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Guest Post: Bernanke Employs a Modified 'Pump and Dump'

Tyler Durden's picture




 

From Jeffrey Snider first posted at RealClearMarkets

Bernanke Employs a Modified 'Pump and Dump'

Gold is not money, according to Federal Reserve Chairman Bernanke.
When pressed on the subject, he demurred that banks, including, I
presume, central banks, continue to hold gold due to nothing more than
"tradition". Thus, he feels there is a vast difference between dollars
and gold. It is curious word for him to choose because Mr. Bernanke is
actually correct, but probably not in the way he intended with his
unspoken pejorative connotation, politely dismissing any value for the
precious metal.

Value itself is nothing more than the outward expression of
individual faith. The traditional value of money is really just an
outgrowth of its historical reputation, earned through so many actions
and consequences. Money may seem to add a level of objectivity into the
discussion of value, but that is only because of a more universal
"faith" in the transactional price discovery process it allows.

This discussion of "tradition" in the context of "value" is the
central problem of our financial age. The question of faith in
valuations is at the very heart of the ongoing crisis, infecting all
facets of finance and economics. Almost three years after a major
banking panic, we are still wrestling with the idea of valuations, and
more innately, value itself. Economic and financial unease and
uncertainty trace their roots to the shaky valuations that have been
provided or interjected into every marketplace, keeping up with the
grand tradition of fiat currencies and centralized policy.

For example, U.S. treasuries are supposed to be, pardon the pun, the
gold standard of riskless assets. Yet they are increasingly questioned
(ask Bill Gross and China). The value of the paper is a derivative
function of the ability to tax, as in full faith and credit of the
United States. But the same is also true of Greek paper, as sovereign
Greek debt derives its value from the Greek government's ability to tax.
Yet U.S. debt is more "valuable", in money terms, than Greek debt
solely because the Greeks have a "tradition" of default while the U.S.
does not. Tradition matters.

By engaging in quantitative easing, the Fed is creating cash for
primary dealers that, it hopes, will be used to fund the purchases of
"riskier" assets. But those additional purchases only push up the
momentary price of the asset, so this flow needs to be ongoing otherwise
it is supremely susceptible to reversal. This means a constant state of
interference. After establishing such a flow and the follow-on
"favorable" price trend, the ensuing faith that higher prices are
supposed to generate is thought to lead directly to spending "velocity",
which yields economic flow and a healthy economy. That is the theory of
the "wealth effect". It is being practiced on both sides of the
Atlantic with equal fervor, though with slightly different mechanics.

If prices are the independent variable in the economic equation, that
is, the x-factor that needs to be manipulated, then why not just remove
the marketplace and mandate specific valuations? Why go through the
charade of "managing" a market-based price discovery process? Greece
would not need restructuring if the European Central Bank simply decreed
that it would convert all Greek debt at par, setting the universal
price. After all, Greek principal and interest payments are denominated
in euros, so the ECB can easily supply them.

The answer here is that value in any human economic system cannot be
directed by diktat or fiat order. If it could, central banks would have
done it by now. Instead, value is conferred by scarcity . In engaging in
market manipulations to create the appearance of monetary values for
financial and derivative financial assets, central banks have turned
value on its head by making money plentiful. Plentiful money has always
been problematic.

Anyone with the means, and that includes those that hold the power of
money printing, can pay $1 million for a stick of gum, but that only
establishes a price, not a wider acceptance of value. But that is what
central bank intervention is, the establishment of price in a narrow
way. Greek debt scarcity and its attendant real value are governed by
the perceived ability to repay, a direct link to the quantity of debt
for a given tax base. If the market perceives a stable or declining tax
base but the Greeks issue twice as much debt at a consistent price, the
level of scarcity falls in relation to repayment probabilities,
affecting the larger question of value.

It does not matter if the ECB buys a substantial portion at par; the
larger system is not fooled into blindly believing in scarcity, or that
price action equals true value. The marketplace will instead buy on the
foolishness and irresponsibility of the central bank, buying up all
Greek debt solely on the ability to pawn it off on taxpayers at an
unearned profit. But even here, it only works as far as faith in the ECB
and the euro is maintained, since value has not really changed. The
central bank interference is nothing more than a game of musical chairs,
with risk investors willing to play as long as they believe the music
will keep playing. The second the music stops, that entire intervention
and managed price discovery becomes irrelevant as the assets suddenly
become bidless.

This is the essence of central bank liquidity management: ensuring
that marketplace actors have enough money to prop up prices. But all
that liquidity fails if there is no implicit, sometimes explicit,
backstop of central bank guarantees. Moral hazard is fully acceptable
because without it many more markets will find themselves bidless. This
is the opposite of what investing is supposed to be - buying assets with
the hope that the rest of the world never finds out what they are truly
worth.

In fact, successful investment is predicated on buying something
valuable before the wider world recognizes that value, with the greatest
hope that the rest of the world will see that value. Investment scams
work because they get a small audience to believe that they are
discovering something valuable just before the rest of the world makes
the same realization, meaning the subject of the scam is presented as
undervalued by current prices.

In a way, central banks are engaged in nothing more than a modified
"pump and dump". They are attempting to create the illusion of value
through price action. By maintaining high valuations due almost solely
to their own purchases, they hope to "attract" additional investors into
the process. Whereas the exit plan of the traditional version seeks a
higher price to disgorge the schemer's original holdings, the legal,
central bank version is trying to buy public faith in order to disgorge a
larger acceptance of a return to normalcy. In both cases, the public
gets abused - suckered investors in the first, taxpayers in the second.

Contrary to Chairman Bernanke's meaning, in this vital respect
tradition and reputation are far more important, not less. The more
central banks fool investors into placing money into investments of ill
repute through these legal confidence schemes, the less faith about the
wider marketplace they will engender. There is already considerable
damage to reputation after the great pains the ECB took in 2010 to
repeatedly assure investors that Greek, Portuguese, Irish, Spanish, and
Italian debt were safe and secure. Any investors that committed to
purchasing such debt as a result of these assurances have fallen prey in
the same way stock investors are taken in by illegal "pump and dump"
schemes.

Considering the potential losses that the ECB, now heavily assisted
by China, continues to create as all the PIIGS persist in issuing
billions of euros in new debt, central banks are building on their own
tradition of dishonor. Now the debate is about what kind of default
should be employed by Greece; essentially who should be identified as
the Greatest Fool.

The Federal Reserve, for its part, has added to its own fine
tradition. Before the crisis, the Fed used much of its credibility to
"assure" markets that everything was fine, right up and into a
full-blown panic. After the panic, the Fed lost still more credibility
on assurances of monetary efficacy with regard to the recovery, yet no
recovery exists. It proclaims a job well done in "saving" millions of
jobs, to the amazement of any impartial observer.

Trillions of dollars have been used on price discovery, especially in
the stock market, but 45 million people continue on food stamps and the
average duration of unemployment is now twice the previous record.
Banks are enjoying healthy profitability, assisted by loan loss
accounting, at the same time withholding credit from all but the largest
obligors. Individual American savers who are doing everything right are
bearing the brunt of all this monetary success, as zero interest rates
transfer money from them to the very banks that colluded in creating
this disaster in the first place.

Those that have the means will always dilute currencies. It is the
greatest temptation of any fiat regime - the easy answer to all the hard
problems. No one has to lose money if it can be created out of nothing.
It sounds like the path to financial and economic paradise but it is
the devil's bargain. No matter how much money they print, it will never
be circulated fairly enough.

Market discipline, no matter how brutal, is at least objective and
often meritorious, an acceptable condition to free people - free to
succeed, free to fail, all regardless of size or stature. General
interference, including fiscal interjections such as General Motors and
Chrysler, breeds distrust. Fiat is simply an invitation to chaos and
discord, so three years of ongoing uncertainty is wholly unsurprising.
Price discovery due to interference is not really price discovery at
all, meaning the larger class of investors will never fully commit or
regain faith. If the game is rigged, fewer and fewer will play.

The interbank money markets are now, invisible to the broader public,
tightly in the grips of amplifying turmoil because banks simply do not
believe in each other's prices. Banking rules allow German and French
banks, among others, to hold PIIGS debt at par on their books,
establishing a price for their credit portfolios that no one actually
believes (the very same problem as 2008, so much for progress).

Instead of transforming these artificial prices into increased faith
within the intercontinental banking system, especially the eurodollar
market, they have unleashed nothing but havoc. The mass of overnight
lending activity has shifted out of unsecured transactions into
collateralized loans whereby U.S. treasury bills are now the only
accepted collateral - fewer and fewer institutions are willing to play
the unsecured lending game. So we see the general collateral rate, for
the first time in history, fall below zero. Inspiring confidence is not
how I would describe this action.

For Mr. Bernanke and his contemporaries, gold's traditional value is
not in question, which is probably what Congressman Paul's query was
driving at. Rather, it was the value of fiat in light of its well-earned
and sordid reputation that was being indirectly questioned.

Ironically, it is the ongoing tradition of central bank intervention
and currency devaluation that is shining the brightest light on gold's
intrinsic value. You may not be able to eat gold, but it is a constant
reminder of the constraints that it places, even in our modern times, on
central bankers - earning their scorn and pejorative dismissal. There
is a reason that Americans' private gold holdings were confiscated by
executive decree in 1933; they offered actual protection against the
currency devaluation that was being planned. Gold is the foil, the
opt-out, of every central bank confidence scheme.

Central banks are betting the financial health of their constituents
on the theory that they can buy prosperity. Just like the eccentric art
collector that vastly overpays for some obscure artist's original work,
the Fed and its global counterparts are hoping that the rest of the
world comes to see what they see, to value what they have valued. They
are hoping that the prices they establish through narrow transactions
become universally accepted as true value. If not, then the central
banks will once again transfer to the rest of us the cost of eating
their art.

 

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Fri, 07/15/2011 - 23:24 | 1461595 caerus
caerus's picture

Don't lie to me shit head...I will short the shit out of you when the time is right...

Sat, 07/16/2011 - 01:34 | 1461729 Fox Moulder
Fox Moulder's picture

The time will be right when the Fed runs out of money.

 

 

Wait, what?

Sat, 07/16/2011 - 07:25 | 1461864 Quintus
Quintus's picture

No, the time will be right when people begin to laugh at the idea of exchanging valuable goods and services for the Fed's pretty paper oblongs and binary digits created out of nothing and backed by nothing.

Sat, 07/16/2011 - 08:43 | 1461896 Bicycle Repairman
Bicycle Repairman's picture

Forget about shorting the shit out of anything.  When the SHTF, the financial markets will be closed.  Permanently.  You may think markets are sacrosanct.  Markets may be sacrosanct.  But in the lofty world of think tanks and foundations, they have a better idea.  What's the idea?  It isn't in the constitution.

Sat, 07/16/2011 - 10:29 | 1461976 caerus
caerus's picture

the time will be right when the neckline is broken at ES 1260 confirming the reversal and yes I will short it please excuse the earlier whiskey addled posts...I tend to get over excited

Sat, 07/16/2011 - 11:32 | 1462022 Thomas
Thomas's picture

Indeed, but I seem to be sitting in the minority by believing that Bernanke, because of his capacity to answer literally, was correct: Gold is not money and they are not printing money. To clarify, gold is not broadly accepted for goods and services, it really has to be sold (as an asset if you will) before it can be used in the market place. When he says he is not printing money, he is simply relying on the fact that the amount of actual physical currency in circulation is stable. If those who opposed him face-to-face had half a brain, they would ask the questions so as to not offer these relatively trivial escape routes. Ron Paul ought to know better; his rhetoric is getting the best of him.

Sat, 07/16/2011 - 15:30 | 1462351 LawsofPhysics
LawsofPhysics's picture

Funny thing about that.  I just gave some silver coins to a plumber to sign off on some sewer lines I recently ran.  He also helped with some of the plumbing.  Pretty sure he would have taken some of my gold coins if the value of the services were more and I agreed to that payment. He also took pictures and sent them to the county and city inspector.  Gold and silver still remain a safer store of value until we figure out what the next "fiat du jour" is going to be and as long as people who are capable of added real fucking value to your life will take it for services rendered, don't fucking kid yourself about Mr. Paul's rhetoric.  Just like the post crash U.S.S.R. there will be many bribes to be paid shortly.  Either way, compensation for those who add REAL value to your life is about to find it's way back to these folks, pronto.

Sat, 07/16/2011 - 18:33 | 1462672 sellstop
sellstop's picture

did he give you a receipt?

If he did, what did it say?

gh

 

Sat, 07/16/2011 - 11:40 | 1462031 Dan Alter
Dan Alter's picture

We have not known what thing all life forms use to measure value with.

Discovering what that thing is and how we use it is the oldest moral and economic question of all. I discovered what it was in 1985. Since we all use the same "thing" the same way all the time to measure how anything affects our personal welfare, that implies we can know the right way to issue money and credit which we most obviously are not doing now.

The title of the article is "The Objective Measure Of The General Welfare". http://www.no1stcostlist.com/News/article/sid=30.html

This discovery of what we use and how we use it to measure personal value necessarily led to deducing an even bigger danger that the oncoming catastrophic financial collapse we feel coming. You can not run money and credit honestly without consciously and publicly agreeing we are all own time cost minimizers. You each up to now have unconsciously tried to spend as little of your time alive as possible to get what you need or want. Unconscious gets you dead.

http://www.no1stcostlist.com/index.php

Sat, 07/16/2011 - 12:25 | 1462073 trav7777
trav7777's picture

get a proofreader, dude

Sat, 07/16/2011 - 09:48 | 1461940 Re-Discovery
Re-Discovery's picture

Don't piss on my head and tell me it's raining!

 

(Not sure this comment applies in any way  to this post, but I've wanted to write it for some time.)

Sat, 07/16/2011 - 10:54 | 1461988 cosmictrainwreck
cosmictrainwreck's picture

LOL. Kudos.... and yes, it could be applicable here, as most anywhere - could say it has veritible universal application

Sat, 07/16/2011 - 11:36 | 1462025 JW n FL
JW n FL's picture

Good Ideas

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

our Piss Umbrellas need to discourage The Government from pissing on "We the People without a Billion Dollar Lobby" heads as well.

Sat, 07/16/2011 - 11:39 | 1462028 JW n FL
JW n FL's picture

The Empathic Civilisation

http://www.youtube.com/watch?v=l7AWnfFRc7g

Fri, 07/15/2011 - 23:28 | 1461603 wsmith
wsmith's picture

This obviously presents us all with another great buying opportunity.

Well, since I don't have a dollar to my name, I can't afford to enjoy the stock market.

Instead, I'll just stay home and masturbate while dreaming of the lovely Becky Quick.

http://geraldcelente.proboards.com

 

Fri, 07/15/2011 - 23:29 | 1461605 caerus
caerus's picture

She is cute isn't she... Fuck in buffet!

Sat, 07/16/2011 - 00:10 | 1461624 wsmith
wsmith's picture

Listen, you dirty motherfuckers.

I've spent far too many nights having hot sweaty dreams about Becky Quick and Erin Burnett.

At this moment, I've got my prick in my hand while thinking about the sexy Asian chick who hosts Fast Money.

This, of course, begs a fundamental economic question:

Which CNBC girl would you most like to vandalize with your proletarian farm tool?

http://geraldcelente.proboards.com

 

Sat, 07/16/2011 - 00:40 | 1461678 TheForgottenMan
TheForgottenMan's picture

You sick bastards, CNBC?

I think Jenna Lee from Fox (who just got married)

TSA agent quits:

http://thewashingtonfancy.com/2011/06/man-takes-viagra-wears-sweatpants-...

 

Sat, 07/16/2011 - 00:49 | 1461696 slewie the pi-rat
slewie the pi-rat's picture

+^funny!^+

Sat, 07/16/2011 - 01:06 | 1461707 wsmith
wsmith's picture

Just answer the fucking question, Mr. Fancy Pants!

Becky?

Erin?

Or the hot Chinese Fast Money chick.

Jeeez!  You motherfuckers are complicated.

Your psychiatrists need psychiatrists.

So long for now.

And God bless all you rotten cocksuckers.

http://geraldcelente.proboards.com

Sat, 07/16/2011 - 02:13 | 1461760 Fish Gone Bad
Fish Gone Bad's picture

I can't believe you left off the Godzilla queen herself, Maria Bartaromo.  At one time, before the invention of the make-up gun by Homer Simpson, I thought Playboy courted her.

I don't watch CNBC, or any TV for that matter.  Put me down for whichever one is the LEAST whiny one who does not get orange pulp stuck in her front teeth.

 

Sat, 07/16/2011 - 02:19 | 1461765 TheForgottenMan
TheForgottenMan's picture

Ok, we will put you down for Rachel Maddow.

Sat, 07/16/2011 - 05:50 | 1461834 TuesdayBen
TuesdayBen's picture

He he he. And I do mean he.

Sat, 07/16/2011 - 02:18 | 1461762 The Shootist
The Shootist's picture

yeah, Fox has the foxes... I kinda like that Megan Kelly.

Sat, 07/16/2011 - 00:44 | 1461688 slewie the pi-rat
slewie the pi-rat's picture

heluva 2nd & 3rd post, ws_ith.  might as well go for it!  is this the universe's response to what barney frank suffered at the hands of zHeroes?

Fri, 07/15/2011 - 23:39 | 1461617 jack stephan
jack stephan's picture

I find it ironic that the henchman president studied constitutional law and is doing everything to ruin it.  The master money printer has knowledge of the Great Depression in and out, but sending us farther down towards a Greater Depression intentionally.

The US got sold queer giraffes.

 

Fri, 07/15/2011 - 23:39 | 1461625 caerus
caerus's picture

errr... Are we still talking about Becky here? Nvm we're screwed see you after the crash

Fri, 07/15/2011 - 23:48 | 1461636 Big Ben
Big Ben's picture

With all the US budget problems, it is funny that no one has suggested selling the US gov's gold. I would love to get my hands on some of it (if there actually still is any). But I think that no matter how much economists and central bankers may denounce gold as a "barbarous relic", they deep-down realize that it is actually very valuable. So they will even sell off the strategic petroleum reserve, but they just won't let go of the gold.

Fri, 07/15/2011 - 23:54 | 1461641 Libertarian777
Libertarian777's picture

Actually Ron Paul has suggested this multiple times.

Sell the gold back to that people. Not to pay off the debt, since it won't come close, but to call Bernake's bluff about the traditional barbarous relic being of not much value.

Sat, 07/16/2011 - 00:24 | 1461662 UP4Liberty
UP4Liberty's picture

Gold isn't the barbarous relic to which Keynes referred - he was talking about the gold standard.

 

But then again, according to Ben, when asked if Gold is money, he replied, "No."

Sat, 07/16/2011 - 05:18 | 1461825 TuesdayBen
TuesdayBen's picture

Was Ben also asked if Au is a store of wealth?

Sat, 07/16/2011 - 09:51 | 1461942 snowball777
snowball777's picture

Does your argument not also apply equally well to say....a water tank?

 

Sat, 07/16/2011 - 15:33 | 1462358 LawsofPhysics
LawsofPhysics's picture

Potable or non-potable water?

Sat, 07/16/2011 - 11:09 | 1461997 NervousRex
NervousRex's picture

For just a minute there I thought he was going to blurt out "Ya canna eat it now, can ya?

Just a fantasy.

 

Sat, 07/16/2011 - 00:36 | 1461676 Caviar Emptor
Caviar Emptor's picture

There's a reason why nobody has suggested selling US gold reserves. As the article mentions, that reason is faith. Because, after all the BS has been said and done, the country with the biggest gold reserves commands the highest rung in the global economic food chain. That country's currency is considered "Gold Standard" and "reserve currency". That was the position of Pound Sterling in the early 20th century when the British economy was pre-eminent and larger than that of the US, and the Pound was reserve currency. The British used their gold reserve, the largest,  to pay for their vast empire (which was unprofitable in many locations) and for wars in Europe. And when the US began accumulating the largest reserve of gold, the dollar became reserve currency. 

Gold and power have always gone hand and hand. Everyone in power knows it, but tries to keep it quiet. So when the US could no longer pay for it's debts through trade and was running an ever larger trade deficit, the gold window was urgently slammed shut in 1971 because the gold reserve was being drawn down. And we've been trying to hold our reserve status with IOUs ever since. 

Never forget that currency is simply an IOU. For what? For gold. That was the original intent. IOUs can be traded for other things like food as long as there is gold supplying value. Otherwise it's just swapping food for paper. If the US ever sold off the gold reserve, the dollar would lose reserve status immediately and would play second fiddle to the next dominant currency. 

Sat, 07/16/2011 - 02:05 | 1461754 oldman
oldman's picture

Hey Cav,

In spite of what I posted below----I really hope that you are correct. I like your thought better.

thanks            om

Sat, 07/16/2011 - 05:14 | 1461823 Dr. Eldon Tyrell
Dr. Eldon Tyrell's picture

I'd like to dedicate this song to Barry, Boner, and Bernanke...

"Were in the basement, learning to print.....All of it's hot!

10-20-30 Trillion ready to be spent...

Were stackin' em against the wall...those gangster presidents..."


http://www.youtube.com/watch?v=7oPuVAdGkk8

Sat, 07/16/2011 - 09:57 | 1461948 snowball777
snowball777's picture

Bishop to E7 Checkmate.

Sat, 07/16/2011 - 07:48 | 1461865 LMAO
LMAO's picture

"There's a reason why nobody has suggested selling US gold reserves. As the article mentions, that reason is faith"

 

That dear Sir is the reason why "extend and pretend" policy still works and this is at the heart of the issue why there is never going to be a decent Gold reserve audit.

 

"Because, after all the BS has been said and done, the country with the biggest gold reserves commands the highest rung in the global economic food chain"

 

In which lies the real twist of faith; it's not about having the biggest gold reserves, it's all about pretending to have the biggest gold reserves. It's not about you proving you have all this gold, it's all about counterpart interest having to prove you don't have it.

LMAO

 

Sat, 07/16/2011 - 08:57 | 1461903 Bicycle Repairman
Bicycle Repairman's picture

"Because, after all the BS has been said and done, the country with the biggest gold reserves commands the highest rung in the global economic food chain"

The US has attempted to change this rule i.e. the country with the biggest military commands the highest rung in the global economic food chain.  Yet oddly even with all this military action the US sinks deeper into the economic morass.

As for US gold, even if it is in Fort Knox, it is probably encumbered in any number of ways.

Sat, 07/16/2011 - 11:45 | 1462008 equity_momo
equity_momo's picture

Most gold - most powerful military. The 2 have generally gone hand in hand.

The Brits built their Empire through naval power remember. They put France and Spain in their place when needed. But Prussia became a risk by the 19th century and when Bismarck put good relations with Russia and Austria at the heart of his foreign policy ,  the British saw the writing on the wall. Cue an Alliance with the US to undermine the eastern powers and create World War 1 through diplomatic chicanery.

Have no doubt who was behind WW1.  As have no doubt who will behind WW3 (some say WW3 started on 9/11 or when the US invaded Iraq)

Crumbling Empires under threat start more and more and bigger and bigger wars.

Sat, 07/16/2011 - 12:43 | 1462092 Caviar Emptor
Caviar Emptor's picture

Well said. That 'back to the wall' feeling is growing. It started in the 1970s. Hence the need for more and more military. Gold is needed to pay for it all, or in or case, the belief in our gold reserves. We survived off the gold standard for this long because China needed access to our markets, and Europe/Japan were still completing their post-war build out and also wanted access. But the dynamic has changed. 

Sat, 07/16/2011 - 10:21 | 1461936 Bicycle Repairman
Bicycle Repairman's picture

.

Sat, 07/16/2011 - 09:47 | 1461938 Marco
Marco's picture

OPEC could start demanding gold for oil and empty government coffers in a couple of months unless it triggered an invasion, but then again ... an invasion would prove it's still not gold which puts you on the top rung, but your military and willingness to use it.

Sat, 07/16/2011 - 09:51 | 1461943 Bicycle Repairman
Bicycle Repairman's picture

"OPEC could start demanding...."

LOL.

Sat, 07/16/2011 - 01:59 | 1461747 oldman
oldman's picture

There is no gold.

Otherwise. we could just back the treasuries we need to sell externally at some outrageous rate of exchange for the foreign buyers----we the people don't require gold backed anything or we would have said something before.

iI dreamt that the gold went to bush1----just a dream five or six years ago

 

Sat, 07/16/2011 - 00:01 | 1461645 Manthong
Manthong's picture

Selling of any gold that may be left, emptying the SPR and selling of a trillion or so of federal property would go a long way towards "fundamentally transforming the United States".

Can you say "Hope and Change" in Mandarin?

Sat, 07/16/2011 - 00:04 | 1461648 KTV Escort
KTV Escort's picture

One of the best articles I've ever read, period.

Sat, 07/16/2011 - 00:09 | 1461652 static
static's picture

Agree ,  a well articulated epistle.

Sat, 07/16/2011 - 01:59 | 1461748 Raymond Reason
Raymond Reason's picture

Excellent.  And is Ben really so dumb?   ....or is he like many habitual liars, eventually losing the ability to perceive truth. 

Sat, 07/16/2011 - 07:45 | 1461870 Optimusprime
Optimusprime's picture

Agree. Glad to see Tyler has discovered Jeff Snider.

Sat, 07/16/2011 - 00:07 | 1461651 static
static's picture

"For Mr. Bernanke and his contemporaries, gold's traditional value is not in question, which is probably what Congressman Paul's query was driving at. Rather, it was the value of fiat in light of its well-earned and sordid reputation that was being indirectly questioned".

Yes,Gold is Gold Yesterday,Today,Tomorrow...easy to see that eh? It does not change... value.. measured in whatever medium is used to exchange for it is what changes. Likewise for ANY Natural resource. this is where scarcity makes its big play.

 

Sat, 07/16/2011 - 00:18 | 1461657 John Law Lives
John Law Lives's picture

In the meanwhile, 4 more banks in the US were seized today:

http://www.fdic.gov/

http://finance.yahoo.com/news/Regulators-shut-4-small-banks-apf-63267614...

55 banks seized so far in 2011... and counting.

Sat, 07/16/2011 - 08:07 | 1461882 Esso
Esso's picture

Jeeze, is Georgia EVER going to run out of banks?

Sat, 07/16/2011 - 11:54 | 1462044 JW n FL
JW n FL's picture

http://cr4re.com/PBL07152011.html

That list is compiled by a fellow family member here in Fight Club.. Calculated Risk is simply one of the pillars of Fight Club.. although he does not fight or bash people here.. his constant sharing and trying to educate the Broader Populace for the betterment of ALL! should be noted.. if you see him say Thanks and Good Job! it is the least we can offer to someone who is so helpful.

 

http://www.calculatedriskblog.com/

That is the home page for our fellow Fight Club Brother who Fights against ignorance every day!

 

http://www.calculatedriskblog.com/2011/07/bank-failure-55-summit-bank-prescott-az.html

From the FDIC: The Foothills Bank, Yuma, Arizona, Assumes All of the Deposits of Summit Bank, Prescott, Arizona

As of March 31, 2011, Summit Bank had approximately $72.0 million in total assets and $66.4 million in total deposits. ... The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $11.3 million. ... Summit Bank is the 55th FDIC-insured institution to fail in the nation this year, and the second in Arizona.

 

 

is the latest Bank he has posted.. once again he does a FANTASTIC Job! You can follow him on Twitter and he will as well send out email alerts to you if you sign up.. I have been on his mailing list going back more than a few months now and I have not been spammed (I dont think he gives away or sells your email info) and his alerts are short and sweet (one sentence of substance) with a link if you want more. His information is ALWAYS! sourced and sited by accompanying links! Gotta Love That!!

 

Thank You Calculated Risk!! Please NEVER STOP!!!

 

Sat, 07/16/2011 - 00:19 | 1461658 Shineola
Shineola's picture

I dunno.....could stop all foreign aid immediately.   Could stop bombing soveriegn nations.... that didn't do 911. 

could stop buying guns for international drug cartels and walking them across another nations border using Federal Agents.

 

there seem to be some spending solutions that aren't on the table.

Sat, 07/16/2011 - 01:13 | 1461714 Mactheknife
Mactheknife's picture

>there seem to be some spending solutions that aren't on the table.

Noticed that, did ya. We've got bases and/or installations in 140 countries. For what? We've got 70 thousand guys sitting in Germany. For what? With B-1 bombers that can fly from South Dakota to Libya and back why do we need any of that. The Pentagonhas 2.1 million people on the payroll but at the height of the 2 wars with 140 thousand guys actually fighting they said we were stretched to the limit which begs the question-what were the other 1.96 million people doing? Bureaucratic waste beyond belief.

Sat, 07/16/2011 - 01:49 | 1461740 Raymond Reason
Raymond Reason's picture

For what?  Guarding the poppy fields. 

Sat, 07/16/2011 - 00:29 | 1461666 MobBarley
MobBarley's picture

I eat not because my body requires sustenance, but for

the sake of tradition, and in fact, ever since the discovery

of Zero Point Energy, this truth evidences itself in all people today.

Sometimes, just to elucidate this point, I eat chunks of solid gold

and defecate silver, my body having absorbed the elusive transformative

power embedded mysteriously within.

 

Sat, 07/16/2011 - 00:34 | 1461670 wsmith
wsmith's picture

I had Rice Krispies this morning.

They were good.

Then I took a shit.

That was good, too.

Soon I'm taking my wife and kids to the beach.

That's not good.

I'm currently watching re-runs of CSI.

That's satisfying.

Later, I'm going to get pissed on Jinro Soju.

Have you ever had soju?  I can get totally faced for less than two dollars American.

That's very very good.

Peace.

www.geraldcelente.proboards.com

Sat, 07/16/2011 - 01:56 | 1461745 saulysw
saulysw's picture

When you wake up in the morning, you never know what you will learn during the day.

http://en.wikipedia.org/wiki/Soju

today : Korean drinking etiquette.

Sat, 07/16/2011 - 05:25 | 1461828 TuesdayBen
TuesdayBen's picture

What, are there no frolicking babes at this beach?

Sat, 07/16/2011 - 07:31 | 1461867 wsmith
wsmith's picture

Many frolicking babes.

But I'm married.  Plus I have two children.

I do what all married men do.

I go home and jerk-off to images of Becky Quick.

And don't fucking say you haven't done it!

Anyway, so long for now.

And God bless all you rotten cocksuckers.

http://geraldcelente.proboards.com

Sat, 07/16/2011 - 11:38 | 1462027 kennard
kennard's picture

Now I realize how TPTB destroy the minds of the best and brightest: through InfoBabes.

Rupert Murdoch had the formula down long ago.

Sat, 07/16/2011 - 09:34 | 1461929 mess nonster
mess nonster's picture

You're very educational wsmith, I'd never heard of this stuff. Somehow,the term  "korean vodka" has an evil ring to it, which makes it just that much more tempting. I suppose one has to be something of a hangover connoisseur?

Sat, 07/16/2011 - 09:56 | 1461946 Bicycle Repairman
Bicycle Repairman's picture

What is the radioactive content of Jinro Soju, post Fuk-you-shima?

Sat, 07/16/2011 - 00:35 | 1461677 slewie the pi-rat
slewie the pi-rat's picture

Central banks are betting the financial health of their constituents on the theory that they can buy prosperity.

prosperity going negative, j_snide.  this is gonna really be expensive, isn't it?  wait!  i don't wanna know.  that was purely rhetorical.  trust me. 

Sat, 07/16/2011 - 00:40 | 1461681 Caviar Emptor
Caviar Emptor's picture

There's little doubt left that the current policies are tarnishing the brand

Sat, 07/16/2011 - 00:47 | 1461692 Oh regional Indian
Oh regional Indian's picture

I like the fact that at least as far as the farcial game is concerned, we are now at a point when the honor amongst thieves, never there in the first place, will now lose it's illusion of Suited/Tied, back-slapping you scratch my back I'll stab you in yours kind of bonhomie.

Murdoch being fed to the press is hilarious, ironic and a heck of a twist in the tale!

ORI

http://aadivaahan.wordpress.com/2011/07/13/dublinmick-shared-this/

 

Sat, 07/16/2011 - 00:52 | 1461699 slewie the pi-rat
slewie the pi-rat's picture

it's practically biblical, ORI

i betcha the brits go levitical on him!

Sat, 07/16/2011 - 06:10 | 1461841 Oh regional Indian
Oh regional Indian's picture

Slewie, while I do not know my biblical his/her/theirstory too well, I take it he will have his Arse handed to him.

With the bard being quoted below and THE BARD above, I feel a little under-informed! ;-)

ORI

Sat, 07/16/2011 - 01:59 | 1461750 Helena Bonham-Carter
Helena Bonham-Carter's picture

The thieves are scattered, and possess'd with fear so strongly that they dare not meet each other. Each takes his fellow for an officer.

Sat, 07/16/2011 - 02:13 | 1461758 slewie the pi-rat
slewie the pi-rat's picture

there's no equity stirring.

Sat, 07/16/2011 - 02:19 | 1461764 Helena Bonham-Carter
Helena Bonham-Carter's picture

Furnish me lines from mine own library, Google?

Sat, 07/16/2011 - 02:27 | 1461770 slewie the pi-rat
slewie the pi-rat's picture

Strong's 

Sat, 07/16/2011 - 02:34 | 1461772 Helena Bonham-Carter
Helena Bonham-Carter's picture

Mine equity or else my stomach!

Sat, 07/16/2011 - 02:51 | 1461783 slewie the pi-rat
slewie the pi-rat's picture

i'd take the tummy.  yes, google.  you seem to have it pretty well downloaded, H_B-C.  the tempest.  nice.  very rich.  thank you.

Sat, 07/16/2011 - 01:03 | 1461703 Dempster
Dempster's picture

I have always understood that Market Value, as opposed to Specific Worth, was:

 

‘The estimated amount for which the *xxxxxxxxxx* would exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion’.

 

*delete XXXXXXXXX and add in whatever the name of the 'thing' is*

Sat, 07/16/2011 - 02:13 | 1461759 Helena Bonham-Carter
Helena Bonham-Carter's picture

O prudent discipline! From north to south, Ireland and Greece shoot in each other's mouth.

Sat, 07/16/2011 - 03:23 | 1461790 slewie the pi-rat
slewie the pi-rat's picture

nicely done!  was this the theme on bastille day, too? 

Sat, 07/16/2011 - 01:16 | 1461718 Caviar Emptor
Caviar Emptor's picture

The jig is up. We're not stupid. Gold ownership is way up as a result of spooky Fed policy. Premiums on gold are up. And scarcity will gradually set in. 

Sat, 07/16/2011 - 01:21 | 1461722 wsmith
wsmith's picture

Unfortunately, the jig isn't up.

The government has a lot of power.  And when gold breaks 2,000, you WILL see intervention.

Unlike Celente or Schiff, I don't see a huge crash.

My vision is more dim.

I think this is the new normal.

Welcome to paradise.

http://geraldcelente.proboards.com

Sat, 07/16/2011 - 01:24 | 1461724 slewie the pi-rat
slewie the pi-rat's picture

if you weren't running the ads here, would you have anything to say?

no.  obviously.

Sat, 07/16/2011 - 01:41 | 1461734 wsmith
wsmith's picture

I'm still waiting for your answer.

Becky?

Erin?

Or the hot Chinese girl?

Make a choice, you limey bastard!

I'm going with the china girl.

Well, I'm off to the beach.

Peace.

And don't get too down.

I lost a great deal during the crash.  My income dropped from lobsters to pork, from single malt Scotch to soju.

Life goes on, brothers and sisters.

Just be thankful we still eat meat.

http://geraldcelente.proboards.com

Sat, 07/16/2011 - 02:00 | 1461751 slewie the pi-rat
slewie the pi-rat's picture

you are the worse kind of fuking asswipe troll, thinking in false dichotomies from TV, even the most superficial of superficial, and presenting them here as if they were interesting, while advertising shit that nobody would click on, anyway

bye, shitforbrains

Sat, 07/16/2011 - 03:01 | 1461786 Vic Vinegar
Vic Vinegar's picture

Just keep in mind, friend, that some of the false dichotomies from tv are presented here as there truly is nothing left to say on Zero Hedge.  By now everyone should have made their choice.

You are a smart man slewie.  Good luck in these next few years that will most certainly be interesting.

Sat, 07/16/2011 - 03:30 | 1461792 slewie the pi-rat
slewie the pi-rat's picture

for sure, vic.  we've all done our schtick with these gals, here.  at least i have.  i just don't care to be run down by a drunk with advertising on his car.

Sat, 07/16/2011 - 05:23 | 1461827 NewThor
NewThor's picture

He's not even a troll.

He's a troll fluffer. 

Sat, 07/16/2011 - 07:14 | 1461856 wsmith
wsmith's picture

Brother, I'm just breaking your balls.  No shit.

I'm from the American deep South.  I'm a proud product of incest.

In fact, you could even call me a stereotype.

When it comes to fisticuffs, I have a distinct advantage--genetically speaking.

Let's be friends.  I'm looking for a hobby.  And I love this Zerohedge place.

So what do you say, you limey bastard?

Will you be my BFF?

Puuuulllleeeeze?

Yes!

You've made me a happy country boy.

Thanks, brother.

And God bless your English ass.

http://geraldcelente.proboards.com

Sat, 07/16/2011 - 09:28 | 1461927 Byte Me
Byte Me's picture

I lost a great deal during the crash.  My income dropped from lobsters to pork, from single malt Scotch to soju.

That's sad man, I made a bucket load by being fleet of foot. I guess your ancestral inbreeding finds you with yur feet on backwards.

Now fuck off to yoopoo financial or whatever damp rock you crawled out from under.

Sat, 07/16/2011 - 01:23 | 1461723 ebworthen
ebworthen's picture

"For Mr. Bernanke and his contemporaries, gold's traditional value is not in question, which is probably what Congressman Paul's query was driving at. Rather, it was the value of fiat in light of its well-earned and sordid reputation that was being indirectly questioned."

Exactly.

Sat, 07/16/2011 - 01:35 | 1461731 slewie the pi-rat
slewie the pi-rat's picture

here's the porn to prove it, eb!

usd_gold.gif (PNG Image, 850x668 pixels)

from morris hubbart: Jul 15, 2011 Gold, Silver, Sugar, Cotton Morris Hubbartt 321gold ...inc ...s

the scale on the right is sumkinda log, i think.  or, b/c it is approaching zilch, it would flatten.  these hi-paid geniuses must think this correlation is random, eh?

 

Sat, 07/16/2011 - 05:51 | 1461814 Habspurg
Habspurg's picture

Both gold and the usdx are measures of dollar weakness — usdx as it declines and gold as it ascends. But just what is the usdx:gold ratio supposed to show?

Sat, 07/16/2011 - 10:49 | 1461985 Bastiat
Bastiat's picture

Had the same thought after looking at the chart.  USDX muddies the picture, however the linear correlation gets my attention.  Pure expression of the decline of the dollar vs gold would be an inverse dollar gold price chart ie. gold/USD.  But that correlation is  interesting.

Sun, 07/17/2011 - 01:55 | 1463241 Habspurg
Habspurg's picture

Dividing a downtrending price (usdx) by an uptrending price (gold) doesn't show you their correlation. Multiply them and you're on the right path.

Sat, 07/16/2011 - 10:53 | 1461986 slewie the pi-rat
slewie the pi-rat's picture

(from the chart) The Dollar has declined abut 88% against gold in just ten years.


Sat, 07/16/2011 - 15:17 | 1462313 Bastiat
Bastiat's picture

I know slewie but price of gold in dollars defines exactly (in inverse) the decline of the dollar (USD) vs gold.

USDX is an index reflecting the value of the dollar vs a selected, weighted basket of other fiats, primarily the Euro; so charting gold against that index puts those other fiat variables in the mix and makes it less clear what's going on. 

Anything with a correlation like that gets my attention though . . . I'm just not sure what to make of it.  Hope to get back to it if someone else here doesn't explicate it first.

Sat, 07/16/2011 - 01:35 | 1461730 AUD
AUD's picture

Value itself is nothing more than the outward expression of individual faith

Bullshit. In the first line of the second paragraph. Value is an expression of utility, faith has nothing to do with it.

 

Sat, 07/16/2011 - 01:51 | 1461741 slewie the pi-rat
slewie the pi-rat's picture

yeah, aud, that slowed my reading down too.  but i like what this j_snide guy did with this piece, so i gigged him 5% and gave him a 95. 

Sat, 07/16/2011 - 01:54 | 1461744 Raymond Reason
Raymond Reason's picture

He didn't say blind faith.

Sat, 07/16/2011 - 02:18 | 1461761 Double down
Double down's picture

No.  Shallow and stupid.  Utility has no value at all.  The relativity of utility is just a double negative.  Utility is therefore an illusion of value, an extremely temporal circumstance; at best a measure of marginal efficiency.

Faith has everything to do with value.  Read Nietzsche.   Utility is an emptiness of value, a form without substance.  Value is a secret, a mystery.

 

Sat, 07/16/2011 - 03:47 | 1461800 AUD
AUD's picture

Read Nietzsche

Get fucked.

 

 

Sat, 07/16/2011 - 09:44 | 1461934 mess nonster
mess nonster's picture

Sheesh...I have to read Nietzsche to understand the difference between utility and faith? How 'bout... Buying a prostitute is an example of utility, because I KNOW I'm going to get laid, while marrying a wife is an exercise in faith, since I can only hope thereafter.

Sat, 07/16/2011 - 10:06 | 1461953 Bicycle Repairman
Bicycle Repairman's picture

A rock that is smelted and shaped becomes a hammer.  The hammer can be used to build and has greater utility, and thus more value than the original rock.

BTW Nietzsche died incurably insane.  The good news?  He wasn't a Keynesian.

Sat, 07/16/2011 - 09:58 | 1461949 Marco
Marco's picture

All money requires faith in it's future convertibility, you can have thousands of years of evidence ... but still certainty requires faith.

Sat, 07/16/2011 - 02:28 | 1461771 Double down
Double down's picture

Tyler

One of the best ever on ZH.

 

Sat, 07/16/2011 - 09:58 | 1461947 Conor
Conor's picture

I am a newbie here and not an economist, and I have to say that this piece is really very good.  Breaking down the question into these fundamental concepts helps me understand the relationship of sovereign debt to physical assets.

The subsequent comments of value and faith are also interesting.  Seems to me that value and faith are closely linked.  Gold would retain value, and indeed become more valuable as uncertainty increases with hyperinflation and societal breakdown.  But it is valuable only becuase most people believe that gold retains its position as a medium of exchange, a surrogate for hard assets that people need to live.   Easier to accumulate and carry gold coins than it is to store bushels of wheat.

But then one raises the question, "When is it that the limited practical utility of gold also renders diminishes its value?".  

This is why I am interested in other precious metals, particularly combinations of lead and brass of the 9mm, .357, 5.56, .308, and 00 buckshot varieties.   It does not require much faith to understand that in a societal meltdown, these assets can be easily exchanged for goods and services.  And the utility of these assets is such that they can help you acquire and protect food, shelter, and other necessary requirements to sustain activities of daily living.

 

 

 

 

Sat, 07/16/2011 - 10:11 | 1461960 Bicycle Repairman
Bicycle Repairman's picture

Gold vs. lead.  Which has more value?  Depends on the context. Contexts where lead is more valuable are probably far more dangerous and to be avoided.  Looking out over history the periods where lead is more valuable tend to be short lived and isolated.  Again knoeledge, evasion and gold appear to be a better strategy.

Sat, 07/16/2011 - 14:29 | 1462219 Conor
Conor's picture

That's kinda my point.  There is a risk that we will reach a place where the need for lead CANNOT be avoided.  At that point in time, gold may or may not be seen as having value.

 

Interesting observation below:  it really is the government who doesn't want to see an armed citizenry empowered and angered, isn't it?

Sat, 07/16/2011 - 14:29 | 1462220 Conor
Conor's picture

That's kinda my point.  There is a risk that we will reach a place where the need for lead CANNOT be avoided.  At that point in time, gold may or may not be seen as having value.

 

Interesting observation below:  it really is the government who doesn't want to see an armed citizenry empowered and angered, isn't it?

Sat, 07/16/2011 - 12:13 | 1462061 whstlblwr
whstlblwr's picture

Here is other example to us why not expect government able to save economic day. Can't even do simple job of disguise in blog.

Need free market.

Sat, 07/16/2011 - 18:17 | 1462636 sellstop
sellstop's picture

Yes, those are the precious metals that just keep on giving. The more you give away, the more come flying right back at ya!

gh

Sat, 07/16/2011 - 05:35 | 1461830 TuesdayBen
TuesdayBen's picture

Superb article...thx

Sat, 07/16/2011 - 06:54 | 1461848 pcrs
pcrs's picture

US tax slaves can be harvested more easily now than Greek tax slaves, but they also used to be a lot more productive. The tax slaves of the future produce mostly in Asia.

Sat, 07/16/2011 - 08:14 | 1461886 Sutton
Sutton's picture

Excellent piece.

Sat, 07/16/2011 - 08:30 | 1461891 Atomizer
Atomizer's picture

Son of a bitch.. we all just lost our tinfoil hat conspiracy rating..

Bauhaus - Stigmata Martyr

http://www.youtube.com/watch?v=nnrG904talA&feature=related

Sat, 07/16/2011 - 08:55 | 1461902 rwe2late
rwe2late's picture

"Yet U.S. debt is more "valuable", in money terms, than Greek debt solely because the Greeks have a "tradition" of default while the U.S. does not."  - J. Snider

"solely because"??? Yeah, let's ignore the role of the military  in establishing financial hegemony at the end of WW2, seizing control of resources and markets, and enforcing the petrodollar currently.

Just how less "valuable" would the dollar be if oil did not have to be purchased in fiat dollars, and quisling despots willing to cooperate with US trade dictates were not propped up around the world?

And how convenient it is to also ignore the tradition of repeated US defaults.

Sat, 07/16/2011 - 09:14 | 1461919 boooyaaaah
boooyaaaah's picture

To default or not to default that is the question.

Whadif G. Washington, T Jefferson, J. Adams had to consider the global ramifications of the Declaration of Independence. How would this affect the Bank of England, would it disrupt the French Royal Court.

And what about the citizens of the colonies that wanted to remian loyal to the Crown. How would the declaration affect them?

Read Youngblood Hawke by Michner

Did the founding fathers consider the ramification of the Declaration of Independance.

What is the "fall back position" to enowed by their creator with certain unalienable rights --- life liberty and the pursuit of hapiness.

This outrageous overspending, is this curbing our individual rights? Overspent money has three components -- Taxes, Debt And Printing. Our rulers have become so arrogant soon they will not need our approval for any component.

The reason America is great is not because we have a currency that the rest of the world uses. It is not because we a medicare system that surpasse the European model.

America is great because Our Founders and the patriots that supported them decided that the Government was to get Consent  from those governed.

Sure the rulers will invent reasons why this can not be

Each month, from what I have read, America takes in 180 B and spends 235 B. The 180 B is taxes, the 235 B is taxes plus debt and does not even count printing money (inflation).

But the Rulers say 235 B is not enough

It is time we withold our Consent.

Screw the international bankers - the military industrial complex - if we don't excersize our rights --- do we really have them?

They will not let us drill for oil, exploit our natural gas, yes exploit!, but they will tell us what light bulb we must use.

Who do they think they are?

Who do they think we are?

We are the sons of liberty --- How do I know? Because Abe Lincoln said so.

 


Excerpt of speech by Abraham Lincoln, delivered in Chicago on July 4,1858:

Now. it happens that we meet together once every year, sometime about the 4th of July,
for some reason or other. These 4th of July gatherings I suppose have their uses. If you
will indulge me, I will state what I suppose to be some of them.

We are now a mighty nation, we are thirty—or about thirty million of people, and we
own and inhabit about one-fifteenth part of the dry land of the whole earth.

We run our memory back over the pages of history for about eighty-two years and we discover that
we were then a very small people in point of numbers, vastly inferior to what we are now, and a vastly less extent of country,—with vastly less of everything we deem desirable among men,

—we look upon the change as exceedingly advantageous to us and to our posterity, and we fix upon something that happened away back, as in some way or other being connected with this rise of prosperity.

We find a race of men living in that day whom we claim as our fathers and grandfathers; they were iron men, they fought for the principle that they were contending for;

and we understood that by what they then did it has followed that the degree of prosperity that we now enjoy has come to us.

We hold this annual celebration to remind ourselves of all the good done in this process of time of how it was done and who did it, and how we are historically
connected with it; and we go from these meetings in better humor with ourselves

—we feel more attached the one to the other and more firmly bound to the country we inhabit, in every way we are better men in the age, and race, and country in which we live for these celebrations,

But after we have done all this we have not yet reached the whole. There is something else connected with it.

We have besides these men—descended by
blood from our ancestors—among us perhaps half our people who are not descendants at all of these men..., finding themselves our equals in all things.

If they look back through this history to trace their connection with those days by blood, they find they
have none, they cannot carry themselves back into that glorious epoch and make themselves feel that they are part of us,

but when they look through that old Declaration
of Independence they find that those old men say that "We hold these truths to be self- evident, that all men are created equal,"

and then they feel that that moral sentiment
taught in that day evidences their relation to those men, that // is the father of all moral principle in them, and that they have a right to claim it as though they were blood of the blood, and flesh of the flesh of the men who wrote that Declaration,

[loud and long
continued applause]

and so they are.

 

 

 

 

 


That is the electric cord in that Declaration that links the hearts of patriotic and liberty- loving men together, that will link those patriotic hearts as long as the love of freedom exists in the minds of men throughout the world. [Applause.]

Sat, 07/16/2011 - 09:34 | 1461930 tradewithdave
tradewithdave's picture

In the search for value, Chairman Bernanke has exposed the tradition of zero. Ground Zero, Zero value, ZeroHedge and Zero Mostel. 

When you "soft default", you're like a broadway show.  You don't "close"... you just "go dark" and that's an important distinction for an enlightened understanding of the reset switch.  In the meantime, keep Fiddlin' on the Roof while the Fed is intentionally burned by the very folks that own the $42 gold certificates. 

http://tradewithdave.com/?p=7306

http://tradewithdave.com/?p=7173

Dave Harrison

www.tradewithdave.com

 

Sat, 07/16/2011 - 09:53 | 1461944 jm
jm's picture

I don't disagree with the "central bankers as purveyors of illusion" notion at all.

One quibble:  But comparing Greece and the United States is just one of those great misnomers that allow some to profit from the igonorance of others.  Greece is not a true sovereign.  They gave up having their own monetary poilicy that meets their needs in order to be in the EU.  In short, they can't default in slow steps by printing.  Their only option is to jump into default.

To the real point: now we have the Fed who wants to print a slow controlled diminishment of claims on the future if only to mitigate te possibility of default, Germans who call the shots seem to want to implode a big chunk of their export market via ill-suited unilateral monetary policy, and the elected in WashDC that are too dumb, childish, and hubris-ridden to actually make decisions that look outside their own limited vantage point.

Here's a fun game to try your hand at:  of the three, who's dumbest? 

Sat, 07/16/2011 - 10:11 | 1461958 blindman
blindman's picture


http://www.youtube.com/watch?v=ttDF9ATr57E&feature=player_embedded
MUST SEE! Ex-CIA Agent Explains How Bloggers Can "Dump Congress On Its Ass"
.

Sat, 07/16/2011 - 10:41 | 1461961 Atomizer
Atomizer's picture

Coupled with a manufactured monetary crisis, the new green movement is based on Shintoism.

Ancient religion developed in Japan around 500 BC. Followers believe that nature is sacred and worship natural objects like mountains, trees, and rivers.

Image a very large dart board. Central planners blind fold themselves, toss and recreate failed civilization as new hope and change.

Edit. forgot to site my source

http://quizlet.com/5440534/global-ancient-world-civilizations-and-religions-4000-bc-500-ad-flash-cards/

No one ever talks about a very,very early society that existed on this globe. I will tell you about it shortly.

 

Sat, 07/16/2011 - 11:05 | 1461993 PulauHantu29
PulauHantu29's picture

Fundamentals?.....Valuations?.....doesn't matter anymore.

The system is distorted...corrupted. We have the so-called "gold standard" that are supposed to be the presently AAA rated Treasury Bonds that are nothing but Debt back by washed out taxpayers who bought too much stuff they could not afford with money they did not have. The Bonds and the USA dollar are backed by these washed out debtors and the hopes of a growing GDP....i.e., production.  But what is our GDP?

75% consumer spending and 20% financial instruments......less then 5% manufacturing.

In the meantime, the gubberment (FHA, etc...) are still handing out Zero-Down loans to people who cannot afford them so the house prices are guaranteed to continue their decline.

On top of it all we have a Federal reserve in charge of the economy that favors the bandits who caused the problem and Bonusing them while whippping the Middle Class. The balance needs to be restored.

GL!

Sat, 07/16/2011 - 11:49 | 1462041 the grateful un...
the grateful unemployed's picture

But those additional purchases only push up the momentary price of the asset,

 

reminds me of something Prechter says, markets need constant buying to maintain themselves, and they tend to fall on their own accord.

like Ancient Romes vast roads across Europe, the lines of supply become tenuous, the castles are hard to heat and expensive to maintain. Eventually the system crashes under its own weight.

how's corporate America doing, with its tentacles into places like Pakistan, and China. and with it goes the USG, with its need for mass produced cheap goods.

and with slimming margins the value of an asset is largely what it takes to maintain it. what does it take to maintain the dollars reserve status. military adventure, bogus foreign aid money, buying our own bonds to fix the rates where they give us the most benefit.

Sat, 07/16/2011 - 12:32 | 1462079 Atomizer
Atomizer's picture

+1. You get it, others will soon follow.

Sat, 07/16/2011 - 14:24 | 1462202 honestann
honestann's picture

Wrong.  The USSA has a horrific record of default.

In the 1930s the USSA utterly and completely defaulted, not to mention went total gangster-theives, when they stole ALL money from their own citizens, and asserted their own citizens were not allowed to hold... get this... one of the 92 natural elements (and an incredibly inert and non-dangerous one at that).

In 1971 the USSA utterly and completely defaulted when they unilaterally refused to honor their promise to exchange physical gold for printing press dollars.

And recently the USSA utterly and completely defaulted on ALL honesty, ethics and lawfulness when they stopped prosecuting massive crimes AND started to aid, abet and support massive crimes.

The USSA has been defaulting on every dollar their create since 1971, since they completely destroyed money (official money no longer exists in the USSA, only debt (notes)), and also the never-ending inflation they create is default.

The USSA has defaulted on everything they could possibly default upon.

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