This page has been archived and commenting is disabled.

On The Fed's "Stunning" Finding Of Gold As An Inflation Predictor And The Subsequent Cover Up [Laughter]

Tyler Durden's picture




 

The WSJ has an adorable article titled "The Fed's Laugh Track" in which it has done a word search for "laughter" and come up with some amusing results. Of course it would be far funnier if the WSJ had an article disclosing all the conversation transcripts between Jon Hilsenrath and the various Fed's presidents and executives. We won't hold our breath on that on. We would, however, like to present one of tha laugh tracks that the WSJ conveniently decided to drop. Not surprisingly, the topic of that particular transcript disclosure is, well, gold.

To wit, from the September 22, 2005 meeting transcript:

CHAIRMAN GREENSPAN. Several years ago I recall that we ran a correlation with the gold price against levels of inflation. We actually came out with some forecasting capability. Has that been rerun in recent years?

MS. [Karen] JOHNSON [(PhD. MIT, 1973)]. Not by us.

MR. STOCKTON: Not by me. I think we did that at your request. [Laughter] And we were not so convinced by the evidence that we’ve maintained that particular series for forecasting.

MR. REINHART. I think you actually alternated your requests—asking each one of us in turn—and we haven’t updated that in a long time.

CHAIRMAN GREENSPAN. The problem is that it kept coming out, for reasons I can’t understand, with some information capability. The reason I raise it, as you know, is that we have a big, fat spike here, and I don’t know what to make of it.

MS. JOHNSON. Yes, a 17-year high. I volunteer to run the gold price. [Laughter]

CHAIRMAN GREENSPAN. Provided that you don’t tell anybody you’re doing it!

MS. JOHNSON. Right.

This is indeed funny, because if the current Fed Chairman had only deferred to his predecessor, currently advising John Paulson to buy up every ounce of gold available, and to this transcript, he would figure out that the 30% surge in the price of gold in 2010 predicted precisely why there was a surging food price-based revolution in Tunisia yesterday and why the CPI confirmed the biggest jump in inflation in 18 months, and why food prices and corporate margins are about to prolapse. He also would not be at all confused when he told Congress back in June that he doesn't "fully understand movements in the gold price."

That said, we are confident the Federal Reserve will shortly come out with a statement that the first POMO/money-printing, pardon, monetary base-printing, driven revolution in Africa would have been much worse in the absence of QE2, and that Tunisia was really revolting against the possibility of deflation many years down the line.

As for Ms. Karen Johnson's kind suggestion to "run the gold price" we can assure her that she will not have to. After all CFTC just made sure that JPM will be able to continue to do that indefinitely [Laughter].

h/t Paul

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Sat, 01/15/2011 - 19:58 | 879186 traderjoe
traderjoe's picture

Thanks for posting that. I am in the process of removing my consent from the Ponzi, and will read further that site as time allows...

Sun, 01/16/2011 - 00:04 | 879441 Thomas
Thomas's picture

Read the original article: I am in the process of wiping the vomit off of my lap.

http://blogs.wsj.com/economics/2011/01/14/fed-laugh-track-can-we-borrow-...

Sun, 01/16/2011 - 09:57 | 879802 simonsito
simonsito's picture

i am feeling just like that...

Sat, 01/15/2011 - 23:21 | 879396 trav7777
trav7777's picture

bunch of tinfoil garbage...seriously.

There are elements of truth, but power flows from guns.

Britain was on the verge of being destroyed by Germany-how powerful were these titles and contracts?

The government has no title to your ass that can be enforced anywhere.

Sun, 01/16/2011 - 00:45 | 879478 ronin12
ronin12's picture

Agree -

Also at the end of the day, it's not the "law" that matters but how the law is enforced that matters.

Sat, 01/15/2011 - 14:48 | 878854 midtowng
midtowng's picture

Yes, it is very hard to understand.

The Fed prints mountains of money and makes real interest rates negative, and for some unknown reason, gold goes up.

It's so hard to figure out. After all, its not like you can eat it.

Sat, 01/15/2011 - 15:02 | 878861 benb
benb's picture

100% correct. You cannot eat gold. Also, silver is an irritant to the digestive tract.

Sat, 01/15/2011 - 15:12 | 878869 TheGreatPonzi
TheGreatPonzi's picture

Actually, you can eat gold. A French princess, Diane de Poitiers, drank gold nuggets all her life, believing it was the secret to longevity.

It is not a toxin for the body, however it has no effect and is not digested. It just tends to accumulate in certain parts of the body.

Sat, 01/15/2011 - 15:29 | 878886 benb
benb's picture

I stand corrected. Personally I cannot afford to eat gold like the princess. I haven’t the stomach for it…but on topic TD has brought up the point that the ‘experts’ and ‘officials’ act in the capacity of carnies to herd and throw the public off track.

Sat, 01/15/2011 - 16:35 | 878977 LowProfile
LowProfile's picture

Where is she buried, again?

Sat, 01/15/2011 - 18:11 | 879075 Sudden Debt
Sudden Debt's picture

You check out her background and I'll bring out my metal detector and shovels :)

And as gold doesn't digest, I won't even mind to check out her toilet :)

Sat, 01/15/2011 - 18:14 | 879082 Beam Me Up Scotty
Beam Me Up Scotty's picture

Are you in search of the Golden Turd?

Sat, 01/15/2011 - 20:32 | 879216 Rahm
Rahm's picture

WIN!

Sat, 01/15/2011 - 23:40 | 879416 Jreb
Jreb's picture

More importantly - where did she go to the can???

Sat, 01/15/2011 - 17:05 | 879012 asdasmos
asdasmos's picture

So, can you eat money, CDs, stocks, bonds..... etc?

 

Are they not all some sort of a medium of exchange?

 

This argument lacks any substantive point.

 

Also, what does the US air force give pilots in case of a crash and they need to barter?

 

 

Sat, 01/15/2011 - 17:06 | 879015 Jasper M
Jasper M's picture

Panty hose and chocolate bars, if I remember correctly.

Sat, 01/15/2011 - 17:48 | 879055 blindman
blindman's picture

http://www.donrearic.com/airman.htm

.

i don't fully understand it.

Sat, 01/15/2011 - 18:46 | 879095 magis00
magis00's picture

apparently,

the

concept of grouping

related ideas

into

paragraphs

has escaped the author.

Sat, 01/15/2011 - 22:44 | 879349 Caged Monkey
Caged Monkey's picture

Goldschlager, bitchez!

Sat, 01/15/2011 - 16:01 | 878927 Savonarola
Savonarola's picture

Why would you want to eat money, let alone a precious metal ?

Sat, 01/15/2011 - 16:58 | 879008 unwashedmass
unwashedmass's picture

 

it is time to buy gold, buy silver, get out of the city, and get beneath a desk, put your head between your knees ...

and start praying.

this is not going to last much longer, and when it goes, its not going to be good.

not good at all. it may be peachy keen in Bennie, Lloyd and Jamie's world, but....for the rest of the population who need food and gas on a daily basis.....

at a reasonable price.....

its going to be horrific. its already really rough for people where i live -- we're starting to see the dead seniors turn up in cold houses and the house fires from people desperately trying to heat up their kitchens with gas stoves......

 

 

Sun, 01/16/2011 - 17:13 | 880344 IQ 145
IQ 145's picture

 "some unknown reason,"--don't you hate it when that happens. And that darn inflation went up too. Well, it's probably just a co-incidence.

Sat, 01/15/2011 - 15:04 | 878863 EB
EB's picture

How about this graph from the Feb '05 presentation materials:

Looks like a nationwide housing down turn was not only contemplatable, but contemplated.

Sat, 01/15/2011 - 15:32 | 878891 put_peter
put_peter's picture

This is hilarious... really.

Sat, 01/15/2011 - 15:07 | 878866 Silversinner
Silversinner's picture

They sure know about gold,but pretend they

don't.Would be funny if it was not for all

the victims caused by their policy.

They got blood on their hands and

we all know it.You will run bankers,

but you can not hide.

Sat, 01/15/2011 - 15:15 | 878875 gwar5
gwar5's picture

The CBs covet the gold, they always have.

They're goal is to make us ignore it.

We need to get our gold away from the FRBNY. Now.

Sun, 01/16/2011 - 00:47 | 879482 ronin12
ronin12's picture

Buy it. Ounce by ounce.

Sat, 01/15/2011 - 15:16 | 878876 The Rock
The Rock's picture

Golden [Laughing] Cow Bitchez!

Sat, 01/15/2011 - 15:21 | 878880 onlooker
onlooker's picture

Where can I find charts showing the ration of gold/silver to the dollar, oil, Dow and other units of measure?

Sat, 01/15/2011 - 15:25 | 878882 Gully Foyle
Gully Foyle's picture

http://theautomaticearth.blogspot.com/2011/01/january-14-2011-zombie-mon...

And since oil and food are traded on international commodity markets, and they have gotten hold of all the money America is worth, and then some, they can play these markets as much as they want, whether it’s wheat or natural gas or gold. People like to claim that gold will rise as the US dollar becomes worth less, but they forget that it’s zombie money that has been buying gold, and that has thus lifted gold prices. Once daylight comes and the zombies are gone, there's only one way left to go for gold prices too.

Sat, 01/15/2011 - 16:27 | 878962 Davilis
Davilis's picture

They can stay zombied longer than you can stay solvent.  :-)

Sat, 01/15/2011 - 22:01 | 879301 JW n FL
JW n FL's picture

Yes Sir!

Sat, 01/15/2011 - 23:10 | 879376 trav7777
trav7777's picture

Ilargi and Stoneleigh are WRONG.  TAE has been pounding this same crap for years now.  WRONG.

I know this may be hard for people to accept, but they are using incorrect monetarist definitions.

Monetarism is FLAWED and a bogus doctrine.  When you approach everything through the bullshit of "velocity" and "quantity" in terms of THEORIES of money and these THEORIES themselves are fucked up, then it is no surprise that you cannot predict outcomes properly.

I have explained repeatedly why these deflationists are wrong and precisely how they are wrong.  Blaming fucking "speculators" for all price rises sets EVERYTHING as a MONETARY phenomenon which is ABSOLUTELY WRONG.

I don't care how "authoritatively" TAE's authors phrase it; their predictions have failed and will continue to fail.  They do not realize that they are subsuming their predictions within the framework of MONETARISM, which is a FAILED and erroneous doctrine.  And it isn't as if MONETARISM is the ONLY theory of money or value, it's one of FOUR or more schools of economics!  I am APPALLED by authors who ASSUME that Monetarism is somehow like freaking Relativity - even THAT was "proven" emperically; Monetarism has NOT BEEN.  Yet, idiot deflationists latch onto it like starving pigs on a teet.

The idiocy of maintaining that PRICES will fall and FRNs will be worth more when the ENTIRE FRN SYSTEM is structurally bankrupt - I absolutely MARVEL that otherwise seemingly intelligent people can not step back from Friedman's dead nuts and see the paradox in their basic claims.

Look.  The creditmoney system works in ONE DIRECTION.  If deflation occurs, the MATH makes implosion to 0 inevitable and that means that the FRN becomes useless, bankrupt, gone...the entire financial system built around FRNs collapses.  They will be worthless; that is hyperinflation as we know it.

TAE thinks the world revolves around fucking US HOME PRICES?  That is HORSESHIT.  The housing bubble was MERELY the tip of a vastly gigantic credit bubble iceberg.  Swaps and related derivatives dwarf outstanding mortgage credit by several orders of magnitude.

Mon, 01/17/2011 - 03:23 | 881068 cityguyusa
cityguyusa's picture

Gold stays neutral only the $ devalues.  The dollar is only worth what people believe it's worth or what you are buy with it today, tomorrow it may be worthless.

Sat, 01/15/2011 - 15:27 | 878884 LeBalance
LeBalance's picture

Such derisive laughter in a publicly recorded (and now publicly available) document does not speak to well of the survival instincts of certain individuals.

Sat, 01/15/2011 - 15:30 | 878888 DavosSherman
DavosSherman's picture

This is scarey shit. The Morg now runs the White House with Bill Daley.

Sat, 01/15/2011 - 15:44 | 878905 benb
benb's picture

Why be Frightened? We’re just in the Twilight Zone. (Daley has nothing to do with the Chicago Mob, The Syndicate.)

http://www.youtube.com/watch?v=8Q8eJT9oEHI

Sun, 01/16/2011 - 01:09 | 879513 trav7777
trav7777's picture

it's a real hoot, ain't it?  You could not GET more establishment insider than Daley and here he is the chief of staff.

JPM must've felt left out of the revolving door in the NeObama administration between GS and the Capital

Sat, 01/15/2011 - 15:31 | 878890 duncecap rack
duncecap rack's picture

Fall 2010 meeting:

Chairman Bernanke: Lets talk about exit strategies [laughter]

Sat, 01/15/2011 - 19:11 | 879138 Don Birnam
Don Birnam's picture

+1

Sat, 01/15/2011 - 15:39 | 878896 MarketTruth
MarketTruth's picture

"In the absence of a gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good and thereafter decline to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as claims on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to be able to protect themselves.

This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard."

The above was said by Alan Greenspan, 'Gold and Economic Freedom' in 1966.

Sat, 01/15/2011 - 17:11 | 879018 asdasmos
asdasmos's picture

......and then he turned to the establishment.

 

Volcker was hated for what he did, but I guess it is easier to keep feeding the monster.

 

http://www.bloomberg.com/news/2011-01-14/fed-saw-housing-bubble-in-2005-...

Sat, 01/15/2011 - 15:49 | 878912 Fish Gone Bad
Fish Gone Bad's picture

Our central bankers may not be the smartest people in the room, but they are also not complete idiots.  How people perceive money (and its equivalents) has a great deal with how much money they have and how they acquired it. 

Sun, 01/16/2011 - 13:55 | 880100 Mark Beck
Mark Beck's picture

From Fisher;

"to provide the bridge financing until the new Congress gets to work restructuring the tax and regulatory incentives",

this is one of the first public acknowledgments that the reason for QE is to finance the government. Also, if you control the churn you can control the bid, which is a way to manipulate rates (price). However, by the time QE2 is complete, there is no way for the FED to backout. Especially if its is trying to agressively sell Treasuries into the market.

Fisher seems to imply that the FED has limits to monetization of debt which may threaten the FED's existance through congressional action.

But, exactly how will this play out?

How can congress abolish the FED when the FED is the only mechanism to inflate away the debt congress creates? For any soft political landing the FED must exist to debase the currency, and fill the role of congressional whipping boy as the USD is put to rest. Without the FED congress will shoulder all of the blame. This is inconsistant with their finger pointing ways.

It is interesting to note that the statement was made after extension of the Bush tax cuts and the expansion of regulatory control for new oversight (just more government overhead).

What restructuring of tax? To improve the business climate?

A further reduction of tax would help business, but how would this help fiscally?

The remainder of the quote;

"American businesses need to confidently expand their payrolls and capital expenditures here at home."

Fisher seems to imply that to foster growth you need an effective foundation for investment, sound money, and the rule of corporate law. That's correct, unfortunately the FED exists to undermine all of these.

Bottom line; Fisher is everything we have come to expect from the FED. However, Fisher need not defend the FED against congress. The FED's role is obvious going forward.

The FED is the only USD debasement option open to congress to fund government until crisis.

Mark Beck

Sat, 01/15/2011 - 15:58 | 878916 johnnyBoy
johnnyBoy's picture

Read "The Creature From Jekyll Island: A Second Look at the Federal Reserve"  My neck hurts from reading it.  With each page, I was shaking my head in disbelief that we allowed this institution into existence.  More incredibly, why do we allow it to continue to this day?

Sun, 01/16/2011 - 02:27 | 879619 Dantzler
Dantzler's picture

Plus a mole of your favorite element, jB

I'm more than 1/2 way through now and should have read this long ago.

Every American should read this book!

http://www.amazon.com/Creature-Jekyll-Island-Federal-Reserve/dp/0912986395/ref=sr_1_1?ie=UTF8&s=books&qid=1295159173&sr=8-1-catcorr#_

Sun, 01/16/2011 - 10:52 | 879856 The Talmud Kid
The Talmud Kid's picture

"The Secrets of The Federal Reserve" by Eustace Mullins.

Sat, 01/15/2011 - 15:52 | 878918 monopoly
monopoly's picture

The fed is so incompetent and useless in this society. They are destroying the moral fabric of this country. Just today, in the NYT business section, "Evergreen solar" who opened a factory in Mass. with 41 million  of state money in 2008 is now closing that factory, moving the business to China and laying off 800 workers.

And our plumber and heating company just advised effective March 1st, all products including copper, steel, plastic, fittings, glue, all going up 15 to 20%. But they cannot raise there rates as housing is now officially in a depression.

And the market moves higher.

Sat, 01/15/2011 - 22:24 | 879327 Real Estate Geek
Real Estate Geek's picture

The Fed is NOT incompetent. 

It's doing its job very well; unfortunately, it's not working on our behalf.

Sat, 01/15/2011 - 23:51 | 879424 ebworthen
ebworthen's picture

Are the old ladies eating dog food yet?

I remember in the 70's, stories of the Widows of WWII vets broke, eating ALPO because it was cheap and helped them survive.

I thought that was kind of crazy then, and surreal, but now I know that if they can sell out the dying generations, and ape the young, they can carry on quite well at the top.

Sun, 01/16/2011 - 02:57 | 879645 The_Dude
The_Dude's picture

Already happening.

 

My brother works at a pet food factory in the midwest and the FDA has been stepping up inspections since '08 since they know people will resort to it as a cheap protein source.

Sun, 01/16/2011 - 14:33 | 880144 benb
benb's picture

Yeah, I’d like to see a somewhat real number from Shadowstats.com on how many people are eating ‘Pet Food.’ Back in the day the connoisseurs of the elderly poor used to pop open a can of Mighty Dog for their dining pleasure. IIRC as of last March the ‘pet food’ manufacturers could no longer use road kill, dogs and cats put down at your local animal control, downed animals found rotting in fields, and whatever else they could render.

Sat, 01/15/2011 - 15:54 | 878920 Waterfallsparkles
Waterfallsparkles's picture

In essence.  The value of the US Gold Reserves go up with Money printing while the value of the Dollar goes down and reduces the value of the Debt.  Double win for the FED.

While Americans get a double loss.  Loss of their purchasing power and higher prices for everything they buy.  Including Oil, food and anything else.

Sun, 01/16/2011 - 04:18 | 879669 FreeMartinArmstrong
FreeMartinArmstrong's picture

the FED doesn't own the gold ...

Sat, 01/15/2011 - 16:06 | 878938 alter ego
alter ego's picture

What US Gold Reserves?

Has anybody seen the vaults at Forth Knox?

Most of he US Gold is in the hands of the New York Fed

 

Sat, 01/15/2011 - 17:59 | 879066 Mariposa de Oro
Mariposa de Oro's picture

My thoughts exactly.  I would be less surprised if the gold were long gone, than if it were there.

Sat, 01/15/2011 - 18:26 | 879088 Sudden Debt
Sudden Debt's picture

First of all, there is a heck of a lot more gold in Europe then in the rest of the world. When gold would go up so much, the old empires would rise again. The US can't have that and neither does the EU because the gold isn't from the governments but owned by individuals and institutions.

Second thing is, there are just to many dollars as it's the reserve currency to be backed up by gold. UNLESS we're talking about a collapse of international trade because of the lack of a reserve currency.

Replacing it with gold would make trade so expensive it would be horrible for our way of life. Because of that, every nation in the world will be willing to look aside and let the US do what they think is necessary. So the dollar won't dy.

But I do believe people will try to save the VALUE of their wealth by putting it into something that remains it's value. Even if the intrensic price drops over time because the currencies will lose much more in value.

But by then, the lucky and smartest will have converted againt to the inflated currencies.

 

Sun, 01/16/2011 - 01:03 | 879506 ronin12
ronin12's picture

"Second thing is, there are just to many dollars as it's the reserve currency to be backed up by gold."

Silly. You are thinking in terms of today's prices.

Sun, 01/16/2011 - 01:11 | 879518 trav7777
trav7777's picture

gold goes to $50k and oil goes to $3000/bbl.

Gold cannot sustain a value ratio with respect to other commodities sufficient to back the money supply

Sat, 01/15/2011 - 17:25 | 879027 duo
duo's picture

There's a reason the title of this piece isn't

"The ecstasy of Federal Reserve Notes" or "The ecstasy of underwater real estate", or "The ecstasty of AAPL stock"

http://www.youtube.com/watch?v=jarN7TYgChE&feature=related

Sat, 01/15/2011 - 17:28 | 879029 lunaticfringe
lunaticfringe's picture

Just buy the fucking dips.

Today I went into the coin store to blast off another 2k on 1 oz gold, and 20 oz silver. The store owner and I have become well acquainted. When I walk in, he knows selling is about to happen.

At any rate, dude was almost completely out of silver. He said he had sold well in excess of 5000 ounces this week. He said he couldn't keep up with demand. We laughed and I told him that any day now, I expect Congress, the Fed, and the President to quit printing money, cut spending, and pay off that 14.1 trillion. Then I will lose money. When pigs fly.

 

Sat, 01/15/2011 - 17:43 | 879047 Quinvarius
Quinvarius's picture
“First they ignore you, then they laugh at you, then they fight you, then you win.”

-Ghandi

Laugh it up, laughing boys.

Sat, 01/15/2011 - 18:31 | 879093 Sudden Debt
Sudden Debt's picture

 

If somebody kicks you, YOU BEAT THE CRAP OUT OF HIM!

If somebody cheats you, YOU ROB HIM BLIND AND BEAT THE CRAP OUT OF HIM!

If you don't like someone, YOU BEAT THE CRAP OUT OF HIM!

                                     - My Grandfather - RIP

 

 

Peaceful protest is for idiots, pussies and Indians.

Sun, 01/16/2011 - 12:09 | 879962 InconvenientCou...
InconvenientCounterParty's picture

When they do not accept the truth, take their heads.

Sat, 01/15/2011 - 18:34 | 879062 JR
JR's picture

"...a distinquished gentleman offers a few medals to a man selling apples from a cart.  The man pulls open a drawer in the cart and shows it to him. It's full of medals.  The gent says nothing and walks away with dignity.  When I first read it I died a little.  So you fight for your country and what you get in return cannot even buy you an apple.  No wonder Hitler came to power." -- Taki

When Money Dies by Taki Theodoracopulos January 13, 2011

GSTAAD—Back in 1975 Adam Ferguson, a Fellow of the Royal Society of Literature, published a very important book with a very apt modern title, When Money Dies. It was about the Weimar hyperinflation nightmare, something our so-called leaders might well think about, which of course they will not...

Inflation is what kills wealth, unless the goodies are in property, ships, or other such solid matter, but let’s not get too academic about it. The only ones inflation helps are debtors, which are most Western governments nowadays. No wonder they don’t mind piling on the debt. But for us normal folk, inflation can be a very big pain you-know-where. Did you know that one pound sterling back in 1923 is the equivalent of 42 pounds today? Think about it. You could give a nice-looking German girl one pound as a tip and hope that she might let you walk her home after she finished working at the restaurant. Girls back then were moral, and a walk was the equivalent of a f—- today. Nowadays you’d need to come up with 42 pounds, and she’s more likely to thank you for the tip and inform you not to get your hopes up because she lives upstairs with another woman (mein partner) and that three’s a crowd.

The great economist Taki says that tipping a pound makes one look a gent, but £42 makes one look vulgar and a fool. When I was a very small boy I remember running out of the house and picking up millions off the street. This was 1943 and the drachma had just been devalued again and bills of one million were scattered all over, worthless. I didn’t understand inflation at my young age, so I scooped them all up and brought them home, where Fraulein gave me a wintry smile and tried to explain. She, in fact, had been ruined by the 1923 inflation and had to go to work as a nanny to rich foreign children, so she knew what she was talking about.

In 1923 a billion meant a million times a million, as it does today, but unlike today, there were no real billionaires around, except for the false ones in the Weimar Republic. Just imagine. At the end of the Great War one could in theory “have bought 500,000,000,000 eggs for the same price as that for which, five years later, only a single egg was procurable.” I am quoting Adam Ferguson. Papa Hemingway wrote a wonderful news story about German inflation called “War Medals for Sale.” He describes how a distinguished gentleman offers a few medals to a man selling apples from a cart. The man pulls open a drawer in the cart and shows it to him. It’s full of medals. The gent says nothing and walks away with dignity. When I first read it I died a little. So you fight for your country and what you get in return cannot even buy you an apple. No wonder Hitler came to power...

write all this because of Uncle Sam and the Bank of England’s appetite for “quantitative easing,” the bureaucrooks’ lingo for printing moolah. Why can’t they simply call it printing money? QE is an American invention, like reality shows and celebrity programs. The Brits simply follow, the way they did for Iraq and Afghanistan. The bankers tell us that printing money will stimulate the economy. The great economist Taki is not convinced. Stopping the presses is like stopping a VLCC—a very large tanker—it can take up to twenty miles. Worse, it takes a very long time for inflation to show up even after you’ve stopped printing. At present, inflation is running at three times the rate of public and private sector pay increases, which means everyone is getting poorer except for the bankers, the dealmakers, and those who owe big money to the big banks for the dealmakers’ financing of their shady mega-deals.

Still, life goes on and a very good life it is except for the crappy snow in Gstaad and the arrival of Abramovich types—not too many, thank God. I had a slight run-in with one of them who refused to take off his very dirty boots inside a very clean shop on The Promenade. The owner didn’t dare ask him to remove them. So I put in my two cents by reminding him that it wasn’t too long ago that he was without shoes, so why not revert to his younger self and remove them? He was not best pleased.

http://takimag.com/article/when_money_dies/print

Sun, 01/16/2011 - 16:12 | 880271 Dolar in a vortex
Dolar in a vortex's picture

"When Money Dies" - dateline Gstaad.

Rather ironic, no?

Sat, 01/15/2011 - 18:32 | 879096 dalkrin
dalkrin's picture

You'd think they'd be sitting on the best inflation predictor around:  The sound of printing presses churning out more FRN's 24/7.  It's only a question of when such inflation rears its head in the real world.

Sat, 01/15/2011 - 19:33 | 879164 MrMorden
MrMorden's picture

So...I can't eat gold and I can't barter with chicken nuggets.  Why don't these two things have overlapping roles?!?

Sat, 01/15/2011 - 19:43 | 879171 Living_Stone
Living_Stone's picture

Local coin dealer completely out of bullion.  Does not know when the next purchase will be made.  He had a bunch of freshly (re)acquired numismatics on offer and quite a few at the right price.  Nice to be able to pick up a stack of Morgans and Peace Dollars at $24 this weekend!  Got a couple Stone Mountain commemoratives for kicks.  Charge the $1k to my Chase Visa natch...

Sat, 01/15/2011 - 20:24 | 879210 lunaticfringe
lunaticfringe's picture

My dealer was almost out as well. With supply gone, where is the demand driven price rise? You hoo..Blythe...where has all the silver gone?

Sun, 01/16/2011 - 02:14 | 879601 Commander Cody
Commander Cody's picture

PM prices are, were and will be manipulated to support the fiat ponzi.  It matters not that JPM and HSBC short physical silver (the CFTC assures they do not have to).  They short the price.

Sat, 01/15/2011 - 19:50 | 879174 joepast
joepast's picture

Its hard to swallow the populist view that hyper inflation is dead ahead.I always go to..well they are up to something entirely different ..as in no more dollar so what does it matter..

Sat, 01/15/2011 - 19:52 | 879177 joepast
joepast's picture

hyper inflation??? there is something else that they have in mind.. hyper will not matter.. that is where I always end up on this popular rant..

Sat, 01/15/2011 - 20:04 | 879190 nmewn
nmewn's picture

CHAIRMAN GREENSPAN. Several years ago I recall that we ran a correlation with the gold price against levels of inflation. We actually came out with some forecasting capability. Has that been rerun in recent years?

MS. [Karen] JOHNSON [(PhD. MIT, 1973)]. Not by us.

MR. STOCKTON: Not by me. I think we did that at your request. [Laughter] And we were not so convinced by the evidence that we’ve maintained that particular series for forecasting.

MR. REINHART. I think you actually alternated your requests—asking each one of us in turn—and we haven’t updated that in a long time.

CHAIRMAN GREENSPAN. The problem is that it kept coming out, for reasons I can’t understand, with some information capability. The reason I raise it, as you know, is that we have a big, fat spike here, and I don’t know what to make of it.

MS. JOHNSON. Yes, a 17-year high. I volunteer to run the gold price. [Laughter]

CHAIRMAN GREENSPAN. Provided that you don’t tell anybody you’re doing it!

MS. JOHNSON. Right.

 

Why...this changes everything we thought we knew ;-)

Sat, 01/15/2011 - 21:37 | 879279 gwar5
gwar5's picture

 

A marxist and his banker friend passed a blind beggar on the road with a tin cup full of money.

The marxist very quietly and expertly takes all the money from the beggar's cup as they go by, and they continue on down the road.

The banker: "I do believe I'll take that," and he calmly reaches over and takes all the money from the marxist.

The marxist: "But, but, it should be --- to each according to his needs --- and I will be hungry soon"

The banker: "No, no, it's --- from each according to his ability --- and clearly, the beggars fortunes have greatly improved and he can now begin to pay me back. I've been very kind, and very patient. The fact is, he should be thanking me. That cup would've remained empty had I not thought of poking out his eyes."

 

Sat, 01/15/2011 - 22:13 | 879313 Troublehoff
Troublehoff's picture

Off topic a little:

I've just been reading Krugman's blog: http://krugman.blogs.nytimes.com/2011/01/14/dollareuro-irrelevance/

Quite unbelievably, Krugman postulates that the USD reserve currency status is not important/irrelevant!

What a complete twat!

 

 

Sun, 01/16/2011 - 00:57 | 879495 penisouraus erecti
penisouraus erecti's picture

I actually admire Krugman. I wish I could make his kind of money and wield his influence for being WRONG 95+ fucking % of the time. Kudo's, Mr. Krugman.

Sat, 01/15/2011 - 23:28 | 879404 sub Z
sub Z's picture

What inning are we in again?

Sat, 01/15/2011 - 23:43 | 879419 nmewn
nmewn's picture

I believe that was Hussman...LOL...maybe 6th. by now.

Sun, 01/16/2011 - 00:02 | 879439 USD-25
USD-25's picture

     MS. JOHNSON. Yes, a 17-year high. I volunteer to run the gold price. [Laughter]

Behind every great man...

Sun, 01/16/2011 - 04:51 | 879678 dumpster
dumpster's picture

over the  last ten years a silver dollar would buy  2 to now 10 gallons of gas

 

two dollars would buy  2 to now  2/3 gallons of gas.

 

in the next three years  2 bucks will buy 1/3 gallon of gas @ 6.00 .. a silver dollar will buy 10 gallons of gas

 

in four years   2 dollars will buy  1/4 gallon of gas @ approx 8.00.. the silver dollar @100 will buy 12 gallons . 

'

cant eat silver but you can exchange it for a monetary equivalent for the purchase,, and many states are now proprosing laws to accept silver in direct trade as money.

a silver dollar any where in the world will be excepted as a monetary value for the local currency or directly traded for goods  

 

 

Sun, 01/16/2011 - 06:23 | 879709 Burnsy
Burnsy's picture

-

Sun, 01/16/2011 - 10:52 | 879855 Wags
Wags's picture

It isn't a matter of making money, the US Treasury & the Fed have been doing that for too long. It is a matter of protecting what you have now. The Great Deflation cycle has begun. It will be a sad tale of a country destroyed by Greed and an economy based on coveting.

Sun, 01/16/2011 - 13:07 | 880033 cramers_tears
cramers_tears's picture

You know, Ron Paul wants to End the Fed.  I just sent Ron Paul's Campaign Fund 10 oz. silver.  You think they'll cash it in or hold on to it until they need it?

Sun, 01/16/2011 - 13:14 | 880041 The Pop In
The Pop In's picture

The password is : Tangibles

Ding

Sun, 01/16/2011 - 14:34 | 880145 GeneH3
GeneH3's picture

One of the traits that does not endear Dr. Bernanke is his smug condescension. Consider this 2008 exchange with Ron Paul -- http://www.ronpaul.com/2008-11-18/ron-paul-questions-ben-bernanke-about-...

Ron Paul: And does the subject of gold ever come up in any of your conversations?

Ben Bernanke: Only in terms of the sales that the central banks are planning.

He failed to mention that the Fed had studied the correlation of inflation and the gold price.

The hearings this year should be fun.

Sun, 01/16/2011 - 17:14 | 880348 rlouis
rlouis's picture

There was a quote in 'Dying of Money' that Central Bankers "obsess over gold".  That line struck me, and it was an observation that continues to validate itself.    That they publicly lie about gold is even more telling.  Recently I've wondered who the lucky buyers were, the buyers who bought the Bank of England's gold at the bottom, or who the lucky buyers were who bought the Royal Bank of Australia's gold at the bottom.  No doubt the buyers were well connected insiders, and this is just another criminal act of central bankers doing their daily work of screwing the less fortunate citizens of their nations. 

Thu, 01/27/2011 - 07:02 | 908760 paragshah12
paragshah12's picture

Gold is also an element of the "reflation" trade, which has become popular among some macro investors. This trade is betting that various stimulus actions, coupled with a weaker dollar, will inevitably lead to rising commodity prices.
http://www.financemetrics.com/gold-overpriced-inflation-and-gold-prices/

Do NOT follow this link or you will be banned from the site!