The Coming Financial Tsunami

Gordon_Gekko's picture

via Gordon Gekko's Blog


In light of what’s happening right now (and the fact that I never posted it on ZH before), I thought it relevant to post this article that I wrote in the February of 2009 as a primer for friends and family to help them become aware of what was happening (and prepare for what I saw coming). Remember – this was written for people who were very much enmeshed in the MSM propaganda world and had no clue of the reality behind our economic, financial and monetary system. The idea was to gently introduce them to the truth and give a brief overview, so you won’t find me going into the full technical and gory details; plus I wanted to keep the length manageable so as to not put them to sleep. 

If you find it worthwhile, feel free to forward it to your near and dear ones who are still entrapped in The Matrix. Here it is:

What's happening now is just the beginning of the collapse of a multi-decade debt bubble. All the so-called "growth" since the 70's has been based on ever increasing amounts of debt - not just the US, but the entire world. Here is a US Debt (public and private) to GDP percentage graph:

You can see that the debt has increased exponentially since ’71. In fact, the last peak occurred at the time of the Great Depression in the 30’s, and this one is even bigger than that, so you can imagine what the crash this time is going to be like.


A bit of history first. It really starts with the creation of central banking paper-money system in the US in 1913 - the Federal Reserve System, but for brevity's sake we'll just jump onto the story after World War II, as the biggest structural economic imbalances have occurred since then. After World War II, all the major countries decided on the US dollar as the reserve currency for international trade (since the US was the most powerful nation left, and with the biggest reserve of Gold at 20,000 tonnes). All countries would base their currencies on the US dollar, which was in turn backed by Gold. So, in effect, all countries' currencies were backed by Gold. This is also known as the Bretton Woods System. Under this system, all foreign countries could redeem their dollars for Gold. This kept a limit on the number of dollars in circulation and consequently, the debt in the world economy - basically it imposed discipline on all parties concerned. With the Vietnam War, US deficits started to soar and it could no longer afford to redeem dollars in Gold. Its gold hoard was down to 8,000 tonnes from 20,000 tonnes. So under President Nixon, they decided to delink the dollar from gold (Bretton Woods II). From now on, no country could exchange its dollars for gold. They called it a “floating” exchange system, but really, in terms of purchasing power, all currencies started to sink together. What followed was an explosion of money, as the US could now issue (print) virtually unlimited paper dollars for all its purchases. Other countries followed suit, in order to maintain their exports’ competitiveness. This explosion in money fuelled (or rather was fuelled by) an explosion of debt. I shall leave the detailed mechanics of all this for another post, but suffice to say that this explosion in paper money has caused massive misallocation of resources throughout the US, and indeed, the entire world. The stock market boom in (crashing in 2000) and the massive real estate boom (crashing in 2007) were both manifestations of these misallocations. The global boom starting in 2002 was caused by the Federal Reserve printing money and keeping interest rates artificially low (in order to boost consumption and maintain GDP "growth"), and thus injecting massive amounts of money into the economy - which had no basis in the real productive growth of the economy. Since the dollar is the reserve currency used for world trade, this artificially inflated the entire world economy, which is now crashing. This was done to alleviate the fallout of the 2000 crash, but the cure turned out to be worse than the disease. The "Subprime Crisis" was just the tip of the iceberg and, in fact, an effect not a cause of this meltdown. The real cause is unbridled growth of money supply and debt by the Fed and other Central Banks of the world.


At heart, this economic crisis is in fact a currency crisis. Throughout history no paper currency (or "fiat currency", since it is accepted as money by virtue of Government fiat or decree) has survived, and this time will be no different. The average lifespan of fiat currencies has been 16 years*. The present system is unique in that it has survived for 38 years and for the first time ALL countries throughout the world are on a fiat money standard. This means that the resulting crash will be on the scale of something the world has never seen. This will be a time of hardship for many, but for those who are "economically literate" and prepared - they will come through largely unscathed, even prosper. If there ever was a time to educate yourself about financial matters, this is it. And don’t listen to the stock-pumpers and so called “analysts” on television – who really are just a part of the Wall Street sales force. These are the same guys who peddled complete garbage as “AAA” securities and that there was no “bubble” in real estate. The rating agencies (Moody's, S&P, etc.) are in cahoots with these crooks, and in their pay. The same goes for the regulatory agencies in the US such as the SEC (and I think pretty much everywhere), which was caught not only napping, but deliberately ignoring the doings of the biggest "Ponzi Scheme" perpetrator of all time - Bernard Madoff. All they are interested is in making a quick buck off of you. Doing your own research on the internet is the only way of finding unbiased information. Just switch off the TV, and switch on the Internet.


I am no financial adviser or any kind of expert, but an ideal portfolio in my opinion would be majority in Gold (strictly physical – no ETF’s or any kind of “paper” gold), some Silver (again, physical) and some cash for day-to-day needs. As you must be aware, more and more banks are failing every day, so it’s not advisable to keep an amount over and above that insured by the FDIC in any single bank. If you are not sure about the solvency of your bank (which can be said of pretty much every bank these days), you can also park your cash in short term Treasury bonds. It is also advisable to keep some cash at home in case there is a “bank holiday” or withdrawal restrictions are imposed by the government. Why the bias towards gold, you may ask. Well, gold is a long and complicated subject so I can’t explain it here (although I do urge you to explore it on your own), but suffice to say that not only will it protect your assets in case of Financial Armageddon, but is sure to rise manifold in value as this crisis progresses. It has retained its purchasing power for thousands of years, and this time will be no different. The record of paper currencies on the other hand is quite dismal, to say the least. This is a once in a 100 year crisis, so you really need to have a historical perspective about this. I reiterate - NO other asset is safe, not even the dollar itself. If anything, gold is a sort of insurance for your portfolio that you will not regret buying. And beware of people who tell you that gold is just an "asset" or "commodity", for they don't know what they are talking about. It's not. It's a currency - the best there is.


At some point, after a huge crash has occurred, the stock market will rise. In fact, it may rise tremendously. It will rise not because of strong fundamentals of the economy, but because of the depreciation of paper currencies (hyperinflation). Hence, any steps that you take to retrieve your investments from the stock market will only prove useful if you invest the proceeds in Gold, as Gold will rise much, much more than the stock market at that point. In fact, in such a scenario, it may even become impossible to obtain physical Gold in exchange for paper currency.


There is a lot more to this than what I have just mentioned, so I urge you to do your own research and take the steps necessary to protect yourself and your family financially. We are heading towards a global currency crisis and it will affect everybody throughout the world. 


[Update 13th May, 2010: I originally provided a list of blogs/websites, books and people to follow as a starting point for their research, but some of them have since become dated/irrelevant in my mind. Feel free to provide them with your own list]


And if you think the Government can get us out of this mess, think again. They had a major role in screwing things up so far, and what they are doing now will only make a bad situation even worse. This crisis was caused by excessive money printing and debt, and guess what the Government's solution is - more money printing and more debt. The best they could do in this dire situation was to come up with a budget full of pork randomly throwing money - our money - here and there without any rhyme or reason. All it will do is ensure that the ensuing collapse is even more severe than it otherwise would have been. The Government and the politicians will keep mouthing lies such as it's going to get better next quarter, next year, ad infinitum even as thing get worse and worse everyday. Don't believe them. All they are interested in is preserving their own power. Read a bit of history and know that it's every man for himself now.


As you may or may not be aware, Gold recently hit $1000 an ounce for the third time in history. It started rising from 1999 onwards when it was priced at around $250 an ounce. This is the proverbial "canary in the coal mine" telling us that the international monetary system is at risk of collapse. I can't put a finger on when this is going to transpire - it may happen next month, next year or in a couple of years – but happen it will and the risks today are greater than they ever were. As I am writing this, another crash is brewing in the global stock markets (it may not happen now, but it will - sooner or later). On Friday, the US stock market closed at its’ lowest level since 1997 - over a decade of gains wiped out. Gold has receded in price a bit, presently undergoing a correction after a quick rise from $900 to $1000 an ounce within a span of ten days in February. It has become pretty volatile in the short term (although the long term trend remains up and away), so I am not sure how long this correction will last. It may continue moving a bit downwards or sideways for a while, but it may just be the last chance we have to get it at such low prices. America's - and indeed the world's - disastrous experiment with paper money is about to end in a catastrophe.


*I’m not sure where I got the 16 year figure from.


Brief Opinion: Massive PM Demand in Europe

As an aside, ZH just reported that bullion dealers in Europe were sold out, with many such as Kronwitter having to shut shop temporarily due to their inability to meet the massive demand [sure, they might open back up ala 2008 with or without massive premiums above the spot price, but they just as easily might not if there starts a real run on the PM’s with unlimited demand (i.e. the beginning of hyperinflation) - which WILL be the case at some point in the not too far off future]. 


Here is what a potential run on bullion looks like:


Kronwitter Sold-out page (translated using Google translate)

Here is one of the bigger dealers Proaurum:

(Translated using Google translate)

Another one Westgold sold out:

(Translated using Google translate)

h/t JJ McApe, unky


Tell me, what good is the paper price if you can’t buy the real metal at it? The only thing providing credibility to the paper/futures price is its link to the physical metal. If there is no metal available at that price then it’s just a worthless paper ticket with the words Gold/Silver printed on it. You think that was silver you just bought in the futures market? Nope. More likely a WORTHLESS contract to deliver and it’s not even paper, just some bits in a computer somewhere! (This is practically true even right now for certain corrupt exchanges like the COMEX, considering how hard it is to obtain delivery there). If there is no metal available at the “displayed” price, then it’s just a government dictated price level (ala price controls), with an illusion of free trading thrown in to draw the retail suckers into the casino – just like the stock market. What’s more, due to these hidden price controls created by massive government interference in various markets, we have no price discovery in ANY market right now.


Got Gold?


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Ruth's picture

Great post Gordon and Cheeky and the many others I heed information from here!  Now where's Chumba for that perfect Gold Tsunami Party, cause I'm not looking forward to our Black Gold Hurricane Parties this year.  I hope you guys are working on that problem child too.

Thank You ZeroHedge for everything you do!

ratava's picture


this one looks like a buy to me. insider buying pattern plus the gold bitches factor.

Kina's picture

The MSM may or may not be bullish on gold. But they have been bullish on the economic recovery. The contrarians are bearish on the US and global recovery and future as advertised.

Those bearish the economy, bullish fear look for a safe haven. When everybody is bullish fear then you can look for the eventual gold downside as people see again other opportunities.


Landrew's picture

Bravo! Bravo! Well done Gordon! Keep writing you have a new fan.

RockyRacoon's picture

Fully in agreement.  Gordon continues to raise the bar of discussion and mental gymnastics.  My sclerotic old brain can use the exercise.

(Don't use "Bravo", it attracts troll flies.)

class of 68's picture

Akak, I hardly ever post, but do spend time on ZH. Your posts to JB and Leo were spot on, thanks for your efforts. Have been a physical buyer since the early 80's. Most think I am totally gone. Not just in my  accumulation of the metals, but in my gentle persuasions to alert friends about what's really happening in Government, from Waco, twa800, 9-11 etc. The rolling eyes are far to evident, even on the phone.

I have thought about the ZH community of like thinkers. Would any consider a more connected network of like minds. In times coming a true community could prove in-valuable. I mean a forum where the network could become a powerful force, for the participants. I am in Pittsburgh. Contractor

Gully Foyle's picture

"Would any consider a more connected network of like minds. In times coming a true community could prove in-valuable. I mean a forum where the network could become a powerful force, for the participants."

Bob already the agents of disinformation are appearing here. You want to give them another target? You want to condense everyone for easy access to the jaundiced eye.

Moscow rules Bob, Moscow rules.

tony bonn's picture

you mean how 9/11 was an inside intelligence job led by the bush crime syndicate cia? if that isn't obvious to one and all then there is some serious epistemilogical deficiency operating - as understandable as that might be.


Gully Foyle's picture

Offhand why limit to the Bushco people?

The plan had been made and it did not matter what alphabet letter was in office.


class of 68's picture

Richard Gage now that is one courageous man. I am a financial supporter of AE.

Tony, you are right, even in the words of cognitive dissonance. most can not even consider these

as it would challenge their entire being.

merehuman's picture

911 and the truth of it really hurt. I denied it as long as i could, then the evidence overwhelmed me.  people dont want to know because it makes them responsible to act, to do something . And frankly what does one do?

Calling , voting and protesting is to no avail.

i.knoknot's picture

it kind of keeps us engaged/angry...

i'm supposing we'll act upon it all someday and be able to say "we tried all other avenues..."

as useless as it seems, i don't think we can just sit and hope.

ever forward

Buck Johnson's picture

I see all those gold sellers out and that should be alarming everyone.  Also the market closed today down in the triple digits, I guess that EU's "bailout" was only good for a few days and now after people realized there is no way that they can come up with that money, are selling.  I believe that something is going to go pop in the EU countries very very soon, and it might be that one or more countries will need massive funding and/or leave the EU (Germany).  This market (besides the algos and govt. intervention) is trading like people are waiting for the ending to see what will be left of this whole mess.

The Alarmist's picture

You buy gold if you think the unthinkable has a high probability of happening.  I think many of would agree that we have seen various governments take actions in the past few years that we thought we would never seen in our lifetimes.  That sounds like the "unthinkable" unfolding before our very eyes.  It sounds like it might be time to do a little hedging for the worst case.


akak's picture

That is an excellent point, and one that I have brought up with various friends, relatives and acquaintainces who refuse to just "wake up" to the ongoing reality of our economic, financial and monetary collapse.

I try to point out to them that almost EVERYTHING we have seen happen over the last 2 1/2 years in the financial and economic arena would have been (and was!) dismissed as "impossible" just a few short years ago.  And yet with our political and financial leaders on the exact same path to ruin, these people fundamentally refuse to accept that everything will STILL not be "business as usual" going forward.  This kind of denial of reality, honestly, to me qualifies as insanity, and yet it is THIS that passes as "conventional wisdom", while I am STILL labeled a "doom and gloomer" for trying to warn these sheep about what is most likely in store for all of us.

Where do these kind of attitudes come from?

Gully Foyle's picture

I recall this piece of fiction, can't remember from where but it goes something like this

A dective is hired ti find a man who went missing years before. The man had a fine life as an Accountant. He had a nice home in the suburbs, with a wife two children and a dog. He had a new car and the latest appliances. Everything was fine.

Then one day he just up and disappears.

Eventually the dective tracks the man down to a new city. He follows him and discovers he has a job as an accountant. He has a nice home in the suburbs. He has a wife and three kids. He has a new car and the latest appliances.

The dective decides he should confront the man.

One day he approachs the man and this is the story the man told

"I was walking to my car when a steel beam fell and damn near hit me. In that moment I knew I had to change my life. So I moved away without telling anyone and started a new one. I needed change".


Panafrican Funktron Robot's picture

I think the main reason I'm investing a portion of my USD earnings into physical gold has nothing to do with whether it "goes to $1300" or "goes to $2000" or "goes to $5000" or even "goes to $50".  I'm investing in it purely as a store of value, independant of what the dollar or yen or whatever other form of fiat is "doing".  If gold goes all the way down to $200, does that mean that the gold is worthless?  Or does it mean that the dollar is just that valued?  Just consider how massive a deflationary dump we'd have to take to get to that price, and just how valuable that trade would be.


Consider:  Gold went from roughly 1K down to 700 during the period of the stock market crash.  Dollar value loss:  30%. 

During that same period, the SPX went from 1550 down to 700.  Dollar value loss:  55%.

Now consider the 5 year trending:

SPX dollar value gains:  0%.

Spot gold dollar value gains:  300%.

So, yeah, pretending that the "gold bugs" are "crazy tinfoil hat guys" that can't be trusted, seems a bit, well, completely fucking stupid?

Gully Foyle's picture

Why Gold? Why not farm land? Rental houses?


Panafrican Funktron Robot's picture

I also own rental properties (mix of residential and commercial; primarily low-rent apartments, budget grocery, fast food, and cell towers) and own my own home outright (which includes 150 acres of farmland, not currently a working farm but easy to get it up and running with local labor/knowledge capital).  Physical precious metals is a significant component of my strategy, but not the only component. 

Burnbright's picture

It costs something to hold on to those things, plus maintance. Unless housing prices are going up its really not worth holding on to. Housing really isn't meant to be an investment, more of a cost of living.

Burnbright's picture

Excellent points my friend. The reality is it doesn't matter if it is deflation or inflation, its value is relative.

texpat's picture

Great stuff GG.

To all those calling for deflation: Bernanke can and has been printing trillions of USD at the press of a key.

Say I make $120k a year. $10k a month. $6k take home in 2 x $3k checks.

How much did Bernanke really print? Well, lets do the math...

I make that 166 MILLION texpat months of pay. W-T-F? Now, does that make ANYTHING more valuable???

tony bonn's picture

there is more truth and wisdom in this one article than can be found in most public libraries combined.

for those wanting a deeper understanding of the failures centralized planned economies such as that of the usa or europe or how healthy economies operate then read murray rothbard, antal fekete, von mises, menger, hayek, and of course adam smith.....

william black is superb on the regulatory failures of such stastist and bankster run economies.

and by all means own physical gold. they all laughed when i said to buy gold at 675 and they will still laugh when i say buy it at 1250....

mellmeister's picture

Great, concise essay. There is nothing wrong with owning both PM/hard assets and select stocks, a company that's actually useful to the public will always have an intrinsic value that will rise with (hyper)inflationary trends. One can trade the markets without supporting the bankstas policies.

cocoablini's picture

I would add for price appreciation, after the world is forced into a metals standard, that gold miners will do very well over the next 15 years with relatively low labor,fuel,supply costs and a rising gold price. The real price of gold(not a nominal comparison with fiat but a real comparison with assets) will go way up as it's the last currency standing. Any miner with a decent mineralization has money in the ground, and only they can get it out. Average cost to get gold ounce out seems to be around 4-6 hundred an ounce. But if gold goes to 2000 that's 2x to 3x profit margin. NO industry is going to pull that off unless it's Apple selling iGold. Juniors to outpace Senior HUI stocks sometime next year as people realize that HUI stocks have been dicking around in the hedge markets for a decade...

velobabe's picture

Gordo, thanks.

just wanted to say how i would spend hours reading posts and comments. i can't multi-task to comprehend anything that all of you ZH authors write.

now i am embarrassed when cheeky said this: this article should be read to all children ages 3-22 every day in kindergarten, elementary school, high school and college.

i can't read and understand anything that you wrote. and i received a BA.

any way.

master bates just ruins it for me. he seriously lowers the value of content of this thread.

i know i don't have a damn thing to add to any conversation, but i admit it.

wish i could learn to read the charts.

Burnbright's picture

Well as far as I understand the chart describes % of debt in both public and private combined (amount owed by individuals and federal/state governments) compared against GDP, or gross domestic product, which is a set of calculations. GDP = private consumption + gross investment + government spending + (exportsimports).

What is far more frightning about that graph imho is that even with debt to GDP that high it is still higher in reality. It has been stated several times, at least from what I have read, that 70% of GDP is based on consumption. GDP is highly manipulated to reflect large numbers to give the impression of economic growth when in fact GDP allows expendetures to be calculated in, giving incentive for countries to do like China does and build empty cities etc in order to increase GDP figures.

sgt_doom's picture

Sorry, Gordo, you almost got it right, but you are definitely making progress (just please try not regurgitate everything you've read elsewhere --- be a bit more analytical, if you please, sir!).

It's the securitization, Gordo!!!!  Began back in early 1900's, led to the Great Depression, then began anew in the 1970s, going whole hog in this past decade (it's how we ended up with all those Debt-Financed Billionaires, big guy!).

From the site below:

"Securitization: borrowing backed by securities or the transforming of debt into securities.

Samuel W. Straus is credited with originating the first mortgage security with a senior claim, circa 1909.

Over the next two decades (1910-1929) the securitization of mortgages became quite popular, although second liens rendered these financial instruments fragile, with the Great Depression removing them from the table.

Securitization of mortgages began anew in the 1970s, with the US government-sponsored National Mortgage Association and their “Ginnie Mae passthrough.” These mortgage-back securities (MBS) have grown enormously since then, as evidenced by recent years’ publicity correlating to the economic meltdown. [1]

A frequently misunderstood, or ignored, circumstance, is that the greater the debt, the more numerous or greater in number the MBSes; hence all those zero-money down mortgage loans. (Please remember – debt is everything!) "

Please pay close attention to that last sentence, and you will begin to understand that the securitization process IS the primary cost driver in EVERYTHING, be it housing costs, student tuition costs, auto costs, infrastructure costs with all those public-private partnerships, healthcare costs, etc., etc., etc., ad infinitum.

Understand this, and you will begin to fully comprehend fantasy finance!

Peace and joy....

Gordon_Gekko's picture

As I mentioned in the article, I wrote it keeping my audience in mind. Yes it might be a tad simplistic, but that was the intention. BTW, what you are mentioning is just an effect of the corrupted monetary system, which is the source of all the rot.

akak's picture

"...what you are mentioning is just an effect of the corrupted monetary system, which is the source of all the rot."

An excellent and FAR too ignored or unacknowledged point!

The corruption of money is truly the root of all financial evils.

Burnbright's picture

That's what so few seem to grasp, the means are the ends. You can not have an objective market when the creation of money as a unit of bartering is subjective. Subjectivity is what causes the ultimate corruption.

cocoablini's picture

Hi Gordo-

great post and congrats on your first "assignment"

DollarMenu's picture

Thank you GG.

I always enjoy reading your postings,

this is a real treat.

jmc8888's picture

Great stuff. I do see how gold can tumble, as I and others have stated many times.  But I've always prefaced it with the fact that we're doing everything opposite of that, and barring some major epiphanies or totally new regimes from elections, we are set on a course.

Gold/Silver is pretty much the best protection, but it doesn't protect against everything.  Buy gold, but know the drawbacks and what could trigger them.

Gov't can change things, but only when 'we the people', demand change.  Real change.  1st one is to get off our imperialist monetary system dictated through the Fed and their owners.  The Queen of England and her monarchical ilk.

So we must change alot, or the course will more or less be the same proving Gold/Silver a very wise investment.  But Glass/Steagall could change that.  But you WANT that to happen.  Because you'll be better off in a society that is based off the real economy, rather than timing gold right in the fiat economy. 

Besides, since the U.S. is the only one capable of switching to a credit system (initially), the value of gold in dollars would definitely deflate, but in terms against other fiat currencies that would still be in existence at the outset, (since we're using a British/European system they'll be much slower to change until we force them to), would rise tremendously.  So if you wanted to play that game, you'd still have the opportunity, for a while. 

It will be very interesting to watch what happens to those holding onto the toxic debt and derivatives, after we've cast them into the wind.  That's what will force Europe to stop their game.  Especially when they see how switching benefited us.

But until then, we will all surf the crazy waves, and pretend not to notice that we're in a wave pool with manufactured waves.

The author talked about how Vietnam forced us off the gold standard, and I just wanted to go a little bit more in-depth.

You see in WWII Japan was taking over Asia.   Vietnam, Cambodia, Burma, Laos, all that area was known as the Burma Triangle.  This area was pre WWII controlled by France and the U.K. as imperialist colonies.  During WWII the U.S. and Ho Chi Minh fought alongside each other to rid this area of the forces of the Empire of Japan.

When WWII was over, we were going to end imperialism.  That was to be U.K.'s and Frances penalty for starting WWII, and our help in finishing it and saving their asses.  But FDR died, and in place came idiot Truman.  (like the truman show). 

We were going to give Vietnam and everyone else their independance from Britain and France as every country would have the right to govern itself. 

That's what FDR was going to demand and receive.  Because FDR knew it was imperialism that caused WWII, and that it was imperialism causing strife that leads to civil wars, etc.

But idiot Truman was way over his head.  The monetarists also decided to use the atomic weapon needlessly (as we never were going to, nor need to, invaded Japan D-day style to win....they're an island nation that cannot survive without IMPORTS....hello BLOCKADE!!!!!!) and convinced Truman to use it to showcase that the monetarists had the bomb, and the communists didn't.  That's why we nuked Japan. As a warning to the Soviet Union in the post-wwII world.  Which of course merely caused the Soviets to research it and start an arms race.

Anyways, so Ho Chi Minh thought they were going to get freedom. 

Instead, after WWII, Truman had our guys let Japanese soldiers out of their internment camps there, and told them to retake the area.  So we turned our back on Ho Chi Minh, for England and France's imperialist concerns. 

We saw what happened with France, they waged their own Vietnam war for many years.  Then we came.  To fight the guys we helped fight with to liberate their region.  Now we came again, but as conquerors.  Conquerors for imperialism. But we weren't being controlled by FDR, we were being controlled by the Queen through Truman.

Only an IDIOT, a VERY BIG IDIOT, does not see the connection between economic imperialism screwing vietnam, and ho chi minh deciding to give us the finger and joining the other side, communism. In fact many can see communism as an outgrowth of anti-imperialism.  That Russia turned communist, in order to, combat imperialism.  Sadly they just needed to go to real capitalism, (not our crony imperialist version).  But since we were 'capatalists', and joined in with 'monetarists', how could Russia be anti-imperialist, but take on the same ideology that allowed them to bow to the monetarists? 

Because that's what the cold war was about.  Not U.S. vs. Russia like the idiots thought.  It was Imperialism vs. Communism.  Except somehow we were made the monkey in the middle.  Even though it really didn't concern US.  Without the U.S. lending credibility to MONETARISM, there would probably be no major communist nations post 1918.  But 1913 was when we passed the fed, and in 1914 the imperialists started up their nice WWI, a monetary war, to crush Germany..who wanted to become like a pre-fed U.S. economy (crushing britain's imperialism). 

Then the debt that was incurred from WWI and the reparations, CAUSED the economic strife the led to Hitler and WWII.  So in reality WWI and II are connected through IMPERIALSIM.

So again, France pulled out of Vietnam after the battle at Diem Bein Phu, and we went in to help france and thus the entire imperialist system.  In doing so, we spent alot of money.

Then France and U.K. decided to screw us for helping them and started exchanging en masse our deficit dollars for gold.  Which then caused Nixon to get us off the gold standard.  Because they never wanted Bretton Woods I, FDR MADE THEM DO IT.

So as you can see quite clearly, it was a scam job from the beginning.  Our bretton woods II system was dictated TO the U.S. by the monetarists in every way, shape, and form.  We bought it like the fools we've proven to be since.

We help them out, they get us off the gold standard.  Then we all see how debt and derivatives have taken us since then.

Great article.

We need to know enough to get off this imperialist boat.  Instead of everything we do being used against us.  Even though 'no good deed goes unpunished'.  We need to stop the monetarists from being able to play that game over us.  We can. 

We never ruled post WWII world.  We just gave credence to the orders from the real imperialists.  After all, if we ruled the World, why did we drop the nukes (remember it wasn't fdr but a clueless before FDR's death of the Manhattan project TRUMAN who made the call)?

Why did we keep imperialism alive? Why did we go in for France in indo-china? Why did we get forced off the gold standard?

It's simple, because the monetarists never lost control other than when FDR was in office.  That's it.  I guarantee the world would be a much different place if FDR would of lived 2 years longer.  Of course much supposition but still it would have been clear had we made the break we were about to through seeing the other side, on how bad a deal imperialism is.  Which we weren't able to fully do after WWII, because FDR died, and Truman was an idiot. 

I loved the movie Wall Street, even did a nice college paper on it.  It was such a foretell of things to come.  We are now a nation of Gordon Gekko's who think this is the only way to run business is the gordon gekko way and we all must do it to the nth degree.

It's why I understand fully the only way out is with a CREDIT system.  It's also why I've latched onto the best realistic, non-groupthink, non-self limiting behavior ideas that Lyndon LaRouche has put forward.  Not because he's 'the man' or anything.  I know full well what the MSM and CNBC and the like have said about the man my whole life.  I just know what he says makes sense to the fullest.  I give no man a pass, not even LaRouche.  But I haven't seen anything I would even remotely think I needed to give a pass to him about.  He's right.  Pointing to derivatives, floating exchanges, imperialism, Queen of England, and all the other things.  He's right.  Because he's right. (and for the layman he was a financial forecaster in the 1950's, and has had his finger on the important issues ever since).  Imagine being on ZH for ~15 years before Bretton Woods II was adopted, and that is LaRouche.  I love ZH, I love all that give the straight information, and look objectively. 

We must implement LaRouche's Four powers plan.  We must switch over to a credit system.  We must start building our real economy again.  We must put the world through a glass/steagall reorganization.  We must fund fusion. We must fund space travel.  We must fund the things that prevent the scarcity issues from occurring. 

We can chop down all the trees, and say now we must have austerity.

Or we can decide to plant new trees as we're cutting down other ones, so that we don't have to face UNNECESSARY austerity. Or better yet, find some alternatives to wood, like steel, or iron and thus you don't even need to cut down so many trees because you have alternatives.

Helium 3, iron ores, anything pulled from the earth that we use as a commodity, can be pulled from an asteroid, a moon, a rocky planet, a gas planet, etc.  Only idiots will deny this, let us use all our resources, and say we couldn't avoid it.  We only got 1 shot at this, let's get it right, eventually, before it's too late.  (also the concentrations are different on each planet/moon/etc).   So whatever we are scare of here, there's a body out there that is far more abundant than Earth ever had of it.  Like H3 and the moon that Obama says we shouldn't go back there....because Obama is an idiot....not because there isn't H3 there, or it doesn't make sense to do training runs and learning about living off world...3 days away from earth with our ballistic trajectory vehicles.  No Obama doesn't think it's necessary, because he is a idiot monetarist, and the sad thing is he's probably less of an idiot as most monetarists, but idiot nonetheless, with very dire consequences.

I dare Obama to veto Glass/Steagall.  Because who do you think is blocking it? (don't worry the fake republicans would be doing the same)


depression's picture

Nicely done GG !

The physical market is where the rubber meets the road in the PM sector.

These new paper products (GLD and SLV), are doing a grave dis-service to the American public.

GoodBanker's picture


- Jesse has been posting these analyses regularly. I would search his site's archives for further information. Best of luck,



mkkby's picture

We won't get hyperinflation as long as every country is debasing their currency.  As the weaker sovereigns all get in trouble, the US dollar will stay strong on a relative basis due to the flight to safety trade.  That is short to medium term.  Long term is anybody's guess.  China will become the reserve currency... only then is the dollar truely doomed.

I do like physical gold, but I don't like that it's illiquid.  We all agree the markets are rigged.  When somebody drops gold, I can't get out fast enough, and I don't want to lose 3/4 of my money if it goes back to $300 for a few decades.

PS -- Johnny Bravo aka Master Bates --- will you please go away and stop your annoying trolling?  We all despise you.  Get a job or something useful to occupy yourself.



PhD's picture

The hyperinflation will come as soon as the government kills the last remaining domestic industrial production combined with the implementation of protectionist policies.

GGs predictions is spot on in my opinion, however i do still belive it may still be some time before the plunge.

Most probably the spark will consist of the government bond issuance crowding out the private issuers, giving rise to a rapid funding crisis preventing any continuation of production.

The answer to this will be obvious, more government and import restrictions to protect the remaning industry.

If you dont own any gold when this time comes, consider yourself screwed, blowing your brains out might be your best option.



have fun

JW n FL's picture

First of all, let's talk about debt. While leverage works well when things are going up, it obviously magnifies problems when things are going poorly. In some sense, assets are contingent, but debt is forever. Here in America, total debt compared to GDP now stands at around 280% to 300%. (By definition, these numbers are estimates, since it's impossible to arrive at a precise figure, but the latter is not needed in order to get the gist of what's going on.)

This is the highest debt-to-GDP ratio that the country has ever seen. By my calculations, as we exited 1929, debt-to-GDP was about 200%, though it did rise pretty dramatically while we were in the Depression, to about 300%. But by 1950 or so, the debt-to-GDP ratio came in at about 150%. It rose to some 220% in 1990. So obviously, our current ratio of total debt outstanding to GDP is the highest it's ever been (the Depression excepted).

onlooker's picture

I started buying gold and silver in 1997. I have bought a little more on pull backs. I bought silver clad because it is a functional US coin with a silver value attached, and reasonable. I liked gold during the days the stock brokers were saying it was a bad investment. Today, I may buy on a severe pull back but not now. If you do buy, buy from a trusted dealer. There are fake coins in play now, some may come from China? Some of the coin guys use a diameter, thickness, and exact scale to try to detect bad coins. The value may explode upward but it will have to overcome the groups that would like to hold value down or avoid delivery. If governments are involved, this may difficult. In the event that it does get away from them, the gold bug will be the smartest man in the room.


RARE EARTHS. I read of a forced short of these materials by China. I wonder if this may be the gold and silver of the future. Appreciate any opinions or blogs/information.

RockyRacoon's picture

Your "silver clad" wording might be a bit confusing to some.  There are some 40% silver coins after 1964, but 1964 and prior were all 90% silver.   I assume you mean pre-1965 90% coins?

You can use this to value all coins that contain any silver/gold whatsoever:


I print out copies of what is pertinent before I visit a seller.  As a member of the American Numismatic Association (listed as a dealer) I get calls from people who want to sell and get my contact info from the ANA.  I've met some wonderful folks in my travels.

Gully Foyle's picture

I think the same article claimed China wanted to force everyone to buy their own rare earth produced items, like Solar panels. Instead of selling the materials for production elsewhere.

DoChenRollingBearing's picture

Rare earth metals are of great interest to me as well.  I can only find scattered information about them.

Apparently no one here in the USA can refine them.  An opportunity?

aerojet's picture

I can summarize this for you:

The MSM cannot be trusted, only the Internet holds the truth, so buy gold.

Or maybe just "buy gold, bitches."  No real evidence presented, mind you, just the same tired crap about Bretton Woods and 1913 and all the usual horseshit.


sheeple's picture

Very nice post thanks

One question for Gordon Gekko: Many I talk to still believe in "the system"; also, alot of my colleagues still believe in "MBA" and "Quant Fin" going forward (laughing at me on talking science and engineering), whats your take?