The Fed's Nemesis: Exter's $2 Quadrillion Of "Liquidity"
Another representation of what will likely become a prevalent topic in upcoming days: the Exter pyramid. When the system works, the various layers are in equilibrium. When the system is broken, like it is now, the Fed and all Central Banks try to refill the pyramid from the bottom-up with every single dollar they print. The current temporary calm is all Bernanke can hope to achieve before $2 quadrillion of liquidity collapses onto whatever truly tangible assets exist. They don't call it a pyramid scheme for nothing. And by assets, we are not talking about the crap that the Fed collateralizes against in its Discount Window and Primary Dealer Lending Facility taxpayer handouts. And for the goldbugs: $2 quadrillion (mythical liquidity) collapsing into $2 trillion (hard assets): can you spell $1 million an ounce of gold? (Because even S&P would likely rate any company with 1000x book (imaginary to real asset ratio) at most an AAA-...Maybe)
It is starting to get interesting.
(6 votes)
on Mon, 11/09/2009 - 00:08
#124329
T.D.?? You be a sick fu**in machine.
Iiiiiiiiiiiiiii like it!!
"MARK IT ZERO, DUDE"
on Mon, 11/09/2009 - 09:06
#124531
Fellow Humans:
I quote Hans-Hermann Hoppe:
“A state, in accordance with generally accepted terminology, is defined as a compulsory territorial monopolist of law and order (an ultimate decision maker). “
(“On the impossibility of Limited Government and the Prospects for a Second American Revolution”
http://mises.org/story/2874)
In those rare moments in history where a group of people have won their freedom and attempted to preserve their freedom for future times and generations they have resorted to various means to try to preserve it, as history records: monarchy, democracy, oligarchy, and so on up to the 18th century when a minority of Americans tried using a republic with strictly limited powers as granted in a constitution. Any such endeavor that grants a territorial monopoly of law and order must ultimately fail. (Failure in the sense that it must sooner or later cease to be efficacious in preserving life, liberty and property of the people in general and become a tool of plunder by the few against the many).
To be brief: the characteristics inherent in a monopoly of this sort ultimately create the conditions for that failure. The natural laws that govern human action will always lead to this failure, given the starting condition of monopoly that meets the above definition of a State. Its being as such a monopoly, over time, will naturally attract the minority of individuals who consider taking from others through force or fraud a preferred survival strategy. The early stages of their aggressions take on various forms of deception that have become more sophisticated though history, leading of late to central banks, fiat currency, grants of economic and business privileges and so on. In earlier ages religion was often used but that trick is wearing a little thin by now. Eventually as the non-parasitic class becomes aware of the nature of the deceptions and how it has been enslaved, (and eventually it always will happen given the human power of reason, learning and communication: hence the state's perpetual war against reason, learning, and communication), the system enters into its final stage that America is quickly approaching: overt despotism, and open aggression, being unable to exploit by deception any longer.
Many American Colonists reasoned that they needed some kind of minimalist state in order to survive in a world populated by other aggressive states, not at that time in history being aware of how a strictly voluntary system of exchanges amongst individuals and groups could arise and long endure to solve the primary needs of individual and group security and justice. As is always the case, along side such individuals were those who viewed aggression and deception as a preferred way of life and saw the forming of a state as their opportunity. The dynamic of these two forces, the subsequent struggles that ensued, in the formation of and subverting of the United States is a fascinating study, or as is often said: “ the rest is history”.
For those who want to understand how to form a viable, strictly voluntary contractual society may I suggest they study Ludwig Von Mises, Murray Rothbard, and Hans-Hermann Hoppe as a good starting point.
We are at a very exciting moment in human civilization. The State and its thus empowered despotism has never been so vulnerable in known human history. The understanding of how to end the “State” and what to replace it with is well developed. Once the appropriate manifestos/declarations ( I suggest “the Manifesto of the free” as a possible title) are properly formulated and globally communicated in a readily digestible form we could see the rapid, total collapse of State-ism similar to the mostly non-violent collapse of Communistic Eastern Europe and the Soviet block. Given an intact internet This could sweep the planet in a matter of weeks or months.
To put it simply, for we who wish to be FREE, the foundation has been staring us in the face since the beginning of civilization:
VOLUNTARY EXCHANGE.
To all the States of the world and their allies, let the proclamation sound: All those who initiate aggression or use fraud are declared illegitimate. Your system rests upon that which cannot and ought not to endure. You will no longer be obeyed or served. You who have lived by plunder will plunder us no more. Make restitution and go in peace, or face the consequences of open aggression against your moral and just teachers.
Friends, it is high time that we figuratively fight like “warrior poets” and win our freedom! Let those who stand with me against aggression openly declare to each other”
“I AM FREE!”.
on Mon, 11/09/2009 - 10:07
#124587
We are at a very exciting moment in human civilization. The State and its thus empowered despotism has never been so vulnerable in known human history. The understanding of how to end the “State” and what to replace it with is well developed. Once the appropriate manifestos/declarations ( I suggest “the Manifesto of the free” as a possible title) are properly formulated and globally communicated in a readily digestible form we could see the rapid, total collapse of State-ism similar to the mostly non-violent collapse of Communistic Eastern Europe and the Soviet block.
I agree completely. The state is collapsing of its own weight. The transition will be quite dangerous and advocates of liberty must be vigilant; oligarchy would naturally give way to dictatorship. Liberty could be about to break out all over, and it is very exciting. We are making history. I allow myself to be encouraged by the willingess of the middle-aged middle class to demonstrate against their own destruction at the hands of the oligarchy.
Note to all: do not be content to witness history. Make it.
on Mon, 11/09/2009 - 13:19
#124848
I AM FREE.
on Mon, 11/09/2009 - 10:46
#124630
'lived by plunder' - describes post-WW2 US imperialism perfectly...
on Mon, 11/09/2009 - 00:14
#124335
Who says the system can't be fixed? A little flour, water and USD fiatzos, paper mache can fix it right up.
on Mon, 11/09/2009 - 00:34
#124349
the picture says 55 trillion words...
on Mon, 11/09/2009 - 00:35
#124350
Sorry,
but $2 quadrillion divided by $2 trillion is 1000.
How do you calculate a gold price of $1 million per ounce out of that?
on Mon, 11/09/2009 - 00:47
#124358
Not 2 trillion ounces; $2 trillion
on Mon, 11/09/2009 - 01:25
#124384
$1000/oz * 1000 = $1,000,000/oz
on Mon, 11/09/2009 - 07:54
#124495
Thanks, got it.
on Mon, 11/09/2009 - 04:55
#124440
manic irrational overshoot of course
on Mon, 11/09/2009 - 00:42
#124352
So my one ounce American Buffalo coin will make me a millionaire.
Two weeks ago I stuck my whole 401k into our Stable Value Fund to avoid a market collapse and I can't make changes until late November. Did I make a boneheaded move? Is the market going to have a crash up?
on Mon, 11/09/2009 - 08:27
#124504
If the investment remains stable but the value of the dollar declines, you lose. The problem with most 401k providers is they don't offer an investment option that can avoid a declining dollar, so in essence your screwed.
As was touched on here recently, even with the market going up the fact that the dollar has declined means the gains were partially offset by the loss of the dollar. This is what gold / PM's are saying.
on Mon, 11/09/2009 - 09:08
#124532
The problem with ALL 401K providers is that the 401K is a vehicle for making THEM money!
on Tue, 11/10/2009 - 08:15
#125695
"So my one ounce American Buffalo coin will make me a millionaire."
And a million dollars will get you your pick off the Mcdonalds value meal menu.
on Mon, 11/09/2009 - 00:46
#124356
GOLD BITCHES!!!
I am Chumbawamba.
on Mon, 11/09/2009 - 05:14
#124451
Like I tell my sister, If you're gonna be a bitch, GOLD is the best kind to be. :-P
(PS: Who are you again?)
on Mon, 11/09/2009 - 00:48
#124359
I guess this is because AU is at $1k already.
on Mon, 11/09/2009 - 00:52
#124364
This is bullshit, and goldbugs are tiring. I hear you re: gold as an inflation hedge, etc, but ultimately if you are thinking about the apocalpyse, you want to own copper and oil, marlboros, guns, etc, not this crap. A world in which gold costs 1mm per ounce would be so degenerate that you probably wouldn't survive anyhow.
on Mon, 11/09/2009 - 09:18
#124543
Dingggg!!!
It's mainline news.... IE Sludgereport..... its a suckers market now.
I'll trade you a case of Rem 223 rounds for a two bottles of Walker.
See... the apocalypse can be fun.
on Mon, 11/09/2009 - 16:30
#125110
Dayuuum! A case of 223 for just two bottles - they'd better be handles! I guess everyone has their vices.
on Mon, 11/09/2009 - 09:41
#124558
"A world in which gold costs 1mm per ounce would be so degenerate that you probably wouldn't survive anyhow."
What if you had an assload of gold? Bet you'd survive then, Non?
on Mon, 11/09/2009 - 13:21
#124853
Right on...ROTFL!
on Mon, 11/09/2009 - 10:10
#124593
You adolescents have watched "Mad Max Beyond Thunderdome" one too many times.
on Mon, 11/09/2009 - 13:14
#124838
Funny, I've been accussed of this so many times....never seen the move. I dont even know what the plot is other than extrapolating meaning from critisism...
on Mon, 11/09/2009 - 16:32
#125112
Family friendly, more heterosexually oriented Roadwarrior.
on Mon, 11/09/2009 - 15:54
#125070
Road Warrior.
on Mon, 11/09/2009 - 15:54
#125071
Road Warrior.
on Mon, 11/09/2009 - 01:07
#124372
By dividing the dollar value of both markets you got a ratio of 1000. Now multiply that ratio by the current dollar value of gold and it gets you $1M per oz.
on Mon, 11/09/2009 - 01:15
#124378
The earth doesn't look like it stands a chance in that picture.
on Mon, 11/09/2009 - 07:16
#124482
+1
on Mon, 11/09/2009 - 16:32
#125113
Shoot, the earth's not worried. When it has tired of us, it'll be rid of us in no time.
on Mon, 11/09/2009 - 16:44
#125129
Sure it does. $3000 a gallon diesel really cuts down on fuel consumption...
on Mon, 11/09/2009 - 01:38
#124390
I always wonder who the gold bugs think are going to buy the gold from them?
Other gold bugs?
Can you say bubble?
on Mon, 11/09/2009 - 01:53
#124396
It is really sad to see people who just dont get it, and who never will.
on Mon, 11/09/2009 - 02:18
#124410
don't be sad. be happy that there's people to take the other side of the trade. these people don't appreciate the advice anyway so let them be.
on Mon, 11/09/2009 - 09:14
#124540
That chart is designed to get idiots to take the other side of the $1200/oz. gold trade (or whatever the hell the topping out point will be).
on Mon, 11/09/2009 - 09:55
#124574
Then short it motherfvcker!
on Mon, 11/09/2009 - 07:37
#124492
you don't buy money....
on Mon, 11/09/2009 - 09:10
#124533
You don't pay a 15% additional tax on it, either.
on Mon, 11/09/2009 - 09:47
#124562
central banks our buying any gold they can get there hands on and hegde/pension funds own under 1% gold in there portfolio where can Gold go except higher. wait til the world finds out the most ETF and other paper Gold dont have the gold they say they have which should coincide with paper money being devalued unless its backed by AU.
PS perhaps u should get pyramid eye checked out and do some research! haha
on Mon, 11/09/2009 - 10:15
#124598
I always wonder who the gold bugs think are going to buy the gold from them?
Who was buying $147 oil? Who was buying real estate in 2005? Please come up with some better stuff.
on Mon, 11/09/2009 - 11:34
#124693
I find it interesting that any time someone disagrees with Gold, the Goldbugs come out. The reality is that a lot of other commodities have an actual use outside of peoples "perception" of it having value.
Does gold have any value outside of what people perceive its value is?
Who will be buying the gold from the gold bugs if the new reserve currency has nothing to do with gold. We will not be going back to a gold standard. Never happen.
on Mon, 11/09/2009 - 14:04
#124916
Who in their right mind would sell gold for paper money?
on Mon, 11/09/2009 - 15:08
#125006
"The reality is that a lot of other commodities have an actual use outside of peoples "perception" of it having value."
Well at least you are starting to understand why its so valuable.
Of course the statists will never go back to a gold standard. Fiat will remain the medium of exchange and unit of account. Gold is going to be demonetized. A store of wealth, or wealthy thing to store. You know, like the euro is planned to be. Gold marked to market, free.
on Mon, 11/09/2009 - 20:08
#125339
Why gold ?
Really, why gold ? Why not palladium or platinum ? or why not oil, rice, houses, food ?
Then also you can't eat gold ?
Because :
0. IT HOLDS LIABILITY AGAINST NOBODY
1. IT is scarce
2. IT is easy to store and transport
3. Quantity of IT can't increase more than 1-2% per year
4. There is enough of IT in circulation
5. IT is historically recognizable as store of value
6. IT is easy devise-able and countable
7. IT is not perishable
8. IT is hoarded by the banks
And because :
X. Any new paper currency will be based on Debt i.e. contract between two parties which can always be broken (and always is, always) AND it is half of the transaction of the full promise for stuff/work/etc.
Stuff (and gold for that matter) is the end, the final extinguisher of the debt.
Forget about gold-standard, it ain't gonna happen (and it must not happen).
The only solution is free market traded gold, unencumbered of the gov manipulation and used just as a store of wealth,
not like currency (or to be more correct - medium of exchange).
FYI (simplified):
money => unit of account
currency => medium of exchange
stuff,gld => store of value
on Mon, 11/09/2009 - 21:07
#125379
Again Harbourcity pyramid your missing the point central banks our buying gold for reserves when they start buying something else let me know until then get the eye checked out
PS get of your high horse (top of pyramid) cause the fall to reality can be quite painful!
on Mon, 11/09/2009 - 01:45
#124392
I always wonder who the gold bugs think are going to buy the gold from them?
Other gold bugs?
Can you say bubble?
I can say central banks--
It's already happening--
Slowly at first--then a quickening--
Then in a panic--
The other buyers will be squeezed shorts-
Also in a panic--
on Mon, 11/09/2009 - 01:47
#124394
I'll put my gold up against any worthless paper currency anyday, I don't know what I will buy but I do know you won't be buying anything if you don't own any.
on Mon, 11/09/2009 - 02:02
#124401
Maybe this is not the right place for this, but I am really interested to find out how the markets will respond to the health care passage through the house over the weekend. Market reaction and media spin. Should be fun.
on Mon, 11/09/2009 - 10:07
#124585
If a 10.2% U3 didn't affect the markets any, I doubt there's going to be any immediate reaction to the passage of the House bill. We might see more once the bill makes it through the Senate, and then whether or not the Supreme Court agrees that the government can force you to buy health insurance or send you to prison.
I've been seeing complaints on other blogs that this bill actually helps the insurance companies by dumping a bunch of new customers in their lap, so the reaction might not be as negative as some are anticipating--we might even see the creation of a "health care bubble" before the whole system collapses into insolvency.
on Mon, 11/09/2009 - 16:28
#125105
Thank you.
Anyone that thought the insurers and big pharma were not going to come out of this pus festival without a win is not paying very good attention.
on Mon, 11/09/2009 - 05:05
#124445
Here's the real problem.
The actual instruments are not the problem. Society can take care of wiping the bets clean. Poof! No more liquidity. No more of the "bad" liquidity.
That's not the problem.
The problem is the reason there is all that liquidity.
COMMISSIONS!!!!!!!
The gonifs who made all those bets paid good money to make them. They're going to want that money back.
And, guess what, it's that money that's parked in East Hampton summer homes, Fifth Avenue duplexes, etc. Getting that money back is going to ruffle the feathers of the very people who are stroking Larry, Ben, and Tim as hard as their little hands will stroke.
That's the problem.
on Mon, 11/09/2009 - 05:58
#124461
If anyone is inclined to believe that any aspect of the nature of things is changed by such formulations, he is being extremely credulous about numbers. The real facts do not change, whatever numbers we give them. We are living in an age that is dominated by setting sun vision. We should be looking for a new dawn where what we create that is real and tangible is the measure of a man or woman. What we add to society in a real, down to earth exchange between two or more human beings, where our hands actually touch, and we can see, hear, feel, smell and taste the sweat of one anothers labor, that might be something worth living and dying for.
Goldman and the FED, this government and all it's proxies, anyone who aids and abbets them, are not worth another single moment of our time. Do not labor for them. It is time to quit participating in the Lie. Quit your job, stop payment on all your bills, usury notes and help your neighbor do the same. Together we can end this farce once and for all.
on Mon, 11/09/2009 - 09:54
#124571
"...smell and taste the sweat of one anothers(sic) labor..."
easy on the eroticism there buddy. we're talking money here.
on Mon, 11/09/2009 - 12:30
#124785
"Quit your job, stop payment on all your bills, usury notes and help your neighbor do the same."
OK, but you go first. I'll start later...
on Mon, 11/09/2009 - 15:42
#125051
It is done.
on Mon, 11/09/2009 - 06:36
#124468
I do have a bone to pick with this representation though. Misc. Assetts seems to be misplaced on this pyramid. If those misc assets refer to the things of utility then they are the backbone of this pyramid; it's mirror image. If we are talking about money it is easy to build a liquidity pyramid. It is nice and inverse. A representation of assets, as things, usually of utility, that actrually matter, that make up our world, as mr duckweed says above has no shape. A representation of society is a regular pyramid, as our trusty dollar bill implies, and the shape of the future is yet to be determined, so any of those shapes are subject to change. Keep at it.
on Mon, 11/09/2009 - 11:34
#124704
I agree some assets are almost as good as gold.
Here's another one...
If the derivatives (blue) shrink and the "area" of the pyramid stays constant, should the broad & power currency illusions (yellow & green) grow?
After all we would hate for the pyramid to collapse.
on Mon, 11/09/2009 - 07:28
#124486
The "Audit The FED" bill was made toothless, so we have no nemisis.
Isn't that right, Lloyd?
BB
on Mon, 11/09/2009 - 07:33
#124488
gold is only worth what the market says it's worth. When you and your family are hungry and oz of gold may be worth a piece of bread. The real commodity is land, and more importantly farm land. This is why the gov't has effectively taken over Freedie Mac and Fannie Mae. They now own practically every mortgage in the US.
on Mon, 11/09/2009 - 08:40
#124510
When it comes to protecting your wealth from the hugry collective and the ravenous crooks, you make it obvious why gold > land. The G owns the land.
on Mon, 11/09/2009 - 08:54
#124525
Uhh look at Zimbabwe,
Title: Gold for Bread
http://www.youtube.com/watch?v=7ubJp6rmUYM
1/10 gram of gold per loaf of bread
about $3.50 per loaf as of just now.
on Mon, 11/09/2009 - 09:54
#124570
No, that's placer gold (80-90%) and in granular form, so it trades at a discount to bullion.
The price is ~$2.50 a loaf.
on Mon, 11/09/2009 - 16:49
#125139
Unless you buy that farmland now on credit, sit on today's cheap god until it pops, and then use it to pay off the farmland and be debt free.
Gosh, that gold just got kind of useful in your scenario, huh?
on Mon, 11/09/2009 - 07:36
#124490
WOA!!! hey folks, don't you realize that if such an event should ( God Forbid) happen, you had better be on a spaceship where the mobs can't get at you. If such a thing should happen there would be a world wide mob scene...where do you, pro or con gold folks, think you can hid your butts let along your wealth? EVERYTHING would STOP, there would be no food to buy with the gold in the trunk of your car. This in NOT a football game or a TV show, yet I read over and over this " I am detatched" attitude from the mess. Can goods, folks, can goods...I'll sell ya can of beans for an ounce of gold...see how fast you run out of the stuff, and I'll still have can goods.
on Mon, 11/09/2009 - 07:44
#124494
The truth does not change according to our ability to stomach it.
on Mon, 11/09/2009 - 08:32
#124506
I live in a very special place that holds dear very special values. I don't share your vision of the future. I see civil unrest and even violence, but I do not believe that it will be everywhere. It really depends on what the people are made of. I live in a place where people rejected the Goldman Sachs version of America a long time ago. It's a place that most of America has held in contempt for a long time, but we have bedrock values and an unshakable faith and it will get us through, regardless of what your gods throw at us.
It's a place where you don't need a building permit to build a house and you can still build a decent (if not palatial) house for under $50/ft if you're willing to raise a hammer. I live in a place where people hundreds of thousands of people live with no debt and require very little to survive. We are fortunate that it is ingrained in the culture. I live in a place where when an illegal alien runs through a ranch, he is as likely to be fed as turned in.
Don't get me wrong. It's far from perfect but it is very special. I have no doubt that my neighbors and I will get by, regardless of how badly the powerful elite screw things up. Our future may look different but who cares. It's not really ours anyway. We'll adapt. We'll be okay regardless. I sincerely hope you will be too.
Oh, one more thing. The place is called Red Dirt Country. Lots of your neighbors are coming here now, looking for work. If you know anyone that comes, they'll be welcome here because that's who we are. We would appreciate it though if they would assimilate, respect our choices and way of life and try to fit in instead of trying to turn it into the bankrupt hellhole they just left. It may not look like much at first glance, but it's a very special place and I wouldn't trade it for anything in the civilized world.
God Bless.
Thanks. I'm done now. ;)
on Mon, 11/09/2009 - 09:58
#124576
Well, my family owns not one but several farms somewhere on this good good planet of ours. So if it really does get to that point, I think we'll be alright. Hell I'm sure we'd even be giving food out to people in return for labour or something, ahhhh.
To quote Stewie Griffin;
"It's good to have land."
or was that Lex Luthor? ??
on Mon, 11/09/2009 - 09:59
#124578
That's retarded. I have plenty of farmer friends who will gladly sell 16oz of beans for 0.1 oz of silver.
on Mon, 11/09/2009 - 10:47
#124632
And when your can-opener breaks and your little gold-free neck of the woods finds itself unable to barter free and fast enough to replace it, you'll be bashing the crap out of those cans with rocks in order to feast on the contents.
on Mon, 11/09/2009 - 12:45
#124802
When you run out canned beans, I'll sell you vegetable seeds and canning jars for all your gold. If you don't like it, you talk to my shotgun. Cheers!
on Mon, 11/09/2009 - 07:59
#124499
This weekend's commentary has been heart warming and terrifying at once. It has transcended money and politics and is veering toward philosophy. Great stuff! It keeps me sane.
I understand the merits of gold. Number one being it is finite. I own some. But I have to agree with Blindfaith on this one. Gold may very well be the best store of wealth there is but wealth is a rather abstract concept itself. Wealth represents access to resources in the future. Who the hell knows what the world will look like or value years from now. I do know that power trumps money every time.
on Mon, 11/09/2009 - 08:49
#124518
my .30-06 at 800 meters versus you driving your non-armored suburban to Idaho with a pile of gold coins in the back...my gold will cost precisely $1/round.
on Mon, 11/09/2009 - 10:00
#124580
Clearly the captcha has to be cranked up...
on Mon, 11/09/2009 - 11:31
#124697
When you see looters hanging from the trees with signs around their necks you may (may) just be smart enough to figure out that your tactic won't serve you for very long.
on Mon, 11/09/2009 - 13:10
#124833
800 meters? Good luck with that, parasite. I look forward to shooting people like you in the face.
on Mon, 11/09/2009 - 10:50
#124636
I take care of a family member (94) who owns 160 acres of farmland in Iowa. We talk about todays events and I tell him that he is one of the smartest men I know. he says he saw the homeless and hungry in the depression and knew it would come again. I can hunt and fish there and if his kids don't sell out I can live there through this coming mess. The beans and corn will at least pay the taxes if a market survives. And for those of you who understand what the " ditch " is, any govt people who come by will also have a place to sleep.
on Mon, 11/09/2009 - 11:07
#124660
All this waiting for the 'end times' yet, tomorrow is always tomorrow.
I don't know when ZH became a gold- bug site, I yearn for the days of HFT ...
on Mon, 11/09/2009 - 11:33
#124702
Right on. Tomorrow never comes. Oh wait, nevermind.
on Mon, 11/09/2009 - 12:05
#124744
false. keeping track of all assets is critical when one evaluates whatever is left of capital markets and the Fed's and the administration's response in "stimulating" them. After all, most of what is done on ZH is constant brainstorming.
on Mon, 11/09/2009 - 13:24
#124857
+100
on Mon, 11/09/2009 - 12:43
#124798
+1
on Mon, 11/09/2009 - 11:49
#124726
Tyler,
The term "pyramid scheme" generally refers to a pyramid with its long base along the bottom. People entering the pyramid feed those at the top drawing benefits.
Your pyramid is inverted, and top-heavy (granted), and prone to toppling or to collapse. Indeed, the process has already started and gov't is essentially powerless to reverse it.
The process of collapsing $2Q in paper onto real assets (1/1000th value) is essentially a deflationary process, not an inflationary one, yet if I read you correctly, you are implying an inflationary expectation.
If we were talking about $2T in assets then perhaps we could talk about an inflationary outcome, but the prospects of $2Q collapsing is not one where a gov't printing press has the capacity to produce enough inflation to reflate the system.
One of the things inflationists may be missing is that we live in an age of intentional monetary insufficiency. Reserve requirements have been cut to nearly zero for many years. Most reserves are probably held at banks, and are limited to vault cash on hand.
A national run on banks would quickly deplete actual cash reserves, and the federal banking system would have to ration cash by limiting withdrawals. In America? Sure--it's only a matter of time.
If you want to know what outcome the system is expecting, take notice of their leverage ratios. Higer leverage ratios imply we are heading for collapse across the board.
Cordially,
on Mon, 11/09/2009 - 12:54
#124812
I guess you would call the Argentinian collapse "deflationary" too, eh?
I'll have you know that the Argentinian Peso was trading to a premium to the dollar BEFORE the collapse.
Intentional monetary insufficiency was NOT, it seems, sufficiently capable of preserving the value of the Argentinian Peso during the collapse. And yet, you argument for an increase in dollar purchasing power persists. WHY?
No Non-Gold standard FIAT currency has EVER appreciated in the History of the world during repudiation or financial collapse. NEVER, EVER, NOT ONCE.
What's that you say...
Oh, I see. This time... IT'S DIFFERENT.
Sorry, my mistake.
on Mon, 11/09/2009 - 15:55
#125072
This I agree with but Fiat currency is meant to crash. It is based on infinite expansion which obviously has to end at some point.
My problem with gold is that like any form of speculation, it is based on perceived value. The gold bubble doesn't exist now but those who go into gold (not necessarily a bad decision) need to plan the bubble and therefore plan for an exit strategy as it will become a speculative trend and thereby eventually pop.
NOTHING in life is a universal truth, even gold. With any "investment" you need to plan for who is going to buy it so you can "realize" the gain. Sometimes its better to sell before the peak if when it hits the peak there are no buyers left.
on Mon, 11/09/2009 - 13:29
#124862
It is a mega-deflationary depression in terms of Gold, not the dollar.'nuf said.
on Mon, 11/09/2009 - 15:29
#125031
EXACTLY!!! We have had this conversation at my firm - Inflation vs. Deflation. The problem is, at it relates to the US Dollar (and many other currencies), the change in prices (not values) will seem inflationary for some things (food) and deflationary for others (housing).
In relation to Gold, it is ALL Deflationary.
on Tue, 11/10/2009 - 14:12
#126117
Are you saying the 2Q disappears, or the 2Q starts to chase after real assets?
on Mon, 11/09/2009 - 12:56
#124813
Indeed, this does not prevent gold from jumping in price, but inflation does not seem very likely. All the paper currency would be eradicated in an attempt to pay off all the trash. Inflation occurs when money become less valuable. Deflation is when it becomes more valuable.
This would create a scarcity of money, thus insuring it greatly increases in value. Gold would increase in value, though whether it would actually increase in price is another matter since it is priced in currency.
The dollar bubble has been over half a century in the making and a popping of that bubble would be deflationary.
on Mon, 11/09/2009 - 14:17
#124930
its killing time
on Mon, 11/09/2009 - 16:07
#125085
Interesting debate here but the anti-goldbugs appear to focus on the worthlessness of gold in a complete global apocalypse. Uh, okay, if the scenario is Mad Max I guess gold isn't worth anything. Guns, petrol and canned food time. But is that the only or even the most likely scenario? If China, India, Russia et al create a new global reserve currency that is based, say, 50% on gold, and you'd like to be able to move to some foreign land and Start Over, wouldn't it be good to have some stuff you can transform into this new currency? There's more than one possible outcome and contingency plans should have more than one dimension.
on Mon, 11/09/2009 - 16:29
#125107
Voluntary Exchange, nice section about attempts to preserve freedoms in a republic with limited government, but history records plenty of predecessors. The American case isn't helped by pretensions to uniqueness. Venice, Holland, and a host of ancient Mediterranean city states had limited governments and enshrined rights for citizens.
In the modern world, the Swiss Confederation is probably the most interesting and thorough-going republic of limited powers, and a couple of centuries older than the US.
Just saying....
on Mon, 11/09/2009 - 16:37
#125118
How's the Nukes comming along?
on Mon, 11/09/2009 - 18:03
#125241
I saw a van pull up to Costco which was then entirely filled with cigarette cartons. I mean a full van. How long do cigarettes last?
on Mon, 11/09/2009 - 18:11
#125248
May be hard assets like houses are actually worth much more than what the market prices them right now. Time to buy real estate?
time123
admin: http://invetrics.com
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