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Guest Posts: King Nebuchadnezzar Or The Lesser Of Two Evils
Posts submitted by Jeff Clark and Doug Casey, of Casey's Gold And Resource Report
First, some perspectives on gold, sure to incite mild to moderate anger:
Second, some political insights, indicative that we are happy to present all viewpoints, and contrary to the assumption that Zero Hedge has a preference of laying the blame squarely on this or that. This one is sure to incite severe to extreme anger:
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Bush sucked. And this author sucks for putting Truman in his worst president ever list. Tell you what pal, you just made my list. Right underneath that asshole right in front of me in line who bought all the .45 and 9 mm ammo at Wallymart
http://encarta.msn.com/sidebar_761594739/Truman%27s_Korean_War_Statement...
"In Korea the Government forces, which were armed to prevent border raids and to preserve internal security, were attacked by invading forces from North Korea. The Security Council of the United Nations called upon the invading troops to cease hostilities and to withdraw to the 38th parallel. This they have not done, but on the contrary have pressed the attack. The Security Council called upon all members of the United Nations to render every assistance to the United Nations in the execution of this resolution. In these circumstances I have ordered United States air and sea forces to give the Korean Government troops cover and support." [So we send our young men to die when the UN Security Council wants us to? Tell me where this is authorized in the Constitution?]
"I have similarly directed acceleration in the furnishing of military assistance to the forces of France and the Associated States in Indo-China and the dispatch of a military mission to provide close working relations with those forces."
I highly recommend The Coldest Winter by David Halberstam, if you're interested in the Korean war.
One of the first tasks of the newly formed CIA was to advise Truman on Red China. The CIA concluded that the Chicoms would never invade or attack from the north. Fuck me running, this whole thing is nothing but the movie Ground Hog Day.
Weasels ripped my flesh! Cool...
when my neighbors start buying silver eagles and pamp gold, I will think we are in a bubble... good articles 4 slow news day ..http://www..
hat tip: finance news & finance opinions
You have to remember, at the inception of the Korean War and issuance of UNSC Resolutions 82/83 (and the subsequent call to defend the Republic of Korea), the US was effectively the UN and for the most part directed the UNSC's actions through diktat.
The 5-permanent seat holders following the chartering of the UNSC were the US, France, UK, USSR, and Taiwan (not PRC). Just compare the competitive and military positions post-WW2:
1) Soviets weren't about to stop a Communist ally from invading the South.
2) France/UK were in no position to help given the widespread destruction and manpower depletion sustained during WW2. (I mean, they were only in the third year of the allocated Marshall plan reconstruction aid!)
3) Taiwan had no standing army available nor any real force projection capabilities at this point in time.
Thus, the combination of 1) being the only democratic-capitalist country with a force-effective standing army in 1950 and 2) our desire to see communism contained basically demanded that we intervene on the Korean Peninsula.
My buddy actually went to walmart and ended up purchasing an entire pallet of ammo a few weeks ago. he was sick of them being out of ammo.
they wouldnt sell him the whole pallette. so they made him count the cases and buy that many cases.
they even made him break down the pallete and load it case by case into his truck, which would have fit the pallete just fine.
That's annoying. Walmarts cheap but it kinda sucks.
I could understand the purchase of that much ammo as an "investment" or "hedge" bahahah but really if you need that much ammo we're really fucked.
Look. This is not rocket science. THEY ARE LYING. They have no reason not to lie.
good articles 4 slow news day ..http://www..
I'm a big fan of Doug Casey. Though Obama may give Bush a run for his money for the 'worst president ever' award. . . time will tell. . .
For ever Dollar the Fed puts in the market, the Street uses that Dollar and borrows another one to buy something to get a bubble going.
Who cares who's fault it is?
The problem with Gold is that the case for owning it is TOO good. Hence, everybody owns it creating a pain trade of no upward pressure.
This is like devoting your whole life to physics and then waking up one day and having Wall Street and Washington declare that when you fall, you fall up.
Best laugh I've had today. Thanks.
Oh also I was looking at M3' today on Shadowstats...
First derivative might go negative! lol... then Mish will surely post .
Mish is nothing if not predictable.
I always enjoy reading Mish.
Jeff Clark is patently wrong about the "exploding monetary base" and "soaring debt". The monetary base isn't exploding because debt is imploding. More dollars are being destroyed every day than the Fed can possibly pump back in through QE, not to mention that the dollars that the Fed is printing have increased bank reserves - but that's all. They haven't made their way into the economy because banks aren't lending. Credit is tightening, the monetary base is decreasing and debt is imploding. That's deflation, and it's not an environment in which gold prospers. He obviously has a vested interest in getting people to jump onto the gold bandwagon. He can't even give the appearance of being objective when he writes for a publication named Casey's Gold and Resource Report. There will likely be a time to buy gold as an investment after the debt unwind- but not now.
M1/MZM in U.S. is exploding. On the contrary, M3 is on the verge of contraction -- but first derivative is still positive for the moment. So technically speaking author is correct if he is talking about M1 or MZM. He is incorrect if he is referring to M3 -- as M3 looks like its about to 'roll over'.
I agree with you in terms of deflationary forces , but I would say this is more along the lines of a 'systemic crisis' than simply 'deflation'. It's really complex -- a crisis of historic proportions . Exploding M1 and contracting M3 is where we are headed. Deflation and currency crisis are not mutually exclusive - - this is precisely what happened in Iceland last year. If there are bank runs -- what is the value of a hallucinated computer pixel? What is the value of a physical FRN? It is hard to say.
Anyway my position is in cash and precious metals. I rebalance short term and trade in and out.
Carina i dont think you know what monetary base means, but chart (ZH readers have all seen it before) sure looks exploding to me
http://research.stlouisfed.org/fred2/series/BOGAMBNS?cid=124
I think her point is that if you are not taking into account the complete collapse of the credit market and non-payment of debt you aren't looking at the complete picture. Mish writes on this quite a bit.
FOFOA has a very good take on this very topic. Rather than attempt to "badly" reiterate what he said, I'll just put the link here. Be interested to see your rebuttal.
http://fofoa.blogspot.com/2009/08/waterfall-effect.html
Haha are these the latest Martin Armstrong illustrations? From Federal prison?
I love the novos ordo seclorum on the sun in the sky. A nice touch. Works on multiple levels.
Reading now. . .
This is absolutely brilliant. Best article I've read in months. Thank you sir! Site bookmarked.
http://fofoa.blogspot.com/2009/08/waterfall-effect.html
The higher the temp the more likely you are to find nat gas, not oil There are no nat gas 18 wheelers bringing food from Iowa to Savannah. Nat gas is not important to crude.
good articles 4 slow news day ..http://www..
hat tip: finance news & finance opinions
Okay FOFOA is my new favourite site.
"During a credit expansion like we have had for the last 27 years or so, capital flows UP the inverse pyramid. And as the private sector leverages up and creates credit money in many multiples of real money, it creates new products to buy. New places to store this "wealth". John Exter created his inverse pyramid in the 1970's, so let's add some new, monstrous levels for the 21st century. The arrows show how capital flows during a credit expansion"
All paper is still a short position on gold
http://fofoa.blogspot.com/2009/03/all-paper-is-still-short-position-on.html
Simply profound... and illuminating!
Thx for the link.
Exploding or imploding is a matter of perspective based on your reality. The problem with not buying gold now is like trying to define with the market will collapse. There is a small window of opportunity, one not easily defined. For those of you who don't necessarily care about gold as an investment but care more about it as a protection of purchasing power, now is the time to buy.
Carina, there is no "after" to the debt unwind... and when you and the rest of the herd think it is "time" to buy gold you will find that the physical market is very small and, because this will (eventually) be recognized as a currency crisis, there will be no physical gold or silver for sale.
The "Exiled" website is reporting China has created "execution buses" to address criminal CEO's; while the US government gives trillions to our corrupt wall street ceo's. Well, our American CEO's lost money. That shouldnt be a crime. What is criminal is that Obama is giving them 25 trillion in "bailouts" courtesy of the American taxpayor. So who should be put into these"execution buses"?
Like the rationale.
comment deleted
If I read that correctly, Casey says Bush shouldn't be in consideration for any worst lists because he was too stupid to have been President in the first place.
He may be stupid, but we were saved from an even stupider Al Gore. Gore's SATs were lower than GWs.
And Kerry?
Only because George paid someone to take his for him.
Read "Money and Man" to learn about the history of the monetary experience. The author suggests "The soundness of a nations money is in direct relation to the soundness of a nations government."
To think about the US monetary history and know that today, we use a currency with ZERO intrinsic value. Not sound.
Gold is money, dirtbags. The pricing information from the above article shows it faithfully executes the "store of value" function that is so missing in debaseable fiat currencies.
This hard fact leads many goldbugs to wonder alound about suppression schemes. Many here might not know about the Morgan Stanley debacle:
http://uk.reuters.com/article/idUKN1228014520070612
"NEW YORK, June 12 (Reuters) - Morgan Stanley will pay $4.4 million to settle a class-action lawsuit with brokerage clients who bought precious metals and paid storage fees, according to a court filing."
"The suit, filed in August 2005, alleged that Morgan Stanley told clients it was selling them precious metals that they would own in full and that the company would store.
But Morgan Stanley either made no investment specifically on behalf of those clients, or it made entirely different investments of lesser value and security, according to the complaint."
Clients bought what they believed were bars of silver and paid storage fees for them; then one "investor" asked for his bar numbers and MS was unable to furnish them. There were no bars.
http://www.sec.gov/comments/s7-19-07/s71907-321.pdf
The issue specifically concerns whether Morgan Stanley and many other large financial organizations who claim to hold and store silver for their customers, actually possess the silver.
…….there are two types of silver when it comes to professional storage, real silver and paper silver; cold hard metal versus imaginary or make-believe silver. I claimed that investors could be making a mistake in assuming that the metal held for them actually existed. I warned that free storage was a certain tip-off that no real metal existed, but even the payment of storage charges did not prove that real metal existed.
Most stored silver is in 1000-ounce bars, and they are always identified with serial numbers and a specific weight. If an investor was concerned, all he or she had to do was request the serial numbers and specific weights of the bars they owned.
A reader, who held silver in 1000 oz bars, requested Morgan Stanley provide him with the serial numbers and weights of his bars, on which he had paid storage and insurance fees for many years. He was given the run-around and not the serial numbers and weights. I am aware of this through e-mail exchanges with him. I told him that the only plausible reason they wouldn’t give him the information was because the bars did not exist. He contacted a lawyer and that ultimately resulted in the class-action settlement, after years of legal wrangling.
By not actually buying and storing the real metal to back the customers’ purchase, financial firms can greatly enhance their bottom line profits through the free use of the customers’ funds. Morgan Stanley’s actions were not in any way unique in this practice. In fact, in the court documents summarizing the proposed settlement, one of Morgan Stanley’s defenses was that they were not doing anything unusual by charging storage on metal that didn’t exist, as this is a widespread industry practice.
On a purely financial basis, the institution is given cash by the client and does not have to return it until the client sells his silver, which may not be for years or decades. For the entire time the client does not sell, the firm has full use of his money on a zero cost of funds basis. Those firms who charged, and still charge, storage and insurance fees for the non-existent silver rake in even more from the client. Honest dealings aside, this is a very cash-flow positive business for these institutions. Even if silver doubles or triples in price, there is no margin call to the selling institution, as clients don’t issue margin calls. As long as clients don’t sell on a net basis, the issuing institution still doesn’t experience negative cash flow. In our short-term world, that is all that matters. If you or I arranged to do what hundreds of world financial institutions have done, we would quickly be put in jail, as it is fraud, pure and simple.
Morgan Stanley settled while not admitting any wrongdoing.
Nice find. I hadn't heard of this. What a scam. This is why I believe 1oz coins are a far superior investment.
Unbelievable that they could get away with that... ethics means little in the financial world today.
Maybe that is why contrarians seem to be believed more than the 'song and dance' that Wall Street puts out for our consumption... contrarians are people that swim upstream at potentially great cost to themselves.
Philosophically, I don't understand why this shiny soft metal should have any more inherent value than fiat currency.
I agree with the author that to list Bush Jr. as the worst president ever is giving him too much credit. He's way to average to be "the most" anything. Though Cheney may well have have been the worst VP ever.
I think think it is because there are very limited supplies of gold... and fiat currencies can be printed on an unlimited basis... but I agree with you that inherently there is nothing more valuable about a piece of metal versus a piece of dead plant life... its only what we as a society agree to value it as.
What happened to the few analysts who had been forecasting $3,000/oz Gold last September? CW says 'hyper-inflation'. Only problem is this. The pain to the taxpayer of 'paper overing' this amount of debt (Thanks, Bush!) will cause rioting and civil unrest unseen since Rodney King in Los Angeles. When the US Government defaults on Treasuries, even the money on the sidelines will bolt from the USD. Deflation---no jobs, no consumer, no capitalism, no civilsation. At least it should curtail the true ill behind all this calamity--overpopulation. Selah.
the most accurate part is the bit about the government finding people willing to snoop through people's stuff. the entirety of government exists because lazy pricks love to find jobs from which they can't get fired, and the government has a monopoly on those...unless you count panhandling.
people shouldn't be rude to government employees, they should be openly and aggressively hostile towards them.
Gold might be a good store of value if we were still on the gold standard....but since we are not I would put my money on food and clean water (not stocks but actual tangible items). Answer one question for me: Ifthe entire US economy begis to come unglued and I want to trade you a gold coin for one of you last few heads of cattle, will you make the trade and 'HOPE" that you will be able to trade the gold for more food when you run out. Long before the world was put on a gold/silver/copper standard....the people with real wealth were large landowners with access to the necessities of life.
Yeah but we are talking about two different paths. If you are talking about the wholesale collapse of society as we know it, then yeah, you are better off with food and water stored up than with gold.
I'd say that wholesale collapse is not very likely in the near future, but rampant inflation seems pretty likely, possibly after a deflationary period. So in that case, gold makes sense.
uns de tous
the most accurate part is the bit about the government finding people willing to snoop through people's stuff. the entirety of government exists because lazy pricks love to find jobs from which they can't get fired, and the government has a monopoly on those...unless you count panhandling.
people shouldn't be rude to government employees, they should be openly and aggressively hostile towards them.
and have more investigations and more abuses of power.... sorry got too excited there.
hat tip: finance news & finance opinions
He is of course correct that gold is NOT an investment. It is a convenient means for capital preservation. Unfortunately, when most goldbugs argue to purchase gold they are in fact promoting it as an investment that will INCREASE in purchasing power. That is false, it will only retain purchasing power. Now what is true about gold is also true with most hard assets (forests, copper, land, etc) with the exception that gold cannot be readily produced. For example, a house in Amsterdan of the XVIII century would be worth approximately the same in real terms today.
I am pretty certain that if you correlate land prices you will get a similar result. I would also point out that both gold, and other hard assets are VERY much subject to short term price fluctuations (think Hunt brothers or even today's 200% 5yr increase in gold). They will retain purchasing power, but you are only guaranteed this if you hold on to them for decades
Personally, I prefer (as those a lot of the old money) land as a means of capital preservation. You can achieve yearly dividends from it, it is harder to expropriate then gold, safer to store and in a worst case scenario can be physically protected from usurpation. Finally, you can always work the land and get value from its produce.
In contrast, you cannot eat gold, cannot transform it into any product other than jewelry and the only means of protection is burying it / vaulting it. Furthermore people CAN conceivably refuse to accept gold as a means of exchange. Event though for centuries it has been accepted, the value of gold is only in the mind of the beholder. In other words it has no utility value, only value through perception.
"Personally, I prefer (as those a lot of the old money) land as a means of capital preservation. You can achieve yearly dividends from it, it is harder to expropriate then gold, safer to store and in a worst case scenario can be physically protected from usurpation. Finally, you can always work the land and get value from its produce."
Land is the easiest thing in the world to seize; land is being seized by governments all the time, for taxes etc. (Kelo). Land cannot be hidden and is not portable. You can't take your land and run away to fight another day.
There are two ways to become "more wealthy". One way is to gain more than everyone else, the other way is to lose less. Hyperinflationary periods are periods when nearly everyone is losing big. If we experience a hyperinflation, will you be able to pay the taxes on your land? This is the major reason I've opted to not buy land...yet. Land prices are falling, while gold prices are rising.
I disagree. Land is normally VERY hard to seize. If you are not mortgaged it will hardly be seized for tax purposes. Taxes on land are determined based on its profitability. Believe it or not, there is no point for the government to tax you out of your land. All the farmers I know that have ever lost their land was to the bank, not to taxes.
Historically, land can only be taken over by force, such as in a revolution or in a war (ashappened in Zimbabwe). In either case there are actions you can take to protect your land. Sure you cannot move it, but it is not just you. All the land owners are forced to make a common front, and usually the combined influence is enough to dissuade expropriation.
As to gold being portable, that is just plain false. Gold is much too heavy to be portable in any significant amount (which is why the nobility traditionally fled with diamonds, not gold). Plus, it is not safe to move about with all that cash on you in a crisis situation.
Furthermore, gold has also been expropriated in the past when in bank vaults and is NOT easy to hide in private. You have to be pretty brave to have your entire wealth in a vault in your basement, knowing that burglars can break into your home and threaten your family. In other words, gold is easy to steal if they know you have it.
One example. In England, archaeologists periodically unearth silver and gold hordes from Saxon merchants who buried their wealth to protect it from Viking raiders. They obviously did not survive to dig it up afterwards. Other inhabitants fortified their land and defended themselves, most of them did survive. Investing in land and weapons trumped a bag of malleable shinny metal.
Another practical, less extreme example, can be seen in old European money. Most of the ones I have heard about keep their main investments in farmland, and real estate (think Grosvenor)
Finally, we are not in hyperinflation. Yet you are correct, gold has been increasing, while land has dropped. Which is then the overpriced asset?
I like the Lincoln call for one of the worst presidents. I almost want to hear him explain it all as if there is some sort of rationalization that isn't laughable.
#1 Jimmy Carter, #2 Bush, on deck -- Obama.
I agree... yet I have such mixed feelings about Obama... I voted for him... and I like his values as a person and family man... yet I think he going to jeopordize his presidency by working to hard to assure collaboration... you can see it in this health care bill... there is no one leading it so it is degerating into a free-for-all. I know community organizing is trying to get everyone motivated and on-board for the project... but true leadership is turning words into clear action... and I see he is having a trouble in that area.
Doug Casey is a pathetic loser. What a POS piece that was.
Jimmy Carter clearly worst president ever, hands down, no competition.
Obama is Jimmy 2.
Bush had his flaws; he didn't fight back against the dirtbag Dems who assainated his character for 8 years.
He kept us safe after 9/11; and he took this seriously.
His heart was in the right place. But he got eaten up by Washington. He got 2 excellent Supreme's in against the obstructionist opposition.
The economic meltdown wasn't his fault (or all his fault).
He tried to take on Soc Security; but the Dem crooks blocked that too.
I have no problem w/ what we did in Iraq and Afghanistan or Guantanamo.
Doug Casey spouts a bunch of leftist nonsense tripe.
Now we have Obama and Pelosi and Reid and we are truly F-ed !
His heart was in the right place? I'm sorry, Jimmy Carter already lays claim to that excuse.
Agree about Casey. Used to subscribe to his pump and dump letter way back. He ahs been calling for hyperinflation for about two decades now.
Same old tripe about GITMO. Nonsense. You can agree about it or not but saying everyone ther but the Chinese were wrong place wrong time is flat bullshit and is basically calling our special ops forces stupid. That is who made the call on the ground to send a lot of them there.
Abu Graib-yep it happened and was bad. It was unit failure. A state prison guard from PA that was reinstated by his union ran the crap there and his leaders failed to see it. They all went down for it.
Both parties suck ass and we need another.
The "rotten apple theory" brought to you by the propaganda machine that is the MSM.
Yes there was unit failure -- Bush, Cheney and Rumsfeld.
Surprised to see someone spouting that garbage on ZH.
lick balls bitch. MSM? When the Abu Ghraib report (80 or so pages) was leaked I read the whole thing and was talking and e-mailing my former military buddies about what was up.
Here's a little night school that the MSM didn't tell you from the report @ http://news.findlaw.com/hdocs/docs/iraq/tagubarpt.html#ThR1.9 but anyone that has ever worn a uniform can tell you:
There is abundant evidence in the statements of numerous witnesses that soldiers throughout the 800th MP Brigade were not proficient in their basic MOS skills- unit training malfunction!
I find that the 800th MP Brigade was not adquately trained for a mission that included operating a prison or penal institution at Abu Ghraib Prison Complex- a militay police unit not trained to operate a prison is unit commander's training failure.
I find that without adequate training for a civilian internee detention mission, Brigade personnel relied heavily on individuals within the Brigade who had civilian corrections experience, including many who worked as prison guards or corrections officials in their
civilian jobs. Almost every witness we interviewed had no familiarity with the provisions of AR 190-8 or FM 3-19.40. It does not appear that a Mission Essential Task
List (METL) based on in-theater missions was ever developed nor was a training plan implemented throughout the Brigade. - military speak for people that were prison guards in civilian life did not train people according to army rules and did whatever the hell they wanted (these are the sergeants that ran amuk and officers were derelict).
With respect to the 320th MP Battalion, I find that the Battalion Commander, LTC (P) Jerry Phillabaum, was an extremely ineffective commander and leader.- nuff said
At one point, BG(Brigader General- mine) Karpinski sent LTC (P) Phillabaum to Camp Arifjan, Kuwait for approximately two weeks, apparently to give him some relief from the pressure he was experiencing as the 320th Battalion Commander. - suck it up lt. colonel- its a fucking war
I could find no orders, either suspending or relieving LTC (P) Phillabaum from command... Temporarily removing one commander and replacing him with another serving Battalion Commander without an order and without notifying superior or subordinate commands is without precedent in my military career. - the Brigadier General is a dipshit.
LTC (P) Phillabaum was also reprimanded for lapses in accountability that resulted in several escapes. The 320th MP Battalion was stigmatized as a unit due to previous detainee abuse which occurred in May 2003 at the Bucca Theater Internment Facility (TIF), while under the command of LTC (P) Phillabaum. Despite his proven deficiencies as both a commander and leader, BG Karpinski allowed LTC (P)
Phillabaum to remain in command of her most troubled battalion guarding, by far, the largest number of detainees in the 800th MP Brigade. LTC (P) Phillabaum was suspended from his duties by LTG Sanchez - this unit= total failure from top to bottom
CPT Leo Merck, Commander, 870th MP Company
Just go to the doc and do a search for "recommendations"- at the end you can see just how fucked up the leadership of the unit was and how many "leaders" failed to lead. They were a model unit until a politician you hate took office, right? Yeah it all started then.
We hear lots-o-stories about great units in our country's history (AND RIGHTFULLY SO!) but a failure like that of the unit in charge of the prison Abu-Ghraib is a black mark. The blame for poor leadership at the unit level does not lie at the White House (Bush, Carter, Clinton ect...). It lies at the feet of the the unit leaders.
Ducky - great piece of analysis and one that squares *perfectly* with reports discussed with me by contact of
ine in the military.
Ducky,
Breakdowns like you describe start at the top. Command is command, and the responsibilities of command are inescapable. In a former life I worked for the nuclear Navy as a test engineer. Recalling Rickover (regarded by some as the anti-Zumwalt):
""Responsibility is a unique concept. It can only reside and inhere in a single individual. You may share it with others, but your portion is not diminished. You may delegate it, but it is still with you. You may disclaim it, but you cannot divest yourself of it. Even if you do not recognize it or admit its presence, you cannot escape it. If responsibility is rightfully yours, no evasion or ignorance or passing the blame can pass the burden to someone else. Unless you can point your finger at the man responsible when something goes wrong, then you have never had anyone really responsible."
Shame Bushie wasnt doing such a great keeping us safe BEFORE 9/11 ("Bin Laden determined to attack inside the U.S").
Also, great to hear to hear you have no problem with the million+ Iraqi civilians killed in Iraq.
If as you say, you "have no problem w/ what we did in Iraq and Afghanistan or Guantanamo" then I hope our corrupt government drags you off to a gulag later this fall, because your morality and critical thinking skills are conspicuously absent.
I think everyone is misunderestimating him!
"I think we all agree, the past is over." (GW in 2000)
"Rarely is the question asked, 'Is our children learning?'" (2000)
"There's an old saying in Tennessee — I know it's in Texas, probably in Tennessee — that says, fool me once, shame on — shame on you. Fool me — you can't get fooled again." (2002)
"I know how hard it is for you to put food on your family." (2000)
One hundred years from now people will be wondering what the hell our problem was. Strike that. I'm wondering now.
i wrote this on another site eariler today about the same subject...
stocks and real estate where in bubbles when your average neighbor and taxi driver were talking about it....then went to be brokers and real estate agents
when my neighbors start buying silver eagles and pamp gold, I will think we are in a bubble...
but in reality most of my neighbors have never seen a silver eagle or bar of gold, so I think we are good....
once the CRE bubble pops this summer and swine flu is used to freak people out, and the banks that people actually deal with, community banks and the likes (not the global powerhouses that cater to elites) start going belly up in communities and people cant get money out of ATM's because a nationwide rush happens, then we may reach a bubble...
either that or we manage to pay off our global debts, which means full employment again and we are again the most respected country on the planet (we are still the most envied), in which case the dollar strengthens, gold and silver plummet, but all is well in the world...
a) which is more likely
b) if the second outcome happens, I will gladly trade the losses in my investments in metals for that end - i am just not going to risk being broke if things go to the crapper
You can find wackos saying it will be exhausted tomorrow, too. They usually will talk about nukes over the Saudi fields.
good articles 4 slow news day ..http://www..
hat tip: finance news & finance opinions
could the casey report writer buy a man's suit, shoes & belt 8 years ago with 1 ounce of gold?
Intrinsic value aside, gold's value is determined solely by what it can be exchanged for. Logically speaking, gold, when priced in itself, has no transactional meaning. A transaction involves at least two assets of different value, expressed with different prices in exchangeable currencies. There must be an agreed upon exchange ratio at the time of the transaction.
Even two bartering peasants must agree upon an exchange ratio between the assets being traded. For example, an ounce of gold can be exchanged for 15 ounces of silver, $35 USD, or 350 loaves of bread. But the claim that an ounce of gold that can be exchanged for another ounce of gold carries no information of transactional value. Indeed, the fact that a Federal Reserve Note is worth another Federal Reserve Note is no different than an ounce of gold is worth another ounce of gold.
A paper currency backed by gold turns into a fiat currency if it can be redeemed at its face value only in gold. Thus the US dollar, even when backed by gold, was still a fiat paper currency because its monetary value to gold was set by the government. The monetary value of gold is not separate from the commercial value of gold. Gold then can fluctuate in purchasing power due to any number of factors, including government policy, but is not fixed to any other metal of intrinsic value at an universally agreed upon ratio.
I cannot claim to be well-versed in the history of gold, but I assume that it was among the earthly treasures that were captured during times of war. Its unique elemental properties -- ductile, malleable and rare -- made it useful as a currency, especially since the rulers had most of it. These rulers would allow only a certain amount in circulation, and by decreed, ordered that tithes/taxes be denominated in it.
Adam Smith said it best:
“A prince, who should enact that a certain proportion of his taxes should be paid in a paper money of a certain kind, might thereby give a certain value to this paper money; even though the term of its final discharge and redemption should depend altogether upon the will of the prince.”
Indeed, is it not a fact that every fiat currency used today is backed by tax dollars?
Governments possess more gold than any other market participant. Thus its market price can be manipulated by decree. In a world where the US dollar is the reserve currency, central banks, with enough dollars, can use interevene in the foreign exchange market to drive speculators against their own national currencies toward bankruptcy. And if you are given a monopoly on the world's reserve currency, you had a distinct advantage over every other player in the game.
It is this monopoly that makes the Fed, and by extension America, so powerful in both the economic and political scenes.
Your perspective is completely backwards. Dollars (or any paper currency) are valued in gold, not the other way around. Thus, a fiat currency backed by gold and an honest treasury should be, theoretically, "as good as gold". The rest of your missive is masturbation.
I am Chumbawamba.
Sorry to disappoint you, but you are in fact incoorect. In a fiat currency regime, goods and services are valued by whatever the sovereign deems as the currency. When the government decides the monetary regime, money ultimately becomes a political instrument with financial dimensions.
A gold standard simply puts a mechanical constraint on how much money the sovereign can print. But in itself, the gold means nothing.
Re: Hayek:
From this, Hayek concludes that the only viable solution is competing, privately-issued paper currencies -- which of course, has its own problems.