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Guest Post: How Hyperinflation Will Happen
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Submitted by Gonzalo Lira
How Hyperinflation Will Happen
Right now, we are in the middle of deflation. The Global Depression we are experiencing has squeezed both aggregate demand levels and aggregate asset prices as never before. Since the credit crunch of September 2008, the U.S. and world economies have been slowly circling the deflationary drain.
To counter this, the U.S. government has been running massive deficits, as it seeks to prop up aggregate demand levels by way of fiscal “stimulus” spending—the classic Keynesian move, the same old prescription since donkey’s ears.
But the stimulus, apart from being slow and inefficient, has simply not been enough to offset the fall in consumer spending.
For its part, the Federal Reserve has been busy propping up all assets—including Treasuries—by way of “quantitative easing”.
The Fed is terrified of the U.S. economy falling into a deflationary death-spiral: Lack of liquidity, leading to lower prices, leading to unemployment, leading to lower consumption, leading to still lower prices, the entire economy grinding down to a halt. So the Fed has bought up assets of all kinds, in order to inject liquidity into the system, and bouy asset price levels so as to prevent this deflationary deep-freeze—and will continue to do so. After all, when your only tool is a hammer, every problem looks like a nail.
But this Fed policy—call it “money-printing”, call it “liquidity injections”, call it “asset price stabilization”—has been overwhelmed by the credit contraction. Just as the Federal government has been unable to fill in the fall in aggregate demand by way of stimulus, the Fed has expanded its balance sheet from some $900 billion in the Fall of ’08, to about $2.3 trillion today—but that additional $1.4 trillion has been no match for the loss of credit. At best, the Fed has been able to alleviate the worst effects of the deflation—it certainly has not turned the deflationary environment into anything resembling inflation.
Yields are low, unemployment up, CPI numbers are down (and under some metrics, negative)—in short, everything screams “deflation”.
Therefore, the notion of talking about hyperinflation now, in this current macro-economic environment, would seem . . . well . . . crazy. Right?
Wrong: I would argue that the next step down in this world-historical Global Depression which we are experiencing will be hyperinflation.
Most people dismiss the very notion of hyperinflation occurring in the United States as something only tin-foil hatters, gold-bugs, and Right-wing survivalists drool about. In fact, most sensible people don’t even bother arguing the issue at all—everyone knows that only fools bother arguing with a bigger fool.
A minority, though—and God bless ’em—actually do go ahead and go through the motions of talking to the crazies ranting about hyperinflation. These amiable souls diligently point out that in a deflationary environment—where commodity prices are more or less stable, there are downward pressures on wages, asset prices are falling, and credit markets are shrinking—inflation is impossible. Therefore, hyperinflation is even more impossible.
This outlook seems sensible—if we fall for the trap of thinking that hyperinflation is an extention of inflation. If we think that hyperinflation is simply inflation on steroids—inflation-plus—inflation with balls—then it would seem to be the case that, in our current deflationary economic environment, hyperinflation is not simply a long way off, but flat-out ridiculous.
But hyperinflation is not an extension or amplification of inflation. Inflation and hyperinflation are two very distinct animals. They look the same—because in both cases, the currency loses its purchasing power—but they are not the same.
Inflation is when the economy overheats: It’s when an economy’s consumables (labor and commodities) are so in-demand because of economic growth, coupled with an expansionist credit environment, that the consumables rise in price. This forces all goods and services to rise in price as well, so that producers can keep up with costs. It is essentially a demand-driven phenomena.
Hyperinflation is the loss of faith in the currency. Prices rise in a hyperinflationary environment just like in an inflationary environment, but they rise not because people want more money for their labor or for commodities, but because people are trying to get out of the currency. It’s not that they want more money—they want less of the currency: So they will pay anything for a good which is not the currency.
Right now, the U.S. government is indebted to about 100% of GDP, with a yearly fiscal deficit of about 10% of GDP, and no end in sight. For its part, the Federal Reserve is purchasing Treasuries, in order to finance the fiscal shortfall, both directly (the recently unveiled QE-lite) and indirectly (through the Too Big To Fail banks). The Fed is satisfying two objectives: One, supporting the government in its efforts to maintain aggregate demand levels, and two, supporting asset prices, and thereby prevent further deflationary erosion. The Fed is calculating that either path—increase in aggregate demand levels or increase in aggregate asset values—leads to the same thing: A recovery in the economy.
This recovery is not going to happen—that’s the news we’ve been getting as of late. Amid all this hopeful talk about “avoiding a double-dip”, it turns out that we didn’t avoid a double-dip—we never really managed to claw our way out of the first dip. No matter all the stimulus, no matter all the alphabet-soup liquidity windows over the past 2 years, the inescapable fact is that the economy has been—and is headed—down.
But both the Federal government and the Federal Reserve are hell-bent on using the same old tired tools to “fix the economy”—stimulus on the one hand, liquidity injections on the other. (See my discussion of The Deficit here.)
It’s those very fixes that are pulling us closer to the edge. Why? Because the economy is in no better shape than it was in September 2008—and both the Federal Reserve and the Federal government have shot their wad. They got nothin’ left, after trillions in stimulus and trillions more in balance sheet expansion—
—but they have accomplished one thing: They have undermined Treasuries. These policies have turned Treasuries into the spit-and-baling wire of the U.S. financial system—they are literally the only things holding the whole economy together.
In other words, Treasuries are now the New and Improved Toxic Asset. Everyone knows that they are overvalued, everyone knows their yields are absurd—yet everyone tiptoes around that truth as delicately as if it were a bomb. Which is actually what it is.
So this is how hyperinflation will happen:
One day—when nothing much is going on in the markets, but general nervousness is running like a low-grade fever (as has been the case for a while now)—there will be a commodities burp: A slight but sudden rise in the price of a necessary commodity, such as oil.
This will jiggle Treasury yields, as asset managers will reduce their Treasury allocations, and go into the pressured commodity, in order to catch a profit. (Actually it won’t even be the asset managers—it will be their programmed trades.) These asset managers will sell Treasuries because, effectively, it’s become the principal asset they have to sell.
It won’t be the volume of the sell-off that will pique Bernanke and the drones at the Fed—it will be the timing. It’ll happen right before a largish Treasury auction. So Bernanke and the Fed will buy Treasuries, in an effort to counteract the sell-off and maintain low yields—they want to maintain low yields in order to discourage deflation. But they’ll also want to keep the Treasury cheaply funded. QE-lite has already set the stage for direct Fed buys of Treasuries. The world didn’t end. So the Fed will feel confident as it moves forward and nips this Treasury yield jiggle in the bud.
The Fed’s buying of Treasuries will occur in such a way that it will encourage asset managers to dump even more Treasuries into the Fed’s waiting arms. This dumping of Treasuries won’t be out of fear, at least not initially. Most likely, in the first 15 minutes or so of this event, the sell-off in Treasuries will be orderly, and carried out with the idea (at the time) of picking up those selfsame Treasuries a bit cheaper down the line.
However, the Fed will interpret this sell-off as a run on Treasuries. The Fed is already attuned to the bond markets’ fear that there’s a “Treasury bubble”. So the Fed will open its liquidity windows, and buy up every Treasury in sight, precisely so as to maintain “asset price stability” and “calm the markets”.
The Too Big To Fail banks will play a crucial part in this game. See, the problem with the American Zombies is, they weren’t nationalized. They got the best bits of nationalization—total liquidity, suspension of accounting and regulatory rules—but they still get to act under their own volition, and in their own best interest. Hence their obscene bonuses, paid out in the teeth of their practical bankruptcy. Hence their lack of lending into the weakened economy. Hence their hoarding of bailout monies, and predatory business practices. They’ve understood that, to get that sweet bail-out money (and those yummy bonuses), they have had to play the Fed’s game and buy up Treasuries, and thereby help disguise the monetization of the fiscal debt that has been going on since the Fed began purchasing the toxic assets from their balance sheets in 2008.
But they don’t have to do what the Fed tells them, much less what the Treasury tells them. Since they weren’t really nationalized, they’re not under anyone’s thumb. They can do as they please—and they have boatloads of Treasuries on their balance sheets.
So the TBTF banks, on seeing this run on Treasuries, will add to the panic by acting in their own best interests: They will be among the first to step off Treasuries. They will be the bleeding edge of the wave.
Here the panic phase of the event begins: Asset managers—on seeing this massive Fed buy of Treasuries, and the American Zombies selling Treasuries, all of this happening within days of a largish Treasury auction—will dump their own Treasuries en masse. They will be aware how precarious the U.S. economy is, how over-indebted the government is, how U.S. Treasuries look a lot like Greek debt. They’re not stupid: Everyone is aware of the idea of a “Treasury bubble” making the rounds. A lot of people—myself included—think that the Fed, the Treasury and the American Zombies are colluding in a triangular trade in Treasury bonds, carrying out a de facto Stealth Monetization: The Treasury issues the debt to finance fiscal spending, the TBTF banks buy them, with money provided to them by the Fed.
Whether it’s true or not is actually beside the point—there is the widespread perception that that is what’s going on. In a panic, widespread perception is your trading strategy.
So when the Fed begins buying Treasuries full-blast to prop up their prices, these asset managers will all decide, “Time to get out of Dodge—now.”
Note how it will not be China or Japan who all of a sudden decide to get out of Treasuries—those two countries will actually be left holding the bag. Rather, it will be American and (depending on the time of day when the event happens) European asset managers who get out of Treasuries first. It will be a flash panic—much like the flash-crash of last May. The events I describe above will happen in a very short span of time—less than an hour, probably. But unlike the event in May, there will be no rebound.
Notice, too, that Treasuries will maintain their yields in the face of this sell-off, at least initially. Why? Because the Fed, so determined to maintain “price stability”, will at first prevent yields from widening—which is precisely why so many will decide to sell into the panic: The Bernanke Backstop won’t soothe the markets—rather, it will make it too tempting not to sell.
The first of the asset managers or TBTF banks who are out of Treasuries will look for a place to park their cash—obviously. Where will all this ready cash go?
Commodities.
By the end of that terrible day, commodites of all stripes—precious and industrial metals, oil, foodstuffs—will shoot the moon. But it will not be because ordinary citizens have lost faith in the dollar (that will happen in the days and weeks ahead)—it will happen because once Treasuries are not the sure store of value, where are all those money managers supposed to stick all these dollars? In a big old vault? Under the mattress? In euros?
Commodities: At the time of the panic, commodities will be perceived as the only sure store of value, if Treasuries are suddenly anathema to the market—just as Treasuries were perceived as the only sure store of value, once so many of the MBS’s and CMBS’s went sour in 2007 and 2008.
It won’t be commodity ETF’s, or derivatives—those will be dismissed (rightfully) as being even less safe than Treasuries. Unlike before the Fall of ’08, this go-around, people will pay attention to counterparty risk. So the run on commodities will be for actual, feel-it-’cause-it’s-there commodities. By the end of the day of this panic, commodities will have risen between 50% and 100%. By week’s end, we’re talking 150% to 250%. (My private guess is gold will be finessed, but silver will shoot up the most—to $100 an ounce within the week.)
Of course, once commodities start to balloon, that’s when ordinary citizens will get their first taste of hyperinflation. They’ll see it at the gas pumps.
If oil spikes from $74 to $150 in a day, and then to $300 in a matter of a week—perfectly possible, in the midst of a panic—the gallon of gasoline will go to, what: $10? $15? $20?
So what happens then? People—regular Main Street people—will be crazy to buy up commodities (heating oil, food, gasoline, whatever) and buy them now while they are still more-or-less affordable, rather than later, when that $15 gallon of gas shoots to $30 per gallon.
If everyone decides at roughly the same time to exchange one good—currency—for another good—commodities—what happens to the relative price of one and the relative value of the other? Easy: One soars, the other collapses.
When people freak out and begin panic-buying basic commodities, their ordinary financial assets—equities, bonds, etc.—will collapse: Everyone will be rushing to get cash, so as to turn around and buy commodities.
So immediately after the Treasury markets tank, equities will fall catastrophically, probably within the next few days following the Treasury panic. This collapse in equity prices will bring an equivalent burst in commodity prices—the second leg up, if you will.
This sell-off of assets in pursuit of commodities will be self-reinforcing: There won’t be anything to stop it. As it spills over into the everyday economy, regular people will panic and start unloading hard assets—durable goods, cars and trucks, houses—in order to get commodities, principally heating oil, gas and foodstuffs. In other words, real-world assets will not appreciate or even hold their value, when the hyperinflation comes.
This is something hyperinflationist-skeptics never quite seem to grasp: In hyperinflation, asset prices don’t skyrocket—they collapse, both nominally and in relation to consumable commodities. A $300,000 house falls to $60,000 or less, or better yet, 50 ounces of silver—because in a hyperinflationist episode, a house is worthless, whereas 50 bits of silver can actually buy you stuff you might need.
Right now, I’m guessing that sensible people who’ve read this far are dismissing me as being full of shit—or at least victim of my own imagination. These sensible people, if they deign to engage in the scenario I’ve outlined above, will argue that the government—be it the Fed or the Treasury or a combination thereof—will find a way to stem the panic in Treasuries (if there ever is one), and put a stop to hyperinflation (if such a foolish and outlandish notion ever came to pass in America).
Uh-huh: So the Government will save us, is that it? Okay, so then my question is, How?
Let’s take the Fed: How could they stop a run on Treasuries? Answer: They can’t. See, the Fed has already been shoring up Treasuries—that was their strategy in 2008—’09: Buy up toxic assets from the TBTF banks, and have them turn around and buy Treasuries instead, all the while carefully monitoring Treasuries for signs of weakness. If Treasuries now turn toxic, what’s the Fed supposed to do? Bernanke long ago ran out of ammo: He’s just waving an empty gun around. If there’s a run on Treasuries, and he starts buying them to prop them up, it’ll only give incentive to other Treasury holders to get out now while the getting’s still good. If everyone decides to get out of Treasuries, then Bernanke and the Fed can do absolutely nothing effective. They’re at the mercy of events—in fact, they have been for quite a while already. They just haven’t realized it.
Well if the Fed can’t stop this, how about the Federal government—surely they can stop this, right?
In a word, no. They certainly lack the means to prevent a run on Treasuries. And as to hyperinflation, what exactly would the Federal government do to stop it? Implement price controls? That will only give rise to a rampant black market. Put soldiers out on the street? America is too big. Squirt out more “stimulus”? Sure, pump even more currency into a rapidly hyperinflating everyday economy—right . . .
(BTW, I actually think that this last option is something the Federal government might be foolish enough to try. Some moron like Palin or Biden might well advocate this idea of helter-skelter money-printing so as to “help all hard-working Americans”. And if they carried it out, this would bring us American-made images of people using bundles of dollars to feed their chimneys. I actually don’t think that politicians are so stupid as to actually start printing money to “fight rising prices”—but hey, when it comes to stupidity, you never know how far they can go.)
In fact, the only way the Federal government might be able to ameliorate the situation is if it decided to seize control of major supermarkets and gas stations, and hand out cupon cards of some sort, for basic staples—in other words, food rationing. This might prevent riots and protect the poor, the infirm and the old—it certainly won’t change the underlying problem, which will be hyperinflation.
“This is all bloody ridiculous,” I can practically hear the hyperinflation skeptics fume. “We’re just going through what the Japanese experienced: Just like the U.S., they went into massive government stimulus—hell, they invented quantitative easing—and look what’s happened to them: Stagnation, yes—hyperinflation, no.”
That’s right: The parallels with Japan are remarkably similar—except for one key difference. Japanese sovereign debt is infinitely more stable than America’s, because in Japan, the people are savers—they own the Japanese debt. In America, the people are broke, and the Nervous Nelly banks own the debt. That’s why Japanese sovereign debt is solid, whereas American Treasuries are soap-bubble-fragile.
That’s why I think there’ll be hyperinflation in America—that bubble’s soon to pop. I’m guessing if it doesn’t happen this fall, it’ll happen next fall, without question before the end of 2011.
The question for us now—ad portas to this hyperinflationary event—is, what to do?
Neanderthal survivalists spend all their time thinking about post-Apocalypse America. The real trick, however, is to prepare for after the end of the Apocalypse.
The first thing to realize, of course, is that hyperinflation might well happen—but it will end. It won’t be a never-ending situation—America won’t end up like in some post-Apocalyptic, Mad Max: Beyond Thuderdome industrial wasteland/playground. Admittedly, that would be cool, but it’s not gonna happen—that’s just survivalist daydreams.
Instead, after a spell of hyperinflation, America will end up pretty much like it is today—only with a bad hangover. Actually, a hyperinflationist spell might be a good thing: It would finally clean out all the bad debts in the economy, the crap that the Fed and the Federal government refused to clean out when they had the chance in 2007–’09. It would break down and reset asset prices to more realistic levels—no more $12 million one-bedroom co-ops on the UES. And all in all, a hyperinflationist catastrophe might in the long run be better for the health of the U.S. economy and the morale of the American people, as opposed to a long drawn-out stagnation. Ask the Japanese if they would have preferred a couple-three really bad years, instead of Two Lost Decades, and the answer won’t be surprising. But I digress.
Like Rothschild said, “Buy when there’s blood on the streets.” The thing to do to prepare for hyperinflation would be to invest in a diversified hard-metal basket before the event—no equities, no ETF’s, no derivatives. If and when hyperinflation happens, and things get bad (and I mean really bad), take that hard-metal basket and—right in the teeth of the crisis—buy residential property, as well as equities in long-lasting industries; mining, pharma and chemicals especially, but no value-added companies, like tech, aerospace or industrials. The reason is, at the peak of hyperinflation, the most valuable assets will be dirt-cheap—especially equities—especially real estate.
I have no idea what will happen after we reach the point where $100 is no longer enough to buy a cup of coffee—but I do know that, after such a hyperinflationist period, there’ll be a “new dollar” or some such, with a few zeroes knocked off the old dollar, and things will slowly get back to a new normal. I have no idea the shape of that new normal. I wouldn’t be surprised if that new normal has a quasi or de facto dictatorship, and certainly some form of wage-and-price controls—I’d say it’s likely, but for now that’s not relevant.
What is relevant is, the current situation cannot long continue. The Global Depression we are in is being exacerbated by the very measures being used to fix it—stimulus is putting pressure on Treasuries, which are being shored up by the Fed. This obviously cannot have a happy ending. Therefore, the smart money prepares for what it believes is going to happen next.
I think we’re going to have hyperinflation. I hope I have managed to explain why.
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Thank you;
JW saw hyperinflation for years and still didn't happen.
http://www.shadowstats.com/article/hyperinflation
How long will inflationistas be wrong before they throw in the towel?
without the bailout is 08, it would have happened
The Bernanke Paulson Geithner bait & switch bailout stim was a failed attempt to reinflate the economy.
Because debt deflation exceeded it, it did not work except to create an ersatz stock market rally that ended on 26 April 2010.
So much for the summer of recovery, actually relapse. We just had three Hindenburg Omens in less than a fortnight...
Are you fking stupid?
What did FDR do to the dollar during the Depression?
Idiot. How much sterling does a pound now fetch?
Fiats' march toward zero is unabated. The interest on today's debt doesn't exist, man; it HAS to be printed. The type of en masse repudiation that money-supply-consuming deflation will cause will render the values of debts worthless. PAPER claims will be worthless and that is what the FRN is.
WTF good is a debt note obligating someone to pay you a sum of FRNs if the FRN has become "priceless"? The debt will simply NOT BE PAID and your claim is a bagel.
Meanwhile, debt-driven production will drop and prices of consumables and past-peak commodities will march higher
Good luck with your forecasts, humanity, trades and vocabulary...
some just cant figure out that if money is contracting (regardless of printing), prices fall. Inflation is not happening in the near term, as total dollars are decreasing...
Im sure glad i take others money for a living...
Hyperinflation Bitchez, coming to destroy your portfolio, after the deflationary collapse. Hindenberg Omen is alive and well...
Why do you post such garbage?
Mish
I'm cool if you think I'm full of it—just tell me why.
If you can't, well them maybe . . .
I think it was sarcasm...maybe. Perhaps you don't waste your time reading Mr. Shedlock's articles?
You nailed it, Mish, Denninger and Precheter are all just competeing for spots on the next "Peter Schiff was right" video.
Peter Schiff was not only not elected Senator, his clients lost money...
http://globaleconomicanalysis.blogspot.com/2009/01/peter-schiff-was-wron...
hahaha, The fags in that video cherry picked tops and bottoms in stocks and then assumed that everyone bought at the top and sold at the bottom.
Peter Schiff invests with a 5 to 10 year time horizon, do your research on his 10 year record asshole.
I am happy with my Schiff recomended Redback mining at $13 that just got bought out by Kinross for $30.
Learn some manners punk.
Mish's analysis accurate.
On a long enough timeline...
Read the Schiff's before Irwin thrown in prison.
Investigate before you invest.
http://en.wikipedia.org/wiki/Peter_Schiff
http://en.wikipedia.org/wiki/Irwin_Schiff
Security industry regulators would like you to know that our investment strategies are based partially on Peter Schiff’s personal economic forecasts which may not occur. His views are outside of the mainstream of current economic thought. Investors should carefully consider these facts before implementing our strategy.
http://www.europac.net/
The truth will set anonymous junkers free...
<deleted>
Yeah 1 out 100 of his recommendations... I like how you show your winners but not your losers... Schiff is a loser along with the rest of the paid advisors.
1.) he called the housing top or near the top but he didn't short it.... duh...
2.) then he said to be in the Euro and euro stocks.... boy that turned out well
3.) then he said to go long Asia and asia stocks... go look at the charts over there they are worse than the US
4.) the only investment that has done anything is gold, even most gold stocks peaked in ratio terms in 2007... juniors mostly peaked in 2006
He is riding the same waves as the rest of the paid advisors, he wrote a book called Crash Proof but all his clients got crashed. This is a FACT, saying otherwise is just you being a fool.
YES HE DID SHORT HOUSING ASSHOLE, HOW WOULD YOU KNOW ?
His 5 and 10 year record is flawless.
Well, I don't know what you are smoking his investors were down 60-70% along with everyone else, I have personally seen 2 of his clients sheets. Peter was not shorting housing nor was he recommending his clients to short housing.
He was recommending:
- Long euro and euro stocks
- Long asia and asian stocks
- Out of US stocks
- Long commodities
- Long gold miners and physical gold
Sorry buddy, rewriting history is futile. Which is why you pull one of your winners out of all the losers you had... Peter is riding the the same credit waves as Cohen and Cramer. I know the truth hurts which is why you are mad at me, I know your are negative in your account.
I guess his stupid book even says not to short stocks, I have heard him several times say he was not short in 2007 and 2008. Oh, Yeah I am the asshole to pointing out the obvious.
Look man, you are upside down on your account, you taking out on me for you listening to the Schiff's of the world is not my fault. Maybe you should actually learn to read and learn how the credit system operates instead of listening to the likes of Schiff that don't have a FREAKING CLUE.
http://seekingalpha.com/article/106824/comments
"Todd Sullivan:
I think you misunderstood Peter. Investors who listened to Peter Schiff in 2002 would not have "lost their pants." Foreign stocks outperformed US stocks between 2002-2007. Gold had quadrupled while S&P only gained 48%. And why would you short stocks? In 'Crash Proof,' Peter explicitly advised us NOT to short stocks, because the US Dollar is in long-term decline and it can lose value faster than stocks can. Schiff's strategy is an investing one, not a timing one. His investment strategy holds for the long-term and not merely for just the five years from 2002-2007"
I know for a fact that he shorted housing. I will dig it up.
His book says not to short anything. I have personally heard him on TV say he does not short and I heard him say he did not short housing.
You are just making stuff up to make yourself feel better, I know you are underwater following his advice. His clients were down significantly more than even the SP500.
Now you have to dig it up, hahahhaha.
Still waiting...
Long term investment: a bad trade that was not sold.
Gold no magic exception.
On a long enough timeline...
Schiff did indeed get destroyed in his primary run for senate..... however, this merely means that he cannot be categorized with a group of people that are held slightly below pond scum (and on par with sewage):
Dodd, Lindsey Graham, Schumer, Arlen Specter, Bernie Sanders, Joe Lieberman, John Kerry, Kay Baily Hutchison, Scott Brown, Olympia Snowe, Patrick Leahy, and now Linda McMahon, etc, etc.
If anything, one should be given more respect from losing any election to federal office, as the winners of these elections compromise every bit of integrity needed to win.
20% of the vote is not "destroyed".
Having run for Congress against a 15 term incumbent who died in office, inclined to agree...
http://en.wikipedia.org/wiki/Tom_Lantos
Anonymous junking enlightens no one...
Yes, those extremely intelligent and thoughtful Connecticut republicans decided to nominate the wife of the guy who popularized pro wrestling. Shrewd choice.
Come on now Turd, can't be any embarassing film footage or skeletons in that closet to get dragged out before November. Shrewd indeed.
Yes. Soon to be the "first family" of Connecticut politics. Sheesh!
http://www.youtube.com/watch?v=3TP8u5YnCtQ&feature=fvst
Yeah - the Republicans have shown their "wisdom" yet again. Screw that...
Jesse Ventura?
freedom is so relative. Peter Shiff did not get chosen and is free to speak his own words without need of a teleprompter.
the fed will never allow the banks under its control to massively divest themselves of their treasuries. your scenario may happen, but not this way.
You make a very good point, but I disagree. As I pointed out, the TBTF's weren't, in fact, nationalized—so conceivably, they could participate/accelerate a run on Treasuries, as I have outlined.
Bernanke and the Fed HOPE that the American Zombies won't turn on them—but they don't have any guarantees, much less any stick with which to intimidate them. And the Zombies have proven to be willing to do just about anything, to save their bonuses.
The only way the TBTF banks wouldn't screw Treasuries is if they were obliged by law. But the toothless "financial reform" that was just passed proves that the Fed gov. and the Fed Res. don't have the balls to reign in the American Zombies, and truly bring them to heel.
So your point is very well taken—and I thank you for it. But this is why I disagree.
GL.
don't forget it's only a handful of big banks, in league with the fed and treasury, who own these bonds. they will not be allowed to panic-sell UST. but don't let this sticking point alter the larger theme of hyper-I, which somehow will come upon us like a thief in the night.
Never gonna happen. Remember this is a syndicate that makes Brando in Godfather look like a lollypopper in shortpants. Not only would it be death of the company, but all the made men who turned against the conspiracy and their families would be under "the hand". Just not participating in the LTCM bailout was enough to sign the death warrant for some TBTF firms, who failed. There are a variety of deaths much more terrible than standing shoulder to shoulder, come what may, in supporting the doomed-to-fail Treasuries. Zombie banks won't turn on the feeding hand. Just never gonna happen.
The people may eventually repudiate the currency to a degree, but the dyed in wool high ranking financial operators know they are in this to the end. This version of the Titanic has the hands stay on the bridge to the bitter end.
But the debt still exceed all possible receipts, the dollar has outstripped any potential in the time continuum and in its ability to encompass meaningfully the collective goods and services of the global system, the people are slowly and surely falling from the conveyor belt. And the system is slowly starving. It will and must die.
But die another day.
A surprising number of people on this forum have no vision. This is MUCH bigger then the USA or the FED. It's about creating a global government, a global central bank and a global reserve currency that is supranational in origin. Likely this will be the BIS with help from the IMF and the SDR.
Short of the BIS itself and perhaps even that entity, NOTHING is too big to be sacrificed on the altar to bring about elite rule. Read up on Carrol Quigley (Anglo-American Establishment)
Now observe the statements from the G-20, Mervyn King, the IMF and the BIS itself.
A diligent person will find literally dozens of proclamations of a New Financial (World) Order from Gordon Brown, to Obama, to the Pope to Mervyn King all within the past two years.
For a specific link I recommend:
http://www.globalresearch.ca/index.php?context=va&aid=13239
This coordinated global collapse will result in a New Financial Order complete with a governmental arm that is free from democratic controls, utterly opaque and without any oversight whatsoever.
It's possible that this can be prevented, but not by ignoring it or pretending it isn't happening.
Once you have this context quite a few events fall right into place and things clarify remarkably. Order out of Chaos.
"Once you have this context quite a few events fall right into place and things clarify remarkably. Order out of Chaos."
That's what's so great about conspiracy theories!
http://www.infowars.com/
The Fed and the USG no doubt an iron -fist hold on the banks; the first bank that breaks ranks will be quartered and handed over to the others. One or two rounds of that and they'll stay in line.
You mention that the trigger event could happen over 15 minutes to an hour. That is still a long enough time for a couple phone calls; hold your treasuries or we take you down and send in the FBI to "investigate" you for a week, from which you never emerge except in Lehman-esque BK and eventual dissolution.
None of these rich Johnnies want that. Not even for a quick 60 minutes of profit.
But just as you say, nothing to stop the Continentals or and Asians from turning on us. In fact, I imagine that while the US TBTFs will help start the ball rolling, they'll not be able to stay in the game, which will then zone-shift westwards with the trading day, and ruin will descend from the East.
Same outcome either way, maybe a day's respite being the only difference. Our economy will be murdered while we sleep. Fitting, in a way, now I think about it.
cougar,
I think the point you missed is once this STARTS, it would not matter if the TBTF Banks were ordered to do anything, when you open the Gate, the horses are (will already be out) of the barn.
Regardless of what the Banks do..............
American citizens own the Treasuries.......it (stopping it), would be impossible.
Once Confidence is lost, it's too late.............I do not see the ability to shut down all the banks, and runs on stores, etc, as being an event that could be controlled.
Three day store supply, for Normal consitions, 3 week supply Normal conditions, at Dist Ctrs.............
The stores would be emptied in less than a few hours.Currency dump, would be as fast as humanly possible.
Agreed. Don't think this is not already programmed into the algos to act within something like 3 nanoseconds.
Most Americans will be bewildered if this happens, wondering why American Idol is being interupted the breaking news.
Then in a rare moment of enlightenment (or by just observing their smarter neighbors) they will be compelled to make a bee-line for the McDonalds drive-thru and order 20 #1 meals... super-sized.
Well, the fries never go off... so that might just work.
Gonzalo Lira, quick question. What about debt? Dollar denominated debt. What are your thoughts on what will happen to the trillions of dollars worth of debt? Will it just be wiped away or just made to be paid in the new currency?
Excellent post by the way.
Thank you, that's very kind.
Re. dollar denominated debt: In a hyper-I environment, nominal debtors make out like bandits. That's why so much of XIX century long-term debt was in gold or silver—to protect the creditor. We don't have that now—draw your own conclusions.
GL
This is one of the best articles I have read on ZH! It is believable, substantial and it is practical. It is a thesis that though imaginary contain sufficient detail and process flow to be highly realistic. Eventhough there are arguments against certain aspects and directions they in turn can fruitfully be debated. That is why this thesis has a life of its own, it has integrity.
It also does not culminate and terminate in extremes but argues that a process will establish itself without cataclysm. It speaks to questions I have had regarding what to do under scenarios not even contemplated by MSM.
Well done
Hey! That's really nice of you to say.
GL
I agree, this is one of the most thoughtful posts I have seen here. I really hope you will continue to write more, zero hedge could use more of your type around.
I cannot agree that the Fed and TBTFs are members of rival gangs. They are as one. They are solidly linked together at the hip. The big banks have nowhere to go without the central banks and all their propping interventions.
They are in the lifeboat tied together. One jumps and they all drown.
The looming assumption of nationalization by failure keeps order in the house....not the actual implementation. That reality is the intimidation stick that forges their partnership. The carrot is about looking the other way on the bonuses ...... which is mostly a grimy political deal. The Fed doesn't like the bonus scam due to the political heat , but otherwise I doubt they really give a shit.
It's like the Don and his capos. Each has his own function and death is the only way out.
More like a pack of wolves. Picking the carcass of Lehman is a good example, the piece of meat the Fed threw to them to keep them at bay. They will turn on each other when the pickin's get slim. If the banks have an opportunity to hit the legendary pot o' gold by selling off, they will. It will give them the opportunity to get out from under the thumb of the Fed, SEC, and accounting obligations. A quick fortune has turned many a banker's head.
The Fed pays member banks owning Fed stock, much of it held as nominee for private interests, 6% dividends, before sending a much smaller part of its 20:1 leveraged usury monopoly franchise to the Treasury, $45 Billion recently, versus $251 Billion interest costs to taxpayers, the third largest $3.69 Trillion US deficit budget item, if entitlements are aggregated ahead of $738 B for the Military Industrial Government complex as Washington, Jefferson, Jackson, Coolidge and Ike warned, with 0 increasing the budget, deficits and debts, violating numerous campaign promises...
http://www.nytimes.com/interactive/2010/02/01/us/budget.html
Why would they want to reign in their own creatures? They made them what they are today
"the fed will never allow the banks under its control to massively divest themselves of their treasuries."
I'm with GL. Exactly how? The TBTF banks won't do it because the fed asks them nicely. There has to be teeth to the demand. But we already know that TBTF also means Too Big to Jail. And without jail time, it's everyone for themselves and let the devil take the hindmost.
Wonderful post GL. Well done.
Thanks, W-dog.
Looking closely at the Big Six, certainly Citi will do whatever it's told. But Jamie Dimon? He'll give the Fed and Geitner the big Fuck-you-very-much, if TSHTF. It'll only take one to start selling, to fuel a panic in Treasuries—that's what has to be remembered. Like the IRA once famously said, "We have to get lucky only once—you have to be lucky all the time."
GL
TBTF also means Too Big to Jail, hey you have a F not a J¿
add this one
TBTF also means Too Big to F U C K
No such thing for you though, right velopunzel?
fuck U
The hyperinflation commodity thing already happened. Remember POT and oil soaring. Also, where are all of these dollars going to come from to buy all of this stuff? Nobody has any money. The supply of dollars just isn't there. That is why oil came crashing back down to earth.
Good point. Can hyperinflation occur in a society where the average citizen has very little money?
And why are the CAPTCHA questions getting easier? Is ZH trying to be accommodating to the Palinites/Becks' of the world?
IDK, there must be a fatwa on the abacus.
Hey, good one Idiot Servant! Now go make me a sandwich.
PS - the rice will come from Uncle Ben.
The supply comes from the massive liquidation of so called assets. That first wave of money out of treasuries and into the commodities market will not be experienced at the street level immediately. But those who get it start to unload their stuff they don't need to get the stuff they need. The stuff you don't need goes down, the stuff you need goes through the roof.
I thought he did a great job of explaining this.
And like I said, this already happened once and things locked up when oil passed $100 to a $110/barrel. If it happens again, it will be temporary, just like before.
If there is a big wave out of treasuries, interest rates will go up, and money will go back in to treasuries.
My opinion, time will tell.
You are assuming BAU conditions, where a functioning market directs investment toward the best expected return at least risk. You might be right even going forward. There might really be a functioning market out there still. However the parent post was stipulated on the idea that Ts are suspect -- presumably at any price -- and the playerz want out and will bail at the least provocation. Not a functioning market at all, but a panic.
It is an interesting thesis. Suggests that we've crossed some sort of major event horizon beyond which BAU no longer applies. This is in alignment with other themes we hear along similar lines, that the music is ending and the jig is up, which if true means we need to consider business-NOT-as-usual.
And roll out debt to infinity - LOL
Naw, just until the human race ceases to exist.
One thing we could do is ban the trading of commodities for anyone that doesn't actually use them.
I read where 98% of oil traded on ICE is never taken for delivery. I'm sure the same is true for all other commodities. Oil collapsed from $150 to $30 during the crisis because the price is all fluff, not because there was an 80% decrease in demand.
Hello, speculators allow producers and consumers to hedge their risk...
There was a global supply/demand imbalance in the delivery of crude. Whether you believe in peak oil or not (even the US Military acknowledges its growing influence), it wasn't entirely down "inflation" or "speculator greed".
http://www.individualglobalinvestor.com/images/Blog_pics/May18_09_Oil_Su...
This imbalance will hit us in the (rather unlikely) event, the "recovery" carries on. (and by recovery, I don't mean an increase in public sector spending alone).
I don't disagree.
Then why did it start its drop to 75% lower the very week that congress was vowing to "get to the bottom of the speculation"
I'm sorry, the demand did not decrease by 75% in a period of months. Speculation decreased..
http://www.youtube.com/watch?v=VLnWf1sQkjY
ColonelCooper, the self-proclaimed "Johnny Bravo troll".
Well done, man. Well done.
He's lame and has nothing to contribute, and you're even lamer for thinking he's cool.
You guys should go out back and play hide the sausage together. It wouldn't be different than your usual activities, only you'd both have new gay buddies to play with.
http://www.youtube.com/watch?v=VLnWf1sQkjY
LMAO !!!
it just gets funnier.
Just the thought made you have to change your pants, didn't it?
Conning a con, stealing from a thief, and now trolling a troll--all these are truly excellent things to do. Just deserts, at it were.
Did it make you feel sticky, JB?
Then why don't you get out?
Nice try, Johnny.
The homophobic name-calling may get you somewhere on Facebook and/or it may stop all debate in your classroom but it won't get you very far here.
Need some JBgone
This is easy. I been meaning to create some content on how oil and credit work, but just been too lazy.
anyhow, the 2007 oil runup was fueled by the fact that global consumption had exceeded global production for a prolonged period following the world C&C peak in 2005. Inventories were under relentless drawdown.
Then, the credit cycle peaked as $140 oil simply rendered a LOT of shit totally uneconomical. Just couldn't be done with those types of energy costs and the market prices that could be supported.
And I mean ALL kindsa shit, airlines, buses, taxis, everyday food related and ordinary things. Uneconomical. fuckin PIZZA delivery. It cut into every margin everywhere. FEDEX, UPS. ALL started charging fuel surcharges to preserve margins and in some cases any profitability at all.
And this price increase across the board caused people to walk and get their own pizzas. Demand collapsed. The US cut daily oil consumption by 10% in fact from 20mbpd to around 18. Consumption fell well below production, consequently, there was a glut.
But the price fell so low that it fell below the breakeven of nonconventionals, which bottom in the high $30s/bbl. This caused that activity to be uneconomical so it got shut in. Production dropped. Slack capacity went away, up goes the price again. Simple as that.
No conspiracies and no evil speculators necessary
Yea, that's definitely a significant part of the picture, but there was for sure some speculation too, because a lot of these speculators on looking at the data realised there was no more spare production capacity, and demand was not slowing down.
If you opened a book on Microeconomics, you'd find supply/demand pretty much on page 1. A 1% increase in demand can easily spike the price, if it results in further demand than supply.
The Nobel Prize is waiting for the first one that can create a predictive model for why in some goods an increase in price raises demand, particularly if the increase is rapid (think housing bubbles, dot.com IPO's). This is the more interesting, and as we have seen potentially damaging, supply-demand curve.
I'm guessing the reason is what should be on page TWO of every economics textbook:
"of course, when government involves itself in the free market, all expected incentives and bets are off."
from the bubble treasury market. The treasury market backs the dollar.
So dollars are going to come out of the treasury market, into joe six packs hands on the street so he can go pay $5 a gallon in gas or $5 for a loaf of bread?
If it can go from treasury to your average citizen I will agree with you. If not, it is just wall street moving money around from asset class to asset class. Demand will go down when prices go up, bringing prices back down.
You want to see our economy lock up completely? Watch your basic goods go through the roof limiting the populations spending ability on other things.
Nope, as the treasury market sells off, the dollar loses value. The joe 6 pack micro economy doesn't matter at that point.
You are thinking like a keynesian too much, all you think of is spend spend spend. That shoe box full of dollars under your bed will be worth less, it doesn't matter if you spend them or not.
As interest rates go up the dollar loses value? Possibly for a short period, but not long term.
As interest rates rise, people borrow LESS dollars, which leads to LESS money in circulation, which increases the value of dollars.
You're right. The premise above yours is not.
http://www.youtube.com/watch?v=VLnWf1sQkjY
Another takes up the mantle! Bully for you!
I love you man... DON'T FEED THE TROLL!!!
Johnny Jizz. I like it.
+++
shorts, very apropos of you, sir.
wondering when U would link, good job mate.
time stamps r not really making sense on this thread.
http://www.youtube.com/watch?v=VLnWf1sQkjY
JohnyJIZZ²
Even if people borrow less dollars it does not remove the original dollars created and placed into circulation. Their not taken back by the federal reserve, nor are the outstanding domestic and multiple other debts eliminated. If any creditor of the U.S. loses faith that the U.S. can pay off it's debts in U.S. currency that will be enough to destroy the dollar resulting in heavy printing by the fed as a knee jerk response and will result in a hyperinflation currency collapse nonetheless.
I disagree about oil being part of a hyperinflation scenario. Oil futures became the object of wild speculation in a last ditch attempt to save either Lehman or Bear. Those fuckers knew they had blown themselves up and then got the green light to run up commodities or any other vehicle in order to try and save the day. They failed, and oil plunged because there was no demand to support those crazy prices. That's my take, anyways, I could be way wrong, but the timing of events was uncanny.
You think oil running to $147 bbl was commodity hyperinflation?
I think you're in for a very BIG surprise!
Partly, yes, but several things were going on. Time will tell if I am surprised or not.
I was willing to consider your argument Gonzalo, but you lost me when you said that hyperinflation would be a good thing. Later on you say that a quasi-dictatorship would be the result. Why not speak out against this disaster?
Or, if you think that the disaster cannot be prevented, you could have at least condemned the practice of money printing as theft. I understand if your comments were out of frustration, but I would never approve of a system that is killing our country.
Bouncing back from such a scenario would take generations. It might permanently impair our law enforcement efforts. There's a key question: what if the change is permanent and we did nothing but standby and watch it happen?
The original post was not intended to discuss the aftermath or what to do about that.
The post really only said that events past a certain point are inevitable. This is useful information for those who are wondering how best to prepare their communities for painful adjustments. If correct then the projection was value as a management tool.
You are correct, the outcome is not desirable. It might take a century to recover politically. It might take 500 years. There is a lot at stake, but there may not be any way to avoid the outcome when the wheels are already coming off. Your only hope is knowing which way to jump clear of the coming wreckage.
In other blogs they do discuss how to insulate your entire community against chaotic collapse. Do read up on sustainable communities and resilient communities if you are concerned enough about outcomes to try and intercept the worse case scenarios. Many are doing just that. It's not much, it might not matter, but shortly we'll find out is my guess.
It's over. Something else is on the way. It is only a matter of time. What comes after is the work of the moment.
Agreed Cougar.
Hyperdeflagilisiflation. Doesn't matter what you call it. What matters is recognizing 'game over' and preparing for what's next. Resilient communities will bring Darwin back online.
Bah - Germany took but one, Argentina could have bested that if they put away their Peronist tendencies.
Please see above comments amico GL.
People counting on commodities, gold or anything going to the moon illustrate reverse gambler's fallacy...
http://en.wikipedia.org/wiki/Gambler%27s_fallacy
Sorry friend but the problem with your premise is we are now tossing a two headed coin. It's goiong to come up heads no matter what.
The US is broke. It cannot and will not pay off it's debts. So how do we balance the books in such a situation? are we going to do it differently than every other country, empire or kingdom has throughout history or do we simply fall for the same trap of sayig this time is different, we are different, it cannot happen to us?
Sorry, but I'm not that arrogant to look history in the eye and spit. We will and are making exactly the same decisions that have been made many times in the past to deal with the same issue and it always ends the same way - hyperinflation or default and there is no way we are going to default so Helicopter Ben to the rescue!!
ATM: there is no way we are going to default
Adam Smith wrote in 1776 that all governments default on their debts.
Being on a gold standard until 1933 did not stop gold contract defaults or depression...
Anonymous junkers are in jail...
The US is broke, debts cannot be paid--How will the books be balanced? why as crumbling empires always try to do, they go to war
Yep. The pre-emptive treasury run trump card is "create flight to safety stampede via. US induced black swan event" ... WAR.
People who bought Liberty Bonds to finance war lost.
People who went to war for Veterans Benefits and GI Bills lost, as we saw in the Bonus March Army DC Camps literally crushed by Eisenhower, MacArthur and Patton.
http://www.worldwar1.com/dbc/bonusm.htm
The misperception WWII got US out of Depression, along with FDR Norman Thomas John Maynard Keynes Socialist Policies, while popular with academics who like government grants, can be easily refuted by looking at the Dow, which after losing components and value to bankruptcy and inflation, did not regain 1929 highs in nominal terms until late 1954, a decade after WWII, 25 years after the Crash.
http://stockcharts.com/charts/historical/djia1900.html
The only way for America to recover is a return to the Constitutional protections from government that made America great. That may in fact require the de facto collapse of government from too much financial free lunch alchemy.
When the private export manufacturing base replaces the service prostitution gambling drug ersatz economy, putting people back to work with enough real income that they can prosper, save and invest for a secure future, then we may confirm the value of liberty and the productive justice of equal protections under the law with limited uniform taxes and a sound legal tender...
LOL. I love it when people do their own due dilligence on historians and it just destroys the stupid meme's they pass around.
The smart money in WW2 flipped the bird to War Bonds and bought California real estate pending return of soldiers.
Now if someone would just save me from my California real estate...
Hi Gonz...
Thank you for posting your prediction. There's no way to honestly say you're full of it. And it's an excellent way to get more people thinking about more possibilities; and getting some people to think at all.
I want to think you're all wrong. But something tells me you're closer to the truth than is going to be comfortable.
I'm just going to lie down for a few months until it's safe to get up again.
you look pretty cool. is that a little animal to your side, what kind, can't tell? liked your article a lot, your good.
Ah this is Mish..
This is the same moron that is bullish on the USD because there is a housing bubble in Canada. Well guess what..The only way the Canadian housing bubble will pop is with way higher interest rates. The Cad housing bubble is contained in a traditional banking system so it will take a traditional recession to pop the bubble, a traditional recession is a result of credit contraction(HIGHER INTEREST RATES)
So the CAD and AUS housing bubbles will last as long as the US bond bubble. And if your in US dollars to hedge the crashing CAD or AUS housing bubble, you will be more fucked then anyone else.
Did anyone check Mish's portfolio during the entire run from March 2009. His fund did nothing but fall when nearly every single asset class in the world, both good and bad, did nothing but rise. Epic fail!
I don't think that is really Mish. Not arrogant enough, no "Who's to blame? (unions!)
The only way the Canadian housing bubble will pop is with way higher interest rates.
1) Lower demand
2) USA sneezing.
3) Higher Taxes
4) Collapse of Canadoian medical.
5) Higher energy costs
6) Food shortages
7) Terrorism
That was in a minute...
PS Mish is not a moron...perhaps you are...
1)already
2)already
3)HST, already
4)in english please ?
5)thats bullish for Canada
6)thats bullish for Canada
7)already
wait a minute... Thanks for that, it reassured myself.
Hey Mish,
isn't your own blog the place for you to attack those concerned about failed CB and political policies? Too bad you tuned your ideas into a religion where anyone with an opposing view is a heretic or conman. Get a life and go back home to your dwindling audience.
In retrospect, it looks like that Time magazine article placing you in the top five of financial blogs, was wave five of five (blow-off top). I didn't notice, but was there a "B" move up on your downward A-B-C waterfall collapse? If so, did you enjoy it while it lasted?
Tyler, Mish will next survey the members of the blog here to see who has lost money since you've been up and running and then show how he gives better advice to investors than you do. Hopefully he'll have to do that on his own blog and not here.
+1000
Uh, because there are two sides to this argument. Hyperinflationistas (like myself) couldn't have done a better job of describing what a bond collapse will look like. That being said, I still love to read your opinions as well without referring to them as "garbage."
The truth is that nobody knows how this is going to play out 1,2 or 3 years (or days/weeks) from now. Personally, I think that TPTB would prefer that we stay in a purgatory-type balance while trying to manage-down our expectations of either occurring.
Thanks. GL.
garbage = does not have a basis in reality
http://www.youtube.com/watch?v=VLnWf1sQkjY
actually garbage is very real, the Fed's & TBTFs vaults are full of it and it's really starting to stink now
and as for the Imp troll, dont be so naive, course it's not THE Mish, this is basic trolling 101.
I'll say the same thing I always say.
If the USD is "garbage" - then why not give me yours?
The dollar is worth more now relative to other currencies than it has been over the last few years, and is at the same parity to other currencies as it was in 1985. (See a chart of the DXY)
http://www.youtube.com/watch?v=VLnWf1sQkjY
+++
lol, I think I'll watch that video every time I feel the need to reply to JB. It makes the urgency to show him how wrong he is disappear.
Don't FEED THE TROLL. Just watch him shudder.
The Coon is ROTFLMAO!
People need to stop trying to prove the value of the dollar by showing how its held up against that of other currencies. (I don't want these green pieces of paper, why would I want Europe's blue pieces of paper?) The point is that the dollar is well down against anything that anyone would want (save things like flat screen tvs and a few electronics). And even if I do think that the dollar is garbage (and I do), why should I give them to you when there are greater fools currently willing to accept them for the things that I need? At some point this won't be the case, and you can have whatever amount of dollars I haven't coverted into a more desirable asset.
Good luck.
Everyone knows JB is joking
I read and appreciate "the Mish." However, I look at this game as deflation in most credit/derivatives with real assets king.
In my meager portfolio, I have decided to go all out with gold and silver till the end of 2012 and then use that as my timing to transition into real estate.
Don't laugh, it is a good a timing signal as any.
cheers
Good luck with that.
WEB went all in with silver and stocks as a hedge against inflation and BRK went down...
http://stockcharts.com/charts/gallery.html?s=brk%2Fb
Once again, some find it easier to junk than comment intelligently...
Personally, I think that TPTB would prefer that we stay in a purgatory-type balance while trying to manage-down our expectations of either occurring.
This is exactly what they're presently doing... this is how the charade stays alive... as soon as the play becomes obvious, everyone rushes to one side of the island and it tips over, sending us all into water graves. That's because the present plan is a controlled destruction... THE GOAL IS DEFLATION... albeit slow... or slow "enough" for most of the key players to last enough rounds to cull enough of the herd to survive. Much like sale of IMF gold, inflation hints are going to vastly outnumber real injections. (bonds are telling them to put up or shut up).
The real question is whether or not we will adopt the austerity forced upon us... I believe we will not... and that is when the cascade of treasury sales (burning/giving away) will commence.
Yay Mish! This is exactly why I come to your blog more and more and not here so much anymore....
"Why do you post such garbage?"
Because the garbage fits with the agenda of the majority of posters here, which are long gold, on a site that perpetually advertises gold.
Reality has no basis in hope, don'tchaknow. Some hope that gold will reach 54000 dollars an ounce, which is only possible under various cockamamey scenarios that can only be dreamed about by gold salesmen.
Hey, JB, if you are going to give Mish a blow job, do it on his blog. And stay there. You aren't wanted, and your "opinions" aren't appreciated.
Yes, you must only listen to people that agree with you, even if you don't know what you're talking about.
I understand.
Gold is a religion, and you shouldn't talk religion or politics (which is also like a religion).
Did I insult your god?
No, you just have no learning capacity, despite numerous very patient attempts to teach you simple things, like the fact that you get the premium on gold coins back when you sell them.
Since one of the primary traits that defines a human being is the ability to learn, and you seem to lack that, I have to conclude that you are one of those things that looks vaguely human, but carries around a big stick which it uses to bash anyone that doesn't conform to his worldview, ie a troll.
There are plenty of people in these forums who don't agree that gold is going to go up, and while I disagree with them, you don't see me asking any of them to leave. The only other person I ever encouraged to leave was Cheeky, but that was only because of his constant insults to, well, everyone.
But seriously, you are not wanted or needed. Get out.
Really, why don't you stop crying like a little bitch? I can't believe that you can't take what is for the most part respectful discourse. It only shows how weak you are as a person. Even if I was flaming you all day (which I'm not) who cares? What? You've never been called a name before or something? Really. How weak. You're like a third grade little girl on the playground.
As far as learning capacity goes, what do you want from me? To start believing INCORRECT theories?
Should I learn to accept that 2+2 = 17 as well?
The whole thing is that you're WRONG, you obviously don't understand economics, and the best thing that you can do is insult people and/or ask them to leave because you can't present coherent arguments.
I'd be willing to wager I've been coming here longer than you anyway, but even with that said, it's not my or anybody else's place to ask anybody to leave.
While I thought that Cheeky was wrong on occasion, he was obviously much more intelligent than you and your buddies that "run" these posts. He was also much more respectful. I mean really. Look at any Cheeky post compared to somebody like you, or akak, where every post you make is an insult. You guys aren't fit to hold Cheeky's pecker when he pisses.
All you and some of your buddies are are amateurs that have no understanding of economics or the business cycle, yet you insult people day after day thinking that only your way of thinking is the correct way.
Nobody should have to "learn" to think your way on a discussion board, and even if they did - they'd just be learning the WRONG way to view economics or invest.
Do I think you're a fool? Yeah. Would I ask you to leave? Nah. Would I tell Tyler when you call me names? Nah.
I'm not a pussy. I can handle disagreements with others without making it personal. I'm sorry that you're wrong, but there's no way that you are going to make me leave because you can't handle people who disagree with you.
As far as saying I can't learn, gee, you sure do assume a lot. I won't get into my grades, or my IQ, or anything like that, but I assure you that both are much higher than anything you could hope to accomplish in life.
Don't you get it? I don't HAVE to learn to conform to have a discussion. When you find that you and your buddies are wrong, what then? Will you admit it?
Even if you're not wrong, so what? Does it fucking matter?
You crybabies need to grow up sometime. The funniest thing about this site is that the people that throw the most insults (like you and akak) are the ones always "telling Tyler" on people and wanting people to leave.
I never talk to you, so if you don't like what I say take it elsewhere. Or go fuck yourself. Really.
http://www.youtube.com/watch?v=VLnWf1sQkjY
Actually Jizzdiaper, you just a couple of days ago told him how you "kinda liked him". I think I laughed my ass off and commented about how arrogant you are for thinking he gave a flying fuck.
Now go rub your little boywood against something fuzzy while you think about your bulldyke gym teacher.
http://www.youtube.com/watch?v=VLnWf1sQkjY
I've noticed Master Bater's posts have gotten more colorful on the insult front, when previously his posts were just arrogant. I think he's starting to roll over and question the basis of his beliefs, or we're (you're/ getting to him. He is certainly a glutton for punishment...
"Now go rub your boywood against some fuzzy while you think about your bulldyke gym teacher." Priceless.