Guest Post: Here's The Setup For The Con Of The Decade

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Fri, 04/15/2011 - 11:15 | 1172499 Quinvarius
Quinvarius's picture

The best laid plans of mice and men...

Fri, 04/15/2011 - 11:21 | 1172526 Oracle of Kypseli
Oracle of Kypseli's picture

Look out for an interest rate hike this weekend, if not today. Gold and silver breakout will not go unchecked.

Fri, 04/15/2011 - 11:22 | 1172534 the not so migh...
the not so mighty maximiza's picture

If they raise rates the goverment is even more screwed because just the interest on debt will be at insane levels. 

Fri, 04/15/2011 - 11:40 | 1172613 WaterWings
WaterWings's picture

OTM: "Here's how they'll bake the cake..."

tnsmm: "I think you forgot to put in the flour."


Charles, you have an otherwise very intriguing idea.

Fri, 04/15/2011 - 11:56 | 1172670 66Sexy
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i like the idea of accumulating dollars and buying up collapsed commodities once rates hit peaks... thats what all PM investors must be prepared for; the dollar is the PM hedge.

A fiat-float until an eventual doubling of net worth.


Fri, 04/15/2011 - 12:20 | 1172817 mayhem_korner
mayhem_korner's picture

the dollar is the PM hedge.

Go back into the closet, count to ten, come out and try again.  'tard.

Fri, 04/15/2011 - 12:40 | 1172920 ElvisDog
ElvisDog's picture

I wouldn't be too hard on 66sexy. TPTB may very well try to crash commodities, and they may succeed for a little while. If they do try, I suspect the success of the intervention will be less than they hoped for and of less duration too.

Fri, 04/15/2011 - 14:15 | 1173354 SRV - ES339
SRV - ES339's picture

GS tried Monday... worked 'til Tuesday (but the bond auction results were great... the true goal).

Fri, 04/15/2011 - 14:52 | 1173502 rocker
rocker's picture

Lloyd Blankfein and his band of thieves, (Neel Kashkari and Paulson), must be put in Jail.  He lied to congress. Put him in jail.

Close them down. Take away bank status. Take away their software to manipulate markets.

Americans would at least have a chance.  Until then.  They control all.  The FED, the Treasury, the commodity exchange, forex and whatever President is in office.     Until then We Are Japan.   

Fri, 04/15/2011 - 15:56 | 1173804 forexskin
forexskin's picture

What the true believers of hyperinflation and the destruction of the dollar cannot accept is that debt is an asset to the owner of that debt

debt asset holders, meet the bloodless stone.

Fri, 04/15/2011 - 16:18 | 1173914 rocker
rocker's picture

+10   The Morque and Shitty Bank own alot of it.  Problem is, when you rob so much money from the debtors. You get defaults.

Mon, 04/18/2011 - 07:13 | 1179505 zyphryx
zyphryx's picture

Hear! Hear! What good is debt if you can't collect?

Fri, 04/15/2011 - 12:47 | 1172936 tmosley
tmosley's picture

I wouldn't be so harsh.  If the folks in charge had any competence, they might well do what the author thinks they will do.  Higher interest rates would save the economy, if the politicos had the will to default.

Gold and silver will NOT do poorly in such a scenario.  Indeed, with Treasuries no a longer safe haven asset, gold will likely explode as it resumes its role as such.  

The thing is, big evil insiders will profit from ANY situation, if they understand it.  I'm not so sure that they do.  If they did, they would have huge stacks of gold and silver coin in their safes.  There is no need for the author's scenario to play out for insiders to profit, either in real terms, if they understand what is happening, or in nominal, paper terms, if they don't.

The point is that the ship of state has hit an iceberg.  The normal manner of disembarking is to get into the small boats that double as life boats, so you aren't going to be left behind if you go ahead and grab some seats.  If the ship should somehow limp into port, fine, you would need your gold anyways so you can move into the next currency system without a penalty.  If it doesn't make it, then you survive while everyone else drowns.

Fri, 04/15/2011 - 14:28 | 1173416 Bob Sponge
Bob Sponge's picture

Charles Hugh Smith needs to explain how the 2021 Dooms Day he predicts will effect the rich elite executing the con he lays out. The Dooms Day would either be hyperinflation due to creating dollars to fund the gov't or austerity so severe that the US is in severe disarray. In either Dooms Day scenario, I would not want to be holding treasuries.

Fri, 04/15/2011 - 15:01 | 1173534 tmosley
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Right, but you might want to buy them after the rates explode as a result of doomsday, assuming no dollar inflation (due to magic of some sort or another).

Seems pretty wild to me, but not impossible.

Fri, 04/15/2011 - 18:38 | 1174549 Amish Hacker
Amish Hacker's picture

Not impossible, but the whole plan seems to hinge on buying at the exact top in interest rates. If TPTB purchase early, before interest rates have finished going up, they'll take losses, too. It's not enough just to wait for rates to go up, you have to wait until they have stopped going up.

Fri, 04/15/2011 - 15:27 | 1173637 Weaseldog
Weaseldog's picture

When you own the cow, the milk, the churn, and laborers, the butter is all yours.

Fri, 04/15/2011 - 14:19 | 1173373 rjabele
rjabele's picture

whose the 'tard

in the expression  $/t-oz  the dollar is the numerator and the troy oz is the denominator - by definition they are always and everywhere in an inverse relationship. When one goes up the other goes down.

how can that not be a hedge?

The USD is the absolute PM hedge.





Fri, 04/15/2011 - 19:35 | 1174704 mayhem_korner
mayhem_korner's picture

You've just enlightened us that rjabele translates "simple one" in your native tongue.  Your "absolute hedge" works great so long as there is only $ and oz in the world.  Kinda like when we pretend in econ 101 that only guns and butter can be produced. 

So help us understand how you capture the arb today given that the $ and silver both rose, but the $ fell in terms of crude and silver rose against crude?  Check your answer against your theory.

Fri, 04/15/2011 - 13:04 | 1172988 SheepDog-One
SheepDog-One's picture

'Dollar is the PM hedge'...I dont even know what thats supposed to mean.

Fri, 04/15/2011 - 13:33 | 1173119 malikai
malikai's picture

It's like Celente says: 80% PM/20% currency, or so. I think he likes his currency split USD/CAD. It makes sense for a hedge. I think I'd rather have puts on my physical PMs, though.

Fri, 04/15/2011 - 13:45 | 1173223 mayhem_korner
mayhem_korner's picture

Hedge against what?  Hold fiat to hedge against a drop in fiat-denominated asset?  Think it through and you'll realize what you're saying is hedge fiat with fiat (and claim victory if you time it right). 

You're mixing value store with fiat-denominated profit.  I'm with Sheepdog, it doesn't make any sense.

Fri, 04/15/2011 - 14:21 | 1173292 malikai
malikai's picture


Fri, 04/15/2011 - 14:47 | 1173464 hedgeless_horseman
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Hedging and diversification guarantee mediocrity at best, which is fine if you are already old and/or rich.

Fri, 04/15/2011 - 16:57 | 1173848 SME MOFO
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diversification is for cowards but

me likes a nice hedge to clear away the correlation underbrush and so daddy can sleep at night when a position is so big his eyes bleed from the pressure

Sat, 04/16/2011 - 09:46 | 1175652 FEDbuster
FEDbuster's picture

I hedge my precious metals, with alternative precious metals (brass and lead). 

With only 45% of Americans working (the other 55% too young, unemployed or retired) and only a portion of those working paying any taxes, I don't see income tax revenue being the savior for the deficit (or interest payment) problem.  The next big thing will be a VAT in the US.  They will skim a little off of each transaction (including Internet sales) at each level of transfer.  Those on fixed income or the government dole will continue to see their purchasing power go down as inflation and taxes eat up more of their income.  We currently pay almost 10% sales tax here in AZ, property taxes have remained constant despite a 50% drop in real estate values (taxes pegged at the peak in 2006).  The government's "needs" will continue to grow, as the citizen's "means" continue to drop. 

I still think WW3 or a manufactured pandemic (designed to inflict casulties on the 60+ population) will be their last ditch effort to "fix" things.  The author's 2021 doomsday date is optimistic, I think we will see something much sooner. 

Martin Armstrong (now a free man!) has written an interesting article titled "Nothing is Certain but Death, Taxes and the Other Side of Inflation" please take the time to read it.

History always repeats itself, in new and innovative ways.  Fiat money ALWAYS fails.

Fri, 04/15/2011 - 14:00 | 1173304 malikai
malikai's picture

Not neccessarily. If QE ends and PMs either get cut down or they come down as a result of extreme rates, puts serve two purposes. 1. They allow you to retain nominal value. 2. They allow you to BTFD even more. 3. They may also help some people sleep better at night.

Dry powder enables similar results, but without the cost/upside of buying puts.

Fri, 04/15/2011 - 14:03 | 1173315 mayhem_korner
mayhem_korner's picture

I agree with the puts.  I was making reference to the soft-skull comment earlier in the thread about hedging PM with dollars. 

So you can lower your scythe, Jethro...

Fri, 04/15/2011 - 14:30 | 1173417 malikai
malikai's picture

I'll lower my scythe when I'm done with the harvest. :)

Fri, 04/15/2011 - 17:23 | 1174216 redguard
redguard's picture

Huh, the dark lord of the scythians. I wonder if that's who Blankfien was referring, certainly wasn't Jesus.

Fri, 04/15/2011 - 17:55 | 1174393 IQ 145
IQ 145's picture

 "The dark lord of the scythians"---monty python puns. funny.

Sat, 04/16/2011 - 15:37 | 1176325 Bicycle Repairman
Bicycle Repairman's picture

Nominal rates will go up, but real rates remain negative as inflation goes up.  Commodities and PMs continue up.

Fri, 04/15/2011 - 11:53 | 1172669 Bananamerican
Bananamerican's picture

yup, AND author seems to leave out/ignore one little thang...the Pain of the people. 

I doubt we'd get to where his scenario leads before things began to burn

Fri, 04/15/2011 - 12:05 | 1172725 Chuck Walla
Chuck Walla's picture

They elected Obama without a shred of evidence he could the job. I don't think this looks all that hard.

Fri, 04/15/2011 - 12:37 | 1172897 Pegasus Muse
Pegasus Muse's picture

TPTB selected and backed Obama precisely because they knew he couldn't do the job.  That was the point.

Fri, 04/15/2011 - 12:51 | 1172948 Ned Zeppelin
Ned Zeppelin's picture

What makes you so sure Obama is not performing precisely as his TPTB backers were hopeful he would?

Fri, 04/15/2011 - 13:23 | 1173067 Chuck Walla
Chuck Walla's picture

Its not that Obama is not doing the job he was hired to do by TPTB, its that the people were so easily led to actually allow him to take the job. On the other hand, McCain, the Progressive Lite, I think was the backstop option if someone had actually been able to wise up the chumps. John would have made a much better Manchurian.

Fri, 04/15/2011 - 13:30 | 1173125 jomama
jomama's picture

i wouldn't say so much 'easily led', but more like desperate.  
throw in a dash of color and you've got the masses cow tied.

Fri, 04/15/2011 - 13:49 | 1173243 sgt_doom
sgt_doom's picture

"What makes you so sure Obama is not performing precisely as his TPTB backers were hopeful he would?"

Exactly, Ned, exactly so.

How any fool today could possible not understand that anyone from the University of Chicago law or econ faculty would behave otherwise is beyond all credulity.

Did they expect Antonin Scalia, the last high-profile guy from U. of C. Law, to be a liberal, for god's sakes?

Catch a clue, non-thinking types out there!

Fri, 04/15/2011 - 15:28 | 1173649 Weaseldog
Weaseldog's picture

He's doing exactly the job that the bankers elected him to do.

He's also performing his duties with great competence.


You just think he's screwing up, because you think he should be doing a completely different job, and working for completely different people.

Fri, 04/15/2011 - 14:27 | 1173404 geotrader
geotrader's picture

What job?  Act like a puppet?  He's doing quite well.

Fri, 04/15/2011 - 14:53 | 1173508 DeadFinks
DeadFinks's picture

All it takes to make his mouth move is two teleprompters.

Fri, 04/15/2011 - 15:12 | 1173586 GeorgeHayduke
GeorgeHayduke's picture

Not to defend Obama and those that voted for him, but the other, more conservative crowd, elected Bush the lesser...twice...knowing he was a worthless failure and only good as a country-clubbing frat boy. But hey, he talked tough and that counts for something with the Jingo crowd.

Face it, the Prez's job is to carry out the wishes of the upper 3-5% (maybe just 1%). End of story. All the rest is fluff to appease the peasants and keep them from rioting.


Fri, 04/15/2011 - 15:30 | 1173660 Weaseldog
Weaseldog's picture

Remember, half of the American people are communist traitors that want to eat your children.


Now turn left and cough while the bankers steal your wallet.

Fri, 04/15/2011 - 16:11 | 1173885 SME MOFO
SME MOFO's picture

+ 57,700 scrubbed felons

Fri, 04/15/2011 - 12:06 | 1172726 Chuck Walla
Chuck Walla's picture

Debt is the money of slaves.

Fri, 04/15/2011 - 13:28 | 1173101 FIAT_FixItAgainTony
FIAT_FixItAgainTony's picture

agreed chuck, and i prefer to be the gentleman who uses silver!

Fri, 04/15/2011 - 14:26 | 1173405 Cinfultreat
Cinfultreat's picture

Debt is a foolish mans riches

Fri, 04/15/2011 - 11:57 | 1172698 66Sexy
66Sexy's picture

one thing to be considered.


the government doesnt control interest rates; the fed does. the fed is a private, for profit institution.

rates could be raised on the notion of "saving" the purchasing power of the dollar.

Fri, 04/15/2011 - 12:10 | 1172755 Argonaught
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