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Gold and Systemic Crisis
Gold and Systemic Crisis
"To all; are you ready? Never in the history of financial markets have there been so many landmines in place, each one wired directly to a nuclear bomb that sits atop the ENTIRE global financial system. The 'masters of the financial universe' have postponed the coming day of reckoning for so long and in so many different ways that they have backed themselves into a corner where almost any movement at all will trip one of these numerous landmines."
-FOFOA
Bread is not for sale in Zimbabwe dollars.
Presently many otherwise intelligent and capable individuals in America do not seem to understand the origins of the present financial crisis -- and the multiple aspects (or shall we say 'tentacles'?) of its origination. These tentacles stretch far back in history: from the present demoralization and fragmentation of American society, to the demonetization of gold in 1971, stretching to the forces behind World War I and World War II, and ultimately, in terms of the 20th century, to the creation the Federal Reserve in 1913.
Our topic here is gold , and unfortunately we will have to save the analysis of totalitarianism's final forms for another paper. But what must be understood is that ultimately we are witnessing a 'failure of imagination' on the part of the general public -- a similar failure to what always permits radical evil to spread. This moral failure was characterized by both Hannah Arendt in Eichmann in Jerusalem , and Alexander Solzhenitsyn in The Gulag Archipelago. Because in our society people do not understand history nor human nature, and are saturated with lies and propaganda 24/7 via the CNBS broadcast media, they cannot imagine the moral consequences of their actions or inactions -- let alone the consequences of systemic failure. So to remedy this situation, let us take a quick glance at history, but try to avoid the pitfalls of the gold bug crowd. As someone mentioned, here at ZeroHedge, we are 'truth bugs'.
"If only it were all so simple! If only there were evil people somewhere insidiously committing evil deeds, and it were necessary only to separate them from the rest of us and destroy them. But the line dividing good and evil cuts through the heart of every human being. And who is willing to destroy a piece of his own heart?"
-Aleksandr Solzhenitsyn
History is a great teacher. One thing it shows us is that all systems of paper money fail. And they usually fail very quickly, not outlasting a man's lifetime. Gold and silver have been used as money for over 6000 years, including for extended periods of time, such as during the 1000 years of the Eastern Roman Empire. There are mathematical reasons why humans historically use precious metals as money, but we will not go into them here. Our present system is curious and almost astonishing that it has managed to last so long, given the lessons of history. Dr. Antal Fekete wrote in his latest paper that the mean time to failure of a non-gold backed system is approximately 18 years. Our present system has lasted over twice as long -- 38 years at last count, measured since the U.S.'s surreptitious default on it's foreign gold obligations under the Nixon administration in 1971 and currencies began to 'float'.
Most money has no tangible existence.
We have a fractional-reserve credit (read: debt) based system, where our money is mostly hallucinated computer pixels. The system is highly leveraged, but is almost entirely electronic. We now have multiple generations which have grown up without using money in its historic forms. For example, even the new Monopoly game uses electronic cards rather than paper money. Let me summarize these changes -- for simplicity sake, here we use gold to mean gold and/or silver. The global monetary system has changed three times: first, from gold to gold IOUs, then from gold IOUs to debt IOUs, and finally from debt IOUs to electronic-debt IOUs. But are these IOU's really 'unbacked', as claimed by the gold bugs? Actually , they *are* backed. They are backed as long as the IOUs can be exchanged for oil and gold at some realistic price metric.
According to Dr. Fekete, the reason our unmoored system has continued so long, past the usual 18 year lifespan of fiat currency experiments, is that we have invented a system of gold futures clearing and gold derivatives trading -- an innovation that did not exist in the past. In other words, we have created a gold 'price horizon' in electronic-debt IOUs, with the tendency to converge to the gold spot price. (Is the tail wagging the dog?) Additionally we have gold leasing, forward hedging, and all sorts of other trickery that has been going on for quite some time now. The electronic debt-IOU remains linked to gold via various Ponzi-like paper innovations.
The author FOFOA adds that additionally, what has characterized our system since 1971 is gold/oil flows between the various Petro States of the Middle East and the New York and London banking centers. These implicit deals allowed the United States to continue to purchase oil directly in dollars -- despite having defaulted on its international obligations. This 'innovation' somewhat resembles a US military-led protection racket. Remember that the second oil crisis of 1979-1980 coincided with price explosions in both gold and oil, yet catastrophe was avoided. This will not be the case the second time around.
There are also of course the lesser but nonetheless important details such as hedging which was done via large gold producers, the gold price suppression by the central banks, the geometric growth of OTC interest rate swaps, and so on. For those interested in these technical details, we highly recommend reading all the posts at FOFOA and the work of Rob Kirby. But here, the goal is a summary 'big picture' overview regarding the main points. What we can surmise though, is that our present system is a historical anomaly despite its technological innovations. And that should make us cautious of issuing blanket proclamations about the U.S. dollar's future stability over the next 8 weeks -- let alone the next 80 years. Have the pure dollar deflationistas skipped the Taleb? Sometimes we wonder.
The U.S. has a unique and deep relationship with Saudi Arabia, historically the world's largest oil producer. This relationship that goes back almost a century, to the foundation of Saudi Aramco by Rockefeller oil interests (specifically Standard Oil of California) in 1933. From 1933 to 1971 the payment system was somewhat stable, characterized by gold clearing on the international level at a fixed price of dollars for gold. This continued until the French under de Gaulle began draining the US Treasury of its gold, due to the expense of America's involvment in the Vietnam war. The French gold redemptions ultimately lead to the unilateral default of the United States on its gold obligations and the death of Bretton Woods I , which had been created post World War II with the dollar as gold-backed world reserve currency.
What has characterized our international system since 1971, or "Bretton Woods II" as it is sometimes called, is this: 1) the gold futures clearing system, and related paper markets and 2) the ability to swap oil for gold via these markets using exclusively US Dollars. This has given implicit support to the U.S. dollar far beyond what could be reasonably imagined considering the U.S. fiscal situation -- in the sense that the dollar is supported as long as 1) oil is for sale in dollars and 2) gold is for sale in dollars. This does not always have to be the case, and this is the core of the issue. If gold goes into permanent backwardation it will no longer be for sale in dollars on COMEX. Period. This will implicitly cut off oil flows to a trickle until payment is re-linked to gold via the IMF SDR or another mechanism.
The Western Roman Empire collapsed because it debased its currency.
To many of us, it is obvious the US equity markets will soon crash, but the real crisis will come with the failure of our currency -- a currency which is IMPLICITLY and historically linked with trading of both dollars for oil, and dollars for gold. Thus, these spot markets are the ones to watch. Some may be aware Russia recently surpassed Saudi Arabia as the world's number 1 oil producer -- and last week , number 2 oil producer Saudi Arabia has signed a $2bn weapons deal with Moscow. The final strategic alignment of Saudia Arabia and the rest of the Middle East remains up for debate, but we have certainly witnessed the tentative steps of the BRIC nations and their affiliated satellites to build their own international clearing system, based in Hong Kong and Moscow, rather than New York and London. Ultimately this will probably involve some form of the IMF SDR -- rebalanced with new currencies and possibly a gold component. Remember Medvedev at the G8?
Medvedev pimps the New World Currency at G8. No , it's not petrorouble
Minus the political shifts towards a 'multipolar' world (prior to the onset of the final bloody form of the Hegelian dielectic), the weakest point in the present system is certainly the U.S. Dollar. Indeed there are many angles for speculative currency attack. And there are many weak points at which this may simply happen by accident. Assuming we see such an external speculative attack, what can we expect?
1) A currency failure will happen rapidly (likely overnight to 8-12weeks). The dollar will devalue against gold and oil. We are talking 50% decline or more.
2) Gold will go into backwardation (aka Spot Price above Near-Futures Price). This is the single most important indicator.
3) The Gold price will vault upwards -- and ultimately trading will halt in USD.
4) Oil will likely vault upwards as well, but this analysis is difficult. The gold:oil ratio is a useful indicator.
Where will capital flow during a time of a systemic crisis? Since 1971, capital has moved up this chart. Now it is reversing. Capital will flow into government bonds , treasury bills, physical cash, and ultimately its final home , gold.
There are all sorts of other things that may occur under conditions of currency failure, but you can find these sorts of analysis elsewhere. Use your imagination, as Hannah Arendt might suggest. Or google teotwawki and crack open a beer. The point here is that our present system is very fragile and cannot last much longer in its present form. It is far too unstable. There will be a collapse , and out of this a new system will emerge. The only guarantee of your purchasing power is in physical gold coins which you have in your possession. This is why the Zerohedge Dog, Scooby, keeps 20% or more of his assets in physical gold coins, and at least another 10-20% in physical cash with which to pay his bills.
The world is changing ,and to cope with the new reality requires both discernment and imagination.
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A question for the experts:
Being an owner of physical gold, what set of unlikely circumstances might result in a short term crash of the price of gold and is there any scenario that would make such losses permanent?
Thanks in advance.
under one scenario, if equities crash and there is not currency crisis, gold could retest 800-850. not a sermon-- just a thought
at this point gold should be secure both short
and long term....however, playing devil's
advocate with myself
1. profit taking may take gold down short term
but that would be a god-send.
2. liquidity could be drained by the fed in various
channels such as m1-4, slosh, selling of bonds
but these are improbable depressants to gold...
3. confiscation is not a reasonable argument -
i would simply withhold it and tell the government
to go fuck itself....
4. the fundamentals of gold are enormously bullish
as gold production has been falling for several
years, replacement costs are at or above price,
and gold is teetering on backwardation....
5. government manipulation is a real and powerful
threat to gold price....understand that it is
policy to suppress the gold price....this is
achieved through massive naked shorting
and gold leasing from government stocks....however
some believe that the vaults are nearly empty and that
this fraud is about to run its course....
never buy paper gold unless you are an active
trader....for long term purposes always hold
physical gold....
short term....stock market crash, a need to revive stark deflationary fear.
Long term...someone help me out here.
Confiscation.
PM - you really are brilliant.
I plan to read all of this again tomorrow when I'm sober.
I'll let you know what I think after a re-read.
Please don't stop posting here. I look forward to your comments as much as I do from TD and CB.
thank you sir . . . i publish a column on monday mornings called "this week in mayhem" it is usually less serious with more pictures
1. You are correct. The recession now has the added problem of insane household debt, and overall debt, and that is an enormous problem.
2. There are countries that have survived for a while with more debt than us. That's a fact. It is still stupid, but it's true.
5. College grad unemployment 4.7% No HS diploma 16% (approx)
6. I did not mean to imply that Canada was subservient. They, in fact, have the whip hand, but they are unlikely to shut off oil because we support Israel. They are allies and friends.
7. The increase in national debt by this government this year is shocking, and due to the Democrats. This is a simple fact. Will Repubs in power act with less spending. Possibly, even likely.
8. Recent pieces in Debka file point to a chem or bio attack in the near future. We hope not, but it is in the news…
Otherwise the ideas are a conjecture of how we will cope in a food starved world, with a cheap dollar, and a well educated workforce.
As to the remark about churches, it is certainly disappointing that all denominations in general are loosing their young. Not a good thing.
the republicans have proven without a doubt that
they are as committed to big and indebted
government as democrats....
who from the rnc sent you here?
bush gave us the biggest programmatic increase in
government spending sisnce lbj....his trumped
up war on his ex-business parter osama bin laden
was as phony as a 3 dollar bill...
the republican controlled congress was just
as profligate as democrats....fuck repubiicans
and democrats and their hacks who come here
with bullshit argument for neocon flag waving
war waging murder.....
that pointless war has been a huge drain on
the people and economy of this country for
no other reason than for the bushes to push
their tyrannical power over the rest of the globe....
wtc was brought down by controlled demolition
using nanothermite with republicans firmly in
control of government....it was an intelligence
operation to cover up the bushes enron crimes, to
create a war, and strip freedoms from americans
based upon false events....
republicans are neo-nazi freaks and are a cancer
on the republic....
ps. i have never voted democrap in my life....so
if you think i am a democrap hack - go fuck yourself
barry soetoro mubrak hussein obama is as
dangerous to the republic as the bush crime
syndicate....but then both are controlled by
the likes of the rockefellers....
Project Mayhem:
A compendium? From post above " Larouche, Fekete, Arendt, Taleb, Armstrong."
Yes - Please explain Project Mayhem?
Ho hum
I am an intellectual genrevore what can I say haha
I prefer silver to gold. Much more tradeable if TSHTF (a single gold coin holds too much value to be useful in small transactions), plus Ag has much more upside potential in % terms.
The usual cynical cautionary note: never underestimate the power of the uber-short price-suppressors in precious metals. They *will* hand your ass to you on a plate if the BRICs fail to break them. The most cynical perspective is that the BRICs join the game, this latest action is just them throwing a hissy fit about being held out before. In that case it will be the BRICs handing your ass to you.
http://www.youtube.com/watch?v=QbN0g8-zbdY
Larouche, Fekete, Arendt, Taleb, Armstrong.
Playing all the keys on every octave at once.
Well? Done
Adding some voice to the sound and fury.
http://images.google.com/imgres?imgurl=http://www.schillerinstitute.org/...
Lack of confidence = Capital flight esp. foreign
http://economicedge.blogspot.com/2009/09/lack-of-confidence-meet-capital...
public confidence is vaporizing. US ability to fund debt without QE is gone. QE is a must to preserve and pretend low interest rates.
Eventually either repudiation or sheer inability to find the means along with loss of confidence will hit currency hard.
What is the commodity to gain if faith/trust evaporate from fiat?
Only true money can survive.
I have nothing against gold. But I am not an owner of it for several reasons:
1) Strategic inflation/deflation...the United states government still has one wildcard to play in this game, the return of mark to market. And they are going to play it. Why? Because they want to screw everyone who has been fleeing dollars. Instant demand for dollars while ephemeral, would be a great move against China, Russia et al. Of course this demand will not last but it will allow for liquidation that I am certain will occur in some form or another.
2) When gold ceases to be traded on the COMEX, what happens then? A teotwawki scenario where oil relinks with gold via another mechanism is a very good guess for what will happen. However it is an assumption. It could very well be that there is no mechanism to replace the dollar and instead we are faced with financial anarchy. Which leads me to my next point.
3) What are you going to buy with gold? I agree that it is at bottom of the pyramid, but what is gold backed by? I would contend that in a teotwawki scenario it is backed by the very foundations of survival, which is food and water. This is why I own canned goods, seeds and water distillers as my hedges. Right now I can't exchange them for gold on very favorable terms, but in an event when gold stops trading on the COMEX I believe the terms would become a lot more favorable.
PS I keep planning to stockpile alcohol and cigarettes but it's oh so hard.
PPS I am also hoping to turn my speculative paper positions into solar panels and land, but that is a desperate race against time.
We all cynically say "You can't eat gold", but it is a necessary component of any good survivalist stash. If you are that worried do pre-1964 US silver coins, which will be more useful for paying every day stuff "post $$" than gold. still some gold is a "must" if you believe in that stuff.
Haha - I've tried stockpiling alcohol & cigarettes with dismal results, I keep consuming the stockpile.
If there is a rush to $$$ driving PM down, that is your opportunity to get some metal.
The Zimbabwe video demonstrates all you need to know about the moneyness of Gold.
It means little to me if COMEX, Bullion Banks, etc. go away. You will always be able to trade PM in some manner.
Exactly....
They were buying food with the gold...
Since gold is making new highs in non USD terms, then the price of paper gold in London or NY is becoming less relevant where willing buyers/sellers in free markets are determining the actual price is higher than the manipulated price. The current line in the sand seems to be $1000 USD as JPM & the other minion banks of the FED come in as the counter party to all long futures buyers.
What's interesting then, is the beginnings of the delinking of oil & gold from the USD; once that happens as others have posted, the FED loses its grip on these two key commodities & the USD declines further. In effect, they're busted. Conversely, futures buyers can demand physical delivery of contracts now or in the future really torquing the minion banks.
Since gold/silver coins & closed end bullion funds are selling at a premium to the manipulated price, the "free market" is working & the paper gold price is just an artificial price that will be more & more disregarded as time goes by.
I'm not a gold bug, but am long via gold/silver bullion funds (not the paper funds) & add whenever the banks force down the prices. IMHO, the FED is probably most worried about a buying panic of PM. If that happens, arising from any black swan event, they're swimming naked at low tide without any metal to deliver.
The delinking started in January. I wrote this little ditty then:
Welcome to the Gold-Dollar Bifurcation
Joe Sixpack.me
Welcome to the Gold-Dollar Bifurcation.
Just in time for the Obama administration.
Competition for the dollar.
This ought to cause the Fed to holler!
Welcome to the Gold-Dollar Bifurcation.
A new trend is in formation.
Shiny beats empty, and the financial systems goin' down.
If you got gold or silver, you're goin to town!
Welcome to the Gold-Dollar Bifurcation.
Derivatives implosion lead to dollar's deprecation.
Markets down, and bonds collapse.
The world's current financial system will lapse and pass.
"Conversely, futures buyers can demand physical delivery of contracts now or in the future really torquing the minion banks"
As I understand it, Gold futures contracts can be settled through delivery of GLD ETF's.
---First post on any blog. I’ve been following very closely a number of blogs and websites since Mid 2007. This one is the best. And this is a great article. It closely reflects the analysis I’ve been developing over the last two years. I liquidated all dollar assets (except my home) and I have been fully invested at BullionVault for over two years. I am interested to know peoples opinions regarding the safety and efficacy of holding bullion at BullionVault as insurance against crisis. I certainly would not be comfortable holding that much gold in my home and I figure odds are high that I’d be high tailing it out of the country should things get really awful. And I couldn’t carry it with me.
I liquidated 100% into cash a month ago in the belief that the stock market is due for a steep drop as the economy is rife with land mines ready to be tripped, as PM described. Based on the events of the last year or so, I expected gold to fall after an initial pop, and then to move up again. I am quite satisfied being100% in gold for the long term. But I made this call and now I am sweating.
Peter Schiff’s most recent video blog addresses this issue. But if this time is different than a year ago, with respect to the dollar rising relative to equities falling, why is it different this time? He offers no explanation. Any ideas?
-NTJ
Hi NTJ,
You should be fine with the hard gold. You are playing it very safe and that is ok. I'm selling my fine art collection soon and if successful will go 50% in hard gold as well and will trade the equities with the rest.
Good luck my friend and if all else fails see you in Brazil
where I will build a village for my colleagues.
www.itacare.com
Thanks folks for the warnings, advice and encouragement.
Death to Comex, the paper gold market, etc. I agree.
Cindy, I suspect the nice guys with the AK 47s are reading the same articles.
I do have supplies and substantial cash and means to defend extended family and self, all immediately at hand. But I feel the nest egg needs to be outside the country, outside the US currency, and outside the control of the US financial system. In this case, that takes the form of physically redeemable, allocated, financially unencumbered bullion (with weekly audited serial numbers) in Switzerland ---all good and done if, and that “if” is the precarious pivot, BullionVault is what they represent themselves to be. Additionally, I’m inclined toward a single location, (so that I do not need to go globetrotting all over the planet to access it).
As events unfold in this country, I become increasingly convinced that the American population, should the cracks give way to collapse, will careen toward a reactionary, fascist eruption of intolerance and violence. Not because we are evil, but because we are ignorant, and have been cultivated to be culturally predisposed as such. The “rugged individualism” that is a cornerstone of the national character comes now with limited critical capabilities, and is incompatible with the escalating scale of institutionalism and militarization that is occurring. It’s a toxic concoction. This is a very sad assessment, I know. And I truly hope I’m wrong. But I will not hang my future and that of my loved ones on the rung of that “hope” alone.
(Instead, so far, I am hanging it on the hope that BullionVault is what they claim to be.) Yow!
Keep up the good work here.
NTJ
good analysis -- I agree the culture is now a toxic mix, it is sad indeed but thank God for the internet and free speech.
Thank you kindly, Project Mayhem. Amen to the internet and free speech.
I find your articles all to be wonderfully presented and spot-on in terms of analysis. And I commend you for avoiding many of the ideological traps into which, in my opinion, the investment community is prone to fall. These times have thoroughly blurred the lines between right and left, progressive and conservative, Socialist and Capitalist, etc. Many people fight this out of reflex without recognizing the shift taking place or thinking about the promise it holds. Its a rare opportunity for entrenched historical assumptions to be re-examined.
I look forward to more of your work.
NTJ
I would ask for the serial numbers of the gold that is being held for you...
http://uk.reuters.com/article/idUKN1228014520070612
Yeah because after all, the nice men with the AK 47s will be sure you get your gold after TEOTWAKI.
Lots of good articles out there on how to stash your important stuff. Letting otehrs do it for you is probably unwise.
Concentration at any one location is a problem.
Some Green Cash, Gold, & Silver @ your reach is a must.
I don't know anything about BullionVault, so nothing to say about them.
There are other depositories in the US who will work with you and / or your dealer on storage / shipment:
Example without endorsement:
http://www.fsdepository.com/
There are foreign depositories like:
http://www.perthmint.com.au/
The only thing I know is do not keep it all in the same place.
Only the gold in your possession is safe gold. All other forms of gold is illusion.
Hong Kong called its gold and it is more likely than not the neighboring countries of Hong Kong are doing the same, which caught the London off guard and must get the physical gold, instead of other forms of cheats. (delivery is set at the end of the year)
The western countries are loathe to see gold price exceeding a certain threshold (1k) and will do everything in its power to suppress it via all forms of cheats, including paper gold and vault gold ( who knows what happens in the vault, could be sold many times over, could not be there)
If gold can't be purchased at any price, then your gold in the vault will be defaulted and you'll be paid paper money which you can never use it to buy back the gold lost via default by vault.
Remember, vault means default. Gold is used to hedge the black of black swan event. Ask yourself: Will you deposit your gun and ammo in a safe box?
very true about gold in the hand worth more
than two in the vault....
gold owners would see a dramatic increase in
value of their assets should they demand
physical posession....
the paper games are so riddled with fraud and
deceit that someone has truly found the
free lunch....death to comex and its government
puppet masters.
Nice Saturday afternoon read... you are always interesting and bring a fresh perspective to things...
Nice work!
The Chinese government (Red) is encouraging Chinese savers to buy PM. It is available for purchase from local banks. Private demand is rising.
I'm not going to say anything about what this means for the price of Gold or the price of Gumbo in Moscow, because it does not matter to me.
Gold being a most highly prized possession by the ciizens of the worlds two most populous countries is pretty convincing to me.
I do hope for a Prectorscopic bowel (Wave) movement so I can load another truck.
Last time I told the UPS guy the boxes were full of magnets for the Tokamak I'm building.
I enjoy reading Fekete, but I think the new theory that he has developed over the past few months is completely wrong. Basically he thinks that debt monetization will lead to deflation and falling interest rates because speculators will front-run the fed's open market operations. He actually thinks that the fed can successfully halve long-term interest rates forever because our creditors will keep buying treasuries in advance of the fed's purchases. The problem I have with this theory is that it assumes that our creditors are short-term oriented speculators. I think the comments from the BRIC countries over the past few months have demonstrated that the world is no longer willing to blindly finance our reckless spending orgy.
The way I see it, there is absolutely no way that the Fed can both keep interest rates low and maintain a strong dollar. There is no such thing as deflation + a currency crisis.
I also disagree with Fekete on some points but I still read him because I think he is a genius.
well "deflation + currency crisis" is sort of a subjective definition. what if M3 contracts, M0/M1 goes exponential, and the dollar devalues against oil and gold by 50% or more? does that even have a name? ;)
Good point. I actually do think we will see consumer deleveraging and credit contraction at the same time that we have an explosion in the monetary base. I see inflation in basic necessities, while prices of leveraged assets (eg homes) lag. Fekete however, thinks we will have long-term commodity deflation.
You mean.....
...Hyperstaghavenflageddon?
yes there is...deflation is by its very
nature a currency crisis....
inflation and deflation are corruptions of
the currency and represent a dysfunction
and pathology....
and to put a finer point on it i define inflation
as a debasement of the currency - which is to
say a corruption of its value...deflation does
the same only in the other direction....
Currency debasement was not the reason of the Roman collapse. It was a symptom. Just like today, the dollar debasement is not happening because the Fed is evil. Its happening because there is no other choice.
Any new system that is set up will not solve the real problems in the background:
- Diminishing returns in all areas: energy production, healthcare, resource extraction, agriculture, productivity and all other areas of life. The investment requirement in any of these areas to increase output is growing, while the corresponding output gain is falling.
- Overpopulation (on a global level)
- Climate change
http://dieoff.org/page134.htm
i disagree strongly in general although i will
concede that roman moral collapse preceeded
the debasement of its currency....
dollar debasement is happening because the
fed is evil as are its masters and
ultimately the people who elected leaders who
brought us to this point....the severing of
gold to money was moral debauchery of the worst
sort motivated by unbridled greed...
but, the fed has options regarding default - however
it is handling it in the fraudulent ways handed
down to it by its progenitors, fdr, nixon, and
the gaggle of false economists who told us you
are gods and can weave gold out of straw....
there is no overpopulation or climate problem...
these are either out right lies or malthusian
hysteria....
Aha, one of the Hanson clan makes an appearance. What name do I know you by in those circles?
This question is for Project Mayham. Assuming we have a collapse of the dollar and the debit/credit monetary system is exposed for what it is. Would we not also see a collapse in Treasury Bonds and notes as the realization sets in that debts are being serviced by taxes and the printing press? Assume we have a collapse of the dollar and a collapse of our economy less tax dollars and more printing to service debt. Is the treasury market a safe haven in a collapsing dollar and economy environment?
I don't know -- Treasury Bonds I think are the hardest thing to analyze.
The Fed is covertly monetizing debt so I think they will continue to do this by expanding their balance sheet. By doing so they can keep long-term interest rates suppressed at the ultimate expense of the dollar. But I am not sure about this. It's really hard to say, I hope we get the audit of their books...
Treasury market is a safe haven if you have more than $250k in cash and want someplace to park it. I would say Tbills ... but this would need to be hedged with gold in case there is currency crisis. I am a fan of holding both cash in USD as well as gold.
IMO, they have to keep those rates down at all costs or housing issues escalate 100 fold.
Personally though, You'd make more money using that to flip stuff on Ebay than those pathetic interest rates. :)
IMO, they have to keep those rates down at all costs or housing issues escalate 100 fold.
Personally though, You'd make more money using that to flip stuff on Ebay than those pathetic interest rates. :)
I think you've adequately answered your question.
moved to PM's H1N1 post
don't overlook the footnotes in the article....i just discovered martin anderson from the graph on roman silver currency....he provides fascinating insights to the economy which you won't find in the usual places...that was the matine double bonus feature....