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Hinde Capital On China's Stealthy Enforcement Of The Gold Standard And On Wholesale Currency Dumping
Combine Kyle Bass's fatalistic outlook on Japan with some simple geology and you get the following thought experiment from Hinde Capital: "Imagine that there was a full-scale exit out of JGBs. There is 900 trillion yen worth of JGBs outstanding that is 10.588 trillion US dollars at 85 yen, today’s rate. At $1,300 per troy ounce gold this is equivalent to 8.14billion ounces or 253,000 tonnes (8.14bn /31250) of gold. Now we are not for one moment saying that this is realistic, as if there was a rush from JGBs they will not be valued at par and not all JGBS will be exited. However it just goes to show how much gold could rise to reduce the amount needed to convert savings. Let’s say gold went to $13,000 then only 25,000 tonnes would need to be found for Japan. Now if you add inflation of the currency and a few noughts you can see how gold can be valued at almost unlimited numbers. Anyone still think $1,300 is too rich?"
Many more fascinating insights from Hinde into the stealthy, creeping rehabilitation of the gold standard in China, to follow up on Antal Fekete's earlier thoughts on why a return to a gold standard is critical, although likely far too late to save the current doomed economic system.
How times have changed, in the photo above the advent of the Communist control in the late 1940s saw Chinese citizens flock to grab gold. These very same people were summarily executed in the days that followed. Now China wants its people to purchase gold and silver. It makes it easier to move to a gold standard if everyone owns the gold!
First, at least one preoccupation of the 1944 delegates remains: how to manage exchange rates and deal with persistent trade deficits and surpluses. The problem blamed for the great depression of the 1930s – ‘beggar-thy-neighbour’ policies and competitive currency devaluations – may be rearing its head again today. The par value exchange rate system created in 1944 served the world fairly well until 1971, when it was abandoned unilaterally by the US. We believe that the persistent trade surpluses in Asia and corresponding deficits in the West laid the groundwork for the current crisis. The creation of an international currency, international clearing union, or system of globally managed exchange rates should be on the agenda. As the hegemony of the US wanes, there is a practical limit to how long the anachronistic system of a single country’s currency serving as the vehicle for all global reserve holdings can be maintained.
Experience shows that neither a state nor a bank ever has had the unrestricted power of issuing paper money without abusing that power; in all states, therefore, the issue of paper money ought to be under some check and control; and none seems so proper for that purpose as subjecting the issuers of paper money to the obligation of paying their notes either in gold coin or bullion.
Full Hinde Capital report: The World Monetary Earthquake - The Dash From Cash (pdf)
h/t BruiserND
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Anyone still think $1,300 is too rich?"
I do but then Iz po. Citi stock is only $4.15 and will likely be worth very much more very soon. :snark:
Nominally, at least.
Silver up another 1.5% to 23.15 today. Has the cartel set it free?
The Founders thought that printing paper money should be a capital offense. Now I understand why!
who here is willing to make it a capital offense?
no takers?
didn't think so!
(more likely it will be illegal NOT to debase the currency...we need more printing...NOW!)
shucks...i had a guy for that..unfortunately I had to let him go..down-sizing.. :-(
I cried when you fired me.
I'll remember to bring you fresh meat after the collapse!
Capital offence to debase the currency? Already onboard with that one, bring on the guillotine!
+1
Amazing that you got junked!
Frankly, I'd prefer to lock them in a 58F cell and make them watch daytime TV 24/7, but if you'd rather be merciful, then by all means kill 'em.
"none seems so proper for that purpose as subjecting the issuers of paper money to the obligation of paying their notes either in gold coin or bullion."
What about fertile land?
hey now...
some form of transition / transformation happening here..this is an early phase...transitioning to what and what we will look like collectively (global pciture) and individually (some will perish..remember survival of the fittest?) is anyone's guess.
A.u. standard will play a key role, but, again, I think it will be only a transition to something else..I hide no quams...that shit scares me...honestly any change scares me..not quaking in my boots. I'm prepared as I'm gonna be..need some more acquisitions...but I'm painfully aware of what steps have to be made...the next move is in the hands of the egomaniacs and turds (no offense guy)...history is repeating itself in the short and long term. so..fuck fiat, fuck stocks,..fuck gubmint..feeling very jerimiah johnson-ee ...life will be good when you cut out all the complex shit..one of the happiest people I know coudl give a shit about the market..for one I will be happy once I'm out the matrix. Montani Semper Liberi..always free..always
Land? Hell, the Federal Reserve can not afford to make the simple copper penny and soon the nickle may be changed too. Silver left the US coinage in the 60's. Soon aluminum will be too $$ to use for coins due to currency devaluation.
The Founders thought that printing paper money should be a capital offense. Now I understand why!
Legitimately dumb question:
What are JGB's?
Japanese Government Bonds.
Soon to be virtually worthless.
Japanese Government Bonds
Thanks. Everytime I see that I think of The Jerry Garcia Band. LOL.
Respectable looking bald man in a fancy suit, striped shirt, red toe and spectacles was just on CNN 2:57 Eastern with a headline beneath saying" Dont run from the Markets!"
Saying all is well.undervalued, recovery intact and Mortgaugr fraud not much of a concern. All is well. The propaganda is endless.
Typical.
On the other hand, see what Dr. Ben had to say here, this past Monday:
Headlined:
Bernanke Tells the Truth: The United States is on the Brink of Financial Disaster
http://www.economicpolicyjournal.com/2010/10/bernanke-tells-truth-united-states-is.html
In-joy!
ORI
http://aadivaahan.wordpress.com
Thanks for posting this.
Welcome, Escape and Rusty below.
Quite telling, eh? Literally.
ORI
Thanks Oh regional Indian
Wow, I didn't think there are enough surfs fleeing the market to warrant this propaganda. I find it very telling indeed.
John, you may like this - http://www.youtube.com/watch?v=T72TopWbXJg
All is indeed well.
Fiat needs to be a derivative of something other than Geithner's word.
Noice!
ORI
PRC's Worldwide Depression escape-hatch checklist:
Regards
+1
way to keep it simple, GoinFawr. the writing is on the wall.
USA's Worldwide Depression escape-hatch checklist:
- Historically Unprecedented Military-Industrial Complex (check)
Regards
probably accounts for 99% of the 'faith' in our fiat.
Heheh. First mistake is assuming they actually fight for 'America'. Second: Good luck keeping the Military Industrial Complex's 'feet on the ground' in Beijing, especially without a supply of rare earthy materials for guidance. That would be quite the 'feat'. PRC'll reduce 'em to throwing rocks in no time.
regards
PS Before someone accuses me of having a love-on for the PRC allow me to set the record straight: I most certainly do not; more of a healthy respect. I'm just calling it as I see it.
its a great point, GoinFawr. you're spot on.
i do believe every American would fight tooth and nail to protect their homes against invasion, but history tells us that armies in foreign lands lose their 'passion' without a paycheck. completely rational.
"i do believe every American would fight tooth and nail to protect their homes against invasion"
really? They seem to be walking away not fighting...or to busy with new apps to worry that their neighbor's home just got invaded and seized by the corrupt banks and politians.
For the sake of reference, Japan only has 760 tons of gold.
Also for reference,
25,000 tons = ~10 years of worldwide gold production
That's about what JPM is short, eh?
...they'll probably unwind that short silver position when its gets back to breakeven.
About. I defer to Harvey Organ's guesses of 15,000 to 22,000 ounces of gold and 1 billion ounces of silver short among the banks.
Not Oz.
That they disclose.
Exactly.
It didn't all get buried in the Philippines.
There's a lot more than 150,000 tonnes out there.
Off balance sheet, for the time being.
China: 1054 tonnes. Whatever.
Try 4501 tonnes. Or 5401. Even 10,541.
"Wittle mistake. So solly."
Spot on Nuinut. So many legends (verifiable and otherwise) of a lot more gold in the world than the strange 3 swimming pools quote one hears everytime.
Not that it changes anything.
ORI
We are still headed for DEFLATION, there is no way Benjie can get US right to Inflation, he can print all he wants, as long as the dough goes to the banks(fraudsters, shills, etc.) it won't wind up in the system, thus not enough to generate inflation, too many goods, too little money...Deflation! Not to mention the $ taking it big on the chin, QE2 is going to be a big, expensive and dangerous joke! It show already that all that POMO is for nothing and won't ever be for anything but lining elite's pockets! Time WILL tell but then again, it will be too late!
I guess you missed the part where we are already inflating at a rate bordering on hyperinflation. You know, in food commodities.
But then, if you can survive by eating iPads, big screen TV's and RV's, then you will be just fine.
I forget who coined "biflation" but it's true: Inflation in the things you need and deflation in the things you own.
its 'official': http://en.wikipedia.org/wiki/Biflation
it made wikipedia some time ago.
Nope, that's real, not nominal inflation, will be funny to see what happens when people realize it, heheh! Especially them "Investors"!
I'm not convinced you know what those words (real and nominal) mean, or you are using the word "inflation" to mean "government reported inflation", in which case I agree with you.
Just in case, and for the benefit of anyone reading, I will break it down: "nominal" means "numbers", as in the number of dollars it takes to buy a given vital commodity like rice or grain are going up...by 30-70% in the last few months. In "real" terms, in terms of gold, those goods are going up, but far more slowly, perhaps ten or twenty percent over the same time period. Of course, in terms of silver, there is no inflation, or perhaps a slight bit of deflation.
Nominal refers to "in name only, not in fact", or "consisting of/having nature of a name[s].
It comes from Latin nomen = name.
Please check good dictionary as source.
Oil is over 83.
Yeah, that's the lie they have been so succesful at propagating so far. Very soon, however, it will be impossible to deny that it was an outright lie.
“Make the lie big, make it simple, keep saying it, and eventually they will believe it” - Adolf Hitler
BIFLATION, bitchez.
Agreed. Ben can only stand on the accelerator for so long. You think the people will be happy that their homes are appreciating at 10% per year when a gallon of gas costs $10? I am of the minority opinion that any real shock and awe amounts of QE will be constantly hinted at but never delivered. The US is too big a creditor and relies on foreign investment too much for us to default via inflation. That will bring a trade war that will hurt more than deflation.
Me thinks you have too much faith in the sanity of the current crop of predators-that-be. To be sure, to hint but not deliver makes more sense than actually delivering on QE2, QE3, QE4, etc. But they've already destroyed the USSA, so "reasons" for shock and awe will not go away.
You could have made the same argument for every other fiat currency in the history of mankind, but all of them did explode their systems. To have so much faith in the sanity of morons like Bernanke and the current crowd is... well... just way, way too much faith, IMO.
Yo Tyler,
How 'bout hat tip credit?
"Oh, uh, there won't be any money, but when you die, on your deathbed, you will receive total consciousness." So I got that goin' for me, which is nice.
+1
...a little fiat for the effort?
I am amazed at how many people will comment to me "wow the stock market had a big day" then they will look at me like I'm stupid when I explain to them how they really lost money with the devaluing of the dollar.
people talk to you about the economy? In my experience it's not something they get, hence they try like hell to avoid talking about it.
my boss always talks about retirement savings at company meetings..think it gives him a hard-on...I try my best not to bust out laughing..usually I just end up with a "jim from the office" expression..you know what i'm talking about..they wide-eyed look..
You should bust out laughing.
you guys/gals are the only ones that will talk with me about the economy. everyone else rocks back and forth, puts their fingers in their ears, and babbles "la, la, la, la, la...".
monkeys only respond to pain.
Stupidity should hurt. The world would be a better place.
Don't bite me!
there are two pains in life: the pain of discipline and the pain of regret. folks insist on the latter almost every time. unfortunately for them, the postponed pain will come all at once like a tsunami in the night.
JGB- Japaneze Govermint Bonds
from CNBC
"Our Treasury, Fed and administration still don't understand that you can't print jobs, and devaluing your currency doesn't boost exports or balance the trade deficit," Michael Pento, senior economist at Euro Pacific Capital in New York, said in an e-mail. "All it does is send everything priced in dollars up, while creating huge imbalances in the economy."
Pento called the US "the chief currency manipulator" and said the current conflicts are less a currency war than "a skirmish between the U.S., Japan and China. But it may become WW III if Geithner doesn't close his mouth."
good stuff, are you sure about the source? lulz
Shaun Osborne also authored:
http://www.cnbc.com/id/39539787
yup, yup, was simple copy and paste
"The creation of an international currency, international clearing union, or system of globally managed exchange rates should be on the agenda. "
And who pray tell is going to be the Global Manager of said World Currency? Can U Spell I-L-L-U-M-I-N-A-T-I?
I think we hav had enough of the New World Order already. I'll pass on this dimwit's suggestions.
RE
Already sick of this NWO nonsense, product of the sick inbred minds of the 'elite'. *fail* Now we get to hunt them down and hang them.
Humans seem to be terminally afflicted with "complexitus", a virulent and often fatal mental disorder. Otherwise, how can anyone explain why virtually all humans ignore the simple, obvious fundamentals.
In this case, the topic would be "trade" or "exchange" between individuals. Of course, most humans make a terminal mistake right from the start by labeling this problem as "money" or "economics".
To put it simply, civilized (that is, non-predatory) humans survive and flourish by producing real physical goods (and services), and exchanging some of the goods they produced for goods produced by others.
At first, this system of "exchanging real goods for other real goods" seems to have a couple weaknesses, inconveniences or inefficiencies.
For example, if you want to exchange the eggs you (that is, your chicken) produced for lumber and nails to build a barn, shed or house, you need to exchange for those products a little at a time, as your chicken produces the eggs. If you tried to accumulate enough eggs to buy all the lumber you need, most would rot before you were ready to trade. You also need to find a producer of lumber who wants eggs.
This is why wise folks thousands of years ago settled on a single real physical good that never decays to exchange with others, namely "gold". This very efficient, convenient practice assumes every exchange becomes two exchanges: eggs for gold, then gold for lumber. Because the two exchanges can be separated in time, number and quantity, the entire process of exchange became extremely convenient and extremely efficient.
Unfortunately, humans are absolute suckers for that terrible mental disease called "complexitus". So they fell right into the complex traps created by uncivilized humans who decided to live as predators rather than producers (these being the only two ways to obtain goods humans require to live, enjoy and flourish). These naive fool producers fell for the predator's incredibly absurd scam of substituting various forms of fancy-looking paper for gold.
On the surface, this seemed to work, as long as everyone else was willing to exchange their goods for paper rectangles as well as gold rounds. Of course, these naive trusting fool producers should have immediately noticed they were trading real, physical, valuable goods for worthless PAPER... and suspected "something fishy here". They also should have realized that anyone printing up these pieces of paper instantly became infinitely rich, because they could print them at near zero cost, add as many zeros as they wish, and buy any real physical goods from anyone stupid enough to exchange real physical goods for worthless paper.
The rest is history.
The only solution to the near infinitude of paper scams that exist today, and the only way to establish a viable economy, is to reject ALL forms of bogus fictions like paper money, and return to the very most basic fundamental productive behaviors. All the rest is "complexitus".
yeah, but how will the bankers "fractionally reserve lend" gold? Don't you realize they have kids who need private school and braces. sheeeesh.
honestann, nobody 'fell' for anything. FDR (the bully) took gold at the tip of a gun in 1913. "The rest is history."
Yes, no question FDR stole their gold.
However, FDR did not force anyone to NOT switch to platinum, palladium, silver, or other materials as a form of payment (to exchange goods for goods).
Even more ditto in 1971, when humans could have started exchanging gold, silver and other PMs again rather than accept fiat, debt-based, fractional-reserve toilet paper.
The notion that we NEED fractional reserve ANYTHING is massively false. But that idea is loved by everyone who wants "something for nothing", and imagines he will at least get a little bit of "somthing for nothing" if he lets the gangster banksters get "astronomical sums for nothing".
How about if you want something... you go out and produce something to trade for it. That's what I've done my entire life, no (as in ZERO) loans and no debt. I earn before I spend. It IS possible, even in the world of today in which ALL prices have been driven far above where they would be due to the insane mental state that is created by the existence of a fiat-debt-fractional-reserve system.
In an honest system, prices are low because the behavior is, "I can buy this product when I produce enough to exchange for it".
In the system of today, prices are insanely high because the behavior is, "I can buy this product if I have enough for the down payment (now near zero), or if any combination of my 37 credit cards has enough buying power remaining". The prices of homes, education and health-care have been impacted more than most by that travesty.
Even in this system, where those of us who do NOT rely on any form of fractional reserve anything can still get by, even though we suffer the very nasty negative consequences of fractional reserve (but none of the positives).
I think you were probably just pulling my leg! :-)
honestann, i appreciate your thoughtful post. of course i was pulling your leg. you are preaching to the choir.
it takes effort to mine for gold. it takes effort to raise cows. it takes effort to grow corn. it takes effort to build houses. four people doing these four things can trade and coexist without "fractional reserve lending", The Fed, or fiat; all of which were designed by bankers to serve bankers. Folks will want gold, milk and meat, grains, and homes long after central money planning, fractional reserve thieving, and 'greenbacks' are a footnote in history.
personallly, i don't owe nobody nothing, honestann. we park our cars in the same garage. you're a good egg. live long and prosper, my friend.
chopper
JFC, wrong wrong and WRONG.
This is not how the system has worked for 600 years.
A true gold standard is a failure. There is not enough gold.
REAL BILLS DOCTRINE. How can you people read what Fekete et. al. (inc. me) write and not get it?
World trade was financed for centuries with real bills. NOT gold.
A true gold standard is perfectly feasible. Perhaps not at $1300 per ounce, but that's totally irrelevant.
Besides, nobody can (or wants to) force you to convert your products into gold (while you're waiting to exchange for other goods). You can exchange the goods you produced for anything the other party has that you are willing to accept as exchange.
Hey, go ahead and hold your wealth in silver, platinum, palladium, nickel, copper, lithium, hydrogen, helium or 90 odd other elements, or any of millions of other materials, or eggs, or whatever you freaking want. If you believe the exchange rate for gold is "getting out of hand", demand something else.
Really, you're dislike for gold is silly. And it doesn't really matter how much gold is equivalent to 1000 eggs (for example). If it is 1 ounce, 1 gram, 1 milligram, 1 microgram, 1 nanogram... who cares? As long as your two step trades end up letting you trade your goods for goods of equal value... which is automatically what happens.
Yes, I read the article about "real bills", and I have no problem with them, as long as they are fully voluntary, and no middle-man is able to diddle the system to direct wealth to himself for zero (or microscopic) productive work. It sounded to me like a "real bill" was just an agreement to pay with "real gold coins" within 90 days. What's the problem with that? A "true gold standard" does not prohibit anyone from creating fully voluntary contracts like that. And if other folks understand them well enough, and are confident enough in them to accept them in exchange for the goods they produce... fine!
Remember, a gold "standard" is only a standard... much like "measuring in metric system units". This is NOT a law, this is a "standard"... a conventional practice. Nobody is required to measure in metric units, and nobody is required to exchange their goods for gold... or anything else for that matter.
What matters is, people stop accepting totally bogus, fake, fiat BS. For me personally, especially in the world full of scam artists today, that means PHYSICAL gold, not "receipts for gold (at some unspecified time)" and not "real bills for gold (in 91 days)". But that's just me. If you want to accept paper, go for it... sucker!
Japan like China has low centralbank (gold) holdings. A move to just 10% would see almost 7 years of gold mine supply consumed at current annual mining rates.
To achieve levels commensurate with that of the US's 88% of reserve assets in gold, Japan would need to purchase 23,114 tonnes & China 56,249 tonnes. The USGS believes there is 60,000 to 90,000 tonnes left of gold to be excavated worldwide.
Canon makes losses of about 6.8 billion yen for every 1 yen gain against the dollar.
The Chinese have cleverly pushed the horns of the "Impossible Trinity" right up the proverbial backside of the Japanese. The Japanese are anything but pleased; their response could spur a wave of global currency devaluations.
no worries. The Chinese and Japanese have a long history of working things out.
http://en.wikipedia.org/wiki/Rape_of_Nanking
Did I get this right:
The author thinks that a collapsing (against what, besides of gold?) Yen will be supportive of international stocks and commodities? For a Yen-Investor or also for USD-Investors or EURO-Investors, in real terms?
Thanks!
Tyler,
I dont' know who you really are... will likely never shake your hand... but I want to say that what you are doing with this website is unmatched anywhere on the planet.
The information and opinions on this site are a gold mine to anyone wanting to understand the global financial system and the crisis that we are in.
The information on this site is bar-none, unbelievable.
I tip my hat to you sir.
+1
speaking of which: Tyler, i tried to donate some cash today through the PayPal, and to make a long story boring, the damned thing ain't working.
can you please provide another way to donate besides PayPal? for me, they suck. thank you.
chopper
It you don't think that picture will be replicated here in the near future, I got a bridge to sell you in San fran.
ha, ha. thats not your bridge. how do i know? i bought it off someone just yesterday!!
To achieve levels commensurate with that of the US's 88% of reserve assets in gold, Japan would need to purchase 23,114 tonnes & China 56,249 tonnes
What? You aren't implying that the US had gold reserves are you?
China complaining about US pressure and upcoming trade war.Quite simple boycott their goods,won,t be much choice but how much of what they actually produce is essential.This is a country who has never renounced communism,where pay for the masses is paltry in fact probably not far off slave labour for many, its cost us our economies,jobs and financial security for huge profits for the few.So China as far as I,m concerned get stuffed you can keep your crap.Import controls asap and show em we don,t need cheap goods to build up a monster who ultimately laughs at the rest of the world as it destroys there economies.Stop em buying all the Gold and Silver up too.Globalisation is a sham to get everybody working for bugger all,keep poverty in China and Gold and Silver in the West.
Isn't this the year that SDR's get re-valued, (by my rough estimate) the Yuan should contribute 10% to the SDR basket?
The ratios are to be calculated Dec 5 and the new value used from Dec 31, or am I mistaken?
See http://www.imf.org/external/np/exr/facts/sdr.htm
Good post, thanks
If I were Chinese, I would be plenty upset about this - even today. I am not Chinese and am still upset. The Japanese during WW2 were vicious toward their captives. Perhaps an ass-whoopin' is brewing over there. The rape of Nanking is not well addressed in typical history books in the US - but events like this go a long way into understanding how the Chinese feel about the Japanese.