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The CIA Chimes In On Gold Control; Highlights Historical Gold-To-Foreign Holdings Shortfunding

Tyler Durden's picture


After yesterday we highlighted a declassified document by the Department of State, in which it was made clear just how critical it is for the US to remain "Masters of Gold", today we present a comparable memorandum from the same time period (December 1968) this time by the CIA, which presents comparable key high-level gold-related deliberations by the then-administration.

Some of the key points:

We lose influence in world affairs whenever:

  • The dollar is weak in exchange markets
  • There is a major outflow of gold; and/or
  • We are obliged to pressure countries into holding dollars or giving us payments assistance

Our position can also be improved by action on the international monetary system itself to:

  • Decrease vulnerability to confidence crises
  • Increase world monetary reserves (liquidity); and
  • Improve tools for adjusting payments surpluses and deficits

With $33 billion of foreign dollar holdings ($16 billion in official hands) and only $10.7 billion of gold in the U.S. reserve, the risk is clear. To contain these pressures our strategy is:

  • To isolate official from private gold markets by obtaining a pledge from central banks that they will neither buy nor sell gold except to each other;
  • To bring South Africa to sell its current production of gold in the private market, and thus keep the private price down.

And here are the seeds for the need for a fiat currency: growing an economy when monetary supply (and, by implication, currency devaluation) is limited, can only pad the growth rate for the core economic entities so much.

Increasing liquidity


Trade won't be able to grow, and the system will remain vulnerable to speculation unless there is regular growth in the international money supply.

Gold can't provide the needed increase: industrial and speculative demand is too high. U.S. payment deficits can't either: foreigners are unwilling to hold more dollars when we run large deficits and unable to increase net reserves by accumulating dollars when our deficits are small.

Our strategy is to supplement gold and dollars with a new international asset, Special Drawing Rights (SDR).

And, of course, if the SDR does not work, the fall back reserve currency can always just be printed in limitless amounts, thus allowing massive liquidity-based expansion in the trade system, which will further allow the U.S. to grow its trade deficit to record amounts. Just fast forward 41 years.

Indeed, this document was presented before the gold standard was officially abolished. However, in the very near future Zero Hedge will disclose documents that highlight how even in the post-1971 world, gold was still perceived with the same liquidity management and "strategic control" interest as ever before.


h/t Geoffrey Batt


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Sat, 09/26/2009 - 13:07 | 80424 AN0NYM0US
AN0NYM0US's picture

China to invest in Fed's PPIP? (indirectly)


Oaktree to Receive $1 Billion from CIC

"Oaktree is expected to invest CIC's money over the course of several years in distressed debt and other fixed-income assets, and it adds to other inflows to the firm this year, people familiar with the matter say. ...

Oaktree was among nine big asset-management firms chosen by the U.S. Treasury as fund managers for the Public-Private Investment Partnership, or PPIP, the government program designed to rid banks of toxic assets."



Sat, 09/26/2009 - 13:09 | 80425 London Banker
London Banker's picture

"And they who control the credit of the nation, direct the policy of Governments and hold in the hollow of their hands, the destiny of the people." - Rt. Hon. Reginald McKenna

And private ownership of gold was illegal in the USA until 1975 and in the UK even longer.

I am not a gold bug, but neither am I convinced that confidence in banks or the government is in my best interests at this time, leaving few alternatives.


Sat, 09/26/2009 - 13:40 | 80440 Lionhead
Lionhead's picture

Yes, we are quite in the "hollow of their hands." Collectively, we allowed it to happen seduced by easy credit & debt. A human tragedy...

Sat, 09/26/2009 - 15:16 | 80490 Anonymous
Anonymous's picture

London Banker? Are you THE London Banker?

If so, are you active anywhere on the web? I'd love to read again what you have to say.


Sat, 09/26/2009 - 18:28 | 80549 AN0NYM0US
AN0NYM0US's picture

I noticed him here the other day - I think he is "the" London Banker - I think it woud be great if he could take the time to pen an article - his followers really miss his blog

Sat, 09/26/2009 - 22:40 | 80708 London Banker
London Banker's picture

Yes, it's me old friend.  I've started commenting here - and still comment over on Roubini's blog.  I can't blog as I once did in my current position, but still enjoy the give and take of comments.

It's nice to know I'm missed.  Perhaps I will be underemployed and blogging again in the future . . . but there's still too much to do in the real world for now.

Sat, 09/26/2009 - 22:41 | 80710 London Banker
London Banker's picture

Yes, it's me old friend.  I've started commenting here - and still comment over on Roubini's blog.  I can't blog as I once did in my current position, but still enjoy the give and take of comments.

It's nice to know I'm missed.  Perhaps I will be underemployed and blogging again in the future . . . but there's still too much to do in the real world for now.

Sat, 09/26/2009 - 19:28 | 80570 Bubby BankenStein
Bubby BankenStein's picture

Enjoyed your postings at RGE.

Sat, 09/26/2009 - 13:15 | 80430 MsCreant
MsCreant's picture


Someone may have left The Fed a message. I do not approve of this and it is probably backwards yokels, but still:

Feds probe US Census worker hanging in Kentucky

The 51-year-old Sparkman was found hanged from a tree near a Kentucky cemetery and had the word "fed" scrawled on his chest, a law enforcement official said Wednesday, and the FBI is investigating whether he was a victim of anti-government sentiment.


Sat, 09/26/2009 - 13:42 | 80443 glenlloyd
glenlloyd's picture

and so it begins

Sat, 09/26/2009 - 14:05 | 80458 Screwball
Screwball's picture

I've been following this a bit.  Not much to go on really, but from what I have read, and having been through that area, it could be anything.  It is possible this guy may have ran across a meth/pot/moonshine camp.  This area is also highly against the FED, as in the government.  Goes way back to the moonshine era.  I'm curious to see how this shakes out once we have more details, if they ever come out.

Sat, 09/26/2009 - 17:28 | 80543 SloSquez
SloSquez's picture

Being so close to harvest season, I suspect he happened on a pot farmer who was not going to have his kids go without Christmas again.  IMHO.  Sad as it is, the people on that end of the state are extremely suspicious of anyone who remotely looks Federal.  When you see those little "No Trespassing" signs, quite a few of the ones in this area of the country really mean it.  I'm not codoning this type of behaviour at all, I'm just stating a fact.

Sat, 09/26/2009 - 23:00 | 80724 Anonymous
Anonymous's picture

killing census workers as much as i despise them
is going over the top....if they are going to
kill someone, they need to kill an honest to
goodness lying sack of shit like alan blinder,
alan greedscam, ben bernanke, janet yellin and
other financial terrorists...

Sun, 09/27/2009 - 01:37 | 80775 Anonymous
Anonymous's picture

Suicide or David Caradine like scenario. Questions: Lets think about how many people it would take to hang a man (dead already or alive). Several if dead already, more if alive (5-10?). Coroner says he was asphyxiated so now we have 5-10 perpetrators involved. How could nobody hear about this in such a small little town? If it was a drug producer why would they tempt further investigation by a public display like this? (They wouldn't) Why would all of these men drive the truck to the hanging scene? Why could no evidence be found on the truck? Why was the man naked? This sort of display is more indictive of psycho-sexual activity (or self induced psycho-sexual activity). Lots of holes in this - lets be honest, they'll do anything to get Obama out of the news for a day.

Sat, 09/26/2009 - 13:21 | 80432 Mos
Mos's picture

Holy conspiracy theory batman!

Sun, 09/27/2009 - 07:34 | 80821 Anonymous
Anonymous's picture

The correct term is conspiracy...theory goes out the window when it is a real conspiracy.


Sat, 09/26/2009 - 13:35 | 80439 Hephasteus
Hephasteus's picture

I'm so glad we have better politicians and businessmen today. I mean South Africa was so poor back then and now with all this gold buying help and the help of all these prominant wealthy philanthropists. They are rich and lack nothing. They even have Al Gore to help stave off global warming. We love them so much we don't even want them to have to sweat too much while they are mining the few bits of gold and diamonds needed to maintain their wealthy lifestyle.

Sat, 09/26/2009 - 13:43 | 80445 RobotTrader
RobotTrader's picture

Observations from Rasputin:

"Here is what the buggy whip and silver spoon "hoarders" had to face these past five days:

1. The Fed Politburo stating that one day, they swear, they are gonna stop buying Treasuries and Agencies

2. The Fed further announcing that they also, they swear, are sorta start pulling back on some of the Alphabet Soup programs

3. Uncle Sugar issuing 100 billion fiatscos of new debt (always an occasions to crush PMs and drive people into Treasuries)

4. The massive commercial short positions in PMs

5. The G20 goons releasing a statement that any day now, they
swear, they are gonna return to fiscal and monetary sobriety and,
furthermore, "a strong U.S. nightcrawler is in the best interests of
the U.S., blah, blah".

6. Finally, Fed Head Warsh comes out swinging with both and
editorial in the WSJ and a speech that are one-hundred eighty degress
OPPOSITE of the Fed's own FOMC release two days earlier and threatens
that the Politburo may just spike interest rate to da moon if the Fed
feels that "asset prices" (translation: gold) get too frothy.

(Ras): Usually ANY ONE of these events would be sufficient to
crush the GHS/SHS crowd and collapse buggy whips by fifty fiatscos and
silver spoons by two fiatscos. Yet to my utter astonishment, useless
yellow rocks only dropped less than seventeen fiatscos and spoons
dropped by one measly fiatsco.

This unusual resolve shown by the "Seditionists" in the face of
such massive, coordinated attacks impels me to believe that perhaps
things aren't quite as rosy as the Fed and G20 would have us believe."


Sat, 09/26/2009 - 13:50 | 80449 Lionhead
Lionhead's picture

Amen, and more time go on, the less effective their statements & pronouncements will have as their credibility fades into the sunset. The double dip will eventually drive the stake into their heart as they finally accept they cannot create demand for their useless credit.

Sat, 09/26/2009 - 14:07 | 80460 MsCreant
MsCreant's picture

I hope double dip will do it, but honestly, how can any of us have any hope that this charade will finally stop, it has gone on for so much longer than I had ever dreamed possible? It just keeps getting more and more surreal, the truth spills over the edges of the petri dish, and still it goes on.

I wonder if it can keep on till after my death? I wonder if my son will think his mom is just a nut because it all keeps going on, and then it falls on his head, not mine.

I want justice and to see things set straight but I am starting to think it is logistically impossible. These complex systems we have inherited (WE DID NOT CREATE THIS WE WERE BORN INTO IT) will spin on and on and then collapse. Can't rebuild it while we have to depend on it for our livelihood. Ya gotta shut it down at some point. But in the shut down, how do we take care of everyone? So much coordination needs to happen that won't.

Short version of this post? We are so SCREWED.

Sat, 09/26/2009 - 14:24 | 80464 SWRichmond
SWRichmond's picture

I have moments of despair myself, but they are tempered by my knowledge that we (humans, U.S.A., etc) have gotten through much worse than this is history.  Keep working towards the goal: truth and genuine liberty, and a financial and governmental system based on truth and individual liberty and property rights.  Reclaim your birthright.  The genius of America is (was?) its unleashing of the human spirit.  That is how we succeeded so brilliantly.  There is no reason we cannot do it again.

Sat, 09/26/2009 - 14:42 | 80472 Danz Gambit
Danz Gambit's picture

No, I think he got it right - we are screwed.


Want cheered up (not), read this little ditty

Sat, 09/26/2009 - 14:53 | 80479 Anonymous
Anonymous's picture

Oh really?

"3.1) The entire basis upon which Western Industrial Civilization is built, — growth, and ‘Capitalism’, as a form of political economy, is based on the theoretical construct of ‘perpetual resource discovery, acquisition, development and exploitation’; and thus, as finite resources decline and ultimately deplete — as they must, capitalism and perpetual growth must decline and ultimately cease also!"

If that was the case Major Tom would be telling Ground Control that his away team found another planet with a 3 mile crust made up of solid gold and a 12 mile deep inner crust filled with crude oil.

Sat, 09/26/2009 - 15:46 | 80506 SWRichmond
SWRichmond's picture

Ridiculous.  We'll find something else to use.  Will the process be painful?  You bet your ass it will be.  But what you (seem to) want is for some super-body to be put in charge of resource allocation, especially energy, and your supporting assertion is that if we don't we're headed "back to the Olduvai". 

The proof you are wrong is in the article: "1979 US per capita energy use peaked".  We found ways to do more with less energy input.  Imagine, those clever humans.  Since that time, air quality advances and water quality advances are notable. I remember the 70's.

Sat, 09/26/2009 - 19:00 | 80558 Anonymous
Anonymous's picture

Ridiculous. We'll find something else to use. Will the process be painful? You bet your ass it will be. But what you (seem to) want is for some super-body to be put in charge of resource allocation, especially energy, and your supporting assertion is that if we don't we're headed "back to the Olduvai".

You simply do not understand.

There is no energy crisis. There is an oil crisis. There is no substitute for oil. There may never be. It is so much awesome energy density that there is no reason to rely on a miracle discovery.

Besides which, and please think carefully about this, there is no assurance that this miracle you have decided is more likely than no miracle . . . needs time to happen. There is no law of the universe that says you will have that time.

Sat, 09/26/2009 - 22:53 | 80719 DiverCity
DiverCity's picture

Hear, hear.  Most folks don't understand the energy contained in carbon in the form of oil.  They think, erroneously, that fusion or some other newfangled sci fi substitute will make everything all better.  It very likely won't.  We must learn to live some other, more primitive way.  But don't despair;  instead, rejoice.  We'll all be much happier if we can keep the evil heavy hand of government off of our backs.

Sat, 09/26/2009 - 23:34 | 80745 Anonymous
Anonymous's picture

the evil hand of government is behind all of these
moronic atavistic moves to primitive ways....

and it will only be the little people who live can rejoice in your hut all
you want...

Sun, 09/27/2009 - 07:15 | 80818 Anonymous
Anonymous's picture

No, No, you don't understand. The power of the human mind is the most powerful force of all! We're so smart, we can will die-off away! We'll come up with something, you'll see. You treehuggers are so stupid.

Sun, 09/27/2009 - 11:11 | 80871 Anonymous
Anonymous's picture

Our best bet is the much maligned nuclear. True salvation will be if the National Ignition Facility in Livermore CA unravels the true physics of fusion. That's what it was built for. This will be the Black Swan of energy. The prize is unlimited energy. Of course China, Russia, France & England & Israel & everybody else has agents swarming over it like flies hoping it works too. Even if there is no fusion breakthrough we now have TRULY FAILSAFE fission reactor designs. I know the waste problems are formidable, but formidable is not the same as impossible. Even if we get unlimited fusion power we will still have to deal with the waste heat. I would guess that it would triple global warming IF we are lucky. Getting rid of that heat would be the next challenge.

Sat, 09/26/2009 - 15:42 | 80505 Anonymous
Anonymous's picture

Knowing that others have suffered is little consolation.If anything, knowledge of history brings me greater dispair -- it is a catalogue of misery and rarely a roadmap.

I am firmly convinced that the present degree of corruption is so great, it cannot be remedied without a great deal of violence and the collapse/rebuilding cycle. Again, going back to history, a nation with a degree of self-regulation and freedom is the exception. I appreciate your optimism and wish I could share it, but I believe to expect emergence of a free nation is to hope against odds.

It is many of the unsettled answers of the American Revolution brought back to the spotlight.

Sun, 09/27/2009 - 19:18 | 81070 Anonymous
Anonymous's picture

Actually America didn't really have a revolution. We fought England to separate our government in existence from them. Most of the rest was from the Indians & of course Athens. Real revolutions are like France & Russia & China; Long drawn out violent, bloody, between factions inside the country. The alternative 'War of Independence' is the more accurate name. Are we headed towards a real internal blood & guts revolution? I certainly hope not. The world mostly hates & envies us. It would pounce upon us in a heartbeat if we took up arms against each other.

Sat, 09/26/2009 - 17:14 | 80539 Anonymous
Anonymous's picture

I couldn't agree more with this statement, hopefully politicians like Ron Paul and potentially Peter Schiff can gain more clout. I hate to think of america as a place for only the well connected few, and yet it is pretty staggering how much the top percent of income earners make and own versus the people whom are just middle class. And yet obama is like bush's 3rd term, but then again, it does not cost much to buy our politicians these days.

Sat, 09/26/2009 - 14:25 | 80465 Bubby BankenStein
Bubby BankenStein's picture

I just finished telling my daughter about the Bloomberg FOIR and 1207.

We expect knowing the truth will be shocking and potentially destructive to the "System".  The "System" players will fight to the death to keep the secrets secret.

We demand the truth no matter how serious as repercussions could be.  I would rather step up to the problems now.

How else can a viable replacement be built.

Sat, 09/26/2009 - 14:28 | 80467 Lionhead
Lionhead's picture

Yes, we're all screwed. The solution lies with the public; take back the gov't, abide by the Constitution, punish the offenders. Or allow the spin to continue until it does eventually blow up & collapse taking everyone down with it. We created it, or allowed it to happen unknowingly, now we have to stop it as it is reality.

I'm old, maybe 20 more years on the planet, but I can say I truly feel for all my nieces, nephews & their children as well as yours. They have to face the problems ahead and the solutions will entail sacrifice & courage. ZH has done much to reveal the problems. Now we all have to get the political ball rolling to take the first steps of the solution.

You're not nuts; your son should be proud of you to acknowledge & accept the truth. The others are nuts as they allow the lunacy to continue unabated.

Sat, 09/26/2009 - 20:19 | 80596 Anonymous
Anonymous's picture

Short answer, you simply don't take care of everyone.

Everyone will, for the most part, have to take care of themselves.

We - plural - are screwed. We (or I) - singular - perhaps not so much. Some of us have been at this for years and are more prepared than others. It must truly suck to realize at this late stage of the game that you cannot take anything for granted.

Hardly a day goes by that I do not manage to make myself more prepared. I spent this afternoon printing and laminating ballistics tables.

I intend to thrive while many responsible for this falter.

What does our society do for me that I cannot do for myself? Large scale power generation; advanced medicine; production of certain advanced technologies (this computer being a prime example). These things are nice, but probably not worth the hassle attached to them - stifling government, confiscatory taxes. Rules, laws, and regulations about every damned thing you do from the time you get up in the morning to the time you go to bed at night... every freaking day, for the rest of your life.

Screw it, it's not worth it. Who's to say that what comes next will be any better or worse? It could well be better - for some.

Sat, 09/26/2009 - 21:19 | 80632 whopper
whopper's picture

It is like keeps morphing into something worse. 

Sat, 09/26/2009 - 13:55 | 80452 Hephasteus
Hephasteus's picture

Well as long as they swear. I can see their resolve from here. They know how the system works. They know they have to weasel out of it.

Sat, 09/26/2009 - 22:25 | 80690 Anonymous
Anonymous's picture

FYI: GLD has HUGE counterparty risk!!!! Read their rules/regs and you will see their claimed gold holdings ARE NOT insured, they DO NOT have proper and regular independent auditing, etc. IMHO if you actually believe they have all the physical gold IN FULL and none of it has been loaned you are only kidding yourself.

Am sure everyone on ZH knows by now if you do not physically hold your gold investment you do not own it.

Moral of the story: BEWARE COUNTERPART RISK!

Sat, 09/26/2009 - 23:17 | 80737 chumbawamba
chumbawamba's picture

RT, how do you embed images into your comments?  I tried it by turning off the rich-text editor, then inserting HTML tags, then turned RT editor back on, my photo was then embedded in the editor, but when I submitted it the image does not show up.

I am Chumbawamba?

Sat, 09/26/2009 - 13:46 | 80447 Bubby BankenStein
Bubby BankenStein's picture

It's really interesting how serious the concerns were about monetary stability in 1968.

I would imagine the secret communications going on today are exceptionally disturbing.

When Bernanke was asked who received the $500B swap lines he looked like he let a big wet fart.

Sat, 09/26/2009 - 13:56 | 80453 AN0NYM0US
AN0NYM0US's picture

Hey Robo - do you have a link to where Rasputin posts?


Sat, 09/26/2009 - 14:09 | 80461 deadhead
deadhead's picture

think it is wall street cheatsheet...

Sat, 09/26/2009 - 14:19 | 80463 AN0NYM0US
Sat, 09/26/2009 - 14:06 | 80459 Anonymous
Anonymous's picture


Perhaps you missed my late comment on your previous post on this matter.

Gold in 1968 was _deemed_ to be money which it is not now. You are reading this document out of context and barking up the wrong tree as a result.


Sat, 09/26/2009 - 14:51 | 80478 Tyler Durden
Tyler Durden's picture

Perhaps you missed the last sentence which points out that we will shortly disclose information which confirms that we are barking up the right tree. stay tuned.

Sat, 09/26/2009 - 15:04 | 80483 theGhostofXmasPast
theGhostofXmasPast's picture

While I will be curious to see Tyler's docs, it is really intriguing to me how many people absolutely don't get that gold IS money. Spend just a little time reading about money, it's history, etc., and you will find that the sum total of human decision making over the past 3000 years has anointed gold with the unique roll of money. There really is no getting around it.

Simply because we have experimented for 38 years with yet another attempt to make a fiat CURRENCY into actual money doesn't mean it has actually occurred. The dollar is a currency, not money, and ultimately it is only the dollar's ability to be exchanged into true wealth that gives it any value whatsoever. Remove the confidence factor from any fiat currency, and you go Iceland overnight. Period. You really shouldn't try to argue with millennia of history.

So, gold is still money, and it will stay money for a long, long time. That's why the Fed, ECB and ever other central bank are so f'n concerned about gold. And why the Chinese are buying it as fast as they can.

Sat, 09/26/2009 - 15:34 | 80497 Anonymous
Anonymous's picture

"gold IS money" You're assuming that money has value.

Land/Real Estate ownership has value.
Food/Water supplies has value.
Pussy has value.
Refined crude oil has value.
Easy transportation has value.

Maslows hierarchy of gold? If the SHTF, and it never, ever will. (It didn't even hit the fan during the great depression, things just got rough for a little while for SOME people). Gold will be of little value. When was the last time that the world reverted back to caveman days? It will never happen. Too many humans inhabit this planet.

Gold is for JEWelers. US Dollars are for people interested in preserving their wealth over a lifetime horizon and passing on a solid legacy.

The reason that the Fed, ECB and ever other central banks buy gold is so it cannot be used as currency by the flock of sheep that panic because a stupid IB (Lehman) employed too many DeVry® graduates, and University of Phoenix® PHD's that did everything wrong.

Wake up Junior Durdens!

Sat, 09/26/2009 - 16:26 | 80520 perpetual-runner-up
perpetual-runner-up's picture

"Land/Real Estate ownership has value.
Food/Water supplies has value.
Pussy has value.
Refined crude oil has value.
Easy transportation has value."

so if you have too much of any of the above and someone wants to trade for something...and you have enough of all that normally they would trade (hence you are wealthy), what do you trade your excesses for that can store the value and trade to someone else that may not need anything you have, but has too much themselves???


Gold retard....

Sat, 09/26/2009 - 17:00 | 80531 Anonymous
Anonymous's picture

errrr. Gold.

I'd be more worried if every woman in this world bought a Doc Johnson vibrating Rabbit and cut off access to the juicy loins until their demands were met. Now that would be a bonafide crisis.

I wonder if CNBC would cover it?

Oh I forgot they only cover the "bottom" of a certain SENIOR reporter.

Sat, 09/26/2009 - 17:10 | 80538 Anonymous
Anonymous's picture

Why do you think smart money is buying land?

And water:
"the real war will be fought not for oil, but for water"

Sat, 09/26/2009 - 19:29 | 80571 Anonymous
Anonymous's picture

I think the point is people will always want gold and will trade the list above for gold. Countless paper currencies have come and gone, but Roman coins made of gold still have intrinsic value, beyond a collectable.

Sat, 09/26/2009 - 16:35 | 80525 Hephasteus
Hephasteus's picture

Keep lying. Gold is going to explode. It's the way out from under the screwups. You can't herd people away from it.

See ya in heaven. I'll be the one with the belt sander, the gag ball and the lemon juice.

Sat, 09/26/2009 - 19:16 | 80566 Bubby BankenStein
Bubby BankenStein's picture

You receive high honours for the Dumb Fuck of the day and your Trophy is ready.

Transport your real estate?

Sell your Pussy?

Fill your bathtub with oil?

Since the shit will never hit the fan you will always be able to buy a Coke for a nickel like I did in 1968.

As for the quality of higher education, where did you get yours? 

Sat, 09/26/2009 - 19:48 | 80580 chumbawamba
chumbawamba's picture

US Dollars are for people interested in preserving their wealth over a lifetime horizon and passing on a solid legacy.

HAHAHA.  You are suck a fucking horse's ass.  It goes without saying, but it needs to be said so even the dumbfucks can follow along.

I am Chumbawamba.

Sat, 09/26/2009 - 21:02 | 80620 Rusty_Shackleford
Rusty_Shackleford's picture

"US Dollars are for people interested in preserving their wealth over a lifetime horizon and passing on a solid legacy."


Ha, ha!!


I nearly shit a brick when I read that too.

That may be the most un-intelligent thing I've ever seen posted by a commenter on this blog.

Soooooooooooo, losing over 94% of it's value in less than 100 years is a preservation of wealth?


That post is the feces that is produced when shame eats too much stupidity!

Sat, 09/26/2009 - 22:33 | 80700 pivot
pivot's picture

what is the answer to the following math problem:

100 years ago you use your USD to buy an asset that returns 8% per year.  Have you still lost 94% of the value of your USD?

All the arguments about gold vs. dollar are a little silly.  In a pinch either could be used as currency, assuming they are mutually agreed to have value.  Sure everyone thinks gold is pretty, but if a wad of $100 bills is easier to carry than a brick of gold, then maybe you prefer dollars.

the fact is no one really knows what would happen if the end of world scenario happened, and most likely the vast majority of people would be "back to square one" in one way or another. Invariably, anyone that had adequately prepared would be the most attractive target to the masses.  I think that i'd rather be part of the unprepared masses, knowing that one of the easiest ways to survive in a lawless society is not to stick out.  The other thing i keep going back to is the whole idea of "what if the world doesnt end".  Make sure whatever your plan that you aren't putting productive resources into preparing for an eventuality that is highly uncertain.  Its kinda like buying a life insurance policy thats 100 times larger than it needs to be.

Sat, 09/26/2009 - 23:37 | 80746 Anonymous
Anonymous's picture

another massively ignorant analysis about
a wad of paper having value if people think
that it has value....

you are a fine graduate of the hermann goerring
school of truth...

paper has value only because their is gold to
support it....even the debt backing the frn
requires gold however indirect it may be....

Sun, 09/27/2009 - 02:10 | 80781 chumbawamba
chumbawamba's picture

What is a dollar?  I mean, beyond a piece of paper.  This clarification of the question in itself should tell you all you need to know.  A dollar, without backing, is just a piece of paper.  So the real question should be asked: what is a dollar backed by?

And the answer is: nothing.

So, sure, you can buy stuff with it.  But when the music stops, if you're still holding paper currency, you're fucked.

Now, here's where it gets complicated, because (most) humans are not wired to intuitively understand the concept of currency debasement over time.  But to comprehend is simple:

In 1913, the dollar could buy you N.  In 2009, the same dollar can buy you N-94%.

In the 1970s, I could put a penny in a gumball machine and get a gumball.  Today, I could put a penny in a gumball machine and, if I have a paperclip or some flat object, I might be able to get my penny back out of the coin mechanism, which now will only accept quarters.  Quarters, I might add, that if their metal content was valued would come out to a fraction of the face value.

Currency debasement is why you do not hold paper dollars backed by nothing but empty promises by douchebag politicians.  At least you do not hold them in times like these, where confidence in the dollar is at a low point.

Hyperinflation is a crisis of confidence (or lack thereof) in the currency.  If you understand this, you understand why gold priced in all fiat currencies around the globe has been rising over the past several years.  I do not know of any currency against which gold is falling.  That tells you all you need to know.

I am Chumbawamba.

Sun, 09/27/2009 - 03:47 | 80798 George the baby...
George the baby crusher's picture

I agree with the above, but would like to add that gold has gone down in price in Swedish crones.  The price has remained stable during the entire year and retracted somewhat the last few months.  This will certainly change when the Baltic States blow up and Swedish bank that are heavily invested there do likewise.

Sun, 09/27/2009 - 04:50 | 80801 Anonymous
Anonymous's picture

Which asset paid 8% over the last 100 years?

Argument sounds nice, but lacks reality.

Sun, 09/27/2009 - 11:49 | 80885 Rusty_Shackleford
Rusty_Shackleford's picture

@ pivot

There are a few problems with your premises.  I see these same types of points being made all the time.


Let me try and explain:


If 100 years ago, you used US dollars to buy an asset, and that asset held it's value AND had a return, that would be great for you, however, it would have NOTHING to do with the USD as a store of value.  No one is arguing that you cannot use the USD to buy stuff.  However, when you do buy something with it, it is the ASSET that now holds your value.


Let's just say instead of buying that asset 100 years ago, you decided to put the same amount of paper money in a safe deposit box.

Would you still be able to buy that same asset today with that same amount of money?

Of course not.

Why?  It is because the paper currency has lost nearly all of it's stored value since then.  It's inherent value is UNSTABLE, and varies with the whim of central bankers, bureaucrats, and politicians.

However, if 100 years ago, you took that same amount of paper currency, converted it into gold coins, and then put them in your safe deposit box, you would now still likely be able to purchase that same asset with it today.


For example;

It is 1900.  An asset is for sale for $100.  One person has 100 paper dollars, another has 5 X $20 Dollar 1oz Double Eagle gold coins.  If both change their mind and instead put their money under their mattress until today, that same asset will now likely be selling for around $5000. 

The grandson of the guy with the 100 paper dollars is SOL, however, the grandson of the guy with the gold hands over the 5 gold coins and purchases the asset, just like what could have done over 100 years ago.

As I said above, it's not a question of it being able to buy stuff (the gov't can simply just declare it by fiat), the question is whether the same amount of saved USD today will buy the same amount of stuff in the future.

(On an interesting side note, 100 years ago, even if you used your paper USD to buy an asset,  YOU WERE ACTUALLY USING GOLD TO BUY THE ASSET.  The USD was just a paper representation of GOLD.

Like a coat-check ticket, the piece of paper in your hand represented the gold that was standing behind it.  This is a perfectly well functioning system.  There is nothing wrong with paper currencies from this standpoint. However what then happened is akin to going back to the coat-check window, handing them your ticket, and the coat check girl saying, "Why sir, that ticket IS your coat.")

"I think that i'd rather be part of the unprepared masses"

Not sure if this is such a great idea.  If there is a currency crisis, the vast majority of the masses will have all of their wealth destroyed.  Head in sand is never a good contingency plan.


"the easiest ways to survive in a lawless society is not to stick out."

This is true.  However, this has nothing to do with being able to have your wealth stored safely.


"The other thing i keep going back to is the whole idea of "what if the world doesnt end".  Make sure whatever your plan that you aren't putting productive resources into preparing for an eventuality that is highly uncertain.  Its kinda like buying a life insurance policy thats 100 times larger than it needs to be."

Wise words.  However, you'd have to also agree that not purchasing any insurance is equal folly.  Just because your car has a spare tire, doesn't mean that you're hoping to get a flat everyday.  In fact, most people with spare tires are perfectly content if they never get a flat.   In the same way, holders of gold will be be perfectly happy if the paper fiat currency world does not end.  However, they realize that it is a distinct possibility and have chosen to prepare for such an event.

Sun, 09/27/2009 - 12:11 | 80897 pivot
pivot's picture

these points are all fair, and some that others have made are fair too.  I would point out that it is a little bit of double-talk w/ regard to the 100 years ago asset purchase.  You are correct that it is the asset earning a return and not the dollar, but so what?  There are tons of company stock that you could have bought a long time ago (maybe not 100 years ago) and made substantially higher return if recovered from the safe deposit box today.

All i'm pointing out is that there are other assets available other than gold that could be more attractive due to a history (and likely future) of higher compound returns than gold.  Think about a company that does all its business in gold.  Would you expect a higher return on a share of that company than on gold by itself? of course.

I completely agree that there may be some place for gold in one's portfolio, though i think this would be substantially less than the hysterics would recommend (couple % maybe?).  I have still not heard a compelling reason why this level should be more.

It is important for investors to use their heads and think through scenarios to many possible future outcomes.  I personally have assigned a low probability to the end of the world, and have assigned a similarly small probability to the benefits of having "lots" of gold in such a scenario.  Few people have truly lived in an anarchist, mad max type of world (i have not) and one thing i do believe about such a situation is that the world will be such a different place that it will prove to have been almost impossible to have guessed the right course of action ahead of time.  best of luck


Sun, 09/27/2009 - 18:14 | 81052 Rusty_Shackleford
Rusty_Shackleford's picture

Yes.  All good points. Well said.

One final thought though.  I don't think it's good to look at gold as an investment at all.  As you said, there is no interest, no dividends, and no compounding.  I, as well as many others I'd imagine, try to look at gold as purely a store of value - a "savings account". 

At the very moment I trade some FRN's for gold, I "LOCK IN" the purchasing power of those dollars I had. 

Now, that purchasing power cannot be legislated away by any government anywhere on earth.  There is no "counter-party risk".  It's value is not dependent on someone elses decision or trustworthiness.


I, like you, also assign a low probability to the end of the world.

However, there is a 100% absolute guarantee that at some point in the future, the dollar will lose essentially all of it's value.

The real question is the probability of when it will occur.

When it does, we certainly will not instantly become a "Mad Max" world.  We will become what every other economy becomes when it's currency fails.  Things will still be bought and sold.  However, the barter system and the small, battery operated digital scale will replace the cash register.  Just like it did in Zimbabwe in the video I referenced above (although I think there will be a lot more suffering here as most Americans look at the supermarket the same way a domesticated dog looks at his food bowl - they assume that food will always just appear there). 


I give us a 50/50 chance of making it through the next 5 years. 


But, what do I know.  I'm just some dude.


Good talk man.

Sun, 09/27/2009 - 13:07 | 80922 Anonymous
Anonymous's picture

Money equals work. For every dollar you see, you know that someone, somewhere, did something to earn it.

The government printing money is no different than somone creating counterfeit money. Both are created without work being done.

If money was backed by food, that is 1 dollar could be exchanged for 10 pounds of potatoes, then the entire farm output of this planet would be printed out of existence.

Printing is cheap. Work isn't.

Sun, 09/27/2009 - 13:09 | 80923 Anonymous
Anonymous's picture

Money equals work. For every dollar you see, you know that someone, somewhere, did something to earn it.

The government printing money is no different than somone creating counterfeit money. Both are created without work being done.

If money was backed by food, that is 1 dollar could be exchanged for 10 pounds of potatoes, then the entire farm output of this planet would be printed out of existence.

Printing is cheap. Work isn't.

Sun, 09/27/2009 - 19:54 | 81084 SWRichmond
SWRichmond's picture

Yes.  It makes absolutely no sense to be paid hundreds or even thousands of dollars for a day's work, when hundreds of billions of these very same dollars are being clicked into existence effortlessly at the whim of one man.

Sat, 09/26/2009 - 22:03 | 80671 Anonymous
Anonymous's picture

HAHAHA. You are suck a fucking horse's ass. It goes without saying, but it needs to be said so even the dumbfucks can follow along.

I am Chumbawamba.>

Post of the year. A Gold Star for being concise and accurate.

Sat, 09/26/2009 - 20:29 | 80600 theGhostofXmasPast
theGhostofXmasPast's picture

Good Lord! You know, we could have an honest debate about the merits of gold vs paper currency/dollar, but why do people like this guy always have to degenerate into idiocy? JEWelers? Please, leave the anti-semitic remarks somewhere else. Tyler, please, bounce remarks like this. Bounce a bunch below, too, for being off topic and full of hate-filled rhetoric. Come on, people, do you want to make sense of this stuff or degenerate into the typical Internet Flame-fest?

Sat, 09/26/2009 - 23:01 | 80726 DiverCity
DiverCity's picture

I'm Jewish, but STFU about bouncing remarks you totalitarian moron.  You're part of the anti-freedom problem, not the solution.

Sat, 09/26/2009 - 20:41 | 80610 svendthrift
svendthrift's picture

The dollar is down 15% since March. It is no longer a store of value.

Sat, 09/26/2009 - 22:38 | 80707 pivot
pivot's picture

and gold is down 3% in about 4 days. was USD a store of value when it rallied late last year? consider editing your comment so it doesnt look so stupid.

Sat, 09/26/2009 - 23:27 | 80742 Anonymous
Anonymous's picture

the only stupid comment was yours....

gold never loses value....other substances
rise and fall in relation to gold....the
yardstick is gold - not the other way

you will make a fine inductee into the
international hall of fucktards....

Sun, 09/27/2009 - 02:15 | 80785 chumbawamba
chumbawamba's picture

No, the dollar is merely up against gold, the ultimate store of value, as determined by humankind over thousands of years.

I'd invite you to edit your comment so it doesn't look so stupid, but that's simply not possible.

I am Chumbawamba.

Sun, 09/27/2009 - 10:16 | 80847 Anonymous
Anonymous's picture

Consider pondering more than a millisecond on the subject of what "STORE of value" actually means.

Sat, 09/26/2009 - 22:07 | 80677 Anonymous
Anonymous's picture

The Gold for jewelery is directly related to the Pussy has Value part.

Sat, 09/26/2009 - 23:17 | 80736 The Deacon
The Deacon's picture

"US Dollars are for people interested in preserving their wealth over a lifetime horizon and passing on a solid legacy."


I quote from Charlie Wilson's War in my best East Indian accent.  "Is this some sort of joke? Are you making a joke?"


This poster must be BB or Gordon Gecko having a little fun.


Surely he cannot be serious.


How much value has the USD maintained since the FED was created?  5%


Maybe its a CIA dude getting IP addresses of those who ridicule his views on gold...

Sat, 09/26/2009 - 23:23 | 80740 Anonymous
Anonymous's picture

your fucktarded comments are another in a long
string of cia-fed assaults on money - i.e. gold.
it looks like the propagation of truth has agitated
the politburo to such an extent that they sent
psychopaths such as you to do damage control....

and of course the key line to identifying your
psychpathic mind is the let them eat cake crack -
the depression only affected SOME of the people
so that everyone else can go on living their
la-la land existence oblvious to the fate of his

and you admit that your masters keep gold out of
the hands of the people so that they can be
subject to the whims of their overlords...

methinks the lady doth protest too much....

gold undergirds every single paper derivative
and construct in the financial universe.....

the value of an asset is insufficient to establish
its use as money - a subject too great for your
anti-intellectual pygmy intellect...and your pussy
has no value...

and btw - the masters of the universe do not
come from devry or phoenix - they come from the
very elite schools of the country....the very
ones engaged in systematic destruction of the usa....

finally central banks have not been buyers of gold
for the past 50 years....only recently has that
trend changed....

paper money has disintegrated in value and is
the necessary consequence of relentless monetary

go fuck yourself asshole...

Sun, 09/27/2009 - 09:49 | 80837 Anonymous
Anonymous's picture

I just KNEW Ben read this site

Sun, 09/27/2009 - 07:30 | 80819 Anonymous
Anonymous's picture

Great comment!

Sun, 09/27/2009 - 07:33 | 80820 Anonymous
Anonymous's picture

Gold has been money for 5000 years and you do not read enough

Sat, 09/26/2009 - 15:10 | 80487 waterdog
waterdog's picture

Hey wormie, I see you are back. Just because bloggers skip your trash does not mean we missed it. You were not alive in 1968.

Coins of the realm could be classified as money however, it never has been used as money since paper currency was invented.

If gold was money, so were pigs, goats, cows, chickens, corn, wheat, coke, horse, weed, and grain alcohol. You get my drift wormie?

Gold was a product used for barter. If your simple vocabulary wants to call it money that is fine.

Your comments are still very shallow and without merit- in other words trash, and I mark it as so.

Sat, 09/26/2009 - 16:01 | 80511 Anonymous
Anonymous's picture

Ah, gold and silver became money because of its relative difficulty increase the supply of and won out ofver barter because it is/was a convenient common exchange. Just like dollars based on a gold standard was.. Why this is a difficult concept to grasp is beyond me.

Sun, 09/27/2009 - 05:00 | 80803 i.knoknot
i.knoknot's picture

Gold and silver also became money because our women like it :^)

That it happens to have history working for it in the financial transaction world is just icing.

Sat, 09/26/2009 - 23:32 | 80744 Anonymous
Anonymous's picture

gold is money....and never a barter item....if
anything the items you mention are barter
because they simply fail to meet the criteria
for i am sure you discovered when
you tried to put a horse in your pocket....

your comments are the complete outcome of a
retarded and simple mind who could not begin
to fathom the subject of money except in the
juvenile terms which you offered...

gold is, has been, and always will be
meets the criteria for money is ways which no
other substance's use as money has
so agitated and scared you and your cia-fed
handlers that they have come out in force to
discredit it...apparently the thought scares you
because you then no longer have a monopoly
and fascist control over money and people....

you, too, will be another fine inductee into the
international hall of fucktards...

Sat, 09/26/2009 - 15:55 | 80508 Anonymous
Anonymous's picture

empires have always tried to convince the masses that gold isn't money, but to their chagrin, it always is. the document is relevant today and implies that there's a great deal of chicanery going on in the markets akin to what was posted here.

Sat, 09/26/2009 - 23:10 | 80733 Anonymous
Anonymous's picture

gold is, was, and always will be money even
when despotic governments declare it illegal....

you are clearly a fed-cia agent sent to spread
noxious lies to perpetuate your paper tyranny....

gold today is money in all senses of the word
and is very much a concern of central banks
and policy makers so much so that they spend
substantial sums of money and time to discredit it
with hacks like you and all kinds of supression

as hitler envisioned a world without gold so do
the nazis of the fed-cia complex...

as the fed-cia admitted in the documents, he
who controls the gold makes the rules...

go fuck yourself....

Sat, 09/26/2009 - 14:44 | 80475 Anonymous
Anonymous's picture

Honestly, fuck gold. Yes it is shiny, pretty, good for jewelery and has a few industrial application. But other than that gold is like diamonds. A dream come true for marketers and miners.

The US Dollar is the new Gold.

There is too much wealth in this world. If all that wealth cashed out of currencies and into gold the price per ounce would be unthinkable and therefore it will never happen. Why? Because the small concentration of mega-wealth won't let it happen. Ask Sir EVILyn de Rothschild if he has converted all his wealth into gold or any other PM. Chances are he'll tell you a story about the Rothschilds gold arbs back in the day when his families horseback couriers were the closest thing you'd get to a cell phone.

Yes we may see gold trade to $1280 but it's only trading to that level to squeeze a few large hedges. Then the express elevator goes down to floor 1 but may very well do so after a stop at the parking garage on sub-floor 5.

Buy gold, buy silver, it's all going to crash. Yea right.

--Team Player

Sat, 09/26/2009 - 16:41 | 80522 perpetual-runner-up
perpetual-runner-up's picture

u do realize that the only other superpower ever in existence collapsed in a matter of a few months....with its old currency devalued to almost worthless and the world didnt end...


that said, it didnt end well for those holding the currency....or the debt....


in terms of that currency, what did gold peak at in roubles (1961-1997 version - if required to convert into dollars to purchase)...say in 1960, 1970, 1980, 1990

Sat, 09/26/2009 - 17:27 | 80542 Anonymous
Anonymous's picture

It's great to study history. But if you cannot abstract the pertinent information from ancient civilizations and carefully/accurately apply it to current real life scenarios you may as well study English and become a tinhat blogger.

Of course I'm talking about

Sat, 09/26/2009 - 21:07 | 80623 Rusty_Shackleford
Rusty_Shackleford's picture


He's talking about the USSR numbnuts. 

Did you happen to pay any attention to that thing called the 20th century as it went by?



Sat, 09/26/2009 - 21:35 | 80643 perpetual-runner-up
perpetual-runner-up's picture



i was too depressed by that comment to reply...

Sun, 09/27/2009 - 05:24 | 80806 Hephasteus
Hephasteus's picture

YoYo. Go easy. He's only 14 and thinks woodstock is ancient history from the olden days.

Sat, 09/26/2009 - 23:39 | 80747 Anonymous
Anonymous's picture

you are an idiot...your comments were nothing
but the prattling of a retarded mind.

Sun, 09/27/2009 - 18:19 | 81055 Rusty_Shackleford
Rusty_Shackleford's picture

Nice comeback Potsie.

Sat, 09/26/2009 - 17:07 | 80537 Anonymous
Anonymous's picture

Too much wealth in the world? Printed money is not wealth.

Gold is money. It is the only money. The free market chose it for thousands of years. It is durable and has scarcity integrity. Greedy assholes can't print it willy nilly.

You have been deceived. Try to look beyond a 38 year time frame. Try to look outside of the paradigm you are stuck in.

Sat, 09/26/2009 - 23:49 | 80751 Anonymous
Anonymous's picture

he hasn't been deceived....he is the very
deceiver sent to defraud people of their

the torrent of anti-gold zealots who have come
out to attack gold is an index of the fear that
these freaks have of a resurgent interest in
real money....

hitler envisioned a world without gold because
he who controls the money controls the mind
and the life....

Sat, 09/26/2009 - 22:45 | 80715 chumbawamba
chumbawamba's picture

Another fuckwad anonymous dollar douche.  Is there a whole team of you at the Federal Reserve or something?

I am Chumbawamba.  Fuck You.

Sun, 09/27/2009 - 05:03 | 80804 i.knoknot
i.knoknot's picture

lol - i like the updated sig

Sun, 09/27/2009 - 07:35 | 80822 Anonymous
Anonymous's picture

You bet there is. Or the fed pays psy op hacks to post garbage like that in the hopes of changing sentiment. The cot data is another psy op parroted by moles like Butler in the hope that a few chickens will chuck their metal out the window. Don't do it.

Go to the Federal Reserve Bank of New York's website and check out their gold depository. It's quite impressive. There also a reason it's buried in Manhattan bedrock in a huge rotating safe and not kept in a glass case in the Smithsonian with other relics. Use your head.

Sat, 09/26/2009 - 23:46 | 80750 Anonymous
Anonymous's picture

honestly fuck player being
code for cia-fed hacks who are out in force
because of the palpable fear that someone might
see through the lies you fucktards spread about

the price of gold is in no way a relevant factor
in deeming gold use as money...

the us dollar is the new toilet paper for the masses...

you cia-fed hacks are salivating over a gold-free
world because your hero adolph hitler imagined
a world without gold - a world where the state
and only the state determined the value of money
and who would benefit from its manipulations and
suffer from their evil machinations....

gold's primary value by far is as
is irreproachable as such and strikes fear in
the minds of fucktards such as you who denigrate
it for your own totalitarian aims....

rothschild doesn't need to convert squat into
gold because he is a master of the universe -
held in check only by those diehards who hold on
to real money - gold....

Sat, 09/26/2009 - 14:55 | 80480 Slewburger
Slewburger's picture

"Indeed, this document was presented before the gold standard was officially abolished. However, in the very near future Zero Hedge will disclose documents that highlight how even in the post-1971 world, gold was still perceived with the same liquidity management and "strategic control" interest as ever before."

-TD 2009


"All safe deposit boxes in banks or financial institutions have been sealed... and may only be opened in the presence of an agent of the I.R.S."

- FDR 1933

Sat, 09/26/2009 - 16:01 | 80512 Anonymous
Anonymous's picture

He didn't want to waste a perfectly good crisis.

Sat, 09/26/2009 - 23:50 | 80752 Anonymous
Anonymous's picture

totalitarian terrorists never do....

Sun, 09/27/2009 - 10:01 | 80838 Anonymous
Anonymous's picture

"Safe" Deposit Box = numba one

Safe, Mossberg, food to share = numba 10

Sat, 09/26/2009 - 15:08 | 80484 Cheeky Bastard
Cheeky Bastard's picture

An interesting article on David Milibands stand on Iran and potential arms conflict. ( I hope the Brits vote the fucking scum-maggots called the New Labor into the political stone age, and the same goes for the fucking Tories. Goddamn, the West has become a cesspool of political idiots, thieves, cowards and blatant morons with genocidal and racial motives. ) Also, there is only a glimmer of hope that the West will hold the status quo in the upcoming years. Enough is enough.

Sat, 09/26/2009 - 21:38 | 80645 lsbumblebee
lsbumblebee's picture

Very interesting. Let me know when Israel is going to admit to possessing hundreds of nuclear warheads.

The hypocrisy is breathtaking.

Sun, 09/27/2009 - 10:05 | 80840 Anonymous
Anonymous's picture

And every time a US Navy ship pulls into a foreign port? "It is the policy of the US Navy to neither confirm nor deny the presence of nuclear weapons aboard".

Sat, 09/26/2009 - 15:16 | 80489 Anonymous
Anonymous's picture

When the entire treasury curve is being picked up by the FED (as the long end is increasingly now), and only nibbles despite crash fears are taking short end, then currency crash can begin in earnest.

That may take many years or a month.

But REAL wealth in hunkered down. It is now a game players paradise where markers or units of accounting are being counterfeited, duplicated, and sloshing around the universe in a wave of arbitrary sense of value.

The confidence is leaving the system as main street repudiates, while the huge monetary and governing authorities struggle to prop, hoping confidence can return.

Sun, 09/27/2009 - 09:05 | 80831 Ned Zeppelin
Ned Zeppelin's picture

Hunkered down, money on the sidelines.  It would interesting to know and understand what REAL wealth is invested in - what are its holdings, and how are their values protected/hedged, if at all? 

Sat, 09/26/2009 - 15:25 | 80494 Anonymous
Anonymous's picture

"Rome's great industry was usury. Money went neither to land, nor to commerce, nor to industry. The capital of the Roman world did not feed enterprise. Being applied to usury, capital even dried up the spirit of enterprise, and by attacking the sources of wealth, it discouraged production. Usury was at Rome, as it will always be in countries in which there is little commercial industry, an exorbitant tax exacted from the poor and needy by the capitalists, a cause of ruin for the people. The less trade there is, the more excessive the usury. It only thrives in countries and times in which real credit does not exist, in other words, when the mind has not yet risen to the capitalistic conception of business.

In the end of the Republic, beginning of the Empire, senseless acts of prodigality, involving wholesale destruction of wealth, were indulged in. Rome had not created this wealth, its only industry had been war and the spoliation of the vanquished.

The ancients had no sound conception of the nature of productive capital. They confused it with loans in kind or with specie, which is only a symbol of exchange value. When the scarcity of specie began to be felt--and this was as early as the second century--in consequence of the dissipation of former riches and of the exhaustion of the gold and silver mines, there resulted a disturbance of exceptional seriousness.

--The End of the Ancient World (Lot)

Sat, 09/26/2009 - 17:46 | 80545 Anonymous
Anonymous's picture

Ah, just wanted to tell you that the Vanquish is by far the most superior car know to mankind.

And your posting says to me: The global Pool of Money was doubled in the early years of 2000 primarily from contributions made by China. When Wall St woke up to this fact the Bush administration allowed Wall St to market Main St to the Chinese at 5 times its value(NINJA Loans and crooked appraisers).

China lost and now Wall St wants to make sure they cannot do anything to collect on these BS investment schemes.

Yea or Nah. What says you?

Sat, 09/26/2009 - 20:07 | 80588 perpetual-runner-up
perpetual-runner-up's picture

I do think there is a secret war being waged to take china down a notch....but the risk we have with our lack of manufacturing as well as the direct investment in production in China that our US companies have invested has given the wealth transfer from a scenario like your in if we crush the dollar to pay our debts to china back cheaply, they will simply take our factories (and IP and all assets in bank accounts) built by US companies as "security deposit"...


I dunno which way it will go...but I am happy to be cautious with things like PM and happy to lose the bet in exchange for a complete and same recovery in the US of both our infrastructure and balance sheet...

Sun, 09/27/2009 - 10:32 | 80856 Anonymous
Anonymous's picture

China lost? China has said they will allow SOEs to walk away from derivatives that they feel were Ponzi in nature. Your definition of "lose" has a myopically short event horizon.

Sat, 09/26/2009 - 23:55 | 80754 Anonymous
Anonymous's picture

this is actually an astute comment and fits
well a thesis by michael hudson who maintains
that the fire economy and its rentier activities
have so impoverished our economy that strong
antidotes by way of tax policy to rebalance
the incentives for such rentier activities is
desparately needed to prevent the hopeless
descent into which the economy has plunged....

Sat, 09/26/2009 - 15:29 | 80496 Anonymous
Anonymous's picture


"The economic system being in process of marked retrogression, the expenses ought to have been reduced. But to this men could not resign themselves. The Roman State, from the end of the third century, was like a ruined landlord who wants to keep up the same establishment as in the days of prosperity. These attempts were all in vain.

The state saw only one way of salvation; to bind every man (and his descendants) to the same post, a social caste system, an indenturing to occupation throughout the ages."

A Price fixing from birth to death of the merits and ambitions of all men.

Sat, 09/26/2009 - 23:57 | 80755 Anonymous
Anonymous's picture

and while the west plummetted into barbarism
which was no more an outcome of their
totalitarian dishonest minds the
east maintained fidelity to gold where the
bezant alone sustained the morals and vitality
of civilization...

Sun, 09/27/2009 - 10:15 | 80845 Jendrzejczyk
Jendrzejczyk's picture

There are those that believe our fiat currencies are indeed backed only by the citizens' productivity. Each time the government borrows wealth, it is basically enslaving another generation.


Sat, 09/26/2009 - 16:10 | 80515 Anonymous
Anonymous's picture

For you weekend readers. A secret index that I use as a gauge of what's really happening.

National Liquidators is the biggest marine liquidator in the country. Their Fort Lauderdale location is where they started and where they house the majority of the mega yachts repossessed from the NY->South Florida transplants and luxury lifestyle seekers.

I look at the Florida listings over 45'. The list is bustling with 'NEW' activity and is growing every day.

Jonathan Dickerson will tell you how MUCH inventory is currently in the pipeline. Whow!

Madoff's yacht is at this location too.

Sat, 09/26/2009 - 16:52 | 80528 AN0NYM0US
AN0NYM0US's picture

nothing that a bit of deflation won't cure - just like high end real estate, which in some areas of South FL has had quite a good run in terms of volume in the past 8 months. When your alternate investments get wiped out having a $2m tub floating in the back yard is no longer a necessity.

Sat, 09/26/2009 - 19:36 | 80575 Careless Whisper
Careless Whisper's picture

Are all those boats in Florida re-po's? I'm feelin some sadness.

Sat, 09/26/2009 - 16:44 | 80527 AN0NYM0US
AN0NYM0US's picture

"Would you believe me if I told you that BOTH the Fed and Treasury...
...claim to own the same U.S. stockpile of gold, in what is apparently a case of "double counting"?"

Sat, 09/26/2009 - 18:49 | 80555 Mazarin
Mazarin's picture

One thing is certain: even when valued at market (~$980+) the USA's gold reserves are a very small % of its balance sheet. $11 billion or $250 billion, take your pick, still a drop in the bucket compared to the economy, the Fed's balance sheet, or our national debt. 

Sat, 09/26/2009 - 18:39 | 80552 Mazarin
Mazarin's picture

Middle of page 3:

"As more and more SDRs (special drawing rights - the NEW world bank alternate fiat currency) are created over time -- and official gold holdings fail to grow--they (the ADRs) will gradually become a major element of the system. This is the long term cure for the gold neurosis."

Heheheh. As Gold is the long term cure for "inflationist" mega-kleptomania.

Sun, 09/27/2009 - 14:43 | 80971 Hephasteus
Hephasteus's picture

Does anyone really understand SDR's. I don't and I don't know anyone that will explain it. It seems like some sort of trade voodoo to me. If it was a currency clearing house I'd understand it. But then why is being sort of bonded out like a treasury. It just all seems odd to me.

Sat, 09/26/2009 - 21:30 | 80638 lsbumblebee
lsbumblebee's picture

GATA acknowledges Zero Hedge:

By the way Tyler, thanks for your posts on this extremely important matter.

Sat, 09/26/2009 - 23:22 | 80739 chumbawamba
chumbawamba's picture

I would like to urge all of you to stop what you're doing and watch this presentation by Pastor Lindsey Williams:

It will take you more than an hour (conveniently broken into 8 ten minute clips), but it is very worth it.

If you only watch one thing, please watch starting at 2:20 on Part 8:

He discusses the fate of some of the folks who signed the Declaration of Independence.

The presentation is about how the world is controlled through oil, and how the dollar is tied to oil sales, and is the only reason why the dollar has lasted as long as it has.

Ok, I'll say it: it's a must watch.  No, seriously.  Stop what you're doing and watch it.

I am Chumbawamba.

Sun, 09/27/2009 - 00:04 | 80757 Anonymous
Anonymous's picture

oil has no doubt played a role but there is more
to it than that...if the united states had not
implemented the gold exchanges in 1975 the dollar
would have been fact preventing that
outcome was the reason for their estahlishment...

the dollar is deeply embedded in international
commerce as a result of bretton woods...removing
it will be slow and difficult...however, crisis
always has a way of accelerating such

once gold backwardation takes hold, the dollar
evaporates...and is kaput...

Sun, 09/27/2009 - 00:53 | 80769 Anonymous
Anonymous's picture

gold is money because gold is time. gold has, is, and always will be money. do not let the cia-fed fraudsters rob you of your wealth...

even the ablest defenders of gold fail to recognize the salient property which commends gold as represents work which represents is produced at a cost and thus captures forever work and thus time....

as such, gold's value as money does not derive from psychological allure, arbitrary preference, or primitive superstitions....

although gold posesses in perfection and abundance the many attributes which a substance needs in order to be money two other critical properties stand out - constant marginal utility deriving from stable supply and fidelity meaning that it cannot be arbitrarily reproduced....

frn on the other hand are the lays potato chips of currency - when they run out you go print another batch ad infinitum world without end, ad nauseum....

to those who think the frn is a store of wealth i can only note that it is an obligation of someone else predicated upon a complex and unresolvable chain of debt, confiscatory policy, and wishful thinking....

frn always attach to debt which is why the tyrants are always seeking to lay their hands on yet something else to "monetize" it happens debt is a logarithmic mathematical and implaccable function which must overwhelm the economy...when it does so its currency is ruined along with its people....the real economy is like a sinusoidal function, wholly unsuitable to the longterm demands of logarithmic debt....currencies based upon debt are thus fraudulent.

the wisdom of the ages resides in gold - not in the clever and tyrannical designs of the paper other substance be it food, energy, tulips has the properties required of and gold alone is money par excellence....

he who owns the gold makes the rules....and gold is alive and well as sustainer of a complex of financial instruments....the fool claims it is not there because he has no intellect to delve beyond the end of his nose...and
yet the fulcrum of gold is on the verge of sloughing off the
parasites feeding on it....the derivatives avalanche is ready to tumble....

gold incites greed and instills fear in the stone soul of the tyrant but it is mistress to civilization and keeper and guardian of moral conduct.

gold has no replacement. it is indeed money.

Sun, 09/27/2009 - 22:19 | 81132 Anonymous
Anonymous's picture

This is the labour theory of value. Ie., that something is worth the expense of the inputs used to produce it. That is incorrect. Gold is not money because it costs so much to produce. Gold is money because it is scarce, fungible, ductile, beautiful and, by virtually unanimous convention over 5,000 years, perceived to be not just money, but the most desirable form of money. The US dollar is toilet paper, not because it costs nothing to produce, but because it does not possess the fundamental aspect of money. That is, it is not a store of value.

Sun, 09/27/2009 - 01:18 | 80774 Anonymous
Anonymous's picture

If the all powerful suppressing powers that be fail to foil gold, if they are unable to keep supply in constant flux, if they are unable to break Mr. and Mrs. Everyday of the globe from their positions, it will be their turn to break.

They are like erring schoolchildren about to be chastened by the wiser and betters. The economy and commerce only work with their fiat foolishness to the extent that the common people as well as the rich participate.

Education of their plunderous ways will kill them. Denial of their fiat confetti as a means of exchange will kill them. Making strike by not buying or selling through their polluted system will kill them.

You are watching the same gyrations and agonies a petty insolvent debtor takes. Applying for better terms, selling more debt to pay old, gainsaying and pledging more collateral or greater return, hiding defects, baldfaced lying. The system is terminally ill and will die.

The chattel are coming to despise an abusive selfish master.

Sun, 09/27/2009 - 05:47 | 80811 Gunther
Gunther's picture


I watched the part 8, and got to the argument that there is enough oil in Alaska that is not lifted for political reasons.
If you follow then they believe we are close to or past peak oil. They are geologists and oilmen (and women) who understand their business. Except for a miracle the oil production will not go up from here.
Put in very simple teems, to produce oil, someone has to find it. Findings peaked around 1970.
Now most of the then-found oil got pumped and we will have to live with the declining output.

Sun, 09/27/2009 - 17:17 | 81024 Anonymous
Anonymous's picture

People can also read the annual reports of Exxon and other oil companies. The costs of new exploration and extraction are shocking. The oil people know exactly what is going on and there is certainly a reason why we are in Iraq as a permanent presence, or at least for the next 100 years.

Sun, 09/27/2009 - 09:00 | 80830 Ned Zeppelin
Ned Zeppelin's picture

Read "The Long Emergency" by James Kunstler.  If you have not, and are just sort of thinking either that there is plenty of oil out there, or that science will stop by and save the situation, it may be a revelation to you of what the real problem is with rapidly depleting oil reserves. A great book and a great eye-opener.  There are solutions - not to keep the party going, by the way, and yes it will be hard, but once you start to grasp the magnitude of the problem, you can start to understand the shitstorm that will arise as we head down the slope of "cheap oil," the ultimate fuel. No other fuel comes close for its usefulness, raw power, transportability, etc.  

Strange things start to happen when the gas gauge says "half empty" and there are no gas stations in sight.  Things like pulling over another car at gunpoint and siphoning their tank.

Sun, 09/27/2009 - 10:41 | 80857 George the baby...
George the baby crusher's picture

Pulling people over at gunpoint?  But my good man, isn't that against the law?

Sun, 09/27/2009 - 10:51 | 80863 Anonymous
Anonymous's picture

What does he say about ANWAR and other undeveloped resource pools where estimates may be extraordinarily low?

Sun, 09/27/2009 - 11:01 | 80867 Anonymous
Anonymous's picture

Oh never mind. Reading the 1-star reviews of that book I found the critics both intelligent and credible. Keep your bigoted dystopian prophet.

Sun, 09/27/2009 - 12:44 | 80910 Anonymous
Anonymous's picture

ned zep - i read most of kunstler's work with a pinch of fictional sci-fi salt... i read a lot of other stuff, and kunstler seems to feed the fear that will make the next industrial (clean energy) revolution possible and profitable for the few that keep their mind clean of delusion and doubt.

Sun, 09/27/2009 - 23:11 | 81160 Rusty_Shackleford
Rusty_Shackleford's picture

One word.




Jim Rickards with some truthiness.



Mon, 09/28/2009 - 00:45 | 81192 MsCreant
MsCreant's picture

Rusty, is this guy propaganda? Why do you trust him. If what he is saying is true, then we all know what to do, don't we?

Provacative post, thanks.

Mon, 09/28/2009 - 07:41 | 81267 Hephasteus
Hephasteus's picture

Well what is important is when he says. When YOU own gold it limits the central banks ability to pring money. Which says very clearly and very loudly that we are still working on an underlying gold system with the fiat fractional reserve system acting as the magic bs show in front of it.

The "problem" he talks about that occured in the 60's is the problem of how the bs system that matches up to the real system eventually breaks. So SDR's is supposed to be a system that finds some way out of the breakng of the BS system. Which means the original ponzi theme is somehow maintained they just have some way to obfuscate it well enough to make it last longer.

The way it's extended now is through turning some countries into periphery while maintaining the core. SDR's must have some way to make the IMF the CORE and turn ALL nations into the periphery. But since only the central bankers will know how it works they aren't likely to tell. Which means all the power will go into a completely divorced uncontrollable system even worse than what we have now.

So here's the evolution of the scam.

Banks loaned out fractional reserve exploding m2 and m3 money supply until it dwarfs m0 (Cash).

Somebody gets nervous, run on banks. Closed banks, people lost money.

The Fed. All the excess indebtedness of the banks gets aggregated into one spot. The national deficit. Then the system won't break until servicing the debt becomes a rediculous prospect and having this type of system is no longer advantageous to the politicians. Up to that point the politicians get to spend money and simply "charge it" without annoying steps like getting political support for it, setting up taxes for it, etc. You can govern without actually being bothered with interacting with the people other than to pick up juicy stories they tell you and then repeat them at your speaches. "I met an 78 year old grandmother of 3 who's daughter worked 3 jobs and died of ..., struggling to care for her 3 orphaned grandchildren...."

So now that our system is close to collapse we'll degrade dollar a bit and prop up england a bit and then replace the FED scheme with ...

IMF/UN/World Bank/SDR's/Trilateral commission?

They'll try to be the global peace makers. Big deals will made about how they have no "teeth" and can only issue warnings etc etc. So it'll be given more and more power until it's able to starve any nation it wants, pull every nation against any nation. It'll look like peer pressure at first then it will eventually become an independant agency bullying everyone.

Mon, 09/28/2009 - 09:51 | 81349 Rusty_Shackleford
Rusty_Shackleford's picture


Well, it certainly could be propaganda, but I think we all know what he's saying is true.  I really don't know much about this gentleman.


My surprise is that he would be allowed to voice such concepts on Cheerleader Central at all.

Mon, 09/28/2009 - 07:38 | 81271 Anonymous
Anonymous's picture

Here is somebody contending that these papers on central bank gold manipulations are faked


Thu, 02/24/2011 - 01:48 | 991963 shawnlee
shawnlee's picture

Well, it certainly could be propaganda, but I think we all know what he's saying is true. I really don't know much about this gentleman.

My surprise is that he would be allowed to voice such concepts on Cheerleader Central at all.

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