon is because the FR has NOT done anything yet to cause it. Forget about the whole "printing press" and "money out of thin air" shit. That has not happened yet or likely to. Even QE has securitization.
I must admit though that the FR is running out of bullets and has given the government enough warning with their April scheduled MBS reverse repo.
PS. another reason the government hates deflation is because they can't tax you on your increased purchasing power. Ever wondered why taxes rise during deflationary periods??
I believe a significant amount of money has been created out of thin air.
And, now, the Fed will be able to hide it because they purchased the over-valued assets and will hold them and then write off the difference. The Fed does not operate under the normally understood rules of accounting. The Fed has a black hole that never sees the light of day.
There are two items that I believe will drive the economy to a point where even the man on the street gets it.
First, unemployment and underemployment in the private sector is likely to remain very high for an extended period of time.
Second, wait till those who don't feel affected yet suddenly are confronted with a reduction in public services, including scalebacks in local school spending. At this point unemployment will increase again as the public sector begins to contribute to the unemployment rolls.
We are not even close to turning a corner...
Yields on Bonds and Bills should indicate to anyone how much money "out of thin air" is actually being created. Think of the yield as a type of Tacometer for the printing press. Currently, it looks like the machine is about to stall with all that load on it.
The FED has openly been purchasing a huge percentage of treasuries and there is circumstantial their interventions have been far greater, yet people still persist with the whole OMG look at yields.
OMG look at all the IRS held by the TBTF FED proxy banks.
The problem with the fed being the margin buyer of currency is well that that they are the marginal buyer
manufacturing FRNs via whatever method only works if the rest of the world wants them - how many dollars are held outside the USA?
by ozziindaus
on Mon, 03/22/2010 - 13:19
#27252
********************************
Not sure why you got junked on that--
Your right--as far as Fed causing any inflation in the broad economy-
It's a been a no go--
Stuffing money in banks-that hoard it-is simply not inflationary-
The stock market and the economy are not one and the same-
All you need to do-is look at a 20 year chart of the Nikkei to realise that-
Imagine investing your hard earned surplus labor in this fund, going to your mailbox, grabbing the fund's newsletter to see how you did this month, and looking at a "we regret to report a return of -86.25% for the month, which brings our total return for the month to -95.83% for the year". That was two months, including February and it doesn't have that many days in it.
"We regret to inform you" really doesn't do justice does it? Diversification? Stop limits? How much leverage? Was this a self destruction scheme, with a key decision maker standing to gain from the implosion with the other counter-parties? (it is all a zero sum game, AIG detonated from within to benefit the rest of the club). Scam, fraud, deceit.
They are correct that Japan is the only parallel to our current situation. I have said it before and will say it again, but comparing the most powerful country in the history of the world with the reserve currency to a backwater african country (Zimbabwe) in an attempt to push the hyper-inflation argument shows the stupidity of the one making the comparison. Please, no more mention of Zimbabwe it is so moronic.
Weimar inflated because they had an immediate self-reinforcing feedback loop in Union contracts tying wage increases to inflation rates. So as the government printed more currency (paper they had no computers for digital), wages immediately increased and prices continued to increase as the paper was worth less. Our contracts with unions are typically negotiated on an annual or longer basis - wage increase %. If you have noticed there was no Social Security wage adjustment, and wages are not increasing - where is the transmission mechanism? Credit is down, wages down, less employment - they have only given reserves to banks to hold on their balance sheet.
If the government credited every account with $1m, prices would go up because the value of those dollars would be worth less in purchasing power. With $1m, why work at McDonalds, until everyone thinks the same thing and there is no production at minimum wage, so to induce production wages need to increase to feed the populace - the same goes for all other products.
Now, for the game. So few understand, so few. The real game is about hard assets, paper assets are an illusion for the masses, try to cash in the current paper value and there are not enough hard assets to go around. Google is "worth" more than all the gold and gold miners equities in the world.
So, we will have deflation to shake most of the homes and land loose into the posession/ownership of the big banks (that includes the small banks). Despite the fact that they are technically bankrupt without reserve deposits, the fact that they magically created a loan (not even fractional reserve multiples) returns the asset into their hands upon a home owner default/foreclosure. It is this process that converts conjured paper (an illusion) into a real asset (home/land). The banks are 100X more dangerous with a government backstop, in the past there was a threat of bankruptcy but now who cares if you are technically insolvent IF YOU CAN OWN THE WORLD?
Who among you understands? Then what is the next step after the majority have defaulted and the hard assets of the country are in the banks hands? Yes, hyper-inflation to wipe out the debt and leave the ownership of the asset in their hands. Brilliant but evil. The destruction of property rights you see around you is purposeful, and it is so that the banks and elite can legally steal your assets/surplus labor. The whole of the law should be to protect property and prevent plunder. You should believe this unless perhaps you are the wealthiest person in the world and hunger for more - because someone more powerful can come along and take yours.
The moron Jim Rogers has used the USD to Zimbabwe comparison a few times.
+1 best comment today.
They. Want. It. All. Next stop, Feudalism.
Very clever but wrong. You assume that suburban real estate will be valuable in the next cycle despite the fact that it's extremely expensive for the average person to maintain. Farmland, food processors, and a few others have real intrinsic value, above and beyond suburban real estate.
Bryan’s “Cross of Gold” Speech
http://historymatters.gmu.edu/d/5354/
excerpt:
On the 4th of March, 1895, a few Democrats, most of them members of Congress, issued an address to the Democrats of the nation asserting that the money question was the paramount issue of the hour; asserting also the right of a majority of the Democratic Party to control the position of the party on this paramount issue; concluding with the request that all believers in free coinage of silver in the Democratic Party should organize and take charge of and control the policy of the Democratic Party. Three months later, at Memphis, an organization was perfected, and the silver Democrats went forth openly and boldly and courageously proclaiming their belief and declaring that if successful they would crystallize in a platform the declaration which they had made; and then began the conflict with a zeal approaching the zeal which inspired the crusaders who followed Peter the Hermit. Our silver Democrats went forth from victory unto victory, until they are assembled now, not to discuss, not to debate, but to enter up the judgment rendered by the plain people of this country.
But in this contest, brother has been arrayed against brother, and father against son. The warmest ties of love and acquaintance and association have been disregarded. Old leaders have been cast aside when they refused to give expression to the sentiments of those whom they would lead, and new leaders have sprung up to give direction to this cause of freedom. Thus has the contest been waged, and we have assembled here under as binding and solemn instructions as were ever fastened upon the representatives of a people.
We do not come as individuals. Why, as individuals we might have been glad to compliment the gentleman from New York [Senator Hill], but we knew that the people for whom we speak would never be willing to put him in a position where he could thwart the will of the Democratic Party. I say it was not a question of persons; it was a question of principle; and it is not with gladness, my friends, that we find ourselves brought into conflict with those who are now arrayed on the other side. The gentleman who just preceded me [Governor Russell] spoke of the old state of Massachusetts. Let me assure him that not one person in all this convention entertains the least hostility to the people of the state of Massachusetts.
But we stand here representing people who are the equals before the law of the largest cities in the state of Massachusetts. When you come before us and tell us that we shall disturb your business interests, we reply that you have disturbed our business interests by your action. We say to you that you have made too limited in its application the definition of a businessman. The man who is employed for wages is as much a businessman as his employer. The attorney in a country town is as much a businessman as the corporation counsel in a great metropolis. The merchant at the crossroads store is as much a businessman as the merchant of New York. The farmer who goes forth in the morning and toils all day, begins in the spring and toils all summer, and by the application of brain and muscle to the natural resources of this country creates wealth, is as much a businessman as the man who goes upon the Board of Trade and bets upon the price of grain. The miners who go 1,000 feet into the earth or climb 2,000 feet upon the cliffs and bring forth from their hiding places the precious metals to be poured in the channels of trade are as much businessmen as the few financial magnates who in a backroom corner the money of the world.
We come to speak for this broader class of businessmen. Ah. my friends, we say not one word against those who live upon the Atlantic Coast; but those hardy pioneers who braved all the dangers of the wilderness, who have made the desert to blossom as the rose—those pioneers away out there, rearing their children near to nature’s heart, where they can mingle their voices with the voices of the birds—out there where they have erected schoolhouses for the education of their children and churches where they praise their Creator, and the cemeteries where sleep the ashes of their dead—are as deserving of the consideration of this party as any people in this country.
It is for these that we speak. We do not come as aggressors. Our war is not a war of conquest. We are fighting in the defense of our homes, our families, and posterity. We have petitioned, and our petitions have been scorned. We have entreated, and our entreaties have been disregarded. We have begged, and they have mocked when our calamity came.
We beg no longer; we entreat no more; we petition no more. We defy them!
This dummy gets it. The fed ends up owning most of the country.
Land is real value. They will own most REAL assets . We will be impoverished. I bet Gold goes up alot about that same time.
So i was right...they are PIRATES
People will save in gold as they see their currency being debased. This leads to a situation where Gold goes up more than the dollar NO MATTER WHAT. Prices, when framed in terms of gold or silver, will indeed go down, but no-one can say what they will do in terms of dollars, since only a small group of individuals set the amount of dollars in the money supply.
With the government spending at least ten trillion on health care over the next ten years (government run health care system costs always increase by a factor of ten over what they are predicted to cost), that money will be in the economy, along with plenty of other spending programs. Things might even start to look like they are recovering. That is when you really need to head for the hills, because that is when all the savings will start coming out, and prices will explode. Of course, if you have gold, you will just laugh as your purchasing power just keeps going up and up and up.
"... NO MATTER WHAT"
Exactly, and despite the torrid manipulation by the cabal, gold continue to go up on a long term chart.
LOL looks like someone got burned playing with double edged sword called Leverage.
"Either we are going to get hyperinflation... Or we are getting Japan in the ‘90s with no chance of inflation" - maybe rain maybe snow, maybe yes maybe no.
no wonder AUM down 90%
Finally someone who trades worse than me. I blew out my account in January, down about 30%, but in Feb I was only down 10%... Haaaa HAAAAAAAAAA!!!!!
"...the Japan scenario has at least been tried and tested in the real, civilized world, whereas the hyperinflation (discounting Weimar Germany and various kleptocratic African quasi States) has not."
No wonder their hedge fund blew up. I didn't know Russia was in Africa.
Instances of Serious Inflation Since WWII
http://jessescrossroadscafe.blogspot.com/2009/01/serious-instances-of-inflation-since.html
Jesse, IMO, your opinion counts the mostest. So any real chance the US will see hyperinflation as long as it remains the issuer of the worlds reserve currency?
Personally I doubt it by the pure nature and function of a reserve currency but I would at least like to see some sort of clear indicator.
I think comparing Japan and todays global debacle is folly, Looking at the stockmarket of Japan in the bubble period it went up 5 fold very quick, The real estate valuations went up valuation wise much much more than this current debacle, The JCB somehow has kept the yen strong, All very deflationary,
The problems today are massive but the deflation needed to correct things is much less than Japan, For me western governments are puppets paid to BS their electorate for special interests to scam the electorate,
Who are the special interests?
What do the special interests want to make more money?
The answers to these two questions I dont know, I guess Banks and big companies are a good guess.
Would these special interests make more money with Deflation or Inflation?
Whatever the answer is to this question is the way I bet my money, To be honest the connected can profit in both flations, The to big to fail banks for me need inflation to paper over the bad loans and the big companies are ridden with debt, Due to these facts I think the special interests would want inflation.
If and I mean IF they want inflation, How can inflation be stoked? A 25% import tax on Chinas imports is inflationary, Banks pumping up commodities is good too, Printing currency worldwide all inflationary, Interest rates low for an extended period,
I think if the powers want inflation and will do whatever it takes as pledged, I think its possible, If the bond market blows up they can print QE and spend risking the hyperinflationary outcome.
Will the powers run the risk, I dont know, I am watching very close.
This comparison to what has been happening in Japan since the early 90s is really annoying.
The big thing about Japan and why it has been suffering for as long as it has is that most of it's population is aging, you've got way more older people than young people. That along kills it's retail consumer market.
Then you have their anti-immigration policies.
This along insures that what happened in Japan will not happen in the USA.
I've had it. Let's just call it fartflation, because whatever it is, it stinks. Maybe it's a burnt rubber fart, maybe it's a sick dog fart, but in the 'end' it's all stinky.
Oh and Re: Japan, it's a Japanese POLICY. The economic situation here is much worse than it was there then.
Policy = no bond haircuts, zombie banks bleed the economy for a couple of decades.
Result =
Oh and Re: Japan, it's a Japanese POLICY. The economic situation here is much worse than it was there then.
Policy = no bond haircuts, zombie banks bleed the economy for a couple of decades.
Result
Oh and Re: Japan, it's a Japanese POLICY. The economic situation here is much worse than it was there then.
Policy = no bond haircuts, zombie banks bleed the economy for a couple of decades.
Result = nil
Oh and Re: Japan, it's a Japanese POLICY. The economic situation here is much worse than it was there then.
Policy = no bond haircuts, zombie banks bleed the economy for a couple of decades.
Result = nil to
Oh and Re: Japan, it's a Japanese POLICY. The economic situation here is much worse than it was there then.
Policy = no bond haircuts, zombie banks bleed the economy for a couple of decades.
Result = nil to negative
Oh and Re: Japan, it's a Japanese POLICY. The economic situation here is much worse than it was there then.
Policy = no bond haircuts, zombie banks bleed the economy for a couple of decades.
Result = nil to negative real
Oh and Re: Japan, it's a Japanese POLICY. The economic situation here is much worse than it was there then.
Policy = no bond haircuts, zombie banks bleed the economy for a couple of decades.
Result = nil to negative real asset appreciation
Thanks Jim - I think I got it now - lets see: 1. economic situation here is much worse than it was there then 2. Policy = no bond haircuts, zombie banks bleed the economy for a couple of decades 3.Result = nil to negative real asset appreciation
I wonder if these guys have a mirror fund somewhere. The system clearly allows for the possibility. Two linked funds, one goes hog wild the inflation trade, one hog wild the deflation trade. One gets wiped out, one wins big. BOTH get asset management fees. One gets a huge performance fee. The other closes down. The partners meet in Tahiti and split the winnings. Nobody had to have a clue about anything; all they had to do was take polar opposite positions.
Have a system so heavily skewed toward excessive risk taking, with no repercussions to the loser, and this is the ultimate evolution.
I worked in a private bank in Geneva that "employed/shared trade revenue with" so called independant fund managers. One of these "gents" had literally several hundred clients and split the AUM in half and did exactly that. He ran two books mirroring each other. Every few months or so he'd trawl around with the good track record and get a whole bunch more people in. He made an absolute fortune before getting bounced out of the business - he didnt care he was sitting pretty on boodles of cash.
unless they were running a mirror fund this
"Thus we come firmly down on the Japan scenario and expect these markets to go much, much lower..."
together with the fact that they were levered long commodities to the hilt should make sure that they would never get another penny to manage. unfortunately there are many clowns who will let them start over again.
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